Evening star., 1933-10-28

Steel Institute under the steel code.
Twins letter said he had authorized
the companys various subsidiaries to
file with the code authority a base price
of $3775 per gross ton of 2,240 pounds,
fob mill Chicago, Pittsburgh and Bir-
mingham.
Block wrote Eastman that prices had
been filed with the American Iron and
Steel Institute effective Octo'e- 80 as
Nc. z, SJ575, if bought with No. !, and
for No quality only, s36:75.
Roeder telegraphed Eastman a price
80 had been filed with the American
Iron and Steel Institute.
Bethlehem's Schedule.
Paul Mackall, vice president of the
Bethlehem Steel Co. gave Eastman a
schedule of prices ranging from s3775
for first quality steel, S35.75 for second
quality and $38.75 If all second quality
steel were ordered.
All of the letters and kilograms were
dated October 90
Eastman in letter to the presidents
and chairmen of the steel companies
noted the uniform date and the fact
that the letters stated prices would be-
come effective October 80 and had been
filed with the American Iron and Steel
Institute.
The co-ordinator also noted that only
the letter from the Bethlehem Steel
Co. contains a full statement of the
new base prices adding that 1T is ap-
to the price for first quality rails will
exist as to other prices also"
Common Date Cited.
Eastman charged In his letter:
THE fact that these letters bear q
common date; that they name an
identical price for first quality rail.
+. O. b., mill, and this price is the odd
figure of $37.75 point unmistakably to
the conclusion that the letters were the
result of consultation and collusion.
In my letter of october stated:
LAS you know it was the under
standing at the Presidents Conference
that base prices would be submitted
in response to my request by the steel
companies independently Of each other
and without collusion or consultation
Clearly what has been done Is not
In accord with this understanding.
Moreover there is nothing in the code
of fair competition which made neces-
sary such deviation from the under
standing. In confirmation of this
statement it noted that the letter from
the United States Steel Corporation
IF any of our competitors file a
lower price than the above we will, of
course, refile to meet their price
Because of the evident consultation
and collusion in arriving at the new
and uniform base prices it seems clear
that these are non on-competitive prices,
lacking the safeguard to the consumer
which competition provides. Manifestly,
also, the code was not intended to
eliminate competition. On the contrary,
1t is, by its own terms, a code of fair
competition
Safeguard to Be Taken.
"In view of these circumstances and
of the past history of steel rail prices in
this country and what is known about
them, I am authorized by the President
to say that the Federal Government is
unwilling to lend money to railroad
companies for the purchase of steel
rails at the new base prices which have
been filed without some safeguard to
the consumer and to the public inter-
est to take the place of competition.
This substitute safeguard is an exami-
nation by Government accountants of
the books and cost records Of the steel
companies.
Under the existing conditions and to
avoid possible delay. the Government is
willing to lend the necessary fund with
out such examination, provided the base
price, fob. mill for first-quality steel
rail $500 G. T. or over) Is made not
more than S35 per gross ton Of 2,240
pounds with other prices adjusted ac-
cordingly.
IF the steel companies are unwill-
ing to make this concession, then the
Government will lend the necessary
funds only on condition that the steel
companies shall file new base prices
the same as those now on file but with
the added stipulation that If after Gov
ernment accountants have had full and
free opportunity to examine the books
and cost records of the steel companies
the President shall find that reduc-
tions in these prices are necessary 70
make them fair the reduced price
which he then names shall be the base
prices to the same extent and from the
same date as if they had been originally
Up to Presidents Judgment.
"In the meantime the Government
will advance funds to the railroad COM
panies on the basis of price OF $35 per
gross ton for first quality steel rail,
f. o. b. mill, with other prices related In
the ratio of the base prices now on
file and with the understanding that
the Government will later advance ad-
ditional funds or receive refunds to ac-
cord with such other prices not IN ex-
cess of those now on file, as the Presl-
dent may find to be fair. In the absence
of a full disclosure of the facts 1t Is
impossible to define in advance and in
the abstract what may be fair. and this
must be left to the judgment OF the
President.
In the letter from the Bethlehem
Steel Co. reference is made to section 3
of schedule E of the code OF fair COM
petition. The pertinent part OF this Sec
ton is as follows:
Except in the case of product
required by a purchaser for a specified
definite contract of such purchaser with
a third party at a fixed price none OF
the members of the code shall make any
contract of sale of any product by the
terms of which the shipment OF such
product is not required to be completed
before the end of the calendar quarter
year ending not more than four months
after the date of the making OF such
contract
Apparently if contracts for the pur-
chase of steel rails were made in NO
vember this provision of the code would
require shipment of all of the rails be-
fore the end of the calendar year. Some
of the railroad companies will not need
some of the rails until some time IN
1884. Arrangements must therefore be
made by amendment of the code or
otherwise so that it will not in such In
stances be necessary to complete ship
ments of the rails until March 81, 1884.
In my letter of October I stated
that certain railroads contemplating i'm
portant orders make it a condition that
the base price shall not exceed S35 per
ton. There has been no change in this
situation so far as I am aware"