In 1927, on a rising market, they obstructed the price in its upward course, then collusively raised it. Did they increase it as soon and set it as high as open competition would have done? In 1929, on a falling market they accelerated a decline by agreeing on what they would pay. Was the figure they fixed made effective earlier and lower than would have been the case in a competitive market?

Where such restraints upon competition are practiced, it is impossible accurately to indicate the point to which the price would move at any given time, were the market advancing and competitive; or how far above the figure reached by agreement it might remain in a period of decline. But the inference is practically inescapable that in the one case it would have moved sooner and toward a higher point than that at which the agreement placed it; and in the other would have dropped more slowly toward the figure which the parties collusively fixed, if indeed it would have reached it at all, especially at that time. In 1927, competition would have raised the price sooner, probably higher; in 1929, it would have sustained it longer above the agreed figure. In each case, the purpose of the shellers and the result were the same-a price lower than competition would have made it.

In Alabama, also in the southeast section, an instance was found where a meeting of shellers doing business in that State was called at Montgomery "to discuss the runner situation," and at which the record states that the feeling was that "$60 per ton wagon price for farmers' stock runner peanuts * * ** would be a high price for them * *. And therefore we believe we will travel better if we all pay $60 to farmers for wagon loads both at mill points and other places." The record shows that certain of the shellers immediately thereafter "traveled" at $60. No further record of meetings of this kind, however, was found.

*

Another case of restraint of competition was disclosed in the southern part of Alabama, in two peanut-market towns only 30 miles apart, in each of which is located a peanut mill. These plants buy large quantities of peanuts, and, according to the written record, they have deliberately made an agreement whereby each is to refrain from buying peanuts in the territory of the other, and the record also points to price discussions and efforts to cooperate "in keeping the price of peanuts where they will be worth the money."

The record shows considerable informal exchange and discussion of present and prospective prices by shelling companies in the State of Georgia and, to a less extent, in the State of Alabama, a considerable number of the mills in the former State participating. They inform each other as to their present prices, as to the price they propose to pay, as to what they think should be paid, and instances occur of an exchange of views as to the price which they think should be paid at the opening of the peanut season.

In the southwest section, comprising Texas. Oklahoma, Louisiana, and Arkansas, all the shelling plants were investigated, but no questionable practices were developed.

CONCLUSIONS

The steady, industry-wide decline in price of farmers' stock peanuts since 1928 has followed the same general course of practi

cally all other farm products and all other commodities during the period of extraordinary depression through which this country is passing. Such widespread decline is not found to be due to a combination of peanut crushers and mills acting for the purpose of fixing such prices or of arbitrarily forcing them down. No evidence has been developed showing the existence of a section-wide or even a state-wide organization which has attempted to fix the price of farmers' stock peanuts, although the activities of certain groups of mills have undoubtedly been factors which contributed to the depression of the prices.

Those peanut mills which this inquiry shows to have participated in such practices as discussions and exchanges of present and prospective prices, price agreements, and division of territory have in so doing laid a restraint upon competition, the natural effect of which is to impede advancing and accelerate declining prices.

Such practices were found to originate in groups of companies, operating within different, circumscribed territories, the activities of these groups not being related, neither extending across State lines nor laying a burden upon commerce between States.

Hence, these methods do not bring the participants within Federal jurisdiction, and relief from their restraint upon competition is to be found within the States in which such practices are exercised. By direction of the commission.

W. E. HUMPHREY, Chairman,

PRICES AND COMPETITION AMONG

PEANUT MILLS

CHAPTER I. INTRODUCTION

1

Section 1. Origin of the investigation.-Making a spectacular plunge of nearly 8 cents per pound, or $160 per ton, within 11 months in 1920-21, the recorded average price of farmers' stock peanuts reached a low point from which it has never recovered by as much as 4 cents per pound, or $80 per ton. Following a devious course covering more than five years, beginning in 1915 at 4.2 cents per pound, the price movement had been a long upswing to a peak of 11.2 cents in March, 1920. This was an advance of 7 cents, or an average increase of about 1.6 cents per annum. In April, 1920, there was a short, sudden break, a quick recovery to the peak (11.2 cents) in May and June; and then, in July, a swift, unbroken descent which carried the price steadily down to 3.4 cents in May, 1921. This was a decline of 7.8 cents, or nearly 8 cents per pound, in less than a year. The highest average thereafter was 7.3 cents, in 1923, an advance of only 3.9 cents above the low of 1921. The price thus recovered only 50 per cent of the remarkable 11-month break. Since then its general trend, with but two appreciable reactions, has been downward. In June, 1927, it worked back to a minor peak of 6.6 cents, dropped again, reached 5.7 cents in May, 1928, but quickly declined. A slight advance, to 5.2 cents occurred in April, 1929, and then there was a long sag toward new low levels.

By October, 1929, the average had fallen to 4.4 cents, the lowest since the season of 1921-22, with the single exception of December, 1925, when the figure was the same. But whereas in 1925 the price had quickly recovered, in 1929 and the two succeeding years it continued to fall. By January, 1932, it was only 2 cents per pound, or $40 per ton, a figure which is nearly 62 per cent below the 1929 maximum, 65 per cent below the 1928 maximum, 73 per cent below that of 1923, and 82 per cent below that of 1920. By some observers 3.5 cents per pound, or $70 per ton, is considered a necessary price for the farmer to break even on his crop.

As of December 1, 1929, the lowest average price among the States was that of Alabama, 3 cents per pound, or $60 per ton, a figure which was three-tenths cent per pound, or $6 per ton, under the average price paid to farmers in any other peanut-growing State as of that month. The average prices for farmers' stock peanuts in the

1 Table 1, p. 65, and fig. 3. p. 23.

2 Crops and Markets, December, 1931, published by the U. S. Department of Agriculture.

The Senate then passed a resolution, the tent of which is as follows:

Whereas it à aleged that certain peanut crushers and mills live entered in. 2 stination for the purpose of firing prices a pears 2 flutic lự as lave; an:

Whereas it is alleged that as a result of such xatirti pares for peanuts Lave been amitrary formed down: azi

Vicenza the lack of 2 impeditive market for peanuts has been dem

the producers of peanuts and considerable losses are beer ased the pearst rowers: Therefore be it

Komited That the Federal Trade Commission is berely requested to make an inmediate and thorough investigation of all farts relating to the allesed combination in violation of the antitrust laws with respect to prices for peanuts iy orenties operating peanut crusher Li Els The activÈ ÈL report to the Senate as soon as practicable the result of its investigation

In response to this resolution, the commission made a comprehensive survey of the situation. Unfortunately, when the field werk had been practically completed, when a large part of the resulting material had been coordinated and a considerable part of the final report written, the offices of the commission were destroyed by fire and with them much of the collected material and all of the written report. Practically the whole peanut-growing field had to be covered again.

*Congressional Record, Oct. 22, 1929, p. 4771, speech of Senator Hefin

Section. 2. Scope of the inquiry.—The question raised by the resolution is, whether peanut crushers and mills have formed a combination, the purpose and effect of which has been to fix the prices paid to farmers for peanuts in violation of the Federal antitrust laws. If such a combination exists or has existed, the amenability of its members to such laws depends upon whether their acts were done in purchasing from farmers in interstate commerce, or whether such acts laid a burden upon such commerce.

In order to answer the question raised by the resolution, a survey of each of the peanut-growing sections in the United States was made. Individuals in all stages of the industry were interviewed for the purpose of eliciting information, direct or indirect, concerning the alleged illegal combination. Such informants included farmers who grow peanuts, commission buyers, merchants, and speculators who purchase the raw or farmers' stock from the grower for transfer to crushers and cleaning and shelling plants. Practically every shelling and crushing plant in the industry was visited; so were officials and members of all the shelling and cleaning associations in the industry; also brokers, through whom the cleaned and/or shelled goods are sold, warehousemen, and purchasers of shelled goods.

Wherever correspondence was found which related to the purchase of farmers' stock peanuts by cleaners and shellers, an examination was made over a period of five years and copies or originals of pertinent material were obtained. In addition, certain price data were taken from the records of each of the shelling companies, for the purpose of compiling price ranges. Hitherto no definite information having been made public as to the quantities of peanuts carried in cold-storage warehouses, data showing receipts and deliveries were obtained from the principal storage plants and consolidated tables prepared therefrom.

Throughout the progress of the inquiry the best of cooperation was accorded the representatives of the commission by nearly all the companies and individuals visited. The peanut shellers and crushers, with but four or five exceptions, responded readily to the requests made of them, showed no disposition to "hold out" and expressed a willingness to be of all assistance possible. Most of them gave cooperation at their plants in person and by mail a second time in order to aid in the duplication of the records destroyed by fire.