(navigation image)
Home American Libraries | Canadian Libraries | Universal Library | Community Texts | Project Gutenberg | Children's Library | Biodiversity Heritage Library | Additional Collections
Search: Advanced Search
Anonymous User (login or join us)
Upload
See other formats

Full text of "Work materials ..."

7? 3? 




BOSTON 
PUBLIC 
LIBRARY 




,//A33 



OFFICE OF NATIONAL RECOVERY ADMINISTRATION 
DIVISION OF REVIEW 



PRICE FILING UNDER NRA CODES 

By 
Enid Baird 



WORK MATERIALS NO. 76 
VOLUME II 



TRADE PRACTICE STUDIES SECTION 
MARCH .d36 



OFFICE OF NATIONAL RECOVERY ADMINISTRATION 
DIVISION OF REVIEW 



PRI CE FI LIN£ UNDER NRA CODES 
By 
Enid Baird 



TRADE PRACTICE STUDIES SECTION 
MARCH, 1936 



— 415 w 



3. The Scope of the Code. 

The approval of F' : A had to be secured for many actions 
of the Code Authority for the asbestos industry. One of those 
■that caused considerable debate and discussion between the UFA 
and the code authority was the definition of the term "Affiliates". 
"Affiliates" of members of the industry, according to the code, were 
to be subject to the code, the definition of the term, therefore, 
was of importance in determining who 'should wile prices. -In' 
F *ptember, 1334, the sub-code authority for the brake lining in- 
dustry proposed that certain largo private brand buyers be regarded 
as affiliates. The 1TBA took exception to this and the proposal was 
rejected; after further attempts to secure a definition satisfactory 
to the Administration the matter was dropped. (*) 

4. Standard Price Filing Forms 

On January 11, 1935, the Code Authority for the valve and 
fittings industry wrote t'o" the deputy in charge of the code submitting 
a standai-d price filing form, "....which we are endeavoring to b ring 
into general use in our industry for the purpose of price filing...." 
The deputy submitted the form to the advisory boards and divisions. 
The Legal Division and Research and Planning Division objected to 
its use being made mandatory, and the Consumers' Foard felt it was 
unwise to approve it even as a suggested form. The price filing- 
form was withdrawn for further industry consideration, without for- 
mal action. One aspect of the form to which all parties in the NBA 
took exception was' a clause which provided for the filing of minimum, 
rather than actual selling prices. On January 21, 1935, the deputy 
in a letter to the code authority objected to this aspect of the 
form. The letter read in part as follows: 

"....In the first place the Valve and Fittings Code 
Authority is not empowered to issue such an interpre- 
tation. The NBA is the sol"' authority in this res- 
pect. Moreover, the word 'other' cannot be inter- 
preted in any way but its true meaning; namely, that 
there shall bo no deviation in prices filed by them 
either up or down. In this respect, therefore, the 
Code Authority lias exceeded its power in interpreting 
'other than' to mean 'lower than', which has an en- 
tirely different meaning. ..." (**) 



(*) See";<hnufacturers' Control of Distribution; a Study of Trade 
Practice Provisions in Selected 1TBA Codes", Trade Practice 
Studies Section, Division of Beview, March, 1936, Part II, 
Chapter IV. 

(**) Documents referred to above are in UFA files, valve and 
fittings industry code authority folders. 

9826 



- 416 - 



In the shovel dragline and crane industry, the code authority 
also desired to secure a standard form for price filing. In connec- 
tion with this", the deputy administrator in charge of the code on 
September 19, 1934, wrote the administration member of the code 
authority as follows: 

".... I have wired Mr. Lutkin that no attempt should 
be made to force the standard price list form upon 
members of the industry without first having the 
approval of the form by the Administrator. It 
would seem better to report this form to the in- 
dustry, stating that the accompanying form or its 
equivalent should be used that the Code Authority 
mav have uniform filing of prices. It is under- 
stood that the Code Authority will not attempt to 
make the use, of this form mandatory...." 

Later, the form was submitted .for official approval in order 
that it might be made mandatory. The Research and Planning Di- 
vision and the Consumers' Advisory Board both strongly objected to 
it. The former, in a report quoted in a letter from the deputy 
to the code authority dated December 18, 1934, contended that 
such a form was both contrary to policy and contrary to the pro- 
visions of the code for the industry, which provided that each 
member should "individually publish his price list".(*) 

3. Supervision Subsequent to Action (Corrective ) 

1. Price Fixing Activities 

In a number of instances the Administration found it 
necessary to reprimand code authorities for activities connected 
with price filing which were tending, or might tend, toward price 
fixing. One of these, which merits consideration in some detail, 
concerned the mayonnaise industry. 

In the summer of 1934, a price reduction on mayonnaise and 
salad dressing was announced by one of the largest producers in the 
industry. The code authority met, declared that an emergency existed 
and asked that the Administration approve their findings. Prior to 
the hearing on the matter, the largo producers in the industry, in 
conference with a representative of uho Administration, agreed "upon 
an upward revision of prices; thereafter the code authority requested 
that the hearing on the emergency be postponed. In making this re- 
quest, Mr. W. P. L. Cuttle, Managing Agent of the Code Authority, in 



(*) Letters quoted are in 1TEA files, shovel, dragline and crane indus- 
try. 



9826 



- 417 - 

a letter to Deputy Administrator Walter White, dated July 7, 1934, 
said: 

".... If the conditions which caused the emergency 
continue, I will immediately request the Administra- 
tor that he promptly fix a date for a public hear- 
ing. May I report to you those conditions, which, 
if continued, will result in a continuance of the 
emergency. ..." 

Then he proceeded to list a series of prices for the various 
sizes of "both mayonnaise and salad dressing, with differentials 
between advertised and unadvertised brands, and stated that the 
emergency would exist if prices fell belov. those he has specified. 
In reply, Mr. White stated, in a letter dated July 11, 1934: 

" ....The conditions which you report with respect 
to price may be true in a general way, but I very 
strongly advise against any inclusion of these 
statements in bulletin form, as such a procedure 
could only be interpreted as a deliberate price 
fixing activity. It seems to me that the principal 
factors in this business can establish their price 
schedules and then they must disregard a certain 
amount of nonconformance "by the smaller factors. 
If any small factor threatens to increase his volume 
to a point where disruption of the market is threaten- 
ed, then that man should be dealt with individually by 
the code authority or their representative. I trust 
that your industry may continue to stabilize its own 
affairs without the necessity of government inter- 
vention. ♦.."(*) 

Mr. White's warning appears, however, to have largely 
gone unheeded for the code authority shortly thereafter 
virtually ordered the filing of higher prices. A code authority 
bulletin dated July 23, 1934, reads: 

".... The Code Authority in view of the recent 
suostantial increase in oil, lias voted by telegram 
to amend the 'Lowest Reasonable Cost' figures pre- 
viously adopted by it and submitted to the Adminis- 
trator for industrial recovery following its declara- 
tion that an emergency existed in this Industry..... 
It was thought necessary by the Code Authority to 
adjust only the unadvertised brands of salad dress- 
ing as the item that was sold at an improper level 



(*) Letters quoted above arc in UFA files Mayonnaise Industry. 



9826 



- 418-419- 



and in vital need of adjustment in view of ris;ing 
ingredient costs.... 11 

(then follows a list of prices on three sises of salad dress- 
ing). 

"Sales below these figures, in the opinion of the 
Coda Authority as expressed by its action, would 
constitute destructive price cutting. The Code 
Authority reaffirms its purpose of eliminating 
destructive price cutting in this industry and 
hopes that this will be accomplished- by the 
voluntary individual action of manufacturers in 
their efforts to rehabilitate this Industry and 
their own businesses. However, if it cannot be 
accomplished in such manner, then the full powers 
of the Code and of the National Industrial Recovery Act, 
together with its penalties, will be fully util- 
ized.. .." (*) 

In connection with the code authority bulletin just quoted, 
mention maybe made of a letter dated July 34, 1934, sent by Mr. 
Otto Seidner, a member of the mayonnaise code authority, to Mr. 
Lester S. Dame, assistant deput3 r administrator. Mr. Seidner, 
objecting to some of the actions of Mr. Tuttle, referred to 
the bulletin quoted above, which he stated he had just receiv- 
ed. He also enclosed a copy of a letter sent to him by a 
fellow member of the code authority. Speaking of the latter 
he said: 

"....It would seem from this letter than I am 
not the only one who is convinced that the 
Mayonnaise Industry is being run by Mr. 
Tuttle, who is evidently taking dictation 
from someone else." 

Then, referring to the code authority bulletin he continued: 

"I also received a circular letter from Mr. Tuttle this 
morning, in which was stated that the Code Authority 
had Agreed to this and voted this and voted that.... 
But I have not had an opportunity to say whether or 
not I agreed to vote on any question. This is not 
the first time the members of the Code Authority 
have been notified that they have agreed to do things 
of which they knew nothing...." 



(*) Bulletin in NBA files, mayonnaise industry. 



9826 



- 420 - 



In reply Mr. Dame wrote to Mr. Seidner of July 26, 1934: 

"....While I have teen a little doubtful of 
some of the actions taken by Mr. Tuttle I have 
felt that up to the present time they were in the 
test interests of the Industry and of all concern- 
ed. However, I must agree with you that he has 
possibly overstepped his bounds in connection 
with some of his latest bulletins, where he 
states that the Code Authority has made such 
determinations....! believe it is up to you and 
the other members of the Code Authority to in- 
vestigate to your own satisfaction whether or 
not Mr. Tut tic is acting in the interest of the 
Industry and the Code Authority and in accordance 
with the desires of the Cede Authority.... It is 
not an action that should come from the Adminis- 
tration unless the Code Authority fails to 
act." 

Later, Mr. Dame, in a letter to Mr, Tuttle, dated October 4, 1934, 
also warned him of price filing activities. He said; 

".... It is apparent from many letters and con- 
versations that I have received and had with 
members of the Mayonnaise Industry that they are 
of the opinion that the Code of Fair Competition 
for the Mayonnaise Industry was primarily intended 
to fix prices and guarantee a profit.... The 
question of price manipulation is one that you 
and the Code Authority should stay away from as 
much as possible. I know that it is difficult 
to do so, but that is the situation, and you 
must face it sooner or later or you will find 
yourself in a hale which it will be difficult to 
get out of...." (*) 

The administration members of the code authorities were util- 
ized in some instances in an effort to supervise and correct alleged 
price fixing activities carried on in conjunction with price fil- 
ing plans. Thus on July 3, 1034, Mr. J. F. Lynch, Assistant Dep- 
uty wrote to Mr. Shepard Be.rncs, Administration Member of the 
Floor and Wall Clay Tile Code Authority, saying that the Research 
and Planning Division, 

"••••entertains some fears that the price of 
tile is being raised, under the open price filing 



(*) Correspondence referred to in preceding paragraphs contained in 
iTRA files, mayonnaise industry. 



- 421 - 



system, to a print which will prevent. . ..increase 
in volume of sales." 

He stated that it had been suggested that certain changes "be 
made in the Code in order to prevent too fast an increase in 
prices. Among these was the changing of the open price plan to 
conform with the provisions of Office Kemorandiim No. 328, He 
asked the administration member to sound out the code authority 
on the matter and also to submit his own opinions on the question. 
The record does not show any subsequent action on the case.(*) 

Mr. E. W, Morrell, Administration Member of the Code Authority 
for the Scientific Apparatus Industry', on February 19, 1935, wrote 
to Mr. Alfred Hand, Assistant Deputy Administrator of the code 
concerning another instance of alleged attempted price fixing which 
he had sought to, discourage. Mr. Morrell stated that shortly b efo re 
he wrote, a meeting of the industry was held. Describing this meet- 
ing, his letter reads in part: 

"....There was a long discussion on a proposed agree- 
ment not to file prices below a fixed schedule. I 
had to advise them that IT?A policy is opposed to price 
fixing and that NHA could not sanction or recognize 
any fixing of prices by their Institute, so far as 
Code provisions might be concerned. Also that formal 
action by their Institute of this nature might be illegal. 
However, the general sentiment was in favor of an infor- 
mal agreement along these lines, as their only salva- 
tion in eliminating the price-cutting which seems to 
have disorganized this Section, and they did not con- 
sider that svtch action would involve any violation of 
the Code. It appeared to me that any such action 
that they might take in their Institute would not 
amount to anything as it would not be adhered to, 
and that the situation would work itself out, per- 
haps by a request for declaration of emergency, if 
conditions warrant it, and perhaps accompanied by the 
establishment of cost accounting system if policy 
permits.... "(**) 

A number of other ; instances of supervisory action by 1TRA to 
offset price fixing activities should also be noted. In the crushed 
itcae industry, the Horthwest Construction Co. lost a bid because 



(*) Letter in NBA files, w?.ll clay tile industry. 

(**) Letter in KEA' files, scientific apparatus industry. 



9826 



- 423 - 



they wore informed "by the district committee that they must figure 
the cost of materials at the lowest price which was $1.50 per yd. 
Another contractor, who had bid at .''1,00 per yd., received the 
award. The Northwest Construction Co.'s original "bid had "been 
at 90^? a yard. As a result they wished the contract readvertised. 
The Legal Division ruled the district committee out of order in 
advising the Northwest Construction Co. of the requirement that they 
"bid at $1.50 a yd., and that the company who received the hid could 
not be cited for violation. (*) 

A memorandum from the Leg?! Division to the deputy in charge 
of the canvas goods code, dated December 24, 1934, stated reasons 
for staying the price filing and certain other provisions in the 
code. One of the reasons ?as' that' a public hearing had developed 
substantial evidence that price fixing had taken place under the 
guise of price filing. (**) 

Subsequently the price filing provisions of this code were 
stayed, in accordance with this recommendation. 

Investigation of the alleged efforts of the Regional Code 
Authority of the Wholesale Confectioners Trade to arrive at a price- 
fixing agreement caused NRA to conduct an investigation of these 
activities. Price filing had played an important role in this 
effort to fix prices. The entire matter was summarized in a 
lengthy memorandum to the national Industrial Recovery Doard from 
Mr. Ddward K. '.'.'arren, Regional NRA Director in New York City, dated 
May 14, 1935, concerning charges against the Treasurer of the 
wholesale Confectioners' Cor'e Authority. This memorandum reads 
in part: 

" in or about Juno, July and August, 1934, 

respondent accepted blank forms of price lists 
which had not been filled in with prices but 
which had been signed by members of the Industry, 
and also accepted authorization from such members 
of the Industry to insert prices in such price form, 
such prices to be those which he thought should be 
inserted therein in order that the filed prices 
of all members of the Industry in the New York 
trading area would be identical or essentially 
the same « ...respondent neglected to file or 

treat as filed, twenty price lists deposited 

with him pursuant to the provisions of the code.... 
respondent told members of the industry what prices 
and discounts would be acceptable to the Code Autho- 



(*) Letter in NRA files, crushed stone industry, 
(**) Letter in NRA files, canvas goods industry. 



9826 



- 423 - 



rity.... urged members of the Industry to file 
■uniform prices and discounts which result in prices 
approximately BO,; above cost of the products and 
considerably above the total cost of doing busi- 
ness. The respondent indicated that the Code 
Authority would not accept filing of lower 
prices. " 

LIr. Warren's memorandum continues by stating that Mr. 7/eber 
refused to 

"treat as filed one or more price lists tendered to 
him, basing his refusal on the ground that price 
lists could not be filed and made effective which 
contained prices below the standard prices sponsor- 
ed by the respondent, which prices were considerably 
above cost. . . . " (*) • 

The Hew York regional office recommended the ousting of the 
head of the regional code authority but the Supreme Court decision 
on May 27, 1935, -prevented the carrying out of this action. 



(*) Memorandum in 1IEA files, wholesale confectionery industry. 



9826 



- 424 - 

The secretary of the Code Authority for the Macaroni Industry was 
warned by the deputy administrator against too extensive rec6mmendations 
for price increases and the maintenance of filed prices at a profitable 
level. These .-warnings resulted in no special corrective measures, al- 
though the industry was subjected to some brief investigations by the 
Department of Justice because of complaints of price fixing activities. (*) 

The activities of the Code Authority for the fire extinguishing App- 
liance Industry in issuing bulletins containing regulations not in accord 
with the code provisions and in attempting to fix prices were criticized 
by the ERA. and were subjected to investigation by the Federal Trade 
Commission. The review of the code authority bulletins and the actions 
concerning them are given in detail in another section of this report. (**) 
The establishment of trade factors and mandatory price differentials to 
be used in connection with them, and the establishment of lowest reasonable 
costs by means of a cost accounting sj^stem not approved by the ERA were 
among the activities to which objection was raised. Most of these matters 
hadbeen informally approved l>y the deputy adminstrator who had been in 
charge of the code when it was first approved. - 'The Federal Trade Commission 
investigation of this industry resulted in a cease and desist order being 
accepted by the industry in November, 1935. 

An ERA investigation of alleged price-fixing- in the candy manufacturing 
industry was conducted in the -spring of 1935. The charges centered around 
the activities of the chairman of the code authority, and others connected 
with the national confectioners' association, in attempting to restore the 
waiting period which had been staj-ed by ERA action at the time the code was 
approved. The methods employed in certain areas in which these activities 
occurred were the holding of meetings of industry members at which a 
price level was agreed upon, with members obligated to file such prices with 
the regional officers of the code authority before they were forwarded to 
Dun and Sradstreet, which was serving as a confidential agent for the code 
authority. These activities were alleged to have occurred during December, 
1934, and necessary action to remove the chairman from his official capacity 
was taken early in 1935. (***) 

The chairman of the Code Authority of the Builders' Supply Trade was 
charged with issuing bulletins to the industry without approval of the ERA' 
with publishing suggested price lists in metropolitan New York trading area 
and with issuing a cost schedule without ERA approval. Members of the trade 

(*) See letter from Mr. Walter 7/hite to Mr. G. G. Ho skins, April 17, 
1934, in ERA files, macaroni industry. 

(**) Pages 251 & 292-294, above. 

(***) See Transcript of the Hearing on the Code for the ■candy 

Manufacturing Industry, January 19, 1935, in ERA files; also 
memorandum from C. 7. Dunning, Deputy Administrator to D. M. 
Nelson, Code Administration Director, dated January 28, 1935, 
in ERA. files, candy manufacturing industry; also minutes of the 
meeting of the Code Authority for this industry, held February 
22-24, 1S35, in ERA files, Candy Manufacturing Industry. 



9826 



- 425 - 

complained that he completely dominated the Industry. A memorandum from 
the assistant deimty administrator, dated March 11, 1935, summarizes the 
charges and describes the investigation of his activities, but does not 
include the outcome. (*) 

2. Suspension of Price Piling Plan. 

The Legal Division of the I'BA objected to the powers assumed by the 
code authorities for various divisions of the paper and pulp industry in 
suspending price filing provisions without special authorization. These 
suspensions of price filing for particular areas and products for varying 
periods of time, had been made during downward spirals of prices in an 
effort to deter price cuts and stabilise prices. These actions by the 
Legal Division amounted to condemnation of the entire price filing plans 
of some of these industries as being illegal because of the assumption of 
quasi-legislative and quai-judicial powers not within the scope of the code. 
One opinion by Mr. Jack Scott of the Legal Division held that no open 
price plan of any kind could be put into effect without approval of the NBA, 
despite the enabling language in the code. 

This opinion was transmitted to the deputy in charge of a Paper 
Division, Mr. W. J. Brown, in connection with the plan of the folding 
paper box industry and was severely criticized by Mr. Brown in a memo- 
randum to Division Administrator Battley on January 4, 1935. (**) 

This and other legal criticisms of the price filing plans in the 
paper codes effectively prevented IffiA enforcement activities in connection 
with these plans, but did not prevent voluntary compliance on the part of 
members. 

The disapproval of the mandatory customer classification set up by 
the envelope manufacturing industry and the revoking of that bulletin led 
to the voluntary suspension of price filing in that Industry in April, 1935. 

An illustration of unauthorized suspension of the price filing plan, 
as it applied to one industry product is contained in a letter dated January 
9, 1935, from Deputy Administrator Janssen to the Code Authority for the 
Crushed Stone Industry. The letter (****) stated that the action of a dis- 
trict committee in exempting railroad ballast from the price filing require- 
ments was not justified; the letter stated that, once a district committee 

(*) Memorandum to P. A. Hecht, Deputy Administrator, from A. C. Cook, 
Assistant Deputy Administrator, March 11, 1935. In KRA files, 
builders suppler trade. 

(**) In 1IEA files, paper and pulp industry. 

(***) Seo above- pages 248-249. 

(****) Quoted in "The Administration of the Code for the Crushed Stone, 
Sand, Gravel and Slag Industry, " by the Code Administration Study 
Section of the Research and Planning Division, in 173A files. 



9826 



- 426 - 

had elected to make price filing effective, only code amendment could re- 
verse this process. 

3. Irragular Allegations of Violation , 

On December 21, 1934, the Code Authority for the Scientific Apparatus 
Industry filed a complaint against the Abernathy Furniture Company and the 
Swenson Construction Company. The charge was failure to file prices .and 
bidding below the lowest filed price on a P.U.A. contract by the former 
company, to which the latter concern had sublet a contract for laboratory 
furniture. It was commented on this case by the assistant deputy that no 
violation had occurred since no notice to file prices had been sent by the 
manager of the code authority to the respondent prior to the filing of bids. 
(*) 

4. Supervision of Application of Executive Order No. 6767, and 
Administrative Order X-48. 

- Considerable correction and guidance was given to code authorities in 
connection with Executive Order ho. 6767 and Administrative Order X-48. (**) 
Only one example of this will be given here. 

On July 1, 1934,. the code authority of the plumbing fixtures industry 
filed a notice to members, stating that Executive Order X-48, requiring that 
the Government be granted as favorable terms for like quantities as any other 
purchaser, did not apply to that industry, since the code prohibited selling 
direct to consumers. The Legal Division of the-FRA ruled that X-48 and 6767 
did apply and the code authority in October, 1934, rescinded its original 
order. (***) 

5. Supervision Connected with Cost Formulae 

The pricing formula designated by the code authority of the Marking 
Devices Industry was ordered withdrawn by the FRA. since there was no sanc- 
tion in the code for such a formula. A request for withdrawal of the uni- 
form price lists filed pursuant to the formula was made in May, 1934. (****) 

6. Availability of Pilings to Members 

The secretary of the Code Authority for the Cast Iron Soil Pipe Industry 
was rebuked on a number of occasions by the deputy for issuing bulletins and 
other instructions to the industry contrary to the provisions of the code. In 
one instance he was ordered to retract a letter stating that price lists filed 
with him were available only to members of the cast iron soil pipe association, 
and to disseminate such prices to all members of the industry. (*****) 



(*) Letter in NEA files, scientific apparatus industry. 

(**) Por a more complete consideration of these two Orders, see below, 
pp. 477-483. 

(***) FRA files, plumbing fixtures industry. 

(****) URA files, marking devices industry. 

(*****) n this see Mackenzie, J. TT. , "Preliminary Renort on the Administra- 
tion of Trade Practices by' Codo Authoritier.; 1 , Code Administration 
Studies Section, December, 1935, pages 3C-33, KRA. files. 

9826 



- 427 - 

7. Classification of Customers. 

The practice of the Asphalt Shi] .." Roofing Code Authority of 
holding meetings to consider the classifications of customers used in 
filing prices, was objected to by the Administration. The code authority 
was ordered to abolish this practice of "mi s-classif i cation meetings", as 
they were called. (*) 

8. Rejection of Pilings. 

The activities of the Code Authority for the Gas Apoliances Industry 
were subjected to HRA investigation late in 1934, and a report on these 
activities was prepared by the Deputy for the consideration of the national 
Industrial Recovery Board. These alleged activities included efforts to fi; 
prices, to reject filed prices' where not acceptable to the code authorit3>-, 
and to coerce non-members (of the industry) to conform to regulations not 
included in the code. (**) 



The Code Authority of the Vitrified Clcy Sewer Pipe Industry informed 
its members that they would be in violation of t :e price filing provisions 
of the code if they gave prior information of price changes to their cus- 
tomers. The 1T3A objected to this interpretation and asked that it be with- 
drawn. (***) 

In a bulletin issued on October 18, 1934 the Code Authorit3'- for the 
Crushed Stone Industry set forth a number of resolutions in the nature of 
explanations or interpretations. 

These stated, among other things, that the code was to be interpreted 
to meaji that it was unlawful to make a. sale at less than prime plant cost 
plus 10 per cent, that the code provision permitting filing of prices less 
than prime cost plus 10 per cent to meet competition meant to meet a com- 
petition for which a price was filed; that in the absence of definite rulings 
on the matter \ij the district committees, certain rules concerning delivery 
terms were to be observed; and that "any producer not having filed prices at 
least five dajrs prior to the timo of any letting thereto, cannot subsequently 
file prices to meet the filed prices of any other producer which were not 
properly applicable to that letting". (****) 

(*) See Appendix A for further details. 

(**) See "Price Piling in the Gas Appliances Industry" Appendi:; "C" of "A 
Limited Survey of Price Filing in I~RA Codas", Preliminary Report of 
the Price Piling Unit of the Division of Review of the rRA, Novem- 
ber, 1935. KRA files 

(***) HRA files, vitrified cloy sewer pipe industry. 

(****) KI& files, ensiled stone i'.dastry. 



r\ r\ O/* 



- 428 - 

John E. Skilling, Lega.l Advisor, in a memorandum to Assistant Deputy 
Administrator Dickerman, dated November 24, 1934, stated that the effect of 
each of the resolutions was to amend the code. Deputy Administrator Janssen, 
on December 5, 1934, wrote to the code authority and submitted the legal 
adviser's criticisms, hut stated that in hi s opinion the first two resolutions 
did not exceed the power ^iven to tne cede authority. The code authority re- 
plied by stating that the third resolution had been amended and the fourth one | 
rescindec 1 . Speaking of this the writer of the: Pesea.rch and Planning Code 
Administration Study said: 

"With further reference to the letter of the Deputy Administrator, 
in which he concurred in the Code Authority's resolution No.l and 
No. 2, the investigator finds no record of approval of these resolutions 
b-r the various NRA divi sions: and Advisory Boards, nor of any official 
action thereon. It is evident, however, from the reoly of the Code 
Authority that it considered its resolutions No. 1 and 2 had been con- 
curred it, since it expressed satisfaction at this result. It should 
be noted here that Resolution No. 1 presumed that the Codal restriction 
against sales below prime plant cost plus 10 per cent is in effect, 
whereas as a matter of fact, the standard uniform accounting and costing 
system, on the basis of which that allowable cost is to be computed 
(Article VII, Section 2 d) had not been approved by the NRA as required 
under Article II, Section 2, and still remains unapproved " (*) 

Administrative Order No. 109-46, dated October 15, 1934 exercised 
further supervision over this industry. It read: 

"Whereas, on September 25, 1934, the District Committee of North 
Carolina for the Crushed Stone, Sand and Gravel and Slag Industries, 
adopted the following resolution: ' 3e it resolved, where quotations 
are filed by a plant that is not set up, the producer must designate 
the exact location of the olant and the property on which it is to be 
located and the number of miles said plant is located from some specific 
part of the project for which' prices. are filed. 1 

"And whereas the Deputy Administrator has reported and it appears to 
the satisf action of the National Industrial Recovery Board, that the 
said resolution? will. result in hardships. to such members of the 
Industries, and that justice requires that it be disapproved: 

"Nov;, therefore, -pursuant to the authority vested in the National 
Industrial Recovery Board, i-t it hereby ,c-£&es§.d that , the , said resolu- 
tions be and they are hereby disapproved." 

In suhnary, the foregoing instances of cases involving NRA supervision 
may be analyzed as follows: 

Among the items involved in the various cases were: the use of a 
standard price filing form, price fixing activities associated with price 
filing, the use of cost formulae, customer classification, the rejection of 
certain price filings, the scope of membership subject to the code, the avail- 

(*) Quoted in "The Administration of the code for the Crushed Stone, Sand, 

Gravel, and Slag Industry", by Sterling March, Code Administration Study- 
Section of the Research and Planning Division, page 99. 

9826 



- 429 - 

ability of price filings to all members of industry, failure of certain 
members to file prices, failure to adhere to filed prices, failure to 
file prices on certain products, establishment of uniform credit terms, 
the application of Executive Order No. 5767 permitting sales to governmental 
agencies at less than filed prices, and substitution of filing of elements 
of cost for the filing of prices. 

The problems involving the above matters reached the attention of the 
Administration through a number of channels. Among these were (l) submission 
of question to the MA by the code authority, (either by virtue of a code 
requirement or because the code authority wished to avoid unauthorized 
action; (2) through raising of the issue as a result of a ruling or inter- 
pretation of the code authority, as evidenced by code authority minutes or 
bulletins (sometimes the matter was brought up when the deputy saw such a 
bulletin; sometimes a member of on3 of the advisory boards or divisions 
raised the issue); (3) a complaint alleging violation of a code requirement 
or a code authority ruling might have been filed with an MA compliance 
agency by the code authority; (4) a customer or member of the industry might 
have compained against some action or ruling of the code authority; or (5) 
the administration member of the code authority might have brought to the 
attention of the Administration some questionable action by the code authority. 

As the foregoing indicates, sometimes Administrative supervision took_ 
place before a cor.tenplated action or reulinp did not cone to light until it h& 

effect. Sometimes the action or ruling did not come to light until it had 
been put into force and some objection to it was voiced. It is impossible 
to determine what proportion of the cases involved action beforehand, and 
what proportion involved action after the fact. 

As to methods of handling, many cases were handled by correspondence 
between the Administration and the code authority, or between the Adminis- 
tration and the member of the industry or customer of the industry affected. 
In some instances, special investigators or the administration member were 
asked to look into the matter. Public hearings resultod from the efforts to 
adjust some of the problems requiring supervision. Conferences were held 
with members of the advisory boards and divisions to ascertain appropriate 
action in other cases. 

Because of the incompleteness of the records it is most difficult to 
state very much of a definite nature concerning the efficacy of Administra- 
tive supervisory activities. It is clear that in some instances warnings 
against more or less outright price fixing activities,.ialmost completely 
disregarded. In other cases, advice to code authorities that certain 
activities were outside cf their proper field of a.ction appears to have been 
effective. Again any quantitative measure is virtually impossible. 

Supplementing the aspects of administrative supervision presented 
in the foregoing section, the section following will deal with the work 
to the Administration and the code authorities in effecting compliance with 
the open price provisions. 



- 430 - 

. SECTION- B - COMPLIANCE AND LITIGATION ACTIVITIES 

I. COMPLIANCE ACTIVITIES BY CODE AUTHORITIES A"": THE IT.K.A. 

I ntroduction 

In securing compliance with the rice Tiling "rovisions of codes, 
as with other trade practic provisions, much of the responsibility and 
authority was delegated "by the Administration to the code authorities, 
their trade practice complaints committees and other representatives. 
However, the Administration had its own Compliance Division, with 
Washington and field headquarters; and the Government Contracts Branch 
also worked to "bring ah out conformity with trade practice provisions of 
codes. The work of these compliance agencies will he considered in this 
section. 

, A. Code Authority Compliance Activities 

"The Manual for the Adjustment of Complaints by State Directors 
and Code Authorities" laid down the following proportion as a basic 
guide for the division between code authorities and the Administration 
of responsibility for obtaining compliance: 

"....The responsibility for insuring that codes are 
administered and that the public is protected lies 
with the Administrator; but the aim of H.R.A. is to 
give t :> Industry, through its code authorities, the 
widest possible range of self-government, subject to 
the ultimate responsibility of the Administrator ..." (*) 

In order to become officially authorised to handle trade practice 
complaints, code authorities were required to submit for the approval 
of the Administration their plans for procedure in such cases, modeled 
upon the outlines of methods for handling complaint's contained in the 
Bulletin #7 previously referred to. 

1. Code Authority Methods Eor Handling Complaints 

Little information is available concerning the details of the pro- 
cedure actually followed by compliance agencies of code authorities in 
the handling of complaints. However, charges were made that some code 
authorities failed to follow the prescribed methods of obtaining com- 
pliance. It is impossible to state definitely the extent to which such 
charges were justified, and, if justified, whether such instances were 
typicc-1 or exceptional. One case of alleged mal— administration will be 
mentioned to illustrate the point. It concerns the activities of the 
Mayonnaise Code Authority. On September S, 1934, Mr. Nathan Raff, 
President of the United Food Products Company 3f Brooklyn, IT. Y., ad- 
dressed a letter to General Hugh S. Johnson stating: 

"....It would seem to us that after the filing of our 
advance schedule with the local Code Authority, the gentle- 
men who are administering and managing the business of this 
Authority would recognize that we have shown a spirit of co~ 

(*) NRA Bulletin #7, dated January 22, 1954, page 3, NBA files 



-431- 

operation which should be welcomed and appreciated, but since Aug- 
ust 20, (th« effective uate of the schedule filed by Mr. Raff con- 
taining the increase in prices) these gentlemen, especially Mr. Tut- 
tle, the managing agent of the Code Authority, gave us nothing but 
continuous annoyance. They called us a number of times telling us 
that we must again raise our prices in order to conform with price 
schedules filed by othc r manufacturers, We finally arranged for a 
conference with Mr. Tuttle at 10; .X A. M. on Fri'daj; , August 31. The 
writer and his business associate'; went down tj see Mr. Tuttle at the 
appointed hour. Mr. Tuttle again tola us that we must raise our 
prices to the level of the schedules filed by other manufacturers. 
All of our arguments that it wovld be sneer folly for us to announce 
another price rise now whs of no svail to Mr. Tuttle, or fact3 and . 
figures that oar present prices are not below cost ant. do not, there- 
fore, constitute an act of nfa.ir competition meant nothing to him 

then Mr. Tuttle callec in two men from the adjoining room, 

whose name'-, he die not give us and announced that this was a meeting 
of the Complaints Committee of the local Authority. He started to 
reao the riot act to us; he t'areateneo. to have us indicted and con- 
victed of all c-jorts of crimes After Mr. Tuttle got through with 

all of his cajjling, intimidations sno. threats, we again announced 
that we wouli not raise our prices now out would only do so when 
conditions would so warrant " 

On Septemoer 10, Mr. Tuttle wrote to Mr. Lester S. Eame, Assistant 
Deputy Administrator concerning this matter: 

" Our Coue contains the ..rovioion prohibiting destructive price 

cutting which inclucea, without limitation, sales below cost. In 
view of the lact that the Cooe Authority had determined the lowest 
reasonable cost, it is obvious that if the Coue Authority can sus- 
tain its figures, any sales i_elow these costs constitute destructive 
price cutting. We are confident that expert examination would sus- 
tain these lowest c :sts. 

"The Trade Practice Complaints Committee requested, the presence of 
the officials of the Union Food Products Co., as outlined in the 
letter. The Trade Practice Complaints Committee said nothing about 
the price level of other manufacturers, but stated that complaint 
has been made to the effect that " T ni ^n Food Products filed prices 
representing destructive price cutting prohibited by the Mayonnaise 
Code. 

"Neither the Managing Agent or any other member of the Trade Practice 
Complaints Committee read the riot act to the officials of the Union 
Food Productf. Co., and the only reference to penalties of the Act 
were made in response to t>'e suggestion advanced by an official of 
the T'nioR Food Products to the effect that they would continue to do 
so as thy pleased end that the NIRA could not or would not be en- 
forced, ... 'I 

A tendency for code aut' orities to attempt to anticipate their 
official authorization to act ,"in the first instance" is efidenced in 
the following correspondence from Mr, G, G, Iloskins, Chairman of the 
Code Authority for the Macaroni Industry, It also indicates the 
methods used. b„ one code ruthority to achieve mobility of their ad- 
justment agency; 



- 432 ~ 

nWe have, a letter from Division Administrator' Riley 
stating' that our inly elected, members of the Code 
Authority have, he en recognized as such. Can we as-t 
surne that the^r -recognition as the highest industrial 
adjustment agency as per NBA Bulletin #7 will he forth** 
coming soon? • 

"Proceeding under the authority given me .in your 
recent letter -we are assuming that they can handle 
complaints in the first instance hut sooner o.r later 
we are going to cor.e against a state compliance director 
who does not recognize us as being the highest adjustment 
agency in otir Industry, Incidentally, onr by-laws call 
for three members of the Code Authority to sit as such 
committee. This ; rovision 'was made so that by traveling 
to various parts of the country I could- pull in two other 
memhers of the Code Authority without requiring a meeting 
of the whole Code Authority, ,,." (*) 

Certain Code Authorities, by. virtue. cf -articular code provisions 
enabling them to do so, enforced compliance by means of so-called "liqui- 
dated damage" agreements. While there wr.s considerable variation between 
the__. codes as to the exact procedure , the- u eneral nature of these plans 
was the same; members guilty of violation of trade practice -orovisions 
were assessed a fine hy the code authority or one qf its agents. 

Discussing the operation of liquidated damage provisions, Mr. 
Walter Mangum, Acting Deputy Administrator, in a memorandum to Acting- 
Division Administrator Prentiss L, Coonley, November 27, 1934, said; 

"....There are various procedures set up for handling 
the cases, but that adopted by the Reinforcing Materials 
Fabricating Industry would appear to he extremely fair 
and impartial. These cases are presented to the Code 
Authority in the abstract and impersonally. The name 
is not divulged even to the members of the Code Author- 
ity. If a member of the Indu.stry is found guilty, damages 
are then fixed. If he pays willingly, his name is never 
disclosed, Shoxild he desire to appeal, a public hearing- 
is then ordered and all the facts, including names, are dis- 
closed. The Reinforcing Materials Fabricating Code Authority 
has handled four hundred ninety-eight (493) cases in nine 
(9) months. While some of them have been rather bitterly 
fought, in most instances the offending member has admitted 
guilt and paid the damages assessed, This Code Authority 
estimates that the average caso is completed and the money 
paid within three months from the time it is first brought 
to their notice. This Industry has now collected as damages 
a sum sufficient to support its Codo Authority operations for 
, tne nex t six months," (*» ) 

(*) Letter to Mr. Walter White, Deputy Administrator, HRA files 
April 12, 1934 

(**) Copy of memorandum appended to "The Use of Liquidated Damage 
Provisions in Industry Agreements", 1TRA, Enforcement Studies 
Section. 



- 433 - 

Concerning the effectiveness i f this type of provision as an aid 
to enforcement, this emor; .■ tinues: 

" . . . .Generally speaking it is fount: that these provisions 
are most a plicab'le to th ircement if trade practice 

article, and are not usually brought to "bear in cases of 
labor violations. A most considerable measure of success 
has been obtained in these codes where the procedure has 
been adopted and the provisions made effective. I feel 
that the liquidated damage provisions could be made most 
effective in a number of codes in the (textile) Division .... 
The provisions are working better in industries which have 
strong trade associations or institutes, rather than in 
those which are not closely knitted together ... .Every 
effort should be made to have industries adopt these pro- 
visions. Their value is in forcing compliance in small 
cases where publicity might be both harmful and unfair, 
and frequently many cases conld be handled in this way 
where the offense is not such that the conviction could be 
secured in court...." 

Some further indications of code authority compliance procedure 
may be found in the digest of 109 price filing cases (involving the 57 
codes treated by the Price Filing Unit) made by the Compliance Division 
and sent to the Trade Practice Studies Section. These cases were those 
which were referred to the National Compliance Council and (after January, 
1935) to certain of the regional offices, after state offices and code 
authorities had been unsuccessful in bringing about conformity with code 
provisions. Of the 109 cases digested, 75 were handled originally by 
the code authorities, 23 by the state offices and 6 by the Government 
Contracts Branch. 74 of this total number were handled by correspondence, 
33 by interview with the respondents and 3 by interview with competitors. 
Although this breakdown is a description of method of handling by the 
three compliance agencies, since the preponderance of cases were handled 
by code authorities in the first instance and the greatest number were 
handled by correspondence, it is evident that the majority of cases handled 
by code authorities must have been handled by correspondence. 

It is interesting and perhapd significant to note that 89 of the 
above complaints were originally brought by coco authorities, 18 by 
competitors, 1 by a trade association and 1 by an employee. 

adequate quantitative data are available as to the extent of 
' the handling of trade practice complaints in general by the code author- 
ities, or the proportion which price filing complaints made up of the 
total number of complaints dealt with. Figures to be presented below 
in connection with "illA. compliance work indicate that in codes with price 
filing provisions, violations of these provisions often made up a con- 
siderable proportion of the total violations which were referred to 
NBA for action. 

2. Code Authority Compliance Difficulties 

Difficulties in securing compliance were inherent in the nature of 
certain open price plans, such as those containing provisions requiring 



- 434 - •• 

price filing "by a great number of small units of the industry or filing 
of prices on a great number of non-standard items. 

Of the difficulties which -'err experienced by Code Authorities in 
their compliance activities, three major problems will be treated here: 

(a) Failure of NRi to actively, persistently and 
successfully prosecute violators; 

(b) Inadequate code authority financing to carry on 
compliance work; and 

(c) Reluctance of industry members to report violations. 

The most frequently repeated complaint made in explanation of the 
failure to secure compliance with price filing provisions is that vio- 
lators of open price provisions v/ere not actively, persistently and 
successfully prosocuted. It is repeatedly pointed out in the code 
histories and elsewhere that failure to secure convictions of violators 
sooner or later broke down compliance with price filing provisions. The 
following is a typical expression concerning this situation: 

"...There was ore outstanding case of violation by a member 
who defied all provisions of the Code... This case had a very 
serious effect on the Industry and was quite a problem to the 
Code Authority as it developed early ini its administration, 
and al though vigorously pushed for settlement, no prosecution 
or adjustment was made during the life of the code. Failure 
to enforce compliance in this one outstanding case had a very 
discouraging effect on the Code Authority and prompted the 
question as to whether or not the provisions of the Code could 
be enforced. .." (*) 

In certain codes, the lack of adequate code authority financing 
played a part in the failure to secure c r nroliance. Thus, a memorandum 
dated December 24,1934, signed by Frentiss L. Coonley, Division Adminis- 
trator, stated that one of the reasons for the staying of the price filing 
and certain ether trade practice provisions of the Code for the Canvas 
Goods Industry was the realization that the Industry did not have the 
funds necessary to secure compliance with highly restrictive trade prac- 
tice provisions. (**) 

In some instances the hesitancy of members if the industry to report 
code violations by their competitors mode the securing of compliance 
difficult. An instance of this type of difficulty was experienced in 

(*) , Code History for the Ladder Manufacturing Industry, page 33-39, 

For other illustrations of this point, see Code Histories for the 
Retail Monument Industry, page 9; for the Plumbing Fixtures In- 
dustry, page 44; for th ayonnaise Industry, page .230; for the 
Macaroni Industry, pages 40-44 and 93; for the Cement Industry, 
page 52; and for the Folding' F per Box Industry, page 81, 

(**) Code History for the La. .dor Manufacturing Industry, pages 38-9, 

9826 



- 435 - 

the Candy Industry. The writer of the code history for the industry 
says: 

11 The administ atioj f t] tr de ractice provisions 

was han ier a by • r.tv r :t co m the part of members 

of the Ino istr; t t'il : !..'.■ against competitors who 
violated trade practice or visions. This brought about a 
situation wherein* rrta: ■• ibi rs sat tight with files con- 
taining evidence pf violations which they planned to re- 
lease only in self-defense against complaints filed 
agains t them ...."(*) 

As has "been noted above, the Administration laid iown in Eulletin 
No. 7, and its subsequent amendments, rules for the guidance of com- 
pliance agencies of code authorities; and the code authorities were re- 
quired t: submit for Administrative approval their plans for handling 
trade practice complaints; but once such plans were approved, NBA super- 
vision over the power delegated to code authorities to bring about com- 
pliance' was to a considerable extent haphazard, indirect and incidental. 
A limited amount of direct supervision was effected through the work of 
administration members of code authorities, and of the trade practice 
compliance officers .and adjusters attached to State NBA offices. Accord- 
ing to a statement made in an interview by Mr. Howard C. Dunn, formerly 
Trade Practice Compliance Officer for the State of Illinois, state NBA 
offices did considerable work educating the members of trade practice 
complaints committees as to their duties and responsibilities. Such 
groups often did not know how to proceed, Mr. Dunn. stated, and they were 
guided, checked and assisted in their work by the State offices. Some' 
check was made through checking rules and pronouncements in code author- 
ity bulletins, but such checking was by no moans unviersal. .Complaints, 
such as the one cited above frcni'LIr. Baff if the Mayonnaise Industry, (**) 
sometimes led to limited investigation of compliance procedures* Much 
of the NBA supervision over code authority com liance .activity was brought 
about by such indirect means. 

The nature and extent of ERA's own compliance efforts with respect 
to price filing will be outlined in the section following: 

B . NBA' Compliance Activit y . 

1. Volume and Disposition of Cases Handled by State Offices. 

On an accompanying page is shown a table which indicates the volume 
of compliance activity of the NBA State compliance offices relative to 
price filing provisions in the codes, and the proportion which this 
activity represented of these Offices' total compliance work. The great 
majority of these coses, it is indicated, v/ere referred to the NBA agen- 
cies by the code authorities after prior attempts to adjust the cases 
had foiled.. The following points ore offered as the high lights of the 
table : 



(*) Code History for the Candy Industry page 48 

(**) Snrora.,,F. 430. 

qqoo. 



- 436 - 

Of 6,115 individuals and firms charged with violating trade -prac- 
tice provisions in the 57 codes comprising the open price sample, 46 
per cent vrere alleved to have failed to file prices. Complaints of 
failure to file prices outnumbered complaints of failure to adhere to 
prices filed in these codes by approximately 7 to 1. 

In many instances s case against a single individual or firm 
involved several types of violations. The data for the 57 codes further 
show that the 6,115 cases 'noted above violations, total of 7,142 trade 
practice violations. Of this total number of violations charged, 3,264 
or 45 per cent involved either failure to file or failure to adhere to 
filed prices. 

Comparable figures for the entire number of codes for which 
figures were compiled (*) show that alleged price filing violations 
made up 13 per cent of all cases, .and approximately the same pro- 
portion of all the violations charged. 

It is thus evident that from a compliance standpoint the price 
filing provisions were a source of a large amount of difficulty. The 
office of the field division of the ;TRA advises that a survey of ITRA 
State office complaints which have been made since the Schechter de- 
cision, indicates that failuie to file prices accounted for more of the 
alleged" violations than any other one type of trade practice provision. 
Failure to file statistics accounted for the next largest number. 

The majority of cases in the Open Price Sample Codes involved 
members of 12 codes. These codes are: Baking, Builders' Supplies' 
Canvas Goods, Crushed Stone, Electrical Manufacturing, Macaroni, Plumb- 
ing Fixtures, Retail Monument, Retail Rubber Tire and Battery, Set Up 
Paper Box, Structural Clay Products, Wholesale Confectionery. Those 
Industries each contain a large number of units (though not necessarily 
a large number of ewnloyees or large dollar sales volume). 

These 12 codes account for 86$ of the, total number of cases in- 
volving the 57 codes in the open price sample. Likewise the 12 
codes listed account for 87^j of the total number of violations of trade 
practice provisions in the codes in the sample. To look at it in 
another way, these 12 codes account for 36$ of all complaints alleging 
failure to file prices in all, (not just the sample of 57) codes.. The 
12 account for 56$ of all complaints alleging failure to adhere to 
filed prices in all codes. Since over 440 codes contained open price 
provisions, and since 12 of these accounted for over one third of all 
alleged violations of open price provisions investigated by NRA State 
offices, it is clear that compliance cliff iciilties with price filing for 
which NRA aid was involved tended to cluster in a small percentage of 
the total number of open price codes. 

(*) See footnote to the table cited above. 



9826 



- 437 - 
METHOD 07 DISPOSITION 07 CASES, ALL CODES (*) 



Method of 
Disposition 



Total Violations 



Alleged failure t< 
file prices 



Alleged failure to 
adhere to filed -prices 



Fumber of Percent? ;;c: Number of Percentage: Number of Percentage 
Violations of total : Violations of total : Violations of total 



Adjusted 21,961 53.3$ 
•Kfo Violation 9,205 22.3$ 
Dro-oioed 6,144 14. 8$ 
Pending 3,887 °.6< 



TOTAL 



41,197 



100.0$ 



4060 

1709 

863 

550 



7182 



56.5$ 
23.75o 

12.1$ 

7.7$ 



100.055 



392 

135 

101 

60 



688 



56.9$ 
19.6$ 

14.6$ 
8.9# 



100.0$ 



Prom this tabulation it will he seen that there were no significant 
differences in the proportion of the price filing and other cases disposed 
of by the different methods. All three of the items listed, total alleged 
violations, alleged violations involving failure to file nrices and alleg- 
ations of failure to adhere to filed prices, had approximately the sane 
percentage of their respective totals handled in each of the four methods. 
Over half of the alleged violations docketed under each of the three 
categories were adjusted; about one fifth did not involve actual violation; 
about one seventh of the cases dropped; and somewhat less than one 
tenth were ponding when the Supreme Coiirt invalidated the NBA. 

To summarize briefly, alleged failure to file prices was the most 
frequent of all trade practice complaints investigated by the NBA 
State offices. A very small proportion of the open price codes account 
for a substantial number of tho alleged violations. Somewhat over half 
of the complaints were adjusted and about one fifth of the complaints 
were found to be without basis. 

2. Difficulty of State Offices with Code Authority procedures 
and With Changing Code Provisions. 

Apparently considerable difficulty "as experienced by tho Compliance 
Division because some code authorities habitually filed complaints of 
violations without having previously investigated to determine the sound- 
ness of tho accusations. In an attempt to reduce the number of complaints 
not substantiated, the Compliance Division, on August 11, 1934, issued 
Field Letter No. 148, reading as follows: 



"4. COUPLAHTS PILED BY CODE AUTHORITIES. It appears 
that Code Authorities are sending lists of alleged vio- 
lators of their code to Field Offices -There subsequent 
investigation reveals either that the respondents are 
no longer in business, or are not properly classified under 
such code. In the future, you will not investigate lists 

(*) See Attached table for detailed definitions of methods of disposition. 



- 438 - 

of complaints of failure to file statistics, contracts, 
pric'os, otc. , unless a" certificate} is" attached to such 

conplaint that the respondent w»s in business as of some 
recent date, and that a registered letter ^as sent to him 
notifying hin of his code violation." 

This policy was modified somewhat by Field Letter Ho. 173, dated 
November 3, 1934. This stated: 

"Section 3. Item 4 of Field Letter 7T o. 148 instructs you 
to take n'o action on conplaint s filed by Code Authorities 
alleging failure to file price, statistics, et.c, unless 
they are accompanied by a certificate that the respondent 
was in. business as of some recent date and that a registered 
letter was sent hin notifying hin of his code obligations. 

If the action taken by your office will consist 
merely in sending the respondent a letter informing him 
that he will be deemed to be in violation unless the 
necessary information is filed with the Code Authority 
(particularly --lien a, long list of alleged violators is 
filed by you) it will not be necessary to require a 
previous notice by registered mail. If, however, a con- 
plaint is accepted for formal action, with the possibility 
that it nay be later referred to Washington, the file should 
include a return receipt for ? registered letter." 

Difficulty of the field offices in keeping up mith stays of code 
provisions is evidenced in the following excerpt from Field Letter ITo. 
198, dated February 9, 1£35: 

6. Canvas Goods Industry . The Apparel Section informs 
us that offices have docketed complaints under provisions 
of the Canvas Goods Code which have been stayed. This stay 
went into effect on January 14th and covers the following 
provisions of Article VII, B; Section 1 (a); Section 1 (b); 
Section 2; Section 3 (a) and (b) ; Section 4; Section 5; 
Section 6; Section 7; Section 8; Section S; and Section 10. 

(Sections 4 and 5 provide for the price filing plan and for 
adherence to filed prices.) 

3, National and Regional NBA Compliance Procedure. 

When a conplaint seemed impossible of adjustment by the code authority 
enforcement agency aid the IT HA Stats office, it was generally referred 
to the Compliance Council of 1THA, of after January, 1935, to the 1TPA 
regional office. Information concerning Compliance Division policy and 
procedure with rosnect to cases of alleged violations of the mrice filing 
provision was obtained in an interview with Mr. J.J. Rcinstoin, formerly 
Acting Chief of tiie Co-ordinating Branch of the Compliance Division. The 
first stem was to notify the respondent in the case that the complaint 
had been referred to the >THA Compliance Council (or regional office) 
and that a hearing would be held on a designated date. The respondent 
was entitled to appear in person at such hearing but few appeared, gener- 
ally due to the fact that they were so far removed from Washington or 



iB 



• « -j 

rl • or 

•rl -rl , 

*» O K 

■ 

del 

■3 •* ; 

o> ». a 



3 in 



*3S-i 



r-l 

■a 



id 

H 

3 a 



5 


ft 


Vfl 


* 


■0 


p— 


1 


I 


s 


K\ 


in 


i-i 


m 


rH 


in 

K*i 

r-t 


ft 


J* 


3 


■a 


r- 


1 


CM 
r-~» 


in 

CM 


CXI 


K* 

* 




a 


1 


VO 


in 


in 


O 

m 




k-i 


rH 



"i 
j 



I i 



8 



5 



o 

(II 

(V 



n OT 
(*g 

W t-> 
O fa 

H fc/' 

SO IT 

P, El 
O W 

OJ 



O 53 I 



2i~ rtl 

> W 

& Eh t- 

O ,Q 

»-l »-• o 
3 6-t -P 

tn o 
p w o 






* o 

rH •«-« 
O 0) 

► ►> 
O 

V o 

o « 

r-t O 

■a .' 
■si 



■a in 

B w 
v 



■3 - 



I H 



I i i 



rH K\ OJ 



2 I I s 



rH VO rH 



J? 5 I 



ft ft 



rH VO VO 



5 8 



oj in vo rH 



ft 



m 

8 



8 



i*- cu m in in 
p4 in \o r— oj- 
w <d ^o cm m 



r— 

CO 

00 


vo 
ft 


VO 


o 

S 1 


VD 
CM 


vo 

VO 


1 

<-* 

vo 


r— 

I'- 
ve 


s 


ft 


U 

f-i 

rH 


H 




K> 

VO 


ff 


ft 

-3- 


rH 

r-l 


1*1 
o 

H 



f-4 


CVI 


m 


OJ 


in 


OJ 


-=* 


r-l 




VJD 


<r» 


Ol 

w 


o? 


r-l 


in 


s 


§ 


8 


* 


1^ 

Ol 


ft 

Ol 


Ol 


a 


50 
VJD 


m 


* 


vo 


in 


vO 

f^l 
in 


in 

Ol 


3 


OJ 


in 


r— 


m 


<Ti 


<n 


J- 


* 


in 

OJ 



rH J" r— CJ K> 60 

r-< 0J 60 OJ 0J C\J 

N in "^ CT\ tr\ cu 



5! 8 

r-l <TN CM 



r«-\ in m ir-l 
O VO OJ 

f-\ in jt 



A J; o in i«-> 

rH "iO * rH VO 



^ 



O l» Oi 

J rH OJ 



O <T\ rH 



ft 


ON 
AJ3 


n 

.a- 


5 


«o 

ft 


ft 


















on 


m 




K> 








i-4 














in 


in 


-H» 


H 


vr> 


in 


in 


CM 


H 


o 


rH 


8 


CM 


<TN 


Jt 


iH 


to 


m 


m 


K> 
















\£> 


VO 




in 


r-t 






ro 















^> 



1 



-* -* > 



■a -a -a 

4* 4» 4> 



Ol rH J- 

rH f— T»N 



in in 

CTv <T\ 
rH 1^1 



OJ K"! 

Ol m 
OJ H 



in m 
vd in 
3 oi 



I r? ft 8 



-5 s 

in jc 



J- j» vo 
Tn r— in 
h to to 



m in to 



8 



Jt to 
OJ OJ 
J- rH 



3 3 fl S 8 ft 



5 



o? 



CM 'vO 

81 •* 



in »*^ 






1 . 



CM C\ 
1^ rH 
K\ rH 



8 



KJ> 

5 



5 a 2 rH S iS « 

m o o h af o. « 



1-1 

1 


e 


*> 


+s 


+» 


s 


«■-■ 


■^> 


« 


CO 


n 




>)"^^> 



9826 



- 439 - 

other hearing headquarters. In lieu of such personal appearance, the re- 
spondent uas entitled to transmit evidence denying the allegation of 
violation. Mr. Reinstein stated that t>rice filing cases 1 , were regarded 
as "routine". The code authority would make a showing that the alleged 
violator way a member of the industry and that he had not filed prices. 
Removal of the respondent's Blue Eagle frequently followed. In most cases, 
Mr. Reinstein stated, no' 'further action was taken, since the Litigation 
Division did not push such cases in court action(*)lf the respondent 
filed prices at a later date, he was entitled to the return of his 
Blue Eagle. 

4. The Government Contracts Division. 

The Government Contracts Division of the 1JRA (earlier the Government 
Contracts Branch of the Compliance Division) also was an aid toward the 
enforcement of the tr^de practice provisions in certain codes. This Div- 
ision, among other activities, attempted (1) to secure the cancellation 
of contracts between government agencies and code violators and (2) to 
bring about the withholding of new government contracts from such vio- 
lators. 

".... The case of Morrison Brothers is typical of such 
instances. They were the low bidders and were awarded a 
contract to remodel school buildings at Bethesda., Md. 
Before the job was started they were found to be in 
violation of the Contractor's Code, and the right to use 
the Blue Eagle was terminated ~by the Compliance Division. 
The Government Contracts Division, after investigation, 
recommended cancellation of the contract, but P.W.A. , 
for reasons that seemed good and sufficient to them 
declined to follow the recommendation and permitted the 
performance of the contract. Without meaning to criticize 
the action of P.W.A. , or to question the soundness of the 
reasons which prompted such action, it is submitted that 
th work of the Government Contracts Division was seriously 
hampered and its prestige and ef f ectivemess considerably 
damaged thereby. 

"Despite its lack of wower of cancellation of contracts and 
the lack of complete coo-oera.tion of Government Departments, 
there can be little doubt as to the v^lue of the ^ork of the 
Division in securing codo compliance in man3 r industries. 
In the case against the Baltimore Lumber Com.nany (L-1407), it 
appealed that orders for government work constituted 70;j 
of the defendant's business, and because of this fact the 
defendant was willing to consent to an injunction in order 
to retain his eligibility status. In the building trades 
and among building and roads contractors conditions in Govern- 
ment contracts were very valuable in securing code comoli— 
ance, and the tremendous purcha.se s, under such contra.cts, 
of steel, cement, lumber, machine shops, products, cotton 
garments and papar undoubtedly greatly aided enforcement by 
other means. "( **) 



(*) See section II, Litigation Activities, below. 

(**) "Extra Judicial Methods of Enforcement", Work Materials No. 27, Legal 
Enforcement Studies Section, Division of Review, NRA,Jan, 1936 pp.44. 



- 440 - 

Other testimony nay also be cited relating to the effectiveness of 
this agency of compliance. The National Fertilizer Association News, 
in its issue of April 18,1935, stated that the cancellation of certain 
government contra.cts had acted as an efficient means of bringing about 
conformity with code provisions in that industry. The History of the 
Code for the Bailders Supply Trade also testifies to the efficacy of the 
activities of the Government Contracts Division. (*) 

The uork of this division was handicapped in some enpes, it is said, 
because of the fact that the Division was unable to secure definite and 
certain information concerning whether or not a given action complained 
against constituted a code violation. Its position was thus rendered 
difficult when, after attenrpting to have contra.cts cancelled because a 
given concern had violated a code authority interpretation of a code 
provision, this interpretation was held to be an improper action on the 
pa.rt of the code authority. 



(*) See page 19 of the code history. 






9826 



- 441 - 
II. LITIGATLX; ACTIVITIES 

A. Number of Cases Handled . 

There were, durin % the life of the bRA, 2,064 cases referred to the 
Litigation Division for court action. (*) Of these cases, 279 involved 
failure to file prices. (in most, if not all cases, other violations 
were associated with failure to file Trices.) The number of cases in- 
volving selling below filed jrices is not available, since such cases, 
in the tabulation made by the Enforcement Studies Section, -^ere lumped 
with a number of other tyoes of violations under the heading "Violations 
Involving Minimum Price." 

The 279 cases were distributed among the codes as follows: 

Code No. of Cases 

Involving 
Failure to File P rices 

Lumber and Timber Products 

Retail Solid Fuel 

Retail Lumber 

Retail Monument 

Wholesale or Distributing Trade 

Builders 1 Suo uies 

Graphic Arts 

Fabricated Metal Products 

Electircal Manufacturing 

Business Furniture 

Funeral Supplies 

Cigar 

Wholesale .Confectionery 

Baking 

Ice 

Crushed Stone, utc. 

Rubb e r Manuf ac tur ing 

Slate 

44 Others (3 or less cases each) 

Total 

B. Attitude of the Litigation Division Toward Prosecution of Price 

Filing Cases . 

Mr. Robert Denvir, Chief of the Enforcement Studies Section of the 
Division of Review, in response to questions concerning the policy of the 
Litigation Division in prosecuting violations of the price filing provisions, 
stated that there was no general policy with respect to the type of cases 
which the division would -prosecute. However, he continued, few if any 
cases involving only failure to filo price were brought up for court action, 
since it was necessary, in each case successfully prosecuted, to show that 
interstate commerce wa.s affected or involved. It was difficult or impossi- 
ble, he stated, to demonstrate that the failure to file prices had adversely 
affected interstate commerce, and hence cases involving failure to file 

(*) Data suyTiedby the~office oTlTr". - Robert DehTirT _ Enforcement Studies 





78 




23 




21 




11 




9 




9 




3 




8 




6 




5 




5 




4 




4 




4 




4' 




4 




4 




4 




68 







- 442 - 

prices or failure to adhere to filed prices re re not actively pushed "by 
the Division unless the transaction involved in the price violation was 
clearly of an interstate character. In general, it was felt that a ' 
violation of price filing provisions could not be successfully orose— 
cuted by itself, (*) 

SECTION C - HRA POLICY r-ZLATIITG- TO 0PE1I PR I CIS- FILIIIG 



. SUI&IA3Y 

The preceding sections of this chanter have presented the work of 
the NFA in supervising code authority administration of the price filing 
■orovisions, and in assisting to obtain industry -compliance with their 
requirements, 

' The pro-sent section traces the development of the policy which 
guided the Administration in its dealing with the subject of open price 
filing as a whole," 

Two major trends are apparent in the official policy statements of 
the IffiA with respect to price filing, and in the views set forth by 
the various advisory divisions and boards. The first of these is an 
evolution from an almost wholly uncoordinated and unoritical acquies- 
cence in open price programs as presented by the sponsoring industries, 
to a carefully considered and definitely announced policy dealing with 
both the aims and the techniques of the price filing device. 

The first code providing for price filing was approved on August 4, 
1933. As late as March, 1934, a spokesman of the Administration stated 
that no official price filing polios' - had as yet 'oeen formed. At that ti 
more than 300 Codes, a large wro^ortion of them containing open price 
provisions, had been approved. On June 7, 1934, with the issuance of 
Office Memorandum ITo. 228, the first official pronouncement of price 
filing policy appeared.' 

The second principal trend accompanied the first. The provisions 
approved during this early period were diverse in form. The industries 
proposing them were frankly intent \toon price stabilization, which in 
many instances was taken to signify price control. The price filing 
provisions were in the main designed to effectuate this. Policy development 
in the Administration, however, tended definitely away from this aim and 
toward the objective of price publicity divorced from orice control. 



(*). The dubious legality of many of the open price plans set up In pur- 
suance of code provisions was also a factor, if we can judge by the 
memoranda of individual legal advisors'. Ilote particularly the 
business furniture, macaroni, folding paper box cases referred to 
in the text of this study. Farther study of the subject of this 
section would be desirable. 



9826 



me 



- 443 - 

To achieve this aim required that the price filing provisions he 
more uniformly drawn, and that specific .:■ fe guards and limitations, 
based upon administra.tive eroerience, be written in. Office Memorandum 
No. 228 set forth the first model -oricc filing clause. The following 
are among the safeguards which w~re >r ;r isively sought to be thrown 
around the price filing provisions in the Movement to make them more 
nearly mediums of price publicity and less mechanisms for the main- 
tenance of price: 

The rule was laid down that prices must be. filed with confidential 
and disinterested a&ents rather than with the code authorities. 

The waiting period prior to the effective date of price reivisions 
was declared contrary to policy, except in special instances. 

It was held that price filed must be actual selling prices, instead 
of merely minimum prices. 

Mandatory customer classification, which had frequently been incor- 
porated as part of the price filing provisions, was forbidden. 

Restrictions upon premiums, "free deals" and advertising allowances, 
other than that they be filed along with prices and terms of sale, were 
declared to be contrary to policy. 



j 



In order that there might be supervision of price filing plans and 
study of their effects, it was stated in newly incorporated provisions 
that no -price filings could be destroyed without the written consent of the 
Administrator. 

It was ruled that price lists should be disseminated immediately 
upon receipt by the agency receiving them (this both aided in price pub- 
licity and prevented suspension of lor prices by persons interested in 
maintaining or increasing price levels). 

It was required that all -orice information, including all terms and 
conditions of sale, be filed. 

It was provided that filed prices must be mo.de available to all inter- 
ested parties (including customers). 

There was by no means entire unanimity within the Administration it- 
self upon these points, nor acquiscence in them -by industry; neitjhter was 
there any great -progress made in applying this policy to the many, and 
highly important, codes whose price filing provisions had been approved 
prior to the policy formulation, nevertheless, the above represents in 
general the prevailing joint of view concerning price filing policy at 
which the Administration had arrived when the code period came to an end. 

Iii the following section the general course of this policy develop- 
ment, and the principal factors affecting it, will be traced, beginning 
with the deba.tes in Congress preceding passage of the National Industrial 
Recovery Act in June, 1933, and carrying through to the invalidating of 



QrtPfi 



- 444 - 

the codes by reason of the Schechtei- decision in May, 1935. 

I. SENATE DEBATES Oil PRICE" PILING PRICE TO PASSAGE OF THE ITIRA. 

Among the earliest intimations linking the subject of open price 
filing with the proposed National Industrial Recovery Administration, and 
indicating the objectives sought by such' a policy, may be found in refer- 
ences to the subject made in the Senate while the Act was being debated. 
This has already been referred to briefly in the introductory chapter of 
the report. 

At that tine, Senator Borah wanted the anti-monopoly clause of the 
Act sup-olemented "oy an anti-price-f ixing clause and an anti-restraint-of- 
trade clause. Senator Wagner, one of the chief proponents of the Act, 
objected to these proposals, holding that - "* * * a prohibition of 'res- 
traint of trade and price fixing-' as these, -ohrp.se s have been interpreted 
by 'the courts would stand in the way. of the most salutary effects which 
the bill is designed to accomplish." 

He continued: 

"For instance, exchange of information, which serves 
to make competition rational instead of blind and 
destructive and which thus expands trade and commerce, 
would be prohibited. It was declared an illegal re- 
straint of trade in U.S. vs. American Linseed Oil . (*) 

'Price stability as distinguished from monopolistic 
price fixing, is a. universally recognized necessity in 
order to achieve economic welfare, and yet it would 
be made practically impossible by the Borah amendment. 
This amendment would prevent even the publication by 
business of their own price schedules and their ad- 
herence to these schedules even for short periods of time. 
Such a. practice was declared an illegal restraint of 
trade in the Linseed Case. Yet such practices might 
be necessary to prevent unfair price cutting and other 
destructive price manipulations." (**) 

Speaking of this debate and of its legal implications, Mr. George J. 
Peldman, Assistant Counsel of the Litigation Division of the URA, in an 
undated "Memorandum of Law Considering the Legality of Code Provisions 
Requiring the Piling of Prices" wrote: 

"One' 'of the Supreme Court's favorite methods of determining 
what changes were contemplated by a. new statute is a resort 
to the intention of Congress, which may be in part adduced 
from the Congressional hearings and debates. That price fil- 
ing was definitely contemplated is obvious from the debates. 



(*) U.S. vs. American Linseed Oil . 2G2 U.S. 371-1923. 
(**) Congressional Record, June 13, 1933, page 5840. 
9326 



- 445 - 

V 

Indeed, a close re- din ■;; makes it apoear that, , in. the, -proper 
c i r cutis tance s . it is alnost the duty of the Recover" r Admin- 
istration to include -hen in the interest of a stable marke+_, 

" It is significant in this respect that an amend- 
ment to the original Bee v r Sill was offered in the Senate, 
which sought to forbid combinations i n 'restraint of trade 
and price fixing'. The fact th- t bhese provisions did not 
find their way into law as finally enacted is of the utmost 
importance. As was stated "by fir. Justice Cardozo ... (in 
another ca.se), the omission may have been unwise, but it cer- 
tainly was not inadvertant It is of special signi- 
ficance that Senator Borah made several unsuccessful attempts 
to have his amendment reinstated a.fter the conference report 
had been submitted and before the final vote was taken. In 
fact, this issue was the highlight of the Congressional de- 
ba.tes. 

"In view of the established intent of Congress, which not only 
permitted but encouraged price filing when necessary, the Re- 
covery Administration has no alternative. The intent of Con- 
T >ss governs." (*) 

Two points of particular importance appear from the foregoing: first, 
that "price stability as distinguished from monopolistic price fixing" 
was one of the primary aims of the Act, and second, that it was the appar- 
ent intent of Congress that price filing under the I1RA should be "not only 
permitted but encouraged * * * * when necessary". 

The working out in terns of administrative auction of what .thus seems 
to have been the basic legislative policy with respect to the filing of 
prices will be seen in the Sections following. 

II. PIRST 11RA PRICE FILING PERIOD - JUlffi 15, 1933 THROUGH JUHE 6, 1934- 
EXPERIiEITTATI'H AID SEARCH FOR A POLICY. 

Almost precisely a year elapsed from the date of the passage of the 
HIRA to the time when a definite and relatively complete policy with re- 
spect to o-oen price plans was formally enunciated by 1IRA. This period 
was characterized by the adoption of a large number of codes containing 
price filing provisions differing widely in various details, and, especially 
during its later months, by r,n increasing tendency toward critical examination 
of the effects of these diverse experiments and search for some basic 
policy with respect to then. 

A. Six Months of Price PiUnr Experimentation . 

The fourth Code to be approved under the liRA contained a detailed and 
comprehensive price filing plan. This -as the Code for the Electrical 
Manufacturing Industry approved August 4, 1933. numerous others quickly 
followed. During this period of intensive code- making man: r codes, includ- 

(*) Legal Division ISA files, "Price Piling, Ho. 413". 
9826 



- 446 - 

ing those for major industries, were approved with urice filing plans 
to which virtually no consideration had been givenlin the -oublic hear- 
ings. During this period, in fact (with certain exceptions to be 
noted later) little serious consideration of any kind ^as given either 
to the nature or the possible economic effects of the price filing 
provisions as provisions as proposed or approved. 

1. Reasons for Administrative Attitude. 

One reason advanced for this early attitude of relative inattention 
to the price filing plans on the part of HRA is the primary Toreoccupar- 
tion of the Administration during this period with the task of obtain- 
ing satisfactory wage and hour provisions in the codes for the purpose 
of relieving the unemployment emergency and bolstering purchasing power. 
Again 1 ,' the aim of price stabilization - already noted in the Senate de- 
bates - was almost universally sought by the industries proposing codes, 
and was to a considerable degree acquiesced in by the Administration, 
especially when claimed as an effect to the increased labor costs as- 
sumed. The policy of the Administration therefore, insofar as it may be 
called a policy, .appears to have been to aporove what the industries 
asked for with respect to price filing provisions, without serious ques- 
tioning. It was, in fact, a period of broad experimentation with price 
controls of various kinds, and with price filing methods in particular* 

As an illustration both of the general nature of the irice filing 
plans approved during this period, and the scant attention given them in 
the process, an account of ore of the typical early -provisions may be 
given. 

2, The Price Filing Plan in the Electircal Manufacturing Code. 

This Code, as remarked above, was the fourth to be approved under 
LIRA and the first to contain a ;orice filing plan* Only one reference of 
any significance concerning filing appears in the transcript public hear- 
ings on this code. Deputy Commissioner Allen, who conducted the hearing, 
in speaking of the plan, said: 

"... the intent is that a. manufacturer may at any time 
elect what he wants to sell his goods for; if he does, he 
reports it to the supervisory agent, showing his list and 
discount, placing upon him the obligation to publish that 
to all competitors and interested parties, and it provides 
the opportunity for any manufacturer to change his list and 
discount at any time he wants providing he will not sell 
below his -nub li shed discount price, so Ion" as the period 
of that list and discount is effective." (*) 



(*) Transcript of Hearing on the Code for the Electrical Manufacturing 
Industry, July' 19-21, 1933, Vol. I, page 224. 



9826 



- 447 - 

llothing else of importance concerning price filing appears in the 
transcript of the hearing, llonu of the reoorts on the final draft of the 
code submitted "by the boards and divisions of the Administration to the 
deputy administrator prior to -approval contains any reference whatever to 
the price filing provisions* Similarly, in the 'historical sunmary of 
the main points discussed in the development of the code, which Deputy 
Administrator Allen submitted to the Administrator ^hen the code went 
up for approval, there is no mention of the open price plan. (*) 

The essential ->oints concerning price filing, contained in Article 
X (f*) of the Electrical Manufacturing Code, were: 

1. If the code authority determined that it was customery in the 
industry to sell products on the basis of printed price lists, it could 
require the filing of such lists, 

2. If the code authority determined that conditions in a subdivision 
whiph had not previously sold on the oasis of price lists were similar to 
thpse in a subdivision which had, it could require that the former sub- 
division also file jrices.' 

i ' 

3. A ten day waiting -oeriod was provided for revisions of price 
lists. 

4. Competitors could file revised lists to become effective on 
the same date as a revision about which they had been notified. 

5. All known manufacturers in the Industry were to receive the 
original and revised price 1 ists. 

, 5. Members of the industry were forbidden to sell below filed 
prices. There was no reauirement that they sell at filed prices. 

It will thus be seen that, what later "as to become one of the 
principal points of contention with respect to general 1JRA policy con- 
cerning price filing - the waiting neriod before revised prices could 
become effective - was written into the code and acquired something of 
the force of a precedent in the very first price filing plan approved. 



3. Early Dissent With Respect to Price Filing Provisions. 

TThile That has ^oeen previously said as to the degree of attention 
paid to the price filing plans in process of approval reflects the general 
situation at this time, certain groups and individuals within the Adminis- 
tration, and closely connected with the code-making process, soon began to 
object to, or at least to question tentatively the wisdom of, the types of 
open nrice provisions which -^ere being written into the codes. 



(*) Mr. Sterling McKittrick, who was an assistant deputy engaged in the 
administration of this code,, stated that he is of the opinion that 
minor comments on its price filing provisions were made by some of 
the high •.Administration officials in memoranda prior to the approval 
of the code. These have not "oeen located by the Price Piling Unit. 

(**) Codes of Pair Competition, as Approved, Government Printing Office Vol. 
I, P. 49. 



- 448 - 

Although the objections of these individuals paid groups did not 
serve immediately to alter the nature of the plans which were being ap- 
proved, the type of policy eventually adopted b ' IiRA was, as will be 
seen in a later section, mat jriallv effected b; r the dissenting opinions 
expressed in the;:e earl:; months of code f ornula.tion* 

Several instances of these dissident attitudes follow: 

(a) The Code Analysis Division. 

During the latter part of Jul", arid during August and September of 
1S33, the Code Analysis Division headed by Mr. Stephen De.Bruhl, served 
in, a sense as a policy advising group for the Administration* According 
to information secured from Mr. TJ. IT. Bardsley and Mr. Pat Taft,' both 
of whom were members of the division, .the function of the group was to 
take the codes shortly af ter they "tri originally submitted by the indus- 
tries and comment on the provisions for the- benefit of the deputies in 
charge of code negoitations. Their policy advising activities -'-ere of 
a rather negative char; cter, according to Mr. Bardsley, who character- 
ized the work of the group as that of attaching "red flags" to call, to 
the attention of the deputies >rovisions of doubtful desirabilit}--* In 
general, Mr. Taft reported, this group looked pith disfavor on price 
filing provisions and urged their elimination. The members of the divi- 
sion had no very clear cut reason for this, Mr. Taft stated, but ^ere 
vaguely afraid that o?en nrice systems might be used in price fixing 
activities. 

The following illustrates the position of the Division on open prices: 

"This article (in the -iro-iosed Code for the Machine Tool and 
Forging Machinery Industry) sets \\r> an onen price association* 
Uhile the association as defined is not of en extreme type, the 
difference between an open price association and a fixed brice 
plan is apt to be. a. narrow one." (*) 

(b) The Division of Fiesearch and Planning 

This agency, established to advise the Deputy Administrators and the 
Administration generally concernin ; the -:>robable economic effects of code 
operation, and to study those effects, issued no formal statement of polic 
for the guidance of its code advisers. Mr. James Hughes, former chief of 
Code Administration Section of the Division, stated (*) that prior to the 
issuance of Official Memornadum Ho. 228 (arice filing policy) on June 7, 
1934, the division had no established oolicy on the subject. 

Mr. Victor von Szeliaki, who preceded Mr. Hughes in the administra- 
tive work of the division made the same statement but added that, neverthelesl 
certain of the division's economic advisers locked with disfavor on waiting, 
periods, and in general on the re .orting of jrices other than for closed 
transactions. 



(*) Reoort submitted by Code Analysis Division to the Control division 
on September 6, 1933, prior to the publj.cj hearing on the Code. 

(**) In conversation with representative of Price Piling Unit. 
98PR 



- 449 - 
(C) The Consumers 1 Ac ris ry Board 

Reports of the cc s of the "■■/■ it; i rs' Advisory 
Board also, during the jeriod vn to t n of Dffice ' "eino- 

randura ho. 230, f re nuentl" in i t - t the attitude of that 
board was, in general, on ' to : : . " ' ; of ■ ay other than 
past trices. As for enannle, is ; e lorr&'s report rrith re- 
spect to the Cement Code, cl-ted Serbe nber 15, 1933. In other 
cases no objection vte-.s raised to the 'iling of current prices, 
but only to certain tyoes of current renorting. Opposition rrns 
also expressed to waiting periods in ooen irice provisions, rs in 
the reoort on the Li::e Industry Code, Sentember 16, 1933. 

In r statement prepared as a 7ui.de to its Consumer Advisors, 
the Consumers ' Advisor/ "Soard stated in a raenorandun dated September 
23, 1933, 

"....Under the uise of collecting information, the open 
mrice schedules mronosed in some codes lay the foundation 
of monopolistic control of )rices. Periodic collection of 
aver? e prices or of the range of nrice quotations is de- 
sire.ble. Detailed reports of trices, qualities, name 
buyers, etc., i:: particular transactions ma- be made the 
ba.sis for strong pressure to live uo to tacit monopolistic 
understandings, and should he examined closely from that 
point of vie-;. 

"Publicities of scheduled future prices should be omposed 
as a. device to facilitate rrice fixing a ;ree -ents. In cases 
where such reporting systems cannot be ejected from the 
codes, they should e surro . ed '->- r four safeguards: 

1. The time interval bet- een the f ilin ; of a irice schedule 
and tiie date it jecoin effective should be reduced to 

a minimum in order to shorten the >eriou of nersusion. 
A five day interval, although too Ion:, should be taken 
as the outside limit. 

2. Schedules properly filed should become effective auto- 
aatically without veto by u:y trrde associ tion, code 
authority, or producer. 

3. It should bo mandator;'' that at the same time and in the 
same manner as reports are "'he to other producers, the 
same remorts should be nr.de to buyers of the mroduct. 
The only limitations upon this requirement should be 
that ---here the renorts are -de >y nail, very small 
buyers, -ho have not re que .it eh sucl" re jorts, nay be 
omitted, and that there the reports rre made to m 
association,: "buyers" -:rh are not renr< sented by an 
equivalent association should be notified in such 
other ways as -ill ;ive the equal access to the 

i iform.r ti n. 

9326 



- 450 - 

4. "To tine lip.it shoi ribed "or the duration of 

a price schedule, Such Units often see]: to eliminate 
long tern cc lti cts ."or future i] Lver, particularly in 
in cases where the contract: e -t low prices in order 
to keep plants running durin ; r-n of ' season. The con- 
sumer's interest lies in encouraging the stability of 
production by such contracts.' 1 * 

4. The Beginnings of Official liBA Price Piling Policy. 

IThile for the npst jart IJHA irice filing policy during this period 
was, as hrs ieei indie? ted, nerd;- that which was implicit in the ap- 
pro, ed open price plans, with some critical opposition iron 3-rticulrr 
grouos, there were a few preliminary statements foreshadowing definite 
formulation of policy by the Adninistration. 

' The earliest model code, dated October 25, 1933, contained no 
preference to price filing; but a confidential policy memorandum carry- 
ing the same ante "did. This memorandum appears to have, been t he earli- 
est authoritative statement of general principles as to open price sys- 
tems under the ITRA. It re? in part as follows: 

"Open Price Syste is should be ur ;ed, prpviding that prices — 

(a) shall be effective within not more than ten lays in 
complex industries or five days in simple. 

(b) shall be capable of withdrawal at the pleasure 
of the seller. 

(c) are not subject to veto or modification by any 
agency. 

(d) are to he generally ptijlishecL for the ienefit of 
buyers as --ell as sellers." 

This iienorandun, signed by Alvin Brown, -ts r statement of the con- 
clusions reached at a meeting, held on October 25, 1053, of the Policy 
Board appointed at the direction of the AC dnistrator in Office Order 
ho. 35, issued September IS, IS 33. 

This hoard was made up of the following: 17. L. Allen, Alvin rown, 
Thomas S. Hammond, P.obert T. Lea, Edward P. "Ico-rady, Charles hichelson, 
Ilalcolm huir, Donald h. Pichberg, hrs. C. C. tuusey, Alexander Sachs, 
K. . Simpson, h'elson Slater, Robert II. atraus, '' Iter C. lee le, --... D. 
JThiteside, C. C. Uilliams, and Leo "olman. 



(*) Confidential • ienorrndun from the Consumers ' Advisor;' Board to Coae 
Advisors, Dated 5 . )te 1 er 23, 1S33.. In ITRA files. 



9825 



- 451 - 

It shoul )e lote . t'vt, -ith the exception of the approval given 
to tie waiting jeriod, the irinciples set forth in this errliest official 
expression of price filing >olicy - li?:e ::ost of the critical opinion 
recorder, in the section rjrecedin : - tended to e-plv si r ,;e the proper 
function of the orice filing pirn as p, le&ixm of price publicity, as 
distinguished fron r lecaanis;- for >rice control* This fundamental 
divergence fron '-.'hat v ;:.: rail'/ seen as the industry attitude to- 

V7ard the orice filing -olnns will bo found to characterize XL. policy 
on the subject nore cum nore p.s that policy develops. 

It should also he noted, however, that in the case of a nuriber of 
codes approve c after the issuance of this nenorandura', the policies ex- 
oressed in it were not followed. The analysis of open price provisions 
prepared by the Research and Planning Division indicates that three 
codes mid one supolenent were approved after October 25, 1935, in which 
there was a waiting period in excess of l ri d; _ "s. Of these, only one 
actually nent into effect, the other three having had the waiting 
period stayed.* 

Of perhaps even pore ir.roortr;ice is the fact that, according to 
this spj.ie reserrch pnd planning analysis, there '-■ere, after October 
25, 1933, when the policy peporandun urs issued providing for avail- 
ability of filings to custoners, 137 codes approved which made no 
provision for buvers to receive filings. 



(*) ".Analysis of Tr.-de Practices, Provisions P.elatin ; to Open Price 
pnd 73 i c"_ Pilin ; Systems", preprred hv the Division of P. e search 
rnd Planning, 1I3A, revised n - sorrected through '"ay 27, 1955, 
lurlA files. 



- 45? ~ 

B . Six Montns of Study an d Searc h f or Policy . 

In the first half of this section there have been pointed 
out the rapid and largely unconsidered ado "tic n of open price provisions 
in tie cedes, the outcropping of critical protest against the types of 
provisions adopted, and the "beginnings of an official V.RA policy with 
respect to open price systems, all of which characterized the first six 
months of the code period. 

During the second six months of the 'ISk, various efforts 
were made to find out the actual effects of the several types of price 
filing plans that had been approved, and to take certain preliminary 
steps to safeguard open price systems in general against abuse. It hed 
become increasingly apparent that certain aspects of price filing plans 
approved in the early codes were leading to undesirable results. 

The Administration was still without explicit and authori- 
tative price filing policy, although during this period various movements 
were set en foot which eventually culminated in broad, definite state- 
ments of principles. In addition, the Review Division did certain work 
in codifying expressions of policy on matters of detail. 

The most drastic action so far taken in connection with a 
■policy consideration affecting price filing was effected toward the 
end of this period by an official order staying all waiting period pro- 
visions not yet approved, pendin & the outcome of a general study of open 
price plans. 

The details of tnese various developments are presented in 
the sections following. 

1. Efforts to Ascertain the Results of Approved Price 
Plans. 

In January, 1934, a public hearing was held by the 
NRA on "Price Changes". This action was taken especially for the purpose 
of giving an opportunity for expressions of opinion as to the actual 
operation of the price provisions. At that hearing considerable testimony 
was given to the effect that prices generally, and especially bids on 
government purchases, had increased and had become much more uniform since 
codes were put into operation. It was maintained by many that the open 
price provisions, and more specifically the waiting period in the "orice 
filing systems, were in large part responsible for this. (*) 



(*) For testimony concerning identical bids, see statement of 

LIr. J. \7. Nicholson, Purchasing Agent for the City of Milwaukee, 
Wisconsin, at the hearing on "Price Changes" , January 9, 1934, 
pages 533-580. See also appendix "A" of the memorandum submitted 
to General Johnson on February 19, 1934, by the Consumers' 
Advisory Board. 



9826 



- 453 - 

T..:.is ..earing was the first major move to ascertain the effect of 
the trade practice provisions of codes. Other similar efforts followed. 

Largely as a result of the evidence produced at this meeting, 
three official NBA orders affecting open price provisions were issued 
successively. They were Office Orders 63, 63-A, and 63-B, the text of 
which follow: 



OFFICE ORDER NO. 63 

January 25, 1934 

Provisions for Open Price Associations 

Pending completion of a study now being made as a 
result of the price change hearing, no farther 
provisions for open price associations (including 
price registration) are to become effective in 
codes. Therefore, where such provisions are in- 
cluded in proposed codes not yet approved, they 
shall be stayed in the Executive or Administra- 
tor' s order of approval for 60 days pending com- 
pletion of the aforesaid study. 

By direction of the Administrator. 

Alvin Brown 

OFFICE ORDER NO. 63-A 

January 27, 1934 

i .GDI FI CAT I ON OF OFFICE ORDER 63 ON PROVISIONS FOB 
OPEN PRICE ASSOCIATIONS 

Office Order No. 63 is modified to read as follows: 

"Pending completion of a study of open price associa- 
tions now being made as a result of the. price change 
hearing no further provisions which prescribe a 
waiting period before tiie prices filed become effec- 
tive will be approved in codes. Therefore, where 
such provisions are included in proposed codes not 
yet approved, they shall be stayed in t..e Executive 
or Administrator's order of approval for sixty days 
or pending completion of the aforesaid study. 



- 454 - 

"This Order is not intended to prohibit or stay provi- 
sions for open price associations which provide that 
revision prices shall "become effective immediately 
upon filing." 

By direction of the Administrator: 



Alvin Brown 



OFFICE ORDER NO. 63 - B 
January 27, 1934 



UODIFICATI'N 0? OFFICE ORDER NO. 63 - A OH 
FHOYI SIGNS FOR OPEN PRICE A3?OCIATi: iT5 

Office Order No. 63 - A is modified to reed as follows: 

"As a result of the price change hearing a study is 
"being made of open price associations. This study 
particularly involves the waiting period "before 
filed prices become effective. Therefore, any pro- 
vision for a waiting period in codes not yet 
approved will be stayed in the Executive or Admin- 
istrator' s Order of Approval for sixty days, or 
pending completion of the study." 

By direction of the Administrator. 



Alvin Brown 

An extensive but unsuccessful search was made by the writer to 
locate in the NRA files the originals of these orders, to which, it 
is assumed, would be attached recommendations concerning the orders 
by the officials concerned. None of the various sections of the 
organization in which the original orders might logically be filed 
was able to locate the documents. Therefore, it is not possible to 
indicate just why, two days after an order was issued staying all 
open price provisions, the stay was modified to apply only to those 
with waiting periods; and why on the day the second order was issued, 



9826 



- 455 - 



a third v;as promulgated which stayed only waiting "periods. (*) 

Whatever the precise reasons for t.ie modifications, it seems 
certain that there was strong industry px'otest at this drastic move to 
curtail the right to a type of provision already possessed by large 
numbers of codified industries. 

Moreover, in five codes, including supplements, the policy ex- 
pressed in Office Order No. 63-B was not followed. The codes, approved 
after January 27, 1935, in which there were waiting periods which were 
not stayed, were: 

252 Merchandise Warehousing 

(Approved January 27, 1934) 

237 Graphic Arts (All Divisions and 31 Appendices) 
(Approved February 17, 1934) 

401 Copper 

(Approved April 21, 1934) 

4-1 Befrigerator Manufacturing (Supp. to Electrical Mfg.) 
(Approved June 9, 1954) 

4—2 Portable Electrical Lamp and Shade (Supp. to Elec. Mfg.) 
(Approved June 27, 1934) 

According to a responsible administrative official, the action as 
t3 tie codes listed above, with the exception of the Copper Code, was 
due to "pri^r commitments" , which it was felt could not be disregarded. 
The Copper Code provision was of a special type. 

Except for these cases, however, Office Order No. 63-B marked the 
definite adoption of a policy disapproving tie further acceptance, at 
least without stay, of mandatory waiting periods in connection with 

■ t 



(*) In this connection it may be noted tnat Mr. Irving S. Paul, head 
of the code authorities of three of the subdivisions of the fabri- 
cated metal products industry, stated in personal conversation with 
the v/riter that the three codes with which he was concerned were 
up for approval just at the time Office Order No. 63 was issued. 
Mr. Paul reported that when he was advised that by virtue of this 
order the price filing provisions in his three codes were to be 
stayed, he protested vigorously to the Administration. He based 
this protest, he said, on the contention that the industries would 
have no price protection at all, and get nothing from the codes to 
compensate them for the increased cost burden the codes would bring. 
He felt that his protest, and his proposal to withdraw the appli- 
cation for the codes, were influential in bringing about the modi- 
fications contained in Office Orders 63-A and 63-B. 



9826 



- 456 - ■ - 

open price plans. (*) The stays imposed by that Order were never re- 
mo v eel. 

2. Special Studies Undertaken With an 3ye to Policy. 

As a further outgrowth of the hearing on price 
changes, and as a result of the increasingly felt neel to finl out 
what was resulting under the price filing provisions if a definite 
policy was to be formulated, both the "Research and Planning Division 
and the Consumers' Advisory Beard made special studies and reports 
during this period on the operation of the open price plans. Each of 
these reports included a number of policy recommendations, the princi- 
pal points of which are summarized below. 

(a) Research and Planning Division Report, 

The first of these studies, dated April 3, 1934, 
was prepared by Mr.* Simon Whitney for the Division of Research and 
Planning. 

After surveying the operation of open price 
provisions in the codes approved up to that time, Mr. Whitney advised 
against complete elimination of open price provisions. "Te said that 
such a procedure would be "taking away a useful but dangerous tool in- 
stead of teaching its use." 

Mr. Whitney's definite recommendations were: 

"1. The reporting of prices on past transactions 
is already legal and should be permitted but the 
buyer should not be identified and even the 
seller' s name should probably not be reported to 
his competitors, unless the industry can show a 
real necessity for identification. 

"2. The exchange of current price lists should 
be permitted. 

"3. Tne mandatory waiting period should be elimi- 
nated from codes unless a given industry can 
prove its necessitv to prevent grave abuses, or 
unless the customers want it too. 

"4. Price reporting should not be taken over by 
the government but the NRA should reserve the 
right to require copies of all price data to be 
filed with it. 



(*) Hie later amendments, however, affecting the Lime and Cement Codes, 
continued approvals of waiting periods which had been included 
in the original provisions. 



9826 



- 457 - 

":". Price reports should be male available to buyers 
as well as sellers, under reasonable conditions. 

"6. Sealed bids should not be exchanged until after 
t. e award . 

"7. Price fixing should be stopped by taking all 
price fixing provisions (of whica price reporting 
is net one) out of co.es, and by issuing a warning 
to industry followed by prosecution in case of 
continued price fixing. "(*) 

(b) Consumers' Advisory Board Report. [ 

The second of these studies, undertaken pursuant to 
an order issued directly by General Johnson, was conducted by the Con- 
sumers' Advisory Board. This board had, almost from the first, as the 
preceding subsection has shown, been opposed to much in the open price 
plan's which were being approved by the Administration. Typical of the 
attitude of this Board is the following extract from a letter to General 
Johnson dated February 19, 1934: 

"The recent hearing on price changes produced a 
considerable volume of evidence that open price 
systems are facilitating uniform price fixing 
....the information at hand indicates that the 
difficulty cannot be dealt with merely by elimi- 
nation of tne waiting period. The basic diffi- 
culty as we see it is that open price systems, 
with or without waiting periods, identify the 
person or firm quoting the low price and thus 
facilitate the use of pressure to force his 
price up to the level generally lesired in the 
industry. .. .Tail e we do not believe it desir- 
able to eliminate tie reporting of prices and 
price transactions completely, we feel that it 
would be possible to throw safeguards around the 
reporting in such a manner as to make more diffi- 
cult the harassing of those who would keep prices 
down. To this end we suggest as worthy bf your 
consideration, that actual prices charged in sales 
already made be reported to NBA agency pledged to 
keep the detailed reports confidential and to 
supply to members of the industry only statements 
of the range of prices at a given date. If the 
reported prices indicate that existence of Ques- 
tionable conditions, we believe that remedies 
can best be applied by such an agency rather 



(*) "Open Prices" by Simon Whitney, Research and Planning Division, 
i-TRA, April 3, 1934, page 40. 



9826 



- 458 - 

than by those who have private interests at stake." 

On Llay 4, 1934, after a study of the operation of price filing pro- 
visions, the Board issued a report. Its recommendations concerning 
policy wore: 

1. Important revisions are needed in nearly all open price pro- 
visions in cedes. 

2. Open price provisions should not be abolished until attempts 
have been made to remedy abuses. 

3. In revising open price provisions, a model clause is not 
enough; varying conditions in the different industries should be taken 
into consideration. 

4. The result of open price provisions should be true publicity. 
Therefore, code authorities should immediately upon receipt make all : 
price information available to all members of the industry, to the govern- 
ment and to the public, 

5. Code authorities should be prohibited from promulgating regula- 
tions concerning customer classification, grading, discounts, etc. under 
the guise of price filing forms. 

6. There should be no revelation of identity of the filers; only 
the range of prices should be distributed. Therefore, a confidential 
agent should be the recipient of the filing. 

7. Y/aiting period should be retained only if the above safeguards 
are made. 

8. Detailed check on the operation of the provision should be 
made. 

9. There should be prompt investigation of alleged abuses of price 
filing systems; if there was abuse proven, the system should be suspend- 
ed automatically pending a hearing concerning revision of the plan. (*) 

It will be noted that the recommendations contained in these reports 
of the two advisory divisions were in substantial agreement upon the 
following general points: (1) that open price filinr systems should not 
be done away with until efforts had been made to remedy the abuses con- 
nected with them; (2) 0°y implication) that features related to price 
publicity should be encourage! and those tending to price control should 
be weakened; (3) specifically, that the waiting period should be abolish- 
ed except where positive need for it could be shown; and (4) recommended 
changes should apply to codes already approved, as well as to future 
approval s . 



(*) "Experience with Open Price Provisions of Approved Codes", Con- 
sumers' Advisory Board, N3A, winy 4, 1934, pages 39-42, NRA files. 



9826 



- 459 - 
3. Further Search For a Basic Policy. 

A further effort to ascertain the results of the price 
provisions in the NBA codes, and to help in the formulation of a 
basic price filing policy, took the form of a series of conferences 
with code authorities held in March, ,1934. 

That even at that late date no definite policy had been 
adopted i r - evidenced ^y the following statement made by Mr. A.D. 
Whiteside in his introductory remarks as chairman of one of the group 
converence en "Prices", held as part of these general code authority 
conferences: 

"***I must reiterate, in closing, and say to 
you that irrespective of rumors to the con- 
trary, tie National Recovery Administration 
has formulated no conclusion for a definite 
opinion regarding open price provision s*****"(*) 

Still another evidence of the absence of definite policy, 
even at a date when most of the major codes had been approved, is seen 
in the fact that although the "Suggested Outline for Use in Code Draft- 
ing", dated April 3, 1954, notes as a possible Pule 11 of Trade Practice 
Rules, an open price provision, no model is suggested. The outline 
states tat a suggested form of open price provision would be "separately 
circulated". As far as can be discovered, however, no such model pro- 
vision was distributed. 

To these scattered and largely uncoordinated attempts on 
the part of tie Administration to reach a Lefinite position on open 
price systems, as set forth in the preceding pages, there was aided, on 
April 9, 1934, a somewhat more systematic effort resulting from the 
issuance cf Policy Order No. 83 which created the office of Assistant 
Administrator for Policy. 

Subsequent to this a Policy Group of four was appointed 
consisting of i.ir. BLckwell Smith, Mr. Leverett S. Lyon, Mr. William W. 
Bardsley, and Mr. L. C. Marshall. This group advised different admin- 
istrative officers in the UFA on policy matters, some'of which related 
to price filing. An undated document has been prepared concerning the 
work of this group; it is entitled: "Compendium of Abstracts of Policy 
and Other Statements issued by the Policy Group. ••(**) 



(*) Conference of Code Authorities and Trade Association Code Committee 
Conference Group No. II "Trade Practices - Prices", March 5, 1934, 
page o . 

(**) Available in the office of the Legal Service Section, 
ITRA files. 



9836 



. - 460 - 

The following opinions on policies concerning price filing were 
expressed by this group prior to the issuance of Office Memorandum 
No. 233: 

(1) Prices filed should be those at which the member sells, not 
his minimum price. 

(2) A member of an industry should not be required by the Code 
to file ".elivered prices. The filing of delivered prices should not, 
however, be forbidden. 

(5) In the case of an interpretation of a code provision, the 
group reccmmen&ed that ".**** the date of filing of prices, terms, or 
conditions of sale shall be deemed to mean the date of receipt of 
notice by the cole authority, with instructions to. the code authority 
that it adopt regulations that such filing must be by registered mail 
with return receipt requested. " 

Finally, it should be noted that policy statements touching at 
times upon price filing matters, were made during this period by the 
Review Division. This division, designated to advise the Administrator 
concerning conformity of proposed code provisions and rulings with LIRA 
Policy, was one of the first agencies to, begin compilation of state- 
ments of principles. Unlike the advisory groups who represented parti- 
cular interests (industry, labor and consumers) the Review Division did 
not attenpt to influence the formulation of Administration policy. 
Rather, its function was to comity policy and precedents, as indicated 
by previous administrative action, and to check new rulings and code 
provisions r.gainst suca a compilation* To some extent, therefore, ac- 
tion -^receded ratier than followed x>licy during a great portion of the 
code—making period. 

An undated summary' of policy prepared for the guidance of the 
members of tie Review Division and based upon precedents, by Mr. Alvin 
Brown, contains a digest of matters of policy with respect to price 
filing as follows: 

A mandatory list of extras embodied in a code was looked upon with 
disfavor; it was urged that in place of this the members of the indus- 
try in question be required to file tlieir extras the same as any other 
price. (May 1, 1924) 

A provision for filing prices by basing points was "believed valid" 
since each member was free w.ien filing to define his own delivery bases. 
(May 1, 1934) 

The policy of permitting the code authority to prescribe the price 
filing form was approved. (May 1, 1934) 

The objection of a Consumers' Advisor to a provision that producers 
must include marble at filed prices in estimating on finished jobs was 
not sustained. It was contended that this was objectionable since the 



nno/' 



- 461 - 
producer could, file whatever srice he chose. (February 5, 1934) 

These statements, it will ije seen, leal with particular details 
related chiefly to the operation of price filing plans i:i specified 
circumstances, rather than with broadly considered matters of policy 
affecting the general question :.' open price filing. 

4, Summary of the First Price piling Feriod. 

To summarize what has been presented above as to policy 
with respect to price filing in the first period considered — from 
adoption of the Act on June 16, 1233, through June 6, 1934: — price fil- 
ing provisions were incorporated during this period in a large number 
of codes; these provisions were diverse in form, reflected in the main 
no uniform or considered policy on the part of the Administration, and 
were adopted largely as desired by the industries, whose interest was 
frankly in mechanisms for price stabilzation. Growth of criticism of 
this situation within the NBA itself, added to efforts to determine the 
actual effects of the price filing provisions (stimulated to some extent 
by outside dissatisfaction), resulted in various tentative efforts 
directed toward the formulation of a general policy. With the exception 
of the stay upon' waiting periods embodied in Office Order 63-B, how- 
ever, it may be said that there was no general declaration of price 
filing policy prior to the appearance of Office Memorandum No. 228 
which opened the second NBA price filing period and which is the sub- 
ject of t e following" section: 



- 462 - 



III. SECOND NBA FRICE EILING FE IOD - JUNE 7, 1S34 to MAY 29, 1935 - 
DECLARATION, CLARIFICATION AND APPLICATION Ov FOLICY. 

A. Office Memorandum No. 228. 

This period was inaugurated by the appearance of Office ■ 'emorandum 
No. 228, the most important statement of NRA policy concerning price filing 
ever issued, and one of the most important of all NRA policy statements. 
The memorandum dealt with the Question of price provisions in general, but 
its Exhibit A contained a very detailed and comprehensive setting forth 
of what were henceforth to be considered permissible price filing re- 
quirements, in which was disclosed a marked alteration of previous 
attitude in several respects. 

1. Background of the lemorancum. 

The origin of this policy statement is probably to be found in the 
hearing on price changes held in January, 1934, and noted under Section 
II, B, above. Aouses of open price systems uncovered at that hearing 
had led to various inquiries into tne operation of the provisions, and the ■ 
unfortunate corsecuences of lack of a uniform Administration policy as 
to prices in general had become increasingly apparent, resulting in the 
organization of a policy formulating group. 

The immediate background of the memorandum vas a group of policy 
recommendations submitted to ;ir. Blackball Snitn, the Assistant Admini- 
strator ior Policy, ny r. Leveret S. Lyon, Deputy Administrator for 
Trade Fractice Folic", in the latter part of lay, 1934. The memorandum 
was also signed by the .'.embers of a policy committee working with ir. Lyon. 
The members of that committee were: Mr. ..lilton Katz of the Legal Division, 
Mr. James E. Hughes of the I-.esearch and Planning Division, Mr. vV.H.S. 
Stevens of the Consumers' Advisory Board, Mr. Edwin . George of the 
Industrial Advisory Board and Mr. Paul Kutchings of the Labor Advisory 
Board. 

This memorandum contained, with only slight differences, what later 
became Exhibit "A" of Oifice emorandum #228. Ir. presenting this draft, 
Mr. Lyon explained that he had proceedec on three assumptions: 

"(1) That price policies of the National recovery Administration 

are to be designed in terms of a continuation of a capitalis- 
tic economic order; 

"(2) that fair competition is desirable and 

"(3) that fair competition require' knowledge oi competitive 
i actors to the fullest extent possible without unduly 
curtailing private initiative or giving rise to collusion 
and price fixing. " 

Mr. Lyon further stated: 

"On the basis oi these assumptions, I have concluded that open 



463 - 



price provisions properl^ crr-'-r, may be made a desirable part 
of p code of fair competition as a device to secure genuinely 
intelligent and iree competition." 

He further said that he believed that the model provision which 

was later designated Exhibit "A" oi Gil ice Jeaorandum #Sr£fa, provided 

industry "with what is reallv necessary in th<. attainment of an open 
market." 

4 

Elaborating on the reasons for the various portions of the recom- 
mended provision, Mr, Lyon stated that waiting periods hatfe been excluded 
^ecause it '-as regarded as important "to retain the possibility of gain 
through the quick realization o: market trends and prompt action. If 
business men are not permitted the possibility of realizing such gains, 
the incentive to alertness and the inducement to wholesome price read- 
justments is largely nulliiied." he stated that ■ nile there were some 
evidence and considerable feeling that waiting periods aided collusion, 
this was not the principal reason lor omitting provision for waiting 
periods. 

He stated that he believed that the facts that all prices had 
to oe received by the confidential agent beiore. they became effective, 
that they were to be immediately pnd simultaneously distributed to all 
ouyers and sellers, and that they could not be increased for 48 hours were 
sufficient guarantees against abuses in the nature oi "price raids." 

There '-as some though apparently not a great difference in "opinion 
in the committee concerninr identii icatior of sellers. In his memorandum, 
Mr. Lyon stated that he believed much ,7 'as to be said for non-identification 
but that he felt that in vie' of the lack ox standardization in so many 
lines, non-identification w=s impractical. -e urged, however, that 
divisional and deputy administrators "be asked to attempt to work out such 
provisions for unidentifiable publication in every possible case, espec- 
ially in dealing with industries '"hose products are well standardized." 
On the other hand, Mr. r ". H. S. Stevens, oi the Consumers' Advisory 
Board, expressing a minority opinion, urged that "the confidential agent 
should be directed to issue prices in unidentifiable form wherever prac- 
ticable. The deputy administrators. might then be instructed that they were 
to modify this rule only when it was clearly impracticable to release the 
price in unidentifiable form." This appears to be primarily a difference 
in emphasis; in one case the standard was to contain identification but 
deputies ""ere to depart from the standard in this respect wherever possible. 
In the other case, the standard was to be non-identif ication and departures 
from it were to be made onlv where absolutely essential. 

Mr. Lyon stated that reouests from industries for waiting periods 
should be considered on the merits as "proposed departure irom announced 
policy." A craft article providing for a waiting period of three days 
was submitted as a model for those cases in which the need for a waiting 
"eriod was established by an industrv, 

9b26 



- 464 - 

He stressei the importance of the provision for filing with a con- 
fidential agent; this "rs an item of paramount importance, he maintained. 
This provision ,-r ould have the following advantages, among others: (l) 
it wculd eliminate favoritism among members of the industry; (2) it ™ou.ld 
prevent the plan from being used to the detriment 01 customers and the 
public and (3) it <^ould help to Secure compliance with price filing pro- 
visions since filing would not be made with a group, such as a code author- 
ity, made up of competitors. 

2. Principal Points as to Price filing in 
Office Memorandum No. £26 

The chief points in Exhibit "A" oi Office Memorandum No. 228 as 
issued were : • • 

(1) Filings were to be made with a. confidential agent of tne 
code authority, or f if there was none, with an agent designated by the 
administrator, 

(2) Price lists were to be filed for all standard items and 
such non-standard items as the code authority should designate. 

(3) Prices and revised prices were to be effective immediately 
upon receipt by such agent. 

(4) Price lists were to be distributed at once to all members 

of the industry and to those customers who paid the cost of distribution. 
They were also to be available at the office o„ the a, r, ent for inspection 
by any cugto.ier. 

(5) The code authority was to keep a permanent list of -11 prices 
filed. 

(6) revisions upward could not be made until filed prices were 
in effect at least 46 hours. 

(7) All sales were to be made at prices listed, no higher, no 
lower. 

(B) There should be no agreement, conspiracy, etc. concerning 
prices; a free and open market was to be maintained. (*) 

3. Differences Between Subiitted and Announced Draft. 

The proposed price filing provision presented to Mr. Smith bv 

(*) As was noted aoove concerning Oiiice Greer No. 63, it was likewise 
not possible to locate the documents (other than the memorandum to 
Mr. Smith irom Mr. 'yon quoted) which "'ere exchanged with the Ad- 
ministration prior to the issuance oi this order, por the full 
text of Exhibit "A" of Office Memorandum No. 22b see Exnibit V of 
Appendix A. 

^826 



- 465 - 



Mr. Lyon differed only slightly irom the model provision ps finally 
incorporated, in Office ..iemoraridum No. 2?:6. The changes which are of 
signii icarce pre: 

The provision as it r -as finally approved provided that -prices should 
be filed with "a confidential and disinterested agent of the Code Authority, 

or i i no ne, t hen with such en ? i nt designa ted ov th e Ad min i st rat or . " The 

portion of the sentence underlined, was not included in the draft prepared 
by the committee. 

The final draft added to the pro-posed draft the section providing that 
all prices, in addition to being distributed, should "be available for in- 
spection ov any of -their customers at the office of such agent." 

The draft proposed bv Mr. Lyon's committee provided that after a re- 
vision of prices, prices and terms should remain unchanged for not less 
than 46 hours. The final craft provided that a hi :ner price should not 
be filed for 4& hours. 

The following c ppeareo in the original draft as a -paragraph to precede 
all the sections incorporated in the final draft: 

"In order to -prevent unfair competitive practices contrary to the 
policv of the Act bv making generally available full information 
concerning prices and pricing practices, but not thereby to permit 
monopolies or monopolistic practices, this article provides for 
the open filing of -prices and terras o: members of the trade and/or 
industry. " 

Just as the foregoing paragraph, ,?, hich "as an introductory paragraph 
in the Lyon dralt, ,:, ps omittec. ir the iina.1 form, so the final form also 
omitted tne following, which in the Lyon draft was the concluding paragraph. 

"If the Administrator on complaint filed, or on his on initiative, 
after due investigation and on opportunity to the Code Autnoritv 
and other interested persons to oe ue&rd, shall find that this article 
has permitted or is permitting action contrary to the provisions of 
tne National Industrial . ecovery Act or otner-'ise against the -public 
interest, he may stay, modiiy or c?ncel this article or any part or 
application thereof, in accordance with such findings." 

Otner changes were in phraseology, and did not affect the sense of 
the text. 

..hat was of particular significance a out Memorandum No. £28, beyond 
the fact oi a. definite -^rice filing policy Deing announced, was its 
assertion that a "free and open market" was proposed to be maintained, and 
its banning of waiting periods and other control features in favor of re- 
quirements aimed '-holly at effectuating price publicity. It is obvious 
that such a change of attitude would meet with a certain amount of resis- 
tance and difficulty in application, especially insofai as such application 
might be attempted to oe extended to codes already approved. 

9826 



- 466 - 



4. Policy Connected ith Application of the Policy. 

Because the major codes had been approved before the issuance of 
Office memorandum No. 228, the effectiveness of this policy statement de- 
pended largely upon the attitude taken by the Administration with re <ard 
to amending cooes to conform to the new policy. 

Page 1 of this Memorandum contained an important statement con- 
cerning the application of the policy it set forth. It stated: 

"(4) Adjustment of Codes: Pending codes and codes hereafter sub- 
mitted shall be adjusted to these policies. Divisional Ad- 
ministrators shall seek through agreements with Code Authorities 
of approved Codes to a lend .them to conform with these policies 
pnc, '-herever resistance is encountered, the suoject shall be 
taken up "with the Administrator." 

This statement, however, was considerably qualified 'by Office Memoran- 
dum No. ?o0 issued July 16, 1934, which stated in part: 

"....This (the fact that attempts '"ere being made to formulate policy 
does not mean that every code in process and not approved at the time 
of announcement of 3 general policy must conform in the sense of in- 
cluding the type of provision favored by policy. Under Certain cir- 
cumstance's it might be manifestly uniair to recuire substitution of 
a ne 1 " clause after lengthy negotiations have finally resulted in 
assent bv the industry to a supposed final form of the code. 

"Change in codes designed to bring them into conformity with policv 
will be recuired only to tne following extent: 

"k«hen in final form and assented to by tne Industry, before the date 
of announcement of a general policy, the code, if otherwise acceptable, 
'ill be approved. lowever, provisions flatly inconsistent with the 
essentials of such policy will be stayed, to the extent of such in- 
consistency, until the Industry sho^s wny such portions should not 
be permanently stayed, or made to comorm in substance to such policy." 

As to approved codes, Memorandum No. £60 said that nothing would be 
done if the provisions contrary to policy was causing no 'difficulty, but in 
such cases the Research and Planning Division would check the operation 
of the provision - "Whenever desired by the Industry, or whenever the 
occasion is appropriate, changes will be effected." whenever a provision 
out of line with policy was found to be causing difficulty, after consul- 
tation with the industry it should be stayed unless the difficulty "'ere 
remedied. (*) 



(*) ror the full text of Office memorandum #260 see Exhibit V of 
Appendix "C". 

9826 



~ 467- 



5. Reactions to the New policy. 

This modification of the Administration's position concerning appli- 
cation oi the new policy cant -s a result oi the opposition of members of 
industry and of certain individuals Fine -;i oups within the Administration 
to the type of crice provisions set forth in Office he lorandum No. 228. 

Summarizing both the reasons for the change in Administration policy 
which culminated in this Memorandum and also industry reactions, ir. Leon 
Fenderson, Director of the Division of Economic Research and Planning at 
the hearing or. Price Folicy held by the Administration in January 1935, 
said : 

"...As to the open price feature. The open price provisions in the 
early codes departed from the best thought as to ideals of open 
prices. The.. .best ideals of open prices ''ere those which were e n- 
ohasized. ... by Eddy, the precursor of the plan, which were to provide 
publicity to competitors, to the public, to the Government, and the 
buyers, so that everyone might have notice as to what prices were 
oeing emoted and it was thought that secret rebates and the destruc- 
tive influence of private prices and concessions would be largely 
dissipated if a strong open price policy pere mainted. 

"The present policy, as enunciated in Office Me lorandum No. 226, 
which is at everyone's disposal, is to get back to these ideals. 
Our files indicate, most naturally, that many members of industry 
regard price publicity in tho3e ide=' 1 istic forms as not of high 
value, and regard it as a means of preventing price cutting and 
as an agency bv which coercion, mild and otherwise, as our files 
show, and our open price studies show, may be applied to competitors, 
who were getting cat oi li'e, and mav De given notice as to what 
the industry thinks of then. . . " (*) 

During the ensuing period there was fie<uent conflict between those 
groups within the NRA which favored the principles o: Office memorandum 
No. 22e and those within NRA and in industry who opposed it. Industry 
was particularly inclined to avoid any reopening of a o "roved codes, since 
groups such as the Consumers' Advisory Board, which favored in most res- 
pects the policy of memorandum No. 2<b, sought, whenever a code was up 
i or any consideration, to have it amended to comorm fully to policy. 

The fact that under the terms of Office Memorandum No. 22B, price 
changes were to become effective immediately was one reason i or tne dis- 
approval oi it b? members of industry. Thus the Code History for the- 
landy Industry savs: "The Code Authority rejected suggestions that the 
provisions of Art. VII of the open price plan be a leaded in conformity 
with Office memorandum No. 2c6, the members explaining individually that 
even though the waiting perioe was stayed by the Executive Order they 

(*) See Transcript oi Hearing on "Frice Folicy", Jan. y, 1935, pages 32-4. 
NRA files. 

9826 



- -is a ~ 

still entertained hope that this stay might be lifted. ." (*) 

Tne Code History for the Scientific Apparatus Industry also deals 
with tne reluctance 01 industry to change codes . It states: 

"A reluctance to propose amendments or to re-write tne code was 
always evident. In the matter of price: filing provisions, the presence 
of a waiting period oi not to exceed, f if teen d ays bet ore revised prices 
become effective is sufficient reason for unwillingness to jeopardize 
the provisions de< med essential oy proposing any amendments thereof." (**) 

When a public hearing was held on September 2b, 1934, to consider an 
amendment to the Macaroni Code which would provide that future contracts be 
limited to filed prices, all reierences to jiled prices and emergencies 
'"ere deleted from tne amendment at the request of the code authoritv. This 
was done because the code authoritv was very anxious to keep the 'pro- 
visions prohibiting sales belo 1 " cost in the code. They feared that if 
this section of the code i- 'ere opened uo for amendment they might be required 
to accept the wording "of office me norancum 22S. (***) 

The situation relating to amending codes to include Office .:emorandum 
No. 228 has been conciselv stated by tne writer of the Code "-mstorv for the 
jTire Extinguishing Appliance Itfg. Ind. as follows "...It was early evident ' 
that an industry to which had been granted a waiting period applicable to 
price filing, a mandatory cost accounting system, and 'lowest representative 
cost,' would not willingly lorego'such apparent ' advantages in favor of the 
newer KRA oolicv pronouncements.... 1 ^****) 

In short, members of industries with codes providing I'or a type of 
price filing suitable to effect price control as well as price publicity, 
were as might oe 'expected , extremely 'loath to adopt a type of price filing 
"'hicn lent itself much less readily to effecting such control. 

As a result of this clas.sover the 'desirability ox tne new policy pro- 
nouncement, there was constant conflict between these groups within the 
NBA which favored, the principles of Office emorancum ^22 S and those within 
NBA and in industrial groups which opposed it. Those groups such as the 
Consumer's Advisory Board which favored in most respects the new price pro- 
visions endeavored to have the codes amended to conform to policy whenever 
any code was up for consideration, or whenever anything related to codes 
was to be aooroved. As r 'result there' ,,r as a general indisposition to 
open up codes for amendment. 



(*) Code History for the Candy fg. Inc. F. 81 

(**) Code History for the Scientific Apparatus Industry, p, 12. 

(***) See Code I istory, page &7 ff. 

(****) See Core History, page 47. 

962 6 



- 469 - 



The reluctance 01 industries to surrender their >aaeYious price 
control provisions: in favor of the milder provisions recommended in 
Office :it Morpndum l r -b ^as, in numerous instances, acco ippnied by a 
feeling of resentment that a13prov.pl "ras denied to regulations that 
would effectuate existing code provisions, regardless of the fact that 
such provisions were contrary to the revised policy. There is some 
evidence that these attitudes '-ere not limited to industry members but 
were shared by certain deputies who administered the codes, and bv 
others who were advising on code ,'iocii ications. It is obvious from 
communications addressed to Division Administrators end others 
that the principles of Office ' emorandum 22b " r ere never thoroughly 
accepted by some of those charged with the direct administration of 
codes, and in the best position to experience the resistance from 
industrv engendered by the policy. 

As one instance of this, as late as January 2C-, 1935 (six months 
alter the declaration of the oolicy of June 7, 1954), a memorandum was 
addressed to '7. A. Farriman, then Administrative Officer, from the 
Deputy in charge of the business Furniture Code, recommending approval 
of certain regulations for the maintenance of resale prices, and a 
liquidated damage agreement to enforce them. In su omit ting these 
regulations for the approval of the administrative officer, the deputy 
voiced the following opinion concerning the position taken by the economic 
advisor, <io stated that the regulations rere contrary to NBA policy as 
expressed in Office [emorandum 228 and should be disapproved: 

"I do not concur in this opinion. Office memorandum- 
228 provid.es that the principles expressed therein 
shall be incorporated in all codes approved after its 
issuance, and "'here agreement can be secured, in 
all codes previously approved, out it does not 
forbid approval of regulations designed to effec- 
tuate code provisions contrary to these principles 
in codes previously approved. 

"It is my belief that so ion,-; as tne industry con- 
tinued to desire, and refuses to agree to deletion 
or amendment of a code provision not in accord with 
policy, and the NBA does not stay such provision, 
NBA should not reiuse to permit action effectuating 
it, merely because the code provision is contrary 
to policv. To refuse approval for this reason is 
to 137 mind, coercive and unfair to the incustry." 

The National Recovery Board did not concur with the recommendation 
of the deputy in this case and the resale price maintenance regulations 
were not approved, although there was no immediate move to stay the ex- 
tensive price control provisions in the code or to modify the code in 

accord with policy declarations. ( *) 

(*) The industry later asked voluntary stays of clauses requiring adherence 
to filed prices in two supplements of this code, but not to the supple- 
ment that had been interpreted by industry as containing resale price 
maintenance. A study 01 the code was ordered for possible revision 
after June 16, 1935. 



- 470 » 

Ulicn coder,, in spite of industry opposition, were rmended to 
provide for price filing of the 'type provided for in Office Memorandum 
No. 223, efforts were made in some instances to secv.re the control 
features of old style prices filing plans even under the new type of 
provision. 

The reaction of the builders' supplies industry took the 
form of opposition to the' literal application of Office Memorandum 
228, which had "been inserted in their code "by amendment. The adminis- 
tration member of the code authority for thin industry in a letter to 
the deputy dated December 10, 1934, stated that at a code authority 
meeting the secretary of the code, authority had urged agencies "under 
the terms of the ne 1 '/ (228) price filing provision to 'take all the 
time necessary' in checking the filings and receipting therefor and 
urged that receipting be delayed £ t least for 48 hours. " The letter 
from the Administration member continued: 

"His (the Secretary of the Code Authority's) attention 
was invited „to the Code prevision which prescribed that 
the prices filed by a member of the industry become ef- 
fective-immediately end that accordingly no member of the 
trade could technic; lly be termed in violation of the code 
in quoting prices after he had knowledge through registered 
return receipt that his filings had been received. The 
Secretory argued this point bitterly and no eloubt an 
appeal will be mr.de to Washington, as it seems he hrs 
been advised that filed prices do not become effective un- 
til the Secretary has filed them in his own good time and 
has advised the members of the industry of sv.cn. filing. " 

The difference of opinion over the application of the provi- 
sions of Office Memorandum #228 to the Code for the iParm Equipment 
Industry presents an interesting cse, which is ' or thy of mention at 
this point. The producers of track type tractors in this industry 
were sharply divided over the desirability of incorporating the 
price filing provisions of office Llemorandum #228 in their Code. One 
group, headed oy the International Harvester Companj , opposed price 
filing unless there were included a provision which exempted from 
prices to be filed the prices quoted on government bids for track: 
type contractors. The opposing group, headed by the Caterpillar 
Tractor Company, wished prices to be filed on all types of sales, in- 
cluding those to the government. In a memorandum dated July 16, 1934, 
to Mr. George McHultyof the Legal Division, Mr. W.L. Schurz, Assistant 
Deputy, summed up the controversy as follows: 

"The entire controversy cm be reduced to this single i r ;sue. .. 
The background of the disagreement between the two groups is 
probably the intense rivalry between the International Har- 
vester Company and the Caterpillar Tractor Company for the 
large government business in track-type tractors bought for road 
building and for other public work projects. At, present, 
the Caterpillar Company has the great bulk of this business 
and fears that without price filing a price war would re- 
sult, with the International Harvester Company taking the 

9826 



- 471 - 

Ltiative. On K ' ,r si the ; ] ■. '■ 
Com any has repeatedly Represented that price filing on 
^•ov rnment business inevitably results in identical bids and so 
defer t the purpose of such bid \ designed to prevent 
collusion and price fixin ;. " 

The cost of retaining a confidential agent, and a desire that 
filed price information should not be available- to customers, "/ere 
other reasons advanced by the industries for opposition to 
Office Llemorrndum ITo. 223. The Coae Authority for the Ladder 
M nuf cturing Industry, at a hearing on amendraexts held en S e p- 
t racer 18, 1534, objected to filing prices with a confidential 
agent because of the additional expense involved, and also ob- 
jected to dissemination of filed jrices to customers on the 
ground that it was "none of oar distributors' business v;hat price 
they were quoting mother distributor." (*) 

Since this question of the employment of a. confidential agent 
for price filing purposes was one of the significant ne r ' re- 
quirements embodied in hemorandum 228, seme discussion of the point, 
and of problems which arose in connections with appl.icn.tion of the 
provision may be included here. 

6. The Confidential Agent. 

The Qualifications for a "confidential agent "- under the terms 
of the model open price provision given in Office memorandum 228 
were never set forth in any formal order and, as a consecuence, 
there was no established method for d© terming the eligibility of 
those selected by code authorities to perform such functions. 

The code nuthroity for the Carbon Dioxide Industry, which 
was the first code to be.' amended in accordance withitha rr-.» 
policy, appointed the chairman of the code authority, who was like- 
wise president of the Carbon Dioxide Institute, as the confidential 
agent for receiving filed prices. The institute had acted as the 
agency with which prices -ere filed before the amendment to in- 
corporated Office memorandum 228. During this time there had been 
repeated complaints of monopoly and dominance of small 
by the institute members. In at le ',st one ca.se turned over for 
compliance action, resulting in the recommendation that the Blue 
Eagle be removed, the member 'and. admitted his refusal to file prices 
and stated that he would be entirely willing to file them in Wash- 
ington, but not with the code authority made up of the executive 
members of the Carbon Dioxide Institute. These same charges had 
been made at the original hearing of the code. 

Subsequently, the iI.h.A. required that copies of all price 
filings be forwarded to Washington, and at the recuest of the 
deputy an investigation was launched into the operation of the 
Code Authority as to the arice filing and other provisions. (**) 

(*) Page 63 - 67 of transcript of hearing, September 18, 1934, 
iIRA files 

(See other footnote on next page,) 
9826 



- 472 - 

Despite all this, there was apparently no ERA objection 
voiced to the appointment of the president of the institute as con- 
fidential agent when the model price filing provision was written 
in the code. An objection was made by the non-association member of 
the code authority, who was told that the form of the proposed code 
provision (with the exception of the naming of the chairman as con- 
fidential agent) was stipulatec by the ERA and did not originate -1th 
the industry, end that, in the opinion of the code authority, the 
plan r "ould operate better and at less expense with the chairman as 
the confidential agent. 

The available records indicated that the Chairman, Mr. Pettee, 
was vice-president of the largest carbon dioxide company prior to 
his resignation to become president of the Carbon Dioxide Institute 
when it was organised just before the submission of the code. Other 
reports, not fully substantiated, stated that he held the controll- 
ing interest of a company given an exlusive distributor contract 
with this same large member. (*) 

In still another case, the Builders' Supply Code, in which 
the price filing plan, git forth in Office Memorandum 228 was intro- 
duced by amendment, it was desired to name the chairman and the 
Secretary of the code authority as the agents for the receipt of 
filed prices, on the grounds that they were not members or connect- 
ed rath the trade. The administration member, in a report to the 
denuty, raised the Question if they could rightfully be considered 
members of the code authority if they '"ere not trade members, as re- 
quired in Article VI, Section 1, of the code. Present records do 
not show the answer given to this question. 

In at least one instance, the Administration heard an ob- 
jection to the qualifications of Stevenson, Jordan and Harrison as 
confidential agents. This organization, as agent for the Code 
Authority of the Corrugated and Solid Fibre Shipping Container Code, 
was designated as the impartial agent for receiving statistical in- 
formation. One company refused to submit statistics because of 
the activities of Stevenson, Jordan and Harrison in operating the 
voluntas plan for sharing business which was participated in by a 
majority, but not all, of the members of the corrugated and solid 
fibre shipping container industry. The legal propriety of the two- 
fold agency relationship was questioned by the Agar Corporation, on 
the grounds that it introduced too great a strain on the agent to 
maintain a disinterested, impartial view. Unfortunately, for the 
purpose of ascertaining ERA policy on the necessary attributes of 
confidential agents, this particular issue was settled by compromise. 

(*) Confidential Report on Carbon Dioxide Industry, op. cit. 

(**) Confidential Report on Price Filing and Customer Classification 
in the Carbon Dioxide Industry, A. F. O'Donnell, I 'ay, 1935, 
ERA files 



\ 

9826 



- 473 - 

The • • rling corporation was not ready to charge that the Stevenson, 
Jordan and Harrison group had actually violated the confidential 
character of information, and the general question of propriety of 
the dual relationship was ignored so far as any formal action on the 
part of the MPA was concerned. 

Inasmuch as the corrugated and solid fibre Shipping Container 
Co; e Authority had never attempted to implement the price filing 
provision contained in that code, the question of filed prices was 
not involved in this particular hearing, although the market informa- 
tion service carried on by the agency, in connection with the volun- 
tary sharing of business, '-as far more complete than that of the or- 
dinary price filing plan-, and to that extent rras more comparable to 
the market information type of open price plan described in the Fed- 
eral Trade Commission report. This came agency did conduct the 
price filing activities of other open price codes, however, using 
similar statistical reporting methods. (*) 

It is fairly obvious, from comments by critics of open price 
plans, that the potential evils designed to be clone away with by 
requiring prices to be filed with an impartial agent were of at 
least tvo distinct types: (1) the danger of favoritism in dissem- 
inating information or in disclosing confidential data to a com- 
petitor; and (2) the use of the price filing plan for coercion or for 
propaganda toward price control. The solution arrived at unr ; er 
Office Memorandum 228 was pertinent chiefly to the first end. 
This conception of impartial and disinterested, as applied to mem- 
bers of the industry, without specific regard to the interest of 
customers and the public, is not unlike the conception of unfair 
competition as applied literally to harmful effects upon competitors. 
Within the bounds of this interpretation, however, were failures to 
guard against cases such as in the Carbon Dioxide Code, in which 
non— members of the Association anticipated discrimination and were 
reluctant to submit prices and other statistical data to a trade 
association official. The possibility of group bias as well as in- 
dividual bias was sometimes not considered in the appointment of 
such confidential agents. 

7. Extent to Which Hew Policy Was Incorporated in N.R. A. Codes. 

The principles of Office Memorandum #228 were quite generally 
applied to the pricn filing provisions of new codes in the Inst half 
of 1934 and the first half of 1935. However, because of the opposition 
of industry to the type of price filing in this memorandum as set 
forth above, and its unwillingness to open codes for amendment, and 
because of the vacillating policy of the Administration concerning 



(*) The Folding Paper Box, the Kraft Paper and Sulphate Board divisions 
of the Paper and Pulp Code and the Envelope Industries are cases 
in point. 



:826 



~ 474 - 

the amendment of codes to conform to new policy, in only a few in- 
stances were codes amended to include the new type of open price 
system. (*) Ther=fore the new policy, while not completely nullified, 
was rendered much less effective than it otherwise might have been. 

According to Research and Planning study and other sources, 76 
codes and supplements had open price provisions conforming to the 
policy and exhibit set forth in Office Memorandum No. 228 when code 
operation came to en. end. Of these, 58 were approved after the 
memorandum was issued; the remaining 18 had "been approved "before the 
date of the Memorandum and had price filing "^provisions incorporated 
by amendment. 

A break down of this information may of "interest: 



(*) Omfpr , at - pm cm tjcs soctopn os based i-gpia "Analysis of Trade 
Practice Prcvi-sions Relating to Open Price and Bid Filing 
Systems" prepared bythe Division of Research and Planning of 
ERA. revised and corrected up through May 27, 1935, and on other 
records. 



S826 



- 475 - 

codes with opeit price provisions conforming to 
office memorandum number 228. 



iame and number or Divi sion 

I. Food Division 

II . Textile Division 

III. . Basic Materials Division 

IV. Chemical Division 

V. Equipment Division 

VI. Manufacturing Division 

VII. Construction Division 

VIII. Public Utilities Division 

IX. Finance, Graphic Arts and 
Anuseraents Division 

X. Professional Division 

XI. Wholesale and Retail Division 

TOTAL 



NO. CONFORMING 


APPROVED AFTER 


THRU AliENDMEITT 


O.M. 228 ISSUED 



2 


3 


4 


6 


<t) 


2 


2 


13 


5 


13 











1 





3 


1 





1 


4 



18 



58 



The codes in which the price filing provisions of Office 
ilenorandun No. 228 were included by arnenci.ient were therefore relatively 
feu, and nost of then were for snail industries. They include. 

TEXTILE DIVISION 

No. 3S6 1411: Filtering Materials and Dairy Products Cotton Wrappings 

No. 312. Narrow Fabrics. 

BASIC MATERIALS DIVISION 

No. 115 Wood Plug 

No. 389 Clay and Shale Roofing Tile (Pacific Coast Division) 

No. 31 Line (but see paragraph following) 

No. 128 Cenent (but see paragraph following) 

CHEMICAL DIVISIO N 

No. 275-2 Carbon Dioxide 

No. 110 Hardwood Distillation 

No. 33-A Soap and Glycerine (Pacific Coast Section) 



S826 



- 476 - 

EQlIIPuZHT DIVISION 

No. 274 Saw and Steel Products Manufacturing 
Ho. 315 Industrial Safety Equipment 

ILAITUFACTUPJHG DIVISION 



Ho. 58 Cap & Closure 

Ho. 277 Gray Iron Foundry 

ITo.259 Porcelain Breakfast Furniture 

Ho. 286 Beauty and Barber Shop Machanical Equipment Manufacturing. 

Ho. 84.6 Shoe Shank 

WHOLESALE ALTS RETAIL DIVISION 
Ho. 57 B uilders' Supplies 
PROFE S S I OilAL D I VI S I OH 

■ — i . . 

Ho. 352 Photographic and Photo Finishing 



It should he noted that two of "owe codes which are listed 
as conforming to the price filing provision a of Office Memorandun 
Ho. 223 "by amendment, deviated from this model open price system in one 
important particular. These were the codes for the line and cement 
industries. Amendment Ho. 2 of the Lime Code, approved April 1, 1935, 
and A-iendment Ho. 1 of the Cement Code, approved on May 11, 1935, h oth 
included mandatory waiting of five days in price filing plans which 
otherwise conformed to Office Memorandum Ho. 228. Such waiting periods 
had, in "both cases, been part of the provisions originally approved 
with the codes. 

A further analysis of the material collected and tabulated by 
Research and Planning indicates that the first code (*) in which the 
price filing provisions of Office Memorandum Ho. 223 were incorporated 
was No. 473, Toven Wood Fabric Shade, which was approved on June 28,1934. 
After June 7, 1934 there were at least 11 codes approved (again not con- 
sidering supplements) which contained price filing provisions varying in 
some respect from the standard set forth in Ho. 228. The last of these 
11 codes was Ho. 492, Stereotype Dry Mat, which was approved on 
July 27, 1934. (**) 

(*) Information about supplements to codes is not readily available. 

(**) Among the important differences between the open price plan 

provided for in this code and Exhibit "A" of Office Memorandum 
' Ho. 228 are the following: 

1. Prices were to be filed with the code authority, not a con- 
fidential agent. 

2. The code provided that if a member did not file, he should be 
deemed to have filed prices equal to the lowest filed and 
terms equal to the most favorable filed. 

9826 



- 477 - 

3 . Exec uti ve Order #G767 - A Concession to Government 
Purchasing Agent s . 

As the promulgation of Office Memorandum Ho. 228 may be 
re arded as a response to demands from both within and without ITHA that 
price provisions m general bo safeguarded against use to effect too 
rigid controls, so Executive Order Ho. 6757 was issued in response to 
complaints of excessive price uniformity in bids on public purchasing, 
brought by various government purchasing agents - Federal, state and 
municipal. Also, as with Ho. 223, some compromise with opponents of the 
o ■ r is found in the process of its application, the percentage of 
"government tolerance" being in some instances reduced from 15 tc 5. 

1. Essential Points Involved in Executive Order 6767. 
The essential points in this order issued June 23, 1934, were: 

a. A person subject to a code calling for price filing night, 
without violating the code, bid to a governmental body at a price less 
than his filed price by as much as 15; j. 

b . He must file with the code authority a copy of his bid 
after bids were opened, if he bid below his filed price. 

c. The Administrator could reduce this 15,j tolerance to as 
little as 5} if he found the 15fo was resulting in destructive price 
cutting. 

d. The Administrator was to report to the President on 

the effect of the order within 6 months after the date of the order. (*) 



Cont'd. 

3. According to the code provisions, if a member withdrew a 
price schedule raid did not substitute a new one, he was 
deemed to have filed equal to the most favorable ones on 
file. 

4. There was in the code a ten day waiting period on down- 
ward price revisions. (This was stayed in the order of 
approval. ) 

5. It was provided in the code that a member selling below cost 
to meet competition might adopt as his filed price the price 
of the member whose competition he was meeting. It further 
provided that "such adoption shall become automatically void 
upon the withdrawal or revision upward of the price adopted." 

6. Piled prices were to be aminimum, not necessarily actual 
selling prices. 

7. There was no requirement that filings be preserved or be 
made available to the Administrator. 

8. The code did not contain the ant i- conspiracy clause vrtiich 
formed the final paragraph of Office Memorandum No. 228. 

(*) Por full text of Executive Order Ho. 6767 see Exhibit V of 
Atmendix "C" . 



9826 



- 478 - 



This. order supplemented an earlier ITBA Administrative Order dealing 
with governmental purchases, Order X-48, issued on June 12, 1935. The 
salient ""eatures of this Order were: 

In sraite of an^ code -orchibitions there might be to the contrarv, 
members of industry biding on government contracts were, by authority of 
the order, en titled to: 

a. Quote -orices to government agencies as favorable as those per- 
mitted to an-? commercial buyer of the same cmantity. 

b. Make with government agencies a definite contract for future de- 
livery of a definite amount within three months from the date of the con- 
tract at a fixed price. 

c. Make such contract with a government agency for an indefinite 
amount for up to 6 months. 

d. Quote to such agencies prices and terms to aoply on contracts to 
become effective not more than sixty days from the date of the opening of 
bids. 

e. Quote such agencies prices f.o.b. point of origin and/or f.o.b. 
destination. 

"Provided, however, .....that nothing in this order contained shall 
operate to oermit devis.tion from or abandonment of open price and cost 
protection provisions now or hereafter contained in any such code." (*) 

2. Relation of Order No. 6767 to Frice Filing Policy. 

Ti/hile the immediate effect of Executive Order 6767 was to permit 
sales in one very important purchasing field at prices considerably below 
those filed, and thus in a degree to nullify the filing provisions, the 
Order was nevertheless in the direct line of price-filing policv of the 
time in that, like Memorandum 228, it sought to eliminate undesirable 
consequences wiiich had developed in practice, without abolishing -orice fil- 
fng altogether. 

The purchasing agents who testified at the nrice change hearings pre- 
sented a large and convincing mass of evidence of the current tendency to 
price uniformity in government bidding. This was objected to, not only as 
indicating the existence of T)rice control and the nrobability of arti- 
ficial^/- hi c :h orices for public purchasing, out also because it was seen as 
striking at a public -oolicy of long a.nd rather slow growth, namely, the 
awarding of contracts for government supplies on the basis of the lowest 
bid price. 

What was desired was a means to maintain some measure of price flaxi- 
bility in bidding on government reauirements. Whereas Memorandum 228 sought 



(*' For text of .administrative Order X-36 see Exhibit V of Arroendix " C" . 



9826 



- 479 - 

to achieve a similar general end by modifying the- technique of price fil- 
ing itself, Order 6767, employed the method of relaxing arrolication of the 
open price requirement in the particular circumstance. 

It was not, in fact, expected that actual quotations would drop the 
full 15$ permitted, but rather that the competitive uncertainty as to just 
how far tney would drop would tend to restore the "free" if not entirely 
the "open" market called for my I emo 228. For cases where prices showed 
a tendency to drop to a destructive degree, the modification from 15*& to 
5*o was provided. 

Nevertheless, the policy prescribed by Order 6767 met with strong 
reactions from many of the industries principally affected, as the follow- 
ing section will show. 

3. Reactions to Order Mo. 6767. 

As would be expected, the general attitude of industry members toward 
this Executive Order was not favorable. 

a. Expressions of Industry Opinion. 

Complaints against the policy embodied in the order were registered 
b ,r a large number of the industries whose business was, in a significant 
degree, connected with governmental agencies. Five types of objections, 
not altogether mutually exclusive, may be noted. Many more illustrations 
of these types than are given, are at hand. 

It was first contended, almost universalljr, that "destructive price 
cutting" and "price chaos" would result from operation of the Order. At 
a meeting of the governing committee of the water works Valve and hydrant 
producers sub-division of the valve and fittings industry, on July 6, 1934, 
a resolution was passed stating that the committee considered that the 
enforcement of Executive Order 6?67 "would result in ruinous competition 
among the manufacturers of this industry." They further stated that "... 
unless exempted from this order we cannot guarantee to maintain or he able 
to afford the cost of the labor provisions of our code. ..."(* ) 

The second allegation made in connection with the Order was that it 
involved unfair discrimination. Thus, Lr. A. L. Boniface, Secretary of 
the Code Authority for the Eire Extinguishing Aopliances Industry, in a 
letter to the ITEA dated July 3, 1934 stated: " . ...We would also call 
attention to the unfairness of selling one unit of our product to a Federal, 
State or municipal or other public authority, at the same price at which 
we would sell a hundred such units. We would also point out the unfairness 
of putting the smallest village in the same class with the Federal Govern- 
ment as a buyer of products of this industry". 

In the third place, it was contended that this order brought about 
secrecy and uncertainty as to probable prices to be ouoted in bids. On 



("O Ecsolution contained in a letter from the Code Authority for the Valve 
and Fitting Industry to General Johnson, July 11, 1934. 



- 480 - 

this point the chairman of the code authority for the portland cement in- 
dustry on July 10, 1934, wrote to the Administration: "....Our second 
objection is that the Executive Order practically eliminates the open price 
plan. The essence of the open price plan is to make competition fair and 
fully effective by putting all competitors on notice of the ..ertinent facts 
of the competition which faces them. This purpose is not effected if 
notice of the facts is given after the bidding is over. The 'Executive 
Order, therefore, effectively brings open dealing to an end and thrusts 
bidders once more into darkness with its attendant suspicions and lack of 
competitive facts " 

The order was also opposed on the ground that it would break down 
the established channels of distribution. The Code History for the Plumb- 
ing Fixtures Industry, commenting on this aspect, says: "The Industry 
strenously objected to Executive Order ilo. 5767 and Administrative Order 
X-48 permitting Industry members to ouote the government as low as 15$ 
below the lowest filed prices (prices to distributors^. The Industry always 
regarded the government as a consumer. Most governmental sales were made 
through wholesaler^ or contractors. Hence many of the objections had their 
genesis at those sources. . . . "(*) 

Finally, it was contended that the Order made compliance with the 
price filing provisions more difficult to obtain. On this point, the Code 
Authority of the Valve and Fitting Industry, in a letter to Mr. A. C. Cook 
of the itfRA, said, on July 31, 1954: ". . . our code authority has not 
secured complete compliance by all members of the industry with the re- 
quirement that they should file their -orices. Our efforts to secure this 
compliance has been defeated by the Executive Order itself which leads 
these non-coo-oerative members to assume that the administration does not 
deem it is good policy to file arices and abide by them in accordance with 
code provisions." 

b. Attempts to Circumvent the Operation of the Order. 

Various devices were employed, more or less legally, to defeat the 
purpose of the Executive Order. 

Statements were issued attempting to dissuade members of industry 
from auoting prices to governmental agencies below those they had filed. 
Code Authority Bulletin No. 23 of the Gas Appliance Industry, dated 
July 11, 1934, and sent to members of the Industry, stated the provisions 
of the Order and concluded with the following paragraph: 

"Prices to Governmental Agencies should be fair and reasonable 
prices. The member of the Industry is not warranted in selling 
products of his manufacture to Governmental Agencies at less than 
cost. It is our hope that each member of the Industry will comply 
with al"" provisions of our Code and the Orders of the Administration. 
The Industry as a whole and each member of the Industry will be damaged 
greatly and if the members of the Industry use it the exception per- 
mitted under President Roosevelt's Executive Order will result in 



(*"> Code History, plumbing Fixtures Industry pp. 60-61 
9826 






- 481 - 

destructive price competition. " 

Similarly, a code authority bulletin dated July 3, 1934, sent to the 
members of the suppliers, furniture and optical sections of the scientific 
aoparatus industry, stated: 

"Our members before availing themselves of this privilege (to bid 
as much as 15$ less under Executive Order #6767") should carefully 
weigh its advantages or disadvantages on the following points: 

"(a' 1 This order is in the form of a privilege; you are not com- 
pelled to take advantage of it as it is purely optional. As your 
discounted prices would immediately, upon filing the same at this 
office become available to all customers, the result would be that by 
giving the public buyer a discount, you have automatically lowered 
to all customers the level of your orices in all brackets to the 
amount of your discount. (*) 

"(b) Your competitor is privileged to file a complaint with your 
manager that you are engaged in destructive price cutting. 

"(c) Accourding to Article II, Section 1, Schedule C, all consumers 
must be given the same prices. Therefore, your filed quotation be- 
comes your filed price effective at once and cannot be changed for 
10 days. (**) 

"(d) This of course, will not apply to franchise items whose terms 
of sale are determined by the manufacturer of the same. 

"(e) All members arc requested to report any violations of the above 
at the earliest possible moment which will be investigated at once by 
your manager. 

"(f) You realize, of co-arse, that your competitor by revising and 
filing his -orices to you. lower level can then reduce the same by 
15$ and, of course, the next competitor can also." 

On Hay 5, 1934, the UIRA stayed the privisions relating the -orice 
filing, customer classification, and uniform sales terns of the Code for 
the Rubber Manufacturing Industy, in so far as they applied to the Mechanical 
Rubber CrOods Division. This action, in large part, grew out of code author- 
ity connected with Executive Order =£6767. 

Discussing this a.ction of the board, "RA Press Release #11170, dated 
May 3, 1935, stated: 

n At the hearing held Aoril 16 to 18, testimony adduced clearly showed 
abuse of authority. . . The hearings relative to the charges were con- 



(*0 This is a misunderstanding on the oart of the code authority . The 
order did not have the meaning here given to it. 

(**) Idem. 

9826 



- 482 - 

ducted by D. V. Nelson, former Assistant tc the Chairman of the N.I.R.B. 
His findings, reported to the Beard, were as follows: 

'"That the evidence discloses: a participation by respondents, both 
as en individual code authority and in conjunction with the Rubber 
Manufacturers' Association and the Code Authority for the Hubber Manu- 
facturing Industry, in an active and, for a time, a successful attenrot 
to obtain concerted action among members of the Division, particularly 
those manufacturing fire hose, to disregard the -provisions of Execu- 
tive Order 6767 " 

On January 23, 1935, the mechanical rubber goods divisional code auth- 
ority sent a circular letter to all members of the division stating that 
the authority had taken exception to Executive Order #6767, which permitted 
members of al^ codes to quote prices on Government bids 15fo below filed 
prices, that the code authority had requested an exemption, and that pend- 
ing, such action, members were to disregard the Executive Order. (*) 

On February 5? 1935, in a memorandum to the dupty in charge of the 
code, the Code Legal Advisor, commenting on this release, said: 

"The Code Authority is required to effectuate the policies of the 
Act and assist in the administration of the Code. It is a heinous 
disregard of their functions to issue such a statement as 'pending 
such ret ion, they have deemed it advisable to disregard this order' . 
This is an illegal and unwarranted act asking Industry members to 
uphold prices on governmental order . . " 

This action of the code authority resulted, before the provisions of 
the code were suspended, in a boycott of a jobbing firm which attempted to 
sell to the City of Milwaukee fire hose at less than the uniform filed 
nrice. This firm bid about Bfo below its filed price, pursuant to Executive 
Order $6767. It was unable to fill this order because no manufacturer 
would sell it the hose. 

Attempts so to interpret the order as to affect its operation were 
made by certain code authorities. Thus, in a Bulletin dated July 16, 1934, 
discussing the Executive Order, the code authority for the Macaroni In- 
dustry stated: n THIS DOES NOT PERMIT YOU TO SELL BELOW COST IN VIOLATION 
OF ARTICLE VII SECTION 5 OF THE MACARONI CODE." (The caps are their) This 
interpretation was issued without any official sanction. When the issue 
fas raised (by^ahotherrcodeuauthofriiby), the- - HRA Legal (Division ruled that 
the order too : : -precedence over code provisions concerning selling below 
cost. (**) 



(*) Research and Planning Code Administration Study of the Rubber Industry, 
page 42-3, NRA files. 

(**) See letter to A. M. Davis, Counsel for the Code Authority for the 
Mayonnaise Industry, dated July 23, 1934, by Lester S. Dame, Asst. 
Deputy Administrator. This letter states: "After checking with the 
Legal Division, I wish to advise that even though the 15fo reduction 
of said price, as is permitted to a government agency under Executive 
Order 6767, represents a price below cost, a manufacturer may quote 

9825 such a price " N. R. A. files 



w 



■'- 483 - 

More might be quoted to the same general effect. In addition to 
this industry opposition, there was considerable divergence of opinion 
within the Administration itself as to the policy expressed in Order 6767, 
Nevertheless, the order remained in force throughout the remainder of the 
life l. the cedes. 

C. Other Orders Affecting Price Filing Policy. 

Issuance of Office Memorandum 228 had, as previously shown, definitely 
aligned Administration policy with the proposition that the proper function 
of price filing was to effectuate price publicity, rather than price con- 
trol. A series of other policy statements followed which, while primarily 
concerned with setting limits to the use of specific control devices as 
such, also had a bearing upon price filing as a publicity medium. 

1. Customer CI ssification. 

The first of these policy statements, contained in Office Memorandum 
No. 257 dated July 20, 1934, related to customer classification. The gen- 
eral relation of this subject to price filing already has been indicated 
in Chapters Three and Four above. In various of the earlier cedes, provisions 
had been included empowering code authorities to set up such classifications, 
which members were required to follow in reporting their prices. In pract- 
ice, such mandator]/ classification had been found in some cases to work 
hardships en certain classes of customers. In other, the traditional 
business methods of individual members had been disrupted. More broadly, 
the making rigid of one element in the price structure was seen as possibly 
facilitating the effectuating of general price-fixing agreements. 

Office Memorandum 267 was the Administration's answer to this problem. 
Its essential features were as follows: 

1. The code authority was to formulate and keep current a suggested 
classification of types of customers. 

2. The classification was to be subject to the disapproval of the 

administrator. 

j 

3. ilo members were to be required or coerced into putting anv custo- 
mer in any ^articular class, nor w,^s any discount for any class to be re- 
quired of any member. 

4. Each memoer was to be free at all times to classify his own 
customers as he sa m fit. 

By thus making' uossible a suggested, but net mandatorv, system of cust- 
omer classification, the Adminis tration proposed to minimize the use of such 
classification as a control device; but to the extent thrt it should be used 
by members in reporting their prices, the effectiveness of price filing as 
a medium of price publicity would be enhanced. 

2. "Free Deals" or Premiums. 

Another problem concerning which the Administration had to make policy 

9826 



- - 4:84 - 

determination related to "free deals" or premiums. Kany of the earlier 
codes, in the days when price control provisions were more readily grant- 
ed, had. prohibited the use of premiums. If control of -price was to be 
the objective, obviously such patent subterfuges as the giving of free, 
items or premiums of significant value in connection with the sale of 
articles had to be orhibited. But if the objective was simply to make 
all dealings known and above board, with freedom to the individual to 
price and sell his goods as he saw fit, a complet "ly different approach 
was necessary. 

Office memorandum Ho. 316, issued December 6, 1934, and dealing 
with this matter, stated that 

"'. . . the uroper way to prevent, .. . evasion of any trade practice 
provision (where such attempted evasion is connected with premiums 
or 'free deals'") is careful drafting cf the provision in question. 
For example, in an open price provision, it should be required that 
all terms and conditions of sale, including premiums or 'free deals' 
and conditions relating thereto, must be filed." 

Here again is seen & suggestion that publicity of prices be employed 
as one means of abating a questionable trade practice, rather than more 
rigid methods tending to price control. 

3. Advertising Allowances 

Similar to the situation relating to premiums is the question of 
advertising allowances; Again the position of the Administration, as 
expressed in official policy statements, was that there should be free- 
dom to act, but that there should be publicity for the type of action a 
member of an industry chose to : take. Office i emorandura No. 326, issued 
on January 5, 1935, said that the remedy for evils connected with the 
practice (use of advertising allowances as price concessions'), la3r in 
part in "causing that Part of the advertising allowance which is actually 
a price reduction to appear in prices - reported prices, if the industry 
or trade has an open price plan." It also stated that the part of the 
allowance which was actuallv a payment for advertising or promotional 
service should apoear as such, with a definite description of the service 
for which it was given. 

4. Forward Contracts 

The problem of limitation of the duration of forward contracts to 
sell had been presented to the Administration on a number of occasions. 
Definite policy on this matter was announced in Office Memorandum Kb. 327, 
dated January 10, 1935. The question involved may be summed up as follows: 

Any price control efforts on the part of industry groups could be 
effectively hampered if members could make long-term contracts to 
sell at a fixed price, regardless cf later market changes. There 
were, therefore, efforts made, particularly because of the rising 
market which in many industries accompanied the life of the KRA, to 
have code provisions established a limit to the length of these con- 
tracts. Again, in the policy ueterraination as to the matter, there 



- 485 - 



can bo seen the effort on the Dart of the Administration to apply the 
principles of mibli city without control. The order stated: 

"1. NHA policy generally aoes not favor code provisions which 
would limit the permissible period of forward contracts to sell. 

"2. Policy favors provisions, having the purpose of improving 
competitive conditions, which require the filing by each member of 
an industry in accordance with open price provisions of Office 
Ilemorandum l\To. 228, of his practices as to forward contracts to sell. 

"3. In cases in which it is reasonably clear that the reouire- 
ment for filing would be ineffectual, provisions which would limit 
the duration of fcrvard contracts to sell may be approved if the 
following conditions are met: " 

Then arc listed six conditions which required that the maximum contract 
period (l) be "reasonable", (2) be in line with past practice in the in- 
dustry, (5) take into account special cases and problems, (4*) be not of a 
nature as to create compliance problems, (5^ be not of such a nature as to 
render employment and production less stable, and (6) give adequate con- 
sideration to the effect of the provision upon purchasers. (*^ 

D. Interpretations and Advisory Opinions 

In addition to the official orders enunciating policy, various inter- 
pretations and opinions expressed by the Advisory Council (**^ touched upon 
-price filing questions. 

The Administration position that publicity, not control, w?s the aim 
of -price filing was reflected in -advisory Council o-oinions concerning the 
type of -products on which -prices should be filed. If control of prices 
is the objective, -presumably any una all prices should be filed; if, how- 
ever, the air:- is merely to approximate an organized marked similar to the 
commodity and securities exchanges, certain products clearly do not lend 
themselves to price filing. Among the latter are products made to special 
specifications, and perishable commodities on which the price varies con- 
siderably from day to day depending upon the \xo ily which must be disposed 
of. The first type of product is dealt with in a decision of the Council 
which was given in response to the following question from a Deputy Ad- 
ministrator in charge of the Hon-iietallic Products Section: "Where codes 
provide for open price filing, is it a requirement that members, of industry 
file -prices quoted on orders placed with definite specifications given?" 

The reply by the Council was: 

"It is the sense of the Council that the Code Authority should 
not require the filing of -prices on products which are manu- 
factured on unique specifications until such time as there are 

(*) Por the full text of Office uemoranda ::os. 316, 326 and 327 see 
Exhibit V of Appendix "E" 

(**) Set up to advise the /Tational Industrial levocery Board on policy matter. 

9826 



- -x6S - 

recurring salesof such products - in ether words, an onen urice 
filing provision may be applied logically only tc such products 
as enter regularly into channels of trade. '.There there are no 
persisting and recognized specifications, there appears to be little 
value in price filing." (*) 

A case in which the advisory council expressed its doubts as to the 
applicability of Drice filing to perishable products, other than nerhaps 
the reporting of past "orices, concerned the cede for the southeast fish 
and shellfish oreparing and wholesaling industry. 

Price filing orovisions were "revised to restrict the obligation of 
the trucker (as opposed to the established wholesaler; there was, appar- 
ently, such dispute and friction between these two groups) to one of 
regularly reporting at the close of each day, to the appropriate agent, 
the ouantity of each community sold, at each price term, ra.ther than to 
comoel him to file prices in advance of sales and to adhere to filed 
prices; " 

Said the Council? " the change from advance price filing by I 

truckers to :>rice reporting upon conclusion of sales is an improvement, 
even though the whole effort in such an industry is still regarded as high- 
ly doubtful "(**•) 

As has been noted above, one of the cardinal -ooints of Office Memo- 
randum No. 228 was that the price filed should be made available to pro- 
spective purchasers, as well as to industry members. The t>roposed code 
for the clock manufacturing industry followed Office Memorandum Ilo. 228 
for the most part, but did not orovice for giving price data to consumers, 
and in one pi- ce, provided that price must not be lower than (instead of 
other than^ those filed. Because of these deviations from announced policy, 
the matter was brought to the attention of the advisory council. The de- 
cision of the council concerned ifself for the most part with the desire 
of the Industry to withheld prices from buyers. 

The industry contended the t large buyers would -oress to the utmost 
for price reductions and stated specifically that if all their price lists ' 
to jobbers and chain stores were ooen to chain stores, the latter would 
insist not only on as low a price as anv joboer wf.s sold but on a lower 
price because of quantity pruchases. 

The decision of the council reads in part as follows: 

" The possibility that an entirely open price would not work to 

the Industry advantage is no warrant for oermitting the Industry to 
pick and choose parts of oolicy that taken alone would give it in 
turn an unfair advantage. The obligation of distributing trices to 
customers is the responsibility that goes with the privilege of a 
free exchange of prices among sellers. To take one without the other 
was never contemplated by police and would in fact amount to the 
declaration of a new policy. All other industries would be entitled 
to claim it as a precedent and thereby nrovide themselves with a 

perfect sta ~e set ting for price collusion." (***) 

(*) I bid, raage 87, Decision No. 92, November 9, 1934. 

(**) I bid, Page 318, Decision No. 196, March 18, 1935. 

(***) "Decisions of the Advisory Council", page 235. Office of L. C. Karhsal 
Head of Division of Review, N3A, and formerly Executive Secretary of 



- 487 - 

Accordingly, the council recommended refusal cf the orot>osed plan on 
the basis of its bei ig contrary to policy. 

Similarly, if as Office .cranium No. 228 stated, a free and onen 
market was the aim cf price filing, the code authority could net be em- 
'0C" rQ red to suspend urice filing; such a procedure was too susceptible to 

I s involving price control. Therefore the council recommended dis- 
approval r 'hen the spinning industry- sought an amendment which followed the 
Office ivieinoranduia in most particulars but which provided that the code 
authority could susp.end any price it found to be willfully destructive. 
The suL-oe.i^ion was to be for 8 aa-s, and could be extended by the Adminis- 
trator. The council said this out too much cower in the hands of the code 
authority. It also said, hovever, that the request evidenced a uerhaps 
justifieu need for some sound method of dealing quickly with genuinely 
destructive "orice cutting. ("0 

Office Memorandum 228 provided that price changes were to become 
effective immediately uoon filing. 2e sons for elimination of the wait- 
ing period given b~ r Mr. Leveret Lyon in the memorandum accompanying the 
proposed draft of Ho. 228 have been noted above. (**) The attitude of the 
advisory council on this joint is illustrated from the following with re- 
spect to a uroioosed amendment, in which the lime industry accented Office 
Memorandum No. 228' s price filing provisions, except that it insisted on 
a waiting ->?eriod. It advanced the usual argument that it would prevent 
"nrice forays, ■" The council said that it had "considerable resnect" for 
"the oft cited argument that, sines the usual incentive to reduce prices 
is the chance to get more business, the effect of the waiting neriod in 
warning each member of the industry that any orice reductions are likely 
to be met and therefore to be without advantage, will merely be to main- 
tain urices. That is not a function of open price systems as the Adminis- 
tration conceives them. The council doe; not oresume to offer this single 
point as closing the cases for waiting periods, but does stand on the 
ground that the point is a strong one and that r>olicy is still against 
them. The council recommends that the waiting period be deleted from the 
ODen price provisions." (industrial Advisory Board dissented as to both 
premises and conclusions.') 

The National Industrial Recovery Board, however, subseauently 
approved the waiting period in this code, the recommendation of the 
advisory council to the contrary notwithstanding. An extensive search 
has been made in the files to ascertain the reason for the reversal of 
the council's recommendations, but no information on the matter has been 
secured. 



(■O I bid, Page 186, Decision No. 146, January 9, 1935. 

(**) See Section LLL, a, 1, of this Chapter. 

(***) I bid, Fage 322, Decision So. 198, , arch 2' \ 1935. 

9826 



- 488< - 

IV. VIEWS ON PRICE FILING ^CLICY IF THE FINAL DAYS OF NRA. 

The preceding pages have outlined the trend of development of a def- 
inite -oo 1 icy on the part of the Administration as a whol° with respect to 
price filing, this policy bping concerned chiefly with throwing various 
safeguards around the open price provisions approved, in order to prevent 
tneir undue use as devices for price control. That, despite this develop- 
ment, there still remained varying attitudes upon the question among dif- 
ferent elements within the Administration itself, tc the very end of its 
existence, is evidenced by significant expressions of opinion noted below. 

A . Open Price Policy as Discu s sed at the Senate Finance Committee 

Hearing on th^ NRA, L'nr ch 1935 . 

At the hearings held before ta^ Senate Finance Committee during 
March, 1935, with respect to various aspects of NRA, questions concerning 
the price filing provisions were raised by certain senators. 

Replying to queries of Senators Couzens and King. Mr. S. Clay Williams, 
then Chairman of the National Industrial Recovery Board, said: 

"... there is not anything in an open price 

provision in a cod" that fixes prices 

There is an argument that it is desirable that 
the purchasers of any commodity in this country 
should know what (price) that commodity is 
moving t? others at . . . ."(*) 

Mr. Williams continued: 

" . . .If an industry comes forward and says that 
a majority of the industry is in favor of open 
price publication or an oien price clause, I 
have been willing to say, 'well, all right with 
me if you want it.'"(**) 

He continued by saying that one argument advanced for open prices 
is that they tend to prevent one producer from gobbling up the market at 
a secret low price. This, he said, was held by some to be undesirable 
since it would mean concentration of business and dislocation of business 
in plants not getting the orders. He said he f=lt this argument was im- 
portant enough to outweigh the possible coercion of persons filing low 
prices, as contended by opponents of open prices. 

The questioning continued: 

Senator Cousens: "Is he (a member of an industry which has to post 
prices) not fearful of doing it (posting a lover price) because he would 
drag the others down and not get the business anyhow?" 

Mr. Williams: "I believe he is." 
(*)" Investigation of the National Recovery Administration", Hearing Before 
the Finance Committee of the U. S. Senate, March, 1935, page 246. 
(**) Ibid. , page 247. 



- 489 - 
....Senator George: The, -price posting has been done at least 

with the hope of keeping the price "up. 

....- Mr. Williams: "I assume that a great many peoole who were 
favorable to price posting were of the opinion that it would not be hurt- 
ful to -prices ... ." (*) 

Mr. Williams was asked concerning the identical bids which Government 
agencies had received, and if this did not indicate that competition had 
b-en eliminated. He reolied that he thought not; that the identical bids 
came from the fact that all oid the! lowest -price on file; he contended 
that had there not b^en price filing, bids would have been higher; he 
said that "The posting of trices t»nds to bring your bids down." (**) 

The question was raised by Senator Slack whether permission to have 
a price filing system should b° granted by an administrative organiza- 
. tion like the KRA or by Congress. Mr. Williams' answer was that he thought 
it was administratively impossible for Congress to do it; that only a 
body like th<= MA cculd investigate the particular situation in an in- 
dustry and find out.(***) 

The general view of -price filing her-- expressed differs little from 
that held by proponents of o^en price systems in the first days of the 

KRA. 

B . Policy Views of Various G ro ups Within th- Admi nls tration . 

\ 
Other coints of view expressed in th- oeriod immediately preceding 
th*- Schechter decision, and illustrating both divergences and agreements 
of opinion as to different aspects of price filing policy, are outlined 
in the suosections below. Qertain of these expressions were the result 
of direct requests by the Administration for oolicy recommendations. 

In April 1935, the Code Planning Committee was appointed to consider 
the oolicy to b^ followed in the revisions of codes which it was ex- 
pected would oe mad- after the anticipated renewal of th- NIRA by Congress. 
Colonel Salter Mangurn, Chairman nf this Committee, requested suggestions 
from the Advisory Boards and Divisions concerning oolicy. 

1. Consumers' Advisory Board Recommendatinns 

On May 8, Mr. Corvin D. Edwards, Technical "ir-ctor of the Consumers' 
Advisory Board, in a memorandum to Mr. H. Ferris White, Chairman of the 
Administration Subcommittee of the Code Planning Committee , said: 

"... the Consumers' Advisory Board believes that an 
open price system which includes publicity for the 
pric-s of individual concerns is so capable of abuse 
that the -presumption is against it." 

(*) Ibid., page 250. . 
(**) Ibid., pages 268-270. 
(***) Ibid., pages 280-281. 



- -4SD-. 

He referred in this connection to the resolution of the executive com- 
mittee on the Consumers' Advisory ?card, passed en Aoril 19, 1935. 

This resolution expressed fundjjnental opposition to the open orice 
policy hitherto employed by NRA, evf'-n as modified by Office Memorandum 
No. 228. The statement contended that reporting snould be limited to 
past transactions and that the information circulated to participants 
in the reporting system snould b° i\i the form of summaries. It stated 
that in its view even an o'ien pric° system so limited would serve no de- 
siraole public nurpose in many markiets in which monopoly exists. 

In an earlier report, d->t = d >-'>ril 22, 1935, to Colonel Mangum, Mr. 
Edwards had stated that if current prices were to be reported and sellers 
were to be identified, the provisions of Office Memorandum #228 were 
satisfactory. In this memor"ndum also, however, he stressed the im- 
portance of the non-identifying, summary -only , oast-transactiois type 
of r>ric° reporting, contending tliat this type was capable of much less 
abuse than the kind, provided in Office Memorandum #228. 

Thus it will oe se^n that chis board, which ^rior to the issuance 
of Office Memorandum No. 228 hp t d argued strongly for the tyoe of orice 
filing set un in that memo rand' am , after the issuance of this policy 
statement moved still furtner in the direction of safeguarding the device, 
to the noint of favoring non-identif ication cf sellers. 

2. Research and Plann.ing Division's Recommendations 

In connection with Col.onel Mangum 's request for suggestions from 
the Research ^nd Planning division, a memorandum ireoared by C. A. Pearce 
and transmitted through Mr-. James Hughes conveyed certain suggestions 
concerning the general pr jblem of orice filing. 

His report endorsed the price filing uolicy set forth in New Series 
No. 1, d"t»d Aoril 23, :.935, (discussed later in this section), and 
stressed the importance of certain ooints made therein. It emohasized 
the importance of the filing of all terms and conditions of sale as well 
as the filing of nomin.al prices, if price filing was to be employed at 
all. The reoort stressed that this did not imply that price terms and 
conditions should be ma de uniform by code restrictions; on the contrary 
it contended that it wa s of importance that members of the industry have 
freedom in determinr jtion of terms and conditions. Summarizing this po- 
sition, the report said: 

"I.t is felt that unless it is demonstratively prac- 
ticable to file all th° terms and conditions of s^le 
Cised by members of a given industry, a price-filing 
*6ystem for that industry is not acceotable. 11 

If the aoove conditions were met, the report continued, 

"It was unobjectionable to pronibit subterfuges which 
would make it possible to sell at less than filed prices." 

Unless ti'iere mas considerable standardization in industry products 
9826 



- 491 - 

it would be impossible to compare items on wnich prices were filed, it 

was stated, and the objective of DUJlicity of prices would not be achieved; 

therefore, the report continued, tner a was no point in having a price 
filing plan in such an industry. 

The report also stated that nrice filing provisions should be ap- 
proved in cod-s only if the Administration were "satisfied that they 
(the price filing provisions) would not add an element of inflexibility 
to tne -nric^ structure or be a subject of abuse." 

In thos= industries where "dangers of abuse or of unfortunate ec- 
onomic consequences may be anticipated," the report recommended that the 
extent of price publicity be confined to the reporting of past trans- 
actions and their dissemination in such =i way as to be unidentifiable. 

The importance of the complete impartiality of the receiving agent 
was emphasized, as was also the necessity for having supervision of the 
operation and results of th» plan oy the Administration. 

3. Oube.r °clicy Recommendations 

While, as has been previously snown, th- waiting period was regarded 
with disfavor by the Administration generally after the issuance of 
Office kemor-ndum No. 228, it found defenders witnin the NRA to the last. 
In a memorandum dated May 8, 1935, Ovid E. Roberts, Jr., Chairman of the 
Sub-committee on Trade Practice Provisions wrot^ to the chairman of tne 
Code Planing Committee; ",... It is recognized that certain industries 
nave fairly met the requirements of true competition where as much as a 
ten d^y waiting period has oeen provided. Your Committee submits that 
tiiere are certain justifications for this waiting period which may not 
be lightly egnored. Essentially this is true in tne cas° of industries 
made up of firms which do a nationwide business." 

Tne memorandum went on to state that it should not be th° policy 
of the administration to encourage the use of waiting periods, but that 
wher« tney were justified, they should be safeguarded by a provision 
making it an unfair trade practice to ex°rt any influence "inconsistent 
with the maintenance of a free and open market." 

C. Pinal Statement of NPA Price Filing Policy . 

Wbat may be taken ^s the final official statement of the Administra- 
tion as to the e n ds to be served by an op^n price system, its essential 
characteristics and field of use, appeared barely a month before the 
Supreme Court decision invalidating the Recovery Act. This was in "Ad- 
ministrative Policy", New Series TTo.l', issued by the National Industrial 
Recovery Board on April 23, 1935, "to expedite administrative procedure." 

The portion of this document dealing with price filing was summar- 
ized in a digest of NRA policy prepared by Mr. Alvin Brown of tne Review 
Division snort ly after the decision. 

This summary, portions of which are quoted below, shows increased 
clarity both with respect to the function of price filing and with respect 



9826 



- 49'3 - 

to the safeguards npc D ssqry. The summary is quoted here in order to give 
a conplete view of the position .-\ hich th« NB.A held on open ->rice • systems 
at the end of two years of exr,eriiT"=ntntion with them. 

" Open -Price Filing . 

0-nen price filing is a mere device. Its potentialities 
for benefit or mischief depend upon the pumose to which 
it is put and the methods which attend its use. The stand- 
ard oy which it should be judged is price making similar 
to that afforded by an own and competitive market, such 
as an organized commodity excnange. 

" Objectives of Price Filing . 

• The ideal of an open and competitive market .can seldom 
be fully attained. It is no^ed to approximate its object- 
ives by open price filing under appropriate circumstances. 
It is possible for the or>en file to allow ouyers and sellers 

. to accomodate their activities to competitive conditions, 
to fix limits to the snread of quotations at any given time, 
and to tend to make price perform its industrial function. 
Open price filing snould, so far as possible, be made to 
furnish a public record of nrice movements, provide, a check 
on discrimination among customers, give the small enter- 
priser information about the activities of his larger com- 
petitors, reduce the amount of deception among buyers and 
sellers, give the parties concerned a fuller knowledge of 
conditions affecting the market, and promote and safeguard 
the integrity of the process of competitive price making. 

11 Essential characteristics 

'The following are the essential characteristics of an 
open price provision: 

" The filing agency 

An impartial and confidential body should be the ad- 
ministrative agency in order that price lists may be dis- 
tributed to members of the industry and to their customers 
without partiality and without efforts to influence the 
quotations. If the body is a private agency, its activities 
must be subject to the immediate oversight of the Govern- 
ment . 

" Publicity 

The prices must be genuinely nvailable to all customers 
and members of the industry, together with the name of the 
seller whenever it is necessary to an identification of 
the. quality of the product. 






9926 



*. 493'- 

" D p finite prices . 

The filed prices must be tnose at which sales ire ac- 
tually to tnkel'ice, rather than merely minima above 
which members of an industry may secretly vary their 
prices as they choose, or maxima from which discounts are 
to be allowed. 

11 Identification of -product . 

The various qualities, styles, and sizes of the nro- 
duct must be capable of identification. 

" Complete filing . 

Since --my on- of -the terms of sale may be employed 
to vary the actual sales price, all such terms - quality, 
quantity, style, size, discounts, mint of shipment, 
classes of customers, manner of Payment , and so forth - 
must be fil-d in precise and definite terms. 

"The fiel d for use of open pr icin g. 

1 ' Unfavora ol e f i_e 1 ds . 

Open "rice systems should not be indiscriminately 
applied to the entire range of American industry. This 
device may require much effort and give little usable 
information where — 

(1) Commodities differ so widely in quality, character, 
and accompanying s-rvices that prices are likely* to ■ 

. vary. .with each sale. 

(2) Where the number of concerns and products is very 
large . 

(3) Where, through custom or convenience, prices 
remain stable and market changes lie mostly in the 
character of the goods cold. 

(4) Where commodities are highly perishable and their 
supply fluctuates rapidly. 

(b) .here the natur- of the product makes identifi- 
cation of quality, style, or size difficult. 

" Favorable Fields . 

On the other nand, the feasibility of an o^en nrice 
system increases insofar as nrice competition is active, 
the products of th<= industry can be clearly identified, 
and price cnanges are frequently without being incessant. 



0826 



- 434 - 
" Factors to o» Considered . 

Consideration should be given to thp following factors: 
^l) Frequency ana extent of price change. 

(2) Comolesity of terms of sale. 

(3) Ease of identifying the product. 

(4) Number and geograpnical diffusion of members of 
the industry. 

(5) Degree of price competition. 

(6) Economic importance of the oroduct . 

(7) In some instances, as where the finished product 
• of one industry is the raw material of another, the 

conditions in correlative industries. 

' "Where open price systems snould be avoided . 

In certain industries, open pric = systems involve such 
probabilities of serious abuse that, even though they 
are feasible, th°y should be avoided. These are in- 
dustries in which the need is to preserve competition 
against attack. Such is an industry in which the dom- 
inance of an enterprise or groun is intimidating to 
smallei independents, or one in which the chief ob- 
stacle to collusion is the difficulty of devising mach- 
inery for price understandings. The field for open 
pricing is that in which competition tends to be ac- 
tive, but ill-informed and chaotic; not that in which 
competition tends to evolve into monopolistic restraint. 

" Waiting Period 

A waiting period is likely to freeze a competitive 
process which should be kept active. In an open market 
there is no counterpart of such a device. When prices 
are rising, a flood of orders during a waiting period may 
unsettle a future market. V/hen prices are too high, the 
incentive to reduce them may be lessened by knowledge that 
competitors may destroy most of the sales advantage before 
reductions can become effective., Therefore, the general 
presumption must he against the use of the waiting period, 
and the burden of proof is upon the industry which wisnes 
to employ it. 

" Br'St case for waiting perio d. 

Probably the best case for a waiting period can be 
made for industries in which sales are of large size and 



9826 



- 495 - 

smf.ll number, members are many and widely scattered, and 
information about price's cannot, for some reason, b^ quickly 
circulated. 

" Limit on frequency of mice change . 

In industries where trices immediately effective are 
manipulated for the purpose of allowing large discrimin- 
atory discounts to ">i ivil^ged customers, it may be neces- 
sary to imoose some limit uion the frequency of price 
change. In such rare cases this can be done by requiring 
that a price, once effective, must remain so for some re- 
asonable minimum period." 

The policy statement of April 23, 1935, also considered the de- 
sirability of the compilation of unidentifying summaries of prices 
based u -on past transactions and stated that this method of price 
reporting involved neitner the technical difficulties nor the pos- 
sible abuses that might arise in the reporting of current nrices. 
It said: "There may b<= many industries in which the -nds of public 
policy will be adequately served ..." by these price summaries. 

The board concluded by stating that it f<=lt that the ^rice filing 
d^vicp should be perfected .and guarded against abuse. 

A month and four days following this pronouncement the codes 
ceased legally to exist. 



9826 



- 496 - 



APPENDICES 



9826 



- 497 - 
Appendix - A 

Price Filing in the Asphalt and Shingle Roofing Industry 

CHAPTER I 

DE1EL0PLEIIT OF THE M ODERN INDUSTRIAL 

AND 
R EGULATORY SETTIN G 

The Asphalt Shingle and Roofing Industry dates hack to about the 
middle of the nineteenth century, but development was slow until 19no. 
Tn? first, trade association was organized in 1916 and according to a 
statement made some thirteen years later, the purposes were as follows: 

"The essential purposes of the association were stated 
by the secretary to be the general development of the 
industry and to increase consumption of the member's 
products; simplification and standardization; obtain- 
ing better freight rates; the development of statistics; 
industrial research; and work leading up to a national 
advertising and publicity campaign." (*) 

It must be horn in mind that this statement followed by a number of 
years the establishment of the association and the probability is that all 
of these activities were not anticipated at the outset. By 1923 or 1924 
thirteen members reported their costs to, and received summarized reports 
from, the association. (**) 

I. THE ASPHALT SHINGLE AND ROOFING ASSOCIATION 

On January 1, 1926, the Prepared Roofing Association moved its head- 
quarters from. Chicago to New York and changed its title to the Asphalt 
Shingle and Roofing Association because "the old name did not correctly 
describe the business of the members." (***) These changes in no way in- 
dicated the death of the old. organization, but rather a strengthening of 
the lines and in general the creation of a more closely knit unit. It 
is more likely that the aims and purposes of the Association, as quoted 
dj the association secretary* are descriptive of this body rather than 
the previous one. 
(a) Size 

The membership of the organization is reported by the Federal Trade 
Commission in its report of 1929 as being 27, which number represented 
about 75 per cent, "oj number, of the concerns engaged in' this' line of 
business. Applying that percentage, there were at that time about 36 
members of the industry and all but nine belonged to the Association. 



(*) Federal Trade Commission, Open Price Trade Associations, 1929, 
pp. 429-450. 

(**) Ibid, p. 429 
(***) p. 429, Ibid. 



9825 



- 493 - 

In the same report it is stated that the membership of the Associa- 
tion represented "about 65 per cent of the volume of "business as measured 
by sales." This figure would appear to he conservative; inasmuch as the 
Association included in its membership five of the six larger concerns 
and the largest single industry member, 85 per cent of the production 
would seem to be a more accurate estimate. At the lower figure a situa- 
tion would exist in which a majority of the larger concerns roughly five- 
sixths, and a majority of the smaller concerns, roughly three-f ourths, 
produced less on an average than the minority element. 

B, Activities 

The cost reporting and the dissemination of summarized costs under- 
taken by the Prepared Roofing Association (*) did not prove to be a worth 
while venture, and before the association reorganization, the activity 
had been discontinued for want of interest. After the reorganization had 
been* completed, activities tending to keep the members better informed as 
to the status of the industry and their particular positions within the 
industry were begun. Among the various enterprises were: 

" Statistic s. The Association, according to the 
character of the returns made by members, dis- 
tributes each month reports of shipments, in four 
classes and a total, and shows the distribution 
by states. With the summarized reports, the 
Association returns to each member his original 
report to the Association. The Association also 
issues a weekly report of orders for the four 
classes, with comparison for identical concern 
with the previous month and the corresponding 
month of the previous year collected and handled 
in the same way as the shipment reports. 

The Survey of Current Business publishes monthly 
shipments of "prepared", based on the Association 
data prorated to 100 per cent 

Prices .- Whenever a member issues a price list to 
the trade he sends 80 copies to the Association, 
which, in turn, sends a copy to each member. If 
a change is made in any list, the manufacturer notifies 
the secretary, who in turn notifies each member. 



Others .- The Association is interested in simplifica- 
tion and standardization, and has a research associate 
at the Bureau of Standards. A revised simplified pra- 
ctice plan was put into effect by the Association late 
in 1927. It has a committee to cooperate with the 
Department of Commerce. A cooperative advertising 
campaign is contemplated." (**) 



(*) Supra, p. A-l 
(**) Federal Trade Commission, Op.cit., pp. 4-29-430 
QRPfi 



- 493 - 

The years in which each of these activities "began are given in a 
letter from J. S. Bryant , former Secretary of the Code Authority and, 
since 1926, Secretary of the Trade Association, (*) as follows: 

Report Year started 

Weekly Report of Orders 1926 

Monthly Report of Shipments 1925 

Monthly Report of Shipments by states 1925 

The letter further states that these reports were compiled by a 
Confidential Agency, West, Flint and Company from information submitted 
by individual concerns. The reports in the form of summaries were mailed 
to the contributing companies, and at the same time the original data 
submitted oy each company was returned. In a previous letter (**) Mr, 
Bryant informed Mr. Laws on that some of the companies did not make their 
reports directly to West, Flint and Company but reported to the Department 
of Commerce. These data were added by the Department to the summaries of 
the Association Agency and issued as a monthly report by the Bureau of 
the Census. 

It may be seen from the above outline of activities undertaken by the 
reorganized Association that the members of the industry were becoming 
converted to the belief that a fuller understanding of the condition of 
the industry and of the relative standing of the individual members within 
the industry was more desirable than, complete secrecy in business. 

II. DEVELOPMENTS WITHIH THE INDUSTRY 

Concurrently with the growing enthusiasm for industry organization 
other factors were developing which were to have a lasting effect upon 
the industry and industrial development. Two of these were and are of 
sufficient importance to merit attention. The discussion of these will 
of necessity overlap the chronological discussion of the various arbitra- 
rily selected periods of this treatment, but it is felt that present con- 
sideration will not be confusing. 

A. P aten Right s 

It has been previously intimated that early in the history of the 
industry the guarding of innovations in products became customary, and 
it was the general practice to procure patents to protect developments. 



(*) Letter from J. S. Bryant, Secretary to the Code Authority- for the 
Asphalt Shingle and Roofing Industry to William Lawson, Assistant 
Deputy Administrator, July 9, 1934, (In NRA consolidated files, 
Asphalt Shingle and Roofing Industry, folder: "Statistics"). 

(**) Let ter from J. S. Bryant, Secretary to the Code Authority for 
the Asphalt Shingle and Roofing Industry to William Lawson, 
Assistant Deputy Administrator, June 28, 1934. (in NRA files, 
Asphalt Shingle and Roofing Code, Statistics Folder). 

9326 



~ SCO - 

These patents covered "both the finished products and the processes 
under much they were nade. Literally anything pertaining to the industry 
was nade the subject of a patent; thus it is that today we' find patents 
covering colors, composition, the direction in which the figres run, the 
materials used, the machinery used and other phases and steps concerned 
with the finished commodity. The fact that a product or process was pat- 
ented did not mean that it was produced exclusively "by any one member of 
the industry; in fact, for a period of time these rights did not .seem to 
restrict the other members of the industry at all. Later it was'. custom- 
ary for the one who ornied the patent to grant a license to others to pro- 
duce . the product or to use the process so protected. This plan, it appear- 
ed, served two purposes; the licensor was permitted to fix the minimum, 
price at which such commodities could he offered for sale, and royalties 
might he collected from those to whom the license was granted. 

Originally these patents were rather equally distributed amont the 
respective members as the discoveries were made. Any lack of equal bal- 
ance existing generally represented the variance in perspective and 
assiduity of the individual representatives. About 1920 the Flintkote 
Company undertook to get control of the patents affecting the products of 
the industry and by 1929 had acquired about lOOf), which represented a 
considerable proportion of the total and far more than were held by any 
other individual manufacturer. The reason for this policy is not clear. 
However, as indicated above the acquisition offered the possibility of 
increased revenue through royalties and it afforded an instrument of 
price' control through the license agreements, under which the licensor 
could legitimately fix minimum prices at which the controlled products 
might be offered for sale. 

1. Patent and Licensing Corporation 

• ■' ■ '•■. 

By 1929 this department of the Flintkote Company had reached' such 
proportions that the Patent and Licensing Corporation was set up to 
handle all patents and all license agreements arising from them. This 
Corporation was a wholly owned subsidiary of the Flintkote Company, capita- 
lized at $1,0^0, and the checks to cover its operations were issued by 
the patent concern. The advent of this company marked the beginning of a 
rather vigorous licensing policy, and all concerns were urged to avail 
themselves of the privileges offered by such agreements. Frequently, as 
a means of inducement to the prospective licensees, it was pointed out 
..that the increased earnings would more than offset the amount paid out in 
royalties. In some instances the Flintkote Company or the Patent and 
Licensing Corporation were unable to obtain outright ownership of the 
patents, but in such cases they were able to gain control through a pool- 
ing arrangement whereby the right to administer was turned over to them 
and the royalties were divided with the previous owner. Such agreements 
were entered into with Certain-teed, Bird and Sons, Ott and F. R. Brydle.(*) 
Under these agreements the pro rata amount to the respective comoanies 
depended primarily on the individual bargaining ability of the company re 
preventatives. In one agreement, the Hexogan, Certain-teed received 40 
per cent of the royalties; and in another, the lulti-Color, the returns 






(*) Patent and Licensing Corporation v. Weaver-Wall, D.C. H.D. Ohio, 
Testimony of Frank Gilchrist pp. 170 and ff. in Transcript. 

982G 



- 501 ~ 

w?rp divided on a 50-50- basis » (*) It would appear from these ar- 
rangements that sorn^ additional advantages w°re expected to accrue 
from the fact that control of the patents was centered in the hands 
of on'> co lira any. 

B . Combinations," Mer ge rs an d A bsorptions 

The other mov-ment which materially affected the picture of the 
Industry was that reducing the number of members. In its report of 
Trie Administration Of the Code Of Fair Competition For the Asphalt 
Sningle and Roofing Industry, the Code Autnority states that: 

"In the ten years preceding the approval of 
the Code eighteen' (18) companies were 
merg°d with other companies in the industry, 
six (6) fell into receivership, and one (l) 
burn°d up." (*) 

The same report lists the following mergers: 

1. Storm-cite Roofing Corporation, East St. Louis, 
111., merged with the American Asphalt Roof 
Corporation, 1925. 

2. Beaver Products Company merged with Certain-teed 
Products Corporation, 1928. 

3. Lockport Paper Company merged with Beckman-Dawson 
Roofing Company. 

4. Murphy-UcEwen Company merged with Beckman-Dawson 
Roofing Company. 

5. Beckman-Dawson Roofing Company merged with 
Flintkote Company. 

5. Chatfield Manufacturing Corporation merged with 
Flintkcte Company. 

7. Pioneer Paper Company merged with Flintkote Company 

8. Richardson Roofing Company merged with 
Flintkote Company. 

9. Sail -fountain Company, Scranton, Pa., merged 
with Flintkote Company, 1929. 



(**) Report of the Administration of the Code of Fair Competition 
fc- Asphalt Shingle and Roofing Industry. Letter of trans- 
mittal to F. J. Patcnell, Assistant Deputy Administrator from 
Smith Simpson, Agent for the Code Autnority. (in NRA Files, 
Code Authority Folder) 

9826 



- 502 - 

10. Weaver-Henry Corporation, Los Angeles, 
Calif., merged with Johns-Manville. 

11. Amalgamated Roofing Company, Chicago, 
merged with the Logan-Long Company. 

12. McHenry-Millheuse Manufacturing Company 
of New York, Inc., Fulton, N. Y., 
merged with the Logan-Long Company. 

13. Continental Roofing Mills merged with the 
Ruberoid CoeiDany. 

14. Safepack Mills merged with the Ruberoid 
C ompany . 

15. H. F. V- r atson Mills merged with the 
Ruberoid Company. 

+ 

15. McHenry-Mlllhouse Roofing Corporation, 
of Souta Bend, Ind., merged with 
United States Gypsum Company. 

17. SiFo Products Company merged with the 
United States Gypsum Company. 

18. Star Roofing Company merged with the 
United States Gypsum Company, 1934. 

It is possible that there were other mergers and consolidations during 
the period which are not recorded. In 1928 Flintkote effected a 
combination with Royal Dutch Shell whereby the latter company acquired 
a majority of the voting stock of the former. 

From the above it will be seen that Flintkote, aside from the 
combination with Royal Dutch Shell, acquired seven (?) companies; 
C°rtain-teed, one (l); John-Manville , one (l); Logan-Long, two (2); 
Ruberoid, three (3); United States Gypsum Company, three (3); and 
American Asphalt Roof Corporation, one (l). 

Other alignments of interest, which did not necessarily take place 
during this period, are Barrett Company with Allied Chemical; The 
Texas Company (Texas Oil Company) and the Barber Asphalt Company, a 
subsidiary of the General Asphalt Company. 

These combinations and mergers may have been a result «f the 
tendencies toward combinations v/hich were apparent late in the 19th 
and early in the 20th centuries in other lines of industrial endeavors 
and may have been stimulated by desire tc reap the benefits of the 
internal and external economies of large scale production. There is 
no doubt that tney resulted in'ooth vertical and horizontal inte- 
grations, an example of the former type oeing the Flintkote Company 
which, through its cl-jsely held affiliates, carries on a business 
varying from the sale of raw materials, such as aspnalt oil (a residue 
of refined petroleum), to the finished oroduct, roofing paper and 

9836 



- 503 - 



shingles. Certain-teed furnishes a good example of the latter type 
manufacturing asphalt sningles and roofing, tarred and asphalt felts, 
building and' insulating papers, newsprint pap<=r and boxboard, paints 
and varnishes, gypsum, plasterboard blocks and plaster laths, and 
Kalite sound-absorbing plaster. (*) 



(*) "Asphalt Shingle and Roofing Industry: A Study of Some Factors 
Bearing upon the Industry," °am^s E. Gates, Consumer's Advisory 
Board, p. 3. 

(in NEA Files, Asphalt Shingle and Roofing Industry, Folder, 
Legal Code Authority) 



9 £26 



- 504 - 
III. THE ASPHALT SHIHGLE A17B R00FI1TC- INSTITUTE, 1928 

Despite the nlan of enlightened competition under which the 
Association had been operating, at least since 1926, the Industry was 
still beset by the vicissitudes of price wars, secret rebates, 
fluctuating discounts and the like, and it appeared that further 
steps were necessary to eliminate these evils. The filing oi prices 
and the dissemination of price information to members of the Industry 
had not proved to be a panacea. 

A meeting of the members was called for May 29, 1920. at the 
Commodore Hotel. The exact purpose of this meeting is in doubt. One 
attendant stated under oath that prices were discussed and that a 
formula was advanced for determining prices on non-patented products 
based on the minimum prices of patented products as fixed by Flintkotc. (*) 
That prices and pricing practices were receiving the attention of the 
assembled group is indicated by subsequent events. On June 14, 1928, 
the 'Constitution and By-Lews were adopted and the name changed to the 
Asphalt Shingle and Roofing Institute. 

A. Institute Activities 

It is reasonably certain that this reorganization heralded a 
strengthening of the bonds of industry organization and the further 
intensification of the enlightenment of competition. The activities 
of the association were continued and the scope of operation broe.dencd. 

During this period a lierchandising Plan was adopted by the In- 
stitute which established a complex system of customer classification, 
divided the country into shipping zones (determined by location of 
factories, warehouses, etc.) and adopted the principle of freight 
equalization as a br.sis for quoting and selling. The rules thus 
adopted by the Institute were to govern all members in the marketing 
of their products. Either because of fear of the consoapiences, con- 
scientous objections or failure of the plan to conform to their es- 
tablished merchendi sing' policies, some of the former Association 
members refused to become affiliated with the new organization. 

It appears to be advisable before going deeper into the new order 
to review the May meeting. The pricing formula advanced at that time 
was proposed by Mr. Bonney of the Rubcroid Company and established a 
ratio between price and dimensions of shingles. 3y applying this 
ratio to the units of area of non-patented products there would be 
derived a gross price which would vary with the minimum prices quoted 
on patented products. Under this scheme control of the prices of all 
industry products would be vested in the owner of the patent, who was 
alloiTed by virtue of patent rights to determine the minimum prices at 
which such products could be offered for sale. (**) 

At the conclusion of this meeting it was agreed that this method 
of price determination should be adopted. Mr. Bryant, Manager of the 
Institute, then cautioned the members that the revised nricc list 



(*) Patent and Licensing Corporation v. Weaver-Wall , Testimony of 

A. L. Wall. Transcript of Hearing pp.1120 end ff. 
(**) Patent and Licensin Corporation v. Weaver-Wall, pp. 1122 and ff. 



9C26 



- 5C5 — 

should be stir e ad. over a period of two or three weeks but could be made 
retroactive as of that date-. (*) 

The new organization continued the plan of price filing which had 
been begun by its nrede sessor whereby each member filed 80 copies of 
his or ice lists with the Institute, which in turn sent a copy to each 
member. If a change were made in any list, the manufacturer, in 
addition to sending the required number of copies, notified the secre- 
tary, who in turn notified each member of the cange. Thus in addition 
to receiving copies of their competitors price lists, members had 
particular notice of any price fluctuation. 

1. Merchandising Plan 

The above discribed procedure for price filing did not introduce 
any novel plan to the Industry but, with tne ado-otion of the Merchandis- 
ing Plan, tended to strengthen as well as broaden the scotie covered by 
price filing. The specific provisions of the plan will be discussed 
later in connection with the Merchandising Plan of 1929(**). The 
essential difference between this ^lan and that of 1929 was that the 
latter included a liquidated damage agreement under which each member 
of the Institute posted a bond in the amount of $100,000 to grarantee 
performance. The new plan did not greatly improve conditions. Though 
the menoe: s did file their srices and though customers were classified 
and terras and conditions of sale were set forth, there was no provis- 
ion in the agreement that insured observance of these prices, classes 
and terms. Price wars, either secret or open, continued, throughout 
the yepx and early in 1929 some of the members of the Institute began 
to visualize an even better regulation. 

(a) As Amended in 1929 

' Had the plan of 1928 been observed it would have no doubt solved 
the problems of the Industry. Price determination would have been 
vested in the Patent -and Licensing Corporation which could be depend- 
ed upon to care for the interests of individual members. The one 
weakness of the program arose not from its provisions but from the fact 
that there was no penalty for failure to observe its terms. A survey 
of prices (***) will show that immediately following the May meeting 
prices jumped roughly 11.5 -ner cent and for a time remained both uni- 
form and Constant. Eventually some member of the Industry, motivated., 
no doube, by selfish interests, began to violate the.- agreement and the 
Industry was again thrown into a price was. 

That it rr as a matter which demanded the attention of the 
'master minds' is evidenced "o/ the numerous meetings which were held in 
1929 to r emedy the si tuation. (***») ___ •_ __ _ ___ __„_ 

(*) IM£» P- 1237 

(**) Infra, p. 506 & ff. 

( *** ) Infra. Table 3 , .p . 570 y 

(****) patent and Licensing Corporation v. Beaver-Vail, p. 1112 

9825 



- 506 - 

The guiding influence in this movement is unknown. Among those named as 
"officers or directors, and or active in the management of the defendant 
Institute", in the suit filed by the Government were executives of the 
larger members of the Industry. According to the records seven meetings 
of the executives of the various conroanies -.'ere held in the fall of 1929 
(*) 

The plan was ap roved November 1, 1929, and was to become effective 
January 1, 1930, to remain in effect until December 31, 1932. (**) At 
the time that the Merchandising Plan was adopted, the members of the 
Institute entered into an agreement that provided: that each member 
would file prices; that 'Then eny change of any price to any one or more 
customers, in any district, was mace, the member making the change should 
publich a printed price list containing such change to all the trade 
concerned, and simultaneously therewith a copy should be sent to all 
signers of the agreement through the office of the Institute; that each 
of the parties agreed to observe all the agreements, covenants, con- 
ditions and stipulations in the Merchandising Plan and the Code of 
Ethics; that each party agreed that no salesman, district manager, sales 
manager or other employee had a right ot deviate from the published 
prices; that cases of alleged violation would be submitted to an arbit- 
rator, ,who might at his discretion disregard the legal rules of evidence; 
that the findings of the arbitrator should be binding; and that each 
member should post a bond of $1^0,000 to assure adherence to the plan. 

The Tlan itself classified the customers of the industry in 
twelve divisions, namely; Dealers, Line Y. rd or Chain Store Concerns, 
Reserve Supply Companies, Authorized Distributors, Jobbers, Interstate 
Industrial Consumers, Intra-State Industrial Consumers, General Consum- 
ers, Railroads, Railroad Equipment Companies, Mail Order Houses and 'City 
and State Government s. Each of these classes was defined in a detailed 
manner. At least two classes had to submit data on sales to be approv- 
ed by Bradstreet to support their contention for such classification, 
this latter rule applying to the Jobbers and Mail Order Houses. It was 
intended tha,t the information supplied by the firms desiring to be 
classified as Jobbers and Mail Order Houses would be supplemented by 
information gathered by Bradstreet through their regularly employed 
field force. At least throe of the other classes of customers had to 
submit a data sheef attested to by raenuers of the firm that they fell 
within the desired classification. The determination of Bradstreet 
was to be final, it was their duty at the conclusion of the investiga- 
tion to notify the manufacturer submitting the name as to their decision 
and at the same time to notify the Institute of the dicision made and 
the name of the manufacturer in whos behalf the investigation had been 
made. The names of the accounts approved by ^radstreet were compiled 
into an alphabetical list by states and distributed to the participating 
manufacturers, not indication the manufacturer whose application re- 
sulte d in the appro val. ._ __ _ 

(*) Ibed, p. 1112 

(**) Bill in Equity Ho. 57-182, U.S. v. Asphalt Shingle and 
Roofing Institute, Et . Al . , Pane 18 and 63. 

9826 



-507- 



In addition to the classification of cu.stor.iers, the Merchandising 
Flan considered Handling of Orders, Quotations For Periods Beyond 30 Days 
Terms of Payment, Datings, Back Orders, Allowances Por Fixtures, Roll 
Roofing of Irregular Pootage, Shingle Stock in Roll Porn, hill Ends and 
Seconds, Definition of Types of Shipping Points, Definition of Classes 
of Shipments, Allowances Por Preight Equalization, Description of Pactory 
Zones, P.O.B. and Preight Equalization Points, Discounts on Purchases and 
Qualifications for Discounts. Since space does not permit a detailed 
discussion of these various provisions, an attempt will be made to explain 
those which are most pertinent to the pricing structure of the industry. 

Terms of sale were fixed at 2fo ten days, J>0 days net; or sixty day 
trade acceptance with no cash discount; or 2;1 10th proximo, net 30 days 
proximo. Por the purpose, of freight equalization, shipments were calssed 
according to amount, source of origin and agency of transportation and 
the amount of freight which could he allowed varied with each class or 
combination of classes. Thus it may be that delivery would be made free 
or that there would be no allowance regardless of destination. 

Dith the thought that both clarity and brevity can be best served, 
let us take for example an unknown buyer X, requesting quotations from 
an unknown manufacturer Y. The matter of discounts and amount of freight 
equalization allowed need be of no concern, as they were fixed for each 
of the classes. It would first be necessary to determine in which cf the 
six customer classes h falls; if he were a dealer (Reserve supply or 
Line Yard) or distributor one discount would apply; a Jobber, another; 
a Mail Order House, still another; and so on for each of the classes. 
After the classification had been determined, the discount applies auto- 
matically. It should x,'.:.en be ascertained how the shipment was to be 
made, i.e., by rail, water, track or a combination of rail and water; 
and finally the zone in -hich the customer resided. On these factors 
the amount of freight equalization was determined. Truck shipments fell 
in a special class and not only was no freight allowed, but the discount, 
for some unknown reason, was reduced 2-ops. As in the ca.se of discounts, 
the allowance is fixed and the customer falls automatically in one class 
or the other. 

The Agreement also pledged each manufacturer to abide by and observe 
the twenty-six provisions of the Code of Pthics which in turn tended to 
strengthen the merchandising Plan. The Code forbade the members of the 
Institute to evade the Plan secretly or by subterfuge. That is, one 
could not evade the price provisions by any of the following devious 
means: overweight merchandise; consignments; free goods; fictitious in- 
voices; warehousing for customers; etc., any of which would be a means 
of increasing the discount or levering the list price. In addition the 
Code stated that one should not make remarks to the di sparageraent of a 
competitor, entice a competitor' s personnel, etc. 

T7ith the approval of the agreement and the Code of Ethics, its 
adoption was made the sole basis for memoership in the Institute. By 
adoption is meant the signing of the Agreement end the Bond. 



9S26 



- 506 - 
2. Relationship of Patent and Licensing Corporation 

In order to complete the picture, it is necessary to again turn 
our attention to the Patent and Licensing Corporation. It had been 
estimated at various tines that from 60 to 75 per cent of the products, 
of the industry were patented. Thus the control of patents, especially .. 
when that control lis vested in the hands of the largest single producer 
in the Industry, might be a very important matter. 

The exact degree of interrelationship between the Institute and 
the present corporation is difficult of determination. Chester E. Rahr 
was president of both organizations as well as president of the Flintkote 
Company. That the Patent and Licensing Corporation was of the opinion 
that there was. a common interest .is less uncertain. Patent control was. 
sometimes used" as a whip along with threats of T>rice warn to coercs members 
£pe Industry, to accent, the Institute Plan. (*) 

Mo agreement was necessary to put the Merchandising Plan into effect 
with regard, to paterited products. The licensor, oy virtue of his patents, 
could and did determine the minimum price at which goods could be sold, 
and in determining that price, the same classification of customers, 
discounts and basis for freight equalization, as used by the Institute, 
were employed. 

Thus by means of the two agencies, the Institute and the Patent and 
Licensing Corporation, there was a double control of the members of the 
Industry. (**) The Institute, through the bonds made in its favor, might 
demand a penalty up to $100,000 per year for violations of the Merchandis- 
ing Plan and the Corporation by means of its control of patents might 
refuse to license or might sue for damages as a result of an infringe- 
ment by the licensee. It would seem that the more potent of these 
weapons was the latter. An estimated 65 r>er cent of the volume of busi- 
ness of the Industry was in patented goods and prohibition from this 
field would vitally affect the source of revenue of the individual 
members . 

B . Position Under th e Anti-Trus t Laws 

The agreement and bond went into effect January 1, 1930 and was 
revised as above discribed April 1, 1930, The revision resulted in no 
material changes, therefore it is felt that the description needs no 
alteration to cover the period from January to April* 

Soon after its adoption, the plan was called to the attention of 
the Department of Justice and after some preliminary investigation, 
proceedings were started against the President of the Institute, twenty- 
three member concerns and against eighteen individuals who were officers 
or directors and/or active in the management of the Institute. The 
Bill in Equity, No. 57-163, filed in the District Court of the United 
States for the So ut hern Dis tr ict of New York, entitled " United States 

(*) Ibid, p. 1077.1082, and 1117, 

(**) See Chart, p. 570. 



9826 



..- 509.- 

of America, petitioner, v. Asphalt Shingle and Roofing Institute, et al., 
defendants", charged that the defendants since January 1, 1926, had com- 
bined to restrain trade. The charge reed as follows: 

"Defendants, each rail knowing all the natters 
herein before alleged, unlawfully have engaged 
in a combination jxd conspiracy to restrain, 
and pursuant thereto have actually restrained 
throughout said period, and are now restrain- 
ing said interstate trade and commerce of 
defendant manufacturers and their customers 
by: various means raid devices, among them 

"being the following: 

(a) Defendants ~av>ye agreed to fix raid 
have concertedly' fixed and maintained 
uniform and non-competitive selling 
prices, uniform and non-competitive 
discounts for the various classes of 
trade; and types of purchases, uniform, 
artificial and non-competitive charges 

on account of freight rates or the cot of 
transporting re ardless of the pouint of 

the' shipments / and uniform -and •non-compe-t-i— • . 

tive terms, extra charges allowances, and 
conditions of sale, etc.; 

(b) Defendants have agreed to definitions 
for and have concert edly defined the various 
classes of purchasers and have concertedly 
and arbitrarily chosen the names of the 
customers which may be recognised by defendant 
manufacturers in the various classes and which 
may be allowed the discount:', and terms con- 
certedly fixed for the prospective customers 
who had previously been or ordinarily would be 
treated as being in particular classes and as 
entitled to prices anc. terms accordingly, 
were thus unwillingly placed in less favorable 
clas-es and were forced to purchase said products 
only up->n more inerous terms and at discrimina- 
tory and unfair prices; 

(c) Defendants have arbitrarily agreed upon 
and concerted ly fixed the credit qualifications 
of customers necessary to permit defendant 
manufacturers to deal with such customers as 
members of the various classes of trade, and 
have concertedly and arbitrarily chosen the 
persons and concerns deemed thus qualified. 
Pursuant to such plan defendants have agreed 

to refuse and have refused to extend to many 
customers credit which they had enjoyed and 
would ordinarily enjoy in a free market; 



9826 



- 510 ~ 

(d) Defendants, through the Institute have con- 
certed].^ maintained and operated a system for the 
exchange of complete schedules of all prices, terms 
and discounts proposed to "be charged by each defend- 
ant manufacturer; as a p'art of said - system they have 
agreed that no such defendant may deviate in any 
instance from its published schedule unless it shall 
forthwith publish to the trade and send to the other 
defendants a printed price list containing such 
changed prices; 

(e) As a means of coercing and compelling defendant 
manufacturers to perform the agreements above describ- 
ed, the various defendant manufacturers have agreed 
that an arbitrator shall hear and determine all com- 
plaints for the breach of said agreements and may 
make any award therefor up to $25,000 for a single 
breach. Pursuant to agreement defendant manufacturers 
have executed and filed with the Institute surety 
company bonds in amounts ranging from-525,000 to 
$100,000 to secure the -performance of said agreements 
and the payment of said awards; 



The purpose and intent of defendants in entering into 
and performing said conspiracy and each of the said 
acts and agreements, and the actual effect of each of 
the said acts and agreements have been unreasonably 
and unlawfully to restrain said interstate tra.de and 
commerce, to. stifle and eliminate virtually all com- 
petition therein and arbitrarily and oppressively 
to control the course of such trade and commerce and 
unlawfully regulate the channels of distribution 
thereof" 






Since the above litigation we.s never prosecuted to a conclusion, it 
may be cited only as evidence of the alleged activities, rather than 
proof. The case was carried on .the docket until October, 1935, at which 
tine it was removed without prejudice to the c r use of the Government. 
The reason for the discontinuance may be partially attributed to the 
NBA, since Price Filing Activities were made legal by this Act and the 
Department of Justice felt that an attempt to gain a conviction would 
be futile. The cessation of litigation should be accepted in the same 
light that it was granted; it did not indicate a weakness in the Depart- 
ment of Justice's cause of action nor may it be inferred that it acted 
in. the nature of an absolution of the alleged conspirators. 

That there wa/ a combination in the Industry is indicated by the 
pooling of patents and turning the control and administration of rights 
arising thereunder over to Plintkote or the Patent and Licensing 
Corporation. Thus patents, wholly or partially owned by Certainteed, 
Bird & Son, F.B. Brydle and one Ott were placed in the hands of the 
patent corporation to be administered by that firm. Whether or not 
this combination was in restraint of trade could only be determined by 

9826 



511 - 



the prosecution to a conclusion of the above suit or one of a similar 
nature. (*) 

C. 7a.lid.it" of Patents Questioned 

1. Patent pnd Licensing Corporation v. "eaver-TTall 

Doubt has existed for sor.e tine as to the legality of the control 
arising out of patents. This doubt has extended to both the right to so 
control prices and the validity of the patents under which this control 
is exercised. Mr. E. C. Hoffert, for tr/elve ye;;rs associated with 
Certainteed and the Lehon Comt)any, raises the Latter question his article 
"IS THE PATENT AND LICSNSIi G CORPORATIl-N A PRICE FIXING AGREEMENT FOR 
THE POOPING INDUSTRY?". This article traces the history of the patents on 

"Overbury Sauare-Butt Strip Shingles" and concludes that the patent 
expired in 1932. Since that date no new patent has been taken out on 
this product but the Patent and Licensing Corporation continues to 
control its minimum price. (**) 

As has been previously intimated, the possibility of attacks on the 
validity of patents ras always at a minimum. The licensee may not ques- 
tion the authority of the document from which he derives his privileges 
and the individual, not directly effected by such rights, seldom is 
sufficiently interested to r-.ise such a puention. Despite these irmrunit- 
ies, the irrefragaoility of the -power assumed "oy the licensor has been 
questioned at times. Unfortunately, these cases infrequently have been 
prosecuted to a conclusion and when they have been, the decision has 
in most instances been rendered on so".e point other than the authenticity 
of the authouity under which the control 'as being exercised. Since 
the licensee connot raise an issue on a oatent under which he is operat- 
ing, these actions ha ir e generally raised the point of infringement 
rather than the seemingly more important question. 

One of the .ere significant of the?e suits, primarily from the point 
of time during which it was transpiring, was that of Patent and Licens- 
ing Cor-joration v. 7eaver-Wall. As in other litigation, the issue was 
reached on encroachment, but a portion of the testimony had to do with 
the efficacy of the right under which the plaintiff was claiming. The 
point of att ck was that the idea was not new in the Industry at the time 
the patent was granted, and that prior to that time the phenomenon 
protected had been generally used throughout the Industry. While the 
decision of the court in that case, as to the immediate question of valid- 
ity, is not available; in its more far reaching aspect, that of the 
legality of the Institute' s activities, the decision is quite definite. 
In his decision the Master held that the Institute members '-ere guilty 
of a conspiracy in restraint of trade and had violated the Sherman Anti- 
Trust Act, the Clay ton Act and t he Valen tine A ct of 0*.io. . 

(*) Patent and Licensing Corporation v. Leaver-Wall. Testimony of 
Prank Gilcxirist. Transcript, p. 170 and ff. 

(**) IS THE PATENT .TIL LICENSING CORPORATION A PRICE FIXING 
ARFANGEMENT POP THE POPPING Ii"DUSTRY? H. C. Hoffert. 
( In ERA Piles, Volume B, p. 56 ) 

9836 



- .512 - . 

CHAPTER II 

THE INDUSTRY III 1933 

I. SIZE OP THE INDUSTRY 

The Administrator, in his letter of transmittal to the President, 
November 1, 1953, stated that the report of the Eesearch end Planning 
Division showed 65 establishments operating to a greater or lesser ex- 
tent and that the capital investment of this industry was fifty-seven 
($57,000,000,00) million dollars, (*) Both of these estimates are at 
variance with the estimates submitted by the sponsors of the Code. 

A. n umber of Members . 

In the data submitted with the application for a Code, the Asphalt 
Shingle and Roofing Institute, the sponsoring organization, stated that 
there were 27 members of the industry, 13 of which were members of the 
organization. (**) It is felt that with the possible exception of a few 
companies on the West Coast, which operated as a separate body, this is 
a reasonably accurate estimate. It may be reconciled with the figures 
of the Research and Planning when it is noted that these 27 members 
operated in the neighborhood of 70 plants. 

B. Relative Size of Members 

The size of these 27 members of the Industry ranged over a consider- 
able expanse from the point of view of capitalization, from a high of 
around fifteen ($15,000,000,00) million dollars to a low of less than 
twenty-five ($25,000.00) thousand dollars. Though the range was great, 
it is possible to arrange them in three groups without great distortion 
of the picture. Six of the companies fall within a group which might be 
classified as large, ranging in capitalization from ten ($10,000,000.00) 
million dollars upwards; eleven come in the intermediate or medium sized 
group with a capitalization of between one ($1,000,000.00) million dollars 
and ten ($10,000,000.00) million dollars with the point of concentration 
being somewhere around a middle figure; and ten companies may be classified 
a s being small, having a capital of less than the low figure of the inter- 
mediate group. 

Production of industry products does not always follow capital in- 
vested. This is due, in part, to the fact that the larger companies are 
generally engaged in the production of commodities other than those in- 
cluded in the Code definition. Regardless of this dispersion in the ratio 
between capital invested, it can safely be said that roughly 50 per cent 
of the total sales are made by the six larger members of the Industry. 
It had been estimated that one member produces somewhere between 17 and 
24 per cent of the total, that same member controlling through patents 
about 65 par cent of the total Industry production. Sales in most in- 
stances, during the period of 1926 to 1931, approached the capital 

(*) See letter of transmittal of the Code for the Asphalt Shingle and 
Roofing Industry, Codes of Fair Competition, Volume II, page 525. 
(**) Volume A, pages 4-7 -(in Code Record Files) 



cmp.fi 



- 513 - 

invested, indicating that the Industry could operate on a very small 
profit margin and at the same time show a fair return on the investment. 

II. GEOGRAPHICAL DISTRIBUTION 

Due to the fact that freight is a rather important item in the 
cost to the consumer, notwithstanding the freight equalization plan 
practiced by the Industry, the factories are concentrated in sections 
of dense population. Thus from a total of 76 establishments, 18 are 
located in Illinois, 9 in New Jersey, 6 in Pennsylvania and 4 in New 
York, the remainder being distributed among 19 states primarily in 
those regions which show a high ratio in population per square mile. 
In those Instances where an establishment is found to be remotely 
located, it is generally true that it is a small individually owned 
plant which operates within a restricted area. 

It is not intended to indicate that sales outlet alone determines 
.the location of a factory, for the accessibility of raw materials is 
likewise an influential factor. The principal raw materials used in 
the making of asphalt shingles and roofing are asphalt oil (a residue 
of refined petroleum) , waste felt (rag and paper) , coal and mineral 
granules. Peculiarly enough, many of these necessary materials are 
available in a proximity of the principal markets for the finished 
products. The refineries of Pennsylvania, Ohio and New Jersey would 
furnish the by-product of petroleum; the wastes of the cities would 
provide the necessary ingredients for waste felts and the, coal regions 
of Ohio and Pennsylvania would make readily accessible the element of 
coal tar. Thus, as a result of the two determining factors, we find 
the establishment of the Industry concentrated in rather well defined 
logical regions. It is probable that without ihe availability of the 
principal raw materials there would be no great change in plant loca- 
tion as the finished prodiict is more bulky and consequently more 
costly to ship than the raw products used. 

III. PRODUCTS AND PROCESSES. 

The Industry products as defined by the Code are " felt-base 
(made of organic or inorganic fibres) asphalt shingles, sidings and 
roofings, roll roofings (including cap and base sheets and house 
sheathing), starting strips, tarred felt, and asphalt felt."(*) 
In the Code there appears a comma after the first parenthesis which 
was put in by error and was never considered as being in the definition. 
The commodities, manufactured by members of the Industry, which were 
not included in the Code list are both numerous and varied. To name 
all such items would be a laborious task. A number of the concerns 
produce such kindred products as felts of one kind or another and a 
few of them furnish a sizeable proportion of asbestos. One member of 
the Industry operated under seventeen Codes and produced such unrelated 
commodities as newsprint and paint. In most instances, however, there 
is a closer relationship and one or the other of the products might 
logically be called a by-product of the other. 

(*) See Article II, Section 6 of the Code for the Asphalt Shingle and 
Roofing Industry, Codes of Fair Competition, Volume II, page 527. 

9826 



- 514 - 

It is necessary to concern ourselves only with the processes 
involved in the production of the commodities classified as Industry 
products, i.e., asphalt shingles and roofing. The base material ■ 
used is the felt, either in rolls or sheets. This material is first 
saturated with asphalt oil by dipping or spraying and is then seated 
with some mineral granule. To get the various and variegated colors 
it is necessary that the pigments be mixed .with the saturating or 
coating materials and applied before or with the -coating. Both the 
roll roofing and the asphalt shingle is made in this manner. The 
shingle is, however, carried through another step and cut either in- 
dividually or in strips. Though to the layity it may seen to be a 
matter of relatively little importance, the direction in which the 
fibre runs in the finished shingle is, apparently, of some signifi- 
cance, for questions of patent infringement have been determined on 
this factor. 

The necessary processes are highly mechanized, and the number of 
employees has a very loose relation to the total value of the products. 
In 1919 the Industry employed 8,671 wage earners while producing pro- 
ducts valued at $85,895,000, while in 1929 it required only 8,310 wage 
earners to produce goods valued at $123,000,000. From 1919 to 1931 
the percentage of the total costs which went to labor decreased in a 
rather constant degree from 12.1 to 9.0 

Perhaps there is some correlation between the mechanization in 
production and the degree of standardization in Industry products. 
Whether the relationship is one of fact or not, there is a very high 
degree of uniformity in appearance and in materials. So great is 
this standardization that frequently you will find*. for example, a 
distributor of the Mail Order group buying Private label goods from 
two or more producers at the same time and merchandising them as 
the same identical product.. Or perhaps one shipment of merchandise 
from that type of outlet will include the products of several manufact- 
urers. Another factor contributing to this similarity is the influ- 
ence of the Association of Fire Underwriters which has set .up minimum 
standards for roofing materials. That this standardization is not 
entirely a matter of chance or a development thrust upon the Industry 
is attested to by the fact that the Institute has for some time main- 
tained a chair for study and development in the Bureau of Standards. 

IV TYPES OF DISTRIBUTION 

As was pointed out in the discussion of the Institute Merchandising 
there have been for some time, within the Industry, rather well defined 
channels of distribution as well as some equally well defined favored 
consumer groups. (*) 

It was likewise pointed out at one time these channels had been 
specifically defined and the applicable discount to each group, had been 
fixed. 

(*) Supra, page .506 and FF 



9R?fi 



- 515 - 

Subsequently the definition was continued but observance of the stated 
qualifications was no longer mandatory; however, it was necessary 
in cases of non-obervance to give full publicity to the deviations. 
There are no indications that such divergences were either numerous 
or "idely publicized. 

For the purposes of discounts the customers were divided into 
six classes, namely: Dealers (including Reserve Supply Companies, 
Line Yards and Authorised Distributors), Approval Jobbers, Mail 
Order Houses, Railroads and Railroad Equipment Companies, Intrastate 
Industrial Consumers (also City and State Governments), and Inter- 
State- Industrial Consumers. A different discount was granted to 
each of these groups of customers and within the group a Quantity 
discount was applicable. Though no attempt to justify these class- 
ifications was made in the Merchandising Plan, it is logical to assume 
that the differentials recognized both the services performed 
and the desirability of the outlet, as either a means of merchandising 
the products or as a potential market for the products. 

To qualify as a Distributor, it must be shown that the firm or 
individual has purchased during the past year a specified quantity 
of merchandise and has purchased a lesser specified quantity from one 
manufacturer. The preferential discount then applied to anticipated 
total purchases and was not directly related to the present oder ex- 
cept as to the difference between C.L. and L.C.L. prices. 

For each of the other members of this discount group, there was 
rather well defined requirements relating to functions or types 
of services performed, but since the group as a whole occupied the 
position of least consideration and since, supposedly, any purchaser 
purchasing in a like quantity was eligible for the same discount, 
they hardly merit a detailed description. 

To be a Jobber, one must be listed in some registry or reco- 
gnized in his local community as a wholesaler, must maintain at least 
two salesmen who are engaged primarily in soliciting orders, must 
have a credit ratin? sufficient as to indica.te financial responsibi- 
lity, uustnaintaia a^stock of not less than 40,000 pounds of asphalt 
roof inf.' products and must sell at least 50 per cent of his entire 
turnover to retail dealers. In lieu of the two salesmen, the 
Jobber must sell 100 per cent of his entire turnover to retail deal- 
ers. The testimony or evidence offered by the prospective Jobber 
was of little value in the final determination as the matter was 
turned over to Bradstreet for investigation and upon the findings 
of this company, the prospect qualified or failed to qualify. About 
1931, these functions were taken over by the Flintkote Company as af- 
fecting patented products and as affecting non-patented products when 
shipped with patented ones. 

The procedure for Mail Order House was much the sajne as that 
for the Jobber, in that the final determination was vested in the 
hands of Bradstreet, and from their opinion there was no recourse 

or appeal. Peculiarly, these firms fell in the most favored group 
so far as the amount of discount was concerned, in spite of the fact 
that their sales amounted to only 5 to 6 per cent of the total sales 

9826 



- 516 - 

of the Industry; whereas the lumber dealers who handled roughly 70 per- 
cent of the total industry sales, fell in the least favored class. (*) 

The other classification includes large potential users of the 
Inudstry's products to whom are extended discrininatroy discounts for 
no other reason, apparently, than that they do offer a market for 
large quantities of the commodities. 

v. eatuke of the markst 

The Industry is entirely dependent upon construction as a market 
for its products, and more particularly it is dependent upon the build- 
ing division of that industry. As has no doubt neen assumed from the 
name, the primary commodities are roofing materials, though a small 
part of the products are used for building 'siding and for water- 
proofing or damp- proof ing basements. 

A. New Building 

? — »* 

By far the greater part of these materials is for application 
of new structures, and the consumption of the individual product de- 
pends upon the type of the structure, i.e., residential, commercial, 
industrial, etc. The total demand for the products of the Industry 
does not show this same relation to types. whether shingles, rolled 
roofing or tarred felts are- used is based principally on the shape 
of the, roof and its visibility, In residential structures the :roof 
is generally visible, unless the type of architecture happens to 
be Spanish or of some other style which calls for a hidden or semi- 
hidden roof. In the latter case, the selection is apt to be of the 
plainer type which calls for either rolled roofing or built up roof- 
ing, whereas ■ in the more visible styles are more frequently used. 
Likewise the roofs of the commercial or industrial buildings are of 
the flat type, in which cases the esthetic makes less appeal and 
practability is the determining factor. Consequently, the demand for 
t he . various products of the Industry is susceptible to fluctuations 
which effect the demand for the individual product as well as to 
fluctuations of the demand for the total. Due to this degree of the 
dependency upon the construction field, the demand for the products 
of the Industry is both seasonable and cyclical. 

While the market for the products is almost entirely determined by 
the construction industry, it does not necessarily follow that the 
demand will vary directly with the total amount of new building. The 
life of the average asphalt roof depends to a considerable degree 
upon the per unit weight of the roofing used. It may safely be said 
however, th; t it runs from seven to ten years (some companies offer 
a guarantee for a longer period of time). The life of the average 
house being the excess of this period, it is obvious that each struc- 
ture already in existence affords a potential market for such roofing 
this including also structures which were originally covered with 
some other type of roofing. 

( *) Transcript of Hearing, page 137 Sept. 21, 1933 



9826 



- 517 - 



VI. CCXiPETITIOIT 

In marketing their products, the members of the Industry are forced 
to compete with at least four well established industries. In no in- 
stance .have the relative merits of the respective products been deter- 
mined with sufficient defjiniteness and certainty to furnish a guide for 
the consumer. That one form or type of roofing is more durable or is 
more resistive to fire or is more attractive is largely a matter of 
personal opinion or taste, and no one except the members of the groups 
has offered a conclusive opinion on any of these factors, and in those 
instances conflicting opinions are numerous as their advocates. Since 
the layity has no guide other than the advice of interested parties, the 
market limitations are determined by the comparative sales abilities and 
the total possible demand, both of which are uncertain. 

In-making the final determination bet-Teen the competing materials, 
the consumer without any measure must roughly estimate the respective 
virtues and discount the relative deficiencies and then make a guess as 
to which would be preferable. Under such conditions it is possible, from 
the point of view of the manufacturer, that an industry organization 
mi^rht render its most meritorious service, for under these circumstances 
it might be a.dvantagecrm', to combine against the enemy to the benefit of 
the industry in general. 

VII. PRODUCTION, COS'..' AI.'D PRICE TREHDS 

Both production and productive capacity from the beginning of the 
Industry down to and including 1929 showed a rather constr-urt increase. 
There were periods during this time when there were temporary decreases 
in production, but even these moment ; try retardations rarely reached the 
productive capacity which has constantly increased to the present. 

Data are available for both the shipments in squares per year as 
furnished by the Industry (*) a.nd the value of prodacts as furnished by 
the Department of Commerce. (**) In view of the fact that the latter 
figure would not depict the changes in production except when accompanied 
by no change in price, the shi raent data a,re thought to be of more value 
at the present instant. 



(*) Uaterials Searing on the Asphalt Shingle and Hoofing Industry, 
prepared by the he search and Planning Division, page 6. (KRA 
files) 

(**) Census of hanufac tares, 1929, page 1349 . 
9826 



- 513 - 



Shipments Per cent 

(thousands change from 

Year of squares) preceding year 

1919 27,935 1.3 

1920 28,322 1.3 

1921 25,159 . -7.6 

1922 30.U95 16.6 

1923 30,^99 0.0 
192U 32,571 6.8 

1925 33,730 3.6 

1926 36,303 7.6 

1927 37,975 U.6 

1928 3b,54o -3.8 

1929 39,861 9.1 

1930 27.S7U -30.1 

1931 22,565 19.0 

1932 . 23,023 2.0 

Shipments inclf.de smooth- roll and slate— roll roofings and strip 
and individual shingles. (*) 

It will "be seen fro;.: these figures on shipments that while suscep- 
tible to fluctuations in the building trade, members were able to delay 
the effects and recover ::ore rapidly than the industry from which their 
demand came. Data on building permits for comparable periods show a 
constant decline from 1326 through 1932 and a decrease between the last 
two years, 1931-1932, of 65.7 per cent. (**) 

The only available figures on the cost of production are those of 
the Census of Manufactures which show the amount for wages and cost of 
materials (including fuel and purchased electrical power) . These figur- 
es do not permit a determination of value only and are not comparable to 
the above data on shipments. The percentages such costs were of the 
value, of products are shown in the following table: (***) 



(*) Materials Bearing on the Asphalt Shingle and Roofing Industry, 
prepared "oy the Research and Planning Division, page 6, (in NRA 
files) 

(**) Ibid . 

(***) Based on Data of Census of Manufactures, page 13^9» 



9S26 



- '319 - 

Per Cent Labor end I.later- 
Year ials of Va lue of Pr oduc t 

IS 29 SS 

IS 27 63 

1325 66 

IS23 7S 

1921 70 

1919 73 

191U 72 

1909 71 

190U 70 

l&'SS 63 

The above date, indicated that, compared with the value of the pro- 
ducts, costs rope fron 1S99 "to 1923 an d have been decreasing since that 
date. 

A. Compared T/ith C ompetitive Ind ustries 

More interesting, from the point of view of this study, is a com- 
parison of production and price trends with similar movements of the 
competing industries. Data are available for making such a comparison 
with wood shingles, slate roofing and clay tile roofing. These figures 
reveal the fact that members of the Industry were able to maintain both 
price and production more advantageously and were able to recoup more 
rapidly than v-ere the competing groups. More startling is the ability 
to maintain and even increase prices during a period of falling demand. 
Under conditions of free and open competition, the movement would be 
expected to be in the opposite direction, for in an attempt to increase 
demand the price level would fall, profits being maintained or the amount 
of losses being lessened by the increased volume. It will be seen from 
the chart that from the peak production of 1929^'to the minimum production 
of 1933. Asphalt Shingles showed a decline of only 53*2 per cent and 
Roll Roofing only Hi. 1 -' per cent, while "Jood Shingle production declined 
65.5 per cent, Slate Roofing 70*3 V ev cent, and Clay Tile 72.1 per cent. 
The peak and minimum years did not always coincide but all took place 
during the period from IS & to 1933* During the same period the price 
fluctuations, as measured on a 1929 base, were as follows: 



9826 



i- ■ r Cent 
Decrease 

(Maximum) Recovered to 
Commodity 19-39 Base 1929Br.se 



Wood Shingles 51.1 81.7 

Asphalt Shingles 0.0 116.0 

Roll Roofing 3.7 106.0 

Slate Roofing 43.5 Hone shown 

Tile Roofing 33.5 ITone shown 

It should he mentioned in connection with this analysis that only in 
the case of the Wood Shingle was the. 1929 price high price, each of 
the oth r roofing materials showing . decrease from 1923. 

Computations from the figures in the 1329 Census of Manufactures 
develop the fact that in that year, assuming consumption was in keeping 
with production, 72. 6;* of every dollar spent for roofinj was spent for 
products of the Industry. Th nearest competitor was the wooden shingle 
industry, which accounted for 13. 9.;* of each roofing dollar. Indications 
are that at the present bine there would he an even greater dispersion, 
the ratio of wood shingle consumption to prepared roofing shipments, 
since 192,, having 'been as follows: (*) 

Ratio of wood shingle 
consumption to prepared 
Year roofing shipments 



1922 42.7 

1923 41.2 
1934 36.1 
1925 37.5 
1925 33.0 

1927 30,5 

1928 25.9 

1929 24.1 

1930 23.1 

1931 20.3 

1932 18.2 

VIII. EEEECT OE THE DEPRESSION 

Building as measured by building permits reached a maximum in 1925 
when the value of stich permits was 3,793,159,000 and from that date 



(*) Red Ceo.ar Shingles, Report if th; U.S. Trriff Commission to the 
President of the United States, 1934. Tabic 16, page 60. 



9826 



declined steadily to a level of $366,691,000 or 91.2 per cent. (*) 

It is quite certain that .he minimum of building was not reached until 

1933 although figures for that year arc not available. 

With the unprecedented decline in construction, it would be only 
logical and natural that the demand for roofing products v/ould show a 
similar movement. There was, however, considerable variance in the point 
of time. Shipments of prepared roofing reached a high in 1929 of 39,861,000 
and a low in 1931 of 22,565,000 for a total decline of 40.9 per cent. (**) 
As has been previously mentioned a portion of the demand for these pro- 
ducts arises from repairs and replacements though it is extremely doubtful 
that this activity could account for all the difference. It appears likely 
that the competing industry must have suffered more severely and that the 
Asphalt Shingle and Roofing Industry must have profited at their expense. 

This observation is supported by price movements of the Industry 
during the depression, Tal:en alone or in comparison with price movements 
of competing materials, prices seemed to have been maintained with sur- 
prising success. No doubt this unusual ability may be explained, in part, 
by activities of the Institute. 

IX. PRE-CODE PROBLEMS 

Despite the maintenance of prices and the seeming harmony, the granting 
of secret discounts, rebates and allowance? caused much unrest among the 
members. In attempts to meet such special grants to favored customers or 
groups of customers, frequent price wars were precipitated and prices, at 
least temporarily, went skidding downward. The problem seemed to be more 
the possibility of these wars than an actuality, but without some method 
of compelling observance of filed prices, the members of the Industry were 
always conscious of the danger. 

Another practice in the Industry, and which the members felt they were 
helpless to combat, was that of extending favorable prices to mail order 
houses. Such institutions accounted for a very small proportion of the 
total sales of the Industry, yet they at times occupied the most favored 
position so far as prices were concerned. Recognizing the problem, the 
members did not feel that they could either individually or collectively . 
meet the issue unless there was some method of compelling adherence to 
filed prices. 



(*) Material Bearing on the Asphalt Shingle and Roofing Industry, 

prepared "b: the Division of Economic Research and Planning, page 6. 
(In HRA files) 

(**) Supra, page 518. 



9826 



- 522 - 

» 

CHAPTER III 
INDUSTRY PROGRAM FOR PRICE FILING 



The National Industrial Recovery Act became law on June 16, 1933, 
and industries were asked to submit for approval plans devised to 
remedy the competitive evils of each particular group, at the same 
time including provisions to benefit labor. The general theory was 
that as a result of these proposals, not only would industry be rehab- 
ilitated, but, in addition, advantages would accure to the wage earner 
in the form of shortened hours and increased hourly wage rates. 

That the Asphalt Shingle and Roofing Industry already enter- 
tained definite ideas as to the needs of their business is evidenced 
by the fact that little more than a month had passed before they had 
submitted a plan to the Administrator. For the purpose of negotiat- 
ing with the Administration, a Code Committee was ao-oointed by the 
Institute, consisting of the following individuals: (*) 

Herbert Abraham, Ruberoid Co.-, Chairman 

L. R. Hoff, Johns-Manville 

C. W. Bayliss, Barber Asifhalt Co. 

It is probably worth noting that these men and their affiliates were 
all named as defendants in the Bill of Eouity. (**) 

It should have been a foregone conclusion that the plan submitted 
would include a provision for the filing of prices, terras and condi- 
tions of sale. Yhe industry had been operating under such a plan since 
1926 and since the suit of 1930 had been forced to operate without 
any measures which would compel observance of these principles. 

I. PROPOSALS 

The original proposal submitted on July 27, 1933, (***) provided 
that every manufacturer should publish (if not already published) his 



(*) Resolution signed by P. C. Rowe 
(in KRA files, Volume A, p. 77) 

(**) Supra, p. 508. 

(***) Proposed Code of Fair Competition submitted by Asphalt Shingle 
and Roofing Industry dated July 27, 1933, and letter of trans- 
mittal dated August 7, 1933, from Herbert Abrahams to Hugh S. 
Johnson. 
(In NRA files, Volume A, p. 7) 



9826 



■ _ 523" - 

prices, terras and conditions of sale to his trade concerned, each class 
of trade to be furnished with the applicable prices, terms and con- 
ditions. The manufacturer should 'QiaroTjpon file with the Institute 
for immediate distribution to the me: bei*s of the Industry a complete 
schedule of all prices, terms and conditions of sale then in effect. 
This information was also to be .kept on file at the Institute for in- 
spection by any member of the trade or any manufacturer. In event 
any change was made in the price, terras or conditions of sale of any 
manufacturer, such changes were to be published within 43 hours there- 
after and the member making the change was to file all such changes with 
the Institute co incidentally with the publication. (*) 

Paragraph XXIV of that proposal noted exceptions to the require- 
mnets for filing in the following terms: (**) 

"The price publicity herein described shall 
apply to all ;orices, terns and conditions of 
sales of all asphalt shingles, asphalt roof- 
ing and allied products, except at terms, con- 
ditions of sale and other provisions contained 
in industry merchandising plan established here- 
in under need not be published by the manufac- 
turer, such plan being public document." 

In regard to customer classification the following provision was 
incorporated: (*■■**) 

"The names of all customers classified by manu- 
facturing tra.de groups eligible to receive trade 
discounts shall be filed promptly in the proper 
office of the Institute under the trade class- 
ification designated by such manufacturer, and 
all names of customers so filed shall be com- 
piled in the classified customers list and shall 

. be open for inspection to the manuf acturers and 
to the trade at the proper office of the Insti- 
tute, Conies thereof, for the appropriate por- 
tions thereof, shall be furnished by the In- 
stitute upon application of any manufacturer or 
member of the trade to the proper office of the 
Institute in the same manner as provided with 
respect to price lists." 

It is not indicated in this provision whether or not a manufacturer 
was to be permitted to change his definition of classes from time to 



(*) It should be noted that the proposal at this time did not in- 
clude a waiting period. 

(**) See Proposed Code, Volume A, vv. 7-14. (in KBA files, Volume A) 

(***) Ibid 

9826 



- 524 - 

time. There is no specific permission for such changes, hut at the 
same time there is no prohibition* .••"■' ■;.; 

In addition to these reflations governing price -publicity and 
customer classification, Title 5, paragraph 23 empowered the Code 
Authority, through committees, to establish a Code of Ethics, a Code 
of Simplification and Standardization pf Products and a Merchandising 
Plan. In the lignt of previous and subsequent discussions, it seems 
imnortant to direct attention to the similarity of the trade "oractice 
provisions of the original prorto sal and the nlan to which the Depart- 
ment of Justice objected. Granting that the merchandising nlan which 
would have been adopted by the Committee would have been likened to 
that under which the Industry had nreviously one-rated, and this is not 
an unfair assumption, (*) and that the Code of Ethics would have "shown 
the same relationship to the previous Code of Ethics, the Code would 
have reinstituted the plan of 1930, dispensing with the services of 
Bradstreet and the imnartial adjudicator. 

Just what transpired between the original nronosal and the time 
of the public hearing is not a matter of record, but it is apparent 
that the proposal underwent considerable change. A five-day waiting 
period was included; (**) nrovisions were made for changes in customer 
classifications; and the empowerment of the Code Authority to estab- 
lish a merchandising nlan was delimited to nower to study and re- 
commend. 

The Code submitted at the public hearing provided for publication 
of prices, terms and conditions of sale of all products to the trade 
concerned and the coincident filing in an office designated by the 
Code Authority for immediate distribution to the members of the In- 
dustry, In case of nrice changes, either of two alternative procedures 
might be followed at the discretion of the [ 0ode Authority: the man- 
ufacturer making the change might be required immediately to publish 
to the trade concerned every such change and coincidentally file with 
the Code Authority for distribution; or he might be required to file 
such changes with ;the Code Authority five days in advance of the ef- 
fective date for immediate distribution to the members of the Industry 



(*) See Merchandising Plan submitted, Infra , p. 548. 

(**) It is possible that some of the changes were made in the 
light of the results of similar proposals made by other 
industries. In an interview on January 13, 1936, J.S.Bryant, 
Secretary of the Institute and former Secretary to the Code 
Authority, stated that the Industry had never been particular- 
ly enthusiastic about the waiting period but had included it 
in their demands because other industries had been granted 
such a nrovision. 



9826 



<* 525 h 

and" -publish to the trade concerned on the effective date. The terras of 
the provision were as follows: (*) 

"ARTICLE X - PUBLICITY OF PHICES, 

TEEMS AID CCKDITI01TS OF SALE 

"Section 1. Immediately after the effective date of 
this code, every mender of the industry shall 'Dullish 
his prices, terras, and conditions of sale on all prod- 
ucts, to his trade concerned, each class of trade being 
furnished with the prices, terms and conditions of sale 
directly affecting such class. The trade concerned shall 
"be all the trade of the member of the industry directly 
affected by .such prices, terras or conditions of sale in 
the territory to which the same apply. Coincident with 
such publication, every member of the industry shall file 
in an office designated by the Code Authority Committee, 
for immediate distribution to all members of the industry, 
a complete schedule of such prices, terms and conditions 
of sale. Prices, terms and conditions of sale in effect 
in the Pacific Coast Section shall be filed in a Pacific 
Coast Office designated by the Code Authority Committee. 

"Section 2. In the event of any change being made by 
any member of the industry in any price, term, or condi- 
tion of sale, he shall, as determined by the Code Author- 
ity Committee either: 

"(a) Immediately publish to the trade concerned 
every such change and coincidentally file in an 
office designated by the Code Authority Committee 
full and complete copies of every such change in 
prices, terns and conditions of sale, for immediate 
distribution to the memhors of the industry. 

"(b) File full aftd complete conies of every con- 
templated change in prices, terras, and condi- 
tion of sale in an office designated ~by the Code 
Authority Committee within such periods as may be 
designated by the Code Authority Committee but 
not exceeding five days in advance of the effective 
date of any such change. Copies thereof shall be 
immediately distributed to the members of the in- 
dustry. On the effective date of any such change' 
the Industry member shall publish the same to the 
trade concerned and coincidentally file such infor- 
mation in the office designated by the Code Authority 
Committee for immediate distribution to the members 
of the Industry." 



(*) Transcript of Public Hearing, p. 28. 
(In ERA Files) 



9826 



- 526 - 



The problem of customer classification was handled in almost 
the same language as in the proposal of July ■ 27th (*), with no change 
in the meaning. 

The uniform merchandising plan was not considered a matter which 
might be of interest to other than members of the industry and it was 
provided that the Code Authority might propose a Code of Ethics, a 
Code of Simplification and Standardization and a Merchandising Plan, 
Before being sxibmitted to the Administrator for approval these plans 
were required to have the supoort of two-thirds of the memoers of the 
Industry located east of the Pacific Coast Section. 

II PURPOSES TO 3E ACHIEVED 

In discussing the purposes to be achieved ~oy the open -orice plan, 
it i-s probably wise to speak from the mouths of the proponents. In 
the letter of transmittal accompanying the original proposal, the 
Chairman of the Cod's Committee wrote as follows: (**") 

"In the year 1932 and in preceding years, many 
manufacturers in the asphalt , shingle and roofing In- 
dustry suffered serious losses. In order to enable the 
manufacturers in this Industry to make even a little 
profit and to carry out the purposes of the National 
Industrial Recovery Act it is essential, in our opinion, 
to stamp out vicious practices which have existed in 
the Industry causing price wars and cut-throat compe- 
tition detrimental to the workers as well as to the 
manufacturers. 

We have, therefore, proposed in the Code an open price 
plan which expressly permits every manufacturer to fix 
and change his own prices at will, but requires him to 
publish to his trade and concern all prices and terms 
of sales effecting such trade, and after first publishing 
such prices and terms and rates then to file them in the 
office of the Asphalt Shingle and Roofing Institute, 
where they will be open to. inspection by all members of 
the Trade and by manufacturers. Under this plan, the 
manufacturer may change his prices at any time without 
prior notice to anyone, but after change has been made 
he must publish the new price to his trade and file it 
in the Institute office. We earnestly urge the importance 
of an early approval of the publicity features of the pro- 
posed Code. " 



(*) Supra, p. 523. 

(**) Letter dated August 3, 1933, from Herbert Abrahams to Hugh S. 
Johnson. 
(In 1TRA files, Volume A, p. 7) 



9826 



- 527 t 

Further reference was made to the purposes of the -orice publicity 
features in both the first and second drafts of the Code, where it 
was stated: (*) 

The purpose of the publicity requirement of this 
Code is to insure to members of the industry to the 
trade concerned, complete publicity of all prices, 
terms and conditions of sale and thus promote fair 
competition. II o member of the industry shall sell, 
pay rebate, or allow a deduction at any time to any 
person except upon prices, terms, and conditions of 
sale then in effect and published in the manner re- 
auired by the Code. Each member of the industry 
shall have the right individually to publish new 
prices, terms, and conditions of sale, from time to 
time, not inconsistent with the provisions of the 
Code. 

More specifically, it was thought that publicity would place 
the manufacturer in a position to refute the alleged prices which were 
quoted prospective customers in an attempt to drive a better bargain. 
Buyers, particularly those who purchased large quantities, in an at- 
tempt to secure a price advantage, would often quote a ficititious 
price alleged to have been offered by a competit: or. When this price 
was met or a lower price quoted, this quotation would be used to 
drive an even more advantageous bargain with still another competitor, 
and so through a vicious cycle the price would be driven down. Con- 
tinued over a. long period of time this practice was apt to culminate 
in a general price war. It is also probable that publicity of prices, 
supported by governmental compulsion to force adherence, offered an 
opportunity to remove the mail order houses from their position of 
favored buyers, and this favoritism shown mail order houses was gen- 
erally opposed by the members of the industry as being justified by 
quantities purchased. 

In determining the real reasons why the Industry supported the 
measures one should recall the expressed purposes and reasons of the 
Institute in putting a similar plan in operation years before. (**) 



(*) Transcript of the Public Hearing, p. 30. 
(In FRA Files) 

(**) S upra, p. 504 & ff . 



9826 



CHART 3R.. IV 
CONTROVERSIES ARISING DURING CODS MAKING PERIOD 

I. BETV7ESN MEMBERS OF INDUSTRY 

In making their proposals, members of the industry seemed to "be in 
almost perfect accord. If any difficulty was experienced in determining 
just what would best solve the perplexities, such problems were ironed 
out without bringing them to the Administration. It seems logical to 
assume that there were no serious differences and that the members of 
the industry, in the light of their past experience, know or at least 
had very definite opinions as to what would remedy the existing evils 
in their competitive system. ** 

In only one instance is there recorded a lack of cfcplctc harmony 
regarding the proposals of the Institute. On September 13, the Western 
Elaterite Roofing Company wired the Institute that all references to a 
merchandising Plan should be eliminated from the proposed, Code on the 
ground that they had not been worked" out satisfactorily and that they 
were confusing. Five days later in a letter to the Administration the 
contents of the telegram was quoted and the suggestion again ma.de that 
action on the -plan should be defer cd and t ho problem considered in a 
more deliberate manner at some later dato.(*) 

II. MEMBERS AND CUSTOMER GROUPS 

The serenity which marked the consideration of the members of the - 
industry was not so apparent when the Code was brought to the attention 
of the customer groups. Cries of discrimination and price fixing were 
the' immediate reactions. At least three important, customer groups pro- 
tested vigourously the provisions relating to price filing and customer 
classification, each contending, for one reason or another, that if 
incorporated in the Code such provisions would react to the detriment of 
the particular group and ultimately to the consumer. 

A. Lumber Dealers 

The opposition of the Lumber Dealers was not crystallized until 
March, 1934", at which time the Merchandising Plan was up for consideration. 
The arguments advocated by that group will be discussed in connection with 
the proposed amendment. (**) It should be noted at this time, however, 
that in anticipation of such a proposal, the group protested the favorable 
prices extended to the mail order houses on the grounds that they were 
discriminatory and not justified on the basis of quantities. 

3. The Roofing Contractors Association 

The objections of the Roofin b Contractors Association do not appear 
to have been at all times consistent with any particular economic theory, 
being primarily leveled at those provisions of the proposed Code which 
dealt with the filing of prices and trade classifications. In regard to 

T*) Letter dated September 18,1933, from Edward J. Yetter to Assistant 

Deputy Administrator William Lawson. (in NBA files, Asphalt Shingle 
and Roofing Code, Volume A.) 

(**) Infra , p, 548. 

9826 



Article VIII (*) (Trade Qualifications) the criticism war, advanced that 
the various classes of customers should he designated in the Code and that 
there should be provided some means enabling those who were assigned to 
each class to advance to more advantageous positions (**). The then 
Article X, now Article VII (.***) was attacked on the grounds that the 
interchange of vices among members was tantamount to the establishment 
of price fixing. In advancing this criticism it was stated that (****): 

"Again, we are forced to he guided ~oy past performances in attempt- 
ing to determine the future actions of the industry. We have 
present in this room price lists issued by various members of 
this industry for the past few years. By a strange coincidence, 
although these price lists are dated usually only a few days 
apart, they invariably mention the identically same net price 
for each classification of material." 

In general it was felt by this group that, since they were vitally 
connected with the industry, they should be consulted in the drawing up 
of any plan of fair competition. 

C. hail Order Houses 

The hail Order Association of America objected to the proposals 
requiring the, filing of prices and customer classification on the theory 
that such information was confidential between the manufacturer and the 
customer. It was contended, further, that the requiring of data relative 
to sales and ;:rices was requiring not only a disclosure of the manufac- 
turers business, but also that of his clients, constituting a violation 
of confidence. 

This Association expressed the belief that the Code Authority would 
be dominated by the larger firms, who were opposed to the mail order type 
of distribution, and that as a result of this domination the Mail Order 
group would be discriminated against in the matter of discounts. They 
further alleged that the larger or dominating firms would avail themselves 
of the information filed relative to the mail order houses in order to 
use it in combatting such institutions. 

In response to this protest the Code Committee pointed out that "in 
spite of the fact that the total purchases of the primary mail order houses 
do not exceed 5'fo of our Dutput, they have been able for many years to 
secure prices considerably below the level of the various other classes 
of trade." (*****) it was advanced by the Code proponents that this 
situation had led to wide-spread comolaints from the other classes of 



(*) Infra , p. 543. 

(**) Transcript of the Hearing" on Code of Pair Competition, presented by 
Asphalt Shingle and Hoofing Industry, September 21, 1933, p. 71-81. 
(***) Infra , p. 548. 
(****) Transcript of the Hearing on the Code of Fair Competition, presented 

'oy Asphalt Shingle and Roofing Industry, September 21,1933, p. 79. 
(*****) Letter dated September 21, 1933, from the Asphalt Shingle and 
Hoofing Institute to HHA, (in IIHA Files, Volume B, p. 4) 

9826 . 



customers, since the mail order firms, as a resv.lt of this advantageous 
■buying, could and did cut prices to the detrimea-t" of other distributors 
of the industry's products." Relative to the accusation that the Code 
Authority would he dominated' by the large firms and as a result of that 
dominance would be prejudiced against the mail order houses, it was 
called to the attention of the Administration that each member would 
have one vote regardless of size and that there would be two represen- 
tatives of the Administration on the body. *-t was further intimated 
that such an accusation was an affront to the integrity of the Code 
'Authority and the Administration. 

III.. BETWEEN INDUSTRY AND UFA 

Recorded objections of the Administration to the proposals of the 
code sponsors were not numerous. , Concessions sought were no greater and 
no broader than had been previously granted other industries and definite 
policies had.. not yet been determined. Each proposal was supposed to stand 
on its own merits but unconsciously each code was viewed in terms of those 
already approved. From this perspective the demands of the proponents, 
while possible more definite than some, were no more exacting. 

As measured by the changes in the proposed Code from the time, of 
its first appearance (*) to the time of the public hearing, many concessions 
were made and many disputes settled. These alterations, though frequent, 
were in most instances directed to form rather than to content. Many 
of these changes were effected at a conference on August 31, 193", with 
Chairman Abraham of the Code Committee and Lanager Bryant of the Institute. 

Following the public hearing the Consumer's Advisory Board took issue 
with the probisions for customer classification, waiting period and 
definition of costs. (***) This Board considered it undesirable to 
require the listing of customers according to classes, contending that 
this practice would lend itself to discrimination and even to "negative 
blacklisting". It maintained that the other two provisions would raise- 
the possibility of coercion and price fixing. 

IV. THE EFFECT OF THESE CONTROVERSIES 

The outcome of the various controversies can be most readily compre- 
hended from a discussion of the pertinent provisions of the Code, and a 
comparison with the similar provisions in the original proposal. (****) 

The provision relating to publicity of prices, terms and conditions 
of sale (Article VII) (*****) f ' required that each member, within ten (10) 
days after the effective date of the Code, publish his prices, terms and 
conditions of sale on all products and furnish each class of trade with 
the prices, terms and conditions of sale affecting that class. Coincidentally 

J*) Supra , p. 50^. : . . .. 

(**) Report of Assistant Deputy Lawson dated September .5, 1933. (in 
NBA Files, Volume A. p. 65) 

(***) Licmora-n/yts; dated September 29, .1933, from L.F.Boffey of the Con- 
sumer's Advisory Board Zo Malcolm Muir, Deputy Administrator. (I'n 
NBA Files, Volume 3, p. 99) 

(****) Supra , p. 523. 

(*****) See Article VII of the Code for the Asphalt Shingle and Roofing 

9826 Industry, Codes of Fair Competition , Volume II, p. 533. 



— 531 — 

with such publication eo.cn member was required to file with the Cods 
Authority, and the Code Authority was required to irn.viediately distribute 
to all members of the Industry, 3 com-iletr. schedule of such : rices, 
terms and conditions of sale. 

Section 2 of that Article provided that in the event that changes 
were made in any of the above published facts the member so changing 
should file with the Code Authority a full and complete copy of all such 
changes, within periods to be determined by the Code Authority, but 
not exceeding five (5) days in advance of the change. The agency with 
which this information was filed was required to send copies of such 
changes to all the members of the industry immediately, and on the 
effective date to publish them to the trade concerned. 

It was further provided in this Article that no member should sell, 
pay a rebate, or allow a deduction except in conformance with prices 
■filed, but any member was permitted to change his prices, terms, etc., 
individually and of his own volition. 

Article VIII (*) related to publicity of qualifications of the 
different classes of customers, as established by the individual member, 
and the filing of the names of all the customers falling in each class. 
These qualifications could be changed ?s the will of the member dictated, 
but all changes were required to be published to the trade and filed 
with the Code Authority. The nar.es and location of the members of each 
class were to be open to inspection ~oy the members of the industry and 
of the trade but the name of the manufacturers submitting such names 
wore not to be disclosed without their consent. 

Thus members of the industry were reouired to file prices, terms, 
conditions of sale, definition of their various customer classes (if any) 
and the names and location of all customers so classified with the Code 
Authority. All of this filed data was subject co change at the discretion 
of the manufacturer filing, but when prices, terms or conditions of 
sale were changed other members of the industry were to be notified 
five days in advance of the effective date of such change. 



(*) Ibid. 



9326 



- 532 - 

CHAPTER V 

RELATION 0? PRICE FILING TO OTEZ: : OGEE PROVISIONS 

In addition to the requirements for filin; >rices, terras and 
conditions of sale and trade qualifications, which '/ere all an essen- 
tial part of the price filing plan* there '-ere other trade practices 
which tended to strengthen the prohibitions set out in those provisions. 

In d'rde.r to prevent or forestall any attempt to evade the pro- 
visions relating to' prices. Article IX, Section 5,(*) declared the 
granting cf any rebates refunds, commissions , credits, or 
unearned discounts, in the form of money, services or privileges, to 
be an unfair trade practice and to "be in violatior of the Code. Section 
6 cf the sane Article (**) forbade the giving of prizes, nremiums or 
gifts in connection with the sale of products or as an inducement 
thereto, by any scheme involving lottery, misrepresentation or fraud. 

Through': these two sections an effort was made to prevent evasions 
of the price filing plan by devious methods, which might not of them- 
selves constitute violations. Not dnly was a violation of the filed 
prices forbidden, but also the granting of an3 r gratuities which might 
have the same resiilt, as a deviation. 

The other Code provisions relating to prices or to price filing 
were not in the nature of additional forces compelling adherence to 
filed prices, but were provisions having a tendency to limit the 
freedom which might be exercised in determining the price to be filed. 

I. PROHIBITION 07 SALZS 3SLCW COST 

The original proposals from the industry provided that no mem- 
ber shruld sell to the trade any product at a net price which was 
below the said member's total cost thereof. Total cost was defined to 
include "all items properly chargeable to the operation of such mem- 
ber's business'^***) and included such items as the cost of raw mat- 
erials, manufacturing, selling transportation, depreciation and 
interest, all items of overhead expense and "all other items in con- 
formity with sound accounting practices." 

(*) See Article IX, Section 5 of the Code for the Asphalt Shingle 
and Roofing Industry, Codes of Pair Competition, Vol. II, p. 534. 
(**) Ibid. 

(.***) Transcript of Public Hearing, September 21, 1933, p. 30, 
( in NBA Piles. ) 



9326 



— ' (J . 1 ._. — 



Protests were registered against this provision by the Mail 
Order Association of America »nd by the Consumers' Advisory Board. 
The Association contended that the determination of "total cost" 
was extremely difficult, that enforcement would be a oroblem and 
that the real purpose of the provision ras to fix -orices.(*) The 
Consumers' Board suggested the substitution of a provision establish- 
ing a cost accounting system, subject to the approval of the Ad- 
ministrator, -and that the decisions of the Code Authority on points of 
alleged violations be subject to review by the same authority. (**) 

It appears that something in the nature of a compromise must 
have been effected for the Code, as adopted, contained an amended 
prevision on Selling Below Cost and further provided in Article VI 
Sectim 2 (e) (***) that the Code Authority should make a study and 
should make recommendations based on that study with regard to a 
\iniforra cost accounting system. The Codegprbhibited.ihe sale. df" any _ 
products by members of the industry at a net price which was be- 
low the said members' "direct costs". "Direct Costs" were defined 
as consisting of raw material costs (inclusive of transportation 
and shrinkage); direct labor costs; manufacturing burden (inclu- 
sive of power and steam, factory overhead, maintenance expense, 
technical control, factory warehouse, and factory shipping charges); 
plus a markup of 15$ of the total of these three items. It was pro- 
vided that any member might sell below his own "direct costs" to 
meet competitive prices which he had not investigated and to meet 
competition in violation of this rule, pending action theron. (****) 

II. MISCELLANEOUS SEMI-BELATED PROVISIONS 

Though not directly affecting the price filing provisions 
of the Code, but materially affecting the pricing practices of the 
industry, Article X, Section 3 of the Code stimulated that nothing 
contained in the Code should be construed as prohibiting any 
member of the industry from exercising "all its and/or their existing 
lawful patent rights, or as requiring any member of the industry 
to do any act in conflict with the terms of any existing valid 
patent licensing agreement. (*****) 

(*)lbid, p. 93. 

(**) Uemoradum dated September 29, 1933 from L.F. Bcffey of the 

Consumers' Advisory Board to Peputy Administrator Malcolm Muir, 

(in NBA Files, Volume 3, p. 99) 

(***) See Article VI, Section 8Ce) of the Code for the Asphalt 

Shingle and Roofing Industry, Codes of S'sir Competition, Vol. II, p. 532. 

(****) i"bicL. Article XII, p, 535-536 

(*****) Itid] Ar ticle X, Section 3, p. 535 



9826 



- 534 - 



This interpretation permitted the Patent arid ; Licensin§ Corporation 
to continue to-, set :uo customer -definitions and to fi:; minimum 
prices s& related %o patented products and 33 related to non- 
patented products when: shipped such pa tented.products. 

The Code further provided that the Code Authority should study, 
with a view to mating recommendations to the Administrator, the 
problems of limitation of production, limitation of ne" equipment, 
industry merchandising plans and a system of exchange of credit 
information. The -provisions in themselves had no effect on prices 
or price filing out the possible results might have had. In reality 
the Code Authority reported only on the question of a uniform mer- 
chandising plan, and while they pushed this measure with considerable 
interest, they were never successful in obtaining its adoption. 



982G 



- 53o - 

chapter vi 
admiitistratio:>i op price fili:tg pla:t 
i. the administrative ageitcy 



Originally it was intended that the Code should be administered by 
the Institute, but by the time of the public hearing the proposal had been 
changed to virtually the form in which it v/as approved. As finally rati- 
fied, it was provided that the Code should be administered by a Code Au- 
thority consisting of five (5) individuals elected from among those subject 
to the Codes and agreeing to comply therewith by a two-thirds vote of all 
such industry members, three to be elected from the membership of the 
Institute .and two from these not members of the Institute at the time the 
Code was adopted. , 

The first Code Authority was elected at a meeting in New York City, 
October 23, 1933, (*) but at the requesc-of Assistant Deputy Laws on 
another election was held. The request, no doifbt, v/as made by Mr. Lawson 
in view of chc fact that this selection preceded the approval of the Code 
by fifteen days and its effective date by twenty-nine days. The Assistant 
Deputy felt that to be properly elected under the Code, the election should 
not antedate the- effective date of the document which granted the power. - 

A. The Co' " -0 Autho rity 

The first duly elected Code Authority consisted of the following 
individuals from the membership of the Institute: . 

Mr. Herbert Abrahams, Chairman, 

President, Ihi^eroid Company for over twelve years and connected with the 

company in various capacities for over thrity years; 

Mr. L. E, Eofi , 

Vice President of Johns-Manville Company for ten years and connected with 

the company for over thirty years J 

Mr. C. W. Bayliss, 

Vic- President of Barber Asphalt Company for over twelve years and con- 
nected with the company for over twenty years; 

and the folJ owing from the non-members of the Institute: 

Ralph P. Mullcr, 

Vice president of Cooper, Company for three years and connected in various 
capacities with Euberoid Company, with National Asbestos Manufacturing 
and Cooper Company for approximately 19 years; 



(*) Code History of the Asphalt Shingle and Roofing Manufacturing Indus- 
try, as amended August, 1935, p. 14, (in HRA files) 



9826 



... _ 536 - 

John A. Scharwath, 

President of National Asbestos Manufacturing Company for approximately 

twenty years and connected- with the Industry for over 40 years. 

It may he said that the latter tv/o nr raters of the Code Authority, in 
addition to representing the non-members of the Institute, also represented 
the smaller members of the industry. The Chairman of the Code Authority 
was President of the Institute and was a member of the Executive Committee 
as were the other Institute representatives. 

To assist the Code Authority in carrying out its duties, Mr. J. S. 
Bryant, who had been connected with the Institute since 1926 in the capacity 
of Manager, was appointed Secretary; and Mr, P . C. Rowe, an affiliate of 
the Plintkote Company, Assistant Secretary. At its meeting on November 20, 
1953, the Code Authority appointed Lewis H. Brown, President of Johns- 
Manville Company as Treasurer. (*) Mr. Brown at that time occupied a like 
position with the Institute. 

Other industry -representatives of the Code Authority were: (**) 

Mr. Smith Simpson, former Aide to Assistant Deputy Administrator Laws on, 
appointed confidential agent, May 7, 1934; 

Mr. 0. A. Bigler, Assistant Secretary, November 20, 1934, with Philips 
Carey in an executive capacity for many years, appointed to take the place 
of P. C. Rowe, resigned: 

Mr. R. T. Kidde, Agent in Charge of Chicago Office, December 3, 1934, 
appointed to replace P. C. Rowe, resigned: 

Mr. I. J. Harvey, Treasurer, January 10, 1935, President of the Flintkote 
Company, appointed to replace Lewis H. Brov.ii, resigned. 

B . Powers a.nd Duties of the Code Authority 

The Code Authority, by the instrument croating it, was empowered to 
adopt its own rules of procedure and to delegate its authority, or parts 
thereof, to such agencies and committees as it might select. This in gen- 
eral gave the Code Authority the right to avail itself of the of: ices and 
services of the Institute. 

Specifically, subject to the right of the Administrator to modify 
or disapprove, the powers a.nd duties o 4 :' the Cod:- Authority were as follows: 

(a) To require each member of the industry to file 
reports with respect to specified matters and such other 
matters as might be deemed pertinent, 

(b) To permit all members to participate in and share the 
benefits of the activities of the Code Authority. 



(*) Ibid, p. 17 

(**) Ibid, pp. 1SB-19 
9826 



- 537 - 

(c) To collect all confidential information through 
an agency which should keep such information in con- 
fidence except when required 'by the Code Authority 
for the proper administration of the Code. 

(d) To designate an agent or agents, not members of 
the industry, to investigate complaints of violation. 
All pertinent information so collected should be kept 
in confidence except in instances when the alleged 
violation was substantiated, in which event the in- 
formation should "be turned over to the Code Authority 
for proper disposal. 

(c) To study and to recommend to the Administrator any 
regulations regarding the following: 

Uniform Cost Accounting; 
Limitation of Production; 
Limitation of New Equipment; 
Industry Merchandising Plan; 
Simplification and Standardization; 
System of Exchange of Credit Information; 
Inequalities Affecting the Stability of 
the Industry. 

These recommendations, if approved, after such notice 
and hearing as the Administrator deemed necessary, were 
to becoi.ie operative with the same force and effect as 
any other part of the Code. 

These powers as measured by similar provisions in other Codes were 
neither unusual nor unreasonable. The Code Authority was designated 
as the agency to administer the Code and the procedure to be followed, 
while not specifically limiting the activities of the administering body, 
indicated the general linos of those activities. How successfully the 
Code pointed the way can best be determined by a study of the action taken. 

C. Foales and Regulations promulgated by the Code Authority 

Rules and regulations established by the Code Authority are too 
numerous to be mentioned individually. Of the twenty-two (22) Code 
meetings, few, if any, were adjourned without having, passed a number of 
rules to regulate the conduct and procedure of the members of the indus- 
try. It is of interest to note that fully 95 per cent of these rules had 
to do with the filing of prices or customer classification. A consider- 
able number of these regulations were issued as explanations or interpreta- 
tions and will be discussed later. (*) 

An attempt wil be made, by citing a number of examples, to indicate 
their scope and the great latitude covered by them. 

(*) Infra, p. '•■ 



9826 



53S 

Hinutes of meeting, 3/27/35 \:.i 
Code Authority, with concurrence of the Administration 
lie mbers ruled that the Industry Members must file with 
the Code Authority fifteen days "before the effective 
date a list giving names and locations of trade buyers 
who would receive the prices and terns applying to the 
various classifications of trade. 

Minutes of meeting, 9/3/3*4 

Code Authority rules that five days advance notice 
must be filed with the Code Authority -hen equaliza- 
tion rath unpublished freight rates should result in 
a decrease in the net cost of a shipment to a customer. 

Minutes of meeting. 5/l/3*+ 

It was ruled that new items added to a member's line 
of products must be filed within five days; members 
shipping via carriers having unpublished freight 
rates or equalizing against such rates must give 
publicity to the rates applying; and, product life 
guarantees must be filed as part of a member's prices, 
terms and conditions of sale. 

Minutes of meeting. l/lZ/^k 

Code Authority ruled that in classifying customers, 
members must include in their filing each location 
in which a customer had a place of business. 

Minutes of meeting. U/9/3^1- 

Code Authority ruled that members need not publish 

prices beyond the third deoimal point. (*) 

Minutes of meeting, 11/29/33 

Ruled that all complaints of actions of an agent or 
agency of the Code Authority made pursuant to Sec- 
tion 2 (f) of Article VI should be made in writing 
and addressed to the New York office of the Code 
Authority. 

Minutes of meeting. 11-/29/33 _ 

Ruled that to prevent secret allowances, the members 
of the Industry should give publicity to prices of 
all items not included in the list of products of 
Article II, Section 6, in order that there would be 
some check in instances of mixed shipments. 

A recital of the Code Authority rulings could be continued indefi- 
nitely. As previously noted, by far the greater portion of these rulings 
referred to some phase of price filing. 



(*) The Patent and Licensing Corporation at about the same time issued 

the same ruling to gpvern prices of patent products. 
9S26 



~ 539 - 
D. Explanations and Interpretations 

Between the effective date of tha Code, November 20, 1933 and the 
Schechter Decision, May 27, 1935, the Code Authority issued a total of 
thirty-three Bulletins and Explanations, twenty of which were concerned 
with some phase of price filing (publicity of prices, tenns and con- 
ditions of sale or customer classification). 

Apparently some doubt existed in the minds of the memoers of the 
Code Authority as to their power to issue instructions, for at a meeting 
of that "body on November 29, 1933, it voted to forward to the Administrator 
copies of all such documents thus far issued and all that might be trans- 
mitted to the industry in the future. The vote on this question was not 
unanimous, L. R. Hoff dissenting. (*) 

The Code Authority released a number of Bulletins on November 29, 
1933, which were ordered recalled by Assistant Deputy Administrator 
Lawson.(**) It does not appear that these Bulletins were out of order 
nor docs the demanded recall indicate the assumption of powers not deleg- 
ated. Mr. Lawson at this time established the policy of reviewing all 
instructions issued by the Code Authority. The Bulletins thus held in 
abeyance were reissued under date of March 10, 1934, at which time all 
such documents emanating from the Code Authority office, with the excep- 
tion of Number 17, were circulated to the industry. 

In many instances it is difficult to distinguish between an inter- 
pretationswith the exception of those issued by the Administration) an 
explanation and what was designated by the Code Authority as a Bulletin. 
Either of the latter two, which were commonly published to the members 
of the industry by the Code Authority, were used to explain and interpret 
the meaning of the various provisions of the Code. These documents are 
too voluminous to be quoted here in toto and in lieu of such quotation an 
attempt will be made to summarize the rulings so issued under the proper 
caption. 

1. Bulletins 

The first reference to price filing was in Bulletin Number 2, ?/hich 
was issued for the purpose of instructing members in the method of filing 
and time of filing when prices were changed. The introductory paragraph 
stated: (***) 

This bulletin is for the purpose of providing every member 
of the industry with a common understanding of what is 
required in connection with Publicity of Prices, Terms and 
Conditions of Sale on all Sales made for Delivery within 
the Northern anxLSouthern Sections. 



(*) Minutes of Code Authority meeting, 11/29/ 33, p. 2, (in NBA files) 

(**•)■ Letter dated December 3, 1933 from Assistant Deputy Administrator 
W. M. Lawson to Code Authority for Asphalt Shingle and Roofing 
Industry. (in NRA files, Code Authority Letters Polder) 

(***) Bulletin No. 2, 3/ 8/ 34, in NRA Piles, Bulletin Polder 



- 640 - 

The bulletin quoted the first sentence of Article VII, Section 1, and 
stated that this publicity applied to all products both patented and 
unpatented. The publicity requirements could be met by publishing this 
data in part on price lists and in part in a merchandising plan, provided 
that in this manner complete information was furnished to -each class of 
trade. In order to furnish complete information each member was required 
to publish in this combined manner, provided they were a part of his terms 
and conditions of sale, the following; trade qualifications and definitions 
or types of shipments; terms and conditions on which order would be ac- 
cepted; trade discounts, commissions and quantity discoxmts, with the 
basis on which same were extended; amount and term of each discount; and, 
freight equalization an" freight allowance points or zones with outlines 
of methods and conditions cf freight equalization. 

The Code provided for the filing of price changes as designated by 
the Code Authority, with the reservation that the date of filing should 
not be in excess of five days before the effective date. In keeping 
with the authority to fix the time of filing changes, the industry was 
informed that when the effect of the change was to increa.se prices no 
notice prior to the efiectiv'e date was required, but that the member so 
changing should publish to the trade and file with the Code Authority on 
the effective "date. In the event that the change in prices, terms and 
conditions of sale resulted either in no increase in net price or in a 
decrease in net price such changes were to be filed with the Code Authority 
five days in advance of the effective date. Should the change be made by 
any member other than, the one initiating the price decline and should 
the effect of such change in no instance and to no class of customers 
be more favorable than the price quoted by the one initiating the decline, 
these price's would be effective on the same date as would be the prices of 
the initiator; but should these prices in any, instance be more favorable 
to any class of customers in any locality they would not be effective 
until a lapse of five days from the date on which they were filed. 

The Bulletin stated further that if it were. the policy of any 
industry member to sell to any consumer, s\ich as general consumer, intra- 
state industrial consumer, etc., it would be necessary to include in 
prices, terms and conditions of sale published to the trade, the prices, 
terms and conditions of. sale in effect to all such tyDes of customer. This 
necessary data could be included in either the price list or the merchan- 
dising plan. In connection with this publicity it was pointed out that 
while the Code required that such publicity be made to the trade concerned, 
it did not require that this publication be made to the actual consumers 
involved. 

Many of the requirements set forth in this letter of instruction 
seem to be inconsistent with the spirit in which the publicity provision 
was written and the purpose avowed at the time the code provision was 
sought. If benefits were to be derived from enlightening members of the 
industry and the trade concerned as to the prices asked and received 
for the products by the various members, why should- there be a distinction 
between changes which resulted in a price increase to the trade and changes 
as a result of which the net price remained constant or decreased? In 
regard to publication to the trade concerned how could the purpose be 
served when such prices were kept from the "actual consumer " and that 

9826 



- 541 - 

consigner was ■-. ieriber of the tr de concerned, being so classified by the 
members of the industry? 

Bulletin No, 11, officially releasee- Dr. the sane date as the above 
Bullletin, sought to supplement these instructions with rules governing 
filing with regard to prot< ction orders, special products made to meet 
specifications, combined sales of industry and r.on-industry products 
and sales to employees. When a member sold either a protection order 
or special products made to meet specifications, he was requested to 
file information with the Code Authority which would describe the par- 
ticular job and the products to be used. If industry products were sold 
in conjunction with non-industry products the member was required to 
file with the Oode Authority the prices of the non-industry commodities 
included' in the' order. Finally, sales to employees were subject to 
the same publicity requirements as other sales. The purpose of these 
rules was, no doubt, to keep members of the industry from using such 
orders as ruses under which they might at times violate their filed, 
prices. 

Bulletin Number 3 explained the requirement::- under Article VIII, 
Publicity of Trade Qualifications, in much the same manner that Number 
2 had ex-plained Article VII. It was ruled that it was necessary for 
each member to publish his trade definitions and die terms and con- 
ditions of sale applicable to each class of trade so defined. These 
definitions and applicable terms and conditions were to be published 
to the entire trade rather than only to the cla,ss of trade concerned. 
In the event any change was made in a member's trade qualifications, 
these changes were to be given the same publicity as the original 
definitions. It was noted that this Article required each member to 
file, with the Code Authority, the names of his trade under the classi- 
fication to which such member of the trade had been assigned. The names 
so filed were to be -compiled into an alphabetical list by states and 
would be available to the members of the industry without revealing 
the manufacturer who had filed the names in the respective classes. 

Bulletin Number 12 ruled that it would constitute an unfair method 
of competition, in respect to the products enumerated in Section 1-A 
of the proposed Industry Merchandising Plan, for any member in the Northern 
or Southern Sections to enter into any contract, either verbal or written, 
the terms of which were effective beyond thirty days from the date of 
execution. It was further held that this rule should remain in effect 
until revoked by the Code Authority or the Administration, or until the 
proposed Merchandising Plan was approved. This ruling seemingly made 
activities of the members dependent upon the Merchandising Plan which 
had not yet been submitted for approval and which was never approved by 
the Administration. 

Number 13 held that -^guarantees against price declines were terms 
or conditions of sale and must be filed with the Code Authority five 
days in advance of their effective date. 

Bulletins Number 8 and 15 explained Section 5 of Article IX and 
ruled that purchases from customers or prospective customers at prices 
above the market price constituted a rebate or allowance and was prohibited 

QP9A 



- 543 - 

"by Code. 

Bulletin Number 10 sought to prevent evasions through sales to 
' exporters ' and required that all sales for exoort purposes he accom- 
panied "by a statement "by the "buyer that the goods purchased would not 
be offered for sale in the United States. Further the' buyer was re- 
quired to agree that in the event he violated the provision he would 
pay as liquidated damages the sum of five hundred dollars (500) per 
carload or portion thereof which was sold in violation of the agreement. 

Bulletin Number 16 required full publicity with regard to patent 
agreements and patented ->roducte when the patent was held "by non-members 
of the industry. Such publicity vvas to include prices, terms and con- 
ditions oi' sale; a statement of whether the license agreement involved 
"price control"; a full description of product; and the amount of 
royalty paid to the non-member of the Industry. According to Mr. Bryant, 
members did not comply with this railing nor did the Code Authority in- 
sist upon such compliance. (*) The Code Authority believed that details 
of royalties, price control, etc., should be published when held by 
members of the industry, but that the filing of such information when 
the patent was held by a non-member of the industry would serve no useful 
purpose. ViTny the attitude of the Code Authority changed in regard to 
these patent agreements is not known. At the time the Bulletin was issued 
it was common knowledge that practically all of the patents governing 
the products of the industry were controlled 'by the Patent and Licensing 
Corporation, a non-membor of the industry, and in the light of that 
knowledge the explanation that the required publicity would be of value 
only when the patents were owned by members of the industry, appears to 
be rather weak. 

Bulletin Number 9 explained to the members of the industry the 
meaning of "net price" as used in Article XII. It was ruled that the 
term meant the price after deducting all discounts and allowances 
extended by the member, including transportation allowances. 



2. Explanations 

Of the fifteen Explanations issued by the Code Authority between 
June 4, 1934 and May 7, 1935 (it seems that before June 1934, instruc- 
tions sent out by the Code Authority were in the form of Bulletins and 
that from that date such instructions were issued as Explanations) 
thirteen pertained to the problem of price filing. By and large, their 
purpose was to explain the meaning of filing of "prices, terras anc] 
conditions of sale" and tended to broaden the meaning of that expression. 
Thus size and weight became a term or condition of sale as did conditions 
of time payments, guarantees, cooperative advertising, unpublished freight 
rates, inspection service and gratis training of salesmen. It would seem 
that whether the latter two constituted discounts or premiums would de- 
pend upon the value of the inspection or the training, but in either 



(*) Letter dated May 15, 1934 from J. S. Bryant, Secretary to the Code 
Authority for the Asphalt Shingle and Roofing Industry to Assistant 
Deputy Wil lam Lawson. In N3A Piles, Trade Practice Polder. 

9826 



• - 543 - 

event, they were deemed a part of the "rice and as such would have been 
publishec 1 . 

A brief summary of each Explanation, giving the number and the date 
it was issued, follows: (*) 

So. 1, issued June 4, 1934, required the publication of 
dimensions, weight and type of saturant , on slate roll 
roofing offered for sale in jumbo rolls. 

Ho. 2,. issued June 4, 1954, required the publication of 
'.veight, number of square feet and dimensions in price 
publication. 

Ho. 3, issued June 4, 1934, required the publication 
of offers to train salesmen for trade buyers as a 
condition of sale, 

No. 4, issued June 4, 1934, held that terms and conditions 
of time payments should be published as a condition of sale. 

No. 5, issued June 4, 1934, held that when completing 
materials were included in the order and not billed 
separately, a description of such materials should be 
ublished. 

Ho. 7, issued June 4, 1934, required price publication for 
new or altered items, offered for sale. 

Ho. 8, issued June 4, 1934, ruled guarantees issued in 
connection with industry products a condition of sale, re- 
quiring publication. 

Ho. 9, issued June 4, 1934, ruled cooperative advertising- 
offered to trade buyers a condition of sale which required 
publication. 

Ho. 11, issued July 18, 1934, reouired publicity of un- 
published freight rates. 

Ho. 12, issued August 22, 1934, required publicity of number 
of decimal points used in deducting discounts or computing 
delivery charges. (Release by HRA said not to constitute 
approval of freight equalization, insofar as explanation 
related to delivery charges.) 

Ho. 13, issued December 26, 1934, requested each member of 
the industry to publish in his merchandising plan or price 
list tiie date on which invoices were issued. If that date was 
not the date of the shipment, each member was required to give 
the maximum time elapsing between the shipment date and the 
date of the invoice. 



(*) See Explanations, in HPA Piles, Explanations Polders 
9826 



- 544 - 

No. 14, issued February 5, 1935, ruled that should a 
member of the industry establish prices , terras or conditions 
of sale affecting any particular trade "buyer or class of 
trade buyers not previously defined, such information should 
he filed. This might be done in his merchandising plan or 
supplement thereto. Should a new merchandising plan be issued 
it would be considered that this new plan canceled all prev- 
iously issued supplements. 

No. 15, issued May 7, 1935, ruled inspection service, 
furnished in connection with sale of industry products for 
built-up roofs, to be a condition of sale and as such should 
be published, 

E. U nauthorized Activities 

The opinion as to what constitutes an unauthorized activity varies 
a great deal with the individual interpretation of the code provisions 
from which the source of power rises. According to the interpretation 
of the Code Authority, that body was at all times well within bounds of 
the power granted it under the Code. At the same time some less generous 
or less biased individual might have questioned many of their rules and 
regulations. In at least three instance? oil out the Code Authority seem 
to be in accord. It was rather generally believed that in its activities 
in relation to custome"'" classification, elimination of set-up warehouses 
and general industry advertising program, the Code Authority was either 
exceeding its power or was engaged in activities which were foreign to 
the power delegated to it, 

1, Misclassification Meetings 

The Code, inArticle VIII, granted to each member of the industry 
the right to classify customers inany manner that it saw fit, but re- 
quired that the classifications so established must be published to the 
trade and filed with the Code Authority. Also reserved to the individual 
members was the right to change their cla.~s definitions of their own 
volition, providea these changes were published in the sane manner as the 
original publication and filed with the Code Authority. Article VI, Sec- 
tion 2 (e) extended to the Code Authority the power to study the advis- 
ability of a uniform merchandising plan and to make recommenda.ti.Gns to 
the Administrator concerning this problem. Upon the receipt of these 
recommendations the Administrator ■ was to hold such public hearings as 
he deemed advisable and should these recommendations be aijproved they 
would operate with full force and effect. The proposed Uniform Mer- 
chandising Plan came up for hearing March 20, 1934 (*) but met with oppo- 
sition on all sides and was never approved. 

The purpose of this Plan was to establish uniform customer classes and 
to fix uniform terms and conditions of sale. On May 25, 1934, the Code 
Authority announced to the members of the industry that in June there would 
be held a series of Hegiona.1 meetings to discuss the problems of misclassi- 
fication of customers. On June 4, 1934, the A§sista.nt Deputy Administrator 

T*T Infra, p. 
9826 



- 545 - 

wrote the Co> ; Authority (*) requesting that prior to these Regional 
meetings the Code Authority call to the attention of industry members 
the fact that they might classify customers in any manner they wished; - 
in addition, this information was to "be made known to them in the 
form of an announcement at the beg inning of each meeting. 

If the above letter was intended to dissuade the Code Authority 
from holding these meetings it failed in its purpose, for not only 
were the meetings held in June but others followed. In August notices 
were sent to members that another series of meetings would be held in 
September and it was requested that those filing complaints of mis- 
classification should bring to the meeting evidence of the alleged 
violation and that such allegations be specific and refer to one 
instance only. For some reason these meetings were delayed and a 
letter of October 1, 1934 (**) notified the members that the subject of 
Misclassification had been up for discussion at the 'General Industry 
Meeting 5 on September 13 and that regional conferences would be held in 
November. The schedule when announced allowed for sufficient lapse of 
time for an agent of the Code Authority to attend all meetings. (***) 
The effect of and the reaction to these meetings can best be summa- 
rized by quoting from the memorandum from Peter Stone of the Research 
and Planning Division. (****) In the memorandum Mr. Stone pointed to 
the increases in prices since May 14 and explained them in the light 
of the . 'Misclassification Meetings': 

"For some time past we have been receiving complaints 
as to the increased prices of asphalt shingles and as- 
phalt roofing. Particularly retail lumber dealers have 
called our attention to the fact that since May 14 
three price increases have gone into effect up to 
July 12. Since the volume of construction and hence 
the volume of asphalt shingles has decreased, it does not 
appear that such an advance is justified on the basis 
of volume moved nor on the basis of demand, and further, 
since an increased price will have a tendency to slow 
down recovery, we have attempted to examine the sources 
of unwarranted price increases to see whether any 
section of the code might be responsible therefor. 

Data has been obtained on certain asphalt roofing 
products, showing the prices from October 4, 1933 
to July 12, 1934. The following table shows 
comparable prices: 

(*) Letter dated June 4, 1934, from Assistant Deputy Administrator 
William Lawson to the Code Authority for the Asphalt Shingle 
and Roofing Industry, (in LIRA files, Code Authority Letters 
Folder) . 

(**) Letter dated October 1, 1934 from the Code Authority for 

the Asphalt Shingle and Roofing Industry to Members of the 
Industry, (in KRA files, Trade Practice Folder) 

(***) Ibid 

(****) Memorandum dated Sept. 6, 1934 from Peter A.Stone, Division of 
Research and Planning to Bev rly Ober, Deputy Administrator. 
(In KRA Files, Protests Fold. r) 

9826 



- 546 - 

Price Price Price Price 
11/30/33 5/14/34 6/5/34 7/12/34 

10" Strip Shingle $4.20 $4.20 $4.38 $4.78 
553 Rolled Roofing 1.45 1.45 1.50 1.70 

It may "be noted that since Lay strip shingles have ad- 
vanced 14/j while rolled roofing has advanced 18-g^o. 
Construction contracts awarded have declined in a similar 
period from $134,000,000 in Hay to $119,000,000 in July. 

An examination was made of the various "bulletins, inter- 
pretations and circular letters issued "by the Industry's 
Code Authority to Members of the Asphalt Shingle and 
Roofing Industry and such examination had revealed the 
following information: 

(l) Of the various "bulletins, interpretations and 

circular letters issued "by the Code Authority to 
members of the industry, the only one that would 
tend to preserve or control prices is the one of 
May 25, 1934, which was directed to members of the 
industry relative to classification of customers. 
This letter directed the calling of meetings in 
various parts of the country with respect to quali- 
fications for the trade. Such meetings appear to 
be a device for bringing about the uniformity of 
classification of customers and classification of 
discounts; this in spite of the fact that Article 
VIII of the core permits an individual to state his 
own classification for each kind of buyer. The 
fact that these meetings were held during the 
period of the price increases mentioned above, 
indicated that there may be some connection 
between these original meetings on classifica- 
tion of customers and price increases." 



2. "Set-Up" Warehouses 

On September 21, 1934, the Code Authority sent out a circular 
letter listing the warehouses of the industry as revised September 
20, 1934. Th Asphalt Shingle and Roofing Industry at its meeting 
in White Sulphur Springs, West Virginia, October 25. and 26, 1934, 
passed a motion that the Code Authority study the problem of 'set-up 1 
warehouses with the view of issuing a ruling to eliminate them. It 
would appear that this type of warehouse is in a sense a fictitious 
appendage of the manufacturer whereby storage space is rented from a 
favored customer, an arrangement which might be used as a means of 
evading the published prices. Although the exact relation between 
the meeting and the list is not apparent, the two were joined in the 
letter of December 7, 1934, from Assistant Deputy Plimpton to the 



QftPfi 



- 547 - 
Code Authority (*) indicating some casual relation. 

The letter from Mr. Plimpton was written -at the suggestion of 
Mr. T. R. V-ughn of the Legal Division and it requested the Code Authori- 
ty to cite the derivation of their power to carry on this activity. Mr. 
Plimpton's letter follows: (**) 

Our attention has "been called to the circular letter sent 
out by your Code Authority on September 21 and containing 
a list of warehouses revised as of September 20, 1934. 
Apparently the sending out of this list is outside the 
scope of the Code. You can appreciate, of course, that we 
are not in any position to approve or even comment on action 
by the Code Authority unless said action is specifically 
authorized by the Coce. We would like to get your opinion, 
therefc.o, as to just why the Code Authority should attempt 
to pass on the elimination of certain types of warehouses 
assuming that there is an enabling provision. 

Mr. J. S. Bryant, Secretary to the Code Authority responded to 
the above query on December 12. He stated that the authority for this 
activity was derived from Article VII, Section 2, which Article and 
Section governed the filing of changes in price, terms or conditions 
of sale. Mr. Bryant pointed out that any such warenouses established 
in the neighborhood of a favored customer would result in a more ad- 
vantageous price and he quoted from merchandising plans of members of 
the industry to substantiate this assertion. No direct attempt was 
made to justify the elimination of these warehouses. 

Apparently this explanation was not satisfactory to Mr. Plimpton 
for on December 15 he called the matter to the attention of the 
various Advisory Boards and asked for a conference on December 19.(***) . 

There seems to have been a difference of opinion as to the 
'legality' of these activities. F. J. Parchell, Administration Member 
of the Code Authority, wiote the Assistant Deputy on December 20 stating 
that it seemed to him the circular letter was entirely in order but 
that if the Code Authority attempted to prohibit the use of 'set-up' 
warehouses it would be a matter for submission to the Administration, 
The Consumers' Advisory Board, in a memorandum of January 22, 1935, 
suggested that the Code Authority be informed that any attempt to eli- 
minate any type of service was patently beyond their power and that a 
list of warehouses and application of other price terms of members of 
the industry should be broadcast to the trade in the same manner as 
the individual, lists. 

(*) Letter dated December 7, 1934 from Assistant Deputy Administrator 
Plimpton to the Code Authority for the Asphalt Shingle and 
Roofing Industry, in NRA files, Merchandising Plan Folder. 

(**) Ibid 

(***} . Memorandum dated December 15, ,1934, from Assistant Deputy Ad- 
ministrator R. B. Plimpton to the, Advisory Boards, (in 1IRA 
files, Trade Practice Folder) . 



- 548 - 

The final solution of this pro"blem"is not known though it would 
appear that the Code Authority desisted from further attempts to eli- 
minate these warehouses as no further comment is found in the files. 

3. Industry Advertising Program 

In September 1934, Mr. Plimpton asked the opinion of the Legal 
Adviser as to the legality of a Code Authority activity which had recent- 
ly come to his attention. The Code Authority was undertaking to spon- 
sor a natioiial advertising campaign of the products of the industry. 
The program was to he a cooperative on which would tend to promote 
the sale of the industry product in general rather than those of any 
individual company. An opinion was requested of the Legal Division re- 
garding the scheme as a subject of review or control by NRA; the proper 
exercise of power granted the Code Authority in the Code; what provision 
authorized such a plan and, regardless of the authorization, what con- 
sideration of policy or public interest would ' justify any particular 
form' of supervision by NRA. (*) To these interrogations, Mr. Price of 
the Legal Division replied that when completed and in operation it was 
not a matter for review by the NRA unless the Coce Authority continued 
to sponsor it, that it was not a proper exercise of power granted in 
the Code, as the Code conferred no such power, and that the NRA had no 
right to supervise unless it was submitted by the Code Authority under 
Article VI, Section. 2,. (e) . Mr. Price stated further that if submitted, 
the plan would not have the approval of the Legal, Consumers' or Re- 
search and Planning Divisions and that the plan should be discouraged. 
(**) In his memorandum Mr. Price went on record as being of the 
opinion that only the Federal Trade Commission could prevent such acti- 
vities on the part of the industry. 

P. Amendments 

During the life of the Code, the Code Authority proposed some 
twelve to fifteen amendments, the final disposition of which fell into 
four classes; those approved, those not approved, those withdrawn, and 
those pending at the time of the Schechter Decision. Some of these pro- 
posals had no bearing on the price filing activities or the economic 
effects thereof and for the purpose of this discussion will be ignored. 
An attempt will be made to treat the others briefly, giving due con- 
sideration to the significance of each proposal, whether approved or 
not. 

1. Uniform Merchandising Flan 

By authority granted in Article VI, Section 2 (e) the Code Author- 
ity was empowered to study the problem of merchandising plans and ma&e 
recommendations pertaining thereto. The Code became effective November 
20,. 1933, and before a month had passed (December 19, 1933) (***) a 

(*) Memorandum dated Sept. 26, 1934 from R.E.Plimpton, Asst .Deputy 

Administrator to Chester Price of the Legal Division, (in NRA 

files, Trrsde Practice Polder) 
(**) Memorandum dated Oct. 12, 1934 from Chester Price of the Legal Div. 

to R.E.Plimpton, Asst. Deputy Administrator, (in NRA files, 

Trade Practice (Folder) 
(***) Memorandum dated Jan. 19, 1934 from Asst. Deputy Administrator 
826 William Lav/son to the Administrator. (In NRA files, Central 



- 549 - 

preliminary draft of a plan was submitted to the industry. Copies of 
this plan were subjected to criticism of the NBA 'advisors, the Depart- 
ment of Justice and the Federal Trade Commission. 

In its essence, the plan was the same as that under which the 
industry was operating at the time the Bill in Equity was filed against 
it.(*) It included the same complicated system of customer classifi- 
cation, with practically identical definitions of customer classes and 
the same intricate scheme for related discounts. Its complexity all but 
prohibits an explanation and discussion here; however, the comments of 
the Department of Justice and the -Federal Trade Commission will indicate 
its scope and meaning. 

The Department of Justice commented that in deciding to approve 
or disapprove the Blan, the Administration must determine whether it 
wished to authorize "this combination to fix prices and to black list 
or white list its trade". (**) In its consideration the Department enu- 
merated thre . points which tended to make' for price fixing. It was 
noted that competition in this industry had in the past been on discounts 
rather than on basic price lists; that the history of previous re- 
stricting maximum discounts had shown that the maximum figure had be- 
come the fixed figure; and that the third major fac'tor of legitimate 
price, charges for transportation, were fixed in minute detail. In 
conclusion, Mr. Stephens stated: 

"We have previously drawn attention to the possibilities 
involved in placing business in patented products under a 
system of restraints along wita the non-patented, and to 
the fact that one of the largest companies of the group, 
the owner of most of the patents previously charged with 
various forms of unfair prices, particularly chiseling the 
business of its licensees, is represented on the Code 
Authority to which these licensees report the names of 
their customers and every detailed information. 

On the whole this Department is forced to the conclusion 
that the system of prices outlined by the proposed plan 
cannot be carried out except through the exercise of 
monopolistic control by the combination." 

The Department took occasion to make further comments in a letter of 
January 4, 1934. At this time the attention of the Administration was 
called to the striking similarity between the proposed plan and the 
practices covered by the Government's complaint. Mr. Stephens wrote 
as follows: (***) 



(*) Supr; , p. 541. • 

(**) Letter dated December 23,1933 from Harold A.Stephens, Assistant 

Attorney General to NBA. (Copy in Department of Justice Files, 

Folder 7) . 
(***) Letter dated January 4, 1934 from Harold M. Stephens, Assistant 

Attorney General to Assistant Deputy Administrator Lawson. 

(In NBA Files, Trade Practice Folder). 



- o50 - 

"The practices covered by the government', s complaint are 
virtually -the same" as those covered by the rules submitted 
to the Administration. The action was be.^un three years 
ago and is still pending, some doubt 'has arisen as to the 
appropriate method of procedure in the light of present 
circumstances. It is quite apparent that the government 
should not proceed to a determination of the matter if 
the proposed practices are now put into effect. However, 
it is felt that 'your own Administration should be entirely 
free to take such action in connection with the Oocle and 
the proposed changes as it may deem appropriate." 

The attack of the Federal Trade Commission centered on the practice 
of freight equalization which was criticized most severely. It was 
alleged that this practice would tend to freeze channels of distribution, 
stifle competition, maintain artificial price levels and unreasonably 
incre.ase prices. The Commission intimated that the plan could be 
successful (from the point of view of the industry) only when other ele- 
ments of price fixing were present. 

When the proposal came up for public hearing, March 20, 1934, 
protests were made by members of the industry, the Retail Lumber Dealers, 
reserve supply companies, the Hail Order Association of America and 
wholesale hardware dealers. (*) In every instance the protests con- 
sidered only the effect of approval of the plan on the particular group 
represented by the protestants; consequently it was charged that if 
approved the plan would be discriminatory. 

Tlie Advisory 3oards, with the exception of the Industrial Adviser, 
recommended that the plan be not approved. The criticisms from this 
group were more general but they concentrated on the opinion that the 
plan would result in price fixing and that in Section VII, paragraph D, 
an attempt was being mr.de to establish resale price maintenance. The 
latter feature was an innovation since the Industry Flan of 1929. 

After the hearing, numerous conferences were held between industry 
representatives and the Administration though nothing tangible resulted 
from these discussions. Wo definite action was taken and the plan was 
never approved or disapproved. Despite the adverse criticism voiced 
on all sides, the Code Authority contended to the end that no disposition 
was made of the matter and that it was still pending. 

2. Liquidated Damages Agreement 

The only amendment successfully proposed by the Code Authority 
provid.ed that members of the industry might enter into an agreement 
between themselves providing for liquidated damages in cases of Code 
violations. 

The proposal as submitted deviated from the Model Code Provision 
(O.M.II - 1626.1) in two instances. A surety bond ranging from 
$5,000 to $50,000 was provided for, and the Code Authority was empowered 

(*) Transcript of Public Hearing, March 20, 1934 
9826 



- 5j1 - 

to make equitable reductions in the amount of damages. Also the agree- 
ment fixed penalties with regard to violations of the labor provisions 
of the Code and an amount equal to 25 per cent cf the actual selling 
price of the products involved in all other violations. 

The Notice to be Heard (A.G. 99-15) issued January 16,1935, 
elicited complaints from two members of the industry who expressed the 
opinion that small manufac triers might be injured and that the amend- 
ment was unnecessary and might be illegal. (*) The Advisory Boards 
were equivocal in their reports expressing satisfaction with parts of 
amendment, while making objections to other parts; also, they expressed 
dissatisfaction with the failure to include some provisions for super- 
vision by NHA. The Consum-rs' Bonrd requested that the proposal be 
submitted to the Advisory Council for an opinion. This request was 
granted and .he Council recommended that the amenoment be not approved. 
(**) Despite this opposition the proposal was approved as Amendment 
No. 1, March 21, 1935. (A.O. 99-20). 

Thus through two proposed changes or additions to their Code, the 
Code Authority attempted to re-establish the plan complained of by t he 
Department of Justice. Kad it been successful in its sponsorship of the 
Merchandising Flan there would have existed the embarrassing situation 
of one branch of the government approving the very thing complained of 
by another. 

3. Miscellaneous Proposed Amendments. 

Two changes suggested by the Code Authority were designed to render 
more difficult evasions of filed prices. One of these dealt more speci- 
fically with the question of secret rebates and stated that the offering 
or making of any discriminatory payment in the form of cash, refund, 
commission, services, etc., would constitute a violation of the Code. 
This proposal was made early in the period of Code operations but was 
withdrawn when the Cor^e Authority learned that if the Code was opened 
for consideration of amendments the whole document immediately became 
vulnerable. The second of these proposed alterations would have re- 
quired members of .the. industry, when quoting or selling an industry 
product in connection ith any other product, labor or service, to 
quote and invoice these other products or services separately and at 
not less than their respective current market value. 

Two further proposed mutations of the Code would have had the 
effect of li iting the freedom of members in determining their prices, 
terms and conditions of sale. In the group of proposals submitted in 
the spring of 1934 (this was the group withdrawn by the Code Authority) 
appeared one which would have permitted the Code Authority, if they 
found that an emergency existed, to cause to be determined the lowest 
reasonable cost of products. This cost, upon approval of the Adminis- 
trator, was to constitute the lowest price at which goods could be sold 
or offered for sale during the emergency. The other of these proposals 



(*) Code History, F. 24 

(**) Memorandum dated February 15, 1935 from Willard Thorp to NIHB. 
(in NRA files, Amendments Folder) . 



would have limited the amount and effective length of bonds and guarantees. 
It was recommended that the amount of the guarantee he limited by the 
actual cost of the products and that its duration not extend for more 
than two years. This recommendation was pending at the time the Code 
expired. 

One suggested addition is interesting because of its implications. 
Included in the previously mentioned proposals, which were withdrawn, 
was one permitting "Secondary Manufacturers" to quote prices and sell 
products at a net price lower than those quoted by "Primary Manufacturers". 
To this suggestion the required two-thirds majority of the members of 
the industry consented. If put into operation this plan ir 'ould have 
allowed small manufacturers, with the consent of the other manufacturers 
and after having demonstrated a need to quote and sell products 7-^ per 
cent below the price quoted by the larger concerns. In order to avail 
itself of this opportunity the recipient was required to agree to throw 
his bocks open to investigation every three months. If at the end of 
any peiiod it appeared that the business, of the favored concern was in- 
creasing more rapidly than the of the industry in general, the differ- 
ential would be decreased in proportion. Thougn this proposal was 
never presented for consideration by the .Administration, Mr. Ralph 
fuller, Vice Fresident of the Cooper Company (one of the "Secondary" 
manufacturers) stated in an interview, Jmuary 6, 1935, that the prin- 
ciple had been put in operation by the Code Authority. In explaining 
the reason for this seemingly altruistic spirit on the part of the 
larger members of the industry, Mr. Abrahans, ( *) Chairman of the Code 
Authority remarked that it was deemed wise to "control" in this manner 
the small members rather than to permit them to operate without "control". 
The first problem that presented itself was how, in the absence of 
fixed prices, coulr the "Secondary" manufacturer determine the price at 
which he could o_fer his products for sale. Unless the prices of the 
"Frimary" manufacturers were uniform and determined, a filed price that 
was 7i per cent belov the price of one manufacturer might be more or 
less in relation to the prices of another. 

II. ADMIIII STRATI ON BY II. R. A. 

As measured by the administration of other codes, that exercised 
in regard to the code for the Asphalt Shirgle and Roofing Industry was 
rather vigorous. As has previonsly been mentioned, Assistant Deputy 
Administrator Laws on in the beginning established the policy, which was 
continued during the life of the Code, of reviewing the Bulletins and 
Explanations of the Code Authority before they were distributed to the 
industry. While it does not appear that the contents of these documents 
were frequently altered as a result of these previews, the fact that the 
Code Authority was aware of this supervision, might in itself have 
acted as a desirable influence. It should be noticed that the Code 
Authority rather welcomed this supervision. The Institute and most of 
the members of the Code Authority were operating under the cloud of the 
Department of Justice complaint and were glad to have an official 
approval of all of their activities. 



( *) Interview, January 10, 1936 



9826 



- 55? - 

When it -was felt by the NHA officials"* that an activity or under- 
taking of the Code Authority was beyond the bounds of its powers, no 
hesitancy was displayed in calling the matter to the attention of the 
responsible parties. This spirit was exemplified in the action of the 
Assistant D', ity nnd his Advisers in regard to the unauthorized 
activities; (*) and, is further indicated by the price study conducted 
by the Research and Flanning Division. (**) 

At no time did the Administration find it .necessary or desirable 
to issue any unusunl or unique Administrative or Executive Orders. 
There were a total of twenty-one Administrative Orders, all of which, 
with the exception of Order No. 99-20 approving the Liquidated Damages 
Amendment, were routine in nature or pertained to wages and hours. It 
is felt that none of these merit special attention. 



(*) Supra , p. 544 and ff. 
(**) Supra , p. 545. 



9826 



•>- 554-«- 

CHAPTEP VII 
COMPLIANCE 



At first glance it would appear that the proolem of obtain- 
ing compliance witn tne trade -practice provisions of the Code was 
never a matter of great concern. Only three trade practice violations 
were cited to the Compliance Division. This serenity, however, was 
apparent rather than real. In most instances of violations the Code 
Authority preferred to handle the complaint themselves and in many in- 
stances the allegations could not be supported by evidence, The 
reticence of the Code Authority with regard to submitting alleged vio- 
lations to NP.A for settlement may have been occasioned by dissatisfac- 
tion with the disposition of the few cases reported. This feeling 
grew out of the disposal of the Fry Cas- (*) wnich was a thorn in the 
side of the Code Authority throughout the life of the Code. 

I . ENFORCEMENT AGENCY 

It will not be necessary in this discussion to differentiate 
between the Code Authority as an enforcement agency and the Trade Prac- 
tice Comolaints Committee. By Administrative Order 99-12 creating a 
Trade Practice Complaints Committee, the Code Authority was named to 
constitute that body and by this Order the Code Authority was authorized 
to appoint such committees to assist in the handling of complaints as 
were de°med necessary. It is thought that this privilege was seldom 
exercised, the Tr-de Practice Committee itself nandling moot of the 
complaints . 

The Ord^r of Approval also set out rul°s to govern these 
agencies in the handling of complaints. In general the procedure re- 
quired that wnen a complaint was filed the respondent must be notified 
within five days and allowed ten days in which to file a reply. If 
at the end of the alloted period no response was forthcoming the 
respondent should again be notified, this time by regist-red mail. 
Should the alleged violator plead guilty to the accusation, and there 
existed extenuating circumstances wnich would have the effect of an 
avoidance of any animus f erandi , the case might be closed. On the 
other hand, should the accused admit the act alleged but tak" issue on 
the legality of that act, he should receive a tnird notification citing 
the provision or provisions violated and fixing the time and place of 
the Hearing. The Hearing held, should there still be differences of 
opinion, the case could be appealed to the Trade Practice Complaints 
Committee, assuming that the origin-1 hearing was held by one of their 
agencies; or the case, with all documentary evidence, could be sub- 
mitted to the ITEA for settlement. 

No particular effort has been made to explain the tecnnicali- 
ties of procedure under which complaints were adjudicated, as the 
question of jurisdiction or manner of handling was never an important 
issue in eitner the court of first instance or in tne appellate division. 



( *) Infra, p. 355, 
9«26 



- 555 I'- 
ll. METHODS OF GAINING COMFLAINCE 

Most violations cit^d under the Code fell into the class of 
technical infringements arising out 'of honest mistakes in filing and 
estimating discounts. In such instances the problem of the Committee 
was simple. The error was Called to the attention of tne violator 
and the necessary correction was made. 

In the more stubborn cases the threat of NBA procedure was 
used to obtain compliance. In the early period of the NRA this weapon 
was reasonably effective; however, as the Administration comoliance 
activities became retarded by policy determinations, which were delayed 
in their appearance and which were even slower in operation, tnis 
tnreat ceased to be a menace to violators. It is possible that this 
condition furnished the incentive for the liquidated damages -amendment. 
By virtue of tnis provision members of the Code were required to post 
surety bonds as guarantees of adherence to the Code provisions, and in 
cases of violations "fines" could be levied by the Trade Practice 
Complaints Committee. Whether or not tnis would have b=en an efficacious 
instrument c?n be judged only by ore-code experience, as its proposal 
and approval occurred so late in the Code period that it was never put 
into operation. The success of such an agreement under the Institute 
leads to the conclusion that had the plan been out into operation the 
number of violations would have decreased very markedly. 

III. NUMBER OF VIOLATIONS 

The available information relative to complaints and procedure 
is not sufficient either in quantity or quality to permit an enlighten- 
ed discussioii of tne nature of the cases which were called to the atten- 
tion of th° enforcement agencies. An occasional reference in the Min- 
utes of the Code Authority indicate only that the problem existed. As 
far as possible this information has been suoolemented by interviews 
with memoers of the Code Authority. (*) 

The Minutes of the Code Authority meeting of April 9, 1934, 
report 138 complaints of which 4? were pending, and the Minutes of 
May 1, 1934, report 183 complaints with 54 pending. Little can be 
derived from these figures save that complaints were filed in con- 
siderable numbers. What happened in the cases disposed of and the 
nature of the accusations are not shown. 

According to members of the Code Authority, in only two 
instances was there failure to file prices and in one of these it 
appeared that the respondent did not know that this was required. 
The other refused to file on the grounds that he had not offered 
products for sale but in the event ne should, prices would be filed 
in accordance with the Code provisions. In the latter instance, the 
Lloyd A. Fry Roofing Company of Chicago was involved. The complaint 
is difficult to analyze since the case was probably complicated by 
personalities. Tne respondent was the same company which had been 



!*) Interviews with L. R. Hoff, Herbert Abrahams and Ralph Muller, 
January 7-10, 1936 



- 556 - " 

involved in differences with the Institute and the Patent and Licensing 
Corporation in 1928, and it may be that the difficulties arose out of 
ill-will or persecution. Seemingly, Fry was engaged. in manufacturing 
products for one of the mail order houses and was not engaged in com- 
petition with other members of the industry. As final • disposition was 
never mad" of the case, its merits can hardly be discussed here. 

More vexations but less serious were the allegations of eva- 
sions of filed prices and misclassifications . In many instances, of 
course, accusations arose out of loss of customers or failure to secure 
bids and they lacked substantiating evidence other than the suspicions 
of the .complainant . In most cases where actual- violations were found 
they were shown to be the result of an unintended mistake. As evidence 
of 'this, members of tne Code Authority stated that there were very few 
"repeaters". There were, however, some half dozen "habitual • criminals" 
who were frequently cited for having granted rebates or in some manner 
violated their filed prices. (*) 

IV. SUCCESS OF ENFORCEMENT '. aGETjC I ES 

From the above information, it is difficult to evaluate the 
success of the enforcement bodies. Briefly, Che facts show the com-' 
plaints filed were' numerous, but measured by complaints pending and 
those submitted to tne NF.A the efforts of enforcement were cquite 
successful. Tne sponsorship of the liquidated damages amendment as an 
agency of compliance would indicate, however, that it was not all that 
it might or should have been. 



( *) Interview wita members of the Code Authority, January 7-10, 1936 



9826 



- 557 - 
CHAPTER 71 1 1 

ecoitc;;ic lttlcts of phici: r'iLi:;o 

A conplete discussion of the ceo .0 lie effects would necessitate 
separate consideration of the interests of the different grouos which 
night he affected hy the pricing practices of the industry. Among the 
classes which '?ould have to he considered pre the manufacturers, dis- 
tri jutors (including the varions classes) rid consumers, neither tine 
nor r, ip.ee will permit such a detailed treatment of the interests of 
these many groups. In lieu of this, detailed consideration '/ill he 
given here the more general aspects, centere ". around nrices and price 
• love: ients. 

i. prohotio:? or piuch stability 

The ercpression "orice stability" should he considered in a re- 
lrtive sense. "Ton any other ners jective there is seldom, if ever, 
such s thing as stahle orices. In its stricter interpretation the 
tern signifies a fi:-:ed and i _i _ :ohile level that vrould lose its character- 
istic of stability ir ith each change. Prices, therefore, will herein 
he considered as more or las c .> stable as nriee changes occur nore or 
less frequently curing a given jeriod. 

According to testinony given in the suit between the Patent and 
Licensing Corporrtion and TTeaver-TTall , nrices normally changed in the 
Industry about eight or ten tines a. year. (*) Evidence in the sane 
case stated that prices had not chrn ;ed between 1930 and A:ril 11, 
1932. (**) Figures Of the Bureau of Labor Statistics do not bear out 
this statement of no price changes during the above period, but do 
indicate considerable st bility. Throughout the twelve months of 1931, 
according to the Jureau of Labor Statistics, the ~verage wholesale 
price of medium roofing was $1.32 per square with comparable rigidity 
being evidenced in other products. A survey of this compilation from 
1926 through September 1935 indie tes considerable more stability dur- 
ing periods of vigorous enforcement of the price filing agreement. 
(See table page 12U.) 

It may be said without too much fear of contradiction th t price 
publicity in the Asphalt Shingle and Roof in Industry aided in the 
stabilization 0:" prices. I7b.eth.er or not this is an indictment of price 
filing practices is largely a natter of opinion. Eliminating consider- 
ation of orice trends or nrice levels, strbility of trices in no way 
aim ears vicious. 

Prices can hardly be treated in the abstract manner just indicated. 
The tern price stability, being used as a relative one, implies some 
orice movement. The more important question is the direction of changes, 
were these few fluctuations uniformly uoward or uniformly downward or 
were they as ant to move in one direction as the other? Some light will 
be thrown on this subject la.te.r in the discussion. 

(*) Patent and Licensing Corporation 7. We&ver-Vall. Tr nscrint of the 

hearing, o. 1053. 
(**) Ibid. n. 1049. • 
9826 



-553- 

II. PRICE uITIEOEIlITY 

Prices in the Asphalt Shingle and Roofing Industry rT ere and are 
unifom. The treatment of price uniformity" could almost start and stop 
with that sentence. On rare occasions and for short -periods of tine 
it is possible to find examples of lack of corrolete uniformity, "but 
those instances are the exceptions rather than the rule. So perfect 
was this record that generally there was absolutely no variation in 
prices, terns or conditions of sale. 

The identity which was apparent in prices also existed with re- 
gard to merchandising plans, which were a part of the price filing 
practice in this Industry. In the earlier agreement the Institute 
adopted a uniform plan of customer classification and attempted 'to have 
one included in the Code. Tailing to get the consent of the Administration 
for the inclusion of this provision, the individual members published 
a plan which was applicable to their products raid customers. The in- 
ability of the sponsors to have the uniform merchandising plan approved 
could have had no more serious results than inconvenience. A survey 
of the plans published ~oy the different commies verifies the fact that 
they coincided almost to the point of identity of verbiage. (*) 

The similarity of prices is best pointed out by citing a single 
instance, during the Code period, when there appeared to be a lack of 
uniformity. The first filing showed a list price, quoted by most compan- 
ies, of $4.55 per square for individual Shingles to wholesale carload 
distributors, with a 2 per cent Cb.sh discount and either a 5 percent sales 
discount, when the merchandise was shipped directly to the consumer or 
dealer, or a 3 per cent stock discount when shipped to the distributor, 
the 3 or 5 per cent deduction to be applied before the cash discount. 
One company filed a list price of $5.25 per square for the same product 
to which pas applied, in audition to the above discounts, a 33.3 per 
cent reduction as a tra.de allowance. In both cases the net price cuoted 
vras $4.13. (**) 

This uniformity of prices is not conslusive as to price control. 
Products in the Industry were standardized to a -point of exactness; the 
market was national rather than, local, and the price structure embodied 
the principle of freight equalization. Each and all of these factors 
would tend toward a uniform price. At the same time price uniformity 
taken in connection with abnormally high prices may be strong evidence 
of price control. 

A. ! if l- chandi sing Plan s . 

It has already been noted that prior to the Code the Institute had 
sponsored a uniform merchandising agreement and that efforts were ma.de 
to have such a plan incorporated into the Code, It was provided in 
Article VIII of the Code that each member of the Industry should issue 
his own merchandising plan free and independently of every other member, 
subject to such changes and alterations as were desired, so 



(*) In 'PPA Piles, Prices Folder. 
(**) See Table, p. 568. 

9826 



long as those revisions mere-- oublicised Ln bne same manner a s the ori-i- 
ual plan. 

In the light of the previous discussion of the 1929 merchandising 

Plan and its comle'xit- of o jcr-tion : U - 1 survey of t.iose filed uin'.er 
the Code may he of value. Again uniformity is evident and the plans 
are so lil:e the on^ of 1929 that it -rill only be necessary to point 
out the differences. Customer classes mere laintained pith very little 
qhange in title and with no grert deal of difference in definition 
and methods of qualifying. The former jobbers ^ere noted -as TThole- 
sale Onload Distributors, and to qualify for this cl^ss a dealer had 
to meet all the requirements laid domn by the Institute in its former 
.'•"• lent, v/ith t ,-r o errcentions — (1) it r r as no longer left to the 
determination of Dun and Pradstreet, and (2) rather thai maintain an 
average stoc 1- of 10,0 pounds it was no- • necesar;'-' to have on hand 
an average stoc 1 : of 80,000 mounds. Dor other customer classes there 
night have been similar uninmortant differences. The identical systems 
of shimming zones, methods of transportation, freight equalization and 
quantity discounts '-'ere continued. 

in. pfjc:: a:d phice ::0Y2lki:?s. 

An intelligible treatment of trices as evidence of the economic 
effect must consider de , i and 'production costs', as they -'ould tend 
to influence nrices. Certain funda ental economic theories are in- 
voled which -mil aid in the inter jret~tion of price changes. It is 
generally accepted,, for e:ca::ple, that with suoply remaining constant, 
mrices will var: r with demand an." it is also generall"' - r-cne ated that 
prices bear some relationshi > to costs of mm mart inn. A brief dis- 
c"asoio:i of these two factors may be of some value. 

It was stated in Cap iter 'II above^*) that demand for the -products 
of the Industry arose out of the volume of business of the building 
dividion of the construction industr/. for study relative fig- 
ures are more enlighten i ig than mm absolute figures. ureau of Labor 
Statistics based on bu Idi .• Demits shorn a. decrea.se in. total build- 
ing in 1933 of about 10 ?er cent, and increases of 5 >.er cent and 
170 jer cent res mectivel"'- in 1904 ->nd 1900. These f i ures would in- 
dicate that the lo - for bu.ilc-.ing consT,ructio:a -as reached in 1953 and 
that it remained fairly constant during 1933 and 1934. Demand, for the 
-orouaccs of the industr;'' failed to increase bet een 1900 and 1934, 
but increased aomreeia.bly in 1905. Prices, assuming they mere affect- 
ed by no other factor, should have reflected the chan ;es in demand. 

Variations in cost:; of production are more difficult of deter- 
mination. In its remort on the administration of the Code, the Coue 
Authority stated that labor costs had increased 14 per cent during the 
Code FerioO and that the cost of ram u teriais had inere sed in amounts 

ypi-'in-: from. 20 per cent to ?0 mer cent /***) 

(*) Supra, p. 506 & ff . 

(**) Supra, p. 516. 

(***) Report of the Administration of the Ccbe of "'air Commetition for 

the Asphalt Shin ale and Roofing Industry, p. 24. (in ITHA Files, 

Coo.e Authorit" Folder). 
9326 



- 550 - 

It was stated at that tine that the cost of dry felt haxi. increased 
from 61^ per hundred pounds to $1.28, after which there ^as a re- 
duction in -orice to Sl.OG. Assunin . ■ this later figure to be the 
average price, the percentage increase in ths cost of production 
TTOuld he a"opro::in."tely 15 per cent, (it was stated at the sane time 
that the cost of felt represented about 20 -oer cent of the total cost). 
Labor costs, as previously sta.ted, (*) in 1-31 represented about 9.0 
per cent of the value of the product, which would be ap mroxiriately 
6.3 per cent of the ccst of production. The 14 per cent increase in 
labor costs would, applying this ratio, represent s:a increase in the 
cost of production of .35 per cent. The other item of costs mentioned 
in the report was flux oil which had increased 20 per cent. Granting 
that the cost of flux oil represented as large a percentage of the total 
cost as did felt, which is probably a generous assumption,' this would 
have resulted in a 4 per cent increase in the total cost. The total 
increa.se in coses is estimated at ,18.85 per cent of costs or 12.54 per 
cent of the value of the product. (1933 material and laoor costs, 
including fuel and purchased electrical power represented 53.2 -oer 
cent (**)). 

Price movements during the above period Maintain sone relation 
to production costs but appear to have moved in opposition to demand. 
This most unusual reaction would indicate that prices might have been 
increased on a falling Market to maintain profits. Such an inference 
demands a closer scrutiny of prices and shipments. Tables 2 and 

3 seem to bear out this assumption. It may be seen from these tables 

that almost without an exception when demand for the industry's pro- 
ducts, as measured o r shipments, decreased, prices increased, and, con- 
versely, when demand increase."., prices decreased. Such a condition 
would seem to offer only one conclusion; controlled prices are little 
effected by demand and the tendency is to try to maintain profits by 
increasing oer unit profits. 

It is hardly possible to comoare price movements in this industry 
under price filing with price movements during periods when no price 
agreements was in operation. Since 1925 some form of -orice publicity 
has been in effect and ->rice data are n t available for earlier years. 
The comparisons must therefore be made between times -hen the agree- 
ment was observed and times when it was generally not observed. The 
original price publicity agreement became operative at the beginning 
of 1925 and prices at that time were 130.8, based on 1929 average. 
This high level was continued until about "Tovember, 1927 and no doubt 
broke down because of orice wars in the Industry. The decline in the 
latter part of 1927 and in the early part of 1928 occurred, despite 
the fact that juilding construction increased during that period. In 
the light of what has previously oeen sta.ted, this movement is not 
surprising and is apparent through the oeriod for which prices are 
available, though seemingly better regulate . when the agreement is 
being more closely observed, llore enlightening is the marked decline 
between the months of October and Ifovember of 1C27 and the great in- 
crease between iiay and June of 1928. In conoariiv; prices in these 
__ _______ 

(**) The Asohrlt Shingle nn. hoofing r.idu'tr-r, Industry Statistics 

Unit, January 1956, Table IV, p. 8. (in 1JRA Files). 
9326 



- Del - 

latter two months, the Industry ieeti:.i ; o ; ' "ay 1928 should be recalled. 
It has oeen sta.ted that _>rices '^ere discussed at this meeting. Such 
statements have been ?uid """ill no dou)t continue to be denied. In the 
face of these conflicting contentions, it see.:-, ir>ossible to explain 
the 19.5 increase in price on any grounds otner thrn collusion. Through 
a close analysis of prices it is possible virtually to trace the decree 
of success., as measured by ccnolia ice, with which price publicity has 
met. 

Absolute orices rose sharply during the Code perioa. Slate sur- 
faced roofing increased from $1.43 ner sonare in >y, 1933 to PI. 77 per 
square in June, 1935, or an increase of 19.5 per a.ent; Strip Shingles 
during the same period moved from 13.34 per square to $4.52, or an in- 
crease of 33.3 oer cent; Individual Shingles iron ; 3.35 to 85.00, or 
an increase of -29.9 oer cent. liedium Prepared Roofing, alone, decrea.sed, 
the nrice being 1.-7 per square in hay, 1935 and $1.44 in June, 1935, 
or a decl-ne of 2.0 per cent. The increase, as measured by the index 
of wholesale -orices, for the Code period was 19.4 oer cent. 

A vOodly portion of this increase was accomplished from June 1933 
through December 1934, a. period during which demand wrus increasing very 
slightly. Prom January 1135 to June 1935 the index price regained fairly 
constant fluctuating between 112.4 and 114.9, but by Se->te uber it had 
dro v-:ed to 111.1. During tl:is year building construction increased 
170 r,er cent over 1934. ho dov.bt 'igures for iore recent months would 
sho" a continued decline in >rices. (*) 

The concl ision - , to the effect en unices, oh nrice filing under 
the Code, must >e that nrices -ere better controlled and in generr-1 
moved in ommosition to the normal trend as rffecte^ by de 'and. 

Abnormally increased trices, of course, affect the consumer ad- 
"ersely. An increase in the mrice of roofing obviously means an in- 
crease in building costs.. Little complaint was voiced by consumers 
agaunst mrices because the costs of roofing materials represents a very 
small per cent of the total cost of a building. It is conservatively 
estimates that such costs arc only about 2.0 per cent of the cost of 
a. building, a twenty per cent variation in the mrice of roofing ^ould 
then result in only .4 uer cent variation in the total cost of the 
structure. 

Despite the iiroyxceptibility of the effects of irice variations 
in roofing materials on the total cost of construction, the tendency 
of irices to fluctuate in opt-qsition to de land, counled "-it]! similar 
movements in other building materials, would augment the seasonal and 
cyclical variations and would rebound to-the Industry by changing a 
malignant condition into a jernicious one. 

IV. P0SITI01! OP DISThlB-UTOllS 

The position of distributors wa.s not vitally affected by price 

levels or '-Trice trends, but it should be oorn in rind that the mer- 

(*) Hr. duller of Coooer Company stated, in an interview January 10, 1936, 

that there had been 14 nrice changes since the Schecter decision and 

that each of these changes had been u.own-'ard. 
932 5 



- 562 - 

chandising plans were a definite part of the pricin ; structure in this 
Industry.. The discussion of the econonic effects of price filing thus 
far has centered around prices, with the position of distributors Tien~ 
tioned only in relation to uniforn prices. 

By the individual merchandising slans, distributors were pla.ced in 
certriu grottos which determined the amount of discounts that they would 
,je allowed. The tendency of these plans to be uniform in regard to cus- 
tomer classifications definitely fixed the position of these consumers 
in relation to one another. If a particular distributor was placed in 
the Less Then C: rlord Wholesale Distributor class by one member of the 
industry, he -^ould be so placed by ail members. In instances where 
there was lack of uniformity in classifying, these differences were 
generally eliminated at the "misclassification meetings". The problem, 
therefore, so far. as the distributor was concerned,, was an individual 
one, (*); consequently objections were from single distributors whc 
conrolained .of the injustices of their position rather thrn voicin ; any 
opposition to the -vlan. 

A further exception w?is the objection of Mail Order Houses. This 
group op ,'os > the systen of ;rice filing ps well as that of customer 
classif icrtion. Piling was opposed on the ground that it was a viola- 
tion of a. confidence which affected not only the seller, but .also the 
purchaser, while the opposition to customer classification revolved 
around the fact that this ~roup was in urnger of losing its favored 
position as buyers. Thou h Mail Order "louses handled only about 5 per 
cent of the Industry's products, it was contended that the- deserved 
special prices rs a result of quantity purchases. These objections were 
of no av.ail and rs a result iiail Order Houses began mrnufacturing. One 
member of the Industry stated that -orice filing under the Code def- 
initely put hail Order Houses in the roofing industry. (**) 

V. IHCR2ASE III THE hUHJFH Oh : LJIUTA'TTUT-tZHS . 

In addition to this induction of hail Order Houses into the field 
of production, the Code Authority reported that five companies had en- 
tered the Industry by hay 3, 1934. (***) Uhether more new. capital 
came in between Hay, 1534 and Hay, 1955 is not known, though it may 
logically be inferred, since the report was made following the Schecter 
decision and no mention was made of companies entering the field after 
hay, 1934, that no further additions were made. 

(*) One exception to this individuality of objections is the crse of 
retail lumber dealers, who have or yerrs contended that they 
should be allowed a largff discount, in view of the fact thnt such 
concerns handle about 70 per cent of the soles of the Industry. 
The main force of this objection preceeded the adoption of the Code 
and has been mentioned previousl ■ in Chapter V. 

(**) Mr. Ste -man of TTerver-TTrll in an interview, January 13, 1933. 

( * * * ) Report of the Administrat ion or" the C ode of Fair Corn-petition for 
the Asphalt Shin-ale and Roo^in-'; Industry, p. 8. 
(In ISA Files, Code Authority Folder). 



9826 



- 563 - 

This coining in of new crmitaJ. is significant Then it is recrlle . 
that money m- . invented, ■ roba >ly, more ::autiously during this period 
thf 1 at o.ny other time in the history of American industrial develop- 
ment. The relr five a lount of capital represented by the five new 
comoanies c--n not be ascertained. 17umerica.lly they represented ah out 
18.5 -ier cent of the. total number of members of the Industry. Ko--- 
ever, it is reasonably certain thrt, as Measured by ca.mital inv seed, 
it --cul •". he onl ' a very snail mart of the total in the industry. The 
evidence is only indicative rather than conclusive, but the inolica- 
tions should not be lost. 

A. Limitation or Control of ~h.-odv.ct ion. 

At the sane time" that ne'-- capital was coning in, an amendment to 
the Co be ■ -as >eing sponsored by the Code Authority to limit rnd re- 
strict the u le and exSansioii of productive eoui inent* An inventory- 
had been i .e which slio 1 :■>■. that only 2.-.-: mer cent of the productive 
crpacity was in use rnd that twelve fully equin >ed factories were then 
inoperative. In addition, it ^as -tointe out thrt twenty factories 
had been closed in the five "errs receding the Code. It is quite 
certain that the closed factories were as a result of retirement by the 
producing embers, since during t l; t period only six factories vent 
into the hands of receivers and there were mo a nkniptci.es. 

As a result of these diametrically opposed movements, there arises 
an a.iom. lous situation which all but defies economic interpretations* 
There e::ists an industry in which because of prices, production, etc., 
present members deem it economical!; 7, erzoedient to remove productive 
equipment from the active field, r,u". which, at the same time as meas- 
ured by the same 'actors, remaims imviti \ : encu :h to attract criital 
when cap it: 1 is deaf to most invitations. 

VI. DIVERSION OF SALE TO SUBSTITUTE PRODUCTS 

It is doubtful whether or not prices of rsmhr.lt roof in • materially 
affect the demand as measured by use of substitute mroducts. This un- 
usual situation is true for several reasons, most of which have boon 
previously noted but wi" 1 1 be repeated here: the cost of roofing 
is a negligible factor in the total cost of the structure; asphalt 
roofings are generally thought to reduce fire hazards; much attention 
has been given to increasing the demand by increasing the esthetic 
apneal; rnd., as conware to other roofing materials, excepting wooden 
shingles, asphalt roofings are reasonable in mrice. 

The tendency fro:: 1922 to 1934 was for a.sphalt roofing to p- in 
business at the expense of wood shingles. (*) It seens, therefore, 
to resolve itself to the question o' "nether demand would not have 
increased more ra.midl - hi >rice been reduced. To answer that ques- 
tion "oa 1 d necessitate an assumption which could not be supported. 
The only noticeable indication thrt the Industry 'light have suffered 
to the benefit of substitute products is the decrease in shipments 

in 1934 as conmrrod with 1"." 3 3 -hen buildi.v -: increased sli htly. 

(*) Suora, p. 520. 

9326 



- 564 - 
CHAPTER IX 

O PIiTIOUS AMD ATT ITUDES OF I P. TES TES PARTIES 

The sajne concerted opinion among the members of the Industry, 
as to the desirability of price filing, seems to have existed at the 
end of the Code as was apparent during the period of Code formulation. 
In no instance does it appear that a member operating under the Code 
felt that the plan in any manner worked, a hardship on any individual 
firm or on any general class of members. This fact, better than any 
expressed opinion, depicts the attitude of the industry toward the 
system under which it was operating. This is true only with regard 
to the scheme considered is a whole and not to any specific pro- 
vision or proposal* As previously noted, (*) some particular phase, 
as the liquidated damages amendment or the proposed Merchandising Plan, 
drew opposition from among the membership of the Industry. From time 
to time suggestions were made toward its strengthening, but never that 
it should be discarded. 

This unanimity should, in itself, incite skepticism. Under 
ordinary or even unusual circumstances it would be hardly possible to 
design a plan which would be so eminently satisfactory to evpry mem- 
ber of the industry, considering both their independent and relative 
position. All but the most naive, when presented with a Utopia, would 
look around to see who was paying the "piper". Admittedly prices in 
the industry became more uniform and more stable, as did customer 
classes. Those factors, alone, would not prove the existence of 
price fixing, but when coupled with abnormally high prices, a con- 
dition which was also present in this industry, would create circum- 
stances which would permit a presumption that price fixing did exist. 
That members of the industry discussed and determined prices before 
they were filed has been confirmed by one of the members (**) who also 
. stated that the Code plan was almost identical with that of 1929. 

PE RSOIIAh OPIITIUNS OP INTERESTED I1*DIVIDUALS 

A. F. J. Patchell, Administration Member of the Code Authority(***) 



(*) Suora . V'9' ..545 . and ff 

(**) Interview with Mr. Stegman of Weaver-Uall Company, January 13, 
1936. 

(***) Memorandum dated August 9, 1935, from F.J. Patchell to Beverly 
Ober. 



9826 



- 565 - 

In his report to the Deputy Administrator on the history and 
administration of the Code, Mr. Patchell submitted a rehash of the 
Bulletin prepared in the office of the former Code Authority, then 
the office of the Institute. - In this Bulletin it '•'as pointed out 
that price filing had been beneficial to the industry and that this 
was accomplished without any resulting evil effects, e.g., high 
prices, price uniformity, price determination, etc. It was noted 
that five new members had entered the industry as contrasted with 
the mortality in the yea.rs immediately preceding the Code. Prices 
for a given period were quoted which tended to show that price in- 
creases had not been unusual in the face of the increased costs. 

3 . J. S. Bryant, Secretary to the Code Authority and Manage r 
of the Institute. (*) 

Mr, Bryant is of the opinion that price publicity is a very de- 
sirable and necessary agency in this industry. The plan as operated 
under the Code was quite satisfactory but -puld have been strengthened 
by a uniform merchandising plan, which was never approved, and by the 
liquidated damages agreement, which was aparoved in April, 1935. 
Though not admitting that the five-day waiting period might lead to 
coercion, Mr. Bryant stated that the industry had never been en- 
thusiastic over it, and it has been included in the Code only 
because such provisions had been granted other industries. 

It is Mr. Bryant's belief tha.t publicity prevents price wa„rs 
and that without it manufacturers would "be at the mercy of "chiseling" 
buy e r s . 

C« Mr. Stegman, Vice-President, Vfeaver-T/all Conmany (**) 

Talking with less reserve than did Mr. Bryant, Mr. Stegman 
stated that he was frankly surprised \-hen Codes were being drafted, 
to find that the administrative ageacy for the Asphalt Shingle and 
Roofing Industry was to be dominated by that institution and those 
individuals against hich were pending government indictments charg- 
ing illegal practices in restraint of trade. His comments were as 
follows: 

The plan was dangerous. It was subject to the dic- 
tation of the large members and would, in the end, 
tend to eliminate the small companies. 

There was collusion in prices, discussion generally 
taking place in advance of Code Authority meetings. 
Prices were ah normally high. The Weaver-Wall Company 
made more money in 1934, than ever "before, showing a 
profit of from 15 per cent to 20 per cent on in- 
vested capital each month during the year. 



(*) Interview, January 8, 1S3S. 
(**) Interview, January 13, 1936. 



9326 



- 566 - 

A strong effort r *ould have been made to put through 
the Merchandising Plan had the Code been continued. 
This plan was not feasible due to differences in mer- 
chandising policies of various companies. 

The price publicity system was almost identical 
with that of 1929, complained of by the Department 
of Justice. 

If the principle -'ere justified by an emergency, 
that emergency no longer e::ists. 

D. He rbert Abrahams, Chairman of Code Authority; President, 
Ruberoid . (*) 

In discussing the Code provision and its administration, 
Ilr. Abrahams was heartily in favor of price publicity but thought 
that' a waiting period might lead to coercion and was of question- 
able value. Such a, plan to be of real benefit must include prices, 
terms and conditions of sale, and customer classification with 
names and location of customers, and should provide for a liquidated 
damages agreement. Mr. Abrahams further commented as follows: 

Price publicity is desirable in that it prevents 
"customer advantages", "price discrimination" and 
"ruthless price cutting". 

"We want to get as much as our competitors will 
let us." 

Prices and customer classifications became more 
uniform under publicity. 

Equalization- of freight, rates cannot be avoided. 

Smaller companies were much better off under the 
Code than they are today. There were no complaints 
from these companies under the Code, but they are 
numerous at present. 

The voluntary agreement now before the Pederal Trade 
Commission is not practical for this industry. The 
ten-day waiting period after prices go into effect 
before they are published is not possible of en- 
forcement. "If I didn't know their prices the next 
day I would fire my salesmen. " 

" E, Ralph Muller, Vice-President of the Cooper Company and 
Member of the Code Authorit y (**) 

(*) Interview, January 9, 1936. 
(**) Interview, January 10, 1936. 



9826 






567 



■ 
a a 

rH H 

25 

en -h 

u 

h *> 

§5 

•O P 

fH 

t» TJ 
■H «J 

■a o 
a h 

"ft 

M O 
O 

«H • 
H 

cd a) 
e ■ 

o a 

■H rH 

u o 
a. g 

■p 
o o 

1B-P 

35 



a h 

riO 
a) 

CD <D 

■ 
Vl »H 

o a 

S 

b if 

5 c 



• p. 

• n 
o o 

•rt D 

A. 
+» 

« b-. 
■H .O 
•J 



9826 





a^-* 


o • 


s* 


p.i-1 


|H 


+» O 


eR 


S5^- 


oSj e h*' 


o a 


■ a 


•H O r< 


MrH a 

d rH 0. 


a -<^ 




^^ 




■»» 




a 




.M a 




o o 




o 


■ 


+» fc 


B 


CO o 


o 


p» 


TH 




I 








■H 




1 


a 


o 


• « 


o 


• o 




rH 




<fl M 




CO c 




0. 




**"* 




^^ 




+= 




a 




a •> 




BO 




* 




o n 




• 




P. 




^■^ 




^^ 


■ 


►»+> 


♦» 


+> a 


a 


•H « 


3 


+» o 


o 
o 


3 h 


■ 


3 Q> 


iH 


eye. 


Q 


*■* 




^^ 




♦> 









e v 




tJ o 




«J 




Nh 




i-i O 




P. 




' — ' 


■ 


o^~ 


■h a 


o. 3 


H 


♦> rH 


5S 


•j^- 


■ 


♦» 


a) 


Q 


►» 


s 


£ 


o 




o 



rr\ i<\ r«-\ k\ 
t-l H i-t H 

j* .* ^ .* 



.=1- 



o 

in 



O 
CM 



o o 

m i*n 



o o 

in in 



O 

Cvj 



o 

C\J 



o 



o 



O 



. o . o . o • o 

in in in in 

o o o o 

I O I O I O I o 

rH rH t-t rH 
O I O I O I O I 

• in • in • ir\ »in 
cvjaiCycxjcvjcxjcvjoj 



in in in 
r^\ K\ kn 



c\j 
in 



rr\ 


l<-\ 


KN 


KN 


K"\ 


p"\ 


ir\ 


l«"> 


a* 


On 


crv 


C* 


rH 


rH 


rH 


H 


^ 


„ 


^ 


» 


o 


8? 


St 


O 


rS 


CM 


t*\ 


M 


(H 


h 


H 


« 


• 


c 


• 


& 


.O 


* 


A 


E 


B 


s 


B 


o 


• 


•> 


« 


r 


►» 


► 


► 


o 


O 


o 


O 


IB 


ta 


(= 


SS 







C 


• 

>H 


5 


• 


• 


« 


4» 


4* 


O 


a 


O 


a 




i 


M 


*H 


P. 


* 


4* 


« 


^1 


5 


a 


♦» 


<H 


vH 


H 


•v* 


o 
►a 


c 


C 

o 





O 


■ 
• 


P. 


. 




» 


be 


o 


c 


rH 


a 


•3 


-H 




T3 


+> 


s 


9 


A 


o 


o 


o 


h 


• 


« 


■r* 


B 


« 


■o 


a 


s 


m 




o 


■ 




+" 


« 




a 


rH 






■ 


C 


a 


o 


o 


■r-t 


«H 


h 


a 


a 


a 




•H 


T3 


s 


J3 


O 


00 


o 


•H 




rH 


M 


XI 


o 


» 


o 


ft 


4» 




a 


6 




O 


►> 


N 


3 




o 


i 


a 5 




M 


■ 


a 





« 


o 


T. 


■r. 


a 


+> 


a 


O 


o 


C 


o 


CO 






>> 


■ 





o 




w 


•a 


+> 


« 


(E 


••» 


-H 





+» 


ft 


d 


B 


^» 


O 


CO 


O 


tN 


• 


p 


o 


a 


9 


o 


► 


■rH 


o 


+» 


H 


rH 


■3 


tH 




if 


s 

■rH 


O 

o 





§ > 



-568- 

The Cooper Company is a comparatively new mealier of the in- 
dustry, having "been organized in 1S31. Both Mr. Muller and Mr. 
Cooper, President of the Company, were most enthusiastic in their 
support of price filing as it operated under the Code. They con- 
tended that such a plan, with the 15 per cent mark-up, prevented 
ruthless prj.ce cutting and permitted a fair price. Mr. Cooper 
proposed as an alternative for NRA the repeal of the Sherman Anti- 
Trust Act. 

In discussing the preferential allowed "Secondary" manu- 
factures, Mr. Muller stated that in the "beginning lower list 
prices were quoted. This tended to disrupt the price structure 
of the industry and the method was changed to an increase dic- 
c count. The amount of the preferential for the Cooper Company 
was decreased during the life of the Code, of their own volition, 
from 10 per cent to 5 per cent. 

Without attempting to impeach the statements of the various 
proponents of price filing, it should, "be stated that; there was 
price uniformity in the industry; prices were high and they 
moved contrary to demand; and there uere indications of price con- 
trol. That these conditions were caused "by price publicity «annot 
"be said without fear of contradiction; in fact the contradiction 
precedes the conclusion. It may he pointed out that under such a 
condition price publicity could he and no doubt would he an agency 
through which the program could he more effectively policed and 
more carefully regulated. 

TABLE 2 

ASPHALT SHINGLE AND ROOFING INDUSTRY 
SHIPMENTS : PREPARED ROOFING 



I-A Total Shipments of Prepared Roofing (Thousands of Squares) a/ 

1926 1927 1928 1929 1950 1931 1932 1933 1934 1935 

Jan 
Fee 

Mai- 
Apr 
May 
Jun 
July 
Aug 
Sept 
Oct 
Nov 
Dec 

Average 5.045 5.3 22 2.3 25 1,881 1.897 2.061 2.016 
I-B Shipments of Grit Roll Roofing (thousands of squares) p_/ 



2,141 


2,421 


2 , 08 3 


1,395 


1,759 


875 


1,100 


1,277 


1,856 


3,375 


1 , 556 


1,381 


1,724 


1,719 


1,051 


1,118 


4,277 


4,239 


2,240 


1,456 


1,375 


2,773 


2,221 


2,032 


3,672 


4,583 


2,727 


2,202 


2,274 


2,321 


2,946 


2,974 


3,648 


4,583 


2,714 


2,230 


1,610 


2,904 


2,357 


2,832 


4,196 


3,756 


2,384 


2,006 


1 , 529 


2,137 


1,326 


2,213 


2,895 


3,325 


2,151 


2,017 


1,707 


2,793 


1,743 


2,321 


3,070 


2,903 


2,544 


2,237 


2,799 


1,881 


3,752 


2,768 


3,187 


3, nil 


3,506 


2,597 


3,103 


2,153 


1,944 


3,1^2 


3,453 


3,308 


3 , 259 


2,302 


?, 573 


2,671 


2,426 


3,130 


2,470 


2,326 


1,484 


1,765 


1,202 


1,621 


1,941 




1,672 


2,035 


1,126 


983 


608 


889 


1,373 





TABLE 3 (Cont.) 
I-B Shipments of Grit Roll Roofing (Thousands of Squares) h/ 

" 1926 . 1927 1928 .. 1929 1920 1931 1932 . 1933 1934 



1935 



Jan 

Feb 
Mar 
Apt 

May 

Jun 

Jul 

Aug 

Sept 

Oct 

Nov 

Dec 



514 

486 

1,237 

1,013 

995 

1,157 

830 

853 

841 

8 £4 

529 

330 



485 . 

717 

1,039 

1,118 

1,129 

983 

983 

829 

826 

836 

532 

509 



493 
338 
581 
S76 
731 
653 
612 
655 
872 
922 
372 
242 



322 
330 
333 
533 
570 
520 
532 
568 
711 
574 
374 
197 



335 
414 
491 
606 
377 
378 
389 
647 
764 
630 
271 
140 



198 
353 
532 
524 

21 4 
574 

693 
512 
504 
570 
337 
175 



220 
227 
430 
560 
600 
336 
407 

790 
547 
608 
462 

345 



368 
278 
464 
606 
585 
494 
576 

667 
834 
850 



Average 



801 



833 



59 i 



464 



458 



474 



461 



a/ Sum of Shipments for Grit Roll Roofing (i-B), Shingles, All Types 
(I-C) and Smooth Roll Roofing (i-D). 

h/ Bureau of the Census monthly release Prepared Roofing , 1933 to date, 
prior to 1933 data taken from Survey of Current Business . 



DIVISION OF REVIET7, ISA - Industry Statistics Unit, ELG. 1-15-36. 

TABLE 2 (cont.) 

ASPHALT SHINGLE AND ROOFING INDUSTRY 
SHIPMENTS : PREPARED ROOFING 



I-C Shipments of Shingles, All Types (Thousands of Squares) a/ 

1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 



Jan 


428 


511 


665 


299 


282 


119 


155 


247 


Feb 


429 


859 


309 


337 


• 242 


• 329 ■ 


183 . 


257 


Mar 


1 , 243 


1,116 


597 


421 


303 


528 • 


424 . 


555 


Apr 


1,153 


1,402 


860 


702 


528 


493 ■ 


748 


908 


iiay 


1,250 


1 , 538 


894 


595 


• 502 


698 . 


637 


991 


Jun 


1 , 31 3 


1,316 


807 


643 


431 


458 


406 


739 


Jul 


870 


1,004 


735 


612 


451 


. 641 


448 


535 


Aug 


9-60 


997 


868 


602 


. 703 


490 


850 


815 


Se-3t 


952 


954 


1,196 


689 


878 


451 


455 


756 


Oct 


1,025 


970 


763 


600 


■ 656 


491 


559 


859 


Nov 


732 


633 


370 


393 


192 


352 


483 . 




Dec 


500 


576 


302 


214 


107 


164 


315 




Average 


905 


998 


S97 


517 


439 


434 


480 




I-D Shipments 


of Smoo 


th Roll 


Roofing 


(TilOUS' 


->nds of 


Squares) 


k/ 





9826 



1926 1927 



L£28 



TABLE 2 (cont.) 
1929 1930 1931 1932 



1933 



1934 1935 



J- a 


1,199 


1 , 32b 


1 , 224 




773 


1,092 


557 


725 


563 


Fell 


941 


1,799 


709 




714 


1,068 


1,038 


641 


585 


i Li X 


1,797 


2,084 


1,062 




702 


1,081 


1,712 


1,367 


1,012 


Aor 


1 , 506 


2,063 


1,191 




967 


1,140 


1,304 


1,638 


1,460 


May 


1,403 


1,516 


1,088 




965 


732 


1,492 


1,120 


1,304 


Jun 


1,726 


1,452 


924 




043 


720 


1,105 


583 


980 


Jill 


1,195 


1,338 


803 




873 


867 


1,450 


889 


1.100 


Aug 


1,257 


1,077 


1,021 


1 


,067 


1,449 


880 


2,123 


1,286 


Sept 


1 , 394 


1,251 


1,438 


1 


,198' 


1,451 


1,198 


941 


1,501 


Oct 


1 , 604 


1,502 


1,575 


4 


r&8&" 


--l',287 


1,610 


1,158 


1,461 


Nov 


1,209 


1,161 


742 




998 


739 


932 


996 




Dec 


842 


950 


585 




571 


361 


550 


713 




Average 


1,339 


1,492 


1,030 




900 


1,000 


1,153 


1,075 




- — - 



2] Bureau of the Census monthly release Prepared Roofing . 1933 to date, 
prior to 1933 data, taken from Survey of Current Business . 

~bj Bureau of the Census monthly release Prepared Roofing . 1933 to date, 
prior to 1955 data taken from Surve y of Current Business . 



DIVISION OF REVIE7;, ERA - Industry Statistics Unit, ELG. 1-15-56. 



TABLE 5 

ASPHALT SHINGLE AND ROOFING INDUSTRY 
PRICES : PREPARED ROOFING 



II-A Index of Wholes le Prices of Prepared Roofing (1929-100) a/ 

1926 1927 1928.1929 1930 1951" i'932 1953 193/4 1935 



Jan 150.8 152.0 115.9 91.6 99.0 106.0 100.5 100.0 109.2 115.6 



Feb 150.5 152.0 111.6 90.7 99.0 106.2 97.6 

Mar 151.8 150.3 99.5 90.9 99.0 105.2 98.5 

Apr 153.2 128.1 100.4 97.6 99.0 105.2 99.1 

May 154.7 128.7 100.6 102.5 99.0 106.2 97.0 

Jun 155.6 128.7 120.2 102.8 93.5 106.2 90.6 

Jul 155.9 128.5 122.2 105.8 99.5 106.2 83.8 

Aug -135.9 129.1122.2 104.1100.1 106.2 86.4 

Sept 135.9 129.3 122.7 105.9 104.5 106.2 95.6 

Oct 155.9 129.5 125.5 105.9 109.8 106.2 102.6 

Nov 155.6 112.2 123.5 103.9 109.8 106.2 107.6 

Dec 135.4 115.1 10 0.6 105.9 109.8 106.2 107.6 



Ave rage 

154.2 



86.9 

87.5 

88.5 

95.9 

100.7 

101.9 
104.5 

104.9 
107.0 
108.9 
108.9 



102.8 

97.0 

98.0 

105.1 

105.4 

107.6 
111.6 

115.2 
115.2 
112.8 
115.5 



112.8 

112.4 

112.5 

114.5 

114.9 

114.. 5 
111.5 

111.1 



126.8 115.4 100.0 102.3 106.2 97.2 99.6 107.5 



9826 



CCont-1 



- 571 - 
TABLE 3. (Cont.) 

II-B Items and Weighting Factors ~bj 



Items Vfei^hts 

Slate Surfaces Hoofing 11,599 

I.iedium Prepared Roofing 14,627 

Strip Shingles 4,966 

Individual Shingles 4,463 



a/ HELA, composite of Bureau of Labor Statistics series for "Roofing", 
slate surfaced, (III-A), medium prepared, (III-B), strip shingles 
(III-C* , and individual shingles (III-D) weighted as shown in 
II-B. 

h/ Weighting factors are the BLS quantity weights, given in "Quantity 
weighting factors, used in calculating Index Numbers, 1890-1934," 
Llarch 1935. 



DIVISICK OF REVIEW, IRA - Industry Statistics Unit, ELG, 1-15-36. 



9326 



572 



H 



>- 

k 

Q 



O 



O 
O 



UJ 

_l 
o 

z 

X 



< 

I 

Q. 
00 
< 

UJ 

X 



z 
g 

N 

Z 
< 

OC 
O 



O 
ro 
O 









/ 







// 






u - 
i 



// , 

// / /•/ ' 

f\V\ x ' x 

v\a/ a 

V\ / 



\A' 



00 ONIJOOM 
"IVN0I1VN 



01IS 



~n»M-M3AV3M 



"i 



3snoH~niw 

AMN3H=H 



00 S01S38SV 
"1VN0IJ.VN 



~! 



3N0T-NVS01 



00 riVHdSW M39dV9 



r-'M nos onv aaia 

s S \ \ ' -- I 



\M 



\ - N 



W 



N- \ 



\ 

\ \ \ 

1 



' 0331NW1M30 



3 
3 



UJ 

S i 

h- uj 

o 



H * 



ills 



23 



^ ° 

> til 



< - 



I i 



M 



a. 

X 

to 
z 
9 


UJ 

-I 

S 

■z. 
X 

IP 


I 


5 

(9 

2: 


5 


h 


i- 
z 


u. 






CO 
d 5 



x 
co 



o 
o 
tr 



- a 
oc uj 

CL 
Q UJ 

< CL 



< 2 

. Q UJ 

M > S 

Q 
7 Q 



o 



Q 
UJ 
O 

l£ 

en 

3 



CO 
UJ 

g 

tr co 
a. 

UJ 

< -i 

d 9 



9S26 




o 


rO 


o 


■-, 0) 


cc. 




a 


z 


UJ 






3 


< 




Q. 




UJ 


O 


(E 


m 


0- 


'* 


5 


3 


3 








UJ 




2 






"(I) 


- 


CM 




■ 01 



APPEI.DIX B 
PRICE FILIHG III THE STEEL CAST IIT G ICTUS TR Y 
CHAPTER I 
BACKGROUND OP THE I1.DUSTRY 



I. GEESEAI CHARACTER OP THE IEOTSTHI 

A. Definition and Extent 

The Steel Casting Industry is a branch of the Foundry Industry. 
Its products are -oroduced "by pouring molten steel into a form or cast 
and allotting it to harden. The process involved is described in more 
detail in Subsection 9, page B-ll of this chapter below. 



1, 



General Statistics 



Salient statistics of the Industry are revealed in the 
following table: (*) 

Table 1 
KUlZBEa OF FIRI.IS, EHPLCYEES AUD CAPITAL INVESTED, 1929-1934 



Year 

1929 
1930 
1931 
1932 
1933 
1934 



Ho. of 

Firms 

184 
182 
177 
172 
168 
174 



Ho . of 
Employees 

50,052 
53,329 
47,707 
39,108 
20,038 
23,587 



Capital Invested 

$272,000 
270,420 
265,000 
253,429 
220 , 737 
240,000 



Source: Letters exchanged between Code Authority and Assistant Depu- 
ty Administrator. 

The decline in sales during the depression was extremely drastic; 
1933 dollar volume was less than 12 -oer cent of the 1929 level. Em- 
ployment dropped 60 -oer cent during the same period. 

2. Size and Distribution of Plants 

This industry, at the time of application for the Code, 
August 17, I 1 "3, consisted of about 179 active members. Table II 
shows their distribution according to capacity. It is interesting 
to note that 86 per cent of the foundries in number represented only 
35 per cent of the total capacity. 



(*) Various other statistical data dealing with industry operation 
and price filing results are included in Exhibit I, of this 
stud T_ . 



9826 



STEEL FOUNDRIES 



- ;,7o - 

Table II 

TIIE LiITED SIA: 



Size of Foundry 
Rated Ca-oacity 
Net Tons per Mo . 

1 to 100 
101 to 250 
251 to 500 
501 to 1,000 
1,001 to 2,500 
2,501 to 5,000 
Over 5,000 

TOTALS 



iAIIGED III (SOUPS AOCOfeDIi-g TO SIZE 

■ITumber Total Average Per Cent per Cent 

of Capacity Capacity of Totsl of Total 

Foundries of Group of Group Lumber Capacity 



54 


2,421 




45 


GO 


2 


41 


6,988 




170 


23 


6 


34 


12,511 




368 


19 


12 


25 


16,795 




672 


14 


16 


15 


23,267 


1 


,551 


8 


21 


5 


18,058 


3 


, 611 


3 


16 


5 


29,698 


5 


,940 


3 


27 



179 109,733 



i _ * ) 



100 



100 



Source: Letter to the national Industrial Recovery Board, dated January 
2, 1935 from Steal Founders' Society of America. 

Although steel foundries are to he found in nearly every state in the 
Union, the points of greatest concentration are in the following districts: 
Pittsburgh., Mil-yjaukee, Chicago, Cleveland, Buffalo, Eastern Pennsylvania, 
Detroit and the Pacific Coast. 

In a letter sent by the Steel Founders) Society, which was also the 
Code Authority, to the members of the industry, on August 17, 1934, it 
was stated that 173 companies, operating 189 active foundries, constitu- 
ted the Steel Casting Industry. The tabulations attached to the letter 
showed the member foundries and their monthly capacities for each of the 
eight geographical divisions (erolanation of Divisions below). Presumably 
four of the 193 foundries shov.ni in the tabulation were not active. The 
tabulation follows: 













TABLE III 






UUIBER 


OF 


FOUNDRIES 


AID TOTAL 


no: 


TTHLY CAFACITIES, 






ACCORD] 


:iTG TO GI 


I0GPAPHICAL DI7ISI01TS. 1954 








ITumber of 




Per Cent 




Total Monthly 


Per Cent 


Division 




Foundries 
31 




of Total 
16.1 




Capacity 


of Total 


I 


8,689 Tons 


7.9 


II 






10 




5.2 




11,085 » 


10.1 


III 






13 




6.7 




933 " 


.8 


IV 






25 




13.0 




15,549 " 


14.1 


V 






23 




11.9 




21,895 " 


19.8 


VI 






41 




21.2 




26,642 " 


24.1 


VII 






16 




8.3 




20,520 " 


18.6 


VIII 






34 




17.6 




5,025 " 


4.6 


U. S. To 


tal 




193 




100.0 




110.338 Tons 


100.0 


Source: 


Letter 


from Ste 


lei 


Founders 


s< 


jciety of America 


to all foundries, 



dated August 17, 1934. (In ERA files). 



9826 



- 576 •- 
Location of Divisions: 

Geographical Division I comrises Federal Reserve District To. 1 
and Ho. 3 (except that -oart of Pe.v nylvania '-est of a line drawn 
north and south through Altoona, Pennsylvania) and Fo. 5 (exceot 
TIest Virginia and ITorth and South Carolina) and Few York State 
east of a line drawn north and south through the most westerly 
point of Schenectady, Ifew York. 

Geographical Division II conrorises Federal Reserve District No. 2 
(except that -oortion included in Division Fo. I) and Erie, Penn- 
sylvania. 

Geographical Division III comprises Federal Reserve District Fo. 6 
and Fo. 11 (exce-ot southeastern Arizona, . southern New Mexico, and 
Texas west of a line drawn north and south through Raymond, Texas) 
and all of North and South Carolina, Tennessee, Mississippi, and 
Alabama (except Jefferson County). 

Geographical Division IV conrorises Federal Reserve Dostrict Fo. 4 
(except Erie, Pennsylvania, es-stern Kentucky and Ohio) and TTes't 
Virginia, and that part of Pennsylvania not included in Division 
I). 

Geographical Division Fo. V corn-crises Federal Reserve District Fo. 
4 (except Pennsylvania) . 

Geographical Division VI conrorises Federal Reserve Districts Nos. 
7 and 9. 

Geographical Division VII comprises Federal Reserve District No. 8 
(except Tennessee, Mississippi and Arkansas) and Fo. 10. 

Geographical Division VIII comprises Federal Reserve District Fo. 
12 and that part of FederalReserve District Fo. 11, not included 
in Division III. 

Companies operating two or more foundries and the divisions in 
which they are located are tabulated on the following page. 



9826 



■ - 577 - 

tablt: iv 
co:;?A i:i"s or-RATii^c- gyfc qr mo rs fouctriss akd 

TI '.S DIVISIOIIS Ii.:"T3iilC ": TIiSY ARE LO CATED 

^Including Active Foundries Only) 

hunber of Four.dr ie s--Each Divi sion 



Coro~>any 



I II III IV V VI VII' VIII Total 



Bethlehem Steel Co. 2 
Eastern Steel Castings 2 
General Steel Castings -Co. 1 
American Steel Foundries 
Pittsburgh Steel Foundry 

Corporation 
Continental Roll and Steel 

Foundry Company 
Ohio Steel Foundry Co. 
National Mai lea Tale and • 
Steel Castings Co. 
Sivyer Steel Castings Co. 
Columbia Steel Company 
Electric Steel Company 
Kay B runner Steel Prod- 
ucts,, Incorporated- 
Western Steel Casting 
Co. 



1 
2 
2 



1 1 



2 
2 



1 
2 



2 
1 



2 
2 
2 
5 



3 

2 

3 
2 
2 
2 



Total 







Source: Compiled "by Statistics Section SEA from Daily Price Reports 
of Steel Founders' Society of America 

Summarizing the above table, nine companies operated two foundries 
each, two companies operated three foundries, one company operated four 
and one company operated five foundries. 

The largest steel casting companies, based on monthlj 1 ' rated capa- 
city, are shown in the section following. 

3. Description of Im-oortant Companies. 

Table V shows the more important corroanies of the Steel Casting 
Industry. These companies operate about forty of the foundries or about 
20 per cent of the total number in the industry and represent over 60 per 
cent of the total capacity. 



9826 



TABlE V 

PRINCIPAL 0OI.IPA1TI3S BY SIZE AIT UOl'TKLY CAFACITY. 1954 

Monthly Per Cent 

Foundry Capacity, , of Total 

IIo. Ilarae of Company Tons Capacity 

402) 

503) 

602) American Steel Foundries Co. 18,717 17.0 

702) 

703) 

626) National Malleatiie and Steel 

627) Castings Company 

506) Bucheye Steel Castings Company 

204) The Bould Coupler Convoany 

712) Scullin Steel Company 

605) Bettendorf Company 

) Continental Ifoll and Steel 

) Foundry Company 

407) Euquesne Steel Foundry Company 3,678 3.3 

424) Wheeling Hold and Foundry 

Company 

619) Huhbard Steel Foundry Company 

113) General Steel Castings Company 2,843 2.6 
705) 

517) Ohio Steel Foundry Company ' 2,468 2.2 
518) 

207) Pratt and Letchnorth 2,128 1.9 

614) The Falk Corporation 1,911 1.7 

416) Pittsburgh Steel Foundry Corp. 1,800 1.6 
417) 

805) ColximMa Steel Company 1,550 1.4 

806) 



7,000 


6.3 


6,843 


6.2 


5,745 


5.2 


5,500 


5.0 


4,920 


4.4 



9826 



- 579 - 
IABL1 V 

PHirCIPAL COi:FAI T IES BY SISS AID hOITTKLY CAPACITY, 1934 

( Continued) 

Foundry 

llo. Ilane of Con'vn" 

105 Eirdsooro Steel Foundry and 
Machinery Company 

519 Otis Steel Company 

412 McConway and Torley Corpora- 
tion 

616 Harrison Steel Castings Co. 



633) 


Sivyer Steel Castings Co 




1,188 


634) 








505 


Bonne;' - - Floyd Conroany 




1 ,140 


420 


Sterling Steel Foundry 








Company 




1,030 


203 


Erie Forge Company 




1,028 


422 


Union Steel Castings Com - 


jany 


960 


515 


Machined Steel Casting 








Comoany 




953 



Monthly 


Per Cent 


Ce acity, 


of Total 


Tons 


Capacity 


1,544 


1.4 


1,420 


1.3 


1 , 331 . 


1.2 


1,224 


1.1 


1,188 


1.1 



1.0 

0.9 
0.9 
0.9 

0.9 

423 United Engineering end Foundry 

Co. 900 0.8 

611 Detroit Steel Castings 

Company 875 0.8 

122 Penn Ste3l Castings Corporation 679 0.6 

418 Pressed Steel. Car Company 654 0.6 

All other companies 30,309 27.7 

Source: Steel Founders' Society of America, letter dated August 
17, 1934. 



- 580 - 
4. Financial Conditions' of Industry 

Table VI below shows a summary of combined earnings for the years 
1924 to 1928, for a selected group of representative foundries. The 
number of conroanies reporting each year is noted. Earnings are shown 
both as percentage of assets and as Toercentage of sales. 

TABLE VI 

EARNINGS AID CAPITAL TURNOVER FOR SELECT 
GROUP 01' COLPAUIES, 1924-1928 

Ave rage 

for the 

1924 1925 1926 1927 1928 5 Years 

Earnings 

Per Cent of Assets 3.80 4.50 6.70 3.40 5.70 4.80 



Earnings 














Per Cent of Sales 


4.80 


5.30 


7.30 


4.30 


7.20 


5.80 


Caioital Turnover 


.79 


.86 


.92 


.80 


.79 


.83 



Number of Conroanies 

Reporting 38 39 40 41 42 40 

Source: The Steel Castings Industry, by G. P. Sogers, 1930. 

The figures for capital turnover given above were commuted by 
dividing earnings as a -oercentage of assets by earnings as a oercentage 
of sales. 

The best earnings of the grouo for this period, it will be, seen, 
were shown in 1926. 

5. Failures in the Industry. 

Statistics on failures in the Industry are not readily available. 
The Steel Founders' Society stated that in the last eight years there 
were approximately sixty failures, forty-eight from 1927 to 1931 and 
twelve from 1932 to date. (*). 

6. Relationship o'f Earnings, Prices and Volume. 

A re-ocrt ^re-oared by the Consrjners 1 Advisory Board contains the 
following statement: 

"The selling price; (of steel castings) today (Sept., 1933) is 
about $134 per net ton, on the basis of which the industry is losing 
about $48.50 per ton, com-oared with a selling -^rice of $164 a ton in 
1929, when net earnings were about $25.60 per ton. In 1929 the net 



I * '\ T„ 4- , 



n _-i i -: cx~~n n~,, — J i c» - „ 4 ~ J — tt„ — 



- 581 - 

tonnage was 1,671,952 tons, the margin of profit of about $10,000,000. 
In 193?, present comparable figures being somewhat higher, produc- 
tion was only 191,886 net 'tons, on which there was a loss of some 
$9,500,000." (*) 

7. Raw Material Prices. 

The raw materials used by this industry are primarily pig iron 
and scrap steel. Preliminary studies, conducted by the Division of 
Research and 'Planning,- reveal a considerable degree of flexibility 
in the prices of both of these items. 'The price of scrap, expecially, 
is very sensitive to changes in the market. 

The price of steel castings does not reveal the same degree of 
flexibility as does that of its raw materials. 

8. Classes of ~roducts. 

Approximately one— half of tne steel castings produced are so-called 
"miscellaneous" castings and the other half are "specialties. The mis- 
cellaneous group includes those castings which are usually made to 
order, according to specifications, designs, and patterns furnished by 
the buyer; and are usually sold in the rough. 

The group called "specialties" includes castings which are pri- 
marily designed and engineered by the companies producing them, ouite 
frequently produced, from patterns or other eauipraent belonging to the 
producer, and sold in semi-finished or finished form. The "specialties" 
are chiefly railway equipment products such as side arms, draft arms, 
bolsters, couplers, cast steel car wheels, etc. and automobile products. 
The patents on "specialties" are controlled bv a "pool" of the largest 
producers of this class of products. 

Of the total rated monthly capacity of 109,753 net tons shown in 
Table II above, 57,968 net tons represent the capacity, of 20 foundries 
engaged in the production of so- called "railroad specialties." (**) 
The very largest foundries are found in this group. 

There is a tendency for companies to specialize in tne manufacture 
of one or two major clasres of products. For example, the American 
Steel Foundries Company produces primarily railroad equipment, such 
as parts for cars and locomotives. The various foundries of the 
Continental Roll and Steel Foundry Company are tne largest producers 
of rolling mill rolls. These and other major companies were leaders 
in establishing price levels during the Code. 

9. Methods of Manufacture. 

Manufacturing methods ir this industry are based on skill and 

(*) Consumers 1 Advisory Board Report by L. B. Lovell-Sept.. 7, 1933. 

(**) Source: Letter to the National Industry Recovery Board, 

dated January 6, 193. r from Steel Founders' Society 
of America. 

9826 



- 582 - 

secret processes. The crai't is mastered onlv after extensive ex- 
perience- and painstaking research. From the selection and treatment 
of molding sand and the melting of raw materials, to the flogging and 
cleaning of the finished product, dexterity and a ctsitive knowledge 
of proper methods learned iroin experience are essential in the pro- 
duction of these castings. 

Four principal melting processes are used — open hearth (basic 
and acid), electric, converter and crucible. The last two are de- 
creasing in importance while the electric process is growing in 
favor and the open heartn -process iB maintaining its place. Prac- 
ticallv all "specialties" castings are produced from steel made in 
electric furnaces. These casting's are usually small and cost more 
to produce per pounc that the "miscellaneous" castings, i"hich are 
larger and made of open nearth steel. Most up to date foundries 
use heat treating processes in anneslirg furnaces to develop desired 
properties in tne castings. The production of alloy steel Castings 
has recently become of increasing importance. In manufacturing alloy 
steel, various chemical elements are addec to tne ordinary melt. In 
pricing these castings, the cost of the additions in making alloy 
steel are added to the regular caroon steel price as "alloy extras." 

A brief review of tne processes involved in the production of 
a tvpical casting is presented below; 

A foundry receives an order for a casting, together with the 
design and specifications, These are examined and, if satisfactory, 
blueprints are prepared and sent to the pattern shop, where wooden 
pattern of the'proposed casting is made. The pattern is then sent to 
"the mold shop. For the ordinary uniform patterns, halves of the 
patterns are each laid in steel flasks or ooxes. These flasks are 
considerably larger than the pattern. Seecially treated sand is then 
packed in the flask at the sides and under the wooden pattern . When 
the sand completely fills all the volume of the flask not token up 
bv the pattern, the pattern is removed. The two half-molds in the 
flasks are then clamped tightly together. The complete mold is now 
heated and. the sand harrened. When this mold is ready, the steel is 
poured and set aside to cool. "hen ready, the flasks containing the 
sand moldings are removed, exposing the rough casting. 

10. Markets for Industrv Products 

Steel castings are utilized in the manufacture of the following 
products, listed in their relative order of importance in 1929: 

1. Steam railroads, including electric locomotives 

2. Rolling mills, including some steel rolls 

3. uckets, snovels, dredges 

4. Tractors, trailers, and industrial cars 

5. Cranes, hoists and derricks 
'6.' Refinery and oil well equipment 

7. Valves and fittings 
'6. Automotive castings 

9, Electrical machinery 
10. Roac-makin - .nachinery 

i 



- 583 - 

11. Presses (hydraulic and poi"> r) 

12. Machine tools 

13. Agricultural Machinery 

14. Engines, puiops, and compressors 

Source: Special Survey of Distrioution of Steel Castings 
Sales for the year iy?9 "by the Steel Founders' 
Society of America. 

Railroads, the largest consumers, which normally utilize about 
50 percent of the industry's output, consumed only 5 to 10 percent 
of the total output during the depression. This furnishes a partial 
explanation of the drastic reduction in sales during that period, 
(See Chart I & Exhibit I, Table I -A) 

11, Competitive Products, 

Steel castings are in competition with gray iron and malleable 
iron products, as well as welded steel, forgings, die castings, 
stampings and non-ferrous products. Very little statistical data 
showing prices and production are available on these products with 
the exception of Malleable Iron Castings. (See Exhibit I, Table IV 
and Chart II.) 

II. TRADE ASSOCIATION ORGANIZATION AND ACTIVITY 

A. The Steel Founders' Society of America 

1. Membership 

The only organization of any importance w.tnin the industry is 
the Steel Founders' Society of America, extablished in 1902. The 
membership of association includes all of the large and many of the 
smaller units of the industry. 

In 1930, the membership of the Society represented about 20 
percent of the total number of foundries and approximately 30-40 
percent of the output of the industry, (*)' 

The Society has, for .'any years, been actively engaged in the 
collection and distrioution of statistical material covering a wide 
range of subjects. 

When the F.I.R.A. was passed, the Board of Directors of this body 
immediately assumed the responsibility of preparing and presenting a 
code. The first application for a code, dated August 25, 1933, indicates 
that at that time the membership oi the association comprised about 
65 percent of the total number of steel foundries. The sales of 
Society members for the year 1933 amounted to 76 percent of the 
total for the industry. (**) According to a letter from the Steel 

(*) Federal Trade Commission-Open Price Trace Association, 1929, p, 387 

(**) Research and Planning Division Report— Steel Castings Industry 
August, 1933. 

9826 



CO 

e> 
z; 

h- 
co 
< 
o 



LU 
UJ 

H 
CO 

o 



o 

3 
Q 
O 



ro 
i 

CD 
C\J 



Lib^G 




585 



lO 




ro 




(J) 




i 




CD 




CM 




CD 




•» 


CD 


CO 


6 


X 


\\ 


1- 




o 


2. 

o 

1- 


2 


cc 




UJ 


> 


a. 


GO 


UJ 

o 


CO 




O 


iii 


^ 


o 


M 


< 


H 


cc 


CO 


Ul 


< 


< 


o 


Q 




Z 


z 


< 


o 


z 


tr 


o 


^- 


1- 


UJ 


o 

-> 


_i 


O 


CD 


O 

rr 


< 


CL 



UJ 




UJ J 

> K 
UJ O 

££ UJ 

j « fl 

< U. o) O 

o: o o « 

2 5 

> f- 






o < 



I 



9826 



1-586- 

Founders.' Societ", dated August 17, 1934, membership on that date re- 
presented C5 per cent of the industry in number and 95 per cent in 
capacity. 

2. Organization 

The following is a description of the organization of the Societ" in 
1930. (*) It is "believed that the organization today is. the sane, with 
the exception that there are not? eight geographical divisions whereas 
there were only five in 1330, (See Chart III ) 

"The general neribership is vested with authority, through its 
voting ■oower, to regulate broadly all general policies and projects 
undertaken ^oy the Society. Theirs is the right to vote changes in 
the By-laws, to select the members of the Board of Directors and 
pass upon all major matters facing the organization. 

"The Board of Directors are chosen by the members to represent 
them. .Each geographical Division of the Societ" is equally re- 
presented on the Board, thus making that body thorough!-- represen- 
tative. To them are referred specific questions of policy and 
direction for more expeditious handling. Their duties are quite 
similar to those of Boards of Directors in commercial corporations. 

"The President of the S.D.S.A. is chairman of the Board of 
Directors, and presides at all Board meetings as well as at con- 
vention meetings. 

"Banking nest to the President are eight Vice-Presidents, 
each representing a geographical division of the Society, who are 
not only members of the Board of Directors but also Chairmen of 
their respective divisions. They preside at all general meetings 
held in their territory or division. These geographical divisions, 
among other things, are set up to better enable the Society to 
deal with local oroblems a„s well a.s to maintain equitable represen- 
tation of the membership on the Board. 

"Under the Board of Directors and responsible to them is the 
Ilanaging Director, into whose hands the active work of the Society 
is entrusted. His duties corrorise the general conduct and adminis- 
tration of the affairs of the S.B.S.A. , management of its office 
and operating staff, handling of finances, etc. 

"All working committees ere appointed and approved yearly 
by the Board of Directors, and work with the managing Director, 
who is a member ex-officio of all working committees. Beports 
of committees nay be made in any of four different ways, depending 
upon the most practical disposition of the problem in hand;- 

Birst: Directlry to the Board of Directors, 

Second: Directly to the membership, 
(*) The Steel Castings Industry, G. P. Rogers, 1930. 

3326 



587 - 



Third: To the Managing Director, who in turn includes 

the rerort with his own reco mendations delivered 
to the membership or to the Board, or 

Fourth: To the Managing Director 1'or his specific 
guidance in handling a particular proDlem. 



"If a situation or matter arose not classified under the 
specific subjects assigned to each working committee, or if 
in the judgment of the Board of Directors the matter in 
Question could best be han< led by a special committee, provision 
is made, and the loard empowered to appoint such special committee. 

"It is planned, that tne personnel of working committees 
will not, as a rule, exceed three members, thus permitting of 
speedy transaction of business either by mail or throu-h committee 
meetings. In many instances these committees function largely in 
an advisory capacity to the Board of Directors, the Societv and 
the Managing Director while the detail '-ork is handled bv the 
executive office of the Society. 

WORKING COMMITTEES AND MATTERS COMING 
UNDER THEIR JURISDICTION 

(Each composed of three members, unless otherwise specified, and 
all appointed by Board of Directors yearlv) 

Cost Committee: 

Matters pertaining to Uniform Cost System, Comparative 
Cost Studies and Re worts, and selling of sound cost 
methods to the industry. 

Finance Committee: 

Examination of Society's books, and matters pertaining 
to income, expends, budgets anc audit. 

Membership Committee: 

Direction of membership building, passing on eligibility 
and proper classification of applicants and approval 
' of firms seeking membership, subject to final approval 
of Board of Directors. 

Arbitration and Vigilance Committee: 

Disputes and questions involving ousiness ethics, fair 
trade -practices, etc., conciliation anc promotion of 
friendly relations which cannot be successful 1 / handled 
by the Managing Director. 



9826 



- o88 - 

Co-Oneration and Legislation Committee: 

Contacts with government departments, tariff, proposed 
legislation, contacts with other trade organizations 
enC associated industry contacts. 

Industrial Research Committee: 

Matters relating to advancement of manufacturing practice; 
trace customs, standardization, simolif ication, elimination 
of w as tes, apprentice training, all kinds of insurance, 
labor and employment, traffic problems and purchasing 
information, etc. 

Technical Research Committee: 

Development of ne™ uses lor cast steels anc standard 
specifications, Conduct of tests and investigations, 
Chemical ano physical research to improve foundry practice 
product. Compilation of technical manual, etc. 

Statistical Committee: 

Problems relating to collection of data and figures regarding 
the industry, production, bookings,, capacity, earnings, 
shipments, etc., market and. industry surveys and production 
of steel foundry directory. 

Entertainment Committee: • . . 

Matters pertaining to the social phases .of conventions 
en<} meetings. Speakers, programs, recreation, golf, 
accommodations, banquets, entertain .lent of guests, etc. 
The promotion »t friendly acquaintance anions memoers. 

Merchandising Committee! 

Problems regarding advertising, publicity better selling 
methods, market development, Society exhibitions and pro- 
duction 01 Society merchandising publications, etc. 

Administration - General Office: 

! ndles administration and operation of all Society 
work pr.c projects: carries out all plans and under- 
takings, after approval by the Bo- rd of Directors; 
does all detail work incident to meetings and. con- 
ventions; comnxles anc distriuutes rerorts; publishes 
Society Bulletin; special bulletin letters of in- 
formation for members; releases publicity; conducts 
material exchange, traific department ?ri6 employment 
bureau, assists in the ';ork oi all committees and 
deal's with all special projects. 



9826 



- 589 ~ 



"The entire framework of organization constitutes a simple 
effective structure adapted to the successful prosecution of 
the recommended Program for the Society." (*) 

3. Pricing Practices Prior to the Code, 

a. Introduction. 

The- ability of the Steel Pounders' Society to introduce' an elaborate 
system of price filing differentials and. schedules, within sc short a 
time after the approval oi the Code, reflect?, its. .previous experience 
in this field. The Federal Trade Commission in its publication (**) 
"Open Price Trade Associations" describes some of the experiences with 
pricing practices attested by the Society. 

b. Ear""v Forms cf Price Listings and Practices, 1912' '1927 

As early as 1912, a svstem war inaugurated under which members sub- 
mitted reports covering all phases of their business to tne central 
office of the Eddy Association — as it "'as known then. This association 
distributed these reports to all members. The scheme was abandoned 
shortly thereafter. 

Several years later, " a plan was adopted whereby there would 
be no exchange of any price data until after all business or any in- 
quiry, had been closed and the contract let. " From reports released 
by the Society, the members were kept informed of the trend of the 
market and all closed transactions. This plan was not followed to 
any great extent and was considered of little value. At a meeting held 
on May 2, 1934 it was decided to discontinue this practice. 

Daring October, 1923 tne Society, for a time, attempted a system 
of reporting "intentions to quote and orders taken." Each bidder would 
report to tne secretary that ..its were being submitted. If one of the 
bidders was awarded the contract, he furnished the prices and terms to 
the secretary who in turn rele- red this information to the other member 
bidders. In July, 1924 these reports were discontinued. They were 
renewed on June 19, 1925, ant again discontinued on December 10, 1926, 
on the ground that no benefits were derived from this practice and be- 
cause very few operators were cooperating. 

Another form of price reporting was adopted pursuant to a resolution 
adopted by the Society on tdarch S3, 1923, The secretary was risked "to 
have printed and sent out to the members a book of 'notification levels' 
based on the last published rriees of the America- Steel Founders." 
In May, 1923, members were urged to report regularly on ruot^tions and 
orders taken. Apparently this request was made to show that memoprs were 
not using the "notification levels" as t e price to oe quoted, Tne term 
"notification levels" appears to nave represented a compilation oi the 

X*) Ibid, page 47-49. 

(**) Federal Trade Commission— Open-Price Trace Associations 
February 11, 1929, pp. 3t7-3£8. 

9826 



- 590 - 

last published prices, similar to the Quarterly Reports released by the 
Society during the Code period. However, even this typt of price reporting 
was short-lived. In April, 1924 "price level notification" was abandoned 
because of the opin cf most operators that it was of little value. 

It is apparent that all efforts towarc. s securing the filing or 
distribution of price data, (advance prices or even b^ck prices on 
closed business), met with little or no response from foundry operators 
and had to be discontinued. As late as April 29, 1925, Mr. McKercher, 
counsel for the Society, expressed the opinion that, under the law, 
"no collection or distribution of data on advance prices or Quotations 
on jobs ere permitted. "(*) 

Not until the early part ox 1927 was any success achieved in this 
direction. At a meeting neld an January 21 of that year a member inquired 
as to the legality of reporting to the Society, for investigation, the 
name's of foundries selling castings below the cost of -production, Mr. 
McKercher stated tnat, in his opinion, such investigation could be made 
on closed business only. He went or further tu say that "when members 
learn of price situations that can be fairly and generally discussed, they 
are privileged to bring uo the point at these meeting. " He recommended 
further, however, that "nothing be done by "ry of agreement to bring such 
competition to a normal level." (**) 

Members "ere becoming more en: more interested in price and its 
varying oh^ses. From this point on the discussion of the price level, 
the listing oi nrioes, enc other phases of the price problem found a' more 
receptive attitude on the part of t: e members than had prevailed oefore. 

• C . Trade Association Activity — 1929-1935 

1^ 1929, the Steel Fount ers' Society conducted, a survey of pricing 
methods in the Steel Castings Industry. (***) 

It was found that 42 percent of all c.mcerns included in the survey 
quoted principally on scnedule; h2 percent principally on pound, or 
weight basis, and "^ mrctnt on a piece or unit basis. 

In the early d.evs of the Industry it was customary for foundries 
to sell their products at a flat price per pound. As a rule this covered 
anything the customer renuired, reg-rdless of pattern, size or character. 

Subsecuently, contracts were made -t one mice per pound for castings 
above r crrtrin weight with a ligher pound price oelo"- that weight. Still 
later ^ei^ht- schedules were developed in crude form. Concerning these 
schedules, Mr. 0. ?. ivo-ers, in tae 1929 surdrt^j is ouoted as follows: 
. "....In later rears they a've been refined and brought up-to-date, 

so that in some few instances tney may be considered fairly practicable, 

"Howev; r, flat prices or weight prices a; -'ell as scnedules 

are still used, prd t i^e re i s no s tandard practice. All will admit 

(*} Ibid 
(**) Ibid 
(***)G. P. Ho :ers, The Steel Castings Industry— 1929-pp. 123-124. 

9826 






some improvement in Methods of quoting prices, but »e pre p long way 
form ?n intelligent and sound solution. 

"Schedules may be an Improvement on the old flat rate method, 
but it is far from a scientific way of selling a product. 

"It does not follow that the costs of production on castings 
of the same wsight are identical. One may be compact, using simple 
cores or none at all, easy to mold and clem, with little hazard as 
to loss, and producing large tonnage per foot of foundry space. 
Another of the sa me weight may be long, with thin sections, taking 
large flasks, requiring the setting of intricate, cores, having 
a percentage of loss and producing a small tonnage per foot of 
foundry space. 

"There cannot possibly be the siaae cost of manufacture, and 
there can be no justification as sound business practice for selling 
these castings at the same price or oy a schedule of prices. 

"The only reasons I can see f _,r present aethods of 
pricing is because of custom, habit and lack 01 initiative 
to develop and adopt sounder methods. Yet all around us 
we fine irdustry pfter industry, from the farmer to the 
industrialist, '"hose methods of pricing their products have 
entirely charged from tiiose prevailing onlv a ie™ years ago. 

"This subject is not ne m , but it is, in my judgment, 
important, -^nd it is not- receiving from the industry the 
consideration or attention it deserves. 

"It is folly to "mit for the purchaser of castings, or 
unforeseen conditions, to automatically adjust this situa- 
tion. It should be studied carefully by the industry it- 
self, and the solution f ounc , followed by t : e pioneering 
courage to put it into operation. 

"In my judgment it has been no small factor in materially 
contributing more to the mice and pro! it t: ubles of the aver- 
age steel foundry than any other 'one thing, unless the producer 
had little or no method oi cost finding.. 

"No lighting equipment manufacturer ^ould think of 
selling his metal fixtures at tiie s? ie nrice based on weight. 
You do not buy , furniture on trie basis of the numoer of feet 
of lumber used in its construction. 

"I am willing to go on record against the soundness of 
the present method of quoting prices on steel castings, and 
to predict that * ith thorough study tnis condition can be im- 
proved, and once new methods are ojserved will oe aore satis- 
factory to the foundry interests and the industries trey serve 
than present-day oractice, In addition, this will contribute 
much tOTvprd the elimination oi factors tnat are now most dis- 
turbing. 



9826 



- 592 - 

"The production of castings is an art, not a standardized 
manufacturing process, and' with the growing tendency ti"srd 
alloy steel, ulus rapid strides in production methods and 
improved products, as well as new uses, it is going to become an 
industrv based more and -lore on craftmanship and technical 
knowledge. Consequently now is a most opportune time for 
effective consideration of this proDlem. " (*) 

A 'check" study 01 the Industrv 's original Pricing Survey 
was conducted by a private firm of engineers during 1933. The fol- 
lowing quotation is an exfrpct from this check report: 

"The Engineer requested copies of all 
schedules in effect in 1926, these 
schedule usually being for individual 
customers although in many cases several 
customers operated on copies of the same 
schedules, ..." 

"In a few cases tue companies were not selling 
on schedules in 1926, therefore general 
data were obtained regarding the various 
classes of castings which tney "'ere making. 



u 



"During tue examination oi the 1926 selling 
prices..., the Engineers found that in many 
case^ the schedules, were the same as tnose 
which were in effect in ly25, 1924 and in 
some instances, even in 1923...." (**) 

Apparently, during the period preceding approval of the 
code, a more or les r uniform nominal price level- ""as maintained. Price 
competition took the form of indirect concessions through changes in 
terms and conditions of sale rather than 'by changes in the existing 
schedules. 

The schedules in use trior to tne Code did not, m general 
provide for ouantitv differentials. Quoting further from the Engineer's 
report: (***) 

"In some cases the company would allow a 
general reduction oi 5 to 15 percent for 
quantity. In other cases special prices were 
given if the ourchaser insisted upon it, or if 
the company "felt inclined to do so. The prac- 
tice of reducing trie selling price per 
pound on the basis of the number of cast- 
ings per order was not uniform. ..." 



(*) G. P, Rogers - The Steel Castings Inoustrv - 1929 op. 123-124 
(**) Ford, Bacon and Davis Co. - Engineers-Report, Selling Price Sched- 

'■ ules for Miscellaneous Steel Castings-Dec, 29, 1933 - p. 11 
(***)lbid, p. 16 

9626 



- 593 - 



"rior to the Code, although small conoanies may, to a limited 
degree, have followed the price schedules oi their larger co roetitors, 
it is probable that they ircouentl" offered substantial discounts from 
list -prices as inducements to purchase. Ti:.e Code Autnority descrioed 
pre-code prices as the 

"....result of 'sweated' laoor conditions, 
chiseling and cut-throat competition; that 
when the Industry »ps operating at onlv 10 
percent of capacity, as it did during the 
great part of 193? and 1953, the foundries 
were forced to *ive their castings away, if 
necessary, simply to cover as much of tneir 
overhead as possible.... 

"For example, some foundries tnat specialized 
in medium "/eight and very heavy castings used 
to attach a nuisance value to small orders 
for very light castings. 

"Often they would accept a blanket order con- 
sisting almost entirely oi heavier type cast- 
ings but including a few lighter ones. In 
such cases an 8-cent or 9-cent price on the 
heavier castings might be consistent with 
costs, but, frequently, the lighter ones were 
thrown in at the same price regardless of 
whether or not such price represented a loss. 
The object was to onset such losses with 
profits realized from the sale of the heavier cast- 
ings. The lighter castings were tnus fre- 
quently solo at considerably less fcuan 
cost as 'Loss Leaders' to obtain orders on 
the heavier castings." (*) 

The following ouotation from the 19£9 Industry Report indi- 
cates that the Society was anticipating the possibility of establish- 
ing standard systems of pricing for the Industry's products: 

"Consequentlv now is a most opportune time for 
effective consideration of this problem. 

"It is my recommendation that this matter be re- 
ferred to the Industrial Kesearch Committee for 
study in cooperation with the Society, and that a 
definite plan be evolved for the establishment of 
piece prices, and that the question not onlv be 
taken up aggressively with the foundries them- 
selves, but that regular and constant publicity 
be given the matter, to educate both the pro- 
ducer and the- consumer to a piece price basis 

, wherever practical... 

(*) Letter from Code Autnority to members of Industry, November 20, 1934- 
pages 5 and 6. 

9826 



594 - 



"Then, -.if schedules must prevail, let them be brsed 
ort cuantitv purchases, not on weight or tonnage. "(*) 



However, little, if anything, prs done in tnis direction during 
the depression. , Lack oi standardization 01 products would have made 
any action to stabilize -prices an almost hopeless task. The classifica- 
tion of ^roducts accomplished under the Code was really the back-bone of 
the entire oren-price nlan in this Industry. 



(*) G. F. Rogers — The Steel Castings Industry — 1929, pp. 124-125. 



4P2fi 



- 595 - 

C HAPTER II 

FORMULATION OF TSS .CODE P ROVISIONS 
I. PROPOSALS FOR PRICE FILING T J5iPER THE CODE 

A. Indus t it Program for Price Filing as Submitt ed 

The first draft of the Code of which there is record is dated 
August 9, 1933, Article VII - "General Provisions" - is quoted "below: 

Section 1: 



Subject to the approval of Board of Directors, industry members 
may group themselves for administrative purposes into various subdivi- 
sions or product classifications and each subdivision may appoint its 
supervisory and/or administrative agency. 

Section 2 : 

Subject to the approval of Board of Directors, right is reserved 
to Code subscribers to nominate representatives who may meet to determine 
merchandising policies. 

Section 5 : 

Increases in productive capacity prohibited, except by approval of 
3/4 vote of the Board of Directors. 

An amended version was submitted on August 23, 1933. No changes 
were made in Section 1 and 3, but Section 2 was altered to provide for 
price filing in the following manner: 

(a) Power was vested in the supervisory or administrative agency to in- 
stitute price filing at its discretion. 

(b) A ten-day period was stiirolated during which members were required 
to file after such action was taken. 

(c) Price lists were to be individually prepared. 

(d) Price lists were to be disseminated to other producers of the same 
product. 

(e) Price changes could be filed subject to a minimum waiting period of 
ten days, unless the agency should authorize a shorter period. 

(f) Competitors were permitted to meet the effective date of the first 
filed price change. 

(g) Sales below filed prices night be prohibited at the discretion of 
the siipervisory agency. (The agency exercised its power by prohibiting 
sales below filed prices.) 



9826 



- 396..- 

TThen this original draft Code was submitted, no specific statements 
were nade b3 r the proponents indicating the need of a price filing provi- 
sion, the intended functions of sua 1 ', a plan, or the objectives to "be 
achieved. 

B. Omosition to th e Propo sed Provisions. 

The only 'industry protest regarding the price filing provisions of 
the Code received prior to approval was contained in a letter from the 
Thew Shovel Company, Lorain, Ohio, dated August 29, 1933. It is quoted 
below: 

"The Steel Foundrymen * s Association of America we under- 
stand are presenting at Washington a code covering the general 
scope of their industry, end in it is a "basic price list cover- 
ing steel castings purchased in respect to cost for various 
industries. 

"In the new price set-up are provisions for the Crane and 
Shovel manufacturers, specifically outlining the "base price of 
castings sold to that industry. That portion of the code is 
most objectionable and dangerous if our interpretation of it is 
correct. This portion would force all foundries' to sell cast- 
ings on a per pound basis and at a schedule of prices classed 
Recording to the weight of castings. They then intent to classi- 
fy customers according to industry and for each industry they 
will allow a blanket discount from the basic schedule. A quanti- 
ty discount is proposed of appreciable size, but only applicable 
for quantities ordered at one time and for specified deliverv. 

"As we understand the code, , the proposed method would place 
a decided penalty on simplicity of design and will not give the 
consumer the benefit of his engineering talent and experience in 
designing a simpler casting for foundry production over a casting 
of corresponding weight that may be more intricate in design and 
much more costly to produce. 

"llany consumers of steel castings have recognized the jus- 
tice and advantage of purchasing castings on a piece price. It 
has simplified the work, has resulted in no hardship to the foundry, 
and reduces the possibility of being placed at the mere:,* of the 
unscrupulous foundries who are inclined to add as much weight to 
the casting as possible when they are purchased on a pound price, 
T7e consider it patently, unfair to classify castings as just cast- 
ings. Each one is a separate piece of finished product varying 
from all other castings of the sane weight in molding, core 
labor, flash requirements, etc." 1/ 



1/ Letter to Administration from Thew Shovel Co., Lorain, Ohio — 
August 29, 1933— Code hecords Tiles. 



982S 



- 597 - 

Dae to the fact that Administration policy in regard to price filing 
had not crystallized at the time this Code was "being negotiated, there is 
a lack of Administration comment regarding many points which would, have 
teen subject to criticism later. 'The Research and Planning Division and 
Consumers' Advisory Board did, however, submit certain objections. 

Under date of October 11, 1933, the Research and Planning Division 
submitted, a report questioning the advisability of a ten-day waiting 
period for revised prices, contending that price changes should go into 
effect immediately after notice by telegram. (*) 

Under date of September 9, 1933, (two days after the public hearing), 
the Consiimers' Advisory Board reported that it did not object strenously 
to the open price provisions, although it believed that they might con- 
stitute the first basic step toward price-fixing. The Board suggested, 
that a provision making mandatory the amiling of price schedules to all 
buyers who so requested be included in order to "make the open price 
schedules truly open to buyers as well as to sellers." (**) 

II. TIE PRICR-FILIHG PLAIT AS APPROVED Ala) AMSKlCHD. 

A. Analysis of the 0:0 en-Price Provision as Appro ved 

The Code was finally approved on rlovember 2, 1953. Section 1 and. 2 
of Art, VII were substantially in the form contained in the August 23,(***) 
version. Section 3 had been deleted at the request of KRA. Section 2 pro- 
vided tiiat the price filing system could be inaugurated for any subdivision, 
at any time, at the discretion of the agency affected. There was no pro- 
vision for Administrative approval nor for suspending or abandoning the plan. 

General and subdivisional administrative agencies were provided, for 
as follows: 

"The Board of Directors of the Society shall be the general 
agency for the administration of this Code " (****) 



(*) Research and Planning Division - October 11, 1933 - Files, 
Division of Review. 

(**) Consumers' Advisory Board Report - September 9, 1933 - Code 
Records Piles 

(***) See p. 595 supra . 

(****) Code, Art. V, Sect. 1, page 304 



9826 



~ 598 - 

"Members of the Industry having a common interest and common 
problems may group themselves for administrative purposes in 
various subdivisions or product classifications, subject to the 
approval of the Board of Directors. The majority of members in 
each subdivision or product classification may appoint its agency 
with supervisory and/or administrative powers, subject to the Board 
of Directors. In the event that no such agency is so appointed, 
then the Board of Directors may appoint such agency." (*) 

llo such subdi visional agencies were ever set up. The Board of 
Directors was the agency which actually administrated the price filing 
provisions. Trie only duty definitely assigned to it under these provisions 
was the immediate distribution of each price list filed by any member to 
all other members engaged in the manufacture of "such specific product. " 
In actual practice the Code Authority went much further and established 
an, elaborate system of differentials, and rules and regulations to govern 
the price filing activities of the members of the industry. 

There was no provision in the Code requiring administrative approval 
of the rules specifically related to price filing; Section 4 of Article 
V however states: 

"Any action taken by the Board of Directors or other group 
within the Industry, for the purpose of making effective the 
provisions of this Code, may be submitted to the Administrator 
for approval, and shall in any case be subject to the disapproval 
of the Administrator. " 

The Code contained no provision specifying the types of products for 
which prices were to be filed, nor did it require administrative approval 
of the selection of products to be subject to price filing.. The only 
products which were actually subjected to price filing requirements were 
miscellaneous castings, covered b3 r an elaborate system of classifications 
and schedules. 

The Code contains the following provision as to filing of price 
changes: 

"Revised price lists may be filed from time to time there- 
after with the agency by any such member of the Industry to 
become effective on the date specified thereon " (**) 

This paragraph was so worded that it night have been interpreted as 
requiring that an entire new price list be filed in the event of a change 
in price on any individual item; however, this interpretation was never 
used in actual practice. Changes in individual price elements were filed 
regularly by members of the Industry. 






(*) Code, Art. VII, Sect. 1, page 307 
(**) Code— Art. VII, Sect. 2, Page 307 



- 599 - 



Price changes did not become effective -until ten days after the 
> filing date, unless the agency authorized a shorter period, and a pro- 
vision was included in the Code permitting competitors to file prices 
meeting a change on the same effective date. 

There was no requirement that file prices should continue in 
effect for any stated period before being superseded by new filed prices. 

The Code empowered the agency to decide whether products could be 
sold at less than filed prices. 

All of the rules and regulations published by the Code Authority :- 
were submitted for approval, but prior to the issuance of Office Memo- 
randum No. 336 (*) no formal action was taken by the administration. 

There was no requirement for the dissemination of price informa- 
tion to customers, nor for the dissemination of prices by members them- 
selves. 

The agency was required to distribute information "immediately", 
which was construed by the Code Authority to mean "by mail." 

There were no regional filing limitations, although prices were 
filed by regional groups of foundries. 

The price data were made available to members through a series of 
daily and quarterly reports. These quarterly reports furnished minimum 
or prevailing prices filed and in most cases the key numbers and the 
price schedules of the foundries which filed prices other than those 
generally prevailing. Sellers were clearly identified in the code autho- 
rity' s reports by a list previously distributed to all the members of 
the Industry. 

All prices were, by custom and by ruling of the Code Authority, on 
a "delivered" basis, that is, F.0.3. foundry with freight allowed to 
destination. 

There was no restriction on the destruction of price records. No 
substitute for filing with the central agency was provided. 

B. Amendments Affecting Price Filing Provisions. 

Early in 1934 The Code Authority submitted several amendments to 
the Code designed to reduce the possibility of evasion through the offer 
of indirect concessions. Not all of these were approved. 

Under date of March 14, 1934, the Code Authority forwarded a letter 
from which the following paragraphs are quoted; 



(*) Determination Respecting; Acts of Code Authorities and Their Agencies 
Which are Subject to Disapproval by U.S.A. — February 13, 1935. 



- bUU " 

"It is the intention of the Code Authority of the Steel 
Castings Industry shortly to petition the Administration to 
make several amendments to our Code. Amongst other will be 
one having to do with terms of payments. 

"In substitution of Section 7 of Schedule D of our Code, 
it is proposed to substitute a Section as follows: 

'Allow terms of payment more favorable to the 
customer than the standard terms established from time 
to time by the agency exercising supervisory and admini- 
strative powers over the Miscellaneous Castings subdivision 
of the Industry, pursuant to Article VII of the Code.' 

"The purpose of this letter is to inquire whether, in 
your opinion, such a general clause delegating general powers 
to the Code Authority would be approved. If not, we shall 
then draft another clause along the lines of the terms of pay- 
ment of the Iron & Steel Code, being specific in its terms. It 
would be desirable, however, to have the general authority out- 
lined above, if possible." (*) 

This proposed amendment was submitted to the various advisory boards 
and the Code Authority was advised as follows: 

"Replying to your letter of March 14 regarding the pro- 
posed amendment to Section of Schedule D of your Code, I sub- 
mitted this to our Legal Division which has replied as follows: 

'Replying to your memorandum of the 15th instant 
regarding the above, I do not approve of the suggested 
amendment. It is in effect delegating to the administrative 
Agency certain legislative powers. that even the Code Autho- 
rity does not possess. It is couched in such language that 
discriminatory terms or even arbitrary classification might 
be established. 

'In replying to- this communication I would respect- 
fully caution you not to commit yourself in advance to an 
approval of any proposed amendment similar to the one in 
the Iron and Steel Code which the Society mentioned in 
its letter. ' " 
The Code Authority in a letter dated April 5, 1934, submitted a 
comprehensive list of twelve proposed amendments and requested that a 
hearing be scheduled for their consideration. 

The first proposal amendment provided for the investigation of 
prices by the supervisory agency. This amendment was never approved and 
was apparently abandoned by the Code Authority. 



(*) Letter to H.R.A. from Steel Founders' Society - March 14, 1934. 



9826 



- 601 - 

The next amendment submitted constituted a revision of the one 
earlier proposal for deleting Sections 6 and 7 of Schedule D and sub- 
stituting new sections. This amendment imposed mandatory uniform cash 
discounts on all members of the industry, a small discount being allowed 
for payment on long distance shipments, within twenty-five days from 
date of invoice, and for payment within ten days on all other shipments. 

A representative of the Consumers' Advisory Board who attended a 
conference on the amendments proposed in the Code Authority letter of 
April 5, 1934 made the following comment regarding this proposal: 

"It would also seem more equitable to have the credit 
terms applicable to shipments from East to West be made 
reversible so as to apply also from West to East." 

Under date of June 21, 1934 the Consumers' Advisory Board commented 
on this amendment as follows: 

"We recommend the deletion of Section 7 which attempts to 
set up uniform terms, not only because we believe that it un- 
duly interferes with an individual member of the industry in 
his right to elect his own terms, but such enforced uniformity 
has assisted,, and will assist, an industry in accomplishing 
price fixing." (*) 

The Code Authority, in a letter of May 8, 1934, accepted the first 
modification suggested by the Consumers Advisory Board by making the 
credit terms applicable to .shipments from West to East. 

A further modification of the proposal was made by the Code Autho- 
rity in a letter dated May 14, 1934, to include all shipments from any 
plants in the United States, Alaska, the Canal Zone or any of the insular 
possessions of the United States. 

This proposal remained unchanged until the public Hearing, held on 
June 14, 1934 at which, at the request of the Code Authority, the last 
provision was changed to read as follows:. 

"....; provided, however, in the latter cases, that any 
member of the Industry. may allow such discount of one-half of 
one percent (i5o) for payment within 10 days on the basis of 
settlements twice in each month as follows: 

"'(a) On invoices dated from the 1st to the 15th, 
inclusive, of any month, such discount may be allowed on 
payment of such invoices on or before the 25th of such 
month; 

"'(b) On invoices dated from the 16th to the end of 
any month, such discount may be allowed on payment of such 
invoices on or before the 10th of the next following month.'" 



(*) Consumers' Advisory Board Memorandum - June 21, 1934 — Code 
Records Files. 



9826 



- 602 - 

prior to approval, this proposed amendment was further modified, r 
A provision was added which prohibited the dating of a sales invoice 
later than date of mailing of such invoice, or later than the third day- 
following date of shipment, and which lengthened the cash discount 
period for long distance shipments from 25 to 30 days from date of 
invoice. Sales to the United States Government Departments were exemp- 
ted, with the proviso that terms of payment to the Government were not 
to be more favorable than those prescribed by the Government pursuant 
to law. The amendment as revised was approved on August 11, 1934. (*) 

A similar provision, specifying maximum cash discounts for manganese 
steel castings, is contained in Section 12 of Schedule G. This was 
approved as Amendment III on October 2, 1934. (**) 

The next amendment proposed by the Code Authority in its letter of 
April 4, 1934 was the addition of the following new Section to bo added 
to Schedule D. 

"Sec. 8:" It shall be an unfair practice to: Quote prices 
for Steel. Castings for railroad and railroad equipment repair or 
maintenance purposes more favorable to the purchaser than f.o.b. 
freight basing point, seller's foundry, with the freight charges 
allowed to the nearest point on the line of the railroad purchasing 
the castings; providedfhowever, that for castings for new locomotive 
or car equipment to be built in the railroad's own shop or in a 
commercial locomotive and/or car-building plant, prices may be 
quoted f.o.b, freight basing point, seller's foundry, with freight 
allowed to destination; and provided further that new equipment 
shall be defined in accordance with American Railway Association 
Rules. " 

This proposal was modified by the. Code Authority's letters of May 
8, 14, and 31, 1934. This matter was referred back to the Code Autho- 
rity with the request that a ballot be taken among the members of the 
industry, in order that an exact appraisal might be made of their 
attitude on this question. Such a ballot was sent put and a majority 
of the members of the industry indicated their approval of the proposal. 
However, final results were not obtained and published until May 11, 
1935, so no action could be taken.. 

The next proposal covered the quoting of prices of castings on a 
per pound basis, as follows: 

(it shall be an unfair practice to-) 

"Sec, 9. Invoice castings at prices not based upon the actual 
weights thereof or quote or charge lump sum prices or prices per 
piece or per casting." 

(*) Amendment 1, Code of Fair Competition. Vol XV, p. 257 
(**) Code of Fair Competition, Vol. XVII, p» 293. 



-603- 

This proposal was nodified in the letter of Hay 3, 1934 to read 
as follows: 

: "Sec. 9. Invoice castings at prices not "based upon the 
actual weights thereof; provided, however, that ■■>iece -orices 
;-.ia; r he otioted if, after April 1, 1934, a member of the In- 
dustry has produced twenty-five castings or more from approved 
pattern eouipnent applying thereto and the average weight of 
such castings are used in computing the minimum piece -orices by 
multiplying the vendor's filed price per pound "cy the average 
v:eight of such castings." 1_/ 

This proposal remained unchanged throughout the negotiations. A 
public hearing was held on June 14, 1934, at which many protests were sub- 
mitted. ';It was claimed that the proposed amendmend would discriminate 
against the small foundries, and would also prevent bidding on most 
government work in view of the general requirement for lump sum prices on 
steel casting bids. The amendment was never approved. 

A further amendment was proposed to Schedule E of the Code which 
dealt with unfair trade practices relative to specialties. It imoosed a 
system of mandatory cash discounts on domestic sales of cast steel wheels, 
similar to that discussed above in connection with Schedule D. (*) This 
proposal was approved on August 11, 1934, 

The Code Authority letter of May 8, 1934, contained a proposed amend- 
ment to Section 3 of Article VII, (the Section prohibiting Sales below 
Piled Prices) , by the insertion after the words "shall sell" of the words 
"or offer for sale." 

This change was designed to prevent a member of the Industry from 
mailing a quotation below his filed price and then filing a reduced price 
ten days before the delivery date of the materials in question. 

The following comments were received from the advisory boards and 
divisions regarding the entire section: 

Prom the Legal Division May 14, 1934: 

"The 'waiting period' for filed price lists should conform 
with whatever nay be adopted by the Administration as a new 
polic3 r or. the subject." (**) 

Prom the Division of Research and Planning, May 16, 1934: 

"Ue feel that this provision should be amended to provide 
that p. 11 orice lists shall.be open to the inspection of all in- 
terested parties. Tie also suggest the deletion of the words 'at 
least' in the twelfth line." 

T[~ Letter to P. r ..A. - from Steel Pounders' Society - May 8, 1934 — 
Central Record piles. 

(*) Page 599 supra. • 

(**) Code Pecords piles. 

9R?fi 



- 604 - 

From the Consumer's Advisory ^oard, Mpy 21, 1934: 

"We recommend that filed -prices shall become effective immed- 
iately and shall he made available • to all interested parties, 
and that prices shall be filed with a confidential agency, 
obligated not to identity individual concerns in distributing 
information. " 

Under date of August 16, 1934, the Consumers' Advisory Board 
recommended the revision of the entire open price provision to conform to 
Office Memorandum 228, because of evidence ir their files indicating an 
almost complete uniformity of prices at higher levels than before. 

When these amendments were forwarded for approval the fieview Officer 
made the following comments: 

"3. Provisions of Article VII authorise establishment of 
subdivisional or grouo agencies within the industry. Such agen- 
cies are tnen empowered to declare operative open price systems 
for their respective subdivisions, at their option. Power is 
also given the subdivisional agency to prohibit sales below 
filed prices if the agency so decides. A 'waiting period ' of 10 
days is prescribed as an interim between filing date or price 
schedules and eifective date thereof. No provision is mace for 
publicity of price schedules for benefit of buyers as well as 
sellers. 

"This section is manifestly objectionable on several 
grounds including: 

"(a) The vagueness and uncertainty of iuture conditions which 
/surround the vesting with a subdivisional agency the right to 
declare in operation an open price system at anv time and to 
institute a prohibition against sales below the price filed, 
makes the provision undesirable from a general administrative 
standpoint. Even though no other ejection appeared, however, 
the right of a non-governmental and non-impartial body to 
declare in existence the 'prohibition against sales below filed 
price conflicts with the policy outlined by our Legal Division, 
with respect to matters involving property rights. _ Since sales 
below filed prices may effect rights of property of some mem- 
bers of industry, the prohibition is feli by members of Legal 
Division to be improper until confirmed by the ret of a gov- 
ernmental and impartial body. 

"(b) The 'waiting period' x:rovision is vitiative of policy 
declared by Office emorandum No. 22fc (which, however, is not 
required to be applied to approved codes). . 

"(c) Failure to make price lists available to buyers as 
well as sellers violates conditions set forth in ^olicy Memoran- 
dum of Octoutr 25, 1933," 

Despite these aoverse comments, the proposal was approved in unaltered 

QUOR 



- 605 - ■ 

form on August 24, 1934. (*) 

C. Functional Aspects oi Other Code Provisions Integrated With Price 
Filing Provisions as Adopted . 

The code provisions directly integrated with the nrice filing 
provision included: Prohibition of absorption of pattern costs, insur- 
ance costs or inspection charges, anc mandatory uniform cash discounts. 

Sections 8, 9, 10, 11, and 12, of Schedule D, which were approved 
by amendment on August 24, 1934, prohibited the absorption of certain an- 
cillary costs. This was done to prevent members of the Industry from in- 
directly selling below their filed prices. These provisions follow: 

" For all purposes of this Code, it shall be an unfair trade 
practice for any member. to do any of the following acts: 

"Section t . iFurnish pattern- equipment or alterations thereof 
at less than the actual cost pi production; provided, however, that 
if trie patterns are anc remain the property of the foundry producing 
them, it shall not be construed as a violation of this provis- 
ion for such foundry to absorb the cost of patterns or alterations 
in quantities of 500 or ore pieces from one pattern at one time. 

"Section 9, Absorb the cost of any insurance that may be 
carried to protect customers' patterns against fire and/or the ele- 
ments. 

"Section 1 . Accept responsibility, where there is no liabili- 
ty, for consequertial, special or contingent damages, or offer to 
do more than replace castings rejected due to defective workmanship 
and/or materials. 

"Section 11. Absorb any inspection charges incident to 
inspection b/ outside individuals or agent performed at the 
request of the customer. 

"Section 12. Quote or communicate to customers, directly 
of indirectly, a price before the effective date thereof per- 
missible under Tticle VII of the Code." (**) 

Uniform mandatory cash discounts were imposed in the sale of mis- 
cellaneous steel castings and cast steel wheels. (**) 

In addition to these code provisions, . the Code Authority from time 
to time adopted various rules and regulations. These were of these types: 
General Resolutions, Labor Resolutions, and Co nnercial Resolutions. Only 
the last are of importance as affecting price filing. The :iore signifi- 
cant of these are described in Exhibit II, below. 

(*") Amendment #2, Steel Casting Code, Aug. 24, 1934. Codes oi Fair 

Competition, Vol XV, p. 451. 
(**) Amendment 2, to Code of Fair Competition for the Steel Castings 

Industry - August 24, 1934. Codes of Fair Competition. Vol. XV, p. 454 

9826 



- 606 - 
CHAPTER III 
ORGANIZATION AND MECHANICS OF OPERATION OF OPEN PRICE PLAN 



The preceding chapter has dealt with the adoption and later 
modification by amendment of the price filing nlan, and certain re- 
lated provisions. In the following pages the methods employed to put 
the plan into nractical operation will be discussed. 



THE ADMINISTRATIVE ORGANIZATION 



The open price plan for this Industry was administered by the 
Board* of Directors of the Steel Founders' Society of America, the 
trade association which sponsored the code. This was t>ursuant to the 
grant of cower contained in Article V, Section 1, of the Code which 
provided that "The Board of Directors of the Society shall be the 
general agency for the administration of the Code." 

The actual administration was conducted by a professional staff 
consisting of an Executive Vice-President, a Secretary-Treasurer and 
a group of assistants. The first two positions were held during the 
Code period by Col. Merrill 0. Baker and Mr. R. L. Collier, re- 
spectively. Their actions were at all times subject to the approval • 
of the Board of Directors which constituted the Code Authority. This 
Board originally consisted of the following members: 

F. A. Lorens^ jr., Vice-President, General Manager American 
Steel Foundries, Chicago, 111. 

Clarence Tolan, Jr., President, Dodge Steel Corporation, Phila- 
delphia, Pa. 

Keith Williams, Vice-President, Pratt-Letchworth Conroany, 
Buffalo, N.Y. 

J. W. Glover, President, Glover Machine Works, Marietta, Ga. 

D. C. Bak^well, President, Duquesne Steel Foundry Division, 
Pittsburgh, Pa. 

R. L. Brooks, Treasurer, The Sawbrook Steel Casting Co., 
Cincinnati, Ohio. 

J. 0. Houze, President, National Malleable Steel Casting Co., 
Cicr-ro, 111. 

Paul R. Laussler, Vice-President, Omaha Steel Works, Omaha, Neb. 

J. F. Arnoldy, Secretary, Warman Steel Casting Co., Huntington 
Park, California. 

9826 



-607-- 

Each of these members was selected fron one of the geographical 
divisions into which the industry was divided, in accordance with the 
by-laus of the Society. 

There r/as no delegation of power by the Board of Directors to the 
executive officers as far as can he deduced. fron the records available. 
The tra.de association, The Steel Pounders' Society of America., was, to all 
intents and "ourposes, the Code Authority. 

Inasmuch as the activities of this Code Authority were financed by 
the dues ":>a.id into the Society by its members, no information is avail- 
able regarding the proportion of its budget which was employed in opera- 
tion of the ;orice filing "olan. It nay be assumed that a considerable 
pro-oortion of the income of the Societ3" was expended in furtherance of the 
plan, in view of its elaborate and complicated na.ture and the importance 
attached to it by the industry a.s a whole. 

II H3QI-IAIJICS 07 OPEE PRICE 0PERATI01I 

A. Classification of Products 

The Steel Casting Industr" is almost entirely, a special order in- 
dustry. Every item, with a ver]^ few minor exceptions, is made and pro- 
duced in accordance with customers' specifications. There is no manu- 
facture for stock or inventory, nor can "oredictions anticipating demand 
be made with rjiy degree of accuracy. Every casting is produced from a 
pattern which may be the ~oromerty of the customer or of the foundry. 
There are, literal^*", hundreds of thousands of patterns in existence, 
each differing, from a.ll the others to a. grea/ter or lesser' degree. It is 
obvious that such a lack of standardization in products necessitated a 
price filing system differing radical^ in character from the types em- 
ployed by industries whose products are more uniform in character. 

The filing of-orices uoon individual pa.tterns, even if possible, 
would have been too unwieldy to prove successful. It was, therefore, 
decided to establish specific classifications for individual consumer in- 
dustries having certain similar renuirements. Members were permitted to 
file prices covering ail castings enbra.ced in such classifications. 

Such a classification' of -oroducts was an enormous task. ' Its success 
depended upon the activity of the Definitions and Classifications Com- 
mittee of the Code Authority. This Committee, though a.t first not under 
that name, functioned during the entire Code period. (*) It was composed 
of a representative from each of the eight industry divisions. Erom time 
to time it met. to review classif ica.tions and schedules filed by members. 
Hew cla.ssif ica.tions required approval by the Committee in order to be- 
come effective. 

A tabulation conroiled from daily and quarterly price reports (**) 
showing the increase in the number of classifications "between December 5, 
1933 and iiay 23, 1955 is presented in Table VII, below. 

(*) Commercial Resolution ]!o. 22 a.dopted ila.y 7, 1934» 

(**) See Section E, Dissemination of Price Pilings, p. 621 below. 

9R?fi 



- 608 - 
Table VII 



GR07TH OF NUMBER OF PRODUCT CLASSIFICATIONS DURING THE 

CODE PERIOD 



Date 



Number 



Quarterly Report 
Number 



1933 



1935 



Dec. 5 
" 26 
March 51 
June 16 
Sept. 20 
Dec. 13 
March 27 
May 23 



532 
774 
1,117 
1,149 
1,130 
1,190 
1,241 
1,221 



aJ 

a/ 

1 

11 

111 

IV 

V 

V 



Source: Compiled by Statistics Section, NPA from Daily Price 
Reports of Steel Founders' Society of America, 
a/ Daily Report 
by Summary Report by Society 



B . Quantit y and Weight Differential s 

Product* classifications having been establisned, it was next con- 
sidered necessary to standardize quantity and weight differentials. 
The Society describes the steps taken in this direction in the follow- 
ing terms: 

"The second major step in the design of a superstructure or frame- 
work which made possible the orderly filing cf prices was tc 
examine the. past practice of the Industry regarding differen- 
tials based upon various weights and quantities of castings 
ordered. A study of this matter revealed that a series of 
weight and quantity brackets could be set uo which would 
coincide with or closely parallel practically all of the 
schedule structure in use by the Industry. The following 
structure resulted. 



9826 



•• - 609 - 

Table VII I 

TJNTINIS ID STEEL CASTINGS - PRICE PIE IS. - NET 

Quantity is determined by the number of pieces fron one pattern ordered 
at one time 



Number of Pieces 

10- 25- 50- 100 250 500 1,000 2500 

WEIGHT PEP, PIECE - l- 3 U- 9 2h ^ i j0j to ^ to to and 

L -' s - 2'!-S U99 999 2U99 over 



1 tO 5 lbs.(*) 

Over 5 " 10 " 

" 10 » 25 " 

n 25 " 50 " 

» 50 " 100 lbs. 

11 100 » 250 » 
" 250' " 500 " 

" 500 i' 1000 11 

" 1000 " 2500 " 
« 2500 II 5000 " 

" 5000 » 10,000 lbs. 
" 10,000 H 25,000 " 
11 25,000 " 50,000 " 
I' 50,000 'i 100,000 'I 

Over 100,000 lbs. 



"This franevork lends itself to adequate flexibility as far as prices 
being filed is concerned since a foundry may specify 'N.Q.D.' — ' Jjq QUANTITY 
DIFFERENTIAL' if it desires to apply a unit price regardless of quantity but 



(*) For castings under 1 lb., special piece prices ':;\y be quoted. 
9S26 



- 510 - 

varying as to weight per casting. Sirr.ilr.rl7 '• T .0.D. over 99 nieces' 
means that quantity differentials apply out as far as 99 pieces but 
the price for 50-99 -oieces would apply on 100 nieces or more, 

"The nature of this structure indicated the reason why steel 
foundries did not apply so-called 'manufacturers discounts.' The 
manufacturer who ordered in larger Quantities secured nis discount 
or price differential "by reason of the larger quantities taking cor- 
respondingly lo v, er prices oer pound justified oy lower costs attend- 
ant unon Quantity production, whereas the casual buyer of only a few 
cartings Pays more per pound, Thus the natter of discounts to quan- 
tity buyers is taken care of in the Drice structure itself." (*) 

The engineers who examined and spot-checked the "Price Study" (**), 
indicated that the nractice of allowing discounts for quantity was not 
uniform. In many instances, in their examination, "the quantities at 
which such discounts started were not clearly defined. " Evidently the 
Society was able to obtain more complete data on ouantity differentials 
than the engineers .vho had included only a small sarrole of foundries in 
their study. * 

The N.Q.D. method of limiting discounts, described above, was ex- 
tensively used throughout the filing of -orices. The Society, commenting 
on the adequacy of the system stated: 

"It is a composite of the best experience of the Industry as 
regards schedule structure. It has been found adequate, thorougnly 
adaptable and satisfactory." 

C. Suggested Schedules Based on "ffornal" Price Levels 

The Society next took steps to furnish a guide to members as to 
"fair and reasonable" prices. Quoting from its own summary of its ef- 
forts in this direction. 

"The third major problem in developing a price structure was to de- 
termine as a guide to the Industry, what could oe considered fair 
and reasonable prices. This phase was covered by an extensive sur- 
vey of -orice levels which required many months of work. The re- 
sults of this survey were later verified ~oy an "outside engineering 
organization of national reputation by an actual survey in the 
field. They reported that the methods employed were sound and the 
conclusions accurate. 

"The -ooint of departure in determining -orices which might reasonably 
be expected to attach tu the products of the Industry was a normal 
level of -prices . The year 1926, generally regarded as a normal 
business year, was taken as a ba.se to determine normal price levels, 
in spite of the fact that statistics for that year showed anything 
but a satisfactory condition in the Industry as regards profitable 
operation. " 

(*) Letter from Code Authority to foundries — November 20, 1934 — 

Code Records Piles 
(**) See Chapter one, Sec. II, 3b, above. 

9826 



- 611 - 

"It was concluded that trices 'prevailing in 1926 could oe converted 
. into prices that might -reasonably be expected to prevail in the 
last quarter of 1933 (when the survey nas concluded) by applying 
the index composed of the. elements of labor costs, raw material 
costs, etc. Such an index was developed which quite accurately re- 
flected foundry production costs by substituting in the formula the 
average hourly wage rate of foundry ervoloy'ees, the published market 
auotations on the principal materials entering into the -oroduction 
of steel castings^, etc. Equating this index at 100 for the year 
1926 it was found' that it stood at 87 in the fourth quarter of 1933. 
Thus prices current for the latter period might reasonably be ex- 
pected to be around 87 -oer cent of the levels prevailing in 1926." 

"The next step was to segregate all of the classifications which 
had been developed, into groups which normally sold at approximate- 
ly the same level of price. It "as found that there were 21 such 
groups, each of which represented a differential in price level 
from that of the Guiier 20. This dictated the necessity of provid- 
ing 21 different levels of price from which the foundries could se- 
lect one or more to apply to each classification in which they were 
interested. 

"The following steps were taken in evaluating these 21 schedules: 

"First - a master pattern was developed containing values in the 
weight and quantity brackets previously described, such that each 
such feature of this master pattern was the fact that the values 
inserted in the framework were such as to give effect to the nor- 
mal differentials applying to various weights and auantities. 

"The prevailing 1926 -orices for the 21 groups of classifications 
were then expressed in terms of discounts from this master pat- 
tern of values (not prices) and these discounts were converted in- 
to corresponding 1933 discounts by means of the sliding scale in- 
dex, previously explained. Applying the resulting differential 
discounts of 1933 to the 21 groups, it was possible to construct 
21 schedules representing as many different levels of price ad- 
justed for changes in production costs between 1926 and 1933. 

"This was the genesis of a series of schedules from which foundries 
can select a level of price to apply to any one class of castings." 
(*) 



(*) Study of Schedules for miscellaneous Steel Castings Based upon 1926 
Levels. — Steel Founders' Society — November 10, 1933. p.p. 3, 4. 



9826 



- 612 - 

Conies of this report were submitted to all members of the 
Industry about November 10, 1933. Each of the 21 -orice levels re- 
ferred to above was designated by a letter of the alphabet, ranging 
from A through U. The schedule designated by A was the highest in 
price, that designated by U, the lowest. For each t>rice schedule was 
shown a list of product classifications which the Society considered 
apuropriate to it at the time. The schedules were computed on a 
"delivered tirice" basis, thus having the effect of making uniform a 
practice of quoting delivered prices to point of destination, whereas 
previously f.o.b. foundry or other point; or f.o.b. foundry, freight 
•allowed to destination, were commonly used. 

The Society invited the members to file their price schedules or 
actual prices, and to criticize the report. Most of the foundries 
indicated ap-oroval, though a number of changes were proposed. Ap- 
parently these suggested modifications were averaged with the original 
figures. As a result certain of the schedules included in the original 
report were reduced and a few increased. Many new classifications were 
added* Shortly thereafter, on December 5,- a new report (*) in booklet 
form was issued to the foundries showing the revised schedules and 
classifications. 

Table No. IX which follows gives a s-oecimen of the nrice schedules 
and shows the actual price variations given for certain quantity and 
weight groups under each of the alphabetical classes. 



« 



(*) Idem — Revised Report — December 5, 1933 



9826 



613 ~ 



TABLE IX 



Changes in Price Between Schedules for Various Weights and Quantities of Castings 

(Price per Pound) 
SCH EDULE Weights and Number of Castings 



1 to 5 lbs. 



1 to 3 90-99 
•pes. pes. 



10 to 25 lbs, 



1 to 3 
pes. 



50-99 
•pes. 



50 to 100 lbs. 



250 to 500 lbs. 



1 to 3 
pes. 



50-99 

PCS. 



1 to 3 
pes. 



50-99 
pes. 



A 


$0,557 


$0,404 


$0,348 


$0,253 : 


$0,232 


$0,180 : 


$0,178 fl 


50.152 


B 


.469 


.340 


.294 


.213 : 


.196 


.152 : 


.150 


.128 


C 


.436 


.316 


.273 


.198 : 


.182 


.141 . 


.140 


.119 


D 


.408 


.296 


.256 


.186 : 


.171 


.132 


.131 


.112 


E 


.38;. 


.277 


.240 


.174 


.160 


.124 


.123 


. .104 


F 


.362 


.262 : 


.227 


.165 : 


.151 


.117 


.116 


.099 


G 


.348 


.253 


.218 


.159 : 


.146 


.113 


.112 


.095 


H 


.335 


.243 


.210 


.153 ■ 


.140 


.103 


.108 


.092 


| I 


.321 


.233 


. .202 


.146 


.134 


.104 


.103 


.088 


* J 


.308 


.224 


.193 


.140 : 


.129 


.100 


.099 


.084 


K 


.288 


.209 


.180 


.131 


.120 


.093 


.092 


.079 


L 


.275 


.199 


.172 


.125 


.115 


.089 


.088 


.075 


M 


.261 


.190 


.164 


.119 


.109 


.085 


.084 


.071 


N 


.248 


.180 


. 155 


.113 


.104 


.080 


: .080 


.068 





.235 


.170 


.147 


.107 


.098 


.076 


: .075 


.064 


P 


.221 


.100 


.139 


.101 


.092 


.072 


: .071 


.000 


Q 


.201 


.146 


.126 


.092 


.084 


.065 


: .065 


.055 


R 


.188 


.136 


.118 


.085 


.078 


.061 


; .060 


.051 


S 


.174 


.126 


.109 


.079 


.073 


.056 


: .056 


.048 


T 


.152 


.112 


: .097 


.072 


.067 


.053 


: .052 


.045 


U 


.1.47 


.107 


: .092 


.067 


: .062 


.048 


: .047 


.040 


Source: 


Price Study, Stee 


1 Founders 


1 Societ, 


/■ of America, Novem' 


ber, 1933 





♦ 



With respect to -the general price levels represented by the schedules, 
the claim made in the second paragraph of the quotation from the industry's 
Price Study, above, that 1926 was not a satisfactory profit year, is note- 
worthy in view of the earnings data presented in Chapter One of the present 
report (*), from which an ouposite conclusion might be drawn. Returns 
from about 40 companies tabulated there showed earnings during 1926 of 7.3 
per cent of sales, as compared with 5.3 per cent in 1925 and 4.3 per 
cent in 1927. 



Ford, Bacon and Davis, Inc., Engineers, who reviewed the Industry's 
Price Study, made the following comment: 



(*) Table VI, Earnings and Capital Turnover, Chap. One, I, A, A, 



OROa 



- 614 - 

"During the examination of the 1926 selling prices, 
the Engineers found that in many cases the schedules used 
in 1926 were the same as those which were in effect in 1925, 
1924 and in some instances even in 1923. Beginning in the 
latter -oart of 1926 the selling -prices generally scaled down- 
ward and in most cases 1927 and subseauent schedules were at 
lower selling -prices than those of 1926." ■(*) 

Prices and -profits were apparently at relatively high levels in 
1926. and 1929. The latter seems to have been the better year* .especially 
for " specialty" castings* It is also interesting to note that orice 
levels in the Iron and Steel Industry during the last quarter of 1933 
were about 80 per cent of the 1926 level; and in the Malleable Iron 
Castings Industry about 65 per cent of the 1926 level; The comoosite 
price index number, published by the National Bureau of Economic 
Research, on "-producer ' s goods for capital equipment" was aooroximately 
80, based on 1929 as 100. Durable goods -prices on the average, were 
slightly lower in 1929 than in 1926. (**) 

If the above figures may be taken as criteria, the 87 -per cent of 
1926 prices taken by the Steel Castings Society as apnroximating "normal" 
for 1933 may have been a relatively high level for the industry's 
products. 

D. Regulations C o nce rning -Filing; of Prices and. Terms of Sale 

The following summary describes in general the requirements for 
filing of prices' and terms of sale as -prescribed by the Code and the 
Commercial Resolutions of the Code Authority,' and gives a comprehensive 
view of the industry's oricing practices so -provided.. 

(l) General Rules for Filing Prices 

(a) Every steel foundry was reauired to file a list 
of its current prices with Steel Founders' 
Society, comprising all classifications of castings 
in which it was interested or upon which it would 
quote were it requested to do so. 

(b) Every steel foundry was required to file a schedule 
of extras applying, to alloy additions, heat treat- 
ments, ' specif ications , etc., which were to be 
added to the schedules filed to cover rough carbon 
castings only. 

( c) Standard machining operations on Railway Car 
Bolster Center Filler Castings were included in 
the extras upon which interested ' foundries were 
to file. 



(*) Ford, Bacon and Davis, Co. - Engineers T Study of Price" Schedules.;/ in 
Steel Castings- Industry. 

(**) Monthly letters from National Bureau of Economic Research. 

9826 



- 61b - . 

(d) Plain carbon casting prices filed had to be in 
terms of minimum delivered nrices of rough 
castings, and foundries were not to quote below 
their own filed -prices. 

(e) Prices filed on letter schedules related to 
rough, unfinished, unmachined miscellaneous carbon 
steel castings, either unannealed, annealed or 
normalized, but did not include cost of pattern 
equinment, machining, carbon and alloy additions, 
or other extras. 

(f) A foundry had to file unon any classification of 
casting before it was privileged to quote or 
accept business thereon. 

(g) It was required that a foundry wait ten days after 
filing a mice lower than any filed by other 
foundries on similar castings before quoting or 
using this price. 

(h) A foundry was allowed to quote a price on the 
same day it filed the price with the Society, 
provided such filed price was not lower than 
prices on similar castings filed by any other 
foundry. If, however, a foundry filed to meet 
a new low filing of some other foundry that did 
not become effective until ten days after the 
other foundry filed it, the foundry filing to 
meet this low filing was not to quote or use the 
new low price until the date the price filed by 
the original filer .thereof had become effective. 

(i) Foundries desiring to establish specific new clas- 
sifications were to make application for approval 
thereof, but could not use such classifications 
for pricing purposes until the Industry's Defini- 
tions and Classifications Committee had an-oroved 
them. 

(j) If a new classification was filed by any foundry, 
all foundries interested in -producing and selling 
castings coming under such new classification 
were required to file their current price thereon 
and could not continue to classify such castings 
under some pre-existing classification. 

(k) The burden of proof that a lower price was being 
filed to meet competition rested with the foundry 
so filing. 

(l) If a foundry had made a contract at a certain price 
and later revised its price upward, it was to file 
with the Society full details regarding such con- 
tract, giving effective date, expiration dat* or 



3826 



- 616 ~ 

termination clause, name of customer, classifications 
cf castings covered, and trices applying \o each 
classification. 

(2) Quotations 

(a) Quotations were not to be matfe at -orices less than 
the delivered -prices filed with the Society. 

("b) In the cr.se of castings uoon which the actual 

weight was unknown, the foundry was required to 
quote a -oer lb. -orice only and not a lunro sum 
price, and in the event the weight was estimated 
to fall at a point near the dividing line between 
two weight divisions on the schedule, it was to 
quote the per lb. prices which ar>t)lied in either 
circumstance, i.e., if the actual weight was 
later found to be above or below the dividing 
,line weight. 

( 3 ) Invoices an d Bis ount s 

(a) Foundries were not to date invoices later than the 
date upon which they were mailed or later than the 
third day following the date the castings were 
shipped. 

(b) Foundries could not grant discounts greater than 
provided in Section 7 of Schedule D of the Code as 
amended. 

(c) The maximum discount allowable for cash was 1/2 of 
1 per cent. (See new Section 7, Schedule D, of 
the Code). 

(d) There were no so-called manufacturers' discounts; 
the quantity differentials on the letter schedules 
provided for customers that bought in larger quan- 
tities. 

( 4 ) Quantity on Order 

(a) The quantity on an order was normally the number of 
castings ordered at one time, from a specific pa.ttern, 
which was required to be shipped or invoiced within 
90 days from the date of the order. 

(b) The foundry could not negbtiate a contract for a 
larger quantity of castings and deliver a smaller 
quantity at the same -orice r>er casting applying 
to the larger quantity. 






3826 



- 617 - 

(c) Castings that were ordered in pairs or sets were 
priced upon the quantity of each individual type 
of casting included in the pair or set. 

(d) Where patterns were so constructed as to produce 
two or more dissimilar castings joined together, 
and where the customer ordered such combinations 
of castings shipped in one piece, the number of 
ea.ch separate component casting determined the 
quantity of each, and the prices were based upon 
the individual weights. 

(e) Where patterns were so constructed as to produce 
multiple castings of the same design but cast 
integrally in one piece, the auantity was de- 
termined on the basis of the total number of 
individual castings so joined, and the weight of 
the individual casting was determined by dividing 
the total weight of the integrated castings by the 
total number of individual castings so joined. 

This was not, however, to be construed as preventing 
the joining of members of an assembly, which were 
previously cast separately, but which could be re- 
designed in integral form, to be used as received 
from the foundry in such integral form. 

(5) Pattern Equipment 

(a) All pattern eauipme.nt furnished by the foundry was to 
be billed to the customer at not less than what it 
costs the foundry to make it. 

(b) Pattern alterations made at the customer's request 
could not be charged to the customer regardless of 
whether the -oat terns belonged to the foundry or the 
customer . 

(c) Foundries could not repurchase pattern equipment 
from customers in violation of Section 2 of 
Schedule D of the Code. 

(6) Machini ng • ■ 

(a) All machining performed by the foundry was to be 
billed to the customer at not less than cost. 

(b) It was not permissible to partially machine 
castings without charging for the machine work 
performed. 

(c) Holes drilled in lieu of using cores did not need 
to be considered machining within the meaning of 
Section 4 of Schedule D of the Code. 



982C 



~ 61R - 

( 7) Inspection Charges 

(a) Foundries were to charge customers for expense 
incurred for inspection by outside individuals 
or agents when the customer specified such 
inspection. 

(8) Back Charges for Welding 

(a) Foundries could not agree to accent without 

reservation any and all hack charges for welding 
by the customer. Should the foundry agree to 
accept such back charges, such acceptance could 
cover only individual castings or jobs in question. 

(9) Pattern Insurance 

(a) Foundries could not absorb the cost of insurance on 
patterns belonging to their customers and were 
required to charge the customer his proportionate 
share of the cost of "blanket" policies carried 
by the foundry. . 

(10) Responsibility for Damages 

(a) Foundries could not agree to accent responsibility 
for consequential, special or contingent damages 
when otherwise they would not be legally liable 
for such damages. 

( 11) Summary 

These rules operated to insure a uniform relationship 
between filed and actual -nrices. The filing agency 
realized the futility of attempting to gain success of 
operation by publicizing only one or two elements of a 
pricing structure, such as list prices and quantity 
discounts. Instead, from the start, the Agency made 
mandatory the filing of nractically every conceivable 
element in the structure, including even contracts in 
certain instances; and defined as closely as possible 
all merchandising practices, ruling to be unfair any 
that might interfere with attainment of the ends sought 
under the price filing -orovision. 



982G 



- 619 - 
E. Filings For Different Distribut i on Channels 

The principal channels of distribution for castings are (l) Sales 
Representative, Manufacturer's Agent or Commission Salesman, (2) mid- 
dleman, and (3) purchases by customer-users. 

1. Sales Representative, Manufacturer's Agent, etc. 

A. Sales representative, ^J manufacturer's agent or commission 
salesman is a person, firm or corporation that solicits orders for 
castings on behalf of a foundry. Such orders are referred to the foundry 
for acceptance or rejection, the foundry billing and shipping direct to 
the buyer. The salesman or representative guarantees payment of the 
invoice, assuming all or part of the credit risk. The title to the 
castings never passes at any stage of the transaction to such repre- 
sentatives or salesmen. 

Prices were not filed with respect to sales handled through this 
type of distributor. It was understood that the prices they quoted 
were to be not less than those filed by the foundry by whom they were 
employed.. Nor w\e it necessary to file the terms of any contracts with 
such representatives or salesmen, since' these persons were employees 
of the foundry, who were remunerated for their services either in the 
form of a commission, salary, bonus, or a combination of these. 

2. Middleman 

The second class of distributor, known as a Middleman , (*)is a 
person, firm or corporation that performs a jobbing function for the 
foundry, buying the castings outright and reselling them as rough steel 
castings, in the same condition as received from the foundry, to the 
middleman's own customers. The middleman does the billing, and assumes 
the full and ultimate credit risk on the resale transaction. A pur- 
chaser may not be classed as a middleman and may not receive a discount 
in the event he machines, finishes, processes or fabricates the castings, 
or assembles them into integrated devices, machines, equipment or 
products of any sort. 



^J Definition contained in letter sent to foundries by Code Authority 
on May 24, 1934 

(*) Ibid 



- 6?0 - 

It was required that all prices to middlemen be "filed. They could 
"be expresred in. terms of discounts off regularly filed prices, provided 
such middlemen agreed to resell the castings at not less than the prices 
filed by the foundry that produced them. Such filings were required to 
give the following information: names and addresses of the specific ac- 
counts to which the discount was to apply; the character of their "busi- 
ness; the nature of the. services they rendered; and the precise terras 
of the agreement with respect to the orices at which the castings were 
to be resold. 

The purpose of providing for a discount in the case of middlemen 
was to permit a foundry that was unable to cover certain territories 
economically with its own regular sales representatives to secure busi- 
ness through agencies that were in a position to service such territories 
and were willing to assume the full credit risks in connection with the 
resale of the castings. The extent to which these prices to middlemen 
were filed will be discussed in connection with statistical analyses in 
the following chapter. 

3. Customer-User 

The third class of distribution is that of sales made directly to 
user. The purchaser, the Customer-User (*) is defined as a person, firm, 
or corporation that purchases castings direct from the foundry or from 
a middleman for the purpose of using the castings either as a proprietary 
article of commerce in the same condition as received, or as parts or 
components of integrated structures, machines, assemblies, devices, or 
pieces of equipment. 

It was required that all prices to customer-users be filed in terms 
of the letter schedules illustrated above (Table IX). Filings in cerms 
of discounts off previously filed prices were not acceptable. Prices of- 
fered to specific 'customers on s-oecific inquiries or orders were not re- 
quired to be filed, as- it was understood that such trices were to be not 
less than those already filed by the foundry. However, where a quotation 
had been given in connection with a specific project and it was necessary 
for the foundry to wait more than 90 days before receiving the award or 
release to produce and ship'"the castings, quotations or contracts had to 
be filed. In such cases it was required that a copy of the quotation or 
contract be filed with the" Society within 90 days from the' date thereof, 
indicating the reason for the delayed acceptance or release of the ship- 
ment. 

There are no statistics available to indicate the volume of castings 
accounted for by each class of buyer listed above. However, it is safe 
to say that by far the major part of the Industry's output is sold direct 
to user. The prices filed on sales or quotations to users are those 
tabulated in the Daily Price Reports. 

There is a small percentage of output which is sold by various found- 
ries to affiliate companies. The prices on such sales were not subject 
to filing regulations. 
(_) _____ _ 

9826 



- 621 - 
F. Dissemination of Price Filings (Publicity ) 

The Steel Founders' Society of America, loca.ted in New York City, 
which was both the Code Authority and the Price Filing Agency, was the 
headquarters for the receipt and dissemination of all prices filed during 
the Code. Industry members sent price filings and revisions, usually by 
mail, to the Agency, 

1. Daily Price Reports 

The Agency, upon receiving the filed price, reviewed it in order to 
determine whether it was a new low price for the Industry, a filing to 
meet competition, or simply a revision of a price previously filed on the 
classification in question. After its status was decided, the new filing 
was included with others, and typed and mimeographed, usually in the same 
language as received, The various pages of filings were combined to form 
what was termed the Daily Price Report. 

During the Code period, 386 of these reports were issued to the mem- 
bers of the Industry. The first daily report was distributed on Decem- 
ber 15, 1933. In Daily Reports Ho. 1 to 29, inclusive, only prices which 
were lower than those contained in the December 5 Report, the first quart- 
erly report, and in Daily Report l!o. 6 were included. As has been stated, 
Daily Report No. 6 contained price schedules which were lower than those 
tabulated in the December 5 submission. In these early Daily Reports the 
effective date of the price was usually indicated, though many were list- 
ed in which the date was not specified. Beginning with Daily Report No. 
30, the Agency reported all prices filed, whether they were lower or 
higher than the Schedules in the Reports referred to above. The dates the 
schedules went into effect were also consistently tabulated. 

Daily Price Report No. 60 initiated a revised system of reporting 
by the Agency. Thereafter, •■throughout the Code period, reports were com- 
piled xn the following form, 



EFFEC- SCHED- * 

FDY. FILED TlVE CASTING CLASSIFICATION ULE 

NO. 1955 1935 FILED 

402& 3/18 4/l File same classifications and schedules for 
602 Railway Cstgs. as filed by Foundry 105 and re- 

ported in Daily Report #333. 

407 3/18 3/18 Valve Bodies K R 

11 " " " Parts-Pressure, NOCBN K " 

11 " " " " " - Bonnets K " 

" " " " " " " (.With Yoke Cast 

Integrally) K 



1! 



» » » _ r.a-na V II 



- Ca-ps |£_ 



The above form is self explanatory, untib the exception of the column. 
The letter in this column indicates the status of the filing (L for new 
low or minimum schedule; T for ne v ' classification, T7 for withdrawal, and 
R for merely a revised Schedule). About September, 1934, the following 
indications of status were included in the reports: DL for signifying div 4 ^ 
isional low schedule; DN for divisional new classification; and H for a 
schedule which represented a price increase over the one previously filed. 



- 622 - 

In addition to schedules and "classifications, various notices con- 
cerning price filing policy, originating with the Agency and designed to 
emphasize certain rules and regulations, were included in the Daily Re- 
ports. Other such Reports contained statenents filed by members con- 
cerning contract relationships, freight allowances to railroads, discounts 
allowed to middlemen, extras, and similar information. These reports re- 
presented attempts to insure a maximum of publicity. 

According to information supplied by the Society, filings for over 
150,000 items were made. This is assumed to mean not only filings on in- 
dividual classifications of various products, but also other items, .such 
as withdrawals, price extras, etc. There were 4,763 filing schedules 
submitted by the foundry members. Many of these, of course, were on great 
numbers of classifications; many were statements on discounts, filing of 
extras, etc. The number received from the various geographical Divisions, 
follows: 

TABLE X 

AVERAGE NUMBER OP PILINGS PER FOUNDRY , BY DIVISIONS (*) 



Number of 



Division 

I 

II 

III 

IV 

V 

vYI 

VII 

VIII 



Number 


of 


Number 


of 


Pilings 


Times 


Piled 


Foundr 


Les 


Per Foundry 


739 




31 




23.8 


500 




10 




50.0 


199 




13 




15.3 


540 




25 




21.6 


1,025 




23 




44.5 


1,233 




41 




30.3 


180 




16 




11.2 


347 




34 




10.2 



Total 



4,753 



193 



24.6 



Source: Compiled by Statistics Section, IT.R.A. , from Daily Price Re- 
ports of Steel Founders' Society of America. 

Divisions V and VI accounted for nearly a half of the major filings, 
while foundries in Divisions II, V, and VI filed most frequently. Div- 
isions V and VI also accounted for over 40 per cent of the Industry's 
volume. (See Table III Page 575 Chapter I) 

Table of the appendix gives an idea of the approximate number of 
days elapsing between the date a price was filed by the foundry and the 
date of its inclusion in a daily price report. The date of the post-mark 
was taken as the date of filling. This table was developed in three parts. 

(*) While this compilation does show satisfactorily the approximate num- 
ber of times a foundry filed, it does not, in any manner, indicate 
the number of items filed uoon. 



9826 



623 - 624 

The first, Appendix Table V-A, shows the average number of days ela-osed 
for each type of filing. The second part, Appendix Table V-B, shows a 
similar average based only on filings for which the elapsed time was less 
than 10 days, (the length of the waiting period in the cases of new and 
low filed schedules). The third section, Appendix Table V, is based on 
cases in which the elapsed time was tern, days or longer. 

The time elapsed between receipt of schedules and their dissemination 
to the industry varied with the distance of the Division from the New York 
headquarters of the Code Authority. For the Southern and Pacific Division, 
(Divisions III and VIII, respectively) the period was longest. For Div- 
isions I and II, the Divisions nearest New York, the most common type of 
filing, a revision of a previous list, was usually reported to the Industry 
within two days of receipt; . 

The third part of the table presents averages of filings which, for 
reasons usually not known, were not reported to members within ten days 
after their filing. There were 145 such filings, some of which were not 
reported until after two or more months had elapsed. The agency submitted 
explanations with reference to some of these delays. The following case, 
a low filing for six classifications, was not reported for 18 days. 

"This filing was made on January 20. This office 
attempted to secure confirmation but received no response. 
A Lingly we are now reporting this filing to the industry 
hi i under the circumstances it must, of necessity be consider- 
ed as effective at once," (*) 

The second case, a filing listing 10 low and 139 revised schedules 
was unreported for 27 days: 

"In Report No. 95 s foundry 815 was listed as filing 
the same prices as 4 other foundries. Due to an error 
in checking the filing we erroneously reported their 
filings as being identical with those of the other four 
foundries mentioned in the notice. A recheck indicates 
that Foundry 105 filed the same prices as these other 
foundries with the exception of a few not filed upon 
and a number of additions." (**) 

The only other case of delay explained by the Agency was for filings 
of 4 low and 3 revised schedules which were not reported for 16 days. 

"NOTE: On July 10th, Foundry "o. 637 filed the 
above prices, but the letter was mislaid and has only 
just cone to our attention." (***) 

(*) Steel Founders' Society of America — Daily price Report 
No. 92, April 10, 1934. Code Records Files. 

(**) Steel Founders' Society of America — Daily Price Report 
No. 112— May 4, 1934. 

(***) Ibid— Daily Price Report No. 176— July 26, 1934. 



9826 



- &2o - 

According to the tabulation there were 24 instances in which filings 
of low price schedules were not reported for an average elapsed time of 
20.4 days, more than twice the normal waiting period.' It is difficult 
to explain this delay in reporting of filed schedules. In one instance, 
however, a foundry submitted a notarized statement to the effect that it 
has filed prices at some previous date which, for some reason,- had not 
been delivered to the Agency. • 

In the cases of filings on new classifications it is possible that 
the Definitions and Classifications Committee required the extra time to 
review the proposed new classification. Usually, however, new classifca- 
tions were published in 4 or 5 days and "low" schedules in approximately 
3 days. 

The averages in the second part of the table are far more representa- 
tive of the actual elapsed time than the exceptions just discussed. These 
figures are based on hundreds of filings. In most cases, it can be con- 
cluded, filings were handled and disseminated in a very short time, much 
less than the 10 day waiting period. 

2. Quarterly Reports 

Another important method used by the Agency in disseminating price 
information was the publication of booklets known, as Quarterly Reports. 
These booklets, which were published at various times during the Code 
period, had as their major purpose the publicizing of price Schedules. 
They were summaries of the prevailing price levels and exceptions thereto 
included in the daily price reports during the quarterly periods preceding 
their issuance. They included the most recent revisions of all pricing 
practices. Furthermore, they listed the price schedules prevailing in 
the Industry for each classification and the number of foundries which had 
quoted exceptions to any price Schedule. 

The foreword of the quarterly reports usually contained such informa- 
tion as (l) definitions of schedule specifications, quantity on order, 
industrial applications, price extras, etc., and (2) rules concerning fil- 
ing of prices, quotations and invoices, etc. Usually a section of the re- 
port contained a tabulation of all price extras, indicating which foundries 
had filed exceptions to them. 

In addition to showing the prevailing minimum levels on all miscel- 
laneous steel castings classifications, the "quarterly reports" usually 
showed as a separate tabulation the base schedules on high tensile steel 
railway freight and passenger car castings and their extras. These were 
listed separately from ordinary miscellaneous castings because of their 
difference in tensile strength. 

The Quarterly Reports published early in the code period were natural- 
ly not as complete as the ones compiled later. The first was the December 
5 report, although it was not specifically termed a quarterly report by 
the Society. It was published before the filing of prices was formally 
"called". It contained, as previously explained, a suggested schedule for 
each of 532 classifications. Only one schedule for all eight divisions 
was indicated. Starting with Quarterly Report No. 1, separate schedules 
for each division were included. 

9826 



- 626 - 

Daily Report Fo. 6, December 26, 1933, while differing in form from 
the quarterly reports, was used for a similar purpose. It contained a 
summary of all new classifications and new low schedules filed in Daily 
Reports Fos, 1 to 5, which differed from those included in the December 5 
Report. It included 210 new low schedules and 242 new classifications. 

The method of indicating the minimum schedules in the First Quarterly 
Report is described as follows in the booklet: 

"The basis upon which schedules filed are reported 
in this booklet is to indicate as clearly as possible the 
minimum levels which have been filed by foundries in the 
various geographical Divisions. In the case of classifica- 
tion where the minimum schedules filed do not rest upon a 
broad base an effort has been made to describe the exact 
situation indicating the foundries or divisions that have 
filed differential minima. 

"In the case of classifications on which the minimum 
schedules filed by foundries in all Divisions are the same , 
such minimum schedules are placed under the caption of 
'Minimum Schedules - All Divisions. 1 

"In a few cases foundries in only one or two Divisions 
have filed schedules on certain classifications on which pro- 
duction is apparently confined to limited areas. In such cases, 
if the same minimum schedules have been filed by at least one 
foundry in each interested Division then such minimum schedule 
is also placed in the column bearing. the caption: 'Minimum 
Schedule - All Divisions.' The term 'all others' usually means 
minima all other divisions." (*) , . 

Filed -orices for eleven hundred and seventeen classifications were 
published in the first quarterly report. For 913 of these classifications 
identical price schedule were shown to have been filed by all members of the 
Industry. The remaining 204 classifications had several different price 
schedules filed on each, varying according to weight brackets and geogra- 
phical divisions. Within a month after the issuance of the first quarterly 
report, the Definitions and Classifications Committee met and declared 
that a great many of the above 204 classifications were being improperly 
quoted. In a publication sent to the members on April 25, 1934 (see page 
Sr2Q2 ) , the prices on these items were revised, generally upward, and a 
level set below which no foundry was "e::pected" to file. This is one of 
a very few instances of similar administrative action in this Industry. 
In effect it established a "price floor" for the items in question - that 
is, for those items on which variations had appeared in the price filings. 

The method of reporting prices in the Second Quarterly Report was 
virtually the same as in the First Report, In contrast to the first, in 
which there were 204 classifications for which different schedules, vary- 
ing according to weight and to location of the foundry had been filed, 

(*) Steel Founders' Society of America — First Quarterly Report— March 
31, 1934 



- 627 - 

only 71 such classifications were so listed. One minimum schedule for 
all divisions was prepared for practically all items. Almost without 
exception the levels aet by the Agency in the April 25 Bulletin were the 
schedules quoted in the Second Quarterly Report. Extras were listed for 
the first time in this issue - the formal "call" for their filing was made 
only one day before this Report was released. However, it is assumed that 
there were sufficient filings of "extras" already on hand to enable the 
Agency to report the prevailing levels. Accompanying the booklet was a 
request by the Agency that all foundries testify as to the correctness of 
all schedules in this Quarterly Report which they had filed or, if errors 
were noted, to report them promptly. A compilation derived from the 
Daily Reports indicates that of 160 foundries complying with this request 
only 9 submitted any exceptions to the schedules in the Second Quarterly 
Report. Table VII, Exhibit I shows that relatively few new, low minimum 
schedules v/ere filed during the months following the publishing of this 
Report. Apparently, by this tine, prices had been relatively well sta- 
bilized at levels satisfactory to the member foundries. 

The Third Quarterly Report was similar to the second in form. The 
schedules prevailing in each geographical division were tabulated in se- 
parate columns. This permitted distinctly easier reference. 

The Fourth and Fifth Quarterly Reports improved upon the earlier ones 
only in a f r. reword which, was slightly more explanatory as to terms and 
methods of filing, and in more complete tabulations of "Price Extras." The 
Summary Report issued on the last day of the Code Period was the last com- 
pilation of price information to be disseminated by the 'Code Authority. 

These quarterly reports were apparently the most useful of the var- 
ious means of disseminating price information used by the Agency. Members 
were kept informed at all tines of prevailing prices and exceptions to 
such prices. 

Only member foundries were eligible to receive the data distributed 
by the Agency. Members were discouraged from permitting customers to re- 
view these price compilations. Foundries were advised not to mention, 
in quoting a price to a customer, that such price was the same as a com- 
petitor' s. 

G-. Filing Methods Enrol oyed by Members 

During the operation of the Code the following three distinct meth- 
ods of filing were used by members: 

(1) Filing schedules or statements on specific 
named classifications or elements of the 
price structure (discounts, contracts, etc.). 

(2) Filing the same schedules on the same 
classifications as some other foundry had 
filed, usually naming the Daily Report 
Number in which latter had filed. 

(3) Filing all or part of the schedules listed 
9825 in a specific Quarterly Report. These were 

termed "blanket filings." 



- 625 * 

The first method was most common. In the early Code period the 
foundry would list, on an ordinary letter head, the classifications and 
the schedules it desired to file, and send it to the Code Authority. 
Later prices and information' were submitted on a special form provided 
"by the Code Authority. 

The second method was also extensively practiced. Such filings 
often took the form of, "Foundry 206 files the same trices as Foundry 
210 in Report No. 326." This made it simple to meet new low -orices filed 
by a competitor. This method was used very frequently in the filing of 
"Price Extras, " 

About 165 foundries, some of them quite frequently, used the third 
plan, "blanket filing." (*) The Code Authority encouraged the use of 
this method of filing schedules identical with those contained in the 
Quarterly Reports. Although a member might manufacture only a small 
proportion of the classifications listed in the Quarterly Report, it was 
the practice to file all prices contained therein for a specific Division. 
At various times foundries filed "blanket," purporting to meet all minimum 
schedules on file with the Code Authority or that any time were filed with 
the Code Authority. In Daily Report Ho. 50, the Code Authority ordered 
this practice discontinued, as not in compliance with the Code, 

In compliance with Code Authority rules and regulations, in addition 
to price schedules information was filed on sales contracts, allowances for 
freight charges, allowances on patterns and equipment, discounts to other 
foundries (middlemen) and other allowances, and price extras. 

In Chapter V following will be presented a statistical analysis of 
the various types of filings received and reported by the Code Authority; 
and in Chapter VI a similar analysis of the trends of price changes for 
certain representative Droducts as disclosed by these filings, . 

(*) Authorized by Commercial Resolution No, 30, October 10, 1934 



9826 



- 639 - 
CHAPTER IV 
D iscussion Concerning Operation of the Open Price Pla n 

I. CO: PLIANCE Ml ENFORCEMENT 

There is vev r little record as tc compliance with or enforcement 
of the price filing provisions cf the Steel Castings code. 

On January 22, 1954, Administrative Order No. 82-7 authorized 
the Code Authority to handle trade practice complaints. No record 
is available of the action of the Code Authority in handling such 
complaints. It is believed that a large majority of the complaints 
submitted were handled and adjusted informally. The records indicate 
that 184 foundries of 97 percent cf the total of 190 filed their 
prices with the Code Authority. 

The Compliance Division handled only five trade practice comp- 
laints cases of i-'hich three were adjusted and two nere found to be 
cases of non-violation. No Trade Practice cases were submitted to the 
Regional Boards. 

II. ATTITUDES AND OPINIONS OP INTERESTED PARTIES 

On April 7, 1934, the Administration member forwarded the fol- 
lowing letter to the Division Administrator, pointing out certain 
loopholes in the price provisions which permitted members of the 
Industry to evade the requirements of the dole. 

"Three technical sources of evasion of the observance of establi- 
shed fair prices in bidding on manufactured equipment have come to my 
attention: 

"1. Where the bidding ccmpan3^ operates a department that produces 
a component part of material around which an important industry has 
been built up. If the component parts or material are not charged into 
the finished product at a price in keeiin^ with the filed prices cf 
the industry specializing in that component material or part, the latter 
industry is obviously prevented from fairly competing for such business 
with, other manufacturing firms which do not operate a department capable 
of supplying the material in question. 

"2. If the manufacturing company has an affiliate which is ex- 
empted from observing the prices filed oj the industry producing the 
material or component, the result is the same as above. 

"3. Certain manufacturing concerns, the status cf which is not 
clear in specific pieces of business, as to what particular Code they 
are wcr'-ing under, may '-ork an obvious hardship tc an important ind- 
ustry by claiming to come under a Code that allows the action they 
desire to take. 



9826 



- 630 - 

"fhe result will be the sane; The production and use of material at 
prices which are ruinously low as compared with the filed prices of 
the industry affected. 

"Code authorities are naturally deeply concerned as to how this abuse 
may be promptly and effectively remedied. 

"The Steel Casting Industry is now wrestling with a typical case, that 
of a contract for twenty pumps taken by the Bucyrus-Erie Company of 
Milwaukee at a price of $156,000 as against the next lowest bid of 
$208,000. The steel castings alone, at filed prices, amounted to 
$115,000 and the value of materials only, as figured by other bidders 
amounted to more than $156,000. The Bucyrus-Erie Company operates its 
own foundry, so it is evident that they either did not figure their 
materials in at filed prices or ignored their fabricating and assem- 
bly costs. 

"On 'account of the possible wide application of these sources of 
evasion, I would suggest that a general order be issued to the effect 
that no manufacturing company bid en or accept contracts for material 
or equipment "here raw materials, cc nonent parts or services in- 
volved are not figured in conformity with the filed lists of the 
various code groups directly responsible for such raw materials, com- 
ponent parts or services. Such an order ou?ht to prevent much chise- 
ling and evasion of this character, and would ""■lace in the hands of 
injured Code Authorities a simple and effective "eapon to combat the 
practice." (*) 

Apparently the price filing plan, adopted by the Code Authority, 
was not satisfactory to all members of the Industry. A letter from 
the ¥. M. Pettis Company addressed to Senator Alben W, Berkley under 
date of February 27 1934 stated that the price schedules were set 
up by the larger foundries and -ere acting to the detriment of the 
consumer and the small business man. (**) 

This letter was transmitted to General Johnson, who replied 
under dates of March 13, and 17 stating that the Administration 
Member of the Code Authority had been requested to make an investi- 
gation of the situation and that further details from Mr. Pettis 
would be appreciated. A letter from Mr. Pettis to General Johnson 
dated February 23, 1934, states in part; 

"My business is forced to operate under the Steel Foundry 
Industry Code as arranged at meetings of the Industry which meetings 
were dominated by the large interests. In connection with the code, 
and by its authority, there are issued a number of Price Schedules 
with a Classification List, under which everyone in the business 
must work or be penalized. 

(*) Letter from Code Administration Member to Division Administrator 
April 7, 1934. See Price Filing Unit Work Sheets.- Steel Castings Ind. 
(**)^Price Filing Unit Work Sheets - Steel Castings Industry. 

SS2$ 



- 631 - 

"However, in making up the Classification List and Schedules, 
the large Interests very shrewdly divided the Steel Castings Business 
into two classes of work, viz: Miscellaneous Castings and Specialties. 
Specialties in normal times being practically, I would say, about 
ninety percent of their product, while the Smaller foundries can make 
only Miscellaneous Castings, therefore, the Large Interests very wisely 
did not include specialties in the Classification List, or Schedules, 
leaving a free hand in making prices on them but tieing up the makers 
of Miscellaneous Castings hard and fast." (*) 

Under date of April 7, 1934, the following letter was received 
from the Administration Member unto reference to this complaint. 

"Some 14 conroanies in the industry' - manufacture specially designed 
and in many cases patented devices, chief ly intended for use in car 
construction. Those individually engineered products, as I understand 
it, make up the 'Specialty' classification. 

"The companies making such products have signed a patent pool- 
ing agreement among themselves, under which they exchange cost or 
price data. Prices, however, are not publicly filed. 

"In view of their proprietary rights in such products, and the 
fact that they are cooperating within this_ particular trade division 
of ' the industry to prevent harmful price cutting, I do not see how 
they are doing harm to the smaller foundries which specialize in the 
making of competitive contract castings. 

"From the standpoint of protecting the consumer, I would imagine 
that the railroads and car manufacturers are protecting themselves by 
trading; otherwise they would complain." (**) On June 9, 1934, a 
letter was forwarded to the Code Authority by the Assistant for Code 
Administration quoting a complaint received from the Lewistown 
Foundry and Machine Co., Lewistown, Paw This complaint made the fol- 
lowing specific charges: 

" 1. Prices for castings previous to the institution of the 
Code were materially lower'than they are at the present 
time. 

"2. Prices after the effectiveness of the Code were excessive 
and resulted from agreements entered into by producers 

"3. Previous to the institution of the Code certain types 
of buyers were given different price schedules whereas 
now these buyers receive no consideration." 

(*) Code Records Pile 

(**) Letter from Code Administration Member - April 7,1934 - See 
Code Records' Piles. 



9826 



- 632 - 

The Code Authority replied to this complaint at some length and ~ 
investigation was promised. (*) The statement was made that prices of 
steel castings had advanced only 10.2 per cent since July, 1933, 
although production costs had increased approxiamtely 20 percent. 

On June 18, 1934, the International Clay Machinery Company for- 
warded a letter to General Johnson objecting to many of the provisions 
of the Code. 

Excerpts from this letter follow; 

"The Cast Steel Code, therefore, works to the advantage of all 
concerns not operating a steel foundry, as follows: 

1. "A 'steel foundry with a machine shop attached, can either put 
their castings in a t the code prices and charge either nothing, flat 
labor, or flat labor and partial overhead, in making their bid. Or, 
they can put their steel castings in at a lower price .than we can buy 
them, and then change anything for their labor that they please, which 
means that we and all similar concerns purveying to the Government 

in the past, are automatically out on the quotation. 

2. "A steel foundry without a machine shop can put their castings 
in at either the Code price cr any price they please, and then get 
some local machine shop chisler to give them a price on the machining, 
which, with their f.o.b. destination clause in the Code, cuts everyone 
else out who does not have a steel foundry, and who must pay freight 
from one location to another on the raw steel castings. 

3. " A concern operating a general manufacturing plant holding 
considerable stock in a steel foundry juggles the supposed Code price 
on castings as obtained ^rom their subsidiary and their own machine 
work in such a manner that we who are not associated with a steel 
foundry, cannot meet this competition. 

H To back up our statements in this matter, we are attaching a 
series of bid compilations as furnished us by the War Department in 
recent months. "(**) 

III. INDUSTRY REACTIONS TO OFFICE MEMORANDUM 223 AMD EXECUTIVE ORDER 6767 

Under date of June 9, 1934, the Code Authority addressed a letter 
to all members announcing that it would vigorously oppose any amend- 
ment of the Code to conform with Office Memorandum #228 

(*)Letter to Division Administrator form Steel Pounders' Society, 
Price Piling Unit Work Sheets — Steel Castings Industry. 
(**) Letter to General Johnson from International Clay Machinery Co.- 
June 18, 1934. Price Piling Unit Work Sheets - Steel Castings Industry 



9826 



- 633 - 

On June 11, 1934, a telegram on this subject was forwarded to 
General Johnson asserting that the waiting period was considered the 
very essence of their open price policy end its elimination would 
lead to "the return to the conditions of chaos" in their industry. 
The immediate withdrawal of Office Memorandum #228 was urged. (*) 

On July 5, 1934, the Steel Founders 1 Society of America forwar- 
ded a. letter to General Johnson protesting Executive Order No, 6767' 
and petitioning for its withdrawl. Excerpts from this letter are as 
follows:.. 

"Prices on the average represent an advance of about lO^o only 
by comparison with those of July, 1933 while costs have in- 
creased nearly 20^ and current prices are lower by approximately 
13$ than in 192S, a normal year. It may not therefore be asserted 
with any justification that the general level of current prices 
in this Industry is unfair and unreasonable . 

" . . . » The government may not fairly assume that it is entitled 
to preferential treatment by being accorded prices lower than 
those to other customers. The reverse proposition could easily 
be demonstrated. 

" . . . . Government requirements are mostly of a. special chara- 
cter calling for castings of an individual type making it im- 
possible, weight for weight of castings compared, for producers 
of steel castings to obtain costs comparable with those of pro- 
ducts sold to other large customers. 

" .... It should be manifest that it would be impossible to 
maintain a differential in favor of government castings as 
against castings of similar weight classifications for other 
users. 

"... In the light of the admitted and well known fact that 
government castings are more costly, how could such a differen- 
tial be justified and maintained? 



(*) Steel Founders' Society - Telegram to General Johnson, June 11, 
1934 - Code Records' Files. 



9826 



- ^34 - 

"... It is not necessarily true that prices are collusive, ex- 
cessive and non-competitive, merely "because they happen to "be 
identical. Though identical, or approximately so, these prices 
usually represent the lowest that any member in the Indxistry feels 
he may quote in any circumstance. 

"... It is contended that the Executive Order of June 29th is 
unfair "because it does not give consideration to conditions in 
individual industry. - - - It is destructive to morale in industry 
at a most critical period of recovery "because it is a definite 
invitation to the "chiseling" minority again to resort to the 
tactics -which "brought about the demoralized conditions of 1932 and 
1933.* 

On August 13, 1934 a formal petition regarding exemption of the 
Industry from the provisions of the Executive Order was filed with the 
Administrator. In subsequent correspondence the Code Authority was 
advised that in ord°r to secure a reduction in the 15$ tolerance it 
would be necessary to, present evidence to the effect that the Executive 
Order had resulted in destructive price cutting. 

There appears to have b°en no further action relative to this 
matter. In a letter of November 9, 1934 from the Code Authority to 
members of the industry it was pointed out that the Executive Orders 
did not apply to quotations or sal^s to contractors or subcontractors, 
even though the castings might be used for a government job. It was 
also emphasized that the Executive Order was permissive only and not 
mandatory and "that members of the Industry have the right to ignore 
it if they chose ." The letter reported that there were only three • 
instances to date in Hiich the members of the industry had made the 
price concessions permitted by the order. (**) 

IV. LATER CODE AUTHORITY AND NSA ATTITUDES 

On January 25, 1935, the Steel Founders ' Society of America 
addressed a brief to the National Industrial Recovery Board on the 
general subject of the open price plan, presumably in connection 
with the hearings being held at that time. This document sets 
forth clearly the attitude of the industry regarding the open 
price plan. Excerpts are quoted below! 



{. ) Letter - Steel Founders' Society of America - to General Johnson - 
July 5, 1934 - Code Records' File. 

(**) Letter to foundries from Code Authority - November 9, 1934 - Code 
Records' File. 



9826 



- 630 - 

"The Steel Casting Industry is not interested in -orice-f ixing 
as correctly defined and properly interpreted. It is. intensely 
interested in the O-o^n Price Plan with a waiting -period , such as 
it has operated under for a period of fourteen months through its 
Code of Pair Comoetition, which was approved "by the President on 
November 2, 1933. It desires to go on record with regard to the 
following propositions! 

"l. That th° O^en Price Plan with the waiting r>eriod, while 
undeniably tending toward uniformity of prices, and therefore 
stabilization 

(a) Is not a method of Price-Fixing; 

(b) Does not necessarily involve coercion, intimidation 
or collusion; 

(c) Does not eliminate fair competition; 

(d) Is not oppressive to small enterprises; and 

(e) Is not against the -oublic interest. 

■"?. That the Cpen Price Plan without , a waiting period is 
meaningless and valueless. s 

'"'3. That no general -orohibition applicable to all industries, 
against the use of the 0-oen Price Plan with a waiting period, 
should be prescribed. Conditions vary as between industries. 
Each industry should be the subject of independent study and 
consideration. 

"4. That the use of the Ooen Price Plan with a waiting period 
should be encouraged,' If an industry can prove the desirability, 
and in certain cas°s the necessity of the Open Price Plan with a 
waiting period, it should be accorded the privilege of operating 
under such a plan. 

"5. That the 0-oen Price Plan with a waiting period is 
needed as a protection against unscrupulous and dishonest buyers. 

"6. That most buyers are imbued with a sense of integrity, 
accept the Open Price Plan and believe that it is fair to all. 

"7. That One Price Plan (a very good example of the Open 
Price Plan) has become an established institution through years of 
use in department store merchandising. It has been' applauded and 
hailed as the fairest known method' of selling. The same practice 
prevails with the catalog houses. If that be true with respect 
to those institutions, there is no logic in denying the probability 
that the same will be true in industry. 

"8. That it has been the established policy of Federal, State, 
Municipal and other governmental agencies to make public a list 
of all bidders, together with their -orices, when a contract is 
awarded by such agencies. This practice has profoundly influenced 
the making of bids and has usually r°s\ilted in lowering the price 
levels for materials sold to such agencies. Th* Open Price Plan 



9826 



■ • - 636 - 

with a waiting oeriod is not detrimental to the interest of such 
agencies and generally '-ill likewise result in the lowest obtain- 
ahle levels of nrice, 

"9. That many industries without the stabilizing effect of 
the Open Price Plan with the waiting period cannot support the 
labor -provisions in their codes." (*) 

Under date of May 16, 19,35, the Consumer's Advisory Board (**) 
revised the various provisions of this Cod° and recommended that 
many of the Commercial Resolutions issued by th<= Code Authority 
be stayed as contrary to policy. In addition the Board criticized the 
Industry's pricing practices as follows: 

"The members of the Code Authority have frequently made 
statements to the effect that industry members are allowed the 
• utmost freedom in p~ice filing, that the system worked out by the 
Society provides merely for more intelligent pricing based on 
knowledge of e*ach other's filings, that any uniformity of prices 
as a result of the system has been a uniformity at th a noint of 
lowest filed price, a nd that -there is no price— fixing, etc. 
And the Consumers' advisory Board has had great difficulty (in 
this and in similar situations) in finding any terminology 
that can b° used in common with the Code Authority in such a 
discussion. What this Board understands by "price fixing"is 
price control, a control of all or eny of the -orice factors 
making up the net nrice ; and there are many such nrice factors. 
Under this meaning of the ^ord nriee-f ixing, there has been no 
fixing of base prices in the Steel Casting Industry but there has 
been a fixing of weight and piece extras and deductions. This 
latter class of nrices is an important component part of the net 
price as is any other, and Commercial Resolution No. 16 very 
definitely takes this factor out of the r°alm of nrice filing into 
that of nrice fixing." (**) 

. "It might seem a far cry from classification to -price 
fixing. But even if nrice fixing ^rs not involved, the assumption 
of pow-=r to classify nroducts in this industry can be justified by 
no provision in the Steel Casting Code. In our oninion such a 
nower, wi°lded as the code authority may see fit, has tremendous 
oossibilities. Its implications include the ability to harass 
industry members who are' obstreperous, although observing the 
letter of the code. But it has. price control implications also, 
because the ability to out classifications on a common basis would 
surely enable the influential members of the industry to exercise 



(*) Brief on ?ric° Control Provisions in Codes of Fair Competition — 
Steel Founders' Society of America — January 25, 1935. 

(**) Consumers' Advisory Board, B. 3. Lovell Memorandum to J. B. Freund, 
Deputy Administrator'- May 16, 1935. 



9826 



- 637 - 

their powers of price leadership to function to the fullest °xtent. 
And this is no theory. Such a succession of events has occurred 
in other industries, with ^ell recognized results. Products 
classification is another one of those factors the control over 
which mak°s it so much harder to file a price in relation to your 
costs and your market and much easier to file prices identical with 
those considered desirable "by certain of the larger foundries. " (*) 

Further: discussion or action with resnect to the subject was 
halted "by the Schechter decision, May 27, 1935, declaring the ERA 
unconstitutional and voiding the codes. 



(*) Consumers' Advisory Board, L- B. Lovell Memorandum to J« B. Freund, 
Deputy Administrator - May 16, 1935. 



9826 



- 638 - 
C HAPTER V 

STATISTICAL ANALYSIS OF TYPES OF FILINGS RECEIVED 

This chapter will attempt to present a statistical picture of the 
nature and frequency of the different types of filings received by the 
Steel Castings Code Authority during the life of the code, as obtainable 
from its ov/n reports of these filings. 

The analyses included will appear in the following order: 

I. Analysis of Filings Relating to Prices. 

A. Frequency of Filing of Hew Low Prices and New 
Classification Schedules. 

B. Extent of Use of "Same As" Filings. 

C. Extent of Use of "Blanket" Filings. 

D. Use of Withdrawals* 

II. Analysis of Filings Relating to Discounts and Allowances. 

A. Disccuits to Other Foundries 

B. Allowance of Freight Charges. 

C. Allowances on Patterns and Equipment. 

III. Analysis of Filings Relating to "Price Extras". 
IV. Analysis of Filings Relating to Contracts. 

I. ANALYSIS OF FILINGS RELATING TO PRICES (FOR CUSTOMER-Users) 

As far as it was possible to determine from the price filings quoted 
in the Daily Reports, the following data were obtained and tabulated for e 
each steel casting foundry: 

(a) The number of times filings of any type, price, discounts, 
allowances, etc., were made with the Society. 

The number of new low minimum schedules filed (L) . 

The number of schedules filed on new claacificitions (N)j 

The number of divisional low schedules filed (,DL) . 

The number of divisional new classifications filed (DN) . 

The number cf increased prices filed (H). 

The above tabulations all refer to prices filed for Customer-Users. 

Each new low minimum schedule was the lowest on record from the be- 
ginning of the Code to the d~te of its filing. These schedules were always 
subject to a ten dry waiting period before becoming effective. The ten day 
waiting period also applied to new classifications. All other types of fil- 
ing became effective immediately, except that filings to meet competition 
did not become effective until the ten day period applying to the original 
filing had expired. 

Table VI Exhibit I shows the frequenc - "- distribution of filings by 
divisions. Practically all foundries participated in the filing of prices 
Some foundries filed very frequently, while others were relatively non- 
participant. Those foundries which did not take part in the filing, as 

9826 



- 639 - 

indicated by the daily reports, './ere nos. 4Q6, 409, 610, 710, 716, 809, 
817, 829 and 833. These were without exception very small conserns with 
an average monthly capacity of about two tons each. Wo filings were re-_ 
corded for foundries nos. 702 and 703, operated by the American Steel Foun- 
dries Company,- the largest unit in the Industry. It is assumed that sales 
or quotations made bv these foundries were filed by other units of the 
company. 

This record of the total number of filings made by each foundry gives 
no idea of the actual number of classifications on which filings were made. 
As most of the filings on individual classifications '.7ere merely revisions, 
no exact statistical tabulation was made. However, a count was made of all 
other important changes resulting from this system of price filing. Table 
VI Exhibit I shows the number of each of these filings for each geographical 
division. Totals of these tabulations are not significant when considering ' 
the Industry as a whole, because of duplications. A number of times three 
or more foundries sent in identical "low" filings on a number of schedules, 
which were recorded in the daily price reports as one filing. In view of 
this fact, the number of "L's" or low schedules placed on record indicated 
that only one foundry, instead of sevr.:al," had filed classifications. In 
this tabulation, such filings are included as though each foundry had filed 
on separate classifications; in other words, the number opposite each foun- 
dry represents the number of times it participated in the .creation of such 
filings, regardless of whether the filing was made alone or in combination 
with other foundries. 

A. Frequency, of Filing of New Low Prices and New Classif ication 
Schedule s ; 

As recorded in the price reports, less than half of the foundries 
initiated the filing of new low prices. A considerable number of the 
"lows" that were listed were filed by the smaller members of the Industry. 
Foundry No. 705, the Duncan Foundry and Machine TJorks, having a monthly 
capacity of less than ten tons, '..'as responsible for almost 200 of the total 
of approximately 800 "low' schedules. " 

An explanation of this record of unusual filing activity is included 
later in this chapter. 

In a great many instances, the schedules on classifications eatabli sh- 
ed early in the Code Period were not changed. TThile the price reports did 
not disclose the names of the foundries which filed the original low, it is 
believed that on the more important classifications the large and the most 
efficient foundries created the "level." 

• Nearly all foundries participated in the filing on new classifications. 
However, foundries in Divisions V and VI filed nearly three-fourths of 
these. The DL, DN, and H types were first filed toward the end of 1934. 

Most of the new low prices and new classifications were filed during 
the first few months after the Code became effective. (See Exhibit I, Table 
VII.) While there were in all about 1,200 classifications, relatively few 
price reductions were filed after that early period. This is an indication 
of the stability of prices during most of the Code period. 



9826 



*i '640 -< 

B. Extent of Use of "Same As" •Filings . 

Table VIII, Exhibit I, gives a sample of "same as 11 filings* In fil- 
ings of this type, procedure usually followed was to file the same sche- 
dules or information included by another foundry in a specified reports thus 
meeting competition. This type of filing, according to the Agency, reduced 
the amount of clerical work, which in some other types necessitated the re- 
cording of schedules on hundreds of classifications. Filings of this "same 
as" type also tended to promote uniformity of prices. Data appearing in 
Appendix Table VIII relating to price filings of Extras, Railway Freight 
assumed by certain companies in establishing prices for these items. 

That "same as" filing met with considerable favor was indicated by 
the fact that it was used by 15? foundries, at one time or another. It 
was in general use only where a considerable number of classifications 
were involved. 

C . Extent of Use of "Blanket" Filings 

The "blanket" filing was frequently used. (Appendix T a t)le IX.) In a 
filing of this type, the foundry merely stated that it filed all schedules 
for a specific division to conform with those shown in a specific quarterly 
report or bulletin issued by the Agency. In some cases, the foundry indi- 
cated that it filed all the quarterly report schedules with certain excep- 
tions or additions to those listed in the quarterly report. There were 
496 filings of this type; 165 foundries employing it at least once. 

D. " Withdrawals" 

I. The Nature of Withdrawals 

The practice of withdrawing price schedules was one of the features 
of the Steel Casting Industry open-price system. The 386 reports of the 
Steel Founders' Society show two classes of withdrawals. In the first 
class, the withdrawals were accompanied by a refiling for the same product 
effective the same date as the withdrawal. Apparently, there was only one 
real difference between this method of changing a price schedule and the 
more usual one in which the product and its appropriate schedule were 
listed as a revision without the formality of prior withdrawal. In a 
revision from a minimum schedule, the minimum schedule still remained 
the permissible low market price regardless of whether any foundry con- 
tinued to file at that level, and a ten day waiting period was not re- 
quired should any member wish to lower his price to such minimum. However, 
if a foundry withdrew its low schedule and filed a higher one, the price 
schedule was removed from the market as a minimum and any member desiring 
to quote at the old minimum would have to wait ten days before his price 
could become effective. 

In the second class of withdrawals the withdrawing foundry refiled 
the item or items either in a later report or not at all. Under with- 
drawals of this type, a period of time elapsed during which the member had 
no designated price schedule for the items infolved. During this period 
he was not supposed to sell or quote such items. 

A tabulation was made of the 122 instances of this latter type of 



- 641 - 

withdrawal. See Table (Xl) (i) , below. Only withdrawals of schedules have 
"been treated. Withdrawals of price extras, etc., were omitted. 

table (xi) (i) 

dumber of Foundries Filing 

GENUINE WITHDRAWALS 
BY DIVISIONS AND BY MONTHS 



DATE 



Year; Month 



DIVISIONS 
: 5 : 6 



Totals 



1933 


Dec. 






1934 


Jan. 




5 




Feb. 




2 




Mar. 


2 






Apr. 


3 


1 




May- 


1 






June 


2 






July 


3 






Aug. 


1 






Sept. 








Oct. 








Nov. 








Dec. 






1935 


Jan. 

Feb. 
Mar. 
Apr. 

May 











1 








4 


4 


1 




1 


3 


3 






1 


3 


4 


1 


4 


1 


2 


2 




1 


1 


6 


3 




2 




1 


5 




1 




3 


2 




3 


1 


6 


5 




3 


1 


3 


2 






1 


1 
1 


4 

1 

5 


1 






1 


1 


1 





1 

14 

10 

15 

10 

13 

9 

11 

16 

6 

2 

1 

4 



1 

6 

3 



Totals 



12 



34 



42 



14 



122 



It is apparent, first, that the major portion of these withdrawals 
were filed during the months from January to August, 1934, and, second, 
that, the foundries .in divisions V and Vl together filed almost twice 
as many withdrawals as all of the foundries in the remaining six divisions. 
The frequency of withdrawals during the first half of 1934 presumably 
resulted from changes made to conform with the standard classifications 
specified by the Definitions & Classifications Committee. 

The disproportionately large number of ^ withdrawals in divisions 5 
and 6 may be explained, in part, by the fact that there were more found- 
ries in these divisions than in the average division. However, allowing 
for this, there were, on the average, 1.8 withdrawals per foundry in these 
two divisions for each withdrawal per foundry in the other divisions. 

Of the 122 cases in the table above, representing over 1,067 items, 
three cases lacked data showing the number of items involved; in ten cases 
the date of the original filing could not be determined, and in eleven 
cases the withdrawal was effective on the same date as the original -filing. 
The remaining 98 cases represented 888 items. An average of the number of 
days these schedules were effective prior to withdrawal was calculated. 
This was found to be 37.4 days. 

Thirty- three of these 98 cases, representing 52 items, were with— 



9826 



-642- 

drawals of classifications of items not recorded in the third Quarterly 
Report. 

Sixteen cases of the remaining 6^ cases included 5 or more items 
each and represented a total of 769 items. 

The remaining 4-9 cases comprised 67 items. 

The use of withdrawals as a means of protecting en established price 
level has already "been mentioned. It remains (a) to show the use of 
withdrawals for the purpose of removing classifications of items not gen- 
erally accepted as standard classifications from the published record; 
(b) to analyze withdrawals from the standpoint of the length of time the 
schedules were effective before withdrawal and the length of time 
elapsing before the schedules were refiled; and (c) to consider the price 
changes affected by the use of the device. 

a. Removing Classifications 

By the time the third quarterly report was published the 
classif ication of products was more uniformly established than in prior 
reports. For this reason the classification of products as given in 
the third quarterly report has been chc sen for the analysis of those 
withdrawal cases in which the apparent purpose was to correct discrepan- 
cies in the classification of items already filed. 

Approximately one- third of the withdrawal cases were with- 
drawals of classifications and specifications not regarded as standard 
according to the third quarterly report. For example, the withdrawal 
of "Drying Car 'Theel Castings" by the Ohio Steel Foundry Company 
eliminated this item from the classification list entirely. 

The withdrawal of "Automobile Truck Castings, IT0C3N 11 is (*) 
especially interesting since "confirmation" of this filing from the 
foundry was requested by the Society. Eighty days elapsed between the 
effective date of this filing and its final publication, which was 
accompanied by a note from the Steel Founders' Society stating that 
several requests for conf irmation had been unanswered by the foundry 
and that the Society felt it could wait no longer to publish the class- 
ifications and schedules. The day following its publication the filing 
was withdrawn by the foundry. Request for confirmation of filings was 
apparently not a usual practice, except in cases where grave doubt 
existed as to the accuracy of the filed data. 

b. Effective Period Before Withdrawal. 

A total of 848 items were included in schedules which were with- 
drawn and then refiled at a date later than that of the daily report not- 
ing -their withdrawal. The average number of days elapsing between the 
effective dates of the schedules withdrawn and their dates of withdrawal 
was 37.4 days. i.Iany of these items were combined in only a few cases, 
so that this average is very heavily weighted by a few cases. If sixteen 
cases which contained five or more items are- removed, the number of items 
is reduced by 769 leaving 79 items. The average nunber of days between 
effective and withdrawal dates for this smaller group of items was 
twenty-five. About one-fourth of these 



(*) The Symbol "NCGBIT" means "not otherwise classified by name." 



r\ n «-i /* 



J5U3- 



were between one and ten days; another fourth between eleven and twenty- 
twod days; another fourth between twenty-three and fort -four days; and 
the others between fort" '-five and two hundred days. 

The average number of days elapsing between the date of withdrawal 
of schedules and the date of refiling for the smaller group was seventy- 
seven. On the other hand, the average for the S4S ite. is was thirty-four 
and a half days. 

c. Price Changes Effected by withdrawals. 

Those withdrawals which resulted in a change of the price schedules 
are of particular interest. Of the seventy-nine items noted above, 
thirty-eight itens or forty-eight per cent represented withdrawals of 
schedules which were identical with those listed in the quarterly re- 
ports. Twenty-nine items or thirty-seven per cent were withdrawals from 
a lower price schedule than the one listed in the quarterly report. In 
these cases the refiling was at a higher schedule, the average increase 
being 2.3 price schedules per item. Twelve itens or fifteen per cent 
were withdrawals from a higher price schedule than the one listed in the 
quarterly report. The refilings were made at an average decrease of 
3.4 price schedules per item. 

(1) Lower Price Schedules Withdrawn 

The following examples are cases in which foundries filed low 
schedules and then withdrew them after the price had been effective for 
a short period, occasionally for only one day. A higher price effective 
on the withdrawal date or soon thereafter was usually filed concurrently. 

Item 1. "Automobile Body Skid Brackets or Posts" 

; No. of Date of Price 
Action Repor t Ile'oort Schedule 

Piled 9/7/34 209 9/17/3^ P 

'.Tithdrew 9/17/34 210 3/17/34 P 

P.efiled 9/17/34 211 3/12/34 M 

berly Report (Division 6 only) M 

Schedule P was the first filing for this classification. It nay 
have been that this foundry filed Schedule P, transacted business at the 
price filed and withdrew the schedule immediately thereafter. This 
would have the effect of preventing any subsequent .filing at the same 
price from becoming effective prior to the expiration of the ten-day 
waiting period. 

The first filing, filed September 7," effective September 17, was not 
reported until September l4, while the withdrawal was filed September 17, 
effective September 17, and reported September 17. The delay in the first 
instance may have been due to the fact that the definitions and classi- 
fications committee of the Code Authority delayed taking action. 

0826 



Effective 
Date 


Foundry 

Number 


9/17/34 
9/17/34 
9/17/34 ' 
9/20/34 


625 
625 
625 
Third Qua 



- 644 - 
Item 2. " Ball (and Rod) Mill Liners. " 

Price 

Effective Date Schedule 

3/8/34 Foundry 811 filed (Revision) U 

3/21/34 Foundry 811 withdrew U " 

3/31/34 First Quarterly Report - all foundries U 

6/15/34 Second Quarterly Report - 2 foundries S 

" all others Q 
9/20/34 Third Quarterly Report - Divisions 6 and 8- S 

- all others Q 
11/26/34 Foundry 811 refiled S 

This item represents a oa.4§ where schedule U was revised upward - 
part of the foundries filing (Q) and the others filing (s). 
Foundry 811 withdraw intil after the "price level had 'become more stabi- 
lised'. 



Item 3. "Buoy Castings - N.G. C.B.N 



u 



Price 

Effective Date Schedule 

1/25/34 Foundry 410 filed (Revision " R 

2/20/34 Foundry 410 withdrew R 

3/31/34 First Quarterly Report - Div.3,7,8 K 

~ all others 
6/15/34 Second Quarterly Report - all divisions filed K 
6/29/34 Foundry 410 refiled by reference to quarterly 

reports K 

A number of foundries withdrew schedule and refiled schedule 
K in the same daily report, revising the price upward in the process. 

Item 4. • " Dragline Excavator (Walking Type) Castings 
N.G. C.B.N. " 

Price 
Effective Date Schedule 

5/2/34 Foundry 612 filed (Revision) — " S 

6/15/34 Second Quarterly Report - all foundries S 

8/14/34 'Foundry 612 withdrew S 

8/17/34 Foundry 612 filed; (less than 25#,N.Qi_Dfc 24 

pes. R 

(over 25#, N.Q.D.24 pes. P 
9/20/34 Third Quarterly Report Div.l: 1~100# - I; 

over 100# - H 
Div. 5: l-25# ~ R; over 25# P-N.Q.D.24 
pes. 

Div. 6: 1 S 

Div. 8:' 1~100# - K; 100# - J 



It appjars that Foundry 612 filed schedules in order to match 
higher competitive prices in Division 5. 



- 645 ~ 
Item 5 . 

Price 
Effective Pate Schddule 

12/28/33 Foundry 511 filed 

1/3/34 Foundry 511 withdrew 

3/31/34 First (and all subsequent ) quarterly reports M 
4/9/34 Foundry 511 refiled M 

■Whether a low price was filed for a few days to secure certain 
"business, and then withdrawn, or whether revision was to natch higher 
prices "by others, is not clear. 



Item 6. "Elevator Castings for Buildings. IT. 0. C. B. N. " 

Price 
Effective Date Schedule 

3/19/34 Foundry 116 filed (Revision) 

3/28/34 Foundry 116 withdrew 

3/31/34 First Quarterly Report Foundry 116 and 

Foundry 111, (o) all others N 

No record of refiling by F. 116 

3/23/34 Foundry 111 filed (revision) 

4/3/34 Foundry 111 withdrew 

3/31/34 First Quarterly Report - Foundry 116 & 111, 

(C) all others N 

7/7/34 Foundry refiled by reference to second 

quarterly report - N 



These two foundries filed and later withdrew schedules wiiich were 
lower than those f;iled by other members of the industry. 



Item 7. Gears - Cast Tooth and Blank 1 to 250#; 
250# & over 



Effective Date 

3/31/34 First Quarterly Report all foundries v? M-/-G 

4/11/34 Foundry 105 filed (Revision) N/P 

4/23/34 Foundry 105 withdrew N/P 

7/3/34 Foundry 105 filed by reference to 2nd Q. R. — m/G 

This is another example of prices being lowered and almost immed- 
iately revised upward by the method of withdrawing schedules to protect 
the market. 

These seven examples illustrate the withdrawal of price schedules 
from a lower bracket and the eventual refiling of higher ones. General- 
ization is difficult and the actual motives prompting withdrawal in the 
various cases cannot be ascertained. However, when the industry wished 
to raise the price of some product, withdrawal of the lower schedule was 
the practice resorted to. When the last foundry had withdrawn the schedule , 

9826 



- 646 - 

it could no longer function as a minimum price. When a foundry filed a 
price lower than the minimum for the purpose of obtaining special jobs, 
the immediate withdrawal of such schedules protected the market by 
making lower schedules filed by other foundries ineffective until the 
expiration of the ten-day waiting period. 

(2). Higher price Schedule Withdrawn. 

The following examples are cases of lower prices being substi- 
tuted for higher ones. The usual expedient would be merely to refile 
at lo^er schedules. In these cases higher schedules were withdrawn 
prior to filing lower schedules. 



Item 1. "Automobile Transmission Shift Forks. 



Effective Date Price Schedule 

12/26/33 Foundry 207 filed J 

1/13/34 Foundry 207 withdrew J 

3/31/34 First Quarterly Report K 

6/15/34 Second Quarterly Report K 

7/14/34 Foundry 207 refiled by reference to second 

quarterly report K 

This appears to be a case in which the price was reduced to 
the level established by other member of the industry. 

Item 2. " Boiler and Tank Castings (Not subject to pressure ) 

N.G. C.B.N. 

Effective Date Price Schedule 

2/17/34 Foundry 507 filed " K 

3/29/34 Foundry 507 withdrew K 

3/31/34/ First Quarterly Report M 

6/15/34 Second Quarterly Report M 

7/3/34 Foundry 507 refiled by daily report — M 



Item 3 . " Lock and Dam Castings N.O. C.B.N." 

Effective Date Price Schedule 

3^/26/34 Foundry 418 Filed " 

. (less than 50# N 

(over 50# Q 

3/31/34 First Quarterly Report 6 

4/4/34 Foundry 418 withdrew 

(less than 50# N 

' (over 50# Q 

4/10/34 Foundry 418 refiled by daily report (no 

weight class) 

This case illustrates the withdrawal of weight differentials and 
refiling of a single classification in accordance with the practice of 



- 647 - 
other members of the industry, 

These are typical illustrations of withdrawals for the purpose of 
lowering the price schedule. It appears that the filing foundry mis- 
judged the market level and filed a higher price than other members of 
the industry, and was forced to reduce it to meet competition. 

c. Withdrawal of Identical Price Schedule 

(3). A Sample Case nf a Large Number of Items Withdrawn 

The discussion of withdrawals would be incomplete without 
examining at least one case in which a large number of items were iw 
withdrawn, perhaps the uost interesting of this group involoved Foundry 
7£5, Duncan Foundry and Machine Works, -which was one of the smallest 
foundries in the industry. The chronological history of their filings 
and witbcrawals is as follows: 



Effective Foundry 
Date Number 
3/16/34 705 filed 15 items (Revision) 
3/26/34 705 filed 97 items (New Low Schedules) 
3/27/34 7'~>5 withdrew 112 items (Those listed 

above) 
3/26/34 705 filed record of sales contract with 

one customer for two items, for one 
year 
4/18/34 705 filed 108 items (New Low Schedules) 
4/16/35 705 withdrew 108 items 
4/18/35 ■?05r filed record of 3 months' contract 

with one customer, 55 items 

Any explanation of the basis for these moves by the Duncan 
Foundry is necessarily based oh conjecture. It is, however, plausible 
to assume that this concern found it desirable to offer a price differen- 
tial to its customers. Under the terms of Commercial Resolution #38, a 
member could continue to sell his product under the terms of a binding 
contract, even though the contract price was lower that his effective „>.' 
fried price. It appears that the Duncan Foundry took advantage of this 
method of selling their castings, since, in the case of the first with- 
drawal they seem to have made their sale at the filed prioi and then made 
a contract for two other items when their prices were withdrawing, in the 
case of the second withdrawal, they withdrew their filed prices before 
they became effective and negotiated a contract for the same items instead. 

(*) 



m 



( *) The 55 items mentioned in the contract probably refer to the same 
items on which price schedules, were filed. In the price Report practic- 
ally every item was given two schedules,- one for a small number of pieces 
and one for a large number of pieces. This explains how a contract for 
55 items could include approximately 
/112 filed items. 

9826 



- 648 - 

In this way the low prices quoted "by the Duncan Foundry were prev- 
ented from 'becoming effective and disturbing the market. Also the Duncan 
Foundry was able to establish a price differential suitable- to its needs 
without influencing or being influenced by the; prices maintained by other 
members of the industry. 

2. purposes of Withdrawals 

The objects for which the withdrawal of price schedules appear 
principally to have been employed may be summarized as follows: 

a. To remove from the published price record those classifications 
of items not accepted or approved by the Definitions and 
Classifications Committee. 

b. To remove from the record a price that appeared too high in 
comparison with prices filed by other members of the Industry. 

c. To remove from the record those prices which were believed to 

be too low in comparison with prices filed by other members of 
the industry. 

d. To remove a specific minimum schedule from the published prices 
so that a waiting period would be necessary before that schedule 
could again be quoted. 

Further statictical analysis of uthe sample cases presented in the 
table abpve adds certain results which, together with those given in 
connection with the table,, may be summarized as follows: 

a. There were 122 cases of wothdrawals, excluding those for which 
other schedules were refiled in the same report. Divisions 

5 and 6 filed more than an average number of withdrawals. 

b. The great majority of cases were withdrawals of less than five 
items. 

c. Approximately one-third of the withdrawals were for the purpose 
of removing unapproved classifications from the published price 
record. 

d. Of the remainder, 16 cases included five or more items and rep- 
resented a total of 769 items. 



9826 



•- 649 - 

Analysis of this special sample siiows that nearly one-half of 
the' items were withdrawn at the same schedule (price level) as 
that recorded for the item in the quarterly report. Ahout one- 
third were withdrawn from a lower schedule than given in the 
quarterly report, and the remainder from a higher schedule than 
there shown. 

In the cases where items were withdrawn from a lower price 
schedule and refiled at a higher schedule, the average rise 
(or increase) was found to he 2.3 price schedules per item. 
For the^items withdrawn from ai higher schedule and a refiled at 
a lower one the average decrease was 3.4 price schedules per 
item. 



g. The items which were withdrawn from the same schedule as that 
given in the quarterly report appear in all cases to have "been 
refiled later at the same schedules, the reasons for such a 
manoeuvre not "being apparent. 



9R?.fi 



- 650 ~ 

II. ANALYSIS OF FILINGS RELATING TO DISCOUNTS AID ALLOWANCES. 

A. Discounts to Other Foundries (Middlem en*) 

The Society required that all discounts to midclemen be filed. 
These were then published in the drily price reports. The three dis- 
count rates most commonly filed during the Code were (1*) 5 per cent, (2^ 
l\ per cdnt, and (3*> "not over 10 -oer cent". These were granted with 
the stipulation that the product was not to be resold at less than the 
filed price. Exhibit I - Table X-A shows the type of discount filed for 
each foundry, the recipient, and the effective date. Exhibit I - Table 
X-B shows the frequency of each type of discount filed during the Code, 
listed by months. 

The few discounts reported by the Agency before i arch, 1934, were all 
fairly high, some reaching 20 per cent. Beginning with Larch and April, 
1934, -when the Agency formally required publicity, discounts fell to the 
5, 7-f and 10 per cent referred to above. There is a record of 120 filings 
distributed as shown' in the table. 

It seemed to be the practice of foundries to grant reciprocal discounts 
to each other. An example of this is shown in the table (Exhibit I - X-A" 1 
opposite Report No. 102; foundries "Jos. 202, 2">1, 2 n 7 and 2^8 evidently 
participated in such an agreement. It probably was a case of one mill dis- 
tributing another' s Rolling Hill Castings, with the lattT reciprocating 
by handling the former's Freight Car Castings. 

B. Allowances of Freight Charges to Railroads 

The daily price reports issued orior to July 6, 1934, include 71 
statements made b-r foundries concerning freight allowances to purchasers cf 
railroad castings. Some of the f. undries allowed freight to railroad com- 
panies to the nearest point on the line; others absorbed freight to destin- 
ation. There were approximately ten different provisos representing differ- 
ent allowances to railroads. In most cases, members allowed complete 
freight charges to destination on railraod castings, whether for new equip- 
ment or repairs. Many, however, set the western boundary as longitude 105, 
(the meridian through Denver, Colorado*!. Exhibit I Tables XI-A and B show 
the statistical distribution of these allowances. 

The general practice before the Code was the allowance of full freight 
to Railroads. It has been alleged that this practice was occasionally abused 
by the purciiasers - there were instances of the railroad requesting delivery 
of casting at a point far distant from the foundry, requiring long hauls over 
tbjft lines of the purchaser. (**) In the case of an unusually long haul, 
tUe freight charges sometimes destroyed the profit margin on the sale. When 
the Code became effective, it was suggested that the limit oft freight allow- 
ance to railroads be the point on the line nearest to the foundry. This 
suggestion was not always complied with, possibly because of pressure brought 



(*) J. 2 T . Anderson - Coae History, oage 159 
9826 



- 651 - 

to bear by the railroads. (*) Statements were made by members to the 
effect that railroads three toned to take away iron foundries not allow- 
ing freight, certain important patterns owned by the railroads, father 
than lose the patterns and business, foundries often allowed full freight. 
(See filings co-railed on 'Exhibit I-Table XI-A). 

In October 1954, the Cor.anitt.ee of the Society studying transportation 
problems recommenced that, on sales to railroads, freight charges to the 
nearest point on the line and an allowance of 5 mills per ton-mile over 
the railroad's lines oe allowed. This proposal evidently met with the 
approval of the interested foundries and was adopted by the Society as a 
Commercial Resolution in December, 1934. However, as far as can be learned, 
it was never approved by the Administration. This orr-ctice was never fully 
standardized, although practically all foundries filed their allowances 
accordingly, and it is generallv supposed that competitive bids included 
nearlv uniform freight allowances. 

C . Allowances to Customers en Ratt-rn s .-nd ^nujpm ent 

There were 233 instances of filing on Patterns - their distribution 
by comaany and bv mouth is compiled in "Sxhibit I - Tables XII A and B. 
Nearly all of the filings during the early months of 1934 were of the fol- 
lowing types: 

"When a new pattern is required and when 5' v ^ or more miscellan- 
eous Railroad castings are bought at one time, we will -absorb oattern 
cost, aattern to remain cur aroaerty. " and, (*) 

"".(hen a new pattern is reauired and less than 500 miscellaneous 
Railroad castings are bought at cne time, we will make an extra charge 
to the customer at not less than cost." (**"> 

Altogether, there were 123 such filings recorded on the daily arice 
reports. However, beginning in March, 1934, and continuing through August, 
80 foundries filed statements, almost all identical as to wording, to the 
effect that, 

"'.','e hereby file with your office the stipulation where any orttern 
is in existence and owned by a comoeting coiiroany we will, to meet 
competition, likewise furnish a pattern from which to make castings 
for a customer withou t anv charge we to be the judge as to when the 
pattern is to oe made and the condition, pattern to remain our prop- 
erty." (***) 

The other tyaes of filing were relatively unim-ocrtant, with the ex- 
ception of one instance in which the 17 foundries filing reserved the right 
to eoualiza uattarn transportation charges to me e -t comae tit ion. 

(*) Statements of Industry members - interview December 22, 1935. 

(*'*) Steel Founders' Society - Daily Price Reports 
(***) Ibid 
(***N) Ibid 



- 552 - 

It is interesting to ooserve the degree of leadership revealed by 
these filings. In Report Mo. 14, Janus ry 4, 1934, two foundries, the 
Buckeye Steel Castings Company and the Ohio Steel Foundry Comoany, Found- 
ries Nos. 5 '6 and 517, respectively, both large producers, filed clauses 
of the tvpe first referred to above, "."ithin 3'^ days, more than r ir > 
foundries had filed statements almost identical in wording. In the case 
of the second clause quoted, the Crucible Steel Castings Company, No. 5 ^9, 
filed first and '.'as followed within 30 days by approximately 5' * foundries. 

Pursuant to an amendment to the Code, effective September 3, 1934, (*") 
it was no longer permissible for foundries to furnish pattern equipment, 
or alterations thereof, at less than actual cost of production; except that, 
in the case of i'iscellaneous Railway Car Castings, it was not a violation 
for a foundry to absorb the cost cf patterns when castings were ordered 
in quantities of 50' 1 or more from o^e pattern at one time. Fatterns, in 
this case, were to be the property cf the foundry. 

The amendment had the effect of eliminating all other provisions and 
allowances on patterns with the possible exception of the absorption of . 
pattern transportation costs to meet competition. There is no indication 
that this allowance was discontinued. The fact that with little exception, 
allowances on patterns to Railway Car Builders were allowed to stand, is 
another indication of the pressure brought to bear by these large pur- 
chasing interests. 

III. ANALYSIS OF THE FILING RELATING TC- "PRICE EZS&iS ." 

The steps taken to stabilize another element of the price structure, 
price extras, will new be considered. 

The Agency defined the filing of letter schedules as relating to 
"rough unfinished, unmachined miscellaneous carbon steel castings, either 
unannealed, annealed or normalized, but not including cost of pattern eauip- 
ment, machining, carbon and alley additions or other extras," The practice 
of adding the various "extras" to the schedule prices before the Code was 
not clearly defined. Available records show varying extras. During the ■ 
Code the orice extras filed, after the "call" for their filing, were practi- " 
cally identical and uniform. 

A. Descriptiot of Price Extra Practice . 

During the Code Period eight different types of price extras were filed 
upon: Carbon extras; Allov extras, (such as nickel, chromuim, manganese, 
molybdenum, vanadium, copper, tungsten and titanium V, extras for Hardness 
and Tension Specif icrtions; Special Test extras for carbon and alloy cast- 
ings; extras for Maching and/or Drilling Bolster Center Filler Castings for 
Grades A or B and High Tensile Steel; and extras for Radiographic 'Examinations 
and X-Ray Inspections. 

The first price extra filing was made oy the Otis Elevator Company of 
Biffalo, New York, on January 26, 1934. At this time it filed alloy extras 
for nickel ' nd nickel chrome steels, molybdeno"., chronium, vanaduim, manganese 



Amendment 2, Codes of Fair Competition, Volume X7 , P. 451. 



- 653 - 

and molybdenum steels, ana mild u i ;anese steels. The next extra filing 
was submitted by the 3irdsboro Steel Foundrv and machine Comoany of Penn- 
sylvania. On March 5, 1934, it filed extras for Carbons, Alloy steels 
such as chronium, nickel, manganese, nolvDdenum, vanadium, copoer and 
tungsten, Hardness and Tension Specif ica.tions and Special Tests for car- 
bon and allo ,r castings. Following the release of the Sirdsboro orice extra 
list in Report '61, many members of the industry filed extras "sane as" 
the Birdsboro Ccmo my, and filed each revision or addition as Birdsboro 
did. In Report #74 the latter co iianv added Titanium alloy extra and other 
companies imnedi- tely followed. Commercial Resolution #29, adopted June 13, 
1' 34, issued a formal call for the filing of -orice extras by members of the 
industry, iiore than six months before a notice had appeared in Report #3, 
da,ted December 19, 1933, which stated, "The filing of extras to cover allov 
additions, etc., is not required at this time under the call for the filing 
of prices during the -period ending Dec-mber 21, 1933." However, even 
though not required, extras had been filed prior to the adoption of the 
Resolution. 

B. Methods of Filing: price Extra Schedule s 

As in the case of filing orice schedules, there rere three general 
methods of filing -orice extras, namely, by refer ing directly to the type 
of extras and giving the cost of each item, b~r filing "same as" some other 
foundry, and b-r referring to a quarterly report. "Same as" filing was 
most common, and usually referred to the filing of Foundry ITo. 105, the 
Birdsboro Company. Perhaps this may be related to the fact that the chair- 
man of the Extras Committee of the Code Authority was an official of the 
Birusboro Company. As far as can be learned from study of the daily price 
reports and subsequent compilations, there '"as lit r le or no disagreement 
with the Birdsboro "Extras" - thev became the established levels, were 
published in the quarterly reports and adopted, almost without exceotion, 
by every interested foundry. Inspection of "Extras" as filed by the Birds- 
boro would be representative of all filings. 

This foundry issued 6 filings during the Code. The first and second 
have already been described. The third extra, filing, which was submitted 
in Daily Report #144, reported increases for chrome, nickel, vanadium and 
■copoer in Alloy Steel castings. The next extra filing was made in Daily 
Report #225, it included the extra filings as submitted in Daily Report 
#144 and also extras for the U. S. Navy Specifications group and Radio- 
graphic examinations. The fourth filing was e withdrawal of the U. S. Navy 
Specification group. The final filing oy the Birdsboro Company, in Report 
#333, dated ..arch 15, 1935, was for Machining and/cr Drilling Bolster 
Center Filler ca tin^s of High Tensile Steel. 

In each case, the lead of the Birdsboro Company was widely followed. 

Approximately 330 price extra filings were submitted to the Agency, 
15 per cent of which were filed before the official "call, " June 13, 1934 
by about 75 per cent of the foundries. It is believed that ether members 
adooted the Extras published in the quarterly reports and did not refer 
to them specifically. 



9826 



~ 654 - 



IV. ANALYSIS OF FILINGS RELATING TO SiiLI^ CO,; TRACTS 

Commercial Resolution No. 6, adopted November 27, 1933, required 
members of the Industry to file sales contracts which they had made before 
December 11, 1933, which continued in ef ^ect after December 31, 1933. 
These contracts were to have been filed concurrently with the first filing 
of orices, December 11 to December 21. 

The "Call" required that the foundry file information giving the 
effective and expiration date, name of customer, the class or classes of 
castings and the price specified. These contracts, if any were filed, 
were not reported in the daily price reports. 

The minutes of an Industry meeting held in Cincinnati, Ohio, on 
October 9 and 10, 1934, reported to the memoers in the form of a letter 
October 24, 1 '34, are quoted in parts: 

"It was stated that some contracts are in effect between certain 
foundries and their customers embracing prices lower than those 
currently on file by these foundries. flhile these contracts were 
made at prices actually on file at the time they were consummated, 
it was pointed out that unless the terms of these contracts are filed 
and published to the Industry, the Industry is misled into believing 
that a. higher revised price is the prevailing minimum price at which 
the castings of the classes in question are currently being sold. 
The Board of Directors on advice of Counsel later adoited a resolu- 
tion to rectify this situation." (*) 

The following section of Commercial Resolution #33 required the fil- 
ing of all unfilled con.tra.cts, wherein deliveries were to be made at 
prices lower than current filed prices. 

Commercial Resolution ?f33: 

"RESOLVED, that in cases where a neiber of the Industry desired 
to file prices for current new business which are higher than the 
prices at which a purchaser is entitled to recieve deliveries under 
an unexpired contract or contracts, such member is hereby required 
to file with the Society the following particulars relating to each 
such contract: 

1. Name of purchaser 

2. Date contract became effective 

3. Expiration date of contract, or the provisions as to dur- 
ation, termination or cancellation 

4. Classification names of castings involved 

5. Prices applying to each clasrif ica.tion 

6. Such further information as the executive officers of the 
Society may request 

"and further 

"RESOLV ED, that the fore.?;oin£ particulars as to such contracts 



(*} Steel Founders' Society - transcript of Proceedings, Industry Meeting, 
October 24, 1934. 



QfiOR 



- 655 - 

shall be given the same circuit fcio-n among members of the Industry as 
all other price data, )rovided, however, that the names of the pur- 
chasers under such contracts shall not be disclosed without the con- 
sent, in writing, of the rae ibers filing the contracts." 

Exhibit I - Tables XIII A, B and C (Based on the daily price reports 
issued by the Agency} reveal that under this resolution, during a period 
of six and one-half months, 22 lembers of the Society filed 60 contracts 
covering oeriods ranging from 2 months to 1 year. Many of the agreements 
as filed showed neigher effective date nor date of expiration, making it 
difficult to compute the average length of the contracts filed. 

Contract prices were filed only in a few scattered cases. 48 per cent 
of the total number of contract filings were made during the 10 days follow- 
ing the formal "call", and more than 36 per cent were filed during November 
and December, making a total of almost 85 per cent within 2 l/3 months. 

The companies situated in Divisions V and ' r I submitted the greatest 
number of filings. These divisions correspond to the Chicago, Cleveland 
and Finneapolis Feo.eral Reserve Districts. Foundries in Division ¥ filed 
20 uer cent of the contracts, while those in No. VI filed more than ? n per 
cent. Contracts were filed on almost 50 different oroducts, most of which 
were load and Street Machinery G-ear Castings and various types of automotive 
castings. There wore two other products for which filings were made; 
Agricultural Machinery and Overhead Travelling Cran.?. 

Foundry ITo . 705, the Duncan Foundry ana machine crks, Alton, Illinois, 
filed a. contract granting lo prices on 55 diff Tent heavy type products 
to one customer, covering, for the most oart, various products under the 
Crane, Overhead Travelling and Charging Machine classification, and includ- 
ing such products .-. s Foundry Eauipraent,' "levator, paper Mill and Platform 
Truck and Trailer Castings. This contract was in effect for 3 months, term- 
inating July 17, 1935. The Deemer Stool Casting Company of Hew Castle, 
Pennsylvania, filed a blanket contract on Rnbb.r Machinery. This contract 
covered almost 100 products of this major classification, and although the 
effective date was not specified, it t. rminated March 31, 1935. The Reed 
Foundry and Machine Company of Kalamazoo, Michigan, filed the greatest number 
of contracts, submitting 13 filings cov ring 20 customers and affecting 23 
products. 

This Sales contract device seem d to b used as ' moans of protecting 
the orevailing minimum price level. A foundry desiring to file or quote 
at levels ; rich below the orevailing ones was evidently forced into- a contract 
ual relationship with its customer. The cr.se of the Duncan Foundry and 
Machine Works is an example f this. In g neral, companies using the sales 
contract device were small concerns which may h^ve benn able to compete only 
on the oasis of a price differential. Commerci; 1 Resolution #38 granted 
foundries the privilege of closing contracts a.t prices lower than, the mini- 
mum on file, provided such contracts were reoor.ted to the Agency, 

T*) See Exilic it I - Table XIII -C . 



9RP.6 



\ 



- 656 - 

CHAPTER VI 

STATISTICAL ANALYSIS OF .-C.ICHS UUDER TIB OPEN PRICE PLAIT 

Turning from a general examination of the degree to which the elaborate 
price-filing system set up in this industry under its code was accompanied 
by uniformity in pricing practices, an attempt will be made in this 
chapter to appraise its actual effect on prices. 

I . SUBJECT MATTES AHD METHOD OF STUDY EMPLOYED 

A. Sanrole of Products Selected for Study 

When this study was planned, it was decided to center the statistical 
analyses around a sample of products, large, medium and small castings, 
which it was felt would give a better and more usable basis for appraising 
the effect of the system on price levels, their flexibilities and their 
uniformity, than would a more extensive survey of a great number of 
products. The procedure was outlined briefly to the manager of the Steel 
Founders' Society with the request that approximately five products, 
including heavy, medium and light-weight castings, be suggested, together 
with the names of five representative producers of castings of each weight 
class - the foundries to be typical large, medium and small producers of 
the particular class produced. The Society responded by sending a list 
of products, included below, which were used in the analysis. 

A few additional products were selected on the basis of other factors, 
such as completeness of filing. The products, arranged in the order in 
which they will be discussed are: 

1. Aeronautical Castings 

2. Agricultural Machinery - Combine Harvester 

3. Automobile B rake Clutch Pedal 

4. Automobile Axle Housings 

5. Automobile Brake Drums 

6. Bread Slicing Machinery 

7. Cylinders - Hydraulic Accumulator 

8. Dredge Ball & Socket Joint Castings 

9. Electrical Machinery & Equipment 

10. Gears - Cast Tooth & Blank 

11. Heat Treating Furnace & Equipment 
Carbonizing and Carburizing Boxes 

12. Railroad Locomotive Driving Boxes 
(Friction Type) 

13. Refinery Oil Castings - Sectional »U" Bend Only 

14. Refractory & Brickyard Roller Tires 

15. Rolling Mill & Steel Plant - Roll Housings & Caps 
(UQp over 2,499) 

16. Power Shovel & Dragline Bases - Upper 

17. Shoes and Treads 

18. Valve Bodies 

These castings are practically all parts of equipment manufactured by 
other industries - for instance, automobile-axle housings used in the 
automobile industry, agricultural machinery combine harvester castings, xxscd 



- 657 - 

in the manufacture of mechanical harv sster, power shovel bases used in the 
construction of power shovels, etc., as their names often imply. They are 
considered to "be standardized products' - they are not controlled by or 
under patents, so far as is hnov/n. All are included in the "Miscellaneous" 
products group - the only products for which prices were filed. 

B. Method of Analysis . 

Tabulations have been prepared of the filings for each of these 
products, based upon the daily price reports published by the Code 
Authority. Three of these tabulations - those for Aeronautical Castings, 
Locomotive Driving Boxes, and Power Shovel Shoes and treads - arc 
reproduced in the Exhibit I of this appendix. The tabulations for the 
remaining products studied show similar results, and their inclusion in 
detail was not considered necessary. 

In the following pages summaries have been prepared for each of the 
specimen products, based upon the tabulations, and designed to show the 
degree of uniformity of the prices filed, the extent and sequence of 
price changes, the influence of leadership, geographical differentials, 
flexibility of the price structure, and other factors which may appear 
as indicative of the influence of the filing plan. The minimum prevailing- 
schedules published in the Society's quarterly reports will also be 
shown at approximately quarterly intervals, to indicate and accentuate 
more clearly the various movements away from the mean or prevailing- 
price levels. Where available from the daily price reports, the status 
of each schedule filed will be indicated ( L, IT, DL, DN, etc. - See 
Chapter III, ?,1. Daily Price Reports) 

During the code, 16.3 foundries filed "blanket filings", quoting and 
referring tc all schedules contained in a quarterly report. There is 
no way of determining which specific classification these were designed 
to cover, consequently it has been necessary to neglect these filings 
in the following analysis. 

II. ANALYSIS 07 TSS TABUIATICIIS 01 PHICd; FILIITGS 

A. By Individual Product 

In the following sub-sections the data contained in the tabulations 
prepared for each of the 18 products listed above are analyzed and summarized. 

1. Aeronautical C? stings, 1T.0.C.B.H. 

The first recorded filing on this classification was made by Foundry 
504, the Atlantic Foundry Company, on December 18,1933 (see Exhibit I, 
Table XV). The schedule placed on file was "C", one of the highest prices 
filed for a product class. This is somewhat accounted for by the fact 
that this class of casting is usually very small and - more expensive to 
cast than the larger ones. 

There were two distinct cases of following the leader in the filing- 
en this product. On March 36, 1934, Foundries Hos. 832, 812, SOI, 8.23, and 
815 filed "same as" schedules. On August 23, Foundry 622 also filed C. 
This was followed "oi r "same as" filing by 22 companies, all in Division VI. 
There were oj filings in all recorded with the Agency. 

QQOC 



- 658 - 

The only other than C filed for this product during the entire code 
Period was by Foundry 303 on April 18, 1934. This schedule showed an 
increase in price, to Schedule 3. Later, en July 4, this foundry went 
back to tho C schedule. 

It is apparent that prices were entirely uniform on these castings. 
With the one exception, referred to above, the levels remained unchanged. 

2. Agricultural Machinery - Combine Harvester Castings, 

II. 0. C.B.N. 

In the report of December 5, 1933, published by the Steel Founders' 
Society of America, this classification was listed as M. Subsequent 
filings were at lower prices. It is therefore assumed that "M" was 
considered too high a level, since it was never filed subsequently. 
The first filing to be recorded on the daily price reports was by 
Foundry 608, Clark Equipment Company, at Schedule P. On March 26,1934, 
five foundries in Division VIII filed J and K for over and under 100 lb. 
castings, both above the low schedule P. Foundry 335 met this new schedule 
on April 7, 1934. However, most of the filings were on Schedule II. The 
general adoption of this level is indicated by the fact that, on June 16 
of the same year., the Second Quarterly Report listed the schedule as II. 
The schedule listed in the First Quarterly Report had been P. 

On August 23 Foundry Ho. 622 filed a set of schedules, new "lows", 
effective Sept. 4, 1934. This was followed by "same as" filing on the 
part of 18 foundries and the filing by one other foundry of schedules 
which referred specifically to the item. The Third, Fourth and Fifth 
Quarterly reports indicated this last schedule as the prevailing minimum 
in Division VI. In all other divisions it remained N. 

The following may be considered as summarizing the filings: 

(1) The tendency was to establish price differentials according to 
geographical divisions. 

a. Levels in Division VIII (California) were highest. 

b. Levels in Division VI were lowest. 

c. Levels in other divisions varied between P and E, with N 
prevailing. 

(2) Foundries in Divisions VI and VIII did most of the filing and 
levels were quickly established by the practice of "following 
the leader." This may bo traced to tho fact that Division VI 
was the largest producer of Agricultural Machinery, with 
Division VIII also a fairly large producer. The high prices in 
the latter division were due to the fact that competition was 
localized; long distance delivery costs prevented foundries 
located in other divisions from selling their products at lower 
prices. 

(3) Host of this product, especially during the last half of the 
Code Period, was sold at uniform prices. In Division VI this was 

. especially noticeable. 



9826 



< 



- 659 - 

(4) Prices in the Industry went down from M to ?, then up to H and 
then down to G, P, Q,, R, and S, as established in Division VI. 

(5) Price changes were not met during the waiting period. 
3. Automobile - Axle Housings (Banjo Type) 

An examination of data with reference to this product reveals that: 

(1) the method of quoting as to size, weight, etc. was not uniform 
during the early clays of the Code; 

(2) it tended to become uniform as time passed; 

(3) the original filing, indicated in the December 5 Report as 0, 
was undoubtedly considered too low in all divisions except ITo.o, 
since higher Trice schedules were filed from the start; 

(4) lower prices were usually withdrawn before filing higher levels; 

(5) the most usual levels "'ere K for Housings over 30 inches in 
length and P for those under 30 inches; 

(S) Foundry 600, the Clark Equipment Company, one of the smallest 
firms in the Industry, tended to be the low and most frequent 
filer, accounting for all three of the instances in which a low 
was filed and a waiting period required; (There is no indication 
that other foundries paid much attention to the low filing of 
this small company, ) 

(7) in this product, as in other products, Foundry Ho. 622, the 
Milwaukee Steel Foundry Company, on August 23, 1934, made a 
filing of K and P, (over and under 30 inches in length) which 
was filed "same as" by 24 foundries in Division VI. Foundry 608, 
referred to above, fell in line with the others, filing "same as" 
Foundry 622; 

(8) the orevailing levels according to the quarterly reports were 

K and P, except in Division VIII in which it was 3, a consider- 
ably higher price level; 

(9) the plan resulted in uniformity of method of filing and of 
schedule filed; 

(10) the uniformity was most complete in Division VI, where the 
production of this prrduct.is concentrated. 

4. Automobile Brake Clutch Pedal and Similar Levers (with Foot Pads) 

An investigation of ;oricc schedules filed for this product revealed the 
following: 

(l) the original filing, Schedule 3 on a new classification, was made 
by Foundry Ho. 625*on March 14, 1934, effective after the waiting 
period, March 24, 1934. 
* Hote: The first number in the foundry number indicates the location 
9826 (Division), i.e., Foundry Ho. 625 is in Division VI. 



- 660 - 

(2) Schedule 3 was filed, by all interested concerns, except 
Foundries 130, 109 and 112, 305 e.nd 70y which filed Schedule I, 
considerably lower. 

(3) On August 23, 1934, Foundry 622 filed 3, followed by 25 
foundries in Division VI. 

(4) On October 5, Foundry S25 again filed Schedule B, followed by 

7 foundries all from Division VI - this established the level of 
"B" at least in Division VI, the center of production. 

(5) The quarterly reports list the prevailing minimum schedules 
for all divisions as "B". 

(6) This is an instance where, with slight exception, the level was 
uniform from the time of the first filing. 

5. Automobile Brake Drums - 1 to 100 lbs. 



For this product, Schedule I, filed originally before the December 5 
Report, was the established level throughout the Code Period in all 
divisions. Four foundries in Division VIII had filed Schedule K on 
March 20, 1934, but in a matter of days most of them were back up to I. 
One other foundry, Ho. 714, filed K on December 4, 1934 - all others were 
I. 

Foundry 522, which filed I on August 23, 1934, was followed by 25 
foundries in Division VI which filed "same as". This concerted action 
was responsible for the establishment of uniform prices on most automobile 
castings. 

6. Bread Slicin. Machinery Castings, II 0. C.B.I!. 

This product was originally filed as a new classification by Foundry 
No. 709 on September 26, 1934, effective October 6. The schedule was K. | 
During the Code it was filed by only two other foundries, lTos. 64-1 and 
505, both as Schedule K. 

7. Cylinders - Hydraulic Accumulator Type 

The early report issued by the Industry oh December 5 listed this 
casting on Schedule G, '-here it remained throughout the life of the Code. 
Ho foundry filed any other schedule - there were 48 filings at "G", including 
the foundries 'in Division VIII, which in this instance did not file higher 
than foundries in other divisions. 

The usual concerted action by foundries in Division VI followed the 
filing of Foundry 622 on August 23, 1934. 

8. Pro fee Ball and Socket Joint Castings. Including Cases. Balls, 
and Glrnds 

An investigation of the various filings revealed that until May 23, 
1935, the prevailing level in this classification in all divisions except 
the California district was Schedule L, which- was the level included in 



~ 66-i - - 

the Report of December 5, 1933. Foundries in Division VIII quoted J 
and K, respectively, on castings over and under 100 It's, in weight. 
Following the filing of "L" by Foundry 622 on August 23, 1934, 25 
foundries in Division 71 filed "same as," the usual procedure. 

On May 13, 1935, effective May 23, Foundry 205 filed Schedules 
P and (over and under 1,000 lbs.), new low or minimum schedules. 
During the 10- day waiting period 6 foundries filed tc meet the new 
low schedules and four days after the new prices were effective another 
foundry filed. Whether this activity disturbed the prevailing "L" 
level is not definitely known, since it occurred near the end of the 
Code Period. 

9 . E lectrical Machinery a nd Eq uipment - Motor Frame 
( Box Type ) ~ 

The filing in the early days of the Code was not uniform, although 
most foundries quoted on both over and under 500 lb. castings. The most 
usual filing quoted Schedule K on both, with the exception of foundries 
in Division V, which filed Schedule J on castings under 500 lbs. and a 
number of foundries in Division VIII which filed I and J (higher prices). 
Most of the filings made in the interim between the First and Second 
Quarterly Reports listed K and J for the two weight groups. These 
were levels published in the latter report. However, on August 23, 
1934, Foundry 522 quoted K for both weights. This was, as usual, fol- 
lowed by 25 "same as" filings, which definitely set the level as K in 
Division VI. Subsequent filings in Division II established the same 
levels in that Division. 

10. G-ears - Cast To oth and Blank 

The original filings as published in the Report of December 5, 
1933, were Schedules and. M on castings over and under 250 lbs,, re- 
spectively. During the Code, filings were made on Ring G-ears as such, 
and a composite filing for all other types of gears. The schedule most 
often filed on Ring G-ears was L, although later in the Code Period 
(about August, 1934), a number of foundries listed N and L for Rings 
over and under 250 .lbs. 

The filing on other types of Gears was not uniform during the early 
months of the Code. Schedules L, and P on over 250 lbs. and M, N 
and, occasionally on castings under 250 lbs. were most consistently 
used. The prevailing levels about April 1, 1934, were: 

(1) over 250 lbs., Divisions II, V and VI - P; 
all others, 0; 

(2) under 250 lbs,, Divisions III and IV - M; 
all others, K. 

On March 21, 1934, low schedules, and M, were filed by Foundries 
407, 424 and 420, effective March 31. Why the waiting period was re- 
quired is not clear, because the same schedules were being used by other 
foundries. The day following this filing (March 22, 1934), Foundry No. 
419 filed the same schedules (0 and M), which were allowed to become 

9826 



- 662 - 

effective immediately. There were two other instances of filing and 
M during the waiting period, prices becoming effective on the same day. 

Fifteen foundries filed "same as" the original filing of Foundries 
407, 424 and 420, some effective "before and others after the original 
filing. In the interim between the dates *o£ publication of the First 
and Second Quarterly Reports, most of the filings became Schedules 
and M, although several foundries in Division VIII quoted -higher sched- 
ules, H and I, for castings over and under 10<"> lbs. Most of the filings 
during the first half of the Code period added N.Q. D. - R.M.O. (no 
quantity discount to Rolling Mills). 

On August 23 and 25, 1934, Foundry 622 filed and M on Gears - 
Cast Tooth and Blank, and N and L on Ring Gears; this was followed by 
the usual 25 "same as" filings by members in Division VI. During the 
last half of 1934, prices of this product appear to have been uniform. 

11. Heat Treating Fur nace and Equipment, C arboni zing 
and Carbur izin g Boxes 

Although Schedule K was listed as the prevailing level for this 
product in the Report of December 5, 1933, no foundry filed it during 
the first few months of the Code. Schedules M and N (over and under 
500 lbs.) and L were most consistently quoted. Six foundries in Div- 
ision VIII quoted H and I for the weights over and under 100 lbs. On 
April 23, 1934, Foundry N. 416 filed K; this was followed by similar 
filings by a number of foundries. 

On July 10 of the same year, Foundry 63 filed Schedule M, effective 
ten days later, on July 20. This was evidently considered a new low 
although it had previously been filed and there is no evidence of a 
withdrawal. Foundry 622 filed M on August 23, 1934, followed by the 
usual "same as" filing on part of 25 foundries. This fixed M as the 
prevailing level in Division VI. 

The First Quarterly Report, published March 31, 1934, listed the 
prevailing schedules as follows: over 500 lbs. -Divisions IV, V and 
VIII - M, all others, K; under 500 lbs., Divisions IV, V and VIII = 
N, all others, K. The Second Quarterly report listed K for all divisionsi 
In Aigus't the levels were established as M in Divisions I, II, V and VI, 
and K in Divisions III, IV, VII arid VIII. This differential prevailed 
during the remainder of the Code Period. In Division VI, especially, 
these schedules were uniformly quoted. 

12. Railroad locomotive - Drivi n g Boxes (Friction Type) 

The study of prices for this class of casting revealed an interest- 
ing manipulation of prices within a schedule by use of the N.Q. D. (No 
Quantity Discount) principle. Examination of Exhibit I - Table XVI 
shows that the schedule published in the Industry Report of December 
5, 1933, was P with N.Q. D. - this status made operative only the prices 
under the 1 to 3 piece column of the schedule, with no reduction in 
price for any quantity on order. ■ The first record of any filing was 
on December 30, 1933, when Foundry 402, American Steel Foundries 

9826 



-Ot^- 



Corapany, filed. On March 2, 193^+. a foundry in Division VIII filed 
schedule F with the P.y.D. moved cut to 99 pieces. This was soon follow- 
ed by other members of Division VIII and constituted in effect a price 
reduction^*) as reference to the actual schedule will indicate. During 
the next six nonths many foundries in other divisions also filed "P" 
with P.Q.D. over g$ pieces. On October 29, 193 ! 4-, foundries ^07, 105 and 
U22 filed jointly, effective November 8, Schedule p with IT.Q.D. over 2^9 
pieces - a new lo -- price. 

"hen the Fourth rniarterly Report was published, December 13, 193^i 
the above schedule and L7.Q..D. over 2U9 pieces was the prevailing level 
in all divisions er.cept "do. VIII. On January 2, 193 5 1 Foundries 8O5 and 
806 jointly filed the new level ( IT.Q.D. over 2k$ pieces). Pive other 
foundries in Division VIII followed with "same as" filings. The Fifth 
Quarterly Report, issued on March 23, 1935. indicated complete uniform- 
ity in all divisions at the new level. 

1 3. Re finery Oil C astings - Sectional "IJ" Bend Only 

The Report of December 5» 1933. and the very early filings by mem- 
bers specified Schedule I and made no differential for "eight classes. 
However, Foundry "do. 206 filed on February 28, 193^» effective March 10, 
low schedules L and U (over and under 100 lbs.). Shortly after this, 
effective March 17,- Foundry 626 filed low schedules M and N. About that 
time several foundries in Division VIII filed the higher levels, H and 
I. However, the prevailing level was L, indicated in the Pirst Quarter- 
ly Report and again in the Second. The L and M schedules were, however, 
filed consistently during July and August of that year, 

On August 25, 193^-1-, Poundry 622 filed "L" for all weight classifi- 
cations. Again the same 25 foundries followed this filing establishing 
the prevailing level as !, L" for division VI. The differentials prevail- 
ing during the remainder of the Code Period after August, 193^» were as 
follows: 

Castings over 100 lbs. - Schedule L, all divisions 

Castings under 100 lbs. - Divisions I, II, IV and VII - M 

Divisions III, V, VI and VIII - L 

lk. Refrac tory and Brickyar d Roll er Tires 

Pith few exceptions the prevailing schedule used on this classifi- 
cation was "?•!". On April 13, 193^ » several foundries in Division VIII 
put into effect a new low schedule "0." Within a month this' "low" was 
withdrawn and the higher schedule M substituted. On Jul" 13 , Foundry 



(*) In the sched-.les the price per lb. is lower for quantities. There- 
for the allowance of quantity discount up to SZ pieces is in effect 
a lower price than when there is P.Q.D. (no quantity discount); 



982S 



- 664 - 

420 filed "0" effective July 23, a new low price, because the previous 
filing of "0" had been withdrawn. (*) This filing by Foundry 420 was 
withdrawn on August 28. 

The filing of Foundry No. 623 and other foundries in Division VI 
on schedule M completed the filing on this product, resulting in un- 
iformity without exception. 

15 . Rolling Mill and S t eel Plan t - F.oll Housings and Cap s 

Here again price changes were effected by utilization of quantity 
discounts. The December 5 Report issued by the Industry quoted schedule 
Q for this product. In February, 1'934, Foundries 501, 508 and 713 
filed the same schedules, but without quantity discounts. Foundries 
407, 424 and 420 jountly filed schedule Q, and all quantity differentials 
availabe therein (new low prices) on March 21. This change became effect- 
ive in ten days, on March 31. Subsequently Foundries 419, 122 and 105 
filed the same schedule, effective before the waiting period was com- 
pleted on the original filing. Forty-four foundries filed "same as" 
.clauses to the filing by Foundries 407, 424 and 420,' above. The First 
Quarterly Report established the level as Q, (all discounts available) 
for all divisions. 

f 

However, in the Second Quarterly Report the Agency indicated the 
prevailing level as schedule Q (N.Q.D. over 2,499 pieces). (**) Since 
the records show no filing of this NQD arangement, it is assumed that the 
Code Authority was responsible for its institution. On August 25, 1934, 
Foundry 622, followed by the 25 members of Division VI, filed the 
schedule Q, and the 1T.Q.D. 2,499 pieces. The Fourth and Fifth Quarter- 
ly Reports listed the same arrangement as prevailing without exception 
in all divisions. For this product, leadership in this survey was ap- 
parently accorded to ^Foundries 407 and 424, both divisions of the Con- 
tinental Roll and Foundry Company, largest producers of Rolling Mill 
equipment in the Industry. 

16. Power Shovel and Dragline Bases - Uppe r 

The schedule suggested in the Report of December 5, 1933, as 
appropriate for this product was "L". This evidently was the prevail- 
ing level in Divisions I, III and VII, being indicated as such in the 
First Quarterly Report (March 31, 1934). The filings on Schedule M 
to be representative of all other divisions. One filing of a lower 
schedule "P" was not met by any other foundry. A few foundries in 
Division VIII filed H and I (over and under 100 lbs.) but the common 
level was lower, at M. 



(*) The withdrawal of a "low" price eliminates it as a filing - see 
explanation of withdrawals, pages - 640 & ff . 

(**) See page 6^9 for explanation of 1I.Q.D. 



9826 



- 655 - 

Division VI established its level at M by the usual concerted 
action of 26 foundries. Tne latter part of October, 1934, found all 
foundries quoting at t! except those in Division VII, in which "L" was 
still the prevailing level. 

: 17. Shoes or Trer ds - Power Sho vel and Dragline 

The study of the prices (Exhibit I - Table XIV) of this product 
classification reveal: 

(1) The elimination of filing on weight classes, 
i.e., over and under 100 lbs., following the 

I ruling of the Definitions and Classifications 

Committee on April 25, 1934, 

(2) The trend of prices, was 

(a) first schedule - December 5 Report: 

(b) then down to and P, which most foundries 
filed; 

(c) down another step to P, filed by only a 
few foundries; 

(d) Foundry 509 filed R, then withdrew E and 

(e) filed high schedule Q; 

(f) several foundries in Division VIII filed J 
: ,and K ; ; 

(g) Foundry 509 withdrew Q,, and P became the "low" 
again ; 

(h) after May, 1934, there was no filing on weight 
classes; 

(i) the levels became schedule in Divisions I, 
III, VII and VIII and "P" in Divisions II, IV, 
V and VI, with the exception of 2 foundries in 
No. Ill and 3 foundries in Ho. V which quoted Q. 

(3) Although divisional differentials were prevalent, 
complete uniformity was effected within the div- 
isions which produced most of the product. Div- 
ision VI is an example of this and exhibits the 
usual concerted filing by members following Foundry 
No. 622. 

(4) There is evidence of the Agency allowing a price, 
filed to meet competition, to become effective 
before the waiting period on the original "low" 
was completed. In cases of this sort the company 
filing the second schedule was usually located in 
a division other than the company filing the 
original low. 

(5) The withdrawal device was effectively used. 

18. Valve Bodies 

For this classification, the following items are noted: 

(1) Filings during the early Code Period quoted various 
schedules on various weight and quantity specifica- 
tions. Some filed L and K for over and under 50 lbs; 

9826 



- 666 - 

others filed on over and under 50 pieces; some "based 
their prices en classes of over and under 250 lb. 
castings and still others quoted just one. schedule 
for all weight groups. Schedules H and I quoted 
in. California were the highest prices - I,J,K,L 
and M were often quoted by foundries in other 
divisions. This gives an idea of the lack of un- 
iformity, at least between devisions, which prevail- 
ed during the early Code period. 

(2) After 'the issurance of the First Quarterly Report 
on March 31, 1934, and subsequent rulings by the 
Code Authority on April 25 and May 5, foundries 
were not allowed to file on the various weight 
classifications. As a result, from that time on, 
only single schedules were filed on all weights of 
valve bodies. 

(3) From May 5, 1934 until the end of the Code only 
two schedules, I and K, were filed - the I 
schedule predominating. This was the one suggested 
in the Bulletin of April 25, 1934, as a minimum. 
However, 3 foundries in Division I, 5 in Division 
II, 1 in Division III, 5 in Division IV, 2 in 
Division V. and 2 in Division VIII, a total of 19, 
filed K schedules, which evidently were accepted 
by the Agency. Divisions VI and VII were uniform 
on schedule I. The procedure of 25 foundries 
filing the "same" as a "leader" foundry in Div- 
ision VI established a uniform level there. 

B. G-eneral Summary of t he Price Data 

The cases presented in the preceding analyses and similar but more 
fragmentary data concerning other products may be summarized as follows: 

a. Filings in most imstances were not uniform in the 
early days of the Code. 

b. Prices did tend to become uniform, especially in 
the last eight months of the Code period. 

c. This uniformity was facilitated by administrative 
action, reducing the number of weight classifica- 
tions, etc., and the concerted action by many pro- 
ducers in filing "same as,." some other foundry. 
Especially in Division VI, source of a large pro- 
portion of the Industry's volume, did this proced- 
ure prevail. On 582 products, 26 . foundries. out 

of 41 in Division VI filed the "same as" Foundry 
No. 622 after Auguat 23-25, 1934. 
d; There was this and other evidence of "follow- the 
leader" practice. 

e. The filing of prices on the important classifica- 
tions, for example, Rolling Mill equipment, usually 
"followed" the most important producer. 

f. On certain occasions ten or more foundries from the 
same division would file on the same day, to become 

9826 



-667- 

effective on the same date, identical schedules for 
the same group cf classifications. 

g. In several instances levels were stable during the 
entire period and uniformity practically complete 
from the start. 

h. There was usually no definite trend of prices in 
achieving uniformity and stability. In most of the 
cases studied the prevailing level did not change 
during the Code period. 

i. Prices, based on number of changes, were more flex- 
ible during the first few months of the Code than 
during the balance of the period. With the increase 
in uniformity and stability, as the system became 
more completely operative, the entire price struc- 
ture, including terms of sale, tended to exhibit 
more rigid characteristics. 

j. There is evidence of a small foundry filing new low 
prices en a product and net being met by other 
foundries. A possible explanation for this lack of 
action en the part of the other members is that the 
small foundry's production capacity was of little 
significance and did not affect the prevailing OTice 
level. Several times this foundry cut to lower 
schedules. However, when uniformity among other 
foundries was achieved, it apparently decided to 
conform. 

k. There are instances in the price filing experience 
of this Industry that new low prices were filed 
effective in 10 days. During the waiting period 
other foundries filed low to meet the competition; 
apparently, because of this competitive filing, the 
first foundry withdrew, before the end of the wait- 
ing period, and refiled higher prices. In such cases 
it appears that the existence of a waiting period 
did deter the tendency to revise prices downward. 

1. Ordinarily a new "low" price required a ten-day 
waiting period before becoming effective. However, 
there ?;ere occasions when a foundry in another di- 
vision filed the same "low" price on the same date 
or shortly after the original filing, and the price 
of the former was permitted to become effective im- 
mediately. 

m. There ^ere many cases of differentials in filed price 
seemingly based on geographical location; (*) for 
example, levels in the California Division, No. VIII 
usually higher than others. This may be explained in 
pert as the result cf higher production costs based 
on (l) inaccessibility of raw materials, and (2) more 
complete unionization of plant personnel, with higher 
labor charges. Another factor advanced as the cause 
of the higher levels is the lack of competition from 
producers in other areas, mainly because of long hauls 
to the market. 



(*) See Chart III following. 
9326 



~Wi 



668 



*.*■ 


UJ 


>t- 


UJ o 


(r ui 0) 


< if) a> 




ZI-2 


O<0 


031- 


>S 


Q« 



«l 



co 



CD 



D >1 



*: 



o 



L±J 

*l 

U_ H 
O CO 

z> 

CO Q 



a 



H 




x° 

< UJ 

cr uj 
^ h- 

° CO 
UJ UJ 

CD 




^ 



o 



r 



u 



o 



o 




,>> I 



Uj 




i 



- 669 ~ 

n. Price differentials to different classes of customers 
were apparently reduced by the use of a system of 
standard quantity discount brackets and by the 
occasional practice of quoting prices without any 
quantity discount. However, it is believed that the 
railroad group of customers was relatively success- 
ful in preserving the differentials enjoyed in the 
pre-code days. Threats by this group to shift cer- 
tain owned patterns to rival foundries and fear of 
losing railroad business were the pressures which 
forced concessions from seme foundries. These con- 
cessions took the form of additional freight allow- 
ances for on-line-haul, allowances for patterns and 
equipment, etc. 

o. The establisliment of a system of filing delivered 
prices brought about a uniformity in the treatment 
of geographical price relationships which had not 
existed before the Code, when not all producers 
quoted on a delivered basis. 

Filed prices in this Industry for the most part represented a 
fixed relationship to a suggested cost floor. Price levels supposed 
to be 87 per cent of the levels in 1S26 were suggested by the Code 
Authority in its report to the members on December 5, 1933. These 
levels prevailed, much as originally suggested, throughout the Code 
Perlo die ^Evidence seems" to. -point to the fact that these levels were 
higher, especially on the small castings, than those in ffect im- 
mediately prior to Code. 

The trend of prices in this Industry was downward immediately 
following the Code. This statement is based on figures submitted by 
the Steel Founders' Society and presented in Exhibit I Table II and 
Chart II. It is believed that the same condition prevailed at this 
time as the period immediately following the price reporting activ- 
ities employed by the Society in the year 1923 to 1926 inclusive. 
It will be recalled that the Engineers who examined the Industry's 
code pricing system made the following statement concerning prices 
in those years: 

"During the examination of 1926 selling prices, the Engineers 
found that in many cases the schedules used in 1925 were the same 
as those in effect in 1925, 1924 and in some instances even in 1923. 
" ... ..Beginning in the latter part of 1926..." (price reporting was 

discontinued in December, 1926) "...the selling prices generally 
scaled downward and in most cases 1927 and subsequent schedules 
were at lower selling prices than those of 1926. " 

This seems to indicate that schedules, among members, were uniform 
during the price reporting days of 1923-1926 and that following the 
end of reporting the levels scaled downward; this experience practically 
parallels the experience of the industry during the Code and Post-Code 
period. 



9826 



- 670 - 



Examination of Tables II and III in Exhibit I. and Chart IV. and V. 
impresses one with the fact that prices of Steel Castings during the 
period of the Code increased almost twice as fast as costs; increases 
were 18 percent for prices and about 9>; percent for costs. During the 
same period prices of "Froducers goods for capital equipment" \j advanced 
less than 4 percent, which, when compared with the increase for steel 
castings, gives the impression that latter went up more than the average* 



1_/ National Bureau of Economic Research. 
9826 



671 



AVERAGE SELLING PRICE OF STEEL CASTINGS 

1933-1935 




100 



80 



60 



40 



20 



OPEN HEARTH 



J I I I l_ 





M J S D 




1933 


SOURCE 


STEEL FOUNDERS' SOCIETY OF AMERICA 


9S2G 





1934 



1935 



100 



80 



60 



40 



20 



N.R.A. 

DIVISION OF REVIEW 

STATISTICS SECTION 

NO 507 



UJ O 

o o 

IE I 

Ul 



o 

CD 



LU 

o 



o 
o 




I- 
w 
o 
o 

_l 
< 
I- 
o 









■■■■■*■■ 








9826 



-672- A- 



EXKIEIT I 



Tables I to XVI 



9828 



673 



R-P 


-28 






















TABIE I -A 
Production of Conmeroial Steel 
(Thousands of short tons 


Castings a / 
) 








1926 1927 1928 


Total 
1929 1930 lSfel 


1932 


1933 


1934 


1935 




JAN 


97 


87 


74 


93 


109 


46 


18 


14 


28 


29 


FEB 


96 


89 


88 


98 


108 


50 


19 


12 


29 


30 


MAR 


116 


103 


94 


115 


113 


57 


20 


13 


39 


32 


APR 


114 


95 


86 


122 


111 


48 


17 


12 


46 


32 


MAY 


103 


87 


93 


127 


105 


43 


14 


19 


57 


31 


JUN 


99 


88 


92 


116 


91 


35 


13 


27 


50 


28 


JUL 


91 


80 


79 


118 


79 


32 


11 


29 


46 


31 


AUG 


85 


87 


88 


121 


. 64 


30 


12 


31 


44 


SB 


SEP 


R3 


70 


7fi 


107 


62 


27 


11 


2K 


32 


35 


OCT 


83 


§3 


.88__ 


121 


60 


24 


13 


25 


29 


.43 


NOV 


89 


59 


82 


110 


44 


23 


14 


23 


2fi 


.'36 


DEC 


fiS . 


59 


82 


106 


46 


22 


14 


22 


24 


3fi 


























192b 1927 1928 


Miscellaneous 
1929 1930 1931 


1932 


1933 


1934 


1935 




JAN 


58 


53 


45 


57 


61 


33 


13 


11 


21 


2X 


FEB 


53 


54 


50 


58 


63 


36 


15 


10 


23 


?.« 


MAR 


66 


62 


56 


66 


65 


43 


Ifi 


in 


27 


Pi. 


APR 


68 


56 


53 


69 


66 


35 


13 


9 


2R 


2K 


MAY 


57 


52 


56 


68 


fi?. 


SI 


11 


lfi 


74 


P!f? 


JUN 


fi2 


53 


fil 


fi?. 


5« 


?.« 


11 


R5 


«1 


?.s 


JUL 


58 


47 


51 


66 


53 


24 


R 


as 


?.ft 


PR 


AUG 


57 


55 


61 


68 


43 


21 


in 


J>A 


? r fi 


PR 


SEP 


59 


44 


51 


62 


44 


an 


a 


91 


*3b 


25 


OCT 


56 


41 


K9 


71 


44 


17 


i" 


-39 


?0 


31 


NOV 


64 


40 


51 


50 


32 


16 


in 


Ifi 


ifi 


26 


DEC 


55 


40 


56 


71 


32 


16 


11 


17 


lfl 




























1926 1927 1928 


Railroad Specialties 
1929 1930 1931 


1932 


}933 


_JL324 . 


19SS l 




JAN 


39 


34 


29 


36 


48 


13 


5 


3 


7 


« 


FEB 


43 


35 


38 


40 


45 


14 


4 


?. 


fi 


« 


MAR 


50 


41 


38 


49 


48 


14 


4 


3 


12 


A 


APR 


46 


39 


33 


53 


45 


13 


4 


s 


lfl 


t 


MAY 


46 


35 


37 


59 


43 


12 


3 


s 


23 


E 


JUN 


37 


35 


31 


54 


33 


9 


2 


4 


lfl 




JUL 


33 


33 


28 


52 


26 


8 


3 


6 


18 


Y 8 


AUG 


28 


32 


27 


53 


21 


9 


2 


7 


18 


8 


SEP 


24 


26 


25 


45 


. 18 


7 


3 


' 5 ' 


11 


10 


OCT 


27 


22 


29 


50 


16 


7 


3 


6 


9 


12 


NOV 


25 


19 


31 


50 


12 


7 


4 


4 


7 


10 


DEC 


,.2,Q 


19 


?.K 


35 , 


14 


6 


3 


fi 


fi 


in 
























Source 


Survey of Current i 
See note, p» 


Business. 











DIVISION OF REVIEW, NRA 

9826 



i 



« 



- 674 - 

a/ Compiled by the U. S, Department of Conferee, Bureau of the Census, 
from reQorts of 130 identical firms, including reports collected 
through the Steel founders' Society. These firms have a monthly 
capa.city of 146,900 tons, at oresent representing over 80 Dercent 
of the capacity of the industry for com?iercial castings (as dis- 
tinguished from castings ased in further manufacture in the same 
plant), of which 67,570 tons are usually devoted to railway specialties 
and represent the complete capacity of that branch, while 79,330 tons 
are generally devoted to miscellaneous castings. Railway specialties 
include such items as bolsters, side arms, drafts arms, couplers, and 
cast-steel car wheels. Owing to reports from additional firms, these 
figures represent revisions of those shown in the Record Bock of 
Business Statistics. Metals and Machinery Section. The revisions in 
detail appeared in the March, 1928, issue (No. 79), p. 20, including 
annual averages from 1913 through 1920. 



675 676 677 



R- V 


-28 




















TABLE I-B 
Per Cent of Capacity Utilized in the 
Production of Commercial steel Castings a / 


192b 1927 1928 1929 1930 1934 1932 1933 1934 1935 




JAN 


69 


60 


51 


64 


7b 


32 


13 


10 


ia 


24 


FEB 


69 


o2 


60 


67 


75 


34 


13 


8 


18 


25 


MAR 


83 


71 


64 


79 


79 


39 


14 


9 


?.k 


27 


APR 


81 


66 


58 


84 


77 


33 


12 


8 


an 


27 


MAY 


74 


60 


63 


87 


73 


30 


10 


IS 


37 


?K 


JUN 


71 


bl 


62 


80 


63 


24 


9 


IP 


RJ> 


as 


JUL 


65 


55 


53 


81 


55 


22 


ft 


?.n 


Sn 


p.tf 


AUG 


bl 


60 


60 


83 


45 


21 


8 


21 


?.fi 


?.q 


SEP 


59 


49 


51 


73 


43 


19 


8 


17 


?.a 


an 


OCT 


59 


43 


60 


83 


41 


17 


9 


17 


19 


3fi 


NOV 


(34 


41 


56 


7b 


31 


lfi 


9 


15 


17 


3D 


DEC 


61 


4i 


56 


73 


32 


15 


9 


IK 


IS 


RS 




























JAN 






















FEB 






















MAR 






















APR 






















MAY 






















JUN 






















JUL 






















AUG 






















SEP 






















OCT 






















NOV 






















DEC 
















































JAN 






















FEB 






















MAR 






















APR 






















MAY 






















JUN 






















JUL 






















AUG 






















SEP 






















OCT 






















MOV 






















DEC 












































Source: Survey of Current Business. 

Capacity is based on the average monthly shipments for the best 
six consecutive months since January 1. 1919. 



DIVISION OF REVIEW, NRA 

9826 



- 678 - 



TABLE II 



Average Selling Price of Steel Castings 
from July, 1933, to September, 1935 

(Dollars oer Ton) 





Year and 






Combined Oven Hearth 


Month 


Open Hearth 


Electric 


and Electric 


1933 








July- 


a/ 


a/ 


137.00 


August 


a/ 


a/ 


144. 00 


September 


a/ 


a/ 


144. 00 


October 


a/ 


a/ 


159.00 


November 


111.66 


171.64 




December 


115.03 


169.90 




1934 








January 


116.40 


181.00 




February 


120.00 


184.50 




March 


116.00 


187.20 




April 


123.00 


188.00 


o 


May 


122.40 


188.30 


c+ 


June 


125.00 


184.40 


% 


July 


124.00 


183.60 




August 


120.00 


191.00 


h- 1 
P 5 


September '. 


122.00 


194.40 




October 


128.40 


193.60 


CD 


November 


134.00 


185.00 




December 


131.00 


193. 50 




1935 








January 


127.00 


195.00 




February 


126.40 


195.60 




Mar ch 


131.60 


199.00 




April 


131.60 


190.00 




May 


131.60 


190.00 




June 


130.00 


192.00 




July 


128.00 


193.60 




August 


126.^0 


190.80 




September 


125.00 


191.20 





Source: Steel Founders' Society of America. 
a/ Not available. 



9826 



- 679 - 



TABLE III 



Changes in Production Costs of Steel Castings 
January, 1933, to October, 1935 
(1S26 - 100 percent) 

















III 














Total Raw 




I 


II 








Materials Total of 


Year and 


Fixed 


Labor 


Vari- 




Pig 


and Sum I , 


Month 


Cost 


Cost 


ables 


Scrap 


Iron 


Variables "I, III 



1926 
1933 



15.0 



50.0 



14,0 



13c 



8.0 



35.0 



100.0 



January- 


15.0 


41.0 








22.4 


78.4 


February 


15.0 


40.9 








22.2 


78.1 


March 


15.0 


40.5 








22.0 


77.5 


April 


15.0 


40; 








22,2 


77-2 


May 


15.0 


39.8 








24.8 


79. b 


June 


15.0 


38.5 








25.1 


78.6 


July 


15.0 


33-6 








26,1 


79.7 


August 


15.0 


39.4 








27.8 


82.2 


September 


15o0 


42.2 








27.8 


85.0 


October 


15.0 


44.0 








27.7 


86.7 


November 


15.0 


43.2 








27.5 


85.7 


December 


15.0 


44.2 








27.9 


87.1 


1934 

January 


15.0 


45.0 








28.3 


88.3 


February 


15.0 


44.6 








28. 4 


88.0 


March 


15.0 


45.4 








29.5 


89.9 


April 


15.0 


45.6 








29.6 


90.2 


May 


15.0 


47.4 








29.7 


92.1 


June 


15.0 


47.9 








29.0 


91.9 


July 


15.0 


48.3 


13.0 


10.0 


6.0 


29.0 


92.3 


August 


15.0 


49.2 


12.6 


10.1 


6.0 


28.7 


92.9 


September 


15.0 


49.0 


12.5 


9.4 


6.0 


27.9 


91.9 


October 


15.0 


48.5 


12.0 


9.0 


6.3 


27.3 


90.8 


November 


15.0 


49.7 


12.5 


9.3 


6.0 


27.8 


92.5 


December 


15.0 


49.0 


12 5 


9.5 


6.5 


28.5 


92.5 


1935 
















January 


15.0 


49.0 


12.6 


10.0 


6.5 


29.1 


93.1 


February 


15.0 


49.5 


12.4 


10.0 


6.0 


28.4 


92.9 


March 


15.0 


49.5 


12.4 


10.0 


6.0 


28.4 


92.9 


April 


15.0 


49.2 


12.4 


10.0 


6.0 


28.4 


92.6 


May 


15.0 


50.0 


12.4 


10.3 


6.0 


28.7 


93.7 


June 


15.0 


50.0 


12.5 


10.0 


6.5 


29.5 


94.0 


July 


15.0 


50.0 


12.4 


10.0 


6.5 


28.9 


93.9 


August 


15.0 


50.5 


12.9 


10.0 


6.5 


29.4 


94.9 


September 


15.0 


49.5 


12.9 


11.0 


6.2 


30.1 


94.6 


October 


15.0 


49.5 


12.9 


11.0 


6.-3 


30.2 


94.7 



Source: Steel Founders' Society of America. 



680 



R-P 


-26 




















TABLE IV 

Price and ProduotioxJjbf Malleable Iron Castings 
i and Per Cent of Capaoitv Utilized 


Number of Short Tons 

1926 1927 1928 1929 193n 1931 193?. 1QMC 1934 1QSR 




JAN 


66.776 


56.627 


61.072 


73.125 


62 f 33£31,665 


22,216 


l?.,fi3fl 


sn 4i7 


43, Ann 


FEB 


71,161 


62,335 


65,359 


73,875 


66,909 34.076 


21.578 


13 '.7 80 


33.939 


41 ,377 


MAR 


80,116 


72,205 


70,070 


83,365 


64.38S35.758 


19 r 597 


9.959 


_4J^43_a 


42,f!0fl 


APR 


72,241 


64,612 


63,380 


83,744 


62, 945136. 682 


16,758 


18 f 566 


40,742 


42,035 


MAY 


65,106 


62,747 


67,903 


81,641 


54. 277)31. 964 


17 r 430 


2&+S2&- 


37,lfifi 


34,729 


JUN 


66,358 


64,310 


67,090 


72,232 


39*971 
31.318 


24.245 


15_*143_ 


31,118 


28,340 


27,548 


JUL 


60,384 


53,046 


60,290 


70,600 


20,223 


9.703 


30,865 


ii^aa, 


28,915 


AUG 


62,218 


57,096 


68,606 


69,173 


25.93318.831 


7.038 


3_l*filL 


23,910 


KB,?.*.*! 


SEP 


63,399 


50,807 


62,665 


59,087 


26,83918.485 


10.168 


27,078 


li^Ml, 


36,996 


OCT 


62,321 


52,458 


70,054 


65,526 


29,10120,444 


12,586 


24.381 


25 r 317 


43 r 467 


NOV 


50,946 


46,698 


63,560 


46.459 


27.47017,984 


J3.912 


21,944 


28,515 


44,277 


DEC 


55,561 


53.824 


59.428 


46.029 


30.79C21.503 


14.128 


21.870 


32 r 74fi 


























1926 1927 1928 Pel "lSl9 lt °?9§8 paC i&l 1932 1933 1934 lORR 




JAN 


57.4 


52.0 


62.7 


77.7 


61.5 


31.4 


23.5 


14.9 


35.8 


50.8 


FEB 


61.1 


57.8 


66.8 


77.1 


67.2 


34.4 


23.1 


16.2 


40.1 


49.9 


MAR 


68.9 


65.7 


73.0 


87.7 


64.5 


35.9 


20.5 


11.4 


49.9 


52.0 


APR 


62.7 


59.1 


66.0 


87.8' 


63.0 


36.3 


18.0 


21.8 


47.9 


51.1 


MAY 


56.9 


57.2 


70.7 


83.7 


53.7 


32.1 


18.7 


29.0 


42.7 


41,1 


JUN 


57.3 


58.5 


69.9 


74.9 


40.2 


24.5 


16.3 


35.8 


33.4 


33.5 


JUL 


52.9 


49.3 


63.1 


■ 73.5 


30.9 


20.0 


10.7 


36.3 


27.6 


34.3 


AUG 


54.6 


52.4 


72.1 


70.6 


26.1 


18.9 


7.7 


36.6 


27,9 


42.5 


SEP 
OCT 


56 r4 


47.6 


66.3 


61 o2 


27.1 


18.6 


10.9 


31.6 


25.6 


44,7 


55 .5 


50.0 


73.4 


66.7 


28.8 


20.4 


13.8 


28.4 


30.3 


51.0 


NOV 


45,9 


44.4 


56.8 


47.7 


27.7 


13.3 


15.3 


25.0 


33.5 


53.1 


DEC 


40,4 


51.2 


S3. 4 


47.3 


31*o_ 


o-\ c 


16.2 


25.6 


38. 7 




















, 






Average price per Ton (f.o.b. Plant) (In Dollars) 
1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 , 


i 


JAN 


177 


143 


150 


346 


137 


131 


115 


112 


135 


118 


FEB 


177 


148 


150 


146 


137 


131 


115 


,107 


135 


na 


MAR 


177 


148 


150 


146 


137 


131 


115 


104 


135 


119 


APR 

MAY 


177 


148 


150 


146 


137 


124 


115 


98 


1 135 


123 


177 


148 


150 


146_ 


137 


124 


115 


100 


123 


127 


J'JN 


177 


148 


IfiO 


148 


137 


124 


96 


100 


119 


12fi 


JUL 


177 


148 


150 


146 


137 


117 


107 


104 


120 


l?.fi 


AUG, 


T — — 
177 


148 


150 


146 


137 


117 


115 


U.2 


121 


124 


3£P 


177 


148 


150 


146 


137 


117 


120 


121 


120 


124 


OCT 


177 


148 


150 


146 


137 


115 


115 


114 


119 


122 


NOV 


177 


148 


150 


146 


137 


115 


115 


123 


115 


119 


DEC 


177 


_14fL_ 


150 


146 


137 


115 


115 


113 


115 


























Source: "Survey of Current Business," Foreign and Domestic Commerce; 
"Wholesale Prices," Bureau of Labor Statistics, 
a/ Compilod by the UiS. Department of Commerce.. Bureau of the Census 
representing reports from 130 identical establishments, covering 
• afrm-.fc 00 pnt» nm~ib of th»— «tdae£g^. • ■■ ■ — ' 



DIVISION OF REVIEW, NRA 

9826 



■d 

o 



co 

$ 


O 
•H 

u 
Pi 


-p 

a 
o 

pi 



IS 
+3 


n 



p. a 

■P -H 
CO i-H 
d -H 

-d r-. 

Pi 

H li-l 
O 

CD 

rd 

■P 



CD 
KM 

Eh 



CD rf CD 



k-h C 

m -h 

«J CO 
EH ft 

CO 
rH 

p-q 



fn CO 

o p| 

Ph O 
© -H 

rrj co 



CO > 
CO 'H 



01 >s 
>s O ,£> 
CO -H 

n fn-d 

Ph <d 
<h -H 

o 0) (h 



CO 
O 

£' 

o 

o 



CO 

to 

CO 



fn CO 
CD p| 

,Q 

a -d 

|3h CO 

CD 

M 

CD 
U 

CD 
> 



rH 




CO 


CD 


C! 


O 


O 


■ H 


•H 


U 


CO 


Ph 


•rH 




> 


& 


•H 


o 


n 


PI 




Q> 


& 


O 


o 


■H 


PI 


fn 




Ph 


rH 


Pi 


CO 


O 


C 


•H 


o 


-P 


■rH 


CO 


VI 


c 


•H 


■rH 


> 


HH 


•i-l 


•H 


PI 


CO 




CO 


& 


CO 





rH 


S 


O 




Pi 




O 




■H 




-P 




CO 




o 


& 


•H 


CD 


<M 


{2; 


•H 




CO 




CO 




cd 




H 




O 




CD 


■fl 


O 


a 


•H 


•H 


fn 


" 


Ph 




co 




rH 




CO 




t- 




oS 




3 




PI 




■p 




•rH 




lr» 




CO 




a 




O 

•Hi 



•r* 

> 

•H 
Pi 



r<-\ r-\ mc\j to to i^i^i 
• ••••«•• 



U3 LO LP, CPi O CTl r—^t- 



k-\ 



LP, 



h j- w to^Hinot^ 

• •••••■• 

H H C\J H W OJ rO-zt" 



tiO 



to inn J- mo o nj 

• • • • • ■ • • • 

mvo r*~\ i — vo r— in to 



LTv 



CM CTiO ITi CTV.O O & 
• ••••••• 

<-\ J- CVIJ- <\J r-o CM O 



LT\ r — O r— to IC\ CM K> 
• ••••••• 

H H r^H W W OJ4- 






OMM WOCTiOHO 
• •«•••■• 

h h noj ro nnm 



CM 



H H rH >■ ,t» 

I-H HH H 

r-l 



H H H 

>• H H 

> H 



a 

cd 
r-i 
a 
> 
<4 



o 

FH 



9226 



-p 

CD 
■ H 
O 
O 
CO 



w 

H 

CD 

-a 
pI 
d 
o 

rH 
CD 

a 

•P 
CO 

HH 

o 

CO 

-p 

rH 

o 

Ph 
CD- 



CD 
O 



rH 

Pi 



CO 

n 
a 

o 

f-l 

HH 

r3 



■p 

o 

CD 
CO 

01 

o 

■H 
-P 
CO 



CD 
•P 
CO 

!>a 


o 

•H 
■P 

CO 
rH 
•H 

Oh 

a 

o 
o 



CD 
O 

Th 

O 
CO 



Pi 
a 

•H 
CO 

■H 
> 

•H 

n 

O 

CC 
CD 

Pi 
■H 

CD 

-p 

c 

CD 
CD 



o 

HH 
CO 



HH 





rn 


HH 
O 


J- 


- HH 




• 


O 


u 


OJ 




0! 



CD 
-P 

■a 

•H 
CD 
E- 

Cl 
•H 



6D 
CO 

p-l 

CD 

> 



to 
-p 
o 

EH 



■*1 



Td 

CD 



HH" ■ 

>> 
rH 

co 

pi 
o 

■H 
> 

P. 

CD' ' 

Pi 

O • 

o 

3 r-j 

O pj 

rH T^ 

HH CD 
rC 

CD O 

CO 



^ 



TH Cn 
CD O 

.Pi 

o d 

CO o 

•H 

<H -P 

o o 

id 

CD rH 

M -P 
P! CD 

Cd rH 

O I 

cd 
o cd 

•H H 

CO rH, 

•H XI 

> -P 

CD -H 



CD 

•P 

O 







PI 










O 










•H 










CO 










•H 










> 










5 





















in 










PI 










•H 






■ 




!>= 










fH 










X) 






• 




fj 






CD 




P 






O 




o 






•H 




V) 




■ 


rH 








Pi 


Ph 




p. 




o 

•H 


rH 


• 


cd 




Cfl 





>s 






•H 


^ 




!> 3 

r° 




> 

■H 


a 


B 


2 




-d 




o 


a 




fn 


i 


tH 


cd 
pi 




cd 

rH 


u 


>r 






d 


0) 


cl 


S 




o 


+= 


rO 




•H 


+3 








+3 





>» 


Pi 




fn 


i-H 


P> 


o 




cd 

Ph 


fH 





T3 









a 







PI 


r^ 


cd 


rH 




•H 


6 


pi 


•H 


• 




rH 




HH 


^d 


nd 




r ^ 




rH 


fn 


<H 


,Q 


t>j 


o 


O 


O 




rH 





o 




Pi 


0) 











o 


■"H 


fH 


fn 


« 




b 






o 


nd 


•H 


f-J 


Pi 







> 


b 


O 


o 


rH 









-p 


•H 


fn 










«H 


P< 


o 


CJ 









•H 


■H 


a 


J>! 


•P 


fH 


fH 


rH 


O 


Pi 


Ph 


td 


CO 


(H 









Pi 




HP 


-P 


r-=H 


o 


I 


CO 


CO 


o 


•H 










CO 


> 


Pi 


:-■ 


F: 







o 


o 


b 


<H 


fH 


•H 


rH 


rH 


O 


P. 


-P 

cd 


1 


1 





•P 


o 






r Ai3 


o 


•H 








a 


P! 


HH 


rH 


,-l 


i 




•H 


d 


H 


rCl 


1 


CO 


'd 


-& 


o 




CO 










Pi 


cd 


rC 


rP 


I 


o 


rH 


O 


o 




•H 


O 


CO 


CO 





■P 








o 


cd 


rH 


g 


£~ 


•H 


o 


cd 


d 


o 


rH 


•H 


Pi 


a 


rH 


Phhh 


o 


•H 






■H 


•H 


Pi 


rH 


rd 


CO 


CO 


■H 


cd 





CO 


■H 


a 


Pi 


CO 


cd 


> 




o 


cd 


rH 


•H 


fH 


•H 





"D 


Tl 


o 


CO 


fH 








■H 


O 


£ 


i 


r5 


> 


^ 








o 


•H 


Pi 


!-T 


i-H 


,-■) 


P) 



■d 

CD 
H 
•rl 

Fh 

en 
P 







r^ 


W) 




CD 


fn 


d 




O 


-P, 


•H 




•H 


03 


H 




h 


;i 


•H 




Ph 


'J 

d 


Ph 




CD 


M 


<H 




-P 




o 




a 


CD 






R 


£1 


a) 






■p 


Ph 




rt 




K 




© 


o 


EH 




CD 


-p 




R 


I-. 




-d 


i 


-P 


•d 


d 


!> 


0) 


<D 


cd 




R 


•p 




a 


5P 


o 


to 

d 


! A 


3 


Pi 


o 


•rl 


cd 


•H 


EH 


CO 


Pi 


CO 




Ph 




■H 




Cfi 


to 


> 




H 


cd 


•rl 



Ph- p R 

co a) >3 

>* o & 
cd -h 

R fn <d 

r ^ 5 

O 0) <H 

•P -H 

fn cd to 

cd R to 

r5 



P S 

£h cd 



SP 

fH 

CD 



cd 

rH 
O 



cd 

r 

o 

rH 

cd 



tn 
to 

CD 
R 

CO 

cd 
P 

CD 

fi 

•H 
EH 

rd 

CD 

to 

8' 

rH 

R 
d 

CD 



cfi 


CD 


d 


o 


o 


•H 


•rl 


rH 


CO 


Ph 


•H 




> 


P 


•H 


o 


R 


R 




CD 


P 


O 


c 


•H 


R 


rH 




R 


H 


£ 


cd 


O 


d 


•rH 


o 


•P 


•rH 


cd 


to 


o 


•rl 


■H 


l> 


<H 


•rl 


•rl 


r 


to 




to 


p 


Bj* 


CD 


H 




O 




d 




o 




•rl 




+3 




cd 




o 


f: 


•H 


cb 


«H 


l— H 


•H 




to 




CO 




cd 




H 




o 




CD 


.1 


O 


6JD 


•H 


•rl 


fH 


w 


Ph 



Cd 

fH 



+5 
•rl 



CO 
d 

o 

•H 
CO 

!> 

CD 



9S26 



o 

•H 
CO 
■H 

> 

• H 

r 



- 682 - 



fr,HJ CM CT\K) P^nVO 
• •••-••••• 

HHK^r^riai f\^t cm 



V_OtO LTi CA CM r^i r— LT\ O 
• •••••••• 

r^ fr,J H cm r^r^\ LT> t^ 



H; cu m inn mo nw 

• ••■■•••■•• 
H H ra H W W r^J- rH 






CM CM OJ- ITVvO O O r^i 

«. •. • « • . • • • • 

rHCMCMCMCMCMCMOCM 



lo r— p r— lpi loi cm r— r<-> 

• •- '•■ • ••■••• • 

HdnHWPJOJfOW 



vo r— cm o Lnr— fo hj- 

HH (^iCM CM CM CMJ- CM 



hi ! > J> I- 1 l-H n 

M l-H J: • H l-H 

H >- I— I 

> 



CD 

§P 
CO 
fH 

CD 

rl 
Cd 
-P 

o 

EH 



• 
r'vj 










O 






•P 










■rl 






CD 










CO 






• H 










■rl 






o 










> 






o 










H 






in 










-d 






_ 










CD 






w 

rl 




• 




• • 


s 






CD 










to 






■d 
















d 










d 






P 










•H 






o 
















Ph 










fH 






rH 










•d 






CD 


• 






• 


p| 






CD 


G 






CD 


p 






H^ 


o- 


. 




O 


o 






C/3 


•H 

to 






•H 
U 


«H 




• 

d 


<H 


• H 






Pi 


b 




o 


O 


> 








d 




•rl 




■H 






fn . 


Co 




CO 


to 


R 






cd r>3 






•H 


•P 








^i fH 


>» 




s> 


fH 


<H 






t.0d 


,o 




•H 


o 


O 






•h a 






-d 




a 






■^ p 


CD 






CD' 


CD 






o 


1 




'rl 


Ph 








I <H 




cd 




ri 








d 




r-j 


CD 


■H 






fn >a 






g 


o 








CD f! 


r^i 




•rl 


CD • 






-P cfl 


if 




•H 


fH 


Pi 


• 




-P 






•P 


Pi 


v. 

IO 


r d 




0) r^ 


d 




fn 




+3 


CD 




H r° 


o 




: 


I-s 




H 










Or 


rH 


rd, 


•H 




fn CD 


r d 






•H 


o 


C(H 




g § 


CD 




d 


Cf) 


fj 






H 




■H 


R 


CD 


I "-1 




O £ 


■H 


• 








rH 




rH 


«H 


■d 


r d 


rt 


fn 


w 




>= 




fH 


fH 


5 


O 


p 




<H ,Q 


r J 


o 


o 


fH 


HH' 


O 




O 


H 





o 


«H 




•rl 




rt 


CO" 


CD 







CO 


!> 




CD O 


P 


fH 


fH 


"=4 

P. 


y 


CD 




fl 


o 






a 


u 




O TCi 


•rl 


d 


d 


g 


•H 

H 


O.j 




CD 
O rH 


r> 

CD 


o 


o 


<H 


•H 


CD 




-P -rl 


fn 


CD 


CD 


O 


tH 


rt 




CH 


P-l 


c; 


O 






O 


• 


CD 




•H 


•H 


fl 


CH 




aj 


H !>5 -P 


fn 


fn 


o 


o 


fH. 


K 


P HI 


O 


Pi 


P 


•H 




6 


■d to 


d 






•P 


rl 


fH 


r o 


CD rj 




+3 


■P 


o 


CD 


HH 





^! o 


I 


to 


CO 


CD 


rQ 




rj 


O -H 




CD 


CD 


W 


Ej 


CD 


o 


CO > 


rt 


f; 


fc 




3 


H 


to 


© 


o 


b 


b 


CO 


s 


p 




«H fH 


•H 


rH 


H 


o 




-3 


«H 


o p. 


-P 






•H 


1^ 


CD 


O 




Oj 


t 


I 


+J 


^ 


■ — 1 




CD -P 









CO 




o 


^ 


:j) o 


•H 


CD 


CD 


•H 


r o 


to 


o 


s « 


«H 


"g 


rH 


+3 


CD 




•H 


& 


•rl 


P 


c3 


-P 


«H 


•P 


4 1 


CO 


■3 


rS 


•p 


H 


O 


O 


o 


CO 


CD 


CD 


CO 


ttf 




Cj 


fl 


Co 


^ 


r5 




• H 


CD 


fn 


I o 


rH 


o 


o 


>a 


CD 


rf 


+3 


•H 


o 


CO 


to 


r^ 


P 


CD 


CD -P 












crj 


fn 


o cd 


rH 


rl 


p 


s 


to 


<H 




•rl O 


Ct3 


o 


o 


• H 


3 


I 


fn -n 


d 


s 


i-H 


■rl 








Pi *h 


o 


■H 




-P 


CD 


i 


H 


•H 


•H 


d 


r-t 


Co 


hO 




ru 


rj CO 


CO 


•H 


i,; 


H 


ci 


s 


r; 


CD CO 


•rl 


rH 


d 


•H 


fn 


o 


id 


CO Co 


S> 




o 


n 


CD 


•H 


fn 


Ci rH 


•rl 


fn 


•rl 


n 


> 


to 


r O 


CD O 


-d 


o 


CO 


s 


c3 


•H 


& 


fn 






• H 


o 




> 


H-> 


O p 


P 


h: 


!> 




rH 


CD 


•rl 


C CD 


CD 


6 


•rl 




CO 


1 1 


r= 


H & 


S3j 


R 


R 


• • 


•P 














CD 


O 














O 


E-l 


• • 












fn 




CD 












p 




•P 












O 
rn 


^ 


O 













- 683 - 



4 

p 





•H 

u 

PM 
(U 

-p 
cd 

n 

d 



CD .. 

P ^ 

-P fn 

-P \. 

d d 



to 

rH -P 

N 

o 

to -p 

cd 'tf 
P 

-P 
C H fn 

o o rH 

. Pi d 
rH o cd 

rO 

cd 



R 

•H 
rH 
•H 



O 



r j 
EH 



CO 

o 



01 
.H 

Cd -H .H 

^ U P) 

CD n. 

■ij ,jO 
-(J 

TJ Cj tj 

CD 
•H 



5 n 

CO 



rd 'h 



a5 1 cj 


CO 




CO 


to rd 


03 


CD 


|H 


W rH 


o 


Cu .H 




O fn 




Ch CO 




o cj 




[-. 




fn " 




CD 




rO 





9S26 



CO 
CD 

F) 

CD 
fH 
O 



rH 

o 



o 



w 



CD 

G 

■H 
Eh 

'd 

CD 
CO 

B 1 

H 

a 

CD 



d 

o 

■H 
•P 

cj 

O 

P -H 

CD ^ 



CO CO 

CO CD 

Cd 00 

rH Cj 

O O 





CO 


CD 


r i 


o 


cj 


•H 


Pi 


fn 




Pi 






CO 


H 


CD 


[„" 


CO 


•H 


Cu 


wl 


O 



r J 


CO 


rH 


CD 


4J 


c; 


•H 


cd 


Mc5 


CO 


CO 


>* 


d 


cd 


o 


n 


•H 




0? 




: 


CO 


! • 


CD 




CO 


"H 1 


a 




o 



d 
o 

•H 

co 

■H 
> 
•H 
P 



H 


CO 


Cd CD 


>a 


d O 


Cu 


O -H 


Pt 


■H Ci 




CO p, 




•H 


CO 


> (3 


CD 


•H O 


co 


Pi p 


cd 




o 





03 





t 


o 


cd 


•H 


n 


rH 




Ph 






CO 


fr 


o 


O 


CI 


^ 1 


cd 




o 



I . ° ° 

! • I . | 

I ( in i ^ 

rH CM 



I I H I 



rH I I 
[ I 



O 



O 
I • I 
I OJ | 

rH 



rn 



Oh- LO 
• • I 

rH OJ OJ cd 



I CM j j r .-v.o , ^ 

1 ' rH 



O to O LTWJ3 vjj ^ 

u ■••■•• I 

-•r -d" f— to OJ In 



O 



■ I in |— 

rH rH [ a rH rH rf OJ rH 



C7A LTV 



•d" V.O 



CM 



I rH 

I rH 



J" 

r .. 
r oj 



mo in 
• • • i 
I r-vj i- 

H OJ !■■->, 



to 

rH 



' I I 

I J" rH OJ | | 



O 



O 



I I 

I I 



I I 
I I 



J W J I o 

I H I | H 



I ri I | H 
' I I 



-H- 

rH 



o in oo^h n^o 

■ • • I •••... 

^3 fn I -d" ONHW 

rH rH rH OJ ,H H rH 



jH 



rH 



*~° CM I rH rH 
I H 



OJ O 
rH 



1-1 'H > > H t-H H 
H HH HH > n hH 



CD 

cd 

CD 



rH 
Cd 
+3 

O 
EH 



CD 

<d 
o 
o 



• o 

>s -H 

-P 4-"> 
CD Cj 

•H O 
O .H 
O r d 



•H <( H 



Co CD 



CO 

rl 

CD 

r d en to' 
f) cd 



P 
o 



. ci o 
PH Cd -H 



CD 40 
CD .H 



CD 



W CD fl 
O -H 

<H Ci +> 

-p 

CO f H 
O 



cd 

I": 



o 



CD 




fcj CD 



■H 4J 



Ci 

o 



> 

■H 

P 

rCj 

o 
cd 

CD 



r, P" OJ 

CD -H r-J 

O +3 += 

•H cj 

!n r-: ^ 

ft CO (D 



• CD 

c; o 



+3 

cd 



•H rj 
Cj -P 
P 



•H P 

CD CD cu ^ . 

O O <H 



!>s -d 

CD 



CH CI 

n o cd 

o t 

fn CD 

Cf-l CO CD 

«3j Cj 

0, o 



r( 

ElO -H 
C,_ 



Cu CH 
rH 



K3 

rH 
CO 

P 
O 
•H 



o 



cd 



O CO 

EtO CD 
£ (H 



■d . 

O O -H CD 

,"--^ CO .H «H C! 

CO 



rH D, 

J id 



CD 



-p r^\ 
o 

f H J rC 

to " 



o 

•H 
4^ 

tn 

•H d 
-^ P 

Cj o 

+= rd 

in en 



CD 

G rH 

o p 

rH TH 

CD 



- H Ch 

O rH j> o 
CD .H 

P fn . 
CD C, H 
■ P rO _TJ 

H +2 CD n CD O 
M ^ CD c! p 

^ rH CD rg Ch 

d CD .- !-, CD o 

■H rg += ,Q ^ 

d d -d CO 

tO .H CD 

cd -p ch 

O -d rd O 

d o tj 

Cu rH -H 



d 

•H 

d 
rH 
O 
O 

CD 

rH 

d 

O 

CD 
O 



CD 
O 



> u 

•H p, 
rd 

+^ 
CD CO 

CO o 
rH 

d 

•H I 

CD 



rH 

P. 



d p 
P rrj 
P CD 

O ,CJ 

fn • C H O 
CD r-a CO 

rd rj ^ 

W r d C f- 

■h d cd o 

^! P rH 

o >„ 

I <H rJri 

, r ^ 

rl r> 1) S 

cd d r3 o 

■^ 05 Cj .H 

+> d co 
cd > 3 . H 

rH r° p, > 

rQ -H 

s d R 

P cd o 

O CJ 

iH Hj "j 

. K ^> CD f H 

'HfO H O 

O -HO 

d ch cd 

0) O fn 

d ^ 

o rj r-i c; 

CD to o 

O rH p 

-P -H O CD 

rtTl t) 

CD > .H 

rj >s CD !-, 

3 rH fn O, 

rd CO o, 

2 P ' -p 

rd o 1 co 



CD 



>a CO . 

r° Cu CO O 



P d b 



O CO 
•H CD 
■P CO 

cd cd 

rH O 

•H 

Pi «H 

r: o 
o 

O fn 




O 
O 



d 
o 

■H 
+3 
CD 

cd 

CD fn 

yj +> 
P s 

Cd fn 

CO rCj 

•H O J 



[ 





o 
fj 

b ~~^. 

w cd| 



Cj CD 

P rH tj 

o cj 

•H fc rH 

•P CD 

Pi CO h> k 
Cd -H 

o co ;> 

'•'< Oj rH 
O Cj Ph 

S EH .. 



-p 

^°l"0| rS 



I rH 

rH ^ 

d t 

o cd 





w > d p 

000 

C+-I fn -H ,-H 
O Pi -P 

Cd I 
-P CJ 

O O -H CD 

d C! «H rH 

Oj -h d 

d I CO r d . 
CO CD CJ 

d cd rd o 

Or-: O -H 

„ 'H O CO C0 

-P -H 

O Cd rH E > 

•H O cd 

fn -H fj 

Pi «h O 

•H .H 

d to CO 

9 10 H 

co cd !> 

Cj rH -H 
rrj 

U 4J. 

p p r- Ci 

d b cj 
M fe ^; i-q p. 



•H 

d 

•H 

G 



td 

rH 
P 




ch 
o 



- 684 - 



TABLE VI 



Number of Low, New and High Price Filings and All 
Tyoes of Filings Made, by Livision 









Number of Products on 


wh: 


Lch 










Filings 


: were Made 


a/ 




Total, b/ 














All Types 


Division 


L 


DL 


N 


DN 




H 


of Filings 


Aggregate 


897 


299 


1,470 


789 




701 


4,763 


I 


8 


31 


110 


■ 72 




62 


739 


II 


25 


23 


177 


136 




72 


500 


.III 


41 


27 


25 


8 




4 


199 


IV 


299 


35 


66 


80 




48 


540 


V 


105 


• 36 


■ 402 


. 74 




268 


1,025 


VI 


162 


18 


602 


30 




235 


1,233 


VII 


205 


25: 


18 


357 




8 


180 


VIII 


52 


104 


G6 


32 




4 


347 



Source: Compilation by Statistics Section of ERA from Daily Price Reports 
Steel Founders' Society of America. 

a/ Frequencies represent number of products filed upon by a single 
foundry or in combination with others, which were given in the 
status according to the following: 

L - New, low or minimum schedule 
DL - Divisional low or minimum schedule 

N - New classification 
DN - Divisional new classification 

H - Increased orice 

b/ Total, All Types - number of times a foundry filed prices or 

other required material, i.e., discounts, etc. Does not refer 
to number of oroducts filed at e^.ch time. 



9826 



- 685 ~ 
TABTE VII 

lluraber of Low, New, and High Price Filings 
and All Types of Filings, "by Months 



Number of Products 
on which Filings 

were made a/ Total, All 

Year and Types of 

Month L PL N DN H Filings b/ 



1933 



1934 



Aggregate 897 299 1,470 789 701 4,763 

December 15 to 31 731 136 

January 

February 

March 

April 

May 

June 

July 

August 

September 

October 

November 

December 



4 




94 






305 


17 




80 






316 


468 




162 






410 


68 




76 






425 


20 




27 






364 


11 




54 






526 


42 




24 






295 


14 




53 






228 


31 




18 




9 


153 


40 


6 


22 


6 


55 


204 


10 


39 


21 


159 


25 


232 


17 


38 


19 


392 


80 


209 



1935 



3 


116 


15 


89 


172 


280 


19 


24 


18 


17 


65 


169 


16 


28 


18 


42 


237 


186 


107 


18 


21 


65 


47 


201 


& 


30 


17 


19 


11 


124 



January 

February 

March 

April 

May 



Source: Compilation by Statistics Section of ERA from Daily Price Reports 
of Steel Founders' Society of America* 

a/ Frequencies represent number oi items filed upon by a single 
foundry or in combination with others, which were given the 
classification according to the following: 

L - New low or minimum schedule 
DL - Divisional low or minimum schedule 

N - New classification 
DN - Divisional classification 

H - Increased price 

b/ Total, all ty^es - number of times a foundry filed prices or 

other required material, i.e., discounts, etc. Does not refer 
to number of products filed. 



9826 



TABLI VIII 



Report 
Number 



Kx ample of "Same As" Filings: SJ "Rolling Mill 
and Steel Plant Castings' 



Effective 
Date 



Foundry 
Number 



Filed Sans In Report 
Is Founlry Number 



BffeotlTe 
Data 



iJosptlons A4dl*lom« 



50 1934, February 16 
55 24 



«5 
87 

89 
90 

91 

9* 
96 

97 
104 

108 

111 
117 
119 

121 

125 
172 



Usiob 



April 



116 

502 



31 504 

(422 
1 413 



203 
619 
109 
(501 
(508 
606 
4oS 
310 
126 
207 

517 



4l4 





12 

11 

13 

23 


205 

306 
(415 

626 
(627 

620 




27 
28 


(512 


May 


1 

9 

11 


"21 
401 
113 




14 


602 




21 


(204 
(209 


July 


17 


707 



423 

1*23 

(407 

(420 

(424 

(407 

(420 

(424 

407 

407 

407 

407 

407 

407 

U07 

407 

407 

(407 

(420 

424 

(407 

(420 

(424 

420 

407 

407 

(407 
(424 
(407 
(420 
(424 

407 

407 
(407 

424 
(407 

424 
(407 
(420 

424 
(407 
("20 

424 



3 

(' 
(76 



76 

7 S 
J! 

7 i 

I 

76 

76 



76 

7 f 
76 

76 

(76 



(76 

76 

I 76 
76 



76 



76 



1933, December 19 

19 

1934, March 31 



31 

31 
31 
31 

31 

31 
31 
31 
31 
31 

31 



31 

3D- 

31 

31 
31 

31 
31 



31 



31 



1 
17 



Source: Compilation by Statlstloe Ssotion, HRA, from Dally Price Reports of Steel Foundere' 
Society of America*. 

a/ In Reports 90, 96 and 125, and 89, 97, 104 and 119, the filings had exceptions and 
additions to the "same as" filings submitted. 

Note: This method, "same as filing," was used very frequently by various foundries In placing 
prices on rscord with the Code Authority. The practice was mersly to submit a statemsnt 
to the Agency to the effect that the foundry files the same prioes as another specified 
foundry in a specific report. 

9826 _~ 



T3 



oc 

CO 



J 



- 687 - 



TABLE IX 



Frequency Distribution of Foundries Submitting 
Blanket Filings, by Quarterly Reports 



Number of 
Daily Report Filings Quarterly Report 



Total 496 

1 to 49 19 a/ 

50 to 99 8 I 

100 to 149 2 b/ 

150 to 199 121 II 

200 to 249 61 II 

250 to 299 133 III 

300 to 349 70 IV 

350 to 386 82 V 



Source: Compilation by Statistics Section of 1IRA from Daily Price Re- 
ports of Steel Founders' Society of America. 

a/ December 5, 1933, Bulletin. 

b/ April 25, 1934, Bulletin. 



9826 



TABLI I-A 



Type of Discounts Granted to Other Foundries 
and Effective Dates 



Companies Companlae 

tffectlTe Foundry Type of Receiving effective Foundry Type of Receiving 
Date Number Discount Dleoount Date Number Discount Discount 



»•©. 29, 193? 



Feb. 23, 1934 

m»t. 13 

Feb. 27 

Mar. 5 

Mar. 14 

Mar. 23 

Mar. 30 

Apr. 10 

Mar. 30 

Apr. 12 

Apr. 12 

Apr. 13 
Apr. 18 

Apr. It 

Apr. 20 

Apr. 20 

Apr. 23 
Apr. 25 
Apr. 25 

Apr. 24 

Apr. 26 

Apr. 25 

Apr/ 26 

Apr. 27 



Apr. 27 

Apr. 27 
Apr. 30 
May 9 
May 8 

May 9 
May 1* 
May 14 
May 16 
May 18 
May 16 
May 19 
May 20 
May 26 
May 29 
■ay 29 
June 1 



826-808) 
818-807) 
820-822) 
8?4 
824 
819 
207 
601 
636 
696 
512 
620 
310 



206 

202-207) 
201-208) 



509 
*202 

201 

2C7 

208 

126 
50? 



513 
201 
123 
62S 
2C6 



519 



$ 



14 



519 

i 09 

407 
429-119 
626 
4l6 
422 
504 
401 
111 
419 
102 
521 
102 



All 

All 
All 



All 
516 

515 

District 2 
District 2 

519 

201-207 
(208-210 
(202-206 
(207-208-210 

201-202 

206-208-210 
(201-202 
(206-207-210 

105 

(402-411 

(416-423 
625-512 
Aome Steel 
105 

513 

(201-202 

(207-208 

(210 
411-515 

(509 
All 

Dlatrlot 4 
423 

Dlatrlot 1 
Dlatrlot 4 
Dlatrlot 1 
410 
All 

Dlatrlot 4 
Dlatrlot 4-5 
Dlatrlot U 
Dlatrlot 1 
District 4 
Dlatrlot 1 
All 
All 



June 
June 
June 
June 
June 
June 
June 
June 
July 
Aug. 
June 
Sept 
Sept 
Sept 
Oot. 
Oot. 
Oot. 
Oot. 
Oot. 
7ov. 
Nov. 

NOT. 

Dec. 
Dao. 
Deo. 
Deo. 
Deo. 
Jan. 
Jan. 



7, 193* 

11 

9 

a 

19 

22 
26 
30 



12 

14 

7 

12 
1 
5 

11 
19 
25 
1 

12 
28 

10 
18 
21 
26 

8. 
28 



iK 



121 
105 
309 
304 

108 

515 

819 
616 

, 6l ' 
204-209 

819 

61U 

126 

636 

625 

516 

J 1 ? 

6?9 

402-602 

636 

520 

20J 

635-304 

101 

412 

101 

807 

825-826) 

827-828) 

602 

208-818 

805-806 

822 



All 
126 

New Orleans 

309 

All 

Dlatrlot 5 

All 

All 

6 
2 



b 


Dlatrlot 


b 


Dlatrlot 


f 


All 


b 


622 


b 


123 





All 


b 


All 


b 


All 


b 


All 


b 


HI 





All 


b 


All 


c 


All 


b 


All 


b 


All 


b 


All 


f 


All 


b 


All 


a 


All 





*)latrlot 





All 



Fab. 11 


825 


-826) 
-828) 





All 




827 






Feb. 18 




210 





All 


Feb. 19 




208 


b 


All 


Feb. 18 




705 


c 


All 


Fab. 19 




3 11 





All 


Mar. 2 




612 


b 


All 


Feb. 19 


805-8( 





All 


Feb. 21 




416 


b 


All 


Mar. 6 




210 


b 


All 


Mar. 11 




621 


b 


All 


Feb. 19 




821 





All 


Feb. 22 




607 
824 





All 


Mar. 15 







All 


Mar. 20 




832 





All 


Apr. 9 




401 


a 


All 


Apr. 11 




421 


a 


All 


Apr. 26 




812 


b 


All 


May 3 




306 


b 


All 


May ?3 


504-5C 


b 


All 


May 23 




619 


a 


All 



All 
All 

Dlatrlot 8 
All 



Source! Compilation by Statlatloa Seotlon, HRA, from Dally Prloe Reporta, Steel Foundera' 
Society at America. 

Type of Discount) 
a -"We will allow off of our regular prloea discounts of 5% when the castings are re- 
sold by the customer without further processing at prloea not lower than file prloea." 

b -"We reserve the right to sell to ... and grant 7-W discount on condition that the pro- 
ducta be reaold at not leea than filed prloe.' 

-"We reserve the right to Bell to ... and grant not more than 10% dleoount on the con- 
dition that the product be reaold at not laae than filed prloe." 

d -"Subjeot to maximum dleoount of 20%." 

a -"Maximum dleoount allowed from sobedule la 15$ on the flrat two columns, that la, 
'1 off and '2-5 off columns, and 10% on the balanoe." 

f -"Allow maximum 15$ dleoount and on Railroad oaatlnga and Bridge castings make a 
mlnlmva prloe of 5^ per pound." 

g -"On crder, for miscellaneous castinge where the agent furnlshea the patterns, Inspection, 
and carrlee the accounts, we will al'ow 5$ commission on sales, eald 5* commleslon to 
be figured on the net value of the castings shipped. Where patterns are furnished by 
the cuetomer or by ue we will allow the agents 3?$-" 



9826 



- G89 - 

TABLE X-B 
Frequency of Type of Discounts, by Months 



Type of Discount 
Year and 
Month Total a b c d e f g 



Total 120 31 45 32 



December 


9 








1934 










January 










February 


2 








March 


6 


1 


3 


1 


April 


22 


20 


o 




May 


14 


3 


11 




June 


10 


3 


3 


4 


July 


1 




1 




August 


2 




2 




September 


3 




2 


1 


October 


5 




4 


1 


November 


4 




3 


1 


December 


6 


1 


4 


1 


1935 










January 


6 




1 


5 


February 


18 




2 


16 


March 


5 




3 


2 


April 


3 


2 


1 




May 


4 


1 


3 





2 
1 



Source: Compilation by Statistics Section, NBA., from Daily 
Price Reports, Steel Founders' Society of America. 



Type of Discount: (See notes to Table X-A. ) 



9826 



«90 



TABLE XI-A 

Type of Freight Allowances Granted to Railroad* 
and Effective Dates 



Effective 


Foundry 


Type of 


Effective 


Foundry 


Type of 


Data 


Number 


Allowance 


Date 


■umber 


Allowanoe 


Deo. 29, 1933 


All 


e 


June 4, 1934 


i 18 
418 


a 


Dec. 27 


506 


e 


June 4 


d 


Dec 28 


306 


a 


June 4 


126 


d 


Jan. 28, 193* 


501-508 


a 


June 5 


519 


a 


Feb. 1 


311 


1 


June 5 


517 


d 


Feb. 5 


606 


g 


June 6 


108 


d 


Feb. 20 


636 


a 


June 6 


205 


a 




504 


1 


June 6 


128 


a 


Feb. 25 
Mar. 23 


3 °5 
504 

407-424 


e 
j 


June 6 
June 7 
June 6 


111 
516- 


a 
a 


Mar. 23 


a and b 


518 


« 


Apr. 11 


105 

204-209 


a and b 


June 6 


506 


d 


May 3 


k 


June 6 


408 


d 


May 1 


812 


k 


June 7 
June 6 


• 


May 4 


801 


k 


635 


a 


May 9 


51" 


k 


June 8 


113 


a 


May 14 


832 


k 


June 6 


602 


« 


May 15 


506 


a and b 


June 14 


207 


a 


Ma* 28 


105 


e 


June 14 


520 


d 


May. 28 


407-428 


c 


June 14 


623 


d 


May 31 


109 


d 


June 19 


201 


a 


June 1 


412 


d 


June 18 


601 


d 


June 1 


.11 


e 


June 20 


1X J 
206 


d 


June 1 


122 


e 


June 22 


d 


June 2 


202 


• 


July 1 


208 


a 


June 1 


102 


e 


June 25 


704 


e 


June 1 


410 


c 


June 2b 


51 1 


a 


June 1 


126 


a 


July 3 


64o 


d 


June 2 


4i4 


t 


July 5 


130 


a 


Jum 1 


619 


a 


July 6 


805 


a 


June 1 


626-627 


d 


July 6 


112 


a 



Source: 



Compilation by Statistics Seation, SKA, from Dally Prloa Reports, Steal 
Founders' Society of Aaerica. 



Type of Freight Allowance: 

a - In caaes of Railroad castings for repair or maintenance purposes, 
these prices are f.o.b. freight basing point seller's works with 
freight charges allowed to the nearest point on the line of the 
railroad purchaser. 

b - In cases of Railroad castings for new equipaent to be built either la 
Railroad shops or commercial oar-builders' plants, the prloes are 
f.o.b. freight basing point seller's works with freight charges 
allowed to destination. 

- In cases of Railroad castings for repair or aalntenanoe, these prloes 

are f.o.b. freight basing point seller's works with freight charges 
allowed to destination in any case providing such destination la east 
of Longitude 105, passing through Denver, Colorado. 

d - In cases of Railroad castings whether for new equipaent or repairs, 
are f.o.b. our works with freight charges allowed to destination, 
provided such is east of Longitude 105, through Denver, Colerado. 

e - In casae of Railroad castings whether new equipaent or repairs, our 
pricea are f.o.b. freight basing point our works with freight charges 
allowed to destination. 

f - In cases of Railroad castings, frslght charges allowed to destination 
on orders of 150 lbs. or aore. 

g - Allow freight charge east of Mississippi and north of Ohio Rivera. 

h - We reaerve right to equalize pattern transportation oharges with any 
competing foundry. 

1 - Published freight rates will be allowed within radius of 150 alles froa 

Akron, Ohio. 

i - Published freight ratea will be allowed within radlua of 250 alias froa 
Akron, Ohio. 

k - Reaerve right to aeet coapetltion, to equalise by freight allowanoe. 



<1 fc 9 a 



- 691 - 



TABLE XI-E 



Frequency of Type of Freight Allowances, 
by Months 



Year and 
Month 



Total 



Type of Allowance 



Total 



71 



3 19 



1 6 



1933 



1934 



December 


2 


January 


3 


February 


5 


I arch 


8 


Aoril 


2 


I ay 


9 


June 


37 


July 


5 


.augus t 




Seotenber 




October 




^ov-mber 




December 





2 
1 
1 



2 

1 
1 



1 
1 



17 18 



11 
2 



8 
1 



1 
1 



1935 



January 
February 
March 
April 

May 



Source: Compilation by Statistics Section, MA, from Daily Price 
Reports, Steel Foun^rs' Society of America. 

Type of Allowance: (See Notes to Table XI-A. ) 



9826 



TABLE III-A 
Type of Pattern Allowances Granted to Foundries and Effective Dates 



Tear and 


Foundry 


Type of 


Taax and 


Foundry 


Type of 


Month 


luabex 


Allowance 


Month 


Number 


Allewanoo 


Dec. 2g, 1933 
Jan. 4, 193* 


302-307-313) 
506-517 


b 



and 


d 


Max. 

Apx. 


31, 193* 


607 


a - - t 


Jan. 5 


(at. Malleable 








Apr. 


4 


521-109 v 






Cleveland, Ohio 


f 


and 


C 


Apx. 


5 


128-122) 




Jan. 9 


602-416) 
407-42*) 


c 


and 


d 


Apx. 


2 


107-808) 
808-812 






■ 12 9 


b 






Apr. 


5 


705-314-311 \ 
813-815) 




Jan. 11 


20U-422 





and 


d 








Jan. 16 


611-412) 








Apr. 


6 






619-310) 

101-202-413) 

407-424) 


c 


aad 


d 


Apr. 


9 


105-805 
206-801) 












Apr. 


11 












Apr. 


10 


124) 




Jan. 17 


201-117 





and 


d 


Apr. 


13 


204-209 ) 




Jan. IS 


616-207 





and 


« 






834-102-132) 




Jan. 19 


629-709) 





and 


d 


Apr. 


16 


412 






616-207) 








Apr. 


IS 


SZ 


c and d 


Jan. 20 


408-109) 








Apr. 


19 




Jan. 22 


509-205) 





and 


4 


Apr. 


3 


109 






128-420) 








Apr. 


832 




Jan. 24 


641-106) 





and 


d 


Ma r 1 


405 






421-614) 








May 


5 


615 




Jan. 25 


102-126) 
601-311) 








May 
May 


L 
» 


812 
801 




Jan. 26 


638-605) 





and 


d 


May 9 


516 




Jan. 27 


505-131) 








May 


LI 


123 




Jan. 28 


.301 


b 






May 


14 


832 






131 


c 


and 


4 


May 14 


816 




Jan. 31 


108 





and 


4 


May 23 


822 




Feb. 1 


127-714 


c 


and 


4 


May 


28 


811 




Fab. 3 


713-306) 
805) 


c 


and 


4 


Jon* 


14 


306 












June 


14 


623 




Tab. 5 


816 


c 


and 


d 


June 


19 


602 






606 


1 






June 


22 


512-206 
408-619 






629 





and 4 


June 


23 




**b. 8 


511 









June 


27 


108-306 




Fab. 9 


701 





and d 


July 


2 


127-302 




Feb. 12 


£2 





and 4 


July 7 


504 
208-20JJ 






I 






July 10 




Fab. 19 


% 


e 


and 


4 








Fab. 21 


1 






Jvily 


11 


207 




Max. 5 


63. 


b 






July 13 


203 




Bar. 9 


509 


a 






July 13 


202-205 


a and a 




129 


b 






July 13 


201 


a and a 


Mar. 1* 


es 


a 






July 


16 


621-629 


a and a 




a 






July 


27 


502 


a and e 


■ax. 17 
Mar. 19 


ss 




a 






Aug. 
Aug. 


I 


630 


a and a 


Max. 20 


504-202 


a 






Aug. 


17 


S3 




Max. 21 


639 


a 


and 





Aug. 


21 


416 




Max. 22 


637 


a 






Aug. 


22 


306 






111 









Aug. 


24 


513 




Max. 23 
Max. 24 


612 


a 


and 





Aug. 


13 


105 

814 




823-416 


a 






Aug. 


28 




Max. 26 


626 





and 


4 


Sept 


. 12 


112 




Max. 28 


205-71* 
620 


a 
a 






Sept 
Dae. 


. 29 


m 




Max. 30 


310 


a 






Dae. 


26 


627-415 




Max. 28 


131 


a 















Source: 



Compilation by Statntlce Seotton, ISA, from Dally .Price Reports, Steal 
Foundera' Society of Aaerloa. 



Typo of Pattern Allowancee: 

a - 'Wo hereby file with your office the etlpulatlon where amy pattern la In exle- 
tenoa and owne4 by a competing company we will to meet competition llkewlee 
furnleh a pattern from which to make castings for a cuatoaer without any charge . 
wa to be the Judge ae to when the pattern is to be made and the conditions, 
pattern to remain our property. ■ 

b - "Castings requiring Intricate mouldings and castings to be made from ewaap 
skeleton or other Incomplete pattern equipment castings having a thin metal 
eeomon ... will be subject to nagotlatlona onprloa." 

o - "When a new pattern la required and when 500 or more miscellaneous Railroad 
oast Inge axe bought at one time, wa will absorb the pattern cost, pattern to 
remain ourproperty. " 

- "Then a new pattern is required and less than 5°0 miscellaneous castings (Rail- 
road) are bought at one time, we will make an extra charge to the cuetomer at 
not lsaa than cost.' 

- "We reserve the right to equalise pattern transportation chargee with any com- 
peting eteal foundry." 

- "When patterne are available in stock there will be no charge to customer - if 
new pattern la required customer will be charged.' 

- "fe will make no charge for patterns on Railroad Car castings when orders axe 
fox pxoduction quantities. Till charge ox require cuetomer to furnish patterne 
in cass orders are for Jobbing quantities.' 

- 'We reeerre right to supply pattern at no coat when auch are for standard paxts. 



9826 



- 693 - 



TA3LF XII-B 



Frequency Distribution of Allowances 
on Tattersn, by Months 



Year and 

Month 



Total 



Total 



233 



80 



Tyoe of Allowance 



b 
7 



64 59 



17 



1933 



19; 



1935 



December 


4 


January 


95 


February 


24 


iw'arch 


27 


' IApril 


33 


May 


10 


June 


6 


July 


20 


August 


9 


September 


2 


October 




November 




December 


2 


January 




February 




March 




April 




May 





17 
31 
10 

6 
14 

2 



46 

11 

6 

1 



46 

10 

2 

1 



1 
3 



6 
7 
2 



Source: Compiled by Statistics Section, ERA, from Daily Price Re- 
ports of Steel Founders' Society of America. 

Type of Fattern Allowance: (See Notes to Table XIII-A. ) 



9826 



694 



TABLE ZIII-A 

Foundries Tiling Salts Contraots Specifying Price* Lower 

than Current Filed Prices, number of Customers, 

Produots Affected, and Length of Contracts 



Date of 
Report 



foundry 
Humber 



Contract 



Iff sot It* 



Ixplras 



Length of 
Contract 



Huaber of 
Products 



Hunber of 
Customers 



Oot. 20, 193* 
Oot. 2J 
Oct. 23 
Oot. 23 
Oot. 23 
Oot. 23 
Oot. 23 
Oot. 23 
Oot. 23 
Oot. 23 

8 



Oot 
Oot 



Oot. 23 
Oot. 23 
Oot. 23 
Oot. 23 
Oot. 23 
Oot. 23 
Oot. 23 
Oot. 23 
Oot. 25 
Oot. 25 
Oot. 25 
Oot. 2* 
Oot. 29 
Oot. 29 
Oot. 29 
Oot. 29 

Hot. 22 
Hot. 22 
Hot. 22 
Hot. 22 
Hot. 22 
Hot. 22 
Hot. 28 
Hot. 28 
Hot. 28 
Hot. 30 

Dec. 11 
Dec. 11 
Dec. 11 
Dsc. 11 
Doc. 11 
Dsc. 11 
Dsc. 11 
Dsc. 11 

Dsc 17 

Dsc. 17 

Dsc 22 

Jan. 2, 1935 

Jan. 7 

Jam. 17 

Jan. 23 

Jan. 31 
Mar. 8 
Mar. il 

Apr. 18 
Apr. 18 



518 


Oct. 13, 193* 


Dsc. 


31, 193* 


620 


4/ 


Jan. 


1, 1935 


•20 


tJ 


Jan. 


1 


620 


y 


Jan. 


1 


620 


y 


J.sm. 


1 


620 


aJ 


Jan. 


1 


620 


y 


Jan. 


1 


622 
622 
622 
622 
622 
622 


i 




i 


626 


Aug. 16 




S/ 


626 

705 


Aug. 16 
Uar. 26 


Uar. 


* . 


519 


JUBS 30 


Dae 


31, 193* 


«3« 


1/ 


Jan. 


1, 1935 


«3» 


*/ 


Jan. 


1 


638 


&/ 


Jan. 


1 


51' 


Oct. 5 


Dso. 


31. 193* 


5 1 ' 


*/ 


Dsc. 


31 


619 


l/ 


Dsc. 


31, 


609 

609 
609 


i 




1 


609 
509 
628 


July 7 




i 


631 


Hot. 10 


Apr. 


1, 1935 


«31 


Hot. 10 


Apr. 


1 


631 


Hot. 10 


Apr. 


1 


631 


Hot. 10 


Apr. 


1 


631 


Hot. 10 


Apr. 


1 


631 


Hot. 10 


Apr. 


1 


635 


Sspt. 20 




*/ 


635 


Sept. 20 




*/ 


635 


Sept. 20 




*/ „ 


505 


Sept. 17 


Dae 


31, 193* 


505 


Sept. 17 


Dec 


31 


§31 


Hot. 10 


Apr. 


l, 1935 


5' 1 


Hot. 10 


Apr. 


1 


631 


Hot. 10 


Apr. 


1 


«3l 


Hot. 10 


Apr. 


1 


631 


Hot. 10 


Apr. 


1 


S' 1 


Hot. 10 


Apr. 


1 


631 


Hot. 10 


Apr. 


1 


826 


Dsc 30, 1933 




a/ 


616 


Dsc 12, 193* 




&, 


616 


Dsc 7 




W 


7!J 


Jan. 1, 1935, 


Juna y 


516 
619 


Dsc 31. 193* 


Apr. 


1 


Jan. 3. 1935, 


Uar. 


31 


5l« 


Dsc 28, 193* 


Mac 


31 


108 


A> 


Uar. 


31 


5 1 ? 


Jan. 28, 1935 


Uar. 


31 


51* 


Jan. 26 


Apr. 


1 


511 


Feb. 18 


Dae 


31 


50* 


Apr. 11 


Dae 


31 


705 


Apr. 18 


July 


18 



2 monthe - 17 daya 

I 

1 year 

6 months 

t 

2 monthe - 

I 

V 

* months - 20 daya 

* aontha - 20 daya 

* monthe - 20 daya 

* monthe - 20 daya 
* 
4 



21 daya 



months - 20 daya 
months - 20 daya 

i 

3 monthe - 



* 

* 



20 
20 
20 



months 
months 
months 
months 
months 
. months 

* months 

* months 
60-day olause, 

either party 

i 

6 monthe 
3 monthe 

2 monthe - 

3 monthe - 



13 daya 

13 days 

20 daya 

daya 

daya 

daya 

20 daya 

2» daya 

20 days 



28 days 
3 days 



2 months 

2 months 
9 months 
7 months 

3 months 



3 d*rs 
5 days 

10 days 
19 days 



3 

2 

1 
2 

1 
1 
1 
2 
2 
1 
1 
1 
1 
2 
2 
2 



1 

1 

1 

10 

5 

1 
2 
2 
1 
1 



2 

10 

1 

Blanket , 

filing 2/ 

2 

1 

9 

1 

55 



2 

1 

2 

1 
1 
2 
2 

3 
1 
2 
2 

1 
1 
1 
1 
1 
1 
1 

1 
1 
1 
1 
1 
2 
1 

1 
2 
2 

1 

1 



Souroa: Compilation by 8tatletics Section, HRA, from Dally Price Reporte, Steal Foundsre' 
Society of America. 



a/ Hot specified. 

b/ In sffsot until further notics. 

iJ Fourth Quarterly Report. 



9826 



- 695 - 

tabl:-: xiii-b 

Frequency oi C rr. ract i 
Customer k Filed, 'by Months 



Year nnd 

Mo nth C in t r r ,c t s C\ \ z u o raer s 



Total 50 91 

1934 

October 29 46 

Ho v ember 11 21 

December 11 12 

1935 

January 5 6 

Februrry C 

March 2 4 

Aoril 2 2 



Source: Compilation by Statistics Section, 1-IHA, from Drily Price 
Reports, Steel Foionders 1 Society of America. 



- 696 - 
TABLE XIII-C 

Frequency of Contracts, Classified "by 

Length of Dy.rr.tion, 



ITumber of 
Duration Contrrcts 



To tal 50 

2 to 3 months 5 

3 to 4 months 5 

4 to 5 months 13 

5 to 6 months 

6 to 7 months 2 

7 to 8 months 1 

8 to 9 months 

9 to 10 'months 1 

10 to 11 months 

11 to 12 months 

12 months and over . 1 

Hot specified 32. 



Source: Compilation by Statistics Section, ERA., from Daily 
Price Heports, Steel Founders' Society of Americr. 



9826 



ITlaa 3ehadula 

Qrar 100t D»*»r 100? Mot Uyt.<Lll*l 



(823 
(601 

(616 
(B32 



IBM, r*b. u 1934, Kb. 21 



1 



(634 

(626 Jui* 27 July 7 P - L 

(622 

(«fl 

636 July 6 P 

819 July 8 July 9 P - R 

112 July 9 July 9 - R 

60T July 12 July 12 P - R 

619 July 16 July 16 P - B 

612 July 14 July 14 - R 

(501 July 16 July 16 t - 3 



July 16 
July 17 
July 20 

July 20 
July 24 
July 24 
J.ily 25 
July 23 
July 30 
Aug. 14 



521 


July 16 


707 


July 17 


(519 


July 20 


(929 




60* 


July 20 


306 


July 24 


206 


July 24 




July 26 


901 


July 23 




July 30 




lug. 1* 


622 


Au£. 26 


602 


Sap. 12 


(634 




(639 




(Ml 




(619 


Sap. 17 


(602 




(626 




(621 




[6M 




(614 


Sop. 17 


(626 




(640 




(613 


S*p. 19 


(639 








(630 


Sap. 19 


(609 




(629 





l».*.»fl 



(624 




21 


(636 






604 


Sap. 


SO 


636 




26 


314 


Sap. 


M 



0»°. 13 


«th 4. 


a. 


(j Iv. 7 
Apr. 22 

Apr. 2E 


1936. Mai. 

toy 
toy 


T 

e 

z 


Mar. 23 


6th q. 


1, 



p 


- R 


F 


- R 







P 


- R 


P 


- B 


P 




I 


- Ot 


f 


- DL 


P 


- B 


P 


-R 


(Di.l. 


T.6-0) 


(■.*. 


S.B"f1 



Jl.l.T.B-O) 
ggg|g| 



lota. Tha latter 1 with aubaonpt lndloataa a 'iw aa' miagi for anuf>la, i (I j aaaaa that 
tfaa foundry la thda inataoo* filaa the iu> aohadula or prloa aa aajthar foundry tbora 
Mrtad i,i In raport flV9, ata. 



i - ntlii™ DL - 8 



A (7) 


21S 


a (y) 


214 


a (y) 


21S 


a (y) 


222 


a (y) 


226 


a (y) 




a (y) 


241 



698 



TABLE XT 
Price Schedules Tiled on Aeronautical Castings - NOCBN 



511 




Apr. 9 






Apr. 9 


855 




Apr. 7 






Apr. 7 


806 




Apr. 10 






Apr. 10 


709 




Apr. 12 






Apr. 12 


130 




Apr. 16 






Apr. 16 


616 




Apr. 23 






Apr. 23 


303" 




Apr. lg 






Apr. 18 


836 




Apr. 7 






Apr. 7 


516 




May 4 






May 4 


621 




Hay 12 






May 12 


SU 




May 25 






May 26 


514 




June 1 






June 1 


607 




June 6 






June 6 




June 16, Seoond 


Quarterly Report 


126 




June 22 






June 22 


303 




July 4 






July 4 


112 




July 9 






July 9 


117 




July 7 






July 7 


512 




July 14 






July 14 


622 




Aug. 23 






Aug. 23 


(634 


1934, 


Sept. 17 






At Onoe 


(629 












(641 












(619 












(602 












(626 












(621 












(638 












(614 












(628 












(640) 




Sept. 19 






At Once 


(613 












(639 












(606 




Sept. 19 








(630 












(609 












(628 














September 20, Third 


Quarterly Report 


644 




Sept. 20 








(624 




Sept. 21 








(636 












636 




Sept. 26 




1934, 


Sept. 26 


608 




Oct. 3 








620 




Oct. 8 








625 




Oct. 5 






Oot. 5 


609 




Oct. 29 










Deoember 13, Fourth 


Quarts 


rly Report 


310 


1936, 


Jan. 31 






Jan. 31 




March 


23, Fifth 


Quarterly Report 



iViee 3cne3Sf 





Not 




Sp 


eclfied 




C 






C 






C 


- R 




C 


- R 




C 


- R 



Report Foundry Filed Effective 

2 ' 664 1933, Deo. 18 

5 206 Deo. 26 

60 (601 1934, Feb. 19 1934, Feb. 19 

(508 

87 512 Apr. 2 Apr. 2 

95 (1) (832 Mar. 26 Mar. 26 
(812 
(801 
(823 
(816 

March 31, First Quarterly Report 

96 511 Apr. 9 Apr. 9 C - R 
A (x) 835 Apr. 7 Apr. 7 C 

97 806 Apr. 10 Apr. 10 -R 

C - R 

98 130 Apr. 16 Apr. 16 C - R 
104 616 Apr. 23 Apr. 23 C - R 
106 303" Apr. 18 Apr. 18 B - R 

A (x) 112 836 Apr. 7 Apr. 7 C 

116 516 May 4 May 4 C - R 

120 621 May 12 May 12 - R 

130 SU May 25 May 26 C - R 

135 514 June 1 June 1 C - R 

141 607 June 6 June 6 C - R 



151 126 June 22 June 22 C 

162' 303 July 4 July 4 C - R 

164 112 July 9 July 9 - R 

166 117 July 7 July 7 C - R 

170 512 July 14 July 14 C - R 

196 (y) 622 Aug. 23 Aug. 23 - R 

A (y) 210 (634 1934, Sept. 17 At Onoe C 



A (y) 212 

A (y) 



C 

c 

c 
c 



c 
c 
c 

>, Jan. 31 Jan. 31 C - R 

C_ 

Hotel The letter A with a subsoript indicates a "same as" filing. For example, A (yj means that 

the foundry in this instanoe files the same sohedule or prioe as another foundry above marked 
(y) in report #196, etc. In column "price schedule" as in the oase of "C - R" in report 
#307 the first letter is the price sohedule and the second letter speoifloations as followsi 

R - revision 



9826 



TABLS XVI 



Price Schedules Filed on Railroad Locomotive 
DrlTlng Boxee, Friction Type 













Price Schedule «/ 










Report 


Foundry 




Filed 


Effective 


Specified 


Remarks . 


5/ 


/ 








1933, 


Decenber 5 




P 


IQD 










12 


402 




December 30 


At once 


Price given 












24 


208 


1934, 


January 18 


At onoe 


P 


NQD 










60 


(501 
(508 




February 19 


1934, February 19 


P - R 


IQD 




















nqd 










62 


805 




March 2 


March 2 


P - W 


NQD 














Uarct 


1 31. Flret Quarterly Report 


P 


MOP 










91 


805 

12" 




April 3 


April 3 


P - R 


HQD 


over 


99 


pee. 




95(x) 


(S1S> 

(801 

823 

(815 




March 26 


March 26 


P - R 


IQD 


over 


99 


pes. 




96 


l U 




April 9 


April 9 


P - R 


IQD 


over 


99 


pee. 




*(x) 


835 




April 7 


April 7 


P - R 


NQD 


over 


99 


pee. 




97 


70? 
124 




April 12 


April 12 


P - R 


IQD 


over 


99 


pee. 




109 




April 21 


April 21 


P - R 


IQD 


over 


99 


poe. 




A (x]i 112 


835 
304 




April 7 


April 7 


P 


NQD 


over 


99 


poe. 




117 

124 




Bay 3 


May 3 


P - R 


NQD 


over 


99 


pc». 




6i4 




May 15 


May 15 


P - R 


IQD 










126 


103 




May 21 


May 21 


P - R 


NQD 


over 


99 


pee. 




132 


J1 i 




May 25 


May 25 


P - R 


IQD 


over 


99 


poe. 




i4o(y) 


128 




June 6 


June 6 


P - R 


IQD 


over 


99 


pea. 




2C3 




June t 


June 8 


P - R 


IQD ever 99 


pee. 




l4l 


507 




June 6 


June 6 


P - R 


NQD 


over 


99 


pea. 




1*3 


641 




June 11 


June 11 


P - R 


IQD 


over 


99 


poe. 








June 16. Second Quarterly Report 


£ 


IQD 


ever 


99 


PCfl 




*(y)i5l 


206 




June 22 


June 22 


P - R 


NQD 


over 


99 


poe. 




152 


6l4 




June 22 


July 1 


P - R 


NQD 


over 


99 


pee. 




157 


712 




June 27 


June 27 


P - R 


IQD 


over 


99 


pee. 




158 


306 




June 29 


Jujb 29 


P - R 


IQD 


over 


99 


pee. 




165 


112 




July 9 


July 9 


P - R 


IQD 


over 


99 


pee. 




172 


707 




J"ly 17 
July 1* 


July 17 
July l4 


P - R 


IQD 


over 


99 


poe. 




189 


835 




(No price ei 


jhedu] 


e) 












September 20. Third OuarterlT Report 


£ 


NQD 


over 


99 


pee, 




216 


303 
516 




September 22 


September 2£ 


! P - R 


IQD 


•war 


99 


poa. 




III 




October 19 


Ootober 19 


P - R 


IQD 


over 


24g 


poe. 




105 

407) 

422 




Ootober 29 


November 8 


P - L 


NQD 


over 


poa. 




242(a) 




Ootober 29 


November 8 


P - L 


NQD 


over 


?H9 


poa. 




246 


502 
4i9 




November 3 


November J 


P - R 








-*■ 




*(«)2t« / 
252 2/ 




November 6 


November 8 


P - L 


IQD 


over 


2Uq 


pea* 




502 




November 13 


November 13 


P 












259 


502 




November 19 


November 19 


P - H 


IQD 


over 


21*9 


poe. 




260 


502 

4l8 




November 22 




P - DL 


IQD 


over 


?l*9 


pee. 




261 




November 21 


November 21 


P - R 


IQD 


over 


2ft9 


poa. 




271 


304 




December 6 


December 6 


P - DL 


IQD 


over 


?l*9 


poe. 








December 11. Fourth OuarterlT Rerort 


£ 


(£ 


over 


?*o 


poa. exoept 


D8 




(806 
808 


1935, 


January 2 


1935, January 2 


P - DL 


IQD over 


99 DOB. 




285(w) 


IQD 


over 


2*9 


poe. 




»(w) 29< 
*(w 303 




January 18 


January 18 


P - DL 


IQD 


over 


2U9 


poe. 




814 




January 25 


January 25 


P - DL 


X%D 


over 


2 1*9 


poa. 




»(w) 308 


(812 
(813 

811 




February 1 


February 1 


P - DL 


IQD 


over 


?Vj 


poe. 




•.<») 316 




February 13 


February 13 


P - DL 


IQD 


over 


?\a 


1 poa. 








March 23. Fifth Quarterly Report 


£ 


IBS 


over 


21*9 


P°«t 





Source: 



Compiled by Statlftioi Section, IRA, from Dally Price Report of Steal Founders' 
Society of America. 



5/ 



P - DL, in Report #316 - the flret letter le the prloe quoted and the eecond 
letter or lettera are epeclf loatlone ae follows: 

L - new low 
DL - new divisional low 
R - revision 
B - new high 



al 

Note: 



ff - withdrawal 

IQD - No Quantity Discounts allowed. 

"In Report #246, filing by Foundry 502, echedule 
as a new low, effective November 13- " 



P' ehould have been ahown 



The letter A with a eubecrlpt Indicates a "same ae filing. ' For example, 
A(-) meane that the Foundry in thle lnetanoe fllee the eaae echedule or 
price sb another foundry above, marked ( w ) In Report #285, etc 



9826 



- 700 - 

e:: t i?it ii 
soi ferci;x rssol" tio^s 



The rules and regulations prescribed by the Code Authority in 
its administration of the Code -Tore designated as Resolutions. These 
were of three types; General Resolutions, Labor Resolutions, and Com- 
mercial Resolutions. The Commercial Resolutions embraced most of the 
regulations affecting price filing p.nd the more important of these are 
summarized below, grouped according to subject matter. 

I. Price Filing Procedure 

A. Formal "Call" for Price piling 

Commercial Resolution ITo. 5 was adopted on November 27, 1933 and 
sent to all nonbers of the industry. This resolution represented the first 
formal call for the filing of prices and established December 11, 1933 as 
the deadline for filing. 

B. Waiting Period for Price Revisions 

Commercial Resolution ITo. 7, dated January 10,1934, established 
a ten day waiting period before a filed "now low current price schedule 
on a specific classification or - current prices on an entirely new classi- 
fication" would become effective. 

Commercial Resolution Ho. 18, adopted May 7, 1934, roplaccd 
a resolution of the same number adopted February 13, 1934, and provided: 

"that no member of the Industry shall quote or com- 
municate to custonors, directly or indirectly, a 
price on Miscellaneous Castings before the effective 
date thereof permissible under Article VII of the Code." 

Under date of March 27, 1934, the Legal Division made the 
following comments on the original resolution: (This original resolution 
is not available in the records). 

"I do not believe that this resolution is in order nor 
that the Code Authority (Board of Directors) or any agency 
appointed by a Subdivision of the Industry can indicate to the 
industry when it shall or shall not communicate prices to 
customers. The restriction with reference to filing price 
lists other than prices themselves is restricted only 
in so far as the effective date is concerned." 

This resolution was withdrawn by the Code Authority as a 
result of this opinion. 

C. Prohibition of S^les 3elow Filed Prices. 
3*26 



- 701 - 

Commercial Resolution No. 24 of May 7, 1934, confirmed the 
prohibition of sales below filed prices for member:: of Kiscellaneous 
Castings Branch, as decided infor ially by the Board on or about November 
28,1933. 

The regul n ti'm. is clearly v/itliir. the >owers granted to the Code 
Authority ~oy section 3 of Article VII of the Code, No infornation is 
contained in the record regarding the incident which prompted the Code 
Authority to emphasize the prohibition of sales below filed prices. 

D. Status of Rer>air and Reol.ncer.ent Parts 

Cor.inercial Resolution No. 2 adopted November 27, 1933, read as 
follows: 

"RESOLVED, that Cast Steel Parts for nev.' Locomotives or 
other finished products, built by companies affiliated 
with the steel foundries producing such parts, are not 
subject to the Steel- Casting Code, but reaair and replace- 
ment parts for such finished products are subject to said 
Code." 

It may be informative at this ooint to discuss the background 
which lee. to this Resolution and eventually to a request for an inter- 
pretation. It had been, for many years, the practice of the railroads 
of the country to service and repair their O'tl locomotives in their own 
shoms. In the course of such repairs, it mas ^moarontly their general 
practice to buy such steel castings as were required from favorably 3it*» 
dated jobbing steel foundries equipped to supply such material. There 
appears to be no doubt that the mreoonderar.t tonnage of such parts was 
furnished by independent jobbing steel foimdries. In 1928, locomotive 
builders (Baldwin Locomotive Company and American Locomotive Company) 
appear to have decided upon a change in policy which "as probably motivated 
by the fr.ct that few, if any, locomotives '.'ere being purchased by the 
railroads. This policy appears to h^ve included a plan for increasing 
the locomotive builders' mart icim^t ion in the supply of repair and re- 
placement parts. In furtherance of this no 1 icy, the General Steel 
Castings Corroany ma.s organized and a new and large steel foundry was 
constructed in Eddystone, Pa., adjacent to the works of the Baldwin 
Locomotive Company. The General Steel Ca.stings corroany was admittedly 
subject to the erovisions of the Steel Casting Code. However, under the 
code definition ox' the industry, (*) it became possible for the locomotive 
builders to acquire steel castings from their affiliate foundry com- 
pany, (General Steel Castings Company), at any price they saw fit. They 
could then be resold to the railroads at prices bearing no relation to 
those filed by the General Steel Castings Company. 

As a result, one of the largest of the Steel Casting In- 
dustry markets uas being supmlied with competitive products at prices 
which were unkno-.7n to the members of the Industry. This was contrary 
to the principle of an open market for the products of the Industry. 

Commercial Resolution No. 2 indicated the attitude of the Steel 



(*) See Sections 5 and 4 of Article VI of Steel Castings Code. 



- 702 - 

Founders' Society on this question. This resolution was protested by 
the loconotive builders at hearings on April 2 and May 2, 1935, but the 
Schechter decision was handed down before any action could be taken 
by the Administration in regard to this question. 

E. Filing of Sales Contracts . 

Resolution No. 6, adopted November 27, 1933, called for t^e 
filing of sales contracts made prior to December 11,1933, c and which 
were continued in effect after December 31, 1933. The dpta so filed were 
to be submitted concurrently with the other price lists and were to 
specify (l) date contrpct was made, (2) name of customer, (3) class of 
castings involved, (4) prices specified and (5) date on which contract 
would expire. 

Commercial Resolution No. 35, adopted October 10, stipulated' 
that all contracts, at prices below current filed prices, must be filed, 
A statistical tabulation and summary of the effects of this Resolution is 
submitted in another section of this report. (See pages 654 ff. .) 

The Code Authority undov.btedlj'- felt that the Drovision of the 
Code which empowered it to make rulings governing the filing of prices (*), 
also grp.nted it authority to require the filing of contracts. 

Commercial Resolution No. 38 which superseded Resolution "To'. 33 
provided that sales under long term contracts, pt nrices below the filed 
price for current sales of the same type of product, did not constitute 
a code violation if such meriber filed with Cede Authority either a copy 
of contract or summary of terms. It further provided that, with the ex- 
ception of the name of purchaser, the particulars as to such contr-cts 
were to be disseminated among industry members, in the same manner as all 
other price data. 

F. "Blanket Filings" 

A number of tines during the Code period, until about February 
13, 1934, the Code Authority accepted and reported' filings made by found- 
ries to the effect that "we amend our minimum price schedules to minimum 
prices thus far filed with the Steel Founders' Society, or which at any 
future time may be filed, such prices to become effective as of sane date 
as the lower prices so filed become effective." 

Commercial Resolution No. 17, February 13, 1934, eliminated the 
above as Code practice, by the following p.ction: 

"RESOLVED, that the filing of 'blanket' revisions of 

price schedules purporting to meet all minimum schedules 

filed by all other steel foundries shall not be acceptable 

and that all revisions must be made in writing individually 

setting forth the names of the classifications to nhich 

they respectively apply, and the corresponding revised schedules." 

(*) Article V, Section 1, (c) 
982S 



- 703 - 

A continuation of this practice would have "been a deterrent to 
the success of the nrice filing plan. Allowing a foundry, to file such 
sweenin?; provisions would, in effect, have relieved the foundry of the 
responsibility of filing current prices. 

Commercial Resolution No. 30, adopted October 10, 1934, replaced 
the above Resolution No. 17 and again permitted the making of so-called 
"blanket filings" by allowing any member of the Industry to meet the 
minimum prices filed in his division by a mere statement to that effect. 
This -orocedure would seem to tend to the establishment of nrices at the 
level filed by the majority of the members in the division, -and published 
by' the Code Authority in the "Quarterly Report." This Quarterly Report 
was a publication issued quarterly by the Code Authority, containing the 
minimum and in some cases the prevailing prices filed by all members of 
the industry, and indicating exceptions to the prevailing levels by the 
name of the foundry filing such exception. The foundries which filed e.t 
the minimum or prevailing levels were not mentioned specif ically. 

G. Filing of Frices to Meet Specific Competition 

Commercial Resolution iTo. 12, adopted January 10, 1934, defined 
industry policy on "meeting competition" as follows: 

"No foundry is nernitted to sell or offer for sale 
steel castings at less than the prices slwn on 
schedules filed by such foundry with the Societ3f. 
If a foundry desires to meet a price of a competitor, 
it is necessary that the price be first filed with 
the Society by the foundry desiring to meet such competi- 
tive price. If -a foundry has not filed on a, specific 
classification, their 'Miscellaneous, N.O. C.B.N. , schedule 
must be used." 

Commercial Resolution No 30, (*) in addition to permitting 
"blanket" filings, also stated that it was possible to file the sane 
schedules as another foundry had previously filed, by merely filing with 
the Code Authority a statement to that effect and listing the name of the 
foundry and the date on the Dally Report in which the foundry's filing- 
was published. 

Proposed Commercial Resolution No. 39 emphasized the above re- 
quirement and provided that a member of the industry, in filing to meet 
a, competitive price with the sane effective date as the first filed price, 
must name the conoetitor whose Drice he was meeting. 

II. Terms and Conditions of Sale 

A. Subsidizing or Financing of Customers 

Commercial Resolution No. 34, effective February 19, 1935, pro- 
hibited the ca.rrying of insurance on customers' patterns without charge 
to the customer and provided that where covered by a blanket insurance 
policy, a share of the cost of such blanket policy must be charged to the 

cus-tomers. 

(*) See above. 
9826 



- 704 - 

3. Furnlshi'v; Fr ee Serv ice -■.nd Goods 

About march 32, 193: rop : 3 C eroial Resolution dealing 
with the filing of prices on pattern equiunent and machining was sub— 
nitted for approval. This Resolntio> , ■liich -■.■ »osed to make effect- 
ive the Code provision prohibiting t .■ absor ' ; of all or any part of 
the cost of pattern eqi.iio.ient or nachi.iin g, required the filing of in— 
formation ^retaining to orders received and aece ted for new pattern 
equipment or machining upon forms supplied by the S.F.S.A. and such 
information was to be available to any industry member on request. 

There is no indication in the record as to whether this reso- 
lution was approved or not. Such a requirement would be a logical ex- 
tension of the price filing plan to include another element of trices 
which might have been employed to induce sales at less than filed prices. 
Without such a requirement the price of pattern equipment or machining 
"it have been used as an inducement to purchase castings. 

On May 14, 1935, a letter was sent by the Code Authority . 
to all members of the industry requesting a ballot on this proposition. 
The letter consisted of : an elaboration of the original proposition as 
contained in' the proposed resolution. 

C. Gua ranteeing Delivery Date . 

Commercial Resolution No. 40, effective February 9, 1935 re - 
presented an attempt to close a loophole in the regulations which per- 
mitted members to sell belo^ filed prices. This Resolution cautioned 
industry members that the practice of promising delivery on dates "which 
they could not arid 'knew that they could not meet" and the paying of a 
fictitious penalty for delay in such deliveries night result in a vio- 
lation of the code. 

D. Lump Sun lidding 

Commercial Resolution Ho. 37, effective February 9, 1935, app- 
arently prohibited the quoting of lump sum prices by members of the in- 
dustry and required them to quote on a per pound basis only. This Reso- 
lution, although approved by the Administration, "as protested by a 
member of the industry. In answer to this protest the Assistant Deputy 
Administrator submitted the following reply, which clarifies the Resolu- 
t i on : 

"I wish to repeat that there is no provision in the Code 
that would prevent a member from quoting you a firn price 
on a specific lot of castings. It is true that such a 
member is preparing his quotation to you on a firn basis 
would necessarily have to make the quotation large enough 
to surely cover the maximum possible weight of the cast- 
ings delivered since the member would be violating the 
Code if he delivered castings to you at actual pound prices 
which were below the filed prices." 

E. Quantity on Orde r 



- 705 ~ 

Comnercial Resolution No. 01 , adopted Hay 7, 1934 defined the term ' 
"quantity," used in connection -ith the filing and quoting of prices for 
steel castings, as the number of castings ord°red at on° time from a 
specif ic pattern. The castings "">re to be shipped or invoiced within 
90 days from the date of the ord s.r, except in the ciase of specific 
projects and in cases "here it was physically impossible for the 
foundry to manufacture the total rvuantity specified within the above 
prescribed time. In these cases, it was required that copies of quo- 
tations be filed with the Code Authority. 

Commercial Resolution No. 27, May 7, 1934 clarified the method 
of computing "quantities' in order" when paired patterns are included. 

"RESOLVED, that in the case of -patterns which are paired, that is, 
consisting of right and left hand, or upper and lo^er members, 
quantities are to be computed separately on °ach such memb°r in 
accordance with Commercial Resolution No. 21, and the quantities 
of such members may not be combined for the purpose of determining 
the quantity or quantities on ord^r," 

Quotations involving estimated weights were dealt "ith in Com- 
mercial Resolution No. 32, adopted October 10, 1934, specifying that 
quotations shall be made on a per pound basis only and 

"In th° event the actual weight(s) of the Casting(s) is (are) 
different frorp the estimated weight(s) used in this quotation 
the actual weight(s) will "be used as a basis for billing."' 

III. Distributive Relationships 

Commercial Resolution No. 10, adopted on January 10, 1934, defined 
"sal°s or commission agents," and established- regulations for selling 
through these agents, in the following terns! 

"RESOLVED, that a sales or commission agent shall be defined 
as any person, firm or corporation employed by a member of the 
Industry to sell steel castings to the trade, und°r such terms 
and conditions that such agent does not become at any stage of 
the transaction the purchaser of the castings, and that the . • 
castings are sold and billed by the member of the Industry, 
to the ultimate customer, not to the agent and farther 

"RESOLVED, that in all cases castings sold through agents or 
commission sales representatives shall be sold at trices not 
less than th° prices filed by the foundry which produces the 
castings. " 

IV. Geographical Price Structure 

Commercial Resolution No. 4, adopted on November 27, 1933, 
provided that prices must be filed ^n a. delivered basis. 

Commercial Resolution No. 36, superseding Commercial Resolution 
No. 4, covered th° delivery practices of members of th° industry in 
s°lling to railroads and prohibited th^ selling "at a price "hich 



- 706 - 

results in a delivered price to th° purchaser that is less than the 
schedule of minimum delivered -oriels of rough castings fil°d "by the 
s°ller" and further prohibited th° selling "which results in a net 
price to the railroad l°ss than the scheduled pric° filed by the 
seller, with freight allowed to the nearest point of road with addi- 
tional freight allowances of five mills per ton mile for the on line 
haul." 

The most important phas-^ of this resolution is the additional 
allowance of five mills p^r ton-mil* for the on line haul. The 
previous freight allowance was on the basis of destination as nearest 
point on the road. At the Industry meeting h°ld in Cincinnati, Ohio, 
on October 9-10, 1934, the matter of allowing this concession to 
Railroads was discussed. The Code Authority's letter to the Members on 
October 16 gave the following report: 

"The Special Committee appointed to study the problem of freight 
allowances on railroad castings made the following recommendation 
to the Society: 

"'That all Railroad Castings for direct shipment to 
railroad customers b v sold on the following delivery basis; 
"Freight basing point, seller's works (location) with 
freight allowed to nearest point on lin° of road, plus 
cost of the on-haul of five mills per ton rail via shortest 
route from the point where customer road rec°ives the 
shipment , to destination." 

"It was explained that no cm foundry has more than 15 to 17 
railroad customers a^d the locations of the destinations (shops) 
are »11 known to th-m so that it would be a relatively simple . 
matter to s°t "p a schedule of freight charges to cover all 
combinations. 

"The committee's recommendations met with a diversity of 
opinion and no action w a s taken thereon. Instead it was 
referred to the rroup comprising manufacturers of railway car and 
locomotive castings for acceptance or rejection. The matter has 
not yet be° n settled."' 

It was known that the Railroad interests ^ere clamoring for an 
additional' freight allowance; this concession was the outcome. 

Under date of January 9, 1935 the Legal Division suggested 
that the code authority b° request ^ to submit a Cod° Amendment covering 
this subject or, alternatively, that, 

"A Resolution requiring a, break-down of prices to be quoted to 
railroads so that such prices may be readily compared, ^ould be 
acceptable to the Legal Division. It could properly provide 
that prices on sales to railroads must be filed; that sach 
price lists must show the delivered price ( delivery to the 
nearest point of the purchasing Mr to be deem?d delivery) and 
the freight allowance per ton mil^, if any, from the point of 
delivery to the ultimate destination; and that 5 mills p«r ton 

98?6 



- 707 - 

mile shall b° d^m-^d th-> freight allowance unless th° member of 
the Industry otherwise designates. Such a resolution would 
afford an adequate "basis of comparison without unalterably 
establishing any of th° elements of price." 

This au^stion was submitted to the Industry for "ballot, which 
resulted in an overwhelming vote in favor of th° proposal. This 
question was latT "brought up as an amendment, "but was not disposed 
of "before the ^nd of the Code. 

Proposed Commercial Resolution Ho. 43 was a restatement of the 
material contained in Commercial Resolution Nos. 4 and 36 and in an 
effort to meet a certain objections raised "by the Administration. This 
Resulution, which was received "by the Administration on April 16, 1935, 
provided as follows? 

"That on sa"i °s of miscellaneous castings to purchasers other than 
railroads, the requirement of Commercial Resolution No. 4 that 
filed prices shall b D on a 'delivered "basis' is h°re"by declared 
to mean that such prices are charged for the rough castings f.o.b. 
seller's foundry, with an allowance equal to the actual charges 
for delivery to the purchaser, provided, however, that such 
allowance shall in no ^vent exceed the railroad freight, at 
the published rate applicable to the shipment, from the seller's 
foundry to the railroad switching point or terminus nearest 
to the plant of the purchaser, exclusive of local trucking or 
other transportation charges from such point or terminus to the 
plant of the purchaser;' and further 

"RESOLVED that on sales of miscetlaneus castings to railroads, 
the requirement of Commercial Resolution No. 4. declared to mean 
that such prices are charged for the rou£h castings f.o.b. 
seller's foundry, with an allowance equal to the actual charges for 
delivery to the purchasing railroad at the point on its lin Q s\ which 
is nearest to the -olant of the seller, provided, ho"°v a r, that 
such allowance shall in no ev°nt exceed the railroad freight, 
at the published rate applicable to the shipment, from the 
seller's foundry to such point on th° lines of the purchasing 
railroad which is nearest to the plant of the seller; and further 

"RESOLVED that this resolution shall become effective on 
July 1, 1935 and shall be applicable with respect to all sales 
mad after that date, including sales und°r contracts which are 
in effect before that dat D , if such contracts are made the 
fifth day following the date upon which approval of this 
resolution .is received by the Society from the National Indus- 
trial Recovery Board." 

Under date of May 15, 1935, the Legal Division approved this 
Resolution, stating that "it is proper that freight allowances be 
limited to the delivery costs actually incurred "and that for the 
purpose of comparison it is e as ier "to regard all allowances as being 
fixed and confine price variations to the basic charge." However, in 
view of the effective date n f the Resolution, it was suggested that 

9826 



- 703 - 

final approval be withheld pending n°.w NRA legislation. 

V. Product Classifications . 

Commercial Resolution No. 8 dated January 10, 1934, nads as 
follows! 

"RESOLVED, that classification 1-iio^n as 'Miscellaneous Castings, 
N.O.C.B.H. ' shall "nbrac^ only such castings as have not h^-n 
specifically classified "by name bv any ijqnVr of th-- Industry, 
and that the filing of a new classification not hitherto filed by 
any member of th= Industry shall 'be considered a revision of the 
classification knoxm as ''Miscellaneous Castings, N.O. C.B.N. 1 
and may riot therefore become effective until ten days after the 
date upon which such new classification and schedule" ™° r o filed, 
and further 

"RESOLVED, that if any of the castings -produced by a member of 
the Industry are such that they cannot be properly classified un- 
der some one or more of the classifications hitherto fil^d by any 
other members of the Industry, such member of th° Industry must 
file a schedule covering 'Miscellaneous Castings, N.O. C.B.N. ' 

This Resolution indicates that the system of classifications 
and schedules referred to above was already in us° at this early date. 
The records available do not contain any officio,! notification to 
the industry that this system was to be employed. 

Commercial Resolution No. 13 dated February '12, 1934, provided 

"That no member of the Industry shall sell or offer for sale 
Miscellaneous Steel "Castings which have been 'specifically 
classified by name by at least on^'oth^r foundry, without having 
filed a sch a dule of prices applying to such specific Classifica- 
tion." 

The object of this resolution was to promote comparability. 

In the course of a general review of the Commercial Resolutions, 
dated January 17, 1935, th-= Legal Division made the following comments 
in regard to this Resolution! 

" No, 13 , The Legal Division recommends that this Resolution be 
supplemented by! > 

"Provided, however, that members of th° Industry w ho have 
previously filed the prices of such specif ically classified Cast- 
ings as "Miscellaneous" may s°ll or offer to sell such castings in 
accordance with th Q ir previously filed schedule until the effective 
date of the revised schedul required to be fil^d by th^m by the 
foregoing paragraph. "' 

"This nroviso is considered necessary' in ord°r that the foundry 
filing' the specific classification may not thereby prevent other 

9826 



~ 709 - 

members of th" Industry from selling the casting in question until 
their revis n d schedules b.^cojv effective." 

"It is further r°connende.d th-t action on this Resolution be 
withh°ld p->ndinr the outcome o J - the recent price hearings 
conducted "by th= Board." 

Under date of Karen 22, 1934,.. a member of the Legal Division 
made the following comment, concerning th° Resolution explained above: 

"It would seem to me that this resolution is not only undesirable 
and indicates an att°mpt to control-the free filing of prices, hut 
also I douht if th° Code Authority has any authority to pass any 
resolution which is in 5 xc°sa of the po^°rs granted it by the Code. 

On April 2, 1934, a letter was received from the Code Authority 
containing the following paragraphs* 

"W<= have received your letter of the 28th advising that the 
Legal Division of the National Recovery Administration disapproves 
of Commercial Resolutions Nos. 12 and 13 as adopted on February 
13, 1934, by the Board of Directors of the Ste=l Founders' Society 
of America. 

"Accordingly, ™* have advised th° Industry that these resolutions 
are not effective." 

Commercial Resolution No. 16 dated February 16, 1934, stated 

"that on and after April .1, 1934 all schedules of prices for the 
various castings classifications shall be fil°d in accordance 
with schedules represented by letters as pet forth in "A Study of 
Schedules for Miscellaneous Castings Based, upon Levels of 1926" 
iss\i°d by Steel Found -rs' Society of America under date of 
D=5c o ml)^r 5, 1933, provided that schedules filed with the notation 
N.Q.D. or any other terms filed Uniting the quantity or weight 
differentials shown on above 'study' shall not be construed as a 
non-compliance with this resolution." 

This Resolution enforced the price filing system and made it 
mandatory that members of the industry should file prices in accordance 
with the price filing plan and, in a measure, enforced the system 
of quantity and weight discounts ^hich were an inherent part of the 
system. As a result of this resolution no member of the industry was 
able to create his o t ti system of quantity and weight discounts, nor was 
he able to file different prices for different products '-uthin a 
classification. In other iTr ords, th 3 same schedule or prices was 
automatically applied to all of the products falling within a classi- 
fication unless a foundry '"ished to file a n^ classification 
specif ica,lly exempting certain products from an existing classification 
and grouping them in a new classification. This resolution is referred 
to in the minutes of the Board me°ting of January 29, 1935, as follows* 



QBOC 



It 



- 710 - 

"It was the sense of the meeting that the filing of a price 
specifying a letter schedule out indicating that, for example, 
one to forty-nine pieces snail take the prices specified in 
the ten to twenty-four piece column does conform to the 
requirements of Commercial Resolution No. 16, and is entirely 
permissible. 

"There was a discussion of a question of drafting a proposed 
resolution making a low price filed for use in a specific 
contract the open price of the contracting foundry for the 
effective period of such contract, even though an upward 
price revision is filed by such foundry following the con- 
summation of such contract. It was pointed out that this 
question is covered by a resolution (No. 38) already sub- 
mitted to NRA for approval." 

This resolution was supplemented by Commercial Resolution No. 26, 
adopted on May 7, 1934, which provided that current prices to users 
of steel castings "shall be filed in terms of letter schedules as pro- 
vided in Commercial Resolution No. 16." 

On June 7, 1934, a report was received from the Research and Plan- 
ning Division regarding these two resolutions. It strongly recommended 
the rescinding of any approval which might have bean given to Resolution 
No. 16, pointing out that it prohibited industry members from filing 
prices in accordance with their individual pricing practices. 

Commercial Resolution No. 22, dated May 7, 1934, established a 
Committee on Definitions and Classifications to meet at least once each 
quarter for the purpose of reviewing all classifications filed and with 
power to disallow such classifications, to formulate definitions to apply 
to any classification, and to require members to define new classifications. 

Even prior to the official establishment of this Committee by the 
above resolution a letter (*) was forwarded to the members of the Industry 
giving an account of the functioning of this Committee and setting up a 
number of new classifications in accordance with its recommendation. 
This Committee had undoubtedly been operating for several months. It is 
believed that most of the work on classifications was accomplished by 
the Definitions and Classifications Committee. A casual examination of 
its duties and functions would immediately point to its great importance 
in the operation of the Open Price Plan. Comments made by various 
members (**) indicate that subcommittees in the geographical Divisions 
assisted in the work of classifying products. 

(*) Letter from Code Authority to members of the Industry, April 25, 

1934. * • 

(**) Interviews with members - field trips - December 22, 1935. 



9826 



- 711 - 
VI . Price Extras 

Commercial Resolution No. 19 of March 9, 1934, provides that the 
filing of price extras for alloys could not he made by trade name and 
that either chemical com. osition or physical properties should he 
specified. This was a further attempt on the part of the Code Authority 
to clarify the competitive situation so that nil members of the industry 
might have exact information regarding the operations of their competitors. 

The first call for the filing of price extras was issued in Commercial 
Resolution Mo. 29, adopted June 13, 1934, and reads as follows: 

"RESOLVED, that there be issued a call for the filing 
< of price extras by the Industry on or before a date 
ten (10) days after the date of such call." 

This represents a further step in securing the filing of all price 
data. Hor-ever, nearly all types of extras had been filed before this 
call. 



- 712 - 

APPENDIX C 
Exhibit I 
METHODOLOGY A3 ID SUGGESTIONS ?OR FURTHER RESEARCH 
Pertaining to Price Piling Study 

A. The Code Sam-pie 

This study is limited in industry coverage to a basic sanrole of 
57 codes, selected from the total of 444 NRA codes containing open 
■orice provisions. This code sample, referred to throughout the study, 
includes the following industries: 

4 Electrical 

18 Cast Iron Soil Pipe 

20 Salt Producing 

23 Underwear and Allied Products 

31 Lrrae 

37 Builders' Surrolies 

39 Farm Equipment 

59 Marking Devices 

67 Fertilizer 

78 Nottingham Lace Curtain 

80 Asbestos 

81 Cotroer and Brass Mill Products 

82 Steel Castings 

88 3\isiness Furniture 

90 Funeral Suxroly 

92 Floor and Wall Clay Tile 

98 Fire Extinguisher 

99 Asphalt Shingle and Roofing 

102 Shovel, Dragline and Crane 

103 Machine Tool and Forging 
107 Ladder 

109 Crushed Stone, Sand and Gravel 

114 Scientific Atroaratus 

120 P^-per and Pulr> 

123 Structural Clay Products 

128 Cement 

134 Gas Appliances 

136 Vitrified Clay Sewer Pipe 

153 Valve and Fittings 

156 Rubber Manufacturing 

167 Set Up Paijer Box 

175 Medium and Low Priced Jewelry 

176 Paner Distributing 
193 Folding Paper Box 
202 Carpet and Rug 

204 Plumbing Fixtures 

205 Metal Window 
220 Envelope 
234 Macaroni 



- 71.-7 - 

249 Tag Manufacturing 

265 Coffee 

275-1 Agricultural Insecticide 

275-2 Indiistri.nl Alcohol 

275-3 Carbon Dioxide 

291 ',/ood Cased Lead Fe lcII 

303 Cordage and Twine 

311 Ready Mixed Concrete 

333 Canvas Goods 

344 Metal Lath 

349 Mayonnaise 

366 Retail Monument 

401 Cooper 

410 Retail Tire 

421 Marble Quarrying and Finishing 

445 Baking 

458 TTholesale Confectioners 

463 Candy Manufacturing 

The industries within this sanple have not been accorded equal 
attention, since it has "been impossible to complete separate case 
studies of price filing experience in all of them. Illustrative 
material from other industries has been incorporated in some instan- 
ces, but the report is based primarily on experience records for the 
above sample of codes. 

B . Selection of the Code Sample 

The choice of a sample of 57 codes represented a compromise be- 
tween a broad . coverage of all often price codes and detailed studies 
of price filing experience in a fe"? industries. 

3ecause of the number and complexity of price filing provisions, 
and the diversity of industry and code environments in which they 
operated, it seemed advisable to use a sample sufficiently large to 
counteract the possible bias that would result from a small sample. 
This approach was further indicated because price filing has been 
accented and for the most Dart administered under the 5RA as a reg- 
ulatory device capable of wide and, general application. 

Prior to IffiA there had been no experience with mandatory price 
filing plans, nor much with the reporting of present or future pricesi 
The prevalence of such plans under the T1RA suggested that an over-all 
survey of experience would Prove more useful than detailed studies. 

Accordingly, at one point in the development of the study, one 
hundred and ninety-one codes were selected as the prospective sample. 
The codes selected are listed in Exhibit III. This number was event- 
ually reduced to fifty-seven, following an investigation of materials 
available and a realization that research facilities would not permit 
the use of a larger sample. 

The final selection of 57 codes represented an effort to select 
codes which would be representative of the total number of open price 

9826 



- 714 - 

codes and would cut across as many of the significant criteria as pos- 
sible, thus serving to focus the evidence on doubtful issues of admin- 
istrative policy and economic effects. 

To these ends, codes were selected illustrating (l) the dif- 
ferent structural features of price filing plans, (2) different 
industry groupings, (3) different competitive situations, and (4) varied 
types of experience in operation. Factors considered under the first 
point were types of information reported, types of central agency, geo- 
graphical scope, presence or absence of a waiting period, conformity of 
■orice filing provisions to Office Memorandum No. 228, presence of min- 
imum price provisions, or the other trade practice provisions such as 
bid filing, basing points, product standardization, etc. Secondly, 
codes were chosen from the several industry groups, such as Basic Mat- 
erials, Equipment, Chemical, Manufacturing, and Distributing Trades, and 
for different types of products. Under the third consideration, codes 
were selected for industries with varying degrees of price leadership, 
or for other loosely organized, with numerous units. Finally, on the 
oasis of operating experience, there were included industries that had 
had Varying degrees of success with price filing and others in whicn 
a complete breakdown of price filing had occurred. 

Aside from this effort to insure the representative character of 
the sample, certain factors of expediency influenced the final choice. 
Codes selected for study by other Units in the Trade Practice Studies 
Section, or ay the Industry Studies Section of the Division of R e view, 
were included in preference to other onen price codes, because of the 
opportunity to obtain significant information relative to price fil- 
ing from the work-sheets and analysis of these studies. The willing- 
ness of trade associations in the Fertilizer, Electrical Manufacturing 
and Coffee Industries to make their price files available for specific 
statistical studies instituted by the Division of Review, led natur- 
ally to their inclusion in the sample. A survey of the adequacy of 
NBA file materials prompted the inclusion of certain industries and 
the exclusion of others tentatively selected. 

C. The Work Outline 

The preliminary work outl:' ie for the study is incorporated in 
this Appendix to indicate the focus of the research on price filing 
operations in individual industries. It was originally contemplated 
that available evidence for all the industries in the sample would be 
_ assembled and organized in a series of case studies reflecting the 
operation of price filing against the industry background and code 
setting. 

These case studies were to have follcv/ed the work outline 
as here presented; with the final report representing a cross-analysis 
of evidence to focus experience for purposes of comparison and gen- 
eralization. 



9826 



- 715 - 

Limitations of time and personnel made it necessary to abandon 
this procedure, except for a few industries. Consequently, the work 
sheet data were assembled and indexed in accordance with the attached 
outline, but the final report was written directly from the indexed 
work sheet rather than from complete and integrated case studies. 

The disadvantages of this method are numerous and fairly obvious 
in character. The significance of much qualitative evidence on price 
filing appears only through a survey of the entire industry and code 
situation. The interdependence of methods of filing, administration 
and industry organization, and the resultant experience, has been in- 
dicated throughout the report. 

The possibilities for over-all comparisons and appraisals were 
distinctly limited by this method of treatment. It is at best, ex- 
ceedingly difficult to identify and isolate the effects of price 
filing. In the aosence of such integrated case histories, it becomes 
even less "oossible to discern casual and functional relationships be- 
tween component elements of price filing and other regulatory and 
industry factors. 



9326 



-716- 



^:- 3L i::i::xr- :.: outlihe jo?, opsk p~-ice ftvestigatioi 1 

(lndivid ni .a.l industry abroach - organization of 
material in finished report '-ill -orobably "be 
along different lines) 



P^-E-CODE TTTSTCT.Y 0? ??.ICE FILI1I0 

I. Industry and regulatory setting. 

(See "Some Partial Tyoes .'. Sources of Inf or.nation for Us^ by 
On en Price Group" for indicated pertinent data.) (o. 744 below) 

II. Inception of -irice filing experiments 

A. Functions intended to "be achieved - "both expressed and 
implied - e*g. , 

1. Eliminate ignorance on -mrt of buyers and/or sellers 
a. Misrepresentation anc? resulting suspicion 

2. Eliminate "confusion" in market and Tornote comparability 

of -orice and terms 



9826 



-717- - 

3. Lessen intensity of erratic or rapid fluctuations 

4. Harrow the range of competitive prices "by eliminating quotations 

below a profitable level 

5. Lessen discrimination in favor of large buyers- 

6. Use as device for actual price control at a specific time and 

place 

7. Use as device to change relative competitive positions of units or 

groups in the industry 

8. Police private agreements already existing, etc. 

9. Complement and complete existing forms of control 

B. Specific industry problems that may have led to adoption of plan, e.g., 

1. Declining market 

2. Excess capacity 

3. Instability due to technological change or shift in industry 

4. Instability due to varied distribution methods 

5. Destructive price cutting from other causes 

6. Unusual buyer dominance 

III. Agency undertaking price filing activities 

A. Trade association 

1. Scope of membership and activities, e.g., 

a. Location regional associations 

b. product divisions 

c. National associations 

2. Administrative set-up as related to operation of plan, e.g., 

a. Staff personnel-executive secretary 

b. Procedure as to confidential handling of reports, etc. 

B. Non-association agencies, e.g., 

1. Government bodies 

2. Management engineers ' 

3. Trade journals 

IV. Price filing plans developed 

(See Section V of outline for code period for expanded detail of 
analysis to be applied if experiments are elaborate in character) 

A. Types of reporting 

1. Past transactions only 

2. Current prices 

3. Future price reporting (with waiting period) 

B. Types of information filed, e.g., 

1. Price and/or terms and conditions of sale 

2. Prices plus general data on production, shipments, stocks, 

3. Information on pricing practices, e.g., freight allowances 

4. Products and areas covered 



-718- 
C. Requirements as to filing and dissemination 

1. Forms used, etc. 

(See V-G of outline on code period) 

V. Sanctions and controls employed 

A. Moral suasion, e.g., 

1. Group opinion 

2. Appeals to self— interest 

3. Economic sanctions, e.g., 

1. Liquidated damage agreements 

2. Threats of hovcott-of supply, and/ or demand 

3. Black lists - white lists 

4. Threats of law suits, prosecution 

5. Threats of predatory price cutting 

6. Refusal to grant patent licenses 

C. Procedural checks and supervision 

1. Reports of invoices, orders, etc. 

2. Inspection of hooks, etc. 

VI. Performance and reasons for non-perf ornance under ;olan 

A. Actual scope of filing as to areas and products 

B. Participation of members 

C. Completeness of data filed 

D. Sources of difficulty in operation - e.g., 

1. In industry, product or competitive set-up, e.g., 

Non-comparability of ite'is, too many small units, 

2. In administrative technioue, e.g., 

distrust of code authority 

3. In compliance activities 

4. Legal or other difficulties 

E. Remedies employed to overcome difficulties encountered 

F. Subsequent history of plan, e.g., 

1. Abandonment - reasons 

2. Modification of original lolan 

VII. Status of price filing experiments with respect to government regulation 
A. General position under anti-trust laws and deaisions, i.e., 



-719- 

1. Precedent 

2. Briefs 

B. Inroact of courts, Federal Trade Commission, Department of Justice, on 
price filing plans used, e.g., 

1. Prosecutions, cease and desist orders, consent decrees 

2. Findings on complaints and investigations 

C. Encouragement or discouragement of voluntary activities, e.g., 

1. Trade practice conferences 

2. Other government participations, Department of Commerce, 

3. Experience with War Industries Board, if any 

VIII. Attitudes 

A. Of participating members 
1. Minority groups 

B. Of non-participating members 

C. Of customers 

D. Of administrative agency 

IX. Economic Results of Price Filing plans 

(See Section XI. in outline for code period for detail) 



CODE HISTORY OF PRICE FILING 

I. Industry and regulatory setting immediately -prior to code 

(See "Some Partial Types and Sources of Information for Use 
by Open Price Group" for pertinent data) 

A. Effects of depression 

B. Degree of industry organization at this time 

C. Comparison with period of any pre-code urice-f iling experiment 
II. Industry Program for price filing as submitted 

A. Nature of proposals 

3. Reasons to support need for device 

C. Functions intended to be achieved 

(See detail under II-A in outline for Pre-Code History) 
9326 



-780- 

D. Legal cronsiderations involved 

E. Proposals discarded before submission to NRA 
1. Seasons for discard 

III. Controversies arising during code-making period 

A. Between members of industry, e.g., 

1. Objections of small units 

2. Objections of members using special selling practices 

3. Objections of other minority groups 

B. Between members of industry and customer groups, e.g., 

1. In distributor relationship, e.g. 

a. Influence on position of privileged middlemen 

b. Facility for resale price maintenance 

c. Fear that distributors' margins would be lowered 

d. Technical objections to details of plan, e.g., 

waiting period, suggested customer classification 

2. In consumer relationship, e.g., 

a. Influence on position of privileged large buyers 

b. Piye,. excessive prices 

c. Reduced incentive to lower prices 

(1) ror particular transactions 

(2) ..For long- run period 

d. Technical objections to details of plan, e.g., waiting 
•period, suggested customer classif ication 

C. Between industry and a competitive industry, e.g., 
1. Fear of adverse effects of price control, e.g., 

a. On raw materials of another industry 

b. In diverting sales to a substitute product 

D. Between industry and N.R.A. , e.g., 

1. General Itf.R.A. policy 

2. Objections of consumers 1 , labor, industrial advisory boards 

3. Objections 0^' legal division and research and planning division 

E. Changes effected in original proposal 

1. Provisions added 

2. Provisions deleted 

IV. Relation of open price pro\ r ision to other code provisions considered 
and/or accepted 

9f!V, 



A. Compromise after efforts for minimum prices, -production control, eto. 

B. Other provisions supplementing, implementing or modifying open 
price provision 

C. Open price provision as a device to implement other regulations 
of prices, credit terms, allowances 

V. Analysis of open price provisions as approved 

A. Establishment of open price system 

1. Mandatory under code 

a. At fixed date 

b. At specified date 

2. Optional under code 

a. To be adopted by majority vote of members 

b. At discretion of code authority or divisional body 

(l) With administrative approval 

3. Right to suspend or abandon plan 

a. In whole or in part 

b. At discretion of code authority 

c. By vote of members 

4. Areas and divisions included 

B. Agency to administer price filing 

1. Agency designated 

a. Code authority 

b. Trade association 

c. Executive secretary of code authority or trade association 

d. Confidential and disinterested agent - e.g., management 

engineers, etc. 

(1) Named in code 

(2) To be appointed by code authority 

(3) Appointed or approved by administrator 

e. Government or other agency 

f . Regional or divisional agencies 

2. Powers and duties imposed by code 

a. General powers that might affect price filing, e.g., 
insoectron of books 

b. Specific powers over price filing 

(1) To issue rules and regulations 

(2) To prescribe form of schedule 
qop_ (3) To investigate and void prices 

(4) To select products for filing 



-722- 

(3) To investigate and void prices 

(4) To select products for filing 

c. Obligation not to disclose confidential filings 

(1) To code authority 

(2) To other members 

C. Compulsion on individual members to file 

1. All members raus t file 

2. Member nay file 

3. Members may abide by lowest price o:a file if they desire 

a. After original filing 

b. At all times 

4. Members exempted from filing 

5. Requirement that filings must be withdrawn and new filings made 
at stated intervals 

D. Transactions'exenrpted from regular filing requirements, e.g., 

1. With mail order houses 

2. With chain stores 

3. With governments r ^„ 

4. With other large buyers 

5. With other types of buyers 

6. For export purposes 

7. For own use or inter-industry sales 

E. Products subject to price filing requirement 

1. All products 

2. Goods customarily sold from price lists 

3. Code authority to prescribe 

a. With administrator's auoroval 

4. Determined by vote of members 

5. Standard products only 

a. Code authority to define standard 

6. Standard and selected non-standard products 

a. Code a\ithority to determine 

b. Majority vote to determine 

c. Criteria set by code 

7. Other inclusions and exclusions - e.g., job lots, custom 
products, 

8. No reference in code to kinds of products included 



93^6 



-723- •' 

Information which must toe filed 

1. Enumerated in code 

a. Prices, terms, rates, tariffs, price lists, price 
terms, net price lists, toase price, list prices, 
schedule of prices, all conditions of sale, fixed 
terms of payment, schedule of rates, individual 
pricing practices, all terms of sale 

to. Credit terms, discounts, discount sheets, cash discounts, 
trade discounts, duality discounts'." 

c. Allowances, freight allowances, service allowances, 
trade-in allowances, advertising allowances 

d. Delivered prices; f.o.to. factory prices 

e. Prices, trials, rebates, premiums, toonuses, free- 
deals, commission, consignment sales 

f . Guarantee policy, sample policy, returned goods 
policy 

g. Names of customers and their classifications 

(1) Availatole to industry 

(2) Withheld from industry 

h. Buyer's name (past transactions) 

i. Invoices 

j. Estimating schedules, 

2. Code authority may alter requirement 
a. With administrative approval 

3. Code authority to prescritoe information required 
a. With administrative approval 

4. Code authority to prescritoe form 
a. With administrative approval 

5. Information on past transactions only 
Requirements as to filing and dissemination 

1. Numtoer of copies of price lists to toe filed with agency 

a. Enough for distritoution to all memtoers 

to. Enough for distritoution to all memtoers and customers 

c. One copy 



93*36 



qn;?fi 



-724- 

(1) Central agenc'y makes copies distribution 

(2) Central agency makes summary for distribution 

(a) Code prescribes nature of suiamary. Specify 

2. Piling of price changes 

a. TJord "filing" defined so as to require entire new price list 
for each instance of price change 

b. Word "filing" defined so as to require change only of 
part of list affected. 

c. Other definitions of filing. Specify. 

3. Requirements covering dissemination by central agency to members 

a. Distribution mandatory 

b. All filed data to be forwarded to all members 

(l) Members to bear expense 

c. Composite or individual price lists 

d. Ho provision for distribution but data available for inspec- 
tion by members 

e. Dissemination only to producers of similar products 

f. Dissemination only to members of same region 

g. Dissemination only when specifically requested 
h. Dissemination only of upward revisions of prices 
i. Dissemination only of lowest price on file 

j. Code authority ;iven complete discretion concerning 

data disseminated to members 
k. Data neither distributed nor available to members 

4. Requirements covering dissemination by central agency to customers 

a. Notice of all price changes to be forwarded 

(1) Only when specifically requested 

(2) Only to those paying cost 

(0) Simultaneously with distribution to members 

(4) To members upon filing and to customers on effective date 

b. Data open to inspection 

(1) By certain classes of customers only 

(2) Only of one item at a time. Specify 

c. Degree of dissemination to custoners discretionary 

with code authority 

d. No provisions covering dissemination to customers 

5. Requirements of dissemination by members themselves 

a. Members upon each price change must distribute copies 
(in addition to central filing) 



-725- 

(1) To members 

(2) To members and customers 

b. Members must "publish" price changes in addition to 
filing 

6. Means and speed of dissemination to members required of 
central agency. 

a. By mail 

b. By telegraph or equally speedy means 

c. "Immediately" or "promptly" 

d. Trade periodical 

e. Other provisions. Specify 

f. Ho provision covering this point. 

7. Provision forbidding release to one member before all 

8. Provision forbidding inclusion or interpretations or com- 
ments by central agency in dissemination of information 

H. Provisions relating -to identification of seller end buyer 

1. Code requires agency to include seller's name when dis- 
tributing filed prices 

2. Code forbids inclusion of sellers' name 

3. Optional with code authority whether or not seller's name 
disclosed 

4. Symbols to be used to identify sellers 

5. No provision concerning identification of seller 

6. Buyer's name withheld from other members (Applying only 
when past transactions reported) 

I. Waiting periods and effective date of filing 

1. No waiting period required 

a. Prices not effective until filed 

(1) Effective upon receipt by agency 

(2) Effective only when agency's acknowledgement 

received 

b. Prices changes effective at once even before filing 

2. Code authority may establish waiting period though code 

required none 

a. Specify under what conditions, if any, prescribed 

3. Waiting period after filing required before price becomes 

effective 

a. On all price changes 

b. Only when prices are lowered 



■982E 



•738- 



c. Only when prices are raised 

d. Before paying of rebates, allowances, commissions 

e. Before other special actions. Specify 

4. Waiting period may "be waived 

a. To meet non-member competition 

t>. If newly filed price is not lower than the lowest of 
the already filed prices of other members 

5. Length of required waiting period 

a. Specify number of days of waiting period 

b. Code authority may lengthen waiting neriod 

(1) With administrator's approval 

(2) Other conditions. Specify. 

c. Code authority may shorten waiting period 
(l) -Specify conditions, if any 

d. Waiting period may be shortened to meet revision by 

another member 

(1) Effective on same date as first filer's price 

(2) Effective on same date as first filer's price 

if not below his price 

(3) Effective on same date as first filer's price, 

if revised filing made before certain part 
of waiting period has elapsed. Specify part. 

e. No provision whatsoever for shorter waiting period 

6. Procedure on price changes if waiting period required 

a. Declines retroactive on shipments during waiting period 

b. Orders for delayed shipments may be accepted at existing 

price during waiting period before an advance 

(l) Maximum number of days ahead 

c. Other variations. Specify. 

J. Prices must be in effect for specified minimum period 
bafore new -orice nay be filed 

1. Specify number of days 

2. Minimum period for downward but not upward changes 

3. Minimum period for upward but not downward changes 

4. Exceptions to rule. Specify 

5. Limitation on number of price changes in a given period. 

Specify. 

E. Pi7 ' 1 price and effoctive prices 



-727- 

1. Member must sell at filed price terms only . 

2. Member may sell above filed price terms 

a. In certain cases only. Specify 

3. Ma'"' sell below in certain instances 

a. At a lower price filed by another member 
(l) After reporting to Code Authority 

b. Other instances. Specify 
L. Area of uniformity of price 

1. Member permitted to file different prices for different 

regions of the country 

2. Code or Code Authority sets up regions for price 

reporting purposes, check which one 

a. Member of one region, when selling in another region, 
may not sell below lowest price filed by members 
of latter region 

3. Specific provision requiring uniform prices in all regions 

4. No provisions concerning variations as between areas 

M. Destruction of price records by central agency forbidden 
without Administrator's consent 

N. Substitute for filing with central agency 

1. Prices must be posted 

a. May not sell below posted price 
(l) Specify any exceptions 

b. Prices must be in effect specified period before 

being revised. Specify number of days. 

2. Members must exchange prices directly (and do not file 

with central agency) 

a. May not sell below prices reported 
(l) Specify any exception 

b. Specify when price changes effective 

c. Prices must be in effect specified period before 

being revised. Specify number of days 

d. Revised prices must be sent to customers also 



9836 



-72.8- 

3. Publication in trade periodical used in place of central 

filing system 

0. Bids outstanding at tine of revision of filed price list 

1. When prices increased 

a,. Bid must be increased also 

b. Bid must be registered but need not be increased 

2. When prices decreased 

a. Bid mas'- be decreased accordingly 

b. Bid may not be changed 

P. Pilings required ty other trade practice provisions, e.g., 

1. Premiums 

2. Prizes 

,3. Special services or favors 

4. Price concessions, e.g., 

a. Allowances 

b. Commissions 

c. Rebates 

5. Deviations from credit terms 

6. Sale of seconds, sub-standard goods, trade-ins, etc. 

VI. Functional aspects of other code provisions directly integrated with 

price filing provision as written, e.g., 

A. No selling below cost provision 

B. Minimum prices or fixed elements of prices 

C. Provisions governing transportation allowances 

1. Freight equalization 

2. Delivered or F.O.E. prices 

3. Zoning or anti-dumping, etc. 

D. Uniform or limited cash discounts 

E. Uniform or limited quantity discounts 

F. Mandatory classification of customers 

G. Mandatory differentials or mark-ups 

1. Between trade factors 

2. Between base products, etc. 

H. Resale price maintenance 
9836 



-729- 

I. Uniform contract 

J. Advertising allowances 

VII. Operation of price filing plan as modified and administered 

(This section should record all variations between the code provision 
as written (analyzed in Section V) and as actually operated) 

A. Code Authority or other agency administering plan 

1. Organization, e.g., 

a. Committees, staff 

b. Procedure, by-laws 

c. Delegation of powers 

d. Cooperative arrangements with trade association 

e. Methods of financing price filing activities, pro- 

portion of total budget, etc. 

2. Rules and regulations, instructions and suggestions 

a. Purpose and authorization 

b. Occasion, issues and controversies, e.g., 

persons involved, economic or administrative 
developments leading to change 

c. Adoption and dissemination 

d. Substance, e.g., 

(1) Prescribed reporting form, e.g., 

(a) Contents of form 

(b) How issued 

(c) Predetermining or restrictive nature 

(d) Changes made 

(2) System of product specifications or standards ' 

(3) Prescribed terms and conditions of sale to be filed 

(4) Prescribed customer classifications and/or trade 

factor differentials 

(5) Prescribed elements of cost or standards of accept- 

able costs or prices 

(6) Rules as to challenge, rejection and investigation 

of prices filed 

(7) All other rules and regulations, instructions and 

suggestions 

3. Procedures instituted in pursuance of code powers or with- 

out specific authorization, e.g., 

a. Practices as to form and promptness of dissemination 

of information filed 

b. Practices discriminating between members and buyers or 

between classes of members and/or buyers, as to 
form, completeness, promptness, e.g., 

' 9836 



-730* 

(1) Premature or partial disclosure of nrice 

filing 

(2) Delay or withholding of prices 

c. Practices as to closed "bids, refiling of prices, etc. 

4. Amendments considered and/or presented to NRA 

a. Occasion, issues, controversies and procedure 

5. Exemptions and stays 

a. Occasion, issues, controversies and procedure 

6. Interpretations and explanations 

a. Occasion, issues, controversies and procedure 

7. Other actions, e. g. , 

a. Collusive or coercive activity 

b. Special assessments for price filing 

c. Assumption of powers not conveyed by code, e.g., 

(l) Requisitions of records, invoices, as a means 
of checking filed prices against cost or 
othensrise 

8. Sanctions used to secure compliance with Code Authority 

Requirements (i.e., 2, 3, 5, 6, and 7 above). 

a. Moral suasion 

b. Threats of boycott 

c. Threats of prosecution 

d. Liquidated damage agreements 

c. Threats of predatory price cutting 

f . Comparative use in pre-code and code periods 

B. N.R.A. Administration 

1. Supervision and control of code authority actions. (For 
actions listed under 2, 3, 5, 6 and 7 in VII A there 
should be answered the following) 

a. What was the date of action? 
.b. Was the action sanctioned by the code provision? 

c. Were proposals ever submitted to N.R.A. for approval? 

For review? For record? 

d. Were any of them specifically disapproved prior to 

adoption? 

e. Were any of them reviewed and cancelled? Why? By 

what method (e.g., formal order, letter, deputy, 
division administrator)? After how long in op- 
eration? 



9821! 



-731- 

f. Did any of these actions lapse or disappear without 
N.R.A. initiative? Why? After how long a time? 

2. Amendments 
a. Occasion, issues, controversies 

3. Exemptions and stays 
a. Occasion, issues, controversies 

4. Interpretations and explanations • . 

a. Occasion, issues, controversies 

(List dates of all actions under 2, 3 and 4 above 
pertaining to open price plan. Develop for each the 
occasion, issues and controversies involved. Indi- 
cate for each the nature of -orior or subsequent 
action "by the code authority, if any. - e.g., refus- 
al to approve an excemption requested "by a member of the 
industry; recommendation that a particular exemption or 
interpretation be made; the issuing of interpretations 
or granting of exemptions which have been approved by the 
Adminiatration; the granting of an exemption which has 
been denied by the Administration, Etc.) 

5. Special forms of N.R.A. administration, e.g., 

a. Investigations, warnings 

b. Assumption of price filing function 

6. General administrative or executive orders, e.g. 

a. Stay on waiting period 

b. Administrative order X-48 

c. Executive order 6767 

III. Compliance and enforcement 

A. Agencies established by code authority for compliance purposes 

B. Record of cases handled by code authority and its agencies, 

including Trade Practice Complaints committee and other 
bodies 

C. Compliance procedure under Trade Practice Complaints Committee 

or other agency of. code authority, e.g. 

1. In handling complaints, e.g. 

a. Concealment of names 

b. Opportunity for hearing ,.■ 



9826 



-733- 

2. In initiating complaints, e.g. 

a. Evidence 

b. Complaint forms 

5. Sanctions employed, as to kind, frequency of use and 
relative success 

4. Methods of appeal, e.g. 

a. To higher "bodies in the industry 

b. To H.R.A. 

5. Informal handling of compliance problems 

6. As compared with procedure and attention to other trade 

practice complaints 

<7. As compared with procedure established in code or oursuant 
thereto 

D. N.R.A. compliance activities 

1. Record of cases handled 

2. Procedure 

3. Appraisal of effect of 1-J.R.A. comoliance activities 

on efficacy of device 

4. Development of legal approach to compliance in open price plan 

5. Cases referred for court action 

E. Measure of compliance obtained, e.g. 

1. Volume and nature of complaint?- received, adjusted and on hand 

2. Devices used to evade, without legal penaltjr, the' price 

filing provision 

3. Reports of field investigators 

4. Analysis by areas or type of establishment 

5. As compared with other provisions of the code 

IX. Performance and reasons for non-performance, e.g. 

A. Actual scope of filing as to areas and products 

B. Participation of members 

C. Completeness of data filed 

D. Sources of difficulty in operation, e.g. 

1. In industry, product or competitive set-up, e.g., 

non-comparability of items, too many small units, 

2. In administrative technique, e.g., distrust of code 

authority, 

3. In compliance activities 

4. Legal or other difficulties 



-733- 

X. Attitudes and opinions of interested parties, e.g., trade associa- 
tion, code authority, N.R.A. deputy, advisory "boards, Research 
and Planning, Legal Division, Administration Members, Members 
of the industry, distributor customers, industrial and ultimate 
consumers. 

A. At time of adoption of the provision, as to: 

1. Function of the provision and the adequacy of the one 

adopted 

a. Objection of the provision 

b. Place of the provision in relation to other 

provisions in the code affecting prices 

c. Scope: inclusion or exclusion of middlemen 

2. Authorization of Act as to relaxation of Anti-Trust Laws 

B. During operation of the code, as to: 

1. Function of the provision 

2. Proper role of code authority, e.g. , as administrative 

agency only, as director and leader 

3. Proper role of N.R.A. in supervision and control, e.g., 

deputy, administration member 

4. W.R.A. policy announcements, e.g., X-48, Office Memorandum 

228, Executive Order 6767 

5. Performance of members of the industry 

a. Compliance 

b. Cooperative or destructive efforts 

6. Dominance of code authority or other group on prices filed 

and conformance of other members to them 

7. Sanctions employed 

8. Adequacy of the provision 

a. In coverage 

b. In looseness or loopholes permitting coercive practices, 

etc. , evasion or identification or prices 

c. In terms of support from other provisions 

9. Success of the provision in terms of its declared functions 

10. Economic effects 

(As listed in Section XI of Outline for Code Period) 

C. At termination of the code, as to: 

1. Success of the code, in terms of its functions 
9P,?.r, 



2. Economic effects 

3. Desirability of continuance 

a. In what form? 

b. Under what authority? 

c. With what degree of compulsion? 

XI. ECONOMIC RESULTS OF OPEIT PRICE FILI1IC- , in Terms- of Functions and Per- 
formance 

A. Elimination of ignorance on oart of buyers and, sellers 

1. To what extent was publicity actually achieved, e.g;, 

(a) Did each member of the industry receive all price in- 
formation or only that pertaining, to the products manu- 
factured by him and to the classes of customers served 

by him? : ■ • 

(b) Did the Code Authority. or its agency combine or other- 
wise, edit the price filings before dissemination to 
members or to customers? If so, in what way, and to 
what extent did this limit the actual price publicity 
afforded under the plan? 

(c) Was price informa.tion limited to the highest filed price, 
the lowest filed price or to partial information of any 
other character?. 

(d) Has the Code Authority or its agencies exempted members 
from filing information covering transactions with cer- 
tain classes of buyers, sucji as mail order houses', chain 
stores, governmental agencies, etc.? If so, specify. 

(e) How has the resulting publicity of price information com- 
pared with the publicity of prices prevailing before the 
open price plan? To members of the industry? To cus- 
tomers? 

(f) What organized sources of price information, such as 
trade journal ojuotations, were available to members prior 
to the introduction of the open price plan? To customers? 

(g) Has the failure of the code to make adequate 'provision 
for dissemination of price v infarmation to customers pre- 
vented any real elimination of ignorance? 

(h) Where the code provides that price lists shall be made 
"available" to customers, what has been the practice of 
the Code Authority or its agencies in this regard? 

(i) Where the code provides that price lists shall be made 
"available" to customer, to what extent have customers 
availed themselves of this privilege through inspection 
or through requests for filed prices? 



-735* 

(j) Have customers received all price information or only 
that part pertaining to their own particular classi- 
fication? 

2. What have "been the results of the increased publicity of 
prices and price terms? 

(a) What evidence is there that price publicity has had a 
tendency to diminish competitive risks "by eliminating 
certain types of business uncertainty? e.g., as to 
prices charged "by competitors? as to customer classi- 
fications followed "by competitors? Through increased 
stability of prices? Through provisions for adjusting 
prices on forward contracts? 

(b) Has the open filing of prices of products used as raw 
materials in other industries had an effect on the sta- 
bility or level of costs for such materials? If so, 
has this effect been reflected in price changes in the 
product of the industry buying the materials? 

(c) Has publicity of prices resulted in any change in buying 
practices, such as the elimination of bid shopping, of 
speculative buying, changes in the size of inventories, 
length of advance contracts, etc. 

(d) Has it enabled members of the industry to combat cus- 
tomers' misrepresentation of competitor's prices? 

(e) Has the publicity or stabilization associated with the 
plan resulted in strengthening, stabilizing or increasing 
the production or prices of a sup-p lying industry, i.e., 
in industries where we ale prices in the finished product 
react on the prices of raw materials? 

B. Elimination of confusion and the promotion of comparability and uni- 
formity of price quotations and terms and conditions of sale 

1. To what degree were terms and conditions of sale uniform prior 
to the adoption of the open price plan? Prior to the 
depression? To what extent were filings of terms and 
conditions uniform when the open price plan was first 
put into operation? To what extent were they uniform 
just prior to the termination of the codes? 

(2) Have open prices promoted comparability and uniformity, e.g., 

(a) Through the detail required in the reported form pre- 
scribed by the Code Authority? 

(b) Through a system of product specifications prescribed by 
the code or Code Authority for the purposes of price filing? 

(c) Through the requirement by the code or the Code Authority 
of a uniform sales contract? 



983f 



-738- 

(3) To what extent has the -..rice filing; plan, or the rules 
and regulations established pursuant thereto, altered or 
modified previous industry practice as to terns and con- 
ditions of sale? 

(4) Has the requirement of price filing acted to encourage a 

lack of uniformity in terms and conditions of sale to counter- 
act a uniformity in the nominal price i.e., have differences 
in real price tended to take the form of filing varying terms 
and conditions of sale or in fine distinctions between prod- 
ucts rather than differences in the nominal price? 

(5) Has standardization effected by a price filing provision been 
a factor in price stabilization and price uniformity? 

(6) Does standardization developed under an open price plan tend 
toward certain ideal standards, (i.e., quality or simplifica- 
tion) or toward the identification and price classification 
of existing products, or toward those of the most effective 
competitor in the industry? 

C. Changes in the freruenqy and abruptness of fluctuations in -price levels 

(1) Do price changes follow changes in volume of production or 
volume or sales as closely under the open price plan as prior 
to its adoption? 

(2) Do prices under the open price plan change more or less fre- 
quently than formerly? 

(3)' Do prices under the open price plan change more or less violent- 
ly (i.e., are the price changes greater in magnitude) then 
formerly? 

(4) What has been the effect on frequency of price changes of a 
requirement that filed prices must remain in effect for a 
certain period before a new price may be filed? 

(5) What tendenc Tr is there for price changes to be limited to the 
meeting of competition of a lower filed price? To undercutting 
below that price? 

(6) Has a trend toward uniformity in terms and conditions of sale 
under open price filing led to more frequent changes in the 
list price of products than formerly? 

(?) Did price changes previously take the form of changes in the list 
price pr in the changes in discounts or other conditions of sale? 

(8) Have price changes under the open price plan been through a series 
of small changes brought about by several re-filings or have 
changes been centered in single changes upward or downward? 



noor 



t737~ 

(9) Has the publicity afforded, "by an open price plan led to the 
elimination of erratice price movements arising from rumored 
price changes on the part of one or more members of the in- 
dustry? 

D. Maintenance of nrices at high levels 

(1) Through reduced incentives to lower prices, for particular 
transactions, or for long-run period 

(a) Is there any evidence that prices have been maintained 
at a higher level under an open price plan because the 
reduction of a price to secure a. particular order or 
class of order would result in the lowering of the price 
for all other customers in that category? 

(b) Is there any evidence that the knowledge that price re- 
ductions will immediately be known and followed by com- 
petitors has deterred a member from filing a reduced 
price even when such a reduction was economically 
possible? 

(2) Through follow-the-leader practices to raise prices to more 
profitable levels 

(a) Have members tended to follow the leadership of 
dominant members in raising prices? 

(b) Have upward changes been more frequent, and of greater 
magnitude than downward changes? 

(c) Have re-filings to meet upward changes occurred more 
rapidly than in the case of downward changes? 

(d) Did prices advance to any marked degree in anticipa- 
tion of open price filing or immediately thereafter? 
If so, have these prices been maintained or increased? 

E. Reduction of prices to unprofitable levels through increased price- 

cut t ing 

(1) Has the open price plan tended to lower the going level of 
prices to the level of the lowest cost producer or to that 
of the traditional lowest pricing member? 

(2) Have prices been lowered by the tendency of sellers to under- 
cut published prices? To what erctent have no selling below 
cost provisions been used to stop this tendency? 

(3) Was price cutting more or less prevalent than before the 
open price plan? 

(4) To what extent is a provision against sales below cost or 
destructive price cutting necessary? 



9826 



-738- 

(5) To what extent arc the provisions in Office Liemorandum 
228 a satisfactory protection against destructive price 
cutting? 

P. Narrowing; of the range of competitive -prices by the elimination - 
of quotations "below a profitable level 

(1) What evidence is there that price publicity has had a 
tendency to narrow the range of competitive prices which 
have prevailed in the past? 

(2) Has this narrowing of the range of competitive prices 
occurred through the elimination of quotations "below a 
profitable level or through the elimination of t he higher 
quotations previously existing in the industry? 

G. Effect upon the maintenance of resale prices 

, (l) Has the establishment of uniform trade discounts in con- 
nection with open price plans led to an increase in resale 
price maintenance? 

(2) What' effect has the failure of the price filing plan to 
include middlemen had in making re-sale price maintenance 
less possible by those manufacturers having their own re- 
tail outlets? Selling direct? 

(3) Has resale price maintenance been furthered by the practice 
of filing the names of distributors entitled to certain 
customer classifications? 

H. Use of the device for temporary control of price movements 

(1) Has the open price plan been used to further control over 
price movements in the industry by preventing changes without 
advance notice? By delay in distributing or accepting 
filed prices? 

(2) What evidence is there that cost provisions in the code have 
been used, either before or after approval, as a club against 
members filing low prices? How was this accomplished? 

(3) To what extent has customer classification aided in control 
of the price structure? 

(4) Has control of prices on particular transactions been effected 
by comparison of bids before submission, or by the use of a 
bid-checking bureau? 

(5) Has control over the price structure been furthered by the 
requirement either in code or through Code Authority that 
filed prices must include certain fixed or suggested dif- 
ferentials, charges or other elements or price? 



.QRPr, 



-739* 

(6) In what respects have open price plans gone "beyond the 
function of publicity of prices to control of prices or 
pricing practices? 

I. Use of the device to -police private agreements 

(1) Did members of the industry exchange information regarding 
prices or terms to be filed under an open price plan "before 
it was put into effect? 

(2) Were the prices first filed under the code uniform? 

(0) Have simultaneous changes of price filings occurred after 
the plan was set up? 

(4) Is there any evidence that filed prices "bear a fixed rela- 
tionship to a suggested cost-floor, an existing price agree- 
ment or any other established base? 

(5) Is there any evidence of efforts to keep members priees in 
line with a predetermined schedule, e.g., by systematic 
challenges of prices below that schedule? By pressure upon 
a member to raise a filed price? By threats of boycott? 

Of citation for code violation? 

(6) Is there any evidence that members of the industry have 
agreed to follow the price leadership of one or more members 
in the industry? 

(7) To what extent does price uniformity occur above the lowest 
price? What evidence is there to show any direct relation- 
ship between such uniformity and collusive activity of one 
kind or another? 

(8) To what extent has price filing been used as a cloak or a 
device to implement collusive price? 

J. Alterations in the -position of favored buyers or classes of buyers 

1. by the elimination of secret rebates or secret con- 
cessions 

2. by lowering of previous differentials 

(1) Was the granting of secret rebates or special concessions 
prevalent in the industry prior to the adoption of the open 
price plan? 

(2) Is there any evidence to indicate that such rebates have per- 
sisted or have been eliminated under the open price plan? 

(3) What other forms of discrimination by the individuals or 
special classes of buyers existed prior to the open price 
plan? 



9826 



(4) Has the open price plan served to eliminate these forms of 
discrimination? 

(5) What evidence is there that price publicity has had a 
tendency to stimulate the use of indirect or secret forms 
of price. competition in cases where it is specifically 
required that all terms and conditions of sale "be reported 
in price lists? Where it is not so required? 

(6) What special terms, services and favors still appear as 
forms of discrimination between customers of the same class? 
Between customers of different classes? 

(7) Has the failure to extend the price filing requirement to 
certain types of transactions such as chain stores, mail 
order houses, permitted the continuance of favored treat- 
ment? When such transactions are covered by the price 
filing plan are special prices filed for this class of 

. buyers? What changes have actually "been effected in the 
position of these "buyers? 

(8). Has the publicity concerning price differentials to different 
classes of trade led to a lowering of previous differentials 
for any class of consumers or distributors?-i.e. through 
pressure from less favored groups? Through uniform treat- 
ment by members? 

(9) Have previous classifications of customers and the trade 

factor differentials applying to such classifications been 
altered by the establishment of a uniform classification 
established by the Code Authority? 

K. Changes in the relative competitive -positions of units or groups 
in industry 

(1) Has publicity of prices resulted in a shift in the volume 
of sales between members of the industry - through customer 
knowledge of cheaper sources of supply? Through actual 
changes in the relative prices of members through meeting 
competition? Through the shifting of customer preference 
under the existence of uniform prices? 

(2) Have previous price differentials disappeared - e.g., 
between large and small members? Between different areas? 
Between known and unknown brands? Between inferior and 
superior quality goods? 

(3) Has this been due to increased price competition or to 
the nature of the price filing requirements themselves 
as regards product classification, etc.? 

(4) Has the failure of the code to include middlemen under 
the jurisdiction of the code proved discriminatory against 
members of the industry performing their own distribution 
functions when the latter are required to abide by filed 

982G 



-741- 

prices? In what way? What means were, or could be used 
to eliminate this difficulty? 

(5) Is there any evidence that open price plans, alter the 

focus of price leadership in the industry? i.e., from the 
small unit to the dominant producer, or vice versa? Does 
it, on the other hand, strengthen the influence of a 
former price leader? 

L. Diversion of sales to substitute products 

1. Through filed prices becoming a target for under- 
selling on competitive products 

2. Through diversion in demand because of increase 
in price 

(1) Have there been any diversion of sales to substitute prod- 
ucts because the mere openness of prices have encouraged 
undercutting on competing products? 

(2) Has this undercutting been facilitated by higher prices 
under the open price plan? 

(3) Has diversion of sales been facilitated by inflexibility 
and r estrictive features of the price filing plan? 

M. Use in conjunction with other provisions in the code or other 
merchandising methods existing in the industry 

(1) Has the presence of previous merchandising plans in the 
industry - such as uniform cost figures, discount sheets, 
uniform extras or differentials, contributed to the uni- 
formity of prices under the open price plan? To the 
inflexibility of the parts o"" the total price structure? 

(2) What is the interdependence, in performance and in results 
between open price filing and other price restrictive 
provisions in codes? 

(3) What supplementary provisions covering prices or other 
forms of control are considered necessary to the successful 
operation of the open price plan in terms of its various 
functions? 

Miscellaneous Points of Inquiry. 

(1) Has the existence of a mandatory waiting period discouraged 
individual sellers from initiating price changes because of their anti- 
cipation that such changes would be promptly made by competitors? 

(2) G-ive evidence, if any, that where there is a mandatory wait- 
ing period individual members have been discouraged from initiating price 
changes because of the opportunity furnished competitors to exercise pres- 
sure or to practice collusion. . 

9826 - . 



~?4& : 

(3) Has the Code Authority ir. any wny altered the length of the 
waiting period prescribed in the code or in the absence of a waiting 
period introduced one by instructions or interpretations with respect to 
the time prices shall become effective? 

(4) Has the presence of a waiting period "by offering opportuni- 
ties to meet a competitive price on the same effective date, resulted 
in more uniformity of prices and terms and conditions of sale? 

(5) Is the waiting period an important element in coercive prac- 
tices? Is its absence or presence in the code itself significant or 
can the same results be achieved by administrative tactics? 

(6) Has the identification of sellers names in open price filing 
led to pressure on individual sellers to alter filed prices? 

(7) To what extent is the identification of the seller necessary 
to the functioning of an open price plan? In what types of industries 
(as to products, concentration, size and distribution of units, etc.) 
does such identification become necessary in order to permit comparabil- 
ity of prices filed? 

(8) Did legal sanctions generally replace moral suasion and eco- 
nomic sanctions in the open price plans under the codes, or did they 
only supplement such sanctions? Were the economic sanctions listed in 
Section Y B of the outline for the pre-code period employed to a lesser 
extent under the codes? 

(9) Fnat were the comparative results of plans that provide only 
price filing and those that have collected and utilized more complete 
data on market conditions - production, shipments, stocks on hand, etc.? 

(10) What evidence is there to show the comparative effects of 
mandatory price filing under the codes with participation of the entire 
membership as contrasted with voluntary price filing schemes? 

(11) Is there any evidence to show that previous experience with 
open price filing was conducive to more successful operation of an open 
price plan, either because of the perfection of the mechanics of 

price filing and disseminatio , or b ecause of the attitudes of the members 
participating? 

(12) What have been the deterring factors that kept code price 
filing plans inactive even when authorized, in the code? 

(13) What difficulties or considerations have led to the abandon- 
ment or staying of open price filing in specific cases? Were these 
dependent upon the plan itself, the nature of the industry or products, 
or upon difficulties in administration? 

(14) What differences in the operations and economic results of open 
price plans can be traced to the presence or absence of a trained executive 
secretary or industrial management agency? — e.g., as to smoothness of 
operation, as to compliance, as to control and direction of prices and terms 
and conditions of sale? 

0826 



-743=- 

(15) What criteria have been developed for the review and rejec- 
tion of prices that are "below cost, incomplete or otherwise contrary 
to the open price plan as written? What provisions have "been made for 
appeal in such cases? 

(IS) Is there any substantial evidence of abuse or misuse of 
price information by Code Authority members or others having access to 
price filings before their dissemination to the industry as a whole? 

(17) What procedures have been developed to check violations under 
the mandatory open price plans in codes? Which of these could be recom- 
mended and what safeguards should be present to prevent intimidation 

of members and other abuses? 

(18) Does the type of agency employed have any direct bearing 
on the degree to which price filings are held confidential? 

(19) What criteria of the "successful" operation of an open price 
plan have been set up in the various industries? Which of these can- 
be accepted as a guide to public policy? 

(20) If open price plans are to be adapted to fit individual in- 
dustries, what criteria can be set up from the nature of the industry 
itself? From the past record of the operation of price filing in the in- 
dustry? 

(21) Can causal or coincident relationships be discovered between 
"types of industries and products and types of performance and results^ 
under open price plans? 

(22) In what respects have open price plans gone beyond the func- 
tion of pub licit:/ - into prescribing or regulating pricing practices or 
prices themselves? 

(23) Can open price systems feasibly be confined to the function of 
providing price publicity? What are the limiting factors to accomplish- 
ing this? What are the safeguards - positive and negative, that might 

be necessary to accomplish this end? 

(24) What current information about prices, etc., should be 
available for government supervision of open price plans, e.g., 

(a) Statistical reports 

(b) Administrative reports 

POST-CODE PERIOD OF PRICE-? II I1TG- EXPERIMENT 
I. Attitude concerning continuance of code and open price plan 

A. Code Authority 

B. Industry members 

C. Customer groups 

982G 



-744- 

II. Relation of code price filing provision to changed legal stauts 
under Anti-Trust Law. 

A. Analysis of provisions contrary to anti-trust laws 

B. Necessary changes 

III. Efforts to continue code or related plan for price filing 

A. General appeals to members 

3. Submission of voluntary code 

C. Trade association organization 

D. Liquidated damage agreements 

IV. Price filing plan as continued or reorganized 

A. Agency to administer plan 

B. Scope of plan 

• 1. As to products 
2. As to areas 
5. As to items filed 

C. Requirements as to filing and dissemination 

1. Description of reauirements 

2. Changes from previous code rulings 

D. Other provisions used to supplement O'oen price plan 
1. Uniform terms, etc. 

E. Administration of plan 

1. Points of variance from code plan 

2. Sanctions and controls employed 

V. Performance and reasons for non-performance 
(See outline for code period for detail) 

A. Comparison with pre-code and code periods as to effectiveness 

B. Difficulties encountered 

C. Suggested remedies 

VI. Present and potential economic results 

(See section XI on outline for code period for detail) 

SOi.iE PARTIAL TYPES OP IET0RI.IATI0N 
FOR USE BY OPEIT PRICE GROUP 

A - Descriptive industry materials - Historical -picture of 

1 - Size of industry - (e.g., number of concerns and plants and their 
relative size, volume and value of production) 



-745-- 

2 - Geographical distribution of industry 

3 - Processes -performed by industry 

4 - Product characteristics - (e.g., extent of product differenti- 

ation, standardization, role in production or consumption, perish- 
ability, indlucing style) 

5 — Technological development 

6 - Types of distribution - (e.g., extent of direct selling, use of 

independent intermediaries) 

7 - Financial structure of the industry 

a. Assets and liabilities 

b. Capital and surplus 

c. Income and disbursements 

d. Profits 

e. Financial relationships between members and between 

members and related industries 

f . Bankruptcies and insolvencies 

8 - Competitive structure of industry - (e.g., dominance of large 

members, concerted movements in adoption of trade practices, 
collusive price and production activity, patent controls, relative 
consumer acceptance, concentr tion) 

9 - Exports and imports, tariff protection 

10 - Nature of the market 

a. Elasticity-response of price to changes in supply and demand 

b. Susceptibility of product to changes in supply independently 

of price 

c. Nature of demand; elasticity; dependency on seasonal or 

other occasional factors, etc; dependency on other 
industrial activity or demand, etc. 

11 - Production trends - (e.g., plant and productive capacity, volume 

of production, shipments and inventories) 

12 - Price trends - (e.g., wholesale and retail price levels, changes 

in terms and conditions of sale) 

13 - Cost trends - (e.g., labor, raw materials, overhead, taxes) 

14 - Changes in industry condition durin,;; depression period 

15 - Organization of industry for trade association work, cooperative 

and educational activities 

16 — Impact of the anti-trust laws on the economic development of 

the industr:/ - (e.g., cease and desist orders, merging of assets) 



9826 



- 746 - 

D. Srmrc.es r,f Information and Research Procedure 

Relevant material on price filing experience in each of the fifty- 
seven industries 'was assembled from KRA files. This information was 
trasncribed to work sheets by -investigators, 'and constituted the major 
body of material in this report. These files contained transcripts 
of public hearings, correspondence between NRA, and code authorities, 
industry members, an< other interested parties ;. intra-1 7 RA memoranda ; 
correspondence between code authorities and industry members; protests 
of members and' non-members'- to LIRA or other ■governmental agencies'; 
minutes of code authority and industry meetings; code authority bulletins 
to members of industry; price lists r.nc filings; and uniform reporting 
forms used in some industries. The files ;w.ete characteristically." in- 
complete with respect to the latter types of data, but did contain a 
substantial amount of information of a qualitative and descriptive 
character. In most cases, the files for industries included in the 
sample were covered by investigators of the Price Filing Unit, but in 
some instances work sheets were received from other studies in progress 
in Hal. 

A thorough search was made in NBA files for price filings which 
had been collected by iTRA. The discouraging results of that search 
have been noted in Chapter VI above. 

Usable sets of price filin";s ' a .- . lii able' 'only' for- a few 
industries. Those for the Asphalt .Shin :le and ""loafing and'-for the 
Steel Castings industries have beer analyzed in the case histories 
set forth in Appendices A and 3 -'boye... Those '.for Fiectrical Manufac- 
turing, Fertilizer, and Coffee, anion were used at the respective 
trade association offices, served as the basis for.reports independent 
of this study, but some of the evidence obtained from these filings 
has been incorporated. 

In addition to primary source materials, such as memoranda, 
correspondence, and transcripts, extensive use has been made of certain 
of the Code Histories written under the Division of 'Review and of 
preliminary reports of industry studies. Material from previous 
reports of the Division of Research and Planning and of the Consumers 1 
Advisor;; Bo, rd, and the Federal Tr tde Commission report on Open Price 
Associations has also "Qeen utilized'. 

Field interviews were restricted- to only two* of- the - industries 
in the sample, Asphalt Shingle and Roofing and Steel C- stings. However, 
partial reports of field work done in connection with other studies 
have been made available to the Unit, specifically -for the .Fleetrical " 
Manufacturing, Fertilizer, Coffee, Sr.lt Froducing, Paper Distributing, 
and Agricultural Insecticide- and Fungicide Industrie's-. In none of 
these instances was there any detailed cov ra of the experience with 
open price filing,, nor any general', contact with industry members. 

Sore interviews were also made for this stud; - by the i T RA Field 
Division. A series of questions was' prepared by the Unit , .which the 
field staff submitted to. former local code authority- officials of 
those industries which had been organized on a regional basis. These 
interviews covered eighteen industries, only seven of which were in 



- 747 - 

the code sample. He turns from 195 interviews were reported. A 
typical questionnaire, for the Crushed Stone, Sand and Gravel and Slag 
Industry, is included "below. (*) . 

Two other questionnaires wer nt out in connection with the 
study. (**) One of these was addressed to persons that had been cited 
to the NRA Compliance Division for some violation of the Code provisi- 
sions on open prices. The mailing list included all names on the 
Compliance face sheets for the period between August, 1934, and May, 
1935, except that a maximum of 25 names was circularized for any one 
industry. These names were those of alleged violators; the inclusion 
of a name on a list did not signify that a violation had actually 
occurred. It was hoped through these questionnaires to obtain first- 
hand information concerning the reasons for nonperformance and non- 
compliance with the price filing requirements. The returns were scanty 
in number and contained little information of value. 

A second questionnaire concerning */ne operation and effects of 
price filing plans was mailed in January, 1936, to secretaries or 
executive officers of former Code Authorities for some 330 codes which 
contained price filing provisions. For administrative reasons, the 
mailing list was limited to representatives cf code authorities for 
those industries not otherwise contacted by the Division of Review, 
and hence did not include many of the more important open price codes. 
Also excluded from the mailing list were those industries which it was 
known had not put their filing plans into effect. 

Approximately 70 replies were received, many of which contained 
useful data, chiefly in respect to mechanics and to performance 
under price filing plans. These have een incorporated at various 
points in the report. 



(*) See pages 748 - 752. ■ 

(**) Copies of these are included below. 



-748- 

QUESTIONNAIRE TO LOCAL Al- i D REGIONAL CODE AUTHORITIES 

CRUSHED STOKE, SAND AND G^YEL,,AND SLAG INDUSTRY 
(Applies to State, Regional and District Committees) 

A. General 

1. Name and address of Committee. 

2. ITame of person interviewed and former connection with Committee. 

3. How many concerns were under the jurisdiction of this Committee? 

4. How many concerns voted in the last election for membership on the 
Committee? 

5. How often were meetings held by the Committee? 

6. Where are the records of the Committee and are they available for in- 
spection by representatives of the National Recovery Administration? 

B. Compliance . 

1. How many complaints were received on trade' practice violations from 
.sources outside of the Committee itself? How many labor complaints? 

2. How many trade practice complaints of violation were initiated by the 
Committee or its representatives? How many labor? 

3. Describe briefly the procedure used in handling complaints. 

4. Was it customary to inspect members' payrolls and other records at 
periodical intervals? Was it done in all cases when conrolaints were 
charged against members? If not, how often? What action was taken if 
members objected to such inspection? 

5. Was restitution always demanded for adjustment of labor violations? What 
was required for violations of maximum hour provisions? How much restitu- 
tion money was collected by this Agency? What disposal was made of this 
money? Was restitution required for all employees affected by violations 
or only for complaining employees? 

6. In cases of trade practice violations what type of adjustment was re- 
quired in order to consider a case satisfactorily adjusted^ 

7. Was the respondent always given the opportunity of a hearing? If so, be- 
fore what body"? What notice of the hearing was given to the respondent? 
How was the hearing conducted? Was it open or closed? How were the 
charges presented? Was the identity of complaining employees withheld 
from the respondent? Of other complainants? 

8. How many labor and trade -oractice cases were referred by the Committee to 
the National Code Authority? How many to State NRA Office? 

9826 



-749-> 

9. Estimate for "both trace practice and lat>or provisions the degree to which 
compliance was secured. Rate as excellent, fair, poor, complete breakdown. 

10. With what code provisions did compliance "breakdown completely? To what 
do you attribute this breakdown? 

11. Did the agency have the services of any paid staff for compliance work? 
How many persons were employed" What compensation did they receive? Were 
they authorised to settle complaints without the approval of the agency? 
fere the funds available for compliance p>ork adequate? 

0. Relationship with Other Agencies 

1. Was this Committee adequately informed of code developments by the National 
Code Authority? 

2. On what matters did the Committee exercise discretionary powers? (Ex- 
planations? Interpretations? Exceptions? Collection of statistics? 
Collection of assessments?) 

3. On what matters did the Committee report regularly to the National Code 
Authority? 

4. What were the most common criticisms of this Committee by members of the 
Industry? 

5. Did this local Agency have the benefit of Trade Association funds and the 
use of Trade Association staff? 

D. Price Filing 

1. What considerations led to the establishment of the price filing provi- 
sion within your District? If none was so established, what considera- 
tions made it seem unnecessary or impractical to have price filing? 

2. What special difficulties did you have in the administration of the price 
filing plan? To your mind, was there any possible solution to these diffi* 
culties? 

3. What specifically were the difficulties which arose out of the Executive 
Order 6767 permitting 15$ reduction on government contracts? How did you 
meet these difficulties? 

4. What complaints or protests, if any, were raised because of the fact that 
filings were disseminated only to members selling within the District? 

5. How quickly was it possible for the District Committee to issue the fil- 
ings, that is, get them into the hands of members? 

6. Give an index or estimate of the extent to which customers availed them- 
selves of the privilege of inspecting the filed prices. 

7. Do you think that the requirement that five days must elapse "between fil- 
ing and effectiveness of price prevented temporary price cuts? Was this 
provision evaded in any way? How? 



8. Did. the ability of all competitors to meet the lowest filed prices act to 
discourage or eliminate price cutting? C-ive any evidence you have on this 
po int , 

9. Give any index or estimate of the extent to which members in your region 
conrolied with the -price filing provision, 

10. What procedure was followed in drafting rules and regulations relating to 
price filing, terms and conditions of sale; that is, by whom were they 
drafted, with what committee or administrative (ERA) assistance or colla- 
boration, etc? (Note to interviewer: Please ash for a copy of all rules 
and regulations relative to price filing issued by this agency). 

11. Give an index as estimate of the extent to which members in your District 
complied with the price filing provision. To what was any failure (1) 

to file or (2) to sell at filed prices principally due? Many small com- 
petitive units? Lack of standardization of product or service? Distur- 
bance of ordinary distributive or customer relationship? Was the failure 
to sell at filed prices open or through indirect rebates, secret conces- 
sions, etc.? 

12. To what purpose, ^other than orice publicity, were you able to put price 
filings? To furnish statistical information to the Code Authority? 
Would you consider price filing desirable even if there were no dissemina- 
tion required? Why? 

13. What protests did you receive concerning either the price filing plan it- 
self or its administration? Were any protests directed specifically at 
the use of a District organization in the administration of the plan? 

If so, in what resnect? Do you prefer an industry organization to re- 
ceive price filings or an independent one? Why? 

14. What differences have come to your knowledge between your practices and 
experiences and those of other Districts, in relation to the price filing 
provisions? To what do you attribute these differences? 

15. Did the open price provision in your code meet the neculiar conditions in 
your Industry If not, in what respects did it fall short of a satisfac- 
tory appr >aeh to your ^ro'ble?.-;? 

Capacity Control 

1. For those states of the division in which permissive areas were approved 
by the Administration: 

a. How many applications were there to increase capacity? What was the 
tyoe and amount of capacity involved? Did it represent recently con- 
structed equipment or equipment to be moved from some other place? 

b. In addition to formal applications, what other proposals were there to 
. introduce new capacity which did not reach formal amplication? Why 

not? 

c. What disposition was made of the formal applications? Granted? With- 
drawn? Denied? Did all those who were granted permission use it? 
Upon what basis were decisions reached to grant or recommend to the 
Code Authority denial of applications? 



d. Were any of the applications made by members with a view to being 
"bought off"? Had this practice existed in the area prior to the Code? 
If so, describe when, and extent. 

e. What difficulties, if any, 'rose because of competition by operators 
outside of the permissive areas, or by contractors or others within 
the permi«sive area, who did not come under this provision of the code? 

f. What has been the effect of the abandonment of the code provision on 
the introduction of new capacity? 

g. What is the present opinion in the industry with regard to the wisdom 
of the code provision regarding capacity control? 

2. For those parts of the division in which permissive areas were not approv- 
ed "oy the Administrator; 

a. Was there any demand for the establishment of a permissive 'irea? On 
what grounds? 

b. Describe efforts to establish a permissive area and explain obstacles 
and reasons why this was not done. 

Geographic Relations 

1. Pre-code period 

a. Approximately how many stationary plants and how many portable plants 
were located in your district? How did each group quote prices; f.o.b 
or delivered? Was this a uniform practice for all plants, for all 
"olants of one type, and for all products? If not, what variations 
were there? Did producers take advantage of Code provisions which 
enabled them to meet competition prices and terms of sale? 

2. Code period 

a. Did the district committee adopt uniform rules for the filing and 

quoting of prices? If so, were they f.o.b. or delivered, or did the 
committee leave it optional? If no mandatory method was adopted, what 
tens were customarily used by the different producers? Did these 
apply to both portable and stationary plants? To all products? Did 
these represent a shift from pre-Code practice? Why was the change 
made? 



2b. 



a. Were products shipped into your market from distances which you consi- 
der excessive? If so, cite illustrative cases. How were such product 
shipped - by railroad or truck? What proportion of the products sold 
in your market carae from an excessive distance? Were the products 
shipped on an f.o.b. or delivered basis? If shipped "delivered" was 
the price realised at point of shipment less than the price realized 
on sales in the normal marketing area of shipper? Explain, 



~752~ 

b. Did producers in your market ship products beyond their normal market? 
If so, cite illustrative cases. What proportion of , gross tonnage pro- 
duced in your area was shipped excessive distances? How were such 
products shipped - by railroad 'or truck? Were such shipments made on 
an f.o.b. or delivered basis? How much of such product was "dumped" 
into other market areas (that is, sold at a price which net the ship- 
per less than he received for his product in his own market)? When 
products were dumped into other markets, cite any illustrative cases 
which show freight absorption or price cutting below shippers price 

in home market, 

c. Were sales outside of normal marketing areas more frequent or less 
frequent during the code period than during the pre-code period? 
Give reasons? Than during the post code period? Give reasons: 

Misrepresentation and Deception 

1. Prior to N.R.A. were any of the following practices disturbing factors to 
your industry: Inaccurate advertising, price misrepresentations, or mis- 
representations of competitive goods, etc.? What efforts were made to 
curb these practices? With what success? Specifically, did the industry 
seek the cooperation of the Federal Trade Commission, and if so, with what 
success? Did your ILR.A. code provisions concerning misrepresentation and 
deception serve effectively to check the practices? If not, what princi- 
pal difficulties of enforcement were encountered? Did you have a definite 
procedure for collecting evidence of violation preliminary to making the 
formal charge? If so, please explain in detail what this procedure or 
procedures was. 



DR-14 Confidential Government Report Pile No. 



Return to: NATIONAL RECOVERY ADMINISTRATION 

Division of Review, 
Washington D. C. 



QUESTIONNAIRE ON EXPERIENCE WITH OPEN PRICE PROVISIONS 

We desire to make our studies on the operation of the National Recovery Administration 
as complete as possible - indicating both sides of the difficulties which were involved. 
In this regard, the views of persons who were not in agreement with certain activities are 
just as Important as the views of those who favored them. We understand that you either 
disagreed or had a misunderstanding with the code compliance agency regarding the provision 
on open prices, so we would like to have your story - your side of the argument. 

The Information which you submit will be considered confidential and your name or the 
name of your firm will not be disclosed In our reports. 



Name of Respondent 








. Date 




Address 












(Street) 




(City) 




(State) 



I. Indicate (<r) the total volume of sales for this establishment in 1934: 

□ Under $25,000 \J $100,000 to $500,000 

□ $25,000 to $100,000 Q $500,000 and over 

II. A. (•) Check one or more of the following to indicate the subject of your disagreement 

or misunderstanding with the Coie Authority: 

□ Failure to file, post, or publish prices as required 

□ Selling at prices lower than filed prices 
Q Failure to file complete data on prices 

□ Failure to observe prescribed terms and conditions of sale 
Q Filing prices which were allegedly below cost 

Q Failure to fellow customer classification' 
[J Others (specify) 

B. Indicate (')in what manner you were notified of the above condition. 

Q By mail □ By direct personal contaot 

□ BY telephone □ Other (specify) 



C. Indicate (r) who filed the original oomplaint resulting in the disagreement: 

□ Competitor □ Other (specify) 

□ Code Authority rj Do not know 

D. We/e you requested to appear before Code Authority for a hearing? Q Yes; □ No. 

If yes. did you appear? □ Yes; Q No. Before what committee? 



III. Indicate (/) whether your disagreement resulted from: 

Q Specific open price provisions e mbodie d in. the Code 

fj Rules or regulations on open prices formulate d by the Code Authority 

If your disagreement on open prices was due to the rules or regulations formulat ed 
62 i&2 Code Authority , please answer the following: 

A. Had you been Informed of the rules or regulations formulate d by the Code, Authority 
on open prices before the complaint was made against you?Q Yes; Q No. If yes, 
please state: 

1. In what manner were you informed of the rules or regulations formulated by. ike. 
Code, Authority on open prices (/): 

□ By Hall Q By direct personal oontaot 

□ By telephone □ Other (specify) 



2. Approximately how many days after you were informed of Uigge. £o.de Authority 
rules or regulations on open prices, were you notified of the complaint made 
QJJOO against vou? d ays. 



754 



IV. Indicate (v) below, ho* your ca9e was disposed of: 

n You agreed to comply Q Payment of fine 

J Blue Eagle withdrawn □ Case was dropped by Code Authority or HRA 
Q Case pending on May 27. 1935 fj Other (specify) 



A. Did the Code Authority make any particular efforts to get you to oomply? rn Yes; 
Q No. If yes, please explain the nature of the efforts. 

V. Indicate (r) below, what iou think was the real reason for the complaint against you: 
\H\ Misunderstanding on part of person making the complaint 
Q Misunderstanding on your part 

□ Conflict over Code jurisdiction 

n Complaint was intended to get you to comply with other Code provisions or Code 

□ Authority regulations not directly related to price filing 

□ Complaint was intended to get you to follow some price or other policy of Code 
Q Authority or of dominant members of the Industry 

□ Others (specify) 

VI. A. Would compliance with the Code or with the Code Authority regulations have made it 
necessary for you to change your: (Use Check) 

□ Customary prices □ Customary terms of payment 

□ Customary quantity discounts Q Customer classification 

D Customary allowances (advertising, etc. ) Q Other terms and conditions of sale 



(specify). 



Please explain briefly, what changes would have been necessary. 



B. Approximately how long had you observed such terms or conditions of sales prior to 
to the time the complaint was made? years 

VII. Would you have preferred to file prices with some agency other than the one designated 
in Code for receiving and distributing prices? □ Yes; □ No. If yes, state what 

agency _^ __ 



VIII. A. Were the price filling provisions being generally observed in your marketing area 
by some members and ignored by others? □ Yes; □ No. Explain briefly. 



Were you influenced in non-compliance by the belief that your competitors were not 
complying with the price provisions of the Code? 



IX. Would you have been more inclined to comply with the open price provisions of the Cod* 
if they had been different in some respect? Q Yes; □ No. If yes, lndioate below 
(•), in what respect you think the open price provisions should have been changed: 

□ Range of products for which prices were to be filed 

□ Waiting period before revised prices could be effective 

□ Filing of prices on past transactions as opposed to filing prices which were 

currently offered 

□ Identification of seller in filing 

□ Others (specify) __^_____. 



Please explain the nature of the change, and give reasons. 

X. Were you, at the time the complaint was made against you. a member of the Trade Associ- 
ation which sponsored the Code? □ Yes; Q No. 

Please feel free to attach any comments you may wish to make. 

9826 



- 7.35 - 
E-2-2U Con fidential C-o-vornment Eeport .Ti le Eo. . . . 

ee?A2T!;e:tt o: oo;:ibce 

Office of the National Zecovery Administration 

■ 'i 'ton, E. C. 

:i I'fi •: :: * V .. $ ;<:;:; ;,: ;,; * # * 

QUEST IOHNAIEE OK 0JF3H PEICE l-ILIIIC AMD 1JSPSPEESEHTATIVE 

PRACTICES 

Pealizing that you nay not have precise information on many of the 
following questions, we are requesting your informed opinions. 

Your cooperation in filling out this schedule "ill he of material 
assistance in our study of open price filing and riisrepresentative 
■practices. 



Name p£ 

Address . . 



Code reported on (repcrtion on? only)^ 



SECTION I - 0?EN FEJCE 'FILING 



1. Eate of first filing of prices- under the Industry Code. (l!onth, 
day and [''ear) 



2. Annual dollar sale s. .v.ol-une- of -t-'ris Indus try-l93M rough 
estimate) . G 

3. a. Did price filing apply, to all * "product's" under this Code? Yes : 

Eo. If no, please answer the following: 
h. Approximately -"hat percentage of the total foliar sales of this 

Industry was subject to price filing? ' 

c. List the products or hinds of products of this Industry which 

were excluded from the price filing requirements, 



h, a. State the total number of iembers in this Industry during-. 133^ 

(estimate) . 

t>. Estimate what per cent of the total members filed prices as 
required by the Code during: 
First half of price filing period. p 



Second half of "orice filing period. 



o 



c. Estimate "hat per cent of the total dollar sales of this Industry 
was represented by the members who filed prices during: 

First half of price filing period. p 

Second half of price filing period. , . 



5. a. In addition to prices, what terms and conditions of sale were 
ordinarily filed by members of this Industry. 

b, TThat other information was ordinarily (i.e. sales and production 
data, names of distributors or customers, etc.) 



)f:26 



... - 756 - 

-. a. Indicate ( ) in '.That form prices '7ere filed "by members of this 
Incus try: 

List prices with discounts 

Discounts from Industry 'cross or master list prices 

Base prices with extras 

Set prices to various classes of customers 

Other (specify) 

"b. List the classes of customers of this Industry (jobbers, whole- 
salers, dealers, etc. for which prices were ordinarily filed. 

c. List the classes of customers of this Industry for which ;orices 
were not ordinarily filed. 

7« a. Indicate ( ) the net hods actually used in the dissemination of 
the price infor nation to members and customers of this Industry 

Method of dissemination To members of To customers of 
of price information this industry this industry 

Hailed upon request, without charge 

Hailed upon request, at cost 

Hailed regularly, without charge 

Hailed regularly, at cost 

Available for -inspection only 

Direct exchange among nenbers XXX 

Ho dissemination of price information 

frices available to customers of sane 

classification ohl^r XXX 

Prices available only to ... memo o'r in 

direct competition .XXX 

Other method 1 s (Specify 

b. Please explain briefly wo what extent cus toners availed them- 
selves of the opportunity to inspect or request prices? 

S. a. Here prices ordinarily filed on: Delivered basis: 3T.0.B. basis 
b. If on an P.O.".'. basis, die price quotations apply: Nationally: 
Regionally. 
S. a. TTere prices filed: 

With one national agency and .disseminated nationally 
With Regional agencies an<? disseminated regionally, 
b. If filed on Regional basis, how many regions were established? • 

10. a. Did distributors, not members of this Industry, file prices with 

the filing agency for this Industry? Yes: No. 
b. If no, did distributers ordinarily adhere to manufacturers suggested 
resale prices? 

11. a. What benefits did proponents of the Code eroect to obtain by 

; establishing an open price system? 

b. Please explain how the proponents of the Code expected the open 
orice system to achieve the above benefits? 

c. What is your opinion as to the extent to which these expected 
benefits r rere actually realized? 



- 757 - 

12. What off net, in your opinion, aid the operation of the open price 
system in this Industry have on the following: 

a. Level of prices - higher or lower. 

b. Extent of price uniformity among co voetitcrs. 

c. Degree of price steadiness as contrastec 1 with frequent and abrupt 
chan,'jes. 

d. Relative competitive position of industry members. 

e. Relative competitive position of classes of liuyers. 

13. In your opinion to what extent was the "Publicity given to prices 
and terns of sale (as distinguished fron other code provisions such 
as "no selling below cost") responsible for the effect* - v/hich you 
stated in que-tion 12. 

lU.a. What T 7ere the principal difficulties experienced in the effective 
operation of the open price system? 

b. Hou night they have been remedied? 

15. What is your opinion of the value of a price filing system in which 
the filing of prices by members - T ould be voluntary, as a means to 
a more stabilized price structure in your Industry? 



SUCTION II - hISZEIPRESEITTATlOU 



l6. Indicate ( ) which of the following hinds of nisrepresentation and 
others, were a serious problem in this Industry before the N.H.A. . 
code. Also indicate ( ) iiether such nisrepresentative practices 
•jere still of a serious nature during the code and after the code. 
Kind of misrepresentation before Code Daring Code After Code 

Deceptive advertising 

False marking or branding 

Deceptive packaging 

Other (specify) 



a. Please explain briefly the nature of the above practices which were 
or are a seriou-S problem to this Industry during any of the above 
periods, 

17. Did the provisions in your Code prohibiting misrepresentations serve 
materially to lessen the prevalence of practices of the hind which 
you have indicated in Question l6. 



SS2S 



,.- 758 - 

IS. tfas the Code Authority able to obtain compliance with such provisions 
without recourse to N.R.A. enforcement? 

19. TThat -7ere the chief obstacles encountered to effective functioning 
of the Code provisions concerning misrepresentation of the kind you 
have indicated in question l'S? 



q£26 



- 759 - 

E. Stati s tica l Pr ogra m for the Prico Filing Uni t 

X' 

The statistical projects of the Pric-o Filing Unit included analyses 
of the price filing of only two industries - Asphalt Shingle and Roofing 
and Steel Castings. (These studies '/ere based in large part on a com- 
prehensive outline for statistical analysis, prepared by the Unit as a 
basis for intensive studies of price filing experience in separate in- 
dustries. This outline covers subject -.natter, methodology, and material 
specifications for such statistical studies below. An outline for briefer 
inspection studies is included: 

Outline of the Statistical Program 
for the 
Price Filing Unit 

Subject Latter 

The following outline is meant to suggest various questions which 
the Price Filing Unit of the Trade Practice Studies Section wishes to 
have answered, so far as practicable, by the intensive statistical stud- 
ies of particular industries. It is not expected that the outline can be 
followed in exact detail "oy any particular study; on the other hand, it 
should suggest certain questions which each can answer in some fashion 
or to some degree, if not in the form indicated by the outline. 

ECOITOUIC AHD ADLilHISTRATIVE EFFECTS OF OPEIT PRICE FILING 

I . E ffect on Prices ; 

A. Uniformity 

(1) Direction of price changes in achieving uniformity. 

(a) Where Goes the greatest degree of uniformity occur - 
at the top, middle, or bottom of the price range? 

(b) Is there any evidence showing relationship between 
such uniformity and collusive activity of one kind 
or another? 

(2) Has publicity re: price differentials to different classes 
of customers led to changes in these differentials? 

(a) Through uniform treatment by members? 

(b) Through pressure from less favored groups? 
If so', what kind of pressure? 

(3) Has open price activity caused alterations in the price 
status of competitors? 

(a) Through customers learning of cheaper sources of 
supply? 



9826 



■ - 760 - 

(b) Eirough actual changes in the relative prices of nem- 
"bers in meeting conpetition? 

(c) Through shifting of customer preference under exis- 
tence of uniform prices? 

(d) Have these developments (if present) brought about 
changes in the respective volume of competitors' 
sales? 

(4) Are variations in price due to - 

(a) Lack of standardization of products? 

(b) Advertised and non-advertised brands? 

(c) Large and snail members? 

(d) Integrated and non-integrated members? 

(e) Location - Hast and lest?, 

(Lut suggestive but not exhaustive) 

(5) Have previous price differentials disappeared - 

(a) Between large and small members? 

(b) Between different areas? :.-,'.' 

(c) Between advertised and non-advertised brands? 

(d) Between inferior and superior quality goods? 
(List suggestive but not exhaustive) 

(6) What has been the effect of the clause allowing the meeting 
of competition? 

(a) Has competition been met at the mill or at destination? 

(b) Is this a change from previous practice? 

(7) Has the tendency toward list price uniformity been offset 
by a growing lack of uniformity in terms 'or conditions of 
sale, in service, or the quality of the products? 

(3) Has a tendency toward uniformity in terms and conditions 

of sale under open price filing led to more frequent changes 
in the list price of products than formerly? 

(9) Are prices showing a tendency toward uniformity for products 
sufficiently standardized to justify such a tendency? 

(10) How early did "uniformity" occur? 

(a) Were the prices first filed under the Code uniform? 



9826 



- 751 - 

(11) Is there a tendency for manufacturers with incomplete 
lines to sell at lower prices? 

(12) Is there an;"- relationship between trends in the dis- 
persion of competitors' prices and trends in prices? 

(13) Is there any relationship between trends in the dis- 
persion of cdmpetitors' prices and the frequenc7 of 
price changes? 

(14) Breakdowns and over-all comparisons (this list is 
merely suggestive and not exhaustive) 

(a) What types of open price systems have been most 
effective in bringing about uniform prices? 

1. With or without waiting period. 

' 2. Data filed: 

a. prices only.' 

b. more complete data (production, 

sales, stocks, etc.) 

3. Methods of collection and dissemination. 

(b) "hat relationship has adr.iinistra.tion of the 
open price system had to its effectiveness 
in promoting price uniformity? 

1. Types of administration. 

a. By Code Authority. 

b. By Confidential Agent. 

c. By Trade Association Secretary. 

2. 'Efficiency and sincerity of administration. 

a. Very efficient. 

b. Moderately so. 

c. inefficient. 

(c) what effects has combination with other price 
provisions had on the effectiveness of open 
price filing in promoting price uniformity? 

1. With minimum price. 

2. With production control. 

3. With cost provisions. 

4. Other provisions such as to freight, 
cash terns, etc. 

(d) In what types of industries have ODen price 
provisions been most effective from the stand- 
point of promoting price uniformity? 



- 762 - •• 

(e) What effect has pre-code price filing exper- 
ience had on effectiveness in establishing 
price "uniformity under open price codes? 

(f) Other similar comparisons would be - 

1. Mandatory vs. Voluntary O.P.F. schemes. 

2. Codes affected by O.M. 228 vs. those 
not affected. 

3. Plans with and without customer indent i- 
fication. 

4. Those with and without seller identi- 
fication* 

5. Codes which exempted certain members vs. 
those which dia not. 

6. Codes where members were permitted to 
meet the lowest prices filed vs. others 
without this provision* 

7. On the basis of the area of price uni- 
formity. 



B. Bipiidity and Flexibility 

(1) Frequency 

(a) Has open price activity affected the' 

■ frequency of price changes? If so, how? 

(b) What has been the effect of waiting periods 
on the frequency of price changes? 

1. Does existence of a waiting period 
deter the tendency to revise prices 
downward? 

2, Have upward changes been more frequent 
than downward changes under open price 
codes? 

a* With waiting periods? 
b. In general? 

(2) Amplitude 

(a) Has open price activity affected the ampli- 
tude of price changes? If so, how? 

(3) Relationship between Frequency and Amplitude 

(a) Has open price practice affected the relation- 
ship "between the frequency and amplitude of 



1. TJhat is the relationship between the 
duration of a filed nrice and the mag- 
nitude of a succejding change? 

2. Uhat is the influence of the magnitude 
of the initial price change on the fre- 
quency and amplitude of succeeding changes? 

3. How does the general trend or direction 
of prices affect the frequency and ampli- 
tude of price changes? 

a. Yiihat is the relationship of this to 
the fact that upward or downward 
changes were fovmd to he most frequent? 
(See (b), 2, under "frequency" ahove.) 

(4) Miscellaneous 

(a) Do price changes follow changes in volume of 
production or volume of sales as closely as 
under a secret price system? 

(h) Effect of price stability on business volume 
and profits? 

(c) What is the relationship "between the stability 
of filed prices and the stability of trade dis- 
counts and other conditions of sale? 

(d) Does the stability produced by open prices (if 
it occurs) extend to the price structure of 
other stages of the productive process, - i.e., 
is it reflected in more stable prices in the 
svipplying and in the buying industries? 

(e) What evidence is there of price leadership in 
the price changes? 

1. Simultaneous changes after the plan was 
set up? 

2. If not ; . order of changes by competitors? 
a> 1 •"' noipal coup ■; ti tors? 

b, S -a. 1 . co:ape c J- o: :-'•: 

Co On downward charges, does the changed 
price approach; meet or undercut a 
previousl3 r changed orice? 

d. What happens or. upward changes? 

e. Character of firms initiating price 
change s ? 

f. Market covered by the new price? 

Part of company's old market? 
All of company 1 s old market? 
A new market for which the company 
appears to be fighting? 



- 734 - 
(f) Rapidity with which filed prices were met? 

1. Were refilings to meet upward changes 
more or less raoid than those to meet 
downward changes? 

2o Relationship to general price trend? 

(5) Breakdowns and Over-all Comorrisons - (Similar 

to those listed under "Uniformity"; also additional 
ones pertaining especially to stability such as - 
(a) Codes covering one step in fabrication or dis- 
tribution and effects of the Code provisions on ,the 
preceding or succeeding steps or stages.) 

C. Level and General Direction 

(1) Is there an:/ evidence that filed prices bear a fixed 
relationship to a siiggested cost floor, existing 
price agreement, or other established base? 

(2) Relation of price movements to the time when effective 
price filing began or ended? Did price advance to any 
marked degree in anticipation of open price filing or 
immediately thereafter? Was there an immediate effect 
on price when open price filing was discontinued? 

(o) Comparison of levels of comparable open and secret 
price groups during same period of time. 

(4) Comparison of price levels for specific products during 
time open price system was effective with previous or 
later periods when it was not. 

(5) Breakdowns and over-all comparisons: 

Similar to those listed under "Rigidity and Flex- 
ibility" and "Uniformity". 



II. Effects of Ooen Price Filing on Production, Sales and Employment 

A. Has a waiting period (especially in the durable goods in- 
dustries) operated to prevent greater production and 
greater employment? 

B» Have open prices resulted in larger or smaller inventories? 
Have they led to a change in the size of individual orders 
through more rigid classifications of discounts and trade 
factors or simply because of the publicity accorded to such 
discounts and the fact that they can be obtained by any 
customers qualifying? 



9826 



C. Question of the reaction of potential equipment and capacity 
in the Industry under open price practice: 

(1) Have new increments of supply appeared? 

(2) Are these due to new units in the Industry or 
expansion of era sting units? 



III. Effects of Open Price Filing on Consuir.'otion : 

A. Has open price activity in certain industries resulted in 
the diversion of sales to substitute products? 

(1) Has mere openness of prices encouraged undercutting 
on competing products? 

(2) What has been the relationship between changes in 
filed prices and the movements of prices of important 
substitutes? 

(3) What has been the relationship between sales of 
"principal" and "substitute" -orodvLcts? 

(4) Question of the reaction of potential equipment in 
the "substitute" industries. 

(a) Have new increments of supply appeared? 

(b) If so, are they due to - 

1. Hew Units in the Industry? 

2. Or increased output of existing units? 

B. The problem of the general effect of open price filing 
practice on consumers. 

(1) Has it resulted in higher prices to them? 

(2) If so, are these higher prices to consumers 
offset or justified by the other general effects 
of open price filing? 



IV. Effects of Q-pen Price Filing on the Conroetitive Structure . 
of Industry 

A. Has the failure of the Code to include middlemen under 

the jurisdiction of the Code proved discriminatory against 
members performing their own distributive functions? 

B» Is there any evidence that open price plans a.lter the 

focus of price leadership in the Industry? That is, from 
the small unit to the dominant producer, or vice versa? 
Does it, on the other hand, strengthen the influence of 
a former price leader? 

9826 



- 766 - 
2. METHODOLOGY 



(For detailed suggestions regarding Subject Matter and Material 
Specifications , see the separate outlines on these two subjects). 

The general supposition on which this outline is based is 
that the final, complete report on each intensive study of price 
filing in a particular industr" or under a given code will probably 
consist primarily of the following or similar divisions: 

(1) An introductory section which will include a 
statement of the problem and a brief outline 
of the plan of attacking it. 

(2) A summary of the information necessary to give 
., the layman the background needed in order to 

understand the general character, organization 
and operation of the Industry., 

(3) A summary of pertinent provisions in the Code 
"bf Fair Competition and a brief historical 
account of the negotiation of the Code, the 
source of any opposition, any controversies 
which arose, the members or sections of the 
Industry intered or affected, and the real 

or stated reasons for including the open 
price and related -ore-visions in the Code. 

(4) An exact, detailed description of the price 
structure and pricing practices in the Indus- 
try plus an explanation of how these have 
functioned. , : 

(5) A detailed presentation of the results of 
the statistical analyses of the price filings 
together with a full explanation of the 
methodology used in obtaining these results. 

(6) Conclusions on as many of the points listed 
in the Subject Matter Outline as it is 
possible to give in each case. 

I. BACKGROUND KHO'VLEDG-S OF THE IHJUSTHY ; 

A. General Character of the' Industry: 

(1) Size? Number of employees? Capitalization? , . 
• Output ? Sale s ? C apaci ty ? 

(2) Stage in the general industrial process? 

(3) General importance in the industrial process? 
national importance? 

(4) Hew or old Industry? General trend? Expanding 
or dying? 



- 767 - 

(5) State of technology? Extent of research and 
experimentation? Rate of obsolescence? 

(6) Financial structure? Methods of financing? 
Finance as a control device? History of profits? 

(7) Stable or fluctuating? If latter, cyclical? 
Seasonal? 

(8) Complex or simple? Degree of integration? 
B. Relationship to Other Industries: 

(1) Character of the ran material market? 

(a) Are the prices of the industry's principal 
raw materials flexible or rigid? Otherwise 
controlled? 

1. Causes? 

a. Nature of the. supplying industry? 

b. Elastic or inelastic supply? 

c. Others. 

(b) Nature of the prices of products or other 
industries using the sa-me kinds of raw 
materials? 

(2) Nature of the market for the industry's products? 

(a) Are the -or ices of good manufactured from the 

industry's products flexible or rigid? Other- 
wise controlled? 

1. Causes? 

a. Types of buying industries? 

b. Are they confronted by an elastic or 
inelastic demand? 

c. Others. 

(3) Character of the Competition of this industry with 
other industries? 

C. Nature of the Competition in the Industry : 

(1) Approximate number of competitors within the 
Industry? 

(2) Character of the principal companies? 

(3) Representative large, small, and medium-sized 
firms? 



- 768 - 

(4) Relationship of these to each other? To the 
Industry as a whole? 

(a) Any evidence of leadership? 

(5) Competitive practices? 

(6) Effects of business cycles and seasonal movements 
on the nature of the competition? 

D. Products : 

(1) Representative products of the Industry? 

(2) In general, how they are made: 
(a) Raw materials? 

(t>) Processing: How and to what stage? 

(c) Finishing? 

(d) By-products or joint-products? 

(3) General character of the products selected? 

(a) Degree of standardization? 

(b) Patents? 

(4) Uses: 

(a) Hhere? For what? How? Extent of each use? 

(b) Competitive or substitute products? Extent 
of substitution possible? 

(5) Marketing: 

(a) General character of the market? 

(b) Methods of distribution? Favored or usual one? 

(c) Sensitivity of demand? 

(d) Nature of the competition as it affects the 
particular products selected? 

II . Summary of the early Code History : 

(See(B) of the introductory statement, Page 1 of this 
outline). 



9826 



- 769 - 

III. Price Structure 'and Pric i ng Pract i ces ; 

In general,, this section should include everything that is 
necessary to enable the research staff to determine the net 
prices received for the representative products of the selected 
companies* 

Specifically, the following information is set forth as a guide 
to v;hat is necessary the various items will, of course, vary 
from industry to industry: 

A. List Prices : 

(1) Of what type; 

(a) Standard established list prices with discounts 
and plus percentages? 

(b) Quoted list prices? How quoted? 

(c) Special schedules? and 30 forth. 

(2) On what bases are the list prices? 
(a) F.O.B., delivered basis, etc. 

B. Discounts ; 

(1) Trade? 

(a) Customer classification? 

(b) Favored or usual method of distribution? 

(2) Quantity discounts? 

(2) Special discounts? t 

(4) Cash discounts? Hate? Net Period? etc. 
C • Other terns and conditions of Sa le : 

(1) Deferred payment plans? 

» 

(2) Rental plans? 

(3) Other credit plans, terms, etc. 

If possible, it would probably be quite helpful to set 
up charts showing the changes, if any, in the various 
elements of the price structure during the Code period 
(Contrast the situation at or near the beginning with 
that at the end of the period). 



9826 



- 770 - 771 - 
IV. PRELIMINARY ANALYSIS OF THB PRICE' FILINGS ; 

A» Selection of representative products and companies. 

B. Collection and consolidation of all price filings 

(for the products and companies selected) in NBA files. 
This step will not be necessary ercept for the studies 
on Steel Castings and Asphalt Shingle and Hoofing. 

C. Listing of all price filings on the selected products 

by representative companies and by dates (where the filings 
are numbered consecutively, as in the case of Steel Castings, 
this listing is not necessary inasmuch as it is possible to 
determine whether or not the filings are complete without it. 
Neither is it necessary in the case of the Electrical, Fer- 
tilizer, and Coffee studies). 

D. Checking with the Code Authority in order to locate and fill 
in any gaps in the filings in NBA files for the companies and 
products selected. 

E. Show for individua.1 companies the list orices and discounts 
for the various classes of customers. 

F. Determine the net' -orice (or the nearest possible approach to 
it) received for each product by each company for different 
customer classifications, different quantities sold, and 
different credit terms, etc. 

(1) At the time of original filing and 

(2) Near the close of the Code period. 

The procedure under F will vary, considerably from industry 
to industry since the price structure and practices of each 
are usually different in a number of important respects. 

Where possible, '.it will undoubtedly be helpful, at this 
point, to set tip charts showing the following: 

(1) The net prices to various classes of customers 
by. '; individual companies (l) at the beginning and 
(2) end of the Code period. 

(2) The same for each customer classification, including 
all selected companies. 

(o) The list and net prices for the various quantity 
groupings for the same periods' or dates as in (l) 
above and by' companies. 

In some cases, figuring the net price for a hypothe- 
tical standard transaction may prove to be a useful 
device, especially when actual volume figures are 
not available. 



- 772 - 

V. BASIC ANALYSIS 0? THE PRICE FILIITGS : 

A. Utilizing the results of Sections III and IV, it should be 

possible at this stage to make comparisons and tests to answer 
the following questions: 

(1) Was there an increase or decrease in the Uniformity 
(as among competitors) of net orices during the code 
period? 

(a) If so, which of the following price elements 
changed, in what way, and with what effects? 

1. List prices 

2. Discounts 

3. Other terns or conditions of sale 

(b) Which element (1,2, or 3) was chiefly responsible 
for any changes in net prices? 

In this connection, it should be possible to compile 
a "Running Account" or "Calendar of Changes" in List 
Prices, Discounts, and other Terms which will indi- 
cate the nature of changes during the code period, 
the reasons for the changes (such as to meet com- 
petition) , etc. , 

(2) Did net prices tend to become more or less flexible 
during the code period? 

(a) 7ere changes more or less frequent? 

(b) Did the magnitude of the changes become greater? 
or less? 

(c) Which of the price elements mentioned under 1, 

(a) above, was chiefly responsible for the changes? 

(d) Was there any change in the apparent relationship 
between the frequency and magnitude of the changes? 

(3) What was the general trend or direction of net prices 
during the code period? Of each of the price elements? 

(a) Which of the price elements was chiefly responsible 
for the trend in net prices? 

(b) How significant is any trend which may be discovered 
in net prices? 

(l) Has the Industry been giving the consumer more 
or less value per dollar? 



9826 



«. 773 - 

2. How does the value given compare with that in 
other similar industries? 

(4) In some casus, where the necessary quantity figures are 
not available, it may only "be possible to establish the 
upper and lower limits within which the net -orice falls. 
This range, however, should afford something in the way 
of answers to most of the questions listed above, 

VI . SECOmftZY AIJaLYS-S : 

Note: These analyses are termed "secondary" only in the sense that 
they are to be derived chiefly from the results of the basic analyses 
under V above. These results (with respect to price uniformity, Flexi- 
bility, Level and General Direction) should, when subjected to further 
purposeful analysis, yield much of the information necessary to answer 
some of the important questions listed in the Subject Matter Outline' for 
these studies (See "Outline of the Statistical Program for the Price 
Filing Unit, Subject Matter") • The sections on breakdowns and over-all 
comparisons, will, of course, have little significance for single studies 
except in the case of the more complicated industries, such as Elec- 
trical Manufacturing, where some 20 or 25 different products will be 
studies). • ' 

Many of these questions can be answered largely by earful inspection 
of the results obtained under Section V. For example, the "Running 
Account" or "Calendar of Changes" should afford some evidence regarding 
price leadership, the rapidity with which filed prices were met, direction 
of the changes in achieving uniformity, how early uniformity occurred, 
etc. 

Other questions will require further statistical analysis, including 
the introduction of supplementary data and information. Thus, in any 
cases where price filing has apparently exerted considerable influence 
on the price of a product, secondary effects may show up in the form of 
new increments of supply, increased employment, changes in consumption 
(including shifts to substitute products), alteration of the status of 
particular competitors or groups in the industry or market, etc. 

In other instances, certain open price code provisions or adminis- 
trative practices may appear to have exerted considerable influence more 
or less directly upon competitor relationships and the competitive 
structure of the industry. 

The problem here will be to determine the relationship, if any, 
between such price changes, code provisions, or administrative practices 
and the changes noted in production, consumption, sales, or other phases 
of the industrial set-up. The exact methodology will probably vary 
considerably, from case to case. "There sufficient data adapted to the 
purpose are available, some type of correlation analysis may be useful; 
otherwise, more general information will have to suffice, 

PRE-CODE ATS POST-COSE ANALYSES 

It is assumed that wherever possible the analyses outlined for the 
code period will be extended into the pre-code and post-code periods in 
order to obtain a better picture of the influence of the code on the 
industry, especially on prices and pricing practices. 



9826 



RSGIOILxL COiffARISOMS 

It is also assumed that, wherever relevant, comparisons will "be 
made between representative regions in those industries which have a 
regional set-up. 

(Material Specifications) 
Master List of Materials lveeded 



This list is given as a general guide to the data and other in- 
formation needed in order to follow the Methodology and Subject Matter 
outlines of the Statistical Program. The exact materials needed will, 
of course, vary considerably from one individual to another. 



I. Effects on price : 

The principal materials needed for statistical study of the effects 
of open -orice filing on price are the data necessary for the 
computation of net prices; ordinarily this includes the list prices, 
discounts, and other terms and conditions of sale for each company 
and for each customer, quantity, or other classification used in 
marketing the products selected. 

A. Unifor:..iity ; 

1. Reliable information regarding representative products 
under each code studied will usually be needed from 

• experts on that particular industry. In some cases 
these experts may be found within HRA; however, in a 
good many cases it "ill probably be necessary to con- 
tact the Code Authority, trade a ssociation, or outside 
individuals especially well-informed about the products, 
their uses, and their market. 

2. Reliable information regarding the size, competitive 
status, type, and representativeness of the competitors 
in the industry is also necessary in order to permit 

of their selection or proper classification in making 
the statistical analysis* In some instances this 
information is available from experienced and well-in- 
formed deputies, from industry studies, or others within 
1PA. Zor certain industries it -/ill have to be secured 
from outside sources 



• o. 



In most crises the information called for under 1 and 2 
above, if not known, can be obtained by the members of 
the statistical stiff themselves through studies of the 
industries. This will require considerable time, however, 
and since we may not receive much servicing from the 
Industry Studies or others during the early period when 



we are forced to select representative products and 
companies, the logical short-cut is expert advice 
where needed on these orobleins. 

3. Complete 'rice filings or comparable price lists of 
all important competitors (in some cases of represent 
tative competitors), on representative products selected 
from each industry, for the code period. 

Where possible; similar price series covering a pre- 
code neriod or periods (preferably all of 1929 and 
pre-code 1933) and the post-code months. 

Where the filings are not numbered consecutively, it 
is impossible to tell if they are complete for each 
competitor without checking our list of such filings 
against the Code Authority's or trade association's 
complete list. Ihis makes it necessary to contact 
the Code Authority at an early date for this inform- 
ation. Hie success and accuracy of the statistical 
analysis depends largely upon the completeness of the 
data; if certain price filings are missing, the con- 
clusions drawn from the analysis may be very misleading. 

The above step will, of course, not be necessary in 
the case "of the Electrical, Fertilizer, and Coffee 
Studies. 

Where the members of the industry filed by regions 
or zones, data are needed for representative competi- 
tors in each region or zone selected for study; it will 
also probably be necessary to obtain the prices filed 
by certain companies in several regions or zones where 
there are companies selling in more than one geographi- 
cal division. 

4. Information - statistical or otherwise, preferably the 
former - regarding discounts and other terms and con- 
ditions of sale. This information is the necessary 
complement of the data on list prices; until both are 
known it will be impossible to determine, in any pre- 
cise manner, what happened to the prices actually paid. 

This information should be obtained for each represen- 
tative competitor and product and for each customer, 
quantity, and other classification used. 

Where available, information as nearly comparable as 
it is possible to obtain should be secured for a pre- 
code period and the post-code months. 

B« Flexibility or Rigidity : 

\m In the main, the data- listed under the material speci- 
fications for the study of price uniformity can be 
made to serve for the study of price flexibility or 



- 77G - 

rigidity. An analysis of the changes which took place 
in the net prices, list prices and discounts and other 
terms and conditions of sale of representative competi- 
tors will give r, good indication of the frequency and 
extent of changes in the different price elements during 
the code period,,. If the necessary data can he obtained 
for the pre-code and post-code periods ( nee the third 
paragraph, Section 4, under "Uniformity") , it will also 
be possible to compare the frequency and extent of price 
. changes before, during, and after the code period. The 
details of the analysis will probably vary considerably 
from one industry to another. 

C. Price Levels and Trends : 

1, Most -.of the conditions outlined under "Flexibility or 
Rigidity" above also apply to the study of the general 
direction and level of prices. 

While in some cases it might be possible to combine 
the net prices (or values of the particular price element 
under consideration) of the various representative com- 
panies, into one price series which would be representative 
of the industry and might be used in an analysis of price 
flexibility, level, or trend, it will probably not be 
feasible to attempt to do this in most cases. The 
question of weighting offers one very troublesome problem 
in this connection. 

In most instances, the trend of prices for one or more 
representative companies should serve to indicate the 
trend for the industry; where this does not hold, there 
apparently is no well-defined trend for the industry as 
a whole . 

it is assumed, of course, that the price trends for each 
customer, quantity, and other important classification 
will be determined for each representative company wherever 
possible. The further classification and comparison of 
these results should provide considerable information 
relative to general price trends in the industry. 

D. Effect of Open Price Filing on Production. Sales. Employment . 
Consumption, and the Competitive Structure of the Industry. 

An attempt to study the secondary effects of price filing 
and the more or less direct effects of certain administrative 
code provisions or Code Authority practices will call for the 
following data in addition to that mentioned in the preceding 
sections of this outline: 

1. Production data, (in some cases for the industry as a 
whole and in others for individual members if possible; 
for separate products for certain purposes and for all 
products for others). 



- 777 - 

2. Sales data on the' same ''basis as 1. It na:^ also be neces- 
sary to have information on stocks and / or inventories. 

3. Figures on employment and / or payrolls for the entire 
industry; also probably for important individual members 
in some instances. 

4. Information on the consumption of - 

a. The principal products being considered. 

b. Important substitutes. 

5. Price data for the substitutes considered; this should 
probably be ' for the 'oeriods covered by the price data 
for the principal products with which the substitutes 
compete. 

4. III5FECTI0II STUDY OF P.xICE FILING 

I. CHRONOLOGICAL IIJF0,3.1ATl0iI 

The first step in surveying a file of prices is to determine the 
order of time in which the filings were made, if any. (Arrange- 
ment of the files by companies is assumed.) At one extreme are 
those price filings which were filed .. only pri certain dates, while 
at the other extreme are those price filings which do not appear 
to have any relation to specific filing dates, that is, they do 
not cluster about any given date. 

what is the chronological nature of the available p*rice filings? 
Did the filings cluster about certain specific dates (periodic) 
or were they scattered uniformly throughout the period in which 
price filing provision was in effect (non-periodic)? 

A. Periodic Filing 

The fact that prices '/ere filed periodically does not, in 
itself, indicate why they were filed in this manner. Any 
one of a number of reasons may explain subsequent periods 
of filing after the first one. 

After the first, what are the reasons which explain the 
subsequent periods of filing? That is, was the refiling 
due to reclassification of products, inclusion of new items, 
changes in the filing system, to make changes in terms or 
conditions of sale, to revise prices or discounts, or to 
meet competition', etc? 

B. Non-Periodic Filing 

A description of non-periodic filing involves special treat- 
ment for each case. An attempt should be made to classify 
the results in one or more ways. 

"That length of time was required for a complete first filing? 



~ 778 - 

Does the classif ication of companies "by certain types of pro- 
ducts show any temporal relationship with respect to filing 
dates? 

Cm Frequency of Piling by Companies 

Regardless of periodic or non-periodic filing, a set of files, 
when tabulated, may show, for example, 80 companies which 
filed once, 40 companies which filed twice, and 15 companies 
which filed three times. 

What evidence does this chronological array indicate with 
respect to changes in prices, terms, conditions of sale, 
customer classification, etc? 



II. TIB M3CHANI5M OF P2IC5 FILI1T& 

Price filing assumed a great variety of forms with respect to the 
mechanism by which filing was achieved. Not only was the mechanism 
subject to a variety of forms among industriej, but also it was 
often not uniform in many ways among members of an industry. This 
latter case is one of the methods whereby "net" price variations 
were actually achieved without altering other factors, such as, 
the "gross" price. .The mechanism may have failed to provide for 
the filing of terras; half the companies filing price information 
may have filed their terms and the other half may have omitted this 
information. 

In general, what does the available material indicate with respect 
to the nature of the mechanism of the system employed? 

Was the information recorded on standa,rd forms or on individual 
company price lists? 

What was the nature of the variety of products involved? 

A» . The Form Used to Record Information 

The nature of the form used to record the price filing 
information is of material importance in ascertaining the 
mechanism of the system. There a degree of standardization 
among companies has been achieved with respect to the product, 
one might expect to find more often some standardization of 
price filing form. 

Was the price information filed on standard forms? 

Or was the price information filed in some non-standard 

manner such as individual company price lists? 

B, The Nature of the Products 

Price filing involves information relative to the product, 
such as the variety, of the products, which is not "price" 
information, as such. The information is sometimes of such 



oaoa, 



- 779 - 
■ 

a nature that the identification of the product for purposes 
of comparison is very difficult, if not impossible. In other 
cases this information is the key to any analytical attack. 

a It V ti 

That is the extent of the variety of the products? 

What methods are used for identification or description? 

Are product classifications used? 

To what extent has product standardization taken place? 

1. Variety of Products 



Variation among products may exist either as a variation 
in the product anong companies, or as a variation in the 
product within each company. 

What variation in the product exists among companies? 
What is the chief characteristic of the variation? 
Design? Use? Patent? Trade Mark? i.Iaterial Content? 

Are there a variety of products within each company? 
Is the variation according to design, (shape, color, 
size); or according to use, (Heaters: water heaters, 
fireplace heaters, etc.); or according to material 
content (-Fire extinguishers; wet chemical, powder, 
etc.)? 

To what extent does the variety extend throughout the 
industry? 

2» Idontif ication or Description . 

The description or identification of a product may he 
achieved in a great many different ways. Some of these 
wavs. make the identification of the product among 
companies very easy; some of them are of little or no 
value in identifying the product among companies. 

What are the methods used to identify the product? 
Which are comparable among companies? 

3. Product Classification 

A more or less complete product classification is often 
applied to price filing* The" extent of product classi- 
fication is an important step in the analysis of •price 
filing. 

What is the nature of the product classification, if any? 
To what extent is it uniform among companies? 
■ What is the degree of refinement of the classification? 
Is the classificatipn an aid to identification of items? 
Or is it obscure with respect to identification of items? 



9826 



4. Product Standardization 

The final step in uniformity ■ with respect to the products 
of an industry is the degree of standardization. This 
standardization forms the basis upon which nan"' trade .- 
pra.ctices ultimately rest. Obviously, uniformity in ■ 
price is much more difficult to achieve in the case of 
non-standardized products than in the case of highly 
standardized products. 

To what extent has product standardization taken place? 
What is the apparent relation of the product standard- 
ization to the structure or mechanism of the. price filing 
system? 



III. CKARACTIRISTICS OF THE PHICE INFORMATION 

The inspection of the mechanism of price filing by means of 

which price information was obtained, is one thing; the inspection 

of the characteristics of the information obtained is another. 

The inspection of the characteristics of the information is 
not intended to be an analysis cxf the filings, but rather the 
discovery of the, kinds of information that were obtained.. "1 

What kind of customer or distributor classification was>use&?. 
What kinds of prices were filed? 

What kinds of terms and conditions of sale were employed? 
What was the nature of the quantity classifications used? 

A. Kinds of Prices Filed 

A variety of -methods were used to achieve the actual 
filing of prices, some of which were the prices themselves, 
discounts from a standard list price, minimum prices, etc.. 

What kind of price was filed? 

Was the practice uniform among companies? 

Was the price information filed comparable among companies? 

Was it adaptable to statistical manipulation? 

B. Customer Classification 

Customer classification may or may- not vary among companies. 

The chief characteristics are the kind of classification 

used and the degree of uniformity with which the;'' were em- 
ployed. 

What kind of classification was used? 

To what extent was it uniform among companies? 

C. Quantity Discounts 

Quantity discounts are so common that this form of altering 
the list price merits special treatment. The quantity 
classifications and the associated discounts are the chief 
characteristics of this kind of information. 



- 781 -• 

TJere the quantity classifications uniform for all members of 
the industry? 

Were the discounts for the quantity classifications likewise 
uniform? 

Tfere the quantity classifications comjarable among the products 
of the industry? That is, was a 10$ discount given on one 
dozen fire extinguishers, size one quart, "by one company while 
another conroany- gave a 10$ discount on one dozen fire extin- 
guishers, size one gallon? 



D. 



Terms and Conditions of Sale 



Terms of payment and conditions of sale involve a great 
variety of methods whereby the list price is altered. One 
list price for a single item may resolve itself into a large 
number of net arice to various customers. Terms of payment 
and conditions of sale are largely determined by the policy 
of the -industry as a 'whole and finally "oy the police of the 
industry member. The customary treatment of these matters 
by the industry as a whole, often establishes precedent upon 
which the policy is based, 

What are the terms of, payment erroloyed? 

TJhat are the conditions of sale? - The Sales Policy? 

1. Terms of Pa ,r ment 



Did the sales policy involve: 

a. Guarantees and similar provisions, such as, 



Product guarantees, 
Rettirn of defective, 
and damaged merchan- 
dise , 

Allowance or. obsolete 
and discontinued lines, 
Price .Guarantee, 



Resale guarantee, 
Repurchase guarantee, 
Assuming liability 
for errors in plans, 
patent infringement, 
non-controllable 
factors, etc. 



Other. 



b. Additional goods, such as, 

Free deals, 
Preriiuns , 
Samples, 
Containers, 



Labels, 
Advertising, 

Other. 



c. Service, sixch as, 
Demonstrating, 
Estimating, 
Installing, 



Maintenance and re- 
conditioning, 
'Tarehousing and 
Storing, 

Lending or leasing 
of equipment. 



982fi 



d. Financial assistance, such as, 

Gifts, Paving buyers' per- 

sonal charges, etc. 



- ?8C - 

e. Shipment, such as, Shipments less than 
Split shipments, specified minima, 
Odd-Lot shipments, Other, 

f. Consignment goods, 

g. Commissions and fees, such as, 

To brokers, To customers, 

r 

h. Allowance for service rendered by buyer, 

such as , 
Trade-in allowance, Catalogue allowan- 
Label allowances, ces, 
Advertising allowances, Cartage allowances, 

Other, 

i. Substitute or obsolete foods, such as, 
Seconds, Damaged goods, 

Used goods, - Scrap, 

j. Transportation charges, such as, 

Basing points, Freight equaliza- 

TJarehouse sales, tion, 

F. 0. "i. Basis, Sales in other 

zones below lowest 
•F. P., 

F. 0. 3. basis, 
freight allowed, 

k. Resale rjrice, such as, 

In relation to brokers or agents, 

In relation to consignees, 

In relation to customers, 

Respecting maintenance of manufacturer's 

list price, 

Minimum price, 

Other, 

3. Filing of Terms and Conditions of Sale 

It will be impossible to say conclusively what 
were the actual terms and conditions of sale 
in most cases. Some of the terms and conditi- 
ons of sale may have been filed uniformly by 
all members of the industry while other terms 
that Y/ere not filed by these members may have 
played an important part in determining actual 
price » The inspection can hooe to show only 
the visible conditions in this respect, that 
may be observed from the files available. 

To what extent were terms and conditions of 
sale filed by all members of the Industry? 
Did price competition apparently center about 
terras and conditions of sale? 



9826 



- 783 - 

!7ere statements confined tc "announcements" or were 
they descriptive. For example, was a statement made 
that free deals wo ild bo given, or did the statement 
actually set forth the free deals to be given? 

IV. APPRAISAL OF THE INSPSCTIiN 

Insofar as possible a comparison should be made of the original and 
the final filings. It is particularly important to observe changes 
which took place in the nature of the information files, especially 
with respect to uniformity or lack of uniformity that developed 
among the members of an industry. 

The various individual characteristics that will probably appear in 
any one inspection should be noted and related to the material in 
the outline. 

F, Suggestions for Further Research 

The Statement of the Problem in Chapter II of the report reveals, in 
general, the limited scope of the present study and obviates the necessity 
for nny lengthy discussion of future research at this point. Three 
specific suggestions can be made. 

1. The series of individual case studies originally contemplated 
should be completed along the lines of the Preliminary Outline to afford 
further examples of "going" open price olans, and, more important, to 

lend a perspective to the descriptive and illustrative material utilized 
in the present study. Sach case studies would offer a basis for compar- 
ative analysis far beyond what was possible in the present study. 

2. The information assembled from NRA files should be supple- 
mented by extensive interviews and questionnaire data from members of the 
industries participating in the Open Price plans. Lack of access to 
Code Authority records, and to the experience and reactions of industry 
members, was perhaps the greatest handicap of the present survey of price 
filing experience. 

3. Intensive statistical analyses of price filings for other 
industries in the sample would afford further opportunity to check the 
suggested "tests" for evaluating the effects of price filing on an in- 
dustry's price structure and competitive relations. Every effort should 
be made to extend those studies to a continuous record of price changes 
beyond the code period, both for those industries continuing price 
filing on a voluntary basis and for those abandoning price publicity. 
Tne absence of comparable pre-code price data, and the inadequacy of any 
current price series for such purposes, suggests that some provision for 
continuous collection and analysis of price quotations is a necessary part 
of any comprehensive survey of the effects of price filing. 

Other trade statistics, for production, volume of sales, etc., are 
of course desirable for any such analysis. The statistical outline 
devised by the Unit, and included above, suggests the scope and detail 
for such a research program. 



- 784 - 



" EHH1MT II 



Analysis of Price Piling Provisions Contained in ERA Codes 



9828 



785 



EXHIBIT II 
444 OPEN PRICE C DES BY DIVISIONS, BY SIZE 
ACCORDING TO NUliBER ■■& EMPLOYEES, 
AND BY TIME ON CODE 
OPERAT ION 



DIVISION 



B 



D E 



MONTHS 



o o oo oo oo oo o 

. O O OO OO OO OO O U O 

mo o oo oo ooooooocuo 

o) •• * o •» » o •. » o •» •» -p •» #» -p •'d o 

> O O-POO-POLO-POO LT\LP\ OP! « 

OlT> O LTMC\ OW LTAH CM ri lb in 

CM H OJ H 



Over 13 
12 - 18 
lANUFACTUETNG - 88 6-12 
, , ,_Ua&ex_iL 



EQUIPMENT - 112 



Over 18 

12 - 18 

6-12 

Unrlnr ,6, 



BASIC MATERIALS- 68 



Over 18 
12 - 18 
6-12 
Ilnfter ii. 



TEXTILES ~ 



Over 18 
12 - 18 
6-12 
■Uiiiifir 6. 



DISTRIBUTING - 23 



Over 18 
12 - 18 

6-12 



CHEMICALS - 51 



Over 18 

12 - 18 

6-12 

TTn rlp.r 6 



FOOD - 31 



Over 18 

12 - 18 

6-12 

TTn rim- 6 



2 
1 



7 
1 



3 

2 



2 1 
2 8 
2 
L. 



5 5 
1 1 

L 



1 
6 
1 



1 

2 1 
1 



3 1 
1 



1 6 



1 3 



1 

1 



2 
3 



32 

37 

_2- 



1 
31 
48 



1 
31 
10 

•?, 



12 
5 
_2_ 



6 
7 



30 

6 



5 
10 

-JL 



o 



2 

44. 

40 
—2- 



46 
50 



2 
50 
13 
_2- 



6 
20 



2 

13 

8 





1 

41 

8 



1 

7 

21 



PUBLIC UTILITIES^ 



I/nnp.r. 



CONSTRUCTION - 


• 8 


6-12 
TTnrlp.r fi 


1 


2 


3 

9 


6 


GRAPHIC ARTS 




12 - 13 


. \ . . 






1, . 


RECREATION 




12 - 18 




1 




1 



J826 



CLASS _A__ C( DES - OVER 250 , 000 EMPLOYEES 



DIVISION 



Over 18 Mo . 



12 to 18 Ho, 



6 to 12 i.io , 



Under 6 Ho. 



MFG. Fabricated Ketals 

Ecuipraent Automobile 

BASIC HAT. Iron & Steel 

TEXTILE CbUomEextile 

DIST. TRADE Retail Solid Fuel 

Wholesale Dist. Trade 
CHE, JCAL 
FOOD 

PUB. UTIL.. " Trucking . .. 

CONSTRUCTION Construction 

GRAPHIC ARTS Graphic Arts. 



CLASS _B_ CODES - 100,000 to 850,000 EMPLOYEES 

MAMJFAC. 

EQUIPiiEHT 

BASIC MAT. 

TEXTILE Silk Textile 

'Tool Textile 
DIST TRADE Builders' Suopl. Motor Vehicle & F 

Retail Lumber 
CHEMICAL Paper & Pulp 

FOOD Ice 3akery 

PUB. UTIL. House. G.M.& ST. 



CLASS __C_ CODES - 50,000 to 100,000 EMPLOYEES 



MANUF. 
EQUIPLiENT 

BASIC MAT. 

TEXTILE Underv'.&A.p! 
DIST. TRADE 
CHE..ICALS 

FOOD 



FU3. UTIL. 



Photog.. & Phot of . 
Gray Iron Found. 
Steel Casting 
Copper Mfg. 
Structural Clay 



Chemical Mfg. 
Rubber Mfg. 



Motor Bus. 



Bottled S. Drink 
Canning Industry 
Cigar Mfg. 



NOTE; -These tables are subject to error, for a number of reasons 

ex-olained in the. -text. Until checked and made perfect, they 
are -not to be published. 



982S 



(V ( 



CLASS 



~'o 



>i ,000 to 50.000EMPL0YESS 



DIVISION 



Over 13 uo, 



MAEUFAC . 

EQUIP; XXT Farm Eoiip, 
Oil Burner 
BASIC MAT. 



TEXTILE Throwing 
DIST. TRADE 



CHEMICAL 

FOOD 

PU -. UTIL. 



CLASS 



13 to 13 Mo. 



6 to 12 Mo. Under 6 IIo, 



Plunb. Fixtures 
Valve & Fittings 
American Glassware 
Cement 

Concrete Masonry 
Copper & B Mill P. 
Crushed Stone S. & G. 
Carpet & Ru L ; 
Ra/on & Silk Dye 
Ind. Sup. & Mach. 
Faper Dist. Trade 
Retail Monument 
Set-U-o Paper Box 



Mdse. Thole. Tr, 



Retail Rubber T. 



Candy Mfg. 



CODES - 10,000 to 25,000 EMPLOYEES 



MANUFAC3 



EQUIPiEKT- 



Boiler Ilfg. 



BASIC IiAI 



TEXTILE 
DIST. TRADE 
CHEMICAL 



FOOD 



9826 



Bedding 

Dental Lab. 
Tuner al Supply 
Med.&LO.Pr . Jevel. 
Precious Jerrel 
Sraall Arms & Am. 
Toy & Plaything. 
Am-.petroleum Eq. 
Anti-Friction 3eai 
Cast Iron Boiler 
Cooking & Heat ihg 
Gas Appliance 

-;C O t X - ( J Li - 

Printing X . 
Scientific Appar. 
Shovel, Dragline& 
Asbestos 
Limestone 
Linen Import. Tr 
Refractories 
"'ood Keel 
Hat Mfg. 
Outdoor Adv. 
Corrug.& S.F.S.C. 
Envelope 
Fertilizer 
Folding Paper Box 
Oxy~.Ace tylene 
Preformed Plastic 



Elect. &ITeon S. 



Boatbuilding 
Drop Forging 



..hoi .Mon. Granite 



Candlev/ick 3edsp. 

Loose Leaf & 3.B. 
Pacha e Medicine 



Canned Salmon 
'.hoi. Confec. 
TThol. Tobacco 



— i do •» 



CLaSS f codes 



5,000 to 10,000 EMPLOYEES 



DIVISION 



Over 13 Mo. 



12 to 18 Mo. 



6 to 12 i.!o, 



Under 6 Mo. 



MANUFaC. 



EQUIPMENT 



BASIC FAT. 



Cast Iron S.P. 
Heat Exchange 
Pump Mfg. 
Lime 



TEXTILE . Textile Bag 



DISTRIB. TR. 

CHEMICAL Salt Prod* 

POOD 



PUB. UTIL. 
CONSTRUCTION 



Brush ivif g. 

Bus. Furniture 

Porcel. Br. Furn. 

Gear Mfg. 

Steam Heat. Eq. 

Warm Air Furnace 

Asphalt Sh.&Rocf. Gypsum 

Coal Dock 

Floor & Wall C.T. 

Vit. Clay Sewer P. 

Window Glass 

7ood Turning 

Canvas Goods 

Cotton Cloth Glove 

Lace Mfg. 

Light Seeing Ind. 

Nottingham, L. Curt. 



Optical Whol. 
Specialty Acct. 



Batting & Padding 
Leather Cloth &c. 



Paper stationery 
Import. Date Pack. 
Macaroni 



Cordage & T;:ine 
Ready Mixed Cone. 
Radio Broadcast. 



Cocoa & Choc. 

Coffee 

Ref ri g. Warehouse 



CLASS G CODES 



Under 5,000 EMPLOYEES 



manufacturing 



Cop & Closure 
Marking Devices 



9826 



All Metal Ins.S. 

Beauty&Barb. Mfg. 
Beverage Disp. 
Buff&Polish. Wh. 
Chain Mfg. 
Col laps. Tube 
Crovm Mfg. 
Cutlery 

Fishing Tackle 
Forged Tool 
Hacksaw Blade 
Horseshoe & A. P. 
House. Ice Ref rig. 
Lightening Rod 
Mach. Ap. Staple 
Mach. Knife 
Metal Lath 
Metal Treating 
Metfl Window 
Metal Wall Struc. 
Porcelain Enam. 
Rolling Steel D. 
Saw & Steel Prod. 
Shoe Shsnk 



Artificial Limb Arch. 

Oman. &c. 

Blackboard&c. Metal Hosp. F. 

Bright Wire Goods 

Cap Screw 

Cut Tack 

Dental Goods 

Drapery & C. Hdw. 

Elect. Plating 

File Mfg. 

Filing Supply 

Fire Res. Safe 

Flex. Metal Hose 

Floor Mach. 

Fly Swatter 

Galvanized Wire 

Hand Bag Frame 

Hog Ring 

Job Galvanizing 

Mach. Screw 

Mach. Screw Nut 

Metal Etching 

Milk & I. C. Can 

Open Steel Floor 

Perforating Mfg. 



- 789 - 
(C L..5S _G_ COPZS - IT~Z. 5.000 Z RLOVhhS - Continued) 



Over 18 ilo. 



12 to 18 Ho. 



8 to 12 lio. 



Under 6 ho. 



Co. Tores seel Air 



Public Seating 

Pipe Tool 

Pulp & P.::. Wire C 
Socket Screw Prod 
Standard Steel Bbl. 
Upholstery Soring Steel Package 
Wood fcs? L. Pone Tutmlar Split Rivet 



Slid: Fastener 
Snao Fas tenor 
Steel ITool 
Tool & In )lement 
Umbrella Frar.is 



Wrench Hfe 



Door 



are 
Parts 



Air Valve 
Alloy Casting 
Canning J: Pack.' 
Card Clothing 
Clay keck. 
Con. Refrig. 
Oni inder \ o uld 
Slec. Ind. Tr. 
Fire h::t. Aop.. 
Foundry Sup"oly 
Funeral Vehicle 
Gas Co ck 
Gasoline Pump 
Hand Chain Eoist 
Ind. Sefety Eq. 
Mach. Tool 
hot or 7ire App, 
H~Fe rrous H . h . T . 
E-Ferrous Steel C 
Pipe hi rale 
Po\7er u Gang L.h. 
R.R. Special Tracl 
Reduction ilach. 
Road Ilach. 
Rock Crasher 
Snray Painting 



Upward Act. 
Vis- Mfg. 
Vit, Snanel 

Wash. Mach. 
Wire Rope 
Wood Screw 
Air Filter 
.auto Hot.W. Heat 
Beater & Jordan 
Brass Forging 
Cast.& Floor Tr. 
Chen. Sng. Eq. 
Cold Storage D. 
Concrete Mixer 
Contractors Pump 
Conveyor & c. 
Cutting Die 
Diamond Core Drill 
Diesel Engine 
Electric Hoist 
Gas P. Ind. Tr. 
Hoist Builders 
Hoist Engine 
Jack !ifg. 
Kiln Cooler & Dry 
Laundry & Dry CI. 
Leaf Spring Mfg. 
: Lift Truck 
Marine Equip. 
Liquefied Fuel 
Median. Lubric. 
Mechan. Press 



Steel Tabu & F.B. hulti-v Belt Dr. 



Stone Finishing 
Tackle Block 
Unit Heater 
Uire Rod & T.D. 



Oil F. Pomp. Eng. 
Paper Bo:: Machine 
Port Elect. Lamp 
R. R. Appliance 
Refrig. Mach. 
Refrig. Ind. 
Refrig. Valves 
Ring Traveler 
Rock & Ore Crush. 
Roller & S. Chain 
Rolling Mill Mach. 
Sawmill Mach. 
Shuttle Mfg. 
So rocket Chain. 



Auto Shop Equip. 
Can Labeling 
Cereal Mach, 
Gasket Mfg. 
Power Tranmnis. 
Wheel & Sin 
Wiring Device 



- 790 - 

i 

' ( CLASS _G_ COPES - UNDER 5,000 EMPLOYE ES - Continue d) 
DIVISION Over 18 Ho. 12 to 18 Ho. 5 to 12 Ho. 



Under 6 Ho. 



equipment 

Continued. 



3ASIC HAT. Plumbago Cruc. 



TEXTILE 



Asphalt &.Am. Tile 
Chinarrare-& Pore. 
Clay Drain Tile 
Clay & S.R.Tile 
Earthenware 
End Grain Strip 
Excelsior 
Feldsnar 
Fibre' Wall 3d. 
Fullers Earth 
Grinding Wheel 
Ind. — Brass & Br. 
Insu.lation Board 
Ladder I.ifg. 
Hica 

Hop Stick 
Ornament. Hould. 
Picture Would. 
Preformed Plast. 
Quicksilver 
Hock <"-. Slag W. 
Roofing Gran. 
Sand Lime Brick 
Sandstone 
Secondary Alumir.. 
Shoe Last 
Slate 

Talc c: Soapstone 
Venitian Blind 
Whol. Hon. 'Marble 
Wood Insl. Pin 
Animal Soft Hair 
Cotton Converting 
Covered' Button 
Fibe:- MWC Button 
For Dealing Tr. 
Hair Cloth Hfg. 
Hair & Jute Felt 
Milk Filtering 
Ready Made Slip C. 
Rug Chem Process. 
Sanitary 5: W, Spec, 
Wool Felt 



Trailer Hfg. 
Warm Air Furnace 
Warm Air Register 
TJater Meter Hfg. 
Waterpo-jcr Sq. 
Yfater Softener 
Woodwork Hach. 
Abrasive Grain 
China Clay Prod. 
Dowel 
Dor/el Pin 
Flex. Insul. 
Hangane s e 
Harble parrying 
Natural Cleft St. 
Soft Lime xiock 
Woven Wood Fabric 



Bias Tape 
Curled Hoir 
Grass & F. Ru 
Papermakers Felt 
Shoe Pattern 



Bitu;:.Road H 
Wood Plug 



Brattice Cloi 
Canvas St, Bel 
Horse T "airDrc 



9826 



( CLASS S CODES - 



- 701 - 
UNSET. 5.000 ",'T LOYBBS - Continued ) 



DI VI SI 01 



Over 18 I'.o, 



DISTRIB. TR 



CHEMICAL 



FOOD 



CONSTRUCTION 



12 to 10 Mo. 



6 to 12 Ko, 



Under 6 Mo. 



Advert. Display Ind. './hoi. Plumb. 
Beauty iBarber Eq. Private K.S. School 
Gov: :erc. Stationery Radio TTholesale 



Liquefied C-as 
Mac line '.'aste 
Upholstery 3c S.F. 



Amer. Match 

Bleached Shellac 

Bulk Drink. Stra 

Condi e Mfg. 

Carton Black 

Cloth Reel 

Cyl. LTP. Contain. 

Fibre Can & Tube 

Fluted Cup. 

Food Dish 

Glazed & F. Paper 

Gummed Label 

Gumming 

Hardwood Distil. 

Insect, co Disinfec. 

Lye 

Open Paper Disc. M.B.C. 

Photo, Mount 

Pyrotechnic 

Reclaimed Rubber 

Rubber Tie 

Sarnie Card 

Sanitary Milk B. C. 

Sanitary Napkin 

Tag 

Transparent M. C. 

'.Tat s rp roof Pap er 

7/axed Paper 

Chewing Gum 

Fresh Oyster 



S cho o 1 Supp lies 
Sheet Metal Dist.T. 
T/hol. Jevelry 
¥nol. Stationery 
Ag.Ins. c: Fung. 
Auto Chem Spec. 
Ind. Alcohol 
Pac.C.Soap & Gl. 
Stereo. Dry Hat. 
Sulmhonated Oil 



Mayonnaise 

Peanut Butter 
TThol. Lobster 



Carbon Dioxide 



Cork 

Elect. Contract 

Re info r c i ng Hat . 



Blue Crab 
Col. Sardine 
Dog Food 
Ice Cream Cone 
Malt Prod. 
N.Eng. Fish 
Preserve, Etc. 
Process. Fish Oil 
Spice Grinding 
Trout Farming 
Corrug. R.M.C. Pipe 
Steel Joist 



N.Eng. Sardine 



NOTE; These tables are subject to error, for a number of reasons explained in 
the text. Until checked and made perfect, they are not to be published. 

9826 



S2 

5: 

Q 

<o 

Q 

i 

B 

















































' 


92 


































































MS* 


s»?t4ct ■****& +nVr 




























- 
























M 
























1 








« 




















r "*<7. W/W. W* w> 




IT, 








Q 








>o 








IV 








v> 
















^J 


























•7 








s 
























II 














•^ 
















K. 


























































i- 
























/y*0 sjerfvji&r Oi 




























- 


























































n 
























P 


c/QtSirtOHj 0// "i 




5 






^ 








5 
















« 
















1 


















"> 








a 










































~i 








- 








-. 






























«M 


























- 
























, '-£ S§ ££**& -■ 




- 
























o 








^ 










































<\J 








"j 
























5 iv«w<Vf^? //#' v 




3 






1 








« 








* 
g 
















- 








IM 








m 










M 








Ol 








Kj 
























- *33W^ 










M 










































































^j 
























sum *6t*r yjv * 




«* 






« 








a 








>o 








j 
















^ 


























'•. 








«■ 
























9 12^*^ *~r * 




<oj 






>. 
















a 








5 
















. 


























", 








-: 
























| "tgg'Zg * 




N.I 






o 
















s 








s 
















- 


























C? 








? 




































































































- 










-j 
























is 


CJO/r/jfA^ 9// f\ 




K 








D) 








■■■ 








0| 








o 
















^ 


















^ 








f- 






s 




































- 
















"M 
























































no 
























6/v& (joijaxfroj 5 




~i 








« 








"1 








5j 








^ 
















^ 








m 










i 








o 








£ 




























- 


















































































■N 






















3 -^'^»- ft****? 






















































































1 






















i «gy%«2&- 












"l 
















N 


















































*> 








O 




























"^ 








^i 








* 








* 








«] 










































") 








'■? l 




































-i 
























s. 










































'J 








o 




























- 








"J 








k, 








V 








Q 








- 


































- 








5 
























* 1 //f «/ y"«r 




5 
















O 








S 








« 
















- 


























o, 








? 
























VZhtgA 




- 








5 








to 








'\, 








S3 










































J. 








K 
























Via 






























a 








5 
























r 'j 


























Q 
























/7</^ /««**j-'*»«(? ftj 




01 

























J ; 
















- 








<o 








*) 










to 
















^ 




















































^j 


























































IV] 
























-^rtfc^*" 




"7 








Ol 








"> 








!Q 








5 


















































5 
























^9 
* It 






- 








- 








M 








K 








^ 










































<M 








* 
























>*? 'jjm^ v5 






















































































-. 
























5»^t,1f? ^ 












nj 
















N 










































> 
















to 
























H, //<*? W^/ /^%' 




N 
























- 


























































"i 
























5 S 














01 
















•o 








~! 


















































IS 
























sus**/ JM*A9 "7 




Ul 








51 








;-j 








'■■i 








Rj 
























<*j 










- 








iv 








to 
























J-t/O/tf/IUUlfQ 

.-■ iilH 141 <M a 




« 








jo 








o 








Ki 
























- 








•o 


















W| 
































SXX*"0/ttf K. 




i 








"1 








-> 








































"i 










- 








"i 








3 
























syunaxxy *^ 




5 








$ 








3 








g 








s 








- 








f\j 








»n 










\| 








N 








i 




























9 








•*; 








iS 








Ol 








s 
















«n 








u-. 










•^ 








si 








. 
























^/f^ ssa/jfj <"i 




M 








« 








-» 








rs 








<^ 
















"j 


















- 








w> 


































ctofsr'*t3-tef 0/V *M 




e*. 








SI 








•O 








M 








5 


































- 








•s 








s 
























j-^&^Sp s&°o ^ 




■> 








- 








<NJ 








"i 








- 










































«y 








5j 
























'-'SKfcb-'.S^P - 




- 








n] 








- 
















n 
















^ 


























^ 








~i 
























ass«ns3SSf » 




m 








Ol 








<M 








fi 








S) 
























"7 


















"7 








to 

to 
























r>/"o f/p^p^^j 




pj 








^ 








■o 








O) 








5 


































- 








<\j 








9 
























p$i//iliJat*j 




- 
































<o 
























- 




















































-' 
































5 








- 
















N 










- 








"I 








to 
























rjMpo^/ //tr 5! 




5 








?i 








5 
















Si 
















to 


















N 








Tj 








? 
























bit' 


. ««5^ 




- 
















"J 








- 


















































^ 








fv 
























5 sjfifcffj£e*-f*?*C> 




























N 








- 


















































"1 
























^ SjUOtuu J**0Q ^ 




















ei 


























































■s 








■X, 
























""/ ^ 












M 








« 








^ 








n 


















































a 
























M 


li 


>*Q CUJ/«V. "^ 




W| 








* 








<-i 








"1 








§5 
















- 








^ 


















"7 








s 
























*%?izgp * 




u, 








Q 








in 
















S 
















- 








n. 


















•o 
































J T 


jpo- •'.. a****/ 




































fv 


















































s. 
























{jOLf&isors-p *P&il -- 




« 








1 








to 








<0 








IM 










































"> 








*1 
























^"^Zsff^ «. 












K. 
























- 
















^J 


















N 








'* 








«: 
























"fl&SZ.f s 




Ol 








5 








•J 








s 








s 








- 








<*i 








■■j 










n 








r> 








* 
























Hi 


<W<*7M«Wf ""W 




- 








- 
















■** 


























































"- 




































ty 








^ 


























































RJ 








sa 
























/poofjdQ 




































- 










































<■*! 
































/£sOprfiw0 * 




v 








§ 








Q 








9 








fe 








- 








to 








U) 










m 








































Is a 


^y<j-r fiffjofew s>g 




























ey 
































(y 


























i 




























M 
















K 








5 
































N 


















- 
































111 


3JC/1 fyisofyv *& 




« 








^ 
























a 
























"- 


















<M 








s 
























jO 'uoijiCZc/djfy " 




V, 








to 








a 








1 








5 








- 
















N 


















N 








1 
























S>s<iiep<sc>w J\ 




9 








S 








s 








a 








s 
















la 








~i 










w 








■-J 








! 
























4 1 3 & J 




Vi 








« 








f\ 








3 








5 
















- 








*] 


















" 








& 
























S 

o 




% 












o 
» 








ft 








s 








to 








to 








to 








to 










* 








" 

i 








S 
























> 

c 

c 
c 
c 




z 

O 
« 
> 

Q 

ll 

F 
u 

h 

P 








z 
o 

« 

> 

o 

_■ 
■: 

2 
u 

< 

a 








z 



> 

< 

2 

UJ 

X 
& 








z 
c 
■ 

> 
5 
t- 

X 
u. 
2 
a 

C 

b 








2 
o 
m 
> 
Q 

z 
or 

Z 
« 

2 
& 








z 
o 

> 
o 

z 
o 

p 

3 

a 

s 

z 

s 








z 
o 

> 
5 
<n 

UJ 

E 

-i 

% 

o 

i 



s 








n 

< 
u 

r 

< 
a 


w" 
U 


Z 

o 

> 
5 

h 
z 

UJ 

u. 

'■ 

D 

2 
< 








z 
o 

S 
> 
c 

•A 

2 



S 

O 
a 

0. 








Z 

o 

m 

> 
a 

i 

a 

•a 

< 

3 
i 
* 








- 
< 

h 
c 








5 




3 
1 

S 
1 

s 
i 

Q 


i 

to 

< 

« 
Q 

ft 











9(f26 



?92-A 



i 

- 

1 


A&****<*' w *-"r v J?-> 
















































■>. 










































c. 


























X -i 

4 1 


*f*M*& J A/ 
















- 










































































«n 




























-v -■-«..■ 


















- 
























- 








- 










































> 


























-'-'-■ •-0---V. 


















































N 










































(\ 






































































<\J 


















































fNj 


























I-V-V-" *■■*»«> 




























































































- 


























*■ 1 § 


l/ose/Jos^/ tty 
























































































- 




"* 






} 




















*/*£? &*KTJ> J*S/J 
















- 
























- 








j* 










































to 


























/rf**Jar **S/> 










































<\J 


















































~> 


























1-^ 


"set? -"*f/o 






















































































































*■*'/. y+*Z?S*'»*¥/ 










































- 








- 










































■M 


























*/"0 f"& T " , *""7 










































- 


















































- 


























S>/& */oJfK/-\f /**)& 


















f^ 
















(M 








f-1 








3 










































« 


























y "W"^/.*** 


































'NJ 
















- 










































■1 


























t/Bs£S*0JS C&I 
















































rv 








































O, 
























*St& S*f*#j j^/j> 




























































































- 


























*S*i7 **&¥J **V*& 










































■n 








■o 








































5 


























^ ■«. * 


Oi'j.*V jiysj 0ikv 
















































^ 










































(\J 


























rtojuvp &*/»u/yj-j 








































N 


















































t\l 


























#3 ■*/ a*wt?r 

■ 






































- 








Q 










































^ 


























jSft tsotf//y -?wj 














"J 
















"J 


























































to 


























Hi 

•5 £ ^ 
















o; 
































CD 










































O 


























C/ttyA? '■?■■>"'-.- */>0J 












^M 
















"J 








<i 








m 








































BJ 














































































































































^ 






















































































1 
























taMtS it?**/ /o*M> 
























































































- 














































































































































- 






















































































- 




































- 
































































- 














*» 
























^ 


~s^ § §§ 


















' 
















1 








"> 
































- 














2j 
























* 




»V ^ir>Jv **"& 




















































































- 


























if] 








u-, 






» 








HI 








't. 








ft] 
















- 








"-> 
















y-. 






s 


























Awmfy'Jt r,-s- - 


* 






















































































o, 


























" J. 1 
1"^ 




















^ 




































































-J 




























"1 
























■> 
























































v, 






5j 












































k 








- 
















































- 








> 






^ 




























-. 
















^ 








to 








M 








1 








































M 






^ 


























*■*$! 

<<^* 




Py 








"i 








- 
















■" 








- 
















- 
























^ 








to 


























*S'-i~ ... 


•o 








"J 








- 






















^D 
















- 
















- 








BJ 








<^j 


























■s-"**" yC^r '">>•' 


- 






N 














SO 














5| 








- 
















<\ 








- 








O 








? 


























/<» //*f/-" , A' 


Kl 








2e 








^ 








Q 








fjj 








s 
















*i 








r. 










1 








^ 








si 






















































- 




























































































4,r Citm Al j^ < - *JtJ?g 
















































































































jwtfr'^sjij' jyajjp 








ifl 








« 








^. 








5 






















v 








^ 


















v\ 








£ 


























vJtr+jf? *,*• ^y^^ 
















































































- 








n< 


























It 
It 


iC/z/iHi^ -V«j) 


































t\l 
























































^» 


























s 


**sr/**j</ o/y 


o. 








r-, 








Q 








w, 








"■; 








5 
















<*i 








M 










<*) 








W 








& 


























ls.S/JI>4>£- Ae>i*r 


















Ul 








^J 








■g 








•* 


































^ 








- 








o 
n 




























**#■,** 


















^ 








<\l 








•f, 








<^ 


















































«n 


























-•■/■-.- 


-\l 








"^ 








Si 








q 








1*1 








to 










































^J 








3 


























■fJF^W 










<* 








lt\ 








o, 








3 








^ 










































<VJ 
































it 


^*w *VA&i . 






















































































































^■iTi rjC/-*/.v^ *■",'*& 










5 


« 








i 








3 






~. 


? 








5 






















f\j 










- 


? 






Wl 


Z 






•A 


J 
























cvoK-ntty A <f a\ty*ff 


5 


i 






<-> 


7 






S 


J 






■^ 








to 










5 














"i 


V 
















"> 








o> 


? 






% 


J 
























S?rsenfj*4S -^">j 


W] 
















o, 
















to 








1 


T 


















































j 
























\ 


M**^ J- 


- 








", 








^ 








^j 








-, 
























- 


















- 








^ 


































r^wty**),- .*y**#/s 


















<\J 
























"^ 










































- 








to 


























#*Ss> asi/Mtf/j 


*>, 








Ch 








■o 








m 








Si 








SI 
















^ 








^ 


















g 








? 


























3^v 

js > \ 




MpfAmfc 










M 


















































































■^ 


























* 

i 


tatcMpSj' oft? 


5j 








o, 
















o 
■^ 
















K 








- 








"i 








^j 










«J 








N 








l 


























WW'S 










- 










































































































/ovoySe 


■q 
















^ 








- 








*» 


























































m 


























/•je>/*s>t/*i t 


o, 








•^ 








0) 








1 








to 






•■J 
























"*i 










- 








to 








R 


























*V fs-0J!/Pjr ja isai/jfivmJs 


\ 








^1 








o, 








•^ 








to 








X) 
















- 








•»! 


















m 








s 




























neT'^ojcf ofy 


s 






D| 








« 
















% 








to 
























^ 










■) 








a 








S 




























o, 








«o 








s 








to 








J 
















- 








- 








M 


















«J 








^ 


























■ 


















'\l 
















'M 








tij 










































- 








53 




























i 


























































































































IS 
3 


z 
O 

> 
o 
o 
o 
o 








z 
o 

O 

h 

2 








z 
o 
1/1 
> 
o 

< 
<r 

w 

I 

O 

s 

a 








1 

> 

o 

5 








Z 

o 
l/l 

> 
a 

z 
u 

2 
a 

3 

u 








g 

5) 

> 
□ 

o 

z 

i 

D 
t- 

Z 
< 
2 

E2 








Z 

o 

./I 
> 
o 

z 
o 

h 
u 

L.. 
z 

s 








z 
o 

> 
a 

UJ 

t 

i 

_< 








< 

I 

! 

U 

w" 

z 
< 

z 


z 
o 

> 
6 

Z 
u 

i 

M 

< 








z 
o 

in 

> 

a 

s 

o 
(/I 

11 

o 

a 
a 

H 








z 
o 

Ul 

> 

o 

1 

BE 

J! 

< 
o 

X 

* 








-1 

f- 

E 



























0S26 



- 793 - 

•EXHi: IT III 

Al-ohabeticrl List of 1S1 Codes in 

Over-All Scrrole for Price 

Piling Study 



- 794 - 
E X H I 3 IT III' 

ALP'- a' -/ IOa. LIST IE 191 CODES III OVER-ALL SAMPLE FOR P^I OE FILING STUDY 



No. 



Code 



Division 



275A AGRICULTURAL INSECTICIDE & FUNGICIDE - 
div. of Chemical Mfg. Ind. 

112 ALL METAL INSECT SCREEN INDUSTRY 

85 AMERICAN PETROLEUM EQUIPMENT IND. & TRADE 

80 ASBESTOS INDUSTRY 

150 ASPHALT AMD MASTIC TILE INDUSTRY 

99 ASPHALT SHINGLE AND ROOFING INDUSTRY 

105A' AUTOMOBILE HOT WATER HEATER MFG.- 

Sup. Automotive Farts & Equipment Ind. 

445 BAKING INDUSTRY 

201D BEAUTY & BARBER EQUIPMENT MFG. - Div. Wholesale 
or Distributing Trade 

530 BITUMINOUS ROAD MATERIAL DISTRIBUTING TRADE 

403 BLEACHED SHELLAC MANUFACTURING INDUSTRY 

38 BOILER MFG. INDUSTRY 

459 BOTTLED SOFT DRINK INDUSTRY 

37 BUILDERS' SUPPLY TIADE 

96 BUFF & FOLISHING WHEEL INDUST >Y 

88 BUSINESS FURNITURE STORAGE EQUIPMENT & 
FILING SUPPLY INDUSTRY 

302 CANDLE MFG. IND. & BEESWAX BLEACHERS & REFINERS 

463 CANDY MANUFACTURING INDUSTRY 

429 CANNED SALMON INDUSTRY 

446 CANNING INDUSTRY 

333 ' CANVAS GOODS INDUSTRY 

58 CAP AND CLOSURE INDUSTRY 
9826 



Chemical 

M anuf ac tur ing 

Equipment 

Basic Material 

Basic Material 

Basic Material 

Equipment 
Food 

Manuf ac tur ing 

Basic Material 

Chemical 

Equipment 

Food 

Distri outing 

Manufacturing 

Manuf ac tur ing 

Chemical 

Food 

Food 

Food 

Textile 

Manufacturing 



- 795 - 



No. Code 

269 CARBON 3IACK INDUSTRY 

275B CARBON DIOXIDE IND. - Div. of Chemical Mfg.lnd. 

222 CAHD CLOTHING INDUSTRY- 

202 CARFET AND HUG MFG. INDUSTRY 

258 CAST IRON 30ILSE & CAST IRON RADIATOR INDUSTRY 

■ 

18 CAST IRON SOIL PIPE INDUSTRY 

128 CEMENT 113). (See Portland Cement Ind.) 

84C CHAIN MFG. II©. - Div. Fabricated Metal's 

275 CHHaaCAL'MAIIUFACTU3I]-TG INDUSTRY 

520 CHINA CLaY PRODUCING INDUSTRY 

467 CIGAR MANUFACTURING INDUSTRY 

389 CLAY & SHALE ROOFING 'AID TILE INDUSTRY 

364 CLAY DRAIN TIL".-: MFC-. INDUSTRY 

265 Coffee Industry 

201C COMMERCIAL STATIONERY & OFFICE OUTFITTING TRAD! 
Div. Whole, or Dist. Trade 

84L1 COMPLETE WIRE & IRON FENCE IND. _ 
Div. Fabricated Metals 

55 COMPRESSED AIR INDUSTRY 

133 CONCRETE MASONRY INDUSTRY" 

81 COPPER & BRASS MILL PRODUCTS IND.' 

401 COPPER INDUSTRY 

303 CORDAGE AND TUINE INDUSTRY 

199 CORK INDUSTRY 

245 CORRUGATED & SOLID FIBRE SNIFFING CONTAINER 

511 CORRUGATED ROLLED METAL CULVERT FIFE IND. 

187 COTTON CLOTH MFG. IND. 

1 COTTON TE "TILE INDUSTRY 

9826 



Division 

Chemical 

Chemical 

E quipment 

Textile 

Equipment 

Equipment 

3asic Material 

M anuf ac tur i ng 

Chemical 

Basic Material 

Food 

Basic Material 

Basic Material 

Food 

Distributing 

Manuf ac taring 

Equipment 

Basic Material 

Basic Material 

Basic Material 

Construction 

Construction 

Chemical 

Construction 

Textile 

Textile 



- 796 - 



No. 



Code 



Division 



77 CBOWN MFG. INDUSTRY 

109 CRUSHED STONE', SAND '& GRAVEL & SLAG INDUSTRIES 

423 DROP FORGING INDUSTRY 

322 EARTHENWARE MFG. INDUSTRY 

4 ELECTRICAL i ANUFAC TURING INDUSTRY 

186 END GRAIN STRIP '..'COD BLOCK INDUSTRY 

220 ENVELOPE MFG. INDUSTRY 

146 EXCELSIOR AND EXCELSIOR FR0DUCT3 INDUSTRY 

39 FAR: . EQUIP! ZW2 INDUSTRY 

67 FERTILIZER INDUSTRY 

326 FIBRE WALL30ARD INDUSTRY 

88B FILING SUPPLY IND. Sup. Business Furniture , etc. 

98 FIRE EXTINGUISHING APPLIANCE MFG. IND. 

88A FIRE RESISTIVE SAFE IND. Sup. Bus. Furniture 

92 FLOOR & WALL CLAY TILE MFG. IND. 

193 FOLDING PAPER BOX INDUSTRY 

90 FUNERAL SUPPLY INDUSTRY 

224 FURNITURE & FLOOR WAX & POLISH 

S4A1 GALVANIZED WARE MFG. IND. Div. Fabricated Metals 

134 GAS APPLIANCES & APPARATUS IND. 

70 GAS COCK INDUSTRY 

1051 GASKET MFG. IND. Sup. Auto. Farts & Equip. 

26 GASOLINE PUMP MFG. IND. 

117 GEAR MFG. IND. 

248 GLAZED AND FANCY PAPER INDUSTRY 

287 GRAPHIC ARTS INDUSTRIES 

COMMERCIAL RELIEF PRINTING 

NON-METROPOLI TAN NEWSPAPER 

PERIODICAL PUBLISHING 
9826 



Manuf ac tur irig 

Basic Materials 

Equipment 

Basic Materials 

Equipment 

Basic Materials 

Chemical 

Basic Mat -rials 

Equipment 

Chemical 

3asic Materials 

Manufacturing 

Equipment 

Manufacturing 

Basic Materials 

Chemical 

Manufacturing 

Chemical 

Manufacturing 

Equipment 

Equipment 

Equipment 

Equipment 

Equipment 

Chemical 

Gra. Arts. Div. 



- 797 - 



ITo. Code 



Division 



! ] • GRASS r FIBRE RUG IEDUSTRY 

277 GRAY IRON FOUIIDRY IED¥STRY 

17 GRI1SI1TG WIIZEL MFG. IS). 

223 GUMMIHG'IEDUSTRY- 

4-20 GYPSUM II.DUSTSY 

73 HAIR £ JUTS FELT IEDUSTRY 

110 HARDWOOD DISTILLATI01T IHD 

56 HEAT EXCHAITGE INDUSTRY 

183 HOUSEHOLD ICE REFRIGERATOR IEDUSTRY 

43 ICE IEDUSTRY 

275C INDUSTRIAL ALCOHOL -Di v. Chemical Mfg. Ind. 

315 113. SAFETY EQUIP. 112). & IKD. SAFETY EQUIP. TRADE 

391 IKSECTICIDE £ DISIEFECTAITT MFG. IHD. 

11 IROK & STEEL I ED. 

6 LACS I IPC. INDUSTRY 

107 LADDER MFG. IED. 

34 LAUEDRY £-. DRY CLEAITIHG IiACEIi" RY MFG. HID. 

105C LEAP SPRIEG I.E''G. -Sun .Automotive Parts £-. Equip, 

51 LIME INDUSTRY 

113 LIMES TOES INDUSTRY 

104 LIQUEFIED GAS IEDUSTEY 

412 LOOSE LEAF L BLAISE BOOK INDUSTRY 

300 LYE INDUSTRY 

234 MACARONI IEDUSTRY 

103 MACHINE TOOL & FORGIEG MACHINERY INDUSTRY 

149 I.iAC HIKED WASTE MFG. IHD. 

421 MARBLE QUARRYING & FINISHING IEDUSTRY 
9826 



Textile 

Equipment 
Basic Materials 
Chemical 
Basic Materials 
Textile 
Chemical 
Equipment 
Manuf ac tur i ng 
Food- 
Chemical 
Equipment 
Chemical 
Basic Materials 
Textile 

Basic Materials 
Equipment 
Equipment 
Basic Materials 
Basic Materials 
Distributing 
Chemical" 
Chemi cal 
Food 

Equipment 
Distributing 
Basic Materials 



- 798 - 



ITo . Code 



Division 



59 MARKING DEVICES INDUSTRY 

349 MAYONNAISE INDUSTRY 

175 MEDIUM c n ; LOW PRICED JEWELRY MFG. IND. 
232 MERCHANDISE WAREHOUSING TRADE 

344 METAL LATE MFG. HID. 

84A METALLIC WALL STRUCTURE IND. -Di v. Fab. "Metals 

205 METAL WINDOW INDUSTRY 

108 MOTOR FIRE APPARATUS MFG. HID. 

519 NATURAL CLEFT STONE INDUSTRY 

271 'iTOKFERROUS AND STEEL CONVECTOH MFG. IND. 

84N NONFERROUS HOT WATER TALE MFG.IND.-Div.Fab.Met , 

78 NOTTINGHAM LACE CURTAIN INDUSTRY 

25 OIL BURNER INDUSTRY 

448 OPTICAL WHOLESALE IND. AND TRADE 

430 PACKAGE MEDICINE INDUSTRY 

120 PAPER AND PULP INDUSTRY 

230 PAPER BAG MFG. HID. 

176 PAPER DISTRIBUTING TRADE 

361 PERFUMES, COSMETICS & OTHER TOILET PRPS.IND. 

290 PHOTOGRAPHIC MOUNT INDUSTRY 

524 P ICICLE PACKING INDUSTRY 

131 PIPE NIPPLE MFG. IED. 

63 PLUMBAGO CRUCIBLE INDUSTRY 

204 PLUMBING FIXTURES INDUSTRY 
239 ■ PORCELAIN BREAKFAST FURNITURE ASSEMBLING IND. 

4B PORTABLE ELECTRIC LAMP & SHADE- Subdiv.Elec. 

359 PREFORMED PLASTIC PRODUCTS INDUSTRY 
9826 



Manufacturing 

Food 

Manufacturing 

Public Utilities 

I ^anuf ac tur i ng 

Manufacturing 

Manufacturing 

Equipment 

Basic Material 

Equipment 

Equipment 

Textile 

Equipment 

Manufacturing 

Chemical 

Chemical 

Chemical 

Distributing 

Chemical 

Chemical 

Food 

Equipment 

Basic Materials 

Equipment 

Lianuf ac turi ng 

Equipment 

Basic Materials 



- 799 - 



No . Code 



Division 



257 PRINTING EQUIPMENT INDUSTRY & T1ADE 

500 PROCESSED OR REFINED FISH OIL INDUSTRY 

57 PUMP MANUFACTURING I1IDUSTRY 
148 PYROTECHNIC 1 ANUFACTURING INDUSTRY 
105J RADIATOR MFG. -Div. Auto. Parts and Equipment 
201G- RADIO WHOLESALING TRADE -Div. Whole, or Dist. 
172 RAYON & SILK DYEING & PRINTING INDUSTRY 
311 READY MIXED CONCRETE INDUSTRY 
168 REFRACTORIES INDUSTRY 

4A REFRIGERATION -Subdiv. Electrical ilfg.Ind. 

127 REINFORCING lATERIALS FABRICATING IND. 

105B REPLACE1.IENT AXEL SHAFT -Supp. Automotive parts 

33 RETAIL LUMBER, LUi.SER PRODUCTS, BUILDING 

MATERIALS AND BUILDING SPECIALTIES TRADE 

366 RETAIL MONUMENT INDUSTRY 

410 RETAIL RUBBER TIRE & BATTERY TRADE 

280 RETAIL SOLID FUEL INDUSTRY 

68 ROAD MACHINERY I.IANUFAC TURING INDUSTRY 

171 ROLLING STEEL DOOR INDUSTRY 

156 RUBBER 1.IA1TUEAC TURING INDUSTRY 

174 RUBBER TIRE MEG. IND. 

20 SALT PRODUCING INDUSTRY 

200 SANITARY NAPKIN & CLEANING TISSUE IND. 

274 SAW L STEEL PRODUCTS MEG. IND. 

114 SCIENTIFIC APPARATUS INDUSTRY 

167 SET UP PAPER BOX MEG. IND. 

201P SHEET METAL DISTRIBUTING TRADE -Div. Whole. 



EQUIPMENT 

Food 

Equipment 

Chemical 

Eauipment 

Distributing 

Textile 

Construction 

Basic Materials 

Equipment 

Construction 

EQUIPMENT 

Distributing 

Distributing 

Distributing 

Distributing 

Equipment 

Manufacturing 

Chemicals 

Chemical 

Chemical 

Chemical 

Manufacturing 

Equipment 

Chemi cal 

Distributing 



- 800 - 



No. Code 



Division 



102 SHOVEL, DRAGLINE &. CRANE IND. 

48 SILK TEXTILE INDUSTRY 

84Z STAiDARD STEEL BARREL & DRUM MFC-.-Div.Fab.L'Iet , 

278 stem: HEATING EQUIPMENT INDUSTRY 

82 STEEL CASTING INDUSTRY 

62 STEEL TUBULAR & EIRE BOX BOILER IND. 

313 STEEL WOOL INDUSTRY 

158 STONE FINISHING MACHINERY £ EQUIPMENT IND. 

123 STRUCTURAL CLAY PRODUCTS INDUSTRY 

469 .SULPKONATED OIL I ANUFAC TURING INDUSTRY 

249 TAG INDUSTRY • 

54 THROWING INDUSTRY 

36 TOYS AND PLAYTHINGS INDUSTRY 

382 TRANSPARENT MATERIALS CONVERTERS II©. 

23 UNDERWEAR AND ALLIED PRODUCTS MFG. I ID. 

272 UNIT HEATER AID/OR UNIT VENTILATOR MFG. IND. 

502 UPWARD- ACTING DOOR INDUSTRY 

153 VALVE & FITTINGS MAIiUFACTURIMG INDUSTRY 

136 VITRIFIED CLAY SEWER PIPS MFG. I ID. 

137 WARM AIR FURNACE MANUFACTURING INDUSTRY 
472 WARi.i AIR REGISTER INDUSTRY 

295 WATERPROOF PAPER INDUSTRY 

166 WAX PAPER INDUSTRY 

105D WHEEL & RIM MFG. -Sup. Auto. Parts & Equip. 

458 WHOLESALE CONFECTIONERS INDUSTRY 

201U WHOLESALE COPPER, B PASS, B BONZE & RELATED 
ALLOYS Div. Wholesale or Distributing Trade 



Equipment 
Textile 

Manufacturing 

Equipment 

Equipment 

Equipment 

Manufacturing 

Equipment 

Basic Materials 

Chemical 

Chemical 

Textile 

Manufacturing 

Chemical 

Textile 

Equipment 

Manufacturing 

Equipment 

Basic Materials 

Equipment 

Equipment 

Chemical 

Chemical 

Equipment 

Food 

Distributing 



9826 



- eoi - 



ITo. Code 



Division 



449 WHOLESALE LI0HUKEHI4L GHANIEB IHDUSELY 

484 WHOLESALE MOHUlIEilTAL ItfBBLE IEDUSTRY 

508 WHOLESALE PLUMBING PRODUCTS, EEATIilG PRODUCTS 
AND/ OH DISTRIBUTING PIPE, FITTINGS & VALVES 

462 WHOLESALE TOBACCO TRADE 

8481 WIRE ROPE & STRAND MEG-. IND .-Div.Fat). Metals 

4C WIHI1IG DEVICES- Sub di v. electrical mfg.ind. 

291 WOOD CASED LEAD PENCIL IITDUSTRY 

3 WOOL TEXTILE INDUSTRY 

383 WOOD TURNING & SHAPING INDUSTRY 



Basic Materials 
Basic Materials 

Distributing 

Food 

M'anuf ac tur i ng 

Equipment 

Manufacturing 

Textile 

Basic Materials 



9826 



- 803 - 

EXHIBIT IV 

OPEN PRICE PLAIT FOR THE FOLDING- PAP2R BOX INDUSTRY 

FOLDING- BOX AUTHORITY 
19 West Forty-Fourth Street, 
New York, IT. Y. 



October 22, 1934 
Bulletin No. 29-H 
Ouen Price Plan 



TO ALL IviSIIBERS OF THE FOLBIHG PAPER BOX INDUSTRY 



The Code Authority has declared all products of the Industry 
subject to the Open Price Plan of Selling frith the exce-otion of those 
products exempted in Order Ho. 12-B. Order No. 12-F was issued imder 
and pursuant to the provisions of Article VI, Accounting-Selling, of 
the Code of Fair Competition for the Folding Paper Box Industry, ap- 
proved "by the President on December 30, 1935, and sets forth the method 
of operation. The purpose of this Bulletin is to explain in detail the 
optional courses of -orocedure provided in the Open Price Plan, any one 
of which the members of the Industry may choose, and to show what in- 
formation the members will receive from the Code Authority in connec- 
tion with the plan. The information in this Bulletin supersedes that 
given in Bulletins 29-A and 29-B. 

OPEN PRICE PLAIT 

In order to sell a particular product to a particular customer in 
full accordance with the provisions of the open -orice plan, each mem- 
ber shall sell or offer for sale any particular product to a particular 
customer by making use of any of the following methods prescribed in 
the plan: 

1. Register Customer and Product 

2. Register Inquiry. 

3. Quote Price in accordance with Estimating Manual. 

1. Register Customer and Produc t 

A member becomes a Registered Liember on any product when he files 
Customer Registration and Product Registration. All Registered Hembers 
will receive notification of all Registered ITembers, inquiries and 
declarations of price concerning the product on form listed on page 4. 

A member registered on a particular product proceeds as follows: 

1. When no price has been declared, 

a. Sells or offers product for sale immediately, 
at any price he chooses which is not below his 
own cost and without notification to Code 
authority; or 



9826 



- GO? - 

b . Declares a price, not "bellow his own cost, end 
sells or offers product for sale immediately 
at price declared. 

2. When Price has been declared, 

a. Soils or offers product for sale immediately, 
and without notification to Code Authority, 
at lowest declared price on or after its effec- 
tive date providing he has no higher price on 
file himself. In the latter esse he must use 
his ovm price until such tine as he withdraws 
his price or files a different price; or 

1. Declares a price, not "below his own cost. If 
this price is higher than the lowest declared 
price, it becomes effective immediately. If 
this price is lower than the lowest declared 
price, it becomes effective five days from re- 
ceipt in Zone Office in which customer is located. 
If this -orice is lower than the lowest declared price 
hut higher than one declared which is awaiting its 
effective date, the new price "becomes effective on 
the same date as the one awaiting its effective date. 

Prices once declared remain effective until withdrawn or super- 
seded. To place any product on a closed price "basis, all declared 
prices must he withdrawn. 

2. Register an Inquiry 

When a member, not registered on a -oroduct, receives a "bona fide 
inquiry from a customer, he shall file a Registration of Inquiry. The 
Zone Agent will immediately notify the inquirer regarding the complete 
status of the account including the members who are registered or have 
made inquiries on the product and any prices which have "been declared, 

A member who has registered an inquiry on a particular product 
proceeds as follows: 

1. When product has not beer registered by any other 
member. 

a. Sells or offers product for sale immediately, at 
any -orice he chooses which is net below his ovm 
cost and without notification to Code Authority; 
or 

b. Declares a price, not below his own cost, and sells 
or offers product for sale immediately. 

2. When product is registered and a price declared, 

a. Sells or offers product for sale immediately, and 
without notification to Cod.e Authority, at lowest 
declared price on or after its effective date; or 



932, 



- 804 - 

b. Declares a price, not below his Dun cost. If this 
price is higher than the lorest declared price, it 
becomes effective immediately. If this price is 
loner than the lowest declared price, it "becomes 
effective five days from receipt in Zone Office 
in which customer is located. If this price is 
lower than the lowest declared price hut higher 
than one declared which is awaiting its effective 
date, the new -orice "becomes effective on the same 
date as the one awaiting its effective date. 

3. When product is registered hut no price declared. 

At end of three days from receipt of first Inquiry 
on this product still effective in Zone Office of zone 
in which customer is located, inquirer 

a. Sells or offers product for sale, at any price he 
chooses which is not below his own cost and with- 
out notification to Code Authority; or 

h. Declares a price, not below his own cost and sells 
or offers product for sale at this price. 

An inquiry member, except for the three day period outlined in 
"3" above, has the same status as a Registered Member for a period of 
thirty days from receipt of inquiry in Zone Office of zone in which 
customer is located and will receive same information as a Registered 
Member. If inquiring member makes the sale, he should register the 
customer and product and become a permanently Registered Member. 

When II forms are sent to members, the forms will show the complete 
and up-to-date status of the account and will suoersede any previous 
notification concerning the same customer and product. When a member 
is only registrant or inquirer on a particular product the acknowledg- 
ment copy of the Registration of Product or Registration of Inquiry 
will be returned stamped "Product not Registered - Llay Quote at Once" 
and no IT sheet will be sent. 

3. Use Manual 



It is advisable for a member to register all his customers and pro- 
ducts so that he may receive prompt information concerning any activity 
on all his accounts. 

However, in lieu of such registering, any m&mber shall sell or 
offer for sale any product to any customer at any time and without any 
notification to the Code Authority providing the price is at least equal 
to the cost computed on the basis of the rates included in the Basic 
Estimating Manual plus the material cost as issued by the Code Authority 
and plus the lowest filed percentage for the zone in which purchase is 
made . 



9826 



FORMS USED I IT OPEIT PRICE FLAK 

Forms Sent "by Members to C.A . Forms Sent to Members b^- C.A. 

1. When Customer is being Registered 

Registration of Oust oner Acknowledgment Cory 

RC-1 • rid RC-2 RC-2 

2. When Product is being Registered 

Registration of Product a.. Acknowledgment Copy, RP-2 

RP-1 and RP-2 b. Notification of, li-1 

1. Other Registrants 
2» Inquiries 

3. Price Declarations 

4. Price Withdrawals 

3. When Inquiry is being Registered 

Registration of Inquiry, a. Acknowledgment Copy, RI-2 

RI-1 and RI-2 b. For a 30 day period, sane 

notifications as sent 
Registered llembers, IT— 1 

4. When Price is being Declared 

D e cl ar at i or. of Price, a. Acknowledgment Co-oy, D-2 

D-l and D-2 b. Same notifications as sent 

Registered Members, N-l 

5. When Declaration of Price is being Withdrawn 

Withdrawal of Price, a. Acknowledgment Copy, W-2 

W-l and W-2 b. Same notifications as sent 

Registered Members , N-l 

6. When Percentage is being Declared 

Declaration of Percentage Acknowledgment Copy, DPC-2 

DPC-1 and DPC-2 Notice of Lowest Filed 

Percentages 



982G 



- 806 - 

s imjary of esseittial f-wire'v i'ts . 
for effective operation 
of qpetj price plait 

A. Register your products and customers on the forms provided "by the 
Code Authority: 

1. Furnish all the information called for on these 
forms. This is absolutely essential in order that 
members may he advised of other product registrants 
and of other activity on the particular product. 

Ii.IPORTAITT - Dimensions of boxes should he given as 
follows: 

1. Length- Larger dimensions at opening 

2. Width - Smaller dimension at opening 

3. Depth - Remaining dimension 

In the absence of conppete information on the forms 
prescribed, it becomes practically impossible for 
Zone Agent to determine the similarity? - of products 
manufactured by more than one member. 

2. It is important that the customer's name on bo.th 
the customer and product registration shovild be 
correctly spelled, inasmuch as all records in Zone 
Agent's files are filed alphabetically, and errors 
will result in misfiling and confusion of records. 
If customer is hnown by more than one name, all 
names should be sho-m on forms. 

3. It is important that you furnish the name and style 
of carton as designated in Section 2 of the Basic 
Estimating Uanual . 

4. In registering customers and -oroducts, the address 
given for the customer should be that '"here the 
purchasing agent of the customer is located so that 
your registration may be filed in the proper zone. 
On product registrations, furnish address of cus- 
tomer where purchasing agent is located and also 
point of delivery, whenever known. 

5... Registrations for affiliated or subsidiary products 
are cross-indexed to parent cor/maiiy. 

6. Registration of -products sold through jobbers shall 
be registered and/or declared with cross reference, 
in the name of both the jobber and the jobber's cus- 
tom- r. 



9326 



- 8C7 - 

7. A member who has registered his specific products 
and customers in accordance with the Open Price 
Plan need not declare an open price for any speci- 
fic product where no competitive situation exists. 

&. A Registered Member should file his declaration 
of ririce only "hen he fells that the nature of 
the s-oecific product for the particular customer 
requires open price dealing. 

9. A member who has declared an open price may not 
quote a lower -orice to meet an o-oen price on 
file, unless he withdraws or supersedes his pre- 
viously declared open price. 

10. No member shall file a declaration of price un- 
less one of the following requirements have "been 
met: 

1) Bona fide registration of product and 
customer has been filed; or 

2) Bona fide registration of inquiry has 
been filed. 

Very truly yours, 

FOLDIi'G BOX AUTHOPJTy 

(signed) A. E. Murphy 

Agent Representative 



982P 



- 808 - 
PH03L3MS A1TD PROCEDURE ARISING UNEER 

Tin open pbigs plai; • . 



There are many questions and -or obi ems that arise from the opera- 
tion of the Open Price plan. ¥e have listed several of the most re- 
curring situations, so that the practical operation of the Open Price 
Plan can be seen. 



CASS 1T0. 1 



1. FACTS 

1. Member A registered 

on Product X for Custome: 

Y. 

2. IIo other registrants 

3. lib inquirers 

4. No -or ice declarations 



PROCEDURE 

Member A nay immediately 
quote a price on Product X 
for Customer Y without de- 
claring such price with the 
Zone Agent , 

a) Such -nrice must not be 
below member A's cost. 



2. Member A nay declare with 
the Zone Agent a price 
below which he will not 
quote to Customer Y on 
Product X. 

a) Member A nay quote de- 
clared price immediate- 

b) Such price must not b« 
below member A's cost. 



******** ** 



CASS 170. 2 



1. Members A & B regis- 
tered on Product X for 
Customer Y. 

2. No -orice declaration 



1. Members A & B may immedi- 
ately quote a price to 
Customer Y without declara- 
tion to Zone Agent. 

a) No price may be below 
the quoting Member's 
cost, 



9826 



CASE i:o. 3 



FACTS 



PROCEDURE 



1. LI embers A & 33 regis- 
tered on Product X 
for Customer Y. 

2. Member A declares price 
on Product X for Cus- 
tomer Y which is only 
price declaration on 
file 



Declaration of price by Mem- 
ber A immediately becomes 
open price for Product X for 
Customer Y for all regis- 
trants. 

a) Such price must not he 
"below own cost of Member 
A. 



Zone Agent, upon receipt of 
such declaration, will imme- 
diately so notify memhers 
A & 3 * 

LI ember 3 may immediately 
quote the same price as de- 
clared by Member A. 

If LI ember 3 desires to quote 
a price lower than the de- 
clared price of Member A, he 
must file such price with 
the Zone Agent 

a) Such price must not be 
below his own cost. 

b) I.Iember 3 must wait five 
days after receipt "by 
Agent before quoting such 
lower price to Customer Y 



***** 



CASE HO. 4 



1. Member A registers 
inquiry on Product X 
for Cut tome r Y. 

2. Ho other Inquirers 

3. Ho registrants 



1. Member A will he informed "by 
the Zone agent that there are 
no registrants or inquirers 
on Product X for Customer Y 

2. Member A may immediately 
quote a price to Customer Y 
on Product X without declar- 
ing such price to the Zone 
Agent 

a) price must not be below 
Member A's own cost 



9826 



- 810 - 



CA£ 



FACTS 



PROCEDURE 



1. Liember A registers inquiry 
on product X for Customer Y 

2. 1.1611113 er B is registered on 
Product X for Customer Y 



Liember B will be notified 
immediately "by Zone Agent 
that Li ember A has registered 
an inquiry on Product X for 
Custoner Y. 



3. Ho declaration of -orice 
by Iie:-iber B on file 



2. The Zone Agent vri.ll immedi- 
ately notify Liember A that 
Li ember 3 is registered on 
Product X for Customer Y. 



4. Declaration of price 
by Llember B on file 



If there is no declaration by 
Liember B on file, Liember A 
may not quote any price except 
Lianual until 3 days after re- 
ceipt of inquiry in Zone Of- 
fice, Saturday and Sunday ex- 
cluded. 



4. If Llember B has declared a 
"orice on Product X for Cus- 
tomer Y, iiember A is notified 
by the Zone Agent of sxich 
price and effective date and 
Liember A may quote such price 
without declaration on such 
effective date 

5. Liember A may file a lower 
price than the one declared 
by Liember B 

a) Such price shall not be be- 
low his own cost 

b) iiember A must wait five days 
after receipt by 'Zone Agent 
before quoting such . price 



$ * i'fi ^c :< $fi ^c * ste * sje :fc * aje 



2. 



CASE 170. 6 



Liember A registers inquiry 
on Product X for Customer Y 

Liember A declares -orice on 
Product X for Customer Y 



1. Liember A -.'ill be informed by 
the Zone Agent that there are 
no registrants or inquirers on 
Product X for Customer Y 



9826 



-811- 



3, ::o other registrants 

4. IJo other inquirers 



2. Member A nay immediately quote 
his declared price to Customer 
Y on product X 

a) Such price shall not he be- 
1ot7 his o~ r n cost 



CASE ICO. 7 



FACTS 

1. Members A & B regis- 
tered on Product X 
for Customer Y 



PROCEDURE 



2. Member A declares 
first price ($10.00) 
effective Uovember 5th. 

3. Henber 3 declares 
price ($8.00)- 

Declaration received 
in Zone office November 
10 th 

Declaration effec- 
tive iTov ember 15 th 



1. L : ember D is notified of dec- 
laration of Member A 
($10.00) 

2. Member A is notified of dec- 
laration of Member 3 
($3.00) 



Member A withdraws his 

price — 

Withdrawal received 
in Zone Office ITo- 
venber 12th 



3. Member 3 is notified of with- 
drawal of declaration of 
Member A ($10.00) and noti- 
fication will show effec- 
tive date of declaration 
of Member B ($3.00) moved 
up to effective d?te of 
withdrawal of declaration 
of Member A. 



9826 



- 312 - 
EXHIBIT V 
ifflA FOLICY STATELEJT 
EXHIBIT "A 11 

OPEil PRICE FILING- 

1. ERA policy favcrs properly drawn open price provisions in codes 
where desired by the industry. The attached draft Article reflects ap- 
proved policy and should be susbtantially followed: 

2. The objective-is to achieve fair cempe.tition, based on knowledge 
of competitive factors to the fullest extent oossible without unduly cur- 
tailing private initiative or destroying incentives to any individual 
legitimately to extend his business. 

3. jjhere industries believe- th t sone waiting period is essential 
in order to accomplish the objectives outlined, the matter will be treat- 
ed on its uerits °s in the case of any proposed departure from announced 
policy., 

J' ARTICLE ; OPEil FRICE 

"Section 1. Each member of th- trade/industry shrll file with a 
confidential and disinterested agent of the code authority or, if none, 
then with such an agent designated by the Administrator, identified lists 
of all of his prices, discounts, rebates, allowances, and all other terns 
or conditions of sale, hereinafter in this r.rticle referred to as 'price 
terns', which lists shall ccnpletely and accurately conform to and repre- 
sent the individual pricing practices of said member. Such lists shall 
contain the price terns for all such standard products of the industry as 
-.r sold or offer :1 for sale by sail member and for such non-standard 
products of said nenber as shrll be designated by the code authority. 

Said price terHs.sha.il in the first instance be filed within days 

after the date of approval of this provision. Price terms and revised 
price terns shall become effective immediately upon receipt thereof by 
said agent. Immediately upon receipt thereof, sal ;ent shall b^ tele- 
graph or other eoually prompt aeans notify said member of the tine of such 
receipt. Such lists and revisions, together with the effective tine there- 
of, sha.ll upon receipt be immediately and simultaneously distributed to 
all members of the industry and to all cf their customers who have applied 
therefor and have offered to defray the cost actually incurred bv the code 
authority in the preparation and distribution thereof and be available 
for inspection bv any cf their customers at the office of such agent. 
Said lists or revisions or any part thereof shall not be made available 
to any person until released to all members of the industry and their 
custoners, as aforesaid; provided, th:t prices filed in th; first instance 

shall not be released until the expiration of the aforesaid day period 

after the approval of this code. The code authority shall maintain a 
permanent file of all orice terns filed a herein provided, and shall not 
destroy any part el such records except upon written consent of the Ad- 
ministrator. Upon request the code authority sh; 11 furnish to the Adminis- 
trator or any duly design; t a ;ent of the Administrator copies of any 
such lists or revisions of price terns. 

9826 



- 813 - 

"Section 2. When an;.' member of the trade /in ust.y has filed any 
revision, such member snail not file a hi ;her price within forty-eight 
(48) hours. 

"Section 3. Un member of the trade /industry shall sell or offer 
to sell any produc ts/services to the trr.de/industry, for which price 
terms have been filed purt;u ; t to the provisions of this article, 
except in accordance with such price terms. 

"Section 4. No member of the industry shall enter into any agree- 
ment, understanding, combination or conspiracy to fix or maintain price 
terms, nor cause or attempt to cause any member of the industry to 
change his price terms by the use of intimidation, coercion, or any 
other influence inconsistent with the maintenance of the free and open 
marhet which it is the purpose of this Article to create." 



)826 



- 814 - 

OFFICE MEMORANDUl.1 NO. 260 
July 16, 1934 

APPLICATION OP GENERAL POLICY 



1TRA is endeavoring in the light of its experience to formulate 
general policies so that interested parties and the organization itself 
may know end work toward definite 1IRA aims. 

This does not near, that every code in process and not approved at 
the tine of announcement of a general policy must conform - in the 
sense of including the type of provision favored by policy. Under 
certain circumstances, it might he manifestly unfair to require sub- 
stitution of a new clause after lengthy negotiations have finally 
resulted in assent by the industry to a supposed final form of the 
code. It would he equally unfair to the members of an industry to 
approve a provision and thus cause them to adjust their practices to 
conform thereto, when the provision is so framed as to require sub- 
sequent change or elimination. 

Change in codes designed to bring them into conformity with policy 
will be required, only to the following extent: 

1. As to. sending co de s : 

When in final form and assented to by the Industry, before the date 
of announcement of a general policy, the code, if otherwise acceptable, 
will be approved. However, provisions flatly inconsistent with the 
essentials of such policy will be stayed, to the extent of such in- 
consistence, until the Industry shows why such portions should. not be 
permanently stayed or made to conform in substance to such policy. 

2. As to. approved codes : 

(a) There will be no change so long as such a provision is 
causing no difficulty, but in such cases the Research and Planning 
Division and Deputies must observe operation: 

(b) Whenever desired by the Industry or whenever the occasion is 
appropriate changes will be effected: 

(c) Whenever such observation reveals that such a provision in 
operation. is troublesome administratively or is "not operating in harmony 
with the purposes of the Act, the matter must be taken up with repre- 
sentatives of the industry and thereafter stayed unless a satisfactory 
modification can be effected with sufficient promptness. 

By direction of the Administrator: 



G. A. Lynch, 
Administrative Officer. 



9826 



- 815 - 

EXECUTIVE ORDER 



MODIFICATION OF EXECUTIVE ORDER NO. C646 OE MARCH 14, 1954, ETC. 

Ev virtue of and pursuant to the authority vested in me under 
title I of the National Industrial Recover:- Act of June 16, 1953 (ch. 
90, 45 Stat. 195), and in order to effectuate the purposes of said 
title, it is hereby ordered rs follows: 

1. Any person submitting a "bid to any agency or instrumentality 
of the United States, or any State, municipal, or other public author- 
ity, to furnish goods or services at prices which, in accordance with 
the requirements of one or more approved codes of fair competition, 
must have been filed, prior to their quotation, with the Code Authority, 
or other designated agency, shall be held to have complied adequately 
with the requirements of such code of fair competition: (a) If said 
"bidder shell qurte a -rice or trices not more than 15 percent below 
his price or prices filed in accordance with the requirements of such 
code or codes; and (b) if, after the bids are opened, each bidder 
quoting r. price or prices below his filed irice or trices shall im- 
mediately file a copy of his bid with the Code Authority or other 
appropriate agency with which he is required to file prices. 

?.. If upon cormlaiut made to the Administrator for Industrial 
Recovery, he shall find, after due investigation, that the tolerance 
of 15 percent provider in this order is resulting in destructive price 
cutting in a particular trade or industry, he is hereby authorized to 
issue an administrative order reducing said tolerance of 1'5 percent 
for such trs.de or industry to the extent he shall find necessary to 
prevent such destructive price cutting, but in no event to a tolerance 
of less than 5 percent. 

3. The Administrator for Industrial Recovery is directed to cause 
a study to be made of the effects of this ord"r upon the maintenance of 
standards of fair competition in spies to public and private customers 
and to report to the President thereon within six (6) months of the 
da.te of this order. 

4. All prior Executive orders, including Executive Order No. 6646 
of March 14, 1954, arc hereby modified insofar as, and to such extent, 
as they may be in conflict or inconsistent with this order. 

FRANKLIN H. ROOSEVELT. 



The White House, 

June 29, 1934. 



(No. 6767) 



9R9fi 



- 616 - 
R D'E R 

GRANTING LIMITED EXEMPTION FROM PROVISIONS OF 
CODES OF FAIR COMPETITION 111 CONNECTION WITH 
QUOTATIONS MADE TO GOVERNMENTAL AGENCIES 

Administrative Order ITo. X-48 



WHEREAS, certain provisions cf Codes of Fair Competition, ap- 
proved under Title I of the National Industrial Recovery Act, are in 
conflict with statutory provisions or well established procedure re- 
latin^.; to contracts awarded by the United States, the District of 
Columbia, and the various States "or political subdivisions thereof- 
(all of which are hereinafter described as governmental agencies); and 

It appearing to me that the exemption hereinafter' granted is in 
furtherance of the public interest and will tend to effectuate the 
policy of. said Title of said Act; 

Pursuant tc the authority vested in me under said Title of said 
Act by Executive Orders of the President, including Executive Order 
ITo. 6343-A, dated December 30, 1953, and otherwise, it is hereby 
ordered that members of industry subject to codes of fair competition 
who bid or niay bid on contracts to be awarded by governmental agencies 
be and they are hereby exempted from compliance with any provisions of' 
such codes governing the'malring of quotations to governmental agencies 
which prohibit any of the following -nracticcs and such members, not- 
withstanding such prohibitions contained in such codes may: 

. (a) Quote prices and terms of sale to. governmental agcnci'es as 
favorable as. those permitted to be quoted to any commercial buyer for 
like quantities; 

(b) Quote definite -orices of terns of sale, not subject to ad- 
justment resulting in increased costs during the life of the contract, 
for definite quantities and for definite periods not to exceed three 
months (unless a longer period is not ncrnit '"• cd by any such code); 

(c) Quote definite nrices or terns of sale, not subject to ad- 
justment resulting in increased costs during the life of the contract, 
for indefinite quantities and for definite periods not to exceed six 
months (unless a longer period is now permitted by any such code); 

(d) Quote prices and terras to apply on contracts to become 
effective not more than sixty days from the date of the opening of bids; 

(.) Quote, prices F.O.B. point of origin and/or F.O.B. destination. 

PROVIDED, HOWEVER, that the exemption hereby granted shall be 
limited to and operative only in connection with quotations made by such 
members to governmental agencies; that nothing in this order contained_ 
slia.ll operate to ;oermit deviation from or abandonment of open price and 
cost protection provisions nor or hereafter contained in any such code; 
and that nothing in this order contained shall relieve any such member 
at any tine from the duty of complying with all other provisions of such 
codes. 
Washington. D. fi. wrTfW q. .TDPTr.qrYM 



- .-. J. ( - 
OFFICE LM.iOi-A.liiU:: 110. 267 

JULY 30, 1934. 

CLASSIPICATIOli CF customers. 



The following clause reflects ERA policy on this matter and 
should he substantially followed wherever provisions for classification 
of customers are included in codes: 

"The Code Authority shall cause to he formulated and 
keep current a classification of all types of customers 
of the industry. Such classification shall be subject 
to the disapproval of the Administrator and shall con- 
tain: (a) A complete list of all of the classes of 
customers of the industry, including a class to cover 
every known type of customer; and (b) definitions or 
descriptions of the several classes in terms of 
functions performed, or in other appropriate terms 
such as purchasers of defined quantities. 

"After submission to the Administrator, if there is 
no disapproval or request for suspension of action 
within twenty (.30) days, full information concerning 
the classification shall- be made available to all 
members of the industry. l T o one shall by intimidation, 
coercion, or other undue influence cause or attempt 
to cause the inclusion of any customer in or the 
exclusion of any customer from any class of customers 
from the classification., or the use of uniform or 
stipulated prices., discount, or differentials and each 
member of the industry may at all times classify his 
own customers in accordance with his own judgment." 

Ho such -~>ro;nosed code provision nor any classification there- 
under shall be approved if the same is designed or would tend to fix 
uniform prices, discounts or differentials or to establish resale 
price maintenance, eliminate or suppress, or discriminate against any 
customer or class of eustomers. 

Other proposed provisions concerning classification of customers 
are presumed to be contrary to policy. 

3- direction of the Administrator: 



G. A. LY1TCH 
Administrative Officer. 
10304. 



982G 



- 813 - 

OFFICE l.Ei.IORAi'DUM 

l*o. 316 (*) 
December 6, 1934. 
PEEiilUIIS AID "FREE DEALS" 

'The following policies will govern clauses in codes relating to 
premiums or "free deals." 

1. There should be no general provisions prohibiting the use of 
premiums or "free deals." 

2. Certain uses of premiums or "free deals" would constitute 
methods of evading trade practice provisions; for example, open price 
provisions. The proper way to prevent such evasion of any trade 
practice provision is careful drafting of the provision in question. 
For example, in an open price provision, it should be required that 
all terns and conditions of sale, including premiums or "free deals" 
and conditions relating thereto, must be filed. 

3. Although there should be no general prohibition against the 
use of premiums or "free deals," the use of premiums or "free deals" 
in the following ways may be prohibited: 

(a) The use of premiums or "free deals" in 
ways which involve commercial bribery in 
any form. 

(b) The use of premiums or "free deals" in 
ways which involve lottery in any form. 
The term ''lottery" should be construed to 
include, but without limitation, any plan 
or arrnagement whereby the premium or 
"Free deal" offered differs substantially 
in value from customer to customer of the 
same class, except as a result of differ- 
ences in quantities purchased. 

(c) The use of premiums or "free deals" in ways 
which involve misrepresentation, or fraud, 
or deception in any form. It should be 
noted that the use of the word "free", 
"gift", "gratuity", or language of similar 
import in connection with premiums or 
"free deals" cannot be declared deceptive 
in and of itself. It will be proper, ho?:- 
evcr, to prohibit the use of this or any 
other language with intent to deceive, or in 
such a way that it does in fact mislead or 
deceive customers in some material particular. 



9826 



- 819 - 

(d) The giving of premiums or "free deals" to 
any customers when such premiums or "free 
deals" are not offered to all customers of 
the same class in the trade area. 

Office Memorandum "Jo. 232 is hereby superseded. 

By direction of the National Industrial Recovery Board: 



VT. A. HARRIMAN 
Administrative Officer. 



[*) Note — The substance of this memorandum will be incorporated in 
the 1IRA Office Manual under "Code Making and Amendment, Part II, 
1736." 

2423. 



9826 



- 820 - 

OFFICE L33JDRA1TDD1I 1T0. 326* 

JA11UARY 5, 1935 

ADVERTISING ALLOiTAFCES 



Manufacturers or other vendors selling goods to distributors 
frequently find themselves desiring to purchase from their customers 
an advertising or promotion service v, r hich their customers can render. 
In purchasing such services the vendors have become accustomed to 
make payment by "allowing" a certain reduction from what would other- 
wise he the price. The payments thus me.de have "become known as 
"advertising "allowances". 

Code provisions declaring the giving of advertising allowances an 
unfair practice would not change the basic facts that sellers must 
urice their goods to buyers and that certain buyers have promotion 
services which they are desirous of selling for which those who sell 
to them are willing to pay. The remedy for such suspicion, secrecy, 
confusion, and misrepresentation as may be connected with advertising 
allowances, lies in:, 

(?,) Clearly separating and thus establishing 
the distinct identities of the two ac- 
tivities which are involved in giving ad- 
vertising allowances. 

(b) Causing that part of the advertising allow- 
ance which is actually a price reduction to 
appear in prices - reported prices, if the 
industry or trade has an open price plan. 

(c) Causing that part of the advertising allow- 
ance which is actually a payment for ad- 
vertising or promotion service to appear as 
such with definite description of the 
service for which it is given, and with such 
publicity, where publicity is practicable, that 
it is unlikely that the payment will be more 
than the competitive worth of the services 
involved. 

Accordingly, it is MA policy that an industry desiring to 
regulate advertising allowances should not be permitted to do so by 
general prohibitions, by restrictions on the basis of products or types 
of distributors, or otherwise than in accordance with the following: 

1. That no member of an industry or trade shall designate as an 
"advertising allowance", "promotion allowance" or similar term, any 
price reduction, discount, bonus, rebate, or other form of price 
allowance or concession, or any consideration for advertising or pro- 
motion services offered or given by him to any customer. 



9826 



- 821 ~ 

.?,. That no member of an Industrjr or trade shall offer or give 
any consideration for advertising or promotion services to any customer 
except for definite and specific advertising or promotion services. 

3. Agreements to purchase advertising services from customers 
shall be made in written contracts separate from sales contracts. 

4. Such contracts shall specifically and completely set out the 
promotion services to be performed, together with the practice con- 
sideration to be naid therefor, the method of determining performance, 
and all other terms and conditions relating thereto. 

5. Some arrangement for -publicity may be ma.de, where effective 
machinery therefor can be devised. In considering any arrangement for 
publicity, care should be taken to avoid machinery so cumbersome that 
its cost will outweigh benefits to be gained. 

There is attached a draft section (Exhibit A) suggested for use 
in codes in which it is desired to regulate advertising allowances. 

By direction of the national Industrial Recovery Board: 



W. A. HA.RFJMAN, 
Administrative Officer, 



*Hote— The substance of this memorandum will be incorporated in the 
NBA Office Manual under "Code Making and Amendment - Basic Code - Trade 
Practices - Part 11-5031.15" when released in Office Manual Form. 



123 



9826 



EXHIBIT A 

Section . ! T o member of the trade/ industry shell designate as 

an "advertising allowance", a "promotion allowance", or by a similar 
term, any price reduction, discount, "bonus, rebate, concession, or other ■ 
form of allowance, or any consideration for advertising or promotion 
services, offered or giver, by him to any customer. 

!Io member of the trade/industry shall offer or give any considera.- 
tion merely for "pushing", "advertising", or otherwise than for definite . 
and specific advertising or promotion services. Such consideration shall 
be given only pursuant to a separate written contract therefor, which 
contract shall specifically and completely set forth the advertising 
or promotion services (in such manner that their specific character may 
be understood by other members of the trade/ industry and their customers) 
to be performed by the recipient of said consideration, the precise 
consideration to be paid or given therefor by said member, the method 
of determining perforrna.nc.es, and all other terms and conditions re- 
lating thereto. 



'The following are examples of provisions for publicity which may 
be found workable and desirable by particular industries: 

Exarrnl el. Immediately upon the making of any such contract for 
advertising or promotion services by any member of the trade/industry, 
a true copy thereof shall be filed by said member with a confidential 
and disinterested agent of the Code Authority (as provided for in this 
code), or, if none, then with such an agent to be designated by the 
ITational Industrial Recovery Board. Said agent shall maintain all 
copies of such contracts on file until six (6) months after the 
termination thereof, and shall make the same available at his office 
for inspection at all reasonable times by all members of the trade/ 
industry, and all of their customers and shall distribute a true copy 
of any such contract to any member of the industry or any customer who 
applies therefor and offers to nay the cost actually incurred by the 
Code Authority in the actual preparation and distribution thereof; pro- 
vided, that no such inspection or cony shall be permitted or made avail- 
able to any person until permitted or made available to all members of 
the industry and their customers, as aforesaid. Upon request, said 
agant shall furnish to the National Industrial Recovery Board, or any 
duly designated agent of said 3oard, copies of any such contract. 

Exrnrol e 2. Immediately upon the making of any such contract for 
advertising or promotion services by any member of the trade/industry, a 
true copy thereof shall be filed with a confidential and disinterested 
agent of the Code Authority (as provided for in this code), or, if none, 
then with such an agent to be designated by the National Industrial 
Recovery Board. Said agent shall thereupon proceed to have copies of 
such contract published in a journal or journals or other appropriate 
medium of general circulation among members of the trade/ industry. 



123 



9826 



- 323 - 
OPTICS LIEIuORAlTSuII ITO. 327* 

January 10, 1935 

LIMIT AT 101' OT POKBAR D COITTRACTS 

?he following statement v.-ill govern provisions in codes relating 
to forward contracts: 

1. IJSA policy generally docs not favor code provisions which 
would limit the permissible period of forward contracts to sell.. 

2. Policy favors provisions, having the purpose of improving 
competitive conditions, which require the filing by each member of an 
industry, in accordance with the open price provisions of Office 
Memorandum Ho, 228, of his practices as to forward. contracts to sell. 

3. In cases in which it is reasonably clear that the requirement 
for filing would be ineffectual, -irovisicns which would limit the 
duration of forward contracts to .-ell may be approved, if the follow- 
ing conditions are met: 

(a) The maximum contract period set is reasonable, 
with respect to the nature of the industry's 
products find its trade practices. 

(b) Such provisions arc. note more stringent than the 
customary practice within the industry over a 
preceding period of at least one year. 

(c) Adequate consideration is given to the question 
of necessity of including a provision as to 
special types of contracts which may require 
exceptional treatment, such as contracts to 
furnish materials for a specific project cr 
"cost plus" contracts. 

(d) Compliance can be reasonably anticipated to a 
degree which will rvoid any substantial increase 
in the administrative and enforcement burden of 
ERA. 

(e) The provision in operation will not tend to 
render production and employment less stable. 

(f) Adequate consideration is given to the effect 
of the provision u^on purchasers. 

By direction of the national Industrial Recovery Board: 



W. A. HAERILiAK 

Administrative Officer. 
*lTote — The substance of this memorandum will be incorporated in the 
ERA Office Manual under "Code Hairing and Amendment, Part II - 

440 
9826 



OFFICE iiEiJORAtlDUM 
Ho. 334* 

January 31, 1955 
FRESCRIBI1TG- PROCEDURE FOP. STATISTICAL RIPORTI1TG 
She following procedure is prescribed for statistical reporting: 

(1) The Research and Plannin; Division is designated as the only 
NBA division authorized to collect statistics from code authorities; 
all statistical reports and correspondence relating thereto now re- 
siding in other 1TRA files to be transferred to said division; and for 
the purpose of statistical reporting said division to make its first 
contacts with code authorities through the Deputies and thenceforth 
deal directly therewith; 

(2) The Research and Planning Division is charged with the duty 
of cooperating with the Compliance Division in developing reports for 
compliance, with the understanding that the malting of decisions as to 
the extent and form of all statistical reporting be lodged with 
Research and Planning; 

(3) The Research and Planning Division will request code author- 
ities to submit their statistical forms and procedures, and changes 
therein, to the Research and Planning Division for review and advice, 
and to deposit with the said division two copies of all summaries of 
price, production, labor and other statistical data, which they have 
collected, promptly upon preparation; 

(4) The Research and Planning Division is hereby empowered to 
investigate the reporting systems of code authorities and to audit the 
statistical reports submitted by them; 

(5) The Research and Planning Division is hereby authorized to 
collect directly from members of the industry such special inf ormation, 
not available elsewhere, as is necessary from time to time for 
recommendations on questions of policy. 

By direction of the national Industrial Recovery Board. 



W. A. HARRIMAN 
Administrative Officer. 

*Uotc— The substance of _this memorandum will be incorporated in the 
1JRA Office Manual under "Code Administration — Planning, Fact Finding 
and Education — Fact Finding and Collection of Statistics— Part III- 
2200" when released in Office Manual form. 

1631 



9826 



- 82j - 

Atiril 23, 1935 

NATIONAL INDUSTRIAL ESC0VER7 BOARD 

ADMINISTRATIVE FOLICY 

New Series No. 1 

Administration of codes requires the farther clarification and 
extension of certain administrative policies. The National Industrial 
Recovery Board has caused special studies to "be made within NRA and has 
held public Hearings to aid in this development. 

To expedite administrative procedure, announcements of "broad 
policies will be made when statements in p.-nrj particular area are ready. 
These broad expressions of policy will be later supplemented, "hen 
necessary, b^ more detailed statements. 

Three statements follow. Two are of a general character; and one 
is the first of a series dealing with specific problems: 

II Administrative Ste-os for tne Application of Policy. 

Hi Introduction to General Price Policy. 

III. The Problem of Open Price Filing. 



QCOC 



- 826 - 

I 

ADMINISTRATIVE STEPS FOR APPLICATION OF POLICY 

A. General Administrative Guidance 
(connection with ■orivisions contrary to announced policy) 



The Board recognizes that a policy is not self -operative, and that 
its announcement necessitates ry program of ways and means to render it 
effective. The following is for general administrative guidance in deal- 
ing with cases in which proposals of code provisions are contrary to 
announced policy. 

(1) If approval is asked of a, proposal which is contrary to 
announced policy and i.nsufficent ground is shown for exception from such 
policy, the deputv will give the applicant a prompt decision to that effect, 
Tnis decision will be accompanied, if possible, with suggestions for the 
modification of the proposal designed to cause it to conform to policy. 

(2) If a provision in an existing code is contrary to announced 
policy,' and if further action by MA is required to make it operative, the 
provision will be left inoperative sending Congressional decision concern- 
ing the jurisdiction and objectives of the HRA, unless the industry for- 
mally requests earlier action. If such request is made, an opportunity 
will be furnished the sponsors of the provision to show sufficient cause 
why it should be made operative, with or without modifications. After 
adequate opportunity to be heard has been given interested parties, de- 
cision will promptly be made whether to make the provision operative or 

to delete it. 

(3) If a provision contrary to announced policy has been tem- 
porarily approved for a trial period, an opportunity will be furnished the 
sponsors of the provision to show sufficient cruse for (a) extending the 
period of trial or (b) making the provision permanent. After adequate 
opportunity to be heard has been given interested parties, decision will 
promptly be made whether to continue the provision or to allow it to 
lapse at its next expiration date. 

(4) If a provision contrary to announced policy is now fully 
operative in an existing code, there may be, pending legislative redefini- 
tion of the jurisdiction and objectives of HRA. either of two t^oes of 
situation, leading to different courses of action: 

(a) If no adequate showing has been made to HRA that 
such provision is in conflict with the interests 
of the public or the justifiable interests of any 
group, arrangements for observation will be made; 
but no other action will be taken in the first •■ .. 
instance. 



- 827 - 

(b) If there is adequate reason to relieve that such 
a provision is in conflict "ith the interests of 
the public or the justifiable interests of any 
group, the industry will be offered an opportunity 
to negotiate with! 1IHA or to be heard -on the subject. 
If, after such a hearing or negotiation such con- 
flict still appears and a oronrot solution cannot 
be reached, the provision in question will be de- 
leted, or suspended, or temporarily modified, nend- 
ing atroroval of a satisfactory substitute or modi- 
fication. 

(5) After Congressional redefinition of the jurisdiction and 
objectives of KRA, operative or ino'oer ti lr e code prpvisions which are 
inconsistent with the new Act will be "ororrotl r reconsidered. 

3. Supervision and Observ tion of Policies 

Supervision of the application of policy decisions has Qeen de- 
legated to the Code Administration Director. He will be responsible 
for conveying to the members of industry, through -proper organization 
channels, announced policies and the considerations underlying them. 

At least three -persons who will aid in the interpretation of 
policy to divisional and de-puty administrators will be appointed. One 
will specialise en price and other trade practice policy, one on labor 
policv and one on code administration p lic ,r . Their duties "ill not 
be administrative. They "ill submit to the Code Administration Director 
regular reports on problems requiring treatment, and suggestions con- 
cerning the nature and frequency of reports which should be made upon 
the operation of nodes by divisional administrators, deputies and ad- 
rainistration members. 

All executives and major staff officials, especially division 
and de-outy administrators rnd administration members who are in continual 
touch with the problems of industry, 'fill observe the actual operation 
of policy decisions. 

Special research and collection of the results of observation 
of the operation of codes "ill be organized Q-j the Research and Planning 
Division under the direction 0" the Board. Reports and surveys will be 
made to the Board and will be made available, as appropriate, for the 
use of the administrative and advisor-' personnel. In the discretion of 
the Board such reports and surveys will be issued by the Board, with or 
without its recommendations or conclusions, for the information of in- 
dustry and the -public. 



- S28 - 
11 
IN'TRODUCTICH? TO r GEITEPAL PRICE POLICY 



Industry is tlie instrument tnrou, ;:h which goods or services 
are supplied. The producer, the laborer, and the consumer alike have 
a stake in its efficient and orderlv operation. The facilitating of 
adjustments among these several interests and tneir individual members 
is the function of price. Price also facilitates adjustments among the 
many industries whose products compete with one another for the consum- 
er's dollar. Unless price operates effictively to determine these working 
arrangemnts among the interested Parties, some deliberate arrangement 
or planned control must he -oermitted or established. Tnis would necessari- 
ly limit severely the area of the individual business man's discretion. 

In regard to orices and pr ice-making, industries present the 
greatest variety. But in so far as government policy is concerned, they 
fall roughly into three distinct groups. The first group — of which 
education, the highways, the nostril service, and the police are typical 
examples — are government undertakings. In their operation the charge 
for the service has little relation to the cost; -orice, if there is an _r , 
has been fixed by the government according to some such principle as 
the encouragement of the wide use of the service. The second grout) — 
generally called public utilities — includes industries usually private- 
ly owned, monopolistic in tendency, and subject to regulation. In such 
cases, a government --1 commission usually fixes rates ■oredicated upon "a 
fair return uoon a fair value." The third group — comprehending the 
greater -oart of business activity — is free enterprise. In this domain 
government has customarily limited its efforts to maintaining and regulat- 
ing competition. It has left the actual making of price to the market. 

This third group — much of which is in the jurisdiction of 
the NRA — price is not fixed bv a government' 1 autnority. It is supposed 
to be determined in an open market where it is assumed to emerge from the 
operation of all the competitive forces which are included in the shorthand 
words "supply" and "demand". The system is one of crude checks and bal- 
ances. Producers are balanced against consumers; and' the efforts of buyer 
or seller to drive too hard a bargain are presumably checked by the com- 
petition of other buyers or sellers in the same or in competing bussinesses. 
In so far as either party is able to go elsewhere in search of a better 
bargain, he has some protection against the bargaining power of the other 
party. The principle of price-making by competition in a free and open 
market is' established in the common law, the anti-trust acts, and oublic 
policy. 

The competitive system is often sooken of as "an automatic self- 
regulating mechanism. Government and business are said to have separate 
provinces; government is to keep hands off and leave the determination of 
questions affecting business to the market. But as a matter of fact the 
economic order is not now, and never was, self-regulating. To the end 
of securing an orderly, efficient, and humane industrial system, the 
regulation of competition ha^. proceeded along three distinct lines. 



QROP, 



- 329 - 

First, government intervenes to secure the maintenance or restora- 
tion of competitive conditions. An understanding- among interested 
business men may prevent the establishment of a competitive price. In 
consequence, monopoly, combination and conspiracy in restraint of trade 
is illegal. In the anti-trust acts an attempt is made to keep indus- 
tries open to all who • will take their chances, and to maintain " a. fair 
field and no favors". The prohibition against monopoly is written into 
the anti-trust laws, the National Industrial Recovery Act, and the codes. 

Second, government undertakes to regulate the plane of competition 
in the field of . wages and working conditions. In nany instances a sm- 1 !! 
minority, who seek to gain by disregard of labor standards, may have 
their way against the wish of the great majority in the industry. They 
may make labor suffer unduly low wages, long hours, and intolerable work- 
ing conditions. Accordingly, government steps in to fix standards of 
safety and health, to establish workmen's compensation and to regulate 
hours of labor. The labor provisions in the codes represent a fuller 
development of such necessary intervention. 

Third, government undertake-s to regulate the plane of competition 
in the field of trade practices. In the -conduct of business, practices 
grow up which are the customs of the industry. These practices are among 
the rules of the game for the competitive struggle, and the function of 
government is to intervene to insure fairness of opportunity. In the 
heat of the struggle, a few firms may resort to unfair practices — such 
as the misrepresentation of goods and secret discriminations — which 
their competitors are 'forced to adopt. Thus a minority has it in its 
power greatly to affect, and sometimes to determine the conditions of 
survival. Government, therefore, must see to it that trade practices 
are freed from abuse and are made proper instruments of business and 
public policy. 

A price policy should of necessity be stated in genoral terms. Its 
end is to cause price to perform its essential functions. The standard 
alike in the law of the land and in public policy is a competitive price 
made in an open market. It should not be perverted by such influences 
as ignorance, malice, deception, or collusion. Such barriers to the 
effective operation of competition must be removed; the forces which tend 
to destroy standards and to create unfair methods must be controlled; and 
trade practices must be harnessed to the industrial and social ends they 
should serve. 

The establishment of a plane of competition involves a consideration 
of all the arrangements, usages, and customs under which prices are made. 
These characteristic's of a. business are just as significant as the tech- 
nology employed in the physical process of production or marketing. They 
consist of devices and procedures — • such as a free market, open price 
filing, quantity discounts, cost accountancy, and the like. All of these 
are mechanisms; no one of them is good or bad in itself; the merit or de- 
merit of each comes from the use to which it is actually put, Nor can any 
device or procedure be judged alone, for it always appears in combination 
with other devices. Moreover, in considering the totality of a business 
in operation, all these devices together must be judged in relation to 
its technical operations and the character of its growth, 

9826 



- 830 - 

A great many of these devices and procedures are the inventions 
of business. A group of them have now the approval of administrative 
todies and the courts. Such "fair practices" may be eraoloyed freely. 
Another grout) are still on trial; their range of usefulness and their 
accord with public policy have not yet been fully demonstrated. They 
should be cautiously employed, and the burden of proof is upon the in- 
dustry wishing to use them. A third group, forged in the heat of the 
competitive struggle, must be freed of their capacity for unfair use 
before they can be generally employed. One of the great tasks of the 
NRA is to develop trade practices, observe carefully their operation, 
and fit tnem for service in the larger task of maintaining order and 
fairness in industrial relations. 

It follows that a general statement of policy can present no 
more than an approach to a specific problem. Industries are far from 
being enough alike to permit identical treatment. They differ in struc- 
ture, in organization, in the usages of business, and in their places 
in the national and the international economy. They are currently at 
very different stages of development. They are susceptible to different 
degrees and types of supervision. In some instances stated policy, how- 
ever appropriate to the -.usual case, night not accomplish the desired 
results if applied to a particular industry. Therefore, in certain ex- 
ceptional cases, provisions usually in accord with policy may be limited 
or avoided in the case of certain industries. In other exceptional cases 
provisions usually contrary to policy may be acceptable. But all such 
departures from stated policy must be justified by the values which com- 
petition is intended to serve. 

But, whatever the necessity for variation in detail, the gen- 
eral objectives of price policy are definite. It must promote fairness 
between the parties to an industry and make its contribution to the 
betterment of the standard of living. A control of production is in- 
evitable under any industrial system. A long experience has led us to 
leave that problem to the open market. In a few industries, in which 
competition has proved unusually disorderly, it may be necessary to inter- 
vene to bring production into line with demand; but such intervention 
should avoid "restriction of output" and should aim at the kind of equa- 
tion between production and consumption as the market is supposed to 
effect. The strategy of policv must find e-oression in a multitude of 
decisions. But its end is single — an economy, not of scarcity but of 
plenty. 

In other words, means and ends must not be confused. Means 
should be flexible, requiring the use of a miscellany of devices and 
procedures. Objectives should be stable. The goal sought is the 
establisnment of conditions under which in a free and open market 
competiticnmay determine a fair price. 



- 831-.- 

III 

T HE PROBLEM OF OPE;t PBICE PILING 

A. E nd To Be Served 

Open price filing is a mere device. Its potentialities 
for benefit or mischief depend upon the purpose to which it is put and 
the methods which rttend its use. The standard by which its promotion 
should be judged is price making similar to that which would be 
afforded b^ an open andcompetitive market such a„s an organized com- 
modity exchange. In such a riarket all the forces of demand and supply 
converge, the transactions are a matter of public record, buyer and 
seller can accommodate their activities to the course of events, every 
factor of significance has a chance to be registered, and a changing 
price represents all that affects the current value of a commodity. 

The ideal of an open and competitive market can seldom be 
fully attained. The conditions under which various industries are 
carried on are diverse; the obstacles to open and free competition are 
many; and the devices and -orocedures for maki lg markets open have been 
inadequately developed. In general the open market is currently limited 
to starile commodities, capable of standardiza/tion, and objects of a 
continuous flow of trade. Cotton and wheat aro examples of wares 
susceptible to open market operations. 

But where there is no open market, its functions still need 
to be performed. Their performance ma." be rendereo difficult or im- 
possible by the local character of trade, -irregularity or infrequency 
of purchase, restraint of trade, or some other condition. 

HRA has hoped to approximate the objectives of the open mar- 
ket by a system of 0"oen price filing to be applied under appropriate 
circumstances. This takes the form of the collection and general cir- 
culation of the price quotations at which members of an industry indi- 
cate a readiness to sell. A "file" is not a market, and the process 
of record and circulation lacks the speed and completeness of a con- 
tinuous report of^a series of commodity excnange transactions. But it 
is possible for the open file to allow buyers and sellers to accommodate 
their activities to competitive conditions, to fix limits to the spread 
of quotations at any given time, and to tend to make price nerform its 
industrial function. 

To these ends o _ oen price filing should, so far as possible, 
be made to furnish a public record of price movements, provide a check 
on discrimination among customers, reduce the amount of deception among 
buyers and sellers, give the parties concerned a fuller knowledge of 
conditions affecting the market, and oromote and safeguard the integrity 
of the -orocess of co'roetitive "arice making. It should be used to remove 
the ignorance which the small enterpriser has about the activities of his 
larger competitors, -and thereby to insure him a measure of protection 
against their rivalry. 



QROP. 



- 832 - 

The open market is the desired institution; open price filing 
1 - an imperfect substitute. The open market fixed the standard of per- 
formance for open price filing. 

Like all other procedures, open price filing is not immune to 
abuse. In combination with otlier "orocedures and understanding it may 
be employed to maintain a price fixed "by a combination of "oroducers. 
It may be used to expose to trade minishment or the damaging ill will of 
his competitors the individual whose trices are out of line. But in 
such instances the evil almost inv.~ria.blv lies in extra-code arrangements 
which limit competition and for wnich the open price filing device becomes 
a convenient instrument. 

It was hardly to be expected that open price filing should 
immediately attain its fullest possible usefulness. Abuses such as 
have appeared in a number of industries v, ere to be anticipated. These 
abuses must be overcome. However, the experience of }TRA has indicated 
the po-ssibility of developing saf eguards , and much of the testimony at 
the January, 1935, hearings of price policv confirms the belief that 
further experiment with o-oen -prices is desirable. Time will be required 
to -perfect the device, discover its full possibilities, and contrive 
ways to guard it agaihst abuse. Ingenuity will be. required to ada"ot it 
to many industries in whicn products and conditions of sale are diverse. 
A continuous and intelligent observation of its operation and a prompt 
correction of abuses are essential to its fullest usefulness. 

3. Essential Characteristi.es of an Open Price Provision 

Price filing should be p.dmins,itered to serve the ends of a 
free and o-pen market. An impartial and confidential Dody should be 
the administrative agency in order that -price-lists may be distributed 
to members of the industry and their customers without partiality and 
without efforts to influence the quotations. The trices must be gen- 
uinely available to all customers and members of the industry. If the 
body with which prices are filed is a -private agencv, its activities 
must be subject to the immediate oversight of the government. It is 
also essential to the purposes of open price filing that the filed prices 
be those at which sales are actually fro take place rather than merely 
minima above which members of an industry -may secretly vary their 
prices as they choose or maxima from which discounts are to be allowed. 

The general -presumption must be against the use of the wait- 
ing period and the burden of proof is upon the industry which wishes 
to employ it. A protracted experience with the waiting period has 
revealed sftortcomings, for which no one is consciously to blame and 
which are not easily avoided or corrected. Awaiting period is likely 
to freeze a competitive process which should be kept active and to 
impair the very purpose for Which sealed bids are used. In an open 
market there is no counterpart of such a device, '/hen prices are rising 
a flood of orders during the waiting period may unsettle a future market. 
When prices are too high the incentive to reduce them in order to got 
more volume of sales may be lessened by the knowledge that price reduc- 
tions will not become effective until competitors, by similar reductions, 
have destroyed most of the sales advantage. 



9RPfi 



- 853 - 

Probably the best case for p. uniting period can be made for in- 
dustries in which spies are of large size and snail number, members are 
many and widely sc ttered, and information about orices cannot,' for some 
reason, be quickly circulated. But even in such industries the burden of 
oroof must oe uoon those "ho wish to employ a, waiting period. 

In industries wh'er,e prices immediately effective are manipu- 
lated for the ouroose of allowing large discriminatory discounts to 
privileged customers, it may be necessar*'" to impose some limit uoon the 
frequency of orice change. In such rare cases this can be done by oro- 
visions requiring that a orice, one effective, must stay in effect for 
some reasonable minimum period. Awaiting period before the orice De- 
oomes effective is not necessary in dealing with this problem. 

C. The ?ield for the Use of Ooen Pricin g 

Ooen orice systems s.-ould not ue indiscriminately a"0"jlied to 
the entire range of ,,'vmeric n industry. In some industries the technical 
oroblems oresented by an OD-en orice system would oe insuperable. If 
commodities differ so widelv in quality, character, and accom-oanying 
service that orices are likely to vary with each sale, or if the number 
of concerns and products is very large, an ooen orice filing system may 
require much effort and give little usable information. If through 
custom or convenience -orices remain stable and market changes lie mostly 
in the character of the goods sold, orice reoorting may be a meaningless 
process. If commodities are highly perishable and their surely fluc- 
tuates raoidly, even. the quickest system of recording current orices 
would oe a burden uoon many rasi-iess men and consumers. The feasibility 
of an open price system increases in so far as price cc roetition is 
active, the products of tne industry can be clearly identified, and 
orice changes are frequent without being incessant. 

A nrice is not just p orice, but a price of something. It is 
meaningless aoart from information about the quality of the oods and 
the terms of sale. Accordingly, to be informative, all the factors that 
help to give identity to a price should be reported. In industries in 
which this connot be done it is questionable whether an ooen price system 
can be effectively used. It is difficult to provide properly for such 
information. Identification of, articles and their qualities, descrip- 
tion of how doscounts are rel ted to quantity and to the classification 
of customers, indication of the way in which prices vary with varying 
transportation costs - these are eo-rolicated matters. Yet any one of 
the terms of sale may oe used, not only, by the unscrupulous but even by, 
the independent minded merchant, in a way which imoairs the achievement 
of the open market purposes contemplated in tne use of tne device. It 
is possible, for example, to confuse tne meaning of the schedule of 
orices by withholding an adequate definition of classes of customers. 
Therefore, the relation of quality, quantity, class of customer, and 
various terras of sale to open price filing will later be given separate 
treatment. 



9R?fi 



- 834 ~ 

Observation, ingenuity, and patience may permit the extension 
o^ o'ien price filing iiito what at the moment seems to he i!.Toracticable 
territory. Even now it may be applied to industries in which goods are 
not strictly standardized; for the members of an industry have a pricti- 
cal knowledge of each other's ,T, ares, and customers can be educated to 
the larger differences among grades and brands. However, in most of 
these cases the difficulties which arise from variations of product and 
service are such that open ■price systems might confuse rather than re- 
veal what is happening in the market. The meaning of a "orice may depend 
upon who quotes it. The name of the seller may be necessary to an iden- 
tification of the quality of the product. It may be necessary to indi- 
cate whether the article in the requisite quantity can be supplied or 
whether the price is only nominal. Hence, to make open-pricing effec- 
tive, the identy of the seller often needs to be revealed. 

In certain industries open price systems, though feasible, 
involve such probabilities of serious abuse that tney should be avoided. 
These are, industries in which the need is to preserve competition against 
attack rather than to provide facilities by which competition may be 
made more informed. An industry 'in which the dominance of an enterprise 
or group is intimidating to smaller independents is not a suitable field 
for open pricing; for the identification of the smaller concern's prices 
would, in such cases, be inconsistent with the preservation of its free- 
dom to make whatever prices it may choose. Industries in which the chief 
obstacle to collusion is the difficulty of devising machinery for price 
understanding are equally unsuitable to open price systems, since even 
the best open price system may be used as a collusive device. The field 
for open pricing is that in which competition tends to be active but ill- 
informed and chaotic; not tnat in which competition tends to evolve into 
monopolistic restraint. 

D. Price Statistics as an Alternative 

There may be many industries in which the ends of public policy 
will be adequately served by price filing or reporting as it was under- 
stood generally and accepted by the courts even prior to NBA, Such are 
systems for the open reporting of price summaries, price ranges and sales 
volumes or sed upon records of past transactions.' Such a reporting system 
involves neither the same technical problems nor, if the identities of 
sellers are concealed in the summaries, as great dangers of abuse as 
necessarily appear _ with current price filing. In such industries, when 
names of sellers are not to be disclosed, a form of su iraary statement 
must je devised adapted to the circumstances and detailed enough to serve 
those, concerned. The contrivance of this form reauires a nice balance 
between the safeguards of secrecy and the necessity of information. 

E. Price-Filing not Price-Eixing 

It is hardly necessary to say that open price filing is not 
price-fixing. Nor should evidence of collusion in their making be in- 
ferred from a uniformity in the prices which are filed. Competition 
is supposed to effect uniformity of prices through an open market; and 
approximation to uniformity is almost certain to result from the 
oroper maintenance of open price filing. It is when the prices quoted 
by the members of an industry move in concert faster than competitors 



- 335 - 

can easily accomodate themselves to each other's activities or when 
prices move uniformly and sharply upward in contrast to trends in re- 
lated industries that evidence of collusion is present. Open price 
filing is a device; price-fixing is a "business policy in operation. 

F. The iveecl for Flexibility 

Open price filing should he applied to .specific industries in the 
light of the particular circumstances rather than as a rigid formula. In 
each case attention should he given to such considerations as the fre- 
quency and extent of price change, the complexity of terms of sale, the 
difficulty of identifying an article, the number and geographical diffu- 
sion of members of the industry, the degree of price competition, and 
the economic importance of the article. In certain instances, for example 
where the finished product of one industry is the raw material of another, 
it may be necessary to take account of conditions in correlative indus- 
tries. But however difficult may be the accommodation of the device to 
industrial circumstances, the ends which the open market should serve are 
definite guides. 

The National Industrial Recovery Board feels that the device of open 
price filing should be perfected, guarded against abuse and applied with 
discrimination in the industries to which it is appropriate. In certain 
industries and for certain commodities for which en organized open market 
is not practical, the virtues of an organized commodity exchange may be 
approximated through the device of open price filing. 



OFFICE OF THE NATIONAL RECOVERY ADMINISTRATION 

THE DIVISION OF REVIEW 

THE WORK OF THE DIVISION OF REVIEW 

Executive Order No. 7075, dated June 15, 1935, established the Division of Review of the 
National Recovery Administration. The pertinent part of the Executive Order reads thus: 

The Division of Review shall assemble, analyze, and report upon the statistical- 
information and records of experience of the operations of the various trades and 
industries heretofore subject to codes of fair competition, shall study the ef- 
fects of such codes upon trade, industrial and labor conditions in general, and 
other related matters, shall make available for the protection and promotion of 
the public interest an adequate review of the effects of the Administration of 
Title I of the National Industrial Recovery Act, and the principles and policies 
put into effect thereunder, and shall otherwise aid the President in carrying out 
his functions under the said Title. I hereby appoint Leon C. Marshall, Director of 
the Division of Review. 

The study sections set up in the Division of Review covered these areas: industry 
studies, foreign trade studies, labor studies, trade practice studies, statistical studies, 
legal studies, administration studies, miscellaneous studies, and the writing of code his- 
tories. The materials which were produced by these sections are indicated below. 

Except for the Code Histories, all items mentioned below are scheduled to be in mimeo- 
graphed form by April 1, 1936. 

THE CODE HISTORIES 

The Code Histories are documented accounts of the formation and administration of the 
codes. They contain the definition of the industry and the principal products thereof; the 
classes of members in the industry; the history of code formation including an account of the 
sponsoring organizations, the conferences, negotiations and hearings which were held, and 
the activities in connection with obtaining approval of the code; the history of the ad- 
ministration of the code, covering the organization and operation of the code authority, 
the difficulties encountered in administration, the extent of compliance or non-compliance, 
^.nd the general success or lack of success of the code; and an analysis of the operation of 
code provisions dealing with wages, hours, trade practices, and other provisions. These 
and other matters are canvassed not only in terms of the materials to be found in the files, 
but also in terms of the experiences of the deputies and others concerned with code formation 
and administration. 

The Code Histories, (including histories of certain NRA units or agencies) are not 
mimeographed. They are to be turned over to the Department of Commerce in typewritten form. 
All told, approximately eight hundred and fifty (850) histories will be completed. This 
number includes all of the approved codes and some of the unapproved codes. (In Work Mate- 
rials No^ 18, Contents of Code. Histories, will be found the outline which governed the 
preparation of Code Histories.) 



(In the case of all approved codes and also in the case of some codes not carried to 
final approval, there are in NRA files further materials on industries. Particul rthy 
of mention are the Volumes I, II and III which constitute the material officially submitted 
to the President in support of the recommendation for approval of each code. These volumes 



- iii - 

Women's Apparel Industry, Some Aspects of the 

Trade Practice Studies 

Commodities, Information Concerning: A Study of NRA and Related Experiences in Control 

Distribution, Manufacturers' Control of: Trade Practice Provisions in Selected NRA Codes 

Distributive Relations in the Asbestos Industry 

Design Piracy: The Problem and Its Treatment Under NRA Codes 

Electrical Mfg. Industry: Price Filing Study 

Fertilizer Industry: Price Filing Study 

Geographical Price Relations Under Codes of Fair Competition, Control of 

Minimum Price Regulation Under Codes of Fair Competition 

Multiple Basing Point System in the Lime Industry: Operation of the 

Price Control in the Coffee Industry 

Price Filing Under NRA Codes 

Production Control in the Ice Industry 

Production Control, Case Studies in 

Resale Price Maintenance Legislation in the United States 

Retail Price Cutting, Restriction of, with special Emphasis on The Drug Industry. 

Trade Practice Rules of The Federal Trade Commission (1914-1936): A classification for 

comparision with Trade Practice Provisions of NRA Codes. 

Labo r Studies 

Cap and Cloth Hat Industry, Commission Report on Wage Differentials in 

Earnings in Selected Manufacturing Industries, by States, 1933-35 

Employment, Payrolls, Hours, and Wages in 115 Selected Code Industries 1933-35 

Fur Manufacturing, Commission Report on Wages and Hours in 

Hours and Wages in American Industry 

Labor Program Under the National Industrial Recovery Act, The 

Part A. Introduction 

Part B. Control of Hours and Reemployment 

Part C. Control of Wages 

Part D. Control of Other Conditions of Employment 

Part E. Section 7(a) of the Recovery Act 
Materials in the Field of Industrial Relations 
PRA Census of Employment, June, October, 1933 
Puerto Rico Needlework, Homeworkers Survey 

Adm inistrative Studies 

Administrative and Legal Aspects of Stays, Exemptions and Exceptions, Code Amendments, Con- 
ditional Orders of Approval 

Administrative Interpretations of NRA Codes 

Administrative Law and Procedure under the NIRA 

Agreements Under Sections 4(a) and 7(b) of the NIRA 

Approved Codes in Industry Groups, Classification of 

Basic Code, the — (Administrative Order X-61) 

Code Authorities and Their part in the Administration of the NIRA 
Part A. Introduction 
Part B. Nature, Composition and Organization of Code Authorities 

9768—3. 



- IV - 

Part C. Activities of the Code Authorities 

Part D. Code Authority Finances 

Part E. Summary and Evaluation 
Code Compliance Activities of the NRA 
Code Making Program of the NRA in the Territories, The 
Code Provisions and Related Subjects, Policy Statements Concerning 
Content of NIRA Administrative Legislation 

Part A. Executive and Administrative Orders 

Part B. Labor Provisions in the Codes 

Part C. Trade Practice Provisions in the Codes 

Part D. Administrative Provisions in the Codes 

Part E. Agreements under Sections 4(a) and 7(b) 

Part F. A Type Case: The Cotton Textile Code 
Labels Under NRA, A Study of 

Model Code and Model Provisions for Codes, Development of 

National Recovery Administration, The: A Review of its Organization and Activities 
NRA Insignia 

President's Reemployment Agreement, The 

President's Roemployment Agreement, Substitutions in Connection with the 
Prison Labor Problem under NRA and the Prison Compact, The 
Problems of Administration in the Overlapping of Code Definitions of Industries and Trades, 

Multiple Code Coverage, Classifying Individual Members of Industries and Trades 
Relationship of NRA to Government Contracts and Contracts Involving the Use of Government 

Funds 
Relationship of NRA with States and Municipalities 
Sheltered Workshops Under NRA 
Uncodified Industries: A Study of Factors Limiting the Code Making Program 

Lepal Studie s 

Anti-Trust Laws and Unfair Competition 

Collective Bargaining Agreements, the Right of Individual Employees to Enforce 

Commerce Clause, Federal Regulation of the Employer-Employee Relationship Under the 

Delegation of Power, Certain Phases of the Principle of, with Reference to Federal Industrial 
Regulatory Legislation 

Enforcement, Extra-Judicial Methods of 

Federal Regulation through the Joint Employment of the Power of Taxation and the Spending 
Power 

Government Contract Provisions as a Means of Establishing Proper Economic Standards, Legal 
Memorandum on Possibility of 

Industrial Relations in Australia, Regulation of 

Intrastate Activities Which so Affect Interstate Commerce as to Bring them Under the Com- 
merce Clause, Cases on 

Legislative Possibilities of the State Constitutions 

Post Office and Post Road Power — Can it be Used as a Means of Federal Industrial Regula- 
tion? 

State Recovery Legislation in Aid of Federal Recovery Legislation History and Analysis 

Tariff Rates to Secure Proper Standards of Wages and Hours, the Possibility of Variation in 

Trade Practices and the Anti-Trust Laws 

Treaty Making Power of the United States 

War Power, Can it be Used as a Means of Federal Regulation of Child Labor? 
9768—4. 



- V - 

THE EVIDENCE STUDIES SERIES 

The Evidence Studies were originally undertaken to gather material for pending court 
cases. After the Schechter decision the project was continued in order to assemble data for 
use in connection with the studies of the Division of Review. The data are particularly 
concerned with the nature, size and operations of the industry; and with the relation of the 
industry to interstate commerce. The industries covered by the Evidence Studies account for 
more than one-half of the total number of workers under codes. The list of those studies 
follows: 



Automobile Manufacturing Industry 
Automotive Parts and Equipment Industry 
Baking Industry 

Boot and Shoe Manufacturing Industry 
Bottled Soft Drink Industry 
Builders' Supplies Industry 
Canning Industry 
Chemical Manufacturing Industry 
Cigar Manufacturing Industry 
Coat and Suit Industry 
Construction Industry 
Cotton Garment Industry 
Dress Manufacturing Industry 
Electrical Contracting Industry 
Electrical Manufacturing Industry 
Fabricated Metal Products Mfg. and Metal Fin- 
ishing and Metal Coating Industry 
Fishery Industry 
Furniture Manufacturing Industry 
General Contractors Industry 
Graphic Arts Industry 
Gray Iron Foundry Industry 
Hosiery Industry 

Infant's and Children's Wear Industry 
Iron and Steel Industry 



Leather Industry 

Lumber and Timber Products Industry 
Mason Contractors Industry 
Men's Clothing Industry 
Motion Picture Industry 
Motor Vehicle Retailing Trade 
Needlework Industry of Puerto Rico 
Painting and Paperhanging Industry 
Photo Engraving Industry 
Plumbing Contracting Industry 
Retail Lumber Industry 
Retail Trade Industry 
Retail Tire and Battery Trade Industry 
Rubber Manufacturing Industry 
Rubber Tire Manufacturing Industry 
Shipbuilding Industry 
Silk Textile Industry 
Structural Clay Products Industry 
Throwing Industry 
Trucking Industry 
Waste Materials Industry 
Wholesale and Retail Food Industry 
Wholesale Fresh Fruit and Vegetable Indus- 
try 
Wool Textile Industry 



THE STATISTICAL MATERIALS SERIES 



This series is supplementary to the Evidence Studies Series. The reports include data 
on establishments, firms, employment, payrolls, wages, hours, production capacities, ship- 
ments, sales, consumption, stocks, prices, material costs, failures, exports and imports. 
They also include notes on the principal qualifications that should be observed in using the 
data, the technical methods employed, and the applicability of the material to the study of 
the industries concerned. The following numbers appear in the series: 
9768—5. 



Asphalt Shingle and Roofing Industry Fertilizer Industry 
Business Furniture Funeral Supply Industry 
Candy Manufacturing Industry Glass Container Industry- 
Carpet and Rug Industry Ice Manufacturing Industry 
Cement Industry Knitted Outerwear Industry 
Cleaning and Dyeing Trade Paint, Varnish, ana Lacquer, Mfg. Industry 
Coffee Industry Plumbing Fixtures Industry 
Copper and Brass Mill Products Industry Rayon and Synthetic Yarn Producing Industry 
Cotton Textile Industry Salt Producing Industry 
Electrical Manufacturing Industry 

THE COVERAGE 

The original, and approved, plan of the Division of Review contemplated resources suf- 
ficient (a) to prepare some 1200 histories of codes and NRA units or agencies, (b) to con- 
solidate and index the NRA files containing some 40,000,000 pieces, (c) to engage in ex- 
tensive field work, (d) to secure much aid from established statistical agencies of govern- 
ment, (e) to assemble a considerable number of experts in various fields, (f) to conduct 
approximately 25% more studies than are listed above, and (g) to prepare a comprehensive 
summary report. 

Because of reductions made in personnel and in use of outside experts, limitation of 
access to field work and research agencies, and lack of jurisdiction over files, the pro- 
jected plan was necessarily curtailed. The most serious curtailments were the omission of 
the comprehensive summary report; the dropping of certain studies and the reduction in the 
coverage of other studies; and the abandonment of the consolidation and indexing of the 
files. Fortunately, there is reason to hope that the files may yet be carec for under other 
auspices. 

Notwithstanding these limitations, if the files are ultimately consolidated and in- 
dexed the exploration of the NRA materials will have been sufficient to make them accessible 
and highly useful. They constitute the largest and richest single body of information 
concerning the problems and operations of industry ever assembled in any nation. 

L. C. Marshall, 
Director, Division of Review. 
9768—6 . 



1