sales of gas to public-utility consumers in 1930 was 21.68 percent of the estimated total for the entire country. For the other company groups, that is, those in which voting-stock interest was less than 11 percent, in each case, the total sales to public-utility consumers were 12.44 percent of that estimated for the country as a whole; a total of 34.12 percent of the estimated sales for the United States. ELECTRIC BOND & SHARE CO. The investigation into the affairs of Electric Bond & Share Co., particularly as to the exact costs and profits as a result of its managerial service and supervisory contracts, is nearing completion. The decision of the United States District Court for the Southern District of New York in the suit of the Federal Trade Commission against the Electric Bond & Share Co. et al. (1 Fed. Supp. 247), which decision was handed down August 19, 1932, directed the individual respondents to answer all questions relating to the cost to Electric Bond & Share Co. of such services as it renders the operating companies in return for the payment of a fee based upon their gross earnings, etc. An agreement was reached between the Commission and the Electric Bond & Share Co. whereby Commission examiners examined the expense ledgers and other records of the Electric Bond & Share Co., which had been denied them at the time of the first examination of this company. A report is now being prepared on the results of this investigation. INTERSTATE TRANSMISSION OF ELECTRIC ENERGY AND GAS Data gathered in connection with electric energy transmitted across State lines by electric utility operating companies were compiled for the years 1929 and 1930 according to holding-company group ownership and introduced into the record in report form when hearings on such companies were held. These reports show in detail the quantities of electric energy generated, disposed of, and transmitted across State boundaries by each operating-company group. During the fiscal year such data were presented for the Pennsylvania Electric Corporation, Columbia Gas & Electric Corporation, New England Gas & Electric Corporation, Pennsylvania Electric Co., United Gas Improvement Co., Central Public Service Co., and the Utilities Power & Light Co. Transmission lines of the operating companies of these groups extend into more than 30 States and the Dominion of Canada. Reports were also introduced into the record covering gas operations with respect to production, sales, and quantities moved in interstate commerce by the following company groups for the year 1930: Columbia Gas & Electric Corporation, North American Power & Light Co., United Gas Improvement Co., and the Central Public Service Corporation. REMAINING WORK OF THE INVESTIGATION It is expected that the investigation will be concluded during the fiscal year 1933-34. Work has been started to collate the material gathered together in the reports for the preparation of the final report on the results of this investigation. The inquiry into the financial and economic problems in the industry will cover most of the large hoiding-company groups and a few of the smaller ones. Most of the principal holding, management, and servicing companies in each of these groups will be covered together with a sampling of the operating companies. The total of the material collected will, it is believed, represent a good sample of the conditions among such companies in the electric utility field, which, in the aggregate, represented in 1929 more than 45 percent of the total output for the United States, and more than 80 percent of the electric energy sold by privately owned electric utilities doing an interstate or international business. The gas utility field, which of necessity will have been covered less comprehensively than the power field, is becoming a subject of increasing interest on account of recent developments in natural gas production and the great extensions of interstate pipe lines for gas. By the terms of the Senate resolution the Commission, in addition to learning certain facts, is required to report to the Senate the value or deteriment to the public of public utility holding companies and particularly to suggest what legislation, if any, should be enacted by Congress to correct any abuses that may exist in the organization or operation of such holding companies. The Commission is further directed to report whether any of the practices described in the resolution tend to create a monopoly or constitute violations of the Federal antitrust laws. CHAIN-STORE INQUIRY TWENTY-SIX REPORTS ARE SENT TO CONGRESS Work on the chain-store inquiry during the fiscal year comprised the writing or completing of 26 reports on the different phases of chain-store operations. Seven reports had previously been sent to Congress, as follows: 1 Scope of the Chain-Store Inquiry. Growth and Development of Chain-Stores. Cooperative Drug and Hardware Chains. 1 These reports were briefly described in the preceding annual reports of the Federal Trade Commission; that on the Cooperative Grocery Chains in the report for the year ending June 30, 1931; the remaining six in the report for the year ending June 30, 1932. Sources of Chain-Store Merchandise. Chain-Store Leaders and Loss Leaders. The 26 reports completed during the fiscal year 1932-33 are: Chain-Store Manufacturing. Chain-Store Private Brands. Chain-Store Advertising. Chain-Store Wages. The Chain-Store in the Small Towns. State Distribution of Chain Stores, 1913-28. Sizes of Stores of Retail Chains. Chain-Store Price Policies. Quality of Canned Vegetables and Fruits (Under Brands of Manufacturers, Chains, and Other Distributors). Short Weighing and Over Weighing in Chain and Independent Grocery Stores. Service Features in Chain Stores. Prices and Margins of Chain and Independent Distributors, Washington, Grocery. Prices and Margins of Chain and Independent Distributors, Memphis, Grocery. Prices and Margins of Chain and Independent Distributors, Detroit, Grocery. Prices and Margins of Chain and Independent Distributors, Cincinnati, Grocery. Prices and Margins of Chain and Independent Distributors, Detroit, Drug. Prices and Margins of Chain and Independent Distributors, Washington, Drug. Prices and Margins of Chain and Independent Distributors, Cincinnati, Drug. Prices and Margins of Chain and Independent Distributors, Memphis, Drug. Special Discounts and Allowances to Chain and Independent Distributors, Tobacco. Special Discounts and Allowances to Chain and Independent Distributors, Grocery. Special Discounts and Allowances to Chain and Independent Distributors, Drug. Gross Profit and Average Sales per Store of Retail Chains. Sales, Costs, and Profits of Retail Chains. Invested Capital and Rates of Return of Retail Chains. REPORTS TO CONGRESS ARE BRIEFLY DESCRIBED Brief descriptions of the salient features of the reports completed during the fiscal year, grouped to some extent by subject matter, are given below. CHAIN-STORE MANUFACTURING The report on chain-store manufacturing shows to what extent the manufacture of commodities and the distribution of them through retail stores have been combined by chain-store organizations in various lines of business. Of 1,068 chain-store companies in 26 kinds of business which furnished information on the question of manufacturing, 162 reported that they manufactured part of the goods sold by them in the year 1930. While only 9 percent of the chains operating from 2 to 5 stores are engaged in manufacturing, 65 percent of those operating more than 500 stores are manufacturing chains. The retail sales in 1930 of goods manufactured by these chains amounted to approximately $350,000,000 which is equivalent to 14.1 percent of the total retail sales of the 162 manufacturing chains and to 8.1 percent of the total sales of 1,068 chains reporting. Seventy-three of the 162 chains manufacture from 50 to 100 percent of the goods sold to their stores. Upwards of 70 percent of the sales of manufacturing chains is represented by goods of their own manufacture in seven kinds of business (confectionery, men's shoes, men's ready-to-wear, women's shoes, hats and caps, men's and women's shoes, and women's accessories), and in no other line of business do manufacturing chains produce more than one third of the merchandise they sell. More than 50 percent of the total sales of all reporting chains is produced by the manufacturing chains in three lines of business (confectionery, men's shoes, men's ready-to-wear), and in no other kind of business does this proportion exceed 30 percent. It appears that those lines of chain-store business such as foods, drugs, and variety which handle wide assortments, as contrasted with specialized lines of merchandise have experienced the greatest expansion in number of stores operated and have experienced, relative to their volume of sales, the least development of chain-store manufacturing. Approximately 80 percent of the manufacturing chains report that they own private brands, while only 20 percent of the nonmanufacturing chains own such brands. Of 985 chains which report as to manufacturing and the use of private brands, 704 chains neither manufacture nor use such brands. CHAIN-STORE PRIVATE BRANDS The report on private brands shows that about one fourth of the reporting chains owned private brands but these chains accounted for about three fourths of the stores and sales. Private brands appear to be sold to at least to some extent in about 97 percent of the chain grocery and meat stores, in from 84 to 90 percent of the chain grocery and department stores, in about 86 percent of the confectionery stores, in from 63 to 81 percent of the chain dry goods and apparel stores, and in from 62 to 75 percent of the dollar-limit variety stores. Considered from the standpoint of the dollar volume, the great bulk of the private brand sales of brand owning chains, at least in recent years, has been made by chains in a limited number of lines of business. Excluding A. & P. and Kroger, nearly four fifths of the total private brand sales reported by 274 chains in 1930 were made in five of the 26 kinds of chains, namely, dry goods and apparel, department store, men's and women's shoes, grocery, and grocery and meat. If A. & P. and Kroger are included, the private brand sales of these five kinds of business represent nearly six sevenths of the total. Approximately one third of the private brand sales of all private brand chains reporting in 1930 was made by A. & P. and Kroger, and these two chains together with The J. C. Penny Co., accounted for more than one half of the total private brand sales reported in that year. Based on the proportion of private brand sales to total sales of private brand owning chains, the private brand business is apparently most important in confectionery and men's shoe chains and least important in hardware, unlimited price variety, variety ($5 limit), and millinery chains. The trend of private brand business appears to be definitely upward from 1925 to 1930 in grocery and meat (excluding A. & P. and Kroger), drug, women's shoes, men's and women's shoes, and men's furnishing chains. It was also clearly upward from 1928 to 1930 in grocery and department store chains. The trend appears to be clearly downward in dollar-limit variety chains and in the two hat and cap and one musical instrument chains reporting. The trend in tobacco chains although not so definite apparently is downward. A detailed analysis of the actual mark-up taken on 249 items sold under private brands and 294 items sold under competing standard brands by 59 chains handling grocery products does not support the statements of policy made by the chains, most of which claim to mark up their private brands either the same or lower than competing standard brands. Only 14.8 percent of the private brands reported, as contrasted to 32.7 percent of the standard brands were being sold on March 30, 1929, at a gross profit of less than 16.1 percent, the average cost of doing business for all chains of these kinds. The gross profit was 20 percent or more on 73.9 percent of the private brands as compared with only 48.2 percent of the standard brands. Only 46.2 percent of the private brands were sold at a gross margin of less than 25 percent as compared with 71.5 percent of the standard brands. At the other extreme, a gross profit of 40 percent or more was made on 10 percent of the private brands but on only 1.3 percent of the standard brands. An analysis of quotations received from 25 drug chains on private and competing standard brands of drug and miscellaneous products and toilet articles disclosed that only about one half of one percent of the private brands, as contrasted to 54.3 percent of the standard brands, was being sold on March 30, 1929 at gross margin of less than 33.3 percent, the average cost of doing business in 1929 in all reporting |