Omaha daily bee., 1911-11-28
OMAHA PAYS PAYING COMBINE
Creosote Block Transactions Dupli-
Gated in Many Cities.
WESTERN SITUATION REVEALED
Prices Have Keen Controlled by
Agreement by Two Firms,
Though Il Appears They
Compete for Business.

apolis. Long before the final organlze-
ton OF the trust early in January, 1911.
the cities OF the northwest, as well as
Omaha, paid huge profits to two paving
companies which have had a practical
monopoly OF the western territory.
The Minneapolis Journal presents H.
luminative facts with reference to the
ereosote paving block combines opera
tons in the northwest This territory
has been awarded to the Kettle River
and the Republic companies, other block
makers agreeing to keep out. Although
the Republic people were not definitely
forced into the trust until last January,
they frequently in previous years made
local agreements with the Kettle River
people TO split contracts anS eliminate
competition and through comparison OF
contracts in competitive and noncempet.
tive points 1t usually cost a town about
40 per cent more for its paving blocks
when these agreements were made. That
is what happened In Omaha at least.
1t is also known that the two paving
block companies had favorite contractors
to whom they made lower prices on
blocks, so that such favorites could al
ways underbid competitors. In this way
powerful local allies were built up and
prices maintained on a high level. The
Journal says:
The Omaha situation.
As fair example G: the methods EN-
ployed by the Republic and the Kettle
River companies, take the situation in
Omaha In February, 1910. as typical of
that In other western cities where the
paving companies had decided to let the
blocks be laid by contractor rather than
by the companies themselves, but 20 con-
troll the price absolutely.
Prior 60 the letting of the contract for
creosote block paving in Omaha, Feb
ruary l, 1910, It was agreed that the Re-
public company should furnish one-third
of the blocks sold the contractor who OBJ
tanned the contract. An agreement,
drawn by A. w. Van Hafften, north
western manager of the Republic COM
pany, read:
The Republic Creosoting company is 10
furnish one-third of the yardage resulting
IN letting at Omaha, Neb., February 1,
lSlO, az prices based on Milwaukee letting
october II, 1909
The Republic Creosotng company Is to
ship to the General Contracting company,
milwaukee,, sufficient blocks to offset
ITS proportion at Omaha.
IL the Republic Creosoting company S
proportion at Omaha is in excess of yard
age at Milwaukee IL Is to ship blocks to
Omaha TO make UP the difference or. to
be given sufficient yardage elsewhere to
offset same on Milwaukee price.
In other words, the two companies were
splitting the business. agreeing on prices
and contractors before jobs were let and
apparently competing, when in reality
they were sharing business on the agree
ment basis. The agreement went so far
as to permit one company to ship blocks
to other cities than the one mentioned
in the agreement IL this were convenient,
and turning in these blocks to offset the
share agreed to in the original cities. AS
indicated in the agreement at Omaha a
like agreement had been made in Mil
waukee in 1902 An agreed price for
blocks was made to a favored contractor
and other contractors who wished to bid
on city work found it impossible to get
blocks at a price which would warrant
their bidding for the work.
ostensibly there was competition. In
reality there was none.
south Omaha, Too.
In South Omaha In December, 1909 only
one bid was submitted for creosote block
PAVING AhdN Mdb ny NlH GSiNldl
Construction company of Minneapolis,
and II was made on the agreement that
the Republic Creosoting company. rep
resented by Mr.. Van Hafften, should
furnish one-thlrd OF the blocks, the other
two-thirds to be furnished by the Kettle
River company.
A letter from A. c. Morrison, then a
salesman for the Kettle River company,
to the home office in Minneapolis. states
the exact agreement at South Omaha.
The letter. written from Chicago to the
Minneapolis office, November 30, 1903,
read:
General Contracting company bid for
us at South Omaha and therefore / did
not bid In the name OF our company. We
are 70 do all the promoting. Van Is to
promotion expense. We are to furnish
two-thirds. General Construction COM
pany is TO do all construction. / am en-
to take care OF this personally until Mr..
Bestor's return. Mr.. Lynch is to attend
to promotion work at South Omaha under
my instructions.
SEQ on three-lnch sixteen-pound blocks,
four-inch concrete base. No other bids,
They bid one price on all jobs and one
sized blocks. Brick people bid 81, Sarco
fA'9V' Feiy NuiSs a. - NAOiilSOhs
Copy of Contract.
The written contract entered into No
yember %, 1909. between the General Con-
tracing company. by A. J. Leahy, man
ager, and the Kettle River company, by
A. c. Morrison, western sales manager
shows that the construction company, by
contract absolutely agreed to bid 32.G0 a
yard for furnishing and laying the blocks
and to pay the Kettle River company
! S1.47 for the blocks. The Kettle River
company agreed actively to use It's in
! fluenoe and assist In every possible way
| in the securing OF contracts by the Gen.
eral Contracting company. II was even
! agreed that, II surety bond were ae-
cepted by the city TO protect the city
against loss under the maintenance guar.
antee. the Kettle River company should
pay two-thirds OF the reasonable cost OF
the surety bond,
This agreement, the original OF which
is in possession OF the Journal. reads:
This agreement made and entered into
/ this twenty ninth day OF November. 1870
/ between General Contracting company
! hereinafter designated at the party ol
! the first part, and the Kettle River
/ Quarries company, hereinafter designated
as the party OF the second part.
| Witnesseth, the party OF the first par
l agrees 70 bid on Creosote block paving
/ letting OF November g. al South Omaha
| and We agree 10 bid a uniform price oil
! $3.50 on such streets as seem possible e
propote for this particular material. i
J he