    [Eleventh Quarterly Report for the Period Ended September 30, 1944]
    [From the U.S. Government Publishing Office, www.gpo.gov]

    ﻿
    LIBRARIES
    UTAH STATE AGRICULTURAL COLLEGE
    From...
    Call No..
    UTAH STATE UNIVERSITY
    DATE DUE
    NOV i	WQI
    	igeo
    —o	luUC

    —		" —
    I
    OFFICE OF PR G ADM NISTRATION
    CHESTER BOWLES, Administrator
    ELEVENTH QUARTERLY REPORT
    FOR THE PERIOD ENDED
    SEPTEMBER 30, 1944
    UNITED STATES GOVERNMENT PRINTING OFFICE, WASHINGTON : 1945
    For sale by the Superintendent of Documents, U. S. Government Printing Office Washington 25, D. C. • Price 15 cents
    LETTER OF TRANSMITTAL
    Office of Price Administration, Washington, D. C., January 5,19^5-
    Sirs: I have the honor to submit herewith the eleventh report of the Office of Price Administration, covering the period ended September 30, 1944.
    Sincerely yours,
    Chester Bowles,
    Administrator.
    The Vice President.
    The Speaker of the House of Representatives.
    TABLE OF CONTENTS
    Chapter	page
    I.	Price Control: Progress and Special	Problems__________ 1
    Compliance with the Stabilization Act_______________ 4
    Planning for Reconversion___________________________ 5
    Surplus Goods Pricing_______________________________ 7
    II.	Price Control: The Food Programs_______________________ 9
    Food Prices________________________________________ 10
    Grains and Feeds___________________________________ 14
    Tobacco___________________________________________  14
    Restaurants________________________________________ 15
    III.	Price Control: Consumer Goods_______________________ 16
    Consumer Durable Goods_____________________________ 16
    Textiles___________________________________________ 18
    Apparel__________________________________________   19
    Leather, Fur, and Fibers_________________________   20
    IV.	Price Control: Industrial Products___________________ 22
    Building Materials_________________________________ 22
    Lumber_____________________________________________ 23
    Paper and Paper Products________________________ _ 25
    Iron and Steel_____________________________________ 25
    Used Passenger Cars_______________________________  26
    V.	Price Control: Fuels, Services, and,Other___________ 27
    Petroleum_______________________ _______________ 27
    Solid Fuels________________________________________ 29
    Services___________________________________________ 30
    Export-Import Regulations_________________________  31
    Emergency Court of Appeals_________________________ 33
    Appendix to Price Chapters___________________________  38
    VI.	Transportation and Public Utilities__________________ 40
    Transportation________________,____________________ 41
    Public Utilities____________________________, _ _	46
    VII.	The Rent Control Program_______________________________ 49
    Amendments to Regulations__________________________ 49
    Protest and Review Proceedings____________________  51
    Area Office Operations____________________________  54
    VIII.	Rationing: The Food Programs__________________________ 56
    Meat Rationing_____________________________________ 57
    Fats, Oils, and Dairy Products_____________________ 58
    Processed Foods_____r______________________________ 59
    Sugar Rationing____________________________________ 61
    Institutional Users_____________________________    63
    III
    IV • Table of Contents
    Page
    IX.	Rationing: Automotive Supply_______________________ 64
    Rubber Tires____________________________________ 64
    Automobiles______________________;______________ 65
    Gasoline__________________________________________ 66
    X.	Rationing: Fuel Oil and Other Programs_______________ 68
    Fuel Oil__________________________________________ 68
    Pacific Northwest_________________________________ 69
    Stoves__________________________________________   70
    Shoe Rationing.___________________________________ 71
    Rubber Footwear___________._____________________	72
    Currency Control Program________________________   72
    XI.	Enforcement________________________________________   75
    Enforcement Programs______________________________ 76
    Litigation________________________________________ 80
    Statistical Summary_______________________________ 84
    PRICE CONTROL: PROGRESS AND SPECIAL PROBLEMS
    September 1944 was the 16th month of the “hold-the-line” price control program, which got under way in May and June of 1943? During this period the cost of living was held within a narrow range of fluctuation and in September was only 1.1 percent above the level of May 1943. This slight rise over a period of 16 months contrasts sharply with the total increase of 28.3 percent during the 61 months since August 1939.
    This total rise of 28.3 percent may be compared in turn with the cost-of-living increase in the first World War. Between July 1914 and November 1918, when the Armistice was signed, the cost of living rose 61.8 percent and by August 1919, the 61st month after the outbreak of war (corresponding to September 1944 in this war), it had risen 76.3 percent.
    These comparisons bring out clearly how much more effectively the cost of living has been controlled in the present war and how slight the rise has been since the hold-the-line program was instituted in late spring 1943.
    Similar comparisons may be made with regard to industrial prices. Their total rise between August 1939 and September 1944 was 23.1 percent. Since May 1942, however, the rise has been only 2.0 percent. In the last war, by the Armistice, industrial prices had risen 97.7 percent and in the 61st month after the outbreak of hostilities, they were up 106.9 percent from pre-war levels.
    These comparisons are shown graphically in Charts 1 and 2.
    At the close of the quarter the prospect for continued stabilization both of the cost of living and of prices generally was excellent. It was a matter of some concern that the cost of living, after nearly a year of decline, had been gradually rising since March 1944, but the factors responsible for this rise were known, and the programs of the Office were in process of improvement to halt this trend. Most important among the regulations affected were those governing clothing and textile prices, the field in which control had proved most difficult.2
    Retail clothing prices had increased 10.6 percent since May 1943. Had it not been for the decline of 4.2 percent in food prices during this
    1 See Fifth Quarterly Report, p. 1, and Sixth Quarterly Report, pp. 1 and 7-8.
    2 See Tenth Quarterly Report, pp. 12-14 ;■ Ninth Quarterly Report, pp. 7—8; and Eighth Quarterly Report, pp. 10-11; also, below, pp. 18-20.
    1
    2 • Eleventh Quarterly Report
    COST OF LIVING IN AND AFTER FIRST WORLD WAR AND IN PRESENT WAR
    SOURCE; Office of Price Administration and Bureau of Labor Statistics.
    OFFICE OF PRICE ADMINISTRATION
    CHART I
    Price Control: Progress and Special Problems •	3
    INDUSTRIAL WHOLESALE PRICES' IN AND AFTER
    FIRST WORLD WAR AND IN PRESENT WAR
    '•All Commodities other than farm products and foods.	OFFICE OF PRICE ADMINISTRATION
    SOURCE: ■ • U.S. Bureau of Labor' Statistics
    CHART 11
    4 • Eleventh Quarterly Report
    period, the cost-of-living index would have increased by 1.3 percent on account of the rise of clothing prices alone. Thus, as the quarter came to a close, the question of clothing prices had assumed central importance similar to that which rising food prices had had before the hold-the-line program effectively halted and reduced them. It was expected that during the succeeding quarter the new programs designed to halt this rise would be put into final shape and scheduled to go into effect early in 1945.
    Special problems which confronted the Office during the third quarter of 1944 were concerned with meeting the requirements of the Stabilization Extension Act of 1944, planning for reconversion prices, and setting policy on sales of surplus commodities held by Government agencies.
    The first of these, particularly the change in the legal standard, effective immediately, for ceiling prices on the 2-billion-dollar textile industry, imposed a heavy burden on the Office, but the basic work of reappraising these ceilings was started promptly and a number of interim adjustments were made.
    The problem of reconversion pricing—reexamining or establishing prices for civilian goods which have been out of production as a result of the war production program—became a primary task in the administration of price control during the quarter. Although the largest part of the reconversion pricing job was still in the future, several reconversion products appeared on the market which constituted test cases for the policies and practices that were being developed.
    Since establishment of the Office, price ceilings have been applicable to sales by Government agencies as well as by private persons. As the war has progressed and the character of military requirements has shifted, the magnitude of Government sales has necessarily increased. Consequently, it seemed desirable to simplify existing price controls and to adapt them to Government disposal procedures by issuing a single order covering such sales.
    COMPLIANCE WITH THE STABILIZATION ACT
    The Stabilization Extension Act of 1944, signed June 30, brought about a number of adjustments in ceiling prices during the July-September quarter. The requirements of the Bankhead amendment necessitated virtually immediate upward revision in some cotton textile prices, a movement which complicated efforts of the Office to keep clothing prices from sharply ascending.3 In the apparel field, the highest price line limitation was removed at the retail level, in accordance with the mandate of the act.
    * See also below, pp. 18—20.
    Price Control: Progress and Special Problems •	5
    To meet the requirements of the act for the control of food prices, ceilings were increased in several instances. Thus, the requirement that the Administrator must from time to time adjust maximum prices to make appropriate allowance for substantial reductions in merchantable crop yields, unusual increases in costs of production, and other factors which result from hazards occurring in connection with the production and marketing of fresh fruits and vegetables, resulted in higher prices for cherries, plums, cabbage, apples, and potatoes.
    Salmon prices were increased to conform to the requirement that the prices of any fishery commodity may not be established at levels below the average price for that commodity in 1942. Producer prices for certain species of fresh salmon were raised during the quarter to bring them up to the 1942 average level.
    To comply with the provision of the Stabilization Extension Act requiring the Administrator to announce ceiling prices at the grower’s level on farm products, not later than 15 days before the planting season in each major producing area, announcements were made on July 14 for lima beans, cauliflower, celery, eggplant, sweet peppers, and tomatoes; on August 9 for cabbage; on August 14 for beets and early potatoes ; on September 13 for onions ; and on September 30 for strawberries and cantaloupes. Such announcements were made in the Federal Register, and copies of pertinent regulations or amendments were distributed to colleges of agriculture and trade associations, and other appropriate means were used to insure general publicity to such prices in the areas affected.
    PLANNING FOR RECONVERSION
    During the quarter under review there was very little actual reconversion so the Office had few operating problems of this sort. Reconversion price problems were extensively studied, however, so that the Office would be ready for reconversion price cases when they are presented in large numbers, whether before or after V-E day. Plans to meet this new load of price cases were developed from study of the nature of the probable pricing problems to be encountered, the areas of products and firms involved, and the probable extent of the administrative load. Initial conferences were held with industry advisory committees. These meetings were exploratory, with formal action awaiting a final determination of Office policy concerning reconversion problems.
    The reconversion pricing problem is that of pricing products which have been entirely or largely out of production for some time past as a result of Government orders incident to needs of the war production program. These products are principally consumer durable 620666—45-------2
    6 • Eleventh Quarterly Report
    goods and some items of industrial and housing equipment. Since most of these products had price ceilings set in 1942 or earlier, the pricing problem is one of reviewing such ceilings in the light of the present situation.
    Reconversion pricing must have two primary objectives: (1) To prevent any unnecessary increases in prices above the last ceiling price, usually the 1942 price; and (2) to permit prices which will assist in rapid reemployment and expansion of civilian output.
    The Administrator in his public utterances has stressed also that price policy in the reconversion period must be a flexible policy which will foster full production and full employment at high wage rates.
    Scope of Problem
    The scope of the problem is indicated by the following statistics. The retail value of the products made by the metal-using consumer durable goods industries was 6.5 billion dollars in 1941. That represented only 8.5 percent of the total of all consumer expenditures in 1941. About 12 principal products or product groups made up more than 85 percent of the value of all these metal-using consumer durable goods. Among these were automobiles and parts, refrigerators, sewing machines, washing machines, vacuum cleaners, other principal electrical household appliances, radios, phonographs, pianos, heating and cooking equipment, clocks, and watches. The other 15 percent of the total comprised thousands of miscellaneous articles such as egg beaters, garden trowels, roller skates, can openers, and the like.
    About 25,000 firms of varying sizes were engaged in the production of the metal-using consumer durable goods. Approximately 80 percent of the total volume of all these products, however, was produced by only about a score of companies.
    Basic Plans
    According to the plans developed during the quarter, the price problems of at least the 12 principal products or product groups will be handled in the national office by consultation with industry advisory committees and by collection of pertinent data bearing on general changes affecting costs and. profits on an industry-wide basis. The exact procedure for appraisal of prices of the thousands of other products produced by about 25,000 firms had not been completely worked out by the close of the quarter, but it was decided that a large part of this work would be done in the field offices under pricing standards developed by the national office. This decentralization of operations should enable rapid disposition of individual company cases.
    Development of pricing standards for reconversion was well along
    Price Control: Progress and Special Problems •	7
    at the close of the quarter. The regular pricing standards used in the case of commodities which have been continuously in production cannot, as such, be automatically applied in the case of reconversion pricing, owing to the existence of special characteristics peculiar to the reconversion industries, such as lack of a continuous record of cost experience as a result of cessation of production, and uncertainties with respect to the rate at which volume of production can be expanded. Pricing standards for reconversion must take account of special characteristics and also fit into the general standards of the law as approved by the Congress.
    SURPLUS GOODS PRICING
    A general regulation covering sale by the Government of all commodities except food,4 and except commodities purchased by the Government for the sole purpose of resale or of stockpiling, was issued in August. The order also applies to sales of commodities (other than food) by a contractor or subcontractor whose contract has been terminated by the Government where such sales are authorized or directed by the Government. Resale prices of commodities purchased from Government agencies are not affected by the order unless special resale prices or exemptions are issued thereunder. The order became effective September 1, but prior to that date its use was optional with Government agencies.
    Before issuance, the regulation was carefully considered by the principal owning and disposal agencies and by the Surplus War Property Administration. In order to achieve the necessary flexibility and at the same time maintain adequate price control, it seemed desirable to permit to the Government selling agencies alternative methods of establishing maximum prices where the use of a single method would entail undue administrative burdens.
    General Provisions
    Exemptions.—Certain transactions and commodities are exempt from price control where the nature of the transaction and market conditions for the particular commodity are such that little danger of inflationary prices exists.
    New commodities.—Various alternatives are provided for establishment of maximum prices of new commodities. Where the Office has established maximum prices in dollar-and-cent terms at various levels of sales, such prices apply to Government sales. Where no such prices in dollar-and-cent terms have been established, Government prices may not exceed cost of acquisition of a particular commodity or the
    4 Covered by a different order; see Ninth Quarterly Report, p. 16.
    8 • Eleventh Quarterly Report
    manufacturer’s list price. The base price for the Government is the price generally charged by manufacturers to wholesalers or jobbers or on direct sales to industrial users or retailers, but the Government may sell at the ceiling prices of wholesalers or jobbers when selling to retailers or industrial users, or at the retail ceiling when selling to consumers for their personal use.
    Used, commodities.—In selling used commodities Government agencies may determine the maximum price by reference to dollar-and-cent prices where they exist, formulas contained in existing price regulations, or formulas proposed by the selling agencies and approved by the Office.
    Special provisions.—Where the Government agency is not able to determine its own maximum price under the foregoing provisions, sales may be made on the basis of certifications from buyers that the price charged does not exceed their maximum price from customary sources of supply.
    The order contains several provisions covering the sale of a number of heterogeneous lots of commodities and sales of contract termination inventory (which may be sold at not to exceed cost of acquisition); provision is also made for establishment of prices by the OPA upon its own motion or upon application of a Government agency.
    Administration
    The Office has established surplus price specialists in each of the regional offices to cooperate with the owning and disposal agencies in establishing maximum prices and in furnishing any information requested by the selling agency as to actual selling prices. Arrangements have been made with the disposal agencies for interchange of necessary information. In many areas special maximum prices applicable to sales by the Government as well as to subsequent resellers have been made.
    The order contemplates the establishment of maximum prices for Government agencies at the same levels prevailing for private sellers under similar circumstances. As the necessity for price control may be removed owing to a true balance of supply and demand, further exemptions will be granted.
    • II.
    PRICE CONTROL: THE FOOD PROGRAMS
    Price control was extended during the quarter to some fresh fruits and vegetables for the first time and to others at new levels of distribution. Prices were established for the 1944 crops on two varieties of tobacco.
    Transfer of commodities from the General Maximum Price Regulation to a specific regulation in a number of instances resulted in tighter control. Continued efforts to simplify the regulations led to changes in several orders, which, it was anticipated, would bring about improved compliance.
    The national restaurant regulation became effective at the end of July.
    The Administrator on August 7 directed that price controls on various canned vegetables and canned fruits be based on commercial grades without reference to or use of the United States grades established by the Department of Agriculture. This action followed a ruling by the Comptroller General that the Congressional rider to the appropriation act providing funds for the Office for 1945 prevents “any and every use of AMA (Agricultural Marketing Administration) grades for fixing maximum prices in connection with the processed fruits and vegetables.”
    The rider prohibited the use of funds “to pay the salary or expenses of any person fixing maximum prices for different kinds or classes or types of processed fruits and vegetables which are described in terms of specifications or standards unless such specifications or standards were, prior to such order, in general use.”
    The ruling left the Office no alternative but to drop all reference to Government standards for grades, although it was realized that this would increase the enforcement problem in preventing inferior grades from being sold at ceilings for better grades.1
    The whiskey “holiday” for the month of August, which permitted the production of beverage alcohol for the first time since October 8, 1942, had a salutary effect in relieving pressure on ceiling prices. The Office set special ceiling prices, effective August 1, for all grain neutral spirits and bulk whiskey produced during the holiday, as well I as new ceiling prices for bulk and packaged domestic gin and vodka.
    1 See Enforcement, p. 77.
    9
    10 • Eleventh Quarterly Report
    The augmented liquor stocks and the prospect of their availability to the consumer did much to eliminate black-market operations.
    FOOD PRICES
    The requirements of the Stabilization Extension Act of 1944 necessitated upward price adjustments in a number of cases, and in other instances prices had to be increased to meet changed conditions. Adjustable pricing provisions were added to several regulations to facilitate movement of stocks.
    Fresh Fruits and Vegetables
    Price control was extended during the quarter by bringing a number of items in the fresh fruit and vegetable field under control for the first time. These were cantaloupes and other melons, peaches, pears, and horseradish root. In addition, the following fresh fruits and vegetables were for the first time brought under price control at the retail level, based upon action previously taken at prior levels: Apricots, Italian prunes, sweet peppers, melons, watermelons, peaches, and pears.
    During the quarter, also, prices of table grapes were increased for the 1944 crop, and distributive and protective service allowances on a dollar-and-cent basis were provided. Concord grapes for table use were removed from price control in late August, pending preparation of new ceilings for the 1944 crop.
    The Office in August revised apple prices for the 1944 crop, and made substantial modifications in technique. Pricing was changed from a zone basis to an f. o. b. basis, eliminating the freight equalization provision of 1943. The revised regulation set up standard containers, with specific pack specifications for each, and established appropriate differentials for graded, ungraded, and bulk. Over-all maximum markups (including allowances for direct sales and sales through agents) were provided for the distributive services, and provision was made for periodic adjustments for storage charges.
    Maximum prices for 1944 crops were set during the quarter on red sour cherries, white potatoes, and dry onions. Prices were increased seasonally for winter and very early strawberries; for Western peaches to provide properly for the containers customarily used; for lettuce to permit addition of a protective service charge; for cab-1 bage, on authorization of the War Food Administration with approval of the Office of Economic Stabilization, to secure adequate! production; and on Isle of Pines (Cuban) grapefruit, with OESl approval to offset discontinuance of subsidy payments. Specific! dollar-and-cent prices were substituted for freeze prices for sweet-1 potatoes on a zone basis and for cucumbers and snap beans on a basing-]
    Price Control: The Food Programs • 1.1
    point basis. The dry bean and pea regulation was revised and collated after intensive consultation with industry.
    Processed Fruits and Vegetables
    Actions taken during the quarter fall into two broad classes: Those providing adjustable pricing provisions for existing regulations, and those substituting new maximum prices and new regulations for those previously in effect.
    Adjustable pricing provisions.—The purpose of the adjustable pricing provision is to enable processors to make sales and delivery of new pack items at current maximum prices subject to adjustment upward or downward in accord with maximum prices subsequently established for the pack.
    These provisions were attached to several regulations at the request of Government procurement agencies who found that uncertainty over the level of prices had delayed purchasing programs. They were also deemed necessary to enable processors to move stocks and to free warehouse space, pending announcement of new prices. In industries where seasonal packs were being completed, piling up stocks in processors’ hands before calculations of new maximum prices could be concluded, it was essential to provide this form of pricing flexibility to remove uncertainty in the trade.
    Adjustable pricing provisions were made applicable during the quarter to regulations covering packed fruits and vegetables, frozen fruits and vegetables, dried fruits, and dried and processed apples.
    New maximum prices.—A supplement issued in July was designed to provide maximum prices for sales of frozen fruits, berries, and vegetables of the 1944 and later packs by all persons except wholesalers and retailers, who price under the fixed markup regulations. Dollar-and-cent ceilings were established under this supplement for frozen red sour pitted cherries, superseding the former more complicated formula method of pricing. Additional frozen products were to be added from time to time.
    Maximum prices for the 1944 pack of fruits and vegetables were established under a general formula allowing processors to add to 1941 base selling prices a dollar-and-cent permitted increase, calculated so as to return to the industry, on the average, profits earned in the years 1940-41.
    Prices for the following products were issued during the quarter: Apricots (packed in California), asparagus, beets, red sour pitted cherries, sweet light unpitted cherries (packed in California), sweet corn, fruit cocktail (packed in California), yellow cling peaches (packed in California), Bartlett pears (packed in California), green peas, snap beans, spinach, and tomatoes except Italian pear-shaped. Of this group, asparagus, red sour pitted cherries, sweet corn, green
    12 • Eleventh Quarterly Report
    peas, snap beans, spinach, and tomatoes had previously been under flat dollar-and-cent ceilings. The remainder of these products had been priced at processors’ 1942 maximum prices plus increases necessary to cover higher raw material costs up to a specified maximum.
    Dollar-and-cent maximum prices for the 1944 pack of dried fruits allowed for changes in the cost of raw material from 1943 levels. The following products were included: Dried apricots, peaches, pears, prunes, raisins, and figs. Ceilings in 1943 had also been dollar-and-cent prices.
    Dollar-and-cent maximum prices for the 1944 crop of unpacked natural condition dried prunes and raisins were established on the basis of 1944 support prices announced by the Department of Agriculture. Prices for the 1943 crop had also been on a dollar-and-cent basis.
    Meat and Fish
    Canned meats.—Virtually all canned meats were brought under a single simplified regulation during the quarter instead of five regulations as previously. Some of the most important canned meat items were uniformly priced for all sellers on a dollar-and-cent basis. Other varieties were priced on a formula basis with a definite rollback in the prices which had formerly prevailed. A flexible pricing provision was added to the regulation to permit the Government to purchase canned meats under development contracts, free from price control, until adequate data were obtained to support uniform dollar-and-cent pricing of such experimental products.
    Cured fish.—In August a regulation on cured and smoked fish was issued. Processors had previously been under the General Maxi-1 mum Price Regulation and prices were subject to wide individual variation and increased costs. This had led to a serious black market condition which was difficult to eliminate. The regulation raised legal prices by some 10 cents per pound at retail but in reality led to a price reduction in that it established enforceable prices substantially below the black market level. The new regulation provided processors with the minimum requirements of the law, using the base-period earning standard as a criterion. The establishment of cents-per-pound prices throughout the country led to better trade recognition! and understanding of ceilings, and was expected to result in better! compliance by both consumers and the trade.
    Eggs, Dairy Products, and Fats
    Eggs.—In mid-September a revised regulation on eggs and egg products was issued, establishing shell egg prices by zones. Ceiling prices on eggs and egg products had been established under the original regulation on the basing-point system. Experience with this
    Price Control: The Food Programs • 13
    systemy however, proved it lacking in the flexibility required to move eggs rapidly in and out of certain areas as seasonal demand necessitates. The revised regulation includes a table of prices in cents per dozen for shell eggs in every county of the United States. It was believed that this system would facilitate the movement of eggs to areas of rapidly increasing demand and would assist in effective enforcement.
    Manufactured dairy products.—Swiss cheese was removed from the freeze prices established at the September 28-October 22, 1942, level, and specific dollar-and-cent maximum prices were established for producers, assemblers, and primary and service wholesalers. Adjustments were made in the prices of Limburger, Brick, and Munster cheese, and new dollar-and-cent maximum prices were established for consumer sales of Blue and Gorgonzola cheese. These actions were part of the general program designed for all manufactured dairy products, which will place manufacturers on an equitable competitive basis in the procurement of raw milk. After consultation with advisory committees, margins were established on a functional basis for each step in the movement of cheese from the factory to the retail store.
    Fats and oils.—Oleomargarine was transferred from GMPR to the fats and oils regulation in order to assure tighter control. The Office had found, upon investigation, that upgrading was widespread and that manufacturers were introducing high-priced brands, with a consequent undesirable effect on the cost of living. Under the new procedure a higher price cannot be secured until the processor has proved conclusively to the national office of OPA that he has substantially improved the quality or the method of distribution. Only I two such applications had been approved by the close of the quarter. I The effect on other processors who had adopted higher prices for so-called improved brands was to roll prices back to March 1942 ceilings.
    Sugar
    Establishment of uniform maximum basis prices for raw and direct-consumption sugars throughout the Nation was completed during the quarter.
    The basis prices of cane and beet sugar were set at $5.50 and $5.40 I per 100 pounds respectively, and prices of other types of direct-Iconsumption sugar were set in their historical relationship to these I prices. A study of the industry revealed that the refiners in the ¡Northeast were no longer in need of the full 15 cents differential lover the $5.45 price prevailing in the rest of the country, which had been granted in March 1942 to prevent their suffering substantial ¡losses.
    620666—45--------3
    14 • Eleventh Quarterly Report
    The study further indicated that the equalization of prices at $5.50 per 100 pounds for cane sugar, and $5.40 per 100 pounds for beet sugar, would reflect to the sugar refining industry as a whole, including cane refiners and beet processors, profits not less than those earned during the 1936-39 base period. However, beet sugar processors’ earnings were still below those of the base period because of a sharp decline in volume.
    The equalization of prices of raw cane sugar on a historical c. i. f. (cost, insurance, and freight) basis resulted in a slight decrease in off-shore sugar prices formerly prevailing for deliveries at all ports except United States Gulf of Mexico ports, at which the price remained the same, and in an increase of 2 cents per 100 pounds in the price of mainland raw cane sugars. This equalization was effected in conjunction with the revision of refined sugar prices.
    GRAINS AND FEEDS
    Oats and barley, which had been priced on a freeze basis, were during the quarter placed on a specific dollar-and-cent basis. Inequities which had been uncontrollable under the freeze order were eliminated, and uniformity was established in the provisions for pricing retail sales of grain. There had been some variance in the provisions of the individual regulations covering cottonseed meal, and minor protein meal products, and a regulation effective in September unified these provisions. It was anticipated that these changes would permit better understanding, greater compliance, and easier enforcement of the grain-pricing regulations.
    In July oats prices were reduced by about 5 cents per bushel on a nation-wide average and barley about 3 cents, to align ceilings with parity. In August and September oats and barley prices declined considerably below parity with the new crop movement.
    In September animal feeds made from milk products were removed from the freeze regulation, and dollar-and-cent prices were established on sales by manufacturers, wholesalers, and retailers.
    Two actions in August simplified control of bakery product prices by consolidating one regulation and its four amendments, and by bringing under one regulation products which had hitherto been controlled by three regulations.
    TOBACCO
    Control was extended during the quarter over Florida-Georgia shade-grown tobacco at the farm level and flue-cured tobacco of the 1944 crop at the farm and dealer level. For the Florida-Georgia tobacco previous prices were renewed. In the case of flue-cured |
    Price Control: The Food Programs • 15
    tobacco the differential between tied and untied tobacco was broadened to provide 4^ cents per pound between the two.
    For the first time since the inception of price control, an increase was granted in the manufacturers’ price of scrap chewing tobacco, to offset repeated rises in the cost price of cigar cuttings and clippings and of certain types of cigar leaf tobacco. The adjustment was made to restore base period earnings to manufacturers of scrap chewing tobacco and to permit continued production of this product which is in great demand by tobacco users employed in war plants where smoking is prohibited.
    A revision was made in existing controls over the pricing of imported cigars to provide prices more in line with the value of new brands and sizes of imported cigars than had been previously possible.
    RESTAURANTS
    The national restaurant regulation issued June 292 went into effect July 31. Meetings were held in each district during the quarter to acquaint the industry with the regulation, and educational material and administrative procedures were developed.
    To secure widespread industry cooperation in compliance, a system of industry advisory councils was formulated and inaugurated. Over 2,500 restaurant operators, representing all types of eating and drinking establishments were organized into local groups. As a result of their suggestions and advice, 95 district posting orclers were issued and the items to be listed on restaurant posters in the particular district were determined upon. These councils serve not only to advise the local price officials on industry problems and to make recommendations, but'also to inform local establishments of the provisions of the regulation and to secure their cooperation in compliance.
    Responsibility for compliance work in connection with the posting and filing requirements of the revised restaurant regulation was placed upon the price panels. During August members of price panels made educational visits to all restaurants to inform them of the new regulation and of the posting and filing provisions.
    A letter of instructions which outlined council activities was sent to the chairmen of the industry advisory councils by the president of the National Restaurant Association, and the chairman of the war food committees of the American Hotel Association. To further the effectiveness of this cooperative program, frequent conferences were held with members of the national restaurant advisory council.
    A national survey to measure the compliance of the industry under the new regulation was prepared. This survey was to be made by the price panels during the period September 15 to 30.
    2 See Tenth Quarterly Report, pp. 9-10.	, 'T
    . Ill.
    PRICE CONTROL: CONSUMER GOODS
    Efforts to develop a single over-all regulation to replace the GMPR at retail for all consumer goods (other than food) were abandoned during the quarter. With the active cooperation of representatives of the retail trade, a number of plans had been proposed, examined, and abandoned in the course of almost a year. The eighth such plan was completed and discussed with the industry advisory committee during the quarter. Although this plan was admittedly the best of the many considered, the net judgment was that it was impossible to frame a single regulation which was both simple and practicable for retailers, and yet represented adequate, enforceable price control. Instead, substantial improvements in the GMPR, revision and possible consolidation of existing retail regulations, and the development of new specific retail controls were decided upon.
    In the consumer durable goods field, the main problem was reconversion pricing, while the major problem in the textiles field was the urgent necessity to reexamine prices for all cotton textiles in terms of the new standards required by the Stabilization Extension Act of 1944. This also led to considerable difficulty in apparel pricing, which continued to be one of the most acute problems of the Office.
    CONSUMER DURABLE GOODS
    A number of ceilings were set during the quarter on products recently brought back into production. In addition, complaints and protests were analyzed, industry studies were continued, and progress was made on improvement of existing controls over both new and used commodities.
    Dollar-and-cent ceiling prices for upholstery springs and accessories for use in the manufacture of upholstered furniture were issued in July. Inner constructions for sofa beds and studio couches were simultaneously placed under similar control. Prices for most of these reconversion products, particularly those of all-metal construction, were set at March 1942 levels. Adjustments were necessary, however, on several assembled items in which cotton fabrics comprised a significant item of material.
    Following, the authorization of the War Production Board for the resumed manufacture of electric irons, prices of this essential civilian
    16
    Price Control: Consumer Goods • 17
    commodity were established in mid-August at March 1942 levels. Retail ceiling prices were required to be displayed on tags attached by the manufacturer.
    The piano and piano parts industry presented one of the first fullblown reconversion industry problems. During the quarter, a comprehensive cost and price survey was made in order to determine the amount of adjustment which would be forthcoming by applying the various reconversion formulas then under consideration. After examining the data, an order was prepared embodying a proposed price adjustment. This order was sent to the Director of Economic Stabilization at the close of the quarter.
    A resumption in the manufacture of small firearms for civilian sale was also authorized during the quarter by the War Production Board, and a financial survey was undertaken to determine whether a price adjustment was needed in this case. The decision had not yet been officially issued at the end of the quarter, pending a determination of the method of handling the adjustment at the wholesale and retail levels.
    In response to industry complaints and protests, studies were made of the general fairness and equitability of ceiling prices for a number of products which had remained in production. Industries on which such surveys were completed and in which hardship was found not to exist were wood office and institutional furniture, vitrified and semi-vitreous china and pottery, caskets, brushes, and wheelbarrows.
    A finding of hardship was made in the case of unpainted furniture and assembled wood furniture parts, and manufacturers of those articles were made eligible for the 5-percent price adjustment granted in December 1943 to manufacturers of wood household furniture.
    Studies continued for the wool floor covering and the glassware industries, and a special survey was started on surgical dressings as a result of the price increases required by the Bankhead amendment to the Stabilization Extension Act of 1944.
    In the absence of new consumer goods, the pressure of demand for used items made necessary the extension and tightening of controls on the used items. Dollar-and-cent regulations covering used pianos, used sewing machines, and used business machines were in preparation during the quarter. Existing regulations covering used washing machines,, used vacuum cleaners, and used photographic equipment were extended or in process of revision.
    Special problems which received attention during the quarter included the formulation of a regulation to improve control over jobbers of household furniture, and an additional adjustment provision to aid in maintaining production of low-end merchandise.
    18 • Eleventh Quarterly Report
    TEXTILES
    Requirements of the Stabilization Extension Act necessitated immediate examination of textile prices. Available data indicated that prices for a number of important fabrics were probably below the requirements of the new legal standards. An order was therefore issued July 3, effective June 30, permitting adjustable pricing1 of these fabric groups. As rapidly as reasonably satisfactory data could be obtained, adjustable pricing for these products was replaced by interim prices. Interim prices were established July 8 for denims; July 29, chambray; August 17, print cloth yarn fabrics; August 28, combed and carded sales yarns; September 5, sheeting yarn fabrics; and September 16, fine cotton goods. At the end of the quarter, adjustable pricing still remained for towels and ducks.
    These interim prices covered fabrics which account for about 57 percent of total cotton consumption, while an additional 11 percent was under adjustable pricing. The increases permitted amount to approximately 100 million dollars on an annual basis. Because the interim prices were based on incomplete and largely unchecked data, it is possible that the cost accounting survey of the cotton textile industry, which was begun during the quarter, may permit a reduction of some of the interim prices. It is also possible, however, that the survey will disclose the necessity to increase prices of a few of the other fabrics which, because there was no evidence to show that existing ceiling prices did not accord with the new legal standards, were not covered by interim pricing.
    The price increases necessitated by the act bore most heavily upon one group—the converters, who have cotton goods finished for use by the garment trades. An amendment to the finished piece goods regula-I tion was issued, requiring converters to absorb the increased costs! resulting from the new grey goods prices. It was clear from all available data that converters’ profits were such that they could absorb the entire amount of the increased cost and still remain far above! the minimum standards for fairness and equity. The mere require ! ment that converters absorb these increased costs did nothing, oil course, to reduce the overfinishing which had become so prevalent ini the trade; if anything, it tended to increase the incentive to over! finish. Efforts to find a remedy for this difficult problem were intensified during the quarter, and at the end of September three alternative! plans were under consideration, with a decision among them pending! final consultation with the trade.
    1 Adjustable pricing, if authorized by the Administrator, permits open billing when actions to increase ceiling prices are pending in the Office. The buyer and seller may agree that if the existing ceiling price is later increased, the price for deliveries made ill the interim may retroactively be adjusted up to the amount of the new ceiling.
    Price Control: Consumer Goods
    • 19
    Ample supplies of wool tended to reduce inflationary pressures in the woolen fabric field, despite continuing manpower shortages in yarn and fabric production. Supplies of mohair were so plentiful that price control was lifted from this commodity.
    APPAREL
    Although significant progress in apparel price control was made during the quarter, it remained an area in which the greatest efforts of the Office are required in order to halt the rise in the clothing component of the cost-of-living index. Increased inflationary pressures resulting from further shrinkage of textile supplies available for civilian use added to the already great difficulties of controlling prices in an area where the commodities being priced are constantly changing, and where style is an important factor of value. In addition, pricing of apparel was complicated by the increased textile and yarn prices required by the Stabilization Extension Act.
    The first area to feel the impact of higher textile prices was men’s and boys’ work clothing. Increased costs of denim and chambray, on top of higher labor costs, required an increase in manufacturers’ ceilings for work clothing made from these fabrics. Available evidence demonstrated, however, that distributors of work clothing, frozen at March 1942 levels by the General Maximum Price Regulation, had in many instances been frozen at prices which yielded more than their historical distributive margins. Consequently, wholesalers and retailers of work clothing were placed under a specific regulation which gave them dollar-and-cent margins approximately equal to average historical margins. As a result, prices of work clothing to consumers, on the average, were not increased.
    A second product on which a price increase was necessitated by the act was heavyweight knitted underwear. Pending completion of an accounting survey of the underwear industry, manufacturers’ prices were increased by about 2 or 3 percent. Distributors’ prices were left unchanged, pending further study.
    Increased cotton yarn prices were felt also by knitters of lightweight underwear, cotton hosiery, and cotton outerwear, and surveys were under way to determine, whether price increases on these products were required.
    Another action required by the Stabilization Extension Act was the removal of the highest price line limitation at retail. This limitation, which does not permit a seller to offer any goods which constitute a higher price line than the highest price line offered by him during the base period stipulated in the regulation, had formerly applied to retail sellers of women’s outerwear, fur garments, men’s tailored clothing, and certain seasonal wear.
    20 • Eleventh Quarterly Report
    Plans were made to include knitted heavyweight underwear and men’s and boys’ clothing in the program of price adjustments for items of which the War Production Board had directed production, in accordance with the directive of the Office of Economic Stabilization.
    Acting on the recommendations of a joint WPB-OPA task committee, the War Production Board issued a program designed to channel textile supplies into low-end medium-priced essential garments, A price regulation establishing manufacturers’ and distributors’ prices for these garments was about to be issued at the close of the quarter. Earlier in the quarter, a dollar-and-cent regulation was issued covering certain low-priced women’s housedresses and slips and maternity dresses and slips, and men’s shirts and shorts, for which WPB had allocated materials. Although the total coverage of these two programs was not sufficient to affect the cost of living in any important degree, they represented à significant new direction in administration and controls, which, if extended, might prove of major importance in holding or reducing the consumer’s clothing expenditures.
    LEATHER, FUR, AND FIBERS
    Many improvements in price control on hides and leather were in progress during the quarter, and changes in military demand, in shipping conditions, and in international distribution practices required alterations in existing price regulations. Action was completed to revise prices for imported pickled sheepskins, and action was in progress on raw and tanned shearlings, imported cabrettas, India-tanned goatskins, domestic and imported alligator leather, and imported peccary, carpincho, and deerskins. In addition, a major revision of the basic leather regulation was under way. Among the most important revisions were those affecting prices of finding leather for the shoe repair trade and affecting markups for jobbers and dealers in leather.
    In the fur area, the most important action during the quarter was a new regulation which in effect reduced dealers’ resale prices on imported Australian and New Zealand rabbit skins in order to make it possible for garment and hat manufacturers to operate within their existing ceilings. Nonetheless, manufacturers and wholesalers of low-priced fur garments were found to need relief, and exemption levels (prices below which the highest price line limitation is not controlling) were established for eight principal types for fur garments. A complete revision of the fur garment regulation was undertaken.
    A drastic increase in the price of rope manufactured from a combination of sisal and American hemp over the price of rope manufactured from pure sisal was avoided through the cooperation of the
    Price Control: Consumer Goods • 21
    Commodity Credit Corporation. This hemp, which was produced in large quantities as an emergency measure, is being furnished to cordage mills for combining with sisal in the manufacture of rope at the same price as sisal fiber.
    Maximum prices for the important shoe industry remain governed by the GMPR. Imminent changes in the controls exercised by the War Production Board (over styling, color, etc.) made it imperative that action be taken promptly on the long-pending specific price regulation for shoes. At the end of the quarter, plans were almost completed for a major accounting survey of the shoe industry, which will form the basis for a new regulation.
    Increases in lumber prices, and the necessity to use substitute woods, presented the necessity for reexamining and extending the coverage of maximum prices established for heel blocks, heels, and wood shanks.
    620666—45--------4
    . IV.
    PRICE CONTROL: INDUSTRIAL PRODUCTS
    While the price level of important industrial materials in general remained relatively stable throughout the quarter, there were a number of significant price increases, particularly in the field' of building materials. These increases were to a very large extent made necessary by the sharp decline in construction activity that took place during the early months of 1944.
    The most important price action affecting consumers was the regulation bringing prices of used passenger cars under control for the first time. This action resulted in the stabilization of a market that had some time ago become highly speculative in character.
    BUILDING MATERIALS
    Increases were permitted during the quarter in the prices of vitrified clay sewer pipe and allied products when sold in the North Central and the East Central States. The decline in volume experienced by this industry during the first two quarters of 1944, coupled with increases in labor and fuel costs and declining efficiency of labor, reduced earnings below their normal level. These price adjustments were designed to return to each segment of the industry average dollar profits equal to those earned during the 1936-39 period.
    Increases in the price of Portland cement were permitted for producers in the Ohio and Michigan area and in southern California to meet the minimum requirements of law and at the same time assure production of that commodity.
    Studies were made during the quarter of virtually the entire structural clay products industry, and during this period adjustments ranging from $2 to $3.75 per thousand were permitted in the price of brick and tile produced in the southern, midwestern, and middle Atlantic States. While demand for brick and tile was somewhat lower as the result of a decline in construction, increasing direct costs and diminished labor supply, with a consequent reduction in the number of operating plants, resulted in an acute shortage of clay products in these areas. A price was provided for each segment of this industry which, by covering the costs of needed supply, was designed to assure continued production of essential supplies.
    22
    Price Control: Industrial Products • 23
    An increase was also permitted of 3 percent in the price of asphalt and tarred roofing products in the eastern area. This action, which rescinded a portion of a price reduction originally ordered in December 1941, was undertaken to permit dollar returns to this industry equal to those earned during a representative peacetime period.
    An important step was taken during the quarter to stabilize the prices of used plumbing and heating equipment by the issuance of a regulation establishing specific dollar-and-cent prices for this equipment. The scarcity of new materials resulting from the curtailment of production had resulted in such pressure upon ceilings under the General Maximum Price Regulation that prices were not effectively controlled and in some instances ha:d risen as much as 300 percent above the March 1942 levels. The specific dollar-and-cent regulation issued during the quarter was designed to aid in effective enforcement and to maintain a continuous flow of used equipment at fair prices.
    The regulation controlling construction services and installed sales of building materials was significantly revised during the quarter. This revision was undertaken to clarify the regulation and, at the instance of the Director of the Office of Economic Stabilization, to provide for the recognition of increased labor costs resulting from authorized wage increases in the construction industry. Further, the revision gave the OPA field offices broad authority to establish specific area maximum prices when necessary.
    LUMBER
    The general price level of lumber remained relatively stable throughout the quarter and many of the price actions issued during this period consisted of technical adjustments in the regulations and measures taken to clarify existing provisions and to simplify administrative controls. The only significant changes in individual industry price levels were made in northeastern softwoods and in walnut lumber. Of particular importance to the lumber industry ¡and to lumber price control was the establishment in August of overall control of lumber in the United States by the War Production Board.
    Price Adjustments
    At the request of the northeastern softwoods industry advisory committee, the OPA made a detailed accounting study of the costs of producing softwood lumber in the Northeast. It was found that as of March 1944 approximately 40 percent of the output was produced at a loss. To correct this situation, price increases of $1 to $2.50 per thousand board feet were established in the maximum prices of soft-kood species, grades, and items, applied in accordance with the recom-
    24 • Eleventh Quarterly Report
    mendations of the War Production Board. It was expected that the increases would enable all but the normally unprofitable fringe mills to operate on a break-even'or on a profitable basis.
    A new regulation provided specific dollar-and-cent maximum prices for milling and kiln drying services on northeastern softwoods when performed on a custom basis in the six New England States. The level of prices established was similar to that previously prevailing under the regulation governing services. The new regulation, which was patterned after the regulation on custom milling and kiln drying of western softwoods, was issued to facilitate efficient handling and processing of northeastern softwoods and, by so doing, to contribute to a reduction in the average prices paid by consumers for this lumber.
    Dollar-and-cent maximum prices were established for walnut lumber at a level in line with that established for comparable species produced in the same area. The result of this action was to increase the average prices of walnut lumber $8.75 per thousand board feet, or 7.5 percent, over those established at March 1942 levels under the special pricing provisions of the formerly applicable regulation.
    An increase of approximately 14 percent was permitted in the maximum prices for cooperage dowel pins. Since maximum prices were first established for this commodity, general cost increases occurred in material, labor, and other production costs to the extent that the average sales realization was not covering the average cost of production. Continued production could not be obtained under such conditions, and’the War Production Board certified that maximum production was vitally needed in the war, effort. The increase established provided an average selling price which would permit a dollar-and-cent margin of profit comparable to that received in March 1942. The increase in the cost of dowel pins did not affect prices of headihgs or cooperage, since the cost of pins is negligible in comparison with that of the products in which they are used and the increase of approximately 14 percent could be absorbed by heading manufacturers.
    WPB Control Order
    The order establishing an over-all control on the movement of lumber in the United States was issued by the War Production Board during the quarter, effective August 1. The sustained demand for lumber in face of declining production and depleted inventory stocks had resulted in a critical shortage of lumber. In order to assure an adequate supply for military and essential industrial needs, a limitation order was imposed on the entire industry, which prescribed methods of lumber procurement and provided for the allocation of lumber to be used by nearly all types of consumers.
    Price Control: Industrial Products • 25
    The establishment of such an over-all control was expected to have a very salutary effect on controls established by the OPA. The pressure for higher, prices grew progressively stronger as the lumber market became increasingly tight. Any control which had the effect of equating effective demand with the potential supply was expected to ease the pressures threatening the maintenance of price ceilings.
    PAPER AND PAPER PRODUCTS
    An important price action was taken during the quarter to effect an increase in ceiling prices of packed and sorted wastepaper, together with small increases on several grades of wastepaper in loose condition. A uniform differential of $5 per ton was established between the ceilings for loose wastepaper and packed wastepaper for all grades. The purpose of this action, which was taken after extensive consultation with industry, with the WPB, and with officials of the wastepaper salvage campaign, was to enlarge the flow of properly packed and sorted wastepaper to the consuming mills, chiefly paperboard mills. Concurrently, an extensive compliance and enforcement campaign was initiated to stamp out widespread violations of the wastepaper ceiling.
    While no industry-wide increases in ceilings on paperboard were permitted in connection with the increase in wastepaper ceilings, OPA was giving attention to the question of adequacy of existing paperboard ceilings at the end of the quarter.
    Prices of used paperboard containers were increased about 30 percent during the quarter to stimulate conservation and encourage the flow back to original users. During the period, also, prices of pulpwood imported from the Canadian provinces of Quebec, New Brunswick, and Nova Scotia were increased to bring prices in line with similar increases allowed to brokers by the Canadian Government.
    IRON AND STEEL
    During the third quarter of 1944, only one industry-wide price increase was permitted in iron and steel. Numerous industry profit studies were maintained on a continuing basis for the purpose of evaluating specific requests for price action.
    A study was concluded of the cost-price relationship of steel power shovel castings, the demand for which had greatly increased during the war. Maximum prices for these castings had been established at July 1941 levels but cost increases since 1941 had absorbed the profit margin which existed at that time, and these castings were [generally being produced at a loss. As the earnings of the steel castings [industry were currently considerably in excess of base period earnings,
    26 • Eleventh Quarterly Report
    a 6-percent increase, designed to cover out-of-pocket costs of more than half of the volume of power shovel castings, was granted. In addition, individual price adjustments, sufficient to cover out-of-pocket costs of 75 percent of the production not fully covered by this 6-percent increase, were made for three companies.
    USED PASSENGER CARS
    The regulation establishing maximum prices for used passenger automobiles became effective in July.1 This action was undertaken to stabilize a highly speculative market and to reduce prices that consumers were paying for these highly essential items.
    Dollar-and-cent prices were set forth in the regulation. These were determined on the basis of a formula designed to preserve insofar as possible the relationship existing among the list prices of various cars when new. Soon after issuance of the regulation, it was callee to the attention of the Office that use of this formula tended to lower prices of Chevrolet cars in relation to competitive makes. A study was therefore initiated to determine the extent of this alleged discrimination and to determine what steps, if any, could be taken to alleviate the situation.
    As one step in improving enforcement of the regulation, an amendment was issued that extended the use of a certificate of transfer to all sales of used passenger cars. Formerly, filing of such a certificate with the local war price and rationing board had been required only on sales to persons other than dealers. At the same time used car dealers were required to file reports of used car inventories.2 The price panels of the local boards were delegated responsibility for securing the certificates of transfer and for auditing them for compliance with ceiling prices. This program resulted in a workload of some 200,000 certificates of transfer each month at the local boards.
    In spite of some dealer opposition to the regulation, experience during the quarter indicated that dealers were continuing to handle a high proportion of the used cars changing hands and were realizing good margins on these sales.
    1 See Tenth Quarterly Report, pp. 18-19.
    2 See also Enforcement, pp. 78—79.
    .v.
    PRICE CONTROL: FUELS, SERVICES, AND OTHER
    Foremost among petroleum price actions during the quarter were establishment of specific prices in several areas and inauguration of the stripper well premium plan. In solid fuels, a number of anthracite mines were granted increases, as were various bituminous mines; simplified schedules were issued in the bituminous field.
    PETROLEUM
    Amendments to the regulation governing fuel oil, gasoline, and liquefied petroleum gas prices during the quarter continued the practice of spelling out dollar-and-cent prices wherever such action will simplify pricing practice and aid enforcement. The fuel oil blending amendment was revised, and the price of 72/74 octane gasoline was reduced to offset a reduction in octane rating. Several actions were taken in the crude petroleum field to facilitate administration of the stripper well premium plan.
    Petroleum Products
    The Office established specific prices for Inland Lower Texas petroleum products on shipments to PAW District 1 (17 Eastern States) and on shipments to all other States except Texas. Inland Lower Texas constituted the only part of that State for which specific prices for petroleum products destined for PAW District 1 had not been established. Since relatively few products normally moved from this area into other regions, their prices were not generally known by potential purchasers.
    Specific dollar-and-cent prices f. o. b. refineries and terminals on shipments within the State and to other States were also established in Kansas at the request of refiners. An amendment which became effective during the quarter allows refiners a uniform netback where heretofore their netback varied considerably, depending on the particular destination involved.
    A fundamental change, agreeable to a substantial portion of the industry, was made in the method of pricing residual fuel oils and . blends thereof with distillates. The very great need for heavy residual fuel oil, which had inspired the adoption of the blending amend-
    27
    28 • Eleventh Quarterly Report
    ment in March 1943, no longer existed. In operation, that amendment had given fuels less desirable from the consumer’s point of view higher ceiling prices than more desirable fuels. During the quarter the Office provided for the establishment of ceiling prices for residual fuel oil and blends thereof with distillates on the same basis as that in effect prior to the adoption of the blending amendment.
    Another amendment established maximum delivered-at-destination ceilings in 11 midwestern States for gasoline and kerosene delivered in tank cars and transport trucks to tank wagon resellers and consumers. The formula provisions adopted provide, in most instances, a method of determining prices that has the same advantages of simplicity and ease of administration as flow from specific dollar-and-cent ceilings. This method is consistent with industry practice and will not change the general level of prices. It removes the uncertainties hitherto prevailing in this area with respect to the delivered-at-destination ceilings, which were a source of inconvenience both to the industry and to the administration of price control.
    The maximum price of 72/74 octane ASTM gasoline was reduced one-eighth cent except at the tank wagon and retail levels. The jobbers in most cases reaped the benefit of this decrease. The Office considered this desirable since jobber margins in many parts of the country were not too broad when account was taken of the reduced volume being distributed. The reduction in price was made in order to compensate, at least in part, for the lower octane content brought about by a directive of the Petroleum Administrator for War, the purpose of which was to conserve tetraethyl lead.
    Crude Petroleum
    The most significant price actions in the crude petroleum field during the quarter had to do with the stripper well premium plan,1 formulated in accordance with a directive issued by the Director of the Office of Economic Stabilization and inaugurated August 1, 1944. Production data from every known pool or field in the United States had been obtained from the respective conservation or proration authorities of the States involved, and upon the basis of this information it was determined which wells or pools were eligible to receive premium payments. Industry committees were established in all of the important producing areas.
    A plan was formulated whereby pools or fields not otherwise eligible to receive the premium payments may be granted such payments on an adjustment basis. Generally speaking, these adjustments are to be made upon the basis of demonstrated hardship.
    1 See Tenth Quarterly Report, pp. 24-25.
    Price Control: Fuels, Services, and Other • 29
    Specific dollar-and-cent prices for crude petroleum in the States of Kansas and Oklahoma were established chiefly to facilitate administration of. the stripper well premium plan. An interpretation made by the Office, effective August 19,1943, had permitted use of the highest posted price on gravities below 28° rather than the lowest posted price as had previously been the case. Investigation revealed that the change had resulted in these States in establishment of maximum prices somewhat in excess of prices prevailing during the base period. The new prices, which were to go into effect October 3, more nearly reflected October 1,1941 prices and did not reduce the prices actually being charged on August 1, 1944.
    SOLID FUELS
    The entire anthracite mine price situation was reviewed, and maximum price adjustments granted to several mines to enable them to secure a? realization approximating their representative costs of production. Other actions designed to facilitate production and distribution of solid fuels, in view of the possibility of a critical winter fuel situation, consisted of adjusting maximum prices for various bituminous coal mines, promulgating prices for 328 new mines, clarifying bunker fuel prices in New York Harbor, and establishing dollar-and-cent prices for sales of bunker fuel in certain Gulf harbors.
    The program of reviewing, in the light of later data, the temporary bituminous coal mine price increases which had been issued subsequent to the wage agreement of November 1943, was nearing completion by the end of September.2 Revised and simplified schedules of maximum prices for 11 of the 22 bituminous coal-producing districts in the country were promulgated under this' program. The new schedules, which cover the bulk of the bituminous coal production, apply to all mines in Districts Nos. 2 (western Pennsylvania), 3 (northern West Virginia), 6 (West Virginia Panhandle), 7 (portions of West Virginia and Virginia), 8 (portions of West Virginia, Virginia, Kentucky, Tennessee, and North Carolina), 9 (western Kentucky), 11 (Indiana), 13 (Alabama and portions of Georgia and Tennessee), 17 (southern Colorado and portions of New Mexico), and 22 (Montana), and all mines shipping by rail in District No. 10 (Illinois). Schedules covering the remaining producing districts are under consideration and will be issued as quickly as the analysis of the pertinent data is completed.
    Continuing the solid fuels area ceiling program, 36 area ceiling price orders were issued during this period. The area covered by these orders consumes approximately 7,000,000 tons annually, bringing the total tonnage for all areas covered to an estimated 85,000,000.
    2 See Ninth Quarterly Report, pp. 9—10, and Tenth Quarterly Report, p. 23. 620666—45------5
    30 • Eleventh Quarterly Report
    Additional sections of the States of Idaho, Oregon, and Washington were granted dollar-and-cent prices by 10 firewood area orders issued during this quarter. As of September 30, there were 104 dollar-and-cent firewood orders in effect, covering all or parts of 30 States.
    SERVICES
    The principal task in the service trades field during this quarter was to acquaint the trade with the provisions of the revised maximum price regulation covering the service trades.3 This became effective August 1. A bulletin emphasizing the changes in the new regulation was distributed to the trade not only through the customary mailing lists, but also through the price panels of the local war price and rationing boards.
    An amendment issued in August to the revised regulation required suppliers of services to new purchasers to submit to the Office complete data on such service and to secure approval of the proposed price before putting it into effect. This amendment cut the filing of data to a minimum and provided automatic approval of prices for services supplied before August 1, the effective date of the regulation; these prices were, however, subject to revision if the Office found them to be out of line.
    Considerable progress was made on a shoe repair pricing program which was to be completed in the next quarter. Dollar-and-cent prices were established for shoe repair services in Seattle, Wash., with the requirement that they be posted. A war-swollen population, together with rising labor and materials costs, had constituted a constant pressure against base-period prices which were difficult to enforce.
    An influx of military and civilian personnel in the Columbia, S. C., area had heavily overburdened laundry and dry-cleaning plants, and there was a very strong upward price pressure. The Office took action to translate the March 1942 prices into dollar-and-cent prices, and required that they be posted to provide for more effective enforcement.
    At the request of the War Food Administrator, OP A established dollar-and-cent prices for services rendered on a contract basis, in connection with harvesting and baling of alfalfa hay and flax straw in the Imperial Valley area of California where WFA had established specific wage ceilings. Control of services rendered through a contractor is necessary to prevent evasion of the wage ceilings established by WFA, since the services covered by this regulation are generally furnished to farmers by contractors, and farmers do not normally employ agricultural labor directly. Rates established were based on WFA ceilings, allowing the margins of profit prevailing in this industry in the normal pre-war period.
    8 See Tenth Quarterly Report, pp. 25-26.
    Price Control: Fuels, Services, and Other • 31
    EXPORT-IMPORT REGULATIONS
    The quarter was marked principally by improved administration of the export and import regulations. While a number of amendments were made to both regulations, these resulted in no fundamental change. Improved operating techniques were put into effect, however, better compliance was achieved, and improved trade relations resulted in closer cooperation with industry.
    During the quarter the Office was called upon by the Department of State to interview and advise authorities from other countries visiting the United States on price control problems. Specially prepared memoranda on specific problems, as well as printed and mimeographed material, were supplied price control officials of foreign countries. Information on maximum export prices, which some countries use as a base for determining maximum prices within the country, was supplied when requested by foreign countries.
    Exports
    Two amendments were issued to the Maximum Export Price Regulation during this quarter. One amendment, issued in August, broadened the language of a section which had been added to the regulation so as to permit Government agencies to recover subsidies paid in order to maintain low prices on domestic consumption. The amendment provides that exporters of products which are subsidized when sold domestically, but not when sold in the export market, may increase their otherwise applicable base prices by the amount of the subsidy or similar payment which they are unable to obtain, or which they must refund to the Government.
    Another amendment, issued and effective in September, permits domestic firms to resume the practice of charging exporters in this country higher prices than the maximum prices which they are permitted to charge similar domestic buyers, provided this was their regularly established practice before the imposition of price controls. Many firms had this practice prior to the institution of controls, in order to protect their own export sales organization, but it was forbidden in many cases by the Maximum Export Price Regulation. The amendment permits resumption of the practice on an equitable basis. To prevent possible abuses, approval must be obtained from the Office, and is granted where the supplier can satisfactorily show that it was, in fact, his regularly established practice and that resumption is necessary to protect his export organization.
    Imports
    The Maximum Import Price Regulation was amended during the quarter to permit adjustments in maximum wholesale and retail prices
    32 • Eleventh Quarterly Report
    of articles made in the United States of imported materials for which an industrial user had been given an adjustment of his maximum prices. The term “purchasing commission” was clarified by indicating that it applies only to commissions paid bythe importer to his agent abroad.	.
    The definition of total landed costs was changed to include an allowance for war risk insurance costs which may not exceed the amount of the war risk insurance premium paid (at rates in effect at the time of shipment) on a value representing 105 percent of the sum of the foreign invoice price, freight to port of entry, and premiums paid for marine and war risk insurance. This amendment was made necessary by the almost complete withdrawal of the War Shipping Administration from the field of war risk cargo insurance. The definition of total landed costs previously permitted the inclusion of a war risk insurance premium not in excess of that which would be charged by the War Shipping Administration. Other maximum price regulations which contained a reference to war risk insurance premiums charged by the War Shipping Administration as an element in determining maximum prices were similarly amended.
    An amendment was issued and made effective in September which in effect extended coverage of the Maximum Import Price Regulation to foods and food products which are imported ready for human consumption. These products had been originally excluded because it was feared their inclusion would lead to an increase in the cost of living. It was found, however, that prices of imported foods had risen steadily since March 1942 by reason of the ability of importers to convert themselves into sales agents of foreign sellers, thus buying and selling free from price control, or by reason of such importers being permitted a markup on their costs under regulations governing certain domestic foods at wholesale and retail.
    By no longer permitting a markup on what was, for all practical purposes, an uncontrolled cost, the Office expects to reduce prices on imported food products. Moreover, the amendment puts all importers on an equitable basis. Thus importers who had been under GMPB and were limited to their prices of March 1942, the base date under the Maximum Import Price Regulation, may recover cost increases incurred between that month and April 1943.
    Coverage of the MIPR was also extended to include sales of imported materials by importers to Government agencies and Government contractors and subcontractors. The effect was to bring the prices of imported materials sold to Government agencies and contractors in line with those being charged manufacturers producing articles for civilian use.
    Price Control: Fuels, Services, and Other • 33
    EMERGENCY COURT OF APPEALS
    Several cases of general significance to the price control prograna were decided by the Emergency Court of Appeals during the quarter. The most important of these was Gillespie-Rogers-Py att Go. Inc., et al., v. Bowles, which involved the general standards applied by the Price Administrator in determining whether maximum prices are generally fair and equitable. Another case of considerable significance was Powers and Urick n. Bowles, in which the court considered questions of interpretation and application of the minimum pricing standards established in section 3 of the Stabilization Act of 1942.
    Gillespie-Rogers-Pyatt Co., Inc.4
    Eight manufacturers of bleached shellac charged that ceiling prices established by Maximum Price Regulation 245 were no longer generally fair and equitable because increased costs of production and distribution had decreased profit margins since issuance of the regulation. Thé Price Administrator had denied the protests on the ground that protestants had not shown either that the over-all earnings of the industry had fallen below their normal peacetime level, as evidenced by earnings in the period 1936-39, or that the maximum prices for bleached shellac were insufficient to return out-of-pocket costs on that particular product. The court held that the administrative standards thus applied by the Price Administrator—the industry earnings standard and the product standard—constituted a correct application of the statutory standards of section 2 (a) of the Emergency Price Control Act, and that the complainants had failed to offer sufficient evidence to sustain their burden of establishing that the maximum prices for bleached shellac were not generally fair and equitable.
    After examining the legislative history of the Stabilization Extension Act of 1944, the court said :
    We conclude that the use by the Administrator of the industry earnings standard in conjunction with the product standard to determine whether a maximum price previously set by him is no longer generally fair and equitable and such as will effectuate the purposes of the Emergency Price Control Act is a reasonable exercise of the discretion conferred upon him in the administration of the act and is in consonance with its mandate. It follows that the present complainants, who sought to have the maximum prices of bleached shellac modified upon the ground that they were no longer fair and equitable, had the burden of showing the facts from which the Administrator in the light of the industry earnings and product standards could find that these prices had ceased to conform to the statutory standard.
    * Gillespie-Rogers-Pyatt Co. Inc., et al. v. Bowles, No. 134, decided August24, 1944.
    34 • Eleventh Quarterly Report
    In applying these standards to the facts of the particular case, the court said :
    It is true that the complainants’ evidence does show a reduction in the gross profit on bleached shellac which might call for an increase in the maximum price of that product under the industry earnings standard if the industry has in fact suffered a substantial decrease in its over-all earnings as compared with those of the pre-war period. But since the complainants declined to offer evidence as to their over-all earnings for either period they failed to provide the Administrator with the necessary basis for determining, by the application of the industry earnings and product standards, whether the maximum prices for bleached shellac had ceased to be generally fair and equitable. They failed to exclude the possibility that reduced profits on bleached shellac had been offset by increased profits in other departments of the industry.
    Lucius Powers and W. E. Urick 5
    Growers of California table grapes asserted that maximum prices for table grapes violated provisions of the Emergency Price Control Act of 1942 and the Stabilization .Act of 1942. The Price Administrator had established a single dollar-and-cent maximum price for all grades, brands, and varieties of table grapes, subject to seasonal variations. The growers contended that the price regulation violated the minimum standards prescribed for agricultural commodities by the Stabilization Act of 1942, on the ground that the Secretary of Agriculture should have determined price differentials for the different grades and varieties of table grapes^ and that such differentials should have been embodied in the regulation. The court, however, held that the Price Administrator’s obligation under the act was to establish maximum prices not lower than the minimum price standards “determined and published by the Secretary of Agriculture,” and that determination by the Secretary of an undifferentiated minimum price standard for table grapes did not render the maximum price invalid.
    The court also held that evidence of cost increases since 1942 did not establish that the maximum prices violated the provision of the Stabilization Act requiring that maximum prices for agricultural commodities reflect increases in labor and other costs since January 1, 1941. The court stated that the appropriate base point for computing whether maximum prices reflect increased costs was January 1,' 1941, the date set forth in thé act, rather than the later date chosen by the growers.
    The court also ruled that the Price Administrator was not arbitrary or capricious in establishing a single maximum price for all table grapes, in view of past fluctuations in price relationships, and in view of the recommendation of a committee of table grape producers that separate maximum prices for the different grades and varieties of
    8 Lucius Powers and W. E. Urick v. Bowles, August 4, 1944. The Supreme Court denied complainants’ petition for a writ of certiorari October 23,1944.
    Price Control: Fuels, Services, and Other • 35
    table grapes would be unworkable. Finally, the court rejected the growers’ contention that such a single maximum price required them to change their business practices in violation of section 2 (h) of the Emergency Price Control Act.
    Automatic Fire Alarm Co.6
    In this case the court considered the validity of Maximum Price Regulation 165, Services, as applied to charges for services in the “maintenance, repair, rental, supervision, operation, or inspection” of equipment used for the detection of, and protection against, fire and theft. The court held that the Administrator had no authority to regulate charges for the “maintenance” of such equipment where the equipment remained the property of the person rendering the service. The court said:
    We conclude that there is no warrant in the act for the Administrator’s inclusion in the amended regulation of services in connection with the maintenance, supervision, operation and inspection of fire protection equipment, to the extent that these services involve more than the repair of such equipment and that to the extent that they involve no more than repair their inclusion is unnecessary.
    Foster and Company 7
    The Emergency Court of Appeals in this proceeding passed upon the authority of the Price Administrator to modify and reduce maximum prices which he had theretofore established. Under the General Maximum Price Regulation, and later under Maximum Price Regulation 193, maximum prices for packaged distilled spirits were established by the freeze technique on the basis of prices charged by the seller during March 1942. Subsequent to this base period, Foster & Co. proposed to sell packaged whiskey under a new brand name. Being unable to establish a maximum price under the freeze provisions, application was made and approval secured of a maximum price on the basis of prices charged in the base period for other brands of whiskey. The order establishing the maximum price provided that the order “may be revoked or amended by the Price Ad mi n i strator at any time.” The company entered into contracts for the sale of its whiskey at the maximum price so obtained. However, before delivery of all the whiskey covered by these contracts, dollar-and-cent maximum prices applicable to all brands not sold in the base period were established. This action reduced the maximum price theretofore established for Foster & Co. and cut across the contracts calling for delivery at the higher price.
    ’ Automatic Fire Alarm Co. et al. v. Bowles, No. 105, decided July 3, 1944.
    Foster 	'	: .	..
    66 • Eleventh Quarterly Report
    for which such permission had not been obtained by October 18 were to be considered as held for sale. A further step in aiding certificate holders to locate cars was the preparation of an amendment requiring dealers to keep an up-to-date inventory posted in their places of business.5 Jurisdiction over the rationing of cars to exempt Federal agencies such as the War and Navy departments, and the Maritime Commission, as well as over releases for export, was transferred during the quarter from the War Production Board to the Office. The rationing of all new passenger cars was thus brought under the jurisdiction of the Office.
    GASOLINE
    Increased use of nonhighway gasoline was largely responsible for failure to keep within the quota of 1,250,000 barrels a day set for the quarter by the Petroleum Administrator for War. Although seasonally below the preceding quarter, nonhighway use was extremely high as a result of the expanded farm program and of weather difficulties which necessitated duplicate planting in some areas.
    The continued scarcity of gasoline necessitated further limiting the use of nonessential boats. The ceiling for inboard motor boats was reduced from 125 to 24 gallons for 3 months. This is equal to the A ration for motor vehicles. The outboard motor ceiling was reduced from 20 to 10 gallons.
    Extensive counterfeiting of A-12 coupons made it necessary to order issuance of new ration books in the East, to be accomplished I before November 9. All A-12 coupons, which normally would have I been valid in-the East from November 9, 1944, to February 9, 1945, I were canceled. Outside the gasoline shortage area, basic A rations I were renewed during the quarter.
    In a further effort to plug leaks in supply, the Office permitted large I commercial fleet operators to use ration bank checks instead of coupons I for the purchase of gas. Experience had shown that many coupons I entrusted to the drivers of commercial and passenger fleet vehicles had I been diverted into the black market. The deposit of coupon books al I selected retail outlets had proved unsatisfactory. Under the ne* I procedure, fleet operators who acquire 960 or more gallons of gasoline I per month may surrender ration checks in exchange for gasoline I purchased on credit at designated stations and delivered directly inti I the fuel tanks of official and commercial motor vehicles clearly iden I tified as units of their fleet. Large operators had urged this actioi I upon the Office.
    Restrictions on transfer of R coupons, introduced during the firs I quarter of the year6 in order to reduce their possible illegal use I
    5 This amendment became effective November 4, 1944.
    8 See Ninth Quarterly Report, pp. 51-52, and Tenth Quarterly Report, pp. 53-54. I
    Rationing: Automotive Supply • 67
    were lifted during the quarter under review. Despite the success of a preliminary test plan, the limitations had caused discrimination among dealers since many ration holders preferred to change dealers rather than to exchange their R coupons for E coupons which were universally valid.
    To meet the needs of the November elections, special gasoline rations, not to exceed the B ceiling, were made available to both compensated and uncompensated campaign managers. The issuance of these special rations was limited to the principal campaign manager of a duly qualified and bona fide candidate for Federal or State office.
    During the quarter, also, the furlough ration provisions were amended to provide gasoline on the basis of 1 gallon per day up to a limit of 30 gallons. The previous standard allowance of 5 gallons of gasoline for furlough travel had resulted in discrimination against members of the armed forces who were granted extended leave, particularly men who had returned from overseas service.
    At the request of the Petroleum Administrator for War, a program was prepared during the quarter for the rationing of naphtha. Ration-free sales of naphtha for use in the fuel tank of a motor vehicle in violation of the regulations had for some time constituted a serious problem in some Midwestern States. The Petroleum Administrator for War was first of the opinion that the problem could be solved by means of a limitation order, and this was issued in October 1943. The order did not bring anticipated results, however, and the problem became particularly acute in PAW District 2. The plans for rationing naphtha were completed, and at the close of the quarter needed only the necessary directive from the War Production Board to be put into effect.7
    7 Rationing of naphtha became effective Nov. 20.
    . X .
    RATIONING: FUEL OIL AND OTHER PROGRAMS
    The fuel oil program operated with a minimum of change except for the usual adjustments for the new heating season. At the end of the quarter, at the request of the Petroleum Administrator for War, provision was made to allow consumers who had converted from oil to other fuels to reconvert.
    In stove rationing the first two steps were taken toward removing stoves from rationing. The Pacific Northwest firewood program was seriously handicapped by manpower and trucking shortages but an intensive educational program resulted in much greater consumer stockpiling of solid fuels than in previous years.
    No substantial changes were made in the shoe or rubber footwear programs.
    Several adjustments were made in the currency control program in the interests of simplified operation, and the verification centers established in eight regional cities began functioning.
    FUEL OIL
    The renewal of rations for the 1944-45 heating season was substantially completed by the local boards, and the plan for issuing rations to new applicants was installed September 1. Work on the procedure for issuing additional rations to consumers whose needs increase or who are threatened with hardship was expedited so that it would be ready for the boards by the first of December. Other changes I were made in simplification of forms and procedures for both con-1 sumers and industry.
    The procedure for issuing rations to new applicants was not in-1 stalled until September 1, in order that the boards might be free to I complete issuance of renewal rations. The largest single group oil consumers were thus enabled to fill their tanks during the summer, I relieving the industry of the winter storage and distribution problem. I Only minor changes were made in the established formula for deter-1 mining these rations. Provision was made for new and renewal! applicants alike to apply for rations at any time during the remainder! of the heating season.
    Boards were permitted to issue space heater rations for short periods! to .migratory workers and other consumers who are unlikely to need!
    68
    Rationing: Fuel Oil and Other Programs • 69
    a ration for the full year. Procedures were also completed simplifying the issuance of additional rations to relieve hardship and to take care of consumers whose circumstances change during the season or who have sickness or other special needs.
    Improvement in the supply of residual oil permitted liberalization of these rations. At the request of the Petroleum Administrator for War, it was provided at the end of the quarter that any consumer of residual oil for heat or hot water might receive an additional ration which would allow him the full amount of oil he normally requires. Such consumers need merely present to their local boards a certification from their dealer that the heating equipment uses residual oil. The relaxation affected principally industrial plants and large apartment houses or hotels whose heating equipment is designed to use residual oil. Few private home owners were affected.
    A new and simplified one-page form was prepared and distributed to cooking and lighting consumers. At the same time a revised procedure was installed to permit simplified renewal of cooking and lighting rations. Planning was completed for a new and simplified application form for industrial, commercial, and agricultural uses. A new form was provided for dealers to prepare and file statements from which it can be determined whether they are out of balance. Evidences on hand, with some exceptions, must be equal in gallonage value to unfilled storage capacity. Where evidences exceed this value, the dealer must surrender the excess.
    Validity of all period 4 and period 5 unit value coupons and all definite value coupons issued for rations during the 1943-44 season was extended until August 31,1945.
    Provisions were made for dealers and suppliers to report to OPA ■ district offices, after á reasonable period, consumers who are delinquent in furnishing ration evidences for deliveries received. This action relieved the trade of the responsibility for determining whether transferees have sufficent evidences on hand to cover deliveries.
    PACIFIC NORTHWEST
    During the quarter some 3,000 Northwest firewood and coal dealers further demonstrated their ability to cooperate effectively in carrying lout this industry-operated rationing program by their accomplishments in connection with the program’s winter storage consumer fuel I program. Fuel dealers spent tens of thousands of dollars in advertising, radio, and direct mail publicity urging consumers to stockpile within limitations of the ration order, and cooperated with all the procurement agencies in ordering coal and firewood supplies in advance of their normal buying season. Additional publicity and support of the winter storage program was secured from chambers of com
    10 • Eleventh Quarterly Report
    merce, mayors, and other Government agencies in the Northwest. All this, despite severe labor shortage and trucking handicaps, resulted in much greater consumer fill-up of solid fuels than the previous year.
    The first group of contracts with Pacific Northwest solid fuel dealers was completed during July in connection with the Defense Supplies Corporation program sponsored by the Office of Civilian Requirements. Through stockpiling insurance and financial aid, this program stimulates purchase of solid fuels from surplus production areas to supplement the deficit supply in important northwest war production areas. The volume of supplementary firewood supply secured by the use of DSC program by September 1 was less than anticipated in July because manpower shortages at sawmills throughout the area made it difficult to recover wastewood for fuel purposes. The manpower shortage plus a shortage of serviceable trucks in many communities also seriously handicapped the handling and distribution of incoming solid fuel shipments.
    STOVES
    Rationing restrictions were removed during the quarter from coalwood laundry stoves and gas ranges with nonmetallic outside back or side panels. This step was taken in cooperation with the Office of Civilian Requirements of the War Production Board. Removal of the laundry stoves from rationing was made possible because the supply of these stoves was sufficient to meet demand. Gas ranges with nonmetallic outside backs or sides were removed to prevent them from clogging dealers’ stocks when models preferred by the consuming public became available.
    Plans for permitting certificate-free transfer of coal and wood heating and cooking stoves after October. 15 were announced during the quarter, in accordance with an agreement with the Office of Civilian Requirements. Probable production of heating stoves, combined with favorable inventories due to rationing, appeared to be sufficient to meet unrestricted demand for the balance of the heating season. The cook ing stoves were made certificate-free because the Office of Civilian Requirements feared that production, already critically short, would be impaired if both stove types were not freed from rationing at the same time.
    At the request of the Petroleum Administrator for War, the Office extended the oil shortage area from the 28 States included in the fuel oil rationed zones to the entire country. This move was made to save scarce kerosene and lighter oils by restricting purchases of oil heater! to replacements and to those cases wherein the burning of other type! of fuel is not feasible.
    Rationing: Fuel Oil and Other Programs • 71
    To facilitate the handling of stoves damaged in transit to dealers, the procedure was changed to permit certain certificate-free transfers.
    SHOE RATIONING
    Announcement of the validation of the fifth shoe ration stamp on November 1, 1944, was made during the quarter. Airplane Stamps 1 and 2 continued to be valid for the purchase of shoes.
    Shoes made with rubber soles and with uppers other than leather were declared ration-free due to continued increase in the over-all production of rubber soles and heels as well as the improved outlook for synthetic rubber production.
    Dealers with factory-damaged shoes on hand were permitted to sell them ration-free by applying to their district OPA office during a designated period, providing the price charged did not exceed a stated price limit: $1.20 for sales within the trade and $1.80 for sales to consumers. A number of these shoes had been accumulating since the beginning of rationing, as consumers were unwilling to pay a ration stamp for damaged goods even though they had walking mileage.
    A nation-wide shoe inventory was taken July 31, the third since the start of the program. Dealers were required to furnish information on their shoe stocks and ration currency as well as on the number of shoes released from rationing since the filing of the second inventory September 30,1943. The inventory will furnish data on the existing shoe supply, needed to determine future shoe rationing policies and the length of future rationing periods.
    A nation-wide compliance program was started in connection with the third shoe inventory. The inventory responsibility of every dealer it was to be checked by the district offices to see whether each dealer under-ii stood how to operate under the Shoe Ration Order and whether the required records were being kept. Appropriate enforcement action et was to be taken in cases where dealers were found in violation of the order.
    e A number of steps were taken during the quarter to simplify procedures. Chief among these was the removal of expiration dates from all special shoe stamps, except those issued to Mexican border residents. Making these stamps valid indefinitely, like war ration book stamps, ce relieved the trade of a good deal of ration bookkeeping.
    id An amendment was issued clarifying eligibility for shoe rations, vi All persons in this country for 60 days or more and not in the armed in forces or institutions of involuntary confinement must have obtained iei a War Ration Book 3 and have used all the valid shoe stamps in it before applying for a supplemental ration. The one exception to this rule is for persons brought into the continental United States by a Federal
    72 • Eleventh Quarterly Report
    agency for the sole purpose of performing agricultural or other labor In such cases no ration book is to be issued but an equivalent ration ii stamps may be given. The exception was made because of the ad ministrative difficulties involved in tailoring ration books for th large number of laborers who entered the country for short periods and in collecting the books when they left.
    RUBBER FOOTWEAR
    Supplies of men’s rubber boots and rubber work shoes continued lov during the quarter and the outlook for immediate improvement ii the situation was not encouraging. The small volume of productioi for civilian use had made steady inroads on inventory, manpowei shortages persisted, and needs of the armed forces for this type o: footwear increased. In order to adhere to the policy of issuing cer tificates to all persons engaged in essential occupations who need boot! for the protection of their health and safety, and not remove anyonf from the eligibility list who has real need, the local boards were re quested to adhere strictly to eligibility standards in issuing certificates
    During the quarter, rubber riding boots, which have no industrial utility and are designed for sport use, were released from rationing These boots had not been selling, as consumers are not eligible tc obtain certificates for boots to be used for sportswear.
    CURRENCY CONTROL PROGRAM
    The use of ration currency is the central control feature in a ration ing system. Simply stated, it consists of issuance by the Office oi Price Administration of ration evidences such as tokens, coupons, oi certificates, which indicate the extent to which the individual may buy rationed goods, and which constitute the authority he must present to a dealer when the goods are bought. The dealer in turn uses these evidences to replenish his supply. This exchange is repeated up through all the levels of the trade until the level of processors, refiners, or primary distributors is reached. At that point the top level of the trade reports its sales to the Office of Price Administration and returns with the report a corresponding amount of ration evidence.
    The sheer volume of paper involved is too great to permit the original currency to be handled through all levels of the trade. It is necessary to transform the paper into some form of credit. Fo this purpose the Office created the ration banking system under whicN the retailer deposits ration evidences in a bank where credits ars set up in his favor against which he draws by check in a manna comparable to regular commercial banking.1
    1 See Sixth Quarterly Report, pp. 16-17; Seventh Quarterly Report, pp. 34-37.
    Rationing: Fuel Oil and Other Programs • 73
    The operation of such a currency system also requires that in some transactions the parties be permitted a period of time within which to settle their ration debts. A system which requires a banking plan and which creates the possibility of debt necessarily must have controls to prevent the abuse of the banking privilege and of the credit privilege. These controls were for some time widely scattered under rationing. Early in 1944 steps were taken to bring them together for coordinated handling in the interest of simplicity and more effective control. All activities having to do with the design, production, listribution, issuance, flow-back, accounting for, and disposition of ration currency were brought under a new division of ration currency control in the national office.
    Mailing and Verification Centers
    ! In the interest of greater protection of ration currency and more Efficiency in issuing rations, central mailing centers were set up in a number of metropolitan areas for the issuance of ration currency authorized by the local boards.2 This development relieved the boards of a considerable clerical burden involved in preparing rations for delivery to consumers, and thereby freed more time for attention to the adjudication of applications. Each board retains a small supply ()f ration currency to meet emergency demands. Aside from this small Store, however, all other stocks of ration currency were withdrawn !rom the boards served by the mailing centers. Loss of currency through theft was reduced markedly in areas where these mailing enters operate.
    I After ration currency has been exchanged by the consumer for rationed goods it is typically deposited in a ration bank account by (he retailer. The banks were at first responsible for opening a small percentage of the envelopes in which ration coupons were deposited Io be sure that the number therein was as declared by the depositor, phis task, however, proved burdensome to the banks, and the Office therefore set up in each regional office city a central point for the rétification of ration deposits.3 The function of these centers is to receive from the ration banks all deposited ration evidences, to I,, check the totals of these evidences against the bank reports of transacts ions, to verify the contents of individual deposits, and to detect ol ounterfeit or stolen documents.
    During the quarter under review, the verification centers went into Pill operation in each of the eight regional cities. Owing to dif-iel iculties in getting adequate staffs in the early stages of organizing hese cepters, they did not produce the results desired of them until
    2	See Ninth Quarterly Report, p. 31.
    8	See Ninth Quarterly Report, pp. 31, 32.
    74 • Eleventh Quarterly Report
    the closing days of the quarter. It was anticipated, however, that I the centers would before long well justify themselves in gaining morel effective control over ration currency and in saving many hundreds I of thousands of dollars previously paid to banks for doing a less I satisfactory job of verification.
    Modifications of Program
    All local boards were provided with ration bank accounts during the quarter. This was a step toward simplifying OPA and bank procedures, eliminating several forms of ration currency, and pro-1 viding more effective control over the issuance of ration credit. This I program was initiated in gasoline alone with the objective of extend-1 ing it soon to all other programs. The plan provides that where I local boards have issued rations to certain users on various types of certificate forms, they may make the issuance by use of a ration I check. The check ultimately clears back to the local board and thus I provides a means by which the board can be sure that all issuances I are used for the purpose for which they are intended and that none I is raised by any person through whose hands they pass.
    Plans were made during the quarter to withdraw blue tokens whenB many of the items rationed under the processed food program wereH withdrawn from the ration list.4 The plan of withdrawal consistedH of invalidating the tokens in the hands of the consumer after a give™ date and encouraging their use by the consumer up to that date.® The retailers to whom the tokens were given in exchange for goods, ■ in turn deposited them in their bank accounts. The banks returned ■ the tokens to the Office where they were to be disposed of beyond the« possibility of their getting back into circulation.
    The decision to withdraw the blue tokens was in line with aV commitment made by the Office to the Congress that tokens would be f withdrawn before or at the termination of rationing programs. The ■ commitment arose out of discussion in Congressional committees, when V the token plan was inaugurated, of the possible difficulty that the ■ transit industry and the vending machine industry might encounter I when the tokens were no longer of value for rationed goods.
    4 Blue tokens became valueless for consumer use September 30, 1944.	fe
    ¡ne
    . XI .
    ENFORCEMENT
    A substantial degree of compliance at manufacturing and wholesale levels characterized the third quarter of 1944. Violations that were brought to light indicated a tendency to resort to undercover transactions and to more evasive practices. At the retail level compliance was not as successful due chiefly to the very large number of email units involved. Securing compliance at this level has since the fall of 1943 been the task mainly of the price panels1 but expe-rience has shown that price panel operations have been powerless to prevent profiteering in many retail fields. Increased emphasis upon ■the enforcement aspects of price panel operations, however, and delegation during the quarter of authority to the panels to negotiate and recommend settlement of the Administrator’s consumer claim? were expected to result in improved retail compliance.
    I At the close of the quarter it could be stated that the 10-point program for enforcing gasoline rationing,.which was described in the two preceding reports, had finally given the Office the tools necessary to break up the gasoline black market. The black market was still a real menace, but with the verification centers steadily increasing in Operating efficiency and the further development of the debiting pro-gram, the counterfeit racket was rapidly losing its attractiveness. As me pressure against counterfeiting grew, the racketeers were turning ¡|heir attention increasingly toward theft and robbery of gasoline cou-, pons. They were being met, however, by increased vigilance in safe-, guarding coupons and also by improved techniques for the detection e of stolen coupons.
    11 Approximately 80,000 violations were uncovered during the period, in the great majority of which administrative rather than court action was taken. Thus, nearly 50,000 violations were closed out by con-Berences or by warning letters; district offices and local boards revoked nearly 10,000 rations during the three months; suspension order pro-Bedings were instituted in nearly 3,000 cases; and license warning notices were issued in an additional 3,200.
    B1 See Seventh Quarterly Report, pp. 83-84.
    P Made possible by the Stabilization Extension Act of 1944. See Tenth Quarterly Report,
    75
    76 • Eleventh Quarterly Report
    In the field of litigation, the summer quarter was one of the busiest I since the inception of wartime price control, owing largely to the numerous new legal issues created by the Stabilization Extension Act. I
    Court proceedings were instituted in almost 6,000 cases, consisting! of more than 3,700 injunction suits, 900 Administrator’s treble damage! suits, and 1,200 criminal cases. In the 3,279 civil and criminal pro-1 ceedings which were completed during July, August, and September,] 3,175 decisions, or 96.9 percent of the total, were in favor of the Office] of Price Administration. The proportion of decisions favorable to] the Office was about 97.4 percent in civil cases and 95.1 percent in] criminal cases.
    ENFORCEMENT PROGRAMS
    Enforcement operations are conducted on a commodity program] basis. Since these programs are drawn up only after the inflationary] pressures present in an industry have been carefully analyzed, the] programs have in general been successful in meeting the enforcement I problems that arise over a period of many months. Most of the com-] modify programs have been described in previous quarterly reports] to the Congress. ,A few significant developments in various com] modifies during the quarter are set forth herein.	]
    Meat
    The shortage of beef, especially of the better grades, which bega] to develop in earlier months, was accentuated during this reporting f period. Prices of quality cattle rose to record levels as slaughterer: t throughout the country competed for the small supply that Ayas avail) h able. The program inaugurated during the preceding quarter oi o reporting purchases of cattle at excessively high prices was continue« r Chief violators of the beef regulation became known before the eni n of the quarter, and investigations were instituted to uncover the viola] tions. Because of the extreme cunning with which many of the illega Ipi transactions are consummated, however, investigation was difficulldi and time consuming.	9a
    In the Southwest, meat violations for some time had taken the fori to of upgrading. By use of Department of Agriculture meat grader ]i hundreds of these violations were uncovered during the quarter, ar pu many sanctions were imposed.	pi
    Upgrading had long been prevalent also at the retail level, frequent! ] resulting in overcharges of 50 percent or more. Although enforci ] ment at this level was generally the responsibility of the price pane] * at the end of the quarter a nation-wide enforcement program design' ]{ to combat this type of violation was being prepared.	—
    Ma ;
    Enforcement • 77
    । The excess-pork-fat cases against certain leading packers, mentioned [in the preceding report,3 were tried during this quarter. The refusal [of the court to issue injunctions, despite the great many violations [proved, illustrates the difficulty of trying to control a broad field with [a small amount of manpower. Although many man-days were spent in making the investigation in these cases, the court nevertheless was of the opinion that the investigation had not been extensive enough to warrant issuance of the injunctions. The Office was encouraged, however, by the fact that as a result of institution of the actions, the ■packers adopted means of controlling the amount of fat on pork cuts.
    Compliance with the regulation thereupon improved greatly.
    Other Food Programs
    Dairy products.—The butter grading program instituted by the Office during the spring quarter continued throughout the summer with very good results. Over 60 injunction actions were filed and about 400 settlements were made for upgrading violations. Reports from the •trade indicate that the program was highly successful in curbing gutter upgrading. Despite the serious shortage of butter, violations were generally limited to upgrading and there was no general black market in this commodity. One dealer who resorted to a cash-on-the-side transaction was prosecuted criminally and promptly given a jail sentence.
    I Processed foods.—The enforcement program prepared for the 1944 pack of processed foods had to be scrapped during the quarter because the act granting OPA operating funds for fiscal 1945 specifically prohibited use of AMA grades as a standard for fixing prices. Efforts of the Office to prevent upgrading, the most common and most difficult type of violation to detect in processed foods, thus received a second I'aj or set-back, the first being the prohibition against grade labeling. ■ Before the close of the quarter a revised enforcement program was prepared and put into operation. This program was designed to ■iscover whether packers were pricing in accordance with the applicable formula and also to uncover upgrading insofar as it is possible to establish upgrading with the use of undefined commercial grades.
    Since much of the 1944 production had been packed before the enforce-ment program could be put into operation, however, it was expected that the 1944 pack would be subject to very loose controls.
    1
    ■	Corn, Feed, and Seeds
    ■	Com and feeds.—Enforcement activity in this field during the quarter was directed primarily at violations by commercial mixed feed H3 See Tenth Quarterly Report, p. 64.
    78 • Eleventh Quarterly Report
    manufacturers. Because of the great number of mixed feed formulae and the continual changing of formulae by various manufacturers, opportunities for price violations are almost infinite, and detection is extremely difficult. Despite these handicaps, some cases against violators were developed and compliance in the industry was greatly improved. A 3-million-dollar treble damage • action was brought against the largest manufacturer in the industry.
    Seeds.—Coincident with the revision of the legume and grass seeds regulation in July, an enforcement program was instituted. Since I these seeds are in short supply and are vital to the production of hay, I many evasive practices had developed. One common violation, the I understatement of dockage (i. e. foreign matter in the seed), was I diverting the supply of these seeds to certain unscrupulous processors, I Results of enforcement action in testing samples of these seeds were I apparent during the quarter, with the beginning of resumed normal distribution of the seeds.
    Apparel
    While the enforcement program on women’s and girls’ outerweai continued to uncover many significant violations, increased emphasii was placed throughout the quarter on other apparel items, including men’s cotton shirts, shorts, and pajamas. In these items, as well s I in the apparel field generally, quality deterioration has been the most I common and troublesome problem. A program designed to expos I this deterioration through the use of technical experts was commence! I during the quarter.
    The Office also initiated during this period a program to check th I rationing operations of shoe dealers. Shortages disclosed by analyse I of reports derived from the national shoe inventory taken July 31 led to investigation of shortages in a number of instances. Th I dealer in each case was afforded an opportunity for explanation. 11 those case» where it appeared that the shortage was occasioned by i j violation of the regulation, however, enforcement action was taken I A number of sanctions, usually suspension orders, were imposed dur ( ing the quarter, and it was expected that disclosure of additional vie t, lations would result in further sanctions in subsequent quarters. 1
    I
    Used Cars	I
    With the used car price regulation effective as of July 10, Ob I ran headlong into another black market. Violations ran the gam I from cash-on-the-side to forced trade-ins and forced financing. L
    The enforcement program, which had been prepared in advance, g under way promptly. The first step in the program called for prii • panels to check certificates of transfer for evidences of violation. T [(
    Enforcement • 79
    second step called for enforcement action against violators. The price panels did a thorough job of checking certificates, and enforcement action was taken promptly against numerous violators.
    I Many violators, however, adopted the practice of filing false certifi-categ which show the correct ceiling price rather than the illegal price which was charged. A pilot drive was made in Kansas City during the quarter to develop techniques for uncovering this fraudulent type of transaction. The experience gained in this drive was incorporated (in an enforcement program which was to be put into general operation in the following quarter. One of the most significant findings of the Kansas City drive was that violations were far more frequent on sales by dealers than on sales between individuals.
    Services
    The Office put into operation during the quarter a plan to compel ¡"compliance in this field. Despite a broad educational program conducted by the Office for more than 2 years, many thousands of shop (owners in the service trades had not yet fulfilled their first obligation under price control, that of filing their base-period prices with DPA
    The enforcement program was centered about a new provision in the services regulation which permits the fixing of in-line prices for tradesmen who have not filed base-period statements. The first Istep in the program was carried out by price panels who surveyed the field to find all nonfilers. In those cases where the failure to file ivas shown to be unintentional or due to ignorance of the requirement, he price staff fixed in-line prices and no further action was taken. In other cases, appropriate enforcement action was taken along with he fixing of prices. While the program had not yet been fully completed in all areas, by the close of the quarter substantial reductions In charges for services had already been reported.
    51	Two other service programs were initiated during the quarter. One was directed against contract petroleum carriers who were found o be charging the Army exorbitant prices for transporting gasoline, 'he other was planned to prevent overcharging for repair of build-ngs which had been damaged by the September hurricane along jhe Atlantic coast.
    Rent
    11	The new damage claim given the Administrator in the Stabiliza-ion Extension Act proved valuable during the quarter in the many . lent cases where violations do not require the issuance of an injunc-ion or a criminal proceeding. As a result of the new provision, the total number of sanctions applied in rent cases during the quarter fas nearly double that of any preceding quarter.
    80 • Eleventh Quarterly Report
    One of the major enforcement activities during the period wasl the program to stop the collection and compel the return of illegally] obtained security deposits. Many owners of priority-constructed] housing had adopted the practice of compelling tenants to put up a] security deposit in addition to paying the maximum legal rent. Fre-] quently these deposits were equivalent to several years’ rent and enl tirely disproportionate to any risk taken by the owner. The regu-| lation was clarified on the point that such transactions were illegal,w and by the end of the quarter many thousands of dollars of refunds had already been obtained for tenants who had been forced to make! such deposits.	E
    LITIGATION	I
    OPA litigation has never passed through the inactive stage, experienced by most other Government agencies, during the summea court vacation season. This year in particular the summer quartei witnessed no slackening in the demands made upon the Office bi nation-wide litigation needs. On the contrary, the quarter was an unusually busy one, partly due to the numerous new legal issues create] by the Stabilization Extension Act. Of the numerous significani decisions in both Federal and State courts—almost uniformly favor] able to the Government, as have been well over 95 percent of the de] cisions in OPA cases down to the present time—a few of those involv] ing issues of wider interest are described in the following pages]
    New Stay Procedure
    c
    E
    n
    r
    r bi
    li
    P nt f
    Foremost among the new legal issues created by the Stabilization^ Extension Act were those which grew out of the new procedure peri11 mitting the Federal district courts to grant stays of OPA enforcemenl J actions at the behest of defendants who display “good faith” and can1^ show proper “excuse” for their failure to seek review of the price reg]°u ulations under the regular statutory review procedure.5
    When this provision was adopted, the Administrator conveyed the Congress his very earnest fears lest the procedure develop into Bai means for the indiscriminate thwarting of all or a large portion oB68 OPA enforcement actions. The matter was put to the Senate by Seiial^ tor Wagner, manager of the Senate conferees on the renewal act, alap follows:	r-U
    ■e
    The Price Administrator has expressed great concern lest the right accord#^ by this procedure be abused by defendants resorting to protests and leaves B. complain as a means of deferring or even avoiding the trial of criminal caseBa* and of staying the execution of judgment in civil proceedings. But the procF th ------------	I Ju
    4 See also Rent, p. 51.	■ .
    5 See Tenth Quarterly Report, p. 4.	BUC
    Enforcement • 81
    Jure provided in the amendment does not represent a regular method to be followed in enforcement cases. Rather, it is an exception procedure which has been made available to avoid the risk of injustice that existed under the original ict under which a defendant who had excusably failed to file a protest within the strict time limits the act allowed, might be denied any opportunity to question the validity of the regulation which he was charged with violating. The remedial irocedure prescribed by the conference committee is available only to defendants fhose objections the courts find have been made in good faith, and not primarily or the purpose of delay. The committee is confident that the courts will be igilant in administering the standards of good faith to deny stays to defendints who have not previously availed themselves of the unrestricted opportunity o protest but who have been violating the regulations on the gamble that, if aught, they could then protest and secure stays of proceedings which would fford them a good chance to avoid the trial or the execution of judgment.6
    It was evident that the fate of future OP A enforcement measures vould depend on the spirit in which the Federal district courts might tpply the new stay provisions. It was essential that the new pro-edure be applied sparingly, on a closely selective basis, and only at he behest of the most deserving defendants. The Office felt that the Congress could not have intended the new procedure to be available iidiscriminately to all defendants who might take the trouble of filing n application setting forth mere pro forma grounds for a stay. The trictly conditional terms of the statute itself seemed to indicate un-listakably the congressional intent that the new procedure be ap-lied by the courts with the greatest care. The duty seemed to rest ipon the district courts then, tp insure that persons who are brought ito court by the Government for violation of the present wartime illation control measures should not be encouraged to regard the new ;ay procedure as an instrument for mere obstruction and delay or as means of thwarting the just processes of the law.
    The Office was gratifyingly successful during the quarter in fostering lis conception of the new stay procedure before the Federal district
    >g mrts. District judges in various parts of the country responded ivorably to the view that the new stay procedure should operate in t ich a way as to give just treatment to deserving defendants, rather ) tan in such a way as to cripple the Government’s efforts to enforce o iese vital wartime controls. The first of the new stay cases was de-m ded by District Judge Baltzell at Indianapolis in July. Judge a ¡altzell denied two stay applications before trial in criminal cases on ie ground that the defendants had failed to bring themselves within ® statutory requirement for the granting of this special relief. t ater, one of these defendants succeeded in obtaining a stay after ial and conviction, the Government not interposing any opposition 00 the renewed application.
    Judge Baltzell’s lead was followed by Federal district judges in nous other parts of the country, notably in Los Angeles, New York
    Cong. Rec. (Senate), 78th Cong., 2d sees., June 21, 1944, p. 6451.
    82 • Eleventh Quarterly Report
    City, and Newark, N. J. An exhaustive and definitive opinion carefully analyzing the new stay procedure, and emphasizing its strict and limited operation, was handed down by District Judge Leamey of Vermont, visiting in the Southern District of New York, in the easel of U. 8. v. Aronin, a criminal prosecution involving alleged forgery of records and alleged cash-on-the-side overcharges totaling tens oil thousands of dollars on the part of a lady’s fur garment manufacturer.! Judge Leamey denied a stay. The defendant later pleaded guilty to! the indictment. A significant opinion was also delivered by District, Judge O’Connor at Los Angeles in the case of United States v. Vent U. Ayres.
    The new procedure was still in its infancy at the close of the quarter,! and its effect on continued efficient functioning of OPA enforcement! could not be predicted. If the picture becomes more discouraging,! it may be necessary, as the President suggested in his statement at the . time of signing the Stabilization Extension Act, to ask the Congress I to reconsider its action in establishing a procedure which, it must bel admitted, contains within itself such grave possibilités of danger to I the war effort. These dangerous possibilities had not materialized by I the end of September, and with continued care on the part of the I district courts in applying the new provisions, they may never1 materialize.	i
    Exclusive Jurisdiction Provision	f
    In Rosensvoeig v. U. 8., the Circuit Court of Appeals for the Ninth * Circuit affirmed the conviction of two defendants for overceilins ...... wholesale sales of beef. The court held that the exclusive jurisdiction provisions of the statute, which channelize exclusively into the Emer V gency Court of Appeals all issues as to the validity of OPA regulation: I (and which were unaffected by the Stabilization Extension Act) con r stitute a bar to the defense, in a criminal suit, that a regulation is voie V and unenforceable for lack of prior approval by the Secretary oil Agriculture.
    The Government acknowledged in this case that the régula ■ tion had not been approved by the Secretary of Agriculture since the I* statutory requirement in this regard was inapplicable. The courir1 was urged, however, to decide the case on the basis of the exclusive I jurisdiction provisions, and the fact that it did so, displayed an ent • couraging tendency on the part of the courts to follow the principle IJ laid down by the Supreme Court in Ya&us v. U. S.1
    State-Federal Collaboration
    In People v. Maidman, the Appellate Division of the Sùpreme Cour I of New York upheld a conviction for violation of the State Wai-A ------'■---	Ito
    ’ Takus v. U. S., 64 S. Ct. 662. March 27,1944.
    Enforcement • 83
    ■Emergency Act and of the Resolution of the New York State War ■Council which promulgated OPA price regulations and made viola-tions punishable as violations of the laws of the State. The court up-held the constitutionality of the State legislation, declaring “that the
    ■State has undertaken to put itself on a war basis in support of the ■United States and its allies in the pending struggle against the Axis tpowers.”
    I A rather less favorable situation, as regards State-Federal collabo-ration in the wartime inflation control program, developed ip the State of Washington. A difference of views arose between the State Land Department apd the Office over the question whether sales of ■State-owned school-land standing timber is subject to Federal price control. The issue was first presented to the Washington State courts in a case to which thé Office was not a party. The lower courts held that the State timber was subject to Federal price control (OPA’s Western Timber Regulation expressly so provides), but the State | Supreme Court reversed and held that State sales must be made in accordance with the provisions of State law, at public auction, to the highest bidder.
    I In view of the great importance of the question, not only as a matter of law, i. e., as a matter of clarifying the extent of Federal authority
    I in wartime to control the prices of sales by State agencies, but also in ! view of the extremely scarce supply of standing timber and the skyrocketing prices obtained at uncontrolled State auctions, the Administrator instituted an injunction suit in the Federal district court at “Tacoma, Wash., naming as defendants the successful overceiling bid-] der and the State Land Commissioner.
    JI The matter was heard by Judge Leavey, and the ruling made by him was that the Price Control Act should be construed as not apply-y mg to sales of State owned school-land timber. It was pointed out I to the court that this ruling was in literal effect a finding that the OPA regulation which explicitly covers the timber in question was invalid as being unauthorized under the statute ; and that in making such a ruling the court was acting in direct defiance of the exclusive ^Jurisdiction provisions of the statute, which exclusively confine to ■ vf the Emergency Court of Appeals the authority to make such determi-e]) nations of invalidity.
    Æ The Office is appealing the decision to the Circuit Court of Appeals for the Ninth Circuit. The State authorities in the meantime have consented to maintain the status quo.
    Different Prices for Same Services
    mil
    Va g A significant victory for the Office was scored in Bowles v. Nu Way Laundry Co., decided by the Circuit Court of Appeals for the Tenth
    84 • Eleventh Quarterly Report
    Circuit. A number of important OPA regulations, in particular those dealing with service fields such as laundry services, established a pattern of control which depends in part on a differentiation between! the prices charged by a seller during a particular base period to different classes of customers. That is, if a seller customarily sold the! same services to different customers at different prices, the regulations! of this type provide that these different prices themselves constituted! a demarcation of the customers into separate classes for the purpose! of the regulation, and, accordingly, a customer who paid a lower price in the base period should have the right to continue obtaining! the service at such lower price rather than being pbliged to pay prices! charged for the same service to higher paying customers.
    The district court in the Nu Way case had rejected the interpretation of the regulation urged by the Office. The circuit court of appeals in a lengthy and exhaustive opinion adopted the Office interpretation of the regulation, and thus immeasurably strengthened the entire pattern of price control under the base-period type of regulation.
    STATISTICAL SUMMARY
    A statistical summary of enforcement activity for the months July. August, and September 1944 is shown in the following table whicl gives in detail the number of investigations and violations, thf number of defendants whose cases were settled by administrative enforcement action and the number in whose cases civil and criminal
    proceedings were instituted.
    Investigations and violations (eases):
    Investigations completed_______________________________________________74,23'
    Violations found on investigation--------------------------------------42,611
    Administrative enforcement (defendants) :
    License warning notices________________________________________________ 3,21
    Ration revocations by district offices_________________________________ 60
    Ration revocations by local	boards___________________________ 9,30
    Suspension proceedings	instituted_____________________________ 2,91
    Monetary settlements__________________________________________________ 4,11
    Civil and criminal proceedings:
    Injunction suits_______________________________________________________ 3,71
    Administrator’s treble damage suits---------------------;--------------	1
    Criminal actions_______________________________________________________
    License suspension suits_______________________________________________ 1