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. 0 .
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:

0

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. 0
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 1926. 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

."

*

r^^

•f

.»

.»

'

^

^v.'

1

«•

,«, ""

IS>

^

1935

-10 -5 0

• 10 tl5 ♦20 -10
Rote of return on invested Capitol

Corporotions omitted for porl

1931

1936

1937

1

A

•m

" y

K:

'■y

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> /

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.„«*! .(

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1932

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y

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n.

1938

: i

■

'1

y

^

1

\ i

i

0 -

s

■5 ?

10 'IS '20 -10 -5 I

Role of return on mvested copitol

+5 'lO +16 '20 -10 -5 0 +5 tlO

-10 -5 0 *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

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CONCENTRATION OF ECONOMIC POWER

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CONCENTRATION OF ECONOMIC POWEli

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

88

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88

88

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164

CONCEJ^TRATION OF ECONOMIC POWER

2«-

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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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CONCENTRATION OF ECONOMIC POWE-R

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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

t-i lO ^CD-^

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CONCEJS'TRATION OF ECONOMIC POWER

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174

CONCENTRATION OF ECONOMIC POWER

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CONCENTRATION OF ECONOMIC POWER

175

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sua aS a
o o Gj o Qj a>

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

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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 Aoqulred 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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00 . 11

ll

sjiaoMjD jaqmnN

-H

--

- II

Mer-
chant

bar,
hoop,

and
cotton

tie
mills -

sJiJom at
si[ira JO jaqdm>j

N rH m

to 1

S2(J0M JO jaqranjsl

-H ^

" 11

sjjJOJi m
siiitn JO jaqranjsi

SJiJOM JO jaqmoM

II

60
■9 OT

■35

^a
Pi

SIIOJ

j[onra JO jaqmniST

II

saaBUjnj Snqp
-pnd JO jaqoinjsr

1

SJiJOM JO jaqmnN;

11

ffl_M

"S3

sa.

S3(J0A\ ut

siiim JO jaqranM

■* rt (N

- II

S31I0M JO jaqmnM

^ ^ «

M 1

siiim iiBj JO laqumjsi:

C^

;

- II

Bloom-
ing,
slab-
bing,
billet,
and
sheet
bar
mills

S3[J0Ji m
snini JO jaqiiin>i

"I -i< ' to

- II

SJfJOAi JO jaqran^;

-H ,H

„ II

Open
hearth

steel
works

saoBn
-anj JO aaqranNvT

IM CO

0 1
to

S}[JOAi JO jaqran^v

— n

- II

Bes-
semer

steel
works

sjajJSA
-uo^ ' jaqranN

■<»< (N <N

. II

s. jAvjojaqranN;

-H -

" II

sooBr ij 5SB[q JO aaqmniM

^ ■*

-)• a

S II

"0

•P

0
1-3

C3 i

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s § =

±? b/!iJ 6£.3 4J bO aJ

^s^-s^ 2 sad
s s? « s w

is

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Mi
0

0

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a

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0

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3

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CONCENTRATION OF ECONOMIC POWER

269

W CC »0 lO f^

CO CO c<

« IN « IN

c<t -^ -^cn CO

3 —

•-HO* ~,

— o uisi 3 .2 t, -^

3 ° S ° -

n ;5 ra

^5

SI'S

oW

3 2 CD

S O

Ph =

C 03

5 * ~ -a-s

e t^ > a1 ° o
S ■• ^ o ^ o'Z^

16 ol Sill

ta U s: (SO

-So

4^

13

o

1

S(5§

Bell
Work

New
Work

Sharon

o

*JCQ

g an

<J

Ot3 J r2;

— g C3

03
Ph

1 S 1

||5

Qrec
Mill

McCu
Mill

I'aintc

a
5

Isabel
nac

M 0 n
Mil

Dune
Mil

270

CONCENTRATION OF ECONOMIC POWER

§

Urn

c

a

£

5

c

p

■

saupunoj jo jaqmnN

-

-" :'

-^

siuBid iBjnjonj^s pnB aSpijq jo jaqmnN

siiira oqni jo jaqranM

Sheet mills,

black plate

mills, and tin

plato mills

SmziaBAiEg
joj sinarajiBdacr

Sainni}
joj siuoraiJBdacr

S31J0M ui siiira
loq JO jaqniryvj

S3[J0Ai JO jaqnm Nj 1

Suinuij 1
JOJ sjnamjJBdacr 1

-^

-" ;

'^.

JOJ sj'uamiJBdaa |

-

S3JJ0M JO jaqmnj^ | ^^^„^^^^^^

-

SJjjoM UI siiim 1
poj JO jaquiTiN |

«

1 rH (N ,-(

o.

S5iJOAijojaqmn>j |

-

l ^ ^ ^

-

Struc-
tm-al
shape
mills

S3[J0A\ m 1

S[i!m JO jaqtiinN 1

^

SJjjOAi JO jaqraiiM 1

; -^

Mer-
chant

bar,
hoop,

and
cotton

tie

mills

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Sdicn JO jaqninN |

-

si[aoA\'j& jaqranN |

-

aw
•ll.

sjjjoM ni
siiim JO jaqiianN

sjfJOAi JO jaqranN

be

.9 w

SIIOJ

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saoBUjnj 3nifP
-pnd JO joqmnN

s^ijo.w JO jaqranN

E'a

s^jo.tt ni
siiira JO jaqtiinM

S51J0M JO jaqtnnjsj

siifiu \\vj JO jaqranM

Bloom-
ing,
slab-
bing,
billet,
and
sheet
bar
mills

S^IJOM UI

siiim JO joqmnN

Cl

S3iJ0A\ JO jaqranN

-^

Open

hearth
steel
works

saaBTi
-jnj JO jaqranjV

•^

S2iJOMj(TJ0qran,M

-^

Bes-
semer

steel
works

sja^jaA
-noo JO jaqranN

a

sjjJOAV JO joqmnM

-

saoBajnj iSBiq jo joqainN

CC i-H W

s

s

"5

II

i '^■

£■ a

— CJJ —

s ^ a

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C

c
•c

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t:

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o

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rv

o O

^ -Mo,

02 •«!

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■sill

o c

sa

i-t

CONCENTRATION OF ECONOMIC POWER

271

252-2

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a*fi"

m

CjS CjO

o

Cco.ge^

is

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CSIC^ o « c^

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ea oj
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a'^ 3 o

A"a . ■•• w M J ■

P^ o o

II llcS

■272

CONCEiNTRATION OF ECONOMIC POWER

c

i ■

■o
a
a
bi
o

o

1 1

saupnnoj ;o jaqranM

-^ h ■ II i

II

I

sjuB[d [Bjnjonj^s puB aSpuq jo jaqmnf<;

II ;

II

;■

S[i!in aqnj jo jaqrariM

II -"

1 - II

;

Sheet mills,
black plate

mills, and tin
"'ate mills

■

ani'zmBAiBg
joj sjuau^jBdaa

II "

- 1 ,

-

-

Swnnij
JOJ s^uarajJBdaQ

II "

1 - II

I

i

sjiJOA ni sijitn
ioq JO J9qmnf<[

II °

o t- -^ -^ t^ -^ a» ■

S2{J0A\ JO jaqran m

^£S

(N -H -Hrt ^ W r-l

£s

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JOJ siuauijJBdaa

II '

1 : II

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JOJ sjuamjjBdaa

II ""1 " II

sjjjoM JO jaqmnN

II --"I "^ ir ■

OS

sjjJOAi ni sjijui
poj JO jaqoinM

. 1 1 « (M rj. II

sjiJOAi JO jaqmnjs[

II -"-1 "^ II

Struc-
tural
shape
mills

S2(J0A< "•

S[iini jOi^iSi^flM

II .;

II

SJIJOJA jtxosqumN

II

" Mer-
chant

bar,
hoop,

and
cotton

tie
millSj

' SJJ^OM UI

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1

sj[jOAi JO jaqmuM

'■ II i

11

_0-w
.11

SJIJOM m
S[nni JO aaqransj

«

h-ll'

s^tJOM JO jaquinjsi

11 -^

1- II

Puddling
mills

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il •

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II

.

.2 —

ca

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1- II

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-

h II :■

1 ; II

Bloom-
ing,
slab-
bing,
billet,
■ and
sheet
bar
mills

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N

|c» II «KN 1 "5 II (N -I

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- -

^

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hearth

steel
works

saoBu 1
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II -"1 - II •

sjjjOAi JO jaqninN 1

II ^-] o» II

Bes-
semer

steel
works

SJa^JBA

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"

- II i ;|

II

s^jOM JO jaquinKi

-

h II i il

11

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C

|- II "-| - II

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^

•c
c

a
•c

;> c5

c
" c

■H °

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s

o.

CONCEWTBATION OF ECONOMIC POWER

273

; i - i i i ;. i ; - 11 ; i ; i - ;« i i

i i i. i i i i i i ■■ i i i ■ i ; i i i ;

i : :• i : i i i i i II i i i i i i . i i

-

1 1 •-! 1 1 1—1 1 1 iO 11 't 'i \ 't ',',', ]

1

; : h : i ; 1 i ; 'i

< 1

--

;

; 1

O >0 ■^<0 50 M CO 00 «0 ■* tDCT US O

^ ^OcOr^qCCOCDCO COt>.CQ -

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s ■

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1 ^^^^w_^rH^ r-^-.

i i i i i n. i'i i 1 i i

• 1 1 ; 1

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-

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i ;

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r~*'

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1 i, : i I i i 1 1 1 1 ■ i i

0 .-

•3-2 0

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

1

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0<0*^OS^O®OJ,)0

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;o,'S

g S 6
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a t. >-■—

^, 0.0-.

o o <; <;

S H, o

264905 — 41— No: 13-

-19

274

CONCENTRATION OF ECONOMIC POWER

seijpTmoj JO JeqmnN

sincid patnoniis ptns eSppq Jo laquniN

sintn eqm jo jeqintiM

Sag a

101 sinemiJBdea

Joj sinerajJBdaa

s^JOAi m sinni
?oq JO jequhiN

SJtJOAijoJoqniti^

Smnnn
JOJ siao'raiiBdea

^•i

SoizinBAiBS
loj sinemijedeci

s:^JOAijoi9qnmH

«a

SJfJOAv ni snitn
poJ JO aeqainN

t s?[JOAijoJ9qniiiN

S3(J0M UI

sintn JO jeqnniN

s:siJ0Av JO JeqmnN

is d c Ocia c ,

s ( sinni jc jeqTnmKi

I SJ[JOAijoJ9quinH

sjiaoM tn
snnn JO jeqiiinN

ssjJOAijoJeqnmH

snoj
3ionnijoJ9qnin|>i

saoBuJnj Su!iP
-pnd JO jeqninH

s^iJOMjoJaqniTiN

ss

I sJiJOAi m
snita JO jeqiiinN

S3[J0Mj0J9qnmK

siiitn n«J JO jeqmtiN

sntm jo'jaqtiinN

S31J0M JO J9qtanH

S b CD t-

S90Bn

-JTij JO J9qumN

s^stJOMjoJgqnmN

SJ91J9A

-uoo JO jgqumN

SJiJOAijoJeqnmN

S90Cnjnj jSGiq jo J9qinTiN

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■2ai

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CONOEiNTRATION OF ECONOMIC POWBB

■a ' '^
£ « ft

.Srtft
— ■a ^^

"■Sal

275

l-l -H t-H N

^ m

= ^ ^

M ^ fQ Ph

<a

fl

^

13

60

bn

o

M

3

M

J3

OJ

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il^Pl

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i:^

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"a °3 3 o i S J5 c-i

o.^ ^.^.^

^ _'!'£■

O I- O o t. o

•»* <! O '^ Oa;;

276

CONCEiNTRATION OF ECONOMIC POWER

i •
. II

.a

saijpnnoj p aaquniN

-. ^

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

joq JO jaqranjsj

sjjjoji JO jaqamN

Smntnj-
JOJ siuauiiJBdacl

ll

3uizinBArB3 ■
JOJ sjaaanJBdaQ

.

s^t-iuM JO jaqmUiSi

OS

sJiJOAi ni snim
poj JO joqnfnN

«fi

S31J0M JO jaqranH

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

s^fjOM JO jaqnmM

0.m

s:!lJOA ni
sijira JO jaqranM

•<)<<»M <N N

05

sjjjOAv JO jaqranM

^^-H ^ «

•

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■ga

C4

SIIOJ

Honni JO jaqtanjst

|-

saoenjnj 3u!iP
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11

« en

Ea

si[itu JO jequin>j

1

sjjjoAijo jaqcoTiM

II

sijim n^J JO wqninN

11

Bloom-
ing,
slab-
bing,
billet,
and
sheet
bar
mills

sinui JO jaqiiinM'

1

SjlJOAi JO jaqmn^

II'

Open
hearth

steel
works

sao'BQ
-jnj JO jaqmnN

sjfJOAi JO jaqranN

«

Bes-
semer

steel
works

sjajjaA
-uoa JO ^aqranN

II ■

S31J0A1 JO jaqranfj

II

saaeajnj iSBiq jo jaqran^^

o

c

>

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ft

CONCEiNTRATION OF H'JONOMIC POWER.

277

£ 2

3 t£ So

^£> as,

o o

o-o

O 5

53 Ck
P-.

. cSi-i o'o OO 03 O^

i w^g

55 com-;

. ■=> S a

■ (H M ><

q; c- OJ -tJ r^ T3 c . ,03 w .S ,

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o^ K 03^i3,2 o- p 3-
PO.ojjao'oOO.osoft

, 0:— O ^ '

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-"O^'^npo'aip-5. -^ ia

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C4 Q,

p o Prs £ p >. n>- g-
S offl(2g«R2d2

■sSo

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

0
'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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«C005D^C>l'»«<Ot>-

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ocoeococodc^r^

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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, 0 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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318

OONCEiNTRATION OF ECONOMIC POWER

m

CO
b£ 0^

Jl

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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.

m

s

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COMUii.iViKAXiOi\ OF ECONOjMIC POWER

321

ggOO OOiO
2f Ji'Sf ^^ *^' -'* op"

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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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a c g fc

to 13 o3

^ to

■^ 8 c"3

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01

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TJ gXJ 03 »^
G - £3 >^

1^ i" i

' 0) c

73 i-. +i

+i O o3 C

^J r*> O .

o3 "— > ,—

(S o o3 to "

y CI ^ 03

03 <! P '^ fl
rH *^ O O to

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^ -c '^ .ti -c
W«Co3 a

IS

fO ^ --H

C> C> C> CI

iO lO »c o

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U5 »0 iC ^^r*

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lO «D CD

OS o

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- . CO rf O
~ t^C<i CO »o

40 lO loco cD;o»o »oo> co

CC t* CO lO t^

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GOOS 0> .OS

*0 ^ ^ .;

05 cc t^ o t^ ,-r

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orc4"cD oTo'c^'cd CO od

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f!5'^co<^'^co'^JOscOcj(Mrob-f2
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CCOSOOOC'OOOOOOOO— "CO00iOOSioasiOCSCOC0CD0000COiO00tO-^0Q(NO

dc^cscjc^(Nc^cicou:irios(Nosc^os(Ntoc^cscscsc^oscsoscsc5r~co

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326

C0XCE,NT1{ATI0X OF ECONOMIC TOWER

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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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5 ^ .C£ ^ C^

M o -i^ _,roo
^•^^^{^

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g^i

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"o "S S -S .2

O) <u fl ;< (N-
^ o C q; 05

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2 .S -^ c S

■*^ S „■, S! C^
w ^ to OJ

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O .t3 to 1-1

.-I MOO.,

MCCCO ^
«5t~C» r-l

1 r^'i^s o ii n i; p ii q-^x: OX! « I

•c o " 2 S-° "-^ a-" a-~ 0x5 ox: oX! g « S ?? '^ ^-^ ^ ^ ®x]x:xi jaxitS
B-"v no S'^-Sn'-^sk "sf,.s- a-_« g-g g-g — ^ o- o o n c c a c3•"
V* N? .2 .2 ^'^ *<" "^ ►- ►. ^ -^ .^ V* v-^-y- ■£! .2 .t; V— v-^fix--^ — c^ 00 M t^ ic _:

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C^C^X3XlX!^^'^^^'^^CSCOcccCfOCOXi^J2,0'^2S^^^,j2JaJ2X3.0J2J3^
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sji vjix!^ XI xi j2 X3 ^^;s;2;;ss;SJ Si^Sl* -"^ * •'^ -^"^ ■'-' -^ -^ -^ * •^ -^ •'^ •'^ ■^

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'^'Si'S-M.-^ ^ -^ ■'^ ■'^ ■^'S-
X2X3XiX!:g:j;;j;:j;SJ:K-^

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M « w S 3 o O c CO c/i'U'U'^'O'O'D'C'O'D'O'O'O'O

"2 '^ "2 S S '^ i^ '^'2 '2BOHaoaa6ncaaa

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'2'S'S'H'S'2aa3oeBaRocpa3Sg§55S§gsggS§3§

SS292S3S03333333S30000COOOOCOOOCO'-

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• ^ - T ~' ^■■; ~: ". ". "'. 'r ^. ^ in u^ CD — ic C5 u:: c:; (T^ U-. ,

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>>>.>>f>i >.>>>.>>>.>.>.>. >>>.>>>>>) >.uD .cx:X:x:x:X3£X:x:x:j:x:jC£J2
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336

CONCENTRATION OF ECONOMIC POWER

^^3jQgjQj©o3a5aj©® . * • < • . • • t ^ V oi (D V . ■ • •

,J5 .5 ,^ .^ .2 -llj .ZS .S .S -S -S .-i C3 C3 O O O O O O O « .-3 ■— ■ .2 'S O O C3 i>

Ti«-o '^ iM 00 00 1~ w -TO o ■<)< .9 .9 .9 .9 .9 -B-S .9 .9 •= <2 "-"= o* .9 9 .S .9
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S j^^SSSi J^wsSJ~o3J^* -"^ ■^ •'^ •'^ •'-' -^ -^ •'-' ^ jJ^^X-'^ ■'^ -^ •^

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00000000000

10t^CO'^t>;OqOiOOO'3>
?O00»Ot^c4>C0c5c^»^'-*CD

to CO O <0 00 00 00 CO 00 00 00

Odd
3 3 3
000
S<O.Q.

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'O'CJ'UTS'O'b d'^ d

.0000000,00,

Q. o. Q« Q, a. o>^ Cl^

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

11,691

■

26095.-.-

Aug. 3, 1920 .-- -

25096

26097'

Aug: 14, 1920

25098

do ...: ..

26099

Aug. 17, 1920 - . -

25100

Aug. 28, 1920 -

25101...

Sept. 11, 1920

26102

Sept. 13, 1920..

'\~

25103...

->...do -- -.- .'

49,200
49, 185
60, 048
68,580
44, 615
70,190
44, 460
11,395

25104-..

Sept. 14, 1920.-1' .

25105

do- -

25106...

Sept. 15,4920 -.-

25107 .

Sept. 16, 1920

25108

do

'.

^

26109.

do -...-

- i:.;^

25110 .

Sept. 17, 1920 ...

35", 720

-,

25111

Sept. 20, 1920

7^

26112.....

.. ,.do . . ..

15, 487

40, 725
73, 840
42, 878
45,001

26113

Sept. 28, 1920.

*.' ■

25114-....

25115.. ..

Oct. 13, 1920

35, 102

^116

do

112,330

-^j.. ^.,

340

COXCEXTKATIOX OF ECONOMIC POWER
SUIPrKD BV BETHLFUE.Nt STEEL CO.— Continued

Invoice 'late

Form of product

Exhibit
No.

Bethle-
hem
specials

Plates

Stand-
ard

shapes

Bars

25117

Oct. Vi, 1920 •

13,000

31,260
90,000

25118

do

25)19

Oct. 16. 1020

152, 680
112,040
111,220
8,3,110
73, 730

25120...

Oct. 20, 1920 .

25121

Oct. 22. 1920 :

25122

Oct. 25. 1920.......

25123

Oct. 26, 1920..

Oct. 27. 1920

""ig.'iio

25124

58, 460

25125

Oct, 29, 1920

107, 680
19, 420
58, 270

25126

Xov. li, 1920

do

..

25127

25128

Dec. 6, 1920 _. ..

458

Exhibit 29
C.vMBRi.\ Steel Comp.\ny

WIDENER BUILDING
PHIL.iDELPHIA

Contract No. CH-200

Cambria Steel Comp.\ny agrees to sell and Russell Wheel & Foundry Co.,
Detroit, Mich., agree to buy at prices and upon terms specified below: (7,000 to
8,000 tons) 7,000-8,000 Net tons of Seven thousand to eight thousand tons of
Standard Structural Shapes, Plates and Bars.

Material and price

Division of tonnage '

6,500 tons
500 tons..
500 tons..

Description of material

Shapes
Bars..
Plates.

Hiise price
IT pound

Cents
2.29
2.29
2.29

E.xtras

Sept. 1.1919
.lune 1, 1918
Sept. 1,1919

1 Approximately.

Afcove material for Detroit Edison Co. Power Plant.

Quality: Manufacturer's Standard Class A or B Structural Shapes; Plates and
Bars of Soft Open Hearth Steel.

Material to be within the limits and of the sizes published by Seller and subject
to Seller's standard variations for rolling and shearing.

Place of Delivery: F. O. B. Cars Detroit, Mich.

The price or j^rices quoted herein are based upon carload freight rate from
Pittsburgh, Pa. to the place of delivery in effect at the date of this agreement,
viz.: 29 cents per 100 lbs. In the event of an increase in such freight rate, the
amount of such increase shall be added to the price of all materials shipped against
this contract during the period in which such increased rate is in effect, and in the
event of a decrease in such freight rate, the amount of such decrease shall be
deducted from the price of all materials shipped hereunder during the period in
which such decreased rate is in effect.

Terms of Payment: Net cash in 30 days or %% discount for cash in 10 days
frotn date of invoice.

In case Buyer shall fail to make payments in accordance with the terms and
provisions of this agreement, Seller may defer further shipments until such pay-
ments are made, or may, at its option, terminate this agreement.

CONCENTRATION OF BOONOMIC POWER. 34 ^

Credits: Shipments and deliveries uoder this agreement shall at aU times be
subject to approval of Seller's Credit Department; and in case Seller shaU have
any doubt as to Buyer's responsibility Seller may decline to make any or further
shipments hereunder except upon receipt of satisfactory security or for cash before
shipment.

Specifications : Specifications shall be furnished to Seller by Buyer in substanti-
ally equal monthly quantities, beginning and ending

Buyer's failure to furnish specifications as aforesaid

may, at Seller's option and without notice to Buyer, be treated and considered as a
refusal to accept and receive the unspecified portion of the goods. 4,500 tons
before April 1st, 1923; 3,000 to 3,500 tons before June 15f ., 1923.

Time of Shipment: Shipnaents shaU be made ^.s soon af .er receipt of specifica-
tions as condition of Seller's mills will permit.

In the event of unavoidable delay due to fires, strikes or oth&r causes beyond
the control of Seller, Buyer may, subject to previously obtaining consent of
Seller, cancel the portion of the goods not manufactured or in process of manu-
facture at the time his request to cancel reaches the works.

Seller shall not be responsible for delays in deliveries caused by strikes, differ-
ences with workmen, shortage of cars, delays in transportation, accidents at mills,
ot other contingencies beyond its control.

Seller is hereby given the right to have any Company in which the. Midvale
Steel and Ordnance Company is interested as stockholder or otherwise furnish
material of the same kind and quality at the- same cost to Buyer in whole or part*
performance of this contract; and it is agreed that shipments and bijling of material
by or in the name of such Company, as well as any payments made to such Com-
pany therefor, shall be as effective and binding as if made by or to Cambria Steel
Company direct.

Executed at Philadelphia, Pa., in duplicate, this 30th day of January, 1923.

Cambria Steel Company,
By (Signed) J. C. Holding,

Manager Str.uctural Division.

Russell Wheel & Foundrt Co.,
(Signed) C. W. Russell, V. P. & G. M,

Source: F. T. C. Docket 962, Ex. 22945.

Exhibit 30
In the Matter op Bethlehem Steel Corporation et al. Docket No. 962
- Cambria v. Bethlehem and Lackawanna

The following is a partial Abstract of invoices contained in Commission's
Exhibit, herein. No. — , showing' shipments of Plates, Standard Structural Shapes
and Bars to Russell Wheel & Foundry Company, Detroit, Mich., from January 6
to October 26, 1923. On January 30, 1923, Cambria Steel Conlpany contracted
to furnish the above-named consumer approximately 6,500 net tons of structural
shapes; 500 net tons of Bars; and 500 net tons of Plates (contract No. CH 290,
Commission's Exhibit, herein. No. 22945).

The first and only shipment against this contract appears to have been made by
Cambria Steel Company on March 28 (Commission's Exhibit, herein, No. — ,
pp. Nos. 8 and 9).

With those exceptions the shipments made subsequent thereto, as listed below,
were invoiced by Bethlehem Steel Company, all or a considerable part of the
amounts being designated upon invoices as applving upon the contract place*,
with Cambria Steel Company. (See EXCEPTIONS.) Some of these shipment,
included substantial quantities of identically the same form and size of materials
by two or more mills.

342

OONCEiNTRATION OF E<X)NOMIC POWER
PROM: JOHNSTOWN, PA.

Page
No.

Invoice
date

Plates

Shapes

Bars

Page

No.

Invoice
date

Plates

Shapes

Bars

1

ms
Jan. 6
Jan. 8
Jan. 9
Jan. 18
Mar. 28

do

59, 180

108
110
111
112
113
114
115
116
117
118
120
121
122
123
124
125
126
128
129
130
132
133

162S
July 2
July 3
July 5
July 6
July 9

do ....

82,520
149, 870
50, 240
61,210
62,450

2

120, 233
147, 193
147, 526
51,875
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, 014
259,009
89, 598
201, 976
142, 692
41,292
34,917
122, 940
184,399
114, 337
54,700
130, 530
179, 433
134, 560
15, 942

4

6

• 8 '

9

156,800

24

Apr. 3
Apr. 4
Apr. 6
Apr. 9
Apr. 10
Apr. 17

...do

Apr. 20
Apr: 23

...do

Apr. 24
do

..

July 13

...do.—.

...do

July 16
July 20
July 21

...do

July 23
July 25

...do.....
July 26
July 27

...do

July 30

July 31

do

78,420
120, 620
122,650
240, 900

68, 750

25

26

28

29

30

39,494

31

66, 120

33

100,600
91,686
79, 873
85, 745
2,897

35

36

37

38

39

...do—..
Apr. 26
Apr. 27
Apr. 28
Apr. 30

...do

...do..-.

May 2

May 4

do

.81, 770
130, 970

41

42

13, 310

43

46, 870

44

134 An?- 1

68,550
132,811
88,872
72, 430
131, 865
101, 471

45

135
137
138
151
154
165
167
173
177
180
182
185'
187
190
192
194
204
207
209
210
211
212
219
220
221

1222
225
226
227
228
229

' 231
232
238
239
240
242
243
244
247
250
251
255
257
258
259
260
261
263

Aug. 2

Aug. 3

do

46

50

-

51

Aug. 9
do

52

63

...do

do '

Aug. 10
. do

123,400

54

30,068

55

May 8
May 10
May 12
May 17
May 18
May 21

...do

do

Aug. 13
do

92, 860

57

92,090
83, 437
77, 149
87, 393
161, 306

58

Aug. 17
-. do ..

'

59

63

Aug. 20
do .

65

66

59,440

Aug. 21
do

65,310

67

100, 346
76, 095
97, 272

130, 774

166, 016
138, 903
114,095
104,028
93,245,
140, 358
111,464
100, 292
13, 243
12,484

69

May '25

Aug. 22

Aug. 25

Aug. 27

do

70

71

May 26
May 28

...do

do

72

114,670

73

150, 963

9,576

140, 594

Aug. 28
Aug. 29

..do

Sept. 3
...do

74

75

...do...,.
Mav 30
May 31
June 4
June 5
..do... .
June 6
June 7
do

'l59,"880'
128, 260

77

78

....,.-_...

80

103, 800
60,600
71,218

--.do

- do

11,220

81

42, 775

82

" 138,140"
47, 230

Sept. 5
do

112,-482
98,235
73, 461

175, 502

83

84

do

85

108,407
137, 357

...do

86

do

...do

. -do

50,810

87

...do

June 8

June 9

June 11

do

.142, 760
180, 320
221,460
164, 630

14,320

88

Sept. 7

Sept. 11

do

116,311
78,4i>6
55,0-. 7

135,626
53, 148
75,426
38,243
72, 968
92,664
77,846
80,465
68,586
54,550
6,768
6,445

107,924

89

90

91

121, 893

-..do.....

92

June 14

...do

June 16

...do

June 19

June 20

June 23

do

80, 280

. 105,320

107, 180

"iot'sso"

79^200

do

93

...do

95

Sept. 12
Sept. 17
Sept. 18
Sept. 21
Sept. 26
Sept. 28
Sept. 29
Oct. 3
. do ...

■

96

30, 975

97

98

99

132,774
46, 794

101

-

102

June 26
June 27
June 29
June 30
do

103, 830
148, 630
66, 320
122, 450

103

104

105

do. ..

106

36, 687

Oct. 26

50,920

107

July 2

72, 580

CONCENTRATION OF ECONOMrC POWER
FROM BETHLEHEM, PA.

343

Page
No.

Invoice
date

Plates

Shapes

Bars

Page

No.

Invoice
date

Plates

Shapes

Bar5

10

1913
Jan. 11

...do

Jan. 16
Jan. 26
Feb. 2
Feb. 8
Feb. 26

do

96,400
19,135
33, 859
70,700
10 439
18, 339
24, 809
86 740
36, 266
57,600
615
62, 378

179

1 127

1 161

184

189

230

1236

1 237

I 249

254

256

262

1923
June 2
July 26
Aug. 11
Aug. 20
Aug. 21
Sept. 6
Sept. 8
Sept. 11
Sept. 17
Sept. 25
Sept. 27
Oct. 25

20,240
12, 636
9,026
24,744
53, 890
62, 512
34,507
52, 469
37, 419
94,828
25, 471
12, 630

11

12

14

15

. 16

17

18

19

Mar. 5
Mar. 7
Apr. 2
May 19

20

.

' 23

' 64

FROM LACKAWANNA, N. Y.

13
21

1 47
148
161
68
1 76
139
143
145
147
149
156
159
162
168
170

Jan. 23
Mar. 27
Apr. 30
__do-...
May 17
May 24
May 29
Aug. 4
Aug. 6
Aug. 7
Aug. 8

_-.do

Aug. 9

...do

Aug. 10

...do.-...
Aug. 11

79, 015
82, 460

118,115
'106,640
108,235
144, 180
113,695
148, 296
112,310
89, 425
100, 575
105, 985

62, 830

69, 212
62, 445
63, 350
57,058

175
I 178
1 179
183
196
198
200
202
206
208
213
215
216
'218
234
245
252

Aug,
Aug.
...do..
Aug.
Aug.
...do.
Aug.
Aug.
Aug.
Aug.
4ug.
...do.
Aug.
...do.
Sept.
Sept.
Sept.

113,420

120,100
106, 145
109, 155
106,920
111,410

74, 1.55
119, 875
149, 565

21, 175
119,270

66,095
86, 520
66,600

59, 452

4,895

78,750

1 Does not apply upon contract with Cambria Steel Co.

Exhibit 31

In the Matter of Bethlehem Steel Corpor-^tign Et Al. Docket No. 962

The following is an Abstract of "Shipping Notices" of Bethlehem Steel Co.,
Lackawanna Steel Co., and Cambria Steel Co., covering steel bars shipped for
account of Ford Motor Co., Detroit, Mich., to D. Wilcox Manufacturing Co.,
Mechanicsburg, Pa., which shows— ' .

(1) Shipment of substantial quantities from Johnstown and Lackawanna, both
prior and subsequent to the merger of the properties of Bethlehem, Lackawanna,
and Cambria; "

(2) The character and dimensions- of materials;

(3) The chemical analysis of product as disclosed by "Shipping Notices";

(4) The "Ford U. S. Symbol" covering the various sizes; and

(5) The tonnage of the different sizes supplied by each mill.

Note. — ^This statement does not purport to be a complete statement of such
shipihents. It is intended to illustrate merely the fact that both mills produced
substantially the same materials at the same time.

Legend:. ...

(A) "Ford U. S. Symbol," T-321.

(B) "Ford U. S. Symbol." T-4323-'

(C) "Ford U. S. Symbol." T-228.

(D) "Ford U. S. Symbol," T-222.
. (E) "Ford U. S. Symbol," T-248.

(F) "Ford U. S. SVmbol," T-24L •

(G) f'Ford U. S. Symbol, ".T-45-46.

344

CONCENTRATION OF ECONOMIC POWER
FROM JOHNSTOWN, PA.

Exhibit

No. Page

Date of ship-
ment

Weight

Description

Analysis

Car-
bon

Silicon

Phos-
phate

Sulfate

Manga-
nese

7

27
13
93
93
95
100

8
20
23

9

64

89
1
2
18
19
22

28

24
25
91
94

Apr. 30,1922
Feb. 12,1923
Apr. 4, 1923
Nov. 22, 1924

....do

Dec. 5, 1924
Dec. 19, 1924
July 22,1922
Nov. 6,1922
Jan. 17,1923
Apr. 9, 1923

Sept. 27, 1923

Nov. 10, 1924
May 31, 1922

do

Nov. 3,1922
Nov. 6,1922
Jan. 7, 1923

Mar. 5,1923

Aug. 31,1923

do

Nov. 10, 1924
Nov. 22, 1924

May 31, 1922

July 26,1922

do

Aug. 29,1922

Jan. 17,1923
Jan. 25, 1923

do.

Apr. 9,1923
Aug. 31, 1923
July 25,1924

do

do.

July 28,1924

do

Sept. 27, 1924
Oct. 3, 1924
Nov. 4,1924
Nov. 6,1924

do

Nov. 8,1924
Dec. 5,1924
Dec. 9, 1924

......do

June 17, 1928

July 28,1922

Jan. 25,1923

June 2, 1922

June 17,1922

Aug. 1, 1922

Aug. 19,1922

Sept. 27, 1924

Sept. 29, 1924

do ...

Nov. 4,1924

do...

... do -

Nov. 8,1924
Nov. 10, 1924
Nov. 22, 1924

. Dec. 9, 1924

Dee. 19.1924

38,300

47,800

44,940

7,240

6,900

2,050

18,300

92, 100

47, 620

38,700

103, 500

46,300

46, 770
50, 660
29, 700
115,0,80
11,000
64,220

59,940

91, 650
31,200
32,360
15,890
84,000

91, 560
91, 540

74, 720

24,200
45, 580
7,000
15, 420
19,800
19,800
40,100
36,100
55,200
30,000
111,090
51, 300
5,200
33, 190
69,030
36,840
96, 610
11,460
19, 400

36, 160

81,040
25,400

100, 260
31, 50O

114, 360

55,560

62,420

42,340
3,840
8,990
1,720
49, 2,50
23, 310
32,060
7,150

48,600

(A)

(B)

65,120

Rounds: ^inch....

do..... 1

do

do

do

do .

do

Rounds: IMe inches-

-do

.do...

.do...

do .

do

Rounds: 114 inches
Rounds: IH inches
Rounds: IH inches.

do

do

do

..do

..do

..do...

..do

(D) Roimds: 1J< inches.

(E) Rounds: IJ^ inches.

(D) Rounds: 1}^ inches.

(E) Rounds: IM inches,
do

(D) Rounds: 1}^ inches.

(E) Rounds: 1^ inches.
OD) Rounds: IJi inches.

....do

....do

....do... -.

....do

do.

(E) Rounds: lii inches.

(D) Rounds: 1^ inches.

(E) Rounds: IJi inches,
do.

(D) Rounds: IJi inches
do

(E) Rounds: 1]4 inches

(D) Rounds: 15^ inches.

(E) Rounds: IJi inches
do.

(F) Rounds: l-Me inches

do

do ..—

(XJ) Rounds: 1916 inches.

....do... -

do .

.....do - -.

do... -

do '- -

......do

do

.....do....- -

do

do -

do....

do...-. .......

.do.

.do.

Bounds: li^-^^ inches. .

).310
.290
.320
.280
.280
.280
.300
.330
.330
.280
.300
.350
.370
.400
.280
.280
.340
.340
.340
.031
.035
.310
.310
.300
.300
.280
.330
.330
.330
.290
.320
.280
.300
.280
.330
.280
.340
.320
.340
.340
.340
.390
.340
.390
.380
.360
.350
.330
.340
.340
.290
.280
.330
.330
.300
.320
.330
.330
.320
.340
.300
.340
.350
.360
.350
.360
.380
.360
.310
1330
.330
.350
to
.400
.280
to
.340

0.13.
.11
. .12
.09
.11
.11
.11
.10
.13
.12
.11
.13

.10

-.10

.11

.10

.10

.13

.08

.13

.08

.08

.13

.13

.09

.13

.11

.11

.10

.11

.12

.10

.12

.12

.08

.11

.13

.09

.09

.11

.10

.11

.12

.12

.11

.12

.12

.11

.12

.08

.11

.11

.12

.10

.10

.10

.10

.11

.13

.14

.12

.12

.12

.12

.13

.12

.13

.08

.12

.12

.13

0.014

0.026

.018

.030

.016

.027

.017

.036

.015

.028

.015

.028

.021

.032

.015

.040

.014

.035

.014

.030

.028

.049

.016

.027

.017

.038

.017

.028

.014

.026

.014

.026

.014

.039

.014

-.039

.015

.045

.015

.025

.020

.045

.015

.038

.015

.038

.018

.031

.018

.031

.014

.020

.017

.030

.014

.038

.014

.019

.015

.022

.017

.023

.014

.030

.015

.032

.014

.030

.015

.045

.017

.043

. 017-

.030

.018

.025

.017

.027

.017

.027

.017

.030

.018

.032

.017

.029

.016

.039

.018

.C.

.018

.037

.017

.037

.018

.042

.017

.040

.020

.045

.014

.022

.016

.026

.014

.038

.015

.034

.015

.032

.015

.027

.018

.031

.015

.031

.014

.023

.017

.038

.014

.032

.015

.032

.018

.032

.021

.032

.018

.032

.017

.038

.018

.034

.017

.03S

.018

.039

.018

.042

.018

.042

.018

.036

.80

• Indicates analysis of largest tonnage in cases where more than one analysis and -tonnage ase shown.
' None. •

CONCENTRATION OF BCONOMIC POWER

345

FROM LACKAWANNA, N.Y.

Exhibit

Date of ship-
ment

Analysis

No. j Page

1

Weight

Description

Car-
bon

Silicon

Phos-
phate

Sulfate

Manga-
nese

31

Sept. 13, 1923

19,775

(A) Rounds :H inch

.305

.010

.040

.88

32

do

18, 250

do...

.305

.010

.040

.88

36
39

Nov. 14, 1923
Dec. 14,1923

16,560
16,260

. do

.345
.335

.010
.018

.030
.039

.71

*"

do..-

.78

42
51
68
69-

Jan. 15,1924
Apr. 14,1924
Sept. 30, 1924
do

15, 895
10, 285
10, 865
20, 755

. ..do

.300
.330
.330
.340

.030
.011
.018
.020

■ .038
.039
.039
.034

.81

do .

.88

do

.76

do

.85

80

Oct. 24.1924

20.400

do,.----.

.335

.023

.032

.76

4

Mar. 2,1923

94, 770

Rounds: IMe inches

.320

.028

.049

.75

5

Mar. 23, 1923

92,900

(B) Rounds: IHe inches.

.270

.033

.044

.73

14

May 25,1923

90,120

Rounds: IHe inches....

r .350
I .295

, .140
.117

.015
.033

.036
.035

.77
.77

22

July 13,1923

1,780

do '

.285

.018

.046

.71

27

Sept. 11, 1923

19, 125

(B) Rounds; IMo inches.

.280

.018

.043

.77

30

:.._.do.:.-....

61,050

.....do

.280

.018

.043

.77

34

Oct. 6, 1923

2,076

Rounds: IMe inches

.286

.018

.046

.71

75

Oct. 7, 1924

137, 165

(B) Rounds: IHs inches.

.365

.022

.039

.65

76.
15

Oct. 23,1924
July 7, 1923

64,770
78, 345

do

.350
.315

.020
.015

.028
.038

'.87

(C) Rounds: Hi inches..

.90

16

do

19, 140

(E) Rounds: \],i inches..

.315

.015

.038

.90

17

July 10,1923

37,490

(C) Rounds: 1}6 inches..

.310
f .310
I .270

.015

.038

.90
.90
.72

18

-—-do

38, 155

(E) Rounds: IJ-i inches..

.015
.009

.038
.038

20

July 13,1923

64, 125

(C) Rounds: Hi inches..

/ .290
l .270

.012
.013

.037
.045

.68
.57

28

Sept. 11, 1923

5,690

do — .

.280

.010

.039

.48

35

Nov. 14, 1923

56, 105

do

.255

.101

.013

.035

.54

38
43

Dec. 14,1923
Jan. 15,1924

35, 725

36, 540

do

.340
.280

.015
.016

.036
.034

. .61

do ..:

.61

44

Jan. 16,1924

19,900

do.—

.340

.015

.035

.64

44

do

49, 145

do

.280

.016

.034

.61

48

Mar. 11. 1924

36, 780

do

.340

.016

.045

.54

49

Apr. 2, 1924

49,095

do

.345

.027

.050

.62

53
61

May 16,1924
Sept. 22, 1924

130, 095
33, 710

do

.345
.260

.027
.020

.050
.049

1.62

...-■-do... ;.

.44

62

-----do

19, 420

do

.260

.015

.049

.68

71

Sept. 30, 1924

5,900

do .-

.260

.016

.049

.68

74

Oct. 4, 1924

1,840

do

.275

.010

.025

.61

77

Oct. 23, 1924

50,565

do

.325

.014

,.037

.60

99

Dec. 18,1924

139, 280

. ...do :

.370

.035

.055

..56

13

Aug. 10,1922

86,100

(D) Rounds: IH inches .

f .320
\ .350

.129
.156

.020
.024

.038
.049

.79
.84

1
3
2

JMar. 29, 1923
do

85,885

do - —

1 .300

I .290

.200

.012
.017
.017

.039
.041
.041

.74

.77
.77

16,600

do... --

3

do-

47,300

(E) Rounds: IH inches..

.300

.012

.039

.74

( .310

.134

.013

.043

.82

19

July 10,1923

101, 900

(D) Rounds: IH inches.

\ .335

.125

.010

.047

.77

I .310

.140

.010

.050

.80

33

Oct. 6,1923

44,320

(E) Rounds: IH inches..

.320

.020

.034

.80

37

Nov. 15, 1923

39, 575

...do-.— --....

/ .275

\ .335

.290

.320

.008
.011
.016
.020

.038
.035
.050
.034

.71
.87
.84

41

45

Dec. 15,1923
Jan. 16,1924

46,660
8,750

do .-

do..... -

.80

45
45

do

do

7,865
32,960

do - -

.310
.310

.015
.012

.04r
.045

.80

do

.79

47

Mar. 11,1924

27, 990

do

.365

. .011

.036

.93

50

Apr. 14,1924

28, 350

do .;.— .

.350
( .280

.012
. 015

.038
.036

.74

.74

54

June 4, 1924

55,330

do '.-

{ to
I ,320

to.
.014

to

.036

to

.85

58

Aug. 20,1924

23,770

do-

.296

.112

.024

.034

.71

59
60

..-..do

Aug. 29,1924

21, 220
6,980

do

.320
.360

.098

.015
.022

.042
.033

.76

(D) Rounds: IH inches-

.90

. 60

do

65,935

do-....

.380

.011

.036

.88

73

Oct. 4, 1924

65,270

do .- -

.325

.027

.039

.77

78

Oct. 23,1924

22, 540

(E) Rounds: IH inches..

.290

.030

.034

.78

78

do

30, 095

do

. 315

.016

.035

.73

82

Oct. 31,1.924

20, 870

(D) Rounds: IH inches..

.375

.021

.027

.76

82

..-.do

6.330

-.—do

.375

.018

.041

- .77

82

do

16, 455

-...do -. -

.395

014

.033

.83

82

—..do.

16, 265

do

.390

.018

.033

.81

82

.....do..

14, 695

do...^_.

.360

.020

.038

.81

82

do

18.545

do-..?*

.400

.013

.029

.90

■ 82

...-do— J....

10, 000

---do

.405

.017

.037

.86

; 14

Aug. 11,1922

76, 410

(F) Rounds: IjieincheS-

f .300
I .320

.109
.129

.019
.020

.048
.049

.79
.90

: 10

Apr. 21,1923
do,

25, 505
39, 830

do ... ' .

.270
.270

.12

.019
.019

.044
.044

.70

12

1 do

.70

346

CONCENTRATION OF ECONOMIC POWER

FROM LACKAWANNA, N. Y— Continued

Exhibit

Date of ship-
ment

Analysis

Weight

Description

No.

Page

Car-
bon

Silicon

Phos-
phate

Sulfate

Manga-
nese

21

July 13,1923

65, 725

(F) Rounds: IMo inches.

.295

.014

.033

.87

23

do

62, 165

...do ..:....

/ .310
\ .295

.013
.014

.043
.033

.82

28

Sept. 11. 1923

25, 515

do

.340

.034

.049

.70

40

Dec. 15,1923

2, 345

do

.325

.016

.041

. .87

40

do

50,210

do .

.290

.016

.050

.84

46

Jan. 17,1924

54,010

do

.295

.017

.038

.84

. 52

May 13,1924

67, 430

do

.320

.014

.040

.82

15

Aug. 15,1922

102, 820

(Q) Rounds: iHa inches.

.305

.12

.023

.036

.89

1 .295

.094

.017

.033

.70

6

A pr. 2, 1923

91,430

do - -—

to
I .320

to
.109

to
.027

to
.053

to

.90

11

Apr. 21,1923

79,830

do

.370

.014

.032

.84

67

Sept. 30, 1924

3.680

do

.325

.094

.035

.039

.77

67

.-..do

73, 075

do :

.310

.094

.018

.043

.68

70

do—

84,900

do

.370

.016

,029

.77

79

Oct. 24, 1924

60, 735

do ....

.400

.019

.034

.74

81

do

63,560

do :.

.350
( .270

.010
.019

.039
.040

.82
.70

7

Apr. 6, 1923

141,915

Rounds: I'Ms inches

{ to
{ .285

to
.025

to
.044

to
.70

Exhibit 32

In the Matter of Bethlehem Steel Corporation, et al. Docket No. 962

The following is a partial abstract of invoice's rendered by Cambria Steel Co.
and Bethlehem Steel Co. agaifnst Bellefontaine Bridge & Steel Co., Bellefontaine,
Ohio, during a portion of the years 1919, 1922, and 1923, showing shipments
of substantial quantities of structural shapes, including bar sizes, from com-
petitive plants, both prior and subsequent to the acquisition of such plants by
the Bethlehem Steel Co. As a fraction only of the total number of invoices were
examined and tabulated and tonnages of less than 10,000 pounds were omitted,
this does not purport to be anything like a complete statement of such shipments.

ExhibitNo.

Invoice date

Material

Betli-
lehcm

Jrthn.s-
town

Lacka-
wanna

24040...
24026...
24051 . . .
24075. . .
24065...
24050...
24072...
24078...
24064...
24072-3.
24078...
24066...
24072-3.
24074...
24075...
24047...
24066...
24072-3.
24066...
24060-1.

Oct. 20, 1919'
June 21,1922
Dec. 20,1922
July 7. 1923
Apr. 24,1923
Dec. 18, 1922
June 11, 1923
July 23,1923
Apr. 17,1923
June 11,1923
July 23,1923
Apr. 25,1923
June 11,1923
July 7; 1923

do

Nov. 22, 1919
Apr. 25,1923
June 11,1923
Apr. 25, 1923
Feb, 2, 1923

ANGLES

2\i by 2 by Hinch...
2}.^ by 2 by Winch...
2iA by 2 by H inch...
21.2 by 2 by Hinch...
2!.iby 2bv Winch...

3bf 2by H inch

3 by 2 by M inch

3 by 2 by H inch

3 by 2 by Me inch

3by 2 by Me inch

3 by 2by Meinch

3 by 2!^ by H inch...
3by2'/2by Mln*...
3 by 21-2 by .Winch...
3 bx 2!-^ by Winch...
3 by 2)^2 by Winch!,.
3by2!.-sby5-!6inih..
3by2i.&byM6inch..
3H by 2H by W inch.
3'A by 2H by Winch.

28,685
"89,'2i6"

53, 605
33, 157

27, 000

116,068

43, 440

17, 117
14,960

15,000
27,000

26, 388
24,502

16, 800
'26,'936"

46,580

14, 555
13," 244

16,345
"33,'977.

COiVCENTRATION OF ECONOMIC POWER

347

Exhibit No.

24053-4.
24067-8-
24082,..
24039...
24060-1.
24067-8.
24082...
24033...
24067-8.
24069...
24078...
24057-8.
24013...
24069...
24078...
24067-8.
24067-8.
24053-4.
24016...
24034 5.

24014

24020.

24055-6 :

24059.

24031-2

24067-8 i-

24071

24016

24053-4

24070

24021

24022-3

2406O-1

24081

24060-1

24063 ;...

24077

24029...
24055-6-
24053-4.
24083...
24024...
24084...
24028...
24018...
24062. . .
24086...

Invoice date

Dec.

May

Aug.

Sept.

Feb.

May

Aug.

Aug.

May

May

July

Jan.

May

May

July

May

Jan.

Dec.

May

June

31. 1922
4, 1923

27. 1923
18, 1919

2, 1923
4. 1923
27, 1923

7. 1922

4. 1923
10, 1923
23, 1923
15, 1923

25. 1922

10. 1923
23, 1923

4, 1923
16, 1923
31,1922
30, 1922
14, 1922

May 26, 1922
May 31, 1922
Jan. 2, 1923
Jan. 25, 1923
July 6, 1922
Jan. 15,1923
May 21. 1923
May 27, 1922
Dec. 31,1922
May 21, 1923
June 2,1922

do

Feb. 23,1923
Aug. 27, 1923
Feb. 2, 1923
Apr. 4. 1923
July 23.1923

June
Jan.
Dec.
Oct.
June
Dee.
June
May
Feb.
Dec.

27. 1922
2, 1923

31, 1922
9, 1923

14, 1922
3, 1923

22, 1922

31. 1922

10. 1923
5,1923

Material

ANGLES— continued

3^4 b. 2!ribyMinch..
3).iby2i.iby Hinch..
3H by 2}iby Minch..
3H by 2}-^ by ^einch.
3J^by2Hby Meinch.
'i\'ihy2\<ihy Me inch.
3>6by2i^by M6inch-
3!^by 2i.2by Meinch.

4 by 3 by H inch

4 by 3 by Yt inch

4 by 3 by Winch.

4 by 3 by H inch

4 by 3 by Me inch

4 by 3 by Me inch

4 by 3 by Me inch

4 by 3 by Me inch

4 by 3 by Mo inch

6 by 4 by ?iinch

6 by 4 by ?^ inch

6by 4 by ^iinch

CHANNELS

einchesby 8.2feet...
6 inches by 8. 2 feet...
■6 inches by 8.2 feet .. .
7inchesby9.8feet...
8 inches by 11.5 feet..
8 inches by 11. 5 feet..

8 inches by 11.5feet..

9 inches by 13.4 feet..
9 inches by 13.4 feet-.

9 inches by 13.4 feet. .

10 inches by 15.3 feet.
10 inches by 15.3 feet.
10 inches by 15.3 feet.
10 inches by 15.3 feet.
12inches by 20.7 feet.
12inches by 20.7 feet.
12 inches by 20.7 feet.

8 Inches by 18.4 feet..

8 inches by 18.4 feet. -

9 inches by 21.8 feet..
9 inches by 21.8 feet..
12inchesby31.8feet.
12 inches by 31.8 feet.
15 inches by 42.9feet.
15 inches by 42.9 feet.

15 inches by 42.9 feet -

16 inches by 42.9 feet.

From —

Beth-
lehem

25, 696

13, 080

20,449

14, 126
29, 726

John.s-
town

29,277

18, 300
38, 692

17, 394
14,600

74, 634
10, 800
21,600

29, 331
23, 370

59, 470
48, 960

107, 205

72, 769
74, 852

64, 789
61, 884
22, 491

48,400

19, 803
32, 361

33, 840

Lacka-
wanna

21, 839
27,264

14, 183
18, 026

16, 356
"i7,"687

10, 678
23,308
34, 634

12,890
60,641

20, 482

14, 807

18, 421
"i§,"362

11,610
13, 385

45, 361

34, 860

48, 788

'

Exhibit 33
In the Matter op Bethlehem Steel Corporation et al. — Docket No. 962

The following is a partial Abstract of invoices of Bethlehem Steel Co. rendered
against Russell Wheel & Foundry Co., Detroit, Mich., which invoices, with the
exceptions noted, are shown to cover shipments against contract placed with
Cambria Steel Co. on January 30, 1923 (commission's exhibit, herein. No. 22945)
No. CH200.

These invoices, show that portions of the order whiclf were diverted by Bethle-
hem Steel Co. to the Lackawanna plant consisted of substantial quantities of
identically the same size of plates as were being produced and shipped by the
Johnstown plant at about the same time.

348

CONCENTRATION OF ECONOMIC POWER

Invoice date

Product, width and
thickness

From Lackawanna, N. Y.

Page
No.

Destination

Weight

From Johnstown, Pa.

No.

Destination

May 21, 1923..
May 28, 1923..

May 30, 1923..

May 31, 1923..

June 6, 1923...

June 7, 1923...

Junes, 1923...
June 9, 1923...

■June 11, 1923..

June 14, 1923,.

Do

June 16, 1923..
June 19, 1923..
June 20, 1923..
June 26, 1923..
June 27, 1923..
June 29, 1923..
June 30, 1923..
Julys, 1923...-

Do '..

July 3, 1923....
July.5, 1923....
July 6, 1923....
July 9, 1923...-
July 13, 1923...

Do

Do

July 16', 1923...
July 20, 1923—
July 21, 1923...
July 27, 1923...
July 30, 1923...
July 31, 1923...
Aug. 4, 1923...
Aug. 6, 1923...
Aug. 7, 1923...
Aug. 8, 1923...

Do

16 inches by H inch. ..
14 to 36 inches by H to

•^ inch.
18 to 20 inches by H

inch.
14 to 18 inches by ^i to

J§ inch.
10 to 18 inches by H to

J'i inch.
24 to 54 inches by H to

J-2 inch.
20 inches by ^inch...
18 to 20 inches by }•(. to

Ji inch.
10 to 20 inches by H to

li inch.
40 to 56 inches by fie

to ^ inch.
12 to 36 inches by Hi

to % inch.
10 to 21 inches by Me

to ?li inch.
8 to 36 inches by H to

Ji inch.
24 to 54 inches by ^ to

]>i inch.
42 to 60 inches by He

to ?3 inch.
48 to 78 inches by Me

to H inch.
48 to 78 inches by Me

to ?4 inch.
42 to 60 inches by Me

to H inch.
42 to 60 inches, by Me

to M inch.
llto22inchesby?ito

H inch.
40 to 72 inches by H to

?4 inch.
40 to 60 inches by H

inch.
18 to 36 inches by M«

to H inch.
42 to 60 inches by Me

to H inch.
40 to 78 inches by % to

H inch.
48 to 60 inches by Mo'

to % inch.
18 to 36 inches by Me

to Hinch.
12 to 30 inches by {.no

54 inch.
42 to 60 inches by Me

to ^ inch'.
16 to 32 inches by ^ to

H inch.
12 to 36 inches by H to

?4 inch.
7 to 16 inches by H to

H inch.
7 to 16 inches by H to

H inch.
10 to 36 inches by H to

?i inch.
10 to 24 inches by H to

H inch.
18 to 36 inches by H to

H inch.
16 to 36 inches by H to

?4 inch.
12 to 36 inches by ?i to

?4 inch.

139
143
145
147
149

Detroit, Mich.
do ,

-do.
-do.
.do.
-do.
.do.

.do.

.do.

.do.
-do.
-do.
.do.

.do.
-do.
-do.
-do.
-do-
.do.
-do-
.do-

.do.
-do.
-do.
.do-
-do-
-do-
.do.
-do-
-do-

-do.
-do.
-do.
-do.
-do-
-do-
.do.
.do.

1 118,115
1 106, 640
i 108, 235
1 144, 180
1 113, 695

66
72

77

78

83

84

88
89

90

92

93

95

97

98

102

103

104

105

107

108

110

111

112

113

115

116

117

118

120

122

129

130

133

Detroit, Mich.
do

-do.
.do.
.do.
-do-

.j..-do

.....do

do

do

do

do

do

do ^-.

do„......

do -

do

do

do

do

do

do-

do

do

do

.-..-do

do

do..

do

,..-do

....do..'

....do.

....do

-do-

-do-
-do.
.do.
-do-

' Exception, applies in part only upon contract CH200.^

CONCEiNTRATION OF ECONOMIC POWER

349

Invoice date

Aug. «, 1923...
Do

Aug. 10, 1923..

Do

Do

Aug. 11, 1923..

Aug. 13, 1923..

Do

Aug. 18,1923..
Aug. 21, 1923..
Aug. 22, 1923..

Do........

Aug. 23, 1923..
Aug. 24, 1923. .
Aug. 25, 1923..
Aug. 27, 1923..
Aug. 29, 1923..

Do

Aug. 31, 1923,.
Sept. 3, 1923...
Sept. 5, 1923...
Sept. 7, 1923...
Sept. 12, 1923..
Sept. 23, 1923..
Oct. 26, 1923...

Product, width and
thickness

12 to 36 inches by J^ to

^i inch.
12 to 16 inches by % to

% inch.

7 to 36 inches by H to
H inch.

8 to 24 inches by ^-i e to
H inch.

10 to 36 inches by H to

. ^i inch.

8 to 36 inches by H to

H inch.
10 to 18 inches by \i to

H inch.
10 to 36 inches by H to

Hinch.
36 to 72 inches by Me

to \i inch.
8 to 36 inches by H to

94 inch.
42 to 78 inches by Me

to H inch.
12 to 78 inches by H to

^inch.
12 to 78 inches by Me

to H inch.
42 to 78 inches by Me

to H inch.
38 to 72 inches by H to

56inch.
42 to 60 inches by H to

H inch.
40 to 72 inches by Me

to H inch.'
38 to 78 inches by Vn

to- ^ inch.
8 to 78 inches by H to

M inch.
12 to 16 inches by ^ to

Hinch.
8 to 36 inches by H to

H inch.
12 to 72 inches by H to

H inch.

7 to 48inehes by H to
H inch.

8 to 78 inches by H to
H inch.

12 to 18 inches by H to
?4ineh.

From Laclia wanna, N. Y.

No.

156
15?
162

168

170

175
183

196
198
200
.202
206
208
213
215
216
216

234
245
■262.

Destination

Detroit, Mich.

do

do

do

do.

do

.do.

-do.
.do.
-do.

.do.
.do,
.do.
-do.
-do.
.do.
-do.
-do.
-do.
-do.

-do-
-do.
.do.
-do.
.do.

Weight

>148,
1112,

1100,
1 105,

1 113,
I 120,

1106,
1 109,

106,
1111,

174,
1 119,

149,
21,

119,

66,

66,

From Johnstown, Pa.

No.

173

190

221

229

Destination

Detroit, Mich.

do

do...

do

do.........

do

do

do

do....

do

.do.

.do.
.do.

-do.

.do.

.do-
_do.
-do.
.do.

.do.
.do.
.do.

.do.
do.
.do.

Weight

123, 400

92, 860

65, 810

11,220
50, 810

> Exception, applies in part only upon contract CH200.

FROM: JOHNSTOWN, PA.
FROM: SPARROWS POINT, MD.

Exhibit 34

In the Matter of Bethlehem Steel Corporation et al. Docket No. 962

The following is a partial abstract of invoices covering tank and structural
quality steel plates rendered by Bethlehem Steel Co. to Belmont Iron Works,
Philadelphia, Pa., showing substantial shipments from Johnstown, Pa., and
Spalrrows Point, Md.. dirt-ing the vears 1925 and 1926.

350

10.

11.

13.
14.
15.
16.
18.
•19.
20.
21.
22.
24.
25.
26.
27.

10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
23.
24.
25.
26.
27.
28.
29_
30.

Page No.

Page No.

CONCENTRATION OF ECONOMIC POWER
FROM: JOHNSTOWN, PA.

Invoice date

Jan. 9, 1925
Feb. 14,1925

do

Apr. 28,1925
May 1, 1925
May 21,1925

do--

May 22,1925
June 10, 1925
June 16,1925
June 26,1925
July 16,1925
July 22,1925
.\u?. 6, 1925
Aug. 20,1925

do..

Aue. 26,1925
Sept. 8.1925
Sept. 15,1925
Sept. 17, 1925
Oct. 15,1925
Oct. 20,1925
Dec. 6, 1925
Dec.- 8,1925

Plates

15,480
26, 310
13,720
43, 670
75,300

5.070
16, 550
19, 780

5,390
12.500
28, 220

3.190
23, 130
60,500
52, 655
13, 210
36,160
38, 160
41,050
69, 410
7.230
6,110
66,930
49, 050

728, 775

Page No.

FROM: SPARROWS POINT, MD.

Invoice date

Jan.
Jan.
Jan.
Jan.
Jan.
Feb.

6, 1925
8, 1925
13, 1925
14, 1925
27, 1925
5, 1925
Mar. 28, 1925
Apr. 18,1925
May 2, 1925
May 4, 1925
June 24, 1925
June 29,1925
Aug. 4,1925
Aug. 5, 1925
Aug. 7, 1925
Aug. 13,1925
Aug. 15,1925
Aug. 21,1925'
Sept. 14,1925
Sept. 28, 1925
Oct. 7, 1925
Oct. 8, 1925
Nov. 10, 1925
Nov: 9, 1925
Nov. 10, 1925
Nov. 11,1925
Nov. 12, 1925
Nov. 17,1925
---.do

Plates

Feb. 2. 1926
Jan. 12,1926
Jan. 20,1926
Feb. 4, 1926

17,245
39. 874
12,884
66,155
17, 336
11,645
40,246'
43, 331
34,900
33, 843
27,066
41, 400
43, 435
49, 341
43, 175
60,564
86,412
60, 404
53, 906
37,123
72, 853
71, 730
59, 898
103, 383
58.280
08,835
46,010
59, 498
64, 597

Page No.

1, 425, 429

61,676
41,954
42,612
39, 206

Invoice date

Jan. 9, 1926
Jan. 26,1926
Feb. 24,1926

do-

do-.

do.

do..

Mar. 2,1926
Mar. 4, 1926
Mar. 25, 1926
Apr. 14,1926
Apr. 21,1926
May 3, 1926
June 21,1926
Aug. 7, 1926
Aug. 27,1926

..-do

Sept. 20, 1926
Sept. 22, 1926

..--do

Sept. 30. 1926
Oct. 18,1926
Oct. 30,1926
Dec. 4, 1926

Invoice date

Feb. 8, 1926
Feb. 9, 1926
Feb. 13,1926

....do

Feb. 17,1926
Feb. 18,1926
Feb. 19,1926
Feb. 20,1926
Feb. 23,1926
Feb. 25.1926
Feb. 27,1926
Mar. 2, 1926
Mar. 11,1926
Mar. 16,1926
Mar. 22, 1926
Apr. 5,1926
May 25,1926
Aug. 7, 1926
Aug. 19,1926
Aug. 20,1926

do,.

Aug. 21,1926
Aug. 30,1926

do

Sept. 3. 1926

do •-.

Oct. 9, 1926
Oct. 15,1926
Nov. 3,1926
Nov. 30, 1926
Dec. 17,1926
Dec. 28,1926

....do

Dec. 31,1926

Plates

38, 610
47,680
30,850
42,350
3,890
12, 120
25, 270
29,960
29,630
38,230
16,730
750
32,890
3,210
20,620
64,680
12, 180
2,720
57,070
13,860
35,700
40,530
43,660
6,130

649,320

Plates

4.'>, 641
80, 616
59, 537
40. 368
68,539
57, 477 .
20,035
48, 156
45, 071
79,546
45, 316
90,072
80,489
44,806
43, 969
42,200
33,054
29, 632
74, 663
117,949
40,890
106, 860
38, 577
58,090
103. 151
29, 821
124, 945
112, 094
29, 932
66, 084
56, 175

48, 865
29,335

49, 410

2, 226, 813

CONCENTRATION OF ECONOMIC POWER

351

Exhibit 35
[Bethlehem Steel Co. exhibit No. 86. Witness: Crawford]

Before tije Interstate Commerce Commission, Investigation and Suspen-
sion Docket No. 1929, Iron and Steel Between C. F. A. and Trunk-Line
Points

Statement of carload shipments of manufactured iron and steel articles forwarded
from Johnstown, Pa., Jan. 1 to Sept. SO,' 1923, inclusive, with information as to
average loading per car, increase in freight charges under proposed rates, and earn-
ings per ton-mile and per car-mile

Destination

Mil(te

1

Number
of cars

Total
weight (in
pounds)

1

Average

weight

per car (ii

pounds)

Proposed

increase in

charges

Earnings at pres
ent rates

Earnings at
proposed
1 rates

Mills

Per

Mills

Per

per ton

car

per ton

- car

mile

mile

mile

mile

Akron, Ohio

197

24

1, 450, "656

60,444

$217. 60

20.8

$0,629

22.3

$0,674

Aliquippa, Pa

99

2

105, 120

52,560

26.28

29.2

.767

34.3

.901

Alliance, Ohio

161

322

30, 430, 463

94,504

9, 129. 14

23.6

1.115

27.3

1.290

Allison Park, Pa..

88

7

532, 580

76,083

79.89

21.6

.811

25.0

.950

Altoona, Pa

39

188

- 17,059,191

■ 90, 740

2, 558. 88

41.0

1.860

48.7

2.210

Apollo, Pa

54

1

48, 273

48, 273

7.24

35.1

.847

40.7

.982

Avondale, Ohio...

156

1

85. 838

S5, 838

38.63

22.4

.961

28.2

1.210

Barberton, Ohio..

204

18

1, 880, 940

104, 496

282.14

20.0

1.045

21.5

1.123

Beaver Falls, Pa..

108

205

16,984,638

82. 851

2, 647. 70

28.7

1.189

31.4

1.300

Barnesboro, Pa. .

48

1

38, 217

38,217

9.56

54.1

1.034

64.5

1.233

Bentleyville,^ Pa. .

100

1

95,500

9.5,500

14.33

■ 19.0

.907

22.0

1.051

Benwood, W. V^a.

143

1

42, 470

42, 470

12.74

24.4

.518

28.6

.607

Black Rock, N. Y.

306

2

101, 300

50, 650

1 ' 5. 07

18.6

,471

'18.3

1.463

Blairsville, Pa

27

1

62, 506

62,506

9.38

59.3

1.850

70.4

2.196

Brackenridge, Pa.

72

5

516, 130

103. 226

77,42

26.4

1.362

30.6

1.578

Bradford, Pa

182

1

72, 130

72, 130

1 3.61

31.3

1.129

'30.8

'1.111

Bridgeport, Ohio.

143

2

67, 820

33,910

20.35

24.5

.414

28.7

.485

Buflalo, N. Y

302

129

9, 085, 8.54

70, 433

1 4.54. 79

18.9

.665

' 18.5

1.651

Butler, Pa

88

12

614, 130

51, 177

92,12

21.6

.551

25.0

.638

Calvin, Pa

90

1

45. 070

45, 070

6.76

38.8

.873

42.2

.950

Carnegie, Pa

88

10

724, 941

72, 494

108. 74

21.6

.782

25.0

.910

Charleroi, Pa

100

7

355, 965

50, 852

53. 35

19.0

.483

22.0

.559

Claysville, Pa

114

7

387, 665

55, 380

116.30

30.7

.847

36.0

.994

Cleveland, Ohio..

210

385

26, 260, 393

68, 209

6, 565. 10

19.5

.665

21.9

.747

Connellsville, Pa.

70

5

299, 810

59, 962

44.97

27.1

.810

31.4

.939

Corry, Pa.

214

8

305, 761

38, 220

198. 74

15.9

.304

22.0

.420

Cresson, Pa

24

1

38,520

38, 620

I 5.78

79.1

1.519

'66.6

1 1. 279

Derry, Pa.

32

1

38, 562

38, 562

5.78

50.0

.960

59.4

1.140

Du Bois, Pa

101

3

167, 869

55, 956

50.35

36.6

1.021

■ 42.6

1.189

Dunkirk, N. Y...

266

2

68, 990

34, 495

'3.45

21.4

.368

'21.1

1.363

East Greensburg,

Pa

47

1

72, 454

72, 454

10.87

40.4

1.462

46.8

1.694

East Liverpool,

Ohio

123

4

195, 785

48, 946

58. 74 ■

28.4

.696

33.3

.816

East Palestine,

Ohio

128

37

3, 250, 695

87, 857

975. 21

27.9

1.226

32.0

1.406

East Pittsburgh,

Pa

63

7

397, 570

56, 795

59.64

30.1

.855

34.9

.991

Economy, Pa

96

7

588, 960

84, 137

88.34

19.8

.831

23.0

.968

Ellwood City,

Pa....

M23

2

107,810

53, 905

16.17

■25.2

.678

28.4

.764

Emlenton, Pa

125

10

843, 010

84, 301

168.60

25.6

1.080

28.8

1.215

Elyria, Ohio

235

U

1, oof, 280

92, 025

400.51

17.4

.792

20.8

.946

Euclid, Ohio

210

9

635, 494

70. 610

158. 87

19.5

.688

21.9

.773

Ebensburg, Pa

35

1

41, 267

41, 267

10. 32

74.3

1.531

88.6

1.7S4

Farrell, Pa

147

1

39, 483

39, 483

11.84

23.8

.469

27.9

.550

Ford City, Pa....

76

1

51, 194

51, 194

7.68

25.0

.638

28.9

.737

Franklin, Pa

160

1

58, 090

58, 090

29.05

21.2

.615

27.5

.798

Freedom, Pa

102

3

117,163

39, 054

52.72

24.5

.478

34.3

.670

Glanford, Pa

83

12

677, 277

56, 439

101. 59

22.9

.640

26.5

.747

Glassport, Pa

75

1

65, 756

65, 756

9.86

25.3

.830

29.3

.961

Greensburg, Pa...

47

1

117,300

117,300

16.76

40.4

2.367

46.8

2.742

Greenville, Pa

145

77

6, 962, 972

90.428

2, 088. 89

24.1

1.089

28.3

1.280

Harmony, Pa

111

2

76, 436

38, 218

19.11

27,9

.533

31.5

.602

Holsopple, Pa

13

1

39, 812

39, 812

5.97

123.0

2.447

146.2

2.910

Homestead, Pa. ..

75

7

442,640

63, 234

66.40

25.3

.799

29.3

.926

Hooversville, Pa..

19

1

37, 312

37, 312

5.60

84.2

1.566

100.0

1.860

Huff. Pa

48
44

9
10

580, 935
721, 370

64,437
72, 137

87.14
108. 21

39.6
43.2

1.275
1.560

45.8
50.0

1.475

Indiana, Pa

1.805

Koppel, Pa

114

1

39,800

39,800

3.98

28.1

.559

29.8

.593

Lackawanna,

N. Y..

302
37

5

1

279, 859
49, 969

55, 971
49, 969

I 13. 99
7.50

18.8
•43.2

.525
1.076

1 1;>. 5
SI. 4

'.516

Latrobe, Pa

1. 2S0

LaughJi';, 0;\io...

120

42

3. 317, 855

78, 996

995. 36

29.2

1.150

34.2

1.347

' Koduclivm.

352

CONCENTRATION OP ECiONOMIC POWER

Statement of carload shipments of manufactured iron and steel articles forwarded
from Johnstown, Pa., Jan. 1 to Sept. SO, 1923, inclusive, with information as to
average loading per car, increase in freight charges under proposed rates, and earn-
ings per ton-mile and per car-mile — Continued

Destination

Leectiburg, Pa

Leetonia, Ohio

Leetsdale, Pa

Ligonier, Pa _

Marianna, Pa

Martins Ferry

Ohio

Mclntyre, Pa

McKeesport, Pa..
McKees Rocks,

Pa

Meadville, Pa

Midland, Pa.

Millvale, Pa

Morado, Pa

Mount Pleasant,

Pa.

Nanty Glo, Pa...
Neville Island, Pa.
New Brigliton, Pa.
New Castle. Pa...
Newton Fall s,

Ohio

Niles, Ohio

North Warren,

Ohio....

Oil City, Pa

Parkview, Pa

Penn. Pa.

Pitcairn, Pa

Pittsburgh, Pa....
Port Allegany, Pa.

Rankin, Pa

Rochester, Pa

Rockwood, Som-
erset Coimty, Pa.
Saltsburg, Pa .*!...

Scottdale, Pa

Shafton, Pa

Sharpsville, Pa...

Sharon, Pa

Smitbport, Pa

Steubenville, Ohio.

Swissvale, Pa

Tarentum, Pa

Titusville, Pa

I'niontown, Pa...

Verona, Pa

Wardwell, Ohio..

Warren, Ohio

Washington, Pa..
Wellington, Ohio.
Wellsville, Ohio...
West Monessen,

Pa-...

West Salisbury,

Pa

Wheeling, W. Va.
Youngstown,

Ohio

Grand total.

Miles

Number
of cars

61
141
93
47
109

140
63

75

82
176
115

81
111

106
128

164
152

158
170
81
53
63
78
99
70
104

45

42

63

55

151

149

231

121

70

73

187

59

84

158

158

109

234

128

64
135

143

12
13

4
73

1

1

135

1

9

85

168

29

• 1

18

79

398

1

1

103

1
1
2
5

50
232
1
2
1
1

28

7

101

3

65

11
1
2

112

Total

weight (in

pounds)

38,856
80,480
2, 584, 441
48, 681
166, 416

4, 347, 393

65,600
1, 210, 850

6, 237, 428
840, 255
926, 150
194, 420

5, 231, 697

53, 119

-45, 159

9, 195, 065

50,800

434, 198

415, 396
6,824,617

17, 971, 133

2, 365, 305

58, 640

1, 372, 965

6, 665, 525

27, 333, 877

53,570

40,400

6, 230, 963

37,704

43, 277

118, 676

466, 340

5, 194, 480

24, 476, 725

39,868

107, 380

109,000

38,096

2,961,710

349, 363

- 9, 997, 993

167, 099

5, 515, 416

798, 837

57,090

111,046

827, 271

38, 310
4, 509, 086

8, 655, 935

Average

weight

per car (in

pounds)

3,^56 294,480,951

38, 856
40, 240
95, 720
48, 681
55, 472

65, 869
65, 600
67, 270

103, 957
70, 021
71,242
48, 605

71, 667

53, 119
45, 159
68,111
50,800
54, 274

46, 155
80,289

106, 971
81. 562
58,640
76, 276
84, 373
68,678
53, 570
40,400
60,494

37,704
43, 277
59, 338
93, 268

103, 889

105, 503
39,868
53,690

109,000
38,096

105, 775
49, 909
98,990
55.700
84, 853

72, 621
57, 090
55,523

75,206

Proposed

increase in

charges

$05.83
24.14

387. 67

7.30

24.96

1, 304. 22
16.40
181.63

935. 61
420. 13

92.62
29.16
523. 17

7.97

11.29

1, 379. 26

7.62

130. 26

124. 62
2, 047. 39

S, 391.34

1,182.65

8.80

205. 94

1, 999. 66

4, 100. 08

1 2.68

6.06

1, 557. 74

5.66
6.49
17.80
69.95

1. 558. 34

7, 343. 02

1 1.99

32.21

16.35

5.71

1, 777. 03
52.40

1, 499. 70
50.13

1,654.62
79.88
22.84
33.31

124. 09

' 17. 24
1, 352. 73

2, 596. 78

3 67, 742. 37

Earnings at pres-
ent rates

Mills
per ton-
mile

31.1
24.1
20.4
55.8
17.4

25.0

50.7
25.3

23.2
19. a
27.9
23.4
29.0

28.0
60.5
22.5
29.2
27.3

21.3
23.0

22.1
20.0
23.4
35.8
30.1
24.3
57.6
27.1
29.8

35.5
45.2
30.1
34.6
23.2
23.5
24.7
28.9
27.1
26.0
18.2
32.2
22.6
22.2
22.2
29.3
17.5
27.3

19.2

54.7
25.9

Per
car
mile

$0,603
.484
.975
1.356
.482

.823
1.663

.855

1.204
.676
.993
.569

1.038

.742
1.361
.767
.742
.740

.922

1.180
.814
.686

1.304

1.270
.833

1.539
.547
.900

.667
.976
.891
1.612
1.204
1.238
.492
.775
1.477
.497
.961
.963
1.127
.617
.941
1.064
.481
.756

.722

1.050
.721

Earnings at

proposed

rates

Mills 1 Per

per ton-' car

mile I mile

36. 1 i$0. 700
.585
1.133
1.509
.557

-.961
1.930
.984

1.584
.875

1.050
.659

1.095

.856
1.622
.893
.815

29.1
23.7
62.1
20.1

29.2
58.7
29.3

26.8
25.0
29.5
27.1
30.6

32.3
72. 1
26.2
32.1
32,0

25.0
26.3

25.9
25.8
27.1
41.5
33.3
28.2
> 56.5
31.4
32.7

42.2
52.4
33.3
40.0
27.1
27.5
124.3
33.9
31.4
30.1
34.7
37.3
26.2
26.0
26.0
31.2
20.9
32.0

22.2

'.40.6
30.4

28.7-

»35. 1

.578
1.055

1.383
1.050

.794
1.581
1.405

.967
'1.509

.634

.988

.793
1.132

.986
1.864
1.406
1.449
'.484

.909
1.711

.575
1.832
1. 115
1.307

.723
1.102
1.133

.596

1.780
.846.

1.108
s 1. 078

' Reduction.

• Average.

' Divided as follows:

Advances _. _. $68,250.97

Reductions 508.60

Net advance 67,742.37

N07. 19, 1923.

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CONCEJNTTKATION OF ECONOIMrC POWER 353

Exhibit 37

To the Stockholders of Midvale Steel and Ordnance Company, Inland Steel Company,
Republic Iron and Steel Company:

After careful negotiations and consideration, the respective Boards of Directors
of the three above-named Companies have approved the outline of a plan for the
unification of the properties of the three Companies and have authorized the
undersigned to formulate a final plan to be submitted to the respective Boards
of Directors and when approved by them to be submitted to the stockholders of
the different Companies.

So much erroneous interpretation of the proposed plan has been given publicity
during the last few days that, pending preparation of the final plan, the under-
signed make the following statement, which is based upon the reports of Messrs.
Price, Waterhouse & Co. and Messrs. Arthur Young & Co., Public Accountants,
and upon other documents and data which we believe to be reliable and correct.

All steps that will be tak^n in formulating the plan and in consummating the
same will be subject to the advice of the respective counsel of the different com-
panies.

It is proposed that the Midvale and Inland Companies will consolidate and
merge and take the name North AiMERic.4.N Steel Corporation. This Corpor-
ation, hereinafter called the Company, will acquire, subject to its liabilities, the
assets of the Republic Company. Before tha unification of the properties, Mid-
vale will place its Nicetown plant and certain assets and liabilities connected with
the operation of it in a separate Corporation, stock of which will be distributed"
pro rata among the stockholders of the Midvale Company, as hereinafter stated.
This separate Corporation will thereafter continue as a separate enterprise for the
manufacture of the ordnance, armor plate, and special steel products to which it
is adapted.

Capitalization

Upon the consummation of the plan, the issued capital will be as follows:

Bonds and other Fixed Charge Obligations. $79, 173, 500

New Preferred Stock of $100 par value 50, 331, 475

Shares of New Common Stock without par value , 3, 309, 612

The $79,173,500 Bonds and Fi.xed Charge Obligations will consist of $60,-
599,500 Bonds and guaranteed obligations of the Midvale Company, or its
subsidiaries; $13,357,000 bonds and other obligations of the Republic Company
or its subsidiaries; and $5,217,000 Bonds and other obligations of the Inland
Company, all of which, in addition to the other liabilities of the three corporations,
are to be assumed by the Company.

The $50,331,475 Preferred Stock is to be 7% cumulative and is to be convertible •
until July 1, 1934, into Common Stock at the rate of four shares of Preferred for
five shares of Common. It is to be redeemable at the option of the Company at
115% and accrued dividends. Of the amount to be presently issued, $25,000,000
par value is to be issued to provide in part for the acquisition of th^ properties of
the Republic Company, and $25,331,475 par value is to be issued and the proceeds
thereof, amounting to $24,064,901, is to be paid by the Company to the, stock-
holders of the Inland Company.

The 3,309,612 shares of no par value Common Stock are to be issued as follojivs: :

Sharu

To Midvale shareholders 1, 500, 000

To provide in part for the acquisition of the properties of Republic

Iron & Steel Company . 510, 000 >

To Inland shareholders 709, 281

To be sold for cash ..-,^- 590, 331

Distribution of Securities

On completion of the Plan, each holder of one share of steck of Midvale Com-
pany will be entitled to receive:

(1) Three fourths of a share of the New Common Stock; and

(2) One-fourth of a^sjjare of stock of the corporation wh^iph ip t,o take over the.
Nicetown Plant.

264905 — 41— No. 13 24

354 CONCENTRATION OF ECONOMIC POWER

Each holder of one share of stock, of the Inland Company will be entitled to
receive:

(1) $23.75 in cash and

(2) Seven-tenths of a share of the New Comnaon Stock.

Each holder of one share of stock of the Republic Company will be entitled to
receive:

(1) v;lu4i respect to each share of Preferred Stock, one share of new Preferred
Stock and an amount of cash necessary to provide for the then impaid dividends
on such Preferred Stock of the Rcpubfic Company;

(2) with respect to each share of Common Stock, one and seven-tenths shares of
new Common Stock.

It is intended that a syndicate will be formed to provide for the cash require-
ments of the plan including the provision of $20,000,000 additional cash working
capital, which will make the total working capital of the Compan}- over
$100,000,000.

Messrs. Kuhn, Loeb i Co. have agreed to act as bankers for the plan.

The plf !i contemplates that the Company will sell to Mr. Thomas L. Chad-
bourne, for services rendered 25,500 Common Shares at $10 per share, and to
Messrs. Kuhn, Loeb & Co., 59,500 Common Shares at $10 per share.

Fixed Charges and Earnings

It is estimated that upon the consummation of the plan, the fixed charges of
the Company will amount to $3,913,085 per annum "(^vhich is about 74c per ton
of rated ingot capacity) and the Preferred Stock Dividends to $3,523,203 per
annum (which is about 67c per ton of rated ingot capacity). The total rated
ingot capacity of the Company ^^111 be 5,249,000 tons per annum.

The book value as of December 31, 1921 (which is far below the present replace-
ment figures) of total net assets of the Mid vale, Republic, and Inland Companies,
including the $20,000,000 new cash working capital (but excluding the'Nicetown
Plant) totals about $284,000,000.

The earnings of these three Companies (exclusive of the Nicetown Plant earn-
ings) applicable to dividends on the Preferred and Common 'Stock, that is, after
deduction of bond and other interest. Federal and other taxes and adeciuate depre-
ciation, as compiled from the annual accounts for the ten years ending December
31, 1921, averaged $20,462,248 per annum and were as follows:

1912.-- $7,435,42111917 $60,257,399

1913 L 10, 164,892

1914 3, 379, 545

1915 13, 702, 110

1916 52, .595, 325

1918. 34, 598, 221

1919 11,612,487

1920 22,429, 534

1921 (Loss) 11, 522, 446

Since the year 1916 the three Companies have expended more than $120,000,000
for improvements and additionar facilities, greatly increasing capacity and reduc-
ing operating costs so that the earnings reported for the past ten years do not
full}' reflect the earning power of the three Companies as now situated.

Advantages of the Plan

Some of the essential reasons for the proposed unification of the properties of the
Companies may be stated as follows:

(1) Increased economy, resulting from the mining of a larger tonnage of ore,
coal and limestone under one control, together with the economic advantage of
better distribution for the use of such products.

(2) Stronger management through the corr bined ability of the principal officers
of the respective Companies to direct the operations.

(3) With plants located at Johnstown, Pa., Coatesville, Pa., Youngstown,
Ohio, Niles, Ohio, and Chicago, 111., and with facilities for steel production in the
Southern field of Birmingham, Ala., the Company will be in better position to serve
the consuming trade with a larger diversity of products and to effect a substantial
saving in the selling and administrative costs.

The^foregoing plan is subject to changes to meet conditions and circumstances
and the ipinion of counsel.

CONCEiXTRATION OF ECONOMIC POWER 355

While the details of the organization of the Company have not been definitely
settled, the undersigned mil continue to be identified with its management.

Chadboukne, Babbitt & Wallace and W. E. Corey,

A. H. WiNTERSTEEN, Chairman of the Board, Midvale Steel

Counsel, Midvale Steel and Ordnance and Ordnance Company.

Company. L. E. Block,

Mayer, Meyer, Austrian & Platt, Chairman of the Board, Inland Steel

Counsel for Inland Steel Company. Company.

Simpson, Thatcher & Bartlett, Jno. A. Topp' g,

Counsel for Republic Iron and Steel Chairman c thj Board, Republic Iron

Company. and Steel Co^ipany.

New York, June 7, 1922.

Source: WashiBgton Herald, June 8, 1922

Exhibit 38

Lackawanna Steel Co.
Xew York, September 13, 1920.
GIFFORD-WOOD Co.,

Hudson, N. Y.
Dear Sirs: We are in receipt of yours of the 7th instant inquiring for a tonnage
of plates, shapes, and bars, and we are pleased to quote on not less than carload
basis, plates at $3.50 base per 100 pounds, and structurals $3.25 base per 100
pounds Pittsburgh basis.

The established meaning of Pittsburgh basis is that the fh-ice is f. o. b. Pitts-
burgh, plus the official all rail freight rate in effect from Pittsburgh to destination
on date of shipment, less the official all rail freight rate in effect from Seller's Works
to destination on date of shipment, and that the point of delivery is f. o. b. mills,
except when otherwise specifically stated.

We regret to notify you that on the 2 items of 40 lineal feet of 3}^ by }4 inch flats,
and 500 lineal feet of 3 by }^ inch flats we are unable to quote, due to the already
overloaded condition in the mill on which this material is rolled. We could make
delivery of this material within 60 days.

We trust we may hear from you shortly as to whether or not this is favorable,
and beg to remain.

Yours very truly.

G. A. Pendergast,
District Sales Manager.

Source: F. T. C. Docket 962

Exhibit 39

General Conditions in the Iron and Steel Indu.stry, 1919-20-21 as Shown
IN Annual Reports of United State.s Steel Corporation for the Re-
spective Years

The conditions in the iron and steel industry during the year 1919 as reflected
by the operations (Ji the subsidiarj' companies were varyijig. 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.
During the second half of the year, however, owing to shortage in labor, labor
difficulties at a number of the mills, the general strike in the bituminous-coal
industry and insufficiency of transportation service, actual mill operations were
seriously handicapped, the outpux during this period averaging only 67 percent of
normal capacity, and in the month of October it M'as .'■till lower. For the entire
year of 1919 the output of finished steel products for r.ale averaged 74.5 percent of
capacity.

On March 21, 1919, the Industrial Board of thi Department of Commerce
announced a .schedule of prices for the principal si xr dard steel products which,
after extended investigation, it had concluded w ,s fair and reason^lble i.iader

356 CONCENTRATION OF ECONOMIC POWER

prevailing conditions. These prices were a substantial reduction from those which
had previously been quoted by steel manufactilrers 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 produc-
tion, and that the demands of customers for rnaterials 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, in comparison with a total of 7,379,152 tons at December 31, 1918.
(Annual Report of tl °. United States Steel Corporation for the fiscal vear ended
December 31, 1919, p. 2.-

The demand for iro". and steel products during the first 7 months of the year was
large, the new business booked from month to month materially exceeding ca-
pacity. Beginning with August there was a slackening in the volume of orders
offering. The new business accepted during the year with the considerable ton-
nage of unfilled orders carried over from 1919 enabled the properties of the
subsidiary companies to operate to very nearly full capacity except as operations
were interfered with, especially from April to July, inclusive, because of inade-
quate railroad service, arising principally from strikes and from shortage in fuel
supplies. For the entire year the output of the steel plants, measured by the
tonnage of finished products for sale, averaged 88.3 percent of total rated capacity.
During the 4 months from April to July, the output equaled only about 80 percent,
of capacity. 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
price policy adhered to by the Corporation, however, enabled it, notwithstanding
subbtantial increased costs arising from advances in labor rates, in freight rates,
and higher costs for raw materials required to be purchased, especially fuel, to
net considerable profij^s and to maintain operations a.t the degree above mentioned,
also to carry forward to 1921 a large tonnage of unfilled orders. These latter at
December 31, 1920, totaled 8,148,122 tons of various classes of steel products, in
compjirison with a total of 8,265,366 at the close of 1919. The unfilled tonnage at
December 31, 1920, has since been reduced to 6,933,867 tons at Ma-rch 1, 1921.
(Aiiuual Report of United States Steel Corporation for fiscal year ended Decem-
ber 31, 1920, p. 25).

Tl'.e marked decrease in the demand for iron and steel products which devel-
oped in the midsummer of 1920 continued until the early fall of 1921, when there
was some improvement. As stated in the annual report for last year the subsidi-
ary companies carried forward into 1921 a substantial tonnage of orders for steel
products. This enabled them to operate at an average of somewhat over 70
percent of capacity during the first quarter. The degree of operations dropped
in succeeding months and reached the low point for the year in July when the out-
put was only about 29 percent. The average production for the entire year in
rolled and other finished products for sale was 47.5 percent of capacity, the lowest
ratio of production to capacity in any year since the organization of the Corpora-
tion. Concurrently with the decrease in demand for steel products there were
mr.rked declines in the prices obtained for nearFy all classes of the same. These
price reductions as a rule exceeded the decreases it was possible to effect in the
cost of production through the reduction in unit prices of factors entering into cost
of operations and the exercise of rigid economies. A number of elements in the
cost of producing steel show little if any recession from war-time figures, notably
that of railroad transportation, which on basis of existing rate conditions averages
in the case of the subsidiary companies upward of 40 percent of the total cost of
producing steel. At the close of the year the prices prevailing for some products
were below the cost of production. Since the beginning of 1922, and to the date
of writing this report, the new orders received have been equal to about one-half
the total capacity of the plants of the subsidiary companies. (Annual Report of
United States Steel Corporation for the fiscal year ended December 31, 1921,
p. 24).

C0NCE2s^TEATI0N OF ECONOMIC POWER 357

Exhibit 40

Fifth Annual Report to Stockholders of Midvale Steel & Ordnance Co.

(a Corporation of the State of Delaware)

7 West Tenth Street,

Wilmington, Del.
To the Stockholders:

The year 1920 began under rather unfavorable commercial and operating con-
ditions. These improved somewhat in the spring, although impaired transporta-
tion continued to be a disturbing factor until late in the year.

In October a marked recession in trade began, so that our operations for Novem-
ber and December were materially curtailed. This necessitated a considerable
reduction in selling prices, and to meet this condition we were compelled in Decem-
ber to announce reduction in wages and salaries, effective January 1, 1921.

A large part of the energies of our engineering and operating staff has been
devoted during the year to extensive alterations^ repairs, and renewals at Johns-
town, the necessity for which was mentioned in our last report. The principal
items in this program of rehabilitation and extension are shown on pages 16
and 17.

This work, as well as our regular operations, was hampered, especially during
the first 9 months by lack of efficient labor, transportation difficulties, and delays
on the part of outside contractors, but with improvements in these conditions we
are now making rapid progress, and when trade conditions permit approximately
full operations, we should secure substantial benefits in reduced cost of production.

In order to provide for these expenditures and others, the necessity for which
may develop later, it has been the constant aim of the management to conserye
our cash resources, which will account for the relatively large amount of cash, as
shown by the balance sheet.

Our foreign trade, which is conducted through the Consolidated Steel Corpora-
tion, has been an important factor in the year's business. The abnormal condi-
tion of international exchange is a severe handicap in the selling of material for
export. From present outlook, the volume of foreign business for 1921 will be
less than for the previous j'ear.

While the figures in this report apply only to the year ended December 31, 1920,
these comments are being WTitten late in February 1921, a considerable interval
being required between the end of the year and the date of printing for the audit-
ing of accounts. In view of their importance, it is deemed advisable to inform
you as to some developments in trade conditions since the beginning of the year
1921. The halt in 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 our stockholders, but especially to the thirty thousand (30,000) em-
ployees, who, vmder normal conditions, depend upon the operation of our mills
for the daily living of themselves and their families.

While we appreciate the fact that the causes of the halt in trade are very com-
plex, 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 impor-
tance would be done until the consuming interests were convinced that the market
had fallen.

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
expectation that it would immediately start a buying movement, but with the
belief that such a step must be the first one taken in order to restore normal
conditions.

We are confident that the principal underlying factor in the present trade depres-
sion is the fact that the general buying public believes there must be thorough
liquidation in all commodities before a revival in trade can be expected. This,
of course, involves further readjustments in labor rates, not only in the steel
business but in all other industries, and a frank recognition of this condition by
both employers and workmen is imperative.

It is extremely unfortunate, however, that there does not seem to be any im-
mediate prospect Ifqr relief in one of the principal items of manufacturing costs,
i. e., freight rates. The quantity of material which must be assembled for the
production of 1 ton of plates, i. e., ore, fuel, limestone, and all of the various sup-

358 CONCENTRATION OF EOONOMIC POWER

plies, is about twelve thousand (12,000) pounds, or six (6) net tons. A com-
parison of freight rates on these materials in effect July 1914, with present rates,
shows an average increase of about ninety (90) percent.

Business is, therefore, confronted with the abnormal condition that, with some
notable exceptions, the railroads cannot be operated profitably if these high rates
are not maintained, and, on the other hand, general business will be seriously handi-
capped and tonnage of freight reduced unless railroad freights are included in the
general scheme of liquidation. . Manifestly, the only way out is for the railroads
to reduce their operating costs also, the principal item of which is labor, so as to
be in a position to establish lower freight rates.

In general, we believe that the first half of the year, at least, must be devoted
to the solution of the above problems, which will require time and patience.

Respectfully submitted by order of the board of directors.

William E. Corey, Chairman.
A. C. Dinkey, President.

Exhibit 41

IFrom the Iron Age, February 10, 1921]
Iron and Steel Markets

DEEPER price CUTTING MORE AGGRESSIVE POLICY OF INDEPENDENT COMPANIES

REDtTCTIONS OF S5 OR MORE HAVE NOT STIMULATED BUSINESS ALL LINES

AFFECTED

Announcement by the Midvale Steel & Ordnance Co. that it would quote prices
low enough to bring business to its mills, some of which have been shut down since
early Decembfer, has brought the steel market this week to a new stage in price
readjustment. Thus far no large business has been done, but already cuts of $5
per ton below the Steel Corporation's schedules are reported.

There are plentiful indications that other independent steel companies stand
ready to take a share of the going business, even though realizing that under
present conditions there will be no free buying. No definite price schedule is
given out by. any of the cut-price sellers, the policy being to get sufiicient orders
for a mill operation up to the average of independent mills.

The products chiefly affected thus far are plates, structural shapes and bars,
on which the Steel Corporation prices have been 2.65, 2.45, and 2.35 cents,
respectively. Sales of plates at 2.40 cents are reported, of shapes at 2.25 cents s'^d
of bars at 2.10 cents. There is no other expectation than that the whole range of
rolled products, with the exception of rails, will now be offered at lower prices.

The crux of the new situation is the extent to which the wage reductions already
made by some independent producers will allow them to go below Steel Corpo-
ration prices. These reductions have been from 15 to 25 percent. One indepen-
dent company has made a second reduction of 15 percent. In the Youngstown
district wage reductions are expected by the middle of February. At present high
freights on raw materials there are mills whose range of action under free competi-
tion will not be great.

In all the trade's comment on the new turn in prices its effect on the Steel
Corporation's position has been uppermost. The Corporation's operations, while
not equally full in all lines, are still at an 80 to 90 percent rate, and there is no indi-
cation of an early change in its policy as regards either wages or prices. Leading
independent mills have run at 20 to 35 percent in the past week (p. 400).

PITTSBURGH

Pittsburgh, February 8.
This week has developed the first definite step looking toward the uncovering
of demand so long dammed up because buyers have not regarded the prices of the
Steel Corporation as the ultimate minimums. The Midvale Steel & Ordnance Co.
has instructed its sales t)frices to find out the prices at which orders Can be secured
and also has granted authority to take the business. The drive on the part of this
company has resulted in definite oiiers of tonnages of the major products at well
below the regular market quotations. Since the instructions were not written, it is
di^cult to obtain actual information as to the prices named, but it has been veri-
fied-that it named 2.25 cents, Pittsburgh, on shapes and bars. Um'erified reports
have been current of quotationp of 2 cents on bars and it also is rumored that the
same price was named against a toi\i:.sge of plates in the Chicago district.

CONCE.XTRATION OF ECONOMIC POWER 359

Other independent interests have done nothing in the matter of price cuts, but
it is patent that in the event any business is uncovered by the company which is
active in this respect the others will go along. So far as can be learned, the effort
to interest buyers in purchases at practically their own prices has not been success-
ful. This, however, was to be expected, in view of the fact that the first effect of a
sudden reduction in prices usuall}' is to make buyers cautious. The Steel Corpo-
ration subsidiaries meanwhile are holding to the Icvelof prices which it has observed
now for almost 2 years, and apparently they are content to wait to see what success
attends the efforts of independent companies to secure business at lower prices
before taking any action either as regards selling prices or wages. It is pretty well
established that the cutting of prices by independent companies is to be accompan-
ied by lower wages, and since the rates of Pittsburgh and Youngstown companies
have not yet been disturbed, it is figured that the acceptance of business at the
prices named would involve a cut in wages of as much as 30 percent. The market
is even duller than it has been as a result of the apparent willingness of independents
to consider lower prices, and prices are even more indefinite now than they have
been at any time since the reaction in business set in last fall (pp. 400-401).

[From The Iron Age, February 17, r921)
Low Opehating Rate

REDUCTION OF PRICES DOES NOT INCREASE ORDERS IN THE MAHONING VALLEY

Youngstown, Ohio, February 15.^-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. The market is
still more or less indefinite. Manufacturers believe the recession to a lower cost
level, enabling them to quote lower prices, M'ill stimulate buying to some degree,
though to what extent is a matter of speculation. That orders on the books of
the leading makers have been reduced to bedrock is indicated by the experience
of a sheet maker last week. The operating schedule provided for complete
suspension during the week of the sheet-rn'ill department. On Tuesday an order
was booked which permitted the mills to operate the last 3 days of the week,
following which they were again suspended. Much of the current business,
therefore, is for day-to-day production and schedules are adjusted accordingly.
While buyers have been placing orders only against pressing requirement?, a
freer buying movement is expected with lower prices. One district maker has
reduced sheets uniformly $3 a ton, and is quoting No. 28 black 4.20 cents. No. 28
galvanized 5.50 cents, and No. 10 blue annealed 3.40 cents. Another producer is
meeting the Midvale Steel quotation of 2.25 cents on plates * * * (p. 460).

Iron and Steel Markets

STEEL obtainable $5 BELOW STEEL CORPORATION LEVELS — STEEL-MAKING IRON
CUT — BUYING POSTPONED AND OPERATIONS RECEDING

Developments have met expectations. The price cuts clinched business known
to be urgent, but have postponed those purchases which could be held back for
the time being. As natural, wild rumors are afloat of quotations much below
those of actual transactions, and lowest dependable prices are difficult to name.
Bookings have been made at the Steel Corporation's levels, but also at prices
fully $5 under these. It has become apparent that buying is dropping below
one-fourth of the country's capacity. * * *

Finished steel and possibly also semifinished material are now quite generally
obtainable.at .$5 per ton below the Steel Corporation prices. Steel bars have been
sold at prices ranging from 2 to 2.35 cents, Pittsburgh, with 2.25 cents
freely quoted and 2.10 cents the market at the moment. Steel plates in even
moderate amounts command no more than 2.25 cents, with structural steel at
2.25 and 2.20 cents. Black sheets have been moved at 4.10 cents, Pitts-
burgh, and at 5.35 cents for the galvanized product, and blue annealed sheets,
particularly in ilie heavier gages where there is competition with. plate mills,
3.15 fents has been done, this last representing a drop of $8 a ton in 2 weeks.
Independent nail quotations range from .$3.10 to $3.25 per keg, while plain and
. galvanized wire is down $5 from the quotations of a week ago * * * (p. 468).

360 CONCENTRATION OF ECONOMIC POWER

Pittsburgh

Pittsburgh, Fehruarxj 16.
While the price cuts recently made by a large independent steel interest and
followed by others to some extent have uncovered some business, the results of the
drive, viewed in a broad way, have been disappointing. Buyers are taking hold
with even less freedom than thej' did prior to the change in independent company
price poUcies, and are more impressed with the possibility of obtaining even
greater concessions than already have been offered. Some prospective business
undoubtedly has been uncovered by the cut, but in a general way it must be said
that buyers have been inclined to use the quotations named by one company to
pry loose even lower prices from some other company. There. is nothing at all
definite or fixed about the prices of most of the independent companies at the
moment, and the actual basis of business usually is upon firm offers of buyers. As
far as its effect upon the price and wage policies of the Steel Corporation is con-
cerned the course pursued by the independents in the matter of price and wages
has been. nil. The Steel Corporation subsidiaries are holding rigidly in all direc-
tions to the schedule it has observed, for practically 2 years, and not even
intimations of lower wages are heard * * * (p 468).

[From the Iron Age, February 24, 1921]

Iron and 'Steel Markets

The Carnegie Steel Co. now has 43 furnaces in blast, two less than last week.
The American Steel & Wire Co. is operating well below a 50-percent basis, and the
American Sheet & Tin Plate Co. has failed to maintain the recent 70-percent
activity, showing a loss in sheets rather than in tin plate, possibly through thQ
holding back of shipping instructions in the face of independent prices $5 and $7
lower.

Steel bars are easily obtained at 2.10 cents, Pittsburgh basis, but sales have been
made at 2 cents, and 1.95 cents has been quoted. Plate quotations range from
2.15 to 2.20 cents, though here also 2 cents has been named, with doubt now
that business could be done at this basis except on an unusually attractive lot
* * * (p. 528).

Pittsburgh

Pittsburgh, February 21.

The drive for business at cut prices on the part of some of the independent steel
companies seems to be falling short of attaining its purpose, in that those which
have been most active in the pursuit of orders are not materially busier than they
have been, and the fact that one large independent maker in Pittsburgh again is
quoting the Steel Corporation levels on most products, after having indic&ted a
willingness to meet competitive prices, would rather indicate that not a great deal
of business actually exists at any price at present. The effect of the low prices
named by the independents has not been to fill their order books, but rather to make
buyers more conservative, and this tendency has been ffelt by most of the Steel
Corporation subsidiaries, which, because of lighter specifications, are not as busy
a.s they were recently. The effect upon the Steel Corporation order book, however,
is not nearly as great as might be expected, for the reason that in a number of
products, notably merchant bars, the corporation is practically alone in being able
to make prompt deliveries, and the delivery, rather than the price, is w^hat counts
with those who actually require tonnages. Buyers who have been interested in
the market by low quotations invariably have asked for early delivery as a condi-
tion of purchase. Since the amount of business presented has been in only a few
cases sufficient to provide a fair rolling schedule and so much independent capac-
ity is idle at present, the best delivery promised by a number of those naming lower
prices than the coTporation has been 6 weeks.

There continues to be considerable interest with regard to the probable future
course of the Steel Corporation as to prices and wages. Some see in the diminish-
ing rate of operations by the subsidiaries the possibility of early action on selling
prices, but it must be said that no such impression is gained at the offices of the
corporation constituents in this district * * * (pp. 528, 529).

CONCENTRATION OF ECONOMIC POWER 361

(From the Iron Age, March 3. 1921]

Reduced Prices Quoted to the Government

Washington, March 1. — Recent reductions in prices made by independent steel
companies were reflected in bids opened by the Bureau of Supplies and Accounts,
Navy Department, last Friday. They involved 350 tons of base gage plates 60^2
to 96 inches, 190 tons of medium rivet rods and 240 tons of reinforcing deformed
steel bars. The Cambria Steel Co. submitted a bid of 2.80 cents, delivered Phil-
adelphia, on the plates, which, allowing for the 10 cents per 100 pounds extra for
Navy specifications, is equivalent to 2.35 cents base, Pittsburgh. Recommenda-
tion has been made that this cornpany be awarded the contract. Delivery is
promised in 15 to 21 days. The Cambria company also was the lowest bidder,
making a guaranty on the rods, ji to 1 inch 15 to 18 feet at 2.70 cents, delivered
Philadelphia, or equivalent to 2.25 cents base, Pittsburgh, after allowing for
Navy specifications * * * (p, 582).

The 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 Wheeling, it may be said that 20 percent of capacity
operations is a liberal estimate of what thej^ are doing today. * * * (Pp_
590-591.)

[From the Iron Age, March 10, 1921]

Ikon and Steel Markets
* * * * * * *

It is doubtful if the independent steel mills are operating at as high as 20 percent
of capacity. The booking by one such steel maker of a total of 1,000 tons in 51
different orders is an index of the situation. * * * (p 654.)

Pittsburgh

Pittsburgh, Pa., March 8.

* * * Willingness on the part of several of the independent steel manu-
facturers to accept business in the major products has been no more effective in
securing orders in the past week than it was when the drive first started. The
explanation for this condition is to be found in the fact that buyers have sought
to place small tonnages while the mills which have quoted the lowest prices have
been interested only in those that would assure them of a run of some duration.
A quotation of 2 cents on plates, shapes, and bars and of even less of the last-
named product has Ijeen heard frequently, but it has been the experience of.
buyers who have attempted to ]ilace orders of from 100 to 200 tons at that price
that none of the price-cutting manufacturers was willing to enter the business
except at an advance of $2 to $3 over that figure. The opinion is confidently
expressed that a sizable tonnage of plates and shapes could be placed readily
at 2 cents, Pittsburgh, but on a large majority of the inquiries now coming out,
which are for relatively small tonnages, 2.10 cents has been as low as anj- of the
companies has been willing to go. * * * (P. 655.)

[From the Iron Age, March 31, 1921]
Iron and Steel Markets

Comment in the trade on possible price and wage reductions by the Steel
Corporation has turned on the fact that the Corporation's earnings for 1920, if
assigned entirely to steel products, represent $12,82 per ton. The losses of some
independent companies on quotations $7 to $13 per ton below those of the Cor-
poration are not offset by wage reductions thus far made, and lower prices and
lower wages bv the Steel Corporation may mean further wage reductions at other
works. * * " * (P. 866.)

;362 CONCENTRATION OF ECONOMIC POWER

[From the Iron Age, April 14, 1921]

Pittsburgh

Pittsburgh, April 12.
The week has been featured by a revision of prices b}' independent steel manu-
facturers which for unanimity has few parallels in the recent history of the industry
or since ruinous competition gave way to stabilized prices. While the revision
has resulted in higher prices than independents previously had been accepting on
most products, there have been a few striking exceptions. These include wire
rods, the independent price on which now is $48 for the base size as compared
with the former quotation of $52; tin plate, in which there has been a cut of $10;
per ton; and in steel pipe, the price of which has been reduced $10 per ton by the
Mark Manufacturing Co., and which action appears likely to be followed by other
independent manufacturers. All of the independents now are quoting stee)
bars at 2.10 cents, base, Pittsburgh, and 2.20 cents, base, Pittsburgh, represents
the minimum-price idea of all manufacturers except the Steel Corporation on
shapes and plates. The revision of sheet prices has resulted in the' adoption of
minimums of 3 cents for blue annealed, 4 cents for black, and 5 cents for galvanized
sheets. Wire nails have been advanced $5 per ton, and independent quotations
on other wire products, with the exception of plain wire, now are identical with
those quoted bj' the American Steel & Wire Co. While the new bases yet have
to be established by actual sales, it is worthy of note that now, unlike previous
attempts to bolster prices, all of the independents are giving voice to a preference
to shut down their plants rather than to shade the new quotations. Complete
suspension is now regarded as preferable to the heavy losses which former
quotations meant, and which, contrary to expectations, failed to stimulate business.
With, all independents now observing the same prices and unprofitable competition
eliminated, it is hoped that business held up by the uncertain price conditions will
come out. Besides the consideration of the heavy loss which the old price
entailed, it is believed that the independent companies in taking this new position
on prices had in mind the revision which it is expected the Steel Corporation will
make at an early date. * * * (p, 999.)

Iron and Steel Markets

corporation prices down — MIDDLE GROUND REACHED AS INDEPENDENTS AD-
VANCE— MORE ACTIVITY AT LOW PRICES PRECEDING THE ANNOUNCEMENT OF
THE NEW SCHEDULES

Steel Corporation prices and those of a number of independent steel companies
have become identical on some products and in close relation on others, as the
result of several interesting developments of 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.

Late last week several independent steel manufacturers announced an advance
of $2 per ton in steel bars and of $2 to $4 per ton in plates and structural shapes.
On Tuesday afternoon, April 12, the Steel Corporation made public a list of reduc-
tions in its prices, effective on the following daj', 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 by $15 per net ton. It retained wire products at $3.25 for wire nails and $3
for plain wire.

Some consumers had intimations last week of the expected action of certain
independent companies. It was stated that the lower prices recentlj' named had
brought out little business and had resulted in losses. 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.

No announcement concerning wages is made by the Steel Corporation, but 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 out-
put will have come down an average of $7 to $8 per ton. Its 1920 earnings, if all
credited to steel, represented $12.82 per ton. **:*(?. 993.^

CONCENTRATION OF EOON'0:MrC POWER 363

[From The Iron Age, April 21, 1921]

Iron and Steel Markets

buying still limited considerable business at former low prices

market turns on freight rate reductions japan buying sheets and

COPPER

The chief effect of the coming together of independent and Steel Corporation
prices by the raising of the former 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 same time the Steel Corporation has been helped by the reinstatement
of business which had gone off its books while it was maintaining Industrial Board
prices.

There is no indication that consumers will change their policy of limited buying.
Generally they count on further revisions of prices as the result of the expected
reduction in freight rates. In addition, the Steel Corporation's policy in respect
to wages is admittedly a factor in the determination of future prices.

Published predictions of larger building operations because of the Steel Corpora-
tion's reduction of $5 in structural shapes are received with reserve by fabricators.
The cut in steel is of small moment in comparison with the high labor scales in all
building trades. * * * (P. 1060.)

'i^rom The Iron Age, May 12, 1921]

Pittsburgh

Pittsburgh, May 10.
Steel prices again are beginning to take on a somewhat ragged appearance, due
to the fact that here and there anxiety on the part of some of the independent
producers to secure business has led to substantial concessions from the stabilized
levels, but some makers are not prepared to jield. The outstanding cases of this
sort are found in hot-rolled strip steel, wire nails, and sheet bars, which in the week
under review have gone at lower than the April 13 schedules. 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, Pitts-
burgh, 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,
Pittsburgh, or $5 per ton below the recently established quotation. Labelle Iron
Works has placed 2,000 tons of an inquiry amounting to 5,000 tons of Bessemer
sheet bars, at below the stabilized quotation of $39, Pittsburgh or Youngstown.
* * * (P. 1258.)

[From the Iron Age, June 23, 1921]

Iron and Steel Markets

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
formal announcement of lower prices would be made July 1. However, market
developments api^ear to be making any such formality unnecessary. All pro-
ducers are meeting competition as it develops.

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. In
the Chicago market thp weakness in bars is more pronounced. Sheets are now
about $5 per ton below the April schedule and bolt and nut discounts liave beeii
revised downward. * * * (P. 1708.)

[From the Iron Age, July 7, 1921]

Iron and Steel Markets
*******

The reductions in prices of various steel products formally inad(; oii July 5
by the Bethlehem Steel Co., amounting to $4 per ton for bars, plates, shapes,
billets, skelp, sheet bars, and blue-annealed sheets, $5 for black and gulvanized

364 CONCENTRATION OF E00N0:MIC POWER

sheets and $10 for tin plate, have been met by such of the other producers as were
not already selling at the new Bethlehem levels. The fact is that as to some
products the announcement merely recorded what the market already had done.
That the Steel Corporation will meet the market is inferred from recent evidence
that the schedule of April 13 was not rigidly observed by some of its subsidiaries.
Formalities' of publication, as followed by the Bethlehem Co., tend to make
the adjustment of the industry to lower prices gradual and somewhat or-
derly. * * * (P. 32.)

Pittsburgh

Pittsburgh, July 5.
The new schedule of prices announced by the Bethlehem Steel Corporation is
received here with mixed emotions. The reductions have been 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. As a
stimulus to business, nobody e.xpects that the new schedule will be any more
beneficial than the old one, for the reason that the prices named had been fairly
generally quoted against attractive inquiries previously. The claim is made in
some quarters that some business which was near the closing stage has been de-
ferred as a result of the announced reduction. Publication of a new price schedule
on the minor products still is to be made, but it is expected that the revision will
be completed by the end of the week and that then the Steel Corporation will
adopt all of the new schedule. * * * (p. 32.)

[From the Iron Age, July 21, 1921]

Iron and Steel Markets

price cutting general more concessions in plates, shapes, bars, and

sheets sharp competition in the chicago district railroad buying

increasing

Cutting of the steel prices announced early in July has been more general in
the past week, particularly in plates, structural shapes, reinforcing bars, and
sheets. The favorable feature has been that more business has come up. In the
eagerness of producers to get a share of it, prices suffered.

Railroad and construction demand are responsible for most of the week's
activity in plates and shapes and the accompanying concessions of $3 to $5 per
ton in the prices of the two products. The buying was not such as to indicateany
change in the general situation, much of it having been in sight recently awaiting
favorable prices.

Steel-works operations are on a smaller scale in some districts and in others
practically unchanged. The Youngstown district in particular is at a low rate.

Aggressive competition between Steel Corporation and independent steel has
been seen in the Chicago market. Pittsburgh basing has gone by the board in
that district and on a small plate order from a railro'ad 1.80 cents, Chicago, was
done. Presumably lower prices were made on 3,000 tons of steel for car repairs,
2,600 tons placed by one fabricating companj- and 1,200 tons by another. The
week's transactions at Chicago show that the extent to which the announced prices
are cut depends entirely on the size and character of the order and the hunger of
the mill.

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 presumabh' 2 cents, Pittsburgh. Several lots of about 1,000
tons, reported in the New York market, brought out prices of 1.80 cents and
1.85 cents, and in one case 1.70 cents. * * * (p 158.)

[From The Iron Age, September 1, 1921]

Pittsburgh

Pittsburgh, August SO.

Reports abofft business covering the past week are of a slightly less cheerful
tenor, but there is nothing to suggest that the lull is anything more than temporary
and a natural development in view of the fact that there has been a comparatively
steady diniand for more than a month. • The recent announcement by Judge

CONCENTRATION OF BCONOJIIC POWERi 3g5

Gary that the Steel Corporation hereafter woiild meet competitive market i)rices
was received with keen interest. His words were as follows:

"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 precipitate or lead in establishing lower prices, for they
are aware that the prices which have prevailed for some time past are lower than
the actual c )st of production by most if not all of the producers."

The prevaiy.ng opinion is that the pronouncement has clarified the situation and
that the fact the Steel Corporation now will sell as low as anj'one else is likelj' to
exert a restraining influence on promiscuous cutting of prices. This will prob-
ably mean less selling to recognized regular customers of the Steel Corporation
by independents, because such buyers now will be able to match the lowest
prices named by independents with those of the Steel Corporation sub-
sidiaries. * * * (P. 552.)

Iron and Steel Markets

meeting competition no new price policy but some fresh declines

sheet reduction general, but tin-plate market not unsettled new

plate inquiry

In the varying reports from different branches of the steel industry the balance
is still on the side of betterment in demand, but with no clear indication of pro-
gressive improvement- ahead. E.xhaustion of inventories is more marked a* the
occasion of buying.

Steel Corporation activities still average a fraction under 30 percent, with the
Carnegie Steel Co. running at a lower rate than in recent weeks, while the Tennes-
see company, owing to export and other contracts and to the improvement in the
South, is at nearly half of full operation.

The competitive aspect of the market has not changed, despite widespread
reports attributing a more aggressive policy to the leading producer. Actual
transactions show that both the Steel Corporation and the leading independent
producers are following their practice of many weeks, making such concessions as
are required by new developments. * * * (p_ 552.)

[From The Iron Age, December 15, 1921]
Low Plate Prices

MAHONING valley MILLS COMPETE WITH THE EAST- — LITTLE SHEET BUYING

Competition from ei^sttrn plate mills

While the plate market continues to show more life, prices are still so far out of
line that only one interest in the Mahoning V^alley is producing merchant plate,
the Brier Hill Steel Co. The Youngsto.wn Sheet & Tube Co., which has been out
of the market indefinitely, has no intention of reentering it undeT present con-
ditions. Plate production of the Republic Iron & Steel Co. consists wholly of
material for pipe manufacture. A sales executive states that 1.50 cents represents
the top and not the bottom of the plate market and that tonnage is being freely
placed at this figure. A number' of interests which have been regular buyers of
plates from Valley producers have been obliged, under these circumstances, to
purchase tonnage elsewhere. One of the most striking instances recently involved
20,000 tons of plates sought by a Shenango Valley fabricator which .had been a
consistent buyer from a Valley maker for many j-^ars. An eastern interest, how-
. ever, offered to produce the plates at a price which the Valley maker could not
touch and for that reason the business went elsewhere. Most of the current
inquiry in the plate market emanates from builders of oil storage tanks and from
car-repair plants. * * * (p_ 1578.)

366

Archbold Brady Co.,

Syracuse, N. Y.

CONCENTRATION OF ECONOMIC POWER

Exhibit 42
Philadelphia, Pa.

Agency: NiS'. York.

Bought of Cambria Steel Co.

franklin works

July 28, 1921
Shipped from Johnstown, Pa., to Archbold Brady Co., Syracuse, N. Y

Bill No. F-1685.
Freight: Collect.

Route: Pennsylvania Railroad by way of West Shore Railroad.

Cars

Description per bill of lading, 51500

Weight

Initials

Numbers

Capacity

P & R

7431

140

46, 860

22,325

Total

69, 185

Dunnage, 75 pounds.

Order Nos.

Heat or
blow No.

Price
No.

Pieces

Description

Weight

per
foot or
thick-
ness

Length

Weight

Customer

Mill

Feet

Inches

Marks

9139

51866

N9073

10
10
8
8
6
8
4

OH steel angles-

9139

L 19062

3Hby2H

do.

8by6.

.... do._

4.9
4.9
23.0
2.3.0
23.0
23.0
23.0

40
46
29
31
33
34
36

0
0
6
0
0
6
0

1,960
2,254
5,428
5,704
4,554
6,348
3,312

29,560

7/15/21
8pe(i,502B

...do.....
L 17040..

1.90

L 21048

...do

L2093 .

do

do

....do.

...do

2.00

54

RECAPITULATION

Material

M^eight

Price

Amount

Terms: Net cash within 30 days or one-half of 1 percent discount if

/ 4,214
\ 25,346

$1.90
2.00

$80.07
506.92

29,560

586.99

F. 0. b.: Johnstown, Pa.

Notice.— Makeremittances in New York Exchange to order of Cambria Steel Co., and address treasurer,
Widener Building, Philadelphia, Pa. Right is reserved to draw without notice for all accounts past due>
Interest at 6 percent will be charged on overdue accounts. Claims for errors, deficiencies, or imperfections
Will not be considered unless made with rea.'sonable promptness after receipt of material. Material found
defective when in hands of original purchaser and when used for the purpose for which sold, will be repiaced,
but no claim for labor or damage will be recognized. Cambria Steel Co. will not be liable Tor ioss or dam-
ages arising from nonfulfillment of contract by reason of accidents, fire, strikes, transportation delays, or
other causes beyond its control. A.s required in rule 3, uniform bill of la'img, consignee should a-jtify rail-
road agent promptly at destination in writing in ca-'e of shortage or damage en route in order to ?-ubs!i»ntiate
formal ebim when pre.sented.

OONCEJs-TRATION OF ECONOMIC POWER

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i

i

to

!

1

CO

i

5?!S!!

i

3

!!

iiii

1
Ph

w'"'

i

g

Freight
rate from
Pittsburgh
to Buf-
falo

E ■

d
O

1-5

^!

"oX!
.§

Ph

g

s

s?

1

CO

s

g

g

g

g

gggg

1

'

g

g

a
a
p
«

%
d

i

Ph

m

gg

g

gg

g

g

g

1

03
CO

S§SSS«c

!

g

g

g

g

gggg-

gg

g

g

i

Date of invoice

i

3

1

HJ

>
7

.2

i

> c

o
c

2

•t

1

2

_c

1

<:

1

- 0

I

_c

1

c

1

a
c.

a

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?3?

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-

Exhibit

d

e-

3

-i
3

0-

i

s

9
a-

c

\r

S5

g

5

1

1

1

ir

3

1

ss

368

CONCENTRATION OF ECONOMIC POWER

8

be a
£><->

■«.S
- £s

03
pq

: I 1 I ;g ; : I 1 i ; 1 ;g

1.50

1.50
1.50
1.50

;0

■ 0

'fi !

1
CO

ggg ggggg gggg s

:g ; ;g ;gsi igggggg iSgggggsgg

ig i i i is ; i ; i

; l«> 1 1 1 1 1'"' 1 1 1 1 !

. 1 1 ; ; ; iio I

c
o

■5

>

3
0"
a

a

a

n

i : i ii ;■ : i i i : i
i i i i^ i i ! i i i i i"^

0 ' r^ 1^ 0 0 1 'O

i i^ i

0.

CO • ■« 'COCO 1 CO cc CO ro « ?o • co « cc co re ^^ co co co

CO

i i ii ii i i.

i N N i^ i

Freight
rate from
Pittsburgh
to Buf-
falo

g • ■ . • • •_•_ ■

d
If

i g I i i i :g

g ;gggg i

CO

g

S ;.

03

g i s.

0

gggggg .sssssssss

1

Pi

g i i i g.i i i i

1 ^

a
a
«

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1-

i i is i i i jS

g ;SSsS :

s

0

u-

1

ogo ;gggg§ S8§S is

0 ■ 'O

0 ; ;®

ss

0 <^ i^ in •--^ IC ! lo I-': i.-^ »c c: >n 0 »-* 0

'j5 00000 .ooooSoooo

J

_«

S

i is i i ; s i i i ;

is

8 .

'o

>
a

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1

2 lci!M '050; ! '010- |os [0:

^ ,Cios , ^ — ' ; i*-^-* ;<-« I'-'

" lad lad 1 ;da la |c
Q I1-.1-, li-ji-, 1 li-ji-j Ih-j li->

d
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a a

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m

i

CON'CEtNTRATION OF BOONOMIC POWER.

369

lO Ut lO

•C »0 »0 lO u^ »o
CO to CD cc CO CO

00 > CO CO CO 00

£1 * 'SS^

t^ O »— < CO ■^ lO

00 03 O OT Ol Oi
«? CC CD CD CO CO

3 SiOlO §

OOOOOOWOiO*-

CO CO t^ »o *o '

500000

3C0C0'^»CCDCOCO^-r^

*o6t>-t^cSic»c&cnc6cftoacboOoOoc5

^ WMCMNCSN

a lO '**' 6D CO CO c

*o »0 lO iJ^ »o

00 CO 00 00 00

■V r-- ^ '«*' Tj<

OOOOCOCOOOOOOOCOCOQO
■»J'»0<Db»iC"«J'»OcDr-*iO

:g^

W5 U5 kO iO

00 00 CO CO

OlO>plOSOi^OiO>QiOiOipSOiO>OlOiO>0101<DCDCDcOCOCDCOcDcDCOCOcDcDCCCCCDCDCDcCcDCDeD

»O*CU0^I--r»t^00*OiO^^^^'^CD*C»OCD^CD

ocoocooooo

:g ; ; : : ;

iCtO»dOOOO»OiCOOOOQOOiCOiOC

CDCOCOCOOOOOOOI-^COCOCOCDlOi

> to CO to CO b

to »000 »C U3 iC
t^ 00 OT O 00 t^ 00

S8J

^rHrlC^— I.-1,-HP-(W»-1

3 2 '<^ <^

05 OS Oi OS 2

cs SJ S2 £J |^^ 1^

C OJ r-< —. _ rt

■ o>S ;»a 'SiS ^2

^oS^4^ssss<§ ;55 ;S^ ;^< i^

"-^OOOfNoOOi

r^t^oOGOOOc^

OQOor*r^i^i^<-HooQQooooco

. — — — — -- — T--r-*i*rrx-- - - ^COcCCD^OiCiO»OiOV'N-^^'(r

HCOCOCOCOC^fl<N5)C5c5f555f5C^C^<NCMCN»C*^^tMOCflCSIC^C^C^CMTrC^MCN|CN»

264905 — 41— No. 13-

-25

370

CONCENTRATION OF ECONOMIC POWER

«:^

So
Eh

«

$2.00

CO

gggggooooggogooggggogg

CS(NlNWMCSCMWC4MCSC»CSCmNC^lNC<CS(NCS<M

Oh

1

>

er

0

J3

1

m

• 1 I ' I 1 1 1 ' 10

; : ; ; I ; I i 1 I i I ; i ;s : 1 ; I ; ;

1 1 ! '1 ! ! ! 1 1 1 1 ! ' 1 le« 1 1 ! 1 1 1

1

.a

$1. 485
1.585
1.635
1.735
1.495
1.585
1.635
1.735
1.485
1.635
1.485
1.735
1.485
1.635
1.735
1.485
1.635
1.735
1.485
1.735
1. 485
1.735

PH

Freight
rate from
Pittsburgh
to Buf-
falo

iiiiiiiiiiiiiiiiiiiiii

g '

6

4^ bA

.ȣ!

biiS

o|

8
c

Ph

P5

i i i i i i i i i ii i i i jsa i i i i i i

1' !! 1 1 1 1 1 1 1 1 I 1 1 1^ 1 1 1 1 1 !

1.

SS
OQ

$1.95
1.95
1.95
1.95
1.95
1.95
1.95
1.95
1.95
1.95
1.95
1.95
1.95
1.95
1.95
1.95
1.95
1.95

i.g5

1.95
1.95
1.95

1

a

S ■
i

6

B
•E

P5

i i ; i ; 1 i M ; ; .; ! 1 i^-i i M j i
1 1 1 1 ! 1 1 1 1 1 1 , 1 1 .! 1 «^ 1 I ' I 1 1

1
a

S3

$1.75
1.85
1.90
2.00
1.75
1.85
1.90
2.00
1.75
1.90
1.75
2.00
1.75
1.90
2.00
1.75

i.go

2.00
1.75
2.00
fl.75
12.00

1

0

>

i I i^ i i i^ 1^ ii i ii Mi i 1

n 0 6 6"^ e 6 6'^ 6'^ 0'^ 6 6'^ 6 o"' 6 6
<! , . ,03 . . .m |C0 .CO . .ra . .cQ I .

C>3

1 •

SllliillsSiiiiliiilii

oa ^

1 iw 1 1 1 1 1

$1.50
1.50
1.50
1.40
1.35
1.35
1.60

1 Ito 1 i 1 1m 1
'f ',(» \ \ \ \ 1

$1. 355
1.355
1.355
1.355
1.355
1.355
1.355

'"""i."385"

iiisiisii

a •••••••

i S i i i g :•
1 1 619. 1 1 1 I" 1

to to iO •<*' ^ ^ S l«3

^« rt rt rH -1 rH 1.^

991

99 1$

$1.65
1.65
1.65
1.65
1.65
1.65
1.65

"""''i.'es'

Dec. 15, 1921

Jan. 3, 1922

Jan. 31, 1922

Feb. 22, 1922

Mar. 1, 1922

Mar. 13, 1922

May 20, 1922

June 10, 1922-..

July 1, 1922

3445
3448
3451
3454
3456
3458
3461
3463
3465

CONCENTRATION OF ECONOMIC POWER

371

lO 1 1 1 1 1 1 1

!** i i i i i i i

ssgggs? ssj?§^g iRg i i

o

«» 1 III

; ; i : i is i^J§s is ggg i

r 1 1 ! ! !«» I 1 I*^ I 1 '"' I

i«» 1 1 1 1 1 1 1

Tjt ^ Tf< ^ Tt< Tt* r ^rh CO CO CO CO <M 'C5CS 1 1

1

^ ^^^ ^^ ^W ^ ^

1 > 1 1 1 1 to iiOtCtO I itO I rtOtOtO 1

1 i i ; i .;§ \^^^ •. ;?? 1 ;sss :

1 1 '. 1 1 1 ^ 1 -H -^ rH 1 1 -H 1 1 rt rt rt 1

isiisiiiiiiiiiiiiiii

s

lo 1 i 1 i' i 1 1
l-^J*

iS» 1 i i 1 1 1 1

r^cCCDCOOiO IIO-^TJITJ^COCC) IcocD ' ''

-:» 1 .1

""""$i."56"

1.40
1.40

1.60

i.'eo'

1.60
1.60
1.60-

is i i i i 1 i ;

;^ ; : ; : : /I :
lie 1 1 1 1 1 1 1

OOOOOO 100000*0 J'OIO 1 1

t^i^r^r^t^t^ it^coocDO»o i»o»o i -

S

«« 1 "^ i'^'^ 1 1

1 1 1 1 1 lO lOOO ■ 1 »0 1 riCiO*0 ■
1 I 1 I I . t^ . CO U3 o 1 1 lO 1 . lO O >0 1
I 1 . 1 1 1 «^ 1 " rt I I rt 1 j ,-1 r-l ,-1 1

Nov. 11, 1921

Nov. 16, 1921

Nov. 25, 1921

Nov. 30, 1921

Dec. 13, 1921. ._

Dec. 15, 1921

Dec. 20, 1921

Dec. 29. 1921... _.

Fph 9d 1Q59

,1922.

, 1922

, 1922

, 1922

1922. _

1922

1922.... _ _

1922 ...

1922

1922

P

Mar. 11
Mar. 23
Mar. 3C
June 19
Julys,
July 3,
July 11
July 13
July 14
July 19
July 26

3926
3927
3931

3933
3936
3938
3941
3944

3953
3957
3961
3966
3968
3970
3971
3974
3975
.'5977

372 CONCENTRATION OF ECONOMIC POWER

Exhibit 44
In the Matter of Bethlehem Steel Corporation bt al. Docket No. 962

MAXIMUM prices OF LACKAWANNA STEEL CO.

The following is a partial Abstract of invoices appearing in the record herein
which were rendered by Bethlehem Steel Co., Cambria Steel Co., and Lackawanna
Steel Co., against Kellogg Structural Steel Co., Buffalo, N. Y., during the year
1910 and by Bethlehem Steel Co., during a portion of the year 1920, showing —

(1) the prices at which pletes, standard structural shapes, and bars were
sold "freight allowed to Buffalo, N. Y.";

(2) the then current carload freight rate from Pittsburgh to Buffalo;

(3) the Pittsburgh equivalent price;

(4) the tl eL urrent price of Carnegie Steel Co., base Pittsburgh.

(5) the th ,n current Pitttbu'-gh price, as quoted in the Iron Age.

In view of the fact that the prices charged this consumer by Lackawanna Steel
Co. were slightly higher during a portion of 1919 then the then current prices of
Carnegie Steel Co., or those quoted in the Iron Age as prevailing at Pittsburgh,
plus the then current carload freight rate from Pittsburgh to Buffalo, and that
market conditions were such at the time that steel was not commanding a premi-
um for prompt delivery, attention is called to the fact that Lackawanna's terms
of sale which appear on face of invoice provided for "trade acceptance payable
in 45 days from invoice date," whereas, those of Cambria Steel Co. and Bethlehem
Steel Co. were the usual terms prevailing in the trade, i. e., "30 days net, one-half
of 1 percent in 10 days."

CONCEiNTRATION OF BOONOMIC POWERi

373

£f5

4> a

ccccccccecc*3foo

1/3 lO W5 iO iC »0 lO O >0 m U5 lO lO »0 lO "^ *0 »C »0 »C lO *C *0 *0 »0 »mc IC US lO »o »o »o

»OiC»OOiOiOu^iCtC»OiOiC u%»/3 »0»C tO »CtO ^O iO»CO

5 UX»J

5 toV]

o 3 -S ^ °

I iQ lo lo I m lo to u^ u? tc to to u^to lo to

N C^C^ C^ C^NC^)C^CMW(MC^tMC^C^C^C*4

lOCO

•* lO »o

iOu'?'^-T}<-rJ<-^T}<io»0'C'^ ~^

J-^-^-^ OtC**-^

l(M(NNir»NC<lMe-)MIN (NC^IMIM (NIM?<

lO »o to to to lO lO t

to ' I ■ ' I '

r^ ■ I I I I I It . I I to

;o I ' 1 ■ I I I to

oi I 1 I ; I ! 1 1 1 1 1 I II 1 I I N

lo wo «0 lO

lO lO W5 lO »c »o

»C tC to IC W5 >c *o

<NCNCSMdlM<NC^C^(NCsC^ CMCIMC^ MCM<N

•O »0 lO iO »C iC lO kO »c »c ..

:;0 tC O ^ <d O CD CC CD ?D 2:

CO CD CO CO "C CD o cc «D eo ja

CST^IMC^C^CJMC^C^IM

11

1919
1919
1919
1919
1919
1919
1919
1919

M t~

C M rj to CO

-

>i a> o
03 d C

SS5

>

"5

3
<

Oi OS
OJOi

3 3

Cs OS OS OS C> OS 03
OS OS OS Cs OS OS OS

t^ or<cr t>r r^ •-^*^ os"

?^ ?r o o o o o
(ZmOOlZOQ

: *
a> is

^ o
a «

a! 60

22,

S

o

03 «W «
03 c« 0) c3

o;5^2 o o

to 00 (M « -»** to r^ 00 O --I (N OS CO ■«*< O CD I^ CD 00 -^

■«r j^ toiomiotocsoootocDcDt^i^ r^ coco oo

COCOCOCOCOCOfOCDI-r^l-*COfOCOC^CO CO t^t^ ro

CSC^CIC^INC^CSC-4(N(NCSC^C1C^'NC^ C^ C^(N CM

CJCor~!

■^■^ CO c^ -

r- t^ CO 1^ I

374

CONCENTRATION OF ECONOMIC POWER

.2
o

m

i ; i i i 1

1

$2.45
2.55
3.00
2.70
3.25
3.25
3.10
3.10
3.10
3.10
3.10
3.10

1

Pricfs "base Pitts-
burgh" of Carnegie
Steel Co.— subsidiary
of United States Steel
Corporation

CO

Mc^eiicsc-ic^MN(Nc4NN

J

03

N i N

a

•3

>

v

1
1

«

1
03

CO

M C^i W W W ci C^' Ci M* CJ W «

s

Freight
rate
from
Pitts-
burgh

icu5'C»oioioic»ow:iio»oio

«MC^3C^IC^(MWCMNWMM

S

a.

1
>

0

i

1

(DOeCCC<e<CcO«C«>CCCD<D

(MC^C^MC^CSC^iMWC^NC^

1

M ;

Nn

s

0

0

Jan. 14,1920
Jan. 30, 1920
Mpr. 11,1920
Fob. 21,1920
Ajir. 2, 1920
Apr. 28,1920
May 12,1920

do

do

May 27,1920
June 11,1920
Juno 23, 1920

Producer"

d i ■ 1 1 .' ' .' ; 1 ! 1

0 ;;;;;;;;;; 1

1 i ; i ; M M ; ; i

w 1 ; ] ; ; ; 1 ; 1 1 ;
.2 1 1 1 1 1 ! 1 I 1 1 1
^66666606660

•g -^ TS "O "O "0 13 '0 13 •© 73 ri

S3 ; ' I . , .

2756
2757
2758
2759
2760
2765
2764

concejNtration of economic power 375

Exhibit 45

In the Matter of Bethlehem Steel Corporation et al. Docket No. 962

method of sale by bethlehfim steel co.

The following is a partial abstract of quotations by Bethlehem Steel Co. on bar
steel to a customer in Philadelphia, Pa., which are contained in the record herein,
all of which quotations, except as otherwise indicated and stated in note (^) hereof,
are in substantially the following terms, "We are pleased to offer our basic open
hearth commercial quality soft steel bars in the black as rolled condition and cut
to regular mill lengths at a price of — cents per lb. base, Pittsburgh basis. •

"To the above price will be added the Pittsburgh rate of freight from Pittsburgh
to Philadelphia, the rate of freight from mill to Philadelphia being allowed on
invoices." (Commission's Exhibit, herein, No. 21378.)^

Exhibit
No.

Date

Form of prod-
uct

Delivered
price

Freight
from
Pitts-
burgh

Pitts-
burgh
equiva-
lent

Iron
Age
price

Carnegie
Steel
Co.'s
price

21299

Jan. 14, 1919

Jan. 28, 1919

Bars

Cents

$2.70
2.70
2.35
2.35
2.35

»2.36
2.35
2.35
2.35

3 2.50
2.50
2.50

3 4.25
4.25
4.25

3 4.00
4.00
4.00

'2.75

1 2.35

12.35
2.10
2.35
2.00
2.00
2.10
2.10
2.10
2.10
2.10

« 1.90
1.75
1.75
1.75
1.60
1.60
1.50
1.40
1.40
1.50

$2.70
2.70
2.35
2.35
2.35
2.35
2.35
2.35
2.35
2.35
2.35
2.35
3.50
3.50
3.50
3.25
3.25
3.25
2.35
2.35
2.35

<2.00
2.00
2.00
2.00
2.10
2.10
2.10
2.10
2.00
1.90
1.75
1.70
1.50
1.50
1.50
1.50
1.35
1.35
1.50

$2.70

21300

do

2.70

21326

July 29, 1919

do

• 2.36

21327

July 30, 1919

do

2 35

21328

do

...do

2.35

21330

Aug. 26, 1919

do -.

2.35

21331

Aug. 27, 191U

do

do

2.35

21332. . .

do-

2.35

21333

Aug. 29, 1919

. do

2.35

21335

Oct. 1, 1919

do

2.35

21336

Oct. 2, 1919

do

2.35

21337

do

. do -

2.35

21342

July 6, 1920

do . ...

2.35

21343

July 7, 1920

do.

2.35

21344.. ..

do

.... do.

2.35

21345

Sept. 7, 1920

do

2.35

21347

do

do

2.35

21348

do

.... do. -.

2.35

21363 ...

Dpc. 6, 1920 . ..

2.35

21354

Dec. 31, 1920

do _ . . .

2.35

21355

Jan. 12, 1921

do

2.35

21356

Mar. 4, 1921

... do

2.35

21357

Mar. 8, 1921

do

2 35

21358

Apr. 1, 1921

do

2.35

21360

Apr. 2, 1921

do.

2.35

21361

Apr. 26, 1921 . .

do

5 2.10

21362

Apr. 28, 1921

do . .

2.10

21364

June 2, 1921..

do.

2.10

21366

June 14, 1921......

. _ do

2.10

21307

June 29, 1921

July 7, 1921

do

2.10

21368

do

1.90

21369

Aug. 3, 1921

do

1.75

21370

Aug. 31, 1921 . .

.. do

1.78

21371 ..

Nov. 29, 1921

Dec. 2, 1921.

do

1.50

21372

do.-

1.50

21373

21374

do..

Jan. 3, 1922 . .

do_ -

do

1.50
1.50

21375

Mar. 2, 1922

do

' 1. 40-1. 50

21376

Mar. 7, 1922

do.

n. 35-1. 50

21378

Apr. 13, 1922

do-

M. 50-1. 60

' So-called "Redfleld Scale" announced by Industrial Board of Department of Commerce, March 21, 1919,
Commission's exhibit, herein.

3 1'rice is resolved into base quality by use of forging quality extra 25 cents per cwt. as per Commission's
exhibit, herein. No. 2n54.

3 "Premium price" for prompt or specified delivery as shown by Commission's exhibits, herein.

* Price succeeding action of Midvale Steel & Ordnance Co. stated in annual report of that company year
1920, p. 5, Commission's exhibit, herein, which is as follows: "We therefore on February 4, 1921, announced
radical reductions in the selling prices of our standard rolled products."

" "Stabilized basis of April 12" as per Commission's exhibits, herein.

9 Price announced by Bethlehem Steel Co. on July 4 to become ellective on July 5, as recorded in Philadel-
phia market letter in The Iron Age, Jlssue of July 7, 1921, p. 41, Commission's exhibit, herein. No.—, pp.
126-129.

' Variable prices "base Pittsburgh" during period in which Lackawanna Steel Co. and Midvale Steel &
Ordnance Co. were quoting "f. o. b. seller's mill," Commission's exhibits, herein.

1 "The established meaning of Pittsburgh basis is that the price is f. o. b. Pittsburgh plus the oflflcial all-rail
freight rate in effect from Pittsburgh to destination on date of shipment, less the official all-rail freight rate in
effect from seller's works to destination on date of shipment." (Commission's exhibits, herein, Nos. 11443,
16443.)

376 CONCENTRATION OF ECONOMIC POWER

METHOD OF SALE BY BETHLEHEM STEEL CO.— Continued

Exhibit

No.

21381

21382

21383

21384

21386

21388

21389

21390

21391

21392

21393

21394

21395

213^6

21397...-. _

21398

21399

21400

21401

21402

21403

21404

21405

21406

21407

21408

21409

21410

21411

21412

21413

21414

21415

21416

Date

June 14, 1922.
Julys, 1922...
Oct. 5, 1922...
Oct. 11, 1922-.
Oct. 28, 1922-.
Oct. 30, 1922..
Dec. 31, 1922.
Feb. 7, 1923..
May 29, 1923.
June 13, 1923.
July 2, 1923...
July 30, 1923..
do-

Aug. 6, 1923...
Sept. 1, 19-23...
Aug. 29, 1923..
Sept. 29, 1923..
Oct. 2, 1923....
Oct. 3, 1923.-..
Oct. 27, 1923...
Dec. 1, 1923...
Dec. 8, 1923...
Dec. 22, 1923..
Jan. 25, 1924...
Mar. 19, 1924..
Apr. 4, 1924...
Apr. 9, 1924...
Apr. 28, 1924..
May 10, 1924..
Junes, 1924...
July 30, 1924..
Aug. 27, 1924 9
Sept. 19, 1924!
Dec. 3, iy-'4»..

Form of prod-
ucts

Bars

do...

do...

do...

....do...

do...

do...

.....do...

do...

do...

do_.'

do..

do_-

do..

do-.

do..

do.-

do..

do-.

do-.

do-.

do..

do..

dc-

do..

do..

do.-

do-.

do..

do..

do.-

do-.

(10)
(10)

Deljvered
price

Back to
Pitts-
burgh
plus
prices

« $2. 47
« $2. 475
» $2. 475

Freight
from
Pitts-
burgh

Cents

Pitts-
burgh
evuiva-
lent

32

37H

371.2

$1.70
1.75
2.15
2.10
2.10
2.00
2.00
2.15
2.50
2 50
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.30
2.30
2.25
2.15
2.15
2.10
2.10

Iron

A9e
price

Carnegie
Steel
Co.'s
price

$1.70
1.70
2.00
2.00
2. 'to
2.00
2.00
2.10
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.40
2.30
2.30
2.30
2.25
2.20
2.15
2.10
2.00
2.10

$1.60
1. 60-1. 70

* Quotations made subsequent to the Commission's order in Federal Trade Commission v. United Staiet
Steel Corporation, et al. — Docket No. 760, -which quotations read substantially as follows: "based on furnish-
ing our commercial quality soft steel, black as rolled, we quote price of — cents per lb. base mill with carload
(or less carload) freight allowed to Philadelphia.

» "There is nothing to indicate that the abandonment of Pittsburgh basing for steel products by the United
State Steel Corporation and some of the independents will have any marked effect upon prices or conditions
of doing business in the Philadelphia 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." (Philadelphia market letter, The Iron Age, Oct. 2, 1924, p. 883; Commission's ex-
hibit, herein, No. — , p. 63).

'1 Less than carload quantity.

Exhibit 46

Bethlehem Steel Co.,
Philadelphia, Pa., August 27, 1924.

2250-15
Subject: Steel bars.

The Philadelphia & Reading Coal & Iron Co.,
Mr. E. L. Keane, Purchasing Agent,

Philadelphia, Pa.
Dear Sir: Ackno-w'ledging your inquiry PS-583 of August 22d covering a
quantity of steel bars to specifications given, based on furnishing; our commercial
quality soft steel, black as rolled, we quote price of 2.47 cents per pound base mill,
with carload freight allowed to Philadelphia.

Shipment of the 2>2-inch, 3-inch, 5-incli, and dYi-'mch. rounds would be subject to
mill conditions, but on the balance of the sizes specified we could offer shipment in
about 30 days after entry of order by our mill.

The above proposition is made for acceptance within 7 days from date, and we
hope to be favored.

Very truly yours,

Bethlehem Steel Co.,
[s] W. B. Kennedy, Sales Agent.
PBB:R

OONCENTKATION OF BCONOMrC POWER

377

Exhibit 47

In the Matter of Bethlehem Steel Corporation et al. Docket No. 962

method of sale by bethlehem steel co.

The following is a partial list of acknowledgments of orders by Bethlehem Steel
Co. addressed to customers in Baltimore, Md., which are contained in the record
herein, some of which are dated immediately subsequent to the acquisition by
Bethlehem of the properties of Lackawanna Steel Co. and/or Midvale Steel &
Ordnance Co., which acknowledgments are in substantially the following form,
showing that the sales referred to therein were made upon the "Pittsburgh basis"; *

"We acknowledge with thanks receipt of your order number dated

for approx. No. commercial quality steel bars which has been entered for

prompt attention on account of your contract , at the following prices:

cents per pound base, Pittsburgh basis, for soft steel and tire steel, plus

cents for tire steel under 1^2 x }4, cents per pound, base, Pittsburgh

basis, plus cents for quality, for spring steel plus cents for jobbers

differential, f. o. b. cars our works, Johnstown, Pa., and Lackawanna, N. Y."
(Commission's exhibit No. 21913.) '

Exhibit No.

Date

Exhibit

No.

Date

Exhibit
No.

Date

Exhibit

No.

Date

21768

Oct. 23,1922

21789....

Julv 5, 1923

21926....

Dee. 13,1923

21931....

May 7, 1924

21769

Nov. 4,1922

21912...

July 6, 1923

21929....

Jan. 15,1924

21815....

May 8,1924

21919.

Dec. 13,1922

21913'...

July 20,1923

22288....

Feb. 9, 1924

21932....

May 15,1924

21910

Dec. 18,1922

22279....

July 24,1923

21800....

Feb. 1,5,1924

21817.-..

May 21. 1924

21911_

Dec. 20,1922

21791.-..

Aug. 13,1923

22289....

Feb. 25,1924

22296.-..

May 27, 1924

21771

Jan. 5, 1923

21918 2...

Aug. 13, 1923

21802.--.

Mar. 7,1924

22297....

June 3, 1924

21772

Jan. 13,1923

21793....

Aug. 21, 1923

21803-.. .

Mar. 14, 1924

22298....

June 6, 1924

21773

Jan. 17,1923

21794....

Sept. 6, 1923

21804....

Mar. 22, 1924

22299....

June 13,1924

21774

Jan. 30,1923

21921....

Sept. 18, 1923

22083.-.-

Mar. 25, 1924

22300....

June 14,1924

22262.

Feb. 19,1923

21795....

Oct. 1, 1923

21805...-

Mar. 31, 1924

21933...-

July 8, 1924

22263

Mar. 8,1923

21796....

Oct. 9, 1923

21808.-..

Apr. 3, 1924

21822....

July 10,1924

21782.

May 24, 1923

21924....

Oct. 23,1923

21930....

Apr. 4. 1924

21787

June 15,1923

22284...-

Oct. 27,1923

21810--..

.A.pr. 10,1924

21788

June 16,1923

21797....

Nov. 1,1923

22293-...

Apr. 28,1924

1 96,000 pounds commercial quality steel bars, 2.40 cents per pound base Pittsburgh basis, * * * f. o. b.
our works Johnstown, Pa., and Lackawanna, N. Y.

2 170,000 pounds soft and tire steel, price $2.40 base Pittsburgh basis, * * * f. o. b. cars, our works
Johnstown, Pa., and Lackawanna, N. Y.

Exhibit No. 48
In the Matter of Bethlehem Steel Corporation et al. Docket No. 962

The following is a tabulation of invoices contained in the record herein showing
shipments of plates, standard structural shapes and bars from Cambria Steel Co.,
Johnstown, Pa.; also plates (tank and structural quality) from Midvale Steel &
Co., Ordnance, Coatesville, Pa., to Bethlehem Fabricators, Inc., Bethlehem,
Pa., during the years 1921 and 1922.

' The established meaning of Pittsburgh basis is that the price is f. o. b. Pittsburgh plus the official all-rail
freight rate in effect from Pittsburgh to destination on date of shipment, less the official all-rail freight rate
in effect from seller's works to destination on date of shipment. (Commission's exhibit Nos. 11443 and
16443.)

378

CONCENTRATION OF ECONOMIC POWER
FROM JOHNSTOWN, PA.

Ex-
hibit
No.

Invoice date

Feb. 21, 1921.

do

Feb. 24, 1921.

do

Feb. 25, 1921.

do..

do

Mar. 4, 1921..
,Mar. 12, 1921.

do

Mar. 14, 1921.

do..

do

do

do

Mar. 16, 1921.
Mar. 24, 1921.

do

Mar. 30, 1921.

do.

do.

do.

Apr. 1, 1921..
Apr. 7, 1921..
Apr. 11, 1921.

....do

July 16, 1921.

do

do.

Aug. 3, 1921..

do

Sept. 3, 1921..

Form

Plates

34, 020
70, 760

28, 370

63, 740
40, 280

16,990.

3,070
070

56,020
35, 985

44. 000
43, 610

Shapes

16, 094
73, 630
56, 903
127, 449

110,021

67, 603
70, 422
18, 460
22, HO
27, 748
87, 199

32, 205
'33,"297'

7,380
73. 620
69, 527

8,700
10. 965
10, 368

6,517
66,848

10, 060

306

Ex-
hibit
No.

Invoice date

Form

Plates

Shapes

Bars

45

46

47

48

49

50

51

52

53

55

57

58

59

61

62)^

64

65

66

08

69

71

72

73

74

75

76

77

78

79

80

Sept. 9. 1921.

Sept. 26, 1921....^

2,380

5,706

4,976

25, 957

2,030

138,000

44, 124

48, 390

Nov. 9, 1921

do

Feb. 4, 1922 . .

May 11, 1922

June 17, 1922

do.

June 20, 1922

do

do . .

39, 710
38, 380

8,607

June 22, 1922

do....

July 10, 1922

do

7,100
59, 320
40,760

42,409

do

do

July 21, 1922

July 27, 1922

11,490
30, 530
68, 840

46,236

do...

do

43, 760

61, 065

43, 289

1,959

57, 358

July 31, 1922

do

Aug. 24, 1922.

.. do

36, 750

do..

76, 897
48, 565
62, 640
100, 139
64, 581

.....do

Oct. 21, 1922 ...

Dec. 23, 1922

do

Total

816, 535

1, 890, 084

FROM COATESVILLE, PA.

81

Apr. 19, 1921

Aug. 19, 1Q21

Aug. 22, 1921

Sept. 5, 1921.

Oct. 15, 1921

do ...

1,745
98, 545
79, 345
35, 735

3,660
102, 895

88
89
90

Oct. 17, 1921

--..do

Oct. 19, 1921

Total

29,24a

73, 235

1,745

82

83

84

86

426, 145

87

1

The following is a complete Abstract of invoices showing tonnage consisting of
24-inch beams:

Exhibit

No. Page

Invoice date

Weight

Mar,
Mar,
July
Sei)t
Sept
Nov.

July

July

Dee.

14, 1921
, 30, 1921

16, 1921

. 3,1921

, 26, 1921

9, 1921

do

do

27, 1922

do

do

31, 1922

do

do

do

23. 1928

24 inches bv 79.9 feet.
24 inches by 100 feet..
24 inches by 79.9 feet.
24 inches by 79.9 feet.
24 inches by 79.9 fret .
24 inches by 79.9 feet.
24 inches by 100 feet..
24 inches by 110 feet..
24 inches by 100 feet..
24 inches by 79.9 feet .
24 inches by 85 feet...
24 inches by 79.9 feet -
24 inches by 90 feet...
24 inches by 79.9 feet .
24 inches by 79.9 feet-
24 inches by 105.9 feet

Total

21, 553
5,151
3,656
10,066
5,706
2,757
2,219
25, 957
27,056
10, 656
2,412
20, 425
3,368
7,834
1,959
8,612

159, 387

24-inch beams are of total standard structural shapes: 7.4 percent.

CONCEiNTRATION OF ECONOMIC POWER
Exhibit 49

379

In the Matter op Bethlehem Steel Corporation et al. Docket No. 962

The following tabulation shows —

(a) A comparison of the various charges as additions to base prices or what are
commonly known as "extras," for various sizes of steel bars and small structural
shapes (other than base sizes); which became effective on July 1, 1923, with
those in effect prior to the acquisition by Bethlehem Steel Co. of the properties
of Lackawanna Steel Co., Cambria Steel Co., and Midvale Steel & Ordnance Co.

(b) A comparison of the charges for machine cutting to specified lengths;

(c) A comparison of the "extras" for other than machine cutting to specified
lengths;

(d) A comparison of "quantity differentials," i. e., for aU specifications for less
than 2,000 pounds of a size; and

'(e) A statement of additional charges not theretofore made as charges for
"differentials for quantity cutting" wherein it is stated that "whether or not
quantity differentials or cutting extras apply there will be an extra charge for
cutting less than 2,000 pounds of any size to a specified length, regardless of the
total tonnage of the size ordered, regardless of what the length may be and
regardless of exact quantity shipped."

The following is derived from Commission's exhibits.

Extra if any

Percent of
increase

Forms and sizes

Effective
July 1, 1923

Prior

ROCTNDS AND SQUARES

H to 3M 6 inches

Base
$0.10
.15
.20
.30
.40
.55
.70
.85
1.00
1.25
1.50
2.00
.10
.15
.25
.36
.46
.55
.65
.75

.16
.26
.26
.30
.36
.40
.45
.60
1.50
2.00
2.20
2.50
.60

.25
.40
.40
.60
.70
.50
.60
.80
1.70
2.00
2.50
3.00

Base
$0.05

.10

.10

.20

.25

.30

.35

.40

.50

.75
LOO
L25

.07«

.12>^
15

.20

.26

.37^

.60

.62H

.10
.16
.15
.20

.20
.25
.25
.30
LIO
L30
L60
L80
.35

.16
.25
.26
.35
.50
.30
.40
.55
1.20
L40
L80
2.00

H to 'He inch .

100

9<6 inch V .

50

H inch .. -

100

■Jie inch _ .

60

fi inch._.

60

•Hz inch

80

fi« inch

100

%2 inch . .-

112

H inch ".

100

'%4 inch

67

%2 inch... •.

50

Ha inch .• 1

60

ZH to 3^Ae inches .,

33

39i to 4H6 inches --^

20

4H to 4?'ie inches

67

45i to 5M6 inches

75

BH to 5?'i6 inches .

80

5^i to 6M6 inches

47

6}4 to OMe inches 1

30

6fi to 7H inches

20

ANGLES

IH by m inches and wider but under 3 by Me inches and over

W by W inrh nnrl widpr hut nnripr ^ hy li infhM

60
67

i by 1 inch to IH by l}4 by Me inchesand over

67

1 by 1 inch to IH bylH by H inches

60

J^ by ]ii by Me inch

76

% by J^ by !^ inch .

60

^ by M by Me inch . . ...•

80

JibyM by j-i inch :.

100

56 by ^ by H inch

36

5i by H by Hz inch

64

H by H by H inch ,. J.

38

H by H by less than >6inch .,.

3»

8 by 3 by H" inches ^

CHANNELS

IM Inches and wider but under 3 by Me inches and over

4a
67

IH Inches and wider but under 3 by H inches

60

1 to IH by Me inches and over -

60

1 to IH by H inches

43

1 to IH by %4 inches

40

M and % by Me inch and over .....

67

M and J6 by !^ inch

60

M and ^ by %4 inch

46

42

^ by ^2 inch

44

39

H by %i inch

50

380

CONCENTRATION OF EOONOMIC POWER

Forms and sizes

Extra if any

Eflective
July 1, 1923

Prior

Percent of
increase

IH by IH inches and wider but under 3 by Me inches and over

1 by 1 to m by l^by Me inches and over

1 by 1 to m by VA by finches

^ by ^ by f-fe inchl -..

% by ^ by !^ inch -.

% by y^ by ^ie inch

4^ by ?4 by J^ inch

H by H by li inch

H by H by Hinch -

HALF ROUND?

1 to 3 inches. ..-

^i to iMeinch ..- -

H to 'He inch ._.

H to Me inch

H to J-ieinch

HALF OVALS

H to 4 by Vi inches and over

1 to 4 inches in numbers 7, 8, and 9 and Mn inch

1 to 4 inches in numbers 10, 11, and 12 aiid ^ inch

yi to 'Me by Vm inch and over _..

H to 'Ma inch in numbers 10, 11, and 12 and H inch

M to 'Me inch in numbers 13, 14, and 15

% to 'He by ^2 inch and over ,

% to 'Ha inch in numbers 10, .11, 12, and H inch

H to 'He inch in members 13, 14, and 15....

H to 9ie by li inch and over

y> to Viti inch in numbers IS, 14, and 15

H to lid by Hi inch and over

5i to lie inch in numbers 14 and 15.,

0VAL3

H to 2H by H inches and over.. ...J

H to 2H by H to Me inches

H to 2J4 by Hi to 'Ma inches.. .

H tp 'He by Me inch and over

Hto 'Ha by ?-(e to H inch

5i to 'Ha by H to 9^2 inch

H to ?-ie by H inch and over

H to Me by H to Me inch

H to Me by ?^2 inch ._

H to Me by Ma inch and over

^ to Me by W to ^^2 inch ., .^

H to Me by ^^2 inch

5^ to 3 H finches

H to 'Meinch '. ..^

HEXAGGNS AND OCTAGONS

H to Ma inch

'Meinch

?^inch , ,

^■ieinch

Hinch.

Machine cutting to specified lengths:

Lengths over 48 inches..

Over 24 to 48 inches, inclusive •.

Over 12 to 24 inches, inclusive

12 inches pnd less quoted on application but not less than

Cutting to specified lengths other than machine:

Cutting to lengths 120 inches and over I

Cutting to lengths over go to 120 inches

60 inches

59 inches

24 to 48 inches - -■

12 to 24 inches

12 inches and, less quoted on application but not less than

Differentials for quantity cutting;

Less thEn 2,000 to 1,500'inches.

Loss than 1,500 to 1,000 inches

Less than 1,000 to JOO inches

Less than 500 inches 1..-

■Quantity differentials: ''AH specifications for less than 2,000 pounds
of a size will be subifect to the following extras, the total weight of
a size ordered to determine the extra, regardless of lengths and re-
gardless of e^dct quantity actually shipped."

Less than 2,000 pounds but not less than 1,000 pounds ._

Less than 1,000 pounds —

$0.30

$0.20

.55

.40

.70

.60

.70

.60

.90

.60

.90

.60

1.10

.70

1.80

1.30

2.50

1.80

.30

.20

.60

.35

.70

.50

1.00

.70

1.50

1.10

.40

.25

.50

.35

• .70

.50

.70

.50

.90

.66

1.20

.80

.90

i60

1.20

.75

1.40

.90

1.20

.80

1.60

1.06

2.00

1.36

2.40

1;60

.30

.20

.40

.30

.70

.45

.50

.35

.70

.50

1.00

.65

l.CO

.55

1.30

.70

1.60

.95

1.60

.95

2.00

1.20

2.40

1.45

.25

.15

.40

.25

.60

.36

.80

.55

1.00

.65

1.20

.75

.50

1.00

.20

.16

.30

.25

.40

.36

.70

.45

0

0

.05

0

.10

0

.10

.06

.15

.10

.30

.20

-.40

.30

.10

0

.20

0

.40

0

.60

0

.16
.35

CONCEJsTRATION OF ECONOMIC POWER

FLATS

381

Effective
July 1, 1923

Prior

Percent of
increase

1 to 6 by % to 1 inch

Base
$0. 15-
.40
.60
.40
.30
.60
.40
.75
.70
.90
1.00
1.20
1.40
.10
.10
.10
.20
.30

1 to 6 by H to 1 inches

Base

$0.10

.20

25

1 to 6 by H to ^l 6 inches

1 to 6 by H to 5l6 inches

'Ha to i51e by H to % inch

'Ha to i5^« by H to Mo inch....

50

'Mo by H to H inch

'Mo by Vi to 'Me inch

100
140

94 to ma by H to ^Ae inch

60

Ji to 15/16 by H to Ho inch

20

J-ie by H to ).4 inch

?16 to 96 by 96 to H inch

.25

lOO

5i by ?S to ^^2 inch

60

9i8 by M to Via inch

?18 to 56 by W to 51a inch

H by 96 to Ma inch

.35

.50
.60
.70
.80
1.00
.05
.10
.15

114

H by ?^ to Ma inch .

40

H by M to 516 inch

60

Me by 96inch._._._ ;

43

Ma bv M to 51b inch...

60

96 by M to 51 a inch

96 by M to 51e inch

U6to6by IMeto 1?15 inches...

H6to8by IM to IH inches

194 to 6 by 156 to 294 inches

40

1^6 to G by IJIe to l^la inches

1^ to 6 by U4 to IH inches

IH to6by 15ito 2 inches

U6 to 6 by 2M a to 2M inches

100

0

-33

25

3H6 to 6 by 3 to 4 inches

3 H to 6 by 3 to 4 Inches

.20

50

Exhibit 50

Abandonment of Pittsburgh Basing of Little Effect in Eastern Penn-
sylvania District

Philadelphia, September 30. — There is nothing to indicate that the abandon-
ment of Pittsburgh basing for steel products by the United States Steel Corpora-
tion and some of the independents will have any marked effect upon prices or
conditions of doing "business in the Philadelphia 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.

Orders for steel in the past week have shown a slight gain over the preceding
week notwithstanding the expectation that the change in methods of quoting
would havv-f an upsetting effect. The fact isthat eastern consumers have generally
understood that the new deal would not alter their situation and have accepted
the delivered method of quoting' with very little comment. The gain in orders in
the past week does not mean that business is good; there continues to be a con-
siderable degree of disappointment among steel companies that recovery has not
been more rapid. In some lines, notably in structural shapes, conditions are not
so promising as they were a month ago.

Source: '*The Iron Age," October 2, 1924.

Exhibit 51
Origin and Purpose of the Pittsburgh Plus Method

(The following are excerpts from the testimony of Col. Henry P. Bope, formerly
vice president of Carnegie Steel Co., in the Pittsburgh Plus case, F. T. C. Dopket
760:)

Q. Going back to the original organization, what- connection did the Pittsburgh-
base system have with that?

A. The price was made, based upon Pittsburgh, because the Carnegie Bros. &
Co. were the largest manufacturers, and it was felt they should have the say as to
what the price should be, and how it should be established at the main point, so
as to give stability of prices, which had been fluctuating all over the lot.

Q. By that do you mean to get uniform prices?

A. To get uniform prices.

Q. Before that time what was the practice?

A. The practice was generally to quote f. o. b. mills. Every mill was a law
unto itself.

Q. And the difference in prices between the mills, did that amount to the freight
rate, or was it entirely independent?

A. Each mill made whatever price seemed necessary to take the busi-
ness. * * *

382 CONCENTRATION OF ECONOMIC POWER

A. 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 we went to
a cost basis in order to establish scientific extras, which were almost more impor-
tant 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; but the structural asso-
ciation existed in one form or another from 1880, excepting in 1893, when the
panic produced such a chaotic condition of affairs that practically all the associa-
tions were dissolved; but they came together again after things began to get a
little bit more stabilized.

Q. What was the necessity for a basing point? Could they maintain prices
without a basing point?

A. JS[o. They tried it once in 1909 and got into such chaos in a short time that
the mills were glad to get back to the old base.^°

(The following are excerpts from the testimony of Edward Worcester, formerly
vice president of National Tube Co., subsidiary of United States Steel Corpora-
tion, in the Pittsburgh Plus case:)

A. There were several plans proposed, and I proposed that in order to have a
price perfectly definite to everybody anywhere, that we should sell delivered
freight prepaid, so that there could be no interference with our freedom of action
as to shipments, and no doubt in the mind of the customer what he was going to
pay for his pipe, and, in order to do that we had to select a basing point to work
from. So we established what was known as the Pittsburgh basing discount.
That was under discussion from September 1899 until February 1900, and was
finally agreed to among ourselves and put out on March 1, I think, 1900; but
theretofore the list price of pipe — pipe is all sold on the basis of list and discounts —
the list price of pipe took care of the various costs of the various sizes, so that
pipe could be sold at one discount practically. That would have been a very
cumbersome thing for us to handle. There was nothing to base your freight on.
So we changed that and made our list 10 cents a pound.

Q. Made your list 10 cents a pound?

A. Made our list 10 cents a pound, so that if 3-inch pipe weighed 10 pounds
the list was $1. If 4-inch pipe weighed 10 pounds, it was $ 1. If itweighed 12
pounds, it was $1.20. So that every 10 cents a hundred freight, which would be
$2 a ton", would be 1 percent of discount. As your list was $200 a ton, 1 percent
of discount would be $2 a ton; so that when we published a Pittsburgh-basing
discount, we published it with these lists, and with a tariff book giving the rate
of freight from Pittsburgh to every point in the United States, which was all dis-
tributed freely, and anyone anywhere wishing to know what pipe would cost him
where he was had simply to take the Pittsburgh-basing discount and the freight
rate. * * *"

(The following is an excerpt from a statement made by Judge Elbert H. Gary,
then chairman of the United States Steel Corporation, at a conference held between
the Federal Trade Commission and representatives of the Western Association of
Rolled Steel Consumers:)

It was deemed necessary for the orderly conduct of the business to have one
basing price and that was not alone for the benefit of the producer but for the
benefit of the purchaser, who in turn fabricated the steel which he bought into
something else, finished some form of steel with it, and therefore desired stability
of price, something that was well understood, so that every user of steel all over
the. country bought and used his steel on a certain basis, knowing in advance that
everyone else who bought steel had to pay exactly as he did, with the addition of
the increased freight depending upon where he wanted to use the steel."

(Excerpts from the testimony of Walter S. Tower, executive secretary, American
Iron & Steel Institute, in hearings before the Committee on Interstate Commerce,
.U. S. Senate, March 18, 1936, speaking personally and as secretary of the institute.)

I want the record to be perfectly clear and explicit, however, in regard to these
very important matters to the members of the steel industry (p. 255) .

The basing-point method of quoting prices existed for many, many years before
the code was ever heard of. * * * It was not modified under the code in any
detail whatever, and it was still used in the steel industry quite unchanged from
what it was before the code incident came into the history of the industry (p. 253).

w Verbatim record of proceedings before Temporary National Economic Committee, January 29, 1940,
p. 374.
«i Ibid. p. 376.
" Transcript of record in the Pittsburgh Plus Case (docket 760), pp. 11736-11737.

CON'CEiNTRATION OF ECONOMIC POWER. 333

Under the basing-point method the seller quotes a "delivered" price to the
buyer. The "delivered" price is composed of the price at the basing point —
which may or may not be the location of the seller's plant — plus freight charges
from the basing point to the point of delivery. The cost of transportation inilu-
ences prices in two ways. For sales in his own locality a producer has an advan-
tage over any competitor located elsewhere. For sales at a distance a producer
is at a disadvantage from the standpoint of freight and he must, figure it into
his cost of doing business if he wants to meet competition. For these reasons
any producer who does other than a local business will find that his net return on
sales varies with the place where the sale is made. * * * As a result of that
practice a producer, no matter where located, may sell his products in any part
of the country in competition with all other producers (p. 273).

(Excerpts from testimony of Walter S, Tower, executive secretary, American
Iron & Steel Institute, before the National Recovery Review Board, April 19,
1934:)

Q. Given a piece of business, what do you mean by fair competition among
members of the industry with reference to that business?

A. That a producer located anywhere may, if he desires, compete for that
business, have an opportunity under the provisions of the code so to compete.

Q. A fair chance to get the business?

A. A fair chance to get the business (p. 70).

Q * * * Do you mean that all members of the code have an equal oppor-
tunity to go out and get that business if tiiey wish to get it?

A. As I understand the situation, and in accordance with my own thought
which I have previously tried to express, any member of the code may, under the
provisions of the code, compete for business anywhere without disadvantage to
him (p. 71).

* * * * * * . *

Q. So that, as I understand you, one of the purposes of the gentlemen who
were preparing the code was to prepare a code that would enable the members of
the code to compete on a substantially equal footing for any piece of business
anywhere in the country?

A. That was the thought I was trying to put into words. * * * (p, 72).

Exhibit 52

(Letter from A. A. Dorenbusch, general sales manager, Newport Rolling Mill Co.,
Newport, Ky., to A. K. Andrews, president, Newport Rolling MiU Co.)i

August 17, 1935.
Mr. A. K. Andrews,

Footes Bay, Ontario, Canada.

Dear Mr. A. K.: It was not definitely decided until late last evening to put
jjD-to effect for fourth quarter a one-price policy allowing the galvanized sheet
price to remain at $3.10 per 100 pounds for No. 24 gage base f. o. b. Pittsburgh.
A few of the larger interests such as Weirton and Inland were in favor of reducing
the price to $3 base for No. 24 gage f. o. b. Pittsburgh but this was finally defeated
and it was agreed to allow all prices to remain the same as now in effect.

The announcement of no further jobber al^.owance after October 1 will be made
by Continental on Tuesday of next week after which all mills can announce like-
wise. We, of course, in the meantime will notif}' our people which no doubt WiU
be conducive of causing an influx of jobber business for shipment prior to
October 1.

It is my intention to discuss this with Mr. Little this morning so that we will be
prepared to take care of the rush that we, like others, will, no doubt have during
the month of September.

I discussed the automotive situation with Neil Flora last evening and he
informed me that while some little tonnage was placed several weeks ago, nothing
more has been done and that all the mills are holding firmly to their prices and
are expecting that additional tonnages will have to be placed soon.

I find that our tonnage booked up to last night (Friday) amounted to 2,812
tons and this morning's mail brought several additional cars so we are hoping at
least to have 3,000 tons for this week.

» Hearings before the T. N. E. C, Part 27, Exhibit No. 22H.

384 CONCENTRATION OF ECONOMIC POWER

Do hope that your stay in Canada, will be pleasant and that you will be greatly
benefited by your vacation.
Sincerely yours,

AAD-.GRK

The System That Is in Effect

(The following dialogue in explanation of the practice of following the base-price
announcement of designated or acknowledged leaders, occurred in connection
with the examination of the writer of the above letter) :

Mr. O'CoNNELL. In this case you followed on a price increase. Had you not
followed Continental you would have been selling at a lower price.

Mr. DoRENBUscH. That is right.

Mr. O'CoNNELL. Would that not have been competitive?

Mr. DoRENBtjscH. I don't get the question.

Mr. O'CoNNELL. Wouldn't that have been competitive to sell at a lower price?
You indicated that it was competition that required you to some extent at least
to follow Continental on the way up on the price increase. Would you not have
been competitive had you either reduced your prices or kept them lower than
Continental prices after this increase?

Mr. DoRENBXJSCH. I don't think so.

Mr. O'CoNNELL. You don't?

Mr. DoRENBUSCH. No.

Mr. O'CoNNELL. Then competition to your mind is following someone else's
prices.

•Mr. DoRENBUscH. Well, that ^s the system that is in effect. * * * 2

Government Prices Versus Industrial Prices, 1937-38

(Excerpt from the testimony of Mr. Eugene G. Grace, president, Bethlehem
Steel Corporation before the Temporary National Economic Committee.)

Mr. Grace. * * * As your demand increases your ability to maintain
your published prices is naturally easier than it is in low demand, where com-
petition is keener. It is all controlled, substantially, by competition in the
industry.

Acting Chairman King. Are you sufficiently familiar with other commodities
in other lines of industry than the steel industry, with the woolen industry and
all of the cotton fabrications, wheat markets and all of the other agricultural
commodities, to state that there was a variation there from what might be de-
nominated a base line?

Mr. Grace. I don't think I had better try to go afield, Mr. Chairman.

Acting Chairman King. You want to stick to your own last, do you? You
want to be a good shoemaker and stick to your own last?

Mr. Grace. I think we had better stick, from my standpoint, to the steel
business.

Mr. Feller. You wouldn't care to say, Mr. Grace, that the price of steel
should behave the way the price of wheat behaves?

Mr. Grace. No; I wouldn't want to compare the two, but I do know that the
steel industry is no different than any other basic industry in our whole bag of
tricks of our industrial and economic structure. It goes and comes with the
conditions of business.

Mr. Henderson. Mr. Grace, I have examined a number of the contracts for
Government purchasing during that period, and most of them I have seen show
that your company and all other companies bid the base price and the identical
price. Was that "your policy during that period?

Mr. Grace. Our policy was, during-that period, to get our published prices
if we could.

Mr. Henderson. And your bidding on Government contracts was at that price?

Mr. Grace. That is right. . We were trying to get it, it was appropriate and
proper to get it in our commercial activities if the demand and conditions were
such that we could get it. * * *

Q. Is it correct, then, Mr. Grace, to say that during this period when the base
price was fictitious as far as the trade was concerned, that it was not fictitious as
far as the United States Government was concerned?

Mr. Grace. I have told you what .our policy was in quoting to the United
States Government. That .2 as far as I can go.

2 Hearings before the T. N. E. C, Part 27.

CONCEN'TRATION OF BCONOMrC POWER 385

Q. Your poKcy was that the pubhshed base price was a real price?
Mr. Grace. That- is the basis upon which we quoted and undertook to get
Government business.^

Competition Under A Noncompetitive Formula

(Excerpt from the testimony of Mr. Eugene G. Grace, president, Bethlehem
Steel Corporation before the Temporary National Economic Comm'ittee.)

Mr. O'Connell. From my standpoint, I am a little bit on the horns of a
dilemma. I am given a situation, told that competitive forces require deviations
or in certain situations result in reductions in the price level in the steel industry,
and it is given to me as something I should take comfort in; but I can't help but
think that from the point of view of jj,our industry that situation is one which is
evidence of breaking down, partially breaking, down, of the very price structure
which you and the industry think is a good price structure and something to be
maintained,

Mr. Grace. The reason it is so hard to answer specifically, it seems to me this
would help us: We have, in effect, published a set of prices. We endeavor to
obtain those prices. As we have seen it through this period we have been dis-
cussing, that price structure failed. Eventually we drift to another set of prices.
Now we have in front of us another published set of prices.

I claim the factor of competition has played a great part in establishing that
new set of prices, and for any set of prices which is put out reasonably and fair
for any industry it can't be devoid of the competition which has taken place in
creating same.

Mr. O'Connell. My difficulty is that I am expected to take some comfort
out of the forces of competition which result in the change in the price structure
on the one hand, and I am to be expected to be comforted by the fact that you
are trying to maintain the price structure on the other.

Mr. Grace. And we poor fellows are suffering.

Mr. O'Connell. Isn't it somewhat of an anomalous situation?

Mr. Grace. It would seem so, stated that way.^

Pittsburgh Plus Still Operating East of Pittsburgh in 1938

(Excerpt from the testimony of Mr. Eugene G. Grace, president, Bethlehem
Steel Corporation before the Temporary National Economic Committee.)

Q. Let me see if the committee can understand what the effect of that was.
Perhaps a few questions will bring that out. Prior to June 27, 1938, when you
sold sheets in Baltimore what price did the purchaser pa^?

Mr. Grace. The method of quoting prices?

Q. What price did you quote?

Mr. Grace. The quoting method was on the Pittsburgh base. I think I am
right.

Q. Yes; was on the Pittsburgh base.

Mr. Grace. That is right.

Q. And after June 27, 1938, the purchaser at Baltimore was quoted by you on
the Sparrows Point base.

Mr. Grace. That would be the normal operation of that basing point system.
Consumer at Baltimore, you asked me?

Q. Yes.

Mr. Grace. That is right.

Q. And similarly before June 27, 1938, it was the custom of all sellei sheets
to quote in Baltimore the Pittsburgh price

Mr. Grace. I should think so.

Q. Now, assuming that the quoted price was adhered to prior to June 27,
1938, the purchaser of sheets at Baltimore would have paid the price at Pitts-
burgh plus the freight from Pittsburgh.

Mr. Grace. Right.

Q. Could you tell us, then, what the amount of saving was to the consumer at
Baltimore in consequence of the estabhshment of a Sparrows Point differential.

Mr. Grace. I can tell you the effect of establishing a Sparrows Point basing
price. I can't give you the exact figures. If in establishing Sparrows Point as
a base for sheets, we priced at that basing point sheets at the same price as they
were being quoted on the Pittsburgh base, then the natural saving would be to

3 Ibid., part 19, pp. 10593-94, 10596-97.
« Ibid., part 19, 10609.

264905 — 41 — No. 13 26

386 CONCENTRATION OF ECONOMIC POWER

the Baltimore consumer the difference in cost of transporting tlie pfcite from our
Sparrows Point plant to Baltimore, and the cost of transporting that same p\st,te
from Pittsburgh to Baltimore, starting with base prices being the same.

THE BALTIlilORE PRICE

Q. Now, prior to the change, prior to the institution of this basing point at
Sparrows Point, if you sold to a customer at Baltimore and he paid you the
quoted' price, which was the Pittsburgh price plus the freight, your company
would have received as part of its profit margin an amount equivalent to the
charge, the freight charge from Pittsburgh to Baltimore.

Mr. Grace. Starting with the same price, I have said, we would have net
more for our sheets in Baltimore, net price to that extent than the Pittsburgh
producer would have netted.^

» Ibid., part 19, pp. 10612-13.

GONCEiNTRATION OF BCONOMIC POWER

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CONCENTRATION OP ECONOMIC POWERi 38^

July 10, 1922.
Hon. H. M. Daugherty,

Attorney General, United States, Washington.

Dear Sir: Referring to the proposed steel mergers and your request for state-
ments from responsible persons in connection therewith, we desire to call to your
attention the practice in the steel industry known as "Pittsburgh Plus."

The Federal Trade Commission is now conducting an investigation as to this
practice, under a complaint issued upon our application. This investigation has
been handled in a very thoroughgoing, competent, and exhaustive manner, and
we are confident that the Commission will arrive at a just conclusion upon the
evidence when its hearing has concluded.

It is quite probable, however, that if the proposed mergers of the several steel
companies are effected, there may be an intimate connection between them and
this practice. The proposed mergers may or may not be for the best" interests of
the industry and for the best interests of the public. As to that we express no
opinion, nor have we one to offer. However, since j'our department has under-
taken to investigate and supervise the mergers in question, we believe it of the
utmost importance, in the interests of western industry, that such investigation
include the practice of "Pittsburgh Plus."

Mergers of steel companies which might otherwise be for the benefit of the
industry and the public might have an effect upon the extension and perpetuation
of this unjust practice which would be very injurious, and which would seriously
handicap the Trade Commission in its present investigation, or possibly render its
orders ineffectual.

For the reasons above indicated we desire to call luis practice to your attention
and to request that it be included in your investigation in order that the interests
of this association, which represents 800 of the major western manufacturers, and.
the interests of the public generally may be fully protected, not only with respect
to the mergers themselves, but also with respect to the practice of "Pittsburgh
Plus" which must of necessity be intimately connected therewith.

For your information we are enclosing some data and some expressions of
opinion with respect to the practice. We believe you can fully inform yourself
with regard to the same through the Federal Trade Commission.

Trusting that this matter may have your attention, we are
Very truly yours,

Western Association of Rolled Steel Consumers,
W. E. McCoLLUM, Secretary.

Exhibit 54

Consolidated balance sheet of the Lackawanna Co. and subsidiary companies as of

Dec. 31, 1921

assets

Cost of property, real estate, buildings, plant
machinery, etc.:

As at Dec. 31, 1920 $82, 938, 602. 74

Net additions during 1921 . 1, 249, 133. 76

84, 187, 736. 50
Less: Depreciation, depletion, and amor-
tization reserves ..-. 21,316, 232. 84

$62, 871, 503. 66

Investments in ore companies, etc., less amortization 5, 253, 688. 50

Cash in hands of sinking-fund trustees and other trust funds 860, 076. 91

Current assets:

Inventories? $13, 304, 041. 43

Miscellaneous accounts receivable 913, 407. 55

Customers' accounts (less reserve) 3, 473, 044. 97

Notes receivable. . 170, 376. 59

Cash :._ 2, 259, 580. 62

Marketable securities 415, 161. 59

20, 535, QJ2 75

390 CONCENTRATION OF EOONOMIC POWER

Consolidated balance sheet of the Lackawanna Co. and suhsidiary companies as of

Dec. 31, 1921— Continued
Deferred charges $114, 686. 66

89, 635, 568. 48

Note. — The acquisition by the Lackawanna Bridge Works Corporation (a
subsidiary company) of the fabricating plants of Lackawanna Bridge Co. and
Ferguson Steel & Iron Corporation on Jan. 3, 1922, is not reflected in this balance
sheet.

LIABILITIES

Capital stock:

Preferred 7-percent cu-
mulative—authorized. $10, 000, 000. 00
Common— authorized... 60,000,000.00

Issued $35, 108, 500. 00

Capital stock of subsidiary companies not held by Lackawanna

Steel Co 3,887. 50

Bonded debt:

Lackawanna Steel Co. :

First-mortgage 5-percent convertible

gold bonds due 1923 $10, 862, 000. 00

First consolidated mortgage gold
bonds due 1950 — Series A, 5 per-
cent convertible 6,891,000.00

Car trust certificates, due 1922-26 558, 000. 00

Subsidiary, companies bonds 4, 700, 000. 00

Less: The Lackawanna Iron & Steel
Co. bonds formerly assumed by
Lackawanna Steel Co. and now
assumed by Bethlehem Steel Co 1, 775, 000. 00

Current liabilities:

Current Accounts payable and pay rolls 2, 583, 424. 40

Notes payable 43, 000. 00

Taxes and interest accrued 441, 215. 67

18,311,000.00

2, 925, 000. 00

3,067,640. 07

R^fferves for contingencies and miscellaneous operations 318, 443. 94

Surplus:

Balance as at Dec. 31, 1920 $33, 812, 60L 26

Deduct: Loss for year as per profit and loss

account 3, 384, 876. 79

30, 427, 724. 47
Less: Dividends on common stock 526, 627. 50

29, 901, 096. 97

89, 635, 568. 48

Consolidated profit and loss account of the Lackawanna Co. and subsidiary companies
for the year ended Dec. 31, 1921

Gross sale.s and earnings $18, 301, 331. 84

Less: Manufacturing and producing costs and operating ex-
penses! 18,036,058.80

265, 273. 04
Dividends on investments, net income from property rented,

etc . - 406,129.17

"Deduct:

Administrative, selling, and general ex-
penses. $649, 943. 21

Taxes 1,093,472.47

Commercial .riterest and discount — 10, 262. 55

671, 402. 21

1, 753, 678. 23

OONCENTEATION OF ElCONOMIC POWER. 391

Consolidated profit and loss account of the Lackawanna Co. and subsidiary companies
for the year ended Dec. SI, 1921 — Continued

Operating deficit after deducting all expenses, including ordinary
repairs and maintenance amounting to $2,823,064.91, but not
renewal expenditures and other appropriations for the current

year, which are deducted below . $1,082, 276. 02

Deduct:

Interest on bonds and other obligations:

Lackawanna Steel Co $887, 962. 50

Subsidiary companies 147, 916. 66

1, 035, 879. 16
Appropriations:

For extinguishment of mines

and mining investments $151, 557. 31

For depreciation and accruing

renewals 1,378,176.99

1, 529, 734. 30

— 2, 565, 613. 46

Deficit for the year '3,647,889.48

Less: Adjustment account of excess provision for Federal taxes

and sundry reserves less inventory revaluation adjustment-. 263, 012. 69

Net loss for the year 3,384,876. 79

Surplus, Jan. 1, 1921 33,812,601. 26

30, 427, 724. 47

Less: Dividends on common stock .. 526, 627. 50

Surplus at Dec. 31, 1921 29, 901, 096. 97

Exhibit 55

Bethlehem Steel Corporation — Midvale Steel & Ordnance Co.

consolidated profit-and-loss account of the midvale co. and the cambria
co., and their respective subsidiaries (except as stated below) tor the
year ended december 31, 1922

The following is a statement of the profit and-loss-account of the Midvale Co.,
the Cambria Co., and their respective subsidiaries for the year ended December
31, 1922 (excluding, however, the operations of the Nicetown plant and other
properties that are not to be acquired by Bethlehem Steel Corporation or any of
its subsidiaries) :

Net income before providing for depreciation, amortization, and

depletion, and after providing for all taxes $1, 901, 324. 96

Other income: Interest, divdends, and other miscellaneous in-
come 1,425,805. 92

3, 327, 130. 88
Less: Interest charges 2, 603, 120. 57

724, 010. 31
Deduct: Provision for depreciation, amortization, and depletion. 4, 253, 628. 03

Net loss for the year 1922 after providing for profits appli-
cable to minority interest 3, 529, 617. 72

Surplus: Unappropriated, Dec. 31, 1921 $53, 551, 936. 32

Less: Amount applicable to the properties that
are not to be acquired by Bethlehem Steel

Corporation or any of its subsidiaries 16,461,284.41

; 37, 090, 651. 91

Surplus: Unappropriated, Dec. 31, 1922, carried to balance sheet. 33, 561, 034. 19

392 CONCENTRATION OF ECONOMIC POWER

MIDVALE STEEL & ORDNANCE CO. CONSOLIDATED BALANCE SHEET OF THE MIDVALE

CO. AND THE CAMBRIA CO. AND THEIR RESPECTIVE SUBSIDIARIES (EXCEPT AS
STATED BELOW) AS OF DECEMBER 31, 1922 j

The following is a consolidated balance sheet as of Dec. 31, 1922, of the Midvale
Co., the Cambria Co., and their respective subsidiaries (excluding, however, Mid-
vale-Cambria Co., Midvale Steel Co. of Philadelphia & London, Ltd., the Nice-
town plant of the Midvale Co., and the other properties that are to be acquired
by said new corporation and the obligations that are to be assumed by it) :

Capital assets:

Property account: (less depletion) $174, 644, 798. 66

Less: Reserve for depreciation, relining
of furnaces, and coke oven renewals,

etc 22,284,719.69

$152,"360, 078. 97

Investments in and advances to affiliated companies - - 1, 991, 783. 00

Special funds in hands of trustees: For payment or redemption

of bonds or notes 18, 548. 51

Current assets:

Inventories of products, materials and

supplies $34, 537, 719. 60

Advance payment on ores, etc 1, 292, 797. 56

Marketable securities 2, 848, 757. 20

Accounts and notes receivable 10, 345, 812. 63

Cash in banks and on hand 3, 211, 743. 92

52, 236, 830. 91
Deferred charges to operations 1, 910, 445. 13

208, 517, 686. 52

LIABILITIES

Capital liabilities:
Capital stock:

Authorized $150, 000, 000. 00

Outstanding - - $100, 000, 000. 00

Capital stock of subsidiary companies
not held by Midvale Steel and Ord-
nance Co. (par value) . - - 2, 019, 450. 00

Guaranteed stock: Cambria Iron Co.

Stock (see note below) 8, 465, 625. 00

110, 485,075.00

Funded and secured debt - 50, 836, 900. 00

161, 321, 975. 00
Current liabilities:

Accounts payable, including advance
payments on contracts, pay rolls, and

accruing liabilities $6, 859, 535. 65

Bond interest accrued 851, 600. 83

7,711, 136. 48

Reserve funds: Contingent funds, including reserve for doubt-
ful accounts and depreciation of securities 1, 151, 196. 02

Surplus: Appropriated, applicable to minority stock interests,

premium and discount on capital liabilities, etc 4, 772, 344. 83

Surplus: Unappropriated 33, 561, 034. 19

208, 517, 686. 52

Note. — Cam})ria Steel Co. guarantees an annual dividend of 4 percent on the
above-mentioned Cambria Iron Co. stock as rental for property held under the
999-year lease.

The annual meeting of the Corporation is held on the first Tuesday in April of
each year at the principal office of the corporation, at the Prudential Life Building,
755 Broad Street, Newark, N. J.

CONCE.NTEATION OF ECONOMIG POWER 393

The fiscal year of the Corporation ends on the 31st day of December of each
year.

The directors of the Corporation are as follows: C. Austin Buck, of Bethlehem,
Pa., and O. G. Jennings, Charles M. Schwab and Harold Stanley, of New York
City, term expiring 1923; John W. Griggs and Alvin Untermyer, of New York
City, H. G. Dalton, of Cleveland, Ohio, and Archibald Johnston, of Bethlehem,
Pa., term expiring 1924; and Eugene G. Grace and Henry S. Snyder, of Bethle-
hem, Pa., and Grayson M.-P. Murphy and Moses Taylor, of New York City,
term expiring 1925.

The officers of the Corporation are as follows: Charles M. Schwab, chairman
of the board of directors; Eugene G. Grace, president; Archibald Johnston, Henry S.
Snyder, H. E. Lewis, James H. Ward and William F. Hartman, vice presidents;
R. E. McMath, secretary; WiUiam F. Hartman, treasurer; Norborne Berkeley,
and William J. Brown, assistant secretaries; W. L. Achenbach and William J.
Brown, assistant treasurers; F. A. Shick, comptroller; and W. L. Lewis, assistant
comptroller.

The transfer agent for' the stock of the Corporation is the Equitable Trust Co.
of New York, 37 Wall Street, New York City, and the registrar of the stock is
Guaranty Trust Co. of New York,- 140 Broadway, New York City.

Bethlehem Steel Corporation,
By H. S. Snyder, Vice President.

394

CONCENTRATION OF ECONOMIC POWER

Exhibit 56

In the Hatter

STEEL COBPWUTIOH, BT I

ILLUSTRATING THE "OVER-NIGHT EFFECT" OF THE KOi) I FICATION OF THE "PITTSBURGH PLUS' METHOD Ot

HERCHANDISING WIRE AND WIRC NAILS IN THE TERRITORY WEST AND SOUTH OF PITTSBURGH (SEE NOTE)

IN PARTIAL COMPLIANCE MITH THE ORDER OF THE FEDERAL TRADE COMMISSION IN DOCKET NO. 760

T^ls eraphlc portrays '

. Federal Trade CobbIss:
oi ol Uie "Pittsburgh I
n produclne points ov

ce reductions !n territory West and South or
(or as subsequently BOdlMed) upon partial '
1 Federal Trade CoibbIssIoo v. United Stat«s
;" practice and the adoption, Jn lieu th«re

Aburgh (also BufTalo
>llance with the Ceasi
■el Corporation, et a

; prices solely upon Pittsburgh, without ragiunl

NOTE: The relatl
at Clevela
Cleveland

o reduction shown at Bulfalo, K. Y., Is due to the lac
d, Ohio, on a price parity with Pittsburgh and the I\ji
^ ftillalo is less than that applying (roco Pittsburgh '

ns to "the price "base Plttsburgi*
lalng points lasedlately prior to
of the then current freleht rates .

base Pittsburgh' which became
Eodltled) under partial cop-
In the above nentloned case.

TERRITORY WEST AND SOUTH OF PITTSBURGH

TERRITORY EAST AND NORTH OF PITTSBURGH

CONCEiNTRATION OF BCONOMrC POWER 395

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CONCENTRATION OF ECONOMIC POWER

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APPENDIX D

THE FUNDAMENTAL PRINCIPLE OF EFFICIENCY IN MAS&
PRODUCTION BY DR. FRANK FETTER '

As an introduction to a discussion of the relation of efficiency to the
size of business organization, it is important at the outset to outhne the
.terms used in the discussion of this subject and to indicate the various
meanings assigned to them.

AMBIGUITY OF ECONOMIC TERMS

Every economic discussion is beset with misunderstandings by
reason of the shifting senses in which words are used by speakers or are
understood by hearers. Words are often used with conscious soph-
istry to mislead; more often speakers and hearers alike are imiocently
misled by the sanae confusion of words; again, their minds fail to meet
because they are talking about very different things under the same
names. Many of the popular errors and many of the controversies on
economic questions result from the ambiguity of words. The legis-
lative, executive, and judicial branches of Government all alike
occasionally fall victims to verbal confusion. The utmost caution in
the use of economic terms is called for when entering upon the dis-
cussion of an important economic public question such as this one.
The principle of the pure food law should be applied to economic
terms; they should be truthfully labeled like bottles of drugs to show
their contents. Some, innocent looking enough on the outside, are
filled with rank poison.

What is needed is not merely an exercise in the new indoor sport of
semantics for its own sake. Rather, the very practical task is to
consider the varieties of meaning which occur constantly in statements
on this subject, and which baffle even the most careful students as
well as confuse the public mind. A frame of reference, so to speak,
should be established within which economic terms may be accurately
used and located.

AMBIGUITY OF THE TERM "EFFICIENCY"

In the present subject this caution is especially needed. Each of
the principal terms used, efficiency, business, size, combination, etc.,
is used with various shades of meaning. What is efficiency and how-
is it to be measured — by lower costs of production, by promoters'
profits, or by higher dividends on invested capital? In all such cases
efficiency is judged by the benefit accruing to a few persons owning the
particular business, not by any benefits passed on to the public in the
form of lower prices and better services. Moreover, certain other
grave issues of a social and political nature are entirely left out of
consideration.

I This statement should be regarded as consisting solely of the opinions of the author.
398

CONCE^'TRATION OF BOONOMIC POWKK. 399,

It can hardly be doubted that the promoters and advocates of bigger
business organizations are thinking of efficiency primarily and almost
wholly in the former sense. Private profit is, of course, what moti-
vates theto, even though, to placate the public, they mostly present
public benefits as the sole purpose of greater size in business. That is
no crime— only a rationalization of self-interest — to make it appear as
benevolence. The public and public officers are to blame if they allow
themselves to be caught by this bait to fool gudgeons. It seems
obvious that the only sort of efficiency which can have any ultimate
significance for public policy is that which results in lower prices,
better goods and qualities, and better social economic conditions for
the people. Simple as is this distinction in the meaning of efficiency
and essential as it is to the purposes of this committee, it is almost
wholly ignored or is hopelessly confused in much of the discussion of
this subject.

THE VARYING CONTENT OF THE WORD "BUSINESS": SINGLE UNITS

Even 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
designate both a single plant and various kinds of groupings or col-
lections of plants. Confusion is 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 complications as compared with the plural -unit kind or kinds.
It is a single physical unit, and is at a single definite location. It is a
unit technologically; that is, it is operated as a physical unit, and it is
under a single ownership — individual, partnership, or corporation.
It is the 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,
affecting quantity of production, services, and prices to the public.
It is the kind of business organization which unquestionably most
facilitates true market competition and the maintenance of the
competitive system if and when that is the public policy. The
decrease and disappearance of the single-unit business has created
the problem which faces the public and this committee today.

PLURAL-UNIT BUSINESSES

In contrast, the plural-unit business presents a bewildering variety
and degree of complications, in the meaning of business size. These
rdate to the number of physical units (or plants), to the size of these
units considered first separately and then collectively, to their likeness
or differenbe of technical equipment, operation and products, to their
dispersion in geographical location, to the various forms and degrees
of centralization or decentralization, both in technical operation and in
management, and also in respect to price and other 'commercial
pohcies of buying, selling, etc., and, finally, to the kinds and extent of
their unity of proprietorship. It is obvious that in this situation it is
impossible, without confusion, to make any sweeping statements
regarding the efficiency and size of business without carefully dis-
tinguishing between different kinds of business size. The original
simple separateness and independence of ownership, operation, and

400 CONCENTRATION OF ECONOMIC POWER

price policy of single-unit businesses has been replaced by various
kinds and degrees of combination into more complex ownership,
operation, and price policy of modern corporations.

COMBINATION AS PROCESS AND AS STATE

It is well, therefore, to consider the meaning of the term "combina-
tion" which enters so largely into the discussion of the antitrust laws.
The words combine and combination originated in medieval Latin,
being derived from the Latin roots com (together) and bini, or bis
(the Aryan cognate of the Enghsh word "two"). Combination
originally meant the imion of two, but has ceased to be so limited and
now means the union of two or more things. Like most words ending
in "tion,-" it has both a Verbal sense of a process and a noun sense of
the group of things resulting from the process. It is defined today
(in the Century Dictionary) as: "The act of combining, or the result-
ing state; also a number of things combined, or something formed by
combining," It may seem trivial to note this distinction between
process and state, but it appears to have hjad real practical significance
in the mterpretation of the antitrust laws. If the prohibition of
combination in restraint of commerce applies only to the process of
forming a corporation, theii the mere stat^ of combination among
former competitors completed before prosecution began is no offense.
This narrow view seems indeed to have been taken by our highest court
in respect to section 7 of the Clayton Act. On the contrary, if
""combination" in the antitrust laws is understood to, have both mean-
ings recognized by lexicographers, the mere state of combination
would appear to be equally with its formation an illegal restraint of
commerce. Indeed, is it not the very substance of the matter with
which public ,pohcy is concerned, i. e., the preservation of free compe-
tition and independent enterprise— to which the question of when or
how the combination was formed is but incidental and subordinate?
Every state of combination in ownership among separate producing
plants as completely prevents price competition among them as could
be effected by contractual price agreement among the constitutuent
units, which' is unquestionably unreasonable and illegal restraint of
commerce. If a state of combination is the essential condition which
the Sherman Act aimed to prevent and declared to be illegal, it appears
that an enormous existing structure of combinations in industry would
have to come imder scrutiny. Their existence is a continuing offense,
however much a statute of limitations may apply to their formation.

RELATIVE DEGREES OF COMBINATION; DEFINED BY OWNERSHIP

The unification resulting from, business combination is not neces-
sarily absolute. It obviously may occur and exist in varied forms
and degrees and in respect to various facts and practices.. At one
extreme, any contract between business- units independently owned,
which even temporarily substitutes unity for independent action and
com^petition in management, production, and selling policies, is, insofar
and for the time, a combination in the wider sense. At the other
extreme is the completest possible combinaltion of plural units, by
which all separate ownership of the constituent parts is extinguisheo
and all legal identity and independence of control is merged into a
single governing whole.

CONCENTRATION OF ECONOMIC POWER 401

Somewhere between these two extremes, a distinction is made and
a line is rather loosely drawn between combinations of a limited and
temporary nature, such as are made between business entities still
retaining otherwise their independence of action and, on the other
hand, combinations of a more substantial and enduring character
which terminate identity of ownership and the independence of legal
action of the constituent parts.

Recognition of this difference is implied in the Sherman Act where
three terms are repeatedly used: Contract, conspiracy, and combi-
nation. These words rather obviously are not used as exact synonyms.
The words "contract" and "conspiracy" suggest more limited and tem-
porary modes of unification between separate business entities, where-
as combination suggests their more lasting and substantial union.

As a layman, I do not presume to treat in any formal and systematic
way the legal distinctions involved, but merely call attention to a
distinction made both in the law and in popular economic usage.
This usage marks the practical limits of the present discussion. The
idea of combination (and its common synonym, merger) in the dis-
cussion of the antitrust laws thus includes all those processes and
states of unified ownership which give a unified control over manage-
ment, production, and commercial policies, as contrasted with more
temporary relationships such as pools of various kinds, gentlemen's
agreements, price arrangements, certain types of trade-association
activities, and the basing-point practice. All of these leave the
proprietary identity of the parties substantially intact.

VARIOUS MODES OP ATTAINING OWNERSHIP COMBINATION

Even after this limitation, this concept of combination is still one
of great complexity. It is the result of the 'phenomenal growth of
industrial corporations in America dm'ing the past 100, and especially
the last 50 years, under the skillful manipulation of the col*poration
lawyers. Aii effective degree of industrial combination may also be
brought about by one or some of a large- variety of extra-legal prac-
tices. The complete analysis of the bewildering legal inventions is
a task for the jurist, but many of the features are obvious even to the
interested layman. On the very border line are conditions innocent in
appearance, such as interlocking directors, which one hesitates to
include but which practically may be quite effective. The trust
device was tried but soon condemned by the courts.

The establishment by producers — both those with a single plant
and those already in combinations — of branches, while not entirely
negligible, has a comparatively small part in the explanation of the
present state of big business. Its part is so small it that is usually
forgotten in the discussion of big business. Combination is assumed
to be not merely a state of common ownership of plural plants but
such a state only that has resulted from a process of combining
formerly independent competing plants. The problem of new
branches built by a parent company may safely be put aside for the
present. The purchase and absorption of existing competition is
now the essential problem.

About the importance of the holding company in creating industrial
combinations, there can be no debate; it has been the most potent
single agency for bringing about cgmbination among existing actual

264905 — 41— No. 13 27

402 OOJNOENTEATION OF EOONOMIC POWEH

and* potential competitors, and the resulting decline of competition
because of the decrease in the number of independent sellers. As a
deviciB for concentrating into a few hands the management and control
of .other people's money, nothing remotely approaching the holding
company in simplicity and effectiveness has been discovered. It is
not merely the holding company created especially for the purpose of
holding the entire common stock of its subsidiaries which is significant
for the combination movement. When the old rule broke down that
only natural persons could hold corporate stock, every corporation
became a holding company to the extent of its investments in other
corporations. This is now a familiar story. By pyramiding organi-
tions and proxy voting, a small group of men with a ridiculously small
percentage of the total investment in a great combination of formerly
independent businesses can retain control of the whole complex of
businesses indefinitely. Moreover, the ownership by one corporation
of a comparatively small fraction of voting stock in another corpora-
tion may, for some practical purposes, be as truly a combination as is
complete amalgamation or as is a giant holding company.

OWNERSHIP COMBINATION VERSUS PRODUCTIVE UNIFICATION

It wiU be observed that combination by tneans of special holding
companies or by ownership of stock in other corporations gives unity
to the. ownership, but not to the productive processes of the subsidiary
companies. The physical plants and equipment remain largely under
decentralized management ; they stiU produce singly, while the officers
of the controlling corporation are concerned almost wholly with finan-
cial 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. Among the
financial and commercial matters that are controlled by combinations
are all general price policies and price relationships. Combination by
holding companies (and substantial intercorporate stock ownership)
gives even more complete control over competition between subsidi-
aries formerly independent than the most elaborate conspiracy and
collusion between them could have given if they had remained sepa-
rate. It is power over price policies absolute in degree and unlimited
in time. It is well to remember this when considering the radically
different treatrrient which trade association agreements have had at
the hands of the courts as compared with combination by means of
outright mergers and holding companies.

HORIZONTAL COMBINATIONS

A familiar classification of industrial combinations is into the two
kinds, horizontal and vertical (also called integrated). A single
merger may unite both kinds in some measure. It should be observed
that the differences between these two involve further comphcations
in the conception of business size and its relationship to efficiency.
There is a corresponding widespread confus'on in the discussion. of this
question. Horizontal combination is that in wHich plural plants of
the same kind, normally separate physically and geographically ^and
located more or less economically in relatiorv to their market areas
and consumers' destinations, are combmed in respect to ownership
by the various legal devices before mentioned. This gives ..unity in

CONCENTRATION OF EC0N02»iIC POWER 4Q3

respect to commercial and price policies, but does not unify the
productive plants physically, and usually it neither changes their
number nor increases their unit size. This is a conspicuous fact of
observation, although in exceptional cases one or more of the plants
acquired may be discontinued and their cost in the merger charged to
invested capital thus permanently increasing overhead costs by adding:
the costs of removing troublesome competitors. Nevertheless,
financial size attained by horizontal combination is coijstantly con-
fused by the apologists of bigness with increased s e of single plants,
and it is assumed to have the same beneficiaLoffec us that under some
conditions result from greater mass production.' This will be recalled
in our further consideration of the question of size and efficiency.

VKJiJICAL COiMBINATION IN OWNERSHIP OR IN OPERATION

VorLica eombination is that m which plural plants and resources of
different kinds and a^dif'orent stages of the changes which products
undergo from natural materials to more nearly final form are united in
respect to ownership. Vertical combination (like horizontal combina-
tion) may be thought of either as a process of combining ownership-
or as the state of united ownership however attained. A common
synonym is integration but it is somewdiat more ambiguous in respect to
the state of unity and refers sometimes to united ownership but more
often to the miitcd operation of the plants and processes thus owned.
In both senses, more or less indefinitely, corporations are classified as
unintegrated, semi-mtcgratcd, and fully integrated. Evidently inte-
gration is a relative term in respect to jirevious practice and to stages
of technical development. Even in the smallest plant somethmg
more than a single process is performed and there is some integration
of equipment and productive processes.

The term vertical combination (or integration) introduces an am-
biguity in the thought of size, not present in horizontal combination.
Plants horizontally combined are physically alike and perform like
operations at different locations. They are united by ownership but
not in their operation. In contrast, the thought of integration first
presented is that of a unified, c ntinuous, physical operation on suc-
cessive processes under one roof or witliin some practical plant bound-
aries; but often the thought vacillates and integration is taken to mean
simply the unified ownership of scattered resources and equipment
(such, for example, as coal, iron ore, blast furnaces, rolhng mills, and
fabricating plants) which may be widely separated in space and sep-
arately operated. The constituent elements of such an integration
have no features of teclmical efficiency not available to any single-unit
business of optimum size. The resulting confusion in court decisions
may be referred to later.

size: PHYSICAL AND FINANCIAL GROWTH

Turning to the question of the way in which si;:c of ^ usines&is in-
creased, it is important to distinguish (1) between j-iysical growth and .
financial growth, and (2) between the growth of a s ngle plant and the
j,'rowth of a combination of plants. Physical g?o s^th in the amount
of resources and equipment is the primary fact. The single-unit busi-
ness may (^nlarge its plant and equip it better. i combination may

404 CONCKNTRATIOX OF IvCOX'OMIC POWKR

(1) likewise enlarge each of its separate plants, and further (2) may
build new plants, and (3) may acquire the plants of its competitors.
Physical growth in our capitalistic system is accompanied, preceded,
or followed, by financial growth, which may be obtained by a single-
unit business either from outside investors (the capital markets) or
from plowing back profits (reinvestment of earnings).

Plural-unit corporations are financed in the same two ways in which
single corporations are financed, and also b,y various methods for
merely exchangii g ">rporate securities. Tliat is, the growth of plural
corporations is fi.iaaced in three ways: (1) By plowing back profits
used to enlarge existing plants or to build new ones; or to acquire the
plants of competitors. (2) By new capital from outside used for the
same three purposes, (3) By exchange of corporate securities, and
various other financial devices, not requiring a total of new capital to
be obtained from outside. It would be diflicult to overemphasize the
significance of this last feature in accounting for the ease and success
with which promoters interested in and profiting by the formation of
mergers have been able to effect them. No doubt many reluctant
owners of long-established enterprises have, by a variety of influences,
been coerced into exchanging their independent properties for stock
.in new mergers.

MASS PRODUCTION

~ yVc turn now from the terms and concej^ts connected with size to
those connected with efficiency.

Mass production primarily and generally means a relatively large
degree of specialization in a single plant which turns out a large num-
ber 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 prod-
ucts of the same kind from the same factory. Some of the most con-
spicuous examjiies of mass production are plants that are largely en-
gaged in assembling parts, some or many of which have been brought
from the first stage of the crude materials to an advanced stage of
fabrication in other industries and plants, under different ownership^
each specializing in its stage, of production. In certain respects, it
. appears that mass production is the opposite of integration, not its
synonym, as is sometimes assumed.

The phrase "economy of large production" is used to designate the
Tidvantage in lower costs (on the average and per unit) of mass pro-
duction as compared with the cost of producing simultaneously or in
succession diflferent products in the same plant. The economy con-
sists in the smaller unit cost (and hence larger resulting profit) of
large, continuous, quantity production as compared with small, more
•or less discontinuous production of certain goods.

■TECHNICAL ADVANTAGES OF LARGE PRODUCTION IN A SINGLE PLANT

It is apparent that "the -economy of large production" in this
-sense is 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 technical or technological, not
ifinancial or commercial; that is, it is the sum of various economies of
itime, materials, and wear and tear of machinery combined with labor

CONCENTRATION OF ECONOMIC POWER 405

used in a continuous process on one product, as compared with a more
or 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 sp'ecialized machinery for a single product, thus reducing
the machine cost attributable to each unit of product; (2) less disuse
of machines during changes and adjustments for sizes, patterns, etc.;
(3) reduction of labor cost for changes of machines for gages, processes,
etc.; (4) reduction of labor cost through increased skill resulting from
specialized practice; (5) various miscellaneous advantages, such as
economy in factor}'' 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 economics of large size
in the case of plural unit combinations, such as mass buying, monopo-
listic buying and selling power, economy of salesmanship due to
absence of competition, etc. Obviously, the economy of mass pro-
duction in its proper sense docs not even imply the necessity of very
largo size in a single unit factory. It is more a matter of the degi'ee
of specialization attainable within a single factory than a matter of
the size of the plant as a whole. A small factoiy 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 pro-
duces a variety of products. A variety of special appliances and
parts may be economically produced in comparatively small plants
and later assembled in comparatively large plants, as Henry Ford has
frequently declared and to some extent has demonstrated. Whether
there are further advantages in having these diverse and decen-
tralized plants owned by the assembling plant is again another matter
not to be confused with the question of mass production

ECONOMIC LIMITATIONS OF MASS PRODUCTION

However real is the economy of mass production, and however
great it may at times be, it varies with the practical conditions and
is distinctly limited. Like every sort of economic advantage, it is
subject to a principle of decreasing returns. After a certain degree
of mass production in any situation the gahis of further specialization
in one plant and at one place becomes less and less, and at length
a point is reached beyond which unit factory costs tend to increase.
Moreover, a limit is put to the advantages of mass production by an
external factor, the cost of transporting and distributing the products
to greater and greater distances. Adam Smith saw this clearly, and
he said that the advantages of geographical division of labor were
limited by the area within which they could be profitably exchanged.

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.
Truth lies with the golden mean. It is often implied and sometimes
explicitly declared with an appearance of seriousness that any limita-
tion of the size of corporations means a return to the hand tools and
the small neighborhood 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. It, ignores the part wiiich the advance of science^ invention,

406 CONCENTRATION OF ECONOMIC POWER

education, and improved social and political conditions have had in
improving the technical arts; and it subtly asserts that all recent
technical progress has resulted from the growth of big business through
the financial combination of plants, and therefore that progress would
cease and change to disastrous retrogression if limits were put to
financial bigness with centralized ownership. I know of no serious
suggestion from any critic of big biisiness 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
lools and methods which modern science and the technical arts make
possible.

IIORIZOxVTAL COMBINATION IS NOT MASS PRODUCTION

In the light of these distiiictions, what is to be thought of the claim
Uia't the economy of mass production results from horizontal merger
of duplicate plants under a single ownership? What teclinical
economy of mass production could result from the mere common
ownership of two or more duplicate plants? The one most, plausibly
claimed is that, if the plants arc of varying degrees of efficiency the
poorer ones will all be brought up to the level of efficiency of the best.
This is a matter in which there seems to be no positive evidence.

Even though no technical economies result from the larger size of
combination's, there may be, and doubtless are, certain advantages
to some persons and of some kind, or else there w£)uld be no such
corj)orations formed. But personal advantage and private profit are
no sure proof of technical economy. Important questions- are, what
sort of advantages result from this kind of growth in bigness; and who
profits by 'these advantages? 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 community,
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.

EX-PRESIDENT TAFT's CONFUSION OF COMBINATION SIZE WITH PLANT

SIZE

One notable example may suffice, that to be found in the higlily
significant little volume by ex-President Taft, The Antitrust Act and
the Supreme Court (19 i4). When summing up "the effect of anti-
trust law on big business" (pp. 126-128), he recognizes the danger
that big business may use its "preponderating capital" (as he calls it)
in various ways to destroy their competitors, to oppress patrons, etc.
He seems not to question that (in his words) "the largeiiess of their
resources and the extent of their output compared with the country's
total output" gives big business the power^"to establish a monopoly
and violate the act" if they are not prevented from - sing that power.
But he says: "The object of the antitrust law was to suppress the
abuses of business of the kind described." Here he warns against
going any further, to. take away or reduce the power of big business to

CONCENTRATION OF EbONOMIC POWER 407

commit these abuses. The antitrust law, he says, "was not to interfere
with a great volume of capital * * * concentrated under one
organization," and he fully approved of that policy of laissez-faire in
respect to size. Why? The context makes it perfectly clear; it was
because Mr. Taft was implicitly accepting the doctrine that it was the
great concentration of the ownership of plural plants which made
possible the economies of mass production. He thinks it would be
disastrous to prevent or reduce the size of horizontal combinations.
He speaks of "the economies of management and of production due to
the concentration under one control of large capital and many plants."
And again: "I conceive that nothing could happen more destructive
to the prosperity of this country than the loss of that great economy
in production which has been and will be effected in all manufacturing
lines by the employment of large capital under one management."

At this point he becomes confused between the thought of^ the
economy resultmg from a large combination of plants and ' the
economy of mass production in a single plant, and he qoncludes the
paragraph: "There is usually a limit beyond which the economy of
management by the enlargement of plant ceases; and where this
happens and combination continues beyond this point, the ve?y fact
shows intent to monopolize, and not to economize." Having «et his
feet back on the firmer ground that the economy of large production
was essentially a matter of the right size of single plants, Mr. Taft
continues with well-warranted expressions of doubt as to "the original
purpose of many combinations of capital in this country" having
been "confined to the legitimate arid proper object of reducing the
cost of production," and more to this effect. But the confusion to
which we are referring pervades his treatment and seems to have been
the cause of his very influential opposition to any further attempt to
limit the growth of combinations. He believed it was, in 1914,
practically at an end.

PRIVATE ADVANTAGES AS MOTIVES FOR COMBINATIONS

The most immediate motive in the formation of combinations is the
profit to be mAde by promoters, corporation lawyers, and banking
underwriters. These are obvious, and I shall not attempt to discuss
them further. The advantages most reputed to result from a con-
tinued state of combinations of plural units are those in financing,
distribution, research, a^-d control of price policy. These will be
briefly considered in turn.

(1) The advantages in financing result mainly from the closer
relation of big industry to big finance, and is itself a big problem, into
which I shall not enter.

(2) The savings in distributing goods after they are physically
produced consist principally in the reduction of unit costs of adver-
tising and of salesmen's salaries. In the case of some nationally
advertised goods, these savings doubtless are considerable, but are not
to be confused with the economy of large production in a single plant.
In large part, it seems, the possibility of such savings in distribution
costs result from the disappearance of competition in wide regions and
the less active efforts therefore needed to secure buyers. This is
pretty closely bound up with the monopoly power and greater price
control which combination secures the third advantage enumerated
later.

408 CONCENTRATION OF ECONOMIC POWER

(3) A further effect of combination unquestionably is to give gi'eater
control over prices. Every combination endows its promoters and
directors with a certain degree of monopoly power, both in buying and
in selling, not possessed singly or collectively by the constituent
elements. This prospect doubtless looms large in the minds of pro-
moters, although, for fear of the law, they soft-pedal this claim and
instead almost solely emphasize the promise of mass-production
economies. The readiness of the investing public to accept without
discrimination the promise of increased profits to result from combina-
tion has made easy the promoters' task of floating merger securities
and thus has strengthened the motive to combination.

When any combination once formed is challenged either in or out
of the courts, its defenders always strenuously deny that in any
reivsonable degree it tends to restrain commerce or to monopolize any
part of interstate commerce. The central importance of this question
warrants a brief consideration of the nature of the monopoly which
results from combination of formerly competing businesses.

GEOGRAPHICAL MARGIN OF MONOPOLY POWER AND COMPETITION

It is now a familiar truth that no monopoly (or monopoly power)
with which the antitrust laws are concerned is absolute; monopoly in
business is always partial, limited, and more or less relative. The
limits of buyers' purchasing power, the competition of substitute
goods, increasing distance between production and use, finally reduces
monopoly in specific cases to the point where it shades off into dis-
criminatory competition.

The geographical margin of monopoly is particularly important in
the case of horizontal combinations. The small degree of potential
monopoly power possessed by a single isolated mill with fairly near
competitors is greatly increased when independent plants in a con-
siderable region are combined under one ownership. The degree of
monopoly is enhanced and the geographical margin within which it
can be exerted by the combination is widened. Early discussions of
the monopoly problem were concerned too largely with the question
as to what percentage of the total national capacity of an industry had
to be combined into a single corporation to constitute a monopoly —
whether 40, or 50, or a higher proportion. The courts appear still to
consider this the main criterion by which the monopolistic efl'ects of
combination are to be judged. It should be clear from the foregoing
economic analysis that the merger of formerly competing plants in a
certain restricted area may cause a substantial increase of localized
monopoly power, however small is the percentage of the national
capacity of the industry thus combined.

THE BETHLEHEM MERGER

An outstanding example of this process is the Bethlehem-Lacka-
wanna merger effected mostly between 1916 and 1923, This brought
under one control substantially all of the steel-ingot and rolling-mill
capacity east of central Pennsylvania and north of the Potomac. The
merged mills had a freight advantage in a vast region larger than the
German Empire before 1933, and containing a highly industrialized
population of some 40,000,000 people, equal to the total population
of the United States in 1870. Yet it was only about 15 percent of the

CONCENTRATION OF ECONOMIC POWER 409

total ingot capacity of the United States. Thereby, the Bethlehem
Steel Co. acquired, in that well-rounded region, 7 strong competitors
with a combined capacity of over 6,000,000 tons, 8 times that of the
Bethlehem Steel Co. itself in 1916. As throwing light on the question
of combination and mass production, it should be observed that
although the Bethlehem plant has since been somewhat enlarged, all of
the acquired mills, with one exception, have continued to be operated.
It is the general belief that the much-discussed secret bonuses to the
higher officials of the Bethlehem Corporation about that time were
based upon the increase of capacity and sales effected by these com-
binations, and not on any demonstrated reduction either of the cost of
production of steel or of its price to the public; certainly not on in-
creased earnings and dividends to stockholders. The bonuses were
the rewards of mdustrial statesmanship, which appears to mean adding
one industrial empire to another, somewhat in the style of Hitler.

UNEQUAL APPLICATION OF THE SHERMAN ACT, STIMyLATING THE
COMBINATION MOVEMENT

It has been frequently complained by representatives of the trade
associations that they have been more stringently dealt with under the
antitrust laws than have the plural-unit combinations. The same view
has been taken by disinterested students of the subject. The mem-
bership of many trade associations is composed of comparatively
small independent businesses, often or usually single-unit plants.
Agreements among them to regulate production and prices, even
"reasonable" prices, has been sternly repressed (notably, and finally,
in the Trenton Potteries decision in 1927). An outright combination
of formerly independent plants, however attained, obviously puts an
end com-pletely to competition among the constituent members, giving
a degree of control over production and price policies not attamable
by any trade-association agreement. Yet few combinations have
been questioned in the courts and others have been given a clean bill
except where the abuses were so exaggerated as to shock public opinion
and the court. The public policy has been in effect to accept the un-
proved claims of economies and benefits to the public resulting from
combination, and to throw the burden of proof of restraint of com-
merce upon the prosecution instead of recognizing the inevitable
restraint, in certain areas, equivalent to complete price agreement
among competitors, that every combination ipso facto involves.
The courts assume that the merger of formerly competing plants
does not and cannot "tend to form a n^onopoly" in a reasonable
degree, if and whMi there are still single-unit, nominally independent,
plants outside the merger in considerable number. Thus the vital
public function of maintaining the competitive process in the industry
is left wholly to a comparatively small group of small independents, .
giving them practically an impossible task, with the result that com-
petition has been weakening in wider and wider areas. This dis-
crpiinatory application of the laws designed to maintain and restore
competition has had the unintended but inevitable effect of actually
encouraging the movement toward horizontal combination. Such is
the widely shared opinion. Small businesses are under various kinds
of pressure from their larger competitors, and from the monopolistic
buying power of large combinations in the mass purchasing of supplies

410 CONCEXTKATIOX OF ECONOMIC POWEiR

from small business. Every other avenue- of escape is closed to them,
but the gateway of combination stands open. It is a paradoxical and
unstable situation.

ASSUMED ECONOMY OF INTEGRATED OWNERSHIP

The main part of the preceding analysis relates to horizontal com-
bination, while vertical combination has been referred to more briefly
and rather incidentally. Both are species of the single genus, com-
bination, but they differ in more respects than they resemble ea«h
othef. The economic results of one kind cannot validly be assumed
to be the same as those of the other kind. Frequently a specific
combination is of both kmds in varymg degrees, and this increases
the possibility of confusion.

Attention has before been called to the error of identifying owner-
ship integration of geographically separate plants and resources at
different stages of production with the economic integration of succes-
sive physical processes in a single plant. The real economy of physical
integration in some cases cannot properly be attributed in all cases to
mere unity of ownership. There is double confusion.

Very commonly a different explanation is advanced for the assumed
economy of mere ownership combination. Integrated ownership, it is
said, saves in the later stages the profits of manufacture which other-
wise 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 mvestment, 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 in-
vestment of an integration cannot as a rule be greater unless some new
economies result, and that has to be shown.

The most credible claim of this sort is that selling costs in inter-
subsidiary sales (or transfers) are less. The products of the plants at
each lower stage are sure to be taken to the extent of the needs of the
plants at each higher stage of the technical process. However,
unless the capacities' and needs of the integrated plants are exactly
coordinated the advantages are largely illusory. If the plant at the
lower stage has any excess product at any or all times, it must sell it to
outsiders, and if the plant at the higher stage has excess needs it must
supply the lack by buying from outsiders. Selling cost is a minor
element in total cost of production. A much more important question
is that of the efficiency in the technical management of integrated
plants as compared with that of independent plants specializmg on
fewer products and selling to numerous buyers. Again it is a question
of the economy of mass production. These are the main considera-
tions to be kept in mind ; what are the actual results in practice I do
not undertake to report.

COMPETITION BETWEEN INTEGRATED AND UNINTEGRATED BUSINESS

A motive that probably has stimulated the movement toward
integrating combination has been the fear which independents and
smaller companies have when their essential primary and intermediary
materials are being monopolized by their larger rivals. Unintegrated
independents become increasingly dependent for certain essentia]

CONCENTRATION OF ECONOMIC POWER 41]

supplies upon the large integrated companies. Take, for example,
such materials as iron ore or coal ; if they are sold regularly by. numer-
ous competing producers in a weU-organized open market without
discrimination, a small independent company ynth blast furnaces and
rolling mills has nothing to- fear. Otherwise, it is simple prudence
for each company to strive to secure its own sources of supply at all
the earlier stages, at-, the same time small independent producers at
the earlier stages find their markets narrowing and fair competition
more difficult. If ownership integration is a problem, it appears to
be a problem which, like jealousy, grows by what it feeds on.

The conditions just mentioned are alleged often to be present at
the later stage of construction of steel bridges arid other structures
Arhen integrated and unintegrated bidders compete for the same
contract. Likewise in the moving-picture industry where iaffiliated
producers' theaters compete with independently owned theaters. In
all such conditions, of which there are now many, the independent
company must buy its partly finished materials at the going market
price, perhaps from the very integrated company competing for the
same job. There is no published price on intercorporation sales (or
transfers) of materials, and the combination may practice cutthroat
discrimination ad libitim without the slightest danger of detection.
There appears to be small chance of the ultimate smwival of inde-
pendent unintegrated fabricating plants in various jindustries under
these conditions.

DECISIVE EFFECT OF INTEGRATION IN THE STEEL DECISION

The most momentous decision ever made in a Sherman Act case, it
will doubtless be agreed, was that of March 1, 1920, in the Steel
Dissolution suit. It also strikingly illustrates the decisive influence
upon court decisions which may be exercised by the ambiguity of such
an economic term as integration. One has but to reread the decision
to see that in the skillful weighing of conflicting claims the balance
was tipped by the court's belief that the chief motive for the formation
of the United States Steel Corporation was to secure the economies of
integration. Without this the court was convinced that further tech-
nical progress in the industry was impossible. The circumstances
may be recalled without attempting to criticize the legal reasoning,
but merely to analyze the economic concept of integration adopted
in that decision as one of the main premises of Justice McKenna's
legal reasoning.

The Supreme Court had before it two opinions coming from the
lower court of four judges, the one (by Judges Wooley and Hunt)
held that the organizers had illegal purposes of monopoly, and that
"neither the Steel Corporation nor the preceding combinations, which
were in a sense its antetypes, had the justification of industrial con-
ditions, nor were thfey or it impelled by the necessity for integration."
(Justice McKenna's paraplirasing of the opinion, 251 U. S. 438.)
'The other opinion (by Judges Buffington and McPherson) held that
the purpose was "not monopoly * * * but concentration of
efforts with resultant economies and benefits. The tendency of the
industry and the purpose of the corporation in yielding to it were
expressed in comprehensive condensation by the word 'integration,'
which signifies continuity in the processes of the industry from pre

412 CONCENTRATION OF BCONOMIC POWEH

mines to the finished product," (The same, p. 438.) Both opinions
agreed, however, "that the power of the corporation never did and
does not now reach to monopoly." (The same, p. 442.) With this
last behef, Justice McKenna, speaking for the decisive plm-ality of
the Court, agreed. As to the summary of other matters, he said:
"We concur in the main with [the estimate] of Judges Wooley and
Hunt.' And .we add no comment except, it may be, that they imder-
estimated the influence of the tendency and movement to integration,
the appreciation of the necessity or value of the continuity of man-
facture from the ore to the finished product." (The same, p. 442.)

INTEGRATION IN THE TECHNICAL SENSE — THE COURT'S VIEW

In these expressions, Justice McKenna, while showing the decisive
importance he and his colleagues attached to integration as motive
and justification for the combination, also repeatedly indicates that
he means by integration solely continuity of the physical" processes
of production, not simply unity of ownership or certain quite different
conditions which appear elsewhere in his opinion.

In part. Judge Buifington, whose views regarding integration the
Supreme Court was fully accepting, had discussed integration in the
technological sense, quoting and epitomizing a considerable volume
of testimony on the question (223 Federal Reporter, pp. 121 ff.).
The prize exhibit was the Jones Mixer (the same, p. 122) an inven-
tion in the late eighties "for the purpose of carrying on the production
of steel as one continuous operation from ore to the finished product,
never permitting the material to become cool until it reached" a
certain stage where "it would be economical to let the material
cool." .

The obvious waste of fuel in the old discontinuous process gave a
dramatic quality to this oft-cited illustration of the economies of
physical integration in the production of steel, and caused great
importance to be attached to it as an explanation of the econoniies
expected to result from the formation of the giant corporation, a
combination of combinations.

There are several remarkable facts weakening or invalidating this
testimony as to the movement for physical integration, accepted by
both lower and higher courts as the dominant motive for the forma-
tion of the United States Steel Corporation. Very briefly expressed,
the facts are these. First, the testimony had all been given as a
historical account of technological changes which had been largely
completed before 1890, and pretty fully completed in the various
subsidiaries formed before 190], the year of the United States Steel
combination. Mr. Schwab tesjified that this sort of economy had
reached the limit. Second, the economy of a continuous physical
process can be secured in a single plant, and only in what is essentially
a single plant at a single location. It is not and cannot be attained
by mere combined ownership of plants and resources at successive
stages when they are geographically separate. The sort of integra-
tion actually attained was not the sort of integration to which the
Court was attaching great importance. Thii'd, even if, and to the
extent that, technological economies and continuous physical processes
were attainable by some part of the integration effected by the for-
mation of the corporation, this afforded no support for the view that

CONCENTRATION OF ECONOMIC POWER 4J3

economies could be effected by the horizontal combination involved
in the formation of the corporation.

SHIFT TO INTEGRATION IN THE SENSE OF MASS PRODUCTION

As if this were not confusion enough centering about one economic
term, it is appalling to find in Judge Buffington's opinion a quite
different conception of integration which probably influenced both
his decision and that of the Supreme Court as much as did the notion
of physical continuity. Justice McKenna quoted in part, with
apparent approval, the views of Charies M. Schwab expressed in a
conversation with J. P. Morgan, to the effect that before the forma-
tion of the corporation the steel industry had "reached the limit, or
very nearly so, at which, economies from a metallm-gical or mechanical
standpoint could be made effective." (251 U. S. 443, quoting from
223 Federal Reporter 117.) Mr. Schwab therefore had urged that
the next step of economy could be taken by forming a great combina-
tion of existing plants — and only in that way, the extremest specializa-
tion by single plants in turning out a single kind of product. He
said: "instead, as was then the practice, of having 1 mill make 10 or
20 or 50 products, the greatest econoiny would result from having
1 mill make 1 product, and make that product continuously." (The
same.) He would have "one works to devote itself to the manu-
facture of steel car's, and one kind of steel cars," and he said he would,
if he could, build separate mills to roll exclusively angles, beams, etc.,
even as many as 6 mills to roll beams of 6 different sizes.

The word integration does not appear in Mr. Schwab's vocabulary
in this or any other connection, but Judge Bufiington calls such
specialization integration and Justice McKenna, after quoting Mr.
Schwab's description as above, says it shows: "in other words, that
there was a necessity for integration, and rescue from the old con-
ditions, from their improvidence and waste of effort."

Now it is clear that this extreme specialization in a single plant is
mass production of an extraordinary sort, one plant for the whole
country, without regard to the offsetting costs of transportation. It
is a ridiculously impractical ideal which the history of the corporation
shows it made no effort to attain. Such an effort would have ended
in bankruptcy. Moreover, mass production, so far from being inte-
gration in the technical sense of carrying on different successive
processes under one roof or in a single plant, is logically its direct
opposite. The two are mutually limiting concepts. It will be
observed also that there is an ambiguity in the term "continuous
process" which helps to make the illogical shift. The continuity of
technical integration consists of an unbroken transition from one
stage of the physical process to another stage; the continuity of mass
production consists of the operation without interruption in time of
the machines and processes at the same stage.

There are doubtless other diSiculties concysaled in the innocent
looking term "integration," but what has been said is sufficient to
indicate the unstable foundations of economic terminology on which
the legal reasoning in the majority of Steel Dissolution opinion was
erected.

414 CONCENTRATION OF. ECONOMrC POWER

SOME GENERAL CONCLUSIONS

It is not necessary to catalog and repeat the numerous ambiguities
which have been analyzed in the foregoing, but it may be worth while
to indicate a few of the salient poipts.

1. The economy of large production to which such importance is
attached in claims for the efficiency of big business is a technical fact.
It results from operating a single plant in a highly specialized manner.

2. The economy of mass production has distinct geographical and
other limits, so that there is an optimum size of plant in any set of
conditions. An optimum-sized plant may be fairly small compared
with a plant producing a more generalized line of products. Vice
versa, a more generalized plant may be the more economical in some

' cases.

3. The term "size" when used in reference to business organizations
is ambiguous if applied without careful distinction to single-unit and
plural-unit businesses. The economy of mass production in larger
single plants in some cases cannot logically be attributed to, and
assumed to result from, the greater size of business attained by the
horizontal combination of like plants as has been customary in the
claims for the advantages of financial combinations.

4. Certain advantages claimed, and in some degree probably result-
ing, from the formation of horizontal combination of formerly inde-
pendent plants, such as promoters' and underwriters' profits, greater
ease in financing, economy in selling, greater bargaining power in buy-
ing from small producers, and greater control of prices thr-ough the
weakening of competition and through price leadership, are mainly
advantages to the promoters and to the corporation itself, and are
not in tlie nature of net economic efficiency benefitting the commun-
ity^ They are private advantages gained at the cost of other members
of the community.

5. Vertical combination, or integration, is a compound ambiguous
term ; its more usual meaning is the carrying on of a variety of succes-
sive physical processes in a single plant, and is the opposite of mass
production, not the same. In certain cases, because of the technical
conditions, this is doubtless truly economic.

6. Vertical combination of geographically separate plants and re-
sources at successive stages is not physical integration and cannot
logically be assumed to have its advantages. WTiatever advantages
it may have to the promoters and owners of vertical combinations are,
like those of horizontal combinations, in the nature of promotion,-
financial, and price control;

7. Contemporaiy criticism of "big business" is directed essentially
against the excesses of the industrial combination movement and the
■conditions attending and developing out of plural-unit ownership. So.
far as single-unit corporations come within the purview of the anti-
trust laws, either separately or organized in trade associations, it is
largely because of their efforts to protect themselves and to get bar-
gaining equality against tLSiT large combined competitors. If these
(efforts involve conspiracy and specific contracts in restraint of com-
merce, this is easy to discover as compared with the subtle price leader-
ship of dominant corporations in each industry.

8. The scandalous evils of corporations which have been revealed
in a succession of investigations of big business and high finance in the

CONCENTRATION OF ECONOMIC TOWER 4]^5

past 50 years have been almost wholly connected with large business
in the financial, not in the techiiological, sense, and have occurred in
plural-unit rather than in single-unit corporations. The problems
which almost wholty absorb the attention of the S. E. C. arise out of
the increasing complexity of corporate structures. With the rarest
exceptions the independent .single-unit corporation is not- a peculiar
public problem under the antitrust laws.

9. We have examined the terms used by the promoters and partisans
of the recent and contemporary movement toward "big business," in
supporting their claim that it is the main cause of industrial progress
and that its limitation or reversal w'ould- bring public disaster. To a
very large extent, these claims, constantly set forth, have been accepted
by the public and have influenced the thought of legislatures and courts.
The public, while keenly sensing the monopolistic features and the
social and political evils of big-business growth, has been hesitant to
act, because it is afraid that it would destroy economic efficiency.

If our analysis of economic terms is correct, the sweeping claims for
the virtues of big business are mostly discredited in advance of trial.
Those claims are shown to be largely sophistical and contradictory.
Our analysis of the confusion would not lead us to expect that big-
business combinations would prove in practice to be more truly effi-
cient in the welfare sense than business of moderate size. However,
we should expect that the power of combinations to restrain trade
and to exercise price leadership would be formidable. We now have
a considerable body of factual evidence of the results of many such
combinations. It is a rhatter of common knowledge that the things
done and the policies followed have not always been those given as
motives by their promoters — in such matters as research, mass pro-
duction, relative increase of the size of single plants, concentration of
physical production at single locations, and reduction of costs in com-
parison with their smaller rivals. Matter of common knowledge also
is the dominance and price leadership exercised by the larger combi-
nations in various industries.

I have not attempted to examine and present factual evidence of
the results of large combinations in comparison with medium and
small business. That lay outside the field assigned to me, and is to
be treated by other witnesses.

APPENDIX E

Table 1

(The directors of the American Telephone & Telegraph Co. in 1939 had affiliations
in companies which had the following total assets in 1937:)i

Charles Francis Adams (26 affiliations):

Director, American Employers Insurance Co ^ $10, 128, 870

Trustee, Amoskeag Co 2 20, 513, 564

Director, Bigelow-Hartford Carpet Co ... 46, 866, 281

Director, Boston- Consolidated Gas Co.

Trustee, Boston Personal Property Trust 24, 227, 351

Director, Boston & Albany R. R 2 57^ 733^ 6I3

Director, Central Aguirre Associates 22, 405, 1 58

Director and vice prcciident, Gauley Coal Land Co 1 - 3, 300, 980

Director, John Hancock Mutual Life Insurance Co 2 376, 184, 201

Director, Massachusetts Hospital Life Insurance Co.
President and trustee, Provident Institution" for Savings.
Director, Employers Liability Assurance Cb.

Director, New York, New Haven & Hartford R. R - 582, 998, 785

Director, General Electric Co r 527, 020, 706

Director, American Telephone & Telegraph Co 5, 057, 809, 062

Director, United States Smelting, Refining & Mining Co.. 2 71^ 479^ 993

Chairman of board and director^ State Street Trust Co '-. 2 gS, 954, 095

Director, Urtited Drug Co .-.--.' 68, 001, 373

Trustee, Boston Real Estate Trust.

Director, Eastern Gas & Fuel Associates 230, 950, 829

Director, John P. Maguire & Co.

Director, Boston Fund, Inc ? 1, Sr32, 569

Trustee, Massachusetts Investment Trust . 2 117^ 250, 669

Trustee, State Street Investment Trust . 2 34^ 804, 613

Director, International General Electric Co., Inc.

President, Boise Gas Light & Coke Co _. 687, 402

Total . - 7, 832, 600, 114

WinthropW. Aldrich (13 affiliations):

Chairman of board and director, Chase National Bank of

Nev/ York 2 2,375,379,411

President and director. Chase Safe Deposit Co.

Director, American Telephone & Telegraph Co 5, 057, 809, 062

Director, Rockefeller Center, Inc.

Director, Westinghouse Electric & Manufacturing Co 286, 707, Oil

Director, Westinghouse Electric International Co.
Trustee, New, York Community Trust.

Director, Discount Corporation of New Yora. 293, 418, 728

Member, executive committee. Chamber of Commerce of

New York State.
Director, New York World's Fair, 1939, Inc.
Trustee, Rockefeller Foundation.
Trustee, General Education Board.
Director, Metropolitan Life Insurance Co . 2 4^ 841, 350, 352

Total . 12, 659, 664, 564

> Total assets are before deducting depreciation reserves and are as of Dec. 31, 1937, except when a com-
pany ended its fiscal year at some other time. List of directors and their affiliations is from the 1940 edition
-of Poor's Register of Directors and Executives, and total assets are from Poor's Financial Statements. It
was not possible to get the assets of every company but a great majority were obtained.

• Amount of depreciation reserve, if any, not shewn.

416

CONCENTRATION OF ECONOMIC POWER 4^7

James F. Bell (8 affiliations) :

Chairman of board and director, General Mill$, Inc $77, 909, 968

President and director, Brown Grain Co.

President and director, St. Anthony & Dakota Elevator Co.

Director, Northwestern National Bank & Trust Co_..^ 2 121, 143, 526

Director, American Telephone & Telegraph Co. . . . 5, 057, 809, 062

Director, Pullman Co.

Director, Pullman, Inc . 459, 729, 847

Chairman of board, Distillation Products, Inc.

Total ^ 5^ 71 6, 592, 403

Charles P. Cooper (3 affiliations) : •

Vice president and director, American Telephone & Tele-
graph Co 6, 057, 809, 062

Director, Guaranty Trust Co. of New York " 1 2 1, 781, 934, 938

Trustee, Mutual Life Insurance Co. of New York 2 1, 368, 850, 469

Total -. 8, 208, 594, 469

David A. Crawford- (11 affiliations):

President and director, Pullman, Inc . 459, 729, 847

President and director, the Pullman Co.

Director, Harris Trust & Savings Bank 2 23 1, 069, 295

Director, Continental Illinois National Bank & Trust Co.. 2 1^ 133^ igo, 037

Director, Montogomery Ward & Co 235, 601, 069

Director, Aridor Co.

Director, Armour & Co., ^ 375, 900, 276

Director, Michiana Products Corporation.
Director, Hansell-Elcock Co.

Director, American Telephone & Telegraph Co 5, 057, 809, 062

Director, West Virginia Coal & Coke Corporation . 12, 912, 236

Total 7, 506,201,822

John W. Davis (5 affiliations) :

Partner, Davis, Polk, Wardwell, Gardiner & Reed.

Director, Mutual Life Insurance Co .- 2 j^ 358, 850, 469

General counsel, United States Rubber Co , (^)

Du-ector, Guaranty Trust Co 2 1^ 731^ 934^ 93^

Director, American Telephone & Telegraph Co 5, 057, 809, 062

Total ■ . i.. 8,208,594,469

W. Cameron Forbes (15 affiliations) :
Partner, J. M. Forbes & Co.

Director, United Fruit Co . . 359, 499, 753

Director, Commercial Credit Co... . 1. 2 343^-678^ 698

Director, Arthur D. Little, Inc

Director, Massachusetts Fire & Marine Insurance Co 2 3^ 951* 386

Member executive committee, chairman of bqard and

director. Petroleum Heat & Power Co ^^ 7, 800, 395

Director, Boston Cattle Co., Ltd.

Vice president, Massachusetts Hospital Life Insurance Co.

Director, Neponset Investment Co.

Vice president and trustee. Provident Institution for

Savings.
Director and member executive committee. Old Colony

Trust Co - . 2 10,380,940

Director, Copper Range Co 2 n^ 858, 654

Director, Stone & Webster, Inc -.-.-' ._. 2 13^ 559, 324

Director, American Telephone & Telegraph Co . . 5, 057, 809, 062

Director, Boston Metal Investors, Inc.

Total : 5,807,629,212

' Assets not listed here because of the nature of the ofiBce held.
264905 — 41 — No. 13 28

418 CONCENTRATION OP ECONOMIC POWER

George P. Gardner (18 aflHliations) : .

Director, American Telephone & Telegraph Co $5, 057, 809, 062

Chairman of board and director, Atlantic Coast Fisheries

Co 4,356,640

Trustee, Amoskeag Co :.-- 2 20, 513, 564

Director, Boston Fund, Inc 2 1^ 332, 569

Director, Boston Metal Investors, Inc.

Director, Eastern Steamship Lines, Inc 25, 829, 837

Director, First National Bank of Boston. 2 720, 348, .364

Director, General Electric Co 527, 020, 706

Director, Grosvenor-Dale Co.

Director. Grosvenor-Dale Securities Corporation.

Director, Massachusetts Fire & Marine Insurance Co 2 3^ 051, 386

Director, Massachusetts Hospital Life Insurance Co.

Director, North American Mines, Inc 631, 855

Director, Old Colony Trust Co . - MO, 380, 940

Trustee, Provident Institution for Savings.

Director, Thomson Electric Welding Co 711, 408

Director, Waltham Watch Co 9, 837, 742

Chairman of Board & Director, Wilson- Jones Co 6, 032, 256

Total - ---- 6,387,856,329

Walter S. Gifford (9 Affiliations) :

President and director, American Telephone & Telegraph

Co -, : 5,057,809,062

Director, First National Bank of New York.Gity 2 ^73, 601, 460

Trustee, Bank for Savings in City of New York.

Director, Bell Telephone Company of Canada. _ _ , 224, 302, 404

Trustee, Johns Hopkins University.
Trustee, Carnegie Institute.
Trustee, Cooper Union.
Trustee, Rockefeller Foundation.
Trustee, General Educational Board.

Total 5,860,712,^

Barklie Henry (3 affiliations) '.

Director, American Telephone & Telegraph Co 5, 057, 809, 062

Director, United States Trust Co. of New York .--. ^ 117, 966, 643

Director, Texas Co 896,388,544

Total 6, 072, 164, 249

Hale Holden (4 affiliations) :

Director, American Telephone & Telegraph Co. . . . 5, 057, 809, 062

Director, New York Life Insurance Co ^2, 557, 310, 414

Chairman of board and director, St. Louis Southwestern

R« ^ . . 147,996,815

Director, Chemical Bank & Trust Co 2 593, 804, 851

Total 8, 361, 921, 142

Davis F. Houston (5 affiliations; :

President and trustee. Mutual Life Insurance Co. of New

York - ^ 1 , 368, 850, 469

Director, American Telephone & Telegraph Co 5, 057, 809, 062

Director, Guaranty Trust Co 2 1,781,934,938

Director, North British & Mercantile Insurance Co.

Director, United States Steel Corporation . 3, 066, 968, 828

Total ■-■■-- 11,275,563,297

■ 2 Amount of depreciation reserve, if any, not shown.

CONCENTRATION OF ECONOMIC POWE-R 4^9

Arthur W. Page (3 afl31iations) :

Vice president and director, American Teleplione & Tele-
graph Co $5,057,809,062

Director, Chase National Bank 2 2, 375,379, 411

Director, Continental Oil Co 195, 714, 463

Total 7,628,902,936

Elihu Root, Jr. (5 affiliations) :

Partner, Root, Clark, Buckner & Ballentine.

Director, Teachers Insurance and Annuity Associati. n.

Director, Mutual Life Ini^urance Co. of New York 2 1^ 308, 850, 469

Director, Fiduciary Trust Co. of New York 2 15, 885, 093

Director, American Telephone & Telegraph Co 5, 057, 809, 062

Total ., 6,442,544,624

Philip Stockton (30 affiliations) :

Chairman, executive committee and director, First National

Bank of Boston 2 720, 348, 364

President and director, A. J. Tower Co.

Director, American Alliance Insurance Co 29 343^ 354

Director, American Sugar Refining Co 160, 902, 985

Director, American Telephone & Telegraph Co 5, 057, 809,062

Trustee, Bankers' Electric Protective Association.

Director, Berkshire Fine Spinning Associates 2 jg^ ggg^ 77Q

Trustee, Boston Five Cents Savings Bank. '

Director, Fall River Gas Works Co 4, 463, 029

President and director. First of Boston International Corpo-
ration.
Director, French American Banking Corporation.

Director, General Electric Co 527, 020, 706

Director, Gillette Safety Razor Co 31, 335, 196

Director, Great American Insurance Co 2 50, 130, 660

Director, Guarantee Co. of North America • 2 4 558^ o26

Director, Haverhill Gas Light Co 2, 693, 314

Treasurer and director. Infants' Hospital.

Director, International General Electric Co.

Member board of advisory trustees, Ludlow Manufacturing

Associates • 37, 857, 577

Director, Massachusetts Fire & Marine Insurance Co 2 3^ 051, 386

Chairman of finance committee and life member, Massa-
chusetts Institute of Technology.

Director, New England Mutual Life Insurance Co 2 408, 854, 343

Trustee, Old Colony Investment Trust - 2 8, 010, 346

Director, Old Colony R. R 252,916.499

Chairman of trustees and president, Old Colony Trust

Associates 2 9, 931, 004

Director, Pacific Mills 66, 730, 019

DirectKjr, Railway & Light Securities Co 29, 552, 409

Director, Scott & Williams, Inc.

Director, Submarine Signal Co. 2, 733, 317

Director, Union Freight R. R ■- 2 645, 968

Total - , 7, 186, 498, 334

Myron C. Taylor (7 affiliations) :

Director, First National Bank of New York 2 ,73, 6OI, 460

Member executive committee and director, A'chison,

Topeka & Santa Fe Ry. Co 1,292, 641,014

Member finance committee and trustee, Mutual Li'/ e Insur-
ance Co - 2 1_ 368 850, 469

Member executive committee' and director, Ame ican Tele-
phone & Telegraph C ■ - 5, 057, 809, 062

Director, Metropolitan Opera & Real Estate Cd

- Amount of depreciation reserve, if any, not shown.

420 CONCENTRATION OF ECONOMIC POWER

Myron C. Taylor (7 affiliations) — Continued.

Member finance committee and director, United States Steel

Corporation $3,066, 968,828

Director, New York Central R. R. Co , 1,829,425,538

Total - .: --- 13, 194, 296, 371

Samuel A. Welldon (5 affiliations):

Vice president and director, First Nati. lal Bank of the City

of New York 2 578, 60 1, 460

Director, American Telephone & Telegraph Co 5; 057, 809, 062

Director, Bige o\ Sanford Carpet Co., Inc ' 46,866,281

Director, Lehi ^h u. Wilkes-Bnrre Corporation.

Director, Northern Pacific<Ry 847, 087, 898

Total - --- 6, 530, 364,701

Daniel Willard (18 affiliations):

President and director, Baltimore & Ohio R. R 1, 214, 130, 094

President, chairman of board, and director, Alton R. R '^9, 594, 610

Member executive committee and director, American Asso-
ciation of Railroads.
President board of trustees, Johns Hopkins University.
Trustee, Johns Hopkins Hospital.

Director, American Telephone & Telegraph Co 5, 057, 809, 062

Director, Mutual Life Insurance Co. of New York ^ i_ 358, 850, 469

Chairman of board and director, Baltimore & Ohio Chicago

Terminal R. R. Co.
Director, 'Washington Terminal Co.

Chairman of board, member executive committee, and di-
rector, Reading Co J- 463, 480, 042

Director, Richmond, Fredericksburg & Potomac R. R 39, 170, 783

Director, Richmond- Washington Co 2 17,607,321

President and director, Staten Island Rapid Transit Rj' ^ 14 149 1Q4

Chairman of board and director, Buffalo & Susquehanna

R. R. Corporation.
Chairman of board and director, Buffalo, Rochester & Pitts-
burgh Ry.

President and director, Joliet & Chicago R. R ^.- ''-I, 526, 294

President and director, Kansas City, St. Louis & Chicago

R. R. - -.

President and director, Louisiana & Missouri Rive^ R. R.

Total.... 8,256,317,779

S. Clay Williams (3 affiliations):

Chairman of board and director, R. J. Reynolds Tobacco

Co 193,515, 108

Director, Security Life & Trust Co.

Director, American Telephone & Telegraph Co . 5, 057, 809, 062

Total 5,251, 324, 170

Table 2

(The directors of the American Telephone & Telegraph Co. in 1939 had business
affiliations in companies which had the following total assets in 1937:)'

American Telephone & Telegraph Co $5, 057, 809, 062

AKpn R. R 79,594,610

American Alliance Insurance Co . 2 9^ 843, 354

American Employers Insurance Co - 10, 128, 199

American Sugar Refining Co 160, 902, 985

' Total assets are before deducting depreciation reserves and are as of Dec. 31, 1937, except in a few cases
when a company ended its fiscal year at some other time. The assets of every company with which the
directors were affiliated were not available but the great majority were; only those companies whose assets
could bo obtained are listed hero. List of directors and their affiliations is from the 1940 edition of Poor's
Re.dster of Directors and Executives and total assets are from the 19:58 editions of Poor's Financial State-
ments.
:. ' Amount of depreciation resepvo, if any, not shown.

CONCENTRATION OF ECONOMIC POWER

421

Armour & Co $375

Amoskeag Co 2 20

Atchison, Topeka & Santa Fe Ry. Co 1, 292

Atlantic Coast Fisheries Co • , 4

Baltimore & Ohio R. R 1, 214

Bell Telephone Co. of Canada 224

Berkshire Fine Spinning Associates ^^ 16

Bigelow-Hartford Carpet Co . 46

Boise Gas Light & Coke Co

Boston Fund, Inc M

Boston & Albany R. R . 2 67

Boston Personal Property Trust ^4

Central Agiiirre Associates ." 22

Chase National Bank of New York * 2 2, 375

Chemical Bank & Trust Co . 2 593

Commercial Credit Co 2 343

Continental Illinois National Bank & Trust Co 2 j^ 133

Continentfil Oil Co . 195

Copper Range Co 2 n

Discount Corporation of New York 293

Eastern Gas & Fuel Associates 230

Eastern Steamship Lines, Inc 25

Fall River Gas Works Co 4

Fiduciarv Trust Co. of New York 2 15

First National Bank of Boston 2 720,

First National Bank, of New York City 2573

Gauley Coal Land Co . 23

General Electric Co 527

General Mills, Inc 77

Gillette Safety Razor Co 31

Great American Insurance Co 2 50

Guarantee Co. of North America 2 4

Guaranty Trust Co. of New York 2 1^ 731

Harris Trust & Savings Bank 2231

Haverhill Gas Light Co 2

John Hancock Mutual Life Insurance Co 2 §76

Joliet & Chicago R. R ' 2 1

Ludlow Manufacturing Associates 37

Massachusetts Fire & Marine Insurance Co 23

Massachusetts Investors Trust r 2 117

Metropolitan Life Insurance Co 4, 841

Montgomery Ward & Co 235

Mutual Life Insurance Co. r(f New York 2 j^ 3(53

New England Mutual Life Insurance Co 2 408

New York Central R. R. Co 1, 829

New York Life Insurance Co 2 2, 557

New York, New Haven & Hartford R. R -582

North American Mines, Inc

Northern Pacific Ry 847

Northwestern National Bank & Trust Co 2 121

Old Colony Investment Trust ^8

Old Colony R. R . 252

Old Colony Trust Associates 1 29

Old Colony Trust Co 2 iq

Pacific Mills . 66

Petroleurri Heat & Power Co 7

Pullman, Inc __.. 459

Railway Light & Securities Co 29

Reading Co..-^ 463

R. J. Reynolds Tobacco Co 193

Richmond, Fredericksburg & Potomac R. R , 39

Richmond-Washington C6 - 17

St. Louis Southwestern Ry . 147

Staten Island Rapid Transit Ry 2 14

State Street Investment Corporation 2 34

State Street Trust Co j 2 gg

- Amount of depreciation reserve, if any, not shown.

900,
513,
641,
356,
130,
302,
969,
866,
687,
332,
783,
227,
405,
379,
804,
678,
180,
714,
858,
418,
950,
829,
463,
885,-
348,
601,
300,
0^0,
909,
335,
130,
588,
934,
069,
693,
184,
526,
857,
051,
150,
350,
601,
850,
854,
425,
310,
998,
631,
087,
143,
010,
916,
931,
380,
730,
800,
729,
662,
480,
515,
170,
607,
996.
149,
804,
954,

422 CONCENTRATION OF ECONOMIC POWER

Stone & Webster, Inc $23,262,402

Submarine Signal Co 2, 733, 317

Texas Corporation 896, 388, 544

Thomson Electric Welding Co 711, 408

Union Freight R, R 2 546, 968

United Drug Co 68,001,373

United Fruit Co 359, 499, 753

United States Smelting, Refining & Mining Co 2 71, 479, 993

United States Steel Corporation 3, 066. 968, 828

Unifed States Trust Co. of New York 2 117, 966, 643

Waltham Watch Co 9, 837, 742

Westinghouse Electric & Manufacturing Co 286, 707, Oil

West Virginia Coal & Coke Corporation 12, 912, 236

Wilson-Jones Co 6, 032, 256

Total 38,030,503,073

' Amount of depreciation reserve, if any, not shown.

APPENDIX F

Table 1

(The directors of the United States Steel Corporation in 1939 had business
affiliations in companies which had the following total assets in 1937:) ^

Edward R. Stettinius, Jr. (4 affiliations): Total assets

Chairman of board, United States Steel Corporation $3, 066, 968, 828

Director, Metropolitan Life Insurance Co M, 841, 350, 352

Director, Bradley Transportation Co.,
Chairman finance committee; member, executive com-
mittee; vice president and trustee. New York Museum of
Science and Industry.

Total , 7,908,319, 180

WilHam A. Irvin (2 affiliations):

Director, United States Steel Corporation 3, 066, 968, 828

Director, American I. on and Steel Institute.
J. P. Morgan (11 affiliations):

Director, United' States Steel Corporation 3, 066, 968, 828

Partner, J. P. Morgan & Co 2457, 111,631

Treasurer and director, Church Hymnal Corporation.
Treasurer and director, Church Life Insurance Corporation.
Treasurer and director. Church Pension Fund.
Director,, Church Properties Fire Insurance Corporation.

Director, Discount Corporation of New York 98, 418, 728

Director, Metropolitan Opera & Real Estate Co.

Member, New York Stock Exchange.

Director, Pullman, Inc . 459,729,847

Total 4,082,229,034

James A. Farrell (1 affiliation): Director, ITnited States Steel

Corporation 3,066,968,828

Benjamin F. Fairless (9 affiliations):

President and director, Carnegie Land Corporation.

President and director, Conneaut Land Co.

President and director, Bessemer Electric Power Co.

President and director, Sharon Coke Co.

Director, Carnegie Natural Gas Co.

Director, Pennsylvania & Lake Erie Dock Co.

Director, Pittsburgh Limestone Corporation.

Director, Michigan Limestone & Chemical Co,

President, director, member, finance committee. United

States Steel Corporation 3, 066, 968, 828

W. J. Filbert (1 affiliation): Director and member of finance

committee, United States Steel Corporation 3, 066, 968, 828

1 Total assets are before deducting depreciation reserves and are as of December 31, 1937, except in a few
cases when the eompany ended its fiscal year at some other ttime. The asset* of every company were not
available. List of directors and their affiliations is from the 1940 edition of Poor's Register of Directors and
Executives and total assets are from the 1938 editions of Poor's Financial Statements.

' Amount of depreciation reserve, if any, not shown.

423

424 CONCENTRATION OF ECONOMIC POWER

Philip R. Clarke (3 affiliations): Total assets ■

Director, United States Steel Corporation .... $3,066,968,828

Director, Pure Oil Co 269, 620, 191

Piesident and director, City National Bank & Trust Co.

(Chicago, III.) . 2 126, 481, 738

Total 3,463,070,757

Nathan L. Miller (3 affiliations) :

Director, United States Steel Corporation 3,. 066, 968, 828

Trustee, Mutual Life Insurance Co. of New York . "- 1, 368, 850, 469

Partner, Miller, Owen, Otis & Bailly.

■Total.-.- . 4, 435, 819i 297

Thomas W. Lamont (11 affiliations):

Director, United States Steel Corporation 3, 066. 968, 828

Partner, J. P. Morgan & Co 2 457^ ni, 631

Director, Guaranty Trust Co. 2 1, 781, 934, 938

Director, International Agricultural Corporation (June -30,

1937 : 36, 783,078

Director, and chairman of board, Lamont, Corliss & Co 9, 330, 623

Director, Southwestern Construction Co.

Partner, Drexel & Co. (included in total for J. P. Morgan

Co.).

Director, Atchison, Topeka & Santa Fe R. R ... 1, 292, 641, 014

Director, Santa Fe Pacific R. R. (included in above).

Trustee, Metropolitan Museum of Art.

Trustee, Carnegie Fovmdation for the Advancement of

Teaching.

Total 6, 644, 770, 112

Junius S. Morgan (5 affiliations) :

Director, United States Steel Corporation 3., 066, 968, 828

Partner, J. P. Morgan & Co 2 457^ in_ 631

Member, New York Stock Exchange.

Partner, Drexel & Co. (included in total for J. P. Morgan

Co.).
Director, General Motors Corporation 1, 566, 673, 796

Total 5,090,754,255

David F. Houston (5 affiliations) :

Director, United States Steel Corporation 3, 066, 968, 828

President and trustee, Mutual Life Insurance Co. of New

York 2 1,368,850,469

Director, American Telephone & Telegraph Co 5, 057, 809, 062

Director, Guaranty Trust Co .-_ 2 1^ 731, 934, 938

Director, North British & Mercantile Insurance Co.

Total , 11,275,563,297

George A. Sloan (5 affiliations):

Director, United States Steel Corporation 3, 066, 968, 828

Director, Bankers Trust Co. (New York)... 2 975, 069, 368

Director, Sclby Shoe Co. (Apr. 30, 1937) 2 8,536,934

Director, Goodyear Tire & Rubber Co 290,419,513

Director, Cotton-Textile Institute.

Total 4,340,994,643

I

' Amount of depreciation reserve, if any, not shown.

^ CONCENTRATION OF ECONOMIC POWER 425

Sewell L. Avery (9 affiliations) : ^o^a/ assets

Director, United States Steel Corporation $3, 066, 968, 828

Chairman of board and director, United States Gypsum Co_ 84, 681, 409

Director, Chicago Daily News 28, 070, 944

Director, Armour & Co. (Illinois) (Oct. 30, 1937)..; 375, 900, 276

Director, Northern Trust Co. (Chicago, 111.) .. . . 2 335^ 847, 598

Chairman of board and director, Montgomery Ward & Co.

(Jan. 21, 1938) .' 235,601,069

Director, Peoples Gas Light & Coke Co 196, 107, 911

Director, Pullman, Inc 459, 729, 847

Director, Pure Oil Co . 269,620, 191

Tot&l - 5, 052, 288, 534

Leon Eraser (10 affiliations):

Member, finance committee, and director. United States

Steel Corporation 3, 066, 968, 828

President and director. The First National Bank of the

City of New York •. 2 578,601,460

Director, General Electric Co 527, 020, 706

Director, International General Electric Co,

Trustee, Mutual Life Insurance Co. of New York - 1, 368, 850, 469

Trustee, Union College.
Treasurer, Academy of Political Science.
Treasurer, American Academy in Rome.
Trustee, American Historical Association.
Trustee, Columbia University.

Total - 5, 541 , 44 1 , 463

Enders M. Voorhees (2 affiliations):

Chairman, finance committee, and director. United States

Steel Corporation 3, 066, 968, 828

Director, Johns- Mansville Corporation 76, 408, 754

Total • --.-.. 3,143,377,582

Irving S. Olds (2 affiliations) :

Member, finance committee, and director. United States

Steel Corporation '.^ . 3, 066, 968, 828

Partner, White & Case. — =

Myron C. Taylor (7 affiliations) :

Member, finance -'committee, and director. United States

Steel Corporation 3,066,968,828

Director, First National Bank of New York 2 578, 601, 460

Director, New York Central R. R. Co 1,829,425,538

Member, executive committee, and director, Atchison,

Topeka & Santa Fe Ry. Co -- 1, 292. 641, 014

Member, finance committee, and trustee, Mutual Life

Insurance Co 2 1,368,850,459

Member, executive committee, and director, American

Telephone & Telegraph Co 5,057,809,062

Director, Metropolitan Opera & Real Estate Co.

Total... 13, 194,296,371

Robert C. Stanley (20 affiliations):

Member, finance committee, and director. United States

Steel Corporation . 3,066,968,828

Pre.'?ident and director. International Nickel Co., Inc.

President, chairman of board, member, executive and ^d- ^

- visory committees, director, International Nicfkel Co. of

Canada, Ltd ' , 305,410,561

Director, Ontario Refining Co., Ltd.

Director, International Sales, Ltd.

Member, advisory committee, Mond Nickel Co T td. . '

(England). ^

2 .Amount of depreciation reserve, if any, nof shown.

426

CONCENTRATION OF ECONOMIC POWER

Robert C. Stanley (20 affiliation) — Continued.
Director, Huronian Co., Ltd.
Director, Canadian Nickel Products, Ltd.
Director, Centre d'Infonnation du Nickel (France). Total assets

Director, Canadian Pacific Railwaj^ $1, 382, 062, 058

Member, executive committee, and director. Chase National

Bank (New York) 2 2, 375,'' 379, 411

Director, American Metal Co., Ltd ..-. 86, 758, 364

Director, Amalgamated Metal Corporation, Ltd. (England).
Director, Henry Gardner & Co., Ltd. (England).
Director, International General Electric Co.

Trustee, Mutual Life Insurance Co. of New York 2 j^ 3f,g_ §50, 469

Director, Babcock & Wilcox Co ^ 29, 480, 043

Director, Holland House Corporation of the Netherlands.
Chairman, Board of Trustees, Stevens Institute of Tech-
nology.
Director, General Electric Co 527, 020, 7( 6

Total 9, 1 41 , 930, 440

2 Amount of depreciation reserve, if any, not shown.

3 Depreciation is deducted, the amount of which is not available.

Table 2

(The directors of the United States Steel Corporation in 1939 had business
affiliations in companies which had the following total assets in 1937:) ^

United States Steel Corporation $3, 066, 968, 828

American Metal Co., Ltd 86, 758, 364

American Telephone & Telegraph Co 5, 057, 809, 062

Armour & Co 375, 900,276

Atchison, Topeka & Santa Fe Rv 1, 292, 641, 014

Babcock & Wilcox Co 1 ^29, 480,043

Bankers Trust Co. (New York) 8 975,069,368

Canadian Pacific Rv . 1, 382. 062, 058

Chase National Bank ^ 2, 375, 379, 411

Chicago Daily News 28, 070, 944

City National Bank & Trust Co. (Chicago, 111.) » 126, 481, 738

Discount Corporation of New York » 98. 418, 728

The First National Bank of the City of New York 3 575, 601, 460

General Electric Co 1 .527,020. 706

General Motors Corporation _• 1, 566, 673, 796

Goodyear Tire & Rubber Co 290, 419, 513

Guaranty Trust Co 3 1^ 731, 934, 938

International Agricultural Corporation 36, 783, 078

International Nickel Co. of Canada, Ltd - 305, 410, 561

J. P. Morgan & Co ._- ' 457, 111,631

Johns-Manville Corporation 76, 408, 754

Lamont, Corliss &,Co ... 9, 330,623

Metropolitan Life' Insurance Co 24, 841, 350, 352

Montgomery Ward & Co ..... 235,601,069

Mutual Life Insurance Co. of New York . '1, 368, 850, 469

New York Central R. R. Co . . 1,829,425, 538

Northern Trust Co. (Chicago, 111.) ^ 335^ 347, 598

Peoples Gas Light & Coke Co 1 196, 107, 911

Pullman, Inc 459, 729,847

Pure Oil Co . 269,620, 191

SelbvShoeCo 3 8,536,934

United States Gvpsum Co 84,681,409

Total 30, 154, 486, 212

' Total assets are before deducting depreciation reserves and are as of Dec. 31, 1937, except in a few cases
when a company ended its fiscal year at some other time. The assets of every company with which the
directors were affiliated were not available but the great majority were; only those companies whose assets
could be obtained are listed here. List of directors and their affiliations is from the 1940 edition of Poor s
Register of Directors and Executives and total assets are from the 1938 editions of Poor's Financial State-
ments.

' Depreciation is deducted, the amount of which is not shown.

' Amount of depreciation reserve, if any, not shown.

APPENDIX G

Table 1

(The directors of the National Steel Corporation in 1939 had
affiliations in companies which had the following total assets in 1937:)

Frank W. Blair (11 afRliations) :

Director, National Steel Corporation $262, 735, 192

President and director, Union Joint Stock Land Bank i 7, 175, 086

Director, Michigan Bell Telephone Co 194,346,518

Direi'tor, Standard Savings & lioan Association.

Director, Russell Steel Construction Co.

Director, Republic Gear Co.

President and director, River Rouge Improvement Co.

Director, American Life Insurance Co.

President, the Whittier Corporation.

President, Bagley Building Corporation .^ 2, 699, 414

Director, Washington Boulevard Buildings, Inc.

466, 956, 210

Maurice Falk (8 affiliaiions) :

Director, National Steel Corporation. 262, 735, 192

Director, Weirton Steel Co.^
Director, Edgewater Steel Co.

Director, Farmers Deposit National Bank i 95, 812, 534

Director, Farmers Deposit Trust Co . . :« '2; 725, 228

Director, Reliance Life Insurance Co_-J ' 769, 194

Director, Blaw-Knox Co 25, 646, 133

Director, Falk Foundation.

387, 688, 281

George R. Fink (3 afRliations):

President, member executive committee, and director.

National Steel Corporation 262, 735, 192

President and director, Great Lakes Steel Corporation.

Director, Manufacturers' National Bank U 21, 882, 749

384, 617', 941

Howard M. Hanna (7 affiliations) :

Director, National Steel Corporation 262, 735, 192

Chairman and director, M. A. Hanna Co 62, 251, 587

Director, National Biscuit Co " 124, 022, 849

Director, Howe Sound Co J 27,499,731

Director, Producers Steamship Co.

Director, Hanna Iron Ore Co.^

Director, M. A. Hanna Coal & Dock Co.<

476, 509, 359

George M. Humphrey (41 affiliations):

Chairman, executive committee, and director, National Steel

Corporation . 262, 735, 192

President and director, M. A. Hanna Co 62, 251, 587

li Depreciation reserve, if any, not shown.
'Assets are included in total for National Steel Corporation.
' Depreciation deducted, amount of which is not given.
^.'Assets are included in total for M. A. Hanna Co.

427

428 CONCENTRATION OF ECONOMIC POWEH

George M. Humphrey (41 aflSliations) — Continued.
Director, Hanna Furnace Corporation. ^

Vice president and director, Susquehanna Ore Co $4, 148, 531

Chairman of board and director, Susquehanna Collieries Co.
Director, M. A. Hanna Coal & Dock Co.*
President and director, Hanna Ore Mining Co.^
President and director, Hanna Iron Ore Co. 2
Director, Eastern Steamship Co.
- Director, Jefferson Coal Co.
Director, La Belle Steamship Co.
Director, Mahoning Steamship Co.
President and director, Richmond Iron C0.2

Chairman of board and director. Union Collieries Co 9, 106, 566

Director, Mahoning Ore & Steel Co.

Director, Pittsburgh Coke & Iron Co 15, 704, 868

Director, Donner-Hanna Coke Corporation.

Director, Great Lakes Steel Corporation .^

Director, Hanna Coal Co. of Ohio.*

Director, Mesaba-Cliffs Mining Co.

Director, Michigan Steel Corporation.

Director, Midwest Steel Corporation. ^

Director, Weirton Steel Co.^

President and director. Western Copper & Mining Co.

Director, National City Bank (Cleveland, Ohio) 1 153, 896, 134

Director, Forest City Live Stock & Fair Co.
President and director, Homer Ore Co.^

Director, Industrial Rayon Corporation .26; 555, 053

President and director, Nokay Iron Co.^

President and director, Northern Iron Mines, Ltd.

Director, Virginia Steamship Co.

President and director, Waukenabo C0.2

President and director, .Western Ore Co.^

President and director, Ozark Ore Co.

President and director, Williams Ore Co.

President and director, Franklin Steamship Corporation.*

President and director Lake Erie Harbors, Inc.

^ Director, Phelps Dodge Corporation 340, 942, 652

Director, Hanna Coal Sales Co.*
President and director, Mahland Ore Co.
President and director. Manganese Ore Co.

875,340,683

Thomas E. Millsop (2 affiliations) :

Vice president, member, executive committee and director, Na-
tional Steel Corporation.. 262, 735, 192

President and director, Weirton Steel Co.*
E. W. Mudge (5 affiliations) : > .

Vice president and director, National Steel Corporation..., — 262, 735, 192
Owner, Edmund W. Mudge & Co.
Director, Edgewater Steel Co.

Director, Fidelity Trust Co... . ' 34,042,661

Director, Mudge Oil Co.

296, 777, 853

Carl N. Osborne (20 affiliations) :

Director, National Steel Corporation.... 262, 735, 192

Vice president, treasurer, and director, M. A. Hanna Co 62, 251, 587

Director, American Puddled Iron Co ' 312, 852

Director, Franklin Steamship Corporation.*
Director, Hanna Coal Co. of Ohio.*
Director, M. A. Hanna Coal & Dock Co.*

' Dfipreciation reserve, if any, not shown.

' Assets are included in total for National Steel Corporation.

* Assets are included in total for M. A. Hanna Co.

CONCENTRATION OF ECONOMIC POWER 429

Carl N. Osborne (20 affiliations) — Continued.
Director, Hanna Coal Sales Co.^
Director, Hanna Iron Ore Co. (Michigan) .2
Director, Homer Ore C0.2

Vice president and director, M. H. Hussey Corporation.
Director, Jefferson Coal Co.
Vice president and director, Lytle Coal Co.
Director, Manganese Ore Co.
Director, Northern Iron Ore Mines, Ltd.
Director, Ozark Ore Co.

Vice president and director, Susquehanna Collieries Co.
Director, Western Copper & Mining Co.
Director, Western Ore Co.
Director, Williams Ore Co.
Director, Youngstown Steel Co.. 1 $1, 572, 152

326, 871, 783

Murray W. Sales (5 affiliations):

Director, National Steel Corporation 262, 735, 192

President and director, Murray W. Sales & Co.

Director, Manufacturers National Bank of Detroit 1 121, 882, 749

Director, Detroit Steel Products Co 7, 6 1 3, 366

Director, Michigan Bell Telephone Co. 194, 346, 518

586, 577, 825

Charles M. Thorp (5 affiliations):

Director, National Steel Corporation 262, 735, 1 92

Member, Thorp, Bostwick, Reed & Armstrong.
Director, Edgewater Steel Co.

Director, Blaw-Knox Co 25, 646, 133

Director, Copperweld Steel Co . 6,704,633

295,085,958

Ernest T. Weir (21 affihations):

Chairman of board, member, executive committee and direc-
tor. National Steel Corporation.. 262, 735, 192

President and director. Bank of Weirton.

Chairman of board and director, Weirton Coal Co.^

Director, Edgewater Steel Co,

Director, Hanna Ore Mining Co.*

Chairman of board and director, Weirton Steel Co.*

Chairman Of board and director. Great Lakes Steel Corpora-
tion.*

Director, Hanna Iron Ore Co. (Delaware).*

Chairman of board and director, Hanna Furance Corporation
(New York).*

Chairman of board, president and director, Midwest Steel
Corporation.*

Director, Pittsburgh & West Virginia R. R. Co 64, 340, 891

Director, Peoples Bank of HoUidays Cove, W. Va.

Director, Fidelity Trust Co ' . 1 34,042,661

Director, National Association of Manufacturers.

Director, Weirton Improvement Co.*

Director, Oak Hill Supply Co.*

Director, Richmonji Iron Co.*

Director, Susquenhanna Ore Co 4, 148, 531

Director, Maurice & Laura Falk Foundation.

Director, American Iron & Steel Institute.

Trustee, University of Pittsburgh.

365, 267, 275

' Depreciation reserve, if any, not shown.

* As-^ts are included in total for National Steel Corporation.

* Assets are included in total for M. A. Hanna Co.

430 CONCENTRATION OF ECONOMIC POWEIl

Total assets are before deducting depreciation reserves and are as of December
31, 1937, except in a few cases when a company ended its fiscal j^ear at some other
time. List of directors and their affiliations is from the 1940 edition of Poor's
Register of Directors and Executives and total assets are from the 1938 editions
of Poor's Financial Statements. It was not possible to get the assets of every
companJ^

Table 2

(The directors of the National Steel Corporation in 1939 had business connec-
tions in companies which had the following total assets in 1937:)'

National Steel Corporation $262, 735, 192

Union.Joint Stock Land Bank 2 7, 175, 086

Michigan Bell Telephone Co 194, 346, 518

Bagley Building Corporation 2, 699, 414

Farmers Deposit National Bank 2 95, 812, 534

Farmers Deposit Trust Co 2 2, 725, 228

Reliance Life Insurance Co 2 709^ 194

Blaw-Knox Co 25, 646, 133

Manufacturers' National Bank (Detroit) 2121, 882, 749

M. A. Hanna Co 62,251,587

National Biscuit Co . s 124,022,849

Howe Sound Co 27,499,731

Susquehanna Ore Co 4, 148, 531

Union Collieries Co 9, 106, 566

Pittsburgh Coke & Iron Co .15, 704,868

National City Bank (Cleveland, Ohio) 2 153^ ggg, 134

Industrial Rayon Corporation 26, 555, 053

Phelps Dodge Corporation 340, 942, 652

Fidelity Trust Co 2 34^ 042, 661

American Puddled Iron Co. ■ 312, 852

Youngstown Steel Co.. . = 1, 572, 152

Detroit Steel Products Co 7,613,366

Copperweld Steel Co . . 6, 704, 633

Pittsburgh & West Virginia R. R. Co 64,340,891

Total 1, 592, 506, 574

• Total assets are before deducting depreciation reserves and are as,of Dec. 31, 1937 except in a few cases
when a company ended its fiscal year at some other time. The assets of every company with which the
directors were affiliated were not available but the great majority were: only those companies whose assets
could be obtained are listed here. List of directors is from the IQ'IO edition of Poor's Register of Directors
and Executives and total assets are from the 1938 editions of Poor's Financial Statements.

2 Amount of depreciation, if any, not shown.

' Depreciation is deducted, the amount of which is not available.

APPENDIX H

Mr. H. Donald Campbell, president of the Chase National Bank of.
the City of New York, has the following nine other business connec-
tions, in addition to the task of running the largest bank in the
United States:

Director, American Alliance Insurance Co.

Director, American Smelting & Refining Co.

Vice chairman of board. and director, Chase National Bank.

Vice president and director. Chase Safe Deposit Co.

Director, Twentieth-Century-Fox Film Corporation

Director, Great American Indemnity Co.

Director, Great American Insurance Co..

Director, Rochester American Insurance Co.

Director, Consolidation Coal Co. •

Mr. Gordon S. Rentschler, president of the National City Bank 6f
New York, the second largest bank in the United States, has the
following nine other business connections:

Director, International Banking Corporation.

Director, Hooven, Owens, Rentschler Co.

Director, City Bank Farmers Trust Co.

Director, Discount Corporation of New York.

Director, General Machinery Corporation.

Director, Home Insurance Co.

Director, Federal Insurance Co.

Director, National Cash Register Co.

Director, International Telephone & Telegraph Corporation.

Source: Data is from the 1940 edition of Poor's Register of pirectors
and Executives.

431

INDEX

Page
AGRICULTURAL ADJUSTMENT ADMINISTRATION: Survey of

milk marketing in Milwaukee. May, 1937.. iv, 119 pp.; cited. 56

AGRICULTURAL IMPLEMENTS. {See Farm Machinery.)

•AIR REDUCTION CO., INC.: Business investment return; rate of re- .

turn each year 1934-37; comment and table 106 . . 90-91

ALLIED CHEMICAL & DYE CORPORATION: Business investment

return; rate of return each year 1934-37; comment and table 106. 90-91

ALLIS-CHALMERS MANUFACTURING CO.:
Invested capital return:

Average rate of return on invested capital for period 1927-36 and

each year 1935-37; table 87 79

Size rank in farm machinery industry . . 15,30

ALPHA PORTLAND CEMENT ^O: Size rank in cement industry 21, 76

AMALGAMATED SUGAR CO.: Size rank in beet sugar refining indus-
try .• 44

AMERICAN AGRICULTURAL CO. (OF DEL.) : Invested capital re-
turn, rate of return each year 1934-37; relative size of corporation accord-
ing to average annual assets for period 1934-37; comment and table

107 . 1. . .. 91

AMERICAN BEMBERG CORPORATION : Invested capital return, rate

of return each year 1928-38; table 108 . j, 92

AMERICAN CRYSTAL SUGAR CO.:
Invested capital return:

Assets, average for period 1934-37, rate of return each year 1934-37;

table 92 _. 82

Size rank in beet sugar refining industry . 44

AMERICAN ENKA CORPORATION: Invested capital return, rate of

return each year 1930-38; table 108 „.. 92

AMERICAN ROLLING MILL CO.:
Invested capital return:

Average annual total investment, average annual profit applicable
to total investment capital, average annual rate of return on

invested capital for period 1917-38; table 85 78

Rate of return on total invested capital, 1930-38, each year; table

86 .-____ 78

AMERICAN SUGAR REFINING CO.:
Invested capital return :

Assets, average for period 1934-37, rate of return each ydar 1934-37;

table93 _. 83

!5ize classification in cane sugar refining industry. 44

Supercorporation in sugar refining industry; asset size relation to

National Sugar Refining Co , 15

AMERICAN TELEPHONE & TELEGRAPH CO.: Activities, pay roll,

employees, gross income, directors J 120-121

Directors' affiliations in 1939; assets of companies as of 1937, with

which affiliated 416-422

AMERICAN TIN PLATE CO.: Competitive practices, remarks by

William Griffiths quoted 112

AMERICAN VISCOSE CORPORATION: Invested capital return, rate

of return each year, 1915^38; comment and table 108 ; 92

ANDERSON, ARTHUR: Large industrial combinations; remarks (1930)

quoted . 130

ARIZONA: Beet-sugar plants located in Arizona by rank of plants 45

433

264905 — 41— No. 13^ 29

434 INDEX

Page
ATLANTIC REFINING CO.: Invested capital return, assets, average
for period 1934-37, rate of return on invested capital each year, 1934-

37; table 91 62

AUTOMOBILE COMPANIES:
Invested capital returns:

Rates of return on invested capital of 7 named companies (Gen-
eral Motors, Ford, Chrysler, Studebaker, Hudson, Packard,
and Nash) for their motor-vehicle business, 1927-37, each year;

comment and table 78 ^ 1 ._ __ 73-74

AUTOMOBILE INDUSTRY: Supercorporation and next in size 15

AUTOMOBILE PRODUCTION:
Costs — passenger cars:

Average price realizations and costs for Chevrolet and Plymouth
cars, Chevrolet and Ford cars, Studebaker and Oldsmobile ears,
dollars and percentages, 1929-37, each year; comment and

tables 79-81 74-75

AVERY, B. F., & SONS. (See B. F. Avery & Sons.)
B. F. AVERY & SONS: Invested capital return, average rate of return
for periods 1913-38, 1919-26, 1927-36, and each year 1935-36; table

87 :.., . 79

BAKING COMPANIES:
Invested capital return:

Number of plants, amount of sales, baking investment, rate of
return, totals for 70 companies, for each of 3 largest by name,
for 10 companies absorbed by Continents Baking Corporation,

as of 1924; comment and table 103. 88

Rank of 51 companies, 4 largest by name, number of plants,
amount of sales, rank based on rate of return, 1925; comment

and table 104 . . _.._: 88-89

Rates of return on business investment of 4 largest companies by

Eoine, 1927-37, each year; comment and table 105 90

BAKING INDUSTRY:
Mergers:

Continental Baking Corporation, 1924; case study -. 101-102

"Supercorporatfon and next in size 15

BEET-SUGAR' COMPANIES:
Invested capital return:

Rate of return of 6 named companies, percent each year, 1934r-37,

by asset size; comment and table 92 82

BEET-SUGAR PRODUCTION. {See Sugar Production.)

BETHLEHEM-LACKAWANNA MERGER, 1916-23 408

BETHLEHEM STEEL CO.:

Historical development and merger motives of company, charts and

exhibits 1-51 . - 214-397

BETHLEHEM STEEL CORPORATION:

Merger ; case study 106

Size rank in steel and iron industry . 15

Invested capital:

Average annual total investment, average annual profit applicable
to total invested capital, average annual rate of return on

invested capital for period 1917-38; table 85-J .1.- 78

Rate of return on total invested capital, 1930-38, each year;

table 86 78

BISHOP, A. L.: Large-scale business, remarks on . 129

BORDEN CO.: Size rank in milk and milk products industry _.'- 15

BRANDEIS, LOUIS D.: Other people's money; extract .. 128

BREAD BAKING INDUSTRY:
Costs — Wheat bread:

Rank according to total cost per pound of bread, cost minus ingre-
dients and profits per pound of 4 largest companies in 1925;

comment and table 76 70

Ranks of General Baking Corporation, United Bakeries Corpora-
tion and Ward Baking Corporation, according to total costs
per pound, costs excluding ingredients per pound, profit per
pound 1920-24, each year; comment and table 76 69-70

INDEX 435

BREAD BAKING INDUSTRY— Continued.

Costs — Wheat bread — Continued. ' Page

Ranks of 15 companies absorbed by Continental Baking Corpo-
ration, average production each company, in pounds per year,
ranks according to total costs per pound of bread, to costs
minus ingredients, to profits per pound of bread, 1920-24 each

year; comment and table 77_- 71

Total unit costs, unit cost exclusive of ingredients ind profit per
pound for bread made in exclusively wholesale bj in i plants of
different size, yearns 1922-2.5 combined, by productioii per plant

in pounds per year; comment and table 74 69

BUSINl!:SS EFFICIENCY:

Criteria used as tests by Federal Trade Commission: Costs and rate of

return on invested capital 4-7

Managerial responsibility in business and in Government 127

Measurements of business iefficiency selected by Federal Trade

Commission for this study; reasons. 3-7

Multiple or interlocking directorships, relationship to business

efficiency 120-124

Relative efficiency of large, medium-sized, and small business:

Summary of result of exploration of theoretical economic litera-
ture on subject 1-3

Tests made by Federal Trade Commission (233) stuumarized:
Individual and group company costs, individual and group plant
costs, rates of return on invested capital individual and group

companies 1 2-14

Technique employed by Federal Trade Conunission in applying

measurement selected 7-10

BUSINESS INVESTMENT: Defined 90

BUTTER PRODUCTION:
Costs:

Costs per pound of butter for centralizers of different size in 1918;
range of company production per company, number of companies
and of plants each range, butterfat cost, collection cost, and total

cost per pound of .butter; comment and table 59 1 58

Ranks of G largest and 3 lowest-cost butter producers each year
1914-18, and total production during 5 years; comment and table

60 . 59

Volume in pounds produced 1934 by each of four-named centralizers;

table 95 84

CALIFORNIA: Beet sugar plants located in California by rank of plants. . 45

CALIFORNIA & HAWAIIAN' SUGAR REFINING CORPORATION,

LTD. : Size rank in cane-sugar refining industry 44

CAMPBELL, HUGH, president. United States Tobacco Co.: Large indus-
trial combinations, remarks on 113

CANE, SUGAR. {See Sugar Production, Sugar Refiners, Sugar Refining.)
CANNED MILK COMPANIES:
Investment earnings:

Rates of return earned on gross investment, number of companies,
percent of profit each year 1915-18, by size of sales; comment

and table 94 . 83-84

CANNED MILK PRODUCTION:
Costs, evaporated milk:

Costs of evaporated milk per case in 1918, of large, medium-
sized, and small companies; number of companies and of plants,
average j)roduction per company, average cost per case; com-
ment and tal)le 61 59

CASE, J. L, CO. {Sfe ,1. I. Case Co.)

CELANESE CORPORATION OF AMERICA: Invested capital return,

rate of return each year 1925-38; comment and table 1','S 92

CEMENT COMPANIES:
Mergers :

Pennsylvania-Dixie Cement Co., 1926; case stu y 103-105

Invested capital returns:

Average rates of return on stockholders' inve; te I capital of 17
unnamed companies.for 1917-36 combined b; s ze and location
of company; comment and table 82 . 76

436 INDEX

CEMENT COMPANIES— Continued.

Invested capital returni, — Continued. Page.

Average rates of return on stockholders' invested capital of 16
unnamed companies by size and location for 1935 and 1936;

comment and tables 83-84 77

Simple averages of yearly rat«s of return on stockholders' in-
vested capital for 17 companies and the consolidation in follow-
ing periods: 1921-25, 1927-29, 1930-33, and 1934-36; comment

and table 104-105

Size classification used 21

CEMENT PLANTS:

Big Five, nanes of 21

Size classificati m sed 21

CEMENT PROD^CxION:
Costs : i

Costs per barrel of 45 companies, 1929, by size classification;

comment and table 2 23

Costs per barrel of 102 mills, 1929, by size classification; comment

and table 1 22

Costs, Lake Stages plants:

Big Five and independent plants: Rank, percent of capacity uti-
lized, cost per barrel, net mill price received per barrel, margin

per barrel, 1929; comment and table 4 25

Costs, Lehigh Valley plants:

Big Five and independent plants: Rank, percent of capacity uti-
lized, cost per barrel, net mill price received per barrel, margin

per barrel, 1929; comment and table 3 — . : — -24

Costs, southeastern section plants: "

Big Five and independent mills: Percent capacity utUized, cost
per barrel, net mill price received per barrel^ margin" per barrel,

1929; comment and table 5-- 25

CHASE NATIONAL BANK: President, H. Donald Campbell, multiple

business interests of 125

CHEMICAL COMPANIES:
Invested capital return:

Rates of return for nine named general chemical companies,
1934r-37 each year, with average yearly assets; comment and

table 106 ....:_._ 90

CHEMICAL INDUSTRY: Supercorporation and next in size .._- 15

CHEVROLET CO:

Average price realizations, passenger cars, on all types and models
and average cost of all types and models each year 1929, 1932, 193"4,

1936-37, dollars and percent; table 79 - -, - - 74

Average price realizations, passenger and commercial vehicles, all
types and models, and average cost, all types and models, 1929, 1932,

1934, 1936-37, each year, dollars and percent; table 80 - _ 75

CHRYSLER CO.:

Invested capital return rates, 1927-37, each year; table 78 73

Size rank in automotive industry -•. — 15

COLGATE-PALMOLIVE-PEET MERGER IN SOAP INDUSTRY... 136
COLORADO: Beet-sugar plants located in Colorado, by rank of plants. _ 45

COLORADO FUEL & IRON CO.: Size rank in steel industry 26

COMBINATIONS. (See Mergers.)

CONSOLIDATED OIL CO.: Invested capital return, assets, average for
period 1934-37, rate of return on invested capital each year 1934-37;

table 91 -' 82

CONTINENTAL BAKING CORP.:
Business investment return:

Rate of return of four largest companies compared, each year-

1927-37; table 105 . ....- 90

Costs:

Rank of corporation according to total cost per pound of bread,
costs minus ingredients per pound, and profit per pound, 1925;
table 76 70

INDEX 437

CONTINENTAL BAKING CORP.— Continued.

Invested capital return: Pag«.
Number of plants of companies absorbed by Corporation, amount
of sales and of baking investment, return on baking invest-
ment, as stated and as revised 1924; table 103 88

Number of plants, sales amount, rank according to return on

baking investment of 51 baking companies, 1925; table 104 88

Merger creating the largest wholesale baking corporation in the

United States, 1924; case study ---- 101-102

Supercorporation in the baking industry; asset size relation to Ward

Baking Corporation 15

CONTINENTAL OIL CO.: Invested capital return,. assets, average for
period 1934-37, rate of return on invested capital each year 193'^ -37;

table 91 - 82

COST OF DISTRIBUTION: Milk. (,See MUk Distribution.)
COST OF PRODUCTION:

Agricultural implements. (See Farm Machinery.)

Automobiles^ — passenger cars. {See Automobile Production.)

Beet sugar. (See Sugar Production.)

Binders. (See Farm Machinery.)

Bread. (See Bread Baking.)

Butter. (See Butter Production.)

Cane sugar. (See Sugar Producti6n.)

Cane-sugar refining. (See Sugar Refining.)

Cement. (See Cement Production.)

Combines. (See Farm Machinery.)

Crude petroleum. (See Petroleum Production,)

Cultivators. (See Farm Machinery.)

Data used by Federal Trade Commission, source and nature of 17

Factors whichaffect costs of production 1 18

Farm machinery. (See Farm Machinery.)
Flour. (See Flour Production.)

Merger stimulation and cost of production-relationship; Dr. Myron
W. Watkins' testimony before Federal Trade Commission; sum-
mary 98-100 '

Milk products. (See Milk Products Production.)

Petroleum. (See Petroleum Production; Petroleum Refining.)

Pig iron. (See Steel Production.)

Plows. (See Farm Machinery.)

Sugar. (See Sugar Production; Sugar Refining.) ^- ,

Technique employed, United States Tariff Commission and Federal \

Trade Commission , : 17, 19 "'

Tests of relative efficiency of business by size on basis of costs of pro-
duction ; summary ■ -. 12-14

Tractors. (See Farm Machinery.)

CRESSON, GEORGE V.: Effect of size in business, remarks on 113

CRUDE OIL PRODUCTION. (See Petroleum Production.)

CRUM, WILLIAM L.: Corporate size and earning power (1939); cited

(n.) : 4,13,73

DAIRY BUSINESS:

Invested capital returns:

Rates each year 1929-35 for each of 4 named centralizers ; com-
ment and table 95 84

DAVISON CHEMICAL CORPORATION: Invested capital return,
rate of return each year, 1934-37; relative size of corporation according

to average annual assets for period 1934-37; comment and table 1'07 91

DEERE & CO.:

Invested capital return:

Average rate of return on invested capital for periods 1913-38,

1919-26, 1927-36, and each year 1935-37; table 87 79

Size rank in farm machinery industry 15, 30

DEWING, ARTHUR S.:

The corporation — A study of its financial structure (1934) ; cited (n.)_ 111

Corporation finance (1921; revised edition, 1930); cited (n.) 111

Financial policy of corporations (1920; third revised edition, 1934);

cited (n.) 111

Promotion and reorganization of industrial corporations (1914);

cited (n.) " ..- Ill, 114

438 INDEX

DIRECTORATES: Page

American Telephone & Telegraph Co., directors' affiliations in 1939;

assets of companies, as of 1937, with which affiliated 416-422

Multiple or interlocking, relationship to business efficiency . 120-124

National Steel Corporation, directors' affiliations in 1939; assets of

companies, as of 1937, with which affiliated 427-430

United States Steel Corporation, directors' affiliations in 1939; assets

of companies, as of 1937,' with which affiliated 423-426

DISTRIBUTION COST: Milk. {See Milk Distribution.)

DOUGLASS, ARCHER W.: Handicaps of big business (1916); cited (n). 129

DOW CHEMICAL CO.: Business investment return, rate of return each

year 1934-37; comment and table 106 90-91

DULUTH SUPERIOR MILLING CO.: Accounts included in those of the

Standard Milling Group, which see..
DU PONT DE NEMOURS & CO.:
Invested capital return:

Rat^^ of return each year 1934-37; comment and table 106 90-91

Supercorporation in chemicals industry; asset size relation to

Union Carbide & Carbon Corporation 15

DU PONT DE NEMOURS & CO.— RAYON DEPARTMENT:
Invested capital return :

Rate of return each vear 1921-38; comment and table 108 92

EMERSON-BRANTINGHA'M CORPORATION:

Invested capital return, average rate of return on invested capital for

periods 1913-38, 1919-26; table 87 79

EMPIRE GAS & FUEL CO.:

Invested capital return, assets, average for period. 1934-37, rate of

return On invested capital each year 1934-37; table 91 82

EPSTEIN, RALPH C: Industrial profits in the United States (1934);

cited (n) 4

EVAPORATED MILK: (See Canned Milk Production.)
FARM MACHINERY PRODUCTION:
Costs:

Bii;ders, cost per pound of grain binders, dififerenx, companies

1935 and 1936, by size of company; comment and table 17-- 33
Binders, profits percent, price realization percent, cost per unit
1935 and 1936, manufacturers by size of company; commerit

and table 18 --- - 34

Combines, cost per pound, different companies, 1935 and 1936,

by size of company; comment and table 15 32

Combines, profits percent, costs per combine, and price realiza-
tions percent, manufacturers, by size of company, 1935 and

1936; comment and table 16 33

Cultivators, riding, cost per pound, 1935 and 1936, different c6m- P^

panies, by size of company; comment and table 23 36

Cultivators, riding, profits and price realizations in percentages,
price per unit, 1935 and 1936, by size of manufacturing com-
pany; comment and table 24 37

. Cultivators, tractor-mounted, 2-rowi costs per pound, different
companies, 1935 and 1936, by size of company; comment and

table 21 35

Cultivators, tractor-mounted, 2-row, profits and price realizations
in percentages, cost per unit, 1935 and 1936, by size of manu-
facturing companies; comment and table 22 36

Plows, 14-inch, 2-base, tractor-gang, costs per pound, different
companies, 1935 and 1936, by size of company; comment and

table 19 34

Plows, 14-inoh, 2-base, tractor-gang, profits and price realiza-
tions in percentages by size of manufacturing company, 1935

and 1936; comment and table 20 35

Steel-wheel tractors, 1935 and 1936, cost per tractor, different

compa,nies, by size classification; comment and table 13 31

Steel-wheel tractors, profits, costs and price realizations in per-
centages, 1935 and 1936, by size of company; comment and

table 14 -. 31-32

FARM MACHINERY INDUSTRY: Supercorporation and next in size. 15

INDEX 439

FARM MACHINERY MANUFACTURERS:

Invested capital returns: Paee.

Rates of return on invested capital of long-line nanaed com-
panies, average 1913-18, 1919-26, 1927-36, ^nd 1935-37 each

year; comraent and table 87 ^i 79

FEDERAL TRADE COMMISSION: Cost studies technique 17, 19

FERTILIZER COMPANIES:
Invested capital returns:

Rate of return for five named companies, 1934-37 each year,

with average yearly assets; comment and table 107 91

FETTER, DR. FRANK A.:

Efficiency in mass production; summary of testimony before Federal

Trade Commission 107-110

The fundamental principle of efficiency in lass production 398-415

FLINT, CHARLES R.: Large corporations, remarks on 112

FLOUR PRODUCTION:
Costs — wheat flour:

Cost of producing a barrel of wheat flour excluding cost of wheat
and packages, in 1922, by companies of different size; comment
and tables 71-73 including cost of wheat but excluding cost of

packages ; including and excluding cost of wheat ^ 66-68

Costs per barrel of wheat flour for flour mills of different capaci-
ties for 6 months ending June 30, 1926-28, by range of capacity

of flour mills; comment and table 62 60

Cost per barrel of wheat flour for flour mills of different sj?e,
each crop year 1935-36 and 1937-38, by range of production

of mills; comment and table 63 61

Costs of a barrel of wheat flour including cost of wheat and
packages, by 94 companies of different size; comment and

table 70 . 65

Cost of producing a barrel of wheat flour, including cost of wheat
but excluding packages, excluding cost of wheat but including
packages and excluding both cost of wheat and packages, 1913,

40 companies ; comment and tables 67-69 63-64,

Costs, prices, and profits of 38 flour-milling companies of different
size for the 5-year period 1913-14 to 1917-18, by volume of

annual production; comment and table 65 62

Selling, advertising, and miscellaneous expenses per barrel of
flour for groups of mills of different size, 1935-36 and 1937-38
averaged, by range of production of mills; comment and table

64 61

Total costs of producing ^ barrel of wheat flour in 1913, including
cost of wheat and packages, 40 companies classified by size;

comment and table 66 62

FLOUR-MILLING COMPANIES:
Invested capital return:

Average annual investm.ent and profit and rate of return, 47
unnamed companies by size of investment, 1919-24 combined;

comment and table 100 86

Average annual production investment, net profits and rate
of return, 47 unnamed companies grouped by vohime of

production, 1919-24 combined; comment and table 99 86

Investment, net income, and rate of return, by investment size, '"^

1919-22 combined; comment and table 96 84

Investment, rank according to rate of return, size classification
11 companies, 3 named, 8 unnamed, in 1922; comment and

table 98 ' 85

Production, investment, income, rate of return, by vohime of

production groups, 1919-22 combined; comment and table 97. 85
Rate of return on milling investm.ent, 47 unnamed companies,
1919-24, each year, by size of investment and by volume of

production; comment and tables 101 and 102 87

FLOUR MILLING INDUSTRY: Sqpercorporation and next in size 15

FLYNN, JOHN T.: Multiple directors; quoted 126

440 INDEX

FORD MOTOR CO.: Page

Average price realizations, passenger and commercial vehicles, all types
and models, and average cost, all types and models, 1929, 1932,

1934, 1936-37, each year, dollars and percent; table 80 75

Invested capital return rates, 1927-37, each year; table 78 73

Size rank in automotive industry 15

GENERAL BAKING CORPORATION:
Business investment return:

Rate of return of four largest companies compared, each vear

1927-37; table 105 I... 90

Costs:

Rank of corporation according to total cost per pound of bread,
costs excluding ingredients per pound and profit per pound,

1920-24, each year and 1925; table 75-76 69-70

Invested capital return:

Number of plants, amount of sales, of baking investment, return

on baking investm^ent as stated and as revised, 1924; table 103- 88
Number of plants, sales amount, rank according to return on

baking investment of 51 baking companies, 1925; table 104.. 88
GENERAL MILLS, INC.: Supercorporation in flour milling industry;

size relation to Pillsbury Flour Milling Co 15

GENERAL 'MOTORS CORPORATION:

Invested capital return rates, 1927-37, each year; table 78 73

Supercorporation in automobile industry; asset size relation to Ford

-^otor Co. a.nd Chrysler Corporation • 15

GODCHAUX sugar CO.: Invested capital return assets, average for

period 1934-37, rate of return each year 1934^37 ; table 93 83

GOVERNMENT: Managerial responsibility in business and in gov-
ernment 127

GREAT WESTERN SUGAR CO.:
Invested capital return:

Assets, average for period 1934-37, rate of return each year 1934-

37; table 92 82

Supercorporation in beet sugar refining industry; asset size relation

to Holly Sugar Co . 1>5

GRIFFITHS, WILLIAM, tin plate manufacturer: American Tin Plate

Co.'s competitive practices, remarks on 112

GULF OIL CORPORATION: Size rank in petroleum industry... 38

HADLEY, PROF. ARTHUR T.: Formation and control of trusts

(1899) ; cited (n.) 112

Large corporations, remarks on .. 112

HECKER-JONES-JEWELL MILLING CO.: Accounts included in those

of the Standard Milling Group, which see.
HOLLY SUGAR CORPORATION:
Invested capital return:

Assets, average for period 1934-37, rate of return each year .

1934-37; table 92 . 82

Size rank in beet sugar refining industry 15, 44

HOPKINS, DR. ERNEST M.: On banks and mergers and industrial re-
organization ; remarks quoted 131

HORIZONTAL COMBINATION: Fetter on 406

HUDSON MOTOR CAR CO.: Invested capital return rates, 1927-37,

each y_ear; table 78 , : 73

IDAHO: Beet sugar plants located in Idaho by rank of plants ^ 45

IDEAL CEMENT CO. : Size rank in cement industry 21, 76

INDUSTRIAL RAYON CORPORATION: Invested capital return,

rate of return each vear 1926-38; table 108 . 92

INLAND STEEL CO.:

Invested capital return:

Average annual total investment, average annual profit applicable
to total invested capital, average annual rate of return on

invested capital for period 1917-38; table 85 78

Rate of return on total invested capital, 1930-38, each year;

table 86 78

Size rank in steel industry. . 26

INSULL COLLAPSE: Owen D. Young on 130

INDEX 441

Page

INTEGRATION: Assumed economy of integrated ownership (Fetter) J^j 410

Competition between integrated and unintegrated business (Fetter).. 410

Decisive eflfect of integration in the steel decision (Fitter) 1. 411-413

Degree of integration and business efficiency relationship, comment.. 93-94

Vertical combination (Fetter) ■. _ — '. 403

INTERNATIONAL AGRICULTURAL CORPORATION: Invested cap-
ital return, rate of return each year 1934^37; relative size of corporation
according to average annual assets for period 1934-37; comment and table

107 91

INTERNATIONAL HARVESTER CO.:
Invested capital return:

Average rate of return on invested capital for periods 1913-38,

1919-26, 1927-36, and each year 1935-37; table 87..-. 79

Supercorporation in farm machinery industry; asset size relation to

Allis-Chalmers Manufacturing Co. and Deere & Co 15

INTERNATIONAL MATCH CO 126

INVESTED CAPITAL RETURNS (see also automobile companies;
banking companies; beet sugar' companies; canned milk companies;"
cement companies; chemical companies; dairy business; farm machinery
manufacturers; fertilizer companies; flour-milling com.panies; petroleum
refiners; rayon companies; steel companies; sugar refiners):

Comment on tables and related data. _ . 72-73

Factors which affect rate of return . 18

Tests 01 relative efficiency of business by size on basis of rate of return;

summary 1 12-14

IOWA: Beet^sugar plants located in Iowa, by rank of plants 45

IRON AND STEE]^ INDUSTRY. (See Steel industry.)

J. I. CASE CO.: Invested capital return, average rate of return on invested

Capital for periods 1919-26, 1927-36, and each year 1935-37; table 87.. 79

JONES, ELIOT: Trust problem in the United States (1929); cited 114

JONES & LAUGHLIN STEEL CORP.:
Invested capital return:

Average annual total investment, average annual profit applica-
ble to total invested capital, average annual rate of return on

invested capital for period 1917-38; table 85 78

Rate of return on total invested capital, 1930-38, each year; table

86 ----.- 78

Size rank in steel industry 26

KANSAS: Beet-sugar plants located in Kansas, by rank of plants 45

KREUGER COLLAPSE . 126

LARGE BUSINESS. (See Size of business.)

LEHIGH PORTLAND CEMENT CO.: Size rank in cement industry.. 21, 76
LONE STAR CEMENT CORPORATION: Size rank in cement industry. 21, 76
MASS PRODUCTION:

Efficiency in mass production, by Dr. Frank A. Fetter; summary of

testimony before Federal Trade Commission 107-1 10

Fundamental principle of efficiency in mass production ^ 398-415

MASSACHUSETTS MILK CONTROL BOARD: Report, Nov. 30, 1936.

39 pp. ; cited (n.) 55

MASdEYjH ARRIS CO.: Invested capital return, average rate of return

for period 1927-36 and each vear 1935-37; table 87 . . . 79

MATHIESON ALKALI WORKS, INC.: Business irivestm.ent return,

rate of return each vear 1934-37; comment and table 106 90-91

McKESSON & ROBBINS CASE . 136

McKINNEY STEEL CO.: Size rank in steel industry 26

McNULTA, GEN. JOHN: Large industrial combinations, remarks on.. 113
MEDUSA PORTLAND CEMENT CO.: Size rank in cement industry.. 21
MERGERS:

Bethlehem-Lackawanna merger, 1916-23 408

Case studies:

Bethlehem Steel Corporation 106

Continental Baking Corporation 101-102

Pennsylvania-Dixie Cement Corporation 103-105

Colgate- Palmolive-Peet merger in soap industry 136

Critics of the first merger movement in American business, 1890-1904;
summary of commitments 111-115

442 INDEX

MERGERS— Continued. Pagfr

Critics of the second merger movement iri. the United States, 1919-28;

summary of commitments z 128-131

Horizontal combination (Fetter) 406

Merger stimulation and cost-of-production relationship; Dr. Myron
W. Watkins' testimony before Federal Trade Commission; sum-
mary.... . 98-100

Relation of industrial consolidation to, the general economy, by Dr.
Myron W. Watkins; statement prepared for the Temporary National

Economic Committee, March 1940 133-139

Vertical combination (Fetter) 403

MICHIGAN: Beet sugar plant located in Michigan by rank of plants 45

MICHIGAN SUGAR CO.:
Invested capital return:

Assets, average for period 1934-37, rate of return each year^ 1934-

37; table 92.. .. 82

Size rank in beet sugar refining industry . ■ 44

MID-CONTINENT PETROLEUM CORP.:

Invested capital return; assets, average foi period 1934-37, rate of

return on invested capital each year 1934-37; table 91 82

MILK AND MILK^RODUCTS INDUSTRY: Supercorporation and

next in size 15

MILK DTSTRIBUTIUiv
Co

Coi. parison of average costs of delivering a quart of milk at retail
and wholesale for certain large dealers with average costs of all
dealers covered by Boston report, 12 months ended Sept. 30, 1935;

comment and table 54 55-56

Cost of distributing 100 lbs. of milk by 9 retail dealers in West
Virginia for 1933; lbs. produced, delivery and sales cost and total

distributing expense per 100 lbs. ; comm.ent and table 57 57

Cost of retail and wholesale delivery per qt. of fluid milk for 5 Con-
necticut, 5 Cincinnati, and 7 Philadelphia distributors during

June, 1934; comment and table 58 57-58

Costs of distributing 100 lbs. of milk by 22 dealers in West Virginia
for 1933; lbs. purchased, plant cost per 100 lbs., delivery and sales

cost per 100 lbs. total aistributing costs; comment and table 56 56-57

Estimated costs per qt. of fluid m.ilk sold for 2 large, 2 m.edium-sized,

and 2 small distributors in Milwaukee, 1933; comment and table

55 _ 5g

MILK products' PRODUCTION :" ^ " " '

Butter: See Butter Production.
Evaporated milk: See Canned Milk Froc ction.
MINNEAPOLIS-MOLINE CO.: Invested capital return, average rate of
return on invested capital for periods 1913-18 and 1927-36 and each year

1935-37; table 87 79

MONSANTO CHEMICAL CO.: Business investm.ent return, rate of ■

return each year 1934-37; comment and table 106 90-91

MONTANA: Beet sugar plants located in Montana by rank of plants 45

NASH MOTOR CAR CO.: Invested capital return rates, 1927-37, each

year- table 78 . _____ 73

NATIONAL CITY BANK OF NEW YORK: P'resident, Gordon S.

Rentschler, multiple business interests of 125

NATIONAL DAIRY PRODUCTS CO.: Supercorporation in milk and

milk products industry; asset size relation to Borden Co , 15

NATIONAL INDUSTRIAL CONFERENCE BOARD: Mergers in in-
dustry, by Dr. Mvron W. Watkins, sponsored bv 138

NATIONAL STEEL CORPORATION: Directors' affiliations in 1939;

assets of compan ies, as of 1937, with which affiliated 427-430

Invested capital return:

Average annual total investment, average annual profit applicable
to total invented capital, average annual rate of return on in-
vested capital for period 1917-38; table 85 78

Rate of return on total invested capital • 1930-38, each year;

table86 . ' .- 78

NATIONAL SUGAR REFINING CO.: Size r^nE in cane Bugar refining
industry ^ .- 15,44

INDEX 443

Page

NEBRASKA; Beet sugar plants located in Nebraska by rank of plants 45

NORTH AMERICAN RAYON CORPORATION: Invested capital

return, rate of return each year 1929-38; table 108 92

NORTHWESTERN CONSOLIDATED MILLING CO.: Accounts in-
cluded in these of the Standard Milling Group, which, see.

OillO : Beet sugar plants located in Ohio by rank of plants 45

OHIO OIL CO.: Invested capital return, assets, average for period 1934-37,

rate of return on invested capital each year 1934-37; table 91 82

OLDSMOBILE CO.: Average price realizations passenger cars and com-
mercial vehicles all types and models and average cost of all types and

models, 1932, 1934-37, each year, dollars and percent; table 81 75

OLIVER FARM-EQUIPMENT CO.: Invested capital return, average
rate of return on invested capital for period 1927-36 and each year

1935-37; table 87 ' ■. ...^ 79

OREGON: Beet sugar plants located in Oregon bv rank of plants 45

OTIS STEEL CO.:

Invested capital return :

Average annual total investment, average annual profit appli-
cable to total invested capital, average annual rate of return on

invested capital for period 1917-38; table 85 78

Rate of return on total invested capital, 1930-38, each year;

table 86- 1 78

PACKARD MOTOR CAR CO.: Invested capital return rates, 1927-37,

each year^ table 78 73

PENNSYLVANIA-DIXIE CEMENT CO.:

Merger of 1926; case study... ....^ 103-105

Size rank in cement industry . 21, 76

Study of corporation and predecessor companies, the merger and its
effect on operations, tables 1-15 and texts of agreements effecting

merger . : 140-213

PENNSYLVANIA SALT MANUFACTURING CO.: Business in vest-
ment return, rate of return each vear 1934-37; comment and table 106 90-91

PETROLEUM INDUSTRY: Supercorporation and next in size ^. 15

PETROLEUM PRODUCTION:
Costs — crude petroleum:

Cost ranks and sizes of two largest producers and lowest-cost
producer of crude petroleum in Santa Fe Springs (Calif.), in

1927-30, each year; comment and table 31 41

Cost ranks and sizes of 2 la- -^est producers and lowest-cost produ-
cer of crude petroleum in Seminole field (Okla.), 1927-30, each

year; comment and table 32 41-42

Cost ranks and sizes of three largest and two lowest cost crude
petroleum producers in Long Beach., Seal Beach, and Signal
Hill fields (Calif.), 1927-30, each year; comment and table 30_- 41
Cost ranks and sizes of three largest and two lowest-cost produ-
cers of crude petroleum in West Texas, in 1927-30, each year;

comment and table 33 42

Cost ranks and sizes of five largest and three lowest crude-oil-
producing companies in 1927-30, each year; comment and

table 29 40

Production, cost per barrel crude petroleum, number of barrels
produced for groups of companies, 1927-1930, each year;

comment and tables 25-28 38-40

PETROLEUM REFINERS:
Invested capital returns:

All refiners with producing facilities, 18 nam'ed companies, assets
(4-year average), percent rate of return each year 1934-37;

comment and table 91 a '. - 82

California refiners, 9 unnamed companies, total investment and
ranked according to average return on capital ihvestmeijt,

1922-25 combined; comment and table 89 80

Eastern refiners, 16 unnamed companies, total investment and
ranked according to average return on capital investment, 1922-

25 combined; comment and table 88 80

Midcontinent refiners, 30 unnamed companies, total investment
and ranked according to average return on investment, 1922-25
combined; comment and table 90 81-82

444 INDEX

PETROLEUM REFINING:

Cost : Page

Analysis of data of lowest-c6st refineries of California, Gulf

Coast, Atlantic Coast, and interior States, 1929-30 42-43

PHILLIPS PETROLEUM CO.: Invested capital return, assets, av^erage
for period 1934-37, rate of return on invested capital each year 193>4-37;

table 91 _~ 82

PILLSBURY FLOUR MILLING CO.:
Milling investment and return:

Size classification, total investment, rank according to ra|te of

return , 1 922 ; table 98 . ' 85

Size rank in flour-milling industry -. _^_ J _.' ' 15

PITTSBURGH STEEL CO. :
Invested capital return:

Average annual total investment, average annual profit appli-
cable to total invested capital, average annual rate of return on

invested capital for period 1917-38; table 85 78

Rate of return on total invested capital, 1930-38, each year;

table 86 . 78

PLYMOUTH CO.: Average price realizations, passenger cars, on all types
and models and average cost of all types and models each year 1929,

1932, 1934, 1936-37, dollars and percent; table 79 74

PRODUCTION COSTS. (See references under Cost of Production.)
PURE OIL CO.: Invested-capital return, assets, average for period 1934-37,

rate of return on invested capital each year 1934^37; table 91 82

PURITY BAKERIES CORPORATION:
Business investment return:

Rate of return of four largest companies compared, each- year

1927-37; table 105 90

Costs :

Rank of corporation according to total cost per pound of bread,
costs excluding ingredients and profit per pound, 1925; "table

76 . 70

Invested. capital return:

Number of plants, sales amount, rank" according to return on

baking investment of 51 baking companies, 1925; table 104-. 88
RAYQN COMPANIES:

Invested capital returns:

Annual rate of return, eight named companies: American
Visco.se, 1915-38; Du Pont rayon department, 1921-38; Cel-
anese Corporation, 1925-38; Industrial Ravon, 1926-38;
American Enka, 1930-38; North American, 1929-38; Tubize
Chatillon, 1933-38; American Bemberg, 1928-38; comment

and table 108 J 92

REFERENCES TO LITERATURE:

Agricultural Adjustment Administration. Survey of milk marketing

in Milwaukee. May 1937. iv, 119 pages; cited 1 36

Crum, William L. : Corporate size and earning power (1939); cited

(n.) '...: . _• -.-- 4, 13,73

Dewing, Arthur S.: Corporation finance (1921, revised edition, 1930);

cited (n.) .._:.... Ill"

The corporation — a study of its financial structure (1934);

cited (n.) 1 111

Financial structure of corporations (1920; 3d rev. ed.) ; cited (n.) . Ill
Promotion and reorganization of industrial corporations (1914);

cited (n.) 111, U4

Douglass, Archer W.: Handicaps of big business (1916); cited (n.) 129

Epstein, Ralph C: Industrial profits in the- United States (1934);

cited (n.) 4

Hadley, • Prof . Arthur T.: Formation and control of trusts (1899);

cited (n.) . 112

Jones, EHot: Trust problem in the United States (1929); cited 114

Massachusetts Milk Control Board, Report, Nov. 30, 1936. 39 pp.;

cited (n.) 55

Suflfern, Ernest S.: Apparent failure of industrial eugenics (1913);

cited (n.) . 129

INDEX 445

REFERENCES TO LITERATURE— Continued. f&ik.

Taft, William Howard: The Antitrust Act and the Supreme Court

(1914); cited 1 406

Twentieth Century Fund: How profitable is business? (1937); cited

(n:) ---. 4

Watkins, Dr. Myron W. : Industrial combinations and industrial

policy (1927); cited (n.) :.. 98

Mergers in industry (1929); cited 138

Oil: Stabilization or conservation? (1937); cited (n.) 98

Public regulation of competitive practices in business enterprise

(1940) ; cited (n.) 98

REPUBLIC IRON & STEEL CORPORATION:
Invested capital return:

Average annual total investment, average annual profit applica-
ble to total invested capital, average annual rate of return on

invested capital for period 1917-38; table 85. _. 78

Rate of return on total invested capital, 1930-38, each year;

table 86 78

Size rank in steel industry 26

SCHELL, DR. ERWIN H.: Horizontal mergers; remarks (1930) quoted. 130
SHELL UNION OIL CORPORATION: Invested capital return, assets,
average for period 1934-37, rate of return on invested capital each year,

1934-37; table 91. . . 82

SIZE OF BUSINESS: , •

Classifications adopted by Federal Trade Commission 16-17

Collapse of large concerns, examples. (See InsuU collapse,* Inter-
national Match Co., McKesson & Robbins Case.)

Conglomerate businesses, examples 1-2 117-119

Critics of the first merger movement, 1890-1904... 111-115

Critics of the second merger movement, 1919-28 128-131

Large, medium-sized, and small business advantages and disadvan-
tages in relation to business efficiency ; comment. .^ 95-97

Problem of size in American business 132

, Size in American business today; growth in the size of business units

within a single industry 116-119

Supercorporations, examples of, in various industries: automobile,
iron and steel, farm machinery, petroleum, sugar refining, milk and

milk products, flour milling, chemicals, bread baking 15

SKELLY OIL CO.: Invested capital return, assets, average for period

1934-37, rate of return on invested capital each year, 1934-37; table 91 _ 82
SOCONY-VACUUM OIL CO., INC.:
Invested capital return:

Assets, average for period 1934-37, rate of return on invested.

capital each year, 1934-37; table 91.- ' 82

Size rank in petroleum industry 15, 38

SLOAN, ALFRED P.: Address to General Motors Corporation sales

committee, July 29, 1925; extract u '130

SMALL BUSINESS. (See Size of Business.)

SOUTH COAST SUGAR CORPORATION:^ Invested capital return, as-
sets, average .for period 1934-37, rate of return each year 1936-37; table

93 83

SOUTHWESTERN MILLING CO., INC.: Accounts included in those
of the Standard Milling Group, which see.

SPRECKELS SUGAR CO.: Size rank in beet sugar-refining industry 44

STANDARD MILLING GROUP:

Milling investment and return, size classification, total investment,

rank according to rate of return, 1922; table 98 85

STANDARD OIL C6. OF CALIFORNIA:
Invested capital return:

Assets, average for period 1934-37, rate of return on invested

capital each year 1934-37; table 91 1 82

Size rank in petroleum industry 38

STANDARD OIL CO. OF INDIANA:
Invested capital return : .

Assets, average for period 1934-37, rate of return on invested

capital each year 1934-37; table 91 .. 82

Size rank in petroleum industry 15, 38

446 INDEX

STANDARD OIL CO. (NEW JERSEY):

Invested capital return : Page

Assets, average for period 1934-37, rate of return on invested

capital each year 1934-37 ; table 91 82

Supercorporation in petroleum industry; asset size relation to Socony-

Vacuum Oil Co. and Standard Oil Co. of Indiana 15

STANDARD OIL CO. (OHIO):

Size rank in petroleum industry 38

STEEL COMPANIES:

Invested capital returns:

Average annual total investments, average annual profit appli-
cable to total invested capital, average annual rate of return for
each -of 11 named steel companies, 1917-38 combined; com-
ment and table 85 78

Rates of return on total invested capital of 11 named steel com-
panies, 1930-38 each year, in percentages; comment and table

86 78-79

STEEL INDUSTRY:

Mergers: Bethlehem Steel Corporation, 1922-33; case study 106

Supercorporation and next in size 1 15

STEEL PRODUCTION:
Costs, ingots:

Basic open-hearth ^nd Bessemer billet ingots. United States
Steel Corporation per gross ton production costs; comment

and tables 8-9 27-28

Costs, pig iron:

Basic and Bessemer pig iron, United States Steel Corporation, per

gross ton production costs ; comment and tables 6-7 26-27

Basic pig iron, northern furnaces, book furnace costs, 1910,
United States Steel Corporation plants, by size of production;

comment and table 6 _ 26

Basic pig iron, cost of producing a ton by integrated producers,
February-December, 1918, by rank and production size of pro-

" dueer ; comment and table 11 29

Bessemer pig iron, cost of producing a ton by integrated pro-
ducers, February'-Decem.ber 1918, by rank and production size

of producer; comment and table 12 29

Pig iron production costs per ton, 1916, by merchant coro.panies,
by rank and location (State) of producer; comment and table

10 .28

STUDEBAKER CO.:

Average price realizations, passenger and commercial vehicles, all
types and models, and average cost all types and models, 1932,

1934-37, each year, dollars and percent; table 81 75

Invested capital return rates, 1927-37, each year; table 78 73

SUFFERN, ERNEST S.: Apparent failure of industrial eugenics (1913);

cited (n.) 129

SUGAR PRODUCTION:
Costs — beet sugar:

Cost per pound, averaged for 5 crop years ending 1913-14, by
rank of plant in produciion, location of plant, and classification

of com.pany; comment and table 34 '_ 45-46

Cost per pound, averaged for 5 crop years ending 1913-14, by

size of companies; comment and table 35 46

Cost per pound, by companies of different sizes during crop years

1929-30 and 1931-32; comment and tables 39-41 48-49-

Cost per pound, during crop years 1929-30 and 1931-32, each ,
year, by size of com^pany and production rank of plant; c6m-

fnent and tables 36-38 46-48

Cost — cane sugar:

Cost ranks and size of two largest m.ills and four lowest-cost mills

in Hawaii, 1929-30 and 1931-32; comm.ent and table 43 50

Cost ranks and size. of two largest raw-sugar and three lowest-cost
raw-sugar companies in Louisiana, 1929-30 and 1931-32; com-
ment and table 44 50

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

in Cuba, 1929-30 and 1931-32; comment and table 42 49-50

INDEX 447

SUGAR REFINERS:

Invested capital returns — cane sugar refiners: Pag*

Rate of return, three named companies, each year, 1934-37, by

asset size ; comment and table 93-' 83

Supercorporations and next in size, beet and cane- sugar refiners 15

SUGAR REFINING:
Costs — cane sugar:

Refined cane sugar, cost per pound, by large, medium-sized, and

small companies,. for 1929-31; comment and tables 48-50--___ 52-53
Refined cane sugar cost per pound, by rank of refining plant in
production and by size of company, 1929-31; comment and

tables 45-47 - 51

Refining cane sugar, cost per pouiid, by large, medium-sized and

small companies, for 1929-31; comment and tables 51-53 , 53-54

SUN OIL CO.: Invested capital return, assets, average for period 19S4r' -37.

rate of return on invested capitkl each year, 1934^37; table 91 .. 82

SUPERCORPORATIONS: Examples of, in various industries: automo-
bile, iron and steel, farm machinery, petroleum, sugar refining, milk and

milk products, flour milling, chemicals, bread baking 15

TAFT, WILLIAM- HOWARD: The Antitrust Act and the Supreme

Court (1914); cited - 406

TENNESSEE CORPORATION: Invested capital return, rate of return
each year, 1934-37; relative size of corporation according to average

annual assets for period 1934-37; comment and table 107__- 91

TEXAS CORPORATION:-
In vested capital return:

Assets, average for period 1934-37, rate of return on invested

capital each year 1934-37; table 91 82

Size rank in petroleum irldustry ,. 38

TIDE> WATER ASSOCIATED OIL CO.:

Invested capital return, assets, average for period 1934—37, rate of

return on invested capital each year 1936-37; table 91 82

THORP, DR. WILLARD L.: Large-scale industrial operation; quotation

from statement in Recent Economic Changes report 129

TRAYLOR, MELVIN A.: Combinations and consolidations; remarks

(1931) quoted . 131

TUBIZE-CHATILLON CORPORATION: Invested capital return, rate

of return each vear 1933-38; table 108 .--- 92

TWENTIETH CENTURY FUND: How profitable is business? (1937);

cited (n.) 4

UNION CARBIDE & CARBON CORPORATION:
Invested capital return:

Rate of return each year 1934-37; comment and table 106 90-91

Size rank in chemicals industry 15

UNION OIL CO. OF CALIFORNIA: Invested capital return, assets,
average for period 1934^37, oarte of return on invested capital each year

1934-37; table 91. 82

UNION SUGAR CO.: Invested capital returns, assets, average for period

1934-37, rate of return each year 1934-37; table 92 •. 82

UNITED BAKERIES CORPORATION:
Costs:

Rank of corporation according to total cost per pound of bread,
costs excluding ingredients per pound and profit per pound,

1920-24, each year; table 75 69

Invested capital return:

Number of plants; amount of sales and of baking investment,
return on baking investment as stated and as revised, 1924;

table 103 - 88

UNITED STATES STEEL CORRORATION:

Activities, directors 121

Costs:

Basic open-hearth Ingots (northern worKs), costs per gross tou,
for each of works of United States Steel Corporation, by size

of production, 1910; comment and table 8 27

Basic pig iron northern furnaces, book furnace costs per gross ton,
1910, plants of United States Steel Corporation, by size of
production, comment and table 6 26

448 INDEX

UNITED STATES STEEL CORPORATION— Continued.

Costs — Continued. ' ^*e*
Bessemer pig iron, book furnace costs per gross ton, plants
United States Steel Corporation, by size of production; com-
ment and table 7 , 27

Bessemer billet ingots costs per gross ton, plants of United States
Steel Corporation, by size of production, 1910; comment and

tableQ : 28

Directors' affiliations in 1939, assets of companies as of 1937, with

which affiliated. 423-426

Invested capital:

Average annual total investment, average annual profit applica^
ble to total invested capital, average annual rate of return on

invested capital for period 1917-38; table 85 78

Rateof returnon totalinvested capital, 1930-38, each year;table86_ 78
' Supercorporation in iron and steel industry; asset size relation to

Bethlehem Steel Corporation 15

UNITED STATES TARIFF COMMISSION: Cost studies technique 17, 19

UNIVERSAL ATLAS CEMENT CO.: Size rank in cement industry 21, 76

UTAH : Beet sugar plants located in Utah by rank of plants .45

UTAH-IDAHO SUGAR CO.:
Invested capital return:

■ Assets, average for period 1934-37, rate -of return each year

1395-37; table 92 82

Size rank in beet sugar refining industry 44

VERTICAL COMBINATION: Fetter on 403

VIRGINIA-CAROLINA CHEMICAL CORPORATION:

Invested capital return, rate of return each year 1934-37; relative size
of Corporation according to average annual assets for period 1934-

37; comment and table 107 '. ■ 91

WARD BAKING CORPORATION:
Business investment return:

Rate of return of 4 largest companies compared each year 1927-37;

table 105 90

Costs:

-Rank of Corporation according to total cost per pound of bread,
costs excluding ingredients per pound and profit per pound,

1920-24; each year and 1925; tables 75-76 69-70

Invested capital return:

Number of plants, amount of sales and of baking investment,
return on baking investment as stated and as revised, 1924;

table 103 . - - 88

Number of plants, sales amount, rank according to return on

bakkig investment of 51 baking companies, 1925; table 104 88

Size rank in bread baking industry ^ 15

WASHBURN-CROSBY CO.: Milling investment and return, size classi-
fication, total investment, rank according to rate of return, 1922; table

98 „_ 85

WATKINS, DR. MYRON W.: Industrial combinations and industrial

policy (1927); cited (n.) 98

Mergers in industry (1929); cited 138

Oil; stabilization or conservation? (1937) ; cited (n.) . 98

Public regulation of competitive practices in business enterprise (1940) ;

cited (n.)___ . - - 98

Statement prepared for Temporary, National Economic Committee,
March, 1940; relation of industrial consolidation to the general

economy 133-139

Testimonv before Federal Trade Commission on merger stimulation

and coi.,* of production relationship; summarv 98-100

WESTVACO CHLORINE PRODUCTS CORPORATION: Business in-
vestment return, rate of return each year 1934-37; comment and table
106 . 90-91

INDEX 449

WHEELING STEEL CORPORATION:

Invested capital return: Tage

Average annual total investment, average annual profit appli-
cable to total investment capital, average annual rate of return

on invested capital for period 1917-38; table 85 78

Rate of return on total invested capital, 1930-38, each year;

table 86 78

WISCONSIN: Beet sugar plants located in Wisconsin by rank of plants 45

YOUNG, OWEND.: Insull utility empire; remarks quoted 1. 130, 137

YOUNGSTOWN SHEET & TUBE CO.:
Invested capital return:

Average annual total investment, average annual profit appli-
cable to total invested capital, average annual rate of return on

invested capital for period 1917-38; table 85 78

Rate of return on total invested capital, 1930^38, each year;

table 86 . 78

Size rank in steel industry^ , 26

26490&— 41 — No. 13 ;<0

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