Document zzeqxMNLr5z5MogJG3dXbx6x7

FILE NAME: National Safety Council (NSC) DATE: 1940 June 18 DOC#: NSC403 DOCUMENT DESCRIPTION: Transcript of Conversation between James P. Parker of the Federal Trade Commission and Paul Collopy ANSCRIPT o f c o n v e r s a t i o n June 18 1940 ! James P, Parker, Federal Trade Commission Answers by: Paul C, Collopy !UL 1 0 Q. As I understand it, one of the principal reasons for your rescinding your license agreement with Hr. Tullooh was that local competition repre sented by competitors not operating under the agreement ce-used you to resort to other types of asbestos, whioh would enable you to meet lower prices of such non-licensees. If that is the case, please state why such competition could not have been anticipated when the license agreement was entered into by you with Hr. Tullooh. A. Well, the license agreement was a new thing at the time it I can't speak for him but will say for myself that we could not extent to which it would be used or which it would not be used. covers your question. was propose foresee the That about Q. With that in mind, was it a presumption or understanding at the time you entered into the agreement that the greeter majority of competitive asbestos pipe covering manufacturers -.voulci Iso be governed by that agree ment? A. ves, we were given to understand that there would be more complete n/ subscription to the agreement; also we were perhaps attracted, maybe I should say impressed, with the value of the patents to the merchandise itself. We felt a big demand would be built up for it and if we were to remain outside the license agreement our ability to sell the old style stuff would be impaired. It was held out to us, therefore, as the answer to the asbestos man's long search for something to stop shrinkage. Q,. Have you found that to be the case now that you have abandoned the agreement and are now using another material - in other words whether it is known to be shrinkproof or non-shrinkproof, have you had any difficulty in selling it? A. No, I can't say that we have. public did not go shrinkproof mad. covering. Contrary to our expectations the They just continued to call it pipe Q. How is it sold? Is the shrinkproof angle stressed? A. Well we mention the shrinkproof angle in the oatalog, I believe, but otherwise haven't emphasized it a good deal - other than that. Q,. When you were first approached with the lioense agreement, was one of the principal inducements or attpwt l o n s offered you with such an agreement, price stabilization? -- E x h i b i t . ---- Transcript of Conve: ition -8 "une 18, 1940 A. No, the real advantage was improvement of the quality of the mer- ohandise, it "being held out that there would be very muoh less trouble - not entirely eliminated perhaps - but very much less trouble with the = annoyance of shrinkage on coverings made from this paper. I tut ft. With respect to prices and discounts - does your firm use the Manuel of Unit Prices? V A. Tea, it has been a great help to the industry. Q. Row was that adopted by the Industry? A. Well as I recall, it was kind of a brain child of Mr. Stover who is Licensor for another industry. Q. Magnesia? y A. Yes, Magnesia. Q. You do use the Manuel in your pricing? A. Yes, but it does not have to do with prices in the sense of prioe oontrol but is a series of tables showing net prices figured out for all discounts. Q. I understand, but ----- A. --- A number of the asbestos manufacturers do not use it today but it seemed like such a forward step toward modern selling that we went in to it enthusiastically. Q. When was it first adopted? A. Well on the cover here it says published "October 1936." I can*t remember any better date than that. We have made up a price sheet that lifts out of that book net prices on the styles that we make and -- --here-- I find the first one dated March 1937. I guess we didn't adopt it until the issuance of this sheet in May 1937. The first sheet was dated May 1937; not March. Q. That list has been in existence since 1907 hasn't it? A. The book? No, that was not..... Exhibit.!. J . That particular method A. Not that* r Perhaps I did not make Table 0 (zero) in the book. FEDERAL TRADE COMMISSION of basing prices. . obtaid 7 L*tter N o J i / a l .VJroP 7A tty. Federal Trade Commieeioa myself clear. I mean the pipe covering list That is the old pipe covering list, isn't it? 'N I r i t St T' . ,T, ( - .. - to'.. . ------- " ^ i'y /i Transcript of conversation 3- June 18, 1940 A. Tes, that zero list is the old pipe covering list. Q. How long has it been sinoe it was used; that is, the sero list in the Manual of Unit Prices? A 0, it never was used except as a foundation on whloh to base discounts. The pipe covering was never sold on the list prioes. The list and discount method has not been generally used sinoe the new method went into effect. Q,. Did you ever attend any meetings called by Mr. Tulloch on prices, and so on? A. No, he hasn't called any meetings lately. Of course we are out of the agreement and so do not know just what he is doing at the present time. Be occasionally comes through and we have lunch together or something like that. When he was soliciting our membership he cams in here and talked to us - to me and my associate. Q,. Did you ever attend any meetings at which any competitors of yours,who were also licensees, were present? Fxhbit / e- A* Tes. Obtained. .. f. ?-?. Letter CU When and where did they take place? No/ Federal Trade Commission A. Well sometimes it was at some one of the hotels: Palmer House or Bismarck. Q,. When was the last? A. It has been some time. Tulloch was out here last summer - have seen him very infrequently lately. Q., Did you ever get any oiroular letter - addressed to all licensees subsequent to those meetings, telling what had taken plaoe in those meetings? A. No, it was all more or less informal. Q. Well, now when did you rescind the contract? Do you have the date? A. I suppose it is around somewhere. It was in the winter sometime. Q. And since ^gj.yo^.^J^^ought your asbestos paper from 0'3,frpf;v 1 ^ 1133 ______ ,, T, A. Yes. in i-- - u ' (/ ^ . Q,. And you presume aray had knowledge of the rescinded contract and sent you paper which was manufacturedby a process other than that r -- x,, r 10b\ Transcript of Conversation 4 June 16, 1940. governed by the Tulloch patent? A. Tea. Q , Have you made any effort to determine whether the paper recently sent you by Carey la of another process than that governed b y the Tulloch l: patent? ' A. No, we haven't. In appearance there was never any difference and c it would take some considerable testing to know the difference. c Q. Have you stopped paying royalties? [ i c A. Tea. Q,. Now, what is your total volume of sales in a year? A. Of this material only? Of everything. A. Around 150 to $175,000 - sometimes $200,000. Q. That is, or rather, is that based on actual cash transactions or is that on the zero list basis? A. No, that is the net sales, including a lot of things outside the license agreement. Q. Of that figure, what proportion would you say were sales of products manufactured under the Tulloch patents? A. I presume anyway two-thirds. Q. And just what products comprise the other third? A. Well, we make plastic magnesia flooring, furnace oement - we make a number of asbestos cements. Q. Cork tnd hair felt? A. Ho, we buy and sell those. We presume you might say we job 85jC Magnesia - in molded form, oovering and blocks. Q,. What is Victor Ioe Water and Brine Covering made of? A. Well ohlefly alternate layers of waterproof felt and dry wool felt. Q. Praotioally no asbestos in that? * , / 108.3 , T R ,ut C O M M I T NO. FEDEKALTRAULC^ . A. . , , ... ' ` / y=~ E ...r * V / Letter O btained.. 7 ' /. Pr. XlP.. I y i wvieTg. N \ ... *....-- Federal Triune Commission Transcript of Convene " M o n 5 June 18, 1940 What is stack lining made of? A . That is a material we buy. Our idea is that it is made out of corrugated asbestos, heavily impregnated with some kind of vitrifying solution which is baked in and the process repeated a number of times until it has built up a much stronger resistance to high temperatures than asbestos paper would normally have. Q. Now with respeot to your corrugated asbestos paper, is that bought from Carey in the corrugated form? Tlir A* No, we oorrugate it ourselves* t Q. Y o u corrugate the flat sheets as purchased from Carey? A. Yes. Q. Was it your understanding that the License Agreement with Tulloch merely governed your corrugation of that flat paper which was manufactured by Carey under the Tulloch prooess? A, I d o n 't quite know what you mean. We b o u h t the paper - the flat paper - and we always felt it was made unaer the shrinkproof patent. That is where the shrinkproof process goes into the paper - in the manufacture oi the flat paper itself. After that, whether you out it up or corrugate it or no matter whet you do, it doesn't affect the prooess that is^the shrinkproof quality*. Q. That being the case, was it your understanding that you were to pay royalty to Tulloch not ;e r e l y f o r the purpose cf eorru e M n g it but for any purpose you might find such as manufacturing or assembling Y~T^pMhsulation units? \ Q. Tes* Did Mr. Tulloch undertake to control the price at whioh you sold that asbestos paper after you had corrugated it and assembled it into a unit? A. I wouldn't say he controlled it - no. He at times suggested what he felt his patented materiels should sell for. C Now as a matter of refreshing your memory - I don't want to frighten Transcript of Conversation 6 June 18, 1940. Q f Has Hr. Tulloch exeroised any similar control of prices on ice / water and brine covering, molded cork insulations, insulating hair felt, j Acme Vitrao Stack Lining, Insulating cements and furnace cements? J A. NO. Q,. Were prices on those last named products ever suggested by Hr. Tulloch? A. Ho. Q,. Y/ere the various circular letters pertaining to price structures as i disseminated by ^r. Tulloch confined to the products which you have ~ ^ checked in this catalog furnished me a moment ago? y 0"* A. I would say they were confined to his licensed products - yes, what I have eheoked in the book is not apparent. Q. Since cancelling your agreement do> you con^i^e^ on prices and so on? circuler s A. No. T 0 * 0 * 4 -^ Q,. -Has he abandoned any effort to o c t r o i the prlces at which ou sell .i-..."V .* your products? A. We have not reoeived anything at all from Hr. Tulloch in some time. Whether or not Hr. Tullooh has abandoned all control, we do not know. Q. Eow did you rescind that contract - by letter? notice? A. As I recall we wrote him, yes. , !' . ... ~ :'ity ^ Q. In your letter did you state conditions and your withdrawal? A. I presume we did. letter. I d o n 't recall Just the exact wording of^bfce... Q,. During the time in whieh you operated under the license agreement, did Mr. Tulloch ever impose on you a penalty for failure to maintain the prices attached to the agreement? A. Ho. Q. When you paid your royalty to Hr. Tullooh you were required to execute a report on materials shipped, sold or used as lisensed under Patent 1972500 - in computing such reports was there a definite relationship between the figures furnished by you end the actual ship- r , ment, sale or use of the products in question? / * 6 O ^ <F 10S7 Tranaoript of Conversation -7- June 18, 1940 X. Tea. Q. Were your reports accurately eomputed? A. Yes, to the best of our knowledge. Q,. Did you ever pay royalty on fine or coarse eorrugated asbestos paper? A. X don't know without looking up the records - would have to look that up. Q. Do you have earbon copies of those reports to Mr. Tulloch? A. 0 yes. .. <-nMMlSiiWN ^ L Q. Good, will probably want to get copies of thgpkS6y&S3f^ufc' ^.4-^/^ ................... *1'. Q. During the time in whioh your agreement w^th^fcr'. Irulloch was^ operative and particularly in the early periods of its operation^ did Mr. Tulloch undertake to classify or determine who was a jobber or who wasn't a jobber with a view to further determining at what price you ahould quote thiscustomer on these produots? A. I d o n 't recall that be ever did. You mean make a list of jobbers? 0. Yes. A. If he attempted that I don't know list now. Q. No list of approved jobbers? A. No. Now we decide who is and who is not a jobber and whether he could legally be established as a jobber under the Robinson-Ratman Act that is our chief concern. You see we sell quite a bit to a olass of trade that most of the industry isn't oonoerned with; that Is the plumbing and heating contractor himself. ur outlets are rather different from say the big J-W concern who sell almost entirely to approved contractors and distributors. We have almost none of them but on the other hand do sell plumbing and heating contractors. Do you sell to jobbers? A. We sell to jobbers, yes, but we have but very few of what the industry terms an "approved contractor." Q,. During the course of the operation of the license agreement did / o 7 6 ^y y 1088 Transcript of Conversation -8 June 18, 1940. U r Tulloch ever undertake policing of your aeoounta to find out if you were selling such and such a jobber who was known to be cutting the price in reselling the material? Has he ever corresponded with you, making in quiry as to whether you were selling a certain jobber, what price, and so cn? A In a very limited way. I can't remember a single speoifio ease of where that happened. I know the V'agnesia Lioensor has done that and am not certain whether I am thinking of one or the other ---- but I do think there was some effort on Tulloch*s part to uphold his schedule and give equal opportunity to all the people who were subscribing to his agreement. Q,. Now was that effort confined to policing of sales by you and of the prices quoted by you, or did it go into the fild of policing various jobbers and the prices at which they sold to their customers? In other words, did he make an effort to curtail your sales to a jobber known in the industry to be engaged in price outtlng - that is when he sold the material bought from you? A. No attempt to oontrol the resale was ever made. In what state was your company incorporated? A. Illinois. Q. When? A. August, 1907. Q. Who are the officers of your firm? A. Alfred E. Hermes is secretary-treasurer, and I, Paul C. Collopy am the president. Q. Are there any vice-presidents? A. No, no vice-presidents. K E i j R R A r . T I J l i i i , ' I v-|\,r u I . - . M , ,