Domestic Relations

U. S. tire makers are a notoriously jealous family and almost all of them live in Akron. But it was only a coincidence that the leading member of the family spent most of last week in Akron's Domestic Relations Court. The Federal Trade Commission was using the courtroom for hearings not on domestic relations but on unholy relations which, the Commission charged, have long existed between Goodyear Tire & Rubber and the world's biggest mail order house. Sears, Roebuck (TIME, Oct. 30). Invoking the Clayton anti-trust laws and the ancient demons of discrimination, monopoly and secret rebates, the Commission attacked the contracts by which Goodyear makes cheap tires for Sears to sell under Sears' brand names. Last week's revelations:

1) From 1926 when the first contract was signed through 1932 Sears' tire business amounted to $122,800,000 or nearly 10% of Goodyear's total sales.

2) The contracts were on a cost-plus basis. The present ten-year non-cancellable contract signed in 1931 calls for at least 1,800 tires per day and a profit of 6% or 6 1/2%, depending on the price of crude rubber.

3) To obtain this contract Goodyear paid Sears 18,000 shares of treasury stock and $800,000 cash which Sears used to buy Goodyear stock in the open market.

4) All the contracts contained clauses permitting "adjustments" after Goodyear had had time to figure its costs more accurately, but these adjustments worked in favor of Sears only. In seven years Goodyear had paid Sears $2,500,000 in "adjustments," which the Commission's attorney insisted on calling "secret rebates."

Goodyear President Paul W. Litchfield was the least excited of all the tire executives who jam-packed the Domestic Relations Court in Akron last week. He has consistently maintained that the making of special brand merchandise is a common practice in U. S. manufacturing and wholly legitimate. Goodyear's concessions for the 1931 contract, he said, were simply a means of getting business when business was scarce.

Two others of the Big Four tiremakers --Goodrich and U. S. Rubber--also manufacture special brands. But Firestone and most of the small companies regard the cheap tire as the chief source of the industry's woes. And last week many a tire man was sure that it was that embattled elder of the tire family, Harvey Samuel Firestone, who had egged the Government into Akron's Domestic Relations Court.

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