[The Fourteenth Report of the Office of Price Administration; Letter from the Administrator, Office of Price Administration, Transmitting the Fourteenth Report of the Office of Price Administration, Covering the Period Ended June 30, 1945]
[From the U.S. Government Publishing Office, www.gpo.gov]

THE FOURTEENTH REPORT OF THE OFFICE OF PRICE ADMINISTRATION
LETTER
FROM THE
ADMINISTRATOR
OFFICE OF PRICE ADMINISTRATION
TRANSMITTING
THE FOURTEENTH REPORT OF THE OFFICE OF PRICE ADMINISTRATION, COVERING THE PERIOD ENDED JUNE 30, 1945
November 6,1945.—Referred to the Committee on Banking and Currency and ordered to be printed.
UNITED STATES
GOVERNMENT PRINTING OFFICE
WASHINGTON : 1945
LETTER OF TRANSMITTAL
Office of Price Administration, IVashington, D. G., November 6, 19^5.
Sirs : I have the honor to submit herewith the fourteenth report of the Office of Price Administration, covering the period ended June 30, 1945.
Sincerely yours,
Chester Bowles,
Administrator.
The President Pro Tempore of the Senate.
The Speaker of the House of Representatives.
TABLE OF CONTENTS
Chapter	Page
I.	Price Control:	Reconversion	Planning__________________ 1
Amendments to the Acts_____________________________________  1
Reconversion Pricing________________________________________ 2
Surplus Goods Pricing_______________________________________ 4
Import-Export Problems______________________________________ 6
II.	Price Control:	Food and Consumer	Goods_________________ 8
Food Price Problems_______________________________________   8
Textiles and Apparel_______________________________________ 19
Consumer Durable Goods_____________________________________ 23
Consumer Services__________________________________,_____ 24
III.	Price Control: Industrials and Fuels,________________ 25
Lumber_____________________________________________________ 25
Paper______________________________________-_____________ 28
Iron and Steel_____________________________________________ 29
Building Materials_________________________________________ 31
Machinery__________________________________________________ 32
Rubber Tires and Tubes_____________________________________ 33
Carbon Black and Other Chemicals___________________________ 35
Petroleum Prices__________________________________________  36
Solid Fuels________________________________________________ 37
Appendix to Price Chapters___________________________ 39
IV.	Transportation and Public Utility Rates______________ 46
Transportation___________________________________________   46
Public Utilities_________________:_______________________	49
V.	The Rent Control Program_____________________________  53
Amendments and Interpretations_____________________________ 53
Area Office Operations_____________________________________ 54
Protests and Review Proceedings____________________________ 54
VI.	Emergency Court of Appeals__________________________  56
Price Control Cases________________________________________ 56
Rent Control Cases_________________________________________ 61
VII.	Food Rationing_____________________________________  70
Wartime Food Diary_________________________________________ 71
Meat Rationing..___________________________________________ 73
Fats, Oils, and Dairy Products_____________________________ 76
Processed Foods____________________________________________ 77
Sugar______________________________________________x.___	78
Institutional and Industrial Users_________________________ 79
¡¡i
IV • Table of Contents
Chapter	Page
VIII.	Other Rationing Programs___________________________   81
Gasoline_________________________________________ 81
Automobiles______________________________________ 82
Rubber Tires_____________________________________ 82
Fuel Oil_____________________________________     83
Northwest Solid Fuels____________________________ 83
Stoves______-____________________________________ 84
Shoes__________________________________________   84
Rubber Footwear__________________________________ 86
IX.	Enforcement_______________:________________________ 87
Enforcement Activity____________________________  89
Litigation___________________________________     92
Statistical Summary______________________________ 93
Price Control: Reconversion Planning •	1
• I •
PRICE CONTROL: RECONVERSION PLANNING
During the second quarter of 1945, the Office was primarily concerned with perfecting its plans for pricing products which would return to the civilian market after relaxation of wartime controls. These policies concerned not only the pricing of domestic products but also the pricing of products in foreign trade and of products being released by Federal agencies as surplus.
During the quarter, also, the Office undertook to modify certain of its procedures in carrying out the changes in the acts made by Congress in extending price control for still another year. In all, Congress wrote six amendments into the two statutes, none of which entailed any fundamental revisions in their basic provisions or in the operations of the Office.
AMENDMENTS TO THE ACTS
Of the six amendments to the Emergency Price Control Act and the Stabilization Act, three may be considered major—the one brought forward by Senator Barkley and Representative Bates, and those introduced by Representatives Patman and Andresen.
The Barkley-Bates amendment provided that prices on meat products must permit the meat packing industry as a whole to earn a profit on the processing of each species of meat; and that, in fixing prices, cattle and calves, lambs and sheep, and hogs are to be separately considered. This amendment wrote into the law standards which the OPA and the Office of Economic Stabilization had already recognized as,appropriate in the critical supply situation then existing.
The Andresen amendment extended to foods processed from agricultural commodities the provision, formerly applicable only to agricultural commodities, which requires that the Secretary of Agriculture approve all price actions other than individual adjustments before they are issued.
The Patman amendment authorized the Secretary of Agriculture to permit nonfederally inspected slaughterers who meet certain sanitary requirements to ship across State lines or sell to the armed services. The amendment prohibited quota or slaughtering limitations1 on slaughterers receiving such certifications, and was intended to increase meat supplies in shortage areas by enabling shipments from surplus producing sections.
1 See pp. 10, 74-75.
2	• Fourteenth Quarterly Report
The Congress also required the setting up of national industry advisory committees for rent control, similar to those previously established for price control; and directed that sellers be permitted to increase their maximum prices to cover higher postal rates on commodities sent through the mails c. o. d., wherever it has been the seller’s established practice to add a uniform mailing charge to his selling price.
Another minor change permits a defendant in a conspiracy action involving violation of an OPA regulation to file a complaint in the Emergency Court of Appeals objecting to the validity of the regulation which he is alleged to have conspired to violate.
RECONVERSION PRICING
The reconversion pricing program was announced May 11. At that time the program referred primarily to the basis on which prices would be reviewed for an industry resuming production of commodities entirely or largely off the market because of wartime restrictions, which felt it could not operate under existing ceilings. Later the program was extended to include individual adjustments for reconverting manufacturers in industries where the volume had been well maintained in the industry as a whole during the war, but where particular companies in that industry had largely converted to war work.
On most of the commodities produced by reconverting manufacturers, ceiling prices were established in 1941 or 1942. Under the Office policy, manufacturers may produce and sell at these ceilings if they wish. If an industry finds that its costs have increased so much that there is no prospect of profitable operations under existing ceilings, however, that industry may request an adjustment. For products which have been largely or entirely off the market, the Office will apply its reconversion formula on an industry-wide basis. Usually this will result in a decision that the industry as a whole will receive either no increases or a designated percentage increase. In some cases, however, such as where there are relatively few firms in an industry, or where the cost increase experience of the companies within the industry is quite diverse, the Office will apply the reconversion formula to each of the companies in the industry individually, instead of on an industry-wide basis.
Manufacturers producing reconversion products, and manufacturers who are reconverting although their industry as a whole kept up its volume in civilian lines during the war, may apply for individual adjustments when it appears that ceiling prices based on industry-wide action do not give them a prospect of profitable operation. The standards for individual adjustments differ considerably between firms with less than $200,000 civilian volume and companies with more than $200,000.
' Price Control: Reconversion Planning •	3
Industry-Wide Formula
The reconversion formula, as applied to any product which has been largely or entirely off the market because of wartime needs, adjusts total costs for the product during the last period of normal production, usually October 1941, for the following factors: (1) Legal increases since that date in the basic wage rate schedules of factory employees in that industry; and (2) the legal increases since then in prices of materials and components entering into the factory costs of the industry. To the 1941 costs so adjusted is added a profit margin equivalent to the industry’s 1936-39 percentage margin before income taxes. The increase factor thus obtained is applied to the 1941 price. The resulting figure becomes the new ceiling price unless it is less than the existing ceiling.
This reconversion formula, in the judgment of the Office, assures profitable operation to the industries when they attain volume operations. The Office does not claim that its formula precisely measures increases in labor costs or in total costs. It recognizes that there are elements of cost increase as well as of cost decrease that are disregarded. Furthermore, the Office distinctly did not intend to include certain “bulge” costs present during the early period when civilian production is being resumed, and expected to disappear in a short time, such as price increases resulting from purchases from a more distant supplier, or a different class of supplier, or in small quantities. Inclusion of such costs did not appear to be wise from the point of view of the stabilization program or the needs of business, nor was it the recommendation of businessmen that such bulge costs be recognized.
The Office realized, however, that cost increase experience differed considerably among firms in the same industries. Furthermore, the margin for absorption of such cost increases, as shown by the difference between their 1936-39 profit margin and their 1941 profit margin, varied considerably among companies in the same industry. Therefore, the Office provided an individual adjustment program designed to give each firm a prospect of profitable operations when it gets into volume production.
Individual Adjustments
For smaller firms, the individual adjustment policy provides that 1941 costs will be adjusted for legal increases in materials prices and for increases in straight-time wage rates of the particular firms. To these costs will be added the higher of (1) the firm’s own 1936-39 profit margin, or (2) one-half of its industry’s profit margin. These smaller firms are defined as those whose 1941 volume, in sales other than those to United States Government war procurement agencies or to Allied governments, was less than $200,000, and whose prospective volume of such sales in the year after application for adjustment will
4 • Fourteenth Quarterly Report
be less than $200,000. Firms whose peacetime sales volume was less than $50,000, however, may elect to use a second provision.
For companies whose 1941 and prospective annual total sales are less than $50,000, the applicant need merely state his expected current costs and add these to the higher of the following: One-half his industry’s profit margin, or his own margin for the first of the following years for which he has profit-and-loss information: 1939, 1940, or 1941.
For larger manufacturers with more than $200,000 volume, the individual adjustment provision permits a price increase if the 1941 costs, adjusted for legal increases in basic wage rate schedules and for the general increases in materials prices, yield a cost figure in excess of the applicant’s current ceiling price. The adjustment will be sufficient to raise his price to equal his adjusted 1941 costs plus one-half of the industry’s 1936-39 profit margin. For use in adjusting the company’s 1941 costs for increases in materials prices, the Office may announce materials cost increase factors for a particular material or for a number of parts or general categories, such as castings.
Under the reconversion plans formulated during the quarter, the individual adjustments for smaller firms were to be handled exclusively by the field offices. These offices were also to handle most of the cases of the larger reconverting manufacturers who produce commodities which continued in substantial production all during the war. It was agreed, however, that the national office would handle individual company adjustments for most of the cases involving products eligible for an industry-wide review of ceilings.
By the end of the quarter, work had begun on the field studies of a number of reconversion industries which had requested a review of their ceiling prices.
In announcing its reconversion pricing program, the Office indicated that it would make extensive use of preticketed prices at retail for reconversion products. At the end of the quarter, no announcement had been made, however, of the standards by which retail prices would or would not be adjusted, following adjustments in the ceiling prices of reconverting manufacturers. This problem was to be discussed with the distributive trades.
SURPLUS GOODS PRICING
A new supplementary order was drafted during the quarter to provide for the peculiar pricing problems associated with the resale of surplus commodities originally sold by Government agencies.2 A maximum return to the Government consistent with fair margins to
a SO 122, issued July 23, effective August 22,1945.
Price Control: Reconversion Planning ♦	5
distributors and fair prices to consumers is the underlying aim of surplus commodity orders. To further this general objective, the Office established a general pricing method for the resale of commodities sold by the Government under which it will be possible for resellers to know, prior to purchase, the maximum prices applicable to their sales.
The new order provided that resales of surplus goods remain subject to the regulations under which they were originally priced. Three hundred such regulations are specifically named in an appendix to the order. These regulations contain provisions under which the seller may easily calculate his price prior to purchase. Resales subject to special orders under Supplementary Order 94, which usually establish dollar-and-cent prices, are not affected by the new supplementary order.
All other resales of commodities sold by the Government are subject to the pricing provisions of the new order. Two general pricing methods are provided. Ordinarily, the reseller will use a markup-over-cost method of pricing, modified to fit the peculiar characteristics of the commodities sold by the Government and the methods by which they are sold. In any case where the selling agency chooses, however, it may request special dollar-and-cent maximum prices for resellers prior to its offering the commodity for sale. When this is done, the first method is of course inapplicable.
In using the first method, the reseller first determines the percentage markup on invoice cost for a comparable nonsurplus commodity which he sold during the year June 1,1944-June 1, 1945.3 To calculate his maximum price on the commodity sold by the Government, he applies this percentage markup to the cost of the item and then adds actual inbound transportation cost. The cost base on which the percentage markup is calculated may be adjusted for certain reasons peculiar to surplus goods sales. If some of the commodities sold by the Government are broken, damaged, or deteriorated to the extent that they are unsaleable except as scrap, the unit cost base may be adjusted up to certain limits to prevent a loss to the reseller. Similarly, additions up to certain limits may be made to the cost of used commodities for necessary repairs or reconditioning before the markup is applied. Special provision is also made for low-price Government sales for which the percentage markup on the price paid would not allow an adequate margin. On such sales, a minimum cost base related to the Government’s ceiling price may be used for calculating the markup, which is then added to the purchase cost. Regardless of any of these provisions, if the item sold by the Govern
For commodities subject to MPR 330, 580, and 590, he uses the average percentage markup for the class of items determined under those regulations.
6 • Fourteenth Quarterly Report
ment is one which the seller has in stock and regularly sells, he may use his established maximum selling price.
Any markup-over-cost method might be abused if cross-stream sales, such as wholesaler-to-wholesaler-to-wholesaler sales, were not curbed. After the last war, some of the worst speculation in sales of surplus property took the form of cross-stream selling with each seller adding as large a margin as possible on his sale. Such sales are strictly limited in the new order, although legitimate and customary sales of this type are permitted.
The order anticipates the formation of many new enterprises and additions to established enterprises for the purpose of dealing in surplus property. Sellers such as these who do not have established markups on comparable commodities may get them from the nearest OPA office.
The second major pricing method allows the Government selling agency to propose maximum resale prices to the Office of Price Administration prior to sale. If the prices requested meet the standards set forth in the order, they will be approved. The standards are the same as those which would be used by the Office if it acted upon its own motion. When proper notice of the resale maximum prices is given, the prices become effective without formal action by the Office. This method makes possible expeditious price action, preventing delays in selling incident to drafting and publishing price orders. At the same time, effective dollar-and-cent price control can be achieved by use of the method.
IMPORT-EXPORT PROBLEMS
The end of the war in Europe in May and the developments in the Pacific war, gave rise to an entirely new set of conditions in world trade which necessitated a complete review of the pricing of both imported and exported goods. A primary problem lay in establishing ceiling prices for goods imported from areas liberated from enemy control, with which there had been no trade since 1939 or 1940. The problem was complicated by the fact that such goods would come from countries which had experienced a very high degree of inflation caused by scarcities of goods and a greatly increased supply of money pumped into circulation by occupation forces. Furthermore, no market was in existence in which the values of the currency units of these countries might be determined.
Contributing to the difficulty of effectively stabilizing imported goods prices, moreover, was the imminent entrance of the liberated countries into world markets, competing with the United States and the United Kingdom which had almost completely dominated these markets before VE-day.
Price Control: Reconversion Planning •	7
Similar problems arose with respect to the establishment of ceiling prices on goods exported to these areas. In addition, the probable relaxation of production and distribution controls, including elimination of quantitative restrictions on exports, which would follow the successful conclusion of the war, constituted still another problem. Such relaxation would make strict control over export prices even more essential, in order to prevent diversion into export of needed •goods not yet in ample supply. Moreover, the fact that reconversion to peacetime production in the United States and in the United Kingdom would result in a substantial change in the type and character of goods imported and exported by these countries, led to still other problems.
Considerable study was given all these matters during the quarter under review, and a number of meetings were held with the trades affected, with officials of other Government agencies dealing with foreign trade, and with officials of foreign governments concerned with these problems. An over-all importers’ industry advisory committee was formed in April to assist the Administrator in developing a sound and consistent policy to be followed in pricing imported goods. In addition, the Office met with other interested Government agencies to work out the details of a program of decontrol in the export field.
Although no fundamental changes were made in the Maximum Import Price Regulation, the quarter was marked by continued improvement in the control of import prices. Simplification and more effective administration and enforcement of maximum prices for imported goods sold at retail was effected by two actions which permit the nonimporting retailer to determine automatically his maximum selling prices for imported merchandise, without application to the Office, as was previously required.4
The quarter was also marked by an increase in the number of standardized imported goods for which specific dollar-and-cent maximum prices were established by order under the Maximum Import Price Regulation. Among these were jute and jute cuttings, cocoa mats and ^Numdah rugs imported from India, and balsa wood.
Establishing specific dollar-and-cent prices results in more effective price control and simplifies the problem of pricing for the trade, since it eliminates the necessity for applying for individual prices. Setting specific prices also has a stabilizing effect on prices in foreign markets, since with maximum selling prices established in this country, American importers are definitely limited in the prices they may offer the foreign exporter. Specific prices also equalize competitive conditions for all American importers and render less likely numerous applications to the Office for individual adjustments.
4 MPR 580 ; effective March 20, 1945, and Order 83, MIPR ; effective April 20, 1945.
8 • Fourteenth Quarterly Report
• II-
PRICE CONTROL: FOOD AND CONSUMER GOODS
The severely diminished supply of meat available to civilian consumers presented a problem which outweighed most others confronting the Office during the second quarter of 1945. In April the Office of Economic Stabilization, in cooperation with the Office of Price Administration, the War Food Administration, and the War Department, announced a 10-point meat program. The Director of the Office of War Mobilization and Reconversion in May announced further steps to be taken in order to encourage increased feeding of beef cattle, to increase margins for meat processors, and to improve the distribution of beef and pork. By the middle of June a comprehensive program for the control of meat distribution had been worked out.
A new standard with regard to textile pricing was announced during the quarter, which would reduce or raise prices on major items in line with the movement of raw cotton prices and at the same time assure the industry maximum prices on such items to cover mill conversion costs plus the peacetime return on net worth for each item.
The Office continued its efforts during the quarter to bring clothing prices to 1942 levels. The principal action in this connection was the issuance of maximum average price (MAP) orders covering rayon mills, woolen mills, and garment manufacturers.
In consumer durables, reconversion problems which had bulked large in previous quarters assumed major importance in the period under review and work on these programs was intensified.
Several decisive steps were undertaken during the quarter to tighten control over ceilings for consumer services. The Office, however, also started to review the service programs, recognizing that some of them had become insignificant to the national economy since the end of the war in Europe and might be safely freed from control.
FOOD PRICE PROBLEMS
In the food programs, emphasis during the quarter lay on arriving, in cooperation with other Government agencies, at a solution of the critical meat situation. A number of revisions were made, however, in the regulations covering other commodities, chiefly for the purpose of simplifying industry compliance or strengthening control. Prices were raised on poultry, some cheeses, and processed fruits and vege-
Price Control: Food and Consumer Goods •	9
tables to provide incentive to increased supply, and on a number of I fresh fruits and vegetables to comply with the disaster provision of i the 1944 Stabilization Extension Act.
Joint Agency Program on Meat
A comprehensive program, which had been developed in cooperation with the Office of Price Administration, the War Food Administration, and the War Department, was announced by the Office of Economic Stabilization April 23. The scheduled reduction of 50 cents I per hundredweight in the overriding ceiling and price ranges, and subsidies on choice cattle, which was to take effect July 2,1945,1 was canceled to provide an extra incentive to the feeding of beef cattle. At the same time steps were taken to widen the spread between the prices of the upper and lower grades, thus promoting cattle feeding: Maximum prices of carcass beef of choice, good, and commercial grades, were increased by 25 cents per hundredweight on sales to the Army.2 In addition, an increase of 25 cents per hundredweight was made in the subsidies on those grades, paid to slaughterers when cattle are bought at the top of the stabilization range.
Also, a method was to be worked out to insure that meat sellers would distribute their meats to the same areas and the same class of trade as they did customarily. Plans for equitable apportionment of available live animals among different federally inspected plants were also to be developed if the pressure of cattle and hog prices against ceilings continued to be severe. Finally, 500 additional investigators were assigned to the enforcement of the meat regulation.
To aid in enforcement of price control, the Office tightened the retail meat regulations, establishing ceilings for ungraded or unmarked cuts of beef, veal, lamb, or mutton at levels of the correspondingly lowest graded cuts, and provided a means for determining overcharges on wholesale cuts not priced at retail but sold to ultimate consumers. In addition, provisions for over 20-percent quotas on sales of retail cuts to purveyors of meals and other retailers were clearly restricted to retail establishments.3 At the same time, the Administrator was authorized to declare any specified area in zone 1, having a total population of not more than 25,000 persons, a deficient meat area, for the purpose of permitting nonslaughtering retailers to sell up to 70 percent of their current volumes of meat to purveyors of meals in such areas.4
1 See Thirteenth Quarterly Report, p. 2.
’Amendment 53, RMPR 169 ; effective April 23,1945.
. * Amendment 22, MPR 336; Amendment 25, MPR 355; Amendment 13, MPR 394; all effective May 8, 1945.
/Amendment 27, MPR 355; Amendment 15, MPR 394; Amendment 24, MPR 336; all effective June 11, 1945.
10 • Fourteenth Quarterly Report
Meat Distribution
In order to increase the amount of livestock slaughtered in federally inspected plants, which are able to ship across State lines, and to supply large cities remote from producing areas, limitations were placed upon farm slaughter for sale and upon local commercial slaughter.5 This action was expected to bring nonfederally inspected meat production into about the same relation to federally inspected production as existed before the heavy Government purchasing program. In addition, an attempt was made to induce more slaughterers to come under Federal inspection.
To improve the distribution of beef and pork, it was planned to adjust the set-aside orders for Government meat purchases to take more from federally inspected plants which were slaughtering above their normal proportion of the total slaughter. Plans were also to be developed for showing the movement and destination of all livestock passing through public stockyards and sales yards.
By the middle of June, a comprehensive program for the control of meat distribution was launched. All commercial slaughterers, federally and nonfederally inspected, were required to restore the same meat distribution pattern that they followed during the first quarter of 1944. Strengthening the earlier move aimed at expanding federally inspected plant output, the measure further assured all areas a fair share of the currently short meat supplies.6
Meat Subsidy Payments
The amount of subsidy per hundredweight with cattle selling at the stabilization maximum became, after May 1, 1945, $2.75 for choice; $2.70 for good; $1.65 for commercial; and $1 for utility, and cutter and canner grades. These payments were to be reduced by 2 cents for each 3-cent decline in cost toward the bottom of the stabilization range. Since the spread between the top and the bottom of the range for each grade was $1.50 per hundredweight, the maximum possible reduction in payments, on purchases within the limits of the range, was $1 per hundredweight. The subsidy rates included the additional payment of 50 cents for all grades when cattle were at the stabilization maximum, which became effective April 1, 1945. The total increase in maximum payments since March 1945 was, therefore, 75 cents for choice, good, and commercial grades, and 50 cents for the other grades.
A new provision was added to take care of individual slaughterers whose revenues were not sufficient to cover their costs. Any slaughterer whose plant operated profitably within the period 1938-41 could
8 Meat Control Order 1, effective AprU 30, 1945; see also ch. VII, Meat Control Orders, pp. 74-75.
6 Amendment 8, Meat Control Order 1; effective June 17,1945 ; see also p. 75. •
Price Control: Food and Consumer Goods • 11
apply for relief, assured that enough additional subsidy would be provided to cover his total bona fide costs of operation.
In a further move to improve the meat situation, the Office of War Mobilization and Reconversion announced on May 18 a new program designed to encourage increased feeding of beef cattle, increase margins for meat processors, and improve the distribution of beef and pork. Producers were promised at least 6 months’ advance notice of any reduction in the overriding ceiling or in the maximum of the stabilization ranges for beef cattle, except bulls. The Commodity Credit Corporation undertook to pay a subsidy of 50 cents per hundredweight direct to the feeder of AA and A grade cattle. The subsidy is paid on cattle owned by the seller for 30 days or more, weighing 800 pounds or more, sold for slaughter at $14.25 or more per hundredweight, Chicago basis.
The Defense Supplies Corporation was directed to pay 40 cents per hundred pounds (liveweight) additional subsidy to hog processors retroactively to April 1, 1945, lifting the subsidy from $1.30 to $1.70 per hundredweight liveweight. This rate was to be adjusted, not retroactively, upon the completion of an accounting study, and the Office was to recommend a plan for reduction of the subsidy rate as hog prices decline. DSC subsidy payments on all grades of cattle were increased 25 cents per hundredweight for processors, and the basic subsidy for nonprocessors made the same as that for processors. The extra subsidy for nonprocessors was reduced from 80 to 40 cents per hundredweight. The new subsidy rates per hundredweight, when cattle prices were at the maximum, were thus raised for processors to $3 for grade AA; $2.95 for A; $1.90 for B; and $1.25 for other grades; for nonprocessors the rates per hundredweight, including both basic and extra subsidy, became, respectively, $3.40, $3.35, $2.30, and $1.65. These payments were to be reduced 4 cents for each 5-cent decline in the average drove cost, from the maximum to the minimum of the stabilization range, with a minimum payment per hundredweight by grades as follows: For AA, $1.80; for A, $1.75; for B, $0.70; for other grades, $0.25.
Fats and Oils
Two steps toward simplifying industry compliance with the fats and oils regulation were taken during the quarter. A specific allowance of one-fourth cent per pound was fixed on sales to Government agencies of lard packed in 56-pound wood or fiber containers, replacing a formula for computing such charges.7 Maximums to industrial users of imported fats and oils were fixed at October 1, 1941,
7 Amendment 46, MPR 53 ; effective June 18, 1945.
12 • Fourteenth Quarterly Report
levels, regardless of increases or decreases in war risk and marine insurance.8
Under the lard set-aside order, Government procurement agencies were purchasing refined lard in 56-pound wood and fiber containers especially packed for export. Since no specific differential for this type of container existed, processors were permitted to price under a formula contained in Supplementary Order 106 of the General Maximum Price Regulation, allowing manufacturers the additional cost of special packaging required by procurement agencies. This caused some confusion in the trade. It was decided that a specific differential would eliminate all guess work and simplify the method of determining a price. The differential of one-quarter cent over the tierce basis was fixed for the lard packed and ready for shipment and no additional charges for this type of package may be added. At the same time the Office incorporated an interpretation in the regulation stating that freight shall be added from the basing point “freightwise” nearest to the community of sale.
Prices of imported fats and oils had been frozen at October 1,1941, levels, including all charges prevailing on that date such as ocean freight, war-risk and marine insurance. Increases in such charges could be added to the freeze price if actually incurred by the seller, whereas decreases had to be subtracted. These products were purchased abroad for stock piling and resale here by Government agencies. These agencies had been absorbing both higher purchase costs and increases in freight and insurance rates, thus keeping prices at the 1941 levels. This method avoided a complex situation arising out of the fact that shipping and insurance charges on each lot of oil varied, while the oil upon arrival lost its identity in the stock pile. The amended regulation took cognizance of this situation by freezing October 1, 1941, price levels regardless of increases and decreases. Although rates for marine and war-risk insurance were declining, these decreases were offset by higher procurement costs.
Specific ceilings for Congo Plantation, Sumatra, and Malayan palm oil were set for Pacific coast and Gulf coast ports during the quarter.9 Normally, these oils were sold for arrival at Atlantic coast ports. Due to War Shipping Administration orders, however, some shipments of the Congo oil were routed to the Pacific coast for unloading. It was deemed advisable to fix a ceiling for Gulf coast ports at the same time. Although imports from the East Indies and Malaya were not considered imminent, ceilings for them were also provided. This action was taken at the request of the Foreign Economic Administration and the War Food Administration, which purchase and distribute this critical commodity.
8 Amendment 47, MPR 53 ; effective June 25,1945.
9 Amendment 45, MPR 53 ; effective April 24,1945.
Price Control: Food and Consumer Goods • 13
Poultry and Fish
Poultry.—Several adjustments in prices were granted during the quarter to increase supply and facilitate distribution. Ceilings on live birds shipped to consuming markets were raised 1 cent per pound to return out-of-pocket costs to truckmen; the Office permitted this addition to be passed on to consumers. At the same time, the transportation markup on live poultry, allowed on deliveries to processing plants and commercial and industrial users, was raised half a cent per pound, and higher maximums, ranging from 75 cents to $1.50 per hundredweight were allowed on custom-delivery of live poultry when accompanied by certain enumerated services, and performed for one owner by another. Both increases were given to establish more balanced relationships among the different services and were not to be passed on to the ultimate consumer.10
With the issuance during the quarter of the zoning regulation on poultry,11 maximums on young chickens were raised an average of 1^ cents per pound at wholesale and pre-wholesale levels. This adjustment, affecting 40 percent of the chicken output, was made at the direction of the Office of Economic Stabilization to step up production. Since the increase had been generally known to the industry for several months, it probably had some influence on the record hatchings of baby chicks during the quarter.
Specific cents-per-pound markups were established for all sales of poultry to the armed forces, under the War Food Administration set-aside orders.12
Fish.—A single regulation,13 covering the North Atlantic species, became effective during the quarter, replacing separate regulations for fresh and frozen fish. Applying both to fresh and frozen fish at producer and wholesale levels, the regulation eliminated many of the inequities of the previous regulations, and was particularly helpful in establishing community ceilings for these commodities. In general, prices were restored to 1942 levels chiefly through adjustments in wholesaler and processor markups and in container and delivery allowances. Plans were made during the quarter to place fish from other areas under this regulation.
Control was extended for the first time to retail sales of fresh Atlantic salmon with the establishment of a cents-per-pound markup on such sales. Together with earlier changes in wholesale and import
10 Amendment 4, 2d RMPR 269 ; effective May 11, 1945.
u Amendment 8, 2d RMPR 269 ; effective July 1, 1945.
M Amendment 3, 2d RMPR 269 ; Amendment 42, MPR 422 ; Amendment 41, MPR 423 ; all effective April 12, 1945.
18 MPR 579 ; effective April 1, 1945.
667526—45---------2
14 • Fourteenth Quarterly Report
ceilings, the amendment lowered retail prices about 15 cents a pound under 1944 levels.14
Retail summer markups were established during the quarter for fresh and frozen fish. These markups, together with the seasonal decline in wholesale prices, lowered average consumer prices by 2 to 5 cents a pound under the winter level.15
Cheese, Dry Groceries, and Imported Foods
Cheese.—Two wholesale price schedules for Neufchatel cheese, based upon minimum fat contents of 20 and 23 percent respectively, were issued during the quarter.16 New ceilings for 23 percent fat content added about 1 cent per package to the retail price of popular sizes. Since most neufchatel contains 23 percent fat, the general price level for this type cheese was raised. Only one price schedule was established on cream cheese, pending a decision of the industry concerning the desirability of two schedules. The cream cheese series of maximum prices is applicable to a minimum fat content of 33 percent as established by the Pure Food and Drug Administration.
A general amendment was also issued increasing the price for small styles of cheddar cheese, and providing a markup for the aging of cheddar cheese in small styles. This amendment was designed to make larger quantities of cheddar available to civilians.17
Specific ceilings on Italian type Asiago soft cheese were revised,18 based on actual production costs of the uncured cheese instead of costs of a 4- to 5-month aged cheese which was actually not being produced. The change not only effected a decrease at retail of about 15 cents per pound, but was expected to rechannel milk into production of cheddar, from which it had been diverted by the high prices obtainable for the so-called aged cheeses.
Groceries.—The dry grocery regulations were amended19 to limit packaging allowances to 3 cents on large-size packages. Packaging of spices, tea, and gelatin was made a processing operation and therefore excluded from the packaging allowance when sold in their original containers. The rice markups were made applicable to a lower grade formerly not considered fit for table use. It was found, however, that this type is sold for table use in certain areas. The markups on large containers of olive oil were reduced.
A low-priced seller adjustment provision permitted several manufacturers of gelatin desserts, prices of which had been frozen at
M Amendment 3. RMPR 507; effective June 21, 1945.
15 Amendment 2, RMPR 507 ; effective April 12, 1945.
18 Amendment 24, RMPR 289 ; effective April 16, 1945.
17 Amendment 29, RMPR 289 ; effective May 28, 1945.
18 Amendment 28, RMPR 289; effective June 5, 1945.
19 Amendment 22, MPR 421; Amendment 43, MPR 422, Amendment 42, MPR 423; all effective May 17, 1945.
Price Control: Food and Consumer Goods • 15
abnormally low levels, to continue production.20 Evasionary practices involved in the custom shelling of peanuts were terminated by providing that the price charged by the seller for “in-shell” nuts plus the custom shelling charge should not exceed the ceiling prices for shelled nuts.21
Imported foods.—During the quarter many processed foods were imported, or purchased for importation, for the first time since the beginning of the war in Europe, leading to several changes in the import orders. A revision of Order 38 under the Maximum Import Price Regulation, which contains the pricing formula for imported foods, was completed during the quarter, providing for the establishment of maximum prices in direct relationship to importers’ experience during a base period. Prior to this revision nearly 300 individual price authorizations were issued. Orders of general applicability establishing maximum prices for anchovies and lobster were issued under the revised order.22 The maximum price for futures contracts on black pepper, traded on the New York Produce Exchange, was increased 3y2 cents per pound, bringing the maximum price in line with the spot price, to aid resumption of normal trading in that market.23
An increase of one-half cent per pound was permitted importers of bulk honey during the quarter, to relieve the squeeze between the maximum import selling prices for honey and the maximum import purchase prices.24
Fruits and Vegetables
Price regulations were maintained during the quarter on 95 percent of the volume of all fruits produced for fresh use. Maximum prices were revised for sweet cherries,25 peaches,26 pears, apricots, plums,27 and prunes for fresh use.28 Controls on these deciduous tree fruits, and also on apples,29 were reviewed, and prices adjusted, where necessary, to reflect more accurately the normal price patterns by area, season, and type of outlet. The Office of Economic Stabilization directed that no change be made in the intended grower return to be reflected by the 1945 price ceilings. In the case of sweet cherries, apricots, and pears, however, the f. o. b. prices previously established were found to reflect more than the authorized return, and appropriate reductions were effected at the f. o. b. level. Whenever f. o. b. prices were reduced,
80	Amendment 40, SR 15 ; effective June 11, 1945.
J- Amendment 8, RMPR 335; effective June 7, 1945.
. Orders 357 and 358, Revised Order 38, MIPR; effective May 22, 1945, and June 26, 1»45, respectively.
88	Amendment 2, RPS 52 ; effective April 14, 1945.
* Amendment 1, RMPR 275 ; effective July 2, 1945.
Amendment 101, MPR 426 ; effective May 9, 1945.
Amendment 102, MPR 426; effective May 18,1945.
Amendment 109, MPR 426 ; effective June 1, 1945.
Amendment 109, MPR 426 ; effective June 1,1945.
Amendment 119, MPR 426 : effective June 25,1945.
16 • Fourteenth Quarterly Report
proportionate reductions were also made in the distributive markups allowed.
Steps were taken toward a more complete price control program on grapes.30 Ceilings on both table grapes and juice grapes for home crushing were established prior to the shipping season at levels in line with the prospective return to growers under revised wine ceilings.
Fresh dates31 and cabbage 32 were excluded from price control at retail because they were not under control at prior levels. Apples were placed on a cents-per-pound markup basis in place of a percentage markup, and separate prices were provided for various sizes of iceberg lettuce.33 Further adjustments were made with respect to the retail regulations on bananas, sweet cherries, and frozen fruits and vegetables to make them conform to changes in the commodity regulations.
Disaster adjustments, obligatory under the Stabilization Extension Act of 1944, continued to provide one of the major tasks of the Office. During the quarter under review, 31 adjustments were made covering the following commodities: Sweet peppers, 4; cantaloupes, 3; strawberries, 3; other berries, 2; snap beans, 2; cucumbers, 1; eggplant, 5; dry onions, 3; potatoes, 3; apples, 2; grapefruit, 2; tangerines, 1. In addition to the adjustments actually made, an approximately equal number of surveys was undertaken on commodities for which no adjustments could be justified.
In the field of canned fruits and vegetables, a regulation was in preparation as the quarter ended, establishing ceilings to reflect approved increases in costs of raw materials and in basic wage rates. In the initial program for the pricing of canned fruits and vegetables in 1945, the Office had contemplated requiring the absorption of cost increases over 1944. Upon receipt of final profits data, however, it became evident that margins in the industry were not sufficient to enable absorption without hazard to the maximum production deemed necessary in view of supply requirements.
A simplified procedure was developed during the quarter for individual adjustment of maximum prices for all major processed fruits and vegetables, where concerns showed unfavorable operating profits as compared with industry averages. This provision, scheduled for issuance in the following quarter, provided that where relief was necessary, maximum adjustment could be made up to the average prevailing price of a particular item in the area for civilian or Government sales, as the case might be.
80	Amendment 117, MPR 426 ; effective June 24, 1945.
81	Amendment 43, MPR 422; Amendment 42, MPR 423; both effective May 17, 1945.
82	Amendment 46, MPR 422; Amendment 45, MPR 423; Amendment 12, MPR 268; all effective June 6, 1945.
83	Amendment 44, MPR 422; Amendment 43, MPR 423; both effective May 24, 1945.
Price Control: Food and Consumer Goods • 17
Final approval by the Office of Economic Stabilization of prices for I raw citrus fruits permitted issuance of the price regulation covering I the 1944-45 pack of the processed fruit.34
Tobacco, Grain, and Feed
Tobacco.—At the direction of the Office of Economic Stabilization, I a price of 57 cents per pound was established for the 1944 crop of Maryland tobacco, the marketing of which began during the quarter.35 The sale of loose cigarettes, a practice stimulated by the cigarette shortage, was banned to prevent evasion of ceiling prices,38 and the price of twist chewing tobacco was increased about 12 cents a pound to compensate manufacturers, to the extent required by law, for sharply increased costs of leaf tobacco.37
"Wheat and flour.—The wheat regulation was reissued during the quarter, establishing maximum prices clearly on a point-of-origin basis, similar to that for other grains, and raising ceilings 3% cents per bushel to reflect parity.38 The flour regulation was amended, extending to millers protection against loss on forward sales in the event the subsidy were discontinued.39 Basic data were collected and geographical differentials determined preparatory to announcement of ceiling prices on the rye crop to be seeded in the fall of 1945.
Feeds.—Several of the major regulations relative to grains and feeds were revised during the quarter. The mixed feed regulation, reissued as MPR 585, was expanded to describe several alternative methods of calculating base period margins and current ceilings in accordance with established practices of the trade.40
The regulation covering prices of alfalfa hay was revised and broadened to nation-wide coverage of all classes of hay.41
The oats,42 barley,43 and grain sorghums44 regulations were revised to incorporate in all of the major grain regulations the most desirable features of each of the original regulations, putting all on a uniform basis more readable and easily understood. Flaxseed prices in California were raised to remove inequities between producing areas.45 A higher price was granted for cottonseed and soybean pellets 46 to
84 Supplement 12, FPR 1 ; effective July 2, 1945.
88 Revised MPR 532 ; effective April 25, 1945.
88 Amendment 1, SR 14D ; effective May 12, 1945.
87 Amendment 3, SR 14D ; effective July 3, 1945.
88 2d RMPR 487 ; effective May 30, 1945.
88 Amendment 7, RMPR 296 ; effective May 2, 1945 ; Amendment 8, RMPR 296 ; effective June 11, 1945.
40 MPR 585 ; effective May 19,1945.
41 MPR 582 ; effective May 1, 1945.
48 Revised Supplement 2, FPR 2 ; effective May 28, 1945.
Revised Supplement 3, FPR 2 ; effective May 15, 1945.
Supplement 6, FPR 2 ; effective June 25, 1945,
“Amendment 7, MPR 397 ; effective June 18, 1945.
Amendment 4, Supplement 3, FPR 3 ; effective May 16, 1945.
18 • Fourteenth Quarterly Report
encourage heavier production for range feeding use. Authority to establish local ceilings on straw was delegated to regional offices.47 A new regulation was issued covering all processed grains, including those formerly covered by MPR 401, which established dollar-and-cents margins instead of freeze margins and delegated to regional offices authority to adjust local inequities.48
Restaurant Prices
Extensive changes in the restaurant regulation were decided upon during the quarter after numerous meetings with the restaurant industry advisory committee and a number of field surveys. The amendments, which had not been issued by the close of the quarter, were expected to tighten control and to correct inconsistencies.
Several actions which became effective during the quarter were taken to correct inequities and adjust for changed conditions. The first of these 49 provided that those who sell bottled fermented malt beverages for consumption on the premises be permitted to increase their prices to approximately the extent that federal taxes were added after March 1942. Under the original provisions, on-premise sellers of draught beer and off-premise sellers of bottled beer were permitted to take the increases, but on-premise sellers of bottled beer were not allowed to pass the tax on to consumers.
The second case in which an inequity was corrected pertained to the prices on the sale of certain wines for consumption on the premises in the State of Washington. Formerly, most of the wines sold in this State were produced there, and could be purchased by tavern keepers directly from the producers. Due to wartime diversion of grapes to other channels, wine production in the State declined, and sellers had to procure a greater percentage of wines from other areas. A State law, however, which provided that wines produced outside the State could be purchased only through State stores at the full retail price, led to a price squeeze for tavern keepers. Base-period prices, based on low acquisition costs, were inadequate profit-wise when applied to purchases made in this manner. The Administrator therefore delegated to the regional office the authority to adjust tavern prices for out-of-State wines sold in Washington.
Price operating instructions covering in-plant feeding adjustment cases were issued during the quarter. The need for special treatment of this highly specialized field of feeding operation became necessary as processing offices struggled with adjustment cases under existent adjustment operating instructions. The new and simpler instructions
47 General Order 63; effective May 15, 1945.
48 Supplement 5, FPR 2 ; effective April 30, 1945.
48 Amendment 2, SO 80; effective April 10, 1945.
Price Control: Food and Consumer Goods • 19 laid the ground for dealing with the contemplated flood of adjustment applications, due to reconversion.
TEXTILES AND APPAREL
Office standards with regard to textile pricing, as announced during the second quarter of 1945, assured to the industry ceiling prices on each major item which would cover the weighted average mill cost of the item, plus a profit on each item equal to the industry’s peacetime return on net worth for that item alone.
This standard, in line with previously prevailing policy, followed recommendations of the Senate Banking and Currency Committee, in its report on the Stabilization Extension Act, which in effect stated that ceiling prices, to reflect parity on cotton in accordance with the Bankhead-Brown amendment, should include a reasonable profit over weighted average cost for each major item. The cotton costs, for the time being, were to continue being computed at not less than the landed mill parity equivalent for the grade and staple of cotton used.
At the same time, the Office announced that it reserved the right to increase or decrease textile prices in line with the movement of raw cotton prices (up to parity). This “escalator” plan would lower textile prices if cotton remained substantially below parity since, in the opinion of the Administrator, the Bankhead amendment was not intended to raise textile prices merely to give “windfall” profits to the mills, but to make sure that raw cotton prices were not prevented from rising to parity.
This more liberal pricing standard for cotton textiles was continued largely to stimulate cotton textile production, which had fallen off sufficiently to endanger the supply situation. Since the immediate cause of the decline in textile production since 1942 was due to a decline in man-hours worked, an increase in production could be brought about only by increasing man-hours worked. Though more workers had become available to the textile mills through cutbacks in war production, the industry was loath to undertake the extra costs of overtime and third-shift operations without assurance that these costs could be passed on. Modification of the absorption policy, it was felt, would encourage mills to incur the higher costs of additional labor needed to expand production.
An important step was also taken during the quarter in implementing the joint OPA-WPB program to restore low- and medium-priced apparel to the market. This was the issuance of three maximum average price orders (MAP) covering rayon mills, woolen mills, and garment manufacturers.
20 • Fourteenth Quarterly Report
Price Increases
A series of conferences held during the quarter with a committee of cotton textile producers to examine the whole problem of cost increases in cotton textiles resulted in the declaration of policy outlined above. In line with this policy, it was decided to review industry prices because of wage increases permitted during the period by the War Labor Board. Since current ceilings were based on costs before the wage increases, the industry’s cost position on some items had no doubt changed, and prices would have to be adjusted to assure conformity with policy. Late in June, therefore, producers of specified major items of cotton textiles were permitted to enter into adjustable pricing contracts pending upward price revision to reflect the pass-through of these wage increases.60
At the request of the War Department, the Office exempted from price control 29 specified constructions of combed fabrics in the grey or finished state on deliveries made under contracts entered into during the 3-month period beginning April 16, 1945.51 These constructions were generally heavier than those combed mills could make economically.
A price increase52 designed to encourage the distribution of yard goods to small urban and rural retailers, permitted wholesalers serving such retailers to purchase finished goods at a higher price than formerly. This action also corrected a distortion in the distribution of finished goods by eliminating the advantage which manufacturing retailers had over other manufacturers in obtaining finished goods.
In the field of apparel, an increase was granted on cotton flannel shirts, following an increase in fabric costs.53 The new price was sufficient to yield total cost to manufacturers, and full absorption at the distributive levels was provided for. The rise in prices of cotton fabrics under the Bankhead amendment led to a number of similar situations. Some of the other commodity fields in which the problem arose during the quarter were hosiery, work clothes, and knit underwear.
Towards the end of the quarter, manufacturers of low-priced men’s and boys’ heavyweight underwear produced under War Production Board directives, were permitted to adjust their prices automatically within a specified formula unless proposed prices were modified or disapproved within 20 days of the mailing of application for relief.84
80 SO 114, effective June 21, 1945.
61 Amendment 24, MPR 11 ; Amendment 31, MPR 127 ; Amendment 18, MPR 157 ; all effective June 4, 1945.
82 Amendment 20, MPR 127 ; effective May 7, 1945.
83 Amendment 1, MPR 304 ; effective May 9, 1945.
84 Revised SO 99 ; effective June 5, 1945.
Price Control: Food and Consumer Goods • 21
The MAP Orders
Application of the maximum average price technique to textiles and apparel represented its first large-scale use to halt and reverse on a broad front price increases resulting from upgrading, that is, the dropping of lower-priced lines and concentration on higher-priced lines. The technique had first been applied on a smaller scale to the cigar industry.55 Three orders issued during the quarter included garment manufacturers,56 rayon mills,57 and woolen mills.58 These orders did not supersede existing price regulations which continued to govern individual prices; they merely supplemented the existing regulation.
The core of each order is the requirement that any producer covered by one of the orders must maintain an average price for his deliveries during each quarter at or below his average price for the same products in the base period, 1943. Individual prices may be above or below the average.
The structure of the orders is the same: Each one provides for a base period—1943 or some portion thereof—and a list of categories, for which the base period average prices must be calculated. These base period average prices become the maximum average prices, which may not be exceeded in any quarter for deliveries of these categories. If the maximum average prices of any producer are exceeded in any quarter so that he incurs a “surcharge,” provisions are included for working off these surcharges so that the producer can again be in compliance with the requirement that he be within his maximum average price for any category.
After the initial issuance of the MAP orders, numerous consultations were held with industry groups for the purpose of receiving further industry comments and suggestions. By the close of the quarter, a number of amendments had already been issued based on these suggestions, and further amendments were to be issued. These amendments have as their basic purpose, improvements in the orders that will permit producers to meet their maximum average prices without loss of production or deterioration of quality.
The Office planned to complete the over-all apparel program by issuing a MAP order for manufacturing retailers and a regulation for wholesalers which would put apparel at the wholesale level under some better form of price regulation than the General Maximum Price Regulation. Without such orders, serious gaps would be left in the program to provide the consumer with apparel at lower prices.
Since the garment and textile industries had become subject to the MAP orders Only late in the quarter, their effectiveness in bringing
“ See Twelfth Quarterly Report, p. 19.
“ SO 108 ; effective April 28, 1945.
87	SO 110 ; effective May 14, 1945.
88	SO 113; effective June 9, 1945
22 • Fourteenth Quarterly Report
about lower prices could not yet be ascertained by the end of the period. It was estimated that a time lag of at least 2 or 3 months would be required before goods manufactured under this program would be available upon retail shelves. The Office stressed, however, that the success of the program at the garment level hinged in major part upon the effectiveness of controls directed toward the production and distribution of low-end textiles.
Leather, Hides, and Shoes
Progress was made during the quarter toward establishing and maintaining base-period price levels for all types of leather. A series of standard price tables was established for use in determining prices for the various individual sellers of shoe leather, at levels in line with the base-period general level of prices. In addition, a complete inventory of base-period price data was made for issuance in summary tables during the following quarter, as a guide in establishing prices for other types of leather.
Uniform maximum prices were established by a general order issued under the leather regulation for certain leathers where regulation by individual order was found to be unnecessary, notably in those leathers which were required by the War Production Board or by the military agencies, to meet standard specifications. Wac taps, military strips, and chrome retanned goatskins for shoe upper leather were placed under uniform maximum prices by general price orders.
Import purchase ceilings on East India tanned goatskins and sheepskins had to be advanced 2% cents a pound during the quarter to the level of United Kingdom prices, to effect a more equitable distribution of available supply. Earlier ceilings had failed to correct an unbalanced trade situation, and shipments to this country had all but halted.
Action to check the alarming increase of jobbers in the shoe industry was worked out during the period under review as part of a broad program to deal with the wartime multiplication of jobbers who perform none of the service functions of wholesalers but who add to th cost of the article by obtaining an additional markup. An order was to be issued early in the next quarter59 which would restrict wholesale markups to persons operating regularly as shoe wholesalers sometime in the 5 years before April 1,1945. Jobbers entering the business after that date were not to be permitted the markup. In addition, sellers entering the trade since April 8,1943 (the date of President Rooseyelt’s hold-the-line order), were to prove that they performed regular distributive functions before being permitted to take the markup.
89	SO 120, effective July 12, 1945.
Price Control: Food and Consumer Goods • 23
It was believed that the new procedure would eliminate markup pyramiding by dummy jobbers, and would also remove unnecessary jobbers from the market.
Late in June specific prices were established for high wooden heels, again allowed in production by the War Production Board.60 At the same time, price differentials were established for classified heel heights and for various sizes of top lifts.
A cost and financial study of a sample of 208 shoe manufacturers was completed during the quarter for the purpose of furnishing data for taking specific action on shoe prices at the manufacturing level, with offsetting actions at the wholesale and retail levels. Such action appeared necessary to reduce the need for price relief to many manufacturers of low-priced staple shoes without raising the general level of shoe prices.
CONSUMER DURABLE GOODS
With the end of the war in Europe, the process of shifting indus-i tries back to the production of peacetime products began to be speeded up. Meetings were held with most of the major reconverting manufacturing groups in order to discuss reconversion problems. Negotia-: tions were carried on with both the War Production Board and industry groups for the purpose of insuring the return to the market of low and medium price reconversion items.
Surveys at the manufacturing level were placed in the field for a ¡number of reconverting industries and were in various stages of completion for others. A study of the aluminum ware industry was virtually completed but the final results were not yet available at the close of the quarter. An extensive survey of the distributive field for [electrical appliances, planned in earlier months, was tested by two pilot studies, one at the retail and one at the wholesale level. These ¡studies furnished the basis for launching the full-scale survey during the quarter.
| Steps were taken during the quarter to revise Maximum Price Regulation 18861 to bring its pricing methods in line with the base dates pnd recognized cost increases as set forth in the reconversion formula. [An important development in the area of reconversion took place with respect to the piano industry, which had been granted a reconversion price adjustment in the latter part of 1944.62 By the second quarter of this year, it became evident that the forces which had been plied upon to erase the initial “bulge” costs had not come into play.
MMmenJment 6’ MPR 420; effective July 2, 1945.
Maximum Prices for Specified Building Materials and Consumers’ r ea c °ther Than APParel.
| See Twelfth Quarterly Report, pp. 14-15.
24 • Fourteenth Quarterly Report
It was therefore necessary to take steps to provide further price relief to the industry, both at the parts and at the finished product levels.
The wholesale furniture regulation 63 was issued during the quarter, placing furniture wholesalers on a category markup basis directly in line with prevailing markups of 1942. The regulation replaced GMPB pricing, and was aimed at achieving substantial reductions in prices I charged by the majority of the new furniture wholesalers who had I entered the market since 1942.
CONSUMER SERVICES
One of the more important actions in the services field during the I year was the delegation of authority to regional administrators to I establish dollar-and-cent ceiling prices for shoe-repair services within I their area of jurisdiction.64 By the end of June, this authority had I been used by five of the eight regional offices. Uniform dollar-and-I cent prices for major shoe-repair services were tablished in the cities I of Toledo, Ohio; Charlotte, N. C.; Fort Worth, Tex.; Colorado! Springs, Colo.; and Sacramento, Calif.	I
Inflationary trends in automotive repair-service rates were coun-B tered by issuance of a supplementary service regulation65 establishing B maximum service time limits for 52 major automobile operations. I Under the regulation, ceilings were to be determined by multiplying B the already established hourly rate by the number of hours specified B in the regulation for a particular job and adding the legal maximums I for parts or materials. A “fixed charge” for the service, determined B under the services regulation, was to be used only if they were lower B than the new prices.
Uniform dollar-and-cent pricing was extended during the quarter! to laundry services in Milwaukee and St. Louis, bringing such pricing! to a total of 18 heavily populated areas. Dollar-and-cent prices were!1 also established for linen-supply services in Atlanta and Philadelphia. ■ Laundry prices in the New York City area were increased to offset WarB Labor Board wage grants to employees of power laundries in that area.I ।
Authority was granted to the Chicago regional office to establish I brokerage rates on the Chicago Board of Trade. The San Francisco! ( regional office was given authority to establish dollar-and-cent ceiling 1I prices for automobile parking in the city of Los Angeles,
63 MPR 590, effective July 3, 1945.	I i]
64 MPR 165, Supplementary Service Regulation 47, effective February 12, 1945.
85 Supplementary Service Regulation 49, MPR 165, effective October 10, 1945.	I ■
Price Control: Industrials and Fuels • 25
*111*
PRICE CONTROL: INDUSTRIALS AND FUELS
In industrial materials, the Office was chiefly concerned during the second quarter of 1945 with reviewing ceiling prices which were threatened by adverse operating conditions. Industry profits'in a number of instances were found to be below normal peacetime returns, and prices had to be increased to meet the requirements of the price control acts.
Increased production costs in the lumber industry brought about a number of price adjustments during the quarter, particularly for mills operating under War Production Board orders, although the general price increase requested by the southern pine industry was refused, since industry surveys indicated that current prices had provided a profit margin greater than in the base period for all but the normally unprofitable fringe of mills.
While the general tightness that had characterized the pulpwood ¡market persisted for some time during the quarter, no general increases in ceiling prices appeared to be called for. The Office continued to rely on individual upward adjustments in contract logging services to assist in the maintenance of pulpwood deliveries in certain areas.
I Uneven cost pressures associated with the impact of a somewhat Ireduced wartime demand and a slowly expanding civilian demand lied to further review of iron and steel prices during the quarter, and [several ceiling price increases were granted.
I The Office continued during the period to make area adjustments m prices of building materials where margins of area industries were below their base-period levels.
[ In machinery, the more important actions concerned adjustment of prices on commercial trucks for civilian use, produced under War Production Board orders. Here ceilings had to be raised in order to maintain essential supply.
I Coal prices were also revised upward during the quarter to reflect increases in labor costs arising from a War Labor Board-approved Agreement between mine operators and the miners’ union.
LUMBER
I Early in the quarter, at the request of the Army, temporary in-|reases were permitted for specific sizes of west coast softwood lumber feed for construction purposes and produced in mills operating under
26 • Fourteenth Quarterly Report
a War Production Board order requiring 65 percent of the monthly I output to be in boards and dimensions needed for war use in the I Pacific.1 This requirement resulted in increased costs for which the I Office compensated by an increase in board prices to remain in effect I as long as the WPB directive is operative.
Shortly thereafter, for the same reasons, the prices for all dimen- I sions of Douglas fir and those of select structural were increased in I order to compensate for the costs of producing dimensions which are I somewhat greater than those of nondimension lumber. Prices of I Douglas fir planks and timbers, however, were reduced, to compensate I in part for the price increase in boards and dimension. A further I addition to prices of Douglas fir and other west coast lumber was I permitted for cases in which a buyer requested open carloading for I lumber usually shipped in box cars, or packaging in sling lots or in I individual parcels. These services were deemed valuable to the armed I forces because they reduced unloading cost and conserved manpower, I and the price increases were to cover their direct costs.2
The Office established uniform dollar-and-cent prices at the mill I level, replacing GMPR freeze prices, on the bulk of Douglas fir stock I millwork. The new ceilings for the most part reflected March 1942 1 averages. An increase of 8 percent, however, was granted to smaller I sellers of screen doors through in-lining their prices with prices of I larger manufacturers who account for 85 percent of the production. I Ceilings on doorframes had to be increased 10% percent over the I March 1942 level in order to meet the minimum requirements of law, I and to cover average manufacturing costs of this item.8
Another important change affecting west coast lumber was the I establishment of an individual adjustment provision for cedar shingle I log producers, to prevent further hardship to logging operators whose I production runs heavy to cedar. Western shingle mills had advised I the Office that although they were able to absorb an increase in cedar I log prices, their suppliers were unable to overcome adverse operating I conditions and deliver adequate quantities of logs without an individual I relief provision. Cedar is the most expensive species to log, and several I logging companies had begun to close down or had sold out or moved I into more profitable logging stands. Since any adjustment in the log I price of producers eligible for relief under the new provision was predi-I cated upon the ability of the shingle producer to absorb the increase in I log prices, the action did not change the cost of shingles to consumers.4I
Hardwood price actions were issued for small mills in the Appala-1 chian area. As in the Southern area, these mills were permitted to sell I
1 Amendment 12, RMPR 26, effective April 25, 1945.
2 Amendment 13, RMPR 26, effective May 4, 1945.
3 MPR 589, effective June 11, 1945.
* Amendment 21, MPR 161, effective May 5,1945.
Price Control: Industrials and Fuels • 27
hardwood lumber they did not grade either at new ungraded ceilings or, to buyers authorized by OP A to inspect and grade, at the established ceiling prices for graded lumber less 5 percent. In the latter case the mills may charge a minimum of $20 per MBM for any residual ungraded lumber. The new ungraded hardwood ceilings reflected the same relationship to graded Appalachian hardwood prices as existed between these two types in the Southern area in January 1945. Under this action the authorized buyer must demonstrate his competence to grade hardwood lumber on his own inspection.®
A. major change in pricing method was effected in the hardwood plywood regulation during the quarter. Specific flat mill prices for sales by jobbers, distribution plants, and other intermediate sellers on direct mill shipments, formerly applied to all sellers, were replaced by the slightly higher General Maximum Price Regulation prices, for the individual seller.6 Although, at the time when flat mill prices were first established for all sellers, the data at hand did not indicate that normal pricing practice provided for markups over mill prices on sales by intermediate sellers, the Office felt that this question deserved further study and that a return to GMPR prices would relieve such hardships as might be suffered by individual sellers under the mill prices.
Charges for custom milling and kiln drying of soft and hardwoods were put on a dollar-and-cent area basis in recognition of area differences in labor and other cost factors. Three regulations were issued on March 31,1945: One for western softwoods in the West and South, another for all other woods in the South, and a third for all woods in the Midwestern and Lake States.7 Custom work on hardwoods was specifically priced for the first time in any area, with the new ceilings reflecting average charges for these services when priced under the single regulation previously applicable.
Producers of 7-foot railroad ties were given an increase of 5 percent per tie to stimulate production for increasingly large orders for narrow-gage foreign railroads and domestic streetcar companies. The new ceiling, however, was still 5 cents below the ceiling for the standard 8-foot tie. The net result of this action was a saving to buyers, since previously they frequently had to buy the more expensive standard tie and have it cut at extra cost. In order to facilitate the buying of rough ties, contractors were given permission to resume the formerly prohibited practice of paying purchasing commissions to ! persons not carried full-time on their pay rolls.8
* Amendment 20, MPR 146, effective May 31,1945.
‘ Amendment 4, MPR 568, effective June 6,1945.
’ RMPR 539, MPR 539-B, 539-C, all effective March 31, 1945.
I * Amendment 2, 3rd RMPR 216, effective April 16,1945.
28 • Fourteenth Quarterly Report
In the case of southern pine lumber, industry as well as supp agencies recommended general price adjustments in order to stimulate further production. Cost surveys instituted by the Office as well as by the Southern Pine War Committee, however, established the fact that the industry was receiving a greater margin of profit than at any time in the representative base period and that current prices coverec cost of production and provided a profit margin for all but the normally unprofitable marginal fringe of mills. Strong statistical evidence showed that more than 75 percent of the industry woul( have been found to be operating at a profit, had complete information been available from more of the companies reporting. On the basis of these findings, the existing prices were determined to be generally fair and equitable. This conclusion was found to be true especially in the light of price increases already granted. In general, the increases had kept pace with rising costs. The index of all southern pine prices in June 1945 was 60 percent above August 1939 and 20 percent above October 1941. Actual sales realization, however, was approximately 33 percent above that of October 1941 because in the war-tight market the industry was able to sell each time at the highest grade at which the lumber could be graded, a situation which did not exist earlier.
For certain nonstandard types of boards, dressed thicker or thinner than normal, however, industry-wide premiums of $1 per MBM were restored in view of the increased number of individual requests for special prices on extra and substandard boards.9 No price increase over the January 15,1945, level was involved since such premiums, in conformance with industry practice, had been in effect prior to that time.
PAPER
Wood-pulp shipments from Northern Europe again started during the quarter, and there were indications that bulk shipments would shortly be resumed. Considerable pressure was exerted to have prices established on the basis of equal net realization as between domestic and Scandinavian producers, but the Office decided that this would disrupt the domestic price structure. If such a pricing method were accepted, it would produce a two-price system in the wood-pulp field and in time would require adjustments at subsequent production stages in order to compensate for the higher-priced Scandinavian pulps going into the same uses as domestic pulp. In view of these considerations, the Office relied on its general policy of preserving a competitive price structure, wherever possible, by establishing uni-form ceiling prices with normal freight allowed as between importers
9 Amendment 8, 2d RMPR 19, effective April 4, 1945.
Price Control: Industrials and Fuels • 29
and domestic producers of standardized products. Consequently, existing producers’ ceiling prices for United States and Canadian pulp were extended to Swedish and other Scandinavian pulp, with ¡transportation allowances specifically to cover freight cost for shipment from Eastern ports to destinations east of Chicago.10 However, sellers were permitted to pass on, and mills were required to absorb, the cost of United States inland transportation in excess of the specific freight allowances so established. It was believed that upon resumption of normal Great Lakes traffic the long hauls west of Chicago would be cut down and the freight cost absorption by mills in that area reduced.
Ceilings for baled paper wood and poplar wood wool produced in the Lake States were increased during the quarter in order to restore average earnings comparable to those in the base period. This increase had to be passed on to the ultimate purchaser in accordance with the Office’s standards, which do not require absorption where it would be clearly inequitable.11
IRON AND STEEL
In order to enable the producers of basic steel mill products to recover out-of-pocket costs on particular products, the maximum price of 14 products was increased by $2 to $7 per ton during the quarter, replacing 5 interim increases granted in January and raising the ceilings of 9 additional products for the first time since the beginning of price control.12 No general increases on an industry-wide basis ‘were required by the industry earnings standard, since the over-all earnings position of the industry was favorable, compared with the base period 1936-39. However, under the product standard, the max-imum prices for a particular product or line of products are not deemed generally fair and equitable unless they cover the out-of-pocket costs13 for the bulk of the output. The product standard was applied to the cost information submitted by the steel industry, and ¡the result was an increase in 14 basic carbon steel products, the amount of which was estimated at 1% percent of the total dollar sales of all steel products covered by the iron and steel price regulation.
10 Amendment 4, RMPR 114, effective June 14, 1945.
11 Amendment 5, 2d RSR 14, effective April 5,1945.
“ Amendment 13, RPS 6, effective May 23, 1945.
2 statement made before the Senate Banking and Currency Committee on March I ’ by Mr- Ja“es F. Brownlee, Deputy Administrator for Price, the out-of-pocket osts were defined as follows : “Out-of-pocket costs are those which would be eliminated manufacture of the product were to be discontinued * ♦ ♦. We have come to the conclusion that as a working rule we ought ordinarily to use the measure of manufacturing ¡ Sts although déductions from these costs, or additions to them, will be appropriate in L ? T/68* By then using the average of these manufacturing costs, with or without a adjustments, we are able to cover the out-of-pocket costs for the bulk of the output ” 667526—45---------3
30 • Fourteenth Quarterly Report
Warehousemen and jobbers were required to absorb the mill in-creases (with minor exceptions) under established Office standards applicable to distributive trades.14 Information made available to the Office did not indicate that such absorption would create hardship for intermediate sellers as a group. The fact that mill prices were raised did not of itself demonstrate that existing resellers’ prices had become no longer generally fair and equitable since such a demonstration must depend on whether the increase in purchase prices exceeded the resellers’ capacity to absorb it. Although the data in possession of the Office were inadequate for a final decision, they indicated at the time that as a result of the mill price increases the resellers’ margin on most of the products involved was not reduced below the average operating expense rate of the trade. Efforts to secure a more complete picture of the operating conditions of the warehouse industry proved successful toward the end of the quarter, and an individual adjustment provision was added to the warehouse regulation. By this provision the Office would be able to eliminate any undue absorption by resellers which might otherwise be required by the inability of the industry generally to disprove the general fairness and equity of the prices established for resellers.15
In order to eliminate an unwarranted price differential between sales of heavy melting steel scrap by railroads on the one hand and by ordinary dealers and contractors on the other, the latter received a $1 per ton increase for scrap material obtained from wrecking railroad equipment on railroad property.16
Advances of 25 and 50 cents per ton granted on furnace coke reflected the adjustments made in coal prices on May I.17 To alleviate hardships not covered by this general increase, an individual adjustment procedure was set up for high cost producers who could not operate under the new ceilings without impairment of their over-all financial position.
A revision of dollar-and-cent shipping-point ceiling prices for reusable iron and steel products, suitable for use without further reconditioning, was effectuated by reissuance of the regulation on reusable iron and steel products.18 The scope of that regulation was extended to include not only ordinary used iron and steel products but also materials salvaged from structures (like storage tanks) which were prepared for installation but not placed in service or restored to their original condition. The price changes in reusable steel products involved adoption of a new quantity price differential designed to
14 Amendment 31, RPS 49, effective May 23, 1945.
15 Amendment 32, RPS 49, effective July 1,1945.
18 Amendment 2, MPR 4, effective April 14, 1945.
17 Amendment 7, MPR 77, effective May 26,1945.
18 RMPR 310, effective June 26,1945.
Price Control: Industrials and Fuels • 31
| improve the distribution of reusable iron and steel products without seriously affecting the general price level. As an additional stimulus to a freer flow of reusable iron and steel products, the new regulation provided for a deduction of $8 per ton for most products which require reconditioning but are suitable for reuse.
BUILDING MATERIALS
In line with its established policy for price adjustments in the field of building materials, the Office relied on area action where cost increases made higher prices necessary. The first increase of this type during the quarter covered four counties in Ohio and permitted manufacturers of lime to add 45 cents per ton to their selling prices, thereby restoring base-period profits to producers who in this case specialized in building, chemical, and industrial lime.19 A second action permitted producers in eight southeastern States to advance their realizations on lime by 65 cents per ton, enabling them to recover baseperiod earnings.20 In this case the war-depressed character of the lime industry was particularly marked. A similar situation in the lime trade in five southern States led to a rise of 75 cents per ton above 1942 freeze prices.21 In all cases, industrial and commercial users as well as resellers had a sufficient margin to absorb the increases.
Rapid increases during the second half of 1944 in cost of production of all qualities, shapes, and sizes of fire clay and silica brick in the area east of the Mississippi made it necessary to supersede an earlier 3 percent increase over March 1942 producer prices by an increase of 6 percent. Jobbers and dealers were allowed to pass on the dollar amount of the increase.22
Production of vitrified clay sewer pipe products continued to be below normal levels, particularly in the western areas (except the Pacific coast). Producers of these commodities in this region generally did not manufacture other products and were considered a separate segment of the industry. Under conditions of depressed volume, the Office determined that the industry was entitled to an increase of 10 percent, permitting break-even or profitable operations for all but the high-cost marginal fringe of the industry.23
The same standards were applied to the cast iron soil pipe and fittings industry which was operating at only 20 percent of normal production, since 1942 labor and material cost had increased substantially and the indirect cost per unit had also risen due to the drop in volume.
19 Amendment 74, Order A-l, MPR 188, effective AprU 13,1945.
20 Amendment 77, Order A-l, MPR 188, effective May 12,1945.
21 Amendment 82, Order A-l, MPR 188, effective June 21,1945.
22 Amendment 83, Order A-l, MPR 188, effective June 25, 1945.
28 Amendment 11, RMPR 206, effective May 5,1945.
32 • Fourteenth Quarterly Report
In the absence of adequate base-period earnings data, the Office determined that in this single-line industry, the standards of the Office would be satisfied by establishing a price which would cover manufacturing costs for more than YO percent of the industry, plus average normal overhead expense. As a result, producers’ ceilings were advanced $5 per ton, the first increase since 1942, enabling the bulk of the Industry to cover at least total costs.24
MACHINERY
One of the most important undertakings with respect to the pricing of essential machinery items during the second quarter of 1945 was the establishment of adjusted ceiling prices on commercial trucks for civilian use, production of which had been authorized by War Production Board for the first time since the beginning of the war. Adjustments ranging from 8% to 25 percent were necessary to restore normal cost-price relationships on individual models in the interest of quickly resumed production of these vehicles. The action covered spot authorizations granted to such firms as Mack, Chrysler, International Harvester, Diamond T Motor-Car Co., General Motors Corp., and Studebaker Corp.25
In making the ceiling adjustments, the Office used the same standards as had been applied to products essential to the war effort. Commercial trucks for essential civilian use were deemed to be as essential as items serving the Army directly. Under these circumstances, the firms which had been given spot authorizations for new truck production were entitled to an adjustment commensurate with their over-all profits position, thus removing any possible threat to production. Some of the cost increases which were a basis for adjustment, however, resulted from conditions which would no longer exist once restrictions on production were relaxed or removed. The adjusted price was therefore made applicable to a specific number of units authorized for production under WPB orders. Prices established by the adjustment orders thus could not be used as a basis for quotation for deliveries over and beyond the number authorized.
Wartime decline in production of consumer items manufactured from metal had cut industry earnings below peacetime averages in the field of buff and polishing wheels. The drop in sales of these items had been accompanied by a reduction in the number of manufacturers. The Office recognized that rising costs threatened maintenance of a minimum of essential production. In order to meet the minimum I
24	Amendment 3, RPS 100, effective June 14,1945.
28 RMPR 136 ; Order 423, effective April 18 ; Order 437, effective April 21 ; Order 433,1 effective May 2 ; Order 440, effective May 7 ; Order 447, effective May 24 ; Order 453,1 effective June 15; Order 450, effective June 20; Order 459, effective June 22; and Order 462, effective June 23.
Price Control: Industrials and Fuels • 33
required by law and to secure sufficient output to producers of essential polished metal commodities, manufacturers’ and resellers’ prices of fabric covered wheels were increased 9 percent above March 1942 levels.26 The increment returned at least total cost on the bulk of the output, disregarding the abnormally high overhead expense resulting from the drop in volume.
Further steps were taken during the quarter to make the regulations covering used motor vehicles more workable and more easily enforced. Identical amendments affecting used passenger automobiles, commercial motor vehicles, and motorcycles, required registration and authorization of all dealers of used vehicles who wished to sell on a warranted basis on or after August I.27 The amendments provided that without such authorization no seller might charge a price higher than the “as is” price established in the regulations. The purposes of these amendments were to curb those dealer^ not qualified to sell used vehicles at warranted prices, and also to protect the consumer-purchaser. The principal qualification for a warranted dealer of used vehicles was that he have repair and service facilities which would enable him to fulfill the conditions of the warranty.
At the close of the quarter, the registration of dealers all over the country was well under way, an indication that the program was being easily accepted by the trade.
Preceding initiation of the registration program, sales at warranted prices of vehicles not in good operating condition were specifi-I cally declared to be in violation of the applicable price regulations. This action involved the spelling out of the term “good operating conditions” in accordance with industry standards. It was also pro-ivided that if a dealer were without adequate repairing and recondi-[tioning facilities, his service supplier had to guarantee repairs or replacements before a warranted price could be charged. If repairs or replacements were needed during the 30-day warranty period, the ¡dealer had to supply these services at 50 percent of normal cost. An-other change in the regulation made it clearly a violation of ceilings to give unreasonably low allowances for trade-ins, even though buyers agreed to such allowances.28
RUBBER TIRES AND TUBES
Much attention was centered during the April-June period on tires, tubes, and repair services. Effective May 1, retail prices for passenger car and motorcycle tires were ordered reduced by about 6 percent, and
M Amendment 2, RMPR 136; effective June 4,1945.
27 Amendment 7, MPR 540 ; Amendment 9, RMPR 341; Amendment 3, MPR 569; all issued June 11, effective August 1, 1945.
28 Amendment 2, MPR 569; Amendment 8, RMPR 341; both effective June 13,1945.
34 • Fourteenth Quarterly Report
truck and bus tires by about 7^ percent.28 This action was expected to bring retail prices to the lowest level since early 1942, and to result in yearly savings to consumers of about $17,000,000 and $6,000,000, respectively. The cuts for passenger car tires reflected a reduction in temporary additions allowed manufacturers since April 1944 to offset higher costs and uncertainties involved at the start of the synthetic tire production. At the time the additions were first granted and later when the original expiration date of the additions was extended, it was understood that the increases were temporary, subject to review in the light of additional cost studies to be made as production experience increased.
On the basis of studies conducted by the Office, it was found that the over-all annual profits for the industry, both individually and as a whole, were greatly in excess of the average yearly profits during the peacetime base period. Although the full amount of the temporary increases was no longer required by law as a minimum price adjustment, complete elimination of the increases seemed unwarranted because of the continuing critical need for synthetic tire production. Manufacture of these tires was found still to be handicapped by technological uncertainties and unstable cost elements, particularly in view of higher costs of some of the raw materials (carbon black and tire cord).
Due regard to these factors made it advisable to maintain a price level somewhat higher than that required by law. The reductions therefore merely lowered the original add-on from 8.9 to 3 precent of the maximum retail price for car and motorcycle tires and from 6.5 to 5 percent for all other tires. These reductions maintained a price level for all types of tires at least as high as that prevailing during October 1 to 15,1941.
A new action in the tires and tubes retail regulation was designed to afford relief to service stations and other repair shops which in March 1942 did not have a separate charge for “extra services” but customarily either supplied these services free or had one charge for both the tube repair job and the extra services.30 Dollar-and-cent ceiling prices had been set in May 1944 for tube repairs, and passenger car tube repairs generally were held to 50 cents. Repairmen had previously been permitted to charge for extra services connected with the actual repair job only if they had a separate charge for such services during March 1942. Under the new provision, any additional charge was to be limited to the applicant’s total direct costs attributable to the extra services or the price of the next higher competitive supplier of the service in the area. The action applied to such services as pick-
29 Amendment 6, RMPR 143, effective April 15, 1945; and Amendment 1, RMPR 528, effective May 1, 1945.
80 Amendment 2, RMPR 528, effective June 30,1945.
Price Control: Industrials and Fuels • 35
I up and delivery, mounting and demounting of tire and tube from wheel, and road service for emergency repair jobs.
CARBON BLACK AND OTHER CHEMICALS
Higher maximums were permitted during the quarter for high-cost emergency production of carbon black under the special War Production Board program.31 This action extended the basic pricing formula, issued in November 1944, to sales to Defense Supplies Corporation of I all rubber grades of carbon black and of the black derived from enriching gas agents.32 The increases in maximum prices were geared to the costs of the raw materials used, thereby preserving generally the margin over cost normally enjoyed by carbon black producers. Since March 25, DSC had been handling all carbon black sales under a pool arrangement, buying both normal and high-cost output and selling it at an average price to tire and tube manufacturers. This required a change in the pricing practice of the industry from the normally used Panhandle (Texas) basing point price to an f. o. b. plant basis.33 At the end of the quarter there were indications that the carbon black production goals set by the requirements of the rubber program had been met.
A novel individual adjustment technique was instituted during the quarter for producers of pine wood distillation products for Navy use.34 The industry on the whole was found to be in an unfavorable earnings position as compared with peacetime experience, and 1944 operations of some producers were at a loss, thereby discouraging production of the essential products. The new provision based price adjustments on gross revenue from all joint products derived from a cord of carbonized wood and sold at their respective ceilings. Under this provision, any increase in sales proceeds above factory costs will ordinarily not be granted if the increase exceeds the minimum required to provide each producer with an over-all annual profit comparable“ with peacetime individual or industry experience.
Toward the end of the period general increases ranging from 3 to 20 percent were granted in producers’ ceiling prices for wood rosin in a move to obtain vitally needed increases of production. The Office had been advised by the War Production Board that the current requirements for rosin were nearly twice the probable production, due to a sizable decline in output, to a'marked increase in the use of wood rosin to obtain the required tackiness in synthetic rubber, and to its increased use as a substitute for other scarce resins. WPB cer
81 See Thirteenth Quarterly Report, p. 18.
32 Amendment 3, SR 14-F, effective March 31,1945.
33 Amendment 5, SR 14—F, effective March 25, 1945.
34 Amendment 3, MPR 446; Amendment 12, MPR 431; Amendment 2, MPR 179; Amendment 38, SR 14 ; all effective May 28,1945.
36 • Fourteenth Quarterly Report
tified to the Office that despite its efforts, the desired expansion in production had not occurred, and no expansion was probable without a price increase.
The price increases granted35 were expected to make it possible for producers to meet additional costs entailed in expanding production, such as expenses for longer hauls of stumpage available only at locations farther afield. All the increases were absorbed by manufacturers of synthetic rubber, paper, soap, paints, and varnishes and by other industrial buyers of wood rosin. Dollar-and-cent ceilings were established for the first time for primary resellers and those selling from local stocks. These new ceilings reflected an average of previously realized margins over producers’ prices and included commissions and broker fees.
PETROLEUM PRICES
Operations were continued during the quarter under the stripper well premium plan designed to maintain and increase production from stripper properties.36 Additional pools qualified under the provision for premium payments, ranging from 20 to 35 cents per barrel, where daily average production per well was less than 9 barrels. Other pools, where average cost of production exceeded the average maximum price, qualified under the high-cost provision for premium price increases not exceeding 35 cents per barrel. Financial incentives for maintaining and increasing production are now being provided under the plan to approximately 900 pools, which comprise over 70 percent of the producing wells of the country and account for daily output of about 440,000 barrels, or about 9 percent of national production.
Maximum prices were increased in Wyoming for four fields producing “sour” crude oil and about eight fields producing “sweet” crude oil. This action required an examination of the price structure of al producing oil fields in Wyoming.
In refined products, major actions were concerned with providing a formula for determining delivered ceilings on tank car sales in 11 midwestern States ; the spelling out of prices for aviation gasoline below 87 octane to certain classes of purchasers f. o. b. refineries in Oklahoma; the establishing at the tank wagon level in the Middle West of delivered-at-destination ceilings for various grades of tractor fuel and distillate fuel ; and the drafting of amendments to clarify the applicability of certain tank wagon prices in District 5, and to incorporate specific ceilings f. o. b. refineries in the State of Michigan.
A problem of major interest was the pricing of incremental gas, required for the production of carbon and channel black and necessary
35 Amendment 3, MPR 299, effective June 22,1945.
36 See Tenth Quarterly Report, pp. 24-25.
Price Control: Industrials and Fuels • 37
for the completion of the rubber program.37 The problem was concentrated in Texas, largely in the Panhandle and west Texas areas of that State. It was complicated by the historically low prices at which the gas had sold for this end use in these areas. The Office cooperated with the interagency committee appointed by the Director of the Office of War Mobilization and Reconversion for the purpose of securing’an adequate supply of carbon black.
SOLID FUELS
By far the major activity of the Office in connection with solid fuels during the quarter was the revision of existing price ceilings to reflect increases in cost arising from the approval of new wage agreements between the mine operators and the United Mine Workers of America. The Office had, during the previous quarter, prepared detailed analyses of cost, distribution, realization and margin data in anticipation of the necessity for price changes to insure continued production and to maintain fair and equitable prices under existing standards. Promptly upon approval of the anthracite and bituminous wage agreements by the National War Labor Board, the Office advised the Director of Economic Stabilization of the price adjustments required as a result of the cost increases, and at his direction took appropriate price action.
On April 23,1945, the National War Labor Board approved a wage agreement executed by the bituminous coal operators and the United Mine Workers of America. From the provisions of the agreement and the cost data available to the Administrator, it was estimated that the additional cost of production would amount to 21.3 cents per ton. In determining the amount of the price increases necessary to remove impediments to the supply of this commodity vital to the war effort, essentially the same principles were applied as were embodied in the directive of November 27, 1943, from the Honorable Fred M. Vinson, then Stabilization Director. As in that directive; absorption of the wage cost increase was required in each bituminous coal producing district up to a point leaving a representative margin of 15 cents or the 1942 district margin, whichever was the greater. In every instance where it was feasible and the objectives of price control could be served by reducing the number of existing or potential individual adjustments, differential treatment was given groups of mines within a district. Such treatment was possible in 9 of the 22 producing districts. The over-all adjustments were augmented by individual mine | adjustments whenever necessary to maintain essential supply.38
87 See also p. 35.
38 Amendment 137, MPR 120, effective May 1,1945.
38 • Fourteenth Quarterly Report
With the approval of the Director of Economic Stabilization, prices of Pennsylvania anthracite were increased an average of 75 cents per ton.39 The increases were necessary in order to remove impediments to the continued supply of that essential fuel arising from the impact of a new wage agreement approved by the National War Labor Board on J une 6, 1945, and from the failure of the industry to realize during the first quarter of 1945 its 1942 margin of 19.9 cents per ton. The wage agreement resulted in increases in the cost of producing anthracite estimated to amount to approximately 61 cents per ton. The additional 14 cents per ton adjustment granted was determined in accordance with the principles laid down by Judge Vinson in his directive of May 26, 1944, which stated that it was “essential in the interests of anthracite production that anthracite prices be maintained at a level which will return a margin to the industry this year equivalent to that of 1942.” While margins for the year 1944 amounted to 21 cents per ton, the experience of the industry during the first quarter of 1945 was so unfavorable as to require an adjustment in addition to the direct labor cost increase in order to return the 1942 margin to the industry for the year 1945. Adjustments similar to that effected in Pennsylvania anthracite prices were issued for a miscellaneous semianthracite produced in that State, which was subject to the same cost increases.40
By amendments to regulations governing their respective levels of distribution, wholesale and retail dealers, sellers of bunker fuel, and producers of briquets and packaged fuels were permitted to increase their maximum prices in the amounts of the mine price increases incurred from the above price actions. At the dealer level, further study was made during the quarter of the possible effects upon dealer operations of the limitations upon deliveries instituted by the Solid Fuels Administration for War.
During the period under review, maximum prices were established for 409 new bituminous mines, and orders were issued under the costrealization adjustment sections of the respective producer regulations to 171 producers of bituminous coal and to 18 producers of anthracite. Six additional areas were covered by firewood orders, bringing to 130 the number of specific dollar-and-cent area orders on firewood. The solid fuels area ceiling program was augmented by 13 price orders covering approximately 3,400,000 tons of solid fuel sold by dealers. More than half of this tonnage was accounted for by the area pricing of Pittsburgh, which had presented some unusual pricing problems.
89 Amendment 19, MPR 112, effective June 18,1945.
40 Amendment 33, MPR 121, effective June 18, 1945.
Appendix to Price Chapters • 39
APPENDIX TO PRICE CHAPTERS
Table 1.—Actions Extending Price Control, April-June 1945
Effective date		Commodity	Level of action
Apr.	4,1945	Frozen wild blueberries (from Canada or Newfoundland).	.	Importer-user.
Apr.	14,1945	Iron and steel scrap (sales to exporter-dealer)		Dealer.
Apr.	16,1945	Tar acids (Australian)		All except retail.
Apr.	21,1945	Copal gum (from Belgian Congo)		Importer.
Apr.	30,1945	Processed whole grains (for animal, poultry, and mixed feeds).	All.
May	1,1945	Hay		Do.
May 15,1945		Straw *		Do.
June	2,1945	Used automotive parts		Private owner.
June	14,1945	Woodpulp (northern European)	-		Producer.
June	21,1945	Fresh Atlantic salmon (Eastern)		Retailer.
June	30,1945	Maple sugar (1- to 9-poimd blocks sold for industrial use).2	Producer.
> Authority delegated to regional administrators to fix maximums.
2	Larger blocks previously under control.
Table 2.—Dollar-and-Cent Prices, April—June 1945
Effective date	Commodity	Level of action
Apr. 1,1945	Frozen fish (North Atlantic species)		All.
Apr. 2,1945	Used lumber sales L—				Do.
Apr. 4,1945	Frozen wild blueberries (from Canada or Newfoundland).	Importer.
Apr. 7,1945	No. 5 fuel oil			„	Tank car.
Apr. 9,1945	Rubber heels (third grade, sold unpackaged without mils for home replacement).	All.
Do		.. Rubber boot heels, galosh soling toplift strips (2 grades).	Manufacturer and wholesaler.
Apr. 10,1945	Used beer kegs (sales to users)		Dealer.
Apr. 16,1945	Neufchatel cream cheese (sold in glass containers)		Wholesaler.
Apr. 19,1945	Peeled western red cedar piling	 ___	Producer.
Apr. 21,1945	Copal gum (from Belgian Congo)		Importer.
Apr. 23,1945	Rough and finished rice (Bluebonnet and Magnolia).	Country shipper and mill.
Do		Fountain syringes (hospital grade)	 .	All.2
Apr. 25,1945	Frigidaire electric ranges (2 models).....		Wholesaler and retailer.
Apr. 28,1945	Processed feathers and down (packed for shipment)...	Processor.
Do		Second-hand feathers and down (civilian sales)	Do.
Do		Sleeping pillows..	
May 1,1945	Broached railway car journal bearings (sizes 6 by 11 inches, under J4 inch lining).	Producer.
Do		Imported wash blonde cotton net		All except retail. All.
Do		Hay		
May 16,1945	Military sand bags and burlap sheets (imported from India). Canned beef (34-ounce tins sold to Government)	Importer.
Do			
May 21,1945	Lawn mower tires (Gates Rubber Co.)		Wholesaler and retailer.
May 22,1945	Imported Portuguese and Spanish anchovies (packed in olive oil).	Wholesaler.
May 23,1945	Asphalt and tar saturated felt roofing material (324 square foot rolls 15-pound saturated).	Manufacturer.
May 28,1945	Cairned Pacific squid (packed in its own ink)		Canner.
May 30,1945	Pulpwood1 (produced in the western half of the United States).	Producer.
May 31,1945	Zinc scrap		Do.
Do		Paperboard (sold east of the Rocky Monntains)	Do. Wholesaler.
June 1,1945	Beef hams and sliced dried beef (cutter and canner	
June 8,1945	grade). Industrial wooden boxes (California, Oregon, Washington, Idaho).	Mill.
June 11,1946	Douglas fir stock millwork (except doors and molding).	Do.
J une 12,1945	Imported raw vegetable tanning materials		Importer.
Do		Swiss watches (imported by Longines Wittnauer Watch Co.).	Wholesaler and retailer.
«to set prices delegated to regional and district directors. ’ Effective at retail May 17,1,1945.
40 • Fourteenth Quarterly Report
Table 2.—Dollar-and-Cent Prices, April—June 1945—Continued
Effective date	Commodity	Level of action
June 13,1945 Do.	 Do	 Do	 June 14,1945 June 16,1945 Do		 June 18,1945	Indian Numdah rags (Kashmir type)	 Imported Swiss alarm clocks (Ebosa miniature)-	 Fuel oil (P. S. 100, San Diego; P. S. 100 and 200, Grass Valley, Calif.). Aviation gasoline (3 lower grades, Oklahoma)		 Green herringbone twill khaki cuttings	 Coca mats (made from coir yam and imported from India). India tanned goatskin leather for footwear	 Preservative treating of Lodgepole pine poles		Importer and wholesaler. All. Tank wagon. Refinery. Dealer. Importer and wholesaler. Producer. Do.
Do	 Do	 June 23,1945 Do	- Do.	 June 25,1945	Wood rosin—	——————	 —	 Ice (for car-icing purposes)			 Smoked white fish			—		 Dehydrated cranberries (1944 and later packs)	 Tobacco hogshead material	—	.... Imported coarse wool skins and hair sheepskin		Primary reseller. Producer. Processor and wholesaler. Processor. Producer. Importer.
Do.	 Do	 June 26,1945	Grain sorghums	-	 Puerto Rican rum (not sold in 1942)	 Canadian canned lobster and lobster paste		Producer. Importer. Do.
June 28,1945	Buna-S and neoprene strip rubber		All.
Do	 Do		Canned quahog clams	: Certain dyewood extracts and their derivatives		Canner. Manufacturer. '
Do	 June 30,1945 Do			Mattress innerspring units		 Frozen fabricated wool (for Army)	— Maple sugar (1- to 9-pound blocks sold for industrial use).	Do. Processor. Producer.
Table 3.—Price Reductions, April—June 1945
Effective date	Commodity	Level of action	Amount of reduction
Apr. 9,1945 Apr. 12,1945 Apr. 14,1045 Apr. 16,1945 Apr. 28,1945 Do	 May 1,1945 May 4,1945 May 9,1945 May 14,1945 May 16,1945 May 31,1945 June 1,1945 Do		 Do	 June 5,1945 June 9,1945 June 13,1945 June 21,1945 Do-	 June 22,1945 June 25,1945 June 28,1945 June 29,1945	Limed, pickled, and blue chrome leather splits (other than gelatin or glue stock). Fresh fish and seafood (summer prices)... Cotton print and shade cloth yarn fabrics. Virginia anthracite———.		 Specially processed chicken feathers (sales to Government).! Sleeping pillows and upholstery cushion inner casing. Synthetic rubber tires and tubes (for civilian use). Douglas fir and other west coast lumber... Fresh sweet cherries (1945 crop)—		 Oxtail split joints	 Frozen dressed smelts (Columbia River). Fresh sweet cherries	 Beef hams and sliced dried beef (cutter and canner grades). Fresh apricots and plums (1945 crop)	 Crude oil (West Earlsboro pool, Oklahoma; Freeman pool, Michigan ;Angles-ton pool, Texas). Italian type cheese (Asiago (soft) and group IV). Coal and coke (dealers restricted to one ton deliveries by SFAW). Imported Swiss alarm clocks (Ebosa miniature). Atlantic salmon (eastern)	......... Sweet peppers (eastern grown).	 Canned tuna (lightmeat)	.	 Whiskey blends (containing less than 20 percent whiskey). Buna-S and neoprene strip rubber.——— Canned Maine sardines (fancy grades)..'.	Manufacturer...... Retailer	 Mill....	 Dealer	..... Processor..,.	 Manufacturer	 Retailer	 Mill—		 Country shipper.. Packer	 Processor and wholesaler. Retailer..:		 Wholesaler	 Country shipper and wholesaler. Producer		 Producer, assembler, and wholesaler. Dealer	— AU			— 	do.				 Country shipper.. Canner	....... Processor	.... AU-	— Canner.	........	Varied. 2 to 5 cents per pound. 1	cent per pound. 20 cents per ton. 8 cents per pound. 33)4 percent. 6 percent for car and motor' cycle tires; 7)4 percent for track and bus tires. $1 per MB. M. premiums. 9 percent. 8 cents.' H to 1 cent per pound. )4 and 1 cent per pound. 15 cents per pound at retail. 1)4 cents per pound at retail. 5	, 20, and 35 cents per barrel respectively. 7	,7%, and 8^ to 9)4 cents per pound, respectively. 25	cents per delivery. 10 to 15 percent. 1	cent per pound for frozen, 15 cents per pound for fresh. 1)4 cents per pound at retail. 50 cents per case of 24 No. 2)4 cans. 10 cents per fifth at retail. 6 or 7 percent. 1 to 2 cents per can at ret»
’Or to manufacturers^of articles’for Government use.
Appendix to Price Chapters • 41
Table 4.—Price Increases, April—June 1945
Effective date	Commodity	Level of action	Amount of increase
Apr. 1,1945 Do	- Apr. 2,1945 Do	Frozen roseflsh fillets		Processor			About H cent per pound annual average. 2 to 35 cents a barrel.
	Crude oil (19 stripper pools)		Producer			
	Bunker coal (sold in New York Harbor). Steel oil country tubing, drill pipe, casing, and drive pipe. Frozen wild blueberries (from Canada or N ewfoundl and). Baled basswood or poplar wood wool and excelsior (produced in Michigan, Wisconsin, and Minnesota). Shoe repair leather (upper-sole scrap)—. Shoe repair leather (sold in same form as purchased). Used beer kegs (sales to re-users)		Supplier		Varied.1
		Reseller		Do.1
Apr. 4,1945 Apr 5,1945 Apr. 9,1945 Do . —		Importer-wholesaler. Mill				cents per pound. $3.25 per ton for carload
		Jobber 		shipments; 15 cents per hundredweight for less-than-carload sales. Varied.
		Finder		1 to 1)6 percent. Varied.
Apr. 10,1945 Apr. 12,1945 Do			Dealer		
	North Atlantic fresh and frozen fish (sales of over 500 pounds delivered in smaller units). White potatoes (Texas crop)		Wholesaler ■	1 and 2 cents per pound. $1.70 per hundredweight. April; $1.35 May. 25 cents per hundredweight
		Country shipper.. 	do		
Do		White potatoes (Florida crop)			
Bo		Lemon sole fillets (North Atlantic and Pacific species). Building, chemical, and industrial lime (Ohio). Whole lampong black pepper (futures on New York Exchange). Heavy melting steel scrap (from railroad equipment). Bleached cheesecloth, bunting, and gauze. Northeastern logs and bolts (New Jersey and 9 counties of eastern Pennsylvania). Seven-foot eastern railroad ties.. 			Retailer		April; 20 cents May. 1 to 2 cents per pound. 45 cents per net ton. 3J^ cents per pound. $1 per gross ton. 1J4 cents per pound. 8 percent. 5 percent per tie. Varied.
Apr. 13,1945 Apr. 14,1945 Do			Manufacturer	 Importer		
		Dealer.		
Do			Manufacturer .	
Apr. 16,1945 Do			Producer		
				do—	.	
Do		Neufehatel and cream cheese (23 to 33 percent butterfat). Low volatile briquettes (Washington, D. C., area). Early Texas onions (1945 crop).. .	Wholesaler. .	
Do.J			Dealer .	Glen Rogers product, 44 cents per ton; Berwind, 24 cents. 10 cents per 50 pound bag. 5 cents and 15 cents per bushel, respectively. 22 percent. 10 to 15 cents per gallon.2 $1 per. hundredweight for slab; $1.25 per hundredweight sliced. to 1 cent per pound. 2J^ percent. 70 percent of cost increases. 11	cents per 1% bushel through Aug. 1,1945. 12	percent. 2 cents on medium price and 4 cents on low-price lines. 25 and 35 cents per hundredweight. 2?4 cents per pound. 3 to 22 cents per hundredweight. Zone A—20 cents per ton; zone B—40 cents per ton. 40 cents per hundredweight for April; 35 cents for May. $3.50 to $4.50 per MB.M.2 1	cent per pound. 30	cents per ton.
Do			Country shipper.. do.			
Do		Eggplant and sweet peppers (from Florida). Mack truck chassis (LF) and truck tractor chassis (LFT). Exterior linseed oil paints			
Apr. 18,1945 Do			Manufacturer..... Producer		
Apr. 20,1945	Canned bacon (type IICQD 33 E specifications). Congo copal gum resins		Processor		
Apr. 21,1945			do			
Do		Luggage 'frames (made in New York, New Jersey, and Pennsylvania). Certain cotton products (bed linens, towels, napkins, blankets, etc.). Florida tangerines		M anuíacturer	
Do			Wholesaler	
Do.			Country shipper	 Manufacturer .	
Do		Mack cab (model 270 sold as original equipment). Hot water bottles, combinations and		
Apr. 23,1945			do				
Do		fountain syringes. Beef (Government or set-aside sales) -	Wholesaler	
Apr. 24,1945	East India tanned goatskins and sheepskins (except Bombay and Karachi). Soybean products (deliveries up to 100 miles). Dried beet pulp (carload lots sold on a less-freight basis). Florida white potatoes (1945 crop)	Importer		
Do			Processor	
Apr. 25,1945		Producer...		
Do			Country shipper.. Mill				
Do		West coast softwood lumber (4 grades produced under WPB order). Codfish and haddock (delivered to Gloucester, Massachusetts). Bituminous coal (snow-shoe region, District 1).‘		
Do			Wholesaler	
Do			Producer .	
			
2 Transportation allowance.
represents sav*nSs Producer on new formula, which is not passed on to consumer
42 • Fourteenth Quarterly_Report
Table 4.—-Price Increases, April-June 1945—Continued
Effective date	Commodity	Level of action	Amount of reduction
Apr. 26,1945 Apr. 30,1945 Do	Fresh strawberries (North and South Carolina, Virginia, Maryland, and Delaware). Brown and unpolished whole-kernel rice (for overseas use). Tennessee brown phosphate rock (powdered to specific fineness). Broken and granulated rice		Country shipper.. Mill				3 Ji cents per pound through May 20,1945. 50 cents to $1.30 and 40 to 85 cents, respectively. 25 cents per net ton. 15 cents per hundredweight 16 cents per net ton. 10 and 7 percent respec-tively. $1 to $45 per MB.M.
		Producer		
Do		Dealer	.....	
May 1,1945 Do	Bituminous coal _ - 		Producer		
	Southern hardwood lumber (saps, selects, and yellow poplar, and log runs of yellow hickory). Southern hardwood lumber (standard	Mill			
Do		.....do		
Do		special items). Eggplant, snap beans, and sweet peppers	Country shipper..	15, 25, and 60 cents pet bushel, respectively. 50 cents to $3.50 per ton. 7 to 35 cents per barrel. 14 to 26 cents per ton. 10 and 5 cents per barrel, respectively. 9 percent.
Do	(Florida). Hay.			Producer		
Do	Crude oil (6 stripper pools in Kansas, Louisiana, Oklahoma, and Texas). Bituminous coal (sold in Washington, D. C., area and Alexandria, Va.). Crude oil (Midway Field, Ark., and Butler County, Ky.). International Harvester truck chassis		do		
May 2,1945 Do		Retailer		
		Producer		
Do		Manufacturer		
May 5,1945 May 7,1945 Do ....	(Model K-3). Vitrified clay sewer pipe and allied products (produced in western United States except Pacific coast). Finished piece goods (cut lengths)				do		About 10 percent. 3Ji percent. 8Ji percent.
		Converter		
	Chrysler trucks (Model W H 47, T-120)— Hickory textile machinery parts		Manufacturer		
May 8,1945 May 9,1945 Do			do		5 cents per stick for loom picker sticks; 18 percent for other machinery parts. 24J< to 56Ji cents a dozen. 4Ji percent. 3 to 4 cents per pound. 1 and 2 cents per pound, respectively. 10 to 55 cents per ton. 20 cents per hundredweight to May 31. Ji to 1 Ji cents per pound.
	Men’s and boys’ utility shirts (cotton flannel and domet, produced under WPB order). Imported fresh bananas (specially prepared). Horseradish root.-mn		do		
		Processor		
Do		Assembler		
Do	Smoked kippered salmon, and smoked sableflsh. Bunker fuel (sold in tidewater and lake areas). California white potatoes				Processor		
Do		Ship supplier		
May 11,1945 Do			Country shipper. 	do		
	Poultry (except turkeys on the west coast and in Idaho and Utah), Building, chemical and industrial lime, except agricultural (8 Southeastern States). Eggs and egg products (sales to Government). Variety meats and edible by-products (sales to Government). Crude oil (4 fields in Wyoming)			
May 12,1945 Do		Producer		65 cents per ton. Actual cost of new wooden
		Packer		
May 14,1945 Do			do		 Producer		cases. 10 to 95 cents per hundredweight. . 2 to 12 cents per barrel. 25 cents per hundredweight Iji cents per bushel. 75 cents per ton. 1	and 2 cents per pound for fresh; for frozen 1 Ji and 3 cents. 42 to 95 cents per ounce. 6	Ji percent. 1 cent on medium-priced
Do	Dressed hogs and wholesale pork cuts.— Barley (shipped by vessel on Great Lakes or by barge east or south of Cairo, Ill.). Soybean sized cakes and pellets		Wholesaler		
May 15,1945 May 16,1945 Do		Distributor		
		Processor		
	Red cod	All.		
May 17,1945 Do	Totaquina powder (sales by Defense Supplies Corporation). Rough quarry limestone blocks 		;		Processor		
		Producer		
Do	Hot-water bottles, combinations; and fountain syringes. Mussel shells (Tennessee-Ohio Rivers producing areas). Eggplant (Florida) .. 			Wholesaler		
May 19,1945 May 21,1945 Do		Producer and dealer. Country shipper.. dn	lines; 3 cents on low-priced. 25 percent per ton. Ji cent above original price-IJi cents above origin»
	Sweet peppers (Florida) 				
Do	Fresh strawberries (Zone 1)			do		price.	. 4 Ji cents per quart, and 2?i cents per pint at retail. Ji to 1 cent per pound to live; 1 to 2 cents per pound for processed. 5 cents per hundredweight. Transportation costs.
May 22,1945 Do .	Turkeys (sold under WFA order to authorized processors and Government agencies). Dry edible beans (7 varieties sold in Michigan, but grown in other States.) New Bedford fillets (shipped to Boston)..	Producer and processor. Dealer	'.	
Do			Processor		
Appendix to Price Chapters • 43
Table 4.—Price Increases, April—June 1945—Continued
Effective date	Commodity	Level of action	Amount of increase
May 23,1945 Do 		Basic steel mill products (14 items)		Mill....		1	to 2 percent. Varied. 4	cents per pound at retail. Varied.’ Do. 2	4.4 percent. 7	cents a quart at retail. 25 and 50 cents per ton. 20	to 50 cents per hundredweight. 1	cent per bushel. $5 per ton. Natural M cent per pound; aged 2J4 cents per pound. 20	cents per net ton. cents per pound at retail. 6	.1 to 8.9 percent. 3	H cents per bushel. 3	percent. 50	cents per hundredweight. $1.25 per hundredweight on sales between 100 to 250 pounds; 25 cents per hundredweight above 250 pounds. 2	to 35 cents per barrel. 1	H cents per pound. 5	.3 percent. 15	cents per 50 pounds. 9	percent. Varied.8 Do. Do. 3	cents per dozen No. 2 and 46-ounce cans. 4	cents a dozen on 6- and 7-ounce cans, and 50 cents on No. 10 cans. 8 to 10}^ percent. % cent per pound and $3 per ton, respectively. $1 and $2.25 per ton, respectively. $1 and $1.15 per cord, respectively. $5 per ton. Varied.8 9.7 to 16.7 percent. 4 to 10 percent. Varied. 30 and 15 cents per bushel, respectively.
	Direct consumption sugar4 (sales to Commodity Credit Corporation. Texas cantaloup (f. o. b. El Centro, Calif.). Bananas						Refiner		
Do			Country shipper.. Retailer		
May 24,1945 Do				
	Eggs				dn	
Do		Chrysler Corp, commercial trucks (certain models). Dewberries (grown in Virginia and the Carolinas). Beehive oven coke (Connellsville district). Canned pork (sales to Government)	 Oats (shipped by vessel on Great Lakes or by barge south or east of Cairo, HL). Ground mica		:.	 Cheddar cheese (sizes under 22 pounds).. Bituminous coal		Manufacturer		
May 25,1945 May 26,1945 Do	 May 28,1945 Do		 Do			Country shipper.. Producer....	 Packer		
		Distributer			 Producer		
		All		 Lake dock opera* tor. Country shipper.. Manufacturer	 Producer		
Do	 May 29,1945 May 30,1945 Do					
	Apples (early 1945 crop)			
	Harley-Davidson motorcycles (certain models). Wheat			
Do		Lineal sash and frame stock (for window and door repair). Beef and veal items (sold to peddlers).	 Beef and veal (carcasses and wholesale cuts). Crude oil (21 stripper pools in Indiana, Kansas, New Mexico, Oklahoma, Texas, and Wyoming). Hothouse cucumbers (f. o. b. Davenport, Iowa). Clay pots and pot rings (for melting glass). Dry onions (early Texas crop)		Manufacturer 			
June 1,1945 Do			Wholesaler		
		Truck peddler.	 Producer		
Do				
Do			Country shipper.. Producer		
June 2,1945 Do				
		Country shipper.. Manufacturer and wholesaler. Distributor		
June 4,1945 June 6,1945 June 7,1945 June 9,1945 June 11,1945 Do		Buff and polishing wheels (except under MPR 316). Hardwood plywood (direct mill sales).... Certain food items (sold by Great Lakes Marine suppliers). Beef, veal, pork, and sausage (meeting WSA specifications). Tomato juice (14 Midwestern States— 1944 pack). Tomato paste (California—1944 pack)....		
		Ship supplier.	 	do		
		Processor		
			do		
Do.		Douglas fir stock millwork (except doors and molding). Imported urunday extract and mangrove bark (for tanning). Cottonseed cakes and pellets	.....	Mill		
June 12,1945 June 14,1945 Do			Importer		
		Manufacturer		
	Peeled poplar pulpwood and excelsior wood (Minnesota, Michigan, and Wisconsin). Cast iron soil pipe and fitting (f. q. b. Birmingham). Glass containers (shipped to the west)... Mack truck chassis (Models, EHU, EHUT, EHX). Textiles, bobbins and spools (made principally of wood). Poultry, eggs, and butter (delivered shipside vessels operated under WSA jurisdiction). Snap beans (Arkansas and Tennessee, and Delaware, New Jersey, Maryland, and Virginia).	Producer	
Do....			do	
June 15,1945 Do			Manufacturer	 —«<10 —	
Do			do - _	
Do			Ship supplier	 Country shipper..	
June 17,1945			
Refined in Louisiana, Texas, and Atlantic seaboard, transportation allowances.
• Return to GMPR levels.
44 • Fourteenth Quarterly Report
Table 4.—Price Increases, April—June 1945—Continued
Effective date	Commodity	Level of action	Amount of increase
June 18,1945 Do....	Light weight book paper			Manufacturer.	4	percent per pound.’ 25 cents to $1 per net ton. 5	cents per bushel. 10 cents to $1.90 per hundredweight. to % cent per pound per month for storage. 2	cents per pound.
	Pennsylvania anthracite and semianthracite. Flaxseed (California)		Producer		
Do			do		
Do	Wood rosin		.....do		
June 20,1945 Do		Frozen fruits, berries and vegetables (1944 and later packs, in less-than-bushel containers). Corvallis and redheart strawberries	Processor		
		Country shipper.. L	do	 	do	...	
June 21,1945 Do	(from Washington and Oregon). Raspberries, blackberries, and dewberries (Delaware, Maryland, New Jersey, Pennsylvania). Sweet peppers (California)	u.		6 to 9^ cents per quart. 55 cents per bushel. 75 cents per net ton.
Do		Building^ chemical, and industrial lime, except agricultural (produced in Arkansas, Kansas, Nebraska, Oklahoma, and western Missouri). Canned tuna (Albacore)		Producer		
June 22,1945 June 23,1945 June 24, 1945 June 25, 1945 Do ..		Canner.. ..	$1 per case of 24 No. cans. 7 cents per ounce at retail. 30 cents a crate of 58 pounds net. 6 percent over March 1942. 60 cents per bushel over
	Dehydrated cranberries (1944 and later packs). Honeydew melons (California and Arizona). Fire clay and silica refractory brick (from Missouri and east of the Mississippi River). Apples (1945 crop)		Processor..	 Country shipper.. Manufacturer..... Country shipper.. Processor		
Do.		Domestic distilled spirits and wines			original price. 5 to 9 cents per fifth.
Do..		Liquid-tight cylindrical paperboard con-	Wholesaler		5 percent.
June 26,1945 Do. .	tainers (delivered in far West). Dry edible beans		Country shipper.. .....do		$1 and $1.40 per hundredweight. 1 cent per bushel. $3 and $1.50 per hundred weight, respectively. About 30 cents a dozen
	Eastern Maryland wheat (grading services on Government loan wheat). Logwood and fustic dyewood extracts	 Canned quahog clams			
June 28,1945 Do . .		M anufacturer..... Canner		
Do		Brown cotton sheeting		Wholesaler		No. 1 E.. O. cans. About 3 percent.
Do	Mattress innerspring units		M anufacturer.			5 percent. 12 cents per case.
June 29, 1945 June 30, 1945 Do		Canned Maine sardines (standard keyless can pack). Boneless bull beef (for Army canned meat). Lamb and mutton carcasses (sales to Government).	Canner		
		Processor		75 cents per hundred-
		Slaughterer and processor.	weight. 25 cents per hundred-
			weight.
• Below 25 pounds of machine finished, 30 pounds of supercalendered, or 35 pounds of machine coated
Table 5.—Releases from Price Control, January—June 1945
Effective date	Commodity	Level of action	Period of release
Jan. 1,1945 Do	 Do		Fabricated mica			 Live mallard and black ducks (sold to stock parks or game preserves). Used cars of foreign make (except from Canada or Mexico). Cooking outfits (for small troop detachments).1 Rates for transportation facilities and equipment (leased from RFC). Commission rates for petroleum distributors. Miscellaneous novelty items3	 Oxford-type cloth (heavy construction sold to military procurement). Rentals of trucks (for transportation of primary forest products).	All	 	do.....	 	do		Permanent. Do. Do.
Do	 Jan. 3,1945 Jan. 17,1945 Feb. 17,1945 Mar. 27,1945 Mar. 28,1945		Producer	 Lessor.		 Commission agents All			 Manufacturer..... Lessor			Do. Do. Do. Do. Though Apr. 15,. 1945.3 Permanent.
* Sold exclusively for military use.
2 Includes 18 classes of commodities such as novelties, miniature furniture, dog and cat beds, and other inor articles.
* Renewal; originally exempted from May 5,1944 to Jan. 1, 1945.
Appendix to Price Chapters
• 45
Table 5.—Releases from Price Control, January—June 1945—Continued
Effective date	Commodity	Level of action	Period of release
Mar. 29,1945	Studebaker cargo carriers (Model T 15, sold by U. S. Treasury Procurement).	Reseller		Permanent.
Apr. 2,1945	Wood pipe (5 types sold to the armed forces, institutional users, and municipalities) Onion seeds (produced by seed-to-seed method).	All..*				Do.
Apr. 10,1945		Producer	.....	1944 and 1945 contracts.
Do		Used beer barrels (sales to nonbrewers)	 Superphosphate bagging charges (to Government),	Reseller.		Permanent.
Apr. 12,1945		Intermediate 38 plants.	Do.
Apr. 16,1945	Imported Swiss watches (with 15 or more jewels and jeweled dials).	All..			Do. •
Apr. 17,1945	Live cattle (sold for vaccine or serum production) ,		do			Do.
Apr. 18,1945	Farina (special containers of 10 pounds or less, sold to Government).	Repacker		Do.
May 9,1945	Used passenger cars (1925 or earlier models).	Reseller-		Do.
May 10,1945	Inedible raisins and raisin waste (WFA sales to vintners and distillers).	WFA			..	Do.
May 17,1945 May 25,1945	Fresh dates		All		Do.
	High tenacity rayon yarn4 (sales to and by Defense Supplies Corporation).	Producer—..		Do.
June 4,1945	Combed cotton grey and finished goods (made under WPB direction for sale to War Department).	.....do.		Apr. 16-July 16, 1945.
June 6,1945 June 29,1945	Cabbage			Retail		
	Certain canned fruit, (1945 pack, sold to Government).’	Processor		Permanent.
June 30,1945	Eggplant and sweet peppers		All except retail...	July 16-Dec. 31,1945.
Do.			Cabbage			.do	July-September. August-September. Permanent.
Do		Cucumbers			do		
Do		Distilled spirits and wines...			Sales by court officers and governmental bodies	
4 Produced on machinery built or converted after Mar. 31,1945.
•	Until restoration of control at other levels.
•	Included are No. 10 cans of pie peaches and whole unpeeled apricots; 4-ounce cans of peaches, pears, sweet cherries, aproicts, and fruit mixtures.
667526—45--------A
46 • Fourteenth Quarterly Report
•	IV-
TRANSPORTATION AND PUBLIC UTILITY RATES
In the quarter under review, the Office continued to block effectively many proposals for higher rates and charges for transportation, public utility, and accessorial services, which threatened seriously to undermine the stabilization program by increasing the cost of living or raising the costs of doing business. In large part, these matters were handled under the provision of the Stabilization Act of 1942, as amended, and the directives pursuant thereto, which require common carriers and public utilities to give the Office 30 days’ notice of all proposed rate increases and to consent to intervention before the appropriate regulatory body having jurisdiction. Of no less importance, however, were the results of direct control, as exercised by the Office under the Emergency Price Control Act, over the rates and charges of carriers other than common carriers; those for storage and terminal services, for rentals of commercial vehicles, and for sundry related services.
TRANSPORTATION
Notices received by the Office during the quarter from common carriers proposing changes in their existing tariffs totaled 2,018, about 9 percent over the number received during the previous quarter. In the interests of price stability, the Office found it necessary to enter 47 formal protests covering 77 notices. As a result of these protests, carriers withdrew notices in 3 cases, requested tariffs were suspended by the regulatory body in 20, and 16 were allowed to stand; 5 protests were undetermined by the end of quarter, and 3 were withdrawn by the Office.
During the quarter, the Office quoted 48,333 individual rates to its own branches, 48 percent of which were used in price determinations, and 46 percent in protest and intervention proceedings involving common carriers. The remaining 6 percent were supplied for Office use in respect to contract carrier operations, and also for use By other Government agencies.
Motor Carrier Charges
Motor common carriers operating in interstate commerce were successful in large measure during the quarter in their efforts to obtain approval for their proposals of so-called emergency surcharges on both truckload and less-than-truckload traffic. On intrastate traffic.
Transportation and Utility Rates • 47
however, their efforts to obtain higher rates were generally not so effective. In the main, motor carriers sought to increase their truckload rates by 1 cent per hundred pounds and their less-than-truckload rates by 2% cents per hundred pounds, and in some instances even more. First proposed by a group of New England carriers, the movement for higher rates spread across the Nation during the quarter. Protests filed by the Office against the proposal of New England carriers with the Interstate Commerce Commission and with the commissions of the respective States in the territory, were unavailing, and the requested increases were granted.
Motor carriers operating in the Middle Atlantic States were next to file notice of a similar proposal to raise their rates. In this instance, too, the Interstate Commerce Commission declined to suspend. Notwithstanding, the Public Service Commission of New York suspended the proposed increase, whereupon the carriers operating intrastate in New York subsequently withdrew their proposal. Carriers operating intrastate in Pennsylvania fared better at the hands of the Pennsylvania Public Utilities Commission; in this instance the Commission refused to suspend the proposed increases on truckload and less-than-truckload traffic insofar as they applied to class I carriers but did suspend them in respect to class II and class III carriers.
Carriers in the Central States territory filed proposals for similar increases both with the Interstate Commerce Commission and the respective State commissions. The Interstate Commerce Commission, although instituting an investigation for purposes of a later hearing, declined to suspend the increases. Nonetheless, the State commissions of Indiana and Ohio did suspend, though the Ohio commission later vacated its suspension.
Pacific coast carriers filed a proposal to increase rates by 5 cents per hundred pounds on all shipments weighing less than 5,000 pounds. The Office did not file a protest on this notice since the carriers agreed that the surcharge, deemed absolutely necessary to permit the continuation of an essential service, would expire December 31, 1945.
Carriers engaged in the Central and Southern territories proposed increases of 2 cents per hundred pounds on truckload and 5 cents per hundred pounds on less-than-truckload and any quantity shipments. The Interstate Commerce Commission suspended this proposed increase, and carriers subsequently withdrew.
Though motor carriers operating in other sections of the country were known to have had similar proposals for hiking their rates, no publication thereof was made during the quarter.
Transportation of Petroleum
Motor carrier rates for transporting petroleum products moving in tank trucks from Council Bluffs, Iowa, to points in Iowa and Nebraska
48 • Fourteenth Quarterly Report
were stabilized during the quarter. The rates established were not only compensatory to the carriers, but were also in consonance with the stabilization policies of the Office.
Early in the quarter, the Office completed its presentation before the New York State Public Service Commission in connection with a proceeding involving increased rates for the transportation of petroleum in tank trucks in that State. No final decision by the Commission was expected before mid-summer.
Rail rates for the transportation of petroleum into the still critica District No. 1, the so-called eastern seaboard shortage area, were to continue until April 1,1946, at a level 25 percent lower than that prevailing prior to the emergency, according to tariffs filed during the quarter which extended the June 30, 1945, expiration date. By this action, rail carriers made possible further substantial savings to the Government, all the while affording greater speed in the transportation of petroleum than is possible by water, the means by which a large volume moved to market before the war.
Contract Carriers and Services
Rates and charges of contract carriers were frozen by OPA at March 1942 levels, with appropriate provisions for individual adjustments on showing of hardship. During the quarter, a total of 38 adjustment applications were acted on by the national office. Five of these were denied; 14 were granted in full and 1 in part; 7 were dismissed for want of necessary information; and 11 involved amendments to earlier orders, requests for review from affected carriers, and orders modifying actions previously taken by the regional offices under delegations of authority.
In the special category of contract carriage known in the trade as pick-up and delivery service, 512 applications for adjustments were received during the quarter. Of the 496 applications disposed of in the 3-month period, 473 were granted in full, 12 were granted in part, and 11 were dismissed. At the end of June, 87 applications for adjustment were pending as compared with a total of 71 at the end of March.
Twelve rate reports from contract petroleum motor carriers were received and disposed of during the quarter. These reports were submitted under the applicable provision of MPR 566 to support requests for authorization of increased charges for petroleum transport in tank trucks under individual buyer-seller agreements between carriers and shippers, whereunder the shippers agreed to absorb increased charges for transportation services and not to pass them on to consumers.
During the latter part of the quarter the Office conducted an extensive survey of going rates and practices covering the rental of com
Transportation and Utility Rates • 49
mercial vehicles in the Southwest, governed by MPR 571. Results of this investigation were to be utilized as a basis for an area-wide order to govern such rentals.
PUBLIC UTILITIES
During the quarter ended June 30, 1945, the Office, as intervenor, continued to oppose inflationary proposals for rate advances in respect to public utility services of various classifications. Altogether, 222 notices of proposed changes were received during the quarter. In the quarter under review, the Office continued to be largely concerned with rate increase applications in the natural gas industry, and proposals for increases in the local telephone field in heavy volume.
Proposed Gas Rate Increases
Hearings were held during the quarter before the Pennsylvania Public Utility Commission and were scheduled to be resumed July 17 in the matter of the $1,400,000 increase in retail natural gas rates sought by Equitable Gas Co.,1 affecting about 185,000 customers in Pittsburgh and surrounding territory. This matter was closely bound up with hearings before the Federal Power Commission, initiated on complaint of the city of Pittsburgh, that the wholesale natural gas rates charged Equitable Gas Co. by its parent, Pittsburgh & West Virginia Gas Co., were excessive. The Federal Power Commission matter, heard in June, involved the rates of Pittsburgh & West Virginia Gas Co. and Kentucky-West Virginia Gas Co., another affiliate supplying gas to Pittsburgh & West Virginia, which in turn is sold to Equitable. The Office was authorized to intervene in this proceeding by the Director of Economic Stabilization.
In the related Equitable Gas Co. matter, the company presented testimony purportedly in support of its proposed rate increases by bringing down to date the record in an investigation into its rates initiated by the commission in 1937, in which hearings were completed in 1943, but no decision had been rendered. During the hearings the Office was the most active participant in opposing the rate increase. The City of Pittsburgh and the County of Allegheny joined OPA in opposing the higher rates.2
Hearings were concluded April 18 before the Pennsylvania Public Utility Commission on the intrastate aspect of natural gas rate increases sought by the North Penn Gas Co. and the Allegany Gas Co. A brief was filed with the Pennsylvania Commission stressing the
1 ®ee Thirteenth Quarterly Report, p. 32.
On July io, 1945, the Pennsylvania Utility Commission entered an order nisi, denying "Quitable’s proposed rate increase.
50 • Fourteenth Quarterly Report
fact that the emergency conditions, which had originally justified the imposition of a surcharge, no longer existed, and that the rates which were in effect on September 15,1942, should therefore be found just and reasonable.
In the matter of the Ohio Fuel Gas Co’s request for a $75,000 natural gas rate increase in the city of Lorain, Ohio,3 the Office participated in hearings before the Ohio Public Utilities Commission during May and June.
The Office intervened before the Ohio commission in opposition to $72,000 increase in natural gas rates proposed for the duration by the River Gas Co. of Marietta, Ohio. The company took the matter before the commission after the city council of Marietta had passed a resolution suspending the proposed increase for the duration.4
In the Western Kentucky Gas Co. matter in which the Office had participated in 1944, the Court of Appeals of Kentucky reversed the decree of a lower court which had upheld the commission’s order denying a rate increase, and ordered the case remanded to the Kentucky Public Service Commission. The Office had not intervened initially in the proceedings before the Kentucky commission, but subsequently intervened on appeal. The court of appeals held that the company, under Kentucky law, was entitled to a hearing on the merits of the case, subject to the participation of the Price Administrator and the Director of Economic Stabilization. The lower rates, however, remained  decided June 28,1945,150 F. (2d) 415.
Emergency Court of Appeals • 59
The court held, however, that “the fundamental basis of the regulation is that the asking price of deliveries during the base period is established as the maximum price.” Where, as in this case, a dealer failed to receive its asking price during the base period because of its commitments under old contracts which had no sliding-scale provision, the regulation unlawfully discriminates against it in holding it to its base-period delivered prices.
The court held also that the complainants had not established that the regulation was invalid as applied to its sales of coke for domestic consumption.
Under the Price Control Act the judgment of the Emergency Court of Appeals setting aside a regulation in part does not become effective for 30 days. The Office prepared to issue an amendment to the regulation, correcting the defect found by the court, before the judgment became effective.
Lehigh Valley Cooperative Farmers
A proceeding brought by a cooperative engaged in marketing milk for producers called in question provisions of Supplementary Order 84 which prescribe limitations upon the payment of patronage dividends by cooperatives for commodities subject to price control.7 SO 84 includes, among other requirements, the provision that patronage dividends which result in total receipts to members in excess of the ceiling price for the commodity may be paid only at the closing of the cooperative’s books at annual or semiannual intervals. The Lehigh Valley Cooperative Farmers pointed out that it had customarily made full settlement with its members on a monthly basis, and asserted that the requirement that it retain any portion of the proceeds of is marketing operations for a longer period of time violated section 2 (h) of the Price Control Act.
| The court found that the cooperative’s practice of declaring full patronage dividends on a monthly basis was contrary to the usual business methods of cooperatives, and consequently was not a practice established in an industry, within the protection of section 2 (h). The court also concluded that unrestricted payment by cooperatives of above-ceiling prices for commodities in the form of patronage dividends would tend to result in diversion of supplies to organizations permitted to make such payments. The court consequently concluded that the regulation served to effectuate the purposes of the act stated m section 1(a) “to eliminate and prevent * * * disruptive practices resulting from abnormal marketing conditions or scarcities.”
I Lehigh Valley Cooperative Farmers v. Bowles, No. 192, decided April 13, 1945, 148 F |(2d) 829.
60 • Fourteenth Quarterly Report
Hawaii Brewing Corporation, Ltd.
In an action brought by the Hawaii Brewing Corp., Ltd., the court declared invalid maximum prices for beer established for the Territory of Hawaii.8 The market for beer in the Territory was suppliec by two local breweries and by approximately eight breweries locatec on the mainland. Under Maximum Price Regulation 259, applicable to sales of beer on the mainland, breweries were permitted to pass on an additional excise tax imposed by the Revenue Act effective Apri 1,1944. The territorial director of the Office of Price Administration for the Territory of Hawaii, to whom discretion had been delegated to prescribe maximum prices for those islands, concluded on the basis o: an examination of the profits of local breweries that such a price increase was not necessary for beer produced in the Hawaiian Islands. The price regulation applicable to the Territory established the maximum price of beer imported from the mainland, like other importec commodities, on the basis of landed costs, which included the price adjustment for mainland beer under Maximum Price Regulation 259.
The court held that the price relationship so established discriminated illegally against the breweries located in the Territory. The court did not question the decision of the territorial director that, considered separately, the maximum price for the local breweries was sufficient. The court likewise stated that the Administrator coulc properly shape maximum prices for localities with due reference to local conditions. The court, however, concluded that it was unfair and discriminatory to require the local breweries to absorb the tax on the basis of an examination of their costs and profits, without a comparable examination of whether the mainland breweries whose beer was imported into the Territory could likewise absorb the tax.
The maximum price regulation applicable to the Territory of Hawaii was thereupon amended, increasing the maximum price of the local breweries by the amount of the increase in the excise tax.
Vitamins, Inc.
Maximum Price Regulation 203 established maximum prices for Vitamin A material at 14 cents per million units for natural oil up to a potency of 60,000 units per gram with a graduated scale of increasing maximum prices from that potency up to 30 cents per million units for oil of a potency of 200,000 units per gram. All concentrates, which term by definition includes natural oil of a potency greater than 200,000 units per gram, were given a maximum price of 30 cents per million units, regardless of potency. In order to eliminate the manipulative practice of mixing low and medium potency oils with high potency con-
8 Hawaii Brewing Corp., Ltd. v. Bowles, No. 178, decided April 25, 1945, 148 F. (2d) 8&
Emergency Court of Appeals • 61
centrates, resulting in a mixture of just about 200,000 units per gram, the Administrator amended the regulation to prohibit such blending except on special permission by the Office of Price Administration, and the establishment by the Office of a maximum price for a particular blend which in ho event would exceed the sum of the maximum prices of the component oils if sold separately. The amendment further provided that if necessary to prevent circumvention and evasion of the regulation, a maximum price might be granted lower than the sum of the maximum prices of the components.
Complainant, which alleged it produced concentrates of potencies between 500,000 and 1,500,000 units per gram, objected to the establishment of a flat ceiling of 30 cents per million units for all concentrates, and to the provisions of the amendment restricting blending.9
The Emergency Court of Appeals upheld the regulation, stating that the evidence justified the Administrator’s considering relative potency one of the major tests of quality of Vitamin A materials, while refusing to adopt it as the sole test. The court observed that the complainant had failed to show that the ceilings were inadequate or not generally fair and equitable. The court further stated that the complainants’ objection to the regulation on the basis of section 2 (h) of the Price Control Act was raised too late, not having been presented in the protest, but added that complainant’s own evidence that prior to the issuance of the regulation, very few concentrates more potent than 200,000 units per gram were produced, negatived the existence of any established business practice.
The court upheld the blending restriction on the basis of the Administrator’s argument that it was necessary to prevent evasion of the ceilings for lower potency oils and to maintain the supply of the lower potency oils. The court also held that it was reasonable to require a special application for a maximum price in connection with each proposed sale of a blend of a concentrate and a natural oil. The Icourt said that there was no evidence that in acting on such applications, the Administrator would act arbitrarily or capriciously and pointed out that if the Administrator did so act in a particular case, Ireview could be had in the Emergency Court of Appeals.
RENT-CONTROL CASES
I During the April-June quarter the Emergency Court of Appeals disposed of 10 cases involving maximum rent regulations or orders. The outstanding decision was one ‘which involved an attack on the validity of maximum rentals for the New York defense-rental area. The court sustained the regulation generally, but a majority of the
I 8 Vitamins, Inc. v. Bowles, No. 183, decided May 15,1945,149 F. (2d) 497.
667526—45——5
62 • Fourteenth Quarterly Report
court held that some adjustment had to be made with respect to apartments renting for $100 or more per month. Early in July, the court vacated its judgment on motion of the Administrator and permitted him to present additional evidence, setting the case for rehearing.
315 West 97th Street Realty Co., Inc.
This proceeding represented a direct attack upon the validity of the Rent Regulation for Housing in the New York City defense-rental area,10 which contains approximately one quarter million dwelling units. In the proceedings before the Price Administrator and in their complaint in the Emergency Court of Appeals, the complainants contended that the regulation was not generally fair and equitable on the ground that it was preventing the rental industry in the area from earning a fair return on its investment or profits which might compare favorably with those of the industry during a representative peacetime period which they urged was the year 1939.
Both the Administrator and the court concluded that the complainants’ claim could not be sustained, the court’s opinion stating:
Turning to the complainants’ first contention, namely, that the regulation prevents the industry from receiving a fair return on its investment, we find that the record is devoid of any data as to the industry’s investment in the real estate affected by the regulation. The complainants appear to assume that present fair value may for this purpose be treated as the equivalent of original investment. We do not think that such an assumption is justifiable. It is common knowledge that fortunes have been built from comparatively small investments in New York real estate as a result of the unearned increment in values which has accompanied the growth of the metropolis over the years. Moreover the only evidence of present fair value which the complainants offer, is the assessed value for purposes of taxation. But values established by assessments made for tax purposes may be quite inappropriate for rate making purposes. Bonbright, The Problem of Judicial Valuation, 27 Col. L. Rev. 492 (1927); Missouri Rate cases, 230 U. S. 474 (1913) ; Wilson v. Brown, 137 F. 2d 348 (E. C. A. 1943).
The complainants assert that by New York law assessed valuation and fair value must be identical. Whether the New York statutes and cases cited in support of them so hold is of little significance for our present purpose because the admitted facts are to the contrary. For example there is evidence in the record that real estate in the Borough of Manhattan was sold upon the open market between 1937 and 1943 at prices ranging from 63 to 83 percent of its assessed valuation for tax purposes. The complainants have thus failed to show either the original investment in or the present fair value of the rental properties subject to the regulation. Since the burden was upon them to do so we cannot hold that the regulation is not generally fair and equitable because it prevents the rental industry generally, from realizing a fair return upon one or the other of those bases.
10 315 West 97th Street Realty Co., Inc., Odem Corporation, and Maple—81st Street, Inc. v. Bowles, No. 166, decided June 25, 1945. The court on July 9, 1945, upon petition bi the Administrator vacated its judgment, accepted additional evidence offered by the Administrator, and restored the case to the calendar for rehearing.
Emergency Court of Appeals • 63
The Administrator also observed that since the record, despite some amount of conflicting evidence, showed that the operating position of landlords generally in this area during a year of rent control would compare favorably with that during a. representative prewar period— which the Administrator determined comprised the 2 years 1939-40— complainants’ other basic contention was unwarranted. In view of the fact that the regulation had only been in effect for a few months when the protest was filed, the Administrator’s determinations as to the industry’s profit position during a year of rent control—any shorter period was found to be insufficient to establish a meaningful base for comparison—were necessarily predicated upon the industry’s operating experience during the years directly prior to the effective date of the regulation, with appropriate allowance for such increases or decreases in income and expense during the year under rent control as were indicated by the relevant data in the record. During the proceedings before the Emergency Court, however, the Administrator introduced later assembled data showing the operating experience of the industry in New York City for periods through June 30, 1944, the most recent available from landlords’ books, which also supported his determinations as to the rental industry’s profit position.
The court found, on the whole, that these determinations of the Administrator with respect to the general fairness of the regulation were proper. The court pointed out, however, that while the position of landlords of medium-priced accommodations generally in the area during 1 year under rent control would compare favorably with their position during the year 1939—which the court deemed an appropriate period for comparison—the profit position of properties whose accommodations had maximum rents averaging less than $30 per month or over $100 per month had deteriorated below that of 1939. The majority opinion noted, as the Administrator had observed in his opinion, that the relatively poorer position of the under $30 or substandard group of accommodations was not due to the operation of the regulation but to their relatively high vacancies. But two of the three judges held that this was not the case with units in properties where average maximum rents were in excess of $100 per month; and that as to such properties the regulation prevented operation at a level comparable to that of the year 1939.
While the court as a whole found that the regulation was generally fair and equitable and that the requested 10 percent flat increase in maximum rents for all housing accommodations in the area was not justified, the majority of the court ruled that the regulation must be set aside insofar as it applied to housing accommodations for which maximum rentals of $100 per month or more had been established under the regulation, unless within 30 days from the date of entry of the judgment, the regulation was modified so as not to prevent
64 • Fourteenth Quarterly Report
the owners of such housing accommodations as a group from securing a net rent comparable to that received by owners of such accommodations generally as a group in the year 1939.
The minority opinion dissented from the court’s opinion insofar as it held the rent regulation invalid as applied to the luxury class of housing accommodations. The dissenting judge pointed out:
In the case at bar, the opinion of the court holds that the regulation is “generally fair and equitable” in freezing rents as of March 1, 1943. Since the regulation meets this test, I find nothing in the statute, nor in our previous decisions, which would make it the legal duty of the Administrator, in the situation here disclosed, to make special provision for the so-called luxury group of housing units, comprising a mere 3 percent of the housing accommodations in the area, so as to assure the owners of such housing units as a group “net returns comparable to the prewar net return of the group as measured by the operating results of the year 1939.”
The minority opinion further pointed out that the grouping made by the majority was based solely upon the “price charged,” a grouping which had not been sanctioned in previous findings by the court except in cases where other factors justified setting aside one group from the industry as a whole; and that if the Administrator were compelled to afford to each small segment or possible grouping in the industry the particular profits earned by that segment during a representative prewar period, the Administrator’s burden in rent control would be too greatly enhanced. Finally, it was pointed out that even if the Administrator’s denial of a particular classification or exception might be deemed arbitrary in certain cases, the data in the record in this case did not permit the dissenting judge to find that there had been an abuse of the Administrator’s discretion in that respect.
Mortgage Underwriting & Realty Co.
The complainant in this case 11 owned and leased a building in the San Francisco defense-rental area. The building, containing 29 rooms, 24 of which are sublet by the tenant, was not rented on the maximum rent date nor during the 2 months prior thereto and was thereafter first rented for $250 per month. The maximum rent thus established was, pursuant to section 5 (c) (1) of the regulation, subsequently reduced to $150 per month, the amount found to be the rent generally prevailing in the area on the maximum rent date for comparable housing accommodations.
The court concurred in the Administrator’s interpretation that only the rooms which are sublet by the tenant are to be counted in determining whether the building contains more than 25 rooms for
11 Mortgage Underwriting & Realty Co. v. Bowles, No. 176, decided June 29, 1945, 150 K (2d) 411.
Emergency Court of Appeals • 65
I the purpose of exemption under section 1(b) (4) and also held that the I evidence supports the Administrator’s determination that only 24 of I the 29 rooms of the subject building were sublet. The court further I held that the regulation is not invalid because it fails to guarantee to I individual landlords a fair return on investment or on the value of I their properties, and that the Administrator is not charged with a I study of local law to determine the effect of the regulation upon I individual contracting parties. The court found, however, that the I Administrator had not considered certain evidence which was rele-I vant to a determination of comparability and remanded the proceed-I ings to the Administrator for such consideration.
Homewood Development Co.
Section 5 (a) (3) of the rent regulation provides that maximum I rents for housing accommodations may be adjusted upwards where I there has been a substantial increase in the furniture, furnishings, services, or equipment provided with such accommodations since the dates determining their maximum rents. The measure of adjustment prescribed in such cases is the amount which the Administrator determines would have been the difference in the rental value of the particular dwelling, as of the maximum rent date, by reason of such substantial increases as may have been effected.
The complainants in this case,12 who had received rental adjustments for their 90 units in Alexandria, La., under these provisions, contended in the Emergency Court of Appeals that the evidence in the | record supported adjustments in higher amounts, and that the Ad-! ministrator’s determinations to the contrary were not reasonable. In I making those determinations, the Administrator found that evidence showing the dollar difference between actual maximum rent date rentals in this defense-rental area for unfurnished and furnished apartments, substantially identical to each other and comparable to the complainants’ units, represented the most accurate guide to and the best evidence of the difference in the rental value of the 90 units by reason of undisputed substantial increases in furniture, etc. Finding that these data did not warrant adjustments in excess of those already granted for the complainants’ units, and that the other types of data submitted were not as convincing, the Administrator denied the complainants’ protest.
The Emergency Court of Appeals upheld the reasonableness of the principle relied upon by the Administrator, but set aside his deter-ininations and remanded the case for further proceedings before the Administrator on the ground that the record did not contain sufficient
148F°™2d)^^^	6t al' V- B°WleS’ N°- 1471 decided ApriI 16’ 1945>
66 • Fourteenth Quarterly Report
evidence to establish the maximum rent date rents for several of the comparable units upon which the Administrator had relied; and on the further ground that the descriptions of some of those units were lacking in sufficient detail to enable the court to determine whether or not the Administrator had acted unreasonably in determining that such units were in fact substantially identical or comparable to each other and to the complainants’ dwellings.
In remanding the case, the court also pointed out that the Administrator was not estopped from applying the standards of the regulation and making appropriate adjustments merely because excessive adjustments might have been made in other cases where rental adjustments previously had been granted.
Absar Realty Co.
In this case13 the court upheld the Administrator’s determination that, pursuant to section 5 (c) (3) of the regulation, the maximum rent for each of the apartments in the complainant’s building should be reduced for the discontinuance, upon the order of the Office of Defense Transportation, of a free private bus service provided on the maximum rent date. The court also held that even were the service a gratuity, the reductions were authorized by the regulation and are not limited to the cost of providing the service. It was further held that where many thousands of units were similarly affected the Administrator was justified, in the absence of evidence showing special circumstances, in applying a general formula of adjustment.
1165 Park Avenue Corp.
The complainant in this case14 contended that the rent regulation was invalid because it had established March 1, 1943, rather than March 1,1942, as the maximum rent date for rental housing accommodations it owned in New York City. The basis of this contention lay in a designation by the Administrator in April 1942 of specific defenserental areas and a recommendation that maximum rents for housing accommodations in those areas be stabilized by local officials at the March 1, 1942, level.15 Subsequently, an OPA regional office official March 1,1942, could be increased “to the maximum rental of the freeze answered affirmatively the question whether an apartment rented at any time after March 1,1942, at a rental below the rental received on date” either to an old or a new tenant, and his answer was publicized to owners and agents.
18 Atsar Realty Co. v. Bowles, No. 189, decided June 1,1945,149 F. (2d) 654.
141165 Park Avenue Corp. v. Bowles, No. 167, decided June 25,1945,150 F. (2d) 117.
15 Designation of 259 Defense-Rental Areas and Rent Declaration Relating to Such Areas,
issued April 28, 1942.
Emergency Court of Appeals • 67
The complainant had rented some of its units after April 28, 1942, at lower rentals than it received on March 1, 1942, in order to reduce vacancies and retain tenants. It alleged that it would not have done so had it not believed, along with other New York City landlords, that it would be permitted under rent control to increase the rentals to the March 1,1942, levels. The rent regulation, which was ultimately issued effective November 1, 1943, established March 1, 1943, as the maximum rent date, and the complainant’s lower rentals became maximum rents.
The Emergency Court of Appeals rejected the complainant’s contentions. Pointing out that the Administrator’s designation of rental areas had the “limited function” under the Price Control Act of making clear the necessity for rent stabilization in particular areas and of advising local authorities as to an effective method of achieving such stabilization in order to avoid the necessity of control by the Administrator, the court stated that the recommendation that March 1, 1942, maximum rents should be the rent for housing accommodations “may not properly be interpreted as a representation by him that March 1, 1942, would be the maximum rent date in any rent regulation subsequently promulgated by him.” So to construe the designation, the court said, would be inconsistent with the statutory duty imposed on the Administrator to establish generally fair and equitable maximum rents after giving due consideration to the rents prevailing immediately before defense activities resulted in inflationary increases in rents. Therefore, the Administrator had a duty to fix as the maximum rent date that date “which was closest to the time when defense activities had actually resulted in rent increases”; the date fixed by him, March 1, 1943, had not been assailed by the complainant.
The court held that complainant was not therefore entitled to “conclude that because the Administrator recommended March 1, 1942, in his declaration, that date would necessarily be the maximum rent date subsequently to be fixed.” The court pointed out, in this connection, that in seven other areas the Administrator had issued rent regulations containing maximum rent dates which differed from the date recommended in the declaration. The court likewise held that the answer given by the OPA official to the hypothetical question was “strictly accurate” and did not justify the reliance allegedly placed on it, and that landlords had no right to rely on the newspaper articles which “obviously did not bind the Administrator” and were published after the alleged reliance, in view of the “plain mandate of the act which compelled the Administrator to select as the maximum rent date the latest date prior to the time when defense activities began to cause rent increases in the area.”
68 • Fourteenth Quarterly Report
Village Apartment Homes
In these cases, the owner of two apartment houses in Minneapolis, Minn., claimed that upward adjustments of rents should be grantee under provisions of the rent regulation, and that if such adjustments were not granted, the regulation should be declared invalid.16 The buildings in question were financed under the National Housing Act, and were opened for occupancy during the latter part of 1939 ant early part of 1940. In accordance with the provisions of the Housing Act, a rental schedule was worked out for each building.
Due to the fact that the buildings were large and unusual in the locality and were opened simultaneously, difficulty was, encountered in renting the apartments. This resulted in concessions reducing the rent below the approved rental schedules. The rent received was not sufficient to meet the payments of mortgages and taxes, and in 1940 the buildings were foreclosed. During a 1-year period of redemption (in which rental income was disbursed only for operating expenses, insurance premiums, etc.) rentals below the approved schedules were continued.
Later, the mortgagee conveyed its interest in the projects to the Housing Administrator, who on October 15, 1941, sold both projects to the complainant under agreements providing for further deferment of principal payments. After March 1, 1942, rents were increased to the schedule rate as leases expired and new apartments were rented, On October 22, 1942, however, rent control became effective in the area, with March 1, 1942, fixed as the maximum rent date, and the complainant was compelled to reduce the rents in some of its apartments.
After petitions for upward adjustments in the rents of 38 apartments, filed in December 1942, Were denied by both the area rent director and the Administrator, the complainant filed a complaint with the Emergency Court of Appeals. It claimed the right to an adjustment under section 5 (a) (4) of the rent regulation because a special relationship existed resulting from a deliberate plan, dictated by the Federal Housing Administrator, to pass on to tenants the benefit of the deferment of principal payments in order to facilitate “filling up” the projects, and to increase rents to the approved schedules after the deferment terminated. The complainant also maintained that due to the large vacancy rate in both projects, it was not free to bargain with proposed tenants on the maximum rent date, but was compelled to grant concessions in order to secure occupancy.
The Emergency Court of Appeals rejected this contention, declaring that no special relationship existed between the landlord and its
m Village Apartment Homes, Inc. v. Bowles, Nos. 104, 173, decided May 18, 1945, 149 F-(2d) 649.
Emergency Court of Appeals • 69
tenants; that if any special relationship existed, it was between the landlord and the insurer of its mortgage; and that the fixing of the rents involved no personal motives which resulted in a sacrifice of available economic benefits. The court stated further that, “the presence of a high vacancy rate and the desire to fill the projects undoubtedly influenced the landlord’s position in setting rents for his apartments, but of course these considerations are usual in the bargaining process.”
The complainant also contended that if it were not entitled to adjustments under the existing adjustment provisions of the regulation, the regulation was invalid because it failed to provide an adjustment provision which covered the situation. It maintained that on the maximum rent date it was enjoying a temporary deferment of “substantial cost factors” which is passed on to its tenants at the direction of the Housing Administrator in order to attract tenants to its projects, and that it had a “definite plan” of raising the rents when the deferment expired. It claimed that it was entitled to an individual adjustment provision similar to the provision added to the rent regulation as a result of the court’s opinion in the Hillcrest case.17 The court rejected this contention, pointing out that the individual adjustment provisions of the regulation are designed to provide relief for landlords whose rents on the maximum rent date did not represent a bargaining valuation of the property for rental purposes. The court stated that complainant’s rents on the maximum rent date were, however, the product of a “normal bargaining process between itself and its tenants,” and therefore did not come within the principle of the Hillcrest case. Accordingly, the court found that complainant was not entitled to an individual adjustment provision and that the regulation was valid despite the fact that it contained no such provision. The court dismissed the complaints.
17 Hillcrest Terrace v. Brown, 137 F. 2d 663 (E. C. A. 1943).
IQ • Fourteenth Quarterly Report
.VII.
FOOD RATIONING
Shorter food supplies and determined efforts to distribute equitably those available occupied a prominent place in the rationing program during the second quarter of 1945. Meat shortages were the most acute since rationing began, and fat and oil supplies were far below demand. Processed foods available' for rationing were almost 25 percent under the volume available the year before, and sugar stocks were so low that War Food Administration sharply cut civilian allocations.
Meat production during the quarter was 21 percent less than in the previous 3 months, and 14 percent less than in the corresponding period of 1944, due chiefly to lowered pork production. Meats available for civilians during the quarter were 12 percent less than in January-March, and 22 percent less than in the same months of 1944. Noncivilian procurement, 6 percent greater than the year before, fell short of requirements by 10 percent. Of total meat supplies available in April-June 1945, civilians received 70 percent, while in the corresponding months of 1944 they had received 76 percent.
Worse than shortages, perhaps, was maldistribution. Whereas many communities in areas producing livestock were well supplied with meat, other areas, particularly large metropolitan cities and war production centers, found it most difficult to obtain enough meat to spend their ration points.
To cope with this situation, every phase of the supply situation was thoroughly considered, and a 10-point program was arrived at by the Office, working with the Office of Economic Stabilization and the War Department. This program has already been discussed in some detail in the chapter on food price control.1 At the same time, several adjustments were made in meat point values to effect more even distribution of available consumer supply. The average point value of meat items increased from 5.7 in March to 6.2 in June, while the average of all foods in the red stamp program increased to 7.5.
Supplies of processed foods for civilians were also low, but distribution of available amounts was reasonably good. A survey of retail stores indicated that nearly all retailers carried at least one of the major vegetables. Moreover, 94 percent of all retailers carried at least one of the major canned fruits. Furthermore, the Wartime Food Diary showed that 90 percent of all families bought some processed
1 See pp. 9-11.
Food Rationing • 71
I foods during a 10-week period, 83 percent bought canned vegetables, 167 percent bought canned fruits, and 49 percent bought canned juices.
Late in April, War Food Administration advised the Office that I its allocation of sugar to civilians would have to be reduced substan -I tially for 1945 as a whole. The immediate reason for that action was I the decrease in the Cuban crop below estimates made as late as Feb-I ruary; a contributing factor was the rapidly developing need for sugar I by liberated areas in Europe.
I A national survey was made during the quarter to ascertain con-I sumer holdings of red and blue ration stamps still valid April 1, im-I mediately after the first expiration of stamps following the major I stamp cancellation of December 26,1944. It was undertaken primarily Ito determine the extent and family distribution of the backlog of I stamps accumulated after stamps had been valid for a period of 4 months.
For the blue stamp program, this survey indicated that consumers had used their first quarter’s stamp issuance at more nearly the rate I that stamps were validated. Urban consumers spent more than 90 percent of their blue stamps, but rural consumers spent only about 60 percent. This rate of spending, coupled with the return to expiration dates, had prevented the accumulation of large holdings of excess purchasing power which could have supported scare buying of processed foods.
In the red stamp program, the national backlog of valid stamps was about one-fifth of the original issuance. Almost two-thirds of these unspent stamps were in rural hands, as had been found in previous surveys. Significant upward revisions of meats-fats point values during the quarter, however, undoubtedly increased the rate of point expenditure.
WARTIME FOOD DIARY
; Findings of the Wartime Food Diary2 continued to be a valuable I measuring stick in determining the effect of point-value changes on ■consumer purchases. During the quarter, also, facts supplied by this ■consumer panel indicated that urban families were bearing the brunt I of the meat shortage. Point values were increased slightly on most ■cuts at one time or another during the period to induce better dis-I tribution, and total meat purchases of urban families declined 17 per-cent in the first 10 weeks of the quarter from the previous quarter’s ■ average, but those of rural families remained unchanged.
Continuous dwindling of pork supplies produced a nation-wide de-crease of 35 percent in pork purchases during the first 10 weeks of hou^h'	Food Diary is based on a consumer panel consisting of about 2,000
PP 46-47 8 Wh° report their daily food purchases.. See Thirteenth Quarterly Report.
72 • Fourteenth Quarterly Report
the quarter; this was shared nearly as much by rural as by urban families. Urban families, however, were evidently unable to turn to other meats to make up for their reduced consumption of pork, since their purchases of beef and veal also declined. Rural families, on the other hand, were able to buy enough of other fresh meats and sausage to compensate fully for their smaller purchases of pork.
Besides finding it difficult to obtain meat, urban families were unable to shift materially to such meat substitutes as poultry and canned fish. The 100-percent war-procurement set-aside on chickens in the important producing areas, effective since the year-end, probably caused the 16-percent drop in urban purchases of poultry. Rural families, by contrast, were able to buy about 25 percent more poultry than during the first quarter. The large Government set-aside continued for most canned fish, leaving little for civilians. Neither urban nor rural families were generally able to turn to this food as a meat substitute. Both urban and rural families, however, steadily increased their purchases of fresh fish, which was seasonally in greater supply.
For the country as a whole, a 13-percent decline in family total meat purchases was due mostly to a drop in pork purchases. Smaller reductions were reported for beef and veal, which were somewhat offset by increased purchases of lamb, sausage, and canned meat. A 43-per-cent reduction in purchases of hams was greater than for any other meat cut, but that for pork chops and loin roasts was almost as large. A 16-percent decrease in purchases of beef roasts was more marked than for any other beef cut.
Declines in purchases of fats and oils and canned milk were not so great as for meat. Average purchases of shortening and oils in the first 10 weeks of the quarter were 10 percent less than during the first quarter of the year. Despite point increases, average lard purchases were 7 percent heavier than in the first quarter.
Although the tight meat situation was largely responsible for the 10-percent national decline in purchases of all foods covered by the red stamp program, decreases in purchases of fats and oils and canned milk also contributed to it, in keeping with the downward trend of civilian supplies.
Gradual increases in point values on margarine during the first quarter were ineffectual in adjusting demand to available supplies, and it was necessary to raise point values still higher during the second quarter. This increase was effective in producing a decline of 8 percent in average purchases. Consumer demand for butter was definitely checked by setting point values at 24 per pound, and the trend of purchases continued downward during the second quarter.
Purchases of canned milk also declined from the weekly average of the first quarter. Total purchases of cheese during the first 10 weeks of the quarter remained at about the average of the first quarter.
Food Rationing • 73
Slight increases in cream cheese purchases were offset by smaller purchases of other types of cheese.
The Office made major use of data supplied by the Wartime Food Diary in clearing up a public misconception about the volume of meat available for civilians. The misconception arose out of an announcement by the Bureau of Agricultural Economics that the civilian meat supply for the second quarter was 115 pounds, figured at an annual rate of consumption. This figure, however, was on a carcass or wholesale basis and should be reduced by about 15 percent to arrive at a retail-cut basis. Because the estimate included all meat moving in civilian channels, deductions should also be made for meat which consumers obtain indirectly without ration points, as in public eating places, in institutions, or in manufactured foods like canned soups. Also, allowance should be made for meat produced by farmers for their own use, which is not transferred against ration points. Consumer panel purchases indicated that about 58 pounds per capita moved over butchers’ counters in exchange for ration points during the quarter.
In general, the Wartime Food Diary revealed that purchases of processed foods increased during the quarter. Among vegetables, the largest increases were in tomatoes and minor vegetables. Fruit purchases increased only slightly. Canned juices increased significantly, reflecting the seasonal demand of spring and summer.
A better balance was indicated between points available to hquse-hold consumers and pounds of processed foods available to them. During the first week of each ration period, household purchases averaged about 15 percent more than during any later week of the period, indicating immediate purchases upon validation of additional points. In contrast, when points issued considerably exceeded points spent, purchases tended to be unusually high just before the points expired.
MEAT RATIONING
The Nation’s meat situation during the quarter continued to be characterized by diminishing supplies. However, civilians, scanning Government reports on the livestock population, found it hard to understand why such a shortage, particularly of beef, should exist. These reports show that as of January 1, 1945, the number of cattle on farms, both dairy and range, was exceeded only by the record number of January 1, 1944. In addition, meat production for 1945 was estimated to exceed 22 billion pounds, an increase of 38 percent from the 1935-39 average, but considerably less than the record production of 25 billion pounds in 1944.
With these facts before them, few people could justify empty meat counters and the increased use of meat substitutes. What many failed to consider, however, was that after military and other Government
74 • Fourteenth Quarterly Report
requirements were set aside from total meat production, the civilian share, although by far the largest, was still equal to only the normal peacetime supply. Department of Agriculture officials estimated that because of war-swollen incomes, demand for meat had increased from the 1935-39 average of about 126 pounds to about 170 pounds per person. Furthermore, a great portion of the total civilian supply was being confined within State boundaries, since nonfederally inspected meats may not be shipped across State lines, a restriction placed by an act of Congress in 1907. For some time meat production by non federally inspected slaughterers had been increasing steadily, diverting more and more livestock from federally inspected plants, the only ones from which the Government may purchase. Areas depending upon in-shipments felt the meat shortage most severely.
Meat Control Order
Late in April, the Office of Economic Stabilization announced the 10-point program worked out in cooperation with the Office of Price Administration and the War Department. The distribution aspects of this program were concerned chiefly with the control of farm slaughter for sale, to increase the volume of meat moving in regular commercial channels; control of slaughter by other nonfederally in spected slaughterers, to increase slaughter in federally inspected plants; encouragement of nonfederally inspected plants to adopt Federal inspection, thereby increasing the number of plants from which the armed forces may purchase meat; and fair distribution of meats by slaughterers to those dependent upon them in the past. This policy was to be made effective by order, if voluntary cooperation failed. The Office of Economic Stabilization also urged the Army to seek an increase to approximately 10 percent of Army requirements from plants not then supplying meat to the Government, A greater proportion of meat produced in federally inspected plants for shipment in interstate commerce would thus be made available! for civilian use.
Most of these principles were embodied in Meat Control Order 1, which became effective April 30. The order aimed to increase livestock slaughter in federally inspected plants and to decrease slaughter in nonfederally inspected plants, thereby better protecting the Government requirements and at the same time making a larger proportion! of the civilian meat supply eligible for shipment across State lines!
The order grouped all slaughterers into three classes and estab l lished detailed control over all commercial slaughterers except those! federally inspected (class 1). All outstanding slaughter permits were] revoked, and new ones could be obtained only by registering withl OPA.	I
Food Rationing • 75
Resident farm slaughterers (class 3), who sold or transferred no more than 6,000 pounds of meat in any 12-month period from January 1,1944, to March 31,1945, inclusive, were not limited in their slaughter for their own consumption. In transferring meat produced by their own slaughter (or by custom slaughter for them), however, they were limited to a quarterly quota equaling transfer of meat during the like quarters of 1944, as shown by points they surrendered during those base quota periods. Under the order any class 3 slaughterer who sold or transferred no meat or not more than 400 pounds of meat during the four quarters of 1944 may receive a maximum quota of 400 pounds, divided among the four base periods in any way he elects.
Operations of all other slaughterers (class 2) were limited to specific percentages of a quota base representing for each species the live weight of stock slaughtered during a corresponding 1944 period for which required ration points were surrendered. These percentages, varying with fluctuations in supply and modifications in military set-aside requirements of class 1 slaughterers, were to be set as high as possible in order to effect equitable civilian distribution.
Two supplements and 12 amendments to the order were issued during the quarter. Supplements establish quota percentages and changes in them, while amendments cover administrative details which experience with the order proved to be necessary. Of particular interest were amendments 7-9. Amendment 7 provided that suppliers of meat or their successors must, upon request, sell institutions of involuntary confinement and hospitals to whom they sold during March-April 1944 the smaller amount of either the quantity requested or that sold the institution during that period, modified for subsequent changes in meal-service allotments. Meat must be of the same or comparable grade and types.
Amendment 8, the “fair distribution” amendment, provided that class 1 and 2 slaughterers must deliver each accounting period at least 80 percent, by weight, of the proportionate amount of civilian supply of meats delivered into each county (or trading area) of continental United States into which they delivered meat during the first three full reporting periods in 1944. Deliveries into each county during any three consecutive accounting periods were to equal at least 90 percent of the proportionate amount of the three periods in 1944. The resulting 10 to 20 percent tolerance recognized unavoidable shifts in distribution since the base period, due to transportation and manpower problems or changed demand patterns.
Amendment 9 provided that a class 2 slaughterer who operates his own institutional user establishment, such as an institution of involuntary confinement or a hospital, may apply for a quota adjustment to enable his supplying these institutions with the same proportion of meat as was supplied in the corresponding period in 1944.
76 • Fourteenth Quarterly Report
Red Point Changes •
An important administrative change undertaken during the quarter involved validation of red stamps on the first day of each calendar month, instead of the first day of irregular ration periods. Beginning April 1, both blue and red stamps were to be validated on the same date and to remain good to the consumer for 4 months. This plan made it easier for housewives and the trade to remember validation and expiration dates and also helped the housewife to budget her points, since the number of points became the same for each month.
Numerous changes in point values were made during the quarter. F or April, point values for pork cuts and pork products were raised 1 to 3 points per pound. Beginning with May, point values were assigned to cull and utility grades of veal and lamb. This action enabled the Office to hold point changes for other cuts at a minimum. Changes in point values for May consisted of increases of 1 or 2 points on beef roasts and other beef cuts. The only point changes for June were increases of 1 to 3 points on fat cuts of pork ; these cuts are a source of lard, point values of which had been raised in mid-May.
Assignment of point values to the lower grades of veal and lamb brought under rationing all meat except mutton. No point values were set on mutton because carcasses vary so much in quality that grade differentials would be needed, and because the supply is negligible—one-half percent of the supply of all meats.
FATS, OILS, AND DAIRY PRODUCTS
A gradual tightening of supplies of rationed fats and oils was noted during the quarter, due to decreased production of some items and to a generally increased demand. Equitable distribution was served by prompt changes of point values, and consumers in nearly all sections of the country were able to obtain a fair share of the short supply.
Butter remained unchanged in point value during the quarter, although butter production during the first 6 months of the year was 8 percent less than in the like period of 1944, and a higher set-aside for Government purchases further accentuated the shortage in civilian supply. Allocation of butter during the quarter was 327 million pounds, compared with 547 million pounds consumed in the like period of 1942, the last full year before butter rationing.
The point value of margarine was raised April 1 from 8 to 12 points per pound because of increased demand and sharply diminished supply- Allocation to consumers for the period was 114 million pounds, compared with 150 million pounds available during the preceding quarter.
Food Rationing • 77
Shrinking supplies of lard also led to a rise from 6 to 10 points per pound effective May 13, and to 12 points June 19. Shortening and oils followed the same pattern as lard, and their point values were raised at the same time.
Cheese production had a seasonal increase and was in somewhat more liberal supply. The point value on American (cheddar) types, was lowered to 10 from 12 points. Other cheeses were similarly lowered.
PROCESSED FOODS
Supplies of processed foods continued tight during the quarter, with the most serious shortages in the vegetable group, which on May 1 was estimated to be 48 percent under the available supply for civilians the same date the year'before. Only tomato catsup and chili sauce supplies were higher than on the 1944 date.
Point values continued to rise, the average point value for the period being close to three times that for the corresponding quarter of 1944. This increase resulted largely from continuing to issue about the same number of points each month, but having smaller quantities of food subject to points. The reduction in quantities was due partly to reduced supplies and partly to the removal of certain items from rationing, such as canned soups, baby foods, bread spreads, and frozen fruits and vegetables. Household consumers and other food users like restaurants and bakers were issued about 8.5 billion points a month—approximately the same as in the preceding year. The volume of rationed foods requiring blue points, however, was only 300 million pounds in April 1945 compared with 850 million in January 1944. If the average point value had not been raised as the quantity of rationed food shrank, excessive points in buyers’ hands would have depleted store stocks. *
Though of major importance, point value changes were few. At the beginning of the April ration period, changes were made on five items. Sweet cherries, along with prunes and plums, were reduced to move the remainder of 1944 packs, because unpitted fruits would have been subject to spoilage if carried much longer. The point value of tomato juice was reduced to make actual and scheduled movements more nearly equal, while the point values on the No. 2 cans of asparagus and tomatoes were each increased to retard a too rapid movement from existing and prospective stocks.
For the May ration period, six changes were made. The point value of apricots was reduced (for No. 2% can) for the same reason that cherries, prunes, and plums were reduced in April. Points on grape juice were increased for the pint bottle because its movement in April was 41 percent ahead of schedule. A minor adjustment was made 667526—45------6
78 • Fourteenth Quarterly Report
in point values for tomato juice and mixed vegetable juices packed in containers of 24 to 32 ounces, to bring these odd sizes in line with the more popular small sizes. Since remaining stocks of green and wax beans (packed mostly in No. 2 cans) were of poor-to-standard quality, their points were lowered; this reduction did not affect the No. 10 can. Movement of catsup and chili sauce was slower than was desired, and the point value of the 14-ounce size was reduced.
For the June ration period, point values of tomato juice and mixed vegetable juices were reduced for all sizes under 2 pounds. This action was based on estimated increases in civilian stocks, plus heavier carry-over than had been anticipated. Spinach and tomatoes were each advanced 10 points for the No. 2 can, due to continued heavy demand on current supplies and to the predicted small size of the new packs.
SUGAR
A reduction in civilian rations was made necessary during the quarter by revised supply estimates and lowered allocations. Prompt action was needed because distribution to civilians during the first quarter of the year had far exceeded the revised allocation for that period.
Distribution during the second quarter became progressively tighter as home-canning coupons were issued and as the estimated production of refineries was reduced in the light of lower available quantities of raw sugar. Generally speaking, however, most areas had supplies adequate for immediate needs until the beginning of June, although primary distributors were behind in orders, particularly in the Northeast, and outstanding ration evidence was in excess of supply in much of the East. This contrasted with the position at the start of the quarter, when supplies were fairly adequate, except in the Northeast. At the end of June, supplies were tight in the whole eastern half of the country and in Texas, and in some areas they were inadequate for immediate demands.
Up to May 1, the consumer ration was 5 pounds each 3 months. Beginning on that date, the ration was reduced to 5 pounds each 4 months—a drop of 37% percent from the 1944 level of 5 pounds every 2% months.
Allowances for home canning were also reduced. The original homecanning program for 1945 became effective in February.3 At that time, 700,000 tons were budgeted for home canning, against 775,000 issued by the ration boards in 1944. By May 1, it was evident that only 600,000 tons could be budgeted for home canning. To keep within that figure the program had to be tightened, particularly because
8 See Thirteenth Quarterly Report, p. 50.
Food Rationing • 79
early issuances in some areas had been heavier than the year before. All ration boards were accordingly put on quotas of 70 percent of their own issuances last year, and the per-person maximum was reduced to 15 from 20 pounds. Shortly afterward, authority was given to regional offices to reallocate between districts and between boards, taking into account fruit crops or other factors justifying reallocation. To facilitate adjustments in areas having inadequate quotas, regional administrators were granted a reserve equal to 2 percent of issuances in their own regions in 1944.
During the next month it became clear that if the budgeted quantity were not to be exceeded, further tightening was required. On May 30 regional administrators were instructed to establish monthly quotas for each district, based on 70 percent of 1944 issuance for each region but taking into account any over-issuance through May 31. All issuance was temporarily suspended wherever possible. A new report of issuances was required every 10 days. Issuances against quotas beyond September 1 (those based upon 1944 issuance beyond September 1) were forbidden without approval from Washington.
INSTITUTIONAL AND INDUSTRIAL USERS
Changed allotments of rationed foods to institutional and industrial users during this period reflected tightened civilian supplies.
Sugar allotments to most types of users, reduced for the second quarter, were further reduced. Beginning May 1, allotments of sugar to institutions were reduced to a level 25 to 30 percent per meal below those in effect in 1944; for the first 4 months of 1945 that level was only 10 to 15 percent below the 1944 per-meal allowance. Further reductions in this category were planned beginning July 1, with allotments for canning jams, jellies, etc., limited to 5 pounds for each 1,000 meals served during 1944. In addition, users in group III (restaurants and similar eating places) and group IV (on-the-job feeding establishments) who received no sugar for home canning in 1944, or failed to account for its use, were to be made ineligible for allotments for that purpose. Eligible users were to be limited to the quantity received for this purpose in 1944. Exceptions were planned for eleeniosynary and educational institutions which produce home-processed foods, with transfers of these foods strictly regulated.
To assure an adequate supply of canned milk for infants and invalids and to relieve shortage areas, institutional and industrial users were prohibited in June from acquiring point-valued canned milk. Users who feed employees on board ships, boats, tugs, and barges, as well as heavy workers entitled to special allotments for dietary needs, were permitted, however, to continue purchases. Rationing boards
80 • Fourteenth Quarterly Report
or district offices were also authorized to permit acquisition of canned milk where fluid milk or concentrated milk is unavailable.
For the May-June period a 20-percent reduction in meats-fats allotments was continued, but exception was made for institutional users who feed certain types of isolated heavy workers adjudged to have specific dietary needs.
Several changes were made during the quarter to prevent undue hardship to industrial users. A supplemental point allotment was authorized to users who need points to purchased canned or bottled vegetables point-valued above zero on June 3, 1945. Any wholesaler was permitted to acquire processed foods up to 5 percent in excess of his maximum allowable inventory during a reporting period.
Other Rationing Programs • 81
•VIII •
OTHER RATIONING PROGRAMS
Somewhat easier supply conditions following the close of the war in Europe permitted a liberalization of gasoline rations „during the second quarter of 1945, and allowed the Office to continue residential fuel oil rations at 1944 levels. At the same time, quota limitations on new 1942 cars were lifted to permit issuance of certificates to all eligible applicants. VE-day, however, had little effect during the quarter on the other rationing programs.
Continued shortages of rubber tires made it impossible to allocate sufficient quantities of tires to handle rationed demand, although allocations of both truck and passenger tires were raised, chiefly to meet higher seasonal demand.
In shoes, the trend in civilian rationed supply continued downward. Acceleration of the war in the Pacific prevented any increase in civilian allocations of leather, and further depreciation of prewar inventories made it necessary to bring ration allowances into better balance with production. Consequently, the interval between validations of war ration stamps for shoes was lengthened.
GASOLINE
The liberalization of the gasoline program was chiefly noticeable in the 50-percent increase in A coupon values—from 4 to 6 gallons—and the nation-wide raising of the ceiling for nonpreferred mileage to 650 miles per month. During the period it was also possible to increase boat rations, to allow furlough rations for servicemen on temporary duty status, to permit the issuance of recreational rations for convalescent servicemen, and to raise the allotment of special rations for Canadian vehicles from a maximum of 16 to 20 gallons per year. It was also possible to put in the preferred mileage category certain classes of users who had previously been placed in the semipreferred group, particularly buyers for essential establishments, buyers of farm products, and lumber buyers.
A plan requiring an accounting for the use of nonhighway rations was introduced during the quarter. Following a year’s experience with the plan in Lancaster County, Pa.,1 a plan for controlling the diversion of E and R coupons was incorporated into the regulations. This change required the keeping of a delivery-record form by holders
See Ninth Quarterly Report, p. 52.
82 • Fourteenth Quarterly Report
of E and R coupons to verify a transfer by them of these coupons to their suppliers. During the trial period in Lancaster County, the plan reduced nonhighway issuances by about 28 percent. Subsequent experience required that this plan be revised to permit the exemption of some industrial users of class E and R coupons, such as railroads, utilities, municipalities, etc., if the ration holder required such a ration for use in 10 or more separate machines or pieces of equipment by 10 or more employees who had to use these coupons to acquire gasoline at 10 or more locations.
AUTOMOBILES
Because of the imminence of new production, quota limitations were removed to permit the issuance of certificates for new 1942 cars to all eligible applicants. Control was tightened over the transfer of new 1942 cars among dealers to enable the Office to continue to assist certificate holders in locating cars. At the same time, dealer reporting requirements were simplified.
All rationing restrictions on the transfer of used 1942 cars were removed because dealers reported increasing difficulty in disposing of them. The market for these cars was reported much less tight due to their increased mileage and to harder usage than earlier models.
Plans for the rationing of 1945 car production were being prepared during the quarter.
RUBBER TIRES
Changes in the tire program during the April-June quarter were made to effect a stricter control over tire distribution at the dealer level, and to expand eligibility for grade I passenger tires for farmers.
All dealers were required, effective May 1, to maintain specific records of grade I tires—passenger, large truck (8.25 and larger), small truck (7.50 and smaller), and tractor-implement tires—received from their suppliers and parts B of certificates forwarded to their suppliers. An inventory of all grade I and grade II tires at dealer establishments was taken June 30, the first since tire rationing began in January 1942. This inventory was to be used to maintain records of the number of grade I tires and certificates at each dealer establishment, each dealer being required to account for the number of tires and certificates he reported in his inventory on this date.
In a further move to tighten control, the Office revoked the provision allowing inter-dealer transfer of tires upon OP A authorization) making an exception for business liquidations. Also, the allotment of tractor-implement tires permitted dealers was removed during the quarter. The discontinuance of these provisions obliged dealers to obtain their tires only in exchange for certificates.
Other Rationing Programs • 83
The only persons allowed additional tires during the quarter were those farmers needing passenger tires for their farm vehicles. This action was taken so that vehicles converted for farm use which could not operate on either tractor-implement or truck tires would not be immobilized.
FUEL OIL
A revised renewal form for heat and hot water rations was issued and mailed to consumers in May. Renewal rations were to be issued in the same amount as the ration for the previous year, except where the applicant reported changed circumstances. New coupons were also issued, and rations covering the 1945-46 season were mailed to consumers beginning in June as the completed applications were returned to the rationing boards.
Provision was made during the quarter for an additional ration to jbe allowed users of oil-burning water-heating equipment where the ¡basic ration was insufficient to meet the summer hot water needs. Fuel ¡oil rations were also allowed to summer users of fuel-oil cooking and water-heating equipment, even though coal- or wood-burning equipment was available to them. This allowance was in line with those made in previous summers for such users.
The continued decline of supplies of residual fuel oil, used for industrial purposes and to heat large buildings, made it necessary to restrict users of residual oil for heat and hot water to the same basic ration of two-thirds of normal requirements allowed to users iof other types of fuel oil.
Minor changes in the regulations were made to allow rations for commercial motor vehicles for which a certificate of war necessity is not required by the Office of Defense Transportation, and for boats acquired from the Navy, Coast Guard, or Maritime Commission.
I A new type of definite value coupon made its appearance during the quarter, issued in strips and serially numbered to prevent waste of unused coupons by local boards.
In cooperation with the Petroleum Administration for War and the fuel oil industry, the Office sponsored a summer fill-up campaign Resigned to encourage consumers to fill out their renewal applications early and to place orders for fuel oil as soon as coupons are issued. The filling of consumer tanks during the summer utilizes pn important volume of storage and permits the industry to build up m their own storage facilities reserves upon which they may draw paring the heavy heating season.
NORTHWEST SOLID FUELS
An intensive campaign was inaugurated during the quarter to Persuade coal users in the Pacific Northwest to obtain the major part
84 • Fourteenth Quarterly Report
of their annual coal requirements before October 1. Initiated by the Northwest Interagency Fuel Committee, the Solid Fuels Administrator, and the Office of Price Administration, the campaign was planned and operated by the Office, and received cooperation from other Federal agencies and State and municipal authorities. Surveys made during the last week of the quarter showed that the campaign was highly successful among consumers. Continual decline in lumber production, however, resulted in the inability of wood supply from normal sources to keep up with consumer demand for summer storage. Also, coal was not shipped into the area in the volume anticipated or ordered by dealers.
Estimates at the close of the quarter indicated that during the 1945-46 heating season, solid fuels supplies in this area would be under 1944-45 by at least 20 percent in cordwood, slabwood, and millwood, 30 percent in sawdust, and 20 percent in industrial hog fuel. The exact status of coal supplies to meet Northwest less-than-carload lot domestic requirements was still undetermined.
The Defense Supplies Corporation stock piling and subsidy program remained unextended for lack of statutory authority at the end of the quarter. Lack of these facilities had resulted in an'estimated loss of 100,000 cords of firewood during the quarter.
STOVES
Eligibility for oil cooking stoves was further restricted by providing that in most parts of the United States such a stove can be obtained only for replacement unless a coal or wood cooking stove cannot be used. This action was necessary because the number of stoves available were less than the permitted rationed demand and because of the anticipated severe shortage of kerosene. With this change, the same restrictions were imposed on oil cooking stove eligibility as had been in effect for oil heating stoves.
Plans were developed for relaxing the restrictions on the distribution of stoves in an orderly manner. In accordance with this plan and because stove production was programmed at considerably higher levels, the policy covering the approval of new business applications was broadened to permit any person to register as a stove dealer and obtain a small allowable inventory.
SHOES
Announcement was made during the quarter of the validation of a new war ration stamp for shoes. The effective date, August 1, was set 9 months after the validation of the last shoe ration stamp, in contrast to the 6-month intervals between the two previous stamps. An-
Other Rationing Programs • 85
nouncement of the date of the new stamp was made 3 months in advance so that dealers might make merchandising plans and so that consumers might budget their remaining stamps over the longer period.
In order to arrive at an accurate numerical basis for determining adequate production and fair distribution of shoes during the following year, a new inventory by all registered shoe establishments was planned as of July 31,1945. This inventory was to include all of their existing stocks of civilian shoes, both rationed and nonrationed, by types, and in some cases by price ranges. Reports of sales to consumers and numbers of pairs of shoes released from rationing during the year were also to be required.
In accordance with advance notice given during the previous quarter, babies’ leather shoes in sizes 0-4 were placed on the rationed list May l.2 Kits of unassembled pieces of leather used in making shoes at home were also placed under rationing on June 16.
Releases from rationing during the quarter Were confined to shoes that would not sell for ration currency. A fourth odd-lot release authorized ration-free sale to consumers in July of odds and ends accumulated during the selling season. As with previous releases, certain restrictions, including specified price mark-downs, were imposed to assure that only clearance type shoes would be sold ration-free.
Several steps were taken during the quarter to simplify rationing procedure, most of which involved changes in dealers’ record-keeping requirements.
To expedite issuance of special shoe stamps, agents of institutions of involuntary confinement, acting on behalf of residents, were permitted to make multiple applications instead of a separate one for each eligible resident. Because of the short time alloted for personal business to Red Cross personnel who are given overseas assignments, the national headquarters of the American Red Cross was permitted to keep on hand a supply of special shoe stamps to be issued to them. All issuances will be post audited by the Office.
Export provisions were amended to coordinate shoe rationing regulations with actions taken by the Foreign Economic Administration, and individual, special program, or special project licenses were required for all shoe exports except those to Canada, army or fleet post office addresses, and addresses of United States Government representatives stationed in foreign countries. Shoes having a declared value of $25 or more may be exported to Canada by registered dealers under a purchase order approved by the Canadian Administrator of Wholesale Trade; lower-valued shipments may be sent without prior approval.
2 See Thirteenth Quarterly Report, p. 57.
86 • Fourteenth Quarterly Report
RUBBER FOOTWEAR
A number of changes were made in the ration order to facilitate the handling of rubber footwear by the trade. Provision was made to permit district offices to lend certificates for a limited time to a dealer who may not need a permanent increase but may require a larger stock for a limited time because of exceptional conditions. Dealers were allowed to exchange single certificates for one or more certificates of a larger denomination representing the same total number of pairs, to remove the inconvenience of handling a large number of single certificates. Upon application to OPA, dealers were permitted to sell mismated or damaged rubber footwear, c6rtificate-free, at not more than $1 per pair or 50 cents for a single boot.
Export provisions were considerably tightened during the quarter, and the regulations were coordinated with the restrictions imposed on such exports by Foreign Economic Administration. Previously any person might acquire rubber footwear for export without certificate.
Enforcement
• 87
• IX •
ENFORCEMENT
Nation-wide cooperation of three Government agencies—the Office of Price Administration, the Department of Justice, and the Treasury Department—during the second quarter of 1945 signaled initiation of a triple drive against black-market practices. The Office instituted a regular procedure for turning in names of all price violators to the Bureau of Internal Revenue for investigation by Treasury Department agents. Tax returns of such violators were to be examined for attempted evasion of income tax obligations. The names of customers who bought goods for resale at overceiling prices (taken from the books of sellers found in violation) were to be turned in. Under a recent ruling of the Commissioner of Internal Revenue, overceiling payments may not be deducted from taxable income as items of business expense. Tax returns of sellers who collected illegal overcharges were to be examined to ascertain whether such income had been reported for tax purposes.
The Office also undertook to strengthen enforcement investigations leading to criminal cases which could be referred to the Department of Justice. Drastic penalties were to be sought in such cases. At the same time, the Department of Justice promised immediate and vigorous prosecution of all black-market cases, followed by substantial jail sentences.
The campaign against the counterfeiting phase of the black market met with increasing success during the quarter. Reports from the verification centers1 where ration currency is checked showed that counterfeiting of gasoline coupons, for example, during June 1945 channeled less than 0.03 of 1 percent of civilian gasoline into the black market, compared with about 5 percent about a year and a half earlier. Counterfeit red stamps, which made their first appearance in the preceding quarter, were still in evidence, offering the greatest single potential threat to equitable meat distribution.
With counterfeiting operations under vigorous attack, black-market racketeers turned to theft and bribery to secure ration stamps. The few cases of bribery in local boards and verification centers which were turned up were vigorously handled by the Office. The stealing of ration currency, however, still loomed large as a black-market problem at the close of the quarter, despite the rounding up of a number of organized gangs that had preyed upon local boards.
1 See Eleventh Quarterly Report, pp. 73-74.
88 • Fourteenth Quarterly Report
Steps taken by the Office in dealing with these two problems included strengthening the safeguards against robbery at OPA-con-trolled centers, urging the 14,000-odd banks handling ration currency to improve their safeguards, enlargement of staffs at verification centers, extension of the ration currency debiting plan 2 to all rationing programs and to stolen currency, arrests and indictment of persons selling illegally obtained currency, as well as the suspension of rationing privileges of retailers found buying such currency.
In all, 132 arrests were made during the quarter in connection with stolen or counterfeit ration currency. Of the 65 jail sentences imposed in such cases during the period, 32 were for periods varying from 1 to 5 years, and 2 for more than 5 years. Fines amounting to $32,370 were imposed in 28 other cases.
Contraband currency recovered during the quarter saved 9,575,218 gallons of gasoline, 6,291,910 pounds of sugar, and 202,846,460 red points from diversion to the black market.
Congressional approval of sufficient funds to enlarge the enforcement staff cleared the way for the Office to make a new intensive attack on the meat black market. The meat program investigative staff was enlarged threefold by transfer of trained investigators from other enforcement work. New personnel employed through the additional funds granted by Congress were placed on the other work, so that programs previously begun would be continued.
The stepped-up campaign led to a notable increase in the filing of enforcement cases against meat packers and violators. During the quarter under review such cases were filed at a rate almost 6 times as great as in the first quarter and more than 12 times as great as in the corresponding quarter of 1944.
Enforcement measures were, however, only one facet of the drive against the meat black market. Since virtually all black-market meat was being sold to the public through supposedly “legitimate” channels, the full support and active cooperation of the trade were essential for the success of the drive. A series of meetings was therefore held throughout the country with businessmen in the packing industry and hotel supply houses, chain store officials, supermarket managers, and independent retailers to assist them in protecting the meat industry against depredations of black-market operators, which, if unchecked, would threaten the good name of the industry. Governors and mayors throughout the country were requested to support and assist OPA’s efforts to wipe out the black market.
In the field of litigation, experience of the Office continued to be favorable during the quarter, although, with a few notable exceptions, criminal sentences still remained inadequate.
2 See Tenth Quarterly Report, p. 67.
Enforcement • 89
ENFORCEMENT ACTIVITY
The intensified hostilities against black-market operators, particularly with regard to meat, represented the chief enforcement activity of the Office during the quarter. Substantial work was done, however, in other foods such as poultry, sugar, eggs, and fresh fruits and vegetables, all commodities "where violations occurred with varying frequency. Important campaigns were carried on also in the apparel and textile field, in automotive supplies, and in gasoline, petroleum, and industrial materials. In the field of durable goods, where a large volume of household furnishings and furniture was being brought back into production, it became apparent that enforcement manpower was far too inadequate to handle the growing problems. The need for strengthening control over these products was indicated by the fact that the Bureau of Labor Statistics cost-of-living index showed this component had risen steadily month-by-month, the increase for the 12 months ending June 30, being only slightly under the rise in the clothing component, the chief trouble spot in the fight to hold the cost-of-living line.
Meat
Although the supply of meat had been decreasing for many months, it reached the lowest point during the war in the quarter under review. The Office had endeavored to meet this situation by issuance of the live cattle regulation3 and Meat Control Order No. I,4 which placed a limitation on nonfederally inspected slaughter. Under the livestock slaughter and meat distribution program, authority was given to the Office to revoke permits of slaughterers violating rationing regulations and the new quota restrictions and to direct the withholding of subsidies from slaughterers who were found in violation of price or rationing regulations. The existence of these regulations, which were realistic in their approach, provided the basis of enforcement action. The special funds provided by Congress made it possible to add 500 more meat investigators to the enforcement staff, permitting approximately 750 investigators throughout the country to deal with meat violators at preretail levels.
Under the procedure adopted, OPA regional offices carefully examined reports that slaughterers were required to file every accounting period, showing the total price they paid for cattle slaughtered during the period. If this “drove” cost was higher than the maximum permitted by the regulations, the Office enjoined the slaughterer from going over the maximum price in future accounting periods. His sales of dressed beef were then investigated to see if he tried to recoup his
8MPR 574, see Thirteenth Quarterly Report, pp; 2-3.
4 See Food Rationing, pp. 74-75,
90 • Fourteenth Quarterly Report
excessive costs by charging overceiling prices to retailers. In 2 May weeks alone, the Office filed 141 injunction suits against slaughterers whose drove cost was found to exceed the maximum. During the quarter more than 3,000 sanctions were instituted for violations of meat price regulations and the ration order at preretail levels.
Apparel, Textiles, and Leather
Apparel.—The compliance program for Maximum Price Regulation 580, the retail margin control for clothing and housefurnishings, succeeded in attaining almost universal compliance with the filing requirements of the regulation; about 225,000 retail outlets were affected. The planned use of local board volunteers, educational meetings, newspaper articles, and the like led to widespread voluntary compliance which made only a handful of enforcement suits necessary.
Investigations of manufacturers of lingerie items and of men’s heavy outerwear,5 launched near the close of the preceding quarter, revealed that compliance with the record-keeping provisions of the regulation ■was inadequate, and injunctive action had to be taken in a number of cases. This measure was applied promptly not only to improve recordkeeping compliance but to exercise a beneficial effect on price compliance. The record-keeping drive was basic to projected enforcement surveys on pricing under these regulations.
The program on the regulation covering garments made from priority cotton cloth6 showed quite good compliance with the highest price line and preticketing requirements, and few sanctions had to be applied.
A number of treble-damage cases arose during the quarter from the quality-deterioration program on men’s cotton woven shorts.7 The worst compliance area appeared among new manufacturers, many of whom were former retailers and contractors.
Many other treble-damage cases were filed during the quarter. The compliance program instituted under the revised work clothing regulation 8 resulted in a great number of suits, chiefly against new manufacturers. Many suits were filed also under the women’s and children’s outerwear regulation,0 particularly in New York City. Violations of the branded percentage requirement of the rayon-hosiery regulation continued, and were the subject of a sizable number of trebledamage and injunction settlements.
Textiles.—In textiles, the Office kept up strenuous efforts to control the major jobbing black market in piece goods in New York City.
5 MPR 570 and MPR 572.
6 MPR 578.
7 See Thirteenth Quarterly Report, p. 65.
8 RMPR 208.
9 RMPR 287.
Enforcement • 91
Cash-on-the-side and false invoicing transactions still persisted, and they continued to be the subject of criminal prosecutions. A survey of converter-]'obbers in this city, which disclosed a large number of violations of the provision limiting the jobbing which can be done by such sellers, resulted in the filing of numerous treble-damage suits.
Also in New York, a survey of new jobbers of piece goods disclosed numerous violations on which enforcement action was to be taken. A survey was also started on compliance with the restrictions on excess finishing of piece goods. Important actions were taken in New York and Chicago on illegal pyramiding of markups in jobber-to-jobber piece goods sales. A survey on spinning and weaving services which was started in New England was largely completed, and the survey of cotton yarn mills in North and South Carolina was continued.
Leather.—Diminution of upgrading violations and improvement in quality of hides were noted during the quarter as a result of the longstanding hides inspection program. Enforcement campaigns under the revised leather regulation10 were started in the Boston and Chicago regions.
Automobiles and Gasoline
Automobiles.—Marked improvement in compliance with the used-car regulation was shown during the quarter although violations still remained a pressing problem. Reports from industry and investigations by the Office, however, indicated that the percentage of overceiling sales had been cut drastically, and that some good cars were even being sold below ceiling. These results were brought about not only through energetic enforcement action on the part of the Office, but also through the helpful support of trade cooperating committees which worked closely with the district offices during the period.
A new problem arose with regard to automobile parts as a result of beginning reconversion. It was found that many factories were violating the regulations covering these items.
Gasoline.—In this field, upgrading at the retail level continued a major price control problem, despite several injunctive and treble damage actions.11 With counterfeit coupons a diminishing source of difficulty in gasoline rationing, the chief stumbling block to equitable distribution lay in stolen used coupons which were being taken from banks, filling stations, bulk stations, etc., and sold to filling stations.
Industrial Materials and Manufacturing
The programs on lumber and gray iron foundries, initiated in earlier months, were continued during the quarter.
Investigation of a cash-on-the-side black market in shingles, extending from producing mills in the Pacific Northwest throughout
M MPR 61.
I 11 See Twelfth Quarterly Report, p. 71.
92 • Fourteenth Quarterly Report
the Midwest and Southwest, culminated during the quarter in indictment of 22 persons. A number of sanctions were instituted as a result of the nearly completed survey of gray iron foundries.
Numerous upgrading violations were brought to light by a new mill inspection program of waste paper, and sanction activity was commenced. Prosecutions in Detroit brought a 2-year jail sentence and two $10,000 fines against the most notorious violator of the waste-paper regulation, and a fine of $10,000 on a large mill buyer.
The industrial services program, launched to secure compliance with the filing requirements of the regulation,12 achieved good compliance through educational and informational techniques. At the end of the quarter the Office was preparing injunctive action against firms which had failed to file.
LITIGATION
Several court decisions during the quarter upheld the Administrator in two fields where the Office had long met with judicial rejection of its position, continuing a reversal of trend which had begun in the preceding quarter.13 Not one adverse decision was rendered on the applicability of price control to sales by States or State officers or officers of Federal or State courts, while two circuit courts of appeal, a district court, and a State appellate court all accepted this principle.
Also, on the question of base-period prices, the United States Supreme Court adopted the Administrator’s position that under GMPE and similar regulations, the highest price of an article actually delivered in March 1942 governs as against prices offered before March for a delivery which might have been but was not called for during that month. This decision14 reversed the ruling of the district court and the circuit court of appeals. The Supreme Court declared that administrative interpretation of administrative regulations is entitled to the greatest weight in determining what the regulation means.
In the field of injunctions, the courts continued to carry out fairly broadly the policies and purposes of price control. Decrees were entered in several cases which were broad in the scope of their prohibitions, though the violations actually shown fell within fairly narrow scope. A district court in another case fully implemented the recordkeeping provisions of the regulation, without which compliance with price ceilings would be virtually impossible. It also held that the difficulty and expense of complying with a regulation will not defeat an injunction.
Criminal sentences, particularly in the field of price violations, continued to be inadequate, with a few outstanding exceptions such as
12 MPR 581.
13 See Thirteenth Quarterly Report, pp. 67-68.
14 Bowles v. Seminole Rock & Sand Co., 65 S. Ct. 1215.
Enforcement • 93
the 2-year sentence imposed on a waste paper dealer in Detroit and the 6-year sentence imposed on a liquor dealer in Kentucky.
Full damages were awarded in several cases decided during the quarter under the treble damage provisions of the act, and one appellate court accepted the Administrator’s position that the benefits of the amendment enacted June 30,1944, were designed only for defendants who could offer some showing that tended to exculpate them from fault. This amendment provided that where suit was brought against overcharge, damages may not be greater than the actual overcharge or $25, whichever is the larger, in cases where the defendant proves to the court’s satisfaction that the violation was not willful, nor the result of his failure to take practicable precautions against the occurrence of the violation. Another circuit court of appeals held, however, that even a defendant who has defaulted and has made no showing whatever that he was free from fault is entitled to the benefit of the court’s discretion under that amendment. Believing that this decision failed to carry out the intent of Congress, the Office recommended to the Solicitor General that a writ of certiorari be sought.
State courts, on the whole, continued during the quarter to cooperate with the Office. The supreme courts of Minnesota and Massachusetts upheld State court jurisdiction to entertain tenants’ treble damage actions; the Wisconsin Supreme Court entertained an Administrator’s civil damage action. The New York court of appeals held that a seller may not recover any part of the purchase price on goods sold on credit if it was determined in a manner violative of the regulation. The Supreme Court of Ohio, however, handed down a decision unfavorable to the Office, which was counter to virtually uniform judicial opinion. In this case, the court held unconstitutional a city ordinance which made it a misdemeanor to charge more than the ceiling price prescribed by the applicable price regulation. Since this decision rested m part upon grounds involving the State constitution, certiorari was unavailable.
STATISTICAL SUMMARY
More than 50,000 investigations were completed and more than 44,500 violations were discovered during the quarter. A majority of the violations was disposed of through administrative action: Approximately 7,300 cases were closed with warning letters and informal adjustments; district offices revoked about 1,360 rations; suspension order proceedings were instituted in almost 5,880 cases, and license warning notices were issued in over 3,160 cases. Monetary settlements were made in slightly more than 7,000 cases.
667526—45---------7
94 • Fourteenth Quarterly Report
Court proceedings were instituted in almost 17,350 Administrator’s damage suits, injunction proceedings, license suspension suits, criminal prosecutions, suits under local legislation, and contempt proceedings. The Office completed more than 5,070 suspension order proceedings, and 10,560 court cases. Favorable decisions were received in 92.3 percent of the suspension order proceedings, and 97 percent of the court cases.
Settlements, judgments, and fines during the quarter amounted to $7,176,912.
Statistical Summary of Enforcement Activity, April—June 1945
Type of action	Number of cases
Investigations and violations:	
Investigations completed ._ ..■				1 50,059
Violations found. - 	 					» 44,538
Administrative enforcement:	
Warning letters and informal adjustments...			< 7,307
License warning notices 	 _ . _ 	 		»3,168
Ration revocations by district offices . 		.	1,358
Suspension order proceedings instituted	 			 			5,775
Monetary settlements:	
Administrator’s consumer damage claim 			.		4,222
Administrator’s own damage claim _____________________________. 			2,78?
Litigation instituted:	
Administrator’s consumer damage suit	-		2,74!
Administrator’s own damage suit		 	 -	1,403
Injunction suit	________________________________________	12,847
	
License suspension suit.					51
Criminal prosecution 				..		»1,32!
Suit under local legislation			1 1,400
Contempt proceedings		»88
Proceedings completed:	
Suspension order proceedings			 		5,077
Orders issued			4,242
Proceed ings dismissed __ _ _ _ _  	 _ ________.____________________	34!
Percent won ...........		..-				-------	92.3
Court litigation 			12,072
Cases dismissed _____________________________ __________________________	1,507
C ases completed...		...			10,565
Won				10,246
Lost. _ 	 	 		319
Percent won.. 		97.0
	
i Excludes Albany figures for June.
* Number of defendants.
o