The following letter, introduced during hearings held May 12, 1939, is printed herewith in connection with testimony on p. 2027, supra. Beryllium. Hon. JOSEPH C. O'MAHONEY, EXHIBIT NO. 538 METAL & THERmit CorporatiON, 120 Broadway, New York, May 11th, 1939. Chairman, United States Senate, Temporary National Economic Committee, Washington, D. C. DEAR SIR: On May 8, 1939, at the hearing conducted by you as Chairman of the United States Senate Temporary National Economic Committee, you questioned me as to whether or not there were any subsidiary corporations of Meta! & Thermit Corporation. At that time, you requested that I procure and forward to you a statement showing the names and capital structures of the susidiary corporations of Metal & Thermit Corporation. The aforesaid information is as follows: AMERICAN RUTILE CORPORATION (A VIRGINIA CORPORATION) Capital Stock Authorized: 30,000 shares-Par Value $10 each. 15,960 shares-Par Value $10 each (Voting). 4 shares (Original Issue) Par Value $100 each (Non voting). Total.... $159, 600.00 400.00 160, 000. 00 Metal & Thermit Corporation owns 15,960 shares par value $10 each. ANTIMONY CORPORATION (A NEW JERSEY CORPORATION) Capital stock Authorized: 1,000 shares-Par value $5 each. Issued and Outstanding: 1,000 shares Par Value $5 each (Voting), $5,000.00. Metal & Thermit Corporation owns 1,000 shares of the par value $5 each. Metal & Thermit Corporation also has a substantial stock interest in two other corporations, American Zirconium Corporation and Chromium Corporation of America, which, however, are not subsidiaries. (1) AMERICAN ZIRCONIUM CORPORATION (A MARYLAND CORPORATION) Authorized: Capital Stock 6,000 shares Preferred Stock-Par Value $100 each. Metal & Thermit Corporation owns 6,800 shares of the Common Stock without Par Value. (2) CHROMIUM CORPORATION OF AMERICA (A DELAWARE CORPORATION) 5,000 shares 7% Cumulative Preferred-Par Value $100 each. 1,000 shares Common-Without Par Value. Metal & Thermit Corporation owns 1,193 shares 7% Cumulative Preferred Stock-Par Value $100 each. 2,028 shares Second Preferred Stock-Without Par Value. 500 shares Common Stock-Without Par Value. I trust that the foregoing information will be of assistance to you in your investigation. Very truly yours, H:HS. F. H. HIRSCHLAND, The following memorandum, introduced during hearings held May 22, 1939, is printed herewith in connection with testimony on p. 1826, supra. EXHIBIT No. 598 [Federal Trade Commission] MARCH 14, 1939. MEMORANDUM FOR THE TEMPORARY NATIONAL ECONOMIC COMMITTEE IN RE: THE RELATION OF CHAIN STORE GROSS MARGINS TO DISTRIBUTION COSTS AND NET PROFITS Additional information is here furnished the Temporary National Economic Committee by the Federal Trade Commission at the request of Dr. A. Ford Hinrichs, member of the Committee, following the testimony of Col. William H. England in the afternoon session, March 3, 1939, in which he summarized the Commission's report on Agricultural Income. Questions by Dr. Hinrichs were asked of the undersigned, member of the Commission's staff, regarding the high rate of return on investment shown by the Agricultural Income report for chain grocery stores and what that would indicate, if anything, as to buying and selling prices and distribution costs for particular commodities. Following an inquiry whether a large gross margin (share of consumers' dollar) would indicate excessive costs or large profits, the question was asked by Dr. Hinrichs: "Would it be proper to have information on that point introduced into the record in connection with this presentation?" The following statement is made on this and closely related questions: The Agricultural Income report gives information bearing on the profitableness of the operations of chain grocery stores as follows: (1) For a series of recent years for the entire business of the principal grocery chains the annual rate of net profit on investment and also on net sales; and (2) for approximately one year, the gross margin or share of consumers' dollar received by certain of these grocery chains on each of certain commodities, principally fresh fruits and vegetables, such margin being the difference between the average laid-down cost of a unit of such a commodity to the chain stores and its average net sale price and constituting the provision with which to meet operating costs as well as to yield such stores a net profit in the amount of the residue, if any, after the payment of such costs. This information, however, as to both items, is published in this report in combined form for a group of chain store companies and is not shown separately for any one company, such as The Great Atlantic & Pacific Tea Company. This gross margin for the retail grocer, including the grocery chain, being what it is, may not be taken as an index of the size of rate of net profit on investment or that on net sales, because (1) the net profit on which these rates are, in part, based is derived from the handling of numerous commodities (the grocer's entire line) while the gross margin or share of the consumers' dollar relates to but one commodity; (2) the amount of net profit included in the gross margin bears no fixed relation to the amount of operating costs included therein; and (3) the rate of net profit is itself a ratio between the amount of net profit and either investment or sales, which do not vary directly with the gross margin. The Agricultural Income report shows very little as to the difference between the gross margin or share of the consumers' dollar received by grocery chains and that received by independent retailers, and nothing as to the proportions of this margin absorbed respectively by the distributors' operating costs and net profits. Had the underlying inquiry developed a sufficient basis for comparison of this gross margin of the chains with that of the independents for identical commodities, it would be possible, where this margin of the one is greater than that of the other, to show from such analysis as is made by this report whether the greater margin is accounted for by a lower average buying price or by a higher average selling price, or by both. There would still remain, however, in such a comparison of prices for the two groups, the troublesome questions of identity of grades, sizes, quality, etc., of relative quantities purchased in periods of high and low prices, and of differences in localities where purchases were made and in markets where commodities were sold, these and other like factors making for differences in average prices. The foregoing statement is based upon the data found in the Agricultural Income report. The Commission's report on its Chain Store Inquiry affords more extensive and detailed information and a more satisfactory comparison of the operations of chains and independents, although the information is for & period several years earlier. In this earlier inquiry the average gross margins for so-called independent and chain grocery stores in each of four representative cities were ascertained for a very large number of identical commodities. The combined gross margin for all these commodities for each city was found to be larger for independents than for grocery chains, although for a number of commodities taken separately the margins were larger for grocery chains than for independents. The facts (so far as ascertained) which were significant with respect to this result were as follows: a. The grocery chains both bought and sold these commodities on the whole at somewhat lower average prices, but the selling prices were relatively lower than the buying prices, making for a smaller combined margin for the grocery chains on this group of commodities than for the independents. b. The average quality of these commodities was found to be much the same for grocery chains and independents. c. The grocery chains generally were not giving credit or delivery service, while the independents commonly were. d. The rate of wages paid employees by grocery chains was generally lower than that paid by independents. e. Grocery chains, more than independents, used loss-leader commodities sold at prices below the average cost of doing business plus the cost of the goods, and sometimes below the latter. Respectfully submitted. GAS:hp. (Signed) G. A. STEPHENS. (Typed) G. A. STEPHENS. The following document, introduced during hearings held June 16, 1939, is printed at this point in connection with testimony on p. 2147, supra. To Whom it May Concern: EXHIBIT No. 760 DECEMBER 28, 1937. I, C. B. Sawyer, make affidavit that the following is written by me and to the best of my recollection, is a true and complete account of the events therein related: Memorandum of C. B. Sawyer of discussions between himself and Dr. Merlub Sobel after the presentation of Sawyer's paper at the American Chemical Society Meeting in Cleveland, Tuesday, December 28, 1937 Sawyer's paper was the first on the program and was presented about 9 o'clock, in the morning. Immediately after the presentation, upon the call of the chairman for discussion, Dr. Sobel jumped up and said that he had great admiration for the work of Dr. Sawyer and his associates. He said, however, that he would be remiss in his duty as a consultant for the Beryllium Corporation of America if he did not say that his interpretation of the patent situation differed from that of Sawyer, and that the Masing and Dahl patents did cover ternary alloys. There was some other conversation in here which I cannot remember, but it led up to Dr. Sobel's statement that the Beryllium Corporation wished him to say that if any use was made of these patents which in their opinion constituted an infringement, it would result in a patent suit. In my response which was made immediately in the full meeting I stated that I had anticipated comments of this sort from some representative of the Berryllium Corporation and that these were kinder than I had expected. There was immediately a burst of laughter from the audience. I then asked Dr. Sobel if he was familiar with the file history of the Masing & Dahl patent, and he replied that he was. I addressed the chairman and asked if I might read from the file history. Upon receiving his permission, I read as follows, stating that the remarks which I would read were made by Masing & Dahl's attorney: "Applicants have now canceled all reference to nickel from their application. The claims now standing in the case therefore cannot be construed as covering this metal. In Corson, the nickel content was an essential element. It was present in sufficient quantities to substantially alter the nature of the alloy. And again, "It is not believed that applicant's claims can possibly be construed with sufficient breadth to cover such nickel content or any content sufficient to alter the nature of the alloy." Having finished the quotations from the Masing & Dahl attorneys, I stated that if Dr. Sobel had anything else to say I would see him in the hall. At this point there was again loud laughter from the audience. There was one other question from the floor as to the ductility of beryllium, but this does not bear on the discussion with Sobel. Mr. Sykes' paper on the metallurgy of tungsten followed immediately afterwards. Just before getting to his speech, as he sat in the chair beside me, he said that he thought that we seemed to have about everything in beryllium copper and that he feared his paper was all old stuff to the audience. I told him that I didn't think so as a great many people were still unfamiliar with the metallurgy of tungsten, just as I was. Mr. Sykes then began to present his paper, but on calling for slides discovered some mix-up. A press reporter had meantime sat down beside me and was seeking to obtain a copy of my paper. Having some reluctance about letting him have it, I thought of passing the responsibility to Dr. Burwell and left the meeting room with the reporter to see if I could find Dr. Burwell, while Sykes was finding his plates. In the hall outside I found our Mr. Cobb and Mr. MacIntyre, but could not locate Dr. Burwell. I believe that someone else came up, and then came Dr. Sobel saying that he hoped there were no personal hard feelings; I replied that there were no personal hard feelings, but that I was really surprised at the attitude taken by the Beryllium Corporation. Sobel went on to say that he was sorry to say the things which he did say and sorry to believe them, but that he did believe, and because of it had sold a patent of his to the Beryllium Corporation which he otherwise would not have done. I then asked him whether he regarded the Corson patent as invalid and he replied |