Full text of Wartime Prices : Bulletin of the United States Bureau of Labor Statistics, No. 749

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UNITED STATES DEPARTMENT OF LABOR
Frances Perkins, Secretary
BUREAU OF LABOR STATISTICS
Isador Lubin, Commissioner (on leave)
A . F: Hinrichs, A cting Commissioner

♦

W artim e Prices
Part 1.— A ugu st 1939 to Pearl Harbor
By
John M. Blair and Melville J. Ulmer
under the direction of
Saul Nelson

UNITED STATES GOVERNMENT PRINTING OFFICE « WASHINGTON * 1944

For sale by the Superintendent o f Documents, U. S. Governm ent Printing Office
Washington, D. C. - Price 35 cents

L etter of Transm ittal
U nited States D epartment of L abor ,
B ureau of L abor Statistics,

Washington, July 81, 1948.
The S ecretary of L abor :
I have the honor to transmit herewith part 1 of a history of war
time prices. This volume includes a study of wholesale prices in
primary markets in the United States during 28 months—from
August 1939, when Poland was invaded, to December 1941, when
Pearl Harbor was attacked. Much of the basic material for this
study was obtained from data regularly collected by the Bureau’s
Wholesale Price Division. The study itself was unaer the general
supervision of Aryness Joy Wickens, Chief of the Bureau’s Prices
and Cost of Living Branch. Individual credit for special assistance
in the preparation of this bulletin is given in the preface.
A . F . H inrichs , Acting Commissioner.
Hon. F rances P erkins ,
Secretary of Labor.
u

Preface
This bulletin presents the history of prices in primary markets in
the United States during the critical 28 months which elapsed between
the invasion of Poland at the end of August 1939 and the attack on
Pearl Harbor on December 7, 1941. Events during this preparatory
period largely set the stage for developments in the years to come*
The relationships which emerged during these months between prices
in different markets, and between prices and wages, profoundly
affected market pressures and price trends during the period of our
active belligerency. Moreover, the governmental controls over mar
kets and prices, over the flow of commodities, over farm products and
labor relations were gradually taking form during this preparatory
Defense Period and the necessary administrative structures and
mechanisms were being developed and tested.
In one respect above all, the record of this period affords an en
couraging contrast with that of the years preceding our declaration of
war upon Germany in 1917. The dangers of an inflationary increase
in prices were recognized by the President and by responsible Govern
ment officials as soon as Germany marched into Poland, and the first
steps to avert that danger were taken almost immediately. The
beginnings of administrative machinery for price and market control
were an integral part of the inauguration of the expanded defense
program in June 1940. By December 1941, price control in one form
or another had been extended to a large and strategic sector of the
economy, and a statute to make these controls readily enforceable
was well on its way to enactment. Moreover, the dangers inherent
in runaway markets were widely appreciated by businessmen as well
as by Government. It was this prompt awareness of the problem,
more than any other single factor, which held the rise in prices in the
United States within moderate bounds during the period covered in
this bulletin, with pronounced advances largely confined to those
areas in which higher prices could be regarded as having most economic
justification.
This bulletin was prepared primarily from the wholesale price data
regularly collected and published by the Wholesale Price Division of
the Bureau of Labor Statistics, under the direction of Jesse M. Cutts.
In addition, however, other information in the Bureau's files has been
utilized, as, for example, data on retail prices and living costs, includ
ing special field surveys which the Bureau has conducted for the
Office of Price Administration. Liberal use has also been made of
numerous other sources of information, such as other Government
agencies, and trade and technical publications.
This bulletin was started and much of the work done by John M.
Blair, then chief of the General Economic Studies Section of the
Bureau's Price Analysis Division. Upon Mr. Blair's departure from
the Bureau, it was continued and brought to completion by Melville
J. Ulmer, who succeeded Mr. Blair as chief of that section. Valuable
assistance was rendered in the preparation of individual chapters, as

PREFACE

follows: Foods—Edmund DeS. Brunner, Jr.; Hides and leather
products—Mary L. Lake; Textiles—Eunice B. Get tell and Laura
Brown Webb; Chemicals and allied products—Mary L. Lake, and
on the sections on fertilizers and coal-tar products, Jack J. Gottsegen;
Housefurnishings—Eunice B. Gettell; Metals and metal products—
Kenneth H. Hunter; Building materials—Joseph A. Kershaw and
Clark B. Louden; Paper and pulp, rubber, and other commodities—
Eunice B. Gettell and Katherine Lancaster. The work was con
ducted under the immediate supervision of Saul Nelson, co-chief of
the Price Analysis Division, and under the general supervision of
Aryness Joy Wickens, chief of the Prices and Cost of Living Branch
of the Bureau of Labor Statistics.
A. F. H inrichs, Acting Commissioner.

Contents

Page

Preface________________________________________________________________
Chapter I.— General review____________________________________________
Causes of the price rise____________________________________________
Restraining influences______________________________________________
Phases of the price advance________________________________________
Growth of the price-control program_______________________________
Comparison between the two World Wars__________________________
Chapter II.— Foods:
Summary__________________________________________________________
Grains____________________________________________________________
Cereal products____________________________________________________
Livestock and meats_______________________________________________
Dairy products and eggs___________________________________________
Fruits and vegetables______________________________________________
Sugar_____________________________________________________________
Coffee, tea, and cocoa______________________________________________
Edible fats and o ils .______________
Chapter III.— Hides and leather products:
Summary__________________________________________________________
Hides and skins___________________________________________________
Leather___________________________________________________________
Shoes_________________________________________
Chapter IV.— Textiles:
Summary__________________________________________________________
Cotton____________________________________________________________
Cotton yarns______________________________________________________
Cotton grey goods_________________________________________________
Wool_________
Raw silk__________________________________________________________
Rayon____________________________________________________________
Clothing____________
Burlap____________________
Chapter V.— Housefurnishings:
Summary__________________________________________________________
Textile housefurnishings____________________________________________
Carpets___________________________________________________________
Furniture__________________________________________________________
Household electrical appliances_____________________________________
Chapter VI.— Chemicals and allied products:
Summary_______
Industrial chemicals_______________________________________________
Fertilizer materials_________________________________________________
Inedible fats and oils_______________________________________________
Drugs and pharmaceuticals________________________________
Chapter VII.— Fuels:
Summary__________________________________________________________
Crude oil__________________________________________________________
Fuel oil_______________________________________
Gasoline____________________________________________
Anthracite_________________________________________________________
Bituminous coal__ _________________________________________________
Chapter V III.— Metals and metal products:
Summary__________________________________________________________
Iron and steel______________________________________________________
Copper........................................
Lead______________________________________________________________
Zinc_______________________________________________________________
Tin_________________
Aluminum___________________________________________

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3
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15
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26
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49
54
59
62
69
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78
80
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87
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138
141
146
155
160
164
169
171
176
180
186
190
195
199
211
216
220
224
228

CONTENTS

Chapter IX .— Building materials:
Summary....................— .................................................................... ..........
Softwoods------- -------Hardwood flooring-------------------------------------------------------------------------Paints and paint materials--------------------------------------------------------------Plaster and plasterboard___________________________________________
Asphalt roofing____________________________________________________
Plumbing and heating equipment___________________________________
Window and plate glass____________________________________________
Cement__________________________________________________________ Sand, gravel, and crushed stone____________________________________
Brick and tile............................................
Chapter X .— Paper and pulp, rubber, and other commodities:
Summary.........................— ......................- ............. — ------ -----------------Paper and pulp------------------------------------------------------------------------------Crude rubber................

Pag*
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242
251
252
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268

Bulletin 7S(o. 749 of the
United States Bureau o f Labor Statistics

Wartime Prices

Part 1.— August 1939 to Pearl Harbor
Chapter I.— General Review
Prices in American commodity markets advanced substantially
during the 28 months which elapsed between the outbreak of war in
Europe on August 31, 1939, and the active entry of the United States
into the conflict on December 7, 1941. During this “Defense Period”
(the term used, for brevity, throughout this bulletin) wholesale prices,
as measured by the Bureau of Labor Statistics index of prices of
nearly 900 commodities in primary markets, rose nearly one-fourth,1
while living costs of workers in large cities increased slightly more
than 12 percent. Prices of many articles, of course, rose far more than
this average, both at wholesale and at retail; this was particularly
true of imported articles and of farm products and foods.
Causes of the Price Rise
The principal reasons for the advance in prices were those which
ordinarily characterize a major war. Immediately following the
outbreak of World War II, markets were upset by the disruption of
international trade, as a result both of the blockade and of the diver
sion of materials and shipping to serve the needs of the belligerents.
As the war spread and intensified, this disruption was steadily aggra
vated. The initiation of the National Defense Program in June
1940, followed by the adoption of the Lend-Lease Act in March
1941, progressively augmented the demand for both industrial and
farm products. At the same time, the quickening pulse of business
activity and the unprecedented stream of Government funds through
trade channels into private hands brought with it a rapid expansion
of consumer purchasing power and civilian demand for goods and
services of all kinds. By the time of Pearl Harbor, defense expendi
tures totaled about 2 billion dollars monthly, and the Federal Reservei
i The “weekly” indexes of wholesale prices show an increase of 23.3 percent from the week ended August
26, 1939, just before the outbreak of war in Europe, to the week ended December 6, 1941, just before the
attack on Pearl Harbor. The “monthly” indexes of wholesale prices show an increase of 24.8 percent from
August 1939 to December 1941.

Wartime Prices—August 1939 to Pearl Harbor

Board index of manufacturing production had reached 167 (season
ally adjusted), as compared with 106 in August 1939.
It was this tremendous physical pressure upon supply, far surpassing
the limits of possible ready expansion of output, which constituted the
fundamental basis underlying the price advance. Its effects were, of
course, aggravated by numerous other factors. Among the most
important of these were the waves of speculative buying which nor
mally accompany any period of expanding business activity, and which
are particularly violent during periods of war or preparation for war.
At recurrent intervals during the Defense Period, prices for many
commodities were bid up sharply by industrial buyers, household
consumers, and outright speculators, who sought to anticipate the
price increases, or commodity shortages, which they regarded as
imminent. By reducing the supply of already scarce articles on the
market, these speculative waves materially accelerated the advance.
Increases in cost as such did not play any very important part in
the general price rise during the early stages of the war. I t is true
that direct costs rose substantially in many industries, principally
because of higher prices for raw materials. Costs of farm products
and imported materials rose most sharply, the latter reflecting increases
not only in prices abroad but also in shipping and insurance rates.
Labor costs per unit of output also advanced somewhat in a number of
industries, especially toward the end of the Defense Period when
spreading increases in wage rates could no longer be matched by greater
labor efficiency. In general, however, these higher direct costs were
more than offset by the sharp reduction in unit overhead which
accompanied the expansion of productive activity. Of course, this
situation could not last indefinitely, and by the time*, of Pearl Harbor
costs in a growing range of industries had begun to move upward as
capacity output was approached or reached. Nevertheless, viewing
the period as a whole, little if any of the increase in prices of most
manufactured products can be traced to higher costs.
In interpreting the actual behavior of American markets during the
Defense Period, one very important circumstance must be borne in
mind. The invasion of Poland occurred at a time when prices gener
ally wereat a verylowlevel. The recovery from the 1937-38 “recession”
had been limited. Prices of farm products and foods, in particular,
were near the lowest levels they had reached in 5 years, despite inten
sive efforts of the Federal Government to raise these prices through
the agricultural program. Consequently, a substantial general price
advance would probably have accompanied a much smaller improve
ment in industrial activity and purchasing power than that which
actually occurred.
Restraining Influences
In view of all these factors, the general increase in prices during the
Defense Period must be regarded as having been quite moderate. In
the comparable period following the outbreak of World War I, the rise
in the average wholesale price level was nearly 45 percent, or almost
twice as rapid as during the present conflict.
The principal reasons for this contrast appear to be twofold. In
the first place, American industry in 1939 wTas far better prepared to
meet the demands placed upon it for rearmament and for supplying
the need of our future allies. We were able to adjust rapidly to the

Chapter / . —General Review

loss of Central European imports and the reduced flow of other goods
from abroad. There was ample unused capacity, particularly in the
heavy industries, to permit a ready expansion of operations. More
important was the fact that, as soon as war broke out in Europe, the
dangers of an inflationary increase in prices were appreciated both by
responsible businessmen and by Federal officials. Steps to avert such
an increase were taken almost immediately by the Administration
and received the cooperation of many industrial leaders. Machinery
for stabilizing prices and for insuring the orderly flow of scarce com
modities was inaugurated simultaneously with the beginnings of the
expanded defense program in June 1940. By the time of Pearl
Harbor, the administrative organizations necessary for implementing
these controls were well established, with a substantial nucleus of
trained personnel. As a result, industrial prices as a group remained
well in hand during the period between August 1939 and December
1941, although prices of farm products, foods, textiles, and certain
other commodities rose quite sharply from the low levels prevailing
in the summer of 1939.
Phases of the Price Advance
The actual advance in prices during the Defense Period may be
regarded as falling into three distinct phases, each somewhat different
in character. The first of these phases, which began immediately
after the outbreak of hostilities in Europe and continued until about
the end of 1939, carried the average level of wholesale prices up by
about 6 percent. In part this increase reflected the change in inter
national commerce brought about directly by the war, such as the
diversion of Indian burlap to the United Kingdom, or Spanish mercury
to Germany. The entire Australian wool clip was purchased by
Britain and shipments of botanical drugs and essential oils from
Europe were cut off almost entirely.
While prices of a limited range of commodities were affected by
specific situations of this kind, the principal stimulus to the advance
in the fall of 1939 must be regarded as having been speculative.
Consumers and industrial buyers rushed to lay in stocks of commodities
whose scarcity they feared, or whose prices they expected to advance,
with little regard for actual conditions. For example, there was a
buying rush for sugar which ignored the fact that Cuba’s loss of
European markets actually increased the amount available for con
sumption in the United States.
By the end of the year, this speculative impulse had run its course
and prices turned downward. They continued to decline until
August 1940, at first, because of the relatively inactive appearance
of the war and the failure of anticipated demand from the Allies to
develop; and later, because of the effect of continued German vic
tories upon business sentiment. By that time all but a small fraction
of the 1939 advance had been lost.
The second phase of rising prices began in August 1940 and lasted
until the beginning of 1941. It reflected primarily the actual pres
sures upon supplies of many kinds of raw materials and some manu
facturing facilities created by the National Defense Program. In
creases during this period were largely confined to markets affected
immediately by rearmament needs. Thus, prices rose for scrap metals

Wartime Prices—August 1939 to Pearl Harbor

Chapter I .—General Review

needed for war production, for the grades of lumber used in building
cantonments, and for the kinds of cotton and wool clothing needed to
clothe the growing Army. By the end of 1940, the decline of the
earlier half of the year had been retraced and the average level of
wholesale prices was again at about its 1939 peak, or nearly 7 percent
above its pre-war levels.
During the first 16 months—from August 1939 to January 1941—
rice increases were largely confined to primary markets, as there had
een no opportunity for them to spread appreciably to retail markets.
At the end of 1940 the average level of living costs was only 2 percent
higher than in the summer of 1939.
The third phase of advancing prices began in the middle of Feb
ruary 1941 and continued through the remainder of the year, with
only a brief interruption in September and October. This increase
was very much broader in character and far sharper than either of the
two which had preceded it. From the end of February to December
6 in 1941 the average level of wholesale prices rose almost 15 percent,
as compared with 23 percent for the Defense Period as a whole.
Retail prices and living costs also turned definitely upward in the
spring of 1941 and continued to rise at the average rate of about 1
percent a month for the remainder of the year, until by December
they were 12 percent above their August 1939 level.
The following statement shows the percentage changes in the cost
of living, by item of expenditure, for specified months during the
Defense Period.

Percent of change

February
mi to
December

August
1939 to
December

August 1939
to February

+ 112.
2 .11

+ 2. 2

+ 9. 6

+ 21.0
Food.......... ........................................
+ 14. 5
Clothing________________________
Rent_________ ____________________ +3. 7
Fuel, electricity, and ice------------------- + 66.. 8
+ 16. 1
Housefurnishings___________________ +16.
77
. .33
Miscellaneous________________________ + +

+ 4 .7
+ .1
+ .8
+ 3. 2
2
+ 1.5

+ 15.5
+ 14. 3
+2. 9
+ 3. 5
+ 16. 3
+ 5 .7

All items___________________________

Almost every factor which ordinarily contributes to rising markets
played its role in this broad advance. The spread of hostilities in
Europe and the shortage and diversion of shipping progressively
reduced imports and increased the prices of those goods which were
imported. The rupture of trade relations with Japan at the end of
July cut off the supply of silk over night. The American Defense
Program, swelled by the enactment of the Lend-Lease Act in March,
called for a constantly increasing volume of metals, chemicals,
and textiles, as well as of certain foodstuffs, such as pork products
and cottonseed oil. The diversion of facilities to war production,
while at first slow in making itself felt, finally caused the output of
consumer durable goods to turn down definitely in September, a
decline which rapidly gathered momentum as the Office of Production
Management placed increasing restrictions upon the manufacture of
such articles as refrigerators and automobiles.
In the meantime, growing Government expenditures and the
increasing flow of money into the hands of consumers greatly swelled
purchasing power. Workers shifted from the lower-paid light indus
tries to the better-paid war plants. Hours were lengthened and

Wartime Prices—August 1939 to Pearl Harbor

overtime was paid. A series of wage increases started in March 1941,
which by the end of the year had affected the great bulk of American
industries. All these developments meant much larger pay envelopes.
The same wage increases which contributed to the rise in purchasing
power also exerted substantial upward pressure upon costs in many
industries. By the latter part of 1941, a large number of plants were
operating at close to capacity and the rise in wages and in labor costs
could no longer be offset by economies attendant upon expanding
production.
Finally, many less tangible factors contributed to accelerate the
rise in prices. Speculators entered the market in force early in 1941
and bought heavily. Industrial buyers laid in large inventories of
raw materials in order to protect themselves against anticipated price
advances or shortages; distributors bought heavy stocks of merchan
dise for similar reasons. Consumers laid in stocks of all kinds of
durable and semidurable goods during the summer and early fall.
Some manufacturers took advantage of the situation to raise prices
rapidly, as in the case of cotton textiles. The beginnings of black
markets developed, as, for example, in the case of scrap metals and
extremely high resale prices for a number of chemicals which were
short in supply.
Growth of the Price-Control Program
There is little doubt that the price increases which occurred during
the Defense Period would have been much greater had it not been for
the early initiation of a control program. Price control during World
War II may be said to have had its inception when, shortly after the
invasion of Poland, President Roosevelt wrote to Senator O’Mahoney,
Chairman of the Temporary National Economic Committee, asking
that his staff “keep an eye” upon prices and report upon unwarranted
increases.2 While this step carried no sanction except publicity, the
knowledge that the Government was keeping an eye upon prices
unquestionably had its effect in tempering the speculative upturn of
1939.
With the initiation of the Defense Program and the appointment of
the Advisory Commission to the Council of National Defense in June
1940, the foundation of more formal price control was laid. As
Defense Commissioner in charge of price stabilization, Leon Henderson
was in a position to take immediate steps to hold down prices of key
commodities such as metals. Consultation with industry and informal
agreements were successful in holding down prices of copper, zinc,
steel, and similar metals as early as the fall of 1940. In April 1941,
as the price rise continued, Mr. Henderson was given more formal
authorization from the President, first, as Administrator of the Office
of Price Administration and Civilian Supply, and later, as Adminis
trator of the Office of Price Administration. While this authoriza
tion did not carry with it any specific statutory authority, the Office
of Price Administration and Civilian Supply began the issuance of
formal price ceilings, at the same time continuing to utilize less formal
procedure where feasible. In accordance with the theory of selective
price control, which was followed throughout the Defense Period*
*Hearings, Temporary National Economic Committee, Vol. 2 (p. 11151).

Chapter / . —General Review

these ceilings were imposed principally upon basic industrial com
modities, such as cotton cloth, steel, lumber, and the like. It was
hoped that, by holding down prices of these basic materials, sufficient
restraint could be exercised upon costs at iater levels of production
and distribution to keep the general advarce in check.
These measures for controlling prices were not uniformly effective.
In some fields, particularly the basic primary metals, they enlisted the
cooperation of producers and were generally observed. In other areas,
such as textiles, there was so much resistance to the orders initially
issued that their substantial modification became necessary. In still
other cases the orders were simply ignored; thus, the efforts to forestall
price increases for automobiles in the summer of 1941 had to be
abandoned when a leading producer openly refused to comply.
To provide the firm statutory base which appeared necessary, the
Emergency Price Control Act was introduced into Congress in August
1941. However, the prolonged hearings on this bill delayed final
enactment into law until about 2 months after Pearl Harbor.
Despite the absence of direct statutory authority for price control
up to Pearl Harbor, the measures taken clearly succeeded in retarding
the price advance, particularly in the industrial sector of the economy.
Thus, prices of metals and metal products rose not much more than 10
percent between August 1939 and December 1941, and the increase
during 1941 was limited to about 5 percent. Most of this rise, more
over, resulted from the advance of more than 20 percent in the price
of motor vehicles, which the Price Administrator found himself power
less to prevent. In contrast, list prices of iron and steel, where controls
were effective and were complied with, increased only 2 percent during
the entire Defense Period. Quoted prices of chemicals rose 16 percent
between August 26, 1939, and December 6, 1941, and only 3 percent
from February 22, 1941, until the time of Pearl Harbor.
Prices of other commodities which for one reason or another were
not controlled successfully, rose much more sharply than the average
for wholesale markets generally. Of greatest consequence was the
fact that prices of farm products rose almost 50 percent during the
Defense Period and almost 30 percent in the 10 months preceding
Pearl Harbor. This advance in farm products must be appraised in
the light of their abnormally low level during the summer preceding
the invasion of Poland. Moreover, farm prices are normally much
more responsive to changes in economic conditions than are industrial
prices. No attempt was made to impose any broad control upon
prices of farm products during the Defense Period, partly because of
the belief that some increase from their depressed pre-war levels was
warranted, and partly because of the political and administrative
difficulties involved. By September 1941, the increase had been suffi
cient to restore the “parity ratio” to 100 for the first time in more
than 2 decades, that is, to raise the ratio between prices received by
farmers and those paid by farmers to the favorable levels which had
prevailed during the years 1909 to 1914.
The sharp increase in farm prices was necessarily reflected in sub
stantial advances in prices of manufactured articles derived from farm
products, particularly foods and textile products. Average wholesale
prices for both these groups rose about a third in the Defense Period
and about 20 percent in the last 10 months of 1941. Prior to Pearl
Harbor there was little effort to control food prices, and ceilings placed

Wartime Prices—August 1939 to Pearl Harbor

upon cotton yarn and cloth had to be modified upwards under pressure
from the industry.
In general, therefore, price increases during the Defense Period
were most pronounced for imported goods and for farm products and
goods produced from farm products, while the least marked advances
were for the products of heavy industry. As compared to the average
increase of over 23 percent for all commodities at wholesale, the rise
for all commodities other than farm products and foods was only 16%
percent.
Comparison Between the Two World Wars
The contrast between the behavior of prices in the Defense Period
and the corresponding period of World War I is very striking. In the
first place, as already stated, the actual extent of the increase was con
siderably narrower during the second conflict than the first. More
important, however, was the difference in the sectors of the economy
where the advance was most pronounced. The stability of durable
goods prices in World War II was at variance with the very sharp
advances for these prices 25 years earlier. Thus, prices of metals and
metal products rose 54 percent from July 1914 to November 1916, as
compared with 11 percent from August 1939 to December 1941.
List prices of iron and steel rose 103 percent in the first 28 months of
World War I and only 2 percent in the same interval of World War II.
For nonferrous metals the increase in the earlier period was 114 per
cent, and in the later period, 14 percent; for building materials, the inreases were 34 percent and 20 percent; for chemicals and allied prod
ucts, 93 percent and 23 percent; and for fertilizer materials, 176
percent and 19 percent.3 On the other hand, the increase for farm
products was somewhat more moderate in the first World War than
in the second, while the advances for textile products and for foods
were very nearly the same in both periods.
Percentage increases in wholesale prices, by commodity group, are
given in the following statement for the Defense Period in World
War II and for the comparable period in World War I:
Percent of increase
July 1914
Aug. 1939
to Novem- to Decem
ber 1916
her 1941

All commodities......... - _______ _________________

44. 7

24. 8

Farm products_______
Foods............................................................................
Hides and leather products........... ..............
Textile products_________
Fuel and lighting______________________________
Metals and metal products_____________________
Building materials-........... ......................................
Chemicals and allied products__________________
Housefurnishing goods_________________________
Miscellaneous__________________________________

40. 5
39. 0
62. 1
42. 5
78. 3
53. 7
34.0
92. 6
14. 5
23. 6

55.2
34.7
23.8
35.4
8.0
10.8
20.3
23.0
18.1
19.5

The principal reasons for this difference in behavior have already
been touched upon. The change in industrial potential may be
illustrated by the fact that when World War I started, the United
States had only a limited chemical industry and was acutely short of
fertilizer materials such as potash. However, by 1939, the country
8 Increases were computed between the months August 1939 and December 1941 in World War II and
between July 1914 and November 1916 in World War I.

Chapter I.—General Review

P E R C E N T IN C R E A S E IN W H O L E S A L E P R IC E S
IN FIRST W ORLD WAR AND IN P R E S E N T WAR

A LL COMMODITIES

FARM PRODUCTS

FOODS

HIDES AND
LEATHER PRODUCTS

TEXTILE PRODUCTS

FUEL AND LIGHTING

M ETALS AND
METAL PRODUCTS

BUILDING MATERIALS

C H EM IC A LS AND
ALLIED PRODUCTS

HOUSEFURNISHING
GOODS

MISCELLANEOUS

J WORLD WAR I JULY 1914 TO NOVEMBER 1916
I WORLD WAR JL AUGUST 1939 TO DECEMBER 1941

Wartime Prices—August 1939 to Pearl Harbor

had a huge chemicals industry and was an exporter of fertilizer.
Western Hemisphere sources of many nonferrous metals, which were
developed during World War I, averted serious shortages in World
War II.
While physical differences of this kind were unquestionably signifi
cant, it is probable that the most important reason for the contrast
in price behavior can be traced to the early development of the control
mechanism in World War II and the willingness of many basic indus
tries to cooperate in the stabilization program. Prices were not con
trolled at all in the first world conflict until a considerable time after
our entrance, and even then efforts at stabilization were subjected
to prolonged resistance and objection by many industries, notably
the steel industry. In the present war, on the other hand, the mech
anism for stabilization had been developed to a high degree by the
time of Pearl Harbor and the statute giving it firm and specific
authority was already on its way to enactment. There was a very
marked improvement, too, in methods of Government procurement
and particularly in the coordination of Allied purchases, so as to avoid
the competitive bidding up of prices which had been a serious disturb
ing factor 25 years earlier.
T able

1.— Percentage Changes in Wholesale Prices, Specified Periods, August 1939—
December 1941
[Source: TJ. S. Bureau of Labor Statistics]
Percent of change from week endedCommodity group

Aug. 26,
1939, to
Dec. 6,
1941

Aug. 26,
1939, to
Dec. 30,
1939

Dec. 30,
1939, to
Aug. JO,
1940

Aug. 10,
1940, to
Dec. 28,
1940

-3 1

+3.9

+14.7

+7.2
+9.8
+9.4
+5.1

+29.3
+38.5
+ 8.6
+42.8

Feb. 22,
1941, to
Dec. 6,
1941

All commodities...........................................................

+23.3

+6.1

Farm products.............. .................................................
Grains.................. ...................................................
Livestock and poultry............................................
Other farm products... ............................................

+48.6
+68.2
+38.1
+50.6

+12.1
+40.9
+. 6
+12.7

-4
-1 7
+4
-6

Foods...... ........ ..............................................................
Dairy products........................................................
Cereal products.............................. ........................
Fruits and vegetables..............................................
Meats........................................................................
Other foods........ ......................................................

+33.0
+40.6
+21.0
+31.1
+22.6
+48.8

+7.8
+18.4
+13.8
+4.6
- 5 .4
+13.4

- 3 .6
- 7 .8
- 7 .0
+7.2
+4.3
-11.1

+5.5
+11.5
- 2 .2
- 6 .3
+ 6.9+10.6

+21.2
+20.0
+18.2
+28.4
+7.1
+39.7

Hides and leather...........................................................
Shoes................. .......................................................
Hides and skins.......................................................
L eather.-......................... ......................................
Other leather products............................ ..............

+24.6
+19.7
+54.9
+20.5
+17.7

+12.4
+6.5
+40.2
+13.9
+4.6

- 6 .0
-.4
-24.8
- 6 .9
- .3

+4.9
+ .3
+25.4
+5.8
.0

+13.2
+12.4
+23.9
+7.1
+12.9

Textile products.................................. ...........................
Clothing...................................................................
Cotton goods....... ....................................................
Hosiery and underwear...........................................
R ayon .......... ..........................................................
Silk..........................................................................:
Woolen and worsted................................................
Other textile products.......................... .................

+34.6
+20.2
+61.3
+8.6
0)
0)
+36.6
+50.5

+16.6
+3.3
+15.4
+10.2
0)
0)
+19.6
+29.5

-8 .7
+1.3
- 9 .5
- 9 .4
0)
0)
-7 .1
-12.6

+3.3
+• 2
+9.3
- 2 .2
.0
- 1 .2
+6.3
+3.4

+20.0
+12.8
+36.7
+10.9
+2.7
+19.8
+15.2
+24.2

Fuel and lighting..........................................................
Anthracite......................................................... ......
Bituminous..............................................................
Coke....... .................................................................
Electricity..... ...........................................................
Gas........ ............................... ..................................
Petroleum products.................................................
1Comparable figures not available.

+8.2
+18.1
+12.7
+17.2
-17.3
-11.3
+16.1 1

+ .3
+5.9
+1.8
+5.5
-6 .1
-5 .1
+ .6

- 2 .5
+2.7
- 1 .7
- .3
- 2 .0
+ 3 .0
-5.8:

+1.8
+2.9
+4.4
+3.8
- .5
-5 .7
+L6

+8.9
+5.2
+7.9
+7.3
-9 .4
+ .9
+20.5

8
4
0
0

Chapter I.—General Review
T able

1.— Percentage Changes in Wholesale Prices , Specified Periods , August 1939—
December 1941—Continued
Percent of change from week ended—
Aug. 26,
1939, to
Dec. 6,
1941

Aug. 26,
1939, to
Dec. 30,
1939

Dec. 30,
1939, to
Aug. 10,
1940

Aug. 10,
1940, to
Dec. 28,
1940

Metals and metal products...........................................
Farm equipment.....................................................
Iron and steel...........................................................
Motor vehicles.........................................................
Nonferrous metals...................................................
Plumbing and heating............................................

+10.5
+• 5
+2.0
+20.8
+13.4
+11.0

+2.8
-.2
+1.1
+1.8
+12.9
.0

- 1 .2
- 1 .0
- 1 .6
+• 1
- 4 .3
+1.4

+3.1
+ .2
+1.2
+5.8
+3.1
.0

+5.5
+1.4
+1.5
+12.0
+ .8
+6.9

Building materials.........................................................
Brick and tile................ :........................................
Cement.....................................................................
Lumber....................................................................
Paint and paint materials.......................................
Plumbing and heating............................................
Structural steel.............. ..........................................
Other building materials...... ..................................

+19.7
+ 6.6
+2.3
+39.5
+16.7
+11.0
.0
+14.9

+3.8
+1.1
.0
+6.0
+5.1
.0
.0
+3.8

-.3
- 1 .5
-.8
- .3
- 2 .2
+1.4
.0
+ .8

+7.3
+1.1
+ .2
+24.3
+1.3
.0
.0
+1.4

+ 8.2
+5.8
+ 2.9
+9.5
+10.4
+6.9
.0
+8.5

Chemicals and allied products......................................
Chemicals................................................................
Drugs and pharmaceuticals....................................
Fertilizer materials..................................................
Mixed fertilizers.......................................................
Oils and fats.............................................................

+20.9
+15.9
+69.0
+15.5
+8.2
0)

+5.3
+5.2
+5.9
+11.0
+1.1
0)

- 1 .8
+5.9
+24.5
- 8 .8
- 2 .2
(9

+1.4
+ .7
+ .3
+3.1
+2.1
+7.0

+14.3
+ 2.0
+26.7
+10.5
+7.9
+98.5

Housefurnishing goods...................................................
Furnishings..............................................................
Furniture..................................................................

+17.1
+16.9
+17.6

+3.6
+4.9
+1.7

- .1
+ .4
- .7

+ .2
+ .3
+ .1

+13.0*
+10.5
+16.4

Miscellaneous................................................................
Automobile tires and tubes....................................
Cattle feed...............................................................
Paper and pulp........................................................
Rubber, crude..........................................................
Other miscellaneous................................................

+19.3
+11.5
+75.6
+28.2
+32.3
+13.5

+6.3
- 8 .2
+37.2
+12.3
+21.7
+7.0

- 1 .3
+4.7
-16.0
+ 4.2
-.5
- 4 .7

+ .5
+ .2
+13.4
-.4
+ .7
- .1

+13.7
+15.9
+52.0
+9.8
+7.4
+11.6

Special groups:
Raw materials.........................................................
Semimanufactured articles__ ;..............................
Finished products................................ ..................
All commodities other than farm products...........
All commodities other than farm products and
foods.......................................................................

+36.0
+20.6
+18.4
+19.0

+11.2
+12.2
+3.4
+5.1

- 5 .7
- 7 .5
- 1 .5
-2 .8

+5.9
+4.7
+3.0
+3.3

+22.1
+10.2
+12 .2
+12.1

+16.5

+5.0

-2 .6

+2.8

+10.0

Commodity group

i Comparable figures not available.

547953®— 44-----2

Feb. 22,
1941, to
Dec. 6,
1941

Chapter II.— Foods
Summary
Prices of farm products during the Defense Period rose more than
did those of any of the other major groups in the wholesale-price index.
The over-all increase between August 1939 and December 1941
amounted to 55 percent, as compared to an increase in the all-com
modity index of 25 percent. In keeping with the generally sensitive
behavior of farm prices, this upward movement was interrupted by
periods of price stability and decline.
The marked increase in farm prices started from a level in August
1939 which was comparatively low, relative both to the past levels
of farm prices and to the prices of other types of products. Farm
prices had remained at depressed levels during most of the thirties,
a sharp upturn early in 1937 having been reversed by the “recession”
beginning later that year. At the outbreak of the war, prices of
farm products had recovered only slightly from their depressed levels
of 1938 and were 35 percent below their peak of early 1937.
With the invasion of Poland in August 1939, farm prices shot up
13 percent between August and September, partly as a result of
speculative activity. During the rest of the year, however, they
remained almost completely stable at a slightly lower level of 10 to 11
percent above the August 1939 average.
This slight loss was regained by a minor advance during the first part
of 1940, but in March, as the European front remained quiet and
domestic economic activity slackened, farm prices began an extended
decline. In the summer of 1940, the downward movement became
more pronounced as important European markets were sharply cut
off and as speculative sentiment was adversely affected by the Nazi
conquests. Thus, between January and August of 1940, farm prices
fell from 13 percent to only 8 percent above the pre-war level.
However, as the National Defense Program got under way in the
fall of the year, bringing with it a substantial increase in employment
and purchasing power, the trend was once more reversed, farm prices
rising by December to a level 14 percent above the pre-war position.
This was followed, after a brief period of indecisive fluctuation in
January and February 1941, by one of the most rapid increases in the
history of price movements. Between February and December,
farm prices rose from 15 to 55 percent above the August 1939 level,
or an average increase of slightly more than 3 percent a month.
The trend of food prices at wholesale paralleled almost exactly
the movement of farm prices, being only slightly less pronounced in
the extent of its rise. At the outbreak of the war, speculative
activity carried food prices upward 12 percent, only 1 percent less
than the corresponding increase in farm prices. The price decline
in the first half of 1940 brought food prices by August down to a
point 4 percent above their pre-war level. In the last 4 months of
1940 and the first 2 months of 1941 prices of foods moved irregularly
upward. This was followed, as in the case of farm products, by a
rapid and sustained increase beginning in March. Between February
12

Chapter II.—Foods

and December 1941, food prices rose from 9 to 35 percent above the
pre-war level, an average increase of 2.2 percent a month.
This broad advance in farm and food prices was shared by all the
major types of raw and processed agricultural products. The price
increases between August 1939 and December 1941 in these groups of
commodities were as follows:
Percent of

Percent of

increase
Farm products:
increase Foods:
Grains_______________________ 77
Dairy products______________
41
Livestock and poultry_______
48
Fruits and vegetables________
26
Other farm products_________ 55
Meats_______________________ 29
Cereal products______________ 24
Other foods__________________ 48

The principal cause of these upward movements in agricultural
prices was the great increase in demand resulting from the defense
effort, as nonagricultura] income rose 40 percent between August 1939
and December 1941. Consumers were able to purchase more foods of
a better grade—particularly meats and dairy products—and in some
cases, in order to protect themselves against possible shortages and
further price advances, they increased their purchases of foods which
could be stored. For example, at the beginning of the war and again
in the latter part of 1941, heavy buying took place in the sugar market.
Likewise, throughout 1941, large quantities of canned goods were
bought for storage by consumers.
The general demand for foods was intensified by increases in forward
buying on the part of wholesale and retail distributors. Their stocks
of coffee, tea, sugar, canned goods, and fats and oils reached high levels
in 1941. Furthermore, industrial users of agricultural commodities
accumulated large inventories of cocoa beans, sugar, vegetable oils,
and other products. A considerable proportion of this forward buy
ing was speculative in character, particularly in the month of Septem
ber 1939, and throughout most of the year 1941. Although such spec
ulative activity affected to some extent all farm prices, it was especially
prevalent in the grain, sugar, and fats and oils markets.
Demand was also increased as a result of large scale Government
purchases of farm products for our armed forces and for shipment under
the Lend-Lease program. Throughout most of 1941 the armed forces
consumed increasing quantities of nearly all types of foods. Further
more, after the passage of the Lend-Lease Act in March 1941, pur
chases for shipment abroad took from the market large quantities of
pork and lard, manufactured dairy products, and preserved fruits and
vegetables.
These increases in demand and the resultant improvement in farm
prices brought forth large quantities of farm products, agricultural
production attaining a record high in 1940 and again in 1941. Not all
of this increased output, however, was allowed to flow into the Na
tion’s markets, as limitations on the supplies available to consumers
were introduced for the purpose of raising the level of farm prices.
The most important of these limitations was the loan program enacted
by Congress and conducted by the Department of Agriculture. Under
tne provisions of this program, loans were provided to farmers, ena
bling them to withhold supplies of certain important commodities,
notably corn, wheat, cotton, and tobacco from the market. When the
loan rate offered by the Government was higher than the market price,

Wartime Prices—August 1939 to Pearl Harbor

farmers pledged their products to the Government, thus temporarily
removing such supplies from commercial channels. These supplies
then flowed into the market only when the market price rose to the
level of the loan rate. Increases of the loan rates during both 1940
and 1941 appear to have been partly responsible for the advance in
prices, particularly for grains.
Finally, the level of farm prices reflected increases in the prices of
imported commodities. Higher prices of imported foods resulted prin
cipally from shipping shortages, advances in shipping charges, and the
operation of various types of quota systems, as in the case of sugar,,
coffee, and tea.
The trend of prices of farm products and foods during the Defense
Period was quite similar to that during the corresponding period of
World War I. During both these periods there were three distinct
movements: A rise immediately after the outbreak of the war in
Europe, followed by stability or decline during the next 10 to 12
months, and then by an extremely rapid and almost uninterrupted
advance. At the end of 2}i years, prices of farm products had ad
vanced 40 percent in the first war and 55 percent in the second, while
the advances for food prices in the two war periods amounted to 39 and
35 percent, respectively.
However, behind this similarity in the price movements of the two
broad groups, farm products and foods, were differences in the move
ments of a number of important agricultural products. In World
War I, the price level of farm products was carried upward largely by
the increase in grains, which between July 1914 and November 1916
advanced 84 percent. This rise, together with an increase of 42 per
cent in “other farm products,” was in contrast to the relative stability
of livestock and poultry, which increased only 10 percent. In World
War II, however, the upward movement was more general in agricul
tural markets. Grains again led with an increase of 77 percent from
early levels, while livestock did not reach the peak of World War I,
and poultry instead of remaining nearly stable, rose 48 percent.
“Other farm products” mounted 55 percent.
The same general situation prevailed in foods. Although the
over-all increase during both periods was almost exactly the same,
prices of the individual products moved somewhat differently. In the
last war, the upward movement was led by cereal products; wheat
flour, which had risen substantially more than 100 percent, reflected
the advance in the grain market. On the other hand, meats, following
the trend of livestock and poultry, remained relatively stable, rising
only 10 percent. In the corresponding period of the present war,
cereal products rose only 24 percent, while meats increased 29 percent,
again reflecting the trend of the farm products from which they are
derived. Prices of dairy products rose 41 percent from August 1939
to December 1941, as compared with an increase of 44 percent in the
corresponding months of World War I.
A final, though important, difference between the two wars consists
in the fact that prices of farm products and foods were at or near tho
highest levels of many years 1 at the beginning of the first World
War, while at the beginning of the present conflict they were a t
clearly depressed levels.1
1See Wholesale Prices 1890 to 1919 (U. S. Bureau of Labor Statistics Bulletin No. 269), pp. 13-15.

Chapter / / . —Foods

In the following sections of this chapter the movements of farm and
food prices during the Defense Period, August 1939-November 1941,
and the principal causes of those movements are described in some
detail. Because of the fact that prices of most farm products, when
processed into foods, usually reflect the same general economic con
ditions which affect them as raw commodities, this discussion considers
the various farm products and foods jointly. This chapter, however,
is confined to those farm products which are principally consumed as
foods. Farm products having other primary uses (as, for example,
cotton) are treated in other chapters of the bulletin.
Grains
The course of grain prices since the outbreak of the war can, in
general, be divided into three periods. The first period ran from
August 1939 to April 1940, during which time prices advanced with
little interruption. In the second period, from April 1940 to August
1940, prices fell to levels only moderately above those of August 1939.
During the third period, from August 1940 to December 1941, prices
again advanced, and by the later date, were 77 percent higher than at
the outbreak of the war.
The prices of grains were influenced chiefly by (1) the European war
and (2) the Governmental price-raising measures. Major aspects of
the price movements of the four most important grains are described
below.
WHEAT

Between August 1939 and April 1940 wheat prices advanced on the
average 54 percent. The price of No. 2 hard wheat (Kansas City) rose
from 64 cents to $1.07 per bushel during this period, while a smaller
advance—from 75 cents to $1.08-—occurred for No. 2 dark northern
spring wheat (Minneapolis). The increase in prices was interrupted
only by minor declines in October 1939 and in February 1940. (See
table 2.)
The dominant influences in this rise of wheat prices were (1) the
European war, at the outbreak of which prices shot up 26 percent be
tween August and September; (2) poor crop conditions both at home
and abroad; and (3) Government price-raising measures, particularly
the crop-loan program. Nearly 168 million bushels, or approximately
22 percent of the 1939-40 wheat crop, were placed under loan and
thus removed from commercial channels. In addition, the Govern
ment in September 1938 had instituted an export subsidy program,
under the provisions of which wheat was purchased at domestic
prices and resold for export at the lower world prices.
Partly as a result of these Governmental actions, prices advanced
during this period despite the existence in 1939-40 of both a record
world wheat supply of 5.5 billion bushels and an above-average
domestic supply consisting of a July 1, 1939, carry-over of 252 million
bushels and a crop of 751 million bushels in the 1939-40 crop-year.
Beginning in April 1940, however, wheat prices began to move
downward, influenced by better crop prospects for the coming season,
the invasion of the Low Countries, and the capitulation of France.
This decline, partly seasonal in character, continued through August
1940, by which time wheat prices as a whole were only 5 percent above
the August 1939 levels. In Kansas City, the August 1940 price was

Wartime Prices—August 1939 to Pearl Harbor

69 cents per bushel, compared with an August 1939 quotation of 64
cents, while in Minneapolis, No. 2 dark northern spring wheat was
selling at 72 cents per bushel—2 cents below the pre-war level. The
rate of decline was slowed down during May and June, however, as a
result of the establishment in May of fixed minimum futures prices
based on the close of May 18, which remained in effect until June 14.
At the same time a loan rate of 65K cents a bushel was established.
This was slightly above the minimum futures prices. The decline
was further softened by the establishment of minimum prices in
Canada and by the movement of wheat into loan, 158 million bushels
thus being removed from the market from June tnrough August 1940.
The period from August 1940 to December 1941 was one of gen
erally increasing wheat prices; by December 1941 they had advanced
to a level 76 percent above that of August 1939. The increase was
due primarily to the operations of the loan program, to speculation,
to new legislation affecting prices, and to the increase in consumer
incomes resulting from the defense program.
This price advance occurred even though the 1940-41 domestic
wheat supply again amounted to more than a billion bushels. The
carry-over on July 1, 1940, was 282 million bushels and the produc
tion for the crop-year 1940-41 was 817 million bushels. The carry
over on July 1, 1941, reached a record high of 387 million bushels
which, combined with the production of 961 million bushels of 1941
wheat, yielded a supply of 1,348 million bushels for the 1941-42 cropyear, the largest in history. Furthermore, this rise in prices occurred
in spite of the curtailment of foreign markets. During 1938-39, with
the aid of the Government export subsidy program, exports totaled
116 million bushels; in 1940-41 they had decreased to 34 million
bushels, and during the crop-year 1941-42 continued only in small
volume.
The dominant influence behind rising wheat prices throughout the
period from August 1940 to December 1941 was the loan program.
Approximately 34 percent of the 1940 crop was placed under loan,
thus decreasing market supplies by 278 million bushels. The par
ticularly rapid price advance in the spring of 1941 was caused primarily
by speculative buying, as the market anticipated the passage of
legislation raising the loan rate to 85 percent of parity. The effects of
the loan program upon the market for wheat were summarized by the
Department of Agriculture in May 1941 as follows:
During most of the marketing year (July 1940 to June 1941) for the 1940 crop,
the loan program has held wheat prices at an average of about 25 cents a bushel
above the competitive level which normally would have prevailed under the
demand and supply conditions of this period. Recently the difference between
the actual price and that which would have prevailed without any loan program
has been even greater, perhaps 40 cents a bushel, as a result of the speculative
anticipation of higher loan rates on the 1941 crop.2

In May, Congress passed the legislation raising the loan rate to 85
percent of the parity price of wheat and freezing Government-held
stocks.3 Also in May, the President established import quotas on
wheat and wheat flour in order to protect the rising domestic prices
from the competition of foreign supplies.*
2 The Demand and Price Situation, May 1941. (U. S. Department of Agriculture.)
* The bill designed to prevent the sale of Government-held stocks of agricultural commodities was vetoed
by the President in September 1941.

Chapter II.—Foods

The new loan rate of 98 cents a bushel on the 1941 crop, compared
with 65% cents on the previous crop, became effective June 6. As the
farm price of wheat at no time between June and November 1941 was
as high as 98 cents a bushel, a large amount of wheat went into loan.
Thus, 336 million bushels, or 34 percent of the 1941 crop, was removed
from commercial channels during this time. By September d941*
wheat prices reached a peak of 65 percent above their pre-war levels*
After a slight decline in October, owing to German military successes in
Russia, prices recovered in November to levels 64 percent higher than
in August 1939. In December, wheat prices in both Kansas City and
Minneapolis had reached a level of above $1.21 per bushel, compared
with pre-war quotations of 64 and 74 cents, respectively.
CORN

Between August 1939 and May 1940, com prices, reflecting the
immediate war stimulus felt by most farm prices, generally increased,
and in May 1940 were 49 percent higher than in August 1939. This
increase occurred despite a production in the 1939-40 crop-year
(October 1939 to September 1940) of 2.6 billion bushels of corn, 13
percent above the average for the previous 10 years. The stimulus
to prices resulted principally from the operation of the corn loan pro
gram and from drought conditions in the spring of 1940 which sub
stantially reduced the amount of fall and winter forage crops at a.
time when there were large numbers of livestock on farms. Between
December 1939 and April 1940, 303 million bushels of corn were placed
under loan, thus increasing loan stocks to 550 million bushels, or 39
percent of the total corn supply available on April 1, 1940.
For the next 10 months (May 1940 to February 1941), however*
the trend was reversed as corn prices declined moderately—by 5 per
cent—principally because of the large corn supplies available in 1940.
However, prices remained 41 percent above their pre-war levels.
Partly as a result of the big 1939-40 crop, the October 1, 1940, carry
over was exceptionally large, amounting to 694 million bushels. This
carry-over, plus a 1940-41 crop of 2,450 million bushels, yielded a
total supply of 3,144 million bushels in the crop-year beginning
October 1, 1940, compared with a total supply of 3,185 million
bushels in the previous year.
That the decline in the price of corn from May 1940 to February
1941 was not more severe, as in the case of wheat, may be attributed
to a number of factors. First, the curtailment of world trade had
little effect upon corn, as exports of the grain had been negligible.
Second, approximately 80 percent of the corn supply is consumed by
livestock, and the number of livestock on farms during this period,
although smaller than in 1939-40, was larger than for several years.
Third, the price of corn was supported by the loan rate of 61 cents
per bushel on the 1940 crop, which became effective in December
and which was 4 cents higher than in 1939.
By February 1941 the price decline had run its course, and between
that time and December 1941 corn prices generally advanced, in the
latter month going to a point 72 percent above their pre-war level.
This price rise, which occurred in spite of a new record supply of com
on April 1, 1941, of 1,423 million bushels, plus a carry-over on October
1 of 632 million bushels, was due in large part to the Government

Wartime Prices—August 1939 to Pearl Harbor

GRAINS
WHOLESALE PRICES
AUGUST 1939 • 100
IN O E X
2 2 0

W H EAT

IN O E X

2 0 0

180

160

140

120

100

8 0

A S 0
1939

N 0

J J

A S

N O

F M A M J J A S O N D

19 4 0

M J

1941

8 0

1942

CORN

IN D E X
2 2 0

IN D E X
9C C9 \0J

o n n

2 0 0

CSJyJ

1 8 0

180

160

14 0

140

12 0

1
0
1 C9 U

10 0

II O
U O
U

O O
w v/

1 939
UNITEO STATES DEPARTMENT OP LABOR
BUREAU OP LABOR STATISTICS

1 9 4 0

J F M A M J J
1941

A S O N

D J

A M

1942

Chapter 17.—Foods

“food-for-defense” program, which encouraged a larger production of
livestock and thus increased the demand for corn. Early in May
1941, shortly after the announcement of this program, corn prices
attained the highest levels since 1937. Also contributing to the
advance in corn prices was a certain amount of speculative activity
during the spring of 1941, in anticipation of legislation raising the
loan rate on the 1941 corn crop to 85 percent of parity. This legis
lation was passed in May 1941, with the result that a loan rate of
74.8 cents per bushel was to become effective on December 1, 1941.
The rate of advance of corn prices slowed during the summer and
early fall of 1941, owing to normal seasonal pressure on prices at this
time of year. During the first part of October, corn prices declined
because of the large estimated production for 1941-42 (2,675 million
bushels). However, in the latter part of the month and in November,
prices advanced contraseasonally, because of unfavorable weather
conditions in the corn belt, the higher loan rate, and the greater
demand for corn resulting from the increase in production of livestock.
BARLEY AND OATS

The price of barley and oats generally increased between August
1939 and April 1940. On the latter date, barley was 40 percent and
oats were 43 percent above their pre-war levels.
After this primary stimulus of the war had run its course, however,
the prices of both grains declined; by August 1940 barley had fallen
to 7 percent over its August 1939 position, and oats had dropped to
2 percent below the August 1939 level. This decrease was largely
caused by better crop conditions and larger supplies. The success
of the Nazi armies was also a depressing influence. In addition,
neither of these grains benefited from a Government loan program
until one was instituted for barley in June 1940.
The announcement of the loan rate for barley, and its increase
from 32 to 44 cents per bushel in June 1941, resulted in the removal
of 16 million bushels of barley from the commercial market between
that date and November 194i. As a result of the loan program and
the increased demand for all grains, the price of barley rose moder
ately, in spite of a 1941 supply which was the largest on record, and
by August 1941 reached a level 50 percent higher than in August 1939.
The price of oats rose until December 1940, at which time it was
30 percent higher than in August 1939. The price then fluctuated
irregularly, and in August 1941 was only 28 percent above its pre-war
level, as compared to 55 percent for wheat, 67 percent for com, and
50 percent for barley. Since the supply of oats had remained prac
tically unchanged between 1940 and 1941, a smaller crop being offset
by a larger carry-over, the failure of the price to advance in the same
degree as the other grains may be attributed in part to the lack of a
Government loan program for oats.
Beginning in September 1941, however, the price of both barley
and oats rose rapidly. This increase apparently reflected the an
nouncement on September 8 of the 1942 production goals for all
essential farm products, which included an expansion of hog slaughter
from 71 to 79 million head and an increase of cattle slaughter from
25 to 28 million head. By December 1941 barley prices were 122
percent above those of August 1939, while the prices of oats had
risen 78 percent during the same period.

Wartime Prices—August 1939 to Pearl Harbor

GRAINS
WHOLESALE PRICES
AUGUST 1 9 3 9 *1 0 0

UNITED ST AT ES DEPARTMENT OF L ABO R
8UREAU OF LABOR ST A T IST IC S__________

Chapter II.—Foods
T able 2.— G RAIN S: Wholesale Prices and Indexes, by K in d of Grains, August

1939-December 1941
[Source: U. S. Bureau of Labor Statistics]
Wheat

Com

Barley

Oats

Price per bushel
Price
per
Index i
Index
No. 2
Index
Index i2
dark (August bushel:
(August No. 2
(August No. 2 No. 3 (August
Malt
1939=
1939= yellow, yellow, 1939=
north
1939=
hard,
ing,
ern
100)
100)
100)
100)
Chi
Chi
Kansas spring,
Minne
cago
cago
City Minne
apolis
apolis
Price per bushel

Year and month

1939

August.........................
September-..................
October........................
November...................
December..................

100.0
125.8
123.8
128.4
144.4

$0,642
.838
.825
.859
.979

$0.749
.923
.878
.911
1.022

100.0
129.5
126.5
122.3
133.2

$0,366
.474
.463
.448
.488

100.0
129.4
109.7
113.6
127.9

$0,451
.576
.500
.512
.571

$0,442
.577
.482
.503
.569

100.0
120.6
115.5
128.2
134.5

147.3
146.0
147.5
154.1
134.9
117.9
108.3
105.4
112.8
121.8
125.3
125.1

.999
.991
1.010
1.071
.925
.785
.701
.693
.754
.814
.843
.843

1.055
1.033
1.036
1.081
.953
.828
.774
.728
.789
.858
.877
.876

140.4
139.3
134.9
140.4
140.4
120.6
113.9
107.2
110.3
110.7
134.9
140.4

.514
.510
.494
.514
.514
.441
.417
.393
.404
.405
.494
.514

131.9
130.3
130.5
143.0
148.8
147.5
146.7
146.8
144.5
147.2
147.3
141.4

.591
.584
.584
.639
.680
.664
.658
.652
.647
.661
.670
.645

.586
.578
.580
.637
.652
.653
.652
.656
.643
.653
.648
.621

140.2
140.1
142.6
143.0
131.3
115.6
107.7
98.8
104.2
113.6
129.1
129.7

125.6
118.7
126.1
131.2
139.6
144.2
146.2
154.1

.834
.784
.838
.875
.908
.950
.989
1.065

.896
.833
.895
.941
.979
1.007
1.012
1.049
1.136
1.061
1.124
1.219

142.4
134.5
135.4
147.5
154.4
151.0
139.1
150.3

.521
.492
.496
.540
.565
.553
.509
.550

145.0
140.9
146.2
156.2
163.9
165.0
165.8
167.2

.663
.756
.811

156.0
161.1
171.6

.654
.638
.663
.703
.737
.740
.742
.751
.757
.706
.740
.769

.641
.622
.644
.692
.727
.733
.737
.742
.749
.688
.703
.762

128.5
123.9
128.3
128.5
123.9
122.0
120.3
127.7
153.5
147.5
160.1
177.9

m o

January.......................
February.....................
March..........................
April............................
May.............................
June.............................
July..............................
August.........................
September...................
October........................
November...................
December....................
1941

January......................
February.....................
March..........................
April.............................
May.............................
June.............................
July..............................
August.........................
September...................
October........................
November...................
December..................

164.8

159.6
163.5
176.3

1.141

1.124
1.132
1.210

188.0

181.1
206.6
221.6

.688

168.8

i Based on quotations for wheat in 5 different areas, including Kansas City and Minneapolis,
s Based on prices of both No. 2 and No. 3 yellow corn.

Cereal Products
Between August 1939 and November 1941, the prices of cereal
products were much more staple than those of grains, although price
movements of the two groups of commodities were generally parallel
in direction. While the following analysis is limited to price changes
of the more important cereal products, it is also representative of the
price trends of cereal products in general during the Defense Period.
WHEAT FLOUR

The price of wheat flour began to rise after the outbreak of war
in Europe, and by December 1939 the composite index of wholesale
wheat-flour prices was 28 percent higher than in August. After a
slight decline in the winter of 1940, prices recovered and by April
were once again 28 percent above the pre-war level. The decline
was then resumed and between April and August 1940 the price of

Wartime Prices—August 1939 to Pearl Harbor

wheat flour fell to a level 4 percent below that of August 1939. In
August 1940 flour prices again turned up, following the trend of the
general market, and the ensuing 16 months, through December 1941,
formed a period of almost continuously rising prices By September
1941 the wholesale price of flour had reached its highest point after
the outbreak of the war—36 percent above the August 1939 figure.
There was a small decline between September and November 1941,
but prices rose again in December to a level 41 percent above the
pre-war level.
The price fluctuations of wheat flour tend to parallel those of wheat,
because the cost of wheat constitutes from 50 to 60 percent of the
total cost of manufacturing wheat flour and represents approximately
90 percent of the cost of materials.4 Therefore, the causal factors
influencing wheat prices, which are described in the preceding section
on grains (p. 15), also directly affect the price of flour.
BREAD

Bread prices, which are generally stable, experienced few changes
during the war period. Between August 1939 and January 1940,
wholesale bread prices remained virtually unchanged. In February
1940, however, they were raised in a number of cities, chiefly in the
Northeast, a move attributed by leading bakers to the higher cost of
flour. The composite index of bread prices consequently rose 10
percent, remaining at the higher level through October 1940. In
November 1940 the increases were rescinded and bread prices fell
to their August 1939 level, remaining there through August 1941.
This reduction followed the sharp drop in flour prices between Febru
ary and August 1940. After the sustained increases in flour prices
during 1941, bread prices were again raised in many areas in Sep
tember and October, and, although there was a slight decline in the
next 2 months, the December level was still 10 percent above that
of August 1939.
The relative stability of the price of bread results in part from its
wide distribution as a branded manufactured product. The major
baking companies, which control a substantial proportion of the busi
ness in the Nation’s large bread-consuming centers,5 widely advertise
their trade-marked products, and in common with most other pro
ducers of such commodities, change their prices infrequently.
The spread between the retail price of bread and the costs of its
ingredients, representing the margin absorbed by the baking and
retailing functions, is estimated regularly by the Department of
Agriculture.6 During the first 8 months of 1939, the combined margin
of the baker and retailer averaged 5.66 cents, compared with 5.31
cents for the 10-year period 1929-38. Thus, in August 1939 the com
bined margin was at a relatively high level, comparable to that pre
vailing during the 1920’s. Between August 1939 and January 1940,
while retail bread prices remained the same, prices of wheat and wheat
flour rose and bakers’ margins narrowed somewhat. In spite of this*
* In 1939, according to the Census of Manufactures, the cost of wheat amounted to 68.5 Percent of the value
of product of the flour and other grain-mill products industry.
* In 1933 the 10 largest bakers made and sold approximately 31 percent of all the bread produced and sold
in the United States. Their share of the business in big cities was undoubtedly greater. (Federal Trade
Commission, Agricultural Income Inquiry, 1937, Part I, p. 286.)
« Data available upon request to the Consumers’ Council Division, Agricultural Marketing Adminis
tration, U. S. Department of Agriculture.

Chapter II.—Foods

decline, however, the margin for the entire year 1939 was 5.51 cents,
or 0.20 cents above the 10-year average.
In February 1940, when the retail price of bread advanced 10
percent, bakers’ margins increased, becoming still larger in the spring
and summer of 1940 when wheat-flour prices were falling. Although
margins once more narrowed during the last 4 months of the year, as a
result of the rising cost of flour and a 10-percent decrease of retail
bread prices from October to November, their 1940 average was 5.59
cents, well above that of the 1929-38 period.
As flour costs continued to rise, bakers’ margins generally narrowed
from January through July 1941. This led the bakers in July to plan
an increase in their selling prices. The intended action was met with a
statement from Price Administrator Henderson that the advance in
the cost of ingredients warranted a retail-price increase of only %cent
for a 1-pound loaf. He asked that no increase greater than 1 cent a
loaf be initiated. In August, most bakers raised the retail price of
bread 1 cent a loaf throughout the East and Middle West. This price
advance halted the decline in margins, which widened during the 3
subsequent months and by October had become larger than in August
1939. The average margin for 1941 was 5.41 cents which, although
smaller than in 1940, was above the 1929-38 figure. Although the
increased price of bread applied to loaves of all sizes, the standard size
in most cities was 1 pound. In Omaha, St. Louis, and Milwaukee,
where the price was not altered, the size of the loaf was reduced.
At the annual convention of the American Bakers Association in
mid-October 1941, a representative of the Office of Price Administra
tion advised the industry to cut operating and distributing costs, but
warned that any attempt to affect such reduction by decreasing the
weight of standard products would result in Government action. At
the same meeting, a spokesman for the Office of Production Manage
ment stated that no priority ratings would be issued to bakers for new
smaller baking pans, and that any widespread attempt to make
smaller loaves in normal-sized baking pans would be countered by
appropriate Government action.7
CEREAL BREAKFAST FOODS

Although wholesale prices of cereal breakfast foods are similar in
their movements to prices of grains, they fluctuate within a much
narrower range. By December 1939 the composite index of cereal
prices charged by producers had risen 5 percent. It then declined
slowly during 1940 to a level in September about 1 percent below that
of August 1939. This drop was followed by 9 months of comparative
stability during which the price did not fluctuate more than 3 percent.
In the fall of 1941, however, a moderate upturn set in, prices rising by
December to a point 12 percent above the pre-war level.
This relative stability was largely due to the fact that breakfast
cereals, like bread, are usually branded, advertised products. More
over, the grains used in their production comprise only a small per
centage of their cost. Following the rising cost of grains in 1941,
however, the sizes of the 8-ounce and 13-ounce boxes of one widely
sold brand of corn flakes were reduced in June to 6 ounces and 11
ounces, respectively, while the price per box remained the same.
?New York Times, October 15,1941:

Wartime Prices—August 1939 to Pearl Harbor

CEREAL PRODUCTS
WHOLESALE PRICES
AUGUST 1939 • IOO

S W T f * DEPARTMENT OP LABOR

m m m op lab&r statistics

Chapter II.—Foods

In June, also, the size of another widely advertised breakfast cereal
was decreased from an 8-ounce box to a 6-ounce box, with no change,
in price.
CRACKERS

The wholesale price of crackers rose moderately after August 1939*
and by February 1940 had reached a point 11 percent above the pre-.
war figure. From January to July it gradually fell, declining to a level
4 percent above the pre-war position, where it remained through
September 1941. Following slight increases in the last 3 months of
1941, the price of crackers at the end of the Defense Period was &
percent higher than in August 1939.
Crackers, like breakfast cereals, are generally branded, advertised
products, and prices remain comparatively stable over extended periods,
of time. Furthermore, as in the case of cereals, the grains used in
the manufacture of crackers represent only a small proportion of their
total cost.
T able 3.— CEREAL PRODUCTS: Wholesale-Price Indexes, August 1939-

December 1941
{Source: TJ. S. Bureau of Labor Statistics]
Wholesale-price indexes (August 1939=100) of—Year and month

1989

Alienist
September_____________________________________
October................... ........ ....................... ............................
November______________________________________
December
1940

Jannarv
___
______
February
_
_
March_________________ _______________________
April.....................................................................................
May__________________________________________
June_____________ __________________ _____ ____
J u ly .._______ _________________________________
August
_
__
September_____________________________________
October_______________________________________
November
___
.
December _
_
__________ ____
1941

Jamiarv
February...................................... .....................................
March______________ __________________________
April...................................-_______________________
May_______ _____ ____ ____________________ ____
June_____________________ ______ ______________
July......................................................................................
August________________________________________
September_____________________________________
October_______________________________________
November______________________________________
December______________________________________
* Average of 10 quotations.
* Average of 5 quotations.

Wheat
flour *

Bread *

Cereals3

Crackers3

100.0
121.3
118.1
118.7
128.1

100.0
100 0
100.0
100.0
100.0

100.0
103.6
103.9
104.4
105.4

100.0
103.7
108.4
108.4
108.4

126.9
123.5
124.2
127.5
106.3
104.5
100.3
96.3
100.7
105.7
107.2
105.3

99.9
109.9
109.9
109.9
109.8
109.9
109.9
109.9
109.9
109.9
99.9
99.9

104.8
103.7
103.3
102.9
102.5
101.8
100.8
99.7
99.3
100.0
102.5
103.0

110.2
110.6
109.0
108.4
108.4
106.2
104.0
104.0
104.0
104.0
104.0104.0

106.0
101.4
106.2
111.0
116.5
122.7
124.8
130.0
135.5
132,1
132.2
140.8

99.8
99.8
99.8
99.8
99.8
99.8
99.8
99.8
110.0
114.0
110.5
110.3

102.8
102.3
102.1
102.3
101.2
101.9
101.9
103.7
106.9
108.1
109.3
111.8

104.0.
104.0
104.0
104.0
104.0i
104.0
104.0.
104.0
104.0
104.6
105.1
107.8

3 Average of 3 quotations.
< Average of 2 quotations.

Wartime Prices—August 1939 to Pearl Harbor

Livestock and Meats
Prices of both livestock and meats rose rapidly immediately follow
ing the outbreak of war in August 1939, and subsequently declined,
until by December they were below their pre-war levels. Livestock
prices preceded meat prices in the rise that followed, but by the late
spring of 1940 both groups were advancing, and their movements
continued to be roughly parallel throughout the remainder of the De
fense Period. Despite a seasonal decline during the fall of 1941, the
prices of both livestock and meats in November remained substantially
above their August 1939 levels.
Wholesale prices of livestock and meats are closely related, as the
cost of livestock represents approximately 80 percent of the total
cost of producing meats. The prices that meat packers pay for
animals in the livestock market and the prices at which the products
are sold in the wholesale meat market move together without an
appreciable time differential, although the degree of fluctuation in the
two markets naturally may differ to some extent. Since the factors
affecting livestock and meat prices are essentially the same, price
movements of livestock have been briefly summarized below, while the
more detailed analysis following is confined to a discussion of wholesale
meat prices.
LIVESTOCK

After a rapid upturn at the beginning of the war in Europe, the
average price of livestock declined by December 1939 to a point 3
percent below the August 1939 level. The price of hogs, which rose
31 percent—from $5.75 to $7.54 per 100 pounds—between August
and September, fell back to $5.15 in December; on the other hand,
prices of steers and lambs, which showed relative advances in Septem
ber only one-half as great as for hogs, remained in December well
above their respective pre-war levels of $9.26 and $7.93 per 100
pounds.8 (See table 4.)
Thereafter livestock prices moved irregularly upward through
September 1941, when the average price reached a position 53 percent
above that of August 1939, by far the highest point attained during
the Defense Period. At that time, prices of hogs vrere 99 percent and
lambs 38 percent above their pre-war levels. Steer prices, although
26 percent above their August 1939 level, were 7 percent below a peak
of $12.61 per 100 pounds reached in December 1940.
In October and November, livestock prices fell, a normal behavior
at that time of year, in response to seasonally heavy marketings; but
the average price remained 37 percent higher in November 1941 than
in August 1939. In December, while the price of hogs had dropped
back 8 percent from its September peak, steers and lambs reached their
highest levels of the period—$12.75 and $11.20 per 100 pounds,
respectively.
8 Prices quoted are for steers, good to choice, Chicago; hogs, good to choice, Chicago; and lambs, native,
fair to good, Chicago.

Chapter II.—Foods

T able 4.—LIV ESTO CK : Wholesale Prices and Indexes, August 1939-Decemher 1941
[Source: U. S. Bureau of Labor Statistics]
Wholesale prices (per 100 pounds)of—
Index
(August
1939=100):
Livestock1

Year and month

1939

Ausrust__ _ _
September...................................... ....................................
October....... ................... ...................................... ...........
November___________ ______ ___________ ______ _
December
mo

January.
February........ ........ ......... .................................. ..............
March......... ..................... ......................—............ ..........
April................................. ................................................ .
May........................ ...........................................................
June____________________________________ ______
July.............................................. .....................................
August..................................................................... ...........
September...........................................................................
October____________ ___________ _______ _______ _
November......................................................... ................
December
_
_
m i

January...........
February _
March........................................................ ................... .
April.................... ................... ................. ......... ...............
M ay.................. ................... ..........................................
June___________________ ____________ _______ ___
July..................................................... ................................
August________________ _____ __________________
Septem ber..__________________________ _____ __
October............ ...................................................................
November...... ...... ............. ...............................................
December______________ ______________ _________

Steers,
good to
choice,
Chicago

Hogs,
good to
choice,
Chicago

Lambs,
native,
fair to
good,
Chicago

100.0
115.6
106.8
100.2
96.7

$9.263
10.681
10.070
9.856
10.000

$5.750
7.544
6.970
5.950
5.150

$7.925
9.069
8.995
8.838
8.381

101.8
99.4
101.7
103.6
105.5
98.0
105.8
108.3
109.7
107.0
105.9
110.2

10.435
10.525
11.344
11.215
10.894
10.331
11.015
11.325
11.465
12.094
12.206
12.610

5.250
4.925
4.944
5. 455
5.663
5.038
5.990
6.225
6.585
6.413
6.238
6.420

8.600
8.600
9.644
9.665
9.625
10.156
9.135
.8.750
8.535
8.875
8.875
9.055

125.8
124.9
125.0
130.6
133.3
140.9
149.9
150.0
153.2
143.2
137.3
147.6

13.081
12.550
12.455
12.306
11.969
11.880
12.013
11.925
11.710
11.438
11.056
12.745

7.688
7.600
7.530
8.419
8.969
9.875
10.938
10.881
11.415
10.706
10.306
10.505

9.775
10.094
10.290
9.875
10.438
11.125
10.750
10.875
10.975
10.625
10.569
11.200

i Includes cattle, hogs, sheep, and poultry.
MEATS

Immediately after the outbreak of the war, meat prices rose,
advancing 10 percent between August and September 1939. A
reaction followed, beginning in October and continuing through
December, when meat prices reached a position 6 percent below that
of August 1939, remaining near this level during January, February,
and March of 1940. This decline in the composite index of meat
prices is explainable largely by a fall in the prices of pork products,
accompanying a drop in hog prices, which in March 1940 were 14
percent below their pre-war level. In March 1940, fresh pork at
wholesale was 25 percent below its pre-war level, while ham was
17 percent lower and bacon 12 percent lower than in August 1939.
The prices of beef and lamb, on the other hand, did not decline to
the same extent during the winter, and had recovered somewhat by
March 1940, as had the prices of steers and lambs.
The general fall in wholesale meat prices between October 1939
and March 1940 was partly seasonal and partly a result of unusually
heavy livestock marketings and correspondingly large meat produc
tion during these months. The quantities of cattle, calves, sheep,
547953°—44----- 3

Wartime Prices—August 1939 to Pearl Harbor

and lambs slaughtered were not materially different from those of
previous years, but the hog slaughter was by far the largest since
1931-32. This, coupled with the seasonally large fall and winter
livestock slaughter, was reflected in the Federal Reserve Board index
of meat-packmg production. The index attained unusual heights
during this period, rising in December 1939 to a point far above that
for any previous December since 1924. Inasmuch as nonagricultural
income remained comparatively steady between October 1939 and
March 1940, the marked decline in meat prices during the period can
be attributed primarily to the great volume of meat production.
In the case of pork products the decline was more pronounced, and
longer continued, because of their greater supply.
In March 1940 wholesale meat prices began to move upward. The
advance continued with little interruption through September 1941,
when prices were 35 percent above the August 1939 level.9 Most of
the increase occurred during 1941, and the upward movement was
particularly rapid between May and September. This advance
resulted chiefly from the rise in consumer incomes which, as reflected
by the index of nonagricultural income, rose 27 percent between
March 1940 and September 1941. The rate of increase in these
incomes, as is evident on the accompanying chart, coincided rather
closely with the rate of increase in the average of meat prices.
The advance in meat prices was led by a sharp rise in the price of
pork products, which reflected a rise of almost 100 percent in the
price of hogs between August 1939 and September 1941. Fresh pork,
on the basis of Chicago quotations, was selling for 6>3 percent more at
wholesale in September 1941 than in August 1939; in the same period
ham rose 46 percent and bacon 63 percent.
The stimulus to pork prices provided by rising consumer incomes
was reinforced by Governmental purchases under the Lend-Lease
program, which was inaugurated on March 15, 1941, and applied to
hogs and hog products, but not to the other classes of livestock and
meats. Early in April 1941, the Department of Agriculture announced
that in order to implement the Lend-Lease program and secure ade
quate pork supplies for both the United States and Great Britain,
nog prices would be supported until June 1943, through open-market
purchases, at a level of $9 per hundred pounds. Between March 15
and September 27, 1941, the Government bought 537 million pounds
of pork products, or approximately 13 percent of the total amount
produced during that time, a large part of these purchases being
transferred to Great Britain. In addition, the impact of Government
purchases upon the prices of pork products was augmented during
1941 by a slight reduction in their supply, the output of hog products
during the first 9 months of 1941 being 3 percent less than in the
corresponding months of 1940.
The price of beef did not advance in the same degree as that of pork
between March 1940 and September 1941. In September 1941, the
price of steer carcasses at Chicago was only 17 percent higher than in
August 1939. Beef prices reached their peak for the entire period in
January 1941,28 percent above the pre-war level, but declined 12 per
cent during the next 2 months. Between March and September 1941,•
• There were small seasonal price declines in the latter part of May and in June of 1940, and also between
September and December 1940.

Chapter II.—-Foods

Wartime Prices—August 1939 to Pearl Harbor

however, a partial recovery occurred, steer carcasses advancing 4
percent.
The weakness of beef prices in 1941, especially from January to
March, was the consequence of large marketings of cattle. Between
January and September 1941, Federally inspected slaughter was 14
percent greater than in the corresponding months of 1940 and 24 per
cent greater than the average slaughter for those months during the
preceding 5 years. Furthermore, beef prices, unlike pork prices, re
ceived no direct stimulus from Government purchases under the LendLease program. The withdrawal of pork supplies from the domestic
market and the high prices of pork products, however, undoubtedly
strengthened the demand for beef.
T able 5.— M E A TS: Wholesale Prices and Indexes, by Product, August 1939-

Decemberl94l
[Source: U. S. Bureau of Labor Statistics]
Pork

Meats

Year and month

1989

Beef

Lamb

Price per pound
per
Price
Index1 Index
Index Price
(Chicago)
pound: Index
(Au
per
(Au
(Au
(Au pound:
Fresh,
gust
gust
gust
gust
carcass, 1939=
Fresh,
1939=
1939=* 1939=
Cured Cured
100):
steers,
Chi
100)
100)
Fresh Fresh* hams bacon 100)
Chicago
cago
100.0
109.9
101.6
96.6
93.8

100.0 $0.133 $0,203 $0,153
.155
.206
116.6
.165
.132
.159
99.2
.209
.114
85.7
.185 .152
.106
.146
.176
79.7

100.0
109.9
100.7
99.3
109.9

$0,151
.166
.152
.150
.166

100.0
106.3
98.1
100.0
88.6

$0,158
.168
.155
.158
.140

January...... ............................
February.................................
March.....................................
April........................................
May.........................................
June.........................................
July..........................................
August.....................................
September...............................
October....................................
November......... : ....................
December................................

94.8
92.8
93.9
96.6
100.1
95.9
98.9
103.3
107.2
102.6
103.4
104.6

78.9
76.7
75.2
80.5
86.5
80.5
89.5
99.2
105.3
92.5
92.5
94.7

.105
.102
.100
.107
.115
.107
.119
.132
.140
.123
.123
.126

.171
.173
.168
.168
.171
.173
.175
.178
.183
.183
.183
.183

.154
.143
.135
.131
.135
.129
.135
.139
.153
.157
.158
.171

107.3
99.3
105.3
109.9
112.6
109.3
116.6
121.2
127.2
123.2
125.8
127.8

.162
.150
.159
.166
.170
.165
.176
.183
.192
.186
.190
.193

94.9
104.4
112.7
113.9
116.5
126.6
105.1
122.2
106.3
94.9
94.9
93.7

.150
.165
.178
.180
.184
.200
.166
.193
.168
.150
.150
.148

mi
January....................................
February.................................
March......................................
April........................................
May.........................................
June.........................................
July..........................................
August............................ ........
September...............................
October....................................
November...............................
December................................

112.9
113.4
113.6
116.1
118.3
123.2
127.3
132.3
134.9
127.0
123.2
129.3

110.5
111.3
112.0
121.1
126.3
137.6
148.1
157.9
162.5
144.7
136.7
144.4

.147
.148
.149
.161
.168
.183
.197
.210
.216
.193
.182
.192

.200
.218
.218
.238
.248
.256
.275
.285
.296
.272
.265
.271

.189
.200
.203
.210
.224
.233
.236
.243
.249
.234
.225
.234

127.8
119.2
112.6
112.6
115.9
115.9
113.2
116.6
116.6
114.6
114.6
126.5

.193
.180
.170
.170
.175
.175
.171
.176
.176
.173
.173
.191

103.8
103.2
109.5
110.1
119.0
138.0
125.3
123.4
122.2
115.2
113.3
120.3

.164
.163
.173
.174
.188
.218
.198
.195
.193
.182
.179
.190

August................................... September............................ .
October........................ ..........
November...............................
December................................
1940

1 Includes beef, lamb, mutton, pork, veal, and poultry.
2 Includes hams, picnics, bellies, and loins.

The wholesale price of lamb carcasses between March 1940 and
September 1941 generally moved in its usual seasonal pattern, but with
an upward trend. Thus, lamb prices reached a seasonal peak in June
1940, a low in December 1940, and another peak in June 1941; by
September 1941 they were 15 percent higher than in September 1940,
and 22 percent above pre-war levels. No reduction in the supply of

Chapter I I .—Foods

lamb toot place during this period. The supply in 1940 was 1 percent
larger than the average of the previous 5 years, and, in the months
January-September 1941, 9 percent larger than the average for the
corresponding months of the previous 5 years. The rising trend in the
price of lamb, therefore, was undoubtedly due to the generally im
proved demand for meats, particularly between March 1940 and Sep
tember 1941.
T able 6.— M E A T : Production and Nonagricultural Income Indexes, August 1939—

December 1941
[Sources: Production—Federal Reserve Board; nonagricultural income payments—U. S. Department of
Commerce]
Indexes (August 1939=100) of—
Production1

Year and month
Meat
packing
Alienist

19S9

September
October_____________________________
November___________________ _______
December _
_ _
mo

Januarv
February____________________________
March______________________________
April________________________________
May________________________________
June________________________________
July____________________ ___________
August______________________________
September
.
......
October_____________________________
November___________________________

December

Januarv

•

m t

February____________________________

March
April_____________________________

May. ______________________________
Juno________________________________
July.................................................................
August______________________________
September___________________________
October_______________ ______________

November

........................... . .

December___________________________
1 Not adjusted for seasonal variation.

Pork and
lard

Beef

Nonagri
cultural
income
Lamb and payments
*
mutton

100
113
116
135
153

100
110
122
160
197

100
117
109
108
106

100
123
114
113
112

100.0
100.6
102.4
103.3
104.5

151
128
120
114
121
127
112
105
115
131
156
164

191
157
143
127
138
151
121
108
119
146
195
216

106
97
95
101
103
101
104
102
109
112
113
109

123
108
102
103
103
102
101
103
116
123
116
113

104.3
103.8
104.1
103.9
105.5
106.5
107.1
108.2
109.3
110.6
111.1
114.5

137
126
126
123
136
125
123
120
123
138
157
170

160
148
146
138
150
133
121
114
113
142
182
212

112
100
102
104
122
120
128
129
135
137
133
130

128
133
116
114
121
104
113
113
121
118
117
121

116.4
118.7
120.0
121.6
125.2
128.8
130.0
131.4
131.9
134.0
134.9
140.3

2 Adjusted for seasonal variation.

As is ordinarily the case, the month of September marked a tempo
rary turning point in meat prices; between September and November
they fell almost 9 percent in response to the seasonal increase in meat
supplies. In spite of this decline, however, meat prices in November
1941 were 23 percent above their pre-war levels and 19 percent higher
than in November 1940. This drop in prices was due principally to
the seasonal increase in production, since consumer purchasing power
and the demand for meats continued to advance.
The price decline from September to November 1941 was greatest
in the case of pork, which fell 16 percent, while lamb dropped 7 per
cent. The price of beef weakened in October, the month of largest
cattle slaughter, but recovered during November as the volume of

Wartime Prices—August 1939 to Pearl Harbor

slaughter decreased. In December, quotations for meats moved up
ward appreciably, the average price advancing to a level 29 percent
above that of August 1939.
D airy Products and Eggs
DAIRY PRODUCTS

Prices of the different products derived from whole m ilk10 are
closely related and may be treated together. In general, the price
of fluid milk and the prices of the manufactured dairy products
(butter, cheese, and condensed and evaporated milk) are determined
by the supply of whole milk currently available, by the level of con
sumer incomes, and (particularly for milk) by the operation of local
price-marketing agreements. Egg prices, similarly, are largely af
fected by the level of consumer incomes. In the case of both dairy
products and eggs, production is highly seasonal in character, attain
ing a maximum in the spring and early summer and tapering off to a
minimum during the fall and early winter.
In the first 2}{ years of war, August 1939 to December 1941, the
prices of dairy products and eggs moved upward substantially. This
general advance, occurring despite an increase in production that
carried output to record levels, resulted principally from rising
civilian purchasing power and from Government purchases under the
Lend-Lease program.
BUTTER AND CHEESE

Between August 1939 and January 1940 butter and cheese prices
rose 32 percent and 25 percent, respectively. In both cases the advance,
which was more than seasonal, was apparently caused by the rising
level of consumption and the reduction of storage stocks from previous
record holdings.
In the first half of 1940 butter and cheese prices declined slightly
more than seasonally, owing to a slackening of industrial activity and
an exceptionally large production of dairy products. This downward
movement came to an end in June, and during the last half of the year,
butter and cheese prices again advanced in more than seasonal degree.
By December butter was 16.8 percent higher than during the previous
December and 46 percent above its pre-war level, while the corre
sponding percentage changes for cheese were 11 percent and 35 percent.
(See table 7.) This greater-than-seasonal rise was due not only to the
increase in consumer incomes, but also to unusually rapid withdrawals
from storage stocks during the previous months to meet a strong
demand.
In the first few months of 1941 the prices of butter and cheese began
a seasonal decline which ordinarily continues into June, the month of
peak production. Between March and June 1941, prices of these
two products advanced contraseasonally, despite a record volume of
output. This unusual movement, partly owing to a greater con
sumer demand, was intensified by large purchases of butter and
cheese in May, June, and July for storage purposes and by the anio “Whole” milk should not be confused with “fluid” milk. Whole milk is the raw unprocessed milk
sold by the farmer, fluid milk the pasteurized milk sold by the distributor. Whole milk is the raw material
from which fluid milk, butter, cheese, and other products are derived.

Chapter II.—Foods

DAIRY PRODUCTS

WHOLESALE PRICES AND PRODUCTION
AUGUST 1939■ IOO

1 9 3 9
UNITED STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS_________

1 9 4 0

1941

19 4 2

PRODUCTION, UNITED STATES DEPARTMENT OF AGRICULTURE

Wartime Prices—August 1939 to Pearl Harbor

nouncement on April 3 of a program of Government purchases of
“ food-for-defense,” under the provisions of which very large quanti
ties of dairy products, including cheese, were purchased by the Gov
ernment for shipment to Great Britain.11
The price of cheese continued to advance in July and August, while
the price of butter remained at approximately its June level. In
August 1941, at the close of 2 years of war, the price of butter was 48
percent higher than in August 1939; the advance in the price of cheese
during the same period amounted to 61 percent.
Cheese prices increased further during the fall of 1941, and in
December were 79 percent above the pre-war level. This price ad
vance occurred largely because of substantially increased Govern
ment purchases which, from March 15 through November 1941,
accounted for approximately 19 percent of cheese production. The
fact that butter was not purchased by the Government in significant
amounts at this time resulted in a proportionately smaller increase in
butter prices; in December 1941, they were approximately 46 percent
above the August 1939 level.
FLUID MILK

In general, the wholesale price of fluid milk varies with the price
paid by distributors to the farmers for whole milk. The basis for the
determination of fluid milk prices varies locally to a great extent.
In many important milksheds, for example, the price paid to the
farmers for whole milk is determined by formulas established under
the terms of the Agricultural Marketing Agreement Act of 1937.
The large New York and Chicago markets are discussed here as being
representative of such milksheds, although the agreements controlling
them vary from one locality to another.
In the New York milkshed the marketing agreement provides that
the price paid to the farmer for milk used as fluid milk shall vary with
the wholesale price of 92 score butter in New York, but shall not fall
below a certain minimum. The marketing agreement of the Chicago
milkshed stipulates that the price paid the farmer for milk used as
fluid milk shall vary with the wholesale price of 92 score butter in
Chicago and with the wholesale price of “Twins” or “Cheddars”
cheese in Plymouth, Wis.12 In both milksheds seasonal differentials
in the price paid for milk are established.
Since the price of whole milk for fluid use is everywhere generally
affected by the prices of butter and cheese, in certain important areas
being specifically related to them by formula, the price of fluid milk to
distributor and consumers in turn tends to vary with the prices of
these two commodities for which trends have already been described.
In three leading cities—New York, Chicago, and San Francisco—
for which distributors, prices are reported to the Bureau of Labor
Statistics, the rise in fluid milk prices during the fall of 1939 was
slightly greater than seasonal, while the approximately seasonal
11 The prices of butter and cheese have been supported to a slight extent since 1939 by the operations of
the Federal Surplus Commodities Corporation (later named the Surplus Marketing Administration) and
the Dairy Products Marketing Association. The Surplus Marketing Administration purchases foods for
relief distribution. The Dairy Products Marketing Association purchases dairy products when their prices
are low and sells them when their prices are high. Purchases and sales by both agencies, however, have
been very small in relation to the total volume of these dairy products.
18As described subsequently, the basis for computing the price of fluid milk in Chicago was changed on
September 6,1941.

Chapter II.—Foods

decline, beginning in the early winter and continuing through June
1940, was followed by a more than seasonal upturn during the last
half of the year.
Throughout the fall of 1939 and the year of 1940 the production of
milk and dairy products was maintained at record levels. The down
ward influence of the large volume of production on prices was offset
by strong consumer demand, by Government purchases of butter, and
by the British Purchasing Commission’s demand for condensed,
evaporated, and dry skim milk.
In the early winter of 1941 milk prices began their usual seasonal
decline, which normally continues through June. In that year,
however, the decline, as in the case of butter and cheese, was arrested
in March when prices began to increase contraseasonally. The rise of
Chicago prices and of prices paid to farmers throughout the country
continued through June, ordinarily the month of lowest levels. In
New York, however, milk prices declined in April and May, owing to a
provision in the New York marketing agreement that a seasonally
lower price must be paid for milk from April through July. The
reduction under this provision outweighed the price increase which,
by the terms of the formula, would have resulted from the price
advance of butter. In May, however, the New York marketing agree
ment was amended to allow a rise in the price of milk, beginning in
June.
The contraseasonal price advance in the spring of 1941 and the
continued steady increase through December of that year, in spite of
new high records of production, carried the prices of fluid milk in New
York and Chicago to points 27 and 67 percent, respectively, above
their pre-war levels. The principal cause of this rise continued
to be the strong demand for dairy products resulting both from the
steadily rising level of consumer incomes and the increasing Govern
ment purchases under the food-for-defense program. Between April
and December 1941 large quantities of manufactured dairy products
were purchased for transfer to Great Britain at prices designed to
increase their production. This program stimulated fluid milk prices
in two ways; first, by raising the prices of manufactured daily products
upon which fluid milk prices depend, and second, by reducing materi
ally the supply of whole milk available for fluid use in several impor
tant milksheds, particularly in Chicago.
In addition, the demand for dairy products, and thus for milk, was
reinforced during the summer of 1941, when prices were seasonally
low, by unusually large cold-storage purchases to be held for the
higher winter prices. Prices in the Chicago milkshed were further
stimulated by an alteration in the marketing agreement. In accord
ance with the change, the price of fluid milk, as of September 6, was
no longer to be dependent directly upon the prices of butter and
cheese but instead was to be calculated on the basis of the average
price paid to farmers at 18 specified evaporated-milk plants in Michi
gan and Wisconsin, plus a stated differential. The adoption of the
new basis led to a considerable increase in prices, owing principally
to the large-scale demand for evaporated milk by the Government,
which purchased approximately 14 million cases between March 15
and November 30, 1941.
In the New York milkshed no fundamental change occurred in the
marketing agreement, but it was amended as of October 1 in order to

Wartime Prices—August 1939 to Pearl Harbor

raise the price of fluid milk, and the price of whole milk, thus com
pensating farmers for increased costs resulting principally Irom the
pronounced shortage of farm labor in the East and from the extended
drought.13
EGGS

Egg prices, like those of dairy products, undergo wide seasonal
fluctuations in response to seasonal changes of production. The
production of eggs reaches a maximum in April, declines rapidly
thereafter to a low point in November, and then increases again to
its April peak. Egg prices, in general, move inversely to the volume
of egg production, ordinarily reaching a low point in April and a
peak in November.
The price of eggs, as reflected in the Bureau of Labor Statistics
wholesale price quotations for “firsts, New York,” remained com
paratively steady during the first year of the war; the price in August
1940 being only 5 percent higher than the August 1939 level of 16.3
cents per dozen. During this 12-month period the ordinary seasonal
price movements prevailed except during the first 5 weeks of 1940,
when, as a result of cold weather, production slackened and prices
rose contraseasonally.
This relative stability of price resulted from the attainment of a
balance between an increasing production of eggs, which was especially
large in the spring and summer of 1940, and a generally improved
demand for farm products.
In the second year of the war, however, egg prices turned sharply
upward, and by August 1941 had reached a level of 28.3 cents per
dozen—74 percent higher than in August 1939. The increase in price
during the fall of 1940 was greater than seasonal and continued into
December, a month longer than usual. The price decline which
ordinarily occurs between November and May was, during 1941,
interrupted in February and March by contraseasonal price rises.
Prices continued to advance sharply in April, May, and June, ordi
narily the months during which they are at their lowest levels, while
in July and August they rose still further, though at a slower rate.
The extraordinary upturn in the price of eggs during the second
year of the war was due to the constant increase in consumer demand,
to large-scale purchases for storage, and to a decline in output, the
production of eggs being smaller in 1940-41 than in 1939-40. The
contraseasonal advance in price during the spring of 1941 was given
added impetus in April upon the institution of the “food for defense”
program. The Government announced that it would support the
prices of eggs and began to purchase them in large quantities for
transfer to Great Britain.
Egg prices advanced rapidly from August through November 1941,
but this increase was entirely seasonal, resulting from a decrease in
production. Nevertheless, wholesale egg prices in November 1941
reached a peak of 36.6 cents per dozen—54 percent above the level
of November 1939 and 124 percent above their pre-war figure. In
December, a seasonal decline lowered the level to 113 percent above
August 1939.
)s In 1941, 19 out of the 21 Federal milk-marketing orders were amended in order to raise the price of
whole milk.

Chapter II.—Foods

T able 7.—D A I R Y PRO D UCTS A N D

EGGS: Wholesale-Price and Production
Indexes, August 1939-Decemher 1941

[Sources: Wholesale prices—U. S. Bureau of Labor Statistics; production—U. S. Bureau of Agricultural
Economics]
Wholesale-price indexes (August
1939=100) of—
Year and month

Production indexes (August 1939=100)
of—

Milk, Milk, Eggs,
fluid fluid firsts Butter Cheese
Butter1 Cheese12 (New
(Chi (New (U. S.) (U. S.)
York) cago) York)

Milk, Milk, Eggs,
fluid fluid 3 total
(New (Chi- receipts
(New
York) cago) York)

1939

August.......... .
September__
October..........
November___
December___

100.0
113.1
118.7
124.0
124.7

100.0
113.7
122.8
122.4
122.4

100.0
109.5
117.0
117.0
117.0

100.0
112.4
116.9
119.2
109.9

100.0
116.7
127.4
145.4
125.9

100.0
81.1
73.3
67.7
71.4

100.0
86.1
81.4
63.3
60.9

100.0
106.2
106.9
97.9
107.4

100.0
103.4
104.1
118.8

100.0
87.5
72.0
68.9
88.1

131.8
125.2
121.6
117.8
115.8
112.5
113.4
115.8
119.1
126.7
137.9
146.3

124.6
122.0
112.1
109.4
109.2
110.6
114.1
115.4
116.1
122.7
130.6
135.3

117.0
117.0
117.0
117.0
104.4
104.4
104.4
104.4
104.4
104.4
111.2
111.2

112.7
108.2
105.4
103.0
95.9
95.5
110.6
111.5
112.7
118.1
125.6
121.5

132.0
144.3
108.3
106.4
106.2
101.8
100.9
105.1
127.3
137.2
147.3
161.4

76.0
75.6
82.4
89.1
113.8
122.9
112.1
98.9
87.0
81.7
69.8
75.1

61.7
64.4
79.3
92.2
129.9
138.3
126.5
109.3
97.0
90.3
72.8
69.6

112.2
110.6
133.8
145.4
170.0
176.9
149.2
128.0
112.4
112.6
99.4
106.8

127.8
127.0
142.7
144.0
152.4
160.8
143.1
129.5
122.9
123.0
116.4
132.8

102.2
101.4
165.8
171.6
176.1
142.6
126.5
96.9
87.1
86.9
76.8
78,4

130.5
129.6
132.5
140.3
149.7
151.0
147.9
147.5
153.0
147.9
149.7
146.3

128.7
125.0
124.8
135.3
143.5
148.2
158.9
161.3
166.8
178.9
179.0
178.5

111.2
111.2
111.2
104.4
95.9
102.7
111.2
119.0
119.1
126.8
126.8
126.8

111.6
110.7
111.6
117.8
118.3
119.9
134.6
136.6
156.6
163.4
165.9
166.6

119.0
108.3
118.2
138.3
145.4
158.5
166.3
173.0
184.7
196.5
223.9
213.1

82.3
78.9
90.3
98.6
130.0
129.3
118.6
103.4
93.1
81.9
69.5
71.1

74.4
74.9
91.9
106.3
147.0
158.1
142.4
130.9
123.5
117.2
101.3
103.7

112.0
106.8
134.5
151.5
183.9
177.6
132.1
132.7
122.6
120.3
108.9
116.8

146.7
139.5
161.0
163.4
186.3
174.8
157.6
150.7
135.3
134.0
127.2
140.8

110.8
110.1
130.8
164.4
156.4
131.1
119.1
82.7
86.5
76.9
55.9
89.8

1940

January............
February.........
March..............
April.................
M ay................ .
June................ .
July................ .
August..............
September.......
October............
November.......
December........

January..........
February___
March........... .
April...............
M ay.............. .
June................
July............... .
August.......... .
September__
October......... .
November__
December___

1 Average of 17 quotations.
* Average of 3 quotations.
3 September 1939=100. No figures for previous months available.

Fruits and Vegetables
During the first 2% years of war the wholesale prices of fresh and
canned fruits and vegetables generally rose as a result of increasing
consumer demand and Government purchases for the armed forces
and for shipments under the Lend-Lease program. Lend-Lease pur
chases for the most part offset the loss of export markets, and in some
cases provided a net gain in demand or an entirely new outlet.
FRESH FRUITS

Oranges.—After a rise of 17 percent between August and September
1939, the wholesale price of oranges declined sharply and in January
1940 was 25 percent below the pre-war level. (See table 8.) This
decline was largely seasonal in character, as large quantities of Florida
oranges are marketed during the fall and winter. During the ensuing
months the price rose and was 3 percent higher in June 1940 than in
August 1939. Until the end of 1940 the price fluctuated irregularly,
close to its pre-war level, while at the turn of the year there was

Wartime Prices—August 1939 to Pearl Harbor

another decline; during 1941 the price of oranges remained near this
low level, and in July of that year, after almost 2 years of war, oranges
were selling for 1.2 percent less at wholesale than at the beginning of
the war. Between July and August 1941, owing to a temporary short
age of market supplies, a sharp rise of 21 percent occurred which carried
the price of oranges to a point 20 percent higher than in August 1939;
during the fall of 1941 prices fluctuated seasonally and in December
were 12 percent below the pre-war level.

Throughout the Defense Period the price of oranges was subjected
to the depressing influence of extraordinarily large supplies.14 Aver
age annual production for the 10 years 1929-38 was 56.1 million boxes.
Production in the 1938-39 crop-year was 78.5 million boxes; in the
1939-40 crop-year, 75.7 million boxes; in the 1940-41 crop-year, 84.1
million boxes; and the indicated production for the crop-year 1941-42
was 84.5 million boxes, a new record high.
The large volume of output during this time exerted a downward
pressure on the price of oranges which offset the stimulus of strength
ening demand provided by the growing purchasing power of con
sumers and reenforced by Government purchases. Between July 1939
and August 1941 the Government bought approximately 2.4 percent
of the combined output of the 1939-40 and 1940-41 crop-years for
purposes of relief distribution and for transfer under the Lend-Lease
program to countries fighting the Axis.
Lemons.— After rising in the fall of 1939, the wholesale price of

lemons declined, and during 1940 and 1941 fluctuated seasonally at
levels which were, for the most part, below that of August 1939. The
price of lemons in November 1941 was 9.3 percent below the pre-war
level.
As in the case of oranges, lemon prices were depressed during these
2 years by record-breaking levels of output. Average annual pro
duction for the years 1929-38 was 8.2 million boxes; while production
in the 1938-39 crop-year was 11.1 million boxes, in the 1939-40 cropyear 11.9 million boxes, and in the 1940-41 crop-year 17.1 million
boxes. The 1941-42 crop-year production was estimated in December
1941 to be 14.6 million boxes.
The effect of these large supplies upon price more than offset the
stim ulus of rising consumer purchasing power, which during m ost of
the 2%-year period was not supplemented by any Government
purchases of lemons.
Apples.— Between August 1939 and June 1940 the wholesale price
of apples advanced 109 percent, a considerably greater than seasonal
increase. The rise in price occurred despite a large production,
am ounting to 143.1 million bushels, in the 1939-40 crop-year (July
through June), compared with an average production for the previous
5 years of 125.3 million bushels. Furthermore, exports of apples
during this crop-year were only 3.2 million bushels, or about 2 percent
of the amount produced, whereas in the previous crop-year (1938-39)
approximately 10 percent of the amount produced was exported.
In spite of these large supplies a price rise occurred between August
1939 and June 1940, owing mainly to the ability of consumers to
increase their purchases at rising prices. During this time, also, the
u The supplies of grapefruit, which compete with oranges for the consumer’s dollar, were also very large
at this time. The 1939-40 and the 1940-41 grapefruit crops were, respectively, 60 percent and 96 percent
greater than the average annual crop for the 10 years 1929-38; the indicated 1941-42 crop was 89 percent greater
than the 1929-38 average.

Chapter II.—Foods

Government, through the Federal Surplus Commodity Corporation,
bought 9 million bushels or more than 6 percent of the 1939-40
crop. The loss of export markets was offset to a considerable extent
by these purchases.
During the 1940-41 crop-year the usual seasonal price movements
took place—a decline in the latter half of 1940 and a rise in the first
half of 1941—the price in the 1940-41 crop-year averaging 10 to 15
percent higher than in the previous year. The principal cause of
the higher price, other than improved consumer demand, was a 20percent reduction in the amount of apples produced. Furthermore,
Government purchases remained large, amounting to approximately
7 million bushels in the 1940-41 crop-year, and an additional 5.2
million between July and November 1941. The combined effect
of these factors more than offset the further loss of export markets.
In November 1941 the price of apples was 20 percent higher than in
November 1940 and 83 percent higher than at the beginning of the
war, and further price increases occurred in early December.
Bananas.—Prices of bananas fluctuated very widely during the
Defense Period, in response to changes in the quantity and in the
condition of bananas which reached American ports. Throughout
most of 1941 price levels were high and in October reached a point
71 percent above that prevailing in August 1939. In November
and December the price of bananas dropped sharply.
The shortage of shipping space, which was the chief limit upon
supplies in the United States, became more and more pronounced as
the National Defense Program progressed. In the year from July
1939 through June 1940, 54.1 million bunches of bananas were im
ported. This figure was close to the annual average (54.5 million
bunches) for the previous 5 years. In the year July 1940 through
June 1941, imports were reduced to 51.7 million bunches. Contribut
ing to this decline was the fact that the United Fruit Co. had been
forced to terminate its charter of a number of merchant vessels
owned by Great Britain.
DRIED FRUITS

The average wholesale price of dried fruit, as represented by the
composite price of dried apricots, prunes, and raisins, rose 28 percent
between August and September 1939, as consumers, fearing war
shortages, bought heavily. After September, however, the price
declined steadily and in April 1940 reached its pre-war level, remain
ing at this level through August 1940. The decline was caused both
by the production of ample supplies of dried fruit, especially of
apricots and raisins, and by a drastic curtailment of foreign demand
beginning early in 1940. Ordinarily about 40 percent of the dried
fruit is exported, chiefly to the United Kingdom and to Europe.
From August 1940 to December 1941 a considerable rise occurred
in the price of these fruits, amounting to 70 percent in the 16-month
period. A number of factors contributed to this increase. The
production of dried fruits was sharply curtailed in the 1940-41 cropyear, as is shown in table 8. Furthermore, a combined program of
Federal loans to growers and State control of supply limited the
amount of prunes and raisins available in commercial channels.
Also, in March 1941 the Government began purchasing large quantities
of dried fruit, much of it for transfer to England. Between March

Wartime Prices—August 1939 to Pearl Harbor

15 and August 30, 1941, the Government bought 95 thousand tons of
dried prunes, equivalent to about 53 percent of the 1940-41 pro
duction; 7,900 tons of dried apricots, approximately 60 percent of
the 1940-41 production; and 31,100 tons of raisins, about 18 percent
of the 1940-41 output. During the following 3 months (September
through November 1941) additional Government purchases of 40
thousand tons of prunes, 887 tons of dried apricots, and 18,376 tons
of raisins were made.
CANNED FRUITS

The wholesale prices of canned fruits are, as a rule, much more stable
than the prices of fresh fruits. Not only are canned fruits processed
and branded products, but the price which the earner pays for his
entire year’s supply of fruit is fixed in advance by contract, thus
enabling him to maintain a stable price for his products. From
August 1939 to March 1941 the composite wholesale price of six
canned fruits 15 varied within a range of less than 4 percent, and in
March 1941 the price was only 3.3 percent higher than in August 1939.
By November 1941, however, the price reached a point 25 percent
above August 1939, and by December 1941 it was 31 percent above its
pre-war level. This rise was due not only to the stimulus of increased
purchasing power, but also to the fact that wholesalers, retailers,
and even consumers purchased heavily to build up inventories in antic
ipation of higher prices. The Government also entered the market
to obtain supplies for its armed forces and for transfer to Great
Britain.
The advance in the wholesale price between March and December
1941 was especially pronounced in the case of canned apples which
rose 49 percent, and canned peaches which increased 54 percent.
These two canned fruits were purchased by the Government in largest
quantities, particularly for the Army. In July 1941 it was estimated
that Army and Navy requirements for canned apples and peaches
from the 1941 pack would amount to 10.2 and 4.1 percent, respec
tively, of the 1940 pack. The resultant rise in their prices was
largely responsible for the 1941 increase in the composite price of
canned fruits.
FRESH VEGETABLES

During the 2% years between August 1939 and December 1941, the
©omposite wholesale price of white potatoes, sweetpotatoes, dry beans,
and onions, while experiencing the usual wide seasonal fluctuations,
moved generally upward, with the result that in December 1941 it
was 52 percent higher than in August 1939. This increase, which
occurred despite somewhat larger than average production, reflected
both the growth in consumer buying power and the stimulus of
Government purchases.
The price movements of fresh vegetables are illustrated below by a
description of the behavior of the prices of white potatoes ahd of dry
beans, which together account for 81 percent of the value of these four
ve ‘ ables included in the Bureau of Labor Statistics index.
He potatoes.—The average wholesale price of white potatoes rose
44 percent between August 1939 and June 1940. The advance during
15Apples, apricots, cherries, peaches, pears, and pineapple.

Chapter IT.—Foods

this period was greater in Chicago, where prices rose from $1.09 to
$2.01 per 100 pounds, than in Boston, where the increase was from
$1.42 to $1.91 for the same quantity. This advance, though largely
seasonal, was also due in part to the influence of decreased supplies.
During the 1939-40 crop-year, potato production totaled 364.0
million bushels, compared to 371.6 million bushels in the previous
year and to an average of 366.9 million bushels during the 10-year
period 1929-38.
The price of white potatoes was marked by a greater than seasonal
decline during the summer and fall of 1940, after which it remained at
unusually low levels throughout the winter and early spring of 1941.
An uncommonly large intermediate crop, which came into the
market in July 1940, was the principal cause of the sustained low price.
Although the total production for the crop-year 1940-41 was only 3.9
percent greater than that for 1939-40 and 3.1 percent larger than the
1929-38 average, the presence of this large intermediate supply
exerted a downward pressure upon prices which more than offset the
influence of increased consumer purchasing power. The Govern
ment, in an effort to support prices, bought 5,275,000 bushels of
potatoes between July 1, 1940, and March 15, 1941, and during the
winter also paid growers 25 cents per 100 pounds to divert from com
mercial channels 19 million bushels which were subsequently used for
livestock feed and for the manufacture of starch.
Between May and June 1941 the price of potatoes rose 62 percent,
prices in both Boston and Chicago reaching their peaks for the Defense
Period—$2.23 and $2.21, respectively, per 100 pounds—in June.
This advance was so great that, even after a steep seasonal decline in
the 2 following months, the price in August 1941 was 16 percent
higher than at the beginning of the war. This sharp rise, which came
at the turn of the crop-year, was the result of a short intermediate
crop, 7 percent below the intermediate crop of the previous year.16 In
addition, prices received moderate support from continued Govern
ment purchases, which between March 15, 1941, and November 30,
1941, amounted to 2,292,758 bushels. By December 1941 the price
had risen to a level 24 percent above that of December 1939, and 43
percent above the pre-war level.
Dry beans.—From August to September 1939 the wholesale price of
dry beans rose 54 percent as consumers, fearing a war shortage of this
commodity, made heavy purchases. In October, however, the price
lost about half of this gain, and then continued to fall gradually, with
little fluctuation, to 15 percent above its pre-war level in March 1941.
The 1939-40 production of 14 million bags of dry beans was moder
ately above the 1929-38 annual average of 13.1 million bags; the 194041 production was considerably larger, 16.9 million bags, or 23 percent
more than the 1929-38 average. These large crops were primarily re
sponsible for the gradual decline in the price of dry beans from October
1939 to March 1941. In addition, with consumer incomes steadily
advancing, a movement developed toward the purchase of higher
priced vegetables. The price of dry beans began to advance rapidly in
March 1941, however, and by December 1941 had risen 70 percent to a
position 95 percent higher than the August 1939 level. The principal
cause of this price advance was the institution in March 1941 of the
18 The Agricultural Situation (U. S. Department of Agriculture), August 1941, p. 8.

Wartime Prices—August 1939 to Pearl Harbor

“food for defense” program. Although the Government had bought
substantial quantities of dry beans in the months before the outset of
this program, under its provisions the tempo of purchasing was acceler
ated. From March 15 to August 30, 1941, the Government bought
1,794,000 bags of dry beans, or slightly over 11 percent of the 1940-41
crop; from September through November 1941, 196,750 additional
bags were purchased. These purchases were made at a price of about
$5 per 100-pound bag, approximately $2 to $2.50 above the market
price in March. By the end of May the market price had risen to the
$5 level,17 and during the summer and fall it advanced beyond this
level to $5.99 in December 1941.
T able 8.—F R U IT S A N D VEG ETABLES: Wholesale-Price Indexes, Fresh, Dried,

and Canned9 August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]
Wholesale-price indexes (August 1939=100) of—
Fresh fruits

Year and month

Fresh vegetables

Aver
Oranges Lemons Apples Banan
as
age 1
1989

August...................................
September.............................
October..................................
November.............................
Decem ber............................
mo

January................................
February...............................
March.................................. .
April......................................
May.......................................
June.................................. —
J u ly ......................................
A u g u st................................
September.............................
October— .............................
November.............................
December ..............................
mt

January.............................. .
February...............................
March....................................
April......................................
May................. .....................
June.......................................
July........................................
August....................—...........
September................... ..........
October................... ......... .
November........................ .
December.................... ........

White Dry Sweetpota
pota Onions
toes 2 beans toes

100.0
117.4
103.8
107.5
91.3

100.0
111.0
106.6
115.8
101.7

100.0
124.9
128.1
130.6
138.3

100.0
107.8
124.1
115.7
135.8

100.0
106.4
98.8
104.7
104.7

100.0
108.2
108.5
114.6
115.3

100.0
153.5
125.4
121.1
122.0

100.0
61.5
45.0
60.0
56.3

100.0
101.2
68.6
69.3
70.2

75.4
82.6
79.6
93.7
90.1
103.2
99.4
95.7
93.7
98.2
108.6
102.5

95.4
89.4
82.1
79.8
77.5
100.1
98.4
95.2
73.0
86.2
89.4
78.8

140.4
139.3
147.1
160.3
188.2
209.3
194.2
159.2
160.8
148.2
151.9
162.8

98.0
121.2
116.5
103.5
112.9
114.2
103.1
118.3
122.0
125.0
132.0
111.3

112.8
111.6
112.9
127.3
139.2
150.8
131.9
113.9
95.4
85.0
89.5
94.6

124.1
120.0
120.8
128.5
137.7
143.8
118.0
104.6
94.3
81.8
84.0
85.2

130.0
130.3
126.6
125.1
127.0
126.4
124.6
120.7
125.8
125.6
123.8
119.2

60.8
60.8
72.9
116.2
128.6
139.2
160.0
136.3
72.6
57.8
79.4
107.3

81.0
111.6
96.1
152.9
228.3
353.3
252.9
150.8
103.3
106.6
105.4
115.7

88.9
82.8
88.5
87.5
86.1
94.4
98.8
119.9
114.6
129.2
120.2
87.9

93.3
78.3
75.8
69.5
79.6
97.1
110.8
101.7
86.9
103.4
90.7
114.5

156.4
153.8
162.8
177.1
157.2
184.8
177.3
164.6
171.9
180.7
182.7
189.1

109.1
(8)
129.6
159.5
160.2
125.3
117.6
131.6
137.9
171.0
107.2
97.5

94.3
98.3
98.1
110.8
116.5
166.2
134.0
122.7
124.3
127.3
142.7
151.9

84.3
86.8
87.7
96.4
98.4
159.7
127.5
115.7
118.2
122.5
135.5
143.3

115.6
114.4
114.8
139.7
162.1
164.5
175.9
175.5
177.5
186.3
193.4
195.3

108.4
121.4
112.6
108.2
89.5
105.2
91.8
103.7
98.5
90.0
113.3
127.4

127.1
138.4
149.8
240.5
332.6
461.8
247.9
137.4
149.6
171.5
200.4
232.2

1 Includes beans, onions, white potatoes, and sweetpotatoes.
2 Includes Boston, Chicago, New York and Portland, Oreg., quotations.
8 No quotation, as no bananas were sold on the wholesale market during February.
I’ See The Vegetable Situation (U. S. Department of Agriculture), July 1941, p. 6.

Chapter II.—Foods

T a b l e 8 .—F R U IT S A N D VEGETABLES: Wholesale-Price Indexes, Fresh, Dried,

and Canned, August 1939—December 1941—Continued

Wholesale-price indexes (August 1939=100) of—
Canned fruits

Dried
fruits:
Average4 Aver
age 5
1939
A lien ist

September..................................
October ________________
November _ ______________
T>G<»emhAr

J ftn n a rv

February__________________
March __________________
April_____________________
May
__________________
June_______________ ______
July______________________
August __________________
September
______________
October __________________
November_________________
T>APflmbftr
Tarm nrv

February__________________
March ___________________
April_____________________
May
__________________
June ___________________
J u ly _____________________
Auarust___________________
September_________ ,_______
October ________________
November ______________
December ................. .............
Year and month
1939

August__________________
September..... .........................
October ________________
November..... ........ ................
December...............................
mo

January..................................
February............... ............ ..
March.___ ______________
A p ril___________________
May_______________ _____
June____________________
July......... ......................... ......
August................... —..........—
September............. ................
October..................................
November..............................
December............... ..............
194i

100.0
127.7
120.0
113.1
110.0

100.0
102.1
102.4
102.9
102.5

100.0
100.0
100.0
100.0
100.0

100.0
105.8
105.5
106.8
105.8

100.0
100.0
100.0
100.0
100.0

100.0
105.0
104.5
104.2
104.0

100.0
105.0
108.6
111.8
110.2

100.0
100.0
100.0
100.0
100.0

107.2
104.3
103.9
100.2
99.9
102.3
100.5
101.4
115.0
116.0
114.3
114.6

102.2
102.1
101.9
101.5
100.7
103.0
103.3
101.5
101.0
101.5
101.5
101.5

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

105.8
105.8
105.8
105.8
107.3
121.6
130.8
130.8
130.8
130.8
130.8
130.8

100.0
100.0
100.0
100.0
100.0
400.0
101.1
101.1
101.1
101.1
101.1
101.1

104.0
104.0
102.9
100.8
101.3
101.9
99.4
95.2
95.6
97.7
97.7
97.7

107.9
107.1
107.1
107.1
107.1
107.1
107.1
99.5
95.0
96.2
96.0
96.0

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

113.6
113.2
114.5
121.0
121.6
124.7
136.3

101.2
103.6
103.3
105.4
108.2
10S.4
119.2
127.9
125.2

100.0
112.5
109.8
116.7
121.2
121.2
133.3
151.5
134.0
149.8
151.5
163.6

127.7
126.9
126.0
125.5
126.9
122.6
119.7
122.2
123.5
125.0
125.0
125.0

101.1
101.1
101.1
101.1
101.1
104.7
108.4
120.6
123.2
123.2
123.2
123.2

97.7
99.5
102.2
105.3
114.5
115.0
139.4
153.4
153.4
153.8
154.0
157.1

95.6
95.3
93.3
95.7
97.0
97.6
109.8
122.8
122.8
122.8
122.8
122.8

100.0
100.0
100.0
100.0
100.0
100.0
106.7
106.7
106.7
106.7
106.7
106.7

139:7

143.4
1 2 8 .2
150.9
128.7
160.1
131.2
171.2
Canned vegetables: wholesale-price indexes (August 1939=100)

Average® Tomatoes

String Aspara
less
gus
beans

Baked
beans

Com

Peas

Spinach

100.0
105.6
108.0
106.8
106.0

100.0
104.7
107.8
107.8
107.8

100.0
110.4
113.7
110.8
110.8

100.0
100.0
300.0
100.0
100.0

100.0
105.7
109.1
104.5
100.0

100.0
107.5
110.9
111.4
111.4

100.0
103.9
105.1
105.1
105.1

100.0
103.6
104.3
104.3
106.6

105.7
105.6
103.2
103.0
102.8
103.4
103.1
102.6
102.2
101.3
101.6
101.6

107.8
107.8
100.0
98.8
96.9
96.9
95.6
93.8
92.2
88.1
89.1
89.1

107.3
111.8
110.8
110.8
110.8
110.8
110.8
110.8
110.8
112.5
112.8
112.8

100.0
100.0
100.0
100.0
303.8
109.6
109.6
109.6
109.6
109.6
109.6
109.6

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

108.3
105.5
103.6
103.6
103.6
103.6
103.6
103.6
103.6
103.6
103.6
103.6

105.6
105.1
105.1
105.1
105.1
105.1
105.1
105.1
105.1
105.1
105.1
105.1

107.5
107.5
107.5
110.6
111.5
114.9
114.9
114.9
114.9
114.9
114.9
114.9

105.1
105.1
105.1
105.1
105.1
105.1
109.7
112.8
112.8
117.9
117.9
123.1

109.2
105.4
7105.4
105.4
105.4
120.6
119.1
119.1
(8)
(8)
110.6
115.4

105.5
100.0
115.1
109.6
89.1
101.8
January................ ................
112.3
100.0
125.9
109.6
89.1
103.6
February.................................
115.3
132.5
100.0
109.6
104.8
89.8
March............... .....................
120.3
141.5
103.6
109.6
92.5
107.8
April............ .........................
121.1
104.5
143.2
109.6
98.1
109.7
May....................-..................
121.1
105.7
137.2
143.2
105.9
114.6
June.............................. .........
110.9
121.1
137.4
344.1
121.6
125.0
J u ly ............................. -........
127.0
113.6
166.0
138.3
125.7
125.0
August....................................
132.8
115.5
138.3
160.6
126.8
126.6
September..............................
118.2
136.7
138.3
170.3
129.7
130.6
October..................................
148.4
120.5
138.3
186.6
134.4
129.7
November..... .......................
148.4
122.7
138.3
186.6
135.6
129.7
December................... ...........
4Includes apricots, prunes, and raisins.
6 Includes apples, apricots, cherries, peaches, pears, and pineapple
fi Includes tomatoes, stringless beans, asparagus, baked beans, corn, peas, and spinach.
7 No quotations March through May 1941; price pegged.
8No quotation, September and October; August price used in average.

547953°—44------4

Pine
apple

Apples Apricots Cherries Peaches Pears

Wartime Prices—August 1939 to Pearl Harbor
CANNED VEGETABLES

Canned vegetables, like canned fruits, are fairly stable in price,
partly because the canners contract in advance for their supply of
vegetables. At the outset of the war, however, the composite whole
sale price of seven canned vegetables 18 rose 8 percent by October
1939, partly reflecting efforts by consumers to accumulate supplies.
Between October 1939 and January 1941 the market gradually de
clined, and on the latter date the composite price was but 1.8 percent
higher than in August 1939. This decline was caused in large part
by a weakening in the price of canned tomatoes, the production of
which in 1940 amounted to 29.6 million cases, the largest pack on
record and well above the 1929-38 average.
From January to December 1941 the price of canned vegetables
steadily advanced until in December 1941 it was 36 percent above its
pre-war level. This increase was the result of a number of causes, in
cluding the general rise in consumer purchasing power and a significant
amount of forward buying to forestall future price advances by whole
salers, retailers, and consumers. In addition, the Government not only
purchased canned tomatoes for its armed forces, but between March 15
and August 30, 1941, bought 4 million cases, about 13 percent of the
1940-41 supply, for transfer principally to Great Britain. During the
following 3 months approximately 1 million additional cases were
purchased.
T able 9.—F R U IT S A N D VEGETABLES: Quantities Purchased by the Government,

by Commodity, Specified P e r i o d s 1939-41
[Source: U. S. Department of Agriculture, Surplus Marketing Administration]
Commodity
Fruits:
Apples, fresh______________
Apricots, dried______________
Apricots, canned........................
Oranges . _____ ___________
Peaches, canned____________
Pears, canned______________
Prunes, dried_______________
Raisins
_________________
Vegetables:
Dry beans_________________
O nions____________________
Potatoes, white..........................
Tomatoes, canned......................

Unit

July 1, 1939, to July 1,1940, to Mar. 15,1941, to
June 30, 1940
Mar. 15,1941
Nov. 30, 1941

Bushel...................
Pound......... .........
Case.......................
Box........................
Case.......................
Case___________
Pound...... ........... .
Pound________

9,070,766
0
0
2,112,505
149,663
0
93,053,040
146,277,160

5,939,019
0
0
1,139,292
0
0
1,430,000
825,000

6,336,835
17,474,316
262,049
503,580
572.453
1,004,890
269.444.000
106.952.000

Pound_________
P ou n d .................
Bushel...................
Case.......................

28,710,000
44,381,980
0
0

110,814,100
11,303,750
5,275,344
0

199,075,900
925,000
2,292,758
5,343,143

i The&c commodities are used “for domestic distribution to public-aid families and for free school lunches,
to meet requirements of the Red Cross for shipment to war-refugee areas, for transfer to other countries
under the terms of the Lend-Lease Act, or for release upon the market when this is desirable.”

Sugar
Prices of raw and refined sugar in the United States are determined
principally by the extent of domestic demand and by the amount
of sugar which the Government allows to be marketed each year.

Approximately 70 percent of the domestic requirement is ordinarily
supplied by imports from Cuba, the Philippine Islands, Puerto Rico,
Hawaii, and the Virgin Islands. These imports consist chiefly of raw
cane sugar which is processed by American companies at their refin
eries, located at the principal seaports. The remaining 30 percent is
supplied by domestic producers who derive their product from
American-grown sugar beets and sugarcane.
18 Tomatoes, stringless beans, asparagus, baked beans, corn, peas, and spinach.

Chapter I I .—Foods

Under the terms of the Sugar Act of 1937, the Secretary of Agricul
ture estimates the quantity of sugar needed each year by the United
States and apportions this quantity among the various producing
areas.19 In this way a limit is placed upon the amount of sugar which
each area may produce for sale on the American market and thus
upon the total supply of sugar annually available in the United States.
The beet-sugar industry, which is located at inland points, produces
about 20 percent of the sugar consumed annually in the United States.
The location of the industry “ gives it preferential treatment in all
markets near beet-sugar producing areas except California, because
transportation costs of refined cane sugar from the seaboard are
relatively high. ” 20
Most of the country's annual consumption (between 60 and 65
percent), however, consists of the sugar that is refined from imported
raw cane sugar. The prices of raw and refined cane sugar, while
affected by the consumption of beet sugar, are therefore the controlling
prices for most of the Nation’s sugar supply. Since raw cane sugar
represents approximately 80 percent of the cost of refined cane sugar,
the prices of the two commodities are closely related and are similar
in their movements.21
One of the outstanding price movements which occurred at the out
set of the war was the increase in sugar prices. In the first days of
September 1939 there occurred an increase of 28 percent in the price
of refined sugar—from 4.3 to 5.6 cents per pound—while raw sugar
rose from 2.9 to 3.7 cents per pound during the same period. These
price rises resulted from excessive speculative activity and from
heavy purchases by consumers fearing war shortages. On September
11, however, the President suspended the quota provisions of the
Sugar Act,22 thus allowing unlimited imports and marketings of
sugar. Prices immediately began to fall, and by January 1940 had
dropped to their pre-war levels. (See table 10.)
Although quotas were restored at the beginning of 1940, prices
remained near their pre-war levels during most of the year. The
failure of the reimposition of the quotas to cause an advance in prices
was due to the fact that “ stocks of nonquota sugar had accumulated
in nearly all positions to such an extent that the quota did not become
effective until late in 1940.” 23 Furthermore, in the opinion of the
sugar industry, the initial marketing quota for 1940 of 6,725,000 tons
was larger than necessary and it was twice reduced, in February by
118,000 tons and in August by 136,000 tons. “ This trade opinion,
coupled with much uncertainty as to the continuance of the quota sys
tem beyond December 31, 1940, caused price depression during the
greater part of the year.” 24
In the latter part of the year, however, following the second
downward adjustment of quotas and the extension of the Sugar Act
19 Cuba, the Philippine Islands, Puerto Rico, Hawaii, the Virgin Islands, and the Continental United
States beet-sugar and sugarcane areas. These areas are allotted 99.61 percent of the total quota, while the
rest of the world's sugar-producing areas combined are allotted only 0.39 percent of the quota. The effect
of the quota system is to raise the American price of sugar above the world price.
The act provides for a processing tax of 0.535 cent per pound (raw basis) on all sugar marketed. From
the revenues derived growers are paid 0.6 cent per pound for producing not more than the quotas assigned
to them and for meeting certain other requirements.
20 The Agricultural Industries, by D. W. Malott and B. F. Martin (New York, McGraw-Hill, 1939),
p. 311.
21 Sugar Economics, Statistics, and Documents, by M. Lynsky (New York, U. S. Cane Sugar Refiners'
Association, 1938), p. 5.
22 This action automatically caused the duty on Cuban sugar to be raised from 0.9 to 1.6 cents per pound.
On December 26, 1939, when the quotas were restored, the duty reverted to 0.9 cents per pound.
22 The World Sugar Situation (U. S. Department of Agriculture), 1941, p. 5.
« Idem, p. 9.

Wartime Prices—August 1939 to Pearl Harbor

in late 1940, the price of raw sugar began to advance, rising moder
ately in September and October 1940; refined sugar, however, re
mained unchanged.
The major characteristic of the sugar market in 1941 was extraor
dinarily heavy buying on the part of consumers, which was reflected
in marked price advances during the spring. Manufacturers using
sugar as a raw material, as well as wholesalers and retailers, were
especially active in stocking up against expected shortages and price
rises. Thus, between January and August 1941, deliveries of refined
sugar to wholesalers, manufacturers, and retailers amounted to 1.2
million tons, an amount 25 percent larger than that delivered in the
corresponding period of 1940.
A principal cause of this large-scale buying was the widespread
fear that shipping costs might be subject to even further increases,
or that shipping might at some time be interrupted. The actual
rises in shipping costs which did occur provided some justification
for these fears.25
On the other hand, the quota was set at levels designed to bring
in large quantities from abroad and to permit larger marketings of
continental sugar, and thus relieve the pressure on prices. While
the 1941 quota of 6,617,000 tons, as originally established by the
Department of Agriculture, was somewhat below the amount of sugar
consumed in 1940—a fact which provided a stimulus to prices early
in 1941—the Department subsequently raised the quota on five dif
ferent occasions (ultimately to 9,003,000 tons) in an effort to insure
adequate supplies.
These upward adjustments in the quota were partly reflected by
advances in imports. Total imports of raw cane sugar between
January and July 1941 amounted to 3,280,680 tons, compared to
2,470,489 tons in the corresponding period of 1940, while refined
sugar production, as represented by the Federal Reserve Board
index of cane-sugar meltings, was 24 percent higher between January
and August 1941 than during the corresponding period of 1940.
Increases in imports and production resulting from the higher
quota were, however, partially offset in August 1941 by the crisis in
the Orient, which threatened to cut off sugar supplied from the
Philippines and Hawaii. A speculative upsurge in the sugar market
resulted and between July and August the price of raw sugar rose
6 percent while refined sugar advanced 4 percent at wholesale. This
upward movement, together with the advance in the spring, had by
August 1941 carried the price of raw sugar 28 percent, and that of
refined sugar 21 percent, above their August 1939 levels.
The rise in the wholesale price of raw sugar was halted on August
14, when the Office of Price Administration established a ceiling of
$3.50 per 100 pounds on duty-paid sugar at New York. By August
13, the price had risen from a June and July level of $3.50 to $3.80.
It was hoped that, because of the close relationship between the
prices of raw and refined sugar, the establishment of the ceiling on
raw sugar would have the effect of establishing an indirect ceiling
on refined sugar.
25 On September 1,1939, the shipping rate per 100 pounds of raw sugar from northern Cuba to New York
City was 12 cents; in the spring and summer of 1941 rates varied between 40 and 60 cents per 100 pounds.
In September 1938, the rate per short ton from Hawaii to Atlantic Coast ports was $7.25 per short ton; and
in August 1941 the rate was $7.75. The pre-war rate per long ton from the Philippines to Atlantic Coast
ports was $6.75; by August 1941 it had risen to $25.

Chapter II.—Foods

Wartime Prices—August 1939 to Pearl Harbor

The retail price of sugar continued to rise for some time after the
ceiling on raw sugar had been put into effect. When Price Adminis
trator Henderson announced the $3.50-per-l00-pounds ceiling on raw
sugar—the price current during June and July—he stated that retail
prices should likewise remain at their June and July levels. During
these months the average retail price for the entire united States was
5.8 cents per pound. Many retailers, however, interpreted Mr. Hen
derson^ statement to mean that a maximum price of 5.8 cents per
pound was sanctioned by the Office of Price Administration, and, in
localities where the price was below the Nation-wide average, retailers
generally advanced to the 5.8-cent figure.
Raw-sugar prices declined in September after the imposition of
the price ceiling, but remained above the ceiling level as a result of
contracts signed before the schedule was issued. By October, prices
of raw sugar had reached the level of the ceiling price (which was
21 percent above the August 1939 price), where they remained through
December. The demand for sugar continued to be strong, with de
liveries of refined sugar to wholesalers, manufacturers, and retailers
amounting to 6.8 million tons from January to October 1941, as com
pared with 5.7 million tons during the corresponding period of 1940.26
T able

10.—SIJGAR: Wholesale Prices, Imports, and Production, August 1939-December
1941

[Sources: Prices—U. S. Bureau of Labor Statistics; imports—U. S. Bureau of Foreign and Domestic Com
merce; production—Federal Reserve Board]
Wholesale-price indexes
(August 1939=100)
Year and month

19S9
August...................................
September.............................
October..................................
November.............................
December..............................

January..................................
February...............................
March....................................
April.......................................
May........................................
June........................................
July........................................
August— ...............................
September.............................
October..................................
November.............................
December...............................
January—
February.
March___
April.........
May.........
June.........
July..........
August__
September
October—
November
December.

1941

Production
Imports—
(August
Raw cane index
1939=100)—
sugar (in Refined
cane
short tons)1
Raw sugar Granulated
sugar 8
sugar
100.0
127.6
117.2
103.4
103.4

100.0
130.2
120.9
111.6
107.0

372,288
626,889
345,621
210,193
363,169

100
120
101
74
75

100.0
100.0
96.6
96.6
96.6
93.1
93.1
93.1
93.1
96.6
100.0
100.0

104.7
102.3
102.3
102.3
102.3
102.3
102.3
100.0
100.0
100.0
100.0
100.0

208,489
365,719
381,810
407,612
416,008
332,504
361,343
361,170
300,485
305,608
349,789
259,211

77
90
92
95
92
113
113
92
99
110
109
95

100.0
103.4
113.8
117.2
117.2
120.7
120.7
127.6
124.1
120.7
120.7
120.7

100.0
102.3
111. 6
116.3
116.3
114.0
116.3
120.9
120.9
120.9
120.9
120.9

303,130
416,491
472,907
628,296
575,725
486,611
422,864
387,763
328,399
(3)
(3)
(3)

100
102
131
131
114
128
114
132
128
106
111
(»)

1 Includes receipts from Hawaii and Puerto Rico.
8 Not adjusted for seasonal variation.
8Not available for publication.
88 In 1942 there was a serious supply situation for sugar, owing to the shortage of shipping space, the loss
of the Philippine producing area, and growing industrial uses for sugarcane.

Chapter II.—Foods

Coffee, Tea, and Cocoa
COFFEE

Unlike many other imported foodstuffs, coffee did not rise sharply
in price at the outset of the war. An increase of 3 percent, which
took place between August and October 1939 in the New York
wholesale price of green Brazilian coffee,27 was followed by a general
decline lasting through August 1940, by which time the price had
fallen to 10 percent below its pre-war level.
Throughout the first year of the war the price of coffee was de
pressed, both by the presence of the usual excess supplies in South
American producing areas and by the loss of European markets.
The disappearance of European outlets was aggravated in the spring
of 1940 when the German Army overran Denmark, Norway, Holland,
Belgium, and France. Since these countries ordinarily purchase
approximately 11 million bags annually, or 45 percent of the South
American production, their loss as markets swelled greatly the
volume of surplus stocks, driving down the price of coffee in South
America and the United States, the sole remaining large-scale markets.

During the second year of the war, however, the downward move
ment was reversed. In October 1940, the New York wholesale
price began a rise which continued without interruption through
September 1941 and which was very steep between January and
August of that year. This upswing carried the price in September
1941 to a point 76 percent above its pre-war level. (See table 11.)
The establishment in November 1940 of a quota system, allocating
the United States coffee market among the Latin American producing
nations, was the principal cause of this sharp advance. The InterAmerican Coffee Agreement, as the plan is called, was signed on
November 28 by the United States and the major Latin American
producing countries.28 It provided that a basic quota of 15.9 million
bags could be marketed in the United States during the 12-month
period, October 1, 1940-September 30, 1941. Of this total, 9,300,000
bags were allotted to Brazil and 3,145,000 bags to Colombia. A
limitation was thus placed upon the total supply available in the
United States and upon the amount which could be obtained from
each exporting nation.
The signing of the Coffee Agreement gave an immediate impetus
to the market, which was further strengthened when Colombia set
minimum prices on its coffee exports. The establishment of this
minimum-price system in November 1940 was followed by a series
of upward revisions in the minimum prices. The importance of
these increases to the American market was described as follows in
the Journal of Commerce (January 24, 1941):
Normally the price paid for Brazilian coffee would determine the trend of the
market, but Colombia, coincident with the announcement of the quota plan,
established minimum prices on coffee for export. Since then, with each pro
gressive advance effected by Colombia, Brazil and other Latin American pro
ducers moved up their prices in varying degrees.
27 Santos No. 4, the basic grade of Brazilian coflee.
28 The agreement was not ratified by the United States Senate until February 1941, but its provisions
were operative as of November 28, 1940, when it was signed. Its purpose was to raise prices ana improve
conditions in Latin American coffee-growing nations, and thereby to aid in implementing the “Good Neigh
bor Policy” of the United States. Signatories included the United States, Brazil, Colombia, Costa Rica,
Cuba, the Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Peru,
Nicaragua, and Venezuela.

Wartime Prices—August 1939 to Pearl Harbor

The effects on coffee prices of this minimum-pricing system and of
the quota agreement were summarized in January 1941 by the Journal
of Commerce (January 24, 1941), as follows:
Since the coffee import quota system went into effect on November 28 last, a
substantial recovery in prices realized for coffee exports has occurred in Latin
American exporting countries. Quotations have returned approximately to the
pre-war level, despite the fact that the loss of European markets has created
large surpluses that would ordinarily depress prices severely.
Before the quota system went into effect, the basic grade of Colombian coffee
was quoted here at 8}i cents a pound. Today the price is 11 cents a pound, or
close to the average of 12 cents quoted for August 1939. The minimum-price
system for coffee exports established by Colombia may raise quotations further
over a period of time.
The price of Brazilian coffee has risen from 6.75 cents for the basic grade to
7.75 cents under the import quota system. The quotation is now above the
pre-war price of 7}i cents a pound.

The expectation on the part of buyers of continued raising of the
minimum prices, and the probability that Brazil would follow Colom
bia^ lead, resulted in speculative buying and the accumulation of
large inventories. In March 1941, according to the Journal of
Commerce of May 15, 1941—
Leading national roasters and some of the bigger importers * * * took
overnight the remainder of Brazil’s 9,300,000-bag allotment for the United States.
This quantity, which amounted to about 3,000,000 bags, is now being held for
higher prices by importers or in the case of the national roasters to keep down their
roasted retail price for competitive purposes.

Brazil’s quota for the 12-month period, October 1940-October 1941,
was thus exhausted in March, and by the third week in May,
Colombia’s quota was also completely filled.
This filling of the quotas, the fears of a tighter shipping situation,
and the desperate attempts to obtain supplies on the part of smaller
roasters, who were caught short after their larger rivals had purchased
most of the obtainable supplies earlier in the spring,29 combined to
raise the wholesale price of coffee to even higher levels during the first
half of 1941. In May the price in the United States for Brazilian
coffee was 1% to 2 cents higher than in Canada, which was not a
signatory to the Inter-American Agreement.
Beginning in May 1941 several steps were taken to restrain prices,
which, however, proved ineffectual, quotations continuing to rise
month by month until September. The import quota for the year
October 1940-September 1941 was raised by 705,000 bags. Although
it was specified that these added supplies could not be used until
October 1, 1941, their presence in this country temporarily alleviated
fears of any shortage due to shipping difficulties.30 As shown on the
accompanying chart, imports of coffee were substantially larger in
the months from September 1940 to October 1941 than between
August 1939 and August 1940.31
The increase of the 1940-41 quota and the accumulation of coffee
stocks in this country, however, had little effect in restraining prices.
In July, Brazil established minimum prices for its export coffee at
levels higher than those prevailing in the market. Since quotations
29 On July 1, 1941, stocks of coffee held by large roasters, importers, chain stores, and brokers were 60
percent larger than on the same date in 1940. (U. S. Department of Commerce, Industrial Reference
Service: The U. S. Tea and Coffee Industries, September 1941 and October 1941, p. 3.)
20 The monthly size of coffee stocks in the United States between September 1940 and October 1941 aver
aged 1,600,000 bags, compared with an average of 950,000 bags between August 1939 and August 1940.
The extraordinary drop in imports between May and September 1941 was due simply to the exhaustion
of the quotas and consequent prohibition of imports.

Chapter II.—Foods

COFFEE

WHOLESALE PRICES AND IMPORTS
AUGUST 1939 • IOO
INDEX

W H O LESA LE

P R IC E S

INDEX

220

200

180

160

140

120

too
8 0

INDEX

IM P O R T S *

INDEX

220

200

180

160

140

120

too
8 0

6 0

4 0

0
UNITED STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS

"CONFIDENTIAL AFTER SEPTEMBER 1941
IMPORTS, UNITEO STATES DEPARTMENT OF COMMERCE

Wartime Prices—August 1939 to Pearl Harbor

for the coffee had lagged considerably behind those of Colombia after
November 1940, the price of Brazil coffee (Santos No. 4) rose in New
York from 11% to 12% cents per pound.32
Following this advance, the Inter-American Coffee Board tenta
tively announced on August 11 that the quota for the ensuing year,
October 1941-September 1942, would be raised 25 percent above the
basic figure of 15.9 million bags, which had been in effect during the
previous year. This announcement eased the market and the average
price of coffee in September 1941 remained at the August level, even
though Colombia on September 21 increased its minimum export
price for the quota year beginning October 1, 1941.33
On October 23, the Coffee Board definitely established the quota
for 1941-42, 10 percent above that of the preceding year. Although
this represented a reduction from the 25-percent increase previously
announced on August 11, the definite action of the Coffee Board ended
the circulation of conflicting rumors in the m arket34 and prices moved
slightly downward during October and November, and then up again
in December to a level 75 percent above August 1939.35
TEA

Immediately after the outbreak of the war, the price of tea at New
York advanced sharply, rising 20 percent between August and
October 1939. This rise was due to the general expectation of warinduced shortages and to a tendency on the part of sellers to wait for
higher prices.
The advance was followed by a period of complete stability, as
from November 1939 to April 1940 the price remained unchanged.
Supplies were larger, as the International Tea Committee in October
1939 had increased the quota of the exporting countries.36 The up
ward revision in the quota, together with the inactivity on the Western
Front during the first part of 1940, eased the tension in the market.
However, with the German invasion of the Low Countries and
France, and the resultant shutting off of important markets to the
tea trade, the price of tea declined. I t fell 14 percent between March
and June 1940, which brought it 2 percent below the August 1939
level; but in July, the price advanced to the pre-war position where it
remained through November. (See table 11.)
The market then began to rise, with the price advancing steadily
to a level, in December 1941, 51 percent above that of August 1939.
This rise was caused by an increase in consumer demand and by the
actions of importing nations augmenting their stocks of tea. In spite
of the rising costs and difficulties of shipment, monthly imports into
the United States between November 1940 and August 1941 averaged
8,880,000 pounds, as compared with 8,305,000 pounds during the
period August 1939 to November 1940.
Wall Street Journal, July 10.1941.
33 Journal of Commerce, September 22,1941. Prices were raised proportionately more on the lower grades
in order to discourage thoir output. Brazil, however, made no change in the minimum export prices which
it had established in July.
3* A provision was included, however, that if the shipping situation appeared to be threatening, producing
countries would be allowed to send before September 1942 up to 15 percent of their 1942-43 quotas; the coffee
so admitted was to be held in reserve for use m 1942-43.
35 According to information obtained by the Bureau of Labor Statistics, the rise in shipping costs between
the outbreak of the war and November 1941 was responsible for only 9 percent of the increase in the price of
coffee.
3« The Tea Association of India, Ceylon and the Netherlands East Indies—the major exporting countries—
are signatories to the International Tea Agreement which provides for the control of production and market
ing. The controlling agency, known as the International Tea Committee, determines the annual export
quota for each country.

Chapter II.—Foods

The International Tea Committee authorized the release on
August 1 of extra tea for export from Ceylon, India, and the Netherland Indies, thus increasing the amount available for export from 95
to 100 percent of the basic quota. In October the quota was again
increased to 110 percent of the basic figure. However, because of
war conditions and the shortage of shipping space, it seemed unlikely
that either production or imports would increase materially as a
result of this action. Furthermore, even if additional supplies became
available from these countries, the scarcity of Japan, Formosa, and
China tea would offset any increase from other sources.
COCOA

The upswing of commodity prices at the outbreak of the war lifted
the price of cocoa beans 47 percent between August and September
1939. This rise, resulting partly from the fear that African cocoa
supplies would be curtailed, was followed by a reaction in October
and November, when about half of the previous gain was lost. In
November, however, the British Government announced that it had
purchased the entire 1939-40 cocoa crop of British West Africa and at
the same time it was reported that Brazil's exportable supply for
1939-40 was 50 percent below that of the previous year. As a conse
quence of these two developments, the decline was arrested.
After moderate decreases in January and February 1940, the price
of cocoa beans rose in the spring when shipping rates were advanced.
By April the price had regained its September 1939 level, rising to a
point 40 percent higher than in August 1939. However, with German
successes in the spring and summer of 1940, and the consequent
curtailment of the world cocoa markets, a decline set in. From April
to August the price of cocoa beans fell 30 percent, 2 percent below the
pre-war level. (See table 11.)
The second year of the war, however, brought an almost uninter
rupted rise in the price of cocoa beans, and in August 1941 the price
was 81 percent higher than in August 1939. Trade expectation of a
quota agreement similar to that concluded for coffee was a factor in
this advance.
At the same time there was a marked rise in imports, resulting from
efforts of dealers and producers, particularly chocolate manufacturers,
to accumulate sizable inventories. Thus, stocks on May 1, 1941, as
reported by the Bureau of the Census, amounted to 4,279,000 bags as
compared to 3,275,000 bags on May 1, 1940. The expansion of
imports occurred in spite of sharply rising freight rates. In Febru
ary 1941 the freight rate from West Africa to New York was increased
from $20 to $29 per ton; in March a charter rate of $40 per ton was
reported. A further advance took place in April when the British
suspended dockside delivery of cargoes, thus compelling importers to
hire lighters to take delivery from vessels in the harbor.
The price advance halted in June 1941, followed by a slight decline
in July, which leveled off in August. This change in trend was due
to repeated rumors that the Office of Price Administration would
impose a ceiling on the price of cocoa beans. In June, at the request
of the Office of Price Administration, the New York Cocoa Exchange
lifted margin requirements for nontrade accounts from $300 to $600
per contract, the action being taken “ to eliminate unjustified specu
lative activity."

Wartime Prices—August 1939 to Pearl Harbor

During the fall of 1941, cocoa-bean prices again moved upward,
largely on account of uncertainty regarding shipping space, and by
December were 116 percent higher than in August 1939. The Mari
time Commission stated in October that it could not give definite
assurance that adequate cargo space from West Africa would be
available, since metals were being given priority.37 In November,
after a shipping company had requested permission to add two
Norwegian ships to its South American fleet which would carry full
cargoes of cocoa, the Office of Production Management announced
that full cargoes of cocoa would no longer be allowed, and that ship
ping space from South America would be allocated with regard to the
requirements for strategic defense materials.38
T able

11.— COFFEE , T E A , A N D COCOA: Wholesale-Price and Import Indexes,
August 1939-December 1941

[Sources: Wholesale prices—U. S. Bureau of Labor Statistics; imports—U. S. Bureau of Foreign and
Domestic Commerce]
Indexes (August 1939=100) of —
Tea

Coffee

Year and month

Cocoa beans

Wholesale
price

Imports

Wholesale
price

Imports

Wholesale
price

100.0
101.3
102.6
97.4
96.1

100.0
103.7
139.1
147.7
143.1

100.0
109.9
119.7
119.7
119.7

100.0
97.4
102.1
132.7
159.4

100.0
146.5
123.3
120.9
134.9

100.0
58.8
116.7
121.7
73.1

January-.............................................
February.............................................
March............................. ...................
April...................................................
May.....................................................
June.....................................................
July......................................................
August.................................................
September...........................................
October................................................
November...........................................
December............................................

98.7
97.4
96.1
96.1
94.7
96.1
92.1
89.5
89.5
92.1
94.7
97.4

116.0
116.3
136.6
120.6
126.8
116.1
131.9
108.7
94.1
118.1
131.2
152.0

119.7
119.7
119.7
114.1
98.0
98.3
100.0
100.0
100.0
100.0
100.0
111.3

159.0
118.2
107.4
115.1
65.6
86.8
97.6
95.7
103.8
120.4
124.9
125.2

130.2
125.6
130.2
139.5
125.6
116.3
109.3
97.7
104.7
104.7
114.0
123.3

98.5
132.6
63.8
51.0
86.3
95.6
176.7
151.8
107.0
128.9
129.0
173.9

mi
January...............................................
February.............................................
March..................................................
April....................................................
May.....................................................
June.....................................................
July......................................................
August.................................................
September...........................................
October...............................................
November...........................................
December............................................

102.6
109.2
118.4
130.3
142.1
151.3
160.5
176.3
176.3
173.7
172.4
175.0

190.0
214.0
190.5
202.2
163.9
115.1
56.0
42.0
6.8

114.1
114.1
125.4
124.5
133.8
135.8
141.1
145.1
145.1
145.1
145.1
150.7

104.5
118.2
82.6
103.9
149.2
130.0
142.4
103.6
92.2
(i)

118.6
134.9
165.1
167.4
186.0
186.0
179.1
181.4
188.4
186.0
200.0
216.3

145.0
118.5
138.2
134.3
154.6
147.5
108.2
72.2
104.1

19S9

August.................................................
September...........................................
October................................................
November...........................................
December............................................
mo

0)
0)
0)

0)
(0

Imports

0)
0)
0)

iN ot available for publication.

Edible Fats and Oils
Because of the interchangeability among edible fats and oils, the
prices of the various products in the group are closely related. Lard,
the principal shortening, is a competitive product of compounds and*
37 Wall Street Journal, October 11,1941.
*8Journal of Commerce, November 7,1941.

Chapter II.—Foods

vegetable cooking fats which are composed largely of cottonseed
oil and soybean oil.39 The wholesale-price movements of lard, cotton
seed oil, and soybean oil during the 2%years of war may therefore be
analyzed together.40 The prices of oleomargarine and of imported oils,
such as olive oil, are subject to special influences and are treated
separately.
LARD, COTTONSEED OIL, AND SOYBEAN OIL

Between August and September 1939, sharp advances occurred in
the wholesale prices of lard, cottonseed oil, and soybean oil, which
rose 38, 28, and 25 percent, respectively. These resulted largely
from speculative buying in anticipation of improved demand and
from the curtailment of imports of fats and oils which ordinarily
comprise approximately 15 percent of domestic requirements.
Between October 1939 and October 1940, however, the trend was re
versed. During this time the price of cottonseed oil dropped 21 percent
to a point 3 percent below the pre-war level. Concurrently, the price
of soybean oil fell 21 percent and in October 1940 was 2 percent lower
than in August 1939, while lard prices declined until mid-December
1940, falling 28 percent to a point 17 percent below their pre-war level
of 6 cents per pound.
Contributing largely to this general decline was the pressure of the
largest production and supply of fats and oils on record. The volume
of output, which during the 10 years 1929-38 averaged 8.1 billion
pounds, reached a high of 8.9 billion pounds in 1939, and attained
another new record of 9.5 billion pounds in 1940.41
A substantial part of the increased supply of fats and oils in 1940
resulted from the large output of lard in the October 1939-September
1940 hog-marketing year, when commercial production reached 1.69
billion pounds, the largest since 1933 and 272 million pounds more than
in the previous year. This sharp increase in supply was responsible
for the fact that the price of lard fell more than the prices of cottonseed
oil and soybean oil.
In addition, wholesale prices of fats and oils were depressed in the
spring of 1940 by the slackening of business activity, and in the summer
and fall by the sudden curtailment of important export markets follow
ing the German conquests. At the close of 1940, prices of fats and oils
were said by the Department of Agriculture to reflect—
the record large output of tallow, grease, and soybean oil this year, the large sup
plies of lard available for domestic consumption as the result of the loss of export
markets, and the existence of large supplies of low-priced vegetable oils in the
Philippines, Netherlands East Indies, and other surplus-producing areas cut off
from European markets.42

The decline in the prices of fats and oils came to an end, however,
late in 1940. Cottonseed oil and soybean oil realized moderate gains
in November and December, while lard began to advance in the latter
part of December. These price rises were accelerated during 1941.
By August 1941 lard was selling at wholesale for 10.3 cents per pound—
72 percent above its pre-war level—while soybean oil was 94 percent
39 In 1940 cottonseed oil and soybean oil together comprised 86.5 percent of the total weight of the fats and
oils used in the manufacture of compounds and vegetable cooking fats. (Fats and Oils Situation (U. S.
Department of Agriculture), July 1941, p. 16.)
4° Other oils, such as corn oil and peanut oil, are of only minor importance. The changes in their prices are
similar to the changes in the prices of cottonseed oil and soybean oil and do not require separate treatment.
Total supply, which includes domestic production and net imports, was 9.5 billion pounds in 1939, and
10.0 billion pounds in 1940, compared with an average of 8.7 billion pounds in the 1929-38 period.
42 The Agricultural Situation (U. S. Department of Agriculture), November 1940, p. 6.

Wartime Prices—August 1939 to Pearl Harbor

higher and cottonseed oil 116 percent higher than in August 1939.
(See table 12.)
These advances occurred despite an increase in output, factory
production of fats and oils in the first half of 1941 being 9 percent
higher than in the first half of 1940. Primarily responsible were the
rise in consumer purchasing power, a decline in imports of fats and
oils during the first 7 months of 1941, higher shipping costs, specula
tion, and heavy buying by dealers and large consumers to accumulate
inventories. Moreover, following the passage of the Lend-Lease Act,
the Government purchased large quantities of lard for shipment to
England. Between March 15, 1941, when the Lend-Lease program
was inaugurated, and November 30, 1941, Government purchases of
lard comprised approximately 35 percent of the volume produced.
The increase in fats and oils prices, was particularly rapid during
the first 6 months of 1941. In July the market was checked by a
warning from the Office of Price Administration that a ceiling might
be placed on cottonseed oil at a level below the existent price. In
August, cottonseed oil made only a small advance, while lard and
soybean oil declined slightly.
At the end of August 1941, the Office of Price Administration issued
an order designed to restrain speculation in the fats and oils m arket43
and also announced that for the time being it would not impose a ceil
ing on cottonseed oil. At the same time, however, a movement was
started in other quarters to encourage cotton farmers to hold their
cottonseed until it reached $60 per ton, the current price at that
time being about $50.
Shortly thereafter, prices of fats and oils again turned upward;
cottonseed-oil prices rising to new high levels by the middle of 1941,
the movement gaining strength because of a small cottonseed crop.
This advance occurred in spite of the institution by the Commodity
Exchange Administration of a new reporting system under which any
person holding five or more cottonseed oil futures contracts was re
quired to report daily to the Exchange Administration, a regulation
which was tightened later in the month and extended to include all
fats and oils.
In October and November, cottonseed-oil prices declined seasonally,
but were supported to some extent by the announcement that the
Surplus M arketing Administration intended to buy ‘‘considerable
titles'; of cottonseed oil shortening for relief distribution and
-Lease purposes, and rose again in December to a level 138 per
cent above August 1939.

Lard prices also advanced in September 1941, reaching a level of
11.1 cents per pound—their peak for the Defense Period. This ad
vance reflected large consumer and Government demand. The usual
seasonal decline in prices occurred in October and November, with
the arrival of the heavy hog-slaughtering and lard-producing season.
This decline, however, was lessened by the announcement that at
least 25 percent of the 1942 lard production was destined for Great
Britain, with an unspecified amount expected to be purchased for
shipment to Russia. In December 1941, lard prices were 76 percent
higher than in August 1939.
« Four corrective measures were adopted to eliminate speculative practices; (1) Speculative purchases for
resale prohibited, (2) deliveries against future purchases to be completed within 45 days of commitment,
(3) guaranties by sellers against futures declines eliminated, and (4) circulation of fictitious price quotations
prohibited.

Chapter II.—Foods

OLEOMARGARINE

The price of oleomargarine is relatively stable, reflecting the fact
that it is a branded, advertised product. In addition, the bulk of
oleomargarine is manufactured by 24 companies, the 4 largest firms
producing nearly half of the industry’s output.44
Between August 1939 and December 1940, the wholesale price of
oleomargarine declined steadily until in the latter month it was 15
percent below its pre-war level. This decline was coincident with the
fall in the prices of lard and the vegetable oils, and was due to the same
general causes; namely, the loss of foreign markets and the large sup
plies of fats and oils resulting from record production.
T a b l e 12. —E D IB L E F A T S A N D OILS: Wholesale-Price Indexes, by Commodityf

August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics!
Wholesale-price indexes (August 1939=100) o f—
Year and month
Lard
1989

Ausrust. _
September__________________________
October___ _________________________
November__________________________
December _
191fi

Januarv. .
February.......................................................
March_____________________________
April..............................................................
May_______________________________
June_______________________________
July...............................................................
August_____________________________
September__________________________
October-............... ...... .................................
November__________________________
December __ _
19U

Januarv
February.............. .......................................
March______________________________
April............................ .................................
May................. .............................................
June_______________________________
July.................................... ..........................
August.____________________________
September....................................................
October____________________________
November__________________________
December.....................................................

Oleomar Cotton
seed oil
garine

Soybean
o il1

Corn
oil

Olive
oil

100.0
138.2
118.5
111.5
116.7

100.0
91.7
90.7
94.8
88.9

100.0
128.1
122.6
117.0
124.5

100.0
125.0
123.3
120.1
120.7

100.0
118.3
120.3
110.9
110.5

100.0
117.9
128.6
120.7
114.3

110.0
111.0
104.7
109.2
100.5
100.7
105.8
92.2
91.7
85.8
87.5
83.2

88.9
88.9
88.9
88.9
88.9
88.9
88.9
87.4
85.2
85.2
85.2
85.2

124.5
125.2
121.9
123.2
115.0
108.9
109.1
100.9
102.0
97.3
103.4
106.2

123.3
123.8
125.0
121.3
119.6
108.5
104.3
100.3
97.8
97.8
104.6
111.1

110.9
110.5
112.2
112.2
112.9
108.5
107.3
101.4
99.2
99.6
100.5
109.8

114.3
114.3
109.7
105.7
108.0
120.0
131.4
135.4
149.3
166.4
177.1
185.7

95.7
104.0
115.8
137.5
158.2
168.5
174.0
171.5
184.8
173.2
173.8
176.3

87.4
88.9
92.6
96.3
96.3
98.1
103.7
103.7
103.7
103.7
103.7
107.4

116.1
112.5
128.6
156.5
190.0
207.6
213.2
216.3
245.7
233.5
225.2
237.9

120.7
113.8
124.8
154.1
176.9
193.5
203.6
194.4
211.6
211.7
206.3
213.6

118.1
122.8
117.8
140.6
164.5
181.3
196.7
191.8
202.6
200.3
191.8
193.5

185.1
184.3
201.4
234.3
274.3
266.4
310.7
310.3
300.0
305.7
305.7
312.1

1Domestic, refined.

Along with other fats and oils, oleomargarine rose in price between
December 1940 and December 1941. This advance of 26 percent
carried the price to a point, in December 1941, 7 percent above the
pre-war level, and reflected the same general influences as those
affecting other fats and oils. The rise was also stimulated by the Gov
ernment’s “food for defense” program, under the provisions of which
large purchases of dairy products were made. These purchases con
44 In 1937 the 4 largest firms in the industry manufactured 48.9 percent of the value of all oleomargarine
produced. (The Structure of Industry, 1941 (T. N. E. C. Monograph No. 27), p. 423.)

Wartime Prices—August 1939 to Pearl Harbor

tributed to an increase in the price of butter, for which oleomargarine
is a substitute, and in that way tended to raise the price of the latter
product.
OLIVE OIL

Between August 1939 and December 1941, the price of olive oil was
affected primarily by war developments. After a 29-percent rise from
August to October 1939, the price of olive oil declined moderately
through April 1940, then mounted rapidly, following Italy's entrance
into the war and the consequent closing of all Mediterranean areas.
The shortage of supply was subsequently aggravated by an increas
ingly difficult shipping situation. Imports into the United States
between January and October 1941 amounted to only 8.9 million
pounds as compared to 46.5 million pounds in the same period of 1940.
The effect of this curtailment was such that the wholesale price of
olive oil in August 1941 was 210 percent higher than in August 1939.
A slight decline occurred in September, but by December prices were
212 percent above the pre-war level.

Chapter III.— Hides and Leather Products
Summary
The sharp rise in consumer purchasing power was the principal
factor affecting prices of hides and leather products during the
Defense Period, although military demand for Lend-Lease and for
United States armed forces was important in markets for certain
types of leather. Prices of hides and skins rose 50 percent on the
-average between August 1939 and December 1941; for leather, the
average advance amounted to 21 percent; for shoes, in the manufac
ture of which 85 percent of all leather is consumed, the advance was
20 percent. The average increase for prices of all hides and skins,
leather, and manufactured leather products as a group was 24 percent.
The sharp increase for hides and skins was in keeping with the
usual behavior of these prices, which fluctuate widely. Produced as
a byproduct of the meat-packing industry, the supply is governed
by the demand for meat and other conditions affecting the rate of
animal slaughter. During the Defense Period, cattle slaughtered in
the United States increased by considerably more than 20 percent.
In addition, a large quantity of South American hides and skins
formerly exported to Europe was made available to American tanners
when German victories closed most European markets to Western
Hemisphere imports. However, the demand for hides and skins in
the United States rose even more sharply than the supply, and price
increases probably would have been even greater had not official
maxima been imposed by the Office of Price Administration and
Civilian Supply in June 1941.
As regards leather, prices are subject to the unsettling influence of
widely fluctuating raw-material prices on the one hand, and the
stabilizing influence of relatively inflexible shoe prices on the other.
During the Defense Period, however, conventional “price lines” for
shoes were varied much more than is customary and there were also
indirect price increases resulting from changes in quality. The in
crease in leather production between August 1939 and late 1941
amounted to about 30 percent and in shoe production to more than
20 percent. Despite the great demand, the advance in prices was
restricted somewhat by the availability of various leather substitutes,
competition within the leather industry, and the fact that production
costs other than those for raw materials were relatively stable.1
Manufacturers’ prices of shoes are fixed on a seasonal basis, usually
twice a year, and are normally kept fairly stable by the general
practice among retailers of adhering to conventional price lines, par
ticularly for women’s shoes. However, price lines for shoes of all
kinds were revised upward sharply during the Defense Period. Al
though increases on a percentage basis between August 1939 and
December 1941 were roughly the same for leather as for shoes, a
comparison on this basis actually understates the relative increase for
the finished product. Since the cost of leather on the average con-i
i Thus, unit labor costs rose less than 3 percent from 1939 to 1941. See Productivity and Unit Labor
Cost, in Selected Manufacturing Industries, 1919-40, and 1941 supplement (U. S. Bureau of Labor Statistics,
mimeographed report).

547953*— 44------5

Wartime Prices—August 1939 to Pearl Harbor

stitutes from about one-half to two-thirds of the total cost of producing
shoes,2 it is apparent that margins between material costs and prices
received by shoe manufacturers widened.3
In addition, there were widespread changes in the quality of many
shoes, particularly in the case of women’s and children’s shoes sold in
popular price lines. Leather soles were often replaced by composi
tion; fabric uppers replaced leather, and cheaper leathers were sub
stituted for more expensive materials.
Prices of hides and leather products participated vigorously in the
sharp rise for all commodities, largely speculative, which immediately
followed the outbreak of war in Europe in August 1939. By the end
of 1939 the average advance amounted to 12 percent. In this over-all
increase, however, shoe prices shared only moderately, advancing 7
percent. The average increase for leather amounted to 13 percent and
for hides and skins, 36 percent. Price movements for hides and
skins paralleled closely those for leather during 1940, when quotations
for both groups declined more or less steadily to reach their “trough”
in August. This low point corresponded roughly with that for most
other commodities and also with a sharp increase in hide and skin
imports from South America. Beginning in September of 1940
prices of both hides and leather advanced steadily, the pace acceler
ating through early 1941 and continuing at a somewhat slower rate
through the rest of the year. (See table 13.)
In general, price movements for shoes lagged behind those for the
raw and semifinished materials. The advance in shoe quotations
continued through early 1940, then eased later in the year. Through
early 1941, shoe prices were nearly stable but increased sharply later.
Prices of other leather products—of considerably less importance
than shoes—behaved in a somewhat similar way. One important
exception, however, was leather suitcases, prices of which rose very
sharply in late 1941 to reach a level (by December) 47 percent above
that prevailing in August 1939. In the case of luggage, however,
leather constitutes only about 20 percent of the total cost of raw
materials used; the other 80 percent includes linings (cotton fabrics,
silk, rayon, etc.), metal hardware (locks, buckles, hinges, corners),
fittings (hangers, compartments, etc.), and zippers and other closures.
For many of these materials, cost increases were greater than those
for leather.
The increase in prices for hides and skins and their products from
August 1939 to December 1941 was considerably less than in the
corresponding period of World War I. By the end of 1916, a period
comparable to the end of 1941 in the present conflict, prices of leather
had increased more than 100 percent, hides and skins about 90 per
cent, and shoes more than 40 percent. The sharp increase in prices
of these products, and particularly of leather, which began in mid1916, accompanied a general price rise for all raw materials and
manufactures, and was essentially speculative, although affected
somewhat by the beginning of heavy Allied purchases. The average
advance for all hides and skins and their products in World War I,
up to late 1916, amounted to about 60 percent, appreciably more than *
2Census of Manufactures, 1940 (U. S. Bureau of the Census); American Shoemaking, April 23, 1941,
p. 11; and Shoe and Leather Reporter, April 26, 1941, p. 9.
* The increase in unit labor costs in the boot and shoe industry was small compared with price advances,
and amounted to 4H percent between 1939 and 1941. (Productivity and Unit Labor Cost in Selected Manu
facturing Industries, 1919-40, and 1941 supplement. U. S. Bureau of Labor Statistics, mimeographed.)

Chapter I II.—Hides and Leather Products

HIDES. LEATHER.AND S H O E S
WHOLESALE PRICES AND PRODUCTION
A U G U ST 1939 • 100

INDEX
180

170

160

150

140

140
I \
PRICES>OF
I
HIDES AN() SKINS

130

120

PRICIE S 0 F 1
LEA! fHER 1

1
1

120

110

110 '
^ P R I C E S 01•• SHOES

100 ^

100

\I]

j \ SHOE PRODUCTION1

90 ■

Somc* SHOE PRODUCTION-FEOERAL RESERVE BOARD
i i i i 1 1 1 1 .1 1 L. .......... .. i i i i i i 1 1 1 1 1 1 1 1 l 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 o n
DU
A S O N D J F M A M J J A S 0 N 0 J f M A M-J J A S O N O J F M A M J J A S O N O J F M A M J J A S O N O J F M A M J J A S O N D
1939

1940

UNITED STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS

1941

1942

1943

1944

Wartime Prices—August 1939 to Pearl Harbor

the increase during the same period in the general level of prices,
as measured by the Bureau of Labor Statistics comprehensive whole
sale price index.
T able 13.

H ID E S A N D L E A T H E R PRO D UCTS: Wholesale-Price and Production
Indexes, August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]
Indexes (August 1939=100) of—
Wholesale prices

Year and month*
Hides
and
skins

Leather

Shde production
Shoes

With
Without
seasonal ad -seasonal adjustment 1 justment

1989

August............................
September......................
October...........................
November......................
-December...-................
1940

-January..........................
February........................
March............................
April..............>................
M a y ...............................
•June.-............................
J u ly ...............................
August............................
September.................. .
October.........................
November. ....................
December.......................

January..........................
February....... ...... .........
March. ..........................
April...............................
M a y ..............................
Ju n e...............................
July................................
August...........................
September......................
October..........................
November......................
December......................

100.0
126.2
145.6
135.1
136.3

100.0
109.5
116.4
116.4
113.3

100.0
101.0
104.9
106.3
106.6

LpO. 0
97.2
98.1
104.7
100.9

100.0
95.9
88.4
80.2
75.2

132.9
125.6
122.1
122.8
119.4
106.1
109.6
99.9
108.8
121.5
131.1
128.6

114.3
112.1
111.3
111.0
111.4
110.0
108.8
105.1
105.8
108.2
111.0
112.0

106.9
107.3
107.5
107.3
107.0
107.0
106.2
106.2
106.2
106.2
106.2
106.3

96.3
94.4
88.8
81.3
82.2
94.4
94.4
94.4
92.5
93.5
104.7
105.6

81.8
90.1
87.6
75.2
71.1
73.6
81.0
94.2
91.7
84.3
79.3
78.5

128.4
122.8
128.4
135.6
142.9
145.6
145.7
145.3
145.2
146.5
147.7
150.1

112.4
112.5
112.9
113.8
115.4
116.5
116.8
117.3
119.0
120.1
120.4
120.6

106.5
106.5
106.5
106.9
109.2
110.8
113.8
115.2
116.1
117.9
119.5
119.7

102.8
104.7
107.5
109.3
117.8
127.1
123.4
112.1
109.3
115.0
125.2
121.5

87.6
100.0
105.8
101.7
102.5
98.3
105.8
111.6
108.3
103.3
95.0
90.1

i Based on indexes published by Federal Reserve Board.

Hides and Skins 4
Prices of hides and skins rose sharply immediately following the
outbreak of war in Europe, weakened subsequently until August 1940
and then rose rapidly again. Speculation entered as an important
factor in these price movements early in the Defense Period; later,
however, growing consumer purchasing power in addition to Army
and Lend-Lease demand for shoes gave a firmer base to the advance.
In June 1941, Office of Price Administration ceiling prices were
imposed on the major types of cattle hides and certain skins, and 2
months later were in part revised upward. Net price increases from
August 1939 to December 1941 ranged from 27 percent for packers’
heavy Texas steers to 115 percent for packers’ sheepskins.
4 The distinction between the terms bide and skin is merely one of weight. Hide generally refers to cattle
Judes, and skin to the lighter weight kipskins (16 to 25 pounds), calfskins (10 to 15 pounds), goatskins, etc.

Chapter I I I .—Hides and Leather Products

Ordm&rily the demand for hides rests primarily upon consumer
buying power as reflected in increased purchases of shoes. Similarly,
a rise in consumer income results in greater purchases of meats, and
thus, usually in an increase in animal slaughtering, the factor immedi
ately controlling hide and skin supplies.5
During the Defense Period, the prices of hides and skins were
influenced materially by a number of additional factors. The most
important of these relating to demand—aside from the increase in
civilian purchases of shoes and other leather products as buying
power advanced—was the placement of large orders for shoes by the
United States Government for its armed forces. Large-scale purchases
of hides by the Russian Government also contributed to demand.
In regard to supply, the most important development, aside from the
increase in animal slaughtering, was the rise in imports of hides from
South America during 1941. Before the war, imports supplied about
10 percent of domestic consumption; during the year 1941 this pro
portion had grown to about 50 percent.
Prices of domestic cattle hides are subject to marked seasonal
influences, reaching peak levels during the late summer and early
fall and dropping to a low point in February.6 The seasonal price
behavior of imported hides, coming principally from the River Plate
district of Argentina and Brazil, is approximately the reverse of that
for the domestic product, and tends to level out the course of prices,
somewhat. In the case of calf, goat, and sheep skins, seasonal pricemovements are relatively small and not so clearly defined.
THE 1939 ADVANCE

Following the outbreak of the war in 1939 and through almost all
of 1940 the price of cattle hides fluctuated more widely than usual for
the season; sometimes these movements were contraseasonal.
Although the price of light native cow hides usually rises very slightly
between August and September, it jumped 34 percent (from 11.4 to
15.3 cents per pound) between these months in 1939, just after the
outbreak of the war. Heavy native steers rose from 11.6 to 14.6
cents, and heavy Texas steers from 11.4 to 14.4 cents. (See table 15.)
After a decline in November, the price of light native cows once more
turned up, contraseasonally, reaching a level 30 percent above the
pre-war figure. Calfskins and goatskins followed the same general
trend, rising from 16 to 24 cents and from 41.4 to 56.6 cents, respec
tively, between August and October, declining in November, and—in
the case of calfskins—rising again slightly in December. Sheepskins
rose 78 percent—from 8.45 cents per pelt in August to $1.50 in Novem
ber—and declined for several months thereafter.
This general increase in hide and skin prices was due largely to
speculative buying in the futures market in anticipation of heavy
Government orders. It was also supported by an increased rate in
the actual consumption of leather, as indicated by the decrease in*•
5 Most leather is manufactured from hides and skins of animals killed for meat; conversely, hides and
skins taken from meat animals are, with very few exceptions, made into leather, regardless of the need for
leather. Thus, hides, skins, and leather are essentially byproducts of the meat-packing industry.
• Paradoxically, the peak month of the seasonal price movement, September, is also one of the peak months
of production, the slaughter of cattle and sheep reaching the highest levels in September and October, while
the low point usually falls in February. That prices tend to increase rather than decline as more hides enter
the market is because of the fact that the hides taken off during July, August, and September are of a superior
quality, chiefly because of their shorter hair and comparative freedom from grubs.

Wartime Prices—August 1939 to Pearl Harbor

C A T T LE

H IDES

PACKERS PRICES, IMPORTS, AND DOMESTIC
CATTLE SLAUGHYER

1939

1940

LA80R

1941

1942

1943

1944

Chapter I I I .—Hides and Leather Products

leather stocks (all kinds, in process and finished) from 8,876,000
equivalent hides at the end of August to 8,666,000 at the end of
October.
PRICE RECESSION— JANUARY—AUGUST 1940

During the first 8 months of 1940 prices of hides and skins weakened
appreciably from their high speculative levels, following the general
market trend, and did not strengthen again until the defense program
was well under way later in the year. In the first 4 months of the
year, the price of light native cows did not depart widely from the
normal seasonal pattern, a decline in the first 2 months being partially
offset by a seasonal advance between March and April. But, late in
April, a decline set in which carried the price steadily downward during
the next 2 months. This drop, which was sharply contraseasonal,
was accelerated by unusual weather conditions; a severe and pro
longed winter had depressed the usual market for spring shoes. The
total production of boots and shoes fell from 31 million pairs in April
1940 to 29 million in May and to 28 million in June, as compared to 33
million, 33 million, and 32 million for the corresponding months of
1939. In addition to its effect on market conditions, the prolonged
winter adversely affected the quality of hides; for example, the hair
on the hides was unusually heavy, thus reducing their value.
Hide prices rose in accordance with the normal seasonal trend
between June and July, the movement gaining strength from requests
during June for bids on Army shoes and from an expression of Govern
ment interest in gloves, jerkins, and other leather products.7 This
was followed, however, by another contraseasonal decline in the next
month, which was related both to the unusual spring weather and to
the chaotic state of foreign markets. Thus, by August the price of
light native cows had fallen to 10.1 cents per pound, a level nearly 11
percent below the August 1939 figure. The price of heavy native
steers had fallen to 10.2 cents and of heavy Texas steers to 9.2 cents.
During this same period, January through August 1940, prices of
calf, goat, and sheep skins also followed a general downward trend.
The decline for calfskins was punctuated by slight upward movements
in March, May, and July, but continued to a low of 15.3 cents in
August 1940, 31 percent below the high of 22.3 cents in January.
Goatskins, which are almost entirely imported, principally from
Brazil, moved continuously downward until September 1940 when the
price was 37.3 cents, 34 percent below the peak which had been reached
in October 1939 and a few cents below the August 1939 level. The
price for sheepskins dropped to $1.26 in June, rose to $1.34 in July,
then dropped again to $1.33 in August, about 11 percent below its
high of $1.50.
RESUMPTION OF THE ADVANCE, FALL OF 1940

August 1940 marked the end of the broad downward movement;
the price of hides and calfskins rose sharply in the next 3 months,
and goatskins and sheepskins increased in October, November, and
December. These increases were in some cases contraseasonal and
resulted in large part from the depletion of finished leather stocks,
which in July and August had reached the lowest figure in 20 years,1
1Journal of Commerce, June 19,1940.

Wartime Prices—August 1939 to Pearl Harbor

owing to “greater activity in the leather trade.” 8 In addition, themovement m prices was strengthened by large Russian purchases of
leather and by the prospect of heavy orders to be placed by the United
States Government.
In December the prices of hides turned down in accordance with
the normal seasonal trend. This downward movement was accentu
ated by the resistance against buying on the part of tanners. The
Shoe and Leather Reporter, December 28, 1940 states:
They [tanners] find it difficult * * * to get any very attractive prices
from the Army shoe orders and shoe manufacturers have already priced their
spring shoes without asking any advance, consequently it is going to be difficult
for tanners to get much of an advance in leather, so [they] hesitate to pay any
advances whatever for hides.

The position of the tanners was strengthened by the substantial
increase in hide imports, a large part of which had formerly gone to
European markets (closed as a result of the war).9 The total of
United States imports rose from 397 thousand pieces in December
1939 to 645 thousand in December 1940. (See table 14.) As a result,
the price of light native cowhides declined from a level in November
24.5 percent above the pre-war figure to only 10 percent above in
February 1941. Heavy native and Texas steers followed the same
trend, while smaller declines occurred for calf, sheep, and goat skins.
THE 1941 PRICE RISE

However, prices of all hides and skins began to rise again late in
February. This upward movement—far greater than the usual sea
sonal advance for hides and for most skins at that time of the year—
was stimulated by the passage of the Lend-Lease Act on March 11,
1941, leading to expectations that large quantities of hides, leather,
and perhaps shoes, would be sent to Britain. In an attempt to arrest
the advance, Price Commissioner Henderson on March 16, 1941,
issued a statement to the effect that price increases after the middle
of February appeared “to be speculative and not warranted by actual
supply conditions” :
These figures [statistics on increased visible supplies of cattle hides and imports]
do not indicate any present danger of a shortage of hides.
The net additional demand for leather due to Army shoe orders is only a small
percentage of total leather consumption and cannot cause any difficulty in supply
ing normal leather requirements.10

Despite this statement, the price continued steadily upward. Fears
that sporadic shortages of shipping space for imports might become
permanent combined with rising consumer demand to strengthen the
market. Thus, on April 17, 1941, the New York Times reported:
With shoe production running higher, spring take-offs improving quality of
domestic hides and Argentine markets virtually closed temporarily to American
buyers because of lack of ship space, domestic spot hide trading has improved
sharply this week.
PRICE CEILINGS

The Government again expressed its opposition to the price advances
on M ay 9, when J. P. D avis of the Office of Production M anagement
8Hide and Leather and Shoes, October 12,19-10, p. 11.
8 Journal of Commerce, July 17,1940, and December 19,1940.
10New York Times, March 17,1941.

Chapter I I I .—Hides and Leather Products

informed tanners, that, if necessary, the Federal Price Administrator
could peg the prices of hides.11 Two and a half weeks later the Govern
ment took two separate actions. The Purchasing Division of the
Office of Production Management on May 27 announced that all bids
on shoes for the Army and the Civilian Conservation Corps had been
rejected, chiefly because the bids were considerably higher than those
submitted on a large order placed in March. At the same time, the
Office of Price Administration and Civilian Supply announced that it
would shortly issue a maximum price schedule for cattle hides, kipskins, and calfskins. Imposition of a ceiling was explained by the
agency on the grounds that recent price increases had been purely
speculative and were causing an unnecessary rise in the cost of leather
and thus of shoes. The ceiling went into effect on June 16, 1941, with
the top price fon cattle hides set at 15 cents per pound (compared with
a price of 16% to 17 cents for light native cowhides in the first 2 weeks
of June 1941 and of 11.4 cents in August 1939), f. o. b. Chicago, freight
equalized. No provisions were made for grade or seasonal differen
tials.*12 Ceilings were established for calfskins in the same market at
20% to 27 cents per pound, depending on size; for calfskins in the New
York market, at $1.30 to $4.60 a hide, depending on weight; and for
kipskins, at 20 cents per pound. Ceilings applied to the futures as
well as the spot market.
As a consequence of the ceiling order, some of the large meat packers
began tanning hides and skins taken off in their own plants and selling
leather instead of raw hides.13 But, more important, mixed grades of
hides and of skins were sold in combination lots at the top price.14
While not prohibited by the order, the latter practice increased tan
ners' costs substantially, since combination lots sold at ceiling prices
often included low grades which could not be used by purchasers.
Within less than a month the Price Administrator was compelled
to yield to this pressure by permitting payment of higher than ceiling
prices in certain cases (e. g., where leather tanners required premium
grades), although permission was to be granted only upon specific
application to the Office of Price Administration and Civilian Supply.
At the same time Mr. Henderson warned against ignoring grade and
quality differentials, which ordinarily prevailed, and declared that
“the trade itself bears the primary responsibility for maintaining the
established practices of selecting and grading, * * * OPACS
expects it to meet that responsibility.” 15
In mid-August of 1941, the OPACS announced that it was studying
goatskin prices and would put them under ceiling if any unwarranted
advances occurred. This was apparently taken as a warning by the
trade, and goatskin prices were lowered from 61.6 to 58.3 cents in
August and September. The warning issued previously with regard
to observing differentials in hide and calfskin trading was not heeded,
however, and by September, 10 of the 12 grades of packers' hides
were selling at the ceiling price. Therefore, on September 13 an
amendment was put into effect raising the ceiling price to 15% cents
for packers' No. 1 native steers and cows, and scaling prices of the
h New York Herald-Tribune, May 10,1941.
12In announcing the maximum price schedule, the Office of Price Administration stated: “* * * the
development of differentials and seasonal adjustments” will be left “to the normal operation of the market
below this ceiling price.” (OPA Release No. PM 561, June 14, 1941.)
is Wall Street Journal, June 17,1941, p. 1.
m U. S. Department of Commerce, Industrial Reference Service, No. 25, August 1941, p. 4.
i* Journal of Commerce, July 10,1941.

Wartime Prices—August 1939 to Pearl Harbor

poorer grades downward to 10 cents per pound for No. 2 branded bulls.
Calf- and kip-skin maxima were not changed, but new classifications
were added. The trade practice of tare allowance was recognized and
a clause was added prohibiting evasive practices, such as upgrading.
The ceiling order, however, did not cover the prices of imported
hides, which were becoming an increasingly important element in
United States supplies. Imports rose materially in the latter part of
1941, totaling 8,733,000 hides for the year as compared to 4,584,000
in 1940. In December the number of pieces imported exceeded the
number of cattle slaughtered (Federally inspected) in this country.
Prices of this important element of supply had been sent upward
largely as a result of competitive bidding between the United States,
England, Russia, and Japan. By December the finest South American
hides—Frigorificos—were selling in the New York market at 18 cents
a pound, 2% cents a pound higher than the price of domestic native
steer hides, the usual premium being 1%cents.16
T able 14.— C A T T L E H ID E S: Imports and Domestic Cattle Slaughter,

August 1939-Uecember 1941
[Source: U. S. Department of Commerce—Bureau of Foreign and Domestic Commerce, and Survey of
Current Business]

Date

19S9

August.............. .............
September......................
October.................. ........
November......................
December____ ______

Imports
(thousands
of pieces)

219
238
214
317
397

823
880
893
837
773

333
375
242
226
188
391
314
463
383
482

827
715
721
774
796
738
822
842
812
968

1940

January..........................
February..... ..................
March.................. ..........
April....... .......................
M ay________________
June...............................
J u l y . .__
_________
August______________
September___________
October........ ..................

Cattle
slaughter,
Federally
inspected
(thousands
of animals)

Date

1940—Con.
November___________
December........... ...........
1941

January..........................
February........................
March.............................
April................... ...........
May.................. ............
June...................... ..........
July.................................
August..... ......................
September......................
October..................... .
November......................
December.......................

Imports
(thousands
of pieces)

Cattle
slaughter,
Federally
inspected
(thousands
of animals)

542
645

848
858

559
400
560
665
828
823
731
888
721
839
607
1,112

891
717
766
792
908
867
968
968
1,004
1,119
941
1,004

The “upward pull” on domestic prices exerted by these relatively
high import prices, and the uncertainties concerning shipping space,
in addition to the very existence of the price ceiling—which like all
ceilings tended, under conditions of strong demand, to become a
“floor”—were the principal factors causing domestic prices to remain
stable during the last 3 months of 1941, instead of declining in accord
ance with the normal seasonal trend. The prices of goatskins, which
were still uncontrolled, rose again in October and November to 62.8
cents per pound, 52 percent above August 1939. Sheepskins, which
were also uncontrolled at that time, had been rising from June and
reached $1.82 cents per pelt in November, a level 115 percent above
that of August 1939.17
16 Journal of Commerce, December 22,1941.
17 On December 12,1941, the OPM took control of the entire shearling (sheepskin) supply to assure the air
forces of suits, jackets, and coats.

Chapter I I I .—Hides and Leather Products

T able 15.—H ID E S A N D S K IN S : Packers’ Prices, August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]
Hides: Packers’ prices per pound (Chicago) of—

Year and month

Packers’ light native
cows
Index (Au
gust 1939
=100)

19S9

Aiivnst___
September________________
October__________________
November________________
Danembar
___
mo

Jannarv__
February________________
March_____ ____ ________
April _ _ __ _____ ____ May____________________
June_____________________
July_____________________
August__________________
Rftntemhor
Oatnbar
November_________ ______
Dflfifimhftr _ ______
m t

Januarv
February______ _____ ____
March___________________
April
________
May ____
. _ __
June______ ______________
July..........................................
August
____
September________________
October__________________
November______ _________
Dftfiftmhfir

Packers’ heavy
steer

Price

Native

Cents

11.4
15.3
15.6
14.0
14.7

11.6
14.6
16.5
14.6
14.4

125.1
117.3
112.1
116.8
110.9
95.9
105.3
89.3
103.8
117.6
124.5
116.8

14.2
13.3
12.7
13.3
12.6
10.9
12.0
10.1
11.8
13.4
14.1
13.3

14.0
12.9
12.6
12.7
12.3
10.5
11.4
10.2
12.3
14.0
14.6
13.3

119.0
109.9
119.4
126.9
138.8
139.9
132.2
132.2
134.9
136.6
136.6
136.6

13.5
12.5
13.6
14.4
15.8
15.9
15.0
15.0
15.3
15.5
15.5
15 5

13.3
12.4
12.9
13.7
14.7
15.3
15.0
15.0
15.3
15.5
15.5
15.5

100.0
134.4
137.1
123.4
129.5

Skins: Packers’ prices

goat3 Packers’
sheep3
Packers’ Brazil
pound, (per
calf i (per
pelt,
New York) Chicago)
Texas
Cents

Cents

16.0
21.1
24.0
21.4
22.2

41.4
47.0
56.6
55.3
55.1

$0.85
1.06
1.48
1.50
1.48

14.0
12.9
12.5
12.6
12.3
10.3
10.5
9.2
10.9
12.1
13.4
13.0

22.3
21.4
21.6
21.2
21.4
18.7
18.8
15.3
16.6
20.3
21.8
21.3

54.9
53.9
50.1
48.8
45.0
41.7
39.1
37.8
37.3
38.1
42.8
45.5

1.38
1.35
1.35
1.35
1.34
1.26
1.34
1.33
1.33
1.47
1.60*
1.67

13.1
12.4
12.4
13.0
14.1
15.0
15.0
15.0
14.8
14.5
14.5
14.5

21.6
21.6
22.5
24.0
24.5
23.4
21.8
21.8
21.8
21.8
21.8
21.8

45.0
41.5
44.1
49.1
51.7
55.5
61.6
60.6
58.3
60.9
62.8
68.3

1.63
1.65
1.73
1.75
1.75
1.72
1.75
1.75
1.78
1.80
1.82
1.83

11.4
14.4
15.9
14.1
14,4

i Northern native, (16-26 lbs.) green salted.
3 Cereas, dry salted. Price paid by tanner to broker or importer.
* Shearlings, No. 1.

Leather
Prices of leather are affected by the same primary factors which
influence prices of hides and skins; between one-half and two-thirds of
a tanner's total expenses are represented by costs of the principal raw
material. However, price changes for leather are considerably nar
rower than those for hides and skins. Between August 1939 and
December 1941, prices for leather as a group rose 21 percent. During
the same period, the average price of all hides and skins (included in
the Bureau of Labor Statistics wholesale-price index) rose somewhat
more than 50 percent. Aside from the fact that the other costs of
producing leather, such as labor, are relatively stable, there are two
factors outside the industry which tend to limit somewhat the ampli
tude of price movements for this commodity: (1) competition from
substitute materials, and (2) the relative inflexibility of shoe prices.
In the fall of 1939, the speculative advance which occurred in the
prices of hides and skins and many other commodities also affected
the various types of leather. Between August and October the price
of chrome calf rose 19 percent, from 37.4 to 44.6 cents per square foot
(see table 16); the price of side upper leather rose 29 percent, oak-

Wartime Prices—August 1939 to Pearl Harbor

tanned sole bends and backs 28 percent and 23 percent, respectively.
The price of glazed kid leather from Brazil goatskins rose 11 percent.
In November and December prices of leather, except for glazed kid,
began to decline, but in January there was a slight upturn, apparently
prompted by a report that the French were seeking to place orders for
several million feet of upper leather and for one thousand tons of sole.
The size of this prospective order, however, appears to have been
exaggerated,18 and prices resumed their downward trend in February.
With tanning activity and shoe production well below expectations,
this decline continued for most types of leather until the autumn of
1940. By August and September 1940 prices of sole leather were
slightly below, and side leather only slightly above, levels prevailing
before the war in August 1939. However, glazed kid and calf leather
*were affected only moderately by this general weakness: the former
because of its almost exclusive use in women’s shoes, prices of which
are considerably steadier than those of other types of footwear; the
latter because of the firmness of calfskin prices, which in turn resulted
from difficulties in importing enough skins to supplement the
inadequate domestic supply.
Early in the fall of 1940, as expanding defense activities resulted in
increased consumer purchasing power, a general feeling of optimism
began to spread among leather manufacturers. Leather production
and sales were accelerated, and the prices of leathers followed hides
and skins in their sharp upward movements. The price of glazed kid
was an exception, remaining at 59 cents per square foot from August
1940 through July 1941.
The minor declines in hide and skin prices between November 1940
and February 1942—accentuated by a price war between tanners and
packers 19—were not reflected by declines in the various leather prices,
which either remained the same or continued gradually upward. In
November 1940 the prices of calf leather were withdrawn temporarily
as a conservation measure to prevent depletion of United States stocks
by export purchases, inasmuch as the British Government had been
buying heavily.20 Most domestic shoe manufacturers had placed
orders to cover their needs before this step was taken. In December
tanners began to experience difficulty in getting imported tanning
materials; the cod oil supply was decreasing, and prices of hard grease
and curriers’ wax were rising.21
In February 1941, both calf and kip leathers were placed under
export control and by Executive order the export licensing system was
extended to sole and belting leather. Although the latter order was
principally intended to conserve sole leather, sole and belting leather
are for a number of purposes interchangeable.22
During the spring and early summer of 1941, hide prices moved up
ward sharply and leather prices also continued rising. Aware that
the OPACS was closely observing developments, however, the tanners
attempted to prevent a run-away market by limiting sales and
accepting delivery dates no further ahead than 60 days.23
is New York Times, June 14,1940.
See p. 66.
. 2° New York Times, November 15,1940.
21Hide and Leather and Shoes, December 14,1940.
22Shoe and Leather Reporter, March 1,1941.
23 Journal of Commerce, April 12,1941, and New York Times, April 17,1941.

Chapter III.—Hides and Leather Products

LEATHER

TANNERS- PRICES AND PRODUCTION
AUGUST 1939 " 100

T AN N ER S*

INDE)

P R IC E S

INDEX
160

160

150

L A C K S ID E

140

130

OAK

120
110

140

r s
f / i s cH R O M E

CALF
130

SO LE

120

j/
If

110

1
^ G L A Z E D K ID

100

9 0

8 0

9 0

■
.. .1-1,11 I. L U .1 .L .I . .1,1 L l-I 1 111 .1.1 I.1.I .I I L l l . l . l L - U . . U - L U . L l-l-l.. 1 L L -l.l-L.LI-LJ—1.. 8 0
ASOND J FM AMJ JA S ON O J F M AMJ J AS ON 0 J FMA MJ
A S ON 0 J F M A M J J A S O N O J F M A M J J A S O N O
1939
1 9 4 0
1941
1 9 4 2
19 4 3
1 944

PR O D U C T IO N

INDEX

160

150

140

A
/ll

130

-L E A T H E R

120

110
100

9 0

r
C1 /
V
/

TAN IMING

120

110

■

100

9 0

S o u rer F£OCRAt. RESERVE BOARD

8 0

,11-1.1

11111111111

i ,i

1 1 1 1 1 1 i.i. i.. i i l i i i i i i i i -I I .1 1 l- l- l I.L 1.1- I..1 1, 1,.1-IJ.l l- l- l 1„ 8 0

A S O N O J F M A M J J A S O N O J F M A M J J A S O N O J F M A M J JA S O N O J F M A M J J A S O N O J F M A M J J A S O N O
1939

1 940

UNITEO STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS

1941

1942

1 9 4 3

1 9 4 4

Wartime Prices—August 1939 to Pearl Harbor

At the 1941 spring meeting of the Tanners’ Council of America, an
industry representative declared that “ tanners do not want high
prices, since they are fully aware that higher prices encourage substi
tution and that every cycle of mounting prices has eventually brought
disastrous results.” Another spokesman asserted that the peculiari
ties of Army specifications for shoes had actually resulted in increasing
the supply of leather available for commercial use, and explained:
The sharp increase in Army needs resulted in a demand upon tanners for larger
quantities of upper chrome retan. Only a proportion of the hides purchased will
make this leather, and there are important problems in grading and selection which
complicate the price and cost equation. Producers of retan must dispose of those
hides which will not meet Army specifications and prices received for such leather
will affect the price of the Army leather.
In the case of commercial nine-iron and up-sole leather used for Army soles,
only 15 percent or less of the hide can meet the applicable sole leather specifica
tions, and here, too, prices the tanner obtains for soles depend upon what the other
parts of the hide will bring.24

J. P. Davis of the OPM, present at the same meeting, assured
tanners that “ the Government expects the industry to make a fair
and reasonable profit and it will not attempt to force continued sales
a t previous low levels.” 25
Imposition of the ceiling on hides and skins in June 1941 resulted
only in a brief pause in the advance of leather prices. The price of
scoured backs dropped 0.5 cent in June but rose in July from 37.0
to 41.5 cents and remained at that level during the rest of the Defense
Period (see table 16). The price of chrome calf decreased from 50
to 49 cents in July, but rose thereafter to 50.8 cents in November
and 51.2 cents in December. Side leather dropped a fraction of a
cent in July, then advanced between August and October to 31 cents.
Oak bends advanced continuously from March through September
1941, from 37 to 44 cents per pound. The only increase in glazed
kid prices in 1941 occurred in August and September and amounted
to 1 cent.
Prices of some leathers—side, sole, and calf—continued rising even
after the September revision of the hide and skin ceiling had success
fully stabilized raw material prices. These increases were due partly
to the sharp advance in prices of imported skins and Frigorifico
hides. Fine South American hides commanded a premium of 2%
cents26 over comparable domestic hide quotations, compared with the
usual differential of between l}i and 1% cents.27
Accordingly, Price Administrator Henderson warned tanners that
if maximum prices were established for leather, they would be based
on ceiling prices of domestic hides and skins and not upon prices
prevailing for imports. He declared:
If tanners are willing to buy foreign hides at higher prices than those at which
domestic hides are selling under the ceiling, leather prices must be too high. I
still hope that OPA action on the prices of leather and leather products will not
be necessary. However, it is quite clear that increased raw material costs arising
from the use of foreign hides purchased at substantial premiums over domestic
hide prices will generate pressure for advances in prices of leather and leather
products. Further advances in the prices paid for imported hides is almost
certain to result in action on leather prices by this office.
2*New York Times, May 9,1941.
2* New York Herald Tribune, May 10,1941.
2# gee p. 68.
-27 Hide and Leather and Shoes Encyclopedia (Hide and Leather Publishing Co.), 1941, p. 185.

Chapter I I I .—Hides and Leather Produets
T able

16.—LEA TH E R : Tanners’ Prices, by Kinds of Leather9and Production Indexes,
August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]
Tanners' prices of—

Year and month

19S9

August.................................................
September...........................................
October................................................
November.........................................
December............................................
19$

January...............................................
February.............................................
March........................ ........................
April....................................................
May.....................................................
June.....................................................
July....................................................
August................................................
September...........................................
October................................................
November...........................................
December............................................

January...............................................
February................. ..........................
March...................... ..........................
April.....................................—........—
May.....................................................
June......................................... ...........
July.....................................................
August................................................
September...........................................
October...............................................
November...........................................
December-..........................................

Oak sole (per
pound, Boston)

Black
Glazed
Chrome
calf1 (per kid 2(per side3 (per
sq.
ft.,
sq.
ft.,
sq. ft.,
Boston)
Boston)
tannery)

Bends4

Scoured
backs5

Cents

Leather
tanning
index •
(August
1939=100)

20.7
24.5
26.6
26.5
25.0

32.8
38.4
42.0
41.8
39.0

30.5
34.8
37.4
36.8,
35.5

100.0
106.2
108.3
108.3
106.2

62.0
61.3
60.5
60.5
60.5
60.5
60.6
59.0
59.0
59.0
59.0
59.0

25.0
24.6
24.5
24.5
24.5
24.5
23.7
21.1
23.0
25.6
27.0
27.0

41.0
40.0
39.0
39.0
38.5
37.0
35.7
32.9
31.5
33.6
36.0
37.0

35.8
34.8
34.5
34.5
34.4
34.0
32.5
30.5
30.0
31.2
34.3
34.5

106.2
109.4
95.8
90.6
89.6
91.7
86.5
92.7
92.7
96.9
105.2
108.3

59.0
59.0
59.0
59.0
69.0
59.0
59.0
59.3
60.0
60.0
60.0
60.0

27.0
27.0
27.0
27.0
28.5
28.8
28.5
28.6
29.8
31.0
31.0
31.0

37.0
37.0
38.0
38.6
41.5
42.0
43.0
43.1
44.0
44.0
44.0
44.0

35.5
35.5
35.5
36.7
37.5
37.0
41.5
41.5
41.5
41.5
41.5
41.5

107.3
116.7
116.7
114.6
119.8
122.9
125.0
125.0
108.1
134.4
140.6
129.2

37.4
40.2
44.6
43.5
43.4

56.0
61.0
62.0
62.0
62.0

43.8
43.6
43.9
44.7
45.1
43.6
43.5
42.3
42.1
43.4
44.7
45.9
46.2
46.2
46.8
47.6
48.5
50.0
49.0
49.0
49.8
50.5
50.8
51.2

1Average of B and C grades.
2Top grade, from Brazilian skins.
« Chrome tanned, B grade.
4 Tannery run, steers.
* Heavy, civilian trade.
« Based on indexes published by Federal Reserve Board.

The premium prices on the imported hides and skins continued to
press against leather quotations, but it was not until 3 weeks after
Pearl Harbor, on December 29, 1941, that a ceiling for leather was
established.28
Shoes
Between August 1939 and December 1941 prices of shoes rose nearly
20 percent on the average, a substantial increase in view of the price
stability ordinarily characteristic of these markets. The main reason
for the relative inflexibility of shoe prices is the adherence to the
practice of maintaining “price lines” by chain and other large volume
retailers. These large retailers effectively dominate a considerable
part of both the productive and distributive branches of the industry.
Pressures making for higher prices, however, were so great during the
28 On December 25 the leather ceiling was announced, and on December 29 it went into effect restoring
prices to “the highest price contracted for or received by the seller * * * between November 6,1941,
and December 6,1941, inclusive,” and it further stipulated that prices could not be raised by shifting to the
purchaser transportation or other charges which would not have been borne by him during that period.

Wartime Prices—August 1939 to Pearl Harbor

Defense Period, that, both in the fall of 1939 and more particularly
again in mid-1941, manufacturers raised prices by substantial amounts.
The sharp rise in hide and leather prices immediately following the
outbreak of war in Europe was reflected promptly in price increases
for shoes of many types. In men's work shoes, where adherence to
“price lines" is less strict, the increase amounted to nearly 16 percent
between August and November 1939. Increases during the same
period were smaller for other types of footwear, amounting to 6%
percent for men's dress and street shoes, 4 percent for women's shoes,
and 8 percent for children's. (See table 17.)
T able

17.— SHOES: Manufacturers9 Prices (by K ind of Shoes) and Production
Indexes, Augtist 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]

Year and month

Price indexes (August 1939=100) of—

Production index5
(August 1939=100)—

Men’s shoes

With
seasonal
adjust
ment

Dress and
street1
19S9

August........................ ........... .
September-------------- ---------October........ ............................
November ................. ............
December....................... ..........
mo

January....................................
February_______ __________
March......................... ...........
April...................................... .
May_________ __________ _
June-------------------------------July--------------------------------August................................. .
September________________
October...----------------------- November________________
December................................
m i

January----------- ------ ---------February--------- ---------------March___________________
April_____________________
May..... ........ -........ ...... ...........
June-------------------------------July...........-..............................
August.................................—.
September______ __________
October_____ _____ ______ _
November_________ _____
December.................................

Work 2

Women’s
shoes 3

Children’s
shoes4

Without
seasonal
adjust
ment

100.0
100.9
103.2
106.4
106.6

100.0
104.8
114.8
115.7
114.6

100.0
100.1
104.1
104.2
104.3

100.0
103.2
107.0
108.3
108.7

100.0
97.2
98.1
104.7
100.9

100.0
95.9
88.4
80.2
75.2

106.5
106.5
106.5
106.5
106.5
106.5
106.5
106.5
106.5
106.5
106.5
106.7

112.7
110.5
109.8
109.8
109.8
109.8
109.8
109.8
109.8
109.8
110.9
111.3

104.6
105.0
105.0
105.0
105.0
104.5
104.5
104. 5
104.5
104.5
104.5
104.5

108.7
108.7
108.7
108.7
108.7
105.1
101.9
101.9
101.9
101.9
101.9
102.7

96.3
94.4
88.8
81.3
82.2
94.4
94.4
94.4
92.5
93.5
104.7
105.6

81.8
90.1
87.6
75.2
71.1
73.6
81.0
94.2
91.7
84.3
79.3
78.5

107.0
107.0
107.0
108.2
112.4
114.5
116.8
117.4
118.0
120.3
121.4
121.6

111.3
111.3
111.8
113.9
118.6
125.2
128.0
131.6
134.9
137.9
139.9
141.8

104.5
104.5
104.5
104.5
105.1
106.5
108.7
109.9
110.7
112.1
114.7
114.7

103.2
103.2
103.2
104.5
106.6
109.9
113.3
114.7
116.2
119.4
123.9
126.1

102.8
104.7
107.5
109.3
117.8
127.1
123.4
112.1
109.3
115.0
125.2
121.5

87.6
100.0
105.8
101.7
102.5
98.3
105.8
111.6
108.3
103.3
95.0
90.1

1 9 series included.
22 series.
26 series.
<4 series.
* Based on indexes published by Federal Reserve Board.

This initial spurt of activity in shoe markets was shortlived. Shoe
production slumped through the first half of 1940, dropping in June
to a level nearly 40 percent below that prevailing before the war.
After a slight recovery in July and August the level of production
continued down through November. Leather prices, as a group,

Chapter I I I .—Hides and Leather Products

declined steadily through the first nine months of 1940. Shoe
prices remained for the most part unchanged throughout the year
with the main exception of children’s shoes, which dropped by about
6 percent. The general inactivity in shoe markets was described in
the July 31, 1940, issue of American Shoemaking, as follows:
For weeks now, even for months, the expectation has been for larger volume.
It can fairly be said that this has been the attitude since last September * * *.
* * * Hand-to-mouth buying has * * * been the procedure in leather
buying for months, and is attributed by most of the authorities consulted to one
factor— uncertainty * * *.
Early in the year it was overproduction of 1939 that supposedly delayed activity;
then it was price, then it was “ wait for the June shows;” and, of course, always,
the war.

Some makers of higher grade shoes established new and lower price
lines in order to boost sales volumes.29

In late 1940, leather prices strengthened considerably and the de
mand for shoes also began to increase. Although shoe prices remained
for the most part unchanged, by March 1941 there were rumors of
many impending increases. A statem ent30 by Miss Harriet Elliott,
consumers commissioner of the National Defense Advisory Commis
sion, that such increases were not justified by market conditions
evoked a reply from the trade that producing costs had risen consid
erably, both because of higher wage payments and higher raw material
prices.
On March 27, 1941, a group of shoe manufacturers met with Miss
Elliott and other Government representatives. At the meeting’s
conclusion it was announced that—
1. Shoe prices will advance only in proportion to increased costs. 2. Supplies
of hides are sufficient for both military and civilian requirements. 3. Military
demand, only a small percent of available productive capacity, will disturb con
sumer markets very little. 4. Recent advances in shoe prices have resulted largely
from unwarranted apprehension over the supply situation.31

Beginning in April 1941 there were increases in prices of almost all
shoes. As prices rose, Marshall Field, executive secretary of the New
England Shoe and Leather Association of Boston, declared:
The costs of manufacturing women’s novelty shoes have advanced so materially
as to require a fundamental shift in the long established fixed price brackets, or a
marked lowering in quality standards * * *.
When one realizes that upper leather and soles alone represent more than 50
percent of the factory value of women’s shoes, there can be no question that
either higher retail prices are necessary for fall or the quality of the shoes will
have to be greatly cheapened— and this is virtually impossible now for the $2
shoes. Leather prices for the women’s $4 retailers are up today as compared
with a year ago 10 percent on colored calf, 11 percent on colored suede kid, 20 per
cent on gabardine, and 12 percent on leather soles.32

He added that costs of other materials and of labor, as well as overhead
and taxes, had also risen and attributed the increase in labor costs
to the “35-cent minimum wage and overtime payments due to the
maximum workweek.” 33
American Shoemaking, October 9,1940, p. 7.
30 National Defense Advisory Commission. Release No. PM 133, March 6,1941.
81 Idem. Release No. PM 207, March 28,1941.
22 Shoe and Leather Reporter, April 26,1941.
88 Between August 1939 and December 1941, hourly earnings in the shoe industry as a whole increased
23 percent. Average unit labor costs in 1941 as compared with 1939 rose 4J4 percent.

547953°—44----- 6

Wartime Prices—August 1939 to Pearl Harbor

SH O ES

MANUFACTURERS' PRICES AND PRODUCTION

A U G U S T 1939 « IOO

M A N U F A C T U R E R S*

P R IC E S

IN D E X
160

150

140

130

120
110
100
9 6

P R O D U C T IO N

IN D E X
160

150

140

130

120

110
100
9 0

8 0

Chapter I I I .—Hides and Leather Products

Through succeeding months the opposition of retailers to any change
in their price lines gradually weakened, and the pace of the price
advance increased, even in markets for women’s shoes where the
stabilizing influence of large retailers was most pronounced. Mean
while the increase in consumer buying power enabled retailers to
raise the level of their price lines without impeding the considerable
rise which was taking place in sales volume. By December 1941,
manufacturers’ prices of men’s work shoes were about 42 percent
above their level of August 1939. Men’s dress and street shoes
had advanced 22 percent; women’s shoes, 15 percent; and children’s,
26 percent.
The particularly sharp rise for work shoes was attributable to
the fact that the more desirable upper and sole leathers they required
were in heavy demand for use in Army and other service shoes. In
the case of women’s and children’s shoes, and even of some men’s
shoes, the price advance had been retarded somewhat by changes in
construction which had reduced production costs and in some cases
had reduced quality. Thus, composition soles had been substituted
for leather soles in some children’s shoes, and in women’s shoes,
fabrics such as gabardine came into greater use, with various changes
made in style. In men’s street shoes some producers substituted
kip, elk, and side leather for calf uppers.

Chapter IV.— Textiles
Summary
The broad advance in prices of textile fibers and products during
the Defense Period was attributable in large part to the military
demands arising from defense preparations, together with a substantial
rise in civilian purchases. Between August 1939 and December 1941,
nearly all prices rose substantially, although the extent of these move
ments varied widely. The average advance for the entire group was
35 percent. Raw cotton increased nearly 90 percent; cotton yarns,
40 to 60 percent; and grey goods, 80 to 90 percent. Prices of raw
wool and wool tops rose 55 to 70 percent. Raw silk was 17 percent
higher, the rise being moderated by early Government control. The
price of burlap (used primarily in bagging agricultural and other
products) more than doubled. While prices of rayon yarn and fiber
were characteristically stable, rayon grey goods were from 25 to 30
percent higher. These broad advances were reflected in apparel
markets through changes in quality and, particularly in late 1941,
in sharp price increases.
The first prices to move upward immediately after the outbreak of
war in Europe were those for commodities obtained in whole or in part
from abroad. Between August and November 1939, prices of burlap
doubled; raw wool rose 50 percent; and silk, 29 percent. As the war
progressed, all these products were affected by shipping difficulties.
In the case of burlap, limited shipments combined with growing
demand kept prices high and rising almost throughout the Defense
Period, until a maximum-price schedule was issued by the Office of
Price Administration and Civilian Supply in August 1941. The short
age of burlap became pronounced particularly in 1941 as the growing
demand for commercial bagging material was supplemented by rising
military requirements for sandbags and camouflage; meanwhile, the
problem of supply was aggravated by the rise of prices in the Calcutta
market to levels at times higher than the maxima allowed in New
York.
The price of silk during the Defense Period was affected primarily
by the course of developments in United States-Japanese political
relations. With the outbreak of war, the price of silk rose sharply,
declined in 1940, and advanced again early in 1941. The latter rise
was cut short at its height by a series of Government orders in July
and August when stocks of silk were frozen, trading in this commodity
suspended, and maximum prices established by the Office of Price
Administration and Civilian Supply. These measures were taken
concurrently with the rupture of trade relations with Japan.
Wool prices were affected mainly by the supply situation, and,
especially in the early months of the Defense Period, were strengthened
by the loss of imports; in September 1939, the entire Australian clip
was purchased by Great Britain for the duration. Later, shipments
from South America and South Africa compensated for this loss, but
in the fall of 1940, prices turned up again as the result of heavy Army
orders and growing civilian demand. The rate of consumption of
apparel wool in the United States in 1941 reached the highest level
78

Chapter IV .— Textiles

ever recorded. Price increases for wool tops were even greater than
for raw wool, because of the early development of a bottleneck in the
wool-combing industry.
In contrast to imported fibers, prices of domestic textile products
participated in no very sharp or sustained advance until 1941. This
advance, when it finally occurred, was stimulated by rising consumer
purchasing power and growing military demand, especially for goods
of better quality. Between October 1940 and May 1941, prices of
raw cotton rose 33 percent; cotton yam, from 42 to 57 percent; and
cotton grey goods, 47 percent. Maximum prices were established on
combed yarn in May; later ceilings were also fixed for carded yarns
and grey goods, and subsequently these ceilings were in all cases tied
to prices of raw cotton.
Rayon yarn and fiber prices remained stable or rose only moderately
during the Defense Period, in keeping with the general stability of
prices in this industry. The shortage which developed in 1940 and
1941, however, was reflected in the more flexible prices of grey goods.
Between September 1940 and August 1941, price increases ranged from
30 to 60 percent and when voluntary methods failed to halt the rise,
ceilings on representative grey goods constructions were fixed by the
Office of Price Administration in August at levels about 10 percent
below those then prevailing.
In contrast to the broad movements in the fiber markets, the ma
jority of apparel prices remained stable until the latter part of 1941.
Only work clothing, competing with military demand for heavy cotton
fabrics, reflected promptly the price changes in the primary markets.
Durability is the prime requisite of work clothing; hence, substitution
of cheap constructions in order to retard retail price advances was
not as easy an alternative as in the case of style goods. Prices
of overalls rose 13 percent between August 1939 and June 1941,
while work shirts advanced 10 percent. For most other types of
apparel during the period, established price lines were maintained
unchanged, although the quality of many goods was altered con
siderably. For example, the advance in the price of wool led to the
increased use of cotton and rayon blends with wool, while rapid
advances in cotton goods prices resulted in substitutions of lower
constructions. In addition, standards of workmanship were often
lowered.
By July 1941, the accelerated price rise in the fiber markets and the
rapidly increasing consumer demand began to be reflected in sharply
higher retail prices for apparel. For example, retail prices of business
shirts advanced less than 2 percent between August 1939 and June
1941. An increase of 11 percent was reported between June and
December 1941. In the same manner, prices of women’s percale
dresses stood 34 percent higher in December 1941 than in June of
that year. As a result of increased consumer demand and growing
fears of anticipated shortages of consumer goods, retailers tended to
build up their apparel inventories toward the latter part of 1941, and
in October the value of stocks was estimated at about 30 percent higher
than in the corresponding period of the previous year. This accumula
tion of stocks, of course, tended to increase pressure further upon
prices at wholesale and in primary markets.

Wartime Prices—August 1939 to Pearl Harbor

Cotton
Following a slight decline in September and October 1939, the price
of raw cotton advanced until January 1940, fell between February
and October to 2 percent above its pre-war level, and then began a
steady and sharp rise which lasted until September 1941. In October
and November 1941, prices again eased slightly, but the average price
in the latter month remained 78 percent above its August 1939 level.
Between November 1939 and January 1940, cotton prices rose
almost 15 percent, principally as a result of increased foreign and
domestic demands. During this period exports, stimulated by
Government subsidies and by heavy forward buying on the part of
foreign nations, reached a total of 2,425,780 bales,1 an advance of 118
percent over the same months a year before. In the United States,
improved business conditions and efforts of consumers and manu
facturers to build up stocks sent cotton-mill consumption in Novem
ber 1939 up 14 percent above the pre-war level.
Nevertheless, the November 19.39-January 1940 price advance did
not reflect any shortage of supply. Although the 1939-40 crop was
12 percent below the previous 10-year average, the available supply
exceeded by 300,000 bales that of the preceding crop-year because of
a record carry-over of 13 million bales.1
2 A large part of this carry
over was in the hands of the Government, which through its cotton
loan program either owned or held in security against loans approxi
mately 11 million bales.3 However, between August 1, 1939, and
January 31, 1940, the market price of cotton rose above the combined
loan rate of 8.74 cents per pound and carrying charges, and as a
result 800,000 bales of cotton were redeemed and added to market
supplies.4
In February 1940 cotton prices began a decline—gradual until July,,
rapid thereafter—which carried them by October to a point 13 per
cent below the January level. Several factors contributed to this
weakening of the cotton market: Severe curtailment of exports, a
drop in the rate of cotton-mill operations, slackening of business
activities, and the general decline in commodity markets early in
1940. Moreover, British rationing of cotton products and reduction
of shipping space allotted to cotton cargoes in April, followed by the
loss of markets in Nazi-dominated countries in the early summer
reduced United States cotton exports by about 2 million bales annu
ally. Thus, the January 1940 exports were 67 percent higher, while
the July 1940 exports were 50 percent lower, as compared with the
preceding 10-year average for the same months; and the exports for
August, September, and October 1940 were between 77 and 85 percent
lower.
1 Export figures from IT. S. Department of Commerce, Bureau of Foreign and Domestic Commerce.
Raw cotton excluding linters.
2The cotton crop-year runs from August 1 of a given calendar year through July 31 of the following
calendar year. Thus, the 1939-40 crop-year began on August 1,1939, and ended July 31,1940. Most cotton
is picked and ginned from August through December, but its marketing continues through the following
July. The total supply available during any crop-year is equivalent to the carry-over from previous crops
available at the begmnmg (August 1) of that crop-year plus the amount of cotton grown during that same
crop-year.
2 The purpose of the loan program is to assure the orderly marketing of crops and especially to prevent
undue price declines during the marketing season by enablmg farmers to withhold supplies from the market.
Thus, if the price is above the loan rate, farmers sell their cotton in the market; but if the price falls below
the loan rate they pledge their cotton to the Government as security for loans, thereby reducing the amount
of cotton flowing into commercial channels. The pledged cotton is gradually redeemed by farmers and sold
in the market if the price rises to a level above the loan rate (plus carrying charges).
4 This loan rate, and others referred to subsequently, apply to middling 15/16-inch spot cottcn. Differen
tials are allowed for other types of cotton.

Chapter IV .— Textiles

Domestic cotton consumption, after a steady decline from January
to June 1940, began to advance, following the initiation of the defense
program, and by October had risen above the December 1939 level*
This recovery of cotton-mill activity, coupled with a new Government
loan on the 1940 crop, compensated in part for the loss of foreign
markets; and, after their customary seasonal decline from July to
October, prices rose again as the new crop reached the market.
The 1940 loan, announced in August as 9.3 cents per pound, com
pared with 8.74 cents per pound on the 1939 crop, brought 1.2 million
bales of the new crop under loan and tended to steady the market.5
The 1940 crop of 12.6 million bales exceeded the 1939 crop by about
750,000 bales, but the 1940 carry-over was smaller by 2% million bales
than that of 1939. Furthermore, nearly 8.7 million bales of the 1940
carry-over were held by the Government, leaving only 1.8 million
bales of “free” cotton.
Reduction in the free supply stimulated the 82-percent increase in
cotton prices which began in October 1940 and continued through
September 1941, when prices were 86 percent higher than in August
1939. This substantial advance resulted chiefly from wartime busi
ness expansion. While cotton exports between October 1940 and
September 1941 were only 20 to 30 percent of the preceding 5-year
averages for those months, domestic cotton consumption reached
record levels owing to increased consumer purchasing power, forward
buying by manufacturers and consumers, and large Government
purchases for military purposes.6 In November 1940, cotton con
sumption was 18 percent above the August 1939 level. By May 1941
it had risen to 46 percent above the pre-war figure, remaining close to
this level during subsequent months.
In addition to this rise in consumption, a further increase in the
loan rate stimulated cotton prices in 1941. Anticipation of such an
increase was an important factor in the market for some time before
its actual announcement, according to the Department of Agriculture,
which reported in April 1941:
The price rise which has been in progress since mid-October is attributed largely
to speculation that the price will be supported at higher levels next season than
this by higher Government loan rates on the 1941 crop and to greatly improved
domestic demand.7

Enactment in mid-May of legislation providing a mandatory loan
of 85 percent of the parity price on the 1941-42 crop was followed by
a rapid advance in the price of cotton. Large purchases by specula
tors, cotton merchants, and other buyers, accelerating the price rise,
widened the margin by which the price of cotton, between January
and July 1941, exceeded the loan rate of 9.30 cents effective in the
1940-41 crop-year. Four and one-half million bales of cotton were
redeemed during the period from January through July, with the
result that on July 31 the Government held only 350,000 bales of
loan cotton.8
*The movement of cotton into loan occurred even though the average price on the 10 spot markets was
higher than the average loan rate on these markets in each month. The explanation of this apparent paradox
lies in the fact that in some localities, particularly in the important Texas and Oklahoma cotton areas, the
specified loan rates applicable to their markets were above the market prices. Furthermore, the premiums
established by the Department of Agriculture for certain types of cotton caused the loan rate for these types
to be higher than their market prices. In addition, farmers expected a rise in the price of cotton and desired
to hold it for sale at a later time.
• See discussion of cotton yarns, p. 84.
7 The Cotton Situation (U. S. Department of Agriculture), April 1941, p. 2.
8 Not including 6.1 million bales owned outright, as of August 1,1941, by the Commodity Credit Corpora*
tion.

Wartime Prices—August 1939 to Pearl Harbor

COTTON AND COTTON YARNS
WHOLESALE PRICES AND CONSUMPTION

Chapter IV .— Textiles

The new loan rate of 14.33 cents per pound on the 1941-42 crop, com
puted on the basis of the parity price of cotton in July, went into effect
August 4, 1941. Although this rate was substantially higher than
that of the preceding year, the price of cotton on the domestic market
already exceeded it, having risen in July to an average of 15.58 cents
per pound. (See table 18.) This increase reflected expectations of a
small 1941-42 crop, owing to reduced acreage and to generally un
favorable weather and insect conditions. On August 1, 1941, a crop
of only 10.8 million bales was indicated and on September 1 this
estimate was lowered slightly to 10.7 million bales.
During October crop prospects improved, the estimate rising to 11
million bales. With the August 1, 1941, carry-over of 12 million
bales, this indicated a total supply for 1941-42 approximately equal
to that of the previous year. Coupled with rumors of an impending
price ceiling for new cotton, this situation brought about a price
decline in October of 4 percent from the average September level.
During November the price of cotton again declined slightly, but
still averaged 78 percent higher than in August 1939. Weakness of
cotton prices in November was due principally to continued discus
sion of ceiling prices for cotton, unsettled conditions abroad, and large
supplies of “free” cotton resulting from the relatively light movement
of the 1941 crop into loan.
T able

18.—R A W COTTON: Wholesale Prices (per Pound) and Consumption (in
Bales), August 1939-December 1941

[Sources: Prices—U. S. Bureau of Labor Statistics; consumption—U. S. Bureau of the Census]

Year and month

Price
(per
pound)1

Cents

August___________________
September
October...... ..............................
November................................
■pppATTlhAr
19J@

January
■February
.
_
March___________________
April.........................................
May
June
July
.......
Aligns*
September
October.....................................
1 Average price of

Con
sump
tion (in
bales)

9.20
9.09
9.03
9.43
10.54

630,667
624,183
686,451
718,719
650,123

10.80
10.80
10.60
10.62
10.11
10.48
10.38
9.91
9.48
9.38

731,793
661,771
627,194
623,098
641,636
565,416
622,723
650,888
638,235
770,832

Year and month

1940—Continued
November............ ........ ...........
December________________
mi

January__________________
February..................................
March.......................................
April
May.
June_____________________
July_____________________
August___________________
September
________ „
October. _ ___
November________________
December „

Price
(per
pound)1
Cents

Con
sump
tion (in
bales)

9.66
9.86

741,170
777,482

10.10
10.13
10.58
11.09
12.44
13.79
15.58
16.14
17.10
16.49
16.38
17.26

844,830
793,428
864,767
920,250
923,518
875,812
929,782
874,113
875,682
953,600
849,743
887,326

e-inch middling cotton on 10 spot markets.

Cotton Yams
Cotton yam s are of two main types— carded, which comprises
about three-fourths of the industry’s output, and combed. Carding,
which is the first step in bringing the fibers into parallel order, removes
dirt and some short fibers from raw cotton, while combing involves
further processing, use of better grade cotton, and removal of all fibers
below a certain length.9 In recent years, the difference in cost be
• Cotton from Raw Material to Finished Product (New York, Cotton-Textile Institute, Inc., 1940), p. 39-

Wartime Prices—August 1939 to Pearl Harbor

tween the two types has fluctuated from 2% to 8 cents per pound, some
traders estimating the average additional cost involved in producing
combed yarn at about 5 cents per pound.10*
Prices of both carded and combed yams rose rapidly between
August 1939 and January 1940, declined by June 1940 almost to their
pre-war levels, and in September began a sustained advance which
by May 1941 had carried carded yarns to 64 percent, and combed
yarns to 79 percent, above their August 1939 figures. In May 1941
the Office of Price Administration and Civilian Supply issued a
schedule setting ceiling prices for combed yams at well below current
market rates. The schedule was revised upward in July and August,
combed yarn prices thereafter remaining stable. Carded yam prices
rose steadily, reaching in September a level 86 percent above that of
August 1939. In October 1941 a ceiling schedule was issued pegging
prices of carded yams to the market price of raw cotton.
Fluctuations of cotton yarn prices between August 1939 and Sep
tember 1940 roughly paralleled those of raw cotton. After a specula
tive advance of 27 percent between the outbreak of war and January
1940, yarn prices declined sharply for 3 months, then remained rela
tively stable until September 1940 at levels less than 7 percent above
the pre-war figures.
In October, however, cotton yarn prices began a sustained upward
movement, which was particularly pronounced in October and
November as the War Department went into the market on an
enormous scale to obtain clothing supplies for its rapidly expanding
Army.11 Since specifications for most military purchases required
combed yarns, manufacturers began as early as August to accumulate
stocks of the needed types. Despite an increase of almost 12 percent
in production from July to September, deliveries from yarn mills
had by October become very tight, and industrial buyers found it
almost impossible to secure yarns of the counts demanded by the
Army and Navy. To ease the pressure on the market, the Army in
November revised specifications for khaki fabrics to allow the use of
carded yams.12 Carded yarn was also substituted for combed in
some knitted underwear for the civilian trade. Nevertheless, Army
and Navy demand for combed yarns remained so great that, at the
end of 1941, stocks were at a record low and several counts were sold
months in advance.13
This extreme tightness of the market carried the price of combed
yarn from 6 percent above the pre-war level in September to 32 above
in December. At the beginning of 1941, prices of both combed and
carded yarn were above their January 1940 levels, although the price
of raw cotton had declined 6 percent during the same period.
Prices of cotton yarn, which rose steadily in late 1940 and the early
months of 1941, increased at a much faster rate than raw cotton prices,
10New York Times, May 27,1941.
Yam count is measured on the basis of the number of hanks of 840 yards required to weigh a pound.
Thus, yam designated as “30’s” counts 30 hanks to a pound. Single yam is described as “30/1,” and ply
yam as “30/2” for two-ply, “30/3” for three-ply, etc. (Cotton-Textile Institute, Inc., op. cit., pp. 9-10.)
n The persistence of this strong military demand is indicated by the fact that in December 1941 the trade
•estimated that about one-half the combed yam production of sales spinners was going into defense orders;
the corresponding percentage for carded yam was estimated at not more than 15 percent (Journal of Com
merce, December 3,1941).
i2 Daily News Record, November 26,1940.
I8 Journal of Commerce, December 26, 1940.

Chapter IV .— Textiles

which also began to advance in February. Wage increases apparently
accounted for only a relatively small proportion of this advance.14
In April 1941, the price of two-ply combed yarns, for which military
demand was greatest was almost 64 percent above the August 1939
level. The price of two-ply carded yarns, affected by increased con
sumer demand for textiles, rose 57 percent during the same period.
The greater demand for combed yarn was reflected in an increase in
the price differential between carded and combed yarn—from 6.4
cents in August 1939 to 12.5 cents in April 1941.
As a result of this rapid increase, Price Administrator Henderson
issued a warning to the industry on May 1,1941, that ceiling prices for
combed cotton yarns would be instituted in the near future if “current
fictitious levels” were not corrected.15 As prices continued to rise
in May, reports that Government control would be imposed were so
widespread that contracts made for combed cotton yarn included
clauses guaranteeing a reduction in price if a ceiling were established
before date of delivery.16
On May 19, Mr. Henderson announced that a ceiling schedule
based on a price of 40 cents a pound for 30’s single ply combed yam
(then selling for around 52 cents a pound) would be issued in the near
future.17 Trading in both carded and combed yams virtually halted
until the schedule was issued on May 24. The price ceinng was
established for combed yams only, on the basis of 42 cents a pound
for 30's single ply. Prices for other counts were related to this price
and premiums were allowed on yam made from better-than-ordinary
grades of cotton. In issuing the ceiling, Mr. Henderson stated:
The ceiling prices established take full account of raw material and manufactur
ing costs at the present time. The mill margin or spread between cotton costs
and yarn prices in recent weeks has been the highest for many years.18

Although no price ceiling was set for carded yarns, the Office of
Price Administration and Civilian Supply expressed the hope that
prices of such yarhs would adjust themselves to those of combed
yams. However, carded yam prices declined only fractionally be
tween May and June, and then began to rise sharply.
Immediately upon establishment of the ceiling, the industry began
to attack it; one of the principal criticisms concerned the differential
for coarse count yams. It was argued that the trade had commonly
accepted a margin of cent between counts from 24’s to 10's,19while
the differential set by the Government was % cent per count. As a
consequence, many producers went so far as to refuse orders on the
coarse counts. Accordingly, on June 20, the ceiling was amended
retroactively with the differential on coarse yarns changed to % cent
per count.20 At the same time, combed yam for. export was granted
retroactive exemption from the ceiling.
Despite these readjustments, combed yam spinners continued to
protest the basic figure of 42 cents a pound for 30’s single ply yam.
The price of raw cotton rose 25 percent between May and July, while
a power shortage in the South caused intermittent curtailments of*
H See Hours and Earnings in Manufacture of Cotton Goods, September 1940 and April 1941, in December
1941 issue of Monthly Labor Review. See also Productivity and Unit Labor Cost in Selected Manufactur
ing Industries, February 1942. (U. S. Bureau of Labor Statistics, mimeographed rennrt/i
i# Release No. PM 360, May 1,1941.
i®New York Times, May 18,1941.
w Release No. PM 410, May 19,1941.
** Price schedule No. 7, Release No. PM 443, May 24,1941.
19 Journal of Commerce, May 28,1941.
» Release No. PM 582, June 20,1941.

Wartime Prices—August 1939 to Pearl Harbor

operations, particularly in Georgia.21 On July 19, the Office of Price
Administration and Civilian Supply announced that the price schedule
would shortly be revised upward in order to cover increased costs.22
The new schedule, issued on July 21, added 3 cents a pound to the
ceiling price for single ply in all counts and 1 cent a pound to that for
two-ply in all counts.23
At the end of July, cessation of imports of silk from Japan increased
the demand for fine combed cotton yams for hosiery manufacture.
In order to increase output of this type of yarn, which is produced at
higher cost than coarser counts, the price schedule was further revised
on August 2. The new amendment increased the ceiling prices for
superfine yams (86’s and higher) by amounts ranging from 11 to 24
cents a pound.24
Shortly after the July revision of the combed y a m schedule, prices
of carded yarns rose 1 cent. A conference of carded yarn spinners
and the Office of Price Administration and Civilian Supply officials
was held at the end of July, but no formal action was taken.25 Carded
y a m prices continued to increase at a rapid rate, while combed y a m s,
reflecting the adjustm ents in the ceiling, advanced very slowly, until
b y the end of August some carded yarn was selling above the corre
sponding size in combed yarn.26 Consequently, on August 22, when
carded y a m prices were 81 percent above the levels prevailing at th e
outbreak of the war, the OPACS announced that a ceiling on carded
y a m s would be issued shortly to “ restore carded yam s to their normal
relationship w ith the prices for combed cotton yarns.” 27

On October 4, a schedule was issued by which the price of carded
cotton yarn was tied to the price of raw cotton, as measured by the
average closing price of ^e-inch middling grade on 10 spot markets
for the previous day.28 A base price of 16.99 cents a pound for raw
cotton (the average price on 10 spot markets on July 19, 1941, when
ceilings were established for combed yam and cotton grey goods) was
selected, and the schedule set maximum prices ranging from 35 to 66
cents a pound for single carded yam and from 39 to 60 cents for
numbers of two or more plies. These prices (which were 3 cents
below those for the corresponding numbers of combed yam) were to
fluctuate one-half cent per pound with each upward or downward
movement of 44% points in the spot price of raw cotton. Once a
contract had been signed, however, it was to be completed at the
agreed price regardless of future fluctuations in raw cotton prices.29
W hen the sliding-scale price ceiling was issued for carded cotton
yarns, it was also announced that preparations were being made to
place combed yarn under a similar type of ceiling, but by Decem ber
« Journal of Commerce, July 19,1941.
22 Release No. PM 757, July 19,1941.
22 Release No. PM 761, July 21,1941.
« Release No. PM 851, August 2,1941.
25 Daily News Record, July 28,1941.
26 Journal of Commerce, August 20,1941.
27 Release No. PM 993, August 22,1941.
28 Price Schedule No. 33, Release No. PM 1307, October 4,1941. Contracts made before October 6 were
to have theirprices changed to those related to raw-cotton prices on the day before the contract was signed.
Carded yarn producers protested against this retroactive clause and on November 7 Price Administrator
Henderson announced that the schedule would be amended in respect to contracts made before July 21,1941,
at which time the spot price of cotton was 15.99 cents per pound. This change was made on November
26, 1941, and allowed the filling of contracts entered into on or before July 21 at maximum prices related to
the base spot price of cotton. (OPA releases T 41, November 7,1941, and T 54, November 27, 1941.)
29 The schedule covered only carded yam of the ordinary commercial quality, but it was announced that
special grades should sell at the ordinary differential above or below these prices, and that a list of fixed
differentials would be subsequently issued by the Office of Price Administration.

Chapter IV .— Textiles

no such action had been taken.30 Between October and December,
the price of carded cotton yarn remained approximately the same,
dropping slightly in November and recovering later in response to
changes in the price of raw cotton.
T able

19.— COTTON YAR N : Wholesale Prices, and Production Indexes,
August 1939-December 1941

f Sources: Prices—U. S. Bureau of Labor Statistics; production (cotton spindle activity, operations, percent
of capacity)—U. S. Bureau of the Census]
Wholesale price
per pound of—
Year and month

19S9

August__________
Sftptfimhfir _ _
October...................
November..............
December...............

Combed
yam 1

Carded
yam 2

Cents

38.5
41.5
46.5
48.0
49.0

Produc
tion
index
(August

49.0
47.0
43.0
41.0
40.0
39.0
41.0
40.0
41.0
44.0

Year and month

=100)
19Ifi—Con.

32.1
35.9
38.8
39.9
40.7

100.0
108.7
115.0
119.0
118.3

41.0
38.5
36.0
33.6
32.8
32.2
33.5
33.3
33.7
36.9

120.8
117.2
111.2
108.1
105.1
103.3
101.8
106.2
113.6
121.4

1*7Ip)

January
. __
Ffthmary_ ._
March
_
April.......................
May____________
Jvma
July
A u gu st_________
£?apt.ambar
October...................

Wholesale price
per pound of—

November_______
December...............

Combed
yam 1

Carded
yam 2

Cents

47.0
51.0

Produc
tion
index
(August
1939
=100)

39.9
40.9

124.4
123.4

41.3
40.7
43.0
50.5
52.6
52.2
54.5
58.2
59.7
52.6
51.1
52.2

131.7
133.9
137.1
140.5
143.1
142.8
144.5
147.8
145.4
147.8
152.1
145.7

m i

January..................
February................
March
_
April.......................
May_
_
June____________
July____________
August__________
September_______
October_________
November_______
December...............

51.0
52.0
58.0
63.0
69.0
54.0
54.0
55.0
55.0
55.0
55.0
55.0

1 Combed cotton yam, 2-ply 40’s, middling, lH$-ineh staple.
2 Carded cotton yam, 40/2, twisted, weaving.

Cotton Grey Goods
Cotton grey goods consist of “fabrics made from unprocessed yarns,
as distinguished from yarn-dyed goods which are made from dyed,
bleached, or mercerized yams.” 31 Roughly 40 percent of all goods
woven by the cotton-textile industry is sold in the grey goods market
concentrated in Worth Street, New York City.32
Following a 20-percent rise between August and October 1939, the
average price of cotton grey goods eased until September 1940, then
began an advance which, by June 1941, carried it almost 73 percent
above its pre-war level of 20.71 cents per pound. Price ceilings estab
lished in June 1941 at 15 percent below current market rates for
leading types of grey goods were adjusted upward in July and August,
and in October were replaced by a sliding-scale ceiling schedule which
ed grey goods prices to those of raw cotton. Except for slight
nes in July, October, and November, the average price of grey goods
rose steadily throughout the summer and fall of 1941, reaching in

30 On October 8, however, a change was made in the schedule for combed yam; the Office of Price Admini
stration announced that the new price ceilings would apply to yam delivered freight prepaid to the pur
chaser’s point of business; the phrase “purchaser’s customary receiving point” had been interpreted by
certain combed yarn manufacturers as referring to the seller’s mill, with freight charges being added to the
ceiling price.
The Marketing of Textiles, by Reavis Cox (Washington, The Textile Foundation, 1938), p. 117.
32 Of all woven goods, approximately one-fourth is yam-dyed, one-fourth never finished, and one-half
produced in the grey and subsequently finished. Of the last type, about one-fifth is finished by weavers
themselves and the remainder sold in the grey. (Ibid., pp. 117-118.)
While this chapter deals primarily with grey goods which are later finished, reference is also made occa
sionally to certain types of yam-dyed cloth and to cotton goods which are used in the grey.

Wartime Prices—August 1939 to Pearl Harbor

December a level of 37.68 cents per pound—82 percent above that of
August 1939. (See table 20.)
During the Defense Period, cotton grey-goods prices were influenced
largely by the same factors which affected prices of cotton yam. Until
the fall of 1940, the average price of grey goods showed two major
movements, a 20 percent increase between August and October 1939,
and a decline which began in November and lasted throughout the
summer of 1940, when the price dropped to 3 percent above its pre
war level.
The price of print cloth—a leading type of grey goods—followed
the same pattern, rising from 3.5 to 4.1 cents per yard between August
and October 1939, easing during the winter and spring of 1940, and
then remaining stable at 3.6 cents per yard—3 percent above its pre
war level—until September, when it once more began to advance.
Prices of duck—another important class of grey goods—fluctuated a t
relatively higher levels than those of print cloth during this period.
Rising from 26.3 cents per yard in August 1939 to 33.9 cents in Decem
ber, the price of duck remained at its December level through
February 1940 and, although it fell 11 percent between February and
May, recovered in July to a level of 35.7 cents per yard, 36 percent
above the pre-war quotation.
Increased military and civilian demand as well as higher prices for
raw cotton contributed to a sustained rise in the price of cotton grey
goods, beginning in September 1940. The price of duck, which had
been at a high level during the summer of 1940, remained stable dur
ing September and October and in contrast to the general trend, eased
slightly in November. However, early in 1941 duck prices, like those
of other grey goods, began to rise steadily.
By February 1941 the average price of grey goods was 27 percent
above its August 1939 level ana mill margins33 had risen from 11.42
cents to 16.00 cents per pound. The Advisory Commission to the
Council on National Defense was reported to be seriously concerned
about this rise, but direct Government intervention was not expected
by the industry.34
The Textile Fabrics Association, at its annual meeting in April
1941, received telegrams from members of the National Defense
Advisory Commission urging that no further price increases be in
stituted in cotton textiles.35 By May, however, the average price of
grey goods was 61 percent above its August 1939 level, while mil]
margins had advanced to 20.85 cents per pound. At this time, the
Office of Price Administration and Civilian Supply received a formal
protest from the president of the House Dress Institute against rising
cotton grey-goods prices.36
33 Mill margins represent the difference between the price of cloth obtainable from a pound of cotton and
the price of the cotton. The prices used in computing the mill margin are for 17 standard constructions
unfinished (not including fine cloth) in the New York market, taken from the International Textile Apparel
Analysis. Unfinished (grey) cloth is cloth that has not been bleached, dyed, or colored. Price per yard
was converted to price per pound on the basis of approximate quantity of cloth obtainable from a pound of
cotton with adjustment for salable waste. The number of yards of cloth obtainable from a pound of cotton
varied, for the 17 constructions included, from 2.0 to 8.2 according to the construction. Raw cotton prices
are based on the average price of % middling cotton in 10 spot markets adjusted for premiums and dis
counts for grade and staples as quoted in 6 markets. However, this is not necessarily the price paid by
mills, for transportation and handling charges from central markets to manufacturing markets have not
been included. Mill margins are compiled by the U. S. Department of Agriculture, Agricultural Market
ing Service and published in Survey of Current Business, U. S. Department of Commerce.
34 Daily News Record, February 11,1941.
3« New York Times, March 16,1941.
*« Idem, May 15,1941.

Chapter IV .— Textiles

On May 24,1941, a price ceiling was fixed for combed cotton yarns,
but in succeeding months prices of cotton grey goods continued to rise,
particularly those made from combed yarns, which were still exempt
from control. In June, duck and print-cloth prices were; respectively,
59 and 77 percent above the pre-war quotations, while the average
price of grey goods had reached a level almost 73 percent above that of
August 1939. Mill margins had almost doubled in the same period,
rising from an average of 11.42 cents to 21.84 cents per pound. Only
a small part of this increase in spread could be attributed to higher
labor costs; average hourly earnings in the industry had risen only 18
percent since the outbreak of the war in Europe.37
Widespread rumors that a price ceiling would soon be established
had by June 21 virtually halted all trading in the grey-goods market,
as the trade awaited a definite announcement.38 On June 28, the Price
Administrator announced the schedule establishing ceiling prices,
f. o. b. seller’s point of shipment, for six leading types of cotton grey
goods at levels approximately 15 percent below the current figures.
In announcing the schedule, Mr. Henderson stated: “The price ceil
ings take into account the current price of raw cotton and at the same
time make adequate allowance for operating costs of mills.” 39
The ceiling prices were to become effective June 30, 1941, applying
to existing as well as future contracts. With regard to the scope of the
schedule, Mr. Henderson said:
Ceiling prices are mandatory only as to the types of grey goods specified. It
is expected, however, that ceilings on these six types will establish a basis for
prices of other constructions and that normal interplay of market forces will bring
the others into line. If this does not happen the ceilings will be extended to cover
specifically other types of grey goods.38

The W orth Street market vigorously protested various features
of the ceiling schedule, especially the retroactive clause. Deliveries of
grey goods at previously contracted, above-ceiling prices were re
ported, while m any mills refused to quote prices on new contracts at
ceiling levels, adopting instead the practice of making deliveries at
above-ceiling prices with the provision that if the schedule proved
valid, excess over the ceiling price would be refunded.

As a formal expression of protest by the trade, a Cotton Textile
Advisory panel was created to advise the Office of Price Administration
and Civilian Supply on matters pertaining to textile prices.40 After
a series of meetings with this group, the Office of Price Administration
and Civilian Supply announced on July 19, 1941, that ceiling prices
for cotton grey goods would be raised because of the increases in cotton
prices and the added costs resulting from third-shift operations,
training of learners, and intermittent power shutdowns.41
On July 21, the revised price schedule was issued, effective retro
actively to June 30, adjusting upward the prices of all previously cov
ered types of cotton grey goods. The increases ranged from 10 to
37 Average hourly earnings figures (as regularly reported to the U. S. Bureau of Labor Statistics, Wage
and Hour Division) include cotton broad woven goods, cotton yarn, and cotton thread. According to the
Census of Manufactures, wages in the cotton woven broad fabrics industry, constituted about 26 percent
of the value of the product in 1939.
38 Daily News Record, June 19, 23, 25, 26; New York Times, June 20, 21, 23, 25, 29; Journal of Commerce,
June 21 23 24 1941.
3« Price schedule No. 11, Release No. PM 637, June 28,1941.
Daily News Record, July 14,1941; Release No. PM 720, July 13,1941.
41 Release No. PM 757, July 19,1941.

Wartime Prices—August 1939 to Pearl Harbor

28 percent.42 Producers were permitted to carry out contracts made
before June 30 involving prices lower than the new ceiling levels,
irrespective of whether they were above those permitted by the original
schedule.43
The effect of the June ceiling and the July and August revisions on
grey goods in general is indicated by the behavior of the average price
of grey goods. (See table 20.) The June 30 ceiling affected July
sales of those grey goods not covered by the retroactive provisions of
the July 21 revision. The average price of grey goods fell from 73
percent above the pre-war level in June to a July figure 68 percent
above that level. After the August revisions, the average price rose
to about 80 percent above the August 1939 figure, its highest level
after the outbreak of the war. Concurrently, the margin, affected
both by the ceiling orders and by the rise in the price of cotton, fell
from 21.84 cents a pound in June to 19.06 cents in July; and rose in
August to 20.53 cents.
Even after this increase in ceiling prices, trading in grey goods con
tinued slow. Some mills were said to be sold up until October, while
others were refusing orders in the expectation that the continued rise
in cotton prices would induce the Government to set still higher
maximum prices for grey goods.4445 In an attempt to stimulate sales
of cotton grey goods, the Office of Price Administration and Civilian
Supply on August 9 issued a further amendment to the ceiling, grant
ing restricted exemptions to wholesalers, jobbers, and retailers who
sold grey goods for use in unfinished form to industry or private
consumers.46
On August 22, 1941, price ceilings were extended to include several
other types of grey goods.46 Contracts already made for such goods
at higher than ceiling prices were not to be filled without specific
permission of the Office of Price Administration.
Extension of the ceiling was accompanied by a decrease in mill
activity. Cotton-mill consumption, which had recovered in July,
was lower again in August and September; in May, before the price
ceiling action, it was 46 percent above the August 1939 level; by
September it had fallen to 39 percent above the pre-war figure.
In September 1941, Office of Price Administration officials and
cotton grey-goods producers held a series of meetings for the purpose
of completely revising grey-goods ceiling prices. On September 19,
Price Administrator Henderson announced that a ceiling would soon
be established under which grey-goods prices would fluctuate with the
42 The ceiling prices for print cloth and carded broadcloth were raised from 39 to 43 cents a pound. The
combed broadcloth ceiling price became 61 cents a pound instead of 54 cents. The maximum prices for
three classes of sheetings were increased from 30, 32, and 33% cents to 35% cents, 36% cents, and 38 cents a
pound. Part-waste osnaburgs were divided into two classes and ceiling prices of 29 and 32 cents were set
according to the yarn numbers involved; this replaced the former single figure of 25 cents. Tobacco cloth
received a ceiling price of 46 cents a pound in place of the old level of 39 cents.
Other changes concerned differences in quality. A premium of 1 cent per pound was to be allowed for
fabrics made with “feeler motion,” which assures better than ordinary quality. In addition, a further
premium of 1 cent per pound could be charged for fabrics of shade cloth quality.
« This provision was amended on November 27 to allow completion of deliveries under contracts made
before July 1,1941, at maximum prices based upon a spot price of 15.99 cents per pound.
44 Daily News Record, August 7,1941.
45 Release No. PM 904, August 9,1941.
4« Maximum prices, expressed on a yardage rather than a poundage basis, were announced for combed
lawns (10M cents), dimities (10% cents), voile (9 cents), and two constructions of high grade broadcloth
(15% cents and 17 cents). Other changes announced at this time were a ruling that “seconds” and “shorts”
of all materials should not exceed 95 percent of the ceiling price for such goods, and a provision that no
“feeler motion” premium was to be allowed for combed broadcloths, since all such cloths are made in this
fashion. (Release No. PM 993, August 22,1941.)

Chapter IV .— Textiles

price of raw cotton. This schedule, according to Mr. Henderson,
was expected to “facilitate the flow of textiles under the price ceiling.” 47
No action was taken by the Government for a month,48while trading
in grey goods continued to be restricted as the industry awaited a
definite announcement. The new schedule, issued on October 20,
covered a wide range of cotton grey goods, including various types of
print cloths, sheetings, denims, and colored yarn cloths, the prices of
which, like those of cotton yam, were to fluctuate according to changes
of designated amounts in the price of raw cotton.49 At this time, it
was estimated that price ceilings covered approximately two-thirds
of all primary cotton textiles manufactured in the United States.60
After the issuance of the new schedule, the rate of activity in the
grey-goods market tended to vary directly with the movement of
raw-cotton prices. These prices rose substantially in December,
with a resultant increase in ceiling prices of cotton goods. The average
price of grey goods, which had declined fractionally in October and
November, rose in December to a point 82 percent above the August
1939 level. Duck prices in November were 92 percent and printcloth prices 74 percent above their pre-war levels. Mill margins,
which had remained relatively stable during August, September, and
October, continued at about the same level—slightly above 20 cents
a pound—as compared with 11.42 cents in August 1939.
On November 28, 1941, the House of Representatives passed and
sent to the Senate the price-control bill, including provisions granting
special treatment to agricultural commodities. However, this
action had been expected by the market, and the price of raw cotton
rose only 13 points, with a corresponding slight increase in the price
of cotton grey goods. Early December was apparently a period
of inventory speculation, as producers anticipated further advances
in the price of raw cotton.
While the intervention of the Office of Price Administration and
Civilian Supply at the end of June failed to prevent further advances
in grey-goods prices entirely, it did succeed in substantially retarding
their pace. In fact average mill margins in December were lower than
in June, though they remained far above the figures prevailing in
August 1939.*
« Release No. PM 1197, September 19,1941.
** Except an amendment on October 5, allowing a premium on combed lawn meeting the requirements
of the U. S. Marine Corps for poncho material. (Release No. PM 1313, October 5,1941.)
As measured by the prices in 10 spot markets. (Price Schedule No. 35, Release No. PM 1393, October
20,1941.) On November 27 the schedule was amended to allow premiums on certain varieties of fine goods.
(Release T 54, November 27,1941.)
50 Daily News Record, October 20,1941.

547953®—44----- 7

Wartime Prices—August 1939 to Pearl Harbor

T able 20.— COTTON G R E Y GOODS: Prices and M ill Margins , August 1939-

December 1941
[Sources: Duck and print cloths—U. S. Bureau of Labor Statistics; average price and estimated mill margin,
17 standard constructions—U. S. Department of Agriculture, Agricultural Marketing Service]
Price per yard of—
Year and month

1939

Composite of
17 constructions

Duck *

Print
cloth2

Average
price3
per pound

Estimated
mill margin *
per pound

Cents

September__________________________________
October......... .................. ............................... ........ .
November................................................................ .
December
mo

Jannarv
February___________________________________
March............................................................................
April............................................................... ..............
M ay____________________________ ___________
June_______________________________________
July................................................. ..............................
August...........................................................................
September..........................................- .........................
October_____________________________________
November_______________ _______ ___________
December _
.
_
___ ____
rn t

Jannarv
February___________________________________
March...... ................................. ........ ........ ..................
April................................ ........................................ .....
M ay__________ _______________ _______ _____
June...... ............................................................ ............
J u ly _______________________________________
August ___________________________________
September__________________________________
October........................ ............ ...................................
N ovember__________________________________
December___________________________________

26.3
30.3
32.1
33.4
33.9

3.5
4.0
4.1
4.1
4.1

20.71
23.75
24.94
24.51
24.38

11.42
14.58
15.83
15.02
13.72

33.9
33.9
33.4
31.4
30.3
32.1
35.7
35.7
35.7
35.7
35.4
35.6

4.1
3.9
3.8
3.8
3.7
3.6
3.6
3.6
3.7
3.9
4.1
4.1

24.25
23.14
22.29
22.12
21.58
21.26
21.48
21.24
21.83
22.79
24.00
24.48

13.36
12.25
11.59
11.40
11.37
10.68
11.00
11.23
12.26
13.31
14.24
14.50

35.6
39.5
39.5
39.5
39.6
41.9
43.5
45.4
47.4
50.4
50.4
50.4

4.2 !
4.4
4.9
5.4
5.8
6.2
5.5
5.7
5.7
5.9
6.1
6.2

25.16
26.27
28.90
31.05
33.42
35.74
34.74
36.78
37.22
37.06
36.84
37.68

14.94
16.00
18.17
19.81
20.85
21.84
19.06
20.53
20.01
20.45
20.34
20.30

1 Wide No. 8,46 x 28,36", 0.8888 yards per pound, carded yarn, f. o. b. mill.
2 27", 64 x 60, 7.60 yards per pound in the grey, unmercerized, f. o. b. mill.
8 Unfinished (not including fine cloth) in the New York market, converted to a price-per-pound basis.
* Difference between the price of cloth obtainable from a pound of cotton and the price of raw cotton; the
price of raw cotton is the average price of %-inch middling cotton in 10 spot markets, adjusted for grade and
staple premiums and discounts.

Wool
RAW WOOL

Raw wool may be divided into two broad classes—apparel wool
and carpet wool. Price movements of the latter are described in the
chapter on housefurnishings. The following analysis deals solely
with apparel wool, from which most woolen and worsted clothing
is made.
During the 10-year period 1930-39, domestic production of apparel
wool averaged 431 million pounds annually, approximately 87 percent
of average yearly consumption in the United States, the balance
being made up of imports from Australia and Uruguay and, to a
lesser extent, from New Zealand, Argentina, the United Kingdom,
and South Africa.
Marketing of apparel wool begins with sales by growers to local
dealers, buyers for large central market merchants, or cooperative

Chapter IV .— Textiles

organizations.51* Sales are made for cash when the wool is sold at
shearing time, or on consignment to a central marketing agency, or by
contract made prior to the shearing season. Most wool eventually
arrives at one of the four large central markets—Boston (which is by
far the most important), Chicago, St. Louis, and Philadelphia,
where it passes into the hands of large wool merchants who grade,
classify, store, and finally sell it.
The price of domestic wool in the Boston market rose 58 percent
between August and October 1939, declined almost 22 percent during
the next 7 months, and remained within 25 percent of its pre-war
level of 72 cents per pound until September 1940. In the fall of
1940 the price again turned up and although a period of marked
stability occurred during the summer of 1941, by the end of the De
fense Period the price was about 57 percent above its pre-war level.
When war broke out in August 1939, wool supplies appeared ade
quate. The quantity of wool shorn in the United States for the year
beginning April 1939 was estimated to be about 376 million pounds, 1
percent over 1938,62 apparel wool stocks amounted to 244,862,000
pounds,53 and apparel wool consumption in the preceding month
had been 54,208,000 pounds.54 (See table 21.) Nevertheless, between
August and October 1939 the price of domestic wool (territory, staple,
fine and fine medium, scoured basis) in the Boston market advanced
58 percent to $1.14 per pound—its peak for the Defense Period—while
Australian wool also rose 58 percent.55 This increase reflected pri
marily the relative smallness of domestic stocks and the purchase by
Great Britain in September of the entire Australian wool clip for the
duration, making imports of Australian wool and its selling price in
the United States dependent upon decisions of the British Gov
ernment. Total imports of apparel wool, which rose in September to
161 percent above their August level, fell off somewhat in October
but remained more than twice the August figure.
Following this initial advance the price of domestic wool dropped
steadily from October 1939 to April 1940, falling 22 percent. The
controlled price of Australian wool fell 13 percent in the same period.
The decline in domestic wool prices reflected a 64-percent drop in
mill consumption, from 74 million pounds in October 1939 to 27
million in April 1940, and an increase in total wool supply result
ing from exceptionally large imports from South Africa and
South America.
The downward trend in domestic prices was checked in April 1940
when the rate of woolen and worsted mill operations was sharply
accelerated. From April to August 1940, the price of domestic wool
in the Boston market remained practically unchanged, although
Australian wool prices declined moderately. During this period, con51 Raw wool at all stages of marketing is usually sold “in the grease,” which is the wool as it comes off the
sheep, containing animal grease, dirt, briers, and other foreign matter which comprises about 55 percent
of the weight. After these foreign materials have been removed, causing considerable shrinkage, the product
is known as “scoured” wool. All references to quantity in this discussion are in terms of pounds of wool,
grease basis. However, prices for wool which is still in the grease are quoted on a scoured basis, which
involves an estimate of the amount of shrinkage which will occur in the scouring process.
32 The Agricultural Situation, September 1939 (U. S. Department of Agriculture).
53 Grease basis, September 1939. Compiled by the U. S. Bureau of the Census, and representing “stocks
of apparel-class wool held by and afloat to between 95 and 99 percent of all dealers (including commission
houses, pullers, and cooperatives), top-makers, and manufacturers who usually hold significant stocks of
wool.”
MGrease basis. Compiled by the U. S. Bureau of the Census.
33 Prices of Australian wool (Sydney, 64-70’s scoured, in bond, Boston) compiled by U. S. Department of
Agriculture, Agricultural Marketing Service, and published in “Survey of Current Business (U. S. Depart
ment of Commerce).”

Wartime Prices—August 1939 to Pearl Harbor

RAW WOOL
WHOLESALE PRICES, CONSUMPTION, AND STOCKS

AUGUST 1939s IOO

Chapter IV .— Textiles

sumption, stimulated by improved business conditions and, beginning
in June, by Army orders, rose 98 precent. At the same time imports
of apparel wool fell off sharply from the high levels of the previous
months. The bulk of the 1939 wool clip in Argentina and Uruguay
had been sold by the end of February, with the result that exports
from those countries began to fall off early in March. Sales of wool
in the Union of South Africa—the other major source of United States
imports at that time—also were small after February as supplies
became exhausted. In addition, imports from both South America
and South Africa were delayed by lack of ocean shipping space. Ex
ports from the Union of South Africa were reported to be much smaller
than the amount of wool sold, as large supplies were held at ports
awaiting shipment.56
The domestic wool market strengthened further between August
and November 1940, the price rising to 54 percent above its pre-war
level. Heavy Government purchases for the rapidly expanding
Army, at a time when there was a shortage of fine domestic wools
upon the market, were principally responsible for this advance. The
extent of Government demand is indicated by the fact that Army
requirements alone, during the fiscal year 1940-41, were estimated
by the Department of Agriculture to be 244 million pounds of apparel
wool, approximately 50 percent of the country’s average annual
peacetime consumption. Since manufacturers of worsted goods for
the Army were prohibited, until November 1940, from using foreign
wools, the full stimulus of buying for military orders was felt by the
domestic wool market. In addition, civilian demand for woolen
and worsted goods was rising with the increase in consumer purchasing
power. At the end of the year, England raised the price of Australian
wool to a level nearly as high as the peak quotation of October 1939.
The advance in domestic wool prices was halted in November,
principally by a decision of the Army to allow its contractors to use
foreign wools, which led to a substantial increase in imports from
South America. Between November 1940 and December 1941 the
price fluctuated within a range of less than 5 percent. The price
of Australian wool in the United States rose 9 percent between
November and December 1940 and remained relatively stable during
1941, declining moderately in the second half of the year and rising
in December to a point approximately 4 percent above the November
1940 level.
This price stability was partly due to the importation of unprece
dented supplies, particularly from South America, thus balancing the
rapidly growing demand. In 1941, the total supply of apparel wool
was slightly more than 1 billion pounds, grease basis, domestic pro
duction reaching a record level of 455 million pounds (greasy shorn
and pulled); imports for consumption during the first 9 months of the
year totaled 491 million pounds, as compared with 133 million pounds
in the corresponding months of 1940 and an average level of 64 million
pounds for those months in the preceding 5 years.57 The increase of
56 The Wool Situation (U. S. Department of Agriculture), May 10,1940.
57 Idem, December 1941 and April 1942.

Wartime Prices—August 1939 to Pearl Harbor

shipments from Australia, though substantial, was much less impor
tant than the rise in imports from South America.58
Domestic mill consumption in 1941 attained the highest levels ever
recorded, being estimated at almost a billion pounds, or more than
double the 1935-39 average consumption.59 In June 1941, Army
requirements for the 1942 fiscal year (July 1, 1941-June 30, 1942)
had been estimated at 260 million pounds,60 but these estimates were
subsequently raised, and in February 1942 it was indicated that the
Army alone would need approximately 480 million pounds during
the calendar year 1942,61 as compared with an average annual peace
time consumption in the United States of 495 million pounds.
The price of domestic wool rose slightly in September 1941 and
again in October, because of a buying scramble by mills which fol
lowed the largest Army order issued up to that time. The advance
continued through November, and threatened to become of major
proportions following the Japanese attack on Pearl Harbor.
WOOL TOPS

Raw wool which has been cleaned and scoured must pass through
two preliminary manufacturing processes—carding and spinning—
before it is ready for weaving and knitting into woolen yarn. To
produce worsted yarn, an additional process—combing—is employed
after the wool has been carded. Combing segregates long from
short fibers, the former, known as “tops,” being brought into paral
lel order and spun into worsted yam, while the short fibers or
“noils” are used in the woolen industry. In contrast to the market
ing of cotton yarn, a separate market exists for wool after it has
passed through the combing process.62
Prices of wool tops advanced 40 percent between August and
October 1939, dropped back to 20 percent above their pre-war level
in March 1940, and then turned up again in September under the
stimulus of Army demand for worsted goods. Except for two slight
interruptions during the summer, prices rose steadily throughout
1941, reaching a level 70 percent above that of August 1939 at the
close of the Defense Period. (See table 21.)
The advance in prices and production of wool tops following the
outbreak of war in Europe was due in part to seasonal factors, in part
to international events affecting the price of raw wool,63*and in part
88 In October 1940, the National Defense Advisory Commission made arrangements with the British
Government to store 250 million pounds of Australian wool in the United States, as an emergency stock
pile. The wool is stored in bond, ownership being retained by the British Government, and can be sold
on the United States market only in the event that a supply shortage is found to exist here. In the first 9
months of 1941, 93 million pounds of Australian wool were imported into this country for British account
under that arrangement, and held as a reserve stock pile. (That wool is not included in the figure given
above for imports for consumption during the period January-September 1941). Cf. The Wool Situation,
December 1941.
89 The Wool Situation (U. S. Department of Agriculture), April 1942.
60 Idem, June 1941.
81 Commercial Chronicle, February 7,1942.
69 According to the Census of Manufactures, the wool industry in 1939 produced 185,457,367 pounds of
wool tops, of which 95,447,808 pounds were produced by spinners for their own use, and the remainder by
specialized combers.
63 “Prices of spot wool and of tops manufactured from the wool,” according to the Department of Agricul
ture, “differ largely because of the costs of converting wool into tops. These costs consist in considerable
part of the charge for combing. In addition there is a loss on the resale of noils, or short fibers. * * *
This loss is likely to increase as wool prices advance to a smaller extent than prices of raw wool or tops.
On occasion the tops may have a value which reflects their immediate availability, as compared with a
considerable delay which might be encountered in converting wool into tops.” (Of. U. S. Department of
Agriculture, Commodity Exchange Administration, Trading in Wool Top Futures, pp. 10-11.) Noils
prices as reported in the Commercial Bulletin were only 28.3 percent above the pre-war figure in November
1941.

Chapter IV .— Textiles

to the market speculation common to most commodities during that
period. Between August and October 1939, prices of wool tops rose
40 percent; their production in terms of active hours of worsted combs
advanced 15 percent; and the price spread between raw wool and wool
tops increased substantially. By November 1939, however, this
speculative flurry had subsided. Reflecting a decrease in demand for
wool products, prices of wool tops dropped 12 percent from November
1939 to April 1940, while production declined 45 percent.
In the spring of 1940, actual and potential military demand for wool
products led to a moderate upturn in prices, wool tops between May
and June 1940 rising 4 percent to a level 18 percent above the pre-war
figure. Prices declined in July, but began to advance again in August,
and by November 1940 were 58 percent above their August 1939 level.
Beginning in May 1940, production of wool tops rose steadily,
reaching by October a figure 26 percent above the pre-war level, the
highest point attained during the period for which records are avail
able, i. e., since 1920.64 The increase in demand, however, exceeded
the advance in production with the result that during October 1940
wool combing constituted a marked bottleneck in the production of
worsted textiles.65 Although buyers were then of the opinion that this
tightness of supply would prove only temporary, it actually persisted
throughout the remainder of the Defense Period. Through the insti
tution of 2- and 3-shift operations, the number of active hours of
worsted combs increased substantially, but the number of combing
machines in operation scarcely changed, totaling 2,034,000 in August
1939 and 2,058,000 in October 1940.66
The fractional decline in raw-wool prices which followed the Army’s
decision in November 1940 to accept woven goods made from foreign
wool was not reflected in the price of wool tops. Tight supplies to
gether with anticipation of increased purchases of wool products,
following passage of the Selective Service Act, combined to boost
wool-top prices 9 percent between October and November 1940, and
the advance continued in December, prices reaching a level 61 percent
above that of August 1939.
Wool-top prices continued to rise in 1941 as it became increasingly
apparent that purchases for the armed forces were to include far more
than replacement orders. Seventy-one percent above the pre-war
level in March, the price of wool tops eased in April but in May ad
vanced to its peak for the Defense Period—74 percent above the
August 1939 quotation.
An acute shortage of machinery combined with heavy demand to
support prices at this level. On April 19, 1942, it was reported in
the Commercial Bulletin that—
The combing situation, which is in the worst condition it has been in many
years, continues to grow more serious, and at the rate top makers are booking
business it won't be long before machinery is covered for the balance of the
year * * * . Scarcely a pound of top is available for delivery prior to July and
only a small quantity can be offered between July and October.

In November 1941, production as measured by active hours of
machines had increased to almost 52 percent above the August 1939
MDaily News Record, December 17,1940.
w Idem, October 14,1940.
66 Wool Machinery Activity Reports (U. S. Department of Commerce, Bureau of the Census). During
the same period, the number of combing machines owned by mills, regardless of condition, actually declined
from 2,676,000 to 2,599,000 and the number set up in operating position decreased from 2,606,000 to 2,505,000.

Wartime Prices—August 1939 to Pearl Harbor

level, but the number of worsted combs in operation was only 13
percent above the pre-war figure.67
^Reflecting this continuing pressure of demand upon available
supplies, wool-top prices were 70 percent above their August 1939
level at the close of the Defense Period.
WORSTED YARN

Price movements of worsted yam 68 during the Defense Period
paralleled those of raw wool and wool tops, reflecting essentially
the same factors. After a 33-percent advance in the early fall of
1939, the price of worsted yarn (2/32s, crossbred stock, white) eased
until the summer of 1940, rising thereafter to almost 57 percent
above its pre-war level ($1.15 per pound) at the close of the Defense
Period. The increase in yarn prices, however, lagged far behind
that of raw wool and wool tops until the fall of 1941. (See table 21.)
Large-scale Government purchases of worsted goods were pri
marily responsible for the sustained rise in yarn prices which began
in the fall of 1940. Yarn prices advanced in July, declined slightly
in August, and in September began an increase which continued
uninterruptedly for 3 months. Worsted-yarn production started
upward slightly earlier, in May 1940, and by November had reached
a point 33 percent above the pre-war level. However, demand
continued to exceed available supply and in the fall of 1940 (No
vember 8) the New York Journal of Commerce reported:
Sales spinners making the all-domestic yarns for weaving of Army fabrics
are so rushed they are quoting prices either so far ahead of the market as to shut
off demand or else they have frankly advised their customers for civilian use
that they are, for the present, unable to take care of them.

This inability to fill orders was due in large part to the shortage
of wool tops. In January 1941, it was reported that some spinners
of men’s wear worsted yarn not only had large backlogs of orders
but were unable to run even one full shift because of the scarcity
of tops.69 Manufacturers’ preference for Government orders, not
only because of the “sure credit and steady deliveries inherent
in Government contracts” 70 but also “for the sake of the priorities
position which might sometime result for the holder of Government
contracts,” 71 accentuated the shortage of yarn for civilian goods.
In February 1941 worsted yarn prices, then 27 percent above the
pre-war level, began an advance which continued through November.
Although this increase was more gradual than that of wool tops,
worsted-yarn prices by December 1941 were almost 57 percent above
those of August 1939, while wool tops had advanced 70 percent during
the same period. Production, in terms of active hours, in November
1941, was 58 percent above its August 1939 level, while in terms of the
number of active spindles, it exceeded the pre-war level by almost 25
67 Wool Machinery Activity Reports (TJ. S. Department of Commerce, Bureau of the Census). The
number of combs owned by mills declined by 3.1 percent and the number set up in operating position by
3.2 percent from August 1939 to November 1941.
«8 Worsted yam is spun only from wool tops, in contrast to woolen yam, which is composed of yam too
short for combing, noils, and in some cases waste and shoddy (reworked and reprocessed wool). Woolen
yam which contains waste and shoddy must be so labeled, and a price differential exists between virgin
wool yam and shoddy wool yam. Since most woolen yam is used in plants where it is made and wide
quality differences exist among the different types, adequate price series for woolen yarn are not available;
this discussion is therefore limited to worsted yam, for which price series are readily available.
69 Journal of Commerce, January 31,1941.
70 Commercial Bulletin, February 22,1941.
71 Wool Machinery Activity Reports (U. S. Department of Commerce, Bureau of the Census).

Chapter IV .— Textiles

percent. This slower increase in the number of active spindles did
not constitute a serious production problem, however, since the real
bottleneck was in the preceding stage of the production of wool tops.
WORSTED FABRICS

In contrast to cotton and rayon, woven goods made of wool have
no important “grey-goods” market.72 Most woolen and worsted
apparel fabrics are yam-dyed, and when woven are sold in finished
form to garment cutters.73
The price of uniform serge suiting (medium, 12-ounce, 56-58 inch),
a leading worsted fabric, rose 25 percent between August 1939 and
January 1940, eased slightly in the next 2 months, and remained at
a level 18 percent above that of August 1939 until September 1940,
when it began an advance which in the fall of 1941 carried it 49 per
cent above its pre-war level of $1.63 per yard.
(See table 21.)
Shortly after the outbreak of war in Europe, prices and production
of worsted fabrics, like those of other wool products, began to advance,
prices mounting steadily from September through the end of the year,
and production, which declined in September, rising by December to
20 percent above its August 1939 level.
Retail sales of clothing, however, failed to keep pace with this
advance in output, and both prices and production of worsted fabrics
turned downward early in 1940. By March, the price of uniform
serge was only 18 percent above the pre-war level, where it remained
until fall. However, by April, loom activity had fallen to the lowest
level it had touched in nearly 2 years, 36 percent below its August
1939 position.
This downward trend was reversed in May, and by October, produc
tion of woolen and worsted cloth had risen 73 percent above its
April level to a point 11 percent above the August 1939 level. Unfilled
orders as reported by a sample consisting of 119 mills 74 indicate the
importance of Army orders in stimulating production. Whereas,
during the third quarter of 1939, unfilled orders for wool woven cloth
for Government use amounted to only 635,000 linear yards, or slightly
more than 1 percent of total unfilled orders, in the same period of
1940 they aggregated 12,806,000 linear yards, or almost 28 percent
of the total.
This rapid increase in Army demand was offset, to some extent, by
weakness in orders placed for the manufacture of civilian fabrics.
During the late summer and early fall of 1940, purchases of worsted
fabrics by clothing manufacturers were unusually light because of the
uncertainty concerning the effect of the Selective Service Act on retail
73 “Weavers of wool fabrics sell small quantities of goods in the grey, but only in the sense that they per
mit the buyers to order goods in advance of the season without specifying the colors. Before being delivered,
these goods are finished by or for the weaver in accordance with instructions from the buyer.” (The Mar
keting of Textiles, by Reavis Cox (Washington, The Textile Foundation, 1938), p. 118.)
73 Worsted fabrics are distinguished by their smooth surface in contrast to the soft fuzzy appearance of
fabrics woven from woolen yams. No regularly published statistics are available showing tne separate
output of woolen and of worsted fabrics. However, in 1935-36 the Crompton and Knowles Looms Works
conducted a survey of 2,262 textile mills, using 193,399 of its looms, which revealed that the 42,119 woolen
and worsted looms included were used as follows: of 15,230 automatic looms, 10,463 or 69 percent of the total
were used for the manufacture of worsted goods and 4,767 or 31 percent for the manufacture of woolen goods;
of 26,889 nonautomatic looms, 10,734 or 40 percent of the total were used for the manufacture of heavy and
general worsted goods, 5,917 or 22 percent for intermediate worsteds, and 6,941 or 26 percent for woolen
goods. The remaining nonautomatic looms were used for such relatively minor classifications as felts,
velvets, and plushes. (See American Wool Handbook, New York, American Wool Handbook Co., 1938,
pp. 513-515.) The index of production, as shown in table 21, represents the rate of loom activity. It thus
refers to both woolen and worsted production, but can be taken to represent the general trend of worsted
fabric output during this period.
74The Wool Situation (U. S. Department of Agriculture), December 1941. These figures were compiled
by the National Association of Wool Manufacturers.

100

Wartime Prices—August 1939 to Pearl Harbor

sales.75 Nevertheless, the civilian supply situation became extremely
tight, because of diversion of looms to Government orders and the
shortage of wool tops. The usual seasonal increase in civilian demand
during October and clothing manufacturers7desire to cover all of their
spring requirements before prices rose further intensified this situation.
Although quoted prices remained stable between March and
October certain indirect advances were made, as worsted mills can
celed various types of concessions, which they had formerly offered
to buyers.76 In addition, many mills reduced their number of styles
and colors,77 while some orders were placed by salesmen only on a con
tingent basis, i. e., subject to confirmation by the company as to prices
ana terms involved.78
Between September and October 1940, quoted prices of uniform
serge rose 9 percent to a level 29 percent above that of August 1939,
and a further 9-percent increase in November reflected additional
tightening of the market. To arrest this advance, Price Commissioner
Henderson, in January 1941, called a meeting of wool manufacturers
and requested that no further price increases be made.79 Prices
thereafter remained at the November level of $2.28 per yard—the
highest since the early thirties—until the summer of 1941.
This stability was maintained in spite of further increases in demand.
In December 1940, the daily rate of wool consumption was at the
highest level since June 1918,80 while by April 1941, unfilled orders for
civilian men's wear fabrics were almost double the April figure of the
preceding year.81 Civilian demand in April was estimated to be
approximately 15 percent higher than in 1940.82
Inability of fabric manufacturers to obtain enough wool tops to
meet this increased demand led to extensive changes in production
and marketing policies. A tendency to employ woolen rather than
worsted fabrics in the manufacture of men's clothing became evident
in December 1940 and grew more widespread early in 1941. Certain
companies withdrew their worsted lines from the market for the 1941
fall season, but continued to take orders for woolen fabrics,83 while
others shifted the large part of production to quick-weaving cloths,
abandoning such materials as gabardines and tropical worsteds.84
The allotment of worsted goods on the basis of customers' previous
purchases became a common practice in the market.85
75 Journal of Commerce, January 23,1941.

76Idem, June 8.1940; June 28,1940.
77 New York Times, October 4,1940.
78 Daily News Record, October 12,1940.
79Idem, January 6,1941; January 8,1941.
80 Journal of Commerce, December 21,1940.
81 Daily News Record, May 1,1941.
88 Journal of Commerce, April 4,1941.
88 Daily News Record, January 29,1941; January 30,1941.
88 New York Times, May 9,1941.
88 Daily News Record, February 10,1941.

101

Chapter IV .— Textiles

T able 21.— WOOL A N D WOOL PRODUCTS: Wholesale Prices, Production ,

Consumption, and Stocks9l August 1939-December 1941

[Sources: Prices—U. S. Bureau of Labor Statistics; stocks, consumption, and production—U. S. Bureau of the
Census (Quarterly Wool Stocks Reports, Raw Wool Consumption Reports); imports—U. S. Department
of Agriculture, The Wool Situation]
Wool to p s indexes (Au
gust 1939=100)

Raw wool
Year and month

19S9

August ______
September...........
October________
November.........
December............

January_______
February______
March..................
April ________
M ay........ -..........
June......... ......... July
________
August ______
September...........
October ____ ___
November_____
December............
m i

January..............
February______
March..................
A pril_________
May................—June.....................
July......................
August________
September............
October________
November...........
December............

Worsted yarn

Worsted fabrics

Con
Im
Uni
Whole Produc
tion in
form
Pro
sale
Price Stocks 2 sump
tion8 ports4 Whole duc
(Au serge,
sale
price dex8
per
gust
price per
pound i
price5 tion 8 per
pound7 1939=
yard •
100)
Thousands of pounds

$0.72
.94
1.14
1.08
1.06
1.05
.99
.94
.89
.89
.90
.88
.88
.91
1.03
1.11
1.10

244,862
202,534

173,683
262,942
263,593
261,260

1.10
1.09
1.09 285,310
1.09
1.08
1.08 393,290
1.08 ____
1.08
1.09 368,993
1.10
1.11
1.13 '356,"i75"

. Produc
tion in
dex 70
(August
1939=
100)

54,208
55,284
74,215
57,752
46,988

4,610
12,041
9,380
11,874
15,891

100.0
136.4
140.1
133.0
135.1

100.0
99.3
115.2
108.3
91.7

$1.15
1.38
1.53
1.46
1.45

100.0
105.0
135.9
132.9
108.6

$1.63
1.82
1.88
1.96
2.03

100.0
91.2
104.9
120.3
120.4

45,136
40,916
33,580
27,056
32,^16
40,040
61,050
53,524
61,644
84,615
71,608
70,936

24,266
20,791
20,733
12,038
9,658
10,566
9,818
9,864
15,194
25,598
23,293
41,175

128.0
121.9
119.6
116.8
113.4
118.3
113.7
115.4
128.6
145.3
158.2
161.4

94.5
87.6
68.9
59.9
64.8
94.5
98.6
100.7
108.9
125.5
123.4
128.3

1.42
1.34
1.30
1.30
1.29
1.25
1.29
1.26
1.29
1.40
1.49
1.45

91.8
86.8
66.6
65.9
78.7
85.9
93.9
110.1
113.3
134.3
133.3
137.9

2.03
2.01
1.93
1.93
1.93
1.93
1.93
1.93
1.93
2.10
2.28
2.28

109.1
93.5
66.5
64.1
71.2
82.9
91.8
99.8
102.7
110.9
126.5
131.9

79,755
70,036
73,156
85,505
74,784
77,108
87,770
75,500
82,092
102,685
81,244
86,564

51,809
54,698
50,057
72,306
56,949
61,988
52,468
44,697
46,389
(“)
(ii)
(“)

162.3
169.5
170.8
165.9
173.8
169.1
166.1
167.6
173.2
171. 6
169.6
170.3

132.4
144.8
148.9
148.3
150.3
159.3
144.1
173.1
165.5
169.7
151.7
160.7

1.45
1.46
1.52
1.55
1.59
1.64
1.68
1.70
1.74
1.76
1.80
1.80

134.2
148.3
148.4
151.2
153.9
161.7
151.1
162.0
158.9
163.7
158.0
167.2

2.28
2.28
2.28
2.28
2.28
2.28
2.31
2.33
2.43
2.43
2.43
2.43

129.4
141.9
142.9
144.3
146.7
152.4
142.4
153.2
147.9
148.5
148.6
159.4

1Boston, domestic, territory, staple, fine and fine medium, scoured basis.
2 Apparel class wool, grease basis, representing total of domestic wool held by dealers and manufacturers
and foreign wool on hand and afloat. These figures obviously omit stocks held on farms, for which compar
able statistics are not available.
8 Total of weekly average figures for shorn and pulled wool on a grease basis.
* Apparel wool, formerly “combing and clothing;” weight as reported is for greasy, scoured and skin wool,
added together.
5 Futures, spot market.
* Worsted combs, thousands of active hours, weekly average.
7 Worsted yarn, 2/32s, crossbred stock, white, mill. Bradford system weaving yarn.
8 Spinning spindles, worsted, thousands of active hours, weekly average.
* Uniform serge suiting, style 6512-0 D, medium grade, 12-ounce, 56-58-inch, mill.
70 Looms, woolen and worsted, broad, thousands of active hours, weekly average.
11 Confidential.

Certain quality changes were also made during 1941. In June it
was reported that increasing amounts of rayon staple fiber were being
used in combination with worsted yam.86 However, this tendency to
use substitutes was restrained, to some extent, by the Wool Products
Labeling Act which went into effect on July 15, 1941.87 Under the
terms of this act, all wool products were required to bear labels indicat
ing their fiber content. Manufacturers were uncertain of the consumer
86 American Wool and Cotton Reporter, June 19,1941; Daily News Record, June 26,1941.
87 Daily News Record, May 26,1941.

102

Wartime Prices—August 1939 to Pearl Harbor

acceptance of rayon staple fiber when labeled as such and were thus
hesitant to use it in large quantities.
These diverse trends in worsted manufacture were described by the
Commercial Bulletin of July 12, 1941, as follows:
Most mills continue to operate at capacity but have been unable to step up pro
duction to any extent because of the bottlenecks that still exist in tops and
yarns. * * * Civilian users have been complaining of tardy deliveries, especi
ally from worsted mills which have diverted a large portion of their equipment to
defense orders. Indications are that mills will operate at the current high rate at
least for the balance of the year. Sales of clothing at retail are running consider
ably above normal for this "time of year and large numbers of stores are reported
to have depleted their stocks of summer wear and are unable to obtain replace
ments.

In July the 8-month period of price stability in worsted fabrics was
broken, as prices began once more to rise. By September the price
was 49 percent above the pre-war level, where it remained through the
end of the Defense Period. This advance reflected rising costs of raw
materials, increased demand for worsted fabrics, and the effects of a
general wage increase, granted during August, which carried average
hourly earnings in the woolen and worsted goods industry to a level, in
September, 30 percent above the pre-war figure.88 Despite record
production, which in August 1941 was 53 percent above its August 1939
level, the supply situation remained extremely tight during the fall
of 1941. At the end of 1941, unfilled orders for civilian men?s wear
fabrics were 33 percent above those of the last quarter of 1940 and
constituted 33 percent of total unfilled orders for wool woven cloth,
while unfilled Government orders had increased 90 percent over the
corresponding period in the previous year, and amounted to almost 53
percent of total unfilled orders.89
Raw Silk 90
Fluctuating abruptly with changes in the international situation,
the price of raw silk, which had advanced 39 percent since the begin
ning of 1939, rose about 50 percent between August and December,
and then fell rapidly. By July 1940 silk sold at a price appreciably
below its pre-war level of $2.64 per pound, though well above the
January 1939 quotation of $1.90.91 Except for a slight upswing in
October, it remained at about the July 1940 level until March 1941.
Prices then rose steadily until August 2, when a formal price schedule
was issued setting a ceiling price of $3.08 per pound—17 percent above
the August 1939 level—for the basic grade of raw silk, and relating
maximum prices of the principal grades to that ceiling. On Septem
ber 30, 1941, all types of raw silk known in the United States were
made subject to the price schedule.
During the Defense Period, the international situation influenced
the price of silk so strongly that the commodity was described in the
88 Wages, according to the 1939 Census of Manufactures, comprised 17.6 percent of the value of product in
the woolen and worsted goods industry.
8®Bulletin of the National Association of Wool Manufacturers, Vol. LXXI, 1941, pp. 254r-5.
w Although technically known as “raw,” the silk which is imported has already undergone a certain
amount of processing. The individual silk filaments which are unwound from cocoons are too fine to be
used by themselves, and the reeling operation consists of winding from 3 to 12 strands together in one
continuous thread. This work is done in factories in Japan, known as filatures. Skeins of 30,000 to 50,000
yards are produced and bound into “piculs” (bales of 132J4 pounds each), the silk being exported in this
form. Before it can be used in manufacture, this silk must be “thrown,” a process by which several strands
are twisted together to form either knitting or weaving yam. Silk-yarn prices varied so directly with those
of raw silk from August 1939 through July 1941 that they have not been accorded separate treatment.
91 The price quoted is that for the basic grade, Japanese, white, Grade D, 78percent seriplane, 13/15 denier.

Chapter IV .— Textiles

103

Journal of Commerce (October 1, 1940) as a “political football.”
Raw-silk prices were determined largely by developments in the
political relations between the United States and Japan, not only
because almost the entire domestic supply of raw silk was imported
from Japan,92 but also owing to the Japanese Governments exercise
of strict control over raw-silk production, prices, and quality. The
standardization resulting from such Government supervision was for
years the main reason for the superior quality of Japanese silk.
Raw silk is sold by importers either directly or through brokers
to knitting and weaving mills, or to dealers who have it “thrown”
(i. e., twisted) by commission “throwsters” before selling it to the
mills. Prices are quoted in terms of discounts or premiums relative
to a basic grade of silk 93 and trading is confined almost entirely to
New York City, where both spot and futures markets are located.
The price of raw silk, which had been rising from the beginning of
1939, advanced rapidly upon the outbreak of war, continuing to in
crease through December of that year, when the standard grade of
Japanese silk rose for a time above the $4 level, its highest point after
April 1930. This represented an increase of almost 111 percent from
January 1939, when the quotation was $1.90. The December price
was 50 percent above that of August 1939.
This price advance reflected both the uncertainty concerning shipping
conditions for all imported commodities which followed the outbreak
of war, and the earlier disturbance in the New York silk market caused
by the United States' denunciation on July 26, 1939, of its 1911
commercial treaty with Japan. According to diplomatic procedure,
the treaty remained in effect for 6 months after it was denounced, but
under the terms of the Tariff Act, once the treaty became ineffective
the President was empowered to impose punitive duties up to 50
percent ad valorem on all goods shipped from Japan or brought to the
United States in Japanese ships. Speculation was widespread as to
the nature and extent of the action that the President might take, and
a tendency developed to stock up in anticipation of the imposition of
such duties. Stocks of raw silk in United States warehouses at the
end of January 1940 were 136 percent above those of August 1939.
The rapid rise in silk prices resulted also from developments in
Japan, especially the speculation which occurred in the Japanese silk
market—the one Japanese commodity market where speculation was
not prohibited by rigid Government regulation. In the late fall of
1939 the Japanese Government began to issue statements that
speculation in silk would be curbed, but no official action was taken
until the end of January 1940—after the peak of prices had passed—a
fact which encouraged the belief held by some members of the silk*
« Raw silk is produced in Italy and was exported to the United States before June 1940, although in
amounts which were very small in proportion to total silk imports. China also produces raw silk, but can
not be considered a major source of supply because of the lack of standardization and poorer quality of the
silk and because of Japanese control over the silk industry in Central China during recent years.
* For a long time, raw silk was classified only by the “chops” or trade-marks of the various filatures in
Japan. Quality varied so extensively over time, however, that this method was unsatisfactory, and in 1928
the National Raw Silk Exchange established certain objective tests as to evenness, cleanness, and neatness.
As a result of this system, silk is graded, either in Japan or in New York, according to the same set of stand
ards. Thus, the designation of the basic type of raw silk as ‘‘Japan, white, 13/15denier, D-78percent (crack) ”
means that the source of the silk is Japan, its color is white, the denier (the weight in grams of 9,000 meters
of the skein) averages from 13 to 15, and the quality is 78 percent seriplane, which refers to the standard
test described above. The letters and grades (such as “D ” and “Crack”) also refer to the quality of the silk,
being almost synonymous with the seriplane rating.

104

Wartime Prices—August 1939 to Pearl Harbor

industry in the United States that some official interests sanctioned the
speculative price advance.94
In addition, although production of cocoons had increased over that
of the previous year (stocks on December 1, 1939, were 150,438,000
pounds of cocoons as compared with 130,302,000 pounds on December
1, 1939), raw-silk production failed to increase proportionately.95
At the same time, raw-silk consumption in Japan increased, partly as
the result of limitations placed by the Japanese Government on the
importation of other textile fibers. This action also was interpreted
in some quarters as an attempt to boost silk prices, reflecting the
Japanese Government’s desire to maximize foreign exchange for the
prosecution of the war in China.96
In February 1940 raw-silk prices dropped sharply, declining 17
percent from the January figure to a level only 16 percent above that
of August 1939. The initial cause of the decline and ensuing weakness
in raw-silk prices appeared to be speculative liquidation in Japan,
accompanied by the failure of the United States Government to im
pose import duties after the expiration of the 1911 trade treaty in
January 1940. The Japanese Government on January 20 put into
effect a distribution plan under the provisions of which the Govern
ment was to allot raw silk to domestic mills, in order to curb specula
tion and to release more silk for export.97
During the last half of 1940 the price of raw silk fluctuated narrowly
at levels predominantly below the price of August 1939, except for a
brief interval in October. In January 1941 the price was still 3 per
cent below that of August 1939.
In order to bolster silk prices, the Japanese Government in July 1940
began to make large purchases of raw silk. During the same month,
the Silk Heelers Association in Japan voted a 25-percent reduction in
reeling operations effective August 15, and late in August a decree was
issued requiring use of at least 20-percent raw silk in all Japanese
manufacture of rayon, cotton, and wool fabrics for domestic use
after October l.98
During the summer of 1940, silk consumption in the United States
began to increase. Mills were taking advantage of the low price
level to stock up on silk, and demand was stimulated by the defense
program. Consumer demand for silk products, particularly hosiery,
increased and military requirements were raised substantially. Large
amounts of silk were essential for the manufacture of powder bags for
heavy artillery and no satisfactory substitute was available. Silk
was also needed for parachutes and used in preference to other fibers
for certain parts of military uniforms. Beginning in July imports of
silk rose markedly, and stocks in United States warehouses, although
declining from the January peak, remained at a relatively high level,
their strong position preventing a price advance as demand increased.
On September 28, 1940, the Japan-Italy-Germany 10-year military
pact was signed, and the raw-silk market was in a state of upheaval
for a month afterward. Although the October price was only 2 per94 Journal of Commerce, issues of October 20, December 14 and 28, 1939.
95 A difference of opinion existed as to the basic reason for this situation. Japanese representatives stated
that although the filatures were amply supplied with cocoons, they were unable to reel them because of a
lack of electricity and also because the necessary skilled labor force was being withdrawn to serve in the
army. This explanation was disputed by some Americans who pointed out that silk weaving in Japan,
which required an equal amount of fuel and equally skilled labor, nad not declined. (Cf. Journal of Com
merce, December 27,1939; January 4,1940).
96 Journal of Commerce, November 17, December 13, 20, and 28, 1939; December 15,1940.
97Idem, February 1, 1940.
98 Idem, July 8 and 20, and August 27,1940.

Chapter IV .— Textiles

105

106

Wartime Prices—August 1939 to Pearl Harbor

cent above the September quotation, rumors were current to the effect
that imports might be drastically curtailed as the result of political
tension between the United States and Japan. Raw Silk Importers,
Inc.—a trade association in New York City—strongly advised its
members to insert the following clause in their contracts:
In the event that raw-silk shipments from the country of origin of the silk
herein described shall be interrupted or prevented by war, or domestic or foreign
embargo, or if shipment or delivery is prevented or delayed by any similar or
dissimilar cause beyond seller’s control, the seller may cancel the contract
upon refunding any amount prepaid by the buyer thereunder."

B oth imports and consumption rose sharply during October, as
dealers sought to stock up on raw silk before the trade m ight be
interrupted by political developments. B y October 10, 1940, it was
reported that virtually all stocks of desirable grades of silk in U nited
States warehouses and en route from Japan had been bought up and
some importers were refusing to quote prices beyond Novem ber
delivery.1 B y December 1940, stocks in United States warehouses
had advanced to their peak for the Defense Period, 188 percent above
the August 1939 level. However, when it became apparent in N ovem
ber th at diplomatic relations were not then to be broken off, silk
prices declined once more to below their pre-war levels where they
remained through February 1941.

In February 1941, silk prices began a steady advance which con
tinued through the spring and summer as the international situation
became increasingly tense. In March, prices rose almost 9 percent,
following the signing of the Russo-Japanese 5-year neutrality pact.
Rumors that the Japanese Government planned to increase control
over silk production were a primary cause of the price advance, and
in April the Silk Control Commission announced that 1941-42 silk
production would be cut by 20 percent.*12
During June and July silk prices increased further as a result of the
declaration of war between Germany and Russia, the resignation of
the Japanese cabinet, and the Hull-Nomura conferences. From
July 21 through July 25, when Japanese invasion of Indo-Chiha was
threatened, the price of the basic grade of raw silk advanced from
$3.08 to $3.57.
Although the Office of Price Administration had begun to investi
gate the rise in silk prices in June,3 no action was taken until the
crisis late in July. On July 25, the date of issuance of the State
Department order freezing Japanese funds in the United States, rawsilk futures prices rose the full limit of 25 cents a pound allowed by the
Commodity Exchange.4 On July 27, Price Administrator Henderson
asked the suspension of trading in silk futures on the Commodity
Exchange and at the same time announced that a price ceiling would
shortly be imposed.5 A series of conferences with trade representa
tives followed, and on August 2 the price schedule was issued, setting
a ceiling price of $3.08 per pound (the price prevailing on July 21,
1941) for the basic grade of raw silk, and relating maximum prices of
WJournal of Commerce, October 15, 1940.
1Idem, October 11,1940.
(The crop-year of silk begins in June.)
a Idem, June 21,1941.
4 The limit on permissible daily price fluctuations in the raw-silk futures market was raised from 15 to 25
cents per pound effective January 3,1940, by the board of governors of Commodity Exchange, Inc., primarily
to bring the New York and Japanese futures markets into line. (Journal of Commerce, January 3, 1940).
8Release No. PM 801, July 27, 1941.

2Wall Street Journal, April 29, 1941.

Chapter IV .— Textiles

107

other important grades to this ceding.6 On September 30, 1941, the
schedule was extended to include all types of raw silk known in the
United States.7
Because of the importance of silk to the defense program, the Office
of Production Management, through a series of measures beginning on
July 26, 1941, assumed control over all stocks of silk in the United
States, except bales which had been opened before August 2. Con
sequently, the main effect of the ceiling prices set by the Office of
Price Administration was their stabilization of prices of silk which
had been released by the Office of Production Management for the
manufacture of military goods or for purchase by the Defense Supplies
Corporation.
T able 22.—R A W S IL K : Wholesale Price , Imports , Consumption, and Stocks, August

1939-December 1941
[Sources: Prices—U. S. Bureau of Labor Statistics; imports, consumption, and stocks—U. S. Department
of Commerce, Survey of Current Business]

Year and month

1989

Wholesale
price per
pound1

Stocks, end of
Imports
Consump month, U. S.
(thousands tion
(bales)’
warehouse
of pounds) 2
(bales)4

August............................. .
September................ .........
October...............................
November..........................
December...........................

$2,641
2.993
3.271
3.394
3.973

4,495
7,262
6,936
5,423
5,322

33,095
36,869
41,858
32,241
21,128

25,060
27,760
35,935
41,927
55,610

mo
January...............................
February............................
March.................................
April...................................
May....................................
June....................................
July.....................................
August................................
September...................—
October............................November________ ____
December...........................

3.687
3.061
2.951
2.681
2.794
2.724
2.540
2.529
2.561
2.698
2.585
2.562

4,972
2,175
2,213
2,494
2,925
2,356
3,827
4,761
3,739
6,490
7,219
4,429

29,506
22,485
21,685
21,740
18,997
17,307
22,766
30,189
28,828
39,877
36,374
23,113

59,225
50,306
45,887
42,698
43,285
41,822
43,211
46,898
44,454
48,297
60,330
72,248

19.41
January............................. .
February...........................
March.............................. .
April...................................
May........................ .........
June...................................
July...................................
August...............................
September........................
October............................. .
November..........................
December...........................

2.560
2.589
2.816
2.834
2.886
3.019
3.049
3.080
3.080
3.080
3.080
3.080

3,263
2,430
3,453
3,551
3,509
3,895
2,347
332
1,003

28,425
28,111
25,828
23,538
22,440
24,251
28,528
2,069
4,685
4,160
5,676
<*>

63,433
54,106
49,904
49,373
50,341
53,436
47,208
53,988
53,008
57,508
55,486
(*)

( 5)
( 5)

<*)

1 Basic grade of silk: Japanese, white, grade D, 78 percent seriplane, 13/15 denier.
2Unmanufactured silk, comprising raw silk, cocoons and waste.
« Compiled by Commodity Exchange, Inc. and representing deliveries to mills, obtained by adding to
or subtracting from imports during a given month the difference in the United States stock position at the
beginning and at the end of the month. The figure thereby obtained includes re-exports.
4 Compiled by Commodity Exchange, Inc., reported by principal warehouses in New York and Hoboken,
and include Commodity Exchange certified stocks and stocks at terminals.
* Confidential.

Rayon
The contrast between the price movements of rayon fibers and yarns
and those of the natural fibei*s during the Defense Period can be
• Price Schedule No. 14, Release No. PM 865, August 3,1941.
» Release No. PM 1279, October 1,1941.

547953°— 44----- 8

108

Wartime Prices—August 1939 to Pearl Harbor

accounted for primarily by the fact that production of rayon is con
centrated in approximately a dozen corporations. Between August
1939 and December 1941, prices of the principal filament yarns rose
from 4 to 8 percent and prices of staple fibers either declined or re
mained unchanged. In markets for rayon grey goods, however,
prices rose sharply—from 25 to 30 percent.
Rayon is a synthetic fiber manufactured from a cellulose base by
means of three chemical processes—viscose, acetate, and cuprammonium, named in order of the quantity produced.8 The two main
classifications of rayon are filament yarn and staple fiber.
RAYON FILAMENT YARN

Production of the two principal types of filament yam, acetate and
viscose, is concentrated in a relatively small number of large companies,
which distribute most of the yarn directly to knitting and weaving
mills. This concentration of production and marketing is accom
panied by a marked stability of prices, manufacturers issuing list
prices which remain in effect for long periods of time.9 Rayon yarn,
in contrast to other raw materials used in textile manufacture, has
no futures market.
In the early fall of 1939, prices for the most popular size of acetate
and viscose yarn rose slightly above their respective pre-war levels of
54 and 51 cents per pound.101 Acetate yarn fell back to its August
level in December and prices of both types then remained stable until
June 1941, when they were indirectly raised by a revision of credit
terms. In September and October 1941, rayon-yarn prices rose until
they were pegged at their October 5 levels—56 cents per pound for
acetate yarn and 55 cents for viscose—by an informal ceiling issued
by the Office of Price Administration.
Between August and October 1939, prices of acetate and viscose
yarns advanced almost 4 percent, reflecting increases in the prices of
essential raw materials (wood pulp, cotton linters, and several im
portant chemicals). In addition, there appeared the beginning of a
pronounced shortage of rayon yarn, partly because of widespread sub
stitution of rayon for silk, prices of which had risen very sharply.11
At the end of the year, however, acetate yarn dropped back to its
pre-war level.
Prices of both types of yarn remained at their December 1939
levels until June 1941. This stability of prices was maintained in
spite of rising demand owing to greater defense expenditures, the in
crease in the price of silk, and uncertainty concerning future silk
supplies which led to increased use of rayon in knitting (e. g., for
welts and feet of silk hosiery),12 and in weaving, where it had already
virtually replaced silk. By the end of December 1940, rayon yarn
stocks held by producers (never substantial in quantity) were 67
percent below their pre-war level, despite a 33-percent increase in
production during the same period.13 Civilian purchases were almost
8 A fourth process, nitro-cellulose, is no longer used in the United States.
9 Prior to June 16,1941, a credit discount, usually of 2 percent for 30 days, was allowed.
10 Acetate yarn, first quality, natural, cones, 150 denier; viscose yarn, first quality, bleached, skeins, 150
denier.
11 Journal of Commerce, October 21,1939.
12 Idem, October 16,1940.
18 Rayon Organon, Statistical Supplement, January 1942.

Chapter IV .— Textiles

109

entirely responsible for the rise in demand, Army requirements during
1940 being relatively small in quantity and of an experimental nature.14
Demand for rayon yarn, stimulated by heavy consumer purchases
of apparel, continued to advance during the first 5 months of 1941,
when domestic consumption of filament yarn was 17 percent above
that for the same period in 1940.15 A tendency toward substitution
of rayon for silk in many types of apparel and housefurnishings con
tinued, particularly in view of the uncertain supply and price situa
tion prevailing for silk.16 By April, reports of an impending price
rise, owing to increased demand and to fear of shortages of certain
essential chemicals and other raw materials, began to appear in the
market.17
The first advance in the cost of rayon yarn to buyers, which took
place in June 1941, consisted of a revision in credit terms rather than
a direct increase in list prices. All filament yam, as of June 16, was
to be sold on a strictly net basis instead of on the former basis of 2
percent for 30 days.18
Nevertheless, demand continued to exceed supplies. By June,
customers who had for some time been receiving yam on an allotment
system were complaining that deliveries amounted to only 40 or 50
percent of their requirements.19 The supply difficulties of weavers
and knitters were intensified in late July and early August as a result
of the silk crisis. In order to temper the effects of the freezing of
silk stocks upon the hosiery industry, the Government began to allo
cate rayon yarn to former users of silk. Beginning in August a series
of orders was issued, of which the last one during the Defense
Period (effective October 1) provided for the diversion of 9 percent
of the production of viscose and cuprammonium yam and 5 percent
of acetate-yam production to former manufacturers of silk products,
both hosiery ana nonhosiery.20
Rayon-yam manufacturers objected to the allocation program on
several grounds: the industry was virtually sold out at the time;
manufacturers contended that since the silk-hoisery industry had for
years branded rayon as an inferior fiber, it was unfair to force yam
producers to allot their already scarce supplies in this fashion; in
addition, they were concerned about consumer reaction to hosiery
composed in part of types of rayon yams not intended to be used for
this purpose.21 However, as a result of the allocation order, the
amount of rayon yam used by the hosiery industry increased from
16.4 million pounds in 1940 to 26.3 million pounds in 1941.22 During
the Defense Period, the prices of fine denier rayon yams of particular
importance to hosiery manufacturers rose more sharply than those
of the coarser count yarns: For example, quotations for viscose
yams advanced as much as 27 percent for the 50-denier size and 15
percent for the 75-denier size.23
14 Rayon Organon, January 1941, p. 11.
15 Journal of Commerce, June 6,1941.
i®Idem, February 24,1941.
17 Daily News Record, April 9,1941.
« Idem, June 14,1941.
19 Journal of Commerce, June 16,1941.
2® OPM Release No. P M 1232, September 25,1941.
21 Daily News Record, August 4 and 6,1941.
22 Rayon Organon, Statistical Supplement, January 22,1943 (p. 18). In addition, the demand for rayon
yarn was potentially increased by two additional developments after August 1941. With future silk sup
plies virtually cut off, the armed forces were compelled to consider the extensive use of rayon in place of
silk. Also, as part of the Good Neighbor policy, the Government announced that the United States, to
gether with Great Britain, would take the place of Japan as the source of supply of rayon yarn for Central
and South America.
23Rayon Organon, July 1941 (p. 110) and November 1941 (p. 164).

110

Wartime Prices—August 1939 to Pearl Harbor

Two other upward pressures influenced rayon prices during the
summer and fall of 1941. Wages had risen substantially after the
outbreak of the war and, in addition, the industry was faced with a
serious materials problem, especially with regard to cotton linters,
one of the essential raw materials for the manufacture of acetate rayon
yarn.
A general revision in the prices of both viscose and acetate was
made in September 1941, effective immediately for spot sales and on
November 1 for contract sales. Since the market was virtually sold
out, relatively few spot sales were made at these prices in September,
and reported spot-market prices (see table 24) do not fully indicate
the extent of the price advance. The revised price list of the largest
rayon-producing company showed an increase from 53 to 55 cents
per pound for 150 denier, 24-40 filament viscose yarn, and from 54 to
55 cents per pound for 150 denier, 40-60 filament acetate yarn.24*
The Office of Price Administration, which had established ceiling
prices for rayon grey goods in August, announced that these increases
occurred with its full knowledge and consent. The agency objected,
however, to larger increases instituted by several other companies,
and these advances subsequently were withdrawn during the month.26
Administrator Henderson stated:
The near-capacity level of operations enjoyed for many months by yarn mills,
together with the current price increase, is expected to enable producers to con
tinue to supply the requirements of the weaving and hosiery trades without any
further advances in the price of yarns. Should prices rise further, we are pre
pared to take immediate action.26

To facilitate maintenance of stable prices for rayon as well as for a
number of other products, the Office of Price Administration on
September 25, 1941, issued a ceiling price for bulk sales of natural and
synthetic acetic acid, extensively used in rayon-yarn manufacture.
Early in October, announcement of substantial price increases by
a large producer of rayon yarn led the Office of Price Administration
to threaten formal ceiling action, but upon the company’s with
drawal of its new prices, Price Administrator Henderson stated that
no formal ceiling would be imposed. At the same time, the Office of
Price Administration made public a suggested list of approved maxi
mum prices for all types of rayon yarn, corresponding generally to
those prevailing on October 5, 1941, and prices remained at these
levels through November.27
STAPLE FIBER

Prices of rayon staple fiber were even more stable than those of
rayon filament yam during the Defense Period.28 Between August
1939 and January 1940, acetate staple fiber dropped 7 percent below
its pre-war level of 46 cents per pound, remaining unchanged there
after, while the price of viscose staple fiber remained constant at 25
24 Journal of Commerce, September 15,1941.
2» Cf. Daily News Record, September 18-22,1941.
2* OPA Release No. PM 1174, September 17,1941.
27 OPA Release No. PM 1459, October 28,1941.
29 Rayon staple fiber is of the same chemical composition as rayon filament yam, but differs fundamentally
in physical structure and manufacturing process. Whereas the latter consists of long continuous strands of
filaments twisted together, staple fiber is produced by cutting filament rayon into short uniform lengths
which are subsequently spun into yams. Since this spinning process may be done on either the cotton or
the woolen system, rayon staple fiber is used not only for the manufacture of spun rayon woven goods,
but also in combination with other fibers.

Chapter IV .— Textiles

I ll

cents per pound during the entire period, despite marked changes in
both demand and sources of supply.29 (See table 24.)
Until 1940, roughly half of the rayon staple fiber annually available
in the United States was domestically produced, the other half im
ported.30 In 1940, while imports from Japan increased, total imports
decreased as shipments from Italy, Germany, and the United Kingdom
declined. Expansion of domestic plants, however, brought production
in the United States to a level of approximately 81 million pounds,31
almost compensating for the decline in imports.
Domestic production in 1941 was further expanded to 122 million
pounds,32while total imports from January through November totaled
only 11.6 million pounds, a large part of this total representing with
drawals of stocks from United States bonded warehouses. Imports
from Japan were virtually cut off beginning in August, those from
Italy through November totaled less than 17 percent of the small
1940 figure, while the United Kingdom halted all exports of staple
fiber in July.33 Before that date, substantial quantities of shipments
from the United Kingdom were reported to have been lost at sea.34
The demand for rayon staple fiber mounted rapidly because of
increased consumer acceptance of spun rayon fabrics and especially
because of the greater use of rayon staple fiber in combination with
other fibers. Rising prices and shortages of certain types of cotton
yam, of wool (both apparel and carpet) and flax, led to the widespread
use of varying proportions of rayon staple fiber in the manufacture of
apparel, blankets, carpets, table linen, towels, draperies, and slip
covers.35 Consequently, in spite of the expansion of production during
the Defense Period, a pronounced shortage of rayon staple fiber
existed throughout 1941.36
RAYON GREY GOODS

During the Defense Period, the reactions of the rayon-grey-goods
market to the war and to the price-control activities of the Govern
ment were similar to those of the cotton grey-goods market. Prices
of three important types of grey goods—viscose twill, pigment taffeta,
and acetate warp crepe—rose 15, 14 and 11 percent, respectively,
between August and October 1939, then eased until the summer of
1940, when quotations for the first two constructions were slightly
below their pre-war levels.37 In the fall of 1940, grey-goods prices
began a sustained advance which carried them during the summer of
29 Prices are for staple, acetate, 5 denier; and staple, viscose, 1H denier.
29 Between 1930 and 1939 imports rose from 518,000 to 47,403,000 pounds, while domestic production
mounted from 350,000 to 51,314,000 pounds. (Rayon Organon, Statistical Supplement, January 2. ;1942,
p. 16.)
31 Rayon Organon, June 1941, p. 91.
32 Idem, Statistical Supplement, January 1942, p. 16.
23 Journal of Commerce, July 24,1941.
3<Idem, June 4,1941.
33 Although the armed forces made no substantial purchases of staple fiber, the Army was reported to
be conducting experiments on its use for uniform fabrics, shirting materials, and blankets. (Rayon
Organon, June 1941, p. 97.)
36 Journal of Commerce, November 19,1941.
3?Viscose twill, 38-inch, 112 by 68; pigment taffeta, 40-inch, 92 by 68, 100 denier warp, 150 denier filline;
acetate warp crepe, 45-inch, 135 by 64, 100 denier, 2 by 2. These three constructions, in the order listed;
are used for linings, underwear, and dress goods.
Accurate price data for rayon grey goods are difficult to obtain since the construction of rayon fabrics
is subject to frequent changes as a result of the development of new fashions. Also, no uniform method of
price reporting exists within the industry, with the result that prices reported in the trade press, such as
those used in the present study, may represent contract or spot transactions. However, the three selected
series, representing leading types of grey goods, indicate the general trend of rayon grey-goods prices during
the Defense Period-

112

Wartime Prices—August 1939 to Pearl Harbor

1941 to levels varying from 30 to 60 percent above their pre-war
quotations. On August 24, 1941, the Office of Price Administration
established ceiling prices for leading types of grey goods at levels on
the average 10 percent below current market rates.
The price advance following the outbreak of war in Europe was
greatest for acetate warp crepe, which rose 16 percent—from 22.0 to
25.5 cents per yard—between August and November 1939, and re
mained at its November level through the end of the year. Viscose
twill and pigment taffeta rose 15 and 14 percent, respectively, from
August to October 1939 and thereafter moved steadily downward ex
cept for a slight interruption in March 1940. By June, viscose twill
had reached a level of 15.6 cents per yard—almost 3 percent below the
August 1939 quotation—where it remained until October. The de
cline was smaller for pigment taffeta, but in August 1940 it was
selling for 14.38 cents per yard—slightly below its pre-war level.
During this period, the price of acetate warp crepe fell more slowly
than those of the other two constructions, and its lowest level—22.25
cents per yard, which prevailed from June to October 1940—was still
slightly above the August 1939 quotation.
In the fall of 1940, prices of rayon grey goods began an advance
which continued at a sharply accelerated pace during the spring and
summer of 1941. Primarily responsible for this advance was the fact
that supplies were inadequate to meet demand, which rose steadily
owing to increased consumer purchasing power. Shortages developed
in the basic materials required for rayon grey-goods production—rayon
yam and staple fiber—and by June 1941, converters were complaining
that the early opening of fall lines in the dress industry was being
hindered by slow deliveries of rayon g;rey goods.38
By May 1941, prices of viscose twill, pigment taffeta and acetate
warp crepe were, respectively, 22, 10, and 14 percent above their pre
war levels. Since only minor increases had occurred in yarn and
staple fiber prices, the advance in grey goods was attributed in large
part to higher labor costs.39 Wages had moved upward in the silk
and rayon industries since the outbreak of the war, average hourly
earnings having risen by June to a point 15.6 percent above the
August 1939 level.40 As a cost factor, however, wages comprised only
20.5 percent of the value of product in the rayon woven-goods indus
try, according to the 1939 Census of Manufactures.
At the end of June 1941, when a price ceiling was placed on cotton
grey goods, the Government price officials warned rayon grey-goods
producers that their prices also were under close observation. Like
other textile markets, the rayon-grey-goods market met announce
ment of impending price control by a sharp curtailment in trading.41
Prices continued to advance, however, and a conference was called
on July 16 between Government officials and rayon weavers to lay
the ground for issuance of a formal ceiling. The producers agreed,
temporarily, not to advance existing prices of certain standard
constructions. Thereafter, mill offerings again declined as producers
awaited the setting of a definite ceiling level, and sales dropped to a
minimum through the first 3 weeks of August. What grey goods
were sold during this period were largely “second-hand” sales (e. g.,
38 New York Times, June 19,1941.
89 Cf. Daily News Record, May 9,1941; Journal of Commerce, June 24,1941.
40 Hours and Earnings in the United States. (U. S. Bureau of Labor Statistics Bulletin No. 697.)
« Daily News Record, July 6,1941.

Chapter IV .— Textiles

113

sales of grey goods by converters). Since this type of sale had not
been covered by the July 16 agreement, grey goods sold by converters
commanded premium prices. For example, spun rayons, such as one
way flake and 10-percent acetate blend, were resold at prices 27 and
57 percent, respectively, above the mills’ voluntary ceilings.42 Prices
for types of fabrics not included in the original agreement also rose
sharply.
Because of the “dried-up” condition of the market and the pressure
on rayon supplies resulting from the raw-silk shortage, Price Admin
istrator Henderson announced on August 12 that a price ceiling would
shortly be established for rayon grey goods. The schedule, issued on
August 24, set maximum prices for leading constructions at levels
averaging about 10 percent below existing quotations, and covered
second-hand as well as original sales. Manufacturers of constructions
not included in the price schedule were required to report to the
Government all sales in excess of 25,000 yards per month and were
expected to keep prices of these fabrics in line with the ceiling prices.
Manufacturers were required to include in their sales contracts a full
description of the fabric sold, whether or not it was covered by the
price ceiling.43
The schedule set maximum prices of 20 and 18 cents per yard,
respectively, for viscose twill and pigment taffeta of the constructions
previously referred to. Although these ceiling prices were 11 and 22
percent, respectively, below the August 1941 peaks of 22.38 cents per
yard for viscose twill and 23 cents per yard for pigment taffeta, they
were still 25 percent above the pre-war level for both constructions.
The ceiling price established for acetate warp crepe—28.5 cents per
yard—was almost 30 percent above the August 1939 quotation.
Demand for grey goods continued to exceed available supplies
during the fall of 1941. In mid-November, a number of mills were
reported to be refusing December business, asserting that they would
still be delivering November orders during the remainder of the year,
and by December most mills had adopted an allotment system.44
« New York Times, August 12,1941.
43 This provision, however, was amended on October 4, the reason given being that it constituted too
great a hardship upon an industry in which fashion plays so large a part. Rather than insisting upon the
inclusion of complete details of fabric constructions in sales contracts, the Government merely required that
the producers keep records of this nature and that sales contracts contain a style number for each construction
referring to the manufacturers1 record. Detailed reports were still to be filed with the Office of Price
Administration.
44 Journal of Commerce, November 17 and December 12,1941.

114

Wartime Prices—August 1939 to Pearl Harbor

T able 23.—R AYO N : Production , Consumption, Stocks, and Imports ,

K ind ,

August 1939-December 1941
ISource: Kayon Organon, Special Supplement (Vol. XIV, No. 2), January 22,1943]1234*6
Filament yam (in millions of
pounds)
Year and month

Produc Consump
tion »
tion 2
(quarterly)

Stocks 3

32.5
33.0
34.7
33.3
32.0

19.3
13.1
9.4
7.7
6.4

31.8
29.8
29.8
31.1
32.3
31.4
32.1
34.0
30.9
36.7
34.8
34.0

7.0
8.3
10.4
11.7
12.5
12.8
11.1
9.9
8.3
6.9
6.7
6.3

35.0
31.6
35.4
38.7
40.2
38.3
39.4
37.3
37.0
41.7
38.5
39.3

8.9
10.0
10.2
7.4
5.8
4.6
3.6
4.2
4.9
5.4
4.5
3.8

Staple fiber (in millions of pounds)
Produc Consump
tion 1
tion 4
(quarterly)

Stocks3

7.6
9.1
9.1
11.0
11.2

3.0
1.2
1.0
1.0
2.0

3.4
3.1
4.0
5.7
6.7

11.0
7.4
4.2
4.9
5.6
6.1
6.6
7.3
9.0
10.2
10.4
10.6

2.7
4.9
8.8
12.6
14.2
14.5
14.1
13.5
11.1
8.7
7.4
7.5

5.1
2.6
1.3
2.1
6

9.0
8.1
11.3
12.0
11.5
12.4
12.6
12.2
13.0
13.2
11.6
12.4

8.4
9.8
9.8
7.5
6.0
4.9
3.6
3.4
2.7
1.7
1.8
1.8

Imports4

1989

August........................
September..................
October.......................
November..................
December...................

78.0
93.6

13.3
15.6

January......................
February....................
March.........................
April...........................
M ay............................
June............................
July.............................
August........................
September..................
October.......................
November..................
December...................

95.8
97.5
93.0
103.7

m i

January.......................
February....................
March.........................
April...........................
M ay............................
June............................
July.............................
August........................
September..................
October.......................
November..................
December...................

106.2
112.0
114.2
118.8

20.4
19.1
18.4
23.2

25.0
26.6
34.1
36.3

'.7

.4
.4
.2
4
16
2 .5
1.7
18

1.6
1.3
1.5
.6
*2
'.7

(•)
(•)
«

1Total all processes.
2 Compiled by the Textile Economics Bureau. Data for August 1939 through September 1941 represent
domestic deliveries of rayon yam (all processes, acetate data partially estimated) to customers by domestic
producers plus yam imports for consumption; October through December 1941 data represent deliveries of
yam by domestic producers only.
3 Compiled by the Textile Economics Bureau and representing stocks of finished rayon yam and staple
fiber held by domestic producers at the end of each month. Stocks of acetate yarn and staple fiber are
partially estimated.
4 Compiled by the Textile Economics Bureau. Data cover all processes (acetate partially estimated)
and are compiled on the same basis as those for rayon yarn.
3 Includes also imports of sliver, tops and roving.
6 Not available for publication.

Chapter IV .— Textiles

115

T able 24.—R AYO N : Wholesale Prices , by K in d , August 1939-December 1941
[Sources: Grey goods prices—Daily News Record; filament yarn and staple fiber prices—U. S. Bureau
of Labor Statistics]
Filament yarn per
pound1

Staple fiber per
pound3

Date
Acetate

Viscose

Acetate

Viscose

Cents

54.0
55.0
56.0
56.0
54.0

August___
September.
October...
November.
December.
1940

January.................
February............. .
March.................. .
April......................
May..................... .
June.......................
July...................... .
August................. .
September........... .
October................ .
November........... .
December............ .
1941

January.................
February...............
March....................
April......................
May.......................
June.......................
July........................
August...................
September.............
October.................
November.............
December..............

51.0
52.0
53.0
53.0
53.0

46.0
46.0
46.0
46.0
46.0

25.0
25.0
25.0
25.0
25.0

Grey goods per yard
Viscose Pigment Acetate
warp
tw ill3 taffeta * crepe1
*368
Cents

16.0
17.4
18.4
18.0
17.8

Cents

14.4
16.0
16.5
16.0
15.8

Cents

22.0
24.3
24.5
25.5
25.5

54.0
54.0
54.0
54.0
54.0
54.0
54.0
54.0
54.0
54.0
54.0
54.0

53.0
53.0
53.0
53.0
53.0
53.0
53.0
53.0
53.0
53.0
53.0
53.0

43.0
43.0
43.0
43.0
43.0
43.0
43.0
43.0
43.0
43.0
43.0
43.0

25.0
25.0
25.0
25.0
25.0
25.0
25.0
25.0
25.0
25.0
25.0
25.0

17.4
17.0
16.3
15.9
15.9
15.6
15.6
15.6
15.6
15.8
16.5
16.9

16.1
15.5
16.5
15.3
15.1
15.0
14.8
14.4
14.6
14.4
14.8
14.7

25.3
25.3
24.9
23.3
22.5
22.3
22.3
22.3
22.3
22.8
23.0
23.4

54.0
54.0
54.0
54.0
54.0
54.0
54.0
54.0
54.6
56.0
56.0
56.0

53.0
53.0
53.0
53.0
53.0
53.0
53.0
53.0
54.2
55.0
55.0
55.0

43.0
43.0
43.0
43.0
43.0
43.0
43.0
43.0
43.0
43.0
43.0
43.0

25.0
25.0
25.0
25.0
25.0
25.0
25.0
25.0
25.0
25.0
25.0
25.0

17.3
17.0
17.3
18.5
19.5
(•)
(•)
22.4
20.0
20.0
20.0
20.0

14.8
14.8
15.5
15.9
15.9
17.0
18.5
23.0
18.0
18.0
18.0
18.0

23.8
23.9
23.9
24.5
25.0
26.0
ff>
(«)
28.5
28.5
28.5
28.5

1 Yarn, first quality, minimum filament, per pound, f. o. b. producer’s plant, minimum freight allowed
to destination. Acetate, natural, cones, 150 denier, viscose, bleached, skeins, 150 denier.
3 Staple, in bales, per pound, f. o. b. producer’s plant, minimum freight allowed to destination. Acetate,
5 denier. Viscose, 1H denier.
* Viscose twill, 38-inch, 112 by 68.
< Pigment taffeta, 40^-inch, 92 by 68,100 denier warp, 150 denier filling.
«Acetate warp crepe, 45-inch, 135 by 64, 100 denier, 2 by 2.
6 No quotation.

Clothing
Substantial price increases in textile fibers during the Defense
Period were reflected in varying degrees in the apparel markets.
Nearly all prices rose, particularly in the last 6 months of 1941, some
very sharply. During the early part of the Defense Period, however,
much of the adjustment to rising costs took the form of altering quality
while leaving the price to the consumer in established “price lines”
practically unchanged.
In the cotton-garment field, heavy military orders severely strained
loom capacity for certain fabric constructions, especially work
clothing materials, and prices of civilian apparel made from such
fabrics rose sharply. Conversion of looms to the weaving of these
much-needed fabrics in turn led to a tightening of supplies of other
constructions and a consequent rise in price. A bottleneck developed
in the combing of wool used in the manufacture of worsted fabrics
required for military orders and prices of worsteds rose rapidly.
Consequently, manufacturers increased the use of soft woolens, as

116

Wartime Prices—August 1939 to Pearl Harbor

well as blended fabrics, for civilian goods in order to retard the price
advance which it was feared would curtail civilian demand.
Although little of the price advance in the primary textile markets
was reflected in the retail prices of apparel other than work clothing,
prior to the summer of 1941, substantial increases developed in the
latter half of that year. The loss of silk to the civilian m arket led to
a consumer rush for available supplies of women's hose, and prices
rose rapidly. Higher consumer incomes from defense industries, the
draft deferment of men above 28 years of age, and fears of shortages,
especially of wool, led to increased demand for all types of clothing.
Sales of men's and women's apparel averaged 13 percent greater dur
ing the first 11 months of 1941 than in the same period of the year pre
ceding;45 increases were particularly great for women's clothing. As
the demand for apparel continued to rise, retailers increased their in
ventories considerably in anticipation of shortages. The value of
stocks of women's and girls' apparel held by department stores in Oc
tober 1941 was estimated to be 32 percent higher than in October
1940, and for men's and boys' wear, 29 percent higher. To some
extent these high figures for sales and inventories reflected price in
creases.45 A t the same time there were probably some increases in
labor costs, although detailed unit cost data are not available for these
industries; between August 1939 and December 1941 hourly earnings
rose 14 and 27 percent, respectively, in the men's clothing and men's
furnishing industries.
COTTON APPAREL

The rise in cotton-yarn and grey-goods prices, which occurred im
mediately after the outbreak of war in 1939, was of such a temporary
character that it was not generally reflected in the retail prices of cotton
apparel. Throughout 1940, retail prices for cotton apparel remained
close to their pre-war levels and even work shirts and overalls, com
peting with Army demands for denim and other types of work-clothing
fabrics, had risen only approximately 4 percent by December 1940.
Early in 1941, however, the steady rise in raw-cotton, cotton-yam,
and grey-goods prices, which had started in mid-1940, began to be
reflected in apparel prices at the retail level. In order to alleviate
the severe disturbance in civilian markets, occasioned by large mili
tary orders requiring short delivery periods, Congress approved early
in 1941 an appropriation of $175,000,000 so that the Army might
undertake a long-range program of cotton- and wool-textile and ap
parel buying. Even though delivery of these purchases was scheduled
over a relatively long period, in order to cause the least possible dis
ruption to the civilian market, the orders did lead to a considerable
tightening in the stocks available for the civilian trade. Denim, re
quired in large quantities by the Army, advanced nearly 15 percent
between January and June 1941, and the rise was reflected in a 7-percent increase in the retail price of overalls during the same period.
Large orders for Army shirts led to the general disappearance of cer
tain fabrics on the civilian market. When the Army experienced
increasing difficulty in obtaining desired qualities of fabrics originally
requested, specifications were changed to other constructions or dif
ferent types of fabrics. As looms were shifted to these other con
structions in order to meet military demand, civilian shortages devel
« Federal Reserve Board.

Chapter IV .— Textiles

117

oped for additional fabrics. During this period, work-clothing prices
reflected these increases more than did other apparel, partly because
work clothing was more directly affected by Army buying and partly
because, being more standarized in relation to quality of materials
used and cut of garment, work clothing did not readily lend itself to
adjustments through quality changes.
Although the prices of other cotton apparel were influenced only
slightly during the early part of the Defense Period by price advances
in yams and grey goods, many quality adjustments were made in
order to continue selling apparel in the customary retail price lines.
For example, between August 1939 and June 1941, the average retailprice increase reported on men’s business shirts was less than 2 percent
(see table 25), as compared with an approximate 44 percent rise in the
wholesale price for 128 by 68 broadcloth. This price stability was
accomplished, according to the trade press, by the substitution of
100 by 60 broadcloth to retail in the lines formerly cut from 136 by 60
broadcloth and by the substitution of printed patterns and solid
colors in the place of woven patterns. Similarly, retail prices on
women’s percale house dresses had advanced only 3 percent above
the pre-war level by June 1941, while the grey goods from which the
percale was made had risen approximately 85 percent at wholesale
during the same period. Manufacturers were reported to have
succeeded in retarding price advances on dresses by the substitution
of lower count fabrics, simpler styles, and shorter zippers.
While actual price advances for most cotton apparel other than work
clothing were moderate up until mid-1941, the rate of advance was
accelerated appreciably during the latter part of the year, as a result
of the spectacular increase in yarn and grey-goods prices. Business
shirts advanced 11 percent between June 1941 and December 1941,
as compared with less than 2 percent between August 1939 and June
1941, while overalls advanced 16 percent in the later period as com
pared to 13 percent in the earlier.
Although ceilings were placed on yarns and leading grey-cloth
constructions several months prior to the entry of the United States
into the war, the ceilings were established at such relatively high
levels that no general downward price revisions were made in the
apparel market. On the contrary, prices continued to increase as
yarn and grey-goods ceilings were revised upward.
WOOL APPAREL

Retail-price movements of wool apparel during the Defense Period
reflected much less of the price gains in raw material than did cotton
apparel. This relatively long lag between the increase in the price of
raw wool and the price of woolen apparel may be accounted for to
some extent by the fact that woolen apparel is a seasonal commodity,
and a longer period of time elapses between the preparation of raw
wool and the appearance of finished clothing on the market than in
the case of raw cotton and cotton apparel, such as work clothing.
Furthermore, the construction of woolen and worsted goods is not
standardized to as great an extent as are cotton weaves, so that the
various types lend themselves more readily to changes designed to
save weaving costs.

118

Wartime Prices—August 1939 to Pearl Harbor

The retail price of men’s worsted suits had advanced only 5 percent
by June 1941, although wholesale prices for worsted fabrics from
which men’s suits are manufactured rose 25 percent during the first 4
months after the outbreak of war, fell only moderately in 1940, and
by the summer of 1941 stood 40 percent above the pre-war level.
By the autumn of 1941, however, the effects of increased fabric prices,
as well as the higher labor rates allowed clothing workers in May 1941,
were felt on the civilian market; and, by December, suits at the retail
level stood 10 percent above their midsummer level and 16 percent
above their pre-war prices. Weak consumer demand, attributed in
part by the trade to uncertainties regarding the Selective Service
draft plans, and resistance to higher prices had induced some manu
facturers to adopt indirect methods to increase prices earlier in
the Defense Period. For example, fighter weight fabrics, or fabrics
made from coarser grades of wool, were substituted by some manufac
turers in established price fines, while machine operations were sub
stituted for hand detail in the manufacture of some of the cheaper
suits. Woolens were used more frequently for men’s suits when a
bottleneck developed in the wool-combing industry and prices of
worsteds rose rapidly as Army demand increased. The fact that
woolens lend themselves more readily than do worsteds to blending
with rayon and cotton likewise favored their use. Tropical worsteds,
slow and difficult to weave, were dropped from many manufacturers’
lines in the summer of 1941, and rayon blends assumed an increased
importance. Topcoats, typically manufactured from wool material,
advanced less than suits during the Defense Period, owing no doubt
to the greater use of blends.
Style trends toward softer fabrics in the women’s wear field in
recent years had led to a much greater acceptance of blends than in
men’s wear. Consequently, the effect of increases in raw-wool prices
were reflected even less in women’s apparel than in men’s apparel.
Retail prices of women’s coats in December 1941 stood only 7 percent
above their September 1939 level, while dresses had advanced 12
percent during the same period.
SILK AND RAYON APPAREL

Prices of women’s silk hose rose sharply upon the Government
announcement that no further processing of silk for civilian use would
be permitted, following the rupture of commercial relations with
Japan at the end of July 1941. Since the larger part of silk imports
in recent years had been used for hose, the stoppage of imports af
fected hosiery manufacturers primarily, and women’s lingerie and
men’s tie manufacturers to a lesser extent. Immediately after it
became known that further processing of silk for hosiery manufacture
was prohibited, demand for hose soared as numerous consumers
purchased quantities sufficient to last for some time. With the excep
tion of a temporary price increase early in 1940, retail prices of women’s
hose had remained practically unchanged between August 1939 and
July 1941, but advanced nearly 20 percent between July and Decem
ber 1941. In order to conserve the remaining supplies of silk-hosiery
yarn, the Government requested that only one-half the stocks be used
for making all silk hose and that the other 50 percent be used in combi
nation with other fibers. Manufacturers of rayon yarn were required

119

Chapter IV .— Textiles

to allocate designated quantities of yarns to hosiery manufacturers
in order to conserve silk and nylon. A t the same tim e the Govern
m ent made a similar request relative to the use of nylon yarn.

The sharp rise in rayon-lingerie prices during the latter part of 1941
reflected the moderate price advances for yarn and, probably more
important, the shortage of yarns. Retail prices of rayon panties
remained practically unchanged between August 1939 and August
1941, but advanced approximately 14 percent during the last 4
months of 1941. Some manufacturers employed blends of cotton
with rayon in order to maintain established price brackets.
Advances in rayon grey-goods prices, ranging from 30 to 60 percent,
between August 1939 and August 1941 and the shortage of rayon
yarns led to some quality changes in women’s dresses, as manufac
turers sought to maintain established price brackets. Cotton and
rayon mixtures replaced all-rayon fabrics in some of the cheaper lines,
while weavers tended to concentrate production on lighter weight
fabrics in order to produce the maximum yardage from the rayon
yarns available.
T able 25.—M E N ’S A N D W O M E N S A P P A R E L : Retail-Price Indexes for 34 Cities

Combined, June 1939-December 1941
Men’s clothing: Retail-price indexes (June 1939=100)
Year and
month

Women’s clothing: Retail-price
indexes (June 1939=100)

Coats, Dress Hose, Pan- Wash
Suits, Top Trou
Over Shirts,
sers, Under
es,
busi Shirts,
shirts heavy,
work Socks wool coats work
alls ness
plain1 wool1 Silk ties frocks2

1939

100.0
99.8
100.7

100.0
100.0 100.0 100.0
99.9 100.0 100.2 100.0 99.8
100.5
100.6 100.0 100.8

104.2
104.5
104.1
104.1
104.2
104.1

101.0
101.0
100.6
101.0
101.0
100.8

102.2
102.9
103.2
104.7
104.7
104.0

100.2
100.2
100.2
100.4
100.4
100.1

105.0
105.6
106.4
108.7
109.9
112.8
115.1
119.2
124.4
127.3
129.7
131.4

100.8
100.8
100.9
101.1
101.3
101.6
103.1
104.6
107.9
109.3
111.2
112.5

103.8
104.5
105.0
105.5
107.5
109.5
113.5
116.0
123.0
127.5
131.0
134.0

100.1
100.2
100.2
100.2
100.2
100.5
101.0
102.1
104.8
106.0
108.1
109.0

100.6
101.7
103.5
103.8
104.6
105.2
106.3
108.7
114.4
115.0
115.3
115.5

June.. ___ 100.0
September... 99.9
December.... 102.3

100.0
99.9
100.5

100.0

101.9
101.3
101.8
101.5
102.0 10i.3 102.1
102.1
102.0
102.3
102.0
102.1 102.2 102.2

100.6
100.1
99.9
100.1
100.1
100.0

lo o . 6

98.1 102.3
98.1 102.5
103.7 103.7
104.6
105.5
107.5
109.3
110.3
109.6 115.9
110.6 119.6
109.6 121.5
110.1 122.4

100.1
100.1
100.5
101.1
101.3
101.4
104.1
109.7
113.4
114.3
116.6
118.4

100.0 100.0
100.0 100.5 99.5
........... 103.9 99.5

100.0
95.0
100.8

m o

March_____
June_______
September...
October _
November__
December___

99.5

105.7
102.1
101.0 100.4
100.0
100.0
100.6 100.0

99.9
99.8
99.9
99.9
99.9
99.9

100.1
100.1
100.2
100.4
100.4
100.5

100.0
99.7
99.8
99.7
99.7
99.5
99.5
102.3
ii i .8 113.1
115.8
117.4
112.4 119.2

99.9
99.9
99.6
99.6
99.6
99.6
100.4
100.1
105.3
108.8
112.3
114.0

99.9
99.9
100.6
100.6
100.9
102.9
107.2
111.8
119.9
129.1
134.9
138.3

m i

January.........
February----March...........
April
M ay. _
June_______
July_______
Angus*
September...
October.........
Novem ber...
December__

92.1
86.0
100.3

il0.3
110.0
108.5
107.0

100.6

>Base, September 1939=100.
* Percale.

Burlap
During the Defense Period, burlap prices rose sharply as a result of
shipping difficulties and of control exercised over production and prices
in India. During the spring of 1941, prices were more than double
those preceding the attack on Poland. OPA controls reduced this

120

Wartime Prices—August 1939 to Pearl Harbor

extreme advance somewhat, but at the end of the Defense Period the
net increase over August 1939 amounted to 109 percent.
The price of burlap (10% ounce, 40-inch, New York), like that of
other imported commodities, reacted violently to the outbreak of war
in Europe, rising from 5.5 cents per yard in August 1939 to 11.1 cents
in November. The price then eased until Apru 1940, rose slightly in
April and May, and fluctuated between 27 and 47 percent above its
pre-war level until November. A sustained advance which began in
the fall of 1940 carried the price in July 1941 to its peak for the
period, 13.8 cents per yard—more than 150 percent above its pre-war
level. (See table 26.) On August 16 a ceiling schedule was issued
which lowered the prices of 17 burlap constructions approximately 20
percent from prevailing market rates in the New York market. Price
quotations remained unchanged at ceiling levels from September until
the attack on Pearl Harbor.
The 102-percent increase in burlap prices during the early fall of
1939 resulted largely from speculative activity, uncertainty concern
ing shipping space, and large British orders for sandbags. In October
1939, Great Britain ordered 500 million burlap sandbags to be deliv
ered by April 1940.46 Following receipt of this order, the Indian Jute
Mills Association (composed of the majority of mills in Calcutta)
increased the hours of burlap production from 54 to 60 hours a week,
but prices continued to rise.47
Because of the price increase and a decline in imports which caused
United States burlap stocks to fall from 258 million yards at the end
of September to 221 million at the end of October, a movement de
veloped toward substitution of cotton fabrics (osnaburgs and coarse
sheetings) for burlap.48
Prices turned down in December, the decline continuing through
March 1940, when burlap was selling in New York for 7.3 cents per
yard—34 percent below the November peak, but still 33 percent above
the pre-war level. This decline reflected a drop in domestic economic
activity, relatively large imports in November and January, and the
failure of Great Britain to place another order for sandbags, originally
expected for January. Calcutta prices and production both declined
when Great Britain postponed the delivery date of the October 1939
order until August 1940.49*
Burlap prices rose slightly in April and May, reaching a level of 8
cents per yard (New York) in the latter month—45 percent above
that of August 1939. The increase resulted from extension of the war
in Europe, a marked drop in imports during April, and price-raising
actions taken in India. The Indian Jute Mills Association cut pro
duction drastically by a series of agreements beginning in January,
and in June, after the loss of many European markets; also, Calcutta
mills agreed upon minimum burlap prices for the spot market in
Calcutta.80 Nevertheless, prices declined in June and July, reflecting
the prospect of a record-breaking August jute crop which led in India
to widespread discussion of crop control.51
48Journal of Commerce, October 31,1939.
47 At this time, one grade of burlap used for bags commanded a price one-half cent a yard above the
fine combed cotton broadcloths used in men’s expensive shirts. (Journal of Commerce, November 30,
1939).
48Journal of Commerce, November 17,1939.
48 Idem, January 29,1940.
w Idem, June 28,1940.
51Idem, September 4,1940.

Chapter IV .— Textiles

BURLAP

WHOLESALE PRICES, IMPORTS, CONSUMPTION,
AND^
STOCKS
A U G & T 1939 « IOO

121

122

Wartime Prices—August 1939 to Pearl Harbor

In September 1940, burlap prices in the New York market began
a gradual advance which was accelerated in the winter and spring of
1941. The seasonal demand for burlap, which accompanies harvesting
of domestic agricultural crops, contributed initially to this rise. Early
in September, the British Government placed another large order for
sandbags. In addition, the shipping situation became increasingly
difficult.62 Both freight and war-risk-insurance rates were raised
during the summer of 1940.63 As a result, the price of burlap in the
New York market rose from 7 cents per yard in August to 8.1 cents
in December and continued to increase, reaching in January 1941 a
level 49 percent above that of August 1939. In that month the United
States Government, inviting bids for 2 million sandbags, gave bidders
the option of offering either burlap or cotton bags.64
Throughout 1941, shipping difficulties became more and more
acute. Many British vessels were withdrawn from the burlap runs
and although United States ships took over a large part of the Pacific
trade, their cargo space was increasingly used for transportation of
other strategic war materials.66 Also, at least one burlap steamer
was lost at sea.66
B y July 1941, burlap was selling in the New York market for almost
14 cents a yard—more than 150 percent above its pre-war level—
while the spread between N ew York and Calcutta prices, less ocean
freight, had increased from 0.729 cent a yard in August 1939 to 4.68
cents.67 Early in August the Office of Price Administration and
Civilian Supply held a series of conferences with members of the burlap
industry, and trading in the New York market came to a standstill
in anticipation of price control. A formal ceiling was issued on August
15, 1941, Mr. Henderson stating that—
The price increase in this country has been due in part to higher prices in
Calcutta, in part to higher shipping and insurance costs, and in part to a wholly
unjustified increase in the margin between what importers pay for burlap and
what they sell it for.8
*78
3
8
2

Effective August 16, 1941, the price schedule lowered the prices of
17 burlap constructions in the N ew York market approximately 20
percent, and further provided that they be reduced an additional
5 percent in January 1942. The maximum prices for the period
ending December 31, 1941, were about 15 percent above the Calcutta
prices of July 29, a mark-up which the Office of Price Administration
considered adequate to cover increased shipping and insurance costs
and to maintain importers' margins at normal levels.
The fact that the schedule did not specify maximum prices to be
paid to suppliers in Calcutta led to the complications frequently
attendant upon efforts to control prices of commodities produced
almost entirely outside of the United States. Burlap prices in the
Calcutta market, strengthened by heavy demand from Great Britain,
South America, Russia, and the United States, advanced until they
82 Journal of Commerce, September 4,1940.
53 Idem, August 30,1940.
MDaily News Record, January 29,1941. However, the price of cotton fabrics also had risen considerably
after the outbreak of war. (Cf. section on Cotton Grey Goods, p. 87.) Osnaburg prices in January
1941 had advanced to a level more than 31 percent above that of August 1939, and by September they were
83 percent above their pre-war level.
88 After June 15,1941, all ships were ordered to allot half of their cargo space to the transportation of man
ganese ore. (Journal of Commerce, June 20, 1941.)
88 Journal of Commerce, March 7,1941.
87 Based on data obtained by the Bureau of Labor Statistics.
88 Price schedule No. 18, Release No. PM 950, August 16,1941.

123

Chapter IV .— Textiles

were higher than the maximum prices allowed in New York. Although
the shipping situation became easier during September, available
cargo space was not filled with burlap because of the high prices
prevailing in Calcutta. However, imports contracted for in preced
ing months continued to be received in New York. Although trade
reports indicated that domestic bag manufacturers were unable to
satisfy their needs during this period, the movement from import
ers’ stocks to cutters-up did not diminish. Prices of second-hand
burlap bags, supposedly covered by the ceiling schedule but apparently
considered by some sellers to be excluded, soared.59
T able 26.—B U R L A P : Wholesale Prices , Imports , Consumption, and Stocks, August

1939-December 1941
[Sources: Prices—U. S. Bureau of Labor Statistics; imports—U. S. Bureau of Foreign and Domestic Com
merce; consumption and stocks—Daily Mill Stock Reporter]

Year and month

Wholesale
price, per
yard1

1989

Cents

Alienist
September__________________ _________ ___
October
November_______________________________
December

Januarv
February______________ ________ ________ _
March___ ________________________
April___________________________________
May________________________________ ___
June____________________________________
July
_
_
........
August _
_ _
_ _
September_______________________________
October_________________________________
November______________________ ________
December
_
. _

Januarv
February________________________________
March__________________________________
April
May
June____________________________________
July______ _________ ____________________
August____ ___ _____ ______________ _____
September_____________________ _________
October_________________________________
November_______________________________
December_______________________________

Consump
Imports
Stocks
(millions of tion (millions (millions of
pounds)
of yards) 2
yards)3

5.5
7.5
9.6
11.1
10.6

19
40
22
58
28

54
91
73
63
53

264
258
221
240
264

9.4
7.8
7.3
7.4
8.0
7.6
7.4
7.0
7.1
7.3
7.7
8.1

65
35
40
17
42
35
67
25
56
49
34
40

55
52
50
44
53
49
54
55
60
71
57
53

231
213
210
232
276
294
295
274
284
261
253
259

8.2
9.1
10.1
11.8
12.3
12.9
13.8
12.6
11.5
11.5
11.5
11.5

31
47
43
33
31
51
57
49
30

57
60
67
55
47
49
64
60
63
63
53
75

269
215
187
189
214
221
225
198
213
242
265
212

0)
(4)
(4)

1 Burlap, 10K-ounce, 40-inch, New York.

2Represents shipments from importing firms to cutters-up.

3 Total of spot stocks (in hands of importing firms, not including those in hands of bag manufacturers)
and stocks afloat (ordered and cleared from port of Calcutta, not including those orders not cleared from
the docks at Calcutta).
4 Not available for publication.
5* In announcing the schedule, the Office of Price Administration stated that “imposition of the ceiling
is also expected to produce a downward movement in the price of second-hand bags to their normal price
relationship of 30 to 40 percent under the prices of new bags of similar kind and quality.” (Office for
Emergency Management, PM 950, August 16,1941.)
On February 11, 1942, the Office of Price Administration announced an amendment to the burlap-price
schedule, effective February 7,1942, to “make clear that the schedule applies to all burlap.” It was stated
that, while “the schedule as originally issued was intended to cover not only new material, but used, dam
aged and resewn burlap as well * * * OP A has discovered that some sellers * * * have been
disposing of second-hand and damaged materials at prices higher than those obtaining for new burlap
under price ceiling.” (Office of Price Administration, PM 2465, February 11,1942.)

547953— 44-------9

124

Wartime Prices—August 1939 to Pearl Harbor

The price of 10% ounce, 40-inch burlap, which had dropped back
to the ceiling level of 11% cents per yard in September 1941, remained
unchanged at that figure through December. Early in the latter
month, prices in Calcutta declined slightly owing to a step-up in
production and to fear of hostilities in the Pacific, but this develop
ment did not result in increased imports into the United States,
because in the weeks immediately before the attack on Pearl Harbor
the shipping situation once more became extremely tight.

Chapter V.— Housefurnishings
Summary
Prices of housefurnishings as a group rose moderately during the
Defense Period, advancing 18 percent between August 1939 and
December 1941. However, prices of certain products such as sheets
and blankets rose more sharply—from 40 to nearly 60 percent-r
and shortages necessitated changes in construction which often
lowered quality. Prices of furniture and carpets rose 23 percent.
Advances for electrical appliances, stoves, and china and glassware
were, on the whole, considerably smaller.
Prices for textile housefurnishings were affected, as was apparel, by
the broad price movements in the fiber markets and rose appreciably
during the Defense Period. Civilian demand competed with the
military for much of the available loom capacity and this contributed
to a still greater price increase. For example, unprecedented military
demand for bed sheets, the supply of which was limited by the number
of wide weaving looms available, caused prices to advance rapidly and
supplies became very limited, especially for widths required by the
Army. As was true in the case of apparel fabrics, looms were shifted
to increase production on constructions needed for military purposes.
Looms normally employed in weaving curtain fabrics, for example,
were converted to the production of mosquito netting needed for cam
ouflage purposes, and supplies of civilian curtain fabrics were curtailed.
Much of the advance in prices for cotton housefurnishings during
the early part of the Defense Period is thus attributable to the bottle
neck in spinning and weaving facilities resulting from the heavy
civilian and military demand rather than to any sharp price rise for
raw cotton. In the case of other textile housefurnishings, however,
important factors were the curtailment of wool and jute imports for
civilian use and the consequent sharp rise in the prices of these raw
materials. Wholesale prices for all-wool blankets rose nearly 21
percent during the 3 months succeeding the outbreak of the war in
Europe and remained unchanged during the following 10 months.
As imports of desirable Asiatic and Scottish rug wools and jute used
for rug backings decreased, prices for available supplies soared, with
consequent increases in carpet prices. Competition for South
American wools, plus rising transportation costs, pushed prices up
sharply for these fabrics; and substitution of these less desirable
wools did not lead to a halt in the upward price movement for carpets.
Numerous quality changes were reported for textile housefurnish
ings during the Defense Period, occasioned in some instances by
m anufactured desires to retard the effect of rapidly increasing costs,
which, it was feared, would reduce civilian buying, and in other instances
by the necessity of seeking substitutes for imported materials which
could be obtained only in lim ited quantities, if at all. For example,
some manufacturers reduced the size and weight of popular priced
bath towels in order to maintain established price brackets, while the
weight of some wool blankets was likewise reduced. Faced with the
necessity for stretching available supplies of wool to m eet civilian
demand as well as the desire for limiting price advances, manufac-

125

126

Wartime Prices—August 1939 to Pearl Harbor

turers employed blends, especially of rayon, to an increasing extent
in the manufacture of blankets and carpets. Pastel colors were
dropped in blanket lines as supplies of white wools diminished;
fewer rug patterns were produced. Even with the deterioration in
the quality of rugs wholesale prices advanced 23 percent by July
1941, and, although the OPA publicly questioned the necessity for
such advances, no formal action was taken. On the other nand,
ceiling prices were placed on wool upholstery fabrics in November
1941, following an investigation of these prices by the Federal Trade
Commission at the request of OPA.
Although furniture prices remained fairly stable until early in 1941,
the shortage of certain imported materials and the shift of experienced
labor to defense industries resulted in marked changes in quality
before that date. Hide glue rose sharply in price and the supply
became so limited that some manufacturers had to turn to less de
sirable substitutes. The use of burlap was limited by Government
order and cotton fabrics had to be used as furniture manufacturers'
stocks of burlap were exhausted. The use of down and feathers,
which were needed for Army sleeping bags, was prohibited as a stuffing
material for furniture, while the available stocks of steel were con
served through the reduction in the number of coil springs used or
through the substitution of link for coil springs. The growing
scarcity of metals resulted in a greater use of wooden and plastic
drawer pulls. While some of these substitutions in the manufacture
of furniture led to a deterioration in quality, manufacturers contended
that the substitutions were seldom accompanied by a reduction in cost.
T able 27.—H O U SEFU RN ISH ING S: Indexes of Wholesale Prices , August 1939-

December 1941
[Source: U. S. Bureau of Labor Statistics]

Year and month

19S9

August
___________
September_____________________
October.......................... ............ ........
November...........................................
"Denember
mo

January
_______
February______________________
March
___________________
April
May
- June
_ ____________________
July___________________________
August________________________
September____________________
October...............................................

All housefurnishings
index
(August
1939=100)
100.0
101.2
102.6
103.3
103.4
102.7
102.8
102.8
103.3
103.4
103.4
103.4
103.4
103.4
103.6

Year and month

1940—Continued
November...........................................
December....... ............................ ........
m i

January________________________
February..............................................
March..................................................
April..................................... .............
May.............. ......................................
June........... ...... ............. .............. ......
July
August_____________ ___________
September_____________ ________
October____ _____ _____ _______
November_____________________
December______________________

All housefurnishings
index
(August
1939=100)
103.5
103.9
104.0
104.1
104.6
105.6
106.8
108.8
110.3
111.4
113.5
116.2
117.5
118.1

Rising consumer demand for furniture, the increased cost of ma
terials, an impending hourly wage-rate increase, and rumors relating
to an expected shortage of woods, led many manufacturers to an
nounce plans for price advances in the spring of 1941. The continued
price advance, together with a shortening of trade discounts and the
growing practice of accepting orders at prices prevailing on the

Chapter V1—Housefumishings

127

delivery date, resulted in an investigation of furniture prices by
OPA in April 1941. As a result of the investigation an attempt was
made to control prices through a series of agreements with manu
facturers, but these proved ineffective. In August, OPA announced
that orders would be issued shortly for formal price controls and
compulsory simplification, including reduction of the number of
designs; but in November it was made known that these plans would
be postponed indefinitely. Wholesale prices of furniture continued
to rise dining the fall and in December 1941 stood nearly 23 percent
above their pre-war level, approximately 18 percent of the rise occur
ring in 1941.
unlike other consumer durable goods for which prices had increased,
prices for electric refrigerators were nearly 6 percent below their pre
war level at the close of the Defense Period. This unusual situation
reflected a price decrease by one large producer in 1940, which was
followed by successive reductions by competing firms; and by Jan
uary 1941, prices for popular models stood 16 percent below their
pre-war level. Three successive price increases by leading producers
in March, M ay, and June 1941, canceled more than half of these 1940
reductions.

Textile Housefumishings
Prices of textile housefumishings, such as sheets and blankets,
advanced substantially during the Defense Period, reflecting the
shortage of raw materials and their higher cost.1 In addition, some
changes in quality were introduced—for example, in the case of
blankets other fibers were extensively substituted for wool. Be
tween August 1939 and December 1941 prices advanced by amounts
ranging from 40 to nearly 60 percent.
SHEETS

Prices of sheets,12 participated in the general advance of prices
following the outbreak of war and by November 1939 were 17 per
cent above their pre-war figure, a level which they held through
February 1940.3 In March, however, sheet prices turned downward,
reflecting a decline in the price of carded cotton yarns from which
most sheets are made. By April, they had dropped to a level only
4 percent above the August 1939 figure, where they remained through
August 1940.
Large scale Army orders—the first of which were placed in June
1940 4—combined with rising civilian demand, brought about a
moderate price increase in September, and by October the quota
tions were 8 percent above the pre-war level. During the latter
month, there were Army bids for 6 million sheets, a quantity esti
mated by the trade press as equal to approximately 10 percent of
the year’s production.5 Consequently, by December 1940 many
1 Cf. Raw wool (p. 92), Raw cotton (p. 80), and Cotton yarns (p. 83).
2 Sheet prices are quoted in terms of discounts from or premiums above a list price. Thus, the 54.2
percent increase from August 1939 through December 1941 represents not a change in the list price for the
six sheets which make up the composite price (which was $13.38 a dozen throughout the entire period),
but a shortening of discounts from 35-40 percent to 6.5-10 percent.
2 The price series used for this analysis is composed entirely of branded (i. e. nationally advertised) sheets,
which are less sensitive to market conditions than the prices of unbranded sheets. According to the trade
ess, sales of branded sheets constitute roughly two-thirds of total sheet sales. (Cf. Daily News
ecord, November 19,1941.)
4 Daily News Record, June 15,1940.
* Idem, October 17,1940.

Wartime Prices—August 1939 to Pearl Harbor

128

TEXTILE HOUSEFURNISHINGS
WHOLESALE PRICES
AUGUST

1939 «100

S H E E T S

IN D E X
180

in d e j c

IO W

160

140
I ^ S H I ;E T S

120

100

11 M t 1 1 1 1 11 111 111 11 1 1t
ASONOJFMAMJJASONDJFMAMJJASONOJFMAMJJASONOJFMAMJJASONOJFMAMJJASOND
1939
1 9 4 0
1941
1 94 2
1 943
1 944

IN D E X
Ii oO nU

B L A N K E T S

Ii nWn

IN D E X
180

160

C O T T O N ^ jf

IA f \
140

140

120

in n
IW

WOOL

T “

J
1
—

120

1 l 1t 1 • » I I 1 1 1 1 1 1 1 1 1 1 IJJ. |A A
ASONOJF MAM<l <I AS ONO<I FMAM' l<I AS ONO<I FMAMt l<I A$OMDJF MAMJJ A$OND i F M A M J J A S O N D IO O
1939
1 94 0
1941
1 94 2
1943
1 94 4

immusMmstLAB0*

Chapter V.—Housefumishings

129

sheet and pillowcase mills were sold up through March so far as
civilian orders were concerned.6
Prices remained at the October level until February 1941, but in
that month they began a sustained advance which continued through
out the remainder of the year. This marked advance, which bv
October had carried prices 54 percent above their pre-war level,
resulted from a combination of increased consumer demand, mount
ing prices of raw cotton and of carded cotton yams, and continued
large-scale Army and Navy purchases which, by the end of Novem
ber 1941, amounted to approximately 14.4 million sheets.7
In October the Office of Price Administration announced that
ceiling prices would soon be set at figures roughly 15 percent below
the existing market levels. Price Administrator Henderson stated
that the maximum prices for sheets would be tied to a certain price
for raw cotton, as had been done in the case of cotton grey goods.
Although no maximum price schedule was established until February
1942, branded sheet prices remained at their October level through
out the remainder of 1941.
BLANKETS

Prices of both cotton and all-wool blankets rose rapidly during
the 3 months following the outbreak of war and by November 1939
were 16 and 21 percent, respectively, above their August levels.
Following the initial advances, prices leveled off. Raw-wool
prices, which had risen abruptly at the outset of the war, declined
slightly from December 1939 through August 1940, while woolblanket prices remained unchanged. In September, as the result
of large-scale Army orders (beginning in June) for wool products,
raw-wool prices began to rise; tins increase led to a 3-percent advance
for wool blankets during October. Raw-cotton prices, which had
dropped slightly during the first 2 months of the war, rose 20 per
cent between October 1939 and February 1940, but turned down
ward in March.* This decline was reflected at once in a reduction
of 6 percent in quotations for cotton blankets.
Blanket prices were stable thereafter until the spring of 1941 when
continued purchases for the armed forces, coupled with increased
consumer demand for textile products, resulted in higher prices for
cotton and wool and a further advance in prices of blankets. By
June, prices of cotton blankets were 27 percent above the August
1939 figure (see table 28). This upward movement continued with
out interruption to the end of the Defense Period, largely as a result
of the soaring prices of raw cotton during the summer and fall of 1941;
it was also intensified by a heightened demand for cotton blankets as
substitutes for wool, owing to the short supplies and increased cost of
the latter. Thus, by December 1941, cotton-blanket prices were 58
percent above the August 1939 quotations.
A steady increase in the list prices of all-wool blankets began in
August 1941, and by December had mounted to 42 percent above the
pre-war level. In addition, retailers’ costs were further increased by
partial withdrawal of discounts formerly allowed. I t had been the
custom to allow a 2-percent discount for payment before October 10
on fall lines, with the net amount due December 10, and an additional
•Daily News Record, December 3,1940. Pillowcase prices have not been treated separately because their
fluctuations are almost exactly parallel to those of sheets.
7Daily News Record, passim.

130

Wartime Prices—August 1939 to Pearl Harbor

“anticipation” discount for bills paid earlier. In 1941, however, the
2-percent discount was allowed only for payments made by August
10, net October 10, and the “anticipation” discount was canceled.8
Army purchases of wool blankets, which amounted to 10.5 million
during 1940 and 1941,9 were part of the huge military demand for
wool products. Because of the resulting shortage of raw wool, the
production of all-wool blankets for civilian use was materially curtailed,
while the complete or partial substitution of cotton and of rayon
staple fiber for wool became increasingly widespread. For the fall of
1941, leading blanket manufacturers offered 45 lines containing spun
rayon—more than three times as many as in 1940.10 In addition,
the higher price of white wool led to the cancelation of many pastel
lines which can only be produced from white wool.11
T able 28.— T E X T IL E HO U SEFU RN ISH ING S: Manufacturers' Prices of Sheets

and Blankets, August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]

Indexes (August 1939=
100) of manufactur
ers’ prices
Year and month

Blankets
Sheets1

100.0
106.3
115.8
116.7
116.7

100.0
106.1
118.0
120.8
120.8

100.0
104.3
110.1
116.2
116.2

116.7
116.7
110.4
104.2
104.2
104.2
104.2
104.2
107.3
108.3

120.8
120.8
120.8
120.8
120.8
120.8
120.8
120.8
120.8
125.0

116.2
116.2
109.2
109.2
109.5
109.5
109.5
109.5
* 109.5
109.5

1940

January
February..........................
March. ............ ................
April________________
May_________________
June.................................
July...................................
August...... .......................
September____________
October.............................

Year and month

Blankets
Sheets1

All
wool2 Cotton8

1939

August...... .......................
September........................
October..... ......................
November.........................
HfirtAmhfir

Indexes (August 1939=
100) of manufactur
ers’ prices

1940

November........................
December........ ................
1941

January........ ....................
February..........................
March...............................
April________ ________
May_____ _____ ______
June__________ _____
July_________________
August...... .....................
September....... ........... .
October______________
November____ _______
December____________

All
wool2 Cotton2

108.3
108.3

125.0
125.0

109.5
109.5

108.3
109.4
113.5
118.3
121.9
125.0
125.0
(4)
(4)
154.2
154.2
154.2

125.0
125.0
125.0
125.0
125.0
125.0
125.0
127.1
130.8
135.4
141.7
141.7

109.5
109.5
110.3
112.9
115.9
127.2
129.9
141.9
147.5
155.4
157.3
158.2

1 Sheets, bed, plain, 81 by 99 inches, per dozen, mill.
2 Blankets, wool, 4 to 5 pounds, per pound, factory.
* Blankets, cotton, per pair, factory.
* No price available.

Carpets
Carpet prices advanced 23 percent on the average during the Defense
Period, largely because of difficulties in securing raw materials and
the sharp rise in consumer demand.
Wool suitable for pile fabric floor covering is not grown in the United
States, and consequently the outbreak of war brought fear of raw
material shortages. The price advance for carpets began in midSeptember 1939, as several important sources of supply (India, Scot
land, and Syria) were threatened by the war,12 and by December 1939
8Journal of Commerce, February 4,1941.
8 Daily News Record, March 25, 1942.
Recent Changes in the Quality of Consumers* Goods, by Laura Brown Webb (U. S. Bureau of Labor
Statistics, mimeographed report), p. 5.
« Idem, p. 9.
22 Journal of Commerce, October 20,1939.

Chapter V•—Housefumishings

131

increases averaged 12 percent. The best grades of carpet wool, nor
mally sent to the United States from India, were completely cut off
by British trade regulations, while imports from other countries be
came more costly as freight and insurance rates rose. South American
wool, which generally had been used only when blended with the
sturdier Indian variety, was greatly in demand by all countries.
A change in the carpet-price structure was instituted early in 1940,
but lasted only 2 months.13 Carpet manufacturers in January an
nounced the elimination of volume rebates, citing as precedent a ruling
by the Federal Trade Commission that certain quantity discounts
offered by a large mattress company were in violation of the RobinsonPatman Act. Large retailers promptly termed this action a “hidden
price increase” and reduced their purchases substantially in the hope
of forcing a renewal of discounts, and in February the discount system
was reinstated by the industry.
Further increases were announced in the winter and spring of 1940,
bringing prices by June to a level 17 percent above that prevailing at
the outbreak of the war. These advances reflected the increasing
tightness of supply. England’s wartime restrictions prohibited the
export of wool from any of the dominions except to Great Britain,
while American importers were notified that no wool would be sold
to them in Liverpool markets.14 These restrictions were due in part
to the utilization of carpet wools for the weaving of military textiles
rather than of rugs; thus, mills in India turned from the production of
carpet wool to blankets and uniform cloth for British and Colonial
troops.15 In addition, Italy’s entrance into the war in June 1940
jeopardized shipments of wool by way of the Mediterranean. Ar
gentina, the only remaining free wool market, was faced by a greatly
increased demand not only from the United States but also from
France and Japan.16*
Because of the fact that consumer purchasing power had not as yet
felt the influence of the recently initiated defense program, carpet
manufacturers were hesitant during the middle and latter part of 1940
to institute further price increases. This, coupled with the cheapness
of South American wools relative to those previously used, resulted
in a period of complete price stability from July 1940 to February
1941. Producers, however, introduced a number of substitute materi
als, lowering the quality of the product, particularly of lower-priced
carpets. Thus, the substitution of jute, hair, and mill waste, as well
as spun rayon, was extensively practiced. Spun rayon was introduced
as a mixture with wool early in 1940, but by the summer of that year
severe shortages of all types of rayon had developed.
is Cf. New York Times, December 31, 1939, January 19 and February 10, 1940; Journal of Commerce,
January 8 and 9,1940; Business Week, March 9,1940.
u Journal of Commerce, January 11,1940.
is Idem, July 17,1940.
16 The following figures indicate the shift in United States sources of raw carpet wool. Imports of carpet
wool, according to the Journal of Commerce, October 15,1940, were as follows:
August 19S9
(thousands of
pounds)

Argentina................................................................................................................- 1,475
India........................................................................................................................... 2,697
United Kindgom....................................................................................................... 1,171
Syria............................................................................................................................1,065
Iraq..................................................
818

August 1940
(thousands of
pounds)

2,544
250
294
294
252

132

Wartime Prices—August 1939 to Pearl Harbor

In the latter part of 1940 prices were subject to intensified upward
pressures, of which the foremost was the rapid increase in consumer
demand resulting from the defense program. This was accentuated
by the accompanying population shifts, as many workers apparently
preferred to buy new rugs rather than ship old ones to the location of
their new jobs.17 In addition, both the prices of South American wool
and shipping costs from that continent were increased; freight rates
on the exportation of South American wools were advanced 33}£ per
cent, effective February 1,1941. Shipping space from any source was
difficult to obtain; for example, the British Ministry of Supplies in
October and November 1940 released 7 million pounds of Indian wool
for American import on a quota basis, but shipping difficulties pre
vented its arrival before 1941.18
An upward movement in prices, which had long been expected,
began in February 1941 with the announcement of a 5-percent rise by
one large company. This action was promptly followed by other
manufacturers and constituted the first of a series of advances which
were to continue through June 1941, when prices were 23 percent
above the pre-war level. (See table 29.)
These increases were accompanied by lowered costs as a result of
the larger volume of output attained by the industry. Demand
continued to be heavy, With sales for the first half of 1941 totaling
$200,000,000 as compared to $145,000,000 for the same period of 1940.19
To meet this rising demand with limited supplies, manufacturers
instituted an allotment system in carpet sales, and limitations were
placed on colors and patterns by a number of mills.
In July, while the New York market for fall floor coverings was in
session, Price Administrator Henderson sent a letter to representative
carpet manufacturers asking that the industry refrain from further
price advances:
If carpet and rug prices go still higher, other industries are certain to feel that
they also are entitled to take advantage of improving market conditions. It is
the combination of such price increases pyramided throughout industry which
constitutes inflation * * * I should like, therefore, to request that you do
not advance prices on lines to be marketed this fall.20

During the remainder of the summer, demand continued to be
heavy, with sales being made largely on an allotment basis. One
large company withdrew a popular carpet from the market for a 90-day
period because of its inability to fill orders. In August 1941, with
carpet prices 23 percent above those of August 1939, the Office of
Price Administration held a series of conferences with wool dealers
and carpet manufacturers concerning carpet prices, but no specific
action was taken.
However, prices remained stable in succeeding months, despite
sharply rising demand and in mid-November producers agreed with
the Office of Price Administration to defer proposed price increases for
at least another month.21 Prices remained unchanged during the
remainder of the year. It was rumored in the trade that increases of
5 to 7 percent were to be expected at the January openings.22
v Journal of Commerce, October 15,1940.

28 Idem, November 19,1940; Daily News Record, November 25,1940.
» Idem, July 14,1941.
20 Idem, July 8,1941.
21 Idem, November 18,1941.
23 Idem, December 4,1941.

Chapter V.—Housefumishings

133

T able 29.— C A R P E T WOOL a n d

C AR PE TS: Imports and Consumption, and
Manufacturers' Price Indexes, August 1939-December 1941

[Sources: Imports and consumption—U. S. Bureau of Foreign and Domestic Commerce and Bureau of
the Census; prices—U. S. Bureau of Labor Statistics]
Carpets—
Carpet wool (thou Axminster
sands of pounds)
9x12
Year and month

Con
sump
Imports1 tion,
scoured
basis

Price
index
(August
1939=100)

9,604
8,847
11,274
9,238
7,665

100.0
105.1
112.0
112.3
112.3

1989

August....................
September..............
October..................
November.............
December...............

Year and month
Imports1

Con
Price
sump
index
tion,
(August
scoured 1939=100)
basis

1940—Con.

11,669
17,671
9,916
10,962
9,630

1940

January..................
February................
March.....................
April.......................
May........................
June........................
July........................
August...................
September..............
October...................

Carpets—
Carpet wool (thou Axminster
sands of pounds)
9x12

20,069
16,124
17,801
9 598
8,242
7,365
7,164
6,079
6,460
8,067

9,703
8,658
7,340
8,544
6,524
5,798
6,061
7,571
7,941
11,387

112.5
112.4
113.3
115.9
116.4
116.6
117.1
117.1
117.1
117.1

November..............
December...............

11,583
15,595

8,969
9,352

117.1
117.1

19,905
18,614
22,325
19,002
17,683
24,275
19,958
18,599
16,496
(2)
(2)
(2)

11,015
10,996
11.056
13,370
10,904
11,260
11,465
11,256
11,212
13,980
10,700
11,708

117.1
117.1
117.7
121.1
122.8
123.1
123.1
123.1
123.1
123.1
123.1
123.1

1941

January..................
February................
March.....................
April.......................
May........................
June........................
July........................
August....................
September..............
October...................
November..............
December...............

1Includes all nondutiable wool, except camel’s hair.
2Not available for publication.

Furniture
Furniture prices remained relatively stable until mid-1941, despite
very rapid increases in demand and output, and then rose sharply
to reach a level in December 1941 about 23 percent above that pre
vailing before the outbreak of war in Europe. This advance persisted
in the face of repeated price-stabilizing attempts by the Government.
During the period August 1939 to November 1939, furniture prices
on the average rose less than 2 percent. Sales, however, expanded
rapidly during this period, orders in September 1939 being 28 percent
higher than in September 1938.23 From August to November 1939
production increased 14 percent, in part seasonally. At the same
time prices advanced moderately. These upward movements, how
ever, came to an end when it became evident that no shortages of
materials for the industry were imminent.
Both prices and production remained fairly stable in the first half
of 1940, but in the latter part of the year demand rose sharply, re
flecting the increased pace of the National Defense Program and the
rise in consumer purchasing power. Thus, in January 1941 furniture
>roduction was 17 percent above the level of January 1940. Simiarly, the National Retail Furniture Association reported that sales
had increased 18 percent between February 1940 and February 1941,
and Seidman and Seidman, furniture accountants, reported that new
orders in April 1941 were 3 percent higher than in March, the first
March-to-April increase in 5 years.24

}

* Retailing, December 30,1940, p. 18.

24 New York Times, March 21 and May 25,1941.

134

Wartime Prices—August 1939 to Pearl Harbor

Chapter V —Housefumishings

135

These increases in demand and in output began to affect prices in
the spring of 1941. In March, a number of furniture manufacturers
announced plans to advance prices on some lines from 5 to 8 percent,
while the American Furniture Mart Spring Survey predicted a general
rise of prices which it attributed to (1) labor shortages, (2) rising prices
of raw materials, and (3) shortages and consequent allocation of
essential raw materials. According to its report, lumber costs had
advanced by 30 percent; hide glue had risen 20 to 25 percent in price
and was being rationed; plastics were to be substituted for metal
finishings often at higher cost; more expensive synthetic substitutes
were being used for imported finishing materials (tung oil and im
ported pigments); and costs of all fabrics were increasing.
These increases in costs of materials were among the factors leading
to the price advance which began in April. Not only were quoted
prices raised, but trade terms and discounts were shortened.
One of the outstanding developments will be a shortening of trade terms and
discounts. Already several of the larger case-goods manufacturers have an
nounced a shift from 2 percent 30 days, net 60 days, to 2 percent 15 days, net
30 days.25

Government officials, however, were apparently unconvinced that
the cost increases had been sufficient to justify the advances made in
prices. They were also concerned by a change which was being
adopted in the method of sale. When the Merchandise M art and
the American Furniture Mart opened in May, some companies had
insisted on the “open” method of quoting prices—i.e., prices as of
date of shipment on future delivery. To the dealers at the Ameri
can Furniture Mart, the newly organized Office of Price Administra
tion and Civilian Supply sent a letter condemning this practice as
conducive to price increases.
By June 1941, however, the “open-price” system was in widespread
use throughout the industry. In its defense, producers claimed (1)
that manufacturing costs were unpredictable, and (2) that a minimum
wage increase from 30 to 40 cents per hour, as suggested by the in
dustry committee under the Wage and Hour Act, would add ap
preciably to costs.26
This extension of “open-price” sales brought forth a second con
demnation by the Government. In June the Midsummer Market of
the New York Furniture Exchange opened with many manufacturers
not only employing the “open-price” method but also making sales
largely by quota on the basis of former purchases and credit rating.
On June 24, 1941, Price Administrator Henderson sent a letter to 47
of the largest furniture manufacturers protesting against both the
“open” method of quoting prices and the general increase in furniture
prices.
This method of quotation (i. e., as of time of shipment) leaves the price open to
unwarranted advances and removes the effect of competition in the furniture
market. If continued, it will upset the market and have far-reaching repercus
sions on the general price level. * * * If such price increases continue in this
and in other industries the result will be inflation and demoralization not only in
your industry but over the economic system generally. Therefore, pending a
determination as to the justification of your recent price increase, we request that
you make no additional advance in prices until you have discussed the matter
with us.27
25 Retailing, April 21,1941.
26 According to the Bureau of Labor Statistics, average hourly earnings in the furniture industry rose from
52.9 cents in August 1939 to 60.2 cents in August 1941, an advance of 13.8 percent. According to the Census of
Manufactures, wages in the furniture industry were, in 1939,25 percent of the value of product.
27 Release No. PM 602, June 24, 1941.

136

Wartime Prices—August 1939 to Pearl Harbor

Despite this request, several manufacturers, the day after receiving
the letter, announced further increases of 5 percent. Thereupon Mr.
Henderson, on June 28, requested the Federal Trade Commission to
investigate prices, costs, and profits in the furniture industry. In his
letter to the Chairman of the Commission, he stated:
On June 26 the New York Times and other newspapers reported that, despite
my request, several furniture manufacturers have announced a further increase of
6 percent. This is in addition to the increase from 5 percent to 10 percent made
immediately prior to my letter.
If the recent price advance is not in fact justified, we wish to know it and we
think that Congress and the public should know it. If, on the other hand, in
creases in the price of materials have been such that the furniture manufacturers
cannot fairly absorb them, we wish to know what these increases have been and
the extent to which they may be justified.28

In July, prices, as well as production and sales, continued to rise,
though officials of the Federal Trade Commission and the Office of
Price Administration were reported to be investigating the records of
various furniture factories in Grand Rapids and attendmg the Chicago
Furniture Mart.
Furniture prices rose still higher in August. This was due in part
to a regulation issued August 22 by the Federal Reserve Board, limit
ing the terms and conditions under which credit repayable in install
ments might be extended for purchasing or carrying consumers’
durable goods.29 Under the terms of the regulation a 10-percent down
payment on household furniture was required, with remaining pay
ments to be made in not more than 18 months. Since two-thirds of
the sales of furniture stores are normally financed by installment
credit,30 the notice of this impending regulation resulted in a consum
ers’ rush to purchase furniture before the regulation became effective
on September 1, 1941.
This stimulus to prices, however, was to some extent offset by the
fact that the raw material situation in the summer of 1941 appeared to
be less stringent than had previously been feared. The principal
potential shortage was in mahogany, arising from defense uses and
from lack of shipping space from South America and the Philippines.
In July, however, a statement was issued by the Mahogany Associa
tion, Inc., to the effect that a large proportion of the supply of ma
hogany logs had already been converted to veneer, which is suitable
only for furniture. It was therefore pointed out that no immediate
shortage was to be anticipated.31 Furthermore, the trade was in
formed by the Department of Commerce in August that the supply of
domestic woods (cherry, maple, oak, walnut, and birch) was quite
sufficient to provide substitutes for mahogany if any shortage did
develop.32
Despite this easing of the raw materials situation, the increasing
pressure of consumer demand led to even further price increases. In
August 1941, furniture prices were 14 percent above their levels of
August 1939 (see table 30).
In August 1941 it was reported that more stringent Government
control measures were to be adopted: furniture designs were to be
frozen by an order from the Office of Price Administration, for the
m Release No PM 636, June 28,1941.
29 Federal Reserve Bulletin, September 1941.
30Journal of Commerce, August 21,1941.
31 New York Times, July 13,1941.
33 Idem, August 16,1941.

137

Chapter V.—Housefumishings

T able 30.—F U R N IT U R E : Indexes of Manufacturers9 Prices and Plant Operations,

August 1939-December 1941
[Sources: Prices—U. S. Bureau of Labor Statistics; plant operations—U. S. Department of Commerce]
Indexes
(August 1939=100) of —
Year and month

19S9

August...............................
September ___________
Ofitnhfir
_________
November.........................
December..........................
mo

January_______________
February ____________
March
_____________
April_________________
M ay
June
_______________
July__________________
August_______________
September __________
October_______________

Indexes
(August 1939=100) of—
Year and month

Manu
facturers*
prices1

Plant
operations2

100.0
100.3
100.9
101.7
101.8

100.0
106.8
111.9
113.6
110.2

102.1
102.2
102.2
102.2
102.2
102.2
102.3
102.3
102.3
102.3

101.7
106.8
106.8
105.1
105.1
106.8
101.7
110.2
120.3
128.8

Manu
facturers*
prices 1

Plant
operations *

102.3
102.9

130.5
125.4

104.2
104.2
104.4
105.2
106.4
109.7
112.5
113.8
117.1
119.6
121.6
122.7

118.6
123.7
127.1
128.8
127.1
139.0
139.0
147.5
149.2
152.5
148.3
139.0

1940—Con.

November______ _____
December_____________
m i

January.............................
February...........................
March________________
April_________________
May_________________
.Tnrift
July....................................
August_______________
September.___ ________
October_____ _________
November_____________
December....................... .

1 Furniture subgroup, excluding refrigerators.
2Computed by Seidman and Seidman to indicate activity in the Grand Rapids district and in the in
dustry as a whole, as revealed by reporting plants throughout the country. Data are expressed as per
centages of normal (1926), based on relation of current to normal man-hours for the reporting plants. Nor
mal is a fixed figure established on the basis of operations when the industry was working full force and full
time. Since 1934 it has been adjusted to reflect a 40-hour week instead of a 50-hour week, as originally
established. (U. S. Department of Commerce, Survey of Current Business.)

purpose of facilitating the establishment of price ceilings, while the
number of market weeks in a year was to be reduced in order to
lower expenses and discourage design changes.33
An additional step to stabilize the furniture market was taken by
the Government in October; the Office of Price Administration an
nounced that a voluntary agreement had been reached with furniture
upholstery-fabric manufacturers whereby prices were to be kept at
their September 10 levels until November 10.34 The agreement
provided, however, that requests for increases of 5 percent over these
levels would be considered. A number of such requests were granted,
and on November 12, 1941, a price schedule for furniture upholstery
fabrics was issued, in which maximum prices were set at levels ap
proximately 5 percent above those prevailing on September 10.35
A t the time that the upholstery fabric ceiling was announced,
Price Administrator Henderson stated that a schedule of maximum
prices for wood furniture would be issued shortly thereafter. Late in
November, however, he announced that plans to issue a furniture
price ceiling had been indefinitely postponed, although his office
would continue to keep a close watch on prices in the industry.
3*New York Times, August 30,1941.
Release No. PM 1296, October 3,1941.
MPrice Schedule No. 39, Release No. PM 1549, November 11,1941.

138

Wartime Prices—August 1939 to Pearl Harbor
Household Electrical Appliances
ELECTRIC REFRIGERATORS

The electric-refrigerator industry is highly concentrated; in 1937,
the latest year for which statistics are available, the four largest com
panies produced about 77 percent of the value of all 6 to 10 cubicfoot refrigerators,36 the largest selling sizes. Prices quoted by these
leading producers to dealers generally are uniform.37 During the
Defense Period, quotations declined in 1940, recovered partly in 1941,
and at the time of the attack on Pearl Harbor the average price of
refrigerators was about 6 percent below that prevailing in August
1939.
Prices of electric refrigerators were stable from August through
December 1939, but were materially reduced in 1940. One major
company began the downward revision in January and the other
producers soon took similar action. Other price reductions followed,
so that the average wholesale price of five models decreased from
$101.11 in December 1939 to $94.69 in January 1940, to $92.95 in
June 1940, and to $89.88 in December 1940.38 Prices on individual
models were reduced by amounts ranging from $2 to $17.20.39 As
a consequence of these price reductions and of increased purchasing
power, sales rose sharply. In December 1940, sales were 25 percent
higher than in December 1939.
This downward trend of prices was reversed in 1941, and there
were three successive increases by August 1941. The first of these
was instituted in February 1941 when three of the leading manu
facturers advanced their prices from $5 to $10 a unit, and by March
12 this change had been followed by all other producers except the
mail-order houses.40 In April and again in June the major companies
announced further price increases which were also reflected in the
prices charged by the smaller manufacturers. However, in August
1941 the composite price of five models was still 12 percent lower
than that of August 1939 (See table 31).
These price advances were due in part to the necessity of finding
substitutes for ahiminum, zinc, steel, copper, and other metals needed
for the defense program. In the first part of 1941 tin-plated copper
was used in place of aluminum for ice trays, and porcelain was sub
stituted for nickel steel in evaporators and coils. As copper became
increasingly difficult to obtain, further substitution became necessarjr
and rubber and plastics were used for trays. These changes tended
to increase costs because of the technological problems of change
over, although in some cases the substitute materials were less expen
sive than the products which they replaced.
Higher labor costs also contributed, though only slightly, to rising
prices. Between December 1940 and July 1941, according to a
survey made by the Bureau of Labor Statistics, unit labor costs of
best-selling models (generally 6-foot) increased by amounts ranging
from $0.29 to $1.99 per refrigerator. A typical change in labor
36 T. N. E. C. Monograph No. 27. The Structure of Industry, p. 478.
37 Idem. Price Behavior and Business Policy, pp. 131-134,162.
38 The composite consists of a simple unweighted average of five models: three 6-foot models, one 4-foot
model, and one 8-foot model.
3« However, the largest price reductions were made on “stripped” models, the sales of which were not
pushed as vigorously as on other models. (T. N. E. C. Monograph No. 1, Price Behavior and Business
Policy, pp. 154-158.)
4° New York Times, February 21,1941; Wall Street Journal, March 12,1941.

Chapter V.—Housefumishings

139

T able 31.—E LE C TRIC REFRIGERATORS: Indexes of Manufacturers’ Prices and

Sales9 August 1939-December 1941
[Sources: Prices—U. S. Bureau of Labor Statistics; sales—U. S. Department of Commerce, Survey of
Current Business]

Year and month

Indexes (August 1939=
100) of—
Prices 1

19S9

August...............................
September—.......................
October____ __________
November_____ _______
December____ ________
1940

January..............................
February______________
March................................
April....... ..........................
M a y .____ ___________
June...................................
July....................................
August_______________
September..... ........... ........
October_______________

100.0
100.0
100.0
100.0
100.0
93.7
93.3
93.3
93.3
93.3
91.9
91.9
91.9
91.9’
91.9

Year and month

Sales2

100.0
77.2
65.5
58.2
97.6
247.7
296.6
314.8
358.6
407.1
347.2
262.4
217.9
118.6
93.1

Indexes (August 1939=
100) of—
Prices 4

Sales2

1940—Con.

November..... ................
December..
1941

January.............................
February......................... .
March..............................
April......................
May..................................
June..................................
July....................................
August....... .......................
September............... .........
October............ ..............
November_____________
December..
............

91.9
88.9

84.3
121.6

83.5
83.5
85.1
85.1
85.3
88.4
88.4
88.4
88.4
92.4
92.4
94.3

397.1
378.3
446.5
509.4
457.8
399.1
358.3
285.6
173.7
140.4
98.2
51.4

1 Average of 3 6-foot models, 1 4-foot model, and 1 8-foot model.
2 Compiled by the Edison Electric Institute.

costs, reported by one company, was an advance from $4.77 to $5.98
per refrigerator. These increases were due to higher wage rates and
to decreased labor productivity resulting from the employment of
untrained workers.
A third upward pressure upon prices resulted from the increase in
consumer demand. The threatened scarcity of raw materials, such
as steel, chrome, plastics, and rubber, engendered a fear of further
price rises and eventual drastic curtailment of production. In addi
tion, during the summer of 1941 there was a rush to purchase refriger
ators before September 1, when the installment credit regulations of
the Federal Reserve Board became effective,41 and before the new
excise tax of 10 percent (an increase of 4% percent over the previous
rate) was levied.42
In June 1941, after the third price increase in 6 months, Price
Administrator Henderson sent a letter to 16 producers of refrigerators,
who manufactured approximately 97 percent of the industry’s output.
In this letter he stated:
We are deeply concerned over the fact that the price of refrigerators has risen
considerably during recent months. If such price increases continue in this
and other industries, the inevitable result will be inflation and demoralization
not only in your industry but throughout the economic system.
Pending a determination as to the justification of your recent increase, we
request that you make no additional advances in prices until you have discussed
the matter with us.43

After the issuance of this request, electric-refrigerator prices
remained unchanged through the end of August. Although further
advances were opposed by the Office of Price Administration,44 two
additional price increases were announced by refrigerator producers
before the year ended. However, in December 1941 prices on the
average were still materially below their level of August 1939.
41 Federal Reserve Bulletin, September 1941, p. 845.
42 New York Times, September 21, 1941.

547953—44------ 10

43 OEM Release No. PM 603, June 24,1941.
44 New York Times, November 1,1941.

140

Wartime Prices—August 1939 to Pearl Harbor

Sales of refrigerators in August 1941 were more than two and onehalf times those of August 1939. The first intimation of materially
decreased production came only in August 1941, when manufacturers
were informed by the Office of Price Administration that in the
near future production would be reduced to levels 30 to 50 percent
below those of the preceding year.45
Early in September a meeting was held between a committee of the
American Standards Association and the Consumer Division of the
Office of Price Administration, the purpose of which was to formulate
methods of reducing the amount of strategic raw materials consumed
by the electric-refrigerator industry. Tins conference was followed
on September 30 by an Office of Production Management order limit
ing the production per month of refrigerators from August 1 through
December 31, 1941, to 56.8 percent of the average monthly factory
sales in the 12 months ended June 30, 1941.
VACUUM CLEANERS

Prices of vacuum cleaners for the most part remained unchanged
during the 2-year period from August 1939 to August 1941. By the
summer of 1941, however, the supply had been drastically restricted,
production for the remainder of the year had in many cases been sold
up, and several leading manufacturers withdrew quotations. Prices
of a few models which remained on the market during this period
rose from 13 to 21 percent.
During the 2-year period the demand for vacuum cleaners advanced
rapidly. Shipments, though sharply seasonal, rose markedly, and in
August 1941 were 103 percent above those in August 1939. At that
time, several manufacturers announced that their production for the
next 3 or 4 months had been sold up, and that orders for delivery
beyond 1941 were not being accepted.46
The vacuum-cleaner industry was particularly affected by defense
requirements for metals. Aluminum, nickel, chromium, steel, and
plastics became increasingly scarce. At first, the industry turned to
the use of substitute materials, with some resultant increases in costs
due to the technological changes required by the transition. With
their supplies of aluminum drastically curtailed, vacuum-cleaner
manufacturers turned to steel and plastics; nickel and chromium
plating were replaced by painted steel.
However, as the defense program expanded, shortage of steel,
plastics, and other metals developed, the effects of which were to
curtail vacuum-cleaner production. By July 1941 several vacuumcleaner companies were operating their departments intermittently
with resultant increases in overhead costs.
During the remainder of the year the industry not only faced a
drastic shortage of essential raw materials, but its facilities were being
converted increasingly to defense production.*•
45Journal of Commerce, August 25,1941.
• New York Times, August 21,1941.

Chapter VI.— Chemicals and Allied Products
Summary
“Chemicals and allied products” is a broad group of commodities
sold in a wide variety of markets. Because of the many special con
ditions affecting the supply and demand of these products, price
movements during the Defense Period were highly diverse. These
commodities range from the acids, solvents, and basic chemicals,
used in heavy industry and munitions, to dyes and plasticizers,
fertilizers and insecticides, drugs and pharmaceuticals, and the in
edible fats and oils used in soaps and paints. Their producers include
some of the largest corporations in the United States, and smaller
domestic manufacturers of “specialties” as well as plantations in the
Far East, South America, Africa, and the factories of Europe.
The broad expansion in demand, from the outbreak of war in Europe
in August 1939 to December 1941, affected virtually all of these prod
ucts. Consumption of industrial chemicals increased as the defense
program developed, and the rapid rise in consumer purchasing power
extended this demand to commodities entering primarily into civilian
goods. Use of such diverse products as denatured alcohol and
Java citronella doubled. At one time or another, scarcity was
reported in markets for almost all chemicals and related products. It
was therefore necessary to expand productive capacity materially for
many commodities, and to seek substitutes or develop hitherto unused
resources for other commodities previously obtained in abundance from
abroad.
As a group, prices for all chemicals and allied products rose 23
percent between August 1939 and December 1941, about the same
amount as the general level of wholesale prices measured by the
Bureau of Labor Statistics comprehensive index (see table 32). The
bulk of this advance, except for short-lived speculative increases in
the fall of 1939, occurred in 1941.
Changes in prices varied greatly between individual products and
groups. Quotations for products which came largely from abroad
rose sharply, often increasing two- or three-fold between August 1939
and December 1941. These increases were particularly pronounced
among imported drugs and pharmaceuticals and fats and oils. Prices
of certain domestically produced industrial and other chemicals, for
which existing sources of supply were inadequate also rose substan
tially—from 30 to 60 percent for some alcohols and solvents and a few
of the coal-tar products.
On the other hand, prices of m ost basic industrial chemicals main
tained the stability which normally characterizes their behavior in
peacetime. In fact, one of the m ost striking characteristics of
mdustrial chemical markets, particularly in contrast to World War I,
was the remarkable price stability prevailing for m ost heavy chemicals.
uotations remained unchanged or increased very slightly during the
efense Period for sulphuric acid (used so widely in heavy industries
that its consumption has been used as an index of business activity),
hydrochloric and nitric acid, chlorine, carbon dioxide, phthalic an
hydride, and other industrial chemicals. In some of these cases,
capacity to produce was adequate for all needs arising during the
Defense Period. In almost all cases, higher expenses for labor and

141

142

Wartime Prices—August 1939 to Pearl Harbor

materials were significantly offset by lower unit costs for overhead.
Where shortages developed, prompt Government priority control was
simplified administratively by the fact that production was concen
trated in one or a few large companies. The more essential wartime
needs were satisfied effectively in virtually all cases. Prices of basic
industrial chemicals as a group (i. e., chemicals and allied products,
excluding drugs and pharmaceuticals, fertilizers, and fats and oils)
rose only 6 percent between August 1939 and December 1941.
This 6-percent average increase was mainly due to sharp advances
for certain alcohols and solvents, a few coal-tar products, and tanning
materials. Thus, a tripling in the raw-material costs for molasses
resulted in price advances during the Defense Period of 40 percent and
more for butanol and other alcohols. Demand for these products rose
greatly and there was a twofold increase in production from August
1939 to December 1941. Among coal-tar products, the need for
expanding productive capacity of toluol, in order to meet require
ments for explosives, resulted in a price increase of 32 percent. In
markets for tanning materials, there was a 25-percent increase for
quebracho, because of difficulty in obtaining shipments from abroad;
supplies of domestically produced chestnut extract had to be increased
substantially, and the price rose more than 30 percent.
The general picture of stability in markets for most industrial
chemicals, however, must be qualified by reference to speculative
activities which at times achieved considerable importance. While
producers’ quotations for many scarce products, such as phenol and
formaldehyde, remained unchanged (or declined slightly) throughout
the Defense Period, much higher prices were asked and received by
certain jobbers and dealers who had purchased and hoarded large
supplies. Special studies of the Bureau of Labor Statistics have
shown that on the whole only a small part of total supplies passed
through speculative channels. Nevertheless, many small or occasional
consumers of some scarce chemicals, who lacked contracts with their
producers, could have recourse only to speculators. Many regular
buyers, who required additional supplies above those contracted for,
were directed to similar channels. In the “ resale” market thus
created, prices boomed. For example, sales were at times reported for
formaldehyde at 52 cents per pound, although producers’ quotations
actually declined during the Defense Period and were never greater
than 5% cents. Similarly, oxalic acid was quoted by producers
at 10% cents, but was purchased at resale for 23 cents per pound.1
Before the Defense Period had ended with the attack on Pearl Harbor,
the Office of Price Administration had made strenuous efforts to elimi
nate such speculative transactions.
Price increases for other subgroups comprising the general
category of chemicals and allied products— fertilizer materials, drugs
and pharmaceuticals, and fats and oils—were materially greater on
the average than those for industrial chemicals. In the case of drugs
and pharmaceuticals, the sharp advances occurred almost entirely
for imported products. Supplies of some botanical drugs ordinarily
obtained from Central Europe were cut off immediately after Poland
was invaded. Expansion in the theater of war gradually cut off the
major sources of some materials and many others were clearly i
i See Indirect Price Increases, by Melville J. Ulmer (Monthly Labor Review, November 1942, p. 909). .

143

Chapter VI.—Chemicals and Allied Products

threatened. Shipping costs—ocean freight rates and war-risk in
surance—rose appreciably for some commodities. Cargo space grew
extremely scarce, particularly for less essential pharmaceuticals, and
quotations fluctuated wildly from day to day in response to military
development. By December 1941 menthol (natural), ordinarily
imported from Japan and China, sold for more than four times its pre
war price. The price of tartaric acid, derived from raw materials
(argols) shipped largely from Italy and Spain, rose 160 percent.
There were correspondingly sharp increases for products of similar
nature.
In general, these sharp advances were due only in small part to
actual increases in shipping or other costs. In most cases, the princi
pal factor appeared to be the competitive bidding of consumers for
limited supplies which could not be replaced or which depended upon
the uncertain and irregular arrival of shipments from abroad. Thus,
less than 2 percent of the price increase for menthol was accounted
for by higher ocean freight rates and war-risk insurance.
T able 32.— CH EM ICALS A N D A L L IE D PRO D UCTS: Wholesale Prices ,

August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]
Wholesale-price indexes (August 1939=100) of—
Year and month

All chem
icals and
allied
products

Chemicals

Drugs and
pharma
ceuticals

Fertilizer
materials

Mixed fer
tilizers

100.0
103.2
104.6
104.3
104.7

100.0
100.8
101.7
101.7
101.8

100.0
101.7
103.4
103.4
104.1

100.0
102.6
104.7
106.6
108.2

100.0
99.0
99.2
99.3
101.1

100.0
133.5
140.9
134.7
130.8

104.7
104.4
103.8
103.6
103.4
102.6
103.8
103.4
103.5
103.6
104.4
104.7

101.8
101.8
101.6
101.4
101.6
101.6
101.3
101.2
101.2
101.4
101.5
101.9

105.4
105.4
105.6
106.1
106.4
106.6
124.4
124.8
124.5
124.3
124.4
124.8

108.9
108.4
107.8
107.9
108.1
102.9
102.7
103.8
104.0
104.0
106.7
106.9

101.1
101.5
101.1
101.0
99.9
99.6
99.6
101.5
101.5
101.5
101.5
101.6

129.1
125.6
117.7
115.3
113.5
111.1
105.9
96.3
98.3
98.0
104.2
104.4

105.9
105.8
107.5
110.2
112.7
112.9
114.8
115.9
117.8
120.9
121.0
123.0

102.1
102.3
102.5
103.1
103.6
104.1
104.2
104.4
105.3
105.5
105.4
105.7

125.2
125.7
126.1
126.5
128.0
129.6
129.7
129.8
135.4
161.0
159.8
159.5

107.9
107.5
107.5
108.4
108.5
106.7
113.0
115.0
116.9
118.0
118.0
118.8

102.9
101.0
100.8
100.1
100.1
101.0
105.3
105.5
105.5
106.0
108.9
111.1

113.8
115.3
137.2
170.7
198.5
198.5
206.2
215.0
224.9
230.0
228.8
251.0

19S9

August................
September...........
October................
November...........
December...........

Inedible
fats and
oils

1940

January...............
February.............
March..................
April....................
May.....................
June.....................
July.....................
August................
September...........
October............... .
November...........
December........... .
1941

For certain other imported products, price trends were influenced
by the use of substitutes or the expansion of dom estic production, as
in the case of camphor, or by the accumulation of stock piles, as in the
case of quinine. Prices of m ost dom estically produced drugs and

144

Wartime Prices—August 1939 to Pearl Harbor

pharmaceuticals, such as acetylsalicylic acid, citric acid, and ether,
were stable. The average price increase for all drugs and pharma
ceuticals from August 1939 to December 1941 was 60 percent.
Sharp price advances for inedible fats and oils .occurred both for
imported and domestically produced commodities—the average in
crease during the Defense Period being 150 percent. The chief
reason for these increases was a huge expansion in demand coupled
with a relatively inelastic supply. Occasional speculation, specifically
censured by Price Administrator Henderson in the summer of 1941,
aggravated the situation.
Stocks of tallow declined 16 percent between December 1940 and
December 1941, as the use of this fat in soap manufacture and in other
industries rose more rapidly than production. While imports of some
commodities (such as sulfur olive oil) were cut off almost entirely
before the end of 1940, arrivals of other products (palm and coconut
oil, for example) continued in considerable amounts throughout the
Defense Period, although shipments were uncertain and more ex
pensive and did not keep pace with rapidly expanding demand. Use
of all inedible fats and oils in the soap industry—the chief consumer—
increased 30 percent between 1939 and 1941. In the summer of 1939
prices of fats and oils generally had been at a relatively low level, but
this situation was soon reversed. Before the attack on Pearl Harbor
prices of most inedible fats and oils had doubled or tripled. The price
of glycerine—a byproduct of the soap industry and important for
explosives—rose 63 percent.
In the case of fertilizers, price increases on the average were con
siderably more moderate, despite the development in 1941 of urgent
requirements for additional supplies. The supply of nitrogenous
materials was seriously affected, not only by greater use in agriculture,
but because of the rapidly growing need of fixed nitrogen in explosives.
The disparity between supply and demand was further widened by the
fact that a relatively small but important proportion of United States
requirements were obtained from abroad, and the shortage of shipping
space and other factors interfered with deliveries. The sharpest
price increases were for the relatively less important organic materials,
such as fish scrap and animal tankage. Among the important in
organic materials, ammonium sulfate prices advanced 12 percent;
Chilean nitrate, 14 percent; cyanamid, 57 percent; and phosphate rock
and superphosphates, about 25 percent. The price of anhydrous
ammonia remained unchanged during the Defense Period, at levels
prevailing since 1934, and by December 1941 supplies of this chemical
had been diverted in large part to use in explosives. Quotations for
potash and synthetic sodium nitrate were also stable or only slightly
higher. As a group, prices of fertilizer materials rose 19 percent
between August 1939 and December 1941; prices of mixed fertilizers
rose 11 percent.
Because of their strategic importance, Government regulations came
early in markets for chemicals. In the summer of 1941, priority or
allocation orders were issued for 30 of the leading chemicals or chemical
groups, including acetone, anhydrous ammonia, boric acid, chlorine,
cresylic acid, formaldehyde, phenol, potassium compounds, toluene,
ethyl alcohol, and other alcohols. Maximum price regulations during
the Defense Period were issued for formaldehyde (because of the
speculatively high “ resale” prices), ethyl alcohol, wood alcohol, butyl

145

Chapter VI.— Chemicals and Allied Products

CHEMICALS AND ALLIED PRODUCTS
WHOLESALE PRICES
INDEX

AU 6U ST

IN D EX
ouu

'9 3 9 * '0 0

2 6 0

2 8 0

2 6 0

2 4 0

2 2 0

2 0 0

INEDIi 3LE
FATS ANI[) OILS

180

160

. DRUGS AND
U

IARMACEUTICALS
140

140

If
_oo«/
J L fT

/kLL CHEM ICALS
AND ALLIED PRODUCTS
/

120

1
1

120

'F E R T IL IZ E R MATEIRIALS

"CHEM ICALS

100

^ M I X E D FIERTILIZERS

1 11 1

1 1 1 « i > 1 1 1 11

11 i i i i i i i i i

i i i i i i i i i i i

«' »» » i »i i i i

OU A i o N D J F M A M J J A S O N O J F M A M J J A S O N D J F M A M J J A S O N O J F M A M J J A S O N O J F M A M J J A S O N O OU
1939

1 9 4 0

UNITEO STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS

1941

19 4 2

1 9 4 3

1 9 4 4

146

Wartime Prices—August 1939 to Pearl Harbor

alcohol, acetic acid, acetone, glycerine, paraffin wax, and fats and
oils. Informal agreements for stable prices were reached with pro
ducers of ammonium sulfate and cotton linters
In general, the price advance for chemicals and allied products as
a group, during the Defense Period, appears relatively limited when
compared with developments in the same markets during World War I.
Against the over-all increase of 23 percent from August 1939 to Decem
ber 1941, prices of chemicals and allied products during a comparable
period of World War I rose 93 percent.

A major reason for this difference is at once apparent. In 1914 the
American chemical industry was in its infancy and was dependent in
whole or in great part upon imports for its supply of many basic
new materials and finished chemicals. Although an important start
had been made before the war ended, domestic production of such
products as coal-tar derivatives, anhydrous ammonia, potash, and
sulfur were either nonexistent or far below the levels of self-sufficiency
since attained. Thus, it is typical that up to December 1941 in World
War II prices of sulfuric acid and hydrochloric acid remained un
changed, potash rose less than 1 percent, and phenol declined 4
percent; while prices of these commodities rose 50, 54, 1,052, and 633
percent, respectively, during a comparable period in World War I.
Industrial Chemicals
ALCOHOLS AND SOLVENTS

Demand for the chief alcohols and solvents was peculiarly sensitive
to the growth of the defense program. Used in numerous industries,
their production ordinarily rises as general business activity expands.
Superimposed on this general increase in demand was that arising
from the many direct or indirect military uses to which these chemicals
are put—for example, in smokeless powder and in plastics. In most
cases, this situation led to sharp price increases, amounting for some
products to more than 60 percent. The main exception to this rule
was the price of synthetic methyl alcohol (methanol) and its deriva
tive formaldehyde. Quoted prices of these chemicals declined slightly
through the Defense Period, principally because of the economies
realized from mass production.2
With the outbreak of war in Europe, the price of ethyl alcohol was
raised immediately, and those of some of the other products in this

soon afterward. The advance for ethyl alcohol was attributed
froup
y producers to the supply situation for blackstrap molasses, the
principal raw material for this chemical. Supplies of molasses avail
able for Americans at primary points in Cuba and Puerto Rico were
greatly reduced, since certain European nations had purchased
heavily just prior to the German attack on Poland. Some vessels
ordinarily used to transport molasses were taken off that service and
freight rates were advanced the equivalent of %-cent per gallon.3
Price increases for ethyl alcohol amounted to 14 percent in September
and an additional 9 percent in October, excluding the Federal tax
2 Synthetic-methanol production was begun commercially in the United States in 1927. At that time the
price of “natural’- methanol or wood alcohol was 82 cents per gallon. Synthetic methanol was introduced
on the market at 68 cents per gallon, and its price has been reduced steadily as its production has been
developed and expanded. In 1940 about 90 percent of the methanol produced in the United States was
synthetic.
3 Chemical and Metallurgical Engineering, February 1940, p. 85.

Chapter VI.— Chemicals and Allied Products

147

(which amounts to about 95 percent of the total price of the nondenatured alcohol) .4 These advances were soon reflected in the price
of denatured alcohol (pure ethyl plus denaturing agent), which
advanced 14 percent by December 1939 and an additional 1 percent
in January 1940. (See table 33.)
The temporarily tight supply situation for molasses also had the
effect of increasing the quotation for butyl alcohol, which by January
1940 rose to 29 percent above its pre-war level.
The price of acetone rose even more sharply. This commodity is
obtained partly as a byproduct of butyl alcohol in the fermentation of
molasses, and partly by synthesis from petroleum gases. Through
the fall of 1939, demand for acetone from rayon manufacturers rose
substantially. Because of its importance for this and many other
purposes—as in the manufacture of smokeless powder, plastics, safety
glass, dyestuffs, chloroform, etc.—the export demand for acetone was
also great. Business firms in the Far East and South America, which
formerly obtained supplies from Germany, directed their orders in
large volume to the United States. According to one trade journal:
This sudden expansion in demand both at home and from abroad put con
siderable pressure on producers who by that time were carrying very little reserve
stocks. As this buying interest increased rather than diminished, an actual short
age developed which became more pronounced when foreign buyers started
bidding frantically for supplies with total disregard for costs.6

The result was an advance in the price of acetone by December 1939,
amounting to 35 percent. Moreover, according to trade reports,
foreign purchasers were compelled to pay “approximately triple” the
price paid on contract by domestic consumers.6
Through 1940, until the fall, there was some slackening in demand
for almost all products in this group. Contract prices were adjusted
downward for butyl alcohol and acetone and remained unchanged for
ethyl and denatured alcohol. As business activity spurted in the fall,
and defense plants got under way, this trend was reversed and the
demand for alcohols and solvents grew steadily through 1941. From
time to time scarcity was reported, and the problem of meeting im
portant defense requirements, as well as less essential needs, grew
more and more serious.
Although production of ethyl alcohol rose from a monthly average of
about 18 million gallons in mid-1939 to about twice that amount in
late 1941, stocks in warehouses declined from about 15 million gallons
in December 1939 to approximately 8 million in December 1941.
Similarly, production of denatured alcohol rose from a monthly aver
age of between 7 and 9 to about 17 million gallons, but stocks declined
from 1 million gallons in December 1939 to 0.7 million in December
1941.7 (See table 34.) Meanwhile raw-material costs were increas
ing—between August 1939 and July 1941 the price of blackstrap
molasses in New York had doubled and by December 1941 it had
tripled.*
* The Federal tax on pure ethyl alcohol in August 1939 was $4.27^ per gallon; in July 1940 it was
raised to $5.70, and in October 1941 it was further increased to $7.60 per gallon. In August 1939 the price of
ethyl alcohol, 190 proof, was $4.49 and in December 1941, $7.92^4. Succeeding discussions refer to the price
excluding the Federal tax, since most ethyl alcohol sold for industrial purposes (i. e., for denaturation) is
tax free.
* Chemical and Metallurgical Engineering, February 1940, p. 85.
* See, for example, Oil, Paint, and Drug Reporter, January 13, 1941, p. 48; and Journal of Commerce,
May 19, 1941.
7 U. S. Department of Commerce, Survey of Current Business, 1942 Supplement.

148

Wartime Prices—August 1939 to Pearl Harbor

Price increases, from August 1939 to the peaks reached in the sum
mer or fall of 1941, amounted to 51 percent for ethyl alcohol, 41
percent for denatured alcohol, 43 percent for butyl alcohol, and 63
percent for acetone. While these advances reflected changes in
contract prices, at which the bulk of these chemicals is sold, small
quantity purchasers or contract buyers who were compelled to supple
ment their supplies by buying “on spot,” frequently paid much higher
prices. Thus, in February 1941 the resale price of acetone was
quoted at 10% to 11 cents per pound, almost double the producer’s
contract quotation of 6 cents.8
Increases in contract prices for most alcohols and solvents during
the Defense Period ended between May and September 1941, as a
result of several Government regulations designed to insure orderly
marketing of these products, adequate supplies for essential uses, and
the maintenance of price stability. In July 1941 acetone was placed
under export license control.9 In August a priority order was issued
for ethyl alcohol.10* At the same time, OPACS announced that
maximum price schedules were being prepared for several of the
industrial solvents; producers, dealers, and purchasers were in the
meantime requested to maintain prices at levels no higher than those
prevailing on July 29. Effective September 15, formal ceilings were
established for ethyl and denatured alcohol.11 A month later, maxi
mum prices were also fixed for acetone 12 and butyl alcohol.13 Except
in the case of butyl alcohol, maximum prices were set approximately at
prevailing contract levels. For butanol the maximum price level
exceeded current quotations because, according to the Price
Administrator, “the OPA is attempting to stimulate the use of corn
as a raw material to relieve the pressure on supplies of molasses.
This use of corn involves somewhat higher costs to the producers.”
As already indicated, quoted prices of methanol and formaldehyde
declined. Methanol was in great demand for use in explosives and
also in the manufacture of antifreeze preparations and for other
oses; in addition, through its derivative formaldehyde, it was
in the broadly exparding group of plastics which were being
substituted more and more for the strategic metals. While scarcity
developed early in the Defense Period for both products, producers’
quotations between August 1939 and December 1941 were reduced 16
percent for synthetic methanol and 5 percent for formaldehyde.
Speculation interfered seriously, however, with the marketing of
these commodities. Small or occasional users of formaldehyde were
compelled to purchase from brokers and dealers and often paid prices
many times producers’ contract quotations. Thus, in the summer and
fall of 1941, when formaldehyde was quoted at 5% cents per pound,
transactions were reported in the “resale” market at as much as 52
cents per pound.14 Similarly high resale prices were reported paid
for methanol. Scarcity was intensified by the need for partly divert
ing methanol-plant facilities to the production of synthetic ammonia

8Journal of Commerce, February 15,1941.
9 Export Control Schedule No. 12, effective July 23, 1941.
10 General Preference Order M-30, Ethyl Alcohol and Belated Compounds, issued August 25, 1941, effeo»
tive August 28,1941.
n Price Schedule No. 28, Ethyl Alcohol, issued September 15,1941, effective September 15,1941.
18 Price Schedule No. 36, Acetone, issued October 20,1941, effective October 27, 1941.
is Price Schedule No. 37, Normal Butyl Alcohol, issued October 20,1941, effective October 27,1941.
14 See, for example, Oil, Paint and Drug Reporter, June 9,1941, p. 17, and July 28,1941, p. 43; Journal Of
Commerce, September 17,1941. The high prices paid at resale in September were not necessarily in viola
tion of the maximum price schedule for formaldehyde, which became effective in August. The ceiling did
not apply to sales in quantities under 45 pounds.

Chapter VI.— Chemicals and Allied Products

149

Wartime Prices—August 1939 to Pearl Harbor

150

for munitions. Manufacturers of explosives complained that they
were unable to get adequate shipments of methyl alcohol because of the
large proportion of the reduced supply going to producers of anti
freezes, plastics, and other less essential products.
T able 33.—ALCOHOLS A N D SOLVENTS: Producers9Prices9August 1939-December

1941
[Source: U. S. Bureau of Labor Statistics]
Indexes (August 1939=100) of producers’ prices of—
Alcohol
Year and month

1989

August..................
September............
October.................
November.............
December.............
1940

January.................
February...............
M arch .................
April......................
M ay......................
June......................
Ju ly.............. .......
August..................
September............
October................
November........... .
December............ .
1941

January................
February.............
M arch ................
April.....................
M ay.....................
June.....................
July......................
August.................
September...........
October...............
November...........
December............

Ethyl, ex-molasses Specially
dena
(190 proof)
Methyl, Butyl,
tured,
formula pure syn normal
Includ Exclud
No. 1
thetic
ing Fed ing Fed
(190
eral tax eral tax
proof)

100.0
101.1
101.1
101.1

100.0

Formal
dehyde

Acetone,
chemi
cally
pure

100.7

114.0
123.3
123.3
123.3

100.0
100.0

111.3
111.3
114.4

100.0
100.0
100.0
100.0
100.0

100.0
100.0

100.0
100.0
100.0
100.0
100.0

101.1
101.1
101.1
101.1
101.1
1132.9
01.1

115.4
115.4
115.4
115.4
115.4
115.4
115.4
115.4
115.4
120.5
121.5
125.6

100.0
100.0
97.3
90.1
90.1
90.1
90.1
90.1
90.1
90.1
90.1
90.1

128.6
128.6
128.6
128.6
128.6
128.6
114.3
114.3
114.3
114.3
114.3
128.6

100.0
100.0
100.0

133.3
133.3
133.5
133.6
133.7

123.3
123.3
123.3
123.3
123.3
123.3
123.3
132.6
132.6
137.2
138.1
141.9

94.8
94.8
94.8
94.8
94.8
94.8
94.8
94.8
94.8

134.9
134.9
137.2
139.5
139.5
139.5
116.3
116.3
116.3
116.3
116.3
139.5

133.7
133.7
133.7
134.0
134.2
134.2
134.2
134.2
134.2
176.5
176.5
176.5

141.9
141.9
141.9
146.5
151.2
151.2
151.2
151.2
151.2
151.2
151.2
151.2

125.6
125.6
126.2
133.3
138.5
138.5
138.5
138.5
140.0
141.0
141.0
141.0

90.1
90.1
90.1
90.1
90.1
90.1
90.1
90.1
87.1
84.1
84.1
84.1

128.6
128.6
128.6
128.6
128.6
140.0
142.9
142.9
142.9
142.9
142.9
142.9

94.8
94.8
94.8
94.8
94.8
94.8
94.8
94.8
94.8
94.8
94.8
94.8

139.5
139.5
139.5
139.5
139.5
158.1
162.8
162.8
162.8
162.8
162.8
162.8

114.3
114.3
125.7

100.0
100.0

139.5
139.5
134.9

In May 1941 methanol and formaldehyde were placed under priority
control,16 and in August an OPACS order restricted the use of plastics
made from formaldehyde for nonmilitary purposes.16 At the same
time a maximum price schedule was established for formaldehyde,
with a ceiling at approximately the quotation fixed by leading produc
ers.17 In October a price ceiling was fixed for natural methanol,18 but
because of the cooperation of producers in keeping prices down, none
was established for the synthetic product. In 1940, natural methanol
accounted for only 10 percent of domestic consumption, but its pro
duction was expanded somewhat in 1941 because of the great demand.
15 Priorities Critical List, as revised to May 1,1941, issued May 8,1941.
18 General Preference Order M-25, Formaldehyde, issued August 21,1941, effective August 23, 1941.
u Price Schedule No. 21, Formaldehyde, issued August 20,1941, effective August 20,1941.
is Price Schedule No. 34. Wood Alcohol, issued October 3,1941, effective October 10,1941.

Chapter VI.— Chemicals and Allied Products

151

Price increases for natural methanol from August 1939 to October
1941, when the ceiling was established, amounted to 33 percent.
T able 34.—ALCOHOLS: Production and Stocks, August 1939-December 1941
[Source: U. S. Department of Commerce]
Denatured (thousands
of wine gallons)

Year and month
Production

Stocks,
end of
month

Ethyl (thousands of
proof gallons)

Production

Stocks
ware
housed,
end of
month

Methanol
Production (thousands
of gallons)
Crude
(wood,
distilled)

Synthetic

1939
August................
September...........
October...............
November...........
December-.........

9,191
12,625
15,181
13,065
11,145

2,007
1,776
1,496
1,481
1,170

18,539
18,104
20,963
21,793
22,080

32,918
25,913
17,975
14,168
14,614

360
405
463
480
434

2,679
2,640
4,158
4,612
4,184

19.$
January...............
February.............
March..................
April....................
May.....................
June....................
July.....................
August................ .
September...........
October...............
November............
December.............

10,398
8,460
9,524
9,994
10,037
9,707
10,442
11,510
13,694
15,098
13,154
12,215

1,417
1,366
1,392
1,591
1,586
1,662
2,605
2,919
2,450
1,980
1,586
1,360

20,652
20,381
20,983
20,218
20,948
21,423
22,457
24,094
21,559
23,595
23,347
23,762

15,279
18,773
20,676
20,957
21,921
21,799
22.394
23,645
18,483
13,471
10,018
9,503

457
447
507
. 442
437
426
390
408
366
463
468
484

3,453
3,782
3,463
3,486
3,409
3,426
3,852
3,788
3,549
4,408
4,440
3,913

10,610
10,556
13,186
12,652
14,714
15,678
15,242
15,065
16,908
18,185
16,965
0)

1,468
1,465
1,313
1,511
1,329
1,095
1,293
1,089
861
740
724
(9

24,224
22,029
25,655
26,248
29,651
32,224
33,021
34,299
35,757
36,393
37,541
0)

11,963
12,166
11,127
11,330

450
435
455
463
466
436
417
450
487
502
529
557

3,882
3,618
4,174
4,241
4,423
4,663
4,725
5,006
5,085
5,416
5,104
5,663

January...............
February.............
March.................
April....................
May.....................
June.....................
July.....................
August................
September—........
October...............
November...........
December-.........

10,000

10,392
7,108
10,117
6,491
7,143
8,038

i Data not available for publication.
COAL-TAR PRODUCTS

Coal-tar derivatives are used in explosives, plastics, drugs, dyes,
protective coatings, and in many other civilian and military products.
Despite increased demands during the period from August 1939
through December 1941, produced prices of the coal-tar products, as
a group, displayed considerable stability, although at times sharp
speculative adyances occurred in the “resale” market. Relief from
the pressure of greater demand was provided by increased supplies,
reflecting the high activity of coke ovens. Supplies of toluene pro
duced from crude petroleum also appeared in the market. Never
theless, demand for some of these coal-tar products proved to be
greater in relation to supply than for others and thus divergent price
trends appeared. While the prices of toluene and naphthalene in
creased, those of benzene and phenol decreased, and the prices of
creosote oil and coal tar remained substantially unchanged.

152

Wartime Prices—August 1939 to Pearl Harbor

At the outbreak of hostilities in Europe, it was anticipated that a
price boom would occur particularly in toluene, a basic ingredient of
the explosives TNT and DNT. Speculative demand, coupled with
greater legitimate requirements, created a strong pressure for a price
increase. As stocks of this commodity dwindled,19 the change finally
came in December 1939 when contract prices (tank-car quantities)
were revised upward from 22 cents per gallon to 26H cents, an advance
of more than 20 percent. Market conditions during the period were
described by the Oil, Paint and Drug Reporter (October 9, 1939) as
follows:
Demand exceeded available production, and sellers continued to restrict
acceptance of any new business, but endeavored to make shipments against
orders on contract which were booked some time in advance. Current production
was sold up for at least a month ahead.

During the same period, prices of benzene, phenol, and naphthalene
remained unchanged. No immediate large increases in demand for
these products developed and supplies increased with expanding
activity in the coal and gas industries. Even the domestic supplies
of naphthalene proved adequate, despite the fact that a substantial
proportion of domestic requirements were ordinarily provided by
imports from Germany, Russia, and the Netherlands. The situation
may be typified by the following comment from the Oil, Paint and
Drug Reporter of December 4, 1939, relating to benzene:
Industrial consumption has kept pace with
few months. October output was estimated
gallons in the preceding month and 7,100,000
first 10 months of this year output aggregated
55,941,000 gallons in the corresponding period

higher production during the past
at 10 percent over the 9,435,000
gallons in October 1938. For the
79,704,000 gallons, compared with
a year ago.

By May 1940 no shortages of coal-tar products, with the exception
of toluene, existed. Supplies of benzene were so ample that “when
small quantities of toluol2021 [were] available for export, sellers [de
manded! that buyers take 5 gallons of benzol for each gallon of toluol
offered/721 As a result, the new price schedules, effective July 1,
1940, indicated an advance of 2 cents per gallon for toluene and a
decrease of 1 cent per gallon for benzene. The price of 1-degree
nitration toluene thus became 28% cents per gallon, and remained at
this level, 29.5 percent above the pre-war figure, until December 1941.
On the other hand, the tank-car price of pure benzene, 90-degree
nitration, was further reduced by 1 cent in August 1940. These
decreases, resulting from the fact that supplies continued to be “more
than sufficient to take care of all domestic and export business,” 22
carried the price of benzene to 14 cents a gallon, a level 12.5 percent
below that of August 1939. (See table 35.)
The price of phenol (U. S. P. grade, drums, carlots) was also reduced
from 13 to 12 cents per pound in November 1940. Supplies of this
product were more than ample,23 especially in view of the fact that no
w Oil, Paint and Drug Reporter, September 11,1939, p. 31.
20 The terms toluol and toluene and benzol and benzene are used interchangeably.
21 Chemical Industries, May 1940 (p. 620). “The few sales fof toluene] were [made] at prices almost double
the domestic levels.” (Oil, Paint and Drug Reporter, May 13, 1940 (p. 44). Also New York Times, June
20, 1940.) In AprU, the resale price of toluol, in drums, was 65 cents per gallon. (Journal of Commerce,
AprU 22, 1940.)
22 Journal of Commerce, July 1,1940, and August 26,1940.
22 In addition to supplies secured directly from coal-tar distillation, phenol is also secured by a synthetic
process from benzene compounds. In 1940 the quantity of natural phenol produced totaled 25,967,560
pounds as compared with 72,187,520 pounds of the synthetic product. (U. S. Department of Commerce, .
Industrial Reference Service.)

Chapter VI.— Chemicals and Allied Products

153

active demand for its use in explosives had developed despite “the
tight position in toluol.” 2425
In mid-1940 steps were taken to increase the supply and control
the distribution of toluene. Output from byproduct ovens was
being increased as a result of expanding steel activity.26 In addition,
vast strides were made in the recovery of toluene from petroleum.26
The Shell Oil Co., awarded a contract in August, produced its first
barrel by December 11, 1940.27 Other oil companies, including the
Humble Oil & Refining Co., an affiliate of the Standard Oil Co. of
New Jersey and the Universal Oil Products Co., were also awarded
Government contracts to produce toluene.28 In addition, the gas
industry was supplying toluene in large quantities. Moreover, it
was hoped that larger domestic supplies would be available as a
result of the Presidential proclamation which placed toluene under
export control, effective July 5. Finally, the industry itself was
controlling the distribution of toluene by selling the bulk of its output
direct to consumers.29
By the spring of 1941 the market for coal-tar chemicals had widened
further. “With activity in plastics beginning to assume large pro
portions in view of their growing substitution for strategic metals,”
the demands for phenol and naphthalene increased. An expansion
in the use of motor benzol and a broadening in the use of industrial
grades, especially in dyes and solvents, also had a favorable influence
on the market price structure.30 In addition, the shortage of toluol
diverted some phenol (a possible substitute) to the production of
munitions. Thus the resale market price of phenol tended to increase,
particularly as a result of inquiries made by Russia and Japan.31
In order to conserve supplies and prevent their possible flow into
hostile countries, naphthalene and phenol were placed under export
license control, effective April 15.32 This, however, did not ease the
pressure on prices in the resale market because of the expanding use
of plastics. In March resale lots of phenol were quoted at 15 to 15%
cents per pound,31 and by May a range of 20-21 cents prevailed, even
though the producers’ prices had remained unchanged at 12 cents
per pound.33*
24 Journal of Commerce, July 1,1940.
28 Journal of Commerce, September 7,1940. In addition, it was announced in the Journal of Commerce,
October 25, 1940, that “the Bethlehem Steel Co. is installing a new battery of coke ovens at Lackawanna,
N. Y., which should provide additional supplies of toluol, benzol, and other coal-tar chemicals for defense
and ordinary chemical needs. The Koppers Co. also has been awarded a contract for the installation of
25 Koppers-Becker type byproduct coke ovens at the plant of the American Bolling Mill Co. at Hamilton,
Ohio.”
2« While it had been known for some time that toluene could be produced from petroleum, the peacetime
demand for toluene had not warranted the expenditures of the large sums necessary for establishing plants
employing this method. (Chemical and Metallurgical Engineering, August 1940.)
27 The annual capacity of the Houston, Tex., plant is 2,000,000 gallons. (New York Times, December
12,1940.)
28 Journal of Commerce, September 7, and October 25, 1940. The Humble plant has an annual capacity
of 25,000,000 gallons.
*2 Chemical Industries, November 1940.
8° Journal of Commerce, March 3,1941.
3i Idem, March 17,1941.
«2 Idem, March 31,1941.
33 Idem, May 7 and May 14,1941. In April phenol sold in the resale market at a range of 24-25 cents a
pound. (Journal of Commerce. April 14,1941.)

154

Wartime Prices—August 1939 to Pearl Harbor
T able 35.— COAL-TAR PRODUCTS: Indexes of Producers' Prices,

August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]
Indexes (August 1939=100) of producers’ prices
Year and month

19S9

August....................................................................
September..............................................................
October...................................................................
November...............................................................
December...............................................................

Toluene, 1° Naphthalene,
domestic
nitration
crude, 74°

120.5

100.0
100.0
100.0
100.0
100.0

120.5
120.5
120.5
120.5
120.5
120.5
129.5
129.5
129.5
129.5
129.5
129.5

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

100.0
100.0
100.0
100.0
100.0
100.0

95.4
92.3

93.8
91.3
87.5
87.5
87.5
87.5

129.5
129.5
129.5

100.0
100.0
100.0

92.3
92.3

87.5
87.5

9 2 .3
9 2 .3
9 2 .3
9 5 .4
9 6 .2
9 6 .2
9 6 .2
9 6 .2
9 6 .2
9 6 .2

8 7 .5
8 7 .5
8 7 .5
8 7 .5
8 7 .5
8 7 .5
8 7 .5
8 7 .5
8 7 .5
8 7 .5

m i

January...................................................................
February................................................................
March.....................................................................
April.......................................................................
May........................................................................
June.................................................... ...................
July.........................................................................
August..... .......................................... ..................
September------------ ---------------------------------October...................................................................
November...............................................................
December...............................................................

Benzene,
pure, 90%
nitration

100.0
100.0
100.0
100.0

January...................................................................
February...............................................................
March.....................................................................
April........................................................................
May.........................................................................
June.........................................................................
J u ly .......................................................................
August..... ...................................................... ........
September.............................................................
October.................................................................
November..............................................................
December...............................................................

Phenol,
U. S. P.

129 .5
129 .5
1 29 .5
129 .5
1 29 .5
129 .5
129 .5
129 .5
131.8

1 0 0 .0
1 0 0 .0
1 0 0 .0
1 0 0 .0
1 0 0 .0
1 0 0 .0
111.1
111.1
111.1

Throughout 1941, defense requirements, particularly for plastics,
munitions, solvents, and dyestuffs, continued to stimulate the demand
for coal-tar products. In June 1941, the producers’ price of phenol
was raised to within % cent of the August 1939 price of 13 cents a
pound. Supplies of cresylic acid and naphthalene were sufficiently
scarce to cause the appearance of these items on the Priorities Critical
List of May 8, 1941 35 and phenol was added to the list on June 10,
1941.36 As the year progressed, supplies of the coal-tar products
became even more inadequate to meet the rising demands. Fears
were expressed that despite expansions in output capacities, shortages
of naphthalene, and its derivative, phthalic anhydride, as well as
phenol, toluene, benzene, and cresylic acid, would occur.*37 Supplies
of phenol, in particular, were scarce as a result of the large quantities
being exported to Kussia for use in the manufacture of the explosives,
picric acid, and dinitrophenol. Threats of strikes in the captive
coal mines also tended to disturb buyers. In October the producers’
price for crude naphthalene (tank-car quantities) was raised from
$2.25 to $2.50 per hundred pounds, and late in December toluene
and benzene were both raised 1 cent per gallon, bringing the Bureau
3« Release No. PM 380, May 8,1941.
38 Release No. PM 526, June 10,1941.
37 Journal of Commerce, July 15, July 21, October 1 and November 10,1941; Oil, Paint and Drug Reporter,
August 18,1941, p. 32.

Chapter VI.— Chemicals and Allied Products

155

of Labor Statistics average prices for that month to 29 and 14% cents,
respectively. At the same time, resale market prices rose sharply,
a range of 40 to 60 cents a pound being reported for phenol in late
November.38
The expanding defense needs for coal-tar products, even before
December 7, 1941, necessitated further governmental controls. In
August both phenol and toluene were brought under full priority
control,39 and in November an amendment40 to General Preference
Order M-27 tightened the control over distribution of phenol and
placed all shipments under the direction of the Director of Priorities.
HEAVY CHEMICALS

As previously described,41 prices of other industrial chemicals—
particularly those classified traditionally as “ heavy” chemicals—re
mained generally stable during the Defense Period. There were no
quoted price changes between August 1939 and December 1941 for
sulfuric, nitric, acetic, and hydrochloric acids, carbon dioxide, chlorine,
soda ash, and caustic soda, among others. The few changes which did
occur were mostly moderate. The price of oxalic acid, used in the
manufacture of an explosive (pentaerythritol) and for other industrial
purposes, rose 5 percent. Other exceptions to the general rule of
stable prices were those for salt cake, which advanced 31 percent, and
for calcium chloride, which declined 7 percent. The sale of certain
quantities of some of these products at higher than quoted prices in a
“resale” market has already been noted.42
Fertilizer Materials
As many as 22 elements have been considered necessary for plant
growth, but only three—nitrogen, phosphorous, and potassium—are
applied regularly and in large amounts to the soil. These elements
are also used in the manufacture of munitions. Nitrogen is the basis
of all explosives; phosphorous is the active ingredient in incendiary
bombs and tracer bullets; and potash is essential to the manufacture
of optical glass, of gas masks, and of high-octane aviation gasoline
by the Houdry process. Only in the case of nitrogen, however, did
the military demand constitute a sufficiently large factor to be a
serious threat to the adequacy of fertilizer supply.
Although there were some substantial price advances during the
Defense Period, particularly for the less important products, increases
for most of the basic fertilizers were moderate. As a group, prices
of fertilizer materials rose 19 percent.
The chief nitrogen fertilizer materials used in the United States
are natural sodium nitrate, imported from Chile; synthetic sodium
nitrate, produced domestically from anhydrous ammonia; and am
monium sulfate, a domestic coke-oven byproduct. Less important
nitrogenous materials are calcium cyanamid, produced in Niagara
Falls, Ontario, and organics such as cottonseed meal, animal tankage,
and fish scrap. The chief phosphorous-containing materials are phos-*
88 Journal of Commerce, November 25, 1941.
88 General Preference orders: Schedule M-27, August 30,1941—Phenol; Schedule M-34, August 28, 1941Toluol.
« Release No. PM 1538, November 10,1941.
« See pp. 141-142.
*2See p.142.

547953— 44-----11

156

Wartime Prices—August 1939 to Pearl Harbor

phate rock (containing bone phosphate of lime) and superphosphate
(made by treating phosphate rock with sulfuric acid). The principal
potassium fertilizer materials are muriate, sulfate, and kainit of
potash and manure salts.
During peacetime the United States imports slightly more fertilizer
materials than it exports, although the trend during the past 20 years
has been increasingly toward self-sufficiency. The principal imports
ordinarily are Chilean sodium nitrate, other nitrogenous materials,
and potash salts; the principal exports, phosphate rock and phosphate
compounds. During the Defense Period there was a sharp rise in
requirements for all of these materials, both for agricultural and
military purposes. In the case of phosphates and potash, supplies
proved plentiful, although mining capacity for the latter product had
to be expanded materially. In the case of nitrogenous fertilizers,
the supply problem was more difficult, although no serious shortago
developed during the Defense Period.
Following the outbreak of war in August 1939, “scare” buying was
a feature in markets for all fertilizers, and some trade publications
wrote prematurely of shortages.43 Prices of some products moved
upward. With demand heavy, producers of superphosphates an
nounced a 13-percent price increase in November. Prices of organic
nitrogen materials,44 used both as feeds and as fertilizers, also rose
sharply; by December 1939 cottonseed meal had increased 39 percent*
fish scrap 17 percent, and animal tankage 36 percent. However, all
other prices remained unchanged except for their usual seasonal move
ments, and thus no general upturn developed. (See table 36.)
Early fears of a shortage subsided through 1940 and, except for
inorganic nitrogenates, prices weakened. Fertilizer consumption was
approximately unchanged and demands arising directly from the war
were not up to expectations. In July 1940, about half of the initial
price rise for superphosphates was withdrawn. By the end of the*
year, prices of organic nitrogenates were all below their 1939-fall peaks.
Prices of phosphate rock remained unchanged and a slight increase
for manure salts raised the average price of potash less than 1 percent—
its only price change during the entire Defense Period.
Demand was considerably stronger in markets for important inor
ganic nitrogenates for several reasons. Export sales of ammonium
sulfate were heavy; for nitrogenous materials as a whole, shipments
abroad in 1940 were 54 percent above 1939. Heavy Canadian pur
chases of oyanamid, produced in Ontario, cut deeply into American
imports. Military demand for inorganic nitrogen compounds was
very much greater than for other fertilizer materials.
In price schedules announced by fertilizer producers for the year
beginning in July 1940, seasonal discounts for ammonium sulfate*
usually allowed during the summer and autumn months were omitted
and $1 was added to the spot market price; quotations were 8 percent
above the pre-war level. Moreover, a speculative “export” market
for this product developed in which sales were reported at $41 per ton
against a domestic contract price of $28.45 A 5-percent increase for
cyanamid was announced in April. Smaller price increases of 1
percent were announced in October for sodium nitrate—both im
ported and domestic—to cover increased costs of burlap bagging.
43 Oil, Paint and Drug Reporter, November 6,1939.
44 Organic nitrogenates ordinarily account for about 10 percent of all the nitrogenous materials used as.
fertilizer.
<5The American Fertilizer Handbook, 1941, p. 20s

157

Chapter VI.— Chemicals and Allied Products

FERTILIZER M ATERIALS
WHOLESALE PR ICES
AUGUST 1939 = 100

IN O RGAN IC N IT R O G E N A T E S

IN D E X

125

120

115

115
—

AMM0NIUM S U L F A TE ^

110

no
^-C H II-EAN SODIUM NITIRATE
105

too

105

S o d iu m n i t r a t j
DOMESTIC SYNTHE1'1C
1 ...........................
j1i i i i i i i i i i i 1

i i i m i ii i i i
,,,,
A S 0 N0 J F M A M j J A S O N O J F M A M J J A S O N O J F M A M J J A S O N O J F M A M J J ASON 0 J F M A M J J A S O N D
1944
1941
1942
1943
1939
1 940

100

PH O SPH A TES

IND EX

145

140

135

130

SUPERPHOSPHATE

\
125

125

120

120
^•PHOSPHATE ROCK
115

110
105

105

100 A S 0 N D J F MA MJ J AS 0 N 0 J F V
m

1939

1940

UNITED STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS

m' JY a V o'n D J f ' mY m' j' J a V o'n'o

1941

1942

J f 'm'a'mY j V'i'o H ' o j ! ' A V i ' l u V ^ 0
1943

1944

Wartime Prices—August 1939 to Pearl Harbor

158

In 1941 nearly all fertilizer prices increased, except that for potash.
Consumption in the Southern States rose 8 percent above levels of
1940 and 1939. The quantity of phosphate rock marketed reached
an all-time high. Phosphate rock exports during the first 9 months
of the year, the only period for which figures can be published, were 9
percent above those for all 12 months of 1940. This huge demand
enabled producers of phosphate rock and superphosphates to raise
prices 25 percent and 27 percent, respectively, above pre-war levels.
T able

36.—F E R T IL IZ E R

M A T E R IA L S : Indexes of Wholesale Prices ,
August 1939-December 1941

[Source: IT. S. Bureau of Labor Statistics]
Indexes (August 1939=100.0) of wholesale prices of—
Organic nitrogenates
Year and month

1989

August..........
September.........
October.......—
November.........
December..........
1940

January.............
February...........
March................
April..................
May....... ...........
June..................July....................
August-.............
September.........
October..............
November_____
December..........
1941

January...............
February.............
March..................

April...................

May......... ...........
June.....................
July.....................
August-...............
September..___
October-............
November...........
December...........

Inorganic nitrogenates

Sodium nitrate
A m m oTank nium
Fish Cotton
seed
age, sulfate,
scrap, meal,
Domes
ani
ground1 prime1
Chilean tic
2 m al2 domes
syn
tic
crude
thetic

Phosphates

Cyanamid Phos Super
phos
cal
phate,
cium, phate
rock2
domes
pulver
t ic 2
ized *

100.0
104.7
117.2
117.7
117.2

100.0
116.1
118.0
132.4
138.9

100.0
128.4
140.3
128.4
136.0

100.0
101.1
101.9
102.8
103.7

100.0
100.0
100.0
100.0
100.0

100.0
100.0
100.0
110.0
113.3

118.2
119.2
119.2
117.2
117.2
117.2
117.2
101.0
101.0
101.0
102.6
109.1

143.8
141.6
141.6
146.2
142.2
118.2
119.9
132.1
124.4
115.2
137.7
138.4

137.9
130.8
121.6
118.5
122.8
85.8
88.1
90.5
100.0
101.4
105.7
100.0

104.4
104.4
104.4
104.4
104.4
104.4
108.2
108.2
108.2
108.2
108.2
108.2

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
101.4
101.4
101.4

100.0
100.0
100.0
102.7
104.6
104.6
104.6
104.6
104.6
104.6
104.6
104.6

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

113.3
113.3
113.3
113.3
113.3
113.3
106.7
106.7
106.7
106.7
106.7
106.7

118.7
117.2
118.2
121.2
124.7
125.3
130.3
131.7
132.8
137.0
141.4
142.4

133.9
119.4
115.5
120.4
117.3
123.5
145.0
160.8
189.6
170.6
174.2
177.5

100.0
98.1
97.2
107.1
109.5
111.9
126.1
136.0
142.7
147.4
147.4
147.4

111.9
111.9
111.9
111.9
111.9
111.9
111.9
111.9
111.9
111.9
111.9
111.9

101.4
101.4
101.4
101.4
101.4
101.4
101.4
113.8
113.8
113.8
113.8
113.8

101.4
101.4
101.4
101.4
101.4
101.4
101.4
101.4
103.1
103.6
103.6
103.6

104.6
104.6
104.6
104.6
104.6
104.6
144.1
149.1
155.3
156.9
156.9
156.9

100.0
100.0
103.1
104.2
104.2
104.2
104.2
114.6
114.6
114.6
114.6
125.0

106.7
106.7
106.7
106.7
106.7
106.7
126.7
126.7
126.7
126.7
126.7
126.7

111-12 percent ammonia, 15 percent bone phosphate.
2 41 percent protein.
* 10-11 percent ammonia, 15-20 percent bone phosphate, domestic fertilizer grade.
* 27 percent ammonia, 22 percent nitrogen.
* Florida land pebble, 72 percent minimum.
* 16 percent basis, run of pile.

W hile no question was raised concerning adequacy of phosphate
supplies, actual tightness in the supply of nitrogenous fertilizers w as
growing. A t the beginning of the year m ilitary requirem ents of
the explosives industry were estim ated at considerably more than

15$

Chapter VI.— Chemicals and Allied Products

the current domestic production of synthetic nitrogen,46 part of
which was still being used for fertilizers.47 New plants for synthetic
production were not scheduled for completion until 1942. Efforts
to increase substantially Chilean nitrate imports met with the ob
stacle of shipping space. Imports of cyanamid (which, however,
normally accounts for only about 6 percent of the total United States
nitrogen supply) continued to decline because of heavy purchases of.
this material in Canada.
T a b l e 37. — F E R T IL IZ E R : Consumption and Imports; F E R T IL IZ E R M A T E R IA L S ;

Production and Deliveries, August 1939-December 1941

[Sources: Ammonium sulfate production—U. S. Bureau of Mines; other statistics—U. S. Department
of Commerce]

Year and month

Fertilizer
consump
tion in
Southern
States

Sodium
nitrate
imports

Ammonium Superphos Potash
sulfate
phate
production production deliveries

Thousands of short tons
1939

Alienist
September___________________________
October_____________________________
November___________________________
December
_ _ __________ .
mo

January
February
_
March__ ___________________________
April______ _________________________
May__________ ______________________
June
July.................................................................
August______________________________
September____________________ ______
October..___________________ ________
Nnyemher
December
_ _
m i

Jamiarv
February
March______________________________
April_____________________ ________
May____ ____________________________
June________________________________
July.................................................................
August____________________ ______ ___
September___________________________
October________ _____________________
November___________________________
December___________________________

43
164
190
108
187

11
12
47
74
67

51
53
59
60
61

279
305
407
417
405

41
57
75
73
65

409
675
1,636
1,125
329
122
32
61
142
189
105
182

63
30
96
100
89
70
92
59
42
39
32
31

60
54
56
55
58
59
61
62
63
64
63
64

431
359
351
338
340
327
324
361
327
404
398
425

58
13
8
6
8
27
39
38
51
46
54
41

518
762
1,365
1,390
258
104
58
71
134
168
186
267

38
45
94
100
47
31
18
36
76

65
58
65
58
61
61
63
62
62
63
61
66

408
385
436
397
419
374
383
379
364
413
420
488

52
36
30
24
13
58
41
49
40
56
54
60

0)
0)
0)

1 Data not available for publication.

Before the year ended, increases above pre-war levels amounted
to 57 percent for cyanamid, 14 percent for Chilean nitrate, and 12
percent for ammonium sulfate. In the case of the latter product,
additional advances were halted by a letter to producers from Price
Administrator Henderson in M ay ;48 the Administrator requested
the maintenance of prevailing prices and declared that a formal
46 Current Market Situations, Chemical Nitrogen (U. S. Bureau of Labor Statistics), March 25, 1941.
47 Anhydrous ammonia is the principal domestic source of synthetic fixed nitrogen and is the form most
suitable for the production of nitric acid and explosives. In the United States about 40 percent of the annual
consumption of nitrogen was supplied by the domestic synthetic industry In 1939 and 1940. About half of
this was then employed for fertilizers and the rest in explosives and other industrial uses. Other forms of
inorganic nitrogen—ammonium sulfate, Chilean nitrate, and cyanamid—are used mainly as fertilizers.
48 Office for Emergency Management, Release No. OPACS—PM 457, May 26,1941.

160

Wartime Prices—August 1939 to Pearl Harbor

price ceiling would be imposed unless speculation on “export” sales
was discontinued. The price of synthetic sodium nitrate rose to 4
percent above the August 1939 level because of higher costs of burlap
bagging. The price of anhydrous ammonia, however, continued
to be quoted at levels prevailing since 1934. For organics, ad
vances between August 1939 and December 1941 were 42 percent
for fish scrap, 78 percent for cottonseed meal, and 47 percent for
animal tankage.
At the time of the attack on Pearl Harbor the chief problem for
fertilizers remained the supply of nitrates; however, this problem
was based mainly on prospective difficulties. Fortunately, produc
tion of ammonium sulfate rose about 29 percent in 1941 over 1939
levels, as the steel industry expanded output, though the rate of in
crease tapered off as capacity production was approached. In addi
tion, production of synthetic nitrogen before the year had ended
rose considerably more than was originally estimated. In July
1940, exports of nitrogenous fertilizers were placed under license
control and were restricted materially. Despite temporary periods
of scarcity, all essential needs for nitrogen during the Defense Period—
as well as for the other fertilizer materials, of which there was a
more plentiful supply—appear to have been met.
Inedible Fats and Oils
The inedible fats and oils discussed in this section are used mainly
iii the manufacture of soap,49 and except for tallow and its derivatives,
are obtained principally from abroad. In August 1939, the price levels
(or most of these commodities were relatively low. Thus, when the
war began in Europe, quotations for copra, tallow, and castor, coco
nut, and sulfur olive oil (foots) were at their lowest levels since 1934.
Partly because of this factor, price increases for this group of commodi
ties during the Defense Period were great, averaging 150 percent from
August 1939 to December 1941. Contributing to this increase were
import difficulties, the relative inelasticity of the tallow supply, wide
spread speculation at certain times, and a huge increase in demand.
The initial increases in the fall of 1939 were spectacular. In one
month, from August to September, the price of tallow rose 44 percent;
copra, 31 percent; coconut oil, 43 percent; and olive oil foots, 32 per
cent (see table 39). These advances were short-lived; they were
based on speculative anticipations of shortages which actually did not
materialize until 1941. By December 1939 there was an appreciable
easing in quotations and in 1940 large supplies contributed toward
keeping prices low.
Production of inedible tallow, most important soap fat,50 was 18
percent greater in 1940 than in 1939 and 62 percent greater than in
1937. The total supply of crude coconut oil in 1940 was 10 percent
greater than in 1939 and 35 percent greater than in 1937. There was
also a gain over 1939 of 36 percent in the total supply of copra.51
« In 1939 and 1940 about 40 percent of all fats and oils consumed in the United States were used in foods,
about 35 percent in soap, and the rest in paints and varnishes, medicinal and other products. (Special
Bureau of Labor Statistics study on fats and oils, June 25, 1941.) The chief food fats—butter, lard, oleo
margarine, soybean, corn, and olive oils—are discussed in the chapter on foods. Some of the oils used in
;paints and varnishes are discussed in the chapter on building materials.
; MTallow represents almost half of all the fats consumed in the manufacture of soap. However, tallow
.alone does not make a good soap. It must be used in conjunction with smaller quantities of other com
modities. Thus, for a quick-lathering soap, an oil containing lauric acid is essential. Laurie acid is cus
tomarily obtained from oils such as coconut and palm kernel.
Sl Special Bureau of Labor Statistics study on fats and oils, June 19,1941.

Chapter VI.— Chemicals and Allied Products

161

Meanwhile, activity in the soap industry failed to expand in accord
ance with original expectations. Sales in 1940, as reported to the
American Soap and Grease Producers, declined slightly from the level
of 1939.52 By the summer or fall of 1940, prices of tallow, copra, and
coconut oil had returned to, or were below, their pre-war levels.
The price situation for palm oil and olive oil foots in 1940 was
somewhat different. Although fairly large supplies of palm oil had
been entering the United States in the early part of the Defense
Period, it had all been allotted to contract holders and no market
quotations were made until January 1940. In that month the price
of Sumatra palm in tank cars, f. o. b. New York, was quoted at 4.2
cents per pound. This price, however, was high compared with
those prevailing for other oils and there were few buyers.53 Accord
ingly, the price was lowered later and continued to ease through the
last of the year.
In the case of sulfur olive oil, extension of the war in the Mediter
ranean gradually cut American imports from Greece, the principal
normal source. Available supplies through 1940 grew progressively
smaller and for the entire year were 4 percent below 1939. During
the first 10 months of 1940, the price of olive oil foots remained from
20 to 40 percent above its pre-war level, and in November and Decem
ber began to advance abruptly.
Prices of fats and oils advanced sharply throughout 1941, the
upturn beginning in late 1940 for some products. In virtually all
markets during this period, demand rose considerably faster than
supply. In the soap industry, during the first half of the year, sales
{in pounds) rose 35 percent above 1939 levels and 30 percent above
the volume in the same period of 1940. Consumption of fats and
oils, as a group, by the soap industry was 25 percent greater in 1941
than in 1940 (see table 38). Because of the sharp price increases,
supplies available during the year rose for some products (such as
coconut and palm oils), but for others (such as olive oil foots) shipments
ceased almost entirely.
With demand booming, stocks in factories and warehouses in
mid-1941 were 8 percent lower than at the same time in 1940 in the
case of tallow, 13 percent lower for coconut oil, 16 percent for sulfur
olive oil, 13 percent for palm oil, and so on. Throughout the year
1941 stocks of tallow declined by 16 percent, despite a substantial
increase in production.
In addition to the spurt of activity in the soap industry, demand
was further enhanced by expansion of fat and oil consumption in
other industries. Thus, according to the Wall Street Journal of
April 16, 1941:
Soap makers and lubricant manufacturers are still scouring the country for
tallow, supplies of which have been cut sharply by increased demand for lubricat
ing oils and greases under the defense program. Moreover, the amount of tallow
going into machinery oil has been -increased. Formerly the oil had a 10-percent
tallow base. It has now been stepped up to 20 percent.

By May 1941 the price of tallow had already advanced to 88 percent
above its pre-war level (see table 39). Increases during the same period
were 144 percent for copra, 146 percent for coconut oil, and 119 percent
for sulfur olive oil. Palm off sold at 31 percent above its level of
« Soap and Sanitary Chemicals, September 1941.
« Journal of Commerce, January 3, 1940 (p. 19), and February 6,1940 (p. 7).

162

Wartime Prices—August 1939 to Pearl Harbor

January 1940. Advances between August 1939 and May 1941 for
tallow derivatives (such as oleic acid—52 percent higher) were con
siderably less than for tallow itself. Speculative activities were an
important factor in the increase in prices during succeeding months.
In August 1941, Price Administrator Henderson issued an order
designed to curb these speculative practices, and declared:
Supplies of fats and oils are ample, but because of speculation and h o ld in g
over recent months, the specter of shortage has made its appearance. As a
result, prices have been influenced artificially to the detriment of the public
interest and the defense effort.
Continued instability in the prices of these vitally important commodities can
only serve to contribute to inflation.54

The order contained the following four “ corrective measures” :
1. Purchases of fats and oils purely for the purpose of speculative resale at a
profit are prohibited. This provision does not apply to futures trading on or
ganized commodity exchanges for hedging purposes or to purchases or sales in the
course of recognized manufacturing and distributing functions.
2. Deliveries against forward purchases must be completed within 45 days of
commitment. However, forward sales of crude oils by crushing mills are specifi
cally excluded, as are forward sales of imported oils and fish oils.
3. “ Guarantees” on the part of sellers of fats and oils or their products against
future price declines are eliminated, with the exception that wholesalers, jobbers,
and retailers are allowed to obtain such guarantees as regards their floor stocks.
4. A device sometimes employed to circulate fictitious price quotations in the
trade is outlawed.54
T a b l e 38.—F A T S A N D OILS: Consumption by the Soap Industry, and Production

and Imports fo r Selected Products, August 1939-December 1941
[Sources: Consumption and import statistics—U. S. Department of Commerce; inedible tallow production—
U. S. Department of Agriculture]

Date

1939.............................................
1940.............................................
1941.............................................

Consump
tion (mil Production
lions of
of
pounds): (millions
pounds):
All fats
Tallow,
and oils by inedible1
the soap
industry
1,635
1,707
2,124

1,127
1,375
1,551

Imports (millions of pounds)

Copra

430
615
*436

Coconut
oil

337
371
2 299

Palm oil

286
225
2 223

Sulfur
olive oil

28
24
24

* Includes greases, excluding wool grease.
2 Imports in 1941 are for the first 9 months only; data after September 1941 are not available for pub
lication.

Although rumors of impending OPA ceilings resulted in market
uncertainty from time to time, prices continued to advance despite
the new restrictions on speculative purchases, and the upswing was
accelerated as American participation in the war appeared more
imminent. By December 1941, the price of inedible tallow had
more than doubled when compared with the quotation prevailing
in August 1939; the price of sulfur olive oil was more than 2 y2 times
as great; prices of copra and coconut oil were more than triple their
pre-war levels. For palm oil the increase from January 1940 to
December 1941 amounted to 110 percent. Price ceilings for these
products were not issued until a week after the attack on Pearl
Harbor, when maximum prices were fixed at levels “ not above those
prevailing on November 26, 1941.” 55
54 Office for Emergency Management, Release No. PM 1040, August 29, 1941.
86 Office of Price Administration, Release No. PM 1796, December 13,1941.

Chapter VI.— Chemicals and Allied Products

163

INEDIBLE FATS AND OILS
WHOLESALE PR IC ES
AUGUST 1939*100

TALLOW

IN D E X

IN D EX
2 4 0

220
200
180

160

140

120

100
8 0

6 0
1 9 4 4

SU LF U R O L IV E A N D C O CO N U T O IL

IND EX
3 6 0

3 4 0

3 2 0

3 0 0

2 8 0

2 6 0

SULFUR OLIVE OIL
2 4 0

220
200
180

160

140

/^C O C O N U T OIL

120
■I I I I I I I I I I
1939

1 9 4 0

UNITED STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS________

100

I I I.1 I

1944

164

Wartime Prices—August 1939 to Pearl Harbor

T able 39.-—IN E D IB L E F A T S A N D OILS: Wholesale-Price Indexes by Product,

August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]
Wholesale-price indexes (August 1939=100) of—
Year and month

Tallow,
inedible1

Copra,
Pacific
Coast

Coconut
oil,
oil, Manila, Palm
Sumatra
crude

Sulfur
olive oil
(foots)

19S9

Ausrnst
September.......................... ...........................
October.......... .......................................... .
November_________________________
December
mo

Jannarv
February.........................................................
March............................ ................................
April.......................... ........ ............................
May______________________ __________
.Tune
July______________________ ______ ___
August
September___________________________
October_____________________________
November.......... ...........................................
December
m i

Jannarv
February......... ..............................................
March
.
_
_ _ .................
April.........................................................
M ay________________________ _______
June
.
July
August........... .................. ............................
September_________ _____ ___________
October_____________________________
November________________ _________
December___________________________

100.0
144.2
144.2
137.2
127.9

100.0
131.2
143.8
131.2
125.0

100.0
142.9
142.9
132.1
128.6

127.9
125.6
114.0
111.6
111.6
107.0
95.3
79.1
86.0
88.4
104.7
107.0

125.0
112.5
106.2
106.2
100.0
100.0
100.0
87.5
87.5
87.5
87.5
87.5

125.0
117.9
114.3
114.3
110.7
103.6
107.1
100.0
100.0
100.0
103.6
100.0

100.0
95.2
81.0
71.4
69.0
64.3
61.9
59.5
54.8
54.8
54.8
54.8

122.1
122.1
120.1
120.1
125.0
133.8
130.9
127.9
130.9
139.7
151.5
152.9

116.3
114.0
130.2
167.4
188.4
183.7
186.0
188.4
202.3
209.3
204.7
209.3

106.2
112.5
150.0
187.5
243.8
237.5
231.2
250.0
256.2
256.2
250.0
318.8

117.9
121.4
153.6
200.0
246.4
250.0
264.3
264.3
267.9
271.4
271.4
321.4

54.8
54.8
88.1
116.7
131.0
138.1
154.8
169.0
183.3
185.7
190.5
209.5

151.5
155.9
167.6
194.1
219.1
244.1
247.1
247.1
247.1
250.0
250.0
261.8

(2)

(2)
(2)
(2)

100.0
132.4
147.1
135.3
126.5

* Packer's prime.
* No prices available prior to January 1940, January 1940=100.

Drugs and Pharmaceuticals
Prices of drugs and pharmaceuticals as a group rose very sharply
during the Defense Period, the increase amounting on the average
to 60 percent.56 In general, however, there were two types of price
movements within the group: (1) sharp increases, mainly for products
affected by the import situation, such as menthol, tartaric acid, and
nux vomica; and (2) relative stability for domestically produced drugs
such as citric acid, acetylsalicylic acid and ether. There were, of
course, exceptions to this rule. For example, the price of ethyl
alcohol,57 a domestic product and one of the chief ingredients of
numerous medicinals, rose 77 percent, mainly as a result of an increase
in the Federal tax on this commodity. On the other hand, a large
Government stock pile had the effect of maintaining prices of morphine
and codeine unchanged during the Defense Period, despite dependence
on foreign sources of raw materials.
The rise in prices for imported commodities began as soon as Ger
many invaded Poland. Supplies of a few products ordinarily obtained
from central Europe, such as botanical drugs, were shut off at once,
and between August and September 1939 alone, prices advanced
« Commodities discussed in this section are the ingredients of drugs and pharmaceuticals rather than the
finished products themselves. In most cases, price increases for finished drugs and pharmaceuticals were
smaller.
w The price of ethyl alcohol excluding the Federal tax is discussed in the section on industrial chemicals.

Chapter VI.— Chemicals and Allied Products

165

125 percent for belladonna leaves and valerian root and 165 percent
for henbane leaves. Supplies of other imports (for example, those
from the Far East) became more expensive to obtain as ocean freight
rates rose and war-risk insurance became necessary. This situation
grew more serious as the theater of war was extended. Price move
ments became directly related to changes in the prospective availability
of the various channels of trade. Moreover, speculators were extremelyactive and they, as well as usual consumers, accumulated huge stock
piles. Thus, during the course of the Defense Period, large consu
mers of some products had stored supplies equivalent to 3 and 4
years’ consumption.58
Through the fall of 1939, prices of then virtually unobtainable
imports generally maintained their huge initial increase, and for the
most part later moved constantly higher. For other imports, initial
advances were much smaller but still substantial—for example, 8
percent for menthol, 11 percent for quinine sulfate, and 17 percent for
camphor, between August and December 1939.
These advances continued in most cases through 1940. The Dutch
surrender following the German invasion in May cut off the Nether
lands as a source of quinine supplies and made the United States
dependent upon direct shipments from the Netherlands East Indies
for both cinchona bark and quinine.59 Although the Trade Commis
sioner for the Netherlands assured importers that Java would satisfy
all United States requirements,60 the uncertainties involved in main
taining normal trade with the Indies were many. No sulfate was
imported in May and only 256 ounces in June. Effective August 11,
the Netherlands Indies placed an ad valorem export tax of 5 percent
on cinchona bark and its derivatives, which was immediately reflected
in the price of quinine.
Imports of synthetic camphor were expected from time to time, but
only in April 1940 were shipments received—48,300 pounds—the
first after August 1939. In the meantime, however, domestic produc
tion was being expanded by du Pont and two other concerns, and
natural camphor continued to be received in fairly large amounts from
Japan and China, although these shipments remained sporadic and
uncertain. In the case of crude tartar and argols, supplies from Italy
were shut off and shipments from Spain were not arriving according to
schedule.61 By December 1940, tartaric acid sold at 67 percent above
its pre-war level. On the other hand, heavy shipments of natural
menthol continued to arrive from Japan and domestic production of
the synthetic product expanded. However, domestic production was
dependent upon supplies of citronella imported from Java.
In 1941 there was an acceleration of the price advance. As tension
with Japan mounted, prices of Far Eastern products generally sky
rocketed. On July 25, Japanese credits in the United States were
frozen, thus stopping shipments of menthol and camphor as well as
many other products from Japan and making it more difficult to get
88 The Supply of Menthol and Java Citronella, by Melville J. Ulmer and John H. Kaufmann, November
14,1941 (Ui S. Bureau of Labor Statistics), pp. 16-17.
The sharpest price increases for drugs and pharmaceuticals during the Defense Period were mainly the
result of this general scramble for supplies. Thus, only 1H percent of the sharp advance in the price of
menthol during the Defense Period was attributable to increased shipping costs. In the case of Java citron
ella, the raw material for producing synthetic menthol, the equivalent relationship was 3 percent. (Ibid.,
p. 19.)
89 A quinine factory had been in operation at Bandoeng, Java, for several years and capacity was to be
increased *
60 Journal of Commerce, April 10,1940j
61 Idem, December 27, 1940.

166

Wartime Prices—August 1939 to Pearl Harbor

DRUGS AND PHARMACEUTICALS
WHOLESALE PR ICES
AUGUST 1939 » 100
INDEX

C A M P H O R AN D Q U IN IN E S U L F A T E

INDEX

200

150

200

150

^ C A M P IHOR

1,1 1 .1 1 I-I..I.U 1 -I-I.J 1,1 I..I 1 1 1 1.
1939

1 9 4 0

1941

INDEX

QUININE SULFJ

100

-K

100
i i i i i i i i i ■ i ■U . *1.1 U M i l
1942

1943

i : . i.± . i u

; i i i

1944

T A R T A R IC A C ID A N D M E N T H O L

INDEX

5 5 0

5 0 0

4 5 0

4 0 0

3 5 0

NATURAL. MENTHOL
3 0 0

3 0 0

2 5 0

TA RTARIC ACIO

200

1
150

150

1 1 1 1 1 1 1 U-t-L.I

100

[SY N T H E T IC MEINTHOL
1 1 1 » i .1 i i i i i i

Source. NATURAL MENTHOl -O'L.
PAINT, ANO(DRUGREPORTER
! 1 1 1 1 1 11 1 I I 1 1 1 1 1 I I 1 1 1 1 1

S ON 0 J F M A M J J A S O N 0 J F M A M J J A S O N O J F M A M J J A S O N D J

1939

1940

1941

1942

1943

1944

100

167

Chapter VI.— Chemicals and Allied Products

supplies from China. The price of imported menthol, which still
supplied 80 percent of American needs, rose to $9.13 per pound in
November 1941, about three times its pre-war price. Domestic men
thol rose to $3.80 in July, as compared with $3.00 before the war, and
in August the chief producer of this product withdrew formal quota
tions. The price of Java citronella had risen to 87 K cents per pound,
compared with an August 1939 price of 27 %cents.
In the case of camphor and quinine sulfate, price advances were
moderated by the domestic supply situation. United States stocks
of quinine were considered sufficient for between 2 and 3 years’ con
sumption, and imports from the Dutch East Indies were increasingly
being supplemented by those from South and Central America.62
Domestic production of synthetic camphor was expanding constantly.
T a b l e 40.—DRUGS A N D P H A R M A C E U T IC A L S: Indexes of Wholesale Prices,

August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]
Indexes (August 1939=100) of wholesale prices of—
Year and month

1939

August................
September......... .
October...............
November...........
December........... .

AcetylEthyl
alcohol1 salicylic
acid

Menthol
Camphor,
Tartaric synthetic,
acid2 domestic3
Synthetic Natural

Quinine
sulfate,
USPX<

100.0
100.7
101.1
101.1
101.1

100.0
100.0
100.0
100.0
100.0

100.0
107.3
114.7
114.7
114.7

100.0
106.5
108.7
108.7
117.4

100.0
105.0
108.3
108.3
108.3

100.0
105.2
117.2
115.5
117.2

100.0
101.3
106.6
110.3
111.5

101.1
101.1
101.1
101.1
101.1
101.1
132.9
133.3
133.3
133.5
133.6
133.7

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

120.1
129.3
135.2
136.6
139.6
145.8
151.3
151.3
151.3
151.3
157.1
166.7

119.6
119.6
119.6
126.1
130.4
130.4
130.4
130.4
130.4
130.4
130.4
130.4

108.3
108.3
108.3
108.3
108.3
108.3
108.3
108.3
108.3
108.3
108.3
108.3

131.0
131.0
124.1
124.1
124.1
124.1
124.1
124.1
119.0
120.7
120.7
120.7

111.5
111.5
110.8
109.8
110.8
111.5
113.9
119.3
121.3
121.3
121.3
121.3

133.7
133.7
133.7
134.0
134.2
134.2
134.2
134.2
134.2
176.5
176.5
176.5

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

185.0
205.1
221.6
232.6
232.6
232.6
232.6
232.6
258.2
258.2
258.2
258.2

130.4
130.4
130.4
130.4
130.4
130.4
130.4
130.4
133.7
137.0
137.0
137.0

116.3
121.7
121.7
121.7
121.7
121.7
126.7
(5)
(5)
(5)
(5)
(»)

135.5
137.9
142.4
142.4
142.4
144.8
148.3
250.0
237.2
245.9
314.8
6 422.4

121.3
121.3
121.3
122.0
123.8
123.8
123.8
123.8
123.8
123.8
123.8
123.8

1940

January..............
February.............
March..................
April................... .
May.................... .
June.................... .
July......................
August............... .
September.......... .
October................
November.......... .
December............
1941

January..............
February.......... .
March.......... ......
April...................
May....................
June...................
July......... ...........
August...............
September..........
October...............
November_____
December...........

1190 proof, ex-molasses, tax-paid.
2 Crystals, granulated, powdered.
* Granulated, powdered.
*Japanese or Chinese, from Oil, Paint and Drug Reporter.
5No prices available after July 1940.
* December price mainly nominal.

By December 1941, advances above the August 1939 level amounted
to 158 percent for tartaric acid, 37 percent for camphor, 24 percent
for quinine sulfate, and for menthol (imported, natural) about 300
percent.63 (See table 40.) Similarly, increases were very large for
62 Oil, Paint and Drug Reporter, March 24,1941.
63 At the time of the attack on Pearl Harbor, several new firms were undertaking production of synthetic
menthol in the United States and experiments were under way to use as a raw material domestically pro
duced peppermint oil, or other more readily available “essential” oils, in place of Java citronella.

168

Wartime Prices—August 1939 to Pearl Harbor

other imported products such as nux vomica, which advanced 105
percent during the Defense Period, and castor oil, which rose 47
percent.
On the other hand, markets for numerous other drugs and pharma
ceuticals remained remarkably stable. Prices of acetylsalicylic acid,
citric acid, salicylic acid, chloroform, codeine, morphine, and others
remained unchanged during the Defense Period. Quotations for
opium rose only 10 percent, for iodine 14 percent. Relative stability
in these cases was due either to satisfactory domestic production, as
in the case of citric acid; to the availability of sufficient imports, as
in the case of iodine from Chile; or to the accumulation of satisfactory
stock piles, as in the case of opium.
Aside from the rise in prices of imports, a large part of the average
advance for all drugs and pharmaceuticals during the Defense Period
was attributable to price changes for ethyl alcohol. Because of its
importance this product is “weighted” very heavily in the Bureau of
Labor Statistics index.64 Between August 1939 and December 1941
the Federal tax on this product, which amounts to about 95 percent
of the total price, was raised twice, and accounted in the main for a
77-percent price increase.66*
to As of January 1941, ethyl alcohol accounted for about 60 percent of the aggregate value of all products
included in the Bureau of Labor Statistics wholesale-price index of drugs and pharmaceuticals.
* m The tax was $4.27H per gallon in August 1939, and was raised to $5.70 in July 1940 and to $7.60 in
October 1941. In October 1941 the price of ethyl alcohol, 190 proof, was $7.92H.

Chapter VII.— Fuels
Summary
The increase in the price of fuels during the Defense Period was
relatively moderate, the average wholesale price1 rising 15 percent
between August 1939 and November 1941, as compared to a corre
sponding advance of 23 percent in wholesale markets generally.
After the outbreak of war in Europe, the price of fuels rose ap
proximately 4 percent between August and November 1939, a sharp
movement for this generally stable group of commodities. Higher
prices for fuel oil and gasoline in the East, resulting from sharp ad
vances in tanker rates from the Gulf Coast, were largely responsible
for the advance. The price of fuels then fell by more than this
amount, remaining slightly below its pre-war level during the spring
and summer of 1940. In October 1940, however, when minimum
prices were established for the first time under provisions of the
Bituminous Coal Act, the average price of fuels rose slightly above its
pre-war level. It then remained relatively stable until the following
May when substantial price increases for bituminous coal, following
the miners’ strike and the wage increase of April 1941, initiated a
steady upward movement in the composite price of fuels for the
remainder of the Defense Period. In March 1941, the average price
was only 1 percent higher than in August 1939; by November it had
advanced to 15 percent above that level.
Each of the various fuels participated in the advance; bituminous
coal rising least and fuel oil most. The net increases for typical
grades of fuels discussed in this chapter follow:
Percent of
increase

Bituminous coal, prepared sizes_____________________
Anthracite, chestnut size___________________________
Crude oil, Oklahoma-Kansas________________________
Gasoline, national tank-car average_________________
Fuel oil, light______________________________________
Fuel oil, heavy_____________________________________

14
20
25
19
34
29

These price advances were due in large part either to increases in
manufacturing, mining, and railroad activity which swelled demand
for the industrial fuels—principally bitiminous coal and heavy fuel
oil—or to the simultaneous rise in consumer purchasing power which
led to greater purchases of gasoline, anthracite, and light fuel oil.
Although both types of demand, industrial and domestic, started
expanding with the beginning of the National Defense Program in the
summer of 1940, it was not until the spring of 1941 that prices of fuels
began their sustained advance. This delayed rise may be attributed
partly to the conditions of excess capacity which for years had char
acterized the bituminous-coal, anthracite, and crude-oil industries.
It was not until demand for fuels had been strengthened by almost a
year of rapidly increasing defense activity that fuel markets were
strong enough to support a sustained price advance.
1 This composite index is a weighted average of the 16 published price series of the fuels discussed in this
chapter: Bituminous coal, anthracite, crude oil, gasoline, and fuel oil. It omits the series on byproduct
coke, electricity, and gas, of which the latter two are broad realization figures that tend to move inversely
to the rates actually charged, reflecting the changing relationship between the volume of industrial and
domestic sales.

169

170

Wartime Prices—August 1939 to Pearl Harbor

The price increases would probably have been even further delayed
had it not been for the curtailment oi output and the establishment of
minimum prices by various Government bodies. Minimum prices
for bituminous coal, established under provisions of the Bituminous
Coal Act, were put into effect for the first time on October 1, 1940.
The establishment of this price floor—which, according to the terms
of the Bituminous Coal Act, was set at a level approximately equal
to average unit costs in the industry in 1936-37—resulted both in
price increases and in greater purchases of higher priced coals, owing
to changes in grade differentials.
Prices of both anthracite and crude petroleum were strengthened
by limitations imposed on output. In the State of Pennsylvania*
the center of anthracite mining, a voluntary plan of controlled output
was put into effect in February 1940, and was accepted by nearly
all of the industry’s operators. Similarly, crude-oil production was
limited by the operation of conservation measures in most of the oilproducing States. The “drastic” and “severe” curtailments of pro
duction imposed by State bodies during 1940 and the early part of
1941 were frequently cited by the trade press as a principal cause of
strength in the crude-oil market.
Prices of fuels were also affected by wage increases and by higher
transportation costs. Following the strike in the bituminous-coal
mines during April 1941, hourly earnings in the industry were raised
16 percent, from an average of 88 cents per hour in March to $1.02 in
June. Since the minimum prices had been set in October 1940 at a
level approximately equal to total unit costs as of 1936-37, and costs
had declined between 1936-37 and 1940, the wage increase did little*
more than offset the decline which had taken place in costs. Never
theless, extensive increases in prices were announced following the
wage advance.2
Higher transportation costs were a further source of price increases
in fuels, particularly gasoline and fuel oil. Widespread fluctuations
in tanker rates between Gulf ports and the Atlantic Coast were a
principal cause of price changes for these products. The tanker-rate
increases, especially toward the end of the period, reflected partly
the shortage of shipping space owing to the transfer of tankers to other
areas, but they also were a means by which the delivered price of
gasoline on the Atlantic Coast was advanced. Thus, between August
and December 1939, before any important tanker shortage had de
veloped, tanker rates for gasoline were, raised from 15 to 52 cents a
barrel; and in the fall of the following year they were increased from
18 cents in September to 65 cents in December, despite the fact that
dining this same period the Gulf Coast price was actually declining.
Finally, prices of fuels were directlyinfluenced by weather conditions.
The severe and prolonged winter—December 1939 and January and
February 1940—swelled the demand for household fuels, especially
fuel oil; at the same time, however, the market for gasoline was
materially weakened by reduced automobile driving.
The over-all increase of 15 percent in the price of fuels between
August 1939 and November 1941 was less than half of the advance
which took place in the average price of fuels during the corresponding
2 Wage and Price Structure of the Bituminous-Coal Industry, by Witt Bowden (Monthly Labor Review.
August 1941).

Chapter V II.—Fuels

171

period of the previous war; between July 1914 and October 1916 prices
of fuels rose 39 percent.
Immediately following the begmning of conflict, fuel prices in the
first war began to fall, whereas in this war they moved moderately
upward. Seasonal declines during the spring and summer of 1915
and of 1940 carried the prices somewhat below their pre-war positions.
Thus, after 1 year of conflict fuel prices were 13 percent below their
pre-war level m the first period and 2 percent below in the second.
Thereafter prices advanced strongly in both war periods. The major
increases during the first 2 years of World War I came at the end of
1915 and in the fall of 1916. In World War II, up to November 1941,
most of the advance came in the last 6 months of the period.
The main reason for the substantially greater increase in fuel prices
as a group during World War I was the sharp advance in prices
of bituminous coal. A serious congestion in railroad traffic resulted
in a shortage of coal in industrial centers, and prices rose in September
and October 1916 to a point nearly 100 percent above their pre-war
level.
Crude Oil
Prices of crude oil, with the exception of Pennsylvania grade, are
relatively stable, the major oil companies generally leaving the “posted
prices” which they pay for crude unchanged for months at a time,
After rising from 89 to 96 cents per barrel between August and Sep
tember 1939, the price of a typical grade of crude on (OklahomaKansas, 33 to 33.9 degrees, well) remained at the latter level until
April 1941, when it rose to $1.01 as demand increased. Further
advances brought the price in June to $1.11, where it remained for the
remainder of the Defense Period.
At the outbreak of the war in Europe, producers had just completed
a major effort to obtain higher prices by reducing the size of crude
stocks. During the first 15 days of August 1939, States which were
members of the Interstate Oil Compact Commission—Texas, Okla
homa, Kansas, New Mexico, Colorado, and Michigan—shut down
their crude-oil production. Thus, total domestic crude output fell
from 111 million barrels in July to 81 million in August. This action
was taken as a response to a price reduction instituted in August by
one large buyer and immediately followed by all other major oil
companies.3
As a consequence of this action, stocks of refinable crude in the
United States dropped from 271 million barrels in July 1939 to 238
million in August; prices then advanced from 89 cents a barrel in
August (Oklahoma-Kansas, 33.0 to 33.9 degrees) to 96 cents in
September (see table 41).
After the outbreak of the war, the industry increased its production
in the expectation of larger orders, particularly from foreign sources.
Thus, in October, output advanced to 114 million barrels, the highest
level of the year. However, the war actually brought with it no
material increase in the demand for petroleum in 1939 and most of
1940.
3 Appearing before the special oil subcommittee of the House Interstate and Foreign Commerce Com
mittee on February 8, 1940, Mr. A. Andreas, State geologist and member of the Oil Conservation Com
mission of New Mexico stated that the shut-down was due solely to the price reduction.
547953— 44-------12

172

Wartime Prices—August 1939 to Pearl Harbor

These large stocks were a depressing force upon the price of crude
petroleum throughout 1940. Stocks of refinable crude rose steadily
from 231 million barrels in October 1939 to 262 million in May 1940,
remaining around the latter level for the rest of the year (see table
41). At the same time the large stocks of gasoline resulted in price
reductions of the motor fuel which in turn constituted a depressing
force upon the price of crude oil. In February 1940, it was reported
that because of the weakening of the gasoline market, refiners would
“be under increasing pressure to obtain their crude at lower cost. It
has been demonstrated repeatedly that a stable price structure for
crude cannot be sustained while low prices are being received for the
major refined product." 4
This pressure of supply was aggravated especially in the early
part of the year by the high levels of production maintained in the
State of Illinois, which did not have pro-ration control. When in the
third week of February production in the Illinois field reached a daily
average of 408,000 barrels, causing the Nation's aggregate output to
move upward, the New York Journal of Commerce (February 21,
1940) stated:
Long a source of worry to the other large oil-producing States, the rising pro
duction rate in Illinois is leading some observers to believe that if the produc
tion there is not checked, the crude-oil price structure throughout the Southwest
may become undermined.

In the summer of 1940 a general reduction of crude-oil prices ap
peared imminent. The fall of France and the closing of the Mediter
ranean seriously curtailed American exports. Exports of crude
petroleum, which had declined from a monthly average of 6,187,000
barrels in the last half of 1939 to 4,403,000 barrels in the first half of
1940, dropped still further to 4,098,000 barrels in the last half of 1940;
in the last quarter of 1940 exports averaged only 3,716,000 barrels a
month.
During the third week of July two petroleum companies actually
lowered their buying prices in North Texas, “and fear was expressed
in many quarters that a general crude-oil price-cutting movement
might develop." 5
In an effort to avert “a wide open break in the price structure of the
petroleum industry," two members of the Texas Railroad Commission
on July 17, 1940, asked the Governor of Oklahoma to hold a meeting
of the Interstate Oil Compact Commission “to weigh the current
crisis in the industry" and “to consider the need for a further cut in
the production of oil." 5
Although no shut-down was ordered, a general price reduction did
not materialize. The strengthening in the market was due primarily
to a marked increase, beginning in August 1940, in the domestic
demand for petroleum products. As estimated by the United
States Department of Interior, total domestic demand, rose from
110 million barrels in July to 113 million barrels in December, a sharp
rise in the demand for fuel oil during the latter months more than off
setting a decline for gasoline. This upward movement, carried the
monthly level of demand by September above that of production,
the first time that this had occurred, except in January 1940, since
the outbreak of the war. (See chart, page 175.)*
4Journal of Commerce, February 1,1940.
* Idem, July 18,1940.

173

Chapter V II.—Fuels

In addition, the market was strengthened by a decline in Illinois
production which in mid-August dropped below the 400,000 barrel
mark after reaching an all-time peak of 518,000 barrels late in June.6
This decline was due primarily to a drop in the output from shallower
formations and was regarded as “a helpful factor” to the crude-oil
market.
The market was also aided by a drastic curtailment in the output
of the Venezuelan oil industry, controlled in large part by two Ameri
can major oil companies. Venezuelan production and exports, which
had been running close to 600,000 barrels a day, were lowered in July
to 450,000 barrels daily, the curtailment about equaling purchases
made by France before its couquest.7
In the first 4 months of 1941, domestic demand for petroleum
products, except for a brief decline in February, remained at the high
levels attained during the last part of the previous year. Production
also remained relatively stable and well below the level of demand.
As a consequence of the continuation of demand above production,
stocks in March began an extended decline, falling from 266 million
barrels in March to 250 million in August, and to 244 million in
November, just before Pearl Harbor (see table 41).
T a b l e 4 1 . — C R U D E PE T R O L E U M : Domestic Production, Demand, Stocks, and

Producers’ Prices, August 1939-December 1941
ISources: Production, demand, and stocks—U. S. Bureau of Mines; prices—U. S. Bureau of Labor Statistics]

Year and month

August__
September
October...
November
December.
January__
February.
March___
April.........
May.........
June.........
July..........
August__
September
October...
November.
December.

1989

1940

end of
Production
Demand Stocks,
month
(thousands of (thousands of (thousands
of
barrels)
barrels)*1
barrels)2

Price
bam

80,865
108,168
114,198
111,887
114,810

110,007
108,419
114,066
106,929
107,933

238,479
234,555
230,854
234,027
238,910

$0.89
.96
.96
.96
.96

113,140
108,668
120,075
116,045
118,283
111,690
113,244
110,523
109,337
113,418
106,904
110,520

109,949
103,038
112,144
107,975
113,972
109,485

239,794
244,417
251,120
258,066
261,839
261,971
263,498
264,252
263,124
263,856
263,163
264,079

.96
.96
.96
.96

110,221

110,228
110,353
111,441
107,820
112,614

. vo
.96
.96
.96
.96
.96
.96

1941

January__
February.
March___
April.........
May.........
June..........
July..........
August__
September
October...
November
December.

110,647
100,791
112,817
111,080
116,976
115,027
118,251
121.354
119,446
126,145
123.355
128,293

112,648
101,592
112,812
112,750
120,965
118,991
123,783
127,778
125,338

263,251
264,432
266,012
262,111
259,075
255,378
249,620
246,111
243,735
243,679
246,884

.96
.96
.96
1.01
1.04
1.11

1.11
1.11
1.11
1.11
1.11
1.11

1Apparent domestic consumption compiled from U. S. Department of Interior, Monthly Petroleum
Statement.
2 Refinable crude petroleum in the United States.
2 Kansas-Oklahoma, 33.0 to 33.9 degrees gravity, well.
4 Not available for publication.
e Journal oi Commerce, August 22, 1940.
1 1dem, July 23,1940.

174

Wartime Prices—August 1939 to Pearl Harbor

This strengthening of the oil market resulted in two price advances
within a period of less than 60 days. The first movement began in
the last part of March and took a number of forms. By April 1,
1941, advances of from 5 to 11 cents a barrel had been made in oil
fields, accounting for approximately 15 percent of the oil produced
in the Southwest. In Illinois the advance first took the form of pre
mium payments, which amounted to as much as 10 cents a barrel
before upward revisions were made in the posted prices.8* In Louisi
ana, buyers resorted to a 2-cent differential between gravity and high
grade and, in purchasing, used the higher gravity schedules instead of
flat prices, with consequent advances of from 3 to 11 cents a barrel.*
This first set of advances, which averaged 5 to 7 cents a barrel for
the United States, was followed by a second series of increases insti
tuted on March 19. Producers were anticipating this increase as
they had been reported to be “of the opinjpn that another advance
in prices would take place in the near future.” 101 In this second rise,
Oklahoma and Kansas prices were raised 10 cents a barrel to the
highest level after 1938, and Texas Panhandle prices were raised 9
cents a barrel.11 Similar advances followed in other fields throughout
the country.
These upward movements were offset by the inability of large oil
companies to obtain petroleum sufficient to meet their increasing
demand:
Among these, Consolidated Oil is known to have encountered some trouble in
obtaining nominations in Texas sufficient to meet local refinery needs in full,
necessitating the withdrawal of crude oil from storage and the purchase of petro
leum products from other refineries in the Southwest.121
3

This difficulty of the major oil companies in securing satisfactory
quantities was attributed to the restrictions on production imposed
by the various State regulatory bodies. “Drastic production curtail
ment,” according to the New York Journal of Commerce (April 1,
1941), “already has made it difficult for some major units to obtain
as much crude oil as they need for their current requirements.”
These curtailments on production also tended to increase produc
tion costs. This was particularly true in the case of the small pro
ducing companies operating pumping wells. Although more than
half of the crude-oil output is produced by 20 major oil companies,ia
which are able to operate on a mass-production basis and can also
balance transportation, refining, and marketing profits against crudeproduction losses, these smaller units are large in number and produce
an appreciable proportion of total domestic output. To offset the
increasing costs of pumping wells, these companies in the past had
often brought into operation flowing or so-called “flush” wells. But
during the latter part of 1940 and the early months of 1941 State
curtailments on production severely restricted this practice. On
April 1, 1941, the New York Journal of Commerce reported that
“drastic curtailment in the Southwestern States virtually bars any
possibility of the existence of such (flush) wells, which are confined
mainly to such States as Illinois, which do not have pro-ration.”
8Wall Street Journal, April 1, 1941.
• Idem, April 11,1941.
10 Journal of Commerce, April 29,1941.
11 Wall Street Journal, May 20,1941.
18Journal of Commerce, April 1,1941.
13 in 1937, 20 major oil companies owned 23.7 percent of the producing oil wells in the United States but
produced 52.5 percent of the total domestic production of crude petroleum. (Source: Temporary National
Economic Committee, Hearings, Part 14-A, 1940, p. 7714.)

Chapter V II.—Fuels

175

CRUDE OIL

PRODUCERS' PRICES, DOMESTIC PRODUCTION, DEMAND,
AND STOCKS
AUGUST 1939 « 100

P R O D U C E R S ’ P R IC E S

INDEX

160

140

1—

120

/ ^ K A N S A S , OKLAHOMA
»• TO S9* GRAVITY

100

100
1939

1 940

1941

1942

1943

1944

PRODUCTION , D E M A N D ,A N D S T O C K S

INDEX

200

INDEX

200

180

160

PROIDUCTIONx

140

120

120
STOCKS

100

100
f^ O E M A N O

Sou ret:

8 0

-.L..1.X-1

1 1 1 1 1 1 1 i-l-J-1.

1939

1 9 4 0

i i i ' i ' i i i i i -» i i i i i i < i i i
1941

1942

1943

o s cIEPARTMENT OF INTERIOR.
BUREAU OF MINES
.1 l - U - L l . l 1 i M
1944

8 0

176

Wartime Prices—August 1939 to Pearl Harbor

In the spring and early summer of 1941 the market lost some of its
tightness as curtailments on output were relaxed. Production rose
from 111 million barrels in April to 117 million in May, and then, after
a slight decline in June, to 121 million in August. At the same time
the cost-price relationships in the industry were eased by the increase
in profits resulting from the price advances made during the spring:
Despite increased costs and State restrictions reducing crude petroleum so far
this year about 4 percent under 1940, oil-producing companies generally have
been able to improve their profit showings, due to higher prices posted in April
and May.14*

In July and August, however, the market once again became firmer
as a result of a sharp increase in demand. Demand for petroleum
products which, since March, had been relatively stable at around
113 million barrels per month shot up to 124 million barrels in July
and continued to increase during October. At the same time stocks
of refinable crude declined from a peak of 266 million barrels in March
to 244 million in November (see table 41).
As a result of these developments, the pressure on price became
more intense toward the end of the year. Several producers requested
price increases but in each case the Office of Price Administration
refused permission.16 On November 7, three firms in the Texas area
posted notices of price increases in the face of a request from the Price
Administrator that no advances be made. A few days later, however,
these increases were withdrawn after vigorous objection had been
voiced by the Office of Price Administration.16 At the same time the
Price Administrator formally requested the industry to refrain from
making any price increases without the prior approval of his office,
adding, “Prices cannot be advanced first and discussed afterward.”
The controversy between the industry and the Government became
acute diming the final months of 1941. On October 22 the Independent
Petroleum Association of America insisted that prices would have to
rise in order that greater reserves could be discovered and that pre
mature abandonment of wells could be avoided.17 In support of its
position, the association on December 2 released a cost study pup
porting to indicate that costs had advanced 35 cents per barrel since
1937, and that, consequently, an appreciable increase would have to
be made in prices.18
The Office of Price Administration, however, remained firmly
opposed to any further price rise. This Office, with the cooperation
of the U. S. Tariff Commission, was conducting a study of crudepetroleum costs. Pending the completion of this study, the Admin
istrator stated that a price increase was premature, particularly in
view of the fact that in October, November, and December crude
production rose to the highest levels reached after the beginning of
the war in Europe.
Fuel Oil
The most important types of fuel oil are distillate or “light,” which
is used almost exclusively for domestic oil burners, and residual or
“heavy,” which finds its way into industrial and maritime uses.
Demand for these two types is affected by different factors. Domestic
u Wall Street Journal, August 6,1941.
18 The Mid-Continent producers made particularly strong representations for price increases.
16 Journal of Commerce, November 12,1941.
17 Baltimore Sun, October 23,1941.
18Journal of Commerce, December 3,1941.

177

Chapter V II.—Fuels

consumption is greatly influenced by weather conditions, while the
rate of industrial activity largely determines the requirements for
“heavy.”
Starting from a pre-war level of $3.88 per barrel, the New York
price of No. 2 fuel oil advanced between September 1939 and April
1940 to $5.40, its peak for the Defense Period. The price then eased
until August, when it once more started up, continuing to rise until
November 1941. An informal ceiling established by the Office of
Price Administration on November 7 froze the price of light oil at
$5.20 per barrel—34 percent above its pre-war level.
Heavy fuel oil (bunker C, New York) followed a similar pattern
during the Defense Period, rising from $1.05 per barrel in August 1939
to a peak of $1.50 in February 1940, easing throughout the remainder
of the year and again rising during 1941. By November 7, when the
Office of Price Administration requested that fuel oil prices be held at
their current levels, the price of heavy oil had risen to $1.35 per
barrel—29 percent higher than in August 1939.
T able 42.—FU E L OIL: Prices, Production, Demand, and Stocks, August 1939-

December 1941
[Sources: Production, demand, and stocks—U. S. Bureau of Mines; prices—National Petroleum News]
Prices per
barrel of —
Year and month

19S9

August...............
September..........
October..............
November..........
December..........

January..............
February............
March__..............
April...................
May....................
June....................
July.....................
August..............
September..........
October.............
November_____
December...........

January..............
February...........
March.................
April...................
M ay....................
June....................
July.....................
August...............
September..........
October..............
November..........
December...........

Light Heavy,
No. 2 bunker
C3
and 3 1

$3.88
4.00
4.38
4.60
4.70

Production
Light

Heavy

Stocks, end
of month

Demand*3
Light

Heavy

Light

Heavy

Thousands of barrels

16,246
$1.05
12,975
1.05
15,017
1.15
1.15 . 13,757
14,433
1.15

25,299
26,302
27,594
26,088
26,944

7,829
9,684
10,548
14,074
16,843

25,735
27,292
28,683
29,796
31,587

37,626
38,138
40,093
37,888
33,718

101,361
100,063
99,921
96,696
92,290

6.10
6.10
6.10
6.40
6.40
4.76
4.70
4.40
4.10
4.10
4.10
4.60

1.15
1.50
1.50
1.50
1.50
1.35
1.35
1.15
1.15
1.15
1.15
1.15

16,548
16,262
16,346
15,260
14,541
14,154
14,439
14,957
14,735
14,381
15,073
16,608

28,082
24,680
26,870
25,372
26,548
25,469
25,248
26,451
25,504
27,944
26,125
27,925

22,462
17,623
16,187
11,849
9,738
7,028
7,223
8,362
10,439
13,358
16,848
19,702

32,473
27,123
31,188
26,887
26,338
25,048
23,990
26,267
25,843
30,192
29,980
33,955

26,462
24,640
23,086
25,092
28,220
33,585
39,412
45,041
48,828
49,037
46,624
42,940

89,281
89,784
89,351
88,932
89,835
91,148
93,029
94,421
94,658
94,647
92,392
89,304

4.90
4.60
4.00
4.20
4.70
4.90
4.90
4.90
5.20
5.20
5.20
5.20

1.25
1.25
1.25
1.25
1.25
1.25
1.35
1.35
1.35
1.35
1.35
1.35

17,018
14,732
15,326
14,692
15,546
14,697
15,746
15,409
16,024
16,554
16,230
17,142

27,958
25,979
27,858
27,310
28,393
28,255
28,624
29,836
28,118
30,871
29,666
31,127

21,010
17,783
19,847
12,264
11,233
10,853
10,653
9,667
11,516
(4)
(4)
(4)

32,885
30,647
32,626
31,354
30,328
29,413
29,290
30,122
31,831
(4)
(4)
(4)

37,926
34,790
29,805
31,725
35,389
38,274
43,037
47,163
51,412
55,385
55,073
49,926

85,092
82,902
81,634
79,138
79,218
79,948
80,760
82,268
83,752
84,960
83,730
(4)

i Bulk, tankcars, New York Harbor.
3 New York Harbor.

3 Apparent domestic consumption.
4 Not available for publication.

At the outbreak of war in August 1939, the price of No. 2 light oil
on the East Coast began a month-by-month rise which carried the
New York price from $3.88 per barrel to $5.10 in January 1940, an
increase of 31 percent. (See table 42.) This rise, which was con-

178

Wartime Prices—August 1939 to Pearl Harbor

siderably greater than the usual winter advance, was due both to
soaring tanker rates and to an unusually severe winter. Between
August and December, shipping rates for light oil from the Gulf to
the North Atlantic C oast19 rose from 17 cents per barrel to 62.6
cents,20 an advance considerably greater than the customary seasonal
change.21 Domestic demand, which had totaled 7,800,000 barrels in
August, rose to 16,800,000 barrels in December, and to 22,500,000 in
January 1940; the corresponding figure for January 1939 had been
16.500.000 barrels.
The price of heavy fuel oil (bunker C, New York), which was not
directly stimulated by any demands resulting from the severe winter,
experienced a more moderate increase, rising from $1.05 per barrel in
August to $1.15 in December. This was largely a reflection of the
increase in tanker rates.20 Foreign, as well as domestic, demand
showed little unusual change as the belligerent nations resorted to
severe rationing to conserve their supplies for war industries.
The year 1940 was characterized by two outstanding developments,
which, to some extent, offset each other. First, a tanker shortage
developed toward the end of the year as a number of ships were trans
ferred to other runs: “Gulf to North Atlantic Coast tanker rates
* * * advanced sharply from an average of 27.8 cents a barrel for
clean boats in 1939 to 52.6 cents in 1940, and charges for carrying
residual grades (heavy) rose from an average of 25.8 cents a barrel
in 1939 to 46.9 cents in 1940.” 22
On the other hand, the tightness in supply resulting from the short
age of coast-wise tankers was eased by a radical change which took
place in foreign trade. Imports of fuel oil for some time had—
* * * been limited largely to heavy or residual grades brought in under
bond for the supply of vessels; however, with the ships7 bunkering business on a
decline and an active domestic market, this custom was reversed in 1940, so that
the larger share of fuel-oil imports was entered as duty-paid and was intended for
domestic consumption.22

Exports of light oil fell from 32 million barrels in 1939 to 19 million in
1940, a decline of 41 percent, whereas duty-paid imports, which were
practically nonexistent in 1939, amounted to 3 million barrels in
1940. Exports of “heavy” declined 8 percent in 1940 while dutypaid imports (i. e., intended for domestic consumption) rose from
929.000 to 17,940,000 barrels.23 This increase in imports was a
result, partly, of a reciprocal trade treaty concluded with Venezuela
on December 16, 1939, whereby the tariff on fuel oils was cut from
21 cents to 10%cents per barrel for a limited quantity of oil.24* Aided
by the treaty and by the prevailing high coast-wise tanker rates,
Venezuela and Netherlands West Indies were enabled to send con
siderable quantities of fuel oil to the United States during the year.
During the first 3 months of 1940, No. 2 fuel oil remained unchanged
at $5.10 per barrel. Some sellers posted higher quotations in January,
but it was not until April that a new price, $5.40, was generally
announced. This quotation proved to be too high in the face of the
seasonal decline in demand, the increase in stocks which accumulated
19 Approximately 70 percent of the consumption of heating fuel is concentrated in the Atlantic Seaboard
States. (Journal of Commerce, April 12,1941.)
20XJ. S. Bureau of Mines, Minerals Yearbook, Review of 1940, pp. 1006-7.
Cf. Gasoline, p. 180.
22U. S. Bureau of Mines, Minerals Yearbook, Review of 1940, p. 1006.
23 Idem, p. 1003.
24 Imports under the new duty were limited to 5 percent of the previous year’s crude-oil runs to stills in
American refineries.

Chapter V II.—Fuels

179

rapidly after April, the decline in exports following the blockade of
European ports, and a fall in tanker rates. Prices continued to drop
until September by which time the price had reached a low of $4.10.
Heavy fuel followed somewhat the same course, although price
changes, while less frequent, were ordinarily more severe when they
did occur. Thus, in February 1940 the price jumped from $1.15 to
$1.50 per barrel, an increase of 30 percent. Supplies had become
scarce in January and there took place “an almost wild scramble for
oil,” 25accompanied by occasional price advances; by February the in
creases had become general. In spring, however, supplies of “heavy”
became easier, tanker rates declined seasonally, and the rate of
industrial production fell, thereby decreasing demand. The price
dropped back to $1.15 by August, where it remained during the
remainder of 1940.
At the beginning of 1941, higher prices were expected by the trade.
The tanker shortage became more severe when, in May, 50 tankers
were transferred to Great Britain. Both the high rate of industrial
production called forth by the defense program and an estimated
increase of 300,000 domestic oil burners during 1941 (14 percent)
were expected to swell materially the demand for oil.26
An advance did take place in January when “light” moved up to
$4.90. However, a contraseasonal reaction set in, the price falling to
$4 in March, which, in turn, was followed by a contraseasonal increase
during April, May, and June. These erratic movements were due to
several unusual developments: tanker rates dropped from 55 cents in
January 1941 to 42 and 45 cents in February,27 and exports of distil
late fuel oil in February and March had fallen almost 50 percent below
the corresponding period in 1940. Finally, the industry had accu
mulated a large supply of heating oil early in the season in order
to insure itself against a recurrence of the previous year’s experience.
Since the tanker shortage proved to be less acute during the early
months of 1941 (and the winter less severe than the preceding one)
the industry found itself overstocked; consequently prices were de
pressed.28 These factors gradually dissipated themselves during the
late spring, and by June the price had returned to its January level.
During the summer months the usual seasonal decline in price did
not take place, the price remaining unchanged through August. An
increase in the price of crude oil, coupled with rumors to the effect that
50 additional tankers were to be transferred to Great Britain,29 made
sellers reluctant to grant any reductions. Prices of “heavy” during the
first part of 1941 remained stable after an initial seasonal advance of
10 cents in January. However, the market remained strong as stocks
declined while demand reached levels about 10 percent above those of
the corresponding period in 1940. In May, for example, domestic
demand was 14 percent higher than in May 1940, while stocks were
13 percent lower. This situation was aggravated on the East Coast by
the failure of inventories to build up during the summer months,36
and by increases in costs of crude oil and in transportation charges.
As a result, many refiners in June began to post a price of $1.35, 10
cents higher than the prevailing quotation. Although some discounts
28 Journal of Commerce, January 8,1940.
* Idem, April 12,1941.
27New York Times, February 7,1941.
28 Journal of Commerce, March 3,1941.

180

Wartime Prices—August 1939 to Pearl Harbor

were allowed to most buyers, by July the discounts had disappeared
and the new price was firmly established at $1.35,30 where it remained
through November.
In June 1941, the Office of Price Administration and Civilian Supply
began to express an interest in all petroleum prices, including fuel oil.
Letters were sent by the Price Administrator to refiners and marketers,
requesting that no price advances be instituted without prior consul
tation with his office. It was also announced that the industry and the
Government were in agreement that no price changes should take place
unless “basic conditions change.”
Despite these requests, subsequent price increases did occur in
addition to the above-mentioned July increase in “heavy.” The
price of “light,” which had experienced no seasonal decline during the
warm months, nevertheless rose from $4.90 in August to $5.20 in
September as the heating season began. Expectations of a heavy
demand in the fall combined with a peculiar supply situation exerted
a strong upward pressure on prices. The unusually large demand for
gasoline caused refiners to use distillate fuel oil as a refining stock to
produce motor fuel and aviation gasoline. In addition, tankers,
which ordinarily would have been used for fuel oil, carried gasoline
until unusually late in the season. Additions to inventories of fuel
oil consequently lagged on the Atlantic seaboard, causing “misgivings
about the supply outlook.” 31
In order to put an end to further price advances—which by No
vember had carried the prices of “light” and of “heavy” to levels
34 percent and 29 percent above their respective pre-war figures—the
Office of Price Administration, in its letter of November 7, formally
requested sellers of fuel oil to make no further price changes. Under
this informal price ceiling, prices of fuel oil remained stable to the end
of the Defense Period.
Gasoline
The retail price of gasoline paid by the motorist at the service
station represents an accumulation of prices at several levels, the base
of which is the price at the refinery. Prices on the eastern seaboard
are therefore based upon the quotations of refiners on the Gulf Coast,
while in the Midwest they are based upon refiners7 quotations in the
midcontinent area. Principal emphasis in this section is upon the
refinery figures; the “ tank car” price, which is the quotation* for a
tank car at a major distribution center; the tank-wagon figure, which
is the price to the dealer; and the average retail price as recorded by
the Bureau of Labor Statistics.
From a pre-war level of 5.67 cents per gallon, the national average
of tank-car prices rose to 6.16 cents in December 1939, and subse
quently dropped sharply during 1940 to 5 cents in January 1941.
In February 1941 a sustained rise began which carried the average
tank-car price in November to a peak of 6.77 cents. Dealer prices
followed the same pattern, although frequent minor fluctuations in
terrupted the general trend of the national average, which stood at
10.02 cents per gallon at the close of the Defense Period in contrast to
a level of 9.70 cents in August 1939. (See table 43.) The average
retail price,32 which remained stable at 18.6 cents per gallon during
30Journal of Commerce, July 1,1941.
81Idem, March 3, 1941.
82 The average retail price of regular or house brand grade gasoline in large cities, calculated by the Bureau
of Labor Statistics.

Chapter V II.—Fuels

181

the fall of 1939 and declined steadily throughout 1940, began to rise
in February 1941. Reaching a peak of 19.6 cents in September and
October, it levelled off at 19.5 cents for the remainder of the year.
(See table 44.)
T able 43.— GASOLINE: Wholesale Prices , Production, Demand , and Stocks, August

1939-December 1941
(Sources: Production, demand, stocks—U. S. Department of Interior, Annual Petroleum Supplement;
prices—National Petroleum News]
Wholesale prices
per gallon
Year and month

1939

August.............. -...................................................
September.............................................................
October.................................................................
November............................................................
December............................................. ................
mo

January..................................................................
February............................................... ...............
March........................... ............. ......... ................
April................................. - -------- ----------- -----May.................................................... ..................
June........................... — ........... -.......................
July........................................................................
August............................... .................. ................
September.................................. ............. ............
October............................ ................... ................
November......................................... ....................
December.................................................. ...........

Dealer 1

Tank
car 2

Cents

Produc
tion

end
Demand 8 Stocks,
of month

Thousands of barrels

5.67
5.92
6.21
6.26
6.16

52,335
52,047
55,161
52.893
52,464

54,025
49,505
49,854
47,407
43.807

73,072
71,389
73,256
76,198
81.722

9.79
9.68
9.60
9.60
9.07
8.93
8.89
8.93
8.86
8.57
8.71
8.66

6.03
5.91
5.86
5.84
5.66
5.48
5.35
5.37
5.22
5.13
5.06
5.04

50,281
47,609
51.223
50,612
52,222
51,362
51,918
52,694
52,351
52.945
50.931
52,547

40,385
37,416
44,532
47,716
52,913
55,497
53,904
55,382
52,335
53,845
49,113
46.452

89,339
97.478
101,860
102,727
99,988
93,276
89.669
84,836
82,953
79.907
79,531
83,647

8.55
8.58
8.65
8.93
9.41
9.77
9.93
9.96
9.96
9.98
1U.00
10.02

5.00
5.12
5.14
5.48
5.80
6.49
6.69
b. 71
6.73
6.77
6.77
6.80

53,384
49.155
54.221
54,493
59,072
57,689
60,594
61,578
61.067
63,273
62,187
64,581

46,190
42,782
49,572
55,879
60.121
59,062
63,906
63,575
59,768
(4)
(4)
(4)

88,800
93,920
96.832
93,918
91,281
88,646
83,746
79.205
78.134
79,568
83.935
90,688

9.70
9.69
9.74
9.84
9.59

m i

January................................................................
February............ :.................... ............................
March............................. .................. ....................
April......................................................................
M ay.............................- ............. — ........... ........
June...............................-........... -.........................
July...................................-...................................
August------------------ ------------------------ ------September.............................................................
October................................. ................................
November..... .............................. .........................
December......... .................................................

1 Average of tank-wagon prices, ex-tax, for regular-grade gasoline in 50 cities; earliest date reported in
month.
2 Weighted average of prices for regular-grade gasoline, ex-tax, in 9 markets (August and September 1939,
12 markets); earliest date reported in month.
*Apparent domestic consumption.
* Not available for publication.

In the first 3 months following the outbreak of the war in 1939,
tank-car prices throughout the country advanced approximately 11
percent, the national average rising from 5.7 cents per gallon in August
to 6.3 cents in November. As is usually the case, a less abrupt ad
vance took place in national dealer prices. On the eastern seaboard
the dealer price rose in New York City from 8.5 cents in August to
9.2 cents in December, while in Chicago no change occurred. The
average retail price likewise remained unchanged.
The advance along the eastern seaboard was due to a sharp rise
in the Gulf Coast refinery price, coupled with a very marked increase
in tanker rates. The anticipation of enlarged foreign demand re
sulting from the wartime needs of the belligerents was the apparent
cause of the increase in Gulf Coast refinery prices.

182

Wartime Prices—August 1939 to Pearl Harbor

T a b l e 44.—GASOLINE: Retail Price of Regular or House Brand Grade in Large

Cities, September 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]

Year and month

Average
retail
price

19S9

Cents

Rp.ptfvmhpr
rWpmhAr

Retailprice
index
(June
1939=100)

18.6
18.6

101.6
101.6

18.5
17.7
17.8
17.5
17.7
17.5

101.1
96.8
97.4
95.7
96.8
95.7

March_______ ___________
June............... ...........................
September........................ ........
October1............................ ......
November1__ ____________
December. _
________

Year and month

Average
retail
price

m i

Cents

January1..... .................. .........
February1...............................
March........ .............................
April1.......................................
M a y 1.... ...................................
June............... ..........................
Ju ly1.....................................
August1______ _______ ____
September___________ _____
October1_________________
November1.................. ...........
December.................................

17.6
17.7
17.8
18.0
18.6
19.2
19.3
19.2
19.6
19.6
19.5
19.5

Retailprice
index
(June
1939=100)

96. £
96.9
97.5
98.6.
101.9
105.2
105. T
105.2
107.4
107.4
106.9
106.9

1 Monthly prices have been adjusted to the quarterly level.

Between August and December, tanker rates from the Gulf to
New York rose from 15 to 52 cents a barrel, an increase of 247 percent.
Individual quotations were made at even higher levels; “ Reports
current in the trade,” at the end of December, “ indicated that some
shipowners if they had the vessels available would ask around 75
cents a barrel for gasoline.” 33 The increase in tanker rates alone was
responsible for 0.88 cent of the total advance of 1.51 cents per gallon
which took place between August and December—the aggregate of
the Gulf price plus the tanker rate to New York.
Although these increases in tanker rates carried prices upward on
the eastern seaboard to the end of the year, both tank-car and dealer
prices throughout most of the Nation had begun to decline by No
vember while retail prices turned downward early in 1940. This was
due to a decline in demand and to the continuation of a high rate of
refinery operations. Domestic demand for gasoline, as estimated by
the United States Department of Interior, dropped from 53 million
barrels in August to 44 million in December. This resulted partly
from the failure of any large-scale expansion of industrial activity to
materialize and partly from the seasonal down-turn in consumption
which regularly occurs in the winter months. Demand from abroad
also fell off, as exports in the last quarter of 1939 were 33 percent less
than in the corresponding quarter in 1938. This decline ran contrary
to expectations that the effects of the war would create a widespread
export demand for American gasoline.
The downward trend in prices, which began in the last part of 1939,,
continued throughout the entire year 1940, as progressive German
conquests further cut export markets and refinery operations continued
at a high rate. Stocks increased greatly, reaching a high of 103
million barrels in April 1940 as compared to 73 million in August 1939’
and to 87 million in April 1939. After April, stocks declined moder
ately, but remained well above the pre-war levels throughout the*
year. (See table 44.)
83Journal of Commerce, December 29,1939.

183

Chapter V II.— Fuels

GASOLINE

WHOLESALE PRICES, PRODUCTION, DEMAND,
AND STOCKS
W H O LESA LE

1939

1 9 4 0

UNITED STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS _____

1941

P R IC E S

1942

1 943

1 9 4 4

184

Wartime Prices—August 1939 to Pearl Harbor

A number of efforts were made during 1940 to reverse the downward
trend of prices. An attempt was thus initiated in May to increase
prices in the midcontinent area by raising the Oklahoma tank-car price
from 4.50 to 4.75 cents a gallon; but the increase could not be main
tained, and by October the price had fallen back to 4.50 cents.
On the eastern seaboard, prices rose late in 1940 as tanker rates
again advanced. These rates, which by the early fall of 1940 had
fallen almost to their pre-war level, were raised from 18 cents a barrel
in September to 65 cents in December. This advance in transporta
tion charges caused the delivered cost on the eastern seaboard to in
crease between September and December from 4.30 to 5.05 cents per
gallon, despite an actual decline in the Gulf Coast price from 3.88
to 3.50 cents in the same period. This increase was subsequently
reflected along the eastern seaboard in higher tank-car and dealer
prices; between December 1940 and January 1941, they rose in New
York from 5 to 5.5 cents and from 7 to 7.5 cents, respectively.34
During the first quarter of 1941 prices remained comparatively
stable; tne decline in demand during the winter months was not nearly
so great as in the preceding year, and the rise in stocks was moderate
owing to a curtailment of production in February.
In April, however, prices began to rise abruptly, reflecting a sharp
increase in domestic demand. Higher levels of industrial output,
large purchases of gasoline by the Government for defense purposes,
increased employment and overcrowding in many defense centers
which meant a greater use of automobiles as a means of transportation
to work, and the rise in purchasing power with the consequent in
crease in pleasure driving—all contributed to swell the domestic
demand for gasoline from 43 million barrels in February to 61 million
in May.
The average tank-car price, for the Nation as a whole, rose from
5.14 cents in March to 5.80 cents in May, while the dealer price
mounted from 8.65 to 9.41 cents, increases of 12.8 percent and 8.8
percent, respectively.35 During the same period the average retail
price increased from 17.8 cents to 18.6 cents.
In May it was reported that officials of the Office of Price Adminis
tration and Civilian Supply “have been concerned over recent price
increases” in gasoline and other petroleum products. On May 23 a
meeting was held between those officials and representatives of leading
oil companies in the New England and Mid-Atlantic areas, the con
sensus of which was reported to be that “no further substantial in
creases in gasoline prices are called for unless basic cost conditions
change,” and that no advances were to be made, for any reason,
without prior consultation with the Government.
This proposed stabilization of prices was based, in part, upon the
favorable condition of earnings in the industry. At the end of the
34 The advance in tanker rates also had other consequences. In the Oil and Gas Journal of December 12
1940, it was reported: “From a refinery-market standpoint, however, particularly as it affects the independ
ent and nonintegrated companies on the Gulf Coast, depending on the chartering of outside bottoms for the
movement of their products, the high tanker rates now in force from Texas, as well as Louisiana ports, to the
Atlantic seaboard are serving as a check against material improvement of prices at refineries. Companies
which own their own fleets of boats, on which costs of operation are more or less constant over a period of
time, may be in a position to offset to some extent the low Gulf Coast quotations by the higher prices received
in the Atlantic seaboard market by reason of the tanker-rate increases, but the other companies cannot ex
pect to get higher prices at the Gulf until the strengthening on the East Coast is sufficient to absorb entirely
the higher transportation cost, which so far has not been the case.”
33 In New York the tank-car price during this period rose 27.3 percent, while the dealer price advanced
13.9 percent. In the mid-continent area the Oklahoma tank-car price mounted 17.1 percent and the Chicago
dealer price increased 6.2 percent.

Chapter V II.—Fuels

185

first 6 months of the year, the Wall Street Journal (July 11, 1941)
reported:
Further strengthening in gasoline prices in recent weeks, together with a peak
demand for oil products, gives a clear indication that the 1941 profit outlook for
the oil industry is the best since 1937, the record year.
It would not be surprising, moreover, if some companies this year came through
with new record profits. * * *
A number of companies, in the first half of this year, more than covered their
full year's dividend requirements. Continuance of the present demand and price
trends— there seems to be nothing on the horizon to alter the course for the im
mediate future— presages some extra dividend distributions before the year is out.

After the May meeting, however, prices continued to advance, the
national average tank-car figure rising from 5.80 cents per gallon in
May to 6.49 cents in June, while the dealer price advanced from 9.41
to 9.77 cents and the retail price from 18.6 to 19.2 cents. On June 19,
the Price Administrator sent a telegram to leading refiners and mar
keters of petroleum products throughout the country, in which he
asked that no further advances be made without consultation with
the Government; he pointed out that in the meeting of May 23 a
general agreement to that effect had been reached, the agreement to
hold unless “basic conditions change.”
Nevertheless, another increase took place in July, with the national
tank-car price moving up to 6.69 cents per gallon and the dealer price
to 9.93 cents. This advance brought the national tank-car and dealer
mces 33.8 and 16.1 percent, respectively, above their January 1941
evels; with increases on the eastern seaboard continuing to be well
above the average for the Nation.
To arrest this movement, the Price Administrator on July 17 re
quested all refiners in the Gulf Coast area to maintain a base price of
6 cents for Gulf Coast gasoline. This price had already risen from
3.62 cents per gallon at the beginning of the year to 6 cents per gallon
on June 19, and in July several cargoes were reported to be moving at
prices ranging from 6.25 to 6.50 cents.
After this action, tank-car and dealer prices throughout the United
States remained relatively stable. On the eastern seaboard this
stability was maintained in spite of a further sharp increase in demand
and action by the Office of Price Administration on September 17
permitting small refiners on the Gulf Coast to raise their price from
6 to 6.50 cents a gallon because of increases in costs.
Retail prices snowed a different trend, as the national average,
which rose in July to 19.3 cents, declined 0.1 cent in August, and ad
vanced in September to 19.6 cents, its peak for the Defense Period.
In a further effort to put ah end to sporadic advances which had
occurred in spite of the June requests, the Office of Price Administra
tion on November 7 sent a letter to all marketers of refined products,
formally requesting that no increases be instituted without the prior
approval of the Price Administrator. Following this action no
further price changes took place, partly because of an apparently
better balance between supply and demand.
The average retail price, which remained at its peak level of 19.6
cents in October, subsequently eased slightly and stood at 19.5 cents
during November and December.

186

Wartime Prices—August 1939 to Pearl Harbor

Anthracite
During the 2^-year period, August 1939-December 1941, economic
conditions of the anthracite industry, long known as a “depressed”
industry, improved materially—wholesale prices for the common size
increased 15 to 20 percent, and operations became generally profitable.
The depressed condition of the industry which had lasted for over a
decade, had resulted largely from the competition of other types of
fuels, principally bituminous coal and fuel oil and to a lesser extent
byproduct coke, range oil, natural gas, and manufactured gas.
The production of anthracite during the generally accepted period of stability
from 1913 to 1921 (excluding the 2 war years of 1917 and 1918) averaged between
85 and 90 million net tons. By 1936 its production had declined to 54)4 million
tons, representing a reduction" in output of approximately 35 percent. Since
there was a substantial increase in total fuel consumption during this period, the
decline may be attributed entirely to the growth in the consumption of competi
tive fuels.36

To improve the condition of the industry, the State of
Pennsylvania in February 1940 instituted a voluntary plan of
controlled output which was adopted by anthracite operators
representing over 95 percent of the industry’s production. Thus,
during most of the Defense period, prices of anthracite were directly
affected by the operation of this allocation plan, under the provisions
of which estimates were made each week of production requirements
“for the industry as a whole and for each producer in accordance with
his percentage position.” 37
Anthracite prices, up to 1941, had for years been subject in the
spring to a seasonal reduction of approximately 50 cents a ton, with
the discount gradually being withdrawn in the summer and fall. In
1941, however, the seasonal discount was not allowed in the spring,
with the result that prices were approximately the same in April as
in the winter months. This omission came at a time when the in
dustry was conducting wage negotiations with the United Mine Work
ers. The basic wage increase agreed upon in May wras 7% percent for
all day and piece-work rates, retroactive to May 1, 1941, and effective
for the 6 months ending October 1; after the latter date and for the
duration of the new contract the increase was to be 10 percent. In
addition, a vacation payment of $20 was granted to each person em
ployed for 1 year or more.
The Journal of Commerce in its issue of June 26, 1941, reported
that these wage increases had been completely offset by more profit
able operations:
Better control over the “ bootleg” coal situation, the trend toward coal burners
in new construction, and an improved price structure are all expected to contribute
to earnings of leading anthracite producers. Price advances and economies due
to larger volume have offset wage increases, so that profit margins are unimpaired.

This reported “better control over the ‘bootleg’ coal situation” was
an important market factor. Bootleg-coal operations, which in
1936-37 accounted for 5 percent of the total output of all legal anthra
cite mined in Pennsylvania,38 had for years disturbed the anthra36 Commonwealth of Pennsylvania, Report of the Anthracite Coal Industry Commission, 1938, pp.
185-196.
37 Coal Age, February 1940, p. 104. (For example, for the week ending February 3,1940, the production
quota was placed at 960,000 tons; for the second week it was reduced to 480,000 tons; and then for the week
ending February 17 it was raised to 720,000 tons, etc. Coal Age, March 1940. p. 67.)
38 Report of the Anthracite Coal Industry Commission, op. cit. p. 43.

Chapter V II.—Fuels

187

cite price structure; this coal “was sold directly by the bootleggers in
competition with legitimate producers and generally at prices below
the market.” 39 The improvement in this situation resulted from the
introduction by the State of Pennsylvania of a plan in March 1941
to reduce and eventually eliminate bootleg mining, the plan providing
that “legitimate” producers could increase their production alloca
tions by 3}i net tons per day for every bootlegger which they put on
their own pay roll.40
The increase in profits resulting from the lessening of bootlegging,
from increased sales, and from the omission of the seasonal discount
was reported to be substantial. According to the Wall Street Journal
of June 30, 1941—
The hard coal industry is closing the most successful second quarter in a number
of years * * * tentative indications are now that the industry as a whole
not only was in the black for the period, as compared with a substantial net loss
in the same period of 1940, but that its earnings showed a contraseasonal gain
over the first quarter of this year.

In July, leading producers announced that they intended to in
troduce the regular seasonal price increases, despite the fact that the
usual seasonal discounts had been omitted. This would maintain
prices at a level 50 cents a ton above those of the previous winter.41
Following this announcement, producers representing most of the
industry were summoned on July 10 to a conference with the Office
of Price Administration and Civilian Supply, at which it was requested
that the advance be withdrawn. The meeting ended in disagreement,
and 2 weeks later the operators announced that they intended to
continue with the proposed increases.42 On its part the Office of
Price Administration and Civilian Supply was reported to be planning
the establishment of a price ceiling if these increases actually were put
into effect. This report was met with statements by the operators—
who were joined in their stand by the United Mine Workers 43—
that the price advances were justified by the wage increase and that
consequently any attempt by the Government to impose a price
ceiling would be “vigorously fought” :
The anthracite producers * * * made it plain that the concessions in
wages and working conditions under the new wage-hour contract governing the
industry merited the increased price schedule and they intended to carry it out.44

The proposed “seasonal” advances were instituted by Pennsylvania
anthracite producers on July 15 and August 15. On September 12,
the Government established a price ceiling which was intended to
block the additional 15 cents per ton increase which the producers had
planned to put into effect on September 15. Administrator Henderson
stated that the operators had failed to supply his office with reports
and statistics necessary to justify the increase, and he added that no
advances would be allowed until the operators produced such in
formation.
The operators nevertheless proceeded with the announced increases.
They maintained that the Administrator “ * * * had, in effect,
39 Wall Street Journal, June 30,1941.
40 Coal Age, March 1941.
41 Wall Street Journal, July 9, 1941.
42 New York Journal of Commerce, August 7,1941.
43 Scranton Tribune, August 16, 1941.
44 Idem, August 22,1941.
547953— 44------13

Wartime Prices—August 1939 to Pearl Harbor

188

ANTHRACITE
AGENTS- PRICES, PRODUCTION. AND STOCKS
AUGUST 1939 »100

A G E N T S’ P R IC E S

INDEX

IN D E X

160

1 6 0

140

CHESTNUT COAL'S.

120

- p e A COAL

100 jE \

A S O N 0 «l F M A M J J A S O N O J F M A M J J A $ 0 NO J F M A M J J A S O N 0 J F M A M J J A S O N O J F M A M J J A $ 0 M'O ’
1939

1 9 4 0

1941

1942

1943

19 4 4

PR O D U C T IO N AN D S T O C K S

IN D EX
180

I NO EX
180

160

140

PRODUCTION

120

<20

100

100
1

P S

r OC K S

8 0

6 0

4 0

20
Senre* U S DEPARTMENT OF COMMERCE.

SURVEY OF CUI?RENT BUSINESS

1. 1.1, I.L.I 1 l-l.-]-l,
■ i ' i ' i i i t ■ t
i ' i i i i i i i i '
11' 11 111 11 11
A S O NO J F I A M J J A SO NO J F M A MJ J A SO N O J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A SO N D '
1939

1940

UBS ^ A DU ^ l l ! o S f | ATgTT,MSEA TSOF LA60R

1941

< 9 4 2

1 9 4 3

<944,

189

Chapter VII.—Fuels

prejudged the situation,” 45 as information had been submitted which,
in their opinion, was adequate to justify a price advance.
On September 18, the Price Administrator revoked the price ceiling,
stating that this action was taken “following the submission of full
and comprehensive data supporting the price advance.” Although
he approved the price advance, he criticized the action of the operators
in violating the price schedule while it had been in effect, stating that
he could not “condemn such arbitrary action too strongly. If
followed by other industries it would threaten the whole basic structure
of price stabilization.”
T a ble

45.—A N T H R A C IT E : Agents’ Prices , Production , and Stocks, August 1939December 1941

[Sources: Prices—U. S. Bureau of Labor Statistics; production and stocks—U. S. Department of Commerce,
Survey of Current Business]
Prices (per ton)
Year and month
Chestnut
Ansmst _
Saptamhar
Ofttober
NnvAmhAr
Dfinp.mhftr

1939

_ _
___ ___

Jamiarv
Ffthmary . __ _ _ __ ___ _ ___
Marnh _
_
__ _____ . . . . . . .
April
May.
JllTIA
July........................................................................
August
...... . . . . . . . . . . . . . . . .
Saptamhar .
. _ ___ ... ____
Oatnhar __
_
_ ......
NnvATnhAr _ _ __ __
DfiAP.mhp.r
19U

Jannarv
Fahrnary
__
Marr»h. . . . . . .
April____________________________
. ..
M ay____________________________________
June.
. _ _ _ _ _
July
_
. „ _ __ _
August__
Saptambar
Ontnhar. _
__ _
_
__
Nbvamhar
_
_
_
nanamhar

Pea

Stocks, end
of month *
(in thou
sands)

Production
(in thou
sands)

Short tons

$8.60
8.65
9.03
9.16
9.16

$7.67
7.70
7.93
7.95
7.97

9.50
9.58
9.58
9.39
9.28
9.33
9.46
9.56
9.64
9.77
9.78
9.80

8.18
8.23
8.21
7.98
7.89
7.98
8.10
8.19
8.26
8.37
8.37
8.38

647
372
128
91
137
506
953
1,164
1,279
1,112,
1,112
939

5,783
3,648
3,881
3,853
4,070
4,492
4,534
3,883
4,172
4,355
3,980
4,834

9.83
9.83
9.81
9.81
9.79
9.81
9.95
10.10
10.25
10.30
10.30
10.29

8.40
8.40
8.40
8.39
8.36
8.41
8.56
8.68
8.83
8.89
8.89
8.89

704
531
331
197
169
205
268
414
708
1,177
1,393
1,237

4:977

1,129
1,172
1,219
1,365
994

3,883
4,840
4,985
3,989
3,914

4,432
4,595
3,198
3,858
4,891
4,681
5,246
5,143
5,380
3,832
4,118

*In producers' storage yards.

At the same time the Office of Price Administration and the coal
producers agreed that no further price increases would be made with
out the prior approval of the Price Administrator. This constituted
in effect an informal price ceiling; no changes took place subsequent to
the agreement.
At the time of Pearl Harbor, in December 1941, the wholesale
price of anthracite was reported at $10.29 per ton for the chestnut size
as compared to $8.60 in August 1939, while the quotation for the:pea
size had risen to $8.89 from the pre-war figure of $7.67 per .ton,, ad
vances of 20 and 16 percent, respectively.
« Wall Street Journal, September 16,1941.

190

Wartime Prices—August 1939 to Pearl Harbor

Bituminous Coal
Between the invasion of Poland and the attack on Pearl Harbor,
bituminous-coal prices were marked by two important upswings, the
first following the establishment of minimum prices by the Bituminous
Coal Division on October 1, 1940, the second following the coal strike
in April 1941. During this period the average wholesale price of pre
pared sizes rose from $4.31 to $4.93 per ton, an increase of 14 percent.
Screenings advanced in about the same proportion, mine-run coal
somewhat less (see table 46).
From the outbreak of the war to October 1940, prices remained
relatively stable, a minor increase in the fall of 1939 being offset by a
roughly corresponding decline in the spring of 1940. Production,
industrial consumption, and stocks of industrial and retail dealers
followed normal seasonal fluctuations.
In the latter part of the summer of 1940, buyers entered the market
for large quantities of coal, but with little effect on prices. This
movement was attributed to reports that minimum prices for the
coal industry would shortly be established by the Bituminous Coal
Division of the Department of the Interior, and that these minimum
prices, as fixed by the Government, would be higher than the prevail
ing quotations. The Journal of Commerce, July 27, 1940, stated
that—
Since current quotations are materially below the minima proposed, a con
siderable advance buying of soft coal is likely during August. Prevailing prices
are about 30 cents below the legal minima for low volatile, and 50 to 75 cents a
ton lower for higher volatile coal.

On October 1, 1940, minimum prices became effective under the
provisions of the Bituminous Coal Act. There was an immediate in
crease in coal quotations from the mine to the dealer, prepared sizes
rising from $4.35 in September to $4.60 in October, mine run from
$4.28 to $4.38, and screenings from $3.45 to $3.53. In addition, the
minimum prices reduced the differentials formerly existing between
high-grade and low-grade coals and thus induced a more widespread
purchase of the higher-priced grades:
With the minimum prices on bituminous coal only 4 days old, already there has
been one effect noted: a shift in demand to the higher grades both of mine run and
nut and slack * * *. Coals w^hich are now required to sell at $2.25 net tons
mines, for example, under distress conditions of accumulation, have often been
disposed of well under $2. Now that the difference between the top and the me
dium or lower grades is established by law at only 20 to 30 cents, dealers have
noted a tendency already for buyers to call for the better types.46

In the winter and early spring of 1941, coal prices remained rela
tively stable despite large-scale purchases of buyers who were stocking
up in anticipation of possible disagreement in the pending wage
negotiations. By March, stocks were reported to be at the highest
levels in 4 years.47
The negotiations failed to achieve agreement and on April 1, at the
expiration of the old wage contracts, miners in both northern and
southern mines went on strike and did not return to work until April
29-30. During this period, both. production and stocks fell pre
cipitously, the former from 48 million tons in March to 6 million in
April, and the latter from 51 million to 36 million tons (see table 46).
46 American Metal Market, October 5,1940.
47 Daily Metal Trade, March 11,1941.

191

Chapter V II.—Fuels

T a b l e 46.—B IT U M IN O U S COAL: Prices , Production , Consumption , an d Stocks,

August 1939-December 1941
[Sources: Prices—U. S. Bureau of Labor Statistics; consumption, production, and stocks—U. S. Department
of Commerce, Survey of Current Business]
Prices per ton
Year and month

Industrial
consump
tion
Mine
run

Prepared
sizes

Produc
tion

Stocks (in
dustrial
and retail
dealers),
end of
month

Screen
ings

Thousands of tons
1939

August................ .
September................
October....................
November................
December................
1940

January....................
February.............. .
M arch.....................
April_______ -------May..........................
June.........................
Ju ly.— , ..................
August......... ...........
September.......... .
October.................. .
November............ .
December............. .
1941

January................ .
February.................
March______ _____
April...... ..................
May..........................
June.........................
July..........................
August.....................
September................
October..... ........... .
November................
December.................

$4.25
4.27
4.33
4.33
4.32

$4.31
4.36
4.44
4.43
4.40

$3.43
3.43
3.48
3.48
3.48

23,437
24,980
29,519
30,243
31,031

35,016
38,465
46,394
43,301
38,066

33,624
36,943
41,919
45,542
44,571

4.32
4.32
4.30
4.28
4.27
4.26
4.25
4.26
4.28
4.38
4.37
4.37

4.43
4.46
4.40
4.30
4.23
4.23
4.28
4.31
4.35
4.60
4.62
4.62

3.50
3.48
3.44
3.43
3.43
3.42
3.42
3.44
3.45
3.53
3.54
3.54

33,183
28,780
28,538
26,072
25,741
24,988
25,877
27,079
26,783
30,333
30,961
32,637

44,976
39,277
35,244
32,790
34,896
32,400
35,890
39,010
38,650
38,700
40,012
41,400

40,222
39,077
35,108
35,721
39,203
41,563
45,438
48, 111
51,122
51,564
51,872
50,998

4.37
4.37
4.37
4.38
4.55
4.58
4.63
4.67
4.69
4.70
4.71
4.70

4.63
4.63
4.63
4.54
4.63
4.67
4.75
4.85
4.91
4.92
4.93
4.93

3.54
3.54
3.54
3.56
3.69
3.75
3.81
3.86
3.92
3.93
3.93
3.92

33,588
31,161
34,041
29,023
31,199
30,881
31,510
32,400
31,928
34,978
34,555
37,192

44,070
41,695
47,996
5,975
43,400
42,774
43,300
45,650
46,880
49,800
43,770
46,667

48,702
48,518
50,690
35,971
37,483
42,929
47,051
52,801
56,994
61,401
61,763
62,737

. To prevent prices from soaring during the strike, the Price Admin
istrator on April 2 issued a ceiling order for bituminous coal. Prices
were frozen as of March 28 for the duration of the coal strike, the
ceiling being revoked on May 1.
Although the market was thus stabilized during the strike, it was
widely reported that if a settlement allowing a $l-a-day wage increase
were accepted, prices would advance:
An increase of 20 to 25 cents a ton in soft-coal prices was predicted by operators
yesterday as the Joint Appalachian Conference * * * was moving forward
in its efforts to reach an agreement on the basis of a flat wage increase of $1 a day
for 450,000 miners in the Appalachian and outlying districts.48

These predictions were confirmed by Howard A.. Gray, Director of
the Bituminous Coal Division, who, on April 18, disclosed that “the
Bituminous Coal Division would raise and coordinate minimum prices
to protect all producers, North and South, against hardships resulting
from wage increases/' He further added that hearings would be
called to revise the price structure set October 1, and stated that “any
general increase in costs would be followed by a general upward
revision of prices."49
48New York Times, April 9,1941.
49Journal of Commerce, April 19,1941*

192

Wartime Prices—August 1939 to Pearl Harbor

Five days later, however, the Bituminous Coal Division published
statistical data which indicated that the average cost of producing
coal for all districts combined had dropped 18.8 cents or 9 percent
between 1936-37 and 1940. This decline, from $2.09 a ton in 1936-37
to $1.90 in 1940, was attributed primarily to the growth of mechanical
loading and to the increase in sales. It was especially significant,
because the prices established by the Division in 1940 had been set as
closely as possible to the $2.09 figure. In accordance with the pro
visions of the Bituminous Coal Act, the minimum prices, as established
in 1940, yielded the coal industry an estimated minimum income
averaging $2.07 per ton, which was as near to the average cost of
$2.09 per ton during the base period as the income could be brought
and still reflect the other requirements contained in the act.
As a consequence of this 19-cent decrease in costs between the base
period and 1940, Secretary Ickes announced on April 23 that hearings
would be held within a short time to determine whether the minimum
prices should be reduced in accordance with the decline in cost.50
However, no immediate action was taken on this program.
The effect of the wage agreement reached between the operators
and the union on costs and prices was analyzed in a study published
by the Bureau of Labor Statistics.51 In this report it was found that
the increases in cost resulting from the wage agreement were little
more than the decreases which had taken place between 1936-37 and
1940; in other words, “average costs by minimum-price area after the
1941 wage changes are not greatly in excess of average costs in the
price-base period.” In summarizing the cost change in the Appalach
ian fields (minimum price area 1), which produces more than 70 per
cent of the country's bituminous coal, the report stated:
On the basis of the estimated increases in wages paid per ton after the 1941
wage changes, and assuming no other changes in costs from the 1940 averages,
the cost per ton in minimum-price area 1, after the 1941 wage changes, is 4.47
cents greater than in the price-base period.

The actual increase in prices which occurred after the end of the
strike considerably exceeded this estimate of the rise in costs. Be
tween April and August 1941 the average price of prepared sizes and
mine run advanced 31 cents, and screenings rose 30 cents. The
upward movement was sharpest immediately after the end of the
strike and again upon the acceptance on June 5 of the report of the
National Defense Mediation Board, recommending the elimination
©f the wage differential between northern and southern mines.
Thus, in the Boston area leading shippers during May advanced
their prices 30 to 40 cents per net ton, “as a result of the wage conces
sions to the United Mine Workers.” 52 Then in July, prices in the
area were increased 15 to 25 cents per ton, an advance, which, re
portedly was “the result of the operators’ final surrender to the
U. M. W. demands in the southern fields.” 53
Similarly in the Pittsburgh area, prices were increased both after
the strike and after the elimination of the wage differential. In June,
advances in bituminous-coal prices, following the wage boost of
$1 a day, were placed in effect: Central Pennsylvania, 30 cents
m Journal of Commerce, April 24,1941.
8i1 Wage and Price Structure of the Bituminous-Coal Industry by Witt Bowden. .(Monthly Labor
Bhview, August 1941).
» American Metal Market, May 9, 1941.
« Idem, July 23, 1941.

193

Chapter V II.—Fuels

,BITUMINOUS COAL

AGENTS’ PRICES, PRODUCTION, CONSUMPTION,
AND STOCKS
AUGUST 1939 « 100

IN D EX

A G E N T S* P R IC E S

160

140

120

120
SCR E E N I N G S - ^ y jM *

RUN

100

100
^ P R E P A R i EO S I Z E S

■1 1.J-I.

i i .1 i l .i t i ■■ i i Jt.

1939

i » ««»»«««« «

l J .l 1 .1.1 M i l l

1941

1940

1942

1943

l .1 i -.1-1 i i l, i i l .

1944

TONS

PRO D UCTIO N , C O N SU M P T IO N A N D S T O C K S

MILLIONS

100

MILLIONS

100

stocks-2

^=>

-"^ S

nij u s t r ia l

co nsum p

TlON

20
PRODUCTK N'-'JI

Soi/rei: U S OCPANTMCNT OF COMMENCE.
SURVEY OF CURRENT BUSINESS
‘ 1 111 1
1 ■ 1- L I . L-J-l 1„,l J i l l
JA SO N O JFM A M J JA S O H O JF M A M J JA S O N D JF M A M J JASONO '

■■ «

l SO N 0 J F M

1939

1940

UNITED STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS_________

1941

1942

1943

1944

194

Wartime Prices—August 1939 to Pearl Harbor

a ton; Western Pennsylvania, 25 cents, etc.64* In July, the prices were
again increased, quotations on domestic sizes advancing 15 to 25
cents a ton.66
These increases were held to be unjustified by the Office of Bitu
minous Coal Consumed Counsel. On May 11, the Acting Director
of that agency stated:
In the past week bituminous-coal consumers have reported that prices quoted
on bituminous coal were from 15 to 35 cents a tbn above minimum mine prices
fixed under the Coal Act * * * it would seem obvious that most, and in
some producing districts all, of the increase in labor cost required in the produc
tion of coal can be met out of present minimum prices.56

Following this announcement, the Consumers’ Counsel moved to
establish a ceiling over coal prices. On July 24, it petitioned the
Bituminous Coal Division to establish maximum prices at approxi
mately 10 percent above the existing minimum prices.67
Three weeks later the Bituminous Coal Division announced that
hearings would be held, beginning September 9, to determine whether
or not it should exercise its legal power to establish maximum prices,
the Consumers’ Counsel “charging that consumers are being seriously
injured by excessive and oppressive coal prices in many markets,
which, in many instances, approach the proportions of profiteering.” 68
During the course of the hearings, the Consumers’ Counsel amended
its petition, which originally had called for the establishment of maxi
mum prices 10 percent above the minimum prices, to a request that the
ceiling prices be set at levels 20 percent above the established costs.69
The arguments presented by the Consumers’ Counsel were, how
ever, regarded as inconclusive by the Bituminous Coal Division; the
Director of the Division held that the Consumers’ Counsel had failed
to prove that “maximum prices are necessary because the coal in
dustry is charging ‘excessive and oppressive’ prices.” 60
In the remaining months of the year, bituminous-coal prices moved
slightly higher. The 4-day captive mine strike at the end of October
brought some strengthening of price, but this resulted more from
anticipated shortages than from any actual lack of supply.61 Sim
ilarly, the 2-week renewal of the stoppage in November caused produc
tion to fall somewhat, but by the end of the month stocks in the hands
of industrial and retail dealers were at the record level of 62,000,000
tons, in spite of the fact that industrial consumption was 47 percent
higher than it had been in August 1939.
84 American Metal Market, June 5,1941.
85 Idem, July 25, 1941.
86 Journal of Commerce, May 12,1941.
87 Wall Street Journal, July 24, 1941.
88 Journal of Commerce, August 15,1941. This charge was later withdrawn during the time of the hearing.
89 Idem, September 6,1941.
80 Idem, October 6,1941.
81 American Metal Market, November 6,1941.

Chapter VIII.— Metals and Metal Products
Summary
In the light of their strategic position in a war economy, prices of
metals and metal products as a group remained fairly stable during
the Defense Period. The average increase between August 1939 and
December 1941, as measured by the Bureau of Labor Statistics index,
was only 11 percent, considerably less than the average advance for
all other commodities and only a fraction of the advance in prices of
metals and metal products during a comparable period in World War
I. For several reasons discussed later in this chapter, actual price
increases for this group of commodities are not fully reflected in the
Bureau’s index,1but on the average the difference does not appear to be
so large as to alter the general conclusion drawn in this discussion.
Sharp price increases were confined mainly to zinc, some of the
minor metals, and scrap metals of all kinds. Iron and steel prices rose
moderately. The average advance for all major nonferrous metals
between August 1939 and December 1941 was 14 percent. Prices of
agricultural implements increased only 3 percent; plumbing and heat
ing equipment,1212 percent; motor vehicles, 21% percent (see table 47.)
Understatement of price advances in the Bureau’s index of metals
and metal products arises mainly from the nature of price changes in
the iron and steel industry. The Bureau’s average price for iron and
steel rose only 2 percent, but this average was computed almost en
tirely from published “base” prices. Particularly in the early months
of the Defense Period, price increases in the steel industry were
primarily indirect in form. That is, while published base prices
generally remained unchanged or rose only slightly, “concessions” and
deductions formerly allowed to purchasers were in many cases with
drawn, thereby increasing actual costs.3 A special study by the Bureau
of Labor Statistics shows that net-price increases to consumers,
including concessions, deductions, and extras, ranged from 0.5 to
15 percent between the third quarter of 1939 and mid-1941.
These price advances for steel occurred in conjunction with the
progressive development of a serious supply shortage as the National
Defense Program expanded. In April 1941, maximum prices were
established by the Office of Price Administration and Civilian Supply,
and this order placed limits upon and materially reduced the extent
of the indirect price increases which occurred thereafter during the
Defense Period.
Markets for nonferrous metals were likewise affected by the rapid
rise of demand to levels well above immediately available supply.
Nevertheless, except for zinc, price advances were effectively limited
by the prompt establishment of Government controls and the co
1 The chief reason is the fact that the greater part of the price advance for steel-mill products during Defense
Period occurred in indirect form (see pp. 206-211). Such increases are not reflected in the published
base prices for steel carried in the Bureau’s wholesale price index.
In addition, the index does not include quotations for nonferrous scrap and certain imported ores, prices
of which rose sharply during the Defense Period. However, prices of certain other products not in the
index, such as industrial machinery, rose less than the average for all metals and metal products.
Unfortunately, available data are not sufficient for an accurate estimate of the amount by which the index
understates the true extent of the price increase for this group.
2Prices of plumbing and heating equipment are discussed in Chapter IX —Building materials (see p. 263).
* For details see discussion on iron and steel (p. 199).

195

196

Wartime Prices—August 1939 to Pearl Harbor

operation received from many producers. Average increases between
August 1939 and December 1941 amounted to 7 percent for tin, 18
percent for lead, 20 percent for copper, and 70 percent for zinc. The
price of aluminum departed from the general trend and declined 25
percent.
T able 47.—M E T A L S A N D M E T A L PRODUCTS: Wholesale Prices, August 1939-

December 1941
[Source: U. S. Bureau of Labor Statistics]
Indexes (August 1939=100) of —
Year and month

19S9

Alienist _
September
October _
November__________________________
December
, _

Januarv
February___________________________
March______________________________
April_______________________________
May .
June_______________________________
July.................. .............................................
August____________________________—
September................„ .................................
October_____________ _______________
November__________________________
December
__ __
___ _
1941

Januarv
February___________________________
March______________________________
April...............................................................
May
..........
June________________________________
July................................................................
August_____________________________
September__________________________
October_____________________________
November
December
.......

All
metals Agricul
tural
and
imple
metal
ments
products

Iron
and
steel

Motor
vehicles

Nonferrous
metals

Plumb
ing and
heating

100.0
101.7
102.8
103.0
103.0

100.0
100.0
99.9
99.8
99.8

100.0
100.4
100.9
100.9
101.1

100.0
99.6
101.5
102.4
102.4

100.0
113.5
114.3
114.1
113.4

100.0
100.0
100.0
100.0
100.0

102.8
102.3
102.5
101.4
101.4
101.6
102.0
101.8
102.4
104.4
104.7
104.7

99.9
99.9
99.9
100.0
98.9
98.9
98.8
98.7
98.8
98.9
99.0
99.0

101.3
101.3
101.4
99.2
99.1
99.2
99.5
99.7
99.8
99.8
100.2
100.3

102.4
102.4
102.5
102.5
102.5
102.5
103.4
103.4
103.9
108.2
108.4
108.4

110.7
106.2
106.8
106.2
107.6
108.8
108.3
106.0
108.2
112.1
112.5
111.8

100.0
99.7
102.1
102.0
101.6
101.5
101.5
101.5
101.5
101.5
101.5
101.5

104.8
104.7
104.8
105.0
105.3
105.5
105.7
105.8
105.8
110.6
110.8
110.8

99.1
99.3
99.1
98.7 .
98.8
98.8
98.9
99.4
99.9
100.3
103.0
103.1

100.6
100.4
100.6
100.8
101.1
101.5
101.8
101.9
101.9
102.0
102.1
102.0

108.4
107.9
107.9
108.2
108.3
108.4
108.5
108.5
108.5
121.4
121.4
121.5

112.1
112.6
113.0
113.0
113.1
113.3
113.5
113.1
113.1
113.4
113.7
113.7

101.5
103.7
104.4
104.7
104.7
104.8
104.9
109.5
109.8
110.7
110.8
112.4

Except for aluminum, nonferrous metal prices shared in the specula
tive rise which occurred as soon as the war broke out in Europe, eased
in the early months of 1940, and then turned up again as the pressure
upon supplies intensified in the latter part of that year and throughout
1941. Beginning in September 1940, however, numerous Govern
ment orders controlling supply and price halted or retarded the price
advance. Initially, informal price regulations were issued, later
replaced by formal schedules. Priority control was established for
all major metals.
In the case of zinc, the price increase between August 1939 and
December 1941 was much greater than that for the other major metals,
in part because of a serious bottleneck in smelting and refining capacity
and later because of the need for working high-cost mines.
On the other hand, sharp price increases were general for scrap
metals of all types and were a direct result of the general shortage*

Chapter V III.—Metals and Metal Products

197

prevailing for primary metals.4 The large number of small firms
engaged in collecting and assorting scrap made control of supply
and price difficult. The need for greater supplies involved certain
higher costs of collecting and processing. The strong sellers’ market
made a broad expansion of profit margins simple. Thus, between
August 1939 and their peaks in March 1941, prices of aluminum scrap
rose as much as 112 percent; zinc scrap, 126 to 140 percent; and
copper and brass scrap, 16 to 44 percent. The price of heavy melting
scrap steel increased 43 percent. By December 1941, maximum
prices had been established on virtually all scrap metal, and in many
cases the ceilings fixed were substantially below the peaks reached in
earlier months. Meanwhile, although evasion of price schedules was
widely reported in scrap markets in certain periods, such reports
had become relatively infrequent by the time of the attack on Pearl
Harbor.
There were also substantial price increases for certain less important
metals, and these were especially sharp for those obtained in whole
or in part from abroad. The price of quicksilver, for example, rose
148 percent between August 1939 and December 1941; the price of
chrome ore rose 149 percent, and iridium, 169 percent. Since these
metals have particular uses essential to the war effort, their supply
was of great concern and higher prices were in some part required to
meet greater costs of transportation or to increase domestic production.
On the other hand, markets for some metals such as iridium were at
times highly speculative.5
The price increases for motor vehicles, which averaged slightly
more than 21 percent over the Defense Period, came at the beginning
of each of the three “ model years,” 1940, 1941, and 1942. The last
of these advances was effected in the face of strenuous opposition from
the Office of Price Administration. However, by the latter part of
the Defense Period, output had been curtailed sharply because of the
shortage of materials, on order of the Office of Production Manage
ment.
As previously indicated, the reasons underlying the generally
moderate price advances for metals and metal products varied. In
virtually all cases there were higher direct costs of production. Unit
labor costs between 1939 and 1941 rose from 11 to 12 percent in steel
works and rolling mills, in blast furnaces, and in nonferrous primary
smelters and refineries.6 For imported products such as chrome ore
and tin, there were higher costs of transportation. For commodities
such as quicksilver and zinc, there were the added expenses of operat
ing mines formerly considered too costly to work in order to expand
production. New facilities of many types were constructed to meet
the growing demands of military preparation.
On the other hand, greater utilization of existing productive capacity
reduced overhead costs substantially, and in combination with price
increases, tended to expand profit margins. Partly because of this,*
<There is an important difference, however, in the relationship between scrap and primary metal in the
case of steel and in the case of nonferrous metals. Steel scrap is used as a raw material in new steel produc
tion, but nonferrous scrap is often melted and used as such, as a substitute for (or interchangeably with)
virgin metal for many purposes.
* In 1 month in late 1940 the price of iridium more than doubled, rising from $163 to $360 per troy ounce.
Following this rise the Price Stabilization Division of the National Defense Advisory Commission warned
traders in iridium against speculative activity, and shortly thereafter the price declined to $190. (See OPA
First Quarterly Report, 1942, p. 148.)
• Productivity and Unit Labor Cost in Selected Manufacturing Industries, 1919-40. Supplement 1941.
(U. S. Bureau of Labor Statistics, mimeographed report.)

198

Wartime Prices—August 1939 to Pearl Harbor

METALS AND METAL PRODUCTS
WHOLESALE PRICES
AUGUST 1939 * 100

INDEX

140

135

130

125

f° °

120

% ^ i HOTOR VEHICLES

!
i
%
;

115

1
1

110

115

NONFERROUS ME TALS

1
1

i s '

l
?

110
J i l

n
I r

f I a l L METALS AND
| K ME:t a l p r o d u c t s

VI
1

105

p l u m IBING

105

ANO HEAT INI

1 / 0

'IRON AND STEEL
j

100

L
^AGRIC1
U LTURAL 1MPLEMENTS

9 5

9 0

„U, U.L..I l.l l„l’l,

1,1 l. .1,1 i 1,1 1 l.l

1 9 4 0

1941

J A S 0 ND J

1939

» 1 1 1 1 1 1 1 1 1 1 -L.l -l. 1.1 ! 1 1 1 1 1 -L -U J L L l.U 1 1,1...

JA S0N0 9 0

ASOKD JFM AM J J AS 0 N 0 J
1 9 4 2

1943

1 9 4 4

Chapter V III.—Metals and Metal Products

199

but also because of a much greater volume of business, profits in the
industries producing metals and metal products rose on a broad scale.7
Of all commodity groups, metals and metal products present the
most striking contrast in the behavior of prices in this war and in
World War I. Prices of. all metals and metal products from July
1914 to November 1916 (equivalent to a period from August 1939 to
December 1941) rose 54 percent; of iron and steel, 103 percent; and
of nonferrous metals, 114 percent. These sharp advances occurred in
response to a flood of orders from belligerents, especially in 1916.
The difference between the two periods is mainly attributable to the
timing and scope of Government price control. Price controls in
World War I were not established until sometime after the United
States actively entered the war, and there was little effective public
pressure upon producing corporations to limit price increases during the
earlier period. In the current war, the pressure of publicity and public
opinion became effective soon after establishment of the National
Defense Advisory Commission in May 1940, and was promptly supplemented by direct controls for leading metals early in 1941.
Iron and Steel
IRON ORE

In contrast to the trend for most products, prices of iron ore were
somewhat lower in December 1941 than they had been in August 1939.
Two successive price reductions in the spring of 1940 lowered prices on
the average by about 10 percent; these quotations were maintained
throughout the remainder of the Defense Period, despite the fact that
stocks of ore fell to very low levels early in 1941.
In April 1940, the price of nonbessemer Mesabi iron ore f.o.b. lower
Lakes ports was reduced from $4.95 per gross ton to $4.75; in May the
quotation was further lowered to $4.45 (see table 48). Prices of
bessemer ore, which ordinarily commands a differential of 15 cents per
ton above nonbessemer, were reduced correspondingly. At the same
time the United States Steel Corporation, reversing an established
policy, placed some of its ore upon the market, selling a large quantity
to a leading automobile concern.
As the defense program gathered momentum in the early fall of
1940, it became apparent that there was danger of a serious shortage
in the early months of 1941. Steel operations were increasing rapidly
* Percentage increases in profits before and after taxes and in the dollar volume of sales between 1939 and
1941 for various metals and metal products industries were as follows. (Office of Price Administration,
War Profits Studies Number I—Profits of 1763 Large Industrial Corporations, 1939-41.)

Percent of increase, 1939 to 1941
Industry

Profits—
Before
taxes

Iron and steel_____________________________________________
Nnnfcrrnns mining and products
Agricultural machinery.._______________ „___________________
Railway equipment______ _________________________________
Automobiles and accessories_____ :__________ ________________

345.2
128.5
292.3
422.9
155.4

After
taxes
148.2
62.1
199.4
247.1
40.2

Net
sales

95.3
54.1
72.8
146.9
85.5

200

Wartime Prices—August 1939 to Pearl Harbor

and only a limited amount of ore could be shipped during the remainder
of the 1940 shipping season before ice closed the Lakes shippingroutes.8
By March 1941, scarcities developed in some special grades of ore,
and resort became necessary to years-old accretions of ores at various
lower Lakes ports.9
To relieve the situation, ice breakers were put to work on the Soo
Canal during March and ore shipments were resumed on the first
of April, about 2 weeks ahead of the usual schedule. Eighty million
tons of ore were moved during 1941, nearly 15 million tons above the
previous all-time record. As a result, stocks at furnaces and Lake
Erie docks by December 1 reached the record level of 45,500,000 tons.10
PIG IRON

Immediately upon the outbreak of the war, prices of all the impor
tant types of pig iron rose; the increase in the composite price of 5
types during September and October amounted to about 10 percent.
During the following 12 months, pig-iron prices remained generally
stable. The decline in demand during the spring of 1940, and lower
prices for steel scrap, brought no corresponding drop in pig-iron quota
tions.
The first effect upon pig-iron prices of the increase in steel operations
resulting from the defense program was felt early in October 1940.
One large producer raised his quotations by amounts ranging from
$1.50 to $2 per ton, but this increase was not followed by the United
States Steel Corporation and was not accepted by the industry. At
the same time, the National Defense Advisory Commission called
conferences with pig-iron producers in an attempt to head off a general
price rise. I t was announced that the Commission had made a survey
of pig-iron costs and prices, and that, in the view of the Commission,
the “demand outlook for pig iron does not now justify price in
creases.” *11
Two months later, however, trade journals reported that increases
would probably be announced for the first quarter of 1941. This
reflected the sharp upturn in steel production during the last half of
1940 which had, by the end of the year, brought most of the Nation’s
pig-iron producing facilities into operation. The December 12, 1940,
issue of Iron Age reported that 201 furnaces were active, leaving not
more than 22 idle furnaces; many of the latter were reported to be in
need of extensive repairs, while others were very old and of small
capacity.12
The first actual advance in price in December was announced on the
11th by a midwestern producer, who increased his price for the first
quarter of 1941 by $1 per ton. This increase was generally adopted
by the entire industry for the same period, although in the South it
did not go into effect for several months.
The advance brought pig-iron prices for most grades to about $3
above pre-war levels. Between August 1939 and March 1941, basic
pig iron had risen from $20.50 per gross ton to $23.50; foundry
No. 2 northern, from $22.89 to $25.89; malleable valley, from $21 to
* Iron Age, September 12,1940.
• Daily Metal Trade, March 21,1941.
i° American Metal Market, December 27, 1941.
11Wall Street Journal, October 28, 1940.
» Idem, June 2,1941.

Chapter V III.—Metals and Metal Products

201

$24. In addition, the delayed increase in the South had, by April
1941, brought foundry No. 2 southern to $20 per gross ton as compared
with $17 in August 1939. The Bureau of Labor Statistics composite
price of pig iron by April was almost 15 percent above the pre-war
figure, at which level it remained throughout the remainder of the
Defense Period.
In the spring of 1941 an acute shortage of pig iron developed. This
was aggravated in May by the coal strike which decreased the supply
of coke and caused a number of furnaces to shut down. Even after
settlement of the strike, the shortage continued. Trade journals,
in the early summer, stated that pig-iron capacity was “admittedly
less than required.” 12 At the same time, they carried rumors of a
further price increase.13
On June 24, the Office of Price Administration and Civilian Supply
established ceiling prices for pig iron in an order which froze quota
tions at the existing levels. According to the Price Administrator, the
shortage of pig iron (which was later estimated to be approximately
5 million tons for the year 14) and the wage increases recently granted
by the industry, “have been exerting pressure upon the price structure,
causing the prices of certain grades and kinds of pig iron to be in
creased.”
In addition to the advance in published prices, there were also some
indirect increases resulting from the charging of premiums. Thus, a
month before pig-iron prices were fixed, the magazine Steel (May
19, 1941) stated, “in occasional instances tonnage has been booked at
premium prices from customers unable to obtain sufficient supplies
from nearby producing points.” In some cases, pig-iron buyers were
required to pay freight charges normally absorbed by the producers.
The May 5,1941, issue of Steel reported that “some Midwest pig-iron
producers are now selling f.o.b. furnace into outside districts, refusing
hereafter to absorb freight.”
The price ceiling established in June prevented further advances in
the base price of pig iron and also prohibited the charging of premiums
or other changes in terms of sale which would result m higher costs to
the buyer.15 The order specifically stipulated that “the price limita
tions set forth in this Price Schedule shall not be evaded by * * *
direct or indirect methods.”
The pig-iron supply situation remained so tight, however, that even
after the ceiling was established various attempts were made to obtain
higher prices by passing freight charges on to the buyer.16 The Office
of Price Administration on occasion allowed such changes where the
producer was selling in an area in which he had not previously operated
and where such sales would otherwise have necessitated heavy freight
absorption. However, the amount of tonnage affected was negligible.
As the Defense Period came to a close, there appeared to be an
acute shortage of supply. Although production in 1941 totaled
.55,900,000 tons, a gain of 18 percent over the previous record year of
1929, the sustained high rate of steel operations continued to strain the
i* W all S treet Journal, Jun e 2,1941.
18 A m erican M etal M ark et, Ju n e 5,1941.
14 Journal of Com m erce, A u gu st 2,1941.
18 In effect, th e ceiling froze th e delivered price since th e “governing basing p o in t” w a s defined as “ th a t
’‘basing p oin t th e u se of w hich results in th e low est delivered price a t tb e place of delivery * *
”
18 For exam ple, certain producers in T oledo, selling in th e C incinn ati area, planned in D ecem b er to qu ote
prices f.o.b. p oin t of origin instead of a t th e custom ary basing p oin t, H am ilton , Ohio, w hich w ould thereby
increase th e delivered price at C incinn ati b y $1.80 per ton w h en purchased from T oledo. (Journal of C om
m erce, N ovem b er 17,1941.) T h is particular advan ce w as perm itted.

202

Wartime Prices—August 1939 to Pearl Harbor

216 blast furnaces in operation. The pig-iron shortage for 1942 was
estimated in November by the Office of Production Management at
6,400,000 tons,17 a situation whose gravity would increase if the steelscrap market became tighter.
T a b l e 4 8 . —IRON: Wholesale Prices, August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]

Year and month

Pig iron: Wholesale
Iron ore: Wholesale
price per gross ton
price per gross ton
All
types:
Foundry
Price
No. 2
index7
Malle
Bes
(August
Basic, northern,
able
Nonbesgross
ton
gross
ton, valley,
semer 2 semer2
1939=100)
Pitts gross ton
burgh

1989

August.................. ............................... ........
September....... ..........................................
October— ..................- .............................
November...................................................
December......................................................
1940

January.................. ................................. .
F ebruary........................... — ____ _____
March................... .......................... ............
April......................................................... .
May....................................................... ........
June............ ............................. ........ ...........
July.................................................... ...........
August.........................................................
September....... .............................................
October........... ................... ........................
November.....................................................
December......................................................
1941

January________________________ ____
February..................... ..................................
March....................................................... .
April........ ....................... .............................
M ay............. ....................... ........................
June............................................................
J u ly............................... ..............................
August...........................................................
September....................................................
October....... ............................ .....................
November........................................... ..........
December......................... ........................

100.0
104.9
109.8
109.8
109.8

$20.50
21.50
22.50
22.50
22.50

$22.89
23.89
24.89
24.89
24.89

$21.00
22.00
23.00
23.00
23.00

$5.10
5.10
5.10
5.10
5.10

$4.95
4.95
4.95
4.95
4.95

109.8
109.8
109.8
109.8
109.8
109.8
109.8
109.8
109.8
109.8
109.8
111.4

22.50
22.50
22.50
22.50
22.50
22.50
22.50
22.50
22.50
22.50
22.50
22.90

24.89
24.89
24.89
24.89
24.89
24.89
24.89
24.89
24.89
24.89
24.89
25.29

23.00
23.00
23.00
23.00
23.00
23.00
23.00
23.00
23.00
23.00
23.00
23.40

5.10
5.10
5.10
4.90
4.60
4.60
4.60
4.60
4.60
4.60
4.60
4.60

4.95
4.95
4.95
4.75
4.45
4.45
4.45
4.45
4.45
4.45
4.45
4.45

113.5
113.5
114.1
114.7
114.7
114.7
114.7
114.7
114.7
114.7
114.7
114.7

23.50
23.50
23.50
23.50
23.50
23.50
23.50
23.50
23.50
23.50
23.50
23.50

25.89
25.89
25.89
25.89
25.89
25.89
25.89
25.89
25.89
25.89
25.89
25.89

24.00
24.00
24.00
24.00
24.00
24.00
24.00
24.00
24.00
24.00
24.00
24.00

4.60
4.60
4.60
4.60
4.60
4.60
4.60
4.60
4.60
4.60
4.60
4.60

4.45
4.45
4.45
4.45
4.45
4.45
4.45
4.45
4.45
4.45
4.45
4.45

1 Includes five series.
2 Iron ore, Mesabi, lower Lakes ports.
SCRAP STEEL

The price of steel scrap rose rapidly after the outbreak of war and
again in the fall of 1940; the total increase for representative grades
between August 1939 and December 1941 approximated 20 to 35
percent. Because of the critical importance of steel scrap to the
economy, this advance constituted one of the most urgent and most
difficult problems of Government price control during the period from
the initiation of the defense program in June 1940 to the attack on
Pearl Harbor in December 1941.
In the first 2 months after the war began in Europe, prices of steel
scrap advanced sharply, the heavy melting price published by the
Bureau of Labor Statistics rising from $13.88 per ton in August 1939
to $19.05 in October.18 Prices then dropped during the last 2 months
of the year, partly because it appeared doubtful that the British would
17 Journal of Commerce, November 17,1941.
18 Per gross ton, bulk, f.o.b. Chicago.

Chapter V III.—Metals and Metal Products

203

be able to provide enough ships to transport the reportedly enormous
tonnages which they had bought in this country.19
During the early months of 1940 steel-scrap prices showed little
change. However, although the price of scrap ordinarily varies
directly with the rate of steel operations, a material decline in this rate
during the first half of 1940 was not accompanied by any drop in scrap
prices.
Following the beginning of the defense program in June 1940, and
the rapid expansion in steel operations which ensued, scrap prices
advanced steadily, heavy melting rising from $18.03 per gross ton in
August to $20.60 in December.20 On October 8, 1940, the Price
Commissioner called a meeting of steel producers and scrap dealers to
discuss this increase in scrap prices. “On the eve of the conference,”
according to the Wall Street Journal of October 8,1940, “the attitude
of officials was that nothing in the supply-demand situation justifies the
recent sharp rise in scrap prices, particularly the ‘jumpy’ way in which
the prices have moved.”
Although it was reported that producers had agreed to cooperate
“in preventing wide fluctuations in scrap prices,” 21 the meeting dis
closed considerable difference of opinion concerning what was to be
regarded as a “desirable” price. It was contended by some that the
suggested prices were not high enough to attract sufficient scrap in view
of the high rate of steel operation and by others that uncontrolled
rising prices would aggravate the shortage by encouraging hoarding.22
The latter group also asserted that prices higher than those then pre
vailing for scrap would threaten the stability of steel prices and that
the cost increases would fall chiefly on small steel producers.
These producers, through the chairman of their organization, the
Independent Steel Producers, stated their position in the following
terms:
Rising scrap prices would lift the cost of steel production and enormously
complicate the problem of avoiding the spiralling of prices. Certainly it would be
a great blow to the small nonintegrated steel producer now engaged in defense
work. I see no justification for any sharp advance in scrap prices.23

In the meantime the price of scrap continued to rise from the date
of the first conference in October to the end of the year. At the begin
ning of 1941, on January 10, Price Commissioner Henderson, address
ing the Scrap Iron and Steel Institute, stated that these increases were
not justifiable and called for immediate price reductions.24 At the
same time, the National Defense Advisory Commission issued a
statement calling for a reduction of approximately $3 a ton. Within
a few days after this warning, scrap quotations at principal centers
were reported to be $0.50 to $2.00 a ton lower on a majority of grades.25
The Government also took steps to obtain the cooperation of leading
railroads, the largest single source of scrap, in limiting the prices
charged for their scrap. Thus No. 1 heavy melting (a railroad grade)
was restricted to $21 per gross ton, Pittsburgh, a reduction of $1 per
ton from the January price.
19 Journal of Commerce, November 30,1939.
99 Institute of Scrap Iron and Steel Yearbook, 1940, p. 3.
21 New York Times, October 11,1940.
22 During the early part of the 1940 increase, for example, it was reported that “gatherers and dealers, as
well as producers of scrap, such as the automobile manufacturers, are holding back supplies in expectation of
higher prices. This practice tends to hasten the rise.” (Journal of Commerce, September 18, 1940.)
23 Journal of Commerce, December 7,1940.
24 American Metal Market, January 10,1941.
25 Idem, January 14,1941.
547953— 44-------14

204

Wartime Prices—August 1939 to Pearl Harbor

Quoted prices for scrap dropped following these steps, but it soon
became apparent that many “bootleg” sales were being made at prices
above the nominal figures. According to the American Metal Market
of March 29, 1941:
There is a sinister word that has crept back into popular use in the scrap trade:
“ Bootlegging.” And it applies to the quiet selling of iron and steel scrap at
prices well above the maximum levels previously suggested, but not demanded,
by the Government. It is not uncommon for buyers to ask for two prices on
scrap— first, the legitimate price; then, the bootleg price. And there's no
mistaking or denying the fact that a large amount of so-called “ bootleg” busi
ness has been recently transacted.

Because of this “bootlegging” and of uncertainties surrounding the
suggested prices, a formal price ceiling for iron and steel scrap was
established on April 2 at levels from $1 to $3 per ton below those then
in effect. Scrap dealers were reported by trade journals as greatly
opposed to these ceilings, arguing that prices were too low, that suffi
cient scrap would not be drawn out, that shortages would develop,
and that steel operations would be hampered.26
Trading in marketed scrap fell off sharply, partly because of wide
spread hoarding. Two months after the ceiling had gone into effect,
the Price Administrator openly condemned this practice, adding that
it was accentuated by the “circulation of rumors to the effect that
ceiling prices were to be raised in substantial amounts.” The Com
missioner then requested the Department of Justice to investigate.
He stated that there were approximately 15 large brokers of iron and
steel scrap who supplied roughly 90 percent of the scrap purchased
by steel mills, and that “the control thus exercised through these
combinations has, by inviting the expectation of increased prices,
encouraged the hoarding of iron and steel scrap and thus seriously
shortened an already reduced supply.”
The slump in marketed scrap was offset to some extent by a marked
increase in “direct dealing” between primary suppliers of scrap and
the steel mills. Thus, mills entered into agreements with purchasers
for the return of any scrap derived from processing, thereby insuring
their receipt of all scrap provided by their own steel operations.27
Although scrap dealers objected to these practices,28 their effect
was tp stave off temporarily a general scrap shortage.29
B y the end of August 1941 scattered instances were reported of
steel mills and foundries which had been forced to suspend operations
because of inadequate scrap supplies. In the m eantime bootlegging
had apparently developed on a large scale. T he Wall Street Journal
o f August 25, 1941, stated that the scrap-price schedule was adm itted
by OPACS as “being violated 100 percent.” Scrap, in some instances,
was reported to be “selling for as much as $5 above the ceiling prices.”
In an effort to speed the flow of scrap, the ceiling was modified in
September, and again in October. The first revision was designed to
bring out scrap in areas remote from consuming centers by allowing
higher shipping point prices on scrap in nine States and permitting
consumers to pay greater transportation charges from these areas.
28 Indications of this attitude are to be found in the following 1941 issues of these publications: Journal of
Commerce, May 16, June 13 and 19, July 25, August 12; American Metal Market, June 17 and 26, August 8;
Wall Street Journal, May 1, July 16,24, and 26; Waste Trade Journal, April 12; Daily Metal Trade, July 12.
27 Journal of Commerce, July 18,1941.
22 Idem, July 25, 1941.
28 Cf. New York Journal of Commerce, June 27,1941; American Metal Market, July 29,1941.

205

Chapter V III.—Metals and Metal Products

Under the second revision, arrangements were made to grant buyers
special permission to pay prices in excess of the ceiling on imported
scrap.
Even before these revisions, the help of the Office of Production
Management had been enlisted to obtain a larger flow of scrap, which
would move at prices within the ceiling levels. It was announced on
August 25 that iron and steel scrap would be placed under full priority
control, and sale of scrap without authorization of the Priorities
Division was prohibited. The belief was expressed that this would
result in observance of the prices which had been established.30 The
order was issued on October 9, but it does not appear to have been
uniformly observed, although the Office of Production Management on
December 3 forced five large dealers to reallocate scrap steel in ac
cordance with the regulation.
At the same time, the Office of Price Administration was taking
direct steps to enforce its ceilings. On October 9 it induced a large
broker to refund to buyers all amounts in excess of ceiling levels on
sales subsequent to September 2. This procedure was repeated on
several occasions, the names of violators who agreed both to refund
excess charges to buyers and to obey the order being withheld from
publication. However, on December 6, the day before Pearl Harbor,
two firms were publicly cited for refusing to desist from persistent
violations.
Throughout this period, compliance appears to have been unsatis
factory.31 When the City of New York in September asked for bids
on scrap reclaimed from an elevated structure, several bidders
publicly offered prices above the ceiling.32 In Los Angeles, widespread
violations were reported, premiums of 75 percent being paid on some
sales.33
T able 49.—H E A V Y M E LT IN G S C R A P S T E E L :'

Wholesale Prices, January

1939-December 1941
[Source: U. S. Bureau of Labor Statistics]'

Month

January..
February,
March__
April___
May....... .
June.......

Wholesale prices
per gross ton
1939

1940

1941

$13.85
14.06
14.25
13.38
12.80
13.56

$16.38
15.75
15.69
15.33
16.88
18.19

$20.00
19.25
19.88
18.95
18.75
18.75

Month

Wholesale prices
per gross ton
1939

July................................... $13.56
August.............................. 13.88
September......................... 16.22
October............................. 19.05
November......................... 17.66
December......................... 16.56

1940
$17.35
18.03
19.22
19.75
20.06
20.60

1941
$18.75
18.75
18.75
18.75
18.75
18.75

i Scrap steel, bulk, f. o. b. Chicago.

The flow of scrap also remained inadequate. The Bethlehem Steel
Co. on October 20 was forced to shut down five open hearth furnaces
a t its Lackawanna steel plant because of the shortage,34 and plants in
other areas were also forced to curtail steel operations.35 On November
Wall Street Journal, August 25,1941.
81 Cf. American Metal Market, September 12, 1941; Journal of Commerce, September 19, 1941; New
York Times, December 4,1941.
82 American Metal Market, September 16,1941.
83 Los Angeles Times, November 9,1941.
3<Journal of Commerce, October 21,1941.
8« American Metal Market, December 9,1941.

206

Wartime Prices—August 1939 to Pearl Harbor

1, it was announced by the Office of Production Management that
a “serious shortage of iron and steel scrap” was imminent and had
already resulted in some reduction in steel output.
STEEL

As the rearmament program gained momentum, steel production
became progressively inadequate for total civilian and military
demands. The results during the Defense Period were a depletion of
mill and warehouse inventories, expansion of production facilities,
and progressive conversion from production for civilian needs to
armament. Some advances in price, principally indirect in form,
accompanied the increase in demand.
The term “ price of steel” requires some explanation. Although
steel mills sell some “ semifinished” products (ingots, blooms, and
billets), their principal sales are “ finished” products (sheets, strip,
bars, rods, structural shapes, tubular goods, and wire products).
Each of these products is made in many sizes and shapes and with
varying chemical analyses and physical qualities. The calculation
of a price for most products starts with the so-called “ base price” 36
which applies, in principle, to the cheapest size and type of the given
product and to an order of stipulated size. For smaller orders, for
sizes more difficult to roll, or for more rigorous specifications than those
covered by the base price, the customer’s price will be augmented by
“ extras” which are determined by reference to a detailed “ Extra
Book” (“extras” of the leading steel companies are alike). Conversely,
on orders with less rigid specifications than those covered by the
base price, “deductions,” also listed in the Extra Book, are subtracted
from the base price. The third element in a steel price is freight,
which is railroad freight, and normally is calculated from the recog
nized “basing point” nearest the consumer’s establishment.
The final price then, is the sum of “ base price,” “ extras” (minus
deductions), and freight from the applicable basing point. This
resultant “ published price” is identical for all steel mills for a given
customer. In practice this “ published price” is often modified by
“ concessions” granted buyers in a strong bargaining position, par
ticularly when steel mills are not operating at capacity. The granting
of concessions is an indirect method of reducing steel prices, as com
pared to the direct reduction in base price or extras.
During the Defense Period, the most important changes which
occurred in the prices of steel were indirect, involving the withdrawal of
concessions which had been granted during the buyer’s market pre
ceding the outbreak of war. There were, of course, some direct in
creases in published prices. Higher charges were made for a few
extras, and some new extras were imposed in part at least to offset
the expenses of meeting the more rigid specifications required of steel
for military material. Minor increases in the base price of several
steel products also were announced. Among these few changes in
base prices, between August 1939 and December 1941, were hot-rolled
sheet and strip from $2 to $2.10 per 100 pounds and wire rods from
$43 to $44.80 per gross ton.
3« Base prices of many steel products are published regularly in certain trade journals and with few ex*
ceptions these are the steel prices included in the BLS wholesale price index.

Chapter V III.—Metals and Metal Products

207

The indirect changes in price which constituted, as previously
stated, the most important increases in actual steel prices during the
Defense Period arc difficult to measure statistically on any over-all
basis. In general, they may be regarded as falling into the following
three major types: (!) Withdrawal of concessions; (2) shift to higher
priced sources of supply, such as warehouses; and (3) custom er
“ absorbing” freight on “ dislocated tonnages.”
Concessions are reductions from the published prices of the steel
companies, and usually conform to one of the following patterns:
(a) Reductions in base prices; (b) discounts for special reasons;
(c) waiving some of the extra charges for which the customer’s
specifications call; (d) delivery of material of higher specifications
than that shown on the invoice; and (e) rebates based upon the total
quantity of steel purchased over a given period of time.
This last type of rebate was quite commonly given to large pur
chasers of certain types of steel. Information on such rebates is
difficult to obtain, but it is probable that then* use was curtailed during
the Defense Period.
Withdrawal of Concessions

Some indication of the extent to which the withdrawal of conces
sions affected the price of steel during the Defense Period may be
gained from a special survey of Consumers’ Prices of Steel Products,
conducted by the Bureau of Labor Statistics for the Office of Price
Administration during 1942. (See table 50.) In the first illustration,
the increase resulted from the revocation of concessions from the base
price. In each case, the buyer had in August 1939 received a reduc
tion of 40 cents a hundred pounds from the published base price. By
May 1941, the concession was reduced to 15 cents, and at the end of
the year it had disappeared altogether.
The second illustration shows the withdrawal of a special discount
previously granted. The purchaser in this case claimed the pipe
produced by the mill in question was much more difficult to machine
than the pipe produced by certain competitors. To meet this alleged
deficiency, the mill had in August 1939 granted a special discount of
10.1 cents per foot, but by the latter part of 1941, this special machin
ing discount had been discontinued. On the other hand, a much
larger special discount remained in effect. It is noteworthy that the
customer did not change his source of supply when the special machin
ing discount was withdrawn.
The third example illustrates a somewhat different method of
obtaining a higher price—i. e., charging for a regular “extra”
which previously had been waived. In this case, the steel maker
formerly had granted a concession by failing to charge the customary
extra for “heading”—a special softening process to make wire suitable
for rivets. When the steel company began to charge for this extra.,
the actual price increased 50 cents per 100 pounds.
In many cases, sellers who had failed to charge the appropriate
extras for departures from base-price specifications in 1939 imposed
these extras when the market grew tighter. At various times in the
past, cold-rolled sheets, for example, had been billed as hot-rolled
sheets, bars requiring added chemical constituents were invoiced as
standard carbon steel bars, and special sized steel strip as sheet*

Wartime Prices—August 1939 to Pearl Harbor

208

T a b l e 50— STEEL: Indirect Price Increases, Selected Dates, 1939-42
[Source: Data submitted by purchasers to U. S. Bureau of Labor Statistics]
E xa m plb 1.—Withdrawal of Concessions in Base Prices

Pub
lished
base
price

Commodity
Date

Reinforcing bars (100 pounds):
round__ ________________
34" round

Aug.
May
Dec.
Aug.
May
Jan.

13,1939
27,1941
31,1941
28,1939
27,1941
15,1942

Actual
base
price
paid

$1.90
2.15
2.15
1.90
2.15
2.15

Freight
from
basing
point

Total
Extras
unit
actually
price
paid
paid
(de
(size)
livered)

$0,095
$0.20
.095
.20
.095
.20
.095
.095 ................
.095

$1.50
2.00
2.15
1.50
2.00
2.15

$1,795
2.295
2.445
1.595
2.095
2.245

E xample 2.—Withdrawal of Special Discounts

Pub
lished
base
price

Commodity
Date

Standard pipe (per ft.)----- Aug. 12,1939
(10%" O.D., 40-48 lbs) Apr. 23,1941
Dec. 22,1941

Actual
net price
at basing
point

Freight
from
basing
point

$1.37
1.432
1.471

$0.13
.13
.13

$4.12
4.12
4.12

Discounts actually
allowed

Total
unit
price
Special paid
(de
Special discounts
discounts for ma livered)
chining1
$2.649
2.587
2.649

$0.101
.101

$1.50
1.562:
1.601

E xample 3.—Withdrawal of a Conceded Extra

Commodity
Date

Manufacturer’s wire
(per lOOlbs.) (0.118"
bright basic wire)

Aug. 17,1939
Apr. 24,1941
Feb. 7,1942

Pub
lished
base
price
$2.60
2.60
2.60

Actual
base
price
paid

Freight
from
basing
point

$2.60
2.60
2.60

$0.32
.32
.32

Extras
Size

Proc
ess
ing a

$0.10
.10
.10

$0.60
.60
.60

Total
unit
price
Head paid (de
ing a livered)

$0.50

$3.62
3.62
4.12

E x a m ple 4.—Withdrawal of Concessions by Reverting to Accurate Specifications

Commodity
Date

Plates: (per 100 lbs.)—. May 15,1941
(% "x6% "xl0'll" May 14,1942
RX 788)
Cold-rolled strip (per
100 lbs.).................
(0.065xl2H"x96")

Sept. 21,1939
June 23,1941
Apr. 15,1942

Pub
lished
base
price

Actual Freight
from
base
price basing
paid
point

$2.10
2.10

$2.10 $0.1303
.1384
2.10

«3.05
*3.05
•2.80

2.75
3.05
72.80

.15
.15
.15

Extras

Size

Phos Sul Mill
pho phur4 run
rus**4*7

$0.05

7 $1.20

Total
unit
price
paid (de
livered)
$2.23032.4384

$0.15

-$0.10
-.10

2.80
3.10s
4.15

* Allowance made because of difficulty of machining this pipe.
* A process to soften the wire.
* A further softening process to make the wire suitable for rivets.
4 Steel furnished earlier than May 1941 had the same chemical analysis but extras on chemical content
were waived.
* Base price of sheet.
* Base price of strip.
7 Priced as strip but previously sold as sheet.

Chapter V III.—Metals and Metal Products

209

As illustrated in the fourth example, one buyer had been purchasing,
at no extra charge, plates with phosphorus and sulfur content below
that normally found in carbon steel. In 1942 listed extras amounting
to 20 cents per 100 pounds were imposed, for reducing the phosphorus
and sulfur content. Prior to April 1942 the same buyer had been
obtaining cold-rolled strip, billed as sheets. Although the base price
for strip is slightly lower than for sheets, the change to the strip desig
nation in 1942 made it possible for the producer to impose a size extra
of $1.20, resulting in a price increase of $1.05 per 100 pounds. The
mill in this case also withdrew the special concessions which the cus
tomer had been granted for accepting mill-run material.
Shift to Higher Priced Sources of Supply

As the demand for steel increased under the defense program, many
buyers who had formerly experienced no difficulty in purchasing lessthan-carlots of steel from mills were forced to obtain their supplies
from warehouses at the higher prices applying to less-than-carlot
shipments. For example, an Eastern seaboard manufacturer, during
the depression years, had been purchasing a certain type of steel from
a nearby rolling mill in less-than-carlots at $2.10 per hundredweight,
delivered. As the business of the mill increased, such small orders,
were no longer accepted, and the customer was forced to obtain his
supply from a rather distant warehouse at a delivered price of over
$6 per hundredweight.
At times carload purchasers who wanted steel immediately turned
to warehouses to supply their needs. Since the warehouses were only
allowed to sell less-than-carlots, carload buyers either placed more than
one order or bought from more than one warehouse at the higher lessthan-carlot prices. Deals of this kind probably were not contem
plated by OPA under its ceiling orders.
Dislocated Tonnage

The third type of indirect increase pertained to the extra freight
costs caused by the so-called “dislocated tonnage.” Large backlogs of
orders for particular types of steel made it unnecessary and undesirable
for many mills to change their rolls frequently. Customers who
wanted early deliveries had to go outside their normal sources of
supply in order to obtain steel when it was needed. Some consumers
turned to warehouses, as described above, others shopped around until
they found a mill which could fill their order. Frequently this mill
was outside the customer's normal basing-point territory. Under the
ordinary operation of the basing-point system, this should not have
affected the delivered price, since the mill would charge only the freight
from the basing point nearest the buyer and absorb the difference. In
the sellers' market that developed during 1941, however, the competi
tive pressure leading to such absorption was absent, and the consumer
in many instances was required to pay the added freight costs. In
certain circumstances the Office of Price Administration considered
this practice legitimate.
A special case of “dislocated tonnage” is that of the Pacific Coast
consumers. In peacetime, prices of much of the steel sold on the
Pacific Coast were predicated on a combination of rail and water
freight rates through the Panama Canal With the virtual closing of

Wartime Prices—August 1939 to Pearl Harbor

210

the Canal to commercial intercourse, the Pacific Coast consumers of
steel had to pay the all-rail freight from their sources of supply in the
Middle West and on the Eastern Seaboard. In one case coming to the
attention of the Bureau of Labor Statistics, the all-rail freight charge
increased the delivered price more than $1 per hundredweight, or
almost 50 percent.
It is difficult to determine the over-all extent of these various in
direct advances in steel prices. There can be little doubt, however,
that their importance steadily increased from the beginning of the
defense program to the imposition of a price ceiling in the spring of
1941, and that by April, the month preceding the ceiling, indirect price
increases of these kinds had become common.
Some indication of the net effect of all these increases, however, may
be obtained from averages computed on the basis of the Bureau of
Labor Statistics steel consumers survey for representative firms and
transactions.37 Percentage increases in delivered prices are shown in
the following statement for eight types of steel, comparing the second
quarter of 1941 with the third quarter of 1939. Increases range from
a half of 1 percent for cold-finished bars to 15 percent for hot-rolled
strip. Changes in base prices were only a minor factor in these
advances, as may be seen from the base-price figures shown for August
1939 and December 1941.
Delivered
Base prices 2 per
prices 1—Per
hundredweight
cent of increase
( Pittsburgh)
3d quarter,
1939, to 2d
August
December
1939
quarter, 194-1
1941

Cold-rolled sheets__________
Hot-rolled sheets___________
Universal and sheared plates
Merchant bars_____________
Cold-finished bars__________
Hot-rolled strip____________
Cold-rolled strip____________
Structural shapes___________

....

. . . . 11

(3)

15
5
2

$3.
2.
2.
2.
2.
2.
2.
2.

05
00
10
15
65
00
80
10

$3.
2.
2.
2.
2.
2.
2.
2.

05
10
10
15
65
10
80
10

1 Preliminary. Source: Bureau of Labor Statistics Survey of Consumers’ Prices of Steel Products.
2 Source: The Iron Age, January 7, 1943, pp. 205-208.
2 One-half of 1 percent.

Wags Increases and the Price Ceiling

While the advance in prices, principally indirect, was one of the
reasons for placing a price ceiling over the steel industry, the immediate
event prompting this action was the granting of a wage increase. By
April 15, 1941, most of the large steel companies had put into effect
a 16-percent wage advance, raising the basic wage from 62% to 72%
cents an hour. Following these increases, there were reports to the
effect that steel prices would be raised.38 To forestall such action,
the Office of Price Administration on April 17, 1941, issued a schedule,
freezing steel prices at the levels which had prevailed during the first
quarter of 1941. In announcing the order, specific mention was made
of the indirect increases which had been occurring in steel prices:
37 However, “the extent of price concession shown by this survey is probably understated. First, it is
likely that certain big consumers not included in the study receive large concessions (which were with
drawn); and second, the price series obtained, with few exceptions, do not include those concessions which
take the form of rebates based upon the volume of steel purchased during a given period.” (Consumers’
Prices of Steel Products, by Willard Fazar and Fay Bean, Bureau of Labor Statistics mimeographed r©"
port, March 31, 1943.)
38 Wall Street Journal, April 15,1941.

Chapter V III.—Metals and Metal Products

211

# Despite the fact that published base prices have remained unchanged, conces
sions have disappeared, extra charges have been increased, and in some cases,
premiums have been obtained. In addition, certain contracts have escalator
clauses which enable producers to add certain additional costs to contract prices.39

The establishment of the ceiling, however, did not put an end to all
increases in the cost of steel to buyers.40* In the first place, a large
volume of steel had been sold prior to the ceiling to big users at prices
considerably below the published quotations which were established
as the ceiling levels, and producers who had been granting concessions
were permitted to raise their quotations to the level of the published
figures. In addition, a number of minor upward revisions were made
in the ceiling itself, though these revisions did not result in any ma
terial change in the general level of steel prices. Finally, a few highcost companies were granted specific permission to charge prices above
the general ceiling levels, but the tonnage involved was negligible.
As the Defense Period drew to a close, however, the price increases
resulting from these factors— the movem ent of actual prices up to the
ceiling levels, the purchase of steel from warehouses, added freight
due to “dislocated tonnage,” and the revisions or exemptions from
the ceiling— had largely run their course, and by the end of 1941
prices of steel had apparently become relatively stable.

Copper
The net advance in the price of copper from the beginning of the
war in Europe to the end of the Defense Period in the United States
amounted to 20 percent, the quotation for electrolytic copper (deliv
ered, Connecticut Valley) rising from 10 cents per pound in August
1939 to 12 cents in December 1941. The price advance was limited,
with the cooperation of leading producers, under an informal under
standing with Price Commissioner Henderson which was subsequently
translated into a formal price ceiling. Price stability was maintained
during the latter part of 1941, despite the fact that the supply of
copper was rapidly becoming one of the most critical problems con
fronting the defense program.
Immediately after the outbreak of war in 1939, the price of copper
started an advance which carried it from 10 cents per pound in the
first part of August to 12% cents in November (see table 51). This
rise partly reflected the anticipation that Britain and France would
need large quantities of copper in their armament programs and also
the efforts by many American copper users to replenish their depleted
stocks.
On September 13, President Roosevelt, in referring to this price
advance, stated that at 12% cents a pound a great deal of copper could
be produced and sold in this country profitably. The President indi
cated that if copper advanced very much above the existing level,
Government action would be taken to prevent a repetition of the first
World War inflation which carried the price of copper to 36.6 cents
per pound.

By the turn of the year the demand for copper had begun to sub
side, owing to inactivity on the western front, reliance of the Allies
upon African and South American ore, and late 1939 accumulations
39 OPA Press release No. PM 279, April 17,1941.
40 The BLS survey showed some increase in delivered prices between the third quarter of 1941 and April
1942.

212

Wartime Prices—August 1939 to Pearl Harbor

of stocks by domestic consumers. Produced stocks of refined cop
per rose sharply, as shown in the chart on the next page. At the same
time deliveries to domestic customers lagged, while crude production
maintained the comparatively stable rate which was to characterize
it throughout the entire 2%-year period. As a consequence, copper
prices slowly but steadily declined, dropping from 12.2 cents in January
to 10.8 cents in July.
The copper market reached its lowest point in June upon the capit
ulation of France. That nation had for some time been shipping
large amounts of foreign copper under bond to this country for refin
ing; the cancelation of these orders created fears that copper supplies
would back up on the domestic market.41 This weakness in the copper
market was illustrated by frequent sales, during the early months of
1940, by copper producers to the Government at prices well below the
prevailing market. In July, for example, the Kennecott Copper Cor
poration sold 2 million pounds of grade A copper to the Navy at a
price three-fourths of a cent below the regular producers’ market
quotation.42
By the fourth quarter of 1940, however, a fundamental change in
the market had become apparent under the influence of expanding
defense needs. Producers’ stocks were declining sharply, while do
mestic deliveries were increasing. These trends, coupled with stability
of production, advanced the domestic producers’ quotation from 10.9
cents in August to 12 cents in October, where it remained for the
remainder of the Defense Period. According to the Daily Metal
Trade of December 12, 1940:
Not so long ago we were trying to keep copper stocks from piling up but in less
than 6 months we may be faced with a severely depressed stock situation. This
is the domestic copper situation in a nutshell: Monthly consumption of 103,000
tons * * * monthly domestic production of 85,000 tons, possibly 90,000 tons
maximum at the 12-cent price. Thus, stocks are going down 15,000 to 20,000
[tons] a month. This indicates the rate the mills are eating up copper only
5 months after this country first thought of rearming on a serious scale.

To alleviate this growing shortage, the Government, toward the end
of the year, moved to bring into the country large amounts of South
American ore. Importation of copper, except m at which is refined
under bond and re-exported, is subject to a tariff of 4 cents a pound.
The Metals Reserve Company, a subsidiary of the Reconstruction Fi
nance Corporation, began inDecember to purchase large amounts of Chil
ean copper which it resold to American consumers at 12 cents (delivered,
Connecticut Valley) , the Government absorbing some 2){ cents of the
tariff.43 Beginning in March 1941, deliveries of this South American
ore by the Metals Reserve Company swelled domestic supplies by ap
proximately 35,000 tons a month.
Although domestic supplies were thus increased by about a third,
the demand for copper in 1941 became so great that producers’ stocks
continued to decline during most of the year, falling at the end of
September to a low of 63,700 tons, as compared to a peak of 215,800
tons at the close of July 1940. (See table 51.)
*1 Business Week, June 22,1940.
« Journal of Commerce, July 19,1940.
43 The copper was generally purchased at 10 cents a pound, delivered Chilean ports. Shipping costs to
New York totaled approximately one-half cent, the price f. a. s. New York thus ranging around 10.5 cents
per pound.

213

Chapter V III.— Metals and Metal Products

COPPER
PRODUCERS PRICES, PRODUCTION, AND STOCKS
P R O D U C E R S ’ P R IC E S

IN D EX

IN D EX
125

120
115

110
105

100
1 9 3 9

1 9 4 0

1 9 4 1

1 9 4 2

1 9 4 3

1 9 4 4

1 9 3 9

1 9 4 0

1 9 4 1

1 9 4 2

1 9 4 3

1 9 4 4

214

Wartime Prices—August 1939 to Pearl Harbor
T a b le

51.— COPPER: Wholesale Prices , Production , Shipments, and Stocks,
August 1939-December 1941

[Sources: Prices—U. S. Bureau of Labor Statistics; production, shipments, and stocks—Copper Institutel

Year and month

Wholesale
price per
pound i

Production, Domestic
shipments
crude2

Befined
stocks
(end of
period) 2

Short tons
1939

August.................................................................................
September.......................... .................................. ............
October.................................................. .......................... .
November......................... ................................................
December.............................................................................

Cents

10.5
12.1
12.4
12.5
12.5

4 408,786

4 457,315

159,485

12.2
11.4
11.4
11.3
11.3
11.4
10.8
10.9
11.4
12.0
12.0
12.0

89,598
76,145
85,796
84,366
82,682
79,845
79,327
79,967
78,328
86,911
84,283
85,135

91,428
63,215
64,376
68,665
69,467
61,716
71,226
96,383
96,485
103,771
102,483
112,671

135,441
145,393
159,795
169,120
178,664
199,586
215,823
198,730
185,313
164,618
158,418
142,772

12.0
12.0
12.0
12.0
12.0
12.0
12.0
12.0
12.0
12.0
12.0
12.0

83,280
79,240
85,701
88,042
90,342
82,558
82,099
84,695
81,839
86,019
84,718
88,463

119,736
112,808
134,333
123,580
148,301
121,331
150,078
119,937
125,585
126,622
124,645
138,585

116,854
97,698
89,873
98,789
93,076
98,164
74,384
71,930
63,670
67,260
72,352
75,564

January................................................................................
February........ .............................................................. .
March........... ......................................................................
April.....................................................................................
M ay................ ............................................................ ........
June.................................................................................... .
August..... ............................. ............................................
September................. .........................................................
October.......... ....................................................................
November...... .................. _............. ............................. .
December.................................. .........................................
m i

January................................................................................
February..............................................................................
March..................................................................................
April.....................................................................................
M a y .....................................................................................
June......................................................................................
July.......................................................................................
A ugust-...............................................................................
September..................... ........ ...........................................
October. _________________ ________ _____________
November...... .....................................................................
December.............................. .............................................

1 Delivered, Connecticut Valley.
2 Mine or smelter production.
3 At refineries, on consignment and in Exchange warehouses; but not including consumers’ stocks at their
plants or warehouses.
* Total for 5 months, August-December; totals for individual months not available.

This tightness of supply led the Government to attempt other
methods of increasing the supply of copper. It developed a plan
designed to obtain the output of small high-cost mines without dis
turbing prices received by the relatively low-cost large producers who
supply the bulk of American production. Particular attention was
devoted to the problem of increasing the production of high-cost
Michigan Lake copper. On August 27, Michigan producers were
informed by the Price Administrator that they would be granted a
subsidy of 1 cent a pound over their “out-of-pocket” costs (i. e., costs
exclusive of such items as depreciation, depletion, and amortization
of fixed charges) for the first 6 months of the year, and that provisions
would also be made for an increase of $1 a day in miners’ wages which
had been distinctly substandard. By the adoption of this plan, it
was believed that the Michigan mines would add about 75,000 tons
yearly to domestic supplies.44
Steps were also taken to restrict the export of South American ore
to foreign countries. American companies which controlled the South
44 Journal of Commerce, July 7 and August 13,1941.

Chapter V III.—Metals and Metal Products

215

American copper output were requested either to postpone shipments
or to cancel contracts made with Japan for March, April, and May
(1941) shipments and to transfer that copper to the Metals Reserve
Company.45
Despite all these measures, the shortage grew more acute. For the
month of September 1941, it was estimated that domestic production
plus Chilean imports would total only 122,000 tons, while consump
tion was running at the monthly rate of 135,000 tons.46
Until August 1941 the price of copper had been governed under an
informal understanding which fixed the most important quotation—
that for copper mined and refined by integrated domestic producers—
a t 12 cents per pound (delivered, Connecticut Valley) and permitted
small differentials for other producers. On August 12, 1941, a formal
ceiling was issued which, in general, fixed maximum prices for all
producers at 12 cents (Connecticut Valley).
The principal reason for the imposition of this formal ceiling was
the fact that on August 6 the Office of Production Management had
issued a general preference order, placing copper under complete
priority control. At the same time, the Office of Price Administra
tion and Civilian Supply, recognizing the fact that a few high-cost
copper producers could not sell at 12 cents, recommended that the
Metals Reserve Company purchase such copper at a price 1 cent above
“out-of-pocket” costs. In announcing the ceiling, Price Adminis
trator Henderson stated that more than 90 percent of the domestic
output could be produced without loss for 12 cents a pound or less.47
Subsequent price developments did not affect this basic ceiling, but
were designed further to stimulate marginal production. Contracts
with several Michigan high-cost producers were negotiated at prices,
based on a cost-plus formula of 15 and 16 cents per pound. There
was also some discussion of the establishment of a third copper price,
higher than 12 cents, to be paid to all producers for metal produced
in excess of assigned quotas. In December, however, the Office of
Price Administration announced its opposition to this plan.48
The establishment of the formal ceiling in August had little effect
upon production which continued through the year at about the same
stable rate. Monthly output during the first 11 months of 1941
averaged only 2 percent higher than during the corresponding period
of 1940. Production was actually 6 percent lower in November 1941
than in January 1940. By the latter part of 1941 monthly require
ments for purely military needs were well in excess of supplies. For
example, the Office of Production Management announced that the
demand in November, for direct military and lend-lease uses alone,
would reach 150,000 tons, whereas only 128,000 tons were made
available. The salvaging of scrap could meet only a small proportion
of the requirements.
According to the Office of Production Management, additional
refining capacity of some 13,000 tons monthly was to become available
early in 1942. Other new plants financed by Government funds
were to get into production in January 1943.49 In addition, the prob
« Daily Metal Reporter, March 13,1941.
46 American Metal Market, September 3,1941.
47 This would seem to be justified by the record of net earnings of five copper concerns which for the first
three-quarters of 1941 were 65 percent higher than the corresponding period of 1940, in spite of much heavier
taxes. (New York Times, November 14,1941.)
48 American Metal Market, November 6 and December 23, 1941.
49 U. S. Senate (77th Cong., 2d sess.), Additional Report of the Special Committee Investigating the
National Defense Program. Appendix VI, pp. 212-213.

216

Wartime Prices—August 1939 to Pearl Harbor

lem of stimulating mine production, which constituted the principal
difficulty throughout most of the Defense Period, was being studied
by both the Office of Production Management and the Office of Price
Administration.
Lead
Starting from its pre-war level of 5 cents per pound, the price of
lead (pig, desilvered, New York) rose to 5.5 cents by October 1939,.
fell by more than this amount in the first half of 1940, and then
increased again to 5.85 cents by March 1941, where it was pegged by
Price Administrator Henderson. The net advance from August 1939*
to December 1941 amounted to 18 percent.
The initial rise in lead prices during September and October 1930'
occurred principally because of consumed efforts to build up stocks*
To meet the demand, producers placed large quantities of American
lead on the market, with the result that the price remained stable
during the remainder of the year.50 Most of the price advance was
lost early in 1940, as both domestic output and imports rose and
produced stocks reached high levels. At the same time, there was
a temporary drop in industrial activity, and British and French
demand for lead products proved to be less than had been antici
pated. As a result, the price continued to ease, falling below 5 cents
per pound in August and September.
Imports during this period increased substantially; the bulk of
these foreign shipments, however, went into bonded warehouses and
accordingly this tonnage is not reflected at once in the figures on
“imports for consumption” shown in table 52. Western Hemisphere
producers, particularly in Mexico, turned to the United States to
compensate for the loss of European markets, despite a duty of IK
cents per pound on lead in the form of ore and 2% cents on base bullion
and refined pig lead. For many months supplies of foreign lead con
stituted an important stabilizing influence in American markets.
Prices showed no tendency to rise until October 1940, when the
effects of the defense program at last became manifest. Stimulated
by a sudden, panicky buying movement the quotation jumped from
4.85 cents in mid-September to 5.75 cents in early November. The
demand was so great that immediately available supplies proved
inadequate.51 Price advances only accelerated the movement, which
reflected such factors as increased automobile production, heavy
buying by cable producers, buying for submarine batteries, bullets,
airplane flares, pipe and sheets, caulking lead, etc. Speculation
further aggravated the situation. According to the American Metal
Market (November 7, 1940):
Reports from sales offices today indicated that consumers were not at all
deterred by the advance and came into the market for further large tonnages.
They were not able, however, to contract for all that was wanted, and, had sellers
withdrawn all restraint, the bookings today could easily have been twice as large
as they were.

Buying pressure eased in December and the price declined slightly
when it was disclosed that some 130,000 tons of Mexican ore were
held in Texas, under bond, awaiting more favorable prices; being under
bond they were not reported in the regular trade statistics. According
50 American Metal Market, January 1,1941.
MIdem, American Metal Market, October 17,1940.

Chapter V III.—Metals and Metal Products

217

to the New York Journal of Commerce (December 6, 1940), “Imowledge of their existence in this country would have been sufficient to
check the recent nervousness displayed by consumers.”
Early in 1941 prices again started increasing, rising to 5.85 cents
by April. Large amounts of foreign metal were released from bond,
imports for consumption rising to a peak of 65,500 tons in September
1941 as compared with 19,000 tons a month in the last part of 1940.
Describing this trend, the American Metal Market of February 11,
1941, stated:
At the 5.50 cents New York level, quite a lot of foreign lead has been brought
in to meet the excess of demand and consumption over domestic production
* * * but demand has been extremely strong over the past few weeks and
today it reached a point where resort in a very considerable way had to be taken
to the foreign supplies and the rise is credited primarily to the necessity of making
them available in the required volume.

On April 5, 1941, an informal price ceiling was fixed at the 5.85-cent
level then prevailing. The Government also took steps to import
lead directly through [purchases by the Metals Reserve Company.
In July this agency completed negotiations to purchase up to 225,000'
tons of Mexican and Canadian lead during the last half of 1941.
The increase in imports, however, was accompanied by an actual
decline in production from domestic ores—from 54,700 tons in Janu
ary 1941 to 41,600 in November. Thus, in the spring, producers*
feared an oversupply. Domestic trade journals frequently referred
to the belief prevalent in the industry that the advance in imports
coupled with the use of concentrates accumulated in 1940 would
readily meet demand.52
However, the increasing pace of the defense program caused actual
demand in the latter part of 1941 far to outrun expectations.
At the beginning of October the Office of Production Management
pointed out that annual consumption of lead was approximately
960,000 tons, whereas domestic production, including that from
foreign ores, was not over 600,000. The balance represented scrap
and imports of refined lead. On October 4, formal priorities were
established for all foreign and domestic supplies of lead. At the
same time steps were taken to reduce the use of lead in nonessential
industries and to increase production of the metal.53 As a result of
the failure of production to keep pace with demand, some upward
pressure upon prices developed, manifested occasionally by “bootleg”
sales—sales of refined lead at prices above the informal ceiling. The
American Metal Market of August 28, 1941, reported:
The producers feel that in the case of lead the amount of this business is very
small but that pig lead is here and there bringing 6.12% cents to 6.25 cents,
ossibly more, as compared to the 5.85 cents New York and 5.70 cents St. Louis
ases.

In October the opinion began to be voiced in the trade press that
the informal ceiling should be raised in order to bring forth greater
production.54 It was contended that under existing limitations on
hours, continuous operation would require overtime payments to
labor and these increased expenses could not be met at 5.85 cents per
52Cf. Wall Street Journal, March 5, 1941; American Metal Market, January 1,1941, April 8,1941; Daily
Metal Reporter, April 16,1941.
m On November 24 the use of lead in lead foil for cigarettes, candy, etc., wa6 restricted. On November 6
Directors Knudsen and Hillman wired all lead mining companies to begin production on. as24-hour, 7-day
week basis wh6r6V6r possiblo
« Cf. New York Herald Tribune, October 12,1941; American Metal Market, October 11,1941.

218

Wartime Prices—August 1939 to Pearl Harbor

LEA D
PRODUCERS’ PRICES,PRODUCTION,AND STOCKS

UNITED STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS_________

219

Chapter V III.—Metals and Metal Products

pound. The decline in domestic production, which by October had
carried the output to a level 31 percent below that of January, was
attributed to the fact that the ceiling was too low.
T

able

52.—R E F IN E D LEA D : Wholesale Prices, Production, Imports , and Stocks9
August 1939-December 1941

{Sources: U. S. Prices—Bureau of Labor Statistics; production, stocks, and shipments—American Bureau
of Metal Statistics; imports—U. S. Department of Commerce]

Year and month

August.................
September...........
October................
November...........
December............

January...............
February.............
March..................
April....................
May.....................
June.....................
July.....................
August.................
September...........
October...............
November...........
December...........

Wholesale
price per
pound i

Produc
tion from
domestic
ore

Cents

Net tons

5.04
5.45
5.50
5.50
5.50

Imports for
consump
Total pro tion except Stocks, end Domestic
manufac of month shipments
duction
tures (lead
content)
Net tons

Net tons

3,019
4,391
4,063
2,762
4,164

Net tons

117,985
97,473
73,963
58,061
58,777

Net tons

36,566
35,086
38,903
44,748
42,547

39,000
39,359
42,563
48,467
45,615

5.47
5.08
5.19
5.07
5.02
5.00
5.00
4.85
4.93
5.31
5.73
5.50

47,149
40,564
44,783
31,192
37,918
34,041
35,343
36,851
41,528
39,228
45,089
47,208

49,683
43,317
48,400
35,343
46,268
42,306
44,596
47,614
51,441
56,600
57,926
61,906

4,496
2,958
4,787
2,866
7,404
4,723
16,581
10,230
10,739
27,739
19,084
19,205

68,539
72,658
74,692
63,610
62,955
55,343
47,360
43,321
41,292
35,386
35,791
40,926

39,875
39,176
46,353
46.496
46,919
49,904
52,560
51,643
53,456
62.496
57,510
56,755

5.50
5.60
5.77
5.85
5.85
5.85
5.85
5.85
5.85
5.85
5.85
5.85

54,658
47,764
46,748
43,423
46,104
38,669
42,048
39,100
41,373

62,048
54,231
61,503
56,086
60,509
48,224
48,989
51,157
44,903

19,707
14,321
27,991
39,764
40,553
33,374
22,160
47,891
65,519

47,248
46,604
45,996
42,899
34,018
24,265
19,172
15,330
13,148

55,711
54,859
62,090
59,169
69,382
57,969
54,067
55,005
47,093

37,221

41,127

33,627

10,735

43,537

41,566
48,829

48,930
57,181

23,119
17,318

13,671
20,185

45,980
50,680

45,025
59,889
66,060
64,365
44,881

1 Lead, pig, desilverized, New York.

Rumors of an impending price increase were circulated and these
accentuated the tightness of the market by causing some producers
to hold back supplies. To meet this situation the Price Administrator
on November 5 issued a statement criticizing the speculative hoarding
of lead scrap and denying that any increase in the ceiling was immi
nent. He added that “evidence accumulated by OPA clearly indi
cates that a large part of the mining industry is in a position to
increase its output at the present price of lead. The bulk of the
industry is not operating at anything like full capacity. Lead output
can be increased quickly by various methods.,,
By the end of the Defense Period the shortage had become acute;
refined lead stocks on December 1 were sufficient for only 5 days’
requirements,55 while on December 2 it was reported that scrap
dealers were still withholding supplies in anticipation of the hoped-for
price increase.56*58
ss American Metal Market, December 23,1941.
58Idem, American Metal Market, December 3,1941; Standard (Butte, Mont.), December 6,1941.
5 4 7 9 5 3 -4 4 15

220

Wartime Prices—August 1939 to Pearl Harbor

Zinc
Between August 1939 and December 1941, the price of zinc rose
about 70 percent, advancing from 5.1 cents per pound (slab zinc, pig,
western New York), just before Poland was invaded, to 8.6 cents at
the time of Pearl Harbor. This increase was considerably larger than
that for any of the other principal nonferrous metals.
Im m ediately following the outbreak of war, the price of zinc
rose from 5.1 cents in August 1939 to 6.9 cents in October. To some
extent this increase reflected the fact that zinc prices in the first half
of 1939 were relatively low, owing in part to the reciprocal trade agree
m ent with Canada, which on January 1, 1939, reduced the duty on
slab zinc by 20 percent.
The October price held during November, but in December the
m arket weakened as a result of the accumulation of large stocks by
consumers and increased imports from M exico and Canada. There
was little further change in the first 4 months of 1940, when the price
remained at a level of 6.0 cents in January and February and 6.1 cents
during March and April. A t the same time, shipments fell below pro
duction, while producers’ stocks rose rapidly.
Summarizing this decline of activity in the zinc market, the N ew
York Journal of Commerce for April 17, 1940, stated: “B uying has
now fallen off following the initial rush, which was stimulated by the
invasion of Denm ark and Norway. * * * The backlog of unfilled
orders on producers’ books * * * was 30,000 tons of the common
grade of the m etal as against 90,000 tons last September.”

This period of falling prices and declining activity came to an end for
zinc sooner than for the other important metals. Prices started rising
in May—carrying the quotation to 6.7 cents in August 1940 and to
7.6 cents in October. (See table 53.) At this point, it was stabilized
through the intervention of the Price Administrator and there was no
further change for the next 11 months.
Production during 1940 advanced somewhat but shipments rose
more sharply, especially from April to September. As a result pro
ducers’ stocks fell precipitously, dropping from 79,000 tons in May to
18,000 in December.
The principal cause of the advance in prices and the decline in stocks
was the inability of smelting and refining capacity to meet the swelling
armament demand. Zinc was needed in rapidly increasing quantities
for the production of cartridge brass as well as for other military pur
poses.57 While the rise in prices succeeded in stimulating ore produc
tion and in inducing the reopening of high-cost mines, refining capacity
took longer to expand. By the fall of 1940, smelting facilities were
operating at capacity. In the words of the American Metal Market of
September 6, 1940: “It may well be repeated that under present con
ditions merely raising the price of spelter (zii\c) does not release an
appreciable additional amount of metal. The situation is distinctly
a matter of smelting capacity.”
57“The tremendous amount of zinc required for small arms is indicated by the fact that in making cases
and jackets of .30 caliber, about 16 pounds of zinc are required per 1,000 shells. In a 76 mm. shell case, zinc
requirements are about 3,800 pounds of brass per 1,000 cases. During the World War, and before the advent
of the rapid-firing Garand rifle and the mounting of four and more machine guns on an airplane, the produc
tion of small-arms ammunition reached a peak of 4 billion rounds a month. While no data are available
of present-day requirements, it is obvious that this figure must be increased many times.” (Journal of
Commerce, May 26, 1941.)

Chapter V III.—Metals and Metal Products

221

Reflecting this acute shortage of supply, quotations of zinc futures
on the New York Commodity Exchange rose to very high levels; by
December they had advanced to a level 2% cents per pound (or 30
percent) over that charged by all principal sellers in the regular mar
ket.68 An investigation was begun by the Commodity Exchange
early in December 1940 to determine whether these increases were
“tying up zinc for speculative purposes.” 69 Two months later the
National Defense Advisory Commission requested that no more sales
be made by zinc smelters on the Commodity Exchange.80*8234 Shortly
thereafter, the Exchange announced that new sales of zinc futures
would be prohibited as of March 4, and that trading would be limited
to the liquidation of open positions.61
This measure was the first of several adopted in 1941 by both
industry and Government to relieve the tightness of the market.
Primary attention, however, was devoted to expanding smelting
capacity. Although the increase in capacity actually achieved
during 1941 fell far below the 100-percent enlargement recommended
by the United States Bureau of Mines,62production in the last quarter
of the year was 16 percent higher than in the first quarter. In addi
tion, a zinc pool was organized by the Government, each producer
being required to set aside a certain percentage of his output for allo
cation by the Director of Priorities. In April, producers were re
quired to set aside 5 percent of their March production; in May the
figure was raised to 17 percent; in June, to 22; in August, to 27; and in
November, to 31 percent.
Efforts also were made to reduce the large consumption of zinc b y
the automobile industry. Forged parts and malleable castings were,
to some extent, adopted in place of zinc-consuming die castings, while
some use was made of substitute parts of glass, copper, and plastics.
Nevertheless, the automobile industry in the production of its 1941
m odels used an estimated 105,000 tons of zinc, or 12 percent of the
entire zinc production during the 12 months, August 1940 to August

1941.69

D espite all these measures, the shortage of zinc continued to be
acute. B y August 1941, members of the industry were expressing
w ith growing frequency the opinion that the price ceiling was restrict
ing production,64 and by September rumors of zinc sales at “bootleg”
prices had become current in the market.65 W ith the enlargement of
sm elting capacity, larger ore supplies were needed. Independent
zinc miners urged that this required higher prices for concentrates,
particularly in view of increases in the cost of mine labor. W hile
any substantial increase in the price of concentrates could not be
absorbed by refiners unless the ceiling on slab zinc was raised, a small
advance did take place. For 50 weeks, concentrates had been selling
in the Joplin market at $48 per ton. However, in the last part of
August, sales were reported at $48.58; in a few weeks this advance
was accepted by the entire industry.66
58 American Metal Market, December 6, 1940.
88 Journal of Commerce, December 5, 1940.
«° Idem, January 21,1941.
61 Idem, March 4,1941.
82 Daily Metal Trade. January 31,1941.
83 Journal of Commerce, May 26, 1941.
84 Idem, August 20, 1941.
88 American Metal Market, September 12,1941; Washington Post, September 19,1941.
88 Idem, September 18,1941.

222

Wartime Prices—August 1939 to Pearl Harbor

Chapter V III,—Metals and Metal Products

223

Following this advance, the market became confused as efforts were
made to obtain a higher price for the metal. The trade anticipated
an immediate increase in the ceiling, a belief reportedly shared by the
Office of Production Management which was said to be proposing a
price advance.67 One producer actually announced a new price of
7.32% cents, East St. Louis (equivalent to about 7.72 cents, New
York) but the Office of Price Administration soon persuaded him to
withdraw this increase.68
Meanwhile, rumors of “bootleg” sales of slab zinc persisted, with
the result that several concentrate producers in mid-September were
reported refusing to sell at ceiling quotations in the face of the higher
prices for slab. Sales in the Joplin area were thus reduced by 20
percent in 1 week in September.69
The failure of production of concentrates and also of refined zinc
to expand in the summer of 1941 was attributed by producers to
rising costs. Mines now in operation, they contended, were growing
less profitable and labor was being constantly lost to nearby defense
plants. In addition, opening of new mines was held to be com
mercially impracticable under ceiling prices then prevailing. How
ever, the production situation during this period was interpreted
differently by the Senate Committee Investigating the National
Defense Program. In the opinion of the Committee:
It is only natural that * * * the mine operators would calculate normal
profits during the number of years of expectancy at normal operation and deduct
therefrom normal income tax profits. They would compare the figure so ob
tained with the larger profits for a lesser number of years after deducting the
normal and excess profits tax, and would conclude that it would be more profit
able to continue normal production than to increase their production. This fact,
together with the fact that the companies assume that if production continues
to be unsatisfactory the Government ultimately will increase the base price,
explains why the production of these strategic metals (copper, lead, and zinc) is
so disappointing.70

Confronted with the urgency of stimulating production, the Office
of Price Administration on October 10 issued a formal ceiling order,
establishing the maximum price for spelter 1 cent.per pound above
the previous informal ceiling levels. The new price for western slab
zinc thus became 8.25 cents at East St. Louis and 8.6 cents at New
York. The price for concentrates was raised from $48.58 to $55.28
per ton. In issuing this order the Price Administrator stated:
“This action represents a case where intensive study by the OPA
staff has disclosed that a price increase is necessary to maintain and
expand supply.”
The Office of Production Management welcomed this action, stat
ing that the new prices were “expected to stimulate production enough
to take care of all existing defense and essential civilian demand.”
I t was hoped that production would be increased by at least 10 percent,
possibly by 15 percent.
Sales of ore responded rapidly to the advance, and refinery opera
tions also rose though at a slower rate. By December 1941, produc
tion of refined zinc reached 79,000 tons, the highest on record, and
stocks were recovering slowly, though remaining far below normal
levels.
67 Wall Street Journal, September 23, 1941.
w American Metal Market, September 24,1941.
w Journal of Commerce, September 25,1941.
70 XJ. S. Senate, 77th Cong., 2d sess., Additional Report of the Special Committee Investigating the
National Defense Program, 1942, p. 24.

224

Wartime Prices—August 1939 to Pearl Harbor
T able

53.—SLA B Z IN C : Prices, Production, Shipments, and Stocks,
August 1939-December 1941

[Sources: Production, shipments, and stocks—American Zinc Institute; prices—Bureau of Labor Statistics]

Year and month

Producers*
price2

Production1

Shipments
(total)

Stocks, end
of month

Tons of 2,000 pounds
August__
September
October...
November
December.
January...
February.
March___
April........
M ay.........
June..........
July..........
August__
September
October...
November
December.
January...
February.
March___
April........
M ay.........
June.........
July..........
A u gu st....
September
October. __
November
December.

19S9

Cents

5.1
6.4
6.9
6.9
6.4

40,960
42,225
50,117
53,524
57,941

49,928
69,424
73,327
64,407
53,468

122,814
95,615
72,405
61,522
65,995

6.0
6.0

58,442
55,518
58,890
57,299
58,320
53,273
57,168
57,196
59,800
63,338
61,502
65,354

59,825
53,867
52,796
50,102
67,083
56,800
64,691
72,989
75,193
73,099
66,064
70,270

72,878
74.529
80,623
87.820
79,057
75.530
68,007
52,214
36.821
27,060
22,498
17,582

66,121

68,844
65,818
67,640
70,414
73,090
71,569
71,894
71,403
71,767
73,989
73,363
77,755

14,859
10,644
13,345
11,474
11,833

6.1
6.1
6.2
6.6
6.6
6.7
7.3
7.6
7.6
7.6

7.6
7.6
7.6
7.6
7.6
7.6
7.6
7.6
7.6
8.4
8.6
8.6

61,603
70,341
68,543
73,449
70,837
74,641
75,524
73,225
76,156
74,951
78,635

11,101

13,848
17,969
19,427
21,594
23,182
24,062

1 All grades. Commencing with January 1940, production from foreign ores 1s included; the figures for
1939 do not include production from foreign ores.
* Zinc, pig, slab, western, per pound, New York.

Tin
Except for a brief flurry immediately after the outbreak of war in
Europe, the price of tin remained comparatively stable during the
period, August 1939-December 1941. The net advance during these
27 months amounted to a little more than 6 percent, from 48.8 cents
per pound in August 1939 to 52 cents at the time of Pearl Harbor.
(See table 54.)
Within 2 weeks after Poland was invaded, the price of tin, c. i. f.
New York, jumped from 48 cents a pound on August 28 to a peak of
74 cents per pound on September 12.71 American buyers purchased
large quantities of the metal, and imports rose from 4,700 tons of
refined tin in August to 12,500 tons in December 1939. To check the
rapid price rise resulting from these purchases, the British Govern
ment on September 18 established maximum prices in the Straits
Settlement market.72 In addition, the International Tin Committee
raised export quotas for the last quarter of 1939 from 60 to 100
percent of so-called standard tonnages 73 and again to 120 percent
for the first quarter of 1940. Primarily as a result of these actions,
h Iron Age, September 14,1939.
72 New York Times, December 10,1939.
72 Standard tonnages were originally based on 1929 exports, but were subsequently revised.

Chapter V III.—Metals and Metal Products

225

the quotation for tin declined steadily from its September high through
the remainder of the year and continued at the relatively low level of
about 47 cents per pound until May 1940.
Higher prices prevailing in M ay and June, when tin sold for more
than 54 cents, were probably attributable to a reduction in the export
quotas for the second quarter of 1940 to 80 percent of the base.
According to the Journal of Commerce (February 21, 1940), this
reduction “was plainly for the purpose of raising prices.” However,
quotas were promptly raised for the third quarter to 130 percent of
the base, where they remained throughout the Defense Period, and
both the United States and British Governments cooperated vigor
ously in accumulating supplies. The price of tin fell 4 cents during
ensuing m onths to 50 cents per pound in September.

The Reconstruction Finance Corporation during this period set out
to purchase 75,000 tons of tin at 50 cents per pound, New York, for
stock-pile accumulation.74 At the same time Government officials
urged industrial consumers to increase their holdings to at least 1
year’s supply. Stocks of tin in the United States in mid-1940 were
estimated at less than 4 months’ normal requirements.
A few months later the Government moved in another direction to
increase United States stocks. The Metals Reserve Company in midOctober arrived at an agreement with Bolivian producers to purchase,
during the next 5 years, tin concentrates equivalent to 18 thousand
tons of fine tin per annum. Average United States consumption of
tin ranges in peace years between 70 and 80 thousand tons. By
February 1941, plans had been completed for the construction of an
RFC-financed plant in this country with sufficient capacity to smelt
the Bolivian ore. The plant was to require 8 months for construction
and was to be operated by experienced Dutch tin producers.75
In 1941 the tin market, after dull trading in January and February,
became increasingly active, owing both to the growing tension in the
Far East and to the steady increase in demand. Tin was especially
needed for tin plate—used in cans—which accounts for 60 percent of
United States consumption; and also for solder, babbitt metal, and
bronze, requiring 21, 7.2, and 6.8 percent, respectively.76
The demand for tin cans was swollen by the rise in domestic con
sumer purchasing power, by the mounting requirements of the armed
forces in this country, and by shipments to Britain under the food-fordefense program. In addition, the British curtailed their tin plate
production, with the result that their colonies and certain foreign
markets ordinarily served by them were forced to turn for tin plate
to the United States.77 The demand was further increased by efforts
of nondefense users in this country to accumulate inventories in
response to Government request and also as protection against
possible rationing.78
This tight market situation and fears that shipments m ight be
interrupted 79 led to a price increase in February. As a result of
this increase, the Office of Production M anagement issued a warning
that the Government would commandeer all tin supplies if shipments
7* Journal of Commerce, July 9,1940.
78 Wall Street Journal, February 19,1941.
76 Idem, July 24, 1941: Other uses are for collapsible tubes, 5.9 percent; chemicals, 1.8 percent; type
metal, 1.9 percent; tinning, 3.1 percent; and tin oxide, 1.7 percent.
77 Daily Metal Trade, March 26,1941.
78Journal of Commerce, May 26,1941.
78Idem, February 21,1941.

226

Wartime Prices—August 1939 to Pearl Harbor

TIN
IMPORTS AND IMPORTERS’ PRICES
IM P O R T S

BUREAU OF LABOR STATISTICS

THOUSANOS OF

Chapter V III.—Metals and Metal Products

227

were interrupted. At the same time, the Reconstruction Finance
Corporation assured the International Tin Committee that it would
purchase all the tin which the cartel would sell, provided that suffi
cient shipping space was available.80 Once again, Government action
brought about a relative stabilization in the price.
In May, however, tin prices began another upward movement and
in Juty reached 54 cents. Noting this increase, the Office of Price
Administration and Civilian Supply on July 28 issued a warning
that a price ceiling might be imposed in the near future. At the same
time, the Office of Production Management requested buyers “not
only to refrain from increasing their stocks but also to cease replacing
their current consumption until such time as the increase acquired
by them since June 1940 is reduced by one-half.”
The price, however, continued to rise with the result that on
August 15 the Office of Price Administration and Civilian Supply
established a ceiling of 52 cents a pound for grade A pig tin. The
expressed reaction of the trade was given in the Journal of Commerce
for August 15, 1941: “Tin dealers here yesterday expressed relief at
the provisions of the tin ceiling * * * earlier talk of a 50-cent
maximum had been disquieting.”
Within a week after the imposition of the ceiling it became difficult
for buyers to obtain tin.81 To meet this situation, the Metals Reserve
Company—which on September 13 reported the possession of 39,592
tons of refined tin, delivered—agreed on August 23 to release some of
its tin to consumers who could produce evidence that they needed the
metal for current requirements and not merely for stock accumula
tion. Very few applications, however, were made, a fact which was
interpreted by the trade as indicating the inability of consumers to
furnish evidence that the metal was needed for current use.82
Although thus adequately supplied in August for short-term
requirements at least, industrial users of tin were faced with a decline
in shipments, a problem aggravated by the.beginning of an advance
in the Singapore price. By the end of August that price had advanced
to a figure equivalent to 51.8 cents, c. i. f. New York, which was so
close to the ceiling price of 52 cents that many importers reportedly
did not feel justified in handling the business.83 The upward price
trend in Singapore continued until at one time in October 1941, the
Singapore price was 52.57 cents in the New York equivalent,84 part
of the rise being a result of the increase in shipping insurance rates
from % to 1 percent via the Pacific route.
Between the end of August and the Pearl Harbor attack the Singa
pore price fluctuated within a narrow range around the ceiling, with
the result that many dealers were reluctant to buy tin for resale.
Imports accordingly declined considerably in the last 3 months of
the year, a situation which gave rise to reports from time to time
that the Government was planning to take over the entire purchase,
transportation, and distribution of tin.85 No such action was taken
during the Defense Period, however, although immediately after
Pearl Harbor rigid restrictions were placed on the use of the metal.
At that time, it was estimated that the supply of tin on hand was
sufficient for 15 months.86*
w Daily Metal Trade, February 28, 1941.
84 American Metal Market, October 24,1941.
84 American Metal Market, August 22,1941. 88 Cf., e. g., American Metal Market, September 12,1941.
88 Idem, August 27, 1941.
88 American Metal Market, December 9,1941.
88Idem. Metal Market, September 9,1941.

228

Wartime Prices—August 1939 to Pearl Harbor
T able 54.— TIN : Prices and Imports, August 1939-December 1941

[Sources: Prices—U. S. Bureau of Labor Statistics; imports—U. S. Bureau of Foreign and Domestic
Commerce]
Year and month

19S9

August___________________
September_______ ____ ____
October....................... ............
November................................
December________________
mo

Jn.nnn.ry__________________
February_________________
Marnh
April_____________ _______
M ay_____________________
.Tiinn __ _
July...........................................
August
_______________
Spptnmhftr _
October.....................................

Imports
in long
tons7

Price per
pound 2

4,735
4,427
5,247
7,629
12,518

$0,488
.680
.562
.530
.512

8,851
6,499
10,334
7,886
7,982
11,611
9,185
12,926
14,604
10,116

.470
.464
.472
.470
.520
.542
.518
.514
.502
.515

Year and month

Imports Price per
in long pound2
to n s1

1940

November___ ____________
December________________

10,237
14,504

$0,506.501

12,055
9,836
13,896
15,427
13,060
11,552
14,765
11,575
12,196
8,222
9,114
9,356

.601
.513
.520
.520
.522
.526
.536
.522
.520
.520
.520
.520

1941

January__________ _______
February..................................
March......................................
April______ ______________
May______ ______ _______
June...................... ....................
July...........................................
August_______ ___________
September___ ____________
October.............................. ......
November________________
December________________

7 Bars, blocks, and pig.
a Pig, New York.

Aluminum
In contrast to the trend of most other strategic metals, the price of
aluminum dropped steadily during the Defense Period. Four suc
cessive reductions brought the price charged by the Aluminum Co. of
America for virgin pure aluminum ingot down from 20 cents per
ound in August 1939 to 15 cents in October 1941—25 percent
elow the pre-war level—where it remained for the remainder of the
year. (See table 55.)

T able 55.—A L U M IN U M Ingot, 98-99 Percent Virgin: Producers9 Prices, 1939-41
[Source: U. S. Bureau of Labor Statistics]

Year and month

January..
February.
March__
April___
May....... .
June.........

Price (in cents) per
pound
1939

1940

1941

20.0
20.0
20.0
20.0
20.0
20.0

20.0
20.0
19.8
19.0
19.0
19.0

17.0
17.0
17.0
17.0
17.0
17.0

Year and month

July.............................................
August........................................
September...................................
October.......................................
November...................................
December...................................

Price (in cents) per
pound
1939

1940

20.0
20.0
20.0
20.0
20.0
20.0

19.0
18.0
18.0
18.0
17.5
17.0

1941
17.0
17.0
17.0
15.0
15.0
15.0

Although long-term stability of price has been the outstanding
characteristic of its policy, the Aluminum Co. of America in February
1940 lowered its price to 19 cents from the 20-cent level which had
prevailed from March 1937. A reduction to 18 cents followed in
August, with a further drop to 17 cents in November.87 In August
87 Shortly before the outbreak of war in Europe, the Department of Justice, which was prosecuting the
Aluminum Co. of America for violation of the antitrust laws, placed in the public record of the trial figures
showing the cost of producing aluminum as computed by the Department from the books of the company.
According to these figures, in 1937, the total net mill cost of producing pig aluminum, plus the cost of
converting the pig aluminum into commercial ingot, plus administrative and selling expenses, was 9.6
cents per pound. (Source: United States District Court, Southern District of New York, u . S. of America
v. Aluminum Company of America et al., Vol. XVI, Exhibit 718. Received in Evidence, May 6, 1939.)
These figures, which did not include the following overhead expenses—freight and express, duty paid,
interest and discount paid, cash discounts on sales, royalty paid, premiums and special items, expense
A. M. I. lease, idle plant expense, rent expense (Buffalo, Detroit, Edgewater)—were contested by the
company.

Chapter V III.—Metals and Metal Products

229

1941, as a result of negotiations with the Government, the companyagreed to lower its price to 15 cents on all shipments made after
September 30.8889
Meanwhile the Keynolds Metal Co., which in 1940 began the produc
tion of aluminum at its first plant of 40 million pounds capacity, an
nounced that its initial price would be approximately 12 cents per
pound and that a 2-cent reduction would be effected “after the ma
chinery and men were broken in.,, 89
The reduction in the price of aluminum during the Defense Period
occurred in the face of acute shortages of supply which developed
during 1940 and 1941. In June 1940, the Office of Production Manage
ment estimated that a primary annual production of some 400 million
pounds,90together with a secondary output of 75 million pounds, would
be sufficient to meet the military requirements of a 2-year emergency
period. The Army and Navy Munitions Board had estimated annual
requirements to be 480 million pounds.91
However, tremendously increased demand rapidly outstripped
available supplies. In the fall of 1940, plans were announced for an
annual production of 50,000 airplanes, requiring an additional esti
mated 150 million pounds of aluminum per year. The inauguration
of the British Aid Program in 1940 further increased requirements,
while estimates were steadily revised upward during 1941 as the
defense program was intensified.
The Office of Production Management estimated the aluminum
shortage for defense and essential civilian demand during the month
of June 1941 alone, at 4,400,000 pounds,92 and in July announced
that not only was there no aluminum available for civilian use, but
that there also existed an “urgent problem” in supplying enough
fabricated aluminum parts even to defense plants.
Various steps were taken by the Government to increase aluminum
production. In January 1941, plans were made to increase annual
output to 880 million pounds a year by the fall of 1942.93 By the
end of August this figure had been raised to 1,500 million pounds, a
rate which, it was hoped, would be achieved by the fall of 1942 or at
least the beginning of 1943. On August 19, 1941, the Government
contracted with the Aluminum Co. of America for the construction
of four new plants with an annual capacity of 340 million pounds,94
and further contracts were subsequently let for expansion amounting
to an additional output of 300 million pounds annually.
In December 1941, the supply situation was as follows:
Pounds
(in millions)

Capacity as of December 1941______________
New capacity under construction___________
Imports from Canada_________ _____ ______

650
640
200

Total......... .............................................

1,490

88Journal of Commerce, August 21,1941.
89 Idem, May 14,1941.
80 In 1940, the total output of the Aluminum Co. of America was 412.6 million pounds.
81 Investigation of the National Defense Program, U. S. Senate (77th Cong., 1st sess.), Special Committee,
8. Res. 71, Hearings, Pt. I ll, p. 824.
88Journal of Commerce, July 17,1941.
88Investigation of the National Defense Program, op. cit., p. 825.
88 Cf. Huge Expansion of Aluminum Capacity Will Help Meet Wartime Demand for Light Metal,
by H. A. Franke, of the Metal Economics Division, 17. S, Bureau of Mines. (Daily Metal Reporter
Monthly Supplement, December 1941.)

Chapter IX.— Building Materials
Summary
Construction activity during the Defense Period kept pace with the
swift growth of military preparation, industrial expansion, and the rise
in consumer purchasing power. Beginning in the summer of 1940
the Federal Government awarded contracts for Army camps, other
military facilities, and war-material plants. Private expenditures—
for industrial facilities, for housing defense workers, and for other
purposes—rose sharply. In 1941, the total volume of expenditures
on construction in the United States reached nearly 11 billion dollars,
70 percent above the total for 1939.1 Almost half of these expendi
tures were for Government construction, mainly for industrial,
military, and naval facilities. (See table 56.)
T a b l e 56.— Construction Expenditures in Continental United States, 1939-411
[Source: U. S. Bureau of Labor Statistics, Bull. No. 713, Building Construction, 1941]

Type of construction and ownership

Expenditures (millions
of dollars)
1939

Percent of total
expenditures

1940

1941

1939

1940

1941

All construction................................................................

6,451

7,299

10,969

100.0

Private construction.........................................................
Residential (nonfarm)i2*.............................................
Nonresidential............................................................
Farm:
Residential........... ...............................................
Service buildings........ ........................................
Public utility............................................................

3,878
2,046
768

4,604
2,359
1,015

5,667
2,881
1,244

60.1
31.7
11.9

63.1
32.3
13.9

51.7
26.3
11.4

235
295
534

250
320
660

300
415
827

3.6
4.6
8.3

3.4
4.4
9.1

2.7
3.8
7.5

.Public construction............ _............................................
Residential.................................................................
.Nonresidential:
Industrial facilities............. ................................
Military and N aval8................................. ........
Other....... .............................................................
'Highway..................................... ...............................
Other public:
Federal4_______________________________
State and local8.................. ..................... ..........

2,573
72

2,695
202

5,302
442

39.9
1.1

36.9
2.7

48.3
4.0

20
128
814
872

130
481
365
932

1,236
1,710
264
999

.3
2.0
12.6
13.5

1.8
6.6
5.0
12.8

11.3
15.6
2.4
9.1

329
338

346
239

421
230

5.1
5.3

4.7
3.3

3.8
2.1

1 Estimates include expenditures for new construction and major additions and alterations, but^ exclude
expenditures for maintenance and work-relief construction.
2Estimates adjusted to new levels indicated by the 1939 Census of Housing.
* Does not include industrial facilities or defense housing (for families of enlisted men).
4 Mainly river, harbor, flood control, reclamation, and power projects.
• Includes water supply, sewage disposal, and miscellaneous public-service enterprises.

Prices of building materials on the average rose 20 percent between
August 1939 and December 1941, somewhat less than the advance of
the Bureau of Labor Statistics index for all commodities. There were,
however, substantial differences in price behavior of the various types
of materials. These differences were related in part to the variety in
market and industrial structures characterizing these products and in
pftrt to the uneven impact of demand arising from the nature of con
struction undertaken. Thus, the price advance for lumber was par
ticularly sharp—44 percent on the average. (See table 57.) The
extent of this rise is explained primarily by two factors: the demand
i Although higher than any year in the 1930’s, the level of construction activity in 1941 was still consider
ably below that in the boom years of the middle 1920’s. However, the nature of the later construction was,
for obvious reasons, quite different, with relatively greater emphasis on industrial and military facilities.

230

231

Chapter IX .—Building Materials

for lumber was especially great in view of the Army cantonment
program; in addition, lumber is produced by a large number of com
panies in contrast to the high degree of industrial concentration
characteristic of most other building materials. Price changes for
other products in this group ranged from virtual stability for structural
steel,2 plaster and plasterboard, plate glass, and cement to advances
of 17%percent for paints and paint materials and from 15 to 29 percent
for asphalt roofing.
T a b l e 57.—B U IL D IN G M A T E R IA L S :

Wholesale Prices, August 1939December 1941

[Source: U. S. Bureau of Labor Statistics]
Indexes (August 1939 =100) of—

Year and month

19S9

August................ ....................
September...............................
October........... ........................
November............................. December...............................
1940

January...................................
February................................
March.................. ..................
April.................... ..............
May.......................................
June____________________
July.........................................
August....................................
September.................. ...........
O ctober............ — .............
November........... ..................
December...............................
m i

January...................................
February............. .................
March......................... ...........
April........................................
M a y ......................................
June........ ................ ............ July................. .......................
August.............. ....................
September _____________
October................................ .
November..............................
December............ ..................

All
build
ing ma
terials

Brick
and
tile

Cement Lumber

Paint
and
paint
mate
rials

Plumb
ing and
heating

Struc
tural
steel

Other'
build-ing ma«terials

100.0
101.5
303.6
103.8
103.8

100.0
100.6
101.1
101.2
101.2

100.0
100.0
100.0
100.0
100.0

100.0
104.1
110.5
111.1
110.4

100.0
103.2
104.4
103.4
104.1

300.0
100.0
100.0
100.0
100.0

100.0
100.0
100.0
100.0
100.0

100.0
100.9
102.7
103.8
103.6

104.2
104.0
104.1
103.2
103.2
103.3
103.2
104.1
106.7
109.2
110.4
110.8

101.2
100.8
99.9
99.7
99.7
99.7
99.6
99.6
99.7
99.7
99.7
100.7

100.1
100.1
99.9
98.9
99.1
99.2
99.2
99.2
99.2
99.3
99.5
99.6

109.5
108.4
108.1
107.3
106.6
105.2
105.2
109.2
118.9
127.0
130.4
131.9

106.2
105.7
106.2
105.6
104.7
103.8
103.0
102.6
102.4
103.3
104.4
104.0

100.0
99.7
102.1
102.0
101.6
101.5
101.5
101.5
101.5
101.5
101.5
101.5

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

104.1
103.8103.6103.1
103.0
103.9
104.6
104.4
104.5
104.8
105.2
105.6

111.2
110.8
111.0
111.7
112.1
112.7
115.1
117.7
118.8
119.8
120.0
120.3

100.9
101.0
101.1
101.3
101.5
102.2
104.1
105.1
105.7
106.7
106.7
106.9

99.5
99.5
99.5
99.7
100.2
100.7
100.9
100.9
101.0
101.5
102.0
102.3

131.4
130.1
129.5
129.5
129.6
130.5
135.7
141.5
143.3
143.7
142.8
143.6

105.6
105.5
106.5
108.0
108.8
110.0
111.6
113.6
115.3
116.9
116.1
117.5

101.5
103.7
104.4
104.7
104.7
104.8
104.9
109.5
109.8
110.7
110.8
112.4

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

106.0
106.0
*106.4
107.1
107.6
108.3
109.9
111.6
112.0
113.4
115.3
114.5

i Includes plaster and plasterboard, roofing, plate and window glass, sand, gravel and stone, hard
ware, and other lumber and metal products.

Except for the speculative rise immediately following the outbreak
of war in Europe, the advance for lumber came in two main stages.
From the early fall of 1940 until January 1941 prices rose briskly—as
much as 30 percent above August 1939 for some of the leading soft
woods—as the Government awarded contracts for Army camp con
struction. The Army buying program, which was hampered at the
beginning by a lack of centralization and consequent exaggeration of
a Although quoted base prices for structural steel remained unchanged, the cost to buyers was raised’
considerably through the imposition of “extra” charges and the withdrawal of concessions formerly
allowed. Prices of steel and steel mill products are discussed in Chapter VIII.—Metals and Metal Products.

232

Wartime Prices—August 1939 to Pearl Harbor

actual demand,3 subsided in the early months of 1941, but was re
sumed later. Accordingly, after a brief period of weakness, prices
turned upward again in the early summer of 1941 and continued rising
until in the fall and winter, a series of maximum prices were issued by
the Price Administrator for products most widely out of line. Ad
vances from August 1939 to December 1941 ranged from 47 to 58
percent for softwoods and averaged nearly 40 percent for hardwood
flooring. For certain lumber products (mlllwork), such as Ponderosa
pine doors, increases of more than 40 percent took place.
While tightness in supply appeared early in markets for lumber,
capacity or near capacity levels of production for most other building
materials were not approached until the late months of 1941. Some
kinds of materials, however, remained in good supply. Output in
most cases was centered mainly in a few large companies which through
out the 1930’s had been burdened by costly excess capacity to produce.
With the increase in demand during the Defense Period, production
expanded promptly and the resulting reduction in overhead unit costs
was in many cases substantial. Production of plaster and plaster
board, plumbing and heating equipment, window and plate glass, and
cement rose substantially, some as much as 50 percent; but in several
•cases—e. g., window glass and cement—existing capacity was in
considerable part, not being used.
Price increases between August 1939 and December 1941 for plumb
ing and heating equipment averaged 12 percent; for window and plate
glass, plaster and plasterboard, and cement, changes varied from slight
declines to increases of almost 6 percent. In the case of asphalt
roofing initial increases were considerably greater—ranging up to 29
percent by November 1941—but maximum prices fixed in early
December by the Office of Price Administration resulted in substantial
reductions.
Prices of prepared paints were likewise relatively stable, despite the
fact that the cost of paint materials rose substantially. The average
increase during the Defense Period for prepared paints was 6 percent.
On, the other hand, increases for paint materials averaged 33 percent.
These sharp advances occurred for various reasons. Some imported
paint materials (such as China wood oil) were shut off or were more
expensive to obtain, and their scarcity intensified pressure on supplies
of certain domestic products such as linseed oil. For other products
costs of production increased and, in the case of naval stores, supply
was restricted by the conservation program of the Department of
Agriculture.
Shortages of basic materials resulted in substantially higher prices
for some metal products, as, for example, building hardware—locks
and door knobs, rose as much as 40 and 75 percent, respectively,
between August 1939 and December 1941. On the other hand,
quotations for structural steel were relatively stable, though prices of
some other metal products used in construction, such as copper and
zinc sheets, increased substantially, as described in Chapter V III—
Metals and Metal Products.
3 In describing conditions in the fall of 1940, the first quarterly report (for the period ended April 30,1942)
of the Office of Price Administration declared: “There was no centralization of Army purchases. Individual
contractors, on being given contracts, went out into the market to bid, and at the same time called on brokers
and dealers to assist them in finding the necessary materials. Though only a billion feet of lumber were
needed in the cantonment program, more than 2 billion feet were being bid for in the market because of the
confusion induced by this want of centralization.”

233

Chapter IX .—Building Materials

BUILDING MATERIALS
WHOLESALE PRICES
AUGUST 1939*100

A L L BUILDING M A T E R IA L S

INDEX
140

130

120
110
100

A S ON D J F M A M J J A S 0 N 0 J
1939

in d e x

1 9 4 0

l A M J J A S O N O J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O NO
1941

1 9 4 2

1 9 4 3

LUMBER, PAINTS AND PAINT MATERIALS, AND OTHER BUILDING MATERIALS

100

1 9 4 4

in d e x

180

170

160

150

140

130

120

110
100

234

Wartime Prices—August 1939 to Pearl Harbor

During the comparable period in World War I, price increases for
building materials were considerably greater in almost all cases.
Against an over-all increase of 20 percent between August 1939 and
December 1941, prices of building materials as a group rose 34 percent
between July 1914 and November 1916. Unlike the current situation,
however, the sharpest increases in World War I occurred for structural
steel, for which prices rose 135 percent. On the other hand, prices of
lumber in late 1916 were only 14 percent above their level at the out
break of war. The sharp advance in structural-steel prices was in
keeping with the behavior of most metals and metal products during
the first World War. The relatively small increase for lumber,
however, was largely fortuitous and was due to a temporary weakness
in prices which occurred as the result of the transportation tie-up in
1916. The inability to ship lumber during that period, together with
the fact that production is not susceptible to prompt curtailment
because of the large number of producers in this industry, resulted in
large supplies being accumulated which could be sold only at heavy
discounts.
Softwoods
Softwood prices between August 1939 and December 1941 m oved
sharply upward on three different occasions. The first advance oc
curred shortly after the outbreak of war and reflected speculative
activity and purchases by dealers for inventory ; the second and largest
increase came in the fall of 1940, with the initiation of the Arm y can
tonm ent program; and the third rise took place in the fall of 1941,
following renewal of the cantonment program, expansion of emergency
construction of all kinds, and the efforts at substitution of lumber for
scarce metals. B y December 1941, prices of southern pine were 47
percent above their August 1939 level; quotations for Douglas fir were
68 percent higher and for western pine, 56 percent higher.
SO U TH ER N

P IN E

Im m ediately after the outbreak of war in Europe, prices of southern
pine rose substantially. The increase for No. 2 common boards, for
example, amounted to almost 18 percent by Novem ber 1939. New
orders, which had averaged 644 million board feet a m onth during the
first half of 1939, jumped to 776 million in August and to 909 million
in September, as dealers m oved to build up inventories. (See table
57.) This flood of orders reflected mainly dealers’ attem pts to protect
them selves against anticipated stock shortages at the mills, owing to
heavy war dem ands;4 in addition, many purchases were made in
anticipation of a price rise reflecting higher minimum wages (scheduled
to rise on October 24 from 25 to 30 cents per hour) established under
the Fair Labor Standards Act.

After reaching a peak in November, the price turned downward
because war demands failed to materialize as anticipated and con
struction activity showed no material increase. The large stocks
which .thus remained on hand depressed the market and prices declined
gradually throughout the first half of 1940.
In July and August, however, southern pine prices began a rapid
upward movement. Between July and November 1940 the price of
4 T h e T im berm an, January 1940.

Chapter IX .—Building Materials

235

No. 2 common board rose 51 percent to a peak of $33.01 per thousand
board feet, f. o. b. mill— 58 percent above its pre-war level. This ad
vance resulted largely from the needs of the cantonment program fol
lowing enactm ent of the Selective Service Act in September 1940.
I t was estimated, in August, that 650 million board feet of lumber of
all types would be required imm ediately for this purpose and that be
tween 4 and 5 billion board feet, almost one-fifth of the 1940 produc
tion, would be needed during the following 12 m onths.5 In addition,
building construction rose markedly during the second half of 1940,
reaching a level, in October, 80 percent above the m onthly average for
the first 6 months of the year.6 These increases in demand carried
orders for the fall m onths to record levels, and in spite of substantially
increased production, stocks of southern pine fell by December to
1,500 million board feet.
Several Government officials expressed concern at the rapid advance
of softwood prices. On September 9, 1940, Price Commissioner
Henderson stated that the sharp rise was caused by “unfounded
rumors” relative to defense needs;7 2 weeks later Edward R. Stettinius, Jr., of the National Defense Advisory Commission echoed this
sentiment, pointing out that no shortage of lumber would develop;8
and on December 2, Thurman Arnold, head of the Anti-Trust D ivi
sion of Departm ent of Justice, intim ated that price increases in the
South m ight bring action from his office.9
By October the increase in new orders, which followed the incep
tion of the cantonment program, had run its course; and in December,
prices of southern pine began a gradual decline, as monthly orders
dropped and stocks slowly rose to 1,800 million board feet by May
1941. The decline continued until June 1941, when the price of No.
2 common boards was 8 percent below its peak of the previous No
vember, although still 45 percent above the August 1939 quotation.
During this period the Army announced a plan to acquire gradually
a stock pile of lumber, which could be used in the event of any future
rapid expansion of demand, and which, it was hoped, would avoid
any repetition of the price increase in the second half of 1940.101
Prices turned up again in July 1941, following a sharp increase in
new orders, beginning in M ay. N ew orders rose from 888 million
board feet in April to 1,216 million in July, owing to anticipation of a
new cantonment program, expanded construction for ships, railroad
cars, and aircraft, and the substitution of lumber in m any cases for
metals, which were becoming difficult to obtain.11 Output lagged
behind demand at this time, new orders averaging 19 percent above
the level of production during M ay, June, and July. As a result, the
price of N o. 2 common boards rose from $30.28 in June to $34.55 in
August, an increase of 14 percent.
To arrest this advance, the Office of Price Administration and
Civilian Supply held a conference with representatives of the southern
pine industry on August 6, and thereafter conferences were also held
with numerous individual members of the trade. On August 16,1941,
5 W ashington P o st, A u gu st 31,1940.
6 13. S. D ep artm en t of C om m erce, S u rvey of C urrent B usiness.
7 W ashington Star, Septem ber 10,1940.
s W all Street Journal, Septem ber 27,1940.
9 Id em , D ecem b er 3,1940.
10 Journal of Com m erce, M arch 3,1941.
11 Id em , A u g u st 25,1941,

547953— 44-------16

236

Wartime Prices—August 1939 to Pearl Harbor

a price ceiling which reduced southern pine prices roughly $3 per
thousand board feet was announced, effective September 5.12 In
establishing the ceiling, the Price Administrator declared that the
order would result in savings of more than $20,000,000 per year to
the Government and civilian consumers.
When the ceiling was announced on August 16, “practically all
southern pine manufacturers felt that the prices were too low.” 13
Following further conferences between Government officials and
members of the industry, a revised order was issued on September 4,
raising the level of a number of the ceiling prices. This adjustment,
Mr. Henderson stated, was made, “after full hearing of their [the in
dustry’s] complaints and in the light of additional data collected by
my office, * *
14 Finally, on November 19, additional minor
adjustments were made in the order—freight-car construction lumber,
previously omitted, was placed under the ceilings; certain of the estab
lished prices were moderately increased, and others were lowered.15
By December 1941, the price of No. 2 common boards had been
reduced to $30.80 per thousand board feet—47 percent above its pre
war level, but 11 percent below the August 1941 peak.
DOUGLAS FIR AND WESTERN PINE

Price trends for Douglas fir and western pine during the Defense
Period were similar to those for southern pine, although there were
some differences in the extent of their advances. During the months
immediately following the outbreak of war, prices rose sharply and
then weakened through the early part of 1940. Prices of both types
of lumber responded sensitively to the Government cantonment pro
gram in the latter part of that year. From July to December, quo
tations for Douglas fir rose about 50 percent and those for western
pine about 35 percent. New orders during most of this period were
considerably ahead of production. Commenting on the price ad
vance, a representative of the West Coast Lumberman’s Association
declared:
The National Defense Program came unexpectedly and very suddenly into the
picture. There was no diminution in private building. We already had com
fortable orders when during the balance of the year the Government came in
with orders that represented, in broad terms, 20 percent of our production for the
first half of the year.16

As in the case of southern pine, prices declined moderately during
early 1941 and then turned upward abruptly as the pace of the Na
tional Defense Program quickened. By August, prices of Douglas
fir were nearly 70 percent above their pre-war level and those for
western pine were more than 50 percent higher. After repeated
warnings, the Office of Price Administration and Civilian Supply
issued a maximum price order for Douglas fir, fixing ceilings for the
common grades at approximately prevailing market levels, though
there were some reductions for upper-grade qualities.17 During
October and November, orders dropped well below the level of pro
duction and Douglas fir quotations declined, but jumped back to
ceiling levels immediately following the attack on Pearl Harbor.
w Office for E m ergen cy M anagem ent, R elease N o. P M 961, A u g u st 16,1941.
13 Sou thern L um berm an, D ecem ber 16,1941.
1* Office for E m ergency M anagem ent, R elease N o. P M 1081, Septem ber 4,1941.
i® Id em , R elease N o. P M 1603, N ovem b er 19,1941.
i® S eattle P o st Intelligencer, Janu ary 24,1941.
ii Office for E m ergen cy M an agem en t, R elease N o. P M 1124, Septem ber 11,1941.

237

Chapter IX .—Building Materials

DOUGLAS FIR

MILL PRICES, PRODUCTION, NEW ORDERS,AND STOCKS
AUGUST 1939 * IOO
IN D E X

M IL L P R IC E S

IND EX

PRODUCTION , N E W O R D E R S,A N D S T O C K S

IN D EX

180

160

140

120

100
60

40
UN'TED STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS

238

Wartime Prices—August 1939 to Pearl Harbor

Prices of western pine rose through October but weakened later
because of rumors of Office of Price Administration action. On
December 3, it was formally announced that maximum prices would
be established, but these did not go into effect until 1942.18*
T able

57.— SOFTWOODS:

M ill Prices , Production , New Orders, and Stocks,
August 1939-December 1941

[Sources: Production, new orders, and stocks—IT. S. Department of Commerce, Survey of Current Business,*
prices—IT. S. Bureau of Labor Statistics]
Southern pine

Year and month

Douglas fir2

Western pine4

Stocks Price Pro New Stocks
Pro New Stocks
Price Pro New
Price duc
or end of index3
duc or end of index®
or end of
index1 duc
tion
tion
ders
month
ders
month
(Au
(Au
(Au- tion ders month
gust
gust
gust
1939=
Millions of board 1939=
Millions of board 1939=
Millions of board
100)
100)
100)
feet
feet
feet

19S9

August................
September_____
October...............
November..........
December...........

100.0
106.7
117.5
117.7
115.5

705
640
686
663
626

776
909
677
561
495

2,018
1,907
1,811
1,825
1,919

100.0
100.0
110.5
110.5
105.3

613
613
634
611
544

884
721
589
470
516

869
838
839
908
930

100.0
105.1
114.0
117.7
116.7

554
503
494
432
292

517
607
476
310
331

1,965
1,977
1,954
1,953
1,923

114.9
669 667
112.8
708 666
110.9
807
758
109.1
826 852
105.1
856 869
104.1
763 784
104.4
793 967
111.3
914 1,142
131.9
937 1,103
154.8 1,049 1,171
157.7
931 960
155.6
910 832

1,949
2,014
2,037
2,028
1,991
1,996
1,912
1,814
1,681
1, 556
1,477
1,503

105.3
105.3
105.3
105.3
105.3
105.3
105.3
112.3
128.9
134.2
147.4
157.9

580
553
604
639
621
637
573
684
634
653
608
611

615
568
615
629
603
599
734
821
733
713
649
636

953
961
976
981
926
920
900
892
865
860
867
851

116.2
114.5
114.0
114.5
110.3
108.0
103.5
100.9
109.5
122.9
139.7
140.3

215
212
279
390
524
543
572
620
551
546
415
344

325
300
354
400
457
421
495
653
629
546
441
397

1,829
1,744
1,672
1,664
1,745
1,861
1,962
2,043
2,051
1,997
1,917
1,812

154.2
154.7
152.1
150.8
147.2
144.7
152.7
165.1
157.9
148.2
147.2
147.2

1,506
1,539
1,642
1,737
1,795
1,747
1,590
1,456
1,422
1,375
1,398
1,425

152.6
147.4
144.7
147.4
147.4
152.6
161.8
168.4
168.4
152.6
152.6
157.9

683
677
760
750
672
703
700
822
742
787
678
747

666
660
799
749
797
771
776
705
679
671
590
946

855
889
885
888
867
838
831
819
821
854
929
971

142.2
140.7
140.8
142.3
142.1
141.4
143.9
150.8
153.9
157.8
157.6
156.2

266
269
348
475
579
623
682
695
671
646
443
362

425
380
480
502
560
637
607
523
543
542
387
491

1,663
1,551
1,479
1,469
1,523
1,593
1,665
1,733
1,775
1,788
1,779
1,721

1940

January_______
February.............
March____ ____
April_____ ____
May.... ................
June.....................
July...... ...............
August________
September_____
October_______
November_____
December______
1941

January_______
February,..........
March.................
A p r il.................
May.....................
June___ ____ _
J u ly ................. .
August...... ..........
September..........
October___ ____
November...........
December_____

968 978
858 856
931 839
956 888
962 970
850 1,076
931 1,216
949 893
898 885
896 861
824 771
859 800

1No. 2 common board; 1" x 8", S/L, S. L., includes rough, SIS to S4S, shiplap, and center matched, loose,
carlot or mixed car.
2 Data on production, new orders, and stocks refer to lumber produced in the States of Washington and
Oregon only and include small quantities of western hemlock, western red cedar, and Sitka spruce.
3 Boards and shiplap, No. 1 common; 1" x 8", R. L., dried, S4S, mixed carlot.
4 Data on production, orders, and stocks refer principally to Ponderosa pine but also include minor quan
tities of Idaho white pine, sugar pine, and a few other types. 1941 figures are industry estimates and are
subject to revision as Census data become available.
3 Ponderosa pine, No. 3 common board; 1" x 8", R. L., S2 or 4S, loose, carlot or mixed car.

Hardwood Flooring
W hile hardwood finds a wide variety of uses, its principal use in the
construction industry is for flooring. During the Defense Period, the
i8 The order was issued on February 4, 1942, effective on February 15. It established maximum prices
at approximately the levels prevailing in the first week of October 1941. (Office of Price Administration,
Release No. P M l 424, February 4. 1942.)

Chapter IX .—Building Materials

239

sharp rise in demand for hardwoods for this purpose was coupled with
that arising from their use in ships, Army cantonments, crates and
boxes, tent pegs and stakes, Army cots, and other war products. Be
tween August 1939 and December 1941 prices of hardwood flooring
rose about 40 percent.
The advance in prices which immediately followed the outbreak of
war in August 1939 was based primarily upon a brisk rise in orders
for purposes of inventory accumulation. Between August 1939 and
December 1939 stocks of maple, beech, birch, and oak flooring rose
about 8% percent. Prices of maple flooring increased 4 percent and
those for oak flooring, 9 percent. This speculative rise in new orders
soon tapered off, however, and prices leveled off during the first half
of 1940. When the price advance was resumed in the summer of 1940,
it was sharper and more firmly grounded.
The initiation of the National Defense Program at this juncture
involved both large-scale industrial construction and, as pay rolls
increased, a substantial improvement in residential building. In
addition, the passage of the Selective Service Act also reacted strongly
on hardwood markets. Purchases for cantonments, cots, tent stakes,
and similar products stimulated markets for hardwood and led many
buyers to place orders for flooring in anticipation of higher prices. In
July, August, and September, new orders reached an average level
about 24 percent above production. “ Inventories of large [oak floor
ing] plants,” according to the Southern Lumberman (October 1,1940),
were “oversold by many millions of feet.,, As late as November 15,
the same trade journal reported that “ flooring factories are still work
ing at full capacity, selling their product at advanced prices; and the
price of flooring oak is still inching upward.” Mill prices of red-oak
flooring rose from $55.63 per thousand board feet in July to $69.22 in
December, an advance of about 24 percent. Similarly, quotations for
maple flooring rose 20 percent, from $55.30 per thousand board feet
to $66.59.
In January 1941, Price Commissioner Henderson pointed out
that the increase in the general price level had amounted to only
2 percent from May 1940 and that lumber prices were “ completely
out of line.” 19 Industry representatives replied that price advances
were caused by huge Government orders needed for immediate deliv
ery, particularly for the construction of Army camps. However, dur
ing the following 4 months prices remained fairly stable. In the case
of maple flooring, there was a slight increase in price between January
and May of 3 percent; but for oak flooring, there was a slight decline
of 2 percent. Contributing factors were a seasonal decline in building
and the fact that the first stage of the Army construction program
had been completed. Nonetheless, optimism in the trade remained
general and trade journals typically reported that “ the market has
a very firm undertone.” 20
The sharp upturn in prices began in M ay and June. Lower grades
o f flooring m oved more rapidly into industrial uses, while the higher
grades were being used increasingly in shipbuilding and other defense
construction.21 Army purchases were m aterially increased when it
became apparent in the summer that the term of service of selectees
» New York Times, January 24, 1941.
American Lumberman, February 22, 1941.
2i Idem, June 28,1941.

240

Wartime Prices—August 1939 to Pearl Harbor

HARDWOOD FLOORING
MILL PRICES,PRODUCTION,NEW ORDERS.AND STOCKS
AUGUST 1939 « IOO
INDEX

INDEX

1 6 0

160

M IL.L P R IC E S
1 4 0

140

o
111
oc

OAK FLOORING ^

120

120
^ MAPLE FLOORIN'3
2nd GRADE

100

...1 J. 1 L

t 1 I 11 11 1 11 1

11 1111 1t 11 t

1.11,1 I l . l I-.1.1 J .

1 9 3 9

1 9 4 0

1941

19 4 2

l.l l-J 1 J - L U J - l , .■ L.I..L-1-.I.1.1 L I l. l,
1943

1 9 4 4

INDEX

INDEX
1 60

1 6 0

BEEC H A N D B IR C 5H

h 1A P LE ,*

140

1 4 0

^TO CKS

I 1 'S l E W

OROERS

120

1^0
[ % A k

100

100
8 0

8 0

f PRODUCTION 1
6 0

6 0

1 I I I 1 1 1 1.1 1 1. i i i i t i i i i i i

1M 1
INDEX

1939

1941

1 9 4 0

1 4 0

l .l l l l l .l l l. l l. - l- l- l l,.l l-l l-l I I - U J J - , 1 t-l, l- l 1 J

FMAMJJ AS 0 N0

1 942

1 9 4 3

1 9 4 4

INDEX
1 4 0

OAK

WJ PRODUCTION

120
fl

sH O C K S
iZ
L

100

fik

M
l
J |# \ j
[/ \ i

120

f\uf A W

nn U 1

l l

100

8 0

ORDERS

6 0

J 1 L-L. I I . . I I I ,1 l-l 1J 1

11 111 1 11 11 1

l 1t l

t 1 1 1 ( ft l

- 1 . U . U I I l-,l 1 1

1 1 1 1 11 1 1 1 11

' A S O N 0 1 F M A M J J A S O N 0 J F M AM J <1 A S 0 N 0 J F M A M <1 J A 9 0 N OJ F M A M A A A 9 0 N 0 J F M A M J J A S O N O
1939

1 9 4 0

1941

1942

1943

1 9 4 4

Sov' c t' untteS^ ta V e I ' oepartm ’e n t 'of8 COMMERCE

_______ ______________________________ SURVEY OF CURRENT BUSINESS

241

Chapter IX .—Building Materials

would be extended. By June many flooring sellers were having diffi
culty filling orders, and some obstacles developed to the rapid expan
sion required in supply. Many producers in the South were con
centrating on pine to the exclusion of oak, since pine prices were at
premium levels. Production in some areas was also limited by heavy
rains during the spring of 1941. New orders during several periods
ran materially above production. Flooring stocks from January to
December 1941 declined by 23 percent. By December 1941 the price
of maple flooring was $78.14 per thousand board feet, 40 percent above
its level of August 1939; and prices of oak flooring had risen 39 percent.
In early December, Office of Price Administration officials met with
representatives of the industry to discuss the imposition of maximum
prices, but formal control was not established until February 1942.
T a b l e 58.—HARDW OOD FLOORING: M ill Prices, Production, New Orders, and

Stocks, August 1939-December 1941
[Sources: Prices—U. S. Bureau of Labor Statistics; other data—U. S. Department of Commerce, Survey of
Current Business]
Maple, beech, and birch flooring

Year and month

Price
index1 Produc
(August
tion
1939=100)

‘ New
orders

Oak flooring

Price
Stocks,
index2 Produc
end of (August
tion
month 1939=100)

Thousands of board feet

New
orders

Stocks,
end of
month

Thousands of board feet

19S9

August.......................
September.................
October.....................
November.................
December..................

100.0
100.3
103.5
104.2
104.1

8,150
8,600
9,000
8,150
7,000

8,250
11,900
8,650
6,200
4,800

15,900
16,000
16,600
18,050
19,125

100.0
105.0
111.7
110.2
109.3

41,180
39,835
44,750
42,497
36,046

47,117
58,230
38,729
21,890
25,692

72,679
65,647
66,397
71,603
77,066

103.9
102.9
101.8
100.3
98.9
99.9
99.0
102.2
106.4
112.3
118.9
119.2

7,150
6,600
6,350
6,850
6,420
6,450
7,450
8,175
7,500
9,200
7,100
7,600

5,800
6,200
6,350
6,350
6,550
7,000
9,350
10,725
8,700
9,900
6,450
5,750

20,125
20,700
20,035
19,700
19,060
18,400
17,350
16,600
16,000
15,850
16,200
17,500

103.2
104.7
106.9
106.8
105.7
105.6
105.0
110.5
120.2
127.4
130.2
130.6

35,252
33,435
35,266
41,190
43,865
38,015
41,658
46,148
46,916
51,938
48,413
44,254

44,622
42,338
39,658
34,438
45,935
33,357
49,687
65,836
51,344
47,571
31,588
25,942

81,295
81,012
78,471
79,397
75,139
70,027
65,317
57,879
52,712
51,426'
55,197
62,786

119.8
119.2
121.4
122.1
123.3
126.5
129.9
135.4
139.3
139.8
141.1
139.9

8,550
6,650
7,800
8,275
9,000
8,750
8,200
8,950
7,600
8,900
7,500
8,075

8,075
8,225
7,900
8,075
9,300
10,350
12,800
9,050
7,000
7,650
5,050
7,225

19,300
18,350
18,350
18,200
17,750
16,675
14,800
13,425
12,200
12,850
13,100
13,625

129.4
126.2
126.9
125.8
126.5
132.4
135.4
139.8
142.0
140.8
140.4
138.7

46,656
38,409
40,369
43,227
46,761
48,686
51,865
49,925
47,432
49,227
40,910
42,697

35,903
45,981
45,931
58,267
54,442
53,489
60,524
44,781
36,363
40,080
28,102
34,286

71,503
74,235
73,938
70,737
65,533
61,580
51,038
44,962
41,956
43,088
48,278
55,875

1940

January___. .............
February..................
March........................
April................ .........
M a y ..........................
June...........................
July............ ...............
August.......................
September-...............
October.....................
November.................
December..................
1941

January.....................
February...................
M arch--...................
April..........................
M ay..........................
June...........................
July............................
August.......................
September...............
October.....................
November.................
December..................

i Maple flooring, 2d grade;
X V X il/ U .

x 2^:", face, standard lengths, bundled, carlot, f. o. b. cars, Cadillac,

« Oak flooring, red; select, plain, 2^2" thickness, 2J4" face, average length 4' bundled, carlot, f. o. b.
Memphis, Johnson City, or Alexandria (basing points).

242

Wartime Prices—August 1939 to Pearl Harbor

Paints and Paint Materials
Between 1939 and 1941 the volume of paint sales in the United
States rose 41 percent, and in the face of this sharp increase in demand
shortages of several important paint materials developed. This was
particularly true of certain strategic materials and also products
obtained wholly or in part from abroad. During the Defense Period,
prices of paint materials as a group increased 33 percent. However,
prices of finished paints maintained their characteristic stability,
rising on the average only 7 percent. The average increase for paints
and paint materials together, between August 1939 and December
1941, was 17% percent.
PAINTS AND VARNISHES

Although a large number of firms are engaged in the production of
paints and varnishes, a substantial portion of total output is accounted
for by only a few companies. In 1937, the four largest companies
accounted for 33 percent of the total production of mixed paints, 59
percent of the total for enamel, and 29 percent for varnish.22 In
general, prices of paints and varnishes are stable and show little
correspondence with changes in raw-material costs.23
The wholesale price of ready-mixed paints is largely a matter of administrative
determination, and different methods are used by the different firms in the
industry. Management weighs innumerable factors, such as costs of production
and distribution, known or rumored prices of competitors, type of paint needed
in the locality, etc., and sets up a list or lists with specified volume, trade, and
cash discounts. Departures from the trade lists are relatively rare, except when
prices may be reduced in order to secure the order for a large job.24

From 1937 through January 1940, wholesale prices of the principal
paints and varnishes were unchanged. Despite constantly rising
raw-material costs, price changes even after this date were relatively
small. Production in 1941 was nearly 40 percent above that in
1939 and the industry's chief problem was the supply of raw materials,
some of which grew scarce. Although average hourly earnings rose
substantially during the Defense Period, unit labor costs declined
as a result of the higher rate of output.25 The net increases in prices
of the principal standardized products of the industry between
August 1939 and December 1941 were 8 percent for inside flat house
paint, 6 percent for outside flat house paint, 7 percent for floor varnish,
and 5 percent for white enamel.26
22 Geographical Differentials in Prices of Building Materials, by Walter G. Keim (Temporary National
Economic Committee, Monograph No. 33), p. 123.
23 Varnish and enamel are usually somewhat more responsive to changes in raw-materials costs than
paints, the principal component ordinarily being China wood oil.
24 Temporary National Economic Committee, Monograph No. 33, p. 125.
23 Average hourly earnings in the paint and varnish industry rose by about 16 percent between August
1939 and December 1941. Unit labor costs, however, declined 6 percent between the years 1939 and 1941.
See Productivity and Unit Labor Costs in Selected Manufacturing Industries, 1919-40,1941 Supplement
(U. S. Bureau of Labor Statistics, mimeographed report).
2» It is possible that price increases for unstandardized products (some of which were highly important
in industry during the Defense Period) were greater, but because of frequent changes in specifications,
price indexes for these “specialties” are virtually unobtainable.

243

Chapter IX .—Building Materials

PAINTS AND PAINT MATERIALS
PRICES AND S A L E S
AUGUST 1939*100
INDEX
180

160

140

120

in d e x

M A N U F A C T U R E R S * P R IC E S

PREPARED

P A IN T S

IN D E X
140

120

100
8 0

IN D E X

200

180

160

140

120

100
8 0

244

Wartime Prices—August 1939 to Pearl Harbor

T ab le

59.— F IN ISH E D P A IN T S A N D V AR N ISH E S: Sales and Wholesale Prices,
August 1939-December 1941
[Sources: Prices—U. S. Bureau of Labor Statistics; sales—U. S. Bureau of the Census]
Sales

Year and month

Price indexes (August 1939=100) of—

Paint, var
nish, lac
quer, and All paints
filler

House paint
Inside,
flat

Outside,
fiat

Enamel,
white

Floor
varnish

1989

August.......................................
September.................................
October......................................
November.................................
December..................................

100.0
111.4
104.0
88.5
77.8

100.0
100.0
100.0
100.0
100.0

83.2
77.0
91.7
109.3
126.2
110.0
103.2
105.8
102.5
113.7
92.6
82.2

101.6
101.6
101.6
101.6
101.6
101.6
101.6
101.6
101.6
101.6
101.6
101.6

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

94.4
94.4
94.4
94.4
94.4
94.4
94.4
94.4
94.4
94.4
94.4
94.4

104.2
104.2
104.2
104.2
104.2
104.2
104.2
104.2
104.2
104.2
104.2
104.2

107.0
107.0
107.0
107.0
107.0
107.0
107.0
107.0
107.0
107.0
107.0
107.0

100.5
97.8
116.7
150.8
169.6
157.7
142.2
141.2
146.2
148.4
120.1
121.1

101.6
101.6
101.6
101.6
101.9
102.6
102.6
102.6
103.7
106.8
106.8
106.8

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
103.1
107.8
107.8
107.8

94.4
94.4
94.4
94.4
95.3
98.2
98.2
98.2
99.8
106.3
106.3
106.3

104.2
104.2
104.2
104.2
103.8
102.8
102.8
102.8
103.2
104.8
104.8
104.8

107.0
107.0
107.0
107.0
106.9
106.6
106.6
106.6
106.6
106.6
106.6
106.6

1940

January.....................................
February...................................
March........................................
April..........................................
May...........................................
June...........................................
July............................................
August.......................................
September.................................
October......................................
November.................................
December..................................
m i

January.....................................
February...................................
March........................................
April..........................................
May...........................................
June...........................................
July............................................
August.......................................
September.......... .....................
October....................................
November.................................
December..................................

PA IN T M ATERIALS27

Drying Oils

Linseed oil, the leading drying agent, is derived from the crushing
of flaxseed; and the prices of these two products ordinarily fluctuate
in close correspondence.28 The outbreak of war was followed by a
sharp advance in the price of linseed oil, which was largely lost in 1940
as available supplies continued to be ample and important export
markets were destroyed by German invasion. In the late months of
1940, however, the price moved upward again, reached a peak 33
percent above its pre-war level in September 1941, and then declined
moderately.
There were several reasons for the sustained advance during the
first 9 months of 1941. The effects of a bumper flaxseed crop in
Argentina29*were partly offset by an American loan of $100,000,000
to that country, which, according to the trade, enabled Argentina to
27 Solvents have been omitted from the following discussion because the primary factors affecting prices
of these products have been discussed in the section on alcohols and solvents in Chapter VI—Chemicals and
Allied Products. Between August 1939 and December 1941, prices of ethyl acetate and butyl acetate, used
in paint manufacture, rose 32 and 38 percent, respectively.
28 Cost of material constitutes about 80 percent of the total value of linseed oil.
28 About 60 to 70 percent of United States supplies of flaxseed are ordinarily produced domestically, the
rest being imported.

Chapter IX .—Building Materials

245

support the price at which flaxseed was marketed.30 Consumption
of linseed oil in 1941 was 39 percent greater than in 1940 and 56 percent
greater than in 1939; demand was augmented not only by the rise in
paint and varnish sales, which reached an all-time high, but also by
the expanding use of linseed oil as a substitute for foreign drying oils,
which were growing more and more difficult to obtain. In August
1941, the Department of Agriculture announced that loans would be
granted to domestic flaxseed growers on the 1942 crop. However,
linseed-oil production rose sharply and the Department of Commerce
in its report on the paint and varnish industry in October 1941 stated
that there was “no statistical basis for rising prices.” 31 In October
and November, the price of linseed oil declined from its September
peak, but in December 1941 quotations were still 26 percent above
August 1939 levels.32
T a b l e 60.—D R Y IN G OILS: Wholesale Prices, Production, Consumption, and Imports,

August 1939-December 1941
[Sources: Production and consumption—U. S. Bureau of the Census; imports—U. S. Bureau of Foreign
and Domestic Commerce; prices—U. S. Bureau of Labor Statistics]
Linseed oil

Year and month

Factory
Production consump
(quarterly) tion (quar
terly)

China wood oil

Price
index1
(August
1939=100)

Price
Imports
index2
(thousands (August
of pounds) 1939=100)

Millions of pounds
1939

Anernfit.
•September__________________________
October.
_ _______________________
November___________________________
Dfiflflmhfir
_ _____

134
166

88
4

Jannarv
February __________________________
March______________________________
April................................................................
M ay________________________________
June________________________________
July____ _____ ______________________
August
September___________________________
October_____________________________
November___________________________
December
_

150

128

135

101

192

100

196

107

183

143

237

142

252

146

m i

Januarv
February____________________________
March______________________________
April __
_
__ _.
May______ _________________________
.Time . _
July
.......
._
_
August
.
___
__
_ __
September
_
... ...
October________ ________ __ __________
November___________________________
December.... .................................................

100.0
115.1
118.6
114.0
118.6

4,592
5,713
6,679
3,098
12,593

100.0
120.9
128.6
113.6
116.4

124.4
118.6
123.3
125.6
122.1
115.1
107.0
101.2
97.7
96.5
100.0
102.3

16,158
7,262
8,886
1,279
11,862
14,874
18,721
9,941
1,884
4,414
456
1,312

122.7
122.7
122.3
110.5
105.0
103.6
115.0
117.7
119.5
121.8
121.8
121.8

110.5
110.5
115.1
124.4
125.6
125.6
131.4
130.2
132.6
125.6
117.4
125.6

959
76
4,015
3,516
4,702
2,500
8,005
1,216
906
00
(3)
00

124.1
125.5
130.0
136.4
140.5
145.5
146.8
154.5
161.4
163.6
160.5
162.7

1 Raw, New York.
2 Atlantic Coast.
3 Not available for publication.
w Journal of Commerce, December 6,1940.
The United States Paint and Varnish Industry, October 1941. (U. S. Department of Commerce,
Bureau of Foreign and Domestic Commerce, Industrial Reference Service.)
32 The effect of a 50-percent reduction in the import tax on flaxseed, as the result of a trade conference in
September 1941, appeared to be short-lived. The price of both linseed oil and flaxseed declined in October
and November, but rose again in December when the Argentine Government offset the duty reduction by
placing flaxseed prices under official government control and by increasing the Buenos Aires quotation.

246

Wartime Prices—August 1939 to Pearl Harbor

Price increases for imported drying oils, such as China wood, perilla,
and oiticica oils, were even greater. In the months imm ediately after
the outbreak of war— from August to December 1939— increases
amounted to 16 percent for China wood oil, 27 percent for perilla oil,
and 17 percent for oiticica oil. Through 1940 these advances held for
the m ost part, and further increases occurred in 1941 as scarcity be
came more pronounced. Thus, during the first 9 months of 1941
shipments of China wood oil received from the Far E ast were 72 per
cent below those in the corresponding period of 1940 and 54 percent
below 1939. B y December 1941, price increases above the August
1939 levels amounted to 63 percent for China wood oil, 82 percent for
perilla oil, and 31 percent for oiticica oil.
Pigments and Colors

W ith some exceptions, prices of pigments and colors rose only
m oderately during the D efense Period. The chief exceptions were
whiting, quotations for which advanced 45 percent between August
1939 and December 1941, and carbon and bone black, which rose
48 and 55 percent, respectively. In the case of whiting, supplies
had come primarily from Europe and the loss of these sources led to
scarcity. In the case of carbon black, prices prior to the war had
been especially low and costs of production rose sharply.33 Prices of
bone black rose m ainly because of higher costs of raw materials,
which were derived primarily from foreign sources.

Only moderate price advances occurred for other pigments and
colors, despite the fact that supplies of almost all products in this
group were smaller than the large quantities in demand in 1941.
Relative stability was mainly attributable to three factors. In
many cases—such as white lead—production was concentrated in a
few companies.34 Prompt priority controls were imposed over nu
merous derivatives of the strategic metals, such as chrome pigments
and zinc oxide, and minimized competitive bidding for scarce products.
Increased production of some commodities in cases where output had
been well below capacity resulted in appreciable reductions in unit
overhead costs. Informal agreements in the fall of 1941 between the
Office of Price Administration and some producers also helped to
stabilize quotations. On the other hand, advances occurred for com
modities such as red lead, white lead, litharge, and zinc oxide. Price
increases between August 1939 and December 1941 ranged from 3
percent for chrome yellow to 14 percent for litharge.35
88 In late June 1941, Price Administrator Henderson reached an informal agreement with carbon-black
producers to maintain stable prices in the third quarter of the year. In December, however, additional
price increases were permitted by the Office of Price Administration as the result of sharply rising costs.
Although important as a paint material, carbon black is used mainly in the rubber industry.
84 In 1937 more than 90 percent of the value of all white lead sold was produced by the four largest firms.
88 The price of one relatively unimportant blue pigment, ferrocyanide of iron, declined slightly during
the Defense Period. Low prices for this product were apparently due to a price war among producers
which occurred in early 1940.

Chapter I X .—Building Materials

247

T able 61.—P IG M E N T S A N D COLORS: Wholesale Prices by K in d ,

August 1939—December 1941
[Source: U. S. Bureau of Labor Statistics]
Wholesale-price indexes (August 1939=100) of—
Blacks

Chrome colors Lead pigments

Lith
Year and month
arge,
Red,
Green,
com
Car
dry White, mercial,
Iron 21-25 Yel
Bone bon
black, black, oxide, per low, (95per in oil
pow
cent
dered
graded stand typ el cent
dry
ard
or less)
blue

Lithopone,
domes
tic, or
dinary
strength

Zinc
Whit oxide,
ing, domes
com
tic,
mer leaded,
cial, 5 per
im
ported cent
pig
chalk ment

19S9

August..................
September............
October................
November............
December.............

100.0
100.0
100.0
100.0
118.2

100.0
100.0
100.0
100.0
100.0

100.0
100.0
100.0
100.0
96.1

100.0
104.7
105.9
105.9
105.9

100.0
101.6
104.1
104.1
104.1

100.0
105.5
106.8
106.8
106.8

100.0
100.0
100.0
100.0
100.0

100.0
100.0
114.7
125.0
125.0

100.0
106.6
106.6
106.6
103.3

118.2
118.2
118.2
118.2
118.2
118.2
118.2
118.2
118.2
118.2
118.2
118.2

113.0
113.0
113.0
121.7
121.7
121.7
134.8
134.8
134.8
134.8
134.8
134.8

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0

93.5
93.5
93.5
93.5
93.5
93.5
93.5
93.5
93.5
93.5
93.5
93.5

105.9
101.2
103.5
100.0
100.0
100.0
100.0
97.6
97.6
104.7
108.2
105.9

104.1
104.1
104.1
104.1
104.1
104.1
104.1
104.1
104.1
104.1
104.1
104.1

108.2
104.1
106.8
102.7
102.7
102.7
102.7
100.0
100.0
106.8
112.3
109.6

95.0
97.5
97.5
97.5
97.5
97.5
97.5
97.5
97.5
97.5
97.5
97.5

125.0
125.0
125.0
125.0
125.0
125.0
125.0
125.0
125.0
125.0
125.0
125.0

100.0
100.0
100.0
100.0
103.3
106.6
106.6
104.9
103.3
104.9
104.9
104.9

118.2
118.2
118.2
1J8.2
118.2
154.5
154.5
154.5
154.5
154.5
154.5
154.5

134.8
134.8
134.8
143.5
143.5
143.5
147.8
147.8
147.8
147.8
147.8
147.8

100.0
100.0
100.0
100.0
100.0
106.3
106.3
106.3
106.3
106.3
106.3
106.3

100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
102.1
108.3
108.3
108.3

93.5
93.5
93.5
93.5
93.5
93.5
93.5
93.5
96.1
103.2
103.2
103.2

105.9
105.9
109.4
109.4
109.4
109.4
109.4
109.4
109.4
109.4
109.4
109.4

104.1
104.1
104.1
104.9
108.1
108.1
108.1
108.1
108.1
108.1
108.1
108.1

109.6
109.6
113.7
113.7
113.7
113.7
113.7
113.7
113.7
113.7
113.7
113.7

102.5
102.5
102.5
102.5
102.5
102.5
102.5
102.5
102.5
102.5
102.5
102.5

131.6
131.6
131.6
131.6
131.6
131.6
131.6
131.6
131.6
144.7
144.7
144.7

104.9
104.9
104.9
104.9
104.9
104.9
104.9
104.9
104.9
104.9
104.9
104.9

January................
February..............
March...................
April.....................
M ay..................
June......................
July.......................
August..................
September...........
October................
November............
December.............
19U

January................
February..............
March...................
April.....................
May......................
June......................
July___________
August..................
September............
October.................
November............
December.............

Naval Stores

For naval stores price increases between August 1939 and December
1941 were large, amounting to 166 percent for turpentine and 56 per
cent for rosin. Demand for both products increased enormously,
especially in 1941, while production was reduced substantially under
the Department of Agriculture conservation program.
In 1940, production of both rosin and turpentine was limited by the
Forest Service of the Department of Agriculture to 80 percent of 1938
output and in 1941 this was further reduced to 75 percent. At the
same time, the Government loan rate for turpentine was raised from
19.7 cents per gallon in 1939 to 21.7 cents in 1940 and to 28.7 cents in
1941. Because an extremely large proportion of annual production
of rosin went into loan (51 percent in 1939 and 40 percent in 1940) the
loan rate for this commodity was reduced from $2.45 per hundred
pounds in 1939 to $2.19 in 1940 and to $1.93 in 1941; however, this
rate was raised to $2.43 in August 1941.

248

Wartime Prices—August 1939 to Pearl Harbor

Shortly after the outbreak of war, prices of both commodities started
an advance which lasted until March 1940, when quotations for
turpentine were 25 percent above the August 1939 level and for rosin,
17 percent. During succeeding months prices weakened; spreading
of the war curtailed European markets36 and domestic demand re
mained uncertain. This weakness was short-lived in the case of
turpentine—quotations took an upward turn in August 1940 and con
tinued to rise throughout the remainder of the Defense Period. Both
foreign and domestic demand rose abruptly, while production in 1941
was 27 percent less than in 1939. The state of the market is illustrated
by the following statement from the Journal of Commerce of August
18, 1941:
Skyrocketing turpentine prices last week, due to powerful domestic demand and
the first of many shipments to Britain, shoved the rosin market into a back seat
and left the New York industry in a frenzy of bewilderment. Gum spirits [tur
pentine] leaped 15H cents per gallon at Savannah to 75K cents, the best price in
almost 14 years.

Prices of rosin remained below their August 1939 level until June
1941. Supplies of this commodity had been especially great, although
stocks were steadily reduced by rising consumption. The price ad
vance in the latter part of the year was aided by the sharp increase in
Government loan rates in August. Between June and December
1941, the price of rosin rose by more than 50 percent.
Shellac

Among the sharpest price increases during the Defense Period was
that for shellac, quotations for which rose 228 percent between August
1939 and December 1941. Supplies of this commodity come almost
entirely from British India.37 While receipts from the Far East re
mained at a high level throughout the Defense Period, they were
limited by the fact that preference in allocating scarce shipping space
was usually given to the more strategic commodities derived from that
area. Although supply increased, demand—both to meet the much
higher rate of consumption and also to build stocks in anticipation of
further military developments—had apparently risen even more.
Ocean freight rates and war-risk insurance mounted substantially. In
addition, sellers in Calcutta apparently boosted prices considerably
beyond the level justified by increases in costs of production and mar
keting. The Oil, Paint and Drug Reporter of July 21, 1941, com
mented on this situation as follows:
Shellac importers have developed a substantial concern about the recent turn
of events in India. Prices have been advancing more or less steadily of late and
local factors have come to believe that at least some of the rise should be attributed
to speculative activity in Calcutta.
Conceding that deliveries of shellac from the interior to the Calcutta godowns
have been reduced by the need to move manganese and other vital war materials,
and accepting as fact the reports of unusual rains being a deterrent on shellac
movements, there still remains the speculator in Calcutta who takes advantage of
other conditions to feather his particular nest at the expense of price stability in
the markets throughout the world.
Local quotations have not risen to an extent warranted by the prevailing cost to
import from the source at the present time and it is hoped that efforts made here
*6 Ordinarily about 50 percent of domestic production of rosin and about 40 percent of turpentine is
exported.
37 Imports are obtained either in the form of crude lac, marketed in the seed, button, and stick, or in the
form of unbleached shellac. Crude lac is refined in the United States to produce the shellac of commerce.

Chapter IX .—Building Materials

249

NAVAL STORES AND SHELLAC
WHOLESALE P R IC E S
AUGUST 1939-100

Na v a l s t o r e s

inoex

IN D E X

400

350

300

250
GUM TURPENTINE

200

150

100
50
1942
SH ELLA O

IND EX

IN D EX

400

350
SHELLAC

300

250

200

150 -i

150

I I I I I I I IAJ.

1940
UNITED STATES DEPARTMENT OF LABOR
BUREAU OF LABOR STATISTICS________

100

250

Wartime Prices—August 1939 to Pearl Harbor

to end Calcutta speculations may make it possible to avoid higher prices. These
efforts have taken the form of protest cables sent to India by the United States
Shellac Importers’ Association and the American Bleached Shellac Manufac
turers’ Association acting jointly in a common cause.

Between August 1939 and December 1940 prices of shellac doubled.
In mid-1940 quotations weakened as the result of uncertainties conconcerning the progress of the war and the National Defense Program,
but then turned sharply upward again. By December 1941 the price
was substantially more than triple its level of August 1939. Govern
ment price control was not imposed until shortly after the attack on
Pearl Harbor.
T a b l e 62.—N A V A L STORES A N D SHELLAC: Receipts, Stocks, Wholesale Prices,

and Imports, August 1939-December 1941
[Sources: Receipts and stocks—U. S. Department of Commerce, Survey of Current Business; prices—tJ. S.
Bureau of Labor Statistics; imports—U. S. Bureau of Foreign and Domestic Commerce]
Gum turpentine

Year and month

Gum rosin

Shellac

Receipts Stocks,12
Receipts Stocks,2
end of
end of
at 3
at 3
Price
Price
month
ports1
index3* ports1 month index1
(August
(August
1939=100)
1939=100)
Thousands of
Thousands of
500-lb. barrels
60-gal. barrels

Imports
Lac

Shellac

Thousands of
pounds

Price
index
(August
1939=100)

1939

August...................
September..............
October.................
November..............
December___ ____

14
16
16

102
101

100.0
111.1

58
60
55
44
51

673
679
631
643
642

100.0

1,619
2,912
1,509
3,916
2,230

1,449
2,767
2,617
2,705
2.593

100.0

12
7
8

605
570
544
522
517
529
520
524
522
528
542
561

107.4
114.8
117.0
103.9
96.9

2,175
2,740
1,325
1,081
1,312
506
1,463
1,891

3,172
4,273
2,249
1,704

200.0

61
51
53
54
55
51
45
44
40

120.5
128.9
125.2
117.1
113.4
108.4
109.4
115.4
123.5
136.2
150.3
146.0

35
34
24
25
27
32
37
34
37
26
19
16

162.4
150.3
149.7
160.7
163.8
162.1
178.5
244.0
273.8
283.2
277.5
266.4

560
542
524
506
490
484
461
429
420
373
297
270

94.3
96.9
96.5
96.5
97.8
100.4
114.4
134.1
137.1
136.2
141.0
155.9

11
10

93
99
96

1
1
1

77
67

107.4
106.0
110.4

99.6
100.4
101.3
101.3

144.9
173.5
173.5
196.9

mo
January..................
February..............
March.....................
April.......................
M ay........................
June........................
J u ly .......................
A ugust...................
September..............
October..................
November..............
Decem ber.............

7
9

11
12
11
10
8
8
7

27
38
43
46
48
40
40
35
34

88.2

79.5
78.6
83.4
97.4
107.9
90.8

2,442
871

2,211
2,102

1,940
3,396
3,236
2,312
1,228
2,131
1,463

161.2
163.3
144.9
137.8
142.9
148.0
148.0
148.0
144.9
159.2
168.4

1,804
3,261
1,673
199
2,269
1,857
3,695
4,158
3,638
(5)
(«)
(5)

1,802
4,800
2,197
766
3,852
3,378
4,574
5,615
2,987
(5)
0)
(5)

166.3
183.7
232.7
250.0
250.0
255.1
282.7
290.8
307.1
311.2
311.2
327.6

2,886

m i

January..................
February................
March................... .
April.......................
May........................
June........................
July....................... .
A u g u st..................
September..............
October...................
November..............
December-.............

2
6
6
8
10
8
10
11
11
6
12

12
10

19
36
31
34
30
29
25
35
35

1 Receipts at Savannah, Jacksonville, and Pensacola. These figures are not accurate indicators of pro
duction; however, during the Defense Period their broad movements were in the same direction and in
most cases, of relatively the same extent as the changes in annual production statistics for turpentine and
rosin compiled by the Department of Agriculture.
2 Stocks at Savannah, Jacksonville, and Pensacola.
3 Southern, gum spirits.
« B grade, strained, yard basis.
* Not available for publication.

Chapter IX .—Building Materials

251

Plaster and Plasterboard
Prices of plaster and plasterboard were virtually unchanged during
the Defense Period. This stability is characteristic of the industry;
throughout the 1930’s prices changed very little and, except for a
brief period in 1937, the few moderate changes which did occur were
upward. The industry is highly concentrated, three firms account
ing for about 75 percent of total output.38
63.—P L A S T E R A N D PLASTERBO ARD : Manufacturers' Prices,
Consumption, and Crude Gypsum Supply , August 1939-December 1941

T able

[Sources: Gypsum lath consumption and crude gypsum supply—-U. S. Department of Commerce, Survey
of Current Business; prices—U. S. Bureau of Labor Statistics]
Consump
Price indexes
(August 1939=100)
tion 8
Year and month
Plaster * Plaster
board 8

Plaster
lath

Crude-gypsum supply 8

Imports

ap
Produc Total
parent
tion
supply *

Thousands of short tons
1989

100.0
100.0
100.3
100.3
100.3

100.0
100.0
100.0
100.0
99.6

100.3
100.3
100.0
100.6
100.0
99.7
99.7
99.7
99.7
99.7
99.7
99.7

99.6
99.6
99.6
99.6
99.6
99.6
99.6
99.6
99.6
99.6
99.6
99.6

99.7
99.7
99.7
99.7
99.6
99.6
99.6
99.6
99.6
101.1
101.1
101.1

99.6
99.6
99.6
99.6
99.6
99.6
99.6
99.6
99.6
99.6
99.6
99.6

August_____________________________
September__________________________
October ___________________________
November__________________________
December __________________________
1940

January____________________________
February___________________________
M arch_____________________________
April.................. ................... ........... ...........
May_______________________________
J u n e_______________________________
J u ly _______________________________
August ____________________________
September__________________________
October __________________________
November ________________________
December__________________________
1941

January____________________________
February___ ______________________
M arch____ • _______________________
April _____________________________
May ______________________________
J u n e_______________________________
July __ ___________________ j_____
August
__________________________
September__________________________
October
____ ___________
November__________________________
December__________________________

342

* 446

996

1,442

630

813

1,343

236

173

686

758

384

313

917

1,230

463

631

1,129

1,660

388

1,033

1,421

323

176

812

987

473

326

1,198

1,524

480

367

1,336

1,703

290

667

“

(5)

1,361

(5)

1 Base coat, neat cement or wood fiber.

2Lath, fireproof, % " thick, 16" wide, 48" long.

8 Quarterly.
* Bepresents total of production plus imports.
8 Not available for publication.

Between August 1939 and December 1941, manufacturers’ quota
tions for plaster rose 1 percent; those for plasterboard declined 0.5
percent. A general price advance in the industry—threatened when
the leading producer announced intention to increase prices—was
averted in January 1941 when the Office of Price Administration and
88 According to a statement of the U. S. Department of Commerce, published in the Journal of Commerce,
February 29, 1940.
5 4 7 9 5 3 °— 44------ 17

252

Wartime Prices—August 1939 to Pearl Harbor

Civilian Supply reached an informal agreement with the industry to
maintain stability.39 Consumption rose sharply during the Defense
Period, especially in the case of prefabricated building boards which
were widely used in the construction of cantonments. Production of
crude gypsum—the raw material for plaster and plasterboard—rose
67 percent between the last quarter of 1939 and the last quarter of
1941. Some shipping difficulties, however, were experienced in ob
taining imports from Canada where American producers own rawmaterial resources.
Asphalt Roofing
Production of asphalt roofing products reached all-time high capac
ity levels during the Defense Period and prices moved upward ma
terially. By November 1941, prices of various types of asphalt
shingles had advanced from 15 to 29 percent above their August
1939 levels. These quotations were maintained through early De
cember until shortly after the attack on Pearl Harbor, when maximum
prices were established by the Office of Price Administration at
considerably lower levels.
T able

64.— A S P H A L T ROOFING: Manufacturers9 Prices and Shipments,
August 1939-December 1941

(Sources: Prices—U. S. Bureau of Labor Statistics; shipments—U. S. Bureau of the Census]
Price indexes (August 1939=100) of—
Year and month

Roofing

19S9

January..........................................................
February........................................................
M arch ...........................................................
April......... .....................................................
May................................................................
June................................................................
July.................................................................
August....... ............................ -......................
September......................................................
October...........................................................
November......................................................
December.......................................................

January..........................................................
February........................................................
March. .........................................................
April.................................... ..........................
M a y .............................................................
J u n e ..............................................................
July.................................................................
August............................................................
September.....................................................
October...........................................................
November......................................................
December......... ....................................... .

Shingles
Prepared
roofing (M
squares)

Slate-sur
faced

Individual

100.0
102.3
102.3
102.3
103.6

100.0
102.9
104.0
104.8
107.3

100.0
100.0
100.0
100.0
101.9

100.0
100.0
100.9
101.4
102.2

3,923
3,868
4,612
2,460
1,489

106.0
107.2
113.1
116.3
116.3
116.3
116.6
112.4
112.4
111.5
111.5
111.5

110.1
110.7
113.4
115.0
115.0
115.0
114.4
112.2
112.2
110.9
110.9
110.9

105.4
105.6
107.7
108.6
108.6
108.6
107.7
106.5
106.5
104.7
104.7
104.7

102.6
102.9
104.6
106.1
106.1
106.1
105.5
103.3
102.8
101.0

1,188
1,925
2,056
2,253
2,875
2,661
2,941
3,483
3.902
4.222
2,927
2,164

113.6
113.6

112.0

104.7
104.7
103.1

101.0
101.0

2,354
2,515
3,105
3,141
3,753
3,570
4,062
3,981
4,146
4,737
3,825
3,033

Medium

August............................................................
September. ....................................................
October...........................................................
November....................................................
December.......................................................

Shipments

112.1
112.2
112.9
116.5
119.0
122.4
123.8
128.9
128.9
119.5

111.5
109.4
109.1
109.5
113.4
116.8

120.6
123.0
127.7
127.7
118.3

101.2
101.2
104.7
107.0

110.2
111.3
116.2
116.2
109.2

Strip

101.0
101.0
99.8
99.0
98.9
102.3
104.4
108.3

110.0
115.1
115.1
109.7

According to the Office of Price Administration, “No reason was given for the prospective price ad
vance, except that the management of the company fell that circumstances permitted an increase and that
the added income would be useful in the company’s business.” (First Quarterly Report for the Period
ended April 30, 1942, p. 170.)

Chapter IX .—Building Materials

253

Price movements during 1939 were generally upward from the low
levels of 1938, which in some instances were below those of 1932 and
1933. The increase in wholesale prices from January to December
1939 amounted to 5 percent for individual shingles, 7 percent for
smooth-surfaced roofing, 13 percent for slate-surfaced roofing, and 5
percent for strip shingles. These gains were extended further and
reached a peak during the second quarter of 1940, but were followed
by price recessions during the remainder of the year.
In January 1941, wholesale prices repeated the pattern of the
previous year by showing small gains over the preceding December.
In this instance, however, the price increases were supported by a
substantial gain in shipments over the corresponding months of the
previous year. At the end of the first 8 months of 1941, the industry
was operating at capacity levels and shipments were in excess of
26 million “squares,” the highest output on record for any similar
period. Substantial price rises had been effected by July 1941 with
increases over January varying from *2 percent for individual shingles
to nearly 5 percent for smooth-surfaced roll roofing. Successive
price increases occurred each month thereafter until prices were
stabilized by the Office of Price Administration in early December,40
with a “roll-back” from 5 to 10 percent to the levels prevailing on
June 29, 1941.
Plumbing and Heating Equipment
Prices of plumbing and heating equipment41 rose by an average of
12 percent from August 1939 to December 1941. In the first part of
this period—until January 1941—prices moved narrowly, continuing
the stability which ordinarily characterized their behavior during
peacetime. In fact, in the 4 years from January 1937 to January
1941, the range of movement of the composite Bureau of Labor
Statistics index for this group was only 5 percent.
In February 1941, however, prices started to rise, supported by a
large volume of sales and heavy demand arising from the defense
program, including housing for defense workers as well as canton
ments. Production costs, both of labor and material, were beginning
to increase. An initial price rise of 2 percent occurred in February
1941, followed by additional increases almost every month thereafter,
with a particularly sharp rise in August. The total increase in the
composite index from January to November 1941 amounted to
approximately 9 percent. The actual rise in realized prices was
greater, partly because some transactions prior to the advance had
been made below published price lists.
While base prices were thus rising, leading manufacturers liberalized
their policy with respect to freight allowances, absorbing full carlot
freight on shipments anywhere in the United States. Smaller pro
ducers also modified their policy to grant larger allowances, though
they did not in general go as far in this direction as the leaders.
The net result of these changes was to lessen the effect of the increases
in base prices in areas remote from centers of production; that is, in
the territory west of the Mississippi and south of the Ohio. Thus,
40 The order was issued on December 1, effective December 12,1941.
41 The plumbing and heating industries are highly concentrated. In 1941 the three largest companies
accounted for 70 percent of the cast-iron enamel ware (plumbing equipment) output, 41 percent of boiler
production, and 64 percent of radiation production. (U. S. Office of Price Administration.)

254

Wartime Prices—August 1939 to Pearl Harbor

the increase in delivered prices of plumbing and heating equipment
in the South and West was somewhat less than the reported change
in plant prices, not only in percentage terms, but also in dollars
and cents.
T a b l e 65.—P L U M B IN G A N D H E A T IN G M A T E R IA L S: Manufacturers9 Prices ,

August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]
Indexes (August 1939=100) of—
Year and month

All
plumbing
and
heating

Boilers1 Kadiators,
(average of 38-inch,
5 tube,
6 types)
standard^

Tulbs
Bath,
recess
5 feet*

Water
closets,
staple,
Laundry, washdown
48 by 24
bowl and
inches123 staple tank

19S9

August................
September...........
October..............
November...........
December............

100.0
100.0
100.0
100.0
100.0

mo
January...............
February.............
March..................
April....................
May.....................
June.....................
July.....................
August................
September...........
October...............
November...........
December............

100.0
99.7
102.1
102.0
101.6
101.5
101.5
101.5
101.5
101.5
101.5
101.5

100.0
98.3
98.3
98.3
98.3
98.3
98.3
98.3
98.3
98.3
98.3
98.3

100.0
98.2
98.2
98.2
98.2
98.2
98.2
98.2
98.2
98.2
98.2
98.2

100.0
101.3
105.2
105.2
105.2
105.2
105.2
105.2
105.2
105.2
105.2
105.2

100.0
100.0
102.6
102.6
102.6
102.6
102.6
102.6
102.6
102.6
102.6
102.6

100.0
101.8
107.3
107.3
107.3
107.3
107.3
107.3
107.3
107.3
107.3
107.3

mi
January...............
February.............
March..................
April...................
May.....................
June....................
Ju ly .......... .........
A u g u st..............
September..........
October..............
November...........
December...........

101.5
103.7
104.4
104.7
104.7
104.8
104.9
109.5
109.8
110.7
110.8
112.4

98.3
106.6
109.4
109.4
109.4
109.4
109.4
118.2
118.2
118.2
118.2
118.2

98.2
104.9
107.1
107.1
107.1
107.1
107.1
114.5
114.5
114.5
114.5
114.5

105.2
105.2
105.2
105.2
105.2
105.2
105.2
106.7
106.7
106.7
106.7
109.6

102.6
102.6
102.6
102.6
102.6
102.6
102.6
102.6
102.6
105.2
113.1
113.1

107.3
107.3
107.3
107.3
107.3
107.3
107.3
110.2
110.2
110.2
110.2
116.8

1 Water or steam systems.
2Double shell front, no fittings, enameled iron, shipping weight 385 pounds
3 2-part cement composition with 6-inch back and steel supporting frame, with fittings.

Window and Plate Glass
The average wholesale price of window glass rose about 6 percent
during the Defense Period, as the result of a price increase put into
effect in July 1940. Production of window glass in this period showed
an increase of 27 percent in 1940 and a further rise of 21 percent in
1941. In November 1941, the industry was operating at 80 percent
of capacity compared with 53 percent in August 1939.
Plate-glass prices remained stable throughout the entire Defense
Period. This stability was maintained while production was expand
ing considerably; 1940 output was 16 percent above 1939, and 1941
output showed a further rise of 16 percent.

255

Chapter IX .—Building Materials

T a b l e 66 . —P L A T E A N D W IN D O W GLASS: Manufacturers’ Prices and Production ,

August 1939-December 1941
[Sources: Prices—U. S. Bureau of Labor Statistics; Production—U. S. Department of Commerce,
Survey of Current Business}
Price indexes (August
1939=100)
Year and month

Window glass (25-inch
bracket)
Single A

1939

Single B

Production

Polished
plate glass
(M sq. ft.)

Window
glass
(M boxes)

August....................... .......
September...................... .
October...............................
November..........................
December...........................

100.0
100.0
100.0
100.0
100.0

10,450
13,663
18,369
15,812
18,477

867
914
1,121
1,143
1,189

mo
January— .............. .........
February ............................
M arch ..............................
April...................................
May....................................
J u n e ..................................
July.....................................
August................................
September........................
October...............................
November..........................
December..........................

100.0
100.0
100.0
100.0
100.0
100.0
105.6
105.6
105.6
105.6
105.6
105.6

100.0
100.0
100.0
100.0
100.0
100.0
105.9
105.9
105.9
105.9
105.9
105.9

17,257
13,175
14,302
12,367
11,721
9,783
8,522
12,533
14,091
17,070
16,059
17,491

1,413
1,099
1,107
1,023
1,068
908
994
993
1,002
1,349
1,264
1,458

105.6
105.6
105.6
105.6
105.6
105.6
105.6
105.6
105.6
105.6
105.6
105.6

105.9
105.9
105.9
105.9
105.9
105.9
105.9
105.9
105.9
105.9
105.9
105.9

19,350
15,664
18,266
18,344
18,394
18,534
12,463
14,126
14,906
15,769
14,277
10,311

1,561
1,397
1,417
1,400
1,282
1,304
1,281
1,267
1,123
1,524
1,300
1,696

January___
February. _
March____
April_____
May...........
June_____
July...........
August___
September.
October___
November.
December..

Cement
In most cities the price of cement remained unchanged throughout
the Defense Period, and in others it rose only fractionally. By
December 1941, the composite delivered price for 48 cities, as com
puted by the Bureau of Labor Statistics, had risen only a little more
than 2 percent above the August 1939 level and 3 percent above that
of April 1940, its lowest position of the entire period. Of the 48 cities
for which the Bureau of Labor Statistics collects prices, the price of
cement between August 1939 and December 1941 showed no change
in 27 and in 5 actually declined. In 16 cities there was an advance
in price, but in only 5 of these did the increase exceed 10 percent.
That the price oi cement did not participate in the general upward
price movements during the Defense Period was due to a number
of factors, which included the high ratio of transportation charges
to the value of cement, the price stability typical of the industry,42
the existence of considerable excess productive capacity, the stability
of unit labor costs, and the favorable condition of company earnings.
42 This stability had been characteristic of the price for a number of years. In the 6 years from January
1936 to December 1941 the range of the composite monthly index amounted to only 5.1 percent.

Wartime Prices—August 1939 to Pearl Harbor

256

Production, shipments, and stocks remained relatively stable
throughout 1940, showing only the normal seasonal changes. The
lag in business in the first part of 1940 was reflected in a slight decline
in price between February and April. The average monthly produc
tion of cement for the entire year 1940—10,854,000 barrels—was only
slightly above that of 1939—10,152,000 barrels.
In 1941, however, the demand and production of cement increased
markedly, the monthly average output rising 25 percent to 13,655,000
barrels. Mounting factory and residential construction, as well as
the demand for military establishments, such as cantonments, con
tributed to this increase in output. The rate of operations thus rose
from 56 percent of capacity in 1939 and 60 percent in 1940 to 65
percent in 1941. However, this increase in the rate of productive
operations still left much of the industry’s capacity unused. Even
in October 1941, the most active month of the entire period for the
industry, 21 percent of its capacity was not in operation. This
adequacy of supply obviously tended to prevent the development of
any powerful upward pressure upon prices.
A further factor which tended to keep cement prices stable was the
movement of costs. The increase in output in 1941, although falling
well below capacity operations, tended to reduce both overhead
charges and unit labor costs. The number of man-hours required
per barrel of cement produced declined markedly as output rose. In
1938, when operations were at the rate of 48 percent of capacity,
45.7 man-hours were required to manufacture 100 barrels of cement,
whereas in 1940, at 60 percent of capacity, only 39.1 man-hours were
required.43
As a result of this decline in unit labor requirements with the
increase in output, unit labor costs in 1941 were 1.5 percent below
the level in 1939,44 despite the fact that during the same period
average hourly earnings had increased 12 percent.
T able

67.—P O R T LA N D C EM EN T: Wholesale Prices, August 1939—December 1941
[Source: U. S. Bureau of Labor Statistics]

Month

Indexes (August 1939=
100)
1939

January______________
February..........................
March............................... .......
April
May...................................
June
_
_

1940

1941

100.1
100.1
99.9
98.9
99.1
99.2

99.5
99.5
99.5
99.7
100.2
100.7

Month

Indexes (August 1939=
100)
1939

July...................................
August ..........................
October___ ___________
November.......................
Dpr*ftmhfir__

100.6
100.0
100.0
100.0
100.0

1940
99.2
99.2
99.2
99.3
99.5
99.6

1941
100.9
100.9
101.9
101.5
102.0
102.3

Sand , Gravel, and Crushed Stone
Sand, gravel, and crushed stone are the chief materials used in
combination with cement to make concrete. About 80 percent of all
sand and gravel, generally produced jointly, is used in some type of
building or highway construction. These materials are abundant and
« Monthly Labor Review, October 1941 (U. S. Bureau of Labor Statistics), p. 873.
« Unit Labor Cost in Selected Manufacturing Industries, 1919-40; Supplement, 1941. (U. S. Bureau
of Labor Statistics, mimeographed report.)

257

Chapter IX .—Building Materials

available over widely scattered areas, but are used only within a narrow
radius of their point of production. Costs of production and prices
are influenced almost entirely by local conditions. Every State in
the Union reports some production and the small plant is the most
typical unit in the industry.45 High transportation costs tend to
confine the distribution of these products to a limited area.
Practically all of these commodities are distributed directly from
the producer to the user, including contractors, Government agencies,
railroads, and ready-mixed concrete plants. Wide variations in the
quality of sand, gravel, and stone deposits have caused specifications
to be drawn up somewhat loosely for pricing purposes.
Average prices of sand, gravel, and stone, as reported to the Bureau
of Labor Statistics, represent a combination of local prices which may
have divergent movements in different areas. The indexes of the
Bureau are composites based on prices in 31 widely scattered areas in
the case of sand, and in 28 areas in the case of gravel. The index for
crushed stone is based on the price in New York City alone.
Price movements for all these products from August 1939 have been
confined to a very narrow range. The composite price of sand in
creased only 5 percent during the period from August 1939 to Decem
ber 1941. During the year 1940, the month-to-month price trend was
slightly downward, but this trend was reversed in 1941. The largest
single increase occurred from July to August 1941 when the index rose
about 3 percent.
Gravel prices showed a similar stability, rising only slightly more
than 4 percent from August 1939 to December 1941. Composite
prices declined gradually during 1940, but reversed this trend during
1941 with increases slightly more than the previous year’s decreases.
Crushed stone prices in New York remained constant throughout the
entire Defense Period.
T a b l e 6 8 . —SA N D A N D GRAVEL: Manufacturers9 Prices, August 1939-

December 1941
[Source: U. S. Bureau of Labor Statistics]
Indexes (August
1939=100) of—
Year and month

19S9

August
September________________
October.....................................
November....... .........................
Dec&nber________________
mo

January.
_. _ _n
February_________ _______
March________ __________
April. ___________________
M ay..........................................
June
. ___ . ___
J u ly
A u g u s t ....................
S e p te m b e r _
_

______

October.....................................

Indexes (August
1939=100) of—
Year mid month

Sand,
building

Gravel,
building

100.0
100.2
100.6
100.8
100.8

100.0
100.1
100.4
100.4
100.1

101.9
101.9
101.4
100.6
99.5
99.4
99.4
99.5
99.7
99.2

100.9
101.2
100.6
99.9
99.2
99.1
98.5
98.7
98.6
98.5

Sand,
Gravel,
building building
m o —Con.
November__ _ _ _ _
December

98.9
99.0

98.2
98.5

99.7
99.8
99.7
98.9
99.8
100.3
100.6
103.5
103.8
103.8
104.2
105.1

98.6
98.7
98.7
98.9
100.1
100.1
101.1
102.9
103.3
103.1
103.3
104.3

m i

January....................................
February..................................
March.......................................
April...............................
May____
- June_________ ______
July—_ __
August......... ........ ............. — .
September_______ . . . .
O c to b e r _____

November______
D ecem ber

48 Geographical Differentials in Prices of Building Materials, by Walter G. Keim (Temporary National
Economic Committee, Monograph No. 33), p. 409.

258

Wartime Prices—August 1939 to Pearl Harbor

Brick and Tile
Both brick and tile have a high ratio of weight and transportation
expense to production cost. Consequently, although there are many
brick and tile producers in the United States, markets are localized
and intermarket competition is severely restricted by freight rates.
Price differentials from community to community are substantial,
particularly between producing and nonproducing centers.
For many years, wholesale prices of common building brick have
varied comparatively little. From 1935 to 1939, the movement of
prices was exceedingly narrow, participating neither in “the broad
upswing of most commodities during 1935-37 nor in the subsequent
down-swing in 1938.” 46 During 1940 the composite price of common
building brick retained this stability. In August 1939, the composite
price at the plant was $12.04 per 1,000. By January 1940, the price
had risen only 7 cents and by December 1940 only 16 cents, increases
of approximately 1 percent each, above the August 1939 level. In
1941 a more pronounced increase took place which by December had
carried the composite price to $12.96 per thousand, almost 8 percent
above the pre-war figure.
These averages, of course, concealed considerable variations between
different areas. The rising demand attendant upon the greater
activity in building was readily met in most areas by an increase in
output which lessened the upward pressure on price. However, in
those areas in which defense work was concentrated, brick prices rose
more rapidly, because of the intensity of demand attendant upon
defense construction and because of the difficulty of retaining labor
forces.
Prices of tile, which were affected in much the same way as those
of brick by the economic developments of the Defense Period, also
remained comparatively stable. None of the quotations of five im
portant types of tile—drain, roofing, hollow building, floor, and wall—
participated in the general upward price movement at the outbreak of
war, remaining unchanged from August 1939 to January 1940.
In January 1940, the market weakened as a result both of the normal
seasonal trend and of depressed economic conditions. Thus, ship
ments of floor and wall tile, which had reached a level of 6,172 thousand
square feet in August 1939, dropped to 3,658 thousand square feet
in February 1940.47 In February prices of standard grades of floor
and wall tile were reduced 8 and 15 percent, respectively.
Prices continued at these levels until April 1941, when they recovered
about half their previous loss, and quotations for floor and wall tile
rose to levels 4 and 8 percent, respectively, below those prevailing in
August 1939. (See table 69.) These increases were followed* by
further advances in August, bringing the prices for both floor and
wall tile to 6 percent above August 1939 figures, where they remained
through the end of the Defense Period. At the same time the price
of drain tile, which had been unchanged since the outbreak of the war,
was raised in August 1941 to 6 percent above its pre-war level and
again in September to 13 percent above that level, remaining at the
latter figure through December 1941.
« Geographical Differentials in Prices of Building Materials, by Walter G. Keim (Temporary National
Economic Committee, Monograph No. 33), p. 384.
« Survey of Current Business (U. S. Bureau of Foreign and Domestic Commerce).

Chapter IX .—Building Materials
T able

259

69.—B R IC K A N D TILE: Wholesale Prices, August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]
Indexes
(August 1939=100) of—

Year and month

Tile

Brick,
com
mon
build
ing

Floor,
stand
ard

Wall,
glazed
white

100.0
100.0
100.0
100.4
100.3

100.0
100.0
100.0
100.0
100.0

100.6
100.7
100.7
100.8
101.0
100.6
100.6
100.6
100.7
100.9

100.0
92.5
92.5
92.5
92.5
92.5
92.5
92.5
92.5
92.5

100.0
85.1
85.1
85.1
85.1
85.1
85.1
85.1
85.1
85.1

M ay

Ju n e..._______________
July...................................
August_______________
S e p te m b e r .

October.............................

Tile
Floor, wan,
stand glazed
ard
white

19^0— Con.

19^0

January..........................
February______ ______
March_______________
April.................................

Brick,
com
mon
build
ing

Year and month

1989

August_______________
September........................
October............................
November........................
December .........................

Indexes
(August 1939=100) of—

November____ _______
December____________
1941

January. _____ ________
February..........................
March...............................
April............. ...................
May___ _____________
.Time
J u ly
A u g u st
S e p te m b e r
O eto b er
N ovem ber. _
D enem her

100.9
101.3

92.5
92.5

85.1
85.1

101.4
102.1
102.8
102.3
103.3
103.9
104.5
105.6
106.6
107.0
107.3
107.7

92.5
92.5
92.5
96.2
96.2
96.2
96.2
106.1
106.1
106.1
106.1
106.1

85.1
85.1
85.1
92.2
92.2
92.2
92.2
105.9
105.9
105.9
105.9
105.9

These price advances in 1941 accompanied a marked increase in
sales for cantonments, factories, and residential dwellings. Floor
and wall tile shipments, which had risen from a monthly average of
4,826 thousand square feet in 1939 to 5,201 thousand in 1940—largely
as a result of a marked improvement during the last half of the year—
increased further to 5,803 thousand in 1941.
However, prices of two types of tile—roofing and hollow building—
were unaffected by this strengthening of the market, remaining com
pletely unchanged throughout the Defense Period. This represented
merely a continuation of an extended period of stability for hollow
building tile, as its price had shown practically no change for 4 years
before 1939.48
48 Geographic Differentials in Prices of Building Materials, by Walter O. Keim (Temporary National
Economic Committee, Monograph No. 33), p. 386.

Chapter X.— Paper and Pulp, Rubber, and Other
Commodities
Sum m ary
Among the products important in wholesale commodity markets
and incorporated into the “miscellaneous” classification of the Bureau
of Labor Statistics wholesale price index are rubber, certain rubber
products, paper and pulp, soap, cattle feed, tobacco products, and
certain others. As a group, prices of all these miscellaneous com
modities rose an average of 20 percent between August 1939 and
December 1941. This chapter is devoted primarily to a discussion
of two of the most important groups contributing to this advance—
rubber and rubber products and paper and pulp.1 The basic factors
affecting the prices of cattle feed and of soap are discussed, respec
tively, in the sections on grains (chapter I) and on inedible fats and
oils (chapter VI) of this bulletin. Prices of tobacco products changed
only slightly during the Defense Period, rising 2% percent as the
result of higher Federal taxes.
Increases for paper and pulp and for crude rubber were greater than
the average for all-miscellaneous commodities—28 and 33 percent,
respectively. (See table 70.) In both cases consumption, primarily
civilian, reached all-time high levels during the Defense Period.
T a b le 70.— Wholesale Prices of Paper and Pulp , Rubber and Rubber Products, and A ll

Miscellaneous Commodities, August 1939-December 1941
[Source: U. S. Bureau of Labor Statistics]
Indexes (August 1939=100) o f—
Year and month

1939

August...................................................................
September..............................................................
October..................................................................
Novem ber.............................................................
December...............................................................
1940

January...................................................................
February..............................................................
March.....................................................................
April........................................................................
May........................................................................
June........................................................................
July.........................................................................
August— ...............................................................
September..............................................................
October...................................................................
November..............................................................
December...............................................................

All miscel
laneous com
modities 1

100.0

Paper and
pulp

100.0

104.5
105.9
105.1
105.6

110.0

106.0
105.5
104.9
106.0
106.0
105.5
106.0
104.6
104.4
104.9
105.7
105.5
105.2
104.9
105.9
107.2
108.6

Crude rubber
ij

100.0

Tires and
tubes

100.0
100.0
100.0

102.3
107.9

136.7
122.3

111.3

121.5

91.9
91.9

112.3
111.9
111.3
111.9
113.4
114.6
116.9
116.9
116.5
116.5
116.4
116.4

113.5
110.9
109.7
112.9
126.4
132.7
126.6
117.5
114.0
119.2
122.9
122.3

91.9
91.9
91.9
95.9
95.9
96.2
97.2
97.2
97.2
97.2
96.9
96.4

116.4
116.6
116.9
118.1
120.9
122.5
123.5
125.9
127.1
127.4
127.8
128.1

117.5
120.9
130.7
136.4
142.7
130.7
131.8
137.0
135.0
133.5
132.7
132.7

96.2
96.2
96.5
97.2
97.2
97.2
97.2
100.5
100.5
108.3
111.4
111.4

121.8

194.I

January..................................................................
February................................................................
March.....................................................................
April.......................................................................
May........................................................................
June........................................................................
July....................................................................... .
August.......................................... ........................
September..............................................................
October.................................................................
Novem ber.............................................................
December.......... ...................................................

110.0

111.9
114.2
116.1
117.9
119.1
119.5

1Includes paper and pulp, crude rubber, tires and tubes; also tobacco products, cattle feed, soap,
lubricating oils, and other items.
1Rubber and rubber products and paper and pulp account for about half of the aggregate value of all
“miscellaneous” commodities.
260

Chapter X .—Paper and Pulp, Rubber

261

Prices of paper and pulp were also affected by the loss of pulp
imports from Scandinavia, following the German invasion of western
Europe. European nations had normally supplied a substantial part
of United States requirements, particularly for chemical pulp. Al
though increased domestic production and heavier Canadian ship
ments gradually compensated for these losses, prices of chemical wood
pulp and waste paper (raw material for boxboard) roughly doubled,
and those for most finished paper products also rose materially.
This advance was retarded, though in most cases not stopped at once,
by informal agreements between producers and the Office of Price
Administration. In the case of waste paper and paperboard formal
maximum price schedules were established in the fall of 1941.
Prices of crude rubber were affected primarily by shipping difficulties
and political relations between the United States and Japan. Efforts
of the Government to accumulate a stock pile were hindered first by
the fact that the Rubber Reserve Company’s maximum buying price
was often below the level of the market price, and later by the shortage
of shipping space. Civilian consumption, however, mounted rapidly
throughout the period, until mid-1941 when a conservation order was
issued and the Rubber Reserve Company was established as sole
purchaser of crude rubber from the Far East.
Increases in prices of rubber products were, of course, less than those
for crude rubber. Between August 1939 and December 1941, quota
tions for tires and tubes rose 11 percent, but actual price increases were
probably greater because of the withdrawal of concessions.2 Informal
control of these prices was established by the OPA in June 1941.
Prices of other rubber products, such as rubber heels, garden hose,
and rubber footwear, rose from 11 to 20 percent.
During World War I the price situation for both crude rubber
and paper and pulp was materially different. In the case of rubber,
no shortage—actual or prospective—developed. Although shipping
space grew scarce, supplies in the Far East were greater than the de
mand in the United States and in the allied countries, and shipments
were adequate. At the same time, requirements for both civilian and
military use were not so large as during the present war. The price
of rubber rose only 5 percent from July 1914 to November 1916,
as compared with a 33-percent advance from August 1939 to Decem
ber 1941.
On the other hand, prices of paper and pulp rose much more sharply
during World War I—about 90 percent between July 1914 ana
November 1916, as compared to 28 percent during the similar period
in World War II. The reasons for these sharp price increases were
serious shortages of certain basic raw materials and speculation
sufficiently widespread to warrant an investigation by the Federal
Trade Commission on order of Congress.3
Paper and Pulp
The great rise in demand for paper products during the Defense
Period paralleled the growth in general industrial activity, and pro
duction rose to all-time high levels. The quantity of raw materials
necessary to achieve this output, however, was supplied with som e *
a The Rubber Age, November 1939, p. 111.
* History of Prices During the War, by Wesley C. Mitchell. (War Industries Board Bulletin, No. 31,.
p. 8, Washington, 1919.)

262

Wartime Prices—August 1939 to Pearl Harbor

difficulty. Pulp imports from Scandinavia, the world’s most im
portant source, were cut off in April 1940 by the German invasion.
The collection of waste paper, used in production of boxboard, was
slow to increase during the period of great expansion in 1941.
Price increases for paper and pulp products as a group during the
Defense Period amounted to 28 percent, and would have been con
siderably larger except for the customary stability in the price of
newsprint. Increases were greatest (nearly 100 percent) for the raw
materials of paper and paperboard manufacture—pulp and waste
paper. The effect of the rise in pulp prices was somewhat limited
by the fact that the industry is highly integrated. Only about a
fourth of all pulp output in the United States is produced for sale,
the rest being consumed by producing companies.4
However, an important part—about one-fifth—of the pulp do
mestically consumed is ordinarily obtained from abroad. Imports
are especially large for the important chemical pulps—sulfate or
“kraft” and sulfite—which are used in the production of wrapping,
stationery, book, tissue, and cleansing papers, and in combination
with waste paper for the manufacture of boxboard. Prior to the
German invasion in Western and Northern Europe, these imports
came mainly from Sweden, Finland, and Norway. Canada also sup
plies some chemical wood pulp, but ships mainly manufactured
newsprint.
Because of the importance of foreign trade, the rise in prices follow
ing the outbreak of the war was immediate and general—and founded
primarily upon widespread rumors of shortages and shipping diffi
culties. By December 1939, increases for chemical pulp amounted
to 29 percent for sulfite and 13 percent for kraft. The price of
waste paper5 doubled between August and October 1939 and main
tained that level until the end of the year. Prices of finished paper
products also advanced—from 37 to 50 percent for boxboard, and
from 6 to 14 percent for wrapping, book, and tissue papers. (See
table 71.) The only important quotation which did not move up in
the fall of 1939 was that for newsprint, which, during the entire De
fense Period, remained at levels prevailing from August 1938.6
Unlike the prices of most other commodities, those of paper and
pulp products generally remained firm in early 1940. The exception
to this general rule was waste paper, which reacted sharply from its
early speculative flurry; by April 1940, quotations dropped below
their pre-war level and as a result boxboard prices also declined,
though much more moderately. However, prices of pulp and other
paper products held their levels of the fall of 1939 and, when Germany
4 Census of Manufactures, Paper and Allied Products, 1939, Bureau of the Census, U. S. Department
of Commerce, Washington, 1941.
In a statement of considerations written in support of a maximum price schedule issued in April 1942,
the Office of Price Administration described the wood-pulp industry as follows (OP A release No. PM 2936,
Apr. 16, 1942):
“The primary wood-pulp and paper industry in the United States consists of more than 800 mills. Of
these, 250 produce wood pulp; of the 250,75 produce more than their own normal needs and sell their excess
production, and 21 produce for sale only. The largest users of wood pulp are the so-called integrated mills
(making the pulp and manufacturing it into paper). Converting mills, which do not produce pulp, have
depended upon domestic and, to a large extent, imported wood pulp for their operations.”
«The waste-using grades of paperboard are made up of about 85 percent waste paper and 15 percent
prime pulp, although the proportion is varied for different grades. In some cases paperboard is made up
of as much as 95 percent waste paper and 5 percent prime pulp, usually strong sulfite. (Report No. 20,
Consumers’ Project, U. S. Department of Labor, July 1, 1936.)
6 Only about a fourth of United States requirements for newsprint is domestically produced, the rest
coming largely from Canada where considerable excess productive capacity has long characterized this
industry. Even in 1941, production was at less than 80 percent of total capacity. Although the price of
the raw material for newsprint—mechanical wood pulp—fluctuates frequently, relatively little is sold, most
being consumed by integrated companies.

263

Chapter X .—Paper and Pulp, Rubber

PAPER AND PULP
WHOLESALE PR ICES
AUGUST 1939 « IOO

PAPER

IN D EX

2 0 0 1---- ------------------------ ------------ -----------

200

180

160

140

120

100
1939

1940

1941

PULP

IN D E X

1942

1943

1944
IN D E X
2 6 0

2 4 0

220

200

180

CHEMICAL WOOD PULP

160

140

120

100

264

Wartime Prices—August 1939 to Pearl Harbor

invaded Norway in April 1940, again rose vigorously. Heavy buying
was general, and in addition to American consumers, “English,
French, and South American countries were * * * offering
prices above the going domestic market.” 7 By July, chemical-pulp
prices were 77 percent above their August 1939 level, and prices of
paper products were from 14 to 31 percent higher. Government
officials in charge of price regulation hastily called a meeting of
industry leaders in Washington and received assurances that no
further “unjustifiable price increases would be made.” 8
As the result of this agreement, prices generally remained unchanged
until the spring of 1941. Meanwhile, increased domestic pulp pro
duction, with greater shipments from Canada, helped to compensate
for the loss of Scandinavian imports. Production in 1940 rose by
1,858,000 tons, or 27 percent, over 1939; during the same period,
total imports declined 801,864 tons, or 40 percent. Despite greater
consumption, stocks remained at a high level until early 1941.
In 1940, consumption of all types of paper pulp was 23 percent above
1939; in 1941 there was a further increase of 16 percent. Civilian
demand continued to grow and Government purchases alone were
estimated at about 20 percent of the Nation’s productive capacity.9
Pulp stocks declined from 206,000 tons in January 1941 to 97,000 in
September. Paperboard production rose from an average of 73
percent of capacity in 1940 to 99 percent in October 1941, and stocks
of waste paper dropped sharply. Although the Office of Price Admin
istration and Civilian Supply continued its attempts to maintain
stability through informal agreements with producers, prices of most
types of paper and pulp products rose on a broad scale. Exceptions
were soda bleached and mechanical wood pulp, which are of relatively
small importance on the basis of sales volume in the United States.101
Concerning the shortage of chemical pulp, the Paper Mill News
(November 22, 1941) commented: “Many mills have eaten into their
last reserves and are already desperately seeking substitutes.”
By June waste-paper prices had advanced to more than 85 percent
above their pre-war levels. Boxboard prices had also increased from
31 to 57 percent above the levels of August 1939. Although leading
representatives of the waste-paper industry agreed with the OPACS
to maintain .stable prices in the summer of 1941, further increases
continued.11 A similar agreement with producers of paperboard,
reached in June, was set aside in August because of constantly higher
prices for waste paper. By September, waste-paper prices were 115
percent above those prevailing in August 1939. Increases for boxboard ranged from 41 to 84 percent. Effective October 1, formal
7Paper Mil] News, March 9,1940.
8Office of Price Administration, First Quarterly Report, for the Period Ended April 30,1942, Washington,
p. 172.
9Journal of Commerce, September 22,1941.
Mechanical wood pulp is used primarily for newsprint and is consumed mainly in Canada.
11The ineffectiveness of these voluntary agreements was acknowledged by the Office of Price Adminis
tration and the various methods used by dealers to circumvent their agreements were described as follows:
“In the face of these agreements, there developed in certain trade quarters methods designed to circumvent
the maximum prices. Among these methods were the imposition and payment of ‘special service charges’
which were not in effect on June 16; adoption of new names for ordinary grades of waste paper, thus creating
new price classes; or even the buying and selling of one grade or type of waste paper under a billing providing
for an entirely different and more expensive type.
“By these means and others certain waste-paper dealers have consistently attempted to force consumers to
•9ay more than the prices determined by OPACS and the waste-paper dealers themselves to be fair and
reasonable.
“Where resistance has been encountered from consumers seeking to conform to their agreements with
OPACS, supplies in some cases have been diverted or withheld, thus creating an unbalanced inventory
situation that has forced some plants to close for want of waste paper.” (Office for Emergency Management,
Release No. OPACS—PM 1021, Aug. 27,1941.)

Chapter X .—Paper and Pulp, Rubber

PAPERBOARD AND WASTEPAPER

WHOLESALE PRICES
AUGUST 1939 -IO O

265

266

Wartime Prices—August 1939 to Pearl Harbor

maximum prices for waste paper and paperboard (in areas east of the
Rocky Mountains) were established by the Price Administrator at
levels roughly equivalent to or slightly lower than those then
prevailing.12
The 1941 advance for most other types of paper and pulp products
began in May and ended in September; as compared to August 1939,
increases amounted to more than 90 percent for chemical pulp, 29
percent for kraft wrapping paper, 34 percent for book paper, 30
percent for tissue paper, and 11 percent for manila wrapping paper.
In September several leading pulp producers announced further
increases in contract prices for the fourth quarter of the year, but these
advances were withdrawn at the request of the Price Administrator.
T a b le 71.—P A P E R A N D P U L P : Wholesale Prices, by K ind, August 1939-

December 1941
[Source: U. S. Bureau of Labor Statistics]
Indexes (August 1939=100) of—
Boxboard (eastern
territory)

Wood pulp
Year and All
month paper
and
pulp

Wrapping
paper

Waste
Tissue paper,
Book
paper,
Chip,
0.009 Ma Kraft, paper white No. 1
Me
mixed,
90 Liner, corru nila,
stand
Sul chan Soda No.
No. 1 clean,
85-Ib. gat No. 1 ard
or
ical, bleached heav
dry
ing
Kraft phite,
wrap
test
easy- No. 1
No. 1 bleach
paper jute ping!
ier
ing
Chemical

19S9

Aug......... 100.0 100.0
Sept____ 102.3 106.4
Oct_____ 107.9 113.3
Nov____ 110.0 113.3
Dec......... 111.3 113.3

100.0 100.0

109.2
116.9
116.9
128.7

105.4
142.4
152.4
154.8

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
100.0 120.8 105.1 101.9 100.0 101.7 100.0 102.4 115.4
100.0 142.0 139.4 119.2 101.1 103.7 103.7 106.0 192.3
103.5
113.7

141.0 150.0 136.5 105.7
141.0 142.4 136.5 105.7

111.6

114.3 104.6
114.3 108.1

106.0
106.0

192.3
192.3

130.3 132.7 105.7
128.3 130.8 105.7
123.2 130.8 105.7
120.2 130.8 105.7
126.3 130.8 105.7
129.3 130.8 105.7
129.3 130.8 105.7
129.3 130.8 105.7
129.3 130.8 105.7
129.3 130.8 105.7
129.3 130.8 105.7
129.3 130.8 105.7

114.3
114.3
114.3
114.3
121.4
121.4
121.4
121.4
121.4
121.4
121.4
121.4

109.2
109.2
109.2
109.2
109.2
109.2
114.3
115.6
115.6
115.6
115.6
115.6

108.4

112.0
112.0
112.0
112.0

173.1
138.5
107.7
76.9
123.1
135.4
138.5
138.5
138.5
138.5
138.5
138.5

129.3
129.3
129.3
134.3
145.5
156.6
172.7
181.8
183.8
185.9
191.9
191.9

121.4
121.4
121.4
123.1
128.6
128.6
128.6
128.6
128.6
128.6
128.6
128.6

115.6
115.6
115.6
115.6

118.1
118.1
118.1
118.1
118.1
118.1
118.1
124.1
130.1
130.1
130.1
133.7

138.5
138.5
138.5
138.5
153.8
184.6

1940

Jan_........
Feb.........
Mar____
Anr.........
M ay........
June........
July____
Aug,........
Sept____
Oct_____
N ov........
Dec.........

112.3
111.9
111.3
111.9
113.4
114.6
116.9
116.9
116.5
116.5
116.4
116.4

123.9
126.6
126.6
146.8
162.8
166.5
177.1
179.8
179.8
179.8
179.8
179.8

145.1
146.2
146.2
151.8
163.1
171.3
177.4
177.4
177.4
177.4
177.4
177.4

154.8
154.8
154.8
155.2
157.1
161.9
166.7
166.7
166.7
166.7
166.7
166.7

113.7
113.7
113.7
113.7
113.7
119.6

121.6
127.5
129.4
129.4
129.4
129.4

141.0
123.4
114.2
113.8
121.7
127.9
126.9
121.7
115.9
115.9
113.2
109.1

116.4
116.6
116.9
118.1
120.9
122.5
123.5
125.9
127.1
127.4
127.8
128.1

179.8
179.8
179.8
179.8
189.4
193.1
193.1
193.1
193.1
193.1
193.1
193.1

177.4
177.4
177.4
177.4
177.4
177.4
177.4
181.0
190.3
190.3
190.3
190.3

166.7
157.1
157.1
152.4
152.4
152.4
152.4
152.4
152.4
152.4
152.4
152.4

129.4
129.4
129.4
129.4
129.4
129.4
129.4
129.4
129.4
129.4
129.4
129.4

120.4
125.3
136.3
140.3
138.7
135.0
140.3
141.0
141.0
141.0
141.0

114.5
118.1
118.1
118.1
118.1
118.1
118.1

1941

Jan..........
Feb.........
Mar____
Apr____
M ay........
June........
July____
Aug____
Sept____
Oct_____
N ov........
Dec____

130.8
130.8
130.8
130.8
130.8
130.8
142.3
142.3
142.3
142.3
157.7
157.7

105.7
105.7
105.7
108.0
111.4
111.4
111.4
111.4
111.4
111.4
111.4
111.4

1Prices from Paper Trade Journal.
12 The effective date for paperboard prices was later postponed until November 1.

120.2

124.8
127.5
133.9
133.9
133.9
133.9
133.9

200.0
200.0
215.4
200.0
200.0
207.7

Chapter X .—Paper and Pulp9 Rubber

267

He declared that “there is ample evidence already at hand to show
that the prices at which wood pulp has been sold over the past 12
months have been more than adequate to most producers. To allow
still higher prices when every effort must be made to resist inflation is
out of the question.”13
Except for some further increases for certain types of boxboard and
continued fluctuations for waste paper, resulting in part from revisions
in OPA ceiling schedules, prices remained unchanged through the
rest of the year.
T a b l e 72.—P A P E R A N D P U L P : Production, Consumption, Imports, and Stocks,

August 1939-December 1941
[Source: TJ. S. Department of Commerce, Survey of Current Business]
Wood pulp i

Year and month

Produc
tion

Consump
tion ana
shipments

Paper production

Imports

Paperboard

All other
except
newsprint

Waste-paper
stocks at
mill, end
of month

Thousands of short tons
19S9

January.....................................
February...................................
March........................................
April..........................................
M ay..........................................
June...........................................
July...........................................
August.......................................
September................................
October..... ................................
November.................................
December. ...............................
1941

January.....................................
February...................................
March.......................................
April..........................................
M ay..........................................
June...........................................
July...........................................
August......................................
September............................. .
October.....................................
November.................................
December. ...............................

566
689
683
683
691

672
616
684
680
677

151
161
216
272
235

516
523
590
569
512

414
438
492
488
467

246
214
219
216
247

737
667
700
726
791
761
727
769
696
780
769
761

691
646
664
700
753
733
729
735
674
744
723
719

262
159
74

522
478
487
499
561
530
526
648
492
583
554
513

463
411
406
431
481
453
448
442
385
445
422
419

237
241
242
226
236
240
252
245
246
250
260
270

806
731
823
828

770
721
812
818
851
814
810
844
805
877
864
848

72
70
85
85
95
105
91

574
647
619
628
676
635
659
702
687
748
677
691

461
427
478
491
529
501
504
528
515
667
542
551

264
261
253
262
270
265
272
237
218
189
167
187

866

821
798
844
817
896
883

868

110
81
93

86
84
66
68
71
71

110

(2)
(2)
(2)

1Total, all grades (sulfate, sulfite, soda, and ground wood).
* Not available for publication.

For the paper and pulp industry as a whole, the Defense Period was
a particularly prosperous one. The rise in raw-material costs for
pulp manufacture was relatively moderate: while prices of chemical
pulp rose $35 a ton, the cost of wood required to produce a ton of
pulp rose $1.25 in the case of hemlock and $5.50 in the case of Southern
pine. Unit labor costs for pulp manufacture declined slightly from
1939 to 1941. In the case of paper manufacture, labor costs rose 11
u Office (or Emergency Management Release, No. OPA—PM 1327. October 8,1941.
547958*— 44------18

268

Wartime Prices—August 1939 to Pearl Harbor

percent.14* Over-all profits (before taxes) for the paper and pulp in
dustry rose 300 percent between 1939 and 1941; the increase after
payment of taxes amounted to 135 percent.16
Crude Rubber
Prices of crude rubber moved sharply upward in September 1939,
fluctuated widely throughout the Defense Period and at the time of
the attack on Pearl Harbor were 33 percent above their pre-war
levels. In general, price changes were attributable in part to the
demands of the defense program, in part to factors peculiar to the
commodity, and in part to conditions which affected all imported
products, such as speculation resulting from political tension and
shipping uncertainties caused by the war.
Prior to and dining the Defense Period the United States was en
tirely dependent upon imports for its supply of natural rubber. The
quantity available for importation from the Far East (source of about
98 percent of the world’s supply) was in turn controlled by the Inter
national Rubber Regulation Committee, in accordance with agree
ments to which the British, Dutch, and French producers were
parties.16 This Committee controlled shipments by setting export
quotas for each of the producing countries on a quarterly basis.17
Ordinarily, the United States accounts for one-half or more of total
world consumption.
When the war began in August 1939, “stocks of rubber in the
United States were the lowest in years.” 18 Prices skyrocketed and
plantation ribbed smoked sheets (New York) sold for an average of
23.1 cents per pound in September 1939, a level 38 percent above that
of the preceding month. However, this upward movement, which
was part of the general speculative price advance of nearly all im
ported commodities, proved to be short-lived, the price turning
downward in October when it became apparent that shipping from
the Far East was not to be immediately affected by war conditions.
Furthermore, the International Rubber Regulation Committee raised
the export quota for the fourth quarter of 1939 from 60 to 75 percent
of the basic quota figure,19 and in December imports reached a peak
of 71,448 tons. Thus, between September 1939 and March 1940,
rubber prices declined 20 percent to a position 10 percent above the
pre-war figure. It was reported in the trade press that as a result of
this price decline producers became reluctant to ship, insisting that
prevailing prices were too low.20 However, export quotas for the
first quarter of 1940 had been raised to 80 percent, 21 and shipments
to the United States rose to a new high in January, declined in Febru
ary, and rose again in March and April.
m Productivity and Unit Labor Cost in Selected Manufacturing Industries, 1919-1940 (pp. 82-84); and
Supplement, 1941 (p. 3). U. S. Bureau of Labor Statistics, mimeographed report.
i# Profits of 1,753 Large Industrial Corporations, 1939-1941. (Office of Price Administration, War Profits
Study No. 1.)
io The International Rubber Committee was established in 1934.
if Government Price-fixing, by Jules Backman. (New York, Pitman Publishing Corporation, 1938,
pp. 133-144.)
is Although 490,000 tons were imported in 1939 the total reserve at the end of the year was only 90,000
tons. (U. S. Congress, Senate, Additional Report of the Special Committee Investigating the National
Defense Program, No. 480, part 7,1942, p. 4-5.)
i* New York Tunes, October 8,1939.
so New York Sun, January 11,1940.'
^Journal of Commerce, January 19,1940.

Chapter X .—Paper and Pulp, Rubber

269

The downward price movement ended with the extension of the war
in Europe during the spring of 1940, rubber prices rising 21 percent
between March and June to a position 33 percent above the pre-war
level.
Meanwhile, rubber consumption in the United States continued
high and the need for accumulating a Government stock pile for
purposes of national defense was growing more evident. Accordingly,
the Rubber Reserve Company was established to purchase supplies and
hold them “intact at least to December 31, 1943,” 22 unless a national
emergency developed before that time. On June 29, 1940, the day
after its establishment, this company signed an agreement with the
International Rubber Committee whereby 150,000 tons of rubber
were to be bought during the remainder of the year at a price range of
18 to 20 cents a pound, c. i. f. New York.
In July, prices turned downward, dropping by September to a level

14 percent below June 1940 but still 14 percent above the pre-war
figure. This decrease was partly seasonal and partly the result of
a marked increase in imports from 53,889 tons in June to 78,972 in
September.23 Since the market price of rubber was within the range
set by the Rubber Reserve Company, Government purchases of ap
proximately 57,000 tons were made by the end of October.24 In
August, the Rubber Reserve Company agreed to buy up to 181,000
tons of rubber during 1941 and set a price range for these purchases
at 17 to 18% cents a pound, f. o. b. transoceanic ships, Asiatic ports.
The maximum lim it was slightly above the price prevailing at the
time of the agreement.

Political tension in the Far East, resulting from the signing of the
Japan-Italy-Germany 10-year military pact, heavy Japanese buying,25
and extensive civilian and defense demand in the United States caused
rubber prices to increase moderately in October and November 1940
and to retain most of the advance in December.26 This 7-percent
increase between September and December brought the price to a
level 22 percent above the pre-war figure (see table 73). Since mar
ket quotations during the fall of 1940 often fluctuated above the
upper purchase price limit of the Rubber Reserve Company, the Gov
ernment was frequently forced to withdraw from the market.27
Although heavy private imports resulted in some increase in total
stocks in the United States, the Government stock pile at the end of
the year was only 40,000 tons.28
22U. S. Congress, Senate, Additional Report of the Committee Investigating the National Defense Pro
gram, No. 480, part 7,1942, p. 8.
23 Rubber export quotas for the third quarter were raised from 80 to 85 percent of basic quotas. (Journal
of Commerce, July 8,1940.)
2* New York Sun, January 11,1941.
2*Journal of Commerce, October 14,1940.
2« These developments counteracted the depressing effect of a quota increase to 100 percent for the first
quarter of 1941, which was announced in November.
27On this point, the Senate Committee Investigating the National Defense Program commented as
follows:
“By setting a maximum price limit which the Rubber Reserve Company would pay, we lost a certain
amount of rubber to other nations, particularly to Japan, which was able to purchase some rubber for as little
as one-sixteenth of a cent above the United States top price. On the other hand, it was considered essential
that a top price be fixed in view of the tendency of rubber prices to rise during the period in which we ac
cumulated our stock pile. Before the agreement with the International Rubber Regulation Committee
for the development of the stock pile, rubber sold at about 17 cents or more New York spot price. The
International Rubber Regulation Committee had no control over price, but controlled only production,
and with the increased demand in 1940, the price had, on one occasion, risen to almost 25 cents. The Rubber
Reserve Company requested the British and Dutch early in 1941 to limit export licenses to 18^4 cents, f. o. b.
Asiatic port, which was the maximum under the United States contracts, and thus to avoid competitive
purchasing, and the British and Dutch cooperated in this respect.” (U. S. Congress, Senate, Additional
Report of the Special Committee Investigating the National Defense Program, No. 480, part 7,1942, p. 11.)
23 Additional Report of the Special Committee Investigating the National Defense Program, op. cit., p. 7.

Wartime Prices—August 1939 to Pearl Harbor

270

CRUDE RUBBER

IMPORTERS* PRICES, STOCKS, IMPORTS,
AND CONSUMPTION
AUGUST 1939 « 100

INDEX

IM P O R T E R S ’ P R IC E S

INDEX

160

150

150
140
130

1 An
t, /L /
jJV

140
130

I ^ A M B E R .L A T t •X, ft PLANTATION
I
RIB8ED SIMOKED SHEETS

120

110
100

120

110

SO NO J F M A j l I J J ’A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A $ ON 0 J F M A M J J A S O N D

1939

1940

1941

1942

1943

S T O C K S , IM P O R T S , A N D C O N S U M P T IO N

INDEX

too

1944.
INDEX

350

300

300
P s T O CKS

250
PORTS

r r

250
ntiel Aft*r S«pt«mb«r 1941

200

150

150
f

I^ C O N S IJMPTION

100

Sourct US. DEF■ ARTMENT OF COMMERCE,
SURVEY OF CURRENT BUSINESS
i i i ■ i t ' i * ■ i -1 L J .1 1 1 .1.1-1.1 1 1 1 l ■ ' ■ 1 l » « 1 l
1 I. 1 1 I 1 1-1-1,111.1 . i - L i
ASONOJFMAMJJASONOJFMAMJJASONDJFMAMJJASO'NOJFMAMJJASONOJFMAMJJASOND

1939

1940

1941

1942

1943

1944

Chapter X .—Paper and Pulp, Rubber

271

T able 73.— CRU D E RUBBER: Importers’ Prices, Stocks, Imports, and Consumption,

August 1939-December 1941
[Sources: Stocks, imports, and consumption—U. S. Department of Commerce, Survey of Current Business;
prices—U. S. Bureau of Labor Statistics/

Year and month

19S9

Aueust___
September.............................................................
October................................................................
November................... .........................................
December . . .

Price index
(August
1939=100)2

Imports

Consump
tion

Stocks, end
of month

Thousands of long tons

100.0

136.7
122.3

121.8
121.6

39
38
46
43
71

52
51
57
56
50

152
137
119
105
126

113.5
110.9
109.7
112.9
126.4
132.7
126.6
117.5
114.0
119.2
122.9
122.3

73
43
59
71
52
54
70
73
79
75
73
98

58
52
52
52
55
48
48
53
52
60
58
60

139
129
135
153
149
154
175
195

117.5
120.9
130.7
136.4
142.7
130.7
131.8
137.0
135.0
133.5
132.7
132.7

87
74
87
63

1940

Januarv .
February...............................................................
March................................ ................... ............
April.................................................. ...................
May........................................ ............ ................
June............................................................ ...........
July.......................... .............................................
August...................................................................
September............................ ........... ......... ...........
October..................................... ...........................
November. _ .
_
. . .
December__
1941

Januarv . .
February_____________________ ___ ____ ___
March_______ ______ ______________ _____
April........ ............................................— .............
May.............................................. .........................
June................... ...................................................
July......................................... ..............................
August........ ...... ........ ............. .................. ...........
September ___________ ________________
October..............................................................__
Novem ber__________ ____ _____________
December................... ............. ................. ..........

309
320
338
330
359
339
376
426
455
455

63
69
71
71
85
69
55
54
60

101

65
97
107
83
(2)

221

235
250
289

(2)

1Average for 3 grades. Includes amber No. 3; thick latex; and plantation, ribbed, smoked sheets.
2Not available for publication.
An increase in export quotas from 85 to 100 percent, announced by
the International Rubber Regulation Committee for the first quarter
of 1941, had only a minor effect on the market. After a decline in
January 1941, prices resumed an upward movement which continued
until May, partly as the result of political developments within Japan
in February and the announcement of a 25-percent increase in freight
rates from the Far East, effective March l.29 Meanwhile, with both
defense requirements and civilian demand rising, rubber consumption
increased steadily, attaining a new high record of 71,374 tons in
April 1941.30 On March 7,1941, the Rubber Reserve Company agreed
to buy during 1941 a maximum of 100,000 tons of crude rubber in addi
tion to the 180,000 tons which it had previously (August 15, 1940)
agreed to purchase. Shipping difficulties were experienced, however,
and at the end of March stocks of rubber were reported to be piling
up in Singapore awaiting shipment to the United States.31* In order
29 Journal of Commerce, February 1,1941.
30 Rubber consumption for the first 5 months of 1941 surpassed that of the entire year 1932. (Wall Street
Journal, June 19,1941.)
Journal of Commerce, March 27, 1941.

272

Wartime Prices—August 1939 to Pearl Harbor

to utilize available ships more fully, arrangements were made in
April to unload rubber cargoes from the D utch E ast Indies at Pacific
rather than Atlantic Coast ports.

By May 1941, plantation rubber sheets were selling for an average
of 24.1 cents per pound in New York, a figure 44 percent above
August 1939 and the highest after May 1937. As a result of this
advance, and the continued political uncertainties in the Far East,
two Government orders were issued, one restricting the consumption
of rubber for civilian purposes and the other establishing the Rubber
Reserve Company as the sole purchaser of crude rubber from the Far
East. Purchases of the Rubber Reserve Company were to be made
at 18y%cents, f. o. b. transoceanic ships Asiatic ports—the upper limit of
the price range which had previously been established. An Office of
Production Management order provided for a gradual reduction in ci
vilian consumption through the second half of 1941, up to 25 percent of
the amount consumed in the 12 months ending March 31,32 Priorities
were established for defense industries and the rubber thus saved was
to be added to the Government stock pile. At the same time, the
New York Commodity Exchange committee on rubber suspended all
trading in rubber futures, other than the liquidation of existing con
tracts, and also reduced the daily limit of price fluctuations from 2
cents to %cent a pound.33 The final Government action at this time
vras an announcement by Price Administrator Henderson that a
ceiling schedule would be imposed on crude, reclaimed, and scrap
rubber, after consultation with the Rubber Reserve Company.
The Rubber Reserve Company did not announce until August 6 the
price at which it would sell rubber to the industry, and in intervening
weeks there was very little activity in rubber markets. The price
announced was 22% cents a pound for the basic grade or rubber ex-dock,
ex-warehouse, or f. o. b. cars in several leading cities; this quotation
was slightly lower than the existing spot price but higher than the pre
vailing price in the futures market where the majority of purchases
were made.34 Differentials for other grades of rubber were announced
in September. These prices—which held for the rest of the Defense
Period—were on the average about 33 percent above those prevailing
in August 1939.
For the last quarter of the year, export quotas were raised by the
International Rubber Regulation Committee from 100 to 120 per
cent,35 but by this tim e the shortage of cargo space placed a lim it on
shipments which could be only partly overcome. A t the time of the
attack on Pearl Harbor, the quantity of rubber in private and Gov
ernment stocks was considerably less than a year’s supply at the
1941 rate of consumption.
•> Release No. PM 594, June 21,1941. This order was later revised so that “no purchaser shall be required
to reduce his consumption in July by more than 20 percent of his consumption in June.” The purpose of this
revision, according to the OPM announcement, was to prevent excessive “dislocation” in the industry by
insuring a gradual rather than a sudden change-over. (Release No. PM 811, July 28,1941.)
33 New York Times, June 24,1941.
34 Wall Street Journal, August 6 and 7,1941.
34 Journal of Commerce, August 20, 1941.

Full text of Wartime Prices : Bulletin of the United States Bureau of Labor Statistics, No. 749

FRASER