[Seventeenth Quarterly Report for the Period Ended March 31, 1946] [From the U.S. Government Publishing Office, www.gpo.gov] OFFICE OF PRICE ADMINISTRATION PAUL A. PORTER, Administrator SEVENTEENTH QUARTERLY REPORT FOR THE PERIOD ENDED MARCH 31, 1946 UNITED STATES GOVERNMENT PRINTING OFFICE, WASHINGTON : 1946 For sale by the Superintendent of Documents, U. S. Government Printing Office Washington 25, D. C. . Price 25 cents LETTER OF TRANSMITTAL Office of Price Administration, Washington^ D. C., July 17,1946. Sirs : I have the honor to submit herewith the seventeenth report of the Office of Price Administration, covering the period ended March 31, 1946. Sincerely yours, Paul A. Porter, Administrator. The President Pro Tempore of the Senate. The Speaker of the House of Representatives. TABLE OF CONTENTS Chapter Page I. Price Control: Ceiling Adjustments________________ 1 Wage Price Policy_________________.______________________ 4 Reconversion Pricing_________________________________________ 6 Cost Absorption__________________________________________ 8 Transition Product Standard_________________________________ 10 II. Price Control: The Food Programs_____________________ 13 Meats and Livestock._______________________________________ 15 Fruits and Vegetables_____________________________________ 17 Grains and Beverages________________________________________ 18 Other Agricultural Products_________________________________ 19 III. Price Control: Consumer Goods________________________ 21 Apparel____________________________________________________ 22 Textiles__________________________________e______________ 24 Leather, Fiber Products, and Furs___________________________ 27 Consumer Durables________________________________________, 27 IV. Price Control: Metals, Machinery, and Automobiles_ 30 Iron and Steel_________________________._________________ 30 Industrial Machinery and Equipment__________________________ 34 Automobiles______________________ _ _ ___________________ 36 V. Price Control: Building, Lumber, and Paper__________ 39 Building Materials_______________________________________ 39 Lumber__________________________.__________________________ 42 Paper and Paper Products_________________________________ 46 VI. Price Control: Rubber, Chemicals, Fuels, Other____ 49 Rubber___________________________________________________ 50 Chemicals___________________.-.i__________.______________ 51 Petroleum_________________________________________________ _ 53 Solid Fuels____________________________...________-______ 54 Export-Import ...________________________________________ 55 Released War Goods_______________________________________ 56 Appendix to Price Chapters_______k__________________ 58 Extension or Resumption of Price Control_________________ 58 Dollar-and-Cent Prices_________________.1________________ 58 Price Decreases___________________________?-------------- 59 Price Increases___________________;______________________ 60 Releases from Price Control. _.__________________________ 66 VII. Transportation and Public Utilities______________ 70 Transportation_________________________'_____________’--- 70 Public Utilities_____________________. „_________________ 73 iii iv • Seventeenth Quarterly Report Page VIII. Rent Control Program_______________________________ 77 Amendments and Interpretations______________________________ 77 Area Office Operations______________________________________ 79 Protests and Review Proceedings_____________________________ 80 Evictions___________________________________________________ 81 IX. Emergency Court of Appeals___________________________ 83 Price Control Cases_______________________________________ 83 Rent Control Cases________________________2 ______________ 90 X. Sugar Rationing______________________________________ 93 Industrial Rations________________________________________ 94 Domestic Consumer Rations___________________________________ 94 XI. Enforcement_____________________________________ 96 Enforcement Activity______________________________________ 96 Litigation________________________________________________ 101 Statistical Summary________________________________________ 103 Price Control: Ceiling Adjustments • 1 PRICE CONTROL: CEILING ADJUSTMENTS Both the number and the extent of adjustments in price ceilings were increased during the first quarter of 1946 by two new sets of factors. The more dramatic of these was the change in wage-price policy announced in February,1 which is discussed in detail below. This change greatly broadened the approvable classes of wage increases from those set forth in the policy adopted following VJ-day.2 The significance for price control of the broadening of approvable wage increases lies in the fact that only approved wage increases may be included as costs in applying for price adjustments. The effect, therefore, was to enable employers to recover through price adjustments all or part—depending upon the price increases approvable in light of their current earnings situation—of any wage increase falling within the pattern set by the wage bargains already reached under the earlier policy. For industries which had raised wages despite the nonrecognition of the increases as costs for pricing purposes—and for industries which would have been forced to follow suit—this of course represented a relaxation of price policy. The same cannot be said of industries which would not have raised wages to the degree set by the pattern, and in such industries the new policy’s effect was a relaxation of wage rather than of price control. Under either circumstance, however, it meant more price increases than would otherwise have been necessary. Another provision of the new policy, by requiring prices to be adjusted on the basis of earnings prospects over a full year ahead, tended to tighten price control, and in ruling out price adjustments based upon costs incurred at abnormally low levels of operations, it ratified the established policy of the Office. A final judgment as to the relative effects of the new policy on wages and on prices must of course await the reporting and analysis of the actual wage and price changes during the months following its establishment. The less dramatic set of factors causing price increases were those set in operation by the lifting of most wartime controls except those on prices. In normal times price changes are important in determining the pattern of production. In the interest of economic stability, wartime policy required that restricted use be made of price increases 1 Executive Order 9697, effective February 14, 1946. 8 See Sixteenth Quarterly Report, pp. 15-17. 2 • Seventeenth Quarterly Report in achieving greater production in essential lines and that heavy reliance be placed instead upon direct controls—allocations, priorities, limitation orders, etc. Following VJ-day, most of these direct controls were speedily lifted, leaving price once more as the one major determinant of the distribution of resources among alternative lines of production. This being the case, price increases became necessary that would have been avoided if direct controls had continued in effect. This new factor, first felt in the closing weeks of 1945, became significant for price control operations during the opening quarter of 1946 as was indicated by the growing number of industry-wide price in-, creases made for production reasons. The price increases made during the quarter were concentrated at the manufacturing level and thus were reflected only partially in consumers’ prices during the period. Consumers’ prices as a whole increased less than 1 percent, the rise being concentrated in clothing and housefurnishings. Small as it was, however, this rise constituted almost all the net increase in the index from August 1945. Wholesale prices of industrial products rose more steeply, increasing 1.7 percent during the quarter, as compared with a total rise of 2.2 percent from VJ-day. Rises in basic materials costs following the wage movements led to further advances in prices of manufactured products. The single advance in the price of steel, for example, entailed widespread consequences in the consumer goods field, as well as in industrial machinery and equipment,3 the full impact of which was not felt during the quarter. The number of industry-wide price increases granted in March, however, jumped to a total of 102, as compared with a monthly average of 63 in the 6 months following VJ-day. During the first 3 months of 1946, the Office granted 225 industry-wide ceiling price increases, more than 60 percent of which were for industrial materials and manufactures, 15 percent for consumer goods, and the remainder for agricultural and food products.4 In the same period, individual price increases were granted to 6,853 individual firms.5 In the month of March alone, 2,726 such adjustments were granted, as compared with a monthly average of 1,744 in the 6 months following VJ-day. Prior to enunciation of the new wage-price policy, the Office had, of course, frequently acted to adjust prices under its industry earnings standard and product standard or the special statutory standard for agricultural and other commodities, as required by law, and had used its discretionary powers to lift ceilings in order to break production bottlenecks, or encourage production of essential low-priced consumer goods. Thus, during the last 3 months of 1945, about 210 3 See ch. Ill, p. 28 and ch. IV, pp. 34-35. 4 Complete list of industry increases during quarter will be found in table 4, pp. 61-66. 3 See Fifteenth Quarterly Report, pp. 8-9 for basis of individual company adjustments. Price Control: Ceiling Adjustments • 3 industry-wide price increases were granted, 50 percent of which covered industrial materials or manufactures, 20 percent consumer goods, and the remainder food and agricultural products. Individual company price adjustments during this period totaled 4,911. The work of the Office with regard to setting prices for goods returning to the civilian market after disappearance of war curtailments was profoundly affected by the wage-price policy, since it became necessary to review virtually all the reconversion increase factors already issued. In many instances, the further price increases granted at the producer level, added to increases already approved, made the total increases so large that it became desirable to reexamine and modify the earlier policy with respect to distributor absorption of manufacturers’ increases on most reconversion goods.6 In the course of its reconsideration of price ceilings, the Office formalized a new standard for granting price increases, which had already been in use for some months. This was the transition product standard, which was a standard intermediate between the minimum product standard, under which the Office was legally required to return out-of-pocket costs on the bulk of output of a particular product even where over-all operations of the industry returned more than peacetime margins, and the supply standard, under which the Office at its discretion raised prices for an essential scarce commodity in order to stimulate its production. Under the new standard, the necessity for specific detailed findings as to scarcity or essentiality was eliminated, and ceiling prices were permitted to reflect to industry, on the average, the total costs of making and selling the product. A full description of the new standard is given later in this chapter.7 With respect to releasing commodities from price control, the Office proceeded methodically to remove controls in accordance with the standards set by the Office of Economic Stabilization.8 Suspension of price control on commodities important in living or business costs was authorized where it appeared likely that balanced supply and demand would keep prices at ceiling levels. After a trial period the commodities were to be exempted entirely from control if prices showed no signs of rising. The Office was also authorized to release from control minor items which did not enter significantly into business or living costs, further control of which represented an administrative burden to the Office and decontrol of which would not cause diversion of materials, facilities, or manpower necessary to effective transition to a peacetime economy. In the 7 months following VJ-day, a total of 566 products, including thousands of items, was released from price control, 218 during the 9 See below, pp. 8-10. 7 See pp. 10-12. 8 Office of Economic Stabilization Directive 68, issued July 25, 1945. 4 • Seventeenth Quarterly Report quarter under review. Of the total items released, about 60 percent was exempted, that is, controls were permanently lifted. Among the more important items suspended from control during the quarter were parts sold as original equipment for commercial vehicles, ship repairs and maintenance services, and a large number of nonferrous metals and metal products.9 WAGE-PRICE POLICY A material change in the wage-price policy under which the Office had operated since VJ-day occurred in February with the issuance of the President’s Executive Order 9697. Although operating relationships between the Office of Price Administration, the Office of Economic Stabilization, and the wage and salary stabilization agencies remained substantially the same, major alterations were effected in the wage-price policy. The wage-price policy followed at the beginning of the quarter was developed under Executive Orders 9599 and 9651, issued in August and October 1945, respectively.19 The principal differences between these and the new order were the following: (1) All wage and salary increases, with few exceptions, made on or before February 14, the date the order was issued, were given automatic approval; that is, all such increases were to be considered proper costs by the Price Administrator in determining price and rent ceilings. A considerable number of increases so approved had not been approvable under earlier standards and thus could not be considered as a basis for increases in price and rent ceilings, pending the expiration of the 6-month test period, which was a major feature of the earlier wage-price policy. The new Executive Order also gave automatic approval to any wage or salary increase made pursuant to a governmental recommendation (authorized fact-finding arid similar bodies) in a wage controversy where that recommendation had been announced prior to February 14. (2) The test-period technique for legal but unapprovable wage and salary increases was abolished, and it was stipulated that, subject to specific provision to the contrary by the Stabilization Administrator, no wage or salary increase made after February 14 without prior approval of the Wage Stabilization Board, or other appropriate wage or salary stabilization agency, could be considered for a price or rent increase for the duration of the stabilization legislation. (3) General standards for approval of wages and salaries were set forth, and authority for general pattern wage or salary adjustments was provided on an industry-wade or labor market area basis. 9 Control over parts sold as original equipment for passenger automobiles was suspended in August. See table 5, Appendix, for complete list of products released from control during the quarter. 10 See Sixteeenth Quarterly Report, pp. 15-17. Price Control: Ceiling Adjustments • 5 The pattern adjustment was not characteristic of the earlier Executive Orders. (4) The Price Administrator was specifically directed to adjust price ceilings for industries found to be in hardship as a consequence of approved wage or salary increases and to take other appropriate action to adjust prices in conformity with the terms of the Executive order. The order specifically defined “hardship,” in the ordinary case as a condition in which the industry would not earn its base-period return in the ensuing 12 months, and directed the Price Administrator to raise ceilings sufficiently to give that return over the 12-month period. (5) The Stabilization Administrator was authorized to specify classes of minor wage or salary increases which might be paid by employers and deemed approved without any prior consideration by wage or salary stabilization agencies. To implement these basic policy standards, the Stabilization Director issued General Order 1 on February 20 and the revised supplementary wage and salary regulations on March 8. The general order, besides establishing the first wage pattern order for steel industry, suspended the prior-approval provisions of Executive Order 9697 for a temporary period and granted automatic pre-approval in two types of situations: Increases granted by most employers of eight or fewer employees, and certain fringe increases having to do with night-shift differentials, vacation pay, etc. The supplementary regulations spelled out in detail operating standards to be observed by the wage stabilization agencies in approving wage and salary increases; specified additional classes of increase given pre-approval; eliminated the “bottleneck” or full-production standard for wage increases contained in the earlier regulations; provided additional exceptions to the prior-approval provisions of Executive Order 9697; elaborated the procedures for issuance of industry-wide- and area-wide-pattern wage and salary approval orders; and detailed the standards and limitations to be observed by the Price Administrator in taking approved wage and salary increases into consideration in determination of price and rent ceilings. The new wage-price policy required the Office to undertake a Jarge number of changes, both procedural and substantive. Close liaison was immediately worked out between the Wage Stabilization Board and the Office of Price Administration after an exchange of plans between the Price Administrator and the chairman of the Board. Both agencies, anxious to carry the new policy into immediate action, undertook an extensive program of training field staffs to administer the adjustment program. Streamlining of procedures was necessary if backlogs were to be avoided, and at the end of the reporting period this program had gone forward very satisfactorily. With the as 6 • Seventeenth Quarterly Report sistance of the Office of Economic Stabilization and Wage Stabilization Board, operating problems arising out of the new policy were being rapidly met at the end of the reporting period, and transition difficulties were rapidly diminishing. RECONVERSION PRICING During the first 3 months of 1946, increase factors were announced for a number of additional reconversion industries. In general, these actions embodied the findings of industry surveys which had been launched during the preceding quarter as part of the over-all program to review maximum prices in all major reconversion industries. New surveys were undertaken in some cases, however, as additional areas which would qualify for such treatment were uncovered, or where changed circumstances with respect to labor and materials costs created a general need for price relief wh ich had not hitherto prevailed. While most of the increase factors announced by the end of the quarter applied to industries in which civilian production had been virtually nonexistent during the war period, Office policy also permitted review of an industry’s ceilings under the reconversion formula where its sales during 1944 had been less than 50 percent of its 1941 rate. Wherever curtailment had reached such levels, the industry’s current operating statements were not regarded as a reliable index to its relief requirements, and projections from a more normal operating period had to be used. Among the increase factors announced during the January-March quarter were two which covered industries subject only to partial wartime curtailment—domestic cooking and heating stoves and wool floor coverings.11 Nevertheless, both industries qualified as reconversion industries not only in having satisfied the volume test, but both had been heavily engaged in war work and both had genuine physical reconversion problems which affected a large proportion of the member firms. While most adjustments for reconversion industries were authorized as uniform industry-wide increases, in certain industries this procedure could not be applied, for example, in cases where the industry included firms differing widely as to type of product line on which they specialized, as to degree to which their operations were integrated, and as to the time of completion of their reconversion operations and resumption of civilian merchandise sales. Firm-by-firm adjustments were allowed such industries in lieu of a uniform increase, based on an individual company’s preconversion costs, adjusted to reflect increases in its own basic wage rate schedules and allowable materials cost increases, plus its own 1936-39 margin of profit or one-half the 11 Amendment 5, MPR 64 ; effective March 15, 1946, and Amendment 6, BPS 57 ; effective January 4, 1946. Price Control: Ceiling Adjustments • 7 base-period rate for the industry, whichever was higher. During the quarter, several industries were found to require firm-by-firm consideration, and the necessary orders were issued under which such individual actions might be authorized. These orders covered producers of metal musical instruments, home sewing machines, home mechanical refrigerator cabinets, rubber mats and matting, and other rubber items which had been almost or wholly out of production since 1941.12 Earlier reconversion adjustments of this type were in the automobile and household mechanical refrigerator industries. Earlier expectations that some major reconversion industries would achieve fairly normal operations during the quarter did not materialize. This was largely attributable to the wave of labor-management controversies which paralyzed the steel industry and many of the basic parts-producing industries oh which reconversion manufacturers were so largely dependent. It was therefore impossible to undertake any industry-wide review of the previous reconversion-formula adjustments on the basis of current profit and loss data. Substantial levels of output were nonetheless reached by a significant number of individual firms scattered throughout these industries, and it was possible to make a transition to the normal adjustment standards for those particular firms. To do so, however, required an amendment to Revised Supplementary Order 119, because that order originally disqualified any firm which was eligible as a reconverting manufacturer for relief under any other adjustment provision. This limitation was removed for any manufacturer who achieved, over a period of 90 days, a unit rate of production averaging at least 90 percent of his unit production volume during the year 1941.13 Thus a manufacturer achieving fairly normal operations became eligible for relief on the basis of the more reliable index of his actual current cost experience, as revealed in his profit and loss statement. The inflow of applications under the reconversion adjustment orders distinctly showed the effects of the modifications in governmental policy during the quarter. The volume of such applications had fallen off considerably during the closing days of the previous quarter and continued at a low ebb during the first part of the January-March quarter. With the announcement of the new wage-price policy in February, however, a reversal of this trend was precipitated. Filings in February and March reached the highest levels since the program was instituted. For the most part, these applications originated with manufacturers who had not previously filed. In some instances, however, they were submitted by manufacturers for whom price relief had been authorized prior to the announcement of the new wage-price policy. u Order 7, MPR 188 ; effective February 14, 1946 ; Order 56, MPR 149 ; effective February 18,1946 ; Amendment 26, MPR 220 ; effective March 21, 1946. 13 Amendment 4, Rev. SO 119 ; effective March 25,1946. 8 • Seventeenth Quarterly Report The Administrator was required, in the new Executive Order, to develop standards consistent with the purposes of that order for industries operating at temporary low volume, which included most reconversion industries. In view of the substantially higher level of both approved wage rates and legal materials prices which the new wage price policy implied, and in consideration of the substantial cost increases which the reconversion industries had already been required to absorb under their adjustment formula, a complete pass-through for these new cost increases was found necessary. Thus-where adjustments had previously been granted, the new policy required recalculations to reflect subsequent increases in wage rates and materials prices. It also required these increased costs to be reflected in all original determinations under the formula. This policy applied to individual hardship adjustments as well as to the determination of industry-wide increase factors. On the basis of this new wage-price policy, original reconversion increase factors were raised for home washing and ironing machines,14 radio speakers,15 fluorescent and other specialty transformers,16 and for Chrysler, Ford, Hudson, and Nash automobiles.17 COST ABSORPTION Several important modifications in Office policy on cost absorption at distributive levels were made during the quarter. Of primary importance was the provision of an automatic mechanism under which individual wholesalers and retailers of certain consumer goods could recalculate their ceiling prices when industry-wide manufacturer increases reduced their prices below individual expense rates.18 Any part of an increase at the factory level, the absorption of which would reduce the reseller’s margin below his operating expense rate, could thus be passed through to the consumer. Resellers were authorized to find their expense rate, which the order limited to listed allowable inclusions, as a percentage of net departmental or entire business sales. Covered by the provision were such products as textiles, apparel, house furnishings, and fall and winter seasonal commodities. In another action the Office authorized resellers to pass on the exact increase in their costs resulting from higher ceiling prices granted to single producers under the Office’s individual price adjustment 14 Amendment 1, RMPR 86 ; effective April 2, 1946. 15 Amendment 27, RMPR 136 ; effective January 15, 1946. 18 Order 572, RMPR 136 ; effective January 17, 1946. 17 MPR 594 : Amendment 3, Order 8 ; Amendment 2, Order 13 ; Amendment 3, Order 1 ; Amendment 3, Order 4 ; Amendment 3, Order 12 ; Amendment 4, Order 9 ; Amendment 3, Order 10; Amendment 2, Revised Order 5 ; Amendment 3, Order 6; all effective March 11,1946 ; Amendment 1, Order 11, effective March 21, 1946. 18 SO 145 ; effective February 2, 1946, Price Control: Ceiling Adjustments • 9 policy.19 The Office reserved the right, however, to supersede this general provision where study had already determined that resellers were able to absorb factory increases, or where passing an increase through would have an unbalancing effect on the price structure. Though not previously formalized, this procedure had been customary, since the administrative burden of making surveys of resellers’ capacity to absorb each time an adjustment was granted individual producers would have been greatly disproportionate to the possible contribution to stabilization. In a third area, that of cost absorption on reconversion products sold chiefly by specialty outlets such as automobile and appliance dealers, a significant change in policy occurred. The manufacturers’ increases granted for such products prior to the new wage-price policy had been small compared with the capacity of distributors and dealers to absorb. When, however, further factory price adjustments took place, the Office reexamined its policy and its data. It found that in some cases small dealers had had larger realized margins than large dealers. In other cases, there was extensive variation of many dealers’ realized margins of preconversion days from the average margin of their trade. The standard was therefore modified to provide that factory price increases had to be absorbed except to the extent that such absorption would reduce the initial margin below the bulk-line (previously the average) realized margin of the trade. Factory increases greater than can be absorbed by this standard were to be passed through by equal dollar-and-cent increases in resale prices. Only in the remote case in which such a dollar-and-cent pass-through has the effect of reducing the intial percentage margin below the average realized margin, would percentage pass-through occur. In addition, previously announced policies with regard to cost absorption at the wholesale and retail levels were modified in three instances to meet unusual situations. The first of these actions was an order regarding wholesale prices of furniture.20 Under this order, the amount of absorption required on increases granted producers for some categories of low-priced furniture was less than that which would have been required had the expense-rate test been used. The purpose of this limitation on absorption was to encourage the production and distribution of this critically needed merchandise. Although retail margins at expense-rate levels would not have prevented the sale of merchandise already made, it was the opinion of the Office that too tight retail margins might discourage production of these low-end commodities. ” Amendment 2, SO, 142 ; effective March 25, 1946 ; SO, 153 ; effective April 1, 1946. u Order 4849, MPR 188, effective February 18, 1946. 10 • Seventeenth Quarterly Report The second action which involved modification of the usual absorption rules was issued as part of the order establishing ceiling prices for innerspring mattresses.21 It had been found that manufacturers in some instances were deteriorating the quality of their products in lieu of increasing their prices the 16 percent allowed by OPA on that product. This action on the part of manufacturers enabled retailers to avoid cost absorption at the expense of consumers. The revised order, by requiring manufacturers to bill separately 12 percent of their adjusted selling prices, which amount had to be absorbed by retailers, eliminated the incentive to deteriorate quality and at the same time minimized the amount of increase in prices to consumers, since most of the 16 percent manufacturers’ increase was thus absorbed. The third action, adjusting manufacturers’ prices for photographic equipment, established retail margins at levels calculated to reflect current expense rates plus the 1936-39 average percentage of profits (before taxes) to net sales.22 Had full absorption been required, margins would have been reduced below this level. The profit factor was added in this case because photographic equipment accounts for the bulk of the sales volume of a large proportion of the sellers affected by the order. Dealer absorption of producer ceiling rises on household washing and ironing machines was automatically fixed in an action limiting distributor margins, except where prices are fixed by special orders, to the base-period percentage margin between the producer’s price to the distributor and the distributor’s price to the retailer.23 Under the original reconversion order for this industry, resellers were given an automatic increase factor of 4.9 percent, reflecting an 80-percent pass-through of the factory advance in cost. Operation under the order, however, disclosed a weakness in that it allowed a distributor to raise prices even when his supplier had elected not to raise prices or not to raise them to the full extent permitted in the order. TRANSITION PRODUCT STANDARD A new standard governing increases in ceiling prices was announced during the quarter for particular products made by multiline firms whose over-all profits from all operations exceeded their earnings in a representative peacetime base period. This was the so-called transition product standard which had already been used in a number of cases since VJ-day, and was beginning to be more and more used to implement the Executive Orders of the President with regard to transition to a peacetime economy. 21 Amendment 1, Order 5, MPR 188, effective March 4, 1946. 22 Order 10, MPR 188, effective April 11, 1946. 23 RMPR 86, effective March 27, 1946. Price Control: Ceiling Adjustments • 11 During the war the Office had used only two standards in deciding the extent to which increases in ceiling prices were needed for particular products in such cases. These standards continued to be used after VJ-day along with the new standard. The first of the wartime standards was the product standard, representing OPA’s minimum obligation under the law to maintain fair and equitable prices. This standard required the Office to raise the ceiling price of any product if it did not cover out-of-pocket costs for the industry generally. As a practical matter, this minimum standard was usually applied by using the measure of average manufacturing cost. The second war standard was the supply standard, which authorized price increases for products found to be both essential and in short supply, whenever a price increase was needed to bring out additional supply. Under this standard, price increases were often made sufficient to cover the total cost of all but the very high-cost producers, thereby assuring substantial profits on the commodity for most producers. The third product standard, in between the minimum product standard and the supply standard, was developed out of the needs of the transition period. The process of transition from the wartime structure of production and prices to the peacetime structure required a new price standard which would facilitate production of goods throughout the economy in a normal peacetime pattern without special determination of degrees of essentiality. This need was recognized in general terms in Executive Order 9599, which provided for correction of price maladjustments that would interfere with effective transition to a peacetime economy.24 Under the new standard, the ceiling price or prices of a particular product produced by a multiline manufacturing industry may be raised to the extent necessary to return to the industry on the average the total costs of making and selling that product. The Office decided to use this standard in all cases in which the minimum product standard would hitherto have been used, with the exception of a few special cases noted below. Even in these cases, however, the transition product standard might be applicable after consideration of the facts of concrete cases. The aggregate number of actions which might be embraced by these exceptions would be small, however, both in an absolute sense and in relation to the actions brought under the transition product standard and the supply standard. One exception involved cases where use of the total-cost standard Would be harmful either to effective transition or to stabilization. An adjustment on this standard might occasionally have the effect of diverting scarce materials or facilities from more essential products 24 See Fifteenth Quarterly Report, p. 1. 12 • Seventeenth Quarterly Report or from lower priced items of the same or a similar product. It might also create a maladjustment between the price of the commodity and prices of related commodities which could be removed only by making otherwise unnecessary increases in other prices, or by withdrawing the adjustment on this commodity. Maladjustment, as used here, does not refer to vertical price relations, i. e., the relations between the price of raw materials or parts and the things made from them. Tn other words, the transition product standard would be used even if the resulting increase in the cost of materials or parts required an increase in prices of some products made from them. Another exception involved cases where a total-cost adjustment would not be needed, either because the product typically sold for less than total cost under normal peacetime conditions, or because it was jointly produced with one or more other commodities under conditions such that all of them had to be produced in approximately the same volume. In the latter instance, the transition product standard would, however, be properly applicable to the group of joint products as a whole. Another exception would occur where a product, of small importance in the total operations of a multiline industry, was at the same time made by singleline producers who were not in hardship or were protected by individual adjustments. Finally, the transition product standard would not be applied to products still under interim pricing by the reconversion formula or other interim formulas. In arriving at total costs for application of the standard, the overhead cost of normal operations rather than the current abnormal overhead would be used where production was abnormally low. Additions to, or deductions from, current costs would be made only where cost changes within a few months were clearly indicated, and a reasonable estimate of their amount could be made. Price Control: The Food Programs • 13 • II * PRICE CONTROL: THE FOOD PROGRAMS Office actions on food prices during the first quarter of 1946 were concerned primarily with adjusting prices and tightening regulations both for meat and for cattle, in an effort to improve the meat supply. Studies of the financial status of 236 meat-packing companies were continued, to comply further with the Barkley-Bates amendment to the Price Control Act providing separate profiitability for each of the three major species of livestock.1 At the same time, the Office was able to remove from price control a large number of minor food items (see table 5, Appendix, for complete list). Controls on fresh citrus fruits, however, had to be reinstated early in January.2 Shortly after these fruits were suspended from control in November, the market strengthened, and prices at all levels began to exceed previous ceilings. After allowing the industry sufficient time to attempt voluntarily to curb excessive prices, the Secretary of Agriculture, the Price Administrator, and the Stabilization Administrator agreed to reinstitute controls. Although sharp price increases on cigar types of leaf tobacco followed their exemption from price control in November, no action was taken to reinstate controls on this commodity. Accounting surveys of the cigar industry were begun during the quarter to measure the impact of higher tobacco prices on 1946 earnings. The Office decided during the quarter to continue price controls over poultry. Preliminary steps toward elimination of controls had been taken, but a subsequent tightening of poultry prices throughout the country gave strong indication of the possible trend of prices should control be actually removed. Recommendations of the Famine Emergency Committee led to several changes in OPA regulations to encourage the conservation of flour, and enable the United States to meet its obligations to UNRRA. Bakers were allowed to reduce the weight of bread and rolls by 10 percent without any decrease in price since the corresponding savings in cost were not likely to be a full cent, the smallest practicable amount of reduction.3 The same decrease in weight was permitted for sweet 1 See Sixteenth Quarterly Report, p. 20. 3 Amendment 14, SO 132 ; effective January 4,1946. 8 Amendment 2, RSR 14-B, GMPR ; effective March 15, 1946, 699337—46-----3 14 • Seventeenth Quarterly Report bakery goods, but here a corresponding price reduction was required to the extent of any full-cent savings.4 The restaurant regulations were also amended to allow reduced portions of items like bread and rolls or salad dressing without consequent price reduction, unless such price reduction was normal in the base period of April 4 to 10, 1943. In addition, the dining-car regulation provided further that when smaller portions reduced food costs by 5 cents or more, an equivalent price reduction must be made, rounded to the nearest full multiple of 5 cents.5 Rapidly increasing feed costs precipitated widespread and sustained pressure during the quarter for increased milk prices at the producer level. Such cost increases had hitherto been covered by dairy production subsidies. Lack of available funds, however, together with the widespread nature of the development, necessitated various price adjustments. Price increases were authorized by the Office of Economic Stabilization for Seattle, Wash.; Phoenix, Ariz.; Portland, Oreg.; and Memphis, Tenn.6 Included in these actions were most of western Washington and western Oregon as well as the State of Arizona. As the quarter closed, discussions were being held with the Office of Economic Stabilization and the Department of Agriculture regarding the general fluid milk situation throughout the country. Some changes in the countrywide program were expected early in the next quarter. It became quite obvious during the quarter that projected removal of subsidies, plans for which had been initiated by Stabilization Administrator John C. Collet in November, would have to be delayed. In scheduling subsidy removal, the Stabilization Administrator had indicated that the price increases required by elimination of subsidies would be offset for the consumer by declining prices on nonsubsidized cost-of-living items.7 Consumer prices for nonsubsidized cost-of-living items, however, did not weaken sufficiently to permit offsetting price rises on items for which subsidies were scheduled to be dropped. Living costs continued to rise, and the Bureau of Labor Statistics consumer price index indicated a higher consumer price level during the quarter than at the time of the Japanese surrender in August. The President therefore proposed to Congress a general subsidy program for the fiscal year 1947 totaling about $2,050,000,000, of which $1,700,000,000 would cover specific food programs.8 4 Amendment 3, 2d RMPR 319 ; effective March 28, 1946. • Amendment 11, Rest. MPR 2 ; Amendment 5, Rest. MPR 1; both effective March 22, 1946. 6 Various regional orders to MPR 329 and SR 15, GMPR; effective February 8, March 8, March 29, and April 1, 1946. 7 See Sixteenth Quarterly Report, pp. 18—19. 8 Estimated expenditures for subsidies during fiscal 1946 were $2,050,000,000, of which $1,750,000,000 went to the food programs. Price Control: The Food Programs • 15 Most major subsidy programs, such as those for meat, flour, and dairy products, were continued during the quarter. It was possible, however, to remove the direct processor subsidy of 3% cents per pound on cheddar cheese and the subsidy on the 1946 pack of canned snap beans. A commensurate ceiling price increase of 3% cents was granted to processors of cheddar cheese, and the advance was passed along to consumers since absorption at the distributive levels did not appear possible.9 Coincident with the stopping of subsidy payments, canned snap beans, found to be in sufficient supply, were indefinitely suspended from price control.10 In addition, a small portion of the sugar subsidy was lifted and prices for direct-consumption sugar were increased one-half cent per pound, in a general readjustment of domestic and imported sugar prices.11 MEATS AND LIVESTOCK The most significant action in meat pricing during the quarter was a set of increases in the various meat items to compensate the meat packing industry for increased wages amounting to 16 cents per hour for most of its employees.12 The financial position of the meat industry was such that the entire amount of the increased wage cost had to be reflected in ceiling prices. The increase that was granted amounted to about 45 cents per dressed hundredweight for cattle and calves and sheep and lambs, and 55 cents per dressed hundredweight for hogs, except that about another 5 cents per hundredweight increase was provided by allowing additional permitted payment of 25 cents per hundredweight by Government agencies. Various amendments to the retail meat regulations were issued, to be effective shortly after the quarter ended in order to reflect the various cents-per-pound increases at wholesale.13 The decision to allow a straight pass-through of the wholesale price increase was based on the knowledge that certain segments of retail trade might be placed in hardship if absorption were required. Another important amendment to the beef and veal regulation14 provided that no one could sell beef or veal derived from cattle or calves that were custom slaughtered at a particular plant unless (1) the seller had his cattle or calves slaughtered in that plant under 9 Amendment 22, SO 132, effective March 1, 1946. 10 Amendment 2, MPR 16, Amendment 1, MPR 60, both effective February 10, 1946. 11 Amendment 44, MPR 289, effective February 1, 1946. u Amendment 66, MPR 169 ; Amendment 33, MPR 148 ; Amendment 22, MPR 239 ; Amendment 24, MPR 389 ; Amendment 8, MPR 286 ; Amendment 57, MPR 33 ; Amendment 12, MPR 398 ; all effective March 11, 1946 ; and Amendment 12, MPR 156 ; effective March 14, 1946. 13 MPR 336 : Amendment 32, effective April 1, 1946 ; Amendment 33, effective April 11, 1946 ; MPR 355 : Amendment 34, effective April 1, 1946 ; Amendment 35, 36, both effective April 8,1946 ; MPR 394 : Amendment 20, effective April 8, 1946. 14 Amendment 69, MPR 169 ; effective April 1, 1946. 16 • Seventeenth Quarterly Report Control Order No. 1 before December 29,1945; or (2) both the cattle owner and the nonfederally inspected slaughterer were certified by the United States Department of Agriculture as meeting the distribution and sanitary requirements of the Patman amendment to the Stabilization Act. Similar restrictions were placed on the slaughtering plants. This action was intended to prevent diversion from the normal pattern of distributing beef and veal by wholesalers, retailers, and purveyors of meals and so to enable legitimate packers to obtain cattle supplies at prices which would permit them to remain in compliance with the price-control regulations. The large increase in custom slaughtering for retailers and purveyors of meals was a serious factor in providing upward pressure on the prices of cattle and calves because these small buyers often disregarded established maximum prices. In a further attempt to relieve shortages of beef and veal in particular areas, provision was made for wholesalers to add local delivery costs to their prices when the national office of OPA determined the area to have a shortage of these products.15 In order to clarify the pricing of canned meat products, an amendment to the canned meat regulation was issued providing a pricing method for intermediate distributors of canned meat who were previously unable to price new canned meat items.16 A procedure was also provided for the establishment of processor prices for individual brands of specified canned meats not previously sold by the manufacturer where such products contain grades of beef, veal, lamb, or mutton higher than cutter and canner grade. The newly established prices recognized the higher costs of this meat when such grades were the entire component of the product. The live cattle regulation was amended in several respects in order to improve compliance.17 Provision was made to bring buying prices for small companies who do not report cattle purchased for slaughter by grades into line with those for other companies. This provision, based on yield without regard to grade, reduced the price of lower grades and raised the price of higher grades when bought by such small companies. Slaughterers were also required to place identification tags on each side or quarter in their coolers so that investigators might determine whether or not they were reporting correctly the weight and grade of meat produced. In addition, slaughterers reporting calculated liveweight in excess of actual liveweight were required to compute their maximum permissible payments on the basis of actual instead of calculated net weight. All commercial slaughterers were required to send monthly reports to OPA even though fewer than five “ Amendment 68, MPR 169 ; effective March 25, 1946. 16 Amendment 11, MPR 156 ; effective March 2, 1946. 1T Amendment 4, MPR 574 ; effective February 4, 1946. Price Control: The Food Programs • 17 cattle were slaughtered; slaughterers of fewer than five cattle in a month were formerly exempted from reporting. The Office of Economic Stabilization issued a directive during the quarter designed to tighten control over cattle prices.18 The directive made several significant changes in subsidy payments when costs of live cattle exceed maximum permissible costs, providing automatic deductions from subsidy payments, as follows: (1) 10 percent of the subsidy to be withheld when the slaughterer’s cattle costs exceed the maximum permissible costs by no more than one-fourth of 1 percent; (2) 30 percent to be withheld when the excess is between one-fourth of 1 percent and 1 percent; (3) 60 percent to be withheld when the excess is between 1 and 2 percent; (4) the entire subsidy to be withheld when the excess is more than 2 percent. Previously the only automatic deductions from subsidy payments for excessive cattle costs were the extent of such costs over the maximum. Withholding of all subsidy payments was resorted to only when a company was proven guilty of a violation of a maximum price regulation through court action. The rate of withdrawal of subsidy payments was also changed to provide a 2-cent subsidy decline for every 3-cent drop in cattle prices below the maximum. Previously the rate of decline in subsidy payments was 4 cents for every 5-cent drop in price below the top of the range. Both measures were intended to improve compliance with the regulation. FRUITS AND VEGETABLES In the fresh fruit and vegetable field, the Office removed a number of commodities from price control during the quarter, and found it necessary to increase prices on three vegetables to meet the legal requirement of higher prices whenever weather or other unforeseen disaster substantially reduces the crop yield. Five disaster adjustments were thus made: Two on spinach, one on green peas, and two on snap beans.19 Decontrol activities resulted in the exemption from price control of fresh sweet peppers, fresh eggplant, hothouse lettuce, and imported hothouse grapes.20 In addition, the suspension of white potatoes was continued until April 10.21 Further suspension during the following quarter was being considered. Growers were notified during the quarter of proposed maximum prices, f. o. b. country shipping point, for dry whole and dry split peas and for processed and unprocessed dry edible beans. *8 Amendment 3, OES Directive No. 41; effective April 1, 1946. «MPR 426: Amendment 162, effective January 31, 1946; Amendments 164 and 165, noth effective February 19, 1946; Amendment 170, effective March 21, 1946; Amendment 171, effective March 27, 1946. „ 132: Amendment 13, effective January 2, 1946; Amendment 15, effective January ° 5 Amendment 17, effective February 6, 1946. Amendment 18, SO 132, effective March 7, 1946. 18 • Seventeenth Quarterly Report A clarifying amendment was issued to specify the price position of imported produce with respect to crop year and to set up begin-ning-of- and end-of-season dates for various melons, thereby providing appropriate ceilings for these items when imported.22 In the processed fruits and vegetables field, prices were established for 1945 and later crops of frozen fruits, vegetables, and berries.23 A simplified pricing method was introduced permitting the processor to start with his 1941 price and to multiply by a given factor in order to obtain his ceiling price instead of starting with his prevous year’s price and adding or subtracting several factors. Prices were also established for the 1945 pack of Bartlett pears produced in Oregon and Washington.24 Processors of mincemeat were allowed to recalculate their prices to reflect the substantially increased costs of dried apples.25 Processors of domestic ripe olives were given a price adjustment to cover increased costs of raw material.26 Plans were being made at the end of the period to amend the dried fruit regulation to reflect increased labor costs, and to suspend pickles from price control. Action was also in preparation to increase the price of imported Spanish olives to cover increased fruit costs and to allow processors of jams, jellies, and preserves to reflect the increased cost of sugar. Several miscellaneous canned goods such as turnips, onions, and parsnips were exempted from price control, and canned snap beans were indefinitely suspended from control.27 GRAINS AND BEVERAGES Various amendments to grain regulations were issued to prevent abnormal merchandising of corn and other grains.28 One action defined a retail sale as one not in excess of 1,000 pounds. Another action reduced the base price of grain when processed and sold by a producer, and also reduced the merchandising markup of the processor. This was done to discourage the increasing tendency toward grinding grains, particularly corn, or mixing corn and other grains for the sole purpose of getting a higher price, resulting in substantial diversion from normal channels. A further action reduced the markups on certain less-than-carload-lot sales of corn. 22 Amendment 161, MPR 426, effective February 9, 1946. 23 Supplement 17, FPR 1, effective January 28, 1946. 24 Amendment 8, Supplement 13, FPR 1, effective January 24, 1946. 25 Amendment 21, MFR 262, effective February 25, 1946. 28 Amendment 16, SR 14, GMPR, effective February 27, 1946. 27 Amendments 15 and 22, SO 132; effective January 28, 1946, and March 1, 1946, respectively. 28 FPR 2 : Amendment 3, Supplement 1 ; Amendment 2, Supplement 5 ; Amendment 8, Supplement 4 ; aU effective March 4,1946, Price Control: The Food Programs • 19 Maximum prices on various grains were increased to comply with the provisions of the Price Control Act that make it mandatory for ceilings on agricultural commodities not to be lower than parity prices.29 The price increases amounted to 2 cents per bushel on oats, 4 cents per bushel on barley, 3 cents per bushel on corn, 9 cents per hundredweight on grain sorghums, 3 cents per bushel on wheat, and 4 cents per bushel on rye. For the same reasons, the price of hay was advanced by $1 per ton.30 American efforts to alleviate world famine conditions, reducing brewers’ use of grain in the manufacture of malt beverages and distilled spirits,31 led to a request for an industry survey to determine the impact of the restriction of grain usage on earnings. The anticipated reduced production also made it impossible to suspend either distilled spirits or malt beverages from price control. For this reason also, the suspension from price control of domestic wine was extended only 60 days beyond the original termination date of April 1, instead of indefinitely.32 Although a survey indicated that retail prices in February were at or below the former ceiling prices, it was feared that the expected drop in production of other alcoholic beverages might result in sufficiently increased demand to force wine prices upward. OTHER AGRICULTURAL PRODUCTS The more important decisions in other food fields during the quarter included an increase in sugar prices, actions on coffee, tea, and cocoa, and on imported spices. The higher price of the 1946 crop of Cuban raw sugar forced an increase of 4%oo of a cent per pound in the domestic raw sugar ceiling and one of half a cent a pound in the ceiling for direct consumption sugar.33 The increase in the maximum prices permitted continued imports of Cuban raw sugars. At the same time, the Commodity Credit Corporation reduced subsidy payments to domestic growers and processors. The green coffee import subsidy, instituted November 19, 1945, in accordance with an Office of Economic Stabilization directive and set to expire March 31,1946, was extended to June 30,1946. Since it appeared that a reversion to the old ceiling prices would not bring in an adequate supply of coffee, after consulting with the Inter-American 29FPR 2: Amendment 6, Supplement 2; Amendment 5, Supplement 3; Amendment 7, Supplement 4 ; Amendment 5, Supplement 6 ; and Amendment 8, 2d RMPR 487 ; Amend-ment 1, MPR 604 ; all effective March 4, 1946. 30 Amendment 3, MPR 582 ; effective March 20, 1946. 81 Amendment 15, War Food Order 66; effective March 1, 1946; Amendments 1 and 2, war Food Order 141; effective September 1, 1945, and March 1,1946. 32 Amendment 41, MPR 445 ; effective March 29, 1946. 38 Amendment 2, MPR 16; Amendment 1, MPR 60; both effective February 10, 1946. 20 • Seventeenth Quarterly Report Coffee Board, the State Department, and the Department of Agriculture, the Office joined in the recommendation by the Department of Agriculture that the subsidy period be extended and made to cover an additional 7,500,000 bags. The excess quantity over consumption was expected to afford the trade an opportunity to build up a stockpile and allow sufficient time to gain an accurate estimate of the new Brazilian crop. The United States Commercial Corporation’s contract with the British Food Mission for purchase and importation of 80 million pounds of tea expired March 31, 1946, returning tea importation to private trade. This move necessitated adjustments in ceiling prices to conform with changes in differentials during the 3 years of public purchase. These amendments in preparation at the close of the quarter were not likely to result in over-all increased costs to United States tea packers, as the British Food Mission gave assurances that tea would be available for export to the United States at prices no higher than those charged USCC during the year, provided price controls were retained. Requests for increases in the maximum prices of cocoa beans were denied during the quarter. Subsequently, exporters in Brazil and Africa (the largest producing countries) entered into large commitments with United States importers. These contracts contained escalator clauses, should United States price ceilings be raised or eliminated. Approximately half of the spices and spice seeds under specific dollar-and-cent price regulations were exempted during this quarter. The remainder, with the exception of pepper, cinnamon, cassia and rape seed, were in process of being exempted at the close of the quarter. Unground pepper ceiling prices were increased by 5 cents per pound, in accordance with a United States Department of Agriculture supply certification.34 As the quarter closed, a similar increase was being prepared for unground cinnamon on the recommendation of USDA.35 In addition, increases amounting to 9 cents per pound36 were being prepared in processor prices for packaged black pepper. 34 Amendment 4, BPS 52, effective March 15, 1946. 35 Amendment 4, MPB 231, effective April 13, 1946. 39 Amendment 17, SB 14C, GMPB; effective April 10, 1946. Price Control: Consumer Goods • 21 • III • PRICE CONTROL: CONSUMER GOODS Rising raw material and labor costs necessitated reexamination of the industry earnings position in virtually all of the consumer goods fields during the first quarter of 1946. A number of increases in ceiling prices had to be made, and many more were in prospect as the quarter ended. In soft goods, wage increases ranging up to 18 percent spread through most of the industries, and the price of raw cotton, stimulated by speculation, rose approximately 13 percent during the quarter. In hard goods, wage costs rose not only in the consumer durables industries, but also in supplying industries. In many industries wages did not fall into a pattern but were spiraling upward, partial increases having been given in the fall, on top of which larger increases were being granted. Furthermore, some industries were experiencing wage increases by segments, so that the spiraling effect was further enhanced. Many consumer durable goods industries were also immediately affected by the steel price increase.1 The situation in soft goods was further complicated by the paradox of increasing production and increasing shortages which marked the quarter in textiles, apparel, and leather products. Much of the energy of the Office was devoted to developing programs, together with the Civilian Production Administration, for increasing fabric supplies available to manufacturers of garments in scarce supply and to the adjustment of ceiling prices and maximum average price requirements to enable manufacturers to utilize all available fabrics profitably. Cotton textile production during January-March was above previous months, output having been increasing since the fall of 1945, after a continuous and drastic decline from the peak level reached in 1942. No marked increase in production was expected, however, until substantially more manpower was available to the low-wage textile mills, and until a greater stability became manifest in the price of raw cotton, the major raw material. The average price of x%6-inch middling cotton in the 10 designated spot markets increased during the quarter from 24.41 to 27.64 cents per pound. This increase of 11 percent occurred on top of an increase of roughly 10 percent which had occurred during the previous quarter. In both instances the increases were largely speculative, since the stocks of raw cotton, with the possible exception of a few of the better 1See below, pp. 31-33. 22 • Seventeenth Quarterly Report grades and staples, were adequate for current consumption. Cotton futures trading had attracted an increased amount of speculation because cotton was the only major agricultural commodity not under price control. The seriousness of the situation was emphasized on January 14, 1946, by the Administrator’s formal notice to cotton growers of proposed maximum prices. This notice was required by law if price ceilings were later to be imposed on the 1946 cotton crop. The continued increase in raw cotton prices to such alarming proportions prompted the Director of Economic Stabilization to direct the Price Administrator to issue a regulation ordering an immediate and substantial increase.in the margin requirements of the cotton futures exchanges in the hope of discouraging excessive speculation in this commodity. The order was in process at the end of the quarter. APPAREL Civilian apparel production, which in 1945 was at its lowest level since the war began, rose in the first quarter of 1946, and in many items approached or exceeded prewar levels. The extraordinary demands for apparel items, however, particularly for men’s tailored garments and furnishings, produced unparalleled shortages. The production of men’s dress shirts, for example, increased steadily from 270,000 dozen in May 1945 to approximately 600,000 dozen in January 1946. Even a doubling of available supplies was not sufficient, however, since demobilization of the armed forces had created a demand equal to a whole year’s prewar production, intensifying normal civilian demand. Despite ceiling price adjustments, relaxation of maximum average price (MAP) provisions, and rechanneling of textile supplies, the situation at the close of the quarter was discouraging, with no real improvement in sight during the remainder of the year. Solution of the problem lay only in increasing fabric production at the mill level, since not even extensive advances in ceiling prices can produce garments if there is no cloth available. Maximum Average Price Regulation The maximum average price regulation applied during the quarter to 424 categories of apparel produced by some 12,000 manufacturers whose sales volume reached 6 billion dollars a year. Widespread criticism of the regulation was therefore not unexpected. Although some of the criticism against the MAP program may have been justified, a good deal was grossly exaggerated. Thus it was charged, for example, that garment manufacturers could not operate under the regulation. In order to determine the validity of this contention, the Office made an extensive analysis of operations under MAP for the Price Control: Consumer Goods • 23 third quarter of 1945, and found that 9 out of every 10 manufacturers had produced at or below their maximum average prices. Only 1 out of 10 manufacturers incurred a surcharge, that is, exceeded his maximum average price. The amount of surcharges incurred was less than one-half of 1 percent of the total dollar volume of business transacted in the categories affected. Between 50 and 60 percent of all manufacturers, moreover, showed credits, that is, produced at an average price below their MAP’s. Clearly these were not the r esults of an unworkable regulation. An analysis of fourth quarter operations had not been completed by the end of March, but preliminary studies showed the pattern to be the same as in the third quarter. It should be remembered that MAP was instrumental in holding down a truly explosive clothing situation. Although it did not roll prices back materially, the price level would undoubtedly have risen to new heights, had MAP not been in effect. This was done during a period when the total supply of fabrics available for civilian clothing was at the lowest level since the depression years, while consumer demand was at an all-time peak. The most significant change in the apparel MAP during the quarter was the provision for an optional basis on which to make up surcharges resulting from exceeding a maximum average price during a particular quarter.2 Under the new procedure, firms were permitted to make up their surcharges by balancing out to a reduced maximum average price each month until the entire surcharge was made up. As contrasted to the original make-up basis, firms in a surcharge position were able by this method to ship merchandise in thé high-price ranges so long as their average prices conformed to their proportionately reduced maximum average prices. Continued shortages of lower priced constructions compelled the extension of tolerances and exemption of price limits, allowed to offset hardship in the third and four quarters of 1945, into the quarter under review. In addition, increasing costs of fabrics, due to such factors as the pass-through of Bankhead textile increases, necessitated revision of exemption price limits and tolerances for approximately 40 categories. Exemption limité were raised by amounts ranging from 1 to 58 cents per item.3 Other Actions A new. regulation was issued during the quarter to govern prices °f men’s and boys’ tailored clothing and such nontailored items as SO 108 : Amendment 9 ; Rev. Special Order 9 ; both effective December 31, 1945. 3 SO 108 : Amendment 3 to Special Order 3 and Special Order 5, both effective December 31, 1945 ; Amendment 4 to Special Order 3 and Special Order 5, both effective March 20, 1946. 24 • Seventeenth Quarterly Report jackets, trousers, raincoats, uniform shirts, and accessories.4 Manufacturer price relationships were realigned in a new pricing method, and more nearly uniform margins were fixed than was possible under previous freeze-type pricing. Similar to the regulation covering men’s shirts, shorts, and pajamas, issued in December 1945 to take effect at the beginning of the quarter,5 the new regulation narrowed margins on the higher-priced lines and widened them on the lower-priced lines, in order to stimulate production of badly needed low-end items. Manufacturers of men’s knitted underwear were provided with a price adjustment procedure to allow lifting of March 1942 freeze prices.® A new technique permitted each manufacturer to add to the ceiling price of a listed type of lightweight garment a standard increase factor reflecting increased yarn costs since the base period and his own increase factor reflecting increased labor costs. No increase could exceed listed cut-off prices for each type of garment. TEXTILES The textile scene during the first quarter of 1946 was marked by a continuation, and, if anything, an intensification of the inflationary pressures which had developed during the war and immediate postwar period. A high level of national income, together with the accelerated demobilization of the armed forces, brought consumer demand for essential textile products to a new high point. Retail, wholesale, and manufacturer inventories which had been at low levels were further severely depleted. Trade demand for yarns and fabrics reflected what was occuring at the consumer level, with mills, converters, jobbers, and apparel manufacturers all making frantic efforts to obtain textiles. The seriousness of the situation was further complicated according to trade reports, by the substantial withholding of yarns and fabrics in the expectation of a price increase. Production of textiles for the civilian market had been gradually increasing from the rate which prevailed at the end of the war, with the greatest strides being made by the woolen textile industry. Except for synthetic fibers, the supply "of raw materials was adequate to meet the needs of the mills. Labor continued to be the principal factor limiting production. Despite fairly general wage increases throughout the textile industries in many areas, wages were still not as favorable as those in other industries, and the movement of workers into the mills proceeded at a painfully slow rate when measured against the need for production. 4 MPR 607, effective April 15, 1946. 6 MPR 605, effective January 1, 1946. See Sixteenth Quarterly Report, p. 30. * SO 154, effective April 3, 1946. Price Control: Consumer Goods • 25 Cotton Goods Early in the quarter cotton mills requested a third general price increase for their products7 on the following grounds: (1) A new wage increase, first granted by some New England mills on November 2, was beginning to spread through the industry; (2) the parity price for cotton had risen above the July level used in the previous recalculations; and (3) the market price of raw cotton, as noted above, was rapidly rising above the parity level. The Administrator had determined that the Bankhead Amendment could in no way be interpreted as requiring the reflection of a cotton price above parity, major item by major item, and that a price for cotton above parity could be reflected only when and to the extent that the higher cost impaired the ability of the mills to earn on an over-all basis their 1936-39 return on net worth, before taxes (i. e., only through the industry earnings standard). He agreed, however, that price increases in excess of those required by law were advisable in order directly to stimulate needed expansion of cotton textile output, despite the fact that cotton textile earnings were, and promised to remain, even without the larger increase, very much in excess of the 1936-39 level. A sweeping price revision was issued in March, covering almost all cotton products, which gave increases that reflected not only the Wage increase and the advance in parity, but also to a large extent the advance in raw cotton prices in excess of parity.8 Increases averaged between 8^ and 9 percent, within a range of 4 to 12 percent, and an additional premium of 5 percent was allowed for staple items designated by the Civilian Production Administration as in most critical need. The latter action was part of a plan adopted both by the Office and the Civilian Production Administration to redivert textile production back to staple low-cost constructions, from which it had been diverted following relaxation of Government production controls after VJ-day. At the same time, CPA decided upon revised and extended distribution controls to assure that the staple fabrics found their way into the most critical needs. In a further move to prevent ceiling prices from impeding cotton textile production, the Office set up an individual adjustment provision, guaranteeing to any cotton textile mill a return on net worth equal to its individual peacetime return but not less than 3 percent nor more than 6 percent.9 (The average peacetime return for the cotton textile industry as a whole was somewhat less than 5 percent on net Worth.) This adjustment provision also covered wool and linen spinning and weaving. 7 Previous general increases granted in summer and fall of 1944 and summer and fall of 1945. 8 Amendment 14, SO 131; effective March 8,1946. * SO 149 ; effective March 18, 1946. 26 • Seventeenth Quarterly Report Action was taken during the quarter on the problem of absorption by converters of ceiling price increases on cotton grey goods. Solution of this problem was complicated by the existence of two classes of converters. Independent converters who normally did the bulk of the converting business were not in a position to absorb much of the cotton grey goods increases, primarily because their volume of business had been sharply reduced by the entry of mills into the converting business. Integrated mill converters, on the other hand, because of their earnings from other sources and because they save an extra selling expense and some administrative expense by selling to themselves, were in a position to absorb most or all of the grey goods increases. The only feasible solution that could finally be devised was to retain a uniform markup factor for both independent and integrated converters, but to require integrated converters to deduct from grey goods ceilings an allowance equal to duplicated selling expense before the converting markup was applied.10 The new converting markup was computed to yield only base period profits on the average for independent converters. Because of this, and because of substantial variations among independent converters which made a uniform markup operate with some inequity, an adjustment provision was provided whereby independent converters, who were not able to operate profitably under the new markups, could receive adjustment. Automatic adjustment was also made available for the small independent converters, many of whom could otherwise have been required to seek and obtain individual adjustments. Rayon and Wool Fabrics The January-March period was the third quarter of operation under Maximum Average Price regulations for rayon and wool mills. The problems encountered under the regulations continued to be quite divergent for the two groups of manufacturers. Early in January, a relaxation of the rayon maximum average price order had to be made because of the considerable shift in sizes and types of yarns available as compared with those consumed during the base period.11 In order to maintain quality with the yarns currently available, some shifts to higher priced fabrics were permitted. Major attention during the quarter, however, was given to the wool MAP order. Despite the freedom given mills to separate their fabrics into categories, and despite the individual adjustment provisions of the regulation, which permit mills to make considerable revisions in their maximum average prices, few producers took advantage of the possible avenues of relief open to them. Many helped themselves to relief, however, by giving undue emphasis to production of lighter 10 Amendment 41, MPR ‘127, effective February 26, 1946. 11 Amendment 3, SO 110, effective January 2, 1946. Price Control: Consumer Goods • 27 women’s wear fabrics, instead of restoring the normal proportion of men’s wear production as military contracts ended. In order to insure that the MAP order could not even be accused of impeding the manufacture of men’s wear fabrics, especially those being used in the CPA’s “set-aside” program for low-cost apparel, a partial exemption was granted for winter-weight worsted suitings.12 At the end of the period under review, a similar action was being contemplated for heavyweight overcoatings selling in the lower price ranges. LEATHER, FIBER PRODUCTS, AND FURS Little possibility existed at the close of the first quarter of 1946 that price control was likely to be relaxed soon in the leather and shoe or fiber fields. Demand for leather continued to be much greater than available supplies, although in most varieties the output was greater than the prewar level. Producers of furniture, wallets, luggage, and handbags competed with manufacturers of shoes, garments, and gloves for many different kinds of leather. Leather production, however, could not be correspondingly expanded, as it was limited by the quantity of hides made available as byproducts of the meat-packing industry plus imports of foreign hides and skins. Importation during the quarter became more and more difficult as competition increased in world markets, especially for hair sheep (cabretta), shearlings, pickled sheepskins, and goat and kid skins. The tight supply situation in leather was the most important factor standing in the way of increased shoe production. Although shoe production was at a high level, demand far exceeded supplies and little improvement was expected for some time. Hard fiber supplies continued to be extremely short, as a result of the failure of producing areas in the Philippines, the East Indies, and elsewhere to revive. As a consequence, cordage producers were forced to operate their plants at low levels. In the domestic fur markets, supplies of certain long-haired furs, namely skunk, raccoon, opossum, gray fox, and wolf, appeared to be reaching a level where they balanced demand, and decontrol was being considered toward the close of the quarter. Short-haired furs, however, continued in short supply, and many skins are being withheld from the market in anticipation of runaway prices if the Price Control Act were permitted to expire on June 30,1946. CONSUMER DURABLES A number of reconversion actions were taken which substantially brought to a conclusion the first phase of reconversion price activity 12 Amendment 3, SO 113, effective February 25, 1946. 28 • Seventeenth Quarterly Report for consumer durables. With the exception of the photographic equipment industry, all major reconversion industries in the consumergoods field had been granted adjustments by the close of the quarter. The new wage-price policy, however, validating cost increases incurred after November 27, 1945, substantially had the effect of requiring new findings for all of the major reconversion industries. Nonreconversion industries were also affected, and the current wage increases, coupled with the loss of lucrative war contracts, resulted in numerous industry requests for review of ceiling prices under the industry earnings standard for price adjustments. Following enunciation of the new policy, individual manufacturers were allowed to apply for further adjustments in ceilings of reconversion goods after 3 months’ operation at 90 percent of their 1941 rate of production.13 A more liberal method of adjusting maximum prices on specified reconversion items was provided for individual manufacturers whose current ceilings were an impediment to continued or expanded production.14 The new order permitted addition of one-half the industry’s 1936-39 profit margin to total costs of the item, regardless of the manufacturer’s over-all position. Previously, low-end adjustments were limited to total costs and covered only applicants in an over-all loss position. This provision did not prove attractive to manufacturers who had alternative products which yielded a profit, and production of low-end items was still inadequate. The new order listed two groups of products on which adjustments could be granted. In the first, applicability was limited by dollar-and-cent cut-off points or by maximum percentage rises over current ceilings, exclusive of individual adjustments already granted. For articles in the second list, formerly under the adjustment provisions of the consumer goods regulation, adjustments were limited to cases where the applicant’s maximum price was lower than that prevailing for other manufacturers of similar items, and the adjustment granted was limited to the lowest prevailing maximum price for the article. A special order issued for producers of metal musical instruments, hdme sewing machines, or home mechanical refrigerator cabinets enabled them to apply individually for high enough ceilings to yield each firm its average peacetime earnings or half the industry’s average earnings, whichever was greater.15 Major reconversion pricing actions during the quarter provided in-dustry increase factors as follows: Oilcloth (except wall), 15 percent over October 1941 ;15 woolen floor coverings, 5 percent over current 13 See above, p. 7. 14 SO 148, Amendment 36, Order A-2, MPR 188, both effective March 13, 1946. 15 Order 7, MPR 188, effective February 14, 1946. 18 Order 157, MPR 478, effective January 2,1946. Price Control: Consumer Goods • 29 ceilings ;1T metal beds, 7.7 percent over March 1942 freeze ;18 metal household furniture, 5 percent over established ceilings ;19 domestic cooking and heating stoves, 5 percent over current ceilings.29 For wool floor coverings, the increase was absorbed wholly by the retailer, as it was for metal beds. Absorption of the increases for oilcloth, metal household furniture, and domestic cooking and heating stoves was shared by both wholesalers and retailers. The reconversion factor for home washing and ironing machines had to be revised to 9.5 percent over 1941 prices to reflect cost advances not considered in the original factor of 7.7.21 Wholesalers’ absorption of reconversion increases was narrowed in several instances during the quarter. Chief among these were household furniture wholesalers22 and oilcloth wholesalers,23 who were allowed to reflect previous increases granted manufacturers. The order providing simplified pricing for new small manufacturers was revised during the quarter,24 to stop an undue rise in prices permitted under the order, which in many cases were far out of line with price levels of established firms. Certain significant items were eliminated from coverage of the order, the definition of small-volume was tightened, and new limitations specified allowable costs. Furthermore, provision was made to revise ceilings permitted under the order when manufacturers shift from the small-volume class to large volume. This provision corrected a major deficiency in the original order. 1T Amendment 6, RPS 57, effective January 4, 1946. 18 3d RMPR 213, effective January 12, 1946. “ Order 8, MPR 188, effective February 25,1946. 20 Amendment 5, MPR 64, effective March 15, 1946. 21 Amendment 1, RMPR 86, effective April 2, 1946. 22 Amendment 1, MPR 590, Order 4849, MPR 188, both effective February 18, 1946. 23 Amendment 1, Order 157, MPR 478, effective February 16 1946. 24 Revised Order 4332, MPR 188, effective March 20, 1946. 699327—46---3 30 • Seventeenth Quarterly Report • IV • PRICE CONTROL: METALS, MACHINERY, AND AUTOMOBILES Actions in the metals, as well as in the machinery industries, during the first quarter of 1946 resulted primarily from the new wage-price policy adopted in February under Executive Order 9697,1 and the consequent advance in steel prices which followed settlement of the steel wage dispute. In the automobile industry, only the wage-price policy as yet affected prices during the quarter. In the machinery field, where the Office was faced with the task of reexamining all ceiling prices in order to determine the extent to which manufacturers of machinery and parts were able to absorb increased metal costs and wage increases, priority was given to industry-wide price actions, and individual company adjustments were put off, pending the clearance of the industry-wide price increases. In automobiles, reconversion pricing continued to be the chief work of the Office, with the problem greatly complicated by stepped-up wage costs due to new union contracts. A number of prices on new cars were revised in accordance with new wage-price policy, and several actions were taken in used-car and commercial-vehicle pricing. Besides the actions undertaken as a result of the new wage-price policy, several other adjustments were made in all three fields. IRON AND STEEL While the bulk of price actions in the iron and steel fields arose out of the new Government wage-price policy, several interim increases were allowed to assure base-period returns where the industry had incurred substantial cost increases but had not yet settled the wage issue. Thus a ceiling price rise of 7 percent, granted manufacturers of bolts, nuts, screws, and rivets to enable the industry to enter upon a full production schedule, was subject to revision if approved wage increases were given by producers who had not settled when the action was taken.2 Resellers of these products were not authorized to pass along the factory price increase, but a study of their absorptive capacity not yet completed at the end of the quarter indicated that an early adjustment of resellers’ prices might be expected. At the same time, ceilings for brass mill products, essential to the manufacture of automobiles and many consumer durable goods, were 1 See above, pp. 4-6. 1 Amendment 2, RMPR 147, effective April 1, 1946. Price Control: Metals, Machinery, and Automobiles • 31 raised cents per pound to offset losses from changes in product mix resulting from the end of the war.3 The increase covered only wage increases granted between August 18, 1945, and the end of the year, and only to the extent to which they were in effect during that period. The Office announced that additional adjustments might be necessary once the bulk of producers had granted wage adjustments, in order to restore base period earnings to the industry. Because of the negligible effect on the cost of living, the increase was passed through at the distributors’ level. Sale of large tonnages of iron and steel scrap by various Government agencies, and the elimination of many Civilian Production Administration controls made several changes necessary in the regulations covering iron and steel scrap. Steel mills were authorized to buy various types of metal structures or surplus war material which were to be scrapped and to pay the preparer in excess of established preparation fees as long as total charges were not in excess of the ceiling price for the prepared grade.4 Another change in the scrap regulation made it illegal for a purchaser of scrap to act in the same transaction both as dealer and as broker, in all cases where such a combination would result in a price in excess of established ceiling prices. This action was based on the distinction that had always been drawn in the industry between the dealer and broker functions.6 Basis for Steel Price Increase The step taken by the Office with respect,to steel prices was a result of the steel strike settlement. Representatives of the steel-producing industry had contended that wage increases such as those recommended by the President’s Fact Finding Panel could not be absorbed unless price increases were authorized. An examination of the steel industry’s financial position was reflected in a sample survey covering 21 steel companies which accounted for 79 percent of all carbon steel tonnage and 49 percent of all alloy steel tonnage. The base-period average return on net worth was 4.3 percent. During the third quarter of 1945 the profit rate was 0.6 percent, and during the fourth quarter the industry actually suffered a Joss of 0.3 percent on net worth. After making corrections for wage inequity payments, the computed loss for the fourth quarter was found to be 3.1 percent. Because of the substantial profits made by the industry during the first 6 months of 1945, however, earnings for the full year 1945 were still above the base-period average. The evidence submitted by the industry showed that with a return to its base-period 8 Amendment 5, SR 14—G, effective April 1, 1946. 4 Amendment 4, MPR 4, effective January 30, 1946. 5 Amendment 5, MPR 4, effective February 25, 1946. 32 • Seventeenth Quarterly Report sales pattern, its base-period average rate could not be reached during the ensuing 12 months if a wage increase were granted. The Stabilization Administrator therefore determined that if an increase of 18% cents an hour were put into effect, price relief would be required in order to permit the industry to earn an average rate of profit approximately equal to its base-period return A directive issued by the Stabilization Administrator authorized the Office, upon resumption of substantial production, to raise maximum prices for carbon and alloy steel mill products in amounts that would be equivalent to an average increase of $5 per ton for all steel mill products.® The Office was further authorized to distribute the increase so as to encourage maximum production of items most needed for the reconversion of the metal industries, to minimize the impact of the increase upon the price of consumer goods, and to minimize or remove hardship to smaller nonintegrated steel mills. Actions on New Policy Ceiling prices were thereupon advanced on a list of about 30 steel products, ranging from ingots, billets, blooms, slabs and bars to nails, staples, and wire.7 The increase averaged 8.2 percent on the previously realized price of all steel, raising that price from $60.92 per ton to $65.92 per ton. Steel warehouses and jobbers were permitted to pass through to their customers the amount of these increases, generally on a dollar-and-cent basis. An examination of the absorptive capacity of the warehouses had shown that, after absorbing increases in steel mill products authorized in January and May of 1945 the margin over the average expense rate was too thin to allow for any further absorption. The ability to absorb higher steel costs at the fabricating level could not be fully determined at the time, but producers and distributors of consumer goods, machinery, and building materials were advised that price actions to adjust their ceiling prices wherever necessary would be worked out within the next 3 months. The higher price of raw steel was chiefly responsible for a large number of advances during the quarter in prices of fabricated steel products, as well as of other steel-containing products.8 Ceilings had to be raised for concrete reinforcing bars, wire rods, and merchant quality wire, as well as bolts, nuts, screws, and rivets, manufacturers of which had also incurred wage cost increases approved by the Wage Stabilization Board.8 After careful consideration of the gross margin on fabricated concrete reinforcing bars, used 8 Office of Stabilization Administrator, Directive 96, effective February 15,1946. ’ Amendment 15, EPS 6; Amendment 38, EPS 49 ; both effective March 1,1946. 8 See also pp. 34-35. • Amendment 1, EMPE 159; effective March 7, 1946. Price Control: Metals, Machinery, and Automobiles • 33 in building and highway construction, it was determined that that margin was too low to support continued operation if the higher material and wage costs were not reflected in maximum prices. Similar considerations applied to the more intricately fabricated forms such as spirals and welded stirrups; if manufacture of these products had been curtailed, users would have been compelled to purchase unfabricated products and to do their own processing without the benefit of the fabricators’ more efficient productive facilities, with resulting higher costs. Steel shipping containers such as drums and pails were found to be in a similar situation. Because of the importance of containers to the reconversion program, prices had to be increased 10 percent in order to cover the average total cost, including selling administrative costs for these containers.10 Other Wage-Price Increases An increase of 75 cents per gross ton in ceiling prices for pig iron was required to compensate producers for advances in wage increases approved by the National Wage Stabilization Board, and for other miscellaneous cost fatcors. The adjustment was designed to enable the merchant pig-iron industry to earn an average rate of profit during the next year equal to its average rate of return in the years 1936 through 1939. The amount of the adjustment was computed on the basis of data reflecting operations for the fourth quarter of 1945 of eight representative companies included in the study.11 In the field of steel castings, the unabsorbable portion of an increase of 18% cents per hour in wages was reflected in an industry-wide ceiling price increase of 4 percent, in accordance with the new wageprice policy. This increase was calculated to restore earnings for the industry as a whole for the next 12 months to the average level of the years 1936 through 1939. The adjustment was based on a projection of the industry’s future earnings position on the basis of the most recent available profit and loss statements and expected labor efficiency improvements and volume increase.12 In order to facilitate rapid adjustments of ceiling prices for producers of malleable iron castings who had also increased their wages with the approval of the Wage Stabilization Board, a new procedure was put into effect for processing individual applications. Where a seller of malleable castings had granted an approved wage increase since August 18, 1945, and therefore sought an increase in his maxi-prices, he was permitted to file merely his profit and loss state 10 Amendment 4, SR 14—G; effective March 26, 1946. 11 Amendment 12, BPS 10; effective March 15, 1946. 12 Amendment 17, BPS 41; effective March 12, 1946. 34 • Seventeenth Quarterly Report ment for the third quarter of 1945 and the percentage wage cost increase. The new procedure enabled the Office, working with a precomputed table, to determine adjustments within a week. INDUSTRIAL MACHINERY AND EQUIPMENT The advance in steel prices had wide repercussions in the industrial machinery and equipment fields, and the Office acted promptly to relieve possible hardship. A number of initial increases for reconversion products were also announced, and in one industry the original reconversion increase factor was raised substantially. All of these ceiling price adjustments reflected the new wage-price policy of the Government. During the quarter, also, ceiling prices for ferrous forgings, which in September 1945 had been raised 8 percent over 1941 to facilitate transition to a peacetime economy, were granted an additional increase of 8^ percent to cover recent rises in material and wage costs. Most of the industry’s production had been affected by wage rate adjustments and all manufacturers had incurred higher material costs since the original increase was announced.13 A 5-percent interim increase on basic construction machinery, equipment, and parts, which was to have expired at the close of December 1945 was extended to May 15, 1946 pending completion of an industry survey.14 Actions Based on Steel Increase The Office used a short-cut method in adjusting prices for all machinery parts and industrial equipment where the percentage of steel costs in selling prices was over 40 percent. The amount of the adjustment was set at the uniform figure of 4 percent of existing ceiling prices. This amount was deemed adequate to compensate producers for the immediate increase in their costs of operation, pending completion of surveys undertaken in each of the larger industry groups. The percentage of cost of steel to price of product was fixed at 40 percent because among such products the cost effect of the steel price increase was most likely to create financial hardship. The products for which the 4-percent increase was authorized were all essential to the reconversion program, and the existing cost-maximum-price relationship was such that the steel price increase, in addition to the increased cost due to wage increases, could not have been absorbed.15 Ceiling prices for steam generating equipment were increased by 12 percent to reflect higher manufacturing costs since 1941, including 18 Amendment 8, MPR 351; effective March 21,1946 ; see also Fifteenth Quarterly Report, pp. 25-26. 14 Amendment 26, MPR 136; effective Januai'y 16, 1946. 15 Order 591, RMPR 136 ; effective March 25, 1946. Price Control: Metals, Machinery, and Automobiles • 35 the March increase in steel prices. Since a wage increase pattern had not yet developed, this increase was to be reexamined within 60 days for possible further adjustment.16 A similar interim adjustment of 9 percent, pending completion of a survey, was granted to manufacturers of cast steel rolls upon whom the increase in steel prices had imposed inordinate hardship.17 Prices of mechanical jacks, producers of which had incurred wage rate adjustments of 1814 cents per hour, as well as increases in steel costs, were advanced 15.8 percent. While insufficient information was available to determine whether this rise provided the industry with its base-period profit for the ensuing year, it did cover all current costs of producing and selling mechanical jacks18 for the companies surveyed. Reconversion Increases The protracted period of reconversion hit particularly hard manufacturers of radio and other electronic parts. In order to arrive at equitable prices in this field, the Office had substituted industry-wide price adjustment factors, applied to base-period prices, for the establishment of individual prices in line with comparable prices in the base period. In doing so, the Office had in effect rolled back the prices of a number of radio-part producers. During the quarter the increase factor for radio speakers was recalculated on the basis of more complete data obtained from major speaker producers, and was set at 19.6 percent over 1941 prices, instead of 13.5 percent.19 In the related field of fluorescent and other specialty transformers, completion of a cost survey resulted in an announcement of increase factors of 6.3 and 14.4 percent on the basis of the rise in basic wage rates and material prices since 1941.20 These specialty transformers are largely used in the manufacture of complex electrical equipment sqch as electric, gas, and fuel oil ignitions, welding equipment, and street lighting controls. Since fluorescent transformers had yielded substantial margins at distributive levels, wholesalers and retailers were required to absorb part of the increase. For all other specialty transformers, resellers were permitted to add to their prices the dollar-and-cent amount of the increase in their cost. A reconversion price adjustment of 11 percent was made in manufacturers’ maximum prices for hand operated gasoline, kerosene, lube oil, and grease-dispensing equipment.21 The advance reflected legal increases in basic wage rates and materials, and the industry’s average ’’Order 589, RMPR 136 ; effective March 21, 1946. 17 Order 590, RMPR 136 ; effective March 22, 1946. 18 Order 593, RMPR 136 ; effective March 27, 1946. 10 Amendment 27, RMPR 136 ; effective January 15, 1946. 20 Order 572, RMPR 136 ; effective January 17, 1946. " Order 577, RMPR 136 ; effective January 29, 1946. 36 • Seventeenth Quarterly Report profit rate for the base period. Since resellers generally were found to receive large discounts, the Office required them to absorb the producer’s price increase. Information secured from the producers of cotton ginning machinery, which is sold directly to industrial consumers, indicated an increase, based on projected costs, of 13.4 percent.22 Another reconversion adjustment covered manufacturers of castors. Prices for washing machine castors were raised 12.3 percent, and for all other castors 7.3 percent.23 Wholesalers were required to absorb 37 percent of the factory addition, and retailers the balance. AUTOMOBILES Pricing orders issued before the interruption of production by the widespread strike movement held average retail prices to substantially 1942 levels, with increases permitted only to reflect engineering changes and improvements. Factory prices, in accordance with the reconversion formula, were allowed to reflect legal increases in basic wage rates and materials costs since 1941, plus the higher of a producer’s own 1936-39 margin, or one-half the industry average in the same period. The major portion of the rise in factory prices was absorbed by dealers, who were uniformly required to reduce their prewar initial margins by 2% percent, which still left them realized margins considerably above prewar.24 Following settlement of the auto workers’ strike and the general signing of higher wage contracts in the industry, ceiling prices had to be reviewed in accordance with new Government wage-price policy. Where revised prices were issued during the quarter, further dealer absorption was required, and retail ceilings for the models affected were consequently increased only slightly. Despite this additional absorption, the dealers’ average realized gross margin was still expected to exceed substantially the prewar level. The dollar amount realized by the bulk of the dealers, however, was not expected to be in excess of the base-period dollar amount. The Office therefore announced that these dollar margins would not be further reduced by future factory price increases reflecting parts and material cost advances. New Car Ceilings Ceilings for four additional 1946 Ford models were issued during the quarter, with the increase in factory price over similar 1942 mod-1 els in no case exceeding 10 percent, including engineering improvements, and 2 percent, excluding such improvements. For 1946 Lin- 22 Order 580, RMPR 136 ; effective February 15, 1946. 23 Order 582, RMPR 136 ; effective February 25, 1946. 24 See Sixteenth Quarterly Report, p. 42. Price Control: Metals, Machinery, and Automobiles • 37 coin models, prices were set 1 percent over October 1941 prices for 1942 models, plus $72 to $87 for engineering improvements.25 New ceiling prices for Plymouth, Dodge, DeSoto, and Chrysler 1946 models exceeded 1942 prices by an average of 1.8 percent, exclusive of allowances for engineering improvements; cost of the latter ranged from $59 to $121, depending upon the model and make.26 Prices for 1946 Nash passenger automobiles were established at $35 to $77 above comparable 1942 model prices.27 Ceiling prices for Hudson 1946 models were established at from $15 to $101 above comparable 1942 model prices, including engineering changes and improvements.28 General Motor models produced prior to the strike carried, for the most popular Chevrolet model, ceiling price increases over the most comparable 1942 model of $43, and from $81 to $286 for Pontiac, Oldsmobile, Buick, and Cadillac models.29 The higher ceilings reflected engineering changes, the value of which increased from the lower priced to the higher priced models. Toward the end of the quarter, adjustable pricing orders were issued to the Chrysler, Ford, Hudson, and Nash automobile companies and their dealers and distributors, to permit sale of cars. at current ceiling prices with the understanding that buyers might be billed later for expected ceiling price advances.30 Adjusted ceilings issued before the close of the quarter for these companies were approximately 2% percent higher at the factory level, reflecting the wage rise only to the extent that it could not be absorbed without imposing hardship on the automobile manufacturer and thereby impeding reconversion of that industry.31 Due to the uncertainty as to the effect of the steel price increase and wage increases on parts and material prices, no other cost increases were reflected at the time. Other Automotive Actions Used car ceiling prices for 1945 and 1946 models of commercial and passenger vehicles were set during this quarter, with passenger automobile prices set at the same level at retail as was established for 2,MPR 594: Orders 4 and 5, effective January 16, 1946 ; Order 6, effective January 10, 1946. “MPR 594: Orders 7, 8, 9, and 10, effective January 16, 1946: Order 13, effective February 26, 1946. 27 Order 11, MPR 594 ; effective January 23, 1946. Order 12 and Amendment 2, Order 12, MPR 594; effective February 4, and March 6, 1946, respectively. 28 MPR 594 : Order 18, effective March 29, 1946 ; Orders 19, 20, 21, and 22, all effective April 11, 1946. “ MPR 594 : Orders 14, 15, and 16, and Order 17 ; effective March 11, and March 21, 1946, respectively. 81 MPR 594 ; Amendment 3, Order 8 ; Amendment 2, Order 13 ; Amendment 3, Order 4 ; mendmen t 3, Order 12; Amendment 4, Order 9; Amendment 3, Order 10; Amendment > Revised Order 5 ; Amendment 3, Order 6 ; all effective March 11, 1946 ; Amendment 1, '-’rder 11 ; effective March 21,1946. 38 • Seventeenth Quarterly Report the cars when new.32 This action was a temporary measure, pending calculation of dollar-and-cent ceilings for such cars. While these new used car ceilings resulted in prices lower than dealers may charge for guaranteed used 1942 cars, the 1942 car prices reflected a charge of as much as 24 percent of list price for handling, delivery, storing, and maintaining the cars, in keeping with the requirements of the rationing program in effect during the war. Obviously 1945 and 1946 car prices could not reflect such charges. For used 1946 commercial model vehicles, the Office established ceiling prices at the same percentage levels in relation to new vehicle prices as those provided for 1945 models.33 As a result, ceiling prices for used 1946 commercial trucks were established at levels reflecting 103 percent of the new vehicle list price when sold on a warranted basis, and 81 percent of their price when sold “as is.” This pricing order was also considered a temporary measure pending further study as to whether depreciation for age should be reflected by reduction in the percentages. In order to simplify the price adjustment procedure available to producers of automotive parts for repair or replacement use, the procedure and provisions in effect for the machinery industry were made applicable to the automotive parts industry.34 Under that procedure an automotive parts manufacturer whose ceiling price causes financial hardship may be granted an adjustment for all his products up to total allowable costs plus the base-period profit margin; or an adjustment for a line of his products up to total costs of the line; or an adjustment for a single item, up to allowable manufacturing cost of the item.35 82 Amendment 12, MPR 540 ; effective January 14, 1946. 88 Amendment 13, RMPR 341 ; effective January 1, 1946. 84 Amendment 2, SO 142 ; effective March 25, 1946. 85 See also Sixteenth Quarterly Report, p. 13. Price Control: Building Materials, Lumber, Paper • 39 • V • PRICE CONTROL: BUILDING MATERIALS, LUMBER, PAPER Efforts of the Office in the building materials and lumber fields during the first quarter of 1945 were bent upon bringing out maximum production for home construction needs. Ceiling prices were raised for a number of building materials, but care was exercised to restrict increases to those actually needed. The probability that production goals could be attained only through full use of high-cost production facilities, however, led the Office to join with the Housing Expediter in urging the Congress to provide funds for premium payments for increased output. Without such premium payments, it appeared clear that increases for the necessary high-cost production would be excessive, thus further raising the already dangerously inflated cost of building. Joint programs designed to maximize the production of building and construction materials were developed during the quarter by the Office and other Government agencies, acting through a special interagency building materials bottleneck committee. These programs clearly demonstrated the desirability and necessity of attacking production problems on several fronts at once. For example, brick production was greatly stimulated by a joint agency program which involved recruitment of labor by the United States Employment Service, and priority assistance in obtaining needed equipment by the Civilian Production Administration; these activities were nécessary supplements to price increases authorized by the Office in the fall.1 In lumber, a number of ceilings were raised to aid supply, and prices were realigned in some instances to restore normal prewar relationships, deflecting a trend toward continued production of lumber war items instead of much needed home construction lumber. BUILDING MATERIALS Acutely aware of the need for speedy and decisive action wherever price might be an impediment to the expanded production of building materials, the Office issued 23 actions during the quarter raising prices industry-wide or region-wide (for masonry materials). In addition, a total of 1,458 individual pricing orders and adjustments was issued during the period for various building materials. 1 See Sixteenth Quarterly Report, pp. 44—47. 40 • Seventeenth Quarterly Report Industry Adjustments Price increases under the reconversion formula were issued for manufacturers of enameled cast iron plumbing fixtures, 8 percent; domestic oil burners, 9 percent; gas fired and liquid petroleum fired furnaces and unit heaters, 12.5 percent; brass plumbing fixtures, 5 to 25 percent; gas fired conversion oil burners, 9 percent; low pressure steel boilers, 14 percent; automatic nonelectric temperature controls, 5 percent; builders’ hardware items and insect screen cloth, 10 percent in general but 16 percent for specified low-end hardware.2 In all but the last three industries, the increase was passed through from manufacturers to consumers. Substantial price increases were authorized for small size valves and fittings and for a selected list of cast iron drainage staples and specialties.3 The items affected by these actions were essential in residential construction, and in all cases production had to be very greatly expanded to meet the needs of the emergency housing program. The increases were designed to permit manufacturers to reach the necessary production levels with adequate returns. Late in the quarter a further increase was authorized for cast iron radiation, raising ceiling prices by approximately 20 percent over current prices.4 This increase was necessary in order to permit the industry, upon regaining normal volume of operations, to recover aggregate earnings approximating normal peacetime margins. The three factors necessitating the price increase were the industry’s loss of wartime business, higher materials costs, and increases in approved wage rates. In the masonry materials field, price increases similar to those previously granted to brick producers east of the Rockies were authorized for producers on the west coast,6 and an increase of $2.50 per thousand was authorized for manufacturers of glazed brick east of the Rockies.6 Further, producers of sand lime building brick were permitted to add $2 per thousand to their previously existing maximum prices in an action which extended to this relatively minor product the same price increase which had previously been authorized for producers of clay brick.7 In an action affecting only Ohio and Michigan, the major pro- 2 Amendments 2-12, Order 48, MPR 591; effective, respectively, January 2, January 14, January 14, January 21, January 21, January 21, February 5, February 5, February 16, March 1, and March 13, 1946 ; Amendment 7, BPS 40; Amendment 5, MPB 413; both effective March 13, 1946. 8 Amendment 7, Order 1, MPR 591; effective March 26, 1946; Amendment 6, Order 1, MPR 591; effective March 27,1946. * Amendment 7, MPR 272 ; effective March 28, 1946. •Amendment 23, Order 1, MPR 592; effective January 2, 1946; see also Sixteenth Quarterly Report, p. 45. • Amendment 24, Order 1, MPR 592 ; effective January 2,1946. ’ Amendment 35, Order 1, MPR 592; effective April 6,1946. Price Control: Building Materials, Lumber, Paper • 41 ducing area, clay drain tile prices were raised 80 cents per ton.8 In addition, an increase was authorized for electrical clay conduit to bring the price of this item into line with the prices of other similarly produced clay products.8 Cement prices in District 6, consisting of the entire southeastern section of the country, were increased by 10 cents per barrel over the 10 cents previously permitted in November.10 The additional 10 cents was considered necessary to prevent undue hardship to some important producers in the area, and in order to remove the possible discrimination against this area by virtue of the fact that in all other areas a total increase of 20 cents per barrel had been allowed. Producers of ready-mixed concrete were permitted to pass on the amount of the increased cost to them.11 The most important millwork action during the quarter was one which increased prices for 12 construction grades of softwood plywood by an average of 20 percent over the ceiling prices which formerly prevailed.12 These items were all needed in the emergency housing program in substantially larger quantities than had normally been produced by the industry. This action was taken in conjunction with a Civilian Production Administration directive which required the plywood industry to produce up to 50 percent of its total output in these particular grades. The Civilian Production Administration program also called for allocation of the construction grades of plywood to low-cost residential construction, and particularly to prefabricators. Area Pricing and Disrtibution Controls The area pricing program for building materials and construction services went into high gear throughout the country during this quarter. OPA field offices, under direction and authorization by the national office, worked on the establishment of dollar-and-cent ceiling prices, applicable within designated areas, on all major building materials and construction services. Emphasis was placed on those used in residential construction. The area orders established maximum prices to be charged by dealers on sales to consumers and contractors for specified materials or services. These dollar-and-cent prices were uniform for various classes of seller throughout a designated area and thus enabled the dealer and contractor as well as the consumer to know the legal ceiling price in his community. The great stress placed on the residential building pro- 8 Amendment 26, Order 1, MPR 592 ; effective January 7,1946. 9 Amendment 30, Order 1, MPR 592 ; effective March 13,1946. 10 Amendment 14, MPR 224; effective February 21, 1946; see also Sixteenth Quarterly Report, pp. 45-46. 11 Amendment 34, Order 1, MPR 592 ; effective March 27,1946. M Amendment 2, 3d RMPR 13; effective March 15,1946. 42 • Seventeenth Quarterly Report gram made this area pricing program of immediate importance during the period, in view of the strong inflationary pressures in the construction field. Area orders were issued during this quarter on building materials, including masonry items, insulation, roofing and glass, stock millwork, plywood, stock screen goods, new lumber and used lumber. Preliminary efforts were concentrated on coverage of major population areas, and as of the end of this quarter an average of 36 percent coverage of these areas was completed. Area orders were also issued on the following maintenance and repair construction services : Reroofing, re-siding, insulation, installation of combination storm windows and screens, painting and wallpapering, carpentry, plumbing, heating, and sheet-metal* work. It was anticipated that other services would be covered during the following quarter. As of the end of March, about 25 percent coverage of the major population areas was completed. Both policies and procedures for area pricing were clarified during the quarter, in the light of continuing experience in the field. The progress made in the field of repair and maintenance services and the experience gained from orders which were issued enabled the Office to concentrate upon the development of dollar-and-cent ceilings on construction services in new residential construction. LUMBER Needs of the housing program underlay most of the actions taken in the lumber field during the quarter. Increases were for the most part discretionary, aimed at stimulating production. A number of adjustments were also made on lumber items used for other purposes, and these were required under the statutory provisions of the Price Control Act. The specified markup previously denied lumber wholesalers13 was granted during the quarter to direct wholesalers in softwood lumber (other than southern pine), in the expectation that their services would help to eliminate a possible bottleneck in the reconversion program of that industry. Both wholesaler and commission men in this field historically received their compensation in the form of discounts or commissions paid by sawmills or concentration yards whose lumber products they sold. Lumber purchased through these middlemen consequently sold at the same general price level as lumber purchased directly from the mills. Since the lumber market was normally a buyer’s market, and since the function of wholesalers and commission men was normally to act as a selling adjunct of the mills, compensation for their services emanated naturally from that source. In the 13 See Sixteenth Quarterly Report, p. 47. Price Control: Building Materials, Lumber, Paper • 43 current extremely short market, however, the seller’s need for wholesalers’ and commission men’s services had diminished greatly. The lumber consuming public had more and more resorted to direct purchases, bypassing wholesale and commission men. Furthermore, lumber mill prices were providing less margin for wholesalers’ or commission men’s compensation than prices previously in existence, especially since no provision had been made in the price regulations for the customary discounts to the selling agents or for maintaining the normal proportion of sales through them. While the Office was not required under the Price Control Act to guarantee continued existence of any group within an industry when economic factors of supply and demand tended to eliminate the economic function of that group, the Office recognized that this group was performing a useful function in the economy as representatives of buyers, particularly the small users, rather than of the sellers, in finding lumber and in assisting in its equitable distribution. Direct wholesalers in the softwood lumber industry received a markup of 5 percent over mill ceiling prices and 3 percent for sales through commission men, which it was estimated would return to them their base period gross dollar margins.14 In order to avoid an influx of dummy organizations set up by mills to increase their realization on lumber sales, the action expressly prohibited the addition of a markup on the sale of lumber originating at a mill or concentration yard having a control relationship with a wholesale distributor. Housing Program Actions The most important action in this field involved an over-all incentive price increase on southern pine mill lumber. The Stabilization Administrator had issued a directive to the Civilian Production Administration to establish production goals on a quarterly basis, at the same time directing the Office to grant a discretionary increase of $3.25 per thousand board feet in mill prices for each quarter during 'vhich such goals were reached. Administrative difficulties, however, subsequently compelled him to amend the directive so as to put the increase into effect immediately and provide for its withdrawal after the first 6 months of 1946 if the production goals established by CPA 'vere not reached.15 The Office therefore authorized an average increase of $3.25 per thousand board feet on all items needed in the construction program and thereby covered the cost of production of all but the highest cost marginal mills. In the other important area of construction lumber, Douglas fir and western hemlock, the Office authorized a complete readjustment 14 SO 150 ; effective March 8, 1946. 15 Amendment 15, 2d RMPR 19; effective February 20, 1946; OES Directive 94, as amended ; effective February 11, 1946. 44 • Seventeenth Quarterly Report of ceiling prices, designed primarily to stimulate production of lumber items urgently needed for postwar residential construction and to discourage production of items that had been in intensive demand during the war.16 Increases on basic construction grades ranging from $2 to $10 per thousand board feet were granted, premiums for special grade and grain specifications eliminated, and ceilings on items not used in construction lowered. The average net increase was expected to be around 3 percent on all sales. In an action designed to increase production of hardwood flooring urgently needed for postwar construction, the Office announced an increase averaging 9 percent in mill ceiling prices.17 These increases were of a discretionary nature and were made at the request of the Civilian Production Administration, which affirmed that shortage of this item was due to improper price relationship with other lumber. The increases for maple and birch flooring were made applicable to these items wherever produced, and for beech flooring in the northern, northwestern, and north central regions. Previously a 10 percent advance in manufacturers’ ceiling prices for all standard grades of oak and pecan hardwood flooring had been announced as an incentive for urgently needed production.18 The increase applied throughout the United States and did not generally affect consumers’ prices except in the Southern area, where distribution yard margins had been lower than in other areas. Mill ceilings for western softwood shingles were adjusted twice. The first adjustment was granted to meet the increased cost of production resulting from a wage increase which would have cut industry profits below the base period. The adjustment of 15 cents per square,19 which was to be absorbed by distributors, was expected to ease the supply in all regions relying on western shingles for construction purposes. The second adjustment amounting to 30 cents per square was made following an increase in the west coast shingle grade logs price of $4 per thousand feet.20 In this case, consumers were required to pay the higher prices since absorption by retail yards could not be required without causing hardship. The Office had raised west coast log ceilings an average of $1.25 per thousand feet to reflect wage rate increases which the industry could not absorb.21 The required average increase was apportioned primarily on shingle grade cedar logs, which had been in very short supply since 1942, causing a drastic reduction in red cedar shingle M Amendment 22, RMPR 26 ; effective March 6, 1946. 17 Amendment 8, MPR 432 ; effective March 22,1946. 18 Amendment 4, MPR 458 ; effective February 13,1946. 19 Amendment 3, RMPR 164 ; effective January 29,1946. 20 Amendment 4, RMPR 164 ; effective March 20,1946. 21 Amendment 23, RMPR 161; effective March 13, 1946. Price Control: Building Materials, Lumber, Paper • 45 output, badly needed for roof and side wall covering in the housing program. Another step furthering the new housing program was an adjustment in prices of Ponderosa pine cut stock, normally used largely for doors, window frames, and sashes but diverted chiefly to box manufacture during the war. An average increase of 6 percent was allowed the industry, with the bulk of the advance going to stock in the short and narrow sizes used by toy, luggage, and furniture makers, which were raised up to 20 percent. Favorable differentials between long and short sizes were maintained, however, so that production would not be diverted from the millwork sizes.22 Critically needed for postwar residential construction, also, was wood plaster lath. On recommendation of the Civilian Production A dministration, ceiling prices were temporarily advanced by approximately 100 percent for a period of 120 days, to encourage use of Douglas fir and hemlock slabs in plaster lath.23 Adjustments were made in ceiling prices of northern white cedar poles and piling as well as of all sawed wooden mine material, partially to offset a wage increase in the Lake States lumber industries, but chiefly to establish a normal price relationship between these items and lumber and pulpwood, whose ceilings had been adjusted in earlier actions.24 Without the restoration of the normal price relationship, production of poles and piling essential to peacetime operation in the construction field, and of mine material needed in the replenishment of domestic and foreign mines, would have lagged considerably behind the production of other items cut from the Lake State logs. Other Price Adjustments In the standard grades of hardwood lumber produced in the south central region increases averaging approximately 7 percent were found necessary to cover cost increases that had occurred since October 19'43, time of the last adjustment in these prices.25 The increase was applied so as to restore normal price relationships between timbers used extensively by the military during the war and grade lumber in demand for peacetime use. Although the action affected 90 percent of all hardwood produced in the south central region, that production is only one-tenth of all hardwood produced in the United States. At the same time, small mills selling ungraded hardwood lumber in the north central region were given new dollar-and-cent ceiling 28 Order 3, RMPR 94 ; effective March 26, 1946. 23 Amendment 21, RMPR 26 ; effective February 26, 1946. 24 Amendment 4, MPR 558, effective February 2, 1946; Amendment 3, MPR 560, effective February 5, 1946. 25 Amendment 20, MPR 155 ; effective February 11, 1946. 699327—46--------4 46 • Seventeenth Quarterly Report prices which reflected the relationship between graded and ungraded lumber that existed in the south central region.26 Sales of ungraded lumber from these mills on authorized buyers inspection were authorized at ceiling prices for regular grades less 5 percent to compensate the buyer for inspecting and grading. Previously ceiling prices for this lumber were the established maximum price for the lowest grade in the shipment, a limitation which had created hardship where the average grade was considerably higher than the lowest grade. Manufacturers’ maximums for butt treating western red ceiling poles were raised 25 percent in order to return to the industry an average increase of 3% percent on all poling operations, which was required under the law to return base-period profits. Telephone and power companies were expected to absorb this increase.27 In the northern softwood area, particularly Michigan, Wisconsin, and Minnesota, increases were required under the statutory standards of the law, covering western white spruce, northern white pine and white cedar jack pine, eastern spruce, and aspen.28 This action was necessary to complete an earlier action, granted to producers of northern hemlock, to make prices in that area generally fair and equitable. Ceilings of railroad cross ties produced in the Lake States were increased 5 cents per tie, to offset a lumber wage increase and higher log costs and return base-period profits to these producers. In order to maintain a balanced price structure in the entire northern production area, this increase was extended to New England, eastern, and central middle western States.29 PAPER AND PAPER PRODUCTS The most pressing problem in the paper industry during the quarter was the adjustment of ceiling prices for raw materials such as pulpwood and pulp. Successive price increases in forest products such as lumber and resins had made it increasingly difficult for pulp and paper mills to cover their requirements of pulp and pulpwood for production of container board, box board, news print, magazine paper, and other items. Substantial increases in stumpage prices, costs of trucking, and wage rates had raised average operating costs above price ceilings for a substantial part of the southern pulpwood producers. Under the authority granted by Executive Order 9599 which authorized price increases to correct maladjustments interfering with effective transition to a peacetime economy, the Office found an increase of $1.40 per cord adequate to secure continued production of pulpwood in the 28 Amendment 19, MPR 155 ; effective February 5,1946. 27 Amendment 2, MPR 554 ; effective January 29,1946. 28 Amendment 5, 2d RMPR 222 ; effective March 1, 1946. 29 Amendment 4, 3d RMPR 216 ; effective March 27,1946. Price Control: Building Materials, Lumber, Paper • 47 South. Recommendations of the Civilian Production Administration had also indicated that such an adjustment was necessary to maintain adequate supply. In order to maintain normal competitive relationships with prices of related products such as excelsior wood, cord wood, stave and heading bolts, these items were also increased by $1.40 per cord. The 11 States affected by this action were Virginia, North Carolina, South Carolina, Georgia, Florida, Alabama, Tennessee, Mississippi, Louisiana, Arkansas, and Texas. Pulp and paper mills in that area were expected to absorb the increase.30 The situation in pulp came to a head when pulp mills advised the Office that supplies from Swedish and other foreign sources had virtually dried up at a time when normally substantial shipments were made and contracts for future deliveries consummated. Due to attractive offers originating in other markets such as South America, Central Europe, and England, Scandinavian exporters had diverted many of their shipments, refusing to sell American importers on the basis of current ceiling prices. While the Office refused to accept the inflationary situation in other markets as a basis for price action, the fact that domestic pulp producers had also complained about increasing costs, partly due to bad weather and partly due to operating expenses, provided an adequate basis for reconsideration of an earlier denial of a price increase. Toward the end of this quarter, a price adjustment was in preparation, which would help domestic producers to overcome the cost-price squeeze, and which was expected to attract adequate Scandinavian supplies. In the field of paperboard the return to normal peacetime sales patterns and the prevailing extremely intensive demand made it necessary to reexamine prices on many important grades of container and box board. The most important action, designed to restore over-all industry earnings to the paperboard industry, granted increases ranging from $2 to $4 per ton on 30 grades sold east of the Rocky Mountains commonly known as boxboard grades and primarily made from waste paper. On binder’s board, an increase of $6 per ton was authorized also to return base-period earnings to the industry. An increase somewhat over the minimum required by law was granted on chip paperboard in this area as an incentive to production of a grade needed for shipping containers.31 In a final action in the paperboard field west coast producers whose prices had stayed frozen at their March 1942 levels were given the advantage of the dollar-and-cent ceiling price established in RPS 32 30 Amendment 6, RMPR 387; Amendment 4, MPR 410; Amendment 4, MPR 433; Amendment 3, MPR 437; Amendment 4, MPR 535-1; Amendment 4, MPR 535-3 ; Amend-ment 2, MPR 535—5; Amendment 1, MPR 535-6; Amendment 2, MPR 535-7; all effective February 18, 1946. 31 RPS 32 : Amendment 25, effective February 1, 1946; Amendment 26, effective March 12,1946 ; Amendment 27, effective March 13,1946. 48 • Seventeenth Quarterly Report applicable to producers east of the Rockies. While the action caused varying increases for most paperboard produced west of the Rockies this adjustment was necessary to establish uniform prices and avoid individual actions in the west coast area.32 New ceilings for imported waste rags, waste ropes, and waste strings used by roofing, flooring, and specialty felt manufacturers were established at levels slightly higher than the previously existing dollar-and-cent prices but considerably lower than the prices that felt manufacturers were paying for more expensive substitutes.33 The new ceilings reflected acquisition costs plus a markup based on March 1942 practices. The return to normal peacetime sales pattern had made it unattractive for many paper product producers to perform certain extra services such as sheeting, cutting, printing, and rolling of wrapping book and writing paper. In order to provide a financial incentive to resume these operations, differentials for them were increased to total costs of the operation.34 82 MPR 32 ; effective April 1, 1946. 88 Amendment 2, MPR 47 ; effective January 30, 1946. 81 Amendment 9, MPR 450, effective February 23, 1946; Amendment 3, RMPR 451, effective January 9, 1946; Amendment 13, MPR 182, effective February 19, 1946. Price Control: Rubber, Chemicals, Fuels, Other • 49 • VI • PRICE CONTROL: RUBBER, CHEMICALS, FUELS, OTHER Price actions in the rubber product industries reflected the return of many consumer items such as footwear and bathing caps to the market and the reappearance of natural rubber. The reconversion formula was made available for all rubber products that had been out of production during the war.1 Since most rubber commodities had been produced in volumes equal or greater than prewar volumes, the reconversion formula was expected to apply to a limited list of products only. In the chemicals field individual price adjustment provisions were liberalized to provide for a more effective transition to peacetime conditions, and control was extended to gum turpentine, which had been free of price ceilings except for a brief period in 1942. Prices were increased in several instances to secure improved supply. Supply reasons also formed the basis for a number of price advances in the petroleum field. The Office made detailed studies during the quarter of the bituminous coal industry to determine the possible effects upon prices of the new wage agreement then in negotiation between coal mine operators and the United Mine Workers. Several alternative courses of action were under consideration, pending conclusion of the negotiations and the signing of an agreement. During the quarter both exports and imports showed a tendency toward marked increases in volume of trade and in number of new entrants and reentrants into the field. Many foreign areas began to open up for trade, on the one hand creating difficulties by using their dollar holdings to compete with domestic purchasers for commodities in short supply, and on the other hand endeavoring to build up their exchange holdings by selling their own products in the United States at prices usually reflecting a high degree of inflation. The situation with regard to price control over United States exports was complicated by what appeared more and more clearly to be a too hasty abandonment of controls by other Government agencies. Revision of the maximum import price regulation, however, was expected to facilitate import trading operations and reduce the administrative workload on the Office. 1 Amendment 26, MPR 220 ; effective March 21,1946. 50 • Seventeenth Quarterly Report RUBBER Increases granted under the reconversion formula, which took into consideration legal changes in raw materials prices and basic wage rate changes since the base period and the industry’s average profit margin for that period, were made for starch filled book cloth—14 percent,2 and for rubber flooring (other than neoprene)—11 percent.3 Application of the reconversion formula to the manufacture of rubber caps made of natural and Buna-S synthetic rubber resulted in a producer increase ranging up to 33 percent over the 1942 price level.4 The rise, however, was to be absorbed to a considerable extent by wholesalers and retailers so that consumer prices were expected to be not more than 10 percent higher. New wholesale and retail prices were set in dollar-and-cent terms. The producer increase reflected chiefly advances in raw materials prices. For 90 new items of waterproof rubber footwear which had been out of production since 1941, new dollar-and-cent ceilings at retail and wholesale levels were established reflecting reconversion rises of 1 to 3 cents per pair allowed producers in September.5 New maximums were in line with those for synthetic rubber footwear produced during the war, slightly higher than the 1941 prices of footwear made of natural rubber. In its efforts further to simplify pricing methods for reconversion specialty items in the rubber footwear field, retailers were provided with a specified division factor on the net purchase price which yielded the usual markup for sales at this level. Wholesalers were directed to deduct their customary discounts from the manufacturer’s list price.6 Dollar-and-cent ceiling prices for natural rubber bands and bands of combination natural and synthetic rubber at manufacturer and reseller levels were set in line with already established maximums for synthetic rubber bands as well as with those prevailing for natural rubber bands prior to the cessation of their production in the early months of the war.7 Manufacturers of imitation reed and rubber mats were declared eligible for individual price adjustments under the reconversion standards, with adjustments allowed on the basis of current materials costs instead of adjusted 1941 figures, since lower-cost reclaimed rubber, the normal prewar material, was no longer available.8 An industry-wide 2 Order 158, MPR 478 ; effective January 29, 1946. 8 Amendment 23, MPR 149 ; effective February 18, 1946. 4 Order 117, MPR 220 ; effective March 22, 1946. 8 Amendment 4, RMPR 229 ; effective February 4, 1946. 6 Amendment 5, RMPR 229 ; effective February 26, 1946. 7 Amendment 25, MPR 220 ; effective March 6, 1946. 8 Order 56, MPR 149 ; effective February 18, 1946 ; Amendment 44, SR 15 ; effective February 4, 1946. Price Control: Rubber, Chemicals, Fuels, Other • 51 adjustment was not deemed feasible because of the widely varying factory costs. Price relief granted in the preceding quarter to manufacturers of molded, extruded, and other mechanical rubber products when made of soft rubber was extended to manufacturers of the same products when made of hard rubber.9 An increase up to 15 percent over existing ceilings for products with frozen base-period prices removed a threat to production and relieved the industry of immediate hardship. The end of tire rationing and the increasing supply of new tires necessitated setting specific trade-in allowances for repairable old tires and tubes turned in by buyers of new ones.10 During the tire rationing period, trade-in tires and tubes were generally unrepairable and came under the category of scrap, requiring little or no allowances. Three categories were established to determine the allowance for all tires traded in, according to the condition of the tire. CHEMICALS Of major importance in pricing of chemicals was the liberalization of standards under which individual adjustments could be granted to manufacturers of chemicals and drugs whose ceiling prices had been frozen at March 1942 levels under the GMPR. Relief, formerly limited to the net amount of the applicant’s increase in factory cost since March 1942, was extended to allow current factory costs, current total costs, or current total costs plus base period profit margin, depending on current overall earnings of the applicant compared with earnings in 1936-39. The requirement that the War Production Board or some other supply agency certify the essentiality of the applicant’s production was eliminated.11 In the related field of trade paints, that is paints sold through commercial distribution channels for use by farmers and urban householders, individual manufacturers were also permitted to apply for adjustments in ceiling prices.12 This action was taken following increasing evidence that some manufacturers of low-price trade paints were unable to continue production profitably at existing ceilings, frozen at March 1942 levels. Price ceilings were established for the first time for gum turpentine at approximately the current selling price, which was slightly above parity.18 This action was taken to prevent a possible inflationary rise in prices following the expected early depletion of Government-held stocks which throughout the war years had served as a restraining in 9 Amendment 24, MPR 149 ; effective March 6, 1946; see also Sixteenth Quarterly Report, P. 54. 19 Amendment 5, RMPR 528 ; effective March 9, 1946. u Amendment 45, SR 15 ; effective February 19,1946. 13 Amendment 37, Order A—2, MPR 188 ; effective March 13, 1946. 13 Amendment 3, RMPR 561; effective January 15, 1946. 52 • Seventeenth Quarterly Report fluence on the price movement. Wood turpentine and other substitute products had been under control since 1942 while there had been no need for price control over gum turpentine as long as the market price did not threaten to exceed parity levels. In the process of the readjustment of the cotton linters and hull fibers industry to peacetime markets, it was necessary to revise the pricing methods applicable to these products.14 Ceiling prices were established for 3 general classes, based on the grade of the linters and cellulose content, instead of the former 21 Government standard grades. The distinction, necessary in wartime, between chemical linters and nonchemical linters was discarded. This change in pricing method was expected to facilitate a return to normal pricing practices so as to provide manufacturers of bleached cotton pulp and bedding and upholstery products a steady flow of raw materials. Manufacturers of putty and of calking compounds who devote at least 90 percent of their business to these products were granted an increase of 15 percent to return 1936-39 margins, weakened by higher material and labor costs.15 These manufacturers accounted for about 30 percent of putty and calking compound production, the remainder being produced by multiline manufacturers whose financial position did not indicate a. need for price relief. Manufacturers receiving the increase were selling mainly to the jobbing trade, and it was therefore possible to limit the increase to a segment of the industry without embarrassing its competitive position. Several price actions in industries relying on imported raw materials reflected the increasing trend of inflationary price movements in foreign countries. Ceilings for bone glue produced wholly or partially from imported raw material had to be increased by as much as 7 cents per pound, to reflect current costs of production.16 In the case of hide glue, a similar increase in raw materials led to an individual adjustment procedure which made price increases dependent upon the absorptive capacity of the individual manufacturer.17 For imported quebracho extract and other tanning materials, the Office again had to meet higher world market prices in order to enable the tanning industry to obtain these essential raw materials.18 Maximum prices for hardwood charcoal, placed by the Civilian Production Administration on its list of commodities in critical supply, were increased by $9.50 to $11.80 per ton on sales of 1 ton and more, thereby leaving the prices on sales to householders untouched.19 Bep- 14 2d RMPR 191; effective January 28, 1946. M Amendment 93, Order A-l, MPR 188 ; effective March 6,1946. 16 Amendment 11, SR 14—F; effective January 21,1946. 17 Amendment 8, RPS 76 ; effective March 25, 1946. w Amendment 4, RMPR 531; effective March 29,1946. 18 Amendment 13, MPR 431; effective March 15,1946. Price Control: Rubber, Chemicals, Fuels, Other • 53 resentative industrial buyers had indicated that they were willing and able to absorb the price increase. Changed conditions in the thermosetting plastic laminates industry following the end of the war made it necessary to revoke the 10 percent rollback of laminate prices, put into effect during the war to reflect operating economies resulting from extensive expansion of output. With a substantial drop in production and generally higher costs of operation, it was necessary to reestablish the higher prewar prices.20 PETROLEUM An increase of 10 cents per barrel in maximum prices of crude oil was announced during the quarter.21 This action was based on a study of crude oil production, together with a consideration of the effect of changes in the industry subsequent to the termination of hostilities. In view of the importance of these changes, it Was announced that a further review of the current operating position of crude oil producers would be made for the purpose of determining whether the increase granted was sufficient to return base-period earnings to the industry. Inadequate supplies and distortions in the distribution of fuel oils, which became evident during the fall of 1945 in the Atlantic coastal region, extended to other areas during the first quarter of 1946.22 Shortages of residual fuel oils became particularly acute, due primarily to the greatly increased Navy and War Shipping Administration requirements, the full extent of which had not been anticipated until late in the quarter. To aid in remedying the general heating and fuel oil shortages, adjustments of nation-wide applicability were made in maximum prices of these products. On kerosene and distillate fuel oils, ceiling prices were increased one-half cent per gallon in all areas except the west coast, where the increases were three-fourth cent per gallon.23 On residual fuel oils the increases in ceiling prices were 21 cents per barrel in all areas except the west coast States, where the increases were 15 cents per barrel.24 For sales of residual fuel oils to Government agencies, adjustments were made in maximum prices for individual refineries, based on costs of diverting output to residual fuel oil production. At the same time, maximum prices of asphalt and asphalt products were increased by the amount of the increase in ceilings for 20 Order of Suspension, MPR 519 ; effective January 11, 1946. 21 Amendment 23, RMPR 436 ; effective April 1, 1946. 22 See Sixteenth Quarterly Report, pp. 56—57. 23 Amendments 40, 41, and 42, MPR 88; effective January 24, February 20, and March i8, 1946, respectively. 24 Amendment 42, MPR 88; effective March 18, 1946. 54 • Seventeenth Quarterly Report residual fuel oil,25 to avoid dislocations in supply of asphalt through diversion of refinery yields to residual fuel oil. Based upon a determination that increases in prices at prior levels could not be absorbed by distributors, the dollars-and-cents amount of all these increases were added to the maximum prices of retailers, where retail ceilings are controlled by other regulations.26 In consultation with the national refiners’ industry advisory committee, it was agreed that an immediate study of the current earnings position of refiners would be made which would take into consideration recent profit and loss data, increases in crude oil ceilings, decline in volume of refinery operations since the termination of hostilities, and effect of recent wage increases upon refinery operating costs. The Office announced that consideration would be given to the suspension of ceilings on crude oil and refined products as soon as it appeared that such action would be consistent with the general stabilization program, and meetings with industry advisory committees were arranged for the purpose of developing data as to probable price trends after suspension of price ceilings. SOLID FUELS Producer maximum price schedules were amended for two bituminous producing districts during the period under review. Prices for strip mines in District 15 (Missouri, Kansas, Texas, and Oklahoma) were raised 6 cents per ton to permit realization of the 15-cent target margin established under the November 27, 1943, directive of the Office of Economic Stabilization.27 A revised price schedule for District 12 (Iowa) established dollar-and-cent maximum prices for out-of-state shipments for all uses.28 In the anthracite field, specific deductions were provided at all sales levels for coal below standard quality.29 During the war, regulations of the Solid Fuels Administrator for War governed the quality of Pennsylvania anthracite. Shortly after these controls were revoked in November 1945, anthracite of inferior quality began moving to market in increasing quantities, and it became apparent that price control could not be effective unless quality standards for anthracite were reestablished and enforced. The regulation was therefore amended, after consultation with the anthracite industry and the Solid Fuels Administration for War, to provide the same quality standards 25 Amendment 12, RMPR 323 ; effective March 18, 1946. “Amendments 19 and 20, RMPR 137; effective January 24 and March 18, 1946, respectively. 27 Amendment 156, MPR 120 ; effective March 25,1946. 28 Amendment 154, MPR 120 ; effective February 5, 1946. 29 Amendment 22, MPR 112 ; effective March 5, 1946 ; Amendment 41, MPR 122 ; effective March 12, 1946. Price Control: Rubber, Chemicals, Fuels, Other • 55 as had been established by the Solid Fuels Administration for War, which reflected the historical practices of the industry. An amendment to the dealer price regulation extended indefinitely a 10-cent-per-ton adjustment previously granted on all delivered sales of solid fuels to persons other than resellers, since conditions underlying the temporary adjustment had persisted and appeared likely to be present for some time. The price adjustment was also made applicable to yard sales to consumers in less than carlots in order to provide a measure of relief for rural dealers, who make most of their sales on that basis.30 Maximum prices were established for 433 new bituminous mines during the quarter. Orders were issued under the cost and realization adjustment sections of the respective producer regulations to 84 producers of bituminous coal and to 11 producers of Pennsylvania anthracite. Additional area price orders were issued under the solid fuels area pricing program covering 1,670,000 tons of solid fuels sold by dealers. By the end of the quarter such dollar-and-cent orders governed maximum prices of more than 77 percent of the total tonnage of solid fuels sold annually by dealers. Issuance of an additional area price order governing sales of firewood brought to 136 the number of such specific pricing orders issued and effective. EXPORT-IMPORT It became clearly apparent during the quarter that the United States was not ready for hasty abandonment of controls over foreign trade. The untimely removal of some of the controls exercised by other Government agencies seriously affected price control in the export-import field. Comparatively minor, exports of consumer durable goods aggravated domestic shortages resulting from a production level far below previous optimistic forecasts, due to industriar strife and other causes. While most exports were actually not significant factors as percentages of production, they had a psychological effect far beyond their factual importance and were blamed for almost every conceivable shortage with which the country was faced, such as the low supplies of nylon stockings and of men’s shirts. This condition was largely brought about by the abandonment or relaxation of production, distribution, and export controls. Relaxation of export controls also robbed the Office of one of its most effective compliance devices—the OPA liaison officers at the Office of International Trade (formerly at the Foreign Economic Administration and transferred to the Department of Commerce). These officers had examined applications for licenses to export every 30 Amendment 42, RMPR 122; effective March 30, 1946. 56 • Seventeenth Quarterly Report conceivable commodity, recommending rejection when prices were too high; they were thus able to prevent the export sale of a commodity at above-ceiling price. Loss of this device (except for a few commodities) and other changed conditions, made it necessary to revise the Maximum Export Price Regulation. The revision was still in progress at the close of the quarter. It also became necessary to fix the export price of wheat at a level which would net the exporter no higher return than upon domestic sales.31 Need for this action developed when exports of wheat were returned to private channels, and exporters were at an advantage over domestic sellers by reason of the lower inland freight rates applicable to export transactions. The new import pricing policy was implemented during the quarter by issuance of the Revised Maximum Import Price Regulation.32 The revised regulation enabled sellers of most imported commodities under the Maximum Import Price Regulation to price automatically, if they had sold those commodities during the period from January 1, 1939, to March 31,1942. Where imported commodities were not previously sold, sellers were to apply for a price or formula; all sellers of apparel, apparel accessories, piece goods made of cotton, artificial fiber and mixtures thereof were also to apply for a price or formula. Under the regulation, prices on these commodities were to be fixed in line with those on similar commodities when produced domestically. RELEASED WAR GOODS The part played by the Office in assisting the Government to dispose of its surplus war commodities in civilian markets was concerned primarily with establishing special maximum prices for the larger sales programs of the disposal agencies, and with establishing pricing methods for new sellers of surplus goods. Many of these commodities were particularly attractive to civilian trade, despite the fact that they may have been made to military specifications. Most such items of consumer goods were sold on fixed price programs by the disposal agencies subject to special dollar-and-cent maximum prices established by the Office of Price Administration for all levels of sale. The special maximum prices relieved resellers of any burden of determining maximum prices, improved the Government’s sales, and removed possibility of undue speculative profits in the goods sold. In addition to the specially priced items, of course, a much larger volume of goods was sold subject to regulations already in effect. A final step in controlling the prices of surplus war goods was taken early in the quarter when resales of all war-contractor inventory were a Amendment 23, 2d RMEPR; effective February 6,1946. 82 RMIPR; effective March 25, 1946; see also Sixteenth Quarterly Report, pp. 59-60. Price Control: Rubber, Chemicals, Fuels, Other • 57 made subject to the general resale regulation for surplus goods.33 Since the same items were being sold by and for the account of the Government, as well as by Government contractors whose contracts had been terminated, considerable confusion was avoided by this step which subjected resales of the same type of goods to the same pricing methods, regardless of whether the contractor or the Government held title originally. The large volume of surplus goods offered since VJ-day attracted many new distributors into the trade. Such new sellers must apply to their nearest OPA office for a pricing method for all the goods which they propose to sell prior to their purchase of such goods. During the quarter under review, the Office made numerous studies or reseller markups, which were expected to result in amending this procedure so that specified markups on various commodities could be incorporated in the surplus war goods regulation (Supplementary Order 122), thereby enabling new sellers to establish maximum prices without making formal application to the Office. The program for establishing flat dollar-and-cent prices for resellers of surplus war goods was vigorously prosecuted during the quarter. The total number of flat pricing orders issued by the Office during the first 3 months of 1946 exceeded the total of all surplus-goods specific pricing orders issued in the entire period previous to the beginning of the quarter. This was due principally to the speed-up in the distribution of desirable consumer goods by the War Assets Administration and to the continued scarcity of such consumer items in normal civilian trade channels. In connection with extension of the flat pricing programs, the Office was able, after considerable negotiation, to secure the full cooperation of the War Assets Administration in carrying OPA resale prices established for all trade levels in the national and local advertising of that organization. Such publicity had great advantages from the standpoint of enforcement of price control, as well as from that of facilitating sales by the War Assets Administration. 33 Amendment 2, SO 122 ; effective January 8,1946. 58 • Seventeenth Quarterly Repor APPENDIX TO PRICE CHAPTERS Table 1.—Actions Extending or Resuming Price Control, January-March 1946 Effective date Commodity Level of action Jan. 1,1946 Merchandise warehousing (performed for certain Government agencies in specified cities).1 Warehouse. Jan. 4,1946 Fresh citrus fruits 1 All. Do Gum turpentine Do. Jan. 29,1946 Surplus-commodity disposed consumer durables (13 items including new ice boxes and war bicycles; used gas cookstoves, home mechanical refrigerators, passenger cars, motorcycles and commercial motor vehicles, photographic equipment, typewriter and business-machines, washing machines, and new and used home vacuum cleaners). Retailer. Mar. 18,1946 Wheat germ (except breakfast cereal packages oi 2 pounds or less).1 All. 1 Resumed in order to check rises above former ceilings. Table 2.—Dollar-and-Cent Prices, January—March 1946 Effective date Commodity Level of action Jan. 1,1946 Merchandise warehousing (performed for certain Government agencies in snecifled cities). Warehouse. J an. 2,1946 Grade D trimmed full beef tenderloins (sales to purveyors of meals). Retailer. Do Kosher and nonkosher cooked or cooked and smoked beef tongue. Do. Jan. 3,1946 Processed domestic Swiss cheese (Wisconsin sales).... All except retail. Jan. 5,1946 Truck and industrial tires (1 Goodrich off-the-road pneumatic; and 2 Firestone traction loggers and 1 solid industrial). Retailer. Jan. 7,1946 Industrial tires and retreads (new types by U. S. Rubber Co., made of neoprene and certain wearresistant compounds). Do. Jan. 12,1946 Metal beds Producer. Do New ice boxes (16 Montgomery Ward and 3 Sears, Roebuck models). Retailer. Do New ice boxes (1 Ice Cooling Appliance Corp. “Automatic,” except sales by ice companies and company-controlled outlets). Do. Jan. 14,1946 Plain chili con carne (without beans) Do. Jan. 15,1946 Shoe resoling services (using Panolene) Do. Do Gum turpentine Producer and bulk storage dealer. Jan. 17,1946 Automobile tires (2 of synthetic rubber for brandowners). Retailer. Jan. 19,1946 Imported table grapes Importer. Do Special purpose automobile tubes (1 type by Star Rubber Co., and 6 by Goodrich). Retailer. Jan. 21,1946 Hardwood tobacco hogsheads and parts Producer. Do New ice boxes (model 317-M by Superior Domestic lee Refrigerator Co.). Retailer. Jan. 22,1946 Die boards and birch and maple plywood panels (zones 2 and 3). Producer. Jan. 23,1946 Passenger car tires (2 new sizes) ... Producer, brand owner, and nonbrand owner wholesaler. Jan. 24,1946 Logging tires (1 type by Sears, Roebuck and 4 by U. S. Rubber). Retailer. Do Tires and tubes (4 assorted sizes and types by Frank C. Schenuit Rubber Co.). Do. Jan. 30,1946 India tanned (DHD) goatskins and (DJD) sheepskins. Importer. Do Mexican istle fiber (for upholstery padding, rope, cordage). Do. Feb. 4,1946 Waterproof rubber footwear Wholesaler and retailer. Feb. 5,1946 Norwegian brisling sardines Importer. Feb. 6,1946. Frozen white sea bass (round, drawn, and steaked; and,dressed, collars oft). Processor. Feb. 15,1946 Blankets (25-percent wool) Producer. Do Tires (1 new solid industrial tire by U. S. Rubber)... Retailer. Appendix to Price Chapters • 59 Table 2.—Dollar-and-Cent Prices, January—March 1946—Continued Effective date Commodity Level of action Feb. 18,1946 Castor beans and oil (Brazilian) Importer. Do Mexican sisal (Henequen) twine (except binder) Importer and primary wholesaler Producer. Do Rubber flooring (except neoprene and'custom-made) - Feb. 19,1946 Parboiled rice (civilian sales) Do. Feb. 25,1946 Platinum-group metals (scrap and substandard) Producer and distributor. Feb. 26,1946 Goodrich tires (new size, off-the-road type) Retailer. Do Men’s and boys’ canvas training shoes (molded soles in colors other than black). Wholesaler and retailer. Feb. 28,1946 Home vacuum cleaners (8 models and 7 sets of attachments by Eureka; Health-Mor; Hoover; and Sears, Roebuck). Retailer. Mar. 5,1946 India tanned goatskins (5 types) Importer and reseller. Do L Prime European goose and duck feathers Importer. Do. Mar. 9,1946 Burlap ’. ” Mar. 11,1946 Custom-milling and kiln drying of lumber (New England, on sizes and species not already given dollar-and-cent maximum prices). Mill. Do Synthetic rubber heels, soles, composition soles (cement-on rubber soles in 2 grades, superior grade brown heels, and 5 sizes of black composition nail-on half soles, for home replacement). All. Mar. 12,1946 Binders board (sold east of the Rocky Mountains) Producer. Do Custom log sawing (by mills in Maine, New Hampshire, Vermont selling up to 5 M b. m. monthly to one customer). Mill. Do Rental of trucks, trailers, and equipment (used in construction and road maintenance except in San Francisco region). Lessor. Mar. 14,1946 All rubber industrial wheels (2 sizes of Goodrich) Retailer. Do Off-the-road truck tires (7 sizes by General Tire & Rubber Co.). Do. Do Truck and bus tires and tubes (7 new size tires and 1 new size tube by Goodyear). Do. Mar. 15,1946 Truck and bus tires (1 new size by Norwalk Tire & Rubber Co.). Do. Mar. 20, 1946 Do Casket shook Producer. High-grade secondary slab zinc (conforming to specifications for primary zinc). AU. Mar. 25,1946 Slop chest supplies (for resale by vessel operators to personnel). Chandler. Mar. 26,1946 Tires, tubes, repair services (1 tractor tire by Firestone, 1 pneumatic industrial tire by U. S. Rubber, 2 special-purpose passengercar tubes by Pharis, and certain repairs made on a 16.00, 30-ply tire by Tire Retread Co.). RetaUer. Table 3.—Price Decreases, January-March 1946 Effective date Commodity Level of action Amount of decrease Jan. 1,1946 Jan. 9,1946 Jan. 14,1946 Jan. 23,1946 Feb. 23,1946 Mar. 2,1946 glen’s and boys’ shirts, shorts, pajamas, and related items. Book paper (jumbo roUs) Heavy residual fuel oils (metro-poUtan Philadelphia). New Nash automobUes (2-door sedan). Writing papers (jumbo roll except grades normally sold in rolls). Packed spinach (southeastern Texas). Processed grain (sales to feeders in lots of 5,000 pounds or less in area A). Processed grain Pennsylvania anthracite (below-standard quaUty). White trucks (model WB-3264).. Live hogs (Birmingham, Ala.)... Cakes, doughnuts, pastries, and cinnamon buns. Knitwear All Retailer: About 5 percent. 50 to 85 cents per hundredweight. Average, 1 to 5 cents per barrel. 3.1 percent under 1942. Per hundredweight: Rag papers, 85 cents; chemical wood pulp bond, ledger, and mimeograph paper, 50 cents. Per dozen: 12 cents No. 2 cans; Producer Wholesaler, refiner, and tanker terminal. RetaUer..-- Producer Processor._ Mar. 4,1946 , Do Country shipper and merchandiser. Processor 18 cents No. 2J^ cans; 56 cents No. 10 cans. 1 cent per bushel. Varied. Mar. 5,1946 Mar. 6,1946 Mar. 13,1946 Mar. 28,1946 Mar. 30,1946 AU RetaUer Interior market RetaUer Manufacturing-jobber. 50 cents to $1 per ton. percent under 1942. 10 cents per hundredweight. Varied.* Average 11 percent. * Represents savings in materials cost following a 10-percent reduction in weight to cooperate with the * amine Emergency Committee. No decrease is required for fractions of a cent saved. 60 • Seventeenth Quarterly Report Table 4.—Price Increases,* January-March 1946 Effective date Commodity Level of action Amount of increase Jan. 1,1946 Do Household furniture All Manufacturer: 8.6 percent all- Cheddar cheese (large sizes, aged do wood; 3.3 percent upholstery. Betailer: Average 6 percent. 2 cents per pound. Do , at least 6 months)? Crude oil (5 pools in Nebraska, Oklahoma, and Texas). Glass containers (cross-country Producer 10 to 35 cents per barrel. Do do Varied until June 30, 1946.1 Do shipments from east to west). Warehousing charges (Govern- Warehouse IM cent per bale. Jan. 2,1946 Do ment-owned cotton, harvested before August 1944). Building brick, structural hollow tile, and drain tile (in 10 far west States). Coal, coke, and other solid fuels (except to resellers). Enameled cast iroh plumbing fixtures. Glazed brick and facing tile All $2 per M clay and shale; 80 Dealer cents per ion hollow and clay drain tile. 10 cents per delivered ton. Do Producer 8 percent over October 1941. Do All $2.50 per M for standard size. Do (except made on west coast, bordering States, and Wyoming and New Mexico). Oilcloth Producer and whole- Producer: 8 percent; whole- Do Openjhead steel drums saler. Producer saler 9.1 percent (except on wall oilcloth). 24 cents for 55-gallon; 33 cents Jan. 3,1946 Jan. 4,1946 Do Processed domestic Swiss cheese. All except retail for 58-gallon. Varied. Lamb and mutton Licensed ship supplier. Producer.. 75 cents 2 per hundredweight. Wool floor covering 5 percent. Jan. 5,1946 Jan. 7,1946 Jan. 9,1946 Do Shoes Producer and whole- Producer: 4J4 percent over Clay drain tile (made in Michigan and Ohio). Book papers (machine-coated)—^ Flatware, compacts, toilet sets, and mirrors (containing foreign silver). Printing trades machinery and equipment. Sheeted book papers.. saler. All 1942. Producer: 80 cents per ton. Producer... 30 percent. All Varied.3 Do .do. 12 percent over October 1941. Do Producer About 3 percent. Jan. 10,1946 Do Box grade veneer do About 18 percent per M b. m. Cotton blankets (plain and jacquard weaves in American or Asiatic cotton, or both, or with 5 percent wool mix). Lincoln automobiles (4 models).. Thermosetting plastic laminates. Metal beds do 6^ to 12 cents per finished Do All pound. Producer: About 7.6 to 9.5 per- Jan. 11,1946 Jan. 12,1946 Do. . Producer cent over 1942. ' Betailer: 4.9 to 6.7 percent. 10 percent. All except retail 7.7 percent over May 1942. Sanded gypsum plaster (except in California and Nevada for producers making neither neet nor white plaster). Domestic oil burners and parts... Gas and liquid petroleum-fired All $1 to $2.40 per ton. Jan. 14,1946 Do ——do.< do.4 9 percent. 12.5 percent. Do. furnaces, unit heaters and parts. Boiled glass (rough-rolled, fig- ured, wire, and heat absorbing). Kerosene and fuel oil (Erie and Niagara Counties, N. Y.). Bedwood lumber and millwork do 2.5 percent.3 Do do 0.2 to 0.5 cent per gallon until Do Exporter Apr. 30,1946. $2.75 per M b. m. Jan. 15,1946 Do items. Shoe repair services (Panolene half- or full-soles). Gauze, flannelette, birdseye products, and oilcloth. Badio speakers and speaker parts. Basic construction machinery, equipment, and parts. Betailer 15 and 25 cents per pair. Wholesaler and re- Varied.* Do tailer. Producer 19.6 percent over October 1941. 5 percent until May 15,1946.' Jan. 16,1946 All • Excludes price increases allowed under individual company adjustment provisions. * Extension of increase scheduled to expire Dec. 30, 1945. . 2 On sales to Department of Agriculture 50 cents per hundredweight may be added for freezing carcass or boneless lamb and mutton, plus 25 cents per hundredweight for lamb and 15 cents per hundredweight ior mutton to compensate for freezer shrinkage. 3 Pass-on of 36-cents-per-ounce rise in cost of foreign silver. * Furnace manufacturers using oil burners must absorb. • Pass-on by resellers limited to top mark-up of 15 percent on case lots and 25 percent on smaller lots. * Partial pass-on of 2.5- to 14.8-percent Bankhead increases. ' Extension originally scheduled to expire Dec. 31,1945. Appendix fo Price Chapters • 61 Table 4.—Price Increases,* January-March 1946—-Continued Effective date Commodity Level of action Amount of increase] Jan. 16,1946 Do Berries Cabbage Country shipper 8 do.8 6 cents per 24-quart crate. 5 cents per 50-pounds. M cent per pound. 7 cents per L. A. crate. 8 cents per crate. 4 cents a bushel. Do Cantaloup and other melons (except watermelon. Carrots do.8 Do do.« Do Lettuce (Los Angeles or Salinas). Snap beans and peas. . ....do.8 Do . . do.8 Do Sweetpotatoes, red sour cherries, and watermelon. New automobiles (Ford, Plymouth, Dodge, De Soto, Chrysler, and Nash). Window and picture glass do.8 Mo cent per pound. Producer: Ford, 7.0 to 11.6 percent; Plymouth, 14.1 to 17.0 percent; Dodge, 12.9 to 14.0 percent; DeSoto, 9.3 to 11.0 percent; Chrysler, 9.8 .to 16.5 percent; Nash, 0.04 to 11.3 percent. Retailer; Ford, 3.8 to 8.1 percent; Plymouth, 10.5 to 13.2 percent; Dodge, 9.4 to 10.4 percent; DeSoto ,6.0 to 7.7 percent; Chrysler, 6.6 to 8.9 percent; Nash, 3.0 to 8.0 percent.9 2 percent. . Do All Do Reseller Jan. 17^1946 Do Fluorescent specialty transformers. Specialty transformers (except fluorescent). Cast iron sash weights Producer and wholesaler. All Producer: 6.3 percent over 1941 Producer; 14.4 percent. 10 percent. 7 cents per pound. Average 8.8 percent over October 1941.10 27.6 percent over 1942. Varied.11 Jan. 19,1946 Jan. 21,1946 Do Producer. __ Bone glue (from materials imported from countries other than Canada). Brass plumbing fixture accessories. Studebaker trucks (one J^-ton and eight lM-ton models). Cotton products (laundry cover cloth and felts, table felts; tobacco seed bed covers; certain rope, twine, yarn, and cord). Bartlett pears (pie-grade peeled halves). Kerosene and fuel oil (districts 1, 2,3). Frozen, fruits and vegetables (1945 and later packs). Liquid ice cream mix do do Jan. 22,1946 Jan. 23,1946 Jan. 24,1946 Do do Wholesaler . Processor 72 cents per dozen No. 10 cans; $1.47 for solid pack pie grade. 0.3 to 0.5 cent to Apr. 30, 1946. Per pound: Apples 4)4 cents in the east, IM cents in the west; red sour cherries M to 654 cents; concord grapes, 3)4 cents;18 plums M cent; prunes J4 cent;13 currants 3 cents; Redheart, Ettersburg, and Corvallis strawberries, 1)4 cents; all other 1)4 to 2 percent. 4 to 11 cents per gallon. All Jan. 28,1946 Do Processor Producer and whole- Do.. Packaged whiskey (used-cooperage-stored liquor). Pumps and parts (hand-operated gasoline, Kerosene, lube oil, and grease dispensing equipment). Starch-filled book cloth saler. All M cent to 7)4 cents per bottle. 11 percent over October 1941. Jan. 29,1946 Producer_ ________ Do.... .do 14 percent over October 1941. 25 percent. 15 cents per square. Do.... Western red cedar poles (butttreating). Western softwood shingles .. do T Do Mill Jan. 30,1946 Do.... Cast iron sash weights __ Reseller Indeterminate.14 Flat galvanized ” steel sheets (secondary or rejected grades). Imported waste rags, rope, and string. Iron and steel scrap (from Florida and States west of the Mississippi, except Iowa, Missouri, and Wisconsin). Warehouse.. 10 cents per hundredweight. Indeterminate. Do... Importer Do... Dealer Do. * Excludes price increases allowed under individual company adjustment provisions. ’ Country shippers functioning through established sales organizations as brokers or shippers’ sales agents. 1 Nash model decreased by 3.1 percent at retail. " Increases vary from 5 to 15 percent with low-end products receiving higher increases. 1 Full pass-on of several Bankhead increases since August 1945. “ Except in Washington, Montana, Oregon, Idaho, and Wyoming. Except in Washington and Oregon. Pass-through of Jan. 19 producer rise up to average operating cost of trade. 699327—46---------5 62 • Seventeenth Quarterly Report Table 4.—Price Increases,* January—March 1946—Continued Effective date Commodity Level of action Amount of increase Jan. 31,1946 Feb. 1,1946 Do Snap beans (f. o. b. Pompano, Fla.). Cheddar cheese Country shipper 25 cents per bushel until Feb. 20,1946. 3% cents per pound. 2 to 35 cents per barrel. Up to 2 cents per hundredweight. $2 to $4 per ton. Sawed material 4 percent; blocking 11 percent. Producer: 15.7 to 19.1 percent over 1942. Retailer: 5.1 to 8.3 percent. 25 cents to $1 per box. Producers: 9 percent over October 1941.18 Average 10.3 percent. 7 percent. ' Producer and dis- Crude oil (13 pools in Arkansas, Illinois, Kansas, Louisiana, Michigan, and Texas). Motor pick-up and delivery (serving railroads in Syracuse, N. Y.). Paperboard (sold east of Rockies), standard grades. Sawed wooden mine material tributor. Producer Do ... Contractor Do Producer Feb. 2,1496 Feb. 4,1946 Do. do and industrial blocking (produced in Michigan, Wisconsin, and Minnesota). Hudson automobiles All Window and picture glass Resellers Feb. 5,1946 Do Gas conversion burners All . Grey duck fabrics Wholesaler Do Northern white cedar poles and piling. Bunker fuel. Frozen white sea bass (dressed and fillets). Veneer egg cases Producer Feb. 6,1946 Do Ship supplier... All 3 cents per ton at New York harbor; 7 cents from district 1 at other Atlantic ports; 10 cents at Gulf ports. Processor: 3%, 3, 9Ji cents per pound, respectively. Retailer: 4 cents a pound, dressed. 10 percent. About 40 cents per dozen. Jan. 26,1946 Feb. 7,1946 Do All except warehouse-Importer New Zealand pickled sheep and lamb skins (f. o. b. specified New Zealand ports). Packed ripe olives All. Processor: 16 percent. Retail- Feb. 9,1946 Asbestos cement building materials (sold to mail order houses). Cane and beet sugar Producer er: 4 cents for 9-ounee can. Indeterminate. Feb. 10,1946 Feb. 11,1946 Refiner, wholesaler, and retailer.10 Producer About Ji cent per pound. Average 6.5 percent. Producer: 10 cents per pair. 13 cents per dozen on items sold under 63 cents per dozen. 10 percent. Average 6 to 31 percent. 13.4 percent over October 1941. 10 percent until June 30, 1946 $4 per M feet. 10 cents per circled head. 10 cents per ton for 6 mines; 20 cents for 15 others. Producer: 24 cents per dozen No. 2Ji can. Retailer: 4 cents per can. 14 percent over October 1941 Varied.18 South central hardwood lumber. Feb. 12,1946 Do Feather-filled pillows (containing new chicken or turkey feathers or fiber, or mixed with crushed water fowl quills). Men’s bandanna work handker- Producer and wholesaler. Producer Feb. 13,1946 Feb. 16,1946 Do chiefs. Hardwood flooring (direct mill sales). Cotton fabrics (combed cottons, blanket robe cloth, 26 percent wool blankets, and minor items brought into customary relationship with major). Cotton ginning machinery and parts. Rayon grey goods (used for lining men’s and boys’ suits, coats, and jackets). Southern pine tobacco hogshead material. Bituminous coal (district 1) Producer and wholesaler.17 Producer All '.’J Do do--- Do Producer Feb. 16,1946 Do All Fancy Elberta peaches (1945 pack, havles and sliced). Low pressure steel boilers and parts. Oilcloth (except wall) do Do do Do Wholesaler • Excludes price increases’allowedjander individualjcompany|adjustment provisions. 11 Pass-on in dollars and cents up to point where reseller’s percentage margin is about equal to operating expense rate of representative sellers. , i« Wholesaler and retailer increases prohibited until amounts equal to the inventories of Feb. 9, were sow at old price. 17 In southern States except Texas, Louisiana, and Florida, retail yards may raise ceilings 4 percent. 18 A wholesaler whose March 1942 price was under 6 percent higher than the manufacturer’s October 1941 price to the same class of purchaser, may raise ceiling to equal that of the manufacturer to the same customer group. Appendix to Price Chapters • 63 Table 4.—Price Increases,* January—March 1946—Continued Effective date Commodity Level of action Amount of increase Feb. 18,1946 Do Castor oil, pomace, and unground cake. Crushed ice (straight run-crushed ice, crushed and sized ice). Rubber flooring (except neoprene and custom-made). Southern pulpwood, cordwood, and related items (east coast States, Virginia to Texas, and Arkansas and Tennessee). Fresh spinach All Crusher: IJi cents per pound for Nos. 1 and 3 grades; 1J^ cents for dehydrated bodied castor oil; $1.75 per ton, f. o. b. point of production, for caster cake in bags; 25 cents per unit of ammonia content for pomace 15 percent but not over $1.50 per ton; 20Jpercent but not over $2 per ton, respectively. 11 percent. $1.40 a cord. do.. Do do Do Producer Feb. 19,1946 Do All Country shipper: 5 cents per bushel until Mar. 20, 1946. Retailer: cent per pound. Country shipper: 10 cents per bushel until Mar. 10,1946. Retailer: H cent per pound. 25 cents per hundredweight. 2J< cents per pound. % cent per gallon. Producer: 7.5, 17.3, and 19.5 Green peas do Do Kraft wrapping paper (sheets or counter rolls). Carded cotton yarn (base grade). Kerosene and fuel oils (western).. Lincoln automobiles (3 models) Producer Feb. 20,1946 Do . _ .do All ... Do do Do Southern pine lumber Producer percent over 1942.’ Retailer: 4.2, 13.5, and 15.7 percent. $3.25 per M b.m. Producer: 4J^, or 6J^ cents per pound for 8-thread pile yams; 1J^ cents for reverse twist yam. 10 cents per barrel. $19 per ton. 9 percent. 5 percent. 1J^ to 2 cents per pound; at retail 2 cents per pound. Varied. Feb. 21,1946 Do Carded cotton yams (for pile fabrics and electrical insulation tape). Portland cement (east coast States, Virginia to Louisiana and Tennessee). Sheeted writing papers (normally sold in sheets). Linoleum and felt-base floor covering. Metal household furniture All do Feb. 23,1946 Feb. 25, 1946 Do Producer Producer and wholesaler. Producer Do Mincemeat (containing dried apples). Prefabricated homes and subas- do Do All Do. semblies (mostly of wood). Primary lead (specially packed and loaded at buyers request). W ashing machine and other casters. Cotton finished piece goods Shippers Pig lead, 30 cents; lead ingots or linked ingots or wooden pallets, 50 cents; and on steel pallets, 70 cents. Washing machine casters, 12.3 percent; other types 7.3 percent over Oct. 1,1941. Varied.19 Do Producer Feb. 26,1946 Do Converter Chrysler automobiles 18 models). Imported cresylic acid Producer Producer: 11.2 to 13.7 percent over 1942. Retailer: 8.6 to 11.0 percent. About 2 cents per gallon. Do Importer and reseller-All Do Plaster lath (No. 1 and No. 2 lath). Automatic nonelectric temperature controls. Crude oil (Rodessa Field, Tex.).. Crude oil (10 pools in Arkansas, Kansas, Michigan, Oklahoma, and Texas). Iron and steel mill products Producer: 4 per M pieces. Retailer: $4.25 to $4.60. 5 percent over October 1941. 10 cents per barrel. 5 to 35 cents per barrel. Varied.20 Mar. 1,1946 Do do Producer Do . ..do Do All Do Live cattle and calved (at Leavenworth, Kans.). Northern softwood lumber . Producer 15 cents per hundredweight for choice grade, and 20 cents, all others. $1.75 per M b. m. 5 to 11 cents per dozen No. 2 cans; 20 to 44 cents per dozen No. 10 cans. . Do .. do war. 2,1946 Packed tomatoes (certain counties of Idaho). Packer. * Excludes price increases allowed under individual company adjustment provisions. M Pass-on of grey goods cost rises since June 1945, virtually full for independent converters and 40 to 50 for integrated. 49 Reflects $5 per ton increase for carbon and alloy steels, ordered by Stabilization Administrator. 64 • Seventeenth Quarterly Report Table 4.—Price Increases,* January—March 1946—Continued Effective date Commodity Level of action Amount of decrease Mar. 4,1946 Do Do Corn (sales in area B to feeders in lots of more than 5,000 pounds, or for 1. c. 1. sales, except to a trucker-merchant). Inner-spring mattresses (with wired tied units). Wheat and corn. __ Country shipper Producer ...... do 1J£ cents per bushel. 16 percent over October 1941. 3 cents per bushel. 2 cents per bushel. 4 cents per bushel. 9 cents per hundredweight. Average 3 percent. 15 percent. Producer: 10.8 to 18.3 percent over 1942. Retailer: 0.6 to 7.6 percent. 15 percent. 6.5 percent. 1.3 to 48.6 percent. 20 cents, 15 cents, and 30 cents per hundredweight, respectively. 5 to 10 percent basic plus 5 percent incentive on specified low-end production. 4 cents per pound or 44 cents per gallon. $1.10 per ton. Do Oats dn Do Rye and barley do Do Grain sorghums do Mar. 6,1946 Do Douglas fir, western hemlock, and true fir lumber. Hard rubber products ... do do .. Do Hudson automobiles (7 models) „ Putty and caulking compounds Vitrified clay sewer pipe and allied products (northern California). White trucks All Do Producer Do do Do do Mar. 7,1946 Mar. 8,1946 Do Concrete reinforcing bars, spirals, and welded stirrups. Cotton textiles Fabricator. Producer Maple sirup (bulk quantities) do Do Ohio clay tile (deliveries in Vir- Producer and reseller Mar. 9,1946 Mar. 11,1946 Do ginia, northwestern New York counties, and Cuyahoga County, Ohio). Burlap (sales of less than 25 bales). Beef liver (in New York and Virginia). Importer! _ 10 percent. $2 per hundredweight. 20 percent. Average 45, 50, and 55 cents, respectively, per hundredweight.21 Sales to civilians, 25 cents per All except retail Custom-milling and kiln-drying of lumber (New England). Beef and veal, lamb, and pork (dressed carcass, civilian sales). Lard _ _ Producer Do All except retail Do do. Do Lumber custom-mill clipping (New England). Sausage products .do _ hundredweight; sales to Government, 75 cents. 50 cents per M. b. m. 25 cents to $1.75 per hundred weight. Producer: 2.5 percent. Retailer: About 1 percent. Producer: 4 percent. Retailer: About 1 percent. $ 6 per ton. $ 1 to $3 per M. b. m. 3 cents per pound on sales. 4 percent. 8 .0 to 12.9 percent. $1.25 per M feet. Do . do Do . . Chrysler, DeSoto, Dodge, and Plymouth automobiles (1946). Ford, Lincoln, Mercury, and Hudson automobiles (1946). Binders board (sold east of the Rocky Mountains). Custom log sawing (low-cost operators in Maine, New Hampshire, Vermont). Green coffee (RFC subsidized) — Steel castings and railroad specialties (except armor, Navy, ordnance). Mack trucks (3 models) All Do do Mar. 12,1946 Do Producer... .do„_ . __ Do Importers. Do AIL Mar. 13,1946 do. Do.. West coast logs Producer Do Builders’ hardware and certain do 10 percent over October 1941; and 16 percent on low-end items. $4 per ton. 19.6 to 33.3 percent. Do screen cloth. Container ship paperboard (east of Rocky Mountains). Diamond T trucks (6 models)—. Electrical clay conduit do Do All Do Producer About 10 percent. Do Live hogs (sold to buying stations, terminal and interior markets in Kentucky, Alabama, Virginia, Tennessee, Illinois, Indiana, and Washington). Canned dried beef (sales to civilians) . Canned pork products (sales to the Government). Nonpork canned meats (except dried beef to civilians). do 5 to 15 cents per hundred- weight. Mar. 14,1946 Do All except retail $3.75 to $6 per hundredweight-70 cents to $2.70 per hundred- do Do do weight. . Sales to civilians : 75 cents to $1 w per hundredweight. Sales to Government: $1.25—$2.32» * Excludes price increases allowed under individual company adjustment provisions. 21 On sales to Government, 25 cents additional. Appendix to Price Chapters • 65 Table 4.—Price Increases,* January-March 1946—Continued Effective date Commodity Level of action Amount of increase Mar. 15,1946 Do Do..— .. Do Black and white pepper (ex dock New York, except CCC imports of black pepper from India). Cuprammonium (Bemberg) sheer grey goods. Domestic cookers and heaters (except electrical). Hardwood charcoal (ton or more quantities). Pig iron.. .. Importer Producer : Black pepper, 5 cents per pound; white pepper, 11)^ cents per pound. 3 cents per yard. Producer: 5 percent.22 Michigan-Wisconsin area, $9.50 per ton; New York-Pennsylvania area, $10.50 per ton; Tennessee-Arkansas area, $11.80 per ton. 75 cents per gross ton. 10 percent. Average, 20 percent. Varied.23 PAW district 5, 15 cents per barrel; PAW districts, 1-4,21 cents per barrel. PAW districts 1-4, cent per gallon; district 5, % cent per gallon.24 0.5 cent per gallon. Blanched, 2 cents per pound; natural 1 cent. Varied. 10 percent. Producer: 13.0 to 24.0 percent. Producer: 19.3 to 27.0 percent. Varied. $1 per ton. 30 cents per square. Producer: 49.7, 51.3, 56.7, and 35.4 percent, respectively. Retailer: 11.2, 7.5, 12.0, and 10.4 percent, respectively. 16.3 percent over 1941. Corm try shipper: 5 cents per bushel until Apr. 20. Retailer: About cent per pound-25 12 and 9 percent, respectively. Producer: 31.5 to 42.9 percent. Producer: 3.5 percent. Retailer: About 1 percent. Average, 9 percent. 18 percent. Regular wholesalers: 9J^ percent. Institutional wholesalers: 11 percent.28 About $1.50 per delivered ton. 6 cents per net ton. 35 cents per hundredweight. 4 percent. $2 and $2.20 per hundred weight. Producer and wholesaler. Producer Do do Do Do Strawberry crates (complete with cups and dividers). W estern softwood plywood (construction grades). Fir sash and windows (Boise, Puget Sound, Portland, and Spokane). Fuel oils (residual Nos. 4, 5, and 6, including Navy Special, gas enrichment, heavy diesel, and bunker “C”), asphalt, and asphalt products (except road oils). Kerosene and lighter distillate fuel oils. Tractor fuel (PAW districts 1-4).. . do . do Mar. 16,1946 Mar. 18,1946 Do Jobber All — do Do do -.. Do Shelled almonds (in small containers) . Shelled pecans, walnuts, and filberts (packaging differentials for additional sizes and package types). Thermostats’(for home gas and electric cookers). International Harvester trucks (13 models). Dodge trucks (13 models) Sheller, packer, primary distributor. do Do Mar. 19,1946 Do Producer All Do. do Mar. 20,1946 Do.. . Gas appliance valves (for gas or petroleum heaters or cookstoves). Hay _ .do .....do Do. Western softwood shingles.. do Mar. 21,1946 Do. . Automobile radios (Chrysler, Hudson, Nash, and Studebaker. Ferrous forgings do Producer Do Fresh spinach All Do. Specified steam generating equipment, and cast steel rolls. Studebaker trunks f6 models') do.. Do do Do... Nash automobiles (1946) _ do Mar. 22,1946 Do Hardwood flooring (maple, birch, and beech). Hardwood heel blocks. ..do. Producer Do. Mill-finished cotton piece goods and sheeting. Roofing flux (St. Paul-Minneapolis area, Wichita, Kans, reference point). Bituminous coal (from strip mines in district 15). Forge steel freight car axles Wholesaler Mar. 24,1946 Mar. 25,1946 Do. Refiner Producer _ _do Do. Machinery, parts, and industrial equipment. Wrought steel freight car wheels (2 common sizes). All.. .. Do.. Producer * Excludes price increases allowed under individual company adjustment provisions. 22 Wholesalers absorb 25 percent and retailers 75 percent of rise. 28 Increases reflect one-half the exact increase in cost resulting from a 10-percent producer increase. "Indefinite extension of increases scheduled to terminate Apr. 30 in districts 1-3, .and June 30 in district 5. 28 Continuation of an increase scheduled to expire Mar. 30,1946. 28 Pass-through of prior Bankhead increases. 66 • Seventeenth Quarterly Report Table 4.—Price Increases,* January-March 1946—Continued Effective date Commodity Level of action Amount of increase Mar. 26,1946 Low-pressure valves and fittings. Afl Producer: 10 percent for 5 groups, and 20 percent for 6 low-end groups, until Aug. 31, 1946. Do Do Mar. 27,1946 Ponderosa pine cut stock (for doors, window frames, and sashes). Steel shipping containers Bed linens, towels, napery, and blankets. „...do Producer Wholesaler 6 percent.27 10 percent. Regular wholesaler: 5 to 7 percent. Institutional wholesalers: 8J^ to 13 percent. Do Innerspring mattresses.—. An At retail, up to $1.50 over 1942. Do Cast iron plumbing drainage do 10 to 20 percent. Do Do staples (specified items). Eastern railroad cross ties (5 sizes). Heavy-duty mechanical jacks Producer AU 5 cents per tie. 15.8 percent. Do.. Do Do Mar. 28,1946. ■(except automotive). Radish crates (western area) Ready-mixed concrete (southern United States producing area). Snap beans (f. o. b. Pompano, Fla.). Cast-iron radiation Producer .....do AU.... Producer and jobber.. $2 per M. b. m. Varied.28 Country shipper: 25 cents per bushel until Apr. 20, 1946. Retailer: About 1 cent per pound. Slightly over 5^ cents per Mar. 29,1946. Do—„ Do Do Imported vegetable tanning materials. Soft mattresses.. Softwood lumber items (retail distribution yard sales). Western shingles (retail distribu- Importer, grinder, liquefier. All Retailer ..„.do square foot. 4 and 9 percent. Producer: 15’percent over 1942. Retailer: Up to $1.25 per mattress. $1.56 per M b. m. 35 cents per square. Mar. 30,1946. tion yard sales). Coal, coke, and other solid fuels Retailer 10 cents per ton.2’ Do. (except to resellers). Western softwood plywood (con- Reseller. Average, 17 percent. struction grades). * Excludes price increases allowed under individual company adjustment provisions. 27 For extra services, 24-100 percent. 88 Reflects pass-tbrougb of 10 percent rise in Portland cement ceilings. 28 Indefinite continuation of an increase scheduled to expire Apr. 30, 1946. Table 5.—Releases from Price Control, January—March 1946 Effective date Commodity Level of action Period of release Jan. 2,1946 Sweet peppers and eggplant— All Permanent. Jan. 16,1946 Jan. 24,1946 Raw silk Sling chains (three types of Government surplus). ..—.do do Do. Do. Jan. 28,1946 Canned beet juice do Do. Do— Canned cabbage do Do. Do Canned carrote and carrot juice (except carrots prepared for baby and junior food). Canned eels do Do. Do do..... Do. Do Canned hothouse lettuce do Do. Do Canned Irish potatoes (except French fried, shoestring, or Julienne). do Do. Do Canned onions (except pickled) do Do. Do.- Canned parsnips do. Do. Do Canned peppers do Do. Do Canned rutabagas do Do. Do Canned sauerkraut juice do _ Do. Do Canned sweetpotatoes . do. Do. Do Canned turnips do Do. Do Cigar cuttings and clippings do Do. Do Fresh, frozen, and canned crabmeat do Jan. 29 to Mar. 30.1 Do — Frozen clams and oysters do Permanent. Do....... Ice cream sandwich wafers and waffles— do Do. Do Imported calf’s foot jelly do Do. Do....... Imported dehydrated banana flakes. do Do. Do Imported hulled sesame seed do.. Do. Continuationpf a 90-day suspension effected Oct. 31, 1945. Appendix to Price Chapters • 67 Table 5.—Releases from Price Control, January-March 1946—Con. Effective date Commodity Level of action Period of release Jan. 28, 1946 Do Imported imitation sage All Imported Irish oatmeal do Do. Do Imported snuff ... do... Do. Do. Nohpyrogenic, nonantigenic gelatin (for starting preparation of intravenous do Do. solutions). Do Toys and games (except specified wheel goods). Vegetable seeds ...do Indefinite. Do ... do Do.» Feb. 6,1946 Feb. 11,1946 Imported hothouse grapes .. do Laboratory testing Supplier Do Lumber inspection service (by nonprofit, nondistributing associations). Alumina . .. *_do Do. Feb. 13,1946 Do All ► Do. Appointment and date books do Do. Do. Baddeleyite do Do. Do Barium. .. . . .. do.... Do. Do Beryllium metal, alloys, and oxide do Do. Do .. Bronze powder 1 do Do. Do Cerium do Do. Do Christmas and New Year seals, tags, and enclosures. do Do. Do. Columbium . .. do Do. Do. . .. Diaries do Do. Do Diving equipment do Do. Do Ferrocolumbium do.... Do. Do Gallium do Do. Do Germarium .. do Do. Do.. Gift money holders. do Do. Do . Gold bullion leaf do Do. Do.... Illium do Do. Do... Indium do Do. Do Lanthanum .. do Do. Do Lithium and compound (other than do Do. salts). Do. . Masurium do Do. Do Mesothorium . do ... Do. Do Monazite , ."...do Do. Do.... Neodymium. do Do. Do.... Nonp'ersonalized Christmas and New Year cards. do Do. Do.... Praseodymium do Do. Do Printed'decorative paper ribbons and tapes. do Do. Do.. . Printed gift and wrapping paper do Do. Do. Radium? _ do Do. Do Reconstruction, maintenance, fitting of, and repairs to, boats and ships. do Do. Do.. Rhenium do Do. Do.... Rolled gold (on base metal other than silver). do Do. Do_. Samarium do Do. Do.. Selenium _ do Do. Do.... Semifabricated gold (other than dental).. do Do. Do. Social and commercial calendars .. do Do. Do.. Tantalum do Do. Do.. Tellurium do Do. Do... Thallium do Do. Do.. Thorium ...do Do. Do Titanium and alloys do Do. Do._ Wooden or combination wood and paper cigar boxes. do Do. Do Zircon and zirconium metal, oxide, alloys, and compounds. ....do Do. Feb. 15,1946 Mar. 1,1946 Coir yarn and bakias. . do — Permanent. Canned and frozen shelled beans (except limas, Fordhook limas, and crowder, blackeye, cream, or field peas). Processed snap beans (processed after Mar. 1, except baby food). do Do. Indefinite. Do do Mar. 4,1946 Mar. 6,1946 Do Stevedoring services (performed for carrier by watera). Supplier Do. Artists’ supplies All Permanent. Baseball, “basketball, softball, football outfits (except shoes). Bowling and billiard equipment (except clothing). do Do. Do.... do Do. Do.... Cabinets (for coin machines) do Do. Chrome, chrome-trimmed, or silver-plated carafes. do Do. 1 Replaces previous exemptions solely of stevedoring for war procurement or Allied Governments. 68 • Seventeenth Quarterly Report Table 5.—Releases from Price Control, January-March 1946—Con. Effective date Commodity Level of aetion Period of release Mar. 6,1946 Do Cocktail shakers Cowbells, bull rings, cattle leaders, and bull snaps. Electric lamp bulbs All do Permanent. Do. Do do Do- . Fencing, field hockey, and soccer outfits (except shoes). Fishing equipment (except clothing) .do .. Permanent. Do- ...do.— Do. Do Do - Do Gas masks, safety goggles, and respirators. Golf and skating equipment (except clothing). Hand finished high-lead-content crystal glassware. Ice bowls and buckets . - do .... do do Do. Do. Do. Do do ... . Do. Do . Ice hockey outfits (except shoes, unless sold with skates as part of an outfit). Industrial safety garments (containing metal and mineral insulation and reinforcement, or fabric or leather specially treated, but not garments made of natural, synthetic, or substitute rubber). Jug sets or coffee servers (for household or personal use). Kitchen items (selling to consumers for 30 cents or less). Musical instruments (except radios and phonographs). Navajo rugs do Do. Do ..do Do. Do do Do. Do do Do. Do do Do. Do— do Do. Do. Paddle, table, and lawn tennis equipment (except clothing). Phonograph records and albums do Do. Do . do Indefinite. Do Portable household and picnic-type ice chests. Stem and footed glassware — ___do. Permanent. Do do ... Indefinite. Do Tent supports _ _do Permanent. Do Unglazed flower pots .do Do. Do Vitrified or semivitrified china ; .do Indefinite. Do Volleyball equipment (excepfclo thing)— White table stock potatoes (except certi- .. do...i ■ Permanent. Mar. 7, 1946 Mar. 11,1946 Do . . _do Until Apr. 10.’ Permanent. fled and war-approved seed).* Bicycle rental do. Services on damaged commodities (sold by insurance or transportation firms, or resellers). Commercial vehicle parts (except tires, batteries, steel castings, and radios; for use as original equipment). Timothy seed, mineral mixed feed, clam and oyster shells. Contract carrier services (transportation by air and transport of certain exempted commodities). Woven ribbons, braids, and hair adornments thereof (narrow, nonelastic). Airline meals . . Supplier Do. Mar. 15,1946 Do Producer Indefinite. All Do.4 Mar. 18,1946 Mar. 20,1946 Mar. 25,1946 Supplier Permanent. All Indefinite. _do Do. Do Antenna systems do_ Do. Do Antenna tuner units (radio) do Do. Do Bicycle tire fluid do. Do. Do Canned carp do Permanent. Do Certain electronic tubes (except X-ray) _ _ Chestnut or Tennessee red cedar logs L . do Indefinite. Do do Do. Do Clam chowder (canned) do Permanent. Do Control panels (radio).. do_ Indefinite. Do Cutting compounds do_ Do. Do Demagnetizing equipment and protective covers and pads (for aircraft). Dollies, cranes, and jacking equipment (aircraft). Domestic dried shark fin —._.do Permanent. Do do Do. Do do Do. Do Electronic camera units (television) do Indefinite. Do Embalming fluids do Do. Do Engine and landing gear handling fixtures and equipment (aircraft). Flexible glass decorative materials do Permanent. Do do. Indefinite. Do Foundry fluxes . do Do. Do FPHA rentals to educational and elee- do_ Permanent. Do mosynary institutions. Frozen oyster stew do Do. Do Gelatin foil. 1- ...do 1 Do. 3 Extension of a suspension originally expiring Oct. 25, 1945. 4 Continuation of a 90-day suspension due to expire Mar. 15,1946. Appendix to Price Chapters • 69 Table 5.—Releases from Price Control, January—March 1946—Con Effective date Commodity Level of action Period of release Mar. 25.1946 Hosiery wash preservations and nylon All.... Indefinite. Do renovators. Imported lime juice do Permanent. Indefinite. Do Incense ' .. do _. Do Ink eradicaiors_ .do. Do. Do Isinglass od _ Do. Do Jewlery and eyeglass cleaners.. do Do. Do Laundry blueing .... do... Do. Do Master control consoles (radio) do. Do. Do Meat gravy (packed in tin or glass) do Permanent. Do Metal and wire drawing compounds do . . Indefinite. Permanent. Do Mobile training units (aircraft). do Do Modulator units (radio). __ do . . Indefinite. Do Montan wax and I. G. waxes do Do. Do Mussels (canned) do . Permanent. Do Nitre cake .. . .do Indefinite. Do. Do Nut cups and novelty hats _ do Do Paper party favors...' ..do Do. Do Pearl essence do Do. Do Pipe cleaning machinery do _ .- Do. Do Place cards do Do. Do. Do Post and rail (hurdle type) fencing of split or round locust. Prepared mustard -. do. Do do Permanent- Do Processed lobster and lobster products (except hermetically sealed). Radio frequency power units and amplifier units. Ramp and baggage and cargo handling equipment (aircraft). Refueling stands and ladders (aircraft).. do Do. Do do Indefinite. Permanent, Do ..do. . Do do _ Do. Do Rectifier power supply units (radio) ..I.. do Indefinite. Do Regulated power supply units (radio) do Do. Do Relay transmitters and receivers —_ do Do. Do Room deodorants do — Do. Do Rye hardtack do Permanent. Do. Do Service docks and personnel service stands and ladders (aircraft). Shoe patterns do Do do Indefinite Do Silica gel . do Do. Do Simulated snow . do Permanent. Do. Do Slings, cradles, and stands (aircraft).... do Do Smoked turkey do Do. Indefinite. Do Snapping mottoes.. . do ... Do Sweep units (radio) do . Do. Do Synchronizing generators (radio).. - do Do. Do Television film projectors (16 and 35 mm). Tow bars and adapters, wheel clocks, moorings, starting service and equipment (aircraft). Turkey foie gras and paté do Do. Do .. ..do ... Permanent Do do ... Do. Do Wallpaper cleaners... ..do Indefinite , Do , Window anti-fogging compounds. do Do. Mar. 27,1946 Bourbon whiskey white oak cooperage and components. Direct consumption sugar (imported by Commodity Credit Cooperation). Bulk and packaged domestic wine do Do. Do Importer ...... Reseller *. Permanent. Until May 31, 1946.5 Permanent. Mar. 29,1946 Do Frozen, canned, and fresh crabmeat All 5 Continuation of a suspension scheduled to expire Apr. 1, 1946. IQ • Seventeenth Quarterly Report • VII • TRANSPORTATION AND PUBLIC UTILITIES Pressures for increased transportation and public utility rates and charges showed no abatement during the first quarter of 1946. Under authority delegated to him by the Director of the Office of Economic Stabilization, the Administrator continued to intervene before regulatory bodies in proceedings, formal and informal, involving common carrier and public utility rate increase proposals.1 As a result of this intervention several highly inflationary increases were either withdrawn by the affected companies or denied in whole or in part by the commissions before which such matters were heard. TRANSPORTATION A total of 2,122 notices of proposed changes in rate schedules was filed with the Office by all types of common carriers during the 3 months ended March 31,1946, an increase of 19 percent over the total for the quarter ended December 31, 1945. As in previous quarters, the notices filed were for the most part to correct tariff errors, to cancel obsolete rates, or to announce the expiration of rates which had served special predetermined purposes. On 49 notices, however, the Office filed 28 individual protests, almost exclusively against proposed increases in motor freight rates, with the Interstate Commerce Commission and various of the State commissions. As a result of these protests, 13 proposed rate increases were suspended by the appropriate commissions, while 8 were sustained. Of the remainder, 3 protests were withdrawn by the Office on showing of later facts, 1 proposal was withdrawn by the carrier, 1 was postponed by the Commission. As the quarter ended, the results of 2 protests were still undetermined. Common Carrier Charges On intervention by the Office, the Interstate Commerce Commission postponed to September the effective date of an order on minimum rate stops via motor carriers operating throughout Middle Atlantic and Central territories.2 The order would have resulted in increases in 1 For rates on contract carriage, storage, terminal and accessorial services, and ice and icing services, the Office has direct control under the Emergency Price Control Act, as amended. * Minimum Class Restrictions Central and Eastern States (ICC Doc. No. MC-C-360) > see also Sixteenth Quarterly Report, p. 77. Transportation and Public Utilities • 71 some instances and reductions in others, through establishing a minimum rate on traffic for which the commodity rating was lower than the prescribed carrier minimum rate stop. Hearings were held before the Interstate Commerce Commission on increases in rates for transportation of household goods between points in the United States,3 but no decision had been issued by the close of the quarter. The Interstate Commerce Commission decided to investigate rates of motor carriers operating in New England, Central States and Middle Atlantic States territories, after the Office protested against new schedules filed with the Commission which would have increased rates by 4 to 20 percent.4 Despite protest by the Office, the Interstate Commerce Commission declined to suspend charges for refrigeration services, which were in addition to the line haul charges, filed in a new schedule by carriers operating in Middle West territory. The Office requested the Commission to deny a petition by various motor carrier bureaus to require rail carriers to increase less-than-carload rates to .the same level in effect for motor carriers, in a general complaint against the low level of railroad less-than-carload rates. The Office filed a petition with the Interstate Commerce Commission requesting postponement of the effective date of orders permitting higher rates for transportation of fat and oil products on the Atlanta, Birmingham and Coast Railroad Co.6 The changes ordered by the Commission appeared to affect adversely price control of these essential commodities. By the close of the quarter the Colorado Public Utilities Commission had not yet acted in the intervention of the Office against a petition of rail carriers operating in Colorado intrastate commerce to increase their rates and charges approximately 10 percent to the level in effect via motor carriers. Among other classes of rate matters in which the Office intervened during the quarter were two cases before the United States Maritime Commission. In one case, the Commission suspended increases in rates published by the Inter-Island Steamship Navigation Co., Ltd., applicable between points in the Hawaiian Islands. In the other case, the Commission suspended increases in rates applicable between Atlantic and Gulf ports, on the one hand, and Puerto Rico, on the other. The increase in freight rates requested in both cases would have re * Household Goods Rates and Charges over Aero Mayflower Van Lines (I. & S. Doc. No. M-2627 and ICC Doc. No. MC-C-517). 4 ICC Doc. Nos. MC-C-527, 528, and 517. 6 Mississippi Cottonseed Crushers Association v. Atlanta, Birmingham and Coast Railroad Co., et al. (ICC Doc. No. 27747), and in National Cottonseed Products Association, tnc. v. Atlanta, Birmingham and Coast Railroad Co., et al. (ICC Doc. No. 28443). 72 • Seventeenth Quarterly Report suited in increased prices and were not consonant with the price stabilization program.6 During the quarter the Office consulted with War Shipping Administration, which had filed petitions with the Interstate Commerce Commission seeking investigations of so-called water-compelled railway freight rates. The basic contention was that increased water carrier expenses tend to prevent resumption of private operations until competitive rail rates are increased. The Office did not oppose such action, although it intervened in the proceeding in which War Shipping Administration sought modification or revocation of orders permitting low railroad freight rates on citrus fruits from Florida to North Atlantic points. Contract Carriers and Services The most significant activity in the field of contract carriage was the assertion of control over rates for towboat services and household goods moving services in the New York City area. Towboat rates were frozen at the March 19,1946, level, to forestall any wild increases in rates in anticipation of advances in labor costs which could arise out of wage negotiations then pending.7 Local moving rates for household goods were frozen at the March 26, 1946, level, preventing drastic increases in rates which had been proposed to offset higher costs, particularly labor costs.8 As the quarter came to a close, studies were being rapidly completed to determine the basis for industrywide pricing actions with respect to these two important transportation services, at levels consistent with the price control and stabilization programs. Control over contract motor and water carriers, pick-up and delivery carriers, and the rental of motor vehicles was continued, being modified to the extent necessary to carry out the new wage-price policy. Studies as to the timing of decontrol in these fields were under way but not yet completed at the close of the quarter. A streamlined method for pricing new or resumed services performed by contract carriers became effective early in the quarter.® Experience with the regulation during the quarter showed it to be of great value. The simplicity of its requirements made possible effective new service pricing with no sacrifice of essential controls. In the truck rental field, fully maintained and bare base rentals were established nationally on a dollar-and-cent basis, providing for easy pricing of these rentals when made for construction and housing 6 U. S. Maritime Commission, Doc. No. 644 and No. 646. 7 Order 1, RSR 11; effective March 19,1946. 8 Rev. Order 2, RSR 11; effective March 26, 1946. 9 Amendment 7, SR 14—H; effective January 9, 1946. See Sixteenth Quarterly Report, p. 78. Transportation and Public Utilities • 73 projects. This extension of an area order previously only in effect in the Southwest lessened the workload for the Office of Price Administration and for lessees, lessors, and other Government agencies who pay for the use of this equipment.10 The simplified area method of pricing pick-up and delivery services by setting uniform ceilings in cities where increased rates were indicated by a showing of financial hardship was continued.11 A total of seven metropolitan centers were under area-price regulation at the end of March. The Office expected to extend area-pricing for pick-up and delivery services to several more centers during the next quarter. Storage and Terminal Charges The rates at which storage and terminal services were frozen in March 1942, had proved generally satisfactory, except for concerns specializing in the warehousing of single crops, such as apples and cotton. Because of a greatly increased business volume, most warehousemen had been able to absorb substantial increases in labor and other operative costs. The drastic decline in space occupancy after VJ-day, which had been predicted, moreover, had failed to materialize by the close of the first quarter of 1946; even increased wages to labor had not made the inroads on revenues that were earlier foreseen. Nonetheless, recognizing that many accessorial warehousing services do not return their costs, the Office set up a new procedure which permitted rapid and more or less automatic adjustment in the rates for so-called “low-end” services.12 Requests for adjustments under this provision must either be approved or disapproved by the Office within 30 days from the date of filing. PUBLIC UTILITIES During the first quarter of 1946, the Office received and processed 293 public utility rate increase notices. This represented a substantial increase above the number of notices received during the previous quarter, reflecting the trend toward higher fares in the local transportation field which had begun after VJ-day. Local Transportation Cases The Office participated in hearings before the Indiana Public Service Commission throughout the quarter concerning an increase in street railway fares sought by the Indianapolis Railway Co. Three days 10 Order 3, MPR 571; effective March 7, 1946. See Sixteenth Quarterly Report, p. 78. 11 See Sixteenth Quarterly Report, p. 78. 12 Amendment 2, MPR 586; effective March 27, 1946; see Sixteenth Quarterly Report, PP. 79-80. 74 • Seventeenth Quarterly Report after the close of the first hearing on January 7, the commission ordered cancellation of the company’s new fares of 6 tokens for 55 cents, instituted without notice to the Office of Price Administration,13 and the reinstatement of the former rate of 4 tokens for a quarter. The company thereupon petitioned the commission to establish temporary fares, hearings as to which were held March 25 and 26. Hearings were also held during the quarter in the matter of the company’s permanent rates. Neither case had been concluded at the end of the quarter. The municipally owned San Francisco Street Railway during the quarter sought to increase its fares from 7 to 10 cents, with 3 tokens for a quarter, which would have meant an annual revenue increase of approximately 3^ million dollars. The Office participated in hearings before the San Francisco Public Utility Commission in opposition to the increase. A suit to enjoin was also filed in the United States District Court in San Francisco, which issued a preliminary injunction against the contemplated fare increase on the grounds that the Office had not received consent to the timely intervention required by the Stabilization Act of 1942, and that the Office had not been given an opportunity to intervene before the municipal regulatory body in advance of the fare increase order. At the same time, the judge who issued the preliminary injunction declared that municipally owned utilities are within the purview of the notice and intervention provisions of the Stabilization Act. The city continued its efforts to increase the fares. . • Representatives of the Office appeared at a hearing before the mayor of the city of Detroit and members of the board of street railway commissioners, in opposition to an increase in street railway fares of the municipally owned Detroit Street Railway System. Subsequently, in a written report, the Office pointed out that the proposed rates were unduly high; that the amount of the increase, ranging in excess of 7^ millioh dollars annually, and possibly up to 15 million dollars, was far greater than the revenue needs of the system; and that the increase which the city had effected January 1, 1946, was not warranted and would greatly burden and unnecessarily add to the cost of living of hundreds of thousands of people in the Detroit area. Oral argument was also heard on February 18 and 19,1946, before the Wayne County Circuit Court before which a suit had been instituted against the fare increase and in which the Office was seeking permission to intervene. While the petition for intervention was denied, the court entered an order permitting participation by OP A counsel as amicus curiae. 18 The injunction previously sought against the company for failing to notify the Office of the temporary fare increase was denied by the district court. Upon appeal by the Office to the Seventh Circuit Court of Appeals, that court refused to order the district court to grant an injunction, although the contention of the Office that the increase was a general one and that it had had no opportunity for timely intervention, was substantiated. Transportation and Public Utilities • 75 The Office was represented before the Interstate Commerce Commission and the New Jersey Board of Public Utility Commissioners in the matter of the $300,000 increase in commutation fares sought by the Central Railroad Co. of New Jersey. At hearings relating to the requested increases, the Office contended that the quality of service offered by the company did not warrant the higher fares, and that the company had not adequately proved its case on financial and operating grounds. Representatives of the Office appeared before the New York Public Service Commission during the quarter in opposition to the proposed increase in fares from 5 to 10 cents on some of the routes of the Club Transportation Co. which serves the city of Yonkers, N. Y. This proposed increase would permit the company approximately $90,000 per year in additional revenues. After several hearings, the commission issued an order establishing a temporary fare of 4 tokens for 30 cents and a 10-cent cash fare, pending the conclusion of investigation and hearing in this matter. In the matter of the $200,000 per year increase in local bus fares sought by the Cincinnati, Newport & Covington Railway Co. for service between points in northern Kentucky and Cincinnati, the company presented its case before an examiner of the Interstate Commerce Commission at Cincinnati, subsequent to which representatives of the Office cross-examined company witnesses.14 Briefs were filed at the end of the quarter and a decision of the Interstate Commerce Commission is awaited. Other Utility Rate Cases The Federal Power Commission issued an order in the matter of the North Penn & Allegheny Gas Co.’s proposed increase in interstate wholesale natural gas rates.15 While the Commission by its order, substantially approved the rates proposed by the company, it found that a 6-percent return was fair and reasonable. This rate of return constituted a reduction below the 6%-percent figure which the Commission had previously recognized as reasonable. Hearings continued before the Federal Power Commission in the investigation of wholesale natural gas rates of the Pittsburgh & West Virginia Gas Co. and Kentucky-West Virginia Gas Co., in which this Office actively participated.16 These companies are the source of the major portion of the gas supply of Equitable Gas Co. In the Equitable Gas case, in which the company had appealed to the Pennsylvania Superior Court after denial of its proposed rate increase by the Pennsylvania Public Utility Commission, the court granted the peti 14 See Sixteenth Quarterly Report, p. 82. 18 See Thirteenth Quarterly Report, p. 33. 14 See Sixteenth Quarterly Report, p. 80. 76 • Seventeenth Quarterly Report tion of the Office for intervention, and the matter was scheduled to come before the court for argument during the autumn of 1946. The Kentucky Public Service Commission rendered an opinion in the Lexington Telephone Co. case, on active intervention by the Office, denying the company’s proposed increase in telephone rates amounting to approximately $120,000 per year. The company had proposed to convert its exchange from manual to automatic rotary dial equipment, for which the commission was asked to fix increased rates, although the conversion could not be completed for 2 years. The New York Public Service Commission issued an order in the matter of a $37,000 increase in water rates sought by the Sea Cliff Water Co. in which it denied a major portion of the increase which had been opposed by the Office. In regard to a $550,000 annual increase in stockyard rates sought by the Omaha Union Stockyard Co., an answer to the company’s petition was filed by the Office requesting that the Department of Agriculture deny the increase. An agreement was arrived at in which the company was permitted to institute rates reflecting an increase of approximately one-third of those requested. Rent Control Program • 77 • VIII • RENT CONTROL PROGRAM Kent control was extended to 23 new areas and removed from 10 areas or portions of areas during the first quarter of 1946. In the 10 areas where decontrol actions occurred, housing shortages had virtually disappeared following the sharp reduction or cessation of military activity. In five of these cases, however, rent increases were reported after decontrol, and the Office instituted investigations to determine whether control should be reestablished. Extension of rent control to the 23 new areas was necessary as a curb on inflationary rent movements and evictions that occurred as postwar housing shortages developed in parts of the country which had been relatively unaffected by war activities. In seven of these areas, college educational programs for veterans were an important factor contributing to the housing shortage. In nearly all of them, the return of veterans—many recently married—and postwar expansion of a variety of industrial activities greatly increased the demand for rental housing. Federal rent regulations were in effect as of March 31,1946, in 497 defense-rental areas including Alaska and Puerto Rico. The 495 areas in the continental United States contained 71.9 percent of the total 1940 population and 82.7 percent of the 1940 nonfarm rental dwellings. AMENDMENTS AND INTERPRETATIONS The housing regulation and the procedural regulations were amended during the quarter to permit a landlord who fails to register within the required time and is directed to refund to the tenant the difference between the rent established by the area rent director’s order and the amount charged when the premises were first rented, to stay his obligation to refund pending review.1 Under the amendment, stay is obtainable by depositing the amount of the refund with the regional budget and finance officer of the Office of Price Administration, within 30 days from the date of entry of the order and filing an application for review or protest. Further stays may be obtained fl the case is carried to the National Office, the Emergency Court of ■Appeals, or the Supreme Court. The funds deposited are distributed 1 Amendment 82, Rent Regulation for Housing; effective March 9, 1946. 699237—46- -6 78 • Seventeenth Quarterly Report in accordance with the final order entered in the case. Similarly the landlord may obtain a stay of refund ordered because of his failure to report a decrease in services, furniture, furnishings, or equipment. Formerly, the landlord was required to make refund to the tenant within 30 days after entry of the area rent director’s order. The change permits a landlord to obtain the benefit, for the refund period, of any modification of the original order. The housing and the hotel and rooming house regulations were amended to exempt during the period June 1 through September 30, 1946, summer seasonal rental units that were exempt in the summer of 1945.2 The provisions for resort housing exemptions for the summer of 1946 were made similar to those for 1945, except that landlords were no longer required to report the accommodations to the area rent office. The summer exemption of housing accommodations in multiple-unit structures in the city of Long Beach, N. Y., was revoked. Because of a recent fire, a large number of permanent residents of Long Beach were made homeless, and the resulting acute shortage of vacant nonseasonal housing made the revocation necessary. This action was taken at the urgent recommendation of the Long Beach City Manager and City Council and the New York State Housing Commissioner. The eviction section of the housing regulation was amended to permit eviction when a tenant refuses to renew a lease for the same term as the expiring lease.3 Previously, a tenant could be required to sign a renewal lease for a term no longer than 1 year. A further change in the eviction section was made by providing for exemption from the eviction provisions of temporary or movable housing accommodations under the jurisdiction of the National Housing Agency which the National Housing Administrator places in a terminated status for relocation in another area in accordance with title V of the Lanham Act. The purpose of this exemption was to facilitate efforts of the National Housing Agency to move housing no longer needed in one locality to points of critical housing shortage. The housing regulation was also amended to provide that the landlord may elect to have the maximum rent for accommodations constructed with priority rating and first occupied after October 15, 1945, fixed at the rent established by the National Housing Administrator or under the generally applicable rules of the Office of Price Administration.4 This action was taken upon the revocation on October 15, 1945, of WPB Conservation Order L-41, which had established priority control over the building industry. Prior to the amendment, 2 Amendment 79, Rent Regulation for Housing ; effective February 15, 1946 ; Amendment 76 ; Rent Regulation for Hotels and Rooming Houses; effective March 15, 1946. 3 Amendment 80, Rent Regulation for Housing ; effective March 1, 1946. * Ibid. Rent Control Program • 79 the regulation in effect delegated authority to the National Housing Administrator to approve maximum rents for newly constructed private war housing. A further amendment to the housing regulation provided that when rents, exempt from control by reason of being fixed by the War or Navy Department National Kent Schedule, cease to be governed by that schedule, the premises, for the purpose of determination of the maximum rents, are to be considered as not rented during the period they were operated under the schedule, and the maximum rent is to be determined under the appropriate section of the regulation.5 Under another amendment, registration was required of housing constructed and owned by a Federal or State agency within 30 days after its sale to a private person, and the notice requirements applicable to other privately owned rental property was made applicable to such housing after sale.6 In the opinion of the Office the reasons for excepting this type of property from the general registration and notice provisions of the regulation are no longer present when it becomes privately owned and operated. The change in the regulation was necessary for uniformity and consistency in operation and control. During the period covered by this report, an official interpretation was issued setting forth the criteria for determining whether an eviction certificate should be granted when possession is sought for the purpose of demolishing or substantially altering or remodeling housing accommodations. The official interpretations concerning evictions for a landlord’s occupancy of accommodations owned by him prior to the effective date of the regulation were revised to specify that a nonveteran landlord seeking eviction through local remedies without obtaining an eviction certificate must establish an immediate compelling necessity for possession. AREA OFFICE OPERATIONS Area offices reported a net increase of 215,110 housing registrations during the first 3 months of 1946, bringing the number of housing registrations on file to 15,360,558. During the same period there was a net increase of 11,233 hotel and rooming house registrations covering 66,824 rooms or dwelling units, bringing the number of hotel and rooming house registrations to 504,512, covering 3,935,741 rooms. Over 75 percent of the housing registrations received during the quarter were for accommodations rented for the first time after the maximum rent date, which brought the number of first-rent housing registrations to 3,178,536. Likewise, 86 percent of the hotel and rooming house registrations filed during the quarter were for units rented for the first time • Ibid. •Ibid. 80 • Seventeenth Quarterly Report since the maximum rent date, bringing the number of first-rent hotel rooms or rental units to 943,426. Landlords may secure an upward adjustment of rents under certain provisions of the regulation. A total of 72,603 landlords’ petitions were processed during the quarter; 49,490 increases in rent were authorized, while 40,110 actions were pending decision at the end of March. Since the inception of rent control, 1,340,955 landlords’ petitions had been disposed of, and 763,193 upward adjustments granted. Violations of the regulations are generally revealed by tenant complaints and administrative operations in the area offices. During the quarter 121,609 compliance actions were processed and compliance was obtained in 80,740 of these actions. At the end of March, 86,993 docketed compliance actions were pending settlement or adjustment. The area rent director may, on his own initiative, reduce maximum rents for housing accommodations rented for the first time after the maximum rent date to the rent for comparable accommodations in the area on the maximum rent date. The rent director may also require restoration of services or order rent reductions commensurate with failure to maintain services and equipment. During the quarter 129,-828 director’s initiative actions were disposed of, and 74^828 adjustments and orders were entered. There were 106,265 docketed director’s initiative actions pending decision at the end of March. 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. As of April 1, 1946, landlords had filed since the institution of Federal rent control a cumulative total of 34,401 applications with regional offices for review of orders issued by area rent directors. At the end of March 1946, disposal had been made of 32,114, and 2,287 cases were Still pending decision. In addition, these landlords had applied to the National Administrator for further administrative review in a total of 1,053 protests. Disposal of these cases resulted in the denial of 484, 14 of which were later reopened. Grants in whole or in part were made in 118 cases, 1 was remanded to the region, and 198 others were dismissed or withdrawn. At the end of March, 266 protests were still pending before the Administrator. Requests for consideration by a board or review were received in 54 cases during the quarter. Hearings were held by boards of review and subcommittees in 27 cases, and recommendations for the disposition of the protest were submitted to the Administrator in 32 cases. During the 3 months ending March 30, 1946, landlords filed no Rent Control Program • 81 protests against maximum rent regulations. Since the inception of rent control a total of 253 such protests had been filed, 42 of which were directed against the hotel regulation, and the remaining 211 involved the housing regulations. Protests had been received from a total of 64 areas. Five protests were pending before the Administrator at the end of the quarter. A cumulative total of 169 protests had been denied, 53 dismissed, and 26 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. A summary of rent cases acted upon by this court may be found in the following chapter.7 EVICTIONS A pressing problem before the Office during the quarter arose out of the alarming increase in the number of evictions throughout the country in the midst of an already inadequate housing market. In the month of March alone, there were 71,757 notices of eviction and 61,567 petitions for certificates of eviction received by area offices.8 The March total of eviction notices and petitions for eviction certificates represented an unprecedented increase of about 50 percent over the same month of 1945. Approximately one-half of all evictions result from nonpayment of rent, the commission of a nuisance, and similar faults on the part of the tenant. The other half, however, result from no overt act or fault of the tenant. At the March eviction rate, 1 out of every 20 tenants, or a total of about 800,000 families in housing under rent control could expect to face the threat of eviction during the ensuing 12 months through no fault of their own. The fact which makes this problem so acute is that a large number of evictions are brought about by recent purchases of dwelling units for self-occupancy. Each time such action takes place, one more dwelling unit is removed from the rental market, and the dispossessed tenants are forced to find rental housing into which they can move m a rental range within their financial ability to pay. Too often the obvious alternatives are to be without shelter or to purchase other rental housing, which in turn results in the dispossession of an existing tenant and a further reduction in the available supply of rental housing. Under these conditions a premium is placed on evasive 7 See pp. 90-92. 8 In some cases, the rent regulations permit landlords who wish to evict tenants to go directly into the local courts to seek such evictions after complying with certain notice requirements. In certain other cases, landlords must petition the area rent office for a certificate before going into court to seek an eviction. During the past 6 months almost 90 percent of petitions for certificates of evictions have been granted by area offices. 82 • Seventeenth Quarterly Report sales contracts in which the tenant agrees to purchase the house he occupies under monthly payments which are equivalent to rent in excess of existing ceilings, and on collusive agreements involving payment of an above-ceiling rent in order to retain possession of the premises. During the period of widespread dislocation following the cancellation of war contracts and the return of millions of veterans from service in the armed forces, the importance of security of tenure and of an adequate period in which to obtain other rental premises within the means of the dispossessed tenant are even more important than during the war. To meet this situation, the rent regulation for housing was amended in September 1945 to extend the waiting period before a purchaser may evict a tenant of the seller for self-occupancy from 3 to 6 months, unless the area rent director in the particular area determines that conditions in his area, on the basis of available evidence, indicate that the 3 months’ period is sufficient for the maintenance of stable rents and to prevent circumvention and evasion. The waiver of all or part of the applicable waiting period for veterans and in cases of special hardship, adds further complications to this problem. Despite the extension of the applicable waiting period from 3 to 6 months, however, the number of evictions for occupancy by a new purchaser increased 67.7 percent during the first quarter of 1946 over the same period of 1945. During the 6-month period October 1945-March 1946 alone, the number of such evictions more than doubled, moving from 14,563 in October to 20,865 in January and 29,686 in March. Since there was no indication at the close of the quarter that the rate of evictions would level off in the near future, the Office was weighing various measures which might be necessary to cope with the problem, such as the lengthening of the waiting period before a landlord may begin eviction proceedings in the local courts. Emergency Court of Appeals • 83 • IX • EMERGENCY COURT OF APPEALS Twenty-nine complaints were filed with the Emergency Court of Appeals1 during the first quarter of 1946, 18 affecting price control and 11, rent control. From the effective date of the Price Control Act through March 1946, a total of 318 complaints had been filed, of which 227 involved price regulations or orders, and 91, rent control. By the end of March 1946, 252 cases had been disposed of by decisions of the court or by agreement of the parties; 29 decisions were adverse in whole or in part to the Administrator. PRICE CONTROL CASES The court disposed of 11 cases affecting maximum price regulations or orders during the quarter, 8 of them favorably to the Office. One of the cases involved some aspects of the validity of the maximum average price (MAP) regulation for the apparel industry. Two additional price cases were dismissed by agreement of the complainants and the Office. The more important opinions of the court are described in the following pages. White Trimming House, Inc. Complainant, a manufacturer of women’s neckwear for sale exclusively to manufacturers of dresses, filed a protest, and upon its denial a complaint in the Emergency Court of Appeals, objecting that its inclusion within the maximum average price controls of Supplementary Order 108 would not achieve the purposes for which that order was issued.2 Its objections rested mainly upon the fact that it manufactured neckwear solely upon the order of, and at prices specified by, dress manufacturers who were themselves subject to maximum average price controls. The complainant argued from this that subjecting it to these controls was unnecessary and also made it impossible to fill certain orders of its customers, thus imposing unnecessary hardship. After considering Supplementary Order 108 together with other parts of the broad Government program designed to bring down in ■ 1 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 regulations or orders have been denied by the Administrator or who have been granted leave by district courts to file complaints in enforcement proceedings. 2 White Trimming Houses, Inc. v. Porter, 154 F (2d) 113 (1946). 84 • Seventeenth Quarterly Report flated clothing prices, the court took note of the need to control the cost of components if the price of the ultimate product was to be effectively controlled, and concluded that in order to achieve a lower level of average prices for dresses it was desirable and reasonable to bring down the level of average prices for constituent elements, such as those manufactured by the complainant. George C. Collins, Jr. On the dissolution of a Kentucky distilling corporation, stockholders of the corporation received negotiable warehouse receipts for specified barrels of whiskey which they sold. Thereafter an enforcement action was brought against them in a Federal district court, charging that whiskey had thereby been sold at prices in excess of the ceiling. The stockholders obtained leave from the district court to institute proceedings in the Emergency Court of Appeals, challenging the validity of the price regulations which they were charged with having violated.3 The stockholders also claimed in the Emergency Court that the price regulations did not cover sales of negotiable warehouse receipts. The court refused to pass on this question, on the ground that this matter was within the jurisdiction of the district court, and pointed out that the district court had in fact rejected this contention of the stockholders. The Emergency Court, however, considered the objections to the validity of the price regulations and found them to be without merit. It held that a sale of negotiable warehouse receipts for specified barrels of whiskey constituted the sale of a “commodity” within the meaning of the Emergency Price Control Act. In addition, the court rejected the contention that the maximum price regulations conflicted with the program of the State of Kentucky for the regulation of alcoholic beverages, pointing to enactments of the State legislature recognizing the national price control program and to the fact that the State fixed minimum rather than maximum prices. The court also held there was no merit to the contention that the regulations were so vague and indefinite that the stockholders could not with certainty have determined a maximum price. Conklin Pen Co. The Emergency Court of Appeals in this case considered a com-paint of the Conklin Pen Co. brought after the Administrator had dismissed its protest against Maximum Price Regulation 188 and an order issued thereunder establishing prices for its sales of fountain pens and mechanical pencils.4 The order expressly stated that it 3 Collins v. Bowles, 152 F (2d) 764 (1946). 4 Conklin Pen Company v. Bowles, 152 F. 2d 764 (1946). Emergency Court of Appeals • 85 covered all sales since the commodities became subject to Maximum Price Regulation 188. The protestant had argued that he was not a “manufacturer” as defined in the regulation; that fountain pens were not covered by the regulation; that the Administrator did not have authority under the regulation to establish prices “retroactively”; and that the regulation was invalid for indefiniteness. The Administrator dismissed the protest, stating that whether protestant was a manufacturer and whether fountain pens were covered by the regulation were purely questions of interpretation, which were not the proper subject for protest, but which, on the contrary, could be decided by an enforcement court. In a pending action against this company, the United States District Court in Chicago had already decided that fountain pens were not covered by the regulation, and the Administrator filed a notice of appeal from this ruling, at the same time proceeding to trial on an alternative count alleging violations of the General Maximum Price Regulation. In dismissing the protest, the Administrator further stated that Maximum Price Regulation 564—Fountain Pens and Mechanical Pencils—which had been issued prior to the filing of the protest, had corrected any ambiguity or indefiniteness there might have been in Maximum Price Regulation 188, and therefore the protest was dis-missible under the ruling in Thomas Paper Stock Co. et al. v. Bowles* Maximum Price Regulation 564 provided: “All provisions of Maximum Price Regulation 188 shall continue to apply to manufacturers of fountain pens and mechanical pencils * * *. Manufacturers must therefore continue to determine their maximum prices under Maximum Price Regulation 188.” In the opinion accompanying the order denying the protest, the Administrator had further stated that since no contention was raised concerning the propriety of the prices established within the provisions of Maximum Price Regulation 188, no objection to the “retroactive” feature of the pricing order could properly be raised. In the Administrator’s brief in the Emergency Court of Appeals, however, counsel had stated that they felt the Administrator’s position on this last point had been wrong and that the Administrator should have considered the question of his right to issue such retroactive orders under the regulation. It was argued, on the merits, that such orders merely served to fill out the regulation, that is, to specify the “in-line” price which the regulation itself prescribed and that by its very nature such an order had to apply to all sales under the regulation. The position taken was, in effect, that such orders were conditional, establishing the proper maximum prices under the regulation if the regulation ‘ 148 F. 2d 831; see Sixteenth Quarterly Report, p. 89. 86 • Seventeenth Quarterly Report covered the sales and for whatever period of time the sales were covered. The court held that, except in the case of a direct complaint filed pursuant to section 204 (e) (1) of the Price Control Act, the Emergency Court of Appeals could and would pass on questions of coverage when a complainant contended that the regulation as interpreted to apply to him was invalid. The court then proceeded to rule that complainant’s sales of fountain pens were not subject to the regulation, basing this conclusion on the combination of the definition of “manufacturer” as “the person who makes the first sale of an article listed in appendix A * * * of this regulation after the article has been completed to the point indicated by the terminology of the appendix” and the fact that fountain pens were not “listed” in the appendix. In this case there was also some question as to whether complainant made the first sale, or was a distributor, even assuming that fountain pens were covered by the regulation. The court ruled that Maximum Price Regulation 564 had not removed or corrected any ambiguity because it did not purport to amend Maximum Price Regulation 188. The court said that Maximum Price Regulation 188 and the specific order involved in this case “remain applicable,to manufacturers of fountain pens and mechanical pencils only if and to the extent that they may fairly be construed as thus applicable.” The court further rejected the Administrator’s argument that the order in this case was conditional, stating that the order clearly proceeded on the assumption that fountain pens were covered by the regulation and had beén for some time prior to the issuance of the order. Ruling that the complainant was not subject to the regulation, the court thus set aside the individual price-determining order. Pacific Gas Corp. In the Pacific Gas case6 the court upheld the validity of an amendment to Maximum Price Regulation 88, which established uniform dol-lar-and-cent prices for refiners, terminal operators, marketers, and other vendors of natural gasoline selling to customers in Petroleum Administrator for War District 1. The complainant, a marketer selling in that district, contended that the establishment of identical maximum prices for marketers and for refiners (which are marketers’ customary source of supply) failed to assure it a reasonable profit on its sales. The court rejected the complainant’s position on the ground that the record in the case showed that the Administrator merely continued the pattern of the price structure he found in a representative • Pacific Gas Corporation v. Bowles, 153 F. (2d) 453, (1946). Emergency Court of Appeals • 87 peacetime period, under which marketers’ margins were normally realized through purchases below the refiners’ selling prices to other purchasers. Complainant also charged that the amendment was unlawfully discriminatory because “eligible marketers” in districts other than PAW District 1 were authorized to add specified differentials to the uniform refiners’ maximum prices whereas marketers in PAW District 1 were not. The court held that the Administrator’s action was amply supported by the record. The authorized additions were designed to afford necessary relief to eligible marketers who normally handled petroleum products in PAW Districts 2, 3, and 4. The situation of marketers in District 1 was distinguished from that of “eligible marketers” elsewhere in the country by the fact that “eligible marketers” as defined by the regulation did not customarily do business, and did not form a part of the distribution system of the industry in District 1, prior to price control. The court also sustained the validity of an order fixing individual maximum prices for complainant’s sales of natural gasoline at specified delivery points prior to the establishment of the uniform dollar-and-cent ceiling prices in the regulation. Complainant’s primary objection to the propriety of the order was based on the claim that its maximum prices were determinable under an automatic pricing provision of the regulation, by reference to the maximum prices of a “seller of the same class.” The court pointed out that the evidence in the record did not establish that the seller whose maximum prices complainant adopted was, in fact, a seller of the same class as complainant, or that the adopted prices were legally established maximum prices under the regulation. Booth Fisheries Corporation Maximum Price Regulation 579' fixed ceiling prices for fresh and frozen fish at different levels for processors, primary distributors, and wholesalers. The highest level of prices could be charged only by wholesalers who buy from primary distributors or inland warehouses for resale to retailers and purveyors of meats. Booth Fisheries Corp., complainant in this case,7 is engaged in an integrated business at all levels of distribution. Since the company normally processes more than 20 percent of the frozen fish of any species it sells, it was treated under the regulation as a processor even with regard to frozen fish bought from independent sources. Consequently none of its branches was permitted to sell at the highest price level available to wholesalers. The company therefore charged discrimination in that it had to sell Booth Fisheries Corp. v. Bowles, 153 F. (2d) 449, (1946). 88 • Seventeenth Quarterly Report frozen fish at lower prices than an independent inland wholesaler, although both performed the same distributive function. The Administrator urged that the regulation provide different price levels for each distinguishable class of sellers, allowing a fair margin over cost of acquisition, and that to permit a wholesale branch of an integrated seller like Booth to sell at wholesaler’s prices whenever it obtained its fish indirectly through some other inland storage warehouse would be a strong incentive to evading the regulation through such indirect routing. The court, however, held that the regulation was unreasonably discriminatory against complainant’s inland branch establishments since those establishments perform the same functions as independent inland wholesalers, particularly in view of the fact that there was no indication of these wholesale branches having historically sold at lower prices than their independent competitors. Following the decision of the court, the Administrator amended the fish regulation to conform with the court’s opinion.8 Joseph A. Gordon This proceeding presented the question whether it is violative of due process of law to require a food retailer sharing a market with noncompetitive food retailers to determine his store classification on the basis of their combined annual gross sales.9 Complainant operates the grocery and liquor department in a food market in which other food retailers operate. The maximum price regulations under attack required the complainant to determine his store group on the basis of the annual gross sales of all the food retailers in the same establishment. The complainant, however, contended that the regulations did not provide a method whereby he could ascertain sales of the other retailers. In dismissing the complaint, the court held that by the Federal Declaratory Judgments Act, the Congress had provided a speedy and inexpensive procedure whereby parties engaged in a reasonable dispute as to the application and interpretation of an administrative order may obtain a decision by a court, and that complainant thus had an efficient means of obtaining a determination as to his status. Bayuk Cigars, Inc. Revised Maximum Price Regulation 494 established maximum prices for the sale of the 1944 pack of Pennsylvania cigar tobacco. In addition to fixing a price for green tobacco, the regulation fixed as the 8 Amendment 17, MPR 579 ; effective March 15, 1946. 8 Joseph A. Gordon v. Bowles, 153 F. (2d) 614 (1946) ; petition for rehearing denied March 26, 1946; petition for certiorari denied by the Supreme Court June 3, 1946. Emergency Court of Appeals • 89 maximum price for packed tobacco the price for green tobacco plus the cost of packing plus a markup of 18 percent. As interpreted by the Administrator, the regulation prevented manufacturers from paying more than the green price to growers who custom-packed the tobacco for them. Bayuk Cigars, Inc., the largest user of Pennsylvania tobacco, protested the regulation as interpreted on various grounds, contending particularly that growers were refusing to sell green tobacco, but were having it custom packed to secure a higher return, and that since Bayuk could not use in its cigars tobacco packed by others, it was actually prevented from obtaining its normal supply of tobacco. Upon the Administrator’s denial of protest, pursuant to the recommendation of a Board of Review, Bayuk filed its complaint with the court.10 The court set aside the regulation as having unreasonably discriminated against Bayuk, one judge dissenting. The majority of the court held that the regulation discriminated against Bayuk as a packer, and that the discrimination was unreasonable because the regulation as interpreted failed to achieve the declared purpose of the Office of Price Administration to prevent unpacked tobacco from being forced off the market. Safeway Stores The adequacy of maximum prices available to integrated retail chain stores for fresh fruits and vegetables was challenged in a proceeding instituted by Safeway Stores.11 In dismissing this complaint, the court held that the principal contention made by complainant was barred under established principles of res judicata and that the remaining objection was without merit. The principal objection advanced by complainant was that the regulation discriminated against large integrated chains because other regulations permitted small independent middlemen to charge higher markups for the distributive functions performed by them before commodities reach retail outlets. Maximum Price Regulation 422, the regulation applicable to retail food chain stores, provides a special allowance of percent of cost for chains which purchase fresh fruits and vegetables in carlot or trucklot quantities from growers, country shippers, and other primary sellers. This regulation also contains other special allowances covering the grading, sizing, and packing of these commodities by chain stores, and the markups established by the regulation cover warehousing as well as retailing. Maximum Price Regulations 271 and 426 provide specific markups for the various types of independent middlemen who handle fresh fruits and vegetables between the grower and the retail store. The Administrator s-------- 10 Baywfc Cigars, Incorporated v. Porter, No. 267, decided March 20, 1946. u Safeway Stores, Inc. v. Porter, No. 281, decided March 29, 1946. 90 • Seventeenth Quarterly Report took the position that complainant made the same discrimination argument in an earlier proceeding,12 which the court had resolved against it. The court agreed that the objections raised an issue which had previously been decided, and consequently held that it could not be relitigated. Complainant’s second objection to Maximum Price Regulation 422 was that the 1^ percent carlot buying allowance was inadequate, although no evidence was offered on this point. This allowance was adopted tentatively by the Administrator after a preliminary study, but was left unchanged when integrated chains failed to offer any data showing its insufficiency. In this proceeding complainant argued that it was up to the Administrator to demonstrate the validity of the allowance. In rejecting this contention, the court’s opinion stated that the regulation must be presumed to be valid until complainant established otherwise by competent evidence. RENT CONTROL CASES During the quarter, the court disposed of three cases involving rent regulations or orders, remanding two of them to the Administrator for further proceedings. Jack Parker Tenants in an apartment house in New York City filed a protest against the Administrator’s order issuing to the landlords certificates which authorized them to pursue their remedies at local law for eviction of the tenants. The landlords claimed to be purchasers of stock in a cooperative corporation and entitled by virtue of their stock ownership to proprietary leases of the apartments. The rent regulation for housing prohibits landlords from evicting tenants except under stated circumstances, requiring in most cases prior application to the Office of Price Administration. The issuance of a certificate does not necessarily result in eviction, but merely removes the restraint in the regulation which prohibits landlords from asserting their rights under local law. The regulation specified certain conditions which had to be satisfied before owners of stock in a cooperative could proceed to such eviction. The tenants in their protest claimed that those conditions had not been satisfied. The Administrator did not consider the protest on the merits, but dismissed it on the ground that the tenants were not authorized by law to file protests, since they were not “subject to” the orders granting the certificates as required by section 203 (a) of the Price Control Act. The Administrator had construed that phrase as applying only M Safeway Stores, Inc. v. Bowles, 145 F. (2d) 836 (1944), cert, denied 324 U. S. 847 (1945). See Twelfth Quarterly Report, pp. 42-43. Emergency Court of Appeals • 91 to persons who were required to do something or prohibited from doing something by the regulation or order in question. The tenants filed a complaint against the Administrator’s order dismissing their protest. On motion of the Administrator, the complaint was dismissed,13 one judge dissenting. The court held that neither the statute nor the regulation conferred upon tenants a right to remain in possession, but that the restrictions on eviction were imposed by the Administrator for the purpose of preventing evasion of the prescribed maximum rents. Accordingly, the court concluded that the tenants were not deprived of property without due process of law in being denied the right to administrative and judicial review of the Administrator’s action. Kuskin & Rotberg, Inc. The record in this case14 showed that the landlord had simultaneously negotiated with three related families for the rental of three separate accommodations by three separate leases; that distinctly low rentals were solicited by the lessees of two of the accommodations, in consideration of their securing another lessee for the third large apartment; and that such low rentals were agreed to by the landlord on condition that if the large apartment were vacated, all other apartments should be similarly vacated. Complainant’s protest against not being permitted to raise the rents on the two low-rental apartments was denied by the Administrator. The court held that such circumstances are abnormal and negate normal bargaining and that they constitute “peculiar circumstances” within the contemplation of section 2 (c) of the Emergency Price Control Act of 1942, as amended, and section 5 (a) (11) of the rent regulation. Accordingly, the Administrator’s order denying the protest was set aside, and the case remanded to the Administrator for further proceedings consistent with the court’s opinion.16 R. E. Rappeport & Sons This decision16 dealt with adjustment orders issued pursuant to the Miami rent regulation for housing, which differs considerably from the rent regulations in effect in virtually all other defense-rental areas. In this case, seasonal maximum rents for complainants’ apartment hotel units had been established by the rent director on the basis of 13 Parker et al. n. Porter, No. 271, decided March 13, 1946. A petition for certiorari was granted by the Supreme Court May 13, 1946. 14 Kuskin & Rotberg, Inc. v. Porter, No. 262, decided February 28,1946. 15 In accordance with the opinion of the court, an order was issued, reopening the protest docket, for further proceedings, and, complying with request of protestant, an order was issued granting it until May 11,1946, to introduce further evidence. ,e R. E. Rappeport & Sons v. Bowles, No. 250, decided February 4, 1946. 92 • Seventeenth Quarterly Report the rent generally prevailing in the Miami area for comparable housing accommodations during the year ending August 31, 1943, as provided for in the regulation. Complainant’s protest objected to this determination, and sought higher rentals. In denying the protect the Administrator followed recommendations by experts, rejecting data for the only comparable accommodations which had been in operation on the ocean front in Miami Beach during the base year on the ground that the maximum rents for these accommodations were not subject to normal competition and were, as a result, substantially higher than more precisely comparable units. The Administrator’s order denying complainants’ protest was predicated upon data for comparable units situated inland rather than on the ocean front, as were complainants’. In setting aside the order denying the protest, the court pointed out that since it was agreed that the units for which data had been rejected by the Administrator were more closely comparable to complainants’ units, failure to consider such data was erroneous; and the case was remanded to the Administrator with directions to consider such data and any other pertinent evidence available bearing upon comparable units in the area, including those units which had not been previously considered.17 w By order dated March 4, 1946, the protest proceeding was reopened and data for the units which the court found the Administrator had previously failed to consider were incorporated into the record with an opportunity to protestants to present further evidence. Such evidence was filed on April 5,1946. Sugar Rationing • 93 • X • SUGAR RATIONING Sugar was the sole product to remain under rationing in the first quarter of 1946, all other rationing programs having been terminated by the end of 1945.1 The tentative allocation of sugar recommended in March by the Department of Agriculture for civilian distribution during 1946 amounted to 5,450,000 short tons, raw value. The increase of 358,000 short tons over the 1945 civilian allocation would have meant higher rationing levels for at least a substantial part of the year but for the greatly increased drain on civilian supplies caused by demobilization of the armed forces. The Office decided, however, that a slight increase in industrial allotments would be possible during the second quarter, and also that a small increase could be provided institutional users for the period commencing May 1. Two home canning stamps for 5 pounds each, to be issued during the canning season, were planned but it did not appear possible to increase the home use ration from the 15 pounds per capita per annum ration hitherto prevailing. It should be noted that provision of 10 pounds of home canning sugar would require about 250,000 tons more than the 500,000 tons issued for this purpose in 1945. The supply problem continued of paramount importance during the quarter. With no sugar expected from the Philippines in 1946, the Caribbean area provided the chief source of supply. Early reports indicated a Cuban crop of 4,700,000 tons, but in view of the adverse weather conditions which prevailed during March, this figure was probably too optimistic. Final negotiations for the purchase of the Cuban crop had not been completed by the close of the quarter. The situation with regard to beet sugar production, however, was not too encouraging. With improved labor conditions expected in the beet fields, it had been anticipated that beet sugar plantings would attain the goal set of 1,033,000 acres, but reports at the end of the quarter indicated that 993,000 acres or less would be planted. The latter figure, however, compares favorably with the 1945 total plantings of 775,000 acres. The program of shipping beet sugar into the deficit area of Ohio and eastern Indiana was continued through February, pending arrival 1 See Sixteenth Quarterly Report, pp. 100-101, 102—105. 699327—46------------7 94 • Seventeenth Quarterly Report of new crop Caribbean raws in sufficient volume to provide supplies for this section of the country. As soon as the supply situation was thus equalized, the zoning restrictions which had been placed on eastern cane refiners were removed. Refiners of cane sugar could thereafter reestablish their markets on a more normal distribution basis. INDUSTRIAL RATIONS Early in March an increase in industrial allotments was announced for the second quarter of 1946. The majority of industrial users were allotted 60 percent of their 1941 base; bakers and manufacturers of allied products 70 percent; and manufacturers of pharmaceuticals 120 percent.2 Industrial allotments in force from July 1,1945, through March 30,1946, for these classes of users had been 50, 60, and 110 percent, respectively. Preservers, many of whom had received sugar base adjustments early in 1946, were allowed 55 percent of their base for the second quarter. A comparable increase in sugar was allowed to provisional users such as fruit and vegetable packers, who received rations at a special rate per unit of output but with no limit on total output permitted. Provision also was made for adjusting bases or establishing bases for certain manufacturers who used sugar-containing products such as syrups, chocolate coatings, and baking mixes during the sugar base year (1941) and whose use of such products had been reduced because of strikes or similar occurrences in the base period. Similar adjustments were provided for such manufacturers who had invested in additional productive machinery during the base year, or just prior to rationing, which they had not had an opportunity to utilize to the fullest extent in the short period before rationing curtailed their supplies of sugar-containing products. The adjustments granted were in line with similar adjustments for manufacturers who used sugar rather than sugar-containing ingredients.3 Applications from veterans for the establishment of new businesses increased during the quarter in direct propbrtion to the pace of demobilization. These applications were chiefly for the establishing of bakeries, bottling of beverages, and manufacture of ice cream and candy. DOMESTIC CONSUMER RATIONS One of the major problems of the quarter was the matter of sugar for home canning. Since local rationing boards had been disbanded and the burden of individual applications would be far too great 3 Amendment 9, 3d Rev. RO 3; Amendment 1, Supplement 1, 3d Rev. RO 3; both effective March 15, 1946. , ..... 'Amendment 7, 3d Rev. RO 3; effective March 4, 1946. Sugar Rationing • 95 for district offices, the issuance of ration stamps for home canning seemed to be the only feasible method of handling this distribution. This posed a second problem. Fruit crops mature far earlier in certain sections of the country than in others but, as it was impossible to isolate these areas through the ration evidence flowback system, it was necessary to validate the first home canning stamp for 5 pounds for the entire country at the same time. It was estimated that considerable numbers of these stamps were cashed promptly. While no definite decision had been reached at the close of the quarter, it was tentatively planned to issue a second home canning stamp late in June or in July of 1946. The Office decided to continue the practice of requiring personal applications for sugar for home canning for sale, as in previous years.4 One stamp for the home use ration was validated at the beginning of the quarter, with the next stamp scheduled about May 1. In order to avoid a disruption of sugar distribution to home consumers, a revision of the sugar rationing regulations, effective January 1,1946, provided for an adjustment of sugar inventories for wholesalers and retailers. They were permitted to apply between January 1 and February 17 for this adjustment, which was given the widest possible publicity. Ration evidence for about 50,000 tons was issued for this purpose.5 4 Amendment 8, 3d Rev. RO 3; effective March 11, 1946. 8 Sec. 17.4, 3d Rev. RO 3; effective January 1, 1946; Amendment 7, 3d Rev. RO 3; effective March 4, 1946. 96 • Seventeenth Quarterly Report • XI • ENFORCEMENT Enforcement activity in the fields of rent, retail food, meat, apparel and textiles, automobiles, and consumer durables was intensified during the first quarter of 1946, with greater emphasis on major sanctions such as criminal prosecutions, license suspension suits, and contempt proceedings. Better selection of cases for investigation was evidenced by the fact that while the total number of investigations completed was less than in the previous quarter, the percentage of investigations revealing violation increased, as did the total number of sanctions instituted. The Office continued to apply criminal investigative techniques to black market price cases,1 using special agents who had previously been dealing with counterfeiting and thefts of ration currency to investigate criminal violations in the price field. These agents developed criminal cases in several critical commodity fields such as meat, grain, lumber, and used cars, in addition to continuing with their currency protection work in the sugar rationing program. In the field of litigation, the record for the quarter reflected successes for the Office of Price Administration in 96.8 percent of all cases. ENFORCEMENT ACTIVITY Activity in all major fields was substantial during the quarter. One of the most significant developments was the joint program against the textiles black market conducted by the Office of Price Administration, the Department of Justice, and the Treasury Department. Food enforcement activity at retail emphasized the institution of major court actions, including criminal prosecution, license suspension suits, and contempt proceedings against persistent violators. In one case of willful violation, a jail sentence for contempt was secured in addition to the suspension of a license. In enforcement of meat regulations, the emphasis was shifted in the last month of the quarter to the live cattle and hog regulations. Use of subsidy withholding was continued. A program for enforcement of the regulation covering new automobiles was inaugurated, with emphasis on license suspension proceedings against franchised dealers who were guilty of repeated violations. 1 See Sixteenth Quarterly Report, p. 107. Enforcement • 97 In the retail field generally, emphasis was on use of price control boards to handle the less serious cases, with enforcement action being concentrated on cases referred by the boards and on persistent violators. Retail Food Considerable activity under the retail food-enforcement program, developed in the last months of 1945, was directed at obtaining major sanctions against persistent and substantial violators at the retail level. Suspension of licenses to deal in price-controlled commodities, punishment for criminal acts, and penalties for noncompliance with outstanding injunctions, rather than monetary settlements, were relied upon to deter potential violators. Emphasis was placed upon careful selection of cases to be investigated and upon checking retail meat compliance. In the quarter under review, investigations of independent and other retail food stores either resulted in license suspension suits and contempt proceedings or laid the basis for future action. In holding sellers in contempt for violating court injunctions relating to OP A price regulations, several courts imposed substantial fines. One court, in dealing with a flagrant violator, both imposed a 10-day jail sentence and suspended the retailer’s license for 4 months. As in other periods, cases submitted by the price control boards to the district offices received attention. Investigations were instituted and sanctions imposed on board cases. The latter included injunctions and monetary damages, as well as more severe actions in the more serious cases. Meat Live cattle and live hog prices continued high during the quarter, and consequently increased emphasis was placed on enforcement of the live animal regulations at the marketing and slaughtering levels. Approximately 60 percent of all preretail meat sanctions instituted during this quarter were for violations of regulations covering sale and purchase of live animals and sales of dressed carcasses by slaughterers. In addition “side money” cases, involving sales of beef and pork carcasses, wholesale cuts and fabricated cuts to purveyors of meats, continued to be stressed. A regular procedure was established for sending warning telegrams to slaughterers whose purchases of live cattle at high prices, revealed by investigators’ reports, indicated probable noncompliance with ceilings on either live cattle or on sale of dressed carcasses. These warnings were followed up by investigations of those slaughterers who continued to make purchases at high prices. In the areas where it 98 • Seventeenth Quarterly Report was in operation, this program helped to keep cattle prices within the stabilization ranges. Although the number of investigators assigned to meat enforcement at preretail levels remained substantially the same as during the previous quarter, the number of enforcement proceedings in this field dropped from about 150 cases per week to about 120 cases per week primarily because of the transfer of a number of investigators from individual case work to the program for reporting purchases by slaughterers. Continued effective use was made of subsidy withholding as a compliance factor. Subsidy withholding on a sliding scale,, dependent on the degree of violation, was made automatic, effective April 1, 1946, for violations of the drove-compliance provisions of the live cattle regulation. Grains, Dairy Products, and Other Foods While temporary shortages of certain grains and feedstuffs were experienced during the war years, the Office during the first quarter of 1946, was confronted for the first time with an over-all grain and feedstuff shortage, particularly of corn, wheat, and barley.. Enforcement problems were increased by devices used to evade price ceilings such as barter transactions, upgrading, and tie-in of leases of unwanted storage space with sales of wheat and corn. A decisive and forceful enforcement program was put into operation. Itinerent truckers engaged in over-ceiling transactions were stopped, their transactions investigated, and sanctions instituted against them. Many of these truckers were found to be newcomers to the industry, trying to make a quick profit by operating in violation of OPA regulations. Several hundred sanctions were instituted in this field during the quarter, with excellent compliance effects. Despite a seasonal increase in milk production, great pressure was exerted against all dairy-product ceiling prides during the quarter. With the termination of butter and cheese rationing in the preceding quarter and the dropping of Department of Agriculture controls over the use of cream, prices soared for milk and cream sold for industrial uses. The diversion of cream to such uses caused butter production to drop to a record low, and the Office was faced with a major enforcement problem in holding butter sales to ceiling levels. Certain distributors and large users of butter resorted to custom churning, leasing of creameries, and other schemes in an attempt to evade legal prices. Most of these evasions were held in check, however, through the Office’s continuous enforcement program. Supplies of many other food items continued far short of demand during this reporting period. The sugar supply remained acutely Enforcement • 99 short, and constant enforcement, in line with the program previously instituted,2 was necessary to protect the integrity of the sugar rationing system. Other items requiring enforcement attention were onions, apples, strawberries, bananas, dried beans, honey, and rice. Apparel and Textiles Serious pressures continued in the textile and clothing fields during the quarter. Enforcement efforts followed the lines of previous programs as well as new programs based on the latest regulations. The joint program of the Office of Price Administration, the Department of Justice, and the Treasury Department initiated in December against the textiles black market resulted in extensive investigation, and several indictments were returned by the special grand jury sitting in New York. Enforcement activity against manufacturers of women’s clothing, initiated earlier,3 was increased during the quarter, and the sanctions imposed resulted in a notable improvement in compliance in this field. During the quarter, enforcement activity at the retail level was accelerated, and particular emphasis was placed on compliance at all levels with the OPA regulation controlling prices of low-end essential garments.4 Activity continued against manufacturers of men’s and boys’ heavy outerwear. The sanctions imposed in this field included a trebledamage action against a Chicago manufacturer which resulted in a settlement of approximately $200,000. A new regulation covering men’s shirts, shorts, and pajamas became effective during the reporting period, and an enforcement program to gain compliance with the filing requirements of this regulation was highly successful. A new regulation covering manufacturers of men’s tailored clothing 5 was issued at the close of the reporting period, which was expected greatly to simplify investigations and to facilitate significant enforcement activity against violating manufacturers. The reappearance of nylon hosiery, after its disappearance from the market during the war years, was marked by petty black market sales by fly-by-night peddlers. Investigations of these peddlers resulted in several criminal convictions. . Further investigations in this commodity field were to include both peddlers and their suppliers. The Department of Justice joined with the Office in a wide program directed at the nylon black market. 2 See Sixteenth Quarterly Report, p. 109. 3 See Sixteenth Quarterly Report, p. 109. 4 2d RMPR 578. 5 MPR 607. 100 • Seventeenth Quarterly Report Automobiles and Consumer Durables During the quarter, a number of franchised dealers were found to be violating the new automobile price regulation. Some of the violations consisted in the payment, in cash, of an excess over the ceiling price for a priority delivery of a new car, and some of outright sidepayments. The most common evasion of the price regulation was to require the trade-in of a used car, allowing the purchaser of the new car substantially less than the current market value of the trade-in. Office policy with regard to evasion of the new car regulation was to send license-warning notices to franchised dealers found in violation, and on repeat violations after receipt of such notices, to subject them to license suspension actions, as provided for by the Emergency Price Control Act. This was the most effective sanction available in enforcing the regulation. There were still a large number of violations of the Used car regulations during the quarter, but they were materially fewer than they had been during the previous two quarters. The program to secure compliance by manufacturers of durable goods was continued. The last survey indicated that approximately 30 percent of the manufacturers were selling some of their merchandise at overceiling prices. Compliance was facilitated by the fact that most of the hard goods reaching the market, including refrigerators, vacuum cleaners, washing machines, and other appliances, as well as new furniture, were dollar-and-cent priced and were preticketed by the manufacturer. Building Materials A compliance program on area orders controlling building and construction materials and services was developed, providing for educational activity at all stages of area-order issuance, followed by an enforcement survey under each order. Numerous such surveys were carried out during the quarter. The deficiency appropriation provided by the Congress during the quarter permitted the Office to strengthen its enforcement staff in the lumber and building materials fields, in which limited manpower had severely handicapped enforcement activity, and noncompliance had become most critical. While the additional staff was concentrated in the major lumber producing areas, many were assigned to the consuming areas. Rent Pressures on rent enforcement increased in their severity during the quarter. The number of wrongful evictions by landlords increased, as did evasive practices such as bonuses and side-payments and requiring' the tenant to pay for services normally included in the rent. The Enforcement • 101 major problem of the Office lay in handling the large volume of violations, particularly referrals from area rent offices. Although a large number of violations were settled by the area rent offices, the Office had to take court action against those violators who would not settle with the area rent offices, or whose violations were of such of a character as to require a sanction other than the assertion of the Administrator’s treble damage claim. LITIGATION The Supreme Court of the United States handed down two decisions during the quarter which fully sustained the authority of the Office to regulate sales of commodities by States, municipalities, or their agencies. In Otto A. Case v. Bowles 7 the Supreme Court affirmed the decision of the Circuit Court of Appeals for the Ninth Circuit which had held that the Administrator was entitled to an injunction enjoining overceiling sales of timber of the State of Washington. In Hulbert d? Bowies n. Twin Falls County J an action was brought by the county to recover an overceiling price on the sale of a county-owned tractor, and the Supreme Court of Idaho had held that the Congress had not intended to regulate sales by States or their subdivisions or agencies. In upholding the position of the Administrator in both cases, the Supreme Court declared that it was “too plain to call for extended discussion that Congress meant to include States and their political subdivisions when it expressly made the Act applicable to the United States ‘or any other Government or any of its political subdivisions or any agency of the foregoing’ ”. The Court further observed that inflationary sales by a State would produce exactly the same conditions as sales by private persons. The Supreme Court also denied certiorari in several cases in which the Administrator had been successful in lower courts. Among these cases were Bowles v. 870 Seventh Avenue C orporation* where injunctive relief was granted against overcharges on certain leases and in various restaurants of a hotel; Beeves v. Bowles* where similar relief was granted against taxicab owners who claimed rental charges were free from price control; Good Luck Glove Company v. Bowles™ and Indianapolis Glove Company v. Bowles*1 involving a construction of the General Maximum Price Regulation in its application to sales and deliveries of gloves; Bowles v. Shawano National Bank™ upholding the Administrator’s right to obtain information by subpoena from a 6 October Term, No. 271, decided February 4, 1946. 7 October Term, No. 238, decided February 4, 1946. 8150 Fj 2d 819 (C. C. A. 2d). 9 151 F. 2d 16 (App. D. C.). 19150 F. 2d 853 (C. C. A. 7th). 11150 F. 2d 597 (C. C. A. 7th). 12151 F. 2d 749 (C. C. A. 7th). 102 • Seventeenth Quarterly Report national bank; United States v. Steiner?3 where alleged leases of farm equipment were held to be sales and evasions of the Price Control Act; Bowles v. Leitkold?^ sustaining a broad injunction against recordkeeping and price violations. The Administrator’s application for certiorari in Porter n. Warner Holding Company 15 was granted by the Supreme Court. In this case, the Circuit Court of Appeals had affirmed a decision holding it was without power to grant restitution of overcharges to tenants in an action brought by the Administrator for injunctive relief under section 205 (a) of the Price Control Act. The sole setback suffered in the Supreme Court was Kraus & Bros. v. United States.16 There the Second Circuit Court of Appeals had upheld a conviction of defendant, a meat and poultry wholesaler, for evading the provisions of Maximum Price Regulation 269, by requiring retailers who purchased turkeys and other poultry also to buy chicken skins and chicken feet. The Supreme Court reversed by a closely divided court. The decision was of limited application. It held that since the “evasion clause” contained in the maximum price regulation at the date of violation did not mention tie-in sales, the court should have allowed evidence as to the value of the tied-in commodity. If the tied-in commodity was worthless or sold for more than market value, the conviction could be sustained. Clauses in most OP A regulations are more specific and under them, the value of the secondary commodity is irrelevant. In three other cases before the Circuit Courts of Appeal involving tie-in agreements, the Government prevailed.17 The Supreme Court of Virginia 18 concluded that the courts of the State should assume jurisdiction of consumer actions brought under section 205 (e) of the act, and the Supreme Court of Indiana19 held that its State courts had jurisdiction over statutory damage suits brought by the Administrator. The Court of Errors and Appeals of New Jersey, however, reversing »a number of intermediate and lower court holdings in that State, ruled that the district courts of the State, which are courts of limited jurisdiction, had no jurisdiction over consumers’ actions under the act.20 Other cases which were important for effective price control likewise received favorable treatment in the courts. In Bowles v. Craw 13 152 F. 2d 484 (C. C. A. 7th). 14 155 F. 2d 124 (C. C. A. 3d). “ 151 F. 2d 529 (C. C. A. 8th). 18 Decided March 12, 1946. 17 United States v. Fish (C. C. A. 2d) ; Bowles v. Royal Wine & Liquor Co. (C. C. A. 7th); Bowles v. Cudahy Packing Co. (C. C. A. 3d) decided March 29, 1946, not yet reported. Of these cases the Cudahy Packing Co. case was decided after the Kraus decision was rendered. 18 Schauback v. Anderson, decided January 14, 1946. 19 Bowles v. Heckman Bros., decided January 24, 1946. 20 Zuest v. Ingra, 38 Atl. 2d, 458. Enforcement • 103 ford & Doherty Co.? the Circuit Court of Appeals for the Ninth Circuit concluded that once an illegal contract is made, a statutory damage claim accrues even though the purchaser withholds the amount of the overcharge. The Sixth Circuit Court of Appeals held that the stay provisions of the act could not be used as an instrument for delaying judgment.22 The court said that the stay should be available only to a defendant who could satisfy the court that his petition objecting to the validity of the regulation was made in good faith and that he had reasonable and substantial excuse for failing to present such objection earlier in a protest filed in accordance with section 203 (a) of the act. In United States v. Hare? the Court of Appeals for the Seventh Circuit held, in a criminal case, that a violation by a “seller,” under the act may occur even though he never has title to the goods. In Bondes v. Indianapolis Railways, Inc.? the Circuit Court of Appeals for the Seventh Circuit sustained the contention of the Administrator that an increase of some of the rates charged by a carrier is a “general increase” within the meaning of the Stabilization Act so as require prior notice to the Office of Price Administration before making any such increase effective. However, it denied the injunction requested by the Administrator on other grounds. STATISTICAL SUMMARY Approximately 36,000 investigations were completed and 31,000 violations established during the quarter. Sanctions of various types were employed in the very large majority of cases disposed of. Court proceedings were instituted in almost 14,000 treble damage suits, injunction suits, license suspension suits, criminal prosecutions, and contempt proceedings. More than 2,550 suspension proceedings and approximately 50 determination proceedings were instituted. Monetary settlements were made in approximately 6,200 cases. In addition, close to 3,100 cases were closed with a warning letter or informal adjustment, and slightly more than 5,000 cases were closed with the issuance of a license warning notice. The department completed about 1,900 administrative proceedings, more than 7,600 civil court proceedings of all types, and more than 1,500 Federal and local criminal prosecutions. Favorable decisions were obtained in 91.6 percent of the administrative proceedings com 21 C. C. A. 9th, March 1946. 22 Dowling Bros. Distilling Co. and Robert Gould v. United States (jC. C. A. 6th), decided Feb. 8, 1946. See also U. S. v. Steiner, supra. 23 C. C. A. 7, February 9,1946. 21 C. C. A. 7, March 1, 1946. 104 • Seventeenth Quarterly Report pleted, 97.0 percent of the civil proceedings, and 96.1 percent of the criminal prosecutions. Settlements, judgments and fines during the quarter amounted to $5,324,310. As a result of a recheck of reporting practices, reports were obtained of a number of settlements and administrative and court proceedings instituted or completed prior to December 31, 1945, but not included in previous statistical summaries. These cases include approximately 50 additional suspension and determination proceedings, 100 settlements, 600 civil suits, criminal prosecutions, and contempt proceedings instituted, and 70 administrative proceedings, 175 civil suits, and 250 criminal prosecutions completed. Settlements, judgments, and fines omitted from 1945 reports aggregated $356,750; the adjusted 1945 total of settlements, judgments, and fines thus amounted to $23,521,846. A corrected statistical summary of enforcement activity for 1945 is included below. Statistical Summary of Enforcement Activity, January—March 1946 January-M arch 1946 Revised 1945 summary Investigations and violations: Investigations completed 35,680 193,348 Violations found with and without investigation 30,756 167,220 Administrative enforcement: Warning letters and informal adjustments 3,073 29.096 License warning notices 6,018 14.275 Ration revocations by district offices 0 5,640 ' Suspension order proceedings instituted 2,555 18,012 Determination proceedings instituted 46 50 Monetary settlements: Administrator’s consumer damage claim 4,513 17,617 Administrator’s own damage claim 1,669 9,587 Litigation instituted: Administrator’s consumer damage suit 3,622 . 10,684 Administrator’s own damage suit 1,193 5,183 Injunction suit 7,225 191 33,756 License suspension suit 307 Federal criminal prosecution Ll 361 4,038 Local criminal prosecution 1 1,184 5,354 Contempt proceedings1 91 216 Proceedings completed: Administrative proceedings closed 2,396 18,522 Proceedings completed 1,902 15,278 Order issued (won) 1,743 13,604 Order denied (lost) 159 1,674 Percent won - • 91,6 89.0 Proceedings withdrawn 494 3,244 Court litigation closed: Civil litigation closed 2 9,487 37,386 Proceedings completed 7,622 31,416 Won 7,391 30,595 Lost 231 821 Percent won 97.0 97.4 Withdrawn 1,865 5,970 Criminal litigation closed3 1,701 6,763 Proceedings completed 1, 511 6,065 Won 1,452 5,791 Lost 59 274 Percent won 96.1 95.5 Withdrawn 190 698 1 Number of cases. 2 Number of cases, except for number of defendants in contempt proceedings. 3 Number of defendants. o