The Richmond Virginian. (Richmond, Va.) 1910-1920, 1919-08-15
HIGH COST OF SHOES;
EXCESSIVE PROFITS

Washington, D. c., August IL
me Federal Trade commission has
found that the high price of shoes
can not be justified by underlying
economic conditions. The commission
AFTER exhaustive inquiry into the
price OF hides, leather and shoes is
reporting to congress that the larger
packers control the hide supply and
nave taken excessive profits and pass
ca increased costs to subsequent
steps In manufacture and distribution.
mat the tanner has taken exceptional
u ohts; that the manufacturer of shoes
mas taken unusual margins and that
the prices charged by the retailer are
NOT 1ustifiable, each factor in the in
oustry adding to the burden he had to
pear oefore he passed it on to the
next.
The summary of the commissions
report is as follows.
Summary.
rms report treats OF conditions In
,ne leather tanning industry includ-
ing nigh trade ard the boot and shoe
industry. including the merchandising
OF Shoes. The period covered by the
inquiry is from 1914 to 1918 inclu-
siFe' except in regard to certain
financial data The outstanding facts
established by the inquiry are as fol-
| lows:
% Between 1914 and 1917 the
prices OF hides, the principal factor in
the cost of producing leather. greatly
advanced and the differential between
country hides aI.o packer hides in :
creased beyond the usual proportion.
uue 10 the more marked increase in
the price of packer hides.
| t2) Though thera u,a. - ,~..
in the cost Of hides to the tanner. the
prices OF his Observation-Disclosures
vanced to poii.t that could not be
JUSTIFIED by the cost OF producing
II This conclusion is supported by
the nigh rates of return on investment,
received by tanners
I'D The cost of manufacturine
shoes increased greatly between
III 4 and 1917. but, as evidenced by
me nlgn rates OF return on investme emf
not TO an extent that warranted me
PRICES at which manufacturers sold
their product
| "a The absolute margins OF prof,
taken by retail shoe merchants per
PAIR or shoes grew wider as their cost.
OF SHOES Increased because their rate
lcI profit remained substantially with.
out change.
/ (5) AS result the public had tc
pay prices for shoes that could no,
De justified not only because retail
shoe dealers took TOO much profit bu,
because the dealer had to pass on ts
the consumer the excessive profit.
received by butchers for hides anf
also the excess profits of tanners anf
shoe manufacturers
General Conditions.
During the progress of the war ir
Europe, even before the United States
became a belligerent, the demand TO,
leather and leather goods for the al.
led nations of Europe had marked
effect on prices. The demand wa.
not only for large quantities OF
ficather and shoes. but there was
pressure for quick delivery. Either
one OF these factors would tend tc
stimulate prices and both of them to-
gether brought rapid and marked ad-
vances in the prices OF both leathe,
and shoes, and also OF hides and
skins.
when the United States entered the
war. there was immediate demand
for shoes and other equipment made
OF leather to meet the requirements
CT the army. The shoes needed by the
government Were required to be made
OF specified high grade leather Only
the better grades of hides could be
used in making such leather. and as
y result hides, especially the better
grades, rapidly advanced in price. The
| situation became so acute that. In
1918 the war industries board under
| took to provide means OF supplying
the tanners with hides at fixed maxi
| mum prices. Maximum prices for
leather was also fixed for the shoe
manufacturers. The demand FOR
labor in other industries compelled
tanners and shoe manufacturers to in
crease wages.
The Hide Market.
There are two well recognized
classes OF domestic hides. 1. e., packer
hides and country hides. Packer
ir' regular slauKhtering establish
ments. while country hides include ali
others. such as are taken off by
small butchers and farmers. The
quality Of country hides. as q class is
generally considered not as good al
packer hides, and there has always
been a difYerential in price in favor
of the latter.
Between 1914 and 1917, there was
a remarkable advance In the prices
Of hides. From 1914 to 1917 the
price OF heavy native packer cow
hides advanced more than IS per cent
while the corresponding grade Of
country hides increased less than ~
per cent. The actual increase In
rrice OF packer and country COW
hides in the two years was 10 cents
and cents per pound respectively.
A comparison Of these actual increases
with the percentage Of increase In
dIcates that the defTerential between
backer hides and country hides
wfdened beyond the usual proportion
More than rs per cent OF the cattle
and So per cent Of the calves killed
by wholesale slaughters In the United
states are killed by ave large meat
hackers The best hides are taken
on by these Wholesale slaushtering