Our entire production was placed on allocation under Government orders for the wartime purposes. Senator KEFAUVER. Are you aware of the fact, Mr. Patton, that during OPA days and after the war your company and all steel companies did submit to OPA very detailed cost data in support of your various applications for price increases? Mr. PATTON. That was the only way available during war days for us to get an increase in price to cover increased costs. The Government set up OPA, set up certain rules and procedures, and we made application from time to time for price increases in accordance with the rules and regulations established by OPA during the war period. (At this point in the proceedings, Senator Eastland entered the hearing room.) Senator KEFAUVER. I was here in the House of Representatives during that time. I did not hear a big hue and cry that your voluntary submission of cost data to OPA for the purpose of getting price increases was going to subject you to giving information that you held dear. Mr. PATTON. Senator, it is my recollection that the cost data we furnished to OPA was absolutely confidential and was not to be made public in any manner. Senator KEFAUVER. Well, you are quite wrong about that, sir. Senator KEFAUVER. After the war was over-and I think we have some copies of this-suppose we give Mr. Patton one and other members of the committee, if we have some. Mr. PATTON. In any event, times were so different. Senator KEFAUVER. The President of the United States, sir, decided it would be a good thing to save for posterity some of the methods used during the wartime period and after the war so that under Mr. Henry A. Peal typical cost data was stated, as submitted by the companies in support of their applications for price increases. It was published in May 1949, in a consolidated form based upon the size of the company or the production of the company. You will see in great detail all types of operations. I heard no hue and cry that this was giving away confidentiality when this was published. The CHAIRMAN. Senator Kefauver, are you asking a question? Senator KEFAUVER. Did you make any hue and cry as to the publication of this? Mr. PATTON. May I call your attention, Senator, with all due respect, to the fact that this document which you handed to me reads: As can be summarized and released within the legal requirements of confidentiality imposed by statute. Now, I do not purport to know all the details, but I do say with all the sincerity at my command that times are entirely different now when the American steel industry is struggling for survival against world competition that did not exist at that time, and that you would not get the damaging effect even in those days by making things public that you will today to the American steel industry. There is no real comparison. Senator KEFAUVER. We will come to that. The CHAIRMAN. This was published in 1949. Now, what years did it include? Senator KEFAUVER. It includes some typical years, 1944. The CHAIRMAN. Back during OPA? Senator KEFAUVER. It picked out the ones for publication, the 9 months ending September 30, 1944. The CHAIRMAN. Well, it was published 5 years later, then. Senator DIRKSEN. Mr. Chairman, on this point I think the statute or the provision of the statute that set up OPA ought to be inserted. I remember the discussion we had in the House of Representatives at that time, which was a nondisclosure of cost data, and the language here bears that out. It says: Within the legal requirements of confidentiality imposed by statute. Senator KEFAUVER. I have no objection to it being inserted, and I would like to have this report inserted. The CHAIRMAN. They will both be inserted. (The documents referred to are as follows:) OFFICE OF TEMPORARY CONTROLS OFFICE OF PRICE ADMINISTRATION ECONOMIC DATA ANALYSIS BRANCH OPA ECONOMIC DATA SERIES No. 17. Survey of Steel Manufacturers: Production Costs Per Net Ton of Selected Carbon Steel Products, 9 Months Ending September 30, 1944 This is the 17th of series of publications through which the Economic Data Analysis Branch plans to make available to other Government agencies and to interested parties in commerce and industry as much of the generally useful economic and financial information submitted to, and collected by, the Office of Price Administration as can be summarized and released within the legal requirements of confidentiality imposed by statute. This study was prepared by Mr. John A. Bricker, Jr., formerly head of OPA's Steel Mill Products Accounting Section, assisted by Mrs. Miriam B. Kagan and Mr. Everett L. Hopkins. Mr. Murray Rafsky assisted in organization of the tables and Mr. Frank S. Howell reviewed the study. Grateful acknowledgment is made to Mr. Peter G. Franck, formerly Division Economist of the OPA Industrial Price Division, for his assistance in planning the study. HENRY A. PEEL, Chief. MAY 1947. INTRODUCTION This study presents, for the first 9 months of 1944, weighted average detailed costs of selected carbon steel products. Insofar as the conversion stages through which the material passed could be made comparable, a total cost is shown for such conversion stages, beginning with and including the cost components of the ingots used, and continuing to the finished product. The basic data for this study were collected by the Office of Price Administration through the use of a series of special purpose cost forms prepared with the advice and cooperation of the controllers subcommittee of the OPA General Steel Advisory Committee. The cost forms were designed, insofar as possible, to conform to the accounting practices used by the industry, and to facilitate the tabulation of items of cost for the entire industry on a comparable basis. Data were, in most cases, submitted on a plant basis. The industry sample of 22 basic carbon steel producers accounts for over 85 percent of total carbon steel capacity. The companies included are representative both as to size and geographical distribution. The greater portion of the sample is accounted for by fully integrated companies, none of which is a single line producer. For the purposes of this study a company is considered fully integrated if it mines its own ore, coal, and stone; produces its own coke; and operates its own blast and open-hearth furnaces. Many of the product summaries are largely accounted for by the volume of the larger fully integrated producers. Cost data for the first 9 months of 1944 were collected in sufficient detail so that the cost components of all products could be reconciled to the operating statements of each company reporting. The period covered represents one of maximum capacity operation under a wartime product mix, and involved virtually full operation of all new facilities built during the war. The product mix during the period was, of course, conditioned by War Production Board directives. Costs as submitted have been adjusted to eliminate both (a) the excess amortization of emergency facilities over estimated normal depreciation, and (b) any variation of the transfer price at which materials were charged over actual cost for raw materials transferred between units of an integrated company. Product costs developed in this study are accumulative from and include ingot cost. They have been calculated by applying the yield in each conversion stage to the cost components of the preceding conversion stage and adding thereto the costs in the given conversion stage. To secure a weighted average of cost components for the products it was necessary to combine many of the conversion stages of companies having highly refined departmentalization, in order to obtain comparability with those companies which were not so completely departmentalized. It was necessary also to combine the costs of pack mills and continuous mills in developing weighted average costs for sheets. In arriving at their reported costs for the period covered, many manufacturers used ingots priced at varying figures. In order to place such manufacturers on a comparable basis with those who used one ingot price throughout, it was necessary to develop average ingot prices weighted by quantities used. The only volume figure available was tonnage of finished product sold and it was therefore necessary to compute the usage of variously priced ingots on the basis of yields at successive stages. It is not thought that this procedure significantly affected the cost calculations. Cost components tabulated for the products consist of gross material less scrap and other credits, net material, operating labor, other direct production costs, plant overhead and selling, general and administrative expenses. Operating labor as shown includes only that portion of labor directly expended on production. Other production costs include labor as well as materials and purchased services or commodities. Plant overhead and selling, general and administrative expenses are allocated on a per net ton basis in accordance with the methods of the producers concerned. |