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We start with virgin aluminum, one company, 100 percent of the output, 1937, authority, Federal Trade Commission.

Automobiles, three companies, 86 percent of the output, 1937, Department of Commerce.

Beef products, two companies, 47 percent of the output, 1935, Federal Trade Commission.

Bread and other bakery products, three companies, 20 percent of the output, about 1934, Federal Trade Commission. Cans, three companies, 90 percent of the output. This is a recent figure; I don't know the exact year. Federal Trade Commission. Senator KING. Is that the American Can Co?

Dr. THORP. That might be one of the companies. The Federal Trade Commission did not supply me with the names of the individual companies.

The cement industry, five companies, 40 percent of the output, 1931, Federal Trade Commission.

Cigarettes, three companies, 80 percent of the output, 1934, Federal Trade Commission.

Coal (bituminous), four companies, 10 percent of the output, 1932, Bureau of Mines.

Copper, four companies, 78 percent of the output, 1935, Bureau of Mines.

Corn binders. That happens to be an agricultural implement. Four companies, 100 percent of the output, 1936, Federal Trade Commission.

Corn planters (perhaps that should have come first), six companies, 91 percent of the output, 1936, Federal Trade Commission.

Flour, three companies, 29 percent of the output, 1934-35, Federal Trade Commission.

Plate glass, two companies, 95 percent of the output, 1935, Tariff Commission.

Safety glass, two companies, 90 percent of the output, 1935, Tariff Commission.

Iron ore, four companies, 64 percent of the output, 1935, Bureau of Mines.

Oil wells, four companies, 20 percent of the output, 1935, Bureau of Mines.

Steel, three companies-this is a measure of capacity rather than production-60.5 percent, 1935, Tariff Commission.

Whisky, four companies, 58 percent, for the year September 1937 to August 1938, Federal Alcohol Administration.

Women's clothing, four companies, 2 percent of the output, 1935, Bureau of the Census.

Wood pulp, four companies, 35 percent of the output, 1935, Tariff Commission.

Zinc, four companies, 43 percent of the output, 1935, Bureau of Mines.

These happen to be figures that were available, and I introduce them to show first the variety in the record, running all the way from 100 percent down to 2 percent, a number of cases in the 30's, 40's, 50's, and 60's. I think that is one important thing to realize.

A second important thing to realize is that there are a number of industries in which we have several large enterprises in what might be described as a dominant position. I spoke somewhat earlier about

the fact that it seemed to be true that the large enterprises had emerged in clusters. It is not so much a matter-as a general matter at any rate it doesn't seem to be true-of one enterprise dominating the picture, but rather that there are several large enterprises.

Of course, that changes the whole competitive situation as one envisages it, because in a situation with several large enterprises the action of any one is a matter of extreme importance, and affects the whole market situation and permits certain further concentrations, of which I am going to speak in a moment.

EXTENT OF CHAIN ORGANIZATIONS

Dr. THORP. It is necessary, now, to carry this picture on to retail trade. So far as retail trade is concerned, the general picture of development of chain stores is that in 1935 we had slightly over 6,000 chains in the United States with about 140,000 stores. They did 22 percent of the total volume of business. I have in this chart the volume of business done by chains in certain of the more important industries. (The chart referred to was marked "Exhibit No. 74" and appears on this page.)

EXHIBIT No. 74

IMPORTANCE OF CHAIN STORE SALES
BY SELECTED TYPES OF OUTLETS, 1935

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Dr. THORP. The industry in which the chains do the largest volume of activity is variety stores, more usually called the 5-and-10-cent stores, where they do about 90 percent. Next come shoe stores, 50 percent; grocery stores, 38 percent; drug stores and fountains, 28 percent-varying degrees of chain operation.

Representative REECE. Do variety stores include such stores of which J. C. Penney, for instance, is representative?

Dr. THORP. NO; I believe J. C. Penney would be included in general merchandise stores. The variety group would include such stores as F. W. Woolworth, S. S. Kresge Co., and G. C. Murphy Co.

Senator KING. How do you differentiate between the variety and the chain, if you do differentiate?

Dr. THORP. Variety is a definition like shoe or grocery, so that the other 10 percent would be independent, single independent variety stores, rather than chain stores.

SUPPLEMENTAL FORMS OF CONCENTRATION

Dr. THORP. In considering the measures on concentration it is necessary to realize that there are various other elements in the economic system, which may reshape and interrelate the single enterprises which I have been talking about, certain relationships which may be regarded as additional or alternative forms of concentration. (Representative Sumners now presiding.)

For example, there are various financial interlocking relationships, spheres of interest, stock ownership, interlocking directorates and such things which complicate the problem of concentration.

Beyond that there are a number of ways in which enterprises act as though they were integrated for certain functions. As an illustration, consider the voluntary group of retailers. A voluntary group of retailers is a group in which each store continues its independent existence, but purchases through a central agency, so that from the point of view of purchasing they have collective action. They purchase more or less as a chain would purchase, but from the point of view of merchandising they operate individually. So that we have there a partial kind of concentration.

There are, according to an estimate made by the American Institute of Food Distribution in May 1936, 809 of these voluntary cooperative groups with 110,000 retailer members, and they claim that they have more members at the present time than the chain stores have outlets. A third form of concentration for the purpose of dealing with specific functions is the trade associations. There are approximately 7,800 trade associations in the United States, 1,800 of which are national, 6,000 State and local groups, that figure not including chambers of commerce. It includes only organizations by industries or

trade.

In those cases you have organizations which are acting for the industry with respect to certain functions. It may be research. It may be that they run a single research organization for the entire industry. In that way, therefore, you get collective action at that point.

It may be advertising or it may be the collection of statistics, or an analysis of the current business situation in the industry.

On the point of trade associations, I merely wish to raise it because we hope to have a great deal more information available in the Department of Commerce shortly.

Senator KING. You haven't indicated the number of constituent parts of the trade associations or units within each or within all of these trade associations.

Dr. THORP. I am not able to do that now, although I hope to be able to do it at a later time.

Senator KING. It would run up into the tens of thousands, would it not?

Dr. THORP. I think it would be true to say that there are more members of trade associations than there are manufacturers, because many of them belong to several trade associations.

COMBINATIONS AND CONSPIRACIES IN RESTRAINT OF TRADE

Dr. THORP. The fourth point that must be made has to do with regard to forms of concentration which emerge through agreements and through unlawful combinations. There is no way, of course, in which one can measure that particular thing. How much actual conspiracy, combinations in retraint of trade, there is in this country is something about which I, at least, would not be in a position to make any estimate. It is possible to say that it exists, and I do want to present an indication of the forms which it seems to take.

Mr. E. B. George made a study of recent complaints which had been made by the Federal Trade Commission and the Department of Justice with regard to such violations of the Sherman Act, and I just wish to summarize briefly the kinds of situations which were found to exist.

Senator KING. Was he a representative of the Department of Justice or the Department of Commerce, or the Federal Trade Commission?

Dr. THORP. Mr. George is associated with Dun & Bradstreet. This was published in an article in Dun's Review. It is based on the official records of the complaints made, which are generally available. Three of the complaints had to do with labor coercion; they might be roughly described as racketeering cases which come under the antitrust laws.

I am going to talk here about the kind of complaint which appeared in 56 cases. Thirty-three of the complaints were in the field of price control; 26 cases where manufacturers had established some form of price control, 5 where distributors had established some form of price. control, and 2 where manufacturers and distributors together had established some form of price control.

Twenty-seven had to do with the control of distribution channels, which has come to be one of the essential issues with regard to the operation of business. There were 6 cases where manufacturers were in agreement with regard to controlling distribution channels, 5 where individual manufacturers were trying to do it, 2 where manufacturers were applying pressure on other manufacturers, 10 where distributors were in the combination, and 4 where manufacturers and distributors were in it together.

Senator KING. Were all these complaints made to the Federal Trade Commission?

Dr. THORP. These were complaints issued by the Federal Trade Commission or the Department of Justice. There were three cases that might be regarded as special cases. One had to do with the development of special brands in order to obtain exclusive control; one had to do with regard to controlling the available locations for doing this particular activity, and one had to do with a group of wholesalers who were in combination trying to represent themselves as manufacturers.

I introduce this into the record merely because it is the only way I know, and the only possible way in which one can indicate the fact, that there is in our system some degree of combination which is going on which would fall in the category of violations of the anti-trust laws as they now exist.

Senator KING. Were any of those complaints predicted upon violation of the Robinson-Patman Act or the Miller-Tydings Act?

Dr. THORP. No; those were not included. I shall now briefly present some charts which indicate a different aspect of this situation.

INTER-INDUSTRY COMPETITION

Dr. THORP. Here we have the fact that industries are competing with each other, and, therefore, the measurement of concentration in a particular industry does not show the whole picture. One must take into account the fact that competition is continually going on as between industries.

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The next chart shows what happened as between vaious types of transportation, the buggies and public conveyances (these public conveyances are horse-drawn public conveyances) and the wagon industry, passenger car industry, and the truck industry. I will not elaborate on it except as an indication of various competing groups and what one industry may do to another industry.

(The chart referred to was marked "Exhibit No. 75" and appears on this page. The statistical data on which this chart is based are included in the appendix on p. 237.)

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