IN THE, DISTRICT CCORT OF THE OiTEO STATES FOR THE OlSieiOI OF iliNESOTL THE UNITED STATES OF AMERICA, PEimoHER. v». INTERNATIONAL HARVESTER COMPANY ET AL., Defendants. RECORD'^^VOLUME L TESTIMONY OF WITNESSES FOR THE PETITIONER. GUMi«MflttiiiiiiiimliHiwiMMi THE GIFT OF ptatg A.s..ans.5..u s\^4'-s- 3777 Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924092550122 A.2-cn85U. United States of America vs. International Harvester Company et. al. EECORD-VOLUME I. Testimony of Witnesses for the Petitioner. INDEX TO VOLUME I. Page. Baker, E. J. : Direct examination Vol. 1, 121-133 Bentley, Cyrus: Direct examination " I, 466-477 Cotton, J. P., Jr. : Direct examination " I, 348-354 Coulter, John Lee : Direct examination " I, 487-505 Cross-examination " I, 505-509 Ee-direct examination " I, 510 Re-cross examination ' ■ I, 510-511 Ee-direct examination ■' I, 511-512 Cravath, Eeastus M. : Direct examination " I, 354-359 Daly, John J. : Direct examination " I, 359 Funk, Clarence S. : Direct examination " I, 1-33 Cross-examination " I, 33- 36 Re-direct examination " I, 37-38 Eecalled : Direct examination " I, 53-55 Cross-examination " I, 55- 63 Re-direct examination " I, 63-68 Glessner, J. J. : Direct examination Vol. I, 439-466 Hamilton, William Pierson : Direct examination " I, 293-339 Recalled, direct examination " I, 397-402 S 11 Haskins, E. C. : Direct examination Hyatt, Abeam M. : Direct examination Jones, Wiijjam H. : Direct examination Cross-examination Re-direct examination King, James: Direct examination Lane, W. C. : Direct examination Llewellyn, S. J. : Direct examination Metcalf, Edwin D. : Direct examination Cross examination Re-direct examination MiDDLEKAXJFF, P. D. : Direct examination Cross-examination Re-direct examination Milleh, Edward M. P. : Direct examination OsBOENE, Thomas Mott : Direct examination 'Cross-examination Re-direct examination Eeay, W. M. : Direct examination Re-called : Direct examination Cross-examination Stoekow, James J. : Direct examination Swift, E. B. : Direct examination Vol TJtley, Henry B. : Direct examination Cross-examination Ee-direct examination ' Wood, E. N. : Direct examination Ee-oalled, direct examination Paga. " I, 73- 90 " I, 339-345 " I, " I, - I 38- 50 50- 52 52 " I, 222-238 " I, 239-293 " I, 183-191 " I, " I, " I, 371-379 380-389 389-395 l-H 1— 1 M 147-174 174-180 180-182 " I, 345-348 " I, " I, " I, 360-364 365-367 368-369 " I, 478-482 " I, " I, 512-516 516-523 " I, 369-370 ^ol. I, 404-437 " I, " I, " I, 191-203 204-207 207-211 " I " I 142-146 482-486 Ill PETITIONER'S EXHIBITS. Vol. I. (This list includes only exhibits introduced at hearings re- ported in this volume.) Exhibit. Page. 1. Agreement July 28, 1902, between the McCormiek Harvesting Machine Co. and W. C. Lane (not printed in this volume) 71 2. Agreement July 28, 1902, between the Piano Mfg. Co. and W. C. Lane (not printed in this vol- ume) 71 3. Agreement July 28, 1902, between Warder, Bush- nell & Glessner Co. and W. C. Lane (not printed in this volume) 71 4. Voting Trust Agreement, Aug. 13, 1902, between W. C. Lane and George W. Perkins, Charles Deering and Cyrus H. McCormiek (not printed in this volume) 71 5. Certificate of incorporation of International Har- vester Co., dated Aug. 12, 1902, with subsequent amendments (not printed in this volume) 71 6a. By-laws of the International Harvester Co., 1902 (not printed in this volume) 71 6b. By-laws of the Internatiomal Harvester Company, 1912 (not printed in this volume) 71 7. Officers of the International Harvester Co. of New Jersey, Aug. 12, 1902, to October, 1912 (not printed in this volume) 71 8. Directors of the International Harvester Co. of N. J. from August 12, 1902, to October, 1912 (not printed in this volume) 71 9. Members of the Executive Committee of the In- ternational Harvester Co. from Aug. 13, 1902, to Nov. 23, 1906, when the committee was dis- continued (not printed in this volume) 71 10. Members of the finance committee of the Inter- national Harvester Co. of N. J. from Aug. 13, 1902, to October, 1912 (not printed in this volume) 71 IV Exliibit. Page. 11. Articles of association of the International Har- vester Co. of America, with amendments (not printed in this volume) 71 1 2a. By-laws of the International Harvester Co. of America, July 21, 1910 (not printed in this vol- ume) 71 12b. By-laws International Harvester Co. of America, 1902 (not printed in this volume) 71 12c. By-laws International Harvester Co. of America, 2nd edition, 1904 (not printed in this volume) . . 71 12d. By-laws International Harvester Co. of America, May 10, 1907 (not printed in this volume) .... 71 1.3. Declaration of trust dated March 19, 1903, of Geo. W. Perldns, Charles Deering, Cj^rus IT. Mc- Cormick (not printed in this volume) 72 14. Officers and directors of the International Har- vester Co. of America, from Oct. 1, 1902, to date (not printed in this volume) 72 15. Agreement between International Harvester Co. "-to^ of N. J. and the Milwaukee Harvester Co., dated Sept. 2, 1902 (not printed in this volume) 72 16. Agreement, International Harvester Co. of N. J. and International Harvester Co. of America, dated Jan. 1, 1907 (not printed in this volume) . 72 17. Agreement between I. H. Co. of N. J. and I. H. Co. of A., dated July 1, 1907 (not printed in this volume) 72 18. List of general agencies in the United States and Canacla, Nov. 1, 1902, acquired by the I. H. Co. (not printed in this volume) 72 19. Same as No. 18, at the date July 10, 1903 (not printed in this volume) 72 20a. List of general agencies of I. H. C. of A. in the United States and Canada, Jan. 1, 1912 (not printed in this volume) 72 20b. Map of United States showing location of general agencies of the I. H. Co. of A., etc. (not printed in this volume) 72 21. Kinds of agricultural machines manufactured by L H. Co. of N. J. in 1902 (not printed in this volume) 72 22. Kinds of agricultural implements added by the I. H. Co. to its lines (not printed in this volume) 73 Exhibit. Page. 23. Kinds of agricultural machines bought by the I. H. Co. of A. from the I. H. Co. of N. J. during the season of 1903 (not printed in this volume) 73 24. New lines of agricultural machines and imple- ments bought by the I. H. Co. of A. from the I. H. Co. of N. J. since 1902 (not printed in this volume) 73 25. Goods sold by the I. H. Co. of A. not purchased from the I. H. Co. of N. J. (not printed in this volume) 73 26. Commission and net price schedule "A" 1912 of the International Harvester Co. of A. (not printed in this volume) 73 27. 'Commission and net price schedule "C" 1912 of the International Harvester Co. of A. (not printed in this volume) 73 28a. Agreement between Thomas M. Osborne and Ed- win D. Metcalf and the I. H. Co., Jan. 15, 1903, providing for sale of business of Osborne & Co. to I. H. Co. (not printed in this volume) 91 28b to 28k inc. Ten other contracts relating to the same sub- ject as No. 28a (not printed in this volume) .... 91 29a. Memorandum agreement between the Keystone C*o. and the I. H. Co., relating to sale of Key- stone Co. to I. H. Co., dated Sept. 6, 1905 (not printed in this volume) 91 29b to 29d inc. Three other agreements relating to same sub- ject as No. 29a (not printed in this volume) .... 91 30. Deed for conveyance of property of Aultman- Miller Buckeye Co. to I. H. Co.> dated Sept. 30, 1905 (not printed in this volume) 91 30b, 30c. Two other deeds relating to the same subject as No. 30 (not printed in this volume) 91 31a. Deed for transfer of Minnie Harvester Co. to In- ternational Flax Twine Co., Sept. 30, 1905 (not printed in this volume) 92 31b, 31c. Two other deeds relating to the same subject as No. 31a (not printed in this volume) 92 Exhibit. Page. 32a. Agreement between H. Weber et al. and I. H. Co. relating to purchase of capital stock of Weber Wagon Co. (not printed in this volume) 92 32b, 32c, 32d. 'Three deeds relating to same subject as No. 32a (not printed in this volume) 92 33. Mem. of agreement, dated June 24, 1902, between 'Stephen Bull et al. of the first part and P. D. Middlekauff of the second part 153-158 34. Letter, Harold F. McCormick to P. D. Middle- kauff, June 25, 1902 158-159 35. Letter, Cvrus H. McCormick to Mr. Perkins, June 25, 1902 159 36. Assignment from P. D: Middlekauff to W. C. Lane, dated Aug. 11, 1912 164-167 37. Assignment from P. D. Middlekauff to W. C. Lane, dated July 28, 1902 167-168 38. Letter, The Keystone Co. to John S. Green, Creighton, Nebraska, 6/5/1905 196-197 39. Mem. of agreement between I. H. Co. and Wm. C. Lane, Aug. 13, 1902. 248-249 40. Agreement between W. C. Lane and J. P. Morgan & Co., dated Aug. 13, 1902, with letters at- tached 250-256 41. This exhibit consists of (1) Memo, for Mr. Lane, dated Aug. 6, 1902, initialed "P. D. C." (2) Let- ter, Wm. C. Lane to Paul D. Cravath, Aug. 6, 1902. (3) Letter Wm. C. Lane to J. P. Morgan & Co., Aug. 6, 1902 256-258 42. This exhibit consists of (1) Letter, Aug. 11, 1902, Paul D. Cravath to Wm. C. Lane. (2) Letter, Aug. 11, 1902, J: P. Morgan & Co. to Wm. C. Lane. (3) Copy of letter, Aug. 12, 1902, Wm. C. Lane to J. P. Morgan & Co., all in relation to purchase of stock of Milwaukee Harvester Co . . 259-260 43. This exhibit consists of (1) Letter, Aug. 12, 1902, from Guthrie, Cravath & Henderson "to Wm. C. Lane; (2) Copy of telegram, Aug. 12, 1902, Wm. C. Lane to Miller, Noyes, "Miller and Wahl 261-262 Vll Exhibit. Page. 44. This exhibit consists of (1) Letter, Aug. 14, 1902, J. P. Morgan & Co. to Wm. €. Lane; (2) Copy of letter, Aug. 15, 1902, Wm. C. Lane to J. P. Morgan & Co 262-263 45. This exhibit consists of (1) Letter, Aug. 15, 1902, Wm. C. Lane to J. P. Morgan & Co. ; (2) Letter, Aug. 15, 1902, J. P. Morgan & Co. to Wm. C. Lane . 264 46. This exhibit consists of (1) Copy of letter, Aug. 35, 1902, Wm. C. Lane to International Har- vester Co.; (2) Letter, Aug. 15, 1902, Interna- tional Harvester Co., by A. M. Hyatt, V. P., to Wm. C. Lane 265-266 47. This exhibit consists of (1) Copy of letter, Aug. 2] , 1902, Wm. C. Lane to Guthrie. Cravath and Henderson; (2) Copy of letter, Aug. 21, 1902, Wm. C. Lane to Harold F. McCormick; (3) Let- ter, Aug. 11, 1902, Harold F. McCormick to Wm. C. Lane ; (4) Letter, Aug. 21, 1902, Guthrie, Cravath & Henderson to Wm. C. Lane 266-267 48. This exhibit consists of (1) Telegram, Standard Trust Co. to First National Bank, Chicago, Aug. 6, 1902; (2) Telegram, Standard Trust Co. to Mrst National Bank, Chicago, Aug. 6, 1902; (3) Telegram, Standard Trust Co. to First Na- tional Bank, Chicago, Aug. 8, 1902; (4) Tele- gram, B. J. Street, Cashier, to Standard Trust Co., Aug. 8, 1902; (5) Telegram, R. J. Street, Cashier, to Standard Trust Co., Aug. 8, 1902 ; (6) Memorandum money received from J. P. Morgan & Co.; (7) Letter, W. C. Cox, Sec'y- ('Standard Trust Co.) to Guthrie, Cravath & Henderson, Aug. 12, 1902; (8) Letter, Wm. C. Lane to Standard Trust Co., Aug. 13, 1902; (9) Letter, George W. Perkins, Charles Deer- ing, Cyrus McCormick, Voting Trustees, to Standard Trust Co., Aug. 12, 1902; (10) Letter, W. C. Cox, Secretary, to Paul ~D. Cravath, Aug. 16, 1902; (11) Letter, Wm. C. Cox, Secretary, to Guthrie, Cravath & Henderson, Aug. 19, 1902 268-272 Vlll Exhibit. Page. 49. Agreement, Aug. 17, 1903, between McCormick Harvesting Machine Co., Deering Harvester Co., Warder, Bushnell & Glessner Co., and Piano Mfg. Co. and Wm. C. Lane and tlie Inter- national Harvester Co 273-279 50. Mem. of agreement, March 24, 1903, between Piano Mfg. Co. and Wm. C. Lane 280-283 51. Memorandum of agreement, March 24, 1903, be- tween McCormick Harvesting Machine Co. and Wm. C. Lane (same as Exhibit 54) 283 52. Memorandum of agreement, March 24, 1902, be- Warder, Bushnell & Glessner Co. and Wm. C. Lane 283-286 53. Memorandum of agreement, March 24, 1903, be- tween Charles Deering, James Deering and Eichard F. Howe, and Wm. C. Lane 286-288 54. Memorandum of agreement March 24, 1903, be- tween McCormick Harvesting Machine Co. and Wm. C. Lane '. 288-291 55. Letter, Aug. 29, 1902, Wm. C. Lane to First Na- tional Bank of Milwaukee 292 (There is no Exhibit 56.) 57. Agreement, Aug. 13, 1902, between owners of stock trust certificates, I. H. Co., and J. P. Mor- gan & Co 294-297 58. Agreement for deposit of stock trust certificates, Aug. 13, 1902, Cvrus H. McCormick and others and J. P. Morgan & Co 297-300 59. Agreement for deposit of stock trust certificates, Aug. 13, 1902, Charles Deering and others and J. P. Morgan & Co 297, 301-304 60. Statement of I. H. C. stock trust certificates held on deposit by J. P. Morgan & Co 305-306, 400 61. Statement showing amounts received by J. P. Morgan & Co. for services in connection with the formation of the I. H. C 306-307 62. Agreement, July 28, 1902, between Deering Har- vester Co. and Wm. C. Lane 308-317 63. Supplemental agreement between McCormick Harvesting Machine Co. and Wm. C. Lane, August 11, 1902 318-321 64. Supplemental agreement between Piano Mfg. Co. and Wm. C. Lane, Aug. 11, 1902 321-325 IX ExMbit. Page. 65. Supplemental agreement between Deering Har- vester Co. and Wm. C. Lane, Aug. 11, 1902. . . . 325-328 66. Supplemental agreement between Warder, Busli- nell & Glessner Co. and AVm. C. Lane, Aug. 11, 1902 328-331 67. Agreement, Aug. 17, 1903, between MeCormick Harvesting Machine Co. et al. and William C. Lane and the International Harvester Co 332-338 68. Stock trust certificates deposited with J. P. Mor- gan & Co. under agreement of deposit of Aug. 13, 1902 399 69. Appraisal of Deering Harvester Co., giving state- ment of profits, etc., made in 1902 513-514 70. Appraisal of MeCormick Harvesting Machine Co., with statement of profits, etc., made in 1902. . . . 514 71. Appraisal of Warder, Bushnell & Glessner Co., with statement of profits, etc., made in 1902. . . 514-515 72. Appraisal of Piano Mfg. Co., with statement of profits, etc., made in 1902 515-516 XI In the United States Disteict Coubt, District of Minnesota. No. 624. United States of America, Petitioner, vs. International Harvester Company and others, Defendants. It appearing that the above entitled cause is at issue on the petition and the answers and replication heretofore filed, now, therefore, upon motion of counsel for the petitioner, and by consent of the parties, It is ordered, That Edbert S. Taylor, of the City of Duluth, Minnesota, be and he hereby is designated and appointed as special examiner to take and report to the Court the evidence adduced or offered by the petitioner and the defendants re- spectively, with full authority as such special examiner ac- cording to the rules and practice in such case made and pro- vided : That said examiner give notice by mail to counsel for the respective parties, of his appointment herein, and of the time and place when and where he will attend for the purpose of hearing such testimony as may be adduced; and that notice be given by the respective counsel or solicitors to the opposing counsel or solicitors, or parties, by mail or personally, of the time and place of the examination, for such reasonable time as the examiner may fix or order in each case. That said examiner may, when necessary or convenient for the respective parties, continue said hearings from time to time, by order made and entered during any regularly ap- pointed or noted hearing had thereunder : That said examiner may, upon application of any of the parties, hold such hearings, and receive testimony in behalf of any party, at such times and such places without the Dis- trict of Minnesota as he may designate and appoint, by giving special notice to the respective parties or their solicitors, or by order made and entered at any regularly appointed or Xll noted hearing had hereunder; notice of such time and place of hearing also to be given by the respective counsel or so- licitors to the opposing counsel or solicitors, or parties, as provided by this order: That said exarainer is hereby given authority to employ such stenographers as the parties may agree upon to assist in the taking of said testimony from time to time as may be necessary : That all testimony adduced pursuant hereto may be taken in the usual manner, under oath ; and when completed, be re- ported by said examiner, together with all and several the proceedings had before him, to this Court, and filed with the Clerk thereof, in accordance with the rules and practice of this Court: That the respective parties ma\' from time to time agree as to the time and place of taking proof outside of the Dis- trict of Minnesota, and may, in case the examiner herein ap- pointed is unable by reason of illness or other cause to at- tend at the time agreed upon, by such agreement select an examiner specially for such examination, wdiereupon such ex- aminer so selected shall as to such proof and the taking and reporting thereof, have all the authoritj^, powers and duties herein given generally to said Robert S. Taylor, examiner, and the said examiner shall act as such examiner outside of said District of Minnesota except where there is an agree- ment among the parties as in the cases provided in this para- gTaph. By the Court : (Signed) Page Mobris, Judge. Dated this 30th day of August, 1912. We assent to the foregoing order. (Signed) Edgar A. Bancroft, (Signed) John P. Wilson, Of Counsel for Defendants. (Signed) Chas. C. Houpt, United Staies Attorney. (Signed) Edwin P. Grosvenob, Special Assistant to the Attorney General. In the District Court of the United iStates For the District of Minnesota. The United States of America, Petitioner, vs. International Harvester Company, and others. Defendants. I In Equity. No. 624. Hearing of September 16, 1912. Pursuant to the order of Kobert S. Taylor, the Special Examiner in the above entitled cause, dated at St. Paul, Min- nesota, August 30, 1912, the parties hereinafter named ap- peared by counsel before the said Special Examiner, in Eoom 603 Post Office Building, City of Chicago, Illinois, on Mon- day, the 16th day of September, 1912, at 10:30 o'clock A. M. The following solicitors and counsel were present: Edwin P. Grosvenor, Esq., Special Assistant to the Attorney Greneral; Joseph R. Darling, Esq.; Edgar A. Bancroft, Esq. ; and John P. Wilson, Esq. The following appearances were entered: On behalf of the Petitioner : Edwin P. Grosvenor and Joseph E. Darling, Esq. On behalf of the Defendants : Edgar A. Bancroft and John P. Wilson, Esq. ^ Thereupon proceedings were had and testimony introduced 4 as follows: CLARENCE S. FUNK, being duly sworn as a witness on behalf of the Petitioner, testified as follows: Direct Examination hy Mr. Grosvenor. Q. Mr. Funk, will you state your business? A. General Manager of the International Harvester Com- pany. I 2 C. S. Funk, Direct Examination. 1 Q. How long have you held that position! A. Since November 1, 1906, Q. Before that, what was yonr office! A. I was assistant to the president for two years. Q. That is, to Mr. Cyras H. McOormick! A. Yes, sir. Q. And before that what was your business? A. I was head of the security department of the Inter- national Harvester Company. Q. How long have you been in the harvester business ! A. Since 1888. 2 Q. With what company! A. The Warder, Bushnell & Glessner Company. Q. Located where! A. Chicago, Illinois, and Springfield, Ohio. Q. Where was the factory of that company! A. Springfield, Ohio. Q. Were you connected with the sales end, or with the manufacturing end of that company! A. The sales end. Q. And you remained with that company until it went 3 into the International Harvester Company in the middle of 1902! A. Yes. Q. What were your duties immediately prior to August, 1902, with the Warder, Bushnell and Glessner Company! A. Sales manager. Q. How long had you been sales manager of that com- pany! A. I had been sales manager of the entire territory for about two seasons ; that would be less than two years. Prior to that I was a district sales manager for three or four 4 years. Q. That is, a general agent in the field! A. No, in the general office in Chicago. Q. As general manager of the International Harvester Company, what are your duties! A. I have general supervision over the operating end of the business. Q. Does that include the sales department! A. The International Harvester Company of America does the selling of the product of the International Harvester Company. Q. Do you have charge of the selling end, or selling or C. S. Funk, Direct Examination. 3 sales department of the International Harvester Company of New Jersey? A. There is no selling department in the International Harvester Company of New Jersey. Q. The International Harvester Company of New Jersey manufactures millions of dollars worth of agricultural imple- ments a year, does it not! A. It does. Q. What does it do with them? A. It sells them to the International Harvester Company of America. Q. Do you have charge of that department of the Inter- national Harvester Company of New Jersey which sells the products of the New Jersey Company to the Harvester Com- pany of America? A. There is no particular department that has that in charge ; that is a matter of negotiation. Q. Do you have anything to do with the negotiations ? A. I at times have had ; at other times not. Q. Will you state what are the departments or into what general branches the business of the International Harvester Company of New Jersey is divided? A. We have an executive department; the law depart- ment ; an experimental department, patent department, manu- facturing department, purchasing department. Those are the main departments. Q. Will you state who is at the head of each of those de- partments ? A. Which shall I give first — the executive? Q. Yes. A. Well, the executive department is, of course, the execu- tive officials of the company. The law department, Mr. Edgar A. Bancroft — Q. Please state the executive officials. I want to get a description of the business and of the departments of the company. That includes the president, and the vice presi- dent? A. And the general officers of the company, yes, sir. Q. The general manager? A. Yes, sir. Do you want me to give the names? Q. Does that include the finance committee? A. I would say not; no, sir. Q. Now give the names, please. A. Mr. Cyrus H. McCormick, president ; Mr. Charles Deer- 4 C. S. Funk, Direct Examination. ing, chairman of tlie board of directors; Mr. Harold F. Mo- Cormick, vice president; Mr. James Deering, vice president; Mr. J. J. Glessner, vice president ; and Mr, W. H. Jones, vice president. Q. And the members of the executive committee 1 A. There is no executive committee, as such, at present. Q Have you had an executive committee in the past? A. There was, at one time. Q. When was that committee abandoned? A. About the fall of 1906, as I recall. Q. What is the committee of which Mr. Charles Deering is at the head? A. Mr. Charles Deering is chairman of the board of di- rectors. Q. Now will you give the names of the heads of those other departments that you mentioned? Just give the name and the department. A. The head of the manufacturing department is B. A. Kennedy. The head of the experimental department is Maur- ice Kane. The head of the patent department is Mr. Charles E. Lord. The head of the purchasing department is Mr. H. B. Utley. I think that covers the principal ones. Q. Will you broadly, or concisely, describe the business of the International IJarvester Company? When I refer to the Harvester Company, you will understand that I refer to the New Jersey Company, and not to the America Company or the selling company unless I so specify. A. The business of the International Harvester Company is the manufacture of harvesting machinery and other imple- ments, and twine. Q. By "other implements" you mean other agricultural implements ? A. Yes, sir. Q. Does not the business include the sale of the things you manufacture ? A. It includes the sales to the America Company — the In- ternational Har^'^ester Company of America — certainly. Q. Please describe the several classes into which agricul- tural implements are divided. A. Do you mean the whole general line, independently of what we manufacture? Q. No. You stated that your company manufacture har- vesting implements. A. Yes. G. S. Funic, Direct Examination. 5 Q. That is one class, is it not? A. Yes. Q. Now name the other classes. A I would call the first class, harvesting implements ; and the second class, tillage implements. Then there is another line of products, which we would hardly term implements; for instance, gasoline engines, and cream separators. Q. Those are for general agricultural use? A. Yes. Q. Then you have seeding implements, do you not? A. Yes. Q. That is another general line? A. That is another line. Q. Then you have threshing machinery; that would form another class, would it not? A. We are a negligible factor in the thresher business. We do not manufacture threshers. We buy a small number from a small outside concern. Q. I am not asking you, in these questions, about the busi- ness of your company. I am trying to get a description of agricultural implements generally; and I will examine you about the things that you make, later on. Taking up the har- vesting implements, so that we can get it on the record: What do you mean by harvesting implements? Do not enu- merate, but define what you mean by them. A. In harvesting machinery I include the machines which cut and bind grass and grain. Q. Will you enumerate the chief harvesting implements, that is, those of which there is the largest sale. A. Grain binders and mowing machines are the two upon which there is the largest sale. Q. And next. A. You refer to the United States, I suppose? Q. I am referring to the United States. A. I should have to do a little calculating on that. Q. Hay rakes is a large article, is it not? A. Yes. Q. Would not that be the next? A, Not in value, possibly in numbers. Along there would come headers, header binders, and reapers. Those are the principal machines. Q. Enumerate what other harvesting implements you can recollect the names of and which your company manufactures, besides those you have named? 6 C. 8. Funk, Direct Examination. A. Com binders (and I should liave mentioned corn bind- ers, by the way, for that is an important line) and corn pick- ers. I think that embodies the principal machines in the harvester line. Q. Now, of these other classes, take tillage implements, — does the Harvester Company manufacture tillage implements'? A. Yes. Q. When it commenced business in August, 1902, or there- abouts, was it manufacturing tillage implements? A. No. Q. Take up the class of seeding machinery, or seeders; does the Harvester Company manufacture seeders? A. Yes, we manufacture drills and seeders in a small way. Q. Did the company manufacture those when it commenced doing business in 1902? A. I think the Deering Company had done something along that line but not very much. Q. Take the articles of general agricultural use, wagons, cream separators, gasoline engines ; does your Company manu- facture those? A. Yes. Q. Did the Harvester Company manufacture those in 1902, when it started doing business? A. It manufactured gasoline engines. The Deering Com- pany had previously been manufacturing engines. Q. To any great extent? A. Not to a large extent. Q. How about threshers? Do you manufacture those? A. No. Q. In 1902 and before the formation of the International Harvester Company of New Jersey, what were the largest companies selling and distributing the harvesting implements that you have named in the United States? Please name them in the order of importance. A. The McCormick Harvesting Machine Company, located at Chicago, Illinois; the Deering Harvester Company of Chi- cago ; the Warder, Bushnell and Glessner Company, of Spring- field, Ohio, and Chicago — Q. That manufactured the Champion machines? A. Yes, sir. The Milwaukee Harvester Company, of Mil- waukee, Wisconsin, which manufactured the Milwaukee line; and the Piano Manufacturing Company, of West Pullman, Chicago, which manufactured the Piano line. C. 8. Funk, Direct Examination. 7 Q. After these that you have named, what was the next largest? A. Among those remaining in the field, do you mean? Q. Yes. A. D. M. Osborne and Company was the next largest. Q. That was located where? A. At Auburn, New York. Q. Did all of these six companies that you have just named join the International Harvester Company of New Jersey? A. They were all bought out by the International Har-- vester Company of New Jersey at one time or another. Q. Do you distribute, as a rule, your products to jobbers? A. You mean the International Harvester Company? Q. Yes. A. It sells its product largely to the International Har- vester Company of America. Q. Then the International Harvester Company of Amer- ica distributes through general agencies located throughout the United States — A. Yes. Q — and sells from these general agencies to the retail dealers scattered throughout the United States? A. Yes. Q. In other words — A. Pardon me. And also to jobbers. Q. To what extent does the America Company sell to job- bers? A. The jobbers cover a large portion of the extreme west- ern trade, — Q. That is, the Pacific coast trade? A. The Pacific coast trade,^;hrough jobbers. Q. Outside of the Pacific coast trade, is any business done by you through jobbers— any appreciable business? A. None that I recall, no. Q. The Harvester Company of America, then, sells to the retail dealer; is that right? A. Yes. Q. And the retail dealer sells to the farmer? A. Yes. Q. Are you familiar with the business of the Interna- tional Harvester Company of America? A. In a general way, yes, sir. Q. Have you been an officer of it? 8 G. 8. Funk, Direct Examination. A. I was general manager of it at one time. Q. When? A. From November, 1906, until early in tlie fall of 1910, as I recall. Q. During those years you were also general manager of the Harvester Company of New Jersey? A. I was. Q. And during that time were the president and vice presi- dents of the New Jersey Company holding corresponding offices with the America Company? A. Yes. Q. During that time did the New Jersey Company own all the stock of the America Company? A. The stockholders of the New Jersey Company owned the stock of the America Company. Mr. Bancroft: The exact fact is shown by the document, is it not? It is not denied? Mr.Grosvenor: I want to lay a basis for the questions that I am asking. Q. Who were the stockholders of the New Jersey Com- pany? A. There is quite a long list of them. Q. Is it not the fact that the stock of the America Com- pany was held by three trustees, in trust for the stockholders of the New Jersey Company? That is what you meant, is it not? A. The stock of the America Company was held in trust for the stockholders of the International Harvester Com- pany as a class. Q. Who held the stock of the America Company during the period you have named, as trustees? A. It was held by three voting trustees: Charles Deer- ing, Cyrus McCormick and George W. Perkins. Q. In what way is the business of the America Company divided in the United States? A. It is divided into general agency territories. Q. How many general agency territories are there? A. Either ninety or ninety-two. Q. And the entire United States is embraced by those ninety-two agencies? A. Except what is included in the Pacific coast jobbing districts. Q. Has the America Company warehouses at these dif- ferent agencies? C. S. FunJc, Direct Examiwation. 9 A. Yes. Q. And the implements and machines are shipped from the factories of the New Jersey Company to these ninety-two or more warehouses scattered throughout the United States? A. A great deal of it, not all. Of course, a great deal of it is shipped direct from the factories of the manufac- turer to the dealer in the town who is selling them. Q. To the retail dealer? A. Yes. Q. To the retail dealer, whose name is furnished to the New Jersey Company hy the America Company! A. Yes, sir. Q. And then implements are shipped and sold from these ninety-two warehouses, direct to the retail dealers? A. Yes. Q. In the territory embraced in each of the general agen- cies, respectively? A. Y€s. Q. Each of these ninety-two agencies has a general agent in charge? A. Yes. Q. Who is in charge of these ninety-two general agencies 1 A. They are divided into sales districts, each of which is in charge of a district manager. Q. How many of those sales districts are there? A. There are five. Q. Please state the names of the five district sales man- agers and the territory which they embrace? A. I may not state these quite accurately because the America Company has made some shifts back and forth, which I have not kept track of. I can give you the correct list. But I will give you my best recollection of it now. I would want to correct it, if I am wrong. Q. You may give your answer, to the best of your recol- lection, and we can have it corrected later if it is in any respect inaccurate. A. Yes. The Central District embraces the territory of Northern Illinois, Northern Indiana, Southern Wisconsin and Eastern Iowa. That is now in charge of J. H. McLane. The Eastern District comprises the states of New York, Penn- sylvania, part of Ohio, Michigan, and is in charge of L. A. Up- ton. The Sotithern District, comprising the territory south of the Ohio Eiver, is in charge of J. M. Eobinson. The South- 10 C. S. Funk, Direct Examination. west District is in charge of B. L. Keese. The Northwest Dis- trict is in charge of T. A. Coleman. Q. Have you given them all? A. I have given them all. Q. Who is at the head of those five district managers] To whom are they responsible I A. To William Browning. Q. What is his title? A. He is vice president of the International Harvester Company of America. Q. How long has he held that office? A. Since October, 1910, as I recall. Q. Who preceded him in the position which he now holds? A. E. C. Haskins. Q. What is Mr. Haskins' duty now? A. He is president of the International Harvester Com- pany of America. Q. When you were general manager of the America Com- pany, what was your duty? A. I had sort of general supervision over the America business. Q. Over these general agents? A. No. In the general office, in Chicago. I did not come in contact with the general agents at all. Q. Below the general agents, who are there? A. The next man is an assistant general agent. That is not the uniform rule; but as a general rule there is an as- sistant general agent in each general agency headquarters. Q. And below them, going outside of the office? A. On the territory? Q. Yes. A. Are blockmen. Q. What is the duty of the Wockman? A. The blockman is a traveler who is assigned to a cer- tain block of territory within the general agency limits. Q. And below the blockman is the retail agent — ^is that right? That is, in each block there are a large number of retail agents? A. Yes. Q. And the blockman sort of supervises or makes himself familiar with their business? A. He transacts the business with them. Q. The general agents report to headquarters, do they not? C. 8. Funk, Direct Examination. 11 A. Yes, sir. Q. By headquarters I mean Chicago. A. Yes. Q. And they receive instructions from Chicago? A. Yes. Q. And they issue, in turn, instructions to their hlockmen and to the retail agents? A. Yes. Q. Has this been the practice since the Harvester Company of New Jersey was formed? A. Yes, sir. Q. And since it entered into a selling arrangement with the America Company, as soon as it commenced business? A. Yes, sir. Q. Before the Harvester Company was formed, was the method of doing business through general agencies and through retail dealers very much like the system at present prevailing? A. Yes. Q. That is to say, the McCormick Company had its gen- eral agencies throughout the country? A. Yes, sir. Q. And your company? A. Yes. Q. And these other companies you have named? A. Yes. Q. They were then in active competition with each other, generally speaking, throughout the country? A. Yes. Q. In the sale of these implements which you have named? A. In the sale of the harvester lines which they were then engaged in selling. Q. From my question I am excluding these lines which were added to the business later. Did you have any part in the negotiations which resulted in the formation of the In- ternational Harvester Company of New Jersey in August, 1902? A. No. Q. You were at that time the general sales manager for the Champion Company? A. Yes, sir. Q. When did you first learn that the company had sold out to the Harvester Company? A. In either the latter part of July or early in August, 12 C. 8. Funk, Direct Excmvination. 1902, when Mr. Olessner, who was our vice president, returned from the East and announced to us that he had sold out. Q. Did you know, prior to that time, that negotiations were pending for the amalgamation of these five compa- nies? i ''■ A. No, I didn't. Q. The first you heard about it was on Mr. Glessner's re- turn, after the contracts of July were signed? A. It was on his return, when he told us that he had sold his business. Q. Who, other than Mr. Glessner, acted for the Champion Company? A. I have since understood that Governor Bushnell, who was the president of the "Warder, Bushnell and Glessner Company, was in the East, at the time, with Mr. Glessner. I have no personal knowledge on the subject. Q. After the Harvester Company of New Jersey was formed were these general agencies of the Champion Company turned over to the New Jersey Company? A. The general agencies, in common with all of the busi- ness, was turned over to the new organization. Q. In territory where each of the five companies had ware- houses or general agencies, after 1903 they were all merged in one; is that right? A. Not entirely. Generally speaking they were; but in a great many instances they were not. Q. What became of those that were not? A. We still have a good many important locations where there is more than one house. Q. After the formation of the New Jersey Company, the products of these five companies were, of course, manufac- tured and sold by the Harvester Company of New Jersey? A, Tes, sir. Q. And after sufficient time had elapsed for proper or- ganization, the products of the five companies were distrib- uted through the same organization? Mr. Bancroft: You do not mean your question as you put it, I am quite sure. You mean the products formerly made by the five companies? Mr. Grosvenor: Yes. Witness : Yes. The last question was read. Witness : I do not know as I understand what you mean by "the same organization." C. 8. Funk, Direct Examination. 13 Q. Well, through the Harvester Company of America, A. Yes. Q. They were all distributed through that company? A. Yes. Q. See if I get this right : They were manufactured by the New Jersey Company — is that right? A. That is right. Q. All sold to the America Company? A. That is right. Q. And distributed by the latter to the retail dealers throughout the country? A. That is right. Q. Before the formation of the New Jersey Company, the products of these several companies were sold under cer- tain trade names, were they not? A. Yes. Q. For instance, |the McCormiok lines; the McCormick binder, the McCormick mower, the McCormick rake? A. Yes, sir. Q. The same way for each of the companies. A. Yes. Q. Except that the Warder, Bushnell and Glessner sold under the name of Champion? A. Champion. Q. And these several machines, or implements, when sold, generally speaking had attached to them in conspicuous places the name; either McCormick, Champion or Deering? A. Yes. Q. The mower would have a large board sign on it, would it not, in_a conspicuous place? A. The mower has no large board sign. Q. Well, some of these implements had? A. Each implement had, on its most conspicuous place, its name or brand. Q. In its most conspicuous place? A. Yes. Q. Now, after 1902 these implements were sold under the same names as prior to 1902; is that right? A, Yes, sir. Q. And the lines or different implements were still known as the McCormick lines, the Deering lines, or the Piano, etc. ? A. Yes. Q. And that is true today? A. Yes. 14 C. 8. Ftmk, Direct Examination. 1 Q. And generally speaking these several lines are sold by different retail dealers'? A. Generally speaking, yes. Q. That is, in the sanie locality one dealer will not, gen- erally speaking, handle both Deering and McCormick lines? A. No. _ Q. But if there are two dealers, one will handle the Deering lines, and sell them under the Deering emblem, and the other dealer will handle the McCormick lines? A. Yes, sir. Q. Generally speaking that is true of the situation through- 2 out the country today? A. Yes, sir. Q. Prior to 1902 there was competition as to the prices at which these binders, mowers, rakes, and other harvesting implements manufactured by these different manufacturers were sold? A. Yes, sir. Q. The list price, if the manufacturer had a list price, was at times departed from? A. Yes. o Q. After 1902, and after the sale of these machines com- menced through one agency, the America Company, the price fixed for each of the different lines was the same? A. Yes. Q. By that, I mean the McCormick binder. Piano, Cham- pion, and the other binders, all sold at the same price? A. Yes. Q. And that statement is true of all these implements of the different lines, so far as the implements were of the same class? A. That is true, except where the condition of the goods ^ makes exceptions necessary. There are a good many excep- tions. Broadly speaking, it is true. Q. That statement applies to the standard type of binder, does it not? A. May I explain what I mean? Q. Certainly. A. If a standard type of binder is in good condition and should be sold at a full price, your statement applies. If they are shopworn — Q. If they are shopworn or there is a defect, then there is a difference, of course. A. Then there is a difference. I probably should say C S. Funk, Direct Examination. 15 that it is entirely possible that variations have been made, in cases, by the America Company to its agents, that I do not know anything about ; because, as I said in the beginning, I do not follow the details of the selling operations ; I am not in close touch with them. Q. Are you a stockholder of the International Company of New Jersey? A. Yes, sir. Q. How long have you been a stockholder? A. Since 1907. Q. Have you attended any of the stockholders' meetings? A. No. Q. Mr. Bancroft thinks that the record is not clear. When you state you are a stockholder, you mean that you are a holder of voting trust certificates? All the certificates of stock in the Harvester Company were deposited in the hands of three trustees in 1902; is that right? A. Yes, sir. Q. Called voting trustees? A. Yes. Q. And then to the actual stockholders so-called voting trust certificates were issued representing their interest in the company; is that right? A. That is right. Q. Now, it was the voting trust certificates which you held? A. Yes. Q. "Who were the three voting trustees? A. Charles Deering, Cyrus McCormick and G-eorge W. Per- kins. Q. Was any of your stock deposited with the J. P. Mor- gan Company, the holders of some of the trust certificates, or did you have possession of it yourself? A. You mean the certificates? Q. Yes, these voting trust certificates. A. I had them. Q. Will you state again, Mr. Funk, — it has passed out of my mind for the moment— what was your first office, or in what capacity did you first serve the New Jersey Company? Was it as assistant to the president? A. As manager of the Security Department. Q. And then subsequently as assistant to the president? A. As assistant to the president, yes, sir. Q. Did you take part in any of the negotiations which 16 C. S. PmiJc, Direct Examination. resulted in subsequent purchases of various companies by the Harvester Company of New Jersey? A. I do not recall that I did. Q. Did you have anything to do with the purchase of the Osborne Company? A. No. Q. Or with the Keystone Company? A. No. Q. Or of the Aultman Miller Company? A. No. Q. Or of the Minnie Harvester Company? A. In the Minnie Harvester purchase I was sent to St. Paul to make an appraisal of the business. Q. When was that? A. I do not remember what year they were purchased, but it was about six months before the purchase was made. I was not in the negotiations for the purchase of the busi- ness. Q. You simply made an appraisal? A. I made an investigation and reported to my directors. Q. WUl you ascertain and refresh your memory through memorandum, or otherwise, the date of your visit to St. Paul? A. Yes, sir, I can tell that. Q. Then let me know subsequently? A. I was there two or three times I think. Q. Your first visit. Did your position with the Har- vester Company enable you to ascertain who were the stock- holders or officers of the Harvester Company who were in- strumental in buying the Osborne Company? A. No, it did not. Q. Do you know what stockholders or officers of the Har- vester Company purchased that company? A. No, I do not; I have no knowledge on that subject. Q. Who would have knowledge on that subject? A. The president of the company would know, Cyrus Mc- Cormick. Q. And he was president at that time? A. Yes. Q. Mr. Funk, can you state what the output of the Cham- pion Company was for the year preceding its going into the new company; that is, for the year 1901? or can you tell me where I could get such information? C. S.Funk, Direct Examination. 17 A. I can get it for you I think. I can give it to you roughly, but I could not state accurately. Q. Will you please ascertain? A. I will. Q. And then we will incorporate it at this place in the record, giving the sale for the year 1901 of binders, mowers, rakes, reapers. Those were your principal lines, were they not? A. Binders, mowers, rakes and reapers were the entire line. Q. Those were the entire line? A. Yes, sir. Q. Can you inform me what the Champion Company re- ceived from the Harvester Company in the aggregate on the sale of its properties? A. I have no personal knowledge on that subject. Q. Who would know that — Mr. Glessner? A. Mr. J. J. Grlessner would know, yes. Q. Do you know how much stock of the Harvester Com- pany of New Jersey was taken by the owners pf the Cham- pion Company by means of the assignment, bills and accounts receivable I A. No, I do not know that. Q. Mr. Glessner would know that, would he? A. I think he would. Q. Are you a director of the company? A. Of the International Harvester Company? Q. Yes. A. No, sir. Q. Of the International Harvester Company of America? A. Yes. Q. How long have you been a director of the latter com- pany? A. Since 1910, as I recall it. Q. As general manager do you have any relations with the finance committee of the Harvester Company? A. No direct relations ; my relations are through the presi- dent. Q. Will you state on the record here the members of the finance committee? A. Mr. George W. Perkins — ■ Q. Is he the chairman? A. He is the chairman; Mr. Cyrus H. MeCormick, Mr. 18 C. 8. Funk, Direct Examination. Charles Deering, Mr. Norman B. Beam, Mr. George F. Baker ; that is my best recollection of it. Q. How many have you given there? A. I have given five, haven't I? Q. Is that am A. That is all I recall. I may be mistaken about those. I have given you my best recollection. I know Mr. McCor- mick and Mr. Deering and Mr. Perkins are, and I think the other two also are. Q. Now, I want to get some figures down here about the crops, and so forth. In certain sections of the country your sales of harvesting implements are very much larger than in, the others? A. Yes. Q. That is, in the great wheat-producing and corn-produc- ing states? A. Yes. Q. In other states of course your sales of harvesting im- plements are very small? A. Yes. Q. That being due to the fact that the amount of grain raised in those states is small? A. Yes. Q. Now, what are the great crops? Just enumerate them, please? A. The principal crops? Q. First, you have the cereals and then you have the hay crop ? A. The principal crops in this country are wheat, oats, rye, barley, corn, hay. Q. In harvesting the wheat, oats, barley and rye crops you use the binder? A. Yes, sir. Q. In harvesting the hay crop you use the mower, more generally speaking? Q. Well, we use the mower to cut the hay. Then there is a line of other implements that come along there, that I should have included in giving you the different classifications of the implement line. There is a line of what we term hay tools, made up of the tools manufactured for the pur- pose of gathering the hay and for stacking it and for putting it in the barn and for handling it. The mower only cuts the grass and leaves it lie. C. S. Funk, Direct Examination. 19 Q. Will you enumerate those? I thiuk you gave most of them before, but just enumerate the hay tools, please 1 A. There are mowers — ^well, a mower is either a hay tool or a harvester; it is termed both; hay rakes, sweep rake, side deKvery rakes, hay stackers, hay loaders, hay tedders. Those are the principal ones. Q. Hay presses? A. Yes, hay presses. Q. Now you make all of those? A. Yes. Q. In harvesting the other crops, the wheat and the rye and the barley and the oats, enumerate the implements that are used there? A. Do you want to start from the preparation of the ground? Q. No, in harvesting, I said? A. The first is the grain biader, which cuts the crop ; then there is the threshing machine which threshes the crop. That is about all there is to it, in grains. Q. Now, for the corn crop, what are the implements used in harvesting? A. The principal implement is the corn binder; then there is a corn picker and a shocker, and a husker and shredder. I possibly should explain there that the term "com binders" embraces several varieties of implements. The regular corn binder is a machine which binds the com just as the binder binds wheat, but there are several varieties of corn binders; there is one that is operated by hand and another one that is a sled, called a corn cutter, sometimes termed a binder. Q. Binders are not used as generally in harvesting corn crops as they are used in harvesting the wheat crops? A. By no means. Q. But they are used universally in harvesting the wheat and the oats and barley and rye crops, generally speaking? A. Grenerally speaking. Q. Please enumerate the states in which you sell most of your binders. A. The principal trade is in the northwestern and south- western states. Do you want me to enumerate the states? Q. Yes; just the principal states. A. North Dakota, South Dakota, Minnesota, Iowa, Ne- braska; Missouri, Kansas, Illinois, Wisconsin, Ohio, Michigan and Indiana. Mr. Bancroft: Why do you leave out poor Oklahoma? 20 C. 8. Funk, Direct Examination. Witness: Well, Oklahoma, yes. Mr. Bancroft: And Texas. Witness: And Texas — sometimes. Q. Now enumerate the states in which the sale of your corn harvesting implements is the largest. A. Iowa, Illinois, Minnesota, Wisconsin, Nebraska, Mis- souri, Kansas, Oklahoma, and the two Dakotas to a less ex- tent. Q Please also enumerate the states in which the sale is largest of the tools used in harvesting hay crops, the tools you have named above. A. Minnesota, North Dakota, South Dakota, Wisconsin, Iowa, Nebraska, Missouri, Kansas, Oklaboma, Illinois, Indi- ana, Michigan, Ohio, some parts of Pennsylvania, and parts of Kentucky. Q. ' The hay crop, generally speaking, is more broadly dis- tributed through the United States than the cereal crop? A. Yes. ■Q. Did you have anything to do, Mr. Funk, with preparing any of the figures given in the answer of the Harvester Com- pany of New Jersey in this case? A. I prepared a good many, or had them prepared under my supervision, which I submitted to the counsel. I may not know at the moment just what particular ones we used. Q. Will you look at pages 54 and 55. Did you have a share in preparing those figures? A. Yes. Q. Will you prepare for me an itemized statement of the names of the different manufacturers who are broadly classi- fied on page 55? A. Yes, sir. Q. Who had charge of the foreign business of your com- pany? A. The International Harvester Company of America, its foreign sales department is in charge of C. H. Haney. Q. Are all the machines which you manufacture for ex- port sold to the Harvester Company of America? A. I do not think they are. I am not clear on that. I do not follow the details closely. Q. In large part they are sold, are they, to the Harvester Company of America? A. There are a good many foreign corporations, such as the German, French and Eussian companies. C. S. Funk, Direct ExamiwcAiort. 21 Q. And some of the products manufactured are sold di- rectly to those companies; is that right! A. It is my impression they are, but I could not say defi- nitely. Q. That may be ascertained from contracts? A. Oh, yes. Q. Who has charge of the twine end of your business? A. H. L. Daniels is the manager of what we' term the fiber department. Q. How long has he had charge of that department? A. Since the International Harvester Company was in- corporated, since the beginning. Q. With what company was he connected prior to 1902? A. The McCormick. Q. Did he have the same duties with them? A. Yes. Q. At which of your factories do you make binder twine? A. At the McCormick works, Deering works, and at the Osborne works, Auburn, New York. Q. Your twine is largely made from sisal, isn't it? A. Yes. We also manufacture twine at St. Paul; that is a small mill. Q. The sisal is imported from Yucatan? A. Yes. Q. And who has charge of the purchases and importations from Yucatan? A. Mr. Daniels. Q. Was the Champion Company, with which you were con- nected prior to 1902, doing a foreign business? A. Very small; very little. Q. Not to the extent that a number of the other companies in the United States were doing a foreign business? A. Practically nothing. Q. And which were the companies iii the United 'States doing a large foreign business at, that time? A. The McCormick and the Deering Companies did most; the Milwaukee Harvester Company did a very little; the Piano Company did a little more, but the Piano business was not large. Q. How about the Osborne Company? A. The Osborne Company probably did — this is just a guess, but I should say they probably did a little more than the Piano. Q. Abroad? 22 C. S. Funk, Direct Examination. A. Abroad. Q. Have I asked you to name the Harvester companies doing business in tbe United States in 1902 wMcb did not go into the Harvester Company of New Jersey? If not, will you enumerate themf A. No, you did not ask me. In 19021 Q. Yes. A. There was the Johnson Harvester Company. Q. Located where! A. At Batavia, New York; the Walter A. Wood Mowing & Reaping Machine Company, at Hoosick Falls, New York; Adriance, Piatt & Co., Poughkeepsie, New York; the Acme Harvester Company, at Peoria, Illinois. There may have been one or two others ; I do not recall them at the moment. You said in 1902? Q. Yes. Mr. Funk, do you keep separate records of the sales of your different lines — that is, the aggregate amount of sales per year of the McCormick binder, binders sold under that name; the Deering binder, the Champion binders, and so forth? A. I have not seen for several years records made up in just that way. Q. Did you for a time keep records of that sort? A. I think there have been. Q. You don't know whether they keep them today? A. No, sir, I do not. Q. Who would be informed as to that? A. Mr. Haskins, the president of the International Har- vester Company of America would know. Q. Have you, at any time in your experience with the Harvester Company of New Jersey, been in charge or the head of all the general agents in the country? I refer, of course, to the general agents of the Harvester Company of America ? A. No. Q. Do you know the character of the reports they make to the home office? A. No, I do not. Q. Or the character of instruction they receive from the home office? A. Not except in a very general way. Q. And who would know about that ? A. Mr. Haskins. Q. He is now the president of the America Company? C. S. Funk, Direct Examination. 23 A. Yes, sir. Q. Wlien you were general manager of the America Com- pany was not that a part of your business? A. No. Q. What officer connected with the Harvester Company of New Jersey has his duty to follow the sales of the machines of the company throughout the country; in other words, to ascertain the growth or the decrease of the business? A. There is no officer whose duty it is to do that. Q. You have no one in charge of the sales organization then? A. The International Harvester Company sells its prod- ucts to the International Harvester Company of America, and that handles the details of the selling. Q. Now, take that Harvester Company of Ainerica: what is that but the selling organization of the Harvester Com- pany of New Jersey? A. That is a separate corporation, with its own officers and managers. Q. How long has it had its own officers? A. Since 19i0 ; I think it was early in 1910. Q. Then for eight years it had the same officers as the New Jersey Company? A. Yes. Q. Where are its offices ? A. Its offices are on the eighth and ninth floors of the Harvester Building. Q. In Chicago? A. Harrison Street and Michigan Avenue, Chicago. Q. Where are the offices of the New Jersey Company? A. The executive offices are on the fourteenth floor of the same building; the other departments are on different floors. Q. The same building? A. The same building. Q. And has the America Company always been as neigh- borly to the other as that? A. Always. Q. Has the America Company ever paid any dividends? A. I think not. Q. Does it have any business other than the sale of the products of the New Jersey Company? A. It sells outside goods not manufactured by the Ne-w Jersey Company. Q. To what extent? 24 C. S. Funic, Direct Examination. A. I could not say what percentage it wonld be. Q. It is a very small percentage, isn't it, of its total busi- ness? A. It is not large. Q. It is not more than one per cent., if that, is HI A. I would have to figure on that; I could not say off- hand. Q. When you were general manager of the America Com- pany was it more than one per cent.? A. I never figured the per cent. ; I could not say. Q. And the other things that it does sell are agricultural implements, are they not? A. Yes. Q. Do you recall any that it sells which it buys from others ? A. It sells Belle City threshers manufactured at Racine, Wisconsin; it sells twine not manufactured by the Harvester Company; and its different agents in different parts of the country have contracts with local manufacturers who manu- facture goods particularly applicable to local conditions. There is a good deal of that ; as to how much I do not know. Q. That is, agricultural -goods? A. Yes. Q. You say, then, that the America Company you would not consider the selling organization of the New Jersey Com- pany? A. No. There are two corporations, each conducting its own business, the New Jersey corporation manufacturing goods and the America corporation jobbing them or selling them, as the case may be. Q. Has there been no officer of the New Jersey Company since the fall of 1910 who has followed the sales of the prod- ucts of the New Jersey Company throughout the country? A. No, sir. Q. Do you know the number of implement dealers, the aggregate number, in the United States who are either agents or representatives or sell the goods of the Harvester Com- pany of New Jersey? A. In 1910 it was about 40,000; the number is less now. Q. How many were there in 1902, when the Harvester Company commenced operations? A. Why, I would say that counting what we term sub- contracts and all, the old companies, there must have been forty-five or fifty thousand. C. 8. Funic, Direct Examination. 25 Q. Did you state you were a director at one time of tlie 1 America Company? A. I stated tliat I now am. Q. Oh, you now are. Where are the meetings of the di- rectors held? A. In their oflfices. Q. Where are the meetings of the directors of the New Jersey Company held? A. In the directors ' room in the Harvester Company Build- ing in Chicago and in New York and other places, wherever they may be called. Q. Do they have regular meetings in Chicago and also 2 regular meetings in New York? A. Yes, they have had. Q. How often in Chicago? A. Every two weeks, as I recall. Q. In Chicago? A. No, about every month. Q. And then in New York how often? A. The practice for a long time was to alternate them between New York and Chicago, for the convenience of the directors. 3 Q. WUl you enumerate the chief lines of agricultural im- plements which the Harvester Company have commenced manufacturing since 1902? By that I mean the lines which the Harvester Company has added to its older lines. Q. Gas engines, in a large way; cream separators, farm wagons, spreaders. Q. You mean manure spreaders? A. Manure spreaders ; hay pressers. Those are the prin- cipal lines. Q. How about harrows? A. Harrows are a tillage implement line. The Harvester 4 Company went into that when it bought the Osborne Com- pany. Q. In 1903? A. In 1903; the Osborne Company had a line of that kind. Q. And cultivators? A. Yes, cultivators. Q. That is an added line? A. Yes, that is an added line. Q. Large line? A. Yes. 26 C. 8. Funk, Direct Examination. Q. Tedders, hay loaders and hay stackers — are those new lines? A. Yes. And I should have added there, also, auto wagons. Q. When the Harvester Company of America commenced selling goods of the New Jersey Company, in 1902, it had as a part of its contracts with retail agents, a clause preventing those agents from handling the harvesting implements of other manufacturers; is that right? A. Yes. Q. That clause was retained several years in the agency contracts of the Harvester Company? A. Yes. Q. And during the same period there was a clause in the contract providing for the attachment to the contract of a schedule of prices, and that schedule of prices fixed the prices at which the retail agent was to sell the binders which he received, and the other harvesting implements? A. I don't know whether that was the general practice. That was done. As to whether that was the general prac- tice I could not say. Q. There was such a provision in a number of the con- tracts ? A. Yes: Q. For a number of years? A. Yes. Q. When did you first learn that the control of the Os- borne Company had been secured by the Harvester Company of New Jersey or by its stockholders? A. I could not say now. I have not any time in my mind when T knew it. I could not say whether I was told ; or, if so, by whom, or anything about it. I knew that that purchase had been made after it was made but I have no recollection now as to the time when I knew. Q. You knew that it was purchased or the control of it had been acquired. This fact came to your knowledge some time before it was made public? A. I do not recall that now. I am inclined to think it did. I would not say definitely. I had nothing to do with the matter, and have no way of fixing any definite time on it. Q. Who would know? A. I do not know who would know ; I suppose the president of the company would know. Q. Did you know that the Osborne Company advertised C. 8. Funic, Direct Examination. 27 for two years after it was acquired by your company, that it was an independent! A. Colonel Metcalf at bne time told me that lie was ad- vertising in that way. Q. He made the statement to you before it was generally known in the trade that the Osborne Company had sold out? A. Yes. Q.' Who is Mr. Metcalf? A. He was the general manager and, I think, vice presi- dent of the D. M. Osborne Company. Q. When they sold out ? A. Yes. Q. Is he at present connected with your company? A. No. He is the president of a rope company at Auburn, New York. I think he is a stockholder in our company, and has a very friendly interest in it. Q. Did he enter the service of your company when the Osborne Company sold out? A. I do not think he ever was in the service of our com- pany, but I could not say definitely about that. That was a matter that I would not he consulted about. Q. You refer to Edwin G. Metcalf? A. Edwin D. Q. These warehouses located throughout the United States, to which you have referred, are owned by the America Com- pany? A. Yes, sir. Q. And the America Company bought them from the New Jersey Company? A. I do not know how the transfers were made. Q. You do not know how that was done? A. No, sir. Q. You do not know what the America 'Company paid, then, for acquiring them? A. No, I have no knowledge on that subject. Q. Did you have anything to do with the acquisition by the Harvester Company of New Jersey of any of these companies which were purchased after 1902? A. Yes. Q. Which ones? A. I conducted most of the negotiations with the Weber Wagon Company. Q. When did you buy that company? A. I think that was in 1908. 28 C. 8. Funic, Direct Eooamination. Q. Did you purchase any of the others for the New Jersey Company? A. Yes, I conducted the negotiations for the Kemp spreader business. Q. Any of the others ? A. I conducted the negotiations with the Kouns Manufac^ turing Company for some tractors. Q. Do you mean simply to buy tractors or to buy the plant? A. We bought a certain number of tractors from them, with a shop right which we di-d not exercise. Q. Do you recall any of the others? A. I do not recall any at the moment; there may have been. Q. You did not have any part in the purchasing of any of those harvesting plants? A. Only in my appraisal of the Minnie Harvester. Q. To which you have already testified? A. Yes. (A recess was here taken until two o'clock P. M., at which time the witness was recalled and his direct exam- ination resumed as follows, by Mr. G-rosvenor:) Q. The International Flax TAvine is a corporation of which the Harvester Company owns all the stock, is it not? A. Yes, sir. ' Q. What officer or official of the Harvester Company has charge of the affairs of the' Twine Company? A. It is under the general supervision of B. A. Kennedy, the head of the manufacturing department. Q. And where are the offices of the Flax Twine located? A. Their home office is in St. Paul, I think. Q. And they have offices in the Harvester Building in Chicago? A. The men that are in conti;ol of it have offices there. Whether the corporation has an office there or not — Q. You mean Mr. Kennedy and — A. And his assistants. Q. The Wisconsin Steel Company is another company of which the Harvester Company has all the stock? A. Yes, sir. Q. It holds all the stock? A. Yes, sir. Q. Who in the Harvester Company has supervision of the affairs of that company? C. S. Funic, Direct Examination. 29 A. H. F. Perkins is president of that company. Q. President of the Wisconsin Steel Company? A. President of the Wisconsin Steel Company. Q. Is he also an official of the Harvester Company? A. He is a division manager of the Harvester Company. Q. What division? A. He is division manager over the fiber and purchasing departments. Q. Does he rank ahead of Mr. Daniels? A. Yes. Q. The Wisconsin Steel Company makes the steel from which your products, so far as you need steel, are supplied? A. A good substantial portion of it. Q. Has that company offices in the Harvester Building? A. Yes, sir. Q. And the Wisconsin Lumber Company is another com- pany of which the Harvester Company owns all the stock? A. It is. Q. What officer or official of the Harvester Company has supervision of the Wisconsin Lumber Company? A. H. F. Perkins is president of the Wisconsin Lumber Company. Q. The same Mr. Perkins? A. The same Mr. Perkins. Q. Does the Wisconsin Lumber Company also have offices in the Harvester Building? A. It does. Q. The Illinois Northern Eailway Company is a railway company of which the Harvester Company owns all the stock? A. Yes. Q. And that company has railroad tracks in the city of Chicago ? A. Yes. Q. And elsewhere? A. I don't know whether the trackage is all within the city limits or not. Q. It is within the state of Illinois? A. Yes, sir. Q. And does it have offices in the Harvester Building? A. Yes. Q. And what officer of the Harvester Company has super- vision over its affairs? A. F. B. Montgomery is president of the Illinois North- ern Eailroad. 30 C. 8. Funk, Direct Examination. Q. Is he an officer of the Harvester Company'? A. He is the head of the traffic department of the Harves- ter Company. Q. And he has offices, I suppose, in the Harvester Build- ing? A. Yes, sir. Q. And the same is true of the Chicago, West Pullman & Southern Railroad Company? A. It is. Q. Is Mr. Montgomery president of that company also! A. He is. ,Q. Now you said Mr. Daniels is the head of the sisal busi- ness, but under Mr. Kennedy? A. No, under Mr. Perkins. Q. Under Mr. Perkins, yes. Now who has charge of the importation of manila? You import a lot of manila fiber, do you not? A. That is in the same fiber department. Q. That is used also in making binder twine? A. Yes; to a much lesser extent. Q. Is that not as good as sisal? A. It is better. Q. More expensive? A. Higher priced. Q. It is used for high class ropes ? A. Yes. A very large portion of the manila imported into this country goes into manila rope, for use on ships, and so forth. Q. Do you know Avhether you import sisal and sell it to others, or use it on your own account? A. We have in times past made small sales to others, but practically speaking we consume all that we import. Q. Now, you said that the Harvester Company of America is buying some goods from others than the Harvester Com- pany of New Jersey; for instance, you said threshers from Belle City? A. The Belle City Thresher Company. Q. And seeding machines? Does it buy any of those? A. They have a jobbing contract with the American Seed- ing Machine Company for seeders. Q. Buying the output of the plant? A. Yes. Q. The entire output of one plant? C. S. Punk, Direct Examination, 31 A. I do not tliink it calls for the entire output, but it is practically tlie output of their plant at Richmond, Indiana. Q. Does it buy any tractors? A. No, sir. Q. Or any plows? A. Yes, it buys plows from two concerns. Practically all the plows it purchases are sold in Canada. Q. How about the seeding machines that it buys? Are those sold throughout the United States? A. Yes, sir. Q. From what two companies does it buy these plows? A. The Oliver Plow Company— well, it would buy some engine plows from the Oliver Plow Company in this coun- try, and it has a contract with the Parlin & Orendorff Com- pany of Canton, Illinois. Q. Now, who negotiates these contracts for the Harvester Company of America? A. I think Mr. Haskins and Mr. Browning, as a rule. Q. Under the direction and assistance and cooperation of the officers of the Harvester Company of New Jersey? A. As a rule not. Q. Do they have the responsibility to incur such obliga- tions? A. Yes. Q. Did you have anything to do with the negotiating of any of these purchases I have referred to? A. No, sir. Q. Now, who fixes the prices at which the International Harvester Company of New Jersey sells its implements and output to the International Harvester Company of America? A. That is a matter of negotiation between the men of the two corporations. Q. Between the officers of the two corporations? A. Well, the men in the Harvester Company who do the negotiating are not officers. The men in the America Com- j)any who do the negotiating are officers. Q. Who are the men in the Harvester Company of New Jersey who have to do with the sales to the America Com- pany? A. B. A. Kennedy, the head of the manufacturing depart- ment, and Mr. Alex Legge, the assistant general manager, frequently — not always. Q. When you were general manager of the America Com- pany, which position you held for some years, as you testis 32 C. 8. Funk, Direct Eooamination. fied this morning, did you have anything to do with that on behalf of either company? A. I made no negotiations for either company, although at times, when there were disagreements, or difficulties in get- ting together, I went over the figures. Q. How do you mean you went over them, as a superior, to direct what should be done? A. To look them over to get an impression of how the prices and how the negotiations were going, and as to whether the prices were fair to both parties ; sort of, possibly, an um- pire. Q. And that is the practice, is it not ; that is, if the Amer- ica Company thinks it is paying too much, some one in the New Jersey Company acts as an umpire to decide what ad- justment shall be made? A. No; as a rule they get together reasonably well. The prices of all those implements are so well established in the trade, both the retail and the manufacturing prices, that it is a matter of rather common knowledge on both sides. Q. Then, the intention is that the New Jersey Company, the manufacturing company, shall sell to the America Com- pany at practically the same prices as those at which the America Company re-sells? A. No. Q. Well, the America Company does not make any profit, does it? A. It has not up to this time, on account of the very heavy selling expenses and advertising expenses and numer- ous other expenses that they have incurred. Q. Then, the intention is that the difference in prices from one company to the other and then from the America Company to the retailer shall be just sufficient to pay the cost of the selling organization, that is, of the distribution and such other expenses as the America Company may in- cur? A. I do not recall that there has ever been any intention expressed in that matiicr. Q. As a matter of fact, when you act as umpire, do you endeavor to arrive at such a price that it will just about make the America Company come out even? A. My idea has been to see to it that the America Com- pany should buy from the Harvester Company its goods at about the same prices, as nearly as we could determine, that they would be able to buy from other people for. C. S. Funk, Cross-Examination. 33 Q. What were the functions of the executive committee 1 while you had that committee? A. I was not a member. Mr. Bancroft: Why not get that from the by-laws ? Mr.' Grosvenor : They were as defined in the by-laws, I sup- pose. I will put those in later. Q. Now, who takes the place of the executive committee — the executive officers'? A. Yes, the general manager. Cross-Examination by Mr. Bancroft. Q. Has there been and is there more than one form of contract between the America Company and the retail dealers with respect to different lines of goods? A. Yes. Q. What were they? A. There was a sales form and a commission form. Q. Under which form were and are the Harvester lines put out by the America Company? A. Commission form generally. Q. Has there ever been in the sales contracts of the Amer- 3 ica Company this exclusive clause that was referred to — ^not to handle the goods of any other company? A. No, sir. Q. That occurred only in the commission contracts? A. Yes. Q. That is, the harvester lines were put out by the Amer- ica Company to local dealers, to be paid for when they were sold, to be the property of the America Company until sold? A. Yes. Q. Was that the custom of carrying on the business by all harvester companies prior to 1902? 4 A. That was the universal custom. Q. And was that clause — the exclusive agency clause — in those contracts generally, in those commission agency con- tracts, used by all the harvester companies prior to 1902? A. Yes, sir. Q. Was the provision as to the local dealer selling goods at a price to be named by the America Company in any except the commission contract, at any time? A. No. Q. Was that provision a universal one prior to 1902 in the Harvester trade, or a general one? 34 C. S. Funk, Cross-Examination. A. On the commission contracts? Q. Yes, on the commission contracts? A. It was practically universal. Q. How extensive in 1902 was the business in the har- vester lines of the Osborne Company? Was that general throughout the United States, or less general than the others, and to what extent? A. I would not caU it general throughout the United States. It was largely in eastern states tributary to the Osborne factory in New York. Q. You mean adjacent to the factory? A. Adjacent to the factory. They also had considerable trade in localities that were more or less favorable to their lines, elsewhere. Q. You spoke this morning about the America Company giving a uniform price on certain harvester lines. Or on lines that it sold, disposed of? A. Yes, sir. Q. That uniform price was the price at which the gen- eral agents were to sell the goods? A. Yes. Q. Prior to 1902 what was the practice with the old com- panies as to having a uniform price throughout the United States on their respective goods? A. They had no uniform prices. Q. I mean the prices to the local dealer? A. Oh! Well, they had a uniform price, although it was deviated from in some cases. Q. Did they make discriminatory prices in localities? A. Yes. Q. The old companies? A. Yes, sir. Q. Did thpy in localities make discriminatory prices be- tween certain classes of farmers or farm customers, — in cer- tain portions of the country? A. Why, I do not recall but one district where there was any discrimination between classes of farmers; I recall that there was one. Q. In one part of the country. Eeferring to the stock of the International Harvester Company, you said you had the voting trust certificates. Have you now the stock itself? A. I have. Q. The certificates for the stock? A. Yes, sir. C. S. Funk, Cross-Examination. 35 Q. When was the exchange of the voting trust certificates for the stock itself made, in your case? A. Within the last forty-five days. Q. Do you know whether that has been general? A. I have the impression that it has. Q. Have you looked up the question as to when your first trip was to St. Paul to make the appraisal of the Minnie? Are you able to answer that? A. No, I have not been to the office, but I have a memo- randum of it. Q. Can you prepare or have prepared the sales of the har- vesting machines by the America Company by states, or are those records kept by the general agencies? A. The practice of the America Company used to be to keep their statistics of sales by general agencies, and the general agencies are not co-extensive with state lines; that is, our general agency at St. Joe, Missouri, for instance, has eleven counties in Missouri and nine or ten in Kansas. So their statistics, unless they have changed the method of keep- ing them, would show that general agency as a whole. Q. Speaking generally, are the general agencies governed by state or county lines, or by centers of population and railroad facilities, in the location of the general agency? A. Centers of location and railroad facilities, taking the crop conditions and the volume of business into consideration always. Q. Speaking generally, do those general agencies as a rule inplude parts of one stated A. We have ninety-two general agencies. I would have to figure that over. I would say at a rough estimate pos- sibly — Q. Well, suppose you make it up instead of guessing? A. All right; I will. Q. Will you look it up and give the territory of the gen- eral agencies, so that it will show what the territory of each general agency is? A. Do you want a map? Q. That would be the best way. A. All right ; I will prepare a map for you. Q, You said, this morning, that you negotiated for the purchase of the Weber wagon plant, as you thought, in 1908, Do you know whether that is the correct date or not? A. It was before 1908. It was before I became general 36 C. 8. Funk, Cross-Examination. manager in 1906. It must have been in tlie winter of 1905 or the spring of 1906. Q. Will you look it up and make sure about the date? A. I will. Q. And the same in regard to the purchase of the Kemp spreaders; I don't know whether you gave the date or not. A. Yes. Q. In addition to the list that you gave this morning, of new lines which the International of New Jersey entered upon the manufacture of, was not also tractors one of the new lines? A. Yes. Q. And farm trucks? A. Yes. Q. Will you prepare and present to be filed with your evi- dence a list of the so-called new lines — lines that were devel- oped or purchased by the International Harvester Company for manufacture and were manufactured by it after 1902, that were not manufactured by it before 1903? A. I will. Q. You do not undertake to give a complete list of articles purchased by the International of America Company from other manufacturers than the International Harvester Com- pany? A. No. Q. Who would know all of those items and be able to give a complete list of its purchases from other manufacturers than the International Harvester Company? A. The officers of the America Company — Mr. Haskins or Mr. Browning. Q. You said, a moment ago, in answer to a question, that the International of America had made no profits. Do you mean that it had made no profits whatever, or that it had paid no dividends? Have you the figures as to its profits in mind? A. No; I thought I was making a general statement — that they had not made substantial profits. I was not asked about dividends. Q. Were you not asked about dividends? A. Was I? Q. That no dividends had been paid? A. I thought I was not. Very well. Q. As a matter of fact, no dividends have been paid? A. No dividends were paid. C. 8. Funic, Be-direct Examination. 37 Re-direct Examination by Mr. Grosvenor. Q. I understand that the business through the retail agent is done by two kinds of contracts ; what you call the commis- sion agency contract, and the sales contract? A. Yes. Q. Concisely speaking, the commission agency contract re- tains title in the Harvester Company of America? A. Yes. Q. Whereas in the sales contract you sell outright to the agent? , A. Yes, sir. Q. What implements did the America Company sell, be- ginning in 1903, under the commission agency contract? A. The harvester lines. Q. That is, the binders, mowers, rakes? A. The binders, mowers, rakes, reapers. Q. Is that true today? A. Yes, generally. There are cases where harvester lines are sold under a sales contract, but those are the exceptions. Q. The other kind of contract — the sales contract, was used in the distribution of the new lines? A. Yes. Q. . Then its use was not very extensive the first few years, was it? A. Its use grew as the lines grew. Q. As th« new lines grew? A. Yes. Q. This Mr. Haskins that you speak of is the president of the International Company of America? A. Yes, sir. Q. On this question of general agency, you stated to Mr, Bancroft that you would prepare a map as he suggested. In some states the America Company has no agency; is that not true? A. That is true in some of the extreme eastern states and some of the extreme western states. Q. For instance in Maine you have no agency? A. No. Q. The farmers in Maine are supplied through the gen- eral agency in Massachusetts, are they not? A. In iBoston. Q. And there is none in New Jersey. New Jersey would be supplied through the general agency in New York? 38 W. H. Jones, Direct Examination. A. Either Albany or Baltimore. Q. Or Harrisburg? I suppose that is too far. A. Albany or Baltimore, I think. Q. It is true, is it not, that the farmers in all these states which do not have general agencies are supplied by the near- est agency? A. Yes, sir. Re-Cross Examination by Mr. Bancroft. Q. There is no general agent, is there, and has been, none, in Texas or Arkansas, since 1907? A. No. Q. And there are some other southern states in which there is no general agency? Well, your map will answer the question. A. The map will show. I could recall, if I should take time enough. Q. But the map will be the best evidence. A. Yes. There are others. It is stipulated by counsel for the respective parties that the signature of the witness Clarence S. Funk to the fore- going report of his testimony is hereby waived. It is also stipulated that the signatures of all future witnesses shall be waived except as may be otherwise specially agreed. WILLIAM H. JONES appeared in response to a subpoena issued on behalf of the petitioner, and being duly sworn as a witness, testified as follows : Direct Examination by Mr. Grosvenor. Q. In the year 1902 you were the president of the Piano Manufacturing Company, were you not? A. Yes, sir. Q. That company was engaged in the business of manu- facturing and selling harvesting implements? A. Yes, sir. Q. Where was it located? A. At first, at Piano ; afterwards at West Pullman. Q. What implements did you make? A. We made binders and mowers, to start with ; and head- ers, corn shredders and buskers, and hay rakes. Q. Did you make anything besides harvesting implements? W. H. Jones, Direct Examination. 39 A. No, nothing, except those for husking corn, of course. Q. Did you sell these implements generally throughout the United States? A. Yes, mostly. Q. Some abroad? A. Yes. There was a good many states where we didn't sell at all. Q. Those were states which did not have much wheat or corn? A. No ; we did not care to spread out more, that is another reason. Q. What was the capitalization of your company? A. Five hundred thousand ($500,000). Q. In 1902? A. Yes, sir. Q. Who were the principal competitors of your company, in that year? A. Deering and McCormick. Q. What others? A. The Champion; Warder, Bushnell and Grlessner, and the Milwaukee, were the principal ones ; that is, in the west- ern trade. We did not sell in the east, you know, but a little. Q. You sold through retail dealers? You sold your im- plements through the retail dealer? A. Yes, sir. Q. Not through jobbers? A. No, not in this country, except in far western states. Q. Was there competition in the trade? A. I guess there was. Q. State whether or not in July, 1902, you entered into a contract with W. C. Lane to sell out the business of the Piano Company? A. You want me to state? Q. State whether or not you did? A. Yes, we did; of course. Q. Your understanding being that Lane was to sell to a new company to be organized? A. Yes. I supposed it was so, of course, on the start. When the thing ended up, I knew it was so. K^. How did those negotiations commence? A. About the 1st of July I received a telegram or a letter — I am not sure which, from Judge Gary, from New York. Q. Judge Elbert H. Gary? 40 W. H. Jones, Direct Eoxi!m,ination. A. Yes. He wanted me to come down there. I went. And he told me that he wanted to introduce me to G. W. Perkins. Q. George W. Perkins? A. George W. Perkins, yes. And he took me and intro- duced me to him. Q. Where? A. In Perkins' office ; in J. P. Morgan and Company's office, rather. Q. What happened at the interview? A. He wanted to know if we were willing to sell out. Q. Who — Mr. Perkins? A. Mr. Perkins, yes. Q. Sell out to whom? A. Sell out to somebody — I don't know who. I did not know at the time, because it had not been explained to me at that time. Q. WTiat did you say? A. I said I was willing to do it on any fair basis. Q. What else was said? A. It happened over ten years ago. I could not tell you in detail. Q. Did any of the other officers of your company go with you? A. Yes, there was a man named Llewellyn went with me. Q. What was his name? A. Silas Llewellyn. Q. Is he living? A. Yes, he is living. Q. Where? A. He lives in Evanston. Q. Did anybody else go with you? A. No. Q. Did Mr. Llewellyn go to Mr. Perkins' office with you? A. He went with me, yes, sir. Q. Did anything else happen besides what you have de- scribed, at that interview? A. After we sold? Q. No; after you told Mr. Perkins that you were willing to sell out on a fair basis, was anything else said? A. No, not at that time, that I remember of. Q. Did you then go back to your factory? Did you then return to your plant? A. No, I stayed in New York for a while. Q. Did you see Mr. Perkins again? W. H. Jones, Direct Examination. 41 A. Yes, sir. Q. About the same matter? A. Yes, about the same matter. Q. About the details of the sale? A. No. He was asking more about the business, what we were doing, etc., at first. Q. How much business you were doing? A. Yes. Q. Did ,you stay in New York until you signed the con- tract on July 28? A. I am not sure, but I think I did. Q. You stayed there nearly a month then? Q. I think I went there on the 5th of July, and I stayed there, I think, until the contract was closed on the 28th. Q. How many times did you see Mr. Perkins ? A. I couldn't tell you, fifteen times probably. Q. Did he come up to your hotel? A. No, he did not. I went there. Q. When you finally sold, you took stock in the new com- pany? A. Yes, sir. Q. That was the only consideration that you received? A. That is aU. Q. Was it suggested, at the start, that you should take stock in the new company? A. I could not answer that question, I do not remember, honestly. Q. That was agreed, some time before — A. No, I do not think it was mentioned to start with; but at the last, of course, he told me. Q. Now, you knew that other companies were also nego- tiating with him? A. No, I did not see any, except I saw Mr. Grlessner a day or two before the contract was signed. Q. I did not ask you if you s.aw any of the others. I said, did you know that Mr. Perkins was trying to get the business of other companies? ' A. I never saw them at all when I was there, until the day I signed the contract, except Mr. Glessner. Q. Did you know that Mr. Perkins was trying to get other companies ? A. Yes. Q. You knew that? 42 W. H. Jones, Direct Examination. A. Yes. I did not at first know who they were, at all. At the last, of course, I did. Q. Well, you knew it some time before you signed the con- tract? A. Yes, sir. Q. iSome days before? A. Yes. I am not sure how many days, but it was not long, anyhow. Q. When you signed the contract, on July 28, where was it? A. I could not tell you. Q. Was it at your hotel? A. No. Q. It was down town? A. No, I think it was at Cravath's office. I am not sure. Q. At a lawyer's office? A. Yes. I am not sure about that, but that is my im- pression. Q. Who else was there? A. Cyrus McCormick was there, Charles Deering, J. J. Glessner, and Lane. Q. W. C. Lane? A. Yes, sir. I do not know of anybody else. I am not sure. I do not think Perkins was there ; if he was, I do not remember. Q. You had arranged things, before the contracts were signed, with Mr. Perkins? A. Yes, practically. Q. Have you retained any of the papers relating to the transaction ? A. Have I kept any, do you say? Q. Yes? A. I do not think I have. I probably have the old con- tract, but I have not got it here. Q. Where is it? A. In California, where my home is. I am pretty sure I have it; still, I would not be certain. That is my opinion. Q. Did Mr. Perkins submit different drafts of the con- tract to you, before you agreed upon its final form? A. I do not think he did. Q. You arranged all the terms orally with him, did you? A. Yes, sir. Q. Discussing the different matters at these fifteen con- ferences? You discussed the different details of the con- W. H. Jones, Direct Examination. 43 tract at these numerous conferences you liad with Mr. Per- kins'? A. Yes, sir. Q. That was the purpose of those conferences? A. Yes, sir. Q. Did you have any negotiations or meetings with Mr. Lane during this period? A. No, I did not. Q. When did you first meet Mr. Lane ? A. The time the contract was signed; that is my impres- sion. Q. He was simply the convenient instrument to receive the transfer; was that it? A. I suppose so. Q. Had you known Mr. Gary long? A. Yes. Q. In what way — as a friend or in a business way? A. Both. He did more or less legal work for the Piano Manufacturing Company here in the city, before he went to New York. Q. Did the Piano Company buy its steel from the United States Steel Corporation? A. Yes, we bought some of them. Of course, I had to see him about that, after I went to New York. Q. When did Mr. Perkins tell you, if at all, that he had acquired an option on the Milwaukee plant? A. I am not sure; but my opinion is that he did not tell me until a day or two before the contract was signed. That is my impression. But I knew they wanted to sell ; they did, for years. I knew that. Q. And it was your opinion or belief, during these nego- tiations, that these larger companies were going into the deal with you? A. I did not know it until the last few days. Q. You hoped they would? A. Yes. That they were going to form some company, of course, anybody would know that. Q. You hoped they were all going in? . A. Yes, I expected they would. Q. But you did not know it? A. No, I could not swear to it at the time. Q. Why did you sell to Lane instead of directly to the new company? 44 W. H. Jones, Direct Examination. A. I do not know. I could not answer that. I supposed it was to organize a new company; but I never was told. Q. That was a matter that the lawyers arranged? A. Yes. Q. You did not think that Lane wanted to buy your busi- ness? A. No, I did not suppose so. I did not know. I had no way of knowing. I never saw him until the day I signed the contract. Q. The International Harvester Company had not been organized on the day you signed the contract, had it? A. No, sir. Q. That was not organized until two weeks later? ■ A. A couple of weeks later, I think. Q. Did you return to your place? A. Yes, I came right home. I left the afternoon after I signed the contract, and came home. Q. And then you returned to New York? A. Yes, sir. Q. "When it was organized? A. Yes, sir. Q. And got there the day it was organized? A. I was there when it was organized. Q. On the day that it was organized you signed the deed to Lane? A. Yes, sir, I think I did at that time, but I am not cer- tain. That is my impression. Q. That is, the deed transferring the property to Lane? A. Yes, sir. Q. Who were the three appraisers who placed an estimate on the value of your property? A. I never knew who they were. Q. You know that it was done? A. Yes, sir. Q. "Who would know? A. The accounting department ought to know. I certainly do not know. I never saw them ; that I know of, I never did. Q. You have testified that you received stock in the new company as consideration for the property which the Piano Company transferred to the Harvester Company? A. Yes, sir. Q. You also took stock in the new company and paid for the same by assigning bills and accounts receivable of the Piano Company? W. H. Jones, Direct Examination. 45 A. I subscribed for a certain amount of stock beside what was coming for the Piano property, and that I sold to friends of mine, mostly here in Chicago. Q. You paid for that stock by assigning bills and accounts receivable of the Piano Company? A. No, sir, I paid for it in cash when they delivered it to me; every dollar of it. Q. Before you signed the contract on July 28, 1902, you knew that the stock was all to be placed in the hands of three voting trustees? A. I am not sure as I did. Q. Was that a matter that you discussed with Mr. Perkins? A. No, I don't think so. I never discussed that with him. I think that came later; but I am not sure about that. Q. You saw that provision in the contract, did you not? Do you recall? A. No, I could not tell you as to that ; I do not remember. Q. In any event, you received the voting trust certificates ? A. Yes, sir. Q. And not stock? A. Yes, sir. Q. Did you have anything to do with the selection of the three voting trustees? A. Not a thing. Q. You knew who they were to be, I suppose? A. Yes, I did at the last end, of course; before, I did not. Q. You knew, when you signed on July 28, who they were to be? A. No, I did not. I do not think I did; no, sir; that is my impression. Q. Did you pledge any of your voting trust certificates with J. P. Morgan and Company? A. Deposit any of them? No. Q. You did not enter into any agreement depositing your voting trust certificates with J. P. Morgan and Company? A. No, sir, not that I know of. Q. State whether or not any of the other stockholders entered into such an agreement. A. Of the other companies, you mean? - Q. Yes. A, I do not know. Q, Why did you come on to attend the organization of the company, August 12, 1902? A. Why did I? 46 W. H. Jones, Direct Examination. Q. Yes. You wanted to attend the directors' meeting: Was that right? A. No, I did not know I was going to he a director, when I signed the contract. Q. Why did you come on to attend, on August 12, 1902? A. I suppose I was asked to, but I do not remember. I must have been, I would not go without. Q. After your company sold out to this new company, you continued to direct, for a time, the factory and plant, did you not? A. I do not remember, honestly, whether there was any- thing said about it or not ; but I know I did. Q. You were elected vice president? A. Yes, sir, in August sometime. Q. As soon as the company was organized? A. Yes. I think that was about the middle of August. Q. And you were elected a member of the executive com- mittee? A. Yes, sir. Q. And also a director? A. Yes, sir. Q. And were you not by the directors directed to manage your plant — the Piano plant? State whether or not you recall any such resolution? A. No, I do not. I do not remember anything of the kind. Q. As a matter of fact, you did continue in charge of your Piano plant? A. I did it just exactly as I did before, practically, any- way, until they were ready to do it themselves. Q. How long was^that? A. It was not very long. I think I did it, though, most of it, for pretty near a year. Q. Are you vice president today? A. Yes. Q. You are not an active manager of the company today, are you? A. No, sir, I am not. Q. For how many years have you been out? A. Six or seven years. Mr. Wilson can tell. I am not sure about it. Q. During those three or four years that you were vice president and active in the company, what were your duties? A. I had charge of certain matters connected with the W. H. Jones, Direct Examination. 47 company, until the change was made. I thiiik that was about 1 seven years ago. Q. What matters did you have charge of? A. The experimental department, the traffic department, and the patent department ; if I remember right, those three. Q. Did you know, on July 28, when you signed the con- tract, that the other companies, represented by McCormicb and Deering and Mr. Grlessner, were going in on the_ same terms as you, namely, that they were receiving stock in the new company as consideration for the transfer of their plants'? A. I did not know it, but I supposed it was so. Q. Who were the men who subscribed to the twenty mil- 2 lion dollars of new interests that came into the company? Do I make my question clear? A. Yes. I do not know who they were. I supposed that Deering and McCormick subscribed for a good proportion of it, but I never knew how much. And I subscribed for some. Mr. Bancroft: I think the witness misunderstands you. I think he did not get your question right. Q. You understand that I am referring to the twenty mil- lion dollars? A. Oh ! No, I could not tell you anything about that. 3 Mr. Wilson : He never heard of the twenty million. Q. Mr. Wilson says that you never heard of the twenty million. A. No, I did not know how much it was. I might have kiil^wn, at the time, you know. Q. Yes, I know. Who is Mr. O. W. Jones? A. He is a brother of mine. Q. He was interested in the Piano Company with you? . A. Yes, sir. Q. Is he now in the business ? A. He is in St. Louis. He is working for the company. 4 Q. Did he come on with you to attend any of the confer- ences with Mr. Perkins? A. No, at first Mr. Llewellyn; and when I went there the second time my brother went with me. Q. Who was Mr. Archer Brown? A. He had some stock with our company. He is of the firm of Rogers Brown & Co. He was one of the Piano Com- pany's directors. He was of Eogers Brown & Company in the pig iron business. Q. Located where? 48 W. H. Jones, Direct Examination. A. His office was in New York but lie lived across tlie river, in New Jersey. I forget the name of the town. Q. Is he an officer or official of the Harvester Company? A. No. Q. Has he been at any time 1 A. No. Q. Did he come on for these conferences? A. No, he was there in New York ; his office was in the Em- pire Building, where Judge Gary was. Q. Was he present at any of the conferences with Per- kins? A. No, I do not think he was; but he was there when I signed the contract. Q. Was anyone present at these conferences with Mr. Per- kins, besides yourself? A. Mr. Llewellyn was, those that I had the first time, any- way. Q. At all of the conferences you had with Mr. Perkins in July, was Mr. Llewellyn present, or was he present at only a few of them? A. I do not think he was present at all of them. Q. Would Mr. Perkins come to see you several times a day, or every other day? How was that? A. No, he used to call me up on the 'phone.' I used to stay in the Empire Building with Mr. Archer Brown, who was an old friend of mine. Q. Did you have any talks with Mr. Gary about the con- solidation? A. No, nothing; not that I remember. Q. But you testified Judge Gary wired for you to come on? A. Yes, sir, he did. Q. What did he say in the telegram? A. I could not tell you. He simply invited me to come down there, that it was something important; and I went. Q. He did not say what? A. I do not think he did. Q. Did he mention whom you were to see ? A. No, not that I remember. Q. Have you ever attended any of the stockholders meet- ings of the Harvester Company? A. No, sir. Q. Your stock was held for ten years by the voting trus- tees? W. H. Jones, Direct Examination. 49 A. Yes. Q. You were on the executive committee of the Harvester Company for many yea,rs ? A. Yes, sir; I think the first four years; that is my im- pression. Q. What were the duties of that committee? A. To pass on different things that they agreed on. Mr. Bancroft : I suppose the by-laws are the best evidence of that. Q. Did you keep a record of what happened at your meet- ings ? A. No, sir, I did not. Q. Was there a secretary of the committee I A. I am not sure about that. Q. Was any record kept of what you discussed and what you decided at your meetings? A. I suppose there was. Q. Who would know? A. Mr. McCormick would know. Q. Who was chairman of the committee? A. Mr. 'Charles Deering. Q. Was Mr. Howe a member of the committee? A. No, he was not. I am not sure about that. I do not think he was. I think it was Cyrus McCormick, Harold Mc- Cormick, J. J. Grlessner, G. W. Perkins, James Deering and myself. There were seven. Q. How often did you meet? A. Whenever there was anything particular came up. We had no regular time. Q. Would the committee report to the board of directors their actions? A. I suppose they did ; but I did not always hear what was going on, on account of my deafness. Q. AVhat was the purpose of placing your stock in trust for ten years? A. I could not tell you. Q. Was that discussed before you signed the agreement — the question of having a voting trust? A. I do not think it was, so far as I was concerned. Q. Nothing was said to you about it? A. Not that I remember of. Q. Are you a stockholder in other companies besides the Harvester Company? A. No, sir. 50 W. H. Jones, Cross-Examination. Q. Mr. Jones, I -wish to have appear on the record the amount that the stockholders of the Piano 'Company received in the stock of the new company. If you cannot give the figure today, will you please ascertain so that the answer may he inserted" in the record later. A. If I can find it I will. Subsequently counsel for the defendants furnished the fol- lowing answer: The amount of stock of the International Harvester Company received by the stockholders of the Piano Company for the property of the Piano Company was $2,- 268,500. Q. Do you know what it was? A. No, I am not sure. Q. Where would the record he kept of that transaction! A. We wound up our business, you know, and the papers are scattered. What I had individually are out in California, but that does not amount to a great deal. I kept them only out of some curiosity. Mr. Bancroft : I think he does not understand you. I think I can get the facts. Mr. Wilson: There will be no trouble about it at all. Mr. Grosvenor: I just wanted it to appear here; and if you will put his answer in later it will be all right. Cross-Examination by Mr. Bancroft. Q. When did you begin business in the harvester lines? A. I think it was in 1866. Q. In what kind of work? A. Selling machines, to farmers. Q. Where? A. Berlin, Wisconsin. Q. And from that time until you retired entirely from business a few years ago, were you continuously in the busi- ness? A. Yes, sir. Q. You knew how the different harvester companies werp carrying on the business? A. In a general way, yes, of course. Q. In this western country? A. Yes. Q. You said you guessed there was competition in 1902. Can you state briefly what the situation was in the harvester trade in 1901 and 1902? W. H. Jones, Cross-Exammation. 51 A. It was about as severe and mean as it could be. Q. Can you describe it a little more in detail! How was it being carried on? A. If one man sold machines — an agent, another man would go and burst up the- order, and there was a regular warfare. There was no business in it, practically; it was a regular cutthroat business. Q. What effect did that have on selling expenses? A. It made them heavy, of course. Q. What effect did it have on prices to the farmers who were buying the machines? Were they uniform, or were they high in one place and low in another? A. That depended on the local agent. Some of them cu^ prices worse than others did, of course; a weak man nat- urally would. A good salesman would naturally get more. Q. How was it between the ordinary fanner who bought one machine, and the farmer who was rich or had a big farm and made large purchases ? Did the latter get advantages ? A. It depended on how shrewd and sharp he was. Q. How long had that situation continued before 1902 1* Had there been any change in it? Had it been getting worse or getting better? A. It was getting worse. It started about 1884 and 1886, along in there. Q. 1884 or 1894? _ A. 1884. Along in there it commenced to demoralize. Q. And it had grown steadily worse, had it? A. Yes, it had grown steadily worse all the time. Q. At the time you were negotiating with Mr. Perkins for the sales of the Piano properties, did you know who the other people were with whom he was negotiating? A. I did not, until the last few days. Q. Did you know until just before you signed? A. Yes, sir. Q. Did you know the terms of their contracts until after your contract was closed? A. I did not know the terms of anybody's contract except my own. Q. You did not sell your receivables, did you — the Piano, to the new company? A. No, sir, I never did. Q. Were they pledged as security for your stock subscrip- tion, or how was that? A. No, sir. 52 W. H. Jones, Re-direct Examination. Q. Not at all? A. The stock I subscribed for I paid for in casb. Q. You subscribed for it yourself, and paid for it in cash? A. Yes. It never was pledged. Q. When you made your deal, was your sale dependent upon anybody else, according to its terms? A. I could not tell you as to that. I do not remember. Q. You remember nothing of that? j A. No. Q. There was no arrangement with you, or understanding on your part, as to who were to be the directors of this new company that was to be organized? A. No, sir. Q. Or who were to be the officers? A. No, sir. I did not know anything about it ; never asked a question. Re-direct Examination hy Mr. Grosvenor. Q. Mr. Jones, one of the reasons which induced you to sell out in 1902 was the existence of the competition you have described? A. Yes, sir, it was on account of the demoralization of the business in general. Q. You agreed, in selling out, to take stock in a new company, did you not? A. Yes, sir. Q. Of what value was that stock to you unless your com- petitors went into the same company? A. I could not answer that question. I do not remember. Q. Before you agreed to take stock in the new company, you knew that those competitors were also going in, did you not? A. I knew, at the time the contract was signed, who was going in, absolutely. Q. Before you signed it? A. Yes, sir, before I signed the contract. Otherwise I would never have signed it. Thereupon an adjournment was taken until the morning of Tuesday, September 17, 1912, at 10:30 o'clock. C. 8. Funk, Re-direct Examination. 53 Heaeih-g op September 17. Eoom 603 Post OfiSee Building, Chicago, 111., September 17, 1912. 10:30 A. M. The taking of testimony was resumed before the Special- Examiner, Eobert S. Taylor, at the above time and place. Present : On behalf of the petitioner, Edwin P. Grosvenor, Esq., Special Assistant to the Attorney General, and ^ Joseph. E. Darling, Esq. On behalf of the defendants, Edgar A. Bancroft, Esq., and John P. Wilson, Esq. CLARENCE S. FUNK, recalled: Re-direct Examination Resmned by Mr. Qrosvenor. Q. Mr. Punk, there were one or two matters referred to 3 in the record, which you were to supply. Ton have returned for that purpose? A. Yes. I have a memorandum of the matters you asked me to look up. Q. You were to ascertain the date of your visit to St. Paul to make an appraisal of the Minnie Harvester pur- chase? A. It was in the summer of 1903. I have not the exact date. Q. Was the transaction brought to a close soon after your visit? 4 A. Some time after. Q. During the summer of 1903? A. I could not say definitely when. It is my impression that it was aloiig in the fall or winter. Q. For whom were you acting at that time ? A. The executive committee. Q. The executive committee of the International Harvester Company of New Jersey? A. Yes, sir. Q. Whom did you meet at St. Paul in connection with the matter, who were interested in the Minnie Company? 54 C. 8. Funk, Re-direct Examination. A. I met the president, Mr. Thomas Ottis, the secretary and manager, Mr. Frank J. Ottis, the sales manager, Mr. Early; and there were others. Q. The International Company, either directly or through its officers or stockholders, secured control of the Minnie Com- pany after your appraisal was made, that is, towards the end of 1903? A. I never knew how the transaction was consummated; I was not consulted about that. Q. It was your understanding that your company secured control about that time, was it not? A. I could not say now when I first had an understanding on the subject. Q. As a matter of fact the interest of the Harvester Com- pany in the Minnie Company was not made known generally in the trade until a year or two later, was it? A. It was some time later. Q. It was some time after your visit? A. Yes; I could not say how long. Q. And during that time the Minnie Company was in business under its own name? A. Yes. Q. The next matter you were to look up is referred to on page 31 of the record. You were to prepare an itemized state- ment of the names of the different manufacturers who are classified on page 55 of the answer. Have you had time to do that? A. I have the list from which that statement was com- piled. Q. Will you let me examine it? A. I will. I have prepared a list showing the number in each line. Q. What I refer to is on page 55 of the answer. My ques- tion was that you prepare the names going to make up the number. A. I have not had time to do that. That is a long list. There are several hundred in each classification. Q. Will you have that done? (That is on page 55 of the answer.) A. Yes, sir. Q. What else was there that you were to supply? I can- not lay my hand this minute on anything further? A. You asked me to bring a map of our general agencies. Q. That was at Mr. Bancroft's request? C. S. Funic, Re-cross Examination. 55 Mr. Bancroft: Have you it here? Witness : Yes, sir. (A paper is produced by the witness.) I might explain that that is a smaller map. It is quite pos- sible that some of those lines are not absolutely accurate; that is, some small town may be on one side of a line or on the other; but it is substantially correct. Q. What else was there? A. You asked me the date the Weber Wagon Company was purchased. That was August, 1905. Q. Anything else? A. And the date of the Kemp spreader purchase'. That was November, 1906. And I should have added another pur- chase, which did not occur to me yesterday in mentioning these ; that was the Bettendorf Axle Company. Q. When was that? A. That was purchased in July, 1910. Q. That completes the questions which you were to cover? A. No. I find I made one mistake, regarding the district managers. Q. That is on page 6 of the record. How should that be corrected? A. I gave you the name of J. M. Robinson, as manager of the Central District, and J. H. McLane as manager of the Southern District. Those have been reversed; it slipped my mind. Mr. McLane is now manager of the Central Dis- trict, and Mr. Eobinson of the Southern. Q. This Minnie Company which you referred to was mak- ing harvesters and binders to some extent? A. To a very small extent, yes. Q. Located at St. Paul? A, St. Paul, Minnesota, yes, sir. Re-Cross Examination by Mr. Bancroft. Q. In your answer yesterday you said that you had no general agent in Texas or Arkansas. How is the business in Texas carried on? How are the goods of the International Harvester Company of New Jersey sold in Texas? A. They are sold to the Texas Harvester Company, jobber, at Dallas. Q. So that your answer as to jobbing should have included Texas? A. Yes, sir. ' 56 C. S. Funk, Re-cross Examination. Q. In Arkansas how is the hnsiness carried on — ^how are these goods sold? A. It is an interstate business, done from Memphis, Ten- nessee. Q. And from Springfield, Missouri, part of it? A. I do not recall. Quite possibly Springfield does get into the western corner of the state; I think it does — a few counties. Q. Did you include Colorado as Pacific coast, or how is it there! A. We have a general agency at Denver. There may be one or two jobbing contracts there; I do not know about that. Q. In Utah? A. In Utah there is a general agency; but the main busi- ness is in the hands of jobbers ; there are several of ..them there. Q. And in Washington, do you remember whether part of it is one way and part the other? A. The state of Washington? Q. Yes. A. I could not say. I am not familiar with the territory lines there. Q. In California I think you said it was mainly, if not entirely, on a jobbing basis? A. I was mistaken if I said ' ' entirely. ' ' We have a general agent there. But it is largely a jobbing proposition. Q. In Oregon, what is the situation? A. I think there is a general agency at Portland. There used to be. I am not quite sure of that. Q. Are you speaking from your knowledge of conditions prior to 19i0? A. Yes. I do not follow the details of those matters; I do not have occasion to. Q. Eeferring to the numbers of competitors in the various lines of goods manufactured by the International Harvester Company of New Jersey, have you made a tabulation of such competitors — not of the names, but of the numbers? A. The numbers, yes, sir. Q. (Handing a paper to the witness.) Is this it? A. That is a copy of it, yes. Q. From what did you make it? A. I made it from what I consider the best available sources of information. It was made up very largely from C. S. FiMk, Re-cross Examination. 57 the two standard implement directories — those which are gen- erally considered as standard in the implement trade; the Buyers ' Guide of 1912, issued by the Farm Implement News — which is probably the leading implement journal of the coun- try; and the 1912 Implement Blue Book, published by the Mid- land Publishing Company at St. Louis — which also publishes an implement paper of quite wide circulation. These are the only two books that I know that purport to give a full list of implement manufacturers. Q. To what extent are you personally acquainted with the question of other manufacturers in these various lines? A. I have a general knowledge on the subject, gained from my years of experience in the business. Q. You had this memorandum that I hand you prepared, did you? A. Yes. Q. Based on your investigation and your personal knowl-. edge as you have stated it, what was the number of com- petitors in motor vehicles in the United States in 1911, or what is the number in 1912? A. I had the names of about forty; but in my estimates I have cut that down to twenty-five; because they are going in and coming out, and some of them are isolated, and it is pretty hard to get an exact figure on it. I would estimate from twenty-five to forty. Q. And in corn binders? A. Four. Q. I wish you would state the character of the business in coyn binders, as to demand and fluctuation and uncertainty, if it has any peculiarities? A. The corn binder business is essentially an emergency business. The demand fluctuates widely from year to year, depending on the com crop primarily; and also depending very largely on the hay crop. Q. When do the farmers use corn binders, and when do they not — speaking broadly? A. Speaking generally, in a year of a short hay crop, there is a heavy demand for corn harvesters, to save the stalks for fodder. A great many farmers, in such years, buy corn bind- ers, who probably would not if hay was cheap and plentiful. Q. When does the extent of that demand develop? A. It develops about the time the hay crop matures, which is, speaking generally, late in the summer. 58 C. 8. Funk, Re-cross Examination. Q. Eeferring to your memorandum again, how many com- petitors in com huskers and shredders? A. I have fifteen on this memorandum. Q. And in corn pickers? A. Three. Q. What is the condition of the corn picker implement or machine? How efficient and successful a machine is that at the present time? A. That is a matter of opinion somewhat. I would re- gard it as just barely out of the experimental stage. Q. Is the sale of corn pickers large, or small? Is it as large as that of corn hinders, or is it small? A. It is very small. Q. In corn shellers, how many competitors? A. I have forty to fifty, on this memorandum. Q. What amount of product does the International Har- vester Company make in com shellers? A. It is very small. Q. In corn planters, how many competitors? A. Fifty-five I have. Q. What amount of com planters does the International make? Is it important or incidental? A. It is very small ; a very insignificant line. Q. How many competitors in cream separators? A. Fifteen to twenty. Q. In cultivators? A. Seventyjfive. Q. What kind of cultivator does the International make? A. It makes a riding cultivator; a two-wheel sulky ma- chine. Q. Does it make a large quantity of them? A. No; small. Q. Gasoline engines; what number of competitors? A. I have here from 150 to 175. Q. That is your estimate of them? A. Yes, sir. Q. Based on your personal knowledge and your investiga^ tion? A. Yes, sir; that is the best information I could get. Q. Grasoline engines of the kind referred to here that are manufactured by the International Harvester Company, we will say, range in horse-power between what figures? A. I do not remember what are the largest engines we C. S. Funk, Re-cross Eo&a/mination. 59 built. I should say from one to thirty. "We have probably 1 built a few larger. Q. They are built entirely for farm use, are they? A. No, not entirely. Q. Speaking generally? A. Speaking generally, yes, but yet when you get to the twenty, twenty-five and thirty horse-power, they are frequently bought for cheese factories and dairy plants, and small elec- tric light establishments, etc. Q. What is a feed grinder? A. It is a machine that grinds corn for feed. Q. What is the capacity and character of the feed grind- 2 ers that the International Harvester Company makes? A. We make a small and a medium size. That is very insignificant line. Q. Are they generally hand grinders? A. Yes. They are for farm use. Q. How many competitors are there in that line of manu- facture ? A. Seventy-eight, I have found. Q. And grain binders? A. Eight. 3 Q. Harrows? A. Eighty-five. Q. How many different kind of harrows are in general use in the United States, or generally on the markfet? A. Speaking broadly, there are the peg tooth and the discs. There is a variety of combinations of those, but those are the two classes — ^the peg and the disc. Q. Is there a spring tooth, also? A. Yes. Q. That is another general class? A. Yes. 4 Q. In your estimates you have put them all together? A. All together, yes. Q. Does a manufacturer, generally, who makes one kind make all three? A. Yes. Q. In hay stackers, how many competitors are there ? A. Twenty-seven. Q. Hay tedders? A. Fifteen to twenty. Q. Hay loaders? A. Fourteen. 60 C. 8. Funk, Re-cross Examination. Q. Hay presses? A. I have here twenty-five. I think that is low. Q. "What kind of a hay press does the International Har- vester Company make? A. It makes a power press, and a belt press. The belt presses are used with gasoline engines, as a rule; that is, for the heavier pressing, — the pressing of larger bundles of hay than where the smaller power press is used of two horse and one horse power. Q. How large are they? Do you rate them by horse power? A. One way of rating them is by the weight of the bale; five hundred pound bales, three hundred pound bales, etc. Q. The International makes those sizes, does it? A. Yes. Q. How many competitors are there in manure spreaders? A. Twenty-eight. Q. How many in mowers? A. Fourteen. Q. In rakes? A. There are two classes of rakes. In side delivery rakes, fifteen ; sulky rakes, fifty to sixty. Q. Is the side delivery a riding rake? A. Yes. Q. And so is the sulky? A. Yes. Q. Are any other kinds of rakes manufactured now for farm use in any large quantities? A. Not in large quantities, I should say. Q. What other kinds are there made? A. There is a walking rake, which a farmer throws over by hand; and there is what we used to call the bull rake — • which a man picks up and throws over; that is a wooden rake. Speaking broadly those are the principal ones. Q. How many competitors in reapers? A. Three. Q. "Where are reapers now principally used, if you know? Are many sold in the United States? A. A very limited number; and it is dwindling; it is less every year. This is sold in localities where crop conditions are rather uncertain, and where a farmer does not want a self-binder. There are some sold in the eastern territory, where the farms are small and rough ; and some in the South ; some in the extreme West. C. 8. Funk, Re-cross Examination. 61 Q. In the Mstory of the harvester business the reaper 1 preceded the binder? A. It did. Q. Every manufacturer of harvesting machinery, in the earlier times made reapers? A. Yes. Q. And when the binders came in, they gradually sup- planted the reaper? A. Yes. Q. So that some of the makers of the binders have ceased to make reapers on account of the smaU demand; is that so? _ 2 A. I do not recall any binder manufacturer that has en- tirely discontinued reaper manufacture; but some of them sell a very small number. Q. How many competitors are there in tractors — ^in the manufacture ? A. Forty-five. Q. How many in wagons? A. One hundred and three. Q. Do you mean that is the total number? A. Yes ; one hundred and three that we consider substantial 3 manufacturers; making, say, over a thousand wagons apiece. There are no statistics obtainable as to how many sm,all deal- ers and blacksmiths and wagonmakers there are in the coun- try making a small number of wagons a year. Q. How many other manufacturers are there of binder twine? A. Sixteen. Q. Are other materials than sisal and manila used for binder twine now? A. Yes, there is some istle used. Q. Where is that? 4 A.* That comes from Mexico. Q. Does the International use any of that? A. We do. Q. Any considerable amount? A. A small amount. Q. Does that resemble sisal or manila, or is it entirely dis- tinct? A. It is more like sisal ; but it is of a finer texture, and it comes in limited quantities. There are only portions of Mexico where it is grown, and the supply is limited? Q. Any other material? 62 C. 8. Funk, Re-cross Eosamination. A. Binding twine lias been made of Kentucky hemp, but never in a large way and never very successfully. Q. Does the International use any of that for its binder twine ? A. No. Q. Has the flax fibre been used for binder twine? A. It has. The Harvester Company conducted very ex- tensive experiments, trying to make a binder twine out of flax straw. Q. Where was that work done? A. At St. Paul. Q. At this Minnie plant? A. Yes. Q. When did that work begin, on flax twine, at the. Minnie plant? How soon after the International bought the plant? A. Within a year, I think. Q. To what extent has that work been carried on? State briefly. A. It has been carried on very extensively, and a very large amount of money has been sunk in endeavoring to make a satisfactory twine from flax. Q. Did the International succeed in making an operable flax twine from American grown flax. Which would work? A. We found that by exceedingly careful preparation and very careful handling by specially designed and expensive machinery, a fairly good working twine could be made; but we found that there was enough saccharine matter left in the fibre after our process, to attract the crickets and grass hop- pers, and they ate the stuff about as fast as we could put it out; so the enterprise has been a failure, for that reason. Q. Can you state in round figures how much jnoney the International expended in endeavoring to develop that indus- try there, in flax binder twine? A. It would be over a milHon dollars. Q. During how many years was that work carried on in order to produce if possible a binder twine from flax straw? A. Eight or nine or ten years. Q. Had it been started by any of the vendor companies before the International took it up? A. I think the Deering company had done some little ex- perimenting with it, but I think they did not have the courage to tackle it in a broad way, on account of the expense in- volved. Q. What effort was made to discover some way to make C. 8. Funk, Re-direct Examination. 63 that twine so that the crickets and grasshoppers "would not attack it when it was used on the bundles? A. We hired chemists and sent them up there — twine ex- perts in different parts of the country, and sent samples of the twine to the laboratories of the different agricultural colleges, and to the Department of Agriculture at Washington. We finally became so much concerned about it that we of- fered substantial rewards to anybody that could make the twine bug proof. Q. Except for that, was the twine a success? A. Yes, it could have been made a success. Q. Was it produced from the American grown flax at a less cost than from these imported fibres — sisal, manila, and the Mexican fibre? A. Yes, considerably less. The flax has been largely grown in Minnesota, and, under the Minnesota methods of farming, it has been largely a waste product, as the farmers burned it to get rid of it, or let it rot, used it for bedding, etc. And that was one thing that appealed particularly to us — the utilizing of practically a waste product, which we could afford to pay the farmers a substantial amount for if we could work it into twine and could sell them the twine cheaper than that made from the imported fibres. Q. Have you in mind the largest quantity of that flax twine produced any year at the St. Paul twine mills, or the total amount produced during "the six or eight, or five or six years, or whatever it was, that the International operated that plant? A. I could approximate that. I suppose there would have been ten or twelve thousand tons of that twine made. Q. And it was distributed out to the farmers, was it? A. Yes, sir. Q. So far as you know, then, there has not yet been found an American grown fibre out of which binder twine can suc- cessfully be made? A. We are constantly hunting it. We have never been able to find it. Re-direct Examination by Mr. Grosvenor. Q. On this list respecting which you have just testified re- garding the number of competitors, there are a large number of articles placed which are not harvesting implements; is not that right? 64 C. 8. Funk, Re-direct Examination. 1 A. Yes. Q. When tlie International Harvester Company began busi- ness, in 1902, it made nothing but harvesting implements; is not that true! A. Not entirely. The Deering Harvester Company had conducted quite extensively experiments on gas engines, and were building some. Q. Building some gas engines? A. Yes. Q. Other than some gas engines manufactured by the Deerings in 1902, was not the business of the Harvester Com- 2 pany limited to harvesting implements — ^just as is indicated by the term "Harvester Company ?" Can you think of any- thing else? A. The MeCormick and Deering Companies, as I under- stood the situation had had, prior to 1902, quite ambitious plans for extending into the implement business. Q. I am not asking you about plans, Mr. Funk. Will you please state whether or not, in 1902, other than engines which you have said the Deering Company was making to some extent, any other imp'i-,ments other than harvesting imple- o ments were made by the Harvester Company? A. I think the MeCormick Company was making some com pickers. Q. Anything else! A. Of course, they were making buskers and shredders. Q. Those are insignificant lines, are they not? They do not compare in importance with binders and mowers, da they? A. No, not in volume. Generally speaking, the old com- panies ' businesses were confined to the harvester business. Q. Then, these other articles which are placed upon this ^ sheet, are articles or implements not harvesting implements, upon the manufacture of which the Harvester Cpnlpany has entered since 1902? A. Yes. Q. I think you testified yesterday that the principal lines of harvesting implements are binders, mowers, reapers and rakes ? A. And incidentally twine. Q. Those are the principal lines, are they not? A. Yes. We consider corn binders an important line. Q. And corn binders. Those are the most important lines of harvesting implements? C. 8. Punk, Re-direct Examination. 65 A. Yes. Q. Was this list prepared by you or under your direction? A. TMs was prepared under my direction and checked over by me. Q. Grain binders is the most important branch of harvest- ing implements, is it not? A. Yes, sir. Q. You stated that this Implement Blue Book is, with the other book, the leading trade information as to the manu- facturers engaged in the manufacture of these different lines ? A. Yes ; I do not know of any better. Q. Will you look at this Blue Book, under grain binders, at page 27, and ascertain the number of competitors in grain binders on that page — competitors of the International Har- vester Company? Please count them. A. There are six on this list. Q. What ones are they? A. There is the Acme Harvesting Machine Company; the Adriance-Platt ; the Seiberling-Miller ; Johnston Harvester Company; Walter A. Wood. Q. That makes how many? A. That makes five, in this book (indicating the Blue Book). Q. What per cent., Mr. Punk, of the grain binders made in this country and sold in this country are made by the Inter- national Harvester Company and sold by the International Harvester Company of America or through jobbers to whom the Harvester Company sells? Can you answer that question or would you rather refer to papers which you may have pre- pared? A. I can answer it broadly. It is impossible for anybody to have an accurate knowledge on the subject, because there is no way, that I am aware of, to know how many binders are sold in the United States in any given year. Q. What is your best estimate? A. My best estimate would be about seventy per cent. Q. You testified that the six largest manufacturers of grain binders doing business in 1902 went into the Harvester Company. I think that was your testimony yesterday. A. Yes. Q. Taking these companies which you have just named (printed in the Blue Book) was the Adriance-Platt doing business then? A. It was. 66 C. 8. Funk, Re-direct Examination. Q. Was the Jolinston Company? A. Yes. Q.' Was tlie Walter A. Wood? A. Yes. Q. Was tlie Seiberling- Miller Company? A. I think they have come in since. Q. That is a small company, is it not? A. I do not know how large their business is. It is a small company so far as binders go. Q. Mowers is another large line. What per cent, of mow- ers are you doing in the United States today? A. My best estimate would be about sixty per cent, Q. Corn binders, that is another large line, is it not? It is not as large as grain binders, but it is an important busi- ness? A. It is an important business in special years, when the conditions are ripe. Q. How many competitors have you in that, or how many have you stated on that list? A. I think I said four. (Eef erring to the list.) Q. Will you look in this Blue Book, at page 27, and count the number of competitors of your company, in com binders. A. Adriance-Platt, Johnson Harvester, Walter A. Wood; there are three in that list. I might explain that where I have knowledge that there are others which are not listed, I have included them. Q. But this Blue Book is the standard in the trade, and is supposed to give the names of the leading manufacturers, is it not? A. Yes, but in some cases the list may be incomplete. Q. You have testified as to the expending of money in an endeavor to develop this flax twine business. It was not any- thing new in the trade for manufacturers of agricultural machinery to spend money in trying to develop business or make improvements, was it? A. Broadly speaking, no. But I think it was very new in the trade for one manufacturer to be willing to gamble a million dollars on an experiment of that kind. Q. Before the binder in its final form of perfection was developed, there were many improvements from time to time made in it, were there not? A. Yes Q. And the manufacturers were all spending money in an endeavor to make improvements, were they not? C. S. Funk, Re-direct Examination. 67 A. Yes. Q. Just as your company spends money today endeavoring to make improvements I A. Yes. Q. The Appleby knotter was simply the final development following previous self-binders, was it not? A. That knotter was the result of long years of experi- mentation. Q. And it put the wire binders out of business, did it not? A. Yes. Q. That was a development? A. Yes. Q. And much money was spent in order to perfect the Ap- pleby twine binder — self-binder? A. The Appleby is a knotter; it is just the device which ties the knot. Q. It succeeded the Withington and the other ones, did it not? A. Yes. I do not think Appleby spent large sums, because he never had them; he was always a poor man. Q. And the Withington succeeded a previous self-binder known as the Gordon, did it not ? A. Yes. It was a process of development. Q. The MeCormicks were using the Gordon, and then changed to the Withington, did they not? Do you know as to that? A. That was before my time. My impression is that that is right. Q. Now, to return to this list which you produced and from which you read the number of competitors: Will you read into the record from the list the articles on that list which are not classified in the trade as harvesting implements? A. Motor vehicles — I would like to explain that there may be a difference of opinion, even among harvester men, as to this classification; that is, I may or may not include certain things which somebody else would include. Q. All right. A. I do not know what to say about buskers and shred- ders. It harvests corn. Q. That is a grain harvesting implement, I should think. A. And here is corn shellers. I do not think that would be a harvesting implement. Mr. Wilson: He asked you for your classification; that is just your opinion, that is all. 68 C. 8. Funk, Re-cross Examination. Witness : Put in corn siiellers, corn planters, cream sepa- rators, cultivators, gasoline engines, tractors — Mr. Bancroft: Are feed grinders harvesters? Mr. Grosvenor: He has not got to those yet. Let him de- scribe. Mr. Bancroft : I thought he just passed it. Mr. Grosvenor : No, tractors was the last named. He is de- liberating about feed grinders. A. Feed grinders — ^you better put that in the list; I do not think that is a harvester. Harrows, spreaders, wagons,* twine. By Mr. Bancroft : Q. Do you regard a hay press as a harvester? A. Well, you can regard it either way. Probably you had better add hay presses. 1 skipped this hay line; I did not notice the presses. Q. Speaking broadly, the lines other than grain binders, mowers and rakes are the new lines as we refer to them in the International Harvester business, are they not? A. Grain binders, mowers, hay rakes, twine and reapers. Q. What was done in the other lines before that, by any of the companies whose plants were bought, was small in comparison? A. Yes. Q. Are you able to give the other three of those eight competitors in binders, from your own knowledge, or from the other book? Is the Minnesota State Prison a competitor? A. Yes. There is the Minnesota State Prison and the Independent Harvester Company. Q. Deere & Company? A. And Deere & Company, Moline. Those are the three. Q. How large an organization has Deere & Company of Moline? A. It is the largest in this country outside of the Inter- national Harvester Company of America's organization. Q. The selling organization? A. Yes. Mr. Grosvenor : You are not speaking of harvesting imple- ments now? Mr. Bancroft: I am talking about an organization to dis- tribute and sell agricultural implements. Mr. Grosvenor: All right. Q. Do you know to what extent the State of Minnesota has C. 8. Funk, He-direct Examination. 69 gone into the manufacture of grain binders ; what investment or plant they have ? A. Not definitely. My impression is that they have got about a million dollars' worth of equipment up there, which is applicable to the manufacture of binders and mowers. Whether they are using it all or not I do not know. Q. Do you know where the plant of the Independent Har- vester Company is? A. At Piano, Illinois. Q. How widely does it conduct its business in grain hin- ders? A. It is small. Q. How much of this Northwestern country we have re- ferred to does it go into? A. I do not know just the extent to which they try to cover the trade. Q. Do you know the extent of the plant for building bind- ers and mowers, of Deere & Company? A. Yes, in a general way. Q. That is a new plant, is it? A. That is a new plant. Q. Where is it built? A. Moline, Illinois. Q. What facilities have they for the manufacture of mowers? What line of mowers do they make? A. They took over the line made by the Dain people. Q. Where? A. They started first, I think, at Kansas City, Missouri. They sold out to the Deere Company, and the Deere people are now building the Dain line of mowers. Q. At the Dain plant? A. I think they are building them at Moline. Q. Then they have built a new plant for making binders? A. Yes. Q. Do you know the extent of that? A. It is an extensive plant. I have had it described to me by men who have been through it, and I have seen pictures of it. I should judge it is probably the best and most modem harvester plant in this country today, outside of some of the Harvester companies. By Mr. G-rosvenor : Q. How many binders have Deere & Company sold? Have you any idea? A. I do not know definitely. I had the information. I 70 C. S. Funk, Re-cross Examination. do not remember just now how it came to me. They were plan- ning to build 5,000 binders for this harvest — 1912. Q. Is this their first season in the businessl A. No, they were in the business last year. Q. Did they sell many binders last year? A. I do not know how many they sold. They did not sell that many. Q. They have not become established enough in the binder business yet to be recognized in the trade as manufacturers of binders, have they? A. We regard them so, yes. Q. How many binders does the Minnesota State Prison sell? (The witness paused.) If you do not know, just say so. A. Well, I do not know accurately. Q. Does it sell outside of Minnesota? A. I think they have shipped some machines outside of Minnesota, but the principal part of their product is sold in the state, I believe. Q. The Independent Harvester Company is a company owned by farmers, is it not? A. No ; it is a company which was organized here in Chi- cago and it purchased the property down there, and has since been selling stock to the farmers. As to how much of that stock the farmers own I do not know. Q. It is a small company in any event? A. Yes. By Mr. Bancroft : Q. The Minnesota Prison and the Deere are just enter- ing into the business, that is, the last two or three years; just getting started? A. Well, I should say the Deere is in, and the State Prison — - Q. I mean they have come in within the last few years? A. Yes, they are new. Q. Do you know the capitalization of the Independent Harvester Company? Is it ten millions? A. I do not remember. (The witness was excused.) Petitioner's Exhibits. 71 EXHIBITS. Mr. Grrosvenor: The petitioner offers in evidence fhe fol- lowing exhibits : Petitioner's Exhibit 1: The agreement of July 28, 1902, between the McCormick Harvesting Machine Company and W. C. Lane; Petitioner 's Exhibit 2 : Agreement dated July 28, 1902, be- tween the Piano Manufacturing Company and W. C. Lane ; Petitioner's Exhibit 3: Agreement of July 28, 1902, be- tween Warder, Bushnell & Glassner Company and W. C. Laiie ; Petitioner's Exhibit 4: The voting trust agreement dated August 13, 1902, between W. C. Lane and George W. Per- kins, Charles Deering, and Cyrus H. McCormick; Petitioner 's Exhibit 5 : The certificate of incorpoartion of the International Harvester Company, dated August 12, 1902, with subsequent amendments; Petitioner 's Exhibit 6a : By-laws of the International Har- vester Company, 1902; Petitioner's Exhibit 6b : By-laws of the International Har- vester Company, 1912. Petitioner's Exhibit 7: Officers of the International Har- vester Company of New Jersey from August 12, 1902, to date. Petitioner's Exhibit 8: Directors of the International Harvester Company of New Jersey, August 12, 1902, to date. Petitioner's Exhibit 9: Members of the executive commit- tee of the International Harvester Company from August 13, 1902, to November 23, 1906, when the committee was discon- tinued ; Petitioner's Exhibit 10: Members of the finance committee of the International Harvester Company of New Jersey, from August 13, 1902, to date ; Petitioner's Exhibit 11: Articles of association of the In- ternational Harvester Company of America, with amend- ments ; Petitioner's Exhibit 12-a: By-laws of the International Harvester Company of America, July 21, 1910; Petitioner's Exhibit 12-b: By-laws International Harvester Company of America, 1902; Petitioner's Exhibit 12-c: By-laws Interna- tional Harvester Company of America, second edition, 1904; Petitioner's Exhibit 12-d: By-laws International Harvester Company of America, May 10, 1907. 72 Petitioner's Exhibits. Petitioner's Exhibit 13: Declaration of trust dated Marcli 19, 1903, of George W. Perkins, Charles Deering, Cyrus H. McCormieb, holding the capital stock of the International Harvester Company of America for the benefit of stockhold- ers of the International Harvester Company of New Jer- sey; Petitioner's Exhibit 14: The' officers and directors of the International Harvester Company of America, from October 1, 1902, to date; Petitioner's Exhibit 15: The agreement between the In- ternational Harvester Company of New Jersey and the Mil- waukee Harvester Company, the latter becoming shortly thereafter the International Harvester Company of America, dated September 2, 1902; Petitioner's Exhibit 16: Agreeinent between the Inter- national Harvester Company of New Jersey and the Inter- national Harvester Company of America, dated January 1, 1907. Petitioner's Exhibit 17: Agreement between the Interna- tional Harvester Company of New Jersey and the Interna- tional Har\'ester Company of America, dated July 1, 1907, relating to division of expenses of employes in certain de- partments ; Petitioner's Exhibit 18: List of general agencies in the United States and Canada, November l', 1902, acquired by the International Harvester Company from the five compa- nies, and showing the location of each agency and to which of the five companies each agency so acquired belonged; Petitioner's Exhibit 19: Same as Petitioner's Exhibit 18 at the date July 10, 1903 ; Petitioner's Exhibit 20-A: List of general agencies of the International Harvester Company of America in the United States and Canada, on January 1, 1912 ; Petitioner's Exhibit 20-B : Map of the United States show- ing the location of the general agencies of the International Harvester Company of America and their territorial extent and location of jobbers and jobbing territory; Petitioner's Exhibit 21: Kinds of agricultural machines and implements manufactured by the International Harvester Company of New Jersey in 1902; Petitioner's Exhibit 22: Kinds of agricultural imple- ments which have been added by the International Harvester Company to its lines, the said kinds not having been manu- R. C. Hashins, Direct Examination. 73 factured in 1902, the list giving tlie year eaeli suci. new line was first manufactured; Petitioner's Exhibit 23: Kinds of agricultural machines and implem.ents bought by the International Harvester Com- pany of America from the International Harvester Company of New Jersey during the season of 1903 ; Petitioner's Exhibit 24: New lines of agricultural ma- chines and implements bought by the International Harves- ter Company of America from the International Harvester Company of New Jersey since the year 1902 ; Petitioner's Exhibit 25: Goods sold by the International Harvester Company of America not purchased from the In- ternational Harvester Company of New Jersey ; Petitioner's Exhibit 26: Commission and net price sched- ule "A" 1912, of the International Harvester Company of •America ; ^ Petitioner's Exhibit 27 : Commission and net price sched- ule "C," 1912, of the International Harvester Company of America ; (A recess was here taken until 2 o'clock P. M.) Afternoon Session. E-. C. HASKINS, being first duly sworn as a witness on be- half of the Petitioner, testified as follows : Direct Examination. By Mr. Grosvenor : Q. Mr. Haskins, what is your business? A. I am the president of the International Harvester Com- pany of America. Q. How long have you held that position? A. Since 1910. Q. Before that were you connected with the Harvester Company of America? A. Yes, sir. Q. In what capacity? A. Domestic sales manager. Q. By "domestic sales manager," you mean manager su- pervising the sales in the United States ? A. Yes. 74 R. C. Hasliins, Direct Examination. Q. And Canada? A. Yes, sir. Q. How long had you held that position'? A. Since the fall of 1903. Q. And before that what was your occupation? A. Sales manager for the Champion division of the Inter- national Harvester Company of America for one year. Q You have been with the International Harvester Com- pany of America since the beginning of 1903? A. The fall of 1902. Q. And before that with what company, if any, were you connected? A. The Warder, Bushnell & Grlessner Company. Q. What was your office with them! A. I was western manager of sales, located in Chicago. Q. How many years had you been with them! A. Since the formation of the company, in 1889, I think; and prior to that time, from 1873 I was with their predeces- sors. Q. Practically your entire business experience, then, has been in the harvesting and agricultural implement business? A. Yes, sir. Q. Have you held any position with the International Har- vester Company of New Jersey? A. No, sir. Q. You have been entirely an officer of the America Com- pany? A. Yes, sir. Q. And your services were paid for by the latter com- pany? A. By the America Company. Q. Now, during the time you were domestic sales manager for the International Harvester Company, which I understood you to say was from the fall of 1903 to the fall of 1910 — A. The spring of 1910. Q. The spring of 1910, — ^who was your superior, if you had one! A. While I was so employed by the America Company, Mr. A. E. Mayer was my superior. Q.' What was his position? A. He was sales manager for the International Harvester Company of America. Q. Sales manager? B. C. Haskins, Direct Examination. 75 ■ A. S&les manager. He had charge of both domestic and foreign business. I was domestic only. Q. You were with the domestic division, including the United States and Canada? A. Yes. Q. Who, if anyone, was above him in the staff? A. The president of the America Company was above him. Q. What are your duties as president of the America Company, today? A. I have general charge of the business of the com- pany. Q. Then, you have control, as superior officer, of the same line of work that you supervised in the years you have named? A. Yes, sir. Q. Who is the sales manager now for the America Com- pany? A. Domestic sales manager? Q. Yes. A. Mr. William Browning. Q. And who is sales manager for both domestic and for- eign business? A. There is no one except myself. Q. Will you please describe the sales organization under you ; that is, what classes of employes is it divided into, giv- ing them in the order of importance. Going now to the time when you were domestic sales manager. A. I had an assistant, six district sales managers, and under them the general agents, blockmen, and so forth. Q. The general agent reported to the division mainagers, or to you? A. To the district managers. Q. The district managers, then, reported to you? A. Yes, sir. Q. Supposing you issued instructions. Would your in- structions go to the general agents, or to the district man- agers ? A. To the district managers ; through them to the general agents. Q. They would repeat the instructions to the general agents ? A. Yes, sir. Q. How were those instructions sent during the years you have named? In the form of circular letters? 76 R. C. Hashins, Direct Examination. A. Some times ; some times verbally. Q. And the circular letters were numbered and lettered, so that they presented a consecutive series? A. Yes, sir. Q. And was that done from the beginning of the business of the Harvester Company! A. I am not sure. I think so. That was the general plan. Q. You have retained, I suppose, the complete file or set of those circulars of instruction, in the office? A. I do not know. I have not seen them personally for a number of years. I am not sure about that. Q. Who would know about that? A. Mr. E. N. Wood. Q. Mr. E. N. Wood, the secretary? A. Yes, sir. Q. Those would be documents of a character which you would require to have preserved as being the instructions which your agents would follow? A. After they had served the purpose they would not be of very much value. There was a good deal in them that was of only transitory value. Q. For instance, here is a copy of what purports to be a general letter number 93-C, dated November 11, 1904. It ap- pears to have your initials on it. A. Yes. Q. And accompanies a letter of yours? A. Yes. Q. That was the general form, was it, of instructions is- sued to agents, that being addressed to general agents, enti- tled "General Letter No. 93-C"? A. Yes, sir. Q. How was that lettered — 93 for that year? A. No, that was the consecutive number. Q. Beginning from the beginning of the business? A. I am not sure whether it was the beginning of the busi- ness or the beginning of that year; I am not clear about that. Q. What does the "C" stand for? A. I do not know. Q. You would not have any objection to producing those circular letters? A. No, if they are in existence. Q. In whose custody would they be — Mr. Wood's? A. Probably. Q. The secretary of the company? R. C. Haskins, Direct Examination. 77 A. Yes. Q. Now, it has been your btisiness to follow the sales of harvesting implements and such agricultural implements as the Harvester Company of America sold throughout the United States? A. Yes, sir. Q. Now taking up the harvesting implements. It is true, is it not, that there are certain harvesting implements which every farmer requires? A. Yes. Q. I am speaking now of every farmer who raises the cereal, — ^wheat, barley, oats, or lye. A. Yes. Q. Will you enumerate which of the harvesting imple- ments fall in that class? A. Plows — Q. You do not call that a harvesting implement? A. I did not understand your question, perhaps. (The following question was read by the Examiner: "Will you enumerate which of the harvesting implements fall in that class?") A. The self-binding harvester. Q. Or binder? A. Or binder; the reaper, header, or header binder. Mr. Wilson: I do not believe you understand the ques- tion now. Witness: The classes of harvesting machines? Mr. Wilson : Yes, that every farmer requires, counsel says. Do you mean to say that every single farmer has a header or binder? Mr. G-rosvenor: That can be brought out on cross-esami- nation. I suggest that the witness be permitted to answer. In my question I said raising the cereals, — wheat, barley, rye and oats. I think the answer is all right. Will you continue now, Mr. Haskins? Mr. Wilson : I suggest the witness have the question read to him again. Mr. 'Gri"osvenor : Yes, if you please. And if you have any doubt, Mr. Haskins, so state and I will repeat the question and try to make it clearer. (The Examiner read the last few questions and answers.) Witness : A farmer who had a sufBoiently large crop of those cereals to cut would need a binder or some equivalent grain- cutting machine. 78 R. C. Haskins, Direct Examination. Q. What are tlie equivalents'? A. There are different types of hinders used in different sections of the country; header or header hinders in some sections. Q. Any others'? A. Eeapers. Q. Are you acquainted with the average size of the farm of the cereal-raising farmers'? A. I do not know that I am. Q. Now take the farmer who has a crop of hay. State the harvesting implements that that farmer requires. A. If he had a large crop he would need a mowing ma- chine and a hay rake. Q. What do you mean hy ' ' large crop ' ' ? A. Fifty to sixty acres. A. And the same thing is true of the farmer raising wheat, as to the size of his farm? A. Yes ; I would say fifty to seventy-five acres there. Q. These implements that you have named have been sold under the commission agency contract to the retail dealers, have they not? A. The harvesting machines have, and mowing machines also. Q. But the rakes are sometimes sold on the other basis? A. Yes, sir. Q. The binders are sold throughout the parts of the coun- try where the wheat is raised ? A. Yes, sir. Q. And the mowers wherever hay is raised? A. Yes, sir. Q. Which is the most common size or type of binder that you sell, — the 5-foot, 8-foot, or which size? A. I think the 6-foot leads a little. Q. What is the cost to the farmer of the 6-foot grain binder? A. I do not know. Q. At what do you sell it to the retail dealers? A. About one hundred dollars. Q. Cannot you state accurately what it is? A. That is approximately right. Q. Is Petitioner's Exhibit 27 the price list of the Har- vester Company of America? (Handing exhibit to the wit- ness.) A. I think it is ; yes, sir. B. C. Raskins, Direct Examination. 79 Q. Please refresh, your memory from that sheet, and then state what you sell the 6-ft. binder at, to the dealer, as it appears from that exhibit; then if there are deductions, for any reason, you can explain them. A. The time price is $105.50, from which there is a cash discount of 5 per cent, bringing the price to approximately $100. Q. When is that cash discount given? A. At the time of settlement. Q. These grain binders are consigned to the dealer, and you retain the title? A. Yes. Q. The dealer sells it to the farmer, generally speaking, on two or three-year payments; is that not right? A. Yes, sir. Q. When does the dealer settle with you? A. Some time in the fall of the year in which the sales are made. Q. But generally? A. Generally August or September or October; when our man calls for the settlement. Q. Then, the dealer does not pay you in three years ? A. He may give us notes due in one, two or three years. Q. What per cent of your binders are sold on the two- equal payments system, as indicated, and what per cent un- der the other? A. I could not answer that, sir ; I do not know. Q. Then, the farmer pays to the dealer for the binder Ibis sum, whatever it is (this $100, we will say, approximately), pkis whatever the dealer collects as his commission? A. I presume that is true. We do not regulate the price to the farmer in any way. Q. Now, take a mower. What is the cost of the mower, or the price at which you sell the mower? I refer to the most common type of mower. A. A 5-ft. cut? Q. Yes. A. I think the time price is $35 or $36; I am not quite sure. Q. And of the different rakes that are used? What is the most common form of rake? ' A. 10 feet. Q. And what is the price of that? A. I think about $16; that is my recollection. Q. Do you sell any binders except under the trade names 80 B. C. Hashins, Direct Examination. "McCormick," "Deering," "Champion," "Milwaukee," or "Plapo"? A. Yes, sir. Q. What is the name of your other? A. "Oshorne." Q. The "Osborne"? A. Yes. Q. Other than those six have you any types ? A. I think not. Q. As you have entered upon the sales of new lines in the ten years you have been in the business — such as tedders, different kinds of rakes, cultivators and other things — ^have you not from time to time given them the same trade name, that is "McCormick," "Deering," or "Osborne," so that the trade name is preserved in the business? A. No; the intention has been to do the reverse of that. Q. Did either the McCormick or the Deerings make tedders in 1902, do you know? A. I do not know. Q. Do you know what new lines you have added to your business? A. I do not think I could enumerate them offhand. I know them. Q. I show you Petitioner's Exhibits 21 and 22. Look those over, please. (The witness looks at the exhibits handed to him by Mr. Grosvenor.) Q. Now, returning to the question of trade names. Is that what you term it — the use of a trade name? For instance, your lines are sold under those names, "McCormick," "Deer- ing, " " Osborne. ' ' How do you designate those names ? Trade names? A. Yes. Q. Harrows are a new line, are they not? A. Yes. Q. You sell disc harrows under the name- "Deering disc harrows," "McCormick disc harrows," "New Deering bump- er," "Keystone bumper," do you not? A. Not under the names "Deering" and "McCormick" in the United States, except in some of the Eastern and South- ern portions. Q. Do you advertise those as ' ' Deering harrows ' ' ? A. Not in the United States. Q. "Well, where do you? R. C. Haskins, Direct Examination. 81 A. Canada. Q. Do you sell harrows in the United States? A. Yes, sir. Q. And what do yon call them in the United States? A. One line is known as the "Keystone" and the other as the "Victor." Q. How about the Disc Harrows Cut-out? I find in this Implement Blue Book, referred to hy Mr. Funk as the stand- ard, this morning, "Deering Disc Cut-out Harrows," and "McCormick Disc Cut-out Harrows." Are those sold in the United States? A. No, sir. Q. They are sold in the United States but not under those names ? A. Not under those names. , Q. Why are they advertised under those names in this Implement Blue Book of the United States? A. I do not know. The machines, by the way, are not ab- solutely identical. Q. The which? A. The machines are not absolutely identical, as between the "Keystone" and "Victor," "Deering" and "McCor- mick. ' ' Q. How do you distinguish them, then, in the United States when you advertised them? A. Under the names "Keystone" and "Victor." Q. Now, cultivators: that is a new line, is it not? A. Yes, sir. Q. You sell those under the "Deering," "McCormick," "Osborne" trade names, do you not? A. Yes, sir. Q. Does your answer apply to the United iStates ? A. To the United States, yes, sir. There is very little dif- ference between them in design. Q. I am not asking you about design. I am trying to as- certain whether these trade names are not applied today to the different lines that you manufacture to sell in the United States. The sweep rake is a new line, is it not? A. Yes, sir. Q. Those are sold under the "Deering," "International," "MeiCormick," "Keystone," "OsTjorne," "Champion" trade names, are they not? A. I do not think any are sold under the "Keystone" and ' ' Champion, ' ' but they are under the other three. 82 R. C. Hashins, Direct Examination. 1 Q. What is a tedder? A. A machine for stirring up cut hay so that it may be cured better. Q. That is a new line since 1902, is it not? A. Yes, sir. Q. Now you sell tedders under the "Champion," "Deer- ing," "McCormick," "Milwaukee," "Osborne," "Piano" trade names, do you not? A. I do not think under the last three mentioned, but under the first three. Q. Which were the first three? 2 A. "Champion," "McCormick" and "Deering," and as I now recollect "Osborne" and "International." Q. Alfalfa stackers and hay stackers are new lines, are they not? A. Yes, sir. Q. And you sell alfalfa stackers under the Deering and McCormick trade names? A. Yes. Q. And hay stackers under the Champion, Deering, Deer- ing, Jr., McCormick and McCormick, Jr., names? 3 A. Yes, sir. Q. Hay loaders are new lines, are they not? A. Yes. Q. You sell those under the Deering, Keystone, McCor- mick and Osborne trade names? A. No, sir. Q. Do you not sell them anywhere under those names? A. No. Q. Why are those lines listed in this book? A. I do not know, sir. We sell them under the Keystone name. 4 Q. As far as possible it is the custom, is it not, in the har- vesting business, to apply a well known trade name to the harvesting implements? A. I presume so. Q. Is not that the fact? A. It has not been the custom in our business. I do not know whether it is a general custom or not. Q. Are there any binders that you sell that have not trade names? A. No. Q. Are there any reapers that you sell that do not have trade names? R. C. Haskins, Direct Examination. 83 A. No. Q. Are there anj^ mowers that you sell that do not have trade names? A. No. Q. Do you have means of ascertaining, or do you keep records in your office of the different sales of these different brands or types of machine, for instance, of the aggregate number per year of McCormick binders that are sold, and Piano binders that are sold? A. No, sir. Q. Have you means of ascertaining the number of McCor- mick binders that you sell today in the United States? A. Yes, through the general agencies. Q. They keep them, do they? A. Yes. Q. When your retail agents or the implement dealers en- ter into commission agency contracts with you, these are contracts for specific lines of implements, are they not? A. Yes, sir. Q. By "lines" I mean for McCormick binders — A. Yes. Q. — or for Deering binders. A. Yes. Q. I show your Petitioner's Exhibit 25. That is the list of articles which the America Company has purchased from others than the New Jersey Company. From what com- panies do you purchase or have you purchased drills ? A. The American Seeding Machine Company. Q. Do you have a contract with them for the purchase of drills today? A. Yes. Q. Did you enter into that contract? A. Yes. Q. I would like to ask you to produce that, if you will, to- morrow. A. Yes, sir. Q. Whom do you buy hay presses from? A. I do not know. Q. Let me assist you. This list purports to be a list of all articles bought during the past ten years. A. Yes. Q. It may be that you are not purchasing hay presses to- day. How about that? A. Many of those items are bought direct by the general 84 R. G. Haskins, Direct Examination. agents and not through our office at all. I think we are not buying hay presses now. Q. You make your own hay presses? A. Yes, sir. Q. Have you any contract with anyone for the purchase of threshers? A. Yes, sir. Q. With what company? A. The Belle City Manufacturing Company. Q. Will you produce that contract, also, if you please. Now, have you any contract for the purchase of twine? A. No, sir. Q. When did you purchase the twine? A. We purchased some this season. Q. Did you not manufacture enough to supply your agents ? A. No, sir. Q. From whom did you purchase? A. Fitler and Company, and the Peoria Cordage Com- pany. Q. Under any contracts? A. No, sir. Q. Is it not a fact that your total purchases from others than the Harvester Company of New Jersey are a very small percentage of your business? A. I would guess it to be about two and one half per cent. Q. It is two and one half per cent of your entire business. And which are the most important or the largest articles going to make up that two and one half per cent? A. Threshers, wagons — Q. Seeders, or drills 1 A. No. Threshers, wagons and plows make up the prin- cipal part. Q. Have you a contract for the purchase of plows? A. No, sir. Q. Or wagons? A. Yes. Q. With what company? A. The Keller Manufacturing Company. Q. Will you produce that, also, please? Did you have any- thing to do with purchasing for the New Jersey Company, the Osborne, Keystone, Minnie, or Aultman- Miller plants? A. No, sir. Q. When were you first informed that the Harvester Com- R. C. Haskins, Direct Examination 85 pany of New Jersey had secured control of the Osborne 1 business? A. I think either in 1904 or 1905. It is very indistinct in . my mind. Q. 1904 or 1905? A. 1904 or 1905. Q. That was some time after the date that they did ac- quire control, is it not? A. I think so, yes, sir. Q. Had the Osborne Company been advertising itself as independent ? A. I think it had, yes, sir. 2 Q. Returning to your organization: The blockmen have general supervision over the retail dealers; is that not so? A'. No, sir. Q. What are the duties of the blockman? A. ^ He makes the contract and settlements with the local dealer. Q. He goes and endeavors to persuade the retail dealer to enter into a contract ? A. Yes, sir. Q. What is the duty of the canvasser? 3 A. A salesman, to assist the local dealer. Q. You have a large number of canvassers, have you not? A. A good many. Q. Win a canvasser canvass all lines, that is, your lines that are not harvesting lines, as well as your harvesting lines? A. Yes, sir. Q. I show you Petitioner's Exhibit 20-B, being a map of the general agencies. Have you seen that map? A. It is a map of our general agencies. Q. In that map the cities which are marked are the head- 4 quarters of the several agencies; is not that right? A. Yes, sir. Q. And then the territory surrounding the city which is embraced or encircled by lines is the territory belonging to the general agency? A. Yes, sir. Q. In this way you have divided the United States among the agencies of the Harvester Company of America? A. Yes, sir. Q. So that those agencies embrace the entire United States? 86 R C. Haskins, Direct Examination. 1 A. Yes, sir. Mr. Grosvenor: I suppose you want to put in "excluding Texas and Arkansas." Mr. Bancroft: The map itself shows. Q. With what officer of the New Jersey Company do you deal in fixing the prices at which the New Jersey Company shall sell to your company? A. 1 have dealt with Mr. B. A. Kennedy. Q. Upon what basis have you endeavored to adjust those prices? A. Buying them as cheaply as I can for the America Com- 2 pany. Q. Has the America Company ever paid any dividends? A. No, sir. Q. Is not your object to arrive at such price as will en- able the America Company to come out whole when it resells to the implement dealer? A. My object is to buy at a price so that I can re-sell and m.ake a profit for the America Company. Q. Have you thus far been able to do so? A. Generally. 3 Q. What have been the profits of the America Company in ten years? A. They have averaged about $150,000 a year. Q. After paying office expenses? A. Yes, sir. Q. What are the aggregate sales of the America Company a year? A. In the United States, about fifty-five millions. Q. But your profits are on your total business? A. Yes, sir. Q. What was the total business of the America Company 4 for 1911? A. Approximately $100,000,000. Q. And on that you realized a profit of $150,000? A. That was the average profit. I do not recall the exact amount for 1911. Q. Is it not a fact then, that in your negotiations with the officers of the New Jersey Company the object is to arrive at a price which will enable you to re-sell so that there will be neither a loss nor a profit to the America Company? A. As I said before, the object is to buy at a price so that the goods may be re-sold and make a profit for the America Company. R. C. Haskins, Direct Examination. 87 Q. Did you make any profits on these lines wMcli you buy from others than the New Jersey Company f A. Yes, sir. Q. And sell to the retail dealers? A. Yes, sir. Q. How much of your $150,000 profit was realized on those purchases ? A. I do not know. Q. Are you familiar with the business of retail implement dealers as a class? A. No, sir. I never was an implement dealer. Q. You do not know what line of goods the average im- plement dealer handles? A. No, sir, I do not. Q. Or the extent of his business? A. No. Q. I show you Petitioner's Exhibit 14, the same being a list of the officers and directors of the Harvester Company of America. At the end of that exhibit you will see the names of the present directors. Taking up those different directors, those are the directors of the Harvester Company of America ; is not that right? A. Yes, sir. Q. The first name is that of Mr. E. A. Bancroft. Has he any position with the Harvester Company of New Jersey? A. Yes, he is connected with it. Q. As general counsel? A. As general counsel. Q. Has Mr. "William Browning any position with the In- ternational Harvester Company of New Jersey? A. No, sir. Q. How long has he been connected with the Harvester Company of America? A. Since it was formed. Mr. Bancroft: You mean, since 1902? ^ Witness : Yes, sir. Q. Mr. C. S. Funk — is that the general manager of the Harvester Company of New Jersey? A. Yes, sir. Q. Mr. C. H. Haney — who is he? A. He has no connection with the New Jersey Company. Q. What is his capacity? A. Foreign sales manager for the International Harvester Company of America. 88 R. C. Haskins, Direct Examination. Q. Mr. R. C. Has'kins — that is yourself? A. Yes. Q. You have testified that you have no position with the New Jersey Company. A. Yes, sir. Q. C. H. Laufman — who is he? A. Assistant domestic sales manager for the International Harvester Company of America ; no connection with the New Jersey Company. Q. Who is Alex Legge? A. Assistant to the general manager of the International Harvester Company of New Jersey. Q. Mr. W. R. Morgan. A. Mr. Morgan is not now in our service, and is not now a director. Q. Who has succeeded him? A. Mr. W. M. Gale. Q. Is that the assistant secretary of the New Jersey Com- pany? A. Yes, sir. Q. Does Mr. W. M. Eeay have any position with the New Jersey Company? A. Yes, sir. Q. What? A. Comptroller. Q. Mr. Haskins, what other manufacturers are there of binders ? A. The Adriance, Piatt and Company; the Johnson Har- vester Company; the Walter A. Wood Company; the Acme Harvester Company; the Independent Harvester Company; the John Deere Company ; the Minnesota State Prison. Q. The three latter named have not so far had any exten- sive sale of binders, have they? A. Yes, Deere and the Minnesota State Prison have sold quite a number of binders. Q. What do you mean by "quite a number?" A. I think Deere has sold more than three thousand. Q. More than three thousand in what time? A. This year. I think the Minnesota Prison has sold ap- proximately two thousand this year. Q. By "this year" do you mean 1912? A. Yes, sir. Q. How many have you sold this year? A. We have not the returns in yet. B. C. HasMns, Direct Examination. 89 Q. Can you form any estimate! A. Probably 80,000 in the United States. Q. Who has charge of the advertising for the America Company? A. It comes nnder my general supervision. Q. Did you have charge of the advertising in the years 1904 and 19051 A. No, sir. Q. Who did at that time? A. It was under Mr. A. E. Mayer's supervision. Q. Is he at present connected with the company? A. No, sir, he is not living. Q. When did Mr. Mayer die? A. In January, February or March, 1910, I think. In the early part of 1910. Q. You have a separate selling organization for the Os- borne Company in certain parts of the country, have you not? A. Yes, sir. Q. Is that for the entire line of the Osborne plant? A. In that district, yes. Q. In what district? Please state in what part of the country the district is, and its extent. A. Michigan, Indiana, and the territory east of that to the Atlantic Ocean, except New England. Q. That is the territory which is principally covered by the Adriance-Platt, Wood, the Johnson Company, and the Inde- pendent Harvester Company, is it not? ■ A. It is the territory' nearest to the Osborne factory, where the distribution is cheapest. Q. And it is the territory in which the Adriance-Platt, Wood and Johnson Companies do the principal part of their harvester business? A. Their factories are located in that same district. Q. And their sales are largely in that district? A. I do not know about that. Q. Do you have canvassers generally throughout the United States? A. Canvassers are employed by the general agents, and not through our office here. Q. The general agents make reports to you, so that you are advised of what sections of the country you have can- vassers in? A. Yes. 90 R. C. HasJcins, Direct Examination. 1 Q. In what sections of the country do you generally have canvassers for your lines of implements? A. I should say that they are pretty generally used over the country. Mr. Grosvenor: If you will be good enough, Mr. Haskins, to produce at the next hearing the documents that I have named, that will be all for the present. And I should like to have an opportunity to examine those circulars of instruc- tions to agents, which you say are in Mr. Wood's custody. Thereupon, at 4:30 P. M. an adjournment was taken until 2 the morning of Wednesday, September 18, 1912, at 10:30 o'clock. Petitioner's Exhibits. 91 Heaeing of Septembee 18. Eoom 603 Post Office Building, CMcago, 111., September 18, 1912 10:30 A.M. The taking of testimony was resumed before the Special Examiner, Eobert S. Taylor, at tbe above time and place. Present : On behalf of the petitioner, Edwin P. Grosvenor, Esq., Special Assistant to the Attorney General, and Joseph E. Darling, Esq. On behalf of the defendants, Edgar A. Bancroft, Esq. Mr. Grosvenor: The petitioner offers in evidence the fol- lowing exhibits: Petitioner's Exhibit 28-a, being agreement between Thomas M. Osborne and Edwin D. Metcalf and the International Har- v^ester Company, dated January 15, 1903, signed by George W. Perkins, chairman of the Finance Committee of the In- ternational Harvester Company, providing for the sale of the business of D. M. Osborne and Company to the Interna- tional Harvester Company. And I also offer as part of the same Exhibit ten other contracts relating to the same sub- ject, which have been marked Petitioner's Exhibit 28-b to Petitioner's Exhibit 28-k, inclusive. The petitioner also offers in evidence Petitioner's Exhibit 29-a, a memorandum agreement between the Keystone Com- pany and the International Harvester Company and stock- holders of the latter company relating to the sale by the Key- stone Company of its property to the International Harvester Company, dated September 6, 1905; and three other agree- ments relating to the same matter, conveying the property, which have been marked Petitioner's Exhibit 29-b, Petitioner's Exhibit 29-c, and Petitioner's Exhibit 29-d. Also offers in evidence Petitioner's Exhibit 30, deed for the conveyance of the property of the Aultman-Miller Buckeye Company (an Ohio corporation) to the International Har- vester Company, dated September 30, 1905 ; and also two other deeds relating to the same subject matter, which have been marked Petitioner's Exhibits 30-b and Petitioner's Exhibit 30-c. The petitioner also offers in evidence deed for the trans- 92 Petitioner's Exhibits. fer of the property of tlie Minnie Harvester Company, dated September 30, 1905, to the International Flax Twine Company, and two other deeds relating to the same subject, which have been marked Petitioner's Exhibit 31-a, Petitioner's Exhibit 31-b, and Petitioner's Exhibit 31-c. , The petitioner also offers in evidence agreement between H. Weber, W. H. Weber, George Weber and the International Harvester Company relating to the purchase of the capital stock of the Weber Wagon Company, signed by George W. Perkins, chairman of the Finance Committee; and also the three deeds relating to the same subject matter, made part of the same exhibit, which documents have been marked Pe- titioner's Exhibit 32-a, Petitioner's Exhibit 32-b, Petitioner's Exhibit 32-c, and Petitioner's Exhibit 32-d. Memorandum as to Production of Exhibits. The foregoing exhibits have been produced by Mr. Ban- croft, counsel for the Harvester Company, upon subpoenaes addressed to Mr. W. M. Gale, assistant secretary of the In- ternational Harvester Company of New Jersey, and to Mr.' B. N. Wood, secretary of the International Harvester Com- pany of America, with the exception of Petitioner's Exhibits 1, 2 and 3, which are produced by counsel without subpoena. Under subpoenaes were also produced five blanket deeds from the McCormick, Deering, Warder, Bushnell and Gless- ner. Piano, and Milwaukee harvester companies, respectively, to William C. Lane ; a blanket deed from William C. Lane to the International Harvester Company of New Jersey; bill of sale of all accounts and bills receivable of the Milwaukee Har- vester Company; also deeds covering the like property, by specific descriptions, to William C. Lane, and the deed of the same from William C. Lane to the International Harvester Company, describing the properties in detail; also two agree- ments and the deed relating to the purchase of the manurQ spreader properties of the J. S. Kemp Manufacturing Com- pany of Newark Valley, New York, by the International Har- vester Company of New Jersey. These papers were not in- troduced in evidence by the Government, but were returned to counsel for defendants. Defendants' Exhibits — Production of Minutes. 93 1 DEFENDANTS' EXHIBITS. Mr. Bancroft: Defendants offer in evidence blanket deeds from McCormick Harvesting Machine Company, Deering Har- vester Company, Warder, Bushnell and Company, Piano Manufacturing Company, and tlie Milwaukee Harvester to William C. Lane, which documents have been marked Defend- ants ' Exhibits 1, 2, 3, 4, and 5. The defendants also offer in evidence deed of William C. Lane and wife to the International Harvester Company of New Jersey, dated August 13, 1902, of the five properties and businesses acquired under the foregoing deed, which docu- ment has been marked Defendants' Exhibit 6. PRODUCTION OF MINUTES. Mr. Bancroft: In response to subpoenaes duces tecum to W. M. Gale, counsel for the defendants produces and submits for inspection to counsel for the petitioner, the official minutes of the Board of Directors of the International Harvester Com- pany from August 12, 1902, to and including December 28, 1911 ; and under subpoena to said E. N. Wood, minutes of the Board of Directors of the International Harvester Company of America, from October 1, 1902, to and including December 29, 1911 ; and, under the subpoena to Gale, the official minutes of the stockholders' meetings of the International Harvester Company of New Jersey, from its organization to and includ- ing April 18, 1912, being all the minutes of the stockholders' meetings of the International Harvester Company. The min- utes of the directors' meetings for the two companies, re- spectively, since December 29, 1911, not being produced for the present under an understanding with counsel for the peti- tioner. Thereupon, at 12:00 o'clock noon, an adjournment was taken until the morning of Thursday, September 19, 1912, at 10:30 o'clock. 94 Illness of Mr. Bancroft. Heaeing of Septembbe 19. Boom 603 Post Office Building, Chicago, Illinois, September 19, 1912, 10:30 A.M. The taking of testimony was resumed before the Special Examiner, Robert S. Taylor, at the above tinae and place. Present : On behalf of the petitioner, Edwin P. Grosvenor, Esq., 2 Special Assistant to the Attorney General, and Joseph R. Darling, Esq. On behalf of the defendants, John P. Wilson, Esq. Mr. "Wilson : Mr. Bancroft, the general counsel of the Com- pany, is unwell and unable to attend the examination this morning, and I have asked counsel for the Government for an adjournment. They have suggested that the adjournment be until this afternoon, before any date be fixed for the pro- ceeding of the testimony, which is, of course, agreeable. Mr. Grosvenor: I should like to be advised this afternoon ^ more definitely as to how long Mr. Bancroft is likely to be in- capacitated. I understand that the physician has not yet been able to state Mr. Bancroft's condition. I think by this after- noon the examiner will be better prepared to decide as to what day the hearing shall be postponed. (A recess was thereupon taken till 2:00 o'clock P. M.) AFTERNOON SESSION. Mr. Grosvenor : The record may show that we met pursuant 4 to adjournment, and that counsel for the defendants produced, for the inspection of the counsel for the Government, the minutes of the Executive Committee of the International Har- vester Company, from August 13, 1902, down to and includ- ing October 23, 1906, and the minutes of the Finance Commit- tee of the International Harvester Company from September 30, 1902, to and including December 28, 1911 ; also the minutes of the Board of Directors of the International Harvester Com- pany of America from October 1, 1902, to and including De- cember 29, 1911. Thereupon an adjournment was taken until the afternoon of Friday, September 20, 1912, at 2:30 o'clock. Illness of Mr. Bancroft. 95 Heaeing of Septembee 20. Eoom 603 Post Office Building, Chicago, Illinois, September 20, 1912, 2 :30 P. M. The hearing was resumed before the Special Examiner, Eobert S. Taylor, at the above time and place. Present : On behalf of the petitioner, Edwin P. Grosvenor, Esq., Special Assistant to the Attorney Greneral, and Joseph E. Darling, Esq. On behalf of the defendants, John P. Wilson, Esq. Mr. Grosvenor: I have been over the stockholders' min- utes, and there is a short stipulation which I will read into the record. It is as follows : Counsel for the defendants produced the minutes of meet- ings of the stockholders of the International Harvester Com- pany from August, 1902, to and including April, 1912. It is stipulated by counsel that said minutes of the stockholders' meetings show that during the period cov- ered by the minutes, George W. Perkins, Cyrus H. Mc- Cormick and Charles Deering were joint holders of all the shares of the capital stock of the International Har- vester Company except such few shares as were neces- sarily held by the other fifteen directors of the Interna- tional Harvester Company in order to qualify them under the laws of the State of New Jersey to be directors of the International Harvester Company, no such director hold- ing for such qualification purposes at any time more than- one or two shares of stock. It is also stipulated that at each of the meetings of the stockholders during the said period the block of stock held jointly by the three persons above named was rep- resented by one proxy, which proxy cast in one vote the votes of all the stock so jointly held. Mr. Wilson : Mr. Examiner, Mr. Bancroft, the general coun- sel of the Company, who has had the sole charge of the prepa- ration of this case and who, it was arranged, should have sole charge of putting in the testimony, was taken ill the nigM before last and has been confined to his bed ever since with a difficulty which renders it impossible for him to go on with 96 Illness of Mr. Bancroft. tlie work of this case at the present time. His physician says that it will be impossible for him to go on within two or three weeks, and it may be inadvisable for him to continue the re- sponsibility of conducting the examination on behalf of the defense. In view of this situation the defendant Company is endeavoring to secure counsel to go on with this examination at the earliest possible date. It will be necessary, however, to employ counsel who have had no connection with the case, and the effort is in that direction at the present time. Of course it is needless to say that it is uncertain within how many days new counsel can be secured to take up the examination of witnesses. The Company have been advising with counsel in regard to this case who is at the present time in California arguing a case before the Supreme -Court, and who will not return until the 1st day of October. It may be important that his advice be secured in making the new arrangement. That is not certain, however, for if certain other counsel can be secured they will be retained without waiting to consult with him. My own connection with the case is purely that of con- sulting counsel. I have had no part in the preparation of the defense, and am not physically able to assume the burden of going on with the examination, and never would have under- taken it. It may be that Mr. Bancroft will be able to resume the burden in two or three weeks, but we are not resting upon that proposition, because we recognize that the Grovernment is entitled to proceed without waiting for the uncertainty of a man's restoration to health, and therefore all that we are entitled to ask is a reasonable opportunity to secure counsel to go on with the case. That necessarily involves familiariz- ing themselves with the record and the evidence, and we can- not at this moment know what the engagements of any such counsel may be with reference to immediately proceeding with the case. I would therefore suggest an adjournment of the taking of testimony until two weeks from Monday, when we would hope to be prepared to go on. If not, an additional showing would have to be made, of course, that we have used due diligence and have been unable to put ourselves in a posi- tion to proceed. Of course if counsel on the other side wish an affidavit of these facts instead of my statement, I will pre- pare an affidavit and present it. Mr. Grosvenor: Counsel for the Grovernment exceedingly regret the unfortunate illness of Mr. Bancroft, and also re- gret the fact that in view of his illness some delay seems un- avoidable. The counsel for the Government accordingly con- Illness of Mr. Bancroft. 97 sent to an adjournment to October 1st, at wMch time, it seems to me, defendants should be ready to proceed, in view of the other counsel whom they already have in the case, their own legal staff. I am willing that we should adjourn at this time to October 1st. But in fairness to the counsel for the Har- vester Company I think I should state that we shall oppose any adjournment after that time. I think some delay should be granted in view of the illness of Mr. Bancroft. So I suggest that we adjourn until October 1st, and if the defendants are not ready to proceed at that time the matter can be re- considered. Mr. Wilson : I have not any criticism on the suggestion ex- cept that it might obviate some embarrassment if the date of adjournment were put a day or two later, because there will . be counsel here on October 2nd with whom it will be impor- tant to have a consultation before going on. (Mr. Wilson and Mr. Grosvenor confer together.) Mr. Grosvenor: In view of Mr. Wilson's statement that Mr. Kellogg will return October 1st and the defendants and their counsel desire to confer with him, I agree we adjourn until October 2nd at half past 2. As I am at present advised we shall oppose any further continuance at that time. I will ask counsel for the defendants to produce at that time the circulars with respect to which we talked and which are- re- ferred to in the testimony of Mr. E. C. Hasldns. (Adjourned until October 2, 1912, at 2:30 P. M.) September 27, 1912, the Special Examiner received from Mr. Grosvenor a telegram reading as follows: 11 UZX JA 38 GOVT. Amherst, Mass. Sept. 27-1912. Robt. S. Taylor, U. S. Dist. Bldg., Dnluth, Minn. International Harvester Co. has been unable to receive ad- ditional lawyer we are advised and Attorney General Wicker- sham has authorized further adjournment to October eighth at defendants request. Edwin P. Geosvenob. 12 :20 P. M. Thereupon the Special Examiner entered upon the record a further adjournment in this case until the morning of Tues- day, October 8, 1912, at 10:30 o'clock. 98 Minutes of Directors of I. H. Go. 1 Heaeing of Octobeb 8. Eoom 603 Post Office Building, Chicago, Illinois, October 8, 1912, 10:30 A. M. The hearing was resumed before the Special Examiner, Eobert S. Taylor, at the above time and place. Present : On behalf of the Petitioner, Edwin P. Grosvenor, Esq., Special Assistant to the Attorney General, and Joseph E. Darling, Esq.; On behalf of the defendants, Hon. William D. McHugh, John P. Wilson, Esq., and Hon. Philip S. Post. The appearance of Hon. William D. McHugh, as counsel for the defendants, was entered. Thereupon the following proceedings were had and the fol- lowing testimony was introduced: Mr. Grosvenor : Counsel for the Government requested the production of the minutes of the Board of Directors of the International Harvester Company. Judge McHugh now pro- duces the minutes from August 12, 1902, to and including De- cember 28, 1911, in two volumes. (Volume bearing title "Official Minutes Board of Directors International Harvester Company" was marked "Petition- er's Exhibit 1 for identification," and volume bearing title "Official Minutes Directors' Eecords International Harvester Company" was marked "Petitioner's Exhibit 2 for identifi- cation.") Mr. Grosvenor : The Petitioner now offers in evidence and reads into the record the following entries from "Official Minutes Board of Directors International Harvester Company, which has been marked "Petitioner's Exhibit 1 for identifica- tion." (Page 2) : _ "The first meeting of the Board of Directors of the Inter- national Harvester Company was held at the principal of- fice of the Company, at the office of Hudson Trust Company, No. 51 Newark Street, Hoboken, New Jersey, on the 12th day of August, 1902, at 7 :00 o 'clock in the afternoon, pursuant to a waiver of notice and consent signed by all the Directors of the Company. Mimdes of Directors of I. H. Co. 99 The following Directors were present: Messrs. Abram M. Hyatt, George W. Hebard, Koland E. Dennis, Edward M. F. Miller, Eobert S. Green and Erastus M. Cravatb, constituting the entire Board of Directors." * * * (Page 10) : "Thereupon the President submitted to the Board a propo- sition from William C. Lane, and also a letter from Mr. Lane transmitting certain papers, of which the following are cop- ies: PROPOSITION FROM WILLIAM C. LANE. New York, August 12, 1902. To the Liternational Harvester Company: I hereby offer to sell to you, upon the terms stated below, the fa- //. /)'. I'tlr/i, Viici't l\.vaui'ni,ilion. 1 A. 1 Wiiw in business for niysoll", mI, Sll>^^^ll,^ Illinois. Q. in (lie hnrvcstiiii>' business? A. No; in tlic niannliiclnrc' of iniiH>r. Q. You Icl'l tlial iuul biH'iinio tlu> sniK'riiii-cndciii of works ol" llic Mct'orniii'k (.'oiiipniiy ; is Hint. ris;;lii'? A. 1 bct'iiino su[ii'riii((Mi(l(Mil pcrlinps I wo ycnrs a Her my Jirst conncH'tion willi lli(> biisint'ss. Q. ThiMi bow loni;- did yon ronnvin witli lln' McConnicks, Mr. lltloy? A. Unlil .launary I, lt)00. Q. AVIint did you do ihow'! 2 A. For a cousidorablc liuic I did notJiing. Q. Looking around for occuiwilion "/ A. Yos, sir. Q. Wbat was your ucxl iuU'rcsl- in l.lic barvcsliuu; biisi- lU'SS? ;\. PtM'iiaiis 1 sbould Icll yon ilia! I was for ono year k<'ii (M'al nuina,i;('r ol' llic Wliilnian & Barnes Manuraclurinjj; C'orn pauy ; bnrdiy, liowcvcr, nudicrs of farni niai'liin('i'\'. (i No, liiirdly. A. And ai'tcM- t.liai iinic- Q. Wbcn was IJial, Mr. lllb-y? A. 'Pluvt was in lilOO, ibc lallcr pari, ol' l!M)| and lM';,nnninK of '2. g. TlicMi you Mi i.b(>in? A. ^'{>s, sir. Q. 'IMicn wbat did you do? A. 1 bocanic inti'rcslcd in ibc Kcysl.onc Company al, Slcr- ling, Illinois. Q. Did you '^o dirccily I'rom ibc Wbil.man & iiaiMics (^)m- pany to Ibc Kcysl.onc Company? A. Yes, sir. ^ C^. Wbcn did you become ini.ercsied in ibc Keystone (Com- pany? A. 'Pile purc.base ol' ibc Keystone (!onipa.ny was complcteil about ibc lirst of Mareb, 1i»():i. Q. Li't's K'l't ibis liKJit on Ibc record, Mr. lltley. 'i^iiero WHS a Kcyst()n(( Manuracttirini;; ('omf)aiiy, was tlierc not? A. Yes, sir. Q. "Wbat be<^arn(^ of tbat? A. ^riiey were in tlio bands ol' a. receiver, wbi'n w«> pur- cbased tb(> business. (^. You purcbaseil tbc business? A. Y(>s, sir. E. B. Utlcy, Direct Examination. 193 Q. And then you organized this Keystone Company'? A. Yes, sir. C^. Is that right? A. Yes, sir. Q. And that was in ]\[areh, 1903? A. Yes, sir. Q. AVhat was the business of that company? A. The manufacture of corn shellers, hay loaders, hay rakes, disc liarrows and corn shredders. Q. They had a well-known line of hay tools, did they not! A. Yes, sir. Q. In ^larch, 1903, you say, you again started in the har- vesting business, with the Keystone Company. Who were your associates in that company? A. Who were the stockholders' Q. Yes, if you prefer to put it that way. You were a stockholder? A. 'Yes, sir. j\ly chief associates, — perhaps that w^ould be the best way to answer vour question — were j\Ir. E. K. But- ler, i\lr. A.\T. Piatt, Mr. R. B. Swift, Mr. H. S. Butler. I think that is about all, all I recall. Q. Did you name ^Ir. Redmond, Andrew J. Redmond? A Well, he may have been. Q. Do you recall him? A. No, 1 do not. I think he was perhaps employed as an attornej', and his name may ha\-e been used in the or- ganization of the company. However, he was never actively connected with it in any way. Q. Was he a lawver in Chicago? A. Yes. Q. Was he a lawyer in the City of Chicago? A. In Chicago. Q. What is his address? A. I cannot tell von. Q. Who is this :\lr. Butler, E. K. Butler? A. Mr. E. K. Butler is an uncle of mine and lives in Chi- cago. Q. I mean what had been his previous occupation? A. Formerly general manager of the ^IcCoi-mick Harvest- ing ]\lachine Company. Q. He had been with the McCormiek manv vears, had he not? A. Tos, sir. Q. The other ^Ir. Butler was his son? 194 H. B. Utley, Direct Examination. A. His brother. Q. This Mr. Piatt, what had been his occupation? A. Mr. Piatt had been the active man in the business of the Keystone Manufacturing Company. Q. When it failed? A. Yes, sir. Q. You were a stockholder? A. Yes, sir. Q. How much stock did you hold? A. One thousand shares. Q. Was it not more than that? A. No, sir. Q. How much did Mr. Butler hold? A. I cannot remember. Q. For whom did you hold another four hundred shares? A. If I held four hundred additional shares, I have for- gotten it entirely. My ownership was one thousand shares. Q. Have you any recollection of any other shares stand- ing in your name for any one? A. I have liot. Q. How much did you pay for the plant of that Keystone Manufacturing Company? ! A. About one hundred and forty odd thousand dollars. Q. What was the capital stock of the new company? A. $400,000. Q. Issued at par, was it? A. Issued at par. Q. Of which you took a thousand shares? A. Yes, sir. Q, How did you happen to become interested in the Key- stone proposition? A. The Keystone business was located at my old home, 'and I was looking for an opportunity to utilize my long experi- ence and training in similar lines. Q. Who brought the matter to your attention? A. 1 think I brought it to the attention of other people. I was quite interested in securing the business, for the reason stated. Q. In other words, you read in the papers about its re- ceivership, and it occurred to you to buy it; is that right? A. I cannot say 1 read it in the papers. I knew a great deal about the institution, having lived in the town where it was located. Q. Where did you get the money to buy it? H. B. Utley, Direct Examination. 195 A. I borrowed a part of it, and I think I put in, in money, personally — I do not want to state definitely, but I think $60,000. The balance I borrowed. Q. Did you borrow it from any of the officers or stock- holders of the International Harvester Company? A. I did not ; no, sir. Q. Mr. Utley, have you retained a copy of the contract under which the Keystone Company sold out, on October 13th, 1904, to certain officers and stockholders and directors of the International Harvester Company? A. No, sir, I have not. Q. Have you got a copy of that? A. I have not. Q. Do you know where a copy could be obtained? A. Most likely from Mr. Piatt, secretary of the company Q. Where are the records now of the Keystone Company? A. I cannot answer that question. I would assume in the hands of Mr. Piatt, but I cannot say definitely. Q. During the years 1903 and '4, you advertised your com- pany very widely as an independent company, did you not 1 A. Yes, sir. Q. And also during the year 1905 it was advertised as an independent, was it not? A. Perhaps during the early part of 1905. Q. When did you sell out your company? I mean, what was the date at which you first began negotiations with the officers of the Harvester Company? A. Those negotiations were carried on by Mr. Butler. We sold a controlling interest in the fall of 1904. Q. To whom did you sell it? A. To persons connected with the International Harvester Company. Q. Will you name some of them? A. Mr. Cyrus H. McCormick. Q. I show you Petitioner's Exhibit 29a, with a list of names on that contract. See if that will refresh your recollection as to the names of any of the parties (handing paper to wit- ness). A. Yes, sir. Q. Are you able to state more fully the names of the par- sons to whom you sold the stock interest or control of the Keystone Company? A. This list would cover the names, I think. Q. This list covers the names. That was in October, 1904? 196 H. B. Utley, Direct Examination, A. That was in September, 1904; was it not? Q. September, 1904. A. Let me see, sir; perhaps you are right. Q. That is the contract, a year later. A. Yes. Yes, it is my recollection, in September, 1904. May be October. In tlie fall of 1904. Q. Will you read' into the record the names of the per- sons ? A. Shall I read them, sir! Q. Yes, please. . A. Cyrus H. McCormiek, Charles Deering, George W. Per- kins, James Deering, J. J. Grlessner, W. H. Jones, Stanley Mc- Cormiek, Eichard F. Howe, Harold F. McCormiek. Q. I show you a letter addressed to Mr. John S. Green, dated 6-5 1905, on the letterhead of the Keystone Company, purporting to be signed by A. J. Piatt. D'o you recognize that as a letter of your company (handing paper to witness)? A. It is on the letterhead of the Keystone Company, and signed with a rubber stamp. I cannot say anything more. Q. That is the stamp of the secretary of the company, is it? I mean the rubber stamp. A. Yes, I think so. Q. Do you recall having business relations with the gen- tleman named on the letterhead; that is, relations with him as a retail implement dealer? A. I do not. Personally, I had nothing to do with the sales. Q. Are these initials at the bottom of the letter the initials of Mr. Piatt, the secretary? A. They are. Q. And those other initials, "GME", whose initials are those? A. I do not recall. Mr. Grosvenor: I offer that in evidence. Mr. McHugh: I object to that as incompetent, irrelevant, immaterial, no proper foundation having been laid. (The paper was marked "Petitioner's Exhibit 38," and is as follows:) H. B. TJtley, Direct Examination. 197 PETITIONER'S EXHIBIT 38. (Letterhead) "Trade Mark The Keystone Co. 111. Sterling, Horse Powers Side delivery hay rakes Hay loaders Potato planters Com huskers & Fodder shredders Est. 1858 E. H. A. The Keystone Co. Agricultural Implements Corn shellers & corn planters Seeders & Mowers Disc seeders & Disc Harrows Self feeders & Band cutters Snappers & Shredders K. Butler, President, B. Utley, Treasurer, J. Piatt, Secretary. Sterling, Illinois, 6/5/1905. "Mr. John S. Green, Creighton, Nebr. Dear Sif: Replying to yours of the 31st ultimo in reference to reports that the International Harvester Company have purchased our business, beg to say that the officers whose names are at the head of this sheet are in charge of The Keystone Company and there is nothing whatever in the report you have heard of others having secured control of this business. We are of the opinion that the International Harvester Company already have more factories than they are able to operate profitably We hope you will be able to use a liberal quantity of our goods in your trade this season and remain. Very respectfully. The Keystone Co., A. J. Platt, Sec'y. AJPrGMR." Q. Now, Mr. Utley, as a matter of fact, you and the officers of the Keystone Company were concealing, at that time, tlie 198 H. B. Utley, Direct Examination. fact that you liad been sold out to the Harvester Company; is that not right? A. We were doing the things that we thought necessary, in the ordinary conduct of a business, the season of which had been started, as a matter of business policy. I cannot say that we were concealing the fact. Q. Did you not advertise, in the year 1905, that you were still independent? A. Yes, I think so. Q. Who was this Mr. Swift whom you have mentioned? A. Mr. Swift was formerly connected with the McCormick Harvesting Machine Company. Q. During the time that he was your associate, was }ie an employe of the International Harvester Company? A. He was. Q. An important employe; is that right? A. I cannot say that, no. Q. Do you know what position he held? A. I was not connected with the company at that time, but I think in connection with the patent and development depart- ment. Perhaps not patents, but I think in what they know as the experimental department. Q. About the middle of 1905 Mr. Swift filed suit against the Harvester Company; is that right? A. I do not recall, sir. Q. Do you recall whether or not the fact of the conceal- ment of the ownership of the Keystone Company became known by reason of the suit which he filed, and in which he stated that this company had been owned by the Harvester Company? A. I do not remember. Q. You do not remember? A. I do not remember. Q. When did you acknowledge that this Company was owned by the International Harvester Company? A. I think we stopped advertising the company as inde- pendent in the spring of 1905. Q. I did not ask you when you stopped advertising. (Bead the question, please.) (Question read.) A. I do not recall. Q. When did you leave the Keystone Company? A. May 1,1907. H. B. Vtley, Direct Examination. 199 Q. Wlien did you accept employment with, the Harvester Company ? A. About one year prior to that date. Q. You did not leave the harvesting business, did you? A. No, sir. Q. That is, as you left one company you became then em- ployed by the other; is that right? A. That is right. Q. Mr. Piatt was the secretary of your company? A. Yes, sir. Q. And he was the secretary during the year 19051 A. I will have to refer to the records. I cannot answer that question. "Q. Did he, like you, become employed by the Harvester Company as soon as his duties with the Keystone Company were severed? A. He did. Q. Mr. TJtley, I show you volume entitled "Farm Imple- ment News," the issue of April 13, 1905, and point to a full page advertisement on page twenty-one. Is that an adver- tisement of your company? A. It is. Q. I mean of the Keystone Company. A. It is. Q. It says "Better a Live Mouse than a Dead School- master" with a picture of a schoolmaster pointing to "A Man or a Mouse !" What is meant by the reference ''Dead School- master"? To whom does it refer? A. This picture was at that time used entirely by the D. M. Osborne Company in their advertising matter. Q. And what had happened to the D. M. Osborne Com- pany? What do you mean by that? Please explain that ad- vertisement — "Better a Live Mouse than a Dead Schoolmas- ter." Mr. McHugh: I object to that on the ground there is no proper foundation laid. Mr. Grosvenor : He has identified this as an advertisement of Ms company. Mr. McHugh : That does not show that he knows what was meant by the man who wrote it ? (The question was read by the reporter.) 0. Who was the dead schoolmaster? Mr. McHugh : The objection has been noted. A. Presumably the D. M. Osborne Company. 200 H. B. TJtley, Direct Examiination. Q. And what had happened to the D. M. Osborne Com- pany? A. We said that their business had been bought by the International Harvester Company. Q. They had been advertising for two years as independ- ent; is that right! A. That was out of my line of business, Mr. Grosvenor; I had nothing to do with our advertising. I cannot say. Q. I am not talking about your advertising. Are you able to state, from your knowledge of trade conditions, whether or not the Osborne Company, to which you refer in that ad- vertisement and whose advertisement you copied in your ad- vertisement, — are you able to state whether or not they had been advertising as independent? A. They had. Q. And you had reference to their advertising? A. We did. Q. As such? A. Yes, sir. Q. In your advertising? A. Yes, sir. Q. Now there is a picture of a schoolmaster in a coffin, with an animal labeled "Keystone" resting on his chest. The "Keystone" referred to what company? A. Referred to the Keystone Company. Q. "Eun over by Keystone machines" — what did you mean by that? A. I think you might put most any interpretation on that. I would not care to say what was meant. Q. The advertisement reads: "If you want to handle a live, independent line of binders, mowers, rakes and loaders, write us, the Keystone Company." What do you mean by the word "independent" there? A. We meant just that. Q. Just that. That is, not connected with the Harvester Company? A. Yes. Mr. Grosvenor : I offer that advertisement on page twenty- one in evidence. The volume in which the advertisement appears was marked "Petitioner's Exhibit 10 for identification." The advertisement is a full page advertisement. In the upper left hand corner is the picture of a slate labeled "The Osborne Slate." H. B. TJtley, Direct Examination. 201 At the right hand lower corner of the slate stands a man, with one foot on the tail of a rat (the rat being labeled "Key- stone"), and pointing to the printed matter on the slate, which is as follows : A Man or a Mouse both takes chances when they neglect their Own by taking too much interest in their competitor's business We Do Not Claim to Know or Care what our competitors are building but this we do know absolutely : That — our own sales this year will be the largest in our his- tory. That — our own per cent, building order for 1905 is the largest ever placed in our factory. That — our own yards, store and supply houses are full of raw material for 1905. ' That — already more men are working in our factories than ever before at this period of the year. That — both material and labor are for the building of the world's most famous line of grass and grain tools. Harrows, Cultivators and twine. That — our own travelers are now making contracts for 1905. Dealer — contract now for the best selling line of tools ever made in the world. D. M. Osborne & Co., Factories and General Offices', Auburn, New York, U. S. A. Branch Offices in United States : Boston, Mass. Chicago, 111. Indianapolis, Ind. Philadelphia, Pa. St. Louis, Mo. , Minneapolis, Minn. Columbus, O. San Francisco, Gal. Kansas City, Mo. Detroit, Mich. Charlotte, N. C. Pittsburgh, "Pa. and transfer houses in all the principal cities. Watch Our Space for Next Announcement" At the bottom of the slate are the following words : (An Osborne ad. appearing in various trade papers just prior to their announcement of having been absorbed.) In the upper right hand corner of the advertisement are the words : 202 H. B. Utley, Direct Examination. Better a Live Mouse tlian a Dead School Master In the middle of the page is a picture of a man in a cofSn, the face and breast being exposed ; on the lid of the coffin is a mouse, labeled "Keystone." Printed under the coffin are these words : "Eun over by Keystone machines." The other printed matter of the advertisement is in the following words : If you want to .handle a live, independent line of Binders, Mowers, Bakes and Loaders write us The Keystone Co. Sterling, Illinois branch houses Kansas City, Mo. Council Bluffs, Iowa. Columbus, Ohio. Supply houses conveniently located. ' ' Q. At the bottom of this advertisement it mentions "Branch houses : Kansas City, Mo., Council Bluffs, Iowa, and Colum- bus, Ohio." Were those the places at which you had general agencies ! A. Yes, sir. Q. And you shipped to those cities from your factory in Sterling? A. Yes, sir. Q. And then they distributed in the surrounding terri- tory! A. Yes, sir. Q. And you sold through the retail implement dealers to the farmers; is that right f A. Yes, sir. Q. And did you also have the commission agency contract, very largely? A. Very little. Q. You used, generally, the direct sales contract; is that right? A. Yes, sir. Q. And that was the way your company did business in those years that you were connected with it? A. Very largely. We were too poor to do it in any other way. H. B. Vtley, Direct Examination. 203 Q. Is that not the way the business has always been done, — by shipping to general agencies and then distributing through the retail implement dealer! A. But not in commission contracts; we did not do that. Your former question referred to commission contracts. We did not do that business. Q. During the time you were connected with your Company you had been doing business by shipping to these general agencies and then distributing from the general agency to the retail implement dealer? A. And direct to the implement dealer from our factory; very largely directly to the implement dealer from the fac- tory. Q. That is shipping from your factory to these dealers around in the states named? A. Yes, sir. Q. And in others? A. Yes. Q. Do you recollect when you became president of the Keystone Company, succeeding Mr. Butler? A. I do not. Q. You say that Mr. Piatt will have the records of this company, if they have been preserved? A. I think so. Q. Mr. Utley, I show you a circular labeled "An Open Let- ter," signed "The Keystone Company, Sterling, 111." Are you able "to state about what date that was issued by the Key- stone Company? A, I am not. Mr. Grosvenor: That is all. Mr. McHugh : By consent of the parties, the cross-examina- tion of the witness is reserved to some future time. Mr. Grosvenor: I suggest we now adjourn until tomorrow morning at 10 :30. Mr. McHugh : Very well. An adjournment was then taken until the morning of Fri- day, October 11, 1912, at 10:30 o'clock. 204 H. B. Utley, Cross-Examination. Subsequently, on November 22, 1912, Mr. iTtley was re- called and cross-examined as follows : Cr OSS-Examination hy Mr. McHugh. Q. Mr. Utley, speaking of the purchase of the Keystone Company by the International Harvester Company, I wish you would describe the seasons of the business done by the Keystone, giving the procedure as the business of the season develops, and then tell us what the condition of the company was with respect to its season's business at the time of the purchase. A. The season began July 1st, and the year's business closed the following July. The work of selling began soon after July 1st, and terminated usually in the early spring, ex- cept perhaps in the case of corn shredders, which business would have extended a little later into the season. Q. When you say the selling would begin, describe what was comprehended in the selling business of the Keystone that year. A. It was understood that the business should be con- ducted by the former owners throughout the year in a man- ner as they thought best. Q. Well, that is not what I directed my question to. Be- fore the sale was made, you people who owned this Keystone Company had begun the work of your selling? A. Yes; about three or four months before. Q. Now what I want to have you do is to tell us what had been done before the sale in the way of arranging for your sales. A. We had perfected our sales organization and sent our men out on the road to sell goods, as is the custom, I think, with makers of farm machinery. Q. But the Court that will read this record will not know what is comprehended in the expression you had 'perfected your sales organization. ' Describe what you did in per;fecting your sales organization. A. We hired our salesmen, fixed our selling policy for the year, including prices, and usually the amount of goods to be made, and made what changes were thought advisable in the organization; sent our men out with instructions with refer- ence to the taking of orders and selling goods. Q. Your sales organization — the head of that — was in your office? H. B. TJtley, Cross-Examination. 205 A. Yes, sir. Q, Now Tinder that head what was the organization first, right immediately under him? A. Under the sales manager, as we termed himf Q. Yes. A. The various district salesmen. Q. And they each had a certain territory in charge? A. Yes, sir. Q. Now, under the district salesmen what was there? A. Direct to the dealer. We had no intermediate men as is common in many larger organizations. Q. So you had your sales manager and your district sales managers ? A. Yes. Q. And then under them were the local agents? A. That is right. Q. Now, what arrangements had you made that season with respect to local agents? Did you make contracts with them? A. Usually our manner of doing business was to sell goods outright to the local dealer. Q. Sell goods outright to the local dealer. And how were you to be paid — in cash, or would you take the notes of far- mers or the notes of the agent secured by farmers' notes as collateral? A. In cash at the end of the season. We were not rich enough to do business the other way. Q. Then, the agents at the end of the season paid you for the machines they had sold ? A. During the season, yes, sir. Q. During the season. They did not pay you for all the machines that might have been shipped, if they were not sold, did they? A. As a rule, yes. Q. That was what you tried to make them do? A. Yes. In some cases, perhaps as the result of disap- pointing crop conditions, we were obliged to make extensions, but our policy was to do a cash business. Q. So at the beginning of the season you would ship out to these local agents the machines, sufficient to satisfy their conception of what they could sell, and at the end of the sea- son you would be paid by the agent for them? That was the system ? A. That is right. 206 II. B. Utley, Cross-Examination. Q. And when was the end of the season that you would be paid? ,,^ A, . I think our terms provided for payment in July or August ; I cannot be sure of that. Q. Then what was shipped out to these agents in 1904 would be paid for in 1905? A. Yes, sir. Q. So that the machines that you arranged to manufacture and ship out in the season of 1904 and that were shipped out, were to be paid for in 1905 by the agents? A. Yes, sir. Q. Now, this purchase was made in October, was it not? A. In October, 1904. Q. What would have been the effect on the season's busi- ness if it had been given out that the Internatipnal Harvester Company had acquired the business of this company? A. The effect would have been demoralizing to the busi- ness of the company and to the business of the local agent as well. Q. For that season? A. Yes, sir. Q. Tell why and how. A. For the reason, chiefly, that competitors would have at once advertised the fact that the business had been sold and probably that it would be discontinued and therefore the dealer and the farmer would be unable to get repairs for ma- chines, and probably many other things that a resourceful salesman would resort to. Q. So that, in order to conserve and protect that particu- lar season's business that had progressed that far, as you have described, it was necessary that the fact of the sale be not made public? A. It was good business policy. Q. And that is the reason why the fact of the purchase was not made known? A. We had no thought of deceiving the public; we were aiming to protect the business. Q. For that season? A. For that season. Q. It was no question of any settled policy, but merely to protect the business of that company for that particular sea- son that was then under way? A. That was our only thought. Q. And as you advertised as independent, what is the fact H. B. Utley, Re-direct Examination, 207 as to how you did operate that business, even after the pur- chase in October? ' A. There was no change whatever made in the policy. We managed the business in just as independent a manner as be- fore the purchase; no dictation on the part of anybody with reference to policy, prices or anything else pertaining to the business. We managed it with a free hand. Q. So the fact is, then, this purchase having been made in October, after the season's business was well under way, in order to conserve that season's business, in a business-like way, the management was left in the hands of the officers of the old company, and no publicity was given to the fact of the sale; that is the reason? A. That is the reason. Q. And it -was simply good business sense, to conserve that particular year's business? That is the fact, isn't it? A. That is the fact. Q. Now, Mr. Swift owned some of the stock of this Key- stone Company. Was it known to the International Har- vester people, that he owned that stock? Was he there as a spy for the Harvester Company on your business? A. He was not. Mr. Grosvenor: How does this witness know? He was not with the Harvester Company at that time? Witness : He was with the Harvester Company. Mr. Grosvenor: I say you were not with the Harvester Company. How does this witness know? Witness: By intimate business relations with him as a large owner of the business. Mr. McHugh : That is all. Re-direct Examination by Mr. Grosvenor. Q. Mr. Utley, you did not produce at the hearing, on your direct examination, the contract of October 13, 1904. Have you made any search for it since you were examined? A. I have not. > Mr. McHhigh: I had forgotten all about it. You will do that, will you? Witness : I did not know I was asked to. I thought it was suggested the secretary would furnish that contract; that is my recollection. Q, Will you now make search and endeavor to obtain a copy of that? 208 li. B. Utley, Re-direct Examination. A. I will. The contract dated October 13, 1904? Q. Yes. A. I will do so. Q. You understand that is the contract which you have testified you entered into with some of the important stock- holders and officers of tlio Harvester Company, providing for the sale of the stock or the business from you to them. A. Yes. Q. Are you able to testify when you began to deal with these stockholders in connection with this matter, which nego- tiations Resulted in the signing of the contract of October 13th? A. Those negotiations were conducted by Mr. E. K. But- ler, president of the company. 1 knew all the time in a gen- eral way of things, but not the details. Q. How long before October 13th 1 A. Why, I should think a month or two; several months perhaps. Q. Several months. That would take it back to sometime during the summer of 1904 ; is that correct ? A. I think so. Q. Are you in charge of the Purchasing Department of the Harvester Company today? A. I am. Mr. McHugh: Is this re-direct? Mr. Grosvenor: Yes. I want to get into this question of seasons. Q. Now, Mr. Utley, you have a manufacturing season, do you not, in the Harvester Company? A. Yes, sir. Q. So far as harvesting machinery is concerned? A. We do. Q. And there is a selling season, as far as harvesting ma- chinery is concerned? A. Yes, sir. Q. That has always hc/m the case, has it not? A. Necessarily so. Q. The officers of the Harvester Company, in the fall of a year or the end of th(; summer of a year, make estimates as to what the requirements will bo for th(! following season; is that not correct? A. Yes, sir. Q. And then they proceed to manufacture in accordance with those estimates? H. B. Utley, Re-direct Examination. 209 A. Yes, sir. Q. And the sale of the binders commences after the he- ginning of the year? A. I can 't answer that question ; I have nothing to do with the sales. ' '' '\ --.J Q. How long did you have to do with the sales of the Key- stone Company? A. From the organization of the company, in the early part of 1903, until the turning over of the business to the Har- vester Company, in a general way. We had a sales manager. My duties were largely in connection with the buying of ma- terial and the manufacturing of machines. Q. Now, is it not a fact that the selling season for the harvesting machines begins in the early spring and late win- ter, following the fall when the estimates are made at the be- ginning of the manufacturing season? A. I think the selling season extends perhaps throughout the year. Q. Well, what do you mean when you say that there is a selling season and a manufacturing season? A. I mean to say there is a clear dividing line as between the manufacturing year and the selling year. Q. Now please give that clear dividing line. A. I think our manufacturing year with the Harvester Company ends September 1st; the selling year ends Janu- ary 1st. Q. When is the bulk of the business done in selling har- vesting machines ? A. I cannot answer that question. I have no direct con- nection with the selling part of the business. Q. When you were with the Keystone you did not sell many machines in November and December, did you? A.' We did not sell any harvesting machines at all at the Keystone, except a few the second year that we managed the business or owned the business. Q. You started in with binders, did you not? A. No, we started in with hay tools as the principal line ; disc harrows, corn shredders. Q. I mean, in the second year you began to manufacture a new binder ? A. Yes. Q. And you advertised it, did you not? A. Yes, sir. Q. Now will you state again the reason you gave to Judge 210 H. B. JJtley, Re-direct Examination. McHugli for concealing the fact that you had sold out to the Harvester Company? A. The common sense business reason, that we were pro- tecting the business. Q. In what way? A. To the extent of preventing competitors from circu- lating statements and stories to the effect that we had been absorbed and therefore the business would be closed up. It would have been disastrous to the business, in other words. I do not think we had any thought of deceiving the public. We 'were trying to conserve the business. It was understood we should manage the business in our own way, and that was done. Q. You were advertising and holding yourselves out to be independent that year, were you not? A. For a part of the year. I think we ceased to advertise the business as independent in the spring, sometime, of 1904. Q. You mean 1905? A. In the spring of 1905, yes, sir. Q. Now, what time? A. I think April or May, maybe. Q. You did not make known to the public that you were controlled by the Harvester Company until the fall of that year when an official statement was published, did you? A. We did not. We ceased to advertise the company as independent, I think, in the spring of 1905. Q. Then you distinguish between active advertising and passive silence as to the matter; is that right? A. Well— Q. Answer the question. A. I would not know how to answer the question, Mr. Gros- ,venor, put that way. I would like to answer it, if ypu can put it to me in a way that I can comprehend it. Q. Well, you did not make any direct statement to the pub- lic that the company was controlled until the fall of 1905, did you? A. We did not. Q. Now, it was in the summer of 1905 that the Swift peti- tion had been filed, charging that you were owned by the Har- vester Company and that the relationship was being con- cealed ; is that not correct ? A. I do not recall the date; I'would think sometime in the summer of 1905. U. B. Vtley, Re-direct Examination. 211 Q. That was the time, as you recall, that the Swift suits 1 were started? A. Yes, about that time. Mr. Grosvenor: That is all. Will you make search for that contract ? Witness : I will, sir. Mr. Grosvenor : And see if we can have it before the mid- dle of next week. Witness : I think I am free from criticism. If you will look at the record I think you will find it was stated — Mr. Grosvenor : I am not intending to give the impression that you are open to criticism. 2 Witness: I thought, from the way you spoke, I was open to criticism. Mr. Grosvenor: No. Witness: I thought the information was to be obtained from the former secretary of the company. But I will do as you ask. Mr. Grosvenor: Thank you. ' 3 212 Minutes of Executive Commitiee, I. H. Co. 1 Hearing op October 11. Room 603 Post Office Building, Chicago, Illinois, October 11, 1912, 10 :30 A. M. The hearing was resumed before the Special Examiner, Eob- ert S. Taylor, at the above time and place. Present : On behalf of the Petitioner, Edwin P. Grosvenor, Esq., Special Assistant to the Attorney General, and Jo- seph E. Darling, Esq.; on behalf of the Defendants, Hon. William D. McHugh, John P. Wilson, Esq., and Hon. Philip S. Post. Mr. Grosvenor: Minutes of the Executive Committee of the International Harvester Company, from August 13, 1902, to and including October 23, 1906, have been produced by Judge McHugh, counsel for the defendants, at the request of counsel for the Government (marked "Petitioner's Exhibit ^i 11 for identification"). I offer in evidence and read into the record the following entries therefrom : (Pages 316-318) : MINUTES. "Minutes of a meeting of the Executive Committee of the International Harvester Company, held at the office of the Company, 7 Monroe Street, Chicago, Illinois, Monday, Novem- ber 6th, 1905, at 10:40 o'clock in the forenoon. Present: Messrs. J. J. Glessner, Chairman; Cyrus H. Mc- 4 Cormick, James Deering and William H. Jones. On motion, duly seconded, it was ordered that Vice-Presi- dent Glessner and Secretary Howe be, and they are hereby, authorized and instructed in the name of this Company and on its behalf to execute and deliver the certain contract, a draft of which is as follows: Agreement. This Agreement made and entered into this second day of October, A. D. 1905, by and between Cyrus H. McCormiek and Charles Deering, of Chicago, Illinois, first party, and the Minutes of Executive Committee, I. H. Co. 213 International Harvester Company, a New Jersey corporation, second party, Witnesseth That Whereas, on or about 30 September, 1903, one E. M. Cravath, of the City and State of New York, bought from the Amer- ican Grass Twine Company, a Delaware corporation. Sixty thousand (60,000) shares, being the entire issue of the cap- ital stock of the Minnie Harvester Company, a Minnesota corporation, at and for the price of Nine hundred forty-five thousand (945,000) dollars which was paid by the promissory notes of said Cravath, maturing $145,000 thereof 1 October 1904, $400,000 thereof 1 October 1905, and the remaining $400,000 thereof 1 October 1906, all of said notes bearing in- terest at the rate of five (5) per centum per annum; and Whereas, $545,000, principal amount, of said notes having heretofore matured, have been paid, principal and interest, with moneys borrowed for the purpose by said Cravath, from second party, the debt so created being still unpaid; and Whereas, first party have bought from said Cravath and now own the entire capital stock of the Minnie Harvester Com- pany aforesaid, and have, as one of the terms of such pur- chase, agreed to indemnify the said Cravath against all lia- bilities under or growing out of his purchase of said capital stock; and Whereas, first party desire to be relieved of their obliga- tion to pay the outstanding notes aforesaid aggregating $400,000 besides interest, and also desire to be relieved of their obligation to pay said Cravath 's indebtedness to second party, above mentioned, which aggregated, 1 October 1905, Six hun- dred forty-seven thousand one hundred eighty-five and 94/100 (647,185.94) dollars; and Whereas, the net assets of said Minnie Harvester Com- pany, over and above all its debts and liabilities, had, 30 Sep- tember 1905, an aggregate value of Eight hundred forty-two thousand nine hundred and 71/100 (842,900.71) dollars, said assets consisting on the date of this Contract entirely of cash and accounts receivable: Now, Therefore, the parties hereto, each in consideration of the premises and of the herein expressed undertakings of the other party hereto, and second party in further consideration of Two hundred four thousand two hundred eighty-five and 23/100 (204,285.23) dollars to second party paid by first party, the receipt of which is hereby acknowledged, covenant and agree to and with each other as follows: 214 Minutes- of Executive Committee, I. H. Co. First: First party agree and guarantee that as soon as second party shall have paid and discharged the outstanding notes of said Cravath for the principal sum, in the aggregate of $400,000, besides interest, the corporate authorities of said Minnie Harvester Company shall forthwith take such action and execute and deliver such instruments as will have, the effect of vesting in second party, by good and indefeasible title, the ownership of all the assets of said Minnie Harvester Company. Second : Second party agrees to indemnify and save harm-. less both first party and said Cravath against and from any liability or obligation incurred on account of or in connection with the purchase of the capital stock of the Minnie Har- vester Company, including said Cravath 's indebtedness to sec- ond party for moneys borrowed, with interest, as aforesaid, and also including the outstanding notes of said Cravath, above referred to, for the aggregate principal amount of $400,000, besides interest. In Witness Whereof first party have' hereunto set their hands and seals and second party has caused its corporate name to be hereunto subscribed by its Vice President, John J. Glessner, and its corporate seal to be hereunto affixed, duly attested by its secretary, all as of the day and year first above written. (Seal) (Seal) Inteenationaij Harvester Company, By Its Vice President. Attest, the seal of said Company: Its Secretary. Mr. Grosvenor: From "Petitioner's Exhibit 11 for Identi- fication" I also offer in evidence and read into the record min- utes of a meeting of the Executive Committee held October 24, 1904, as follows: (Pages 226-226B): MINUTES. Minutes of a meeting of the Executive Committee of the International Harvester Company, held at the office of the Company, 7 Monroe Street, Chicago, Illinois, Monday, October 24, 1904, at 11:30 o'clock in the forenoon. Minutes of Executive Committee, I. H. Co. 215 Present: Messrs. J. J. Glessner, Chairman; Cyrus H. Mc- 1 Cormick, Harold F. McCormick, and William H. Jones. Mr. Richard F. Howe met with the Committee. The following preambles and resolution were offered and on motion, duly seconded, were adopted by the unanimous vote of the Committeemen present: Eesoltjtion. Whereas, the International Harvester Company did on or about 15 January, 1903, purchase from Thomas M. Osborne and Edwin D. Metcalf the entire capital stock, aggregating $300,000, and the entire outstanding stock scrip, aggregating 2 $690,000, of D. M. Osborne & Company, a corporation of New York, also the entire capital stock of the Columbian Cordage Company, likewise a corporation of New York; and Whereas, in the judgment of this Committee it is inexpedi- ent that this Company should longer hold and own said capital stock and stock scrip; and Whereas, the following named gentlemen have respectively offered to purchase from said Company said capital stock and stock scrip in the following amounts and for the follow- ing sums, respectively: — 3 Name of Purchaser. Amount Purchased. Price. John J. Glessner, Stock of D. M. 0. & Co. $16,666.67 Stockscrip of " " 38,333.33 $250,000. Stock of C. C. Co., 16,666.67 Cyrus H. McCormick, Stock of D. M. 0. & Co. 100,000 Stock scrip of " " 230,000 $1,500,000 Stock of C. C. Co. 100,000 Eichard F. Howe, Stock of D. M. 0. & Co. 120,000 4 Stock Scrip of " " 276,000 1,800,000. Stock scrip of C. C. Co. 120,000 Harold F. McCormick, Stock of D. M. 0. & Co. 46,666.66 Stock scrip of " " 107,333.33 700,000. Stock of C. C. Co. 46,666.66 William H. Jones, Stock of D. M. 0. & Co. 16,666.67 Stock Scrip of " " 38,333.34 250,000 Stock of C. C. Co. 16,666.67 the price aforesaid to be paid by the respective promissory notes of the several purchasers, bearing date this day and 216 Minutes of Executive Committee, I. H. Co. payable on or before ten (10) years after date with interest at the rate of four (4) per centum per annum: Now Therefore, be it resolved that this Company forthwith sell, convey and assign to each of the above named purchasers the amounts of said stock and stock scrip above set opposite their names respectively, such transfer to be made by bills of sale in the form shown below, upon delivery to this Com- pany of the promissory notes of the several purchasers, ex- pressed in accordance with the foregoing recitals. Bill op Sale. "Know All Men By These Presents, that the vendor, the International Harvester Company, a corporation of New Jer- sey, for and in consideration of the sum of : dollars, to it paid by , of Chicago, Illi- nois, the purchaser, the receipt of which is hereby acknowl- edged, does hereby grant, bargain and sell, convey, transfer and assign unto the Purchaser dollars, par value, of the capital stock of D. M. Osborne & Company, a corporation of New York, also dollars, par value, of the stock scrip of said New York corporation, also dollars of the capital stock of the Columbian Cordage Company, also a corporation of New York; "Whereas, the certificates for the capital stock and stock scrip of the two corporations last aforesaid are now on de- posit with the Standard Trust Company of New York as collateral security for the payment of the certain promissory notes of the said Vendor, aggregating the principal amount of Three million five hundred thousand ($3,500,000) dollars, besides interest; therefore the Vendor covenants and agrees to and with the Purchaser to pay and discharge promptly upon the maturity thereof its said promissory notes aggregating $3,500,000, and further covenants and agrees to and with the Purchaser that at once upon the payment of said notes it, the Vendor, will procure the issuance to the Purchaser of certificates of said capital stock and stock scrip to the amount sold by the Vendor to the Purchaser as aforesaid. "And the Vendor, the International Harvester Company, vouches itself to be the true and lawful owner of the stock and stock scrip aforesaid, and to have full right and lawful power to sell and convey the same in the manner aforesaid. "In Witness Whereof the Vendor has caused its corporate name to be hereunto subscribed by its President and its cor- Minutes, Directors of I. H. Co. of A, 217 porate seal to be hereunto affixed, duly attested by its Secre- 1 tary, this 24th day of October A. D. 1904. Inteknational. Haevestee Company, By Its President. Attest, seal of said Company : Its Secretary." Thereupon the meeting adjourned. J. J. Glessnbr, Chairman, 2 Mr. Grosvenor: Have you the minutes of the Directors of the International Harvester Company of America, Mr. Still- well? Mr. Stillwell handed Mr. Grosvenor a volume entitled "Offi- cial Minutes Board of Directors International Harvester Com- pany of America," which was marked "Petitioner's Exhibit 12 for Identification." Mr. Grosvenor : The Petitioner offers in evidence and reads into the record the following entries from "Petitioner's Ex- hibit 12 for Identification." 3 MINUTES, DIEECTORS OF I. H. CO. OF AM. (Page 1) : "The Minutes of a Meeting of the Board of Directors of ^the International Harvester Company of America, held at No. 7 Monroe Street, Chicago, Illinois, at 11:30 A. M. of Wed- nesday, 1 October, 1902. All of the Directors of the Company and all of the Officers were present. The meeting came to order with Mr. Cyrus H. McCormick, President of the Company, in the chair, and with Mr. Arthur 4 W. Fairchild, the Secretary of the Company, acting as Sec- retary of the meeting. The minutes of the last preceding meeting of the Board were read and, upon motion, duly seconded, were approved. The Secretary presented to the meeting a draft of amended By-Laws for the regulation of the Company's affairs in the following form : ***** (Page 12 same meeting) : After the foregoing By-Laws had been considered and dis- cussed by the Directors, upon motion, duly seconded, it was unanimously 218 Minutes, Directors of I. H. Co. of A. Eesolved, That the By-Laws presented to the meeting be, and the same are hereby, in all respects approved and con- firmed and adopted as the By-Laws of the Company in place of all of its other and former By-Laws; all such other and former By-Laws being hereby repealed. "TP TT TT W (Pages 12-15) : "Mr. Jacob Seger,' a Director of the Company, thereupon offered his resignation as Director, which was on motion, duly seconded, accepted. Thereupon Mr. Seger withdrew from the meeting. By unanimous vote of the Directors of the Company present Mr. John J. Glessner, a stockholder, was duly elected by ballot a Director to fill the vacancy so c.reatfHl. Mr. Gless- ner, being duly qualified, at once took his seat in the Board and thereafter participated in the meeting. Mr. George H. Chapman, a Director of the Company, there- upon offered his resignation as Director, which was, upon mo- tion, duly seconded, accepted. Thereupon Mr. Chapman with- drew from the meeting. By unanimous vote of the Directors of the Company pres- ent, Mr. William H. Jones, a stockholder, was duly elected by ballot a Director to fill the vacancy so created. Mr. Jones, being duly qualified, at once took his seat in the Board and thereafter participated in the meeting. Mr. Walter D. Hickman, Vice President and also a Di- rector of the Company, thereupon offered his resignation as Vice-President and as Director; this resignation was, on mo- tion duly seconded, accepted. Thereupon Mr. Hickman with- drew from the meeting. By unanimous vote of the Directors of the Company pres^ ent, Mr. George W. Perkins, a stockholder, was duly (elected by ballot a Director to fill the vacancy in the Directory of the Company created by the resignation of Mr. Hickman. Mr. Edward T. Fox, Second Vict; President and Treasurer and also a Director of the Company, thereupon offered his res- ignation as Second Vice President, as Treasurer and as Di- rector; this resignation was, on motion, duly seconded, ac- cepted. Thereupon Mr. Fox withdrew from the meeting. By unanimous vote of the Diroftors of the Company pres- ent, Mr. Stanley McCormick, a stockholder, was duly elected by ballot a Director to fill the vacancy in the Directory of the Company created by the resignation of Mr. Fox. Mr. Arthur W. Fairchild, Secretary and also a Director of Minutes, Directors of I. H. Co. of A. 219 the Company, thereupon offered his resignation as Secretary and as Director; this resignation was, on motion, duly sec- onded, accepted. By unanimous vote of the Directors of the Company pres- ent, Mr. Eichard F. Howe, a stockholder, was duly elected by ballot a Director to fill the vacancy in the Directory of the Company created by the resignation of Mr. Fairchild. Mr. Howe, being duly qualified, at once took his seat in the Board and thereafter participated in the meeting. Mr. Howe was nominated for Secretary of the Company to fill the vacancy caused by the resignation of Mr. Fairchild. There was no other nomination and thereupon Mr. Howe was unanimously elected by ballot, in accordance with the By- Laws, Secretary of the Company. Thereupon Mr. Fairchild withdrew from the meeting. Mr. Howe was nominated for Treasurer of the Company to fill the vacancy caused by the resignation of Mr. Fox. There was no other nomination and thereupon Mr. Howe was unani- mously elected by ballot, in accordance with the By-Laws, Treasurer of the Company. Messrs. Harold F. McCormiek, James Deering, William H. Jones and John J. Griessner were thereupon nominated for Vice-Presidents of the Company. There was no other nomina- tion I and thereuupon Messrs. Harold F. McCormiek, James Deering, William H. Jones and John J. Glessner were unani- mously elected by ballot, in accordance with the By-Laws, Vice Presidents of the Company. On motion, duly seconded, it was unanimously, Eesolved, That the Board proceed to the election of Chair- man of the Executive Committee of the Board of Directors. Mr. Charles Deering was thereupon nominated for Chairman of the Executive Committee of the Board of Directors. There was no other nomination and in accordance with the By-Laws and (by ballot Mr. Deering was thereupon duly elected chairman of the Executive Committee of the Board of Directors. On motion, duly seconded, it was unanimously Eesolved, That the Board proceed to the election of Chair- man of the Finance Committee of the Board of Directors. Mr. George W. Perkins was thereupon nominated for Chair- man of the Finance Committee of the Board of Directors. There was no other nomination and in accordance with the By-Laws and by ballot Mr. George W. Perkins was thereupon 220 Minutes, Directors of I. H. Co. of A. duly elected Chairman of the Finance Committee of the Board of Directors. On motion, duly seconded, it was unanimously Eesolved, That the Board proceed to the election of four members of the Executive Committee of the Board of > Direct- ors. Messrs. Harold F. McCormick, Eichard. F. Howe, Wil- liam H. Jones and John J. Glessner were thereupon nomi- nated for members of the Executive Committee of the Board of Directors. There was no other nomination and thereupon Harold F. McCormick, Richard F. Howe, William H. Jones and John J. Glessner were unanimously elected by haUot, in accordance with the By-Laws, members of the Executive Com- mittee of the Board of Directors. On motion, duly seconded, it was unanimously Eesolved, That the Company have, in addition to General Counsel, Counsel in the City of Chicago and Counsel in the City of New York; that Messrs. Bentley & Burling be, and they are hereby, appointed General Counsel of the Company ; that Messrs. Pam, Calhoun & Glennon be, and they are here- by, appointed Counsel of the Company in the City of Chicago, Illinois; that Messrs. Guthrie, Cravath & Henderson be, and they are hereby, appointed Counsel of the Company in the City of New York, N. Y. On motion, du'y seconded, it was unanimously Eesolved, That Messrs. J. P. Morgan & Co. be, and they are hereby, appointed the Fiscal Agents of the Company. On motion, duly seconded, it was unanimously Eesolved, That the Chairman of the Finance Committee of the Board of Directors be, and he is hereby, authorized to appoint Depositaries for funds of the Company in the City of New York and elsewhere. On motion, duly seconded, it was unanimously Eesolved, That the Officers of the Company below named be, and they hereby are, respectively appointed to take charge of the business of the Company growing out of or connected with, the business or operations, of the following named divi- sions, respectively, of the International Harvester Company : McCormick Division : Harold F. McCormick, Vice President, Dcering Division: James Deering, Vice President, Piano Division: W. H. Jones, Vice President, Champion Division: John J. Glessner, Vice President; # » * * * * * (Page 18) : Minutes of the meeting of the Board of Directors of the Minutes, Directors of I. H. Co. of A, 221 International Harvester Company of America, lield at its of- 1 ffiee, #7, Monroe Street, Chicago, Illinois, November 20, 1902, at 3 :00 o 'clock in the afternoon : Present: Cyrus H. McCormick J. J. G^essner James Deering Harold F. McCormick Richard F. Howe Charles Deering Stanley McCormick. ***** * * On motion duly made and seconded, it was unanimously Eesolved, That the entire manufactured product of the In- ternational Harvester Company, wherever intended to he finally marketed, be purchased by the International Harvester 2 Company of America from the International Harvester Com- pany upon the same terms as are expressed in the contract dated 2 September, 1902, between the International Harvester Company and the International Harvester Company of America; and that the International Harvester Company of America distribute such manufactured product and direct the marketing thereof through such agencies or other means as are now and as may hereafter be determined upon; the plan provided by this resolution to supersede all other plans here- tofore followed in marketing the product of the International 3 Harvester Company so far as such other plans are incon- sistent with this. .u. 41. .V. .u, Jf. 4{- ^ 'TP ^ ^ tT 'ft* 'TE" Vi* (Page 36) : Minutes of the regular monthly meeting of the Board of Directors of the International Harvester Company of Amer- ica held at the office of the Company, No. 7 Monroe Street, Chicago, at eleven o'clock in the morning, Thursday, Novem- ber 19, 1903. Present: Cyrus H. McCormick, Charles Deering, Harold F. McCormick, J. J. Glessner, William H. Jones and James 4 Deering. »0' * On motion duly made and seconded, it was unanimously Eesolved, That the entire manufactured product of the In- ternational Harvester Company of Canada (Limited), wher- ever intended to be finally marketed, be purchased by the In- ternational Harvester Company of America from the Inter- national Harvester Company of Canada (Limited) upon the same terms as are expressed in the contract dated 2 Septem- ber, 1902, between the International Harvester Company and the International Harvester Company of America; and that 222 James King, Direct Examination. 1 the International Harvester Company of America distribute such manufactured product and direct the marketing thereof through such agencies or other means as are now and as may hereafter be determined upon ; the plan proVided by this reso- lution to supersede all other plans heretofore followed in marketing the product of the International Harvester Com- pany so far as siTch other plans are inconsistent with this. JAMES KINGr, being duly sworn as a witness on behalf of the 2 Petitioner, testified as follows : Direct Examination by Mr. Grosvenor. Q. What is your business? A. An employee in the Accounting Department of the In- ternational Harvester Company. Q. Have you any official title! A. No, sir. Q. Who is the head of that department? 3 A. Mr. William Eeay. Q. Are you the next man to him? A. I suppose I am, yes ; I am his immediate assistant. Q. That is, you have the duties of Assistant Comptroller, without the title? A. Well, I presume that that would be a fair reply to the question. Q. You state that Mr. Eeay is the head of the Accounting Department? A. He is. Q. What officer of the company is superior to Mr. Eeay, 4 if any? ^^ .i.L^_. ,j A. The President. Q. What committee of the Harvester Company has super- vision over or direction as to the matters in the Accounting Department? A. The by-laws would tell that; I couldn't tell you. Q. Isn't there any committee of the Harvester Company to which Mr. Eeay is responsible? A. As all officers are responsible to the Board of Direct- ors, I suppose he is. Mr. Grrosvenor: Mr. Examiner, read the question and see if the witness can answer it directly. James King, Direct Examination. 223 (The question was read by the Examiner.) A. 1 do not know of any except as i have answered the question. Q. I>oes the Finance Committee have supervision over the Accounting Department? A. Not to my knowledge. t^. How long have you been with the Company? A. 1 went with them in September, 1906. Cj. Where were you before that? A. I was in the employ of Price, Waterhouse & Company ; that is, the name of the house at present is Price, Waterhouse & Company, public accountants. Q. How long has Mr. iieay been with the company? A. I couldn't answer that question exactly; i think it is since about December, 1903, or some such date as that. Q. Mr. Eeay is ill now, is he not? A. He has been away; I have not seen him since, I think, a week ago Monday. Q. Have you produced the annual reports of the Interna- tional Harvester Company? (No response.) Q. Did you hear my question? A. I heard your question, but I don't understand what you mean by "produced." Mr. McHugh: Have you them, here? he means. Mr. Grrosvenor: I will try to use a simpler word. Have you with you now the reports of the International Harvester Company? A. I have. Q. For what years? A. For the years 1907 to 1911, incisive. Q. Why didn't you bring the reports prior to 1907? A. There were no reports published prior to that date. Q. Then, the first report published of the Harvester Com- pany was for the year 1907? A. For the year 1907, except that that report includes a few statistics for the two prior years, 1905 and 1906. Q. That was the first report of any sort published by the International Harvester Company? A. It was. Well now, wait a minute. As far as I know. I might not be competent to answer a question like that. Q. I am only asking so far as your knowledge goes ; you understand that, Mr. King. And that for the year 1907 would be published some time in the spring of 1908, would it not? 224 James King, Direct Examination. A. It would. Q. Have you any reports of earlier years in your depart- ment, made up in the form in whicli these are made up ? A. No, sir. Q. Why were no reports made to stockholders in the earlier years ? A. I could not answer that question. Q. What division, if any, is the Accounting Department divided into? A. A very large number of what you would probably con- sider divisions are accounting sub-offices of works we might have anywhere ; then we have the General Offices Accounting Department, which is divided into what you call a disbursing division — i ; Q. Are you familiar with the Sales Department of the International Harvester Company of America? A. In a measure. Q. You know that is divided up into "divisions," using that term, don't you? A. Yes, but the Accounting Department would be a divi- sion. Q. Now, is your Accounting Department divided up in the same way, in divisions? A. We have a Disbursing Division, and we have a Manu- facturing Division, if that is what you mean by ' ' Division. ' ' Q. Yes. Now state them, please. A. Those of the Sales Department would be three prin- cipal divisions. Q. I am not asking for the Sales Division. Confine your answer to your own department. A. Well, I think I have stated the two important divisions. Q. State all of them, please. A. We have technical names for these things. As I say, we have a Disbursing Division, which attends to disburse- ments ; we have a Manufacturing Division which controls the accounts at the various works, in relation to manufacturing; then we have the General Office Accounting Department, as we call it, which covers all these things. Q. Those are all the divisions there are? A. We haven't any important sub-divisions of the General Office Accounting Department. Q. Will you look at the report for the year 1911, and, refreshing your recollection, will you state what the gross Jewries King, Direct Examination. 225 sales of the International Harvester Company were for tlie 1 year 1911? A. I don't want to appear to be stupid about some of these things, but when you say "International Harvester Com- pany," you will have to explain to me exactly what you mean. Q. What do you mean by the "International Harvester Company, ' ' if that is not clear ? A. Well, this report is a combined report; it is not one company here ; there are several companies here represented. Now do you — Q. Does the figure on the first page of the report repre- sent the combined sales of all the companies! ' A. It represents the combined sales. Q. Of all the companies! A. Yes, of all the companies. Q. All right. Now will you please state what were the combined sales of all the companies for the year 1911, gross? A. As shown here, 108 million dollars. Q. Give the rest of it, please. A. $108,033,595.61. Q. Now I am going to ask you a question, Mr. King, the answer to which you can furnish later and have it incor- ; porated in the record. Please state in the same way the com- bined sales for the International Harvester Company and its affiliated or subsidiary companies for each of the years since it commenced doing business. (The witness subsequently furnished the Examiner, in writ- ing, the following answer) : Season 1903 $ 53,012,823.07 Season 1904, 51,314,752.27 Season 1905, 59,576,393.62 Season 1906, 67,589,056.27 Season 1907, 78,206,890.36 Season 1908, 72,541,771.16 Season 1909, 86,614,549.55 Season 1910, 101,166,358.88 Season 1911, 108,033,595.61 Q. Now you have pointed out that this is a combined state- ment, have you not? A. I have. Q. Then, not only the sales are combined, but all these other items from the different companies? A. Yes. Q. For instance, the item "Cost of Manufacturing and 226 James King, Direct Examination. Distributing," does that cost of distributing include the cost to the International Harvester Company of America of dis- tributing the products through the United States? A. It does. Q. And the same item includes the cost of manufacturing by the New Jersey Company? A. It does. Q. So that in your annual report, for the cost you combine the distributing cost of one company with the manufacturing cost of the other company? A. We do. Q. Now I direct your attention to the ' ' Interest on Loans ' ' item, $1,547,095.42. That was the amount which the Har- vester Company paid for interest in 1911; is that right? A. Interest on borrowed money, yes. Q. On borrowed money ? A. Yes. Q. The Harvester business is divided, broadly speating, into two seasons, is it not; that is, a manufacturing season and a sales season? A. That was quite true at one time ; it is not so much true now. It has been changed in the process of development so that it is practically an all-the-year business now, except that we do distinguish between what we call the manufacturing and selling seasons. The manufacturing season closes at the convenient date for the making of an inventory. Q. In the spring, your loans, or the loans which you re- quire, are larger than they are at any other time of the year, are they not? A. No, not in the spring. Q. When are they? A. They reach the maximum, I would say, in August. ' Q. Then they become reduced as the farmers' notes are gradually paid in the fall? A. Yes. Most of them are made to mature in the fall, because then our own money begins to come in from collec- tions in sufficient volume to retire them. Q. Now, does this item of gross sales include your foreign sales? A. It does. Q. And all sales by your foreign companies? A. Yes, most of the foreign sales are made by foreign companies. James King, Direct Examination. 227 Q. When you say "most of your sales," you mean most i of your foreign sales? A. Yes. Q. That is, those manufactured abroad"? A. Not necessarily. Q. What do you mean by "made by foreign companies"? A. Well, you, apparently, made a distinction there be- tween sales made by us and those made by our foreign com- panies. Q. In other words, you mean if the product is manufac- tured here it is sold by the Harvester Company to one of its foreign companies, and then distributed by the foreign sub- 2 sidiary? Is that what you mean? A. I mean that there might be some foreign sales that are made directly from this country and other sales which are made by foreign organizations abroad. We make a distinc- tion between what we call "Jobbers Business" and "Branch house business." Q. Now, Mr. King, will you turn over to the next page, page 4? You have stated there, on page 4, the gross sales of Harvesting Machinery, Tillage Implements and Twine for the years 1911, 1910 and 1909, giving the same for the United 3 States and for foreign countries. Will you please prepare, so that it may be here entered on the record, an answer to this question: What were the gross sales — that is, the combined gross sales — of the Harvester Company in Harvesting Ma- chinery, Tillage Implements and Twine for every year from the time of its organization to date, giving the same sep- arately for the United States and foreign countries, as stated in this report? (The witness subsequently furnished the Examiner, in writ- ing, the following answer) : United States. Foreign Countries. 4 Season 1903, $39,819,916.37 $12,207,602.56 Season 1904, 34,259,036.84 15,194,113.02 Season 1905, 33,307,719.30 15,737;466.22 Season 1906, 34,516,847.70 18,138,746.36 Season 1907, 35,417,092.88 21,582,557.01 Season 1908, 30,920,336.69 21,419,866.16 Season 1909, 34,616,558.74 22,894,797.55 Season 1910, 37,730,447.61 25,202,914.38 Season 1911, 37,536,394.83 28,965,272.72 Q. Now in the sales there for the United States do you include sales for Canada? 228 James King, Direct Examination. A. No, sir ; the sales to Canada are in the foreign. Q. In the foreign countries? A. Under the head of foreign countries. Q. On the same page: Will you give the answer to this question: What have been the combined gross sales of the International HParvester Company, and its affiliated com- panies, in Wagons, Manure Spreaders, Grasoline Engines, Cream Separators, Auto Wagons, and Tractors for each of the years since the Harvester Company commenced doing business, giving the same for the United States and for for- .eign countries separately? (The witness subsequently furnished the Elxaminer, in writing, the following answer) : United States. Foreign Countries. Season 1903, $ $■ 38,410.17 Season 1904, 108,618.41 155,251.46 Season 1905, 2,885,282.58 1,177,447.55 Season 1906, 7,500,859.03 2,060,567.35 Season 1907, 10,985,492.17 2,895,987.16 Season 1908, 10,903,661.29 3,384,927.22 Season 1909, 15,480,606.95 5,239,578.11 Season 1910, 18,772,535.35 8,993,141.22 Season 1911, 19,331,514.41 13,349,405.95 Q. Now the next topic or item on that page : Fiber Sales, Steel Products. What do you include in Fiber Sales? A. The sales of fiber made by the International Harvester Company and also by Macleod & Company of the Philippines. Q. That item does not include your twine sales? A. It does not. Q. Enumerate the kinds of fiber which the International Plarvester Company sells. A. I would not be an authority on such a question as that. We sell Manila fiber, for instance, that is produced in the Philippines, that Macleod & Company sells. Q. If you are not familiar with the items, say so, and I will ask somebody else. A. Yes, I think you should ask somebody else about such particulars. Q. In other words, you are not familiar with the several items which go to make up the gross figures on page 4, so far as fiber sales are concerned? A. Not so far that I would care to specify what particular kinds of fiber were included. I could answer the question very generally, that is all. James King, Direct Examination. 229 Q. Sisal fiber— did you include that? A. Yes ; there would be some sisal fiber included there. Q. Are your sales of sisal very large? Or aren't you prepared to state? A. Ordinarily I would say not — that they are not, ordi- narily large. Q. Will you make a statement of your fiber sales for the last ten years, taken from your books, giving the several kinds that go to make that up! Do you import more sisal than you require for use in your business? A. I could not answer that question. Q. Your fiber sales include your Manila hemp sales and these other things, such as sisal and jute? A. Yes, they do. Q. Then my question will call for the details of those differ- ent kinds ? A. Yes, I will give the details. (The witness subsequently furnished the Examiner, in writ- ing, the following statement) : MacLeod & Co. Sales Other Sales Manila Manila ■Sisal New Zealand Season 1903 $ — 715,946.19 $1,543,451.78 $ — Season 1904 — 3,063,782.43 690,141.57 64.04 Season 1905 3,888,415.35 784,009.03 126,767.04 43,966.38 Season 1906 2,116,090.80 1,388,556.17 195,345.24 5,851.37 Season 1907 8,707,771.28 27,190.48 8,268.79 3,749.29 Season 1908 2,918,692.00 50,596.70 22,576.20 193.81 Season 1909 3,962,481.15 169,254.81 12,026.87 — Season 1910 5,687,386.44 811,232.79 145,644.23 — Season 1911 4,981,373.99 106,907.51 178,266.58 — Q. Now if you will turn over to page 6. On that page is a combined statement of the combined assets of the Company. What were the assets of the Harvester Company and its com- bined companies for the year ending December 31, 1911? A. As stated here they are $223,724,555.54. Q. Will you please state what the assets of the combineid companies have been for each of the years in which the Har- vester Company has been doing business, as of December 31st for each of such years? (The witness subsequently furnished the Examiner, in writ- ing, the following statement) : December 31, 1903, $130,710,469.99 December 31, 1904, 132,370,000.87 December 31, 1905, 139,168,296.16 December 31, 1906, 147,904,064.14 230 James King, Direct Examination. December 31, 1907, 156,282,454.16 December 31, 1908, 157,608,632.51 December 31, 1909, 172,795,542.61 December 31, 1910, 195,306,083.53 December 31, 1911, 223,724,^55.54 Q. On the same page, the Property Account for the com- bined companies at the end of 1911 is stated at what figure? A. $76,585,000.70. Q. Please state the figures sliowing the Property Account for every year, at the close of the year. (The witness subsequently furnished to the Examiner, in writing, the following statement) : The figures showing the values of the real estate and plant property, ore mines, coal lands, and timber lands, etc., at the close of each year were : December 31, 1903, $54,179,415.85 December 31, 1904, 56,420,517.97 December 31, 1905, 59,042,190.76 December 31, 1906, 60,784,064.65, December 31, 1907, 62,844,136.48 December 31, 1908, 63,680,776.06 December 31, 1909, 66,532,608.86 December 31, 1910, 71,887,402.38 December 31, 1911, 76,585,000.70 Q. Now your Current Assets: You divide your current assets into what two principal classes'? A. There are three. Mr. McHugh: Just for information: Your fiscal year is the calendar year? Witness : Yes, as far as I know. Mr. Grosvenor : I am glad you asked that question. I in- tended to ask it at the beginning, but forgot. Q. It would be easy for you to take them from your books as of those dates, would it not? A. That is the only time we could take them. To answer your other question, there are three subdivisions here: In- ventories, Eeceivables, and Cash. Q. Please state on the record the aggregate amount of your Inventories, as shown on the books at the close of each of the years since the Harvester Company has been in business? (The witness subsequently furnished the Examiner, in writ- ing, the following statement) : The amount of inventories, which include raw materials and supplies, and work in process of manufacture at the various James King, Direct Examination. 2ol works of the Company, and finished products both at the works and on the territory, were : December 31, 1903, $42,891,391.20 •December 31, 1904, 43,032,131.97 December 31, 1905, 47,257,637.93 December 31, 1906, 49,317,885.88 December 31, 1907, 50,287,625.77 December 31, 1908, 47,687,056.26 December 31, 1909, 53,399,926.84 December 31, 1910, 61,646,434.80 December 31, 1911, 69,592,780.86 Q. Your Receivables are divided into what two classes? A. (1) Farmers' and Agents' notes, and (2) Accounts Eeceivable, as we call them. Q. Please state on the record what the item, on your books, on December 31, 1911, for Farmers' and Agents' notes ag- gregated or was? A. Do you want me to give the gross figure or the net fig- ure that is given here ? Q. The item Farmers' and Agents' Notes as it appears in the report, December 31, 1911. A. $52,910,943.11 gross. Q. Now that item represents, principally, does it not, the machines and implements which you have sold either on the commission agency basis to the farmers or on the direct sales basis to the retail implement dealers? A. It represents all the notes we have. Q. From farmers and implement dealers? A. From anybody. That is, where they originated from the sales of harvesting machinery. Q. Please state on the record the item of Farmers' and Agents' notes for each year since the International Harvester Company has been doing business, as taken from your books on December 31? (The witness subsequently furnished the Examiner, in writ- ing, the following statement) : December 31, 1903, $12,712,958.62 December 31, 1904, 18,446,262.84 December 31, 1905, 18,580,977.26 December 31, 1906, 21,735,360.10 December 31, 1907, 26,583,001.10 December 31, 1908, 25,471,132.81 December 31, 1909, 29,752,945.15 December 31, 1910, 39,859,973.30 December 31, 1911, 52,910,943.11 232 James King, Direct Examincntion. Q. Now your Accounts Eeceivable: What was that for the year ending December 31, 1911! A. $19,977,644.65. Q. What does that item represent? A. It represents, for the most part, accounts resulting from the sale of harvesting machinery or tillage implements or of finished products of any kind ; but it also includes all the Miscellaneous Eeceivables we might have had of whatever character. For example, we might have personal accounts in- cluded there in considerable volume. Q. Please give the same information as to the amount of Accounts Eeceivable for each year the International Har- vester Company has been doing business, as taken from youi; books on December 31? (The witness subsequently furnished the Examiner, in writ- ing, the following statement) : December 31, 1903, $12,689,143.72 December 31, 1904, 9,952,124.86 December 31, 1905, 12,470,743.26 December 31, 1906, 12,834,337.56 December 31, 1907, 14,511,387.27 December 31, 1908, 13,064,927.11 December 31, 1909, 19,103,716.45 December 31, 1910, 18,720,597.99 December 31, 1911, 19,977,644.65 Q. Interest on 52 millions of farmers ' notes ; in what item will that be shown? A. You mean the accrued interest? Q. Well, as the notes fall due interest is paid on them. Is that item shown under the item Farmers' and Agents' Notes, or would it be shown under Accounts Eeceivable, — ^interest due? A. When the notes are renewed the interest is included in the renewal, and it goes into the first classification. Farmers' and Agents ' notes ; but if it is merely a matter of the accrued interest at the end of the year, which we make up in the form of ah estimate, we would include it in Accounts Eeceivable. Do I make myself clear? Q. Yes. The rate of interest which you charge on these Farmers' and Agents' notes varies in different sections of the country, does it not? A. It does. Q. Can you state the range of that rate? A. I would not be an authority on that. No, I could not. James King, Direct Examination. 233 Q. Who would know? A. Our Collection Department. Q. That is one of the divisions of the — A. Not of the Accounting Departmentr Q. No, of the Sales Department, of the International Har- vester Company of America? A. Well, I have not the outline of the plan in my mind so that I could answer that question. Q. Who is the head of the Collection Department? A. Mr. Kauffman. Q. Now turning to the next page, page 7, your "Liabili- ties." Bills Payable, $30,918,341.68. What does that repre- sent? A. It represents all the obligations of these companies which are in the form of notes, in distinction from those obligations which are in the form of accounts. Q. Can you state the principal items going to make up that 30 million dollars? A. I can not. Excuse me just a moment. There is an ex- hibit of that in here, further on, which goes into it in some detail. Q. Yes ; that is on the next page. A. Yes; on the eighth page; 17 million dollars of bank loans there that I would not recall. Q. Now state the items on the next page going to make up Bills Payable. A. Loans maturing from 1913 to 1921, $12,000,000; bank loans maturing in 1912, $17,400,509.18 ; fiber drafts discounted in Manila, Phihppine Islands, $1,517,832.50. Q. What sort of loans are those under the first item, $12,- 000,000? A. In our books we distinguish between loans that are made for any length of time and those loans which we nego- tiate at the bank in the spring and intend to pay off in the fall. Q. Have you the report for 1910? A. I have the report for the year 1910. Q. Will you state on the record, in the same way you have answered the other questions, the amounts for the items Bills Payable taken from your books at the end of every year since the Harvester Company commenced doing business? (The witness subsequently furnished the Examiner, in writ- ing, the following statement) : -',14 Jdiiu's King, Direct E.V(i))iiiuUioii. Current Bills Paynblo. Bniik Loiius Fibre Dnifta Mntiirlng lii Discounted lu J )('(•, ;!1 Loug'l'i'iiii lionns Following Yen r Manlln, P. I. Totnl mo;! .$ ;i(io,;uii,i;i $ — | — $ 300,:ii(!.l3 intM _ _ _ _ i!H>r. — — 77S,r>(iOAX) 77S,r.(io.oo ni)0(i 7,0(X),000.(10 — 778,5(10.00 7,778,560.00 11I07 7,000,000.00 l2,(l.S7,2iri.;l(i 77.S,!-|(i0.00 10,465,775.30 11)08 6,000,000.00 680,.SS4.1)r) 1,605,780.00 8,286,664, '.ir. 1000 4,000,000.00 — 1,,S24,750.00 5,824,750.00 11)10 4,000,000. (X) 7,4l8,o;(5,4(i 2,360,010.00 13,778,045.46 lini 12,0tX),00O.00 17,IOO,.501).1S 1.517,832.50 30,018,341.68 In addition to the obligations classified in the balance sheet as Bills Payable, there v^evo outstanding at the close of each )'ear Purcliase Money Obligations, that is notes issued by the Company for the purchase of new properties as follows: Purchase Money Obligations. December 31, 1903, $5,084,678.89 December 31, 1904, 5,067,648.88 December 31, 1905, 5,151,337.68 December 31, 1906, 4,244,740.55 December 31, 1907, 3,450,194.63 December 31, 1908, December 31, 1909, 2,250,000.00 December 31, 1910, 1,125,000.00 December 31, 1911, 879,500.00 Q. There was a very large increase in the items of Bills Payable on your books between the year 1910 and 1911, was there not? A. There was. Q. How was that incurred? A. In general I could only say in the year 1910 collections were not particularly good. When collections are not good we have to rely on outside capital to finance the business, Tlic expenditures on (Capital Account, property account, were large. There is a very large inci'ease in the amount of Cur- rent Assets — Inventories, for example. The same thing holds true of Receivables. Thai, however, woald reflect in- creased sales and a falling off of collections. But in general tliat would l)e the explanation of the increase in the amount of our current Bills Payable. Mr. Grosvenor: I now olfer in evidence and read into the record the following three paragraphs on page 9 of the An- nual Repoi't of the International Harvester Company, De- cember 31, 1911: @r xvlooBe «f %ills payalile v^nied Inr Idle CJoaapany at tbe dkee of tlie &eal year. Antie^ting l^b emditicra. a loen of $1(MMM)U0^) agatming; in 1913. ^ras e^iotibied dntiB^ lAie year 19U. and eai^ in tte &eal year ISO^ $SX.{<(N\iOQi^ dutee year 5^ notes -were i^aied. "Tlie IToffcii^ C^^iilal reqair^neBts fc Uae Cka^ianr ax« -weanr iar^; fii^ Veaa^e of tiae ieayy investaffi^ls in Woad>s inTentQiiies leqnired in tlie ntany nontlis of nannSadtaiiii^ in adranee c>f i^ slioft sdffii^ seasoa; seeoad. lie^aiee «f fke Isigie ^HMks «f barr^tn^ maeMneay, lefsaiis and tvine ear- lied at aO e«»Tie%ksit loieatiiH^ fhro^^hoat tte vscld to lie isae^ttely axailaftle to nteet Idae Taiyii^ Seoaanfe of a trade vli^ eannot lie bnoim ontil 1^ Isaxvest is at ^^oad; tMrdl, Isre- eanse of flbe E&earal jr^Sts^ ensaded t«?i tie fiunae^rs in tbe ss-le of iS?5e mai^ines. F(Nr these reasons the CTliinipaanr ^ le- ^-siired to baT^' in winridji^ capital at all times an asBtoant neaxiy eqfaal to its estire asssial ss>s: and in tie laarre^er fines.' tie inre^naat in isTeitoiiies aM iee»Taliies latge^ es^e t&e ai»«»®nt «sf fte sestssI sales." ^ £b tiat s^eond paoagiapfti: "s loan of SiaWOjlMN) nsia- tni^ in ISO. vas nef^otiated dariri? 1^ year 19UL"' Fk«i«i iiiat sesree va? ftat loan oliained* JL I 'lo not losKiw. Q. Tea vesev, nest to lir. Seay^ tibe iead of tie A«;«?C!iarat- ipg^ S^patljwmt? A. ITdD. these are T^reasany BepaitnnHt wattHSL IvKioild mt neeesswdly ks>i>v. It woold ie n«^ wr daty to tnomr fiBidt fiii» Mioaey «fa»e into lObe tteasasy. Tie soearee woold sot aeees&aiily inier^^ ae. Ql I did ]sot a^ yon v%^i&»- h intne^ted yoo. I a^ed yes if yoa knew the S0iran?e. ' A. i answered tiat I -fid not fcMW. Q. Tea lo not know! A. I do M^ Ql X««w. Ifr. Ki^. iriH yosa ^ate em the reesMrd li^f- ^- fienaat e«npa»es v2»ee eoonm^is 3!o to nake i^ i^fe eonlaned leport? 236 James King, Direct Examination. (The witness subsequently furnislied tlie Examiner, in writ- ing, the following list:) International Harvester Company. International Harvester Company of Canada, Limited. International Flax Twine Company. Wisconsin Steel Company. Wisconsin Lumher Company. Illinois Iron Mining Company. Macleod & Company (Philippine Islands). Eastern Building Company, Limited (Canada). Columbian Shipping Company. Chicago, West Pullman & Southern Eailroad Company. Deering Southwestern Eailway. Illinois Northern Eailway. The Owasco Eiver Eailway. International Harvester Company of America. International Harvester Company Gr. m. b. H. (Austria). Aktieselskabet International Harvester Company (Den- mark). Campagnie Internationale des Machines Agricoles S. A. (France). Compagnie Internationale des Machines Agricoles de France S. A. Deutsche International Harvester Company M. b. h. (Ger- many). International Harvester Company m. b. H (Germany). International Harvester Company of Great Britain, Limited. Aktieselskabet International Harvester Company (Norway). International Harvester Company in Eussia. Aktiebolaget International Harvester Company (Sweden). International Harvester Company A/G (Switzerland). Q. Now please state on the record what the combined net profits of the International Harvester Company have been for every year since it commenced doing business. Also please state on the record what the surplus of the International Harvester Company has been for every year since it commenced doing business. Also please state what dividends have been paid, both cash and stock dividends, on the preferred and common stock of the International Harvester Company for every year since it commenced doing business. I suggest you make up a com- bined statement of those last three questions so that they can all be shown together. James King, Direct Examination. 237 (The witness subsequently furnished the Examiner, in writ- ing, the following statement:) Undivided Surplus at Net Profits Dividends Profits End of Year Season 1903 $ 5,641,180.61 $ 3,600,000.00 $ 2,041,180.61 $ 2,041,180.61 Season 1904 5,658,534.68 4,800,000.00 858,534.68 2,899,715.29 Season 1905 7,479,187.36 4,800,000.00 2,679,187.36 5,578,902.65 Season 1906 7,846,947.32 4,800,000.00 3,046,947.32 — Special Appropriation for Reserve for Col- lection Expenses 500,000.00* — 500,000.00* 8,125,849.97 Season 1907 8,080,457.51 4,200,000.00 3,880,457.51 12,006,307.48 Season 1908 8,885,682.13 4,200,000.00 4,685,682.13 16,691,989.61 Season 1909 14,892,740.21 4,200,000.00 10,692,740.21 27,384,729.82 Amount transferred from Surplus to Capital Stock Janu- ary 29, 1910 — 20,000,000.00 20,000,000.00* — Season 1910 16,084,819.19 _ _ _ Preferred — 4,200,000.00 — — Common — 3,200,000.00 8,684,819.19 16,069,549.01 Season 1911 15,521,397.89 _ _ _ Preferred — 4,200,000.00 — — Common — 4,000,000.00 7,321,397.89 23,390,946.90 $89,590,946.90 $66,200,000.00 $23,390,946.90 $23,390,946.90 *Deduction. _ The $120,000,000.00 Capital Stock, as originally issued, con- sisted entirely of common stock. On this stock cash dividends of 3% were paid in the year 1903, and 4% in each of the years 1904, 1905 and 1906. On January 8, 1907, the original $120,000,000.00 Capital Stock was divided into $60,000,000.00 seven per cent, cumula- tive Preferred Stock, and $60,000,000.00 Common Stock. Cash dividends of seven per cent, were paid on the $60,000,000.00 Preferred Stock in each of the years 1907 to 1911 inclusive. On January 28, 1910, the authorized Capital Stock of the Company was increased from $120,000,000.00 par value to $140,000,000.00 par value by increasing the amount of the authorized Common Stock from $60,000,000.00 to $80,000,- 000.00, such increase consisting of 200,000 shares of Common Stock, par value $100.00 each, $20,000,000.00, which was issued out of surplus as a stock dividend on the Common Stock. Cash dividends of four per cent, for the year 1910, and five per cent. for the year 1911, were paid on the $80,000,000.00 Common Stock. Q, One thing more : I want a list prepared showing the stock relationships of these companies which you have re- ferred to. Whether that would come properly under your 238 James King, Direct Examination. department or some oilier department I am not at present advised. Do you understand what I mean? I want to have it shown which is the holding company. Now, the Interna- tional Harvester Company of America owns the stock of some of these companies, does it not? A. No, it does not. Q. Does the New Jersey Company own all of them? A. As far as I know or recall. It is all recorded in the books of the New Jersey Company. Mr. Grrosvenor: I guess this witness is not the one to ex- amine on that. Mr. Wilson : No. Mr. Grosvenor : Yon can relieve your mind of that. That will be all now. By agreement of the parties the cross-examination of th^ witness is deferred until a later date. Mr. Grosvenor: It has been agreed by counsel, on both sides, that on account of engagements in the Supreme Court we willnow adjourn until October 23, 1912, at New York City. The hearing thereupon adjourned until October 23, 1912, to be resumed on that date at the Post Office Building in New York City. W. C. Lane, Direct Examination. 239 Hearing of October 23. Room 70, Post Office Building, New York, N. Y., October 23, 1912, 10 :30 A. M. The hearing was resumed before the Special Examiner, Robert S. Taylor, at the above time and place. | Present : On behalf of the Petitioner, Edwin P. G-rosvenor, Esq., Special Assistant to the Attorney General ; Joseph R. Darling, Esq., and Abram F. Myers, Esq. On behalf of defendants, Hon. William D. McHugh, John P. Wilson, Esq. ; Hon. Philip S. Post, and Vic- tor A. Remy, Esq., W. C. LANE, being duly sworn as a witness on behalf of the petitioner, testified as follows: Direct Examination by Mr. Grosvenor. Q. Mr. Lane, what is your business! A. I am a banker. Q. With what company are you connected? A. The Guaranty Trust Company; I was formerly -with the Standard; it has recently been merged, within ten days., Q. Are you an officer of that company? A. I am. Q. Vice president? A. Yes. Q. Before the merger of the two companies what was your position? A. I was president of the Standard Trust Company be- fore it merged. Q. How long had you been president of the Standard Trust Company? A. Since it started, in July, 1898. Q. Have you ever been engaged in the business of manu- facturing and selhng harvesting machinery? A. No. Q. Have you ever been interested in that business? A. Excepting in so far as for a short period of time I ac- quired some of those properties. 3 240 W. C. Lane, Direct Examination. Q. You said except? A. Yes. Q. Are you the William C. Lane who, in August, 1902, entered into contracts for the purchase of a number of har- vesting machine companies? A. I am ; I believe I am ; I do not know of any other. Q. Well, you know that, as a matter of fact, you did enter into certain contracts? A. Yes, I did. Q. And that was about July, 1902? A. I should think about that date, yes. Q. With whom did you first have conversation with re- spect to entering into agreements by which you should pur- chase these harvesting companies? A. With the gentlemen who were then my counsel, Messrs. Guthrie, Cravath & Henderson, as I think the firm was at that time. Q. And do you recall the names of the companies which you purchased? A. Well, they are all down in these papers, and I prefer the papers should state rather than my faulty memory after ten years. Q. You have preserved the papers ? A. Thave the papers all- here, yes. Q. And you have been subpoenaed to produce those papers ? A. I have. Q. Will you let me examine them, please? A. Yes, sir. (The witness hands a number of papers to Mr. Grosvenor.) Mr. Grosvenor: I will offer some of these in evidence a little later. Q. Mr. Lane, you have stated that the suggestion that you purchase these companies was made to you by your coun- sel. Are you able to recall what time? During August, or was it during July? A. No, I could not give you the date. Q. The idea of purchasing these properties had not oc- curred to you prior to that time? A. No. Q. You had no intention of acquiring them for your own interest, that is, as a permanent investment? A. No. Q. Your purpose in acquiring them was solely as a mat- ter of convenience to the parties interested, in order that you W. C. Lane, Direct Examination. 241 might then retransfer them to a corporation to be created, or otherwise, as they might direct? A. Something of that kind. I cannot say what the purpose of it was. Just at the moment I do not recall how the mat- ter was led up to. Q. In other words, you allowed your name to be used in the transactions as a matter of convenience for others? A. It was not my purpose to acquire the properties for my own use. Q. Did you meet any of these manufacturers of harvesting machines ? A. I saw some of them. Q. Which ones? , A. I cannot remember, or what times or how often. Q. The details of the contracts, that is, the terms under which they were to make sales to you, were not matters in which you were interested; is that right? A. My memory is very vague on all those things. That whole thing was in the hands of my counsel. They handled the whole thing. Q. Did you pay them for their services in the matter, or did they pay you for the use of your name? A. Well, I have no recollection as to that. Q. Did you meet any of the McCormicks in connection with the transaction or the sale of their property to you? By "their" I refer to the McCormick Harvesting Machine Com- pany. A. I have no recollection at this time as to that. Q. Have you any recollection of meeting them at any time in connection with the matter? A. No, I have not. Q. Did you have at the time any conferences with any of the Deerings in connection with the sale of the Deering Com- pany to you? A. I think I met Mr. Deering once or twice. Q. Which Mr. Deering? A. That I do not remember. Q. Had you met either the Deerings or the McCormick* priorto July, 1902? "A, I do not remember. Q. Did you meet Mr. Jones or any of the officers or own- ers of the Piano Manufacturing Company in connection with the transfer of their properties to you? A. I have no recollection of it. 242 W. C. Lane, Direct Examination. Q. Did you meet any of the officers or owners of the Warder, Bushnell & Glessner Company in connection with the sale of their properties ? A. I have no recollection of that, either. Q. Have you any recollection of the circumstances attend- ing the transfer of these properties to you, on July 28, 1902? A. No recollection other than what those papers would give. Q. Do you recall where the papers were signed? A. No, I do not. Q. Or who was present? A. No, I do not. Q. Or whether the contracts were executed in the presence of all the parties conveying, or in the presence of just you and the single party conveying in each document? A. No, I have no recollection of the circumstances at that time. Q. You refer to Guthrie, Cravath & Henderson as your counsel. By that I take it you refer to your counsel in other matters ? A. Yes, they have been my counsel in all matters for some years. Q. They were not your counsel in this matter, were they? To make my question clearer, were they counsel for somebody else? A. I do not know. I looked upon them as mine, as far as my recollection goes ; I do not remember, Q. I did not hear. You said they were not your counsel in this matter? A. No, I did not say so. I said, so far as my recollection goes they were. Q. In this matter? A. Yes. Q. Did you retain them in order to secure these proper- ties? A. I have no recollection of it. Q. Which of the firm made the suggestion to you that you should acquire the properties? A. I do not remember. Q. You do not remember whether it was in July or August of 1902? A. No ; beyond its being in 1902 I do not recall. Q. Do you recollect whether it was immediately prior to the execution of the contracts to you? W. C. Lmie, Direct Examination. 243 A. I have no recollection as to how mitcli time elapsed J( after the matter was brought to me, before the contracts were " signed. Q. Was it several days or several weeks? A. I have no recollection as to that. Q. Did you keep any track of the negotiations which were necessary in obtaining these properties'? A. My recollection is I kept daily in touch with the trans- action. Q. How long were you in daily touch? A. Oh, I cannot say. Please remember this was all ten years ago and I cannot recall all those minute facts. ^ , Q. How long did you retain the title to the properties of these companies which you acquired? A. I do not remember, but those papers ought to show. Q. Well, I am trying to get it down a little more exactly than the papers show. Have you refreshed your recollec- tion by examining the papers? A. Oh, I have rup those over, yes. Q. As a matter of fact, you obtained the transfer of the properties on August 12, 1902, did you not? A. If the papers so state. I would not venture my own 3 recollection as to any date. Q. And the next day, on August 13th, you transferred them to the International Harvester Company; do you recollect that? A. That might be, but I have no personal recollection of the date. Q. In any event, you have testified that you had no inten- tion of buying these properties for yourself? A. Yes. Q. Did the member of the firm of Guthrie, Cravath & Hen- derson who suggested that you take this part in these nego- 4 tiations, suggest any reason to you for your participation? A. Oh, I think there must have been some reason ; I do not recall now the conversation that bore upon it. Q. You knew that under the terms of your contract of July 28th you were in a position to assign these contracts to the company which was to be formed, in other words, the Interna- tional Harvester Company, did you not? A. Let me understand that question a little better, please. Q. Yes ; I "will state it again. You signed these four con- tracts for the purchase of these four companies on July 28th, 1902, do you recall that? ' 244 W. C. Lane, Direct Examination. A. I say no dates are in my mind at all. Q. Well, do you recall signing those contracts some weeks prior to the actual conveyance of the property to you I A. All dates are very vague in my mind. I could not give any evidence as to — Q. I said, do you recall executing the contracts for the sale several weeks prior to the actual sale? A. There I say I cannot recall the dates upon which I either signed the contracts or the sale occurred; therefore it would be impossible for me — Q. I am not asking you for the dates. I am asking you, do you recall having signed these preliminary contracts be- fore you signed the actual deeds of transfer, several weeks later? A. Well, that implies a knowledge of dates. I simply say I presume I did, but I do not know. The word "before" nat- urally conveys a date. All those dates in my mind are ex- tremely vague. Q. Now, I (jail your attention to this contract of July 28th — I think it is the Government's Exhibit 1 — -which pro- vides that this contract, or any part thereof, may be trans- ferred by the purchaser to the purchasing company — that -is, of course, the International Harvester Company. That contract is dated July 28th. Now, can you state why, several weeks later, instead of transferring your contract rights to this new company, you went all through this procedure of having the deeds transferred to you and all the bills and ac- counts receivable and all these other numerous papers exe- cuted by all the different parties to you, and then the next day transferred by you to the new company? A. That question is what? (The question was read by the Examiner.) A. I cannot at this time state why that procedure was taken. Q. Was any reason stated to you? A. What is that? Q. Do you recall whether any reason was stated to you by your counsel for adopting this method of procedure? A. I have no recollection on that subject. Q. Was anything said to you about avoiding the appear- ance of combination if this form of sale was adopted? A. No ; no recollection of anything of that kind. Q. In other words, you simply did as they asked you to; is that right? W- C. Lane, Direct Examination. 245 A. Very largely, yes. Q. And your part — A. I was governed by their advice, entirely, in the matter. Q. In other words, your action in the premises was (speak- ing plainly) merely that of a dummy, was it not? A. Well, it was that of an agent, perhaps. I don't know what word you would use. Q. An agent? A. "Dummy" does not always sound just as dignified as one would like to have it, perhaps. Q. Well, it was not an agent with powers, was it? A. I don't know what your legal construction of an "agent" would be. I was acquiring these properties, as I told you, with no desire to own them myself, with no idea of owning them. Q. And simply at their suggestion? A. Simply at the suggestion of my counsel. Q. And in signing all these papers you did put yourself at their disposal and trusted them? A. I was guided entirely by their advice and suggestion in the matter. Q. Did you have any discussion, that you now recall, with any of these harvesting manufacturers in regard to the trans- fer of their properties? A. I have no recollection. Q. Your company— I refer to the Standard Trust Com- pany — was appointed as the transfer agent in the issue of the stock trust certificates, was it not? A. Yes. Q. And you paid for these properties — the five proper- ties which you acquired — 120 million dollars in the stock of the new company; is that right? A. The exact figures are in those contracts; I think that was it. I do not like to burden my mind with figures. Do not think, Mr. Grosvenor, I am a witness who wants to retire behind his memory, but this is ten years ago. Q. I understand. A. Anything I can remember I will tell you, but those papers will give you more facts than I can. Q. You understand, of course, that the Court who reads this does not want to read all the papers. So my purpose is to try to get some of these facts on the record in intelligible form for the one who is going to read them. Mr. Lane, you paid for these properties which you acquired in the manner 246 W. C. Lane, Direct Examination. 1 you have testified, by transferring to the manufacturers stock in this new company I Is that right? A. I believe I did. At least I carried out exactly the terms which those contracts provided. Q. And you deposited the stock which you received with the voting trustees'? Do you recall that? A. No, I do not. Q. Do you recall receiving stock trust certificates in ex- change for these certificates of stock in the Harvester Com- pany! A. I have no recollection of exactly how that was done. 2 I remember the original stock was issued and afterwards it went into voting trust certificates. How or when, or whether it all went through my hands, I am not able to remember. Q. Did you at the time ask your counsel, or ask any of the parties interested, why they needed the use of your name in this transaction? A. No; not that I remember. Q. Now, I show you in the record this proposition from you to the International Harvester C6mpany, dated August 12, 1902, set forth in the record at page 148, stating the terms 3 under which you offered the property to the corporation. Was that a paper which was drawn up and which you signed, in the course of the transaction simply because they asked you to do so? (Showing the witness the record at page 148.) That is your offer to the Harvester Company? A. 1 presume it is. I have no distinct recollection of the paper itself. Q. You were not interested in the terms of your proposi- tion, were you? A. Individually, no. Q. Was this proposition dictated by you, do you recall? 4 A. I do not recall. Q. Now, you state: "The total aggregate price at which I offer said properties as going concerns is 132 million dol- lars." I suppose that also was inserted without your con- sideration as to whether or not — A. I was familiar at the time with all the terms, but just how they were arrived at I am unable to tell you at this time. Q. Now, this proposition refers to a number of papers. One is a separate agreement with reference to the payment of said sum of 60 million dollars. Will you look through your W. C. Lane, Direct Examination. 247 papers and see if you have that. I want to find that and put 1 it in evidence. A. (After looking through papers.) Excuse me, what was that that you wanted particularly to find out? Q. I wish you to produce the separate agreement with ref- erence to the payment of said sum of 60 million dollars that is referred to in your proposition to the company. A. There are some letters here which refer to it. Q. Have you a copy of the agreement there ? Look through these papers. (Handing papers to witness.) A. That would seem to — (Handing paper to Mr. G-ros- venor). 2 Q. This paper which you show me^- A. There is one which perhaps is more specific as to that. (Handing Mr. Grosvenor another paper.) Q. This paper which you showed me is simply a copy of your proposition? A. Yes. Well, there is an agreement to pay the 60 million of working capital. Is that the one you refer to? (Handing paper to Mr. G-rosvenor.) Q. Let me look at it. No, that is another paper. A. Well, I cannot find anything more specific on the sub- 3 ject than the one I handed you. Q. This one which you hand me is simply a copy of your proposition? A. Now, what is it you want? What is it you are in search of? Q. You notice this proposition of yours refers to four separate agreements. This one numbered three is the one I want. A. What is the date of that? Q. August 12, 1902. A. The agreements do not seem to be here as far as I 4 have observed. (The witness makes further search among his papers and continues :) There would be agreements that would antedate that, then. If that is in August, 1902, they would have to antedate that, if they refer to that. I can't refer to anything of that kind here. Q. Will you make further search among your papers for a copy of that agreement? A. I dug very deeply in the papers I have got. Q. Let me state for your information : It will be undoubt- 248 W. C. Lane, Direct Examination. edly an agreement dated August 13, 1902, tliat is, of the same date as these other agreements referred to in your proposi- tion. A. I have dug over my papers very carefully, up and down, in every direction, to find every particle, and every- thing I have found I have brought with me, covering all these dates that you have asked ahout. Mr. Grosvenor: You have produced a memorandum of agreement, that is, a blank form of a memorandum of agree- ment, purporting to be dated August 13th, 1902, which refers to the accounts and bills receivable of the McCormick, Deer- ing and Piano companies. I will offer that in evidence and ask that it be copied, into the record. Mr. McHugh: No objection. The paper was marked Petitioner 's Exhibit 39, and is as fol- lows: PETITIONER'S EXHIBIT 39. Memorandum of Agreement between the International Har- vester Company (herein referred to as the "Company,") party of the first part, and William C. Lane (herein referred to as the "Vendor,") party of the second part. The Company has acquired from the Vendor all of the ac- counts and bills receivable of the following manufacturers of harvesting machines : McCormick Harvesting Machine Company, Deering Harvester Company, Piano Manufacturing Company. The Vendor has agreed to pay to the Company the sum of $60,000,000, to be payable in such accounts and bills receiv- able, or in cash, or partly in such accounts and bills receiv- able and partly in cash, as the Vendor shall elect. In consideration of the premises and of the mutual agree- ments herein contained, the parties hereto have covenanted and agreed as follows: First, The Company hereby agrees that in case it shall col- lect upon the accounts and bills receivable of any of said manu- facturers, amounts exceeding the amounts herein set oppo- site their respective names, together with interest from such day in September, 1902, as shall be designated by the Vendor, then it will pay such excess to the Vendor or upon his order. Said amounts are respectively as follows : McCormick Harvesting Machine Company, $20,000,000 Deering Harvester Company, 16,000,000 Piano Manufacturing Company, 4,000,000 W. C. Lane, Direct Examination. 249 Second, Any and all accounts and bills receivable trans- 1 ferred by the Vendor hereunder shall be taken at their face value and accrued interest to date of transfer ; but the Vendor shall guarantee, and hereby does guarantee, that the Company shall realize thereon such face value and interest, and that said principal and interest shall all be received on or prior to the first day of March, 1905. The collections shall be made by the Company, but the expenses of collection shall be borne by the Vendor. Pending such collections, the Vendor agrees to advance and pay to the Company, on demand from time to time, on account of such guaranty, such amounts a^ the board of directors of the Company may determine to 2 be necessary or convenient in the conduct of its business. If such advance payments be made by the Vendor, then the Com- pany shall transfer to the Vendor, or its nominees, an equal amount in principal and accrued interest of uncollected ac- counts and bills receivable of the earliest maturities. The Company may take such meaures as it may deem wise for the collection of the accounts and bills receivable, and grant ex- tensions and indulgences to debtors by whom the same are payable, without release of, or prejudice to, the Vendor's guar- anty and without extension or change of the obligation of the 3 Vendor to make payments as aforesaid. The Company shall from time to time, on demand, furnish the Vendor a full state- ment showing which accounts and bills receivable remain un- paid, and what, if any, disposition has been made in regard thereto or steps taken to enforce the collection thereof. Third. The Vendor may at any time acquire any of said accounts and bills receivable by paying to the Company in cash the amount of their face value and accrued interest. The Vendor may hereafter be relieved of his guaranty and obliga-" tions hereunder by substituting, in lieu thereof, such security and agreements of others as shall be accepted and approved 4 by the Company. In witness whereof the party of ,the first p&rt has caused this instrument to be executed under its corporate name by its proper officers and its corporate seal to be hereunto affixed, and the said party of the second part has hereunto set his hand and seal this 13th day of August, 1902. International Haevestee Company, By President. Attest : Secretary. 250 W. C. Lane, Bisect Examination. 1 Q. Now, you have produced an agreement dated August 13, 1902, between you, as party of the first part, and J. P. Mor- gan & Company, party of the second part, relating to this mat- ter. Let me ask you whether that was one of the papers or contracts which you signed, together with the others, about this time? A. I remember the contract very well at the time. Q. As being submitted to you for signature? A. I do not remember the exact date of it, but I signed it at the suggestion of my counsel. The paper produced by the witness was marked Petitioner's 2 Exhibit 40. Mr. Grosvenor: I offer in evidence Petitioner's Exhibit 40 and also offer as a part of the exhibit the letters which are attached. Mr. McHiugh : No objection. Petitioner's Exhibit 40 is as follows: PETITIONER'S EXHIBIT 40. An Agreement, made and entered into in the City of New York on the thirteenth day of August, 1902, by and between William C. Lane, party of the first part, and the firm of J. P. Morgan & Co., parties of the second part. The party of the first part has acquired and is entitled to receive and dispose of stock trust certificates representing a large amount of the full-paid and non-assessable shares of the capital stock of the International Harvester Company (here- inafter called the "Company"), a corporation organized under the laws of the State of New Jersey, with a capital stock of one hundred and twenty million dollars ($120,000,000) divided into one million two hundred thousand (1,200,000) shares of one hundred dollars ($100) each. , The party of the first part has entered into four several contracts, dated July 28, 1902, respectively with the McCor- mick Harvesting Machine Company, the Deering Harvester Company, the Piano Manufacturing Company, and the War- der, Bushnell & Glessner Co., each of which contracts pro- vides for certain services to be rendered by the parties of the second part, and by J. P. Morgan or George W. Perkins, members of said firm. W. C. Lane, Direct Examination. 251 _ The party of the first part desires to procure from the par- j ties of the second part the sum of twenty-two million five hun- dred thousand dollars ($22,500,000) in cash. Now, This Agreement Witnesseth, that the parties hereto, for and in consideration of the premises, and of the agree- ments hereinafter recited, and of the sum of ten dollars ($10) to each paid by the other, the receipt whereof is hereby ac- loiowledged, have agreed and hereby do agree as follows: First. The party of the first part agrees to sell, assign, transfer and set over unto the parties of the second part stock trust certificates representing twenty-five million five hundred thousand dollars ($25,500,000) par value of full-paid capital 2 stock of the Company for the sum of twenty-two million five hundred thousand dollars ($22,500,000) in cash, payable on demand, and in full payment for the said services rendered and to be rendered by the parties of the second part ; and the party of the first part agrees that immediately upon the pay- ment of said sum of twenty- two million five hundred thousand dollars ($22,500,000) he will deliver to the parties of the sec- ond part, or upon their order, stock trust certificates repre- senting said shares of stock, properly endorsed in blank. Second. The parties of the second part will take from the 3 party of the first part stock trust certificates representing shares of valid full-paid and non-assessable stock of the Com- pany to the amount of twenty-five million five hundred thou- sand dollars ($25,500,000) par value, as herein provided, and, upon receipt thereof, will pay to the party of the "first part, or upon his order, twenty-two million five hundred thousand dol- lars ($22,500,000) in cash. Third. The party of the first part further agrees to pay to the parties of the second part any disbursements and ex- IDenses which they may incur in connection with the services to be rendered as hereinbefore provided, including the fees 4 and expenses of any counsel, appraisers, and expert account- ants employed by the parties of the second part. Fourth. This agreement shall bind the executors and ad- ministrators of the party of the first part and the successors and assigns of the parties of the second part, whose engage- ment and rights hereunder are those of partners and are to be borne and enjoyed by the present firm of J. P. Morgan & Co., or any successor firm, however constituted. In Witness Whereof, the party of the first part has here- unto set his hand, and the parties of the second part have 252 TF. C. Lane, Direct Examination. 1 caused these presents to be executed in their firm name, the day and year first above written. In the presence of : Wm. C. Lane, 40-A J. P. Morgan & Co. Wm. C. Lane. No. 25 Broad Street. Lane to Morgan & Co. New York, Aug. 6, 1902. Messrs. J. P. Morgan & Co., No. 23 Wall Sti-eet, New York City. Dear Sirs : 1 have handed you four contracts dated July 28, 1902, which are respectively between the following named manufacturers of harvesting machinery and myself-. McCormick Harvesting Machine Company; Deering Harvesting Company; Piano Manufacturing Company; Warder, Bushnell & Glessner Com- pany. Each of these contracts provides for services to be ren- dered by your firm, and in certain instances by Mr. J. P. Mor- gan or Mr. George W. Perkins. My object in writing you this letter is to confirm the request which I have already made orally that you render the services provided for in said con- tracts. I shall be very much obliged if you will at once arrange with the Vendor under each contract for the appointment of the various boards of appraisers and accountants provided for in the contracts, of which boards, one member is to be appointed by the Vendor, and two by you. I am willing that any part of the duties intended to be performed by the boards of ap- praisers and accountants, be performed by a firm of expert ac- countants to be designated by you. Yours truly, Wm. C. Lane. 40-B New York, August 11, 1902. Messrs. J. P. Morgan & Co. Dear Sirs: I hand you herewith four contracts, dated this day, re- spectively between the McCormick Harvesting Machine Com- pany, the Deering Harvester Company, the Piano Manufac- turing Company, and the Warder, Bushnell & Glessner Co. and myself, which are supplemental to the contract, between W. C. Lane, Direct Examination. 253 the same parties dated July 28, 1902. I hereby request you to act in the capacities provided for in said agreeemnts. Yours truly, Wm. C. Lane. 40-C August 13, 1902. Messrs. J. P. Morgan & Co. Dear Sirs: I hand you herewith stock trust certificates, duly endorsed for transfer in blank, representing $119,940,000, par value of the capital stock of the International Harvester Company, which have been issued to me as representing full-paid and non- assessable stock. I deposit these stock trust certificates with you pursuant to my contract with you, dated August 13, 1902, and pursuant to the original and supplemental contracts between the fol- lowing manufacturers of harvesting machines and myself ; such original contracts being dated July 28, 1902, and the supple- mental contracts being dated August 11, 1902: McCormick Harvesting Machine Company, Deering Harvester Company; Piano Manufacturing Company: Warder, Bushnell and Glessner Co. You are hereby authorized and directed to hold and dis- pose of said stock trust certificates pursuant to the terms of the contracts above mentioned, delivering to me, or upon my order, any of such stock trust certificates that may remain after the terms of said contracts have been complied with. Yours truly, Wm. C. Lane. (1) J. P. M. & Co. to Lane. 40-D New York, August 14, 1902. William C. Lane, Esq., Dear Sir: We hand you herewith our check, to your order, for $13,- 500,000, as a payment on account of our purchase from you of stock trust certificates for $25,500,000 of the capital stock of the International Harvester Company. We will be obliged if you will approve the delivery to us against this payment of $16,500,000 of the stock trust certificates on deposit with us • stock trust certificates for the remaining $9,000,000 of stock 254 W. C. Lane, Direct Examination. 1 to be subject to delivery to us or upon our order as the re- maining $9,000,000 of the cash purchase price is paid. Yours truly, J. P, MOEGAN & Co. (2) Lane to J. P. M. & Co. 40-E New York, Augu&t, 15, 1902. Messrs. J. P. Morgan & Co., Dear Sirs : I acknowledge receipt of your favor of yesterday enclosing check to my order for $13,500,000. I hereby consent that stock trust certificates for stock to the amount of $16,500,000 be delivered to you, the remaining $9,000,000 covered by your purchase to be delivered to you or upon your order as the remaining $9,000,000 of the cash purchase price is paid. Yours truly, Wm. C. Lane. (6) Lane to J. P. M. & Co. 40-F : New York, August 15, 1902. Messrs. J. P. Morgan & Co., Dear Sirs : I hand you herewith my check for $3,148,196.66, covering the advances you have made for my account by way of remit- tances to Milwaukee upon my order. Yours truly, Wm. C. Lane. (7) William C. Lane to J. P. Morgan & Co. 40-a : — New York, August 15, 1902. J. P. Morgan & Co., Dear Sirs : I desire to open a deposit account with you, and hand you herewith my check to your order for $351,803.34, which you will please put to my credit and hold subject to my check. Yours truly, Wm. C. Lane. W. C. Lane, Direct Examination. 255 40-H C. H. MeCormick to William C. Lane. New York, August 11, 1902. William C. Lane, Esq., Dear Sir: I am depositing with J. P. Morgan & Co., as depositaries, subject to your order, certificates representing shares of the capital stock of the MeCormick Harvesting Machine Company. These certificates, so far as J. P. Morgan & Co. are concerned, are subject to your order. You have agreed with me that the depositors of such certificates shall be entitled to receive from the company all payments upon the stock represented thereby on account of their distributive shares of the purchase price payable by you as the purchaser of the property of said Com- pany, and of all other proceeds of such stock. Subject to this right of the depositors of such stock to receive their dis- tributive shares of such purchase price and other proceeds, said stock certificates are subject to be disposed of by you in such manner as you see fit. This deposit is not to pre- vent the reduction of the capital stock of said Company. Yours truly, Cyeus H. McCoemick. 40-1 J. J. Glessner to William C. Lane. New York, August 11, 1902. William C. Lane, Esq., Dear Sir: I am depositing with J. P. Morgan & Co., as depositaries, subject to your order, certificates representing shares of the capital stock of the Warder, Bushnell & Glessner Co. These certificates, so far as J. P. Morgan & Co. are concerned, are subject to your order. You have agreed with me that the de- positors of such certificates shall be entitled to receive from the Company all payments upon the stock represented thereby on account of their distributive shares of the purchase price payable by you as the purchaser of the property of the Com- pany, and of all other proceeds of such stock. Subject to this right of the depositors of such stock to receive their distribu- tive shares of such purchase price and other proceeds, said stock certificates are subject to be disposed of by you in such manner as you see fit. This deposit is not to prevent the reduction of the capital stock of said Company. Yours truly, J. J. Glessnek. 256 W. C. Lane, Direct Examination. 1 40-J W. H. Jones to William C. Lane. New York, August 11, 1902. William C. Lane, Esq., Dear Sir: I am depositing with J. P. Morgan & Co., as depositaries, subject to your order, certificates representing shares of the capital stock of the Piano Manufacturing Company. These certificates, so far as J. P. Morgan & Co. are concerned, are subject to your order. You have agreed with me that the de- positors of such certificates shall be entitled to receive from the Company all .payments upon the stock represented there- 2 by on account^ of their distributive shares of the purchase price payable by you as the purchaser of the property of said Company, and of all other proceeds of such stock. Subject to this right of the depositors of such stock to receive their distributive shares of such purchase price and other pro- ceeds, said stock certificates are subject to be disposed of by you in such manner as you see fit. This deposit is not to prevent the reduction of the capital stock of said Company. Yours truly. Q. Now, will you look at that letter dated August 13, 1902, and refresh your recollection by reading it. (Handing wit- ness Petitioner's Exhibit 40.) (The witness reads the letter.) Q. Are you able now, refreshing your recollection from that letter, to state the date on which you deposited the stock trust certificates in the new corporation I A. You refer to this amount of 119 million dollars! Q. Yes. A. Let me understand fully what the question means. You mean if I have any recollection of this letter? The question was read by the Examiner. A. I have no other recollection than what this letter would give me. Q. Now, let me see those other papers. (The witness hands papers to Mr. Grosvenor.) Mr. Grosvenor: The witness has produced the following letters, which I now oif er in evidence : August 6, 1902, "Memorandum for Mr. Lane, initialed 'P.D. C" Who is "P.D. C"? Witness : Paul D. Cravath, I think. Mr. Grosvenor : And a copy of letter of the same date, ad- dressed to Paul D. Cravath, signed by Wm. C. Lane, and a W. C. Lane, Direct Examination. 257 letter of the same date addressed to Messrs. J. P. Morgan & 1 Company, signed Wm. C. Lane. I offer those as one exhibit. Mr. McHugh: No objection. Petitioner's Exhibit 41 is as follows: PETITIONER 'S EXHIBIT 41. (Letterhead) : Gruthrie, Cravath & Henderson No. 40 Wall Street. New York, Aug. 6, 1902. Memorandum for Mr. Lane. "We would be obliged if you would write on your business paper the enclosed letter to J. P. Morgan & Co. and send it to us that we may deliver it with the proper explanation. You will retain a copy for your files, and we would be obliged if you would have your typewriter enclose a copy for our files. P. D. C. William C. Lane, Esq., 25 Broad Street, N. Y. 41-A Copy August 6, 1902. Paul D. Cravath ,Esq., No. 40 Wall St., N. Y. Dear Sir: — I am in receipt of your note of this morning, and in com- pliance with your request, send you letter addressed to Messrs. J. P. Morgan & Co. as per memorandum furnished by you, and also a duplicate copy for your files. Yours very truly, Wm. C. Lane (signed) Enclosure. 41-B Wm. C. Lane. No. 25 Broad St. New York, Aug. 6, 1902. Messrs. J. P. Morgan & Company, No. 23 Wall Street, New York City. Dear Sirs: — I have handed you four contracts dated July 28, 1902, which are respectively between the following named manu- facturers of harvesting machinery and myself: McCormick 3 258 W. C. Lane, Direct Examination. Harvesting Machine Company; Deering Harvesting Com- pany; Piano Manufacturing Company; Wardner Bushnell & GHessner Company. Each of those contracts provides for services to be rendered by your firm, and in certain instances by Mr. J. P. Morgan or Mr. George W. Perkins. My object in writing you this letter is to confirm the request which I have already made orally that you render the services pro- vided for in said contracts. I shall be very much obliged if you will at once arrange with the Vendor under each contract for the appointment of the various board of appraisers and accountants provided for in the contracts, of which boards, one member is to be appointed by the Vendor, and two by you. I am willing that any part of the duties intended to be performed by the boards of appraisers and accountants, be performed by a firm of expert accountants to be designated by you. Yours truly, Wm. C. Lane (signed). Witness:, Shall I ever see those papers again? Mr. Grosvenor : Oh, yes, you will see them. "Witness: They are the only thing I have to refresh my memory. Mr. Grosvenor : They will be in the possession of Mr. Tay- lor, the Special Examiner. Q. Now, this memorandum initialed "P. I>. C," says: "We would be obliged if you would write on your business paper the enclosed letter to J. P. Morgan & Co. and send it to us that w'e may deliver it with the proper explanation." That was the sort of instruction you received during these transactions, A. I have not looked at that for ten years. I do not know what it means. Q. I mean, you never took a step in these negotiations or signed any of these papers except in pursuance to the request from your counsel? A. They conducted all the negotiations. Q. And whenever they sent you a letter they sent you a request of this kind? A. Yes, or they came personally and discussed it with me. Q. And whenever they did so, you, without question, did as they requested? Is that right? A. When you say "without question," I did not sign any- thing unless it was fully explained to me and fully under- W. C. Lane, Direct Examination. 259 stood, as part of the negotiation. I am not in the habit of signing papers blindly, no matter whom they are presented by. Q. In this transaction did you sign every paper which your counsel presented to you I A. I cannot say at this time. I was guided by their ad- vice and suggestion in every paper that I signed. Q. Have you any recollection of not signing any paper which they presented to you? A. No, I have no recollection. Q. And this letter addressed to J. P. Morgan & Company was drawn up by your counsel and enclosed with their letter; is that right? A. I presume so. Mr. Grosvenor: The witness has produced a letter dated August 11, 1902, addressed to him and signed by Paul D. Cravath, with a letter dated August 11th addressed to "Wil- liam C. Lane, and signed J. P. Morgan & Co., and another letter addressed to J. P. Morgan & Co., signed Wm. C. Lane, dated Aug. 12, 1902. I offer those in evidence as one exhibit. Mr. McHugh: No objection. The letters were marked Petitioner's Exhibit 42, and are as follows: PETITIONER'S EXHIBIT 42. (Letterhead) : Guthrie, Cravath & Henderson No. 40 Wall Street, New York, August 11, 1902. Dear Mr. Lane : J. P. Morgan & Co. will write you a letter, stating that at your request they have advanced a sum of money to be men- tioned in their letter, to enable you to complete the purchase of the stock of the Milwaukee Harvester Co. Upon receipt of that letter simply write J. P. Morgan & Co. a letter of acknowledgment and confirmation in the usual form. Yours very truly, Paul D. Ceavath. William C. Lane, Esq., 25 Broad St., New York. / 260 W. C. Lane, Direct Examination. 1 42-A (Letterhead) : • J. P. Morgan & Co. Wall St. Corner Broad New York. Drexel & Co. PhiladelpMa. Morgan, Harjes & Co. Pans. New York, Augnst llth, 1902. William C. Lane, Esq., 25 Broad Street, New York, N. Y. JDear Sir: — We beg to advise that in accordance with, your instructions and for your account we have wired a credit to the First Na- tional Bank of Milwaukee, for the use of Bentley & Burling, $2,845,224.85. Please confirm, and oblige. Yours truly, J. P. Morgan & Co. (Pencil notation) : June 29th $100,000 & int. to Aug. 15. 42-B Copy August 12, 1902. Messrs. J. P. Morgan & Co., No. 23 Wall St., New York City. Dear Sirs : I beg to acknowledge receipt of your favor of August llth advising me that in accordance with my instructions and for my account you have wired a credit of $2,845,224.85 to the First National Bank of Milwaukee, which I hereby confirm and for which please accept my thanks. Yours very truly, Wm. C. Lane (signed). Q. Now, this letter of Mr. Cravath states : "J. P. Morgan & Co. will write you a letter, stating that at your request they have advanced a sum of money to be mentioned in their letter, to enable you to complete the purchase of the stock of the Milwaukee Harvester Co. ' ' Had you any interest in that Milwaukee Harvester Company? W. C. Lane, Direct Examination. 261 A. I have no recollection. Is it one of the companies i mentioned in the contract? Q. Tes. Other than as mentioned in the contracts you had no interest in it? A. No. Q. You had no intention of purchasing it to go into the Harvester business, had you? A. I had not. Q. Do these letters, Mr. Lane, refresh your recollection in any manner, as to whether or not any statement was made to you by your counsel as to what purpose you were used for in this transaction? 2 A. Only in the vaguest way — that it was the cleanest way to handle a number of properties and get them together and get them all conveyed as one piece of property. Q. Now, these properties were all transferred to yoti August 12th? A. I, forget the date they were transferred to me. Q. You at once transferred them, within a few hours, to another corporation? A. I transferred them. I do not know what time elapsed. Q. How did it make it simpler to have two transfers in- 3 stead of one? A. That, perhaps, a lawyer would be able to tell you better than I can. Q. As a business man, you do not see how two transfers are simpler than one? A. There are occasions when they are, yes. Q. This was a case where the lawyer suggested two trans- fers? A. No, I could not give you all the details of it. The whole method was carried out under advice of counsel. The motives governing it I cannot give you. 4 Q. Do these letters refresh your recollection as to whether anything was said on the point of eliminating combination by such an arrangement? A. I have no recollection of anything of that kind. Q. I mean by eliminating the element of combination ? A. I have no recollection of anything of that kind. Mr. Grosvenor: The witness has produced letter dated August 12, 1902, on the letterhead of Gruthrie, Cravath & Hen- derson, and signed by them, addressed to William C. Lane, with a copy of a telegram signed by Mr. Lane, and addressed 262 W. C. Lane, Direct Examination. 1 to Miller, Noyes, Miller & Wahl of Milwaukee, August 12, 1902. I offer them in evidence. The same were marked Petitioner's Exhibit 43, and are as follows : PETITIONER'S EXHIBIT 43. (Letterhead) : Guthrie, Cravath & Henderson No. 40 Wall Street. New York, Aug. 12, 1902. Dear Sir: Enclosed please find a copy of a telegram which we have sent in your name to the Milwaukee Harvesting Company pur- suant to instructions. Tours very truly, CrUTHEIE, CeAVATH & HeNDEESON. William C. Lane, Esq., 25 Broad Street. Enc. 5. 2 43-A Copy August 12, 1902. Miller, Noyes, Miller &.Wahl, Milwaukee, Wisconsin. As purchaser and owner of the property and business of the Milwaukee Harvesting Company I hereby request and authorize that company to continue in charge of the property as my agent until I can arrange to take possession of the property and business. William C. Lai^b. Mr. Grosvenor: The witness has produced a letter dgted August 14, 1902, addressed to William C. Lane, signed J. P. Morgan & Co., and another letter dated August 15, 1902, signed by Wm. C. Lane and addressed to Messrs. J. P. Morgan & Co. I offer those in evidence. Mr. McHugh: No objection. The same were marked Petitioner's Exhibit 44 and are as follows : W. C. Lane, Direct Examination. PETITIONEE'S EXHIBIT 44. (Letterhead) : J. P. Morgan & Co. Wall St. Comer Broad. New York. Drexel & Co. Philadelphia. Morgan, Harjes & Co. Paris. New York, August 14th, 1902. William C. Lane, Esq., Dear Sir : We hand you herewith our check, to your order, for $13,500,- 000 as a payment on account of our purchase from you of stock trust certificates for $25,500,000 of the capital stock of the International Harvester Company. We will be obliged if you will approve ^ihe delivery to us against this payment of $16,500,000 of the stock trust certificates on deposit with us; stock trust certificates for the remaining $9,000,000 of stock to be subject to delivery to us or upon our order as the re- maining $9,000,000 of the cash purchase price is paid. Yours truly, J. P. MOEGAN & Co. 44-A '■ Copy Wm. C. Lane. No. 25 Broad St. New York, Aug. 15, 1902. Messrs. J. P. Morgan & Co., No 23 Wall St., New York City. Dear Sirs: — I acknowledge receipt of your favor of yesterday enclosing check to my order for $13,500,000. I hereby consent that stock trust certificates for stock to the amount of $16,500,000 be delivered to you, the remaining $9,000,000 covered by your purchase to be delivered to you or upon your order as the remaining $9,000,000 of the cash purchase price is paid. Yours truly, (Signed) Wm. C. Lane. 264 W. C. Lane, Direct Examination. Mr. Grosvenor : The witness has also produced letter dated August 15, 1902, addressed to J. P. Morgan, signed Wm. C. Lane, and another letter of the same date, in answer to the first, signed by J. P. Morgan & Co. I offer them in evidence. The same were marked Petitioner's Exhibit 45, and are as follows : PETITIONER'S EXHIBIT 45. Copy Wm. C. Lane 25 Broad St. New York, Aug. 15, 1902. Messrs. J. P. Morgan & Co., No. 23 Wall St., New York City. Pear Sirs: — I hand you herewith my check for $3,148,196.66, covering the advances you have made for my account by way of remit- tances to Milwaukee upon my order. Yours truly, Wm. C. Lane (signed). (Blue pencil memo.) : International Harvester Co. 45-A ■- (Letterhead) : J. P. Morgan & Co. Wall St. Corner Broad. New York. Drexel & Co. Philadelphia. Morgan, Harjes & Co. Paris. New York, August 15th, 1902. Wm. C. Lane, Esq., 42 Wall Street, New York, N. Y. Dear Sir: — We have duly received your letter of August 15th, enclos- ing check for $3,148,196.66 in payment in full with interest of the advances made by us for your account by way of re- mittances to Milwaukee upon your order. Yours very truly, J. P. MOBGAN & Co. W. C. Lane, Direct Examination. 265 Q. This letter to J. P. Morgan & Co. says : "I hand you ^ herewith my check for $3,148,196.66, covering the advances you have made for my account by way of remittances to Mil- waukee upon my order." Where did you get that money from? A. What is the amount ? Three million and — : Q. 3 million, 148 thousand. A. (After referring to papers.) There is some letter there that acknowledges the receipt of a lump sum of money, and that is disbursement, of which this is a part. Q. Well, that is just a matter of bookkeeping which whs also arranged by your counsel and in which you followed 2 their suggestion? Is that right? A. The Standard Trust Company was a party — at least it had the handling of some of this money; how or where I do not recall at the moment. They sent remittances to Chi- cago, through their correspondents there. I think it is all shown in the letters and telegrams. Mr. Grosvenor: The witness has produced a letter dated August 15, 1902, addressed to International Harvester Com- pany, and an acknowledgment of the same date. I offer them in evidence. o The same were marked Petitioner's Exhibit 46, and are as follows : PETITIONER'S EXHIBIT 46. Copy Wm. C. Lane 25 Broad St. New York, Aug. 15, 1902. International Harvester Company, Dear Sirs: — Referring to the contracts between us, I enclose herewith . my check to your order for $10,000,000 as a payment on ac- count of the $60,000,000 of working capital payable by me under said contracts. Yours truly, Wm, C. Lane (signed). 46-A New York, August 15, 1902. William C. Lane, Esq., Dear Sir: We beg to acknowledge the receipt of your cheque for $10,- 000,000 as a payment under your contracts with this Company. 266 W. C. Lane, Direct Examination. 1 Ploase pay all further amounts payable under said contracts to Messrs. J. P. Morgan & Co. for the account of the Interna- tional Harvester Company, whose fiscal agents they are. Yours truly, IKTEENATI0N4.L HaEVESTBE CoMPANY, By A. M. Hyatt, Vice-President. Mr. Gro^venor: The witness has produced a letted dated August 21, 1902, addressed to Outhrie, Cravath & Henderson, 2 signed Wm. C. Lane; also a letter dated August 11th, ad- dressed to William C. Lane, signed by Harold F. McCormick; and another letter addressed to William C. Lane, signed by Guthrie, Cravath & Henderson, dated August 21, 1902. I offer those in evidence. The same were marked Petitioner's Exhibit 47, and are as follows : PETITIONEE'S EXHIBIT 47. 3 Copy Aug. 21, 1902. Messrs. Guthrie, Cravath & Henderson, No. 40 Wall St., N. Y. Dear Sirs: — I hand you enclosed letter adressed by me to Mr. Harold F. McCormick. Will you kindly see that it reaches him. Yours very truly, Wm. C. Lane (signed). Enclosure. 4 47-A Copy New York, August 21, 1902. Harold F. McCormick, c/p McCormick Harvesting Machine Company, Michigan Avenue and Monroe Street, Chicago, Illinois. Dear Sir: I hereby confirm the agreement stated in your letter to me of August 11th, a copy of which is given below. Yours very truly, Wm. C. Lane (signed). W. C. Lane, Direct Examination. 267 47-B New York, August 11, 1902. William C. Lane, Esq., Dear Sir : I am depositing with J. P. Morgan &/Co., as depositaries, subject to your order, certificates representing Shares of the capital stock of the McCormick Harvesting Machine Com- pany. These certificates, so far as J. P. Morgan & Co. are con- cerned, are subject to your order. You have agreed with me that the depositors of such certificates shall be entitled to re- ceive from the Company all payments upon the stock repre- sented thereby on account of their distributive shares of the purchase price payable by you as the purchaser of the property of said Company, and of all other proceeds of such stock. Subject to this right of the depositors of such stock to re- ceive their distributive shares of such purchase price and other proceeds, said stock certificates are subject to be disposed of by you in such manner as you see fit. This deposit is not to prevent the reduction of the capital stock of said Company, Yours truly, 47-C (Sgd.) Haeold F. McCoemick, (Letterhead) : 3 Guthrie, Cravath & Henderson No. 40 Wall Street. New York, Aug. 21, 1902. International Harvester Company Dear Sir: , We have your letter of today enclosing letter from you to Mr. Harold F. McCormick. We will forward it to him at Chi- cago. Yours very truly, GrUTHEIB, CbAVATH & HeNDEESON. AVilliam C. Lane, Esq., 4 25 Broad Street, New York. Q. Here is a letter referred to, of Paul D. Cravath to you, Mr. Lane, dated August 15, 1902, which evidently relates tp loans to these six incorporators of the Harvester Company. I cannot find that letter among these papers. Will you see if you can find it? (Handing papers to witness.) Will you make a note to make further search for that letter? A. Well, isn't that what you want? Q. No, it refers to a letter from Mr. Cravath to you, of August 15. This is August 12. 268 W. C. Lane, Direct Examination. 1 A. I have searched my files for everything under those dates; I have searched for a week — ^^have had my secretary do it — and I am confident I have every paper here that has ever been in my possession; not that has ever been in my possession but is at this time. Mr. Grosvenor: The witness has produced the following telegrams and letters, which I offer in evidence as one ex- hibit: Telegram, Standard Trust Co. to First National Bank, Chi- cago, August 6, 1902; Telegram, Standard Trust Co. to First National Bank, Chi- 2 ca go, August 6, 1902; Telegram, Standard Trust Co. to First National Bank, Chi- cago, August 8, 1902; Telegram, E. J. Street, Cashier, to Standard Trust Co., New York, August 8, 1902. Telegram, R. J. Street, Cashier, to Standard Trust Co., New York, August 8, 1902 ; Memorandum money received from J. P. Morgan & Co.; Letter, W. C. Cox, Secretary (Standard Trust Co.) to Guthrie, Cravath & Henderson, August 12, 1902 ; 3 Letter, Wm. C. Lane to Standard Trust Co. of N. Y., August 13, 1902 ; Letter, George W. Perkins, Charles Deering, Cyrus H. Mc- Cormick, Voting Trustees, to Standard Trust Co. of New York, August 12, 1902; Letter, W. C. Cox, Secretary (Standard Trust Co.) to Paul D. Cravath, August 16, 1902 ; Letter, Wm. C. Cox, Secretary, (Standard Trust Co.) to Guthrie, Cravath & Henderson, August 19, 1902. The same were marked Petitioner's Exhibit 48, and are as follows : * PETITIONER'S EXHIBIT 48. Standard Trust Company File International Harvester — Wm. C. Lane July and August, 1902. (Western Union Telegraph Blank) : August 6, 1902. First National Bank, Chicago, Illinois. Please pay the Milwaukee Harvesting Co. one hundred and W. C. Lane, Direct Examination. 269 fifty thousand dollars for account Wm. C. Lane taking receipt therefor. David D. Carse will call upon you in relation to this payment. We will either credit your account with u3 with this amount, or remit to cover, as you may direct. Standaed Teust Cp. 48-A : (Western Union Telegraph Blank) : August 6, 1902. First National Bank, Chicago, Illinois. We have credited your account with us one hundred and fifty thousand dollars. Please wire us when payment is made which we requested you to make for our account by telegraph this morning. Standard Tkxjst Co. 48-B : (Western Union Telegraph Blank) : Aug. 8, 1902. First National Bank, Chicago, HI. Cancel our instructions August sixth to pay one hundred and fifty thousand dollars to Milwaukee Harvesting Company and pay instead two hundred thousand dollars to Bentley & Burling for account Wm. C. Lane taking receipt therefor. Have deposited to your credit with us a further fifty thousand making two hundred thousand in all. Standaed Teust Co. 48-C ■- (Western Union Telegraph Blank) Night Message. Received at the Western Union Building, 195 Broadway, N. Y., Aug. 8, 1902. Dated Chicago. To Standard Trust Co., N. Y. Telegram received we have cancelled instructions to pay Milwaukee Harvester Co. one hundred fifty thousand and have paid Bentley & Burling two hundred thousand charging your account receipt by mail. R. J. Steeet, Cashier. 270 W. C. Lane, Direct Examination. 1 48-D (Western Union Telegraph Blank) : Chicago, Aug. 8, 1902. Standard Trust Co., New York. Telegrams received deal not yet completed will wire when finished have written. R. J. Street, Cashier. 48-E 2 $150,000 received from J. P. Morgan & Co. for remittance to Chicago to pay Milwaukee Harvesting Co. through First Nat. Chicago August 6th, 02. $50,000 reed, from J. P. M. & Co. for remittance to Chicago as per telegram attached this date Aug. 8th. The Standard Trust Company of New York 48-F Copy August 12, 1902. Messrs. Guthrie, Cravath & Henderson, No. 40 Wall St., N. Y. Dear Sirs : — In accordance with reqtiest contained in your favor of the 11th we hand you herewith the following cheques: — To the order of, George W. Hebard $10,000 Abram M. Hvatt 10,000 Roland R. Dennis 10,000 Edward M. F. Miller 10,000 Robert S. Green 10,000 Erastus M. Cravath 10,000 the above having been charged to the account of the several gentlemen to whose order they are drawn. We also hand you cheque to the order of the Secretary of the State of New Jersey for $24,000, which we have charged to the Harvester Company. Kindly acknowledge receipt of the enclosed cheques, and oblige. Yours faithfully, Wm. 0. Cox (Signed) Secretary. Enclosures. W. C. Lane, Direct Examination. 271 48-G Copy New York, Aug. 13, 1902. The Standard Trust Co. of New York, No. 25 Broad St., New York. Dear Sirs : — Referring to the letter of August 12th, 1902, of Mr. George W. Perkins and the other Voting Trustees, authorizing and requesting you to act as their agents under the Voting Trust Agreement relative to the stock of the International Har- vester Co., I beg to hand you certificate No. 7 in the name of Wm. C. Lane for 1,199,400 shares and request you to issue to Wm. C. Lane stock trust certificate to an amount corre- sponding to the amount stated in the above mentioned stock certificate. Yours very truly. / Wm. C. Lane (Signed). 48-H Copy New York, N. Y., August 12, 1902. The Standard Trust Company of New York, No. 25 Broad Street. Dear Sirs : — We enclose herewith the duplicate original of a voting trust agreement relating to the stock of the International Har- vester Company between William C. Lane and the undersigned as voting trustees herein. You are hereby requested and authorized to act as agents for the undersigned voting trustees in issuing and transfer- ring stock trust certificates under the terms of such voting trust agreement. Mr. William C. Lane will deposit with you stock trust cer- tificates representing the entire capital stock of the Interna- tional Harvester Company, excepting only 24 shares required to qualify directors. You will please issue stock trust certificates to the regis- tered holders of the stock trust certificates deposited in amounts corresponding to the amount of stock represented by such stock trust certificates respectively. Georgk W. Perkins Chaeles Deeeing Cyetjs H. MoCoemick (Signed) Voting Trustee&r 272 W. C. Lane, Direct Examination. 1 48-1 Copy The Standard Trust Company of New York August 16, 1902. Paul D. Cravath, Esq., No. 40 Wall St., N. Y. Dear Sir : — Eeferring to your favor of the 15th to Mr. Lane, we will be pleased to carry the three loans indicated, as requested, but call your attention to the fact that the loan to Mr. E. M. Cra- vath was for $10,000 instead of $7600. This will necessitate some adjustment of the payment for 24 shares, and we will 2 await your further advice on the suhject. We will effect settlement with Messrs. Hyatt, Miller and Hebard as indicated by you. Yours very truly, W. C. Cox (signed) Secretary. 48-J Copy The Standard Trust Company of New York Aug. 19, 1902. 3 Messrs. Guthrie, Cravatji & Henderson, No. 40 Wall St., New York City. Dear Sirs : — We beg to acknowledge receipt of your favor of the 18th enclosing duplicate original Voting Trust Agreement in the matter of the International Harvester Company, wLich we file. Yours very truly, Wm. O. Cox (signed) Secretary. Q. Will you make further search for that agreement of August 11, 1902, which I do not find among these papers? Did you keep at the time copies of all papers that you signed? A. I suppose that I did, but I cannot find everything. I thought possibly they might be in the files of my counsel, but they have searched and cannot find them. Q. Did you keep copies of the agreements of July 28? You do not se6m to have produced those, but I have obtained them elsewhere. A. Evidently I have not, because I have brought everything' that my files contain. W. C. Lane, Direct Examination. 273 Q. July 28tli were the most important contracts, weren't' they? A. That must have been in the hands of my counsel, al- thought they say they no longer have it; it has disappeared; I do not know why or how. Mr. Grosvenor: I offer in evidence agreement of 17th August, 1903, between the McCormiek Harvesting Machine Co., the Beering Harvester Co., the Warder, Bushnell & Gless- ner Company and the Piano Manufacturing Company, and William C. Lane, and the International Harvester Co. Mr. McHugh: No objection. The same was marked Petitioner's Exhibit 49, and is as follows : PETITIONEE'S EXHIBIT 49. Agreement, made and entered into this seventeenth day of August, 1903, between the McCormiek Harvesting Machine Company, the Deering Harvester Company (a co-partnership). The Warder, Bushnell & Glessner Company and the Piano Manufacturing Company (hereinafter collectively called the "Vendors" and severally called the McCormiek, Deering, Champion and Piano Companies, respectively), parties of the first part, William C. Lane (hereinafter called the "Pur- chaser"), party of the second part, and the International Har- vester Company (hereinafter called the "International Com- pany"), party of the third part. Each of the Vendors and the Purchaser have entered into three certain agreements dated respectively 28 July 1902, 11 August 1902 and 24 March 1903. The Purchaser has trans- ferred to the International Company all of the property and rights which he has received or to which he may be entitled under said contracts. The Purchaser has deposited with J. P. Morgan & Co. stock trust certificates representing Fifty- three Million Two Hundred Fifty Thousand (53,250,000) Dol- lars, par value, of the capital stock of the International Com- pany, for the purpose of providing the purchase price payable to the respective Vendors under said contracts respectively, for the property (other than cash and accounts and bills re- ceivable) transferred thereunder. The Purchaser has also deposited with J. P. Morgan & Co. stock trust certificates rep- resenting Forty Million (40,000,000) Dollars, par value, of the stock of the International Company for delivery to the McCormiek, Deering and Piano Companies respectively, in 274 W. C. Lane, Direct Examination. 1' the following amounts, as payments or collections are made upon the accounts and bills receivable of said three Vendors heretofore assigned by them respectively to the Purchaser, and by the Purchaser to the Company: McCormick Company, Twenty Million (20,000,000) Dollars, par value. Deering Company, Sixteen Million (16,000,000) Dollars, par value. Piano Company, Four Million (4,000,000) Dollars, par value. The appraisers provided for in said contracts have been duly appointed but have made no appraisals. The Vendors 2 have, however, respectively agreed that the amounts to be received by them for their respective properties should be determined by George W. Perkins and the amounts herein- after mentioned have been determined by said Perkins. In Consideration of the Premises and other valuable con- siderations, the parties hereto have covenanted and agreed to and with one another as follows: I. The appraisal of the property of the respective Ven- dors in the specific manner provided for in said contracts is hereby waived by the respective Vendors and by the Pur- 3 chaser, who hereby agree with one another that said Vendors shall receive, and shall respectively accept, in full payment for the property (other than cash and accounts and bills re- ceivable) transferred to the Purchaser and by the Purchaser to the International Company, pursuant to said contracts, or to which the International Company is entitled under said con- tracts and its contracts with the Purchaser, stock trust cer- tificates for the following amounts respectively of the stock of the International Company, such amounts having been as- certained and determined as hereinbefore recited. McCormick Company, Twenty-six Million, Three Hundred 4 Twenty-one Thousand, Six Hundred Fifty-six and Eighty-six hundredths (26,321,656.86) Dollars, par value. Deering Company, Twenty-one Million, Three Hundred Sixty-two Thousand, Five Hundred Fifty-four and Sixty-four hundredths (21,362,554.64) Dollars, par value. Champion Company, Three Million, Three Hundred Sev- enty-two Thousand, One Hundred Eighty-five and Ninety-one hundredths- (3,372,185.91) Dollars, par value, Piano Company, Two Million, One Hundred Ninety-three Thousand, Six Hundred Three and Nine hundredths (2,193,- 603.09) Dollars, par value. Said respective amounts shall in each case be inclusive of W. C. Lane, Direct Examination. 275 any stock trust certificates already delivered to any of the Vendors on account of the purchase price of property other than cash and accounts and bills receivable. Said stock shall be common stock of the International Company of a total issue of One Hundred and Twenty Million (120,000,000) Dol- lars, par value, and shall carry all rights to dividends since the organization of the International Company, whether pay- able in cash or in stock. In addition to the stock trust certificates aforesaid, pur- suant to the provisions of the contracts aforesaid and to the award of said George W. Perkins, it is provided as follows : The International Company agrees to pay on account of in- debtedness of the McCormick Company owed by the McCor- mick Company 30 September 1902 for property (other than cash and accounts and bills receivable) transferred by the McCormick Company to the Purchaser and by the Purchaser to the International Company, amounts with interest thereon as follows : Eleven Thousand Five Hundred (11,500) Dollars with interest at the rate of five (5) per cent, per annum from 21 May 1902. Four Thousand (4,000) Dollars with interest at the rate of five (5) per cent, per annum from 5 June 1902. Sixteen Thousand Six Hundred Sixty-six and sixty-six hun- dredths (16,666.66) Dollars, without interest; The International Company further agrees that so far as any portions of said indebtedness, principal or interest, have at any time been paid by the McCormick Company it (the In- ternational Company) will repay to the McCormick Com- pany, in cash on demand all amounts so paid by the McCor- mick Company, with interest thereon at the rate of five (5) per cent, per annum from the respective dates of payment thereof by the McCormick Company. The McCormick Com- pany represents and guarantees that no other encumbrances (except current taxes and assessments) than the indebted- ness aforesaid provided to be assumed and paid by the Inter- national Company existed 30 September 1902 against the aforesaid property of the McCormick Company; and repre- sents and guarantees that the indebtedness aforesaid was bona fide indebtedness of the McCormick Company 30 Septem- ber 1902. The International Company further agrees to pay on ac- count of indebtedness of the Deering Company owed by the Deering Company 30 Septepiber 1902 for property (other than cash and accounts and bills receivable) transferred by the Deering Company to the Purchaser and by the Pur- 276 W. C. Lane, Direct Examination. chaser to the iDternational Company, amounts with interest thereon as follows: Three Hundred and Fifty Thousand (350,000) Dollars with interest at the rate of five (5) per cent, per annum from 19 April 1902. One Hundred and Fifty Thousand (150,000) Dollars with interest at the rate of five (5) per cent, per annum from 21 April 1902. Five Thousand Three Hundred Forty-six and thirteen hundredths (5,346.13) Dollars, with interest at the rate of three and one-half (3-}) per cent, per annum from 22 April 1902. Eleven Thousand Five Hundred Twenty- seven and forty- five hundredths (11,527.45) Dollars with interest at the rate of three and one-half {3i) per cent, per annum from 30 October 1902. Four Hundred Four Thousand, Two Hundred Twelve and sixty-three hundredths (404,212.63) Dollars, without interest; The International Company further agrees that so far as any portions of said indebtedness, principal or interest, have at any time been paid by the Deering Company, it (the In- ternational Company) will repay to the Deering Company in cash on demand all amounts so paid by the Deering Com- pany, with interest thereon at the rate of five (5) per cent, per annum from the respective dates of payment thereof by the Deering Company. The Deering Company represents and guarantees that no other encumbrances (except current taxes and assessments) than the indebtedness aforesaid pro- vided to be assumed and paid by the International Com- pany existed 30 September 1902 against the aforesaid prop- erty of the Deering Company; and represents and guar- antees that the indebtedness aforesaid was bona fide indebt- edness of the Deering Company 30 September 1902. The Champion Company and the Piano Company sever- ally represent and guarantee that, 30 September 1902, no encumbrances whatever (except current taxes and assess- ments) rested upon any property by them respectively trans- ferred to William C. Lane as aforesaid. Each Vendor shall pay all indebtedness (owed by it either on general account or on account of any particular property sold by it to the Purchaser) except so far as is above in this contract otherwise provided. The International Company further agrees to pay to each Vendor, in cash, the amount of the inventory of that Ven- W. C. Lane, Direct Examination. 277 dor's property in Australia transferred to the Purchaser and by the purchaser to the International Company, less any amounts thereof included in figures heretofore prepared by or under the supervision of Jones, Caesar & Company; each such inventory, however, first to be certified by Jones, Caesar & Company and approved by the Finance Commit- tee of the International Company. The International Company further agrees to pay on de- mand to the Piano Company One Hundred Thousand (100,- 000) Dollars in cash. II. J. P. Morgan & Co. shall forthwith deliver to the respective Vendors ninety (90) per cent, (including any stock trust certificates already delivered as aforesaid) of the stock trust certificates to which the Vendors are severally entitled as in the next preceding Article hereof provided. The balance of said stock trust certificates for the aggregate of $53,250,000 shall remain on deposit with J. P. Morgan & Co. pending the delivery to the International Company by the respective Vendors of confirmatory deeds and certificates of title to their respective parcels of real estate, deliveries of the stock trust certificates reserved as aforesaid to be made to the respective Vendors upon the order of the In- ternational Company or upon the joint order of either Cyrus H. McCormick, Harold F. McCormick or Stanley McCormick, and either Charles Deering, James Deering or Richard F. Howe, one McCormick and one Deering (or Howe) of those here named being hereby duly authorized to determine joint- ly in their discretion when further deliveries of stock trust certificates reserved as aforesaid shall be made ; in any event, however, each Vendor shall, upon delivery to the Interna- tional Company of all confirmatory deeds and certificates of title above referred to, be entitled to immediate delivery of all of the stock trust certificates to which it is entitled un- der the provisions of this Contract. III. The International Company is hereby substituted as to future transactions in the place of the Purchaser as the party of the second part under said contracts, and hereby agrees with the respective Vendors to carry out and per- form the provisions of said contracts, as modified hereby, in the place and stead of the Purchaser; but (notwithstanding the provisions of this Article III) the Purchaser shall pro- cure and deliver to the International Company, without de- lay, proper confirmatory deeds conveying to said Company or to its order the property transferred to him in August 278 W. C. Lane, Direct Examination. 1902 by the Vendors and by the Milwaukee Harvester Com- pany, a Wisconsin corporation. IV. The Vendors severally hereby accept the Interna- tional Company as the party of the second part under said contracts in the place and stead of the Purchaser, and in consideration of such substitution hereby respectively re- lease the Purchaser from any further liability under said contracts or any of them, or under any and all arrangements connected therewith or resulting therefrom, including any un- paid expenses incurred by the Purchaser in carrying into ef- fect the provisions of said contracts, or otherwise incurred by the Purchaser in connection with the organization of the International Company; subject, however, to the provisions of the last clause of Article III above. V. The International Company hereby accepts the ar- rangements now in force respecting the Sixty Million (60,- 000,000) Dollars of working capital which the Purchaser has agreed to furnish, as a full performance pf the Purchas- er's agreements in respect of working capital, and the Pur- chaser hereby transfers to the International Company all his claims against the McCormick, Deering and Piano Companies respecting the accounts and bills receivable which they have severally assigned to the Purchaser and which the Purchaser has assigned to the International Company, and the Mc- Cormick, Deering and Piano Companies severally agree with the International Company that the International Company is hereby substituted in place of the Purchaser in respect of said arrangements, the Purchaser being hereby released in respect thereof; and the International Company hereby agrees to carry out each and all of said arrangements. VI. The International Company hereby releases the Pur- chaser from any and all liability of any kind whatsoever in respect of any and all contracts between the Purchaser and* the International Company and any and all matters and things connected therewith or arising therefrom; subject, however, to the provisions of the last clause of Article III above. In Witness Whereof the McCormick Harvesting Machine Company, The Warder, Bushnell & Glessner Company, the Piano Manufacturing Company and the International Har- vester Company, have caused this instrument to be executed and their respective corporate seals to be hereunto affixed by their respective proper corporate officers, and the Deering Harvester Company and the members thereof and William W. C. Lame, Direct Examination. 279 C. Lane have hereunto set their hands and seals, all as of ^ the day and year first above written. Executed in six (G) original parts. McCoKMiCK Harvesting Machine Company, By Cykus H. MgCormick, Its President. Attest, the seal of said Company: Hakold F. McCoemick, (Seal of McCormick Harvesting Its Secretary. Machine Company, 'Chicago, 111., incorporated 1879.) Deering Harvester Oo-MPANy, 2 By Charles Deering, Charles Deering (Seal) James Deering (Seal) EicHARD F. Howe, (Seal) The Warder, Bushnell, & Glessner Company, By J. J. Glessnbr, Its Vice-President. Attest, the seal of said Company: G. B. Glessner, (Seal of The Warder, Bushnell & Its Secretary. Glessner Co., Springfield, 0.) 3 Plano Manufacturing Company, By W. H. Jones, Its President. Attest, the seal of said Company: 0. W. Jones, (Seal of The Piano Manufacturing Its Secretary. Co., Chicago, Cook Co., 111.) Wm. C. Lane. (Seal) International Harvester Company, By Gyrus H. McCoemick, Its President. 4 (International Harvester Company, incorporated 1902, New Jersey.) Attest, the seal of said Company: Richard F. Howe, Its Secretary. 280 W. C. Lane, Direct Examination. BEQUEST TO PEODUCE CONTEACT. Mr. Grosvenor: Counsel for the Petitioner reqnests coun- sel for the defendants to produce the contract of August 11, 1902, at the next hearing in Chicago, if they have not copies in New York which they can produce. Mr. McHugh : If I have a copy here I will get it. Mr. Grosvenor: I offer in evidence memorandum of agree- ment made 24th March, 1903, between the Piano Manufac- turing Company and Wm. C. Lane. Mr. MoHugh: No objection. The same was marked Petitioner's Exhibit 50, and is as follows : PETITIONEE'S EXHIBIT 50. Memoeandum of Aegeement^ made the twenty-fourth day of March, A. T>. 1903, between the Piano Manufacturing Company (hereinafter called the "Vendor"), party of the first part, and William C. Lane (hereinafter called the "Pur- chaser"), party of the second part. The parties hereto entered into an agreement dated July 28th, 1902 (hereinafter referred to as the "Main Agree- ment"), and an agreement supplemental thereto (hereinafter referred to as the "Supplemental Agreement"), dated Au- gust 11, 1902. In Consideration of the premises and the covenants herein contained, the parties hereto have covenanted and agreed as follows : I. Instead of three Boards of Appraisers, as provided in the Main Agreement (two of the said Boards being in said Main Agreement called the "Appraisers" and one the "Ac- countants"), only one board or set of appraisers shall be appointed. The three members thereof shall be chosen in the manner provided in the Main Agreement respecting the selection of Appraisers and Accountants. This single board shall determine all the questions and exercise all the func- tions which by the Main Agreement were provided to be de- termined and exercised by the three Boards of Appraisers above described. The Board of Appraisers, however, shall not appraise the Piano malleable and railway property mentioned in the Main and Supplemental Agreements, or any other property which. W. C. Lane, Direct Examination. 281 by the terms thereof, is to be appraised by J. P. Morgan or George W. Perkins. n. Tbe two years' profits with reference to which the value of the patents and good will of the Vendor shall be de- termined, shall be the profits for the two full business years, or seasons, of 1901 and 1902, instead of those for the two years ending November 30th, 1902. This change is made because 6f the difficulty in determining at the present time the profits of the Vendor for the latter period. III. The capital stock of the Purchasing Company re ferred to in the Main and Supplemental Agreements, or if there be more than one class of stock, then the preferred stock of the Company, shall be increased beyond the limit of one hundred and twenty million dollars ($120,000,000) fixed by the Main Agreement, by an amount equal to the excess, if any, over fifty-three million dollars ($53,000,000) of the aggregate value, to be determined as in the Main and Supplemental Agreements and herein provided, of the assets and property of the McCormiek Harvesting Machine Company, the Deer- ing Harvester Company, the Piano Manufacturing Company and The "Warder, Bushnell & Glessner Company, acquired by the Purchaser as of September 30, 1902, including the patents and good will and the value of "name, standing in the trade, stability of business, organization, trade, custom, etc.," but excluding bills and accounts receivable and cash. Any such additional capital stock shall be the same common stock or preferred stock, as the case may be, with all the rights to stock dividends, as the one hundred and twenty million dol- lars ($120,000,000) of capital stock provided for in the Main and Supplemental Agreements. The stock representing any such increase shall be snbject to an agreement on the part of the Purchasing Company that it shall be issued only to pay for property and assets acquired as aforesaid under the Main and Supplemental Agreements mentioned. IV. In reaching their conclusion as to values and amounts the appraisers may consider as evidence the facts and in- formation gathered by Jones, Caesar & Company and their reports thereon (including the inventories taken under the supervision of Jones, Caesar & Company), and may also con- sider the facts and information gathered by the Manufac- turers Appraisal Company as well as their reports thereon; but such facts, information and reports shall not be regarded as evidence of any higher nature than any other facts or in- formation which may be submitted to the appraisers by any 282 W. G. Lane, Direct Examination. party in interest ; it being expressly understood that it sliall be the duty of the appraisers to weigh all facts, information and reports so submitted to them and to give to all such facts, information and reports such weight as the appraisers, or a majority of them, shall, in the exercise of an independent, critical judgment, deem proper. It is further understood that nothing in this agreement contained shall give the appraisers any jurisdiction or power in respect to appraising the value of any property or good will which, under the provisions of the Main and Supplemental Agreements aforesaid, are subject to appraisal by J. P. Mor- gan or George W. Perkins. V. This agreement shall be read in connection with the Main and Supplemental Agreements, and said agreements as supplemented and modified hereby shall continue in full force and effect. Is WITNESS WHEKEOF, the Said Vendor has caused its corpo- rate name to be hereunto subscribed by its President and its corporate seal to be hereunto affixed, duly attested by its Secretary, and the said William C. Lane has hereunto set his hand and seal, the day and year first above written. Ex- ecuted in duplicate. Plano Manufacturing Company, By Wm. H. Jones, (Seal) Its President. Attest : 0. W. Jones, lits Secretary. William C. Lane. (Seal) Eeferring to the foregoing agreement, dated 24 March, 1903, between the Piano Manufacturing Company and Wil- liam C. Lane, the undersigned stockholders of the Piano Man- ufacturing Company, in consideration of the making of said agreement by William C. Lane, hereby jointly and severally agree and guarantee that the Piano Manufacturing Company shall in all respects perform said agreement. Dated, New York, 24 March, 1903. W. H. Jones J. P. Peindle 0. W. Jones Lucy P. Foote W. 0. Jones Maey M. Newton S. J. Llewellyn Archee Brown J. M. COBUEN L. M. FooTE W. C. Lane, Direct Examination. 283 Total number shares represented by above signatures is 1 4,104 shares. Total shares of Piano stock is 5,000 shares. 0. W. Jones, Sec. (Petitioner's Exhibit 50 is an original document.) Q. These several agreements that you signed in the year 1903, Mr. Lane, were signed as the earlier ones were signed, that is, at the request of your counsel or of Messrs. Guthrie, Cravath & Henderson, when they produced them or submit- 2 ted them to you? A. Presumably so. 1 have no distinct recollection. Mr. GrosvenoB: Here is another one I will offer. I offer in evidence memorandum of agreement, March 24, 1903, be- tween the McCormick Harvesting Machine Co. and William C. Lane. Mr. McHugh: No objection. The same was marked Petitioner's Exhibit 51. Note: Petitioner's Exhibit 51 is the same as Petitioner's Exhibit 54. 3 Mr. Grosvenor: I also offer in evidence memorandum of agreement, March 24, 1902, between The Warder, Bushnell & Glessner Company and William C. Lane. Mr. McHugh: No objection. The same was marked Petitioner's Exhibit 52, and is as follows : PETITIONEE'S EXHIBIT 52. Memorandum of Ageeement, made the twenty-fourth day of March, A. D. 1903, between The Warder, Bushnell & Glessner Company (hereinafter called the "Vendor"), party of the first part, and William C. Lane (hereinafter called the "Pur- chaser"), party of the second part. The parties hereto entered into an agreement dated July 28th, 1902, (hereinafter referred to as the "Main Agree- ment"), and an agreement supplemental thereto (hereinafter referred to as the "Supplemental Agreement"), dated Au- gust 11, 1902. In Consideration of the premises and the covenants herein 4 284 W. G. Lane, Direct Examination. containeS, the parties hereto have covenanted and agreed as follows : I. Instead of three Boards of Appraisers, as provided in the Main Agreement (two of the said Boards heing in said Main Agreement called the "Appraisers" and one the "Ac- countants"), only one hoard or set of appraisers shall be ap- pointed. The three members thereof shall be chosen in the manner provided in the Main Agreement respecting the selec- tion of Appraisers and Accountants. The single board shall determine all the questions and exercise all the functions which by the Main Agreement were provided to be determined and exercised by the three Boards of Appraisers above de- scribed. II. The two years' profits with reference to which the value of the patents and good-will of the Vendor shall be de- termined, shall be the profits for the two full business years, or seasons, of 1901 and 1902, instead of those for the two years ending November 30th, 1902. This change is made be- cause of the difficulty in determining at the present time the profits of the Vendor for the latter period. III. The capital stock of the Purchasing Company re- ferred to in the Main and Supplemental Agreements, or if there |be more than one class of stock, then the preferred stock of the Company, shall be increased beyond the limit of one hundred and twenty million dollars ($120,000,000) fixed by the Main Agreement, by an amount equal to the excess, if any, over fifty- three million dollars ($53,000,000) of the ag- gregate value, to be determined as in the Main and Supple- mental Agreements and herein provided, of the assets and property of the McCormiek Harvesting Machine Company, the Deering Harvester Company, the Piano Manufacturing Company and The Warder, Bushnell & Glessner Company, acquired by the Purchaser as of September 30, 1902, includ- ing the patents and good-will and the value of ' ' name, stand- ing in the trade, stability of business, organization, trade, custom, etc.," but excluding bills and accounts receivable and cash. Any such additional capital stock shall be the same common stock or preferred stock, as the case may be, with all the rights to stock dividends, as the one hundred and twenty million dollars ($120,000,000) of capital stock provided for in the Main and Supplemental Agreements. The stock repre- senting any such increase shall be subject to an agreement on the part of the Purchasing Company that it shall be issued W. C. Lane, Direct Examination. 285 only to pay for property and assets acquired as aforesaid under the Main and Supplemental Agreements mentioned. IV. In reaching their conclusion as to values and amounts the appraisers may consider as evidence the facts and in- formation gathered by Jones, Caesar & Company and their reports thereon (including the inventories taken under the supervision of Jones, Caesar & Company) and may also con- sider the facts and information gathered by the American Appraisal Company as well as their reports thereon; but such facts, information and reports shall not be regarded as evidence of any higher nature than any other facts or infor- mation which may be submitted to the appraisers by any party in interest;' it being expressly understood that it shall be the duty of the appraisers to weigh all facts, information and reports so submitted to them and to give to all such facts, information and reports such weight as the appraisers, or a majority of them, shall, in the exercise of an independent, critical judgment, deem proper. It is further understood that nothing in this agreement con- tained shall give the appraisers any jurisdiction or power in respect to appraising the value of any good-will which under the provisions of the Main and Supplemental Agree- ments aforesaid are subject to appraisal by J. P. Morgan or George W. Perkins. V. This agreement shall be read in connection with the Main and Supplemental Agreements, and said agreements as supplemented and modified hereby shall continue in full force and effect. In Witness "Whereof, the said Vendor has caused its cor- porate name ta be hereunto subscribed by its Vice-President and its corporate seal to be hereunto affixed, duly attested by its Secretary, and the said William C. Lane has hereunto set his hand and seal, the day and year first above written. Executed in duplicate. The Waedbk, Bushnell & Glessner Company, By J. J. Glessneb, (Seal) Vice-President. Attest : G. B. Glessnee, its Secretary. Wm. C. Lane (Seal) Referring to the foregoing agreement, dated 24 March, 1903, between The Warder, Bushnell & Glessner Company 286 W. G- Lome, Direct Examination. and William C. Lane, the undersigned stockliolders of Tlie Warder, Bushnell & Griessner Company, in consideration of the making of said agreement by William C. Lane, hereby jointly and severally agree and guarantee that The Warder, Bushnell & Glessner Company shall in all respects perform said agreement. Dated, New York, 24 March, 1903. Asa S. Bushnell J. J. Glessnek G. B. Glessnee E. C. Haskins John L. Bushnell J. M. Glessnee (Petitioner's Exhibit 52 is an original document.) Mr. Grosvenor : I offer in evidence memorandum of agree- ment, March 24, 1903, between Charles Deering, James Deer- ing and Richard F. Howe, and William C. Lane. Mr. McHugh: No objection. The same was marked Petitioner's Exhibit 53, and is as follows : PETITIONEE'S EXHIBIT 53. 'Memoeandum op Agbeembnt, made the twenty-fourth day of March, A. D. 1903, between Charles Deering, James Deer- ing and Richard F. Howe (hereinafter called the "Vendors") parties of the first part, and William C. Lane (hereinafter called the "Purchaser"), party of the second part. The parties hereto entered into an agreement dated July 28th, 1902 (hereinafter referred to as the "Main Agree- ment"), and an agreement supplemental thereto (herein- after referred to as the "Supplemental Agreement"), dated August 11, 1902. In Consideration of the premises and the covenants herein contained, the parties hereto have covenanted and agreed as follows : I. Instead of three Boards of Appraisers, as provided in the Main Agreement (two of the said Boards being in said Main Agreement called the "Appraisers" and one the "Ac- countants"), only one board or set of appraisers shall be appointed. The three members thereof shall be chosen in the manner provided in the Main Agreement respecting the selec- tion of Appraisers and Accountants. This single board shall determine all the questions and exercise all the functions W. C. Lane, Direct Examination. 287 which, by the Main Agreement were provided to be deter- mined and exercised by the three Boards of Appraisers above described. i The Board of Appraisers, however, shall not appraise the Deering coal, iron and steel properties mentioned in the Main and Supplemental Agreements, or any other property which, bj^ the terms thereof, are to be appraised by J. P. Morgan or George W. Perkins. II. The two years' profits with reference to which the value of the patents and good-will of the Vendors shall be determined, shall be the profits for the two full business years, or seasons, of 1901 and 1902, instead of those for the two years ending November 30th, 1902. This change is made because of the difficulty in determining at the present time the profits of the Vendors for the latter period. III. The capital stock of the Purchasing Company re- ferred to in the Main and Supplemental Agreements, or if there be more than one class of stock, then the preferred stock of the Company, shall be increased beyond the limit of one hundred and twenty million dollars ($120,000,000) fixed by the Main Agreement, by an amount equal to the excess, if any, over fifty-three million dollars ($53,000,000) of the aggregate value, to be determined as in the Main and Supple- mental Agreements and herein provided, of the assets and property of the McCormick Harvesting Machine Company, the Deering Harvester Company, the Piano Manufacturing Company and The Warder, Bushnell & Grlessner Company, acquired by the Purchaser as of September 30, 1902, including the patents and good-will and the value of "name, standing in the trade, stability of business, organization, trade, cus- tom, etc.," but excluding bills and accounts receivable and cash. Any such additional capital stock shall have the same character (with respect to its being common or preferred and its right to stock dividends) as the one hundred and twenty million dollars ($120,000,000) of capital stock provided for in the Main and Supplemental Agreements. The stock rep- resenting any such increase shall be subject to an agreement on the part of the Purchasing Company that it shall be is- sued only to pay for property acquired as aforesaid. IV. In reaching their conclusion as to values and amounts the appraisers may consider as evidence the facts and infor- mation gathered by Jones, Caesar & Company and their re- ports thereon (including the inventories taken under the supervision of Jones, Caesar & Company) and may also con- 288 W. C. Lane, Direct Examination. sider the facts and information gathered by the American Appraisal Company and the Manufacturers Appraisal Com- pany as well as their reports thereon ; but such facts, infor- niation and reports shall not be regarded as evidence of any higher nature than any other facts or information which may be^ submitted to the appraisers by any party in interest ; it being expressly understood that it shall be the duty of the appraisers to weigh all facts, information and reports so sub- mitted to them and to give to all such facts, information and reports such weight as the appraisers, or a majority of them, shall, in the exercise of an independent, critical judgment, deem proper. It is further understood that nothing in this agreement contained shall give the appraisers any jurisdiction or power in respect to appraising the value of any property or good- will which under the provisions of the Main and Supple- mental Agreements aforesaid are subject to appraisal by J. P. Morgan or George W. Perkins. V. This agreement shall be read in connection with the Main and Supplemental Agreements, and said agreements as supplemented and modified hereby shall continue in full force and effect. In Witness Whereof, the said 'Charles Deering, James Deer- ing and Eichard P. Howe have hereunto set their own names and seals and the firm name of the Vendors and the said Wil- liam C. Lane has hereunto set his hand and seal, the day and year first above written. Executed in duplicate Charles Deeeing (Seal) James Dreeing (Seal) RiCHAED P. Howe (Seal) Wm. C. Lane (Seal) (Petitioner's Exhibit 53 is an original document.) Mr. Grosvenor : I offer in evidence memorandum of agree- ment, March -24, 1903, between the McCormick Harvesting Machine Company and William C. Lane. The same was marked Petitioner's Exhibit 54, and is as follows : PETITIONER'S EXHIBIT 54. Memoeandum of Agebement, made the twenty-fourth day of March, A. D. 1903, between the McCormick Harvesting Ma- chine Company (hereinafter called the "Vendor"), party of W. C. Lane, Direct Examination. 289 the first part, and William C. Lane (hereinafter called the ] "Purchaser"), party of the second part. The parties hereto entered into an agreement dated July 28th, 1902 (hereinafter referred to as the "Main Agree- ment"), and an agreement supplemental thereto (herein- after referred to as the "Supplemental Agreement"), dated August 11, 1902. In Consideration of the premises and the covenants herein contained, the parties hereto have covenanted and agreed as follows : I. Instead of three Boards of Appraisers, as provided in the Main Agreement (two of the said Boards being in said ' Main Agreement called the "Appraisers" and one the "Ac- countants"), only one board or set of appraisers shall be ap- pointed. The three members thereof shall be chosen in the manner provided in the Main Agreement respecting the selec- tion of Appraisers and Accountants. This single board shall determine all the questions and exercise all the functions which by the Main Agreement were provided to be deter- mined and exercised by the three Boards of Appraisers above described. The Board of Appraisers, however, shall not appraise the McCormick railroad mentioned in the Main and Supplemental Agreements, or any other property which, by the terms there- of, is to be appraised by J. P. Morgan or George W. Perkins. II. The two years' profits with reference to which the value of the patents and good-will of the Vendor shall be determined, shall be the profits for the two full business years, or seasons, of 1901 and 1902, instead of those for the two years ending November 30th, 1902. This change is made be- cause of the difficulty in determining at the present time the profits of the Vendor for the latter period. III. The capital stock of the Purchasing Company re- ferred to in the Main and Supplemental Agreements, or if there be more than one class of stock, then the preferred stock of the Company, shall be increased beyond the limit of one hundred and twenty million dollars ($120,000,000) fixed by the Main Agreement, by an amount equal to the excess, if any, over fifty-three milHon dollars ($53,000,000) of the ag- gregate value, to be determined as in the Main and Supple- mental Agreements and herein provided, of the assets and property of the McCormick Harvesting Machine Company, the Deering Harvester Company, the Piano Manufacturing Company and The Warder, Bushnell & Glessner Company, 290 W. C. Lane, Direct Examination. acquired by the Purchaser as of September 30, 1902, includ- ing the patents and good-will and the value of "name, stand- ing in the trade, stability of business, organization, trade, custom, etc.", but excluding bills and accounts receivable and cash. Any such additional capital stock shall be the same common stock or preferred stock, as the case may be, with all the rights to stock dividends, as the one hundred and twenty million dollars ($120,000,000) of capital stock pro- vided for in the Main and Supplemental Agreements. The stock representing any such increase shall be subject to an agreement on the part of the Purchasing Company that it shall be issued only to pay for property and assets acquired as aforesaid under the Main and Supplemental Agreements mentioned. IV. In reaching their conclusion as to values and amounts the appraisers may consider as evidence the facts and infor- mation gathered by Jones, Caesar & Company and their re- ports thereon (including the inventories taken under the supervision of Jones, Caesar & Company) and may also con- sider the facts and information gathered by the American Appraisal Compaifiy and the Manufacturers Appraisal Com- pany as well as their reports thereon; but such facts, infor- mation and reports shall not be regarded as evidence of any higher nature than any other facts or information which may be submitted to the appraisers by any party in interest; it being expressly understood that it shall be the duty of the appraisers to weigh all facts, information and reports so submitted to them and to give to all such facts, information and reports such weight as the appraisers, or a majority of them, shall, in the exercise of an independent, critical judg- ment, deem proper. It is further understood that nothing in this agreement con- tained shall give the appraisers any jurisdiction or power in respect to appraising the value of any property or good-will which under the provisions of the Main and Supplemental Agreements aforesaid are subject to appraisal by J. P. Mor- gan or George W. Perkins. V. This agreement shall be read in connection with the Main and Supplemental Agreements, and said agreements as supplemented and modified hereby shall continue in full force and effect. In Witness AVhereof, the said Vendor has caused its cor- porate name to be hereunto subscribed by its President and its corporate seal to be hereunto affixed, duly attested by its TV. C. Lane, Direct Examination. 291 Secretary, and the said William C. Lane has hereunto set his j hand and seal, the day and year first above written. Execnted in duplicate, McCoEMicK Harvesting Machine Company, By Gyrus H. MgCormick, (Seal) ^^5 President. Attest : Harold F. McCoemick, its Secretary. Wm. C. Lane (Seal) Eef erring to the foregoing agreement, dated 24 March, 1903, between the McCormick Harvesting Machine Company ^ and William C. Lane, the undersigned stockholders of the McCormick Harvesting Machine Company, in consideration of the making of said agreement by William C. Lane, hereby jointly and severally agree and guarantee that the McCormick Harvesting Machine Company shall in all respects perform said agreement. Bated, New York, 24 March, 1903. Nettie F. McCormick Cyrus HI McCormick Harold F. McCormick 3 Stanley McCormick Anita McCormick Blaine. Referring to the foregoing agreement, dated 24 March, 1903, between the McCormick Harvesting Machine Company and William C. Lane, the undersigned stockholders of the McCormick Harvesting Machine Company, in consideration of the making of said agreement by William C. Lane, hereby jointly and severally agree and guarantee that the McCormick Harvesting Machine Company shall in all respects perform said agreement. 4 Dated, New York, 24 March, 1903. Eldridge M. Fowler. (Petitioner's Exhibit 54 is an original document.) Mr. Grrosvenor: All of these agreements refer to a sup- plemental agreement; that is, there is a supplemental agree- ment in each case, of August 11, 1902, and we want each of them. Each one refers to a supplemental agreement ; so there must be five. Witness : That is not in my possession. 292 W. C. Lane, Direct Examination. Mr. McHugli: No; we understand that. Mr. Grosvenor: The witness has produced a letter dated August 29, 1902, addressed to the First National Bank of Milwaukee, signed Wm. C. Lane, stating that "P. D. Middle- kauff having assigned to me all his rights under the agree- ment dated June 24, 1902, etc. ' ' Did you ever meet Mr. Mid- dlekauff? A. Not that I can remember, sir. Q. You had no dealings with him with reference to pur- chasing this Milwaukee Company? A. I have no recollection of it at the moment. Q. Do you have any recollection of the circumstances at- tending the assignment by him of his contract to you? A. No ; I had forgotten all about it until I saw that paper. Q. This assignment was executed, like the others, at the request of your counsel? A. Presumably so. Mr. Grosvenor: I will offer that letter in evidence. The same was marked Petitioner's Exhibit 55, and is as follows: J PETITIONEE'S EXHIBIT 55. Copy. New York, August 29, 1902. First National Bank of Milwaukee, Dear Sirs : P. D. Middlekauff having assigned to me all his rights under the agreement dated June 24th, 1902, between Stephen Bull, G. H. Sohulte, Frederick Eobinson, Frank K. Bull, Rich- ard T. Eobinson, and C. L. Mcintosh, parties of the first part, and the said P. D. Middlekauff, party of the second part, for the purchase and sale of the stock of the Milwaukee Harvester Company, I hereby withdraw the request for arbitration here- tofore made under said agreement, and I consent that you pay forthwith to the said parties of the first part to said agreement the sum of five hundred thousand dollars ($500,- 000) now on deposit with you. Yours very truly, Wm. C. Lane (signed). Q. Did you have any dealings with anyone other than Guthrie, Cravath & Henderson in connection with this mat- ter? W. p. Hamilton, Direct Examination. 293 A. Not to my recollection. I saw, at some time or other, some of the men who were interested in these various har- vester companies. Q. You saw them at times when you executed some of the papers; is that it? A. I do not know. I saw them once or twice, from time to time, some of them. Mr. Grosvenor: That is all, Mr. Lane. "Witness: You require no further attendance from me! Mr. Grosvenor: I wish you would look further for those papers. Witness: I will do so, hut my files have been gone over with a fine-tooth comb and I am confident there is nothing further in them. I have memorandums of them. Mr. Grosvenor: That is all from. me,, but counsel for the defendants may wish to examine you. Mr. McHugh: No questions, Mr. Lane. Witness : Thank you. (No. 56 was skipped in the marking of exhibits. Therefore there is no exhibit 56.) WILLIAM PIEESON HAMILTON, being duly sworn as a witness on behalf of the Petitioner, testified as follows : Direct Examination by Mr. Grosvenor. Q. Mr. Hamilton, what is your business? A. Banker. Q. Will you state on the record, so we can have it, what your connection in the banking world is? A. I am a member of the firm of J. P. Morgan & Company. Q. Located where? A. New York City. Q. You have been subpoenaed to produce some papers. "First, an agreement dated on or about August 13, 1902, pro- viding for the depositing with J. P. Morgan & Company of stock trust certificates of the International Harvester Com- pany by Charles Leering, Cyrus H. McCormick, Harold F. McCormick, James Leering, Richard F. Howe, William H. Jones, John J. Glessner, and others." Have you that agree- ment? A. Is that the oile you refer to? (Handing paper to Mr. Grosvenor.) Q. You produce the printed copy of what appears to be 294 W. P. Hamilton, Direct Examination. that agreement. Can you add to' that the signatures which should appear at the end of the contract f This appears to be unsigned. A. Not that I know of. It is the only thing we could find answering that description. Mr. McHugh: That is signed hy Morgan & Company, I think. Mr. Grosvenor : This is signed by J. P. Morgan & Com- pany, but is not signed by the depositors. Mr. McHugh: It becomes a contract when they deposit their certificates. Q. You have a list of the depositors, have you? A. I do not know. Q. Have you not a record of what stock trust certificates were deposited with your firm pursuant to this contract? A. I presume there is a record of that. Q. Well, of course if you furnish that record, that in con- junction with this will make a contract. Will you please pro- duce that? A. Exactly what is it you want, sir ? Will you state again what you want, Mr. Grrosvenor? I did not get it. Q. Just a moment. I will state fully just what I want, and then the Examiner can furnish you a copy and you will not have any difficulty. A. Thank you. Q. This subpoena calls for an agreement dated on or about August 13, 1902, providing for the depositing with J. P. Morgan & Company of stock trust certificates. The printed form of contract which you have produced provides: "The undersigned and such other persons as shall accept receipts hereunder, having deposited with J. P. Morgan & Company stock trust certificates representing capital stock of the Inter- national Harvester Company in the amounts set opposite their respective signatures hereto or specified in such re- ceipts, as the case may be, hereby agree with J. P. Morgan & Company as follows." Now I want the list of the persons who comprise the class known as "the undersigned;" that is, the list of persons who deposited stock pursuant to this agree- ment on or about the 13th of August, 1902. The document produced by the witness was marked Peti- tioner's Exhibit 57, and was offered in evidence by Mr. Gros- venor. Mr. McHugh: No objection. Petitioner 's Exhibit 57 is as follows : W. p. Hamilton, Direct Examination. 295 1 PETITIONEE'S EXHIBIT 57. (In ink) : "Original" _An Agreement entered into at the City of New York this thirteenth day of August, 1902, by and between such owners of stock trust certificates representing capital stock of the International Harvester Company, as may deposit their stock hereunder with J. P. Morgan & Co., parties of the first part, and J. P. Morgan & Co., parties of the second part. The undersigned and such other persons as shall accept receipts hereunder, having deposited with J. P. Morgan & ^ Co. stock trust certificates representing capital stock of the International Harvester Company in the amounts set oppo- site their respective signatures hereto or specified in such receipts, as the case may be, hereby agree with J. P. Morgan & Co., and with one another, as follows : I. Such stock trust certificates are to be held by J. P. Mor- gan & Co. as depositaries and trustees for the respective hold- ers of said receipts and are to be delivered to such holders respectively only at the following times and in the following amounts, viz : 3 Twenty-five per cent, thereof on September 1, 1903; Twenty-five per cent, thereof on September 1, 1904; Ten per cent, thereof on September 1, 1905 ; Forty per cent, thereof upon the termination of the voting trust agreement between William C. Lane and others, dated August 13, 1902. It is provided, however, that after September 1, 1906,, either of the two interests represented by the depositors of stock trust certificates hereunder may sell said remaining forty per cent, of said stock trust certificates, or any part thereof, but in case of any such sale the Voting Trustee representing such 4 depositors shall immediately resign, as trustee, if desired by the other two trustees, and in case of such resignation his successor shall be appointed by such other trustees. II. In case, while this agreement is in force, any stock divi- dend is issued by said Company, the stock trust certificates representing the stock dividend apportionable to the stock represented by the stock trust certificates at the time on de- posit hereunder shall likewise be deposited and be subject to the provisions hereof. III. Each of the parties of the first part further agrees with J. P. Morgan &,Co. and with the other parties of the 296 W. P. Hamilton, Direct Examination. first part that if, prior to September 1, 1903, lie shall desire to sell any of the stock trust certificates of said Company not on deposit hereunder, he will offer such stock trust certifi- cates to J. P. Morgan & Co., by notice in writing, specifying the amount of the stock trust certificates offered and the price at which the same are offered, and J. P. Morgan & Co. shall be entitled to buy such stock trust certificates at the price so named within twenty days thereafter, and the person giving such notice shall be entitled to sell said stock trust certificates to others only in case J. P. Morgan & Co. shall not within such twenty days purchase the same at the price named in the no- tice, or at a price satisfactory to the owner, and then only at a price equal to or exceeding the price mentioned in said notice. rV. J. P. Morgan & Co. shall issue to depositors of stock trust certificates hereunder, receipts substantially in the fol- lowing form: ^t5 "International Harvester Company. Eeceipt for Stock Trust Certificates Deposited With J. P. Morgan & Co. The undersigned have received from and hold subject to the terms of an agreement of deposit, dated August 13, 1902, between J. P. Morgan & Co. and others, stock trust certificates representing shares of the capital stock of the International Harvester Company. Twenty-five per cent, of said stock trust certificates is deliv- erable on September 1, 1903 ; twenty-five per cent, on Septem- ber 1, 1904 ; ten per cent, on September 1, 1905 ; and the bal- ance as in said agreement provided. No stock trust certificates will be delivered except upon presentation of this receipt for endorsement thereon of the amount of the stock trust certificates delivered, and upon sur- render hereof when the final delivery of the stock trust certifi- cates represented hereby is made." J. P. Morgan & Co. may, at their option, issue separate re- ceipts for specific amounts of stock deliverable upon one or more of the dates hereinbefore mentioned, in which case the form of receipt to be issued by them shall be modified ac- cordingly. J. P. MOEGAN & Co. W. p. Hamilton, Direct Examination. 297 Name : Amount of : 'Stock Deposited Q. Second: The subpoena calls for an agreement on or abotit August 13, 1902, providing that certain stockholders of the International Harvester Company were not to sell their stock trust certificates before September, 1903, without giving J. P. Morgan & Company an opportunity to buy the same. Have you produced that? A. A printed copy is the only thing I have. (Handing paper to Mr. Grosvenor.) Mr. Grosvenor: The witness produces a printed agree- ment, unsigned, between Cyrus H. McCormick' and others and J. P. Morgan & Company, entitled "Agreement for Deposit of Stock Trust Certificates," dated August 13, 1902; also a printed form of contract, unsigned, between Charles Peering and others and J. P. Morganu & Company, entitled "Agree- ment for Deposit of Stock Trust Certificates," dated August 13, 1902, both of which I offer in evidence. Mr. McHugh: No objection. The documents were marked Petitioner's Exhibit 58 and Petitioner's Exhibit 59, respectively. Petitioner's Exhibit 58 is as follows: PETITIONER'S EXHIBIT 58. (Title page) : Intebnationaij Haevestee Company Cyrus H. McCormick and others and J. P. Morgan & Co. Agreement for Deposit of Stock Trust Certificates. Dated August 13, 1902. An Agbeement entered into at the City of New York this 298 W. P. Hamilton, Direct Examination. thirteenth day of August, 1902, by and between the under- signed and such owners of stock trust certificates represent- ing capital stock of the International Harvester Company, as may deposit their stock trust certificates hereunder with J. P. Morgan & Co., parties of the first part, and J. P. Morgan & Co., parties of the second part. The undersigned and such other persons as shall accept receipts hereunder, having deposited with J. P. Morgan & Co. stock trust certificates representing capital stock of the Inter- national Harvester Company (hereinafter called the "Com- pany") in the amounts specified in the receipts issued or to be issued as hereinafter provided, hereby agree with one an- other and with J. P. Morgan & Co. and with all others who may deposit such stock trust certificates hereunder or under agreements similar to this agreement, as follows : I. 'The stock trust certificates deposited hereunder are to be held by J. P. Morgan & Co. as depositaries and trustees severally for each of the respective holders of the receipts issued and to be issued as hereinafter provided, and, except as hereinafter otherwise provided, are to be delivered to such holders only at the following times and in the following amounts, viz.: Twenty-five per cent, thereof on September 1, 1903. Twenty-five per- cent, thereof on September 1, 1904. Ten per cent, thereof on September 1, 1905. Forty per cent, thereof upon the termination of the voting trust agreement between William C. Lane, G-eorge W. Per- kins and others, dated August 13, 1902. It is agreed, however, that after September 1, 1906, either of the two interests represented by the depositors of stock trust certificates hereunder and under agreements similar hereto, or the holders of the receipts issued hereunder, may sell the last-mentioned forty per cent, of said stock trust cer- tificates, or any part thereof, but in case of any such sale the Voting Trustee representing such depositors shall immedi- ately resign, as voting trustee, if desired by the other two trustees, and in case of such resignation, his successor shall be appointed by such other trustees. The stock trust certificates deposited hereunder shall re- main in the names of the original depositors unless holders of receipts issued therefor shall cause the certificates repre- sented by their receipts to be properly endorsed for trans- fer, and shall direct J. P. Morgan & Co. to cause them to be transferred to the names of such holders, in which case W. p. Hamilton, Direct Examination. 299 such transfers shall be made, the fact of such transfer and the name of the transferee being in every case shown by en-- dorsement upon the receipt or by a new receipt issued in its place. II. In case, while this agreement is in force, any stock divi- dend is issued by the Company, the stock trust certificates rep- resenting the stock dividend apportionable to the stock repre- sented by the stock trust certificates at the time on deposit hereunder shall be issued in the names of the persons in whose names stand the stock trust certificates to which it is apportionable, and shall likewise be deposited hereunder and be held subject to the provisions hereof for the respective hold- ers of the receipts issued by J. P. Morgan & Co. hereunder. III. Each of the parties of the first part further agrees that if, prior to September 1, 1903, he shall desire to sell any of, the stock trust certificates representing stock of the Company not on deposit hereunder, he will offer such stock trust cer- tificates to J. P. Morgan & Co. by notice in writing, specify- ing the amount of the stock trust certificates offered and the price at which the same are offered, and J. P. Morgan & Co. shall be entitled to buy such stock trust certificates at the price so named within twenty days thereafter, and the person giving such notice shall be entitled to sell said stock trust cer- tificates to others only in case J. P. Morgan & Co. shall not, within such twenty days, purchase the same at the price named in the notice, or at a price satisfactory to the owner, and then only at a price equal to, or exceeding, the price mentioned in said notice. IV. J. P. Morgan & Co. shall issue to the depositors of stock trust certificates hereunder receipts substantially in the following form, and no stock trust certificate shall be delivered except upon presentation of such receipt for endorsement thereon of the amount of certificates delivered and for sur- render when final delivery is made. (Form of Receipt) ' ' Inteenatiostal Haevbsteb Company. "Eeceipt for Stock Trust Certificates Deposited with J. P. Morgan & Co. "The undersigned have received from and hold for delivery subject to \ ? . ^^■'" [ order under the terms of an agreement of deposit, dated August 13, 1902, be- 300 W. P. Hmnilton, Direct Examination. tween J. P. Morgan & Co. and others, stock trust certificates representing shares of the par value of $100 each of the cap- ital stock of the International Harvester Company, issued to the persons below named having the following numbers and representing the following amounts of stock : Name of Stock Trust Certificate | Certificate | Number Holders. I Numbers. I of Shares. ' ' Twenty-five per cent, in amount of said stock trust certifi- cates is deliverable on September 1, 1903; twenty-five per cent, on September 1, 1904; ten per cent, on September 1, 1905 ; and the balance as in said agreement provided. "No stock trust certificates will be delivered except upon presentation of this receipt for endorsement hereon of the amount of the stock trust certificates delivered, and upon sur- render hereof when the final delivery of the stock trust cer- .tificates represented hereby is made." V. J. P. Morgan & Co. may, at their option, issue separate receipts for specific amounts of stock trust certificates de- liverable upon one or more of the dates hereinbefore men- tioned, in which case the form of receipt to be issued by them shall be modified accordingly. VI. J. P. Morgan & Co. will be liable hereunder only as custodians of the stock trust certificates on deposit with them, which shall be kept as a trust deposit, J. P. Morgan & Co. being custodians only and having no interest in said stock trust certificates. They may at any time terminate this agree- ment by notice of such termination to the holders of the re- ceipts issued hereunder, mailed to the addresses furnished, from time to time, by such holders, or if no such addresses have been furnished, to the addresses given by the original depositors. VII. Depositors and receipt holders assume no responsi- bility for or to each other with respect to their several de- posits, nor for or to assignees or persons subsequently inter- ested in their receipts or securities. Petitioner's Exhibit 59 is as follows; W. p. Hamilton, Direct Examination. 301 PETITIONER'S EXHIBIT 59 (Title page) : International Haevesteb Company Charles Deering and others and J. P. Morgan & Co. Agreement for Deposit of Stock Trust Certificates. Dated August 13, 1902. An Agreement entered into at the City of New York this thirteenth day of August, 1902, by and between the under- signed and such owners of stock trust certificates represent- ing capital stock of the International Harvester Company, as may deposit their stock trust certificates hereunder with J. P. Morgan & Co., parties of the first p'krt, and J. P. Mor- gan & Co., parties of the second part. The undersigned and such other persons as shall accept receipts hereunder, having deposited with J. P. Morgan & Co. stock trust certificates representing capital stock of the International Harvester Company (hereinafter called the "Company") in the amounts specified in the receipts issued or to be issued as hereinafter provided, hereby agree with one an- other and with J. P. Morgan & Co. and with all others who may deposit such stock trust certificates hereunder or under agreements similar to this agreement, as follows: I. The stock trust certificates deposited hereunder are to be held by J. P. Morgan & Co. as depositaries and trustees severally for each of the respective holders of the receipts issued and to be issued as hereinafter provided, and, except as hereinafter otherwise provided, are to be delivered to such holders only at the following times and in the following amounts, viz. : Twenty-five per cent, thereof on September 1, 1903. Twenty-five per cent, thereof on September 1, 1904. Ten per cent, therof on September 1, 1905. Forty per cent, thereof upon the termination of the voting trust agreement ■ between William C. Lane, George W. Per- kins and others, dated August 13, 1902. 302 W. P. Hamilton, Direct Examination. It is agreed, however, that after September 1, 1906, either of the two interests represented by the depositors of stock trust certificates hereunder and under agreements similar hereto, or the holders of the receipts issued hereunder, may sell the last-mentioned forty per cent, of said stock trust cer- tificates, or any part thereof, but in case of any such sale the Voting Trustee representing such depositors shall im- mediately resign, as voting trustee, if desired by the other two trustees, and in ease of such resignation, his successor shall be appointed by such other trustees. 'The stock trust certificates deposited hereunder shall re- main in the names of the original depositors unless holders of receipts issued therefor shall cause the certificates repre- sented by their receipts to be properly endorsed for transfer, and shall direct J. P. Morgan & Co. to cause them to be trans- ferred to the names of such holders, in which case such transfers shall be made, the fact of such transfer and the name of the transferee being in every case shown by endorse- ment upon the receipt or by a new receipt issued in its place. II. In case, while this agreement is in force, any stock dividend is issued by the Company, the stock trust certificates representing the stock dividend apportionable to the stock represented by the stock trust certificates at the time on de- posit hereunder shall be issued in the names of the persons in whose names stand the stock trust certificates to which it is apportionable, and shall likewise be deposited hereunder and be held subject to the provisions hereof for the re- spective holders of the receipts issued by J. P. Morgan & Co. hereunder. III. Each of the parties of the first part further agrees that if, prior to September 1, 1903, he shall desire to sell any of the stock trust certificates representing stock of the Com- pany not on deposit hereunder, he will offer such stock trust certificates to J. P. Morgan & Co. by notice in writing, speci- fying the amount of the stock trust certificates offered and the price at which the same are offered, and J. P. Morgan & Co. shall be entitled to buy such stock trust certificates at the price so named within twenty days thereafter, and the person giying such notice shall be entitled to sell said stock trust certificates to others only in case J. P. Morgan & Co. shall not, within such twenty days, purchase the same at the price named in the notice, or at a price satisfactory to the owner, and then only at a price equal to, or exceeding, the price mentioned in said notice. W. p. Hamilton, Direct Examination. 303 IV. J. P. Morgan & Co. shall issue to the depositors of stock trust certificates hereunder receipts substantially in the following form, and no stock trust certificate shall be deliv- ered except upon presentation of such receipt for endorse- ment thereon of the amount of certificates delivered and for surrender when final delivery is made. (Form of Eeceipt) ' ' International Habvestee Company. "Eeceipt for Stock Trust Certificates Deposited with J. P. Morgan & Co. "The undersigned have received from and hold for delivery subject to j j^^g [ order under the terms of an agreement of deposit, dated August 13, 1902, between J. P. Morgan & Co. and others, stock trust certifi- cates representing shares of the par value of $100 each of the capital stock of the International Harvester Company, issued to the persons below named having the following numbers and representing the following amounts of stock: Name of Stock Trust Certificate 1 Certificate 1 Number Holders. I Numbers. I of Shares. "Twenty-five per cent, in amount of said stock trust certifi- cates is deliverable on September 1, 1903; twenty-five per cent, on September 1, 1904; ten per cei^t. on September 1, 1905 ; and the balance as in said agreement provided. "No stock trust certificates will be delivered except upon presentation of this receipt for endorsement hereon of the amount of the stock trust certificates delivered, and upon sur- render hereof when the final delivery of the stock trust cer- tificates represented hereby is made." V. J. P. Morgan & Co. may, at their option, issue sepa- rate receipts for specific amounts of stock trust certificates deliverable upon one or more of the dates hereinbefore men- tioned, in which case the form of receipt to be isstied by them shall be modified accordingly. VI. J. P. Morgan & Co. will be liable hereunder only as 304 W. P. Hamilton, Direct Examination. custodians of the stock trust certificates on deposit with them, which shall be kept as a trust deposit, J. P. Morgan & Co. being custodians only and having no interest in said stock trust certificates. They may at any time terminate this agree- ment by notice of such termination to the holders of the re- ceipts issued hereunder, mailed to the addresses furnished, from time to time, by such holders, or if no such addresses have been furnished, to the addresses given by the original depositors. VII. Depositors and receipt holders assume no responsi- bility, for or to each other with respect to their several de- posits, nor for or to assignees or persons subsequently inter- ested in their receipts or securities. Mr. Grrosvenor: I will request the witness to furnish the names of the parties who signed each of the exhibits last mentioned (Exhibits 58 and 59), and also a statement show- ing the number of shares so deposited under the agreement with Messrs. J. P. Morgan & Company. A memorandum of that will also be furnished to you, Mr. Hamilton, by the Ex- aminer. "Witness: All right. Mr. Grrosvenor : This request applies to each of the last named exhibits. Q. Mr. Hamilton, were the stock trust certificates of other parties than the owners of Deering & Company and the own- ers of the McCormick Harvesting Machine Company de- posited with you? A. I have no personal information on the subject. Q. Will you kindly ascertain, so that the answer to that question may be inserted in the record! A. I will. Q. You have produced the agreements with the Deerings and the McCormicks. A. Yes. Q. Please ascertain whether the same character of agree- ment was signed by the owners of the Piano and the Warder, Bushnell & Griessner companies. Mr. Grosvenor : The witness was subpoenaed, in the third place, to produce the books, or in lieu thereof a statement taken from the books, showing the amount of stock trust cer- tificates of the International Harvester Company deposited with Messrs. J. P. Morgan & Company pursuant to the agree- W. p. Hamilton, Direct Examination. 305 ments above mentioned and lield during the years 1902 to 1912, sucli statement showing the amount of such stock trust certificates held on January 1st of each of said years. Have you produced that, Mr. Hamilton? (The witness hands a paper to Mr. Grrosvenor.) Mr. Grosvenor: The witness produces a paper entitled "Statement of International Harvester Co. Stock Trust Cer- tificates held on Deposit by J. P. Morgan & Co." It does not appear in this statement — this which you have furnished — whether the shares so held in deposit were held under the first agreement which you produced, August 13th, or under the second agreements (exhibits just introduced). Can you explain what that list — A. (Interrupting) You do not ask for it in the sub- poena. I do not know anything more about it than the rec- ords they handed me. Mr. Grosvenor : The witness is requested to produce state- ment showing, separately, the amount of shares of stock trust certificates held each year by Messrs. J. P. Morgan & Co. under the first agreement of August 13, 1902, above men- tioned, and the amount of shares held under the second two agreements of August 13th, the latter two agreements pro- viding that the shares should not be sold before September, 1903, and so forth. The paper produced by the witness, entitled "Statement of International Harvester Co. Stock Trust Certificates held on Deposit by J. P. Morgan & Co." was marked Petitioner's Exhibit 60. Mr. Grosvenor: I offer in evidence Petitioner's Exhibit 60, subject to withdrawal and the substitution in place thereof of the statement to be produced by the witness. Petitioner's Exhibit 60 is as follows: (i 306 W. P. Hamilton, Direct Examination. PETITIONEE'S EXHIBIT 60 Statement of International Harvester Co. Stock Trust Certificates Held on Deposit by J. P. Morgan & Co. Jan. 1903 59,760 shares 1904 547,925 " 1905 568,820 " 1906 475,573 " 1907 475,573 " Delivered to Standard Trust Co. in 1907 475,573 " Common Preferred Eeceived in exchange voting trust certificates for 237,786 1/2 shs. 237,786 1/2 shs. Jan. 1908 Held on deposit 276,794 1/2 1909 " 132,097 1910 " 258,810 1911 " 258,810 1912 " 244,691 Sep. 12, 1912— None on hand 113,122 1/2 36,959 36,959 51,159 Q. Now what else have you produced A. No. 4, isn't it, in the subpoena? Q. 4 : Books, or in lieu thereof a statement taken from the books showing the amounts received by Messrs. J.- P. Morgan & Co. for services in connection Avith the formation of the International Harvester Company, said amounts being either in stock of said company, or cash, or both. Have you got that? A. That is the statement showing it. (Handing paper to Mr. Grosvenor.) Mr. Grosvenor: I offer that in evidence. The paper produced was marked Petitioner's Exhibit 61. Mr. McHugh: May I look at the subpoena? Mr. Grosvenor: Yes. Here is a copy of it. (Handing paper to Mr. McHugh.) Mr. McHugh: The witness has got the wrong statement. A man steps to the side of the witness and says : ' ' That can't be right." Mr. Grosvenor: Just a moment. I am asking a question. Witness : I may have misunderstood the question. W. p. Hamilton, Direct Excmiination. 307 Mr. McHugli: Of course the statement on its face does 1 not refer to — Mr. Grosvenor : This does not appear to be what yon were subpoenaed to produce. See if you have got another paper there that represents it. I will leave that in as an exhibit. Witness : I do not appear to have any other paper. Mr. Grosvenor: Well, I will offer that in evidence, in re- sponse to the question, subject to correction. Petitioner's Exhibit 61 is as follows: PETITIONEE'S EXHIBIT 61. '2 Dr. International Harvester Co. Stock a/c 1902 Aug. 15 To Paid Wm. C. Lane for 165,000 shares Stock Trust Ctfs. cum. Eights. Value Aug. 14th $13,500,000 Q. Where did you get your papers from, Mr. Hamilton? A. These papers? Q. Yes. _ A. They were given to me by the various departments that have charge of them. Mr. McHugh : Suppose you just ask him to verify that. Mr. Grosvenor : Yes. Will you please verify that on your return to the office, so that I can examine you further about it? Witness : May I make a copy of it? Q. Yes, make a copy of it. (The witness made a pencil copy of Petitioner's Exhibit 61.) Mr. McHugh: The question calls for what they got for . services. May I keep this copy of the subpoena? ' Mr. Grosvenor: Yes; surely. Q. Mr. Hamilton, did you have any share in the negoti- ations which resulted in the formation of the International Harvester Company? A. None whatsoever. Q. Were you a member of the firm at that time? A. I was. Q. Who acted for the firm in that connection? A. As nearly as I can recollect, Mr. Perkins. Q. Mr. George W. Perkins? A, Mr. George W. Perkins, yes. 308 W. P. Hamilton^ Direct Examination. Q. Now, returning to that last statement. The subpoena calls for a statement showing the amounts received by J. P. Morgan & Company for services. A. Yes. Q. You understand? A. Yes. Q. Now next: "5. All papers, deeds, contracts, and so forth, relating to the transfer to the International Harvester Company, through William C. Lane, of the properties of the McCormick Harvesting Machine Company, Deering & Com- pany, Piano Manufacturing Company, Warder, Bushnell & Glessner Company, the Milwaukee Harvester Company; also option obtained on the plant and business of the Milwaukee Harvester Company, such option being obtained by George W'. Perkins, partner, and on behalf of J. P. Morgan & Co." What papers have you produced in response to that? A. Shall I read them off from this list ? Q. Let me see the list. A. It starts there. (Handing paper to Mr. G-rosvenor, and indicating the place thereon.) That is my list, just for my guidance. (After inspecting the list Mr. Grosvenor returned the same to the witness.) Q. Hand me the papers one by one and I will state what each is. (The witness hands a paper to Mr. Grosvenor.) Mr. Grosvenor: The witness produces original agreement dated July 28, 1902, by and between the Deering Harvester Company consisting of Charles Deering, James Deering, Rich- ard F. Howe, and William C. Lane. I will offer that in evi- dence. We have not that exhibit in evidence now. The paper was marked Petitioner's Exhibit 62. Mr. McHiUgh: No objection. Petitioner 's Exhibit 62 is as follows : PETITIONER'S EXHIBIT 62. An Ageebment, made and entered into this 28th day of July, Nineteen hundred and two, by and between the Deering Har- vester Company, a copartnership consisting of Charles Deer- ing, James Deering and Richard F. Howe (hereinafter called the "Vendor"), party of the first part, and William C. Lane (hereinafter called the "Purchaser"), party of the second part. W. p. Hamilton, Direct Examination. 309 _ Whereas the Vendor owns certain manufacturing proper- ties located at Chicago, Illinois, and in Canada, and employed in the manufacture of harvesting machinery and other prop- erties intended for use in connection therewith ; and Whereas the Purchaser desires to acquire said properties and intends, upon the acquisition of said properties, to sell, convey and transfer the same to a corporation now existing or hereafter to be organized under the laws of the State of Illinois or other state (hereinafter called the "Purchasing Company"), with capital stock as hereinafter provided': Now, This Agreement Witnesseth, that the parties hereto have agreed and covenanted as follows : First: The Vendor agrees, for the considerations and upon the terms hereinafter stated, to sell, assign, transfer, convey and deliver unto the Purchaser, his nominee or as- sign, by good and indefeasible title, free and clear of incum- brances, indebtedness and liabilities, except as herein stated, and the Purchaser agrees to purchase, all and singular the real estate, factories, plants, buildings, improvements, ma- chinery, patterns, tools, apparatus, fixtures and appliances of the Vendor, and all the patents, inventions, devices, patent rights, licenses, trade-marks, trade-names and good-will of all and singular said property as a going concern, and also all of the products manufactured and in process of manufacture, materials, supplies and merchandise on hand at the time of closing said sale and all and singular its then pending con- tracts for the purchase of property or materials or the sale of product ; also all other property of the Vendor appertain- ing to the Vendor's business aforesaid. There shall also be sold and purchased with said properties $16,000,000 (at face value and accrued interest) of bills and accounts receivable representing sales made by the Vendor. Such bills and ac- counts receivable are to mature prior to March 1, 1905, and are to be guaranteed as hereinafter provided. Cash may be substituted for the whole or any part of such accounts and bills receivable at the option of the Vendor. Second: The Vendor agrees that, as soon as practicable after the execution of this instrument, it will duly execute and acknowledge, and cause to be forthwith deposited with J. P. Morgan & Co. or a trust company designated by them, as de- positary, proper deeds and other instruments of conveyance and sale for the granting, conveying and transferring as aforesaid unto the Purchaser and his assigns, all the property hereinbefore recited. Such depositary shall hold the same 310 W. P. Hamilton, Direct Examination. deeds and other instruments in escrow and deliver the same to the Purchaser or upon his order only upon receiving for account of the Vendor the consideration hereinafter provided, and upon the performance by the Purchaser of the provisions hereof. Third: The Vendor agrees to deliver to said depositary as soon as practicable full statements in respect of its prop- erty and its assets and liabilities, its contracts for the pur- chase of materials and other property and for the sale of its manufactured products and otherwise relating to its property and business. The Vendor agrees that, pending the perform- ance of and while this contract is in force, it will not, without the written consent of the Purchaser, or of said Purchasing Company, enter into any new contracts or assume any new obligations or make any purchases or sales except such as are necessary and customary in the ordinary conduct of its regu- lar business or to maintain it as a going concern and except such as may be necessary for the performance of agreements already entered into ; nor make payments in advance of their maturity on pending contracts. The Vendor further agrees that during and while this contract is in force, no new capital shall be employed in its business and no bonds issued, and that no mortgage, lease or conveyance shall be made upon or in respect of its real estate or plant without the written con- sent of the Purchaser; and also that in case of any difference of opinion between the Vendor and the Purchaser in relation to the conduct of the business of the Vendor, such difference shall be decided by J. P. Morgan or George W. Perkins, whose decision shall, be final. All service contracts of the Vendor taken over by the Purchasing Company shall be terminable on sixty days' notice unless in specific cases otherwise deter- mined by said Purchasing Company; and the Vendor shall indemnify the Purchasing Company against any claims under profit-sharing contracts. In the case of any property deliv- ered to the Purchaser by the Vendor which is subject to in- cumbrance, the amount of the incumbrance shall be deducted in determining the value thereof. FoUtrth : The Purchaser and said Purchasing Company and his or its nominee, the appraisers, accountants and counsel, shall have the right to examine the deeds and other instru- ments of conveyance and transfer so to be deposited by the Vendor with the depositary as aforesaid, and shall, if the Purchaser shall so require, be furnished with abstracts of title, title deeds and surveys which may facilitate the exami- W. p. Hamilton, Direct Examination. 311 nation of the title to the property to be conveyed or trans- ferred, and shall have free access to all the deeds, contracts, 'books and records of the Vendor for the purpose of examining and verifying the statements made with respect to its prop- erty, business, assets, liabilities and status. Fifth : The purchase price to be paid by the Purchaser to the Vendor for all and singular said property shall be the aggregate of the several appraisals and valuations herein- after provided for and of said accounts and bills receivable and cash, if any, and shall be payable in full paid and non- assessable shares of the capital stock of the said Purchasing Company taken at par. In order to make such appraisals and fix and determine such valuations, the property of the Vendor shall be classified as follows: (1) Eeal estate, buildings, factories, warehouses, fixtures, machinery, tools, patterns, drawings, moulds and all other personal property used in connection Avith or appertaining to the Vendor's business and Avhich is not intended for sale in the ordinary course of business or to form part of or to be consumed in the manufacture of the Vendor's products, and including pending contracts for purchase of real property and for construction of buildings or fixtures, but not including the property and contracts otherwise classified. The assets of this class are hereinafter collectively designated as "Plant." (2) All materials on hand, manufactured, unmanufactured or in process of manufacture, including any and all articles intended to form part of or to be used in manufacturing the Vendor's product. The assets of this class are hereinafter collectively designated as "Materials on hand." (3) Unexecuted contracts or orders for the sale of the Vendor's manufactured products, but not including contracts or orders for deliveries after the year 1902, for which latter contracts and orders (although to be transferred) no allow- ance shall be made. No allowance shall be made for contracts or orders for delivery prior to January 1, 1903, unless the ma- terial necessary for the completion of the machines or other manufactured products shall be in the possession of the Vendor and upon its plant at the time of the appraisal. Such contracts are hereinafter collectively designated as "Pending Sales." (4) All contracts heretofore entered into by the Vendor for the purchase of materials to be used in the manufacture 312 W. P. Hamilton, Direct Examination. of its products. Suoli contracts are hereinafter collectively designated as "Material Contracts." (5) The coal, iron and steel properties of the Vendor, in- cluding its coal and iron lands, steel plant and blast furnaces, such property being hereinafter referred to as the ' ' Deering Iron, Coal and Steel Properties." (6) Patents, patent rights, devices, inventions, licenses, trade-marks, trade-names and good will, including the value of the established business, name, standing in the trade, sta- bility of business, organization, trade and custom as a going concern. Such assets are hereinafter collectively designated as "Patents, ^ood-Will, etc." The value of the plant, as above defined, shall be ascertained and determined by three appraisers, who shall fix the present value of such plant as a going concern. One of such ap- praisers shall be nominated and appointed by the Vendor, and the other two by J. P. Morgan & Co. The present value to a going concern of said materials on hand, of the said pending sales, and of the said material con- tracts, as above defined, shall similarly be determined by three appraisers, one to be nominated and appointed by the Vendor and two by J. P. Morgan & Co. Such appraisers shall make allowance in their judgment for unprofitable contracts. The value of the Deering Iron, Coal and Steel properties to a going concern, as above defined, shall be determined by J. P. Morgan or George W. Perkins. The value of the patents and good-will shall, for the pur- poses of this contract, be a sum equal to the net profits of the Vendor during the two years ending November 30, 1902, as ascertained in the manner hereinafter provided, plus ten per cent, thereof ; and to such amount shall be added the value of the name, standing in the trade, stability of business, organi- zation, trade, custom, etc., of the Vendor as a going concern, which value shall be fixed by J. P. Morgan or George W. Perkins in his sole discretion. The profits for said two years shall be ascertained and re- ported to J. P. Morgan & Co. by three accountants, one of whom shall be nominated by the Vendor and the other two by J. P. Morgan & Co. In calculating the net profits, of the business, there shall be excluded all allowance for interest on bills and accounts receivable as well as the cost of collecting bills and accounts receivable, and all interest paid or payable on moneys used by the Vendor but belonging to any of the members of the Vendor or William Deering & Co. or William W. p. Hamilton, Direct Examination. 313 Deering or any member of his family. Said accountants, in calculating the net profits for said two years, shall make al- lowance for depreciation or loss, if any, on bills and accounts receivable, for depreciation or loss, if any, on materials on hand, and for depreciation, if any, of the said plant from wear and tear or otherwise. In each case hereinbefore enumerated, the _ decision, appraisal or report of a majority of the ap- praisers or accountants or the decision of J. P. Morgan or George W. Perkins (if sole arbitrator or appraiser), as the case may be, shall be binding and conclusive upon the parties hereto. Sixth. Payment of the amount of all contracts or orders for sales of manufactured products included as assets of the Vendor as aforesaid and transferred under this contract, shall be guaranteed to the satisfaction of J. P. Morgan & Co. by the. Vendor and the net value thereof shall be appraised on that basis. Any and all accounts and bills receivable trans- ferred by the Vendor hereunder shall be taken at their face value and accrued interest to date of transfer, but the Vendor shall guarantee and hereby does guarantee that the Purchaser or the Purchasing Company shall realize thereon such face value and interest accrued and to accrue and that said prin- cipal and interest shall all be received on or prior to the first day of March, 1905. The collections shall be made by the Purchasing Company, but the expenses of collection shall be borne by the Vendor. Pending such collections, the Vendor agrees to advance and pay to the Purchasing Company on de- mand, from time to time, on account of such guaranty such amounts as the board of directors of the Purchasing Company may determine to be necessary or convenient for the conduct of its business, but not in excess of such amounts as J. P. Morgan & Co. may from time to time approve. If such ad- vance payments be made by the Vendor, then the Purchasing Company shall transfer to the Vendor or their nominees an equal amount in principal and accrued interest of uncollected accounts or bills receivable of the earliest maturities. The Purchasing Company may take such measures as to it may seem wise, for the collection of the accounts and bills receiv- able and grant extensions and indulgences to debtors by whom the same are payable withont release of or prejudice to such guaranty or extension or change of the obligation of the Vendor to make payments as aforesaid. The Purchasing Com- pany shall from time to time, on demand, furnish the Vendor a full statement showing which accounts and bills receivable 314 W. P. Hamilton, Direct Examination. remain unpaid, and what, if any, disposition has been made in regard thereto or steps taken to enforce the collection thereof. The Vendor shall secure the guaranties in this article pro- vided, by collateral or otherwise, to the satisfaction of J. P. Morgan & Co. in their discretion. Seventh. The Purchasing Company shall have such cor- porate title, capital stock, organization, by-laws, directors and committees as may be approved by J. P. Morgan & Co. and shall have, in addition to materials on hand and inventories, a working capital of $60,000,000 to be represented by cash or hills and accounts receivable guaranteed as aforesaid. Eighth. The amount and the classes (if there, be more than one class) of the capital stock of the Purchasing Com- pany shall be determined after the ascertainment of the aggre- gate value of all its assets and properties, but such amount and such classes shall severally be satisfactory to J. P. Mor- gan & Co. If, however, there be only one class of stock, the capital stock shall not exceed $120,000,000 par value, even though the aggregate value of the assets and properties of the Purchasing Company be in excess thereof. If there be both preferred stock and common stock, the preferred stock shall not exceed $120,000,000 par value and shall entitle the holders to cumulative preferential dividends at the rate of but not to exceed six per cent, per annum, with preference as to princi- pal and accumulated dividends on dissolution or liquidation; and the common stock shall not exceed the remaining value of the corporate assets and properties as so determined, which value may be ascertained and determined irrespective of the special appraisals which are to be made under this agreement. If there shall be two classes of stock, then and in that event the Vendor shall be entitled to receive as additional purchase price under this agreement common stock to an amount that shall bear to the total issue thereof the same proportion that the preferred stock to be received by the Vendor under this agreement shall bear to the total issue of preferred stock. Ninth. The purchase provided for in this contract shall take effect as of such day in September, 1902, as shall be designated by the Purchaser with the approval of J. P. Morgan & Co.; the appraisals shall be made as of such date as nearly as practicable, and the performance of the contract shall be completed prior to January 1, 1903. Tenth. The charter or certificate of incorporation or or- ganization of the Purchasing Company shall provide, among other things, that the capital stock of the corporation shall W. p. Hamilton, Direct Examination. 315 not he increased or diminislied except upon the affirmative vote or consent of tlie holders of at least two-thirds of each class of the outstanding capital stock of the company. Said charter or certificate may also provide that the stockholders may enter into a voting trust of their stock for a limited period. The charter or certificate shall likewise provide that no mortgage or lien upon the real property, plants, tools, or machinery of the Purchasing Company shall be created with- out the affirmative vote or the written consent of the holders of at least two-thirds of each class of the outstanding capi- tal stock. Eleventh. The Vendor undertakes and agrees that it or the holders of the stock of the Purchasing Company so to he issued in payment for the property to be transferred and con- veyed under this agreement, shall deposit their stock with J. P. Morgan & Co. or a trust company to be designated by them, as depositary, upon a voting trust, which shall provide, among other things, for the appointment of three voting trus- tees, one of whom shall he J. P. Morgan or George W. Perkins and the other two shall be persons appointed by J. P. Morgan & Co. The voting trust agreement shall be for the period of ten years with provision, however, that it may be terminated at any time after the expiration of five years upon ninety days' notice, if a majority of the voting trustees shall so de- cide. The capital stock of the Purchasing Company shall be transferred to such voting trustees, who shall issue transfer- able certificates of beneficial interest entitling the holder to any dividends, distribution of profits and subscription rights which may accrue in respect of the stock so held by the voting trustees, and upon the termination of the voting trust en- titling the holder to a proportionate amount of the stock so transferred to the voting trustees. The form, terms and pro- visions of the voting trust agreement shall be subject to the approval of J. P. Morgan & Co. The voting trust agreement shall contain adequate restrictions upon the voting power of the voting trustees in respect of an increase or diminution of capital stock, or the creation of any mortgage as aforesaid, so that any vote or consent by the voting trustees for any such increase or diminution, or mortgage, shall be given only upon the affirmative vote or written consent of the owners of a cor- responding amount of the voting trust certificates of interest outstanding. The Vendor shall further agree with J. P. Morgan & Co. that during the first year after the issue of such stock or vot- 316 W. P. Hamilton, Direct Examination. ing trust certificates, the Vendor shall own, and shall refrain from selling or otherwise disposing of, at least eighty per cent, of the original holdings acquired under this agreement or otherwise ; during the second year at least sixty per cent, of such original holdings ; during the third year at least forty per cent, of such original holdings ; and thereafter, and during the existence of the voting trust, at least one-third of such original holdings, provided, however, the Vendor may at any time after the expiration of the fourth year withdraw from the custody of J. P. Morgan & Co. and sell or otherwise dis- pose of, the remaining one-third of said original holdings, or any part thereof, but in such case any voting trustee repre- senting such holdings shall immediately resign as trustee if desired by the two remaining trustees. A successor shall thereupon be appointed by the other two trustees. As guaranty for the performance of the foregoing covenant not to sell or otherwise dispose of stock or voting trust cer- tificates, the Vendor shall severally pledge with J. P. Morgan & Co. an amount of stock or voting trust certificates equal to the proportion which they ha-ve agreed to continue to own, which stock shall be released and delivered to them or upon their order from time to time as they may become entitled to sell; but, except as herein otherwdse provided, one-third of the total original holdings as aforesaid shall remain pledged with J. P. Morgan & Co. during the existence of the voting trust. In case during the first year after the issue of said stock by the Purchasing Company the Vendor shall desire to sell any of the stock or voting trust certificates which it is free to sell under the provisions hereof, it shall offer the stock to J. P. Morgan & Co. by notice in writing, specifying the amount of the stock and the price at wliich the same is offered, and the Vendor shall be entitled to sell such stock to others only in case J. P. Morgan & Co. shall not within twenty days thereafter purchase said stock at the price named in the notice or at a price satisfactory to the Vendor. Twelfth. This contract, or any part thereof, may be trans- ferred by the Purchaser to the Purchasing Company, and such Purchasing Company may thereupon enforce all and singular its terms and conditions as fully to all intents and purposes as if it were a party thereto. The place of performance of this contract shall be at the office of the Hudson Trust Com- pany, Hoboken, New Jersey. Thirteenth. The individual members of the Vendor shall W.P. Hamilton, Direct Examination. 317 jointly and' severally guarantee the performance of this con- tract. Fourteenth. The Purchaser undertakes to duly secure by contract the appointment of J. P. Morgan & Co. as the fiscal agents of the Purchasing Company and their acceptance of such appointment, in order that the Purchasing Company may secure and have the benefit and advantage of the advice of said firm in the management of its financial affairs. If any dispute should arise under this contract as to its true intent or meaning, or in respect of the performance of any part thereof, whether between the parties hereto or be- tween the Vendor and the Purchasing Company, the matter in dispute in each and every case shall be left to J. P. Morgan or George W. Perkins as sole arbitrator, and the decision of such arbitrator shall be binding and conclusive upon the par- ties. Fifteenth. In case any appraiser, arbitrator, accountant or voting trustee shall for any reason fail or eease to serve, then and in said event another or a successor shall be nominated and appointed in his place by the Vendor or by J. P. Morgan & Co. respectively as the case may be, subject, however, in the case of voting trustees to the provisions of the voting trust agreement. References in this agreement to J. P. Morgan & Co. shall apply to that firm as now or hereafter constituted. In Witness Whereof, the party of the first part and the party of the second part have hereunto set their hands and seals the day and year first above written. Dbeeing Harvesting Company Charles Deebing (Seal) James Deeeing By Charles Deebing Attorney in fact (Seal) James Deebing Richard F. Howe (Seal) Wm. C. Lane (Seal) (Petitioner's Exhibit 62 is an original document.) Q. What have you next? (The witness hands a paper to Mr. Grosvenor.) Mr. Grosvenor: The witness produces original contract between the McCormick Harvesting Machine Company and William C. Lane, dated July 28th, 1902, signed by Cyrus H. 318 W. P. Hamilton, Direct Examination. MoCormick, president; attest, Harold F. McCormiek. This - paper is returned to the witness. Mr. McHugh: You do not want that? Mr. Grosvenor: No. We have that already in evidence, but we did not have the other one. (The document was returned to the witness.) Q. What is the next? A. The next is the Piano. (Handing paper to Mr. Gros- venor.) Mr. Grosvenor: The witness next produces contract of July 28th between the Piano Manufacturing Company and William 0. Lane, the same being an original contract, signed by William H, Jones, President, in presence of S. J. Llewellyn •and Archer Brown ; attested by 0. W. Jones, Secretary. This paper is returned to the witness. (The document was handed to the witness.) Mr. Grosvenor: The witness next produces an agreement of July 28th, between Warder, Bushnell & Glessner Company and William C. Lane, signed by J. J. Glessner, vice-president ; attested by G. B. Glessner, secretary. This paper is returned to the witness. (The document was handed to the witness.) (The witness handed Mr. Grosvenor another paper.) Mr. Grosvenor : Th6 witness next produces a supplemental agreement, dated August 11, 1902, between the McCormiek Harvesting Machine Company and William C. Lane. Mr. McHugh : That is the one you are asking for. Mr. Grosvenor : It loolis like it. It is signed by Cyrus H. McCormiek, president ; Harold F. McCormiek, secretary, with two papers attached signed by stockholders of the McCormiek Company. This is offered in evidence. Mr. McHugh: We have no objection. The document was marked Petitioner's Exhibit 63, and is as follows : PETITIONER'S EXHIBIT 63. MoC oi'mick-Lane . Supplemental Agbeement, made and entered into this 11th day of August, 1902, by and between the McCormiek Harvest- ing Machine Company (hereinafter called the "Vendor"), party of the first part, and William C. Lane (hereinafter called the "Purchaser"), party of the second part. The parties hereto have entered into an agreement, dated W. p. Hamilton, Direct Examination. 319 July 28, 1902 (hereinafter called the ' ' OrigiBal Agreement " ) , providing for the sale by the Vendor to the Purchaser of the property of the Vendor as therein described. The parties hereto have agreed that said property shall be conveyed and transferred by the Vendor to the Purchaser forthwith and in advance of the determination of the exact purchase price of said property as in said Original Agreement provided. Now, in consideration of the premises, the parties hereto have agreed and covenanted as follows : First: The Vendor shall forthwith convey and transfer to the Purchaser all of the property described in the Original Agreement by instruments of conveyance which shall contain covenants of warranty and further assurance. The Vendor shall also forthwith assign and transfer to the Purchaser all of its accounts and bills receivable, and the same shall be sub- ject to the provisions of the Original Agreement respecting the accounts and bills receivable to be transferred by the Vendor to the Purchaser as therein provided, but the Vendor shall be entitled to substitute cash in place of any such ac- counts and bills receivable. Second: The Purchaser shall cause to be prepared, as soon as practicable, a statement of the accounts and bills re- ceivable assigned by the Vendor as herein provided, including such as may be received prior to the date in September which shall be fixed by the Purchaser with the approval of J. P. Morgan & Co. for the adjustment of the purchase price pay- able to the Vendor. If the aggregate of such accounts and bills receivable, at their face value and accrued interest, shall exceed the sum of twenty million dollars ($20,(|)00,000), then the excess shall be held for the account of the Vendor, and shall be available to be applied by the Vendor towards any other payments that may be due by the Vendor to the Pur- chaser, or in such other manner as the Vendor shall direct. Third : The capital stock of the purchasing company pro- vided for in said contract shall be one hundred and twenty million dollars ($120,000,000), but, prior to January 1, 1903,^ capital stock shall not be issued to an amount exceeding sixty- two and one-half (62|) per cent, of the aggregate amount of the money and cash assets acquired by said company and of the value of the other property acquired by said company, as such value shall be ascertained and fixed by the board of di- rectors of the company at the time of the acqunsition of such property. Fourth : Forthwith upon the conveyance of said property 320 W. P. Hamilton, Direct Examination. by the Vendor to the Purchaser, the Purchaser shall deliver to J. P. Morgan & Co. stock trust certificates for such an amount of the capital stock of the purchasing company as shall, in the opinion of J. P. Morgan & Co., he required to pro- vide the amount of stock trust certificates necessary for ulti- mate delivery to the Vendor in payment for the property, ac- counts and bills receivable and cash to be transferred and paid by it as herein and in the Original Agreement provided. J. P. Morgan & Co. are hereby authorized to deliver to the Vendor, from time to time, such amounts of the stock trust certificates so delivered as, in their opinion, it is proper to deliver to the Vendor. If after the final ascertainment of the amount of stock trust certificates to be delivered to the Vendor as herein and in the Original Agreement provided, and after the delivery to the Vendor of such stock trust certificates, any of said deposited stock trust certificates shall remain on de- posit with J. P. Morgan & Co., the same shall be returned to the Purchaser, but if the stock trust certificates on deposit with J. P. Morgan & Co. shall not be sufficient for the pur- pose of such delivery, then the deficiency shall be forthwith supplied by the Purchaser. Fifth : The purchase price to be paid by the Purchaser to the Vendor for said property shall be ascertained as provided in the Original Agreement, and notwithstanding the immedi- ate transfer and delivery of the property of the Vendor, the purchase shall, so far as the adjustment of the purchase price is concerned, be considered as taking effect as of such day in September, 1902, as shall be designated by the Purchaser, with the approval of J. P. Morgan & Co.; and, for the pur- poses of this contract and of the Original Agreement, the profits of the Vendor for the two years ending November 30, 1902, shall be ascertained in accordance with the provisions of the Original Agreement. The Purchaser shall cause sep- arate accounts of the business of the Vendor, when trans- ferred to the purchasing company, to be kept so long as may be necessary for the purpose of ascertaining the profits there- of for the year ending November 30, 1902, and for the pur- pose of determining and apportioning the profits in accord- ance with the Original Agreement. Sixth : The Original Agreement shall continue in force ex- cept as herein modified, and any questions arising under this Supplemental Agreement shall be determined by J. P. Morgan & Co. as sole arbitrators. In Witness Whereof the Vendor has caused this agreement W. p. Hamilton, Direct Examination. 321 to be executed in its corporate name by its proper officers and its corporate seal to be hereunto affixed, and the Purchaser has signed his name and affixed his seal hereto the day and year first above written. McCoRMicK Haevesting Machine Company, by Cyexjs H. McCoemick, (Seal) President. Attest : Harold F. McCoemick, Secretary. Wm. C. Lane (Seal) In presence of: John J. Daly. McCoemick Haevesting Machine Company. Referring to the agreement between the McCormick Har- vesting Machine Company and William C. Lane, dated July 28th, 1902, and the supplemental agreement between the two parties dated Aug. 11, 1902, the undersigned, stockholders of said McCormick Harvesting Machine Company, in con- sideration of the purchase by said Lane, as in said agreement provided, hereby jointly and severally agree with said Lane that said agreements shall be in all respects performed on the part of the McCormick Harvesting Machine Company, and they hereby jointly and severally obligate themselves to the performance of said agreements, as principals and not as guarantors. The benefits of this agreement may, at the option of said Lane, be transferred to any corporation which may acquire from said Lane the properties purchased by him as provided in said agreements. Dated, August 11, 1902. Nettie Fowlee McCoemick Haeold F. McCoemick Stanley McCoemick Cyeus H. McCoemick Anita McCoemick Blaine (Petitioner's Exhibit 63 is an original document.) Mr. Grosvenor : The witness next produces a supplemental agreement dated August 11, 1902, between the Piano Manu- facturing Company and William C. Lane, signed by W. H. Jones, president, and attested by 0. W. Jones, secretary, in 322 W. P. Hamilton, Direct Examination. the presence of Josepli P. Cotton, Jr. ; to wliieli agreement is attaclied a paper executed the same day, with isignatures of certain stockholders of the Piano Company. I offer that in evidence. The document was marked Petitioner's Exhibit 64, and is as follows: PETITIONER'S EXHIBIT 64. Piano — Lane. 2 Supplemental Agreement made and entered into this 11th day of August, 1902, by and between the Piano Manufacturing Company (hereinafter called the "Vendor"), party of the first part, and William C. Lane (hereinafter called the "Pur- chaser"), party of the second part. The parties hereto have entered into an agreement, dated July 28, 1902, (hereinafter called the "Original Agreement"), providing for the sale by the Vendor to the Purchaser of the property of the Vendor as therein described. The parties hereto have agreed that said property shall be conveyed and 3 transferred by the Vendor to the Purchaser forthwith and in advance of the determination of the exact purchase price of said property as in said Original Agreement provided. Now, in consideration of the premises, the parties hereto have agreed and covenanted as follows: First: The Vendor shall forthwith convey and transfer to the Purchaser all of the property described in the Original Agreement by instruments of conveyance which shall contain covenants of warranty and further assurance. The Vendor ' shall also forthwith assign and transfer to the Purchaser all of its accounts and bills receivable, and the same shall be 4 subject to the provisions of the Original Agreement respect- ing the accounts and bills receivable to be transferred by the Vendor to the Purchaser as therein provided. The Vendor shall be entitled to substitute cash in place of any such ac- counts and bills receivable. Second: The Purchaser shall cause to be prepared, as soon as practicable, a statement of the accounts and bills re- ceivable assigned by the Vendor as herein provided, includ- ing such as may be received prior to the date of September which shall be fixed by J. P. Morgan & Co. for the adjust- ment of the purchase price payable to the Vendor. If the aggregate of such accounts and bills receivable, at their face W. p. Hamilton, Direct Examination. 323 value and accrued interest, shall exceed the sum of four million dollars ($4,000,000), then the excess shall be held for the account of the Vendor, and shall be available to be ap- plied by the Vendor towards any other payments that may be due by the Vendor to the Purchaser, or in such other manner as the Vendor shall direct. Third : The capital stock of the purchasing company pro- vided for in said contract shall be one hundred and twenty million dollars ($120,000,000), but, prior to January 1, 1903, capita] stock shall not be issued to an amount exceeding sixty-two and one-half (62^) per cent, of the aggregate amount of the money and cash assets acquired by said company, and of the value of the other property acquired by said company, as such value shall be ascertained and fixed by the board of directors of the company at the time of the ac- quisition of such property. Fourth: Forthwith upon the conveyance of said property by the Vendor to the Purchaser, the Purchaser shall deliver to J. P. Morgan & Co. stock trust certificates for such an amount of the capital stock of the purchasing company as shall, in the opinion of J. P. Morgan & Co. be required to provide the amount of stock necessary for ultimate delivery to the Vendor in payment for the property, accounts and bills receivable and cash to be transferred and paid by it as here- in and in the Original Agreement provided. J. P. Morgan & Co. are hereby authorized to deliver to the Vendor from time to time, such amounts of the stock trust certificates so delivered as, in their opinion, it is proper to deliver to the Vendor. If after the final ascertainnaent of the amount of stock trust certificates to be delivered to the Vendor, as here- in and in the Original Agreement provided, and after the delivery to the Vendor of such stock trust certificates, any of said deposited stock trust certificates shall remain on deposit with J. P. Morgan & Co., the same shall be returned to the Purchaser, but if the stock trust certificates on deposit with J. P. Morgan & Co. shall not be sufficient for the purpose of such delivery, then the deficiency shall be forthwith sup- plied by the Purchaser. Fifth: The purchase price to be paid by the Purchaser to the Vendor for the said property shall be ascertained as provided in the Original Agreement, and notwithstanding the immediate transfer and delivery of the property of the Vendor, the purchase shall, so far as the adjustment of the purchase price is concerned, be considered as taking effect as 324 W. P. Hamilton, Direct Examination. of such day in September, 1902, as shall be designated by the Purchaser, with the approval of J. P. Morgan & Co., and, for the purposes of this contract and of the Original Agree- ment, the profits of the Vendor for the two years ending November 30, 1902, shall be ascertained in accordance with the provisions of the Original Agreement. The Purchaser shall cause separate accounts of the business of the Purchaser, when transferred to the purchasing company, to be kept so long as may be necessary for the purpose of ascertaining the profits thereof for the year ending November 30, 1902, and for the purpose of apportioning the profits in accordance with the Original Agreement. Sixth: The Original Agreement shall continue in force except as herein modified, and any questions arising under this Supplemental Agreement shall be determined by J. P. Morgan & Co. as sole arbitrators. In Witness Whereof the Vendor has caused this agreement to be executed in its corporate name by its proper officers and its corporate seal to be hereunto affixed and the Pur- chaser has signed his name and affixed his seal hereto the day and year first above written. Plano Manupactuking Company, By W. H. Jones, (Seal) President. Attest : 0. W. Jones, Secretary. Wm. C. Lane. (Seal) In presence of: Joseph P. Cotton, Jr. PLANO MANUFACTURINa COMPANY. Referring to the agreement between the Piano Manufac- turing Company and William C. Lane, dated July 28, 1902, and the supplemental agreement between the same parties dated Au,gust 11, 1902, the undersigned, stockholders of said Piano Manufacturing Company, in consideration of the pur- chase by said Lane as in said agreements provided, hereby jointly and severally agree with said Lane that said agree- ments shall be in all respects performed on the part of the Piano Manufacturing Company, and they hereby jointly W. p. Hamilton, Direct Examination. 325 and severally obligate themselves to the performance of said agreements, as principals and not as guarantors. The bene- fits of this agreement may, at the option of said Lane, be transferred to any corporation which may acquire from said Lane the properties purchased by him as provided in said agreements. Dated, August 11th, 1902. W. H. Jones, J. P. Pbindle 0. W. Jones Aegher Bbown W. F. Boyd W. 0. Jones S. J. Llewellyn. (Petitioner's Exhibit 64 is an original document.) (The witness handed Mr. Grosvenor another paper.) Mr. Grosvenor : The witness next produces a supplemental agreement, dated Au,gust 11, 1902, between the Deering Har- vester Company and William C. Lane, signed by Charles Deering, James Deering and Eichard F. Howe, in the pres- ence of Joseph P. Cotton. I offer that in evidence. Mr. McHugh: No objection. The document was marked Petitioner's Exhibit 65, and is as follows: PETITIONER'S EXHIBIT 65. Deering — Lane. Supplemental Agreement, made and entered into this 11th day of August, 1902, by and betweeri the Deering Harvester Company (hereinafter called the "Vendor"), party of the first part, and William C. Lane (hereinafter called the "Pur- chaser"), party of the second part. The parties hereto have entered into an agreement, dated July 28, 1902, (hereinafter called the "Original Agreement"), providing for the sale by the Vendor to the Purchaser of the property of the Vendor as therein described. The parties hereto have agreed that said property shall be conveyed and transferred by the Vendor to the Purchaser forthwith and in advance of the determination of the exact purchase price of said property, as in said Original Agreement provided. 326 W. P. Hamilton, Direct Examination. Now, in consideration of the premises, tlie parties hereto have agreed and covenanted as follows : First: The Vendor shall forthwith convey and transfer to the Purchaser all of the property described in the Original Agreement by instruments of conveyance which shall con- tain covenants of warranty and further assurance. The Vendor shall also forthwith assign and transfer to the Pur- chaser all of its accounts and hill receivable, and the same shall be subject to the provisions of the Original Agreement respecting the accounts and bills receivable to be transferred by the Vendor to the Purchaser as therein provided, hut the Vendor shall be entitled to substitute cash in place of any such accounts and bills receivable. Second: The Purchaser shall cause to be prepared, as soon as practicable, a statement of the accounts and bills re- ceivable assigned by the Vendor as herein provided, includ- ing such as may be received prior to the date in September which shall be fixed by the Purchaser with the approval of J. P. Morgan & Co. for the adjustment of the purchase price payable to the Vendor. If the aggregate of such accounts and bills receivable, at their face value and accrued interest, shall exceed the sum of sixteen million dollars ($16,000,000), then the excess shall be held for the account of the Vendor, and shall be available to be applied by the Vendor towards any other payments that may be due by the Vendor to the Purchaser, or in such other manner as the Vendor shall direct. Third : The capital stock of the purchasing company pro- vided for in said contract shall be one hundred and twenty million dollars ($120,000,000), but, prior to January 1, 1903, capital stock shall not be issued to an amount exceeding sixty-two and one-half (62|) per cent, of the aggregate amount of the money and cash assets acquired by said com- pany and of the value of the other property acquired by said company, as such value shall be ascertained and fixed by the board of directors of the company at the time of the acquisi- tion of such property. Fourth : Forthwith upon the conveyance of said property by the Vendor to the Purchaser, the Purchaser shall deliver to J. P. Morgan & Co. stock trust certificates for such an amount of the capital stock of the purchasing company as W. p. Hamilton, Direct Examination. 327 shall, in the opinion of J. P. Morgan & Co., be required to 1 provide the amount of stock trust certificates necessary for ultimate delivery to the Vendor in payment for the prop- erty, accounts and bills receivable and cash to be transferred and paid by it as herein and in the Original Agreement pro- vided. J. P. Morgan & Co. are hereby authorized to deliver to the Vendor, from time to time, such amounts of the stock trust certificates so delivered as, in their opinion, it is proper to deliver to the Vendor. If after the final ascertainment of the amount of stock trust certificates to be delivered to the Vendor, as herein and in the Original Agreement pro- vided, and after the delivery to the Vendor of such stock 2 trust certificates, any of said deposited stock trust certificates shall remain on deposit with J. P. Morgan & Co., the same shall be returned to the Purchaser, but if the stock trust cer- tificates on deposit with J. P. Morgan & Co. shall not be sufficient for the purpose of such delivery, then the deficiency shall be forthwith supplied by the Purchaser. Fifth: The purchase price to be paid by the Purchaser to the Vendor for said property shall be ascertained as pro- vided in the Original Agreement, and notwithstanding the im- mediate transfer and delivery of the property of the Ven- 3 dor, the purchase shall, so far as the adjustment of the pur- chase price is concerned, be considered as taking effect as of such day in September, 1902, as shall be designated by the Purchaser, with the approval of J. P. Morgan & Co. ; and, for the purposes of this contract and of the Original Agree- ment, the pi-ofits of the Vendor for the two years ending No- vember 30, 1902, shall be ascertained in accordance with the provisions of the Original Agreement. The Purchaser shall cause separate accounts of the business of the Vendor, when transferred to the purchasing company, to be kept so long as may be necessary for the purpose of ascertaining the profits * thereof for the year ending November 30, 1902, and for the purpose of determining and apportioning the profits in ac- cordance with the Original Agreement. Sixth: The Original Agreement shall continue in force except as herein modified, and any questions arising under this Supplemental Agreement shall be determined by J. P. Morgan & Co. as sole arbitrators. In Witness Whereof the Vendor has caused this agreement to be duly signed in the name of said firm, and the Purchaser 328 W. P. Hamilton, Direct Examination. 1 has signed his name and afiixed his seal hereto the day and year first above written. Wm. C. Lane. Deeeing Habvesteb. Company. ChaeijES Deeeing. James Deeeing. By Chaeles Deeeing Attorney in Fact. EicHAKD F. Howe. By Chaeles Deeeing, 2 Attorney in Fact. Jambs Deeeing. In presence of: Joseph P. Cotton, Je. 'Temple Bowdoin. (Petitioner's Exhibit 65 is an original document.) 4 (The witness handed Mr. Grosvenor another paper.) Mr. Grosvenor: The witness next produces supplemental agreement dated August 11, 1902, between Warder, Bush- nell & Glessner Company and William C. Lane, signed by J. J. Glessner, vice-president, and attested by G. B. Glessner, sec- retary, together with an agreement of stockholders, dated August 12, 1902, attached to the supplemental agreement. I offer that in evidence. The document was marked Petitioner's Exhibit 66, and is as follows: PETITIONER'S. EXHIBIT 66. Warder — ^Lane. Supplemental Ageeement, made and entered into this 11th day of August, 1902, by and between the Warder, Bushnell and Glessner Co. (hereinafter called the "Vendor"), party of the first part, and William C. Lane (hereinafter called the "Purchaser"), party of the second part. The parties hereto have entered into an agreement, dated July 28, 1902, (hereinafter called the "Original Agreement"), providing for the sale by the Vendor to the Purchaser of the property of the Vendor as therein described. The parties hereto have agreed that said property shall be conveyed and transferred by the Vendor to the Purchaser forthwith and W. p. Hamilton, Direct Examination, 329 in advance of the determination of tlie exact purchase price of, said property as in said Original Agreement provided. • Now, in consideration of the premises, the parties hereto have agreed and covenanted as follows: First: The Vendor shall forthwith convey and transfer to the Purchaser all of the property described in the Original Agreement by instruments of conveyance which shall contain covenants of warranty and further assurance. The Vendor shall pay to the Purchaser one million dollars ($1,000,000) in cash, which shall be in lieu of any accounts and bills re- ceivable. Second: The capital stock of the purchasing company provided for in said contract shall be one hundred and twenty million dollars ($120,000,000), but, prior to January 1, 1903, capital stock shall not be issued to an amount exceeding sixty- two and one-half (62-1) per cent, of the aggregate amount of the money and cash assets acquired by said company and of the value of the other property acquired by said company, as such value shall be ascertained and fixed by the board of directors of the company at the time of the acquisition of such property. Third: Forthwith upon the conveyance of said property by the Vendor to the Purchaser, the Purchaser shall deliver to J. P. Morgan & Co. stock trust certificates for such an amount of the capital stock of the purchasing company as shall, in the opinion of J. P. Morgan & Co. be required to provide the amount of stock trust certificates necessary for ultimate delivery to the Vendor in payment for the property and cash to be transferred and paid by it as herein and in the Original Agreement provided. J. P. Morgan & Co. are hereby authorized to deiiver to the Vendor, from time to time, such amounts of the stock trust certificates so deliv- ered as, in their opinion, it is proper to deliver to the Ven- dor. If after the final ascertainment of the amount of stock trust certificates to be delivered to the Vendor, as herein and in the Original Agreement provided, and after the delivery to the Vendor of such stock trust certificates, any of said deposited stock trust certificates shall remain on deposit with J. P. Morgan & Co., the same shall be returned to the Purchaser, but if the stock trust certificates on deposit with J. P. Morgan & Co. shall not be sufficient for the purpose of such delivery, then the deficiency shall be forthwith supplied by the Purchaser. Fourth: The purchase price to be paid by the Purchaser 330 W. P. Hamilton, Direct Examination. to the Vendor for said property shall be ascertained as pro- vided in the Original Agreement, and notwithstanding the im- mediate transfer and delivery of the property of the Vendor, the purchase shall, so far as the adjustment of the purchase price is concerned, be considered as taking effect as of such day in September, 1902, as shall be designated by the Pur- chaser, with the approval of J. P. Morgan & Co. ; and, for the purposes of this contract and of the Original Agreement, the profits of the Vendor for the two years ending November 30, 1902, shall be ascertained in accordance with the provisions of the Original Agreement. The Purchaser shall cause sep- arate accounts of the business of the Vendor, when trans- ferred to the purchasing company, to be kept so long as may be necessary for the purpose of ascertaining the profits thereof for the year ending November 30, 1902, and for the purpose of determining and apportioning the profits in accordance with the Original Agreement. Fifth : The Original Agreement shall continue in force ex- cept as herein modified, and any questions arising under this Supplemental Agreement shall be determined by J. P. Morgan & Co. as sole arbitrators. In witness whebeop the Vendor has caused this agreement to be executed in its corporate name by its proper officers and its corporate seal to be hereunto affixed, and the Purchaser has signed his name and affixed his seal hereto the day and year first above written. WaEDEE, BuSHNELIi & Glessnbe Co. By J. J. Glessner, (Seal) Vice-President. Attest : G. B. Glessnee, Secretary. Wm. C. Lane. (Seal) In presence of: John J. Daly. Waedee, Bushnell and Glessnbe Co. Eeferring to the agreement between the Warder, Bushnell and Glessner Co. and William C. Lane, dated July 28, 1902, and the supplemental agreement between the same parties dated August 11, 1902, the undersigned, stockholders of said Warder, -Bushnell and Glessner Co., in consideration of the W. p. Hamilton, Direct Examination. 331 purchase by said Lane as in said agreement provided, hereby jointly and severally agree with said Lane that said agree- ment shall be in all respects performed on the part of the' Warder, Bnshnell and Glessner Co., and they hereby jointly and severally obligate themselves to the performance of said agreements, as principals and not as guarantors. The bene- fits of this agreement may, at the option of said Lane, be transferred to any corporation which may acquire from said Lane the properties purchased by him as provided in said agreements. Dated August 12th, 1902. Name. Amount. Asa S. Bushnell 842 shares By J. J. Grlessner, Atty. in fact. J. J. Glessner 841 " G. B. Glessner 150 " E. C. Haskins 100 " (Petitioner's Exhibit 66 is an original document) (The witness handed Mr. Grosvenor another paper.) Mr. Grosvenor: The witness next produces an agreement dated March 24, 1903, between Charles Deering, James Deer- ing, Eichard F. Howe and William C. Lane. Mr. McHugh: That went in this morning. Mr. Grosvenor: That is returned to the witness. (The document was handed to the witness.) (The Avitness handed Mr. Grosvenor another paper.) Mr. Grosvenor : The witness next produces a similar agree- ment, same date, between Warder, Bushnell & Glessner Com- pany and Wm. C. Lane. This exhibit is returned to the wit- ness. (Handing the document to the witness.) (The witness handed Mr. Grosvenor another paper.) Mr. Grosvenor : The witness next produces a similar agree- ment, same date, between the Piano Manufacturing Company and William C. Lane. This is returned to the witness. (Hand- ing the document to the witness.) (The witness handed Mr. Grosvenor another p^er.) Mr. Grosvenor: The witness next produces similar agree- ment, same date, between the McCormick Harvesting Machine Company and William C. Lane, which is also returned to the witness, (Handing the document to the witness.) 2 ±'. II 332 W. P. Hamilton, Direct Examination. Q. Have you anything else? A. This is the last. (Handing another paper to Mr. Gros- venor.) Mr. Grosvenor: The witness also produces an agreement, dated August 17, 1903, between the McCormiek Harvesting Machine Company, the Deering. Harvester Company, the War- der, Bushnell & Glessner Company and the Piano Manufac- turing Company and William C. Lane and the International Harvester Company. This is offered in evidence. The document was marked Petitioner's Exhibit 67, and is as follows: PETITIONEE'S EXHIBIT 67. Agreement, made and entered into this seventeenth day of tVugust, 1903, between the McCormiek Plarvesting Machine Company, the Deering Harvester Company (a co-partnership). The Warder, Bushnell & Glessner Company and the Piano Manufacturing Company (hereinafter collectively called the Vendors" and severally called the McCormiek, Deering, Champion and Piano Companies, respectively), parties of the first part, William C. Lane (hereinafter called the "Pur- chaser"), party of the second part, and the International Har- vester Company (hereinafter called the "International Com- pany"), party of the third part. Each of the Vendors and the Purchaser have entered into three certain agreements dated respectively 28 July, 1902, 11 August, 1902 and 24 March, 1903. The Purchaser has transferred to the International Company all of the property and rights which he has received or to which he may be entitled under said contracts. The Purchaser has deposited with J. P. Morgan & Co. stock trust certificates representing Fifty- three Million Two Hundred Fifty Thousand (53,250,000) Dol- lars, par value, of the capital stock of the International Com- pany, for the purpose of providing the purchase price payable to the respective Vendors under said contracts respectively, for the property (other than cash and accounts and bills re- ceivable) transferred thereunder. The Purchaser has also de- posited with J. P. Morgan & Co. stock trust certificates repre- senting Forty Million (40,000,000) Dollars, par value, of the stock of the International Company for delivery to the Mc- Cormiek, Deering and Piano Companies respectively, in the following amounts, as payments or collections are made upon the accounts and bills receivable of said three Vendors hereto- W. p. Hamilton, Direct Eoeamination. 333 fore assigned by them respectively to the Purchaser, and by the Purchaser to the Company : McCormiek Company, Twenty Million (20,000,000) Dollars, par value. Deering Company, Sixteen Million (16,000,000) Dollars, par value. Piano Company, Four Million (4,000,000) Dollars, par value. The appraisers provided for in said contracts have been duly appointed but have made no appraisals. The Vendors have, however, respectively agreed that the amounts to be re- ceived by them for their respective properties should be de- termined by George W. Perkins and the amounts hereinafter mentioned have been determined by said Perkins. In Consideration Of The Premises and other valuable con- siderations, the parties hereto have covenanted and agreed to and with one another as follows : I. The appraisal of the property of the respective Vendors in the specific manner provided for in said contracts is hereby waived by the respective Vendors and by the Purchaser, who hereby agree with one another that said Vendors shall receive, and shall respectively accept, in full payment for the prop- erty (other than cash and accounts and bills receivable) trans- ferred to the Purchaser and by the Purchaser to the Interna- tional Company, pursuant to said contract, or to which the International Company is entitled under said contracts and its contracts with the Purchaser, stock trust certificates for the following amounts respectively of the stock of the Interna- tional Company, such amounts having been ascertained and determined as hereinbefore recited : McCormiek Company, Twenty-six Million, Three Hundred Twenty-one Thousand, Six Hundred Fifty-six and eighty-six hundredths (26,321,656.86) Dollars, par value. Deering Company, Twenty-one Million, Three Hundred Sixty-two Thousand Five Hundred Fifty-four and sixty-four hundredths (21,362,554.64) Dollars, par value. Champion Company Three Million, Three Hundred Seventy- two Thousand, One Hundred Eighty-five and ninety-one hun- dredths (3,372,185.91) Dollars, par value. Piano Company, Two Million, One Hundred Ninety-three Thousand, Six Hundred Three and nine hundredths (2,193,- 603.09) Dollars, par value. Said respective amounts shall in each case be inclusive of any stock trust certificates already delivered to any of the 334 W. P. Hamilton, Direct Examination. Vendors on account of the purchase price of property other than cash and accounts and bills receivable. Said stock shall be common stock of the International Company of a total is- sue of One Hundred and Twenty Million (120,000,000) Dollars, par value, and shall carry all rights to dividends since the or- ganization of the International Company, whether payable in cash or in stock. In addition to the stock trust certificates aforesaid, pursuant to the provisions of the contracts aforesaid and to the award of said George W. Perkins, it is provided as follows : The International Company agrees to pay on account of in- debtedness of the McCormick Company owed by the McCor- miek Company 30 September, 1902, for property (other than cash and accounts and bills receivable) transferred by the Mc- Cormick Company to the Purchaser and by the Purchaser to the International Company, amounts with interest thereon as follows : Eleven Thousand Five Huindred (11,500) Dollars with inter- est at the rate of five (5) per cent, per annum from 21 May, 1902. Four Thousand (4,000) Dollars with interest at the rate of five (5) per cent, per annum from 5 June, 1902. Sixteen Thousand Six Hundred Sixty-six and sixty-six hun- dredths (16,666.66) Dollars, without interest. The International Company further agrees that so far as any portions of said indebtedness, principal or interest, have at any time been paid by the McCormiok Company it (the In- ternational Company) will repay to the McCormick Company in cash on demand all amounts so paid by the McCormiok Com- pany, with interest thereon at the rate of five (5) per cent, per annum from the respective dates of payment thereof by the McCormick Company. The McCormiok Company represents and guarantees that no other encumbrances (except current taxes and assessments) than the indebtedness aforesaid pro- vided to be assumed and paid by the International Company existed 30 September, 1902, against the aforesaid property of the McCormick Company ; and represents and guarantees that the indebtedness aforesaid was bona fide indebtedness of the McCormick Company 30 September, 1902. The International Company further agrees to pay on ac- count of indebtedness of the Deering Company owed by the Deering Company 30 September, 1902, for property (other than cash and accounts and bills receivable) transferred by the W. p. Hamilton, Direct Examination. 335 Deering Company to the Purchaser and 'by the Purchaser to the International Company, amounts with interest thereon as follows: Three Hundred and Fifty Thousand (350,000) Dollars with interest at the rate of five (5) per cent, per annum from 19 April, 1902. One hundred and Fifty Thousand (150,000) Dollars with in- terest at the rate of five (5) per cent, per annum from 21 April, 1902. Five Thousand Three Hundred Forty-six and thirteen hun- dredths (5,346.13) Dollars with interest at the rate of three and one-half (3-1/2) per cent, per annum from 22 April, 1902. Eleven Thousand Five Hundred Twepty-seven and forty-five hundredths (11,527.45) Dollars with interest at the rate of three and one-half (3-1/2) per cent, per annum from 30 Octo- ber, 1902. Pour Hundred Four Thousand Two Hundred Twelve and sixty-three hundredths (404,212.63) Dollars, without inter- est; The International Company further agrees that so far as any portions of said indebtedness, principal or interest, have at any time been paid by the Deering Company it (the Inter- national Company) will repay to the Deering Company in cash on demand all amounts so paid by the Deering Company, with interest thereon at the rate of five (5) per cent, per an- num from the respective dates of payment thereof by the Deering Company. The Deering Company represents and guarantees that no other encumbrances (except current taxes and assessments) than the indebtedness aforesaid provided to be assumed and paid by the International Company existed 30 September, 1902, against the aforesaid property of the Deer- ing Company ; and represents and guarantees that the indebted- ness aforesaid was bona fide indebtedness of the Deering Com- pany 30 September, 1902. The Champion Company and the Piano Company severally represent and guarantee that, 30 September, 1902, no encum- brances whatever (except current taxes and assessments) rested upon any property by them respectively transferred to William C. Lane as aforesaid. Each Vendor shall pay all indebtedness (owed by it either on general account or on account of any particular property sold by it to the Purchaser) except so far as is above in this contract otherwise provided. 336 W. P. Hamilton, Direct Examination. The International Company further agrees to pay to each Vendor, in cash, the amount of the inventory of that Vendor's property in Australia transferred to the Purchaser and by the Purchaser to the International Company^ less any amounts thereof included in figures heretofore prepared by or under the supervision of Jones, Caesar & Company; each such in- ventory, however, first to be certified by Jones, Caesar & Com- pany and approved by the Finance Committee o-f the Interna- tional Company. The International Company further agrees to pay on de- mand to the Piano Company One Hundred Thousand (100,- 000) Dollars in cash. II. J. P. Morgan & Co. shall forthwith deliver to the re- spective Vendors ninety (90) per cent, (including any stock trust certificates already delivered as aforesaid) of the stock trust certificates to which the Vendors are severally entitled as in the next preceding Article hereof provided. The balance of said stock trust certificates for the aggregate of $53,250,- 000 shall remain on deposit with J. P. Morgan & Co., pending the delivery to the International Company by the respective Vendors of confirmatory deeds and certificates of title to their respective parcels of real estate, deliveries of the stock trust certificates reserved as aforesaid to be made to the respective Vendors upon the order of the International Company or upon the joint order of either Cyrus H. McCormick, Harold F. McCormick or Stanley McCormick and either Charles Deering, James Deering or Richard F. Howe, one McCormick and one Deering (or Howe) of those here named being hereby duly au- thorized to determine jointly in their discretion when further deliveries of stock trust certificates reserved as aforesaid shall be made ; in any event, however, each Vendor shall, upon de- livery to the International Company of all confirmatory deeds and certificates of title above referred to, be entitled to im- mediate delivery of all of the stock trust certificates to which it is entitled under the provisions of this contract. III. The International Company is hereby substituted as to future transactions in the place of the Purchaser as the party of the second part under said contracts, and hereby agrees with the respective Vendors to carry out and perform the provisions of said contracts, as modified hereby, in the place and stead of the Purchaser; but (notwithstanding the provisions of this Article III) the Purchaser shall procure and deliver to the International Company, without delay, W. p. Hamilton, Direct Examination. 337 proper confirmatory deeds conveying to said Company or to its order tlie property transferred to Mm in August 1902 by the Vendors and by the Milwaukee Harvester Company, a Wis- consin corporation. IV. The Vendors severally hereby accept the International Company as the party of the second part under said contracts in the place and stead of the Purchaser, and in consideration of such substitution hereby respectively release the Pur- chaser from any further liability under said contracts or any of them, or under any and all arrangements connected there- with or resulting therefrom including any unpaid expenses incurred by the Purchaser in carrying into effect the provi- sions of said contracts or otherwise incurred by the Purchaser in connection with the organization of the International Com- pany; subject, however, to the provisions of the last clause of Article III above. V. The International Company hereby accepts the arrange- ments now in force respecting the Sixty Million (60,000,000) Dollars of working capital which the Purchaser has agreed to furnish, as a full performance of the Purchaser's agree- ments in respect of working capital, and the Purchaser here- by transfers to the International Company all his claims against the McCormick, Deering and Piano Companies respect- ing the accounts and bills receivable which they have severally assigned to the Purchaser and which the Purchaser has as- signed to the International Company, and the McCormick, Deering and Piano Companies severally agree with the In- ternational Company that the International Company is here- by (Substituted in place of the Purchaser in respect of said ar- rangements, the Purchaser being hereby released in respect thereof; and the International Company hereby agrees to carry out each and all of said arrangements. VI. The International Company hereby releases the Pur- ' chaser from any and all liability of any kind whatsoever in respect of any and all contracts between the Purchaser and the International Company and any and all matters and things connected therewith or arising therefrom; subject, however, to the provisions of the last clause of Article III. In witness whekeop the McCormick Harvesting Machine Company, The Warder, Bushnell & Glessner Company, the Piano Manufacturing Company and the International Har- vester Company have caused this instrument to be executed and their respective corporate seals to be hereunto affixed by their respective proper corporate officers, and the Deering 338 W. P. liamillon, Direct Examination. 1 Harvester Company and the members thereof and William ■C. Lane have hereunto set their hands and seals, all as of the day and year first ahove written. Executed in six (6) original joarts. McCoEMicK Harvesting Machine Company, By Cyetjs H. McCobmick, (seal) Its President. Attest, the seal of said Company: Haeold F. McCoemick, Its Secretary. Ueeeing Harvestee Company, 2 By Charles Debring, Charles Deering. (seal) James Deeeing. (seal) Richard F. Howe. (seal) The Wabdee, Bushnell & Gtlessner Company, By J. J. Glbssner, (seal) Its Vice-President. Attest, the seal of said Company : G. B. Glessnee, Its Secretary. 3 Plano Manueactxjeing Company, By W. H. Jones, (seal) Its President. Attest, the seal of said Company: 0. W. Jones, Its Secretary. Wm. C. Lane. (seal) Inteenational Haevesteb Company, By Cyeus H. McCoemick, (seal) Its President. Attest, the seal of said Company : 4- ElCHABD F. HlowE, Its Secretary. (Petitioner's Exhibit G7 is an original document.) Q. No. 6 calls for a letter dated June 25, 1902, from Cyrus H. McCormick to George W. Perkins, J. P. Morgan & Com- pany, introducing one P. D. Middlekauff. Have you that let- ter? A. No. Q. You have not got that? A. No. A. M. By ait, Direct Examination. 339 Q. These contracts wMch you have produced, of July 28, 1902, provide for certain appraisals of these properties, and certain reports to be prepared by accountants. Have you in your offices any of those appraisals or reports of account- ants? A. I really could not say. Q. Will you please have inquiries made in your office to see if such papers have been preserved? They all relate to the formation of this International Harvester Company and concern the appraisals made of the several properties by three appraisers and also the reports made by three account- ants "who were appointed to ascertain what were the profits of the companies transferred. If you will have search made I will be very much obliged to you. A. That will be given to me? Q. That will be given to you, so that you will understand what is required. A. Thank you. Mr. Grosvenor. That is all for this witness. Mr. McHugh: That is all, Mr. Hamilton. No questions. Mr. Grosvenor : Counsel for the Grovernment will endeaver to return the exhibits produced by Mr. Hamilton as soon as they have been copied into the record. ABRAM M. HYATT being duly sworn as a mtness on be- half of the petitioner, testified as follows : Direct Examination hy Mr. Grosvenor. Q. Mr. Hyatt, what is your business, please? A. At the present time I am vice-president of the Lincoln Trust Company. 4 Q. And where are your offices? A. 208 Fifth avenue. Q. In 1902, in the summer of that year, what was your oc- cupation? A. I was vice-president of the New York Security & Trust Company. Q. You were one of the incorporators of the International Harvester Company? A. I was, sir. Q. Of New Jersey? 340 A. M. Hyatt, Direct Examination. A. I was, sir. Q. In August of that year? A. I do not remember the date; about that time, in the summer. Q. How did you happen to become an incorporator of that company? A. As I remember it, at the request of Mr. George W. Per- kins, who asked me if I desired to subscribe to stock and be one of the incorporators of the company. Q. Do you recall at what time that was? A. I do not, no. Q. Was it shortly prior to the formation of the company? A. Yes, it was a short time before that. Q. A day or two? A. I would not want to say that ; it may have been a week or ten days or two weeks ; I do not remember. Q. Did you know these other gentlemen who were also in- corporators? A. I have really forgotten who they all were. I had known Mr. Miller for a good many years, quite a long time, prior to that time. Q. Mr. E. M. F. Miller— who was he? A. He was a broker; had offices, as I remember, about 35 Wall street. Q. Had you ever been engaged in the harvesting machine business? A. I never had. Q. Had Mr. Miller, so far as you know? A. I am not familiar with Mr. Miller's business other than a broker. Q. Mr. E. M. Cravath was another incorporator, was he not? A. I believe so. Q. What was his business ? A. That I do not know. I presume in the law firm, al- though I do not know. Q. Had you met him prior to that time ? A. I do not remember whether I had or not. Q. Mr. Dennis, another incorporator; did you know who he was? A. I do not remember that; I do not think so. Q. Mr. Hebard: who was Mr. Hebard? A. I do not know. Q. Had you known him before? A. M. Hyatt, Direct Examination. 341 A. I do not recall that I had ever met him before. Q. Robert S. Green; who was he, do you know? A. I do not. Q. Had you ever met him before ? A. Not that I recall now. Q. Do you recall the circumstances under which the com- pany was incorporated? A. It is rather hazy at this late date. Q. You were elected a director at the first meeting of the incorporators ? A. I believe I was, yes. Q. You had no expectation of remaining a director any length of time, had you? A. No. Q. In fact, you resigned the next day? A. Oh, I was vice-president for months afterward, as I re- member. Q. I am not referring to your position as an officer of the company, but as director. Did you resign as a director the next day? A. That I do not remember, as to whether it was the next day or days afterward. Q. What were your duties as vice-president? A. Signing papers, checks. Q. That is, at the New York Trust Company? A. The International Harvester Company, as I remember, had an office next door, and occasionally, as I remember, I stepped in there or otherwise they sent papers in to me often to be signed. Q. In other words, your duties as vice-president were lim- ited; they were simplv to facilitate the issuing of these papers as the company was organized? A. I presume so. That is virtually the post of any vice- president — ^to facilitate business. Q. And you facilitated business for a few months ? A. For a few months, yes. Q. Did any of these other incorporators remain connected with the Harvester Company, as far as you know, during the few months that you remained with it? A. I do not remember ten years after. No, I do not re- member that. Q. Do you recall having any business transactions with them? A. I do not recall the transactions with them. 342 A. Hi. Hyatt, Direct Examination. Q. Did you become a stockholder in the Harvester Com- pany? A. I did. Q. And did you remain such? A. For some time, yes. - Q. How long? A. I do not think I sold my stock for — oh, I would not want to guess ; months afterward. Q. What was the first meeting of the International Har- vester Company that you attended? I take it, it was the one over in Hoboken on August 12th, was it not? A. As I remember, that was the first meeting. Q. Do you recall the meeting the day following, at 40 Wall Street? A. Was that the meeting at which the stock was increased, and virtually the permanent directors were elected? Q. 1 think it was probably that. A. I remember attending such a meeting; if that is the meeting you refer to. Q. That is shortly after the incorporation? A. Yes. Q. At which permanent directors were elected? A. Yes. Q. Your understanding was that the directors first elected were simply to be temporary directors; is that right? A. That is right. Q. That was the understanding of all of you? A. I do not want to answer for the others; it was my understanding. Q. Where did you get that understanding, as far as your own position as director was concerned? A. That I do not remember. Q. What did Mr. Perkins say to you when he spoke to you about forming the Harvester Company ? A. Now, you are asking me to stretch my imagination ten years after. I do not remember that. We were all busy men. Q. The formation of a 120 million dollar corporation made no impression on your mind? A. I was the first president of the Northern Securities Company, which was about as large. Q. And was your position as temporary in that connec- tion? A. No, I do not know as to that ; I do not remember. A. M. Hyatt, Direct Examination. 343 Q. You mean you were one of the organizers of the North- ern Securities Company? A. I was. Q. How long did you remain a director 1 A. I do not remember. Q. "Were you with the New York Trust Company at the same time? A. I was. Q. Do you remember the meeting of the directors, the day after you formed the company, at which Mr. Lane's proposi- tion was submitted to the board of directors? A. I remember that there was such a proposition sub- mitted. I do not remember at what meeting or when that was. Q. Who submitted it? A. That I do not remember. Q. Do you recall whether it was read by a lawyer present or whether Mr. Lane was present in person? A. Mr. Lane, I remember, was present at times; I do not remember whether at that meeting or not, or whether it came through Mr. Cravath's firm. That is, that proposition to which you refer. Q. Was one of Mr. Cravath's firm present when the com- pany was incorporated in Hoboken? A. I believe so. Q. Do you recall the gentleman? A. I do not, no. Q. Had you any knowledge or familiarity with the har- vesting business before you formed your company? A. Only in a general way. Q. What do you mean by "in a general way"? A. Well, one running the line of business that I do cer- tainly gets a pretty fair insight into a good many lines of business. Q. Then, other than the general insight which you have into all businesses, you had no special connection with it? A. I was never active in the harvesting business, no. Q^ You subscribed as an incorporator to how much stock of the coftipany? A. 100 shares, for which I paid 10 thousand dollars. Q. Have you stated who asked you to take that 100 shares? A. I did. Mr. Perkins. Q. Did you arrange with Mr. Perkins or with anyone for a loan — 344 A. M. Eyatt, Direct Examination. A. I never did. Q. — for those 100 shares? A. I never did. The stock was never hypothecated. Q. The minutes show, Mr. Hyatt, that you resigned as a director on August 13, 1902. That is the day after the com- pany was organized. Do you recall at whose suggestion you resigned at that meeting? A. I do not ; no, sir. Q. You recall a number of other directors, who had been elected the day previous, resigning at the same time with you? A. Yes. Q. And who was it made the suggestion that they resign? A. I do not remember that. Q. Was there a lawyer present during the proceedings? A. I believe so; that is, it is my recollection that there was. Q. And the proceedings were down in Mr. Cravath's office, at 40 Wall Street, were they not ? A. I think so. I think it was in Mr. Cravath's office. It was in that building. Q. When the proper suggestion or hint was made, you resigned and another man was elected in your place as di- rector; is that right? A. The minutes would show when my resignation was handed in and accepted. Q. Yes, but the minutes do not show how you resigned. Have you any recollection on that point? A. No, I have not, only in a general way, that I did resign. Q. As to what caused you to resign? A. No, I do not. Q. In other words, in forming this company and in these proceedings which transpired the first day or two, you were simply carrying out such instructions as you received from the lawyers ; is that right ? A. In a general way it is right, yes. I do not remember whether the suggestion came from the lawyers or not. Q. Do you recall who was present at that meeting on the next day? A. Oh, there was quite a group of men there — Mr. Deering, the McCormioks ; quite a number ; I do not remember. Q. They were all present at that directors' meeting on the 13th, at which the earlier directors resigned, were they? A. They stepped in as we stepped out, as I remember it. E. M. F. Miller, Direct Examination. 345 Mr. Grosvenor: That is all, unless there is some cross- 1 examination. Mr. McHugh : No questions. A recess was here taken until 2 :30 P. M. EDWARD M. F. MILLEK, being duly sworn as a witness on behalf of the Petitioner, testified as follows : Direct Examination hy Mr. Grosvenor. 2 Q. Mr. Miller, what is your business? A. Stock broker. Q. And located where? A. 40 Wall Street. Q. What is the name of the firm? A. No firm ; I am by myself. Q. Doing business under your own name? A. Yes, sir. Q. What was your business in the year 1902? A. The same. Q. Doing business under the same name? A. Yes, sir. Q. At the same place ? A. Yes, sir. Q. You were the first president of the International Har- vester Company, were you not? A. I think I was. Q. How long were you president? A. I really do not remember how long I was president, what period. Q. Something less than twenty-four hours? . A. Oh, I think not. Q. You were one of the incorporators of the Harvester Company? A. I was. Q. Who suggested to you that you become one of the in- corporators ? A. I do not remember who made the suggestion about my name. Q. Have you any recollection of the circumstances under which you became one of the incorporators ? A. i was invited to become one, but by whom I do not recall. 346 E. M. F. Miller, Direct Examination. Q. A¥hen were you invited? A. You mean how long? Q. I say, when were you invited? A. Sometime in 1902 ; I do not rememher the exact date. Q. Well, do you recall going over to Hohoken — A. I do. ' : Q. — and organizing it? A. I do. Q. And was that shortly after you received the invitation to which you have referred? A. I could not answer that at all definitely, because I do not know or do not remember how long the period was before I went over there that I was asked. Q. Had you been at all interested in the formiation of the Harvester consolidation before this invitation was extended to you? A. No, sir. Q. You were not interested in the harvester business ? A. Not at all. Q. You had no special information in regard to it? A. No, sir. Q. You were one of the directors elected at that first meet- ing in Hoboken? A. I was one of the directors elected at either the first or second meeting; I do not remember which it was. Q. You understood at the time you were elected a director that it was only a temporary arrangement, did you? A. I learned that afterwards. Q. When did you learn that? A. Some days after the company was first formed. Q. How did you learn it ? A. I do not remember how I learned it. Q. Well, someone asked you to resign, to yield your place to another person? A. I know that I resigned, but I do not remember who asked me to resign. Q. Do you recall being present at a meeting of a number of persons, manufactxirers and others, on August 13? A. I cannot swear to the date ; I remember being present at such a meeting. Q. At such a meeting? A. Yes. Q. At which the several incorporators who had been elected directors like yourself, resigned? E. M. F. Miller, Direct Examination. 347 A. Yes, sir. Q. And were succeeded by others? A. Yes, sir. Q. And it was at that meeting you learned that you were to be a director only temporarily? A. I presume so; yes, sir. Q. And at the same meeting you resigned as president, did you not? A. Yes, sir. Q. And another person was elected president? A. I think so ; yes, sir. Q. Do you recall any of the gentlemen who were present at that meeting on August 13th? A. I do not recall all of them. I knew one or two of them by sight. I think Mr. Perkins was there, if I remember cor- rectly. I was told that the McCormicks were represented. I think Judge Gary was there. Q. You did not know the harvester manufacturers ? A. No, sir. Q. You did not have any negotiations with them which resulted in the formation of the Harvester Company? A. None at all. Q. Did you remain a stockholder for any length of time ? A. I do not know how long I was a stockholder; not for any considerable period. Q. You subscribed for one hundred shares? A. I did. Q. Did you assign those over shortly after? A. I did not. You mean did I buy them? Q. No ; did you assign them over? A. No, I do not think I did. No. Q. Do you recall who suggested to you that you resign from your position as director at that meeting? A. No. I answered that a moment ago, I think; I do not recall who it was. Q. Or who suggested that you resign as the president of the company? A. No. Q. In other words, you were acting throughout as a mat- ter of convenience to the person or persons who had asked you to become an incorporator? Is that it? A. I think that is it. Q. Without any intention yourself, or any expectation, of being permanently connected with the company? 348 , J. P. Cotton, Jr., Direct Examination. A. I did not expect to be permanently connected with it, no. Q. Either as president or director? A. No, sir, Mr. Grosvenor: That is all. Mr. McHugh: No questions. J. P. COTTON, JR., being duly sworn as a witness on behalf of the petitioner, testified as follows: Direct Examination by Mr. Grosvenor. Q. Mr. Cotton, what is your business? A. I am a lawyer. Q. And located where? A. In the City of New York. Q. Were you a lawyer in the year 1902? A. Yes, sir. Q. What is your present firm? A. Spooner & Cotton, 14 Wall Street. Q. You have been subpoenaed in this case? A. Yes, sir. Q. In August, 1902, where were you practicing law? A. I was then a law clerk for the firm of Guthrie, Cravath & Henderson. Q. In August, 1902? A. Yes, sir. Q. Shortly after that you became a member of that firm? A. Some time after that. Q. Did you have any knowledge of or any part in the incor- poration of the International Harvester Company of New Jersey? A. I worked on the papers and helped in that work. I had then been a member of the Bar only about two years. That was not very important. Q. In other words, you attended to matters of detail in connection with the preparation of the papers ; is that right? A. That is precisely right. Q. You attended the incorporators' meeting? A. Yes, sir. Q. On August 12, 1902? A. Yes, sir. Q. Did you meet, in connection with these negotiations, any of the manufacturers of harvesting machines? J. p. Cotton, Jr., Direct Examinoition. 349 A. I saw various men who later became the incorporators — later became the directors of the International Harvester Company. Most of those men I saw at that time, if not all of them. Q. That is, on the day following the incorporation? A. I am unable to fix the date. In that period I saw the men who later became directors, who later became incorpora- tors. Q. Do you recall the earlier contracts, of July 28th? A. I remember seeing such contracts. Q. Did you have any part in connection with the drawing up of those papers? A. Som« immaterial part. I probably read the proof of them, and may have drafted them. Q. That is, before July 28th? A. Yes; shortly before. Q. Did you see any of the manufacturers in regard to any of those contracts prior to July 28th? A. I should have said not. Ten years ago. I am not quite clear. But I think not. Q. Did you know Mr. Lane 1 A. Yes, sir. Q. Did you help prepare any papers for the transfer of these several properties to Lane? A. Yes, sir. Q. And the papers relating to the transfer from Lane, sub- sequently, to the International Harvester Company? A. Yes, sir. Q. What was the purpose (if any) of using Mr. Lane in {he transaction, if you are able to state? A^ That was a question that did not come before me at all. Q. That was a matter which was determined by the senior counsel in the case? A. It was not determined by me at all. Q. Do you know by whom it was determined? A. No ; I think I would not 'be sure whom it was determined by. Q. Who were the counsel engaged in the case ? A. The firm for which I was working were the counsel who were engaged in the matter then. At later times there were other counsel in the matter. Q. Now, you state you were present at the first meeting on August 12th. You acted as inspector of elections, did you not? 350 J. P. Cotton, Jr., Direct Examination. A. I usually did; I suppose I did at that meeting. Q. Do you recall the meeting at your offices, the day fol- lowing, at which were present a large number of these manu- facturers of harvesting implements? A. I do not know just what you mean by "these manufac- turers," but I recall a meeting at the office. Q. Do you recall a meeting on the following day, in the morning, at your offices at 40 Wall Street, at which a number of manufacturers of harvesting implements were present? A. I recall a meeting on that day, yes, sir. Q. State to the best of your recollection who were there. A. I should think my recollection would be much less good than the record of that. There were gentlemen who later became directors of the Harvester Company. I would not be sure of any one man being there. I should suppose the McCor- micks and the Deerings — various people. Q. Now, on a previous day, in adopting the by-laws of the company, the number of directors was fixed at sis. Do you recall any such provision? A. Yes, sir. Q. And the day following — ^that is, at this morning confer- ence — the by-laws were changed so as to provide for eighteen- directors ? A. Yes, sir. Q. When was it determined to make that change, from six to eighteen? A. I do not know. I assume sometime between the previ- ous day and that day. Q. As a matter of fact, the arrangement for six directors was only temporary, was it not? A. It only lasted a day, sir, that I remember. Q. I say it was adopted with the purpose only of being a temporary arrangement, was it not? A. I am not familiar with the purposes ; it was adopted and only lasted a day, that is very true. I suppose they wanted to change it. Q. Did you prepare the by-laws? A. I think I did. Q. When did you prepare for the change? A. I think I made the cliange that day. I do not know when I prepared for it. Q. Beg pardon. A. I do not know when I prepared for it, but I think I made the change between those times. J. p. Cotton, Jr., Direct Examination. 351 Q. You had been worldng on these papers for some time? A. I had. Q. Did you have anything to do with the change of the Milwaukee Harvester Company into the International Har- vester Company of America? A. I probably had the same sort of connection. Q. That is, you followed out the instructions of the other counsel, the senior counsel ? A. I did the detail work that had to be done by a law clerk. Q. Now, the minutes of the directors of August 14, 1902, provided that the subject matter of organizing or forming local corporations or auxiliary corporations, or other means of doing business locally in different states, be referred to the president and the general counsel with power. Did you have anything to "do with the drafting of that resolution? Do you recall? A. I do not recall. Q. Was it under that resolution that the International Har- vester Company of America was subsequently adopted as the selling agency? A. I had no recollection of that resolution until you read it. I do not know. Q. Was anything said to you by anyone, that you recall, as to the purpose of using Lane in this transaction? A. I do not recall anything that anybody said to me about the purpose of using Lane in this transaction. Q. Was anything said about avoiding the appearance of any combination by the adoption of the transfer through Lane? A. I do not believe anybody would have said anything like that to me. I do not recall it. Q. I said, was anything, that you recall, said — A. I said I do not recall anything said to me by anybody. Q. Now this contract of July 28th — which was before the Harvester Company was formed — states : "Whereas the pur- chaser desires to acquire said properties and intends to trans- fer the same to a corporation now existing or hereafter to be organized under the laws of the State of Illinois or other state." The corporation was organized under the laws of what state? A. New Jersey. Q. Are you able to state the reason for organizing under New Jersey laws and not under the laws of Illinois ? A. You mean the reason that governed that? 352 J. P. Cotton, Jr., Direct Examination. Q. Yes. A. No. _ _ _ Q. Was any consideration paid to the number of cases in the State of Illinois (with which you are no doubt familiar) relating to combinations of competing manufacturers? A. Not by me. I did not decide that question. Q. That question was not decided? A. Not By me. I never heard of that question coming up — of any question of Illinois. That is what you are asking about? Q. Yes. Or no question as to the possible effect of those Illinois cases upon such a consolidation in Illinois? A. I do not recall any matter of that kind being assigned to me, or that I did anything of that kind or had anything to do with the consideration of it. Q. The state of organization was also a matter decided by others than yourself; is that right? A. Yes. There was some question in regard to New York and New Jersey, something like that, that I worked up. Q. You do not know, then, why the place of organization was changed from Illinois (as contemplated in this contract) to the State of New Jersey? A. I do not know that it was changed or why it was changed, if it was changed. Q. Have you attended any meetings of the stockholders of the International Harvester Company? A. Yes, sir. Q. Holding the proxy of a number of the stockholders? A. I recall doing that a couple of times. Q. Do you recall attending a meeting in April, 1904? A. I recall a meeting in the spring of 1904. Q. Will you state who was present at that meeting of stodk- holders ? A. To the best of my knowledge and belief I was present, some other law clerk, some clerks from the New Jersey Trust Company, and probably some reporters. Q. You held the proxy for how many shares? Do you re- call? A. I held the proxy for most of the shares of the company, for a number of gentlemen who did not want to go there them- selves. Q. That is, the voting trustees? A. Yes, sir. If you would show me the record I could tell you just how many I held. All but a few shares. J. p. Cotton, Jr., Direct Examination. 353 (The record was handed to the witness.) Q. State on the record. A. I held the proxies of all the stock held by the voting trustees, and that was all but about ten or twelve shares of the company — 'all but eighteen, shares. Q. And this other gentleman present, as shown in the min^ utes, Mr. George H. Olney, who was he? A. He was a clerk. I appear to have been made the chair- man of the meeting. Q. And he (Mr. Olney) was from what law office? A. He was from the same law office. Q. Then you two individuals, at that meeting, held prox- ies for all the shares of stock in the International Harvester Company, aggregating 1,999,983? A. I held those myself. Q. 1,999,983 shares? A. Yes. Q. Leaving 17 shares not represented? A. It seems so. And I voted them in accordance with the instructions of persons holding about 99 per cent, of the stock, or over 99 per cent, of the stock. I seem to have done that. Q. Now, at that meeting you elected through your proxies the directors for the ensuing year? A. Yes, sir. Q. Whose instructions did you follow in electing the di- rectors for that year? A. The stockholders whose proxies I held. Q. That is, through the voting trustees? A. They were the stockholders; yes, sir. Q. You stated that you attended other meetings of the stockholders. A. I think I attended another one, another year. I cer- tainly attended some other ones. Q. And were the other stockholders' meetings which you attended conducted in the same way? By that I mean you appeared — A. There was one other stockholders ' meeting in which we represented all the stock in the same way. We did what the stockholders desired us to do. Q. And you elected such directors as you had been in- structed to elect by the three voting trustees? A. There surely wasn't anything else for us to do. Q. And you say that is what you did? 354 E. M. Cravath, Direct Examination. A. And I say that is the only thing we could have done. Q. Yes, of course. Do you know whether Mr. Lane 's prop- osition to the International Harvester Company was pre- pared at your office? It was, wasn't it? A. I think so. He left all of those details to us. Q. Were you acting as counsel for Mr. Lane or for J. P. Morgan & Company? A. The firm I was working for were counsel for Mr. Lane and J. P. Morgan & Company, and they later became coun- sel of the company, on its organization. Q. And in these transactions you acted as counsel for all three ; did you not 1 A. We acted as counsel for the Harvester Company after its organization, I should have said, yes. Yes, I suppose we continued our professional relations with the others. Q. I mean, in the forming of this Harvester Company, in these matters to which you have testified, your firm was act- ing as counsel for J. P. Morgan & Company and the incorpo- rators and Mr. Lane? A. I never knew they were acting as counsel for the incor- porators,— not to my knowledge. Q. Were you present at the meeting at which the six orig- inal directors resigned and the others were elected? A. I think so. I was present at all those meetings, I think. Q. And were those resignations and the subsequent elec- tions in accordance with the plan which had been adopted for conducting the meeting? A. Yes, I think so. There were no surprises, if that is what you mean. Mr. Grosvenor : That is all, Mr. Cotton. Mr. McHugh: No questions. EEASTUS M. CRAVATH, being duly sworn as a witness on behalf of the petitioner, testified as follows: Direct Examination by Mr. Grosvenor. Q. Mr. Cravath, what is your business? A. Banker. Q. Located where? A. 71 Broadway. E. M. Cravatli, Direct Examination. 355 Q. In what name are you doing business? A. 'Chi;sliolm & Chapman. Q. What was your business in August, 1902? A. I think I was South American Agent of the Trinidad Asphalt Company. Q. Doing business where? A. Principally in Venezuela. Q. Where was your New York office? A. 11 Broadway. Q. Had you ever had any fanailiarity or interest in the har- vesting business? .A. Nothing except as a consumer. Q. As a consumer. You are a farmer as well as a banker? A. Yes. I was a farmer before I was a banker. Q. You were one of the incorporators of the Harvester Company? A. I was. Q. And at whose suggestion? A. Some member of the firm of Guthrie, Cravath & Hen- derson, probably Mr. Cravath. Q. And you were one of the original directors? A. I think so. Q. And remained such a few hours? A. A few days, I think. Q. The company was incorporated August 12th, 1902, was it not? A. Yes, I presume it was. Q. And you resigned August 13th. In any event you had no expectation of being permanently a director~or officer of the company at the time when you became an incorporator? A. I won't admit that. I did. Q. You had hopes? A. I had hopes, Q. When did you find that your hopes were not to be real- ized? A. I do not remember the date. I think it was after my last position was gone. Q. Do you recall the meeting on Augus^t 13th, at the law- yer's office at 40 Wall street, in the morning, at which a large number were present? A. I recall a meeting about that date. Q. And do you recall resigning as a director after that? A. Yes. Q, Who suggested that you resign? 356 E. M. Cravaih, Direct Exammation. 2 A. I do not remember. I presume Mr. Cravath. Q. Do yoi^. recall being present at any stockholders ' meet- ings of the Harvester Company? A. Yes. Q. In the year 1902? A. Yes. Q. State what individuals were present at that meeting, so far as you recall them, other than yourself. A. I would rather trust to the records than to mj own memory. I think there was one stockholders' meeting at which there were only two of us. 2 Q. Only two of you? A. I think so. Q. And you held the shares of stock, or proxies, for three voting trustees? A. No, I think I held the proxies for the stockholders at that time. Q. Who were they? A. It is spread on the record there ; principally the incor- porators, I think. Q. And from whom did you get your instruction as to 3 what you were to do at the stockholders' meetings? I A. I do not remember whether I got them from the stock- holders or from their counsel. Q. I show you the minutes of the stockholders' meeting August 18, 1902. (Handing record to witness.) Eefreshing your recollection from the record, state how many shares were held at that meeting. A. I had more than I thought. Q. Let us add them up and get them in the record. Mr. McHugh: They are in the record, are they not? Mr. Grosvenor : Yes, but I want his answer. 4 A. 1,199,976 shares. Q. Do you recall from whom you had received your in- structions to pass the resolutions which were passed at that meeting? A. I do not remember; probably from counsel. Q. That is, from counsel at 40 Wall street? A. From the voting trustees, probably. Q. And you just took the resolutions over with you and passed them at the meeting; is that right? A. I did not take them with me. They were presented there by the secretary. Q. It says Mr. B. W. Wilson was secretary. He acted as E. M. Cravath, Direct Examination. 357 secretary at the previous meeting. Who was Mr. B. W. Wil- 1 son? A. He was an attorney. Q. Located where? A. 40 Wall street. Q. That is, in Guthrie, Cravath & Henderson's office? A. Yes, he was a clerk in the office. Q. Do you recall any other venture of yours other than this temporary one in the harvesting machine business? A. Any other business venture? I do not quite understand the question. Q. Do you recall the circumstances in which you, in Sep- ^ tember, 1903, acquired the property or stock of the Minnie Harvester Company, a Minnesota corporation? I will show you this paper (it is already in evidence) and ask you to re- fresh your recollection. (The witness carefully reads the document which Mr. Gros- venor handed to him.) Q. I have shown you, Mr. Cravath, that agreement, dated the 2nd day of October, 1905, printed in the minutes. Does that refresh your recollection as to any further venture in the harvesting machine business by you? 3 (No response.) Q. Will you state the circumstances under which you pur- chased the capital stock — the entire issue of the capital stock — of the Minnie Harvester Company, on or about September 30, 1903? A. Well, that transaction is very hazy to me. Q. It appears from that exhibit that you paid $945,000 for the entire capital stock of the Minnie Harvester Company. A. I think I did that. Q. How did you happen to do it? A. At the request of Mr. Cravath. ■* Q. You had no expectation yourself of operating that com- pany? A. No. Q. Did you know where it was located? A. Why, I did at the time. Q. Did you have any dealings with the parties who owned the Minnie Harvester Company stock? A. I think not. Q. Now, it says that you gave these notes for $945,000. Have you preserved any of the papers relating to this trans- action? 358 E. M. Cravath, Direct Examination. A. I have not. Q. Were any of the papers turned over to you at the time? Do you recall? A. No, none of the papers were turned over to me. Any papers that I had would have remained on file in Mr. Crav- ath 's office or with the International Harvester Company. Q. In other words, you had no interest in this transaction, and allowed the use of your name as a matter of convenience ; is that right? A. That is possible. Q. Do you recall the borrowing of the $945,000 from the Harvester Company to pay those notes? Or were those also matters in which your name was used as a matter of conve- nience ? A. No, I performed the actual transaction, and I remem- ber borrowing that money, but my memory is very hazy on that. Q. Who furnished you with the $945,000? A. That was furnished to me by the Bankers Trust Com- pany, I think. Q. And what became of these shares of stock when you acquired them? A. I do not know. That was all managed by the attorneys. I left the country at the time. Q. You did not operate the Minnie Harvester Company yourself, did you? A. No. Q. Did you ever take any part in the conduct of its busi- ness? A. No. Q. Or talk with any of its officers or employes in connec- tion with the business? A. No. Q. Was any reason given you why the transaction should be handled in this way; that is, through you? A. I do not remember. Q. Was anything said about keeping the transaction secret? A. Absolutely not. Q. You have testified, have you not, that you did not, in acquiring this stock, have negotiations with any of the own- ers of it? A. The acquiring of which stock? Q. The Minnie Harvester stock. J. J. Daly, Direct Examination. 359 A. No, I did not carry on the negotiations. Mr. Grosvenor: That is all. Mr. McHugh: No questions. JOHN J. DALY being duly sworn as a witness on behalf of the petitioner, testified as follows: Direct Examination hy Mr. Grosvenor. Q. Mr. Daly, in August, 1902, what was your business? A. I was employed by Guthrie, Cravath & Henderson. Q. And were you one of the notaries in that office? A. I was. Q. Deeds and papers were brought and acknowledged be- fore you? A. Yes, some of them. Q. Do you recall, in August, 1902, witnessing deeds to Wil- liam C. Lane by certain individuals and companies interested in the harvester machine business? A. I do not. Q. Have you any recollection of witnessing deeds on or about that 'time, relating to the harvester machine business? A. I have not any special recollection, no. I took a great many acknowledgments of various deeds at that time, and I have no recollection of the deeds. Q. In other words, the papers were just brought before you and you acknowledged them when they were signed? A. Yes, sir. Q. The execution of deeds relating to this matter on or about that time made no impression on your mind? A. They did not; no, sir. Q. Are you able to state whether or not these deeds were all executed together, or separately? A. I have no recollection of executing any deeds, I said, of this company. Q. Did you keep any record of the deeds you acknowl- edged? A. I did not, Q. Did you preserve any papers in this transaction? A. I have not. Mr. Grosvenor: That is all, Mr. Daly. Mr. McHugh: I don't want to cross-examine you. An adjournment was then taken until the morning of Thurs- day, October 24, 1912, at 10:30 o'clock, at Koom No. &Q Post Office Building, New York City. 360 T. M. Osborne, Direct Examination. Heaeing oe October 24. Eoom 66, Postoffice Building, New York, N. Y., October 24, 1912. 10:30 A.M. 'The hearing was resumed before the Special Examiner, Eobert S. Taylor, at the above time and place. , Present : , On behalf of the Petitioner, Edwin G. Grrosvenor, Esq., Special Assistant to the Attomey-Greneral, Joseph E. Darling, Esq., and Abram F. Myers, Esq.; on be- half of the defendants, Hon. William D. McHugh, John P. Wilson, Esq. and Hon. Philip S. Post. THOMAS MOTT OSBOENE being duly sworn as a witness on behalf of the Petitioner, testified as follows : Direct Exaonination by Mr. Grosvenor. Q. Mr. Osborne, where do you reside? A. Auburn, New York. Q. Have you ever been engaged in the harvesting ma- chine business? A. I have. Q. And connected with what company? A. D. M. Osborne & Co. Q. With its headquarters where? A. In Auburn, New York. Q. And what was the business of D. M. Osborne & Com- pany? A. The manufacture of harvesters, binders, mowers, reap- ers and hay rakes — corn harvesters. Q. And did you sell those implements generally through- out the United States? A. Yes. Q. And abroad? A. And in Europe ; South America also. Q. Australia? A. Australia also. Q. You did a large foreign business? A. Yes. Q. Prior to 1902 what were the largest companies in the T. M. Osborne, Direct Examination. 361 United States manufacturing and selling harvesting imple- ments, naming them in the order of their importance? A. The two largest companies were the McCormick Com- pany and the Deering Company. I could not say as to which was the larger of the two. Q. Those were the two largest. And which were the next largest? A. Our company ranked third. Q. Name the others, your competitors, so far as you re- call them, in the or,der of their importance. A. There was the Champion concern. Q. By that you mean the "Warder, Bushnell & Glessner Company? A. The Warder, Bus'hnell & Glessner Company, I could not say as to the relative importance of the others. There was the Piano, the Walter A. Wood Company, the Johnston Harvester Company, the Milwaukee, Adriance, Piatt & Com- pany, and the Buckej^'e — the Miller Company. Q. Aultman-Miller Company? A. I mean Aultman-Miller Company, yes, sir. Q. At that time what per cent, of the business in harvest- ing implements in the United States was done by the five com- panies which went into the Harvester Company, namely, the McCormick, Deering, Champion, Piano, Milwaukee, and your company — D. M. Osborne & Company? That is, what per cent, of the business in harvesting implements in the United States was done by those six companies? A. It would be mere guesswork on my part, but a very large proportion. Q. How long had the D. M. Osborne & Company been en- gaged in business? A. My father went in business in 1857, in the manufac- ture of mowers and reapers. The company was incorporated, — ^the D. M. Osborne Company — in 1875, although a partner- ship had existed under that name for some years previous. Q. How long had you been connected with the company? A. Since the fall of 1884. Q. Then, you had been continuously engaged in the har- vesting business from 1884 to 1902? A. Yes. Q. And did you keep track of the names of your competi- tors and the extent of their business, generally, throughout the United States? A. I knew in a general way. 362 T. M. Osborne, Direct Examination. Q. Based on the information you obtained in that way, what would you say was the percentage of business in har- vesting implements done by these six companies'? Mr. McHugh: The defendants object to the question be- cause the witness has already stated that an answer to that question by him would be pure guesswork ; therefore, the tes- timony is incompetent, irrelevant and immaterial. A. According to the best of my judgment I would say it was 90 per cent, or over. Q. Had the business of the Osborne Company from the year 1892 down to 1902 been profitable? A. It had. Q. And increasingly so? A. Yes. Q. What was the capitalization of the Osborne Company, do you recall? A. There was 300 thousand of stock, as I recall, and scrip, which was practically the same as stock, to the amount of 950 thousand. I think that number is correct. Mr. Metcalf : No, that is not right. Witness: I mean that the stock and scrip together amounted to that. Q. Yes; to 950 thousand? A. Yes. Q. Hav^ you ever owned any stock in the International Harvester Company, Mr. Osborne? A. Never. Q. You never have had any interest in that company, have you? A. None whatever. Q. The International Harvester Company bought out D. M. Osborne & Company in the early part of 1903, did it not? A. Yes. Q. Please state the circumstances, so far as you recall them, relating to that transaction; that is, give an account in your own way of how you sold out. A. We learned through the newspapers, in the summer of 1902 {jnj recollection is it was in August) that the Inter- national Harvester Company had been formed. That was the first we had heard of it. Mr. Metcalf — Q. You had no part in the formation of the company? A. None whatever. We knew nothing about it until it was made puMic in the newspapers. The business of D. M. Os- borne &, Company at that time was owned by my mother, two T. M. Osborne, Direct Examination. 363 sisters and myself, representing my father's interest, and 1 some of the stock was held by my uncle, Mr. John H. Os-- home ; some -by Mr. E. D. Metcalf, who was then treasurer and general manager, or vice-president and general man- ager, I think he was, at that time; and there were some smaller stockholders. But the majority of the stock was owned by my mother and two sisters, and they naturally would have been glad of an opportunity to sell out the busi- ness and retire their money from the uncertainties of a manufacturing business. Therefore Mr. Metcalf entered into negotiations with some of those who were interested in the International Harvester Company for D. M. Osborne & Com- 2 pany to sell out. I took no part in those negotiations, be- cause personally I was not desirous of selling out, although I did not consider that I ought to prevent a sale if one was negotiated. In January, 1903, the negotiations - came to a head and the sale was arranged. Q. Whom did you see, if anyone, connected with the In- ternational Harvester Company in connection with the nego- tiation? A. Personally I saw at one time Mr. Charles Deeririg and Mr. Cyrus McCormick, at the Waldorf; and I saw Mr. Pe*:- 3 kins at the office of J. P. Morgan & Company. Q. That was after it had been arranged that the Harvester Company should buy the D. M. Osborne & Company? A. When I saw Mr. Deering and Mr. McCormick at the Waldorf it had not been arranged. When I saw Mr. Per- kins the arrangements had been practically made. Q. Had D. M. Osborne & Company been engaged in the manufacture of twine as well as harvesting implements'? A. No; there was another corporation called the Colum- bian Cordage Company. Q. Which was owned by practically the same people as 4 owned D. M. Osborne & Company. A. Many of the stockholders of D. M. Osborne & Company owned stock also in the Columbian Cordage Company, but there were a number of stockholders in the Cordage Com- pany who were not interested in D. M. Osborne & Company. Q" Was the twine business of the Columbian Cordage Company sold with the business of D. M, Osborne & Com- pany ? A. Mr. Metcalf was president of that company and the sale of that was negotiated at the same time as that of D. M. Osborne & Company. 364 T. M. Osborne, Direct Examination. Q. In the harvesting machine business, the manufacturers, largely, sell twine and harvesting implements, both lines, do they not? A. Yes. Q. In 1902 what maufacturers other than Osborne & Com- pany were manufacturing and selling twine? A. The Deering Company and the McCormick Company. Q. In what part of the country was most of your busi- ness, if there was any section in which, you did the principal part of your business? A. We had an organization all over the United States and sold machines wherever machines were sold. I could not tell you where the largest part of our business was. Q. That is, you sold machines wherever the cereal crops and the hay crops were raised? A. Yes. Q. And you had branch houses throughout the United States? A. Yes, a number of them. Q. And shipped from your factories to the warehouses-, and then the warehouses distributed to the agents? A. In some cases we shipped directly to the agents. Q. Both ways? A. Both ways. Q. And did you sell your machines on the commission agency basis? A. Our agents were paid a commission, yes. Q. Now, did the owners of D. M. Osborne & Company take stock in the Harvester Company for their property? A. None. Q. What did they receive? A. They received some notes, with the stock of D, M. Osborne & Company as collateral, in the first place, and that continued until the management of Mr. Metcalf and myself terminated, when the collateral was changed to farmers' notes belonging to the International Harvester Company. Q. What was the total consideration received for all the property of the D. M. Osborne & Company? A. .$3,200,000 for the plant; and then we received, also, payment for all the machines on hand and all the goods in process of building. It amounted in all to about 6 million dollars. Q. Was your business increasing in the year 1902? A. It was. T. M. Osborne, Cross-Examination. 365 Cross-Examination by Mr. McHugh. Q. D. M. Osborne & Company, the corporation, as I un- derstand, was owned practically by your mother, your two sisters and yourself? A. We owned, my recollection is, about four-fifths of the stock. Q. And did your mother and your two sisters own a ma- jority of the stock? A. They owned three-quarters of the four-fifths. Q. What is the fact as to whether these ladies took any active part in the business, participated in the management? I do not suppose they did? A. They did not. Q. Where did these ladies live? A. My mother lived in Auburn; my oldest sister, Mrs. Harris, lived in Springfield, Massachusetts ; and my youngest sister, Mrs. Storrow, lived in Boston. Q. You stated that these ladies desired to withdraw their capital from a manufacturing enterprise, and desired to sell? A. They did. Q. Was that desire born in August, 1902, or did that de- sire exist prior to that time? A. It existed prior to that time. They were endorsers on paper amounting sometimes frorn 2 million dollars upward to 4 millions. Q. And being apart from the management of the com- pany and living away, naturally they wanted to get that sit- uation ended? A. Naturally. They were not directly concerned in the management of a company in which they were endorsers to a very large amount. Q. By endorsers, you mean they were endorsers on the paper of the company? A. On the commercial paper of the company. Q. Then, the fact is that the organization of the Interna- tional Harvester Company was not what started the desire to sell the Osborne Company? A. We thought we saw a chance to do what the ladies own- ing the company would have been glad to do for some time previously. Q. You say you individually and personally did not desire to sell? y A. I did not. 366 T. M. Osborne, Cross-Examination. 1 Q. You yielded your desire to tlie situation in wMcli your mother and sisters were? » A. I thought they had the prior right to be considered. Q. Then, you had no fear of the successful carrying on of your business after the International Harvester Company was organized? A. Personally I did not or I should not want to have car- ried it on. Q. So, when the International Harvestpr Company was born you saw a corporation large enough to be, as you thought, a prospective purchaser to buy the plant? 2 A. Yes. Q. And in pursuance of this desire that had long existed, negotiations were opened up along in August of 1902 ? A. Yes. Q. You said that those negotiations came to a head in January, 1903. Do you mean by that, that the negotiations continued steadily and pending all that time, or were nego- tiations begun and broken off and renewed later? A. Negotiations were broken off twice, I think, during that period; in other words, the offer which we made was not ac- 3 cepted. Q. Not accepted. And then later you made another of- fer which was not accepted? A. My recollection is that Mr. Metcalf made two propo- sitions neither of which was accepted. Q. And when those offers were declined that terminated the negotiations? A. For the time being. Q. Then the sale was finally consummated, after the open- ing up of negotiations for the third time? A. The arrangements were consummated in 1903, although 4 of course the management continued with Mr. Metcalf and myself during the s6ason of 1903 and 1904, for two years practically. Q. When you sold to the International ]p[arvester Com- pany, you say the company paid in notes secured by stock of your company as collateral? A. They paid one million dollars in cash and the rest in notes, with our stock as collateral. Q. And no other collateral? A. No other collateral. Q. Now, did your company have any bills receivable? A. We did. T. M. Osborne, Cross-Examination. 367 Q. About how large? I mean in the aggregate. Bills and 1 accounts receivable. A. I cannot recall. I think Mr. Metcalf can tell you that. Q. You do not remember? A. With accuracy I do not recall the amount. But a large amount. Q. Did you sell these accounts and bills receivable to the International Harvester Company? A. We did not. We offered them to the International Harvester Company and they refused to buy them. Q. They refused to buy them. So that your bills receiv- able and accounts receivable remained your property? 2 A. Yes, sir. Q. How long did the situation exist when your security for the deferred payments was represented by these notes and your stock as collateral? A. For two years, as I recall; until December, 1904. Q. Then what change was made? A. Then the management was taken by the International Harvester Company, after they had exchanged the collateral of our stock for farmers' notes. Q. And the management of D. M. Osborne & Company 3 continued as it was from January, 1903, to December, 1904? A. Absolutely. Q. And until there was substituted for your stock as col- lateral the farmers' notes of the International Harvester Company? A. Yes. Q. You have testified to a percentage of business done by the companies that were acquired by the International Har- vester Company. A. I have. Q. You said that was guesswork, — and that is the fact, 4 is it? A. I did, yes. Q. And that is true? A. That is true. Q. The business of D. M. Osborne & Company was rela- tively large in its foreign business? I mean not in relation to other companies so much as in relation to the aggregate of its business. A. My recollection is that about one-third of our business was done outside of the United States. 368 T. M. Osborne, Re-direct Examination. Re-direct Examination by Mr. Grosvenor. Q. Was your foreign business as large as the foreign busi- ness of the McCormicks"? A. Of course I do not know exactly how large McCor- micks' foreign business was, but my judgment is that it was relatively larger to the amount of business than Mr. McCor- mick's. Q. In other words, you mean that the ratio of your foreign business to your domestic business was larger than the ratio of the foreign business of McCormick to his domestic busi- ness? A. I think so. Q. But just as his domestic business was larger than your domestic business, so his foreign business was larger than your foreign business? A. I have no means of knowing how large his foreign busi- ness was, but I should imagine it was somewhat larger than our foreign business. Q. And the same thing is true of the Deerings, is it not! "A. I do not think the Deerings' foreign business was as large as ours. Q. Now, in the harvesting business credit is a very im- portant factor, is it not, Mr. Osborne? A. It was very important. Q. That is, there is a manufacturing season during which you borrow large amounts of money, and then a selling sea- son, and at the end of the selling season you get back only part of your money because the machines are sold on instal- ments running two, three and four years; is that right? A. That is the case. Q. Therefore, as your business expands your credit must expand ? A. Yes. It took more money, more invested capital in other words, to run the business. The larger the business was the more the money necessary to conduct the business. Q. During the years that you have named — that is, these ten years — the business of the Osborne Company was grow- ing all the time, as you have stated? A. Constantly. Q. Therefore as your business grew it made it neces- sary for these other owners to endorse notes in larger amounts ? J. J. Storrow, Direct Eooamination. 369 A. The highest point of our indebtedness increased as 1 our business expanded. Q. And that was one of the reasons that these other own- ers wished to sell out, was it? A. Yes, because all three — ^my mother and two sisters — were also endorsers along with myself on all of the notes of the company. Q. Do you recall how much surplus you laid up in those ten years? A. My recollection is that our surplus was between two and three million. Q. And that had been made in the last few years of the 2 business? A. Since 1890. Mr. Grosvenor : That is all. JAMES J. STOEEOW, being duly sworn as a witness on be- half of the petitioner, testified as follows: Direct Examination by Mr. Grosvenor. Q. Mr. Storrow, what is your business? A. Banker. Q. With what concern are you connected? A. I am a partner in the firm of Lee, Higginson & Com- pany, Boston. Q. You were interested in D. M. Osborne & Company in the year 1902? A. Not financially. Q. Well, an immediate member of your family was ? . A. My wife was a daughter of Mr. D. M. Osborne. Q. And a large owner? A. A substantial owner. Q. Did you have any share in the negotiations which re- sulted in the sale of the business of D. M. Osborne & Com- pany to the Harvester Company? A. I did. Q. State to the best of your recollection what happened,' how the negotiations were brought to an end, and how they commenced. A. I should have to say that this was about ten years ago and I have not had occasion to think of the transaction since; but, as nearly as I can recollect, the more intimate 370 J. J. Storrow, Direct Examination. part in the negotiations which I had began in late Decem- ber, 1902, or early January, 1903. I remember that at that time Colonel Metcalf, who was treasurer and. general man- ager of the company came to see me in Boston. I had known that he had been trying to negotiate a sale of the company to the International Harvester Company. I think he in- formed me then that all negotiations had been broken off and it looked as though further negotiations were impossible. I knew Mr. Perkins slightly at that time, and I said to Colonel Metcalf that I would like to call Mr. Perkins on the telephone. I called Mr. Perkins on the telephone. My purpose was to endeavor to resume negotiations. I do not remember just exactly what was said, but I remember as the result of the conversation that Colonel Metcalf and I went to New York (I think it was the same night) and negotiations were re- newed and lasted for, I should say, perhaps a fortnight. Q. You were dealing with whom? A. Mr. George W. Perkins ; although I believe in the course of those interviews one of the McCormicks (I presume it was Mr. Cyrus MeCormick) was present for a short time. I do not know whether you want to ask another question or — Q. No, go on ; tell your story in your own way. A. Well, those negotiations, as I say, lasted for perhaps a fortnight. I personally spent a good many hours in Mr. Perkins' office and the result was an agreement for the pur- chase of the company. The contract was finally drawn and signed and the sale made, I think the contract being dated January 15th, 1903, although I have not seen it since that time. Q. Did you get for the sale of your property the amount which Mr. -Metcalf had suggested at the original negotia- tions? A. Presumably not, but I have not an accurate recollection of what Colonel Metcalf had originally suggested. Mr. Grosvenor: That is all. Mr. McHugh: That is all; no questions. E. D. Metcalf, Direct Examination. 371 EDWIN D. METCALF being duly sworn as a witness on be- half of the Petitioner, testified as follows : Direct Examination by Mr. Grosvenor. Q. Col. Metcalf, have you ever been engaged in the har- vester business? A. I have. Q. In what capacity? A. As treasurer and general manager first and afterwards as vice-president and general manager of D. M. Osborne & Company, Auburn, New York. Q. How long were you with that company? A. Fifteen years. Q. Beginliing in the early nineties or eighties? A. Beginning November, 1890, and ending in December, 1904 ; and then the year after as general manager of the plant of D. M. Osborne & Company from 1904 to the fall of 1905, or January, 1906, after the International Harvester Company took possession of our plant. Q. You had direction and supervision over the sales of your company in the years you have mentioned? A. Every department. Q. And it was doing business, generally throughout the sec- tion of the country in which binders and mowers and other harvesting implements were sold? A. All over the United States, all over Europe, South America, Australia, and even in Asia, and Africa, too. Q. And under your management had the business of the company become increasingly profitable in those years? A. It had. Q. So that the years 1901 and 1902 were as profitable as any in that period? A. More so, I think, as our business was a growing busi- ness. Q. You had not suffered from competition with other manufacturers in the year 1900? A. We all suffered in those days. Q. You suffered to the extent that your business became increasingly profitable ? A. Yes, but we suffered a good many hours of anxiety owing to conditions. 372 E. D. Metcalf, Direct Examination. Q. But the hours of anxiety were rewarded by increasing profits I A. Satisfactory to a certain extent. Q. Name briefly, in the order of importance, the largest competitors that you had in the business prior to August, 1902. A. It is difficult to say who were the largest, because quite a number of us claimed to be the largest, but I should say that the McCormick and the Deering were unquestionably the two largest concerns; ours the third. Q. And the next largest. A. Then came the Champion, the Walter A. Wood, the Piano and Aultman-Miller Co. Q. Do you recall any others? A. Johnston Harvester Company and Adriance, Piatt & Company. That is about the order that I should place them although it may not be correct. Q. Are you able to state from the information which you acquired, as manager of D. M. Osborne & Company, what per cent, of the total business in binders and mowers, in the United States, was done by these five companies that went into the Harvester Company and by your company which was subsequently 'acquired? A. I cannot, because we all undoubtedly made statements claiming in some sections to be the largest in the world; especially in the foreign mariket that was true. So that I have no data on which to base a calculation as to the percentage. Q. Do you recall the names of any other harvesting manu- facturers, besides those you have named, doing business in 1902? A. Massey-Harris Company in Canada. Q. Were they doing business in the United States? A. No, not in the United States. Hornsby & Company in England. Q. Were they doing business here? A. They were not ; but we competed with both of those con- cerns abroad. Q. Were there any companies in the United States other than those you have named? A. I do not recall them at this moment. Q. What was the surplus, do you recall, of the Osborne Company, in 1902? A. About three million dollars. E. D. Metcalf, Direct Examination. 373 Q. And had that surplus been accumulated in the years that you had been with the company? A. There was a surplus when I went with the company, but a large part of that had been charged off. The bulk of it accumulated during the period that I was manager. Q. You took the leading part on behalf of Osborne & Com- pany in the negotiations which resulted in the sale of its prop- erty to the Harvester Company? A. I took a part. Q. State in your own way, to the best of your recollection, the negotiations, — ^how they commenced and whom you saw in connection with it. Let me ask you, first, did you have any part in the formation of the International Harvester Com- pany? A. I did not. Q. Were you consulted in any way? A. In no way, directly or indirectly. Q. When did you first learn of its formation? A. From the public press, in coming up from my summer home on the coast of Massachusetts. Mr. Grosvenor: Now returning to my last question. Will you read it, Mr. Examiner? The Examiner read the following question : "State in your own way, to the best of your recollection, the negotiations,— how they commenced and whom you saw in connection with it." A. Immediately on reading this article in the public press and knowing how the majority of our stockholders felt, I came to New York City to see if we could find a purchaser for our company through the medium of this new company. I went to see Mr. Norman B. Eeam, whose name I had seen in the reported articles. He had formerly been an agent of D. M. Osborne & Company, in the old days, selling our machines, and I thought he probably could help us in disposing of our property better than anyone who had been an active com- petitor of ours for years. He heard what I had to say, and I asked him then if he could not put me in touch with the powers that be. He said he understood that they did not care to take any more companies into their organization; but I insisted on having an opportunity to meet the gentle- men myself. So he took me over to J. P. Morgan & Com- pany's office and introduced me to George W. Perkins, who heard my story. Mr. Perkins said that they did not feel that 374 E. D. Metcalf, Direct Examination. they wanted to take any more companies into their organiza- tion, but he would take the matter under consideration and let me know later. I went home, and did not hear from him for some time. Finally I came down to New York to see what answer he had. He said he had considered the matter and decided that they did not care for the Osborne Company. I thought I would like to talk to someone else then. So, as soon as I could arrange, I went to Chicago, went to the of- fices of the International Harvester Company and saw Mr. Charles Deering (whom I knew personally), and while we were discussing my proposition, which I had previously made to Mr. Perkins, Mr. Harold F. McCormick came in. We went over the situation, I putting the best feature I could forward as to the advantage to them of having our — Q. That is, putting the best foot forward, you mean? A. Well, the best foot forward. As to the advantage to them of having our foreign business and our small tools, or tillage tools, as they are called, which they did not manufac- ture. They rather laughed at some of my arguments and said they did not believe they cared to talk any further about it. Q. That your price was too high; is that what you mean! A. Well, they said so. I had asked for the plants of the Columbian Cordage Company and D. M. Osborne & Company five million dollars and whatever our inventory showed we had in the shape of machines, extras, and so forth, and what- ever our bills receivable would show, in addition to the five million dollars. I think I remained in Chicago three or four days, constantly going in to see if I could get any encourage- ment, and they politely bowed me out of the door and said they did not care to negotiate for the Osborne business. Then I came back to see Mr. Perkins and finally arranged, after I think one or two interviews, for an interview between all of the parties in interest. I thought if I could get them together I might present an argument that would be effective ; and Mr. Cyrus McCormick and Mr. Charles Deering and, possibly, Mr. R. F. Howe (I would not be sure about him) and Mr. Perkins and Mr. Osborne and Mr. Harris, and Mr. Storrow, I think (I will not be sure about Mr. Storrow) and myself met at the Waldorf, and again I was spokesman, to try to interest them in our proposition. They talked with us some time and finally went out of the hotel. Q. Whom do you mean by "they!" E. D. Metcalf, Direct Examination. 375 A. Mr. MeCormick, Mr. Deering and Mr. Perkins. They went out of the room, at least, where we were, conferred with one another and came back and told us they did not care to negotiate for the Osborne property. Q. Did you ask for the same amount at this interview, or had you come down? A. I did not come down. I tried to get a proposition from them. I never made a price less than the original five million dollars, but I tried to get a counter-proposition from them, and they declined. Of course the season was getting late then and we were starting on next year's product and borrowing money all this time. Q. That is, the manufacturing season for 1903 was com- mencing ? A. It had commenced already. We commence in August to manufacture for the foUomng year's goods and our indebted- ness gradually increases as we proceed in manufacturing. Q. That had been true every year you had been in busi- ness? A. Our largest receipts are in the fall, and sometimes one balances the other; but as soon as those receipts are in then it begins to jump very fast. In January, 1903, it became necessary for us to have more money — I think right after the first of January. I went over to Boston to interview Mr. Storrow, who was very anxious to sell on his wife's account, went over the situation with him and told him we had got to have more money, and wanted to know if he would arrange for us to sell some bills of exchange in London, would loan us the money, or make some arrangement so we could increase our capital stock. He said he would like to talk to Mr. Per- kins again, and said he would call him up over the 'phone, which he did. The result of that conversation was that he and I took a train that night, I think for New York. Q. You needed more money to go on with your business at that time? A. Yes, we did. Q. You had to expand your credit? A. We did ; always did expand our credit in January, Feb- ruary, March and April, the spring months. Q. But at this particular time you had to expand your credit? A. We had to have more money, because we had borrowed of the banks where we usually borrow up to our limit, and be- fore — 376 E. D. Metcalf, Direct Exainination. Q. What banks were those? A. The First National Bank of New York, the Park Na- tional Bank, the Importers and Traders; not at that time the Hanover, but usually the Hanover in the summer months. We got loans from the Hanover, the First National Bank of Chi-' cago, the Boatsmen Bank of St. Louis, and the Bank of Cali- fornia, in San Francisco. Q. From which of these banks were you in the habit of obtaining the largest loans? A. I think about equally. Q. From all of them? A. No. I say the First National Bank of Chicago, the First National Bank of New York, and the Boatsmen Bank of St. Louis, although at times we were able to borrow a very large amount at the Marine National Bank in Buffalo, $300,- 000 at one time, which to us was quite a large sum. To resume the conversation with Mr. Storrow : We came to New York, had several interviews with Mr. Perkins, and tried to get — Excuse me, Mr. Storrow went there first and opened up the subject and asked if it would be — Q. What subject? A. The subject of our selling to the International Har- vester Company (that is what we came over for), to see if we could sell to the International Harvester Company,— and asked if he was willing to open up the subject and consider a proposition from us. I was not present, but as a result I was called in then and negotiations began. Q. Did you offer to take less for your property than you had previously asked? A. We had had an inventory made by the American Appraisal Company just about that time, and we were satisfied that the price I had set was a little larger than that inventory justi- fied ; and so, owing to the desire of our stockholders, we were willing to make some concession, — the majority of our stock- holders. I cannot go through the details of that negotiation, which occupied several days. Like anyone trying to trade, I was trying to get the most we could, and they did not appear to want to buy any way, but until we got down and made the proposition of $3,200,000 for our property, and they to pay — Q. For the property for which you had preAdously asked $5,000,000? A. Yes. And they to take all of our quick assets, in the form of machines in process of manufacture, machines wher- E. D. Metcalf, Direct Examination, 377 ever they were in the worldj parts, extra parts, twine, every- thing in the nature of a quick asset outside of our bills receiv- able and bills payable. We tried to sell them our bills pay- able and bills receivable; we wanted them to include all. We tried to get him to assume our liabilities, so we could make a clean deal. He declined to consider anything in the way of bills receivable or bills payable and accounts payable. And Mr. Osborne and I borrowed a large amount of money on our own names to carry along our bills payable during that period, after we had entered into this contract with the International Harvester Company. Q. Tour bills receivable were larger in the aggregate than your bills payable? A. Not at that time. They were not as large as our bills payable at that time. Our bills receivable at that time were approximately three million dollars; our bills payable and accounts payable were nearer four million dollars at that time. You see we always, at that period of the year, had a large amount of accounts payable, stock coming in, the bills had not matured. Q. Now to return to the negotiations. You had not finished with those, had you? A. When we got into details, Mr. Perkins said that they did not want the plant even at a bargain, and that we should help finance it if they took it over, and wanted to give us notes. We insisted upon having a substantial payment to start with, with the result that they paid us one million dol- lars in cash and made notes for $3,500,000 secured by our own certificates of stock as collateral, and those were to be de- posited with the Standard Trust Company in New York un- til certain things were done ; that is, we were to satisfy them that all the accounts and bills payable of D. M. Osborne & ■Company were settled before those notes were turned over to us entirely. When the detail of these notes came up we ob- jected to that kind of a collateral and wanted some better collateral but finally accepted our own certificates of stock as collateral. In regard to the conduct of the company, we also insisted that we should have absolute control of D. M. Osborne & Company and the Columbian Cordage Company until we had an opportunity to collect our bills receivable, and they to give us some different collateral for our notes than they pro- posed to give. We had about three million dollars of ac- counts and bills receivable, all over the world — Kussia, Si- 378 E. D. Metcalf, Direct Examination. beria, Australia, Austria, Italy, France, Portugal, Spain; in fact practically everywhere where grain was cut we were do- ing business and had bills receivable or accounts receivable. Our foreign accounts and bills receivable at that time prob- ably were at least one-third of our total bills receivable and accounts receivable. In addition to that we had stocks of goods in practically all of these countries, as we carried our stock in branch houses in all these foreign countries, conduct- ing the business in our own name except in Russia, where it was carried on in the name of Thomas M. Osborne. Q. Who besides these persons you have named took part in these negotiations in January, 1903? A. Mr. Storrow, Mr. Perkins and myself were the only ones who discussed the matter down here. No one of the firm of J. P. Morgan & Company ever came in while I was present. Q. Mr. Perkins represented entirely the Harvester Com- pany, was the only one of the Harvester Company that you dealt with? A. He was the only one that I dealt with in January, 1903. Q. Col. Metcalf, you started the twine business, did you not — not Osborne & Company? A. I did. Q. Through the Columbian Cordage Company? A. I did. Q. Is it helpful in the harvesting business to have the sale of twine combined with the sale of harvesting implements, of the binder? A. I have always considered it very desirable because the twine that a manufacturer of harvesting machinery makes will generally work better on a harvesting machine than that manufactured by an independent manufacturer outside of the business. I think the farmers, generally, are better satis- fied with the twine. That was our experience. We never could buy twine from an independent manufacturer that the farmer was as well satisfied with as our own twine. Q. Please state the circumstances under which you came to manufacture twine at the Auburn plant. When was that — in the nineties? A. We had lots of difficulty in getting into the twine busi- ness. In 1891 we became desirous of manufacturing twine. We could not buy any machinery, because John Good had made arrangements to supply others up to his capacity. Q. Who is John Good? E. D. Metcalf, Direct Examination. 379 A. John Good was the patentee of the Good machinery which is used today universally all over the United States. Q. To whom had he assigned the rights in the patent, or who was manufacturing under the patent"? A. He was manufacturing, but I think he was under some contract by which others got all the machinery he could make and we could not get any, and we were obliged to — Q. Who were the others that you refer to? A. Other manufacturers of twine, principally the National Cordage Company. We found a man who would make draw- ings, and the machinery of the Columbian Cordage Company was started from original drawings by a draftsman in the Watson Machine Company, and patterns were made. Q. That was in what year? A. In 1891. Patterns were made from his drawings and the machinery was made and we started manufacturing twine. Q. Had the twine end of the business of which you had charge been prosperous in these years? A. It had after we got to manufacturing. Of course we had the difficulties incident to all new factories. Q. That business also was sold out to the International Harvester Company at the time you have mentioned? A. It was. Q. Did you have any dealings with the other owners of the Osborne Company in connection with the sale of the property ; that is, during the time of your negotiations? A. All the stock of both companies was transferred to Mr. Osborne and myself. Q. When was that transferred? A. When we started negotiations. I was authorized to try to effect a sale if I could. Q. You took a covenant not to engage further in the har- vesting implement business, did you not? A. I did. Q. And who else joined in that covenant? A. Mr. Osborne. Q. Were you the two principal and active officers' of the D. M. Osborne & Company plant? A. We were. 380 E. D. Metcalf, Cross-Examination. Cross-Examination hy Mr. McHugh. Q. Col. Metcalf, yon are entirely familiar witli tlie nature and condition of the business of D. M. Osborne & Company for a number of years prior to 1902? A. From 1890. Q. Yes. You were the general manager of the business during that time. The majority of the stock of that company was owned by Mrs. Osborne and her two daughters ? A. It was. Q. And you have testified to the amount of bills payable that were out. They were endorsers on all that paper and individually liable! A. They were. Q. For how long a time had the condition existed that im- pelled these ladies to desire to sell and get out of the busi- ness? A. It existed when I went with them in 1890 and it had existed I was told since their father's death. Q. So the desire to sell that was communicated to you was not born of the organization of the International Har- vester Company at all? A. It began when I first went there, in 1890. Mr. Grosvenor: Before you first went there? Witness: Well, my connection with it. Q. It existed when you came? A. In 1890 I lived in Springfield, Massachusetts, and Mr. Harris was one of my neighbors. He married Mr. Osborne's daughter, and one of the things he wanted me to do when I went out there was to see if something could not be done to sell tliat plant. That was before I went out there. Mr. Thomas M. Osborne: You mean Mr. D. M. Osborne's daughter T Witness: Mr. D. M. Osborne's daughter. Q. So that when you saw, in August, 1902, in the news- paper, that the International Harvester Company had been organized, the impulse that impelled you to seek an oppor- tunity to sell the plant to that newly organized company was not an impulse born of any fear that that company would crush out the business prospects of D, M. Osborne & Com- pany? A. Not the slightest. Q. You opened up your negotiations, naming your price E. D. Metcalf, Cross-Examination. 381 at five million dollars for the things that you afterwards sold for three and a half millions'? A. $3,200,000. Q. $3,200,000. And that first negotiation ended with the refusal of the company to buy! A. It did. Q. Then you opened up negotiations later. When were the second negotiations opened up? A. The first negotiation was in August; the second nego- tiation was in Chicago in September; the third negotiation was at the Waldorf, I think in October. Then we gave up all hope of being able to sell. Q. And then they began again with this talk with Mr. Storrow 1 A. With Mr. Storrow. Q. And you came down to New York as you have testified ? A. Yes. Q. Now, after this first negotiation was turned down, in August, what did you do with reference to the business of D. M. Osborne & Company? A. Started right up, just as if I had never heard of the International Harvester Company ; getting ready for the 1903 business. Q. What did you do with respect to assuring your financial help, and so forth? A. I went to see the officers of all the leading banks where we had large lines of credit, and asked them if we would be affected whatever in their institution by reason of the International Harvester Company's interest, and I was as- sured by all of them that they would extend to us the same amount of credit which we had been having in the past. Q. And then as you proceeded with your business, did they extend that credit as before? A. They never declined in a single instance to give us what credit we asked, because we were always careful never to ask any more than we had arranged for in advance. Q. So that those arrangements went on in the year 1902 as they had before? A. Exactly. No, we made special arrangement that year ; we wanted to be sure where we stood and we were as- sured that we were all right. Q. And those assurances were — A. Made good. 382 E. D. Metcalf, Cross-Examination. Q. Made good. Then you did the business of D. M. Os- borne & Company during the year 1902? A. Yes. Q. Did anything occur in the transaction of the Harvester business that season, from August, 1902, to the end of that year that showed any desire or intention or purpose on the part of the International Harvester Company to oppress D. M. Osborne & Company? A. Not the slightest. Q. And was there anything in the conduct of the business in the year 1902 that was an incentive to the opening up of the negotiations begun the January, 1903? A. We used simply the old purpose. The incentive was the pressure on the part of the ladies in our company to be relieved of their responsibihty growing out of their endorse- ments and to get out of the manufacturing business. Prac- tically all they had in the world was engaged in this busi- ness. Q. And put more or less at hazard because of their per- sonal endorsement, and all! A. They were endorsers all the way from two millions up to upwards of four or five millions of dollars. Q. Now, your negotiations began in January and finally culminated in the contract? A. Yes. Q. Whereby the price was reduced from five million dol- lars to three million two hundred thousand dollars? A. Yes. Q. The Harvester Company did not pay any more than that property was worth? A. They did not pay us anything for fifty years of good will ; they did not pay us anything for our patents ; they did not pay us for lots of things that I felt they ought to pay lis for. Q. They drove a good bargain, and you drove as good a bargain as you could? A. I was compelled to drive a bargain on account of the pressure back of me on the part of the ladies. Q. Mr. Osborne himself did not want to sell? A. He did not want to sell, and I should have stood by him if it came to an issue. Q. Now, you have testified that you wanted them to buy your bills receivable? E. D. Metcalf, Cross-Examination. 383 A. Yes; I tried very hard to have Mr. Perkins include those. Q. They amounted to about three million dollars! A. About three million dollars. Q. Those bills receivable, about a third of them, about a million of bills receivable were owing to you in South Amer- ica, Africa, Asia, Europe, Canada — outside of the United States? A. Accounts and bills receivable, yes. Q. Yes, accounts and bills receivable. What avus the character of them? Were they in large amounts and few, ac- counts, or small amounts and many accounts and bills? A. Eunning from the price of a harrow of $10, upwards. Q. The International Harvester Company refused to buy those bills receivable? A. They did. Q. And it refused to assume the obligations of D. M. Os^ borne & Company? A. They did. Q. You took finally the notes of the company, the Interna- tional Harvester Company, secured only by the stock of your own companies as collateral? A. We did. Q. Was there any agreement made with respect to the conduct of the business because of that situation in the nego- tiations ? A. We insisted that we should have the control of that business until they made those notes good by different col- lateral and gave us an opportunity to collect the larger part of our bills receivable. Q. Was there anything that you insisted on in connec- tion with your right to manage the business with respect to secrecy to be maintained with regard to the fact of this sale or purchase? A. We insisted positively that we should not only have the management of the business, but that the public should not be advised of it; and when I say "the public" I mean our own men; and none of our travelers, none of our ofifioe men outside of probably the treasurer and the secretary, knew anything about this sale — or contract for sale. It was a con- tract for sale. Q. Now, why was it. Colonel, that you insisted that you have the management of the business while this situation lasted and that the fact of the sale should be kept secret? 384 E. D. Metcalf, Cross-Examination. A. For several reasons. One was that if it had been pub- licly known that we had sold ont we would have lost tremend- ously on our bills receivable and accounts receivable. Q. Tell why. A. Well, the results are the best indication. In the two years that we managed the business we collected about $2,400,- 000 out of $3,000,000, and for the seven years since then we have not been able to collect $200,000. It was simply that farmers will not pay to a concern that is in liquidation. Q. The bills receivable and accounts receivable were in small sums? A. All over the world. Q. All over the world. And if it was known that the com- pany to which they were payable was out of business, there would be difficulty in collecting them, and great loss? A. In collecting them. Great loss to D. M. Osborne & Company. Q. And whatever loss there would be in the collections, due to the fact that it was known you were out of business, would be a loss that would be sustained by D. M. Osborne & Company! A. Yes. The International Harvester Company did not assume any of that loss. We had to suffer that loss. Q. So it was for your interest and for your protection that you insisted that this be kept quiet and secret? A. I doubt if we should have made a sale unless we could absolutely control the situation, until we had a chance to col- lect those debts, if they did not buy them. If they refused to buy them, then I insisted we should have control of that company until we had an opportunity to collect the majority of it, until they gave us better collateral than our own certificates "of stock. Q. And the secrecy that was involved in keeping this from the public was a part of that insistence? A. It was a part of the agreement between us at that time. Q. I am trying to get at whether it was their suggestion and their policy, or whether it was your insistence or for your protection. A. It was for us. If they had bought our bills receivable and given us different collateral it would not have been nec- essary; we would not have insisted on that. Q. And the fact that this sale was made was kept from the E. D. Metcalf, Cross-Examination. 385 public because of your insistence and to protect your inter- ests? A. It was. Q. And it was not done as a policy of the International Harvester Company at all? A. They questioned it. Mr. Perkins did not want to con- cede what I insisted on at the time. Q. And you explained the matter, went over this situa- tion? A. Yes. We were several days going over that and other situations. Q. And they finally consented? A. Mr. Perkins finally consented. He is the only one we dealt with. Q. And he consented because of your insistence and your explaining to him how and why it was necessary for your own protection? A. Yes, sir. Q. Now, when you made this contract, in January, 1903, you went on with the management of this company, D. M. Os- borne & Company? A. We did. Q. And the fact that the sale was made was kept from the public? A. It was. And from our own employes also. Q. Now, there has been introduced in evidence advertise- ments of Osborne & Company, between January, 1903, and December, 1904, wherein Osborne & Company represented that it was under independent management and was not owned by the International. You recall the fact that such advertise- ments were inserted in the trade journals? A. They were. Q. And what is the fact as to whether those advertise- ments were inserted in the trade journals in the interest of the International Plarvester Company or to protect D. M. Os- borne & Company, as you have indicated, on your insistence? A. We had an advertising agent, a manager of the adver- tising department, who did not know any more about that sale than you do this minute; and he was acting under my instructions to conduct his department just as he had be- fore, which was true of every other department of D. M. Os- borne & Company. That department was no exception to all departments. Q. And those advertisements were issued, maintained, in 386 E. D. Metcalf, Gross-Examination. order to enable you people to realize on your bills receivable, and also to keep your company's business up until you had something behind these notes other than your own stock? That is the fact, isn't it? A. We had two objects. One was to collect our bills re- ceivable and accounts receivable all over the world; and the other was that under no circumstances should the business of D. M. Osborne & Company be lessened by reason of the con- tract of sale we had made with them. Q. If you had to take the stock back you wanted your business in good shape? A. We wanted something. Q. You wanted the stock held good? A. Yes, sir. Q. And did you ever get, directly or indirectly, from any- body in the International Harvester Company any direction with respect to these advertisements? A. We did not. We never consulted them as to what we should do. We went on just the same in the conduct of the business, in every department, as if we had never heard of the International Harvester Company and they were the big- gest competitors we ever had, as they had been. Q. There came a time when there was substituted for the stock of Osborne & Company and the Columbian Cordage Company, as collateral for your notes, farmers' notes. When was that? A. In December, 1904. Q. And by the time that had been done you had collected largely on your bills receivable, in the intervening two years? A. Collected over two million dollars. Q. Then when you had collected over two million dollars of your bills receivable and you had behind the notes of the International Harvester Company, as collateral, the farmers' notes, what was done with respect to making public the fact of the sale? A. It was announced that we had transferred our inter- ests to the International Harvester Company. Q. And from that time on the business was conducted as the business of the International Harvester Company? A. I was appointed general manager for the Osborne works of the International Harvester Company in Decem- ber, 1904, and conducted the business for over a year as a department of the International Harvester Company. E. D. Metcalf, Cross-Examination, 387 Q. And that was done openly, with all publicity, and the 1 name was printed on the machines? A. Yes, and on our door. Q. Now, from January, 1903, to December, 1904, while you were in charge of the business and this contract was made, and before these things occurred, and the fact that the sale was made public, you received a great many bills receivable in the conduct of the business! A. We did. Q. And where were those bills receivable during that pe- riod? A. In the possession of our various officers and our main 2 office. Q. When you say I ' our ' ' you mean — A. D. M. Osborne & Company. Q. And in December, 1904, when you had realized the bulk of the collections on your bills receivable and had the farmers ' notes as collateral to the International Harvester Company notes, and the fact "was made public, then what was done with these bills receivable that you accumulated? A. We transferred them to the International Hjarvester Company. 3 Q. And what we have said with respect to the D. M. Os- borne & Company applies equally to the Columbian Cordage Company? A. They did business practically on a cash basis and did not have bills receivable the same as D. M. Osborne & Com- pany. Q. Now, tell us about the business of D. M. Osborne & Com- pany say in 1902. How did its foreign business compare with the foreign business done by other companies? Have you data on that? A. I haven't any knowledge of what other companies were 4 doing. Q. What is the fact as to whether D. M. Osborne & Com- pany, in the conduct of its business, extensively developed its foreign trade ? . ■ ' A. We were represented by personal employes in all the great centers throughout the world. We had at that time the best line of tillage implements in the world, so conceded by all our competitors. We were the first harvester concern in the United States to build tillage implements. Q. I will come to that in a moment. 388 E. D. Metcalf, Cross-Examination. A. I was going to say: we were introducing those tillage implements all over the world, in our foreign business. Q. So you had a large and a growing foreign business? A. "We did. It had grown from $2O,0W} the first year that I went with D. 'M. Osborne & Company to upwards of $2,- 000,000 at the time of the contract of sale to the International Harvester Company. Q. Now, you speak of a line of tillage tools. Did D. M. Osborne & Company make tools that the International Har- vester Company did not make? A. They did. Q. What tools did D. M. Osborne & Company make in 1902 that the International Harvester Company did not make? A. "We had a very large line of peg-tooth harrows, various kinds of peg-tooth harrows; we made a very large line of spring-tooth harrows, and had quite a number of patents on our spring-tooth harrow business; we made a large line of disc harrows, and various kinds of disc harrows ; we made a line of tedders. Q. "What is a tedder? A. A tedder is sometimes called a kicker. Mr. Grosvenor: A steel mule. Witness: It is used to distribute the hay when it is in a swath, and spread it equally over the ground and then af- terwards to go through and turn the hay over. Q. To aid in the maturing of the hay? A. Yes, the maturing of the hay. Q. What else besides the tedders? A. We made a large line of hay rakes, but the Interna- tional Harvester Company made some hay rakes. Q. Can you recall now any other tools that you made which the International Harvester Company did not make? A. We made a large variety of cultivators; that is all I recall. Q. That is all you now recollect. Now, these tillage tools that you made and the International Harvester Company did not make, were tools that were essential in the working out or the cultivation of the soil and gathering the harvest? A. They were. Q. And what is the fact as to whether these tillage tools made by you were growing in popularity in this country and abroad? A. Very much so. Q. Can you tell us of the growth of the business in these E. D. Metcalf, Re-direct Examination. 389 tillage tools that your company made and the International Harvester Company did not make? A. I should not dare to say unless I looked at some fig- ures. Q. Have you them? A. I have some figures, yes. Q. I wish you would, then. (The witness refers to a memorandum.) Q. Just proceed to answer the question. A. In 1902 we made 19,545 peg-tooth harrows; in 1905 (which is the last year I was with the International Harves- ter Company as general manager there) we made 38,670 tools; in 1902 we made 24,770 spring-tooth harrows, and in 1905 32,557; in 1902 we made 9,830 disc-harrows, and in 1905 32,- 736; in 1902 we made 9,462 cultivators, and in 1905 23,804. And all of those were increased the following year. Q. So, the fact is that when the International Harvester Company acquired the plant and business of D. M. Osborne & Company they did not acquire it to close it down or sus- pend the industry, but the fact is there was a great accession of the business? A. They could not have closed it down; we did not pro- pose to have it closed down. Q. But the fact is that they did not close it down, did not suspend its business, but on the contrary developed and ex- tended the business? That is the fact, is it not? A. That is the fact. Re-direct Examination hy Mr. Grosvenor. Q. Col. Metcalf, you offered your bills and accounts re- ceivable to Mr. Perkins? A. I did. Q. You tried to get him to take them? A. I did. Q. And he refused? A. He refused. Q. You told him that if he did not you would have to run your company independently for a while? A. I told him we should have to have control until we could collect them, until we could collect our bills receivable. Q. What did he say to that? A. I cannot recall whether he said that he would have to 390 E. D. Metcalf, Be-direct Examination. consult someone or not, because we were several days in ne- gotiating. We discussed that point several times, he object- ing to our having absolute control of the company for a pe- riod sufficient for us to collect those notes, and we insisting it was either that or they buy them, which would have meant three million dollars more they would have to pay in cash. Q. Tf he bought those it would not have been necessary for you to advertise as independent, would it? A. Not if they gave us good collateral for our notes. They gave us as collateral for our notes only our own stock, which is not considered very good collateral for a note of that char- acter. We finally received 20 per cent, margin of our other farmers' notes, for those three million five hundred thou- sand, the same as any bank would ask collateral on a similar loan. Q. And when did you get that? A. We got that in December, 1904. Q. Until then you held no security for the notes other than the stock and scrip in your own company, which was deposited with the notes? A. Yes, sir. Mr. McHugh : I forgot to ask a question, Mr. Grrosvenor, which I would like to ask at this time. Mr. Grrosvenor: Judge McHugh wants to ask you a ques- tion just now. By Mr. McHugh: Q. While you were operating this company of D. M. Os- borne & Company, from January, 1903, to December, 1904, as an independent organization and holding it out as an in- dependent organization — A. The same as we had before. Q. Yes. — did you manage your business with respect to the competitors in the trade just as you did before? A. Exactly. Q. The Osborne Company was not used in any wise to make a special fight on Adriance, Piatt & Company or any other company that was not connected with the Interna- tional? A. They were not. We would not have allowed it. E. D. Metcalf, Re-direct Examination. 391 {Re-direct Examination Resumed, by Mr. Orosvenor.) Q. Did you hold out as an inducement to the purchase of your company the fact that you were making these lines that the Harvester Company was not making? A. We used every argument possible, and that was one of the strongest arguments we had — ^the fact that we were making a line of goods which they were not making, and it was a very profitable line too. Q. And enable them to extend their business into new ■ lines ? A. It enabled them to have a line of goods which they never had had before. Q. Now, you testified on cross-examination that you had arranged for your credit, for the usual amount of credit, for the year 1903, in advance. When did you make that arrangement ? A. Immediately after the formation of the International Harvester Company and they had refused to purchase our plant. Q. Now, in October, after the final refusal to buy your plant, you went back to Auburn and carried on your busi- ness as you had prior thereto? A. We were carrying it on after August; we started the 1903 product in August. Q. You went back and continued your plans to carry on your business indefinitely f A. We did. Q. Giving up the thought of sale for the moment? A. Necessarily. Q. Now you say that in a few months you had exhausted the credit for which you had arranged for 1903. A. Without going to note brokers. We always — Q. This arrangement you had made with the banks had been exhausted; is that right? A. I think it was to a large extent. No, I will not say that, because some of that money would not come in to us, natural- ly, until the spring. For instance, the Hanover Bank always wanted to loan us in, say, January, February, March or April, payable in the fall. I had a hundred thousand there. The Marine Bank, where we had three hundred thousand at one time, used to like to do the same thing, that is, loan us in the spring and pay in the fall, so they could use the money in the fall to help move the crops of the country. 392 E. D. Metcalf, Re-direct Examination. Q. All that you had arranged to be immediately available had been exhausted at that time? A. I think so. Q. At the time vou went to see Mr. Storrow in Boston? A. Yes. Q. Did you tell him that fact? A. We discussed the situation fully. Q. You discussed the situation? A. Yes. Q. That your credit — ^immediately available supply of credit had been exhausted? A. Oh, no, it "was not exhausted. It was exhausted in certain channels. Q. What channels? A. The First National Bank — we had our full line there. Q. Of New York? A. Of New York. And we had our full line at the Import- ers & Traders Bank at that time. We had our full line I think at the First National of Chicago, although I won't be sure. Q. Did you make any effort at that time, or on or about that time, to obtain further credit from the First National Bank? A. No, sir, because it was not necessary. A large part of our paper was put out through note brokers; for instance Hathaway & Company here, Fogg, Brown & Company of Boston, and what I went to see these banks for : I knew that other banks who were buying our paper would feel the same as they might, and I wanted to know whether they felt the competition would be such that they did not want to extend us the usual line of credit. That is what I went to those old line banks for. They did not represent but a small part of our credits. But in touch with them I got the situation of how other banks would feel that bought the notes not direct of us, but bought them of Hathaway and Fogg & Company of Boston. Simply to know how the banks would feel on the situation. Q. They would give you your usual credit? . ' A. They would give us our usual credit. Q. But at this time you needed more than your usual? A. We always needed more. There was never a time we were out of the market for money — never a time. Q. Were you present when Mr. Storrow telephoned from Boston to Mr. Perkins? E. D. Metcalf, Re-direct Examination. 393 A. I was in Ms office, yes. 1 Q. Were yon present? A. His office is jnst the same as this and I was present in the office. Q. Was any other subject than the subject of making a sale of your property mentioned on the 'phone? A. Not to my knowledge, sir. Q. And it was after you had discussed with Mr. Storrow this situation that you called up Mr. Perkins? A. I did not call him up. Q. Mr. Storrow called him up? A. Mr. Storrow called him up. 2 Q. And suggested that you again have interviews and endeavor to effect a sale? A. I do not know whether the suggestion came from Mr. Perkins or came from Mr. Storrow. The result of it was Mr. 'Storrow and I went over to New York. Q. Now who was it called up New York? Did Mr. Perkins call up? A. No, Mr. Storrow called Mr. Perkins up. Q. And what did he say? What was the subject matter discussed? 3 A. It was ten years ago. It was in regard to this sale — whether it would be of any use for him to see Mr. Perkins again in regard to this sale. He told him, I think that I was there in Boston. Q. Did he say what you were there for? A. I think very likely he did, although I cannot recall it; I think very likely he did. Q. What were you there for? A. I was there to discuss with him the means of expand- ing our business, epecially our foreign business. Q. Of getting more credit? 4 A. Getting more credit. Q. And Mr. Storrow tol^ Mr. Perkins that that was the subject you had in mind? A. I cannot say what Mr. Storrow said specifically, oMy that it was the general subject of our discussion which I had had with Mr. Perkins. Q. Mr. Storrow then took up with Mr. Perkins the subject of expanding your business, over the 'phone? A. I cannot say that he did. I cannot say that he said that part of it. Q. What part of it did he say? 394 E. D. Metcalf, Re-direct Examination. A. He wanted to know if he could talk witli him in regard to selling the. Osborne plant to the International Harvester Company. Q. Was that all? Was that the only subject? A. That was the only subject that I heard any talk about ; that is what he wanted to do ; that was what he had been urg- ing to do ever since he married Miss Osborne. Q. When you mentioned to Mr. Storrow the necessity of expanding your business and getting more credit, that made him still more anxious to sell out; is that right? A. I do not think any more anxious that he had always been. He had always been anxious to sell out. Q. Well, it made him get in touch with Mr. Perkins? A. Probably it made him get in touch with Mr. Perkins, yes. Q. That was one of the matters you referred to Mr. Stor- row, in order that he should take the matter up with Mr. Per- kins; is that right? A. No, I did not consider Mr. Perkins in the proposition at all when I went to Mr. Storrow. I thought that was ended absolutely, and I made my arrangements to go on with the business just the same as if Mr. Perkins had been in Siberia. Q. What did you go to see Mr. Storrow about? A. About the necessities of our business. Q. And that is the subject you discussed with Mr. Storrow. A. That is the subject I discussed with Mr. Storrow. Q. That is, how you could get more money? A. As to what he would suggest for getting a larger capital into our company, in some way or other — ^more money. It had been a constant subject with us almost every month for thirteen years, since I had been with the company, as to how we could get more money in the business. Q. As your business expanded you needed more money? A. We had not paid a dividend for — prior to 1896 the com- pany had not paid a cent of dividend for ten years, and after that only six per cent., because the necessities of the busi- ness absorbed all the profit there was in the business — ^the nec- essities of expansion. Q. That is, the necessity of expansion in this year? A. Yes. Q. When you went to the company in 1890 it was in very bad shape, wasn't it? A. It was. Q. And that was due to unfortunate ventures, due to the E. D. Metcalf, Re-direct Examination. 395 change in the character of the binders sold in the market — 1.- due very largely to that fact? A. A few years ago they had introduced a binder which was unfortunate. Mr. McHugh: You said "A few years ago." You mean — Witness: A few years prior to that time, — and was said to have lost over a million dollars by it. Mr. Osborne is more familiar with that, however, than I am. Q. But in the ten or twelve years up to 1902, that you had been with the company, you had succeeded in rehabilitating and re-establishing it, putting it on a safe foundation? A. I believe our credit was as good as any other company ^ in the United States borrowing the amount of money we were. Q. "When you mentioned to Mr. Storrow the subject of get- ting more money, what did he say? A. I cannot say how he said it, but he inferred that I was not a good negotiator, that I had not been able to sell to Mr. Perkins, and he thought he would like to try again. And so he said he would call him up over the 'phone. He knew Mr. Perkins quite well. Q. Then you went down to see Mr. Perkins ? A. Went to see Mr. Perkins. 3 Q. And the result of your negotiations then was that you got a million and a h^lf less than you had been trying to get? A. We got a million eight hundred thousand dollars k.-i for the plant than I had asked. Q. Prior. A. That I had asked at all of the negotiations I had been trying to conduct. When I say "the plant" that means the two plants—the Columbian Cordage Company and D. M. Os- borne & Company. Q. I understand. Are you connected with the International Harvester Company today in any capacity? 4 A. In an advisory capacity, locally. Q. Locally? A. Matters in Auburn. Q. General adviser to them as to matters that arise in the East? A. That arise at the Auburn factory. Mr. Grosvenor: That is all. A recess was here taken until 2:30 o'clock P. M. 396 E. D. Metcalf, Re-direct Examination. AFTERNOON SESSION. Mr. Grosvenor: Mr. Examiner, let the record show that we met after recess, and then adjourn until tomorrow morn- ing at 10:30 o'clock; that Temple Bowdoin appeared at the hearing, under subpoena, and was excused by counsel for the Government, and requested to appear at 10:30 tomorrow. An adjournment was thereupon taken until the morning of Friday, October 25, 1912, at 10:30 o'clock. 2 W. p. Hamilton, Recalled. 397 Hearing of Octobbb 25. Room 66, Postoffiee Building, New York, N. Y., October 25, 1912. 10:30 A.M. The hearing was resumed before the Special Examiner, Robert S. Taylor, at the above time and place. Present : On behalf of the Petitioner, Edwin P. Grosvenor, Esq., Special Assistant to the Attorney-Greneral, Joseph R. Darling, Esq., and Abram F. Myers, Esq.; on be- half of the defendants, Hon. William D. McHugh, John P. Wilson, Esq., and Hon. Philip S. Post. WILLIAM PIERSON HAMILTON recalled as a witness on behalf of the petitioner, testified as follows: Direct Examination by Mr. Grosvenor. Q. Mr. Hamilton, when you were called the other day at the request of counsel for the Government, you stated that you would produce further memoranda, which you have now returned in order to present. I direct your attention to your testimony, on page 2 of which this question was asked: "This subpoena calls for an agreement dated on or about August 33, 1902, providing for the depositing with J. P. Morgan & Company of stock trust certificates. The printed form of con- tract which you have produced provides: 'The undersigned and such other persons as shall accept receipts hereunder, hav- ing deposited with J. P. Morgan & Company stock trust cer- tificates representing capital stock of the International Har- vester Company in the amounts set opposite their respective signatures hereto or specified in such receipts, as the case may be, hereby agree with J. P. Morgan & Company as fol- lows.' Now I want the list of the persons who comprise the class known as 'the undersigned;' that is, the list of persons who deposited stock pursuant to this agreement on or about the 13th of August, 1902." Have you produced such list? A. You refer to this agreement, do you not, Mr. Grosve- nor? (Handing paper to Mr. Grosvenor.) I may want a lit- tle explanation on this. Mr. Grosvenor: I suggest that the witness take the exhib- 398 W. P. Hamilton, Recalled, Direct Examination. its that were produced the other day and numbered, and then in his testimony, if he will, refer to the number that appears, and no difficulty will arise. (Handing witness papers.) The question had reference to Exhibit 57. A. I do not find that there were any deposits made spe- cifically under No. 57, nor any signers to it. Q. You produced two other contracts or agreements which were put in evidence as Petitioner's exhibits 57 and 58. State whether or not the terms or provisions of that first exhibit, No. 57, were embodied in the other two exhibits which you produced? A. I understand they are substantially the same. Q. That is, Petitioner's Exhibit 57 was a preliminary agreement ? A. Yes. Q. Preliminary draft? A. Preliminary draft. Q. And its provisions are covered by the other two agree- ments ? A. They are. Q. Now the next ,question : ' ' The subpoena calls for an agreement on or about August 13, 1902, providing that certain stocfeholders of the International Harvester Company were not to sell their stock- trust certificates before 'September, 1903, without giving J. P. Morgan & Company an opportunity to buy the same. * * * The witness produces a printed agree- ment, unsigned, between Cyrus H. MeCormick and others and J. P. Morgan & Company, entitled 'Agreement for Deposit of Stock Trust Certificates, dated August 13, 1902;' also a printed form of contract, unsigned, between Charles Deering and J. P. Morgan & Company, same title, same date." Then the question : "I will request the witness to furnish the names of the parties who signed each of the exhibits last mentioned, and also a statement showing the number of shares so de- posited under the agreement with Messrs. J. P. Morgan & Company. ' ' Now, Mr. Plamilton, that is not an exact descrip- tion of those two latter exhibits. Exhibits 58 and 59, as I understand, apply to all the stock deposited and covering the period mentioned in the agreement, that is, from September, 1902 — during the period of the Voting Trust. A. That is my understanding. Q. Now, the request is that you furnish the names of the parties who signed each of the exhibits last mentioned and W. p. Hamilton, BecMed, Direct Examination. 399 also statement showing the number of shares so deposited under agreement with Messrs. J. P. Morgan & Company." Have you produced a list of those who signed! A. I do not find that there were any actual signers of the agreement. The agreement was signed — Q. Well, have you produced a list of the persons who de- posited? A. I have here a list of the depositors under those agree- ments, who aecejoted certificates under those agreements. Q. Which would correspond to the signatures in the agree- ment, the deposit being made under the provisions of the agreement ? A. Yes. Mr. Grosvenor: The witness hands me a list of names, which has been marked Petitioner's Exhibit 68. I offer the same in evidence. Petitioner 's Exhibit 68 is as follows : PETITIONER'S EXHIBIT 68. Stock Trust Certificates of the International Harvester Company deposited with J. P. Morgan & Co. under the agree- ment of deposit dated August 13, 1902, between J. P. Morgan & Co. and others. Nettie F. McCormick Cyrus H. McCormick Anita McCormick Blaine Harold F. McCormick Stanley McCormick Deering Harvester Co. Q. Now this list which you produce contains the names of the five owners of the McCormick Harvesting Machine Com- pany, and also the name of the Deering Harvester Company. You were asked to ascertain whether the owners of the Piano and Warder, Bushnell & Glessner companies deposited any stock, under the same sort of an agreement with you. Have you ascertained whether the owners of the Piano and Cham- pion companies did so deposit? A. The only depositors were those in that list. Q. That is, the McCormicks and Deerings. A. You have it there, sir. I will read it off if you will hand me the paper. (Mr. Grosvenor hands paper to the witness.) 400 W. P. Hamilton, Recalled, Direct Examination. Witness: McCormioks, Blaine, McCormick, MoCormick, and Deering. Q. The witness was also requested to produce statement showing the number of shares so deposited under those ex- hibits. Have you produced that? A. That was produced the last time. (Handing paper to Mr. Grosvenor.) Mr. Grosvenor : The witness shows Petitioner's Exhibit 60, produced at the last hearing, which I would like to have ap- pear in the record at this place. Petitioner 's Exhibit 60 is as follows : PETITIONER'S EXHIBIT 60. STATEMENT OF INTERNATIONAL HARVESTER CO. STOCK TRUST CERTIFICATES HELD ON DEPOSIT BY J. P. MORGAN & CO. Jan. 1903 59,760 shares 1904 547,925 " 1905 568,820 " 1906 475,573 " 1907 475,573 " Delivered to Standard Trust Co. in 1907 475,573 " Common Preferred Received in exchange voting trust certificates for 237,7861 shs. 237,786^ shs. Jan. 1908 Held on deposit 276,7941 " 113,122^ " 1909 132,097 1910 258,810 36,959' " 1911 258,810 36,959 " 1912 244,691 51,159 " Sep 12 1912 None on hand Q. Now the next question is: You produced in response to subpoena a statement taken from your books, which it was requested should be taken from your books, showing the amounts received by J. P. Morgan & Company for services, and I see from the record that that was to be returned for examination. Now I show you Petitioner's Exhibit 61. Ex- plain the same on the record, as being taken from the books. A. This is a copy of the entry on our books, as called for in the subpoena. It shows that we paid $13,500,000 for 165,000 W. p. Hamilton, Recalled, Direct Examination. 401 shares of stock trust certificates. The entry is valued as of August 14th. This is owing to the fact that the transaction was made on the 14th instant and the entry on the book was the 15th instant. It is a bookkeeping term. Q. Have you finished? A. Unless you have something more that you want. Q. Let me ask one or two questions to bring that out more clearly. You paid $13,500,000 to Mr. Lane? A. Yes. Q. You then received in stock $16,500,000? A. 165,000 shares. Q. Yes ; of a- par value of $16,500,000? A. That is right. Q. So that what you received for services would be the difference between those two figures, namely, three million, in stock? A. That is it. Q. You were also asked this question : Referring to these several appraisals and accountants' reports made pursuant to the contracts of July 28, 1902, you were asked to have in- quiries made at your office and ascertain whether copies of reports of those appraisers or of the accountants had been retained in the office of J. P. Morgan & Company. A. I have had such inquiry made, and I do not find that we have any in our possession. Mr. Grosvenor : I understand that counsel for the defend- ants have stated they will have those. Mr. Wilson : We think we can produce them. Mr. Grosvenor: They think they can produce them, and will do so at the next hearing in Chicago, — from the files of the Harvester .Company. Q. That completes the questions which I asked you the other day and the information you were to produce. I find, Mr. Hamilton, there is one other agreement which we have not yet obtained, namely, the agreement for the supplying of working capital by Mr. Lane to the Harvester Company, dated, I think, on or about August 12, 1902. Will you make a memorandum and see if you have a copy of that agreement? A. August 12, 1902; between whom? Q. Between W. C. Lane and the Harvester Company, and I think very probably J. P. Morgan & Company was a party to some such agreement. If you will look that up, please. A. I will. 402 Request to Produce Documents. Q. We are going to adjourn today. I will let you know ■wlien to produce it, or you might write to me. • A. Yes. Q. I understand that the amount of three million dollars, then, comprises everything that your firm received for serv- ices in connection with the formation of this company? A. So far as I know. Mr. Grosvenor: That is all. No cross-examination. "IMPLEMENT AGE" ADVEiETISEMENTS. Mr. Grosvenor : The Government produces volumes of the "Implement Age," and it is agreed that proof of the identi- fication of the books be waived and that counsel for the Gov- ernment may prepare extracts from the advertisements there- in and incorporate them in the minutes at a subsequent date without calling a witness, John D. Toll being present at this hearing to identify the books. BEQUEST TO PEOBUCE DOCUMENTS AT NEXT HEARING. Mr. Grosvenor: Counsel for the Government requests counsel for the defendants to produce at the next hearing at Chicago, Wednesday, October 31, the following papers : 1. Agreement respecting the furnishing of working capital to William C. Lane, dated on or about August 12, 1902, and referred to in the proposition of Lane made to the Interna- tional Harvester Company on that date. 2. The appraisals made under the contracts of July 28, 1902, by the appraisers. 3. The accountants' reports made under the same con- tracts, relating to the operations of the several companies for the preceding years. 4. A complete list of the stock trust certificate holders holding 500 or more shares for each year from 1902 to 1912, inclusive, as shown by the books. 5. Statement showing the amounts paid to each of the Mc- Cormick, Deering, Champion and Piano companies for their several properties, said amounts being paid in stock or cash, or both. Request to Produce Documents. 403 6. The output of each of the five companies which went into the consolidation in 1902, for each of the years 1900, 1901 and 1902; for— (a) Binders; (b) Mowers ; (c) Reapers ; (d) Rakes; (e) Twine; — stated separately for each of said articles. 7. By-laws of the International Harvester Company for 1912. 8. The circulars to the sales agents for the years 1903 and 1904. 9. The several contracts referred to in the testimony of Mr. Funk and Mr. Haskins, which were to be produced by them. 10. The descriptive catalogues published, of the different lines; for instance, catalogue of the McCormick lines, the Deering lines, — for the year 1903, and also for the year 1912. 11. Mr. King's answers to the unanswered questions. 3 An adjournment was then taken until the morning of Wednesday, October 31, 1912, at 10 :30 o'clock, Postoffice Build- ing, Chicago, 111. 404 B. B. Swift, Direct Examination. Hearing op October 30. Eoom 606 Post Office Building, Chicago, 111., October 30, 1912, 10:30 A. M. The hearing was resumed before the Special Examiner, Robert S. Taylor, at the above time and place. Present : On behalf of the Petitioner, Edwin P. Grrosvenor, Esq., Special Assistant to the Attorney General, Joseph R. Darling, Esq., and Abram F. Myers, Esq.; On behalf of the defendants, Hon. William J). MoHugh, Edgar A. Bancroft, Esq., and John P. Wilson, Esq. The following proceedings were thereupon had, to-wit: K. B. SWIFT was duly sworn as a witness on behalf of the Petitioner, and testified as follows: Direct Examination by Mr. Grosvenor. Q. Mr. Swift, where do you reside? A. I live part of the time here in the city and part of the time on my farm at Libertyville. Q. You have both a country residence and a city residence? A. I could hardly dignify them by that name. I have a farm house at which I stay with the farmer's family when I am on the farm, and I have an apartment here in the city. Q. Have you been engaged in the harvesting business, Mr. Swift? A. I have. Q. When did you start in the business of maldng harvest- ing machines ? A. I started to work on harvesting machines in 1876. Q. With what company? A. I worked then with the Wood company, and in 1880 went with the MoCormick Harvesting Machine Company. Q. Here in Chicago? A. I worked at that time at Des Moines, Iowa. Q. — But the company was the Chicago company? A. Yes. Q, From 1880 until 1902, when, as the evidence shows, the B. B. Swift, Direct Examination. 405 MeCormick company went into the International Harvester Company, were you continnously engaged with the MeCormick Company? A. I was. Q. And during that time, had you had a varied experience in the different departments of the harvesting business? A. I think in most departments I had had experience. Q. What was your position in 1901 with that company! A. I had charge of the legal and experimental departments of the MeCormick company. Q. Were you in touch with the other departments of the company? A. I was. Q. You had a general knowledge of the business of the company? A. fhad. Q. Were you called into consultation by the president and the other officers of the MeCormick Harvesting Machine Com- pany in relation to the affairs of the company? A. Frequently. Mr. McHugh: Legal? Witness : Legal. Q. Were you a lawyer? A. I graduated from a law school, but I never dignified myself by that name. Q. In other words, you let your law help your larger busi- ness; is that it? A. Well, I did the best I could. Q. You did not engage in the practice of law? A. I never practiced law. Q. Your entire tim.e was devoted to the MeCormick Har- vesting Machine Company; is that right? A. It was. Q. Now who were tlie larger competitors of the MeCormick Harvesting Machine Company in the year 1902? A. The Deering Company, Warder, Bushnell & Glessner Company, Piano Company, Osborne & Company, Johnston, and several other smaller companies ; and the Mlwaukee. Q. Was the Milwaukee one of the small ones? A. Well, I didn't think of the Milwaukee name when I was mentioning the others. I should call the Milwaukee Company a fair competitor — not a small competitor. Q. Which were the six largest? 2- 406 R. B. Swift, Direct Eooamination. A. The Deering, Warder, Buslinell & G-lessner, Piano, Os- borne, Milwaukee. Q. You have left out the McCormick. A. I was referring to the — Q. To the competitors? A. To the competitors of the MoCormick. Q. The McCormick would rank up with the Deering, would it? A. I always prided myself that it was a little better — a little larger. Q. Was the competition between those companies at that time vigorous ? A. The competition was vigorous. Q. And keen? A. Yes, and keen. Q. Were those different companies always figuring on con- cessions which they might make to the farmer, to persuade the farmer to buy their machines? Mr. McHugh : I object to that as leading. Q. State whether or not. A. The different companies were doing all that they pos- sibly could, in every way, to increase their sales. Q. State whether or not during this period of competition the competition was held within the bounds of the cost of manufacturing and of sale. A. It was held well within the bounds of the leading com- panies. Q. Take your own company, the McCormick company: Had the business of the McCormick company been good? A. It had. Q. Had they made money? A. They had. Q. During the three years prior to 1903, that is, taking the seasons 1900, 1901 and 1902, are you able to state, to the best of your recollection, what the net profits were in those years, in the aggregate? A. I remember those profits. Q. Please state the figures for those three years. A. It was in excess of 16 million dollars. Q. In excess of 16 million dollars for those three years? A. Yes, sir. Q. What was the capitalization of the McCormick com- pany? A. $2,500,000. R. B. Swift, Direct Examination. 407 y Q. _ Take the first year, the year 1900 : Do yon recall ap- 1 proximately the figures for that year? A. I remember those figures. Q. State what they were. A. In excess of $4,300,000. Q. Then that would make the profits for each of the years 1901 and 1902 close to 6 million dollars — for each of those years? A. That is right. Q. Had the McCormick Company, between the years 1888 or 1889 and 1902, paid dividends? A. It had. 2' Q. Can you state the aggregate per cent, of dividends paid during those twelve or thirteen years ? A. I can. Q. State what it was. A. 463 per cent. Q. During those years had the McCormick Company largely increased the property which it held? A. It had. Q. I mean the inventories and the working capital and the plant and all the different items which go to make up the 3 total assets? A. It had. Q. The total assets had then largely increased? A. They had. Q. Are you able to state what the assets were, or the total book value of the property was, in 1889, or thereabouts ? A. It was 12 million dollars. Q. What was the value in 1902 ? A. 50 million dollars. Q. Had this all been piled up out of earnings in those thir- teen years? ^ A. To the best of my knowledge it had. Q. Mr. Swift, state whether or not you had any part in the conferences which resulted in the formation of the Interna- tional Harvester Company in the year 1902. A. I did. Q. State whether or not you had such talks in the latter part of the year 1901 with reference to the formation of a consolidation of harvester interests. A. I did. (At this point, Hon. Phillip S. Post, counsel for the defend- ants, came into the hearing room.) 408 R. B. Sivift, Direct Examination. Mr. McHugh : Wait a minute, please. Mr. Grosvenor: Let me state, just in order to facilitate the progress of the case, that if you want to enter an objec- tion, later, to the question, I am perfectly willing. Mr. McHugh : I was just considering whether I wanted to ask a question on the voir dire that was all. I want to ask one question. Were you consulted as the head of the law de- partment in these matters'? Mr. Grosvenor: The witness has testified that he never practiced ; his post was business. Let, me ask this question : Yv'ero you the general counsel? Mr. McHugh: I think I have a right to an answer to my question, my dear sir. (The question asked by Mr. McHugh was read by the Ex- aminer.) Witness: Well, I should say more particularly consulted in relation to the business end of the matter, rather than the law end of it. Mr. McHugh : More particularly ; but did the consultations involve your function as the head of the law -department at all? A. Somewhat. By Mr. Grosvenor : Now, Mr. Swift, you were not general counsel for the McCormicks, were you? A. I was not. Q. Y/ho was? A. 1 think the McCormicks at that time employed a num- ber of laAvyers; whether they had a general counsel in name at that time or not, I do not recall, but Mr. Cyrus Bentley, Mr. John P. Wilson, and other lawyers, were the people who advised them in relation to their legal matters. Mr. McHugh: Was there any other lawyer who devoted his time to the legal business of the McCormick Harvester Company — all his time — except yourself and those under you in the department, as far as you know? Witness : There was no lawyer at that time that devoted his entire time. Mr. McHugh: Besides yourself. Mr. Grosvenor: He has not said that he devoted his en- tiro time to the legal end of it. I object to your "besides yourself." He has testified he was a lawyer, but he was in the commercial end of it. By Mr. Grosvenor: Mr. Swift, you are an expert on ma- chines, are you not? I mean by that, on patented machines? R. B. Swift, Direct Examination. 409 A. I think so. Q. You were at the head of the patent department, were you not? A. 1 was. Q. And of the experimental department? A. 1 was. Q. Whatever legal service you performed was in connection with these points? Mr. McHugh: I do not think you ought to lead the wit- ness. Q. State whether or not that is the fact. A. That is not the fact. At that time I had charge of the accidents and a great many of the business matters, in the way of some collections and accounts, and so forth, that were all reported to me. There was a young lawyer in the department who looked more particularly after collections and matters of that kind, and I had an assistant who looked more par- ticularly after patent matters. Q. Now, these conferences or these talks to which you have referred, in the latter part of 1901 and the beginning of 1902, with reference to the consolidation of the harvester in- terests, were those in regard to the business end of such a proposition? A. They were in relation to the business and also in rela- tion to the legal aspects of whether such a combination could he legally made. Q. Now state with what officers or important employees of the company you mentioned, the subject of consolidation was discussed in the early part of 1902. A. With Cyrus, Harold and Stanley McCormick, and with Mrs. McCormick. Q. You mean Mrs. McCormick senior? A. Senior. With Mr. Mayer, who was then the head of the sales department ; Mr. Daniels, Mr. Legge, Mr. Cyrus Bentleyj and there may be some others. Q. State whether or not you went to New York in the early part of 1902. A. I did. Q. In connection with this matter? A. I did. Q. Whom did you go with? A. Cyrus McCormick. Q. What was the purpose of the trip? State it, if you are able to do so. 410 B. B. Swift, Direct Examination. '•- Mr. McHugli: That i-s objected to as incompetent, irrele- vant and immaterial, and calling necessarily for the result of conferences and communications made to the witness by the president of his client company, in connection with the company's business, and therefor a privileged communication under the statute. Mr. Grosvenor: Please read the question, Mr. Examiner, and ask the witness to answer it. Mr. McHugh : So that the record shall be complete, I want to ask a question on the voir dire. It is true, is it not, Mr. Swift, that you could not answer that question as to the pur- pose of going down to New York? Witness: That is not true. I can answer it. Mr. McHugh: Wait a moment. You didn't hear my ques- tion. It is true that you could not answer that question with- out disclosing the results of communications made to you by the officers and stockholders of the MdCormick Harvesting Machine Company, your client, with whom you were in consul- tation, you being the head of the law department? Mr. G-rosvenor: Well, he knows. Mr. McHugh : That is for him to say, whether that is so ox not. Mr. Grosvenor: He knows for what purpose he went, and the question only asks him to state the purpose. Read the question again, Mr. Examiner, so that the witness may be able to answer the other question. Mr. McHugh: Well, my question is before him. Mr. Grosvenor: He has not answered my question. Just read it, Mr. Examiner. (The latter part of the record was read by the Examiner.) Mr. Grosvenor: He has not said he was at the head of the law department. Mr. McHugh: Oh, yes, he has. Mr. Grosvenor: No; he was at the head of the patent de- partment. Mr. McHugh : He said the law department and the experi- mental department. Witness : It is true that I cannot answer the question with- out I state the conversations that occurred between Mr. McCormiok and myself. Mr. McHugh: And you being the head of the law depart- ment. There is a difference of recollection between counsel and myself. R. B. Swift, Direct Examination. 411 Mr. Grosvenor: Were you at tlie 'head of the law depart- ment then, Mr. Swift? A. I was at the head of the business law department of that institution; the larger affairs of the institution had spe- cial attorneys. Q. Then I will ask you to answer the question. What was the purpose of your trip to New York? State it, if you are able to do so. Mr. McHugh : Now I want to question him again : Is it not true, Mr. Swift, that to answer that question would involve the disclosure of communications made to you in conferences with you as acting in the law department of the company and consulted in that position by officers of the McCormick Harvesting Machine Company? Witness: I would not say that that is the fact, because I think I went there with Mr. McOormick as a business repre- sentative rather than for any legal knowledge that I might have. Mr. McHugh: The question goes back as to what your knowledge of the purpose was in going down. Witness: I know why we went down. Mr. McHugh : Did you get the knowledge of why you went down in the conferences that they had with you, you being the head of the law department? Mr. Grosvenor : He has answered that he got it in his con- ferences in a business way — not legally. Mr. McHugh: He has answered that in part that was so, but it also inhered in the law consultations. Mr. Grosvenor: No, he has not said that. Now let us go back to Judge McHugh 's question. Mr. McHugh : Mr. Examiner, suppose you read back four or five questions and see what he has said about that. (The last two or three pages of the testimony of the wit- ness was read.) Mr. McHugh: I will make my meaning clear. I am not asking as to whether you went down to New York in your capacity as attorney or business adviser, but my question is this; Is it not true, as you have already stated, that your knowledge of the reasons and the purpose of going to New York — ^your going and Mr. McCormick 's— was knowledge that came to you in conferences at which you, the head of the law department, were consulted by the officers of your client com- pany? Witness : No, I do not think so. I was with the McCormick 412 R. B. Swift, Direct Excumination. 1 company at that time in a business capacity, in a great many of the departments, and the purpose of this visit to New York was talked over before we left ; not talked to me confidentially, but understood by the people about the office; and I take it that I went along having perhaps a fair knowledge of the busi- ness and sufficient knowledge of the law so that I might com- prehend what the good lawyers said about it. Mr. McHugh : And so your legal knowledge was part of the matter that was involved in the consultation with you I Witness: That led me to be selected to go. Mr. McHugh : Well, the talk was with you in part because ' you were a lawyer — had legal knowledge! That is what yov have just said, is it not? Witness : We were, a number of us, present in these talks, some who were not lawyers, and, as I have stated, I have never made any pretense of being a lawyer. Mr. McHugh: Well, I simply want to get your meaning, Mr. Swift. You were the head of the law department that the McCormick Harvester Company maintained at its office, as I understand your testimony? A. I was. Mr. McHugh: So that you dealt with the officers of the McCormick Harvesting Machine Company with that relation- ship in part at least, that you were the head of their law de- partment? That is necessarily true, is it not? Mr. Grosvenor: He has already answered that question several times. Witness : I am compelled to say, Judge, that I do not think my knowledge of law had very much weight with the people of that company. In fact, it never had very much weight with myself. Mr. McHugh : The precise point I am getting at, Mr. Swift, is this: When they came to you and talked with you, was it not in part because you were the head of their legal depart- ment? There was necessarily, was there not, a confidential relationship that existed between the head of the law depart- ment and the officers of the company? That is true, is it not? Witness: I should say that whenever the McCormicks had legal matters that required any confidential information, they went to better lawyers than they required me to be. They went to some good lawyers — ^they did not come to me. Mr. Grosvenor: I do not like to interrupt, but the exam- ination seems to be passing over to you, Judge McHugh. B. B. Swift, Direct Examination. 413 Mr. MeHugh : I have that right on the voir dire. Mr. Grosvenor: He has testified he was a business man — not a lawyer. Mr. McHugh : He has testified he was the head of the law department. By Mr. Grosvenor: Which comprised the larger part of your services — your business knowledge or your legal knowl- edge? A. Oh, very much the business end of the matter. Q. It was the business end that was the occasion for your going with — Mr. McHugh : I object to that as leading. Q. State whether or not the business end of your knowl- edge was the occasion of your accompanying Mr. Cyrus H. McCormiok to New York where he was to consult the real good lawyers. Mr. McHugh: Before that question is answered, I would like to go into this voir dire examination in which I was interrupted. You as head of the law department had certain responsibilities as such, had you not, to the McCormick Har- vesting Machine Company? Witness: I did. Mr. McHugh: And as head of the law department of the McCormick Harvesting Machine Company, you had confiden- tial relations with the company? Witness: Not much. Mr. McHugh: Well, you knew enough law, Mr. Swift, to know that the law makes the confidential relations? That is what I mean by my question. Witness: What I am trying to explain is, that my posi- tion with that company in the legal matters had to do more especially with the every-day business matters of that house. Mr. McHugh: Oh, yes, I understand. Witness : And that is all. When they wanted more than that they went, of course, to good lawyers to get it. Mr. McHugh: I can understand that your function was with reference to the routine law work of the administration of the business. / Witness : Yes, sir. Mr. McHugh: That is true, but I merely wanted to make sure that that was the relationship. You were not the only lawyer they had, not the only one that was consulted on things, but you had the relationship of a lawyer to that 414 R. B. Swift, Direct Examination. company as well as the relationship of head of the experi- mental department; did you notf Witness : I always thought it was very gracious of Mr. Harold McCormick when he used to say that I was the head of the legal department. Mr. McHugh: Yes. Witness : And always so considered it — very gracious. But I really — Mr. McHugh: Well, that was said. Witness: I really, you know, had very little to do with anything in the business except the business end. For in- stance, if there was an accident at the works and the attorney that was employed reported to me that the man was hurt so- and-so, I would say, "Why, go settle it," or I would say, "I guess we won't pay it," and so on. Mr. McHugh: You passed on the legal liability of the company? A. I passed upon usually the business — what I thought to be the sensible business part of the things that were brought to me. Mr. McHugh : Well, you understand that that is what all lawyers are supposed to do — ^to act sensibly along business lines. Mr. Grosvenor: Now, Mr. Examiner, I think we have got these objections down sufficiently, and I suggest that I now proceed with the examination. Mr. McHugh: I want to finish this question that I had started when I was interrupted. Mr. Examiner, will you just read as far as I had gone? (The Examiner read the last question of M^- McHugh 's.) Mr. McHugh : ■ And the fact that you did that in matters of liability with respect to accidents and what should be done didn't change your relationship as an attorney for the com- pany? You understood that, did you not? Witness : Really, Judge, I do not know just what you mean. Mr. McHugh: I mean just this: Didn't you understand — don't you now understand — that at that time, when you were head of the law department, you were a lawyer for the McCormick Harvesting Machine Company? Witness : I never was a lawyer for them ; I never repre- sented them in a case in court or argued a case, or appeared in a court for them. Mr. McHugh ; That is all I care to ask. R. B. Siuift, Direct Examination. 415 By Mr. Grosvenor: Now, to return to the question, wMcli I think was: State what the purpose of your trip to New York was. A. We went down there to consult with some of the leading financial men of the country and some of the good lawyers. Q. In respect to what? A. In respect to whether a combination of the harvesting machine companies could he made, legally, and whether the money could be got to do it with. Q. When was this, approximately 1 Was it in the summer or spring of 1902? A. It was in the early part of the year 1902. Q. Whom did you see in New York? A. Saw Mr. Stetson. Q. What Stetson is that? A. He is the attorney for J. P. Morgan & Co. Q. Francis Lynde Stetson! A. That is the gentleman. Saw Mr. Morgan and saw Mr. Cromwell. Q. What Cromwell was that? Cromwell of Sullivan & Cromwell? A. Yes. Q. William Nelson Cromwell? A. William Nelson Cromwell. We saw the president of one of the large trust companies in New York. Q. Do you recall his name? A. I should say that it was Mr. Stewart. I have not thought of it before in ten years, but that is my recollection of the name. Q. Did you accompany Mr. McCormiok in these interviews and conferences with the gentlemen you have named? A. I did. Q. And were all of these conferences in regard to forming a consolidation of the harvesting manufacturers? A. When we saw J. P. Morgan, nothing was said about a consolidation. Q. Had you seen Mr. Stewart prior to your interview with Mr. Morgan? A. We had. Q. Mr. Stetson was whose lawyer? A. Mr. Morgan's. Q. State to the best of your recollection what was said at the interview with Mr. Stetson. 416 B. B. Swift, Direct Examination. A. I have no such recollection of that interview as would allow me to give the language. The substance of it was that Mr. Stetson assured Mr. McCormick that Mr. Morgan would be willing to stand behind the combination of the harvesting ma- chine companies, and that it, in his opinion, could be done legally— such a combination made. Q. Was the anti-trust law mentioned or anti-trust statutes mentioned ? A. I do- not recall that they were, but I recall definitely that there was quite a little talk about whether the law would allow such a combination to be made. In later interviews, there was reference to the anti-trust law. Q. That is, before the consolidation? A. Yes. Q. How long were you in New York? A. We were there several days. Q. And did you have any business other than this matter? A. No, sir. Q. State to the best of your recollection the interview with Mr. Cromwell. What transpired there? What was said? A. We saw Mr. Cromwell; I cannot tell all he said. He said so much that the gist of it was, in his judgment, a com- bination of the companies could be made. I remember he said some things that I could understand. Q. You mean about the anti-trust law? A. Yes; he thought there was nothing that could prevent people from selling their business to whomever they wanted, or anybody else from buying it. Q. Was anything said at those conferences as to the form that the combination should take; that is, as to maldng sales to one man and then from that man to a corporation to be formed? A. No such talk at that time. Q. Do you recall anything else that transpired while you were in New York about this matter? A. I have not thought of this for years and I recall noth- ing else. Q. Did you return to Chicago with Mr. McCormick? A. I do not remember. Q. Did you have any further conferences, talks, with offi- cers of the McCormick Company in reference to this consolida- tion after this time? A. We discussed it all through the spring of 1902, fre- quently. R. B. Swift, Direct Examination. 417 Q. State wliether or not you had any man working on the books during the spring of 1902, making up estimates of the value of the property and the assets, and so forth, — inven- tories. I A. Yes, there was — Q. State the name of the man, if you recall, who was so en- gaged. A. I think there were a number of men in the employ of the company in its bookkeeping department who were engaged in finding out the exact condition of the company, and I think Mr. Johnston. Q. What is his full name? A. My recollection is that it is Wentworth; I should say Wentworth P. Johnston. Q. Did he afterwards enter the employ of the Harvester Company? A. He did. Q. Now, did any of these New Yoirk lawyers come on to Chicago about this matter? A. They did. Q. Who? A. Mr. Stetson came here. Q. Did you meet him? A. I did. Q. Who else was present? A. Harold McCormiok; at least one of the sons of Mr. Cyrus McCormick. Q. You mean one of the sons of Cyrus McCormick, senior? A. I mean at least one of the sons, either Harold or Stan- ley; Mrs. C. H. McCormick, senior; I distinctly recall them. Q. And where was this conference? A. In one of the hotels in Chicago. Q. And was the consolidation of the harvester interests the subject matter under discussion at that conference? A. It was discussed at that conference. Q. Was anything else considered? A. I have no recollection of anything else. Q. Now, when was that? Do you recall the date ? A. In the spring of 1902. Q. Did you, in the spring of 1902, see any of the other manufacturers of harvesting implements for the purpose of in- ducing them to come into such combination? A. No, sir. Q. Did any of the officers of the McCormick Company 418 B. B. Swift, Direct Examination. state to you at any time that he was seeing any of these manufacturers in connection with this matter? A. They did. Q. State who. A. Mr. Cyrus McCormick. Q. Mr. Cyrus McCormick? A. Yes, sir. Q. Was that in the spring of 1902? A. Yes. Q. Who was the manufacturer? A. The firm was Warder, Bushnell & Glessner. Q. What member of that firm? A. Mr. Glessner. Q. John J. Glessner? A. John J. Glessner. Q. How did you learn that Mr. McCormick happened to see him or was seeing him about this matter? A. Mr. McCormick told me so. Q. When did you have any further conferences in regard to this matter? A. They continued through the spring and early summer of 1902. Q. Who were the officers other than yourself and Mr. Cyrus McCormick who participated in them? A. Mr. Harold and Stanley McCormick, Mr. Bentley, Mr. Legge, Mr. Daniels, Mr. Mayer. Q. Mr. Alexander Legge ? A. Yes. Q. And what is Mr. Daniels' name? A. H. L. Q. And Mr. Mayer? A. Mayer, who is now dead. Q. Were these men whom you have mentioned the most important officials of the McCormick Company? A. They were. Q. And this was all prior to July, 1902? A. It was. Q. Did you go to New York in connection with the matter in July? A. I did. Q. Where did you stay? Do you recall the name of the hotel? A. I think it was the Manhattan. R. B. Swift, Direct Examination. 419 Q. Did any of the other people of the McCormick Company 1 stay at the same hotel? A. We all stayed there. Q. Who was there? A. Cyrus MeCormidk, Harold McCormick, Stanley Mc- Cormick, Mrs. C. H. McCormick, senior, Mr. Cyrus Bentley, Mr. Fowler, Mr. Legge. Q. Eldridge M. Fowler? A. Yes. Q. Alexander Legge. A. And myself. Q. How long were you there? 2 A. I should say two weeks. Q. Were you continuously engaged on this same subject, that is, of consolidation of the harvester interests? A. We were. Q. Bid you know at that time that the plan contemplated the bringing in of the other manufacturers? A. I did. Q. Were the names of these other manufacturers men- tioned? A. They were. 3 Q. At these conferences ? A. They were. Q. And with reference to these other companies which came in, was the subject discussed at these meetings of bring- ing them in? A. It was. Q. State whether or not it was known by all these persons you have named that they were trying to get them all in. A. It was. Q. And was that true of the conferences in the spring of 1902? 4 A. It was not. Q. It was not? A. No. Q. But all the time you were in New York you knew that these other manufacturers were being negotiated with? A. All the time that I was in New York, in July. Q. Yes, that is what I mean; all the time that you were there in July. A. In the middle of July. Q. Did you have meetings of all these persons you have mentioned to discuss the proposition, at the hotel? 420 R. B. Swift, Direct Examination. A. We were in almost continuous session. Q. Did any of the down-town business men come up to see the McCormieks at the hotel, to bring propositions to them? A. I saw Mr. Perkins there. Q. And did any of these McCormick owners send any of their number down town to discuss the proposition? A. They did. Q. And did they then come back and report? A. They did. Q. Now, what topics — I mean by these people whom you have stated were present — what topics were you discussing during July? A. We discussed various topics. Q. Out-put? A. Yes, sir. Q. Out-put of the several companies? A. Yes, sir. Q. That is, of these five or six companies? A. Yes, sir. Q. The per cent, of business which they together embraced? A. Yes. We discussed such matters as business men would discuss, that were together thinking to form a combination of the harvesting machine companies. Q. Now, was it understood all this time that stock was to be received in exchange for the properties conveyed? A. Yes, it was understood so. Q. That is, during July? A. Yes, sir. Q. What per cent, of the business in the United States, in harvesters ; that is, in binders, was done in the year 1902 by the McCormick, Deering, Champion, Piano, Milwaukee and Osborne companies? A. I should say from 85 to 90 per cent. Q. And what per cent, in mowers? A. Practically the same; perhaps a little less, but not much. Q. Do binders and mowers constitute the most important harvesting implements? Most important in value, I mean. A. I should say so. Q. At these conferences were propositions brought in to you assembled there from time to time? That is, I mean propositions relating to the sale of your property. A, Well, propositions looking to the form of organization R. B. Swift, Direct ExctAnination. 421 and methods by which values should he computed, and so forth. Q. And the different manufacturers had different sugges- tions which had to be passed upon; is that true? A. Well, certain suggestions were discussed during that time. Q. State whether or not the question of who should be the officers of the new company was discussed. A. It was. Q. And was it determined at these meetings'? A. I cannot say that it was determined; it was the con- sensus of opinion among us that Mr. Cyrus MeCormick should be president, if there was a combination; and if he was not there would not be any. Q. And was this made known to the others — A. I do not know. Q. — through the common medium? A. I do not know. Q. Was it discussed who the other officers should be? A. It was. . Q. And to which of these five companies the different offices should be allotted? A. It was. Q. What was the office next in importance to that of the president? A. Chairman of the executive committee. Q. Was it at these conferences discussed to whom that office should be allotted? A. It was. Q. And who got it? A. Charles Deering. Q. And to whom was the office of secretary and treasurer allotted? A. That was allotted, my recollection is, to Mr. Howe of the Deering Company. Mr. McHugh: You are testifying now, as I understand it, to the talk at the conferences at the Manhattan Hotel? Witness : Yes. Q. And this question of whom the officers should be was discussed from day to day in the different propositions? A. I cannot say that. I can only say that it was discussed from time to time who should be the officers of the company that was to be formed. Q. And who should be the vice-presidents? 422 B. B. Swift, Direct Examination. A. Yes. Q. And how many vice-presidents there should be? A. I do not definitely remember that. The principal dis- cussion was upon the presidency and the chairman of the ex- ecutive-committee ; considerable discussion as to what the duties of the two offices would be ; in other words, who should have the control of the proposition. Q. Was the subject of having voting trustees taken up? A. It was. \ Q. State, in your own way, how that matter was decided — ■ the voting trustees, why they adopted that form, that ar- rangement of having three trustees, what the purpose of it was. Mr. McHugh : This calls purely for what happened at the conferences with the people he has named, in the Manhattan Hotel, in July? Witness : Yes, I so understand it. Q. What were you doing at these conferences, Mr. Swift? Were you more familiar than anyone else with the figures showing the business of the company? Are you able to an- swer that question? A. I do not think I was more familiar, but I was familiar with them. Q. And the values of the properties? A. I felt that I had a fair idea of the values of the differ- ent properties. Q. Now, what were you doing at these conferences? Were you there as a business adviser, or as a legal adviser? A. Well, I should say that I was there as a business man and not a legal man. Q. Who, if anyone, was the legal man? A. Mr. Cyrus Bentley. Q. You knew more about the figures than he, and the busi- ness, I take it? A. I do not know that I knew more about the figures be- cause he had carefully gone into the figures himself. I like to think that I knew something about the business and the condition of the business in the country. Q. You devoted your entire time to the business of the company in the years you have named, that is, from 1880 — wasn't it? A. 1880, yes. Q. To 1902? Is that right? R. B. Swift, Direct Examination. 423 A. I had been employed by the MeC'ormick Company dur- ing all that time. Q. And Mr. Bentley was a general practitioner in Chicago, was he not? A. He was. Q. And a member of the firm of Bentley & Burling? A. He was. Q. Now state, please (going back to that question) how the matter of voting trustees came up, of having voting trus- tees ; what the purpose of it was. A. The purpose was to prevent any one of the concerns from getting control of the business by getting a majority of the stock. Therefore the stock was to be put into the hands of these trustees for a period of years, so that no one could get control of it, or if they did it would have no effect. Q. That is, the stock was to be fairly evenly divided be- tween the Deerings and the McCormicks? A. Not necessarily evenly divided, because they were to take the stock in proportion to the values of the business, and so on. Q. But they were the largest companies? A. But being the largest companies, and both of them strong concerns, I think the McCormick side perhaps felt that the Deerings might seek to get control of the business, and the Deerings felt the McCormicks would, and therefore they put it into the hands of voting trustees, to keep from being a scramble for it. Q. And who decided who should be the voting trustee rep- resenting the McCormicks? A. It was decided by the McCormick family and the peo- ple who were there present. Q. And who decided, if you know, who should be the Deer- ing representative? A. I do not know. Q. Did you know at those meetings who was to be the Deer- ing representative? A. We did. Q. The names were given to you? A. The names had been suggested. _ Q. And was the successor in line, in case of death or in- capacity of Cyrus McCormick, that is, to be, I think, Harold or Stanley, — was that also decided? A. I clo not think that was decided. I remember it was 424 R. B. Swift, Direct Examination. 1 talked that there would he a succession, but I would not say who it was to be. (A recess was here taken until 2 o'clock P. M., at which time the direct examination was resumed by Mr. Grrosvenor, as follows) : Q. Mr. Swift, you said this morning that you are a farmer. You own a farm? A. Yes, sir, I own a farm and farm it myself. Q. And are you familiar with the conditions existing in the 2 trade at present respecting the sale (around your farm and vicinity) of such harvesting implements as are used in your section of the country? A. I am quite familiar with the trade not only in that sec- tion of the country but in others. Q. And you followed the competitive methods that were prevailing prior to 1902, while you were with the MeCormick Company? A. I did. Q. Now, before 1902 did the MeCormick Company vary „ from its list prices or from its regular prices from time to time in order to meet competition? A. It did. Q. Was that often done? A. It was. Q. Did the MeCormick Company accept old machines in exchange for new machines ; that is, allowing so much on the return of the old machine? A. Well, the local agents of the different harvesting ma- chine companies used to do that more or less. Q. Of the different harvester companies? , A. Yes, sir. Q. And were repairs allowed to some extent or pretty gen- erally? A. Yes, local agents, at the settlements at the end of the year, used to have quite large free lists which would be allowed. Q. That is, free lists of such repair parts as were allowed? A. Yes, sir. Q. Was expert advice furnished to farmers as to the run- ning of machines or making repairs in them when such re- pairs could be made without furnishing new supplies? JR. B. Swift, Direct Examination. 425 A. Experts were furnished in numbers tlirougli the har- ] vesting season. Q. By all the companies? A. By all of the companies. I speak more definitely with relation to the McCormick Company, hut I think it can be said of all the companies. Q. And were all the companies departing in this compe- tition which you have described from their several list prices ? A. Yes. Q. These things that you have just now described were true during the three years immediately preceding the forma- tion of the combination, in which period the McCormick Com- ' pany made the profits respecting which you testified this morn- ing? A. Yes, that is true of the three years preceding and of the three years in which the profits were made that I testified about. Q. If one of these harvester companies learned that a farmer was needing a binder or thinking of buying a binder, what would they do? Send men out to canvass? A. They sent canvassers over the country, who would go to the local agents, see what trade was in sight and in many instances visit the farmers and makes sales if possible, and they used vigorous means to make sales. Q. Now, state what change, if any, was made in the char- acter of the competition and in the supply of these machines, harvesting machines, to the farmers after 1902. A. There were less experts sent out to keep machines in repair, less consideration shown the farmer in relation to free list accounts. Q. Free list and accounts for repairs? A. For repairs ; and he was not solicited for purchases as he had been theretofore so vigorously. Q. He would come into town now? A. More frequently. Q. How about exchange of old machines? A. It is quite difficult now to trade in an old machine. Q. How about ^departures from the regular prices? A. The regular prices are maintained much more closer than they were heretofore. Q. And are these things which you have just mentioned, or this description, true of conditions today as compared with the conditions prior to 1902? A. I think they are. 426 R. B. Swift, Direct Examination. Q. Now, Mr. Swift, going back to this incorporation, to tlie summer of 1902, state, if you are able to do so, why this plan was adopted of selling to Lane and then selling from Lane to the new company. Whose plan was it? A. I think it was Stetson's plan. Q. What was the purpose of it? A. It was deemed to be a safer method of procedure, to avoid the anti-trust law. Q. Were other methods of effecting a consolidation sug- gested? A. A great many methods were discussed and talked over between the McCormick people. Q. And were they discussed at these conferences with these other attorneys, in your presence? A. A number of these schemes were submitted to Mr. Bent- ley, who decided that they would not do. Q. Why not? A. They would not be legal. Q. Violating what laws? A. Violating the anti-trust laws. Q. What schemes? Can you mention them? A. I distinctly recall propositions that looked towards forming selling organizations and towards partial combina- tions which w^ere decided not to be legal. Q. And after these other proposed schemes were rejected, this plan was finally adopted of transferring to Lane and from Lane to the new company? Is that right? A. It is right. i Q. Did you know before you went to New York, in July, that Mr. Middlekauff had obtained an option on the Milwau- kee plant? A. I did. Q. And did you know who had negotiated with him for that option? A. I did. Q. For whom it had been acquired? A. I did. Q. For whom had it been acquired? A. Mr. Middlekauff acted for Mr. Cyrus McCormiok of the McCormick Company to obtain that option. The option was sent to New York and turned over to Mr. Morgan and Mr. Perkins. Q. Now, while you were in New York at the Manhattan R. B, Swift, Direct Examination. 427 Hotel, you say different propositions were brought in from time to time? You so said this morning. A. Well, I said that we were there discussing matters for nearly two weeks, and ideas would be brought in from the other side and would be discussed. Q. Did you know that the other manufacturers were in New York at that time? A. I did. Q. What manufacturers did y6u know were there during this period? A. I knew that — I saw some of them at a distance; Mr. Jones — Q. Where did you see Mr. Jones? A. On the street, in New York. I have a recollection of seeing Mr. "Llewellyn. Q. Was it mentioned at these conferences that these other manufacturers were in town? A. It was, and understood that they were — Q. And understood what they were doing? A. Charles Deering and Mr. Howe. And understood what they were doing, of course. Q. That they were endeavoring to bring about the same result as you people were endeavoring to negotiate? A. That is right. Q. Now, Mr. Swift, you were with the Harvester Com- pany for two or three years after the company was organized? Is that right? A. Yes ; about three years. Q. Generally speaking do you recall the form of contract that the Harvester Company used during the first two years in making commission agency contracts with the retail deal- ers? A. Yes, I recall that contract fairly well. Q. Do you recall what was known as the ' ' exclusive clause ' ' in that contract? A. I do. Q. That clause prevented a retail implement dealer who handled your grain binders, headers, corn binders, buskers, shredders, reapers, mowers, and a few other articles, from handling similar articles manufactured by other manufac- turers; is that right? A. It is. Q. After the Harvester Company was formed did protests 428 R. B. Swift, Direct Excmvination. come into the Harvester Company, from dealers and others, against that provision of the contract? A. That provision of the contract was, in many instances, protested against for years before the formation, and after the formation it was still protested against. Q. Do you recall that, in the latter part of 1902 or the be- ginning of 1903, a bill was introduced in the legislature of Kansas prohibiting or making illegal contracts containing such an exclusive clause? A. I do. Q. That bill was aimed against what was known as the ex- clusive clause in your contract? Is that right? A. I think that is right. Q. Do you recall going down to Kansas, about February, 1903, in relation to that matter? A. I went to Kansas in relation to that matter along in the first part of 1903. MINUTES. Mr. Grosvenor : Now I want to put into the record at this place the following minutes of a meeting of the Executive Committee of the International Harvester Company of America, held at the office of the company, Seven Monroe street, Chicago, Illinois, Saturday, February 7, 1903, at 1 1 'clock in the forenoon, pursuant to notice. "Present: Messrs. Charles Deering, Chairman; Cyrus H McC'ormick, William H. Jones, J. J. Glessner, and Harold F, McCormick. i "Mr. Cyrus Bentley and Mr. W. J. Calhoun were present, and the situation in Kansas was fully discussed. It was de- cided that the General Counsel and Mr. Calhoun should ar- range to have Mr. K. B. Swift go to Topeka immediately to do whatever is best for the interests of the Company and to report thereon. "On motion the meeting adjourned." Q. Was it in pursuance of these minutes which I have read that you went to Kansas, in connection with this matter? A. I do not know. I only know that I was instructed by Mr. Deering and Mr. McCormick to go down to Kansas. Q. You were instructed by Mr. Charles Deering and Mr. Cyrus McCormick? A. Yes. R. B. Swift, Direct Examination. 429 Q. To go down to Kansas. In regard to what matter? A. In regard to this bill that was pending then before the state legislature. Q. What, if anything, was stated to you about what you were to do? State what they said to you, to the best of your recollection. A. I was told to go down and attend to the matter and — Q. And anything else! A. And see that it was fixed. Q. Where did you go ? A. I went down to Kansas City. Q. What did you do there? A. Found out who the man was that had introduced the bill. Q. You mean what member of the legislature? A. What member of the legislature; looked into his ante- cedents a little, found out how his financial condition was, whether he was hard up and what he needed and what he had introduced the bill for. And then I sent over to Topeka to the firm of attorneys — one of the attorneys came over to Kan- sas City — Q. What is the name of that attorney? (The witness pauses.) Q. What is the name of the firm? A. The firm's name was Eossington, Husted & Smith. That is the best of my recollection. Q. Now this bill with reference to which you are speaking was the bill introduced in Kansas aimed to prevent the use of the exclusive clause? Is that right? A. That is right. Q. Now, what did you find out about the financial condi- tion, if any, of this legislator who had introduced the bill? Please answer the question. Mr. McHugh: He'll answer it, don't you worry. You needn 't go through the form of forcing him. A. Found out he was hard up, that he hadn't paid his stenographer within three or four or five months, and that he needed money very, very badlJ^ And I found out what I took to be the fact, that he had introduced the bill for the sake of holding somebody up ; that is the real gist of it. Q. What attorney came up from Topeka? A. My recollection is that Mr. Smith came up from To- peka, 430 R. B. Swift, Direct Exomiination. Q. Did you make known to him this information which you had obtained"? A. I did. Q. What happened then? How long did you stay in Kan- sas City? A. Well, he went home and told me that he thought his partner was a little the better man at that sort of work. Q. Who was his partner? A. Mr. Rossing^ton. And so I went over to Topeka the next day and saw Mr. Eossington. Q. Did you explain to him the financial condition, the sit- uation, of the legislator? A. I explained to him all I knew about the matter up to that time. Q. What else did you do ? Did you give him any instruc- tions? A. He didn't need any — or many; said the matter could be attended to. Q. Was it attended to while you were there? A. Well, I can recall that before I left I was told that it had been sidetracked so that it would not be heard from for a while, Q. Then how long did you stay in Topeka? A. I think about two days. Q. Then what did you do? A. I came to Chicago. Q. Now, was the sole purpose of your trip to Topeka and Kansas City to arrange about this matter in respect to which you have testified? A. It was. Q. On your return did you report ? A. I did. Q. To whom? A. I reported to Cyrus McCormick. Q. State whether or not you made known to him the facts which you had discovered in relation to the financial condition of this legislator. A. It is a long time ago, but my recollection is that I told him that in my judgment the matter was only a hold-up game and the bill filed for the purpose of making somebody pay for it. Q. And that you were going to pay for it? A. No, sir, I did not tell him so. Q. Did you report to anybody else? R. B. Swift, Direct Examination. 431 A. My recollection is tliat Charles Deering was there pres- 1 ent or that I saw him later. Q. And did you go over the matter with him? A. I told him what I had done. Q. Did you tell Mr. MoCormick you had retained a firm of attorneys to look after the matter! A. I did. Q. And what they had said? A. I think I went into the matter with reasonable fullness with him. Q. And did you go into it with reasonable fullness with Mr. Deering? 2 A. As I say, I do not definitely recollect talking with 'Charles Deering at that time. Later I talked with Charles Deering. Q. Now, when did you next hear from these lawyers in Topeka? A. I recall that we had a report from them, that the matter was proceeding satisfactorily and had been put aside. Q. Did they render any bill for their services? A. They did. Q. Did they come up to Chicago about the payment of the 3, bill? A. Mr. Kossington came up. Q. How much was the bill? A. My recollection is it was eight thousand dollars. Q. Why did this man Kossington come up to get his bill paid? A. Because it wasn't paid. Q. Well, was it eventually paid? A. It was. Q. Did he come to see you? A. He did. * Q. What did he say? A. He wanted to know why in blazes that bill hadn't been paid. Said something real emphatic. Q. Did he say anything about having spent the money? A. He did. Q. And how? A. He said he had used it. Q. For what purpose ? A. For the purpose of defeating this measure. Q. This measure in Kansas? A. Yes. 432 R. B. Swift, Direct Examination. Q. Then what was done with the account f Did you take the matter up with anybody? A. I did. Q. With whom? A. Charles Deering. Q. Did you tell Mr. Deering what this man had said about the account, about his bill? A. I told Mr. Deering that Mr. Eossington was here in the office and wanted his bill paid and that he had insisted upon having the money. Q. And was the bill paid then? A. It was. Q. Was it made known to Mr. Charles Deering that the bill had relation to these matters in connection with which you had gone down to Topeka and Kansas City? A. It was. Q. And was it made known to him that the lawyer stated that he had expended the money in carrying out your instruc- tions? A. I said to Mr. Deering that he was there and wanted his pay and had stated that he had used some of the money for another purpose and wanted it. Q. Did the bill go through? A. Not that time. Q. Not at that time? Q. There was a bill passed several years later in Kansas prohibiting such exclusive contracts, was there not ? Are you able to state? A. I do not know. Q. Did you see anyone else in the Harvester Company, any of these others, in reference to this matter, other than the gentlemen you have named ? A. Yes, sir. Q. State whom. , A. I saw Cyrus Bentley. Q. Before you went south? A. Yes, sir. And W. J. Calhoun. Q. State what, if any, conversation you had with those gentlemen. A. The discussion with them was what means should be taken to see that that matter was gotten out of the way. Q. What did they say, if anything? A. I remember very distinctly that Cyrus Bentley did not R. B. Simft, Direct Examination. 433 want anything done in that matter that was not perfectly 1 straight and fair, and so expressed himself. Q. Did yon report to him on your return? A. No, I do not think I did. Q. Were these other gentlemen, Deering and MoCormick, present when you had this talk with Bentley and Calhoun? A. They were not. Q. You saw them separately, did you? A. I saw Mr. Calhoun in his office with Mr. Cyrus Bentley. Q. And where did you see McCormick and Deering in ref- erence to this matter before you went? A. I saw them in their office, I think, on Monroe street. 2 Q. Did you report to Bentley and Calhoun on your return? A. No ; I think not. Q. You did not make known to them what you had done? A. No. I — ^I — I have a recollection of telling Cyrus Bent- ley that the matter had been turned over to this firm of at- torneys. It is rather hazy. Q. Were you familiar with the twine end of the business? A. Yes ; I was quite familiar with the entire business. Q. What per cent, of the binder twine business in the United States was done by the Harvester Company on its in- 3 corporation, that is, what per cent, of the entire business in the United States did it acquire by the j^urchase of the Deer- ing, McCormick and Osborne plants? A. I should say 60 per cent. Q. State whether or not, since the formation of the Har- vester Company, various states have entered into the busi- ness of manufacturing binder twine. A. They have. Q. When you were with the company were you as an officer of the company acquainted with the fact that a bill had been introduced, in the year 1903, in South Dakota with reference 4- to the establishment of either a state binder twine factory or the manufacture of binder twine by the prisoners in the peni- tentiary? A. Will you please read that question? (The question was read by the Examiner.) A. I never was an officer of any of the companies. Q. Well, as an employe of the company had any such matter come to your attention? A. There had. Q. Who was in charge of the binder twine business ,at that time? 434 R. B. Swift, Direct Examination. A. Mr. H. L. Daniels. Q. Now, was that law passed by the State of South Da- kota? A. I do not think so. Q. State whether or not the Harvester Company adted in any manner or took any part in preventing the passage of that bill. A. I have been told that they did. Mr. MoHugh: Well, well now. Witness : I do not — Q. Did you go up to South Dakota? A. I did not. Q. Were you at any conference of officers or employes or directors of the Harvester Company at which the subject was discussed of sending somebody up there? A. I have no definite recollection of this matter. Q. Have you any personal knowledge as to whether or not any officer or employe of the Harvester Company went up to South Dakota in connection with this matter? A. I have no personal knowledge of it. Q. During the time you were connected with the Har- vester Company was it interested in other laws or ordinances or orders of common councils, or legislation, other than in the State of Kansas? A. Yes, it had other matters. Q. Was the procedure which you adopted, the course which you followed, in adjusting the Kansas matter, unusual? A. It was not unusual to employ attorneys in such matters. Q. Was it usual to have the attorneys arrange it in the manner they did in this case? (The witness pauses.) Q. What is the answer? Mr. McHugh: The defendants object to this question as too general and as calling for a conclusion. If the Grovern- ment proposes to assert specific allegations it should, prove them. Mr. Grosvenor: Let me say that this entire line of testi- mony is for the purpose of establishing the intent and also in support of the allegations of the petition which charges that the exclusive clause and the maintenance of the exclusive clause in the commission agency contracts was one of the means adopted by the defendants in order to perfect and maintain their monopoly. Mr. McHugh: You do not answer my objection. My objec- R. B. Swift, Direct Examination. 435 tion is that if you have specific instances, the proper way is to prove them; not to ask if this is an unusual thing, or the broad general question. That is my objection; it goes to the form of the proof. Mr. Grosvenor : You will have ample opportunity for cross- examination. Will you read the question, Mr. Examiner? (The last question was read by the Examiner.) Mr. G-rosvenor: I mean during the period you were with the Harvester Company. (The witness makes no response.) Q. Are you able to answer the question, Mr. Swift? A. Well, it is a difficult question to answer. I should say this was not a usual procedure. Q. Going back to these meetings, in July, in New York: Were any figures submitted to these people, of the MoCormick Company, at the Manhattan Hotel, — ^any figures showing the Deering profits during the preceding three years ? A. No definite figures, and yet figures that were supposed to be substantially accurate figures were referred to and talked of. Q. Brought over by Mr. Perkins? A. I do not know. Q. They were presented at the meeting, were they? A. They were ; discussed at the meeting. Q. And considered as part of this general proposition? A. Yes. Q. Do you recall what the profits, as shown by those fig- ures, were for the years that you have named and for which you have given the profits of the McCormick companies, namely, the years 1900, 1901 and 1902? A. I have only a recollection in the matter. I remember the Deering 's profits were about a little more than two-thirds of the McCormick profits for that period, or about twelve mil- lion dollars. Q. When did you learn that the Osborne Company had been acquired? A. I should say some time in October or first of November, 1902 ; October. Q. Did you know that it was advertised and run as an independent company for a couple of years after that? A. I did. Q. Was this fact known generally throughout the Har- vester staff? A. It was. 436 R. B. Swift, Direct Examination. Q. Beg pardon? A. It was known to the men who were the principal men in the office. Q. In the office? A. Yes. Q. Now, when you went to New York with Mr. McCormick in the spring of 1902, respecting which trip you have testified, was anything said about getting money to expand your for- eign business'? A. No. Q. The sole purpose was to form a consolidation; is that right? A. The purpose was to see what the men haA^ing large amounts of capital would say towards financing a consolida- tion of the harvester machine companies; and, further, to see whether it could be done, legally. Q. Now, Mr. Swift, are you familiar with the circum- stances under which the International Harvester Company of America was adopted as the selling agency of the products of the International Harvester Company of New Jersey? A. I am quite familiar with it. Q. When was that proposition discussed first, do you re- call? A. I remember in the late summer and early fall of 1903, shortly after the company — Q. In 1902, or 1903? A. I mean 1902,— after the company had been determined upon. I Q. That is, after it had been determined to form a com- pany? A. Yes. Q. And was this before the company was actually formed that the first suggestion was made of using a selling com- pany? A. I do not remember. Q. Whose idea was it? A. It was the idea of the lawyers. Q. Which lawyers? Are you able to state? A. I cannot say. Q. What was the purpose of it? A. Its purpose was to have a company with less capital to do the interstate trade, a company of less capital to be sub- jected to the varying laws of the different states, on_the ques- tion of anti-trust laws, taxation, and so forth. Production of Documents. 437 Q. You were subpoenaed in this case, Mr. Swift? A. Yes, sir. Mr. Grosvenor : That is all, unless you want to cross-exam- ine him now. Mr. McHugh : In view of the fact that in order to prepare for the cross-examination of this witness it is necessary to make investigations and have at hand documents which are not now available, I reserve the right to cross-examine the witness at some future time, under the order and ruling of the Examiner. The Examiner (to the witness) : You are still under sub- , poena, and will hold yourself in readiness to appear for cross- examination when notified by counsel for either party. Witness : You will have to give me sufficient notice so that I can arrange my matters to be here. Note : On November 22, 1912, counsel for, defendants waived the right to cross-examine this witness. See proceed- ings for that day. PEODUOTION OF DOCUMENTS. Mr. McHugh: The defendants produce, at the request of the Government, the letters to the general agents, 1,010 in number. These have been produced before. Mr. Grosvenor: I wanted particularly the circulars for 1903 and 1904. Mr. McHugh : They are not quite completed. We will give them to you before the adjournment here — ^I think we can. The defendants also produce, in response to request, the descriptive catalogues of the different lines ; for instance, cat- alognie of McCormick lines and Deering lines, for the years 1903 and 1912. The defendants also produce the by-laws of the Interna- tional Harvester Company for 1912; that is, we produce the by-laws of the International Harvester Company adopted Sept. 7, 1910, which are the ones in force in 1912. That cov- ers your request as to the by-laws, doesn't ity Mr. Grosvenor? Mr. Grosvenor : Yes. I will not put them in evidence just now. Mr. McHugh: Well, I produce them for you. That is a copy. The defendants now produce, at the request of the Govern- ment, the several contracts referred to in the testimony of ^38 Production of Documents. Mr. Funk and Mr. Haskins — or the testimony of Mr. Haskins. I haven't gone back to Funk yet. Mr. Grosvenor: Let Mr. Stillwell keep those until after the hearing today and then I will be glad to look them over. Mr. Mcllugh : All right. Those are the only ones that are ready right now to present. Mr. Grosvenor : I think we might adjourn now, and I will spend the rest of the afternoon going through these matters. Thereupon, at 3:30 P. M. an adjournment was taken until the morning of Thursday, October 31, 1912, at 10:30 o'clock. J. J. Glessner, Direct Examination. 439 Hearing of Octobee 31. Room 606 Post OfSce Building, Chicago, 111., October 31, 1912. 10:30 A. M. The hearing was resumed Before the Special Examiner, Robert S. Taylor, at the above time and place. Present : On behalf of the Petitioner, Edwin P. Grosvenor, Esq., Special Assistant to the Attorney General, Joseph R. Darling, 2' Esq., and Abram F. Myers, Esq. On behalf of the defendants, Hon. William D. McHugh, John P. Wilson, Esq., and Hon. Philip. S. Post. The following proceedings were thereupon had, to-wit : JOHN J. GLBSSNER appeared in response to a subpoena issued on behalf of the Petitioner, and being duly sworn as a witness on behalf of the Petitioner, testified as follows : 3 Direct Examination by Mr. Grosvenor. Q. Mr. Glessner, how long have you been in the harvester business ? A. A good many years. Q. Amounting to? A. Oh, 40 or 50; since 1863, to be accurate. Q. And with what company did you become connected in 1863? A. With the predecessors of the Warder, Bushnell & Gless- ner Company. ^ Q. Located at Springfield? A. At Springfield, Ohio. Q. And that was the company, or its predecessor was the company which was founded by Mr. Whitely? A. No, sir. It was founded by Benjamin H. Warder. Q. Did Mr. Whitely become connected with that com- pany? A. No, sir. Q. Have you ever been in business with Mr. Whitely? A. No, sir. I knew Mr. Wliitely in his lifetime for many years, but we were competitors. 440 J. J. Glessner, Direct Examination, Q. He was doing business in Springfield also, was he? A. Yes. Q. What was the name of bis company I A. Wbitely, Fassler & Kelly Company. Q. During all these years were various harvesting ma- chines sold under the name of "Champion!" A. No, not all of those years. Q. When did you begin to use the word "Champion I" A. I think my firm (it was a firm at that time) began in 1868 or 1869. Q. And thereafter continuously used the word "Cham- pion" as a trade name applied to mowers and reapers, har- vesters which you manufactured? A. Yes, sir. Q. So that the trade name "Champion" is an old and well-established name in the harvesting business? A. Yes, sir. Q. And that is true of the other trade names owned by the International Harvester Company of America, namely, "McCormick," "Deering," "Piano," "Milwaukee" and "Os- borne," is it not? A. Yes, sir. Q. The name "Deering" as a trade name goes back how far? A. I cannot tell you exactly; I should think along about 1875. Q. And "McCormidk" as a trade name? A. Since about 1849. Q. 1849? A. Yes. Q. The "Piano?" A. I do not know. Some years. Q. The "Milwaukee?" A. I do not know that either. Some years though. Q. "Osborne?" A. That probably was along in I860; perhaps not so long. Q. The oldest trade names, then, in the business today are "McCormick," "Deering," "Osborne" and "Cham- pion?" A. The oldest trade name is "McCormick." My guess would be that "Osborne" came next, and "Champion" next. But I may be mistaken about that. Q. ' Now, in 1902 Warder, Bushnell & Glessner Company was a corporation, was it not? J . J. Glessner, Direct Excmiination. 441 A. It was. Q. Organized under the laws of what state 1 A. Ohio. Q. And with branches and warehouses scattered generally, over the United States or in the territory where harvesting machines were sold? A. Yes. Q. That is, you did business, like the other harvesting machine companies, by shipping to these warehouses and then distributing to the retail implement dealers on a commission agency basis? A. They did not all go to the warehouses; many of them went directly to the retailer. Q. Some of them went directly from the factory in Spring- field to retail implement dealers scattered throughout the country? A. They did. Q. And these harvesting implements were generally sold on a commission agency basis, were they not? A. Very largely. Q. That is, the manufacturer retained the title and sold to the farmer? A. The manufacturer retained the title. Q. That is, the implement dealer, acting as agent, sold to the farmer? A. Yes. Q. And then the farmers' notes were taken by you? A. Generally they were. Q. Generally; although sometimes the dealer would take them? A. Yes. Q. And settle with you? A. Yes. Q. Now, in 1902, your company went into the consolidation of a number of harvester manufacturers known as the In- ternational Harvester Company, did it not? A. No, sir. I did not understand it that way. Q. What did happen? A. I sold my company to Mr. Lane. I sold the property of my company to Mr. Lane. My company did not join in the International Harvester Company. Q. Well, the business of your company, with the business of a number of other harvesting compa,nies, in the year 1902, 442 J. J. Glessner, Direct Examination. was transferred over to the International Harvester Company of New Jersey; is that right? A. My business was sold to Mr. William C. Lane, who subsequently transferred it to the International Harvester Company. Q. Yes. Well, you did not sell to Mr. Lane with any ex- pectation that he was going to conduct the business of the Warder, Bushnell & Glessner Company, did you? A. I did not. I did not sell him the Warder, Bushnell & Glessner Company. Q. I did not hear you. A. I say I did not, for I did not sell him the Warder, Bush- nell & Glessner Company. Q. In selling the business of the Warder, Bushnell & Gless- ner Company to Mr. W. C. Lane, you had no expectation that Mr. Lane was going to carry on the business which you were transferring to him, did you? A. I did not, no. Q. You knew that he was only a sort of conduit to a com- pany which was to be formed, did you not? A. I did not know it, but I supposed it. Q. When, in the year 1902, did you hear the first talk of a proposed consolidation of harvesting businesses? A. Along about the middle or the latter part of the month of July. Q. Had it been suggested to you at any earlier time in the year 1902 that a consolidation would be for your best in- terests ? A. I do not know that I quite understand that, Mr. Gros- venor. What would suggest it? In my own mind, you mean, or 'by some — Q. No. Let me get at it a little clearer. You sold out your business by signing preliminary contracts the last of July and executing deeds in August, 1902, did you not? A. Yes. Q. Now that was rather a considerable transaction, was it not? A. It was — for us. Q. That is it ; for you. It was an important matter to you, was it not? A. It was. Q. It involved serious consideration on your part and on the part of the other owners of your company, did it not? A. It did. J. J. Glessner, Direct Examination. 443 Q. Now what I want to know is, when did you first begin to consider the idea of selling out your business'? A. I would say it was sometime in the first we€;k in July. Q. Had the subject been brought to your attention by anybody? A. It had not. Q. How did it come to your attention in the first week of July? A. Mr. George "W. Perkins had telegraphed to the presi- dent of my company, who had been my partner, Grovernor Bushnell, in Springfield, to know if he would go to New Yor% to discuss the sale of his property — of our property — and Governor Bushnell telegraphed me to know if I would meet him en route and go with him to enter that discussion. Q. Have you retained a copy of the telegram? A. No, I have not. Q. Do you recall whether it mentioned to whom the sale was to be made? A. It did not. Q. Just said to sell out your business? A. Yes. Q. r)id you know Mr. Perkins at that time? A. T did not, no. Q. Did Governor Bushnell know him? A. T think he did. Q. You knew he was not engaged in the harvesting busi- ness, did you not? A. I did, yes. Q. Then what happened? A. Well, I went to New York with Governor Bushnell and we went down to see Mr. Perkins at his office, in J. P. Mor- gan & Company's office. Q. That was early in July? A. I cannot give you the exact date but it was sometime between the second and the fifth. Q. Then how long were you in New York? A. Probably two days or three days ; I could not tell you exactly. Q. And did you return during the month of July? A. Yes, sir. Q. How soon did you return? A. I cannot tell you exactly, but within a few days. I \yas in and out of New York almost every week in July. Q. Of that year? 444 J. J. Glessner, Direct Examination. L A. Of that year. Q. And every time tlie sole occasion of your visiting New York, I take it, was tlie sale of your business? A. I believe so. Q. Now state to the best of your recollection wbat Mr. Per- kins said to you when you went down to see him with Governor Bushnell. A. He directed the conversation first to Governor Bushnell and asked him, practically in the same words as I suppose he used in the telegram, whether he was willing to sell his business. ' Q. To whom? Did he say I A. He did not say, no. He said, "Are you willing to sell the business?" The governor intimated to me that I should do the talking. It is only fair to say right here that Governor Bushnell at that time was quite a sick man, and he said that he could not stay in New York to take part in these negotia- tions and that he preferred I should do all the talking. I theii told Mr. Perkins that I was willing to sell the busi- ness if I could get what I thought was a fair price for it. Q. Anytliino; else happen at that meeting? A. Practically that is all. Q. Nc^r when you were in New York during July, what hotel did you stop at? A. I think when Governor Bushnell and I were there to- gether we stopped at the Waldorf-Astoria. That had been the hotel where he had been in the habit of going, but when I was there myself I was at the Holland House. Q. Did you see any other manufacturers — A. I did not. Q. — of harvesting implements while you were there? A. Not in the hotel. I understand Mr. Jones says I met him on the street, but I have no recollection of it. Q. During this month of July, did you see Mr. Perkins at other times in relation to the sale of your business? A. Yes. Q. Who else did you see? A. Nobody. Q. Did you make or prepare for Mr. Perkins' use, or for the use of others in connection with this sale, appraisals or inventories or estimates of your property? A. No ; I simply told him what I thought the property was worth and what it would produce. Q. Did you submit any figures of earnings ? J. J. Glessner, Direct ExaMination. 445 A. No. Q. Or inventories? A. No; only verbal. Q. Only verbajly? A. Only verbally. Q. Did he appoint any one to examine your books? A. I believe so, yes. Q. During this month? A. I do not know that it was during that month, no. I think it was later. Q. Who was that, do you know? A. I do not. Oh, yes, I do know who the accountants were. Q. Who were they? A. Jones, Caesar & Company. Q. Of Chicago? A. I believe they were of' Chicago and New York and various places. Q. That company has a different name, hasn 't it, today ? A. I think it is Price, Waterhouse & Company now. I think that is it. I am not quite sure about that. Q. Now state what transpired at these other conferences which, I believe you stated, you had with Mr. Perkins in July. A. There was very little, Mr. Grosvenor. I do not really recall anything different from what was in the first inter- views. Q. They were all in regard to the sale of your property, ■were they? A. Yes. Q. And you eventually received stock, in large measure, for your property, and for the rest you received cash? A. Yes. Q. You knew then that the company was to be transferred? I mean you knew that the business of the company was to be transferred to another company? A. To another company, yes. Q. To be organized? A. To be organized. Q. And that you would take stock in it? A. I agreed to take stock in it, yes. Q. Now before you agreed to take stock in it, did you make any inquiry as to what the property of the corporation was to be? 446 J. J. Glessner, Direct Examination. A. I was told without making any inquiry. I made no in- quiry, but I was told. Q. You were told without making inquiry? A. Yes. Q.' And what were you told? A. I was told there would be ample capitalization and a large part of it would be in actual cash, and eventually — I can- not tell just at what interview — I think I was told it would be 120 million dollars, but that was tentative; it was not decided at that time what it should be. Q. I did not put my question exactly as I want it. You knew that this company was to be engaged in the harvester business, did you not — this company to be formed? A. Well, I knew of course-if they bought my business they would be engaged in the harvester business. Q. Now, you were to take stock for your business, very largely? A. No, that was not the way of it. My stockholders em- braced among them two estates that had very large interests in the business, and when it came to the matter of selling out the business of course I had to consult those estates, or their representatives. The estate of Benjamin H]. Warder was represented by the American Security and Trust Com- pany, in Washington, and the president of that company said that while he was authorized under the will to continue the estate's interest in the Warder, Bushnell & Glessner Com- pany, he was not authorized in the will to continue it in any other company. Therefore, I found in my negotiations for sale that I had more or less difficulties. Consequently I ar- ranged with Mr. Bell, the president, that I would buy the interests of the Warder estate in the company myself, which I did, so I should not be hampered in the negotiations. And then I afterwards bought the other estate on the same terms. That made it necessary for me to have a very large amount of cash in the sale of the company's business. Q. Half of the consideration you received (or approxi- mately half) was .stock in the new company, was it not? A. It was ; a little more than half. Q. Practically all the cash you received you turned over to pay for these interests in the Warder, Bushnell & Glessner Company which you had acquired? A. And other debts of my own and the company's. Q. Now, when you agreed to take the stock as consideration J. J. Glessrier, Direct Examination. 447 for your business, did you know what properties the Har- vester Company to be formed was going to acquire f A. I did not know what properties the company was to ac- quire. Q. Did you know what properties the Harvester Company to be formed — ^and its organizers — ^were trying to acquire? A. No. Q. Did you make no inquiry? A. No. Q. Had you no thought about the matter? A. I had, yes. Q. And what was your thought! A. I thought that, as Mr. Perkins had told me, we were to have a strong company. Q. What do you mean by a strong company? A. A company that was amply capitalized, so that the business could be increased in the place where it could make money; in other words, so that we could enter largely in the foreign trade, which was a virgin field. Q. A virgin field for whom? A. For all of the harvester companies. None of the other companies, none of the original companies that were in exist- ence at that time, had sufficient capital to properly enter that trade. Now, I did not know who would go into the com- pany at all. Q. Didn't you care? A. I did. I most certainly did. I was selling it my prop- erties. ■ Q. If you cared, didn't you make inquiries? A. I did not. Q. Mr. Perkins told you it was to be a strong company? A. Yes, sir. Q. Strong in harvester lines? A. He did not say strong in harvester lines; he said a strong company. Q. Had you ever met Mr. Perkins before? A. No, never until that first day. Q. Do you mean to say that you were willing to sell out your business and take as consideration stock in a new com- pany without making any inquiry as to what harvesting busi- nesses that new company was to acquire? A. I will tell you what I thought I intended to do, and what any man under the same circumstances, I think, would have intended to do. I intended to take the stock as he rep- 448 J. J. Glessner, Direct Eoeamination. resented it to be. If it was not as lie represented it to be, the trade was off, there was no trade. And I was selling out my property. Q. In any event before you signed the contract on July 28, you did know who was going in, did you not? A. July 27, I knew. Q. July 27? A. Yes. Q. Then before you did part with your property or sign any paper agreeing to transfer your property, you did know who was going into that company? A. I did not absolutely know it, Mr. Grosvenor, but I prac- tically knew it. I knew as well as a man knows things that he doesn't know. I knew on the 28th exactly, because I was present when the contracts were signed. Q. And you signed your contract at the same time the oth- ers signed theirs? A. Yes. Q. Now, where was that? A. That was in Paul Cravath's office. Q. What other manufacturers were present? And state, please, the companies with which they were connected. A. Mr. Charles Deering of the Deering Company; Mr. Cyrus McCormick of the McCormick Company; Mr. William H. Jones of the Piano Company, and myself. I think Mr. Richard Howe was there. I am not sure that he was. Q. Was that the day that you first signed any paper? A. I believe that was the first paper I signed. Q. You had not bound yourself in any way legally before that? A. No. This is ten years ago, you must remember, Mr. Crosvenor. Q. I understand, Mr. G-lessner. A. And as nearly as I can recollect that is the fact. Q. Plave I asked whether these contracts were all signed in the presence of you all? A. I think they were. Q. And when did you get the first draft of the contract which you signed on the 28th? A. I do not know. A very short time before that. Q. What lawyers represented you in this transaction? A. None. Q. Did you meet any lawyers from Mr. Perkins ? A. Well, Mr. Cravath and those gentlemen. J. J. Glessner, Direct Examination. 449 Q. Now why, Mr. Glessner, did they adopt such an arrange- ment as transferring to Lane and then to a new company in this case? A. I suppose for convenience. Q. Well, you know that the contracts of July 28 provided that he might assign his rights to a new company, do you not? A. I think they did. I have not seen the contracts for many years. Q. And the new company that was formed was organized before you executed the final deed to Mr. Lane % A. I do not know about that. I do not know the dates. Q. Do you know that, as a matter of fact, you transferred to Mr. Lane on August 12 ? A. No, but I assume it was so. Q. Do you recall that meeting in New York on August 12, at which you executed your deed? A. No. I have no recollection of it now. Q. Have you any recollection of the circumstances under which that deed was executed? A. No. Q. Was there any consideration of the question of the legality of the consolidation of all the harvester manufac- turers, if you recall? A. No, not with mc. Q. You are not able, then, to explain why the final ar- rangement provided for the sale by you to Lane and then on the next day a transfer by him of all the properties to' the new company? A. No; it was not my device. I do not know why it was done. Q. Who devised that arrangement? A. I do not know. Q. After you agreed to dispose of your business, you fol- lowed out such procedure as was requested of you; is that right? A. As was necessary to carry out the agreement I had en- tered into. Q. Now, you have been an officer of the Harvester Com- pany since its incorporation, have you not? A. Yes. Q. That is, a vice-president? A. Vice-president. Q. And also a director? 450 J. J. Glessner, Direct Examination. A. And director. Q. And also on the executive committee! A. On the executive committee. Q. And chairman of the committee for some time! A. For a time. Q. I suppose in agreeing to sell out your business you knew that you were to remain in the harvester business! Did you not! A. No, no. I imagined that Mr. Perkins would not carry on the harvester business unless he had somebody who had had experience in the business with him, but I did hot know anything about whether I was to be in it or not. Q. You had a hope that you would be retained in the business; is that it! A. No, I cannot say that I had even that. Q. You were surprised when they asked you to remain! A. No, I was not. Q. You were not? A. No. The reason I was not, because I knew Mr. Perkins wailted what experience he could get if he was going to con- duct the business, but I would not have been disappointed if I had been left out. Q. Mr. Perkins did not buy your business, did he! A. He was the representative with whom I talked. Q. I beg your pardon! A. He was the representative with whom I talked. Q. Well, he did not buy your business, did he! A. No. Q. He did not buy any of these other businesses, did he! A. Not that I know of; he did not buy mine. Q. Now, why do you speak of his running the business as his business! A. Because I spoke with him only. Q. You considered it, then, his company! A. No ; I considered he was forming the company though. Q. He was forming the company? A. Yes. Q. And forming it for whom! A. I do not know; for the stockholders, the men he sold the stock to, I suppose. Q. Beg pardon! A. For the men he would sell the stock to, I suppose. Q. Well, he sold a lot of the stock to you, did he not? A. Yes. J. J. Glessner, Direct Examination. 451 Q. You state you were not surprised that you were asked 1 to be a vice-president ? A. No. Q. Did he ask you to attend the first meeting of the di- rectors, down at Mr. Cravath's office, on August 13, 1902? A. I do not know whether I attended that meeting or not. If the records show I did, I did ; but I do not know ; I do not remember it. Q. Do you not recall being present there with all these other manufacturers, and the fact that the incorporators of the company resigned one after the other, and various manu- facturers stepped in as directors and then had a meeting of 2 their own? Have you no recollection of that? A. Now that you mention it, it seems that that occurred. Q. And that was the very first day the Harvester Com- pany did business? A. I do not know. Q. Well, it was the first day they had any meeting of the . directors ? A. If it was, then it was the first day. Q. Now, cannot you recall how you happened to be there? A. No. 3 Q. And to be elected a director? A. No. Q. And an officer? A. No. Q. Now, you transferred your property to that company the day before; do you recall that? A. Yes. I do not remember the dates at all. I transferred my property, and I suppose it was the day before that. Q. Now, if you did not know you were to be a director and a vice-president, how did you happen to be there? That is what I want to know. 4 A. Because I was asked to be there. Q. By whom? A. I do not know. I might have been by any one of half a dozen at that time. I do not know. Q. Well, mention who. A. It might have been Mr. MeCormick, or Mr. Deering, or Mr. Howe, or Mr. Jones, or Mr. Perkins, or Mr. Lane, or Mr. Dennis, or any of the 6 men or 8 men who were in it before. I do not know. Or Mr. Perkins, or Mr. Cravath. I do not know. I know I was asked to be there,- and I went 452 J. J. Glessner, Direct Eaximination. there. If I was there, that was the case. And I suppose I was there. Q. When did you first meet Mr. Lane % A. On the day I signed that contract. Q. July 28? A. July 28. Q. Did you meet him' again at any time, do you recall? A. I think so. I cannot recall the time, hut I think so. Q. Have you preserved any papers, or letters, or contracts in connection with what transpired in July, 1902, which would refresh your recollection in any way? A. No, only such as were turned over to our counsel here at the time of the trial in Missouri. Q. That was simply the agreement of July 28 and the deed of August 12, I recall. A. I do not remember. Q. That is all you had? You kept no personal memo- randum ? A. None. Q. When was the first mention made to you that the stock should be tied up in voting trustees? A. I think that was a ijart of the original contract ; at any rate it was the original understanding. Q. It was ? A. Yes, sir. Q. It was so provided in your agreement of July 28? A. I think it was, yes. I know it was the original under- standing at any rate. Q. How did that come up? Do you recall? A. It was for the purpose of making a continuing man- agement and policy of the business during its earlier years. It was a temporary expedient of course. Q. That is, temporary for the period of 10 years? A. Yes, 5 or 10 years. , Q. That there should be such a voting trust was provided in the agreement of July 28, 1902. When was it first brought to your attention that such a provision was deemed ad- visable ? A. When that contract was first discussed. Q. And when was that? A. I think the first time I saw the contract was the day before I signed it. Q. Wlien was that provision first discussed? A. Pi'obably the first day I saw Mr. Perkins. J. J. Glessner, Direct Examination. 453 Q. I see. Then the first day you saw Mr. Perkins he dls- 1 cussed having a voting trust in the combination which was to be formed? A. He said he wanted to buy this property, and I said I was willing to sell it, and in the discussion of the methods in which it should be done he said he should want to buy it, to be paid for by the stock of a very strong company. I do not know that he said this, but certainly it would have been nat- ural for him to have said it ; to assure a steady policy in the conduct of that company, in its earlier years, there should be a voting trust. At any rate the voting trust was very early mentioned. 2 Q. Now, you knew it was to be a voting trust of all the stock? A. Of all the stock. Q. Was mention made at the same time of who would be the owners of the stock that would be brought within this voting trust? A. It was not, no. Q. Did you have any idea! A. No. Q. When was the first mention made of who should be the 3 voting trustees? A. I do not know. Q. When did you first learn who they were to be? A. That I do not know. Along about that time, about the time of the signing of the contract. Q. Did Mr. Perkins discuss or suggest to you who would be the voting trustees when you first met him? A. I do not think he did, No. Oh, no ; I know he did not, because I did not know who were to be in there. How could he notify me then who they were to be? Q. Well, he might have named to you who would be in tjie 4 voting trust even though you did not know who was going in. A. In point of fact he did not. Q. He did not? A. No. Q. Now, you were to take stock m this company, were you not? A. Yes. Q. Very largely? A. Yes. Q* And was most of your property at that time invested in the Warder, Bushnell & Glessner Company? 454 J. J. Glessner, Direct Examination. A. Well, some of it was. Q. And the purpose of the voting trust was to insure con- tinuity of management, did you say? A. Yes. Q. Now didn't you have any interest in who were to he the voting trustees, who were ^to secure continuity of management of the property in which your property was to he invested? A. Certainly. Q. You did? A. Yes, certainly. Q. When did you first ask him who would be the voting trustees ? A. At the time I was told; at the time when the contract was signed. Or at least I suppose that was the time. I do not remember when I did. Q. Did you ask before you signed the contract? A. I do not think so. Q. As a matter of fact you knew whom it was likely to he, didn't you? A. No, I did not. Q. Did you think you might be ? A. I did not make any suggestion ; no suggestion occurred to me whatever. If they had asked me to be one I should have accepted. Q. When was the suggestion made to you that you should be a vice-president? A. The day I was elected. Q. Did anybody ask you if you would be vice-ipresident? A. I do not think they did. Q. Or consent to serve? A. I do not think they did, except that day. I know they did not until tlT,at day. Q. You just took it as a matter of course you would? A. Yes, I could have said no. Q^ You expected as a matter of fact all along to be an officer and a director of the new company in which your prop- erty was to be invested, did you not? A. No, I was very willing to be, but I had no agreement to that effect at all. Q. Did you express any willingness to be? A. I do not think I had. Q. Are you sure about it? A. No, but I do not think I had. Q. You say you are not certain that you did not? J. J. Glessner, Direct Examination. 455 A. No, I am not certain that I did not. 1 Q. Well, you may have told Mr. Perkins that you would be glad to be vice-president or director! A. I might have, but I do not think I did. Mr. Grrosvenor, I was eager to sell my business. I had those estates, that were a great burden to me. If Mr. Bushnell was incapacitated, as he was practically at that time, it left the entire burden of the business upon me, and not only the work of administering it but the credit, the financial credit of it. Up until the time these men had died, Mr. Warder and Mr. Bauer, they loaned us their personal credit; when they died their estates could not do that and it left the burden of financing the business 2 upon me, and the burden of carrying it on, and I did not care to do that for estates, and I was eager to sell out my business. Q. Yes, I understand. But Mr. Glessner, you took cash and stock in the new company? The cash you paid for the Warder and Bushnell interests? A. Warder and Bauer interests. Mr. Bushnell was then alive. Q. I see. Then you paid all the cash over for those in- terests? A. No, sir. 3 Q. Well, for them and for other obligations of yours? A. Other obligations, yes. Q. Then your sole interest thereafter in the harvesting business consisted in your stock in the Harvester Company? A. Yes. Q. Now what I am getting at is — A. My sole interest in the International Harvester Com- pany was never anything more than the stock that I held, or anything different from that. Q. Now, do you mean to say you were willing to take stock in this company in which you knew there were to be voting 4 trustees, as you have testified, to insure a consistent policy, without knowing who were to be any of the officers and di- rectors ? A. I did take it. Q. You did take it how? A. Took it in payment for the property. Q Without any lists of proposed officers and directors, or either or both, submitted to you for your consideration during July, by Mr. Perkins? A. No ; Mr. Perkins said that he would select the officers as well as 'select the name of the company. 456 J. J. Glessner, Direct Examination. Q. Did he mention to you wliom lie was considering as officers ? A. He did not at that time, no. Q. When did he? A. The day they were elected. Q. Mr. Glessner, do you recall that your agreement of July 28 provided that the company might be organized under the laws of Illinois'? A. No, I do not ; it might have been so, but I do not know it. Q. Do you know why it was incorporated under the laws of New Jersey instead of Illinois? A. I do not. Q. Were any cases decided by the courts of Illinois brought to your attention? A. No, sir. Q. Mr. Grlessner, was there any other agreement signed by you than the agreement of July 28 with Mr. Lane? A. I do not know. Q. You recall signing, as you have stated, on July 28, a preliminary agreement with Mr. Lane, and you have testified that on the same day and at the same time preliminary agree- ments with Mr. Lane were signed by these other manufac- turers ? A. Yes. Q. Now, was there any other paper signed by you manu- facturers on that day? A. I do not think so, Mr. Grosvenor, but I am not sure. Q. That was an important matter, was it not? A. Well, I do not know what — that we signed, yes. Q. You say this transaction on July 28, by which each of you manufacturers bound yourselves to assign your business, was an important matter to each of you? A. It was, yes. Q. Now, are you able to state whether you signed any other agreement on that date 1 A. No, I am not. Q. You are not able to state whether you did or did not? A. I am not able to state whether I did or did not. I do not know. Q. Now, was there any other paper signed by you manu- facturers signed? A. I do not know. Q. You do not know? A. No. J. J. Glessner, Direct Examination. 457 Q. Were any other forms of contracts or contracts sub- 1 mitted to you for signature at that time ? A. No. Q. Beg ipardon! A. I think not. I do not recall any. Q. Was Judge Gary present at that meeting on July 281 A. I think he was. Q. What became of these contracts that you signed on July 28? A. I do not know. Q. Did you take a copy with you? A. I do not know ; it would have been natural to take one. ^ Q. You probably did, you think. Now, did you sign any other contract on that day? A. Not that I know of ; I do not know. Q. You do not know? A. No. Q. Did you sign any other paper on that day? A. I do not know. Q. Did you make Judge Gary custodian of any paper for you on that day? A. I did not. 3 Q. Have you retained any memorandum of what tran- spired on July 28th? A. I have none that I can find. Q. Is there any way in which you can refresh your recol- lection as to whether you signed any other paper than that of July, 28th? A. I do not know of any. Q. You do not know of any way to refresh your recollec- tion? A. I do not know of any way to refresh my recollection. Q. And you do not know whether you did or did not sign ^ any other pai>er? A. I do not. Q. Who would know ? A. Nobody would know. Oh, if I sigTied one that went into somebody else's hands, they would know if they had it; I do not know. Q. Do you know whether or not you signed any paper that went into anybody's hands? A. I said a moment ago I did not know. Q. You do not know whether you signed any paper that went into anybody else's hands? 458 J. J. Glessner, Direct Examination. A. I do not know. Q. Do you know whether or not the others there signed, in your presence, a paper which went into somebody else's hands ? A. I do not. Q. You do not know whether they did or did not? A. I do not know whether they did or whether they did not. Q. Who else was present on that day? A. The men whose names I have mentioned already. Q. State them again, please. I have forgotten them. A. Mr. Charles Deering, Mr. Cyrus McCormick, Mr. Wil- liam H. Jones, and myself. I believe also Mr. Bentley. And you spoke of Judge Gary afterwards. I think he was there. Of course the lawyers were there. Q. Mr. Cravath? A. Mr. Cravath was there. Q. Those gentlemen were lawyers — Judge Gary and Mr. Bentley? A. Yes. Q. And Mr. Cravath. What other lawyers? A. That is all. Oh, I suppose Mr. Cravath 's partners were in the building, in the ofBces there. Q. Do you recall whether prior to July 28th, the draft of any other forju of agreement than that which you signed with Lane was submitted to you ? A. No. Q. You do not recall? A. No. Q. Do you recall whether you discussed signing any agree- ment other than that of July 28th? A. No, I do not think so. Q. Was Mr. Howe present on that day? A. I am not sure. Q. Anybody besides yourself for your company? A. Nobody. Q. Anybody besides yourself at the interview you have mentioned with Governor Bushnell — did anybody else of your company negotiate with Mr. Perkins? A. No, I did it myself. Q. Did you see anybody besides Mr. Perkins in regard to it? A. No. Q. Until July 28th, when you met these manufacturers? A. Yes. J. J. Glessner, Direct Examination. 459 Q. Now, Mr. Glessner, is it not the fact tbat on July 28tli : there was submitted at that meeting another contract which' each of you manufacturers signed? A. I do not know. I do not think so. Q. You have no recollection on the matter! A. No, I have not. Q. Now, there is one agreement that we have not yet ob- tained, Mr. Glessner, and that is the agreement for the supply of working capital to the company, one of the papers signed by Lane ; it is referred to in his proposition made to the com- pany. It is a separate agreement with reference to the pay- ment of said sum of 60 million dollars. Did you keep a copy ' of these different papers ? A. No. Q. You are now vice-president of the Harvester Company, are you not? A. Yes. Q. Will you try and see if you can find that agreement, please ? A. I do not know where to look for it, Mr. Grosvenor; I have none of the papers of the company. Q. Who is custodian? A. I suppose the secretary of the company. I do not know. Q.^ Mr. Gale? A. Mr. Howe, I think, is nominally secretary, but Mr. Gale is the acting secretary. Q. Mr. Glessner, do you recall the circumstances under which the Hjarvester Company acquired the property of the Minnie Harvester Company, in the fall of 1903? A. No, I do not. Q. Do you know why that transaction was done through one E. M. Cravath of New York? A. No, I do not. Q. And the money supplied to him by officers of the Har- vester Company? A. No, I do not. Q. Did you know anything about that at the time? A. Not that part of it at all. I knew that the company bought the — Q. In the fall of 1903? A. I suppose it was that time ; whatever date you say. Q. And you knew that the purchase was kept secret for some time? A. No, I do not. 460 J. J. Glessner, Direct Examination. Q. You do not know whether that was the fact or not? A. No, I do not. Q. You were the head of what branch of the Harvester Company in those years'? A. The collection department. Q. Who had charge of the sales on the other end of it? AVhat executive officer? A. I do not remember. Mr. James Deering, I think, but I am not sure. Q. I show you the minutes of the executive committee, those appearing in the record, of November 6, 1905, at which you were present, as chairman, and Cyrus McCormick, James Deering, William Jones, authorizing you and Secretary Howe to execute a contract relating to this Minnie Harvester Com- pany and the acquisition of the same through E. M. Cravath. Will you look at that and see if that refreshes your recollec- tion? Just read through from here, as to those transactions. (Placing the record before the witness, which the witness reads.) A. I do not recall it at all. I have no doubt I signed it. Q. I did not hear that last. A. I say I do not recall it at all. I do not recall the cir- cumstance at all. Q. You. are unable to state, then, why this matter was handled in September, 1903, through B. M. Cravath? A. I think it is 1905. Q. No ; look at the contract. A. No ; I do not know why it was done. Q. Mr. Glessner, what record, if any, is kept by the voting trustees of the action taken by them relating to the affairs of the company; do you know? A. I do not know. Q. Whether they had any such record, do you know? A. I do not know. Q. Have you attended any meetings of stockholders? A. No, not personally. No, none at all. Q. Your stock having been deposited with the voting trus- tees? A. Yes. Q. And that was for the purpose you have explained? A. Yes. Q. I mean the purpose of the creation of the voting trust was as you have explained? A. Yes. J. J. Glessner, Direct Examination. 461 Q. Now, you testified in the Missouri suit that the business 1 of the Warder, Bushnell & Glessner Company had been a prof- itable one prior to 1902. Do you recall that testimony I A. Yes. I do not recall the testimony but I recall the fact. Q. And that is a true statement, is it? A. Yes. Q,. Do you recall that in 1902 these appraisers or account- ants appointed by Mr. Perkins or by the others interested, examined the books of the several companies to ascertain their profits for the preceding two or three years? A. They examined the Warder, Bushnell & Glessner Com- pany books. ? . Q. Who did that, do you recall? A. Jones, Caesar & Company. Q. And did you preserve any record of what they found? A. I did not have the record. Q. I say did you preserve any copy or — , A. I did not have it. Q. Well, did they give you any? A. I do not think so. Q. Were you present at the meetings of the executive com- mittee or of the directors of the Harvester Company in the S latter part of 1902, soon after the formation of the company? A. I think so. Q. And do you recall the discussion, if there was any, re- lating to the formation or the adoption of a selling agency? A. Yes, I was present. Q. And whose plan was that? A. I do not know. Q. As a matter of fact, before the Harvester Company of New Jersey began to do business directly, this selling agency was created? A. Before they began selling their goods, yes. ^ Q. So that since their organization their product has been sold through this International Harvester Company of Amer- ica; is that right? A.- Yes, sir; it is. Q. Why was that plan adopted? A. In order to give it power to do business in all of the states of the United States, quickly. Q. In other words, the capitalization of your selling agency was a million dollars ? A. Was a million dollars. 462 J. J. Glessner, Direct Examination. Q. The capitalization of the Manufacturing Company was 120 million dollars? A. 120 million dollars. Q. The laws of some states prevented a corporation of that size, 120 million dollars, from doing business within their bor- ders, did they not? A. Yes. Q. And therefore that was one of the reasons you adopted the selling agency? A. That was the principal reason. The other was in order that we might get into those states promptly. Q. Now, all the stock of this selling agency is held by the New Jersey company? A. Held by trustees for the stockholders of the New Jersey company. Q. It was turned over to trustees who held it for the bene- fit of the New Jersey company? A. 'So I understand. Q. And the selling company has never paid any dividends, has it? A. I do not think so. Q. The two companies have the same officers? A. Not the same directors — not now, no. Q. I am not asking you now. A. But originally they had. Q. Originally they had the same officers, for many years? A. They had the same officers but not the same directors. Q. That is, Mr. MoCormick was president of both Com- panies ? A. Yes. Q. And you were vice-president of both? A. I do not remember, but I think so ; that is, I do not re- member whether the America company had four vice-presi- dents or not. Q. And the offices were in the same building, always? A. Yes, in the same building. Q. And you sold all your output to the selling company? A. Practically so, I think. Q. And the selling company had practically no other busi- ness than the selling of your product? A. And such other things as were necessary to make a business throughout the country. Q. That other business constituted but a very small frac- tion of its business, did it not? J. J: Glessner, Direct Examination. 463 A. I do not know. I was not directly concerned with that branch of it. Q. On what basis did you fix the prices at which the prod- ucts were sold by the New Jersey Company to the America Company? A. I do not know. Q. You have testified the America Company never paid any dividends, have you not? A. I think they did not. Q. What was the purpose, if any, in- keeping down the profits of the America Company? A. I do not know that there was any such intention. Q. As a matter of fact all the profits went to the New Jersey Company, did they not? A. I do not know that, Mr. Grosvenor. I know the Amer- ica Company invested very considerable sums of money in building warehouses througout the country. Q. Well, the America Company has never paid any divi- dends, has it? A. I think not. Q. And the New Jersev Company has? A. Yes. Q. And the New Jersey Company has laid up a large sur- plus? A. A considerable surplus. Q. And all the harvesting business in the several states is done by the America Company? A. By the America Company. Q. Now, was this use of the America Company devised by the lawyers? A. I do not know. Q. You had never done business that way while you were with the Champion Company, had you? A. I think we had to a certain extent. Q. Had you sold all your output to a selling company which you owned? A. No. Q. You never had done that? A. Never sold all the output; we sold part of it though. Q. To a selling company which you owned? A. Yes. Q. Where did you do that? A. In several states, where the taxation laws were a little 464 J. J. Glessner, Direct Examination. 1 against us, and we had a plan drawn once by which, we wonld sell every bit of it that way. Q. It was never carried out? A. It was not carried out. Q. Which were the largest companies doing harvesting business in 1902? A. The McCormiek and Deering. Q. And after those? A. Well, they ran along; others were less in size. Q. Will you please name them in the order of importance? A. Well, I will omit my own. 2 Q. No, please state your own. Do not leave that out on ac- count of your modesty. A. Well, I say I came in third and I would imagine that the Osborne came in next, and that the Piano and the Mil- waukee and the Walter A. Wood — no, before Walter A. Wood perhaps came the concern at Batavia, the Johnston Company, and then the Walter A. Wood, Adriance-Platt, and the Kich- ardson Manufacturing Company, the Emerson Company, the Acme Company. Q. AVhat was the Emerson Company making? 3 A. Mowers. Q. It was not making binders, was it? A. I do not think they made a binder. Q'. Just made mowers? ' A. Mowers. They made a binder, but not a successful one at that time. Q. Where was the Richardson located? A. Worcester, Mass. Q. They made mowers, did they? A. They made mowers and reapers. Q. They did not make binders, did they? 4 A. I do not think they did. Their trade was largely in the east, and there is not much sale for binders in the east. Now this is my guess on these things. I do not know. I had no means of finding out the relative size of these concerns. Q. Well, that is your best opinion? A. Yes. Q. Based on the information which you acquired? A. Yes. Q. You had been an active man in your company, had you not? A. I had been, yes. J. J. Glessner, Direct Examination. 465 Q. Did you have any talks with Judge Gary in regard to selling out your business in July, 1902? A. No, none whatever. Q. Did you pledge any of your voting trust certificates with J. P. Morgan & Company after the Harvester Company was formed? A. No. Q. You knew that large deposits were made by the Deer- ing and McCormick stocldiolders? A. I do not think I did. Q. Do you recall the provision in your contract of July 28th which provides that such deposit may be made? A. I do not remember. Q. Shall be made? A. It might have been, but I do not remember. Q. You do not recall it? A. No. Q. Now, the Harvester Company had a capitalization of 120 million dollars ; 60 million of that was issued for the va- rious properties acquired and for services by the promoters? A. Yes. Q. And 60 millions for cash? A. Yes. Q. Of which 40 millions went to the MoC'ormieks, Deerings and Piano ? A. I believe so. Q. What did the other 20 millions represent? A. Cash. Q. By new persons — A. By new persons. Q. — ^who came into the harvesting business? A. Yes. Q. Who were those, do you know? A. No. Q. Their stock was tied up with the others ? A. I do not know anything about their stock being tied up. Oh, you mean in the voting trust? Q. Yes. A. Oh, yes. Q. Do you know Mr. Middlekauff? A. I think not. I probably have met him but I do not know him. Q. Did you know, in July, when you were in New York, that he had acquired the option on the Milwaulsee plant? 466 Cyrus Bentley, Direct Examination. A. I knew it in the end of July, yes. Q. The end of July you learned it? A. Yes. Q. "Who gave you that information? A. I cannot recall. Mr. Grosvenor: That is all. Mr. McHugh: No questions. PEODUCTION OF DOCUMENTS. Mr. MoHugh: We have a trunkful of documents here, of the appraiser company and the accountants, and it takes about one trunk for one of the companies. It will take a dray to deliver all of them. We will deliver them here or wherever you say, Mr. Grosvenor. Those of the Deering Company are here for you. Mr. Grosvenor : We might adjourn now until 2 :30, and then have Mr. Wood here and I will examine him. (A trunkful of documents was brought into the room.) Mr. Grosvenor: Have you the circulars for 1903 and 1904! Mr. MeHugh : No, they are not ready yet, they are not com- plete, but we expect to be able to give them to you before we quit here. Mr. Grosvenor: Who is there, that you will produce, that can talk about this thing intelligently (referring to the docu- ments produced and exhibited in the hearing room) and ex- plain them to intelligent people? Mr. McHugh : I think Mr. Eeay will know as much as any- body. (Counsel said that a list of the documents produced by the defendants at this time would be furnished to the Exam- iner.) A recess was thereupon taken until 2:30 P. M., at which time the hearing was resumed, as follows : CYRUS BENTLEY appeared in response to a subpoena is- sued on behalf of Petitioner and, being duly sworn, testified as follows: Direct Examination by Mr. Grosvenor. Q. Mr. Bentley, you are an attorney, are you not? A. I am. Cyrus Bentley, Direct Examination. 467 Q. And vou were engaged in that profession in the year 1 1902? A. I was. Q. Here in Chicago? A. In Chicago. Q. And a member of what firm? A. At that time my firm was Bentley & Burling. Q. And you went to New York in the summer of 1902 in connection with this Harvester consolidation, did you not? A. I did. Q. And you were present at the meeting at Mr. Cravath's office on July 28th, I think it has been testified, 1902, at which 2 the ditferent contracts to Lane were executed; is that right? A. So far as I personally am concerned I have not any ob- jection to answering that question or the questions which I suppose will follow, but I have a doubt as to whether I have any right to answer them. Whatever information I at any time possessed regarding what occurred in New York came to me in my capacity as counsel for the McCormick Harvesting Ma- chine Company and its stockholders, and I understand, at least ia this State our Supreme Court has ruled that what one sees as well as what information comes to one in other 3 ways, is privileged for the client. So, without asking any- body to accept my idea of the law (I suppose the courts are for that purpose) I must decline to testify as to what I saw or experienced in New York in my capacity as counsel. Q. We will try to exclude questions that relate to what you saw or heard in your capacity as counsel and confine our- selves to whatever you saw and heard in other capacities. You are familiar with the rule, Mr. Bentley, that a communication is not privileged when there are third parties present? A. No, I am not familiar with that rule in its application to the duty of a lawyer to his client. _ 4 Q. I say are you familiar with that rule of law that it is not a confidential communication when other parties are pres- ent than the lawyer and his client? A. No, I am not familiar with that rule of law. I do not say it does not exist, but I am not familiar with it. Q. You are not familiar with it? A. No. Q. Now, at this meeting at 40 Wall street, let me tell you, the testimony shows that a number of manufacturers were present, to wit Charles Peering and others representing the Deering Company, William H. Jones and others representing 468 Gyrus Bentley, Direct Examination. the Piano Manufacturing Company, Jolin J. Glessner repre- senting the Warder, Bushnell & Glessn%r Company. Were any of those persons your clients? A. That you have named! Q. Yes. A. No. Q. They were not? A. No ; none of them. Q. Now, do you decline to answer questions as to what transpired at the meeting on that day, at which these other persons were present, as well as your clients? A. I can answer that question by saying that I was never present at any such meeting. Q. Were you present when the contracts of July 28th to Mr. Lane were executed? A. I was present when one contract was executed. Q. What was that contract? A. Well, I think there, again, I come against the privilege of my client. Q. Was anyone present other than you and your client? A. There again I come against the same difficulty. Q. When this paper was signed, which you say was signed, was Mr. Charles Deering present? A. I come against the same difficulty, Mr. G-rosvenor. Q. Was Mr. William H. Jones present? A. The same difficulty. Q. Was Mr. Glessner present? A. The same difficulty. Q. What became of that document that was signed? A. (after a pause) I do not know what became of that document. Q. How many copies were taken of it? A. I cannot answer that — I do not know — if any. I do not know. Q. Did you retain a copy of it? A. (After a pause) There I come upon the same difficulty to which I have referred before. Q. You understand, do you not, as a lawyer that the priv- ilege does not extend to the custody of' a document or to the question of where the document is? A. No, I do not. Q. You are unwilling to state whether you retained a copy of the document? A. I am, for the reasons given. Cyrus Bentley, Direct Examination. 469 Q. Did Mr. Cyrus H. McConnick retain a copy of the docu- ment? A. For the reasons given I decline to answer that question also. Q. Did Mr. Charles Deering retain a copy of the docu- ment'? A. The saiie difficulty confronts me. Q. Now, Mr. Bentley, did any of these other persons re- tain copies or a copy of the document? A. The same difficulty confronts me. Q. Was Judge Gary present at this meeting? A. I have the same difficulty with respect to that question. Q. I refer to Elbert H. Gary, you understand. A. Yes. Q. Were you his attorney? A. No. Q. Was that document given into the custody of Judge Gary? A. I have the same difficulty, Mr. Grosvenor. Q. That is, you refuse to answer? A. Yes. Q. Now, where was this meeting? A. I might say that I have not said there was any meeting, but I will say, as I have said before, that according to my un- derstanding of the law any information which I receive in my capacity as counsel — and I received no information in New York except in that capacity prior to the organization of the Company, I am forbidden to testify to, and so decline to an- swer the question. Q. Mr. Bentley, I am not asking you about any meeting at which were present only yourself and your clients. I am asking you as to what transpired at meetings at which others besides yourself and your clients were present. You under- stand that? A. Yes, perfectly. Q. Now will you state on the record whom your clients were, for whom you claim this privilege ? A. My clients were the McCormick Harvesting Machine Company, an Illinois corporation, its stockholders, Mrs. Net- tie F. McCormick, Cyrus H. McCormick, Harold F. McCor- mick, Stanley McCormick, Anita McCormick Blaine ; Mrs. Mc- Cormick, Eldridge M. Fowler and Cyrus H. McCormick as trustees for Mary V. McCormick, and Eldridge M. Fowler. Q. Will you state whether or not you attended meetings 470 Cyrus Bentley, Direct Examination. in reference to this consolidation of the Harvester interests, at which meetings — that is, in July, 1902 — at which meetings were present others than these clients yon have named and yourself? A. The objection which I tried to state applies, I think, equally to that question. Q. You decline to answer that! A. Yes. Q. Will you state whether you were present at any meetings in July, 1902, or August, 1902, at which meetings this consol- idation of the harvester people was considered, and where others were present than yourself, the clients you have named, and other officers or employes of the McCormick Harvesting Machine Company, one of your clients'? A. You mean where others as well as my clients were pres- ent? Q. Exactly. I am directing my question now to this : meet- ings at which other manufacturers of harvesting machinery were present. A. You say during July or August? Q. During July; first, during July, 1902. Any of your clients and any of these other manufacturers. A. According to my best recollection I was not. You are talking about July first, you said. I said according to my best recollection I was not — ^in July. Q. Now, were you present in the summer of 1902 at any meetings at which this consolidation of harvesting manufac- turers — of the business of harvesting manufacturers — was considered? A. You are referring, I suppose, to a time prior to the or- ganization of the Harvester Company — the International Har- vester Company? Q. Yes. A. According to the best of my recollection I was not. (The last question was read by the Examiner.) Witness: Now I understood that to mean at which my clients and other manufacturers were present? Mr. Grosvenor: Yes. Witness: Have you got that, Mr. Eeporter? The Examiner : I have taken everything that has been said. Witness: Then my answer is as before: No, to the best of my recollection. Q. Well, were you present at any meeting at which papers Cyrus Bentley, Direct Examination. 471 were signed relating to the formation of this company either ; directly or indirectly? A. At which my client and other manufacturers of harvest- ing machinery were present? Q. Yes. A. To the best of my recollection I was not. Mr. Grosvenor: Mr. Examiner, please go back to the be- ginning of the examination «of this witness and read the ques- tions as I gave them and let us see just where we stand. (The questions and answers from the beginning of the tes- timony of the witness were read by the reporter.) Q. Now, were you present at any meetings in the summer ■ of 1902 at which a number of manufacturers of harvesting machines were present and the problem of selling their re- spective businesses was considered? A. At which any manufacturers were present? Q. Yes. A. Well, I think I must decline to answer that on the ground already alleged. Q. In determining your answers do you make a distinction between the term "consolidation of harvesting business" and the term "selling out?" A. Not at all; nothing of the kind, no. I understood you to refer to the organization of the Harvester Company. That is what I am speaking of. Q. I refer to any transactions preliminary to the organiza- tion of the Harvester Company. A. I so understood you. Q. Well, what were you attorney for, in what matters at this time, if you were riot present at any of these meetings? A. What was I attorney for? Q. Yes. In what matters were you attorney at this time? A. Well, I was attorney in a grea,t many matters, Mr. Gros- venor, and in a good many matters for the McCormicks. Q. And were you the attorney for the McCormicks in this matter of the organization of the International Harvester Company and the sale of the business of the McCormiok Har- vesting Company to that new corporation? A. I do not want to seem over particular, but I do not know of any such sale. The sale was to Lane, as I remember it. But I was certainly the attorney of the McCormicks in reference to the negotiations which preceded the organization of the International Harvester Company. Q. Then, you distinguish in making your answers between 472 Cyrus Benttey, Direct Examination. the sale to Lane, the use of the word ' ' sale ' ' to Lane, and the organization of the Company? A. No, not except in my answer to the last question. Q. Now, you testified you were present when one contract was signed. Now what had that contract reference to — the selling out to Lane, the formation of the Harvester Company, or something else relating to the harvesting business? A. Although I cannot see any objection to answering that question except the technical one, I do not think I have any right to answer it, and so I refuse. Q. And when was the date this contract was executed? A. The same objection. Q. Was anyone present other than your clients when this contract was signed? A. The same objection. Q. Now, referring to that meeting, Mr. Bentley; you do not claim that your observation as to the fact whether or not others were present was derived from your clients? A. I do not think it was derived in any other way, sir. Q. Couldn't you see for yourself whether others were pres- ent? A. Yes, but I was there only in my capacity as counsel. Q. When was this? A. When was what? Q. That the contract was signed. A. I must interpose the same statement. Q. And where was it signed? A. And the same to that. Q. Did you retain custody of the document after it was signed? A. And the same to that. Q. If you did not retain custody, do you know who did re- tain custody of it? A. And the same to that. Q. Did other persons than your clients sign this document? A. And the same to that. Q. Who would know, other than your clients, as to the contents of that document? A. And the same to that. Q. Who would know, other than yourself and your clients, as to where that document went? A. The same difficulty about that question. Q. Who would know where that document is today? A. Also to that. Cyrus Bentley, Direct EMmination. 473 Q. Do yoTi know? !■ A. (After a pause) "Well, I think I will answer tliat ques-- tion. No, I do not, though perhaps it is obnoxious to the same objection, Q. Have you seen the contract since it was signed? A. I have the same difficulty about answering that question. Q. Has great secrecy always been observed regarding that contract? A. I have the same di(ficulty in answering that question. Q. Has that contract ever been put in evidence, in any rec- ords that you know of? A. I do not positively know that it has, but I think it has. 2 Q. Where? A. It is my impression that it was put in evidence in the litigation in Missouri, two or three or four or five years ago. I had nothing to do with that, but it is my impression that it was put in evidence there. I am not sure. Mr. Grosvenor: I am trying to find that contract for you, Mr. Bentley, so that you can refresh your recollection; that is, to find the contract in the Missouri record. Q. I show you the volume of testimony in that case, Mr. Bentley. I point out the agreement of July 28th, be- 3 tween the McC'ormick Harvesting Machine Company and W. C. Lane, page 65. Will you glance that over, please. (Hand- ing volume to the witness.) Have you looked at that agree- ment? A. Yes. Q. Was that the — A. I cannot identify it; but any information that I have respecting that agreement came to me as counsel for the Mc- Cormicks. So I would have to refuse to identify it if I could. Q. You mean any information that came to you regarding this agreement which you have testified was signed in your 4 presence, came to you in your capacity as attorney? A. Yes. Q. Were you present when this agreement was signed? (Referring to the document set forth in the paper book.) A. I have already said, Mr. Grosvenor, that I cannot iden- •tify it. Q. You cannot identify this? A. No. Q. You do not recall being present when this was signed? A. Well, I can only say that I cannot identify it. You 474 Cyrus Bentley, Direct Examination. 1 assume that it was signed. I do not know whether it was signed or not. I suppose it was but I do not know. Q. Well, I can tell you that this one I have shown you is already in evidence. A. Yes. I cannot identify it. That is the hest answer I can make to that. Q. Now, you are unwilling to state, you say, whether this other contract which was signed in your presence was signed by other manufacturers than your clients ? That you are un- willing to state, you say? A. I simply decline to answer your question which pre- ^ sented that to me, as' I remember it, on the ground which I have given. I did not mean to offer any positive testimony or to say anything more than I was not willing to answer that question. Of course the record will show whether I did go further than that. That is what I meant to do. Q. You examined that contract enough to observe that it was the contract between the McCormick Company and W. 0. Lane, did you not? A. I saw printed McCormick Harvesting Machine Com- pany as one party and William C. Lane as the other party. I 3 do not want to be over technical, but I could not possibly iden- tify such a long contract after ten years by referring to the printed page. Q. What I mean is this: you saw enough to assume with reasonable probability that that was a contract between Mc- Cormicks, your client, and Lane, didn't you? A. Well, it certainly purported to be. Q. It purported to be? A. It purported to be, yes. Q. Now I show you Petitioner's Exhibit 1, which is al- ready in evidence in this case, which is a contract between the ^ McCormick Harvesting Machine Company and Lane. Let me state that that is the same contract as the one which you have already observed in the Missouri record. Now, Mr. Bentley, this is my question : Was this the contract, that I show you. Petitioner's Exhibit 1, respecting which you have stated was executed in your presence? A. I cannot identify it as the same. I do not say it was not. I cannot identify it as the same. Q. Now, Mr. Bentley, you were the attorney, the chief at- torney, for the MeCormicks in these transactions which re- sulted in the selling out of their business to the Harvester Company, were you not? Cyrus Bentley, Direct Examination. 475 A. I was. Q. And those negotiations and transactions lasted through a period of a number of months; is that not correct'? A. The information which I have as to their duration came to me as counsel for the McCormicks, and I must on that ground decline to answer until the privilege is waived, and I do not see how it can be. Q. You were consulted in the drawing up of these various papers relating to the selling of the property? That is a ques- tion of fact. Were you the counsel? A. I think I was consulted as to everything that was done by my clients. Q. That is it. And you were familiar with all the papers executed by them? A. If there were any papers executed I was familiar with them, I would say. So far as I know I was familiar with them. Q. You are enough of a lawyer and you know enough about this thing to know that a lot of papers were signed? A. Mr. Grrosvenor, any information I have respecting the course of the negotiations and the results of them came to me in my capacity as counsel for the McCormicks, and for that reason I decline to answer. Q. Then, any papers that were signed by your clients you were their counsel in regard to them; is that right? A. That is, in regard to the signing of them? Q; In regard to this matter? A. I should say so, yes. Q. Then you were familiar, were you not, with all the papers which they signed? A. I think so. Q. Yes. Now I ask you: Was there another paper exe- cuted on or about the time this Exhibit No. 1 was executed, by your clients with Lane, — was there another paper on or about that time which was signed not only by your clients bat by the other manufacturers of harvesting machinery who went into this International Harvester Company through Lane? A. To the best of my recollection there was not. Q. What was this paper which was signed in your pres- ence? A. The information respecting that paper came to me as counsel for the McCormicks and for that reason I think I ought not to state what information I have. Q. Was it an important paper? 476 Cyrus Bentley, Direct Examination. A. Well, I really could not measure that; I could not an- swer that question, on other grounds, whether it was an im- portant paper or not, but I will simply confine my ohjection, my refusal to answer, to the same ground. I do not admit there was any such paper. I do not know what you are talk- ing about, but I am objecting to giving any information that I have because that information came to me as lawyer. Q. Now, Mr. Bentley, you say you do not know what I am talking about. I am asking you about this contract which you stated was signed in your presence. A. I thought you were asking me about some other con- tract, signed at the same time. Q. No, I am asking you whether there was any contract — it is a simple question to answer. Was there any contract or paper in this transaction that was signed by a number of these manufacturers'? A. As I have already said, to the best of my recollection there was not. Q. You stated that you would not testify until your priv- ilege is waived. You were subpoenaed several weeks ago, were you not? A. Yes, I was )Subpoenaed, on the 20th or 19th of Septem- ber. Q. Five or six weeks ago. Has there been any discussion of this question of waiver of privilege between you and your clients in the meantime f A. On the 20th of September, perhaps on the 19th — I am not sure; I think it was the morning of the day after I was subpoenaed, though I am not sure, I telephoned Judge Post that 'I was entirely willing to testify, but that I felt a difiSculty about it in view of the fact that the information which I had, which might be called for, came to me in my capacity as counsel, and asked that someone be present — ^I think it was that morning — with authority to waive the privilege if it was desired that I should testify. Later, in thinking over the subject, it occurred to me that one of my clients was not physically able to be consulted on the subject of waiver, and when I reached— Q. Who is that? A. Mr. Stanley McCormick. When I reached that conclu- sion I notified Mr. McHugh that this was the position which I was going to take. I did not ask him if he wanted me to. I told him I was going to take the position which I am taking Cyrus Bentley, Direct Examination. 477 here today. That is the history of what I have done in regard to the interviews. Q. Mr. Stanley McCormiek and his property is in the hands of trustees? A. Yes. Q. When you say he could not waive it, you mean that that would he a matter that would come up hefore the trustees just as any of his property matters do? A. There again I may be wrong, but I do not so understand it. I understand it is the privilege of the client. In case of his death — Q. Has any one of your clients indicated, to you, one way or the other, whether you should or should not exert your privilege ? A. They have not, no one of them. Q. Mr. Bentley, in order that we may not have this appear- ance on the record and the record show questions not an- swered, will you take up with your clients these questions (the Examiner will, I am sure, furnish you a copy of your testi- mony) and go over the matter with them and see if they may not consent to your answering frankly the questions which I have put to you? A. It is useless — it is useless. I would not undertake to take up such a question as that with Mr. Stanley McCormiek in his present state of health. And, as I understand the law, a single client, where there are several, has the full priv- ilege; a majority cannot waive it. Q. Your understanding of the law is, then, that if some- thing happens to one of the clients, making it impossible for him to determine any questions of business or other matters, that it is impossible for the privilege to be waived by any number of the other chents — A. That is my understanding. Q. - — or by the trustees of that client? A. During the client's life. That is my understanding.. Q. Who are the trustees? A. The trustees are Mrs. Stanley McCormiek, Dr. Henry B. Favill of this city, and myself. Q. Mr. Stanley McCormiek was one of the six or seven, wasn't he, of your clients during the period you have named? A. Yes, I think so ; one of the six or seven or eight. Mr. Grosvenor : All right. Thank you very much. 478 W. M. Reap, Direct Examination. WILLIAM M. EE'AY appeared in response to a subpoena is- sued on behalf of Petitioner and, being duly sworn as a wit- ness on behalf of the Petitioner, testified as follows : Direct Examination by Mr. Grosvenor. Q. Mr. Eeay, what is your business? A. I am comptroller of the International Harvester Com- pany. Q. Hqw long have you held that position? A. Since the early summer of 1908. Q. And before that what was your position? A. I was assistant comptroller of the International Har- vester Company. Q. How long did you hold that position? A. From the beginning of January, 1904. Q. And before January, 1904, what was your business? A. For some time I was one of the Chicago managers of the firm of Jones, Caesar & Company, certified public ac- countants of this city and New York and other places. Q. Are the successors of Jones, Caesar & Company, Price, Waterhouse & Company? A. I understand so ; yes, sir. Q. As one of the managers of Jones, Caesar & Company did you participate in the appraisal of the properties of the several companies which went into the Harvester Company? A. I did, yes, sir. Q. Were those appraisals made under your direction? A. I was the principal representative in Chicago of our firm in charge of the appraisals. Q. And the Chicago office of your firm had charge of the appraisals, had it not? A. No, sir — well, not entirely. Of course it was an im- portant matter, and the matter was finally in charge of our senior partner, in New York City, Mr. Dickinson. Q. Please give his full name. A. Arthur L. Dickinson. Q. And you had the active management ? I mean the mak- ing up of the appraisals was under your direction; is that right? A. Yes, sir. Q. When did you begin to work upon that? TV. M. Reay, Direct Examination. 479 A. I think it was sometime in August, 1902. The exact i date I do not recollect. It is ten years ago. Q. And then how long did you work on it? A. The appraisals were completed about the beginning of May, 1903. Q. And the appraisals were made of the McCormick, Deer- ing. Champion and Piano properties; is that right? A. Yes, sir. Q. Of all those four! A. Of those four properties. Q. All under your direction? A. Subject to Mr. Dickinson's approval. 2 Q. Yes, I understand. Now who was it that immediately under you had charge of the making of the appraisals of the McCormick Company? A. There were three features of the appraisal. There was, first of all, the appraisal of the real estate and plant properties. Then there was the appraisal of the inventories of raw materials, supplies, work in progress and finished products at the works and on the territory; and, third, there was the appraisal of the good will and patents. Q. Now, the last part of it, of those three divisions, good 3 will and patents: you arrived at the good will by ascertain- ing the profits for the last two or three years? A. For the years 1901 and 1902. Q. Calendar years or manufacturing years? A. Seasons; they are called seasons in the harvester in- dustry. Q. Beginning when? A. In the United States, for instance, the season at that time would be the spring and summer season ; but the season is that portion of the year wherein we get one entire year's business. * Q. And you made up, or had made under your direction, in the same way, estimates of the value of the good will and the patents of these four companies? A. The profits for the years 1901 and 1902 were deter- mined under our direction for each of those four companies. Q. And then you did the same in arriving at the value of the real estate and plants? A. For the real estate and plant properties of these four companies, appraisal companies were appointed to make com- plete and exhaustive investigations into the value of these properties at the time of the appraisal. 480 W. M. Reay, Direct Examination. Q. And these were made? A. These were made, yes, sir. Q. And then the reports given to you? A. In the first place, it was the duty of the accountants as such to exercise such supervision. Q. Whom do you mean hy the accountants — Jones, Caesar & Company? A. Yes, sir. It was their duty to so supervise the work upon the appraisals, done by the appraisal companies, that in- finite care would be shown in the collection of the values and — Q. So that they could vouch for it afterwards? A. Yes ; so that we could vouch for it. Q. The third thing you did was to make a careful estimate of the materials on hand, and the inventories; is that right? A. There was no estimating, no, sir. Q. What was the third? You distinguish between estimat- ing and making a careful tabulation? A. Yes. The inventories at the works were all taken under the actual supervision of the accountants. Q. Yes; that is the third thing. A. That is the second. Q. I am trying to make this short. Now, the results of your labors in these three directions, that is, good will and plants — A. And inventories. Q. Including profits — good will and patents including profits; and, second, /plants; and, third, inventories, — were brought down in the final report, were they not? A. Yes, sir, they were summarized in the report. Q. Summarized in a report. And was there one report in which all of these three things were summarized? A. One report for each company, yes, sir. Q. One report for each