Retail Prices for Farm Equipment

[Retail Prices for Farm Equipment]
[From the U.S. Government Publishing Office, www.gpo.gov]

MAXIMUM PRICE REGULATION NO. 133
RETAIL PRICES FOR FARM EQUIPMENT
OFFICE 0F PRICE ADMINISTRATION WASHINGTON, D. C.
TABLE OF CONTENTS
Tage
Introduction..________________________________________________________ III
Maximum Price Regulation No. 133, Retail Prices For Farm Equipment:
1361.1 Prohibition against sales at higher than maximum prices_ 1
1361. 2 Less than maximum prices__________________________________ 2
1361. 3 Maximum prices____________________________________________ 2
(a) New complete equipment with suggested retail price________________________________________________ 2
(6) New parts with suggested retail prices________ 3
(c) New complete equipment and parts without suggested retail prices________________________________ 3
(d) Trade-in equipment____________________________ 3
(e) Repossessed or purchased equipment____________ 3
1361. 4 Evasion____________________________________________________ 4
1361. 5 Itemized invoices__________________________________________ 4
1361. 6 Records and reports________________________________________ 5
1361. 7 Enforcement________________________________________________ 5
1361. 8 Petitions for amendment____________________________________ 5
1361. 9 Definitions________________________________________-_________ 5
(1) Person_________________________________________ 5
(2) Retail dealer____________________________________ 5
(3) Farm equipment__________________________________ 5
(4) Complete farm equipment_________________________ 6
(5) Part____________________________________________ 6
(6) Trade-in equipment________________________________ 6
(7; Sale at retail__________________________________ 6
(8) Suggested retail price.—__________________________ 6
1361.10 Effective date_______________________________________________ 6
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INTRODUCTION
To all farm-equipment dealers:
As you know, maximum prices for all products have now been established by the Office of Price Administration within the limits of the Emergency Price Control Act of 1942. For most goods other than farm equipment which you may sell, and for all the services you render, maximum prices have been established at the level in effect in March 1942, by the General Maximum Price Regulation. Copies of the General Regulation will shortly be made available to all retailers. For your sales of farm equipment, however, maximum prices are established by Maximum Price Regulation No. 133, which is printed herein. This Regulation becomes effective May 11, 1942.
In a letter dated January 19, 1942, and mailed to 34,000 dealers, I requested that you sell your implements, tractors, and other farm equipment at prices not to exceed the manufacturers’ suggested list price plus the actual costs of transportation, handling, and sales-tax charges. The Maximum Price Regulation which has now been issued formalizes the provisions of that letter with some modifications. The terms of the Regulation are very largely based upon the information obtained by members of my staff at numerous conferences with dealers throughout the United States held during the months of February, March, and April 1942.
For your own protection, please read this Regulation carefully. Like the General Maximum Price Regulation, its provisions are mandatory. The discontinuance of the voluntary program should not be regarded as a reflection upon the cooperation received from the dealers, which was in general excellent, but simply as part of an over-all campaign against inflation.
Certain of the provisions of the Regulation which may need explanation are explained in the following paragraphs, together with examples:
Freight charges.—Under Section 1361.3 (a) (2) of the Regulation, dealers are required to calculate, the maximum freight allowance for a given item of equipment on the basis of the average freight for the same general type of equipment received during the preceding 3 months. Unlike the request in the January 19 letter that not more than actual freight costs be added to suggested retail prices, this provision permits the dealer to maintain uniform pricing to all purchasers of similar items.
As an example, suppose that all the freight bills of a dealer for equipment received during February, March, and April indicate that he received tractors during this period weighing 100,000 pounds. One of these shipments may have been by carload direct from the factory to dealer, another by carload from factory to branch house, and less-than-carload from branch to dealer’s town, and another by truck. If the total freight paid for these tractors was $650, as shown by shipping bills, an average rate of 650 per 100 pounds would then apply to all tractors sold in May. The rate for combines should be calculated separately, and a third rate calculated for the group of implements falling within the “third class” less-than-carload freight classification. This “third class” group may be further classified into smaller groups if desired.
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However, in no case shall the maximum freight rate used in computing the maximum price on any item exceed the sum of the carload rate from factory to branch house and the third class less-than-carload rate from branch house to dealer’s town.
Handling charges.—To calculate the maximum handling charges allowable under section 1361.3 (a) (4) for a given item of equipment, take 5% of the manufacturer’s suggested retail price f.o.b. factory up to $400 and add 2% of the amount by which this suggested price exceeds $400. Thus for a $300 implement, a handling charge of $15 is allowed, while for a $750 implement, the maximum allowance would be 5% of $400 or $20 plus 2% of $350 or $7, making a total of $27. In this manner, the proportionately higher handling costs for low- and medium-priced implements are provided for. If any of the services described in Section 1361.3 (a) (4) is not performed, this handling charge should be correspondingly reduced.
This formula provides a handling charge which is easier to calculate than the actual handling costs provided for in the January 19 letter. Furthermore, it makes possible uniform pricing for the same items of equipment to the various customers of a dealer.
For the benefit of dealers in sparsely settled areas where delivery costs are high, an additional handling allowance is provided in that 10 cents a mile may be charged for each truck trip going and coming beyond a 30-mile limit. Thus if the customer lives 50 miles from the dealer by the most direct route, an allowance of 10 cents a mile for 20 plus 20, or 40 miles ($4) mcy be made. This charge is to be made, not for each item delivered, but only for each truck trip required for delivery.
It should be noted that if an installation charge for fixed equipment is made, no charge for handling, includirg delivery, is permissible.
Computation of the maximum price for new equipment.—An illustration of the computation of the maximum price for a tractor to be delivered to a farmer 20
miles from the dealer is given below:
Assume the manufacturer’s suggested retail price f.o.b. factory is_$750.00
Assume an average freight rate of 65tf, as computed above, for a weight of 3,300 pounds____________________________________________________ 21.45
Assuming all handling services are performed, handling charges (as computed above) would be___________________________________________ 27. 00
The total of these three items would be_____________________________ 798. 45
Add to this an assumed sales tax of % of 1%_________________________ 3.99
Maximum price to farmer for tractor delivered on farm_____________________ 802.44
Each of the above items must be stated separately on a purchase order, sales invoice, or sales slip to be given to the purchaser and signed by the dealer. This is necessary to protect the purchaser from ignorant violation of the Regulation, inasmuch as he also is required to observe the maximum price.
Trade-ins.—It is an accepted fact in the farm equipment industry that dealers as a whole have not in the past made profits on the resale of traded-in equipment. To permit them to make such profits now because of the high wartime demand would be just as inflationary as to permit abnormally high prices for new equipment. The present Regulation is designed so as not to prevent dealers from “breaking even” on their trade-in business. The 5% mark-up on the trade-in allowance which is permitted will enable the dealer to realize a small profit on the resale of certain items of equipment so as to offset his losses on others.
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Repair parts which are needed and used in reconditioning may be added to the resale price of trade-in equipment at the maximum prices provided in the Regulation, along with the current customary labor service charge.
Licensing.—Under the General Regulation, all retailers of any product, including dealers in farm equipment, are automatically licensed and will be registered in a manner to be made known to you at a later date.
If, after you have carefully studied the provisions of the Regulation, you still have questions, please do not hesitate to write me, referring your queries to 2:10: AAT.
Leon Henderson, Administrator.
MAXIMUM PRICE REGULATION NO. 133 ’—RETAIL PRICES FOR FARM EQUIPMENT
In the judgment of the Price Administrator retail prices of farm equipment have risen and are threatening further to rise to an extent and in a manner inconsistent with the purposes of the Emergency Price Control Act of 1942. The Price Administrator has ascertained and given due consideration to the prices of farm equipment prevailing between October 1 and October 15, 1941, and has made adjustments for such relevant factors as he has determined and deemed to be of general applicability. So far as practicable, the Price Administrator has advised and consulted with representative members of the industry which will be affected by this Regulation.
In the judgment of the Price Administrator the maximum prices established by this Regulation are and will be generally fair and equitable and will effectuate the purposes of said Act. A statement of the considerations involved in the issuance of this Regulation is issued simultaneously herewith and has been filed with the Division of the Federal Register.2
Therefore, under the authority vested in the Price Administrator by the Emergency Price Control Act of 1942, and in accordance with Procedural Regulation No. I,8 issued by the Office of Price Administration, Maximum Price Regulation No. 133 is hereby issued.
Authority : Sections 1361.1 to 1361.10, inclusive, issued under Pub. Law 421, 77th Cong.
Section 1361.1 Prohibition against sales at higher than maximum prices.—(a) On and after May 11,1942, regardless of any contract, agreement, lease or other obligation, no retail dealer shall sell or deliver, and no person shall in the course of business buy or receive from a retail dealer, any farm equipment at prices higher than the maximum prices set forth in section 1361.3; and no person shall offer or attempt to do any of the foregoing.
( &) There may be added to the maximum prices established by this Maximum Price Regulation No. 133 the amount of any stite or local sales, use, or gross receipts tax required or permitted to be
17 F. R. 3185, April 30, 1942. Published as title 32, ch. XI, pt. 1361.
* Statement of considerations available upon request.
»7 F. R. 971.
(1)
458261*—42
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paid by the purchaser: Provided, That the amount of such tax is stated separately on the invoice or sales check given to the purchaser.
Section 1361.2 Less than maximum prices.—Lower prices than those set forth in Section 1361.3 may be charged, demanded, paid or offered.
Section 1361.3 Maximum prices—{a) New complete equipment with suggested retail price.—The maximum price applicable to the sale at retail of any new complete farm equipment for which the manufacturer has issued a suggested retail price shall be the sum of the following:
(1) The suggested retail price f. o. b. factory.
(2) An allowance for transportation calculated on the basis of the average combined freight rate per hundredweight from factory to dealer for complete farm equipment of the same general type4: Provided, That where shipments are customarily made via branch or transfer point, this allowance shall not exceed carload freight from factory to branch or transfer point, plus third-class less-than-carload rate from branch or transfer point to dealer, the branch or transfer point selected being that which will give the lowest combined freight from factory to dealer.
(3) The manufacturer’s handling charge paid by the dealer if not included in the manufacturer’s charge for freight.
(4) An allowance for dealer’s handling not to exceed the sum of the following:
(i) 5% of the manufacturer’s suggested retail price f. o. b. factory up to $400, plus 2% of the amount by which the suggested retail price exceeds $400;
(ii) For each truck trip required for delivery to a purchaser located more than thirty road miles from the dealer, ten cents for each mile going and coming outside the thirty mile zone, on the basis of the most direct route; Provided, That a reduction equivalent to the dealer’s cost of the service shall be made in the maximum allowance for dealer’s handling if any of the following services is not performed: (a) Erection of equipment; (6) Installation of all attachments; (c) Delivery of new equip-
* Where shipments of complete farm equipment of the same general type have been received by rail or by truck from the same factory in the 3-month period immediately preceding the month in which the sale occurs, the “average combined freight rate per hundredweight” shall be the average rate for the preceding 3-month period. When there have been no shipments of equipment of the same general type in the preceding 3-month period, th© “average combined freight rate per hundredweight” shall be the average rate for the current month, up to the date of the sale In question. For the purposes of this paragraph, all farm equipment which is classified, in any one I. c. L freight class may be considered as of the same general type.
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ment and carrying away trade-in equipment; (d) Gasoline and oil placed in equipment.
(5) A charge for special installation of fixed equipment, if such installation is required, not to exceed the charge customarily made for such installation on or before April 1,1942: Provided, That such installation charge shall take the place of, and not be in addition to, the allowance for dealer’s handling (subparagraph (4) of this section).
(6) The amount of any federal excise tax billed separately by the manufacturer and stated by the manufacturer not to be included in the suggested retail price.
(5) New parts with suggested retail prices.—The maximum price applicable to the sale at retail of any new farm equipment part for which the manufacturer has issued a suggested retail price shall be the suggested retail price plus actual freight cost from factory to dealer, and any extra expense in connection with the sale, such as long distance telephone calls, incurred at the request of the purchaser.
(c) New complete equipment and parts without suggested retail prices.—The maximum price applicable to the sale at retail of any new complete farm equipment or part for which the manufacturer has not issued a suggested retail price shall be the net price in effect on April 1, 1942, (including all extra charges, but not including any sales, use or gross receipts tax), or, if there was no such price in effect for the item on April 1, 1942, shall be the net cost of the item to the dealer, plus a percentage mark-up equal to the percentage mark-up on the most nearly comparable equipment or part for which a manufacturer has issued a current suggested retail price.
(d} Trade-in equipment.—The maximum price applicable to the sale by a dealer of any trade-in equipment shall be the sum of the following:
(1) The trade-in allowance or purchase price paid for such equipment.
(2) 5% of such trade-in allowance or purchase price.
(3) The maximum prices herein specified for such parts as are needed and used in reconditioning the equipment.
(4) A charge for the labor needed and used in reconditioning, not to exceed the amount which would customarily be charged by such dealer to a regular customer for the same work if performed as a service.
(e) Repossessed or purchased equipment.—The maximum price applicable to the sale of any farm equipment which has been repossessed or which has been purchased from anyone other than a manufacturer
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or jobber, but which is not trade-in equipment, shall be the sum of the following:
(1) The purchase price paid or, in the case of a repossessed item, the balance due to the dealer or to the finance company.
(2) 25% of such purchase price or balance due.
(3) The maximum prices herein specified for such parts as are needed and used in reconditioning the equipment.
(4) A charge for the labor needed and used in reconditioning, not to exceed the amount which would customarily be charged by such dealer to a regular customer for the same work if performed as a service.
Section 1361.4 Evasion.—The price limitations set forth in this Maximum Price Regulation No. 133, shall not be evaded directly or indirectly by way of any commission; by way of excessive charges for service; by way of any change in discounts or terms or conditions of sale; by reducing the services provided during warranty period in accordance with factory policy; by reducing “free” services customarily provided; by removing any standard auxiliary equipment or in any other way lowering the quality of any equipment sold; by requiring the buyer to purchase any optional equipment, or to pay for any services not desired, or to agree to trade-in used equipment in part payment of the purchased price; by refusing to sell equipment for cash; by making arrangements with other dealers for the exchange of trade-in equipment so as to increase the profits obtainable from the resale of trade-in equipment; by undervaluing goods other than farm equipment received in trade; by selling through an agent or auctioneer at higher than maximum prices; or by any other hidden or indirect price increases.
Section 1361.5 Itemized invoices.—-(a) In connection with every sale of new complete farm equipment for which there is a suggested retail price, every retail dealer shall supply to the purchaser an invoice or sales check containing a separate statement of the following items:
(1) The suggested retail price.
(2) The charge for freight and manufacturer’s handling.
(3) The charge for dealer’s handling, or the charge for special installation, if any.
(4) The charge for delivery beyond the thirty-mile zone, if any.
(5) The amount of excise tax, if any, billed separately to the dealer by the manufacturer.
(6) The amount of sales, use, or gross receipts tax, if any, required or permitted to be paid.
Section 1361.6 Records and reports.—(a) Every retail dealer shall keep for inspection by the Office of Price Administration for a period of not less than two years complete and accurate records of each sale of farm equipment showing the date thereof, the make and model or part number, the total price received, and a copy of the invoice or sales check given to the customer. Whenever trade-in equipment is received in part payment of the purchase price of equipment, the dealer shall keep attached to the record of the original sale a complete record of the ensuing sales of trade-in equipment.
(5) Retail dealers shall submit such reports and shall keep such other records, in addition to or in the place of the records required in paragraph (a) of this section, as the Office of Price Administration may from time to time require in writing.
Section 1361.7 Enforcement.—(a) Persons violating any provisions of this Maximum Price Regulation No. 133 are subject to the criminal penalties, civil enforcement actions, and suits for treble damages, provided for by the Emergency Price Control Act of 1912.
(b) Persons who have evidence of any violation of this Maximum Price Regulation No. 133 or any price schedule, regulation, or order issued by the Office of Price Administration or of any acts or practices which constitute such a violation are urged to communicate with the nearest field or regional office of the Office of Price Administration or its principal office in Washington, D. C.
Section 1361.8 Petitions for amendment.—Persons seeking any modification of this Maximum Price Regulation No. 133 or an adjustment or exception not provided for therein may file petitions for amendment in accordance with the provisions of Procedural Regulation No. 1, issued by the Office of Price Administration.
Section 1361.9 Definitions.—(a) When used in this Maximum Price Regulation No. 133, the terms:
(1) “Person” includes an individual, corporation, partnership, association, or any other organized group of persons, or legal successor or representative of any of the foregoing, and includes the United States or any agency thereof, or any other government, or any of its political subdivisions, or any agency of any of the foregoing.
(2) “Retail dealer” means any person engaged in the business of selling farm equipment to users.
(3) “Farm equipment” means any mechanical equipment, attachment or part used primarily in connection with the production and farm processing for market and farm use of agricultural products, but does not include automobiles, trucks, general purpose tools, building materials, electrical equipment (except fence controllers), sprays or other chemicals, commercial processing machinery, livestock, seeds,
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feeds or any other agricultural products. A partial list of “farm equipment” follows: farm and garden tractors; planting, seeding and fertilizing machinery; plows and listers; harrows, rollers, pulverizers, and stalk cutters; cultivators and weeders; harvesting machinery (combines, binders, pickers, potato diggers, pea and bean harvesters, beet lifters, etc.); haying machinery (mowers, rakes, hayloaders, stackers, balers, etc.); dairy farm equipment (milking machines, farm milk coolers, farm cream separators, etc.); poultry farm equipment (incubators, brooders, feeders, waterers, etc.); bee-keepers’ supplies; agricultural spraying equipment; barn and barnyard equipment; electric fence controllers; farm pumps and water systems; windmills; windmill generating sets; farm grain elevators, grain bins, corn cribs and silos; circular wood-sawing machines intended for farm use; machines for farm processing for market or farm use (farm size cane mills, cider mills, corn shelters, corn huskers and shredders, ensilage cutters, feed cutters, feed grinders and crushers, fruit presses, grain cleaners and graders, grain threshers, hammer mills, hay presses, peanut pickers, potato sorters and graders, syrup evaporators, etc.); buggies and farm, wagons; harness and saddlery; and attachments and parts for all the foregoing.
(4) “Complete farm equipment” includes any item of farm equipment which is a complete unit in itself although it may be used only in conjunction with other farm equipment.
(5) “Part” means any component part of, or attachment for, complete farm equipment.
(6) “Trade-in equipment” means any farm equipment accepted as partial payment for new or used equipment, or purchased from a person to whom the dealer has sold either new or used farm equipment of the same or greater value within a period of six months before or after such purchase.
(7) “Sate at retail'’ means any sate to a user.
(8) “Suggested retail price” means the price stated in the manufacturer’s current list of suggested or recommended retail prices f. o. b. factory, whether or not such list price is in the possession of the dealer; in the case of mail-order houses, the “suggested retail price” is the catalog price f. o. ft. factory.
(6) Unless the context otherwise requires, the definitions set forth in section 302 of the Emergency Price Control Act of 1942 shall apply to other terms used herein.
Section 1361.10 Effective date.—This Maximum Price Regulation No. 133 (Sections 1361.1 to 1361.10, inclusive) shall become effective May 11, 1942. Leon Henderson,
Issued this 28th day of April 1942. Administrator,
U. S. GOVERNMENT PRINTING OFFICKi 1941