are made in fields where 4 concerns controlled three-fourths or more of the supply. When products with an annual output valued at less than $10,000,000 are eliminated, there remain 121 products, valued at more than $10,000,000, in which it is certain that more than 75 percent, by value, of the total output was manufactured by 4 firms. These goods are listed in table 4. TABLE 4.-Products valued at more than $10,000,000 each in whose manufacture the four largest producers controlled more than three-fourths of the total output in 1937 Hydrocarbon; acetylene.. Tractors; "all purpose," wheel type, belt horsepower under 30, steel tires. Oxygen.. Typewriters: standard. 8 Radio receiving tubes for replacement, alternating current, glass and metal. 91.2 Tractors; "all purpose," wheel type, belt horsepower 30 and over, rubber tires.. Aluminum ware, cast. Copper plates and sheets. Passenger cars and chassis. Corn starch.. Milk bottles. Tractors; other than "all purpose," 30 and over, steel and rubber tires. Window glass.. Cigarettes. Gypsum, neat plaster. Nickel alloys, plates, and sheets. Steel, rolled blooms and billets for forging. A. C. synchronous timing motors, 1/20 horsepower and over, under 1 horsepower capacitor type. Adding machines. Rubber arctics and gaiters. Refined sugar, soft or brown. Combines, harvester-thrasher, 6 foot cut and wider Brass and bronze tubing and pipe, seamless. Steel, skelp. Rubber-soled canvas shoes. Wallboard except gypsum, rigid, cellular fiber. Aluminum ingots. Matches, strike anywhere. Wire and cable, paper insulated. Cotton woven chambrays and cheviots. Rubbers and footholds. Machine-made tumblers, goblets, and barware.. Batteries, dry, other than 6 inch, 11⁄2 volt.. Rayon yarns by denier; 100 (88-112). Motors, direct current, 1 horsepower to 200 horsepower. Partially refined oil sold for rerunning.. Steel, plates, universal. Heating and cooking apparatus, kerosene.. Truck and bus tires.. Coal tar resins derived from phenol, and/or cresol. Rayon yarns by denier, 300 (250-374). Radio receiving sets, beyond standard broadcast, socket power, $45 to $65. Turkish and terry-woven towels.. TABLE 4.—Products valued at more than $10,000,000 each in whose manufacture the four largest producers controlled more than three-fourths of the total output in 1937-Continued Steel; semifinished rolled blooms, billets, and slag. Narrow-neck packers' ware. Steel; black for trimming. Granulated sugar. Woolen woven goods, other. A. C. synchronous timing motors; 1/20 horsepower and over, under 1 horsepower, split phase... Passenger car, truck, and bus inner tubes. Commercial cars, trucks, and busses. Thermostats. Steel rails. Car and locomotive wheels, rolled and forged Lead oxides; litharge.. Beer cans. Corn and other sirups. Axles, rolled and forged. Corn sugar. Oxides, other Steel; pierced billets, rounds, and blanks for seamless pipes and tubes. Steel; sheet and tin plate. 8 Ignition cable sets or wire assemblies for internal combustion engines. 9 Stainless steel plates and sheets. 10 Films, except X-ray. 10 Sensitized photographic paper. 11 Paper; ground wood, printing. 11 Beer bottles. 11 Wool, meat-packing. Lighting glassware, including electric light bulbs. Cameras, including motion picture.. Packing rings, electrodes; miscellaneous graphite and metal graphited specialties. Steel; heavy web, 3-inch and over. Carburetor engines, motor vehicle, industrial stationary. 12 13 13 14 14 16 18 18 18 19 25 27 28 30 31 31 33 44 Aluminum products, other. Motor vehicle hardware, including locks. Sheet metal; culverts, flumes, irrigation pipe, etc. Mattresses, innerspring. 61 62 105 146 525 (2) eeeeeeeeeee Metal davenports, sofas, day beds, studio couches, etc, upholstered. Cartridges.. 1 Information withheld in order to avoid the approximate disclosure of data for individual enterprises. 2 Data not available. Source: Temporary National Economic Committee Monograph No. 27, The Structure of Industry, Part V, Appendix B, pp. 420-481. Among the 1,807 products in the sample for 1937, there were 382 in which 5 to 10 concerns accounted for the whole supply. Eight companies, in recent years, have produced and distributed 80 to 90 percent of the feature films, and produced, distributed, and exhibited 65 percent of all the motion pictures shown in the United States. 8 For a discussion of the industry, see Temporary National Economic Committee Monograph No. 43, the Motion Picture Industry-A Pattern of Control, by Daniel Bertrand, W. Duane Evans, and E. L. Blanchard. Nine companies have manufactured all the liquid chlorine made for industrial and commercial use. Ten companies have supplied the entire domestic output of viscose rayon yarn. In the cement industry, where 75 companies operated 162 mills in 1938, the 5 largest produced nearly 40 percent of the total output, the next 6 produced 16 percent, and none of the others provided as much as 2 percent. In the oil industry, between 1936 and 1938, 14 companies, among several thousand, owned 89 percent of the mileage of crude oil trunk pipe lines; 15 companies owned 87 percent of the dead-weight tonnage of oil tankers; 16 owned 96 percent of the mileage of gasoline pipe lines; 18 made 80 percent of the domestic sales of gasoline; and 20 produced 52 percent of the crude, owned 57 percent of the mileage of gathering lines, 75 percent of the daily crude capacity, and 85 percent of the daily cracking capacity, made more than 82 percent of the runs to stills, produced nearly 84 percent of the gasoline, and held 90 percent of the stocks of gasoline, 93 percent of the stocks of lubricants, and more than 96 percent of the stocks of refinable crude.o An even higher degree of concentration obtains within the regional markets where the major companies refine and sell their gasoline. There is no market within which all 20 of these companies compete; in 16 States there are fewer than 10 of them. The leading firm sells more than 20 percent of the gasoline consumed in each of 30 States, more than 25 percent in 15, more than 30 percent in 5, 40 percent in Wyoming, and 60 percent in Utah. In the production of steel, also, a few large firms are dominant. Integrated enterprises possess about 90 percent of the Nation's pig iron capacity, 90 percent of the steel ingot capacity, and 85 percent of the capacity for hot rolled steel. Ten companies owned 88 percent of the industry's assets in 1937; four companies owned more than 66 percent; 2 companies owned 55 percent. The United States Steel Corporation, with 40 percent, was two and a half times as large as its closest rival, the Bethlehem Steel Corporation, and Bethlehem was nearly twice as large as the third concern, the Republic Steel Corporation, which, in turn, had assets exceeding the aggregate investment of all but 6 of the remaining firms. Productive capacity, in the case of the most important steel products, is similarly concentrated.10 United States Steel is the giant of the industry. Its manufacturing capacity is "approximately that of all German producers combined. It is almost twice that of the entire British steel industry and more than twice that of all the French mills combined." 11 By virtue of its tremendous size and its high degree of integration, the corporation is in a position to dominate the field. The production of drugs, medicines, soaps, cosmetics, and toilet preparations is characterized in general by substantial concentration, rigid prices, and high profits. The 4 leading producers in each case accounted for more than three-fourths by value of the output of 21 among 41 drugs and medicines in 1937, for nearly three-fourths of the total output of soap, and for more than one-fourth of the See Temporary National Economic Committee Monograph No. 39, Control of the Petroleum Industry by Major Oil Companies, by Roy C. Cook. 10 See Temporary National Economic Committee Monograph No. 41, Price Discrimination in Steel, by John M. Blair and Arthur Reeside. Hearings before the Temporary National Economic Committee, Part 18, Iron and Steel Industry, Iron Ore, Appendix 1349, p. 10410. total output of perfumes, cosmetics, and toilet preparations in 1935, the degree of concentration in the latter case undoubtedly being higher where individual products are concerned. Aside from those drugs and medicines which are sold upon prescription by physicians, such goods are usually branded and nationally advertised and their resale prices are maintained. The rate of return in this field has long been higher than that usually obtained under active competition; 14 of the larger producers of drugs and medicines made an average net profit on tangible net worth of 28.53 percent in 1937 and 25.77 percent in 1938; 9 manufacturers of soaps and toilet preparations made 9.83 percent in 1937 and 16.29 percent in 1938. But if these trades present any barrier to the admission of new firms, it is to be found less in the cost of the equipment or the complexity of the processes employed in the manufacture of their products than in the size of the expenditures that are made in advertising the labels which they bear. The situation in this field is to be attributed primarily to the fact that the consumer lacks knowledge concerning the qualities of such products, is unable to make comparisons, and is reluctant to substitute one brand for another in response to differences in price. If it were not for this fact, the field might be effectively competitive. Situations similar to those described above obtain in certain local markets where one or a few establishments control a trade. There is a high degree of concentration, for example, in the sale of common brick in New York, Philadelphia, Washington, San Francisco, and Los Angeles, and in the sale of doors, frames, sash, and other planing mill products in Chicago, Milwaukee, Kansas City, Seattle, Tacoma, San Francisco, and Los Angeles. Among 12,000 towns and cities in the United States in 1936, half of the bankers faced no competition in their communities, a quarter of them had only one competitor, and only 5 percent of them had five or more. In many cities the distribution of milk is in the hands of a few large firms. In some year between 1929 and 1939, two distributors handled approximately half of the milk sold in New York, Chicago, Philadelphia, Detroit, Boston, Pittsburgh, San Francisco, Milwaukee, and Youngstown, two-thirds of that sold in Baltimore, and nine-tenths of that sold in Akron. One distributor handled more than a third of the milk sold in Pittsburgh, Milwaukee, and Salt Lake City, half of that sold in Baltimore, Washington, Akron, and Richmond, and two-thirds of that sold in Madison. Many of these local distributors are controlled, in turn, by one or the other of two large holding companies that operate on a national scale. Subsidiaries of these concerns handled half or more than half of the milk distributed in nine of the cities. Price Leadership. Where one or a few firms dominate a trade, price leadership is likely to obtain. If a single firm overtops its rivals, it may invariably take the initiative in raising or lowering the price. If two or more concerns are dominant, one may habitually serve as leader or more than one may lead, each in a different territory or each in turn. The smaller firms in such a field will follow the changes that are announced and sell at the prices that are set. They may be subjected to hidden pressure by the leader. They may fear annihilation in the warfare that would be provoked by an attempt to undercut him. They may seek to obtain larger profits by taking refuge under the price umbrella which he holds over the trade. They may merely find it convenient to follow his lead. In any case, they abandon independence of judgment and adopt his prices as their own. Prices established through leadership are not effectively competitive. The leader, controlling a substantial portion of the output of the trade, estimates the sales revenues and the production costs incident to the quantities salable at various prices and produces the amount and sells at the figure calculated to yield him the largest net return. In short, he behaves as a monopolist. When other sellers adopt the same price they offer buyers no real alternative, since they must pay leader and followers the same monopoly price. Prices thus established may be rigidly maintained over long periods of time. In general, they are likely to be higher than those that would prevail under active competition. They are sometimes productive of high profits, but they are not invariably so. In many cases they temporarily afford a return so large that additional firms are encouraged to enter the field. The business obtainable at the fixed price is shared by an increasing number of participants. The price leader gets a declining percentage of the trade. Idle capacity piles up, to be carried at heavy cost. Monopoly pricing persists, but monopoly profits are not secured. Leadership serves but to forestall the competitive struggle that would otherwise obtain. Evidence of price leadership is found in the sale of steel, cement, agricultural implements, gasoline, nonferrous metals, newsprint paper, glass containers, biscuits and crackers, and in the purchase of crude petroleum. Price Agreements. In markets where sellers are few in number they may more readily enter into agreements establishing and maintaining uniform prices and terms of sale. Such agreements, though plainly in violation of the law forbidding conspiracies in restraint of trade, have not infrequently occurred. Since 1920, apart from those instances in which a trade association, industrial institute, or some other common agency was employed, cease and desist orders have been issued by the Federal Trade Commission, and decisions have been handed down by the courts in cases involving the producers of viscose rayon yarn, pin tickets, tin plate, flannel skirts, turbine generators and condensers, liquid chlorine, medical cotton goods, calcium chloride, corn cribs and silos, certain types of water works and gas system fittings, fire fighting equipment, pulverized iron, rubber heels, music rolls, lithographed labels, plumbing supplies, fertilizer, metal lath, gasoline, and brushes. More recently complaints have been issued by the Commission against the distributors of foreign-type cheese, the manufacturers of medical cotton goods, chemical and agricultural lime, and erasers, and suits have been initiated by the Department of Justice against distributors of milk in Chicago, against the producers of newsprint paper on the Pacific coast, and against firms engaged in the manu 300282-41-3 |