Evening star., 1948-11-07
TradeGrOup
Eyes Cement
Cases Effect
Business Policies at
Stake in 13.Day
Hearing
By Froncis P. DoueIos

" TtoHSIS =. 1ou9IoS
The Senate Trade Policies Com
mittee, begins hearings Tuesday on
a tangled situation affecting prices
which has upset businessmen from
one side of the country to the other.
This condition arises from a, Su-
preme Court decision in what busi-
nessmen now refer to briefly as "the
cement case" Two other cases also
are involved: The Rigid Steel
Conduit case and one affecting sub
salaries of the United States Steel
Corp. The latter two, however, have
not reached the Supreme Court.
Price Systems Changed
AS a result of these cases steel
companies have already changed
their price systems. The buyer now
buys steel fob. (free on boarO at
the steel mill and pays the freight
from the steel mill to his own plant.
Industry is wondering whether
everything it uses and everything it
sells-from pins and needles to
shoes and sealing wax-will have to
be priced the same way.
For example, will q New England
manufacturer who has sold his prod
uct at an established price through
out the country have to set a new
price effective at the loading dock of
his plant? Then the retail price, as
the product goes through jobbers and
retailers across the country, paying
different freight charges, would no
longer have any semblance of uni
formity.
On the production side of the pic
ture. could the New England man.
ufacturer stay in business if his
competitor in New York moves close
to a steel mill and thus saves the
freight charges on his raw ma
terial?
These are among the reasons why
the Trade Policies Committee
headed by Senator Capehart, Re-
publican, of Indiana, has scheduled
10 days of hearings between Tues
day and December 8.
Lawyers Disagree on Ruling
Confusion Is added to the situa-
ton by the fact that lawyers are
in disagreement on just what is
involved in the price problem and
just what was meant by the courts
ruling in the cement case. Fur
thermore, what is the policy of the
Federal Trade Commission In cases
involving pricing practices which
ihaye become established factors in
business? N - "a
! The cement case was brought by
the FTC against number of ce-
ment companies, their trade asso-
citation and individuals. In it the
Supreme Court upheld the FTC
and knocked out the multiple bas-
ing point system as a conspiracy to
fix prices. {.
The multiple basing point system
is merely an elaboration of q single
basing point, a traditional example
Of which has been furnished by the
steel industry in its Pittsburgh-plus
system.
Until steel companies adopted the
fob. price system after the cement
decision, the price Of steel anywhere
in the United States was the Pitts
burgh price plus the freight cost
from Pittsburgh.
Many Basing Points
Industrial consumers Of steel OBJ
jected for years that when they
bought steel from a mill in the
same city, even though they were
500 miles from Pittsburgh, the cost
of the steel included a charge equal
to the freight cost from Pittsburgh.
phantom freight" was the term for
this charge.
The steel mills, on the other hand,
frankly admitted that the farther
they were from Pittsburgh the
more money they made through
this phantom freight" charge.
In the cement industry there
were many basing points. A con-
struction concern buying cement
from mill "A" at a basing point 20
miles away would pay the mill price
plus the 20-mile freight charge. II
he bought from mill p" 200 miles
away he would pay no more-the
distant mill would absorb the freight
charge.
The commissions evidence showed
there were instances where the
bids Of several cement companies
on public contracts were the same
down to the ne-hundredth of q
penny.
The Supreme Court cited a case
OF the depression years when
cement producer shaved the de-
livered price. Other cement pro-
ducers moved in on him and made
his plant a basing point and cut
the price 10 cents barrel.
Further Reductions
There were further reductions
until the recalcitrant producer, who
formerly had received $145 a barrel
had to drop his price to rs cents.
within six weeks after the base
price hit rs cents capitulation oc-
CURED and the recalcitrant joined
a Portland cement association" the
court recounted. Cement in that
locality then bounced back to $1.15,
later to $1.35 and finally to $1.75."
Senator Capehart has announced
that his committee will not concern
itself with any price system result
ing from price-fixing conspiracy.
His committee was directed by the
Senate to study the effect on the
economy of the country of the