have that would enable us to strengthen our position with this company" (exhibit 2).

In his reply, dated October 1, 1936, to the manager of the Philadelphia office, Mr. Beggs stated:

"Subject: Horn & Hardart Baking Co., Philadelphia, Pa.

"In your letter of September 22, you discuss this negotiation and in particular you recommend that we do not make any suggestions regarding reduced cost of lighting.

"I am somewhat surprised that you should discuss this because actually the last thing in the world that we would suggest in this office would be the reduction in lighting intensities or lighting levels. The key to greater business is definitely along the line of stepping up lighting levels, and it would be suicide for us to urge anything else" (exhibit 3).

One of the things which most clearly emphasizes the intimacy of the relations between General Electric and Westinghouse, and the utilities, is that substantially all of the utilities deal only with Mazda lamps-it is not just that they sell Mazda lamps but that they advertise them and advocate and promote their use in every way.

The utilities have been handling the lamps of the two Mazda companies almost exclusively for so long that one now feels a tendency to accept it as a natural state of affairs. However it has not just happened. That both interests benefit is clearly exemplified by the manner in which the two interests have worked together in order to secure and maintain control over the fluorescent lighting industry and exploit that control in accordance with their respective interests.

THE FLUORESCENT LAMP AND ITS CHARACTERISTICS

A fluorescent lamp is a device consisting essentially of a glass tube, materials possessing properties of fluorescence which are coated upon the inside walls of the tube, a mixture of mercury vapor and argon gas contained in the tube, and caps or bases which seal the tube one at each end, and through each of which is fixed an electrode.

One of the outstanding characteristics of the fluorescent lamp is that it is much more efficient than the incandescent lamp, and consequently it uses much less electricity in producing a given amount of light than the incandescent lamp and thereby enables the consumer to save on his electricity bills. Fluorescent lighting is more efficient than incandescent lighting not only because fluorescent lighting affords more lumens per watt but also because it is possible to use fluorescent lighting for direct lighting in many instances where incandescent lighting would have to be indirect.

REASONS WHY THE PUBLIC UTILITIES AND MAZDA LAMP COMPANIES HAVE UNDERTAKEN TO RETARD AND CONTROL THE DEVELOPMENT OF THE NEW ILLUMINANT The fact that less electricity is needed in the operation of fluorescent lamps than in the operation of incandescent lamps has been the principal reason why the utility companies have desired to control the development of the fluorescent lighting industry and retard the use of fluorescent lighting. For a time after its commercial introduction the installation cost of fluorescent lighting was such that it was not cheaper for the consumer to use fluorescent lighting, but even during this time the utilities realized that fluorescent would become cheaper and this view is reflected in a report written for the member companies of the E. E. I. by three members of the E. E. I. lighting sales committee, Messrs. Sharp, Skinner, and Mueller, entitled, "Plain Talk About Fluorescent Lighting" (printed in 1939) in which it is stated:

"When the economics do change and fluorescent lighting becomes cheaper for the consumer utilities will be getting a much smaller share of the consumer's lighting dollar and only about one-half the revenue for the same amount of light. Therefore, it does not seem safe to adopt merely a policy of watchful waiting. Immediate action is needed to meet the situation" (exhibit 4).

Again, Mr. Mueller stated at a conference on fluorescent lighting held between September 30 and Dctober 3, 1940:

"However, while fluorescent lighting will have no alarming effect on present revenues, it will have a very definite effect on lighting-revenue sales, and on utility-unit sales costs. Fluorescent is normally referred to as having about

twice the efficiency of incandescent lighting. This is true. However, in actual practice the ratio is much higher.

"Incandescent lighting has been used in recent years to a large extent in a semi-indirect or indirect manner but usually with some diffusing medium. Fluorescent, on the other hand, is usually applied in a direct or semidirect manner and frequently with no diffusing medium.

"It is when the method of utilizing the light is taken into consideration that this ratio assumes more alarming proportions. For example, when incandescent lighting is used in enclosing globes as compared to a semidirect fluorescent unit, the ratio of wattage to produce the same lighting intensity is about two to one. However, when incandescent lighting is used in a totally indirect manner as compared to direct fluorescent lighting the ratio may be as high as six to one. * ** This is why so many of the surveys made to date tend to show that incandescent installations are being replaced with about 50 percent of their wattage by fluorescent" (exhibit 5).

As a result of a conference on July 11, 1939, between Mr. Sharp and Mr. Hogue, of the Buffalo, Eastern & Niagara Power Co., and Mr. A. E. Snyder, executive sales manager of Westinghouse lamp division, and Mr. R. G. Slauer, of the commercial engineering department, Mr. Slauer wrote to Mr. Snyder that—

"Regardless of what we wish to think, most fluorescent installations of the last year have resulted in decreased load for the utility. This does not mean that saving in energy costs has always been the incentive-better lighting has as often been the most important point. Nevertheless a lessened load results.

"The average utility-lighting man sees in the rise of fluorescence a decrease in his relative importance. Here is a comparison, based on a 4-cent rate, with equal costs to the user and equivalent results. The design data are unfavorable to fluorescence-almost any other selection would emphasize the differences. "For every dollar the user spends annually with incandescence the utility gets 80 percent; the contractor, 10 percent; the equipment suppliers, 6 percent; the lamp suppliers, 4 percent.

"For fluoresence, the dollar is divided: The utility, 44 percent; the lamp suppliers, 24 percent; the equipment suppliers, 20 percent; the contractor, 12 percent. "In other words, to the utility, fluorescent is only one-half as important as incandescence; to the lamp suppliers it is six times as important; to the equipment manufacturers, three times as important; to the contractor, 20 percent more important" (exhibit 6).

The fluorescent lamp is an electric-discharge lamp and auxiliary apparatus is required to control the discharge. This auxiliary apparatus consists of: (1) A ballast which is a device to govern the flow of electricity, and (2) a starting switch required to facilitate the starting of the lamp.

Ballasts may be designed to operate a single lamp or to operate two lamps together. The single-lamp type of ballast in an electrical circuit introduces what is known as a power factor, this being a differential in phase relation between voltage and current. This power factor may be about 50 percent. Ballasts for two lamps also introduce a power factor, but in this instance it is near unity, being 90 or 95 percent or more. Low-power factor may, if uncorrected, require the installation of lines of greater capacity by the utility companies.

The fear that fluorescent lighting might be operated at low-power factor on their lines was the second reason for the desire of the utilities to control the development of the fluorescent-lighting industry and to retard the use of fluorescent lighting. However, after fluorescent lighting had been on the market for over a year the manager of the commercial engineering department of the lamp division of Westinghouse expressed the belief that, in view of the development of ballasts for the operation of two lamps and the promotional policies of the mazda manufacturers, there was "little justification for the anxiety expressed by the utility companies, who, for years, have permitted and encouraged the sale of all sorts of appliances with even lower power factor than our first fluorescent equipment" (exhibit 7). But the utility companies felt that by cooperation with the mazda lamp companies they might be able to demand that all fluorescent lighting be corrected for power factor and this would also have the incidental effect of making fluorescent lighting more expensive to install and thus would aid in deterring the use of fluorescent lighting generally.

On their side, General Electric and Westinghouse desired to establish and maintain control over the manufacture and sale of fluorescent lamps and equipment for their operation. At the time the fluorescent lamp was introduced commercially, General Electric and Westinghouse feared that their control of the electric-lamp industry might be destroyed by “independent” lamp manufacturers

obtaining a strong position in the fluorescent-lamp manufacturing industry. Consequently General Electric and Westinghouse wished to strengthen their cooperative relations with the utilities companies in order to insure that these companies would deal in and foster the use of Mazda fluorescent lamps to the exclusion of fluorescent lamps made by other manufacturers and thus assist General Electric and Westinghouse in dominating and obtaining and maintaining control over the fluorescent-lighting industry. Moreover, General Electric and Westinghouse wished to be assured the support of the utility companies for programs and plans which General Electric and Westinghouse were to put into effect as a part of their scheme to dominate and control the fluorescent-lighting industry.

PROGRESS OF THE COOPERATION BETWEEN THE MAZDA LAMP MANUFACTURERS AND THE PUBLIC UTILITIES

1. Negotiations and Meetings Between Officials of General Electric and Westinghouse and the Utility Companies

General Electric and Westinghouse and the public utilities early recognized that the fluorescent-lighting industry and the use of fluorescent lighting could be controlled by them to the beneit of each by concerted action.

At about the time the fluorescent lamp was announced commercially by the Mazda lamp manufacturers a meeting was called of the lamp subcommittee of the A. E. I. C. and officials of the General Electric lamp department, to be held at Nela Park, the headquarters of the General Electric lamp department. This meeting, which was held on May 27, 1938, was called "in order [for the members of the lamp subcommittee] to confer with the Mazda lamp manufacturers concerning the assimilation of fluorescent lamps" (exhibits 8 and 9).

* * *

On October 27, 1938, soon after General Electric had placed its fluorescent lamps on the market, Mr. E. E. Potter, manager of the eastern sales division of the General Electric lamp department, wrote Mr. Sharp, manager of the lighting bureau of the Buffalo, Niagara & Eastern Power Co., stating:

"I do want to tell you now, however, that all of us thoroughly believe the story we are telling of using fluorescent for plus lighting and we are making every effort from here to promote it on that basis" (exhibit 10).

Even at this time General Electric recognized that longer, larger, and highervoltage fluorescent lamps would inevitably appear on the market and that "with these lamps, it's going to be possible to produce the same or increased foot candles [of light] at a very practical installation cost and with a very decided drop in wattage" (exhibit 11). In respect to this situation, Mr. H. F. Barnes, of the sales promotion department of the General Electric lamp department wrote other officials of the company a letter on October 28, 1938, in which he stated among other things that he was very much disturbed over the utility reaction which he was sure General Electric would have as soon as the larger fluorescent lamps were announced. He declared:

"Certainly there should be no publicity of any kind on any further development on fluorescent until we have had a chance to see where we are going with our present lamps and to formulate a very definite sales, sales promotion, and advertising program which is definitely pointed at daylight intensities of a high order for stores and factories" (exhibit 11).

On January 24, 1939, Mr. Stryker, an official of the General Electric lamp department in charge of utilities sales promotion, wrote Mr. Barnes that the problem involved in keeping "the intensities up in fluorescent installations will not be too difficult when both the utility and the Mazda lamp manufacturer are working together for this common end" (exhibit 12).

During this period there were discussions between Mr. E. F. Strong, manager of the General Electric lamp department sales division for the Buffalo, N. Y., area, and Mr. Skinner, vice president of the Buffalo, Niagara & Eastern Power Corporation, concerning the statement of policy which General Electric should issue with regard to the use of fluorescent lighting. On March 7, 1939, Mr. Skinner wrote Mr. Strong in connection with a copy of a proposed statement of policy on this subject which Mr. Strong had furnished Mr. Skinner. Mr. Skinner stated:

"I have reviewed this rather carefully with our lighting people and have come to the conclusion that, in its present form, it is not an acceptable statement of what we think the policy should be" (exhibit 13).

Mr. Skinner indicated that the statement of policy should be corrected to show that fluorescent Mazda installations would be as expensive or more expensive

than existing incandescent Mazda installations in almost every instance. He further wished to have the statement corrected to state that the "use of bare lamps should be most carefully restrained." The letter concludes "the foregoing indicate quite a substantial difference in opinion on the appropriate policy applicable to those lamps and unless the authorities in Cleveland have modified their stand as included in the printed statement of policy which you furnished me, I think the matter warrants some further discussion."

A conference of General Electric fluorescent specialists was held at the Nela Park headquarters of the lamp division of General Electric on March 28, 1939, to discuss fluorescent lighting. At this conference Mr. Boynton, manager of the eastern sales division of the lamp division of General Electric, "read a long letter from a utility executive criticizing severely our policy, in regard to fluorescent lamps." Mr. E. E. Potter, manager of the western sales division of the lamp division of General Electric, talked about the problem with the utilities, “and urged the field men to restrict promotion to plus lighting and not to advocate these lamps for general lighting to replace present incandescent lamps" (exhibit 14). At about this time, officials of the General Electric field offices were commencing to work with officials of the various utilities operating in their particular areas. For instance, Mr. E. G. Strong, manager in the western part of New York State for the lamp department of General Electric, was working with offi'cials of Buffalo, Niagara & Eastern Power Corporation to determine the basis on which fluorescent lighting would be promoted in their area. Mr. Strong discussed with Mr. Skinner and Mr. Sharp, of Buffalo, Niagara & Hudson, a revision of the then-current General Electric statement of policy on the use of the fluorescent lighting. Mr. Strong in a letter dated April 12, 1939, to Mr. Ward Harrison, chief engineer of the lamp division of General Electric, suggested to Mr. Harrison that published matter concerning fluorescent lamps "minimize for the present the application of daylight fluorescent lamps for other than special applications which would mean plus installations and plus business for ourselves as well as the utility companies." He further stated that he felt:

"A very positive need of going along with the utilities in our territory in such manner as to impress upon them the fact, which is true, that we are attempting to use the fluorescent product to secure lighting effects through installations which really mean additions to the use of electricity in lighting and to avoid the use of fluorescent lamps for general illumination where either our tungsten-filament lamps are replaced in present installations or where large areas are contemplated in new buildings or in the revamping of old buildings as we all know that our present tungsten filament line with the present complete line of fixtures available must still be our revenue-producing line and with the present status of auxiliary equipment, we will be in a better position with the utilities not to go too fast on large installations.

"We are working at the present time with the local Niagara Hudson representatives so that we may all think along the lines which will be most constructive for the industry as a whole and if I can secure as promptly as possible the new statement of policy of the General Electric Co. in the use of fluorescent lamps, it will be very helpful in talking with Mr. Skinner, Mr. Sharp, and others of the power company with whom we are working (exhibit 15).

* *

In April 1939 the E. E. I. published a report entitled "Current Practice in the Promotion and Application of Fluorescent Lamps," which summarized the results of an investigation" * * * conducted by the lighting sales committee of the Edison Electric Institute by means of a questionnaire, for the purpose of obtaining a cross-section of utility opinion and fact concerning the promotion and application of the fluorescent lamp. Ninety-nine individuals responded, representing 93 utility companies, from every portion of the United States" (exhibit 16). Following the publishing of the E. E. I. report referred to immediately above, it was decided that a conference should be held between members of the lighting sales committee of the E. E. I. and officials of the Mazda lamp manufacturers to review the fluorescent-lighting situation so as to work out a program for the promotion of fluorescent lighting which would have the approval of both the utilities in general and the Mazda lamp manufacturers (exhibit 17). On March 26, 1939, Mr. Sharp wrote Mr. Harrison stating that he felt there were three objectives that should be discussed at the proposed meeting. The first objective would be agreement on the applications of the fluorescent lamp; the second would be the cooperative participation of the promotion and publicity portions of the industry and the development of public acceptance; and third, the development and marketing of equipment necessary to carry out the engineering and promotional aspects of the new light source (exhibit 18).

The meeting which had been proposed was held on April 24 and 25, 1939, at the headquarters of the General Electric lamp department at Nela Park, Cleveland. Present were the following: J. B. Mueller, manager of commercial sales, West Penn Power Co., Pittsburgh, Pa.; H. M. Sharp, Buffalo, Niagara & Eastern Power Corporation, Buffalo, N. Y.; M. M. Waterman, lighting service bureau, Central Hudson Gas & Electric Corporation, Poughkeepsie, N. Y.; Paul Manchester, Blackstone Valley Gas & Electric Co., Pawtucket, R. I.; W. J. Amos, general sales department, New Orleans Public Service, Inc., New Orleans, La.; Norman MacDonald, E. T. L., New York City; Oscar Cleaver, Westinghouse, Bloomfield, N. J.; McKenna, Harrison, O'Day, Barnes, Burrows, Stryker, Sturrock, Boynton, and Potter of General Electric. (Minutes of the meeting, exhibit 19; draft of minutes, exhibit 20.)

This conference was referred to by the utility representatives present as a "council of war" (exhibit 21). The meeting was concerned principally with the question of the basis upon which fluorescent lighting would be promoted and with having the representatives of all interests present decide upon a program for its promotion. The utility representatives were mainly concerned with preventing fluorescent lighting from being advertised and sold to the public on the basis of being a lighting source which would enable the public to save on their electric bills. The representatives of the utility companies also sought to make sure that fluorescent lighting should be promoted with corrected power factor of the lamp.

Mr. Sharp suggested that the Mazda lamp manufacturers for the present omit the use of advertising copy to promote fluorescent lighting to be used for general illumination. Mr. Amos stated that there were many supplementary lighting applications for fluorescent lamps and that lamps should be sold only for such applications. Mr. Mueller stated that he thought that fluorescent lighting should not be recommended for the average small jewelry or drug store (exhibit 19). In conformity with these suggestions and the wishes of the utility representatives present, it was decided that use of fluorescent lamps for general lighting would not be emphasized "until commendable equipment is available giving 50to 100-foot candle levels" (exhibit 19).

As to power factor it was agreed at the meeting that—

"It is to the best interest of all concerned that fluorescent lighting be installed with corrected power factor at the lamp. All emphasis will be on the use of corrected circuits, that is, corrected to both flicker and power factor" (exhibit 19).

One of the principal functions of the meeting was to determine and agree upon a statement of policy which General Electric and Westinghouse should announce with regard to the uses to which fluorescent lamps were adaptable. Such a statement of policy was mutually agreed upon by the representatives of the various interests.

As a result of the conference General Electric and Westinghouse each issued statements of policy pursuant to the decision reached at the conference. The Westinghouse statement read in part:

"We will oppose the use of fluorescent lamps to reduce wattages." [Italics theirs.] (Exhibit 22.)

The General Electric statement, issued on May 1, 1939, stated:

"The fluorescent Mazda lamp should not be presented as a light source which will reduce lighting costs" (exhibit 23).

According to Mr. Kewley, manager of the lamp department of General Electric, General Electric's statement of policy was "issued particularly to allay the fears of the utility companies" (exhibit 24). According to Mr. Robinson of the lamp department, the statement of policy constituted a declaration that General Electric would "play good ball with you central stations but will expect the same brand of ball from you, too" (exhibit 25).

General Electric and Westinghouse officials met with members of the technical subcommittee of the A. E. I. C. lamp committee on May 18, 1939, in New York City. At this meeting was read "the most recent statement of promotional policy issued by the manufacturers of fluorescent Mazda lamps * * * [and there were pointed out] certain changes which had been made after the issuance of an earlier statement. These changes were made by the lamp manufacturers after it had been brought to their attention by the utility representatives that the earlier statement contained grossly exaggerated claims for the new fluorescent lamp" (exhibit 26).

It was planned that the group which had gotten together at the Nela Park conference should in the future continue to meet together from time to time to