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4th Session. S

I No. 293.

ACTIVITIES OF TRADE ASSOCIATIONS AND MANUFACTURERS OF POSTS AND POLES IN THE ROCKY MOUNTAIN AND MISSISSIPPI VALLEY TERRITORY.

LETTER FROM THE CHAIRMAN OF THE FEDERAL TRADE COMMISSION, TRANSMITTING, PURSUANT TO LAW, A REPORT OF THE ACTIVITIES OF TRADE ASSOCIATIONS COMPOSED OF MANUFACTURERS OF POSTS AND POLES IN THE ROCKY MOUNTAIN AND MISSISSIPPI VALLEY TERRITORY.

JANUARY 23 (calendar day, JANUARY 24), 1923.-Referred to the Committee on Inter

state Commerce and ordered to be printed.

FEDERAL TRADE COMMISSION,

Washington, January 24, 1923. To the PRESIDENT OF THE SENATE,

Washington, D. C. Sir: The Federal Trade Commission, under authority of paragraph (f), section 6, Federal Trade Commission act, herewith transmits to Congress a report analyzing the activities of the trade associations composed of the manufacturers of post and poles in the Rocky Mountain and Mississippi Valley territory, one of a number of reports resulting from an inquiry undertaken at the request of the Department of Justice. The instant report, which deals primarily with attempts to fix and control prices, is also being made public. These associations have their headquarters in Spokane, Wash., and are as follows: Western Red Cedar Association, Lifetime Post Association, and Western Red Cedarmen's Information Bureau.

Approximately three years ago the Federal Trade Commission undertook, at the request of the Department of Justice, an inquiry into the activities of the various groups of lumber manufacturers throughout the country.

A nation-wide inquiry was made, covering some 12 or more associations or groups of associations. From time to time during the last two years, as the report of a particular group has been completed, it has been transmitted to the Department of Justice. In the case of the more important associations, reports were simultaneously submitted to Congress. The three largest groups are the Southern Pine Association, the West Coast Lumbermen's Association, and the Western Pine Manufacturers' Association. By direction of the commission:

VICTOR MURDOCK,

Chairman.

REPORT ON WESTERN RED CEDAR ASSOCIATION, LIFETIME POST ASSOCIATION, AND WESTERN RED CEDAR MEN'S INFORMATION BUREAU.

THE FEDERAL TRADE COMMISSION'S STUDY OF LUMBER

ASSOCIATIONS.

In September, 1919, the Federal Trade Commission began a rather extensive inquiry into the activities of the several groups or associations of lumber manufacturers in the United States to determine if, and to what extent, any of these associations were violating the antitrust laws. The Department of Justice initiated the matter by formally requesting the Federal Trade Commission to conduct such an inquiry.

The activities of about 12 associations or groups of associations were analyzed by the commission. As soon as a report could be prepared for any particular association or group, it was submitted to the Department of Justice, the evidence forming the basis of the report being made available at the same time. Preliminary reports of the more important associations were submitted to the Department of Justice in June, 1920. More detailed reports followed, some of which were submitted to both Houses of Congress and made public by the commission.

The first of these published reports, issued in January, 1921, presented a general summary of the activities of the more important associations of lumber manufacturers in their relation to the antitrust legislation. A second report, issued in February, 1921, dealt with the Southern Pine Association. This was followed immediately by an injunction suit filed by the Attorney General against the association, which is still pending. A third report, issued in June, 1921, pertained to the West Coast Lumbermen's Association. A fourth report, issued in February, 1922, covered the work of the Western Pine Manufacturers' Association. Several other reports, discussing lesser associations or groups, were completed by the Federal Trade Commission and submitted to the Department of Justice, without, however, being made public.

The present report deals with one of the smaller groups of associations.

RELATIVE IMPORTANCE OF ASSOCIATION GROUP.

The Western Red Cedar Association, Lifetime Post Association, and Western Red Cedarmen's Information Bureau are composed almost exclusively of manufacturers of posts and poles in what is frequently called the “Inland Empire,” that section comprised by the western portion of Montana, the State of Idaho, and the eastern portion of the States of Oregon and Washington. Only a few members of these organizations are not manufacturers, but are engaged exclusively in the sale of lumber products in the Mississippi River Valley territory.

Most of the companies manufacturing poles also manufacture posts. The three groups listed above have many common members, and are managed by practically the same individuals, therefore they are considered simultaneously.

The number of manufacturers of posts and poles in the inland empire section is not large, but because of the use of poles by telephone and telegraph companies, railroads, and the like, and the wide use of posts, the manufacture and sale of these products occupies a fairly important position in the lumber industry.

The following table, taken from a compilation of the Western Red Cedarmen's Information Bureau, gives the total pole and post shipments in recent years. These figures apparently were compiled from reports submitted by the members of the bureau only.

Number of roles shipped, all sizes.

1914... 1915...... 1916..... 1917... 1918... 1919......

271, 271 292, 750 244, 818 278, 383 160, 023 337, 732

Sales of posts, all si:es

1917...

1918.................................

......................... 1919................................................................... 1919..

... 4,785, 300

... 4,557, 562 ..... 5,498, 000

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WESTERN RED CEDAR ASSOCIATION.

The Western Red Cedar Association is an incorporated body, with offices in 709 Peyton Building, Spokane, Wash. The members are: B. J. Carney & Co., 349 Peyton Building, Spokane, Wash. B. J. Carney & Co., 829 Broad Street, Grinnell, Iowa. E. T. Chapin Co., 202 Columbia Building, Spokane, Wash. Lindsley Bros. Co., 611 Peyton Building, Spokane, Wash. Lost Creek Cedar Co., Ione, Wash. National Pole Co., 742 Peyton Building, Spokane, Wash. National Pole Co., Escanaba, Mich. Naugle Pole & Tie Co., 5 South Wabash Avenue, Chicago, Ill. Northern Cedar Co., Symons Building, Spokane, Wash. Page & Hill Co., Plymouth Building, Minneapolis, Minn. Sandpoint Lumber & Pole Co., Sandpoint, Idaho. Valentine Clark Co., 514 Peyton Building, Spokane, Wash. Western Lumber & Pole Co., 709 Peyton Building, Spokane, Wash.

At the time of the investigation, in April, 1920, the officers of the association were: President, R. G. Jones, of the Lost Creek Cedar Co. Vice president, J. M. Montgomery, of the Sandpoint Lumber Co. Secretary-treasurer, J. E. Seaman, Spokane, Wash.

Mr. W. M. Leavitt, president of the Western Lumber & Pole Co., in whose office the Western Red Cedar Association is located, was merely listed as a member of two of the committees of the association. However, he performs the secretarial work of the association and seems to be the principal factor in directing its activities.

The members of the association manufacture from 60 per cent to 75 per cent of the cedar poles manufactured in the inland empire, about 40 per cent of the western red cedar poles—that is, poles included in the inland empire and the west coast—and 15 per cent of the cedar poles manufactured in this country.

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LIFETIME POST ASSOCIATION. The Lifetime Post Association is likewise unincorporated. It has the following members:

Blackwell-Panhandle Sales Office, 1307 Old National Bank Building, Spokane, Wash.

B. J. Carney & Co., 349 Peyton Building, Spokane, Wash.
B. J. Carney & Co., 829 Broad Street, Grinnell, Iowa.
E. T. Chapin Co., 202 Columbia Building, Spokane, Wash.
C. F. Ewing Co., Sandpoint, Idaho.
Lindsley Bros. Co., 611 Peyton Building, Spokane, Wash.
Lost Creek Cedar Co., Ione, Wash.
Northern Cedar Co., Symons Building, Spokane, Wash.
Sandpoint Lumber & Pole Co., Sandpoint, Idaho.
Searl Waterman Co., Symons Building, Spokane, Wash.
Western Lumber & Pole Co., 709 Peyton Building, Spokane, Wash.

The officers of this association at the time of the investigation were:
Acting president, Frank Ewing, of the C. F. Ewing Co.
Secretary, G. A. Clark, of Spokane, Wash.

Directors, E. T. Chapin, of E. T. Chapin Co.; Beecher Hitchcock; H. J. Searl, of Northern Cedar Co.

However, as in the case of the previous association, the real director of its activities is Mr. W. M. Leavitt, president of the Western Lumber & Pole Co. This association has its office in that of the Western Lumber & Pole Co.

The members of this association manufacture about 50 per cent of the posts produced in the inland empire.

WESTERN RED CEDARMEN'S INFORMATION BUREA U. The Western Red Cedarmen's Information Bureau is in reality merely a name under which certain information is published for the benefit of the members of the Western Red Cedar Association and the Lifetime Post Association. It is not incorporated and has no organization. Mr. W. M. Leavitt, president of the Western Lumber & Pole Co., and the principal factor of the two associations mentioned, operates the Western Red Cedarmen's Information Bureau. Statistics covering the sales, inventory of stocks, etc., are compiled and published by Mr. Leavitt for both associations. The costs of publication are assessed against the individual members of the two associations. The members receiving this information, listed as members of the Western Red Cedarmen's Information Bureau," in April, 1920, were the following:

Blackwell-Panhandle Sales Office, 1307 Old National Bank Building, Spokane, Wash.

B. J. Carney & Co., 349 Peyton Building, Spokane, Wash.
B. J. Carney & Co., 829 Broad Street, Grinnell, Iowa.
E. T. Chapin & Co., 202 Columbia Building, Spokane, Wash.
C. F. Ewing Co., Sandpoint, Idaho.
Lindsley Bros. Co., 611 Peyton Building, Spokane, Wash.
Lost Creek Cedar Co., Ione, Wash.
National Pole Co., 742 Peyton Building, Spokane, Wash.
National Pole Co., Escanaba, Mich.
Naugle Pole & Tie Co., 5 South Washington Avenue, Chicago, Ill.
Northern Cedar Co., Symons Building, Spokane, Wash.
MacGillis & Gibbs Co., Wells Building, Milwaukee, Wis.
Page & Hill Co., Plymouth Building, Minneapolis, Minn.
Sandpoint Lumber & Pole Co., Sandpoint, Idaho.
Searl Waterman Co., Symons Building, Spokane, Wash.
Valentine Clark Co., 514 Peyton Building, Spokane, Wash.
Western Lumber & Pole Co., 709 Peyton Building, Spokane, Wash.

WESTERN CEDAR POLE PRESERVERS

There is another group operating in conjunction with the three organizations above enumerated, as well as the Western Lumber & Pole Co., called the Western Cedar Pole Preservers. This is an organization which operates a plant for the treating of poles en route from the point of shipment to the point of destination. The treatment consists of a creosoting solution intended to prolong the life of the poles. The cost of such treatment is assessed against the poles as treated.

ACTIVITIES OF ASSOCIATION GROUPS AFFECTING PRICES.

The group of organizations enumerated in the introduction is responsible for the distribution among their members of uniform price lists for their products-posts and poles. Meetings of the manufacturers of both products were held from time to time, at which were discussed, among other things, market conditions, prices, price changes to be made, etc. Through the instrumentality of the Western Red Cedarmen's Information Bureau reports of sales were obtained from the members, compiled, and issued periodically. This information was intended primarily to help maintain the uniform prices suggested or agreed upon by the association. These activities are discussed more fully below.

I. PRICE LISTS FOR POLES. The commission obtained during its investigation copies of various

and piling price lists published and distributed through the 's of Mr. W. M. Leavitt. Mr. Leavitt is president of the Western

r & Pole Co., and the principal factor in the Western Red Issociation and the Lifetime Post Association, as well as the

Red Cedarmen's Information Bureau. Mr. Leavitt claimed ti... price lists were distributed by his company. He said he compiled the information which formed the basis of these price lists, but he would neither admit nor deny that the prices were made as the result of discussions or agreements by members of the association. These price lists were printed by the Franklin Press, of Spokane, Wash., but distributed by Mr. Leavitt. Occasionally mimeographed price lists for poles were distributed.

The average number of price lists sent to each member of the association was 20 or 25, although some companies received many more. These price lists were generally printed in pairs, one for the United States and one for the Dominion of Canada. Accompanying these price lists were circular selling instructions.

These selling instructions contained various interesting statements. A basing point for all quotations was arbitrarily determined upon, Sandpoint, Idaho, being the basing point for the United States, and Castlegar, British Columbia, the basing point for the Dominion of Canada. The selling instructions were dated and always gave the price list which was to be used in quoting. For example, the “Selling instructions” for the United States, dated December 11, 1919, contained the following, under group 1, paragraph B: United States Price List No. 6, to be used in quoting prices on poles.

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