in industry generally; (6) International Harvester's ability to make more net profits in 1937 (a year of business recovery) than it did in 1929 (the peak year for national income and general business prosperity) despite the fact that cash income of the farmer in 1937 was approximately 18 percent less than in 1929, and the raising of this company's farm machinery prices in 1938 over those of 1937 in the face of the company's remarkable earnings in the latter year; (7) the character of the International Harvester Company's business operations during the depression when there was only a relatively slight decline in its farm machinery prices but a sharp decline in its volume of production and employment as contrasted with the conduct of industries known to be competitive where the decline of prices was greater and the declines in production and employment were less; (8) exchange of price lists among farm machinery manufacturers, and (9) evidence of dealer coercion. The only instances in which the prices of farm machinery have been materially reduced are those in which competition has been operative, for example, in the sale of tractors during the time that automobile manufacturers engaged in their production. Most of the high degree of concentration which is found in the farm machinery industry has been the result of the acquisition of the capital stock or the assets of competitors prior to enactment of the Clayton Act and thereafter in the purchase of assets of competitors rather than in the purchase of their capital stock. Recommendations.-In view of conditions found to exist in this and other industries, the Commission, in its report, recommended to the Congress that Section 7 of the Clayton Act be amended so as to make it unlawful for any corporation, directly or indirectly, through a holding company, subsidiary, or otherwise, to acquire any of the stock or assets of a competing corporation when either of said corporations is engaged in interstate commerce; provided, this prohibition shall not apply where the corporations involved control, in the aggregate, less than 10 percent of the total output of any industry or branch thereof in the United States, or of the sale of the commodity as to which the corporations are in competition, unless the effect of such acquisition may be to restrain competition or tend to create a monopoly in any line of commerce. AGRICULTURAL INCOME SUPPLEMENTARY REPORT COVERING LEGAL PROCEEDINGS The results of the inquiry into agricultural income, which the Commission was directed to make under Public Resolutions Nos. 61 and 112, Seventy-fourth Congress, were contained in three principal reports, the final report having been submitted to Congress in No vember 1937. The titles of these principal reports are: Agricultural Income Inquiry, Part I, Principal Farm Products, March 2, 1937; Part II, Fruits, Vegetables, and Grapes, June 10, 1937; and Part III, Supplementary Report, November 8, 1937. Until the Congress provided in the Independent Offices Bill for the fiscal year 1938-39 a special appropriation to be immediately available for printing the entire report, the only portion printed was the summary and conclusions and recommendations of the part dealing with principal farm products, which was ready for distribution on May 13, 1937. The entire printed report (except the appendixes which are public records available at the office of the Commission) was not available for distribution until October 1938. The contents of the two principal parts of the report, namely, (1) Principal Farm Products and (2) Fruits, Vegetables, and Grapes, were previously described and the recommendations were briefly summarized in the Commission's Annual Report for 1937. The Supplementary Report was necessary with respect to certain matters covered in the report on Principal Farm Products, and particularly respecting legal proceedings to require the return of report forms called for by the Commission from a few of the many manufacturers requested to make such returns. In this supplementary report, a court decision favorable to the Commission, with respect to the mandamus proceedings against the National Biscuit Company, was noted, as also in the annual report of the Commission for the year ended June 30, 1937 (pp. 5, 69, and 75). No appeal was taken by the respondent. Since that case was concluded, there have been further developments. First, certain other companies which had failed to report, up to the time of that decision, submitted the information required. Second, a suit was brought by the Department of Justice against the National Biscuit Company for penalty in delaying the filing of its report. This case is still pending in the courts. Third, another company which had been recalcitrant, or negligent, in making its return, not only made the return but also settled for the penalty, and without contesting either demand of the Department of Justice. MOTOR VEHICLES INQUIRY IN PROGRESS AT CLOSE OF FISCAL YEAR Public Resolution No. 87, Seventy-fifth Congress, third session, approved by the President April 13, 1938, directed the Federal Trade Commission "to investigate the policies employed by manufacturers in distributing motor vehicles, accessories, and parts, and the policies of dealers in selling motor vehicles at retail, as these policies affect the public interest." The resolution further stated the purpose of this inquiry to be to determine: 1. The extent of concentration of control and of monopoly in the manufacturing, warehousing, distribution, and sale of automobiles, accessories, and parts, including methods and devices used by manufacturers for obtaining and maintaining their control or monopoly of such manufacturing, warehousing, distribution, and sale of such commodities, and the extent, if any, to which fraudulent, dishonest, unfair, and injurious methods are employed, including combinations, monopolies, price fixing, or unfair trade practices; 2. The extent to which any of the antitrust laws of the United States are being violated. The resolution authorized the appropriation of $50,000 for this inquiry, and directed that the Commission report its findings to the Congress within 1 year of the date of the resolution. In accordance with this direction, the Commission initiated the work and, prior to July 1, 1938, inquiries covering the broad scope indicated by the resolution were in progress. Such inquiries were being directed to retailers, manufacturers, and finance companies. COST OF LIVING INQUIRY MADE AT REQUEST OF THE PRESIDENT The President of the United States, on November 16, 1937, addressed to the Commission a published letter, as follows: My attention has been directed to reports of a marked increase in the cost of living during the present year, as compared with recent years past, attributable in part to monopolistic practices and other unwholesome methods of competition. I believe it to be important to know the facts touching this situation, and, therefore, request the Federal Trade Commission to make an immediate investigation into such alleged practices and methods and report to me as early as practicable. I understand such inquiry can be made without any increase in your current appropriation. The Commission immediately undertook an investigation of this subject pursuant to the provisions of section 6 of its organic act, particularly paragraph (d) thereof, and with the aid of all powers conferred upon it by law. Upon completion of the inquiry, a confidential report was made to the President as of April 29, 1938. NEWSPRINT PAPER MANUFACTURERS' COMPLIANCE WITH CONSENT DECREE INVESTIGATED The Attorney General of the United States, on January 24, 1938, pursuant to Section 6 (c) of the Federal Trade Commission Act, requested the Commission to investigate the manner in which certain newsprint manufacturers have complied with a consent decree entered against them on November 26, 1917, by the United States District Court for the Southern District of New York, and further to determine whether there were any violations of the antitrust laws by the newsprint industry that were not prohibited by the decree. The defendants to the suit in connection with which the decree was entered were 7 individuals active in the management of the Newsprint Manufacturers' Association and 45 corporate defendants, including 31 American and 14 Canadian companies. The decree ordered the dissolution of the association and enjoined the defendants from violation of the antitrust laws through such practices as the fixing of prices, division of territory, and limitation of production. The Attorney General's request came as a result of complaints from newspaper publishers alleging that increases in the price of newsprint paper late in 1937 were the result of price-fixing activities of newspaper manufacturers. The investigation was pending at the close of the fiscal year. |