Business Library 
 
 Class 
 Book_ 
 
 BIC. ROOM 
 
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, 1936 
 
OFFICE OF NATIONAL RECOVERY ADMINISTRATION 
 DIVISION OF REVIEW 
 
 PRICE FILING- UNDER NRA CODES 
 By 
 Enid Baird 
 
 TRADE PRACTICE STUDIES SECTION 
 MARCH, 1936 
 
MAGAZINES B6lfl» 
 By W. P- A - 
 
 ™ »!94S 
 
- 415 - 
 
 3. The Scope of the Code, 
 
 The approval of 2T3A had to "be secured for many actions 
 of the Code Authority for the asbestos industry. One of these 
 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-jptember, 1934, the sub-code authority for the brake lining in- 
 dustry proposed that certain large private brand buyers be regarded 
 as affiliates. The 1IHA 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 to the deputy in charge of the code submitting 
 a standard price filing form, "....which we are endeavoring to b ring 
 into general use in ov.v 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' Board 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 form was withdrawn for further industry consideration, without for- 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 
 tock 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 a.n interpre- 
 tation. The NBA is the sole authority in this res- 
 pect. Lioreover, the word 'other' cannot be inter- 
 preted in any way but .its true meaning; namely, that 
 there shall be no deviation in prices filed by them 
 either up or down. In this respect, therefore, the 
 Code Authority has exceeded its power in interpreting 
 'other than' to mean 'lower than 1 , which has an en- 
 tirely different moaning. ... "(**) 
 
 (*) See"ivkrtufacturors' Control of Distribution; a Study of Trade 
 Practice Provisions in Selected ERA Codes", Trade Practice 
 Studies Section, Division of Review, 'I/iarch, 1936, Part II, 
 Chapter IV. 
 
 (**) Documents referred to above arc in UFA files, valve and 
 fittings industry code authority folders. 
 
 9826 "V*.^ 
 
- 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 
 he 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 re-port 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".(*) 
 
 S. 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 censidoration 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 the 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. \7. ?. L. Tattle, Managing Agent of the Code Authority, in 
 
 (*) Letters quoted are in UFA files, shovel, dragline and crane indus- 
 try. 
 
 9826 
 
~ 417 ~ 
 
 a letter to Deputy Administrator waiter 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 below 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 jjrocedure 
 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 he 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 
 substantial increase in oil, has voted by telegram 
 to amend the' Lowest Reasonable Cost 1 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 unadvertisod brands of salad dress- 
 ing as the item that was sold at an improper level 
 
 (*) Letters quoted ahove are in USA files Mayonnaise Industry. 
 
 !826 
 
- 418 -419- 
 
 and in vital need of adjustment in view of risjing 
 ingredient costc.... 11 
 
 (then follows a list of prices on three si?,es of salad dress- 
 ing) . 
 
 "Sales below these figures, in the opinion of the 
 Code 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 he 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 p.ec^very 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 24, 1934, sent by Mr. 
 Otto Seidner, a member of the mayonnaise code authority, to Mr. 
 Lester S. Dame, assistant deputy administrator. Mr. Seidner, 
 objecting to some of the actions of Mr. Tuttle, referred to 
 the bulletin quoted above, which he stated he had just recoiv- 
 el. 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 v.ould seem from this letter than I am 
 not the only one who is convinced tiiat the 
 Mayonnaise Industry is being run by Mr. 
 Tuttle, who is evidently talcing dictation 
 from someone else." 
 
 Then, referring to the code a/uthority 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 s^.y 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 lia.ve agreed to do things 
 of which they knew nothing...." 
 
 (*) Bulletin in IT HA files, mayonnaise industry. 
 
 9826 
 
- 421 - 
 
 system, to a print which will prevent. .. .increase 
 in volume of sales." 
 
 He stated that it had "been suggested that certain changes he 
 made in the Code in order tc prevent too fast an increase in 
 prices. Among these was the changing of the open price plan to 
 conform with the provisions of Office Memorandum Ho. 228, 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. R. 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 before 
 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 H?A policy isojposed to price 
 fixing and that HRA 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 linos, as their only salva- 
 tion in eliminating the price-cutting which seems to 
 have disorganized this Section, and they did not con- 
 sider that such 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.... 1 ^**) 
 
 A number of other instances of supervisory action by HRA. to 
 offset price fixing activities should also bo noted. In the crushed 
 bttae industry, the Northwest Construction Co. lost a bid because 
 
 (*) Letter in HEA. files, wall clay tile industry. 
 
 (**) Letter in HRA files, scientific apparatus industry. 
 
 9826 
 
- 422 - 
 
 they were 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 OlcOO 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 bid could 
 not be cited for violation. (*) 
 
 A memorandum from the Legal Division to the deputy in charge 
 of the canvas goods code, date.'. December 24, 1934, stated reasons 
 for staying the price filin and certain other provisions in the 
 code. One of the reasons vas that a public hearing had developed 
 substantial evidence that price fixing load taken place under the 
 guise of price filing. (**) 
 
 Subsequently the price filing provisions of this code wore 
 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 1TRA 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 Industrie! Recovery Doard from 
 Mr. 3dward K. ".'."arren, Regional I IRA Director in New York City, dated 
 May 14, 1935, concerning charges against the Treasurer of tho 
 'wholesale Confectioners' Code 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 CLcposited 
 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 LIRA files, crushed stone industry, 
 (**) Letter in iTRA files, canvas goods industry. 
 
 9826 
 
- 423 - 
 
 rity...» urged members 'of the Industry to file 
 uniform prices and discounts which result in prices 
 approximately 20 i 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. " 
 
 Mr. Warren's memorandum continues by stating that Mr. Weber 
 
 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 mace effective v.'hich 
 contained prices below the standard prices sponsor- 
 ed by the respondent, which prices were considerably 
 above cost. . . . " (*) 
 
 The New 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 1TRA files, wholesale confectionery industry. 
 
 982G 
 
- 424.- ■ . 
 
 The secretary of the Code Authority for the Macaroni Industry was 
 warned "by the deputy administrator against too extensive rec6rnmendations 
 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 mandator price differentials to 
 be used in connection with then, and the establishment of lowest reasonable 
 costs by means of a cost accounting s3rstem not approved by the ERA were 
 among the activities to which objection was raised. Most of these matters 
 had been informally approved by 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 
 accented 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 sta3'ed by ERA action at the time the code was 
 approved. The methods emploj^ed 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 Bradstreet, 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 wis 
 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. Welter White to Mr. G-. 0. Ko skins, April 17, 
 1934, in ERA files, macaroni industry. 
 
 (**) Pages 251 & 292-294, above. 
 
 (***) See Transcript of the Hearing on the Code for the ■ce.ndy 
 
 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 NSA files, candy manufacturing industry; also minutes of the 
 meeting of the Code Authority for this industry, held February 
 22-24, 1935, in EPA files, Candy Manufacturing Industry. 
 
 9826 
 
 
- 425 - 
 
 corn-plained that he completely dominated the Industry, A memorandum from 
 the assistant deputy 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~RA 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 stabilize 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 ITRA, 
 despite the enabling language in the code. 
 
 This opinion was transmitted to the deputy in charge of a Paper 
 Division, Mr. W. J. 3rown, in connection with the plan of the folding 
 paper box industry and was severely criticized by Mr, Broun in a memo- 
 randum to Division Administrator Battley on January 4, 1935. (**) 
 
 This and other legal criticisms of the x^>rice filing plans in the 
 paper codes effectively prevented ERA 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 r^rice 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. Hec.ht, Deputy Administrator, from A. C. Cook, 
 Assistant Deput3'- Administrator, March 11, 1935. In LIRA, files, 
 builders suppljr trade. 
 
 (**) In KRA files, diaper 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 HBA files. 
 
 9826 
 
- 426 - 
 
 had elected to make price filing effective, only code amendment could re- 
 verse this process. 
 
 3. Irregular 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.W.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 Uo. 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'l^gal Division of the F3A 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 Harking 
 Devices Industry was ordered withdrawn by the FPA since there was no sanc- 
 tion in the code for each a formula. A request for withdrawal of the uni- 
 form price lists filed pursuant to the formula was made in Way, 1934. (****) 
 
 6. Availability of Filings to Members 
 
 The secretary of the Code Authority for the Cast Iron Soil Pipe Industry 
 was rebuked on a number of occasions by the deput3r 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 iJPA files, scientific apparatus industry. 
 
 (**) For a more complete consideration of these two Orders, see below, 
 pp. 477-433. 
 
 (***) ITPA files, plumbing fixtures industry. 
 
 (****) IIPA files, marking devices industry. 
 
 (*****) On this see Mackenzie, J. W., "Preliminary Report on the Administra- 
 tion of Trade Practices by Codo Authoritlcr^', Code Administration 
 Studies Section, December, 1935, pages 30-33, HRA files. 
 
 9826 
 
- 427 - 
 
 7. Classification of Customers* 
 
 The practice of the Asphalt Shingle and Hoofing 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 "..ri s-c" 1 ossification meetings", as 
 they were called. (*) 
 
 8. Rejection of Filings. 
 
 The activities of the Code Authority for the Gas Appliances Industry 
 were subjected to ERA investigation late in 1934, and b. 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 authority, 
 and to coerce non-oembers (of the industry) to conform to regulations not 
 included in the code. (**) 
 
 The Code Authority of the Vitrified Clay Sewer Pipe Industry informed 
 its members that they would be in violation of the price filing provisions 
 of the code if they gave prior information of price changes to their cus- 
 tomers. The LIRA objected to this interpretation and asked that it be with- 
 drawn. (***) 
 
 In a bulletin issued on October 18, 1934 the Code Authority 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 mean 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 by the district committees, certain rules concerning delivery 
 terms were to be observed; and that "any producer not having filed prices at 
 least five days prior to the time 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" Appendix "C" of "A 
 Limited Survey of Price Piling in ERA Codes", Preliminary Report of 
 the Price Piling Unit of the Division of Review of the ERA, Novem- 
 ber, 1935. ERA files 
 
 (***) NRA files, vitrified clay sewer pipe industry. 
 
 (****) l&U, files, cr islied stone i custr~ r . 
 
 9826 
 
- -x<;b - 
 
 John E. Skilling, Legal Advisor, in g 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, 19C4, wrote to the code authority and submitted the legal 
 adviser's criticisms, but stated that in his opinion the first two resolutions 
 did not exceed the power given to tiie code authority. The code authority re- 
 plied by stating that the third resolution had been amended and the fourth one 
 rescinded. Speaking of this the writer of the He search 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^ the various NBA divisions 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 Ho. 1 and 2 had been con- 
 curred it, since it expressed satisfaction at this result. It should 
 be noted here that Resolution Ho. 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 Grovel 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.' 
 
 "And whereas the Deputy Administrator has reported and it appears to 
 the satisfaction of the National Industrial Recovery Board, that the 
 said resolutions will result in hardships to r,uch 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, it ic . • red t&ftt J&e said r- solu- 
 tions be and they are hereby disapproved." 
 
 In summary, 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 ITo. S767 permitting sales to governmental 
 agencies at less than fiM 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 USA 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 ona 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 HRA 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.tenplatec'. action or -reuling die. not cone to light until it hs 
 
 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 '"ere 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.»almost completely 
 disregarded. In other cases, advice to code authorities that certain 
 activities were outside cf their proper field of action 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. 
 
 9326 
 
- 430 - 
 SECTION B -COMPLIANCE AHI LITIGATION ACTIVITIES 
 I. COMPLIANCE ACTIVITIES BY CODE AUTHORITIES AITI rHE IJ.E.A. 
 
 Introduction 
 
 In securing compliance with the 'rice filing ^revisions of codes, 
 a.s with other trade practice 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 about conformity with trade practice provisions of 
 codes. The work of these compliance' agencies will be considered in this 
 section. 
 
 A. Code Authority Compliance Activities 
 
 . "The Manual for the Adjustment of ' Complaints by State Dir^c ors 
 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 tf.R.A. is to 
 give to Industry, throiagh its code authorities, the 
 widest possible range of self-government, subject to 
 the ultimate responsibility of the Administrator. . ."(*) 
 
 In order to become officially authorized to handle trade practice 
 complaints, code authorities were reopiired to submit for the approval 
 of the Admini strati on their plans for procedure in such cases, modeled 
 upon the outlines of methods for handling complaints contained in the 
 Bulletin #7 previously referred to. 
 
 1. Code Authority Methods Por 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 
 typical or exceptional. One case of alleged mal-admini strati on will be 
 mentioned to illustrate the point. It concerns the activities of the 
 Mayonnaise Code Autnority. On September 6, 1934, Mr. Nathan Raff, 
 President of the United Pood Frodv.cts Company of Brooklyn, IT, Y. , ad- 
 dressed a letter to General ?Iugh 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- 
 
 (*) NBA Bulletin #7, dated January 22, 1934, page 3, NBA files 
 
 9826 
 
-431- 
 
 operation which should be welcomed and appreciated, but since Aug- 
 ust 20, (the effective Late of the schedule filed by Mr. Raff con- 
 taining the increase in prices) these gentlemen, especially Mr. Tut- 
 tie, the managing agent of the Code Authority, gave us nothing but 
 continuous annoyance. They called us a number of times telling us 
 that v/e must again raise oiir prices in order to conform with price 
 schedules filed by otbc r manufacturers. We finally arranged for a 
 conference with Mr. Tuttle at 1Q:3G A, M. on Friday, August 31. The 
 writer and his business associate'; went down to 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 would be sneer folly fur us to announce 
 another price rise now was of no avail to Mr. Tuttle, or facts and . 
 figures that our present prices are not below cost an< do not, there- 
 fore, constitute an act of unfair competition meant nothing to him 
 
 then Mr, Tuttle callei in two men from the adjoining room, 
 
 whose name r - he di< 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 threatened to have us indicted and con- 
 victed cf all sx)rts of crimes After Mr. Tuttle got thro\igh with 
 
 all of his cajoling, intimidations ana threats, we again announced 
 that we woul'. not raise our prices now out would only do so when 
 • conditions would so warrant " 
 
 On September 10, Mr. Tuttle wrote to Mr. Lester S. Bame, Assistant 
 Deputy Administrator concerning this matter: 
 
 " Our Code contains the ..revision prohibiting destructive price 
 
 cutting which includes, without limitation, sales below cost. In 
 view of the lact that the Code Authority had determined the lowest 
 reasonable cost, it is obvious that if the Code Authority can sus- 
 tain its figures, any sales below these costs constitute destructive 
 price cutting. We are confident that expert examination would sus- 
 tain these lowest c ists. 
 
 "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 ""ni^n Food Products filed prices 
 reoresenting destructive price cutting prohibited by the Mayonnaise 
 Code. 
 
 "Neither the Managing Agent or any other member of the Trade Practice 
 Complaints Co imittee read the riot act to the officials of the Union 
 Food Products Co., and the only reference to penalties of the Act 
 were made in response to the suggestion advanced by an official of 
 the hnion Food Products to the effect that they would continue to do 
 so as the y pleased and that the FIFA coulo not or would not be en- 
 forced. ..." 
 
 / tendency for code aut Drities to attempt to anticioate their 
 official authorization to act "in the first instance" is efidenced in 
 the following correspondence from Mr. G. G. Uoskins, Chairman of the 
 Code Authority for the Macaroni Industry. It also indicates the 
 methods usee bj one code authority to achieve mobility of their ad- 
 justment agency: 
 98P6- 
 
- 432 - 
 
 ii We have a letter from Division. A .ministrator Riley 
 stating that our duly elected members of the Code 
 Authority have been recognized as such. Can we as- 
 sume that their recognition as the highest industrial 
 'adjustment agency as per NBA Bulletin #7 will be 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 but sooner, or later 
 we are going to cone against a state compliance director 
 who does not recognize us as being the highest adjustment 
 agency in our Industry. Incidentally, onr by-laws call 
 for three members of the Code Authority to sit as such 
 committee. This • revision mas made so that by traveling 
 to various parts of the country I could pull in two other 
 members of the Code Authority without requiring, a meeting 
 of tne whole Code Authority. ..." (*) 
 
 Certain Code Authorities, by virtue of 'articular code provisions 
 enabling them to do so, enforced compliance by means of so-called "liqui- 
 dated damage" agreements. While there was considerable variation between 
 ■fcbe_ codes as o: the exact procedure, the general nature of these plans 
 was the same; members guilty of violation of trade practice provisions" 
 were assessed a fine by the code authority or one of 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 be 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 .-.-.embers of the Code Author- 
 ity. If a member of the Industry is found guilty, damages 
 are then fixed. If he pays willingly, his name is never 
 disclosed. Should 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 d ~ assessed. This Code Authority 
 estimates that the average case is completed and the money 
 paid within three months from the time it is first brought 
 t"> their notice. This Industry has now collected as damages 
 a sum sufficient to support itd Code Authority operations for 
 tne next six months." (**) 
 
 (*) Letter to Mr. Walter White, Deputy Administrator, NBA files 
 April 12, 1934 
 
 (**) Copy of memorandum appended to "The Use of Liquidated Damage 
 Provisions in Industry Agreements", 1TBA, Enforcement Studies 
 Section. 
 9826 
 
- 433 - 
 
 Concerning the effectiveness of this type of provision as an aid 
 to enforcement, this emorandum continues: 
 
 H ... .Generally speaking it is found that these provisions 
 are most applicable to the enforcement of trade "practice 
 article, and are not usually brought to Dear in cases of 
 labor violations. A most considerable measure of success 
 has been obtained in these codes -vac re the procedure has 
 been adopted and tne 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 could 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 Piling 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 wore- .handled originally by 
 the code authorities, 2G by the state offices and S by the Government 
 Contracts Branch. 74 of this total number were handled by correspondence, 
 33 by interview with the respondents and 2 by interview with competitors. 
 Although this breakdown is a description of . iethod 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 code authorities, 18 by 
 competitors, 1 by a trade association and 1 by an employee. 
 
 No 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 TWA 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 
 
 9826 
 
- 434 - 
 
 price filing by a groat number of small units of the industry or filing 
 of prices on a great number of non-standard items. 
 
 Of the difficulties which -'ere experienced by Code Authorities in 
 their compliance activities, three major problems will be treated here: 
 
 (a) Failure of 1TRA 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 were not actively, "persistently and 
 successfully prosecuted. 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 one outstanding case of violation by a member 
 who defied all provisions of the Cede... This case had a vary 
 serious effect on the Industry and was quite a problem to the 
 Code Authority as it developed early in. its administration, 
 and although vigorously pushed for settlement, no prosecution 
 or adjustment was made during the lif. 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 compliancei Thus, a memorandum 
 dated December 24,1934, signed by Prentiss L. Coonley, Division Adminis- 
 trator, stated that one of the reasons for the staying of the price filing 
 and certain other trade practice provisions of the Code for the Canvas 
 Goods Industry was the realization that the Industrj' did not have the 
 funds necessary to secure compliance with highly restrictive trade prac- 
 tice provisions. (**) 
 
 In some instances the hesitancy of members of the industry to report 
 code violations by their competitors me.de the securing of compliance 
 difficult. An instance -f this type of difficulty was experienced in 
 
 (*) Code History for the Ladder Lanufacturing Industry, page 30-39. 
 
 For other illustrations of this point,, see Code ""-list :ries for the 
 Betail llonument Industry, page 9; for the Plumbing Fixtures In- 
 dustry, page 44; for the mayonnaise Industry, page 230; for the 
 Macaroni Industry, pages 40-44 and 93; for the Cement Industry, 
 page 52; and for the Folding Paper Box Industry, page 81. 
 
 (**) Code 1-Iistory for the Ladder Hanufacturing Industry, pages 38-9. 
 
 9826 
 
- 435 - 
 Candy Industry. The writer if t\e - 
 
 say 
 
 p • 
 
 )de history for the industry 
 
 ,.* f . % , i -mcb .c m one part 01 members 
 
 )i tne Indus t'-v t- ■ fi "> - - --■-,-. 
 
 ;^t„ + J . - 7 ~ ' llits r -£ a Wt competitors who 
 
 violated trade -.ractii 
 
 i it 
 
 ••i - ns • ' .if- 
 
 brought about a 
 
 situation wherein ^ny^foers sat tight withliles coi 
 taking evidence pf violations which they planned to re- 
 lease only m self-defense against complaints filed 
 against them...." (*) 
 
 I- 7 aS itf"r f J™' * he ^""^ation laid do m in Bulletin 
 pUance Hue e^? vT ^ nd ? ents . "*•■ f» .*He guidance of com- 
 „: ^%: L :.i C . 1 !! ° f °^ aathoritiea; «<* «» code authorities w, 
 
 were re- 
 
 quired t: sub.it for Administrative ^^1 their ^ f , %££„ 
 
 Uio/^r 1 ^^: 1 f J' ^V^ ^ pUM —proved, IS SL 
 oli^ce ™ t^» ™!-f ff ed l! C ° d0 ^""ies t e bring about eoro- 
 1 lifted « unt f a rect "^ ^^^^ ^"ect anl incidental. 
 
 ^uV^oTlnl " 'eS^tboritles 3 ^0^^ ** "* ° f 
 conrollanr.p ,*«„„, , - ,1 aran orities , and of the trade practice 
 
 in e "t- J" "n' nT adj!; ' SterS attached t3 State ERA offices. Accord- 
 
 i"fe to a statement made m an interview bv Mr Wowarfl r ty,,™ *■ 
 Prade Practice Compliance Officer for the State o> T^* ?^/°™ rl y 
 offices did considerable wor^L^!*' "■ ■ Illinois, state NRA 
 complaints B omf'J!« educating tne members of trade practice 
 
 g'oupTon e rSd W w^ V th ? lr dutiSC and responsibilities. Such 
 ^uiX : cVcVea a "r^ ?V V"" " . Pr ° Ceed ' "^ D ™ st ^ed, and they were 
 
 ity bulletins, buVs\!ch £&' - V Pronouncement, in code author- 
 such as the one eited aboVe *£S "r g-f f ?5 ^rsal Complaints 
 sometimes led to limited inv^nV^f^ J "?• : - a - roim " lse Industry, (** 
 
 - - ^ supervision over ;le au orit-AT r^ B ™ Ced ^ ^ 
 about, by such indirect ZZs. ^^^ C ^ llance activity Was brought 
 
 to pri^c xiS Sll ? S°f tv !T ^' 3 r c W lla *» «**>**■ 1th respect 
 price tiling mil be outlined in the section following: 
 
 B. ITEA Compliance Actio- it- . 
 
 1. Volume and Disposition of Cases Handled by State Offices. 
 .- °V n '-- CC0I ^ a ^ing page is shown a table which indicates fh* vni™ 
 
 3 iS ^;j?^ °f ** lffi \ state j^i— office :* llSXl r 
 
 activ^re^ n d°o IVsT Of noV s ' a t t lT a lZr tim *?* ^ 
 
 ,„.,■-, . . / °- usc unices total compliance work. The .-. reat 
 
 S' 7 t tneS ° C ; SC ^ " ^ Indicated, were referred to the ^ ^n- 
 
 Sad failed ^"f nrf 6S a "r ^ DT aU °" tS * ad ^ st the'cltsel 
 
 V * ln - f ' llDWln - -° lilts are offered as the high lights of the 
 
 (*) Code History for the Candy Industry page 48 
 
 (**) Supra,-, p. 430. 
 
 9826 
 
- 436 - 
 
 Of 6,115 individuals and firms charged with violating trade -prac- 
 tice provisions in the 57 codes comprising the o^en price sample, 46 
 per cent were 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 a case against a single individual or firm 
 involved several tyoes of violations. The data for the 57 ccdos further 
 sho.w that the 6,115 cases noted above violationa total of 7,142 trade 
 practice violations. Of this total nvmber 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 ^hich 
 figures were compiled (*) show that alleged price filing violations 
 made up 19 per cent of all cases, and approximately the same r>ro- ■ 
 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 ;*RA advises that a survey of NBA 
 State office complaints which have been made since the Schechter de- 
 cision, indicates that failuie to file orices 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 O^en Price Sample Codes involved 
 members of 12 codes. These codes are: Baking, Euilders' Supplies' 
 Canvas Goods, Crushed Stone, Electrical Manufacturing, Macaroni, plumb- 
 ing Fixtures, Retail Monument , Retail Rubber Tire and Battery, Set Up 
 Pa-oer Box, Structural Clay Products, Wholesale Confectionery. These 
 Industries each contain a large number of units (though not necessarily 
 a large number of eirplo2>-ees or large dollar sales volume). 
 
 These 12 codes account for 86fo of the total number of cases in- 
 volving the 57 codes in the ooen price sample. Like"ise the 12 
 codes listed account for 87Jo of the total number of violations of trade 
 practice orovisions in the codes in the sample. To look at it in 
 another way, these 12 codes account for 35 l ;o of all complaints alleging 
 failure to file prices in all, (not just the sarrole of 57) codes. The 
 12 account for 56)o of all complaints alleging failure to adhere to 
 filed prices in all codec. Since over 440 codes contained open orice 
 provisions, and since 12 of these accounted for over one third of all 
 alleged violations of open price provisions investigated by HRA State 
 offices, it is clear that compliance difficulties with price filing for 
 which 1TRA 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 0? DISPOSITION OF CASES, ALL CODES (*) 
 
 Total Violations 
 
 Alleged failure to 
 file "orices 
 
 Alleged fed lure to 
 adhere to filed price 
 
 liethod of Number of Percentage: Number of percentage: Number of Percental 
 
 Disposition Violations of total : Violations of total : Violations of total 
 
 Adjusted 21,961 
 
 No Violation 9,205 
 Drooped 6,144 
 
 Pending 3,8 87 
 
 TOTAL, 
 
 41,197 
 
 53. 3£ 
 
 22.3', 
 
 14,8$ 
 
 9.64 
 
 100.0^ 
 
 4060 
 
 1709 
 
 863 
 
 550 
 
 56.5^ 
 
 23. 7*2 
 
 12.1;, 
 
 7.7& 
 
 135 
 
 101 
 
 60 
 
 7182 
 
 100. 0^ 
 
 688 
 
 56.9^ 
 19.655 
 14.6$ 
 
 8.95!, 
 
 100. 0-o 
 
 From this tabulation it rail be 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 prices and alleg- 
 ations of failure to adhere to filed prices, had approximately the same 
 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 Court invalidated the NHA. 
 
 To summarize briefly, alleged failure to file prices was" the most 
 frequent of all trade practice complaints investigated oy the NPA 
 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 the Compliance 
 Division because 'some code authorities habitually filed complaints of 
 violations without having previously investigated to determine the sound- 
 ness of the accusations. In an attempt to reduce the number of complaints 
 not substantiated, tho Compliance Division, on August 11, 1934, issued 
 Field Letter No. 148, reading as follows: 
 
 "4. COLiPLAF'TS FILED 3Y CODE AUTHORITIES. It appears 
 that Code Authorities are sending' lists of alleged vio- 
 lators of their code to Field Offices where subsequent 
 investigation reveals either that the respondents are 
 no longer" in business, or are not properly classified under 
 such code. In the future, yon will not investigate lists 
 
 (*) See Attached table for detailed definitions of methods of disposition, 
 
 9826 
 
- 438 - 
 
 of complaints of failure to file rtntistics, contracts, 
 'pricos, etc., unless a' certificate is attached to such 
 
 cor.plaint that the respondent was in business as of some 
 recent date, and that a re jistered letter ,7 as sent to him 
 notifying him of his code violation." 
 
 This policy was modified somewhat "by Field Letter ! T o. 173, dated 
 November 3, 1934. This stated: 
 
 "Section 3. Item 4 of Field Letter 7T o. 148 instructs ^ r ou 
 to take no action on complaints filed by Code Authorities 
 alleging failure to file price, statistics, etc., unless 
 they ar< acco rpanied by a certificate that the resoondent 
 was in. busines'-- as of some recent date ond. that a registered 
 letter was sent him notifyi ig hi/i of his code ooli Rations* 
 
 If the action taken by your office -rill consist 
 merely in sending the respondent a letter informing him 
 that he nill he deened to he in violation unless the 
 necessar-'- information is fill . h the Code Authority 
 (particularly - hen a long list of alleged violators is 
 filed by you) it will not he necessary to require a 
 previour notice by r ;istered mail. If, however, a com- 
 plaint .s accepted for + r . 1 action, 1th the oossibility 
 that it nay he later referred to Th ton, the file should 
 include s return r< c i t for » registered letter." 
 
 Difficult -- o; the field offices ii kc i. up nth st^ys of code 
 provisions is evidenced in the folio- in,; excerpt from Field Letter "o. 
 198, dated Febru \ry 9, 1S35: 
 
 6. Cf ivas Goods Industry . The Apparel Section informs 
 us thr.t offic< . ve docketed complaints under provisions 
 
 of the Canvas Goods Code which have been stayed. This stay 
 went into effect on January 14th end covers the following 
 
 provisions of Article VII, 2; Section 1 (a); Section 1 (b); 
 Section 2; Section 3 (a) and (b); Section 4; Section 5; 
 Section 6; Section 7; Section 8; Section 9; and Section 10. 
 
 (Sections 4 and 5 provide for the orice filing plan and for 
 adherence to filed orices.) 
 
 3. National and Regional IT HA Compliance Procedure. 
 
 TJhcn a complaint seemed impossible of adjustment by the code authority 
 enforcement agency and the NHA Stat' office, it was rally referred 
 to the Comoliance Council of 1THA, of after January, 1933, -to the :i?A 
 regional office. Information concer ni v" Compliance Division policy end 
 procedure with resect to cases of alleged violations of the nrice filing 
 provision was obtained in an interview with Mr. J.J. Rcinstoin, formerly 
 Acting Chief of tne Co-ordinating Branch of the Compliance Division. The 
 first step 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 cat such hearing but few apocarod, gener- 
 ally due to the fact that they were so far removed from Washington or 
 
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 9826 
 
- 439 - 
 
 other hearing headquarters. In lieu of such personal appearance, the re- 
 spondent was entitled to transmit evidence denying the allegation of 
 violation. Mr. Reinstein stated that orice filing cases', were regarded 
 as "routine". The code authority would make a shoeing that the alleged 
 violator was 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 Gov rnment Contracts Division of the 1IRA (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 promoted such action, it is submitted that 
 the work of the Government Contracts Division was seriously 
 hampered and its prestige and effectiveness considerably 
 damaged thereby. 
 
 "Despite its lack of power of cancellation of contracts and 
 the lack of corrolete cooperation of Government Departments, 
 there can be little doubt as to the value of the work of the 
 Division in securing codu compliance in naiuy industries. 
 In the case against the Baltimore Lumber Comoany (L-1407), it 
 appeared that orders for government work constituted 70$ 
 of the defendant's business, and because of this fact the 
 defendant was willing to consent to an injunction in order 
 to reta.in his eligibility status. In the building trades 
 and among building and roads contractors conditions in Govern- 
 ment contracts were very valuable in securing code compli- 
 ance, and the tremendous purchases, under such contracts, 
 of steel, cement, lumber, machine shops, products, cotton 
 garments and paper 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. 
 
 9826 
 
- 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 contracts had acted as an efficient means of bringing about 
 conformity with code provisions in that industry. The History of the 
 Code for the Builders Supply Trade also testifies to the efficacy of the 
 activities of the Government Contracts Division, (*) 
 
 The work of this division was handicapped in sorie c»pes, 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 attempting to have contracts cancelled because a 
 given concern ha.d violated a code authority interpretation of a code 
 provision, this interpretation was held to be an improper action on the 
 part of the code authority. 
 
 (*) See page 19 of the code history. 
 
 X 
 
 9826 
 
~ 441 - 
 II. LITIG-ATIO:; ACTIVITIES 
 
 A. Number of Cases Handled . 
 
 There were, durin. -• the life of 
 Litigation Division for court act-ion* (*) Of these cases, 279 involved 
 failure to file prices. (In no:;t, if not all cases, other violations 
 were associated with failure to file prices..) The number of cases in- 
 volving selling below filed prices, is ; not available, since such cases, 
 in the tabulation made by the Enforcement Studies Section, -:*ere lumped 
 with, a number of other types 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 Prices 
 
 Lumber and Timber Products 70 
 
 Retail Solid Fuel . 23 
 
 Retail Lumber , 21 
 
 Retail Monument 11 
 
 Wholesale or Distributing Trade 9 
 
 Builders' Supplies 9 
 
 Graphic Arts ■ 8 
 
 Fabricated Metal Products 8 
 
 Electircal Manufacturing 6 
 
 Business Furniture 5 
 
 Funeral Supplies . . 5 ■■ 
 
 Cigar 4 - 
 Wholesale Confectioner*/ ., .. t "4 
 
 Baking . 4 
 
 Ice 4 
 
 Crushed Stonu, etc. . 4 
 
 Rubber- Manufacturing 4 
 
 Slate ■ 4 
 
 44 Others (3 or less cases each) 68 
 
 Total ...279 
 
 B. Attitude of the Litigrtion Division Toward Prosecution of Price 
 
 Filing Cases . 
 
 Mr. Robert Denvir, Chief of the Enforcement Studies Section of the 
 Division of Review r in response to questions concerning the policy of the 
 Litigation Division in prosecuting violations of the urice filing provisions, 
 stated that there was no general policy with respect to the type of cases 
 which the division would prosecute.. However, he continued, £ew if any 
 cases involving only failure to filo price were Drought up for court action, 
 since it was necessary, in each cp.se successfully prosecuted, to .show that 
 interstate commerce was 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 cu-jpl'ied by the" of f ice^f~lrT"S?bTrT'Denvi r, Enforcement Studi e s 
 
 Section, Division of Review, 1'IRA 
 9826 
 
- 44.2 - 
 
 prices or failure to adhere to filed prices T ^ere 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 prose- 
 cuted "by itself, (*) ....... 
 
 S^CTIC" C '-* ISA -POLICY r^LilTIIIL- TO OKI! P2ICS FILIII& 
 
 SULELA3.Y 
 
 The precedin ; sections of this chanter have presented the work of 
 the I]RA in supervising code authority administration of the price filing 
 provisions, and in assisting to obtain industry compliance with their 
 requirements.} 
 
 The present 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 en almost wholly uncoordinated and unoritical acquies- 
 cence in open price pro rams 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 la.te as March, 1934, a spokesman of the Administration stated 
 that no official price filing policy had as yet been formed. At that time 
 more than 300 Codes, r large proportion of them containing open price 
 provisions, had been approved. On June 7, 1934, with the issuance of 
 Office Memorandum Ifo. 228, the first official pronouncement of price 
 filing policy appeared. 
 
 The second principal trend accompanied 'the first. The n-ovisions 
 approved during this early period were diverse in form. The industries 
 proposing them were frankly intent upon 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 price control. 
 
 (*) Tiie dubious legality of many of the open price plans set up in pur- 
 suance of code provisions *-'?£ also a factor, if we can judge by the 
 memoranda of individual legal advisors'. Ilote particularly the 
 business furniture, macaroni, fol Ln paper box cases referred to 
 in the text of this study* -Further study of the subject of this 
 section would' be desirable. - 
 
 9826 
 
- 4-43 - 
 
 To achieve this aim required that the price filing provisions he 
 more uniformly drawn, and that specific safeguards and limitations, 
 "based upon administrative experience, he written in. Office Memorandum 
 No. 228 set forth the first model price filing clause. The following 
 are among the safeguards which were progress ively sought to he thrown 
 around the price filing provisions in the movement to make them more 
 nearly mediums of price" publicity end lens mechanisms for the main- 
 tenance of price: 
 
 The rule was laid down that prices must he filed with confidential 
 and disinterested agents rather than with the code authorities. 
 
 The waiting period prior to the effective date of price reivisions 
 was declared contrary to policy, e.vcept in spe.cial instances. 
 
 It was held that price filed must he actual selling prices, instead 
 of merely minimum prices. ' . 
 
 Mandatory customer classification, which had frequently oeen incor- 
 porated as part of the price filing provisions, was forhidden. 
 
 Restrictions upon premiums, "free deals" and advertising allowances, 
 other than that they he filed along with prices and terms of sale, were 
 declared to he contrary to policy. 
 
 In order that there might he supervision of price filing plans and 
 study of their effects, it was stated in newly incorporated provisions 
 that no price filings co\ild he destroyed without the, written consent of the 
 Administrator. 
 
 It was ruled that price lists should he disseminated immediately 
 upon receipt by the agency receiving them (this hoth aided in price pub- 
 licity and prevented suspension of low "trices by persons interested in 
 maintaining or increasing price levels). 
 
 It was required that all price information, including all terms and 
 conditions of sale, he filed. 
 
 It was provided that filed -orices must he made available to all inter- 
 ested parties (including customers). 
 
 There was by no means entire unanimity within the Administration it- 
 self upon these p oints, nor acquiscence in them by industry; neitfhter 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 vie-? concerning price filing policy at 
 which the Administration had arrived when the code period came to an end. 
 
 In the following section the general course of this policy develop- 
 ment, and the principal factors affecting it, will he traced, beginning 
 with the debates in Congress preceding passage of the national Industrial. 
 Recovery Act in June, 1933, and carrying through to the invalidating of 
 
 9326 
 
- 444 - 
 
 the codes "by reason of the Schechter decision in May, 1935. 
 
 I. SENATE DEBATES Oil PRICE FILING PRIOR TO PASSAGE OF THE 1TIEA. 
 
 Among the earliest intimations linking the sub ject of onen price . 
 filing with the proposed National Industrial Recovery Administration, and 
 indicating the objectives sought "by such a ;oolicy, 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 3orah wanted the anti-monopoly clause of the 
 Act supplemented by an anti-price-fixing clause and an anti- restraint- of- 
 trade clause. Senator TTagner, one of the chief proponents of the Act, 
 objected to these proposals, holding that - "* * * a prohibition of 'res- 
 traint of trade and orice fixing' as those tfirases 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 wa.s .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 T3orah amendment. 
 This amendment would prevent even the publication by 
 business cf their own price schedules and their ad- 
 herence to these schedules even for short >eriod3 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. 
 Feldman, Assistant Counsel of the Litigation Division of the 1IRA, in an 
 undated "Memorandum of Law Considering the Legality of Code Provisions 
 Requiring the Filing of Prices" wrote: 
 
 "One of the Supreme Court's favorite methods of determining 
 what changes were conter. ulated 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. 
 9826 
 
- 445 - 
 
 Indeed, a close J reading makes it apoear that, in the -proper 
 
 circumstances , it is almost the duty of the Recover'/ Admin- 
 istration to include -/hen in the interest of a stable marker 
 
 " It is signif ieant in this ros-oect that an amend- 
 ment to the original Recovery Bill was offered in the Senate, 
 which sought to forbid'conbinations i n 'restraint of trade 
 and price fixing' • The fact that those provisions did not 
 find their way into law as finally enacted is of the utmost 
 
 - importance. As was stated "by I!r. Justice Cardozo ... (in 
 
 - another case), the omission may have "been unwise, hut it cer- 
 tainly was not ina.dvertant, ..... It is of special signi- 
 ficance that Senator horah made several unsuccessful attempts 
 to have his amendment reinstated after the conference report 
 had been submitted and before the final vote was taken. In 
 
 • fact, this issue wa.s the highlight of the Congressional de- 
 
 • bates. 
 
 "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- 
 gress governs," (*) 
 
 Two points of particular importance ampea.r from the foregoing: first, 
 that "price stability as distinguished "from monopolistic ^rice fixing" 
 was one of the primary aims of the Act, and second, that it was the appar- 
 ent intent of Congress that jrice filing under the I IRA should be "not only 
 permitted but encouraged * * * * when necessary". 
 
 The working out in terms of rdainistrptive action 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. FIRST 1TRA PRICE FILIHGTSRIOD - JUKE 16, 1933 THROUGH JUHE S, 1934- 
 EXPERUIEHTATIOII AHD SSARCH FOR A POLICY. 
 
 Almost precisely a, year ela:osed from the date of the pa.ssage of the 
 HIRA to the time when a definite and relatively complete oolicy with re- 
 spect to open price ;olans 'was" formally enunciated by HRA, This period 
 was characterized by the adoption of a large number of codes containing 
 price filing -orovisiens differing widely in various details, and, especially 
 during its later months, by an increasing tendency tov/ard critical examination 
 of the effects of these diverse experiments and search for some basic 
 policy with respect to them, 
 
 A, Six Months of Price Filing Experimentation , 
 
 The fourth Code to be approved under the 1JRA contained a detailed and 
 comprehensive -orice filing plan. This was the Code for the Electrical 
 IIanufa.cturin- r ' Industry approved August 4, 1933, numerous others quickly 
 followed. Luring this period of intensive code-making many codes, includ- 
 
 (*) Legal Division IfPA files, "Price Filing, Ho. 413". 
 9826 
 
- 446 - 
 
 ing those for major industries, were' approved *?ith price filing plans 
 to which virtually no consideration had "been given; in the miblic hear- 
 ings. Daring 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 LIRA is the primary preoccupa- 
 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 'ocen to approve 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 lethods in particular* 
 
 * 
 
 As an illustration both o:° the general nature of the price filing 
 plans approved duriiv this period, and the scant attention given them in 
 the process, an account of one of the typical early provisions may be 
 given. 
 
 2« The Price Piling Plan in the Electircal Manufacturing Code. 
 
 This Code, es remarked above, was the fourth to be approved under 
 LIRA and the first to contain a orice filing plan. Only one reference of 
 any signif icance 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 a.t an;' tine 
 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 en:/ manufacturer to change his list and 
 discount at any time he wants providing he will not sell 
 below his published discount price, so Ion; as the period 
 of that list and discount is effective." (*) 
 
 (*) Transcript of Hearing on the Code for the Electrical ilanufacturing 
 Industry, July 19-21, 1933, Vol. I, page 224. 
 
 9826 
 
- 447 - 
 
 Nothing also of importance concerning price filing appears ,in the 
 
 transcript of the hearing. Hone of the re-oorts on the final draft of the 
 code submitted by the boards rhd divisions of the Administration to the 
 deputy administrator prior to approval contains any reference whatever to 
 the price filing -orovisions. Similarly, in the historical summary of 
 the main points discussed in bhe 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 points concerning price filing, contained in Article 
 X (**) of ■ the Electrical Manufacturing Code, were: 
 
 1« If the code authority determined that it was cust ornery in the 
 industry to sell products on the basis of printed price lists, it could 
 require the filing of such lists. 
 
 2a If the. code authority determined that conditions in a subdivision 
 which had not previously sold on the basis of price lists were similar to 
 those in a, subdivision which had, it could require that the former sub- 
 division also file prices. 
 
 3. A ten day waiting period 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 lists. 
 
 5. Members of the industry were forbidden to sell below filed 
 prices. There was no requirement that they sell at filed prices. 
 
 It will thus be seen that what later n r.s to become one of ' the 
 principal points of contention with respect to general 1JRA policy con- 
 cerning price filing - the waiting period before revised prices could 
 become effective - was written into the code and acquired something of 
 the force of a -orecedent in the very first price filing plan, aooroved. 
 
 3a Early Dissent With Respect to Price Filing Provisions. 
 
 While what has ^ooen 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 price provisions which '-'ere being written into the codes. 
 
 (*) Mr a Sterling HcKittrick, who was an assistant deputy enp;r.ge(l. 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 ' vA&mini strati on officials in memoranda prior to the approval 
 of the code. These have not "aeon located by the Price Piling Unit. 
 
 (**) Codes of Pair Competition, as Aeeroved, Government Printing Office Vol, 
 I, p. 49. 
 
- 448 - 
 
 Although the objections of those individuals and groups did not 
 serve immediately to alter the nature of the plans which were being ap- 
 proved, the type of policy eventually adopted by ilRA was, as will be 
 seen in a later section, materially affected b; r the dissenting opinions 
 expressed in these early months of code formulation. 
 
 Several instances of these dissident attitudes follow: 
 
 (a) The Code Analysis Division. 
 
 During the latter part of Jul; r , and during August and September of 
 
 1933, the Code Analysis Division headed by Mr. Stephen De.Bruhl, served 
 in. a senso as g policy advising group for the Administration. According 
 to information secured from Mr. T7. XI* Bardsley and Mr. Pat Taft, both 
 
 of whom were members of the division, the function of the group was to 
 take the codes shortly after the;- were 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 ,T ere of 
 a rather negative char cter, according to Mr. d- rdsley, who character- 
 ized the worl: of the -group as that of attaching "red flags" to crll to 
 the attention of the deputies provisions of doubtful desirability. In 
 general, Mr. Taft reported, this grouo looked with disfavor on price 
 filing provisions and urged their elimination. 'The members of the divi- 
 sion had no very clear cut reason for this, Mr. Toft stated, but ''ere 
 vaguely afraid that open price systems might be used in 'price fixing 
 activities. 
 
 The following illustrates the position of the Division on open prices 
 
 "This article (in the proposed Code for the Machine Tool and 
 Forging Machinery Industry) sets up an open price association. 
 TThile the association as defined is not of en extreme type, the 
 difference between an open price association and a fixed price 
 plan is apt to be a narrow one." (*) 
 
 (b) The Division of Research and Planning 
 
 This agency, established to advise the Deputy Administrators and the 
 Administration generally concernin ; the probable economic effects of code 
 operation, and to study those effects, issued no formal statement of polic 
 for the guidance of its code advisers. Mr. Janes Hughes., former chief of 
 Code Administration Section of the Division, stated (*) that prior to the 
 issuance of Official Memornadum Mo, 228 (price filing policy) on June 7, 
 
 1934, the division had no established policy 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, neverthe 
 certain of the division's economic advisers looked with disfavor on waitir 
 periods, and in general on the reporting of prices other than for closed 
 transactions* 
 
 (*) Report submitted ~by Code Analysis Division to the Control division 
 on September 5, 1933, prior to the public hearing on the Code. 
 
 (**) In conversation with representative of Price Piling Unit. 
 9826 
 
~ 449 - 
 ( C) The Consu iei a ' A ■ =5 rv Board 
 
 He )orts of tlie ooo advi i s of tiie Uonsuners 1 Advisory 
 3op.ru also, during; the period or to the issu: ice of Office ' "emo- 
 randura ho. 23 : ), frenue lily, i • t b tho attitude of that 
 board was, in .'general, opposed to t ■■ fili > of rny other than 
 past trices. As for e~ar.ele, is b'ie hoard's report with re- 
 spect to the Cement Code, dated September 15, 1933. In other 
 crseb no objection was raised to the hi" 1 . ir ; of current prices, 
 but or 1 .-;-- to certain tyoes of current reporting. Opposition uas 
 also expressed to waiting periods in o ; en prise provisions, as in 
 the report on the Li: ,e Industry Code, Se btember 16, 1933. 
 
 In r statement prepared as a. guide to its Consumer Advisors, 
 the Consumers' Advisor;/ lorrd stated in a memorandum dated September 
 23, 1933, 
 
 11 ....Under the uis.e of collecting information, the open 
 price schedules proposed in sore codes lay the foundation 
 of Monopolistic control of prices. Periodic collection of 
 avera ;e vices or of the pange.of price quotations is de- 
 sirable. Detailed re jorts of irices, qualities, name 
 buyers, etc., in paxtieularr trans act ions may be nr.. ; .e the 
 basis for strong pressure to live up to tacit monopolistic 
 understandings, and should he examined closely from that 
 point of rie-v. 
 
 "Public- tiers of scheduled future prices should be opposed 
 as a device to facilitate price fixing- agreements. In cases 
 where such reporting systems cannot be ejected from the 
 codes, they should e surrounded by "our safeguards: 
 
 1. The tine interval b'et'-een the f ilin . ■ of r price schedule 
 and the date it jecoiaos effective should be reduced to 
 
 a minimum in order to sin rten the jeriod o± persusion. 
 A five dry interval, rlthough too Ion.-;, should be taken 
 as the outside limit. 
 
 2. Schedules properly filed should become effective auto- 
 
 ia tie -ll r without veto by ^ry trade a.ssoci tier., code 
 authority,- or producer. 
 
 3. . It should be mandatory that, at the same time and in the 
 
 same manner as reports are made to other producers, the 
 same reports should be made to buyers of the product. 
 ±'.ie only limitations upon this requirement should be 
 that --here the reports are made >y mail, very small 
 buyers., -ho have rot requester, such reports, nry be 
 omitted, and that there the reports rre race to rn 
 association, ■ buyer a" -'bo ore not represented o _r an 
 equivalent association should be notified in ouch 
 other ways as will :ive the equal access to the 
 i iformr ti r.. 
 
 9326 
 
- 450 - 
 
 4. ITo tine Unit sh n 1 : - >r scribed "or the duration of 
 a price schedule, Such limits often seek to eliminate 
 lonr tar:- contracts ."or fui ire Leliver, particularly in 
 in c~ses T7here the contract 3 at lot; >rices in order 
 t? keen plants running durin ; n off so-son. The con- 
 sumer's interest lies in encouraging the stability of 
 production by ruch contracts."* 
 
 4. The Beginnings of Official J. A Price riling Folic-. 
 
 Thilo for the most )art IJRA iricc fill - policy during this period 
 r r as, a:: hrs ieei indicated, merely that rrhich ts implicit in the an- 
 proved open price plans* uith son 3 critical opposition fron articular 
 groups, there/ Tere s fe-rr jrelinin ry state tents foreshadorin -■; definite 
 formulation of policy "07 the Administration. 
 
 The earliest model code, dated October 25, 1933, contained no 
 preference to price filing; but a confidential policy memorandum carry- 
 ing the sane date did. Phis memorandum appears to - have been the earli- 
 est authoritative statement of ;eneral principles as to open price sys- 
 tems under the iTRA* It re in part as follows: 
 
 "Open Price Syste is should be ur ;ed, srovidin ; that prices — 
 
 (a) shall be effective within not more than ten .a.vs in 
 
 ccivoler: industries or five days in simple. 
 
 (b) shalT! be capable of -h thoracal at the pleasure 
 
 of the seller. 
 
 (c) are not s t to v r 'to or modification by any 
 
 '• 
 
 (d) are to be generally pu >lished for the benefit of 
 buyers as -'ell an sellers*" 
 
 This iienora-ndun, si rr.ed by Alvin bro-m, vas - statement of the con- 
 clusions reached at a meeting, held on October 25, 1053, of the Policy 
 board appointed at the direction of the Administrator in Office Order 
 To. 35, issue-.. September 16, 1933. 
 
 "his board na,s made up of the follor?ing: T7. L. Allen, Alvin broTRi, 
 Thomas S. Hammond, Robert ". Lea, Edward P. be' ra by, Chajles b'ichelson, 
 Iialcolm buir, Donald R. Hichberg, 'rs. C. C. Rumsey, Ale:cander Sachs, 
 K. b. Simpson, Iielson Slater, Robert "I. Straus, Salter Z. Teagle, A* b. 
 Uhiteside, C. C. Williams, and Leo *7olnan. 
 
 (*) Confidential ••emorandum fron the Consumers ' Advisor;'' Board to Coae 
 Advisors, Dated Septem er 28, 1033.. In ITRA files. 
 
 J25 
 
~ 451 - 
 
 It shoul . be noted that, ^ith the exception of the approval given 
 to the waiting period, the -orinci O.r.-j set forth in this e? rliest official 
 expression of price filing policy - lihe nost of the critical opinion 
 recorder, in the section ^recedin ■ - tended to cnlv size the r>rpper 
 function of the orioe filing -.;-lan ar-i a sediun of -orice publicity, as 
 distinguished froii r necLanis:^ for price control* This fundamental 
 divergence from what wps •? ■. rrll <~ seen as the industry attitude to- 
 ward the price filing -olrns will, be found to characterise IfllA policy 
 on the subject none and nore as that policy develops. 
 
 It should also be noted, however, that in the case of a nuriber of 
 codes approved after the issuance of this nenorandum, the policies ex- 
 oressed in it were not followed* The analysis of o-oen price provisions 
 prepared by the Research and Planning Division indicates that three 
 codes ond one supolenent were approved after October 25, 1935, in which 
 there was a waiting period in excess of 10 d;"'"s. Of these, onl" r one 
 actually went into effect, the other three having hp & the waiting 
 period stayed.* 
 
 Of perhaps oven more ii.nortrnce is the fact that., according to 
 this s n ne research and planning analysis, there '-■ere, after October 
 25, 1933, when the ■oolicy raenorandun was issued providing for avail- 
 abilit"/ of filings to customers, 137 codes approved which npAe no 
 provision for buyers to receive filings. 
 
 (*) "Analysis of Trrde D ractices, Provisions Pelrtin : to Onen Price 
 aid Did Pilin ; Systems", prcorred by the Division of Peserrch 
 pnd Pinning 'JTPA, revised rnd jorrecteC- through Pay 27, 1935, 
 "l\RA files. 
 
- 45 j - 
 
 3 . Six Montns of Study an d Search for Policy . 
 
 In the first half of this section there have been pointed 
 out the rapid and largely unconsidered adoption of open price provisions 
 in the cedes, the outcropping of critical protest against the types of 
 provisions adopted, and the beginnings of an official N5A policy with 
 respect to open price systems, all of which characterized the first six 
 months of th.e code period. 
 
 During tie second six months of the PEA, 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 lied 
 become increasingly apparent that certain aspects of price filing plans 
 approved in the early codes were leading to undesirable results. 
 
 Ihe 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 :f principles. In addition, the Review Division did certain worl: 
 in codifying expressions of policy on matters of letail. 
 
 Tie most drastic action so far taken in connection with a 
 policy consideration affecting price filing was effected toward tie 
 end of this period by an official order staying all waiting period pro- 
 visions hot yet approved, pendin & the outcome of a general study of open 
 price plans. 
 
 The details of taese various developments are presented in 
 the sections following. 
 
 1. Sff-rts t~ Ascertain the Results of Approved Price 
 
 Plans. 
 
 In January, 1934, a public ..caring 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 nearing 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 
 
 i.Ir. J. u. Nicholson, Purchasing Agent for the City of Milwaukee, 
 Wisconsin, at the hearing on "Price Changes" , January 9, 1934, 
 pages 5 53-530. See also appendix "A" of the memorandum submitted 
 •to General Johnson en February 19, 1934, oj tie Scnsumers 1 
 Advisory Board. 
 
 9826 
 
- 453 - 
 
 This hearing 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 further 
 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 i 
 
 By direction of tne Administrator. 
 
 . . Alvin 3rown 
 
 OFFICE ORDER NO. 63-A 
 
 January 27, 1934 
 
 iXDIEI CATION OF. O F FICE ORDER 63 ON PROVISIONS FOR 
 • 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 the 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. 
 
 9826 
 
- 454 ~ 
 
 "This Order is not inter.de'' 1 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 
 
 CFF1G3 OEDSil NO. 63 - B 
 January 27, 1934 
 
 i.:;piri cat i-;i cj ■.v?i c 3 order no. 63 - a on 
 
 . PROVISIONS F OJl OPEN PRICE ASSOCIATIO NS 
 
 Cffice Order No. 63 - A is modified to read r>s follows: 
 
 "As -a result of the price cnange hearing a study is 
 being made of open price associations. This study 
 particularly involves the waiting period before 
 filed prices beco r.e effective. Therefore, any pro- 
 vision for a waiting perioi 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 tne study." 
 
 By direction of the Aiministrator. 
 
 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. Tiierefore, 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 was promulgated which stayed only waiting periods. (*) 
 
 'tfnatever the precise reasons for tue modifications, it seems 
 certain that there was strong industry protest at this drastic move to 
 curtail the right to a type of prevision 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: 
 
 232 Merchandise Warehousing 
 
 (Approved January 27, 1934) 
 
 287 Graphic Arts (All Divisions and 31 Appendices) 
 (Approved February 17, 1934) 
 
 401 Copper 
 
 (Approved April 21, 1934) 
 
 4~1 Refrigerator Manufacturing (Supp. to Electrical Mfg.) 
 (Approved June 9, 1934) 
 
 4—2 Portable Electrical Lamp and Shade (Supp. to Elec. Mfg.) 
 (Approved June 27, 1934) 
 
 According to a responsible administrative official, the action as 
 to tie codes listed above, with the exception of the Copper Code, was 
 due to "prior 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 the further acceptance, at 
 least without stay, of mandatory waiting periods in connection with 
 
 . t . . • - 
 
 (*) In this connection it may be noted tuat 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 writer 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- 
 moved. 
 
 2. Special Studies -Undertaken With an Eye to Policy. 
 
 As a further oat :rowth of the hearing on price 
 changes, end as a result of the increasingly felt neei to find 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 rteport. 
 
 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. "!c said that 
 such a procedure would be "taking away a useful but dangerous tool in- 
 stead of teacMng its use." 
 
 Mr. '.itney' s definite recoaaenda^ions were: 
 
 "1. The reporting of prices on past transactions 
 is alrea ,al 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 necessity to prevent ^rave 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. 
 
 (*) The latter amendments, however, affecting the Lime and Cement Codes, 
 continued approvals of waiting periods which had been included 
 in the original provisions. 
 
 9826 
 
- 457 ~ 
 
 "5. Price reports should "be made available to buyers 
 as well as sellers, under reasonable conditions; 
 
 "C. Sealed bids should n:t be exchanged until after 
 
 "7. Price fixing should be stopped by taking all 
 
 price fixing provisions (ox whica price reporting 
 is net one) out of coles, 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 
 plans 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 witn merely by elimi- 
 nation of the wad ting 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 desired in the 
 industry. .. .".Thile we do not believe it desir- 
 able to eliminate the reporting of prices and 
 price transactions completely, we feel that it 
 would be oossibie 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 of your 
 consideration, that actual prices charged in sales 
 already made be reported to MA agency pledged to 
 keep tne 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, He search and Planning Division, 
 xiHA, April 3, 1934, page 40. 
 
 9826 
 
- 458 - 
 
 than by those who have private interests at stake." 
 
 On IJay 4, 1934, after a study of the operation of price filing pro- 
 visions, the Boari issued a report. Its recommendations concerning 
 policy were: 
 
 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. Yfaiting 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 twe advisory divisions were in substantial agreement upon the 
 following general points: (l) that open price filing systems should not 
 be done away with until efforts had been made to remedy the abuses con- 
 nected with them; (2) (by 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 sliculd apply to codes already approved, as well as to future 
 approval s . 
 
 (*) "Experience with Open Price Provisions of Approved Codes", Con- 
 sumers 1 Advisory Board, IToA, May 4, 1934, pages 39-42, MRA files. 
 
 9826 
 
3. Farther Search ?or a Basic Policy. 
 
 A further effort tc 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 cocle authorities held in March, ,1934. 
 
 That even at that late date no definite policy had been 
 adopted is evidenced hy 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, the National Recovery Administration 
 has formuleted no conclusion for a definite 
 opinion regarding open price provisions*****"(*) 
 
 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 
 Rales, an open price provision, no model is suggested. The outline 
 states t'.at 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 the Administration tc reach a definite position on open 
 price s.ystems, as set forth in the preceding pages, there was added., on 
 April 9, 1934, a somewhat more systematic effort resulting from the 
 issuance of Policy Order No. 33 which created the office of Assistant 
 Administrator for Policy. 
 
 Subsequent to this a Policy Group of foar was appointed, 
 consisting of Mr. Blckwell Smith, Mr. Leverett S. Lyon, Mr. William W. 
 Bardsley, and Mr. L. C. Marshall. This group advised different admin- 
 istrative officers in the 17RA on policy matters, some v 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 3. 
 
 (**) Available in the office of the Legal Service Section, 
 NBA files. 
 
 9836 
 
- 460 - 
 
 The following opinions on policies concerning price filing were 
 expressed "07 this group prior to the issuance of Office i ierno randum 
 No. 223: 
 
 (1) Prices filed should be those at which tiie member sells, not 
 his minimum pi ice. 
 
 (2) A member of an industry should not be required by the Code 
 to file ".elivured prices. The filing of delivered prices should not, 
 however, be forbidden. 
 
 (3) In the case of an interpretation of a code provision, the 
 group reccime.ided that "**** tie date of filing of prices, terms, or 
 condi ti-ns ci sale shall be deemed to mean the late of receipt of 
 notice by ti.c code authority, with instructions to tl.e code authority 
 that it adopt regulations that such filing must be by registered mall 
 with return receipt requested. " 
 
 "Finally, it snould be noted that policy statements touching at 
 times upon price filing matters, were Bade during this period by the 
 Review Division. Tni? livi^ion, designated to advise the Administrator 
 concerning conformity of proposed code provisions and rulings with ".THA 
 policy, wa: one of tie first agencies to begin compilation of state- 
 ments of principles. Unlike tie advisory groups who represented parti- 
 cular interests (industry, labor and consumers) the Review Division did 
 not attenpt to influence the formulation of Administration policy. 
 Rsither, its function was to coJ.ity policy and precedents, as indicated 
 by previous administrative action, and to check new rulings and code 
 provisijis ago.inst such a compilation. To some extent, therefore, ac- 
 tion ^receded ratier tnan f oil owed Policy daring a great portion of the 
 code— making period. 
 
 An undc.ted suanary of policy prepared for the guidance of the 
 members of the 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 their extras the same as any other 
 price. (May 1, 1934) 
 
 A provision for filing prices by basing points was "believed valid" 
 since each member was free when filing to define his own delivery bases. 
 (May 1, 1934) 
 
 Tiie policy of permitting the cede 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 
 
 9326 
 
- 461 - 
 producer could tile v»h- '<■■& .. .*ri< ; -e chose. Pebrnarj 5, 1934) 
 
 j.y Uc 
 
 P : statem^r.t'i. .t vi" l . o ■■. - jn . :ai tviu "ticuii 
 
 relate". ' - ;fl;' t( t . ••?.■_, Ldor .' _..- Uii... . PL--- :> ■.: r*?°cified 
 
 circu,-7 :Cj. : . ratlin r ..; "■ ,ith )."j, , p ccr.sx isrc-d .lU'.-r-ers >1 policy 
 affectir. t 3 gen-jr ' i "ice filing. 
 
 ■ ':-.. Suiomar? :,.: the first ?rir?e Filing Period.' 
 
 ^o sramn.ar'i'; w it Lr s b'e.'\i? ,iveae:i3sd above as to policy 
 
 wj'i :. ...' i;c price riling in th-o fi< ;t oeriod considered — from 
 p.do iti • :f the Act on June 16, 1933, .thrcugb. June 6, 1934: •— price fil- 
 ing n . ,•■ \ were incorporated luring this period in a large number 
 o: :.c ' ■ :; '., ,e e provisions were diverse in form, reflected in the main 
 no unii : i or considered policy on the pai't of the Administration, and 
 itfr^ adoptee largely as desirea. by the industries, whose interest was 
 frame!'/ in mechanises for - price stabilzation. Growth of criticism of 
 this sit'-iatiun within the NRA. itself, added to efforts to determine the 
 :-.ct;-j ffoct 3 of the price* filing provisions (stimulated to some extent 
 by Dutqi:" 1 . " satisfaction), resulted : ; .n various tentative efforts 
 directs , tvr. the f oinul'aticn ; f a general policy. vTitb the exception 
 )f the r tay upon i&aivin'g periods embodied in Office Order 63-d, how- 
 ever, it :.:'/[ be said that tr.ere was no general declaration of price 
 filing p:lxc ; 7 prior tc the ppp^rrsnee of Office Il3iaorandu,n Th. 228 
 ft;h ype:if " e ■-" ■• • . . ''v .A price 'filing oeri .a «nd a iich is the sub- 
 ject j. v j f ] •.j.j-ii-"" 4eo+.inTi: 
 
 QPJ£. 
 
- 462 « 
 
 III. SECOND NBA PRICE FILING FE 103) - JUNE 7, 1934 to MAY 29, 1935 - 
 
 DECLARATION, CLARIFICATION AND APPLICATION OF FOLICY. 
 
 A. Office Memorandum No. 226. 
 
 This period was inaugurated by the appearance of Office Memorandum 
 No. 228, the most important statement of NRA policy concerning price filing 
 ever issued, and one of the most important of all N. L A policy statements. 
 The memorandum dealt with the question of rrice provisions in general, but 
 its Exhibit A contained a very detailed and comprehensive setting forth 
 of what rere 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 lemor mourn. 
 
 The origin of this nolicy 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 rnce systems uncovered at that hearing 
 had led to various inquiries into the o> eration of the rrovisicns, and the ■ 
 unfortunate consecuence? of lack oi a uniform Administration policy as 
 to prices in general had oecome. incre.' singly rpparent, resulting in the 
 organization of a policy formulating groop. 
 
 The immediate background of the memorancum '"as a rroup oi policy 
 recommendations suomitted to :;r. Black'-ell Siitn, the Assistant Admini- 
 strator i or Policy, Dy r. Leveret S. Lvo^, Deputy Administrator for 
 Trade Fractice Folic ,r , in the latter part of [ay, 1934, The memorandum 
 was also signed by the ..embers of a policy committee working with ir. Lyon. 
 The members of that committee vert : Mr. .ulton Katz of the Legal Division, 
 Mr. James E. Hughes of the r.esearch anc -lanning Division, Mr. V<.H. S, 
 Stevens of the Consumers' Advisory Board, I jr. Edwin . George of the 
 Industrial Advisory "^oard anc Mr. Paul Hatchings of the Labor Advisory 
 Board. 
 
 This memorandum contained, with only slight differences, what later 
 became Exhibit "A" of Oifice emorandum #228. In presenting this draft, 
 Mr. Lyon explained that he hac oroceedec 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 co ipetition 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 of these assumptions, I have concluded that open 
 
 9&26 
 
- 463 - 
 
 price provisions properly crp'-n may 'be made a desirable part 
 of a code of fair competition a:--, a device to secure genuinely 
 intelligent and free comoetition. H 
 
 He further said that he believed that the model provision which 
 
 was later designated Exhibit "A" oi Oi'i ice Memorandum #228, provided 
 
 industry "with what is really necessary in thu attainment of an open 
 market. " 
 
 Elaborating on the reasons for the various portions of the recom- 
 mended provision, Mr. Lyon stated that waiting periods have been excluded 
 oecause it r?s regarded as important "to retain the possibility of gain 
 through the quick realization oi 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 ' mle there were some 
 evid.ence and considerable feeling that waiting periods aided collusion, 
 this was not the principal reason 1 or omitting provision for waiting 
 periods. 
 
 He stated that he believed that the iacts that all prices had 
 to De received by the confidential agent before they Decame effective, 
 that they were to be immediately pno. simultaneously distributed to all 
 . ouyers and sellers, and that they could not be increased for 4b hours were 
 sufficient guarantees against abuses in the nature oi "price raids." 
 
 There n ?s some though apparently not a great difference in opinion 
 in the committee concerning identification of sellers. In his memorandum, 
 Mr. Lyon stated that he believed much was to be said for non-identification 
 but that he felt that in vie v of the lack oi standardization in so- many 
 lines, non-identification was impractical. He urged, however, that 
 divisional and deputy ad ninistrator s "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. \. 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 unidentii iable form." This appears to be primarily a difference 
 in emphasis; in one case the standard was to contain identification but 
 deputies were to depart from the standard in this respect wherever possible. 
 In the other case, the standard was to be non-identification 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 from announced 
 policy." A draft article providing for a waiting period of three days 
 was submitted as a model for those cases in which the need for a waiting 
 period was estaolished by an industry* 
 
 9b26 
 
- 464 - 
 
 He stressed the importance 01 the provision for tiling with a con- 
 fidential agent; this was an item of paramount importance, he maintained. 
 This provision ^ould have the following advantages, among others: (1) 
 it wculd eliminate favoritism among members of the industry.; (2) it '"ould 
 prevent the -plan from being used to the detriment oi 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. r rincipal Points as to Price Filing in 
 Office Memorandum No. 226 
 
 The chief points in Exhibit "A" oi Office Memorandum No. 226 as 
 issued were: 
 
 (1) Jilings --ere to be made with a confidential agent of the 
 code authority, or, if there was none, wa th 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 efiective immediately 
 upon receipt by such arent. 
 
 (4) Price lists were to be distributed at once to all members 
 
 of the industry and. to those customers < i ! id the cost of distribution. 
 They were also to be available at the of lice o. the agent for inspection 
 by any customer. 
 
 (5) The' code authority was to keep a permanent list of ?11 prices 
 
 filed. 
 
 (6) he visions upward could not be made until filed prices were 
 in effect at le^st 48 hours. 
 
 (7) All sales were to be made at prices listed, no higher, no 
 lower. • . • . 
 
 (6) There should be no agreement, conspiracy, etc. concerning 
 prices; a free and open market was to be maintained, (*) 
 
 3. Differences Between Suo.iitted and Announced ^raft. 
 
 The proposed price filing provision presented to ilr. Smith bv 
 
 (*) As wps notec aoove concerning On ice Orcer 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. For the full 
 text oi Exhibit "A" of Office Memorandum Ho. 22b see Exnibit V of 
 Appendix A. 
 
 ^>826 
 
- 465 - 
 
 Mr. Lyon differed only slightly rrom the model provision ?s finally 
 incorporated in Of l ice ivieraorpT'dum No. 2' b. The changes which are of 
 significance pre: t 
 
 The -provision as it was finally approved provided that prices should 
 be filed with "a confidential and disinterested agent of the Code Authority, 
 or if none, t hen with such an agent d esignated oy the Admin i strator . " The 
 portion of the sentence underlined, was not included in the draft prepared 
 by the committee. 
 
 The final draft added to the proposed 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 draft -provided that a hi rner price should not 
 be filed for 4£ hours. 
 
 The following appeared 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 therebv to permit 
 monopolies or monopolistic practices, tnis article provides for 
 the open riling of -prices and terms o: members of the trade and/or 
 industry, " 
 
 Just as the foregoing -paragraph, which "as an introductory paragraph 
 in the Lyon draft, was omitted in the final 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 o<-n initiative, 
 after due investigation and on opportunity to the Code Autnority 
 and other interested persons to oe heard, shall find that this article 
 has permitted or is -permitting action contrary to the provisions of 
 the National Industrial .■ ecovery ■ Act or otherwise against the ouolic 
 interest, he may stay, modiiy or cancel this article or any part or 
 application thereof, in accordance with such findings." 
 
 Other changes were in phraseology, and did not affect the sense of 
 the text. 
 
 What was of particular significance ai/out Memorandum No, 226, beyond 
 the fact oi a definite nrice filing policy being 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 wholly at effectuating nrice publicity. It is obvious 
 that such a change oi attitude \70ulc. meet with a certain amount of resis- 
 tance and difficult/ in application, especially insofar as such application 
 might be attempted to oe extended to codes already approved, 
 
 9826 
 
- 466 «* 
 
 4. Folicy Connected ith April cation of the Folicy. 
 
 Because the major codes had been approved before the issuance of 
 Office memorandum No. 228, the effectiveness of this policy statement de- 
 pended largely ucon the attitude taken by the Administration with re -ard 
 to amending codes to conform to the ne^ nolicy. 
 
 Page 1 oi this ;.e.aorandum contained an important statement con- 
 cerning the application of the policy it set forth. It stated: 
 
 "(4) Adjustment of Codes: Fending coaes 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 thern to conform with these policies 
 and, '-herever resistance is encountered, the suDject shall be 
 taken up with the Administrator." 
 
 This statement, however, w-"s considerably qualified by Office Memoran- 
 dum No. ? oO issued July 16, 1934, which stated in part: 
 
 "....This (thf. 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 e general policy must conform in the sense of in- 
 cluding the type of provision iavored by policy. Under certain cir- 
 cumstances it might be manifestly uniair to reouire substitution of 
 8 ne 1 " clause after lengthy negotiations have iinally 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 required only to the following extent: 
 
 "when in final form and assented to by tne Industry, before the date 
 of announcement of p general policv, the code, if otherwise acceptable, 
 
 ill be approved, lowever, provisions flatly inconsistent with the 
 essentia 1 s of such policy will be stayed, to the extent of such in- 
 consistency, until the Industry sho^s why such portions should not 
 be permanently stayed, or made to coniorm in substance to such policy." 
 
 As to approved codes, iitmorandum No, 260 said that nothing would be 
 cone if tne 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." ..henever a provision 
 out of line with policy was found to be causing difficulty, after consul- 
 tation with the industry it should be stryeo unless the diificultv "-ere 
 remedied. (*) 
 
 (*) for the full text of Office Memorandum #260 see Exhibit V of 
 Appendix "C". 
 
 9656 
 
~ 4.37— 
 
 5. Reactions, to the Few Policy. 
 
 This modification of the Administration v s eo^it.jor concerning appli- 
 cation oi the ne 1 " policy cam; -s a result of the orroot xtioir o*'. members of 
 industry and of certain individuals and groups within the Administration 
 to the type of price provisions set forth in Office -e lorandum No. 228. 
 
 Summarizing ooth the reasons i or the change in Administration policy 
 which culminated in this Memorandum and also incustrv reactions, lr. Leon 
 Fenderson, Director of the Division of Economic Research and Planning at 
 the hearing on Price Folicy held by the Administration in January 1925, 
 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...Dest ideals of open prices '"ere those whicn were e a- 
 nhasized. . . by Eddy, the precursor of the plan, which were to provide 
 publicity to competitors, to the public, to the Government, and the 
 buyer?, £0 that evervone might have notice as to what prices were 
 oeing cuoted and it was thought that secret rebates and the destruc- 
 tive influence .of private ..rices and concessions would be largely 
 dissipated if a strong open price policy were mainted, 
 
 "The present policv, as enunciated in Office i.-Ie lorancum No. 228, 
 which is at everyone's disposal, is to get Dack to these ideals. 
 Our files indicate, most naturally, that many members of industry 
 regard price publicity in thoae idealistic forms as not of high 
 value, and regard it as a means oi preventing price cutting and 
 as pn agencv by which coercion, mild and otherwise, as our files 
 show,, pnd our open price studies show, may be applied to competitors, 
 Hio were getting out oi lire, ^nc may De given notice as to what 
 the industry thinks of them.. ."(*) 
 
 During the ensuing period there was frequent conflict between those 
 groups within the NRA which favored the principles oi Office memorandum 
 No. cctj and those within NLA and in incustry who opposed it. Industrv 
 was particularly inclired to avoid, any reopening of ac^roved codes, since 
 groues such as the Consumers' Advisory Foard, which favored in most res- 
 pects the policy of memorandum No. 2'cb, sought, whenever a code was up 
 i or any consideration, to have it amended to conform fully to policy. 
 
 The fact that under the terms of Office Memorandum No. 228, price 
 changes ^'ere to become effective immediately was one reason ior the dis- 
 approval oi it by members of industry. Tims the Code History for the~ 
 ^andy Industry says: "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. 228, the members explaining individually that 
 even though the waiting perioo ^ r as stayed bythe Executive Order they 
 
 (*) See Transcript of Rearing on "Trice Policy", Jan. 9, 1935, pages 32-4, 
 NRA files. 
 
 98?6 
 
~ 46S - 
 
 still entertained hope that this stay migh be Tiftod. 1, (*) 
 
 The Code History for the Scientific Apparatus Industry also deals 
 with the reluctance 01 inoustrv to uhange coc'es. It states: 
 
 "A reluctance to propose amendments or to re-write tne code ws 
 always evioent. In the matter ox price filing provisions, tne presence 
 of a raiting period oi not to exceed f if teen d ays before revised prices 
 become effective is sufficient reason for un^illirgness to jeooardize 
 the provisions de< med essential oy proposing any amendments thereof." (**) 
 
 i her e public hearing ras held on September 25, 1934, to consider an 
 amendment to the Macaroni Code w ich would provide that future contracts be I 
 limited to filed prices, all reierences to iiled prices and emergencies 
 •-ere deleted from tne amendment at the request oi tne code authoritv. This 
 ^s done because the code authority, "as very anxious to keep the pro- 
 visions prohibiting sales belo 1 - cost in tne code. They feared that if 
 this section of the code were opened up for amendment, they might be rtqiiire( 
 to accept the wordinr of office memorandum 228. (.***) 
 
 The situation relating to amending codes to include Office memorandum 
 No. : 28 has been concisely stated by tne writer of the Code history for the 
 jpire Extinguishing Appliance ffg. 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 accountii tern, and 'lowest representativ 
 cost, 1 would not willingly forego such apparei I •• - ;es in favor oi the 
 newer ITRA policy pronouncements. ... ■'.(****) 
 
 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, 
 '"ere as might oe expected, extre aely loath to adopt a tvpe of price f fling 
 which lent itself much less ree( ily to effecting such control. 
 
 As a result of this clas.acvpr the desirability ox tne new policy pro- 
 nouncement, there was constant cor.il ict between these groups within the 
 NHA w hich favored the principles of Oifice einorandum ^e'eb and those within 
 NEA and in industrial groups ": ica opposed it. Those groups such as the 
 Consumer's Advisory 3oarc which favored in mo . t 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 approved. As a result there, was a general indisposition to 
 open up codes for amendment. 
 
 (*) 
 
 ( *** \ 
 f **** \ 
 
 96? 6 
 
 Code History for the Cancy "fg. Inc. ?. &1 
 
 Code History for the Scientific Apparatus Industry, p. 1?. 
 
 See Code History, page 67 ff. 
 
 See Core History, page 47. 
 
- 469 - 
 
 The reluctance of industries to surrender their >»eyious price 
 control provision.-; in favor of the milder provisions recommended in 
 Office Memorandum 228 "*as, in numerous instances, accompanied by a 
 feeling of resentment that approval was denied to regulations that 
 would effectuate existing code provisions, regardless of the fact that 
 such provisions vere contrary to the revised policy. There is some 
 evidence thf>t these attitudes vere not limited to industry members but 
 were shared by certain deputies who administered the codes, and by 
 others who were advising on code modifications. It is obvious from 
 communications addressed to Division Administrators and others 
 that the principles of Office i emorandum 22b "ere never thoroughly 
 accepted by some of those charged with the cirect 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 22, 1935 (six months 
 alter the declaration of the policy of June 7, 1934), 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 deme^e agreement to eniorce them. In suomitting these 
 regulations ior the approval of the administrative officer, the deputy 
 voiced the following opinion concerning the position taken by the economic 
 advisor, who stated that the reflations were contrary to ERA policy as 
 expressed in Office iemorancum 2T ; S and should be disapproved: 
 
 "I do not concur in this opinion. Office ; .-lemorandum 
 226 provides 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 long as the industry con- 
 tinued to desire, and refuses to agree to deletion 
 or amendment of a code provision not in accord with 
 policy, and the NPA does not stay such provision, 
 NBA should no" roiuse to permit action effectuating 
 it, merely because the code provision is contrary 
 to policv. To refuse approval for this reason is 
 to ray 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 policv declarations. ('*) 
 
 (*) The industry later asked voluntary stavs 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 oi the code was ordered for possible revision 
 after June 16, 1935. 
 
- 470 - 
 
 Uhcn coder,, in spite of industry opposition, were rmcndod to 
 provide for price filing of the type provided for in Office Memorandum 
 No. 223, efforts were made in some instrnces to secure the control 
 features of old style price 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 i.iemorandum 
 228, which hr.d been inserted in their code by amendment. The adminis- 
 tration member of the code authority for this 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 new (228) price filing provision to 'take all the 
 time necessary 1 in checking the filings and receipting therefor and 
 urged that receipting be delayed at 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 provision which prescribed that 
 the prices filed by a member of the industry become ef- 
 fective immediately and tha.t accordingly no member of the 
 trace cculd technics 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 
 Secretary argued this point bitterly and ho doubt an 
 appeal will be made to Washington, as it seems he has 
 been advised that filed orices 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 such filing. " 
 
 The difference of opinion over the application of the provi- 
 sions of Office i-.Iemorandum #228 to the Code for the Farm Equipment 
 Industry presents an interesting c se, which is worthy of mention a.t 
 this point. The producers of track type tractors in this industry 
 were sharply divided ever the desirability of incorporating the 
 price filing provisions of office Ac idum #228 in tjieir Code. One 
 
 group, headed by the International Harvester Com i , 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 McUultyof the Legal Division, Mr. W.L. Schurz, Assistant 
 Deputy, summed up the controversy as follows: 
 
 "The entire controversy cm be reduced to this single issue,.. 
 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 md for other public work projects. At present, 
 the Caterpillar Comp r . n y has the great bulk of this business 
 end fears that without price filing a price war would re- 
 sult, with the International Harvester Company taking the 
 
 9826 
 
- 471 - 
 
 "! n 
 
 nitiatiye. On the other side the International Harvester 
 Company has repeatedly represented that price filing on 
 government business inevitably results in identical bids and so 
 defeats the purpose of such bids as designed to prevent 
 collusion and price filing. " 
 
 The cost of retaining a confidential agent, end a desire that 
 filed price information should not be avrilable tc customers, were 
 other reasons advanced by the industries for opposition to 
 Office Memorandum No. 223. The Code Authority for the Ladder 
 Manufacturing Industry, at a hearing on araend-ne: .ts held en S e p~ 
 tember 13, 1934, objected to filing prices with a confidential 
 agent because of the additional expense involved, and also ob- 
 jected to dissemination of filed prices to customers en the 
 ground that it was "none of our distributors' business 'what price 
 they rere Quoting another distributor." (*) 
 
 Since this question of the employment of a confidential .agent 
 for Drice filing puroosos uas one of the significant ne^ re- 
 auirer.ents embodied in Memorandum 228, seme discussion of the point, 
 and of problems which arose in connections vrith application of the 
 provision may be included here. 
 
 6. The Confidential Agent. 
 
 The oualifi cat ions 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 determing the eligibility of 
 those selected by code authorities to : perform such functions. 
 
 The code authroity for the Carbon Dioaide Industry, which 
 was the first code to be amended in accordanco with ith' 5 ' srw 
 policy, appointed the chairman of the code autnority, who was like- 
 wise president of the Carbon Dioaioe 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 
 reoeated complaints of monopoly and dominance of small 
 by the institute members. In at least one case turned over for 
 compliance action, resulting in the recommendation that the Blue 
 Eagle be removed, the- member had 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 emec\itive 
 members of the Carrbon Dio::ide Institute. These same charges had 
 been mads at the original hearing of the code. 
 
 oubseeuently, the IT. II. A» required that copies of all price 
 filings be forwarded to iTashington, and at the request of the 
 deputy an investigati on was launched into the operation of the 
 Code .Authority as to the price filing and other provisions. (**) 
 
 (*) Page G3 - 67 of transcript of hearing, September 18, 1934, 
 IaRA. files 
 
 (See other footnote on ner.t oage.) 
 S826 
 
- 472 ~ 
 
 Despite all this, there was apparently no KRA 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, ^ho was told that the form of the proposed code 
 ■orovision (with the exception of the naming of the chairman as con- 
 fidential agent) was stipulatee by the ERA and did not originate -1th 
 the industry, end that, in the o -union of the code authority, the 
 plan would 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 organized just before the submission of the code. Other 
 reports, not fully substantiated, stated that he held the controll- 
 ing interest of a comoany given an exlusive distributor contract 
 with this same large member. (*) 
 
 In still another case, the Builders' Supply Code, in which 
 the price filing plan cat forth in Office Memorandum 228 was intro- 
 duced oy arendment, 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 with the trade. The adminis'. :■-' ion member, in a report to the 
 de-outy, raised the question if they could rightfully be considered 
 members of the code authority if they were 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 a.nd Harrison as 
 confidential agents. This organization, as agent for the Code 
 Authority of' -the Corrugated end Solid Fibre Shipping Container Code, 
 was designated as the impartial agent for receiving statistical in- 
 formation. One com-oany 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 tco great a strain on the agent to 
 maintain a disinterested, impartial view. T Jnf ortunately, for the 
 purpose of ascertaining NEA 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 Piling and Customer Classification 
 in the Carbon Dioxide Industry, A. F. O'Donnell, I 'ay, 1935, 
 ICIA files 
 
- 473 - 
 
 The appealing 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 eny formal action on the 
 part of the MA was concerned. 
 
 Inasmuch as the corrugated raid solid fibre Shipping Container 
 Code 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 informal 
 tion service carried on by the agency, in connection "ith the volun- 
 tas sharing of business, was far more complete than that of the or— 
 dinary price filing plan, and. to that extent was more comparable to 
 the market information type of o^en price plan described in the Fed.- 
 eral Trade Commission report. This same 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 de signed to be dione away with by 
 requiring prices to be filed with an impartial agent were of at 
 lea.st two 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 under 
 Office hemorandum 228 " 7 a,s 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 com id.ential agents. 
 
 7. Extent to Which iJew Policy Was Incorporated in N.R. A. Codes. 
 
 The principles of Office hemorandum #228 were quite generally 
 applied to the prico filing provisions of new codes in the last half 
 of 1934 and. the first half of 1935. However, because of the opposition 
 of industry to the tyoe of price filing in this memorandum as set 
 forth above, and its unwillingness to open codes for amendment, and. 
 because of the vacilla.ting -oolicy 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 ca.se s 
 in point. 
 
- 474 - 
 
 the amendment of codes to conform to ne\7 policy, in only a few in- 
 stances were codes amended to include the new type of open t>rice 
 system, (*) Ther c 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 end supplements had open price provisions conforming to the 
 policy and exhibit set forth in Office Memorandum No. 228 when code 
 operation cme to an 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: 
 
 (*) Grnfpr.at : a tjos sectopn cs based i|-pm "Analysis of Trade 
 Practice Previsions 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. 
 
 9826 
 
- 475 - 
 
 CODES WITH OPE1T PRICE PROVISIONS CONFORMING TO 
 OFFICE MEMORANDUM NUMBER 228. 
 
 i:iC AND NUMBER OP Division 
 
 I. Pood 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 
 Anusements Division 
 
 X. Professional Division 
 
 XI. Wholesale and Retail Division 
 
 TOTAL 
 
 NO. CONFOPJ. 
 
 IIHG 
 
 APPROVED AFTER 
 
 THRU AMENDMENT 
 
 O.I.I, 
 
 . 228 ISSUED 
 
 
 
 
 
 8 
 
 2 
 
 
 
 3 
 
 4 
 
 
 
 6 
 
 3 
 
 
 
 2 
 
 2 
 
 
 
 13 
 
 5 
 
 
 
 18 
 
 
 
 3 
 
 1 
 
 
 
 1 
 
 4 
 
 18 
 
 58 
 
 The codes in which the price filing provisions of Office 
 Memorandum Ho. 223 uere included "by amendment uere therefore relatively 
 feu, and most of them uere for snail industries. They include. 
 
 TEXTILE DIVISIOH 
 
 Ho. 326 Hi Ik Filtering Materials and Dairy Products Cotton Wrappings 
 
 Ho. 312. Narrow Fabrics. 
 
 BASIC MATERIALS DIVISION 
 
 Ho. 115 Wood Plug 
 
 Ho. 389 Clay and Shale Roofing Tile (Pacific Coast Division) 
 
 Ho. 31 Line (but sec paragraph following) 
 
 No. 128 Cenent (but see paragraph following) 
 
 CHEMICAL DIVISIOH 
 
 Ho. 275-2 Carbon Dioxide 
 
 Ho. 110 Hardwood Distillation 
 
 Ho. 83-A Soap and Glycerine (Pacific Coast Section) 
 
 S826 
 
equipment Division 
 
 Ho. 274 Sau and Steel Products Manufacturing 
 Ho. 315 Industrial Safety Equipment 
 
 lIAirjPACTUHU'G DIVISICii 
 
 Ho. 58 Cap & Closure 
 
 No. 277 Gray Iron Foundry 
 
 No. 239 Porcelain Breakfast Furniture 
 
 ITo.286 Beaut, and Barber Shop Ilachanical Equipment Manufacturing. 
 
 No. 84.6 Shoe Shank 
 
 WHOLESALE AND RETAIL DIVISION 
 
 Ho. 37 B uilders' Supplies 
 
 PROFE S S I ON AL D I VI S I OH 
 
 No. 3S2 Photographic and Photo Fin: 
 
 It should "be noted that tvro of t codes which are listed 
 as confoming to the price filing provi ' of -ice Memorandum 
 No. 228 by amendment, deviated from this model o^ n price system in one 
 i ] :>ortant particular. These were the code.- for the lime and cement 
 industries. Amendment Ho. 2 of the Line Code, reproved April 1, 1935, 
 and Amendment No. 1 of the Cement Code, aj on i.Iay 11, 1035, b oth 
 included mandatory waiting of five days in irico x'iling plans which 
 otherwise conformed to Ofi ice Memorandum ".). 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 
 vras Ho. 473, Woven Hood 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 No. 228. The last of these 
 11 codes was No. 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 
 No. 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 i^rices equal to the lowest filed and 
 terms equal to the most favorable filed. 
 
 9826 
 
- 477 - 
 
 B« Executi ve Orde r #6767 - A Concession to Government 
 Purchasing Agents ■ 
 
 As the promulgation of Office Memorandum ITo. 220 may be 
 regarded as a response to demands from both within and without IIHA that 
 price provisions in general bo safeguarded against use to effect too 
 rigid controls, so Executive Order ITo. 6767 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 ITo. 22S, some compromise with opponents of the 
 order is found in the process of its application, the percentage of 
 "government tolerance" being in some instances reduced from 15 to 5. 
 
 1. Essential Points Involved in Executive Order 6767. 
 The essential points in this order issued June 29, 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 authoritjr 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]'o if he found the 15;'o 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 and 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 act\ml 
 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 anti-conspiracy clause which 
 formed the final paragraph of Office "memorandum Ho. 228. 
 
 (*) Por full text of Executive Order No. 6767 see Exhibit V of 
 Ampendix "C" . 
 
 9826 
 
rhis. order supplemented an earlier URA Administrative Order dealing 
 with governmental purchases, Order X-48, issued on June 12, 1935. The 
 salient features of this Order were: 
 
 In spite of any code prohibitions there might be to the contrarv, 
 members of industry biding on government contracts were, by authority of 
 the order, entitled to: 
 
 a. Quote -orices to government agencies as favorable as those oer- 
 mitted to any commercial buyer of the sane nuantity. 
 
 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 apply on contracts to 
 become effective not more than si::ty days from the date of the opening of 
 
 bids. 
 
 e. Quot 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 permit deviation from or abandonment of ooen -or ice and cost 
 protection provisions now or hereafter contained in any such code."(*) 
 
 2. Relation of Order No. 6767 to Price Filing Policy. 
 
 '.Thile 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 policy of the 
 time in that, like Memorandum 228, it sought to eliminate undesirable 
 consequences which had developed in practice, without abolishing price fil- 
 ing altogether. 
 
 The purchasing agents who testified at the price 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 price control and the probability of arti- 
 ficially high orices for public purchasing, nit also because it was seen as 
 striking at a public policy of long and 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 flexi- 
 bility in bidding on government retirements. TThereas Memorandum 228 sought 
 
 (*"> For text of Administrative Order X-36 see Exhibit V of Appendix " C" . 
 
 9826 
 
- 479 - 
 
 to achieve a similar general end by modifying the technique, of price fil- 
 ing itself, Order 6767, en-ployed the method, of relaxing amplication of the 
 open price requirement in the particular circumstance. 
 
 It was not, in fact, expected that actual quotations would drco 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 }• emo 228. For cases where -prices showed 
 a tendency to drop to a destructive degree, the modification from 154 to 
 5 c o was provided. 
 
 Nevertheless, the policv 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 I-io. 6767. 
 
 As would be exoected, the general attitude of industry members toward 
 this Executive Order was not favorable. 
 
 a. Expressions of Inuustry O'oinion. 
 
 Complaints against the policy embodied in the order were registered 
 bv a large nuaber of the industri-es^whose business was, in a significant 
 degree, connected with governmental agencies. Five tvpes 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 universally, 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 6767. "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 be able 
 to afford the cost of the labor provisions of our code. » . . "(*) 
 
 The second allegation mace in connection with the Order was that it 
 involved unfair discrimination. Thus, Mr. A. L. Boniface, Secretary, of 
 the Code Authority for the Fire Extinguishing Appliances Industry, in a 
 letter to the iJHA dated July 3, 1934 stated: ". ...Vile 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 
 
 (*) Resolution contained in a letter from the Code Authority for the Yalve 
 and Fitting Industry to General Johnson, July 11, 1934. 
 
 9826 
 
this point the chairman of the code authority for the port land 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 pertinent 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 
 conroetitive facts " 
 
 The order was also oooosed 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 Jo. 6767 and Administrative Order 
 X-48 permitting Industry members to quote the government as low as 19$ 
 below the lowest filed prices (prices to distributors); The Industry always 
 regarded the government as a consumer. Most governmental sales were made 
 through wholesalers 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 ooint, the Code 
 Authority of the Valve and Fitting Industry, in a letter to Mr. A- C. Cook 
 of the NBA, said, on July 31, 1934: "... our code authority has not 
 secured complete compliance by all members of the industry with the re- 
 quirement that they should file their prices. Our efforts to secure this 
 compliance has been defeated by the Executive Order itself which leads 
 these non-coooerative members to assuie that the administration d.oes not 
 deem it is good policy to file or ices 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 -'ere issued attempting to dissuade members of industry 
 from ouotiiig 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 orovisions 
 of the Order and concluded with the following paragraph: 
 
 "Prices re 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 all x->rovisions 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 
 
 (*0 Code History, Plumbing Fixtures Industry on. 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 
 apparatus industry, sta.ted: 
 
 "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) 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, ycur 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 course, 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 May 5, 1934, the I\TI?A stayed the privisions relating the price 
 filing, customer classification, and uniform sales terms of the Code for 
 the Rubber Manufacturing Indus ty, in so far as they applied to the Mechanical 
 Rubber G-oods Division. This action, in large cart, grew out of code author- 
 ity connected with Executive Order #6767. 
 
 Discussing this a.ction of the board, YRA Press Release #11170, dated 
 May 3, 1955, stated: 
 
 "At the hearing held April 16 to 18, testimony adduced clearly showed 
 abuse of authority. . . The hearings relative to the charges were con- 
 
 (*} This is a misunderstanding on the oart of the code authority . The 
 order did not have the meaning here given to it. 
 
 (**) Idem. 
 
 9826 
 
 d 
 
- 482 - 
 
 ducted by D. M. Nelson, former Assistant to the Chairman of the N.I.R.B. 
 Kis findings, reported to the Board, were as follows: 
 
 "'That the evidence discloses: a participation by respondents, both 
 as an individual code authority and in conj\mction with the Rubber 
 Manufacturers' Association and the Code Authority for the Rubber Manu- 
 facturing Industry, in an active ar.d, for a tine, a successful attempt 
 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 oermitted 
 members of all codes to quote prices on Government bids 15$ below filed 
 prices, that the code authority had requested an exemption, and that pend- 
 ing such action, members were to disregard the Executive Order. ("0 
 
 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 action, 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 
 price. This firm bid about 8fS 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: "THIS DOES NOT PERMIT YOU TO S2LL BELOW COST IN VIOLATION 
 OF ARTICLE VII SECTION 5 OF THE MACARO'JI CODE." (The caps are their) This 
 interpretation was issued without any official sanction. Fnen the issue 
 Was raised (by.ahotherrcodenauthbtlty), the-"HBA Legal (Division ruled that 
 the order took precedence over code provisions concerning selling below 
 cost. (**) 
 
 (-0 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 15$ reduction 
 of said price, as is permitted to a government agency under Executive 
 Order 6767, represents a price below cost, a manufacturer may quote 
 
 9826 such a price /...." N. R. A. files 
 
- 483 - 
 
 More might be quoted to the same general effect. In addition to 
 this industry oppo-sition, there was considerable divergence of opinion 
 within the Administration itself as to the polic:/ - expressed in Order 6767, 
 Nevertheless, the order remained in force throughout the remainder of the 
 life t- the codes. 
 
 C. Other Orders Affecting Price Filing Policy. 
 
 Issuance of Office Memorandum 228 had, as previously shown, definitely 
 aligned Administration policy with the oroposition 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 orimarily 
 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 Gl ssification. 
 
 The first of these nolicy statements, contained in Office Memorandum 
 No. 257 dated July 20, 1954, 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 codes, provisions 
 had been included empowering code authorities to set up such classifications, 
 which members were reouirei to follow in reporting their orices. In pract- 
 ice, such mandator]/ - classification had been found in some cases to work 
 hardshi'os 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 oessibly 
 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. 
 
 i 
 
 3. ITo members were to be required or coerced into putting anv custo- 
 mer in any particular class, nor wps any discount for any class to be re- 
 quired of any member. 
 
 4. Each member was to be free at all times to classify his own 
 customers as he saw fit. 
 
 By thus mailing nossible a suggested, out not mandatory, system of cust- 
 omer classification, the Administration proposed to minimize the use of such 
 classification as a control device; but to the extent that 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 11 or Premiums. 
 
 Another eroblem concerning which the Administration had to make policy 
 
 9826 
 
- 484 - 
 
 determination related to "free deals" or premiums. Many of the earlier 
 codes, in the days when price control provisions were nore readily grant- 
 ed had prohibited the use of premiums. If control of price '"as 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 boar;., with freedom to the individual to 
 price and sell his goods as he saw fit, a completely different aooreach 
 was necessary. 
 
 Office memorandum Ho. 316, issued December 6, 1934, and dealing 
 with this matter, stated that 
 
 "... the proper way to prevent. . . evasion of any trade practice 
 provision (where such ettemoted evasion is connected with premiums 
 or 'free deals 1 " 1 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 1 
 and conditions relating thereto, must be filed." 
 
 Here again is seen a 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 auestion 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. 336, issued 
 on January 5, 1935, said that the remedy for evils connected with the 
 practice (use of advertising allowances as price concessions), lay 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 tra.de 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 aooear 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 v-as announced in Office iiemorandum l*o. 327, 
 dated January l') f 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 coula make long-term contracts to 
 sell at a fixed price, regardless of later market changes. There 
 were, therefore, efforts made, particularly because of the rising 
 market which in many industries accompanied the life of the NRA, to 
 have code provisions established a limit to the length of these con- 
 tracts. Again, in the policy ue termination as to the matter, there 
 
 9826 
 
- 485 - 
 
 can 'bo seen the effort on the part of the Administration to apply the 
 principles of oubli city without control. The order stated: 
 
 "1. NRA policy generally does 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 -or ice provisions of Office 
 ilemorandum No. 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 
 . • i the -duration of forward contracts to sell may be ape-roved 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 oast practice in the in- 
 dustry, (3) 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 ana opinions expressed by the Advisory Council (**^ touched upon 
 price filing questions. 
 
 The Administration position that publicity, not control, wps the aim 
 of price filing was reflected in Advisory Council opinions concerning the 
 type of products on which prices should be filed. If control of prices 
 is the objective, presumably any and all or ices should be filed; if, how- 
 ever, the aim 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 up 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 Non-Metallic Products Section: "Uhere 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 Memoranda Nos. 316, 326 and 327 see 
 Exhibit V of Appendix "E" 
 
 (**) Set up to advise the National Industrial levocery Board on policy matter. 
 
 9826 
 
recurring salesof such products - in ether vords, an o^oen price 
 filing provision may be applied logically onlv te such products 
 as enter regularly into channels of trade. Where there are no 
 persisting and recognized specifications, there am ear 3 to be little 
 value in price filing." (*) 
 
 A case in which the advisorv council expressed its doubts as to the 
 applicability of price filing to perishable products, other than perhaps 
 the reporting of past prices, concerned the cede for the southeast fish 
 and shellfish preparing and wholesaling industry. 
 
 Price filing provisions were "revised to restrict the obligation of 
 the trucker (as oooosed to the established wholesaler; there was, appar- 
 entlv, s\ich dispute and friction between these two groups) to one of 
 regularly reporting at the close of each day, to the appropriate agent, 
 the nuantity of each community sold at each price term, rather than to 
 compel him to file prices in advance ■ of ' sale a and to adhere to filed 
 prices. " 
 
 Said the Council: " the change from advance price filing by 
 
 truckers to orice reporting upon conclusion of sales is an improvement, 
 even though the "hole effort in such an industry is still regarded as high- 
 ly doubtful "(**> 
 
 As has been noted above, one of the cardinal points of Office Memo- 
 randum Ho. 228 was that the price filed should be made available to pro- 
 spective purchasers, as well as to industry members. The proposed code 
 for the clock manuf- cturing industry followed Office Memorandum l!o. 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 oe lower than (instead of 
 other than^ those filed. Because of these deviations from announced policy 
 the matter vas 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 withhold prices from buyers. 
 
 The industry contended that large buyers would press to the utmost 
 for price reductions and stated specifically that if all their price lists 
 to jobbers and chain stores were open to chain stores, the latter would 
 insist not only on as low a price as aav joboer was sold but on a lower 
 price because of quantity pruchases. 
 
 
 The decision of the council reads in -oart as follows: 
 
 11 The possibility that an entirely open price would not work to 
 
 the Industry advantage is no warrant for permitting the Industry to 
 pick and choose parts of oolicy that taken alone would give it in 
 turn an unfair advantage. The obligation of distributing prices 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 policy 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 provide themselves with a 
 
 perfect sta^e setting for price collusion." (***) . 
 
 (O I bid, page 87, Decision No. 92, November 9, 1934. 
 
 (**) I bid, Page 318, Decision "Jo. 196, March 18, 1935. 
 
 (***) "Decisions of the Advisory Council", page 235. Office of L. C. Marhs 
 Head of Division of Review, NRA, and formerly "Executive Secretary of 
 9826 the ^133. NBA files. i 
 
~ 437 ~ 
 
 Accordingly, the council recommended refusal of the proposed plan on 
 the baris of its b.eiig contrary to policy. 
 
 Similarly, if as Office emorandum 'f.o. 228 stated, a free and open 
 market was the aim of price filing, the code authority could net be em- 
 powered to suspend price filing; such a "orocedure was too susceptible to 
 ■abuses involving price control. Therefore the council recommended dis- 
 approval when the gumming industrv sought an amendment which followed the 
 Office fiSe^oranduin in most particulars but which provided that the code 
 authority could suspend any price it found to be willfully destructive. 
 The suspension was to be for 8 da- r s, and could be extended by the Adminis- 
 trator. The council said this out too much power in the hands of the code 
 authority. It also said, however, that the request evidenced a perhaps 
 justified need, for some sound method of dealing quickly with genuinely 
 destructive price cutting. ("0 
 
 Office Memorandum 228 provided that price changes were to become 
 effective immediately upon filing. He sons for elimination of the wait- 
 ing period given b~ r Mr. Leveret Lyon in the memorandum accompanying the 
 proposed draft of lie. 228 have been noted above. (**) The attitude of the 
 advisory council en this point is illustrated from the following with re- 
 spect to a proposed amendment, in which the lime industry accepted Office 
 Memorandum N.o. 228' s price filing provisions, except that it insisted on 
 a waiting; period. It .advanced the usual argument that it would prevent 
 "price forays." The council said that it had "considerable respect" for 
 "the oft cited argument that, since the usual incentive to reduce prices 
 is the chance to get more business, the effect of the waiting period in 
 warning each member of the industry that any price reductions are likely 
 to be met and therefore to be without advantage, will merely be to main- 
 tain prices. That is net a function of open price svstems as the Adminis- 
 tration conceives them. The council does not presume 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 policy is still against 
 them. The council recommends that the waiting period be deleted from the 
 open price provisions." (industrial Advisorv Board dissented as to both 
 premises and conclusions.') 
 
 The National Industrial Recovery Board, however, subsequently 
 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. 
 
 ("0 I bid, Page 186, Decision No. 146, January 9, 1935. 
 
 (**) See Section LLL, a, 1, of this Chapter. 
 
 (***) I bid, Page 322, Decision uo. 198, Larch 2<\ 1935. 
 
 9826 
 
- 488- - 
 
 IV. VIEWS ON PRICE FILING ^GLICY IF THE FINAL DAYS OF NRA. 
 
 The preceding pages have outlined the trend of development of a def- 
 inite oolicy on the part of th c Administration as a whole with resoect to 
 price filing, tnis oolicy being concerned chiefly with throwing various 
 safeguards around the ooen price provisions approved, in order to prevent 
 tneir undue use as devices for orice control. That, despite this develop- 
 ment, there still remained varying attitudes uoon the question among dif- 
 ferent elements within the Administration itself, to the very end of its 
 existence, is evidenced by significant expressions of ooinion noted below, 
 
 A . Ooen Price Policy ss Discu s sed at the Senate Finance Committee 
 Hearing on the NRA, :..a rch 1935 . 
 
 At the hearings held before tn< 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 cf Senators Couzens and King. Mr. S. Clay Williams, 
 then Chairman of the National Industrial Recovery Board, said: 
 
 "... there is not anything in an ooen price 
 
 provision in a cod° that fixes oriels 
 
 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 tc others at . . . ."(*) 
 
 Mr. Williams continued: 
 
 11 . . . If an industry comes forward and says that 
 a majority of the industry is in fovor of ooen 
 price publication or an ooen price clause, I 
 have been trilling to say, 'well, all right with 
 me if you want it.'" (**) 
 
 He continued by saying that one argument advanced for ooen 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 olants not getting the orders. He said he felt this argument was im- 
 portant enough to outweigh the oocsible coercion of persons filing low 
 prices, as contended by opponents of ooen 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 orice) 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. 
 
 9826 
 
— 4:0 J — 
 
 ....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 people 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 replied 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 Dring your bids down."(**) 
 
 •The question was raised by Senator Black whether permission to have 
 a price filing system should b Q granted by an administrative organiza- 
 tion like the NRA 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- ERA could 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 open price systems in the first days of the 
 NRA . 
 
 Views of Various Groups Withi n th-~- Administr ation . 
 
 Other ooints of view expressed in the period 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. Certain of these expressions were the result 
 of direct requests by the Administration for policy recommendations. 
 
 In April 1935, the Code Planning Committee was appointed to consider 
 the policy to be followed in the revisions of codes which it was ex- 
 pected would oe mad- after the anticipated renewal of the NIEA by Congress. 
 Colonel aalter Mangum, Chairman of this Committee, requested suggestions 
 from the Advisory Boards and Divisions concerning policy. 
 
 1. Consumers' Advisory 3oard Recommendations 
 
 On May 8, Mr. Corwin B. Edwards, Technical .Director 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 nrice syst-m which includes publicity for the 
 prices of individual concerns is so capable of abuse 
 that the presumption is against it." 
 
 (*) Ibid., page 2c0. 
 
 (**) Ibid., pages 268-270. 
 
 (***) Ibid., pages 280-281 
 
 9826 
 
- 490 - 
 
 He referred in this connection to the resolution of the executive com- 
 mittee on the Consumers' Advisory Board, -oasseo en April 19, 1935. 
 
 This resolution expressed fund-ur^ntal opposition to the open orice 
 policy hitherto employed by NRA, c v-n as modified by Office Memorandum 
 llo. 228. The st-'te:nent contended that reporting snould be. limited to 
 past transactions and that the information circulated to participants 
 in the reporting system snould b<° in the form of summaries. It stated 
 that in its view even an o-^pn price system so limited would serve no de- 
 siraole oublic ourpose in many markets in which monopoly exists. 
 
 In an earlier report, dnt c d x-oril 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 memorandum also, however, he stressed the im- 
 portance of the non-identifying, summary -only , oast-trans^ctiens type 
 of price reporting, contending that this type was capable of much less 
 abuse than the kind provided in Office Memorandum #228. 
 
 Thus it will oe se ( n that this board, which ^rior to the issuance 
 of Office Memorandum No. 228 had argued strongly for the tyoe of price 
 filing set uo in that memorandum, after the issuance of this r)olicy 
 statement moved still furtu-r in the direction of safeguarding the device, 
 to the ooint of favoring non-identific>tion rf sellers. 
 
 2. Research and Planning Division's Recommendations 
 
 In connection with Colon-1 Mangum 1 s request for suggestions from 
 the Research -^nd Planning Division, a memorandum oreoared by C. A. Pearce 
 and transmitted through Mr. James Hughes conveypd certain suggestions 
 concerning the general problem of orice filing. 
 
 His report ^ndcrspi the orice filing policy set forth in New Series 
 No. 1, d'-ted April 23, 1935, (discussed later in this auction), and 
 stressed the importance of certain points made therein. It emphasized 
 the importance of the filing of all terms and conditions of sale as well 
 as the filing of nominal prices, if price filing was to be employed at 
 all. The report stressed that this did not imply that price terms and 
 conditions should be made uniform by code restrictions; on the contrary 
 it contended that it was of importance that members of the industry have 
 freedom in dptermination of terms and conditions. Summarizing this po- 
 sition, the reoort said: 
 
 "It is felt that unless it is demonstratively prac- 
 ticable to file all the terms and conditions of s^le 
 used by members of a given industry, a price-filing 
 system for that industry is not acceptable." 
 
 If the aoove conditions vere met, the report continued, 
 
 "It was unobjeccionable to prohibit subterfuges which 
 would make it possible tc sell at less than filed prices, 
 
 Unless there was considerable standardization in industry products 
 
 9826 
 
~ 491 - 
 
 it would dp impossible to compare'items' on wnich prices were filed, it 
 
 was stated, ^nd the objective of Duplicity of trices would not be achieved; 
 
 therefore, th- report continued, there was no point i.n having a orice 
 filing olan in such an industry. • ,-.••■'..• 
 
 The report also stated that price 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 inflexioility 
 to the price structure- or be a subject of abuse." 
 
 In tho-Sf industries where "dangers of abuse or of unfortunate ec- 
 onomic consequences- may be anticipated^ 11 the report recommended that the 
 extent of orice publicity be confined to the reporting of past trans- 
 actions and their dissemination in such a 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 the plan by the Administration. 
 
 3. CKher Policy Recommendations 
 
 While, as has been previously snown, the waiting period was regarded 
 with disfavor by the Administration generally after the issuance of 
 Office iviemor-ndum No. ?,28, it found defenders within the NRA to the last. 
 In a memorandum dated May 8, 1935, Ovid E. Roberta, Jr., Chairman of the 
 Sub-committee on Trade Practice Provisions wrote to the chairman of tne 
 Code Planing Committee; ",... It is recognized that certain industries 
 have fairly met the requirements of true competition where as much as a 
 ten day waiting' period has oeen provided. Your Committee submits that 
 there are certain justifications for this waiting period which may not 
 be lightly egnored. Essentially this is true in the case of industries 
 made up of firms which do a nationwide .business J 1 
 
 The memorandum went on to state that it should not be the policy 
 of the administration to encourage the use of waiting periods, but that 
 where tney were justified, they should be safeguarded by a provision 
 making it an unfair trade practice to exert any influence "inconsistent 
 with the maintenance of a free and open market." 
 
 C. Pinal Statement of NRA Price Filing Policy . 
 
 What may be taken as the final of ficial .-statement of ohe Administra- 
 tion ps to the e n cLs to be served by an open 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 To.1, issued by the National Industrial 
 Recovery Board on Aoril 23, 1935, "to expedite administrative procedure." 
 
 The oortion of this document dealing with price filing was summar- 
 ized in a digest of NP.A policy prepared by Mr. Alvin Brown of the Review 
 Division snortly 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 
 
- 492 - 
 
 to the safeguards nec<=s.3qry. The summary is quoted h< re in order to give 
 a conolete view of the position v,hich th^ N&A, held on open price systems 
 at the end of two years of experimentation with th^m. 
 
 " Open Fric^ Filing . 
 
 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 attend its use. The stand- j 
 ard "oy which it should be judged is pric<^ making similar 
 to that afforded by an ooen and competitive market, such 
 as an organized commodity exchange . 
 
 " Qpjectives of Price Filing . 
 
 The ideal of an open find competitive market can seldom 
 be fully attained. It is no^ed to approximate its object- 
 ives by open price filing und^r appropriate circumstances. 
 It is possible for the open file to allow ouyers and seller^ 
 to accomodate their activities to competitive conditions, 
 to fix limits to the spread of quotations at any given time, 
 and to tend to m^ke price perform its industrial function. 
 Open price filing snould, so far as possible, be made to 
 furnish a public record of ^rice movements, provide a cneck I 
 on discrimination among customers, c /ive 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 tne market, and promote and safeguard 
 the integrity of the process of competitive price making. 
 
 11 Essential characteristics 
 
 The following ^re thr essential characteristics of an 
 open orice provision: 
 
 " The filing agency 
 
 An impartial and confidential body should be the ad- 
 ministrative agency in order that price lists may he 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 tne immediate oversight of the Govern- 
 ment . 
 
 " Publicity 
 
 The prices must be genuinely available to all customers I 
 and members of the industry, together with the name of the I 
 seller wnenever it is necessary to an identification of 
 tne quality of the product. 
 
 982S 
 
~ 493 - 
 " Dp finite price s. '. 
 
 The filed prices roust be thosp at which sales nre ac- 
 tually to take place j 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. 
 
 "Identification of product. 
 
 The various qualities, styles, and sizes of the pro- 
 duct must be capable of identification. 
 
 " Complete filing . 
 
 Since any one of the terms of sale may be employed 
 to vary the actual sales price, all such terms - quality, 
 quantity, style, size, discounts, point of shipment, 
 classes of customers, manner of Payment, and so forth - 
 must be fil>-d in precise and definite terms. 
 
 " The field- for use of open pr icin g. 
 
 " Unfav oraole fie lds . 
 
 Open price systems should not bp 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 services that prices are likely > to • 
 
 ■.•• . vary.. with each sale. 
 
 (2) where the number of concerns and products is very 
 large . 
 
 (5) '..'here, through custom or convenience, prices 
 remain stable and market cnanges lip mostly in the 
 character of the goods sold. 
 
 (4) Where commodities are highly perishable and their 
 supply fluctuates rapidly. 
 
 (5) .here the natur- of the product mikes identifi- 
 cation of quality, style, or size difficult. 
 
 " Favorable Fields. 
 
 On the other nand, the feasibility of an o^en price 
 system increases insofar as price competition is active, 
 the products of the industry cnn be clearly identified, 
 and price changes pre frequently without being incessant. 
 
 0826 
 
~ 494 - 
 " Factors to p° Considered . 
 Consideration should be given to the following factors :l 
 vl) Frequency and extent of price change. 
 
 (2) Complesity of t c rms of sale. 
 
 (3) Ease of identifying the product. 
 
 (4) Number and geographical diffusion of members of 
 the industry. 
 
 (5) Degree of price competition. 
 
 (6) Economic importance of the product. 
 
 (7) In some instances, as where the finished product 
 of one industry is the raw material of another, the 
 conditions in correlative industries. 
 
 " Where opt-n price systems snould be avoided . 
 
 In certain industries, onen price systems involve such 
 probabilities of serious abuse that, even though they 
 are feasible, they should be avoided. These are in- 
 dustries in which the need is to preserve competition 
 against attack. Such is »n industry in which the dom- 
 inance of an enterprise or group is intimidating to 
 smaller independents, or one in which the chief ob- 
 stacle to collusion is tne difficulty of devising mach 
 inery for orice understandings. The field for cpen 
 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 restrai 
 
 "". Vaiting 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 nigh, 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 be against the use of the waiting period, 
 and the burden of proof is upon the industry which wishes 
 1 enrol oy it. 
 
 " Best case for waiting period . 
 
 Probably the best case for a waiting period can be 
 made for industries in which sales are of large size and 
 
 9826 
 
- 495 - 
 
 sm-'.ll number, members are many and widely scattered, and 
 information about prices cannot, for some reason, be quickly 
 circulated. 
 
 " Limit on frequency of price change . 
 
 In industries where trices immediately effective are 
 manipulated for the purpose of allowing large discrimin- 
 atory discounts to privileged customers, it may be neces- 
 sary to impose some limit uoon the frequency of -orice 
 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 pnsc transactions and stated that this method of price 
 reporting involved neither the technical difficulties nor the -pos- 
 sible abuses that might arise in the reporting of current prices. 
 It said: "There may be many industries in which the ^nds of -public 
 oolicy will be adequately served ..." by these price summaries. 
 
 The board concluded by stating that it felt that the ^rice filing 
 device 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 - 
 
 enclix - A 
 
 Price Piling in the Asphalt and Shingle Roofing Industry 
 
 CHAPTER I 
 
 DE¥£L0?HENT OP THE M ODERN INDUSTRIAL 
 
 AID' 
 
 R EGULATORY SETTIN G 
 
 The Asphalt Shingle and Roofing Industry dates back to about the 
 middle of the nineteenth century, "but development was slow until 1900. 
 The 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 increa.se consumption of the member's 
 "oroducts; 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 born 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 ROOPING 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 
 Sningle and Roofing Association because "the old name did not correct^ 
 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 
 by the association secretary, are descriptive of this body rather than 
 the previous one. 
 
 ( a) S ize 
 
 The membership of the organization is reoorted bj/- the Pederal Trade 
 Commission in its report of 1929 a.s being 27, which number represented 
 about 75 per cent, n oy 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. 
 
 (*) Pederal Trade Commission, Open Price Tra.de Associations, 1929, 
 pp. 429-430. 
 
 (**) Ibid, p. 429 
 (***) p. 429, Ibid. 
 
 9826 
 
- 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 be 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-fourths, 
 produced less on en average than the minority element. 
 
 B. Activities 
 
 The cost reporting and the dissemination of summarized costs under- 
 taken by the Prepared Hoofing 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. TJith 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 ?/ear collected and handled 
 in the same way as the sliipment reports. 
 
 The Survey of Current Business publishes monthly 
 shipments of "prepared", based on the Association 
 data prorated to inn 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 lias 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. 429-430 
 9826 
 
- 499 - 
 
 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 
 
 Llonthly 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 'by each company was returned. In a previous letter (**) Mr, 
 Bryant informed Mr. Lawson that some of the companies did not make their 
 reports directly to West, Flint and Company out 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 WITHES 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. Paten 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 iTRA consolidated files, 
 Asphalt Shingle and Roofing Industry, folder: "Statistics"). 
 
 (**) Letter from J. S. Bryant, Secretary to the Code Authority i or 
 the Asphalt Shingle and Roofing Industry to William Lawson, 
 Assistant Deputy Administrator, June 28, 1234. (in HRA files, 
 Asphalt Shingle and Roofing Code, Statistics Eolder). 
 
 9826 
 
« 500 - 
 
 These patents covered "both the finished products and the processes 
 under which the}^ were made. Literally anything pertaining to the industry 
 was made 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. Lat«r it was custom- 
 ary for the one who owned 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 "be offered for sale, and royalties 
 might "be 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 10^0, wnich 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 acauisition 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 $l,ono f 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 i 
 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 companies 
 depended primarily on the individual bargaining ability of the company re- 
 presentatives. In one agreement, the Hexogan, Certain-teed received 40 
 per cent of the royalties; and. in another, the I'.ulti-Color, the returns 
 
 (*) Patent and Licensing Corporation v. Weaver-Wall, D.C. iT.D. Ohio, 
 Testimony of Frank G-ilchrist pp. 170 and ff. in Transcript. 
 
 982G 
 
- 501 - 
 
 w?re divided on a 50-50- basis. (*) It would appear from these ar- 
 rang°ments that som° additional advantages w c r° exp°ct°d to accrue 
 from the fact that control of the patents was centered in the hands 
 of on-> company. 
 
 3 . Combinations, ivip rg prs and Absorptions 
 
 The other movement which materially affected the picture of the 
 Industry was that reducing the number of members. In its report of 
 Tne Administration Of the Code Of Fair Competition For the Asphalt 
 Sningle and Roofing Industry, the Code Autnority states that: 
 
 "In tne ten years preceding the approval of 
 the Code eighteen (18) companies were 
 merged with other companies in the industry, 
 six (6) fell into receivership, and one (l) 
 burned up." (*) 
 
 The same report lists the following mergers: 
 
 1. Storm-cite Roofing Corporation, East St. Louis, 
 111., merged with tne 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-McEwen Company merged with Beckman-Dawson 
 Roofing Company. 
 
 5. Beckman-Dawson Roofing Company merged with 
 Flintkote Company. 
 
 6. Chatfield Manufacturing Corporation merged with 
 Flintkote Company. 
 
 7. Pioneer Paper Company merged with Flintkote Company 
 
 8. Richardson Roofing Company merged with 
 Flintkote Company. 
 
 9. Sail -Mountain Company, Scranton, Pa., merged 
 with Flintkote Company, 1929. 
 
 (*) Ibid 
 
 (**) Report of the Administration of the Code of Fair Competition 
 fo-" Asphalt Shingle and Roofing Industry. Letter of trans- 
 mittal to F. J. Patchell, Assistant Deputy Administrator from 
 Smith Simpson, Agent for the Code Authority, (in NRA Files, 
 Code Autnority Folder) 
 
 9826 
 
- 502 - 
 
 1C. Weaver-Henry Corporation, Los Angeles, 
 Calif., merged with Johns-Manvill- . 
 
 11. Amalgamated Roofing Conroany, Chicago, 
 merged with the Logan-Long Company. 
 
 12. McHenry-Mi 11 house Manufacturing Company 
 of New York, Inc., Pulton, N. Y., 
 merged with the Logan-Long Company. 
 
 13. Continental Roofing f.lills merged with the 
 Rub^roid Cocropny. 
 
 14. Sr>fer>ack Mills merg-d with the Ruberoid 
 Company. 
 
 15. F. F. '. r atson Mils merg-d with the 
 Ruberoid Company. 
 
 16. f.'.c-ir »nry~Mi llhou.se Roofing Corooration, 
 of Soutn Bend, Ind . , merged with 
 United St.^t^s }ypsum Company. 
 
 17. Si?o Products Company merged with the 
 United States gypsum Company. 
 
 18. Star Roofing Company merged with the 
 Unit- a States Gypsum Conroany, 1934. 
 
 It is possible that there w r- other mergers and consolidations during 
 tne period which are not recorded. In 192B Flintkote effected a 
 combination with Royal Dutch Shell whereby the latter conroany acquired 
 a majority of the voting stock of the former. 
 
 From the above it will be s^pn that Flintkote, aside from the 
 combination with Royal Dutch Shell, acquir- d seven (7) companies; 
 C^rtain-teed, one (l); John-Manville , one (l); Logan-Long, two (2); 
 Rub-roid, three (3); United Stat-s Gyosum Conroany, three (3); and 
 American Asphalt Roof Corporation, one (l). 
 
 Oth^r alignments of interest, which did not n-cessarily take olace 
 during this period, are Barrett Company with Allied Chemical; The 
 Texas Company (Texas Oil Conroany) and the Barber Asphalt Company, a 
 subsidiary of the General Asphalt Conroany. 
 
 These combinations and mergers may have been a result of the 
 tendencies toward combinations which 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 tt> 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 closely held affiliates, carries on a business 
 varying from the sale of raw materials, such as aspnalt oil (a residue 
 of refined petroleum), to tne finished oroduct , roofing paper and 
 
 9826 
 
- 503 - 
 
 shingles. Certain-teed furnishes a good example of the latter type 
 manufacturing ssrhalt shingles and roofing, tarred and asphalt felts, 
 building and insulating papers, newsprint pap-r and boxboard, paints 
 and varnishes, gynsum, plasterboard blocks and plaster laths, and 
 Kalite sound-absorbing plaster. (*) 
 
 (*) 
 
 "Asphalt Shingle and Roofing Industry: A Study of Some Factors 
 Bearing upon the Industry," J ames E. Gates, Consum-r's Advisory 
 Board, p. 3. 
 
 (in NEA Files, Asphalt Sningle and Roofing Industry, Folder, 
 Legal Code Authority) 
 
- 504 - 
 III. THE ASPHALT SHINGLE A1IB ROOFING INSTITUTE, 1928 
 
 Despite tie nlan of enlifr.it ened competition under which the 
 Association -had been operatin , at least since 1926, the Industry was 
 still beset by the vicissitud s of price wars, secret rebates, 
 fluctuating discounts and the like, and it appeared that further 
 steps were necessary to climir. ite these evils. The filing oi prices 
 and the dissemination of T>rice information to members of the Industry 
 had not proved to be a panacea 
 
 A meeting of the members ras called for May 29, 1928. at the 
 Commodore Hotel. The exact purpose of this meeting is in doubt. One 
 attendant stated under oeth th t prices were discussed and that a 
 formula was advanced for deter: lining prices on non-patented products 
 based on the minimum prices of patented products as fixed by Flintkotc. (*) 
 That prices and pricing practic es were receiving the attention of the 
 assembled group is indicated b; subsequent events. On June 14, 1928, 
 the Constitution and By-Laws were adopted and the name changed to the 
 Asphalt Shingle and Hoofing Institute. 
 
 A. Institute Activities 
 
 It is reasonably certain t'. at this reorganization heralded a 
 strengthening of the bonds of il dr.stry organization and the further 
 intensification of the onlightex Blent of competition. The activities 
 of the association were continued and the scope of operation broadened. 
 
 During this period a Merchandising Plan was edopted by the In- 
 stitute which established a coop lex system of customer classification, 
 divided the country into shin in, ; zones (determined by location of 
 factories, warehouses, etc.) and adopted the principle of freight 
 equalization as a basis for quoting and selling. The rules thus 
 adopted by the Institute were to govern ?11 mcr.ibers in the marketing 
 of their products. Either because of fear of the consequences, con- 
 scientous objections or failure o.~ the plan to conform to their es- 
 tablished merchandising policies, some of the former Association 
 members refused to become af filial ed with the new organization. 
 
 It appears to be advisable be 'ore going deeper into the new order 
 to review the Hay meeting. The pr .cing formula advanced at that time 
 was proposed by lir, Zonne?/ of the i'uberoid Company and established a 
 ratio between price and dimensions »i shingles. By applying this 
 ratio to the units of area of no n-p. '.tented products there would be 
 derived a gross price which would Vtxy 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 
 allowed by virtue of patent rights t ■> determine the minimum prices at 
 which such products could be offered for sale. (**) 
 
 At the conclusion of this mecti; g it was agreed that this method 
 of price determination should be ado] ted. Mr. Bryant, Manager of the 
 Institute, then cautioned the members that the revised price list 
 
 (*) Patent and Licensing Corporat'ic l v. Weaver-Wall, Testimony of 
 
 A. L. Wall. Transcript of Heari lg pp.1120 and ff. 
 (**) Patent and Licensing Corporation, v. Weaver-Wall, pp. 1122 and ff. 
 
 9C26 
 
- 505 - 
 
 should be spread over a period o"f two 'Or three '; : eeks but could be made 
 retroactive as of that date.(*) 
 
 The new organization continued the ;lan of price filing which had 
 been begun by its nrede lessor thereby each member filed 80 copies of 
 his price 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 numoer 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 adoption of the Merchandis- 
 ing Plan, tended to strengthen as well as broaden the scope covered by 
 price filing. The specific provisions af the plan will be discussed 
 later in connection with the Merchandising Plan of 1929(**) . The 
 essential difference between this plan 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 menbe: s did file their -rices and though customers were classified 
 and terms and Conditions of sale were set forth, there was no provis- 
 ion in the agreement that insured observance of these prices, cla.sses 
 and terms. Price wars, either sec?~et or open, continued throughout 
 the je^x 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 :. f as. 
 
 That it "a;- a matter which demanded the attention of the 
 'master minds' is evidenced by the numerous meetings which were held in 
 1929 to., r emedy the s itua tio n. (****) _ ,._ _ mmm .____ _ ._ _ 
 
 (*) Ibid, p. 1237 
 
 (**) Infra, p. 506 & ff. 
 
 (***) Infra. Ta ble_a T p. 570 j 1 
 
 (****) patent and Licensing Corporation v. Beaver-Vail, p. 1112 
 
 9826 
 
- 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 companies -ere held in the fall of 1929 
 (*) 
 
 The plan wa.s 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 vras adopted, the members of the 
 Institute entered into an agreement that -orovidec : that each member 
 would file prices; that when an/ 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 obssrve all the agreements, covenants, con- 
 ditions and stupulations 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^,000 to assure adherence to the plan. 
 
 The Plan 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, Intrn-State Industrial Consumers, General Consum- 
 ers, Railroads, Railroad Eouipment Companies, Mail Order Houses and 'City 
 and State Governments. 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 classif ication, 
 this latter rule applying to the Jobbers and Mail Order Houses. It was 
 intended that the information sxipplied 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 forco. At least three of the other classes of customers had to 
 submit a data sheet attested to by members 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 ^Bradstreet were compiled 
 into an alphabetical list by states and distributed to the participating 
 manufacturers, not indication the manufacturer whose application re- 
 sulted in the approv al . __._„___„.____— __>__——_ 
 
 (*) Ibed, p. 1112 
 
 (**) Bill in Equity No. 57-162, U.S. v. Asphalt Shingle and 
 Roofing Institute, Et . Al., Pane 18 and 63. 
 
 9826 
 
-507- 
 
 In addition to the classification of customers, the Merchandising 
 Flan considered Handling of Orders, Quotations For Periods Beyond 30 Days 
 Terns of Payment, Eatings, Back Orders, Allowances For Pictures, Roll 
 Roofing of Irregular Footage, Shingle Stock in Poll Porn, Hill Ends and 
 Seconds, Definition of Types of Shipping Points, Definition of Classes 
 of Shipments, Allowances Por Preight Equal ization, Description of Pactory 
 Zones, P.O.B. and Preight Equalization Points, Discounts on Purchases and 
 Qualifications for .Discouj.it s. Since space does not permit a detailed 
 discussion of these various provisions, an attempt \iill be made to explain 
 those which are most pertinent to the pricing structure of the industry. 
 
 Terms of sale were fixed at 2.fc ten days, ^0 days net; or sixty day 
 trade acceptance with no cash discount; or 2;U 10th proximo, net 30 days 
 proximo. For the purpose of freight equalisation, 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. 
 
 Tilth, the thought that both clarity and brevity can be best served, 
 let us take for example an unknown buyer X, reoue sting quotations from 
 an unknown manufacturer P. 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 F falls; if he were a deader (Reserve supply or 
 Line Yard) or Distributor one discount would apply; a Jobber, another; 
 a Hail Order House, still another; and so on for eaxh of the classes. 
 After the classification had been determined, the discount applies auto-* 
 ma/tically. It should then be ascertained how the shipment was to be 
 made, i.e., by rail, water, truck or a, combination of rail and water; 
 and finally the zone in which 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 2hfo. 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 Ethics which in turn tended to 
 strengthen the Merchandising Flan. The Code forbade the members of the 
 Institute to ova.de the Flan 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 -'ould be a means 
 of increasing the discount or lowering the list price. In aldition the 
 Code stated that one should not make remarks to the disparagement of a 
 competitor, entice a, competitor' s personnel, etc, 
 
 With the approvrl of the agreement and the Code of Ethics, its 
 adoption was made the sole basis for membership in the Institute* By 
 adoption is meant the signing of the Agreement' and the Bond. 
 
 9826 
 
__... - 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 oroducts, 
 of the industry were patented. Thus the control of patents, especially 
 v/hen 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 F.lintkote 
 Company. That the Patent and Licensing Corporation v/as of the opinion 
 that there v/as a common interest is less uncertain. Patent control v/as. 
 sometimes used" as a whip along with threats of r>rice Vara to coerc* mernberj 
 & 1 * ..Industry, to accent, the Institute Plan. (*) 
 
 No agreement v/as necessary to put the Merchandising Plan into effect 
 with regard to patented prodacts. The licensor, by 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 per cent of the volume of busi- 
 ness of the Industry was in patented goods and prohibit ibn from this 
 field would vitally affect the source of revenue of the individual 
 members. 
 
 B . Position Under th e Anti-Tr ust 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 t'o 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 whd v/ere officers 
 or directors and/or active in the management of the Institute. The 
 Bill in Equity, No. 57-162, filed in the District Court of the United 
 States for the Southern Dis tr ict of I'Tew York, entitled " United States .. 
 
 , (*) Ibid, p.. 1077.1082, and 1117, 
 
 (**)*' See Chart, p. 570. 
 
 9826 
 
• - 509 - 
 
 of America, petitioner, v. Aspno.lt Shingle and Roofing Institute, et al., 
 defendants", charged that the defendants since January 1, 1926, had corn- 
 Dined to. restrain trade. The charge read as follows: 
 
 "Defendants, each well knowing all the matters 
 herein oefore alleged, unlawfully have engaged 
 in a combination .aid conspiracy to restrain, 
 and pursuant thereto have actually restrained 
 throughout said period, and are nor; restrain- 
 ing said interstate trade and commerce of 
 defendant manufacturers and their customers 
 "by various means and devices, among them 
 being the following: 
 
 (a) Defendants have agreed to fix and 
 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 co-t of 
 transporting re ardless of the pouint of 
 the shipments, and uniform and nor.-competi- 
 tive terms, extra charges allowances, and 
 conditions of sale, etc.; 
 
 (b) Defendants have agreed to definitions 
 for and have concertedly defined the various 
 classes of purchasers and have concertedly 
 and arbitrarily chosen the names of the 
 customers which may be recognized l>y defendant 
 manufacturers in the various classes and which 
 may be allowed the discounts 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 ana terras 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 concertedly 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 en joy in a free market; 
 
 9826 
 
- 510 - 
 
 (d) Defendants, through the Institute have con- 
 certed].^ maintained and operated a system for the 
 exchange of coarolete schedules of all prices, terras 
 and discounts proposed to he charged by each defend- 
 ant manufacturer; as a part 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$25,000 to 
 $100,000 to secure the performance of said agreements 
 and the payment of said awards; 
 
 The purrnse 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 sadd interstate trade and 
 commerce, to stifle and eliminate virtually all com- 
 petition therein and arbitrarily and oppressively 
 to control th? course of such trade and commerce and 
 unlawfully regulate the channels of distribution 
 thereo". " 
 
 Since the above litigation was never prosecuted to a conclusion, it 
 may be cited only as evidence of the alleged activities, rather than 
 proof. The case ^as carried on -the docket until October, 1935, at which 
 time it was removed without prejudice to the Cpjise of the Government. 
 The reason for the discontinuance may be partially attributed to the 
 NBA, since Price Piling 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 6ame 
 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 -oatents and turning the control end administration of rights 
 arising thereunder over to Plintkote or the Patent and Licensing 
 Corporation. Thus patents, wholly or -oartiadiy owned by Certainteed, 
 Bird & Son, F.B. Brydle and one Ott were ple.ced in the hands of the 
 patent corporation to be administered by that firm. IThether 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. Validity' of Patents Questioned 
 
 1. Patent pnd Licensing Corporation v. Veaver— Wall 
 
 Doubt has. existed for some 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. H. C. Hof fert , for- twelve yej^rs associated with 
 Certainteed and the Lehon Company, raises the Latter Question his article 
 "IS THE PATSHT AKD LICSL'SLEG CORPORAT IOl: A PRICE EIHIHC- AGRES1.3ET FOR 
 TEE P.OOFIEC- IinXJSTRY? n . This article traces the history of the patents on 
 
 "Overbury Square-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 possi ulity of attacks on the 
 validity of patents v:as 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 \>y such rights, seldom is 
 sufficiently interested to raise such a quention. Despite these immunit- 
 ies, the irref ratability of the power assumed by the licensor has been 
 questioned at times. Unfortunately, these cases infrequently have been 
 prosecuted to a conclusion and '.Then they have been, the decision has 
 in most instances 'been rendered on some point other than the authenticity 
 of the authouity under which the control ' ts being exercised. Since 
 the licensee connot raise an issue on a patent under which he is operat- 
 ing, these actions have generally raised the point of infringement 
 rather than the seemingly more important question. 
 
 One of .the .ore significant of there suits, primarily from the point 
 of time during" which it- 'was transpiring, was that of Patent and Licens- 
 ing Corporation v. "leaver— 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 attack was that the idea was not new in the Industry at the time 
 the patent wa.s 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 Clayton Act and the Valentine Act of Ohio. 
 
 (*) Patent and Licensing Corporation v. Weaver— Wall. Testimony of 
 Prank Gilchrist. Transcript, p. 170 and ff. 
 
 (**) IS THE PATENT .LID LICSUSIBG CORPORAIIOE A PRICE FIXIUG 
 AREAEGEI.EET FOE THE EOulING IEDUSTEY? E. C.Koffert. 
 ( In ERA Piles, Volume E, p. 56 ) 
 
 9826 
 
- 312 - 
 CHAPSSH II 
 
 T EE INDUSTRY IN 193 3 
 
 I. SIZE OF TnE INDUSTRY 
 
 The Administrator, in his letter of transmittal to the President, 
 November 1, 1953, stated that the report of the Research and 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. I'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, 18 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. 
 
 P. 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, COO .00) thousand dollars. Thoagh 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 dollar 
 a nd ten ($10,000,000.00) million dollars with the point of concentration 
 being somev.here 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 'o^j 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 per 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 Pair Competition, Volume II, page 525. 
 (**) Volume A, pages 4-7 (in Code Record Files) 
 
 9826 
 
- 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 aense 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 file availability of the 
 principal raw materials there would be no great change in plant loca- 
 tion as the finished product 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 dippirg or spraying and is thee* seated 
 with some mineral granule. To get the various end variegated colors 
 it is necessary thrt the pigments be mixed with tne 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 .aechanized, 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 $125,000,000. 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 snme correlation between the mechanization in 
 production and the degree of standardization in Industry products. 
 In/he ther the relationship \s 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 findv.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- 
 trined a chair for study and development in the Bureau of Standards. 
 
 IV TYPES CF 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 
 
 9826 
 
- 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 corn-unity as a wholesaler, must maintain at least 
 two salesmen who are engaged primarily in soliciting orders, must 
 have a credit ratin? sufficient as to indicate financial responsibi- 
 lity, must maintain a^stock of not less than 40,000 pounds of asphalt 
 roofing 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 same 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 cnly 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 whop are extended discrininatfoy discounts for 
 no other reason, apparently, than that they do offer a market for 
 large quantities of the commodities. 
 
 v. itatupj: of the kabkst 
 
 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. JLs has no doubt oeen 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. VHiether 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 cr.se, 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 Cc..ses the esthetic makes less appeal and 
 prcctability is the determining factor. Conseouently, the demand for 
 the 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, the 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 alre-dy 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. CO! PETITION 
 
 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 definiteness 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 between 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 s\ich conditions it is possible, from 
 the point of view of the manufacturer, that an industry organization 
 might render its most meritorious service, for under these circumstances 
 it might be advantageous to combine against the enemy to the benefit of 
 the industry in general. 
 
 VII. PRODUCT I Oh, C0SL : AI7D PRICE TBEKDS 
 
 Both production and productive capacity from the beginning of the 
 Industry down to and including 1929 showed a rather constant increase. 
 There were periods during this time when there were temporary decreases 
 in production, but even these momentary retardations rarely reached the 
 productive capacity which lias constantly increased to the present. 
 
 Data are ava.ila.ole for both the shipments in squares per year as 
 furnished by the Industry (*) and the value of products 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 shipment data are thought to be of more value 
 at the -present instant. 
 
 (*) Materials Bearing on the Asphalt Shingle and Roofing Industry, 
 prepared by the Research and Planning Division, page 6. (ERA 
 files) 
 
 (**) Census of ilanufactures, 1929, page 13^9. 
 9826 
 
- 619 - 
 
 Shipments Per cent 
 
 (thousands change from 
 
 Year of squares) preceding year 
 
 1919 27,935 1.3 
 
 1920 23,122 1.3 
 
 1921 26,159 -7.6 
 
 1922 30,U 9 r- l6#6 
 
 1923 30,493 0.0 
 192U 32,571 6.8 
 
 1925 33,730 3.6 
 
 1926 36,303 7.6 
 
 1927 37,975 4.6 
 
 1928 36,540 -3.g 
 
 1929 39, 861 9.1 
 
 1930 27,874 -30.1 
 
 1931 22,565 19.0 
 
 1932 23,023 2.0 
 
 Shipments include snooth-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 mere able to delay 
 the effects and recover more rapidly than the industry from which their 
 demand came. Data on building permits for comparable periods show a 
 constant decline from 1926 through 1932 and a decrease between the last 
 two years, 1931-1332, 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 deter. dilation of value only and are not comparable to 
 the above data on ship eirts. The percentages .such costs were of the 
 value of products are shown in the following table: (***) 
 
 (*) Materials Bearing on the Asphalt Shingle and Doofing Industry, 
 prepared by the Research and Planning Division, page 6, (in HRA 
 files) 
 
 (**) Ibid . 
 
 (***) Based on Data of Census of Manufactures, page 1349 • 
 
 9826 
 
- 519 - 
 
 rear 
 
 1 OOP, 
 
 1927 
 1S25 
 
 is 23 
 
 1921 
 
 1515 
 1S1 J : 
 1S0S 
 
 190U 
 
 1S3S 
 
 Per Cent Labor and mater- 
 ials of Value of product 
 
 63 
 
 SS 
 
 7S 
 70 
 73 
 72 
 
 71 
 70 
 
 S3 
 
 The above data indicated that, compared with the value of the pro- 
 ducts, costs rose from 1S39 to 1923- and have ~oee±i decreasing since that 
 date. 
 
 A. Con-pared *.";'ith Cocroetitive Ind u strie s 
 
 More interesting, fron 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 nailing 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 were 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 \ r 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 ;>3»2 per cent and 
 Roll Roofing only Hi.'-!- per cent, while '^ood Shingle production declined 
 65.5 P er cent, Slate Roofing 7^*3 per 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 !'■ .8 to 1933* During the seme period the price 
 fluctuations, as measured on a 1929 base, were as follows: 
 
 9S26 
 
- 520 - 
 
 : per Cent 
 • Decrease 
 (]'. ximum) Recovered to 
 Commodity 12-39 Base 1229 Base 
 
 W -d Shingles 51.1 81.7 
 
 Asphalt Shingles 0.0 116.0 
 
 Roll Ro >fing { .7 106.0 
 
 Slate Roofing 43.5 None shown 
 
 Tile Roofing 33*5 ITone shown 
 
 It should "be mentioned in connection with this analysis that only in 
 the case of the Wo d Shingle was the 1929 price high price, each of 
 the oth r roofing mat ri Is showin ecreasc from 1928. 
 
 Computations from the figures in the 1229 Census of Manufactures 
 develop the fact that in that year, assigning consumption was in heepi 
 with production, 72.6^ of every dollar spent for roof inf was spent for 
 product )f the Industry. The nearest competitor vras the wooden shingle 
 industry, which accounted for 13.9;* of each roofing dollar. Indications 
 are that at the resent cine there would be an even greater dispersion, 
 the ratio of wood shingli consumption to prepared roofing shipments, 
 since 1922, hav . .. as follows: (*) 
 
 Ratio of wood shingle 
 
 LStnaption to prepared 
 roofing shipments 
 
 12 42.7 
 
 1923 41.2 
 
 19; 36.1 
 
 1225 37.5 
 
 1226 53.0 
 
 1927 30.6 
 
 1928 • 25.9 
 
 1229 24.1 
 
 1230 25.1 
 
 1231 . 20.3 
 1932 18.2 
 
 VIII. ' EITECT 07 THE DEPRESSION 
 
 Bui Icing as measured by building j ermits reached o. maximum in 1925 
 when the value of such permits was 3,793,169,000 and from that date 
 
 (*) Red Cedar Shingles, Report of the U.S. Tariff Commission to the 
 
 President of the United States, 1934. Table 16, page 6". 
 
 9826 
 
531 
 
 declined steadily to a level of* $366 ,S91,000 or 21,2 per cent. (*) 
 
 It is quite cert .in that -ho minimum of "building was not reached until 
 
 1933 although figures for that year ere not available. 
 
 With the unipre cedent od decline in construction, it would be only 
 logical and natural bhat th; demand for roofing products would show a 
 similar movement. There was, however, considerable variance in the point 
 of tine. Shipment? 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 repair? 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 "oy price movements of the Industry 
 during the depression, Tahen alone or in comparison with price movements 
 of competing materials, prices seemed to hive been maintained with stir- 
 prising success. Ho doubt this unusual ability nay be explained, in part, 
 by activities of the Institute, 
 
 IX. PRE-CODE PROE'IEIIS - • ■ ' 
 
 Despite the uiainfrenance of prices and the seeming harmony, the granting 
 of secret discounts, reb'; tea and allowances caused much unrest among the 
 members. In attests to meet 'such special grants to favored customers or 
 groups of customers, frequent price wars were precipitated and prices, at 
 least temporarily, went ski 6 .ng 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, ana which the members felt they were 
 helpless -to combat, war; 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 es prices were concerned. Recognizing the problem, the 
 members aid 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 h the Division of Economic Research end Planning, page 6, 
 (In :mA 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 •ourpose of negotiat- 
 ing with the Administration, a Code Committee was appointed by the 
 Institute, consisting of the following individuals: (■*) 
 
 Herbert Abraham, Ruberoid Co. , Chairman 
 
 L. R. Hoff, Johns-Manville 
 
 C. W. Bayliss, Barber Asphalt Co. 
 
 It is probably worth noting that these men and their affiliates were 
 all named as defendants in the Bill of Equity. (**) 
 
 It should have been a foregone conclusion that- the plan submitted 
 would include a provision for the filing of prices, terms 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 FRA files, Volume A, p. 77) 
 
 (**) Supra , p. 503. 
 
 (***) 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 I-TRA files, Volume A, p. 7) 
 
 9826 
 
~ S23 - 
 
 prices, terras and conditions of sale to his trade concerned, each class 
 of trade to "be furnished with the applicable prices, terras and con- 
 ditions. The manufacturer should Sioreqpoaa file with the Institute 
 for immediate distribution to the members • of the Industry a complete 
 schedule of all "orices, terms and conditions of sale then in effect. 
 This information was also to be kept on filo at the Institute for in- 
 spection by any member of the trade or any manufacturer* In event 
 any change was made in the price, terms 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 coincidentally 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 
 aoply to all prices, terms and conditions of 
 sales of all asphalt shingles, asphalt roof- 
 ing and allied products, except at terms, con- 
 ditions of s-^le 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. 11 
 
 In regard to customer classification the following provision was 
 incorporated: (***) 
 
 "The names of all customers classified by manu- 
 facturing trade 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 manufacturers and 
 to the trade at the proper office of the Insti- 
 tute. Copies 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, pp. 7-14. (in NRA files, Volume A) 
 
 (***) Ibid 
 
 9826 
 
- 524 - 
 
 ^S^e. There is nd specific permission for such changes, hut at the 
 sabu tine there is no prohibition. - : ' 
 
 Jn addition to these regulations governing price puolicity 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 of Products and a Merchandising 
 Plan. In the light of previous and subsequent discussions, it seems 
 important to direct attention to the similarity of the trade practice 
 provisions of the original proposal and the plan to which the Depart- 
 ment of Justice objected. Granting that the merchandising plan which 
 would have been adopted by the Committee would have been likened to 
 that under which the Industry had previously operated, 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 impartial adjudicator. 
 
 Just what transpired between the original proposal 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; (**) provisions were made for changes in customer 
 classifications; and the empowerment of the Code Authority to estab- 
 lish a merchandising plan was delimited to power to study and re- 
 commend. 
 
 The Code submitted at the public hearing provided for publication 
 of prices, terns 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 price changes, either of two alternative procedures 
 might be followed at the discretion of the Code Authority: the man- 
 ufacturer making the change night be reauired 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 Cdde 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 provision. 
 
 9826 
 
and" publish to the trade concerned on the effective date. The terms of 
 the provision were as follows: (*) 
 
 » ARTICLE X - PUBLICITY 0? PRICES, 
 TERMS AIT3 CONDITIONS 0? SALE 
 
 "Section 1. Immediately after the effective date of 
 this code, every meraber of the industry shall -publish 
 his "orices, terms, 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, terms 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 Const 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 anv 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, terms and conditions of sale, for immediate 
 distribution to the members of the industry, 
 
 "(b) Eile full arid complete copies of every con- 
 templated change in prices, terms, 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 NRA 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 he 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 e 
 Before "being submitted to the Administrator for approval these plans 
 were required to have the support of two-thirds of the memoers of the 
 Industry located east of the Pacific Coast Section. 
 
 II PURPOSES TO 3F. ACHIEVED 
 
 In discussing the purposes to be achieved by the open "orice plan, 
 it is probably wise to speak from the mouths of the proponents. In 
 the letter of transmittal accompanying the original proposal, the 
 Chairman of the Code 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 -ourooses of the national 
 Industrial 'Recovery Act it is essential, in our ooinion, 
 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 ruouires him to 
 publish to his trade and concern all orices 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 ay 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 ?TBA files, Volume A, p. 7) 
 
 9826 
 
- 5:.; 7 ~ 
 
 Further reference was made to the purposes of the price publicity 
 features in both the first and second drafts of the Code, where it 
 was stated: (*) 
 
 The ouroose of the publicity requirement of this 
 Code is to insure to members of the industry to the 
 trade concerned, complete publicity of all trices, 
 terms and conditions of sale and thus promote fair 
 competition. No member of the industry shall sell, 
 pay rebate, or allow a deduction at any time to any 
 person except upon trices, terms, and conditions of 
 sale then in effect and oublished in the manner re- 
 paired 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 prosoective 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 ouote a ficititious 
 price alleged to have been offered by a competit: or. When this orice 
 was met or a lower price ouoted, this quotation would be used to 
 drive an even more advantageous "bargain with still another competitor, 
 and so through a vicious cycle the orice 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 
 opoortunity to remove the mail order houses from their position of 
 favored buyers, and this favoritism shown mail order houses was gen- 
 erally opoosed 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 ERA Files) 
 
 (**) S uora, p. 504 & ff . 
 
 9826 
 
- 528 r 
 ■•CHAPTER IV 
 
 CONTROVERSIES ARISING DURING CODi: MAKING PERIOD 
 
 I. BETTOEN 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 wore 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 complete harmony 
 regarding the proposals of the Institute. On September 13, the Western 
 Elatcritc 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 made that 
 action on the plan should be defer ed and the problem considered in a 
 more deliberate manner at some later date.(*) 
 
 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 
 cf the customer groups. Cries of discrimination and price fixing were 
 the immediate reactions. At least thro-? important customer groups pro- 
 tested vigourously the provisions relating to price filing and customer 
 classification, each contending, fcr 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 grov. i will bo discussed in connection with 
 the proposed amendment. (**) It should be noted at this time, however, 
 that in anticipation of such a pre pos©.l, the O roup 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 Roofii\. Contractors Association do not appear 
 to have bean 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 
 
 (*) Letter dated September 18,193", from Edward J. Ycttcr to Assistant 
 
 Deputy Administrator William Lavson. (In HRA files, Asphalt Shingle 
 and Roofing Code, Volume A.) 
 
 (**) Infra , p. 548. 
 
 9826 
 
- 529 •* 
 
 Article VIII (*) (Trade Qualifications) the criticism was advanced that 
 the various classes of customers should "be 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, nor Article VII (***) was attacked on the grounds that the 
 interchange of prices among members was tantamount to the establishment 
 of -price fixing. In advancing this criticism it was stated that (****): 
 
 "Again, we are forced to be guided by 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 -oast few years. By a strange coincidence, 
 although those 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 Liail 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 prices 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 ~oy 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)o of our output, 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. 548. 
 
 (**) Transcript of the Hearing on Code of lair Competition, presented by 
 Asphalt Shingle and Hoofing Industry, Se-ot ember 21, 1933, -p. 71-81. 
 (***) Infra, p. 548. 
 (****) Transcrrot of the Hearing on the Code of Fair Competition, presented 
 
 ~oy Aspha.lt Shingle and Hoofing Industry, September 21,1333, p. 79. 
 (*****) Letter dated September 21, 1333, from the Asphalt Shingle and 
 Hoofing Institute to 1THA. (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 tnc detriment of other distributors 
 of the industry's products. Relative to the accusation that the Code 
 Authority would he dominated by the l-^r e firms and as a result of that 
 dominance would- be prejudiced against the mail order houses, it was 
 called to the -.attention of the Admini strati en that each member would 
 have one vote regardless of size and that there would be two represen- 
 tatives of the Administ ration on the body. i t was further intimated 
 that such an accusation was an affront to the integrity of the Code 
 'Authority and the Administration. 
 
 III. BETWE3H I1TDUSTRY AND NBA 
 
 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. Fach 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, wcr.: no more exacting. 
 
 As measured by the ciianges in the ">ro-oosod Code from the time of 
 its first appearance (*) to the time of the oublic hearing, many concession 
 were made and many disputes settled. These alterations, though frequent, 
 were in most instances directed to form rather thru to content. Many 
 of these changes were effected at a conference on August 31, 193", with 
 Chairman Abraham of the Code Committee and i.ianager Bryant of the Institute. 
 
 Following the public hearing the Consumer's Advisory Board took issue 
 with the probisions for customer classification, waiting' oeriod and 
 definition of costr. (***) 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 fixii . 
 
 IV. THF IFFFCT 07 TH3S3 C0NT20V2RSI3S 
 
 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) (*****) t required that each member, within ten (10) 
 days after the effective date of the Code, publish his prices, -terns and 
 conditions of sale on all products and furnish each class of trade with 
 the prices, terms and conditions of sale affecting that class. Coincidental 
 
 11. 
 
 (*) Supra , p. 500. 
 
 (**) Report of Assistant Deputy Lawson dated September 5, 1933. . (in 
 
 HRA Files, Volume A. p. 65) 
 (***) I.Iemorar>V ^ dated September 29, 1933, from L.F.Boffey of the Con- 
 sumer's Advisory Board to Malcolm Muir, Deputy Administrator. (In 
 .NBA. Files, Volume 3, p. 99) 
 (****) Supra , p. 523. 
 
 (*****) See Article VII of the Code for the Asphalt Shingle and Roofing 
 9826 Industry, Codes cf Fair Competition , Volume II, p. 533. 
 
- 531 - 
 
 with sucii publication each member was required to file with the Code 
 Authority," and the Code Authority was required to immediately distribute 
 to all members of the Industry, a complete 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 as the will of zhe member dictated, 
 but all changes were required to be published to the trade and filed 
 with the Code Authority. The names and location of the members of each 
 class y/ere to be open to inspection by the members of the industry and 
 of the trade but the name of the manufacturers submitting such names 
 were not to be disclosed without their consent. 
 
 Thus members of the industry were req^^ired 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 to change at the discretion 
 of the manufacturer filing, but when prices, terms or conditions of 
 sa.le were changed other members of the industry were to be notified 
 five days in advance of the effective date of such change. 
 
 (*) Ibid . 
 
 9826 
 
- 532 - 
 
 CHAPTER V 
 
 RELATION 0? PRICE FILING TO OTHER OUDS PROVISIONS 
 
 In addition to the requirements for filing )rices, terras and 
 conditions of sale and trade qualifications, which ;: ere all an essen- 
 tial part of the nrice filing plan, there -ere other trade practices 
 which tended to strengthen the prohibitions set out in those provisions. 
 
 In order to prevent or forests!? any attempt to evade the pro- 
 visions relating "to prices Article IX, Section 5,(*) declared the 
 
 granting of any rebates refunds, commissions, credits, or 
 unearned discounts, in the form of ^.oney, services or privileges, tc 
 be an unfsir trade practice and to "be in violation of the Code. Section 
 6 cf the same Article (**) forbade the iving of prizes, nreraiuras 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 (inly was s violation of the filed 
 prices forbidden, but also the granting' of any gratuities which might 
 •have the same result, as a deviation. 
 
 The other Coce provisions relating to prices or to -orice filing 
 were not in the nature of additional forces compelling' adherence to 
 filed prices, but were provisions having s tendency to limit the 
 freedom which might be exercised in determining the price to be filed. 
 
 I. PROHIBITION OF SAL 3 BELOW COST 
 
 The ori ins! proposals from the industry provided that no mem- 
 ber should 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 Roof ing Industry, Codes of Pair Competition, Vol. II, p. 534. 
 (**) Ibid. 
 
 (.**•*) Transcript of Public Hearing, September 21, 1933, p. 30, 
 ( in NBA Piles. ) 
 
 9326 
 
— UoO *• 
 
 Protests '7ero registered against this provision by the Mail 
 Order Association of America and by the Consumers' Advisory Board. 
 The Association contended that the determination of "total cost" 
 was extremely difficult, that enforcement would be a problem and 
 that the real purpose of the provision was to fix prices. (*) 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 
 provision on Selling Below Cost and further provided in Article VI, 
 Section 2(e) (***) that the Code Authority should make a study and 
 should make recommendations based on that study with regard to a 
 uniform cost accounting system. The Code;. 'prohibited .the sale of ~ any _ 
 products by members of the industry at a net price which was be- 
 low the said members' "direct costs". "Direct Costs" ^ere defined 
 as consisting of raw material costs (inclusive of transportation 
 and shrinkage); direct labor costs; manufacturing burden (inclu- 
 sive of bower 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 r.nj existing valid 
 patent licensing agreement, (*****) 
 
 (*)lbid, p. S3. 
 
 (**) Hemoradum dated September 29, 1933 from L.P. Bcffey of the 
 
 Consumers' Advisory Board to Deputy Administrator Malcolm Muir, 
 
 (in NBA Files, Volume 3, p. 99) 
 
 (***) see Article VI, Section 8(e) of the Code for the Asphalt 
 
 Shingle and Roofing Industry, Codes of Fair Competition, Vol. II, p. 532, 
 
 (****) IMd> Ar tide XII, p, 535-536 
 
 (*****) IMd) ^tide x, Section 3, p. 535 
 
 9826 
 
- 534 - 
 
 This interpretation permitted the Patent arid Licensing Corpor- tion 
 to continue to set up customer definitions and tc fix minimun 
 prices ss related tto patented products and as related tc non- 
 patented products xrhen shipped such patented products. 
 
 The Code further provided that the Code Authority should study, 
 T?ith a view to mal-in]; recommendations to the Administrator, the 
 prcbleins of limitation of production, limitation of ne^ equipment, 
 industry merchandising plans and a system of exch-^n-e of credit 
 information. The provisions in themselves had no effect en prices 
 or price filing out the possible results might have had. In reality 
 the Code Author it? r reported only on the question of a uniform mer- 
 chandising plan, and '"'hile they pushed this measure ^ith considerable 
 interest, they uere never successful in obtaining its adoption. 
 
 9826 
 
— ooa — 
 CHAPTER VI 
 ADMINISTRATIS! OF PRICE FILING PLAN 
 I. THE ADMINISTRATIVE AGENCY 
 
 Originally it v;as intended that the Code should be administered "by 
 the Institute, Tout "by the time of the public hearing the proposal had "been 
 changed to virtually the form in which it was approved. As finally rati- 
 fied, it, was provided that the Code should be administered by a Code Au- 
 thority consisting of five (b) 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 those not members of the Institute at the time the 
 Code was adopted. 
 
 The first Code Authority was elected at a meeting in Now York City, 
 October 2d, 1933, (*) but at the requesc of Assistant Deputy Lawson 
 anothor election was held. The request, no doubt, was made by Mr. Lawson 
 in view of one fact that this selection preceded the approval of the Code 
 by fifteen days and its effective dote 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 Code Autho rity 
 
 The first duly elected Cede Authority consisted of the following 
 individuals from the membership of the Institute: 
 
 Mr , He rbe r t Abrahams , Chai rman , 
 
 President, Ifa^sroid Company for over twelve years and connected with the 
 
 company in various capacities for over thrity years; 
 
 Mr. L. R, Hoff, 
 
 Vice President of Johns-Manville Company for ten years and connected with 
 
 the company for over thirty years j 
 
 Mr. C. W, Bayliss, 
 
 Vice President of Barber Asphalt Company for over twelve years and con- 
 nected with the company for over twenty years; 
 
 and the following from the non-members of the Institute: 
 
 Ralph P. Mullcr, 
 
 Vice President of Cooper Company for three years and connected in various 
 capacities with Ruberoid Company, with National Asbestos Manufacturing 
 and Cooper Company for approximately 19 years; 
 
 (*) Code History of the Aspho.lt Sh.ngle and Roofing Manufacturing Indus- 
 try, as amended August, 1935, p. 14, (in NRA files) 
 
 9826 
 
— 536 - 
 
 John A. Scharwath, 
 
 President of National Asbestos Manufacturing Company for approximately 
 
 twenty years and connected with the Industry for over 40 ye r rs. 
 
 It may "be said that the latter two nr rubers of the Code Authority, in 
 addition to representing the non-members cf 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 «o.pacitj 
 of Manager, was appointed Secretary; and Mr. P . C. Rowe, an affiliate of 
 the Flintkote Company, Assistant Secretary. At its meeting on November 20, 
 1933, 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 Lawson, 
 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, ap ointed to take the place 
 of P. C. Howe, resigned: 
 
 Mr. R. T. Kidde, Agent in Char of Chicago Office, December 3, 1934, 
 appointed to replace P. C. Howe, resigned: 
 
 Mr. I. J. Harvey, Treasurer, January 10, 1.-55, President of the Plintkote 
 Company, appointed to replace Lewis H. Brown, resigned. 
 
 B • P o we r s a.nd Put i c s of t he C o d e Aut ho r i t y 
 
 The Code Authority, by the instrument creating it, was empowered to 
 adopt its own rules of procedure and to delegate its authority, or parts 
 thereof, to such agencies and committee! 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 pov/ers and duties of 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. 
 
 JL 
 
 (*) Ibid, p. 17 
 
 (**) Ibid , pp. 1C3-19 
 9326 
 
- 537 - 
 
 (c) To collect all confidential information through 
 an agency which should keep such information in con- 
 fidence except \faen 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. 
 
 (e) To study and to recommend to the Administrator any 
 regulations regarding the following: 
 
 Uniform Cost Accounting; 
 Limitation of Production; 
 Limitation of New Equipment; 
 Industry Hercnandising 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 "become o-erative with the same force and effect as 
 any other part' of the Code. 
 
 These powers es 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 he followed, 
 while not specifically limiting the activities of the administering body, 
 indicate.", the general lines of those activities. How successfully the 
 Code pointed the way can 'best he determined by a study of the action taken, 
 
 C • Pules aaid 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 ma.de, 'oy citing a number of examples, to indicate 
 their scope and the great latitude covered by them. 
 
 (*) Infra, p. 
 
 9826 
 
Minutes of meeting, 3/27/35 
 
 Code Authority, with concurrence of the Administration 
 Members 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 Troulc* receive the prices and terns applying to the 
 various classifications of trade. 
 
 Minutes of meeting, 9/3 /3*+ 
 
 Code Authority rules that five days advance notice 
 must be filed with the Code Authority 'hen equaliza- 
 tion with unpublished freight rates should result in 
 a decrease in the net cost of a shipment to a customer. 
 
 Minutes of meeting. 5/1/3*+ 
 
 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 roust give 
 publicity to the rates applying; and, product life 
 guarantees naist be filed as part of a member's prices, 
 terms and conditions of sale. 
 
 Minutes of meeting, 7/13/3*+ 
 
 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*+ 
 
 Code Authority ruled that, members need not publish 
 
 prices beyond the third decimal 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 cliec': 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 govern prices of patent products. 
 9326 
 
- 539 - 
 D» Explanations and Interpretations 
 
 Between the effective do.te Df the' Code, November 20, 1933 and the 
 Schechter Decision, May 27, 1335, 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, terms and con- 
 ditions of sale or customer classification). 
 
 Apparently some doubt existed in the minds of the members of the 
 Code Authority as to their power .to issue instructions, for at a meeting 
 of that body on November 29, 1955, 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 "oy Assistant Deputy Administrator 
 Lawson.(**) It docs not appear that these Bulletins were out of order 
 nor docs the demanded recall indicate the assumption of powers not deleg- 
 ated, Mr. Laws on 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, we re 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, which 
 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 anrLSouthem Sections. 
 
 (*) Minutes of Code Authority meeting, 11/29/33, p. 2, (in NBA. files) 
 
 (**•); Letter dated December 3, 1935 from Assistant Deputy Administrator 
 ¥. 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 Files, Bulletin Folder 
 9326 
 
- 540 - ■'•- ■•- 
 
 The bulletin quoted the first sentence of Article VII, Section 1, and 
 stated that this j-ublicity 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 definition 
 or tyoes of shipments; terms and conditions on which order would be ac- 
 cepted; trr.de discounts, commissions and quantity discoiints, with the 
 basis on which same were extended; amount and term of each discount; and, 
 freight equalization an'" freight allowance noints or zones with outlines 
 of methods and conditions of freight equalization. 
 
 The Cocle 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 efiective date v/as required, but that the member so 
 changing should publish to the trade ant" file with the Code Authority on 
 the efiective 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 m 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 prices 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 da.ys from the date on which they were filed. 
 
 The bulletin stated further that if it v/ere the policy of any 
 industry member to sell to 3ny consumer, such as general consumer, intra- 
 state industriail consuner, etc., it would be necessary to include in 
 prices, terms and conditions of sale -oublished to the trade, the prices, 
 terms and conditions of sale in effect to all such tyoes of customer. This 
 necessary data coLild be included in either the price list or the merchan- 
 dising plan. In connection with this puclicity 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 v/hich resulted in a price increase to the trade and change; 
 as a result of v/hich the net price rema.ined constant or decreased? In 
 regard to publication to the trade concerned how could the purpose be 
 served when such prices v/ere kept from the "actual consumer " and that 
 
 9826 
 
- 541 - 
 
 consumer was " member of the trade concerned, being so classified by the 
 members of the industry? 
 
 Bulle tin No. 11, officially released on the same date as the above 
 Bullletin, sought to supplement these instructions with rules governing 
 filing with regard to protection orders, special products made to meet 
 specifications, combined sales of industry and non-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 Code 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 explained Article VII. It was ruled that it was necessary for 
 each member to publish his trade definitions and c he 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 class 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 t o 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 Indus try 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 t lis. t ^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 
 
 9826 
 
- 542 - 
 
 "by Code. 
 
 Bulletin Number 10 sought to prevent evasions through sales to 
 'exporters' and required that all sales for export purposes he accom- 
 panied "by a statement by the buyer that the goods purchased would not 
 "be offeree for sale in the United States, Further the "Luyer 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 Uumber 16 required full publicity with regard to patent 
 agreements and patented ^roducts when the latent was held "by non-members 
 of the industry. Such publicity was to include prices, terms and con- 
 ditions of 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 ruling nor did the Code Authority in- 
 sist upon such compliance. (*) The Code Authority believed that details 
 of royalties, price control, etc., should oe published when held by 
 members of the industry, but chat the filing of such information when 
 the patent v/as held by a non-member of the industry would serve no useful 
 purpose. Why the attitude of the Code Authority changed in regard to 
 these patent agreements is not known. At t'he time the Bulletin v/as issued 
 it was com on knowledge that practically all of the patents governing 
 the product? of the industry we^e controlled ''q-/ the Patent and Licensing 
 Corporation, a non-menbor 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, ap jars 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 ^rice after deducting all discounts and allowances 
 extended by the member, including transportation allowances. 
 
 2. Explanations 
 
 Of ti;_e 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 uy 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, terms anc' 
 conditions of sale" and tended to broaden the meaning of that expression. 
 Thus size and weight became a tern 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 t v, o constituted discounts or premiums would de- 
 pend upon the value of the inspection or the training, out in either 
 
 (*) Letter dated Hay 15, 1934 from J. S. Bryant, Secretary to the Code 
 Authority for the Asphalt Shingle and Roofing Industry to Assistant 
 Deputy William Lawson. In 1TRA Files, Trade Practice Polder. 
 
 9826 
 
~ 543 - 
 
 event, they were deemed a part of the price and as such would have been 
 put li shed, 
 
 A brief summary of each Explanation, giving the number and the date 
 it was issued, follows: (*) 
 
 ho. 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, 1934, required the publication of 
 -.-/eight, number of square feet and dimensions in price 
 publication. 
 
 Ho. Z, issued June 4, 1934, required the publication 
 of offers to train Talesmen for trade buyers as a 
 condition of sale.-. . 
 
 II o. 4, issued June 4, 1934, held that terms and conditions 
 of time payments should be published as a condition of sale. 
 
 Ho, 5, issued June 4, 1934, held that when completing 
 materials were included in the order and not billed 
 separately, e, description of such materials should be 
 published. 
 
 Ho, 7, isrued June 4, 1934, required orice 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- 
 qui r i ng pub 1 i ca t i on . 
 
 ITo . 9, issued June 4, 1934, ruled cooperative advertising 
 offered to trade "buyers a condition of sale which required 
 publication* 
 
 ITo, 11, issued July 18, 1934, required publicity of un- 
 published freight, rates. 
 
 No. 12, issued August .32, 1934, required publicity of number 
 of decimal "ooints .used in deducting discounts or computing 
 delivery charges. (Release by 1IBA said not to constitute 
 ap or oval 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 the 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 h?A Piles, Explanations Eolders 
 9826 
 
- 544 - 
 
 No. 14, issued February 5, 1935, ruled that should a 
 member of the industry establish prices , terms or conditions 
 of sale affecting any particular trade "buyer or class of 
 trade buyers not previously defined, such information should 
 "be filed. This might he done in his merchandising plan or 
 supplement thereto. Should a nev; merchandising plan he issued 
 it would he considered that this new plan canceled all prev- 
 iously issued supplements. 
 
 No. 15, issued. May 7, 1935, ruled inspection service, 
 furnished in connection wit.: sale of industry products for 
 built-up roofs, to be a condition of sale and as . such should 
 be published, 
 
 E. Unauthorized 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 wi thin 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 instances all out the Code -Authority seem 
 to be in accord. It was rather generally believed that in its activities 
 in relation to customer classification, elimination of set-up warehouses 
 and general industry advertising program, the Code Authority v/as 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 ench member of the industry 
 the right to classify customers inany manner. tint 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 ri L "nt to change their class oof initions of their own 
 volition, provided these changes ■..•ere published in the same manner o.s the 
 original publication and filed with the Code Authority. Article VI, Sec- 
 tion 2 (c) extended to the Code Authority the power to study the advis- 
 ability of a uniform merchandising plan and to make recommendations 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 approved they 
 v/ould 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 aoproved. 
 
 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 Regional meetings to discus? the problems of misclo.ssi- 
 fication of customerc. On June 4, 1934, the Assistant Deputy Administrator 
 
 (*) Infra, p. 
 9826 
 
- 545 - 
 
 wrote the Code 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 abov- 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 
 Kisclassification had been up for discussion at the 'General Industry 
 Meeting' 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 NRA files, Trade Practice Folder) 
 
 (***) Ibid 
 
 (****) Memorandum dated Sept. 6, 1934 from Peter A.Stone, Division of 
 Res^ rch and Planning to Bev rly Ober, Deputy Administrator, 
 (in iIRA Files, Protests Folder) 
 
 9826 
 
- 546 
 
 ~ 
 
 
 
 Price 
 11/30/33 
 
 Price 
 5/14/34 
 
 Price 
 6/5/34 
 
 Price 
 7/12/34 
 
 $4:20 
 1.45 
 
 $4.20 
 1.45 
 
 $4.38 
 1.50 
 
 $4.78 
 1.70 
 
 10" Strip Shingle 
 553 Rolled Hoofing 
 
 It may be noted that since Lay. strip shingles have ad- 
 vanced -14$ while rolled roofing has advanced 18^. 
 Construction contracts awarded have declined in a similar 
 period from $134,000,000 in May to $119,000,000 in July. 
 
 An examination v/as made of the various "bulletins, inter- 
 pretations and circular letters issued by the Industry's 
 Code Authority to Members of the Asphalt Shingle and 
 Hoofing 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 w as 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 code 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. 11 
 
 2. "Set -Up" Warehouses 
 
 On September 21, 1934, th« 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' 
 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 
 
 9826 
 
-•-547 - 
 Code Authority (*) indicating some casual relation. 
 
 The letter from Mr. Plimpton was written at the suggestion of 
 Mr. T. R. Vaughn 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 Code. We would, like to get your opinion, 
 therefore, 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, terns or conditions 
 of sale. 'Mr. Bryant pointed, out that any such warehouses 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. P. J. Parchell, Administration Member 
 of the Code Authority, wrote 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 
 Hoofing Industry, in NBA files, Merchandising Plan Polder. 
 
 (**) Ibid 
 
 (***) : Memorandum dated December 15, 1934, from Assistant Deputy Ad- 
 ministrator H. E. Plimpton to the Advisory Boards, (in NBA. 
 files, Trade Practice Polder) . 
 
 9826 
 
- 548 - 
 
 The final solution of this problem is not known though it would 
 appear that the Coce 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 national advertising campaign of the products of the industry. 
 The program was to be 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 Coae 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, an<f 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 He- 
 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. 
 
 F. Amendments 
 
 During the life of the Code, the Coc'-e 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- 
 x ^y was empowered to study the problem of merchandising plans and matte 
 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, Trr,de Practice Folder) 
 (**) 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 
 
 William Lawson to the Administrator, (in NRA files, Central 
 
 Fi]ps Rfinnrt Foldpr'i. 
 
- 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 three 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 factor 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 witn the non-patented, and to 
 the fact that one of the largest companies of the group, 
 the owner of most of the patents previously cnarged 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 
 tnat the system of prices outlined by the proposed plan 
 cannot be carried out except through the exercise of 
 monopolistic control ^oy 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: (***) 
 
 (*) Supra, p. 541. 
 
 (**) Letter dated December 23,1933 from Harold A.Stephens, Assistant 
 
 Attorney General to IIRA. (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 Fractice Folder) . 
 
 982S 
 
- 550 ~ 
 
 "The practices covered "by the government 1 , s complaint are 
 virtually the same as those covered "by the rules submitted 
 to the Administration. The action was be. run 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 sucxi action in connection with the Oo:le 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 wculd tend to freeze channels of distribution, 
 stifle competition, maintain artificial price levels and unreasonably 
 increase prices. The Commission intimated that the plan could be 
 successful (from the point of view of the industry) only ;\'he:\ 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 Mail Order Association of America and 
 wholesale hardware dealers. (*) In every instrnce 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. 
 
 The Advisory Boards, with the exception of the Industrial Adviser, 
 recommended that the plan bo not approved. The criticisms from this 
 group were more general but they concentrated on the opinion that the 
 plan would result in price fixing ana that in Section VII, paragraph D, 
 an attempt was being made to estnblish resale price maintenance. The 
 latter feature was an innovation since the Industry Flan of 1929. 
 
 After the hearing, numerous conferences wera held between industry 
 representatives and the Administration though nothing tangible resulted 
 from these discussions. No definite action was taken and the plan was 
 never approved or disapproved. Despite the adverse criticism voiced 
 on all sices, 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 
 provided 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 Koc'el 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 Authorit;' was empowered 
 
 (*) Transcript of Public Hearing, March 20, 1934 
 9326 
 
- 551 - 
 
 '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 of the actual selling 
 price of the products involved in all other violations. 
 
 The Notice to he Heard (A.G. 99-15) issued January 16,1935, 
 elicited complaints from two members of the industry who expressed the 
 opinion that small manufacturers might he injured and that the amend- 
 ment was unnecessary and might he 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 NBA. The Consumers' Board requested that the proposal he 
 submitted to the Advisory Council for an opinion. This request was 
 granted and the Council recommended that the amendment 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 the 
 Department of Justice. Had it been successful in its sponsorship of the 
 Merchandising Plan there would have existed the embarrassing situation 
 of one branch of the government approving the very thing complained of 
 ''oy 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 Code 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 with any other product, labor or service, to 
 quote and- invoice these other products or services separately and. at 
 not less thai their respective current market value. 
 
 Two further proposed mutations of the Code would have had the 
 effect of limiting 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 NIB3. 
 (in NBA files, Amendments Folder) . 
 
 9826 
 
- 552 - 
 
 would have limited the amount and effective length of "bonds and guarantees. 
 It was recommended that the amount of the guarantee "be 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' 1 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 incus try consented. If put into operation this plan would 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 period it apperred 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. Though this proposal was 
 never presented for consideration by the -Administration, Mr. Ralph 
 Fuller, Vice President of the Cooper Company (one of the "Secondary" 
 manufacturers) stated in an interview, J; nuary 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. Abrahams, ( *) 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, coul r 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 7jr per cent belo the price of one manufacturer rni^ht be more or 
 less in relation to the prices of another. 
 
 II. ADMINISTRATION 3Y N.R.A. 
 
 As measured by the administration of other codes, that exercised 
 in regard to tne code for the Asphalt Shirgle and Roofing Industry was 
 rather vigorous. As has previOnsly been mentioned, Assistant Deputy 
 Administrator Laws on in the be^inni..g established the policy, which was 
 continued during the lif-j 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 
 
- 553 - 
 
 When it was felt "by the WRA officials that an activity or -under- 
 taking of the Code Authority was beyond the bounds of its powers, no 
 hesitancy w& displayed in calling the matter to the attention of the 
 responsible parties. This spirit was exemplified in the action of the 
 Assistant Deputy and his Advisers in regard to the unauthorized 
 activities; (*) and, is further indicated by the price study conducted 
 by the Research and Planning Division. ( **) 
 
 At no time did the Administration find it necessary or desirable 
 to issue any unusual or unique Administrative or Executive Orders. 
 There were a total of twenty-one Administrative Orders, all of which, 
 with the exception of Order Lfo . 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 f f. 
 (**) . Supra , p. 545. 
 
 9826 
 
- 554 - 
 CHAPTER VII 
 COMPLIANCE 
 
 At first glance it would appear that th° proDlem of obtain- 
 ing compliance witn the trade oractice provisions of the Code was 
 never a matter of great concern. Cnly. three trade oractice violations 
 w°re cited to the Compliance Division. This serenity, however, was 
 apparent ratner than real. In most instances of violations the Code 
 Autnority preferred to handle the co./mlaint th c msplv°s and in many in- 
 stanc s the allegations could not b-> supported by -vidence. The 
 reticence of the Code Authority with regard to submitting ^>lleg c d vio- 
 lations to NF.A for settlement may hnve been occasioned by dissatisfac- 
 tion with the disposition of the f c w 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 Complaints Committee. 3y Administrative Order 99-12 creating a 
 Tr^de Practice Complaints Committer, the Cod c Authority was named to 
 constitute that body and by this Ord-r the Code Authority was authorized 
 to appoint such committees to assist in the handling of complaints as 
 were de e med necessary. It is thought that tnis privilege was seldom 
 exercised, the Tr-'de Practice Comnitoee itself nandling mo3t of the 
 complaints. 
 
 The Ord-r of Approval also s-t out rules to govern these 
 agencies in the handling of complaints. In general the procedure re- 
 quired that wnen a coimlaint was filed the respondent must be notified 
 witnin 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 extemuating 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 take issue on 
 the legality of that act, he should receive a third notification citing 
 the provision or provisions violated and fixing the time and niece of 
 the ->aring. The Hearing held, should there still be differences of 
 opinion, the case could be aooealed to the Trade Practice Complaints 
 Committee, assuming that the original hearing was neld by one of their 
 agencies; or the case, with all documentary evidence, could be sub- 
 mitted to the NF.A for settlement. 
 
 No particular effort has been made to exolain 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 the aooeliate division. 
 
 (**) Infra, p. 355. 
 9«26 
 
II. METHODS OF GAINING COWPLAINCE 
 
 Most violations cited 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 the violator 
 and the necessary correction was made. 
 
 In the more stubborn cases the tnreat of HEA procedure was 
 used to obtain compliance. In the early period of the NBA this weapon 
 was reasonably effective; however, as the Administration compliance 
 activities became retarded by policy determinations, which were delayed 
 in their appearance- and which were even slower in operation, this 
 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 this 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 this would have b c en an efficacious 
 instrument can be judged only by pre-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 nut 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 discussion of the nature of the cases which were called to the atten- 
 tion of the 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 supplemented by interviews 
 with memoers of the Code Authority. (*) 
 
 The Minutes of the Code Authority meeting of April 9, 1934, 
 report 128 complaints of which 4? were pending, and the Minutes of 
 May 1, 1934, report 183 complaints with 54 pending. Little can be 
 derived from tnese 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 he 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 dse 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 
 
 9826 
 
- 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 tney 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 AGENCIES 
 
 From the above information, it is difficult to evaluate the 
 success of the enforcement bodies. Briefly, the facts show the com- 
 plaints filed were numerous, but measured by complaints pending and 
 those submitted to tne NP.A the efforts of enforcement were oquite 
 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. 
 
 (*) Int-rview witn members of the Code Authority, January 7-10, 1936 
 
 9826 
 
 
- 557 - 
 
 CIItt-PTZP. 71 1 1 
 
 5coitc;;ic briers of ?hich riLiho- 
 
 A comlete discus'-io:i of the econo lie effects would necessitate 
 separate consideration of the interests of the different grouos which 
 night he affected by the pricing oractices of the industry. Ariong the 
 classes which would have to he considered pre the Manufacturers, dis- 
 tributors (including the varioas classes) and consumers, neither tine 
 nor soa.ee will permit such a detailed treatment of the interests of 
 these many groups. In lieu of this, detailed consideration will he 
 given here the more veneral asnects, centere ". around -rices and nrice 
 noveients. 
 
 i. prohotio:,' or pric:; stability 
 
 The expression "nrice stability" should he considered in a re- 
 lative sense. "Ton any other perspective there is seldom, if ever, 
 such a thing ?.s stable nrices. In its stricter interpretation the 
 tern signifies a fined and innobile level that would lose its character- 
 istic of stability rath each chm:e, prices, therefore, will herein 
 he considered as more or less stable as rrice changes occur more or 
 less frequently during; e given oeriod. 
 
 According to testinony given in the suit between the Patent and 
 Licensing CoiaDora tion and T7er.ver-T7all, trices normally changed in the 
 Industry about eight or ten tines a year. (*) Evidence in the same 
 case stated that prices had not cnan ;ed between 1030 and Aoril 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 bureau of Labor Statistics, the average wholesale 
 price of medium roofing was $1.32 per sq.u~.re with comparable rigidity 
 being evidenced in other products. A survey of -this co ipilation from 
 1926 through September 1955 indie tes considerable more stability dur- 
 ing periods of vigorous enforcement of the -rrice filing agreement. 
 (See table page 12M-.) 
 
 It :.iry he srid without too much fear of contradiction thrt price 
 publicity in the Asphalt Shingle and Roofing Industry aided in the 
 stabilization of prices, whether or not this is an indictment of price 
 filing practices is lrrgely s matter of opinion. Eliminrting consider- 
 ation of price trends or orice levels, stability of prices in no way 
 Kpo ears vicious. 
 
 Prices can hardly he treated in the abstract manner just indicated. 
 The tern price stability, being used as p relative one, implies some 
 price movement. The more important ouestion is the direction of changes* 
 were these few fluctuations uniformly upward or uniformly downward or 
 were they as ant to move in one direction as the other? Sone light will 
 be thrown on this subject later in the discussion. 
 
 (*) Patent and Licensing Corporation 7. We&ver-^all, Transcript of the 
 
 hearing, n. 1068. 
 (**) Ibid. n. 1049. 
 9826 
 
-5 sa- 
 il. PPJCE UPIPOPJIITY 
 
 Prices in the Asphalt Shingle and Roofing Industry r, ere and are 
 uniform. The treatment of price uniformity could almost start and stop 
 with that sentence. On rare occasions and for short periods of time 
 it is possible to find examples of lack of complete uniformity, "out 
 those instances are the exceptions rather then the rule. So perfect 
 nas this accord that generally there was absolutely no variation in 
 prices, terns o^ conditions of sale. 
 
 The identit;' - 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 uniforn plan of customer classification and attempted to have 
 one included in the Code. Palling to get the consent of the Administra.tioi 
 for the inclusion of this provision, the individual members published 
 a plan which was applicable to their products and custo-ners. The in- 
 ability of the sponsors to have the uniforn merchandising plan approved 
 could have had no more serious results than inconvenience. A survey 
 of the plans published 'oy the different companies 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 lac): of 
 uniformity. The first filing showed a list price, quoted by most compan- 
 ies, of 84.5a per square for individual Shingles to '/hole sale carload 
 distributors, with a. 2 per cent c;*6h discount and either a 5 percent sales 
 discount, vhen the merchandise was shipped directly to the consumer or 
 dealer, or a 3 per cent stock discount when shipped to the distributor, 
 the 5 or 5 per cent deduction to be applied before the cash discount. 
 One cc filed a list price of $5,25 per square for the same product 
 to whiph was applied, in addition to the above discounts, a 33.3 per 
 cent reduction as a trade allowance. In both cases the net price quo ted 
 -as $4.13. (**) 
 
 This uniformity of -rices 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. 'h' rchandising Plans . 
 
 It has already been noted that prior to the Code the Institute had 
 "sponsored a uniform merchandising agreement and that efforts uere made 
 to have such a. plan incorporated into the Code, It was provided in 
 Article Till 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 '.'ere desired, so 
 
 (*) In ilEA Piles, Prices Polder, 
 (**) See Table, p. 568. 
 
 9826 
 
■ Of ; - 
 
 long as those revisions were mblicised in the sane : inner r s the origi- 
 nal plan. 
 
 In the light of the previous discussion of the 1929 merchandising 
 Plan and its corrolexity of o-icr; tionm^ a survey' of those filed under 
 the Code ria.y he of value. A Tin uniformity is evident ana the plans 
 are so lihe the one of 1929 that it -Till only he necessary to -joint 
 out- the differences. Custo . ler classes "ere maintained with very little 
 change in title and with no great deal of difference in definition 
 
 id methods of oualif~ r iu". The. former jobhers "ere noted as Whole- 
 sale Carload Distributors^ and to qualify for this class a. dealer had 
 to meet all the requirements laid down by the Institute in its former 
 agreement, -^ith t"" r o errcemt.ions — (1) it was no longer left to the 
 determination of Dun and '.'v. 'street, and (2) rather than maintain an 
 average stcc 1- of 40,000 mounds it --as now necessary to have on hand 
 an average stcc 1 " of 80,000 mounds, ''or other customer cla,S' es there 
 might have been similar unimportant differe ices. The identical. systems 
 of shipping zones, methods of transportation, freight equalization and 
 quantity discounts "ere continued* 
 
 in. PElcz aid ppicp irovnlci.Ts. 
 
 An intelligible treat::ont of jrices as evidence of the economic 
 effect must consider dena.n» a.nd 'production costs', o.s they would tend 
 to influence prices. Certa.in fundamental economic theories are in- 
 voled which -mil aic i\ the interpretation oi mrice changes. It is 
 generally accepted, for example, that with supply remaining constant, 
 mrices vri.ll v£..r~ r with demand rn- . it is also ;enerally accented that 
 prices bear some relationshi .• to costs of production". A brief dis- 
 cussion of these tmo factors nay be of some value. 
 
 It was stated in Cha 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 ■■-. .'or this study relative fig- 
 urea are more enlightening th-an ere absolute figures. 3urea.u of Labor 
 Statistics based on buildin : mermits she-' a decrease in total build- 
 ing in 1933 of about 12 )cr cent, and increa.ses of 5 oer cent and 
 170 jer cent respectively in 1934 pnd 1935. These fi ;ures "ould in- 
 dicate that the lo" for building construction was reached in 1933 and 
 that it remained fairly constant during 1933 and 1934. 3e land, for the 
 ■oroducts of the industry fa,iled to increa.se bet r een 1933 and 1934, 
 but increased appreciably, in 1935. Prices, assuming they were affect- 
 ed by no other factor, should have reflected the changes in demand. 
 
 Variations in costs of production are more difficult of deter- 
 mination. In its report on the administration of the Code, the Coue 
 Authority stated that labor costs had Increased 14 per cent during the 
 Code Period and that the cost of raw materials had inerc sed in amounts 
 v--r-.ai-.v; from 20 per cent to 75 ier cent/***) 
 
 (*) 
 
 Sumra, m. 506 
 
 & ff 
 
 (** \ 
 
 Supra, m. 516 
 
 
 (*** \ 
 
 Pe sort of the 
 
 Admi 
 
 9323 
 
 itrrtion of the Code of Pair Commetition for 
 the Asphalt Shin~le ana Roofing Industry, p. 24. (in bPA Piles, 
 Code Authority bolder). 
 
- 550 - 
 
 It was strted at that tine that the cost of dry felt had increased 
 from 61jg$ ner hundred pounds to S1.2C, rfter which there was a re- 
 duction in -orice to SI. OS. Assunin : this later figure to he the 
 average price, the percentage increase in the cost of production 
 would n oe p-oproxim-^tely 15 ner cent. (It - , : s stated rt the sane tine 
 thrt the cost of felt represented about 20 per :ent of the total cost). 
 Labor costs, as previously stated, (*) in 1131 represented about 9.0 
 per cent of the value of the product, "hie-: would be ap nroxinately 
 6.3 ner cent of the cost of production. The 14 per cent increase in 
 labor costs would, applying this ratio, represent an increase in the 
 cost of production of .35 -;>er cent. The other item of costs nentioned 
 in the report was flux oil which had increased 20 per cent. Granting 
 that the cost of flux oil represented as large p percent? ;e of the total 
 cost as did felt, rrhich is probably p generous assumption, this v-ould 
 have resulted in a 4 ner cent increase in the totrl cost. The total 
 increase in costs is esti irted at 19.35 per cent of r.osts or 12.54 per 
 cent of the value of the product. (193o Material and labor costs, 
 including fuel and purchased electricpl power represented 65.2 per 
 cent (**)). 
 
 Price movements during the above period Maintain some relation 
 to production costs but apnepr to have mo - ed in op position to demand. 
 This most unusual rerction would indicate thrt trices might have been 
 increased on a falli '.. ■• market to Maintain profits. Such an inference 
 dernrnds a closer scrutiny of trices rnd shipments. Trbles 2 and 
 
 3 see:.: to bear out this assumption. It nay be seen f re .: these tp.bles 
 
 thrt almost v7ithout an exception Then demrnd for the industry's pro- 
 ducts, as measured o r shipments, decreased, prices increased, md, con- j 
 versely, when demand increased, trices decreased. Such p condition 
 would see;: to offer only one conclusion; controlled trices are little 
 affected by demand r.\~. the tendency is to try to maintain profits by 
 increasing ier unit Profits. 
 
 It is hardly possible to ccrrre nrice move :ents in this industry 
 under price filing with -orice movements u*in : >eriods when no price 
 agreements wps in oerrtion. Since 1926 sone form o.i price publicity 
 has been in effect and >r'ice data pre n t avrilrble for earlier years. 
 The comparisons must therefore be made between tines -hen the ayree- 
 ment wp.s o -.ser^eC. and tines when it was generally not observe'".. The 
 original nrice publicity agreement beepme onerrtive at the beginning 
 of 1926 and prices at thp.t tine were 130.3, based on 1929 avere . 
 This high level was continued until about Tovember, 1927 and no doubt 
 broke down becaj.se of nrice wars in the Industry. The decline in the 
 latter part of 1927 and in the errly part of 1928 occurred, despite 
 the fact that juilding construction increased during that period. In 
 the light of what has previously ooen stated, this movement is not 
 surnrisin • and is apparent through the period for which nrices are 
 available, thou.h seemingly better regul when t. e r ;reement is 
 bein- more closely observed. Ifore enlightening is the iirrked decline 
 between the months of October and hovembor of 1927 pnd the grer.t in- 
 crease between day and June of 1928. In connarin"; prices in these 
 
 (*) Supra, p. 519. 
 
 (**) The Asnhrlt Shingle a-, doofm a I :o.a ti-r , Industry Statistics 
 
 Unit, January 1936, Table IV, p. 3. (in IIRA Files). 
 9826 
 
- 551 - 
 
 latter trro months, the Industry meeting of ' ay 1928 should be recalled. 
 It has been stated that orices were discussed at this meeting. Such 
 statements have been and --ill no doubt, continue to be denied. In the 
 face of these conflicting contentions, it seems impossible to explain 
 the 19. S increase in .price on any grounds other thf.n collusion. Through 
 a close a:ipl3 r sis of prices it is oossible virtually to trace the degree 
 of success.* as measured oy compliance, with which price publicity has 
 met. 
 
 Absolute orices rose sharply during the Code period. Slrte sur- 
 faced roof in. . ; increased from $1.43 per square in ay, 1933 to c 1.77 per 
 square in June , 1955, or an increase of 19.5 per cent; Strip Shingles 
 during the sane period moved from 33.34 per square to 34.52, or an in- 
 crease of 33.5 per cent; Individual Shingles from 53.35 to 55.00, or 
 an increase of 29.9 :>er cent, medium Prepared Roofing, alone, decreased, 
 the arice being 31.47 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 goodly portion of this increase was o.ccommlis-ed from June 1933 
 through December 1934, a meriod during which demand was increasing very 
 slightly. Prom January 1935 to June 1935 the index mrice regained fairly 
 constant fluctuating between 112.4 and 114.9, but by September it had 
 dro ooed to 111.1. During this year building construction increased 
 170 ner cent over 1934. ho doubt figures for iore recent months would 
 sho" a continued decline in )rices» '(*) 
 
 The concl ision r ? to the effect on orices, of orice filing under 
 the Code, rust >e thr.t trices -ore better controlled and in general 
 moved in opposition to the normal trend as rffecte.. by de iand. 
 
 Abnormally increased jrices, of course, affect the consumer ad- 
 versely* An increase in the :'rice of roofing obviously hoans an in- 
 crease in bull din v, costs. Little complaint was voiced by consumers 
 against orices because the costs of roofing materials represents a. very 
 small per cent of the total cost of a building. It is conservatively 
 estimated that such costs exe only about 2.0 per cent of the cost of 
 a building. A twenty per cent variation in the price of roofing nould 
 then result in only .4 -oer cent variation in the total cost of the 
 structure. 
 
 Despite the imperceptibility of the effects of price variations 
 
 in roofin ; materirls on the total cost oi' construction, the tendency 
 of orices to fluctuate in op ;osition to demand, counled -nth similar 
 movements in other buildin-; materials, would augment the seo.sonal and 
 cyclical variations and woula rebound to the Industry by changing a 
 malignant condition into a pernicious one. 
 
 IV. P0SITI01T 0? DISThlB'UTOllS 
 
 The position of distributors was not vitally affected by orice 
 
 levels or mrice trends, but jt should be oorn in rind that the mer- 
 
 (*) hr. fuller of Cooper Company stated, in an interview January 10, 1936, 
 
 that there had been 14 mrice changes since the Schecter decision and 
 
 that each of these changes had been downward t 
 932 5 
 
- o62 - 
 
 chan&ising plans were a definite part of the pricin : structure in this 
 Industry. The discussion of the economic effects of price filing thus 
 far has centered around trices, with the position of distributors nen- 
 tioned only in relation to uniforn prices. 
 
 3y the individual merchandising plans, distributors ^ere placed in 
 certrin groups which determined the amount of discounts that they would 
 oe allowed. The tendency of these plans to be uniforn in regard to cus- 
 tomer classifications definitely fixed the position of these consumers 
 in relation to one another. If a martieular distributor was placed in 
 the Less Then Qarload Wholesale Distributor class by one member of the 
 industry, he -fould be so olaced by ail members. In instances where 
 there was lack of uniformity in 'classifyin ;, these differences were 
 generally eliminated at the "misclrssification meetings 11 . The oroblen, 
 therefore, so far as the distributor was concerned; was an individual 
 one (*); consequently objections were from single distributors who 
 complained of the injustices of their position rather than voiein : my 
 opposition to the plan. 
 
 A further exception w^s the objection of Mp.il Order Houses. This 
 grouo op os c the s "ste ] of ;rice filing ns well as that of customer 
 classification. 7iling was opposed on the ground that it was a. viola- 
 tion of a conf ide ice which affectcc not only the seller, but .^lso the 
 purchaser, while the opposition to customer classification revolved 
 around the fr ;t that this ^roum was in ornger- of losing its :"avored 
 position as buyers. Thou h h'ail Order "louses handled only about 5 oer 
 cent of the Industry's )roducts, it was contended that they deserved 
 special prices rs a result of quantity purchases* These objections ''ere 
 of no avail and rs a result hail Order Houses be ;an manufacturing. One 
 member' of the Industry stated that price filin : under the Code def- 
 initely put : ail Order Houses in the roofing industry. (**) 
 
 V. IHCESASE III THE LiUliJZii 01' :LJrjhA> iTUhGRS. 
 
 In addition to this induction of h'ail Order Houses into the field 
 of production, the Code Authority re jorted that five companies had en- 
 tered the Industry Vj hay' 3, 1934. (***) '.Thether more new capital 
 came in between hay, 1934 and hay, 1935 is not ]~iown, though it nay 
 logically be inferred, since the remort rras made follo-'in;; the Schecter 
 decision rnd 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 case of 
 retail lumber dealers, who have for yerrs contended that they 
 should be allowed a l-rytT discount, in view o" the fact that such 
 concerns handle about 70 ;>er ceat of the s-les of the Industry. 
 The m.^in force of this objection preceeded the adoption of the Code ! 
 -and has been mentioned mrevionsl ' in Chanter 7. 
 
 (**) Ilr. Ste nan of Heaver-TTrll in ai interview, January 13, 1935. 
 
 (***) Hemort of the Administration of the Code of Pair Competition for 
 the Asnhalt ShinhLe and Roo^in-': Industry, m. 8. 
 (In 1IRA Piles, Code Authority holder). 
 
 9826 
 
- 563 - 
 
 This coining in of nem crnital is significant idieii it is recalled 
 that none-- •i- i invested, probanly, nore cautiously during this period 
 than at r-x/ other tine in the history of American industrial develop- 
 nent. The relative amount of capital re presented by the five new 
 companies c : a not he ascertained. Irunerically the;- represented about 
 18.5 mer cent of the total number of members of the Industrj r . How- 
 ever, it is reasonably certain that, as nersur3d by capital inv sted, 
 it "Oiild he onl Tr r very s isll part of the total in the industry. The 
 evidence is only indicative rather than conclusive, hut the i.nolicr- 
 tions should not be lost. 
 
 A. hj-jitption or Control of Production. 
 
 At the sane tine that net? canital was coning in, an amendment to 
 the Code • -as >eing sponsored "by the Code Authority to Unit rnd re- 
 strict the use and expansion of -oroductive equir>merit» An inventory 
 bad been nr .e which showed thrt only 29.9 ier cant of the productive 
 caoacity was in use rnd tha.t twelve fullv equity. jed factories were then 
 inoperative* In addition, it "as nointed out that twenty factories 
 had been closed in the five ; r errs precedin ; the Code. It is quite 
 certain that the closed factories were as a result of retirement by the 
 producing embers, since during that period only sis factories vent 
 into the hands of receivers and there were no b nkruPtcies. 
 
 As a result of these diametrically opnosed movements, there arises 
 rn anomalous situation which nil but defies economic interpretations. 
 There enists an industry in which because of prices, production, etc., 
 present members deem it economically errpedient to remove productive 
 equipment from the active field, and which, at the sane time as meas- 
 ured by the sane -.'actors, remains inviting enough to attract capital 
 when capital is deaf to most invitations* 
 
 VI. DIVERSION Of SALE TO SIQSTIWEE PRODUCTS 
 
 It is doubtful whether or not prices of rsnhalt roof in;; materially 
 -affect the demand as measured by use of substitute products. This un- 
 usual situ tion is true for several reasons, most of which have been 
 previously noted but 'd"bl be repeated here: the cost of roofing 
 is a negligible factor in the total cost of the structure; asphalt 
 roofings ere generally thought to reduce fire hazards; much attention 
 has been given to increasing the demand by increasing the esthetic 
 appeal; and, as ccuv-re . to other roofing materials, excepting wooden 
 shingles, asphalt roofings are reasonable in nrice. 
 
 The tendency from 1922 to 1934 was for asphalt roofing to ;min 
 business at the expense of mood shingles. (*) It seems, therefore, 
 to resolve itself to the question '• '-'nether demand would not have 
 increased more ramidly had prices "oeen reduced. To answer that ques- 
 tion ~'ou 1 d necessitate an assumption which could not be supported. 
 The only noticeable indication tha.t the Industry might have suffered 
 to the benefit of substitute products is the decrease in ship? , ents 
 
 in 1934 rs commrred mith 1953 nben build in" increased slightly. 
 
 (*) Sumra, p. 520. 
 
 9826 
 
- 564 - 
 CHAPTER IX 
 
 OPIUIOUS A1TD A TTITrPhS OF IFTJR5ST£D PARTIES • 
 
 The same concerted opinion amo;ig 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 nanner worked a hardship on any individual 
 firm or on any general class of members. This fact, oetter thru 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 sch* me considered \.s 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 Pirn, 
 drew opposition from among tne 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 satisf -ctory to ev-ry mem- 
 ber of the industry, considering both their independent and relative 
 position. All but the most naive, when prespnted 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 vrith abnormally high prices, a con- 
 dition 'hich 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 './ere filed has been confirmed ~oy one of the members (**) who olso 
 stated th/\t the Code plan tras almost identical with that of 1929. 
 
 P£3So:;al o p i nors of iiitep^stjd ivthviduals 
 
 A. F. J. Patchell, Administration Member of the Code Authority(***' 
 
 (*) Su-ora . pp. ..545 . and ff 
 
 (**) Interview with Mr. Stegman of "ieaver-'.'all Company, January 13, 
 1936. 
 
 (***) Memorandum dated August 9, 1935, from F.J. Patchell to Beverly 
 Ober. 
 
 9826 
 
 ■I 
 
- 565 - 
 
 In his report to the Deputy Administrator on the history and. 
 administration of the Code, I.:r. Patchell submitted a rehash of the 
 Bulletin prepared in the office of the former Code Authoritjr, then 
 the office of the Institute. In this Bulletin it was pointed out 
 that price filing had been beneficial to the industry and that this 
 './-as accomplished without any resulting evil effects, e.g., high 
 prices, price uniformity, p rice determination, etc. It was noted 
 that five new members had entered the industry as contrasted with 
 the mortality in the years immediately preceding the Code.' Prices 
 for a given period were quoted which teiid.ed 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 Manager 
 of the Institute. ( * ) 
 
 l.Ir# Bryant is of the opinion that price publicity is a v^ry de- 
 sirable and necessary ^gencj in this industry. The plan as operated, 
 under the Code wa.s quite satisfactory but -'ould have been- strengthened 
 by a. uniform merchandising plan, which was never approved., and by the 
 liquidated damages agreement, which wa.s approved in April, 1935. 
 Though not admitting that the five—day waiting period might lead to 
 coercion, Hr. 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 i.ir. Bryant's belief that publicity prevents price wars 
 and that without it manufacturers would be at the mercy of "chiseling" 
 buyers. 
 
 C. I.lr. Stegman, Vice-President, Vfeaver-T/all Conrorjiy (**) 
 
 Talking with less reserve than rid. Mr. Bryant, i.r. Stegman 
 stated, that he was frankly surprised "-.hen Cod.es were being drafted, 
 to find that the administrative agency 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 
 talcing place in advance of Code Authority meetings. 
 Prices were abnormally high. The tfeaver-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, 1936. 
 (**) Interview, January 13, 1936. 
 
 9326 
 
- 566 - 
 
 A strong effort '-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 -lmost identical 
 with that of 1929, complained of by the Department 
 of Justice. ■ 
 
 If the principle were justified by an emergency, 
 that emergency no longer e?:ists. 
 
 D. He rbert Abrah ams, Cha.irr.an of Code Authority; President, 
 Bubgroid . (*) 
 
 In discussing the Code provision and its administration, 
 l.Ir. 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 oenefit must include prices, 
 terms and conditions of sale, and customer classification with 
 names and location of customers, rua. should provide for a liquidated 
 damages agreement. Mr. Abr-hams further commented as follows: 
 
 Price publicity is desirable in that it prevents 
 "customer advantages", "price discrimination" and 
 "ruthless price cutting". 
 
 "TCe want to get as much as our competitors will 
 let us." 
 
 Prices and customer classifications becaxie more 
 uniform under publicity. 
 
 Equalization of freight rates cannot be avoided. 
 
 Smaller companies ^'ere much better off under the 
 Code than they are today. There were no complaints 
 from these companies under the Code, but they sre 
 numerous at present." 
 
 The voluntary agreement now before the Federal Trade 
 Commission is not practical for this industry. The 
 ten-day waiting period af t^r 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 vould fire my salesmen." 
 
 E« Ralph Muller, Vice-President' of the Cooper Company and 
 Member of the Code Autho rity (**) 
 
 (*) Interview, January 9, 1936. 
 (**) Interview, January 10, 1936. 
 
 9826 
 
567 
 
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-568- 
 
 The Cooper Company is a comparatively new member of the in- 
 dustry, having "been organized in 1931, 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 v/ere quoted. This tended to disrupt the price structure 
 of the industry and the method was changed to an increase dis- 
 ccount. 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 he stated that; there was 
 price uniformity in the industry; prices were high and they 
 moved contrary to demand; and there were indications of price con- 
 trol. That these conditions were caused by price publicity cannot 
 be said without fear of contradiction; in fact the contradiction 
 precedes the conclusion. It may be pointed out that under such a 
 condition price publicity could he and no doubt would be an agency 
 through which the program could be 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 1930 1931 1932 1953 1934 1935 
 
 Jan 
 
 2,141 
 
 2,421 
 
 2,383 
 
 1,395 
 
 1,759 
 
 875 
 
 1,100 
 
 1,277 
 
 Feb 
 
 1,856 
 
 3,375 
 
 1,556 
 
 1,381 
 
 1,724 
 
 1,719 
 
 1,051 
 
 1,118 
 
 Mar 
 
 4,277 
 
 4,239 
 
 2,240 
 
 1,456 
 
 1,375 
 
 2,775 
 
 2,221 
 
 2,052 
 
 Apr 
 
 3,672 
 
 4,583 
 
 2,727 
 
 2,202 
 
 2,274 
 
 2,521 
 
 2,946 
 
 2,974 
 
 May 
 
 3,648 
 
 4,583 
 
 2,714 
 
 2,250 
 
 1,610 
 
 2,904 
 
 2,557 
 
 o no o 
 
 Jun 
 
 4,196 
 
 3,756 
 
 2,384 
 
 2,006 
 
 1,529 
 
 2,157 
 
 1,526 
 
 2, 215 
 
 July 
 
 2,895 
 
 3,325 
 
 2,151 
 
 2,017 
 
 1,707 
 
 2,795 
 
 1,745 
 
 2,521 
 
 Aug 
 
 3,070 
 
 2,903 
 
 2,544 
 
 2,257 
 
 2,799 
 
 1,831 
 
 5,762 
 
 2,768 
 
 Sept 
 
 3,187 
 
 3,011 
 
 3,506 
 
 2,597 
 
 5,105 
 
 2,155 
 
 1,944 
 
 5,102 
 
 Oct 
 
 3,453 
 
 3,308 
 
 3,259 
 
 2,502 
 
 2, 575 
 
 2,671 
 
 2,426 
 
 5,130 
 
 Nov 
 
 2,470 
 
 2,326 
 
 1,484 
 
 1,765 
 
 1,202 
 
 1,621 
 
 1 , 941 
 
 
 Dec 
 
 1,672 
 
 2,035 
 
 1,126 
 
 985 
 
 608 
 
 889 
 
 1,575 
 
 
 Average 
 
 3,045 
 
 3,322 
 
 C) OoO 
 
 1.881 
 
 1,397 
 
 2,061 
 
 2,016 
 
 
 I-B Shipments of Grit Roll Roofing (thousands of squares) b/ 
 9326 
 
- 569 ~ 
 TABLE 2 (Cont.) 
 
 I-B Shipments of Grit Roll Roofing (Thousands of Squares) b/ 
 
 : ' -1926 1927 1928 . 1929 1920 1931 1932 1933 1934 1935 
 
 , ' ■" " 
 
 Jan 
 
 
 514 
 
 485 
 
 493 
 
 322 
 
 385 
 
 198 
 
 220 
 
 368 
 
 Eeb • 
 
 
 486 
 
 717 
 
 338 
 
 330 
 
 414 
 
 353 
 
 227 
 
 278 
 
 liar 
 
 1 
 
 ,237 
 
 1,039 
 
 581 
 
 333 
 
 491 
 
 532 
 
 430 
 
 464 
 
 Aor . 
 
 1 
 
 ,013 
 
 1,118 
 
 676 
 
 533 
 
 606 
 
 524 
 
 560 
 
 606 
 
 I.Iay * 
 
 
 995 
 
 1,129 
 
 731 
 
 570 
 
 377 
 
 &4 
 
 600 
 
 586 
 
 jjun 
 
 1 
 
 ,157 
 
 988 
 
 653 
 
 520 
 
 378 
 
 574 
 
 336 
 
 494 
 
 Jul 
 
 
 830 
 
 983 
 
 612 
 
 532 
 
 389 
 
 693 
 
 407 
 
 576 
 
 Aug 
 
 
 853 
 
 829 
 
 655 
 
 568 
 
 647 
 
 512 
 
 790 
 
 667 
 
 Seot 
 
 
 841 
 
 826 
 
 872 
 
 711 
 
 764 
 
 504 
 
 547 
 
 834 
 
 Oct 
 
 
 ■824 
 
 836 
 
 922 
 
 574 
 
 630 
 
 570 
 
 608 
 
 850 
 
 ilov 
 
 
 529 
 
 532 
 
 372 
 
 374 
 
 271 
 
 337 
 
 462 
 
 
 Dec 
 
 
 330 
 
 509 
 
 242 
 
 197 
 
 140 
 
 175 
 
 345 
 
 
 Average 
 
 
 801 
 
 833 
 
 596 
 
 464 
 
 458 
 
 474 
 
 461 
 
 
 aj Sura of Shipments for Grit Roll Roofing (I-B), Shingles, All Types 
 (I-C) and Smooth Roll Roofing ( I~D) . 
 
 hj Bureau of the Census monthly release Prepared Roofing , 1933 to date, 
 prior to 1933 data taken from Survey of Current Business. 
 
 DIVISION' OP REVIET7, URA - Industry Statistics Unit, ELG. 1-15-36. 
 
 TABLE 2 (cont.) 
 
 ASPHALT SHI1TG1E AND HOOFING IHDUSTRY 
 SHIPMENTS : PREPARED ROOFING 
 
 I-C Shipments of Shingles, All Types (Thousands of Squares) a/ 
 
 1326 1927 1928 1929 1950 1331 1932 1933 1934 1935 
 
 Jan 
 
 428 
 
 oil 
 
 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 
 
 695 
 
 502 
 
 698 
 
 637 
 
 331 
 
 Jun 
 
 1 , 313 
 
 1,316 
 
 807 
 
 643 ' 
 
 431 
 
 458 
 
 406 
 
 739 
 
 Jul 
 
 870 
 
 1,004 
 
 736 
 
 612' 
 
 451 
 
 641 
 
 448 
 
 635 
 
 Aug 
 
 9o0 
 
 997 
 
 868 
 
 602 
 
 703 
 
 430 
 
 850 
 
 315 
 
 Se-Dt 
 
 952 
 
 954 
 
 1,136 
 
 689 
 
 878 
 
 451 
 
 455 
 
 756 
 
 Oct 
 
 1,025 
 
 970 
 
 763 
 
 600 ' 
 
 656 
 
 491 
 
 659 
 
 869 
 
 Nov 
 
 732 
 
 633 
 
 370 
 
 393 
 
 192 
 
 352 
 
 483 
 
 
 Dec 
 
 500 
 
 576 
 
 302 
 
 214 
 
 107 
 
 164 
 
 315 
 
 
 Averse 905 938 
 
 697 517 439 434 480 
 
 L-D Shipments of Smooth Roll 
 
 Roofing (Thousands of Squares) p_/ 
 
 9826 
 
 
 (Continued) 
 

 
 
 ~ 570 
 rABLE' 2 
 
 (cont. ) 
 
 
 
 
 
 1926 1927 1$28 
 
 1929 
 
 1930 
 
 
 1931 
 
 1932 
 
 1933 
 
 1934 
 
 1935 
 
 
 •J -.a 
 
 1 , 199 
 
 1,32b 
 
 1 , 224 
 
 
 773 
 
 1,092 
 
 557 
 
 725 
 
 563 
 
 ?P0 
 
 341 
 
 1 , 799 
 
 709 
 
 
 714 
 
 1,068 
 
 1,038 
 
 641 
 
 585 
 
 Hex 
 
 1,797 
 
 2,084 
 
 1,062 
 
 
 702 
 
 1,081 
 
 1,712 
 
 1,367 
 
 1,012 
 
 Aor 
 
 1,506 
 
 2,063 
 
 1,151 
 
 
 967 
 
 1,140 
 
 1,304 
 
 1,638 
 
 1 , 460 
 
 May 
 
 1,403 
 
 1,916 
 
 1,088 
 
 
 955 
 
 733 
 
 1,492 
 
 1,120 
 
 1,304 
 
 Jun 
 
 1,726 
 
 1,452 
 
 924 
 
 
 043 
 
 720 
 
 1,105 
 
 583 
 
 980 
 
 Jul 
 Aug 
 
 1,195 
 1,257 
 
 1,338 
 1,077 
 
 803 
 
 1,021 
 
 1 
 
 873 
 ,067 
 
 867 
 1,449 
 
 1,450 
 880 
 
 889 
 2,123 
 
 1,100 
 
 1,286 
 
 Sept 
 
 1,394 
 
 1,231 
 
 1,438 
 
 1 
 
 ,198 
 
 1,461 
 
 1,198 
 
 941 
 
 1,501 
 
 Oct 
 
 1 , 604 
 
 1,502 
 
 1,575 
 
 1 
 
 ,128 
 
 1,287 
 
 1,610 
 
 1,158 
 
 1,461 
 
 Nov 
 
 1,209 
 
 1,161 
 
 742 
 
 
 998 
 
 739 
 
 932 
 
 996 
 
 
 Dec 
 
 842 
 
 950 
 
 583 
 
 
 571 
 
 361 
 
 550 
 
 713 
 
 
 Average 
 
 1 , 339 
 
 1,492 
 
 1,030 
 
 
 900 
 
 1,000 
 
 1,153 
 
 1,075 
 
 
 
 2J 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 Prei oared Roofing . 1933 to date, 
 "orior to 1935 data taken from £' Current Business. 
 
 DIVISI01I OF R£VI£:;, ERA - Industry £ \t: sties Unit, £LC. 1-15-36, 
 
 TABLE 3 
 
 ASPHALT SBX7GLE AND ROOFIIIG INDUSTRY 
 
 ??IC£S : PR] - D roofing 
 
 I I- A Index of flholes le Prices of Prepared Roofing (1929-100) a/ 
 
 1926 1927 1928.1329 1330 193I 1932 1933 1934 1935 
 
 Jan 
 
 150.8 
 
 132.0 113.9 91.5 
 
 99.0 
 
 106.0 
 
 100.5 
 
 100.0 
 
 109.2 
 
 113.5 
 
 Feb 
 
 130.3 
 
 132.0 111.6 90.7 
 
 99.0 
 
 106.2 
 
 97.6 
 
 86.9 
 
 102.8 
 
 112.8 
 
 Mar 
 
 131.8 
 
 130.3 99.3 90.9 
 
 99.0 
 
 105.2 
 
 98.3 
 
 87.3 
 
 37.0 
 
 112.4 
 
 Apr 
 
 133.2 
 
 128.1 100.4 97.6 
 
 99.0 
 
 105.2 
 
 93.1 
 
 88.5 
 
 38.0 
 
 112.5 
 
 May 
 
 134.7 
 
 128.7 100.6 102.5 
 
 93.0 
 
 106.2 
 
 37.0 
 
 35.3 
 
 103.1 
 
 114. 3 
 
 Jun 
 
 135.6 
 
 128.7 120.2 102.8 
 
 93.3 
 
 106.2 
 
 90.6 
 
 100. 7 
 
 105.4 
 
 114.9 
 
 Jul 
 
 135.9 
 
 128.5 122.2 103.8 
 
 99.3 
 
 106.2 
 
 83.8 
 
 101.9 
 
 107.6 
 
 114.. 5 
 
 Aug 
 
 135.9 
 
 129.1 122.2 104.1 
 
 100.1 
 
 106.2 
 
 86.4 
 
 104.3 
 
 111.6 
 
 111.3 
 
 Sept 
 
 135.9 
 
 129.3 122.7 103.9 
 
 104.5 
 
 106.2 
 
 95.6 
 
 104.3 
 
 113.2 
 
 111.1 
 
 Oct 
 
 135.9 
 
 129.3 123.5 103.9 
 
 103.8 
 
 106.2 
 
 102.6 
 
 107.0 
 
 113.2 
 
 
 Nov 
 
 135.6 
 
 112.2 123.5 103.9 
 
 103.8 
 
 106.2 
 
 107.6 
 
 108.3 
 
 112.8 
 
 
 Dec 
 
 135.4 
 
 113.1 100.6 103.9 
 
 103.8 
 
 106.2 
 
 107.6 
 
 108.9 
 
 113.3 
 
 
 Avera 
 
 ge 
 
 
 
 
 
 
 
 
 
 134.2 
 
 126.8 113.4 100.0 
 
 102. 3 
 
 106.2 
 
 97.2 
 
 99.6 
 
 107.3 
 
 
 9826 
 
 
 (Cont.)= 
 
- 571 - 
 TABLE 3. (Cont.) 
 
 II— 3 Items and Weighting Factors p_/ 
 
 Items Tfeirhts 
 
 Slate Surfaces Roofing 11,599 
 
 Medium Prepared Roofing 14,627 
 
 Strip Shingles 4,966 
 
 Individual Shingles 4,463 
 
 a/ ITRA composite of Bureau of Laoor Statistics series for "Roofing", 
 slate surfaced, (III-A), medium prepared, (III-3), 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 
 v/eighting factors, used in calculating Index Numbers, 1890-1954," 
 Larch 1935. 
 
 DIVISIGH OP REVIEW, HRA - Industry Statistics Unit, £LG, 1-15-36. 
 
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 APPEI33IX 3 
 
 PRICE FILIHG I iT THE STEEL CASTIITG IHDUSTR Y 
 
 CHAPTER I 
 
 BACKGROUND 0? THE I INDUSTRY 
 
 i. geohal character op the industry 
 
 A. Definition and Extent 
 
 The Steel Casting Industry is a "branch of the Foundry Industry, 
 Its products are produced "by pouring molten steel into a form or cast 
 and allowing it to harden. The process involved is described in more 
 detail in Subsection 9, page B-ll of this chapter belou. 
 
 1. General Statistics 
 
 Salient statistics of the Industry are revealed in the 
 following table: (*) 
 
 Table 1 
 FJIZBER OP FIRMS, EMPLOYEES AHD CAPITAL INVESTED, 1929-1934 
 
 Year 
 
 1929 
 1930 
 1931 
 1932 
 1933 
 1934 
 
 ITo. of 
 Firms 
 
 184 
 182 
 177 
 172 
 168 
 174 
 
 Ho. of 
 Erroloyees 
 
 50,052 
 53,329 
 47,707 
 39,108 
 20,038 
 23,587 
 
 Ca-pital Invested 
 
 $272,000 
 270,420 
 265,000 
 253,429 
 220,737 
 240,000 
 
 Source: Letters e-changed 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 uer cent of the 1929 level. Em- 
 ployment dropped 60 nor cent during the same period. 
 
 2. Size and Distribution of Plants 
 
 This industry, at the time of application for the Code, 
 August 17, 1933, 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"-. 
 
 Q«9£ 
 
- 675 - 
 
 Table 
 
 STEEL FOUIDRIES I'-' TI 
 
 ARIiAliGED III GEOUPS' ACCORDING TO SIZE 
 
 II 
 1 ULTT3D STATES, 
 
 Size of Foundry 
 Hated Capacity 
 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 
 
 Number Total Average Per Cent Per Cent 
 of Capacity Capacity of Total of Total 
 Foundries of Group of Group lumber Capacity 
 
 54 
 
 2,421 
 
 
 45 
 
 30 
 
 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 
 
 613 
 
 100 
 
 100 
 
 Source: Letter to the national Industrial Recovery Board, dated January 
 2, 1935 from Steel Founders' Society of America. 
 
 Although steel foundries are to be found in nearly every state in the 
 Union, the points of greatest concentration are in the following districts: 
 Pittsburgh, Milwaukee, 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 (explanation of Divisions below). Presunably 
 four of the 193 foundries shown in the tabulation were not active. The 
 tabulation follows: 
 
 
 
 
 
 
 TABLE III 
 
 
 
 
 
 1TU1.IBER 
 
 OF 
 
 FOUNDRIES 
 
 AIT) TOTAL 1,101 
 
 TTHLY CAPACITIES, 
 
 Pe: 
 
 
 
 
 ACC0EDI1TG TO GEOGRAPHICAL DIVISIONS. 1934 
 
 
 
 
 Number of 
 
 Per Cent 
 
 Total Monthly 
 
 r Cent 
 
 Divisi 
 
 .on 
 
 
 Foundries 
 31 
 
 of Total 
 16.1 
 
 Capacity 
 
 of 
 
 Total 
 
 I 
 
 8,689 Tons 
 
 7.9 
 
 II 
 
 
 
 
 10 
 
 5.2 
 
 11,085 M 
 
 
 10.1 
 
 III 
 
 
 
 
 13 
 
 6.7 
 
 933 " 
 
 
 .8 
 
 IV 
 
 
 
 
 25 
 
 13.0 
 
 15,549 » 
 
 
 14.1 
 
 V 
 
 
 
 
 23 
 
 11.9 
 
 21,895 " 
 
 
 19.8 
 
 71 
 
 
 
 
 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. 
 
 Total 
 
 
 193 
 
 100.0 
 
 110,338 Tons 
 
 
 LOO.O 
 
 Source: Letter from Steel Founders' Society of America to all foundries, 
 dated August 17, 1934. (In 1IRA files). 
 
 9826 
 
- O rb — 
 
 Location of Divisions: 
 
 Geographical Division I con-irises Federal Reserve District ITo. 1 
 and ITo. 3 (except that part of Pennsylvania vest of a line drawn 
 north and south through Altoona, Pennsylvania) and ITo. 5 (except 
 
 TJest Virginia and ITorth and South Carolina) and New York State 
 east of a line drawn north and south through the most westerly 
 point of Schenectady, ITew York. 
 
 Geographical Division II comprises Federal Reserve District No. 2 
 (except that -oortion included in Division To. I) and Erie, Penn- 
 sylvania. 
 
 Geographical Division III comprises Federal Reserve District ITo. 6 
 and ho. 11 (except 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 
 Alahe-ma (except Jefferson County). 
 
 Geographical Division IV comrises Federal Reserve Dostrict ho. 4 
 (exce-ot Erie, Pennsylvania, eastern Kentucky and Ohio) and West 
 Virginia, and that uart of Pennsylvania not included in Division 
 I). 
 
 Ge ogr ar>hi cal Division ITo. V comprises Federal Reserve District No. 
 4 (except Pennsylvania). 
 
 Geographical Division VI comrises Federal Reserve Districts Nos. 
 7 and 9. 
 
 Geographical Division VII comprises Federal Reserve District No. 8 
 (except Tennessee, Mississippi and Arkansas) and No. 10. 
 
 Geographical Division VIII comprises Federal Reserve District No. 
 12 and that part of FederalReserve District ho. 11, not included 
 
 in Division III . 
 
 Compariies operating t ,_T o or more foundries and the divisions in 
 which they are located are tabulated on the following -oage. 
 
 982( 
 
- 577 - 
 TABL2 XV 
 
 coiipa iti es oi-tdat ivc- rx ok i:cr~: ;~o t .ndries ait 
 
 TIJE DIVISIONS II:' WKIC;: THEY ARE LOCATED 
 
 (including Active Foundries Only) 
 
 Number of Fotmdries — Each Division 
 
 Co imam 
 
 II III IV 
 
 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 Malleable 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 
 2 
 
 2 
 1 
 
 2 
 
 A. 
 
 2 
 
 2 
 2 
 5 
 
 3 
 2 
 
 3 
 2 
 2 
 
 2 
 
 2 
 
 Total 
 
 
 
 33 
 
 Source: Compiled by Statistics Section NBA from Daily Price Reports 
 of Steel Founders' Society of America 
 
 Summarizing the above table, nine companies operated tr/o foundries 
 each, tro companies operated three m foundries, one company operated four 
 and one company operated five foundries. 
 
 The largest steel casting companies, based on monthly rated capa- 
 city, are shoun in the section following. 
 
 3. Description of Important Companies. 
 
 Table V shows the more important companies 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 
 
 PRIiTCIPAL COIIPAIrlSS BY SIZ5 AID uOFTHLY CAPACITY. 1934 
 
 Monthly Per Cent 
 
 Foundry Capacity , of Total 
 
 ITo. Name of Company Tons Capacity 
 
 402) 
 
 503) 
 
 602) American Steel Foundries Co. 18,717 17.0 
 
 702) 
 
 703) 
 
 626) National Malleable and Steel 
 
 627) Castings Company 
 
 506) Buckeye Steel Castings Convcany 
 
 204) The Bould Coupler Company 
 
 712) Scull in Steel Company 
 
 605) Bettendorf Company 
 
 ) Continental Soil and Steel 
 
 ) Foundry Company 
 
 407) Duquesne Steel Foundry Company 3,678 3.3 
 
 424) Wheeling Hold and Foundry 
 
 Company 
 
 619) Hubbard Steel Foundry Company 
 
 113) General Steel Castings Company 2,843 2.6 
 706) 
 
 517) Ohio Steel Foundry Company 2,468 2.2 
 518) 
 
 207) Pratt and Letchuorth. . 2,128 1.9 
 
 614) The Falk Corporation 1,911 1.7 
 
 416) Pittsburgh Steel Foundry Corp. 1,800 1.6 
 417) 
 
 805) Columbia 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 - 
 
 " TABLE V 
 
 FHirciPAL companies by size a_d ecetixy capacity, 1934 
 
 (Continued) 
 
 Foundry 
 
 No. ilane of C omany 
 
 105 Birdshoro Stoel Foundry and 
 Machinery Company 
 
 519 Otis Steel Company 
 
 412 LIcConway and Torley Corpora- 
 tion 
 
 616 Harrison Steel Castings Co. 
 
 633) 
 
 Sivyer Steel Castings Co. 
 
 1,188 
 
 634) 
 
 • 
 
 
 505 
 
 Bonney-Fl oyd Company 
 
 3 ,140 
 
 420 
 
 Sterling Steel Foundry 
 
 
 
 Gonroany 
 
 1,030 
 
 203 
 
 Erie Forge Company 
 
 1,028 
 
 422 
 
 Union Steel Castings Company 
 
 960 
 
 515 
 
 Machined Steel Casting 
 
 
 
 Conn any 
 
 953 
 
 Monthly 
 
 Per Cent 
 
 C; rcity, 
 
 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 and Foundry 
 
 Co. 900 0.8 
 
 611 Detroit Steel Castings 
 
 Company 875 0.8 
 
 132 penn Steal Castings Corporation 679 0.6 
 
 418 Pressed Steel Car Conroany 654 0.6 
 
 All other companies 30,309 27.7 
 
 Source: Steel Founders' Society of America, letter dated August 
 17, 1934. 
 
 9826 
 
- 580 - 
 4. Financial Conditions of Industry 
 
 Ta"ble.VI below shows a sumraary of combined earnings for the years 
 1924 to 1928, for a selected group of representative foundries. The 
 number of companies reporting each year is noted. Earnings are shown 
 "both as percentage of assets and as percentage of sales. 
 
 TABLE VI 
 
 EARNlK&S AI.D CAPITAL TURNOVER FOR SELECT 
 
 GROUP 0I-' C01PAITIES, 1924-1928 
 
 1924 1925 
 
 1926 192' 
 
 Earnings 
 
 Per Cent of Assets 3.80 4.50 6.70 
 
 Earnings 
 
 Per Cent of Sales 4.80 5.30 7.30 
 
 Capital Turnover 
 
 .79 
 
 .92 
 
 3.40 
 
 4.30 
 .80 
 
 1928 
 
 5.70 
 
 7.20 
 .79 
 
 Number of Corroanies 
 Re-oorting 38 
 
 Ave rage 
 for the 
 5 Years 
 
 4.80 
 
 5.80 
 .83 
 
 40 
 
 39 40 41 42 
 
 Source: The Steel Castings Industry, by G. P. Rogers, 1930. 
 
 The figures for capital turnover given above were commuted by 
 dividing earnings as a percentage of assets by earnings as a rtercentage 
 of sales. 
 
 The best earnings of the grout for this period, it trill 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 
 V7ere approximately sixty failures, forty-eight from 1927 to 1931 and 
 twelve from 1932 to date. (*). 
 
 6. Relationship of Earnings, Prices and Volume. 
 
 A report -oreoared by the Consumers' Advisory Board contains the 
 following statement: 
 
 "The selling price; (of steel castings) toda.y (Sept., 1933) is 
 about $134 per net ton, on the basis of which the industry is losing 
 about $48.50 per ton, compared with a selling -trice of $164 a ton in 
 1929, when net earnings were about $25.60 per ton. In 1929 the net 
 
 (*) Interview with R. L. Collier, Steel Founders' Society-lTov. , 1935. 
 9826 
 
- 581 - 
 
 tonnage was -1, 671 s 952 tons, the t margin of profit of about $1,0,000,000, 
 In 1932, present comparable figures being somewhat higher, produc- 
 tion was only 191,686 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 d egree of 
 flexibility as does that. of its raw materials. 
 
 8. Classes of "roducts. 
 
 Approximately one-half of the steel castings produced are so-called 
 "miscellaneous" castings ana 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, quite 
 frequently produced from patterns or other equipment belonging to the 
 producer, and sold in semi-f in i shed or finished form. The "specialties" 
 are chiefly railway equipment products such as side arms, draft arms, 
 bolsters, couplers, cast steel car wheels, etc. arc automobile products. 
 The patents on "specialties" are controlled by a "pool" of the largest 
 producers of this class of products. 
 
 Of trie total rated monthly capacity of 109,733 net tons shown in 
 Table II above, 57,9.68 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 the manufacture 
 of one or two major classes 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 ioundry Company are the 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' Advisory Board Report by L. B. Lovell-Sept. 7, 1933. 
 
 (**) Source: Letter to the National Industry Recovery Board, 
 
 dated January 6, 193c from..,Steel Founders' Society 
 of America. 
 
 9626 
 
- 582 - 
 
 secret processes. The craft is mastered only 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 nroduct, dexterity and a positive knowledge 
 of proper methods learned irom experience are essential in the pro- 
 duction of these castings. 
 
 Four principal melting processes are used — open hearth (basic 
 and acid), electric, converter anc crucible. The last two are de- 
 creasing in importance while the electric process is growing in 
 favor and the open heartn process is maintaining its place. Prac- 
 tically all "specialties" castings are produced from steel made in 
 electric furnaces. These cacting's are usually small ano cost more 
 to produce per pounc that the "miscellaneous" castings, which are 
 larger and made of open nearth steel. Most up to date foundries 
 use heat treating processes in armealirg furnaces to develop desired 
 properties i r tne castings. The production of alloy steel castings 
 has recently become of increasing importance. In manufacturing alloy 
 steel, various 'chemical elements arc addec to t.-ie 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 typical casting is presented belo- 
 
 A foundry receives an order ior a casting, together with the . 
 design anc' specifications, These are examined and, if satisfactory, 
 blueprints are prepared, and sen* to the pattern shop, where wooden 
 pattern of the proposed casting is mace. The pattern is then sent to 
 tne mold sr.op. For the ordinary uniform patterns, halves of the 
 patterns are each laid in steel flasks or uoxes. These flasks are 
 considerably larger than the pattern. Specially treated sand is then 
 packed in the flask at the sides and under the wooden pattern . 7/hen 
 the sand completely fills all tne volume of the flask not token up 
 by 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 tne rough casting. 
 
 10. Markets for Industry Frodu'cts 
 
 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 feome steel rolls 
 
 3. uckets, snovels, dredges 
 
 4. Tractors, trailers, rir 4 industrial cars 
 
 5. Cranes, hoists and' derricks 
 
 6. Refinery and oil well equipment 
 
 7. 'Valves and fittings 
 6. Automotive castings 
 
 Electrical machinery 
 Road -making machinery 
 
 10. 
 
 9826 
 
- 583 - 
 
 11. Presses (hydravilic and power) 
 
 12. Machine tools 
 
 13. Agricultural Machinery 
 
 14. Engines, puiops, and compressors 
 
 Source: Special Survey of Distribution of Steel Castings 
 Sales for the year 1929 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 oartial 
 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 Pounders' Society jf America 
 
 1. Membership 
 
 The only organization of any iixportrnce within the industry is 
 the Steel Founders' Society of America, extablished in 1912. The 
 membership of association includes all of the large and manv 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 appro ximately 30-40 
 percent of the output of the industry. (*)' 
 
 The Society has, for ;anv years, been actively engaged in the 
 collection and distrioution of statistical material covering a wide 
 range of subjects. 
 
 When the F.I.R.A. "as 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 of the association comprised about 
 65 percent of the total number of steel foundries. The sales of 
 Society members for the year 1933 amounted to 78 percent of the 
 total for the industry. (**) According to a letter from the Steel 
 
 (*) Federal Trade Commission-Open Price Trar e Association, 1929, p. 387 
 
 (**) Research and Planning Division Report — Steel Castings Industry 
 August, 1933, 
 
 9826 
 

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-535- 
 
 Founders.' Societ^, da. ted Aligulit 17, 1934, membership on that date re- 
 presented 85 per cent of the industry in number and 95 nor cent in 
 capacity. 
 
 2. Organization 
 
 The following is a description of the organization of the Societ" in 
 1930. (*) It is "believed that the organization todav is the sane, with 
 the encention that there are no 1 ? eight geographical divisions whereas 
 there -."ere only five in 1530. (See Chart III ) 
 
 "The general ne'foershin is vested with authority, through its 
 voting power, to regulate broadly all general policies and projects 
 undertaken by 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 natters facing the organization. 
 
 "The Board of Directors are chosen by the members to represent 
 then. _ Each geographical Division of the Society is equally re- 
 presented on the Board, thus making that body thoroughly represen- 
 tative. To then 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.P.S.A. is chairman of the Board of 
 Directors, and presides at all Board meetings as -'ell as at con- 
 vention meetings. 
 
 "Hanking next to the President are eight Vice-Presidents, 
 each representing a, geographical division of the Societ"'", 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 Societ"/ to 
 deal with local problems as T rell s,s to maintain equitable represen- 
 tation of the membership on the Board. 
 
 "Under the Board of Directors and responsible to then is the 
 Managing Director, into T iiose hands the active vrork of the Society 
 is entrusted. His duties comprise the general, conduct and ad-minis- 
 tration of the affairs of the S.B»S.A. , management of its office 
 and operating staff, handling of finances, etc. 
 
 "All working committees are appointed and approved yearly 
 
 by the Board of Directors, and mot): rath the Ilanaging Director, 
 who is a member ex-officio of all working committees. Deports 
 of committees nay be made in any of four different ''Jays, depending 
 upon the most practical disposition of the problem in hand;- 
 
 Birst: Directly to the Board of Directors, 
 
 Second: Directly to the Membership, 
 
 t> 
 
 The Steel Castings Industry, G-. P. Eogers, 1930. 
 
 9326 
 
- 587 - 
 
 Third: To the Managing Director, who in turn includes 
 
 the report with his own reco imendations delivered 
 to the membership or to the Board, or 
 
 Fourth: To the Managing Director 1'or his specific 
 guidance in haidling a particular proolem. 
 
 "If a situation or matter arose not classified under the 
 specific subjects assigned to each working committee, or if 
 in the judgment of the Boara of Directors the matter in 
 Question could best be hant led by a special committee, provision 
 is made, and the ^oard empowered to appoint such special committee. 
 
 11 It is planned that the 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 by 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 yearly) 
 
 Cost Committee: 
 
 Matters pertaining to Uniform Cost System, Comparative 
 Cost Studies and Reports, and selling of sound cost 
 methods to the industry. 
 
 Finance Committee:. 
 
 Examination of Society's books, and matters pertaining 
 te income, expends, budgets and audit. 
 
 Membership Committee: 
 
 Direction of membership building, passing on eligibility 
 and proper classification of applicants and approval 
 f 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 and promotion of 
 friendly relations which cannot be successfuly h?ndled 
 by the Managing Director. 
 
 9826 
 
- D88 ~ 
 
 Co-Operation and Legislation Coiamittee: 
 
 Contacts with government departments, tariff, proposed 
 legislation, contacts with other trade organizations 
 and associated industry contacts. 
 
 Industrial Research Committee: 
 
 Matters relating to advancement of manufacturing practice; 
 trace customs, standardization, simplification, eliminatio 
 of wastes, apprentice training, all kinds of insurance, 
 labor and employment, traffic problems and purchasing 
 information, etc. 
 
 Technical Research Committee: 
 
 Development of ne'" uses : or cist steels anc standard 
 specifications, Conduct of tests end investigations, 
 Chemical anc physical researcn 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 incustry surveys and production 
 of steel foundry directory. 
 
 Entertainment Coramittei : 
 
 fetters nertei] r to the social phases of conventions 
 and lectin -s. Speakers, programs, recreation, goli, 
 accommodations, banquets, entertainment of guests, etc. 
 The promotion >i friendly acquaintance among aemoers. 
 
 Merchandising Co m -It tee: 
 
 "roblems regarding advertising, publicity better selling 
 methods, market development, Society exhibitions and pro- 
 duction 01 Soci- t" T merchsneising puolicatior s, etc. 
 
 Administration - General Office: : 
 
 Handles administration and operation of al 1 Society 
 work pr.c projects: carries out all plans ano under- 
 takings, after ppr^rov; 1 by the Bo rd of Directors; 
 does all detail work incident to meetings and. con- 
 ventions; compiles an< distriuutes reports; publishes 
 Society 3ulletinj special bulletin letters of in- 
 formation for members; releases publicity; conaucts 
 .material exchange, tr/ific den; rt;ient and emplovment 
 bureau, assists in the 'vork oi all committees and 
 deals with all special projects. 
 
 
 9826 
 
- 589 - 
 
 "The entire framework of organization constitutes a simple 
 effective structure adapted to the successful nrosecution of 
 the recommended Program for the Society." (*) 
 
 3. Pricing Practices Prior to the Code, 
 
 a. Introduction. 
 
 The ability of the Steel Founders' Society to introduce- an elaborate 
 system of price filing differentials ar& schedules, within sc short e 
 time after the approval of the Code, reflect?: its. previous experience 
 in this field. The Federal Trace Commission in its publication (**) 
 "Ooen Price Trade Associations" describes some of the experiences with 
 pricing practices attempted by the Society. 
 
 b. Early Forms cf Price Listings and Practices, 191? '1927 
 
 As early fs 1912, a Bvstem war- inaugurated under which members sub- 
 mitted reports covering all phases of their business to the central 
 office of the Eddy Association — as it was known then. This association 
 distributed these reports to all members. The scheme was abandoned 
 shortly thereafter. 
 
 Several years later, " a plan was aconted whereby there would 
 be no exchange of pny price datr until after all business or any in- 
 ouiry, had been closed and tne contract let, " From reports released 
 by the Society, the members were kept informed of trie trend, of the 
 market and all closed transactions. This plaja v-^s not followed, to 
 any great extent and was considereo of little value. At p. 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 cuote and orders taken," Each bidder would 
 report to tne secretar;- that oics were bein^ submitted. If one of the 
 bidders was rw-rded the contract, he furnished the prices and terms to 
 the secretary '"lip in turn rele- sed this information to the other member 
 bidders. In July, 1924 these renorts were discontinued. They were 
 renewed on June 19, 1925, ant again discontinued on IiecemDer 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 March 23, 1923, The secretary was asked "to 
 have printed and sent out to tne members a book of 'notification levels' 
 based on the last published prices of the America.-' Steel Founders," 
 In May, 1923, members were urged to report regularly on. cuot- tions and 
 orders taken. Apparently this request war made to show that members were 
 not using; the "notification levels" as t e price to oe quoted. The term 
 "notification levels" appears to have represented a compilation oi the 
 
 — IMd> vp ^ e 47 _ 49# ' ' 
 
 (**). Federal .Trade Commission — Open-Price Trace Associations 
 February 11, 1929. pp, 3t7-3£b. 
 
 9826 
 
- 590 - 
 
 last published prices, similar to the Quarterly Reports released by the 
 Society during the Code period. However, even this tvpt of price reporting 
 was snort-lived. In April, 1924 "price level notification" was abandoned 
 because of the opin of most "operators that it was of little value. 
 
 It is apparent that all efforts torarc s securing the filing or 
 distribution of price dat,~, (advance prices or even b^ck. prices on 
 closed business), met with little or no resconse from foundry operators 
 and had to be discontinuec,. As late as April 20, 192-3, Hr. McKercher, 
 counsel for the Society, expressed the opinion that, under the Ipw, 
 "no collection or distribution of data on advance orices or quotations 
 on jobs are permitted. "(*) 
 
 Not until the early oart oi 1927 "?s any success achieved in this 
 direction. At a meeting held on January 21 of that year a member inquired 
 as to the legality of reporting to the Society, for investigation, the 
 names of foundries selling castings belo v ' the cost of production. Mr. 
 McKercher stated tnat, in his opinion, sucn investigation could be made 
 on closer business only. He vert or further tj S8V that "when members 
 learn of price situations that cm be fairl r r-n<. : :ene rally discussed, they 
 are privileged to bring uu the Doint at these meetings," He recommended 
 further, however, that "nothing be cone by ,_ 'ry of agreement to bring such 
 competition to a normal level." (**) 
 
 Members were becoming more anc' more interested in price and its 
 varying Phases. From this point on the discussion oi the price level, 
 the listing o± prices, rr.c other phases of the price problem found a more 
 receptive attitude on the part of the members than had prevailed oefore. 
 
 C . Trade Association Activity — 1929--1933 
 
 In 1929, the Steel Founcers 1 Society conducted a survey of pricing 
 methods in the Steel Oastin :s Industry. (***; 
 
 It was found that 42 percent of all concerns inducted in the survey 
 quoted principally on scnedule; 42 percent -rincipally on pound, or 
 weight basis, and '• 6 percent on a piece or unit basis. 
 
 In the" early d.avs 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 reauired, regardless oi pattern, size or character. 
 
 Subsecuer.tly, contracts were made "t one mice per pound for castings 
 above a certain weight with a ligher pound price below that weight. Still 
 later weight 'schedules were developed in crude form. Concerning these 
 schedules, Mr. G. ?. i\O r --ers, in the 1929 r.ur- or t', t is ouoted as follows: 
 "....In later years they have been refined and brougnt up-to-date, 
 so that in some few instances they mav be considered fairly practicable, 
 
 "However, flat prices or weight prices ps ~ r ell as tcnedules 
 
 are still used, prd t ut- re is no standard practice. All will, admit 
 
 (*) Ibid 
 (**) Ibid 
 (***)G. P. Sogers, The Steel Castings Industry— 1929-pp. 123-124. 
 
 9826 
 
- 591 - 
 
 some improvement in methods of quoting prices,, but w e pre p long way 
 form an intelligent and sound solution. 
 
 11 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 clean, with little hazard as 
 to loss, and producing large tonnage per foot of foundry space. 
 Another of the same weight may be long, with thin sections, taking 
 large flasks, requiring the setting of intricate cores, having 
 a percentage of loss pnc producing a small tonnage per foot of 
 foundry space. 
 
 "There cannot possibly be the smae cost of manufacture, and 
 there can be no justification as sound business oractice for selling 
 these castings at the same -orice or by a schedule of prices. 
 
 "The only reasons I can see for present methods of 
 pricing is Decause of custom, habit and lack of initiative 
 to develo-o ard adopt sounder methods. let all around us 
 vr e fine industry after industry, from the farmer to the 
 industrialist, Hiose methods of pricing their products have 
 entirely charged from those -prevailing onlv a j.e v ' years ago. 
 
 "This subject is .not ne m , out it is, in ay judgment, 
 iraoortart, .^nd it is -not receiving from the industry the 
 consideration or attention it deserves. 
 
 "It -is fblly to wait 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 found, iollo^ed bv t e pioneering 
 courage to nut it into operation. 
 
 "In my judgment it has been no small factor in materially 
 contributing more to the Trice and profit troubles of the aver- 
 age steel foundry than any other one thing, unless the producer 
 had little or no method of cost finding, 
 
 "No lighting equipment manufacturer -would think of 
 selling his metal fixtures, at tne s~ ie price o-"'sed on weight* 
 You do not buy furniture on the oasis of the nunu.r of feet 
 of lumber used in its construction. 
 
 "I am willing to go on rt cord against the soundness of 
 the present method oi quoting prices on steel castings, and 
 to predict that < ith thorough study this condition can be im- 
 proved, and once new methods art oj'served will be ;aore satis- . 
 factory to the foundry interests and the industries they serve, 
 than present-day oractice. In addition, this will contribute 
 much toward the elimination of factors that are row most d is- 
 turbing. 
 
 9826 
 
-•592 -• 
 
 "The production of cestings is an art, not a standardized 
 manufacturing nroces=, and with the growing tendency t)Wd 
 alloy steel, tjIus rapid strides in production methods and 
 improved products, as veil as new uses, it is going to become an 
 industry based more ard more on craftmanship and technical 
 knowledge. Consequently nor is a most opportune time for 
 effective consideration of this proolem. " (*) 
 
 A "check" study of the Irdustrv's original Pricing Survey 
 w^s conducted by a private firm of engineers during 1933. The fol- 
 lowing quotation is an extract from this check report: 
 
 "The Engineer requested copies of all 
 schedules in effect in 1926, these 
 scnedule usually being for individual 
 customers although in many cates several 
 customers operated on copies of the same 
 schedules. ..." 
 
 "In a few casts tue companies were not selling 
 on schedules in 1926, therefore general 
 data were obtained regarding the various 
 classes oi castings which tney were making. 
 
 n 
 
 "During tine examination oi the 1926 selling 
 prices. . . , t t Engineers found that in many 
 case^ trie schedules, "'ere tne same as those 
 which were in effect in ly25, 1924 and in 
 some instprces, even in 1923...." (**) 
 
 Apparently, during the neriod preceding approval of the 
 code, a more of les< uniform nominal price level v-as maintained. Price 
 competition took the form of indirect concessions through cnanges in 
 terms and conditions of sale rather tarn by changes in the existing 
 
 schedules. 
 
 The schedules in use rrior to tne Code did not, in general 
 provide for ouantitv differentials. Quoting further from tne Engineer's 
 report: (***) 
 
 "In some cases tne 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 the selling price per 
 pound on the basis of the number of cast- 
 ings per order was not uniform. ..." 
 
 (*) G. F. Rogers - The Steel Castings Industry - 1929 op. 123-124 
 (**) Ford, Br con and Davis Co. - Engineers-Report, Selling Price Sched- 
 '■ ules for Miscellaneous Steel Castings-Dec. 29, 1933 - p. 11 
 
 (***)lbid, p. 16 
 
 9826 
 
- 593 - 
 
 Prior to the Code, although small companies may, to a limited 
 degree, have followed the orice schedules 01 their larger co ipetitors, 
 it is probable that they frequently offered substantial discounts from 
 list prices as inducements to purchase. The Code Authority descrioed 
 pre-code prices as the 
 
 "....result of 'sweated' laoor conditions, 
 chiseling and- cut- throat co.roetiti n; tnat 
 when the Industry wps operating at onlv 10 
 percent of capacity, ^s it did during the 
 great part of 1952 and 1953, the foundries 
 were forced to r,ive their castings a^ay, if 
 necessary, simply to cover as much of their 
 overhead a s possible. , . . 
 
 "For example, some foundries that specialized 
 in medium weight and very heavy castings used 
 to attach a nuisance value to small orders 
 for verv light castings. 
 
 "Often they would accept a blanket order con- 
 sisting almost entiiel:^ oi utpvier 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 OiiSet such losses with 
 profits realized from the sale of the heavier cast- 
 ings. The lighter castings were tnus fre- 
 quently solo at considerably less then 
 cost as 'Less Leaders' to obtain orders on 
 the heavier castings." (*) 
 
 The following Quotation from the 1929 Industry Report indi- 
 cates that the Society was anticipating the -possibility of establish- 
 ing standard systems of pricing for the Industry's products: 
 
 "Consequently 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 Research 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 only 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 memoers of Indastry, November 20, 1934- 
 page s 5 and 6. 
 
 9826 
 
- 594 - 
 
 "Then, if schedules must prevail, let them be brsed 
 on quantity purchases, not on weight or tonnage. "(*) 
 
 However, little, if anythxng, vas done in tnis direction during 
 the depression. Lack of standardization of products would h»ve made 
 any action to stabilize prices an almost hop^lygs task. The classifica- 
 tion of ^roducts accomplished under the Code v/rs really the br>ck-bone of 
 the entire o-cen-price rslan in this Industry. 
 
 (*) G. P. P.ogers— The Steel Castings Industry — 1929, pp. 124-125, 
 
 9826 
 
- 595 - 
 
 CHAPTER II 
 
 FORMULA TION PIT THE CODE PROVISIONS 
 
 I. PROPOSALS FOR PRICE FILING TJBDER THE CODE 
 
 A. Industry/ Program for Price Fi li ng as Submitted 
 
 The first draft of the Code of which there is record is dated 
 August 9, 1953, 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 
 supervisorjr 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 
 we're 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 stipulated 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 
 
 I filed -orice change. 
 (g) Sales below filed prices might be prohibited at the discretion of 
 the supervisory agency. (The agency exercised its power by prohibiting 
 sales below filed prices.) 
 
 9826 
 
- o96 - 
 
 When this original draft Code was submitted, no specific statements 
 were nade "by the proponents indicating the need of a price filing provi- 
 sion, the intended functions of such a plan, or the objectives to "be 
 achieved. 
 
 B . Opposition to the Prooo sefl Provisi ons. 
 
 The onl3 r industry 7 " 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, datod 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 industr 1 /-, e:n.d. 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, hut only applicable 
 for quantities ordered at one time and for specified delivery. 
 
 "As we understand the code, the proposed method would place 
 a decided penalty on simplicit - ,' 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 he more intricate in design and 
 much more costly to produce. 
 
 "l.Iany 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 mercy 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. 
 We 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 same weight in molding, core 
 labor, flask requirements, etc. " 1/ 
 
 1/ Letter to Administration from Thew Shovel Co., Lorain, Ohio — 
 August 29, 1933— Code Records Files. 
 
 9826 
 
- 597 -• 
 
 1>ae 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 lach of Administration comment regarding many points which would have 
 "been 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 Consumers' Advisory Board reported that it did not object strenously 
 to the open price provisions, although it "believed that the;' 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 ord.er to "make the open price 
 schedules truly open to buyers as well as to sellers." (**) 
 
 II. TIE PRICE-FILING PLAN AS APPROVED AND AMENDED. 
 
 A. Analysis of the Open-Pric e Pro vision as Ap proved. 
 
 The Code was finally approved on November 2, 1933. 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 NBA. Section 2 pro- 
 vided, that the price filing S3^stem 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' Advisor 1 ' - Board Report - September 9, 1933 - Code 
 Records Files 
 
 (***) See p. 595 supra . 
 
 (****) Code, Art. V, Sgfct ."+ 1 r*page -gQ4^-~» , .. 
 
 9826 
 
~ S98 - 
 
 "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 agencjr 
 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." (*) 
 
 17o such subdivisional agencies were ever set up. The Board of 
 Directors was the agency which actually administrated the price filing 
 provisions. The 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 Industr" - , 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 lay an elaborate system of classifications 
 and schedules. ■ • 
 
 The Code contains the following provision as to filing of price 
 changes: 
 
 "Bevised 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 might 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 
 
 9826 
 
 
« 599 a 
 
 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 Cods 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 he 
 sold at less than filed prices. 
 
 All of the rules and regulations published by the Code Authority- 
 rcere 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 followinT paragraphs are quoted: 
 
 (*) Determination Respecting Acts of Code Authorities and Their Agencies 
 Which are Subject to Disapproval by IT. R. A.— February 13, 1935. 
 
 9826 
 
-•6C0 - 
 
 "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 N.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 (s5o) 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. • ■ 
 
 9926 
 
- 002 - 
 
 prior to approval, this proposed amendment was further modified. • 
 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 be 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; provided»however, 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 out 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 practic* 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. 
 
 9826 
 
-603- 
 
 This proposal was modified in the letter of I.Iay 3, 1934 to read 
 as follows: ... 
 
 "See. 9, Invoice castings at prices not "based upon the 
 actual weights thereof; provided, however, that piece -orices 
 nay he quoted if, after April 1, 1934, a mernber of the In- 
 dustry has produced t\'.*enty-f ive castings or more fron approved 
 pattern ccuipnent applying thereto and the average weight of 
 such castings are used in computing the minimum piece prices by 
 multiplying the vendor's filed price per pound b;. r the average 
 weight 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 cleaned 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 imposed 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 Hay 3, 1934, contained a proposed amend- 
 ment to Section 5 of Article VII, (the Section prohibiting Sales below 
 Tiled prices) , by the insertion after the words "shall sell" of the words 
 "or offer for sale." 
 
 This change was designed to prevent e, member of the Industry from 
 making 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: 
 
 3ron the Legal Division Hay 14, 1934: 
 
 "The 'waiting period' for filed price lists should conform 
 with whatever may be adopted by the Administration as a new 
 policy on the subject." (**) 
 
 From the Division of Pe search and Planning, Hay 16, 1934: 
 
 " T Je feel that this provision should be amended to provide 
 that -11 price lists sheJLl.be open to the inspection of all in- 
 terested parties. Tie also suggest the deletion of the words 'at 
 least 1 in the twelfth line." 
 
 1/ Letter to IT. "..A. - from Steel Pounders' Society - May 8, 1934 — 
 Central ?Lecord Piles. 
 
 + 
 (*) Page 509 supra. 
 
 (**) Code Pecords Piles. 
 9326 
 
- 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 he 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 in their files indicating an 
 almost complete uniformity of prices at higher levels than before. 
 
 When these amendments were forwarded for approval the Review Officer 
 made the following comments: 
 
 "3. Provisions of Article VII authorize establishment of 
 subdivisional or grouo agencies within tne industry. Such agen- 
 cies are t;.en empowered tc declare operative open price systems 
 for their respective subdivisions, at their option. Power is 
 also given t:ie subdivisional a,- - er.cv to pronibit sales below 
 filed prices if the agency so decides. A 'waiting period' of 1^ 
 days is prescrioed es an interim between filing date or price 
 schedules and effective date tnereof. No provision is mnc'e for . • 
 publicity of price schedules for beneiit of buyers as well as 
 sellers. 
 
 "This section is aanifestlv objectionable on several 
 grounds including: 
 
 "(a) The vagueness and uncertainty oi iuture conditions '"hich 
 /surround the vesting with a subdivisional ar <: .ncy the right to 
 declare in operation an ooen price system at any time and to 
 institute a prohibition against sales below the price filed, 
 ms<es the provision undesirable from a general administrative 
 standpoint. Lven though no- other ejection appeared, however, 
 the right of a non-governmental p.nc non-impartial body to 
 declare in existence, the rrouibition 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 eifect riguts of property of some mem- 
 bers of industry, the prohibition is felt by members of Legal 
 Division to be improper until confirmed bv the ret of a gov- 
 ernmental and impartial body. 
 
 M (b) Tne 'waiting ptriod' provision is vitiative of policy 
 declared by Office emorrndum No. 226 (which, however, is not 
 required to be applied to approved codes). 
 
 "(c) Failure to make price lists available to ouyers as 
 i--ell as sellers violates conditions set forth in Policy Memoran- 
 dum of Octobt r 25, 1^33." 
 
 Despite these adverse comments, tne proposal " r ?s approved in unaltered 
 
 9825 
 
- 605 - 
 
 form on August 24, 1934. (*) 
 
 C. Functional Aspects oi Other Code Frovisions 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 i ollow: 
 
 " For all purposes of this Code, it shall be an unfair trade 
 practice for any member to do any of the following acts: 
 
 "Section fc . iFurnish pattern- equipment or alterations thereof 
 at less than the a-ctual cost oi 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 tnis 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 tine. 
 
 "Section 9, Absorb the cost of any insurance that may be 
 carried to protect customers' patterns against fir.e and/or the ele- 
 ments., 
 
 "Section 1 ). Accept responsibility, where there is no liabili- 
 ty, for consequential, 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 by outsid.e individuals or agent performed, at the 
 request of tne customer. 
 
 "Section 12. Quote or communicate to customers, directly 
 of .indirectly, a price before the effective date thereof per- 
 missible under ."rticle 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 
 tne last are of importance as affecting prioe filing. The :nore 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 0? OPERATION OF OPEN PRICE PLAN 
 
 The ^receding chapter has dealt with the adoption and later 
 modification by amendment of the price filing -clan, and certain re- 
 lated provisions . In the following pages the methods employed to put 
 the plan into practical operation will be discussed. 
 
 THE ADMINISTRATIVE ORGANIZATION 
 
 The open price pi. an for this Industry was administered by the 
 Board of Directors of the Steel Founders' Society of America, the 
 trade association wnicn sponsored tne code. This was pursuant to the 
 grant of power contained in Article V, Section 1, of the Code which 
 provided that "Trie 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. L.errill G. 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 Coo> Authority. This 
 Board originally consisted of the following members: 
 
 F. A. Lorens t Jr., Vice-President, General Manager American 
 Steel Foundries, Cnicago, 111. 
 
 Clarence Tolan, Jr., President, Dodge Steel Corporation, Phila- 
 delphia, Pa. 
 
 Keith Williams, Vice-President, Pratt-Letchworth Company, 
 Buffalo, N.Y. 
 
 J. W. Glover, President, Glover Machine Works, Marietta, Ga. 
 
 D. C. Bagwell , 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., 
 Cicero, 111. 
 
 Paul R. Laussler, Vice-President, Omana Steel works , Omaha, Neb. 
 
 -J; F. Arnoldy, Secretary, Warman Steel Casting Co., Huntington 
 Park, California. 
 
 9 826 
 
-607- 
 
 Each of these members was selected fron one of the geographical 
 divisions into ;?hich the industry r/r.s divided, in accordance rzith the 
 by-laws of the Society. 
 
 There r;a,s no delegation of power "by the Eoard of Directors to the 
 executive officers as far as can he deduced fron the records available. 
 The trade association, The Steel founders' Society of America, v/as, to all 
 intents and -ourposes, the Code Authority. 
 
 Inasmuch as the activities of this Code Authority r/ere financed by 
 the dues paid into the Society by its members, no information is avail- 
 able regarding the proportion of its budget v.hich was employed in opera- 
 tion of the -orice filing nlan. It nay be assumed th c at a considerable 
 proportion of the income of the Society was expended in furtherance of the 
 plan, in vieu of its elaborate and complicated nature and the importance 
 attached to it by the industry as a uhole. 
 
 ii iisciiaitics op opsn price operatioh 
 
 A. Classification of Products 
 
 The Steel Casting Industry is almost entirely, a special order in- 
 dustry. Every item, with a very fer. r 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 any degree of accuracy. Every casting is produced from a 
 pattern which may be the -oronerty of the customer or of the foundry. 
 There are, literally, hundreds of thousands of patterns in existence, 
 each differing from all the others to a greater or lesser degree. It is 
 obvious that such a lack of standardization in products necessitated a 
 price filing system differing radically in character from the tyoes en- 
 ployed b3" industries whose products are more uniform in character. 
 
 The filing of ;orices upoft individual patterns, 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 joerraitted to 
 file prices covering all castings embraxed in such classif ica-tions. 
 
 Such a classification of products was an enormous tn.sk. Its success 
 depended upon the activity of the Definition's and Classifications Com- 
 mittee of the Code Authority. This Committee, though at first not under 
 that name, functioned during the entire Code period. (*) It was composed 
 of a representative from each of the eight industry divisions. Prom time 
 to tine it met, to review classifications and schedules filed by members. 
 ITew classif ications required ap-oroval by the Committee in order to be- 
 come ef-Jective. 
 
 A tabulation compiled fron daily and quarterly price reports (**) 
 showing the increase in the number of classifications between December 5, 
 1933 and hay 23, 1935 is presented in Table VII, below, 
 
 (*) Commercial Resolution Ho. 22 adopted may 7, 1934. 
 
 (**) See Section E, Dissemination of Price Pilings, p. 621 below. 
 
 9826 
 
- 608 - 
 Table VII. 
 
 GROWTH OF NUMBER OF PRODUCT CLASSIFICATIONS DURING THE 
 
 CODS PERIOD 
 
 Date 
 
 Number 
 
 Quarterly Report 
 Number 
 
 1933 
 
 1935 
 
 Dec. 5 
 " 26 
 March 31 
 June 16 
 Sept. 20 
 Dec. 13 
 iviarch 27 
 May 23 
 
 532 
 774 
 1,117 
 1,1*9 
 1,130 
 1 ,190 
 1,241 
 1,221 
 
 a/ 
 
 1 
 
 11 
 
 111 
 
 IV 
 
 V 
 
 w 
 
 Source: Complied by Statistics S-ction, NFA from D«*ily Price 
 Reports of Steel Founders' Society of America, 
 a/ Daily Report 
 b/ Summary Report by Society 
 
 B. Quantity and Weight Differential s 
 
 Products classifications having been estnblisned, it was next con- 
 sidered necessary to standardize quantity and weight differentials. 
 The Society describes the steos 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 to 
 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 VIII 
 
 UNFINIS TD STEEL CASTINGS -, P?JCE P": IS. - NET 
 
 Quantity is determined "by the number of pieces from one pattern ordered 
 at one tine ■ 
 
 Nuraber of Pieces 
 
 10- 25- 50- 100 250 500 1,000 2500 
 
 "EIGHT Fill PUCE - l- 3 U-9 2 k U 9 ' 99 to to to to and 
 
 LjS ' 25-!-3 U99 999 2U99 over 
 
 1 to 5 los«(*) 
 Over 5 " 10 » 
 
 10 " 25 " 
 
 25 " 50 " 
 
 50 " 100 lbs. 
 
 100 » 250 " 
 
 250 " 500 " 
 
 500 « 1000 " 
 
 1000 " 2300 " 
 
 2500 " 5000 » 
 5000 h 10,000 lbs. 
 
 10,000 " 25,000 " 
 25,000 " 50,000 " 
 
 50,000 " 100,000 " 
 Over 100,000 lbs. 
 
 "This irc::ev:ork lends itself to adequate flexibility as far as prices 
 being filed is concerned since a foundry may specify HT.^.D. 1 — 'Uq QUANTITY 
 DIFFERENTIAL' if it desires to apply a unit price regardless of quantity but 
 
 (*) For castings under 1 lb., special piece prices nay be quoted. 
 9826 
 
- 610 ~ 
 
 varying as to weight vev casting. Similarly ,:T .Q..D. over 99 nieces' 
 means that quantity differentials apply out ?s far as 99 nieces 'out 
 the nrice for 50-99 "oieces "ould apply on 100 -oieces or more, 
 
 "The nature of this structure indicated the reason why steel 
 foundries did not apply so-called 'manufacturers discounts. ' The 
 manufacturer '-'ho ordered in larger Quantities secured his discount 
 or price differential by reason of the larger quantities taking cor- 
 respondingly lo'-'er "orices oer oound justified by lower costs attend- 
 ant unon auantity production, iV ne~eas the casual buyer of only a few 
 cartings Pays more per pound, Thus the matter of discounts to quan- 
 tity buyers is taken care of in tne r>rice structure itself." (*) 
 
 The engineers who examined nnd spot-checked the "Price Study" (**), 
 indicated tha.t the practice 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 obtp.in more comolete data on quantity differentials 
 than the engineers ,yho had included onlv a small sairrole 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 a.deouate, thoroughly 
 adaptable and satisfactory." 
 
 C. Suggested Schedules Based on "Nornal" Price Levels 
 
 The Society next took steios to furnish a guide to members as to 
 "fair and reasonable" lorices. Quoting from its own summary of its ef- 
 forts in this direction. 
 
 "The third najor oroblen in developing a wrice structure was to de- 
 termine as a. guide to the Industry, what could oe considered fair 
 and reasonable trices. This -ohase "'as covered by an extensive sur- 
 vey of nrice levels which required many months of work. The re- 
 sults of this survey were later verified oy an "outside engineering 
 organization of national renutrtion by an actual survey in the 
 field. They reported that the methods employed were sound and the 
 conclusions accurate. 
 
 "The noint of departure in determining "orices which might reasonably 
 be expected to attach tu the products of the Industry was a normal 
 level of trices . The year 1926, generally regarded as a normal 
 business year, was taken as a base to determine normal "orice levels, 
 in spite of the fact that statistics for that year showed anything 
 but a satisfactory condition in the Industry as regards profitable 
 o"oera.tion. " 
 
 (*) Letter from Code Authority to foundries -- "ovember 20, 1934 — 
 
 Code Records ?iles 
 (**) See Chapter one, Sec. II, 3b, above. 
 
 9826 
 
- 611 - 
 
 "It was concluded that prices prevailing in 1926 could oe converted 
 into prices that night reasonably be expected to prevail in the 
 last quarter of 1933 (when the survey was 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 hy substituting in the formula the 
 average hourly wage rate of foundry employees, -.the published market 
 Quotations on the principal materials entering into the production 
 of steel castings, etc. Equating this index at 100 for the yea.r 
 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 per 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 other 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 quantities. 
 
 "The prevailing 1926 prices for the 21 groups of classifications 
 were then expressed in terms of discounts from this master pat- 
 tern of values (not prices) arid 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 tho 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 
 
Copies of this report were submitted to all members of the 
 Industry about November 10, 1933. Each of the 21 price 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 -price schedule was 
 shown a list of product classifications which the Society considered 
 appropriate to it at the time. The schedules were computed on a 
 "delivered price" basis, thus having the effect of making uniform a 
 practice cf quoting delivered prices to "ooint of destination, whereas 
 previously f.o.b. foundry or ether 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 -oroposed. 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, en 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 specimen of the price 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 
 
 nges in Price Between Schedules for Various Weights and Quantities of Castings 
 
 (Price per Pound) 
 3 SDULE Weights and Number of Cas t ings 
 
 1 to 5 lbs. : 
 
 10 to 25 lbs. : 
 
 50 to 100 lbs. 
 
 ■ 250 ta 500 lbs. 
 
 1 to 3 50-99 : 
 
 1 to 3 50-99 : 
 
 1 to 3 50-99 
 
 1 to 3 50-99 
 
 pes. dcs. : 
 
 pes. ties. : 
 
 pes. PCS. 
 
 pes. pes. 
 
 { 
 
 $0,557 
 
 $0,404 
 
 $0,348 
 
 $0,253 
 
 $0,232 
 
 $0,180 : 
 
 SO. 178 
 
 $0,152 
 
 3 
 
 .469 
 
 .340 
 
 .294 
 
 .213 
 
 .196 
 
 .152 : 
 
 .150 
 
 .128 
 
 J 
 
 .436 
 
 .316 
 
 .273 
 
 .198 
 
 .182 
 
 .141 : 
 
 .140 
 
 .119 
 
 ) 
 
 .408 
 
 .296 
 
 .256 
 
 .186 
 
 .171 
 
 .132 : 
 
 .131 
 
 .112 
 
 I 
 
 .38;. 
 
 .277 
 
 .240 
 
 .174 
 
 .160 
 
 .124 ' 
 
 .123 
 
 . ao4 
 
 ? 
 
 .362 
 
 .262 : 
 
 .227 
 
 .165 
 
 .151 
 
 .117 : 
 
 .116 
 
 .099 
 
 > 
 
 .348 
 
 .253 
 
 .218 
 
 .159 
 
 .146 
 
 .113 
 
 ' .112 
 
 .095 
 
 I 
 
 .335 
 
 .243 ! 
 
 .210 
 
 .153 
 
 .140. 
 
 .103 : 
 
 .108 
 
 .092 
 
 ; 
 
 .321 
 
 .233 
 
 .202 
 
 .146 
 
 .134 
 
 .104 : 
 
 .103 
 
 .088 
 
 .308 
 
 .224 
 
 .193 
 
 .140 
 
 .129 
 
 .100 
 
 .099 
 
 .084 
 
 ( 
 
 .288 
 
 .209 : 
 
 .180 
 
 .131 
 
 .120 
 
 .093 
 
 .092 
 
 .079 
 
 L 
 
 .275 
 
 .199 : 
 
 .172 
 
 .125 
 
 .115 
 
 .089 
 
 .088 
 
 .075 
 
 H 
 
 .261 
 
 .190 ! 
 
 .164 
 
 .119 
 
 : .109 
 
 .085 
 
 .084 
 
 .071 
 
 S 
 
 .248 
 
 .180 
 
 .155 
 
 .113 
 
 : .104 
 
 .080 
 
 : .080 
 
 .068 
 
 D 
 
 .235 
 
 .170 
 
 : .147 
 
 .107 
 
 : .098 
 
 .076 
 
 : .075 
 
 .064 
 
 
 
 .221 
 
 .100 
 
 : .139 
 
 .101 
 
 : .092 
 
 .072 
 
 : .071 
 
 .060 
 
 \ 
 
 .201 
 
 .146 
 
 .126 
 
 .092 
 
 : .084 
 
 .065 
 
 : .065 
 
 .055 
 
 B 
 
 .188 
 
 .136 
 
 : .118 
 
 .085 
 
 : .078 
 
 .061 
 
 : .060 
 
 .051 
 
 5 
 
 .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 
 
 <xce: Price Stu dy, Steel Founders' Society of America, November, 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 1 earnings data presented in Chapter One of the present 
 report (*), from which an opposite 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, Char). One, I, A, 4, 
 
 9826 
 
~ 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 nrices generally scaled down- 
 ward and in most cases 1927 and subsequent schedxiles 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 "special ty" castings. It is also interesting to note that nrice 
 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 composite 
 price index number, published by the National Bureau of Economic 
 Research, on "producer's goods for capital equi-oment" was at)t)roximately 
 80, based > on 1929 as 100. Durable goods -nrices 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 approximating "normal" 
 for 1933 may have been a relatively high level for the industry's 
 products. 
 
 ®* Regulations Concerning 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 required to file a list 
 of its current prices with Steel Founders' 
 Society, comprising all classifications of castings 
 in which it was interested or uoon which it would' 
 quote were it requested to do so. 
 
 (b) Every steel foundry was reouired to file a schedule 
 of extras applying to alloy additions, heat treat- 
 ments, specifications, 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 extra.s uoon 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 
 
- 613'- 
 
 (d) Plain carton casting- prices filed had to be in 
 terras of minimum delivered urices 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 
 equipment, machining, carbon and alloy additions, 
 or other extras. 
 
 (f) A foundry had to file uoon any classification of 
 casting before it was privileged to auote or 
 accent 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 -orice on the 
 same day it filed the price with the Society, 
 provided such filed -orice 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 nrice until the date the r>rice 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 approved 
 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 -orice 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 tc. meet co mpetition rested with the foundry 
 so filing. 
 
 (l) If a foundry had made a contract at a certain "orice 
 and later revised its price upward, it was to file 
 with the Society full details regarding such con- 
 tract, giving effective date, expiration d&tfc or 
 
- 616 ~ 
 
 termination clause, name of customer, classifications 
 of castings covered, and orices applying Jo each 
 classification. 
 
 (2) Quotations 
 
 (a) Quotations were not to be made at orices less than 
 the delivered nrices filed with the Society. 
 
 (b) In the case of castings uoon which the actual 
 weight was unknown, the foundry was required to 
 auote a ver lb. orice only and not a lumn 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 T)er lb. prices which a/oplied in either 
 circumstance, i.e., if the actual weight was 
 later found to be above or below the dividing 
 line weight. 
 
 (3) Invoices and Biscounts 
 
 (a) Foundries were not to date invoices later than the 
 date uoon which they were mailed or later than the 
 third day following the date the castings were 
 shioned. 
 
 (b) Foundries could not grant discounts greater than 
 orovided 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 pattern, 
 which was required to be shipped or invoiced within 
 90 days from the date of the order. 
 
 (b) The foundry could not negotiate a contract for a 
 larger quantity of castings and deliver a smaller 
 quantity at the same "orice -oer casting applying 
 
 to the larger quantity. 
 
 9826 
 
~ 617 - 
 
 (c) Castings that were ordered inmirs or sets were 
 priced uoon the quantity of each individual type 
 of casting included in the t>air"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 
 each separate component casting determined the 
 quantity of each, and the prices were "based uoon 
 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 quantity was de- 
 termined on the has is 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 ureventing 
 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 oattern eaui-oment furnished by the foundry was to 
 be billed to the customer at not less than what it 
 costs the foundry to make it. 
 
 (b) Patter n alterations made at the customer's request 
 could not be charged to the customer regardless of 
 whether the -patterns belonged to the foundry or the 
 customer . 
 
 (c) Foundries could not repurchase nattern 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 
 nerf ormed. 
 
 (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 Cede. 
 
 9826 
 
~ 618 - 
 
 ( 7) Inspection Charges 
 
 (a) Foundries were to charge customers f>r expense 
 incurred for inspection "by outside individuals 
 or agents when the customer specified such 
 inspection. 
 
 (8) Bade 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 
 accent 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 
 reauired 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 accept 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 Prices. 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 practically 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 endc sought 
 under the price filing provision. 
 
 9826 
 
- 619 ~ 
 E * filings Fo r Dif ferent Distribution 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 cus-tomer-users. 
 
 1. Sales Representative, Manufacturer's Agent, etc. 
 
 A. Sales representative, */ 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 fo\mdry 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, llor 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 seme 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 ■ ■ 
 
 9826 
 
- 6*30 - 
 
 It was required that all prices to middlemen. fee filed. They could 
 "be expressed in terms of discounts off regularly filed orices, provided 
 such middlemen agreed to resell the castings at not less than the prices 
 filed hy the foundry that produced them. Such filings were required to 
 give the fbllowing 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 terms 
 of the agreement with respect to the orices at which the castings were 
 to he resold. 
 
 The purpose of providing for a discount in the case of middlemen 
 was to permit a foundry that was unahlc 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 he 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 orices to custom- r-users be filed in terms 
 of the letter schedules illustrated above (Table IX). Filings in Germs 
 of discounts off previously filed prices were not acceptable. Prices of- 
 fered to specific customers on specific inquiries or orders were not re- 
 quired to be filed, as it was understood that such -orices 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, located 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 ITo. 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 No. 6 were included. As has been stated, 
 Daily Report ITo. 6 contained nrice 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 in the following form, 
 
 
 EFFEC- SCHED- * 
 
 FDY. FILED i'IVE CASTING CLASSIFICATION ULE 
 
 NO. 1935 1935 FILED 
 
 402& 3/18 4/1 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 
 
 " " " « Parts-Pressure, NOCBN K " 
 
 " " " " " » - Bonnets K » 
 
 " " " " " " - " (with Yoke Cast 
 
 Integrally) K " 
 
 " " " " " " - Caps K " 
 
 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 new 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- 
 isional low schedule; DN for divisional new classification; and H for a 
 schedule which represented a price increase over the one previously filed. 
 
 9826 
 
- 623 - 
 
 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 statements filed by members con- 
 cerning contract relationships, freight allowances to railroads x 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. Ilany 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 OF FILINGS PER FOUNDRY, BY DIVISIONS (*) 
 
 Division 
 
 Number of 
 Times Filed 
 
 "umber of 
 Foundries 
 
 l vT umber of 
 Filings 
 Per Foundry 
 
 I 
 
 II 
 
 III 
 
 IV 
 
 V 
 
 .YI 
 
 VII 
 
 VIII 
 
 739 
 500 
 199 
 540 
 1,025 
 1 , 233 
 180 
 347 
 
 31 
 
 10 
 13 
 25 
 23 
 41 
 16 
 34 
 
 23.8 
 50.0 
 15.3 
 21.6 
 44.5 
 30.3 
 11.2 
 10.2 
 
 Total 
 
 4,763 
 
 193 
 
 24.6 
 
 Source: Compiled by Statistics Section, II.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 elapsed 
 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 tenc. 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 Hew 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, 
 j/. eo rdingly we are now reporting this filing to the industry 
 and 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, 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 recneck 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. 
 
 "HOTS: On July 10th, Foundry "o. 637 filed the 
 above prices, but the letter was mislaid and has only 
 just come to our attention." (***) 
 
 (*) Steel Founders' Society of America — Daily Price Report 
 Ho. 92, April 10, 1934. Code Records Files. 
 
 (**) Steel Founders' Society of America — Daily Price Report 
 Ho. 112 — May 4, 1934. 
 
 (***) Ibid— Daily Price Report Ho. 176— July 26, 1934. 
 
 9826 
 
- 625 - 
 
 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 reoorted 
 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.' 
 
 "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 coliimn 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 S13 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 
 B-202 ) , the prices on these items were revised, generally upward, and a 
 level set below which no foundry was "ercpected" 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 
 
 qaofi 
 
- 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 set "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 repoit 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 were filed during the months following the publishing of this 
 Report. Apparently, by this time, 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 m 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 foreword 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 times 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 Employed 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 
 9826 i n a specific Quarterly Report. These were 
 
 termed "blanket filings." 
 
- 638 - 
 
 The first method was most common. In the early Code period the 
 foundry would list, on an ordinary letter head, the clasrif ications 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 2C6 files the same prices as Foundry 
 210 in Report No. 326." This made it simple to meet new low trices 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 Reoort, it was 
 the practice to file al.l r prices contained therein for a specific Division. 
 At various times foundries filed "blanket," purporting to meet all minimum 
 schedules on file with the Codp Autnority or that any time were filed with 
 the Code Authority. In Daily Report No. 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 products as disclosed by these filings. 
 
 (*) Authorized by Commercial Resolution No. 30, October 10, 1934 
 
 9826 
 
- 629 -l. 
 CHAPTER IV 
 D iscussion Concerning Operation of the Open Price Plan 
 
 I. COMPLIANCE AND ENFORCEMENT 
 
 There is ver _r little record as to compliance with or enforcement 
 of the price filing provisions of 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. 1$ is "believed that a large majority of the complaints 
 submitted were handled and adjusted informally. The records indicate 
 that 184 foundries of. 97 percent of the total of 190 filed their 
 prices with the Code Authority. 
 
 The Compliance Division handled only five trade practice comp- 
 laints cases of which three were adjusted and two were found to he 
 cases of non-violation. No Trade Practice cases were submitted to the 
 Regional Boards. 
 
 II. ATTITUDES AND OPINIONS OP INTERESTED PaRTIE 5 
 
 On April 7, 1934, the Administration Member forwarded the fol- 
 lowing letter to the Division Administrator, pointing out certain 
 loo2oholes in the price provisions which permitted members of the . 
 Industry to evade the requirements of the CJedc. 
 
 "Three technical sources of evasion of the observance pf establi- 
 shed fair prices in bidding en manufactured equipment have come to my 
 attention: 
 
 "1. Where the bidding company 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 keeping with the filed prices of 
 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 pf filiate which is ex- 
 empted from observing the prices filed by the industry producing the 
 material or component, the result is the same as above. 
 
 "3. Certain manufacturing concerns, the status of which is not 
 clear in specific pieces of business, as to what particular Code they 
 are wording under, may work 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 lev; as compared with the filed prices of 
 the industry affected. 
 
 "Code Authorities are naturally deeply concerned as t^ how this abuse 
 may be promptly «nd 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 trices, amounted to 
 $115,000 and the value of materials only, as figured by other bidders 
 amounted to more than $156,000. The 3ucyrus-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, component 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 oudit to prevent much chise- 
 ling and evasion of this character, and would "'.'lace in the hands of 
 injured Code Authorities b simple and effective weapon 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 W. W. Pettis Company addressed to Senator Alben 17. Barkley 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 Inarch 13. and 17 stating that the Administration 
 
 Member 6f 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 ars 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 "/fork Sheets.- Steel Castings Ind. 
 (**) -Price Filing Unit Work Sheets - Stsel Castings Industry. 
 
 9826 
 
n 631 w 
 
 "However, in making up the Classification List and Schedules, 
 the large Interests very shrewdly divided the Steel Castings Business 
 into tt70 classes of work, viz: Miscellaneous Castings and Specialties. 
 Specialties in normal tines 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 companies in the industry manufacture specially designed 
 and in many cases patented devices, chiefly intended for use in car 
 construction. These 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 \yithin 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, Pa-. 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 
 t ime . 
 
 "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 typas 
 of buyers -fere given different price schedules whereas 
 now these buyers receive no consideration." 
 
 (*) Dode Records File 
 
 (**) Letter from Code Administration Member - April 7,1934 - See 
 Code Records' Files. 
 
 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 loner price .than we can buy 
 them, and then charge 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. n A steel foundry without a machine shop can put their castings 
 in at either the Code price or 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 v7ho 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 from their subsidiary and their own machine 
 work in such a manner that we who are hot 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 228 AND 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 Founders' Society, 
 Price Filing Unit Work Sheets — Steel Castings Industry. 
 (**) Letter to General Johnson from International Clay Machinery Co.- 
 June 18, 1934. Price Piling Unit 7ork 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 and 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' 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 a "bout 10$ 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 1926, 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. 
 
 11 ... . 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-j 
 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 different 
 tial be justified and maintained? 
 
 (*) Steel Founders' Society - Telegram to General Johnson, June 11, 
 1934 - Code Records' Files. 
 
 9826 
 
- 634 - 
 
 "... It is not necessarily true thpt 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 Industry feels 
 he may quote in any circumstance. 
 
 11 ... 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 ^hich 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 ^as filed with the 
 Administrator. In subsequent correspondence the Code Authority "as 
 advised that in ord^r to secure a reduction in the 15% tolerance it 
 ^ould be necessary to present evidence to the effect that the Executive 
 Order had resulted in destructive price cutting. 
 
 There appears to have been no further action relative to this 
 matter. In a letter of November 9, 1934 from the Code Authority to 
 members of the industry it to.8 pointed out that the Executive Orders 
 did not apply to quotations or sales to contractors or subcontractors, 
 even though the castings might be used for a government job. It ^as 
 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 MA. ATTITUDES 
 
 On Januar" - 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 nlan, 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 
 
- 835 - 
 
 "The Steel Casting Industry is not interested in price-f ixing 
 as correctly defined and properly interpreted. It is. intensely 
 interested in the Op<=n Price Plan with a waiting period , such as 
 it has operated under for a period of fourteen months through its 
 Code of Fair Competition, which was approved "by the President on 
 November 2, 1933. It desires to go on record with regard to the 
 following propositions! 
 
 "1. That the Open Price Plan ^ith the waiting period, 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 public interest. 
 
 "2, That the Open Price Plan without a waiting period is 
 meaningless and valueless. 
 
 "3. That no general prohibition applicable to all industries, 
 against the use of the O-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 Cpen 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 Cpen Price Plan with a 
 waiting period, it should be accorded the privilege of operating 
 under such a plan. 
 
 "5. That the Open 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 prices, when a contract is 
 awarded by such agencies. This practice has profoundly influenced 
 the making of bids and has usually resulted in lowering the price 
 levels for materials sold to such agencies. The Open Price Plan 
 
- 636 - i 
 
 with a waiting period is not detrimental to the interest of such 
 agencies and generally will likewise result in the lowest obtain- 
 able 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, 1935, the Consumer's Advisory Board (**) 
 reviewed the various provisions of this Cod* and recommended that 
 many of the Commercial Resolutions issued "by the 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 Author itv have frequently made 
 statements to the effect that industry members are allowed the 
 utmost freedom in price filing, that the system worked out by the 
 Society nrovidesg m.?rcly for more intelligent pricing based on 
 knowledge of each other's filings, that any uniformity of prices 
 as a result of the system has been a uniformity at th Q point of 
 lowest filed -orice, end 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 be 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 any of the price factors 
 making up the net nrice : and there are many such r>rice factors. 
 Under this meaning of the ^ord r>ric<=— fixing, 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 ;oart of the net 
 price as is any other, and Commercial Resolution No. 16 very 
 definitely takes this factor out of the r°alm of urice filing into 
 that of r>rice fixing." (**) 
 
 "It might se°m a far cry from classification to price 
 fixing. But even if urice fixing were not involved, the assumption 
 of pow^r to classify products in this industry can be justified by 
 no provision in th^ Ste^l Casting Code. In our ouinion such a 
 power, wielded as the cod° authority may see fit, has tremendous 
 possibilities. Its implications include the ability to harass 
 industry members who are obstreperous, although observing the 
 letter of th° code. But it has price control implications also, 
 because the ability to nut classifications on a common basis would 
 surely enable the influential members of the industry to exercise 
 
 (*) Brief on Price Control Provisions in Codes of Pair Competition — 
 St'e°l. Pounders' Society of America — January 25, 1935. 
 
 (**) Consumers' Advisory Board, L. B. Lovell Memorandum to J» 3. Freund, 
 Deputy Administrator - May 16, 1935. 
 
 9826 
 
- 637 - 
 
 their now°rs of price leadership to function to the fullest extent* 
 And this is no theory. Such a succession of events has occurred 
 in other industries, with well 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 desirahle "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 NBA 
 unconstitutional and voiding the codes. 
 
 
 (*) Consumers' Advisory Board, L. B. Lovell Memorandum to J« B« Freund, 
 Beputy Administrator - May 16, 1935. 
 
 9826 
 
- 638 - 
 
 CHAPTER V 
 
 STATISTICAL ANALYSIS OF TYPES OF PILINGS 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 own reports of these filings. 
 
 The analyses included will appear in the following order: 
 
 I. Analysis of Pilings Relating to Prices. 
 
 A. Frequency of Filing of New 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. Discounts 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 miniimun rchedules filed (L) . 
 
 The number of schedules filed on new classifications (IT; - 
 
 The number of divisional lor, schedules filea (DL; . 
 
 The number of divisional new classifications filed (DN) . 
 
 The number of 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 date of its filing. These schedules were always 
 subject to a ten day 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 filing?, 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 frequence distribution of filings by 
 divisions. Practically all foundries participated in the filing of prices 
 Some foundries filed very f requently, while others were relatively non- 
 participant. Those foundries which did rot take part in the filing, as 
 
 9826 
 
- 639 - 
 
 indicated by the daily reports, were nos. 406, 409, 610, 710, 716, 809, 
 817, 829 and 833. These v/ere without exception very gmall conserns with 
 an average monthly capacity of about two tons each. No filings were re- 
 corded for foundries nos. 702 and 703, operated. by the American Steel Foun- 
 dries Companj/-, the largest unit in the Indiistry. It is assumed that sales 
 or quotations made by 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 were 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 lov? schedules placed on record indicated 
 that only one foundry, instead of several, had filed classifications. In 
 this tabulation, such filings are inexuded 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 ic ation 
 S chedule 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 Works, having a monthly 
 capacity of less than ten tons, was responsible for almost 200 of the total 
 of approximately .800 "low' schedules. " 
 
 An explanation of this record of unusiial 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. TJhile 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, D1T, 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 v/ere 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 
 
- 640 - 
 
 B. Extent of Use of "Same As" Filings . 
 
 Table VIII, Exhibit I, gives a sample of "same as" 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 report T 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 T a ble 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 157 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 ble 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 
 
 9826 
 
- 641 - 
 
 withdrawal. See Table (XI ) (i) , "below. Only withdrawals of schedules have 
 "been treated. Withdrawals of price extras, etc., were omitted. 
 
 
 TABLE (XI) (I) 
 
 
 
 
 Humber 
 
 of 
 
 Foundr: 
 
 Les Filing 
 
 
 
 
 
 
 
 
 GENUINE WITHDRAWALS 
 
 
 
 
 
 
 
 
 BY 
 
 DIVISIONS AND 
 
 BY MONTHS 
 
 
 
 
 
 date 
 
 
 
 
 
 
 DIVISIONS 
 
 
 
 
 Year: 
 
 Month 
 
 : 1 
 
 : 2 
 
 I 
 
 3 
 
 : 4 
 
 : 5 : 
 
 6 : 
 
 7 : 
 
 8 : 
 
 Totals 
 
 1933 
 
 Dec. 
 
 
 
 
 
 
 
 1 
 
 1 
 
 1934 
 
 Jan. 
 
 
 5 
 
 
 
 
 4 
 
 4 
 
 1 
 
 
 14 
 
 
 Pe"b. 
 
 
 2 
 
 
 1 
 
 1 
 
 3 
 
 3 
 
 
 
 10 
 
 
 Mar. 
 
 2 
 
 
 
 
 1 
 
 3 
 
 4 
 
 1 
 
 4 
 
 15 
 
 
 Apr. 
 
 3 
 
 1 
 
 
 
 1 
 
 2 
 
 2 
 
 
 1 
 
 10 
 
 
 May 
 
 1 
 
 
 
 
 1 
 
 6 
 
 3 
 
 
 2 
 
 13 
 
 
 June 
 
 2 
 
 
 
 
 
 1 
 
 5 
 
 
 1 
 
 9 
 
 
 July 
 
 3 
 
 
 
 
 
 3 
 
 2 
 
 
 3 
 
 11 
 
 
 Aug. 
 
 1 
 
 
 
 
 1 
 
 6 
 
 5 
 
 
 3 
 
 16 
 
 
 Sept. 
 
 
 
 
 
 1 
 
 3 
 
 2 
 
 
 
 6 
 
 
 Oct. 
 
 
 
 
 
 1 
 
 1 
 
 
 
 
 2 
 
 
 llov. 
 
 
 
 
 
 
 1 
 
 
 
 
 1 
 
 
 Dec. 
 
 
 
 
 
 
 
 4 
 
 
 
 4 
 
 1935 
 
 Jan. 
 
 Feb. 
 Mar. 
 Apr. 
 
 May 
 
 
 
 
 
 
 1 
 
 1 
 5 
 1 
 
 1 
 1 
 
 
 
 1 
 6 
 3 
 
 Total 
 
 s 
 
 12 
 
 8 
 
 
 1 
 
 6 
 
 34 
 
 42 
 
 4 
 
 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 VI 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 tlie third Quarterly 
 Report. 
 
 Sixteen cases of the remaining 62 cases included 5 or more items 
 each and represented a total of 769 items. 
 
 The remaining 49 cases comprised 67 items. 
 
 The use of withdrawals as a means of protecting e.n established price 
 level has already been mentioned. It remains (a) to show the use of 
 withdrawals for the purpose of removing classifications cf 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 
 classification 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 clicsen 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-ti.ird 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 "Dryin CJ Car '.".heel Castings" by the Ohio Steel Foundry Company 
 eliminated this item from the classification list entirely. 
 
 Tlie withdrawal of "Automobile Truck Castings, IJ0C31I" is (*) 
 especially interesting since "confirmation" of this filing from the 
 foundry was requested by the Society. Sighty 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 confirmation 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 conf irma.tion 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. 
 
 1 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 avorage is very heavily weighted by a few cases. If sixteen 
 cases- which, contained five or mere 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 tai's smaller group of items was 
 twenty-f ive. About one-fourth of these / 
 
 (*) The Symbol "h r C3i!" means "not otherwise classified by name." 
 9826 
 
JOH-$. 
 
 were between one and ten days; another fourth between eleven and twenty- 
 twod days; another fourth "between twenty-three and forty- four days; and 
 the others between fort; -five and two' hundred days. 
 
 The average number of days elapsing between the d-.te of withdrawal 
 of schedules and the date of refiling for the smaller group was seventy- 
 seven. On the other hand, the average for the oUo items was thirty-four 
 and a half days. 
 
 c. Price Changes Effected by Withdrawal s. 
 
 Those withdrawals which resulted in a change of the price schedules 
 are of particular interest. Of the seventy-nine items noted above, 
 thirty-eight items 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 items 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.^+ price schedules per item. 
 
 (l) 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" 
 
 Effective 
 Date 
 
 9/17/3^ 
 
 9/17/3H 
 
 9/17/3^ 
 
 9/20/31+ 1 
 
 Pounory 
 Number 
 
 625 
 625 
 625 
 
 Action 
 
 Piled 9/7/3H 
 "Jithdrew 9/I7/3U 
 Pefiled 9/17/3U 
 
 No. of 
 Hepor t 
 
 209 
 210 
 211 
 
 Date of 
 lie-port 
 
 9/17/3*+ 
 9/17/3^ 
 3/1S/3U 
 
 Third Quarterly Peport (Division 6 only) 
 
 Price 
 Schedule 
 
 P 
 P 
 M 
 
 II 
 
 Schedule P was the first filing for this classif ication. It may 
 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, r 'as not 
 reported until September lU, 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. 
 
 9826 "' 
 
~ 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£§ 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. " 
 
 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 G and refiled schedule 
 K in the same daily report, revising the price upward in the process. 
 
 Item 4. • " Dragline Excavator (Walking Type) Castings 
 
 IT. 0. 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.Q;d> 24 
 
 pes. R 
 
 (over 25#, N.Q.D.24 pes. P 
 9/20/34 Third Quarterly Report Div.l: 1~100# - 1.; 
 
 over 100# - H 
 Div. 5: 1~25# ~ R; over 25# p-N.Q.D.24 
 pes. 
 
 Div. 6: 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. 
 
 9826 
 
- .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 match higher 
 prices by others, is not clear. 
 
 Item 6. "Elevator Castings for Buildings. N. 0. C.B.N. ' 
 
 price 
 Effective Pate Schedule 
 
 3 /__>'/ 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 115 & 111, 
 
 (o) 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 t- — ? — 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/O 
 
 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- 
 isation 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 
 
 9825 
 
- 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 lower 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.C. C.B.N. 
 
 Effective Pate 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 Sam 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 i 
 
 -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 nf 
 
 9826 
 

 
 - 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 of a Large Number of Items Withdrawn 
 
 The discussion of withdrawals would he incomplete without 
 examining at least one case in which a large number of items were iw 
 withdrawn. Perhaps the most 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 withcrawals 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 
 4/18/35 705 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 on 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 .>.* 
 f? Led 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 price 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. 
 
 (*) 
 
 (*) 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 fil d 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 .the sample cases presented in the 
 table abpve adds certain results wnich, '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 - 
 
 5. Analysis of this special sample shows 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. 
 
 f . 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 "be 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. 
 
- 650. 
 
 II. ANALYSIS 0? FILINGS ZELATIiJG TO DISCOUNTS AID ALLOWANCES. 
 
 A. Discounts to Other Foundries (I'idciIemeiO 
 
 The Society required th t all discounts to midolemen be filed. 
 These were then published in the d- i lv price reports. The three dis- 
 ccunt rates most commonly filed during the Code were (l) 5 per cent, (2^ 
 7^ per cent, and (3^ "not over 10 per 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, "xhibit I - Table 
 X-B shows the freouency of each type of discount filed during the Code, 
 listed by months. 
 
 The few disccunts 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- : ;- 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') 
 opposite Report " T o. 102; foundries os. 202, 2TL, 2 ,v ? and 208 evidently 
 participated in such an agreement. It probably was a case of one mill dis- 
 tributing another's Rolling . ill Castings, with the latt-r reciprocating 
 by handling the former's Freight Car Castings. 
 
 B . Allowances of Rreight Charges to R ailroads 
 
 The daily price reports issued prior to July 6, 1934, include 71 
 statements made bw 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 ap proximate lv 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 eauip- 
 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 purchasers - there were instances of the railroad reouesting delivery 
 of casting at a point far distant from the foundry, requiring long hauls over 
 the lines of the purchaser. (*) In the case of an unusually long haul, 
 the freight charges sometimes destroyed the profit margin on the sale, "tfhen 
 the Code became effective, it was suggested that the limit oti. freight allow- 
 ance tc ra ilroads be the point on the line nearer t to the foundry. This 
 suggestion was not always complied with, possibly because of pressure brought 
 
 (*) J. IT. Anderson - Code History, page 159 
 
 9826 
 
- 651 - 
 
 to bear by the railroads. (*) Statements were made by members to the 
 effect that railroaos three toned to take away from foundries not allow- 
 ing freight, certain moortant patterns owned by the railroads, father 
 than lose the patterns and business, foundries cften allowed full freight. 
 (See filings compiled on Exhibit I-Table XI-A) . 
 
 In October 1934, the Committee of the Society studying transportation 
 problems recommended 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 evidentl:/ met with the 
 aporoval of the interested foundries and was adopted by the Society as a 
 Corriercial Resolution in December, 1934. However, as far as can be learned, 
 it was never approved by the Administration. This orrctice was n^ver fully 
 standardized, although practically all foundries filed their allowances 
 accordingly, and it is generallv suoposed th: t competitive bids included 
 nearly uniform freight allowances. 
 
 C . Allowances to Customers on Patterns : nd Enuipment 
 
 There were 233 instances of filing on Pat terns - their distribution 
 by comoany and bv mouth is compiled in Exhibit 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 ne 1 " pattern is required and when 5 ,r > or more miscellan- 
 eous Railroad castings are bought at one time, we will absorb oattern 
 cost, pattern to remain cur property." and, (*) 
 
 ""./hen a new pattern is required and less than 500 miscellaneous 
 Railroad casti igs 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 price 
 reports. However, beginning in I larch, 1934, and continuing through August, 
 80 foundries fil«d statements, almost all identical as to wording, to the 
 effect that, 
 
 "".'e hereby file with your office the stipulation where -^Jiy oattern 
 is in existence and owned by a competing company we will, to meet 
 competition, likewise furnish a pattern from which to make castings 
 for a customer without any 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 types of filing were relatively unimportant, with the ex- 
 ception of one instance in which the 17 foundries filing reserved the right 
 to eoualize pattern transportation charges to me~t competition. 
 
 ( *) Statements of Industry members - interview December 22, 1935. 
 
 (*'*) Steel Pounders' Society - Daily Price "eports 
 (***) Ibid 
 (***'=) ibid 
 9826 
 
- 552 - 
 
 It is interesting to ooserve the degree of leadershiD revealed by 
 these filings. In Report No. 14, January 4, 1934, two foundries, the 
 Buckeye Steel Castings Company and the Ohio Steel Foundry Company, Found- 
 ries Nos. 5 '6 and 517, respectively, ootn large producers, filed clauses 
 of the tvpe first referred to above. \'i'thin 3° da rs, more than l'^"> 
 foundries had filed statements almost identical in wording. In the case 
 of the second clause quoted, the Crucible Steel Castings Conroany, No. 5"*9, 
 filed first and was followed within 3") days by approximately 5 ' foundries. 
 
 Pursuant to an amendment to the Cede, effective Seotember 3, 1934, (*) 
 it was no longer permissible for foundries to furnish pattern equipment, 
 or alterations thereof, at l^ss than actual cost of production; except that, 
 in the case of Miscellaneous 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«i or more from o^e pattern at one time. Patterns, in 
 this case, were to be the oroeertv of the foundry. 
 
 The amendment had 'the effect of eliminating all other provisions and 
 allowances on patterns with the possible exception of the aosorotion of 
 pattern transportation costs to meet comoetition. There is no indication 
 that this allowance was discontinued. The fact that with little exception, 
 allowances en patterns to Railway Car Builaers were allowed to stand, is 
 another indication of the pressure brought to bear by these large pur- 
 chasing interests. 
 
 III. ANALYSIS 0.' THE FILING- RELATING lO^PRIGS EKKAS." 
 
 The steps taken to st~bilize another element of the price structure, 
 price extras, will now bo considered. 
 
 The Agency defined the filing cf letter schedules as rela-ting to 
 "rough unfinished, unmachxned miscellaneous carbon steel castings, either 
 unannealed, annealed or normalized, but not including cost of pattern eaui 
 ment, machining, carbon and alloy additions or other extras." The practice 
 of adding the various "extras" to the schedule prices before the Code was 
 not clearly defined. Available records snow varying extras. During the 
 Code the orice extras filed, after the "call" for their filing, were practi- 
 cally identical and uniform. 
 
 Description of Price Extra Practice. 
 
 
 During the Code Feriod eight different types of price extras were filed 
 upon: Carbon extras; Allov extras, (such as nickel, chromuim, manganese, 
 molybdenum, vanadium, copper, tungsten and titanium'); extra.s for Hardness 
 and Tension Specifications; Special Test e :tras for carbon and allov cast- 
 ings; extras for Maching and/or Drilling Bolster Center Filler Castings for 
 Grades A or 3 and High Tensile Steel; and extras for Radiographic Examinnt 
 and X-Ray Inspections. 
 
 " 
 
 The first price extra filing was made oy the Otis Elevator Company of 
 Buffalo, New York, on January 26, 1934. At this time it filed alloy extras 
 for nickel '<nd nickel chrome steels, molybdenum, chronium, vanaduim, manganes 
 
 (*^ Amendment 2, Codes of Fair Competition, Volume 7CT, P. 451. 
 9826 
 
- 653 - 
 
 and molybdenum steels, ana mild manganese steels. Tile next extra filing 
 was submitted by the Birdsboro Steel Foundry and machine Comoany of Penn- 
 sylvania. On March 5, 1934, it fi led extras for Carbons, Alloy steels 
 such as chronium, nickel, manganese, molybdenum, vanadium, copper and 
 tungsten, Hardness and Tension Specifications and Special Tests for car- 
 bon and allo T / castings. Following the release of the Birdsboro price extra 
 list in Report '61, many members of the industry filed extras "same as" 
 the Birdsboro Company, and filed each revision or addition as Birdsboro 
 did. In Report #74 the latter co loany added Titanium alloy extra and other 
 companies immediately followed. Commercial Resolution =£29, adopted June 13, 
 1934, issued a formal call for the filing of orice extras by members of the 
 industry. Hore than six months before a notice had appeared in Report #3, 
 dated 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 oeriod ending December 21, 1933." However, even 
 though not required, extras had been filed prior to the adootion of the 
 Resolution. 
 
 B. Methods of Filing: price Extra Schedule s 
 
 As in the case of filing orice schedules, there were three general 
 methods of filing -orice extras, namely, by refer ing directly to the type 
 of extras and giving the cost of each item, bv filing "same as" some other 
 foundry and b / referring to a quarterly report. "Same a,s" filing was 
 most common, and usually referred to the filing of Foundry Ho. 105, the 
 Birdsboro Company. Perhaos this may be related to the fact that the chair- 
 man of the Extras Committee of the Code Authority was an official of the 
 Birasboro Company. As far as can De learned from study of the daily price 
 reports and subsequent compilations, there was little or no disagreement 
 with the Birdsboro "Fxtras" - they 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 cf all filings. 
 
 This fc undry 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 
 copper in Alloy Steel castings. The next extra, filing was made in Daily 
 Report #225, it included the extra filings as submitted in Dally Report 
 #144 and also extras for the U. S. Navy Specif ications group and Radio- 
 graphic examinations. The fourth filing was a, withdrawal of the U. S. Navy 
 Specification group. The final filing Dy the Birdsboro Company, in Report 
 #333, dated iiarch 15, 1935, was for Machining and/cr Drilling Bolster 
 Center Filler ca.' tings of High Tensile Steel. 
 
 In each case, the lead of the Birdsboro Comoany 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 other members 
 adooted the Fxtras published in the quarterly reports and did not refer 
 to them specifically. 
 
 9826 
 
- 654 
 
 IV. ANALYSIS OF FILINGS RELATING TO S.hLIS 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, 1S33, which continued in effect 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, 1 134, are quoted in parts: 
 
 "It was stated th-~ t some contracts are in effect between certain 
 foundries and their customers embracing orices lower than those 
 currently on file by these foundries. Uhile these contracts were 
 made at urices r-ctually on file at the time they were consummated, 
 it was pointed out that unless the terns of these contracts are filed 
 and published to the Industry, the Industry is misled into believing 
 tha.t 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 adopted a resolu- 
 tion to rectify this situation." (*^ 
 
 The following section of Commercial Resolution #33 reouired the fil- 
 ing of all unfilled contracts, wherein deliveries were to be made at 
 prices lower thai current filed prices. 
 
 Commercial Resolution 7f33: 
 
 "RESOLVED, that in cases where a ne nber of the Industry desired 
 to file prices for current ne" 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. Rxpiration date of contract, or the provisions as to dur- 
 ation, termination or cancellation 
 
 4. Classification names of castings involved 
 
 5. Prices applying to each classification 
 
 6. Such further information as the executive officers of the 
 Society may request 
 
 
 "and further 
 
 J 'RE SOLVED, that the fore-going particulars as to such contracts 
 
 (*^ Steel Founders' Society - Transcript of Proceedings, Industry Meeting, 
 
 October 24, 1934. 
 9826 
 
- 655 - 
 
 shall be given the same Circulation among members of the Industry as 
 all other or ice data, orovided, however, that the names of the pur- 
 chasers under such contracts shall not be disclosed without the con- 
 sent, in writing, of the members 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 end one-half month.-,, 22 members of the Society filed 60 contracts 
 covering periods ranging from 2 months to 1 year. Many of the agreements 
 as filed showed neigher effective dote nor date of expiration, making it 
 difficn.lt to compute the average length of the contracts filed. 
 
 Contract orices were filed only in a few scattered cases. 48 r>er 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 T "I submitted the greatest 
 number of filings. These divisions correspond to the Chicago, Cleveland 
 and i inneapolis Federal Reserve Districts. Foundries in Division V filed 
 20 per cent of the contracts, while those in No. VI filed more than 70 per 
 cent. Contracts were filed on almost 50 different products, most of which 
 were Road and Street Machinery Gear Castings and various types of automotive 
 castings. There were two other products for which filings were made; 
 Agricultural Machinery and Ov rhc-ad Trav lling Crane. 
 
 Foundry No. 705, the Duncan Foundry end . .''.chine crks, Alton, Illinois, 
 filed a contract granting lo' oriccs en 55 different heavy type products 
 to one customer, covering, for the most oart, vrrious oroducts under the 
 Crane, Overhead Travelling and Charging Machine classification, and includ- 
 ing such products as Foundry Fouipment, '■ Flevntor, 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 Mew Castle, 
 Pennsylvania, filed a blanket contract on Rubb_r Machinery. This contract 
 covered almost 100 oroducts of this major classification, and although the 
 effective date was not specified, it terminated March 31, 1935. The Reed 
 Foundry and Machine Company of Kalamazoo, Michigan, filed the greatest number 
 of contracts, submitting 13 filings cev ring 20 customers and affecting 23 
 products. 
 
 This Sales contract device seemed to b used as a moans of protecting 
 the orovailing minimum price level. i foundry desiring to file or quote 
 at levels . :uch below the prevailing ones was evidently forced into a contract- 
 ual relationship with its customer. The case of the Duncan Foundry end 
 Machine '.Tories is rn example of this. In general, companies using the sales 
 contract device were small concerns which may have be-m able to compete only 
 on the basis of a orice differential. Commercial Resolution #38 granted 
 foundries the privilege of closing contracts at prices lower than the mini- 
 mum on file, provided such contracts were reported to the Agency. 
 
 7*5 See Exhibit I - Table XIII -C. 
 
 9826 
 
- 656 - 
 CHAPTER VI 
 STATISTICAL ANALYSIS OF PRICES UNDER TIE 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 unifoiTnity in pricing practices, an attempt will he made in this 
 chapter to appraise its actual effect on prices. 
 
 I. SUBJECT MATTES AND METHOD OF STUDY EMPLOYED 
 
 A. Sam-ole 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 hotter and more usahle has is 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 ap Proximately 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. ±hc Society responded by sending a list 
 of products, included below, which -ore 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 ite.chinery - Combine Harvester 
 
 3. Automobile ^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 <1 Brickyard Roller Tires 
 
 15. Rolling Mill & Steel Plant - Roll Housings & Caps 
 (ITQD over 2,499) 
 
 16. Power Shovel & Dragline Bases - Upper 
 
 17. Shoes and Treads 
 IS. 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, usee 
 
 9826 
 
.. - 657 - 
 
 in the manufacture of mechanical harvester, power shovel bases used in the 
 constraction 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 laiown. All are included in the "Miscellaneous" 
 products group - the only products for which prices were filed. 
 
 B. Lie t hod of Analysis 
 
 Tabulations have "been prepared of the filings for each of those 
 products, based upon the daily price reports -mblishod "by the Code 
 Authority. Three of these tabulations - those for Aeronautical Castings, 
 Locomotive Driving Boxes, and Power Shovel Shoes and treads - are 
 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 ^rice 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 incicate and accentuate 
 more clearly the verious movements away from the mean or prevailing 
 nrice levels. Where available from the daily price reports, the status 
 of each schedule filed will be indicated { L, IT, DL, M, etc. - See 
 Chapter III, 7,1. Daily Price Reports) 
 
 During the code, 163 foundries filed "blanket filings", quoting and 
 referring tc all schedules contained in a rnaarterly report. There is 
 no way of determining which s-oecific classification these were designed 
 to cover, consequently it has been necessary to neglect these filings 
 in the following analysis. 
 
 II. A1IALYSI3 0" TH3 TABULATIONS 07 PRIGS 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 Castings, H.0.C.B.1I. 
 
 The first recorded filing on this classification was made by Foundry 
 504, the Atlantic Foundry Company, on December 18,1933 (see gxhibit 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 leauer in the filing 
 on this product. On March 26, 1934, Foundries ITos. 832, 812, 801, 823, and 
 815 filed "same as" schedules. On August 23, Foundry 622 also filed C. 
 This was followed by "same as" filing ^oy 22 companies, all in Division VI. 
 There were 5.j filings in all recorded with the Agency, 
 
 9826 
 
- 658 - 
 
 The only other than C filed for this product during the entire code 
 Period was "by Foundry 303 on April 18, 1954. This schedule showed an 
 increase -in price, to Schedule 3. Later, en July 4, this foundry went 
 "back to the C schedule. 
 
 It is apparent that prices were entirely uniform on these castings. 
 With the one exception, referred to a"bove, the levels remained unchanged. 
 
 2. Agricultural Machinery - Coralline harvester Castings, 
 
 II.O.C.B.II. 
 
 In the report of December 5, 1933, published "by the Steel Founders' 
 Society of America, this classification was listed as Li. 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, 1334. However, most of the filings were on Schedule IT. 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 IT. 
 The schedule listed in the First Quarterly Report had been P. 
 
 On August 23 Foundry iTo. 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 IT. 
 
 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 N, with IT 
 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 the fact that Division VI 
 was the lrrgest producer of Agricultural Machinery, with 
 Division VIII also a fairly large oroducer. 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) Most of this product, especially durin^ 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 Li to P, then up to N and 
 then down to 0, 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 days 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 :To.5, 
 since higher price schedules were filed from the start; 
 
 (4) lower prices we.ro usually withdrawn before filing higher levels; 
 
 (5) the most usual levels were K. for' Housings over 30 inches in 
 length and P for those under 30 inches; 
 
 (6) Foundry 600, the Clark Hquipment Company, one of the smallest 
 firms in the i Industry, tended to be ; the low and most frequent 
 filer, accounting for all throe of the instances in which a low 
 was filed and a writing 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 prevailing levels according to the .quarterly reports were 
 
 K and P, except in Division VIII in which it was F, 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 product is concentrated. 
 
 4. Automobile Drake Clutch Pedal and Similar Levers (with Foot Pads) 
 
 An investigation of price 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, uarch 24, 1934. 
 * Note: The first number in the foundry number indicates the location 
 (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 and 709 which filed Schedule I, 
 
 considerably lover. 
 
 (3) On August 23, 1934, Foundry 622 filed 2, followed by 25 
 foundries in Division VI. 
 
 (.4) On October 5, Foundry 622 again filed Schedule 3, followed by 
 
 7 foundries all from Division VI - this established the level of 
 "B" at least in Division VI, the center of -orodxiction. 
 
 (5) The quarterly reports list the prevailing minimum schedules 
 io r all divisions as "3". 
 
 (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 j Schedule I, filed originally before the December 5 
 Report, was the established level throughovtt 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, IJo. 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, 1'iacnin.jry Castings, IT O.C.L.IT. 
 
 This product was originally filed as a new classification by Foundry 
 No. 709 on September 26, 1954, effective October 6. The schedule was K. 
 During the Code it was filed by only two other foundries, ITos. 641 and 
 505, both as Schedule K, 
 
 7. Cylinders - Hydraulic Accumulator Ty-)e 
 
 The early report issued by the Industry on 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. Dredge 3all and Socket Joint Castings, Including Cases. Balls, 
 and Glands 
 
 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 
 
 9826 
 
- 661 - 
 
 the Report of December 5, 1933. Foundries in Division VIII quoted J 
 and K, respectively, on castings over and under 100 lbs. in weight. 
 Following the filing of "L" by Foundry 622 on August 23, 1934, 25 
 foundries in Division VI 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 to 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* Elec trical Machinery a nd Equi pment - 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 622 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.. Gears - C ast Tooth 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 Gears as such, 
 and a composite filing for all other types of gears. The schedule most 
 often filed on Ring Gears 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, N. 
 
 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 daring 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 of 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 100 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 en 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 Furn ac e and Equipment, C arboni zing 
 and Carburizing 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 IT. 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 U 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 divisions. 
 In Aagus't the levels were established as M in Divisions I, II, V and VI, 
 and K in Divisions III, IV, VII and VIII. This differential prevailed 
 during the remainder of the Code Period. In Division VI, especially, 
 these schedules were uniformly quoted. 
 
 12. Railroad Locomotive - Driving 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 Erdiibit 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 
 
-663- 
 
 Company, filed. Or. March 2, 193^> a foundry in Division VIII filed 
 schedule F with the IT, ~.D. Moved out to 99 pieces. This was soon follow- 
 ed "by other menbers of division VIII and constituted in effect a price 
 reduction(*) as reference to the actual schedule will indicate,. -During 
 the next six months many foundries in other divisions also filed "p" 
 with IT.Q.D. over 95 pieces. On October 29, 193^> foundries U07, 105 and 
 ^22 filed jointly, effective Nc venter 8, Schedule p with 1T.Q.D. over 2U9 
 pieces - a new low price. 
 
 Then the Fourth Quarterly Report was oublished, December 13, 193^, 
 the above schedule a:id IT.Q.D. over 2^9 pieces was the prevailing level 
 in all divisions er.cept ITo. VIII, On January 2, 1535i i'oundries 8O5 and 
 806 jointly filed the new level (IT.Q.D. over 2^-5 pieces), Five other 
 foundries in Division VIII followed with "sane as" filings. The Fifth 
 Quarterly Report, issued on March 23, 1935. indicated complete uniform- 
 ity in all divisions at the new level. 
 
 13. Refin ei-y Oil Castings - Se ctional "U" Re nd Only 
 
 The Report of December 5> 1933 » ancl - the very early filings by mem- 
 bers specified Schedule L and made no differential for "'eight classes. 
 However, Foundry ITo, 206 filed on February 28, 193^» effective March 10, 
 low schedules L and II (over and under 100 lbs.). Shortly after this, 
 effective March 17, Foundry 626 filed lew schedules M and N. About that 
 tine several foundries in Division VIII filed the higher levels, H and 
 I. However, the prevailing level, was L, indicated in the First Quarter- 
 ly Report and again in the Second,. The L and I.I schedules were, however, 
 filed consistently daring July and August of that year* 
 
 en August 25, 193'!-, Foundry 622 filed "L" for all weight classifi- 
 cations. Again the s;::e 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 ever 100 lbs. - Schedule L, all divisions 
 
 Castings under 100 lbs, - Divisions I, II, IV and" VII - M 
 
 Divisions III, V, VI and VIII - L 
 
 lU. Refrrctory rnd B rickyar d Roller Tires 
 
 T'ith few exceptionc the prevailing schedule used on this classifi- 
 cation was "K". On April 13, 193*+, several foundries in Division VIII 
 put into effect e. new low schedule "0." Within a month this "low" was 
 withdrawn and the higher schedule II substituted. On Jiily 13 , Foundry 
 
 (*) In the schedules the price per lb. is lower for quantities. There- 
 for the allowance of quantity discount up to 93 pieces is in effect 
 a lower price than ".'hen there is IT.Q.D. (no quantity discount); 
 
 9826 
 
- 664 - 
 
 420 filed "0" effective July 25, a now 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 Ho. 622 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 - Roll 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, 1934, 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. 
 
 However, in the Second Quarterly Report the Agency indicated the 
 prevailing level as schedule Q, (H.Q. D. over 2,499 pieces). (**) Since 
 the records show no filing of this HQD 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 !T.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. 
 
 1 6 . Power Shovel and Dragl i ne Bases - Uppe r 
 
 The schedule suggested in the Report of December 5, 1933, as 
 appropriate for this product was "L 11 . 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 H.Q,. D. 
 
 9826 
 
- 665 - 
 
 Division VI established its level at M by the usual concerted 
 action of 26 foundries. The latter part of October, 1934, found all 
 foundries quoting at M except those in Division VII, in which "L" was 
 still the prevailing level. 
 
 17. Shoes or Treads - Power Sh ovel 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 
 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 R and 
 
 (e) filed high schedule Q,; 
 
 (f) several foundries in Division VIII filed J 
 and K; 
 
 (g) Foundry 509 withdrew 0,, 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 
 Ho. Ill and 3 foundries in ITo. 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 hy members following Foundry 
 No. G22. 
 
 (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 M 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, 1931, as a minimum. 
 However, 3 foundries in Division I, 5 in Division 
 II, 1 in Division III, 6 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 the 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 of 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 on a product and not being met by other 
 foundries. A possible explanation for this lack of 
 action on the part of the other members is that the 
 small foundry's production capacity was of little 
 significance and did not affect the prevailing price 
 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 lo^ prices were filed 
 effective in 10 days. Baring 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 were occasions when a founds 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 were 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 
 part as the result of 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 »s 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 
 
668 
 
- 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 some foundries. These con- 
 cessions took the form of additional freight allow- 
 ances for on-line-haul, allowances for patterns and 
 equipment, etc. 
 
 o. The establishment 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 trie most part represented a 
 fixed relationship to a suggested cost floor. Price levels supposed 
 to be 87 per cent of the levels in 1926 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 
 Periodls. -""Evidence seems" to.- point to the fact that these levels were 
 higher, especially on the small castings, than those in - f f ect 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 Pounders' 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 1926 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 "Producers goods for capital equipment" 1/ 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 
 
 DOLLARS 
 
 PER TON 
 
 200 r 
 
 t80 
 
 CHART JSL 
 
 160 
 
 140 
 
 120 
 
 100 
 
 80 
 
 60 
 
 40 
 
 20 
 
 ELECTRIC 
 
 TV 
 
 £^~t- 
 
 /% 
 
 J 1 1 I I I 1 I I I I I I 1 
 
 1 
 
 OPEN HEARTH 
 
 DOLLARS 
 PER TON 
 200 
 
 180 
 
 J S D 
 
 1933 
 
 SOURCE STEEL FOUNDERS' SOCIETY OF AMERICA. 
 
 9826 
 
 J I I I I I I I I L 
 
 160 
 
 140 
 
 120 
 
 100 
 
 80 
 
 60 
 
 40 
 
 20 
 
 1934 
 
 1935 
 
 N.R.A. 
 
 DIVISION OF REVIEW 
 
 STATISTICS SECTION 
 
 NO. 507 
 
Gi2 
 
 LU 
 
 LU 
 
 \- 
 
 <n 
 o 
 
 £ 8 
 
 O 22 
 
 ro 
 
 O — 
 
 O 
 
 3 
 Q 
 O 
 <Z 
 CL 
 
 LU 
 
 < 
 
 X 
 
 o 
 
 
 9826 
 
-672-A- 
 
 EXHI3IT I 
 
 Tables I to XVI 
 
 9826 
 
673 
 
 R-P 
 
 -28 
 
 
 
 
 
 
 
 
 
 
 TABIE I -A 
 Production of Conmereial Steel 
 (Thousands of short torn 
 
 Castings a / 
 
 
 
 
 
 Total 
 1926 1927 1928 1929 1930 l&l 
 
 1932 
 
 1933 
 
 1934 
 
 J,935 
 
 
 JAN 
 
 97 
 
 87 
 
 74 
 
 93 
 
 109 
 
 46 
 
 18 
 
 14 
 
 28, 
 
 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 
 
 ft5 
 
 87 
 
 88 
 
 121 
 
 - 64 
 
 30 
 
 12 
 
 31 
 
 
 SB 
 
 SEP 
 
 R3 
 
 70 
 
 7fi 
 
 107 
 
 62 
 
 27 
 
 n 
 
 2K 
 
 32 
 
 RK, 
 
 OCT 
 
 R3 
 
 §3 
 
 .88 
 
 121 
 
 60 
 
 24 
 
 13 
 
 25 
 
 29 
 
 .43 
 
 NOV 
 
 R9 
 
 59 
 
 82 
 
 110 
 
 44 
 
 23 
 
 14 
 
 23 
 
 2fi 
 
 .'36 
 
 DEC 
 
 fi.R 
 
 59 
 
 82 
 
 106 
 
 46 
 
 22 
 
 14 
 
 22 
 
 24 
 
 38 
 
 
 
 
 
 
 
 
 
 
 
 
 Miscellaneous 
 1926 1927 1928 1929 1930 1931 
 
 1932 
 
 1933 
 
 1934 
 
 1935 
 
 
 JAN 
 
 58 
 
 53 
 
 45 
 
 57 
 
 61 
 
 33 
 
 13 
 
 11 
 
 1 21 
 
 23 
 
 FEB 
 
 53 
 
 54 
 
 50 
 
 58 
 
 63 
 
 36 
 
 15 
 
 10 
 
 1 23 
 
 Jc 1 
 
 MAR 
 
 66 
 
 62 
 
 56 
 
 66 
 
 65 
 
 43 
 
 lfi 
 
 in 
 
 27 
 
 9JL 
 
 APK 
 
 68 
 
 56 
 
 53 
 
 69 
 
 66 
 
 35 
 
 13 
 
 9 
 
 P.fl 
 
 9.R 
 
 MAY 
 
 57 
 
 R2 
 
 Hfi 
 
 KR 
 
 fi2 
 
 31 
 
 11 
 
 1« 
 
 
 ftff 
 
 JUN 
 
 fi2 
 
 RS 
 
 fil 
 
 fi?. 
 
 KR 
 
 ?.R 
 
 11 
 
 5>3 
 
 31 
 
 «i 
 
 JUL 
 
 58 
 
 47 
 
 51 
 
 66 
 
 53 
 
 24 
 
 R 
 
 23 
 
 2ft 
 
 9.R 
 
 AUG 
 
 57 
 
 55 
 
 61 
 
 BR 
 
 43 
 
 21 
 
 in 
 
 9.A 
 
 ?.fi 
 
 9« 
 
 SEP 
 
 59 
 
 44 
 
 51 
 
 62 
 
 44 
 
 30 
 
 a 
 
 ?.1 
 
 , . .21 
 
 25 
 
 OCT 
 
 Bfi 
 
 Al 
 
 KQ 
 
 71 
 
 44 
 
 17 
 
 10 
 
 -19 
 
 20 
 
 31 
 
 NOV 
 
 64 
 
 40 
 
 51 
 
 50 
 
 32 
 
 16 
 
 10 
 
 19 
 
 19 
 
 26 
 
 DEC 
 
 55 
 
 40 
 
 56 
 
 71 
 
 32 
 
 16 
 
 li 
 
 17 
 
 19 
 
 
 
 . 
 
 
 
 
 
 
 
 
 
 
 Railroad Specialties 
 I 1926 1927 1928 1929 1930 1931 
 
 1932 
 
 .1933 
 
 -1954 _ 
 
 19SR . 
 
 I 
 
 JAN 
 
 39 
 
 34 
 
 29 
 
 36 
 
 48 
 
 13 
 
 5 
 
 3 
 
 7 
 
 6 
 
 FEB 
 
 43 
 
 35 
 
 38 
 
 40 
 
 45 
 
 14 
 
 4 
 
 9. 
 
 fi 
 
 fi 
 
 MAR 
 
 50 
 
 41 
 
 38 
 
 49 
 
 48 
 
 14 
 
 4 
 
 3 
 
 12 
 
 8 
 
 APR 
 
 46 
 
 39 
 
 33 
 
 53 
 
 45 
 
 13 
 
 4 
 
 3 
 
 lfi 
 
 7 
 
 MAY 
 
 46 
 
 35 
 
 37 
 
 59 
 
 43 
 
 12 
 
 3 
 
 3 
 
 23 
 
 fi 
 
 JUN 
 
 37 
 
 SB 
 
 SI 
 
 R4 
 
 ss 
 
 9 
 
 2 
 
 4 
 
 19 
 
 
 JUL 
 
 33 
 
 33 
 
 28 
 
 52 
 
 26 
 
 8 
 
 3 
 
 6 
 
 18 
 
 f«i ■ P 
 
 AUG 
 
 28 
 
 32 
 
 27 
 
 53 
 
 21 
 
 9 
 
 2 
 
 7 
 
 18 
 
 9 
 
 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 
 
 1 30 
 
 19 
 
 2H 
 
 3fi 
 
 14 
 
 fi 
 
 S . 
 
 5 
 
 s 
 
 in 
 
 
 
 
 
 
 
 
 
 
 
 
 Source: Survey of Current Business . 
 a/ See note, p# 
 
 
 
 
 
 DIVISION OF REVIEW, NRA 
 
 9826 
 
- 674 - 
 
 Compiled by the U. S. Department of Commerce, Bureau of the Census, 
 from reports of 130 identical firms, including reports collected 
 through the Steel Joinders' Society. These firms have a monthly 
 capacity of 146,900 tons, at are sent representing over 80 percent 
 of the capacity of the industry for commercial 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. 
 
 9826 
 
675 676 677 
 
 R-P 
 
 -28 
 
 
 
 
 
 
 
 
 
 
 TABLE I-B 
 Per Cent of Capacity Utilized in the 
 Production of Commercial steel Castings V 
 
 192b 1927 1928 1929 1930 1934 1932 1933 1934 1935 
 
 
 JAN 
 
 69 
 
 60 
 
 51 
 
 64 
 
 7b 
 
 32 
 
 13 
 
 10 
 
 18 
 
 24 
 
 FEB 
 
 69 
 
 o2 
 
 60 
 
 67 
 
 75 
 
 34 
 
 13 
 
 8 
 
 18 
 
 25 
 
 MAR 
 
 83 
 
 71 
 
 64 
 
 79 
 
 79 
 
 39 
 
 14 
 
 9 
 
 23 
 
 27 
 
 APR 
 
 81 
 
 66 
 
 58 
 
 84 
 
 77 
 
 33 
 
 12 
 
 R 
 
 30 
 
 27 
 
 MAY 
 
 74 
 
 60 
 
 63 
 
 87 
 
 73 
 
 30 
 
 10 
 
 13 
 
 *7 
 
 ?K 
 
 JUN 
 
 71 
 
 bl 
 
 62 
 
 80 
 
 63 
 
 24 
 
 9 
 
 IP 
 
 32 
 
 PS 
 
 JUL 
 
 65 
 
 55 
 
 53 
 
 81 
 
 55 
 
 22 
 
 n 
 
 ?.n 
 
 3n 
 
 ?.« 
 
 AUG 
 
 bl 
 
 60 
 
 60 
 
 83 
 
 45 
 
 21 
 
 8 
 
 21 
 
 2ft 
 
 29 
 
 SEP 
 
 59 
 
 49 
 
 51 
 
 73 
 
 43 
 
 19 
 
 8 
 
 17 
 
 20 
 
 30 
 
 OCT 
 
 59 
 
 43 
 
 60 
 
 83 
 
 41 
 
 17 
 
 9 
 
 17 
 
 19 
 
 36 
 
 NOV 
 
 (34 
 
 41 
 
 56 
 
 7b 
 
 31 
 
 16 
 
 a 
 
 IS 
 
 17 
 
 an 
 
 DEC 
 
 61 
 
 41 
 
 56 
 
 73 
 
 32 
 
 IB 
 
 9 
 
 IS 
 
 13 
 
 32 
 
 
 
 
 
 
 
 
 
 
 
 
 1 — — 
 
 
 JAN 
 
 
 
 
 
 
 
 
 
 
 
 FEB 
 
 
 
 
 
 
 
 
 
 
 
 MAR 
 
 
 
 
 
 
 
 
 
 
 
 APR 
 
 
 
 
 
 
 
 
 
 
 
 MAY 
 
 
 
 
 
 
 
 
 
 
 
 JUN 
 
 
 
 
 
 
 
 
 
 
 
 JUL 
 
 
 
 
 
 
 
 
 
 
 
 AUG 
 
 
 
 
 
 
 
 
 
 
 
 SEP 
 
 
 
 
 
 
 
 
 
 
 
 OCT 
 
 
 
 
 
 
 
 
 
 
 
 NOV 
 
 
 
 
 
 
 
 
 
 
 
 DEC 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ( 
 
 JAN 
 
 
 
 
 
 
 
 
 
 
 
 FEB 
 
 
 
 
 
 
 
 
 
 
 
 MAR 
 
 
 
 
 
 
 
 
 
 
 
 APR 
 
 
 
 
 
 
 
 
 
 
 
 MAY 
 
 
 
 
 
 
 
 
 
 
 
 JUN 
 
 
 
 
 
 
 
 
 
 
 
 JUL 
 
 
 
 
 
 
 
 
 
 
 
 AUG 
 
 
 
 
 
 
 
 
 
 
 
 SEP 
 
 
 
 
 
 
 
 
 
 
 
 OCT 
 
 
 
 
 
 
 
 
 
 
 
 NOV 
 
 
 
 
 
 
 
 
 
 
 
 DEC 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ■ . 
 
 Source: Survey of Current Business. 
 
 a/ 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 Ooen Hearth 
 
 Month 
 
 Open Hearth 
 
 Electric 
 
 and Electric 
 
 1933 
 
 
 
 
 July 
 
 a/ 
 
 §J 
 
 137.00 
 
 August 
 
 ^ 
 
 a/ 
 
 144. 00 
 
 September 
 
 a/ 
 
 sJ 
 
 144. 00 
 
 October 
 
 a/ 
 
 a/ 
 
 159.00 
 
 November 
 
 111.66 
 
 171.64 
 
 
 December 
 
 115.03 
 
 169.90 
 
 
 1934 
 
 
 
 
 January 
 
 116.40 
 
 131.00 
 
 
 February 
 
 120.00 
 
 184.60 
 
 
 March 
 
 116.00 
 
 187.20 
 
 
 April 
 
 123.00 
 
 188.00 
 
 o 
 
 May 
 
 122.40 
 
 188.30 
 
 c+ 
 
 Juna 
 
 125.no 
 
 184.40 
 
 ^ 
 
 July 
 
 124.00 
 
 183.60 
 
 £• 
 
 August 
 
 120.00 
 
 191.00 
 
 H 
 
 25 
 
 September 
 
 122.00 
 
 194.40 
 
 
 October 
 
 128.40 
 
 193.50 
 
 CD 
 
 November 
 
 134.00 
 
 185.00 
 
 
 December 
 
 131.00 
 
 193.60 
 
 
 1935 
 
 
 
 
 January 
 
 127.00 
 
 195.00 
 
 
 February 
 
 126.40 
 
 195.60 
 
 
 March 
 
 131. 60 
 
 199.00 
 
 
 April 
 
 131.60 
 
 190.00 
 
 
 May 
 
 131.50 
 
 190.00 
 
 
 June 
 
 130.00 
 
 192.00 
 
 
 July 
 
 128.00 
 
 193.60 
 
 
 August 
 
 126. OO 
 
 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 
 (1926 - 100 percent) 
 
 
 
 I 
 
 II 
 
 
 
 
 III 
 Total Raw 
 Materials Total of 
 
 Year and 
 
 Fixed 
 
 Labor 
 
 Vari- 
 
 
 Pig 
 
 and Sura I, 
 
 Month 
 
 Cost 
 
 Cost 
 
 ables 
 
 Scrap 
 
 Iron 
 
 Variables "I, III 
 
 1926 
 1933 
 
 15.0 
 
 50.0 
 
 14.0 
 
 13o0 
 
 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 
 
 39-6 
 
 
 
 
 
 
 
 26 1 
 
 79.7 
 
 August 
 
 15.0 
 
 39.4 
 
 
 
 
 
 
 
 27.8 
 
 82.2 
 
 September 
 
 15 o 
 
 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. 
 
 
 
 in. 
 
 
 
 6. 
 
 
 
 29.0 
 
 92.3 
 
 August 
 
 15.0 
 
 49.2 
 
 12. 
 
 6 
 
 10. 
 
 1 
 
 6. 
 
 
 
 28.7 
 
 92.9 
 
 September 
 
 15.0 
 
 49.0 
 
 12. 
 
 5 
 
 9. 
 
 4 
 
 6. 
 
 
 
 27.9 
 
 91.9 
 
 October 
 
 15.0 
 
 48.5 
 
 12. 
 
 
 
 9, 
 
 
 
 6. 
 
 3 
 
 27.3 
 
 90.8 
 
 November 
 
 15.0 
 
 49.7 
 
 12. 
 
 5 
 
 9. 
 
 <7 
 
 6. 
 
 
 
 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, 
 
 
 
 6, 
 
 5 
 
 29.1 
 
 93.1 
 
 February 
 
 15.0 
 
 49.5 
 
 12. 
 
 4 
 
 10. 
 
 
 
 6. 
 
 
 
 28.4 
 
 92.9 
 
 March 
 
 15.0 
 
 49.5 
 
 12. 
 
 4 
 
 10, 
 
 
 
 6. 
 
 
 
 28.4 
 
 JUf V 
 
 April 
 
 15.0 
 
 49.2 
 
 12. 
 
 4 
 
 10, 
 
 
 
 6, 
 
 
 
 28.4 
 
 92.6 
 
 May 
 
 15.0 
 
 50.0 
 
 12. 
 
 4 
 
 10. 
 
 3 
 
 6, 
 
 
 
 28.7 
 
 93.7 
 
 June 
 
 15.0 
 
 50.0 
 
 12. 
 
 5 
 
 in, 
 
 
 
 6. 
 
 5 
 
 29.5 
 
 94.0 
 
 July 
 
 15.0 
 
 50.0 
 
 12. 
 
 4 
 
 10, 
 
 
 
 6. 
 
 5 
 
 28.9 
 
 93.9 
 
 August 
 
 15.0 
 
 50.5 
 
 12. 
 
 9 
 
 10. 
 
 
 
 6, 
 
 5 
 
 29.4 
 
 94.9 
 
 September 
 
 15.0 
 
 49.5 
 
 12. 
 
 9 
 
 11, 
 
 
 
 6, 
 
 2 
 
 30.1 
 
 94.6 
 
 October 
 
 15.0 
 
 49.5 
 
 12. 
 
 9 
 
 11. 
 
 
 
 6, 
 
 •3 
 
 30.2 
 
 94.7 
 
 Source: Steel Founders' Society of America. 
 
680 
 
 R-P 
 
 -26 
 
 
 
 
 
 
 
 
 
 
 TABLE IV 
 
 Prioe and Produotion!jDf Malleable Iron Castings 
 and Per Cent of Capacity Utilized 
 
 Number of Short Tons 
 1926 1927 1928 1929 1930 10X1 1932 lAMI 1 934 1MB 
 
 
 JAN 
 
 66.776 
 
 56.627 
 
 61.072 
 
 73.125 
 
 62.339 
 
 31 r 665 
 
 22,216 
 
 12,63ft 
 
 30,4,17 
 
 43,400 
 
 FEB 
 
 71,161 
 
 62,335 
 
 65,359 
 
 73,875 
 
 66,909 
 
 34.076 
 
 21.578 
 
 13:780 
 
 33 r 9S9 
 
 41,377 
 
 MAR 
 
 80,116 
 
 72,205 
 
 70,070 
 
 83,365 
 
 64,389 
 
 35.758 
 
 19 P 597 
 
 9.959 
 
 43 f 438 
 
 42,ftOfl 
 
 APR 
 
 72,241 
 
 64,612 
 
 63,380 
 
 83,744 
 
 62,945 
 
 36.682 
 
 16 P 758 
 
 18 r 566 
 
 40,742 
 
 42,035 
 
 MAY 
 
 65,106 
 
 62,747 
 
 67,903 
 
 81,641 
 
 54.277 
 
 31.964 
 
 17 r 430 
 
 2&+S2& 
 
 37,165 
 
 34,729 
 
 JUN 
 
 66,358 
 
 64,310 
 
 67.090 
 
 72,232 
 
 59,971 
 31.318 
 
 24.248 
 
 0£*143_ 
 
 31,11ft 
 
 2R,340 
 
 27 f 54ft 
 
 JUL 
 
 60,384 
 
 53,046 
 
 60,290 
 
 70,600 
 
 20.223 
 
 S,7Q3 
 
 30,865 
 
 23,388 
 
 28,915 
 
 AUG 
 
 62,218 
 
 57,096 
 
 68,606 
 
 69,173 
 
 25.933 
 
 18.831 
 
 7,038 
 
 il^jBJX 
 
 23,910. 
 
 '35.245 
 
 SEP 
 
 63,399 
 
 50,807 
 
 62,665 
 
 59,087 
 
 26,839 
 
 [18.485 
 
 10 P 168 
 
 ^7,078 
 
 ZLtS&L 
 
 36,996 
 
 OCT 
 
 62,321 
 
 52,458 
 
 70,054 
 
 65,526 
 
 29,101 
 
 20.444 
 
 12.586 
 
 24.381 
 
 25 f 317 
 
 43 , 467 
 
 NOV 
 
 50,946 
 
 46,698 
 
 63,560 
 
 46,459 
 
 27.47C17.984 
 
 J3.912 
 
 21,944 
 
 28,515 
 
 44,277 
 
 DEC 
 
 55.561 
 
 53,824 
 
 59.428 
 
 46.029 
 
 30.79C21.503 
 
 14.12ft 
 
 21 r fi70 
 
 32 , 746 
 
 
 
 
 
 
 
 
 
 
 
 
 
 ' ' " 
 
 1926 1927 1928 Per iS!9 lt ^gSo^i&l 1932 1933 1934 19SS 
 
 ■" 
 
 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 
 
 27.8 
 
 42.5 
 
 SEP 
 
 56.4 
 
 47.6 
 
 66.3 
 
 61.2 
 
 27.1 
 
 18.6 
 
 10.9 
 
 31.6 
 
 25.6 
 
 44,7 
 
 OCT 
 
 SB J5 
 
 50.0 
 
 73.4 
 
 66.7 
 
 28.8 
 
 20.4 
 
 13.8 
 
 28.4 
 
 30.3 
 
 51.0 , 
 
 NOV 
 
 4B,9 
 
 44.4 
 
 66.8 
 
 47.7 
 
 27.7 
 
 18.3 
 
 15.3 
 
 25.0 
 
 33.5 
 
 53.1 
 
 DEC 
 
 49,4 
 
 51.2 
 
 63.4 
 
 47.3 
 
 31*0^ 
 
 21.5 
 
 16.2 
 
 25.6 
 
 38.7 
 
 
 I 
 
 
 L_ _J 
 
 
 
 . 
 
 
 
 , 
 
 
 
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 Average Price per Ton (f.o.b. Plant) (in Dollars) 
 
 1926 1927 1928 1929 1930 1931 1932 1933 1934 1935 
 
 i 
 
 JAN 
 
 177 
 
 148 
 
 150 
 
 146 
 
 137 
 
 131 
 
 115 
 
 112 
 
 135 
 
 118 
 
 FEB 
 
 177 
 
 14ft 
 
 150 
 
 146 
 
 137 
 
 131 
 
 115 
 
 .107 
 
 135 
 
 lift 
 
 MAR 
 
 177 
 
 14ft 
 
 150 
 
 146 
 
 137 
 
 131 
 
 115 
 
 104 
 
 135 
 
 119 
 
 APR 
 
 177 
 
 14fl 
 
 150 
 
 146 
 
 137 
 
 124 
 
 115 
 
 98 
 
 135 
 
 123 
 
 MAY 
 
 177 
 
 148 
 
 150 
 
 1.46 
 
 137 
 
 124 
 
 115 
 
 100 
 
 123 
 
 127 
 
 JUN 
 
 177 
 
 14ft 
 
 150 
 
 146 
 
 137 
 
 124 
 
 96 
 
 100 
 
 llfi 
 
 126 
 
 JUL 
 
 177 
 
 14ft 
 
 ISO 
 
 146 
 
 137 
 
 117 
 
 107 
 
 104 
 
 " 121 
 
 124 
 
 AUG. 
 
 177 
 
 148 
 
 150 
 
 146 
 
 137 
 
 117 
 
 115 
 
 JJ.2 
 
 SEP 
 
 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 
 
 14R 
 
 150 
 
 146 
 
 137 
 
 115 
 
 115 
 
 113 
 
 115 
 
 
 
 
 
 
 
 
 
 
 
 
 .. 
 
 Source: "Survey of Current Business," Foreign and Domestic Commeroe j 
 "Wholesale Prioe s," Bureau of Labor Statistics, 
 a/ Compiled by the U»S. Department of Commeroe, Bureau of the Census, 
 representing reports from 130 idenbical establishments, covering 
 
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- 684 ~ 
 
 TABLE VI 
 
 Number of Low, New and High Price Filings and All 
 Tyoes of Filings Made, "by Li vision 
 
 
 
 
 IT amber of P] 
 
 roducts on 
 
 wh: 
 
 Lch 
 
 
 
 
 
 F: 
 
 Llings 
 
 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 
 
 259 
 
 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 
 
 
 36 
 
 32 
 
 
 4 
 
 347 
 
 Source: Compilation by Statistics Section of NRA 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: 
 
 ti 
 
 L - New, low or minimum schedule 
 
 DL - Divisional low or minimum schedule 
 
 N - New classification 
 
 DN - Divisional new classification 
 
 H - Increased orice 
 
 Total, All Types ~ namber of times a foundry filed prices or 
 other required material, i.e., discounts, etc. Does not refer 
 to number of n roducts filed gt each time. 
 
 
 9826 
 
- 685 - 
 TABLE VII 
 
 llumber of Lor/, Hew, and High Price Filings 
 and All Types of Filings, "by Months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Number 
 
 of 
 
 Product! 
 
 3 
 
 
 
 
 
 
 on which 
 
 Filings 
 
 
 
 
 
 
 
 were ! 
 
 nade 
 
 a/ 
 
 
 
 Total, All 
 
 Year and 
 
 Month 
 
 
 
 
 
 
 
 
 
 Types of 
 Filings b/ 
 
 
 L 
 
 DL 
 
 
 N 
 
 
 m 
 
 H 
 
 Aggregate 
 
 
 897 
 
 299 
 
 1 
 
 ,470 
 
 
 789 
 
 701 
 
 4,763 
 
 1933 
 
 
 
 
 
 
 
 
 
 
 December 15 to 
 
 31 
 
 
 
 
 731 
 
 
 
 
 136 
 
 1934 
 
 
 
 
 
 
 
 
 
 
 January 
 
 
 4 
 
 
 
 94 
 
 
 
 
 305 
 
 February 
 
 
 17 
 
 
 
 80 
 
 
 
 
 316 
 
 March 
 
 
 468 
 
 
 
 162 
 
 
 
 
 410 
 
 April 
 
 
 68 
 
 
 
 76 
 
 
 
 
 425 
 
 May- 
 
 
 20 
 
 
 
 27 
 
 
 
 
 364 
 
 June 
 
 
 11 
 
 
 
 54 
 
 
 
 
 526 
 
 July 
 
 
 42 
 
 
 
 24 
 
 
 
 
 295 
 
 August 
 
 
 14 
 
 
 
 53 
 
 
 
 
 228 
 
 September 
 
 
 31 
 
 
 
 . 18 
 
 
 
 9 
 
 153 
 
 October 
 
 
 40 
 
 6 
 
 
 22 
 
 
 6 
 
 55 
 
 204 
 
 November 
 
 
 10 
 
 39 
 
 
 21 
 
 
 159 
 
 25 
 
 232 
 
 December 
 
 
 17 
 
 38 
 
 
 19 
 
 
 392 
 
 80 
 
 209 
 
 1935 
 
 
 
 
 
 
 
 
 
 
 January 
 
 
 3 
 
 116 
 
 
 15 
 
 
 89 
 
 172 
 
 280 
 
 February 
 
 
 19 
 
 24 
 
 
 18 
 
 
 17 
 
 65 
 
 169 
 
 March 
 
 
 18 
 
 28 
 
 
 18 
 
 
 42 
 
 237 
 
 186 
 
 April 
 
 
 107 
 
 18 
 
 
 21 
 
 
 65 
 
 47 
 
 201 
 
 May 
 
 
 8 
 
 30 
 
 
 17 
 
 
 19 
 
 11 
 
 124 
 
 
 Source: Compilation by Statistics Section of ITRA 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 - Hew low or minimum schedule 
 DL ~ Divisional low or minimum schedule 
 
 N - New classification 
 DN - Divisional classification 
 
 H - Increased price 
 
 by Total, all types - 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 
 
 P.er>ort 
 Number 
 
 Example of "Same As" Filings: s/ "Rolling Mill 
 and Steel Plant Castings" 
 
 Effective 
 Date 
 
 Foundry 
 Number 
 
 Filed Sane In Report 
 As Foundry Number 
 
 Effsotivs 
 Date 
 
 Ixosptlons AidltloM 
 
 50 
 
 55 
 
 81 
 
 85 
 87 
 
 89 
 90 
 
 91 
 
 94 
 96 
 
 97 
 104 
 
 108 
 
 ill 
 117 
 119 
 
 121 
 125 
 172 
 
 1934, February 16 116 
 24 502 
 
 March 
 
 April 
 
 May 
 
 31 504 
 
 1 
 
 (422 
 |413 
 
 2 
 
 203 
 
 5 
 
 619 
 
 i 
 
 109 
 
 (501 
 
 
 508 
 
 4 
 
 606 
 
 1 
 
 408 
 
 310 
 
 6 
 
 126 
 
 6 
 
 207 
 
 11 
 
 517 
 
 4i4 
 
 12 
 
 205 
 
 11 
 
 306 
 (415 
 
 n 
 
 626 
 
 
 (627 
 
 23 
 
 620 
 
 27 
 
 (505 
 
 28 
 
 (512 
 
 1 
 
 421 
 
 9 
 
 401 
 
 11 
 
 113 
 
 14 
 
 602 
 
 
 (204 
 
 21- 
 
 .209 
 
 July 
 
 17 707 
 
 423 
 423 
 (407 
 (420 
 (424 
 407 
 420 
 424 
 407 
 407 
 407 
 407 
 
 407 
 407 
 407 
 407 
 407 
 
 (407 
 420 
 424 
 
 (407 
 420 
 
 (424 
 420 
 407 
 
 407 
 
 [407 
 424 
 407 
 420 
 424 
 407 
 407 
 407 
 424 
 407 
 424 
 407 
 420 
 
 ksk 
 
 407 
 
 420 
 424 
 
 3 
 
 ( 3 
 (76 
 
 76 
 
 ' 7 f 
 
 7 S 
 
 7 f 
 76 
 
 76 
 
 7 f 
 
 7 £ 
 
 7 f 
 76 
 
 76 
 
 76 
 
 h 
 
 76 
 
 76 
 
 <« 
 
 (76 
 
 7' 
 
 76 
 
 76 
 76 
 
 1933, December 19 
 
 19 
 
 1934, March 31 
 
 31 
 
 31 
 31 
 31 
 
 31 
 
 31 
 31 
 31 
 31 
 31 
 
 31 
 
 31 
 
 Jl 
 31 
 
 31 
 
 31 
 
 31 
 
 31 
 31 
 31 
 
 31 
 31 
 31 
 
 t 
 17 
 
 Source: Compilation by Statistics Section, NRA, from Daily Price Reports of 8teel Founders' 
 Society of America'. 
 
 a/ In Reports 90, 96 and 125, and 89, 97, 104 and 119, the filings had exceptions and 
 additions to the "sane as 1 filings submitted. 
 
 Note: This method, "same as filing," was used very frequently by various foundries in placing 
 
 prices on record with the Code Authority. The practice was merely to submit a statement 
 
 to the Agency to the effect that the foundry files the same prioes as another specified 
 foundry in a specific report. 
 
 9826 
 
 
 CO 
 00 
 
 to 
 
 0> 
 
 Ti 
 
- 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 NRA from Daily Price Re- 
 ports of Steel Founders' Society of America. 
 
 a/ December 5, 1933, Bulletin* 
 
 b/ April 25, 1934, Bulletin. 
 
 9826 
 
688 
 
 TABLE X-A 
 
 Type of Discounts Granted to Other Foundries 
 and Effective Dates 
 
 Companies Companies 
 
 Effective Foundry Type of Receiving Effeotire foundry Type of RecelTlng 
 Date Number Discount Dlecount Date Dumber Discount Discount 
 
 29, 1933 
 
 Feb. 23, 1934 
 Mar. 13 
 Feb. 27 
 Mar. 5 
 Mar. 14 
 Mar. 23 
 Mar. 30 
 Apr. 10 
 Mar. 30 
 Apr. 12 
 Apr. 12 
 
 Apr. 13 
 Apr. 18 
 
 Apr. 18 
 
 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) 
 
 tin 
 
 819 
 207 
 601 
 636 
 6«6 
 512 
 620 
 310 
 515 
 516 
 
 206 
 202-207) 
 201-208) 
 509 
 *202 
 
 201 
 
 207 
 
 208 
 
 126 
 509 
 408 
 
 513 
 201 
 123 
 625 
 2C6 
 
 519 
 
 405 
 519 
 109 
 
 407 
 429-119 
 626 
 4i6 
 422 
 504 
 401 
 111 
 419 
 102 
 521 
 <>02 
 
 All 
 
 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 
 
 A one Steal 
 
 105 
 
 513 
 
 ( 201-202 
 
 (207-208 
 
 (210 
 411-515 
 
 (509 
 All 
 
 District 4 
 423 
 
 Dlstriot 1 
 District 4 
 Distrlot 1 
 410 
 All 
 
 District 4 
 District 4-5 
 Distrlot 4 
 District 1 
 District 4 
 District 1 
 All 
 All 
 
 June 
 June 
 
 Jane 
 June 
 June 
 June 
 June 
 June 
 July 
 Aug. 
 June 
 Sept 
 Sept 
 Sept 
 Oct. 
 Oot. 
 Oct. 
 Oct. 
 Oct. 
 
 Nov. 
 
 Not. 
 Dec. 
 Dec. 
 Dec. 
 Dec. 
 Deo. 
 Jan. 
 Jan. 
 
 7, 1934 
 
 11 
 
 9 
 
 X \ 
 
 18 
 
 19 
 
 22 
 
 26 
 
 30 
 
 2 
 
 12 
 
 14 
 
 7 
 
 12 
 1 
 5 
 11 
 19 
 25 
 1 
 
 12 
 28 
 10 
 18 
 21 
 26 
 31 
 
 24, i°/?5 
 
 28 
 
 Jan. 31 
 
 Feb. 7 
 
 Feb. 4 
 
 Feb. 5 
 
 Feb. 11 
 
 Feb. IS 
 Feb. 19 
 Feb. 18 
 Feb. 19 
 Mar. 2 
 Feb. 19 
 Feb. 21 
 Mar. 6 
 Mar. 11 
 Feb. 19 
 Feb. 22 
 Mar. 15 
 Mar. 20 
 Apr. 9 
 Apr. 11 
 Apr. 26 
 May 3 
 May ?3 
 May 23 
 
 121 
 105 
 309 
 3o4 
 
 108 
 
 515 
 
 819 
 
 616 
 
 , 6l9 
 204-209 
 819 
 6l4 
 126 
 636 
 
 } 17 
 625 
 
 516 
 
 J 1 ? 
 
 6?9 
 
 402-602 
 
 636 
 
 520 
 203 
 635-304 
 101 
 412 
 101 
 807 
 825-826) 
 827-828) 
 602 
 208-*lS 
 8OR-SO6 
 822 
 825-826) 
 827-828) 
 210 
 208 
 705 
 
 5 11 
 
 612 
 
 805-806 
 416 
 210 
 621 
 821 
 
 607 
 
 824 
 «32 
 401 
 421 
 812 
 306 
 504-507 
 619 
 
 All 
 
 126 
 
 New Orleans 
 
 309 
 
 All 
 
 Distrlot 5 
 
 All 
 
 All 
 
 District 6 
 
 District 2 
 
 All 
 
 622 
 
 123 
 
 All 
 
 All 
 
 All 
 
 All 
 
 111 
 
 All 
 
 All 
 
 All 
 
 All 
 
 All 
 
 All 
 
 All 
 
 All 
 
 All 
 
 'Ustrlot 8 
 
 All 
 
 All 
 
 All 
 
 District 8 
 
 All 
 
 All 
 
 All 
 All 
 
 All 
 All 
 
 All 
 All 
 
 All 
 All 
 All 
 All 
 All 
 All 
 All 
 All 
 All 
 All 
 All 
 All 
 All 
 
 Source: Compilation by Statistics Section, NRA, from Dally Price Reports, Steel Founders' 
 Society of America. 
 
 Type of Discount: 
 a -"We will allow off of our regular prices discounts of 5# when the castings are re- 
 sold by the customer without further processing at prices not lower than file prises." 
 
 b -"We reserve the right to eell to . . . and grant jtf> discount on condition that the pro- 
 ducts be resold at not less than filed price." 
 
 c -"We reserve the right to sell to ... and grant not more than 10$ dlsoount on the oon- 
 ditlon that the produot be resold at not less than filed prioe." 
 
 d -"Subject to maximum dlecount of 20^." - 
 
 A -"Maximum discount allowed from schedule Is 15$ on the first two columns, thit is, 
 '1 off and '2-5 off columns, and 10$ on the balanoe." 
 
 f -"Allow maximum 15$ discount and on Railroad oastlngs and Bridge castings make a 
 minimva price of 5/t per pound." 
 
 g -"On crders f or miscellaneous castings where the agent furnishes the patterns, Inspection, 
 and carries the accounts, we will allow <j% commission on sales, said 5$ commission to 
 be figured on the net T&lue of the castings shipped. Where patterns are furnished by 
 the customer or by ue we will allow the agents 3?$\" 
 
 9826 
 
- 689 - 
 
 TABLE X-B 
 Frequency of Type of Discounts, by Months 
 
 lypQ of Discount 
 
 Year and 
 
 Month 
 
 Total 
 
 a 
 
 Total 
 
 120 
 
 31 
 
 45 
 
 32 
 
 1933 
 
 1934 
 
 December 
 
 9 
 
 
 
 
 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 
 
 
 Source: Compilation by Statistics Section, MA, from Daily 
 Price Reports, Steel Founders' Society of America. 
 
 Type of Discount: (See note a to Table X-A. ) 
 
 9826 
 
690 
 
 
 
 
 TABLE XI 
 
 -A 
 
 
 
 
 Type of 
 
 Freight Allowances 
 
 Granted to Railroad* 
 
 
 
 
 
 and Effective Dates 
 
 
 
 Effective 
 
 Foundry 
 
 Type of 
 
 Effective 
 
 Foundry 
 
 Type of 
 
 Date 
 
 Number 
 
 Allowance 
 
 Date 
 
 lumber 
 
 Allowanoe 
 
 Dec. 29, 1933 
 
 All 
 
 e 
 
 
 June k, 1934 
 
 I 18 
 
 418 
 
 • 
 
 D«c. 27 
 
 506 
 
 e 
 
 
 June 4 
 
 d 
 
 Dec 28 
 
 306 
 
 a 
 
 
 Juna 4 
 
 126 
 
 d 
 
 Jan. 28, 193* 
 
 501-508 
 
 a 
 
 
 June 5 
 
 519 
 
 • 
 
 Feb. 1 
 
 311 
 
 g 
 
 
 June 5 
 
 517 
 
 d 
 
 Feb. 5 
 
 606 
 
 g 
 
 
 June 6 
 
 108 
 
 d 
 
 Feb. 20 
 
 636 
 
 a 
 
 
 June 6 
 
 205 
 
 • 
 
 
 50* 
 
 1 
 
 
 June 6 
 
 128 
 
 • 
 
 Feb. 25 
 Mar. 23 
 
 3 °2 
 504 
 
 407-424 
 
 • 
 
 i 
 
 
 June 6 
 June 7 
 June b 
 
 111 
 51» 
 
 • 
 • 
 
 Max. 23 
 
 a 
 
 and b 
 
 518 
 
 « 
 
 Apx. 11 
 
 10J 
 
 204-209 
 
 a 
 
 and b 
 
 June 6 
 
 506 
 
 d 
 
 May 3 
 
 k 
 
 
 June 6 
 
 408 
 
 d 
 
 May 1 
 
 812 
 
 k 
 
 
 June 7 
 June 6 
 
 d 
 
 May 4 
 
 801 
 
 k 
 
 
 635 
 
 • 
 
 May 9 
 
 516 
 
 k 
 
 
 June 8 
 
 113 
 
 • 
 
 May 1* 
 
 832 
 
 k 
 
 
 June 6 
 
 602 
 
 4 
 
 May 15 
 
 506 
 
 a 
 
 and b 
 
 June 14 
 
 207 
 
 • 
 
 May- 28 
 
 105 
 
 e 
 
 
 June 14 
 
 520 
 
 d 
 
 May 2* 
 
 407-*28 
 
 c 
 
 
 June ill- 
 
 623 
 
 d 
 
 May 31 
 
 109 
 
 d 
 
 
 June 19 
 
 201 
 
 • 
 
 June 1 
 
 412 
 
 d 
 
 
 June 18 
 
 601 
 
 d 
 
 June 1 
 
 611 
 
 • 
 
 
 June 20 
 
 206 
 
 d 
 
 June 1 
 
 122 
 
 • 
 
 
 June 22 
 
 d 
 
 June 2 
 
 202 
 
 e 
 
 
 July 1 
 
 208 
 
 • 
 
 June 1 
 
 102 
 
 e 
 
 
 June 25 
 
 704 
 
 e 
 
 June 1 
 
 410 
 
 c 
 
 
 June 2b 
 
 311 
 
 • 
 
 June 1 
 
 126 
 
 e 
 
 
 July 3 
 
 640 
 
 d 
 
 June 2 
 
 414 
 
 f 
 
 
 July 5 
 
 130 
 
 e 
 
 Jure 1 
 
 619 
 
 e 
 
 
 July 6 
 
 805 
 
 • 
 
 June 1 
 
 626-627 
 
 d 
 
 
 July 6 
 
 112 
 
 • 
 
 Source: Compilation by Statistics Section, HRA, from Daily Prloe Reports, Steel 
 Founders' Society of America. 
 
 Type of Freight Allowance: 
 
 a - In caees of Railroad cartings for repair or maintenance purposes, 
 these prices are f.o.b. freight baeiag 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 equipment to be built either in 
 Railroad shops or commercial oar-builders' plants, the priots are 
 f.o.b. freight basing point seller' e works with freight oharges 
 allowed to destination. 
 
 - In cases of Railroad castings for repair or maintenance, thbse prlcee 
 
 are f.o.b. freight basing point seller's works with freight charges 
 allowed to destination In any case providing euch destination le east 
 of Longitude 105, passing through Denver, Colorado. 
 
 d - In cases of Railroad castings whether for new equipment or repairs, 
 are f.o.b. our works with freight charges allowed to destination, 
 provided euch le east of Longitude 105, through Denver, Colorado. 
 
 e - In cases of Railroad castings whether new equipment or repairs, our 
 prlcee are f.o.b. freight basing point our works with freight oharges 
 allowed to destination. 
 
 f - In cases of Railroad castings, freight chaxgee allowed to destination 
 on orders of 150 lbs. or more. 
 
 g - Allow freight charge east of Mississippi and morth of Ohio Rivers. 
 
 h - ffs reserve right to equalise mattexn transportation charges with any 
 competing foundry. 
 
 1 - Published freight rates will be allowed within radius of 150 miles from 
 
 Akron, Ohio. 
 
 i - Published freight rates will be allowed within radius of 250 mllss from 
 Akron, Ohio. 
 
 k - Reserve right to meet competition, to equalise by freight allowanoe. 
 
 9826 
 
- 691 - 
 
 TABLE XI-B 
 
 Frequency of Type of Freight Allowances, 
 by Months 
 
 Year and 
 Month 
 
 Total 
 
 Tygp of Allowance 
 
 J k 
 
 Total 
 
 71 
 
 3 19 25 
 
 1 6 
 
 1933 
 
 1934 
 
 December 
 
 2 
 
 January 
 
 3 
 
 February 
 
 5 
 
 I arch 
 
 8 
 
 Aoril 
 
 2 
 
 I ay 
 
 9 
 
 June 
 
 37 
 
 Jaly 
 
 5 
 
 jiUSUSt 
 
 
 Seot ember 
 
 
 October 
 
 
 November 
 
 
 December 
 
 
 
 
 
 
 
 
 11 
 
 2 
 
 
 
 
 
 
 1 
 
 
 2 
 
 1 
 
 1 
 
 2 
 
 2 
 
 2 
 
 
 1 
 
 
 
 
 1 
 
 1 
 
 1 
 
 
 
 
 
 
 
 
 1 
 
 1 
 
 1 
 
 1 
 
 17 
 
 1 
 
 18 
 4 
 
 1 
 
 
 
 
 1935 
 
 January 
 February 
 March 
 April 
 
 May 
 
 Source: Compilation by Statistics Section, MA, from Daily Price 
 Reports, Steel Founders 1 Society of America. 
 
 Tyoe of Allowance: (See Notes to Table XI-A. ) 
 
 II 
 
 9826 
 
692 
 
 TABLE ZII-A 
 Type of Pattern Allowances Granted to Foundries and Effective Dates 
 
 Tear and 
 
 Foundry 
 
 Typa of 
 
 Tear and 
 
 Foundry 
 
 Type of 
 
 Month 
 
 lumbar 
 
 Allowance 
 
 Month 
 
 Number 
 
 Allowance 
 
 Dec. 28, 1933 
 Jan. *, 193* 
 
 302-307-313) 
 506-517 
 
 b 
 
 c 
 
 and d 
 
 Mar. 31, 193* 
 Apr. 4 
 
 607 % 
 
 a - - i 
 
 Jaa. 5 
 
 ■at. Malleable 
 
 
 
 Apr. 4 
 
 521-109 
 
 
 
 Cleveland, Ohio 
 
 f 
 
 and l 
 
 Apr. 5 
 
 128-122) 
 107-808) 
 
 
 Jan. 9 
 
 602-416) 
 
 c 
 
 aad d 
 
 
 
 
 407-424) 
 
 
 
 Apr. 2 
 
 808-812 
 
 
 
 129 
 
 b 
 
 
 Apr, 5 
 
 705-314-311 j 
 
 813-815) 
 
 30* 
 
 
 Jan. 11 
 
 204-422 
 
 
 
 and d 
 
 
 
 Jan. 16 
 
 611-412) 
 
 
 
 Apr. 6 
 
 
 
 619-310 
 
 101-202-413) 
 
 407-424) 
 
 
 
 and d 
 
 Apr. 9 
 Apr. 11 
 
 105-805 
 206-801) 
 
 
 
 
 
 Apr. 10 
 
 12*) 
 
 
 Jaa. 17 
 
 201-117 
 
 c 
 
 and d 
 
 Apr- 13 
 
 204-209 ) 
 
 
 Jan. 18 
 
 616-207 
 
 c 
 
 and d 
 
 
 83*-102-132) 
 
 
 Jan. 19 
 
 629-709) 
 
 c 
 
 and d 
 
 Apr. 16 
 
 412 
 
 
 
 616-207) 
 
 
 
 Apr. 18 
 
 IS 
 
 c and d 
 
 Jan. 20 
 
 408-109) 
 
 
 
 Apr. 19 
 
 
 Jan. 22 
 
 509-205 
 
 c 
 
 and d 
 
 Apr. 27 
 Apr. 26 
 
 109 
 
 
 
 128-420) 
 
 
 
 832 
 
 
 Jan. 2* 
 
 641-106 
 421-614 
 
 
 
 and d 
 
 May 1 
 May 3 
 
 *05 
 61E 
 
 
 Jan. 25 
 
 102-126) 
 6OI-311) 
 
 
 
 May 1 
 May * 
 
 812 
 801 
 
 
 Jan. 26 
 
 638-605 
 
 c 
 
 and d 
 
 May 9 
 
 516 
 
 
 Jan. 27 
 
 505-131) 
 
 
 
 May 11 
 
 123 
 
 
 Jan. 28 
 
 301 
 
 b 
 
 
 May 1* 
 
 ?3f 
 
 
 
 131 
 
 c 
 
 and d 
 
 May 1* 
 
 816 
 
 
 Jan. 31 
 
 108 
 
 
 
 and d 
 
 May 23 
 
 822 
 
 
 Feb. i 
 
 127-71* 
 
 
 
 and d 
 
 May 28 
 
 811 
 
 
 Feb. 3 
 
 712-306) 
 805) 
 
 
 
 and d 
 
 June 1* 
 
 306 
 
 
 
 
 
 June 1* 
 
 623 
 
 
 Fsb. 5 
 
 816 
 
 
 
 and d 
 
 June 19 
 
 602 
 
 
 
 606 
 
 g 
 
 
 June 22 
 
 512-206 
 408-619 
 
 
 
 629 
 
 c 
 
 and d 
 
 June 23 
 
 
 Tab. 8 
 
 511 
 
 c 
 
 
 June 27 
 
 108-306 
 
 
 Fab. 9 
 
 701 
 
 
 
 and d 
 
 July 2 
 
 127-302 
 
 
 Fab. IS 
 
 m 
 
 
 
 and d 
 
 July 7 
 
 50* 
 
 
 
 c 
 
 
 July 10 
 
 
 Fab. 19 
 
 f§ 
 
 e 
 
 aad d 
 
 
 
 Fab. 21 
 
 I 
 
 
 J-.ily 11 
 
 207 
 
 
 Mar. 5 
 
 636 
 
 i 
 
 
 July 13 
 
 203 
 
 
 Mar. 9 
 
 509 
 
 a 
 
 
 July 13 
 
 202-205 
 
 a and 
 
 
 129 
 
 b 
 
 
 July 13 
 July 16 
 
 201 
 
 a and • 
 
 Mar. 1* 
 
 5S 
 
 a 
 
 
 621-629 
 
 a and a 
 
 
 a 
 
 
 July 27 
 
 502 
 
 a and e 
 
 Mar. 17 
 Mar. 19 
 
 42? 
 
 
 
 a 
 
 
 Aug. 3 
 Aug. 6 
 
 ¥ 
 
 a and • 
 
 Mar. CO 
 
 504-202 
 
 a 
 
 
 Aug. 17 
 
 f 1 ! 
 
 
 Max. 21 
 
 639 
 
 a 
 
 and c 
 
 Aug. 21 
 
 *l6 
 
 
 Mar. 22 
 
 637 
 
 a 
 
 
 Aug. 22 
 
 306 
 
 
 
 111 
 
 
 
 
 Aug. 2* 
 
 513 
 
 
 Mar. 23 
 Mar. 24 
 
 612 
 
 a 
 
 and 
 
 Aug. 13 
 
 10 § 
 81* 
 
 
 823-416 
 
 a 
 
 
 Aug. 28 
 
 
 Mar. 26 
 
 626 
 
 
 
 and d 
 
 Sept. 12 
 
 112 
 
 
 
 205-714 
 
 620 
 
 a 
 
 
 Sept. 29 
 
 3 1 * 
 
 626 
 
 
 Mar. 28 
 
 a 
 
 
 Dec. 19 
 
 
 Mar. 30 
 
 310 
 
 a 
 
 
 Dae. 26 
 
 627-*l5 
 
 
 Mar. 28 
 
 131 
 
 a 
 
 
 
 
 
 Source: Compilation by Statistics Sootioa, IRA, from Dally .Price Reports, Steel 
 Founders' Society of Aaerloa. 
 
 Type of Pattern Allowances: 
 
 a - *fe hereby file with your office the stipulation where amy pattern ia in exis- 
 tence and owned by a competing oompany we will to meet competition likewise 
 furnlah a pattern from which to make castings for a customer without any charge , 
 we to be the Judge as to when the pattern is to be made and the conditlone, 
 pattern to remain our property. 1 
 
 b - "Castings requiring intricate mouldings and castings to be made from sweep 
 skeleton or other incomplete pattern equipment castings having a thin metal 
 seotton ... will be subject to negotiations onprioe.* 
 
 o - "When a new pattern is required and when 500 or nore misosllaneous Railroad 
 castings are bought at one time, we will absorb the pattern oost, pattern to 
 remain our property. 1 
 
 4 - "When a new pattern ie required and lees than 500 miscellaneous castings (Rail- 
 road) are bought at one time, we will make an extra charge to the cuetomer at 
 not lees than cost." 
 
 e - "We reserve the right to equalize pattern transportation charges with any com- 
 peting eteel foundry. 1 
 
 f - "When patterne are available in stock there will be no charge to customer 
 new pattern ie required cuetomer will be charged. 1 
 
 if 
 
 "We will make no charge for patterns on Railroad Car castings when orders are 
 for production quantities. Will charge or require cuetomer to furnish patterne 
 la caee orders are for Jobbing quantities. 1 
 
 ■We reserve right to supply pattern at no coet when such are for standard parts. 
 
 9826 
 
- 693 - 
 
 TABLE XII-B 
 
 Frequency Distribution of Allowances 
 on Fattersn, "by Months 
 
 Yerr and 
 
 Month 
 
 Total 
 
 Type of Allowance 
 
 Total 
 
 233 
 
 80 
 
 7 64 59 
 
 17 
 
 1933 
 
 December 
 
 1934 
 
 January 
 
 February 
 March 
 
 iApril 
 May 
 June 
 July 
 August 
 September 
 October 
 November 
 December 
 
 1935 
 
 January 
 
 February 
 
 March 
 
 April 
 
 May 
 
 96 
 
 24 
 
 27 
 
 33 
 
 10 
 
 6 
 
 20 
 
 9 
 
 2 
 
 17 
 31 
 10 
 
 6 
 14 
 
 2 
 
 46 
 
 11 
 6 
 1 
 
 46 
 10 
 
 2 
 1 
 
 1 
 3 
 
 Source: Compiled by Statistics Section, MR A, from Daily Price Re- 
 ports of Steel Founders' Society of America, 
 
 Type of Pattern Allowance: (See Notes to Table XIII-A. ) 
 
 S826 
 
694 
 
 TABLE XI II- A 
 
 Foundrieo filing Salee Contraota Specifying Prices Loner 
 
 than Currant Filed Price*, Number of Cuatomera, 
 
 Produota Affected, and Length of Contracte 
 
 
 
 Oontraot 
 
 
 
 
 
 lumber of 
 
 lumber of 
 
 Data of 
 
 Foundry 
 
 
 
 
 Lengtt 
 
 1 0:; 
 
 Report 
 
 luaber 
 
 EffaotlTa 
 
 Xxplraa 
 
 Oontraot 
 
 
 Produota 
 
 Ouetomera 
 
 Oot. 20, 193* 
 
 518 
 
 Oct. 13, 193* 
 
 Dao. 31, 
 
 193* 
 
 2 montho - 
 
 17 
 
 day* 
 
 3 
 
 1 
 
 Oot. 2J 
 
 620 
 
 ft/ 
 
 Jan. 1, ' 
 
 L935 
 
 ft/ 
 
 
 
 2 
 
 1 
 
 Oot. 23 
 
 •20 
 
 V 
 
 Jan. 1 
 
 
 ft/ 
 
 
 
 1 
 
 I 
 
 1 
 
 Oot. 23 
 Oot. 23 
 
 620 
 (20 
 
 & 
 
 Jan. 1 
 Jam. 1 
 
 
 tf 
 
 
 
 2 
 
 Oot. 23 
 
 •20 
 
 5 
 
 Jan. 1 
 
 
 ft/ 
 
 
 
 
 1 
 
 Oot. 23 
 
 620 
 
 V 
 
 Jan. 1 
 
 
 ft/ 
 
 
 
 
 I 
 
 Oot. 23 
 
 622 
 
 a/ 
 
 \J 
 
 
 ft/ 
 
 
 
 
 Oot. 23 
 
 622 
 
 ft/ 
 
 sJ 
 
 
 ft/ 
 
 
 
 
 1 
 
 Oot. 23 
 
 622 
 
 ft/ 
 
 by 
 
 
 1/ 
 
 
 
 
 1 
 
 Oot. 21 
 
 622 
 
 ft/ 
 
 sJ 
 
 
 ft/ 
 
 
 
 
 1 
 
 Oot. 23 
 
 622 
 
 ft/ 
 
 %J 
 
 
 ft/ 
 
 
 
 
 1 
 
 Oot. 23 
 
 622 
 
 , i/ 
 
 %] 
 
 
 ft/ 
 
 
 
 
 1 
 
 Oot. 23 
 
 626 
 
 Aug. 16 
 
 ft/ 
 
 
 ft/ 
 
 
 
 e 
 
 1 
 
 Oot. 23 
 
 626 
 
 Aug. 16 
 
 Max. 25 
 
 
 ft/ 
 
 
 
 8 
 
 1 
 
 Oot. 23 
 
 705 
 
 Max. 26 
 
 
 1 year 
 
 
 
 2 
 
 1 
 
 Oot. 23 
 
 9 
 
 •3» 
 
 June 30 
 
 Dao. 31, 
 
 193* 
 
 6 montha 
 
 
 
 t 
 
 I 
 
 Oot. 23 
 
 ft/ 
 
 Jan. 1, : 
 
 L935 
 
 ft/ 
 
 
 
 Oot. 23 
 
 1/ 
 
 Jan. 1 
 
 
 5 
 
 
 
 1 
 
 1 
 
 Oot. 23 
 
 638 
 
 ft/ 
 
 Jan. 1 
 
 
 &/ 
 
 
 
 1 
 
 1 
 
 Oot. 25 
 
 619 
 
 Oot. 5 
 
 Dao. 31, 
 
 193* 
 
 2 month* - 
 
 21 
 
 daye 
 
 1 
 
 2 
 
 Oot. 25 
 
 ft/ 
 
 Dao. 31 
 
 
 ft/ 
 
 
 
 10 
 
 1 
 
 Oot. 25 
 
 619 
 
 i/ 
 
 Doc. 31 . 
 
 
 ft/ 
 
 
 
 5 
 
 1 
 
 Oot. 29 
 
 609 
 
 
 
 
 
 ^ 
 
 
 
 1 
 
 2 
 
 Oot. 29 
 
 609 
 
 ft/ 
 
 
 
 
 ft/ 
 
 . 
 
 
 2 
 
 k 
 
 Oot. 29 
 
 609 
 
 J/ 
 
 
 
 
 ft/ 
 
 
 
 2 
 
 2 
 
 Oot. 29 
 
 609 
 
 S/ 
 
 
 
 
 ft/ 
 
 
 
 1 
 
 1 
 
 Oot. 29 
 
 509 
 628 
 
 4/ 
 
 
 
 
 s 
 
 
 
 1 
 
 1 
 
 
 July 7 
 
 
 
 
 ft/ 
 
 
 
 2 
 
 I 
 
 Hot. 22 
 
 631 
 
 Iot. 10 
 
 Apr. lT 
 
 L935 
 
 h montha - 
 
 ?0 
 
 dayt 
 
 ! 
 
 Hot. 22 
 
 <3l 
 
 Iot. 10 
 
 Apr. 1 
 
 
 k montha - 
 
 20 
 
 daye 
 
 2 
 
 Hot. 22 
 
 631 
 
 Iot. 10 
 
 Apr. 1 
 
 
 h montha - 
 
 20 
 
 day* 
 
 3 
 
 1 
 
 Iot. 22 
 
 631 
 
 Iot. 10 
 
 Apr. 1 
 
 
 4 montha - 
 
 20 
 
 day* 
 
 1 
 
 2 
 
 Rot. 22 
 
 631 
 
 Iot. 10 
 
 Apr. 1 
 
 
 k montha - 
 
 20 
 
 day a 
 
 1 
 
 1 
 
 Iot. 22 
 
 631 
 
 Iot. 10 
 
 Apr. 1 , 
 
 
 k montha - 
 
 28 
 
 day* 
 
 1 
 
 1 
 
 Iot. 28 
 
 635 
 
 Sept. 20 
 
 ft/ 
 
 
 */ 
 
 
 
 1 
 
 2 
 
 Iot. 28 
 
 635 
 
 Sept. 20 
 
 ft/ 
 
 
 ft/ 
 
 
 
 1 
 
 2 
 
 Iot. 28 
 
 635 
 
 Sept. 20 
 
 ft/ 
 
 
 ft/ 
 
 
 
 2 
 
 3 
 
 Iot. 30 
 
 505 
 
 8ept. 17 
 
 Dao. 31, 
 
 193* 
 
 3 montha - 
 
 13 daye 
 
 8 
 
 1 
 
 
 505 
 631 
 
 Sept. 17 
 
 Dao. 31 
 
 
 3 montha - 
 * montha - 
 
 13 daye 
 
 1 
 
 2 
 
 Doc. 11 
 
 Iot. 10 
 
 Apr. 1, • 
 
 L935 
 
 20 
 
 day* 
 
 3 
 
 2 
 
 Dae. 11 
 
 *31 
 
 Iot. 10 
 
 Apr. 1 
 
 
 h montha - 
 
 20 
 
 daye 
 
 1 
 
 1 
 
 Dae. 11 
 
 631 
 
 Iot. 10 
 
 Apr. 1 
 
 
 k months - 
 
 20 daye 
 
 3 
 
 1 
 
 Deo. 11 
 
 *31 
 
 Iot. 10 
 
 Apr. 1 
 
 
 h montha - 
 
 20 
 
 daya 
 
 2 
 
 1 
 
 Dae. 11 
 
 631 
 
 Iot. 10 
 
 Apr. 1 
 
 
 h montha - 
 
 20 day a 
 
 1 
 
 1 
 
 Dae. 11 
 
 631 
 
 Iot. 10 
 
 Apr. 1 
 
 
 k montha - 
 
 2* 
 
 day* 
 
 1 
 
 1 
 
 Dae. 11 
 
 St 
 
 Iot. 10 
 
 Apr. 1 , 
 
 
 h montha - 
 
 20 
 
 daya 
 
 1 
 
 1 
 
 Dao. 11 
 
 Dao. 30, 1933 
 
 ft/ 
 
 
 60-day olauae 
 
 
 5 
 
 1 
 
 
 
 
 
 
 either party 
 
 
 
 Dao. 17 
 
 616 
 
 Dao. 12, 193* 
 
 # 
 
 
 ft/ 
 
 
 
 5 
 
 1 
 
 Dao. 17 
 
 616 
 
 Dao. 7 
 
 W 
 
 
 ft/ 
 
 
 
 I 
 
 1 
 
 Dao. 22 
 
 711 
 
 Jan. 1, 1935, 
 
 Juno 30 
 
 
 6 montha 
 
 
 
 1 
 
 Jan. 2, 1935 
 
 |16 
 619 
 
 Dao. 31. 193* 
 
 Apr. 1 
 
 
 3 montha 
 
 
 
 2 
 
 1 
 
 Jan. 7 
 
 Jan. 3, 1935 
 
 Mar. 31 
 
 
 2 montha - 
 
 28 
 
 daya 
 
 10 
 
 1 
 
 Jan. 17 
 
 518 
 
 Dao. 28, 193* 
 
 Mar. 31 
 
 
 3 montha - 
 
 7 < 
 
 lay a 
 
 1 
 
 2 
 
 Jan. 23 
 
 108 
 
 ft/ 
 
 Mar. 31 
 
 
 ft/ 
 
 
 
 Blanket , 
 filing 2/ 
 
 1 
 
 Jan. 31 
 
 511 
 
 Jan. 28, 1935 
 
 Mar. 31 
 
 
 2 montha - 
 
 3 < 
 
 lay a 
 
 2 
 
 1 
 
 Mar. 2 
 
 51* 
 
 Jan. 26 
 
 Apr. 1 
 
 
 2 montha - 
 
 5 **y» 
 
 1 
 
 2 
 
 Mar. 11 
 
 511 
 
 Fab. 18 
 
 Dao. 31 
 
 
 9 montha - 
 
 10 daye 
 
 9 
 
 2 
 
 Apr. 18 
 
 50* 
 
 Apr. 11 
 
 Dao. 31 
 
 
 7 montha - 
 
 19 
 
 daya 
 
 1 
 
 1 
 
 Apr. 18 
 
 705 
 
 Apr. 18 
 
 July 18 
 
 
 3 montha 
 
 
 
 55 
 
 1 
 
 Bouroat Compilation by Statistics Baotion, IRA, from Daily Price Reporte, Steel Foundare' 
 Society of Anerloa. 
 
 ft/ lot apaolflod. 
 
 b/ In effeot until further notioa. 
 
 ft/ Fourth Quarterly Report. 
 
 9826 
 
- 695 - 
 TABLE XIII-B 
 
 Frequency of Conor act. 3 and 
 Customers Filed, by Months 
 
 Year and 
 Month Contracts Customers 
 
 Total SO 91 
 
 1934 
 
 October 29 46 
 
 Ho v ember 11 21 
 
 December 11 12 
 
 1Q7C 
 1 JUU 
 
 January 5 6 
 
 February 
 
 March 2 4 
 
 April 2 2 
 
 Source: Compilation by Statistics Section, 'SUA, from Drily Price 
 Reports, Steel Founders 1 Society of America, 
 
- 696 - 
 TABLE XIII-C 
 
 Frequency of Contract , Classified by 
 Length of Duration 
 
 ITumber of 
 
 Burnt ion Contrrcts 
 
 Total 50 
 
 5 
 5 
 13 
 
 2 
 1 
 C 
 1 
 
 
 
 1 
 
 2 
 
 to 
 
 3 months 
 
 n 
 
 o 
 
 to 
 
 4 months 
 
 4 
 
 to 
 
 5 months 
 
 5 
 
 to 
 
 6 months 
 
 6 
 
 to 
 
 7 months 
 
 7 
 
 to 
 
 8 months 
 
 8 
 
 to 
 
 9 months 
 
 9 
 
 to 
 
 10 months 
 
 10 
 
 to 
 
 11 months 
 
 11 
 
 to 
 
 12 months 
 
 12 
 
 months pud over 
 
 Not specified 
 
 Source: Compilr.tion ~oy Statistics Section, KEA, from Daily 
 Price Reports, Steel Founders' Society of Americr. 
 
 9826 
 
Prio. &on.duU« FlUd < 
 
 614 
 
 1933 
 
 Dm, 
 Du. 
 
 6 
 21 
 
 
 820 
 
 1934 
 
 fob. 
 
 12 1934, Fob. 22 
 
 636 
 
 
 r.D. 
 
 17 
 
 Fob. 27 
 
 622 
 
 
 M. 
 
 19 
 
 
 636 
 
 
 WO. 
 
 23 
 
 At Coco 
 
 612 
 
 
 >ob. 
 
 23 
 
 
 609 
 
 
 yt.. 
 
 26 
 
 
 T15 
 
 
 Ub. 
 
 26 
 
 
 (601 
 
 
 r*0. 
 
 19 
 
 Fob. 19 
 
 (60S 
 
 
 
 
 
 (601 
 
 
 U»r 
 
 1 
 
 Mir. 1 
 
 (608 
 
 
 
 
 
 Kw 
 
 14 
 
 HW> 
 
 14 
 
 Uw 
 
 15 
 
 
 lb 
 
 yu. 
 
 
 llir, 
 
 as 
 
 Uar 
 
 21 
 
 lur, 
 
 21 
 
 
 22 
 
 aar 
 
 22 
 
 '-»-' 
 
 22 
 
 Mar. 
 
 22 
 
 H>T. 
 
 23 
 
 Hu 
 
 H 
 
 Apr. 
 
 10 
 
 Apr. 
 
 11 
 
 
 12 
 
 Apr. 
 
 16 
 
 ftp 
 
 ^i 
 
 Apr. 
 
 i(T 
 
 *ror 100* nndar 100£ 
 
 120 
 
 812 
 
 Hay 
 
 10 
 
 May 10 
 
 122 
 
 (204 
 (209 
 
 M*y 
 
 15 
 
 Hay 15 
 
 124 
 
 614 
 
 toy 
 
 16 
 
 May 15 
 
 126 
 
 606 
 
 ->y 
 
 18 
 
 Hay 18 
 
 132 
 
 311 
 
 Hay 
 
 26 
 
 Kay 26 
 
 139 
 
 128 
 
 JUDO 
 
 6 
 
 Juno 6 
 
 
 
 Juno 
 
 _16 
 
 2nd 3- R. 
 
 
 
 
 
 
 
 (634 
 
 
 
 
 169 
 
 (626 
 (622 
 (638 
 
 Juno 
 
 27 
 
 July 7 
 
 162 
 
 «35 
 
 July 
 
 6 
 
 
 16* 
 
 619 
 
 July 
 
 9 
 
 July 9 
 
 165 
 
 112 
 
 July 
 
 9 
 
 July 9 
 
 166 
 
 607 
 
 July 
 
 12 
 
 July 12 
 
 169 
 
 519 
 
 July 
 
 16 
 
 July 16 
 
 1T0 
 
 612 
 
 July 
 
 14 
 
 July 14 
 
 
 (601 
 
 July 
 
 16 
 
 July 16 
 
 
 (606 
 
 
 
 
 
 609 
 
 July 
 
 16 
 
 July 16 
 
 
 (616 
 
 July 
 
 16 
 
 July 16 
 
 
 (61T 
 
 
 
 
 171 
 
 521 
 
 July 
 
 16 
 
 July 16 
 
 172 
 
 707 
 
 July 
 
 17 
 
 July 17 
 
 173 
 
 (616 
 
 July 
 
 20 
 
 July 20 
 
 
 604 
 
 July 
 
 20 
 
 July 20 
 
 176 
 
 
 July 
 
 24 
 
 July 24 
 
 
 206 
 
 July 
 
 24 
 
 July 24 
 
 177 
 
 506 
 
 July 
 
 26 
 
 J-ily 26 
 
 
 801 
 
 July 
 
 23 
 
 July 23 
 
 179 
 
 B12 
 
 July 
 
 SO 
 
 July 30 
 
 1S9 
 
 
 Aug. 
 
 14 
 
 Aug. 14 
 
 "»(!) 
 
 622 
 
 Aug. 
 
 26 
 
 Aug. 26 
 
 209 
 
 602 
 
 
 12 
 
 Sop. 12 
 
 
 (634 
 
 
 
 
 
 (639 
 
 
 
 
 
 (641 
 
 
 
 
 210 
 
 (819 
 
 Sop. 
 
 IT 
 
 
 
 (602 
 
 
 
 
 
 (626 
 
 
 
 
 
 (621 
 
 
 
 
 
 1638 
 
 
 
 
 
 (614 
 
 
 IT 
 
 
 
 (626 
 
 
 
 
 
 (640 
 
 
 
 
 
 (613 
 
 
 19 
 
 
 
 (639 
 
 
 
 
 
 (606 
 
 
 
 
 
 (630 
 
 Sop. 
 
 19 
 
 
 (D2.T.E 
 
 *<«) "! 
 
 a 
 
 Sop. 20 
 
 Sop. 28 
 
 Sop. 2* 
 
 Oot. 3 
 
 Oat, 
 
 12 
 
 Oat, 
 
 17 
 
 Dot 
 
 U 
 
 Dot. 
 
 29 
 
 *ar. 
 
 1 
 
 in 
 
 b 
 
 NOT 
 
 20 
 
 taw. 
 
 n 
 
 1556, Mar. 7 
 Apr. 52 
 Apr. 26 
 
 tap, 
 
 20 
 
 
 26 
 
 asp, 
 
 <i9 
 
 Dot. 
 
 6 
 
 Oct. 
 
 9 
 
 Det, 
 
 10 
 
 Dot. 
 
 12 
 
 Dot. 
 
 17 
 
 Dot. 
 
 u 
 
 (Dl f 3.7.8«0) 
 
 fjg .4,6,01;) 
 
 (Dl,3,7,8*0) 
 
 ;p2,*,S,o-rf 
 
 lot*, Tho lotto r 1 
 
 1 tubiorlpt India* to* a 
 tho rouadry la this lnatanoo fllao tho 1 
 aarfcod f x ) ^ 'oport 5199, oto. 
 
 »8|ft 
 
698 
 
 tABLX XT 
 Price Schedule! Tiled on Aeronautical Castings - BOCBN 
 
 
 Report 
 
 Foundry 
 
 
 Piled 
 
 
 Effective 
 
 Mod ScUJWW — 
 
 
 Not 
 
 
 
 
 
 
 
 
 Specified 
 
 
 I 1 
 
 604 
 
 1933, 
 
 , Deo. 18 
 
 
 
 C 
 
 
 6 
 
 206 
 
 
 Deo. 26 
 
 
 
 C 
 
 
 60 
 
 (601 
 (508 
 
 1834, 
 
 i Feb. 19 
 
 
 1934, Feb. 19 
 
 C - R 
 
 
 
 
 
 
 
 
 
 87 
 
 512 
 
 
 Apr. 2 
 
 
 Apr. 2 
 
 C - R 
 
 
 95 (x) 
 
 (832 
 (812 
 (801 
 (823 
 (816 
 
 
 Mar. 26 
 
 
 Mar. 26 
 
 C - R 
 
 
 
 
 lUreh 
 
 31, First 
 
 Quarterly Report 
 
 C 
 
 
 96 
 
 511 
 
 
 Apr. 9 
 
 
 Apr. 9 
 
 C - R 
 
 I (x) 
 
 
 835 
 
 
 Apr. 7 
 
 
 Apr. 7 
 
 C 
 
 
 97 
 
 805 
 
 
 Apr. 10 
 
 
 Apr. 10 
 
 C -R 
 
 
 
 709 
 
 
 Apr. 12 
 
 
 Apr. 12 
 
 C - R 
 
 
 98 
 
 130 
 
 
 Apr. 16 
 
 
 Apr. 16 
 
 C - R 
 
 
 104 
 
 616 
 
 
 Apr. 23 
 
 
 Apr. 25 
 
 C - R 
 
 
 106 
 
 303 
 
 
 Apr. IP 
 
 
 Apr. 18 
 
 B - R 
 
 I (x) 
 
 112 
 
 836 
 
 
 Apr. 7 
 
 
 Apr. 7 
 
 C 
 
 
 116 
 
 516 
 
 
 Hay 4 
 
 
 Hay 4 
 
 C - R 
 
 
 120 
 
 621 
 
 
 Hay 12 
 
 
 Hay 12 
 
 C - R 
 
 
 ISO 
 
 511 
 
 
 Hay 25 
 
 
 Hay 26 
 
 C - R 
 
 
 158 
 
 514 
 
 
 June 1 
 
 
 June 1 
 
 C - R 
 
 
 141 
 
 607 
 
 
 June 6 
 
 
 June 6 
 
 C - R 
 
 
 
 
 June 16, Seoond 
 
 Quarterly Report 
 
 C 
 
 
 161 
 
 126 
 
 
 June 22 
 
 
 June 22 
 
 C 
 
 
 162 
 
 305 
 
 
 July 4 
 
 
 July 4 
 
 C - R 
 
 
 1M 
 
 112 
 
 
 July 9 
 
 
 July 9 
 
 C -R 
 
 
 166 
 
 117 
 
 
 July 7 
 
 
 July 7 
 
 C - R 
 
 
 170 
 
 512 
 
 
 July 14 
 
 
 July 14 
 
 C - R 
 
 
 w« (y) 
 
 622 
 
 
 Aug. 23 
 
 
 Aug. 25 
 
 C - R 
 
 A(y) 
 
 no 
 
 (654 
 (629 
 (641 
 (619 
 (602 
 (626 
 (621 
 (658 
 (614 
 (628 
 
 1934, 
 
 Sept. 17 
 
 
 At Onoe 
 
 C 
 
 A(y) 
 
 212 
 
 (640) 
 (615 
 (659 
 
 
 Sept. 19 
 
 
 At Once 
 
 C 
 
 A(y) 
 
 
 (606 
 (650 
 (609 
 (628 
 
 
 Sept. 19 
 
 
 
 C 
 
 
 
 
 September 20, Third 
 
 Quarterly Report 
 
 C_ 
 
 a (y) 
 
 213 
 
 644 
 
 
 Sept. 20 
 
 
 
 C 
 
 a (y) 
 
 214 
 
 (624 
 (635 
 
 
 Sept. 21 
 
 
 
 C 
 
 a (y) 
 
 218 
 
 656 
 
 
 Sept. 26 
 
 
 1954, Sept. 26 
 
 C 
 
 a (y) 
 
 222 
 
 608 
 
 
 Oct. 3 
 
 
 
 C 
 
 a (y) 
 
 225 
 
 620 
 
 
 Oct. 8 
 
 
 
 C 
 
 A (y) 
 
 
 625 
 
 
 Oct. 5 
 
 
 Oct. 5 
 
 C 
 
 a (y) 
 
 241 
 
 609 
 
 
 Oct. 29 
 
 
 
 
 
 December 13, Fourth Quarterly Report C_ 
 
 507 510 1935, Jan. 31 Jan. 31 C - H 
 
 March 23, Fifth Quarterly Report C_ 
 
 Note i The letter A with a subscript indicates a "same as" filing. For example, A (y) means that 
 
 the foundry i-a thi« lnstanoe files the same schedule or prioe as another foundry above marked 
 (y) in report #196, etc. In column "price schedule" as In the oase of "C - B" in report 
 #307 the firet letter is the price schedule and the second letter specifications as followsj 
 
 R - revision 
 
 9826 
 
TABLE XVI 
 
 Price Schedules Filed on Railroad Locomotive 
 DrlTlng Boxes, Friction Type 
 
 
 
 
 
 
 
 Price 3chedu: 
 
 Le a/ 
 
 
 
 
 
 Report 
 
 Foundry 
 
 
 Filed 
 
 effective 
 
 
 Ip-eifii?^ 
 
 Remarks £/ 
 
 / 
 
 
 
 
 1933, 
 
 December 5 
 
 
 
 P 
 
 
 NOD 
 
 
 
 
 
 12 
 
 402 
 
 
 December 30 
 
 At once 
 
 
 Pri 
 
 ce given 
 
 
 
 
 
 
 24 
 
 208 
 
 1931, 
 
 January 18 
 
 At once 
 
 
 P 
 
 
 NOD 
 
 
 
 
 
 60 
 
 501 
 
 
 February 13 
 
 1934, February 
 
 19 
 
 P - 
 
 R 
 
 SOD 
 
 
 
 
 
 508 
 
 
 
 
 
 
 
 NOD 
 
 
 
 
 
 62 
 
 805 
 
 
 March 2 
 
 March 2 
 
 
 P - 
 
 W 
 
 NOD 
 
 
 
 
 
 
 
 Mar oil 
 
 31. First Quarterly Report 
 
 
 P 
 
 
 HOD 
 
 
 
 
 
 91 
 
 805 
 8^2 
 
 
 April 3 
 
 April 3 
 
 
 P - 
 
 R 
 
 ZQD 
 
 over 
 
 99 
 
 pes. 
 
 
 95(x) 
 
 81? 
 *01 
 823 
 815 
 
 
 March 26 
 
 March 26 
 
 
 P - 
 
 R 
 
 NQD 
 
 over 
 
 99 
 
 pes. 
 
 
 96 
 
 511 
 
 
 April 9 
 
 April 9 
 
 
 P - 
 
 R 
 
 NOD 
 
 over 
 
 99 
 
 pos. 
 
 
 A (x) 
 
 835 
 
 
 April 7 
 
 April 7 
 
 
 P - 
 
 R 
 
 NOB 
 
 over 
 
 99 
 
 pes. 
 
 
 97 
 
 70? 
 124 
 
 
 April 12 
 
 April 12 
 
 
 P - 
 
 R 
 
 ■00 
 
 over 
 
 99 
 
 pos. 
 
 
 109 
 
 
 April 21 
 
 April 21 
 
 
 P - 
 
 R 
 
 NOD 
 
 over 
 
 99 
 
 pos. 
 
 
 A (l jL12 
 
 835 
 304 
 
 
 April 7 
 
 April 7 
 
 
 P 
 
 
 NQD 
 
 over 
 
 99 
 
 pos.. 
 
 
 TL17 
 124 
 
 
 "ay 3 
 
 May 3 
 
 
 P - 
 
 R 
 
 NOD 
 
 ever 
 
 99 
 
 pos. 
 
 
 6l4 
 
 
 May 15 
 
 May 15 
 
 
 P - 
 
 R 
 
 nqd 
 
 
 
 
 
 126 
 
 103 
 
 
 May 21 
 
 May 21 
 
 
 P - 
 
 R 
 
 NQD 
 
 over 
 
 99 
 
 pos. 
 
 
 1J2 
 
 31 i 
 
 
 May 25 
 
 June 6 
 
 May 25 
 
 June 6 
 
 
 P - 
 
 R 
 
 NQD 
 
 over 
 
 99 
 
 pos. 
 
 
 139 
 
 128 
 
 
 
 P - 
 
 R 
 
 NOD 
 
 over 
 
 99 
 
 pos. 
 
 
 1*0(7 
 
 2C3 
 
 
 June S 
 
 June 8 
 
 
 P - 
 
 R 
 
 NQD ever 99 
 
 pos. 
 
 
 141 
 
 507 
 
 
 June 6 
 
 June 6 
 
 
 P - 
 
 R 
 
 NQD 
 
 over 
 
 99 
 
 pos. 
 
 
 1*3 
 
 64i 
 
 
 June 11 
 
 June 11 
 
 
 P - 
 
 R 
 
 NQD 
 
 over 
 
 99 
 
 pos. 
 
 
 
 
 June 16 . Beoond Quart erlT Report 
 
 
 £ 
 
 
 m 
 
 ever 
 
 9? 
 
 291* 
 
 
 *(y)l5l 
 
 206 
 
 
 June 22 
 
 June 22 
 
 
 p - 
 
 R 
 
 NQD 
 
 over 
 
 99 
 
 pos. 
 
 
 152 
 
 6i4 
 
 
 June 22 
 
 July 1 
 
 
 p - 
 
 R 
 
 NQD 
 
 over 
 
 99 
 
 pot. 
 
 
 157 
 
 712 
 
 
 June 27 
 
 June 27 
 
 
 P - 
 
 R 
 
 NQD 
 
 over 
 
 99 
 
 pes. 
 
 
 158 
 165 
 
 306 
 
 
 June 29 
 
 Juja 29 
 
 
 p - 
 
 R 
 
 NQD 
 
 over 
 
 99 
 
 pos. 
 
 
 112 
 
 
 July 9 
 
 July 9 
 
 
 P - 
 
 R 
 
 NQD 
 
 over 
 
 99 
 
 pos. 
 
 
 172 
 
 707 
 
 
 July 17 
 July 14 
 
 July 17 
 July 14 
 
 
 p - 
 
 R 
 
 NQD 
 
 over 
 
 99 
 
 pos. 
 
 
 189 
 
 835 
 
 
 
 (lo prloe sohsdul 
 
 s) 
 
 
 
 
 
 
 September 20. Third Quarterly Report 
 
 £ 
 
 
 NQD over 99 
 
 09s, 
 
 
 216 
 
 2°? 
 
 51b 
 
 
 September 22 
 
 September 2£ 
 
 p - 
 
 R 
 
 NQD 
 
 ever 
 
 99 
 
 pos. 
 
 
 §8 
 
 
 Ootober 19 
 
 Ootober 19 
 
 p - 
 
 R 
 
 NQD 
 
 over 
 
 249 
 
 pos. 
 
 
 105) 
 407) 
 422 
 
 
 Ootober 29 
 
 November 
 
 8 
 
 p - 
 
 L 
 
 NQD 
 
 over 
 
 pos. 
 
 
 242(e) 
 
 
 Ootober 29 
 
 November 
 
 8 
 
 p - 
 
 L 
 
 NQD 
 
 over 
 
 249 
 
 pos* 
 
 
 246 
 
 502 
 
 419 
 
 
 November 3 
 November 6 
 
 November 
 
 3 
 
 P - 
 
 R 
 
 
 
 
 -*■ 
 
 
 A («) 2W -y 
 
 252 2/ 
 
 
 November 
 
 8 
 
 p - 
 
 L 
 
 NQD 
 
 over 
 
 249 
 
 pes* 
 
 
 502 
 
 
 November 13 
 
 November 
 
 13 
 
 p 
 
 
 
 
 
 
 
 259 
 
 502 
 
 
 November 19 
 
 November 
 
 19 
 
 p - 
 
 H 
 
 NQD 
 
 over 
 
 24$ 
 
 pos. 
 
 
 260 
 261 
 
 502 
 
 418 
 
 
 November 22 
 November 21 
 
 November 
 
 21 
 
 p - 
 
 DL 
 R 
 
 NQD 
 
 NQD 
 
 over 
 over 
 
 249 
 249 
 
 pos. 
 
 pos. 
 
 
 271 
 
 304 
 
 
 December 6 
 
 December 
 
 6 
 
 p - 
 
 dl 
 
 NQD 
 
 over 
 
 249 
 
 pos. 
 
 
 
 
 December n. Fourth Ouarterlv Retort 
 
 £ 
 
 
 !£ 
 
 over 
 
 249 
 
 pos. sxospt 
 
 M 
 
 
 !S06 
 808 
 
 1935, 
 
 January 2 
 
 1935, January 
 
 i 
 
 p - 
 
 DL 
 
 OD over 
 
 
 285(w) 
 
 NQD 
 
 over 
 
 245 
 
 pos. 
 
 
 A(w) 296 
 *(w) 303 
 
 
 January 18 
 
 January 
 
 L8 
 
 p - 
 
 DL 
 
 NQD 
 
 over 
 
 245 
 
 pos. 
 
 
 814 
 
 
 January 25 
 
 January 
 
 25 
 
 P - 
 
 DL 
 
 NfD 
 
 over 
 
 249 
 
 pos. 
 
 
 A(w) 308 
 
 (812 
 (813 
 811 
 
 
 February 1 
 
 Fsbruary 
 
 1 
 
 p - 
 
 DL 
 
 NQD 
 
 over 
 
 245 
 
 pos. 
 
 
 A (w) 316 
 
 
 February 13 
 
 February 13 
 
 T - 
 
 DL 
 
 NQD 
 
 over 
 
 24« 
 
 1 pos. 
 
 
 
 
 Mars* 23. fifth Ouarterly Reoorj 
 
 
 £ 
 
 
 HOD over 2HS 
 
 ooe. 
 
 
 Source: 
 
 Compiled by Statlptioi Section, IRA, from Dally Prloe Report of Steal Founders' 
 Sooiety of Amerioa. 
 
 4/ 
 
 P - DL, in Report #316 - the first letter is the prloe quoted and the eeoond 
 letter or letters ars speolfloatlons ae follows: 
 
 L - new low 
 DL - new divisional low 
 R - revision 
 H - new high 
 W - withdrawal 
 
 a/ 
 
 Note: 
 
 P' ehould have been shown 
 
 NQD - No Quantity Discounts allowed. 
 
 "In Report #246, filing by Foundry 502, schedule 
 as a nsw low, effeotlve November 13." 
 
 The letter A with a subscript Indicates a "same ae filing.' For example, 
 A(-) mesne that the Foundry In this lnstanos files the same eohedule or 
 prloe ae another foundry above, marked ( w ) in Report #285, et0 - 
 
 9826 
 
- 700 - 
 
 EXHIBIT II 
 
 103 f'ETlGi:j. RESOLUTIONS 
 
 The rales and regalations prescribed "by the Code Authority in 
 its administration of the Code were designated as Resolutions. These 
 wore of three types; General Resolutions, Labor Resolutions, and Com- 
 mercial Resolutions. The Commercial Resolutions embraced most of the 
 regulations affecting price filing and the more important of those arc 
 summarized "below, grouped according to subject matter. 
 
 I, Price Filing Procedure 
 
 A. Formal "Call" for Price piling 
 
 Commercial Resolution Ho. 5 was adoiitcd on November 27, 1933 and 
 sent to all mombcrs 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 llo. 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 easterners , 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 v/as withdrawn by the Code Authority as a 
 result of this opinion. 
 
 C. Prohibition of Srles Below Filed Prices. 
 3#26 
 

 - 701 - 
 
 Commercial Resolution No. 24 of May 7, 1934, confirmed the 
 prohibition of sales below filed prices for nenoers of Miscellaneous 
 Castings Branch, as decided informally "by the Board on or about November 
 28,1933. 
 
 The regulation is cle^rl - •.rithin the oowers granted to the Code 
 Authority "oy section 3 of Article VII of the Code. No information is 
 contained in the record regarding the incident -'hich prompted the Code 
 Authority to emphasize the prohibition of sales below filed prices. 
 
 D. Status of Repair and Replacement Parts 
 
 Commercial Resolution No. 2 adopted November 27, 1933, read as 
 follows: 
 
 "RESOLVED, that Cast Steel parts for new Locomotives or 
 other finished products, built by companies affiliated 
 uith the steel foundries producing such parts, are not 
 subject to the Steel Casting Code, but repair and replace- 
 ment parts for such finished products are subject to said 
 Code." 
 
 It may be informative at this point to discuss the background 
 which led to this Resolution and eventually to a request for an inter- 
 pretation. It had been, for many years, the practice of the railroads 
 of blie country to service and repair their o v n locomotives in their orm 
 shops. In the course of such repairs, it was apparently their general 
 practice to buy such steel castings as were required from favorably sit*» 
 uatod jobbing steel foundries equipped to supply such material. There 
 appears to be no doubt that the preponderant tonnage of such parts was 
 furnished by independent jobbing steel foundries. In 1928, locomotive 
 builders (Baldwin Locomotive Company and American Locomotive Company) 
 appear to have decided moon a change in policy which was probably motivated 
 by the fact that few, if ray, locomotives "ere being purchased by the 
 railroads. This policy appears to have included a plan for increasing 
 the locomotive builders' participation in the supply of repair and re- 
 placement parts. In furtherance of this policy, the General Steel 
 Castings Company was organized and a new and large steel foundry was 
 constructed in Eddystone, Pa., adjacent to the works of the Baldwin 
 Locomotive Company. The G-eneral Steel Castings company was admittedly 
 subject to the provisions of the Steel Casting Code. However, under the 
 code definition of the industry, (*) it became possible for the locomotive 
 builders to acquire steel castings from their affiliate foundry com- 
 pany, (G-eneral 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 G-eneral Steel Castings Company. 
 
 As a result, one of the largest of the Steel Casting In- 
 dustry markets was being supplied with competitive products at prices 
 which were unknown 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 3 and 4 of Article VI of Steel Castings Code. 
 
 nnr,/. 
 
- 702 - 
 
 For.nders' Society on this question. This resolution vra.s protested by 
 the locomotive "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 fr^e 
 filing of sales contracts aa.de prior to December 11,1933, and which 
 were continued in effect after December 51, 1933. The data so filed were 
 to be submitted concurrently with the other price lists and were to 
 specify (l) date contract 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. 33, 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 Rooolution is 
 submitted in another section of this report. (See pages 654 ff. .) 
 
 The Code Authority undoubtedly felt that the provision of the 
 Code which empowered it to make rulings governing the filing of prices (*), 
 also gra.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, at ;orices below the filed 
 price for current sales of the same tyoe of product, did not constitute 
 a code violation if such member filed with Code Authority either a copy 
 of contract or summary of terns. It further provided that, with the ex- 
 ception of the name of purchaser, the particulars as to such contracts 
 were to be disseminated among industry members, in the same manner a.s all 
 other -orice da.t^. 
 
 if 
 
 F. "Blanket Pilings" 
 
 A number of times during the Code period, until about February 
 13, 1934, the Code Authority accerjted and r^oorted filings made by found- 
 ries to the effect that "we amend our minimum price schedules to minimum 
 prices thus far filed with the Steel Pounders' Society, or which at any 
 future time may be filed, such prices to become effective a.s of sane da.te 
 as the lower prices so filed become effective." 
 
 Commercial Resolution No. 17, February 13, 1934, eliminated the 
 above as Code practice, by the following action: 
 
 "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 acceotable 
 
 and that all revisions mast be ma.de in writing individually 
 
 setting forth the names of the classifications to which 
 
 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 orice filing plan. Allowing a foundry, to file such 
 sweeoins provisions v/ould, in effect, have relieved the foundry of the 
 responsibility of filing current prices. 
 
 Commercial Resolution No. 30, adonted 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 procedure would seem to tend to the establishment of prices 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 at 
 the minimum or prevailing levels were not mentioned specifically. 
 
 G. Filing of Prices to Meet Specific Competition 
 
 Commercial Resolution No. 12, adopted January 10, 1934, defined 
 industry policy on "meeting competition" as follows: 
 
 "No foundry is remitted to sell or offer for sale 
 steel castings at less than the prices shown on 
 schedules filed by such foundry with the Society. 
 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 same effective date as the first filed price, 
 must name the competitor whose nrice 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 carrying 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 
 
 customers. 
 
 (*) See above. 
 9826 
 
- 704 - 
 
 3. Furnishing "Free Service -.rid Goods 
 
 About Harch 22, 1935 a pro-or 1 Co:' ercial Resolution dealing 
 with the filing of prices on patt : Aning was sub- 
 
 mitted for approval, This Rcsolrtio' , "o nosed to make effect- 
 
 ive the Code provision prohibit in ; the all or any part of 
 
 the cost of pattern equipment or i , required the filing of in** 
 formation pretaining to orders received and acce t . d for new pattern 
 equipment or machining upon forms supplied by the S.F.S.A. and such 
 information was to be available to ^ny industry member on request. 
 
 There Is no indication in the record as to -hether 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 mrices 
 which might have been employed to induce sales at less thrn 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. Guara nteeing Deliv er y Date . 
 
 Commercial Resolution No. 40, effective February 9, 1935 re - 
 presented an atte mot to close a loophole in the regulations which per- 
 mitted members to sell bclo- filed prices. This Resolution cautioned 
 industry members that the practice of promising delivery on dates "which 
 they could not and knew that they could not meet" and the paying of a 
 fictitious penalty for delay in such deliveries right result in a vio- 
 lation of the code. 
 
 D. Lump Sum Biddin ; 
 
 Commercial Resolution No. 37, effective February 9, 1935, app- 
 arently prohibited the quoting of lump sun mrices by members of the in- 
 dustry and required them, to quote on a per pound, basis only. This Reso- 
 lution, although aporoved by the Administration, was 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 firm price 
 on a soecific lot of castings. It is true that such a 
 member is preparing his quotation to you on a firm 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 
 
 :826 
 
- 705 - 
 
 Commercial Resolution No. ?1, 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 ordered at on a time from a 
 specific -pattern. The castings «*ere to be shipped or invoiced within 
 90 days from the date of the order, except in the case of specific 
 projects and in cases "here it "tis physically impossible for the 
 foundry to manufacture the total quantity specified within the above 
 prescribed time. In these cas°s, it was required that copi°s of quo- 
 tations be filed with the Code Authority, 
 
 Commercial Resolution No. 27, May 7, 1934 clarified the method 
 of computing "quantities in order" ^h°n paired -oatterns are included. 
 
 "RESOLVED, that in the case of patterns which are paired, that is, 
 consisting of right and left hand, or upper and lower members, 
 quantities are to be computed separately on each such member 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 order." 
 
 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 the event the actual weight(s) of the Casting(s) is (are) 
 different from the estimated woight(s) used in this quotation 
 the actual weight (s) '"ill be used as a basis for billing."' 
 
 I I I ■ Distributive Relationships 
 
 Commercial Resolution No. 10, adopted on January 10, 1934, defined 
 "sales or commission agents," and established regulations for selling 
 through these agents, in the following terms! 
 
 "RESOLVED, that a sal°s or commission agent shall be defined 
 as any person, firm or corporation employed by a member of the 
 Industry to sell steel castings to th Q trade, under such terms 
 p^rid 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 further 
 
 RESOLVED, that in all cases castings sold through agents or 
 commission sales representatives shall be sold at prices not 
 less than th° prices filed by the foundry which produces the 
 castings. " 
 
 IV. Ceo graphical Price Structure 
 
 Commercial Resolution No. 4, adopted on November 27, 1933, 
 provided that prices must be filed on a d°livered basis. 
 
 Commercial Resolution No. 36, superseding Commercial Resolution 
 No. 4, covered th Q delivery practices of members of the industry in 
 selling to railroads and prohibited th^ selling "at a price which 
 
 9826 
 
- 706 - 
 
 r°sults in a delivered price to th° -purchaser that is loss than the 
 schedule of minimum delivered prices of rough castings filed "by the 
 seller" and further prohibited the selling "whieh 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 td'T ton mile for the on line 
 haul." 
 
 The most important -ohas-^ of this resolution is the additional 
 allowance of five mills T) n r ton-mil° for th° on lin° 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 S-oecial 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^'sold on the following do]iv Q ry basis; 
 "Freight basing noint, seller's works (location) with 
 freight allowed to n-^r^st noint on lin° of road, plus 
 cost of the on-haul of five mills r»er tori mil Q via shortest 
 route from the point "here customer road receives the 
 shipment , to destination." 
 
 "It was exolained that no one foundry has more than 15 to 17 
 railroad customers °~d the locations of the destinations (shops) 
 are "°11 kncmi to th-m so that it would bo a relatively simple 
 matter to s~t — o a schedule of freight charges to cover all 
 combinations. 
 
 "Th= committee's recommendations mot with a diversity of 
 opinion and no action was tak r n th=reon. Instead it was 
 referred to the aroup comprising manufacturers of rail^av car and 
 locomotive castings for acceptance or rejection. The matter has 
 not yet be<=n s°ttled." 
 
 It was known that the Railroad interests "'ere clamoring for en 
 additional" freight allowance; this concession was th= outcome. 
 
 Under date of January 9, 1935 the. Legal. Division suggested 
 that the cod Q authority b° reouest ^ to submit a Code Amendment covering 
 this subject or, alternatively, that, 
 
 "A Resolution reauiring a break-down of orioes to be quoted to 
 railroads so that such prices may be readily compared, ™ould be 
 acceptable to th° Legal Division. It could -oro-oerly provide 
 that prices on sa.les to railroads must be filed; that sach 
 price lists must show the d°liverod price ( d°t ive£y to the 
 nearest point of the purchasing Mn^ to be deem?d d^liv°ry) and 
 the freight allowance per ton mil- 1 , if any, from the point of 
 delivery to the ultimate d°stina.tion; and that 5 mills p n r ton 
 
 98?6 
 
~ 707 - 
 
 mile shall b° deemed the freight allowance unless the member of 
 the Industry otherwise designates. Such a resolution would 
 afford an adequate "basis of comparison without unalterably 
 establishing any of the ^l^rnts of price." 
 
 This auction was submitted to th- Industry for ballot, which ' 
 resulted in an overwhelming vote in, favor of the -proposal. This 
 question was later 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 Comm°rcial Resolution Nos. 4 and 36 and in an 
 effort to meet certain objections raised by the Administration. This 
 Resolution, 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 be on a 'delivered basis' is hereby declared 
 to rn^an 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 miscellaneus castings to railroads, 
 the requirement of Commercial Resolution No. 4. 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 purchasing railroad at the point on its lines - , which 
 is nearest to the plant of the seller, provided, how°ver, that 
 such allowance shall in no event exceed the railroad freight, 
 at the published rate applicable to the shipment, from the 
 seller's foundry to such point on the 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 
 made after that date, including sales und°r contracts which are 
 in effect before that date, 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 easier "to regard all allowances as being 
 fixed and confine price variations to the basic charge." However, in 
 vie w of the effective date of the Resolution, it was suggested that 
 
 9826 
 
- 708 - 
 final approval be withheld pending new NRA legislation. 
 
 V. Product Classifications • 
 
 Commercial Resolution No. 8 dated January 10, 1934, reads as 
 follows! 
 
 "RESOLVED, that classification bOTi as 'Miscellaneous Castings, 
 N.O.C.B.M.' shall o mbrace only such castings as have not "been 
 specifically classified "by name by any memb r of th-e Indv.strv . 
 and that the filing of a n^w classification not hitherto f il°d by 
 any member of th° Industry shall b° considered a revision of the 
 classification known as 'Miscellaneous Castings, N.O.C.3.N. ' 
 and may not therefore become effective until ten days after the 
 date upon Hiich such new classification and schedule ™« r o fiio&, 
 and further 
 
 "RESOLVED, that if any of the castings -produced by a member of 
 the Industry are such that they cannot be proper] y classified un- 
 der some on° or more of the classifications hitherto filed 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 r°ferr°d to above was already in \ise at this early date. 
 The r°cords available do not contain any official notification to 
 the industry that this system was to be ^nrpley^di. 
 
 Commercial Resolution No. 13 dated February 12, 1934, provided 
 
 "That no member of the 'Industry shall sell or offer for sale 
 Miscellaneous" St 00 } Castings v hich'have bee n specif ically 
 classified by name by at least on n other foundry, without having 
 filed a schedule of -prices applying to such s-p p cific 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, the Legal Division made the following comments 
 in regard to this Resolution! 
 
 " No. 13 . The Legal Division recommends that this Resolution be 
 supplemented by! 
 
 "Provided, hoover, that members of th° Industry "'ho have 
 previously f il°d the prices of such s-p^cif ically classified Cast- 
 ings as "Miscellaneous" may sell or offer to sell such castings in 
 accordance with th Q ir -previously filed schedule until the effective 
 date of the revis°d schedule required to b° filed by th°m by the 
 foregoing paragraph."' 
 
 "This proviso is considered necessary in order that the foundry 
 filing the specific classification 'may not thereby prevent other 
 
 9826 
 
~ 709 - 
 
 «iPnb°rs of ' th° Industry from exiling the casting in question until 
 their revised schedules b°com ,: > effective." 
 
 "It is further recommended that aotion on this Resolution be 
 withheld TD^ndinf the outcome of the recent price hearings 
 conducted "by the 3oa.rd, H 
 
 Under date of March 2?, 1934, a. member of the L^gal Division 
 made the following comment, concerning the Resolution explained above! 
 
 "It would s oo m to me that this resolution is not only undesirable 
 and indicates an attempt to control th° free filing of prices, but 
 also I doubt if th ra Code Authority has any authority to pass any 
 resolution which is in °xc°ss of the powers granted it by the Code,' 
 
 On April 2, 1934, a letter was received from the Code Authority 
 containing the following paragraphs* 
 
 "We have received, your letter of the 28th advising that the 
 Legal Division of the National Recovery Administration disapproves 
 of Commercial Resolutions Nbs. 12 and 13 as adopted on February 
 13, 1934, by the Board of Directors of the Ste=l Founders' Society 
 of America. 
 
 "Accordingly, w have advised the Industry that these resolutions 
 are not effective." 
 
 Commercial Resolution No, 16 dated February 16, 1934, stated 
 
 "that on and after Aoril 1, 1934 all schedules of prices for the 
 various castings classifications shall be filed in accordance 
 with schedules represented, by letters as set forth in "A Study of 
 Schedules for Miscellaneous Castings Based upon Levels of 1926" 
 issued by Ste°l Founders' Society of America under date of 
 December 5, 1933, provided that schedules filed with the notation 
 !T.Q,.D. or any other terms filed limiting the quantity or weight 
 differentials sho^mi on above 'study' shall not be construed as a . 
 non-compliance ^ith 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 -clan and, in a measure, enforced the system 
 of quantity and weight discounts Hhich 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 mi system of quantity and weight discounts, nor was 
 he able to file different prices for different products within a 
 classification. In other words, the same schedule or prices was 
 automatically applied to all of the products falling within a classi- 
 fication unless a foundry wished to file a new classification 
 specifically 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 meeting of January 29, 1935, as follows: 
 
 9826 
 
- 710 - 
 
 "It was the sense of the meeting that the filing of a price 
 specifying a letter schedule but indicating that, for example, 
 one to forty-nine- pieces shall 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 V.ay 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 been given to Resolution 
 No. 16, pointing out that it prohibited industry members from filing 
 prices in accordance with their individual pricing practices. 
 
 Commercial Resolution Ho. 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 . Frico Extras 
 
 Commercial Resolution Ho. 19 of March 9, 1934, provides that the 
 filing of price extras for alloys could not "be made by trade name and 
 that either chemical composition 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 all 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 No. 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. However, nearly all types of extras had "been filed "before this 
 call. 
 
 9826 
 
- 712 ~ 
 APPENDIX C 
 
 Exhibit I 
 METHODOLOGY A1?I) SUGGESTIONS ? QR FUHTH5P. RESEARCH 
 Fertaining to Price Piling Study 
 
 A. The Code Sample 
 
 This study is limited in industry coverage to a basic sanvole of 
 57 codes, selected from the total of 444 HRA codes containing open 
 
 price provisions. This code sample, referred to throughout the study, 
 includes the following industries: 
 
 4 Electrical 
 
 18 Cast Iron Soil Pipe 
 
 20 Salt Producing 
 
 22 Underwear and Allied Products 
 
 31 Lime 
 
 37 Builders' Supplies 
 
 39 Farm Eauipment 
 
 59 Marking Devices 
 
 67 Fertilizer 
 
 78 Nottingham Lace Curtain 
 
 80 Asbestos 
 
 81 Copoer and Brass 1 ill Products 
 
 82 Steel Castings 
 
 88 3usiness Furniture 
 
 90 Funeral Supply 
 
 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 Apparatus 
 
 120 Paper and PuIp 
 
 123 Structural Clay Products 
 
 128 Cement 
 
 134 Gas Appliances 
 
 136 Vitrified Clay Sevier Pipe 
 
 153 Valve and Fittings 
 
 156 Rubber Manufacturing 
 
 167 Set Up Paper Box 
 
 175 Medium and Low Priced Jewelry 
 
 176 Paper Distributing 
 193 Folding Paper Box 
 202 Carpet and Rug 
 
 204 Plumbing Fixtures 
 
 205 Metal Window 
 220 Envelope 
 234 Macaroni 
 
 9826 
 
- 713 - 
 
 249 Tag 'Manufacturing 
 
 265 Coffee 
 
 275-1 Agricultural Insecticide 
 
 275-2 Industrial Alcohol 
 
 275-3 Carbon Dioride 
 
 291 wood Cased Load Pe ..oil 
 
 303 Cordage and Twine 
 
 311 Ready Mixed Concrete 
 
 333 ■ Canvas Goods 
 
 344 Metal Lath 
 
 349 Mayonnaise 
 
 366 Retail Monument 
 
 401 Coouer 
 
 410 Retail Tire 
 
 421 Marble Quarrying and Finishing 
 
 445 Baking 
 
 458 Wholesale Confectioners 
 
 463 Candy Manufacturing 
 
 The industries within this sample have not been accorded eaual 
 J; ;; £" "J" ***» !-~"iW to complete spirit J casT 
 materxal frnn o^ f SX1Derience in all of them. Illustrative 
 ce buJ r r f I ^dustries has been incorporated in some instan- 
 
 abo s ; e :L.i: oTzii: sed primarily on erperience records *>* *■ 
 
 B. 5^1ectipn_of the Code Sarin lg 
 
 The choice of a sample of 57 codes rpnrAQPnt^ « „„ • 
 
 tween a broad coverage of a l o- , ^l reoriented a compromise be- 
 
 of orice~m7n~ ™ • Ce COdes and bailed studies 
 urice tiling experience in a few industries. 
 
 Because of the number and cornnlpxi+v nf -™.< „„ «t 
 and the diversity of industry aS^^.S^^'^r^^ 
 
 This abroach was further irdicnL result from a small sample, 
 
 accented pnd for the noSt 111 ^^ ^^ filing has * een 
 
 ulatory de-ice cabbie o- 2E ad f nistered ™ der «» 1«RA as a reg- 
 y ae.ice capable o. wide and general application. 
 
 filin^^L! '"^ there h " d b6en n ° ex P er ience with mandatory -price 
 Th Sev l^ce n o°f suet 2** ^^^^ °* -sent or future Prices, 
 survey If 1 r 1;? if' ^^ th ° im jested that an over-all 
 rvey of experience would prove nore useful than detailed studies. 
 
 huntetTZfntZ'f^ ° ne T int ln the dev elopment of the study, one 
 The coderseUctf £ utlllT^^T ^"^"" ». 
 
 i^iT z\ii:fizii: research faciiuies wouid not m 
 
 codes^Jit,?; 1 r tl0n ° f 5? C ° des "Presented 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 ^ere selected illustrating (l) the dif- 
 ferent structural features of orice filing "olans, (2) different 
 industry groupings, (3) different competitive situations, and (4) varied 
 types of experience in o-oeration. Factors considered under the first 
 point were tyoes of information reported, tyoes 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 -orice provisions, or the other trade practice provisions such as 
 bid filing, basing points, product standardization, etc. Secondly, 
 codes were chosen from the several industry grouos, such as ?asic Mat- 
 erials, Equipment, Chemical, Manufacturing, and Distributing Trades, and 
 for different types of products. Uncer the third consideration, codes 
 were selected for industries with varying degrees of -orice leadership, 
 or for other loosely organized, with numerous units. Finally, on the 
 basis of operating experience, there were included industries that had 
 had varying degrees of success with price filing and others in which 
 a comolete breakdown of orice 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 by 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 adeouacy of 
 NRA file materials wrompted the inclusion of certain industries and 
 the exclusion of others tentatively selected. 
 
 C. The Work Outline 
 
 The preliminary work outl.' le for the study is incoroorated in 
 this Appendix to indicate the focus of the research on orice 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 agrinst the industry background and code 
 setting. 
 
 These case studies were to have follerjed the work outline 
 as here presented; with the final reoort representing a cross-analysis 
 of evidence to focus experience for purposes of com-oarison 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 exDerience, 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. 
 
 9826 
 
-716- 
 
 2 ~~li:;i::a v: qt.tli:™ ?o?. ops: - p~ice i'Testigatioi: 
 
 (individual industry sn~>roach - organization of 
 material in finished report -'ill probably be 
 along different lines) 
 
 p^s-cods '1sto~; o? ?:.ice riLi/" 
 
 I. Industry and regulatory setting. 
 
 (See "Some Partial Tyoes Sources of Information for Uso by 
 CHen Price Group" for indicated pertinent data) (o. 744 below) 
 
 II. Inception of nrice filing experiments 
 
 A. Functions intended to be achieved - both expressed and 
 implied - e.g., 
 
 1. Eliminate ignorance on ->art of buyers and/or sellers 
 a. Misrepresentation and resulting suspicion 
 
 2. Eliminate "confusion" in marlcet and promote comparability 
 
 of -orice and terms 
 
 9836 
 
— / I r — 
 
 3. Lessen intensity of erratic or rapid fluctuations 
 
 4. Narrow 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 
 
 B. Economic sanctions, e.g., 
 
 1. Liquidated damage agreements 
 
 2. Threats of t>ovcott-of supoly, 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 "books, etc. 
 
 VI. Performance and reasons for non-perf ornance under lolan 
 A. Actual scope of filing as to areas and products 
 3. 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., 
 
 Hon-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 
 
 E. Remedies employed to overcone difficulties encountered 
 
 F. Subsequent history of plan, e.g., 
 
 1. Abandonment - reasons 
 
 2. Modification of original plan 
 
 VII. Status of price filing experiments with respect to government regulation 
 A. General position under anti-trust laws and decisions, i.e., 
 
-719- 
 
 1. Precedent 
 
 2. Briefs 
 
 B. Impact 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 
 
 II. 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 orior to code 
 
 I (See "Some Partial Types and Sources of Information .for Use 
 "by Open Price Group 11 for pertinent data) 
 A. Effects of depression 
 B. Degree of industry organization at this time 
 
 C. Comparison with period of any pre-code price-filing 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) 
 "°R6 
 
-?so 
 
 D. Legal considerations involved 
 
 E. Proposals discarded before submission to NRA 
 1. Reasons for discard 
 
 III. Controversies arising daring 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 larfe buyers 
 
 b. Fixed anc excessive urices 
 
 c. Reduced incentive to lower prices 
 
 (1) For particular transactions 
 
 (2) ..For long-run period 
 
 d. Technical objections to details of plan, e.g., waiting 
 period, suggested customer classification 
 
 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. G-eneral IT.R.A. policy 
 
 2. Objections of consumers' , labor, industrial advisory boards 
 
 3. Objections of legal division and research and planning division 
 
 E. Changes effected in original proposal 
 
 1. Provisions added 
 
 2. Provisions deleted 
 
 IV. Relation of oioen price provision to other code provisions considered 
 and/ or accented 
 
 9856 
 
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 
 
 (1) 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., 
 inspection of books 
 b. Specific powers over price filing 
 
 >82£ 
 
 (1) To issue rules and regulations 
 
 (2) To prescribe form of schedule 
 
 (3) To investigate and void prices 
 
 (4) To select products for filing 
 
-72S- 
 
 (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 mug t file 
 
 2. Member may file 
 
 5. Members may abide by lowest ;orice on file if they desire 
 
 a. After original Tiling 
 
 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 exempted from regular filing requirements, e.g., 
 
 1. With mail order houses 
 
 2. With chain stores 
 
 3. With governments 
 
 4. With other large buyers — 
 
 5. With other tyoes of buyers 
 
 6. For export purposes 
 
 7. For own use cr inter-ind\istry 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 1 s approval 
 
 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 authority 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 
 
 9836 
 
-723- 
 
 Information which must "be filed 
 
 1. Enumerated in code 
 
 a. Prices, terms, rates, tariffs, price lists, price 
 terms, net price lists, "base price, list prices, 
 schedule of prices, all conditions of sale, fixed 
 terms of payment, schedule of rates, individual 
 pricing practices, all terms of sale 
 
 b. Credit terms, discounts, discount sheets, cash discounts, 
 trade discounts, nualit'y discounts'." 
 
 c. Allowances, freight allowances, service allowances, 
 trade-in allowances, advertising allowances 
 
 d. Delivered prices; f.o.b. factory prices 
 
 e. Prices, trials, rebates, premiums, bonuses, free 
 deals, commission, consignment sales 
 
 f. Guarantee policy, sample policy, returned goods 
 policy 
 
 g. Names of customers and their classifications 
 
 (1) Available 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 prescribe information required 
 a. With administrative approval 
 
 4. Code authority to prescribe form 
 a. With administrative approval 
 
 5. Information on past transactions only 
 Requirements as to filing and dissemination 
 
 1. Number of copies of price lists to be filed with agency 
 
 a. Enough for distribution to all members 
 
 b. Enough for distribution to all members and customers 
 
 c. One copy 
 
 9826 
 
-724- ■ 
 
 (1) Central agency makes copies distribution 
 
 (2) Central agency makes summary for distribution 
 
 (a) Code prescribes nature of summary. Specify 
 
 2. Filing of price changes 
 
 a. Word "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 
 'oart of list affected. 
 
 c. Other definitions of filing. Specify. 
 
 3. Requirements covering dissemination by central agency to members 
 
 a. Distribution mandatory 
 
 b. Al] filed data to be forwarded to all members 
 
 (1) Members to bear expense 
 
 c. Composite or individual price lists 
 
 d. No provision for distribution bat data available for inspec- 
 tion by members 
 
 e. Dissemination only to producers of similar products 
 
 f. Dissemination only to members of sa le 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 f orwarded 
 
 (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 customers 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) 
 
 9326 
 
 
-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 
 centra.! agency. 
 
 a. By mail 
 
 b. By telegraph or equally speedy means 
 
 c. "Immediately" or "promptly" 
 
 d. Trade periodical 
 
 e. Other provisions. Specify 
 
 f. No 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. Previsions 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 1 name 
 
 3. Optional with code authority v/hether 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 
 
 •982S 
 
-726- 
 
 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 neet non-member competition 
 
 b. 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 -oeriod 
 
 (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 fir>jt 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. ITo 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 minima period 
 bofore new "rice pay 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. IV - 1 price and effective price 
 
 982G 
 
-737- 
 
 1. Member must sell at filed price terms only , 
 
 2. Member may sell above filed price terms 
 
 a. In certain cases only. Specify 
 
 3. May 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 specif ied 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 time, of revision of filed price list 
 
 1. When Torices increased 
 
 a. Bid must "be increased also 
 
 b. Bid must be registered but need not be increased 
 
 2. When prices decreased 
 
 a. Bid may be decreased accordingly 
 
 b. Bid may not be changed 
 
 P. Filings required by other trade practice provisions, e.g., 
 
 1. Premiums 
 
 2. Prizes 
 
 3. Special services or favors 
 
 4. Price concessions, e.~. , 
 
 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.B. prices 
 
 3. Zoning or anti-dumping, etc. 
 
 D. Uniform or limited cash discounts 
 
 E. Uniform or limited quantity discounts 
 
 F. Mandator}' - classification of customers 
 G-. Mandatorj>- 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 
 
 711. 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 he filed 
 
 (4) Prescribed customer classifications and/or trade 
 
 factor differentials 
 
 (5) Prescribed elements of cost or standards of accept- 
 
 able costs or prices 
 
 (6) Rales 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 specif iC' 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., 
 9856 
 
-730- 
 
 (1) Premature or partial disclosure of price 
 
 filing 
 
 (2) Delay or withholding of prices 
 
 c. Practices as to closed "bids, refiling of prices, etc. 
 
 4. Amendments considered and/or presented to MRA 
 
 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 
 otherwise 
 
 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 
 
 e. Threats of predatory price cutting 
 
 f . Comparative use in pre-code and code periods 
 
 B. H.R.A. Administration 
 
 1. Supervision and control of code author itj^ 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? 
 
 982^ 
 
-231- 
 
 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 prior 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 
 Administration; 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 
 
 9836 
 
-733- 
 
 2. In initiating complaints, e.g. 
 
 a. Evidence 
 
 b. Complaint forms 
 
 3. 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 N.R.A. 
 
 5. Informal handling of compliance problems 
 
 6. As compared vrith procedure and attention to other trade 
 
 practice complaints 
 
 7. As compared with procedure established in code or pursuant 
 
 thereto 
 
 D. N.R.A. compliance activities 
 
 1. Record of cases handled 
 
 2. Procedure 
 
 3. Appraisal of effect of N.R.A. compliance activities 
 
 on eff icacy 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 complaints received, adjusted and on hand 
 
 2. Devices used to evade, without legal penalty, 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 
 
 9825 
 
-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. N.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 
 982C 
 
-734- -, 
 
 2. Economic effects 
 
 3. Desirability of continuance 
 
 a. In what form? 
 
 b. Under what authority? 
 
 c. With what degree of corrpulsion? 
 
 XI. ECONOMIC RESULTS OF OPEN PRICE FILING , in Terras of Functions and Per- 
 formance 
 
 A. Elimination of ignorance on part 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 information 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 exemnted members 
 from filing information covering transactions with cer- 
 tain classes of buyers, suca as mail order houses, chain 
 stores, governmental agencies, etc.? If so, specify. 
 
 (e) How has the resulting publicit?/ 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 quotations, 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 information 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? 
 9826 ■ 
 
-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-plying industry, i.e., 
 in industries where weak 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? 
 
-736 
 
 -j« 
 
 (3) To what extent has the -jrice 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 ;;<rice filing acted to encourage a 
 
 lack of uniformity in terras and conditions of sale to counter- 
 act a uniformity in the nominal "orice 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 or>en price plan tend 
 toward certain ideal standardr, (i.e., quality or simplifica- 
 tion) or toward the identification and price classification 
 of existing products, or toward those of the nost effective 
 competitor in the industry? 
 
 C. Changes in the freouency and abruptness of fluctuations in orice levels 
 
 (1) Do price changes follow changes in volume of production or 
 volume or sales as closely under the or^en price plan as prior 
 to its adoption? 
 
 (2) Do prices under the open orice 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) thm 
 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 tendency 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? 
 
 (7) 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? 
 
^737- 
 
 (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 -prices at high levels 
 
 (1) Through reduced incentives to lower prices v 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 ting 
 
 (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 extent 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? 
 
 982£ 
 
-738- 
 
 (5) To what extent are the provisions in Office Memorandum 
 228 a satisfactory protection against destructive price 
 cutting? 
 
 F. Narrowing of the range of competitive trices "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 the higher 
 quotations previously existing in the industry? 
 
 G. Effect upon the maintenance of resale prices 
 
 (1) Has the establishment of uniform trade discounts in con- 
 nection with open price plans led to an increase in resale 
 price maintenance? 
 
 (2) Whet 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? 
 
-739c 
 
 (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? 
 
 (3) 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 
 lino 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? 
 
 (?) 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? 
 
 982G 
 
-7- ■ r r- 
 
 (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?-!. 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 
 
 
-741- » 
 
 prices? In what way? What means were, or could he 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? 1 
 
 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 incree.se 
 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 cpen price plan? To the 
 inflexibility of the parts 0" 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) Give 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. 
 
 826 _ . 
 
~?43* 
 
 (3) Has the Code Authority i~ r.ny wry filtered 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 i.ore 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 o£ 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 V 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) Fnat 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 operstion of an open 
 price plan, either because of the perfection of the mechanics of 
 
 price filing and disseminatic , 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? 
 
 9826 
 
-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? 
 
 (16) 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 publicity - 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-FILING- 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 ap;eals 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 
 
 3. As to items filed 
 
 C. Requirements as to filing and dissemination 
 
 1. Description of requirements 
 
 2. Changes from previous code rulings 
 
 D. Other provisions used to supplement ooen 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 econonic results 
 
 (See section XI on outline for code period for detail) 
 
 S0I.IE PARTIAL TYPES OE INFORMATION 
 ?0R USE BY OPEII 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 during 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 industry - (e.g., cease and desist orders, merging of assets) 
 
 9826 
 
- 74-S - 
 
 D. Sources of Information and Research. Procedure 
 
 Relevant material on price filing experience in each of the fifty- 
 seven industries was assembled from NBA 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 NBA, an, 1 code authorities, 
 industry members, and other interested parties; intra-I J RA memoranda; 
 correspondence between code authorities and industry members; protests 
 of members and non-members to NBA or other governmental agencies; 
 minutes of code authority and industry meetings; code authority bulletins 
 to members of industry; price lists and filings; and uniform reporting 
 forms used in some industries. The files were 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 NBA. 
 
 A thorough search was made in NBA files for price filings which 
 had been collected by NBA. The discouraging results of that search 
 have been noted in Chapter VI above. 
 
 Usable sets of price filings -.ere available only for a few 
 industries. Those for the Asphalt Shin:le and Boofing and for the 
 Steel Castings industries hive bee.; analyzed in the case histories 
 set forth in Appendices A a.d B above. Those for Electrical Manufac- 
 turing, Fertilizer, and Coffee, which were used at th respective 
 trade association offices, served as the basis for reports indepent ent 
 of this study, but some of the evidence obtained from these filings 
 has been incorporated. 
 
 In addition to primary source mat-rials, such as memoranda, 
 correspondence, and transcripts, extensive use has been made of certain 
 of the Code Histories written under the Division of Beview and of 
 preliminary reports of industry studies. Material from previous 
 reports of the Division of Research and Planning and of the Consumers' 
 Advisory Board, and the Federal Trade Commission report on Open Price 
 Associations has also been utilised. 
 
 Field interviews were restricted to only two of the industries 
 in the sample, Asphalt Shingle and Rcofing and Steel Castings. However, 
 partial reports of field work done in connection with other studies ' 
 have been made available to the Unit, specifically for the Electrical 
 Manufacturing, Fertilizer, Coffee, Salt Froducing, Paper Distributing, 
 and Agricultural Insecticide and Fungicide Industries. In none of 
 these instances was there any detailed coverage of the experience with 
 open price filing, nor any general contact with industry ^embers. 
 
 Some interviews were also made for this study oy the NBA 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 
 
 -.•le 
 9826 
 
 
- 747 - 
 
 the code sample. Returns from IPS interviews were reported. A 
 typical questionnaire, for the Crushed Stone, Sand and Gravel and Slag 
 Industry, is included "below. (*) . 
 
 Two other questionnaires were sent out in connection with the 
 study. (**) One of these was add:' sssed 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 non-performance and non- 
 compliance with the price filing requirements. The returns were scanty 
 in number and contained little information of value. 
 
 A second questionnaire concerning: che 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 repre ^entatives 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 v/as 
 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 ben incorporated at various 
 points in the report. 
 
 (*) See pages 748 - 752. • 
 
 (**) Copies of these are included below. 
 
 S 
 
-748- 
 
 Q.UESTIONNAIBS TO LOCAL AbiD RSG-IOl'AL CO BE AUTHORITIES 
 
 CRUSHED STONE, SAID AliD GRAVEL, AND SLAG IKDUSOHY 
 (Applies to State, Regional and District Committees) 
 
 A. General 
 
 1. Name and address of Committee, 
 
 2. Name 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 tra^e 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 conrolaints. 
 
 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? Wha 
 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— 
 ouired 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 o-oen or closed? How were the 
 charges presented? Was the identity of complaining employees withheld 
 from the respondent? Of o'ther conrolainants? 
 
 8. How many labor and trade nractice cases were referred by the Committee to 
 the National Code Authority? How many to State NRA Office? 
 
 9826 
 
-749- 
 
 9. Estimate for "both trade practice and labor 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? Here 
 they authorized to settle complaints without the approval of the agency? 
 Were the funds available for compliance work adequate? 
 
 C. 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. C-ive 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? 
 
 ..9826 
 
-750- 
 
 8. Did the ability of all competitors to meet the lowest filed prices act to 
 discourage or eliminate price cutting? Give any evidence you have on this 
 po int . 
 
 9. Give any index or estimate of the extent to which members in your region 
 complied 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 (NBA) assistance or colla- 
 boration, etc? (Note to interviewer: Please ask 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 price 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 respect? Do you prefer an industry organization to re- 
 ceive price filings or an independent one? Why? 
 
 14. fhat 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 peculiar conditions in 
 your Industry If not, in what respects did it fall short of a satisfac- 
 tory approach to /our sro"b3.e?s? 
 
 Capacity Control 
 
 1. Dor those states of the division in which permissive areas were approved 
 'oy 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 /-ranted Permission use it? 
 Upon what basis were decisions reached to grant or recommend to the 
 Coae Authority denial of applications? 
 
 325 
 
- **51- 
 
 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 permissive 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 oj the Administrator; 
 
 a. Was there any demand for the establishment of a permissive area? On 
 what grounds? 
 
 b. Describe efforts to establish a permissive area and explain obstacles 
 and reasons why this was not done. 
 
 S. Geographic Relations 
 
 1. Pre-code -period 
 
 a. Approximately how many stationary slants 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 -oractice for all plants, for all 
 -plants 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 7 If so, were they f.o.b. or delivered, or did the 
 committee leave it optional? If no mandatory method was adopted, what 
 ter::s 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 
 shi'iped - by railroad or truck? Wnat proportion of the products sold 
 in your market came from an excessive distance? Were the products 
 shipped on an f.o.b. or delivered basis? If shi"oped "delivered" was 
 the price realized at point of shipment less than the price realized 
 on sales in the normal marketing area of shipper? Explain. 
 
 ^9826 
 
-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 N.R.A. code provisions concerning misrepresentation and 
 deception serve ef fective^r 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 e;;plain in detail what this procedure or 
 procedures was. 
 
753 
 DR-14 Confidential Goveranent Report File 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. 
 Zn 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) 
 
 Z. Indicate (O the total volume of sales for this establishment in 1934: 
 
 □ Under $25,000 □ $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 Code Authority: 
 
 □ Failure to file, post, or publish prices as required 
 
 □ Selling at prices lower than filed prices 
 
 □ Failure to file complete data on prices 
 
 □ Failure to observe prescribed terms and conditions of sale 
 
 □ Filing prices which were allegedly below cost 
 Q] Failure to fellow customer classification' 
 
 [J Others (specify) . ., T 
 
 B. Indicate (/)in what manner you were notified of the above condition. 
 
 Q By mail Q By direct personal contaot 
 
 □ BY telephone fj Other (specify) 
 
 C. Indicate (v) who filed the original complaint resulting in the disagreement: 
 
 Q Competitor Q Other (specify) 
 
 □ Code Authority □ Do not know 
 
 D. We»"e you requested to appear before Code Authority for a hearing? Q Yes; □ No. 
 
 If yes, did you appear? Q Yes; Q No. Before what oommlttee? 
 
 III. Indicate {/) whether your disagreement resulted from: 
 
 □ Specific open price provisions e mbodie d in tbe Cfide 
 
 □ Rules or regulations on open prices fo rmulate d by. ib2 £2^2 Authority 
 
 If your disagreement on open prices was due to the rules or regulations formulated 
 by. lbs £o£e. Authority , please answer the following; 
 
 A. Had you been Informed of the rules or regulations fo rmulate d by, tb§ godg 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. i&e. 
 £od§ Authority on open prices (r*): 
 
 □ By Mall Q By direct personal oontaot 
 Q 3y telephone Q Other (specify) 
 
 2. Approximately how many days after you were Informed of ib§Sfi £o.de. Authority 
 isles or regulations on open prices, were you notified of the complaint made 
 QO OO against you? d a vs. 
 
754 
 
 IV. Indicate (v) below, how your case was disposed of: 
 
 □ You agreed to comply Q Parent of fine 
 
 □ Blue Eagle withdrawn □ Case was dropped by Code Authority or NRA 
 
 □ Case pending on May 27, 1935 Q Other (specify) 
 
 A. Did the Code Authority make any particular efforts to get you to oomply? (H Tea; 
 Q No. If yes, please explain the nature of the efforts. 
 
 V. Indicate (r) below, what you think was the real reason for the complaint against you: 
 [j Misunderstanding on part of person making the complaint 
 
 □ Misunderstanding on your part 
 
 □ Conflict over Code Jurisdiction 
 
 Q Complaint was intended to get you to comply with other Code provisions or Code 
 
 Q Authority regulations not directly related to price filing 
 
 □ Complaint was intended to get you to follow some price or other policy of Code 
 
 □ 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) 
 
 Q Customary prices Q Customary terns of payment 
 
 Q Customary quantity discounts ] 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 
 Jn Code for receiving and distributing prices? Q Yes; Q 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; Q 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 Code 
 if they had been different In some respect? □ Yes; Q No. If yes. Indicate below 
 (•), in what respect you think the open price provisions should have been changed: 
 
 □ Range of products for which prices were to be filed 
 
 Q 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? Q Yes; Q No. 
 
 Please feel free to attach any comments you may wish to make. 
 
 9826 
 
- 755 -, 
 D-P-2U Con fidential Government ."le-por t File i'o. . . . 
 
 Office of the Na.tional Recovery Administration 
 Washington, P. G. 
 
 # >jc * si; s}« % :* :£ ^ i,; :* ^ >;: ^c :+: sfc 
 
 OJJESTIOhPAIPE Oh 0PE1T PPJCE FILII7G AKD I JSa^3ESEliTATIVP 
 
 FPJLCTICLS 
 
 Realizing that you nay not have precise information on :-ie.ny of the 
 follo-ing questions, -re are reouesting your i nformed opinions. 
 
 Your cooperation in filling out this schedule "ill he of material 
 assistance in our study of open price filing and misrepresenta.tive 
 practices. 
 
 '.me Pate 
 
 Address 
 
 Code reported on (report ion one only)_ 
 
 SECTION I -•OPEN PPJCE PILING 
 
 1. Pate of first * filing t>f prices under the Industry Code, (lionth, 
 day and year)_ 
 
 2. Annual dollar sales volume of this Industry-193^( rough 
 estimate) . S ■ ■ ■ ■ . . . ■ 
 
 3. a. Did price filing apply to all products under this Code? Yes : 
 
 ho. If no, please ansmer the- following: 
 h. Approximate! - ;/ ■mh.at percentage of the total dollar sales of this 
 
 Industry mas subject to price filing? v 
 
 c. List the products or kinds of products of this Industry mhich 
 -'ere excluded from the "orice filing reouirements. 
 
 h. a. Sta.te the total number of members in this • Industry during 193^ 
 (estimate) . 
 
 b. Estimate mhat per cent of the total memhers filed prices as 
 required "by the Code during: 
 
 First half of price filing period. $ 
 
 Second half of price filing period. fa 
 
 c. Estimate mhat per cent of the total dollar sales of this Industry 
 mas represented "by the members mho filed prices during: 
 
 First half of price filing period. fo 
 
 Second half of price filing period. jo 
 
 5. a. In addition to prices, mhat terns and conditions of sale mere 
 ordinarily filed ~bj members of this Industry. 
 
 b. What other information mas ordinarily (i.e. sales and mroduction 
 data, names of distributors or customers, etc.) 
 
 3o2b 
 
- 756 - 
 
 o, a; Indicate ( ) in 'That form prices mere filed by members of this 
 Industry: 
 
 List prices with discounts 
 
 Discounts fron Industry gross or master list prices 
 
 Base prices with extras 
 
 Net prices to various classes of customers 
 
 Oilier (specify) 
 
 b. List the classes of custoners of this Industry (jobbers, whole- 
 salers, dealers, etc. for which prices were ordinarily filed. 
 
 c. List the classes of custoners of this Industry for which prices 
 were not ordinarily filed. 
 
 7. a. Indicate ( ) the methods actually used in the dissemination of 
 
 the price infor ration to members and custoners of this Industry 
 
 Method of dissemination To icnbers of To custoners of 
 of r)rice 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 ne: ibers Tncy 
 
 Ho dissemination of price information 
 
 Prices available to customers of sane 
 
 classification only XXX 
 
 Frices available only to ■..nemo or in 
 
 direct competition XXX. 
 
 Other methods (Specif jr 
 
 b. Please explain briefly wo what extent customers availed them- 
 selves of the opportunity to inspect or request prices? 
 
 S. a. I7ere prices ordinarily filed on: Delivered basis: P. O.L. basis 
 b. If on an P.0.1. basis, die" price quotations apply! Nationally: 
 Regionally. 
 9. a. Here prices filed: 
 
 tfith one National agency and disseminated nationally 
 sJith Regional agencies and 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. "tfhat benefits did proponents of the Code exoect to obtain by 
 
 establishing -an open price system? 
 
 b. Please explain how the proponents of the Code expected the open 
 price system to achieve the above benefits? 
 
 c. TJhat is your opinion as to the extent to which these expected 
 benefits were actually realized? 
 
 9S26 
 
- 75 - 7 -' 
 
 12. That effect, in "/our opinion, did the operation of the open price 
 system in this Industry have on the following: 
 
 a. Level of prices - higher or lomer. 
 
 "b. Extent of price unaforriity prion;; competitors. 
 
 c. Degree of price steadiness as contrasted with frequent and abrupt 
 changes. 
 
 d. Relative competitive position of industry members. 
 
 e. Relative corpetitive position of classes of "buyers. 
 
 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 belo 1 / cost") responsible for the effects which you 
 stated in question 12, 
 
 l^-.a. That T_r ere the principal difficulties experienced in the effective 
 operation of the open price system? 
 
 b. Horn night they have been remedied? 
 
 15. Tnat is your opinion of the value of a price filing system in which 
 the filing of prices by members would be voluntary, as a means to 
 a nore stabilized price structvire in your Industry? 
 
 SECTION II - hlSRZFRESSrTATIO'J 
 
 l6. Indicate ( ) which of the following hinds of misrepresentation and 
 others, ^ere a serious problem in this Industry before the IT.R.A. . 
 code. Also indicate ( ) • -he t her such misrepresentative practices 
 were still of -a serious nature during the code and after the code. 
 Kind of misrepresentation Z-efore Code During Code After Code 
 
 Deceptive advertising , 
 
 False marking or branding 
 
 Deceptive packaging 
 
 Other (specify) 
 
 a. Please explain briefly the nature of the above practices which 'jere 
 or are a seriow.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. 
 
 ^■o_o 
 
- 758 - 
 
 TJas the Code Authority able to obtain compliance uith such provisions 
 without recourse to i\f. 2, A. enforcement? 
 
 19 • What uere the chief obstacles encountered to effective functioning 
 of the Code provisions concerning misrepresentation of the hind you 
 have indicated in "Question lS? 
 
 9C2S 
 
~ 759 «* 
 E. Statistical progran for the pric o Filing Unit --■- 
 
 The statistical projects of the price Filing Unit included analyses 
 of the price filing of only two industries - Asphalt Shingle and Roofing 
 and Steel Castings. These studios were 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 matter, 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 Piling 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. 
 
 E C0IT0I.1IC AND An.IIinSTHA.TIVE EFFECTS OP OPEN PRICE PILING 
 
 I. Effect on Prices : 
 
 A. Uniformity 
 
 (1) Direction of price changes in achieving uniformity, 
 
 (a) Where does 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 hind 
 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) Through actual changes" in the relative prices of mem- 
 bers, in meeting competition? 
 
 (c) Through shifting of customer preference under exis- 
 tence of uniform prices? 
 
 (&) Have these developments (if present) Drought 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 - East and Vest? 
 
 ( Li 1 1 sugge stive but not erdiaus t i ve ) 
 
 (5) Have previous price differentials disappeared - 
 
 (a) Between large and small members? 
 
 (b) Let-: en different areas? 
 
 (c) Between advertised and non-advertised brands? 
 
 (d) Between inferior and superior duality goods? 
 (List suggestive but not exhaustive) 
 
 (6) What has occn 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 nractice? 
 
 (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 
 
- 761 - 
 
 (11) Is there a tendencj r for manufacturers with incomplete 
 lines to sell at lower prices? 
 
 (12) Is there any 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 competitors' prices and the frequency of 
 price changes? 
 
 (14) Breakdowns and over-all comparisons (this list is 
 merely suggestive and not exhaustive) 
 
 (a) What types of o"oen price systems have oeen most 
 effective in bringing about uniform prices? 
 
 la 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) What relationship has administration of the 
 open price system had to its effectiveness 
 in promoting price uniformity? 
 
 1. Types of administration, 
 a. By Code Authority a 
 
 "b. By Confidential Agent. 
 
 c. 3y 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 terms, etc. 
 
 (d) In what types of industries have open price 
 provisions "been most effective from the stand- 
 point of promoting price uniformity? 
 
 9826 
 
- 76J - 
 
 (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 he - 
 
 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 ^identi- 
 fication. 
 
 4. Those with and without seller identi- 
 fication* 
 
 5. Codes which exempted certain members vs.' 
 those which did not. 
 
 6. Codes where members were, permitted to 
 meet the lowest prices filed vs. others 
 without this orovision. 
 
 7. On the basis of the area of price uni- 
 formity. 
 
 B. Rigidity and Flexibility 
 
 * • 
 
 (1) Frequency 
 
 (a) Has open price activity affected the 
 frequenc;- of orice cha.nges? 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 
 9826 price changes? If so, how? 
 
- 763 - 
 
 1. T/hat is the relationship between the 
 duration of a filed price and the mag- 
 nitude of a. succeeding change? 
 
 2. Xlhat is the influence of the magnitude 
 of the initial price change on the fre- 
 quency and amplitude of sxicceeding changes? 
 
 3. How does the general trend or direction 
 of prices affect the frequency and ampli- 
 tude of price changes? 
 
 a. What is the relationship of this to 
 the fact that upward or downward 
 changes were found to "be most frequent? 
 (See (d), 2, under "Frequency" above.) 
 
 (4) Miscellaneous 
 
 (a) Do price changes follow changes in volume of 
 production or volume of sales as closely as 
 under a secret price system? 
 
 ("b) 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 
 supplying 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? 
 ao Principal competitors? 
 
 "b,. S"".sii competitC3 s? 
 
 c. On downward changes, does the changed 
 price approach : . meet or undercut a 
 previously changed price? 
 
 d. What happens on 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? 
 
 9826 
 
- 754 - 
 (f) Rapidity with which filed prices were met? 
 
 1. Were refilings to meet upward changes 
 more or less rapid than those to meet 
 do wnv/ar d change s ? 
 
 2« Relationship to general price trend? 
 
 (5) Breakdowns and Over-all Comparisons - (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 Directio n 
 
 (1) Is there any evidence that filed prices bear a fixed 
 relationship to a suggested 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? !7as 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 Open 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 increnents of supply appeared? 
 
 (2) Are these due to new units in the. Industry or 
 expansion of existing units? 
 
 III. Effects of Open Price Filing on Consumption : 
 
 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) fhat has "been the relationship "between changes in 
 filed prices and the movements of prices of important 
 substitutes? 
 
 (3) TChat has been the relationship between sales of 
 "principal" and "substitute" products? 
 
 (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 a 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 Open Price Filing on the Competitive 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 alter the 
 
 focus of price leadership in the Industry? That is, from 
 the small \mit 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 t'7o subjects) • 
 
 The general supposition on which this outline is based is. 
 that the final, couple te report on each intensive stud;' - of price 
 filing in a particular industry 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 Industr--. 
 
 (3) A summary of pertinent provisions in the Code 
 of 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 orovisions in the Code. 
 
 (4) An exact, detailed description of the price 
 structure and pricing practices in the Indus- 
 tr:/ plus an explanation of how these have 
 functioned. 
 
 (5) A detailed presentation of the results of 
 the statistical analyses of the urice 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'TLZJGS OF TEE IHDUSTF.Y :' 
 
 A. General Character of the Industr;/ - : 
 
 (1) Size? ITumber of employees? Capitalization? 
 Output? Sales? Capacity? 
 
 (2) Stage in the general industrial process? 
 
 (3) General importance in the industrial, process? 
 IIa.tional importance? 
 
 (4) Hew or old Industry? General trend? Expanding 
 or dying? 
 
 9826 
 
- 767 - 
 
 (5) State of technology? detent 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 raw material market? 
 
 (a) Are the trices 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 same kinds of raw 
 materials? 
 
 (2) Nature of the market for the industry's products? 
 
 (a) Ire the prices 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 o^r 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? 
 
 9826 
 
- 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, hov; they are made: 
 (a) Raw materials? 
 
 ("b) Processing: Eow 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) TThere? For what? How? Extent of each use? 
 
 ("b) Competitive or substitute products? Extent 
 of substitution possible? 
 
 (5) Marketing: 
 
 (a) General character of the market? 
 
 (h) 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 ar.d Pric i ng Prr.ct i ces : 
 
 In general, this seel ion should include everything that is 
 necessary to enable the research staff to determine the net 
 prices received for the represents tive products of the selected 
 companies « 
 
 Specifically, the following information is set forth as a gaide 
 to what is necessary; the various items will, of course, vary 
 from industry to industry: 
 
 A. List Pricos ; 
 
 (1) Of what type: 
 
 (a) Standard established list prices with discounts 
 and plus percentages? 
 
 (b) Quoted list prices? How quoted? 
 
 (c) Special schedules? and so 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? 
 (Z) Special discounts? 
 
 (4) Cash discounts? Rate? Net Period? etc. 
 C • Other terms and conditions of Sale : 
 
 (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 sny, 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 r»eriod) • 
 
 9826 
 
- 770 - 771 - 
 
 I V . PR ELIMINARY ANALYSIS OF THE 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 trill not "be necessary ercept for the studies 
 on Steel Castings and Asphalt Shingle and Roofing. 
 
 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 ca.se of Steel Castings, 
 this listing is not necessary inasmuch a„s 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 NRA files for the companies and 
 products selected. 
 
 E. Show for individual companies the list orices and discounts 
 for the various classes of customers. 
 
 F. Determine the net price (or the nearest "oossible 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: 
 
 ,(l) 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. 
 
 9826 
 
- 772 - 
 
 V. BASIC ANALYSIS OF TUB PRICE PILIITG-S : 
 
 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 or ices 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 terms 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 airy 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. Kow does the value given compare with that in 
 other similar industries? 
 
 (4) In some cases, there the necessary quantity figures are 
 not available, it may only be possible to establish the 
 upper and lower limits within which the net price falls. 
 This range, however, should afford something in the way 
 of answers to most of the questions listed above. 
 
 VI • SEC PISCARY ANALYSES ; 
 
 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 5 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. Tnere 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 AKD POST-CODE 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 
 
- 774 - 
 
 REG-IOIUL CO! :?A?J SOUS 
 
 It is also assumed that, wherever relevant, coraparisons will be 
 made between representative regions in those industries which have a 
 regional set-up. 
 
 (Material Specifications) 
 Master List of Materials Feeded 
 
 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 price 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 foi? 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 industr;". In some cases 
 these experts may be found within ERA; however, in a 
 good many cases it will 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 
 1TRA. Por certain industries it -'ill have to be secured 
 from outside sources. 
 
 In most coses the information called for under 1 and 2 
 above, if not known, can be obtained by the members of 
 the statistical staff 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 
 
 QRPfi 
 
- 775 - 
 
 we are forced to select representative products and 
 companies, the logical short-cut is expert axLvice 
 where needed on these oroblems. 
 
 3. Complete pride filings or comparable price lists of 
 all important competitors (in some cases of represen- 
 tative competitors), on representative products selected 
 from each industry, for the code period. 
 
 There possible, similar price series covering a pre- 
 code period or periods (preferably all of 1929 and 
 pre-code 1933) and the post-code months. 
 
 T/Jhere 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. This makes it necessary to contact 
 the Code Authority at an early date for this inform- 
 ation. The' 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. 
 
 There 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 Pdgidity : 
 
 • 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 
 
 9826 
 
- 776 - 
 
 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 a good indication of the frequency and 
 extent of changes in the different price elements during 
 the code periodo If the necessary data can be obtained 
 for the pre-code and post-code oeriods ( see the third 
 paragraph, Section 4, -ander "Uniformity") $ it will also 
 "be possible to comoare 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, Moot "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). 
 
 9826 
 
- 777 - 
 
 2. Sales data on the same basis as i. It may 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. 
 
 <• 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 periods covered by the price data 
 for the principal products with which the substitutes 
 compete, 
 
 4. INSPECTION STUDY OP PUCE .FILING 
 
 CHRONOLOGICAL INFORMATION • 
 
 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 comoahies is a.ssuned.) At one extreme are 
 those price filings which were filed onl^ r on 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 price 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. -o riodic Filing 
 
 The fact that prices were 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? 
 
- 773 ~ 
 
 Does the classification of companies by certain types of pro- 
 ducts show any temporal relationship with respect to filing 
 dates? 
 
 C» Frequency of Filing "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. THE MECHAIIISU OF PRICE FILIIIG- 
 
 Price filing assumed a great variety of forms with respect to the 
 mechanism by which filing was achieved. Hot only was the mechanism 
 subject to a variety of forms among industrie;-;, 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 mecha.nism may have failed to provide for 
 the filing of terms; 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 standard 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, "faere 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 
 
 r\r\ «-i /* 
 
si 779 a 
 
 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. 
 
 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 among 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? Material 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 headers, etc.); or according to material 
 content (Pire extinguishers;' wet chemical, powder, 
 etc.)? 
 
 To what extent does the variety extend throughout the 
 industry? 
 
 2. Identification or Description . 
 
 The description or identification of a "oroduct may. he 
 achieved in a great many different ways. Some of these 
 ways 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. 
 
 That are the methods used to identify the product? 
 Which ere 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? 
 That is the degree of refinement of the classification? 
 Is the classification an aid to identification of items? 
 Or is it obscure with respect to identification of items? 
 
 9826 
 
- 780 - 
 
 4. Product Standardization 
 
 The final step in uniformity with respect to the products 
 of an industr2 r is the degree of standardization* This 
 standardization forms the basis upon which many trade 
 practices ultimately rest. Obviously, uniformity in 
 price is much more difficult to achieve in the ca.se of 
 non-standardized products than in the case of highly 
 standardized products. 
 
 To what extent has product standardization t alien place? 
 What is the apparent relation of the product standard- 
 ization to the structure or mechanism of the price filing 
 system? 
 
 III. CILuUCTJTJSTICS OF THE P2ICH ICTORiJATIOK 
 
 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 of the filings, but rather the 
 discovery ,of the kinds of information that were obtained. 
 
 What kind of customer or distributor classification was used? 
 
 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 they 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 snecial treatment. The quantity 
 classifications and the associated discounts are the chief 
 characteristics of this kind of information. 
 
~ 781 - 
 
 !~ere the quantity classifications uniform for all members of 
 the industry? 
 
 7,'ere the discounts for the quantity classifications likewise 
 uniform? 
 
 T7ere the quantity classifications comparable among the products 
 of the industry? That is, was a 10fo discount given on one 
 dozen fire extinguishers, size one quart, by one company while 
 another company 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 price to various customers. Terms of payment 
 and conditions of sale are largely determined by the policy 
 of the industry as a whole and finally by the policy 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 employed? 
 
 TThat are the conditions of sale? - The Sales Policy? 
 
 1. Terms of Payment 
 
 Did the sales policy involve: 
 
 a. Guarantees and similar provisions, such as, 
 
 Product guarantees , 
 Return of defective 
 and damaged merchan- 
 dise, 
 
 Allowance or. obsolete 
 and discontinued lines 
 Price Guarantee, 
 
 Resale guarantee, 
 Re pur cha s e guar an t e e , 
 Assuming liability 
 for errors in plans, 
 patent infringement, 
 non-control la.ble 
 factors, etc. 
 
 Other. 
 
 b. Additional goods, such as, 
 
 Free deals, Labels, 
 
 Premiums, Advertising, 
 
 Samples, 
 
 Containers, Other. 
 
 Service, such as , 
 Demonstrating, 
 Estimating, 
 Installing, 
 
 Maintenance and re- 
 conditioning, 
 r *arehousing and 
 Storing, 
 
 Lending or leasing 
 of equipment. 
 
 9826 
 
 d. Financial assistance, such as, 
 
 Gifts, Paying buyers' per- 
 
 sonal charges, etc. 
 
- 782 - 
 
 Shipment, such as, 
 Split shipments, 
 Odd-Lot shipments, 
 
 Consignment goods, 
 
 Shi omen t s less than 
 specified minima, 
 Other, 
 
 g. Commissions and fees, such as, 
 
 To "brokers, To customers, 
 
 h. Allowance for service rendered by "buyer, 
 
 such as, 
 Trade-in allowance, Catalogue ailowan- 
 Label allowances, ces, 
 Advertising allowances, Cartage allowances, 
 
 Other, 
 
 i. Substitute or obsolete goods, such as, 
 Seconds, Damaged goods, 
 
 Used goods, Scrap, 
 
 j. Transportation charges, such as, 
 
 Basing points, Freight equaliza- 
 
 Uarehouse sales, tion, 
 
 F. 0. J5. Basis, Sales in other 
 
 zones below lowest 
 F. P., 
 
 F. 0. 3. basis, 
 freight allowed, 
 
 k. Resale -orice, such as, 
 
 In relation to orokers or agents, 
 
 In relation to consignees, 
 
 In relation to customers, 
 
 Respecting maintenance of manufacturer's 
 
 list orice, 
 
 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 were not filed by these members may have 
 played an important part in determining actual 
 price. The inspection can ho"oe 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 
 terms and conditions of sale? 
 
 9826 
 
- 783 ~ 
 
 JiTere statements confined to "announcements" or were 
 they descriptive. For example, ^as a statement made 
 that free deals would "be given, or did the statement 
 actually set forth the free deals to be given? 
 
 IV. APPRAISAL OF THE IHSPSCTIi-N 
 
 Insofar as oossible 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 orobably 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 any 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 orice olans, and, more important, to 
 
 lend a perspective to the descriptive and illustrative material utilized 
 in the present study. S^ch case studies would offer a basis for compar- 
 ative analysis far beyond what was possible in the present study. 
 
 2. The information assembled from rJRA files should be supple- 
 mented by extensive interviews and questionnaire data from members of the 
 industries participating in the (/pen 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 orice 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 orice 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 siich a research orogram. 
 
 9826 
 
- 784 - 
 
 EXHIBIT II 
 
 Analysis of Price Piling Provisions Contained in NRA Codes 
 
 9826 
 
- 785 ~ 
 
 EXHIBIT II 
 444 OPEN PRICE C DES BY DIVISIONS j BY SIZE 
 ACCORDING TO iTUMBSa '.»JT EMPLOYEES, 
 AND BY TIuE OP COBB 
 OPERAI ION 
 
 DIVISION 
 
 B 
 
 D E 
 
 
 o 
 o 
 
 MOUTHS & °. 
 > o 
 
 O IT\ 
 
 CO 
 
 o o o o o o o 
 o o o o o o o 
 
 O O O O O O Q 
 •» o *»»o •» ■» O •» f» 
 O-POO-POK^-^OO 
 O LTMO O CO ITA H 
 H CO H 
 
 o o 
 o o 
 
 o o O 
 
 +3 * m 
 
 CO 
 
 to 
 10,000 
 Under 
 
 o 
 o 
 o 
 
 i 
 
 o 
 
 EH 
 
 
 "Over" 18 
 
 
 
 
 
 2 
 
 
 2 
 
 
 13 - 18 
 
 1 
 
 1 
 
 7 
 
 3 
 
 32 
 
 
 44 
 
 i-ANIJEACTUBING - 88 
 
 6-12 
 
 
 
 1 
 
 2 
 
 37 
 
 
 40 
 
 
 , TTnflrsr 6. . 
 
 
 
 
 
 o 
 
 
 o 
 
 
 Over 18 
 
 1 
 
 
 2 1 
 
 3 
 
 1 
 
 
 8 
 
 
 12 - IS 
 
 
 2 
 
 2 8 
 
 r7 
 
 31 
 
 
 46 
 
 EQUIPMENT - 112 
 
 6-12 
 
 
 
 2 
 
 
 48 
 
 
 50 
 
 
 TTnflp.r R 
 
 — 
 
 
 1 
 
 
 7 
 
 
 8 
 
 
 Over 18 
 
 
 
 1 
 
 1 
 
 
 2 
 
 
 12 - 18 
 
 1 
 
 2 
 
 5 5 
 
 6 
 
 31 
 
 
 50 
 
 BASIC MATERIALS-68 
 
 6-12 
 
 
 
 1 1 
 
 1 
 
 10 
 
 
 15 
 
 
 yiric-pr 6 
 
 
 
 1 
 
 
 
 
 3 . • 
 
 
 Over 18 
 
 1 
 
 2 1 
 
 1 
 
 1 
 
 
 
 6 
 
 
 12 - 18 
 
 
 
 2 1 
 
 5 
 
 12 
 
 
 20 
 
 TEXTILES - 37 
 
 6-12 
 
 
 
 1 
 
 2 
 
 5 
 
 
 8 
 
 
 TTnflfiV fi ,. 
 
 
 
 
 
 3 
 
 
 <7 
 
 
 Over 18 
 
 
 2 
 
 
 
 
 
 2 
 
 
 12 - IS 
 
 2 
 
 1 
 
 3 1 
 
 
 6 
 
 
 13 
 
 DISTRIBUTING - 23 
 
 6-12 
 
 
 
 1 
 
 
 7 
 
 
 8 
 
 
 TTni*«r R 
 
 
 
 
 
 
 
 
 
 
 Over 18 
 
 
 
 
 1 
 
 
 
 1 
 
 
 12 * 18 
 
 
 1 2 
 
 1 6 
 
 1 
 
 30 
 
 
 41 
 
 CHEMICALS - 51 
 
 6-12 
 
 
 
 2 
 
 
 6 
 
 
 8 
 
 
 Unripr fi\ 
 
 
 
 
 
 1 
 
 
 1 
 
 
 Over 13 
 
 
 .1 
 
 
 
 
 
 1 
 
 
 12 - 18 
 
 
 
 
 2 
 
 5 
 
 
 7 
 
 POOD - 31 
 
 6-12 
 TTp Any fi 
 
 
 1 3 
 
 1 3 
 
 3 
 
 10 
 1 
 
 
 21 
 1 
 
 
 Over 18 
 
 
 
 
 
 
 
 
 
 12 -■ IS 
 
 1 
 
 1 1 
 
 1 
 
 
 
 
 4 
 
 PUBLIC UTILITIES^ 
 
 6-12 
 TTndftr fi ^ 
 
 
 
 
 
 
 
 
 
 Over 18 
 
 
 
 
 
 
 
 
 
 12 - 18 
 
 
 
 
 
 
 
 
 IoNSTRUCTION - 8 
 
 6-12 
 
 1 
 
 
 
 2 
 
 3 
 
 
 6 
 
 
 TTnrifir fi 
 
 
 
 
 
 2 
 
 
 2 
 
 GRAPHIC ARTS 
 
 12 - 13 
 
 1 
 
 
 
 
 
 
 1 
 
 BECREATION 
 
 12 - 13 
 
 
 
 
 1 
 
 
 
 1 
 
 )826 
 
- 786 - 
 
 CLASS _A_ C( DES - OVER 250,000 EMPLOYEES 
 
 DIVISION 
 
 Over 18 Mo. . 13 to 18 Mo 
 
 6 to 12 Mo . 
 
 Under 6 Mo, 
 
 MFG. Fabricated Metals 
 
 Equipment Automohile ■ 
 
 BASIC MAT. Iron & Steel 
 
 TEXTILE CofctonoTextile 
 
 DIST. TRADE Retail Solid Fuel 
 
 'Wholesale Dist. Trade 
 CHE, JCAL 
 FOOD 
 
 PUB. UTIL. Trucking 
 
 CONSTRUCTION Construction 
 
 GRAPHIC ARTS • Graohic Arts. 
 
 CLASS _B__ CODES - 100,000 to 250,000 EMPLOYEES 
 
 MANUFAC. 
 
 EQUIPMENT 
 
 BASIC MAT. 
 
 TEXTILE Silk Textile 
 
 "Tool Textile 
 DIST TRADE Builders' Suopl. Motor Vehicle & P 
 
 Retail Lumber 
 CHEMICAL Pa-oer & Pulp 
 
 FOOD Ice 
 
 PUB. UTIL. House. G.M.& ST. 
 
 Bakery 
 
 CLASS C CCDES 
 
 50,000 to 100,000 EMPLC- 
 
 MAEUF. 
 EQUIPMENT 
 
 BASIC MAT. 
 
 TEXTILE Underyr.&A.p! 
 DIST. TRADE 
 CHEMICALS 
 
 FOOD 
 
 FU3. UTIL. 
 
 Photog. & Photof 
 Gr t oy Iron Found. 
 Steel Casting 
 Copper Mfg. 
 Structural Clay 
 
 Chemical Mfg. 
 Rubber Mfg. 
 
 Motor Bus. 
 
 Bottled S. Brink 
 Canning Industry 
 Cigar Mfg. . 
 
 NOTE; These tables are subject to error, for a number of reasons 
 
 explained in the text. Until checked and made -oerfect, they 
 are not to be published. 
 
 982S 
 
787 - 
 
 CLASS 13 CODES 
 
 25,000 to 50 , OOOEMPLOYEES 
 
 Division 
 
 MANUFAC . 
 ECPIPLSLTE 
 
 BASIC MAT. 
 
 Over 18 Mp; 
 
 Farm Ec.uip, 
 
 Oil Burner 
 
 TEXTILE Throwing 
 
 DIST. I7ADE 
 
 CHEMICAL 
 
 FOOD 
 
 PU\. UTIL. 
 
 CLASS 
 
 12 to 18 i.o. 
 
 Mdse.'.hole. Tr. 
 
 6 to 12 Mo. 
 
 Under 6 Mo, 
 
 Plunb. Fixtures 
 Valve & Fittings 
 American Glassware 
 
 Cement 
 
 Concrete Masonry 
 
 Copper & 3 Mill P. 
 
 Clashed Stone S. & G. 
 Carpet & Rug 
 Ra/on & Silk Dye 
 Ind. Sup. & Mach. 
 Faoer Dist. Trade 
 Retail Monument 
 Set-U'o Paper Box 
 
 Retail Rubber T. 
 
 Candy Mfg. 
 
 CCDES - 10,000 to 25,000 EMPLOYEES 
 
 MANUFACT . 
 
 EQUIPMENT' Boiler. .Mfg. 
 
 BASIC HA3 
 
 TEXTILE 
 DIST. TRADE 
 CHEMICAL 
 
 FOOD 
 
 9826 
 
 Bedding 
 
 Dental Lab. 
 
 Dun e r al Supp ly 
 
 Med.&LO .Pr . Jevrel . 
 
 Precious Jerrel. 
 
 Small Arms c- Am. 
 
 Toy & Plaything 
 
 Am. Petroleum Eq. 
 
 Anti-Friction Beai 
 "Cast Iron Boiler 
 
 Cooking & Heating 
 ' Gas Appliance 
 
 Printing X- . 
 Scientific Appar. 
 Shovel, Dragline& 
 Asbestos 
 Limestone 
 Linen Import, Tr 
 Refractories 
 "7ood -Heel 
 Kat Mfg. 
 Outdoor Adv. 
 Corrug.& S.F.S.C. 
 Envelope 
 Fertilizer 
 Folding Paper Box 
 xy-. Ac e ty 1 e n e 
 Preformed Plastic 
 
 Elect .&Ueon S. 
 
 Boatbuilding 
 Drop Forging 
 
 ./hoi .Mon. Granite 
 
 Candlev;ick 3edsp, 
 
 Loose Leaf & 3.B. 
 Pacha- ,e Medicine 
 
 Canned Salmon 
 '.hoi. Confec. 
 TJhol. Tobacco 
 
-■788 --■ 
 
 CLASS F CODES 
 
 5,000 to 10,000 EMPLOYEES 
 
 DIVISION 
 
 Over 13 Mo. 
 
 12 to 18 Mo. 
 
 6 to 12 Mo. 
 
 Under 6 Ho, 
 
 MANUFAC. 
 
 equipment 
 basic mat. 
 
 TEXTILE 
 
 Cast Iron S.P. 
 Heat Exchange 
 Purnp Mfg. 
 Lime 
 
 Textile 3a g 
 
 DISTRIB. TR. 
 
 CHEMICAL Salt Prod. 
 
 POOD 
 
 PUB. UTIL. 
 CONSTRUCTION 
 
 Brush Mfg. 
 
 Bus. Furniture 
 
 Porcel. Br. Purn. 
 
 Gear Mfg. 
 
 Steam Heat. Eq. 
 
 Warm Air Furnace 
 
 Asphalt Sh.&Roof. Gypsum 
 
 Coal Dock 
 
 Floor & Wall C.T. 
 
 Vit. Clay Sever P. 
 
 Window Glass 
 
 ' 'ood 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 & Twine 
 Ready Mixed Cone. 
 Radio Broadcast. 
 
 Cocoa & Choc. 
 Coffee 
 
 Refrig. 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 
 Crown Mfg. 
 Cutlery 
 
 Fishing Tackle 
 Forged Tool 
 Hacksaw Blade 
 Horseshoe & A. P. 
 House. Ice Refrig. 
 Lightening Rod 
 Mach. Ap. Staple 
 Mach. Knife 
 Metal Lath 
 Metal Treating 
 Metpl Window 
 Metal Wall Struc. 
 Porcelain Enam. 
 Rolling Steel D. 
 Saw & Steel Prod. 
 Shoe Shsnk 
 
 Artificial Limb Arch. 
 
 Ornam. &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. 
 
- 739 - 
 (C LASS G CQIGS - UTTLT . 5, OOP E .PLOYTES - Continued) 
 
 DIVISION Over 18 I.lo. 
 
 12 to 18 Ho. 
 
 8 to 12 lio. 
 
 Under 6 ":o, 
 
 lviAHUFACTUR- 
 INO Cont'd. 
 
 EQUIPHEHT 
 
 Co/roressed Air 
 
 Slide listener 
 Snap Fas tenor 
 Steel T7ool 
 Tool & Lrolement 
 Umbrella ?r;3s 
 Upholstery Spring 
 Wood Ges3 L. Penc 
 Wrench Hfg. 
 
 Air Valve 
 Alloy Casting 
 Canning « Pack..' 
 Card Clothing 
 Clay Hrch. 
 Con. Refrig. 
 Cylinder ;..o :].d 
 Elec, Ind. Tr. 
 Fire Ext, Aop, 
 Foundr~ r Supply 
 Funeral Vehicle 
 Gar, Co ck 
 Gasoline Pimp • 
 Hand Chain Hoist 
 Ind. Safety Eq. 
 Hach. Tool 
 Hot or Eire App, 
 N~Ferrous H. h.T. 
 F— Ferrous Steel C 
 Pipe hi role 
 Power h Gang L.I'. 
 H.R. Special Trad 
 Reduction hach. 
 Road Hach. 
 Rock Crusher 
 Spray Painting 
 Steel Tubu & E.B. 
 Stone Finishing 
 Tackle Block 
 Unit Heater 
 TTire Rod & T.D. 
 
 9826 
 
 Public Seating 
 
 Pipe Tool 
 
 Palp & P.II. Wire C 
 Socket Screw Prod 
 Standard Steel Bbl. 
 Steel Package 
 Tubular Split Rivet 
 Upward Act. Ho or 
 Vise Hfg. 
 Vit. Enamel hare 
 Wash. Hach. Parts 
 hire Rope 
 Uood Screw 
 Air Filter 
 h.uto hot.W. Heat 
 Beater & Jordan 
 Brass Forging 
 Cast.& Floor Tr. 
 Chen. Eng. 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 Hfg. 
 hiln Cooler & Dry 
 Laundry & Dry CI. 
 Leaf Spring Hfg. 
 : Lift Truck 
 Marine Equip. 
 Liquefied Fuel 
 He chan . Lubr i c . 
 Median. Press 
 Hulti-v Belt Dr. 
 Oil F. Pump. Eng. 
 Paper Bo:: Hach in e 
 Port Elect. Lamp 
 R. R. Appliance 
 Re frig. Hach. 
 Refrig. Ind. 
 Refrig. Valves 
 Ring Traveler 
 Rock & Ore Crush. 
 Roller & S. Chain 
 Rolling Mill Mach. 
 Sawmill Hach. 
 Shuttle Hfg. 
 So rocket Chain. 
 
 Auto Shop Equip. 
 Can Laheling 
 
 Cereal Hach, 
 Gasket Hfg, 
 Power Transnis. 
 Wheel & Ri:.i 
 Wiring Device 
 
'■ ~ 790 - 
 
 ' ( CLASS & COPES - UTDER 5,000 EMPLOYE S - Continue d) 
 DIVISIOi: Over 18 Ho. 12 to 18 Ho. 6 to 12 Ho. 
 
 Under -6 Ho. 
 
 EQUIPMENT 
 Continued. 
 
 BASIC HAT. Plumbago Cruc. 
 
 TEXTILE 
 
 Asphalt &.Am. Tile 
 Chinarrare-& Pore. 
 Clay Drain Tile 
 Clay 8: 5. R. Tile 
 Earthenware 
 End Grain Strip 
 Excelsior 
 F eldsr>ar 
 
 Fibre" Wall 3d. - 
 Fullers E,:-.rth 
 Grinding Yneel 
 Ind. — 3rass & Br. 
 Insulation Board 
 Ladder I.ii'g. 
 Mica 
 
 Mop Stic. 1 : 
 Ornament, i.iould. 
 Picture Ho old. 
 Preformed Plast. 
 Quicksilver ■ 
 Rock c: Slag '.;.• • 
 Roofing Greji. 
 Sand Lime 3rick 
 Sandstone ■ • 
 Secondary Aluni::. 
 Shoe Last 
 Slate 
 
 Talc t: Soaostone 
 Venitian Blind 
 Who 1 . Hon. J larbl e 
 Wood Insl. Pin 
 Animal Soft Hair 
 Cotton Converting 
 Covered Button 
 Fiber IT.7C Button 
 Fur- Dealing Tr. 
 Hair Cloth Mfg. 
 Hair & Jute Felt 
 Milk Filtering 
 Ready Hade Slip C. 
 Rug Chem Process. 
 Sanitary & W. Spec, 
 T7ool Felt 
 
 Trailer Mfg. 
 Harm Air Furnace 
 Warm Air Register 
 Water Meter Mfg. 
 Waterpo^er Eq. 
 Water Softener 
 Woodwork Hach. 
 Abrasive Grain 
 China Clay Prod. 
 Do^vel 
 Dov/el Pin 
 Flex. Insul. 
 Manganese 
 Marble '.-uarrying 
 Natural Cleft St. 
 ' Soft Line Rock 
 Woven Wood Fabric 
 
 Bias Tape 
 Curled Hair 
 Grass &' F, . . Rug 
 Papermakers Felt 
 Shoe Pattern 
 
 Bitu:.?:oad 
 Wood Plug 
 
 Brattice Clo 
 Canvas St. Be 
 Horse "airDr 
 
 9826 
 
701 
 
 ( CLpR 
 
 G CODES - 
 
 >,000 ERPLOTFBS - Continued ) 
 
 DIVISIC 
 
 Over 18 Lio, 
 
 13 to 18 Ro. 
 
 6 to 12 Ko, 
 
 Under 6 Ro. 
 
 DISTRIB. TR 
 
 CHEMICAL 
 
 Advert, Display 
 Beauty &Barber. Sq. 
 Co:: ierc. Stationer 
 Liquefied Gas 
 Machine ' r aste 
 Upholstery & D.F. 
 
 liner. Hatch 
 
 Bleached Shellac 
 
 Bulk Drink. Straw 
 
 Candle Mfg. 
 
 Carhon Black 
 
 Cloth Reel 
 
 Cyi. LTP. Contain. 
 
 Fibre Can & Tube 
 
 Fluted Cup. 
 
 Food Dish 
 
 Glazed & f. Paper 
 
 Gummed Label 
 
 Gumming 
 
 Hardwood Distil. 
 
 Insect, & Disinfec. 
 
 Lye 
 
 0;oen Paper Disc. li.B.C. 
 
 Photo. Ilount 
 
 Pyrotechnic 
 
 Reclaimed lubber 
 
 Ind. '. hoi. Plumb. 
 Private H.S. School 
 7 Radio Wholesale 
 School Supplies 
 Sheet iietal Dist.T, 
 Whol. Jewelry 
 Whol. Stationery 
 Ag.Ins, & Rung. 
 Auto Chem Spec. 
 Ind. Alcohol 
 Pac.C.Soap & Gl. 
 Stereo. Dry Mat. 
 Sulfonated Oil 
 
 Carbon Dioxide 
 
 POOD 
 
 C0RSTRUCTI0R 
 
 Sample Card 
 Sanitary Ililk 3. 
 Sanitary llapkin 
 
 m„ „, 
 
 Transparent I.I, C. 
 Rat e rp r o o f Pap er 
 Waxed Paper 
 Chewing Gum 
 Fresh Oyster 
 Rayonnaise 
 Peanut Butter 
 Whol. Lobster 
 
 C 
 
 Cork 
 
 Fleet. Contract 
 
 Reinforcing Mat. 
 
 Blue Crab 
 Col. Sardine 
 Dog Food 
 Ice Cream Cone 
 Malt Prod. 
 R.Sng. Fish 
 Preserve, Etc. 
 Process. Fish Oil 
 Spice Grinding 
 Trout Farming 
 Corrug. R.M.C. Pipe 
 Steel Joist 
 
 IT.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, 
 
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- 793 - 
 
 EIJTI IT III 
 
 Alphaoeticrl List of 121 Coles in 
 
 Over-All Scirole for Price 
 
 Filing Study 
 
 9826 
 
. - 794 ~ 
 
 EXHIBIT III 
 
 aLP-a -/•■ioa , iP3 ; : c :: i c ji codes in ofer-all sample for frice filing study 
 
 No. 
 
 Code 
 
 Division 
 
 275A AGRICULTURAL INSECTICIDE & FUNGICIDE - 
 div. of Chemical Mfg. Ind. 
 
 112 ALL METAL INSECT SCREEN INDUSTRY 
 
 85 AMERICA!! PETROLEUM EQUIPMENT HID. & TRADE 
 
 80 ASBESTOS INDUSTRY 
 
 150 ASPHALT AND MASTIC TILE INDUSTRY 
 
 99 ASPHALT SHIM LE AND ROOFING INDUSTRY 
 
 105A AUTOMOBILE HOT WATER HEATER MFG.- 
 
 Sup. Automotive Farts & Equipment Ind. 
 
 445 BAKING INDUSTRY 
 
 20 ID 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' SUFFLY TRADE 
 
 96 BUFF & FOLISHING WHEEL INDUSTRY 
 
 88 BUSINESS FURNITURE STORAGE EQUIPMENT & 
 FILING SUPPLY INDUSTRY 
 
 302 CANDLE MFG. IND. & BEESWAX BLEACHERS & REFHIERS 
 
 463 CANDY MANUFACTURING INDUSTRY 
 
 429 CANNED SALMON INDUSTRY 
 
 446 CANNING INDUSTRY 
 
 333 CANVAS GOODS INDUSTRY 
 
 58 CAP AND CLOSURE INDUSTRY 
 9826 
 
 Chemical 
 Manuf ac tur ing 
 Equipment 
 Basic Material 
 Basic Material 
 Basic Material 
 
 Equipment 
 Food 
 
 Manufacturing 
 
 Basic Material 
 
 Chemical 
 
 Equipment 
 
 Food 
 
 Distributing 
 
 Manufacturing 
 
 Manufacturing 
 
 Chemical 
 
 Food 
 
 Food 
 
 Food 
 
 Textile 
 
 Manufacturing 
 
~ 795 ~ 
 
 No. C ode . 
 
 269 CARBON BLACK INDUSTRY 
 
 2753 CARBON DIOXIDE I",©. - Div. of Chemical Mfg.Ind 
 
 222 CARD CLOTHING INDUSTRY 
 
 202 CARPET AND RUG MFG. INDUSTRY 
 
 258 CAST IRON BOILER & CAST IRON RADIATOR INDUSTRY 
 
 18 CAST IRON SOIL PIPE INDUSTRY 
 
 128 CEMENT IND. (See Portland Cement Ind.) 
 
 84C CHAIN MEG. II©. - Div. Fabricated Metsls 
 
 275 CHEMICAL MANUFACTURING INDUSTRY 
 
 520 CHINA CLAY PRODUCING INDUSTRY 
 
 467 CIGAH MANUFACTURING INDUSTRY 
 
 389 CLAY & SHALE ROOFING AID TILE INDUSTRY 
 
 364 CLAY DRAIN TILE MEG. INDUSTRY 
 
 265 Coffee Industry 
 
 201C COMMERCIAL STATIONERY & OFFICE OUTFITTING TRAD: 
 Div. Whole, or List. 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 WINE INDUSTRY 
 
 199 CORK INDUSTRY 
 
 245 CORRUGATED & SOLID FIBRE SHIPPING CONTAINER 
 
 511 CORRUGATED ROLLED METAL CULVERT FIFE HID. 
 
 187 COTTON CLOTH MFG. IND. 
 1 COTTON TE "TILE INDUSTRY 
 
 9826 
 
 Division . 
 
 Chemical 
 
 Chemical 
 
 E quipment 
 
 Textile 
 
 Equipment 
 
 Equipment 
 
 Basic Material 
 
 Manuf ac turing 
 
 Chemical 
 
 Basic Material 
 
 Food 
 
 Basic Material 
 
 Basic Material 
 
 Food 
 
 Distributing 
 
 Manuf ac turing 
 
 Equipment 
 
 Basic Material 
 
 Basic Material 
 
 Basic Material 
 
 Construction 
 
 Construction 
 
 Chemical 
 
 Construction 
 
 Textile 
 
 Textile 
 
- 796 ~ 
 
 No. Code 
 
 77 CROWN MFG. INDUSTRY 
 
 109 CRUSHED STOKE*, 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 ENVELOPS MFG. INDUSTRY 
 
 146 EXCELSIOR AND EXCELSIOR PRODUCTS INDUSTRY 
 
 39 FAR'. EQUIPMENT INDUSTRY 
 
 67 FERTILIZER INDUSTRY 
 
 326 FIBRE WALL30ARD INDUSTRY 
 
 88B FILING SUPPLY IND. Sup. 3usiness 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 FAPER BOX INDUSTRY 
 
 90 FUNERAL SUPPLY INDUSTRY 
 
 224 FURNITURE & FLOOR WAX & FOLISH 
 
 S4A1 GALVANIZED WARE MEG. IND. Div. Fabricated Metals 
 
 134 GAS APPLIANCES & APPARATUS IND. 
 
 70 GAS COCK INDUSTRY 
 
 1051 GASKET MPG. IND. Sup. Auto. Farts & Equip. 
 
 26 GASOLINE PUMP MPG, 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 
 
 Division 
 
 Manuf ac tur i rig 
 
 Basic Materials 
 
 Equipment 
 
 Basic Materials 
 
 Equipment 
 
 Basic Materials 
 
 Chemical 
 
 Basic Mat -rials 
 
 Equipment 
 
 Chemico.1 
 
 Basic Materials 
 
 Manufacturing 
 
 Equipment 
 
 Manufacturing 
 
 Basic Materials 
 
 Chemical 
 
 Manuf ac tur ing 
 
 Chemical 
 
 Manufacturing 
 
 Equipment 
 
 Equipment 
 
 Equipment 
 
 Equipment 
 
 Equipment 
 
 Chemical 
 
 Gra. Arts. Div. 
 
- 797 - 
 
 I7o . Code 
 
 512 GRASS £ FIBRE RUG INDUSTRY 
 
 277 GRAY IRON FOUNDRY INDUSTRY 
 
 17 GRINDING WHEEL MFG. IHD. 
 
 293 GBMMISGTlKDUSIRy 
 
 420 GYPSUM INDUSTRY 
 
 73 HAIR c n JUTE FELT IITDUSTRY 
 
 110 HARDUOOD DISTILLATI01T IHD 
 
 56 HEAT EXCHANGE I INDUSTRY 
 
 183 HOUSEHOLD ICE REFRIGERATOR INDUSTRY 
 
 43 ICE INDUSTRY 
 
 275C INDUSTRIAL ALCOHOL -Di v. Chemical Mfg. Ind. 
 
 315 I ED. SAFETY EQUIP. I1BD.& LED. SAFETY EQUIP. TRADE 
 
 391 INSECTICIDE ft DISINFECTANT MFG.IKD. 
 
 11 IRON & STEEL II7D. 
 
 6 LACE MFG. IITDUSTRY 
 
 107 LADDER MFG. IND. 
 
 34 LAUNDRY f- DRY CLEANING MACHINERY MFG. HID. 
 
 105C LEAF SPRING MEG. -Suo .Automotive Parts ft Equip 
 
 51 LIUE INDUSTRY 
 
 113 LIMESTONE INDUSTRY 
 
 104 LIQUEFIED GAS INDUSTRY 
 
 412 LOOSE LEAF ft BLANK BOOK IITDUSTRY 
 
 300 LYE IITDUSTRY 
 
 234 1.IACAR0ITI IITDUSTRY 
 
 103 LIACHINE TOOL ft FORGIITG MACHINERY IITDUSTRY 
 
 149 MACHINED WASTE MFG. IED. 
 
 421 MARBLE QUARRYING ft FI1TISHI1TG IITDUSTRY 
 9826 
 
 Division 
 
 Textile 
 Equipment 
 Basic Materials 
 Chemical 
 Basic Materials 
 Textile 
 Chemical 
 Equipment 
 Ma.nuf 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 - 
 
 I!o. Code 
 
 59 MARKING DEVICES INDUSTRY 
 
 349 MAYONNAISE INDUSTRY 
 
 175 MEDIUM C. LOW PRICED JEWELRY MFG. HID. 
 232 MERCHANDISE WAREHOUSING TRADE 
 
 344 METAL LATE MFG. IND. 
 
 84A METALLIC WALL STRUCTURE IND. -Div.Fab. Metals 
 
 205 I.IETAL WINDOW INDUSTRY 
 
 108 MOTOR EIRE APPARATUS KEG. IND. 
 
 519 NATURAL CLEET STONE INDUSTRY 
 
 271 NOEEEBROUS AND STEEL COFVECTOR MFG. IND. 
 
 84N NONFERROUS EOT WATER TANK MFG.IHD— Div.Fab.IIet, 
 
 78 NOTTINGHAM LACE CURTAIN INDUSTRY 
 
 25 OIL BURNER INDUSTRY 
 
 448 OPTICAL WHOLESALE IND. AIT) TRADE 
 
 430 PACKAGE MEDICINE INDUSTRY 
 
 120 PAPER AED PULP INDUSTRY 
 
 230 PAPER BAG MFG. HID. 
 
 176 PAPER DISTRIBUTING TRADE 
 
 361 PERFUMES, COSMETICS & OTHER TOILET PEPS. HID. 
 
 290 PHOTOGRAPHIC MOUNT INDUSTRY 
 
 524 PICKLE PACKING INDUSTRY 
 
 131 PIPE NIPPLE MFG. IND. 
 
 63 PLUMBAGO CRUCIBLE INDUSTRY 
 
 204 PLUMBING FIXTURES INDUSTRY 
 
 239 PORCELAIN BREAKFAST FURNITURE ASSEMBLING IND. 
 
 4B PORTABLE ELECTRIC LAMP & SHADE- Subdiv.Elec. 
 
 359 PREEORMED PLASTIC PRODUCTS INDUSTRY 
 9826 
 
 Division 
 
 Manufacturing 
 
 Food 
 
 Manufacturing 
 
 Public Utilities 
 
 Manufacturing 
 
 Manufacturing 
 
 Manufacturing 
 
 Equipment 
 
 Basic Material 
 
 Equipment 
 
 Equipment 
 
 Textile 
 
 Equipment 
 
 Manufacturing 
 
 Chemical 
 
 Chemical 
 
 Chemical 
 
 Distributing 
 
 Chemical 
 
 Chemical 
 
 Food 
 
 Equipment 
 
 Basic Materials 
 
 Equipment 
 
 Manuf ac tur i ng 
 
 Equipment 
 
 Basic Materials 
 
~ 799 - 
 
 No. Code 
 
 Division 
 
 257 PRINT ING EQUIPMENT INDUSTRY £ TRADE 
 500 PROCESSED OR REPINED PISH OIL INDUSTRY 
 
 57 PULP I.IANUFAC TURING INDUSTRY 
 148 PYROTECHNIC MANUFACTURING INDUSTRY 
 105J RADIATOR I.IFG. -Div. Auto. Parts arc! Equipment 
 201G RADIO WHOLESALING TRADE -Div. Whole, or Dist. 
 172 RAYON & SILK DYEING & PRINTING INDUSTRY 
 311 READY I.IIXED CONCRETE INDUSTRY 
 1S8 REPRACTORIES INDUSTRY 
 
 4A REERIGERATION -SuMiv. Electrical Mfg.Ind. 
 
 127 REINFORCING lATERIALS FABRICATING IND. 
 
 105B REPLACEMENT AXEL SHAFT -Supp. Automotive parts 
 
 33 RETAIL LUMBER, LUMBER 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 I.IANUFAC TURING INDUSTRY 
 
 174 RUBBER TIRE I.iFG. IND. 
 
 20 SALT PRODUCING INDUSTRY 
 
 200 SANITARY NAPKIN & CLEANING TISSUE IND. 
 
 274 SAW & STEEL PRODUCTS I.iFG. II©. 
 
 114 SCIENTIFIC APPARATUS INDUSTRY 
 
 167 SET UP PAPER BOX I.IFG. IND. 
 
 201P SHEET I.IETAL DISTRIBUTING TRADE -Div. Whole. 
 
 EQUIPMENT 
 
 Food 
 
 Equipment 
 
 Chemical 
 
 Equipment 
 
 Distributing 
 
 Textile 
 
 Construction 
 
 Basic Materials 
 
 Equipment 
 
 Construction 
 
 EQUIPMENT 
 
 Distributing 
 
 Distributing 
 
 Distributing 
 
 Distributing 
 
 Equipment 
 
 I.Ianuf ac tur i ng 
 
 Chemicals 
 
 Chemi cal 
 
 Chemical 
 
 Chemical 
 
 Ivianuf ac tur i ng 
 
 Equipment 
 
 Chemical 
 
 Distributing 
 
 9826 
 
~ 800 - 
 
 No. Code 
 
 Division 
 
 102 SHOVEL, DRAGLINE £ CRANE HID.. 
 
 48 SILK TEXTILE irDUSTRY 
 
 84Z STANDARD STEEL BARREL & DRUM L3PG.-Div.Fab.Met 
 
 279 STSAi: HEATING EQUIPMENT INDUSTRY 
 
 82 STEEL CASTING INDUSTRY 
 
 62 STEEL TUBULAR £ EIRE BOX BOILER IKD. 
 
 313 STEEL WOOL IIDUSTRY 
 
 158 STONE FINISHING MACHINERY £ EQUIPMENT IHD. 
 
 123 STRUCTURAL CLAY PRODUCTS INDUSTRY 
 
 469 SULPIIOMATED OIL i LAMJFAGTURING INDUSTRY 
 
 249 TAG INDUSTRY 
 
 54 THROWING I1TDUSTRY 
 
 86 TOYS AND PLAYTHINGS IIDUSTRY 
 
 382 TRANSPARENT MATERIALS CONVERTERS I ID. 
 
 23 UNDERWEAR AID ALLIED PRODUCTS MFG. IED. 
 
 272 D1IIT HEATER AND/OR U1 T IT VENTILATOR MFG.IND. 
 
 502 UPWARD-ACTING DOOR INDUSTRY 
 
 153 VALVE £ FITTINGS MANUFACTURING IIDUSTRY 
 
 136 VI TRIPLED CLAY SEWER PIPE MFG. I ID. 
 
 137 WARI.I AIR FURNACE I.AITUEACTURIEG IIDUSTRY 
 472 WARM AIR REGISTER IIDUSTRY 
 
 295 WATERPROOF PAPER INDUSTRY 
 
 166 WAX PAPER IIDUSTRY 
 
 105D WHEEL £ Rlli LIFG. -Sup. Auto. Parts & Equip. 
 
 458 WHOLESALE CONFECTIONERS IIDUSTRY 
 
 201U WHOLESALE COPPER, 3 RASS, B RCIIZE £ RELATED 
 ALLOYS Div. Wholesale or Distributing Trade 
 
 Equipment 
 
 Textile 
 
 Manuf ac tur i ng 
 
 Equipment 
 
 Equipment 
 
 Equipment 
 
 Manufacturing 
 
 Equipment 
 
 Basic Materials 
 
 Chemical 
 
 Chemical 
 
 Textile 
 
 Manufacturing 
 
 Chemical 
 
 Textile 
 
 Equipment 
 
 Manuf ac tur i ng 
 
 Equipment 
 
 Basic Materials 
 
 Equipment 
 
 Equipment 
 
 Chemical 
 
 Chemical 
 
 Equipment 
 
 Food 
 
 Distributing 
 
- 801 - 
 
 2 T o . Code 
 
 Division 
 
 449 WHOLESALE LI0MJME1JIEAL GRAI7ITE INDUSTRY 
 
 484 WHOLESALE MOlTUMSnTAL MARBLE IHBUSECT 
 
 508 WHOLESALE PLUMBING PRODUCTS, EEATI1IG PRODUCTS 
 AKD/OR DISTRIBUTING PIPE, EITTI17C-S & VALVES 
 
 462 WHOLESALE TOBACCO TRADE 
 
 8481 WIRE ROPE & STRAHD MFG. IHD. -Di v. Fab. Metals 
 
 4C WIEI1TG DEVICES- Subdiv. electrical mfg.ind. 
 291 WOOD CASED LEAD PENCIL INDUSTRY 
 
 3 WOOL TEXTILE INDUSTRY 
 383 WOOD TURNING & SHAPING INDUSTRY 
 
 Basic Materials 
 Basic Materials 
 
 Distributing 
 
 Pood 
 
 Manuf ac tur i ng 
 
 Equipment 
 
 Manuf ac tur i ng 
 
 Textile 
 
 Basic Materials 
 
 9826 
 
- 802 - 
 
 EXHIBIT IV 
 
 OPEN PRICE PLAIT FOR TIE F0LDI1TC- PAP 3?. BOX INDUSTRY 
 
 FOLDING BOX AUTHORITY 
 19 West Forty-Fourth Street, 
 New York, II. Y. 
 
 October 22, 1934 
 Bulletin No. 29-H 
 O-oen Price Plan 
 
 TO ALL LiSMBERS OF THE FOLDING PAPER BOX INDUSTRY: 
 
 The Code Authority has declared all products of the Industry 
 subject to the Open Price Plan of Selling with the exception of those 
 products exempted in Order No. 12-B. Order No. 12- P was issued under 
 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, 1933, and sets forth the method 
 of operation. The purpose of this Bulletin is to erplain 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 29-3. 
 
 OPEN PRICE PLAN 
 
 In order to sell a particular product to a particular customer in 
 full accordance with the provisions of the open price 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 Product 
 
 A member becomes a Registered Member on any r>roduct when he files 
 Customer Registration and Product Registration. All Registered Members 
 will receive notification of all Registered Members, inquiries and 
 declarations of price concerning the product on form listed on nage 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 
 
 9326 
 
- 003 ~ 
 
 "b . Declares a price, not "be'loV his own cost, and 
 sells or offers product for sale immediately 
 at price declared. 
 
 2. When Price has ^oeen declared, 
 
 a. Sells or offers product for sale immediately, 
 and without notification to Code Authority, 
 at lowest declared -orice on or after its effec- 
 tive date -providing he has no higher price on 
 file himself. In the latter case he must use 
 his ov/n price until such tine as he withdrawn 
 his price or files a different price; or 
 
 t> . Declares a price, not "below his own cost. If 
 this price is higher than the lowest declared 
 price, it becomes effective immediately. If 
 this 7}rice 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 
 "but 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 stiper- 
 seded. To place any product on a closed price "basis, all declared 
 prices mist be 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 price he chooses which is not below his own 
 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 Code Authority, at lowest 
 declared price on or after its effective date; or 
 
 9326 
 
- 804 w 
 
 t>. Declares a price, not "below his own cost. If this 
 price is higher than the lorest declared- price, it 
 he cones 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 rhich is anal ting its effective 
 date, the new price "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 memher, except for the three day period outlined in 
 "3" ahove, 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 sane information as a Registered 
 Memher. If inquiring memher makes the sale, he should register the 
 customer and product and hecome a permanently Registered Ilemher. 
 
 When II forms are sent to members, the forms will show the complete 
 and up-to-date status of the account and will supersede any previous 
 notification concerning the same customer and product. When a memher 
 is only registrant or inquirer on a particular product the acknowledg- 
 ment copy of the Registration of Product or Registration of Inquiry 
 will he returned stamped "Product not Registered - I.loy Quote at Once" 
 and no IT sheet will he sent. 
 
 3. Use Manual 
 
 It is advisahle for a memher 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 hasis of the rates included in the Basic 
 Estimating Manual plus the material cost as issued hy the Code Authority 
 and plus the lowest filed percentage for the zone in which purchase is 
 made. 
 
 9826 
 
- 805 ** .. 
 FORMS USED IP OPEIT PRICE PLAN 
 
 Forms Sent "by Ilembers to C.A . Forms Sent to Ilembers b?. r C.A. 
 
 1. When Customer is "being Registered 
 
 Registration of Customer Acknowledgment Cox>y 
 
 RC-1 and. 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, N-l 
 
 1. Other Registrants 
 2* Inquiries 
 3.- Price Declarations 
 4.. Price Withdrawals 
 
 3. Wlien Inquiry is "being Registered 
 
 Registration of Inquiry, a. Acknowledgment Copy, RI-2 
 
 RI-1 and RI-2 "b. For a 50 day period, same 
 
 notifications as sent 
 Registered I.Iem'bers, IT— 1 
 
 4. When Price is being Declared 
 
 Declaration of Price, a. Acknowledgment Co-oy, D-2 
 
 D-l and D-2 b. Same notifications as sent 
 
 Registered Ilembers, II-l 
 
 5. When Declaration of Price is being Withdrawn 
 
 Withdrawal of Price, a. Aclaiowledgment Copy, W-2 
 
 W-l and W-2 b. -Same notifications as sent 
 
 Registered Members, IT-1 
 
 6. When Percentage is being Declared 
 
 Declaration of Percentage Acknowledgment Oopy, DPC-2 
 
 DPC-1 and DPC-2 ITotice of Lowest Filed 
 
 Percentages 
 
 9826 
 
- 806 ~ 
 S IM/1ARY Ox ESSENTI AL ?.3QJ. t IHE::E I'TS 
 
 for effective oferatioi: 
 of ope:: price fla:: 
 
 A. Register your products and customers on the forms provided "by the 
 Code Authority: 
 
 1. Furnish all the information called for on these 
 forma. This is absolutely essential in order that 
 centers may "be advised of other product registrants 
 and of other activity on the particular product. 
 
 IUPORTAIJT - Dimerisions of "boxes should "be riven 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 tlis forms 
 prescribed, it becomes practically impossible for 
 Zone Agent to determine the similar ity of products 
 
 manufactured by more than one member. 
 
 2. It is important that the customer's name on both 
 the customer and product registration should 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 known by more than one name , all 
 names should be shown on forms. 
 
 3. It is important that you furnish the name and style 
 of carton as designated in Section 2 of the Basic 
 Estimating Manual. 
 
 4. In registering customers and products, the address 
 given for the customer should be that where the 
 purchasing agent of the customer is located so that 
 3 r our 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 company. 
 
 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- 
 tomer. 
 
 !826 
 
7. A member who has registered his specific products 
 and customers in accordance with the Open Price 
 Plan need not declare an oyjen price for any speci- 
 fic prodact where no competitive situation exists 
 
 6. A Registered Member should file his declaration 
 of price only when he fells that the nature of 
 the specific x>roduct for the particular customer 
 requires open price dealing. 
 
 9 . A member who has declared an open price may not 
 quote a lower r>rice to meet an OToen price on 
 file, unless he withdraws or supersedes his pre- 
 viously declared open price. 
 
 10- Ho member shall file a declaration of price -un- 
 less one of the following reouirements 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, 
 
 , . . POLDira BOX AUTHORITY 
 
 (signed) A. E. Murphy 
 
 Agent Representative 
 
 )826 
 
- 808 - 
 
 PROBLEMS Al*D PROCSDUPE AEISI1TG UKDER 
 TEE OPEIT PHI 03 PLAi: 
 
 There are many questions and problems that arise from the opera- 
 tion of the Open Price plan. We have listed several of the most re- 
 curring situations, so that the -practical operation of the Open Price 
 Plan can he seen. 
 
 1. 
 
 CASS 110. 1 
 
 PACTS 
 
 1. Member A registered 
 
 on Product X for Cus toner 
 Y. 
 
 2. Ho other registrants 
 
 3. Ho inquirern 
 
 4. ITo or ice declarations 
 
 PROCEDURE 
 
 1 . Member A nay immediately 
 quote a price on Product X 
 for Cus toner Y without de- 
 claring such price with the 
 Zone Agent , 
 
 a) Such -orice must not he 
 "below member A's cost. 
 
 2. Member A nay declare with 
 the Zone Agent a price 
 helow which he will not 
 quote to Customer Y on 
 Product X. 
 
 a) Uernber A nay quote de- 
 clared price immediate. 
 
 b) Such price must not ho 
 helow memher A's cost. 
 
 ******* * ** 
 
 CASE ITO. 2 
 
 1. Memher s A & B regis- 
 tered on Product X for 
 Customer Y. 
 
 2. Ho price declaration 
 
 1. Members A & B may immedi- 
 ately quote a price to 
 Customer Y without declara- 
 tion to Zone Agent. 
 
 a) ITo price may be below 
 the quoting Member's 
 cost. 
 
 9826 
 
- 809 - 
 
 CASE 170. 3 
 
 1. 
 
 2. 
 
 PACTS 
 
 Li embers A & 3 regis- 
 tered on Product X 
 for Customer Y. 
 
 Member A declares price 
 on Product X for Cus- 
 tomer Y which is only- 
 price declaration on 
 
 file 
 
 PROCEDURE 
 
 Declaration of price "by Mem- 
 ber A immediately "becomes 
 open price for Product X for 
 Customer Y for all regis- 
 trant s . 
 
 a) Such price must not be 
 below 0T7n cost of Member 
 
 A. 
 
 Zone Agent, upon receipt of 
 such declaration, Trill imme- 
 diately so notify members 
 A & 3 
 
 Member 3 may immediately 
 quote the same price as de- 
 clared by Member A. 
 
 If Member 3 desires to quote 
 a price lower than the de- 
 clared price of Member A, he 
 must file such price trith 
 the Zone Agent 
 
 a) Such price must not be 
 below his own cost. 
 
 b) Member 3 must wait five 
 days after receipt by 
 Agent before quoting such 
 lorrer price to Customer Y 
 
 ##*:};* 
 
 CASS 110. 4 
 
 2. 
 
 Member A registers 
 inquiry on Product X 
 for Customer Y. 
 
 ITo other Inquirers 
 
 No registrants 
 
 Member A will be informed by 
 the Zone agent that there are 
 no registrants or inquirers 
 on Product X for Customer Y 
 
 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 - 
 
 CASE 170. 5 
 
 FACTS 
 
 P20CEBURE 
 
 1. Member A registers inquiry 
 on Product X for Customer Y 
 
 2. Member B is registered on 
 Product X for Customer Y 
 
 Member B will "be notified 
 immediately "by Zone Agent 
 that Member A has registered 
 an inquiry on Product X for 
 Customer Y. 
 
 3. Ho declaration of r>rice 
 by Member E on file 
 
 2. The Zone Agent will immedi- 
 ately notify Member A that 
 Member B is registered on 
 Pr o due t X for Cus t ome r Y . 
 
 •i. Declaration of price 
 by Member B on file 
 
 3. If there is no declaration by 
 Member B on file, Member A 
 may not quote any urice except 
 Manual until 3 days after re- 
 ceipt of inquiry in Zone Of- 
 fice, Saturday and Sunday ex- 
 cluded. 
 
 4. If Member B has declared a 
 orice on Product X for Cus- 
 tomer Y, 'Member A is notified 
 by the Zone Agent of such 
 price and effective date and 
 Member A may quote such price 
 without declaration on such 
 effective date 
 
 5. Member A may file a lower 
 price than the one declared 
 by Member B 
 
 a). Such price shall not be be- 
 low his own cost 
 
 b) Member A must wait five days 
 after receipt by Zone Agent 
 before quoting such . price 
 
 **;,:*;:< ******•.;;* * 
 
 CASE 170. 6 
 
 1. Member A registers inquiry 
 on Product X for Customer Y 
 
 2. Member A declares price on 
 Product X for Customer Y 
 
 1. Member A will be informed by 
 the Zone Agent that there are 
 no registrants or inquirers on 
 Product X for Customer Y 
 
 9826 
 
.811- 
 
 3. no other registrants 
 
 4. Ho other inquirers 
 
 2. Member A may immediately quote 
 his declared price to Customer 
 Y on Product X 
 
 a) Such price shall not be be- 
 low his own cost 
 
 CASE i:o. 7 
 
 PACTS 
 
 PROCEDURE 
 
 1. members A & B regis- 
 tered on Product X 
 for Customer Y 
 
 2. member A declares 
 first price ($10.00) 
 effective iTovember 5th. 
 
 3. member 3 declares 
 price ($3.00)- 
 
 Declaration received 
 in Zone Office ITovember 
 10 th 
 
 Declaration effec- 
 tive ITovember 15 th 
 
 1. member B is notified of dec- 
 laration of 1 "ember A 
 ($10.00) 
 
 2. member A is notified of dec- 
 laration of Member 3 
 
 ($8.00) 
 
 Member A withdraws his 
 
 price - 
 
 Withdrawal received 
 in Zone Office ITo- 
 vember 12th 
 
 3. Member B 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 dote of 
 withdrawal of declaration 
 of Member A. 
 
 ??3S 
 
- 812 - 
 EXHIBIT V 
 x^-RA POLICY STATELET 
 EXHIBIT "^ , ' 
 OPEIJ PRICE FILIUG- 
 
 1. HRA policy favors properly drawn open orice previsions in codes 
 where desired by the industry. The attached draft Article reflects ap- 
 proved policv and should be susbtantially followed: 
 
 2. The objectivei'isto achieve fair competition, based on knowledge 
 of competitive factors to the fullest extent possible without unduly cur- • 
 tailing private initiative or destroying incentives to any individual 
 legitimately to extend his business. 
 
 3. '.There industries believe th t some waiting pcrioc 1 is essential 
 in order to cconolish the objectives outlined, the e- tter will be treat- 
 ea on its merits as in the ca c e of any proposed deoarture fron announced 
 policy. 
 
 "ARTICLE ; OPEN PRICE 
 
 "Section 1. Each member of thn trade /industry shall file with a 
 confidential and disinterested agent of the coOe authority or, if none, 
 then with such an agent designated by the Adiinistreter, identified lists 
 of all of his prices, discounts, rebates, allowances, and all other terns 
 or conditions of sale, her in- f tor in this article r3fcrred to as 'price 
 terns', which lists shall completely and accurately conf or \ to and repre- ■ 
 sent the individual pricing practices of said ..; ibor. Such lists shall 
 contain the price t jms for 11 sixch standard products of the industry as 
 are sold or offered for sale bv said member and for such non-standard 
 products of saio nenber e.s sh- 11 be designated oy the code authority. 
 
 Said price terns -shall in the first instance be filed within days 
 
 after the date of approval of this provision. Price terns end revised 
 price terns shell become effective immediately upon receipt thereof bv 
 said agent. Immediately unon receipt thereof, s? i • ;•: >nt shall b™ tele- 
 graph or other eoually prompt leans notify said nenber of the tine of such 
 receipt. Such lists and revisions, together with the effective tine there- 
 of, shall 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 nade available 
 to any perso.i until released to all members of the industry and their 
 customers, as aforesaid; provided, that prices filed in the first instance 
 
 shall not be released until the expiration of the r foresaid day period 
 
 after the approval of this code. The code authority shell maintain a 
 permanent file of all orice terms filed v herein provided, end shell not 
 destroy any part of such records except upon written consent of the Ad- 
 ministrator. Upon request the code authority shell furnish to the Adminis- 
 trator or any duly designated agent ef the Administrator copies of any 
 such lists or revisions of price terms. 
 
 9826 
 
- 813 - 
 
 "Section 2. When any member 01 the trade /in-'" us try has filed any 
 revision, such member shall not file a higher price within forty-eight 
 (43) hours. 
 
 "Section 3. No member of the trade/industry shall sell or offer 
 to sell any products/services to the trade/industry, for which price 
 terms have been filed pursuant to the provisions of this article, 
 except in accordance with such price terns. 
 
 "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 industivy to 
 change his price terms by the use of intimidation, coercion, or any 
 other influence inconsistent with the maintenance of bhe free and open 
 marlzet which it is the purpose of this Article to create." 
 
 9826 
 
- 814 - 
 
 OFFICE l.iEi.DRAlIDUI.i ITO. 260 
 July 16, 1934 
 
 APPLICATION OF GENERAL POLICY 
 
 ERA is endeavoring in the light of its experience to formulate 
 general policies so that interested parties and the organization itself 
 
 may know end y.-orlc toward definite ERA 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 "be 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 be 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. pending c odes: 
 
 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 a-yn ro ved codes: 
 
 (a) There will be no change so Ion,; as such a provision is 
 
 causing no difficulty, but in such coses the Research and Planning 
 Division and Deputies must observe operation: 
 
 (d) 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. 
 
 33" direction of the Administrator: 
 
 G. A. Lynch, 
 Administrative Officer, 
 
 9826 
 
- 815 ~ 
 EXECUTIVE ORDER 
 
 MODIFICATION OE EXECUTIVE ORDER 1JO. 5646 OE MARCH 14, 1934, ETC. 
 
 3y virtue of and pursuant to the authority vested in me under 
 title I of the National Industrial Recovery Act of June 16, 1933 (ch. 
 90, 40 Stat. 193), and in order to effectuate the purposes of said 
 title, it is hereby ordered as follows: 
 
 1. Any person submitting a, bid to air/ 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 shall quote a "Trice 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 a price or prices below his filed orice or prices 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. 
 
 2. If upon complaint made to the Administrator for Industrial 
 Recovery, he shall find, after due investigation, that the tolerance 
 of 15 percent provided in this order is resulting in destructive price 
 cutting in a particular tra.de or industry, he is hereby authorized to 
 issue e:n administrative order reducing said tolerance of 15 percent 
 for such trade 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 ca.use 
 a study to be made of the effects of this order upon the maintenance of 
 standards of fair competition in sales to public and private customers 
 and to report to the President thereon v.lthin six (6) months of the 
 da/te of this order. 
 
 4. All prior Executive orders, including Executive Order No. 6646 
 of March 14, 1934, are hereby modified insofar as, and to such extent, 
 as they may be in conflict or inconsistent with this order. 
 
 FRANKLIN D. ROOSEVELT. 
 
 The White House, 
 
 June 29, 1934. 
 
 (No. 6767) 
 
 9826 
 
- 8X6 - 
 
 _ D E R 
 
 GRAFTING LIMITED EXKPTIOH FR01I PROVISIONS OF 
 CODES OF FAIR COLflPEIDITIOP IE 0OM11ECTIOE WITH 
 
 QUOTATIONS MADE TO GOVERNMENTAL AGEFCIES 
 
 Administrative Order ITo. X-48 
 
 WHEREAS, certain provisions of 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 rc- 
 lating 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 to the authority vested in me under said Title of said 
 Act by Executive Orders of the President, including Executive Order 
 Ho. 6543-A, dated December 50, 1953, and otherwise, it is hereby 
 ordered that members of industry subject to codes of fair competition 
 who bid or may 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 mating of quotations to governmental agencies 
 which prohibit any of the following practices and such members, not- 
 withstanding such prohibitions contained in such codes may: 
 
 (a) Quote prices and terms of rale to governmental agencies as 
 favorable as those permitted to be quoted to any commercial buyer for 
 like quantities; 
 
 (b) Quote definite prices :f terms 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 permitted by any such code); 
 
 (c) Quote definite prices or terms 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 terms to apply on contracts to become 
 effective not more than sixty days from the date of the opening of bids; 
 
 (e) 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 
 shall operate to -permit deviation from or abandonment of open price and 
 cost protection provisions now or hereafter contained in any such code; 
 and that nothing in this order contained shall relieve any such member 
 at any time from the duty of complying with all other provisions of such 
 codes. 
 
 Washington, D. C. HUGH S. JOHNSON 
 
 June 12, 1934. Administrator for Industrial Recovery 
 
 9826 71 
 
- 81V - 
 
 oitice laaaoaMDCii no. 207 
 
 JULY 20, 1934. 
 CLASSIFICATION OF CUSTOMERS. 
 
 The following clause reflects NBA policy on this matter and 
 should "be substantially followed wherever provisions for classification 
 of customers are included in codes: 
 
 "The Code Authority shall cause to be formulated and 
 keep current a classification of all tyoes 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 cla.sses 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 (20) days, full information concerning 
 the classification shall be made available to all 
 members of the industry. ITo one shall by intimidation, 
 coercion, or other undue influence co.use 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 proposed 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 customers. 
 
 Other proposed provisions concerning classification of customers 
 are presumed to be contrary to policy. 
 
 3-- direction of the Administrator: 
 
 G-. A. LYNCH 
 Administrative Officer. 
 10304. 
 
 982* 
 
- 818 - 
 OFFICE LESI,iOBAI T DU"M 
 
 ! T o. 316 (*) 
 
 December G, 1934. 
 
 PEEMIU1IS AED "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 -oroper way to prevent such evasion of any trade 
 practice provision is careful crafting of the provision in question. 
 For example, in an open price provision, it should "be required that 
 all terras 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 arrnagcr.ient 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, how- 
 ever, 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" pre not offered to all customers of 
 the same class in the trade area. 
 
 4. Office Memorandum ilo. 232 is hereby superseded. 
 
 By direction of the National Industrial Recovery Board: 
 
 W. A. HARRIMAN 
 Administrative Officer. 
 
 (*) Note — The substance of this memorandum will be incorporated in 
 the NBA Office Manual under "Code Making and Amendment, Part II, 
 1736." 
 
 2423. 
 
 9826 
 
- 820 ~ 
 
 OFFICE l.ZELIOPAl'DUII TO. 326* 
 
 JAI7UARY 5, 1935 
 
 ADVERT 1 3 USPS ALLOWATCES 
 
 Manufacturers or other vendors selling goods to distributors 
 frequently find themselves desiring to purchase from their customers 
 an advertising or promotion service which 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 be the price. The payments thus made 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 
 price their goods to buyers and that certain buyers h?/ve promotion 
 services which they are desirous of sellin 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: 
 
 (a) Clearly separating and thus establishing 
 the distinct identities of the two ac- 
 tivities which crc 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 NBA 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 ~ 
 
 2. That no member of an industry or tra'de 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 paid therefor, the .method of determining performance, 
 and all other terms and conditions relating thereto. 
 
 5. Some arrangement for publicity may be made, v/here 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. KARRIHAU, 
 Administrative Officer. 
 
 *lTote— The substance of this memorandum will be incorporated in the 
 NBA Office Manual under "Code Hairing and Amendment - Basic Code - Trade 
 Practices - Part 11-3031.15" when released in Office Manual Form. 
 
 123 
 
 9826 
 
- 822 - 
 EXHIBIT A 
 
 Section . ITo member of the trade/ industry shall 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 given by him to any customer. 
 
 Ho 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 oy said member, the method 
 of determining performances, and all other terms and conditions re- 
 lating thereto. 
 
 The following arc examples of provisions for publicity which may 
 be found workable and desirable by particular industries: 
 
 Example 1. 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 
 Hational 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 copy shall be permitted or made avail- 
 able to any person until permitted or made ava.il able to all members of 
 the industry and their customers, as aforesaid. Upon request, said 
 ag«nt shall furnish to the national Industrial Recovery Board, or any 
 duly designated agent of said Board, copies of any such contract. 
 
 Exam-ol e 2. Immediately vpon the making of any such contract for 
 advertising or promotion services by any member of the trade/ industry, a 
 true copy thereof sloa.ll 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 
 
 9326 
 
-.•823 -•■ 
 
 OFFICE UShOPvATDLTI ITO. P27* 
 
 January 10, 1935 
 
 LI HI TAT I Oh OT PORwARD CONTRACTS 
 
 The following statement will govern provisions in codes relating 
 to forward contracts: 
 
 1. 1TRA policy generally does 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, provisions which would limit the 
 duration of forward contracts to sell 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 and its trade practices. 
 
 (b) Such provisions are 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 r.s contracts to 
 furnish materials for a specific project or 
 "cost plus" contracts. 
 
 (d) Compliance can be reasonably anticipated to a 
 degree which will avoid any substantial increase 
 in the administrative and enforcement burden of 
 HBJL 
 
 (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 upon purchasers. 
 
 By direction of the national Industrial Recovery Board: 
 
 W. A. HARM! LAI" 
 Administrative Officer. 
 *lTote — The substance of this memorandum will be incorporated in the 
 ERA Office Hanual under "Code Hairing and Amendment, Part II - 
 
 440 
 9826 
 
- 824 - 
 OFFI CE i lEUOPlAIIDUII 
 
 ITo. 334* 
 
 January 31, 1935 
 
 PRESCRIBING PROCEDURE POP. STATISTICAL REPORTING 
 
 Tlie following "irocedure is "rescribed for statistical reporting: 
 
 (l) The Research and Planning Division is designated as the only 
 IRA division authorized to collect statistics from code authorities; 
 all statistical reports and correspondence relating thereto now re- 
 siding in other ERA 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; 
 
 {?,) The Research and Planning Division is charged with the duty 
 of cooperating with the Coimliance Division in developing reports for 
 compliance, with the understanding that the mailing 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 information, 
 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. HARRIMAH 
 Administrative Officer. 
 
 * Note— The substance of this memorandum will be incorporated in the 
 PRA Office Ilanual under "Code Administration — Planning, Pact Finding 
 and Education — Pact Finding and Collection of Statistics — Part III- 
 2200" when released in Office Manual form. 
 
 1631 
 
 9826 
 
A^ril 23, 1935 
 
 ITATIO'TAL IL1DUSTRIAL B3C0VERY BOARD 
 
 ADMINISTRATIVE POLICY 
 
 Mew Series Ho. 1 
 
 Administration of codes requires the farther clarification and 
 extension of certain administrative -oolicies. The National Industrial 
 Recovery Board has caused special studies to he made within NBA and has 
 held "oublic hearings to aid in this development. 
 
 To expedite administrative procedure, announcements of "broad 
 •oolicies will he made when statements in any particular area are ready. 
 These hroad expressions of "oolicy will he later sucolemented, Hien 
 necessary, by more detailed statements. 
 
 Three statements follow. Two are of a general character; and one 
 is the first of a series dealing with specific "oroblems: 
 
 I. Administrative Stens for the Application of Policy. 
 
 II. Introduction to General Price Policy. 
 
 III. The Problem of Onen Price Piling. 
 
 9826 
 
- 826 ~ 
 I 
 
 ADMINISTRATIVE STEPS ECR APPLICATION OE POLICY 
 
 A. Q-enercl Administrative Guidance 
 (connection with divisions contrary to announced 'colics) 
 
 The Board recognizes that a. oolicy is not self-onerative, and that 
 its announcement necessitates p orogram 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 a"onroval is asked of o. oroposal which is contrary to 
 announced policy and insufficent ground is shown for exception from such 
 policy, the deputv will give the applicant a oromot decision to that effect, 
 Tnis decision will be accompanied, if oossible, with suggestions for the 
 modification of the proposal designed to cause it to conform to oolicy. 
 
 (2) If a orovisio:-" in an existing code is contrary to announced 
 nolicy, and if further action by ERA is required to make it operative, the 
 ■orovision will be left inoperative pending C r Jiial decision concern- 
 ing the jurisdiction and objectives of the NRA, unless the industry for- 
 mally requests earlier action. If such request is made, an opportunity 
 will be furnished the soonsors of the provision + " : 3ho»v sufficient cause 
 why it should be made operative, with or with* it tiodi^icptions. After 
 adequate opportunity to be hea"d has been given interested parties, de- 
 cision will •ororrotlv be made whether, to make the orovision ooerative or 
 
 to delete it. 
 
 (3) If a. -orovision contrary to announced oolicy has been tem- 
 oorarily aooroved for a trial -oeriod, an oproorluntty will be furnished the 
 soonsors of the orovision to show sufficient cpuse for (a) extending the 
 oeriod of trial or (b) making the provision perm it. After adequate 
 OTroortunity to be heard has been given interested -crrties, decision will 
 oronrotly be made whether to continue the -orovision or to allow it to 
 laose at its next expiration dr-to. 
 
 (4) If a provision contrary to announced policy is now fully 
 ooera.tive in an existing code, there may be, oending legislative redefini- 
 tion of the jurisdiction and objectives of IRA, either of two tT>es of 
 situation, leading to different courses of action: 
 
 (a) If no adequate showing has 'ocen made to NRA that 
 such orovision is in conflict with the interests 
 of the oublic or the justifiable interests of any 
 grouo, arrangements for observation will be made; 
 but no other action will be taken in the first ■ _ 
 instance. 
 
 9826 
 
~ 827 - 
 
 (b) If there is adequate reason to believe that such 
 a "orovision 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' NBA or to be heard on the subject. 
 If, after such a hearing or negotiation such con- 
 flict still appears and a Prompt solution cannot 
 be reached, the provision in question will be de- 
 leted, or suspended, or temporarily modified, pend- 
 ing approval of a satisfactory substitute or modi- 
 fication. 
 
 (5) After Congressional redefinition of the jurisdiction and 
 objectives of NBA, operative or inoper ti""e code provisions which are 
 inconsistent with the ne r; r Act will be prompt!* reconsidered. 
 
 B. Supervision and Observation of Policies 
 
 Supervision of the application of policy decisions has been 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 "oersons who will aid in the interpretation of 
 policy t-o divisional and deputy administrators will be appointed. One 
 will specialise on price and otner trade practice policy, one on labor 
 policy and one on code administration policy. Their duties will not 
 be administrative. They will 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 codes by divisional administrators, deputies and ad- 
 ministration members. 
 
 All executives and major staff officials, especially division 
 and deputy administrators and administration members who are in continual 
 touch with the problems of industry j will observe the actual operation 
 of policy decisions. 
 
 Special research and collection of the results of observation 
 of the operation of codes will be organized by the Research and Planning 
 Division under the direction 0" the Boayd. Reports and surveys will be 
 made to the Board and will oe 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. 
 
 9826 
 
- 828 - 
 II 
 INTRODUCTION TO GENERAL PRICE POLICY 
 
 Industry is tiie instrument tnron n which floods 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 -orice. Price also facilitates adjustments among the 
 many industries whose oroducts compete with one another for the consum- 
 er's dollar. Unless price o" crates eff ictivelv to determine these working 
 arrangemnts among the interested "oarties, some deliberate arrangement 
 or planned control must be permitted or established. Tnis would necessari- 
 ly limit severely the area of the individual business man's discretion. 
 
 In regard to orices and "or ice-making, industries present the 
 greatest variety. But in so far as government policy is concerned, they 
 fall rougnly into three distinct grouos. The first group — of which 
 education, the highways, the costal service, and the "oolice are typical 
 examples — are government undertakings. In tneir operation the charge 
 for the service has little relation to the cost; price, if there is an"* - , 
 has been fixed by the government according to some such principle as 
 the encouragement of the wide use of the service. The second group — 
 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 predicated upon "a 
 fair return uoon a fair value." The tuird grouo — 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 orice to the market. 
 
 This third grouo — much of which is in the jurisdiction of 
 the NEA — price is not fixed by a government- 1 autnoritv. It is supoosed 
 to be determined in an ooen market where it is "ssuned to emerge from the 
 operation o.f all the conpetitive 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 -oresumably checked by the com- 
 petition of other ouyers or sellers in the sane or in competing bussinesses. 
 In so far as either- party is able too p,o elsewhere in search of a better 
 bargain, he has some protection against the bargaining power of the other 
 party. The orinciple of pr* ice -making by competition in a free and open 
 market is established in the common law, the anti-trust acts, and public 
 uolicy. 
 
 The connoetitive system is often sooken of as an automatic self- 
 regulating mechanism. Government and business are said to have separa.te 
 provinces; government is to keeo 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 corroetition has proceeded along three distinct lines. 
 
 9826 
 
— 0(0^ — 
 
 First, government intervenes to secure the maintenance or restora- 
 tion of competitive conditions, in 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 many instances a smnll 
 minority, who seek to gain "by disregard of la"oor 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 undertakes 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 general 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 
 a"s 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 characteristics 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 atnoroval of administrative 
 bodies and the courts. Such "fair practices" may be eraoloyed freely. 
 Another group 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, forced 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 
 NBA is to develop trade practices, observe carefully their operation, 
 and fit them 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. Indxistries 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 ore 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 oolicy may be limited 
 or avoided in the case of certain industries. In other exceptional cases 
 provisions usually contrary to poli- be acceptable. But all such 
 departures from stated policy mast 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 snould 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-noression 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 
 establishment of conditions under which in a free and open market 
 competition may determine a fair price. 
 
 9826 
 
-,831 - 
 
 III 
 THE PROBLEM OF OPE'T PPICE FILING 
 
 Ao E nd To Be Served 
 
 Open price filing is a mere device. Its potentialities 
 for Isenefit or mischief depend uioon the purpose to which it is "out and 
 the methods which attend its use. The standard by which its promotion 
 should be judged is price making similar to that which. would oe 
 afforded by an open and coni.petitive market such as an organized com- 
 modit' r exchange. In such a market all the forces of demand and supply 
 converge, the transactions a~re 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 
 "Drice represents all that affects the current va.lue of a commodity. 
 
 The ideal of an or>en 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 procedures for making markets open have oeen 
 inadenuatelv developed. In general the open market is currently limited 
 to staple commodities, capaole of standardization, and objects of a 
 continuous flow of trade. Cotton and wheat ar® exanroles 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 rendered difficult or im- 
 possible b'"- 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 o"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 excriB.nge 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 perform its 
 industrial function. 
 
 To these ends open 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 promote and safeguard the integrity 
 of the process of competitive price making. It should be used to remove 
 the ignorance which the small enterpriser has about the activities of his 
 larger compe tutors, and thereby to insure him a measiire of protection 
 against their rivalry. 
 
 9826 
 
~ 832 - 
 
 The open market is the desired institution;. open price filing 
 is an imperfect substitute. The open market fixed the standard of per- 
 formance for 0"oen price filing. 
 
 Like all other procedures, open price, filing is not immune to 
 abuse. In combination with other procedures and understanding it may 
 be employed to maintain a price fi:;ed by a combination of "oroducers. 
 It may be used to expose to trade 'ounishment or the damaging ill will of 
 his competitors the individual whose prices are out of line. But in 
 
 J t 
 
 such instances the evil almost invariably lies in extra-code arrangements 
 which limit competition and for wnich the onen price filing device becomes 
 a convenient instrument. 
 
 It was hardly to be expected that onen -orice filing should 
 immediately attain its fullest possible usefulness. Abuses such as 
 have appeared in a number of industries n ere to be anticipated. These 
 abuses must be overcome. However, the experience of NRA has indicated 
 the possibility of developing safeguards, and much of the testimony at 
 the Jpnuary, 1935, hearings of price policv co if irms 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 against abuse. Ingenuity will be required to adapt it 
 to many industries in which ^roc'uets and conditio is of sale ^.re diverse. 
 A continuous and intelligent observation of its operation , and a prompt 
 correction of abuses are essential to its fullest usefulness. 
 
 3. Essential Characteristics of an Open Price Provision 
 
 Price filing should be adminsitered to serve the ends of a 
 free and open market. An impartial and confidential body should be 
 the administrative agency in order tlir-t price-lists may be distributed 
 to members of the industry and their customers witnout partiality and 
 without efforts to influence the quotations. The -orices must be gen- 
 uinely available to all customers and members of the industry. If the 
 body with which prices are filed is a orivate agency, its activities 
 must be subject to the immediate oversight of the government. It is ' 
 also essential to the purposes of open orice filing that the filed prices 
 be those at which sales are actually to 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 shortcomings, for which no one is consciousl''' to blame and 
 which arc 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. V/hen prices Pre rising 
 a flood of orders during the waiting period may unsettle a future market, 
 When prico-s are too high the incentive to reduce them in order to get 
 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. 
 
 9826 
 
~ 833 - 
 
 Probably the best case for a waiting period. can be made for in- 
 dustries in which seles .are of large size and snail nunoer , members are 
 many and widely scattered, and information about "orices cannot, for some 
 reason, be quickly circulated. Bat even in such industries the burden of 
 proof must oe uoon those "ho wish to eraoloy a waiting "oeriod. 
 
 In industries where prices immediately effective are manipu- 
 lated for the "ouroose of allowing large -di scriminatory discounts to 
 privileged customers, it may be necessar' to impose some limit uoon the 
 freauency of price change. In such rare caies this can be done by pro- 
 visions requiring that a price, one effective, must stay in effect for 
 some reasonable minimum period. Awaiting period before the "orice be- 
 oomes effective is not necessary in dealing with this problem. 
 
 C . Tvie ?ield for the Use of O'oen Pricing 
 
 0"oen 'crice systems s-ould not oe indiscriminately aoolied to 
 the entire range of Americ n industry. In some 1 industries the technical 
 problems presented by an otjen orice system would oe insuperable. If 
 commodities differ so widelv in quality, character, and accompanying 
 service that orices are likely to vary with each sale, or if the number 
 of concerns and products is very large, an open -orice filing system may 
 reouire much effort and give little usable information. If through 
 custom or convenience "orices retrain stable and market changes lie mostly 
 in the character of the goods sold, "orice reporting may be a meaningless 
 nrocess. If commodities are highly perishable and their supoly fluc- 
 tuates raoidly, even the quickest system of recording current prices 
 would oe a burden uoon many business men and consumers. The feasibility 
 of an o'oen nrice system increases in so far as price covroetition is 
 active, the products of the industry can be clearly identified, and 
 price changes are frequent without being incessant. 
 
 A price is not just a orice, but a "orice of something. It is 
 meaningless apart 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 orice". should o«> reported. In industries in 
 "/hich this connot be done it is Questionable whether an o'oen orice system 
 can be effectively used. It is difficult to provide prooerly for such 
 information. Identification of articles and their qualities, descrip- 
 tion of how doscounts are rel ted to ouantity and to the classification 
 of customers, indication of the way in which orices vary with varying 
 transportation costs - these are complicated matters. Yet any one of 
 the terms of sale may oe used, not only "oy the unscrupulous but even by 
 the independent minded merchant, in a way which impairs the achievement 
 of the open market purposes contemplated in the use of the device. It 
 is possible, for example, to confuse the meaning of the schedule of 
 prices by withholding an adequate definition of classes of customers. 
 Therefore, the relation of quality, quantity, class of customer, and 
 various terms of sale to open price filing will later be given separate 
 treatment. 
 
 9326 
 
- 834 - 
 
 Observation, ingenuity, and patience may "oermit the extension 
 of open "orice filing into what at the moment seems to "be impracticable 
 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 wares, and customers can be educated to 
 the larger differences among grades and bra.nds. However, in most of 
 these cases the difficulties which arise from variations of product and 
 service are such that or>en price systems might confuse rather than re- 
 veal what is happening in the market. The meaning of a price may depend 
 uoon 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 supnlied or 
 whether the price is only nominal. Hence,, to make oot,n-or icing effec- 
 tive, the identy of the seller often needs to be revealed. 
 
 In certain industries onen price systems, though feasible, 
 involve such "orobabilities 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 tne 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 orices it may choose. Industries in which the chief 
 obstacle to collusion is the difficulty of devising machinery for price 
 understanding are equally unsuitable to onen orice systems, since even 
 the best open price system may be used as a collusive device. The field 
 for ooen pricing is that in which competition tends to be active but ill- 
 informed and chaotic; not that in which competition tends to evolve into 
 monopolistic restraint. 
 
 D. Frice Statistics as an Alternative 
 
 There may be many industries in which the ends of public uolicy 
 will be adequately served by orice filing or reporting as it was under- 
 stood generally and accented by the courts even -orior to NRA. Such are 
 systems for the o;oen reporting of price summaries, price ranges and sales 
 volumes brsed uoon records of oast 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 arroear with current orice filing. In such industries, when 
 names of sellers are not to be disclosed, a form of summary statement 
 must jo devised adapted to the circumstances and detailed enough to serve 
 tnose 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-Fixing 
 
 It is hardly necessary to say that open orice filing is not 
 nrice-f ixing. Nor should-' evidence of collusion in their making be in- 
 ferred from a uniformity in the prices whirh are filed. Competition 
 is suoposed to effect uniformity of r>rices 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 
 
 9826 
 
- 835 - 
 
 can easily accomodate themselves to each ether'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 Heed for Flexibility 
 
 Open price filing should be applied to .specific industries in the 
 light of the particular circumstances rather then as a rigid formula. In 
 each case attention should "be 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 hoirever 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 Recovers? - 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 an organized open market 
 is not practical, the virtues of an organized commodity exchange may be 
 approximated through the device of open price filing. 
 
 9826 # 
 
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, 
 and 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, 
 Dut 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 W ork 
 Mat e rial s No. 18, Content s of Code Histries . 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. Particularly worthy 
 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 
 9768—1 . 
 
-11 - 
 
 set forth the origination of the cedes, the sponsoring group, the evidence advanced to sup- 
 port the proposal, the report of the Division of Research and Planning on the industry, the 
 recommendations of the various Advisory Boards, certain types of official correspondence, 
 the transcript of the formal hearing, and other pertinent matter. There is also much offi- 
 cial information relating to amendments, interpretations, exemptions, and other rulings. The 
 materials mentioned in this paragraph were of course not a part of the work of the Division 
 of Review. ) 
 
 THE WORK MATERIALS SERIES 
 
 In the work of the Division of Review a considerable number of studies and compilations 
 of data (other than those noted below in the Evidence Studies Series and the Statistical 
 Material Series) have been made. These are listed below, grouped according to the char- 
 acter of the material. (In Work Materials No . 17 , Tentative Outlines and Summaries of 
 St u dies in P roces s, the materials are fully described) . 
 
 In dus try S tudies 
 
 Automobile Industry, An Economic Survey of 
 
 Eltuminous Coal Industry under Free Competition and Code Regulation, Ecnomic Survey cf 
 
 Electrical Manufacturing Industry, The 
 
 Fertilizer Industry, The 
 
 Fishery Industry and the Fishery Codes 
 
 Fishermen and Fishing Craft, Earnings of 
 
 Foreign Trade under the National Industrial Recovery Act 
 
 Part A - Competitive Position of the United States in International Trade 1927-29 through 
 
 1934. 
 Part B - Section 3 (e) of NIRA and its administration. 
 Part C - Imports and Importing under NRA Codes. 
 Part D - Exports and Exporting under NRA Codes. 
 
 Forest Products Industries, Foreign Trade Study of the 
 
 Iron and Steel Industry, The 
 
 Knitting Industries, The 
 
 Leather and Shoe Industries, The 
 
 Lumber and Timber Products Industry, Economic Problems of the 
 
 Men's Clothing Industry, The 
 
 Millinery Industry, The 
 
 Motion Picture Industry, The 
 
 Migration of Industry, The: The Shift of Twenty-Five Needle Trades From New York State, 
 1926 to 1934 
 
 National Labor Income by Months, 1929-35 
 
 Paper Industry, The 
 
 Production, Prices, Employment and Payrolls in Industry, Agriculture and Railway Trans- 
 portation, January 1923, to date 
 
 Retail Trades Study, The 
 
 Rubber Industry Study, The 
 
 Textile Industry in the United Kingdom, France, Germany, Italy, and Japan 
 
 Textile Yarns and Fabrics 
 
 Tobacco Industry, The 
 
 Wholesale Trades Study, The 
 
 Women's Neckwear and Scarf Industry, Financial and Labor Data on 
 
 9768—2 
 
- iii - 
 
 Women's Apparel Industry, Some Aspects of the 
 
 T rade P ractic e St udies 
 
 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 
 comparison with Trade Practice Provisions of NRA Codes. 
 
 Labor 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 
 
 Par'. 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 
 
 Administrative 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 
 
 Approve 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—2. 
 
- IV - 
 
 Part C. Activities of the Code Authorities 
 
 Part D. Code Authority Finances 
 
 Part E. Summary and Evaluation 
 C^de 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 Reemployment 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 
 Sheltared Workshops Under NRA 
 Uncodified Industries: A Study of Factors Limiting the Code Making Program 
 
 Legal Studies 
 
 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. 
 
 LLM 
 
- 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. 
 
- vi - 
 
 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, and 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 cared 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. 
 

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