Mr. WATERS. No; there is no reciprocal relationship at all. The fact that we sell Carnegie-Illinois, or Republic, or Youngstown, and the others, condensing and cooling equipment for their byproduct coke plants probably isn't known to the people that we buy from.

Mr. LEVI. The question has never been raised with you?

Mr. WATERS. No.

Mr. LEVI. As to whether purchases would be made from you?
Mr. WATERS. That is right.

The CHAIRMAN. Mr. Waters, what are the assets of your corporation?

Mr. WATERS. Our net worth is around $7,550,000, sir.

The CHAIRMAN. The National Radiator was organized in August 1927, wasn't it?

Mr. WATERS. The original company started in 1894.

The CHAIRMAN. I am reading from a report of the United States Supreme Court, volume 290, page 508, October Term, 1933, and a case called the First National Bank versus Flershem which concerns, more or less, the reorganization of the National Radiator Corp., and in the majority opinion we have the following:

In August 1927, National Radiator Corp. was organized to effect a merger of six independent manufacturers of radiators and boilers for heating purposes. The net assets of the consolidated corporation, which included 10 manufacturing plants located in five States and warehouses in four others, were valued at $26,192,261.72.

Is that correct?

Mr. WATERS. Yes, sir.

The CHAIRMAN. The opinion goes on to state:

Before the merger the constituent concerns had operated successfully for many years but after the merger the business ceased to prosper. By the end of 1931 all but 3 of the 10 manufacturing plants had been closed.

Is that correct?

Mr. WATERS. Substantially so.

The CHAIRMAN. How many plants are now open, of the radiator company?

Mr. WATERS. We have now the plant at New Castle, Pa., three in Johnstown, one in Middletown, Pa., and one in Trenton, N. J. The CHAIRMAN. That is six, isn't it?

Mr. WATERS. Yes, sir.

The CHAIRMAN. When the price of your raw material is raised to you, do you raise your price on radiators?

Mr. WATERS. Is that a general question, sir?

The CHAIRMAN. Generally, yes.

Mr. WATERS. Generally, if we can, yes.

The CHAIRMAN. You did, recently, when there was a price hike by your suppliers; you, naturally, raised the price of your own products? Mr. WATERS. That is correct. Sometimes you can't, because if your large competitors don't, you can't very well sell above the going price. The CHAIRMAN. American Radiator Co. is a competitor of yours; are they?

Mr. WATERS. They are; yes, sir.

The CHAIRMAN. Can you tell us what was your raise on radiators per foot recently?

Mr. WATERS. It was around 2 percent, 2 to 6 percent depending on the size and type of radiation.

The CHAIRMAN. I have before me an issue of New York Journal of Commerce, April 26, which indicates that the American Radiator Co. increased its price on radiators per foot from 2 to 5 percent. Your increase was from 2 to 6 percent?

Mr. WATERS. Our increase-I am giving it for the heating products, radiation and boilers.

The CHAIRMAN. Do you know what the raise in that regard is for the American Radiator Co.?

Mr. WATERS. It varied, depending on the size of their boilers, sir. The CHAIRMAN. Are there any further questions?

Mr. BRYSON. Mr. Waters, I believe you stated that you bought certain metals or steel from the United States Steel and manufactured it into heat condensers? Is that right?

Mr. WATERS. No. We buy steel from United States Steel Corp. subsidiaries which we use to manufacture jackets or covers for boilers and also we use steel to manufacture parts for steel boilers, that is, for low-pressure heating, and we also buy steel rods and bolts and nuts and miscellaneous shapes of different kinds.

Mr. BRYSON. But the articles you manufacture and sell to United States Steel, what are those?

Mr. WATERS. We manufacture and sell to United States Steel subsidiaries cast-iron condensing and cooling sections.

Mr. BRYSON. Why are you able to manufacture that article cheaper than United States Steel could manufacture it itself? Do you operate under a patent?

Mr. WATERS. We have had a patent on the sections; it has expired. Mr. BRYSON. Why is it that you can do that better and cheaper than the steel corporation could do it for itself?

Mr. WATERS. Because we are essentially a foundry company and these castings are made in a foundry in small quantities, whereas with the steel corporation, the foundry end of their business, as I understand it, is relatively small, and it would hardly pay the United States Steel subsidiaries to equip to produce their requirements alone of this particular type of equipment. We can generate enough business with the steel corporation and with the chemical industry and process industries to keep a certain section of our foundry fairly busy most of the time, but if we were limited to the requirements of any one company it would hardly pay us to do it.

The CHAIRMAN. What are some other foundry products, Mr. Waters?

Mr. WATERS. Cast-iron radiators, cast-iron boilers, condensing and cooling sections are the principal ones.

The CHAIRMAN. Any others?

Mr. WATERS. We make some small parts for gas heaters.

The CHAIRMAN. Springs?

Mr. WATERS. No. Springs are made of steel. That is entirely out. of our line.

The CHAIRMAN. Are there any other questions?

Mr. LANE. Mr. Waters, in these 6 different plants that you have. you have about 2,000 employees?

Mr. WATERS. That is correct.

Mr. LANE. At the present time?

Mr. WATERS. Yes.

Mr. LANE. And you have had those 2,000 for how many years? Mr. WATERS. Well, we have averaged from about 1,500 to 2,000, I would say, for the last 4 or 5 years.

Mr. LANE. Your peak force is 2,000?

Mr. WATERS. That is right. It was a little higher than that during the war. It was about 2,500.

Mr. LANE. Are your employees organized?

Mr. WATERS. Yes; they are, United Steelworkers, CIO.

Mr. LANE. Thank you.

Mr. DENTON. How many were employed by your company when the companies were consolidated in 1927?

Mr. WATERS. I would say there was about 3,500. That is just a recollection now.

Mr. DENTON. What did it go down to during the depression? Mr. WATERS. During the depression they went down to about 850; 750 probably.

The CHAIRMAN. Thank you very much, Mr. Waters.

Mr. WATERS. Thank you.

The CHAIRMAN. The next witness is Samuel Wasserman, president of American Pipe & Equipment Co. of Baltimore, Md.

STATEMENT OF SAMUEL WASSERMAN, PRESIDENT, AMERICAN PIPE & EQUIPMENT CO., INC., BALTIMORE, MD.

Mr. WASSERMAN. Mr. Chairman and members of the committee, my name is Samuel Wasserman, and I am president of American Pipe & Equipment Co., Inc., of Baltimore, Md., which company is a wholeзaler of steel pipe and related items.

I would like to state at this time that I appear in obedience to a subpena served upon me.

My company is what is generally termed a small business, although I must admit that our business is so small that it is not even worthy

of that name.

My history in this business goes back to the age of 15 at which time I worked as a blacksmith's helper. I have been in this type of business all of my life.

The corporation was formed in the year 1939, and the largest amount of sales made by the corporation in any year was in our fiscal year ending July 31, 1948, when sales totaled slightly in excess of $600,000.

At the inception of the company's business in 1939, pipe was purchased on credit through the use of trade acceptances, although mills were delivering pipe to distributors on a consignment basis at that time. The corporation, in order to get business, was compelled to be aggressive and get business competitively. The company was able to sell at a close mark-up because of small expenses and was able to compete effectively inasmuch as many of the other wholesalers were not able to sell below a fixed price due to the fact that they were on a consignment basis and were always in fear of having their consigned stock withdrawn.

During the month of April 1941, a Mr. W. D. Bourquin, representing Republic Steel, paid a visit to the office of the company and asked me to show him our stock of pipe. I was very pleased that a representative

of such a large company should call on me and I showed him into our warehouse, at which point I was criticized severely for selling pipe below the price currently being quoted by other wholesalers in the city. He told me that if we did not discontinue the practice of selling pipe under the prevailing quoted price that we would be run out of business, or other coercive words to that effect.

I told him that he could not threaten me, that we had a legal right to sell our merchandise as we saw fit, and he thereupon left.

Shortly thereafter, I received a call from our bank

Mr. KEATING. What bank is that?

Mr. WASSERMAN. Baltimore Commercial. The purport of which call was that the company's line of credit was eliminated and that we could no longer clear our trade acceptances through it, and almost simultaneously, I received a communication from my supplier, Mercer Tube of Sharon, Pa., that a trade acceptance coming due would not be extended in spite of the fact that said mill had promised us financial assistance when we became a seller of their products. Furthermore, Mercer Tube then required that I have executed a surety or guaranty agreement, and I was compelled to get a third party to guaranty the corporation's account with Mercer, to the extent of the difference. between $10,000 and $20,000, which was to be the maximum credit extended us. The high point of our inventory was reached at about this time, and at no time subsequent thereto has my company been able to acquire an inventory much in excess of our weekly require

ments.

In August of 1948, our supplier, the above-mentioned Mercer Tube Co., notified my company that they were withdrawing from the Baltimore market because of the decision in the Cement Industry Basing Point case and that American Pipe & Equipment Co., Inc., would have to look to the Baltimore area for its supply of pipe, and that I should get in touch with Bethlehem Steel, which was using Sparrows Point as an f. o. b. point. Bethlehem Steel refused to sell steel pipe products to my company. As a matter of fact, last year we sold many thousands of dollars worth of valves to Bethlehem Shipbuilding in Baltimore, which company is a subsidiary of Bethlehem Steel, and after some months of business relations with the former company, I received an inquiry from the home office in Bethlehem, Pa., as to whom supplied valves to my company. I then ascertained from the purchasing agent of Bethlehem Shipbuilding that it was Bethlehem Steel's policy to do business only with those companies who did business with them. I answered the inquiry directed as to our source of supply, that the valves were sold out of old inventory on hand, but that I would be pleased to buy pipe from Bethlehem Steel. I never received a reply from that company, but subsequently, all further orders from Bethlehem Shipbuilding ceased, the Bethlehem Shipbuilding buyer advising me over the phone that his company could not buy from us.

In order to supply our customers with steel pipe, we were required to buy from other distributors, or steel warehouses, out of town. Of course, the terms upon which pipe was purchased by my company were extremely disadvantageous. However, in August 1949, the corporation was able to obtain a new source of supply, namely, the Wheatland Tube Co., which company has been supplying my company with a small amount of pipe.

The CHAIRMAN. Explain what you mean by:

I then ascertained from the purchasing agent of Bethlehem Shipbuilding that it was Bethlehem Steel's policy to do business only with those companies who did business with them.

Mr. WASSERMAN. On the basis of reciprocity. They have a section or department that checks on reciprocal sales. If we were buying those valves from a particular manufacturer, they would want to know the manufacturer's name and they would contact that manufacturer and see if their ledger showed equal purchases or equivalent purchases from the manufacturer as well as have my company also buy products from them. We were willing to do that, but we just can't seem to place any orders with them.

The CHAIRMAN. When you asked to buy your raw material from Bethlehem they did not supply you?

Mr. WASSERMAN. No; they said they could not take care of us at "this time."

The CHAIRMAN. Therefore, they refused to buy any further goods that you had?

Mr. WASSERMAN. That is correct.

The CHAIRMAN. The Chair desires to read into the record some of the conclusions and recommendations made by the engineering firm to whose report reference has been made frequently, particularly when Mr. Fairless of United States Steel was before us. The statement from the engineers' report is as follows

Mr. MICHENER. Is that the one made 15 years ago?
The CHAIRMAN. Made in 1938. (Reading:)

Reciprocity as a means of producing business unquestionably has proved in the course of its development to be a potent weapon. When finally carried to its logical conclusion, resulting in the arbitrary apportionment of business, it is reasonable to raise question as to its ultimate benefits. The larger companies unquestionably reap greater benefits than the smaller companies which have little to trade. Whether in the long run reciprocity produces more business for the subsidiaries than could be obtained on the basis of aggressive selling, price, merit of products, and service is open to question. The fact that the business of the subsidiaries involves many products which have little to distinguish them, either in price or in quality, may make reciprocity of greater importance than in many other lines of manufacture.

What is the name of that bank with which you had difficulty?

Mr. WASSERMAN. Baltimore Commercial Bank. They are no longer in existence. They were taken over by a larger bank in the city, the Union Trust Co.

The CHAIRMAN. What was the status of your finances then; better or worse than 6 months before that, or when the acceptance was taken by the bank?

Mr. WASSERMAN. Oh, yes; the net worth was greater than when we formed the corporation 2 years prior to that.

The CHAIRMAN. Do you have any reason to believe that the bank took that action because your finances were at a low ebb and were not as good as they were at the time the acceptance was actually taken?

Mr. WASSERMAN. No; I do not believe that, because, as a matter of fact, we made a change when they turned us down on the acceptance; we made better banking connections with another bank immediately or right after, the following month.

Mr. KEATING. Did they give any explanation of why they were doing it.