Mergers Opposed

Last week was a sort of contraceptive week against the creation of huge mergers. The Government took steps to prevent the formation of two different food-products combines. A third food proposition fell through. On the other hand, certain amalgamations in other lines continued to take definite shape.

Ward Flood Products. In Baltimore, at the command of U. S. Attorney General John Garibaldi Sargent, who termed his action the "first instance in which the Department of Justice has sought to administer prophylactic treatment under the anti-trust laws," the Department filed suit in the District Court against the new two-billion-dollar Ward Food Products Corp. (TIME, Feb. 8), charging that corporation with violation of the Sherman Anti-Trust Law and of the Clayton Act. Defendants named are: Ward Food Products Corp., Ward Baking Co., General Baking Corp., Continental Baking Corp., United Bakeries Corp., William B. Ward, Howard B. Ward, William Deininger, Paul H. Helms, J. W. Rumbough, B. E. Peterson, George G. Barber, George B. Smith. The petition charges that since 1921 William B. Ward and his associates have planned to bring substantially all the wholesale bakeries of the U. S. under single control and to eliminate all competition in selling products and buying ingredients.

Answer: William B. Ward privately denied intentions of forming a trust; said that such a trust would be impossible from the nature of the business, that the companies mentioned are successful and would not be likely to give up their corporate identities, that the formation of the new corporation was to economize on distribution costs.

National Food Products. In Manhattan the Government filed in the Federal District Court a similar anti-trust suit against the National Food Products Corp., whose proposed expansions were so exuberantly proclaimed the week before (TIME, Feb. 15). The petition claimed that the Government has the right of preventive action under Par. 2, Sec. 7 of the Clayton Act, which reads:

No corporation shall acquire, directly or indirectly, the whole or any part of the stock or other share capital of two or more corporations engaged in commerce where the effect of such acquisition, or the use of such stock by the voting or granting of proxies or otherwise, may be to substantially lessen competition between such corporations, or any of them, whose stock or other share capital is so acquired, or to restrain such commerce in any section or community, or tend to create a monopoly of any line of commerce.

The Government claims that National Food Products is reaching out for control of certain food-products companies that are doing interstate business and are competitive.

Answer: The bankers deny any plans of consolidation; insist the corporation is purely an investment trust and legal.

Postum-California Packing. In San Francisco last week, stockholders of the California Packing Corp. were agitated. Their directors had met to consider an offer of the Postum Cereal Co., which is frankly out for great expansion, of $185 a share for the packing corporation's stock. The directors were about to submit the offer to the stockholders. Then suddenly and without explanation the Postum people rescinded their offer. Blair & Co. of Manhattan, bankers for California Packing, then intimated that negotiations were definitely off.

Stock Market. The stock market quickly reacted to the above-outlined events thus:

...............................HIGH ....LOW .....NET CHANGE

California Packing ..........172... .152 ...21

Postum Cereal . ............... 117... 110 ...7

Ward Baking ................... 79 .....66....13

General Baking .................72 1/8 ....69... 3 1/8

Oil. Blair & Co. and the Chase Securities Co., which a fortnight ago took control of the Associated Oil Co. for $132,000,000 cash, last week were finishing plans on an alternate offer to minority holders. Their disposition of the oil company is still indefinite.

During recent months there has been considerable shifting of control among companies producing, refining and marketing oil. The trend seems for the leading companies to get better control of the production end so as to manage the diminishing U. S. supply and the increasing demands. Daily production of the crude has fallen 450,000 barrels below the peak flow of last May, 200,000 barrels below that of the past few months.

Rails. The Interstate Commerce Commission is about to announce its decision on the $1,500,000,000 consolidation into a new Nickel Plate System of the present Nickel Plate, Erie, Pere Marquette, Hocking Valley and Chesapeake & Ohio lines (TIME, Jan. 11). On this decision hang several other possible consolidations. The Commission once proposed the enlacement of U. S. railroads into 19 huge systems. But meanwhile the roads themselves have been quietly working out unifications in every section of the country, unifications that will recognize financial and geographical relations and the normal flow of traffic. Possibly 17 systems will thus evolve themselves.