Crane Co. of Minnesota v. Comm'r of Internal Revenue

Full title: CRANE COMPANY OF MINNESOTA, PETITIONER, v. COMMISSIONER OF INTERNAL…

Court: Tax Court of the United States.

Date published: Jan 17, 1956

25 T.C. 727 (U.S.T.C. 1956)

Opinion

Docket No. 26262.

1956-01-17

CRANE COMPANY OF MINNESOTA, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

George S. Stansell, Esq., John B. Chamberlain, Esq., and Leonard S. Schmitz, Esq., for the petitioner. Charles D. Leist, Esq., and Arthur B. White, Esq., for the respondent.

HARRON

Petitioner is engaged in the sale at wholesale of a wide variety of plumbing and heating supplies and equipment in a sales area comprising 4 States and parts of 3 other States. It claims relief from excess profits tax under the provisions of subsections (b)(2), (b)(3)(A), (b)(3)(B), and (b)(5) of section 722 of the 1939 Code. Held, petitioner has failed to establish the qualifying factors requisite to relief under any of the above subsections of section 722(b). George S. Stansell, Esq., John B. Chamberlain, Esq., and Leonard S. Schmitz, Esq., for the petitioner. Charles D. Leist, Esq., and Arthur B. White, Esq., for the respondent.

The taxable year involved is 1941. The Commissioner agrees that the petitioner is entitled to the benefit of an unused excess profits credit carryover or carryback, as the case may be, to the taxable year 1941. The years 1940 and 1942 are involved in the application of an unused excess profits credit carryover and carryback. The respondent has determined that the amount of excess profits tax for 1941 is $58,700.46, after giving effect to an unused excess profits credit carryover and carryback. If the petitioner's claim for relief from excess profits tax is sustained in this proceeding, then there is overpayment of excess profits tax for the year 1941 in the amount of $58,700.46. The petitioner has filed a claim for refund of excess profits tax which has been paid.

The petitioner filed application for relief from excess profits tax under section 722 of the 1939 Code for the year 1941. The petitioner's application for relief for the year 1941 was denied after consideration and review by the Excess Profits Tax Council. Thereafter, the Commissioner issued his notice of disallowance, determining that the petitioner was not entitled to any relief under section 722. The Commissioner determined that the petitioner did not qualify for relief under any of the provisions of section 722 which were relied upon by the petitioner, and that it had not established what would be a fair and just amount representing earnings to be used as a constructive average base period net income for the purpose of computing an excess profits tax based upon a comparison of normal earnings and earnings during the excess profits taxable year ended December 31, 1941.

The issues, in general, are whether the petitioner qualifies for relief under the provisions of either subsection (b)(2), (b)(3)(A), (b)(3)(B), or (b)(5) of section 722 of the 1939 Code, and , if the petitioner qualifies for relief under any subsection of section 722, whether the petitioner has established what would be a fair and just amount representing normal earnings to be used as a constructive average base period net income. The petitioner relies primarily upon the provisions of section 722(b)(3)(A). The petitioner contends that throughout its history it has carried on a business through which it supplied certain types of building materials to the construction industry and that, therefore, at all times it was either a member of the construction industry, or, in the alternative, it was a member of an industry which was so closely related to and dependent economically upon the construction industry that its profits cycle was affected or controlled by the profits or volume cycle, or both, of the construction industry. The petitioner claims that it has a variant profit cycle.

The record in this proceeding is large; it includes 10 volumes of transcript and more than 240 exhibits. A few of the facts have been stipulated.

FINDINGS OF FACT.

The stipulated facts are founds as facts. The stipulations are incorporated herein by this reference.

The petitioner filed its excess profits tax returns for the taxable years 1940, 1941, and 1942, with the collector of internal revenue for the district of Minnesota. The petitioner filed timely applications for relief under section 722 of the 1939 Code for the taxable years 1941 and 1942, on September 15, 1943. Petitioner did not file application for relief under section 722 or claim for refund with respect to the year 1940, and the statutory period within which such application or claim might be filed has expired.

The petitioner, a Minnesota corporation, was organized on December 15, 1892, under the name of Crane & Ordway Company. Its charter was renewed on December 15, 1922, and at that time its corporate name was changed to Crane Company of Minnesota. The petitioner maintains its principal office in St. Paul, Minnesota.

The petitioner is not and never has been engaged in any construction work. The petitioner's charter, both the original and the renewed charter, describes the scope of petitioner's authorized activities in the following way: ‘The general nature of its business shall be buying, selling, dealing in pipe, fittings, railway, mill, steam fittings and plumbers' supplies and similar commodities.’ The nature of petitioner's business operations and of the products its sells are described in more detail hereinafter. In general, petitioner's business operations during the taxable year, the base period years, and during all of the earlier years is and has been primarily the purchase and the resale at wholesale of plumbing and heating equipment and supplies manufactured by Crane Co. of Illinois and by other manufacturers. Petitioner is and always has been primarily a wholesale distributor and it has done very little manufacturing at any time and very little fabricating work. Such fabricating of materials as petitioner does is done in connection with its business of wholesale distribution.

Crane Co., the Illinois corporation, has its principal office in Chicago. It is referred to hereinafter as Crane of Illinois. It was organized in 1865. Crane of Illinois, at all times material, has been and is a manufacturer of a wide line of plumbing and heating materials and allied equipment, heating boilers, heating radiators, plumbing earthenware, plumbing enamelware, and bathroom fixtures such as lavatories, bathtubs, closets, closet tanks, sinks, laundry trays; various kinds of valves and fittings, steam specialties, and pipe fittings. Crane of Illinois, in 1932, operated 11 manufacturing plants. Crane of Illinois has various subsidiaries such as Crane-O'Fallon Co. of Colorado, Trenton Potteries Co. of New Jersey, and Crane Enamelware Co. of Tennessee; and it has a nationwide distributing organization with headquarters in New York, Birmingham, Cleveland, Chicago, Dallas, St. Paul, Denver, and San Francisco. Crane of Illinois, over the long period of its existence, has developed a national system for the distribution and sale of its own manufactured goods. It also has maintained a control purchasing department for the purchase of goods manufactured by others, called jobbed goods, which are sold by Crane's subsidiaries and branches.

In Poor's Industry and Investment Survey of July 5, 1939, the use of Crane products is described in the following way:

Crane's products are used in all major industries as well as for household, office building, hospital and industrial building purposes. Among the major industrial markets are public utilities, railroads, water works and steel, shipbuilding, oil, chemical, textile, paper and food products industries.

In a report to stockholders of Crane of Illinois for the year 1932, the market for the products of Crane of Illinois is described as falling into three large divisions, namely, industry, building construction, and replacements and remodeling; the market of ‘industry’ is indicated by reference to steel mills, oil refineries, public service plants, packing houses, railroads, ships, waterworks, and any plant where water, air, gas, steam, or oil has to be conveyed and controlled; and the field of building construction is indicated by reference to residential construction, served by Crane's plumbing and heating division, and to construction by the Federal Government.

From 1892 until the end of 1922, petitioner's outstanding capital stock was owned 50 percent by Lucius P. Ordway, and 50 per cent by Crane of Illinois. On December 31, 1922, Crane of Illinois acquired an additional .025 per cent of petitioner's stock. Thereafter, including 1939, Crane of Illinois owned 50.025 per cent, and the Ordway family owned 49.975 per cent of petitioner's stock.

Since 1910, petitioner's books of account have been kept on a calendar year basis. From 1892 to 1909, inclusive, petitioner's books were kept on the basis of a fiscal year ended on November 30. Accounting data set forth hereinafter is based on the accounting periods which existed in the respective years.

In its nationwide distribution and sales of its products, Crane of Illinois has established 8 regions, or sales territories. The petitioner's sales territory constitutes 1 of these regions.

The petitioner's sales territory, during all of the time which is material, has consisted of Minnesota, the northwest quarter of Wisconsin, the upper peninsula of Michigan, North Dakota, South Dakota, the northern third of Wyoming, and Montana. From 1906 to 1916, inclusive, petitioner also had a sales outlet in Winnipeg, Canada, and it made substantial sales in the Winnipeg area. The sales territory of the petitioner is principally an agricultural area, but in the States of Minnesota, South Dakota, and Montana there are industrial and mining enterprises.

During the base period years, and before, petitioner had 9 sales offices or branches in its sales territory, together with warehouses. The locations of the branches, the years of their operation, and the type of economy in the area served by each branch are set forth in the following table:

+-----------------------------------------------------------------------------+ ¦TABLE 1 ¦ +-----------------------------------------------------------------------------¦ ¦State and ¦Periods of ¦Type of economy ¦ ¦cities ¦operation ¦ ¦ +------------+----------------+-----------------------------------------------¦ ¦Minnesota ¦ ¦ ¦ +------------+----------------+-----------------------------------------------¦ ¦St. Paul ¦1895-1939 ¦Principally agricultural, some industrial. ¦ +------------+----------------+-----------------------------------------------¦ ¦Minneapolis ¦1895-1939 ¦Principally agricultural, some industrial. ¦ +------------+----------------+-----------------------------------------------¦ ¦ ¦(1895-1897 ¦) ¦ +------------+----------------+-----------------------------------------------¦ ¦Duluth ¦(1904-1939 ¦)Agricultural, industrial, and mining. ¦ +------------+----------------+-----------------------------------------------¦ ¦Mankato ¦1925-1939 ¦Almost entirely agricultural. ¦ +------------+----------------+-----------------------------------------------¦ ¦Hibbing ¦1925-1927 ¦Principally industrial and mining; some limited¦ ¦ ¦ ¦agriculture. ¦ +------------+----------------+-----------------------------------------------¦ ¦Winona ¦1920-1932 ¦Mostly agricultural; some industry. ¦ +-----------------------------------------------------------------------------+

North Dakota Fargo 1904-1939 Almost entirely agricultural.

South Dakota Aberdeen 1910-1939 Almost entirely agricultural. Sioux Falls 1925-1939 Principally agricultural, some industry. Watertown 1904-1910 Agricultural.

Montana Great 1911-1939 Principally agricultural; quite a bit of mining, some Falls industrial associated with mining. Billings 1925-1939 Principally agricultural, including cattle raising. Butte 1911-1912 Principally mining and smelting.

Canada Winnipeg 1906-1916 During years indicated, almost entirely agricultural.

The items sold by petitioner were purchased, almost entirely, from Crane of Illinois and its subsidiaries and affiliates, and from Crane's central purchasing department which did the buying of jobbed goods, i.e., goods manufactured by others. Hereinafter, the lines of goods sold by petitioner are designated Crane-manufactured goods (meaning made by Crane of Illinois), and jobbed goods (meaning made by others than Crane of Illinois).

The principal products which petitioner sold come under the following general descriptions; iron and steel pipe, valves, fittings and appliances for controlling and conveying water, oil, other liquids, steam, gases, and air; heating boilers, furnaces, heating radiators, heating appliances; plumbing appliances (meaning bathtubs, lavatories, water closets, sinks, and other earthenware and enamelware (enameled iron) products of similar use and type); plumbing brass and fixtures; and miscellaneous related goods. Petitioner sold a wide selection of the above classes of goods. In one of petitioner's catalogues it is stated that it handled about 25,000 articles manufactured by Crane of Illinois made of brass, iron, cast steel, ferro steel, and forged steel, and distributed pipe, and heating and plumbing materials. Petitioner sold iron and steel pipe having diameters ranging from one-eighth of an inch to 40 inches. In addition to the above types of goods, petitioner has sold, in each year since 1920, specialized equipment designed for use in creameries and dairies, but such sales have amounted to less than 5 per cent of all sales each year. For many years prior to 1930, petitioner sold windmills. A small percentage of petitioner's sales each year have consisted of such miscellaneous goods as pumps, refrigerators, water and irrigation systems and equipment, flag poles, humidifiers, auto washers, bar furniture and equipment, hose, plumbers' tools, bathroom accessories, clothes poles, belt lacers and lacings, fine brushes, and water softeners.

Petitioner destroyed its sales invoices after 3 years, but it retained other records which go as far back as 1899 from which large group classifications of goods sold by petitioner can be made. Exhibit 64 is incorporated herein by reference. From the retained records, petitioner's sales during 1899-1929 can be described in 3 groups; sales during 1930-1936 can be described in 5 groups, sales in 1937 and 1938, in 8 groups; and sales in 1939, in 10 groups, as the following schedules show:

1899-1929

1. Crane manufactured goods (general).

2. Steel pipe (not made by Crane).

3. Jobbed Goods other than steel pipe (not made by Crane).

1930-1936

Crane Manufactured goods:

(1) Plumbing consisting chiefly of earthenware and enamelware fixtures.

(2) Boilers and radiation.

(3) Other goods such as valves and fittings.

(4) Steel pipe (not made by Crane).

(5) Jobbed goods other than steel pipe (not made by Crane).

1937 and 1938

Crane manufactured goods:

(1) Valves and fittings.

(2) Plumbing brass.

(3) Plumbing earthenware.

(4) Plumbing enamelware.

(5) Heating boilers.

(6) Heating radiators.

(7) Steel pipe (not made by Crane).

(8) Jobbed goods other than steel pipe (not made by Crane).

1939

Crane manufactured goods:

(1), (2), (3), (4), (5), and (6) (same as above).

(7) Steel Pipe (not made by Crane).

Jobbed goods other than steel pipe (not made by Crane):

(8) Jobbed plumbing.

(9) Jobbed heating.

(10) Jobbed miscellaneous.

Petitioner does not have records for all of the years it has carried on its business from which computations can be made of the dollar amounts of its sales of various classes of goods, but it has records for the years 1936-1939, inclusive, from which such computations can be made.

In 1936, petitioner's sales of Crane plumbing goods amounted to roughly $1,138,000; Crane boilers and radiation, $361,400; other Crane goods, $804,900; jobbed steel pipe, $708,400; and other jobbed goods, $1,618,500.

The following schedule presents a breakdown of petitioner's sales in 1937, 1938, and 1939:

+-----------------------------------------------------------------------------+ ¦TABLE 2 ¦ +-----------------------------------------------------------------------------¦ ¦ ¦1937 ¦Per ¦1938 ¦Per ¦1939 ¦Per ¦ ¦ ¦ ¦cent ¦ ¦cent ¦ ¦cent ¦ +--------------------+----------+-------+----------+-------+----------+-------¦ ¦Valves and fittings ¦$978,898 ¦20 ¦$814,564 ¦20 ¦$893,131 ¦20 ¦ ¦¹ ¦ ¦ ¦ ¦ ¦ ¦ ¦ +--------------------+----------+-------+----------+-------+----------+-------¦ ¦Plumbing brass ¹ ¦216,716 ¦5 ¦180,563 ¦4 ¦222,563 ¦5 ¦ +--------------------+----------+-------+----------+-------+----------+-------¦ ¦Plumbing earthenware¦219,446 ¦5 ¦203,267 ¦5 ¦250,116 ¦5 ¦ ¦¹ ¦ ¦ ¦ ¦ ¦ ¦ ¦ +--------------------+----------+-------+----------+-------+----------+-------¦ ¦Plumbing enamelware ¦235,250 ¦5 ¦239,429 ¦6 ¦306,855 ¦7 ¦ ¦¹ ¦ ¦ ¦ ¦ ¦ ¦ ¦ +--------------------+----------+-------+----------+-------+----------+-------¦ ¦Heating boilers ¹ ¦131,408 ¦3 ¦111,669 ¦3 ¦109,749 ¦2 ¦ +--------------------+----------+-------+----------+-------+----------+-------¦ ¦Heating radiators ¦120,414 ¦2 ¦93,626 ¦2 ¦96,712 ¦2 ¦ ¦¹ ¦ ¦ ¦ ¦ ¦ ¦ ¦ +--------------------+----------+-------+----------+-------+----------+-------¦ ¦Jobbed pipe ¦678,381 ¦14 ¦589,506 ¦14 ¦569,058 ¦13 ¦ +--------------------+----------+-------+----------+-------+----------+-------¦ ¦Jobbed goods ¦2,184,478 ¦46 ¦1,926,980 ¦46 ¦ ¦ ¦ +--------------------+----------+-------+----------+-------+----------+-------¦ ¦Jobbed plumbing ¦ ¦ ¦ ¦ ¦1,287,826 ¦28 ¦ +--------------------+----------+-------+----------+-------+----------+-------¦ ¦Jobbed heating ¦ ¦ ¦ ¦ ¦593,167 ¦13 ¦ +--------------------+----------+-------+----------+-------+----------+-------¦ ¦Jobbed misc ¦ ¦ ¦ ¦ ¦229,417 ¦5 ¦ +--------------------+----------+-------+----------+-------+----------+-------¦ ¦Total sales ² ¦$4,764,999¦100 ¦$4,159,604¦100 ¦$4,558,594¦100 ¦ +-----------------------------------------------------------------------------+

The following schedule shows for 1939, the dollar amounts of petitioner's sales of goods in each of 5 classifications without reference to the manufacturers of the goods:

+-----------------------------------------------------------------------------+ ¦Class ¦Amounts ¦Percentage¦ +-------------------------------------------------------+----------+----------¦ ¦ ¦of sales ¦of total ¦ +-------------------------------------------------------+----------+----------¦ ¦ ¦ ¦sales ¦ +-------------------------------------------------------+----------+----------¦ ¦1. Valves and fittings ¦$893,131 ¦19.59 ¦ +-------------------------------------------------------+----------+----------¦ ¦2. Steel pipe ¦569,058 ¦12.49 ¦ +-------------------------------------------------------+----------+----------¦ ¦3. Plumbing (including earthenware, enamelware, and ¦2,067,360 ¦45.35 ¦ ¦brass) ¦ ¦ ¦ +-------------------------------------------------------+----------+----------¦ ¦4. Heating ¦799,628 ¦17.54 ¦ +-------------------------------------------------------+----------+----------¦ ¦5. Miscellaneous (including wrought iron pipe and ¦229,417 ¦5.03 ¦ ¦specialized creamery equipment) ¦ ¦ ¦ +-------------------------------------------------------+----------+----------¦ ¦Total sales ¹ ¦$4,558,594¦100.00 ¦ +-----------------------------------------------------------------------------+

If the annual totals for petitioner's net sales are adjusted for fluctuations in the wholesale price index of metals and metal products, the adjusted figures show a rise from a low point in the years 1917 and 1918 to a high point in 1925, and a decline to a low point in 1933. In each of the years 1916 to 1920, inclusive, the adjusted figures for petitioner's net sales are lower than in any year during the period 1922 to 1930, inclusive. Petitioner's average net sales in the period 1916-1920, as adjusted, amounted to $4,675,056, or only 78.7 per cent of $5,940,508, the average for 1922-1930. On the other hand, petitioner's average taxable income in the period 1916-1920 was the highest in its history. During this period, petitioner's average taxable income amounted to $733,885,or 283.8 per cent of $258,566, the average for the period 1922-1930. Similarly, petitioner's average taxable income during the base period years, $199,913, was higher than $180,560, the average for 1922-1939, whereas petitioner's average net sales during the base period years, as adjusted, $4,824,066, were less than $5,069,104, the average for 1922-1939.

The following table shows, for the years 1900 to 1939, inclusive, petitioner's net sales, the wholesale price index for metals and metal products, petitioner's net sales as adjusted for fluctuations in the latter index, and petitioner's taxable income before Federal income tax.

+------------------------------------------------------------------------------+ ¦TABLE 12 ¹ ¦ +------------------------------------------------------------------------------¦ ¦ ¦ ¦ ¦Petitioner's net ¦ ¦ +--------------+------------+------------------+------------------+------------¦ ¦ ¦ ¦Wholesales price ¦sales as ¦Petitioner's¦ +--------------+------------+------------------+------------------+------------¦ ¦ ¦Petitioner's¦index, metals ¦adjusted by metals¦taxable ¦ +--------------+------------+------------------+------------------+------------¦ ¦Year ¦net ¦and metal products¦and metal products¦before ¦ +--------------+------------+------------------+------------------+------------¦ ¦ ¦sales ¦1926=100 ¦wholesale ¦Federal ¦ +--------------+------------+------------------+------------------+------------¦ ¦ ¦ ¦ ¦price index ¦income tax ¦ +--------------+------------+------------------+------------------+------------¦ ¦1900 ¦$1,120,360 ¦98.0 ¦$1,143,224 ¦$112,870 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1901 ¦1,388,291 ¦93.1 ¦1,491,182 ¦104,437 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1902 ¦1,664,665 ¦91.0 ¦1,829,302 ¦121,128 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1903 ¦1,787,702 ¦90.2 ¦1,981,931 ¦106,470 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1904 ¦1,668,579 ¦79.9 ¦2,088,334 ¦74,961 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1905 ¦1,946,889 ¦89.1 ¦2,185,060 ¦92,146 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1906 ¦2,357,168 ¦102.4 ¦2,301,921 ¦118,885 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1907 ¦2,669,774 ¦109.8 ¦2,431,488 ¦202,640 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1908 ¦2,399,961 ¦86.3 ¦2,780,951 ¦124,547 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1909 ¦3,152,196 ¦84.5 ¦3,730,409 ¦178,325 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1910 ¦4,082,058 ¦85.2 ¦4,791,147 ¦307,291 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1911 ¦3,812,818 ¦80.8 ¦4,718,834 ¦164,205 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1912 ¦4,350,373 ¦89.5 ¦4,860,751 ¦250,870 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1913 ¦4,578,827 ¦90.8 ¦5,042,761 ¦279,654 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1914 ¦4,519,168 ¦80.2 ¦5,634,872 ¦270,076 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1915 ¦4,463,727 ¦86.3 ¦5,172,337 ¦317,234 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1916 ¦5,769,773 ¦116.5 ¦4,952,594 ¦770,820 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1917 ¦5,843,632 ¦150.6 ¦3,880,233 ¦609,884 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1918 ¦5,317,868 ¦136.5 ¦3,895,873 ¦572,982 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1919 ¦6,717,343 ¦130,9 ¦5,131,660 ¦799.209 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1920 ¦8,239,292 ¦149.4 ¦5,514,921 ¦916,530 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1921 ¦5,275,949 ¦117.5 ¦4,490,169 ¦95,734 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1922 ¦6,308,885 ¦102.9 ¦6,131,083 ¦186,915 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1923 ¦6,762,667 ¦109.3 ¦6,187,252 ¦314,065 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1924 ¦6,038,764 ¦106.3 ¦5,680,869 ¦138,233 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1925 ¦6,477,829 ¦103.2 ¦6,276,966 ¦211,215 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1926 ¦6,232.134 ¦100.0 ¦6,232,134 ¦339,998 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1927 ¦5,393,860 ¦96.3 ¦5,601,100 ¦271,857 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1928 ¦5,674,483 ¦97.0 ¦5,849,982 ¦354,301 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1929 ¦5,939,553 ¦100.5 ¦5,910,002 ¦388,777 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1930 ¦5,153,169 ¦92.1 ¦5,595,188 ¦121,730 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1931 ¦4,067,710 ¦84.5 ¦4,813,857 ¦46,679 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1932 ¦2,629,696 ¦80.2 ¦3,278,922 ¦(63,159) ¦ +--------------+------------+------------------+------------------+------------¦ ¦1933 ¦2,186,544 ¦79.8 ¦2,740,030 ¦( 4,279) ¦ +--------------+------------+------------------+------------------+------------¦ ¦1934 ¦3,039,061 ¦86.9 ¦3,497,193 ¦69,030 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1935 ¦3,588,221 ¦86.4 ¦4,153,033 ¦75,067 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1936 ¦4,620,422 ¦87.0 ¦5,310,830 ¦234,869 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1937 ¦4,704,547 ¦95.7 ¦4,915,932 ¦244,423 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1938 ¦4,110,577 ¦95.7 ¦4,295,273 ¦62,441 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1939 ¦4,506,875 ¦94.4 ¦4,774,231 ¦257,920 ¦ +--------------+------------+------------------+------------------+------------¦ ¦Averages: ¦ ¦ ¦ ¦ ¦ +--------------+------------+------------------+------------------+------------¦ ¦1916-1920 ¦ ¦ ¦$4,675,056 ¦$733,885 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1922-1930 ¦ ¦ ¦5,940,508 ¦258,566 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1922-1939 ¦ ¦ ¦5,069,104 ¦180,560 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1936-1939 ¦ ¦ ¦4,824,066 ¦199,913 ¦ +--------------+------------+------------------+------------------+------------¦ ¦Percentages: ¦ ¦ ¦ ¦ ¦ +--------------+------------+------------------+------------------+------------¦ ¦1916-1920 to ¦ ¦ ¦ ¦ ¦ +--------------+------------+------------------+------------------+------------¦ ¦1922-1930 ¦ ¦ ¦78.7 ¦283.8 ¦ +--------------+------------+------------------+------------------+------------¦ ¦1936-1939 to ¦ ¦ ¦ ¦ ¦ +--------------+------------+------------------+------------------+------------¦ ¦1922-1939 ¦ ¦ ¦95.2 ¦110.7 ¦ +------------------------------------------------------------------------------+ ¹Sources: See Exhibits 119 and K.

1 during the base period years than during the period 1922-1939 or any other period after 1900 except 1917-1920 and the period immediately preceding the base period years. The Riggleman data is expressed as building permit values per capita, in terms of 1913 dollars. It was derived by reducing the total annual building permit values in the 65 cities to a per capita basis, and converting the resulting dollar per capita figure to an equivalent to 1913 dollars per capita, by use of a special index of building costs. The following table shows, for the years 1900-1939, the value of building permits per capita, expressed in 1913 dollars, for the 65 cities included in the Riggleman study:

The Central Supply Association is a trade association of wholesalers of plumbing and heating equipment and supplies who sell the same general line of merchandise as the petitioner sells. Its membership consists of corporations, partnerships, and proprietorships located in more than 20 States in the central part of the United States. The area in which its members are located extends from Montana to New Mexico, south, from Tennessee to West Virginia, eastward, and from Pennsylvania to the Canadian border, northward. During the base period years the Central Supply Association had approximately 380 members.

In the years 1927 to 1930, inclusive, and 1934 to 1939, inclusive, the association collected information from its members pertaining to their operations. No data was collected for the years 1931, 1932, or 1933. The following table shows the number of members who reported information, the total net sales reported by such members, and the average net sales per reporting member for the periods 1927-1930 and 1934-1939:

+----------------------------------------------------+ ¦ ¦ ¦ ¦Average ¦ +----+-----------------+---------------+-------------¦ ¦ ¦Number of ¦Total net sales¦net sales ¦ +----+-----------------+---------------+-------------¦ ¦Year¦members reporting¦reported ¦per reporting¦ +----+-----------------+---------------+-------------¦ ¦ ¦ ¦ ¦member ¦ +----+-----------------+---------------+-------------¦ ¦1927¦134 ¦$106,000,000 ¦$791,000 ¦ +----+-----------------+---------------+-------------¦ ¦1928¦120 ¦100,000,000 ¦835,000 ¦ +----+-----------------+---------------+-------------¦ ¦1929¦157 ¦132,000,000 ¦843,000 ¦ +----+-----------------+---------------+-------------¦ ¦1930¦203 ¦114,000,000 ¦564,000 ¦ +----+-----------------+---------------+-------------¦ ¦ ¦ ¦ ¦ ¦ +----+-----------------+---------------+-------------¦ ¦1934¦164 ¦36,000,000 ¦218,000 ¦ +----+-----------------+---------------+-------------¦ ¦1935¦187 ¦52,000,000 ¦281,000 ¦ +----+-----------------+---------------+-------------¦ ¦1936¦152 ¦56,000,000 ¦366,000 ¦ +----+-----------------+---------------+-------------¦ ¦1937¦175 ¦81,000,000 ¦463,000 ¦ +----+-----------------+---------------+-------------¦ ¦1938¦183 ¦68,000,000 ¦372,000 ¦ +----+-----------------+---------------+-------------¦ ¦1939¦179 ¦83,000,000 ¦461,000 ¦ +----------------------------------------------------+

During the base period years, the average value of total construction contracts awarded in the Ninth Federal Reserve District, other than Montana, amounted to $96,244,000, or 99 per cent of $97,186,000, the average for 1922-1939. The average value of residential construction contracts awarded in this area during the base period years equaled 92.0 per cent of the average for 1922-1939, and the value of nonresidential construction 101.8 per cent of the 1922-1939 average. During the base period years, petitioner's average net sales in the same area (Minnesota, North Dakota, northwest Wisconsin, and the northern peninsula of Michigan) equaled $3,732,827, or 87.7 per cent of the 1922-1939 average. The following tables show, for the years 1919 to 1939, the total value of building construction contracts awarded in the Ninth Federal Reserve District, the portions thereof representing residential and nonresidential construction, the petitioner's total net sales in the same geographical area, and indices thereof in which the 1922-1939 average equals 100:

+---------+ ¦TABLE 13 ¦ +---------¦ ¦ ¦ ¦ ¦ ¦ ¦ +---------+

Value of Building Construction Contracts Awarded in the Ninth Federal Reserve District, Other Than Montana Nonresidential ¹ Petitioner's Year Total ¹ Residential ¹ sales 1919 $91,676,000 $30,256,000 $61,420,000 $6,206,591 1920 109,978,000 25,358,000 84,620,000 7,565,186 1921 98,212,000 26,876,000 71,336,000 4,770,145 1922 93,651,000 29,980,000 63,671,000 5,695,594 1923 144,432,000 48,243,000 96,189,000 6,157,751 1924 102,387,000 39,592,000 62,795,000 5,608,693 1925 113,011,000 47,066.000 65,945,000 6,005,043 1926 123,678,000 45,798,000 77,880,000 5,670,734 1927 110,122,000 41,392,000 68,730,000 4,774,684 1928 110,876,000 39,878,000 70,998,000 4,855,420 1929 124,675,000 28,337,000 96,338,000 5,026,525 1930 117,495,000 21,932.000 95,563,000 4,488,607 1931 99,008,000 19,755,000 79,253,000 3,551,596 1932 60,465,000 8,055,000 52,410,000 2,362.171 1933 41,854,000 6,014,000 35,840,000 1,943,194 1934 55,859,000 4,719,000 51,140,000 2,584,352 1935 66,869,000 12,719,000 54,150,000 2,941,686 1936 91,969,000 19,174,000 72,795,000 3,901,847 1937 92,182,000 23,401,000 68,781,000 3,890,505 1938 96,283,000 25,854,000 70,429,000 3,361,036 1939 104,542,000 32,684,000 71,858,000 3,777,919 Average: 1936-1939 $96,244,000 $25,278,000 $70,966,000 $3,732.827 1922-1939 97,186,000 27,477,000 69,709,000 4,255,409 Indices: 1936-1939 99.0 92.0 101.8 87.7 1922-1929 100.0 100.0 100.0 100.0 ¹Source: Board of Governors of the Federal Reserve System, Division Research and Statistics. Exhibit WW.

+---------+ ¦TABLE 14 ¦ +---------¦ ¦ ¦ ¦ ¦ ¦ ¦ +---------+

Indices-Value of Building Construction Contracts Awarded in the Ninth Federal Reserve District, Other Than Montana Total contract Residential Nonresidential Petitioner's Year index ¹ index ¹ index ¹ sales index ¹ 1919 94.3 110.1 88.1 145.9 1920 113.2 92.3 121.4 177.8 1921 101.1 97.8 102.3 112.1 1922 96.4 109.1 91.3 133.8 1923 148.6 175.6 138.0 144.7 1924 105.4 144.1 90.1 131.8 1925 116.3 171.3 94.6 141.1 1926 127.3 166.7 111.7 133.3 1927 113.3 150.6 98.6 112.2 1928 114.1 145.1 101.8 114.1 1929 128.3 103.1 138.2 118.1 1930 120.9 79.8 137.1 105.5 1931 101.9 71.9 113.7 83.5 1932 62.2 29.3 75.2 55.5 1933 43.1 21.9 51.4 45.7 1934 57.5 17.2 73.4 60.7 1935 68.8 46.3 77.7 69.1 1936 94.6 69.8 104.4 91.7 1937 94.9 85.2 98.7 91.4 1938 99.1 94.1 101.0 79.0 1939 107.6 119.0 103.1 88.8 ¹1922-1939 average=100.

According to statistics prepared by the F. W. Dodge Corporation, the average value of construction contracts awarded in the States of Minnesota, North Dakota, and South Dakota during the base period years amounted to $76,090,000, or 101.8 per cent of $74,742,000, the average during the period 1922-1939. Petitioner's average net sales from its branch offices located in these 3 States during the base period years amounted to $3,732,827, or 87.7 per cent of the 1922-1939 average. In Minnesota, the average value of construction contracts awarded during the base period was 99.4 per cent of the 1922-1939 average; in North Dakota, 114 per cent; and in South Dakota, 107.6 per cent. Petitioner's average base period sales in Minnesota were 86.7 per cent of sales during the period 1922-1939; in North Dakota, 90.7 per cent; and in South Dakota 91.1 per cent. The following tables show, for the years 1922-1939, the value of construction contracts awarded and petitioner's sales in each of the States of Minnesota, North Dakota, and South Dakota, and the totals thereof, together with indices based on an average of 100 for the period 1922-1939:

+---------+ ¦TABLE 15 ¦ +---------¦ ¦ ¦ ¦ ¦ ¦ ¦ +---------+

Minnesota Value of Petitioner's Year construction Index sales Index contracts awarded 1922 $67,073,000 113.8 $4,628,057 142.6 1923 103,955,000 176.4 5,074,105 156.4 1924 67,237,000 114.1 4,648,706 143.2 1925 77,529,000 131.6 4,612,214 142.1 1926 78,828,000 133.8 4,239,439 130.6 1927 62,171,000 105.5 3,556,295 109.6 1928 54,918,000 93.2 3,480,457 107.2 1929 63,052,000 107.0 3,671,579 113.1 1930 67,727,000 115.0 3,249,707 100.1 1931 57,140,000 97.0 2,632,587 81.1 1932 36,881,000 62.6 1,842,464 56.8 1933 25,315,000 43.0 1,441,506 44.4 1934 29,588,000 50.2 1,906,870 58.8 1935 34,757,000 59.0 2,170,433 66.9 1936 53,377,000 90.6 2,917,411 89.9 1937 54,739,000 92.9 2,951,025 90.9 1938 56,779,000 96.4 2,550,830 78.6 1939 69,446,000 117.9 2,839,959 87.5 Averages: 1922-1939 58,917,000 100.0 3,245,202 100.0 1936-1939 58,585,000 99.4 2,814,806 86.7

+---------+ ¦TABLE 16 ¦ +---------¦ ¦ ¦ ¦ ¦ ¦ ¦ +---------+

North Dakota Value of Petitioner's Year construction Index sales Index contracts awarded 1922 $2,953,000 39.5 $608,675 120.9 1923 7,583,000 101.3 630,303 125.2 1924 4,108,000 54.9 501,090 99.5 1925 4,838,000 64.6 686,307 136.3 1926 9,062,000 121.1 750,538 149.1 1927 10,243,000 136.8 635,944 126.3 1928 10,412,000 139.1 679,129 134.9 1929 10,733,000 143.4 648,486 128.8 1930 8,837,000 118.1 594,374 118.0 1931 7,621,000 101.8 364,970 72.5 1932 7,620,000 101.8 223,179 44.3 1933 2,948,000 39.4 206,576 41.0 1934 6,918,000 92.4 321,546 63.9 1935 6,727,000 89.9 386,012 76.7 1936 10,626,000 142.0 470,459 93.4 1937 6,877,000 91.9 453,414 90.0 1938 8,258,000 110.3 407,505 80.9 1939 8,364,000 111.7 495,084 98.3 Averages: 1922-1939 7,485,000 100.0 503,533 100.0 1936-1939 8,531,000 114.0 456,615 90.7

+---------+ ¦TABLE 17 ¦ +---------¦ ¦ ¦ ¦ ¦ ¦ ¦ +---------+

South Dakota Value of Petitioner's Year construction Index sales Index contracts awarded 1922 $6,003,000 72.0 $458,862 90.6 1923 11,459,000 137.4 453,343 89.5 1924 7,674,000 92.0 458,897 90.6 1925 9,709,000 116.4 706,540 139.4 1926 7,556,000 90.6 680,757 134.4 1927 8,712,000 104.5 582,445 115.0 1928 7,273,000 87.2 695,834 137.3 1929 9,467,000 113.5 706,460 139.4 1930 8,633,000 103.5 644,526 127.2 1931 10,768,000 129.1 554,039 109.3 1932 4,216,000 50.6 296,528 58.5 1933 6,258,000 75.0 295,112 58.2 1934 8,262,000 99.1 355,936 70.2 1935 8,237,000 98.8 385,241 76.0 1936 8,754,000 105.0 513,977 101.4 1937 9,498,000 113.9 486,066 95.9 1938 9,945,000 119.2 402,701 79.5 1939 7,696,000 92.3 442,876 87.4 Averages: 1922-1939 8,340,000 100.0 506,674 100.0 1936-1939 8,973,000 107.6 461,405 91.1

In dealing with comparisons of cyclical statistics, other than price data, a series of statistics pertaining to value may be reduced to a more comparable basis approximating volume by applying a price index to the value statistics. Application of an index of construction costs to the value of construction contracts awarded over a series of years would tend to eliminate fluctuations caused by fluctuations in constructions costs, and the adjusted data would more closely approximate the volume of construction over the period of years.

The following table shows, for the years 1921-1939, the F. W. Dodge Corporation statistics for the value of construction contracts awarded in Montana, North Dakota, and South Dakota; for the years 1919-1939, the Federal Reserve System statistics for the value of construction contracts awarded in the Ninth Federal Reserve District other than Montana; for the years 1919-1939, the Department of Commerce composite index of construction costs, in which construction costs for 1939 are indexed at 100; and the F. W. Dodge and Federal Reserve System statistics, as modified by the composite construction cost index.

+-----------------------------------------------------------------------------+ ¦TABLE 18 ¦ +-----------------------------------------------------------------------------¦ ¦ ¦ ¦ ¦ ¦Value of construction ¦ +--------------+-------------------------+------------+-----------------------¦ ¦ ¦Value of construction ¦ ¦contract awards ¦ +--------------+-------------------------+------------+-----------------------¦ ¦ ¦contract awards ¦ ¦adjusted by index of ¦ +--------------+-------------------------+------------+-----------------------¦ ¦ ¦ ¦ ¦Composite ¦construction costs ¦ +--------------+-------------------------+------------+-----------------------¦ ¦ ¦_ ¦index of ¦_ ¦ +--------------+-------------------------+------------+-----------------------¦ ¦Year ¦ ¦ ¦construction¦ ¦ ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦ ¦ ¦(Col. B) ¦ ¦ ¦ ¦ ¦ ¦(Col. A) ¦Federal ¦ ¦ ¦ ¦ ¦ ¦Dodge ¦Reserve ¦ ¦ ¦Federal ¦ ¦ ¦statistics ¦statistics ¦costs (1939 ¦Dodge ¦Reserve ¦ ¦ ¦for Minn., ¦for 9th Fed. ¦costs = 100)¦statistics ¦statistics ¦ ¦ ¦N.D. and ¦Reserve ¦¹ ¦(Col. A) ¦(Col. B) ¦ ¦ ¦S.D. ¦District ¦ ¦ ¦ ¦ ¦ ¦ ¦(other than ¦ ¦ ¦ ¦ ¦ ¦ ¦Montana) ¦ ¦ ¦ ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1919 ¦ ¦$91,676,000 ¦106.0 ¦ ¦$86,487,000¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1920 ¦ ¦109,978,000 ¦133.9 ¦ ¦82,134,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1921 ¦$81,532,000¦98,212,000 ¦108.9 ¦$74,869,000¦90,185,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1922 ¦76,029,000 ¦93,651,000 ¦97.7 ¦77,819,000 ¦95,856,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1923 ¦122,997,000¦144,432,000 ¦107.1 ¦114,843,000¦134,857,000¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1924 ¦79,019,000 ¦102,387,000 ¦106.2 ¦74,406,000 ¦96,410,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1925 ¦92,076,000 ¦113,011,000 ¦104.8 ¦87,859,000 ¦107,835,000¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1926 ¦95,446,000 ¦123,678,000 ¦105.2 ¦90,728,000 ¦117,565,000¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1927 ¦81,126,000 ¦110,122,000 ¦104.4 ¦77,707,000 ¦105,481,000¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1928 ¦72,603,000 ¦110,876,000 ¦104.8 ¦69,477,000 ¦106,101,000¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1929 ¦83,252,000 ¦124,675,000 ¦106.7 ¦78,024,000 ¦116,846,000¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1930 ¦85,197,000 ¦117,495,000 ¦102.4 ¦83,200,000 ¦114,741,000¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1931 ¦75,529,000 ¦99,008,000 ¦93.8 ¦80,521,000 ¦105,552,000¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1932 ¦48,717,000 ¦60,465,000 ¦81.1 ¦60,070,000 ¦74,556,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1933 ¦34,521,000 ¦41,854,000 ¦87.1 ¦39,634,000 ¦48,053,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1934 ¦44,768,000 ¦55,859,000 ¦94.4 ¦47,424,000 ¦59,173,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1935 ¦49,721,000 ¦66,869,000 ¦90.8 ¦54,759,000 ¦73,644,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1936 ¦72,757,000 ¦91,969,000 ¦92.8 ¦78,402,000 ¦99,105,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1937 ¦71,114,000 ¦92,182,000 ¦100.0 ¦70,480,000 ¦91,360,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1938 ¦74,982,000 ¦96,283,000 ¦99.7 ¦75,208,000 ¦96,573,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1939 ¦85,506,000 ¦104,542,000 ¦100.0 ¦85,506,000 ¦104,542,000¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦Averages: ¦ ¦ ¦ ¦ ¦ ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1936-1939 ¦76,090,000 ¦96,244,000 ¦ ¦79,399,000 ¦97,895,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1922-1939 ¦74,742,000 ¦97,186,000 ¦ ¦74,782,000 ¦97,125,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1919-1933 ¦ ¦102,768,000 ¦ ¦ ¦98,844,000 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1921-1933 ¦79,080,000 ¦ ¦ ¦77,627,000 ¦ ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦Percentages: ¦ ¦ ¦ ¦ ¦ ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1936-1939 to ¦ ¦ ¦ ¦ ¦ ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1922-1939 ¦101.8 ¦99.0 ¦ ¦106.2 ¦100.8 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1936-1939 to ¦ ¦ ¦ ¦ ¦ ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1919-1933 ¦ ¦93.7 ¦ ¦ ¦99.0 ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1936-1939 to ¦ ¦ ¦ ¦ ¦ ¦ +--------------+-----------+-------------+------------+-----------+-----------¦ ¦1921-1939 ¦96.2 ¦ ¦ ¦102.3 ¦ ¦ +-----------------------------------------------------------------------------+ ¹Source: U.S. Department of Commerce, “Construction and Construction Materials,” Statistical Supplement, May 1950, p. 34. Ex. 12.

The following table shows the petitioner's net sales and the gross income of all corporations filing returns in the States of Minnesota, Montana, North Dakota, and South Dakota, for each of the years 1916-1939:

+---------+ ¦TABLE 19 ¦ +---------¦ ¦ ¦ ¦ ¦ ¦ ¦ +---------+

Gross income of corps in Year Petitioner's Index ² Minn., Mont., Index ² net sales ¹ N. Dak., and S. Dak. 1916 $5,769,773 118.8 $990,000,000 34.3 1917 5,843,632 120.3 2,937,000,000 101.8 1918 5,317,868 109.5 2,715,000,000 94.1 1919 6,717,343 138.3 2,766,000,000 95.8 1920 8,239,292 169.6 3,344,000,000 115.9 1921 5,275,949 108.6 2,533,000,000 87.8 1922 6,308,885 129.9 2,900,000,000 100.5 1923 6,762,667 139.2 2,939,000,000 101.8 1924 6,038,764 124.3 3,175,000,000 110.0 1925 6,477,829 133.4 3,302,000,000 114.4 1926 6,232,134 128.3 3,302,000,000 114.4 1927 5,393,860 111.0 3,460,000,000 119.9 1928 5,674,483 116.8 3,616,000,000 125.3 1929 5,939,553 122.3 3,573,000,000 123.8 1930 5,153,169 106.1 3,080,000,000 106.7 1931 4,067,710 83.7 2,374,000,000 82.3 1932 2,629,696 54.1 1,790,000,000 62.0 1933 2,186,544 45.0 1,922,000,000 66.6 1934 3,039,061 62.6 2,364,000,000 81.9 1935 3,588,221 73.9 2,632,000,000 91.2 1936 4,620,422 95.1 3,040,000,000 105.3 1937 4,704,547 96.9 3,038,000,000 105.3 1938 4,110,577 84.6 2,631,000,000 91.2 1939 4,506,875 92.8 2,816,000,000 97.6 Averages: 1922-1939 4,857,500 100.0 2,886,000,000 100.0 1936-1939 4,485,605 92.3 2,881,000,000 99.8 ¹Source: Exhibit 89.²1922-1939=100.

2 Applicable also are various provisions of Regulations 109 and of the Treasury Department's Bulletin on Section 722, Excess Profits Tax Relief, hereinafter referred to as the Bulletin.
The petitioner contends that its business was depressed in the base period. It claims that it meets the requirement in section 722(b)(2), namely, that the depression was because of the fact that an industry of which it was a member was depressed by reason of temporary economic events unusual in the case of such industry. Petitioner also contends, under section 722(b)(3), that its business was depressed in the base period by reason of conditions generally prevailing in an industry of which it was a member subjecting petitioner either to (A) a profits cycle differing materially in length and amplitude from the general business cycle, or (B) to sporadic and intermittent periods of high production and profits which periods were inadequately represented in the base period.
The petitioner has undertaken to establish that it meets all of the above qualifying factors although petitioner relies in the alternative (b)(3)(B). In attempting to meet the requisites of (b)(2) and (b)(3), the petitioner presented a vast amount of economic data relating to the nationwide construction industry of which it claims it is a member; and, in rebuttal, the respondent presented a substantial amount of economic data relating to the record of profits of all corporations in the United States as well as all corporations carrying on business within petitioner's sales area. There is in the record before us a great quantity of expert testimony, statistical tables and charts, and exhibits. The record contains a great deal of data which is overlapping and which is pertinent to consideration of the questions arising under both (b)(2) and (b)(3). This is because under both (b)(2) and (b)(3) a taxpayer must establish the identity of an industry of which it is a member as well as that the taxpayer's business was depressed in the base period. At the outset, it it noted also that the nature of the provisions of subsection (b)(3) (A) necessitates consideration of period of years other than the base period years. Likewise, determination of the question of whether there is depression in the base period requires comparison with prior years; and comparison of cycles involves consideration of facts and factors over a longer period than the base period. Part IV(B) of the Bulletin.
Since we are confronted with having to analyze the proof with respect to petitioner's contentions that it meets various qualifying factors, it is convenient, if not necessary, to consider the evidence relating to qualifying factors, such as, for example, base period depression, petitioner's industry, conditions in the industry, and the comparison of cycles, rather than to consider the evidence adduced under each of the subsections of section 722(b) on which petitioner relies. See Waldorf System, Inc., 21 T.C. 252, 267, 268, 269, 270, where this approach was followed.

The petitioner's net sales (other than sales in Montana and Wyoming) constituted a smaller percentage of the value of construction contracts awarded in the Ninth Federal Reserve District (other than Montana) during the base period than during the period 1922-1939. Petitioner's net sales amounted to 4.3786 per cent of the value of construction contracts awarded in the period 1922-1939, and to only 88.58 per cent of that amount, or 3,8785 per cent, during the base period years.

The petitioner's total net sales constituted a smaller percentage of the gross income reported by all corporations filing returns in Minnesota, Montana, South Dakota, and North Dakota, during the base period than during the period 1922-1939. Petitioner's net sales amounted to .168313 per cent of the gross income reported by these corporations in the period 1922-1929, and to only 92.5 per cent of that amount, or .155696 per cent, during the base period years.

The following table, derived from the foregoing tables, sets forth the ratio of petitioner's net sales (other than sales in Montana and Wyoming) to the value of construction contracts awarded in the Ninth Federal Reserve District (other than Montana), for the years 1919-1939, and the ratio of petitioner's total net sales to the gross income reported by all corporations filing returns in Minnesota, Montana, South Dakota, and North Dakota, for the years 1916-1939, inclusive:

+--------------------------------------------------+ ¦Table 20 ¦ +--------------------------------------------------¦ ¦ ¦Petitioner's net¦ ¦ +-------------+----------------+-------------------¦ ¦ ¦sales (other ¦Petitioner's net ¦ +-------------+----------------+-------------------¦ ¦ ¦than Montana) ¦sales as percentage¦ +-------------+----------------+-------------------¦ ¦ ¦as percentage ¦of total gross ¦ +-------------+----------------+-------------------¦ ¦ ¦of the value of ¦income reported ¦ +-------------+----------------+-------------------¦ ¦Year ¦construction ¦by all corporations¦ +-------------+----------------+-------------------¦ ¦ ¦contracts ¦filing ¦ +-------------+----------------+-------------------¦ ¦ ¦awarded in ¦returns in ¦ +-------------+----------------+-------------------¦ ¦ ¦Ninth Federal ¦Minn., Mont., ¦ +-------------+----------------+-------------------¦ ¦ ¦Reserve ¦S.D., and ¦ +-------------+----------------+-------------------¦ ¦ ¦District (other ¦N.D.¹ ¦ +-------------+----------------+-------------------¦ ¦ ¦than Montana)¹ ¦ ¦ +-------------+----------------+-------------------¦ ¦1916 ¦ ¦0.5828 ¦ +-------------+----------------+-------------------¦ ¦1917 ¦ ¦0.1990 ¦ +-------------+----------------+-------------------¦ ¦1918 ¦ ¦0.1959 ¦ +-------------+----------------+-------------------¦ ¦1919 ¦6.77 ¦0.2429 ¦ +-------------+----------------+-------------------¦ ¦1920 ¦6.88 ¦0.2464 ¦ +-------------+----------------+-------------------¦ ¦1921 ¦4.86 ¦0.2083 ¦ +-------------+----------------+-------------------¦ ¦1922 ¦6.08 ¦0.2175 ¦ +-------------+----------------+-------------------¦ ¦1923 ¦4.26 ¦0.2301 ¦ +-------------+----------------+-------------------¦ ¦1924 ¦5.48 ¦0.1902 ¦ +-------------+----------------+-------------------¦ ¦1925 ¦5.31 ¦0.1962 ¦ +-------------+----------------+-------------------¦ ¦1926 ¦4.59 ¦0.1887 ¦ +-------------+----------------+-------------------¦ ¦1927 ¦4.34 ¦0.1559 ¦ +-------------+----------------+-------------------¦ ¦1928 ¦4.38 ¦0.1569 ¦ +-------------+----------------+-------------------¦ ¦1929 ¦4.03 ¦0.1662 ¦ +-------------+----------------+-------------------¦ ¦1930 ¦3.82 ¦0.1673 ¦ +-------------+----------------+-------------------¦ ¦1931 ¦3.59 ¦0.1713 ¦ +-------------+----------------+-------------------¦ ¦1932 ¦3.91 ¦0.1469 ¦ +-------------+----------------+-------------------¦ ¦1933 ¦4.64 ¦0.1138 ¦ +-------------+----------------+-------------------¦ ¦1934 ¦4.63 ¦0.1286 ¦ +-------------+----------------+-------------------¦ ¦1935 ¦4.40 ¦0.1363 ¦ +-------------+----------------+-------------------¦ ¦1936 ¦4.24 ¦0.1520 ¦ +-------------+----------------+-------------------¦ ¦1937 ¦4.22 ¦0.1549 ¦ +-------------+----------------+-------------------¦ ¦1938 ¦3.49 ¦0.1562 ¦ +-------------+----------------+-------------------¦ ¦1939 ¦3.61 ¦0.1600 ¦ +-------------+----------------+-------------------¦ ¦Averages: ¦ ¦ ¦ +-------------+----------------+-------------------¦ ¦1922-1939 ¦4.3786 ¦0.168313 ¦ +-------------+----------------+-------------------¦ ¦1936-1939 ¦3.8785 ¦0.155696 ¦ +-------------+----------------+-------------------¦ ¦Percentage: ¦ ¦ ¦ +-------------+----------------+-------------------¦ ¦1936-1939 to ¦ ¦ ¦ +-------------+----------------+-------------------¦ ¦1922-1939 ¦88.58 ¦92.50 ¦ +--------------------------------------------------+ ¹From Tables 13 and 19.

According to a study prepared by John R. Riggleman, an expert economist, there was substantially less construction in 65 cities in the United States

+----------------------------------------------------------------+ ¦TABLE 21 ¹ ¦ +----------------------------------------------------------------¦ ¦ ¦Value of ¦ ¦ ¦Value of ¦ ¦ +----+-----------+------------+---------+-----------+------------¦ ¦ ¦building ¦Index 1922- ¦ ¦building ¦Index 1922- ¦ +----+-----------+------------+---------+-----------+------------¦ ¦Year¦permits ¦1939 Average¦Year ¦permits ¦1939 Average¦ +----+-----------+------------+---------+-----------+------------¦ ¦ ¦per capita ¦=100 ¦ ¦per capita ¦=100 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦ ¦in 1913 ¦ ¦ ¦in 1913 ¦ ¦ +----+-----------+------------+---------+-----------+------------¦ ¦ ¦dollars ¹ ¦ ¦ ¦dollars ¹ ¦ ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1900¦$21.73 ¦86.4 ¦1922 ¦$39.24 ¦156.0 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1901¦30.60 ¦121.7 ¦1923 ¦42.01 ¦167.0 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1902¦30.10 ¦119.7 ¦1924 ¦42.39 ¦168.5 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1903¦29.62 ¦117.8 ¦1925 ¦49.89 ¦198.4 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1904¦33.35 ¦132.6 ¦1926 ¦46.33 ¦184.2 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1905¦41.88 ¦166.5 ¦1927 ¦40.18 ¦159.8 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1906¦41.65 ¦165.6 ¦1928 ¦38.04 ¦151.3 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1907¦35.45 ¦141.0 ¦1929 ¦33.43 ¦132.9 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1908¦31.73 ¦126.2 ¦1930 ¦19.95 ¦79.3 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1909¦44.48 ¦176.9 ¦1931 ¦17.01 ¦67.6 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1910¦38.86 ¦154.5 ¦1932 ¦7.37 ¦29.3 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1911¦37.77 ¦150.2 ¦1933 ¦6.07 ¦24.1 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1912¦41.00 ¦163.0 ¦1934 ¦5.34 ¦21.2 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1913¦33.02 ¦131.3 ¦1935 ¦9.42 ¦37.5 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1914¦29.47 ¦117.2 ¦1936 ¦13.94 ¦55.4 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1915¦29.51 ¦117.3 ¦1937 ¦13.41 ¦53.3 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1916¦31.19 ¦124.0 ¦1938 ¦13.39 ¦53.2 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1917¦15.87 ¦63.1 ¦1939 ¦15.37 ¦61.1 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1918¦7.68 ¦30.5 ¦Averages:¦ ¦ ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1919¦17.67 ¦70.3 ¦1936-1939¦14.03 ¦55.8 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1920¦15.26 ¦60.7 ¦1922-1939¦25.15 ¦100.0 ¦ +----+-----------+------------+---------+-----------+------------¦ ¦1921¦24.37 ¦96.9 ¦ ¦ ¦ ¦ +----------------------------------------------------------------+ ¹Source: Exhibit 126.

During the base period years, the average value of new construction in the United States (other than local transit, military and naval, highway, miscellaneous public service, conservation and development, and certain other public construction) and maintenance and repair work (other than local transit and highway repairs, and repairs by the Corps of Engineers), was less than the average value during the period 1922-1939. The average value of this construction and maintenance work during the period 1922-1939 was $8,759,000.00. During the base period years, the average value was $7,420,000, or only 84.7 per cent of the 1922-1939 average. The following table shows, for the years 1915 to 1939, inclusive, the annual value of construction and maintenance work in the United States, together with an index thereof in which the 1922-1939 average equals 100.

+-----------------------------------------------------------------------+ ¦TABLE 22 ¦ +-----------------------------------------------------------------------¦ ¦ ¦Value of ¦Index ¦ ¦Value of ¦Index ¦ +----+--------------+------------+---------+---------------+------------¦ ¦Year¦construction ¦1922-1939 ¦Year ¦construction ¦1922-1939 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦ ¦work ¹ ¦Average =100¦ ¦work ¹ ¦Average =100¦ +----+--------------+------------+---------+---------------+------------¦ ¦1915¦$4,161,000,000¦47.5 ¦1929 ¦$12,255,000,000¦139.9 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1916¦4,829,000,000 ¦55.1 ¦1930 ¦9,563,000,000 ¦109.2 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1917¦4,999,000,000 ¦57.1 ¦1931 ¦6,786,000,000 ¦77.5 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1918¦4,960,000,000 ¦56.6 ¦1932 ¦3,891,000,000 ¦44.4 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1919¦6,728,000,000 ¦76.8 ¦1933 ¦3,138,000,000 ¦35.8 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1920¦8,154,000,000 ¦93.1 ¦1934 ¦4,036,000,000 ¦46.1 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1921¦7,057,000,000 ¦80.6 ¦1935 ¦4,621,000,000 ¦52.8 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1922¦8,742,000,000 ¦99.8 ¦1936 ¦6,575,000,000 ¦75.1 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1923¦10,727,000,000¦122.5 ¦1937 ¦7,525,000,000 ¦85.9 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1924¦11,695,000,000¦133.5 ¦1938 ¦7,128,000,000 ¦81.4 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1925¦12,692,000,000¦144.9 ¦1939 ¦8,452,000,000 ¦96.5 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1926¦13,521,000,000¦154.4 ¦Averages:¦ ¦ ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1927¦13,340,000,000¦152.3 ¦1936-1939¦$7,420,000,000 ¦84.7 ¦ +----+--------------+------------+---------+---------------+------------¦ ¦1928¦12,973,000,000¦148.1 ¦1922-1939¦8,759,000,000 ¦100.0 ¦ +-----------------------------------------------------------------------+ ¹New construction less local transit, military and naval, highways, miscellaneous public service enterprises, conservation and development, and “All Other Public”; maintenance and repairs less local transit, highways, and Corps of Engineers. Source: U. S. Department of Commerce, “Construction and Building Materials,” Statistical Supplement, May 1951. Exhibit 134.

During the base period years, the average net profit, less tax-exempt income, of all corporations filing returns in the 4 States of Minnesota, North Dakota, South Dakota, and Montana, was higher than the average for the period 1922-1939. The average compiled net profit, less tax-exempt income, for all corporations filing returns in the 4 States during the base period years was $39,225,000, or 108.5 per cent of $36,115,000, the average for 1922-1939. The following table shows, for the years 1918 to 1939, inclusive, the compiled net profit (or loss), less tax-exempt income, for all corporations filing returns in Minnesota, North Dakota, South Dakota, and Montana.

+------------------------------------------------------------------+ ¦TABLE 23 ¦ +------------------------------------------------------------------¦ ¦ ¦Net profit (or ¦ ¦ ¦Net profit (or ¦ ¦ +----+---------------+---------+---------+---------------+---------¦ ¦ ¦loss), less ¦ ¦ ¦loss,) less ¦ ¦ +----+---------------+---------+---------+---------------+---------¦ ¦ ¦tax-exempt ¦Index ¦ ¦tax-exempt ¦Index ¦ +----+---------------+---------+---------+---------------+---------¦ ¦Year¦income for all ¦1922-1939¦Year ¦income for all ¦1922-1939¦ +----+---------------+---------+---------+---------------+---------¦ ¦ ¦corporations in¦Average ¦ ¦corporations in¦Average ¦ +----+---------------+---------+---------+---------------+---------¦ ¦ ¦Minn., N. D., ¦=100 ¦ ¦Minn., N. D., ¦=100 ¦ +----+---------------+---------+---------+---------------+---------¦ ¦ ¦S. D., and ¦ ¦ ¦S. D., and ¦ ¦ +----+---------------+---------+---------+---------------+---------¦ ¦ ¦Mont.¹ ¦ ¦ ¦Mont.¹ ¦ ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1918¦$170,941,000 ¦472.8 ¦1931 ¦($70,159,000) ¦(194.1) ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1919¦206,607,000 ¦571.4 ¦1932 ¦(133,976,000) ¦(370.6) ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1920¦127,247,000 ¦351.9 ¦1933 ¦(69,978,000) ¦(193.5) ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1921¦(18,450,000) ¦(51.0) ¦1934 ¦(39,312,000) ¦(108.7) ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1922¦59,192,000 ¦163.7 ¦1935 ¦4,922,000 ¦13.6 ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1923¦75,462,000 ¦208.7 ¦1936 ¦² 52,827,000 ¦146.1 ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1924¦72,385,000 ¦200.2 ¦1937 ¦² 36,396,000 ¦100.7 ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1925¦110,091,000 ¦304.5 ¦1938 ¦² 13,420,000 ¦37.1 ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1926¦107,670,000 ¦297.8 ¦1939 ¦² 54,257,000 ¦150.1 ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1927¦89,394,000 ¦247.3 ¦Averages:¦ ¦ ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1928¦142,931,000 ¦395.3 ¦1922-1939¦36,155,000 ¦100.0 ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1929¦123,313,000 ¦341.1 ¦1936-1939¦39,225,000 ¦108.5 ¦ +----+---------------+---------+---------+---------------+---------¦ ¦1930¦21,962,000 ¦60.7 ¦ ¦ ¦ ¦ +------------------------------------------------------------------+ ¹Figures from Exhibit KK.²These figures are estimates. For 1936 and subsequent years, taxable net income must be reduced by the amount of taxable dividends received from domestic corporations, in order to make the data for these years comparable with the data for years prior to 1936. Although the amount of these items for all corporations filing returns in the years 1936-1939 is known, the amount is unknown with respect to corporations filing returns in the 4 States listed above. Accordingly, the taxable net income for the corporations in the 4 States has been reduced to determine compiled profit less tax-exempt income by the same percentages as these items for all corporations bore to the taxable net income of all corporations: 1936, 40.4 per cent; 1937, 40.1 per cent; 1938, 56.2 per cent; and 1939, 33.1 per cent.

In the base period years, the compiled net profit, less tax-exempt income, for all corporations filing returns in the United States was higher than the average for the period 1922-1939. The average compiled net profit, less tax-exempt income, for all corporations during the base period years was $3,724,000, or 108.4 per cent of $3,434,000,000, the average for 1922-1939. The following table shows, for the years 1918 to 1939, inclusive, the compiled net profit (or loss), less tax-exempt income, for all corporations filing returns in the United States.

+--------------------------------------------------------------------+ ¦TABLE 24 ¦ +--------------------------------------------------------------------¦ ¦ ¦All corporations¦Index ¦ ¦All corporations¦Index ¦ +----+----------------+---------+---------+----------------+---------¦ ¦ ¦compiled profit ¦1922-1939¦ ¦compiled profit ¦1922-1939¦ +----+----------------+---------+---------+----------------+---------¦ ¦Year¦(or loss) less ¦Average ¦Year ¦(or loss) less ¦Average ¦ +----+----------------+---------+---------+----------------+---------¦ ¦ ¦tax-exempt ¦=100 ¦ ¦tax-exempt ¦=100 ¦ +----+----------------+---------+---------+----------------+---------¦ ¦ ¦income ¦ ¦ ¦income ¦ ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1918¦$7,672,000,000 ¦223.4 ¦1931 ¦($3,288,000,000)¦(95.7) ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1919¦8,416,000,000 ¦245.1 ¦1932 ¦(5,643,000,000) ¦(164.3) ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1920¦5,873,000,000 ¦171.0 ¦1933 ¦(2,547,000,000) ¦(74.2) ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1921¦458,000,000 ¦13.3 ¦1934 ¦94,000,000 ¦2.7 ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1922¦4,770,000,000 ¦138.9 ¦1935 ¦1,696,000,000 ¦49.4 ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1923¦6,308,000,000 ¦183.7 ¦1936 ¦4,370,000,000 ¦127.3 ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1924¦5,363,000,000 ¦156.2 ¦1937 ¦4,407,000,000 ¦128.3 ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1925¦7,621,000,000 ¦221.9 ¦1938 ¦1,608,000,000 ¦46.8 ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1926¦7,504,000,000 ¦218.5 ¦1939 ¦4,509,000,000 ¦131.3 ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1927¦6,510,000,000 ¦189.6 ¦Averages:¦ ¦ ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1928¦8,227,000,000 ¦239.6 ¦1922-1939¦$3,434,000,000 ¦100.0 ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1929¦8,740,000,000 ¦254.5 ¦1936-1939¦3,724,000,000 ¦108.4 ¦ +----+----------------+---------+---------+----------------+---------¦ ¦1930¦1,552,000,000 ¦45.2 ¦ ¦ ¦ ¦ +--------------------------------------------------------------------+

During the base period years, the average compiled net profit, less tax-exempt income, for all corporations in the construction industries, was less than the average for the period 1922-1939. The average compiled net profit, less tax-exempt income, during the period 1922-1939 was $39,080,000. During the base period years, the average was $36,099,000, or only 92.4 per cent of the 1922-1939 average. The following schedule shows, for the years 1920-1939, inclusive, the compiled net profit (or loss), less tax-exempt income, for all corporations in the construction industries.

+----------------------------------------------------------------------------+ ¦TABLE 25 ¹ ¦ +----------------------------------------------------------------------------¦ ¦ ¦Compiled net profit (or loss)¦ ¦Compiled net profit (or loss)¦ +----+-----------------------------+-----------+-----------------------------¦ ¦ ¦less tax-exempt income ¦ ¦less tax-exempt income ¦ +----+-----------------------------+-----------+-----------------------------¦ ¦Year¦ ¦Indices ¦Year ¦ ¦Indices ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦ ¦ ¦1922-1939 ¦ ¦ ¦1922-1939 ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦ ¦Amount ¦Average ¦ ¦Amount ¦Average ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦ ¦ ¦=100 ¦ ¦ ¦=100 ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦1920¦$85,343,000 ¦218.4 ¦1932 ¦($110,369,000) ¦(282.4) ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦1921¦15,828,000 ¦40.5 ¦1933 ¦(67,808,000) ¦(173.5) ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦1922¦39,196,000 ¦100.3 ¦1934 ¦(34,787,000) ¦(89.0) ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦1923¦69,195,000 ¦177.1 ¦1935 ¦(6,477,000) ¦(16.6) ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦1924¦90,694,000 ¦232.1 ¦1936 ¦28,780,000 ¦73.6 ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦1925¦113,145,000 ¦289.5 ¦1937 ¦40,824,000 ¦104.5 ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦1926¦108,948,000 ¦278.8 ¦1938 ¦28,706,000 ¦73.5 ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦1927¦111,743,000 ¦285.9 ¦1939 ¦46,087,000 ¦117.9 ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦1928¦99,537,000 ¦254.7 ¦Averages :¦ ¦ ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦1929¦108,310,000 ¦277.1 ¦1936-1939 ¦$36,099,000 ¦92.4 ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦1930¦68,060,000 ¦174.2 ¦1922-1939 ¦39,080,000 ¦100.0 ¦ +----+----------------+------------+-----------+------------------+----------¦ ¦1931¦(30,348,000) ¦(77.7) ¦ ¦ ¦ ¦ +----------------------------------------------------------------------------+ ¹Source: Exhibit X.

The following table shows, for the years 1918-1939, the indices for petitioner's net income before taxes, and for the compiled profit (or loss), less tax-exempt income, of all corporations filing returns in the United States; all corporations filing returns in the States of Minnesota, North Dakota, South Dakota, and Montana; and all corporations in the construction industries in the United States. In each index, the 1922-1939 average equals 100.

+-------------------------------------------------------------------+ ¦TABLE 26 ¹ ¦ +-------------------------------------------------------------------¦ ¦ ¦ ¦Compiled net profit (or loss) less ¦ +-----------+------------+------------------------------------------¦ ¦ ¦ ¦tax-exempt income ¦ +-----------+------------+------------------------------------------¦ ¦ ¦ ¦ ¦All ¦ ¦ +-----------+------------+------------+------------+----------------¦ ¦ ¦Petitioner's¦All ¦corporations¦ ¦ +-----------+------------+------------+------------+----------------¦ ¦Year ¦net profit ¦corporations¦in ¦All corporations¦ +-----------+------------+------------+------------+----------------¦ ¦ ¦(or loss) ¦in ¦Minn., ¦in ¦ +-----------+------------+------------+------------+----------------¦ ¦ ¦ ¦the United ¦Mont., ¦construction ¦ +-----------+------------+------------+------------+----------------¦ ¦ ¦ ¦States ¦N. D., and ¦industries ¦ +-----------+------------+------------+------------+----------------¦ ¦ ¦ ¦ ¦S. D. ¦ ¦ +-----------+------------+------------+------------+----------------¦ ¦1918 ¦317.3 ¦223.4 ¦472.8 ¦² 304.5 ¦ +-----------+------------+------------+------------+----------------¦ ¦1919 ¦442.6 ¦245.1 ¦571.4 ¦² 362.0 ¦ +-----------+------------+------------+------------+----------------¦ ¦1920 ¦507.6 ¦171.0 ¦351.9 ¦218.4 ¦ +-----------+------------+------------+------------+----------------¦ ¦1921 ¦53.0 ¦13.3 ¦(51.0) ¦40.5 ¦ +-----------+------------+------------+------------+----------------¦ ¦1922 ¦103.5 ¦138.9 ¦163.7 ¦100.3 ¦ +-----------+------------+------------+------------+----------------¦ ¦1923 ¦173.9 ¦183.7 ¦208.7 ¦177.1 ¦ +-----------+------------+------------+------------+----------------¦ ¦1924 ¦76.6 ¦156.2 ¦200.2 ¦232.1 ¦ +-----------+------------+------------+------------+----------------¦ ¦1925 ¦117.0 ¦221.9 ¦304.5 ¦289.5 ¦ +-----------+------------+------------+------------+----------------¦ ¦1926 ¦188.3 ¦218.5 ¦297.8 ¦278.8 ¦ +-----------+------------+------------+------------+----------------¦ ¦1927 ¦150.6 ¦189.6 ¦247.3 ¦285.9 ¦ +-----------+------------+------------+------------+----------------¦ ¦1928 ¦196.2 ¦239.6 ¦395.3 ¦254.7 ¦ +-----------+------------+------------+------------+----------------¦ ¦1929 ¦215.3 ¦254.5 ¦341.1 ¦277.1 ¦ +-----------+------------+------------+------------+----------------¦ ¦1930 ¦67.4 ¦45.2 ¦60.7 ¦174.2 ¦ +-----------+------------+------------+------------+----------------¦ ¦1931 ¦25.9 ¦(95.7) ¦(194.1) ¦(77.7) ¦ +-----------+------------+------------+------------+----------------¦ ¦1932 ¦(35.0) ¦(164.3) ¦(370.6) ¦(282.4) ¦ +-----------+------------+------------+------------+----------------¦ ¦1933 ¦(2.4) ¦(74.2) ¦(193.5) ¦(173.5) ¦ +-----------+------------+------------+------------+----------------¦ ¦1934 ¦38.2 ¦2.7 ¦(108.7) ¦(89.0) ¦ +-----------+------------+------------+------------+----------------¦ ¦1935 ¦41.6 ¦49.4 ¦13.6 ¦(16.6) ¦ +-----------+------------+------------+------------+----------------¦ ¦1936 ¦130.1 ¦127.3 ¦146.1 ¦73.6 ¦ +-----------+------------+------------+------------+----------------¦ ¦1937 ¦135.4 ¦128.3 ¦100.7 ¦104.5 ¦ +-----------+------------+------------+------------+----------------¦ ¦1938 ¦34.6 ¦46.8 ¦37.1 ¦73.5 ¦ +-----------+------------+------------+------------+----------------¦ ¦1939 ¦142.8 ¦131.3 ¦150.1 ¦117.9 ¦ +-----------+------------+------------+------------+----------------¦ ¦Averages: ¦ ¦ ¦ ¦ ¦ +-----------+------------+------------+------------+----------------¦ ¦1922-1939 ¦100.0 ¦100.0 ¦100.0 ¦100.0 ¦ +-----------+------------+------------+------------+----------------¦ ¦1936-1939 ¦110.7 ¦108.4 ¦108.5 ¦92.4 ¦ +-------------------------------------------------------------------+ ¹From Tables 7, 23, 24, and 25.²Source: Statistical Abstract of the United States; Exhibit 47.

Petitioner's average earnings during the base period years were less than its average earnings in the period 1918-1933. During the base period years, the average compiled net profit, less tax-exempt income, of all corporations in the United States, and of all corporations in the States of Minnesota, Montana, North Dakota, and South Dakota, also was less than the 1918-1933 average. The following table, which is derived from tables set forth above, shows for the base period years and for the period 1918-1933, petitioner's average profit before Federal Income taxes, and the average compiled net profit, less tax-exempt income, of all corporations in the United States and for all corporations filing returns in Minnesota, Montana, North Dakota, and South Dakota:

+-----------------------------------------------------+ ¦TABLE 27 ¹ ¦ +-----------------------------------------------------¦ ¦ ¦ ¦Compiled net profit, less ¦ +---------+------------+------------------------------¦ ¦ ¦ ¦tax-exempt income ¦ +---------+------------+------------------------------¦ ¦ ¦Petitioner's¦ ¦ +---------+------------+------------------------------¦ ¦Period ¦net profit ¦ ¦ ¦ +---------+------------+----------------+-------------¦ ¦ ¦before taxes¦All corporations¦Corporations ¦ +---------+------------+----------------+-------------¦ ¦ ¦ ¦in ¦in Minn., ¦ +---------+------------+----------------+-------------¦ ¦ ¦ ¦United States ¦Mont., N. D.,¦ +---------+------------+----------------+-------------¦ ¦ ¦ ¦ ¦and S. D. ¦ +---------+------------+----------------+-------------¦ ¦1936-1939¦$199,913 ¦$3,724,000,000 ¦$39,225,000 ¦ +---------+------------+----------------+-------------¦ ¦1918-1933¦293,174 ¦4,221,000,000 ¦63,415,000 ¦ +---------+------------+----------------+-------------¦ ¦Indices: ¦ ¦ ¦ ¦ +---------+------------+----------------+-------------¦ ¦1936-1939¦68.2 ¦88.2 ¦61.9 ¦ +---------+------------+----------------+-------------¦ ¦1918-1933¦100.0 ¦100.0 ¦100.0 ¦ +-----------------------------------------------------+ ¹From Tables 7,23, and 24.

From the entire record the following findings are made:

The average value of construction contract awards in petitioner's sales area for the base period years, as shown by the Federal Reserve Board statistics, was 99 per cent of the average of the same for the period 1922-1939, and was 101.8 per cent of the average for the period 1922-1939, according to the statistics of the F. W. Dodge Corporation. The average of the value of construction contracts awards in petitioner's sales area, adjusted by use of the composite construction cost index, was somewhat higher for the base period years than was the average for the period 1922-1939. The average value of construction contract awards in petitioner's area for the base period years, using the Federal Reserve Board figures and making adjustments by use of the composite construction cost index, was 100.8 per cent of the adjusted average for 1922-1939; and the average value for the base period years, using the F. W. Dodge figures and making adjustments by use of the composite construction cost index, was 106.2 per cent of the adjusted average for 1922-1939. Therefore, it is concluded that the average value of construction contract awards in petitioner's sales area in the base period years was approximately equal to the average value during the period 1922-1939 on construction contract awards in petitioner's sales area.

The lengths of the movements of petitioner's profits, and their turning points, during the years 1922-1929, excepting the year 1926, are about the same as (if not identical with) the trends of profits (less tax-exempt income) of all corporations in the United States. The indices of both rose steadily from low points in 1921 through 1923; both declined in 1924; both rose steadily through 1926; both declined in 1927; both rose through 1929; after 1929, both indices fell sharply to low points in 1932; thereafter both rose steadily through 1937; both declined in 1938; and both rose in 1939. Also, both indices reached high points in 1923, 1929 (their highest), 1937, and 1939; and both indices fell to low points in 1924, 1927, 1932 (their lowest), and 1938. Accordingly, the pattern of petitioner's profits during the period 1922-1939 was closely similar to the pattern of the profits (less tax-exempt income) of all corporations in the United States during the same period, with the exception of 1926 in which year petitioner's profits increased and profits of all corporations decreased slightly.

Comparison of the trend of petitioner's profits during the period 1922-1939 with the trend of the profits (less tax-exempt income) of all corporations filing income tax returns in the 4 States, Minnesota, Montana, North Dakota, and South Dakota, shows the following: Both indices show a decline in 1924 for 1 year. The profits of all corporations in the 4-State area entered downward phases in 1926, 1929, and 1937, whereas petitioner's profits entered downward phases 1 year later, in each instance, namely, in 1927, 1930, and 1938, so that the duration of the decline of petitioner's profits was 1 year shorter than the decline of the profits of all corporations in the area in these three instances. However, in each instance of a decline, both indices reached low points and began recovery in the same years, namely, in 1924, 1927, 1932 (the year of the greatest depression in both indices), and 1938. Furthermore, each index shows the same general trend; both rise from low points in 1921 to very high levels in 1928 or 1929, after a decline in 1924; then both follow a pronounced decline to 1932 followed by gradual recovery to 1936 (to 1937 in the case of petitioner); followed by a downturn thereafter, and a sharp recovery in 1939. Accordingly, the pattern of petitioner's profits during the period 1922-1939 was closely similar to the pattern of the profits (less tax-exempt income) of all corporations filing returns in the 4-State area during the same period.

The petitioner's profits cycle in the period 1922-1939 did not differ materially in length from the profits cycle of all corporations either in the United States or in petitioner's sales area in the same period.

The average amount of petitioner's profits before Federal income taxes for the period 1922-1939 was $180,560; the average amount of petitioner's profits before Federal income taxes for the base period years was $199,913, which amount is 110.7 per cent of $180,560. The average amount of the profits (less tax-exempt income) of all corporations in the United States for the period 1922-1939 was $3,434,000,000. The average amount of the profits (less tax-exempt income) of all corporations for the base period years was $3,724,000,000 which amount is 108.4 per cent of $3,434,000,000. The amount of the average profits (less tax-exempt income) of all corporations in the 4 States, Minnesota, Montana, North Dakota, and South Dakota, for the period 1922-1939 was $36,155,000. The amount of the average profits (less tax-exempt income) of all corporations in the 4-State area during the base period years was $39,225,000, which amount is 108.5 per cent of $36,155,000. Accordingly, the level of the average profits of the petitioner for the base period years was approximately the same as the level of the average profits, for the base period years, of both ‘all corporations in the United States, ‘ and ‘all corporations in the 4-State area,‘ when, in each instance, comparison is made of the average amount of base period profits with the average amount of profits for the period 1922-1939.

A comparison of the average profits for the base period with average profits for the period 1918-1933, in the cases of the petitioner, of all corporations in the United States, and of all corporations in petitioner's sales area shows that, in each case, the average profits for the period 1918-1933 was higher than average profits for the base period. This is demonstrated by the following:

+---------------------------------------------------------------+ ¦ ¦Average ¦Average ¦Ratio of ¦ +---------------------+--------------+--------------+-----------¦ ¦ ¦amount of ¦amount of ¦base period¦ +---------------------+--------------+--------------+-----------¦ ¦ ¦profits ¹ ¦profits ¹ ¦to ¦ +---------------------+--------------+--------------+-----------¦ ¦ ¦1918-1933 ¦base period ¦1918-1933 ¦ +---------------------+--------------+--------------+-----------¦ ¦All U. S. corps ¦$4,221,000,000¦$3,724,000,000¦88.2 ¦ +---------------------+--------------+--------------+-----------¦ ¦Corps. in pet's. area¦63,415,000 ¦39,225,000 ¦61.9 ¦ +---------------------+--------------+--------------+-----------¦ ¦Petitioner ¦293,174 ¦199,913 ¦68.2 ¦ +---------------------------------------------------------------+ ¹For all corporations, and for corporations in petitioner's area, “profits” means profit less tax-exempt income. For petitioner, “profits” means profit before Federal income taxes.

The petitioner is entitled to use the excess profits credit based upon income under the provisions of section 713 of the 1939 Code. Petitioner's excess profits net income for the base period years was as follows:

+----------------------------------------------+ ¦Year ¦Excess profits net income ¦ +------------------+---------------------------¦ ¦1936 ¦$234,393.59 ¦ +------------------+---------------------------¦ ¦1937 ¦244,039.30 ¦ +------------------+---------------------------¦ ¦1938 ¦62,441.22 ¦ +------------------+---------------------------¦ ¦1939 ¦257,920.01 ¦ +------------------+---------------------------¦ ¦Total ¦$798,794.12 ¦ +------------------+---------------------------¦ ¦Arithmetic average¦199,698.53 ¦ +----------------------------------------------+

These amounts are subject to adjustment for income taxes paid in order to determine the amount of excess profits net income to be used in computing the excess profits credit for 1940 based on the income method.

For the purposes of section 713, petitioner's average base period net income (ABPNI) and excess profits credit for each of the years 1940, 1941, and 1942, as computed under the statutory provisions applicable to each of these years, is as follows:

+----------------------------------------------------------------+ ¦ ¦Average base ¦ ¦ +------+----------------------------------------+----------------¦ ¦Year ¦period net ¦Excess profits ¦ +------+----------------------------------------+----------------¦ ¦ ¦income (ABPNI) ¦credit ¦ +------+----------------------------------------+----------------¦ ¦Year ¦Average base period net income (ABPNI) ¦ ¦ +------+----------------------------------------+----------------¦ ¦1940 ¦$162,852.95 ¦$154,710.30 ¦ +------+----------------------------------------+----------------¦ ¦1941 ¦199,698.53 ¦189,713.60 ¦ +------+----------------------------------------+----------------¦ ¦1942 ¦230,110.28 ¦218,604.77 ¦ +----------------------------------------------------------------+

The invested capital credit for each of the years 1940, 1941, and 1942, to which petitioner was entitled under sections 712 and 714 of the Code, and the equivalent of the invested capital credit in terms of average base period net income, are as follows:

+--------------------------------------+ ¦ ¦Invested capital ¦Equivalent ¦ +------+------------------+------------¦ ¦Year ¦credit ¦ABPNI ¦ +------+------------------+------------¦ ¦1940 ¦$170,306.09 ¦$179,269.56 ¦ +------+------------------+------------¦ ¦1941 ¦177,522.42 ¦186,865.70 ¦ +------+------------------+------------¦ ¦1942 ¦187,527.64 ¦197,398.46 ¦ +--------------------------------------+

The petitioner has been allowed the following excess profits credits in the final determination of its excess profits tax liability for the years 1940, 1941, and 1942, such determination has been made without regard to the application of section 722:

+--------------------------------------------+ ¦Year ¦Excess profits credit ¦ +------+-------------------------------------¦ ¦1940 ¦$170,306.09 (invested capital method)¦ +------+-------------------------------------¦ ¦1941 ¦189,713.60 (income method) ¦ +------+-------------------------------------¦ ¦1942 ¦218,604.77 (income method) ¦ +--------------------------------------------+

In addition, in the final determination of its excess profits tax for 1941 (without regard to the applicability of section 722), the petitioner has been allowed an unused excess profits credit adjustment of $119,629.34 resulting from an unused excess profits credit carryback in the amount from 1942.

The petitioner has paid excess profits tax in the net amount of $58,700.45 for the year 1941, and in the net amount of $1,150.53 for 1940. For the year 142, the petitioner incurred no excess profits tax liability and paid no excess profits tax. The petitioner has not filed any application for relief under section 722 or any claim for refund of excess profits tax for the year 1940, and the statutory period in which such application or claim might be filed, or such refund might be made, expired several years before the petition was filed in this proceeding. However, the petitioner duly filed an application for relief under section 722 for the year 1941, in which it claimed relief under sections 722(b)(2), 722(b)(3)(A) and (B), and 722(b)(5) of the Code and also claimed the benefit of a carryover from 1940 and a carryback from 1942, properly computed under the provisions of section 722. On October 3, 1949, the respondent issued his notice of disallowance, determining that petitioner was not entitled to any relief under section 722 of the Code.

The petitioner does not meet the qualifying requirements of subsections (b) (2), (b)(3)(A), (b)(3)(B), or (b)(5) of section 722 of the Code, and it is not entitled to use a constructive average base period net income for the purpose of computing its excess profits tax.

OPINION.

HARRON, Judge:

The petitioner claims relief from excess profits tax under the provisions of Code sections 722(a) and 722(b)(2), (b)(3)(A), (b)(3)(B), and (b)(5).

The claim in this proceeding is for relief from excess profits tax for 1941. The years 1940 and 1942 are also involved because petitioner claims unused constructive excess profits credit carryover and carryback.

Petitioner's chief contention is that it meets all of the qualifying factors set forth in section 722(b)(3)(A). Petitioner contends also that it qualifies for relief under subsections (b)(3)(B), (b)(2), and (b)(5).

On the basis of the facts found we conclude that petitioner does not meet any of the qualifying requirements of subsections (b)(3)(A), (b)(3)(B), (b)(2), or (b)(5), and is not entitled to use a constructive average base period net income for the purpose of computing its excess profits tax.

At the outset, it is concluded that petitioner's claim for relief under section 722(b)(5) must be denied because it is not based on ‘any other factor’ than those to which subsections (b)(2), (b)(3)(A), and (b)(3)(B) are specifically directed. Clermont Groves, Inc., 17 T.C. 1616; Gulf Coast Broadcasting Co., 24 T.C. 1094.

The petitioner has made computations designed to show a constructive average base period net income. We have not included in the findings the facts upon which petitioner relies in making its computations, and we do not give consideration to petitioner's contentions in support of its computations because of our conclusion that petitioner has not shown that it qualifies for relief under the requirements of section 722(b).

We need consider, therefore, only whether the petitioner qualifies for relief under subsections (b)(2), (b)(3)(A), and (b)(3)(B) of section 722. The provisions of section 722 which are involved under the remaining contentions of the petitioner appear in the margin.

Industry.

The parties are in sharp disagreement over the question involving determination of the industry of which petitioner is a member. Briefly, petitioner contends that it is either a member of the construction industry (nationwide in scope), or of an industry, wholesalers of plumbing and heating supplies and equipment, which is closely related to and economically dependent upon the construction industry. On brief petitioner states its contentions in the following way:

At all times the petitioner was a member of the construction industry, being a member of the sub-division thereof embracing wholesalers of plumbing and heating supplies and equipment; or, in the alternative, petitioner was a member of an industry embracing some or all of the wholesalers of plumbing and heating supplies and equipment, either in the entire United States, or in its general geographic portion thereof, which industry was so closely related to and dependent economically upon the construction industry that its profit cycle was affected and controlled by the profit or volume cycle, or both, of the construction industry.

Petitioner also argues that, at least, it is

so dependent upon and subject to and controlled by the same economic influences as is the construction industry (using this term in the sense of contractors and others actually doing installation and construction work) that its volume and profits cycle is influenced and controlled by the volume and profits cycle of the construction industry.

Respondent contends that petitioner is a member of an industry in the area within which petitioner made sales which is engaged in the wholesale distribution of broadly diversified lines of plumbing and heating equipment and supplies. In advancing this argument, respondent admits that to the extent that petitioner made sales to those engaged in actual construction, it was to a limited extent related to the construction industry. Respondent points out that because of the diversity of the line of products which petitioner sells, it appears to fall into several subindustry classifications according to the classifications of industries in both the Census of Manufacturers and the Census of Wholesalers, and that the diversified line of goods sold by petitioner includes materials which are used not only in new construction but also in repairs, replacements, maintenance, plant equipment, and manufacturing processes.

The statute does not define industry. In Part I(F) of the Bulletin, the concept of ‘industry’ is discussed as follows:

In most general terms an ‘industry’ comprises a group of business concerns sufficiently homogeneous in nature of production or operation, type of product or service furnished, and type of customers, so as to be subject to roughly the same external economic circumstances affecting their prices, volume and profits. Stated otherwise, an industry will generally consist of all of the producers which compete with each other in selling essentially the same products or services in the same market. * * *

Regulations 109, section 30.722-2(b)(8), states as follows:

(8) For the purposes of section 722 and of section 30.722-3(b) and(c), no exclusive definition of the concept ‘industry’ can be constructed. In general an industry may be said to include a group of enterprises engaged in producing or marketing the same or similar products or services under analogous conditions which are essentially different from those encountered by other enterprises. The more similarity of product and marketing methods, however, is not enough of itself to comprehend taxpayers satisfying such conditions within the same industry. Factors such as geographical location, character and location of markets, availability and character of raw material supply, and other conditions under which operations are carried on must be considered. Regard may be had to trade custom and practice in determining whether a group of enterprises constitutes an industry.

In Pabst Air Conditioning Corporation, 14 T.C. 427, 438, we expressed the view that these concepts of industry are sound. Under the facts of this case, these concepts do not permit the industry which embraces the wholesale distributors of plumbing and heating supplies and equipment to be regarded as the same as the general construction industry or the building and construction industry. Paraphrasing our reasoning in Pabst Air Conditioning Corporation, supra, it seems plain that the construction industry (or the building and construction industry) and the industry of wholesale distributors of plumbing and heating supplies and equipment do not ‘compete with each other in selling essentially the same products or services in the same market.’

The petitioner has failed to establish that its business was closely associated with the building and construction industry and that the largest part of its sales was used in new construction.

Petitioner did not maintain records over a long period of years showing the end uses made of the goods it distributed. Such records as petitioner maintained show that its customers were engaged in various businesses which indicates various end uses of the goods sold by petitioner. Furthermore, petitioner was unable to produce satisfactory statistics about concerns comparable to petitioner in its sales area. The record does not establish that wholesale distributors of plumbing and heating supplies and equipment compete with the entire construction industry, or with the building and construction industry within petitioner's sales region.

The record contains no substantial evidence upon which reliable comparison can be made with petitioner. Petitioner attempted to obtain evidence about the sales data of plumbing and heating wholesalers through the records of a trade association, Central Supply Association, but such factual material as petitioner was able to obtain is limited to the years 1927-1930, and 1934-1939; it is fragmentary; and it relates to concerns which operated outside of petitioner's sales region in 20 States.

Petitioner's sales area is restricted to the 4 States, Montana, Minnesota, North and South Dakota, and to portions of Wyoming, Michigan, and Wisconsin. Upon the entire record, it is concluded that the industry of which petitioner is a member comprises wholesale distributors of plumbing and heating equipment and supplies who operate in the same region and markets as petitioner operates; i.e., wholesalers of essentially the same market as petitioner. In determining whether petitioner meets the requirements of subsections (b)(2) and (b)(3)(A) and (B), we shall consider, therefore, the industry of which petitioner is a member as is concluded above.

Base Period Depression.

Petitioner's average net profit during the base period years exceeded its average net profit over the long period 1922-1939. During the base period years, average earnings were $199,913, or 110.7 per cent of $180,560, the 1922-1939 average. The petitioner was well established in its business prior to the base period and was not in a developmental state during the base period. Cf. Ainsworth Manufacturing Corporation, 23 T.C. 372, 376. It is concluded that petitioner's business was not depressed during the base period years. Foskett & Bishop Co., 16 T.C. 456, 462; Industrial Yarn Corporation, 16 T.C. 681, 689; Granite Construction Co., 19 T.C. 163, 170-171; A. B. Frank Co., 19 T.C. 174, 181; Pratt & Letchworth Co., 21 T.C.999, 1005; Edgewater Steel Co., 23 T.C.626-627.

The petitioner contends that its base period earnings were depressed when comparison is made with its average earnings during the period 1918-1933. It is true that petitioner's average base period earnings were below the 1918-1933 average. However, we have held that the fact that average base period earnings were not as large as the average for a prior period does not necessarily mean that a taxpayer's business was depressed during the base period. See Toledo Stove & Range Co., 16 T.C. 1125, 1130; Harlan Bourbon & Wine Co., 14 T.C. 97, 104. On the basis of the entire record, we are satisfied that the petitioner's average profit in the period 1922-1939 is a more appropriate standard by which to measure petitioner's base period earnings for depression than petitioner's average profit in the period 1918-1933. The period 1918-1933 includes the years 1918, 1919, and 1920, which the evidence establishes were years of abnormally high profits due to the influence on the economy of the first World War. Also, petitioner underwent a substantial change in the nature of its business during the early twenties, when it changed from a debtor corporation using borrowed capital to a creditor corporation lending a substantial portion of its net worth to Crane of Illinois. (See Table y.) Of equal significance is the fact that average profits during the base period years were lower than the 1918-1933 average not only in petitioner's case, but also in the case of all corporations in the United States and all corporations in petitioner's sales area. (See Table 27.) Inasmuch as the base period years have been determined by Congress to constitute a period of normal profits for general corporate business, the fact that petitioner's base period earnings, like those of all corporations, were below the 1918-1933 average does not establish that petitioner's earnings were depressed during the base period years. Upon the basis of the entire record, we must reject petitioner's contention that its business was depressed during the base period years.

Depression in Petitioner's Industry.

The petitioner has failed to establish that the industry of which it was a member, wholesalers of plumbing and heating supplies and equipment competing with petitioner in petitioner's sales area, was depressed during the base period. The petitioner was unable to produce any evidence pertaining to its competitors. Nevertheless, petitioner cannot be excused from its burden of proving a fact essential to its contentions. El Campo Rice Milling Co., 13 T.C. 775, 786, 788.

Petitioner also has failed to establish that the construction industry in its sales area, of which it claims to be a member, was depressed during the base period years. The evidence shows that construction activity in petitioner's sales area was at approximately the same level as, or above, average construction activity in the same area during the period 1922-1939. The F. W. Dodge Corporation and Federal Reserve Board statistics show that the average value of construction contract awards in petitioner's sales area for the base period years was 101.8 per cent and 99 per cent, respectively, of the 1922-1939 average value of construction contract awards, and that the average volume of construction contract awards in petitioner's sales area during the base period years was 106.2 per cent and 100.8 per cent, respectively, of the average volume during the period 1922-1939.

It is concluded that petitioner has not established that the industry of which it was a member was depressed during the base period years. Petitioner has also failed to establish that its business was depressed during the base period years. Accordingly, it is held that petitioner fails to qualify for relief under the provisions of section 722(b)(2).

Conditions in Petitioner's Industry.

Under section 722(b)(3), the petitioner must establish that its business was depressed during the base period years by reason of conditions generally prevailing in its industry. Its has been pointed out, above, that petitioner has failed to establish that its business was depressed during the base period years. Petitioner has also failed to establish that conditions generally prevailed in its industry which exerted a depressing effect in petitioner's business. The record before us contains no statistics relating to the business of wholesalers of plumbing and heating supplies and equipment in petitioner's sales area, and we are unable to determine what conditions prevailed in that industry during the base period years. One of petitioner's witnesses testified generally that business conditions among plumbing and heating wholesalers in petitioner's sales area were poor during the base period years because of the lack of construction activity in that area. However, this testimony is in conflict with the evidence relating to construction activity in petitioner's sales area during the base period years. This evidence, which is discussed above, establishes that construction activity in petitioner's sales area was not depressed during the base period. On this state of the record, we cannot find that conditions generally prevailed among plumbing and heating wholesalers in petitioner's sales area, or in the construction industry in petitioner's sales area, which might have depressed petitioner's business during the base period years. It is concluded that petitioner's business was not depressed during the base period years by reason of conditions generally prevailing in an industry of which it was a member.

Variant Profits Cycle.

Cycles can be regarded, as including four phases, which may be designated as prosperity, decline, depression (or recession, if slight), and improvement or recovery. Each of these phases changes gradually into the next phase.

Sporadic Periods of High Profits.

The provisions of section 722(b)(3)(B), relating to ‘sporadic and intermittent periods of high production and profits,‘ are intended to apply in the case of a taxpayer experiencing prosperous years at irregular and unpredictable intervals, and having an earnings experience which cannot be segregated into cyclical patters.

+-----------------------------------------------------------------------------+ ¦TABLE 3 ¦ +-----------------------------------------------------------------------------¦ ¦Sales by Groups of Customers ¦ +-----------------------------------------------------------------------------¦ ¦Customer groups ¦1936 ¦1937 ¦1938 ¦1939 ¦ +-----------------------------+-----------+-----------+-----------+-----------¦ ¦(1) Plumbing and heating ¦$2,356,627 ¦$2,498,073 ¦$2,344,330 ¦$2,753,985 ¦ ¦contractors ¦ ¦ ¦ ¦ ¦ +-----------------------------+-----------+-----------+-----------+-----------¦ ¦(2) Industrial ¦994,022 ¦1,120,545 ¦1,340,988 ¦1,198,874 ¦ +-----------------------------+-----------+-----------+-----------+-----------¦ ¦(3) Wholesalers ¦169,788 ¦191,322 ¦202,497 ¦245,338 ¦ +-----------------------------+-----------+-----------+-----------+-----------¦ ¦(4) Govts., Fed., State, mun ¦111,859 ¦145,028 ¦149,526 ¦199,606 ¦ +-----------------------------+-----------+-----------+-----------+-----------¦ ¦(5) Private ¦¹ ¦¹ ¦47,937 ¦39,840 ¦ +-----------------------------+-----------+-----------+-----------+-----------¦ ¦(6) Fabricators ¦¹ ¦¹ ¦28,479 ¦23,685 ¦ +-----------------------------+-----------+-----------+-----------+-----------¦ ¦(7) General contractors ¦¹ ¦¹ ¦33,153 ¦59,709 ¦ +-----------------------------+-----------+-----------+-----------+-----------¦ ¦(8) Hardware dealers ¦¹ ¦¹ ¦78,183 ¦95,183 ¦ +-----------------------------+-----------+-----------+-----------+-----------¦ ¦(9) Unclassified ¦1,270,843 ¦1,097,446 ¦166,133 ¦164,149 ¦ +-----------------------------+-----------+-----------+-----------+-----------¦ ¦ ¦² ¦² ¦² ¦² ¦ ¦ ¦$4,903,139 ¦$5,052,414 ¦$4,391,226 ¦$4,780,369 ¦ +-----------------------------------------------------------------------------+ ¹Records not available.²The figures set forth in Table 3 are taken from Exhibit 15, and apparently represent petitioner's gross sales. The parties have stipulated that petitioner's net sales amounted to $4,620,422 in 1936; $4,704,547 in 1937; $4,110,577 in 1938; and $4,506,875 in 1939.

Based upon the foregoing table, the following schedule sets forth the percentage of petitioner's total sales in each year to each group of purchasers. (Petitioner's records were not kept prior to 1936 in such say as to show the amounts of sales each year to customers by classifications.)

+------------------------------------------------------------+ ¦Percentage Breakdown of Sales ¦ +------------------------------------------------------------¦ ¦Customers by groups ¦1936 ¦1937 ¦1938 ¦1939 ¦ +------------------------------------+-----+-----+-----+-----¦ ¦(1) Plumbing and heating contractors¦48.06¦49.44¦53.39¦57.61¦ +------------------------------------+-----+-----+-----+-----¦ ¦(2) Industrial ¦20.27¦22.18¦30.54¦25.08¦ +------------------------------------+-----+-----+-----+-----¦ ¦(3) Wholesalers ¦3.46 ¦3.79 ¦4.61 ¦5.13 ¦ +------------------------------------+-----+-----+-----+-----¦ ¦(4) Governments ¦2.28 ¦2.87 ¦3.41 ¦4.18 ¦ +------------------------------------+-----+-----+-----+-----¦ ¦(5) Private institutions ¦ ¦ ¦1.09 ¦0.83 ¦ +------------------------------------+-----+-----+-----+-----¦ ¦(6) Fabricators ¦ ¦ ¦0.65 ¦0.50 ¦ +------------------------------------+-----+-----+-----+-----¦ ¦(7) General contractors ¦ ¦ ¦0.75 ¦1.25 ¦ +------------------------------------+-----+-----+-----+-----¦ ¦(8) Hardware dealers ¦ ¦ ¦1.78 ¦1.99 ¦ +------------------------------------+-----+-----+-----+-----¦ ¦(9) Unclassified ¦25.92¦21.72¦3.78 ¦3.43 ¦ +------------------------------------------------------------+

Large amounts of the goods sold by petitioner were purchased by contractors for installation in new construction of all types including new residences, apartments, schools, hospitals, university buildings, office buildings, power plants, county and city water and sewerage systems, store buildings, commercial buildings, meat packing plants, factories, irrigation systems, installations of wells, public buildings, oil and sugar refineries, an airport administration building, and public works constructed by State and Federal agencies.

Some of the goods sold by petitioner were used by the purchasers in connection with repairs, replacements, and maintenance in existing structures.

The uses made by some of petitioner's customers of goods which they purchased are not readily classified.

Where the uses of goods sold by petitioner were in industrial plants, the goods were sometimes used in connection with plant equipment which was used in manufacturing processes.

According to certain records of the petitioner which were maintained in 1938 and 1939, petitioner classified its customers in groups, as is shown in Exhibit 14, and as is shown in the following schedule. Exhibit 14 is incorporated herein by reference.

TABLE 4

Types of Accounts

A. Wholesalers.

B. Plumbing and heating contractors.

C. Classified ‘industrial’ sales:

1. Food and kindred products.

2. Textiles.

3. Chemical.

4. Iron and steel (not incl. machinery).

5. Oil.

6. Gas.

7. Pulp and paper.

8. Railroad.

9. Shipbuilding.

10. Rubber.

11. Water supply and drainage.

12. Mining.

13. Machinery (excl. transp. equip.).

14. Lumber and forest products.

15. Electric light and power.

16. Automotive.

17. Laundries and dry cleaning estabs.

18. Well drillers.

19. Hotels.

20. Real estate and resorts.

21. Fire apparatus.

22. Florist.

23. Sheet metal works.

24. Tin and roofing.

25. Hatcheries.

26. Electric appliances.

27. Elevator and grain companies.

28. Electric companies and contractors.

29. Farms and farmers.

30. Tractor and impl. companies.

31. Dept. stores.

32. Coal docks.

33. Greenhouses.

34. Refrigeration companies.

35. Consumers.

D. Sales to Federal, State, and municipal governments.

E. Schools, colleges, hospitals, and other private institutions.

F. Fabricators.

G. General contractors.

H. Hardware dealers.

I. Unclassified.

The following table sets forth the capital stock, surplus, and the net worth of petitioner at the beginning of each year in the period 1899-1939:

+-----------------------------------------------------------------------------+ ¦TABLE 5 ¦ +-----------------------------------------------------------------------------¦ ¦Year ¦Capital ¦Surplus¦Net worth¦Year ¹ ¦Capital ¦Surplus ¦Net worth ¦ ¦¹ ¦stock ¦ ¦ ¦ ¦stock ¦ ¦ ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1899 ¦$200,000 ¦$67,942¦$267,942 ¦1921 ¦$2,000,000¦$943,908¦$2,943,908¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1900 ¦200,000 ¦93,116 ¦293,116 ¦1922 ¦2,000,000 ¦327,150 ¦2,327,150 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1901 ¦200,000 ¦62,221 ¦262,221 ¦1923 ¦2,000,000 ¦327,207 ¦2,327,207 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1902 ¦200,000 ¦64,457 ¦264,457 ¦1924 ¦2,000,000 ¦397,863 ¦2,397,863 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1903 ¦200,000 ¦85,585 ¦285,585 ¦1925 ¦2,000,000 ¦315,856 ¦2,315,856 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1904 ¦200,000 ¦92,055 ¦292,055 ¦1926 ¦2,000,000 ¦296,329 ¦2,296,329 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1905 ¦200,000 ¦87,013 ¦287,013 ¦1927 ¦2,000,000 ¦387,083 ¦2,387,083 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1906 ¦200,000 ¦99,159 ¦299,159 ¦1928 ¦2,000,000 ¦218,589 ¦2,218,589 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1907 ¦200,000 ¦218,045¦418,045 ¦1929 ¦2,000,000 ¦178,024 ¦2,178,024 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1908 ¦400,000 ¦100,685¦500,685 ¦1930 ¦2,000,000 ¦170,640 ¦2,170,640 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1909 ¦400,000 ¦125,232¦525,232 ¦1931 ¦2,000,000 ¦24,341 ¦2,024,341 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1910 ¦800,000 ¦23,557 ¦823,557 ¦1932 ¦2,000,000 ¦2,158 ¦2,022,158 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1911 ¦800,000 ¦170,848¦970,848 ¦1933 ¦2,000,000 ¦(63,154)¦1,936,845 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1912 ¦800,000 ¦335,053¦1,135,053¦1934 ¦2,000,000 ¦(70,104)¦1,929,895 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1913 ¦1,000,000¦155,923¦1,155,923¦1935 ¦2,000,000 ¦(12,191)¦1,987,808 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1914 ¦1,000,000¦282,781¦1,282,781¦1936 ¦2,000,000 ¦51,139 ¦2,051,139 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1915 ¦1,000,000¦425,155¦1,425,155¦1937 ¦2,000,000 ¦136,741 ¦2,136,741 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1916 ¦1,500,000¦589,217¦2,089,217¦1938 ¦2,000,000 ¦188,778 ¦2,188,778 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1917 ¦1,500,000¦544,621¦2,044,621¦1939 ¦2,000,000 ¦160,917 ¦2,160,917 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1918 ¦1,500,000¦631,987¦2,131,987¦Averages: ¦ ¦ ¦ ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1919 ¦1,500,000¦601,160¦2,101,160¦1922-1939 ¦2,000,000 ¦168,743 ¦2,168,743 ¦ +------+---------+-------+---------+-----------+----------+--------+----------¦ ¦1920 ¦1,500,000¦699,469¦2,199,469¦1936-1939 ¦2,000,000 ¦134,394 ¦2,134,394 ¦ +-----------------------------------------------------------------------------+ ¹The years 1899 to 1909 are fiscal years ended November 30. The year 1910 represents a 13-month period ended December 31, 1910. The balance of the years indicated are calendar years.

During the years 1899-1925, inclusive, petitioner borrowed capital from Crane of Illinois and from L. P. Ordway. Its total borrowed capital, and the amounts borrowed from Crane of Illinois and from L. P. Ordway, are set forth in the following table. During the years 1918-1939, inclusive (except 1923), the petitioner loaned funds to Crane of Illinois. From 1926 through 1939, petitioner did not borrow funds from either Crane of Illinois or L. P. Ordway, or from any other source; it loaned funds to Crane of Illinois as the following table shows. The following table shows, also, the ratios, in percentages, of the advances to Crane of Illinois to petitioner's net worth:

+-----------------------------------------------------------------------------+ ¦TABLE 6 ¦ +-----------------------------------------------------------------------------¦ ¦Borrowed ¦ ¦ ¦Advances to Crane¦ ¦ ¦ ¦capital ¦ ¦ ¦Co. (Ill.) ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦ ¦Total ¦From ¦ ¦ ¦Ratio (per cent) ¦ ¦Year ¦borrowed ¦Crane ¦From L.P. Ordway ¦Amount ¦to net worth ¦ ¦ ¦capital ¦Co. ¦ ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1899 ¦$42,084 ¦$17,648 ¦$24,436 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1900 ¦191,044 ¦94,822 ¦96,222 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1901 ¦116,558 ¦53,078 ¦63,480 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1902 ¦220,150 ¦171,496 ¦48,654 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1903 ¦318,802 ¦270,245 ¦48,557 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1904 ¦397,696 ¦333,380 ¦64,316 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1905 ¦468,232 ¦385,913 ¦82,319 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1906 ¦667,426 ¦626,928 ¦40,498 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1907 ¦693,027 ¦688,541 ¦4,486 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1908 ¦701,562 ¦645,272 ¦56,290 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1909 ¦679,382 ¦619,232 ¦60,150 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1910 ¦724,928 ¦724,928 ¦ ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1911 ¦646,829 ¦566,984 ¦79,845 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1912 ¦717,249 ¦684,166 ¦33,083 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1913 ¦942,148 ¦869,804 ¦72,344 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1914 ¦833,287 ¦759,314 ¦73,973 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1915 ¦743,698 ¦680,732 ¦62,966 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1916 ¦695,252 ¦618,487 ¦76,765 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1917 ¦392,755 ¦242,881 ¦149,874 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1918 ¦112,970 ¦ ¦112,970 ¦$48,122¦2.26 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1919 ¦29,179 ¦ ¦29,179 ¦360,401¦17.15 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1920 ¦134,740 ¦ ¦134,740 ¦29,157 ¦1.33 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1921 ¦187,047 ¦ ¦187,047 ¦14,328 ¦.49 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1922 ¦103,453 ¦ ¦103,453 ¦44,210 ¦1.90 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1923 ¦257,230 ¦187,428 ¦69,802 ¦ ¦ ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1924 ¦100,059 ¦ ¦100,059 ¦158,899¦6.63 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1925 ¦100,806 ¦ ¦100,806 ¦267,764¦11.56 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1926 ¦ ¦ ¦ ¦172,479¦7.51 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1927 ¦ ¦ ¦ ¦554,864¦23.24 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1928 ¦ ¦ ¦ ¦733,133¦33.05 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1929 ¦ ¦ ¦ ¦510,620¦23.44 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1930 ¦ ¦ ¦ ¦389,371¦17.94 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1931 ¦ ¦ ¦ ¦369,735¦18.26 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1932 ¦ ¦ ¦ ¦375,065¦18.73 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1933 ¦ ¦ ¦ ¦390,297¦20.15 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1934 ¦ ¦ ¦ ¦218,725¦11.33 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1935 ¦ ¦ ¦ ¦202,443¦10.18 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1936 ¦ ¦ ¦ ¦262,176¦12.78 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1937 ¦ ¦ ¦ ¦219,887¦10.29 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1938 ¦ ¦ ¦ ¦394,789¦18.04 ¦ +----------+-------------+--------+-----------------+-------+-----------------¦ ¦1939 ¦ ¦ ¦ ¦517,487¦23.95 ¦ +-----------------------------------------------------------------------------+

In the period 1899-1939, the petitioner received no tax-exempt income, either in the form of dividends from domestic corporations, or in the form of tax-exempt interest on Federal, State, or municipal bonds.

Petitioner's average net profit from Federal income taxes during the base period years was higher than its average net profit during the period 1922-1939. Petitioner's average net profit before taxes during the base period years was $199,913, or 110.7 per cent of $180,560, its average net profit for the period 1922-1939. The period of petitioner's highest profits embraces the 5 years 1916-1920, inclusive. In these 5 years, petitioner's average net profit before taxes amounted to $733,885. In the period 1899-1939, omitting the years 1916-1920 (that is 1899-1915 and 1921-1939), petitioner's average net profit before taxes amounted to $177,682. Petitioner's average net profit before taxes in the period 1916-1920, $733,885, equaled 367.1 per cent of the average for the base period years, and 413.0 per cent of the average for the periods 1899-1915 and 1921-1939. The following table sets forth petitioner's profit or loss for each of the years 1899 to 1939, inclusive:

+-----------------------------------------------------------------------------+ ¦TABLE 7 ¦ +-----------------------------------------------------------------------------¦ ¦ ¦Petitioner's ¦Index ¦ ¦Petitioner's ¦Index ¦ ¦ ¦profit (or ¦1922-1939¦ ¦profit (or ¦1922-1939¦ ¦Year¦loss) before ¦Average= ¦Year ¦loss) before ¦Average= ¦ ¦ ¦Federal ¦100 ¦ ¦Federal ¦100 ¦ ¦ ¦income taxes ¦ ¦ ¦income taxes ¦ ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1899¦$225,002 ¦124.6 ¦1926 ¦$339,998 ¦188.3 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1900¦112,870 ¦62.5 ¦1927 ¦271,857 ¦150.6 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1901¦104,437 ¦57.8 ¦1928 ¦354,301 ¦196.2 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1902¦121,128 ¦67.1 ¦1929 ¦388,777 ¦215.3 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1903¦106,470 ¦59.0 ¦1930 ¦121,730 ¦67.4 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1904¦74,961 ¦41.5 ¦1931 ¦46,679 ¦25.9 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1905¦92,146 ¦51.0 ¦1932 ¦(63,159) ¦(35.0) ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1906¦118,885 ¦65.8 ¦1933 ¦(4,279) ¦(2.4) ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1907¦202,640 ¦112.2 ¦1934 ¦69,030 ¦38.2 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1908¦124,547 ¦69.0 ¦1935 ¦75,067 ¦41.6 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1909¦178,325 ¦98.8 ¦1936 ¦234,869 ¦130.1 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1910¦307,291 ¦170.2 ¦1937 ¦244,423 ¦135.4 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1911¦164,205 ¦90.9 ¦1938 ¦62,441 ¦34.6 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1912¦250,870 ¦138.9 ¦1939 ¦257,920 ¦142.8 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1913¦279,654 ¦154.9 ¦Averages: ¦ ¦ ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1914¦270,076 ¦149.6 ¦1922-1939 ¦$180,560 ¦100.0 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1915¦317,234 ¦175.7 ¦1936-1939 ¦199,913 ¦110.7 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1916¦770,820 ¦426.9 ¦1916-1920 ¦733,885 ¦406.4 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1917¦609,884 ¦337.8 ¦1899-1939 ¦245,511 ¦136.0 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1918¦572,982 ¦317.3 ¦1899-1939 (less 1916- ¦ ¦ ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1919¦799,209 ¦442.6 ¦1920) ¦177,682 ¦98.4 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1920¦916,530 ¦507.6 ¦1916-1920 compared to: ¦ ¦ ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1921¦95,734 ¦53.0 ¦1936-1939 ¦ ¦367.1 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1922¦186,915 ¦103.5 ¦1899-1939 (less 1916- ¦ ¦ ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1923¦314,065 ¦173.9 ¦1920) ¦ ¦413.0 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1924¦138,233 ¦76.6 ¦1899-1939 ¦ ¦298.9 ¦ +----+-------------+---------+------------------------+-------------+---------¦ ¦1925¦211,215 ¦117.0 ¦ ¦ ¦ ¦ +-----------------------------------------------------------------------------+

Petitioner's average net sales during the base period years amounted to $4,485,605, or 92.3 per cent of the average for the period 1922-1939. Petitioner's average net sales during the base period years amounted $4,857,500. Petitioner's annual net sales reached their height in the period 1916-1930. In each of these years, petitioner's sales exceeded $5,153,000, and within the period 1916-1930, annual sales exceeded $6,000,000 from 1919 to 1926, inclusive, with the exception of 1921. On the other hand, sales did not exceed $4,705,000 in any year prior to 1916 or after 1930. The following table sets forth petitioner's annual net sales for the period 1899-1939, and an index thereof based on an average of 100 for the years 1922-1939:

+-------------------------------------+ ¦TABLE 8 ¦ +-------------------------------------¦ ¦Year ¦Net sales ¦Index 1922-1939¦ +----------+----------+---------------¦ ¦ ¦ ¦Average—100 ¦ +----------+----------+---------------¦ ¦1899 ¦$1,183,298¦24.4 ¦ +----------+----------+---------------¦ ¦1900 ¦1,120,360 ¦23.1 ¦ +----------+----------+---------------¦ ¦1901 ¦1,388,291 ¦28.6 ¦ +----------+----------+---------------¦ ¦1902 ¦1,664,665 ¦34.3 ¦ +----------+----------+---------------¦ ¦1903 ¦1,787,702 ¦36.8 ¦ +----------+----------+---------------¦ ¦1904 ¦1,668,579 ¦34.4 ¦ +----------+----------+---------------¦ ¦1905 ¦1,946,889 ¦40.1 ¦ +----------+----------+---------------¦ ¦1906 ¦2,357,168 ¦48.5 ¦ +----------+----------+---------------¦ ¦1907 ¦2,669,774 ¦55.0 ¦ +----------+----------+---------------¦ ¦1908 ¦2,399,961 ¦49.4 ¦ +----------+----------+---------------¦ ¦1909 ¦3,152,196 ¦64.9 ¦ +----------+----------+---------------¦ ¦1910 ¦4,082,058 ¦84.0 ¦ +----------+----------+---------------¦ ¦1911 ¦3,812,818 ¦78.5 ¦ +----------+----------+---------------¦ ¦1912 ¦4,350,373 ¦89.6 ¦ +----------+----------+---------------¦ ¦1913 ¦4,578,827 ¦94.3 ¦ +----------+----------+---------------¦ ¦1914 ¦4,519,168 ¦93.0 ¦ +----------+----------+---------------¦ ¦1915 ¦4,463,727 ¦91.9 ¦ +----------+----------+---------------¦ ¦1916 ¦5,769,773 ¦118.8 ¦ +----------+----------+---------------¦ ¦1917 ¦5,843,632 ¦120.3 ¦ +----------+----------+---------------¦ ¦1918 ¦5,317,868 ¦109.5 ¦ +----------+----------+---------------¦ ¦1919 ¦6,717,343 ¦138.3 ¦ +----------+----------+---------------¦ ¦1920 ¦8,239,292 ¦169.6 ¦ +----------+----------+---------------¦ ¦1921 ¦5,275,949 ¦108.6 ¦ +----------+----------+---------------¦ ¦1922 ¦6,308,885 ¦129.9 ¦ +----------+----------+---------------¦ ¦1923 ¦6,762,667 ¦139.2 ¦ +----------+----------+---------------¦ ¦1924 ¦6,038,764 ¦124.3 ¦ +----------+----------+---------------¦ ¦1925 ¦6,477,829 ¦133.4 ¦ +----------+----------+---------------¦ ¦1926 ¦6,232,134 ¦128.3 ¦ +----------+----------+---------------¦ ¦1927 ¦5,393,860 ¦111.0 ¦ +----------+----------+---------------¦ ¦1928 ¦5,674,483 ¦116.8 ¦ +----------+----------+---------------¦ ¦1929 ¦5,939,553 ¦122.3 ¦ +----------+----------+---------------¦ ¦1930 ¦5,153,169 ¦106.1 ¦ +----------+----------+---------------¦ ¦1931 ¦4,067,710 ¦83.7 ¦ +----------+----------+---------------¦ ¦1932 ¦2,629,696 ¦54.1 ¦ +----------+----------+---------------¦ ¦1933 ¦2,186,544 ¦45.0 ¦ +----------+----------+---------------¦ ¦1934 ¦3,039,061 ¦62.6 ¦ +----------+----------+---------------¦ ¦1935 ¦3,588,221 ¦73.9 ¦ +----------+----------+---------------¦ ¦1936 ¦4,620,422 ¦95.1 ¦ +----------+----------+---------------¦ ¦1937 ¦4,704,547 ¦96.9 ¦ +----------+----------+---------------¦ ¦1938 ¦4,110,577 ¦84.6 ¦ +----------+----------+---------------¦ ¦1939 ¦4,506,875 ¦92.8 ¦ +----------+----------+---------------¦ ¦Average: ¦ ¦ ¦ +----------+----------+---------------¦ ¦1922-1939 ¦4,857,500 ¦100.0 ¦ +----------+----------+---------------¦ ¦1936-1939 ¦4,485,605 ¦92.3 ¦ +-------------------------------------+

The ratio of petitioner's average net income during the base period years, $199,913, to average net sales during the base period years, $4,485,605, was 4.45677 per cent. This base period ratio of net income to sales was 119.9 per cent of the ratio of 3,71714 for the period 1922-1939, when average net income and net sales amounted to $180,560 and $4,857,500, respectively. The ratio of petitioner's average net income during the base period years, $199,913, to average net worth during the base period years, $2,134,394, was 9.36627 per cent. This base period ratio of net income to net worth was 112.5 per cent of the ratio of 8.32556 for the period 1922-1939, when petitioner's average net worth was $2,168,743. The following table sets forth the ratios of petitioner's net income to net sales and to net worth for each of the years 1899-1939, together with indices based upon an average of 100 for the period 1922-1939:

+-----------------------------------------------------------------------------+ ¦TABLE 9 ¹ ¦ +-----------------------------------------------------------------------------¦ ¦ ¦Ratio of net ¦Index ¦Ratio of net ¦Index ¦ ¦Year ¦income to net ¦1922-1939 ¦income to net ¦1922-1939 ¦ ¦ ¦sales ¦Average=100 ¦worth ¦Average=100 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1899 ¦19.014 ¦511.5 ¦83.974 ¦1008.6 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1900 ¦10.074 ¦271.0 ¦38.507 ¦462.5 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1901 ¦7.523 ¦202.4 ¦39.828 ¦478.4 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1902 ¦7.276 ¦195.7 ¦45.803 ¦550.1 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1903 ¦5.956 ¦160.2 ¦37.281 ¦447.8 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1904 ¦4.492 ¦120.9 ¦25.667 ¦308.3 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1905 ¦4.733 ¦127.3 ¦32.105 ¦385.6 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1906 ¦5.044 ¦135.7 ¦39.740 ¦477.3 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1907 ¦7.590 ¦204.2 ¦48.473 ¦582.2 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1908 ¦5.189 ¦139.6 ¦24.875 ¦298.8 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1909 ¦5.657 ¦152.2 ¦33.952 ¦407.8 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1910 ¦7.528 ¦202.5 ¦37.313 ¦448.2 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1911 ¦4.307 ¦115.9 ¦16.914 ¦203.1 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1912 ¦5.767 ¦155.2 ¦22.102 ¦265.5 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1913 ¦6.107 ¦164.3 ¦24.193 ¦290.6 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1914 ¦5.976 ¦160.8 ¦21.054 ¦252.9 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1915 ¦7.107 ¦191.2 ¦22.260 ¦267.4 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1916 ¦13.360 ¦359.4 ¦36.895 ¦443.1 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1917 ¦10.436 ¦280.8 ¦29.828 ¦358.3 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1918 ¦10.775 ¦289.9 ¦26.875 ¦322.8 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1919 ¦11.898 ¦320.1 ¦38.037 ¦456.8 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1920 ¦11.124 ¦299.3 ¦41.671 ¦500.5 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1921 ¦1.814 ¦48.8 ¦3.252 ¦39.1 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1922 ¦2.963 ¦79.7 ¦8.032 ¦96.5 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1923 ¦4.644 ¦124.9 ¦13.495 ¦162.1 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1924 ¦2.289 ¦61.6 ¦5.765 ¦69.2 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1925 ¦3.261 ¦87.7 ¦9.120 ¦109.5 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1926 ¦5.456 ¦146.8 ¦14.806 ¦177.8 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1927 ¦5.040 ¦135.6 ¦11.389 ¦136.8 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1928 ¦6.244 ¦168.0 ¦15.970 ¦191.8 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1929 ¦6.546 ¦176.1 ¦17.850 ¦214.4 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1930 ¦2.362 ¦63.5 ¦5.608 ¦67.4 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1931 ¦1.147 ¦30.9 ¦2.306 ¦27.7 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1932 ¦(2.402) ¦(64.6) ¦(3.155) ¦(37.9) ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1933 ¦(0.196) ¦(5.3) ¦(0.221) ¦(2.7) ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1934 ¦2.271 ¦61.1 ¦3.577 ¦43.0 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1935 ¦2.092 ¦56.3 ¦3.776 ¦45.4 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1936 ¦5.083 ¦136.8 ¦11.451 ¦137.5 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1937 ¦5.195 ¦139.8 ¦11.439 ¦137.4 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1938 ¦1.519 ¦40.9 ¦2.853 ¦34.3 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1939 ¦5.723 ¦154.0 ¦11.936 ¦143.4 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦Averages :¦ ¦ ¦ ¦ ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1922-1939 ¦3.717 ¦100.0 ¦8.326 ¦100.0 ¦ +-----------+-----------------+--------------+-----------------+--------------¦ ¦1936-1939 ¦4.457 ¦119.9 ¦9.366 ¦112,5 ¦ +-----------------------------------------------------------------------------+ FN 1 From Tables 5, 7, and 8.

During the base period years, petitioner's average profit from business done in Montana amounted to $44,803, or 116.9 per cent of $38,338, the average profit during the period 1922-1939. Petitioner's average profit during the base period years in its sales territory other than Montana also exceeded its average profit during the period 1922-1939. Average profits in the base period years in this area amounted to $155,110, or 109.1 per cent of average profits during the period 1922-1939. The following table shows, for the years 1920-1939, petitioner's total profit (or loss) before Federal income taxes, and the respective portions of its total profit (or loss) derived from its business in Montana and from business done in the balance of its sales territory other than Montana.

+------+ ¦TABLE ¦ ¦10 ¦ +------¦ ¦¦¦¦¦¦¦¦ +------+

Petitioner's Profit (or Loss) Before Federal Income Taxes Index Index Index 1922-1939 Montana 1922-1939 Total 1922-1939 Year Total Average= only Average= less Average = 100 100 Montana 100 1920 $916,530 507.6 $101,492 264.7 $815,038 585.2 1921 95,734 53.0 (7,022) (18.3) 102,756 73.7 1922 186,915 103.5 19,162 50.0 167,753 120.4 1923 314,065 173.9 24,458 63.8 289,607 214.4 1924 138,233 76.6 20,202 52.7 118,031 84.7 1925 211,215 117.0 11,587 30.2 199,628 143.3 1926 339,998 188.3 49,329 128.7 290,669 208.7 1927 271,857 150.6 66,611 173.7 205,246 147.4 1928 354,301 196.2 101,585 265.0 252,716 181.4 1929 388,777 215.3 95,314 248.6 293,463 210.7 1930 121,730 67.4 35,177 91.8 86,553 62.1 1931 46,679 25.9 22,087 57.6 24,592 17.7 1932 (63,159) (35.0) (12,061) (31.5) (51,098) (36.7) 1933 (4,279) (2.4) 8,493 22.2 (12,772) (9.2) 1934 69,030 38.2 20,230 52.8 48,800 35.0 1935 75,067 41.6 48,696 127.0 26,371 18.9 1936 234,869 130.1 42,628 111.2 192,241 138.0 1937 244,423 135.4 74,923 195.4 169,500 121.7 1938 62,441 34.6 9,772 25.5 52,669 37.8 1939 257,920 142.8 51,891 135.4 206,029 147.9 Averages: 1922-1939 180,560 100.0 38,338 100.0 ¹ 142,222 10 0.0 1936-1939 199,913 110.7 44,803 116.9 155,110 ¹ 10 9.1 ¹Figure corrected. Compare with Exhibit ZZ.

During the base period years, the average sales made by petitioner's branch offices in Montana considerably exceeded sales made by those offices in the period 1922-1939. Average sales in Montana (including sales made in Wyoming), during the base period years amounted to $752,778, or 125.03 per cent of $602,090, the average for the period 1922-1939. On the other hand, petitioner's average sales during the base period years in the balance of its sales territory amounted to $3,732,827, or only 87.7 per cent of $4,255,409, the average for the period 1922-1939. In petitioner's sales territory other than Montana, average sales in the base period years amounted to 86.74 per cent of the 1922-1939 average in Minnesota; 90.68 per cent in North Dakota; and 91.07 per cent in South Dakota. The following table shows, for the years 1922-1939, inclusive, petitioner's total annual sales and the annual sales in the 4 States in which petitioner maintained branch offices:

+-----------------------------------------------------------------------+ ¦TABLE 11 ¦ +-----------------------------------------------------------------------¦ ¦ ¦Total ¦Minnesota ¹ ¦ ¦North ¦South ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦Year ¦sales ¦ ¦Montana ² ¦Dakota ³ ¦Dakota ⁴ ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1922 ¦$6,308,885¦$4,628,057 ¦$613,291 ¦$608,675 ¦$458,862 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1923 ¦6,762,667 ¦5,074,105 ¦604,916 ¦630,303 ¦453,343 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1924 ¦6,038,764 ¦4,648,706 ¦430,071 ¦501,090 ¦458,897 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1925 ¦6,477,829 ¦4,612,214 ¦472,786 ¦686,307 ¦706,540 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1926 ¦6,232,134 ¦4,239,439 ¦561,400 ¦750,538 ¦680,757 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1927 ¦5,393,860 ¦3,556,295 ¦619,176 ¦635,944 ¦582,445 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1928 ¦5,674,483 ¦3,480,457 ¦819,063 ¦679,129 ¦695,834 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1929 ¦5,939,553 ¦3,671,579 ¦913,028 ¦648,486 ¦706,460 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1930 ¦5,153,169 ¦3,249,707 ¦664,562 ¦594,374 ¦644,526 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1931 ¦4,067,710 ¦2,632,587 ¦516,114 ¦364,970 ¦554,039 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1932 ¦2,629,696 ¦1,842,464 ¦267,525 ¦223,179 ¦296,528 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1933 ¦2,186,544 ¦1,441,506 ¦243,350 ¦206,576 ¦295,112 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1934 ¦3,309,061 ¦1,906,870 ¦454,709 ¦321,546 ¦355,936 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1935 ¦3,588,221 ¦2,170,433 ¦646,535 ¦386,012 ¦385,241 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1936 ¦4,620,422 ¦2,917,411 ¦718,575 ¦470,459 ¦513,977 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1937 ¦4,704,547 ¦2,951,025 ¦814,042 ¦453,414 ¦486,066 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1938 ¦4,110,577 ¦2,550,830 ¦749,541 ¦407,505 ¦402,701 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1939 ¦4,506,875 ¦2,839,959 ¦728,956 ¦495,084 ¦442,876 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦Averages: ¦ ¦ ¦ ¦ ¦ ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1936-1939 ¦4,485,605 ¦2,814,806 ¦752,778 ¦456,615 ¦461,405 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1922-1939 ¦4,857,500 ¦3,245,202 ¦602,090 ¦503,533 ¦506,674 ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦Per cent: ¦ ¦ ¦ ¦ ¦ ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1936-1939 to¦ ¦ ¦ ¦ ¦ ¦ +------------+----------+-------------+-----------+----------+----------¦ ¦1922-1939 ¦92.34 ¦86.74 ¦125.03 ¦90.68 ¦91.07 ¦ +-----------------------------------------------------------------------+ ¹St. Paul, Minneapolis, Duluth, Mankato, 1895-1939; Winona, 1920-1932; Hibbing, 1922-1927.²Great Falls and Billings; includes sales in Wyoming.³Fargo.

⁴Aberdeen, 1910-1939; Sioux Falls, 1924-1939.