[The Sixteenth Report of the Office of Price Administration; Letter from the Administrator, Office of Price Administration, Transmitting the Sixteenth Report of the Office of Price Administration, Covering the Period Ended December 31, 1945] [From the U.S. Government Publishing Office, www.gpo.gov] THE SIXTEENTH REPORT OF THE OFFICE OF PRICE ADMINISTRATION LETTER FROM THE ADMINISTRATOR OFFICE OF PRICE ADMINISTRATION TRANSMITTING THE SIXTEENTH REPORT OF THE OFFICE OF PRICE ADMINISTRATION, COVERING THE PERIOD ENDED DECEMBER 31, 1945 June 14, 1946.—Referred to the Committee on Banking and Currency and ordered to be printed with illustrations. UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON : 1946 LETTER OF TRANSMITTAL Office of Price Administration, Washington, D. C., May 23,1946 Sirs : I have the honor to submit herewith the sixteenth report of the Office of Price Administration, covering the period ended December 31, 1945. Sincerely yours, Paul A. Porter, Administrator. The President Pro Tempore of the Senate. The Speaker of the House of Representatives. TABLE OF CONTENTS Chapter Paga I. The Economic Setting at the Close of 1945___________ 1 Record of Stabilization During the War___________________ 1 Developments After VJ-Day__________________________:_____ 5 Inflationary Pressures and Prospects________________________ 7 Spread of Speculation_______________________________________ 8 II. Price Control: Reconversion Period Pricing_:_________ 11 Individual Price Adjustments_______________________________ 12 Cost Absorption____________________________________________ 14 Wage-Price Policy________________?_______________________ 15 III. Price Control: The Food Programs____________________ 18 Meats and Livestock_______________________________________ 20 Fruits and Vegetables______________________________________ 22 Fish, Poultry, and Dairy Products__________________:_____ 23 Feeds, Grains, and Tobacco________________________________ 24 Other Agricultural Products________________________________ 25 IV. Price Control: Consumer Goods_________________________ 27 Apparel and Textiles_____________________________________ 28 Consumer Durable Goods_____________________________________ 34 V. Price Control: Metals, Machinery, Automobiles________ 36 Iron and Steel______________.____________________________ 37 Industrial Machinery and Equipment_________________________ 39 Automobiles________________________________________________ 41 VI. Price Control: Building, Lumber, Paper________;_____ 43 Building Materials________________________________________ 44 Lumber_____________________________________________________ 47 Paper and Paper Products___________________________________ 50 VII. Price Control: Chemicals, Fuels, Other______________ 53 Rubber and Chemicals___________________________>_________ 54 Petroleum__________________________________________________ 56 Solid Fuels________________________________________________ 57 Export-Import_____________________________________________ 59 Appendix to Price Chapters___________________u___________ 62 Extension or Resumption of Price Control_________________ 62 Dollar-and-Cent Prices_____________________________________ 62 Price Reductions____________.______________________________ 63 Price Increases__________________________________________ 64 Releases from Price Control________________________________ 71 VIII. Transportation and Public Utility Rates_______________ 76 Transportation_____________________________________________ 76 Public Utilities___________________________________________ 80 iii iv • Sixteenth Quarterly Report Page IX. Rent Control Program__________________________________ 84 Amendments and Interpretations_____________________________ 84 Area Office Operations____________________________________ 87 Protests and Review Proceedings____________________________ 87 X. Emergency Court of Appeals_____________ _ .4<_____IT 89 Price Control Cases_______________,_________4 _u__________ 89 Rent Control Cases________________________________________ 96 XI. The Rationing Programs________________________UU____ 100 Sugar Rationing__________________________------------- --- 101 Meats and Fats____________________________________________ 102 Institutional Users_ _______________ _ _________ 104 Shoe Rationing______________,__________?_-_____105 Tire Rationing---------------------------------------- 105 XII. Enforcement_____________________________________:__ 107 Enforcement Activity_____________________________________ 107 Litigation_______________________________________________ 111 Statistical Summary_______________________________________ 113 The Economic Setting at the Close of 1945 • 1 THE ECONOMIC SETTING AT THE CLOSE OF 1945 The ending of hostilities in August 1945 brought to a close the war period of economic controls and ushered in a stage which, like that following the armistice in 1918, might prove to be the most critical of the entire inflationary period. In renewing the Emergency Price Control and Stabilization Acts for another year, the Congress in 1945 gave full consideration to the fact that in World War I period roughly 40 percent of the total inflation took place after the end of hostilities, and that it was the economic distortions caused by the final spurt that made the collapse ‘of 1920-21 unavoidable. It was recognized that the statutory purpose of “preventing a post-emergency collapse of values” could not be achieved unless price control was continued so long as the inflationary pressures remained dangerous. THE RECORD OF STABILIZATION DURING THE WAR The record down to August was impressive. Stabilization—resulting from production controls as well as price, wage, and rationing controls—had proved itself first and foremost in its contribution to production. Production during the war not only broke all records but on both the industrial and the farm front expanded roughly five times as much as during the First World War. The price increases were far less than during the first war, and it is in the balance and stability of the price structure and the predictability of costs that it provided, that we find the specific contribution which price control made to production. The price record discloses a high degree of stabilization of the levels reached in spring 1943, by which time the major inequities mthe price structure of the late thirties—a primary inequity, of course, being the disparity between farm and nonfarm prices—had been eliminated. This marked an especial contrast with the record of the earlier war, in which the price rise not only continued throughout the war itself but persisted for a further year and a half after the Armistice, with distortions and uncertainty, rather than balance and predict-| ability, characteristic of every stage. Measuring in each case from the last month of peace, the official indexes showed consumer prices up only 31 percent by VJ-day, exactly ¡one-half the 62 percent rise that took place by the Armistice. Whole-¡sale prices had increased only 41 percent, as compared with a rise of 102 ¡percent by the Armistice. The entire period of World War I infla- 2 • Sixteenth Quarterly Report IN WORLD WAR I, PRICES NEVER REACHED A BALANCED LEVEL IN WORLD WAR II, PRICES CAME INTO BALANCE THE DIFFERENCE IN INDUSTRIAL PRODUCTION: IN0EX WORLD WAR I— ‘ WORLD WARS- INDEX PRODUCTION EXPANDED PRODUCTION MORE SOURCE: Wholesale Prices and Consumer Prices U. S. Iki re au of Labor Statistics Industrial Production WORLD WAR I: F. C. Mills. ECONOMICTENDENCTES TN TOE UNITED STATES WORLD WAR II: Board of Governors, of the Federal Deserve System The Economic Setting at the Close of 1945 • 3 tion—ending in May-June 1920—was almost exactly as long as the 6-year period of World War II, and when these two periods are compared the contrast of the price records is even sharper. For in 1920 consumer prices reached a peak of 108 percent, and wholesale prices one of 148 percent, above the prewar level, increases three times as great as were permitted during the 6 war years just ended. A more valid comparison of the effectiveness of price control lies, however, in the record since spring 1943 rather than since summer 1939. Statutory price control was not authorized until the end of January 1942, 7 weeks after the United States went to war, and although the national economic stabilization program was announced at the end of the following April, it was not until spring 1943 that agreement on the need for a determined stabilization effort became general. Furthermore, it is questionable whether necessary and desirable adjustments in the price and wage structure had been well enough advanced to have justified the “hold-the-line” policy much earlier than May 1943, when it went into effect. From May 1943 to August 1945, the rise in consumers’ prices was held to slightly over 3 percent and that of wholesale prices to less than 2 percent. Prices received by farmers increased slightly over 5 percent and prices paid by farmers less than 7 percent. As a result, the parity ratio was stable throughout the period and at VJ-day was only 2 points lower than in May 1943. Under this stability of prices and costs, rising production brought a steady expansion of income to business, to workers, and -to farmers. This growth of income during the war years is summarized in the following table. Comparison of Wartime Incomes: Factory Workers, Farm Operators, Corporations, 1939—1945 1939 1940 1941 1942 1943 1944 1945 Average weekly earnings in manufacturing ^(dollars) 23.86 25.20 29.58 36.65 43.14 46.08 44.42 ^lars^C°me ^arm operators1 (millions of dol- Corporation profits (billions of dollars) : Before taxes 4,566 4,767 6,753 10,197 12,571 12,159 12,900 5.5 8.4 15.7 19.8 24.3 24.9 22.0 .After taxes ■ • _ 4.2 5.8 8.5 8.7 9.8 9.9 9.0 Indexes (1939=100) Average weekly earnings in manufacturing-.. 100 wet income of farm operators . . 100 corporation profits’ 106 104 124 148 154 223 181 275 193 268 186 280 Before taxes 100 150 290 360 440 450 400 •wner taxes 100 140 200 210 230 240 210 1 Adjusted for inventory changes. Weekly Earnings: Bureau of Labor Statistics; Net Income of Farm Operators: Bureau of Agri-wrurai Economics; Corporation Profits: Department of Commerce. 4 • Sixteenth Quarterly Report LACKING PRICE CONTROL-DURING FIRST WAR PERIOD FARMERS FOUND THE PRICES THEY PAID ATE AWAY THE PDICEC THEY DECEIVcn AND NET OPERATING INCOME SHOWED IT- UNDER PRICE CONTROL-DURING WORLD WAR H FARMERS WERE BROUGHT BACK INTO PRICE BALANCE AND KEPT THERE AND NET OPERATING INCOME HAS BEEN SUSTAINED AT RECORD-BREAKING LEVELS- NOTE: Net Operating Income shown after adjustment for inventory changes* SOURCE: U. S Department of Agriculture* The Economic Setting at the Close of 1945 • 5 DEVELOPMENTS AFTER VJ-DAY Following the armistice in 1918 there had been a lull on the price front and some prices had even declined. It was during these weeks that the wartime controls were discarded, on the supposition that there was no longer any need for them. The sharp upturn of prices that began in the spring of 1919 took the country by surprise, and by the time restoration of wartime controls was attempted the situation had already become serious and the staff employed in administering the wartime controls had been dispersed. It was determined that this time no such error would be made on the price front. Although it was expected that the deflationary effect of the sudden cutback in war production would begin to be felt as early as the final quarter of 1945, the decontrol of prices and rental areas was planned on the basis of specific findings in specific situations. The agency’s budget for the balance of the fiscal year was reduced in terms of an expected shrinkage of all programs, but neither price ceilings nor rent ceilings were actually removed in advance of market developments warranting decontrol. Only in the case of the subsidy program—responsibility for which was not entirely in the hands of the Office of Price Administration—was a schedule of removal set up and put into operation on the basis of anticipated lessening of pressures. The same rule was followed in respect to rationing, in which field very rapid decontrol was found to be possible. The termination of gasoline and fuel oil rationing immediately after the Japanese surrender was followed by the successive removal of other commodities from rationing until at the end of the year only sugar remained under control. The military and other official demand for all other rationed items had become sufficiently reduced to warrant their removal from the list. During the fourth quarter of 1945, the price situation, however, developed contrary to expectations. The process of physical reconversion of plants proceeded more speedily than had been anticipated, while the decline in Federal expenditures was significantly less than estimated. The elimination of the excess profits tax, effective January 1,1946, put a premium on operations of all kinds, the cost of which could be charged against highly taxed 1945 income rather than lower-taxed 1946 income. These operations entailed a rather heavy volume of reconversion expenditures which otherwise would have been spread over later months. In consequence, although in the industrial sector hardest hit by reconversion—transportation equipment—employment and earnings were drastically cut and factory workers generally suffered sharp reductions, for the economy as a whole both incomes and employment were sustained close to wartime record levels. 6 • Sixteenth Quarterly Report INCOMES IN 1945 COMPARED WITH WARTIME LEVELS CORPORATION PROFITS DECLINED SLIGHTLY FROM WARTIME PEAK WHILE DIVIDENDS CONTINUED AT WARTIME LEVELS NET INCOME OF FARM OPERATORS WAS SUSTAINED AT ALL-TIME RECORD LEVELS FACTORY PAYROLLS AND FACTORY WORKERS' AVERAGE WEEKLY EARNINGS DECUNED SHARPLY SOURCE: U. S. Departments of Commerce, Agriculture, and Labor, The Economic Setting at the Close of 1945 • 7 In addition, many wage increases were negotiated following the President’s move on August 18 to restore wage determination to collective bargaining within the framework of stable prices and following his radio address explaining both the possibility of and the need for substantial wage increases to offset as far as possible the cut of take-home pay in the war industries. Where these increases occurred they of course had the intended purpose of cushioning the decline of wage income. These developments were reinforced by the flow of spending that resulted from the mustering-out payments received by discharged servicemen. Furthermore, the maintenance of employment and payrolls itself helped make people optimistic of the future and willing to spend a higher than normal proportion of their incomes as the first peacetime Christmas in 5 years approached and as long-absent sons and husbands were welcomed home. Retail sales in the fourth quarter were at an all-time high, 12 percent above the final quarter of 1944. These developments in turn encouraged businessmen to undertake expansion that otherwise would have been held back for a longer appraisal of business prospects. The interaction of all these developments sustained economise activity and incomes well above the levels that it had been feared would follow VJ-day. Industrial production turned upward in November, only 3 months after the end of hostilities, and incomes were well sustained, despite the opposite tendency in manufacturing, especially in the reconversion industries. In particular, the maintenance of non-agricultural incomes within 5 percent of the summer level meant sustained farm markets and income. The full effects of reconversion on business earnings could not be so quickly determined. Corporation profits before taxes for the full year were estimated at only about 12 percent below 1944, with considerable cushioning of after-tax earnings provided by the rapid amortization and carryback features of the tax laws. Business failures, furthermore, declined throughout the year, totaling 810, the third successive all-time annual low. This was the more noteworthy in that, beginning, in January 1944, the number of new businesses—normally subject to high mortality—had steadily increased. INFLATIONARY PRESSURES AND PROSPECTS The early end to the decline of production and the sustained levels of employment and income meant that, instead of immediately facing a problem of general deflation, the country found itself moving so rapidly into a peacetime economic pattern that the inflationary dangers were actually higher than at any previous time. Fortunately, because the lesson of 1918-19 had been, borne in mind, the Office was prepared. Only with respect to subsidies was it necessary to reverse 8 • Sixteenth Quarterly Report earlier program actions. This reversal was directly due to the fact that consumer prices generally, as well as wholesale and farm prices, were as high or higher at the end of the year than in August with prospects for continuation at December levels. The seasonal dip in food prices following VJ-day disappeared completely by the end of of the year, and with the restoration of food prices the opportunity disappeared to withdraw subsidies without pushing cost-of-living prices paid by consumers above the VJ-day level. By December, consumer prices were 0.5 percent above the August level, wholesale prices were up 1.3 percent, and prices paid by farmers had risen 1.8 percent, matching an equal rise in prices received by farmers. Minor increases all, but plain indication that up and down the line prices were still under the same sort of pressure that had called for firm control throughout the war and would require its continuance until supplies could be brought back into balance with demand. SPREAD OF SPECULATION Despite the developments of the quarter, it proved possible safely to decontrol the prices of many less important items. The behavior of some of these decontrolled prices dramatically illustrated the prevailing pressures. Some declined following decontrol, as supplies increased. Moreover, most were of such minor consequence that moderate price rises could do no damage, once essential production no longer required protection against the diversion of manpower and materials to nonessential lines. But in a handful of cases decontrol was followed by doubling and trebling of prices. In the case of mink coats and juke boxes, no reversal of policy was called for, but the sharp rise of citrus prices led the Office, shortly after the end of the year, to restore control. These few examples of sharp price increases where control had been lifted were less important, however, than developments in the major areas outside price control—securities and real estate. In both markets, prices were being steadily bid up, and behavior reminiscent of 1929 in Wall Street and 1925 in Florida was becoming widespread. A speculative fever was noted, not only in these markets but in commodity markets as well, where commodities under control huggeo ceilings, and cotton and rye, not yet under price control, were substantially above their VJ-day prices. While the optimistic view taken by the general public aided measurably in cushioning the effects of the cutback of war production by maintaining consumer expenditures, the growing speculation that became evident went far beyond this healthful degree; indeed, by the end of the year it constituted one of the most serious threats yet em The Economic Setting at the Close of 1945 • 9 countered on the stabilization front. For, this bidding-up of values meant that people were betting on inflation. The more widely the view is held that inflation is in the cards, the more difficult is the actual control of prices. The fear of higher prices induces businessmen to overbuy for inventories and thus to increase the pressure resulting from the inadequacy of supplies to meet demand. When this is done by manufacturers, production itself is directly hampered because essential materials and parts are being hoarded for future production by the buyers who “got there first.” Hoarding does not stop here, however. Rising prices put a premium upon the withholding of goods at all stages of production and distribution. Manufacturers and jobbers, wholesalers and retailers—the prospect of rising prices offers them all an incentive to build up their inventories and withhold goods for better prices still. This is a Vicious process that feeds upon itself, stimulating more and more speculation and increasing the difficulties of getting production into full swing. “Inventory booms” are recognized as dangerous phenomena at any time. They are economic dynamite when production is as far below demand as in the winter of 1945-46. The prevalence of speculation and the revival of attacks on price control were factors which at the close of the year constituted a serious handicap to rapid expansion of production. The consequences were felt not only in the markets where speculation was registered on the trading boards but in wage negotiations as well. There can be little doubt that much of the loss of production due to shutdowns during the winter 1945-46 can be traced to decisions of management based on the belief that price control could at least be substantially modified if pressure against existing stabilization policy were maintained. Apart from these factors, the prospects at the close of the year were for a rapid expansion of production which would probably eliminate inflationary pressure in many commodity fields during the course of 1946. In fields such as housing, building materials, and major consumer durables, shortages would continue for a longer time. As already noted, reconversion had proceeded ahead of schedule and was reported by both the Office of War Mobilization and Reconversion and the private Committee for Economic Development to be 90 percent complete in many areas by the end of the year. Some difficulties remained to be overcome, however. In the industries such as steel and brass, where reconversion was a matter not of resuming discontinued civilian production but of shifting to a different “product mix,” the disappearance of special war business introduced a problem outside the scope of the reconversion formulas. The volume of requests for price readjustments was increased sharply just at the time that many experienced staff members found it neces 10 • Sixteenth Quarterly Report sary to return to private business, so that the Office was handicapped at a critical period in processing applications. In addition to these difficulties, there was serious danger that skillful propaganda based on examples of these special problems might undermine confidence in price control, in the Congress if not among the general public, and lead either to crippling amendments of the stabilization statutes or to such delay in their extension as further to encourage disruptive speculation. It was because of these circumstances that the President included in his message on the state of the Union a call for prompt action to renew the stabilization statutes early in the new session of Congress. Price Control: Reconversion Period Pricing • 11 • Il • PRICE CONTROL: RECONVERSION PERIOD PRICING The huge task of reviewing ceiling prices for all major reconversion industries was largely completed during the final quarter of 1945. Not only were most of the industry-wide questionnaire surveys tabulated and summarized, but the results of those completed were crystallized into orders, amendments, and revised or new regulations, in order to give effect to the price adjustments for which these industries were found eligible.1 The reconversion formula, as applied to any product which had been largely or entirely off the market because of wartime needs, adjusts total costs for the product during the last period of normal production, usually 1941, for the following factors: (1) Legal increases since that date in the basic wage rate schedules of factory employees in that industry; and (2) the legal increases since then in prices of materials and components entering into the factory costs of the industry. To the 1941 costs so adjusted is added a profit margin equivalent to the industry’s 1936-39 percentage margin before income taxes. The increase factor thus obtained is applied to the 1941 price. The resulting figure becomes the new ceiling price unless it is less than the existing ceiling. In addition, there is an individual adjustment program designed to give each firm a prospect of profitable operations when it gets into volume production. At the close of the year, no reconversion industry had as yet achieved normal production volume, and thus no opportunity had yet been presented for making conclusive price determinations for reconversion products based on actual operating data. The industries to which the reconversion pricing technique was applied all were assured that the resultant adjustments were of an interim nature and that they would be reviewed as soon as reliable Cost data based on actual production experience at normal volume were available. Reconversion adjustments were voluntarily accepted on this basis. At the close of the year, the prospects appeared good that a few industries might be able to furnish profit and loss information nieetmg these standards sometime during the following quarter. C°nsumer Goods, pp. 34—35, and Metals, Machinery, and Automobiles, pp. 39—40, 12 • Sixteenth Quarterly Report INDIVIDUAL PRICE ADJUSTMENTS Alt hough, the principal phase of the reconversion program consistec of industry-wide reviews, considerable activity continued in the fielc of individual adjustments as well. A sizable volume of applications was processed during the quarter under both Supplementary Order 118 (Small Volume Reconverting Manufacturers) and Supplementary Order 119 (Individual Adjustments for Reconverting Manufacturers) ,2 but the number received was somewhat less than had been anticipated, and the trend was decidedly downward at the end of the quarter. Aside from minor amendments from time to time for the purpose of modifying the lists of products eligible for adjustment under these orders, or to provide additional profit factors, two amendments of major significance to the individual adjustment program for reconversion manufacturers were issued during the quarter. One of the adjustment procedures provided under SO 119 had permitted adjustments on a reconversion product to be based on the October 1941 unit cost of the best-selling article in that product line. The allowable adjustment was equal to the percentage by which such costs, adjusted for legal increases in basic wage rate schedules am materials prices since that time, plus a profit factor equal to one-hal: the industry’s 1936-39 ratio of profit to cost, exceeded the existing ceiling price on the article. That same percentage was in turn applicable to all the other articles in the entire product line. Operating experience under the order soon brought to light two serious difficulties with this procedure, which made necessary its immediate revocation. First of all, it was found that only a few relatively large firms had unit costs of sufficient reliability to meet the standards which the order had set forth. Secondly, even where such costs were available, they frequently gave rise to highly distorted and inequitable adjustments since, because the calculations were based on the unit cost of only one article (the best-selling article) in the product line, the resulting increase factor was subject to all the variations of the costprice relationship of that particular article. More frequently than not, the cost-price relationship of the best selling article was found to be unrepresentative of the manufacturer’s average cost-price relationship over the entire product line. Where the best seller happened to be a promotional item such as a “loss leader,” an inordinately high adjustment was the result; while a highly profitable best seller yielded an adjustment lower than the increase to which the manufacturer was properly entitled. An amendment to the order provided that adjustments must be calculated on the basis of the applicant’s profit and loss statement * gee Fourteenth Quarterly Report, pp. 3-4, Price Control: Reconversion Period Pricing • 13 covering only the reconversion product, where such a segregation of accounts is available, or for the smallest organizational unit for which adequate cost data are available.3 Since the profit and loss statement represents an average relationship of the various cost and income components of the business, it does not give rise to the erratic results yielded by the former procedure, and hence was believed to provide a more equitable and accurate basis for calculating ceiling price adjustments. The second significant modification in SO 119 was the removal of all machinery products from its jurisdiction and their transfer to a new adjustment regulation covering all industrial machinery and equipment, thereby insuring a uniform basis for treatment of individual adjustments for that group of products.4 Both reconverting and nonreconverting manufacturers were brought under the measure to assure equitable treatment for those manufacturers whose more profitable items had become only a small percentage of total sales with the ending of war contracts. A serious discrepancy had developed between price adjustments for manufacturers whose production of base-date items had either fallen sharply or ceased altogether during the war and adjustments for manufacturers who had managed to keep certain peacetime lines in production. In order to bridge the gap, the new order eliminated the over-all profit criterion formerly applying to nonreconverting producers. It provided rises up to allowable manufacturing costs on individual items, and up to allowable total costs on lines of products or accounting divisions. In cases involving a firm’s entire business, however, allowable total costs were permitted plus the same ratio of profit to current net worth as in 1936-39, which in general would be equivalent to one-half the industry’s base-period profit rate. In the absence of any industry-wide base-period data, it was provided that the company could apply its own base-period profit rate to total allowable costs. In computing costs, the order provided for two distinct methods of treatment, depending upon whether or not normal operating experience existed. Where there was recent normal operating experience, increases were to be figured on the basis of current costs. Where there was no recent normal operating experience, as for most reconverting manufacturers, the order provided for the regular reconversion projection method of calculating current costs by projecting 1941 total costs with permissible increments for advances in basic wage rate schedules and material costs since 1941. To avoid inclusion of abnormal costs, the ratio of factory overhead to direct labor and materials expenses, and of general selling expenses to net sales, could not exceed the 1941 ratios. ’ Amendment 7, SO 119 ; effective October 11, 1945. 4 Amendment 12, SO 119 ; SO 142 ; both effective December 11, 1945. 688954—46--------2 14 • Sixteenth Quarterly Report COST ABSORPTION The large volume of reconversion pricing completed at the manufacturing level during the quarter necessitated fixing wholesale and retail margins on these products, and in most cases, preticketed retail prices. In each instance, the Office followed previously enunciated policy.5 Where the commodity was sold principally by specialty outlets which had not been handling it during the war in any large volume, the retail prices were raised only when the manufacturers’ increase was so large as to eliminate the prewar difference that existed between the distributors’ initial margins and their realized margins. The Office had made field studies of the initial and realized margins in the sale of electrical appliances and of automobiles and had found that the initial margins of both wholesalers and retails in 1939 and 1941 were substantially larger than the margins they had actually realized. The differences were explained largely by mark-downs and losses on trade-ins. In carrying out this policy, it was not necessary in any case to raise the retail price for a commodity as a whole. With the exceptions noted below, moreover, the increases in the manufacturers’ prices were not sufficiently large to wipe out the 1941 difference between initial and realized margins. Actually, therefore, the margins allowed to wholesalers and retailers exceeded the margins they had actually realized in 1941. For radios, the margins allowed retailers exceeded the average realized margins of 1941. For a number of electrical appliances sold by mail order houses, however, the difference between initial and realized margins was so small in 1939 and 1941 that it was necessary to permit their retail prices to increase. This situation arose from the fact that mail order houses have never made a practice of taking trade-ins. The Office announced during the quarter that it would no longer require as a general policy the absorption by the distributive trades of price increases granted to individual manufacturers.. Formerly, the question of passing on such adjustments depended on the merits of the particular case, imposing an administrative burden both on OPA and on business, greatly out of proportion to the benefits gained-Some flexibility was reserved in the treatment at wholesale and retail of individual adjustments on certain key “big ticket” items. It was expected that where individual adjustments in a commodity area were so numerous that they might affect consumer prices, steps would be taken to reduce distributive margins in that general commodity area. 5 See Fifteenth Quarterly Report, pp. 9-10. Price Control: Reconversion Period Pricing • 15 WAGE-PRICE POLICY Two Presidential executive orders, following VJ-day, supplemented by regulations issued by the Office of Stabilization Administrator and the National War Labor Board, presented the Office with a new set of relationships within which wage-price problems were to be administered during the transition period.6 Prior to the issuance of Executive Order 9599 in August, all wage and salary increases, with minor exceptions, had to be specifically approved by the War Labor Board or other appropriate wage stabilization agency in order to be legal. Furthermore, under the earlier Executive Order 9250, any wage or salary increase which in the judgment of the Price Administrator would necessitate an increase in ceiling prices, required the additional approval of the Office of Economic Stabilization (later designated as the Office of Stabilization Administrator). This procedure required that all wage and salary increase cases in which the applicant intended to seek ceiling price increases had to be presented to the Office of Price Administration simultaneously with its presentation to the wage agency. To implement this three-agency participation in wage and salary matters, the Office was required to establish relatively elaborate procedures for processing such matters. With the issuance of Executive Order 9599, all increases in wages or salaries, with few exceptions, could be legally made without any Government approval. Under the executive orders and the supplementary regulations of the Office of Stabilization Administrator and the National War Labor Board, approval of a wage or salary increase became significant only with respect to a possible effect on prices. If an increase was to be considered by the Price Administrator in determining price and rent ceilings, it had to be approved first. The necessity for presenting requests for approval of wage or salary increases to the Office of Stabilization Administrator was eliminated. To simplify procedure, blanket approval for a wage or salary increase was granted under specified conditions; in other cases application for approval had to be made to the National War Labor Board or other appropriate wage or salary stabilization agency. Approved increases were to be taken into consideration by the Price Administrator in making price or rent ceiling determinations. The simultaneous filing with both the wage and the price agency was therefore no longer necessary, and limitations upon the time of such filing were removed. Under the regulations of the Office of Stabilization Administrator, ’Executive Orders 9599 and 9651; effective August 18, and October 30, 1945, respectively; OSA directive of December 5, 1945. and WLB regulations of January 3, 1946. 16 • Sixteenth Quarterly Report an employer requiring approval had first to go to the appropriate wage agency, and upon approval to proceed with his price application before the Office of Price Administration. The Price Administrator was directed to treat as approved and hence as appropriate costs in determining price and rent ceilings, the following types of wage and salary increase: (1) Increases legally made by the employer or specifically approved by the appropriate wage agency prior to August 18,1945. (2) Increases made under the terms and conditions of a wage or salary schedule or plan in legal effect prior to August 18. (3) Increases made at any time under the National War Labor Board General Orders Nos. 6, 38, and 30 (the last being the order dealing with substandard wage increases up to 55 cents an hour) . The following types of wage or salary increases occurring after August 18 could be specifically approved by the National War Labor Board or other appropriate wage agency, and upon approval treated as legitimate costs by the Price Administrator in determining price and rent ceilings: (1) Increases appropriate under the standards in effect and applied by the NWLB or other appropriate wage agency prior to August 18 (except the standard applying to “rare and unusual” cases, which was replaced by standard 4 below). (2) Increases necessary to make the percentage increase in average straight-time hourly earnings in the appropriate unit since January 1, 1941, equal to the percentage increase in the cost of living between January 1941 and September 1945. This percentage was established at 31 percent by the Bureau of Labor Statistics consumer price index. Because of the admitted inadequacies of the index, however, the Stabilization Administrator set the increase at 33 percent in the December 5 regulations. (3) Increases necessary, due consideration being given to normal competitive relationships, to correct inequities in wage rates or salaries among plants in the same industry or locality interfering with effective transition to a peacetime economy. (4) Increases necessary to insure full production in an industry designated by the Stabilization Administrator to be essential to reconversion and to be an industry in which existing wage or salary rates are inadequate for recruitment of manpower. Wage or salary increases unapprovable under the foregoing standards, while legal if made by the employer, had to be disregarded by the Administrator and by the seller in determining price or rent ceilings. The only exception to this rule under the executive orders and the Office of Stabilization Administrator regulations was the requirement that the Price Administrator shall, after the expiration of a Price Control: Reconversion Period Pricing • 17 reasonable test period, take such increases into account, even though unapprovable, in determining whether an increase in price or rent ceilings is then required under the established standards governing increases in such ceilings. The test period, save for exceptional cases, was set at 6 months after the wage or salary increase was first reflected in current pay rolls after having been announced as effective. In collaboration with the Office of Stabilization Administrator and the wage agencies, the Office during the period of the report developed and put into operation new procedures for expediting the processing of wage-price matters. 18 • Sixteenth Quarterly Report • III • PRICE CONTROL: THE FOOD PROGRAMS The expected softening of food prices following VJ-day did not materialize, and the continued inflationary pressures necessitated maintenance of price control over most products, despite the broadened decontrol authority delegated to the Office in July by the Office of Economic Stabilization. A large number of minor items, however, were either suspended or exempted from control under the criteria set up by the Office of Economic Stabilization for commodities of little significance in the cost of living, for which continuance of controls would have entailed administrative difficulties out of proportion to their contribution to stabilization.1 Moreover, these commodities also met the condition that their removal from price control provided no threat of diversion of labor, materials, or facilities from other commodities and did not weaken the effectiveness of other price controls. Scheduled termination of wartime subsidies to food processors, announced November 9, 1945, by the Stabilization Administrator of the Office of War Mobilization and Reconversion, presented the Office with the problem of allowing compensating retail price increases on these products. Subsidies were first instituted for food commodities in June 1943, as an anti-inflation measure. Food prices had risen so sharply by the spring of that year that the stabilization of wage rates was threatened. In order to secure the necessary reduction of prices paid by consumers and at the same time assure a fair price to producers and distributors so that production would be maintained and expanded, the subsidy technique was utilized. Its effectiveness had been manifested in that it had already prevented unnecessary price increases in war goods purchased by the Government. The introduction of cost-of-living subsidies was accompanied by a roll-back in prices of fresh vegetables, meat, and butter. Subsidization was accomplished either through purchase-and-sab programs operated by the Commodity Credit Corporation, or through direct payments made by the Commodity Credit Corporation and by the Reconstruction Finance Corporation and its subsidiaries. Among the essential foods covered by the subsidy program were most meatS) 1 Sèe Fifteenth Quarterly Report, pp. 2-3. Price Control: The Food Programs • 19 canning vegetables, flour and bread, milk and dairy products, and sugar. The basis for abandonment of subsidy payments to processors was the policy delineated in the President’s Executive Order 9599 issued in August, providing for removal as rapidly as possible, without endangering the stability of the economy, of price, wage, production, and other controls, and restoration of collective bargaining and the free market. The Stabilization Administrator’s statement indicated that elimination of subsidies and simultaneous offsetting increases in retail ceiling prices on specific items would require careful synchronization with lowered prices on nonsubsidized cost-of-living items, so that over-all cost of living levels would not be adversely affected. Pressure on food prices did not ease off as rapidly as was expected, however, and before the close of the quarter it became clear that the schedule of subsidy removal would have to be re-examined if living costs were to be held down. Subsidy payments to processors of creamery butter and peanut butter, however, had been discontinued October 30. The Office accordingly raised butter prices by 5 to 6 cents a pound and peanut butter prices 4 cents a pound.2 A subsidy on canned grapefruit juice expired automatically in November with the selling of the 1944-45 crop. The Office either exempted or suspended from price control during the quarter a fairly large list of minor items, including various imported food commodities, specialty items, certain canned shellfish, certain fresh and processed vegetables, some processed fruits, various tobacco and liquor products, and some fertilizer products.3 Domestic wines were suspended until April 1,1946, following evidence of extensive under-ceiling price sales at the retail level, a 25-percent reduction • in the prices of major processors, and an anticipated surplus current : production due to an excellent grape crop and the diversion of raisin and table grapes to wine production.4 Possible decontrol of other alcoholic beverages was studied, but the supplies were found still too liar below continued strong demand to justify release. Certain actions were taken on major commodities also, such as continuation of the suspension of controls on white table stock potatoes, the suspension of controls on fresh citrus fruits to January 14, 1946, and the indefinite suspension of controls on certain processed citrus fruits.5 Suspension of controls seemed to have little effect on potato prices except to allow a minor proportion of high quality potatoes, such as bakers, to sell occasionally above the previous ceilings. By the close of the quarter, the effect of decontrol of fresh citrus fruits on ’Amendment 39, EMPR 289 ; Amendment 10, MPR 335 ; both effective November 1, 1945. * Amendments 2—12, SO 132 ; effective October 1—December 24, 1945. 5 Amendment 34, MPR 445; effective November 10, 1945. I Amendment 9, SO 132; effective November 19, 1945. 20 • Sixteenth Quarterly Report prices of the processed product was not clear, but it was apparent that prices for fresh fruit, especially oranges and lemons, had risen substantially above old ceilings. The Stabilization Administrator warned in December that if voluntary restraint on the part of the industry did not result in lower prices, controls would be promptly reimposed on fresh citrus fruits. Resumption of control on cigar types of leaf tobacco, suspended in November, was also being considered at the close of the quarter. During the quarter, the Office also recommended to the Stabilization Administrator a new schedule for Reconstruction Finance Corporation payments to slaughterers, completed its 1945-46 price program for fruits and vegetables, and adjusted ceiling prices for a number of food products to meet necessities of the peacetime transition period. MEATS AND LIVESTOCK The Office sent recommendations during the quarter to the Office of Stabilization Administrator concerning a program for payments to slaughterers, which would comply with the Barkley-Bates amendment to the Price Control Act. This amendment required that in fixing prices for meat products, cattle and calves, lambs and sheep, and hogs must be considered separately, and that ceiling prices must reflect a profit on each species to the packing industry as a whole. The recommendations made by the Office were incorporated in Directive No. 90 issued by the Stabilization Administrator December 4. The Reconstruction Finance Corporation was directed to make additional payments to slaughterers for livestock slaughtered in the period July 1, through October 31, 1945, amounting to 8 cents per hundredweight for cattle and calves and 20 cents for sheep and lambs. In addition, the Reconstruction Finance Corporation was directed to pay subsidies to slaughterers for livestock slaughtered during the period April 1, to October 31,1945, subject to certain conditions, in the amount of 7 cents per hundredweight for cattle and calves, 10 cents for sheep and lambs, and 15 cents for hogs. These payments were to be granted in full to slaughterers who had received during the fiscal year less than $25,000 in subsidy payments, other than the nonprocessing slaughterers’ subsidy. For slaughterers who received over $25,000 the payment was made only to the extent needed to bring the slaughterer’s profit for the fiscal year, before income taxes, up to 1 percent of net sales. Certain pricing actions during the quarter were designed to check diversion of hogs from terminal markets and to retard the increase in direct buying of hogs. A number of definitions were clarified in order to tighten control and reduce evasion. Price increases of 5 and 10 cents per hundredweight were made at a considerable number of terminal markets to offset increases in costs of delivering hogs to these Price Control: The Food Programs • 21 points.6 The increases in terminal prices, though small, were helpful in attracting a larger share of hog offerings to these markets. Nonetheless, at the close of the quarter direct marketings were still following an upward trend. Sales of show animals, both hogs and cattle, were exempted from price control subject to definite qualifications such as type of show and reporting provisions.7 The amendments extended to other persons the exemption already provided for members of 4-H Clubs and other farm youth organizations. Several amendments to the pork and fats regulations were issued in order to preserve existing price and distribution relationships between the west coast area and the rest of the country, which were threatened by lowering of freight rates in November on shipments moving westward from the central zone.8 These actions established quotas in terms of a base period percentage, limiting the movement of dressed hogs, wholesale pork cuts, and lard into the Pacific Coast States. At the same time, packers were permitted to base ceilings on the earlier, higher freight rate. In order to facilitate certain sales of beef and veal products to Government agencies, an increase was granted in the markup for sales of War Shipping Administration fabricated beef cuts and veal carcasses, provided they were taken from the War Shipping Administration stockpile during the period when sellers are restricted to such sales. At the same time an increase was allowed in the volume of fabricated cuts which may be sold during quarterly periods to purveyors of meals by a hotel supply house, slaughterer, or packer’s branch house. Also, a 50-cent-per-hundredweight advance in maximum prices was permitted on “boneless beef for Army canned meat” and on boneless processing beef on sales by persons other than slaughterers. A differential of 30 cents per hundredweight was provided for sales to the Department’of Agriculture for wrapping or packaging beef and veal carcasses according to the specifications of that agency. A freezing allowance was also provided, amounting to either 35 cents or 50 cents per hundredweight depending upon whether the meats are frozen in the seller’s own freezer or in a commercial freezer. An additional allowance was provided for shrinkage. Another action increased by 35 cents per hundredweight the maximum prices for sales of cutter and canner (other than bull) and utility grades of “boneless beef for Army canned meats” and for utility grade frozen boneless beef.9 MPR 469 : Amendment 15, effective October 9, 1945 ; Amendment 16, effective October 12,1945 ; Amendment 17, effective November 8, 1945. ’Amendment 18, MPR 469 and Amendment 3, MPR 574 ; both effective December 3, 1945. ’Amendments 29 and 31, RMPR 148; effective November 10 and December 4, 1945; mendments 52 and 53, MPR 53 ; effective November 10 and December 1, 1945. 9RMPR 169 : Amendment 59, effective October 10, 1945; Amendment 60, effective Octo-er 24, 1945 ; Amendment 62, effective November 3, 1945 ; Amendment 63, effective Novem-er 13, 1945 ; Amendment 64, effective November 30, 1945. 22 • Sixteenth Quarterly Report A further action involving beef permitted the sale of prefabricated quick frozen and packaged retail beef cuts by persons other than hotel supply houses.10 These prices were determined by a formula based on retail prices in small retail stores for similar cuts. FRUITS AND VEGETABLES A general program for the 1945-46 season was submitted to the Stabilization Administrator and received his approval. The program included continuation of controls on berries and on major fruits such as apples, pears, peaches, and grapes. A regulation in preparation as the quarter ended was to bring imported grapes under ceiling.11 The possibility of decontrol of so-called minor fruit items, such as apricots, plums, and Italian prunes, was being considered at the close of the quarter. All fresh citrus fruits were suspended from price control from November 19 to January 14,1946, with the proviso that specific action could be taken either to extend the date or reinstitute controls sooner.12 Since many citrus fruits were selling above ceiling levels in November and December, it appeared evident that citrus fruits would be brought back under control at least by January 14. The Office planned to continue ceilings on vegetables under price control, at least until the heavy summer movement. An action was issued for the 1946 crop of onions continuing the ceilings in effect for the 1944 and 1945 crops.13 Cucumbers were exempted14 from price control, and it was planned also to exempt peppers and eggplant. The suspension of controls on potatoes was extended until March 6, 1946, on evidence that selling prices continued below previous ceiling levels.15 In compliance with section 3 (g) of the Emergency Price Control Act, disaster adjustments were made on seven products,16 three on fruits and four on vegetables. Actions included price rises on apples, table grapes and juice grapes, and on snap beans, spinach, and green peas. New amendments covered the 1945 and later packs of canned fruits,17 preserves, and dried apples.18 Processor advances over pre 10 Amendment 61, RMPR 169 ; effective November 7,1945. 11 Amendment 159, MPR 426 ; effective January 19, 1946. 12 Amendment 9, SO 132 ; effective November 19, 1945. 13 Amendment 45, RMPR 271; effective December 24, 1945. 14 Amendment 2, SO 132 ; effective October 1, 1945. 15 Amendment 10, SO 132 ; effective December 5, 1945. 18 MPR 426; Amendment 145, effective October 1, 1945; Amendment 149, effective October 17, 1945; Amendment 150, effective October 20, 1945; Amendment 151, effective October 25, 1945; Amendment 153, effective November 8, 1945; Amendment 154, effective November 10, 1945; Amendment 157, effective December 15, 1945. 17 Amendment 6, Supplement 13, FPR 1; effective December 3, 1945. M Supplements 15 and 16, FPR 1; both effective November 28, 1945. Price Control: The Food Programs • 23 vious ceilings reflected primarily 1945 raw material costs and approved wage rate increases. For preserves, new prices also reflected a margin adjustment. New dollar-and-cent ceilings were provided on a graded basis for dried apples. A supplement covering the 1945 pack of frozen fruits, berries, and vegetables was awaiting approval by the Department of Agriculture as the year ended. FISH, POULTRY, AND DAIRY PRODUCTS All the major regulations covering fresh and frozen fish were collated during the quarter in order to make them more understandable to the trade.19 In order to allow winter freezing of certain seasonally-priced species of fresh fish, ceilings were raised for certain fillets and steaks frozen during the winter months.20 New reporting provisions assured that summer-frozen fish would be sold at the proper summer price. Cooked and peeled shrimp, delivered within 75 miles of the southern coast (North Carolina to Texas), was placed under flat dollar-and-cent ceilings at the processor level.21 The looseness of previous freeze provisions had led to diversion from normal processing channels. The new uniform prices were expected to aid enforcement and to remove certain inequities often inherent in the freeze type of control. In order to encourage the industry to resume normal production of eviscerated poultry, the prices for broilers and fowl were increased slightly.22 This action was necessary to correct improper price relationships between the maximum prices for eviscerated poultry and other processed poultry items. During the heavy marketing season action was taken to establish specific dollar-and-cent ceilings for cut-up turkeys, in order to utilize every possible method of marketing the enormous surplus of overweight turkeys during the holiday season. In addition, the quantity limitation on consumer sales of chickens and turkeys by producers and distributors was eliminated in order to permit these sellers to dispose of surplus poultry.23 The Office secured authority from the Office of Stabilization Administrator during the quarter to grant price adjustments on fluid Hulk in communities of less than 2,500 people if a local shortage developed, irrespective of the reason for this shortage.24 “Amendment 34, MPR 364 ; effective October 27, 1945 ; Amendment 50, MPR 418 ; ef- 20 November 5, 1945 ; Amendment 14, MPR 579 ; effective November 26, 1945. Amendments 13 and 15, MPR 579 ; effective November 1 and December 1, 1945. Amendment 6, MPR 550 ; effective December 11, 1945. “ Amendment 9, 2d RMPR 269 ; effective November 17, 1945. 3 Amendments 10 and 11, 2d RMPR 269; effective November 15, 1945, and January 3, 1946. 24 OSA Directive 89, effective November 28, 1945. 24 • Sixteenth Quarterly Report Individual low-end-seller adjustment provisions were provided for manufacturers of cottage cheese,25 and similar provisions were being prepared for early issuance in the next quarter on ice cream and related products. Cheese foods and spreads were removed from freeze-type control and given maximum prices under a specific formula, which were lower on most of the items.26 This action was necessary because the level of prices had been comparatively high, and a more equitable relationship had to be established between maximum prices for these and for other manufactured dairy products. FEEDS, GRAINS, AND TOBACCO In order to encourage the production of certain meals for cattle feeding, the markup to processors for “pelleting” was increased for linseed, cottonseed, and peanut meal.27 A new regulation was issued covering processing ceilings for the 1945 crop of soybeans.28 Sudden market advances required issuance of the action in advance of the expected time. Abnormal speculative increases were also somewhat retarded by issuance November 30 of a regulation establishing maximum prices for sale and delivery of the 1946 rye crop.29 Growers had been notified in July that ceilings were to be set, in accordance with the provision in the Emergency Price Control Act that growers must be given notice of price action 15 days before their crop planting time. The 1945 crop had not been brought under regulation because by the time price movements justified establishment of controls, planting of the 1945 crop had already started. The new regulation, to become effective June 1, 1946, was issued early to prevent undue speculative rises in the futures market by notifying buyers of pricing policy governing the 1946 crop. The 1945 crops of the cigar types of leaf tobacco were exempted from price control in November on the recommendation of producers and of cigar manufacturers.30 The action was taken because of the serious administrative difficulties involved in establishing and maintaining ceiling prices on this product and because practically no 1945 crop tobacco would be used in making cigars until the latter half of 1946, by which time it appeared that ceiling prices on cigars would no longer be necessary. Following this exemption, the Connecticut and Wisconsin crops were sold at prices ranging from 50 percent to 100 25 Amendment 56, MPR 280; effective November 24, 1945. 26 Amendment 36, MPR 289; effective October 23, 1945. 27 FPR 3: Amendment 4, Supplement 1, effective October 31, 1945; Amendment 2, Supplement 5, effective November 20, 1945; Amendment 2, Supplement 7, effective November 20, 1945. 28 MPR 600 ; effective November 2, 1945. “MPR 604; effective June 1, 1946. 80 Amendment 8, SO 132 ; effective November 9, 1945. Price Control: The Food Programs • 25 percent above 1944 ceilings. In view of these extremely high prices I and the fact that ceilings on cigars might have to be held much longer than was originally anticipated, there was some possibility that controls would be reinstituted. The 1945 crop of burley leaf tobacco was priced at the same grade I ceilings as prevailed for the 1944 crop.31 OTHER AGRICULTURAL PRODUCTS Actions were also taken during the quarter in the fields of sugar, agricultural chemicals, and imported coffee and cocoa. Accounting studies of the commercial cane syrup industry, raw sugar processors, beet sugar processors, and sugar refiners showed that the yield of raw sugar per ton of cane in 1944 had been normal and since subsidy payments had increased, no price increase on this product was necessary. The raw sugar processors’ study showed that increased yields and tonnage, based on latest estimates of the Department of Agriculture for the 1945 cane crop, indicated a return on net worth for the current year considerably in excess of the base-period rate of return. After a finding that a price increase to compensate for a wage increase was necessary to keep all essential producers in operation, the price of Tennessee phosphate rock was increased by 20 cents per ton of rock. Prices were set for the first time for coarser sizes of Florida ground phosphate rock to be sold for direct application to the soil; these sizes were formerly not generally used for this purpose.32 Other actions in this field included termination of control over sales and deliveries of fertilizers and fertilizer materials used on other than commercial field crops.33 Also removed from price control was DDT, when sold as such, and other insecticidal concentrates containing specified proportions of DDT and not containing certain scarce chemicals.34 This latter action was taken because the volume of DDT products being produced was so great that prices were generally below ceilings and gave all indications of so staying. A major problem during the quarter was the holding of green coffee । price ceilings in the face of a foreign suppliers’ strike and diminishing United States stocks. The problem was placed before the Office of the Stabilization Administrator by the State Department, the Department of Agriculture, and this Office. The Stabilization Administrator ordered that a subsidy of 3 cents per pound be paid by the Reconstruction Finance Corporation on 6 million bags of coffee to be 81 RMPR 500 ; effective December 3, 1945. ” Amendments 4 and 5, RMPR 240; effective October 15 and November 10, 1945. 33 Amendment 4, 2d RMPR 135 ; effective November 26, 1945. 34 Amendment 11, SO 132; effective December 15, 1945. 26 • Sixteenth Quarterly Report purchased and shipped during December through March, in order to secure ample supplies and yet maintain ceiling prices. At the same time, the Office increased the maximum import price by 3 cents per pound.35 During the same quarter, there was considerable pressure towarc removal or adjustment of raw cocoa bean ceilings. Various appeals by the industry were denied by this Office and the Office of Stabilization Administrator. 35 Amendment 13, RPS 50 ; effective November 19, 1945. Price Control: Consumer Goods • 27 • IV • PRICE CONTROL: CONSUMER GOODS The fourth quarter of 1945 was the most difficult that the Office had experienced in the textile and apparel fields of price control. Shortages in both piece goods and finished clothing items not only continued but in certain important areas became more acute than ever before. Returning veterans added their voices to the clamor for such clothing as men’s tailored goods, shirts, shorts, and hats, and the pressure on supplies was the worst on record. The effect of this extreme shortage and of the continued rise of costs of production created an inflationary pressure of unprecedented magnitude. This pressure was manifested in a continued large volume of black market activity, particularly in cotton and rayon finished piece goods; in an increased tendency for legal evasion of regulations through shifts in the pattern of production, particularly by dropping of low-end or staple lines, or distortions of normal channels of production and distribution; in increased requests and pressure by sellers lor increases in ceiling prices; and in further bidding up of prices of ¡items not subject to price control. During the last 3 months of 1945 the price of raw cotton, which had risen only moderately since May 1942 (after having doubled between January 1941 and May 1942), suddenly began to spurt upward, increasing roughly 10 percent in about 3 months, and reaching a point approximately 1% cents per pound above parity. The reasons for [this increase were primarily speculative, for, with the possible exception of a few of the better grades and staples, adequate cotton existed m private or governmental stocks to meet trade demand, despite a phort and relatively poor crop in 1945. Some traders in cotton appeared, however, to be betting on a general inflation of all prices, |which would carry cotton along with it, and on a prospective shortage of cotton due to large exports, increased mill consumption, or another fchort or poor crop in 1946. Apparently, also, there were the usual luninformed speculators who bought merely because they saw the parket was going up, thus bidding the market up further and confirming their own guesses. Uninformed speculation continued to be particularly attractive in cotton because, unlike stocks, margin requirements for traders had remained very low. I The rise in raw cotton prices had by the end of the year already begun to bring requests for higher textile ceilings, and a major drive 28 • Sixteenth Quarterly Report for general cotton textile increases, based on the raw cotton market, appeared in the offing. Reconversion activity in consumer durable goods remained at a high level throughout the quarter, the chief pricing problem being the production of low-end goods. APPAREL AND TEXTILES Major efforts of the Office in the clothing field during the fourth quarter were concentrated on actions which were calculated to reduce clothing prices. In dealing with the low-end clothing problem, procedures were worked out to facilitate individual price adjustments where price was recognized as an impediment to supply, and at the same time steps were taken to make the-maximum average price regulations (MAP),1 both for clothing and for fabrics, more flexible to meet the needs of the current situation. The problem of bringing lower-priced clothing back into the market was complicated by price rises granted on cotton textiles under the provisions of the Bankhead amendment2 and by the dissolution of the War Production Board, which had led to strong pressures for curtailing priorities assistance to apparel manufacturers. A regulation covering nylon hosiery was issued in November.3 It established dollar-and-cent ceilings at all levels for women’s nylon hosiery, with prices based upon those prevailing in June 1941, the last normal period during which nylon hose was sold. Shoe manufacturers were granted a 4%-percent increase in ceiling prices to maintain base-period earnings in the face of cost increases resulting from elimination of nonrationed shoes and of style restrictions, and from the availability of higher-priced leather used during the war only for military shoes.4 MAP Changes The quarter under review constituted the second quarter of operations for wool and rayon mills under maximum average price orders, which required maintenance of approximately 1943 proportions of deliveries of lower-priced fabrics. Despite the similarities of the two orders, wool and rayon, and of the basic conditions which required their issuance, problems in the two fields were strikingly different. Manufacturers of rayon fabrics appeared to encounter the greater difficulties in operating under MAP, primarily due to yarn shortages and to a change in the deniers of yam available. Discus- 1 See Fifteenth Quarterly Report, p. 20, and Fourteenth Quarterly Report, pp. 21-22. 2 See Fourteenth Quarterly Report, p. 19. 3 MPR 602 ; effective November 20, 1945. 4 Amendment 24, SR 14-E ; effective January 5, 1946. Price ControL’Consumer Goods • 29 sions were held with rayon mills during the quarter, concerning proposed modifications in the order to allow somewhat greater flexibility. Although operating reports revealed that wool manufacturers encountered less difficulty in complying with MAP, heavy criticism of the order continued during the quarter. The point most often made was that some manufacturers found it more profitable to comply with the order, not by restoring or expanding production in their lower-priced men’s lines, but by continuing production in higher-priced lines and offsetting this volume with increased production of lower-priced, lightweight fabrics, for the women’s wear market. The charge was made that production of the heavier-weight men’s wear fabrics, especially worsted suitings, was not being expanded sufficiently to meet the vastly increased demand attendant with the sharp rise in demobilization of the armed forces. This course was apparently sometimes adopted even though the order permitted categorization of men’s wear and women’s wear, worsted and woolen, lightweight and heavyweight fabrics separately, so that a change in the proportions as among categories need not affect compliance with MAP. Because of the critical shortage of men’s suits to meet the needs of returning veterans, the Office was seriously concerned lest the order might give even a few manufacturers excuse to reduce or fail to expand men’s suiting production, and was studying possible changes in the order to avoid this result. The worsened fabric situation during the quarter forced the Office to make continuous adjustments and modifications in the garment maximum average price regulation.5 The chief changes were to extend to 60 days, from the original 30 allowed, the period during which a manufacturer could work off any “surcharges” incurred during the third quarter, which had resulted from exceeding his maximum average price; permission to apply credits against surcharges for all categories across the board; extension of the filing date for the third quarterly report to October 30; permission to firms who filed on a quarterly basis to change to annual or semi-annual bases; permission to use the tolerance percentages listed in Special Order 5 during the make-up period; establishment of an individual adjustment procedure; allowing MAP adjustments to firms who had received price increases under adjustment provisions of specified regulations or supplementary orders; and exemption of apparel items of certain fabrics or yarns from coverage of the Maximum Average Price Regulation. 5 SO 108: Special Order 3, effective September 4, 1945 ; Special Order 4, effective Septem-er 7, 1945 ; Amendment 1, Special Order 3; Special Order 5, both effective September 25, ia r ’ Specia* Order 6, effective October 22, 1945 ; Special Order 7, effective November 6, 945; Special Order 8, effective November 26, 1945; Special Order 10, Special Order 11, oth effective December 14, 1945; SO 108: Amendment 5, effective September 25, 1945; • mendment 7, effective October 19, 1945; Amendment 8, effective December 14, 1945 ; Amendment 1, Rev. SO 113 ; retro, effective July 1, 1945. 688954—46--------3 30 • Sixteenth Quarterly Report Despite all these modifications, which did not destroy the basic intent of the order, the further worsening of the fabric situation compelled an important change in structure of the regulation.® It was provided that firms in a surcharge position as of November 30, 1945, could deliver items above as well as below their maximum average price during the month of December, provided that they averaged out at or below their adjusted maximum average price. This order was applicable only for the month of December 1945. Other Low-End Actions .Restoration of low-end price lines in a number of essential items whose price might have constituted an impediment to their réintroduction was made possible by an order issued in mid-November.7 Increase factors of approximately 15 percent on prices up to a specified cut-off price were allowed on men’s and boys’ shirts, shorts, and pajamas, men’s handkerchiefs and underwear, and hosiery items which were under freeze-type regulations. By the end of the year, more than 600 manufacturers had reported taking the increase factor, and a survey had been started to determine the extent to which this order had resulted in the réintroduction of low-end price lines. The low-end preticketed clothing regulation, RMPR 578, was revised to include all cotton, wool, and rayon garments sold at or below specified cut-off points.8 These cut-off prices were originally set by the Civilian Production Administration for the purpose of giving priorities assistance to producers.9 Coverage of the revised regulation was not limited to garments made with priorities assistance but extended to all garments sold below the cut-off points, whether made from channeled material or from free fabrics. The retailer’s markup of 34 percent on cotton goods was maintained, while the markups on rayon and wool gôods were fixed at 36 percent since these more expensive garments were customarily assigned somewhat higher margins. A new regulation covering men’s and boys’ shirts, shorts, and pajamas, issued in December, simplified establishment of manufacturer ceilings, and through a 10-percent average gross margin reduction, was planned to cut back by about 5 percent consumer ceilings which had risen sharply under the freeze-type regulation.10 The action narrowed margins on the higher-priced lines and widened them on lower-priced lines, in order to stimulate production of low-end items. In a further effort to bring badly-needed clothing items to the consumer, the Office permitted manufacturers of heavyweight knitted 8 Special Order 9, SO 108 ; effective December 1, 1945. T SO 139 ; effective November 13, 1945. 8 2d RMPR 578 ; effective November 1, 1945. 9 See Thirteenth Quarterly Report, p. 7. 10 MPR 605 ; effective January 1, 1946. Price Control: Consumer Goods • 31 underwear which the Office of Civilian Requirements had certified to be in short supply, for whom freeze prices had been an impediment to production, to apply for individual ceiling adjustments equal to 104 percent of cost. Categories of knitted garments included were men’s, boys’, and women’s heavyweight union suits and certain children’s and infants’ items.11 Also in line with the cooperative efforts of a number of Government agencies to improve the supply of cheaper utility clothing, the Office allowed price rises on work clothing made of denim, carded chambray, carded shirt covert, pants covert, whipcords and cottonades, and pinchecks, because of the increased cost of these fabrics. Later, manufacturers of garments made from jean, drill, twill, and poplin were allowed to sell and deliver such garments on an open-billing basis, reserving the right to charge the difference, if any, between current ceiling prices and adjusted prices which might thereafter be ! established.12 New dollar-and-cent prices were issued in November on specified utility shirts made of flannel, domet, suede, and moleskin by work clothing manufacturers.13 Cotton Textile Prices Difficult problems created by substantial price increases previously granted under the Bankhead amendment on major cotton items were distressingly evident during the quarter. Not only did producers specializing in minor items feel aggrieved at their failure to share in the general price advance, but the bidding up of raw cotton prices, stimulated at least in part by the rise in major item prices, also increased minor item costs. Most important, the disparity threatened a diversion of production away from the minor items, a great many of which are essential in the consumer budget. Again, these price increases created extremely complex problems of absorption at subsequent levels of production and distribution. The mere fact that cotton grey goods prices had been increased for the second time under the requirements of the Bankhead-Brown amendment did not, under OP A standards, automatically mean that prices of subsequent producers and distributors could be automatically raised. Rather, the continued validity of each previously existing ceiling at subsequent levels had to be re-examined separately. Much of the previous ability to absorb at subsequent levels had already been squeezed out by the previous series of Bankhead-Brown increases, by increased labor and other costs, and by a drop in physical volume resulting from shortages of cotton goods. Hence converters, wholesalers, jobbers, 11 SO 137; effective October 17, 1945. u Amendments 8 and 9, RMPR 208; effective November 5 and December 10, 1945. 18 Amendment 3, RMPR 304; effective November 21,1945. 32 • Sixteenth Quarterly Report garment manufacturers, producers of other textile end-products, and retailers almost universally requested relief, and frequently deserved it under Office standards. But the job of establishing the need for relief and the proper amount, and of preparing the necessary regulations and amendments, was painfully slow because of inadequate staff to meet the increasing workload. The program of increasing for the second time prices of major items of cotton textiles was completed during the quarter, with increases given to ducks; fine goods; tickings; ginghams, seersuckers, and related fabrics; bedspreads, decorative fabrics, and table napery; and corduroy and velveteen. In addition, some 40 or 50 minor items were given increases.14 Most of these items were not previously considered as parts of major items, but, upon further study, determined to be properly capable of inclusion with major items previously designated. In a few cases, minor items not properly included as parts of any major item were, with the approval of the Stabilization Administrator, given increases on supply grounds because of their particular importance to consumers. Among the major item increases, several were notable because of their unusual character. For ducks and fine goods, previous price differentials among the various constructions were readjusted, with industry approval, in an effort to equalize profitability and to avoid production distortions. The action on bedspreads, decorative fabrics, and table napery introduced a principle new to the cotton textile areas. Increases ranging from 10 to 40 percent were given only to items in the lower half of each seller’s 1941 range of prices, except that all items below certain low-end cut-off prices were increased, even if not in the lower half of a seller’s line, and no increase was given to items above certain higher cut-off points, even if in the lower half of the seller’s line. The reason for this form of action was that, to a more than ordinary extent in. these fields, low-end production was unprofitable in relation to higher-priced items, and, as a consequence, low-end items had disappeared. Intensive work continued during the quarter on the problem of absorption, particularly by converters, of the cotton grey goods increases granted during this and the preceding quarter. The problem was made extremely difficult by the fact that converting of their own fabrics by mills had increased during the war period from a relatively minor operation to one representing a major segment of the converting business. Integrated mill converters, because of their earnings from other sources and because of administrative savings, were in a 14 SO 131; effective September 10, 1945; Amendment 1, effective September 17, 1945; Amendment 2, effective September 25, 1945 ; Amendments 3 and 4, effective October 24, 1945; Amendment 5, effective November 9, 1945; Amendment 6, effective November 2ft 1945; Amendment 7, effective November 30, 1945; Amendment 13, SR 14-E, effective October 24, 1945; Amendment 16, SR 14-E and Amendment 30, RPS 35; both effective November 26, 1945 ; Amendment 11, MPR 39 ; effective November 30, 1945. - Price Control: Consumer Goods • 33 position to absorb most or all of the grey goods increases. Independent converters, however, were much less able to absorb, and particularly so because the growth of mill converting had sharply curtailed their sales volume. The marked divergence in ability to absorb made solution of the problem unusually complex. Several varying plans were discussed during the quarter, but it was only as the year ended that a solution appeared near. Furs and Fibers Exemption of all but certain specified types of furs and fur garments in August15 caused considerable disturbance in this field, resulting in a substantial increase in the price of some furs and fur garments. It also brought about agitation from skin dealers and garment manufacturers for exemption of all other furs and fur garments from price control. This latter proposal was actively opposed by representatives of retailers of fur garments, including the National Retail Dry goods Association. After lengthy consideration of this problem at all levels, the Office decided that further exemption of furs or fur garments was not feasible. In order to strengthen remaining controls, specific maximum prices were provided for dressed muskrat skins,16 and MPR 178 was amended to provide that no person could sell above the specified exemption level prices contained in that regulation without specific Office approval.17 In the fibers field, one of .the most important activities during the quarter was in connection with public purchases programs and international allocations of imported materials. Due in large part to efforts of this Office, the public purchases programs on sisal, henequen and abaca fibers, and on cattle hides, kips, and calfskins and goat and kid skins, were extended to June 30,1946. As a result of representations of the Office and other Government agencies, controls had been reinstated on international allocation and importation of pickled sheepskins, an action which was expected to facilitate price control on this scarce commodity. Discontinuance of the public purchases program on horsehides after VJ-day had resulted in a rapid inflation in the prices of imported horsehides. To cope with the situation, the Office issued specific dollar-and-cent prices for this product.18 For the same reason, new maximum limits were set on the price an importer could pay for burlap as well as on his selling price.19 ie SO 12$ ’ effective August 15, 1945. See Fifteenth Quarterly Report, p. 19. j Amendment 6, MPR 541; effective December 22, 1945. ’’Amendment 9, MPR 178 ; effective January.2, 1946. j8 Amendment 17, SR 14—E ; effective December 10, 1945. 19 Amendment 7, RPS 18 ; effective October 30, 1945. 34 • Sixteenth Quarterly Report CONSUMER DURABLE GOODS Major activity in this field was concerned with pricing of consumer goods which were being returned to the market after the lifting of wartime restrictions. Thus, provision was formally made during the quarter for nine reconversion products. These included washing machines and wood radio cabinets, for which increase factors were announced during the preceding quarter.20 Six additional actions authorized increase factors not previously announced, which manufacturers in the following industries were permitted to add to their October 1941 prices : Hand lawn mowers, 17 percent ;21 radio receivers and phonographs, 11.9 percent ;22 metal toys, 14 percent;22 innerspring mattresses, 16 percent;24 small electrical appliances,'8 percent ;25 and household vacuum cleaners, 6 percent.26 One industry, household mechanical refrigerators, was granted permission to apply the reconversion formula on a firm-by-firm instead of on an industry-wide basis, since this procedure appeared to afford not only a more expeditious but also a more equitable method of price adjustment in view of the varying degrees of integration in the firms which comprise the industry, their divergent cost increase experience, an( widely differing timetables for the completion of reconversion operations.27 At the close of the year, surveys based on the reconversion formula were in various stages of completion for stoves and ranges, méta office furniture, metal household furniture, photographic equipment, wool floor coverings, and metal beds, and results were expected to be announced during the following quarter. In general, since ample absorptive capacity existed at the distributive level, the increases granted manufacturers were absorbed h wholesalers and retailers so that the level of retail prices remain# unchanged. The single exception to this was the increase granted to the metal toy industry where, for administrative reasons and because it was expected that metal toy prices would probably soon be suspended from control, the increase granted to manufacturers was passed through percentagewise to the consumer.28 In all but one of the other actions, specific distributor margins were provided, with which manufacturers calculated the retail prices to be affixed to the articles. The distributive margins thus provided were less by the amount of the 20 See Fifteenth Quarterly Report, p. 6. 21 Order 3, MPR 188 ; effective October 10, 1945. 22 MPR 599 ; effective October 30, 1945. 23 Order 4, MPR 188 ; effective November 2,1945. 24 Order 5, MPR 188 ; effective December 13, 1945. 26 Order 6, MPR 188 ; effective December 21,1945. 28 RMPR 111 ; effective December 21, 1945. 27 MPR 598 ; effective October 22, 1945. 28 Order 4, MPR 188 ; effective November 2, 1945. Price Control: Consumer Goods • 35 cost absorption, than the average initial margins prevailing in 1941. In the case of innerspring mattresses, for “nonbranded” lines, the retailers continued to use their pricing chart, but the manufacturers billed the price increase separately as a nonallowable cost for purposes of pricing. The branded items were to be preticketed, with the 1942 level of retail prices maintained.29 A new development in the area of cost absorption was applied to mattresses, in that individual stores were permitted to use their own departmental or store-wide expense rate as a minimum margin. I Two general steps were taken during the quarter to cope with the problem of securing production of lower-priced goods. The increase determined for radio manufacturers was allocated differently to different price lines, the highest increase going to low-priced models.30 Considerable variation in relative profitability as well as in the ratio I of materials to total cost had been found among the various price ranges of radio receiving sets. The lower-priced radios exhibited of course the lower profitability and the higher ratio of materials cost to total cost. In order to remove any price impediments which might exist to the production of a normal complement of the less'expensive merchandise, and in recognition of the higher rate of cost increase which had been experienced on such receivers, the adjustment was graduated so as to achieve approximately the same rate of profitability regardless of price range. Accordingly, sets having manufacturers’ prices to distributors in October 1941 of $11 or less were granted a 15 percent increase; medium-priced radios—those having a price range from $11 to $30—received a 12 percent increase; while those priced higher than $30 were granted an increase of 10.5 percent. A similar procedure was followed in the furniture field. Increases .We developed to be applied to the bottom third and the middle third of each manufacturer’s price line. Also, increases up to 25 percent over March 1942 ceilings (or up to the cut-off point) were permitted on each of a list of articles designated as essential low-end. The cutoffs were provided in terms of the manufacturer’s price to a retailer.31 29 Order 5, MPR 188 ; effective December 13, 1945. ’’MPR 599; effective October 30,1945*. ’'Order 4800, MPR 188 ; effective December 28, 1945. 36 • Sixteenth Quarterly Report • V • PRICE CONTROL: METALS, MACHINERY, AUTOMOBILES Pricing problems in the metals, machinery, and automotive industries during the final quarter of 1945 resulted directly from the changeover to peacetime operations. In the metals field, the war’s end subjected many industries to a sudden and drastic change in the nature of their operations and product mix. In industrial machinery and equipment, the situation was substantially similar. The attendant change in the earnings position of these industries led the Office to reconsider ceiling prices for a great many products. Industry-wide increases were granted in a number of instances, and the procedure for individual firm adjustments was streamlined in most of these fields. New ceilings were announced for several automobile producers, in accordance with previously announced reconversion standards.1 In this connection, the Office was subjected to heavy pressure from automobile dealers to exempt them from established policies as to cost absorption. Despite a widespread and intensive campaign, however, the Office continued to carry out the responsibilities entrusted to it by the Congress and the President by requiring cost absorption within reasonable limits as a means of stemming inflation. As is pointed out below, thorough surveys made by the Office and other Government agencies revealed that even after ob-sorption of producer price rises, automobile dealers would have actual realized margins far in excess of their prewar average.2 The quarter showed increasing evidence of supply not only coming into balance with demand in some industrial fields but also of excess capacity. Thus, a promising supply situation made it possible to release from control various metal and metal products and storage batteries and radio tubes and parts sold to private brand owners. It appeared, moreover, that in several industrial areas the administrative burden of continuing price control was out of proportion to the contribution to the stabilization program made by such, control. In this category fell the release from control of textile machinery accessories and parts made principally of wood, a number of scientific in-struments, laboratory equipment, and such luxury items as racing motorcycles, horseshow buggies, and other articles for amusement enterprises, such as commercial and display fireworks. 1 See Fifteenth Quarterly Report, pp. 7, 23-24. 2 See p. 42; also Fifteenth Quarterly Report, pp. 9-10, 24. Price Control: Metals, Machinery, Automobiles • 37 A complete list of the commodities suspended or exempted from price control during the quarter may be found in table 4 5 of the appendix. IRON AND STEEL Industries such as steel mills, brass mills, and steel castings foundries went from a rather profitable position in the first 9 months of the year to a level of earnings in the fourth quarter below that of their base period. Under established Office policy, this alone did not justify immediately raising the general level of prices, however, and the Administrator held that price actions in particular areas would not be taken on the basis of the temporary cost bulge which was widespread immediately after VJ-day. In the absence of cost and profit data for a substantial period of normal operation, a reasonable assurance was necessary that temporary impairment of earnings would not be remedied by a more normal cost and earnings picture in the ensuing year. Steel Prices Careful study of financial and cost data indicated, for example, that steel mills did not then require a price adjustment under the Office standards, since operations for the full year of 1945 showed earpings well above the base period, 1936-39. Although operations following VJ-day showed such a drop in earnings that a substantial number of products were actually produced at a loss, this period was confused and abnormal. Cost data for this period therefore could not be accepted as representative, and more normal operating conditions could not be expected until early in 1946. The. Office expected, however, to make price adjustments on the basis of trends in cost and earnings and of an appraisal of other factors which might'influence costs in 1946. With respect to the small number of integrated steel companies, many of which were in financial hardship, the Office announced a streamlined procedure in handling individual applications. In the case of steel castings, financial information covering 5 months beginning June 1945 indicated not only that earnings had fallen below base-period rates of return, but also that over-all losses were fairly general. The industry’s readjustment from lucrative war orders to less profitable peacetime lines at 1941 selling prices resulted in the third quarter, of 1945 in an average loss of 10 percent on sales, or 17 percent on investment. Although no increase was required by law at that time because conditions in the castings industry were changing rapidly, the fact that curtailment in castings output would seriously jeopardize reconversion led the Office to grant an increase of 11 percent °n all except military castings, under authority granted by Executive Order 9599.3 "Amendment 16, RPS 41; effective November 30, 1945. 38 • Sixteenth Quarterly Report Kesale prices for flat galvanized steel sheets were raised by 10 cents a hundred pounds when resellers demonstrated that they were unable to recover their operating expense rate on these sheets after absorbing the 20 cents increase in the mill price authorized in May.4 Under the product standard for distributors, the Office was required to adjust resellers’ prices sufficiently to permit them trading margins on these products equal to operating expenses. In making the adjustment, the Office took occasion to correct the computation of the average trading margin for heavy-line products used in calculating the amount o; relief resellers may obtain upon application. Evidence had showec that a trading margin of 22.5 rather than of 18.5 percent was needec to cover the average expense rate for these products.6 Iron and Iron Ore An increase of 75 cents a ton was granted the merchant pig-iron industry when cost data for the first two quarters of 1945 and measurable cost increases incurred since July 1 indicated that over-all earnings had fallen below the level obtained during 1936-39. The industry’s contention, however, that 1936-39 did not constitute a representative peacetime period for this industry, and that a different base period should be used in applying the over-all earnings standard was still under study as the quarter closed.6 The Office found it necessary to develop a modification of the regular standard in the unusual circumstances presented by the case of the Lake States iron ore producers, particularly for underground operators. Although over-all returns of the industry compared favorably with the base period, profits were abnormally concentrated in one company out of the eight companies concerned, while six companies were earning less than they did in the base period. Furthermore, the profitable company was engaged primarily in open-pit operations, whereas 65 percent of 1945 output was accounted for by underground mining. Because of their nature, underground operations had been more seriously affected by labor and material cost increases than had the open-pit mines. On the basis of the extremely unbalanced distribution of earnings, combined with the economic disadvantages peculiar to underground operations, the Office gave special consideration to the position of the operators of underground mines.7 Au increase of 20 cents a gross ton on underground ore was large enough to remedy the unfavorable effects of the prevailing price ceiling upon 4 See Fourteenth Quarterly Report, pp. 29-30. 5 Amendment 36, RPS 49 ; effective November 30, 1945. 6 Amendment 11, RPS 10; effective October 23, 1945. 7 In this action, the Office was reflecting a principle recognized by the Emergency Cour of Appeals in the case of Heinz v. Bowles, (F. (2d) 1945), which arose in the meat pad-ing industry. See Thirteenth Quarterly Report, p. 39. Price Control: Metals, Machinery, Automobiles • 39 that segment of the industry. At the same time, 10 cents per gross ton was allowed for open-pit ore.8 INDUSTRIAL MACHINERY AND EQUIPMENT To facilitate price adjustments necessary in the reconversion process, the Office established a procedure which was substantially the same as that announced in the preceding quarter for the establishment of industry-wide price adjustments for reconversion producers in the consumer goods field.9 Such price adjustments would apply in the case of a machinery product whose 1944 production was not more than one-half of its production in the last representative peacetime period because of Governmental restrictions during the war. Ceilings were to be adjusted so as to reimburse the industry for increases in materials costs and in basic wage rates of factory employees since 1941, and to permit the same profit margin over costs as prevailed during the base-period.10 Toward the end of the year the entire machinery industry was provided with a postwar price adjustment method, already discussed,11 available upon application by individual manufacturers. Resellers of products covered by the new procedures were in most cases to be permitted to pass on the dollar-and-cent amount of the manufacturers’ price increases, provided that these increases did not affect a substantial portion of the distribution trade.12 Reconversion Increases Granted The first machinery industry supplied with an industry-wide increase during the quarter was gasoline dispensing pumps and accessories, where manufacturers were allowed to add 9.2 percent to their October 1941 prices for base date models or modifications of them. In addition, individual manufacturers were provided with an opportunity to obtain adjustments under Supplementary Orders 118 and 119,13 the industry-wide increase did not prove adequate to carry on production. Since pumps are sold by the manufacturer directly to users through salesmen or commission agents, no provision had to be uiade for adjustment of resellers’ prices.14 Similarly, manufacturers of automotive lifts, used in the automobile service trade, production of which was discontinued during the war, Were granted an 8 percent increase over 1941 prices.15 Pending receipt ’Amendment 2, RMPR 113 ; effective December 29, 1945. See Fifteenth Quarterly Report, pp. 5—7; and Fourteenth Quarterly Report, pp. 2-4, , 10 Amendment 15, RMPR 136 ; effective October 3, 1945. 11 See above pp. 12-13. M Supplementary Order 142 ; effective December 11, 1945. 13 See Fifteenth Quarterly Report, pp. 5—6. 4 Order 506, RMPR 136; effective October 3,1945. “ Order 550, MPR 136 ; effective November 28, 1945. .' 40 • Sixteenth Quarterly Report of more adequate information as to operating costs, resellers were required to absorb. Manufacture of radio parts, another industry qualifying for reconversion price adjustments, had been granted interim increases in Aiigust, ranging from 5 to 11 percent,16 pending an analysis of the industry’s cost increases since 1941. The completed survey indicated that advances in factory wage rates and materials cost had exceeded those estimated in August, and the final increase factors authorized ranged from 9.5 to 26.3 percent over 1941 prices.17 The increase in ceiling prices on radio parts was originally granted only for items which had established base-period prices. Many manufacturers, however, had no published list prices or otherwise established prices for parts made during the base period, and others had priced predominantly on a formula basis. It was therefore necessary to extend the price increase to formula-priced parts, provided that these prices were based on 1941 cost factors. In order to make the price adjustment as uniform as possible for all types of radio parts, the category of the base-period items was broadened, as was the category of the so-called modified items, to include comparable parts having the same function and made of virtually the same materials as the base-period parts.18 Other Price Actions An advance of 9 percent over frozen 1941 prices of fractional horsepower electric motors was expected to remove a threat to the production of these products which were vitally important to innumerable items reappearing in civilian use.19 Resellers were permitted to pass on the percentage increase. Due to severe competitive pressure during the base period, the industry had been selling these motors at a book loss, and tended to drop them from production when formula-priced war-needed electric motors of other types yielded far greater unit profits. The increase was granted under Executive Order 9599 which authorized the Office to correct price maladjustments or inequities that might interfere with the effective transition to a peacetime economy. Sellers of buffing and polishing wheels as well as of forged steel railroad axles were granted a price increase under the product standard, which assured realizations equal to the average factory Costs in the industry. In both cases advances in direct material costs and labor rates were so great that they could not be absorbed if equitable prices were to be maintained.20 18 See Fifteenth Quarterly Report, p. 26. ” Amendment 18, MPR 136 ; effective October 11, 1945. 18 Amendment 22, RMPR 136 ; effective December 3,1945. M Amendment 17, RMPR 136 ; effective October 16, 1945. M Amendments 19, 23, MPR 136; effective October 23, December 19, 1945, respectively- Price Control: Metals, Machinery, Automobiles • 41 For the purpose of simplifying pricing methods and of enabling manufacturers entering the field of electrical wires and cables to price their products in line with prices already established by other manufacturers, a new regulation was issued superseding all other provisions governing sales of wires and cables. The regulation covers every type of wire conducting electricity, including aluminum and nickel alloy.21 AUTOMOBILES Ceiling prices were set during the quarter for 1946 Ford, Studebaker, and Mercury passenger automobiles22 in accordance with previously announced reconversion standards.23 At the same time, the Office announced that 1946 factory prices for all makes would, on the average, be approximately 3% percent above the 1942 level, excluding allowances for specification changes, and that retail prices on the average would be no higher than in March 1942, adjusted for changes in design and engineering specifications. Dealers’ normal prewar initial margins for all cars were reduced uniformly by 2.5 percentage points, but elimination or substantial reduction in the losses which they formerly were forced to take on used cars assured them realized margins considerably above prewar. Specific prices announced for Ford automobiles at the factory level showed an average advance over 1942 prices of slightly less than 6 percent, with a retail increase of approximately 2 percent, exclusive of changes in engineering specifications. Maximums established for Studebaker’s new cars were 12 percent higher at the factory level than 1942 prices, with a resulting increase at retail of about 9 percent. The difference in the rise for these two makes was primarily due to the smaller price increase taken by Studebaker between 1941, from which year base cost increases are calculated, and 1942, when prices were frozen. Information available to the Office during the quarter indicated that no across-the-board increase above 1942 was required for General Motors, although minor adjustments, principally in the higher priced models, might have to be made. Lincoln prices were expected to be 1 percent higher than the last prewar prices, while Chrysler’s data indicated a 4-percent increase. Delays in determining new car ceiling prices were due primarily to delay in obtaining cost information, which was a prerequisite for establishing prices. In several instances, also, manufacturers had requested the Office to postpone establishment of 1946 car prices until the wage issue and other problems were settled by the industry. a MPR 82; effective October 29, 1945. ” Orders 3 and 4, MPR 594 ; both effective November 19, 1945 ; Order 5,’ MPR 594 ; effective Deember 14, 1945. “ See Fifteenth Quarterly Report, pp. 7, 23—24. 42 • Sixteenth Quarterly Report In setting retail prices, the Office applied its normal policy of requiring distributors to absorb all or part of the increases in factory prices, wherever this is practicable and does not impose hardship.24 Determination of the amount of absorption that could be required within these limitations depended largely on whether automobile dealers, after absorption, would still realize margins allowing them normal operating profit. A thorough survey by the Office of financial data supplied by the industry and by other Government agencies showed that even after reduction of initial discounts from 24 to 21.5 percent, resulting from absorption of the average factory price increase, dealers would retain an actual realized margin far in excess of their prewar average of around 12 percent. In pricing new trucks and other commercial vehicles, the Office relied on individual adjustment orders under the machinery products regulation. Current costs and financial data submitted by the individual manufacturer were used in determining new ceiling prices, so that the degree of absorption of cost increases incurred since 1941 was related to the current over-all earning position of the particular manufacturer. Companies affected were Chrysler, International Harvester, General Motors, Mack, and Reo Motors.25 These individual orders, however, were expected to be superseded by a new commercial vehicle regulation embodying the principles of reconversion pricing incorporated in the passenger automobile regulation. Earlier, in the quarter the ending of the gasoline rationing program made it necessary to change the filing requirements for sales of used passenger automobiles and commercial vehicles. Sellers, rather than purchasers, were required to submit certificates of transfer to the local OPA Price Boards, so that a check could be maintained on prices for used cars.28 24 See above p. 14, and also Fifteenth Quarterly Report, pp. 9—10. “MPR 136 : Order 511 and Amendment 1 ;.both effective October 9, 1945 ; Amendment 1, Order 477 ; effective October 10, 1945; Order 525; effective October 31, 1945; Order 527; effective November 1, 1945 ; Order 528, effective November 2, 1945 ; Order 538 ; effective November 8, 1945 ; Amendment 1, Order 229, and Amendment 2, Order 447 ; both effective November 20, 1945 ; Amendment 1, Order 460 and Amendment 3, Order 259 ; both effective November 24, 1945; Amendment 1, Order 433 ; effective November 26, 1945. 20 Amendment 11, MPR 540 ; effective October 22, 1945 ; Amendment 12, RMPR 341 ; effective November 9, 1945. Price Control: Building; Lumber, Paper • 43 . VI. PRICE CONTROL: BUILDING, LUMBER, PAPER The extreme housing shortage and the suspension of allocation controls on lumber and building materials on October 15,1945, brought prices of these commodities into sharp focus during the quarter. War Production Board Order L-41 had been the major direct control on construction during the war, channeling scarce supply into the most essential uses, and prohibiting the building of houses costing more than $8,000 per unit. The principal argument for revocation of L-41 had been that production of building materials would increase rapidly as soon as Government controls were taken off. The Office made strong representations to the War Production Board and the Office of War Mobilization and Reconversion to the effect that this action would not increase supplies of lumber, brick, tile, and lath, and, furthermore, would give big builders an inequitable advantage in the market, through heavy direct purchases from mills and primary suppliers which would channel materials away from the smaller contractor who normally depends on wholesale and retail channels. Within a short time after revocation of Order L-41, the contention that the lifting of control would increase supply proved to be erroneous. The supply situation became more critical and the housing crisis aggravated. Toward the end of the quarter the Civilian Production Administration and the Office of War Mobilization and Reconversion were seriously considering reinstatement of some sort of control. During the entire quarter, the Office acted as rapidly as possible to adjust price ceilings wherever it appeared clear that a higher price level would result in a genuine alleviation of the supply situation for a particular commodity, both in building materials and in lumber. A number of additional actions taken in these fields were expected to speed pricing procedures and otherwise facilitate transition to a peacetime economy. A large group of mechanical building equipment was released from price control during the quarter. Information obtained by the Office bad indicated that current inventories of a number of these items, excluding Government-owned surpluses, were sufficient to supply all anticipated needs during the ensuing year. Existing productive facilities, furthermore, were many times above expected requirements. Many of these commodities, moreover, do not enter significantly into 44 • Sixteenth Quarterly Report the cost of living or into business costs, being used by large industrial companies or municipalities for replacement and maintenance purposes. The detailed list of exemptions is given in table 5 of the appendix to these price control chapters. BUILDING MATERIALS During the fourth quarter of 1945, the Office was faced with the problem of keeping its pricing policies sufficiently flexible to allow ceilings which would spur expanded production and at the same time prevent them from adding to the inflationary pressures. A number of steps were taken to implement this goal. District directors in localities where construction was about to be resumed were authorized to establish dollar-and-cent ceiling prices.1 This step signified a further delegation of area pricing authority from the regional offices to the district offices of the job of fixing community ceilings on selected building materials. The items covered involved specifically Douglas fir plywood and doors, stock millwork, stock screen goods, and certain types of mechanical building equipment, and also construction services and sales of installed building materials. Regional offices were also authorized to establish dollar-and-cent ceiling prices for softwood lumber, shingles, and hardwood flooring sold by retail dealers in the areas within their jurisdiction.2 Earlier in the quarter the Office had amended the mechanical building equipment regulation to include provisions incorporating general reconversion pricing methods which would allow the Office to determine, with the aid of certain cost projection methods, the amount of price relief necessary to make 1941 base prices generally fair and equitable during the reconversion period. At the same time, individual price adjustment provisions were liberalized for brick, sand, gravel, and related masonry and refractory materials, and also for mechanical building equipment such as boilers, radiators, and plumbing fixtures, by extending the provisions of SO 133, the “general rescue order” to these industries.8 This order, issued in September,4 permitted application for an individual company price adjustment over and above the industry-wide ceiling prices when a manufacturer’s over-all operations were being conducted at a loss, regardless of whether his production was essential or of low-end nature. Throughout the quarter the Office used discretionary powers to remove price as an impediment to supply where the industry and 1 Amendment 1, General Order 68; effective November 5, 1945; Amendment 4, RMPR 251; Amendment 2, MPR 592 ; both effective November 24, 1945. 2 Rev, General Order 65 ; effective December 26, 1945. 3 Amendments 1, MPR 591 and 592; effective October 25, and November 5, 1945, respectively. > 4 See Fifteenth Quarterly Report, pp. 8-9. Price Control: Building, Lumber, Paper • 45 responsible supply agencies could demonstrate that without price adjustment, increased supply would not be forthcoming. Masonry and Refractory Products Producers of gypsum lath and liner board, used as plaster base in residential and other construction, were given an adjustment of $3 per thousand square feet to permit the. plants east of the Rocky Mountains to recover at least total cost, adjusted to reflect normal overhead and selling expenses. A similar adjustment .previously authorized on the eastern seaboard was left in effect by the new rise.5 The Civilian Production Administration had given assurance that such an increase would enable the bulk of the producers to expand their output approximately 60 to 75 percent over the September 1945 rate within 60 days. Simultaneously, the price for neet plaster for a number of inland eastern mills was increased by $1.50 a ton, average, to enable the industry as a whole to recover the cost of manufacturing and selling this product. This adjustment supplemented an earlier action which applied to eastern and southeastern seaboard plants only. Resellers in both industries were permitted to pass on the increase in their acquisition costs resulting from the mill price increase, since the historical gross margin was found to be narrow, and absorption would have reduced their margins below the average expense rate of doing business.8 Increased ceiling prices for clay and shale building brick were allowed at all selling levels for the area west of the Rocky Mountains, extending an adjustment made in the previous quarter for the eastern area. Ceilings on glazed brick were similarly raised at all levels in all except 10 western States where they were to be adjusted later.7 Prices for vitrified clay sewer pipe and allied products produced in the eastern, east central, and western areas were advanced by 9.7 to 11 percent, to offset a War Labor Board-approved wage rise and more recent increases in fuel costs. The amount of the increase was great enough to return base-period earnings to single-line companies, which accounted for a substantial portion of the industry’s output. The increase was passed through to resellers.8 The cement industries in various geographical areas were confronted with a serious problem due to continued depressed volume in operations. In the southern area, an increase of 10 cents per barrel was • Sea Fifteenth Quarterly Report, p. 29. •Amendment 17, Order 1, MPR 592; effective November 16, 1945. 7 Amendments 23 and 24, Order 1, MPR 592; both effective January 2, 1946; see also Fifteenth Quarterly Report, p. 30. •Amendment 15, RMPR 206; Amendment 19, Order 1, MPR 592; both effective December 17,1945 ; Amendment 16, RMPR 206 ; effective December 26, 1945. 688954—46----------4 46 • Sixteeth Quarterly Report found necessary to return the same dollar profit earned by these producers in the base period. In applying its industry-earnings standard to a depressed volume situation in the midwestern and southwestern areas, the Office permitted an increase of 20 cents per barrel to allow ceilings to cover current average direct unit cost, plus the average unit indirect costs for a period of normal operation, plus the average unit profit for the base period 1936-39. The price thus computed was designed to yield base-period profits when the base-period rate of production was reached. In all three districts, resellers and dealers of cement were permitted to pass on the dollar-and-cent increase to them, since their margins were generally narrow and would have been brought below the average cost of doing business had absorption been * required. Other Products One of the worst bottlenecks in all home construction consisted in the shortage of cast iron soil pipes and fittings. Early in December the Stabilization Administrator had determined that this industry was unable to recruit the manpower necessary to achieve adequate production, providing the War Labor Board with a basis for approving general wage increases. The Office adjusted ceiling prices to reflect the wage increase as well as an advance in the price of pig iron, under the authority of the President’s executive order on transition to a peacetime economy.10 ■ Since the industry had not yet achieved full production schedules, however, it was given notice that a further detailed study within the ensuing 6 months would be necessary to determine whether the increases would continue to be necessary to maintain generally fair and equitable prices.11 After the War Production Board lifted restrictions on the amount and type of builders’ hardware production, including such items as hinges, locks, and various cast iron, steel, and brass items, it became evident that the industry was tending to concentrate on the normally more profitable items, and to drop the low-priced lines. The Office therefore determined that although the prices of builders hardware in general were fair and equitable, price should not stand in the way of production of low-priced hardware items. On this basis, ceiling prices were raised, until March 31, 1946, to a, level covering at least total cost for the bulk of the industry’s low-priced lines. The relief granted was to be passed on by jobbers and retailers.12 8 Amendments 12 and 13, MPR 224; effective November 10, and December 11, 1945; Amendments 15 and 21, Order 1, MPR 592 ; effective November 14, and December 18, 1945. 10 See Fifteenth Quarterly Report, pp. 1-2. 11 Amendment 5, RPS 100; effective December 31, 1945. 12 Amendment 6, RPS 40, Amendment 4, MPR 413; both effective October 8, 1945, Amendment 2, Order 1, MPR 591; effective November 14,1945, Price Control: Building, Lumber, Paper • 47 To return base-period earnings to single-line producers, ceilings of window and picture glass were raised an average of 4 percent, with the advance concentrated in the 25-inch, 34-inch, 54-inch, 84-inch, and 94-inch brackets. The increase was absorbed by resellers.13 Under the reconversion formula,14 an increase of 5 percent was allowed at all levels for automatic electric temperature control equipment ; a rise at all levels of 10 percent for stokers having a capacity of less than 50 pounds and one of 5 percent for those with over 50-pound capacity; and an 8-percent producer advance was granted on enameled cast iron plumbing.16 All three industries were provided with a supplementary procedure under which further increases could be made in individual hardship cases. This procedure permitted Ceiling prices for an individual manufacturer to reflect the increases in his material costs and in the basic wage rate schedules of his factory personnel, plus one-half of the industry’s normal profit margin. LUMBER Supply during the quarter remained far short of demand in most lumber fields mainly because of continued shortage of labor and resumption of construction activity following VJ-day. To facilitate the transition to a peacetime economy, a number of price adjustments were made which brought ceilings above the minimum required by law, and in several instances, price increases were given to meet the industry-earnings standard of the law. The Office found it necessary, however, to deny for the time being an increase to lumber wholesalers who had requested permission to add 8 percent to mill prices of all species, to be absorbed by retailers if necessary. It was claimed that such a markup would result in better distribution to smaller retail outlets which, unlike large yards, could not afford to hire buyers to obtain lumber. Since a representative group of retailers had contended that an increase would have to be passed on to consumers sooner or later, the Office decided nothing would be gained by providing a markup above the mill price, in lieu of the usual mill practice of giving wholesalers a discount off the mill prices. Experience gained in the field of southern pine, moreover, where a 6-percent markup for wholesalers had been established during the. war for special reasons, indicated that small yards in that field had been in just as short supply of southern pine as of other species. In view of further developments, the decision to deny the increase was later modified. 13 Amendment 18, Order 1, MPR 592 ; effective December 7,1945. ' 14 See above p. 11; also Fifteenth Quarterly Report, pp. 5—6. 15 Order 48, MPR 591; effective October 9, 1945; Amendment 1, effective November 8, 1945 ; Amendments, effective January 2,1946. 48 • Sixteenth QuarterlyiReport Price Increases The walnut industry was the only one in the lumber field which had been engaged solely in war production and so had to reconvert to peacetime items. In order to permit the industry good prospects for earning its 1936-39 rate of profits after adjustments for cost increases, an advance of 24 percent was authorized in ceiling prices.16 As there was no current cost experience in producing these items, the adjustment followed the general formula for reconversion industries. The increase was passed on through distributive levels. In order to prevent a further reduction in supply of logs and lumber in the Lake States, War Production Board requested the Office to take discretionary price action. Operators generally were found unable to absorb a wage increase granted by the War Labor Board to enable them to meet competition for needed labor. The authorized increase was expected to enable all except the normally high-cost marginal producers to earn a reasonable profit.17 A corollary action involved increases in ceiling prices of northern hardwood lumber and softwood lumber under the bulk-line-earn-ings standard, following wage rises and higher log prices.18 The industry had requested a much higher discretionary increase in order to remedy the manpower and equipment shortages, but the Office was not convinced that a further increase would remedy these shortages, or that the cost to the Nation in higher residential construction costs and furniture prices would not be far greater than the benefits of such an action. For the purpose of maintaining the normal price relationship with prices of pulpwood, prices of insulation and felt cordwood, excelsior wood, and chemical cordwood in the Lake States area were increased by 8 to 11 percent. This action was necessary to insure adequate incentive for the maintenance of production of these essential peacetime materials.19 Although a cost study conducted in the spring of 1945 indicated clearly that ceiling prices for southern pine lumber at the mill level covered total costs for at least the bulk of the industry, cost increases subsequently incurred had reduced the net average profit margin for most mills between $1.00 and $1.70 per thousand board feet. A price increase, which was higher than the minimum required by law, was granted in order to restore normal price relationships between various types and grades of southern pine lumber, in which distortions 16 Amendment 1, MPR 217 ; effective November 23, 1945. 17 Amendment 4, MPR 533—2 ; effective November 29, 1945. w Amendment 13, MPR 223 and Amendment 4, MPR 222; both effective December 26, 1945. 19 Amendment 3, MPR 535—1; Amendment 5, MPR 535—2 ; Amendment 3, MPR 535-3; Amendment 1, MPR 535-7 ; all effective December 24, 1945. Price Control: Building, Lumber, Paper • 49 made to meet wartime production needs were likely to interfere with the production of items needed for peacetime purposes. Small mills, which constitute the majority of the operating units in this industry, were granted an additional adjustment, bringing their prices in line with the new average level of prices for the large mills. Lumber retailers were required to absorb the mill price advance, since even after absorption their margins would be at least equal to their baseperiod earnings. Wholesale distributors and retail yards which engage in wholesale type sales were temporarily permitted to pass on the increase, pending completion of a cost study.20 Less-than-base-period earnings, arising out of higher operating costs without compensating increase in sales realization, led to an advance of $1.50 per thousand board feet on West Coast log ceilings. Simultaneously, mills producing western softwood shingles were permitted to raise ceilings prices 20 cents per square, to assure baseperiod returns in view of the increase in log prices.21 Other Pricing Actions The field of direct-mill-shipment markups was opened to all wholesalers or commission men handling southern pine lumber, provided they were not controlled by lumber producers. The wholesaler and commission-man markup could previously be charged only by a direct-mill distributor with a certain minimum volume of business in the base period or a certain minimum quantity handled for the Central Procuring Agency of the Army. The sudden ending of the war, cancelling many CPA buying contracts, made these quantitative limitations obsolete.22 In an effort further to simplify special-item-pricing provisions, the Office discontinued requiring manufacturers to obtain approval of special-item prices not only for the initial sale but for subsequent sales of the same product to new customers, and also separate approval for addition of differentials to approved special-item prices. These manufacturers were allowed to use the generally approved specialitem price for all customers and to use an approved list of established differentials on all items. Primarily affected were hardwood plywood, and Appalachian, southern, and central hardwood lumber.23 Ceilings of Douglas fir lumber were reduced by $1.25 per thousand board feet when sold by off-rail mills at any but the mills’ customary 2Q Amendment 14, 2d RMPR; RMPR 19-A; Amendment 13, 2d RMPR 215; all effective November 29, 1945. 21 Amendment 22, RMPR 161; Amendment 1, RMPR 164; both effective December 22, 1945. 23 Amendment 12, 2d RMPR 19 ; effective October 12, 1945. 23 Amendment 6, MPR 568; effective November 26, 1945; Amendment 23, MPR 146; Amendment 21, RMPR 97; Amendment 19, MPR 155; all effective December 4, 1945. 50 • Sixteenth Quarterly Report rail or water loading point.24 Representing the average cost of loading on cars at a rail shipping point, the reduction removed a competitive advantage enjoyed by a small number of purchasers who arranged for delivery at points where off-rail mills could avoid rail shipping costs. South central hardwood mills, which ordinarily do not produce more than a million and a half board feet of hardwood lumber during a 12-month period; had long suffered from inability properly to grade their lumber with the result that their legal ceiling prices were those established for the lowest grade in the shipment. Revised procedure permitted small mills to sell hardwood lumber graded by a buyer authorized by the Office to grade hardwood on his own inspection, at the usual mill prices for the species and grade, less 5 percent to compensate buyers for the inspecting and grading. Small mills equipped to grade hardwood lumber continued to sell on grades determined by their own inspection. Finally, maximum prices established for ungraded hardwood lumber were maintained for those producers not equipped to grade or not wishing to sell on buyer’s inspection. Although this action raised the average price of small mill lumber to a small degree, it removed an inequity which had penalized those producers who, though unable to grade their lumber, customarily sold on grades determined by buyers’ inspection.25 As a result of cancellation of many Government contracts, considerable quantities of unused surplus lumber had accumulated in the hands of private owners and Government agencies. A number of separate regulations governing such sales were replaced during the quarter by a new regulation which fixed prices at levels prevailing for producing mill sales, plus a transportation allowance.26 Quantities amounting to $50 or less, however, if privately owned, or $300 or less, if owned by the Government or Government contractors or agents, were exempted from price control. The new regulation covered all northern, northeastern, southern, and western softwoods, as well as northern, northeastern, Appalachian, and central and southern hard-woodj also walnut and western shingles. PAPER AND PAPER PRODUCTS Pricing problems in the paper products industries were not significantly affected by reconversion to peacetime production schedules. Early in the quarter, in meetings held by the Office with the woodpulp industry advisory committee and with a representative group of industrial pulp users, the industry maintained that any modification in 24 Amendment 19, RMPR 26; effective October 23, 1945. 25 Amendment 17, MPR 155 ; effective October 2,1945. * MPR 603; effective December 3, 1945. Price Control: Building, Lumber, Paper * 51 the prevailing pricing system for woodpulp would be detrimental to an orderly transition to peacetime operations. Interested Government agencies agreed to continue until June 30,1946, subject to continuous review by the Reconstruction Finance Corporation, the subsidy to domestic producers of a relatively small tonnage of high-cost wood-pulp, in order to insure maintenance of essential supply and to assist in stabilization of prices. Late in the quarter, wage increases approved for Lake States logging and lumber operators resulted in price ceiling rises of from $1 to $2 a cord for pulpwood produced in Michigan, Wisconsin, and Minnesota, under Executive Order 9599.27 Although the wage increases for wood labor could have been absorbed at least in part, the margin on pulpwood operations would have been reduced below the level previously established in order to maintain production of this already short raw material. Ceilings for paper and paper products made from pulpwood were not changed by the adjustment in its ceiling prices.28 A study of the general fairness and equity of the ceiling prices for pulpwood produced in the southern area, made at this time, revealed that no increases were called for under current Office standards. The situation was to be followed closely, however, to determine whether future action might be necessary. An increase of 26 cents per thousand yards over the base-period price was granted producers on inch-wide gummed cloth tape.2* Higher production costs had caused a large portion of this tape to be sold at a loss. While the industry generally was recovering on all operations a return substantially above base-period earnings, there was evidence that more profitable items were being substituted for tape to an increasing degree. Since the tape was essential to production of containers, the Office authorized an increase which would cover total costs of the bulk of production, as a measure of facilitating transition to normal operations. A similar action was taken in the field of groundwood specialty papers, which are bought primarily by industrial users for use in publications such as catalogues and pamphlets. The average 10 percent price increase authorized for 19 low-end grades, ranging from $3 to $14 a ton, was expected to check the shift from production of these low-end grades to higher-grade papers which had yielded a greater return to manufacturers. The revised prices permitted the bulk of producers to recover total costs of producing these grades. In order to keep a check on the effect of the price adjustment, the increase was permitted only until July 1,1946.30 27 See Fifteenth Quarterly Report, pp. 1-2. 28 Amendment 6, RMPR 257 ; effective November 29,1945. 29 Amendment 3, RMPR 129 ; effective December 27,1945. ” Amendment 5, MPR 449 ; effective December 29,1945. 52 • Sixteenth Quarterly Report Both newsprint paper and stereotype dry mats which are bought by newspapers became eligible during the quarter for price increases under the industry-earnings standard. Producers’ earnings in the dry mat industry were less than average base-period earnings, and a rise of 2% cents per mat was therefore authorized to correct the industry’s position. Similarly, a price increase of $6 per ton, or approximately 10 percent, was necessary to restore base-period earnings to the newsprint industry.31 Several changes in pricing techniques which relaxed certain wartime restrictions were instituted during the quarter in line with general OP A policy. Thus, the Office allowed manufacturers of paperboard boxes and other containers made with higher-priced substitute materials and sold to ciyilian users, to pass on the higher cost of materials. The value of the substituted raw materials, however, was not allowed to exceed that prevailing on March 31,1943. The regulation had formerly required absorption of the higher cost to discourage substitution of the higher-cost material.32 Manufacturers of toilet tissue and paper towels were provided with a new method of determining price ceilings for new grades which allowed them to establish their own ceilings, subject to OP A review, by adding their existing margin on the most comparable grade to the sum of total cost, freight, and cash discounts of the new grade.33 Regional offices were authorized to provide dollar-and-cent ceilings at producer and wholesaler levels for bakery boxes, egg cartons, garment and laundry boxes, and paperboard coat hangers in a given marketing area.34 31 Amendment 24, RPS 32 ; effective October 8, 1945 ; Amendment 12, RMPR 130 ; effective December 11, 1945. 82 Amendment 7, RMPR 187 ; effective October 8, 1945. 33 RMPR 266 ; effective October 10, 1945. 34 General Order 70 ; effective November 3, 1945. Price Control: Chemicals, Fuels, Other • 53 • Vil • PRICE CONTROL: CHEMICALS, FUELS, OTHER Office actions in the field of chemicals during the final quarter of 1945 for the most part affected various rubber-using items and consisted chiefly of price relief in order to facilitate production of articles needed in the reconversion period. Ceilings of cotton linters were also adjusted and the industrial alcohol regulation revised. A long list of chemicals and drugs, most of which are imported raw materials used in the manufacture of other products and constitute only an insignificant part of the cost of such products, was added to the group of commodities eligible for suspension. (See table 5, appendix.) In the petroleum field the Office was faced with the problem of adjusting prices as a means of maintaining proper balance in supply of refined products after production directives as to .output were dropped by the War Production Board following the end of the war. Several major actions affecting solid fuels were issued during the quarter. Anthracite prices were raised to return 1942 margins to the industry for the period January 1945-April 1946, and the bituminous regulation was amended to relieve specific situations which had arisen in various localities. The fourth quarter witnessed many changes in both the export and import fields. Areas formerly occupied by the enemy began to appear as competitors of the United States in purchasing goods in foreign markets and to seek large quantities of United States products for relief and rehabilitation purposes. In competing against American importers of foreign goods, they increased demand pressures in foreign markets, bringing about price increases which made it difficult and sometimes impossible to maintain ceiling prices on imported goods. At the same time, increased export demand for American products intensified pressure on domestic price ceilings, making even more apparent the necessity for maintaining strict control over export prices. A new policy was developed in order to encourage the development of international trade. It was recognized that foreign nations must be able to sell goods to American buyers if the political and economic rehabilitation of these countries is not to be impeded. Moreover, they must sell to the United States if they are to obtain buying power for the purchase of American products. 54 • Sixteenth Quarterly Report RUBBER AND CHEMICALS Most rubber manufacturers had been producing in volume equal to their prewar volume, and in many instances in excess of it. Because of restricted uses of basic materials, however, a small number of products had been largely or wholly out of production since 1941. F or these products, the Office set up a procedure in line with general reconversion policy to provide for calculation of reconversion priceincrease factors, which would reflect changes in. basic wage-rate schedules and material prices, as well as base-period profits.1 The necessity of facilitating manufacture of various rubber and chemical items essential to a peacetime economy led the Office to use its discretionary power to raise ceiling prices in a number of instances during the quarter. One action, however, was expected to result in lower prices for synthetic rubber products. Ceilings for glycerin-base antifreeze were thus raised to pass on recently increased glycerin prices which the industry could not absorb without hardship, in view of the great need for this product.2 Also, producers of rubber and oil-coated fabrics had experienced an extraordinary increase in cost resulting from the cancellation of war contracts and the persistent shortage of textiles. Since complete industry information was not yet available temporary relief was granted, averaging 5 to 8 percent over frozen March 1942 ceiling prices.3 At the same time, the Office allowed a top 15 percent increase in the base-period prices of molded, extruded, lathe cut, and chemically blown sponge rubber products which are used extensively in the production of washing machines, vacuum cleaners, refrigerators, and other consumer goods.4 Under the regulation, ceilings for rubber products made in the base period were frozen to that period, whereas ceilings for new items could be fixed by a formula which took cognizance of current costs. This situation had led manufacturers to shift away from old products, making users turn to uneconomical and inexperienced supply sources. The oilcloth manufacturing industry qualified for price adjustment under the general reconversion formula, since production had been cut down substantially during the war.5 The increase of 15 percent over October 1941 prices was partially absorbed by wholesalers who were permitted a rise of only 9 percent, as their gross margins were substan 1 Amendment 22, MPR 149 ; effective December 1, 1945; Amendment 10, MPR 478; effective November 10, 1945. 2 Amendment 10, MPR 170 ; effective October 15, 1945. 3 Amendment 9, MPR 478 ; effective October 29, 1945. 4 Amendment 20, MPR 149 ; effective October 29, 1945. B Order 157, MPR 478 ; effective January 2, 1946, Price Control: Chemicals, Fuels, Other « • 55 tially in excess of the operating expense ratio. Retailers were temporarily required to absorb the increase in the wholesalers’ price, pending further examination of their margins. Increasing economies obtained in the production of synthetic and other substitute rubbers permitted the Office to require manufacturers of a variety of items made of such rubbers to pass on the reduction of their cost.6 These manufacturers had been permitted to compute their cost of synthetic or substitute rubber at August 1943 levels in determining their own ceiling prices, but new prices were to be based on current rubber price levels whenever they were lower. While the new requirement caused no immediate reduction in retail prices, which had been established at freeze levels or in terms of specific ceilings, the lowered manufacturers’ prices were expected to provide a basis on which the Office might take subsequent action to lower such retail ceilings. For new commodities, retail prices would, of course, reflect the reduction in manufacturers’ prices. Industrial users and Government agencies buying directly from manufacturers, moreover, were expected to benefit at once from price reductions following the hew requirement. The commodities primarily affected by this requirement were Camelback, tire and tube repair materials, mechanical rubber goods, coated and combined fabrics, rubber drug sundries, and various other rubber commodities. Revocation of the allocation order bn cotton linters after VJ-day led to raising ceiling prices for five subgrades when sold for nonchemical use to the same level previously applying to these grades when sold for chemical uses.7 This revision assured the cotton seed processor the average realization per ton of cotton seed which he had obtained during the war, and which was considered fair and equitable under the agricultural provisions of the Emergency Price Control Act. Three changes in the pricing provisions covering alcohol followed termination of War Production Board allocatioiis and reduction in Government use of that product. (1) Sales of grain alcohol to the Government, previously priced under cost-plus provisions, were exempted from price control in view of the drastic reduction in requirements, the existence of an 80-million-gallon stockpile, arid of Government commitments to purchase Cuban and Mexican alcohol. (2) Military requirements being at a relatively low level, the Government trading loss incurred on purchases of foreign molasses for resale to alcohol producers was no longer accompanied by offsetting savings from sales of alcohol to war agencies or civilian markets. The Office therefore increased the producer ceiling of industrial alcohol (exclud 8 Amendment 19, MPR 149; Amendment 7, MPR 478; Amendment 3, RMPR 300; Amendment 23, MPR 220; Amendment 8, MPR 403; Amendment 4, RMPR 131; all effective October 15, 1945. ’ Amendment 5, RMPR 191; effective October 6, 1945. 56 • Sixteenth Quarterly Report ing the West Coast) by 2 cents per gallon, to permit the Government to pass on the higher molasses costs. Producers’ margins did not permit absorption because of partial idleness of their capacity resulting from the limitation on raw materials supply and competition with the Government stockpile. (3) Some weeks later, it was necessary to raise alcohol ceilings 3% cents higher on the basic formula as the to give producers unit margins approximately equal to those prevail-extent of under-capacity operations was found to be much more prevalent than the originally anticipated. The new price was designed ing in October 1941.® PETROLEUM A major problem in this field during the quarter was the threat of an inadequate supply of kerosene and heating oils in areas along the Atlantic Seaboard, arising chiefly from postwar distortions in demand for refined products which followed the precipitate reduction in military requirements for aviation gasoline without corresponding decreases in demand for kerosene and fuel oils. After the cessation of hostilities, gasoline consumption dropped below prewar levels, both in total amount and relative to low-end products of the industry, while demand for fuel oils remained high, due in part to military requirements for troop transport. The kerosene supply situation was made more acute by demand for this product in the devastated areas of Europe, while local shortages of fuel oils along the East Coast were aggravated by the difficulty in manning an adequate number of tankers for coast-wise movements. Other factors contributing to the short supply situation were work stoppages and the belief that strikes might recur, which led many refiilers to maximize production of gasoline, the high-value product of the industry, until storage in many areas reached near capacity levels. The maintenance of proper balance between refined products, which during the period of hostilities was accomplished by the issuance of directives as to* refinery output, was shortly after VJ-day left to the influence of relative prices and to voluntary action by the industry. The abandonment of the use of directives as to product yields, coupled with the aforementioned postwar distortions, made far more difficult than in prewar years the fulfilling of heating season requirements. In prewar years refinery yields were customarily adjusted in favor of kerosene and fuel oils during the winter months, and accompanied by a narrowing of differentials between prices of gasoline and prices of lower value fuel oils. For the purpose of alleviating the East Coast shortages, temporary increases, to expire April 30, 1946, were 8 Amendment 10, MPR 295; Amendment 3, MPR 28; both effective October 19, 1945; I Amendment 14, MPR 28 ; effective November 28, 1945. Price Control: Chemicals, Fuels, Other • 57 therefore made in maximum prices of kerosene and distillate fuel oils.9 The increases applied at all levels of sale along the Atlantic Seaboard and at refinery and tanker terminal levels on the Gulf Coast for shipment to ultimate destinations along the East Coast. Upon representations that there were threats in other areas of the shortages of fuel oils evident along the Atlantic Seaboard, the Office requested the assistance of the National Refiners’ industry advisory committee in studying the problem of determining whether further price action was necessary to aid in adjusting the supply situation. Inter-refinery sales of petroleum products were exempted from price control,10 pursuant to the industry’s recommendation and the assertion that such exemption would not place pressure upon other ceiling prices or cause maladjustment in the petroleum price structure. The subsequent shortages of kerosene and fuel oil, however, appeared to be due in part to the .exemption of inter-refinery sales under which certain price differentials were available to refiners who sold in the export market. Upon the recommendation of the East Coast fuel oil industry advisory committee, price control over these sales was reinstituted.11 Premium price increases were authorized for 18 pools under the 9-barrel provision and for 13 pools under the high-cost provision of the stripper well premium plan. After a review of their most recent 12-month production figures, 15 pools previously authorized under the 9-barrel provision were given increases in their premium payments by qualifying for a higher bracket. For the 16-month period from August 1944 through November 1945, premium payments under the plan amounted to approximately $75,000,000, or an average rate of about $4,700,000 per month. This was slightly below the original estimate of the amount necessary , to carry on the plan.12 At the close of 1945 the plan was providing premium payments to more than 300,000 wells, or about three-fourths of all the producing wells in the United States, and accounting for about 10 percent of national production of crude oil. SOLID FUELS Anthracite prices were raised in December an average of 19 cents per ton until April 30, 1946, to return 1942 margins to the industry for the 16-month period beginning January 1, 1945.13 Pennsylvania’s nine largest producers received increases averaging 11.6 cents a ton and other companies 32 cents. The fact that substantial individual 8 Amendment 38, MPR 88; Amendment 17, RMPR 137; both effective December 19, 1945. 10 Amendment 35, MPR 88 ; effective October 27, 1945. 11 Amendment 38, MPR 88; effective December 19, 1945. 13 See Tenth Quarterly Report, pp. 24—25. 13 Amendment 21, MPR 112 ; effective December 1, 1945. 58 • Sixteenth Quarterly Report adjustments were superseded minimized the amount of relief to smaller producers. i Early in 1945, the Office had fixed anthracite prices which were calculated to return the industry its 1942 margin over the calendar year 1945, in accordance with principles laid down by the Director of Economic Stabilization.14 Analysis of tonnage, cost, and realization data, however, indicated that this intention was not being fulfilled. The increases granted to correct this situation were made after consultation with the industry advisory committee. The major problems in administering maximum mine prices for anthracite had come up in connection with the smaller companies, and their separate treatment was intended to minimize these problems, as well as to facilitate the administration of area ceilings at the retail level. At the retail level, a study of the operations of a representative sample of solid fuels dealers culminated in a discretionary increase of 10 cents per ton on delivered sales for the remainder of the heating season ending April 30,1946, in order to maintain supply.15 This was the first over-all price increase granted dealers and amounted to about 1 percent in retail prices; on sales to domestic consumers the percentage increase was materially smaller. The new ceiling was estimated to assure the industry a return of approximately 23 cents a ton. Although substantially below margins for 1943, 1944, and the first 6 months of 1945, the industry’s 1942 experience indicated that this margin would be adequate to permit continued supply even by those dealers who had no revenues from related businesses. The price increase was limited to delivered sales because conditions which were adversely affecting dealer earnings generally arose most acutely in connection with delivery operations. In the bituminous field, producer ceilings in District 1 were raised 7 cents a ton to return margins required under an Office of Economic Stabilization directive issued in November 1943, assuring each district the greater of its 1942 margin or 15 cents a ton.18 The increase was passed on. To cope with a serious coal shortage developing in six counties in southern West Virginia which depend entirely on truck-shipped bituminous coal for their domestic fuel supply, the Solid Fuels Admim istrator for War had requested individual producers operating rail-connected mines in that vicinity to deliver coal to truckers in excess of their normal truck shipments. Since such operations involved additional cost and some producers could not comply with the request except at a loss, the Office established a procedure for granting adjust 14 See Fourteenth Quarterly Report, p. 38. 15 Amendment 40, RMPR 122; effective January 2, 1946. 18 Amendment 152, MPR 120 ; effective December 19,1944. Price Control: Chemicals, Fuels, Other '• 59 ments in such, cases, which would bring the mine the same relative margin that would have obtained if its entire production were shipped by rail.17 In the period under review, maximum prices were established for 330 new bituminous mines, and orders were issued under the costrealization adjustment sections of the respective producer regulations to 229 producers of bituminous coal and to 3 producers of anthracite. The solid fuels area ceiling program was augmented by 22 area orders covering approximately 6 million tons of solid fuel sold by dealers. By the end of the quarter such dollar-and-cent orders governed prices of more than 75 percent of the total tonnage of solid fuels sold annually by dealers. In this period, 3 additional firewood-consuming areas were covered by dollar-and-cent orders, bringing to 135 the number of specific area pricing orders applicable to that commodity. EXPORT-IMPORT The period October to December 1945 presented many intricate price problems regarding imported goods. Heightened buying pressure from newly liberated areas raised foreign supply prices of many imported goods to levels which made the maintenance of existing ceiling prices on imported goods difficult or impossible. Moreover, this period brought with it the revival of importation of goods from many areas, such as France, Italy, and the Philippines, which had been cut off from commercial intercourse with the United States for a considerable period. Under the existing provisions of the Maximum Import Price Regulation, ceiling prices for imported goods were based upon foreign suppliers’ prices during 1943 base periods, Since there was no trade with these areas during 1943, however, the regulation did not provide a satisfactory method of determining maximum prices for these areas. These developments necessitated reexamination of pricing policy with respect to imported goods, and the Office devoted a considerable part of its time during the past quarter to the development of policy which would achieve price stabilization and yet not prevent the development of international trade so essential both for the political and economic rehabilitation of war-ravaged countries and for the expansion of the United States export trade needed to achieve a high employ-inent level in the post-war period. A policy designed to achieve these objectives was developed and approved November 30, 1945, after a thorough discussion with other interested Government agencies, such as the Departments of State H Amendment 150, MPR 120 ; effective October 19, 1945. 60 * Sixteenth Quarterly Report and Treasury, and the Office of War Mobilization and Reconversion, and with the importers’ industry advisory committee. Under this policy, three categories of imported goods were to be distinguished for pricing purposes. The first category included basic imported industrial materials and raw foods, which accounted for about 80 percent of the value of all goods imported into the United States in 1944. Almost all of these goods were under dollar-and-cent ceiling prices. The Office policy was to maintain existing ceiling prices of goods in this category. Any increase might have necessitated adjustments of maximum prices on a great number of end products with possible danger to the entire price stabilization program. Goods falling within the second category included imported industrial materials which do not significantly affect business costs and manufactured goods which do not greatly influence the cost of living. Such imported goods meet the criteria established by the Director of Economic Stabilization for exemption from price control.18 The Administrator was authorized to exempt imported goods meeting the established criteria for price decontrol in the same manner as domestic goods. The third category of imported goods included a variety of industrial materials and manufactured goods which, although they are not of primary importance, nevertheless influence business costs or the cost of living. In general, maximum prices for this type of commodity were to be based on the importer’s total landed costs plus a markup designed to yield the same dollar-and-cent margin included in March 1942 selling prices for imported goods. Exceptions were provided for cases where recognition of the importer’s total landed costs would make difficult the stabilization of prices of similar domestically-produced goods. Recognition of the importer’s total landed costs for pricing purposes was chosen rather than in-lining ceilings with maximums for comparable domestic products, to facilitate resumption of normal commercial intercourse between the United States and other countries since, generally speaking, other countries had experienced a very much greater degree of war-inflation than the United States. The Office prepared a revision of the Maximum Import Price Regulation in order to implement t^his new policy. The principal change was to be the substitution of the importer’s total landed costs for “permitted” landed costs in determining maximum prices for imported goods. “Permitted” landed costs did not' include increases in foreign suppliers’ prices which occurred after 1943 cut-off dates. The liberation of areas occupied by the enemy made this formula obsolete, since no trading had been possible during the 1943 base periods. M See Fifteenth Quarterly Report, pp. 2-3, 10-11. Price Control: Chemicals, Fuels, Other • 61 In the export field, the successful conclusion of the war brought an increased demand for United States commercial exports. During the war, commercial demand had decreased since many markets were occupied by the enemy, available shipping was limited, and the quantity of commercial exportation was very strictly controlled through the licensing procedure of the Foreign Economic Administration. Renewed trade with formerly occupied countries was begun after the European phase of the war ended and increased shipping space became available. Many countries sought to obtain American goods to fill backlogs of consumer demand which had developed during the war years. The Foreign Economic Administration was abolished and its functions taken over by the Office of International Trade Operations of the Department of Commerce. Even before the transfer, however, there had been a very substantial reduction in the controls governing the quantity of goods which might be exported. Requirement of individual licenses for the exportation of most goods was dropped. There was no lack of foreign purchasing power during the period under review. Foreign countries held billions of American dollars which were available for the purchase of United States goods. This purchasing power, moreover, was augmented by loans to foreign governments aggregating additional billions of dollars. The combination of the acute scarcity of goods throughout the world, removal of restrictions on the exportation of goods, availability of shipping space, and existence of abundant purchasing power all contributed to a demand for American products which made the maintenance of strict control over export prices more necessary than ever. Any relaxation of the control of export prices in the face of this extraordinary foreign demand would endanger the entire stabilization program. The Office therefore continued to establish specific export markups and allowances on export sales of particular commodities where pricing under the general formula provided for in the Maximum Export Price Regulation proved inadequate. This development was noted in previous reports.19 An amendment to the regulation permitted adjustment of maximum export prices even after the goods were delivered to the foreign buyer, provided the maximum price regulation establishing domestic ceiling prices permits such adjustable pricing.20 The adjustment of the maximum export price, permitted under this amendment, may not exceed the adjustment of maximum domestic prices permitted by the Office. This action was taken to bring the provisions of the Maximum Export Price Regulation relating to adjustable pricing into line with those of other regulations issued by the Office. ” See Fifteenth Quarterly Report, pp. 10-11. 29 Amendment 22, MEPR; effective December 31, 1945. 688954—46--------5 62 • Sixteenth Quarterly Report APPENDIX TO PRICE CHAPTERS Table 1.—Extension or Resumption of Price Control, October-December 1945 Effective date Commodity Level of action Oct. 1,1945 Oct. 27,1945 Dec. 10,1945 Dec. 19,1945 Fresh green and wax beans (f. o.'b. Pompano,'¿Fla. and San Jose, Calif.).1 Mahogany lumber (grades limited for war use)1 Cordials, liqueurs, and specialties (based on or flavored with imported whiskey).1 Gasoline and liquefied petroleum gas (except natural gasoline) inter-refinery sales.1 Country shipper. All. Do. Refiner. i Resumed after release from 'control in order'to prevent rises^above former ceiling prices. Table 2.—Dollar-and-Cent Prices, October—December 1945 Effective date Commodity Level of action Feb. 3,1945 1 Oct. 1,1945 Do Oct. 2,1945 Oct. 3,1945 Oct. 4,1945 Oct. 5,1945 Oct, 6,1945 Oct. 9,1945 Oct. 10,1945 Oct; 11,1945 Do...—. Do— Oct. 12,1945 Oct. 15,1945 Oct. 16,1945 Oct. 17,1945 Oct. 22,1945 Do Rental of trucks, trailers, and equipment (Dallas OP A region).. Sandblast stencij (for engraving tombstones) Sun-dried shrimp (in transparent 1J4-ounce bags).—. Maine sardines (in scored top No. % containers) Port Orford cedar cross.tires.—.—. —. Truck and bus tires (Goodrich) , Imported Swiss watches (Horowitz “Croton”)... Pulverized superphosphate (produced at Pocatello, Idaho, and sold, run-of-pile, to fertilizer manufacturers). Vacuum cleaners (2 models). lJ— Linen supply services (by suppliers with total weekly sales under $50 in Virginia, Tennessee, the Carolinas, Mississippi, Alabama, Georgia, and Florida). Canned Cuban rock lobster ..... Imported Spanish and Portuguese anchovies (packed in olive oil and sold to wholesalers and chain stores). Imported Swiss watches (Parker)..— Cotton tire cord and fabric ............ Used busmess machines (except typewriters) Regular boneless mutton (trimmable fat not over 10 percent). Canvas-topped casual rubber footwear Rubber footwear (several types of heavy-duty men’s boots). Sulphur olive oil Lessor. Producer. Packer. Canner. Producer. Retailer. All. Producer. Retailer. Supplier. Importer. Do. All. Producer. Reseller. Wholesaler. Producer. Do. Oct. 26,1945 Do Icebox conversion (Sears, Roebuck). .......... Brazilian tapioca flour.— Retailer. All. Oct. 29,1945 Nov. 1,1945 Nov. 9,1945 Nov. 12,1945 Nov. 13,1945 Do Leather finishing of base-coated fabrics. —.. ... Low-priced wool, rayon, and cotton clothing..., Household mechanical refrigerators (6 models made by Gibson Co. for private brand purchasers). , Ice boxes (15 new models)............................ Sardines (Portuguese and Spanish skinless and boneless and Spanish boneless, packed in olive oil). Tire splitting . Processor. Wholesaler and retailer. > Retailer. Do. Importer. Tire splitter. Wholesaler. Nov. 15,1945 Pre-cut turkeys i— _i—, 4 .—J ... Do.—— Nov. 19,1945 Nov. 26,1945 Nov. 27,1945 Nov. 28,1945 Do Water-fepellant gypsum sheathing...!......... Bicycle tire assemblies (2 sizes smaller than the popular size and 4 grades other than standard, sold as original equipment). Hardwood plywood (base panels with walnut or imported wood, customer-supplied faces or backs producing 14 inch 3-ply panels). Vacuum cleaners (1 Eureka and 1 Montgomery Ward model). Pressure lamp and stove fuel (petroleum fractions in Arizona, Nevada, and West Coast States). Unpackaged standard grade rubber heels Producer. Do. Do. Retailer. , Tank wagon. AU. 1 Issued Dec. 7,1945. Appendix to Price Chapters • 63 Table 2.—Dollar-and-Cent Prices, October-December 1945—Continued Effective date Commodity Level of action Nov. 28,1945 New tires (24 Fisk industrial solid; and a number of Goodyear, Goodrich, U. S. Rubber, and Firestone truck, bus, farm, and industrial). Retailer. Nov. 29,1945 White birch logs (2 middle grades in Minnesota, Michigan, Wisconsin). Producer. Dec. 3,1945 Electric heaters (General Electric space heater and General Electric and Edison General Electric hot water heaters). All. Do . Cooked or baked aged dry cured hams Producer and wholesaler. Do Domestic distilled spirits (packaging and casing services). Bottler. Dec. 8,1945 Hawaiian bananas * Importer. Dec. 10,1945 Hardwood handles (for hammers, axes, etc.) Producer. Do... .. Hickory handle blanks (for hammers, axes, etc.) Do. Do. South American untanned horse and pony hides All. Dec. 11,1945 Cooked shrimp (delivered within 75 miles of the southern coast, North Carolina to Texas). Processor. Dec. 15,1945 Bronze wire insect screen cloth (18 x 14 mesh) All. Dec. 18,1945 Chili con carne (3 types without beans or other extender). Producer. Do Glykol antifreeze. All. Dec. 19,1945 Fresh spinach (without inedible parts).—— Shipper. Do New wooden egg cases (made in eastern United States). Producer. Dec. 22,1945 Dressed muskrat skins Dealer. Do Western softwood shakes and shingles .... Producer. Dec. 31, 1945 Do Hams, bacon, and picnics (for export) Packer. New household mechanical refrigerators (Gibson Co. private brand models and reconversion models by Philco and Westinghouse). Retailer. Table 3.—Price Reductions, October-December 1945 Effective date Commodity Level of action Amount of reduction Oct. 4,1945 Oct. 11,1945 Oct. 12,1945 Fresh cranberries Fresh fish and seafood (sea scallops and 4 types of sole sold by groups I and II stores; and fillets and steaks of black-back; grey sole, whiting, and Atlantic yellowtail). Live hogs (eastern Montana) Retailer - .——do— Terminal market and buying station. 2 cents per pound. 1 cent per pound. 10 cents per hundredweight. Oct. 15,1945 Oct. 16,1945 Oct. 19,1945 Oct.. 23,1945 Oct. 29,1945 Do.. Dried apricots, peaches, and pears (1945 and later packs). Coarse paper products (7 low-end items). Cranberry sauce Douglas fir lumber (direct sales on deliveries at points other than mills’ customary rail shipping point, f. a. s. vessel, or f. o. b. scow or barge). Leather finishing of base-coated fabrics (spraying to change base color, stencilling, topping, and embossing). Japanning cloth (to make artificial patent leather). Regrooved and remolded tires Cottonseed meal (sold at production plant in quantities of less than 1 ton, except to feeders). Low-priced wool, rayon, and cotton clothing. Sardines (Portuguese and Spanish skinless and boneless and Spanish boneless, packed in olive oil). Juice grapes .... Drawn and eviscerated geese Dehydrated cranberries (1945 and later All Distributor AU— Producer Processor ... ——.do. ....... Processors: 2 to 3 percent. Retailers: 3 percent. 20 to 30 percent, average. Retailers: about 15 percent. $1.25 per Mb. m. Varied. 6 to 16 percent. Oct. 30,1945 °et. 31,1945 Nov. 1,1945 Nov. 13,1945 Nov. 15,1945 Nov. 17,1945 Nov. 19,1945 Retailer........... Processor—.. Wholesaler and retailer. All w Retailer..... 1..... All Processor.—....... 27 percent. $2 per ton. Retailers: about 10 percent. Retailers: about 5 to 10 cents per can. About 17 or 18 percent. Producers: 2 cents per pound. 20 percent average. Nov. 20,1945 crops). New tires (18 sizes of combat and run-flat tires). Western softwood (ripping and resawing) i Frozen pilchard Retailer........... 6 Ji percent. - Do.— .. Nov. 26,1945 Custom miller.... AU Varied. Irocessors: about 3 cents per pound. Retailers i about 5 cents per pound. 64 • Sixteenth Quarterly Report Table 3.—Price Reductions, October-December 1945—Continued Effective date Commodity Level of action Amount of reduction Nov. 28,1945 Heavy residual fuel oils (principal eastern ports). Wholesaler refiner and tanker terminal. 1 to 5 cents per barrel, average. Dec. 3,1945 Packed fruits (No, 2)4 cans of apricots, yellow cling peaches, fruit cocktail, Bartlett pears, and sweet cherries). All...... Processors: )4 to 1 cent per can. Retailers: average 1 cent for Bartlett pears, and 1)4 cents for others. Do. Do. Cotton and rayon finished piece goods (large-volume sales). Smoked pork neck bones.. All Producer Wholesalers: about 3J4 percent. $1 per hundredweight. Table 4.—Price Increases, October-December 1945 Effective date Commodity Level of action Amount of increase Jan. 1,19451 June 1,1945« June 19,1945 » Oct. 1,1945 Motor pick-up ,and delivery for rail carriers (Kansas City and North Kansas City, Mo., and Kansas City, Kan.). Motor pick-up and delivery for rail carriers (Fargo, N. Dak.). Motor pick-up and delivery for rail carriers (Minneapolis and St. Paul, Minn.). Apples (1945 crop grown in California, Idaho, Montana, Oregon, and Washington; all other States). Copper and copper-base castings Crude oil (4 pools in Arkansas, Ohio, and Wyoming). Crude oil (12 pools in Illinois, Kansas, Oklahoma, and Texas). Drawn pollack (April—November) Contract carrier... do do 2 cents per hundredweight. 3 cents per hundredweight inbound; 1 cent outbound. 1 cent per hundredweight; and 10 cents on per stop minimum. Country shippers: 4 and 7 cents per bushel, respectively. 10 percent average. 5 to 94 cents per barrel. All Do Producer .. Do do Do do 8 to 35 cents per barrel. Do All Producers: about J4 cent Do Hardwood flooring. • Producer per pound. Retail: cent a pound, drawn and dressed, and 1 cent filleted. Varied.2 Do Ordinary channel black _. do Do. Do Sandblast stencil (for engraving tombstones). Texas Panhandle residue gas (sold for carbon black). Apparel fabrication ..do About 25 percent. Do do Varied.3 Oct. 2,1945 Oct. 3,1945 Do Contractor Do.4 Filling station gasoline dispensing pumps. Fourdrinier draft container board (sold east of the Rocky Mountains). Machines, parts, and industrial equipment. Western railroad cross ties (produced in the Fringe area). Whiskey (bulk domestic, 18 months old or less on or after July 1,1945). Building, chemical, and industrial lime (except agricultural). Bed linens (types 128,140,180, and 112; back-filled; bleach pillow tubing types 128, and 140). Frozen rosefish fillets Producer... 9.2 percent. About $3 per ton. Varied. do ... Do do Do .do $1.50 per M b. m. 1 to 8 cents per proof gallon-Varied. Retailers: about 10 pel' Do . Processor Oct. 4,1945 Do . Jobber, wholesaler, and agent.® Reseller Do Processor .. cent. H cent per pound. Do Do Household washing machines and ironers. Shoes (made of light colored nonmarking synthethic heels and soles). Cotton linters (5 subgrades for nonchemicaluse). Flour (from wheat, semolina, and farina). Juice grapes (40 pound lug boxes) Producer ■ and wholesaler. All 7.7 and 4.9 percent, respectively. 1 to 3 cents per pan-. Oct. 6,1945 Do Producer About 65 cents per hun- Miller, blender, primary distributor, and jobber. Country shipper.. dredweight. , , 7 to 17 cents per hundred- Do weight. $11 per ton. 1 Issued Nov. 16,1945; effective retroactively. 2 Cost of trucking charges prior to rail or water shipment. 3 Amounts to about $3,000,000 a year over estimated 1944 returns for total output. 4 Pass-on of exact WLB approved wage increase. 5 Affected are dealers with discounts of not over 10 percent from producer’s price or markups of $1 or in specified sales. Appendix to Price Chapters • 65 Table 4.—Price Increases, October-December 1945—Continued Effective date Commodity Level of action Amount of increase Oct. 6,1945 Do Seed potatoes (sales in carload lots) Wholesaler.. . ... 15 cents per hundredweight. 27 to 55 cents per dozen No. 2 cans. 10 percent until Mar. 31, Snap beans (1945 pack) Processor Oct. 8,1945 Do Builders hardware (medium and low- AU priced items). Hinges and butt hinges (low-end bulk production items). Paperboard boxes . .do. ... .. 1946. Do Do Producer Varied. Do Stereotype dry mats (for newspaper presses). Washed wiping cloths do 2J^ cents per mat for the most common size and grade. Varied. Do do .. . Oct. 9,1945 Do Automatic electrical temperature controls. Fresh pears (grown in Josephine and Jackson Counties, Oreg.). Live hogs (43 terminal markets and 2 interior markets in Ohio, Kansas, Oklahoma, and Idaho). Live hogs (22 counties in Kentucky) All 5 percent. 8 to 12 cents a container. Grower-packer... - Terminal and in- Do 5 to 10 cents per hundredweight. 10 cents per hundredweight. 15, 10, and 10 cents per hundredweight, respectively. 5 cents per hundredweight. Varied. Do terior market. Buying station Interior station Do Live hogs (Sheridan, W yo.; Suffolk, Va.; and Tallahassee, Fla.). Live hogs (2 buying stations in Nebraska and 2 in Ohio). Live hogs (service charges on hogs weighed at an auction market). Matches (strike-on-the-box type) Do Buying station Dealer Do Do Producer.. About 9 percent. 20 percent. Do.. Trucks (International Harvester, 1942 model K-2). Beef and veal (WSA stockpiles). All. .. Oct. 10,1945 Do .. Packer’... 75 cents per hundred- Hand lawn mowers Producer weight. 17 percent. 1J^ cents per pound. Groups 1 and 2 stores, 1 cent for sea scallops and sablefish fiUets and steaks.7 4.5 to 21.3 percent. About 9 percent. Do Pecans (orchard run improved and seedlings). Fresh fish and seafood .. ..do Oct. 11,1945 Do Retailer _ Radio and electric circuit parts Producer Oct. 12,1945 Cotton tire cord and fabric : .do Oct. 13,1945 Blue and gorgonzola cheese All except producer. Dock operator...’. All Wholesalers: 12 to 15J^ Do. Oct. 15,1945 Cast iron scrap (allocated by War Production Board for rail shipment after storage for water shipment). Glycerine base antifreeze (with at least cents. 50 cents to $1.25 per gross ton. 21 cents per gallon or 5 cents Do 95 percent glycerine). Phosphate rock Producer . per quart. 20 cents per ton. Processors: prunes, 2 per- Do— Dried small-size prunes and raisins (1945 and later pack). Bakery products (sold to wholesalers and route sellers). Boneless lamb and mutton AU Oct. 16,1945 Producer cent; raisins, varied. About 17 percent. Do— Wholesaler $1.50 per hundredweight. 9 percent. 15 cents for men’s sizes over Do Fractional horsepower electric motors. .. Molded neolite soles (for shoe repair) Wood radio cabinets (with March 1942 ceilings). Wrought steel freight car wheels (2 common base sizes). California table grapes (1945 crop) AU. Do Repairman. ... Producer . Do— 3H; 10 cents per pair for all others. 12 percent. About 18 percent. Country shippers: 25 cents a 28-pound lug. Retailers: 1 cent a pound. Producers: 50 cents for loose Do.— do... Oct. 17,1945 AU Do.... Canvas-topped rubber-soled and casual rubber footwear. Envelopes . .... do Do.... Producer lining, 10 cents for colored soles, and 10 to 25 cents for arch supports or heel cushions. 10 percent. 5 to 7 percent. Producers: 5.7 percent. 50 cents per package of food; 5 percent in fancy reusable containers. Do.... Oil country tubular goods (California)... Commercial trucks (Chrysler 4-wheel drive HQ chassis and cab). Overseas relief packages Warehouser and jobber. All Oct. 18,1945 Do... Retailer J Qualifying as licensed ship suppliers. •„j rouPs 3 and 4 stores, 1 cent on Pacific flounder and yellow tail, on halibut and silver salmon steaks, on sea scallops. 66 »• Sixteenth Quarterly Report Table 4.—Price Increases, October-December 1945—Continued Effective date Commodity Level.of action Amount of increase Oct. 19,1945 Do Industrial ethyl alcohol (except Westcoast produced). Packed apples, applesauce, and grape juice (1945 and later crop). Tomato catsup (packed in New England, New York, New Jersey, and part of Pennsylvania by processors not operating in 1941). Snap beans (sold east of and in Chicago).. Asiago (soft) Italian-type cheese All Producers: 2 cents per 190° gallon. Retailers: 35 percent for apples and applesauce, and 17 percent for grape juice. 10 cents per dozen 14-ounce do.. Do Processor.. Oct. 20,1945 Oct. 22,1945 Do All glasses; 65 cents on No. 10 cans. Country shippers: 25 cents a bushel until November 20,1945. Retailers; 1 cent per pound. 1)4 cents per pound. Varied. Processor New household refrigerators Retailer Do Pulpwood (produced in Arkansas, Texas, and western Louisiana, delivered by truck at Lufkin, Tex.) Buff and polishing wheels (except under MPR 316). Crude oil (Berea Sand, Meigs County, Ohio; and Waskem Field, Tex.). Imported viscose staple fiber Producer 50 cents per cord. Oct. 23,1945 Do.. All Varied. Producer 94 and 50 cents per barrel. 10 cents per pound. 75 cents per gross ton. Do Importer ..... Do Pig iron. 2 Producer Do Rayon yarns (second quality, producer guaranteed). Douglas fir lumber (delivered on scows • or barges by mills having deep-water dock facilities). Boneless beef and boneless processing beef (produced by nonslaughterers). Canned corned beef hash and Vienna Jobber About 2 cents per pound. 50 cents per M b. m. 50 cents per hundredweight. 13 to 22 cents ner dozen 24- Do Mill Oct. 24,1945 Do Independent boner Boner i Do. sausage (nailed in wood boxes for overseas shipment by the Government). Certain cotton textiles (ducks, surgical dressings, laundry cover cloths, rope, twine, and cord (except tire cord and dyed yams), blanket linings, blankets, and laundry and table felts). Glass containers (cross-country shipments from East to West). California juice grapes (for the fresh market). Dry grocery and perishable food items... Anthracite coal All ounce cans; 50 to 86 cents per dozen 6-pound cans. Varied up to 18.6 percent. Varied.8 Do... Producer Oct. 25,1945 Do Country'shipper.. Great Lakes mar- 94 o cent per pound; about 1 cent at retail. Roughly 5 percent. Oct. 29,1945 Do ine supplier. Dealer Varied.8 Cream cheese (37 percent minimum fat and 57 percent maximum moisture). Rubber, pyroxylin, and oil fabrics Producer 1% cents per pound. Do.. do. Average of 5, 6, and 8 percent, respectively. 15 percent. 25 percent service charge. 8 percent. Do... Sponge rubber products (with base date ceilings). Eastern poles and piling (where the invoice value does not exceed $175 on items 50 feet and shorter, or $250 where half the items are over 50 feet). Indian burlap do Oct. 30,1945 Do. Concentration yards, treating plants, and distribution yards. Importer. Do Ready-mixed concrete Producer. Varied. Oct. 31, 1945 Cottonseed meal (sales at production plants to feeders in quantities of 1 to 10 tons). English bone china and earthenware..... Processor $3 per ton. Do....... Importer and wholesaler. Producer 3 percent on china; 5 percent on earthenware. About 25 percent. Do Hard candy (sales to independent retailers). Mack truck (model EFU-Speciai)-. Do All Retailers: 45 percent. Do.... Mixed feeds (in paper bags containing less than 100 pounds). Pecan candy (25 percent or more pecans, products with base-date ceilings). Butter Processor — Varied. Do All... 50 percent. 5 to 6 cents per pound. Nov. 1, 1945 do Do Certain men’s cotton work socks Producer and Producers: 6)4 percent.1" Do ... Crude oil (21 pools in California, Colora-' do, Kansas, Louisiana, and Texas). Fuel oil and gasoline (No. 6 fuel oil in I- Erie and Niagara Counties, N. Y.). wholesaler. Producer 2 to 35 cents per barrel. Do Tank car and truck seller. 7.1 percent. 8 Extension until December 30 of increase scheduled to expire September 30. 8 Pass-on of charges for loading from mine pockets if dealers did not pay them in December 1941. 10 Extension until Dec. 1 of increase originally expiring Nov. 1,1945. Appendix to Price Chapters • 67 Table 4.—Price Increases, October—December"! 945—Continued Effective date Commodity Level of action Amount of increase Nov. 1,1945 Do Kerosene, range oil, and Nos. 1 and 2 fuel oil (delivered from Boston to Brockton, Mass.). Kerosene and other fuel oils. Tank wagon ..do Mo cent per gallon. Mo cent per gallon.11 4 cents per pound. Processors: 3 to 6 cents per pound. Producers: 14 percent. Retail: 7 percent. Per hundredweight: 25 cents 12; 30 cents 13; 35 and 50 cents W; 15 cents.18 Producers: % to 4 M cents Do Peanut butter (packages of 2 pounds or less, except sales to commercial, industrial, and institutional users and to the Government). Winter frozen fish (domestic) All Do....... do.—__ . Nov. 2,1945 Do Certain metal toys do International Harvester' trucks (model do . .. Do K-8-F). Frozen beef and veal carcasses (for Department of Agriculture procurement). Work clothing (made of certain cottons).. Slaughterer and wholesaler. All Nov. 5,1945 Nov. 6,1945 Southern pine tobacco hogshead ma- Producer . per yard. $4 per M feet on staves; 10 Nov. 7,1945 terials. Eastern wooden mine material and in- do cents each on circled heads. $3 per M b. m. Do. dustrial blocking (designated short sizes). Eastern wooden mine material and in- .. do . $5.50 per M b. m.18 10 cents per hundre weight. Producers: 22.7 percent. Processors: Ji to 5J4 cents Do....... dustrial blocking (from Oklahoma and Arkansas south of the Arkansas River). Eastern wooden pit props (from Ala- bama, Mississippi, Louisiana, and parts of Florida, Arkansas, Texas, and Oklahoma). Ford commercial trucks (8-cylinder, 90 horsepower, 122-inch wheelbase 1-ton express model). Processed red sour pitted cherries (1945 and later packs in barrels of 5 parts fruit to 1 part sugar, frozen). Used business machine rentals (except typewriters). Fresh spinach.. .. do _. Do Do. . do Do Lessor. per pound. Original 5 percent raised to 10 percent of “price new” on first month’s rental. Country shippers: 10 cents Nov. 8,1945 All Do.. Furnace stokers and parts do. , per bushel through November 20. Retailers: about Ji cent per pound. Producers: 10 percent for Db Live hogs (13 terminal markets in Massachusetts, Indiana, Kentucky, Tennessee, Alabama, Louisiana, Minnesota, Illinois, Pennsylvania, and North Dakota). Reo commercial trucks (models 19 and 20, and standard cabs for Reo models). Certain combed cotton fabrics........... Producer.. . stokers of 50 pound capacity or less; 5 percent for larger. 5 cents per hundredweight. Producers: 24.6, 21.4, and Do All j Nov. 9,1945 Producer 9.2, percent, respectively. Average 10 and 6.9 percent.17 Varied. Nov. 10,1945 Florida pebble phosphate rock tin Do Fresh green peas.... All. . Country shippers: 20 cents per bushel through Nov. 20. Retailers: about Ji cent per pound. Producers: 10 cents per i barrel. IJi cents per pound. $2 to $4 per hundredweight. Do Portland cement (sold in southern United States producing area). Whole Aleppy black pepper do. v Do Importer.. Nov. 13,1945 Frozen fabricated veal (Army-specification).. Certain low-end apparel Processor... Do Producer.. 15 percent for most covered items,:) About 6 percent. 5 to 13 percent. Producers: 10 percent.18 K Do Tire splitting Tire splitter.. Nov. 14,1945 Certain cotton products (terry products, huck towels, corded napkins, blankets, I blanket robe cloth). 1 Low-priced builders hardware Wholesaler Do Afi ' Extension of increase scheduled to expire Oct. 31,1945, pending completion of cost studies. ‘ On utility or canner and cutter grades of beef. , ^or packaging beef or veal meeting certain specifications. ; Eor freezing in sellers’ own facilities and freezing commercially. ’ For public cold storage for freezing export carcasses, through Dec. 31, 1945. For majority of products. , For producers paying and not paying WLB-ordered wage increases. 18 Not to extend beyond Mar. 31, 1946. 68 • Sixteenth Quarterly Report Table 4.—Price Increases, October-December 1945—Continued Effective date Commodity Level of action Amount of increase Nov. 14,1945 Nov. 15,1945 Nov. 16,1945 Do Ready-mixed concrete (sold in Georgia, Alabama, Tennessee, Louisiana, Mississippi, North Carolina, South Carolina, Florida, and parts of Virginia). Mincemeat Producer Varied. Producers: 1H to 2 cents per pound. Retailers: 2 cents per pound. Producers: $3 per square NT feet. Producers: $2.40; $1.50, and $1 per ton, respectively. Processors: 1.5 to 2.4 cents per pound. Processors: 1 cent per pound. 7 cents and 4 cents per pair,19 respectively. 20 percent. Producers: about 12 and 6 percent, respectively. Retailers: 9 and 2 percent. 11.4 percent. 75 cents per ton. Retailers: 3.1 to 29.3 percent. $6.50 per carload. Producers: 11.5 percent. Producers: 27 cents to $1.86 per dozen. Processors: 6/10 cent per ounce of mustard seed content. 24 percent for producers. Varied.20 1 cent per loaf. 7J^ percent. Retailers: 19.0 to 22.7 percent. Fishermen and processors: 3 cents per pound for fresh and H cent f°r frozen. Retailers: about 4 cents a pound. 13.6 to 10.3 percent. Retailers: 19.1 percent. Producers: 16.8 to 13.7 percent. Processors: 3 to 17 cents per gallon in Western States; 6J^ to 44 cents in other States. 8 percent. . Producers; up to 1.7 cents per pound. Processors: 3.6 to 5 cents per pound; for retailers 5 to 8 cents a pound. 3 cents per pound in the West and 7 cents elsewhere. Varied up to 2 cents a pound. Producers: about 3J4 cents per gallon. 2 cents per dozen bio. * cans 21 and 9 cents P®* dozen No. 10 cans. All... Gypsum lath and linerboard (except California and Nevada). Calcined gypsum piaster (5 eastern mills; 2 Virginia mills; and 5 central United States mills). Quick-frozen, eviscerated poultry Poultry fat do .do Nov. 17,1945 • Do do .... do Nov. 19,1945 Do Bicycle replacement tubes (standard grade popular size). Bicycle tire assemblies (2 smaller sizes and 4 grades sold as original equipment). New automobiles (Studebakers and Fords). Douglas fir open windows and sash Producer and wholesaler. Producer Do. All Nov. 20,1945 Do Producer Linseed and peanut oil pellets do.. . Do New trucks (28 Dodge models) All Do Processed western softwoods (sling lots or individual parcels requested by buyers). Electrical fiber conduit and pipe Producer Do. All Do Men’s and boys’ utility shirts (cottonflannel, -domet, -suede, -moleskin). Prepared mustard (16-ounce jars or larger). Walnut lumber Pro ducer and wholesaler. Processor and wagon wholesaler. All.. Nov. 21,1945 Nov. 23,1945 Do Wisconsin binder tobaccos, type 54 and 55 (1944 and earlier crops). White bread (standard pound loaf produced in San Diego County, California). Douglas flr and minor species of plywood (bought from distribution yards). New trucks (8 General Motors models).. Bay scallops Packer . Nov. 24,1945 Do Wholesaler-baker and retailer. Retailer ... Do All Nov. 26,1945 Do do. . Ginghams, seersuckers, and related fabrics. New trucks (one International Harvester model). Woven ticking Producer All . Do Do Producers and jobbers. All Nov. 28,1945 • Do....... Do Apple products (ciders, juice, and syrup 1945 crop). Automotive lifts. Producer Channel black (certain premium and low-end specialty brands). Dried apples (1945 crop of choice grade packed in 50-pound woodjboxes by processors in California, Idaho, Montana, Oregon, and Washington). Apple chops (1945 crop) All... Do .. . do Do do Do Fruit preserves, jams, jellies, and apple butter. Industrial ethyl alcohol (except on the West coast). Pole beans (1945 and later packs in Washington, Oregon, California, and certain counties of Idaho). -. ..do .. Do.. Producer and jobber. Processor Do 19 Proportionate increases on other sizes. 20 Shrinkage no longer to be absorbed. 21 Sieve sizes 5 and up and ungraded. Appendix to Price Chapters • 69 Table 4.—Price Increases, October-December 1945—Continued Effective date Commodity Level of action Amount of increase Nov. 28,1945 Do Rubber heels (unpackaged competitive grade for home replacement trade). Writing paper (three grades sold to the Government). Hardwood pulpwood (Minnesota, Michigan, Wisconsin). Lake States logs and tie cuts (except white birch) . Southern pine finished lumber and rough stock. White birch logs (veneer grade and 2 woods run grades in Minnesota, Michigan, and Wisconsin). Cotton textiles (bedspreads, woven decorative fabrics, and table linens). Flat galvanized steel sheets All : Producer Producers: 1 cent per pair. Wholesalers: 154 cents. Retailers: 5 cents. 1 to 3 cents per pound. $1 to $1.50 per cord for unpeeled; $1 to $2 for peeled. 1254 percent. Average of $2.25 and $5 per M b. m, respectively. $24, $12, and $7 per M b. m, respectively. 16 to 40 percent. 10 cents per hundredweight. 15 to 35 cents per hundredweight. Producers: 11 percent. Average of 11.6 to 32 cents Nov. 29,1945 Do do do _ Do do Do.. do Nov. 30,1945 Do do Reseller Do Frozen boneless and carcass beef and Processor . Do carcass veal (Army-specification). Steel castings and railroad specialties (except armor, Navy, ordnance). Anthracite coal All Dec. 1,1945 Do do Bituminous coal (United States bank of Lake Superior and west bank of Lake Michigan). Crude oil (14 pools in Colorado, Kansas, Kentucky^ New Mexico, Olkahoma, and Texas). Underwear, nightwear, and negligee garments (for women, misses, children). Winter-frozen pollock fillets Dock operator .... per ton. 5 cents per ton. 4 to 35 cents per barrel. Varied. Do.. Producer Do Integrated producers. All Do Processors: 354 cents per pound until Apr. 1,1946. 25 cents per hundredweight. 7.5 percent, and 4.3 and 7.5 respectively. Retailers: 10 to 40 cents per pillow. County dealers: 54 cent per pound on lots , of 30 tons or more. Packers and shelters: 54 cent. Processors: 3J4 cents per dozen No. 10 can of cherries, 4 cents per dozen No. 2 can of applesauce Retailers: about 5 cents a can for both. Producers: about 2.6 percent. Varied.23 Dec. 3,1945 Do Burley tobacco, type No. 31 (1945 and later crops). Cotton and rayon finished pieced goods (sold by wholesaler-jobbers; and by Pacific coast jobbers to class I and II customers). Feathers, down, and feather pillows (delivered in Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, Wyoming, and 9 counties of west Texas). Pecans Direct-order dealer. Jobber Do All Do Country dealer, packer, and sheller. All Do. Red sour pitted cherries and eastern applesauce. Variable condensers . Do do Do. War bicycles ... Mail order seller.. Dec. 5,1945 Shoe lining fabrics (8- and 9-ounce gem ducks). Window and picture glass Jobber „ 4.5 to 6.9 percent. 25 cents to $1 per box, 9 percent. 80 percent on rough and 50 percent on reconditioned machines. $15 per M. 3.5 percent. $6 per ton. 20 cents per barrel. Producers: 5.9 to 9.2 percent for corduroys; 8.1 to 11.3 percent for velvet teens. Producers: 16 percent. Dec. 7,1945 Producer Dec. 8,1945 Revolvers and pistols All Do Used cash registers (at least 20 years old). Circle sawn export whiskey barrel staves (white oak, bourbon grade). Hardwood handles (for hammers, axes, etc.). Newsprint paper Dealer .. Dec. 10,1945 Producer Do do Dec. 11,1945 do Do.. Portland cement (except white, in Nebraska, Kansas, Oklahoma, Arkansas, western Missouri, Idaho, Montana, Wyoming, Utah, Colorado, and New Mexico). Gray corduroys and finished velveteens.. Innerspring mattresses (with wire-tied units). . do Dec. 12,1945 Dec. 13,1945 Producer and wholesaler. Producer and 1 wholesaler. ,2 Base-period maximums may be raised to the ceiling level of other retailers in the same area, IQ • Sixteenth Quarterly Report Table 4.—Price Increases, October-December 1945—Continued Effective date Commodity Level of action Amount of increase Dec. 14,1945 Dec. 15,1945 Mercury automobiles Bread (chain store private label). All j j. Retailer— Producers: 10 to 13.6 percent. Dealers: about 4 percent. About 1 cent per pound Do Dec. 17,1945 Do Snap beans (f. o. b. Pompano, Fla.)...... Silver services (supplied to manufacturers of silverware, jewelry, and allied products). Vitrified clay sewer pipe and allied pro- All Supplier Producer Country shippers: $1.35 per bushel December 15-31; $1.45 per bushel January 1-20. Retailers: 5 cents a pound. Varied. 9.7 percent. Dec. 18,1945 Dec. 19,1945 Do ducts (eastern and east central areas). Ready-mixed concrete (Nebraska, Kansas, Oklahoma, Arkansas, Western Missouri, Idaho, Montana, Wyoming, Utah, Colorado, and New Mexico). Bituminous coal (from deep mines in Central Pennsylvania, Maryland, and part of West Virginia). Kerosene and fuel oil (sold in district I do —. All All in district I Varied. Producers: 7 cents per ton. 2/10 to H cent per gallon Do Do. Do Dec. 21,1945 Do and by district 3 into district I; exports and sales in certain New York, Pennsylvania, and West Virginia areas excluded). Steel railway (rough) axles Studebaker automobiles L— International Harvester trucks (4 K-models). Cabinets and dispensers of paper towels and toilet tissue. New household vacuum cleaners and at- and refiner and tanker terminal in district 3. Producer..... Dealer.... —L All .1 Retailer Producer and dis- until Apr. 30, 1946. 35 cents per hundredweight or $7 per ton. Varied.23 Retailers: 25 percent average. Varied.24 Producers: 6 percent. Do„—.. Dec. 22,1945 Do Dec. 24,1945 Do Do » Do Dec. 26,1945 Do ». Do...™ Do...™ Dec. 27,1945 Do Dec. 28,1945 Dec. 29,1945 tachments (sold for resale). Small household electrical appliances West coast logs (except select spruce, aircraft grade Noble fir, and wood other than No. 1 fir wood). Western softwood shingles.... Cordwood and related products (Michigan, Wisconsin, and Minnesota). Denatured rapeseed oil (c. i. f. New York, Pacific coast, and Gulf ports). Dry onions (1946 and later crops, early Valencia-type 3-3 finches in diameter) . Pine grain door bolts (truck deliveries from Louisiana and Texas to Lufkin, Tex.). Hemlock lumber (Michigan, Wisconsin, and Minnesota). Hardwood lumber (except structural timbers, common dimension, and certain minor items, produced in Michigan, Wisconsin, and Minnesota). Salted or brined cucumbers and pickles... Vitrified clay sewer pipe and fitting (six inches or more in diameter, sold in southern California, Arizona, and Nevada). Cotton fabrics (40 minor items)... Gummed cloth tape (1 inch wide) Household furniture Iron ore (produced in Minnesota, Wis- tributor. Producer and wholesaler. ..-..do ... Producer do Importer and distributor. All do Producer... do All. Producer... do ...... All do j.j Producers. Producers: 8 percent. $1.50 per M feet log scale. 20 cents per square. 7 to 11 percent. m cents per pound. Country shippers: 20 cents per 50 pounds. 50 cents per cord. About 4 percent. 4 percent. Cucumber salters or brin-ers: 22 cents per bushel. Pickle processors: 3.8 percent. Retailers: M to 1^ cents per quart. About 11 percent. 6 to 31 percent. 26 cents per M yards. Producers: all-wood items, 8.6 percent; upholstered 3.3 percent. Retailers: o percent average. Old Range ores, 20 cents per gross ton; Mesali district ores, 10 cents. Producers: Slightly less than $10 per ton until July 1,1946. Producers: 8 percent. Do Dec. 31,1945 consin, and Michigan for sale). Low-end groundwood specialty papers (19 grades). Cast iron soil pipe and fittings.. Afi do 23 Represents addition of transportation taxes in factory-to-seller shipment. 24 Base-period dollar-and-cgjit margins arg added to currently higher acquisition cogtg, Appendix to Price Chapters • 71 Table 5.—Releases from Price Control, October-December 1945 Effective date Commodity Level of action Period of release Oct. 1,1945 Oct. 2,1945 Oct. 5,1945 Oct. 8,1945 Oct. 16,1945 Do Fresh cucumbers All (except at retail) . Supplier Surplus property storage and handling (supplied RFC). Cotton ginning services Do. do Indefinite. Tobacco services (on fire and dark aircured tobacco). Amusement riding devices for amusement parks. Annatto seeds, saffron, and cochineal . do ..... All Permanent. Do. do Do. Do Botanical drugs and their extracts do Do. Do Calcium metal, ferroboron and boron alloys, ferropnosphorous, lead bullet rod, non-ferrous forgings, and tool steel scrap. Carillons do Indefinite. Do do Permanent. Do.... Chemical stoneware, talc, ground soapstone, and pyrophyllite. Imported chemicals (4, used in making drugs and chemicals). Industrial knitting needles i do Indefinite. Do.... do Permanent. Do do......... Indefinite. Do Instruments for measuring and controlling chemical and physical variables in industrial processes. Replacement radio tubes, parts, and storage batteries (sold to brand-owners). Saponin and gum ghatti do. Do. Do Producer.; Permanent. Do All Do. Do Shredded wastepaper (except sold for use as a raw material). Stainless steels do Indefinite. Do do Do. Do Mechanical building items (wood casing for pipe, window guards, vault doors, certain tie rods and accessories, plastic pipe and tubing, metal awnings, mail chutes (except pneumatic), certain liquid soap dispensers, stainless steel and aluminum molding, binding, and edging, and casket and casket shell hardware). Belting, corset and shoe lace, hat bands, and zipper tapes (made of nonelastic narrow fabrics of 50 percent or more cotton). Sauerkraut (1945 crop) do Do. Oct. 18,1945 do.— Do. Do do Permanent. Oct. 19,1945 Industrial ethyl alcohol (made from grain after Sept. 30, except on West coast).1 Coffee urn bags ana cigars (except cigars in customs or in bond before Oct. do Do. Oct. 22,1945 do Do. Oct. 23,1945 Oct, 24,1945 22). Unpacked dried prunes and raisins (natural condition). Boats of 25 feet or less (except toy) ..... do -....de. Do. Do. Do.... Boxing, wrestling, and striking bag equipment (except apparel). Bowling and billiard equipment and accessories. Certain mortuary equipment do Do. Do.... . do Do. Do.... do Do. Do... Ice cans (sold to industrial users) do.. Do. Do.... Imitation, synthetic, and semiprecious stones (for jewelry purposes, and jewelry findings, mountings, insignia, and emblems). Magazine racks and baskets (except tables or combination units). Plaques and loving cups (for athletic events). Porch gates (retailing at $3 or less, sold to dealers at $1.65 or less, and to jobbers at $1.40 or less). Portable braille writers .. do. . Do. Do.... do Do. Do do Do. Do.... do Do. Do.... do.... Do. Do Scientific instruments (for repair or assembling watches or clocks). Vegetable waxes and beeswax Do. Indefinite. Do. .. Importer, refiner, bleacher, and beekeeper. All. ^Ct. 25,1945 Oct. 26,1945 Oct- 27,1945 White potatoes . Until Dec. 6, 1945.2 Fresh whole and domestic dry coconuts.. Petroleum products (sold to refiners, except natural gasoline). do Refiner Permanent. Do. j Exceptresales of purchases from DSC. extension of a suspension originally expiring Oct. 25. 72 • Sixteenth Quarterly Report Table 5.—Releases from Price Control, October-December 1945—Con. Effective date Commodity Level of action Period of release Oct. 31,1945 Bakers’ fruit pie fillings All Indefinite. Do Bulk or packaged dehydrated vegetables (except peas, beans, and vegetable soups). Canned carrots and carrot juice (except baby food). do Permanent. Do do 90 days. Do Canned lime juice do Permanent. Do Canned or processed sport fishing bait; canned abalone, oysters, clams, and roe. do Do. Do Crabmeat do 90 days. Permanent. Do Dried whole unpitted apricots and peaches, black wine grapes, silver prunes, halved pitted plums, and cherries. do Do Frozen beets, citrus segments, coconuts, mushrooms, greens (other than spinach), melon, kale, figs, potatoes, and pears. do „ Do. Do Frozen uncooked lobster, and salted lake herring. do ........ Do. Do Pretzels and ice cream cones, bouillon cubes, frozen dough, and hardsauce (containing distilled spirits). do ...... Do. Do Spices (21, including fennel seed, anise, dill, thyme, saffron, mint, onion, garlic salt, and imported chutney). do Do. Do Vegetable seeds .do . 90 days. Nov. 9,1945 Cigar leaf tobacco (1945 crop) do... Permanent. Nov. 10,1945 Domestic bottled and bulk'wine Wholesaler and retailer. Until Apr. 1, 1946. Nov. 13,1945 Do Dressed palmetto fiber (forbrushes) All Permanent. Hames (for horses and mules) . .do Do. Do Sisal plastering fiber and filling _ _ . do Do. Nov. 17,1945 Live poultry (sold by youth organization members at fairs, shows, and exhibits).3 Producer... „ Do. Nov. 19,1945 Bulk wine services (except bottling and casing). Grapefruit, lemons, oranges, and tangerines. Supplier Do. Do All Until Jan. 13, 1946. Do Quinidine and its salts do Permanent. Nov. 20,1945 Do Boats (over 25 feet long) do. Indefinite. Imported briarwood do .. Do. Do Paper commodities and services (under MPR 225, including loose leaf binders, social stationery, commercial supplies and printing and binding of these items). Reusable steel storage tanks, and monel metal, pure nickel, stainless steel, and aluminum scrap, secondary aluminum ingot, mica, fine and speciality wire, armor, Navy and ordnance castings (BPS 41), and aluminum and magnesium mill products. do ——- Do. Do do Do. Do Sails and sail making do. Permanent. Do Certain scientific instruments and laboratory apparatus. do Indefinite. Do Textile machinery accessories and parts (made chiefly of wood). .....do Do. Do Wiping cloths do Do. Nov. 26,1945 Specialty fertilizers and ingredients (tablets and plant foods used on other than commercial field crops). do.. Permanent. Dec. 1,1945 Bowling, billiard, and pool charges, rentals, and maintenance. Operator ... Indefinite. Do Judicial sales (except made in the course of trade by legal representatives, or court officers engaged in continuing businesses). Court ... Permanent. Dec. 3,1945 Cattle and hogs (sales at recognized fairs, shows, or exhibits). Producer Do. Dec. 4,1945 Domestic cotton thread (for sewing, crocheting, darning, knitting, embroidery, industrial stitching, and thread weight goods). All4 ..... Indefinite. Dec. 5,1945 White potatoes. do Until Mar. 6,1946.« ’ Designated officials must obtain prior OPA district approval. 4 Manufacturers’ suspension covers only specific quantities of each type, and a report must be filed i of larger quantities; ceilings are automatically restored for any period when such report is overdue. * Second extension of a suspension originally expiring Oct. 25. Appendix to Price Chapters • 73 Table 5.—Releases from Price Control, October-December 1945—Con. Effective date Commodity Level of action Period of release Dec. 12,1945 Automobile steering wheel covers All Permanent. Carbide lamps and lanterns do.. Do. Do Chess boxes* and checkerboards (hand-made and inlaid). ....do Do. Do Coir yarn mats ... do.. Do. Do Crib blanket holders and quilt holders.'.. do Do. Do Ecclesiastial ware (MPR 188) do Do. Do Fish nets do Do. Do Glider slip covers, replacement cushion sets, glider raincoats, and beach chair replacement covers. do Do. Do Handcuffs and billies do... Do. Do Hardware (dock rollers, foot scrapers, garden carts, grass catchers, ice creepers, lawnmower sharpeners, nail strippers, sawbacks, traps and snares (animal), and tree saver bands). do - Do. Do Hearing aids and accessories (except batteries). do Indefinite. Do Household accessories (grandfather hall clocks and cabinets, and holloware, made of or plated with precious metals). Household furniture (cobblers’ benches for living-room novelty; humidor smoking cabinets; all hanging types of wall racks; umbrella stands; wood radiator enclosures; and rugs, custom-made or design furnished by consumer). do Permanent. Do do Do. Do Housewares (anti-splasher faucet attachments; barbecues; barometers; bread and meat boards; bottle cappers; cosmetic brushes; carpet and rug beaters; moth repellent cedar chip and sawdust bags; clothesline props and reels; hand coffee grinders; corn poppers;, cutlery boxes; dog houses, kennels, and exercise pens; portable fireplaces and equipment; portable fire escapes; flagpoles and staffs; food dehydrators; garment bags, except paper; hat racks; hygrometers; ice shavers; ice cube tongs; lamp shade covers; ornamental mantel pieces; plastic flower boxes; rubber bottle stoppers; shopping carts; flat, wooden spoons not sold to ultimate user; toothpicks; and wood knife holders). do.. .... Do. Do Life buoys and preservers (not under MPR 403). do Do. Do Lifesaving equipment (except under MPR 149, 157, 220, and 403). do ... Do. Do Portable camp and picnic-type ice chests. do Do. Do Rubber shapes and’ figures (inflated for display or advertising). do Do. Do.. Sporting goods (custom-built or rebuilt, enhanced guns; exercising dumbbells; elastic chest pulls; grip developers; Indian clubs; medicine balls; steel spring exercisers, wands, and home exercise machines; gymnasium apparatus; playground apparatus; and snowshoes). do Do. Do. Supplies and equipment (cabinets for exempt coin-operated machines; commercial and institutional kitchen apparatus and fixtures, except refrigerators, freezers, and cookware; custom-built commercial furniture, fixtures, and equipment (MPR 188) made on user’s special order and design; dental equipment except office furniture; deodorizers; fire extinguishers; flight demonstrators and aeronavigational apparatus; suntan face reflectors; and U. S. Post Office mail boxes for the Government). do Do. 74 • Sixteenth Quarterly Report Table 5.—Releases from Price Control, October-December 1945—Con. Effective date Commodity Level of action Period of release Dec. 15,1945 Do . Bouillon (granulated) All Permanent. Chili pepper (ground) and chili powder.. do .. Do. Do Chop suey and chow mein (canned and frozen). do Do. Do.’. DDT and insecticide mixtures of which it is the principal ingredient (except mixtures containing pyrethrum, rotenone, and nicotine sulphate). do Indefinite. Do Dry gravy mixes do Permanent. Do Inactive yeast and derivatives (exclusively for human consumption). do Do. Do Onions (brined, imported, arid domestic). Oyster and clam shells (used in poultry feed); mineral mixed feeds; and timothy seed). do . Do. Do .....do 90 days. Do Paprika (ground) do Permanent. Do Sponges (processed from marine animals). do Do. Do Water crackers do Do. Do ... Wheatgerm .. . do Do. Dec. 21,1945 Used military uniforms and clothing (sold as scrap or salvage by the Government). Reseller ..... Do. Dec. 24,1945 Processed citrus products (1945-46 pack of all fresh, canned, or frozen juices; whole or broken segments, pulps and molasses; marmalade base; flavoring base concentrate; beverage syrup; and crushed, shredded, minced, sliced, or diced fruit or peel). All Indefinite. Dec. 31,1945 Airplane tire repair service (with repairs designed for airplane use). do Permanent. Do Aluminum and stainless steel caps, corners, and cornices. do Do. Do Beeswax comb foundations do Indefinite. Do.... Cast iron pressure pipe and fittings.. ... do Do. Do Cast iron risers (manufactured in accordance with the specifications of applicable sanitary laws and regulations). ..L..do Permanent. Do. CNI alloy cast iron thread pipe, couplings, and nipples. .....do Indefinite. Do Coal chutes .do Permanent. Do Coated fabric advertising streamers do Do. Do Cocks, ground key, plug type corporation, curb and service pattern used by gas and water utilities. .....do Indefinite. Do Commodities and services sold by schools primarily training students in a trade or vocation. do Permanent. Do Component parts and accessories of industrial knitting needles. do .... Indefinite. Do Domestically grown bamboo poles do . Permanent. Do Electro-therapeutic apparatus", parts and accessories (needing no further fabrication in order to be identified as such). .....do Indefinite. Do.. Fire hydrants (of the dry barrel type) do... Do. Do Fireworks .do.. .. Permanent. Do Kerosene sulkies do : Do. Do Horseshow buggias do Do. Do Indicating pressure gages (having cast cases with dial faces 4 inches or more in diameter, or pressed metal cases with dial faces 614 inches and larger, or cast or phenolic plaster cases made to U.S. Navy specifications). do Indefinite. Do Indicating pressure test gages do Do. Do Ingot molds, spruces, sprue plates, fountains and runners, cast of pig iron for use in steel making and pouring. do Do. Do Items made with the covering of the caecum of a sheep or cow. do.... Permanent. Do Manholes and covers do Indefinite. Appendix to Price Chapters • 75 Table 5.—Releases from Price Control, October-December 1945—Con. Effective date Commodity Level of action Period of release Dec. 31,1945 Mechanical building equipment (auto-’ matie regulation valves and float valves larger than 3 inches IPS and all sizes designed to operate at pressures in excess of 300 pounds per square inch; safety and relief valves except combination temperature pressure relief valves for hot water supply systems; bronze fittings and valves with ends for high temperature brazing except those using solder material for joining; forged steel fittings, screwed ends, flanged ends and welding ends, except steel welding fittings designed to operate at pressures less than 250 pounds per square inch; iron, bronze, or steel lubricated or asbestos packed plug valves; "manually operated or motorized valves designed to operate at pressures exceeding 250 pounds per square inch; steel, carbon steel, or alloy steel pipe fittings having screwed, flanged, , or welding ends, except steel welding fittings and flanges designed to operate at pressures under 250 pounds per square inch; screwed end and flanged end pipe fittings and pipe unions designed to operate at steam working pressures exceeding 250 pounds per square inch). AU Indefinite. Do Metal clad wooden plumbing fixtures .. do Do. Do Meter boxes (outside) - .... do Do. Do...;... Molds, generally made of sheet metal (used in commercial production of large blocks of ice). do —. Do. Do; Nonmetallic air and fume conductor devices and accessories. do Permanent. Do.. Oil separators (except these spelled out in RMPR 136). do Indefinite. Do... .. Perfection oil gates do Do. Do.. . Pneumatic life rafts _.. do Do. Do Post indicators do . Do. Do.... Racing motorcycles do Permanent. Do. Repair clamps and couplings (except for garden hose). do ; Indefinite. Do Steel pressure and multi-pressure, 2-, 3-, and 4-way hydraulic and pneumatic valves. do Do. Do.... . Steel turbine valves L do Do. Do Valves with ferrous bo.dies with hub end,l or steel, forged steel, carbon steel, or\ alloy steel bodies, or with copper alloy bodies larger than 4 inches IPS or ferrous bodies larger than 8 inches IPS; and valves specially designed for paper and pulp mill services. .....do Do. Do.. Walk gates (except farm gates and fences). Wooden cooperage dowels do : Permanent. Do do Do. Do....... Rolled carpet (for automobile floor mats, sold to automobile manufacturers anq subassemblers). Producer.... Indefinite. 76 • Sixteenth Quarterly Report • VIII • TRANSPORTATION AND PUBLIC UTILITY RATES Inflationary pressures with respect to rates charged for most transportation and public utility services were still in evidence and, as to some services, were increasing during the quarter ended December 31, 1945. The Office accordingly continued not only to intervene before various regulatory bodies in rate increase proposals that appeared likely to injure the stabilization program but also further to implement its direct controls over the charges of a wide variety of transportation and accessorial services. Intervention authority with respect to rates of common carriers and public utilities stems from the Stabilization Act and implementing directives and regulations, under the provisions of which the Office may intervene before the appropriate Federal, State, or municipal regulatory agencies regarding proposed increases in common carrier or public utility rates, and must be given a 30-day notice of proposed increases. Rates and charges of unregulated contract carriers and for services performed by storage, terminal, and other such companies are controlled by the Office directly just as are prices in other industries. TRANSPORTATION The Office received 1,785 notices from common carriers during the quarter, proposing changes in their existing tariffs, an increase of 8 percent over the total received during the previous quarter. Since most of the notices were to correct tariff errors or to announce the expiration of rates which had served special purposes, the Office found it necessary to protest only 36 of them. With respect to these, the Office intervened formally before regulatory agencies in only 26 cases, with the result that 20 of the proposed increases were suspended, 5 w«re allowed to stand, and the Office withdrew one formal protest in the light of added information concerning the need for the increase. Motor Carrier Charges For the most part, the energies of the Office with respect to common carrier rates, as in previous quarters, were directed against motor carrier commodity rate increases and changes in commodity classification. Because of increased costs of operation, particularly wages of motor carrier employees, groups of carriers throughout the coun Transportation and Public Utility Rates • 77 try began consideration of varied proposals to increase rates, particularly on smaller shipments weighing 5,000 pounds and under. Among the more important cases in which the Office took action were the following. In East-South Joint Rates and Routes—Cancellation (I. & S. M-2433), the Office sought reconsideration of a decision by a division of the Interstate Commerce Commission, which held that the Commission did not have power to require motor common carriers to maintain joint rate and through route arrangements into which the carriers had entered voluntarily. This decision was used by certain respondents in Minimum Class Restrictions—Central and Eastern States (ICC Doc. No. MC-C-360), to contend in their petition for rehearing and reconsideration that they would withdraw from joint rates and through routes prescribed by the Commission in the latter proceeding. The petition filed by the Office in the first cited case held that the Commission has the necessary power under section 216 (c) of part II of the Interstate Commerce Act, which provides that “common carriers by motor vehicle may establish reasonable through routes and joint rates with other such carriers * * At a hearing before the Maritime Commission in Increased Rates From, To, and Within Alaska, the Office protested the steamship lines’ contention that freight rate increases of about 100 percent would be needed to meet operating expenses. The steamship officials testified that the Territory of Alaska could not bear such increases, and they proposed a subsidy as a solution. Freight rate increases would have an immediate and direct effect upon ceiling prices in Alaska because all prices are based upon landed costs in which transportation charges are of importance. The proceeding was continued for further hearings. At the end of the quarter, upon protest by the Office, the Civil Aeronautics Board issued an order requiring the Pan American Airways, to cancel its proposal to eliminate or reduce its discount of 25 percent form regular fares for Government transportation and transportation of Government employees after intervention by the Office. The discount was of particular value to employees of the Panama Canal Zone because air service was the only regular means of transportation to and from the Zone. Contract Carrier Services Fifty-one contract carrier applications for rate adjustments were processed during the quarter under the provisions of Supplementary Regulation 15 to the General Maximum Price Regulation. Of these, 6 were denied, 30 granted in whole, 5 granted in part, and 1 dismissed for lack of adequate information; 9 involved amendments granting 688954—46--------6 78 • Sixteenth Quarterly Report relief additional to that afforded by earlier orders. In addition, the National Office issued 9 orders reaffirming earlier orders issued by regional offices concerning findings in respect to applications for individual adjustments in rates. In the field of pick-up and delivery contract carriage, 393 applications for adjustments were acted upon, of which 388 were received during the quarter. Of the applications handled, 363 were granted in full, 19 were granted in part, and 11 were dismissed. As the quarter ended, only 44 applications for adjustments in existing pick-up and delivery rates were pending. The regulation affecting pick-up and delivery carriers (sec. 9 of SR 14-H) was amended to provide for area pricing wherever such pricing became necessary and feasible. During the quarter, four area orders were issued under this provision, providing for dollar-and-cent rates in the Minneapolis-St. Paul area; in the Kansas City-North Kansas City, Mo., and Kansas City, Kans., area; and in the cities of Fargo, N. Dak., and Milwaukee, Wise. Dollar-and-cent pricing was established for the rental of trucks on a fully maintained basis in OPA Region 5 (Texas, Oklahoma, Kansas, Missouri, Arkansas, and Louisiana) ? These fully maintained rental rates reflect approximately the March 1942 levels of lessors who made rentals in that period. The order was general in the region, applying also to lessors who did not have March 1942 prices. It enabled Government agencies to settle accounts for rentals on construction projects expeditiously and equitably in accordance with the principles of the Price Control Act. With the transition from the wartime to a peacetime economy, many contract carrier transportation services which had been abandoned during the war were resumed, and a trend toward the establishment of new contract carrier businesses was noted. A regulation was therefore developed during the quarter, to become effective early in 1946, providing that contract carriers undertaking new transportation services or resuming prewar types after 6 months’ or longer discontinuance could apply for new rates or adjustments in line with legal levels already established from recent cost data. Requested ceilings were to become automatic after 20 days, in the absence of OPA notification to the contrary. Except for this provision, contract carriers were held to March 1942 rates, which in general were lower than the going level.2 Transporters of motor vehicles over the highways presented an individual problem in that a large number had discontinued operations prior to March 1942 and did not have March 1942 ceilings. Some did transport motor vehicles over the highways for the United States Government during the war, while many others, for lack of business, 1 Order No. 2, MPR 571; effective retroactively to February 2, 1945. a Amendment 7, SR 14—H ; effective January 9, 1946. Transportation and Public Utility Rates • 79 had merely laid up their equipment and did not operate during the war. The carriers who operated for the United States Government had good earnings up to the cessation of hostilities and could not show hardship in order to obtain an upward adjustment in rates. Those who did not operate during the war could not submit financial data and, of course, could not show hardship. Since approximately one-third of the motor vehicles transported over the highways move via contract carriers, the necessity for some streamlined method of establishing suitable rates was obvious. New contract carriers and carriers frozen at March 1942 rates which had become out of date were therefore allowed to establish ceilings not to exceed common carrier rates, on agreement with shippers that increases in transportation costs would not be used as a basis for increasing the ceiling price for the commodity which the shipper sells.3 During the quarter the Office was represented at conferences with other Government agencies regarding thé transportation of coal into the Northwest via vessels on the Great Lakes after the close of navigation, in order to make up the deficit caused by the coal strike earlier in the year. A subsidy program was necessary to take care of the additional transportation costs for post-season operation resulting from the lack of cargo on the return voyage and the greatly increased insurance premium because of the dangers of an early freeze. Storage and Terminal Charges First regulated under the provisions of the General Maximum Price Regulation, the rates and charges for a wide variety of storage, terminal, and accessorial services were transferred to a definitive freeze-type regulation especially designed to meet the conditions peculiar to the various segments of the industry.4 This regulation and supplementary regulations issued thereunder provided substantial improvements in the administration of price control in this area and a sounder basis for compliance. Some 4,000 tariffs, as required by the regulation, were filed during the quarter from every type of warehousing facility, providing the most comprehensive picture of the tariff structure of the industry and affording the most effective basis for meeting pricing problems. Meetings held in October 1945 with the two newly constituted advisory committees, the Merchandise Warehousing Committee and the Refrigerated Warehousing Committee, resulted in several useful suggestions for the improved handling of specific pricing problems. Perhaps the most important of these concerned such so-called low-end services as pool car distribution, in which little or no 3 Amendment 6, SR 14—H ; effective January 9, 1946. 4 MPR 586 ; effective June 1, 1945. 80 • Sixteenth Quarterly Report storage income is involved and which warehouses had been supplying at out-of-pocket losses. During the quarter an amendment to the ice regulation was issued to waive, for companies furnishing protective service to rail carriers, the buyer-seller agreement provision for price adjustment requiring the buyer of such service to absorb the increased costs involved in any price adjustment.5 Protective service companies supplying refrigeration service charge the railroads the full amount of the acquisition cost under their contracts, which in turn are subject to the provisions of section (1) 14 (b), part I of the Interstate Commerce Act. PUBLIC UTILITIES A total of 219 public utility rate increase notices were received and processed during the quarter. These notices were received from all parts of the country and from almost every type and size of utility, natural gas matters continuing to predominate. VJ-day and the attendant reconversion problems, however, started a flow of notices of proposed street railway and bus fare increases, which promised to be among the most important public utility matters henceforth to be handled by the Office. Local transportation costs are a relatively large item in the cost of living. Since fare increases are felt immediately, moreover, any attempt to raise unit charges for local transportation constitutes a danger to the stabilization program. Gas Company Rates The Pennsylvania Public Utility Commission on October 29, following oral argument before it, in which the Office participated, entered an order dismissing the Equitable Gas Co.’s exceptions to its original denial of a proposed $1,400,000 increase in retail natural gas rates in Pittsburgh and vicinity.® The company filed an appeal to the superior court of Pennsylvania while the Office filed a petition with the court for leave to intervene as a party appellee. In the allied Pittsburgh & West Virginia Gas Co. and Kentucky-West Virginia Gas Co. rate reduction matter, hearings before the Federal Power Commission were continued during the quarter to determine whether the rates charged Equitable for the gas it resells are too high. The last week of 1945 saw the conclusion of long-standing efforts of the Ohio Fuel Gas Co. to increase its rates in the City of Lorain, Ohio.7 Following an order of the Ohio Public Utilities Commission permitting the Office to investigate all expense items claimed by the 6 Amendment 13, MPR 154; effective November 6, 1945. 8 See Fifteenth Quarterly Report, p. 56. ’ See Fifteenth Quarterly Report, p. 49. Transportation and Public Utility Rates • 81 company, including the cost of gas at the city gate, and granting a subsequent OPA motion for access to the company’s books and records, the company withdrew its application for increased rates at Lorain. The Office also filed complaints against the company in connection with increased natural gas rates established in several Ohio municipalities without notice to this Office, in violation of the provisions of the Stabilization Act of 1942. Accordingly, the Office sought to enjoin the charging of the increased rates and requested the restitution of charges made in excess of the September 15, 1942, level. The West Virginia Public Service Commission denied the Hope Natural Gas Company’s requested $186,000 increase in industrial natural gas rates, following intervention by the Office. The Office had contended and the commission found that the propriety of the proposed increase should be appraised in relation to the over-all return of the company rather than to a single segment of its operations, and that, on this standard, the company had failed to show that its increase was justified. The commission’s action was similar to its previous order in the Godfrey L. Cabot Co. Inc. case, in which the Office also participated.8 During the quarter, the New York Public Service Commission issued an order allowing the Producers Gas Co. the $34,000 increase in rates requested by the company late in 1944, despite the opposition of the Office. Local Transportation Cases The Office protested the Hudson & Manhattan Railroad Co.’s petition to continue permanently the temporary increase in fares granted the company for the emergency war period by the Interstate Commerce Commission’s 1943 order. This order granted an increase in fares on the company’s downtown line from 8 to 10 cents, with 11 tokens for $1, and permitted a uniform fare on the downtown and uptown lines. The Commission reopened the proceeding for further hearing at the request of the Office which pointed out that, as previously predicted, token use actually amounted to but a fraction of the volume estimated by the company. The Commission also clarified its 1943 order by declaring that its limitation was to 6 months after the legal termination of the war. Indianapolis Railways Inc. notified the Office of its request to the Indiana Public Service Commission for permission to continue in effect an increased schedule of fares for local trolley and bus service which had been instituted on September 15,1945, for a 3-month experimental period or until further order of the commission. The company had failed to notify the Office in September of the establishment of the 8 See Fifteenth Quarterly Report, pp. 56-57. 82 • Sixteenth Quartley Report new schedule. Accordingly, on receipt of the notice for its continuation, the Office sought to enjoin the company from charging the increase, and obtained leave to intervene before the commission in a hearing scheduled for January 7, 1946, to determine whether the experimental fares should be continued. The Cincinnati, Newport & Covington Railway Co. early in December submitted notice to the Office of its proposed increase in bus fares from 8 to 10 cents, scheduled to be effective December 14, 1945. Following protest by the Office, the Interstate Commerce Commission suspended the effective date of the proposed increase and set the matter for hearing on February 25,1946, at Cincinnati. The Detroit Street Railway System proposed to raise fares from 6 to 10 cents thereby increasing the cost of local transportation to users by over $7,000,000. The Price Administrator requested the Mayor of Detroit to defer the effective date of the proposed fare structure, scheduled for January 1,1946, and to set a date for a public hearing. Complaints had been received from individuals and from public bodies in the city of Detroit protesting the fare increases. The Chicago Rapid Transit Co. on remand from the State supreme court sought an injunction against the interference with their proposal to increase basic fares from 10 to 12 cents, which was initially denied by the Illinois Commerce Commission.9 This matter was heard on October 18 before the circuit court of Cook County, which referred the case to a Master for the purpose of taking evidence on the income and expenses of the company. This was in line with the Office’s interpretation of the supreme court’s opinion that the company was entitled to an increase in fares only if its revenues did not equal operating expenses. The Master’s hearing was continued to await the action of the supreme court on the mandamus proceeding. The Office successfully petitioned the Interstate Commerce Commission to suspend the effective date of the Central Railroad Co. of New Jersey’s proposed $300,000 commutation fare increase. The Office also intervened before the New Jersey Board of Public Utility Commissioners in the intrastate aspects of this matter. Hearings in this matter were to begin early in 1946. Other Utility Matters The circuit court of Ingham County, Mich., upheld the order of the Michigan Public Service Commission, reducing the electric rates of the Detroit Edison Co. The court signed a decree approving a $10,-450,000 refund to 1944 customers, $6,000,000 to 1945 customers, and a $3,000,000 reduction for 1946. The Office participated actively in all phases of this matter at the request of the city of Detroit before the Michigan Public Service Commission and the courts. 9 See Fourteenth Quarterly Report, p. 51. Transportation and Public Utility Rates • 83 In a proceeding in which the Office participated, the New York Public Service Commission suspended until June 30, 1946, the effective date of an increase in electric rates for industrial refrigeration proposed by the Consolidated Edison Co. of New York. The Office was also involved in a number of telephone matters which were not terminated at the close of the quarter. Hearings on the $40,000 increase sought by the Chillicothe Telephone Co. were concluded before the Public Utilities Commission of Ohio, and at the close of the quarter a decision was awaited. The Office intervened before the Ohio Commission in the matter of the Ohio Associated Telephone Co.’s request for a $71,000 increase in telephone rates and filed objections to a report of the commission because the commission had not viewed the matter on a company-wide basis. Hearings were held before the Oklahoma Corporation Commission concerning the $20,000 rate increase sought by the Southwestern Associated Telephone Co. 84 • Sixteenth Quarterly Report • IX • RENT CONTROL PROGRAM In line with the policy announced after VJ-day of continuing vigilance to prevent inflationary rises in residential rents and of lifting controls wherever pressures against rent ceilings abated,1 the Office extended rent control to 2 new areas and removed control from 13 areas or portions of areas during the final quarter of 1945. Federal rent regulations were in effect at the end of the year in 479 defenserental areas, including Alaska and Puerto Rico. Both new areas were brought under control October 1, 1945, after an inflationary rental situation had developed in conjunction with the opening of military hospitals. The housing shortage was aggravated in one of these areas by expanding railroad employment and the influx of families of service personnel attached to numerous surrounding military installations. Of the 13 decontrol actions, 1 occurred October 1,11 on November 1, and 1 on December 1. In 12 of these cases, a sharp reduction of military establishment personnel caused housing vacancies and the elimination of inflationary rental pressures. In the Punta Gorda area, Florida, for example, which was decontrolled November 1, 1945, the Punta Gorda Army Airfield was inactivated by the War Department September 1,1945, and by the end of September only a small skeleton force remained. It was reported that about 90 percent of the housing that had been rented by service personnel in this area was vacant. In the Grenada area, Mississippi, 3 counties were decontrolled November 1, 1945, as a result of a curtailment in the activity at Camp McCain, which created housing vacancies and caused rents to fall. AMENDMENTS AND INTERPRETATIONS In an effort to stimulate the construction of new rental housing, the housing and hotel and rooming house regulations were amended to provide that in setting rents for newly constructed dwellings, allowance would be made for general increases in costs of construction since 1939.2 This amendment applied to major capital improvements and conversions of existing structures as well as to the construction of new units. Formerly, allowance was made only for increases since the maximum rent date. With maximum rent dates in areas under con- 1 See Fifteenth Quarterly Report, p. 59. 3 Amendment 73, Rent Regulation for Housing, effective November 23, 1945; Amendment 69, Rent Regulation for Hotels and Rooming Houses, effective December 21, 1945. Rent Control Program • 85 trol varying from January 1,1941, to the current year, the need for a uniform date, immediately prior to the time when increased construction costs attributable to defense and war activities became general, had become apparent. A procedure was developed under the amendment whereby builders might present their plans and specifications of proposed construction to the area rent office and obtain prior approval of the rent to be allowed on the proposed units. In this way builders were enabled to proceed with construction, assured of the maximum rents they would be able to charge. Changes in Hotel Regulation The hotel and rooming house regulation was amended in several respects during the quarter, chiefly to bring it into conformity with the housing regulation.3 The area rent director was given discretionary authority to condition the issuance of a certificate permitting removal of a tenant for reasons which the area rent director determined to be not inconsistent with the Price Control Act or rent regulation upon a maximum waiting period of 6 months, unless he determined that a 3-month waiting period was adequate in his area. Formerly, the eviction section did not provide for imposing a waiting period. The elimination of the provision permitting the landlord to remove a tenant for the immediate purpose of demolishing or substantially altering or remodeling a room, by serving an eviction notice and resorting to remedies under local law, obliged the landlord to aPPly for a certificate of eviction. By permitting the imposition of a waiting period in proper cases, this amendment made allowance for the difficulties confronting tenants who face eviction. The eviction section of the regulation was further amended to extend protection from eviction to a daily or weekly tenant of a hotel, or a daily tenant of a rooming house, who has requested change to a weekly or monthly term of occupancy pursuant to certain provisions of the regulation. Landlords were permitted to, demand that a tenant execute a renewal lease for a 1-year term, if the expiring lease was for a period in excess of 3 months and nonseasonal in character. The requirement that any room or cabin in a tourist camp or similar establishment, which, since October 1, 1942, had been rented to the same tenant for a continuous period of 60 days or more on a daily basis, be offered for a monthly term of occupancy was eliminated. This provision had been made at a time when tourist camps, adjacent to war centers, were in many cases renting to war workers and service personnel at daily rates and providing services usually furnished to ’Amendment 69, Rent Regulation for Hotels and Rooming Houses; effective December "1,1945; see also Fifth Quarterly Report, pp. 60—61. 86 • Sixteenth Quarterly Report monthly rather than transient guests. The transient business had largely disappeared with gasoline rationing but began to return when gasoline rationing was terminated, and many tourist courts legitimately wished to return to a transient basis. In cases where abuses appeared and permanent tenants were retained at daily rates, the area rent director had authority under other sections of the regulation to impose monthly rates. That section of the hotel and rooming house regulation prohibiting the demand or receipt of a security deposit was amended to exclude from the definition of “security deposit” amounts in excess of 1 month’s rent voluntarily prepaid for his own convenience by a tenant in possession under a written lease. The area rent director was authorized to grant upward adjustments in rent on the basis of the lease instead of comparability, in those cases in which a lease in effect during the 30-day period determining the maximum rent called for higher rents for other periods during the term of the lease, even though the stipulated rent for other periods was not “substantially” higher than that for the period determining the maximum rent. By deletion of the word “substantially” from another section, adjustments were permitted which would bring rents for rooms under a lease beginning more than 1 year prior to the maximum rent date in line with maximum rent date rents, even though such adjustments would not result in a substantial increase. Authority was given to the area rent director to determine the services, furniture, furnishings, or equipment provided with the accommodations on the date determining the maximum rent in cases where the facts are in dispute, in doubt, or not known. The period within which landlords are required to file notice of change in identity of the landlord with the area office was extended from 10 to 30 days. The 10-day period had been found inadequate to give the new purchaser of an accommodation time in which to notify the area office of a change in landlords. The landlord who- has a real necessity to dispose of furniture in connection with rental of accommodations was permitted to require the purchase of furniture or other property as a condition of reiiting, if prior written consent of the area rent director is obtained. Changes in Housing Regulation An official interpretation was issued during the quarter defining the term “immediate compelling necessity” as used in the section of the housing regulation pertaining to recovery of possession of housing accommodations by a landlord for his own occupancy. Under this definition, the landlord’s need for possession must be “real, immediate, and urgent,” carrying with it more than merely desire or convenience. Rent Control Program • 87 AREA OFFICE OPERATIONS Area offices received 122,303 housing registration statements during the months of October, November, and December, which brought to 15,145,448 the total filed since the beginning of rent control. Registrations filed during the quarter under the hotel and rooming house regulations totaled 6,891 which covered 23,307 rooms, making a cumulative total registration of 493,279 covering 3,86’6,423 rooms. Registrations of first rents, for units not rented on the maximum rent date or during the 2 months ending on that date, accounted for 166,126 of the registrations of family dwelling units and for 8,156 of the hotel and rooming house registrations received by area offices during the quarter. A total of 3,076,922 family dwelling unit registrations and 900,193 hotel and rooming house registrations had been filed as first rents by the end of December. Provision is made in the rent regulations for adjustment in maximum rents on certain grounds upon both tenants’ complaints and landlords’ petitions. During the quarter under review, area offices received 117,769 tenant complaints, and disposed of 119,696, granting 75,663 adjustments. A total of 132,758 directors’ initiative cases of all types was processed during the quarter, among which 84,688 adjustments were made. As of December 31, 1945, a total of 106,451 cases were pending in area offices. Landlords filed 67,301 petitions for an adjustment in rent during the quarter, and 47,2'90 such adjustments were granted. After disposal of 68,792 such cases by the area offices, there were 34,292 pending at the end of December. From the beginning of operations through December 1945, area offices disposed of 1,298,888 landlord petitions for rent adjustments, and granted 730,986 adjustments. PROTESTS AND REVIEW PROCEEDINGS Any landlord who is dissatisfied with an order issued by an area rent director may obtain administrative review on application to the regional office, and, in addition, he may request the Administrator to review any such order. Landlords had filed, as of December 31,1945, a cumulative total of 31,380 applications with regional offices for review of orders issued by area rent directors; disposal had been made of 28,995, and the remaining cases were pending decision. In addition, these landlords had applied to the National Administrator for further administrative review m a total of 952 protests. Disposal of these cases resulted in the denial of 422, granting in whole or in part of 85, remanding of 1 to the region, and dismissal or withdrawal of 180 others. At the end of December, 264 protests were still pending before the Administrator. 88 • Sixteenth Quarterly Report Requests for consideration by a board of review were received in 68 cases during the past quarter. Hearings were held by Boards of Review and subcommittees in 32 cases and recommendations for the disposition of the protest were submitted to the Administrator in 33 cases. During the 3 months ending December 31, 1945, landlords filed 3 protests against maximum rent regulations. Since the inception of rent control, à total of 253 such protests had been filed, 42 of which were directed against the hotel regulation and the remaining 211 of which involved the regulation concerning housing accommodations. The total number of areas from which protests had been received was 64. On January 1, 1946, .there were 10 protests pending before the Administrator. A cumulative total of 165 protests had been denied, 51 had been dismissed, and 25 had been withdrawn. Landlords dissatisfied with any of these decisions have the privilege, under the Emergency Price Control Act, of appealing to the Emergency Court of Appeals, a court set up for the purpose of hearing cases arising under the act. Such appeals are treated in the following chapter.4 * See pp. 96-99. Emergency Court of Appeals • 89 • X • EMERGENCY COURT OF APPEALS Twenty-nine complaints were filed with the Emergency Court of A ppeals1 during the final quarter of 1945, 19 affecting price control, and 10, rent control. From the effective date of the Price Control Act through December 1945, a total of 289 complaints had been filed, of which 209 involved price regulations or orders, and 80, rent control. By the close of the year, 235 cases had been disposed of by decisions of the court or by agreement of the parties; 24 decisions were adverse in whole or in part to the Administrator. PRICE CONTROL CASES The court disposed of 17 cases affecting maximum price regulations or orders during the quarter, favorably to the Office in all but 2 cases. The decision in 1 case, a continuation of an earlier proceeding, was wholly adverse to the Administrator, while in 1 case it was adverse only in part. The more important opinions are described in the following pages. Thomas Paper Stock Co. Pursuant to section 204 (e) of the Emergency Price Control Act, as amended, the complainants in this case2 obtained leave from the district court in which criminal proceedings were pending against them to file a complaint directly with the Emergency Court of Appeals challenging the validity of section 1347.14 (d) of Maximum Price Regulation 30 (Waste Paper) between July 16 and September 11,1943, the period within which the alleged violations occurred. July 16 was the effective date of the Taft amendment to the act, which added a new paragraph (j) to section 2 preventing the Price Administrator from standardizing a commodity unless he should determine that there was no practicable alternative for effective price control. On September 11 the Administrator had issued a finding, with respect to Maximum Price Regulation 30, that there was no practicable alternative to the standardization effected by the regulation. It was the This court, established by the Emergency Price Control Act of 1942, reviews regulations or orders under the act in considering complaints by persons whose protests against regu-m 10”s or or<^ers have been denied by the Administrator or who have been granted leave by he district courts to file complaints in enforcement proceedings. 3 Thomas Paper Stock Co. et al. v. Bowles, 151 F. (2d) 345 (1945), No. 232 E. C. A. certiorari granted Janunary 2, 1946, Supreme Court No. 578; 66 S. Ct. 336. 90 • Sixteenth Quarterly Report complainant’s position that the regulation was necessarily invalid prior to the making of that finding. In granting the Administrator’s motion to dismiss the complaint, the court held that the Taft amendment did not automatically render invalid outstanding valid maximum price regulations which standardized commodities, where there was, in fact, no practicable alternative for effective price control to the standardization involved, and where the Administrator announced his determination that there was no practicable alternative within a reasonable time after the passage of the amendment. Gold-Form, Inc. Complainant, a new manufacturer of boys’ dungarees, objected to a maximum price established for it by the Office under the provisions of Maximum Price Regulation 208.3 This regulation authorized inline pricing methods as the basis for establishing prices of new sellers. In general, established sellers were frozen to prices charged during the base period, March 1942. The validity of the order was attacked on the ground that the authorized maximum price did not cover the complainant’s cost of production. In rejecting this contention, the court stated that in-line pricing does not necessarily contemplate cost-plus pricing, and added: “If complainant as a new manufacturer were given a price on such a basis, it would not only be inflationary in effect, but would discriminate against established manufacturers whose prices are determined by the freeze provisions of the regulation. We agree with the Administrator that ‘a correctly determined in-line price is not more required to guarantee the individual seller a profit than a price established under the general provisions of a valid regulation.’ ” The court noted that complainant’s chief difficulty arose from the fact that as a new manufacturer it had been at a disadvantage in competing for the available supply of piece goods which it had to secure through jobbers, paying a higher price therefor than established sellers whose historical sources of supply are mills. The court pointed out, however, that “the regulation does not contemplate a departure from an otherwise correctly determined in-line price because of any such individual consideration as this.” Fitwell Garment Co. The question presented to the court in this case4 was whether or not the Administrator was unreasonable in denying complainants’ application to amend their spring pricing chart pursuant to the provisions of Maximum Price Regulation 287. Under the regulation, each manu- • Gold-Form, Inc. v. Bowles, 152 F. (2d) 107 (1945), No. 240 E. C, A. * Isidore C. Mevorah et al. v. Bowles, 151 F. (2d) 766 (1945), No. 227 E .C. A. Emergency Court of Appeals • 91 facturer of women’s apparel subject thereto must prepare and file with the Office of Price Administration, a chart, listing, among other things, the selling price lines of the various categories or types of garments which he is entitled to sell under the regulation. Except in specified casts, a manufacturer’s selling prices during the spring and summer season may not exceed the highest selling price line listed for the particular category on the spring pricing chart. Selling prices of garments falling within categories not listed on the pricing chart may be determined under an automatic pricing provision. Complainants sought to amend their pricing chart under a provision of the regulation which authorizes the correction of errors on the original pricing chart. They asserted that they had inadvertently omitted to include a certain selling price line in a category not listed on the pricing chart, but which was higher than that to which they were entitled under the automatic pricing provisions. The- court sustained the Administrator’s basic position that the regulation authorized the correction of pricing charts only where the selling price lines sought to be corrected or added, reflected prices for garments dealt in to a significant extent during the base period. The Administrator’s finding that the complainants’ requested selling price line did not reflect their characteristic operations was substantiated by the fact that only a small number of garments had been cut and manufactured during the base period for sale in that selling price line, and that the garments were designated as samples and were not offered for sale to the general trade. Saunders Petroleum Co. In the Saunders case,5 the court upheld the reasonableness of an order issued under Maximum Price Regulation 88 establishing an individual maximum price for a marketer of fuel oil. The regulation requires sellers unable to price their petroleum products at a particular shipping or delivery point under the dollar-and-cent and automatic formula provisions of the regulation to apply to the Office of Price Administration for price authorization. Complainant sold its fuel at a new point in the midwest area, known in the industry as group 3 area, without first obtaining price approval. The order issued to complainant fixed its maximum prices as to past as well as future sales at the named delivery point. Complainant contended, among other things, that the authorized maximum delivered price was invalid because it did not assure a reasonable profit and because it failed to reflect a “group 2 price” published in certain trade journals, plus freight-to-destination. The court rejected these coñtentions and held that the primary require- 5 Saunders -Petroleum Go. n. Bowles, 152 F. (2d) 112 (1945), No. 170 E. C. A.; petition i°r rehearing denied December 24,1945. 92 • Sixteenth Quarterly Report ment, as evinced by the entire scheme and purpose of the regulation, is that the maximum price established by the Office of Price Administration shall be in line with the level of prices that actually prevailed, or would have prevailed, at the point of delivery during the October 1941 base period. The court stated that a correctly determined in-line price does not guarantee the seller a profit on each individual transaction, and added that since the group 3 pricing method was used by the industry merely as a method of quoting prices, it was not an established business practice protected by the Price Control Act. Consolidated Water Power and Paper Co. In a previous decision6 the court had held that Maximum Price Regulation 451 (Book Paper) was invalid in that it subjected the complainant to an unnecessary competitive disadvantage by failing to group its book papers with those of the same quality and giving to them specific dollar-and-cent prices rather than base-period “freeze” prices. To meet the judgment of the court, the Administrator had issued a revised regulation which listed all book papers alphabetically by name of manufacturers, and set forth in that list the ceiling price for each brand. The complainant filed a supplemental complaint with the court asserting that the new form of the regulation had not entirely cured the discrimination. Although there was no longer any grouping by grade, and dollar-and-cent prices were now set forth in the regulation for other papers as well as the complainant’s, the complainant held that its papers were unfairly singled out since all the other papers of similar quality had exactly the same price under the regulation, whereas before price control there had been some variation, although all the papers, had been substantially higher than the complainant’s. The court held 7 that since the prices as originally fixed by the regulation were being continued, “there lurks in the present regulation a trace of classification according to quality with possible prejudice to complainant.” The revised regulation was therefore set aside. In compliance with this decision, the Administrator has again revised the regulation.8 E. & L. Transport Co. Using specially built Government-owned equipment leased to it at a nominal sum, this company9 transported unassembled airplanes and airplane parts from the Ford Motor Co. plants in Michigan to 9 Consolidated Water Power and Paper Co. v. Bowles, No. 126 F. (2d) (E. C. A. 1944); see also Twelfth Quarterly Report, pp. 44-45. 7 Consolidated Water Power and Paper Co. v. Bowles, 152 F. (2d) 661 (1945), No. 126 E. C. A. 8 Amendment 3, RMPR 451, effective January 9, 1946. 9 E. & L. Transport Company n. Bowles; 152 F. (2d) 274 (1945), No. 221 E. C. A. Emergency Court of Appeals • 93 various Government assembly points in the western part of the country. Maximum rates for this transportation service were established under the General Maximum Price Regulation by the terms of the contract with Ford in February 1942, although transportation movement did not actually commence until after March 1942, the freeze date of the regulation. In September 1943, complainant applied for an increase of approximately 25 percent in its maximum rates, under Revised Supplementary Order 9, which provides for individual adjustments of maximum prices in sales to the Government, where such increases are necessary to prevent or remove an impediment to the continued production or supply of the commodities or services in question. Supplementary Regulation 15 provides for individual maintenance of supply adjustments of contract carrier rates generally. Under both adjustment provisions, an applicant is permitted to contract for sales at the requested price, subject to settlement of payment in accordance with the action ultimately taken by the Administrator on the application for adjustment. Applying uniform objective standards developed for the purpose of determining eligibility to price relief under these adjustment provisions, the Administrator granted complainant a 7-percent rate adjustment through May 31,1944, adding in the order that upon receipt of current data from the applicant, the Administrator would determine what, if any, increase over its freeze rates complainant would be entitled to after May 31, 1944. In considering a protest against this order, the Administrator secured current data and determined that the 7-percent adjustment granted through May 31, 1944, was all that was required to remove any threat to the complainant’s continued supply of the services in question. In upholding the action of the Administrator, the Emergency Court of Appeals reiterated its position in other cases that it was proper for the Administrator, in passing on individual applications for adjustment, to employ general standards, provided he took into consideration all relevant facts, as was done in this case. The court further held that it was reasonable for the Administrator, in passing on this application, to rely on a comparison between complainant’s prewar and current profits, even though before the war complainant had transported other material in vehicles owned by it, rather than m new type vehicles leased by it. Alan Levin Foundation In this case10 the court was confronted with the consequences under price control of the assumption by purchasers of certain tax costs "The Alan Levin Foundation v. Bowles, 152 F. (2d) 467 (1945), No. 193 E. C. A. 688954—46-------7 94 • Sixteenth Quarterly Report normally borne by the seller. The complainant, as a stockholder of the American Distilling Co., had received a dividend of 39,200 cases of whiskey and proposed to sell the whiskey to retailers in the State of New Jersey. The complainant did not, however, hold a State license for the sale of alcoholic beverages at wholesale and-?applied for such a license for which a fee of $2,000 per year is payable. The State officials prescribed, in lieu of the wholesaler’s license, a special license fee of 50 cents per case and provided that the fee could be paid to the State either by the seller or the buyer. The Price Administrator construed the applicable price regulations as barring the complainant from selling his whiskey at the full ceiling price prescribed in the regulation and in addition requiring the buyers to pay the permit fee. The Emergency Court of Appeals rejected attacks against the correctness of this construction and against the validity of the regulation under the act. The court held that the licenses were necessary to authorize the sale of the whiskey by the complainant and were not necessary to authorize its purchase by retailers who already were licensed under State law. It was found that the price structure under the regulation contemplated that wholesalers’ license fees should be borne by the wholesalers out of their markup, rather than by the retailers, and that the ruling by the Price Administrator in the case was appropriate to preserve this structure of price control. The court also rejected contentions that complainant had been misled by the Office as to the regulatory provisions which would be issued to govern these sales, and that it was improper to provide that the stated maximum prices should be reduced for an interest allowance when payment was made for the whiskey in advance of delivery. Allied Foods An attack by processors of pickle products in this case11 against maximum prices under Maximum Price Regulation 488 was based both upon increases in raw material costs incurred by the processors and upon the guarantees applicable to cucumbers, the basic agricultural commodity processed by the complainants. Complainants pointed out that the*parity price for cucumbers as determined by the Secretary of Agriculture had increased since the issuance of the regulation, and for this reason, the maximum prices no longer complied with the requirement of section 3 of the Stabilization Act that maximum prices of products processed from an agricultural commodity reflect the parity price to the producers of the agricultural commodity. The court rejected this contention, concluding that this provision of section 3 of the act was intended for the benefit of growers, rather than processors. The court pointed to the legislative history of the act, 11 Allied Foods et al. v. Bowles, 151 F. (2d) 449 (1945), No. 199 E. C. A Emergency Court of Appeals • 95 indicating that this provision was designed to preclude maximum prices from being established for a processed commodity which would prevent producers of the underlying agricultural commodity from receiving parity, and held that the regulation did not violate this requirement, since it was admitted that the producers of cucumbers were receiving more than the parity price. The court, however, concluded that the regulation should have taken into account increased costs incurred by the processors by virtue of the price increases for cucumbers occurring since issuance of the regulation. The Price Administrator had held that the complainants had not shown a price increase to be warranted, since they had not shown the effect of these cost increases upon their operations. The court reaffirmed its earlier decisions that such was the proper rule in most instances, but concluded that the rule was inapplicable to this. case. In reaching this decision, it relied upon the statement of considerations accompanying the regulation, which had stated that the Administrator did not believe that further cost increases could be absorbed by the industry, and that the prices thereby established had been increased only to the minimum extent required by law. The court rejected the Administrator’s contention that this prediction should be reassessed in the light of actual operations under the regulation, and therefore set aside the provisions of the regulation insofar as it failed to take into consideration these cost increases. The regulation was thereupon corrected to bring it into conformity with the decision of the court.12 Weisel & Co. The court here sustained the denial of a protest against Maximum Price Regulation 389, which established maximum prices for sales at wholesale of the major products of the sausage industry.13 Complainant asserted arbitrary discrimination in that it was not permitted to continue a long established practice of selling its products on an f. o. b. basis in other than carload lots, the purchaser paying the transportation charges. The regulation generally fixed prices on a delivered zone basis, but permitted sales f. o. b. the point of shipment in certain specified classes of cases, particularly sales of kosher sausage, all beef sausage, and pure pork sausage. The court sustained the Administrator’s finding that the historical price relationship of meat raw materials between the various parts of the country reflected substantially the difference in transportation costs of such raw materials from the midwestern area of meat production to the various zones, and that the meat industry generally was therefore well adapted to a system of specific prices based on geographical differentials. The court also approved the Administrator’s con- 11 Amendment 4, MPR 488, effective December 26,1945. 11 Weisel and Company Inc. v. Bowles, No. 256, decided December 21, 1945. 96 • Sixteenth Quarterly Report elusion that such a system was essential to the maintenance of effective price control at retail, and that complainant’s request to have his purchasers absorb transportation cost by express or freight, a practice unique in the industry, could not be reconciled with the Administrator’s duty to “hold the line.” With regard to the permitted exceptions from the general price structure, the court rejected complainant’s charge of unreasonable discrimination. Particularly, the court noted that, while sausage products generally are being produced throughout the country, the three specialty products with regard to which f. o. b. sales were authorized are manufactured only in a few places. The court held that this was a valid basis of distinction. RENT CONTROL CASES During the October-December quarter, the Emergency Court of Appeals disposed of two cases involving maximum rent regulations or orders. Rockcliffe Realty Corporation The owner and operator of an apartment house in Montclair, N. J., sought to have the rent on one apartment increased under adjustment provisions of the rent regulations. The rent for this apartment was $155 per month on March 1,1942, the maximum rent date. Complainant claimed that this rent was substantially lower than at other times of the year because of seasonal demand or seasonal variations in rents for apartments, and consequently sought an upward adjustment under the provisions of section 5 (a) (7). As an additional ground for adjustment, complainant claimed that the rent for this apartment on the maximum rent date was materially affected by “peculiar circumstances,” and that consequently an adjustment pursuant to section 5 (a) (11) of the regulations was warranted. After denials of its petitions for adjustment and applications for review, complainant filed protest. The protest was denied by the Administrator, and complainant filed a complaint with the Emergency Court of Appeals.14 Section 5 (a) (7) of the regulations provides, among other things, that Any landlord may file a petition for adjustment to increase the maximum rent otherwise allowable, only on the grounds that: (7) the rent on the date determining the maximum rent was substantially lower than at other times of the year by reason of seasonal demand, or seasonal variations in the rent, for such housing accommodations * * ♦. M Rockcliffe Realty Corporation v. Bowles, 151 F. (2d) 399 (1945), No. 222 E. C. A. Emergency Court of Appeals • 97 In order to secure an adjustment for an “off-season” renting under this section, a landlord must establish that the term of the lease in effect on the maximum rent date commenced after the customary moving date, in this case October 1; that the rent on the maximum rent date was both substantially lower than the rent would have been for the accommodations had they been rented on the usual annual renting date and also lower than the rent for comparable accommodations in the area on the maximum rent date; that the building in which the accommodations are located had, on the maximum rent date, a pattern for October 1 occupancy; and that the accommodations themselves had such a pattern. These standards announced by the Administrator on numerous occasions were approved by the court in the Andrew Arms case.16 In the instant case, the Administrator found that complainant had failed to satisfy one of these requirements—that the maximum rent fixed by the off-season letting was lower than it would have been had the unit been rented “in season” on the maximum rent date—and therefore was not entitled to an adjustment. The court approved this finding. The evidence disclosed that all the other apartments above and below the subject apartment had been rented on the maximum rent date under “off-season” leases at rents which complainant admitted were satisfactory. The court noted that “it would appear from this that the effect of ‘off-season’ leasing was not necessarily a drop in rentals as compared to those procurable for ‘in-season’ leasing.” It therefore held that the complainant had not met the burden of proof which the law casts upon a petitioner for an adjustment, and that the Administrator was not arbitrary or capricious in denying its petition. As a further ground for upward adjustment of rent, the complainant urged that the rent for the apartment in question was fixed under ‘peculiar circumstances” within the meaning of section 5 (a) (11) of the regulation. The facts relied upon were these: The Rockcliffe Apartments was a new apartment building with luxury type apartments representing a substantial investment, and entailing heavy operating expenses. It was completed in November 1940, after the October 1, 1940, renting season had passed. When the next renting season, October 1,1941, passed, there were still 49 vacancies. The complainant faced the prospect of considerable losses until another renting season arrived. These factors taken in combination amounted to peculiar circumstances” according to the complainant. In disposing of this contention, the court stated: We agree with the Administrator that these were not “peculiar circumstances” within the meaning of the regulation. The complainant was confronted by the not unusual problem of making a choice between insisting on high rents even at the risk of a high vacancy rate or of accepting less satisfactory rents in order Andrew Arms Inc. v. Bowles, 150 F. (2d) 972 (E. C. A. 1945) ; see Fifteenth Quarterly Report, pp. 71-72. 98 • Sixteenth Quarterly Report to obtain maximum occupancy. It might speculate and wait for satisfactory rents or it might play safe and accept immediately available tenants who offered to pay lower rents. We think that these are normal circumstances of bargaining between landlords and tenants. Perhaps the economic pressure is especially heavy upon a landlord who is confronted with the problem of obtaining tenants for all the units in his building at the same time. This, however, does not change the essential nature of the landlord’s problem as one of bargaining in the available market. The court concluded that the complainant failed to bring itself within the terms of section 5 (a) (11), and that adjustment under such provision was properly denied. The complaint was accordingly dismissed. City of Dallas The city of Dallas, Tex., which had originally acquired 116 housing accommodations through condemnation proceedings for the purpose of constructing a public highway, was engaged in renting the units for ordinary dwelling purposes pending the commencement of its highway construction project. It contended16 that the Administrator was without authority to regulate the rents it charged, basing its contention on two grounds. It maintained, first, that as a municipality it was outside the scope of the Emergency Price Control Act. Secondly, it contended that if it were within the statute, the act was unconstitutional for the reason that it violated both the Tenth Amendment to the Federal Constitution and the principles underlying the doctrine of intergovernmental immunity from taxation. After reviewing the conflicting decisions on the questions raised, the Emergency Court rejected the City’s contentions. On the matter of statutory construction, it held that the definition of the term “person” contained in section 302 (h) of the Price Control Act “hardly could be more inclusive” and clearly comprehends the States, cities, and their political subdivisions. Similarly, on the question of constitutionality, it held that since the act was passed pursuant to the delegated Federal war powers, no question of violation of the Tenth Amendment was involved. With respect to the principle of intergovernmental immunity from taxation, the court further held that even if such immunity be implied with respect to the Federal war powers, nevertheless, it could not be greater than that enjoyed under the Federal tax power. -Under the latter, the court pointed out, when a State engages in the sale of commodities, it is subject to Federal excise taxes. Similarly, in the case at bar, the court held, once the city put its dwelling on the rental market, it subjected itself to a generally applicable rent regulation, and the fact that the renting was in a sense incidental to the performance of an orthodox “governmental’ activity became immaterial. u City of Dallas v. Bowles, 152 F. (2d) 464 (1945), No. 259, E. C. A. Emergency Court of Appeals • 99 Shortly after the decision by the Emergency Court of Appeals, the Supreme Court reached a similar result,17 sustaining the Administrator’s construction that the act applied to States and the validity of the act as thus construed. M Case v. Bowles, No. 261, Hulbert and Bowles v. Twin Falls County, No. 238, October term, 1945, decided February 4, 1946. , 100 • Sixteenth Quarterly Report • XI • THE RATIONING PROGRAMS By the close of 1945, all Office rationing operations, except as they affected the distribution of sugar, had been brought to an end. The termination of the combat phases of the war and the consequent better outlook for civilian supply permitted relaxation of these controls, save for sugar, stocks of which remained critically short, with little prospect for immediate improvement. In October rationing controls were lifted for canned milk, cheese, new automobiles, and shoes; in November for meats, fats, and oils; and at the end of December for rubber tires. From VE-day through September, controls had been removed from stoves, gasoline and fuel oil, firewood and coal in the Pacific Northwest, and rubber footwear. The meat distribution order, Control Order 1, suspended during the previous quarter except as to its provisions for subsidy certification,1 was revoked on December 29. At the same time, OES Directive 31, requiring subsidy certification by OPA during the periods covered by the Control Order, was revoked. The delegation of authority to the Office to ration scarce consumer commodities was first made experimentally in December 1941, when the war choked off rubber imports from the Far East and it became necessary to initiate a system which would equitably distribute the available supply of automobile tires. This authority was generalized in Directive No. 1 of the War Production Board, issued January 27, 1942.2 Under the general rationing arrangement, three other agencies issued directives to OPA to institute rationing when the supply of a commodity available for civilian use was so limited that it could not be fairly distributed through the usual trade channels. War Production Board determined the quantity of scarce commodities available for civilian consumption except for foods, where the determination was made by the War Food Administration, and except for petroleum where the determination was made by the Petroleum Administration for War. Tires, automobiles, and typewriters were among the first commodities upon which the impact of war was felt. They were rationed by certificate, as were bicycles, but by the end of 1942, the use of coupon books in rationing was well established. War Ration Book One, put in use in May 1942, first provided coupons for sugar and then for 1 See Fifteenth Quarterly Report, pp. 78-79. * See First Quarterly Report, pp. 56-65. The Rationing Programs • 101 coffee. A separate coupon book was issued for gasoline, and coupon sheets were issued for fuel oil. Point rationing was started early in 1943, with the launching of the meats-fats and processed foods programs. War Ration Books Two, Three, and Four contained coupons for these and other commodities. With sugar the only rationing program remaining of the 15 major programs once in operation, the Office found it possible at the close of 1945 to dissolve its rationing department, transferring distribution controls over sugar to a newly created sugar rationing division in the price department. This division was to assume the responsibilities not only for consumer rationing but also for the institutional and industrial user programs, as well as ration currency control. These operations were formerly managed by separate branches within the rationing department. The rationing activities of the war price and rationing boards3 were also discontinued except for the distribution of forms needed by applicants for furlough rations and for original or replacement sugar ration books. All decisions on sugar rationing formerly made by the local boards were transferred to the district offices. Rationing activity during the final quarter of 1945 is described in the following pages. SUGAR RATIONING The beginning of the October-December period saw a substantial carry-over of demand for sugar virtually throughout the country, brought about principally by the unavailability, in the preceding two quarters, of supplies sufficient to meet the seasonally high demand. Shortly after October 1, however, conditions definitely improved in the Middle West and West as the beet crop was harvested, and in the southern Mississippi States as mainland cane appeared on the market. In the Northeast, however, stocks remained tight; imports of raws from the Carribbean were extremely low, and the volume of off-shore refined sugar was inadequate to remedy the situation. In an effort to meet this situation, the Office revised geographic zones into which primary distributors might deliver sugar. Although action by primary distributors was voluntary, full cooperation was received during the quarter. Two deficit areas were established. The first comprised all of Ohio and the eastern part of Indiana. In conjunction with the Department of Agriculture, arrangements were made with the beet processors to supply this area on a reimbursement basis. The second deficit area consisted of the eastern parts of West Virginia, Kentucky, and Tennessee and the western parts of Virginia, North Carolina, and Georgia. New Orleans refiners were asked to ’ Known as price control boards after January 5, 1946. 102 • Sixteenth Quarterly Report provide for this zone, likewise on a reimbursement basis. To the end of the year, this program had worked out very well, and its continuation was decided upon through February 1946. By that time, receipts of raws from the Carribbean were expected to reach sufficient volume to permit more normal distribution by eastern cane refiners arid a gradual return to normal trade channels. Noncivilian demands for sugar were drastically reduced during the fourth quarter, especially by the Army and Navy, and the Department of Agriculture endeavored to have such remaining purchases as were necessary made from beet processors and from cane refiners on the West coast, where supplies were not so tight as in the East. Despite this reduced demand, however, allocation^ for civilians for the first quarter of 1946 were only 1,100,000 short tons, raw value. This made it imperative that industrial user allotments remain unchanged at the levels effective since July 1,1945; namely, baked goods and allied products at 60 percent of 1941 use, pharmaceuticals at 110 percent, and all other classes at 50 percent, with provisional users held to a somewhat reduced quantity of sugar per unit produced. Many requests and suggestions were received during December for the validation of a home-use stamp prior to the Christmas holidays, on the ground that in some sections of the country, retailers and wholesalers were able to build up some reserve stock. Over-all conditions, however, did not warrant such action. Also, it was definitely advantageous that reserve stocks be held until January 1, 1946. At that time, not only was the new home-use stamp No. 39 validated, but new periods were begun for institutional and industrial users, causing a very heavy demand. The sugar regulations were revised to provide a special adjustment to all registering units whose inventories had fallen below their permanent allowable inventory. This step was necessary because some retailers and wholesalers had depleted their permanent allowable inventories to an extent seriously affecting orderly distribution. The sugar rationing order had also to be revised in view of the changes in the rationing department. With sugar the only rationed commodity, all orders such as those on ration banking, temporary food rations, replacement of rationed foods used in products acquired by designated agencies, and export of rationed foods had to be incorporated in the new Third Revised Ration Order 3. This revision also deleted obsolete portions of the sugar regulations. MEATS AND FATS The determination to discontinue the rationing of meats and fats as of November 24 was made after the Secretary of Agriculture had assured the Office that there would be a sufficient volume of meats The Rationing Programs • 103 to meet domestic demand as well as the Nation’s commitments to Allied and liberated countries. The civilian supply situation had greatly improved in the months following VJ-day. Along with sharp reductions in military needs were a seasonal increase in livestock slaughter, a record production of poultry, and prospects for a record supply of eggs in the months ahead. The supplies of fats and oils, except butter, though still short, appeared high enough at the time to justify their removal from rationing. An alleviation of the winter butter supply situation, moreover, was expected through release of Government stocks. The supplies of fats and oils in December 1945 were estimated at an annual rate of 50 pounds per capita compared with an average prewar consumption of 48 pounds. During the first and second quarters of 1946 per capita civilian supplies of fats and oils were expected to be at the annual rate of about 45 pounds. This supply was considered to be not too far below prewar consumption as to give serious concern about ration-free distribution. For December, it was estimated that civilian meat supplies would be at an annual rate of about 165 pounds per capita, as compared with 115 pounds in the previous quarter and a 1935-39 average of 126 pounds. At the same time, per-capita civilian demand for meat during that month was estimated at 160 pounds. The supply outlook for 1946 likewise appeared favorable, even if some tightening should occur in the second and third quarters. Longer-range estimates indicated an annual per-capita rate of about 155 pounds for the first quarter, 142 pounds for the second quarter, and 140 pounds for the third. By the fourth quarter of 1946, the civilian meat supply was expected to climb to about 160 pounds. The outlook for 1946 thus compared favorably with the 150 pounds per capita available to civilians in 1944, when most meat rationing was suspended for part of the year and when a very high level of consumer buying power prevailed throughout the country. Civilian meat allotments were about 11 percent higher during October than in September, with the supply of beef increased 3 percent, veal 37 percent, lamb and mutton 4 percent, and pork 13 percent. A seasonal increase in the marketing of range-fed cattle made it possible to assign zero point values to lower-grade utility and canner-and-cutter beef and utility and cull grades of beef and lamb, and also to sausages and other products in which these meats are the principal ingredients. Supplies of pork, and the better grades of beef, as well as better grades of veal and lamb, were far under demand, however, and the rationing of these meats had to be continued to obtain good distribution. 104 • Sixteenth Quarterly Report The over-all meat supply for rationing in November showed little change from October. Point values remained the same, with the exception of fatty pork cuts, a source of lard. Point values for these cuts were lowered to correspdnd with the reduced point value of lard. The supply of beef, veal, and lamb and mutton available for civilians declined 13 percent, 19 percent, and 22 percent respectively, as compared with the previous month; but these declines were offset by an increase of 42 percent in the supply of pork. The material improvement in the meat outlook for December, with supply and demand equalized, cleared the ground for terminating the meat rationing program in November. Ration controls were ended for fats and oils at the same time. Since these products were an integral part of the meat rationing program, their continued rationing would have required a completely new rationing system, involving reregistration of more than a half-million industrial and institutional users and the possible issuance of new ration books to all civilian consumers. For these compelling reasons, rationing of fats and oils was also ended even though supplies were not equal to unrestricted demand. INSTITUTIONAL USERS The transfer of institutional user files to district offices in September 4 created a number of minor problems which were solved by personal visits by members of the national office to a number of regional and district offices. Another problem arose out of the fact that many users believed the removal of processed foods from rationing meant a relaxation of all rationing controls. A change in the regulations set a time limit for home-canning allotments to conform with the limits for home consumers. Ten- and one-pound sugar coupons were validated for institutional users not eligible to maintain ration bank accounts to facilitate their sugar purchases. Effective November 1, the general ration order for institutional users was completely revised. All references to processed foods were eliminated, as were references to local boards, and detailed provisions made for issuances of ration currency by district offices. Certain obsolete provisions were also eliminated. , There was little change in customary activities until the removal of meats, fats, and oils from rationing on November 24, leaving only sugar on the ration list. A Revised Ration Order 5 was issued December 29, effective January 1, 1946. This was in effect a sugar order for institutional users, as it provided only for sugar allotments. * See Fifteenth Quarterly Report, p. 82. The Rationing Programs • 105 SHOE RATIONING The shoe rationing program was terminated as of October 31,1945, since the production of ration-type shoes had increased materially during October, largely as a result of military cutbacks of leather after VJ-day. The greatest increases had occurred in the production of the most essential types of shoes, such as men’s work shoes, youths’ and boys’, and children’s shoes. Since output for November and December was estimated high enough to meet prewar consumer demand, it was agreed that no general hardship would result from the discontinuance of the rationing program. The Office pointed out, however, that consumers might find it difficult in early months to purchase particular styles, since goatskin and lightweight calfskin leathers, used primarily in women’s shoes, were still in short supply. With the revocation of the ration order, shoe dealers and manufacturers were authorized to destroy all records required of them by the order, as well as all shoe ration evidences in their possession. TIRE RATIONING Effective midnight December 31, 1945, the tire rationing regulations were revoked. Tire rationing had been the first of the rationing programs, with stocks frozen from the day after Pearl Harbor and rationing begun January 5, 1942. Although pent-up demand could not be met fully on January 1, 1946, tire output had reached a level high enough to obviate a transportation break-down. The decision to end tire rationing was in line with the general Office policy to lift controls as soon as supply of a commodity became sufficient to overcome any danger of general hardship. Production of passenger car tires during December reached about 4,000,000, and it was estimated that 66,000,000 would be made during 1946, most of which could be used for replacements. Civilian quotas of truck tires during the last 3 months of the year had almost equaled eligible rationed demand, as shown by the virtual elimination of backlogs of unfilled truck tire applications. In December there were twice as many truck and bus tires, both for replacement and original equipment, as were available before VJ-day. The termination of rationing was announced December 21, giving holders of tire purchase certificates 10 days to exchange them for tires before unrationed sales began. No additional certificates were issued after December 21 except in emergencies. At the same time, motorists were warned that the lifting of rationing did not mean there was ample supply to meet all requests^ and that it would be necessary to avoid excessive wear and tear on tires. In order to increase further the number of tires immediately available Civilian Production Administration continued in force prohibi 106 • Sixteenth Quarterly Report tions on white side-wall tires and on spare tires for new cars and trucks. Also continued was the quota system for tire exports. The principal work of the Office before tire rationing controls were removed was to maintain enforcement of the regulation. In October new nondirectional military mud and snow truck tires, released through the Surplus Property Board, were removed from rationing in order to market them since certificate holders would prefer to purchase the regular highway tread truck tires. Also in October, cars used in the transportation of mail were made eligible, upon proof of need, for two extra mud and snow passenger tires. Enforcement • 107 • XII • ENFORCEMENT Total enforcement activity during the final quarter of 1945 continued to show the same steady rate of increase that was evident in previous quarters. To meet the changed conditions resulting from termination of hostilities, the elimination of most rationing programs, and the return of consumer goods to the civilian market, several changes were effected in enforcement organization and activity. With the termination of all except sugar rationing, the need for anti-counterfeiting work declined substantially. The Office therefore determined to use a portion of its force of trained criminal investigators to investigate price violations in selected fields, where methods of evasion and organized black market practices made it essential that a new investigative approach, using criminal investigative techniques, be adopted. While continuing its work in the field of illegal traffic in ration currency with a portion of its staff, the Office undertook intensive investigations of price violations looking toward criminal prosecutions in the fields of textiles, lumber, used cars, sugar, and other commodities. The first textile cases were brought to a successful conclusion at the close of the quarter with the indictment by a Boston grand jury of a large number of Boston and New York merchants on conspiracy charges, and further evidence was being developed for the special grand jury in New York investigating the textile black market. Cooperation with other Government agencies continued throughout the quarter along the lines indicated in earlier reports. In the litigation field, the Office continued to be successful, with a record of success in almost 97 percent of all litigated cases. ENFORCEMENT ACTIVITY Enforcement activity in the field of food was mainly concerned with the sugar rationing program and with meat price ceilings. Substantial work was also done on the enforcement of other food price ceilings, notably poultry, fresh fruits and vegetables, and dairy products. Emphasis on retail food enforcement was materially increased, A new retail program was developed at the close of the quarter, having as its objective the institution of major sanctions, such as license suspension suits, criminal prosecution, and criminal contempt 108 • Sixteenth Quarterly Report for violation1 of court injunctions, against persistent and significant violators. The less consequential violations were to continue to be handled by the Price Control Boards. A marked increase in activity was noted in the fields of consumer goods, used cars, and apparel and textiles. The rent enforcement program, as a result of the development of new techniques, showed a decided increase in over-all activity by the end of the quarter. Meat The enforcement situation remained critical during the entire quarter. Except for temporary weakening in local markets, live cattle and hog prices continued high throughout the entire period. The major enforcement activity in the meat field was accordingly concentrated at the livestock market and slaughtering levels, on the sale of beef and pork carcasses, and on sales of wholesale and fabricated cuts to purveyors of meals. In this last group, the emphasis was on transactions involving payment of side money, particularly those crossing State and regional lines. With the elimination of all meat rationing controls (except the quota limitations on sales of fabricated meat cuts to purveyors of meals), a change in enforcement operations was necessary in order to carry out the mandate of Directive 41 of the Stabilization Administrator. This directive provided for withholding of livestock slaughter payments from applicants for the accounting period or periods during which they are found to have violated meat or livestock regulations. For the purpose of ascertaining whether such violations existed during the life of a meat regulation or order, the “determination proceeding” was instituted, to be held before a Hearing Commissioner under a procedure similar to that applicable to administrative suspension order proceedings. The purpose of this modified proceeding was to eliminate the inequity which would otherwise result if withholding or payment of subsidy turned on whether the determination of violation had been made prior to the suspension or revocation of the rationing order involved. Subsidy withholding continued to be one of the most effective factors in securing compliance in this field. In order to combat pressures in other fields of activity, it was necessary to reduce the number of investigators assigned to meat enforcement at pre-retail to approximately 370, as contrasted with more than 900 during the two previous quarters, with the result that the total number of enforcement sanctions instituted decline from a high of approximately 400 per week during the previous summer to a high of approximately 150 per week during the quarter under review. Enforcement • 109 Sugar and Other Foods The sugar enforcement program was put to its most severe test during the quarter, with sugar supplies at the lowest level since the beginning of the war, and demand at an unprecedented peak. The efforts of industrial users to build up their postwar markets and the false belief that sugar rationing controls would soon be lifted led to widespread violations. By a vigorous enforcement campaign, instituting more than 2,000 sanctions, the Office prevented a break-down in sugar rationing controls. Investigations were directed primarly at wholesalers and with the leads thus obtained, appropriate follow-up action was taken against violations by industrial users and retailers. The pattern of these violations changed substantially; counterfeit currency ceased to be the major device for obtaining illegal sugar, and in its place sales without ration evidence, depletion of inventory, and ration banking violations accounted for most of the diversion. This was undoubtedly due to the fact that sellers anticipated an early termination of the rationing regulation, which would make depleted inventories no longer significant. As in the past, the Office received invaluable assistance in its enforcement program from the Alcohol Tax Unit of the Treasury Department. Enforcement programs in the fields of eggs, dairy products, fresh fruits and vegetables, dry groceries, coffee, feeds, and cereals continued and successfully forestalled development of any substantial violations. Apparel and Textiles Apparel.—The quarter was marked by numerous investigations of retail apparel prices,1 with a considerable number of treble damage and injunction suits and settlements resulting. A survey of compliance with the reporting provisions of the apparel maximum average price order (MAP)2 was made. The combined use of publicity and timely reminders to sellers affected resulted in widespread compliance, and only a few injunction suits were necessary. Following record-keeping investigations of manufacturers under the women’s lingerie and men’s and boys’ heavy outerwear regulations,8 special programs were instituted and a number of treble damage and injunction actions were begun for price violations of these regulations and of the women’s and children’s outerwear regulation.4 Investigations were made of new manufacturers who had failed to apply for authorized prices. Enforcement action to compel proper application was very effective and resulted in the filing of a number °f treble damage actions when, after such application, it appeared 1 MPR 580, MPR 330, 2d RMPR 578, MPR 339, MPR 208, and MPR 506. * so 108. ’MPR 570 and MPR 572. 4 RMPR 287. 688954—46-------8 110 • Sixteenth Quarterly Report that extensive sales had been made at prices in excess of those authorized. Under the fur garment regulation 8 a check was made of compliance by New York City manufacturers with the highest price line provisions affecting popular priced fur garments. A large proportion of the sellers investigated were found to have sold such garments at prices in excess of the dollar-and-cent highest price line limits. Prompt court action was commenced against those found in violation. Textiles.—The end of hostilities did not result in any decrease in the extensive textile black market centered in New York City. Actually, the increased demand for fabric resulted in even greater pressure for illegally priced goods. To combat this black market, two major steps were taken. First, the Office joined forces with the Department of Justice and the Treasury Department in an all out drive on the textile black market. Second, on the civil side, the Office launched an enforcement program directed at garment manufacturers who were buying in the black market. A special grand jury for the Southern District of New York was impaneled in December. The United States District Attorney’s office assigned to the drive a special staff of assistants, and this Office assigned a large staff of trained commodity investigators and special agents. On the basis of the-evidence before the grand jury, it was anticipated that a substantial number of indictments would be returned. Shortly after the announcement of the Government’s three-agency drive, a grand jury in Boston returned indictments against 12 defendants in a conspiracy case in which over a million and one-half yards of piece goods were diverted into the black market in New York and Massachusetts. This case was developed by the joint efforts of commodity investigators and special agents in both the New York and Boston regions. To discourage overceiling purchases of textiles, several treble damage actions were instituted against garment manufacturers who had paid overceiling prices for textiles and then attempted to recoup by selling the finished product at overceiling prices. These actions, by making it unprofitable for garment manufacturers to purchase piece goods at illegal prices, were expected to reduce substantially the demand for textiles at black market or overceiling prices. Consumer Durables and Industrial Materials Resumption of production and distribution of many durable goods items was begun during the quarter and, to insure the sale of these items at ceiling prices, enforcement activity was materially stepped • MPR 178. Enforcement • 111 up, with major emphasis at the manufacturing, wholesale, and jobbing levels. Several suits were promptly filed against manufacturers who attempted to bring their goods on the market at illegal prices, and investigations were conducted at intermediate levels of distribution, so that the saving effected by compliance at the manufacturing level would be passed on to the eventual consumer. In the used car field, there were indications of extensive violation, usually through side payments. Several significant criminal cases were developed, and total sanctions in this field averaged 350 per month. The anticipated flow of new cars had not materialized by the close of the quarter, and the pressure on the used car field increased. The national program on lumber continued at all levels. In anticipation of an increased market for other building materials and construction services, enforcement activity was instituted in these fields and plans laid for a large-scale national program to begin early in 1946. Rent The major activity in rent enforcement was the development of more effective coordination between the national and area rent offices. With the sharply increasing pressures in rent, it became readily apparent that enforcement activity in the field of rent control would have to be more vigorous and more extensive in spite of the manpower limitations. The new program eliminated duplication and overlapping of work, and was expected to lead to a more speedy imposition of sanctions against those violators who could not be brought into compliance by the area offices. Reports at the close of the quarter indicated that these procedural and management changes had already resulted in a more effective rent enforcement operation. LITIGATION Appellate courts rendered a number of decisions during the quarter which were favorable to positions taken by the Administrator. While few basic points were decided, some decisions were of considerable assistance in clearing up troublesome questions. The courts continued to apply and uphold the exclusive jurisdiction provision of the Price Control Act, which confines all questions of validity to the Emergency Court of Appeals. The Supreme Court of the United States declined to review the Wheeler case which had upheld the authority of the Administrator to delegate the right to institute enforcement proceedings to field attorneys.® ’ See Fifteenth Quarterly Report, p. 89. 112 • Sixteenth Quarterly Report Of major importance on questions of State court jurisdiction was the decision of the Supreme Court of Oregon in the Barde Steel case, which upheld the Administrator’s right to institute treble damage actions in State courts despite the contention that the action was one for a penalty.7 The exhaustive opinion of the Supreme Court of Oregon is the first decision on this point. It enabled disposition of numerous enforcement actions in Oregon lower courts which had been delayed while this appeal was pending. In an appeal in a criminal case the Circuit Court of Appeals for the Sixth Circuit found completely devoid of substance defendant’s claim that he had committed the violation of a regulation as a result of entrapment by OPA enforcement authorities.8 Attempts to resist the exercise of the investigatory powers of the Administrator were reflected in three appeals involving the enforcement of subpoenas and inspection requirements.9 The decisions, all favorable to the Administrator, sustained his power to enforce compliance with administrative subpoenas and inspection requirements against persons involved in pending enforcement proceedings and his power to obtain information by subpoena from a national bank. Disagreement developed in the circuit courts of appeals with respect to the Administrator’s right to secure a mandatory injunction to compel restitution of overcharges. The Administrator’s position was sustained by the Sixth Circuit19 in a price violation case, while the Eighth Circuit11 denied a similar application in a rent case. In view of the contradiction, the Office recommended to the Solicitor General that a writ of certiorari be sought to review the latter decision. The Circuit Court of Appeals for the Eighth Circuit in the Goebel case ruled that under the Chandler amendment to the treble damage provisions of the Price Control Act, there is no mandatory obligation upon the court to award full treble damages where the defendant fails to show that the violation was neither wilful nor the result of failure to take practicable precautions against the occurrence of the violation, but that the amount of damages to be awarded rests within the sound discretion of the court.12 The Solicitor General declined to request review of this ruling by the Supreme Court, and a modification of the legal position hitherto taken was therefore made. The Court of Appeals of the State of New York sustained the validity of the New York City ordinance punishing violations of OPA regulations.13 7 Bowles v. Barde Steel Co. (Oregon Sup. Ct.), 146 P. (23) 692. 8Shano et al. v. U. S. (C. C. A. 6), 151 F. (2d) 967. 9 Bowles v. Shawano National Bank (C. C. A. 7), 151 F. (2d) 749; Bowles v. Abendroth d/b/a Candy and Tobacco House (C. C. A. 9), 151 F. (2d) 817; Bowles v. Bay of York Coal and Supply Corp. (C. C. A. 2d), 152 F. (2d) 330. i» Bowles v. Skaggs (C. C. A. 6), 151 F. (2d) 817. 11 Bowles v. Warner Holding Co. (C. C. A. 8), 151 F. (2d) 529. 12Bowles v. Goebel (Goebel Motors) (C. C. A. 8), 151 F. (2d) 671. 18 People n. Lewis (N. Y. Ct. of Appls.), 3 OPA Opinions and Decisions, p. 2373. Enforcement . 113 STATISTICAL SUMMARY More than 40,000 investigations were completed and approximately 32,000 violations were established during the quarter. Sanctions of various types were employed in a majority of the cases disposed of. Court proceedings were instituted in almost 13,000 treble damage suits, injunction suits, license suspension suits, criminal prosecutions, suits under local'legislation, and contempt proceedings. Over 2,700 suspension order proceedings and. approximately 50 determination proceedings were instituted. Monetary settlements were made in approximately 6,400 cases. In addition, more than 4,000 cases were closed with a warning letter or informal adjustment, and approximately 3,050 cases were closed with the issuance of a license warning notice. The Office completed more than 2,600 suspension order proceedings, approximately 8,350 civil court proceedings of all types, and approximately 1,950 Federal and local criminal prosecutions. Favorable decisions were obtained in 88.8 percent of the suspension order proceedings completed, 98.0 percent of the civil proceedings, and’ 96.6 percent of the criminal prosecutions. Settlements, judgments, and fines during the quarter amounted to $5,536,143 and during all of 1945, $23,165,096. 114 • Enforcement Statistical Summary of Enforcement Activity During October-December 1945 and Cumulative Summary for Calendar Year 1945 October-December January-December Investigations and violations: Investigations completed i 2 41,499 193,348 ' Violations found 32,054 167,220 Administrative enforcement: Warning letters and informal adjustments... ..2 4,068 29,096 License warning notices 3,040 14,275 Ration revocations by district offices 0 5,640 Suspension order proceedings instituted 2,715 17,967 Determination proceedings instituted 49 49 Monetary settlements: Administrator’s consumer damage claim . 4,531 tl 17,546 Administrator’s own damage claim 1^849 9,563 Litigation instituted: Administrator’s consumer damage suit 2,959 10,640 • Administrator^ own damage suit ____ - _ - 1’266 5,146 Injunction suit - - 6' 514 33,539 License suspension suit - 41 306 Federal criminal prosecution 565 1 Local criminal prosecution . 1,431 i 5,285 2 Contempt proceedings 41 Proceedings completed: Administrative proceedings closed: Determination proceedings 0 0 Suspension order proceedings closed 3,847 18,283 Proceedings completed-”--- 2i 626 15,208 Orders issued (won) 2,332 13,589 Orders denied (lost) | ' 294 1,619 Percent won - 88.8 89.4 Proceedings withdrawn 1,221 3,075 Court litigation closed: Civil litigation closed _ 10,228 37,002 Proceedings completed 8343 '31,238 Won 8,178 30,474 Lost ' 165 764 Percent won 98.0 97.6 Withdrawn 1,885 5,764 Criminal litigation closed 2363 * 6,423 Proceedings completed 1’933 5,808 Won-L '- 1,868 5,548 Lost 65 260 Percent won 96.6 95.5 Withdrawn 230 615 * Number of defendants: January-June 2,462; number of cases: July-December, 1,370 2 Number of defendants: January-June, J14; number of cases: July-December, 98. 8 Adjusted to exclude preliminary injunctions previously included. 4 Number of defendants; excludes local criminal prosecutions completed January-June o