CORNELL UNIVERSITY LIBRARY GIFT OF A. A. loung 3 1924 092 550 346 Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924092550346 No. 624 IN THE District Court of the United States FOR THE DISTKICT OF MINNESOTA. THE UNITED STATES OF AlIERICA, PetWoner, »«. In Equity INTERNATIONAL HARVESTER COMPANY and others, • Defendants. S TATEME NT, BRIEF AND ARGUMENT ■^ " FOR DEPENDANTS. — John P. Wilson, Wm. D. ilcHuGH, Edgae a. Banoboft, Solicitors for Defendants. Phiup S. Post, ViCTOB A.^BMY, Of Counsel. OUHTHORP- WARREN PRMT-tta COMPANY, OHICAQO. TABLE OF CONTENTS. STATEMENT 1-27 Statement of Issues 2 Statement of the Facts 6-20 Development of the habvestino machine business ; its condition in 1902 6-8 State of foreign tbade in 1902 8-10 Negotiations with Geoege W. Perkins and obganization of International Harvester Company 10-12 Development of the foreign trade by the International Company' 14-18 Business methods and practices of the International Company 18-20 iSubsequent purchases made to add new lines 20-22 Course of business of the International Company in the U. S. FOR THE past TEN YEARS 23-24 The International does not control any' soubce of sup- ply 24 Price of harvesting machines 25 International Company' has not made excessive profits . . 25 Statement of the Law 27-38 ABGTJMEITT 39 I. The International was not organized, as charged, for the purpose of destroying competition and creating a. mo- nopoly. It was organized for the purpose of developing and occupy- ing the foreign market for American harvesting machin- ery and to develop an all-year-round business in agri- cultural implements in the United States. The means adopted to accomplish these lawful purposes were necessary and proper. The elimination of the existing competition between the vendor companies was a mere incident, and has not in- terfered with absolute freedom of trade in agricultural implements in the United States 39-90 Historj' of the harvestuig machine 'business in the United States prior to 1902 40-44 Foreign trade in American harvesting machinery ; its condition and possibilities in 1902 44-55 u Negotiations with George W. Perltins, and organization of International Company aa n > Reasons for selecting name "International" <" International Company organized on honest l)usiness ^ basis — no "water" ^' The test of time and conduct puts beyond reasonable ques- tion THE FACT THAT THE INTEENATIONAL COMPANY WAS OR- GANIZED WITH THE DOMINANT PURPOSE OF CREATING AND SUP- PLYING A DEMAND FOE HARVESTING MACHINERY THROUGHOUT THE WORLD 7.^-80 II. No monopolizing' methods or practices. The evidence com- pletely disproves all the petition's charges of monopoliz- ing or oppressive trade methods and practices; no mo- nopolization was effected or attempted 91-146 The course of business of the International ever since ITS organization, is shown by OVERWHELiriNO PROOF TO have been businesslike and fair 91 Testimony of competitors 92-98 Exclusive agency and cancellation clauses in coM^fISSION contracts prior to 1902 not used by International as a means of coercing dealers 98-102 No COERCION of dealers 102-1 19 No MONOPOLY OF LOCAL DEALERS 139-129 The WITNESSES R. B. iSwift, Wm. H. Green, Michael H. Lamb 134-141 Competition in binder twine 145 III. The new lines and subsequent purchases. The subsequent purchases were made in the development of the new line business and did not restrain, but extended the agri- cultural implement trade in the United States 147-101 Purchase of the Osborne plant 148-lDl Purchase of the Keystone plant 151-153 Purchase of the Minnie plant 153-ly7 Purchase of the Aultmau-Miller plant 157-3 58 Purchase of other properties 158-159 Subsidiary companies 159-ieO Purpose of these transactions lawful and their effect HARMLESS 160-101 Ill IV. The International lias no monopoly features or effects. The evidence proves affirmatively that the defendants have produced none of the results which, are essential to and characteristic of monopoly and monopolization. It proves directly opposite purposes and results 1G2-1U7 None of the essential indicia of monopoly present in this CASE 162 Is excessive prices 164-170 No depressing of raw material prices 171 No reduction of wages of labor 171 No deterioration in the quality of the product 171 No excessive profits 172 No discriminatory prices nor oppressive trade methods to injure competitors 17.3 No patent monopoly nor control of any element or ma- terial essential for successful manufacture 174 No plant closed or its product reduced or limited 17."i The testi.mony of fakmebs 176-170 V . Trade is not restrained ; the field is free and open 180-249 The eight to belief depends upon whether trade is now restrained ob not 181 The fabmeb is the consumek and knows the facts. . . .182-183 no farmer called by the govebnment 184 COMPETITOBS DISPBOVE charge OF RESTBAINT 184-18!) Not size, but wrongdoing and restraint prohibited .... 189-202 Concentration and efficiency are not monopoly 199-202 Monopolization by wrongful and oppressive pkactices, to THE destruction OF COMPETITORS AND THE GRAVE IN.IURY OF THE FARMER AND THE PUBLIC IS THE GIST OF THE CHARGES . - 202 Is trade restrained? 204 Oovernment's evidence on competition in harvesting ma- chines and new lines 206-21.T Defendants' competitors testimony 215-241 Present condition of the harvester trade 241-247 Census of implement dealers 247, 248 Jlaps 248 Capital invested in other agricultural implement com- panies since the formation of the International Com- pany 240 iv CONCLUSION 250-355 Exhibits 257-284 "A" — 63 competitors who testified competition of I. II. Co. was fair 2.J7-261 '*B" — 73 dealers who testified that tliey liandled competing ma- chines in 1903, 1904 and 1905 in violation of the exclusive agency clause while handUng I. H. Co. binders or mowers . . 202, 263 "C — 804 dealers who testified that the I. H. Co. had never at- tempted to and could not coerce them 264-281 "D" — 32 competitors who testified dealers buy competing imple- ments while handling I. H. Co.'s harvesting machinery 282-284 CASES CITED IN BRIEF. Page of Brief American Tobacco Co. vs. U. S., 221 IT. S., 106, 110, 179, ISl, 182, 183 B4, 38, 163, 191, 192, 194, 197 Cincinnati I'acliet Co. vs. Bay, 20O U. S., 179, 184 28, 194 Fonitipia, Ltd. vs. Bradley, 171 Fed., 951, 959 195 Hatfey vs. Lynch, 143 N. T., 241, 247 ; 38 N. E., 298, 299 182 Hopkins rs. V. S., 171 U. S., 578, 588, 592... 32 Nash rs. V. S., 229 JJ. S., 373, 376 32, 193 Ridley rs. Greiner, 117 Iowa, 679 ; 91 N. W., 1033, 1034 182 Standard Oil Co. rs. U. S., 221 TJ. S., 1, 58, 59, 60, 61, 62, 77 27, 28, 34, 37, 38, 163, 100, 104, 197, 254 r. S. vs. American Xaval Stores Co., 172 Fed., 455, 458 32, 193 V. S. rs. American Tobacco Co., 164 Fed., 700, 702 191 U. S. rs. E. I. du Pont ct ah, 188 Fed., 127, 120 181, 182 U. -S. vs. Joint Traffic Assn., 171 U. S., 505, 568 37 r. S. vs. North Bloomfleld Mining Co., 53 Fed., 025, 632 182 V. S. vs. Reading Co., 183 Fed., 427, 456 32, Ifto IT. S. VS. Reading Co., 226 U. S., 324, 358, 369. . 32, 194, 196 U. S. vs. Standard Oil Co., 173 Fed., 177, 179, 188, 190, 191, 194, 105, 106 31, 32, 36, 37, 182, 190 IT. S. rs. St. Louis Terminal Co., 224 U. S., 383, 398, 405-408, 410 32, 194 U. S. vs. Union Pac. R. R. Co., 226 U. S., 61, 84 254 U. S. rs. Winslow, 195 Fed., 578, 594 32 U. S. vs. Winslow, 227 V. S., 202, 203, 205, 217 33, 199, 200, 201 IN THE District Court of the United States FOR THE DISTRICT OF MINNESOTA. THE UNITED STATES OF AMERICA, Petitioner, vs. In Equity INTERNATIONAL HARVESTER COMPANY and others, Defendants. STATEMENT. This is a suit in equity, instituted by the United States of America under the provisions of the Act of Congress of July 2. 1890, entitled "An Act to protect trade and commerce against unlawful restraints and monopolies," known as the Sherman Act. The petition avers that the defendant International Har- vester Company is a combination in restraint of interstate trade, and that the defendants have attempted to monopolize and have monopolized interstate trade in agricultural imple- ments, especially harvesting machines and twine, in violation of the Sherman Act. Relief by decree dissolving the corpora- tion, and by injunction, is prayed. The defendants in their answer aver that the Intornational Harvester Company was organized for tlie lawful purpose oi developing foreign trade in harvesting maeliinery and pro- moting legitimate business interests in a proper manner, and deny that they have restrained or attempted to restrain inter- state trade, and specifically deny each averment of the peti- tion charging wrongful or illegal conduct. Robert S. Taylor was appointed examiner to take the evi- dence in the case. The testimony with certain exhibits con- sisting of 18 printed volumes has been taken and returned by the Examiner. A certificate of importance, as provided by the "Expedit- ing Act" has been filed by the Attorney-General, and the case has been set for lioaring before the Circuit Judges. Statement of Issues. The International Harvester Company, the principal de- fendant, was organized under the laws of New Jersey, on August 12, 1902, and immediately acquired the plants and properties and the businesses of five of the principal har- vesting machine companies in the United States. It has since owned, controlled and operated directly the manufac- turing plants and business thus acquired. On April 30, 1912, near the end of the International Har- vester Company's tenth year of business operations, the Government began this suit against the International Har- vester Company and its directors, and its subsidiary selling, raw-material and railway companies. Its expressed object is "to remove the restraints which defendants have imposed upon trade and more particularly upon commerce among the several states in harvesting maeliinery and binder twine." (Pet. 5.) THE PETITION'S CHARGES. The Petition cliarges that the organization of the Interna- tional Company and the acquisition of the' plants and business of the five original vendor companies was the result of a con- spiracj' between the owners of said five companies to monop- olize the business in the so-called "harvester lines," and to use the power of that monopoly to extend it to all other agricul- tural implements. The petition further charges that ever since the organiza- tion of the International Company the defendants have been carrying out their unlawful purpose, and to that end have (a) Bought out competitors; (b) Monopolized dealers through exclusive agency con- tracts ; (c) Compelled dealers to handle their new lines as a condition of continuing their agencies for harvester lines ; (d) Discredited competitors by statements affecting their machines or their credit; (e) Eeduced the price of machines in special localities below cost of production to destroy competitors; (f ) Systematically bought up patents and all new in- ventions in harvesting machines to perpetuate monopoly; (g) Used a subsidiary company with small capital for the sale and distribution of the entire output of the In- ternational Company, so as to enable the latter company to do business in states from which it would otherwise be barred by reason of its large capitalization; (h) Acquired factories for new lines of agricultural implements ; (i) Organized subsidiary companies to aid in carrying out its unlawful purposes ; (j) Acquired switching railways connecting with its plants to secure unfair division of rates on traffic; — with the result that at the date of the filing of the petition the defendants' power makes effective competition in the har- vester lines impossible, and in the new lines nearly so, and that the defendants through the power acquired by their mon- opoly in harvesting machinery have been able to advance, and have advanced the prices of harvesting machinery ' to the gra^e injury of the farmer and the general public," "and un- less prevented and restrained their, complete unchallenged dominion of every branch of trade and commerce in agricul- tural implements of all kinds may be confidently expected at an early date." (Pet. 19-41.) THE ANSWEK. The Answer denies specifically al] wrongful or oppressive acts or methods charged in the petition, or that any of the acts done by defendants were done for the purpose of elim- inating competition or restraining the freedom of trade in harvester lines or other agricultural implements, or that there exists any restraint upon the freedom of trade or competition in agricultural implements. The essential issues in this case therefore are as to the purpose or object for which the International Company was organized, the methods employed in its business, and the con- dition of the trade in agricultural implements at the date of the filing of the petition. The government contends that the International Company was organized for the purpose of creating a monopoly in the agricultural implement trade in the United States, with the result that there exists today a monopoly in harvesting ma- chines, while effective competition in other lines has been ren- dered nearly impossible, to the grave injury of the farmer and the general public. The defendants contend that the International Company was organized for the purpose of securing the capital and men necessary to meet the requirements of the foreign field and of placing the domestic business upon a sound economic ba- sis, with the result that the annual foreign business has ex- panded between 1902 and 1912 from $10,000,000.00 to $50 000 - 000.00, while at home better macljines have been furnished the farmer at the olil prices, notwithstanding great advances in the cost of labor and materials. The farmer and the public have been benefited, not injured. Not a single competitor has been forced to the wall or his trade diminished. New and vig- orous competitors have entered the field and others are pre- paring to do so. The evidence in the record demonstrates that absolute freedom in the trade and in the competitive conditions exists in the harvester lines, as Avell as in all other lines of agricultural implements. The intelligent determination of the question raised by the record in this case, as to the purpose and object for which the International Company was organized, requires a "knowledge of the history and development of the harvesting machinery business, both at home and abroad. It involves a knowledge of the situation and opportunities in this trade in 1902, the date of the organization of the International Company. It involves a knowledge of the course of the business of the com- pany abroad and at home since 1902. It also involves a knowl- edge of the condition of the agricultural implement business in the United States during the years since the organization of the International Harvester Company; and the situation at the time the suit was brought, as to whether the field in the agricultural implement business in the United States was then free and open to all engaged, or who desired to engage therein. All the facts in relation to the trade in agricultural imple- ments, its history, development and present conditions are fully set forth in the testimony. statement of the Facts. In the agricultural implement trade the term, "harvesting machinery," includes the grain hinder,— or " binder, "—and the reaper or "harvester," which are used for harvesting the small grains; the mower, for cutting hay; and the rake, hay loader and hay stacker, for gathering hay ; and the corn binder for cutting and binding corn in the stalk. DKVELOPMENT OF THE GRAIN BINDER. The mower or grass harvesting machine has been in gen- eral use for more than seventy-five years, in substantially its present form; but it has constantly been modified and im- proved to increase its efficiency and durability, and to lessen its draft. The corn binder is the latest of the machines, and is much less generally used. The chief of harvesting machines is the grain binder. The first grain harvesting machine was the reaper which was in very general use as early as 1850. It was a device patterned after the mower but so constructed that the grain fell upon a platform from which a man riding behind the driver raked the grain into gavels which the six or seven men who followed the reaper gathered up and bound by hand into bundles. The next improvement was the self -rake reaper which automatically discharged the grain in gavels from the platform and thus saved the labor of one man. The "Marsh Harvester," patented in 1859 and in general use by 1865, saved the labor of all but two of the six or seven men engaged in binding. It was a modification of the reaper whereby, without disturbing the poise of the machine upon its wheels, two men could ride upon the enlarged platform and there bind the cut grain as fast as a conveying device could bring it to them. The binding was done as before with a band made from the grain itself, and the bundles when thus bound were scattered behind the machine. In 1875 the first self-binder, which automatically bound the grain with wire, was marketed. It worked successfully, but the farmers objected to it because the stock might be injured by the wire in the straw. In 1880 a machine which successfully cut the grain and automatically bound it with twine and dis- charged the bundles, was put upon the market and immediately came into general use. John F. Appleby, the inventor of this automatic binding and knotting appliance, which revolutionized the harvesting of small grain throughout the world, testified for defendants. (XIII, 370-78.) This machine, with various minor changes and improvements, is the modern "binder" or "grain binder." (XIII, 313-31.) The labor saving value of these harvesting machines was so obvious that the opening of the vast acreage of tillable land in the Mississippi and Missouri valleys following the close of the Civil War greatly stimulated the harvesting machine in- dustry. THE DEVELOPMENT OP THE HARVESTING MACHINE BUSINESS : ITS CONDITIONS IN 1902. The great development of the harvesting machinery business in the United States, was coincident with the development of its agricultural resources. As the pioneers settled upon the western lands, a constantly increasing market for harvesting machinery was presented. These pioneers, as a rule, were without means, and it was essential that harvesting machinery be sold to them upon credit and terms of easy payment. The farmers were not skilled mechanics and the manufacturer of harvesting machinery was compelled to provide and hold available, experts to aid the farmers and thus insure the suc- cessful operation of the machine. For these reasons the busi- ness of manufacturing and selling harvesting machinery has always required a large volume of capital in proportion to the volume of the business. (XIV, 23-7.) Another fact which made the business exceptionally expen- sive was that the sales of harvesting machinery were, of ne- cessity, made during the few months preceding the harvest of each year. This compelled the manufacturers to assemble a sales organization which could be used only during a few months each year. This resulted in inefficiency and undue ex- penses. Because of this fact, the trend of the 'business in harvesting machinery was toward an extension of the lines manufactured ; the ultimate object was to manufacture a suf- ficient variety of agricultural implements used at different seasons of the year, to enable each company to organize and use an all-year-round manufacturing and selling organiza- tion. (XIV, 25-8.) Such an extension of the business of harvesting machine companies to other lines would make additional and great de- mands for capital; and, in 1902, those companies had their capital and credit fully utilized. In 1899, 1900 and 1901 the McCormick Company, the strongest of all, had paid no divi- dends, and during the four years preceding 1902 its borrow- ings increased from $1,100,000 to $11,000,000, and the limit of its borrawing capacity had been reached in that year. (XIII, 201, 203.) STATE OP FOREIGN TRADE IN 1902. About 1880, the manufacturers of American harvesting ma- chinery began, in a small way, to introduce their machines in foreign countries. Men were sent to foreign countries to re- port on conditions and the possibilities of the trade in harvest- ing machinery. The use of machinery throughout Europe in harvesting crops, was then practically unknown. After much effort and demonstration in 1898, an interest in the Amer- ican harvesting machinery was aroused on the part of intelli- gent and progressive landed proprietors in foreign lands. A marked increase in the foreign trade followed. The sales however were through johbers who bought th.e machines for cash on delivery at New York and sold them almost exclusive- ly to the landed proprietors, who likewise paid cash for them. By 1902 the use of these machines upon these large estates in Europe had become more general. Upon such estates ex- perienced mechanics were constantly employed, who could un- derstand and operate the machines. (XIII, 135-8.) The Paris Exposition of 1900 brought to the exhibit of American harvesting machines there many men interested in the agricultural development of various countries. These men confirmed the reports, made to the manufacturers by their foreign representatives, of the great possibilities of the for- eign trade in harvesting machinery if the sales of such ma- chines could be extended to the mass of the farmers. (XIV, 28.) It was recognized however, that to extend the sale of ma- chines to the great mass of the foreign farmers, the manufac- turers must abandon the system of sales through jobbers and adopt the method so successful in America, of selling di- rectly to the farmer through an American organization. As the farmers, especially of Eastern Europe and Siberia, were uneducated, entirely unused to harvesting machinery, and wedded to tiie immemorial customs of gathering the harvest by hand, the task of educating them to appreciate and use American machines necessarily involved a tremendous initial expense. Moreover, as these farmers were poor, sales to them must be upon long credits. (XIII, 137.) Again, the machines manufactured in this country must be shipped abroad each year and there delivered to distributing points long enough before the harvesting season to permit of their being sold and supplied for the harvest. An organiza- tion of experts to be available to instruct and aid the farmers in the use of the machines, after they were sold, was likewise 10 essential, and so was the carrying of great stocks of repair parts at points so widely distributed as to be easily delivered to the farmer, in case of a breakdown. (XIII, 137.) Thus, in 1902, American manufacturers of harvesting ma- chinery recognized the great opportunity that lay before them. They knew that the creation of a demand for American harvesting machinery on the part of the millions of farmers throughout the grain-growing countries would present a market of tremendous proportions. But they also knew that an enormous expenditure of money was neces- sary to the creation and sup|)lying of such demand. They recognized as a business proposition the essential unity of the creation and supply of this demand. The folly of expend- ing enormous sums to educate the farmers of the world in the need and use of the machine, without provision to supply the demand thus created, would be simply sowing that others might reap. NEGOTIATIONS WITH G. W. PERKINS. The owners of the McCormiek Harvesting Machine Com- pany in 1901 and 1902 were giving earnest thought to the means whereby they could realize the possibilities of this foreign market. Money in large quantities was essential to its suc- cess. The available resources both of cash and credit of the MeCormiek Harvesting Machine Company were fully utiUzed in the business as it was then carried on. (XIV, 27-9.) After much discussion of the various means of acquiring more capital, Mr. McCormiek, in the summer of 1902 went to New York to enlist the services of J. P. Morgan & Company in an endeavor to secure the capital needed by his company successfully to develop his business and occupy the foreign market. He presented the situation to Mr. George W. Perkins, one of the active partners of J. P. Morgan & Company. For many years Mr. 11 Perkins had been thoroughly familiar with the west- ern portion of the United States and its agricultural con- ditions. As vice president of the New York Life Insurance Company, he also had travelled year after year throughout Europe, establishing and organizing the foreign business of that company. He thus was familiar with agricultural condi- tions of European countries, and had been impressed by the primitive methods which almost universally prevailed there in the harvesting of crops. Mr. Perldns took up the proposition submitted to him by Mr. McCormick, and, comjjrehending the tremendous resources of capital, credit and of men 'which were essential in order that the demand for harvesting machinery on the" part of the great mass of the farmers of the world might be first created and then supplied, concluded that the plan of Mr. McCormick was impracticable. He realized that the work of rapidly and thoroughly developing this foreign trade de- manded such vast capital and credit and such a large force of trained men, that it was impracticable to accomplish it through the expansion of any one existing company. He knew that Canadian and European manufacturers were then in the race to occupy the foreigTi market, and it was essential, if the American machine was to occupy the field, that a new organ- ization be at once created, and that the work should be rapidly and vigorously pushed. (XIIT, 214-7.) He therefore determined to organize a new company which should purchase the plants and business of several com- panies, so that, with the additional capital at his command, there would be sufficient resources in property, cash, credit and men to enable the company promptly to accomplish the work. He entered upon this plan with vigor. He learned that the Milwaukee Harvester Company's property could be bought and immediately paid $100,000 for an option thereon (for J. P. Morgan & Company). He opened negotiations with 12 the owners of the Deering Hurvester Company, the ^NfcCormick Harvesting Machine Company, the Warder, Bushnell & Gless- ner Company, and the Piano Manufacturing Company, all of whichi were large manufacturers 'of harvesting machinery. The negotiations resulted on July 28, 1902, in the purchase of the plants and properties and business (excepting the bills receivable) of eacli of these companies under separate but substantially similar contracts of purchase of that date. These contracts were made with William C. Lane acting as a mere representative of Mr. Perkins in taking and transferring title. The contracts provided that each vendor was to receive the value of its properties, business and good-will as a going con- cern, as .afterward determined by impartial appraisals, and that the properties were to be transferred to a corporation with a capital stock of $120,000,000, of which one-half should be cash working capital and the other half should pay for the properties purchased. The McCormick, Deering and Piano vendors agreed to accept the purchase price in the stock of the new company that was to be organized. The Warder, Bush- nell & Grlessner owners were to receive, and did receive, $1,000,000 of the purchase price in cash and the balance— which proved to be $2,447,185,— in the stock of the new com- pany. Morgan & Company had already purchased the Mil- waukee Company for a little over $3,000,000 in cash. (XIV, 170.) The petition avers that the owners of the five har- vester companies "were to receive, as the consideration for such transfer, shares of the cajutal stock of the new corpo- ration, and no other consideration." (Pet., 10.) THE ORGAN IZATIOST OF THE INTERNATIONAL HAEVBSTEK COMPANY. The International Harvester Company was organized witli a capital of $120,000,000, of which, under the terms of the eon- tracts of July 28, 1902, $60,000,000 should be paid for in cash 13 for working capital, and it was so subscribed and paid for. Of this amount about $40,000,000 were subscribed and paid for in cash by certain of the owners of tiie McCormick, Deering and Piano Companies, the recei^'ables of the McCormick and Deer- ing Companies being assigned as collateral security for these subscriptions. The remaining $20,000,000 of stock issued for working capital was taken and paid for in cash by persons not before connected with the harvester business (XTV, 160, 161). The other $60,000,000 of the capital stock was to be used in paying for the properties and business of the five vendor companies. The appraisals of the properties of the McCor- mick, Deering, Champion and Piano Companies was not com- pleted until the summer of 1903. The seventy-four large vol- umes of records of such appraisals were produced upon the hearing, and their summaries were offered in evidence by the Government. (1,514-520.) They show that the tangible prop- erties of these four companies, including patents and good- will, as appraised, amounted to $74,611,518 (I, 522) ; but, as there remained only the $60,000,000 of stock to pay for the Milwaukee and those properties and the services and ex- penses of the organizers, the four vendors finally, agreed that Mr. Perkins should be the sole arbiter in scaling down those appraisals. Thereupon the values of the patents and good- wills as ascertained under tlie contracts were excluded, and the appraisals were still further reduced. The $60,000,000 set apart for the purchase of properties was then issued as follows : ToLiL£^3lQi:gan & Company, for the Milwaukee Harvester Company's property and business. . $3,148,196.66 To J. P. Morgan & Company for services and ex- penses in connection with the organization of the Company 3,451,803.34 To the McCormick, Deering, Champion and Piano Companies, in payment for their prop- erties and businesses, the balance or 53,400,000.00 14 This last amount Avns very mueli below the a])praisement of the tangible properties Avithout any allowance for patents and good will. Thus the capital of the International Harvester Company not only contained no "water", but was issued one-half for casn to the full par value, and the other half for tangible properties, amounting, in value, to more than the par of the stock issued. THE DEVELOPMENT OF THE FOEEIGN TBADE BY THE INTERNATIONAL HAEVBSTBE COMPANY. The International Harvester Company was organized for the purpose of enabling American business men to realize the colossal opportunity presented by the world as a market for agricultural machinery. It established an organization of Americans thoroughly familiar with harvesting machinery and the harvester business, drawing them from the com- panies Avhose business it had acquired. This organization was extended to the various countries of the world and the work of creating a demand for American harvesting machin- ery on the part of the mass of the farmers throughout the world was begun. Patiently, intelligently and successfully this work was carried on. Expert mechanics were sent to every nation of the world to study the conditions attending the harvesting of crops, and these men designed, in some in- stances, changes in the machines, and in other cases, entirely new machines, to meet the varying conditions of climate, crop and motive power which obtained. These changes were made and new machines built, and the company was provided in each country with a machine especially adapted to the needs of that country, and capable of efficient and satisfactory serv- ice in harvesting the crops. Sales to the farmers as already stated, were necessarily upon long credit, but the resources of the company enabled it to assume this burden. Stocks of 15 supplies were stationed at convenient distributing points throughout the world, and macliines were manufactured in America and shipped abroad and held in readiness each year, to supply the market of that year without delay. The record of accomplishment by the International Har- vester Company in developing the export trade in harvesting machinery is convincing as to the purpose of its founders. To-day 30,888 local dealers handle and sell the harvesting machinery of this company outside of the United States. (XIII, 165.) Its agencies, fully equipped with stocks of goods and supplies and organized with sufficient force of experts ade- quately to serve the business, extend throughout the various countries of Europe, in Xorthern and Southern Africa, in South and Central America and in Siberia. (XIII, 159-162, 166-7.) To tind the branch house agency of the International Com- pany which in 1912 did the largest business we must go to Central Siberia, where the branch house at Omsk in 1912 did a business for the company amounting to more than three millions of dollars. (XIII, 182.) At Vladivostok, the extreme eastern end of the Trans- Siberian Railroad on the Pacific Ocean, the branch house of the International Company did a business of over $569,000 in the same year. (XIII, 183.) The sales of all the vendor companies in the foreign field in the year 1902 amounted in round numbers to $10,000,000. Since that date the foreign sales of the International Com- pany ha^e been, in round numbers, for the several years as follows : In 1903, $12,000,000; 1904, $15,000,000; 1905, $17,000,- 000; 1906, .$20,000,000; 1907, $24,000,000; 1908, $25,000,000; 1909, $28,000,000; 1910, $34,000,000; 1911, $42,000,000; 1912, $51,000,000. In 1912 it had increased 388 per cent, over the foreign sales of the vendor companies in 1902. (XIV, p. 98.) 16 Comparing the total business of the International Company in all lines in United States in 1912 with the total business of the vendor companies in the United States in 1902 (em- bracing only the old lines) we find that the increase is from $48,000,000 to $64,000,000, or only 33.5 per cent as against an increase of 338.6 per cent, in the foreign trade. (XIV, 98.) A comparison of the total business of the company in the harvester lines (embracing all the lines of goods manufactured by the vendor companies in 1902), with the amount of the busi- ness in the new lines, in the United States, of the steel, lum- ber and fibre sales in the United States, and the total foreign business, shows more adequately what the company was or- ganized to accomplish and has accomplished in the brief term of ten years: 1903 190S 1909 1912 New lines in United States..? 2,056,057 $10,677,992 $18,550,894 $24,915,293 Steel products, fibre sales, etc , 946,893 5,373,035 8,.383,0O8 10,533,.392 Total foreign business 12,246,012 20,199,313 28,134,375 50,896,963 $15,248,962 $36,250,340 $55,088,277 $86,376,648 Total sales of old line in U. S 37,763,858 31,339,714 31,546,270 39,062,455 Total Gross Sales $53,012,820 $67,590,054 $86,614,549 $125,438,103 These figures show that four years after the organization of the company, the increase in the foreign business and the amount of new business developed in the new lines and raw material products exceeded by five million dollars the total amount of business in the United States in the so-called "monopolized" harvesting lines; that in 1909 the increase in the foreign business, plus the amount of the developed "new line" business, and steel, lumber and fiber sales in the United States, was 74 per cent, greater than the total sales of the old or "monopolized" lines in the United States; and that in 1912 it was 116 per cent, greater. The new lines and material products sales in the United 17 States have increased from $3,002,950, in 1903, to $35,478,- 685 in 1912, an increase of 1172 per cent., whereas, in the United States, at the same time, the amount of sales of the "monopolized" harvesting lines have increased from $37,- 763,858 to $39,062,455— or only 3.4 per cent. Furthermore, in the so-called "monopolized" harvesting lines the average annual amount of sales in the United States for the ten years was $33,290,154, whereas, the amount of the vendor companies' businesses in the United States in these lines in 1902 was $46,142,158 — so that in the so-called "mon- opolized" lines the business has decreased throughout the ten years 27.85 per cent. During the same period the relative share of the Interna- tional Company in each of the "monopolized" harvesting ma- chine trade in the United States had steadily decreased year by year. In 1912 the foreign business of the International Com- pany exceeded the entire business, foreign and domestic, of the McCormick and Deering Companies in 1902 by nearly $10,000,000. Its total business in 1903 amounted to $52,000,- 000, only slightly in excess of its foreign business alone in the year 1912. (XIH, 172.) Moreover, the foreign business of this company has not yet been fully developed. To-day, of the small grain grown in the world the United States produces less than one-fifth, and outside of the United States more than one-half of the small grain raised is still harvested by hand; and the inevi- table change from this hand labor to the use of harvesters will mean a great increase in the business of the International Company. There is also an undeveloped area of grain pro- ducing country in Siberia, as great as the heart of the grain- growing section of the United States, and as fertile as the plains of Minnesota and Nebraska. It is the best judgment of the men thoroughly familiar with the world conditions that 18 the foreign business of the International Company will double in the next ten years, reaching one hundred million dollars by 1923. (Xlir, 168-171.) The company has steadfastly adhered to and success- fully carried out the main purpose of its organization, the development of the world's market for American agricultural machinery. The testimony further shows that without the great re- sources of capital and credit with which the company was in- vested at its organization, it could not have accomplished the object for which it was organized. Not only were all the assets of the company utilized in its business, but its credit was so drawn upon, that its borro'wings increased year by year from $15,000,000 in 1903, to $66,000,000 in 1912. (XIV, 120.) In addition to this, millions of dollars of the earnings of the company were retained in the business because of the urgent need for capital. Thus, the company was provided at its inception with no more resources in the way of property, credit and men, than were absolutely essential to the realization of the lawful pur- poses of its organization. BUSI2SrESS METHODS AND PEACTICES OF THE INTEKNATIONAL CO. The International Harvester Company was organized for the lawful objects of expanding foreign trade and placing its domestic business upon a better economic basis. It was or- ganized without one dollar of "watered stock." Not only do the facts respecting its organization negative any underlying purpose to restrain trade in the United States, but the subse- quent conduct of the company throughout the ten years of its existence, furnishes affirmative proof of the absence of such an intention. If the International Harvester Company and those owning 19 and controlling it liad intended to suppress competition or limit trade in the United States it would necessarily be known to, and appreciated by those who were competing in the trade in the United States with the International Company. Any acts done by the company or its agents for the purpose of restraining trade would be directed to the curtail- ment or destruction of the business of its competitors. Necessarily, these competitors would know and feel the effect of any such acts at any time during the ten years. Therefore, the men best informed on the question of whether the conduct of the International Harvester Company in its business in the United States was a fair and honorable endeavor to extend its business along proper lines, or was an endeavor through unfair and improper means to destroy com- petition and invade the rights of others and to injure the pub- lic, are the men who, during the ten years, have been engaged in business in the United States in competition with the In- ternational Company. The testimony of its competitors makes a record full and complete upon this subject. More than three score of these competitors have testified that the course and conduct of the International Company in its competition for the business of the United States throughout the ten years of its activities has been businesslike, honorable and fair. Some of these competi- tors represent companies of large means with millions of capi- tal invested, and manufacturing long lines of implements. Other competitors represent small companies. The list in- cludes men who, having a small plant and doing a small busi- ness, manufacture but a single implement in competition with the International. Those competitors, great and small, testify alike to the fairness of the policy which has controlled the course of our client's business in the United States. And every line of implements manufactured by the International is represented in the list of competitors who testified to its fair dealing. 20 The testimony of the competitors who have been competing in harvesting machines with the International, since 1902, shows that not one competitor has been driven out or excluded from the trade in these ten years. It also shows that into this "monopolized" liarvesting madiine business there have en- tered, during "the past five years, new, strong, active com- petitors, whose combined resources exceed $80,000,000. They also have testified, as well as proved by their entrance, that this trade is not restrained, and that tliis field is free and open. Thus, there has been presented the course of dealing of the International Harvester Company in the United States throughout its ten years by the very men who are best in- formed as to the fact. SUBSEQUENT PURCHASES MADE TO ADD NEW LINES. Eeferenee has already been made to the tendency in the harvesting machine business, as in other branches of the business of agricultural implements, toward an extension of the line of implements manufactured, in order that an all- year-round-selling-organization, which would make for effici- ency and economy, could be utilized. The necessity of acquir- ing additional capital in order that new lines might be added to those already manufactured by the harvesting companies, was one of the causes of the organization of the International. After its organization it soon entered upon the work of adding to the line of implements manufactured by it. In some instances, it erected plants, installed machinery, began the manufacture of new implements such as gasoline engines, tractors and cream separators; in other instances, it pur- chased the plants and business of companies which were manu- facturing and selling lines of hay and tillage tools, manure spreaders and wagons, which were known to the trade and were popular. 21 Special stress is laid by the (Jovernment upon the purchase by the International Company of the plants of the Osborne, Keystone, Aultman-Miller and Minnie Harvester Companies; it being alleged that these purchases were concealed for a time for the purpose of defrauding the public and destroying com- petition. The facts connected with these several purchases are fully disclosed in the record and are discussed at length in the argu- ment following the statement, and we therefore only briefly allude to them here. THE OSBOBNE PUECHASB. The purchase of the Osborne Company is relied upon as specially flagrant, and a brief statement in regard to it will illustrate the situation. It had a well organized export trade in the harvesting lines and in twine, which, in proportion to its total business, was larger than that of any other American manufacturer. Its plant at Auburn, N. Y., was specially well located for the ex- port trade. It also had an established line of tillage tools, in- cluding various lines of harrows, into the manufacture of which the International Company desired to enter. (XIV, 41, 71.) The majority of the stock of the company was owned by three women, the widow and daughters of the founder of the company, wlio no longer resided at Auburn, and whose entire fortunes were invested in the business. In the conduct of the business they were forced indorsers of its notes for current bank borrowings amounting to several millions of dollars each year. Owing to this situation these women had long been anxious to sell out the business, and soon after the organ- ization of the International Company endeavored to make a sale to it. The first two attempts to make such sale were futile, but in January, 1903, such a reduction from the first price named was made that the negotiations resulted 22 in the purchase of the Osborne plant and business on January 15, 1903. (T, 363, 373-7, 380.) The purchase did not include the receivables which the International C^ompany refused to buy. l^he purchase pricp,-$4,500,000,-was paid $1,000,000 cash and $3,500,000 in tlie International Company's notes, se- cured only by the pledge of the purchased certificates of stock of the Osborne Company as collateral. The receivables not purchased, but retained by the vendors, amounted to over three millions of dollars, in small amounts, widely scattered in vari- ous parts of the world. The vendors deemed it essential to the collection of these scattered receivables that they should control the business of the company, and also that its business should be kept distinct and going, to the end that the stock of the company held as collateral might be available in case of need. The vendors therefore demanded, and their demand was granted, that they should remain in control of the com- pany and of its business as an independent concern until their receivables were collected and the purchase money paid or other collateral substituted for the stock, and that in the mean- while the sale should not be disclosed. The business of the company was in fact, as well as in ap- pearance, managed independently by its old officers and man- agers the same as before the sale, who continued to advertise it as an independent company. Neither its sales organization nor that of the International knew of this purchase until it was publicly announced. In the fall of 1904, when the pur- pose for which the control of the company was left in the vendors was accomplished, the sale was at once publicly an- nounced and all its properties transferred to the International Company, which has ever since operated and controlled it. The concealment was made a condition of the sale by the ven- dors, for their own use and lienefit, and ceased at once when the control of the company and its plant passed to the Inter- national Company. The concealment was not at the desire nor for the benefit of tlie International. (I, 367, 383-8.) 23 THE COUESE OP THE BUSINESS OF THE INTEENATIONAL COMPANY IN THE UNITED STATES THE PAST TEN YEAES. The proof in this case covers completely the course of the business of the International Harvester Company as it has been carried on in the United States since its organization. Representative farmers throughout the United States, 228 in number, testified as witnesses for the defendants. Repre- sentative dealers in agricultural implements throughout the various grain-growing sections of the United States, number- ing 823, have likewise testified. Seventy-six men who have been doing business in agricultural implements in competition with the Internationa], manufacturing and selling harvesting machinery, tillage tools, hay tools and other implements such as wagons, engines, cream separators, spreaders and tractors, also testified for the defense to the course of business in these lines during the last ten years. It is established by the dealers as well as by the competitors, that the International has never adopted the policy of attempting to coerce local dealers into handling Inter- national goods exclusively, or into increased purchases of In- ternational implements. It is likewise established by the tes- timony of the dealers and of the competitors, that the Inter- national could not, if it would, coerce the dealers respecting the purchases of machines, or suppress or destroy competition in the trade in agricultural implements. The steady growth of the business of those, who, during the entire ten years have been in competition with the International Company in the harvesting machine business, is described by about forty repre- sentatives of such competitors. And the growth of competi- tion in the harvester trade by the entry into the business of new and very strong and well equipped companies having al- ready thoroughly established efficient selling organizations in every part of the United States, together with the success 24 which has attended their efforts, is fully described in the testimonj^ The constant growth of the various companies manufactur- ing and seUing other a.orieultural implements— the "new lines" so called— in competition with the International Company, has been detailed upon the witness stand by those identified there- with. A complete census of the implement dealers of the grain growing sections of the United States showing the brands of harvesting machines and the principal lines of other agricul- tural implements which they handle, has been prepared and in- troduced in evidence. Lists of the dealers who are authorized representatives of competing harvesting machine companies have been produced by the officers of those competing compa- nies". Maps of the grain-growing states based upon this census and these lists have been prepared and introduced in evidence. Upon these maps are marked the locations of local dealers who handle International harvesting machinery, and of those who handle competing machines. Thus, WT-th painstaking thoroughness, the defendants have presented to the court the facts respecting the course of tlie trade in agricultural implements in the United States through- out the past ten years, with the result that this proof com- pletely overthrows the claim of the Grovernmont that the In- ternational Company has either effected or attempted any re- ' striction of competitive conditions, in interstate trade in agri- cultural implements in the United States. THE INTERNATIONAL DOES NOT CONTROL ANY SOTJECB OF SUPPLY. It is shown by the proof that the International Harvester Company has no control over the supply of harvesting ma- chinery. There is no basic patent upon any of the machines in use. All patents had expired prior to its organization. Other companies may, and do duplicate at pleasure the general form 25 and every essential part of the harvesting machines made by the International Company. THE PRICE OE HARVESTING MACHIiNES. The testimony of farmers, dealers and manufacturers, oral and documentary, introduced in this case, puts beyond ques- tion the fact that harvesting machinery today is sold in the United States as cheaply as it was fifteen years ago. This level of prices has been maintained, with the single exception, that in 1908 there was an advance of about five per cent, in the price of harvesting machinery, which advance continued for the seasons of 1908, 1909, 1910, 1911; and in the fall of 1911 prices again went to the former low level. This in- crease in price was because of the increase in the cost of raw material and labor, and did not nearly equal such increase. Farmers and dealers alike have testified to the fact that of all the agricultural implements sold, none in the past ten years have advanced as little in price and improved so much in quality as harvesting machines. THE INTEENATIOISTAL HARVESTER COMPANY HAS NOT MADE EXCES- SIVE PROFITS. The earnings made and dividends paid by the International Harvester Company are in the record. It will be recalled that the capitalization of the company was most conservative. No stock was issued except for actual, tangible value. Upon this capitalization, the International Han^ester Company has paid, during the ten years of its existence, in dividends, an aver- age of only 4..3 per cent, annually. The earnings of the com- pany upon the amount actually invested in the business have averaged only 7.8 per cent, annually. 26 SUMMARY. The proof in this case ov':'rw]ielmingly supports the con- tention of the defendants, that the International Harvester Company was organized for a legitimate purpose as a proper and necessary means whereby a great export trade in har- vesting machinery, might be developed; that its conduct and policy since its organization have been businesslike and honor- able ; that no unfair methods in trade have been adopted by it, and that it is without the inclination or the power to exclude others from the trade. The proof makes clear the fact that competition with the In- ternational Harvester Company in all the lines of implements which it manufactures and sells is active and growing. The proof shows that while the acquisition by the Inter- national Harvester Company of the five vendors' harvester plants which it now owns did stop the competition theretofore existing between those companies, and did invest the Interna- tional Harvester Company with a large porportion of the busi- ness in harvesting machinery in the United States, yet these results were not the object or moving consideration of its organization, but were merely incidental thereto. The purpose and object of the organization of the com- pany was to create and occupy a world market for American harvesting machinery, and the acquisition of the properties of the vendor companies was necessary to the accomplishment of this lawful and proper purpose. The great, salient fact established by the record in this case is, that tlie door of opportunity is wide open for the conduct and development of business in all agricultural implements to all who are en- gaged therein, and to all who may desire to enter therein. The International Harvester Company has neither the inclina- tion nor the power to close this door, nor has it attempted so to do. 27 STATEMENT OF THE LAW. The defendants do not rely upon any new construction of the Sherman Act; nor seek to narrow any interpretation and application of the Act hy this Court or hy the Supreme Court. This case is one of fact; not of controverted questions of law. Therefore, without attempting a review of the decisions, we state only a few general and well estaiblished principles which should govern in applying the law to the facts of this case. The provisions of the Sherman Act which the Petition claims the defendants have violated, are as follows : "Section 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce, among the several states, or with foreign nations is hereby declared to be illegal. * * * Section 2. Every person who shall monopolize or at- tempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several states, or with for- eign nations shall be deemed guilty of a misdemeanor. * * #)? The Sherman Act was enacted to prevent wrongs in inter- state trade to individuals and the public, The wrongs which this act was designed to prevent were these arising from an undue restraint of trade. The first section of the act forbids and makes illegal "all means of monopolizing trade; that is, unduly restraining it, by means of any contract, combination, etc." Standard Oil Co. v. United States, 221 U. S., 1, 59. The second section seeks, if possible, "to make the prohibi- tions of the act all the more complete and perfect by embrac- ing all attempts to reach the end prohibited by the first section, that is, restraints of trade, by any attempt to monopolize or 28 monopolization thereof, even though the acts by which such results are attempted to be brought about, or, may be brought about, be not embraced within tlie general enumeration of the first section." Ihid, p. 61. The word "monopoly" as used in the Act is synonymous with the words "undue restraint of trade." Ihid, pp. 61, 62. The right of each individual to enter upon legal business and to continue therein is of the essence of freedom of trade. The public interest in preserving the freedom of trade lies in its need that the course of business and prices be fixed in a field open to free competition. This public policy of freedom of competitive conditions, it is the purpose of the Act to sub- serve. The Act does not make illegal all contracts which restrain trade. Agreements may lawfully be made, even though they do restrict competitive conditions. A merchant may sell his business to another, and, to get full value for the good will of his business, may lawfully covenant not to engage in sucli business again for a reasonable period and throughout a rea- sonable territory. He may thus lawfully sell his competition. Cinchwati Packet Co. v. Bay, 200 U. S., 179, 184. Such a covenant necessarily restrains competition and may eliminate such competition, yet it is not forbidden by the Sher- man Law, since, in the Slandard Oil ease, it has been settled that the Act makes illegal only those contracts and combina- tions which "unduly restrain trade." The freedom in trade which it was the purpose of the Sher- man Act to preserve, necessarily gives to individuals the right to enter into all needful and proper contracts or combinations for the development and extension of their trade, even though 29 sncli contracts and combinations restrain trade, provided sucli restraint is not undue. That every one may be free to exer- cise this right, the Act only forbids contracts and combinations ^vhich "unduly restrain trade." An undue restraint of trade, is a restraint which interferes with the freedom of others successfully to continue or enter into competition in the trade. Manifestly, therefore, in each case wherein the validity of a contract or combination is challenged under the Sherman Act, the court must determine whether or not the necessary effect or purpose of the contract or combination is control and dominion over the trade involved. If the contract or combi- nation gives such power that the freedom of competitors is thereby limited or destroyed, then trade is unduly restrainedv If, however, such contract or agreement gives no such power, then the restraint of trade, if any, resulting from the contract or combination, is not undue, since the freedom of all individ- uals to continue or to engage in the trade, is unrestricted. This is in harmony with all our jurisprudence. Through- out the reign of "liberty under law," harmony has been pre- served by the rule that the legal rights of all coincide but do not overlap. The legal right of an individual to do any certain thing extends and has always extended only to the point where his act becomes an invasion of the legal right of another. The question may be simple or complicated. The con- tract itself may furnish the conclusive evidence. If the con- tract is one whereby one railroad company acquired the owner- ship of more than fifty per cent, of the capital stock of a com- peting company, the question of fact upon which the validity of the agreement depends is easily decided. The ownership of fifty-one per cent, of the capital stock of the competing company gives the power to control and dominate its policies in operation, and is therefore conclusive evidence that the 30 necessary effect, and consequently tlie purpose of the con- tract, was the acquisition of the power of dominion over the other company. But if the contract vested in the tirst com- pany the ownership of but forty-six per cent, of the capital stock of the other railroad company, the question of fact is not determined by the contract itself. Although the first com-j pany, by the contract, acquired forty-six per cent, of the cap- 1 ital stock, if the other fifty-four per cent, of the capital stock was held in a unified ownership independent of the first com- pany, the contract would not give control. If, however, the first company, by the contract acquired forty-six per cent, of the capital stock and the other fifty-four per cent, was owneS by thousands of people widely scattered and with no unity of action, then the ownership of the forty-six per cent, might give control, and the question would be determined by the facts as they appeared in the record. In exactly the same way the courts in all cases under the Sherman Act will treat the fact of the size of the unit created by the contract or combination. The idea of monopoly is often identified with size or large percentage of business, but the decision in the Standard Oil case concludes debate on that point. Monopoly, as used in the anti-trust statute, ex- ists only where there is "undue restraint of trade." Therefore the size of a unit resulting from a contract or combination has significance only as it bears upon the ques- tion as to whether "undue restraint of trade" was the effect of the contract or combination. If because of its size or proportion of business the imit re- sulting from a contract or combination is invested with the control or domination over the trade in its line so that ex- isting or potential competition is stifled, then this size and proportion of the business is evidence of the illegality of the contract or combination. But if no such control or domina- tion results from the size or proportion of business of the 31 unit created by a contract or combination, then such, size or proportion of business, no matter how extensive, is not proof of the illegality of the contract or combination. The Sherman Act was designed to protect, not to hamper, freedom of trade. The right of every one in business to make all needful and proper contracts to advance his interest and develop his trade, is of the essence of that freedom of trade which the Act was intended to preserve. Great size of a business, even if it is the result of a contract or com- bination, is wholly consistent with the freedom of trade re- quired by the Act, if the rights of others are not thereby- put in jeopardy. If, however, the contract or combination does not itself furnish the conclusive proof of its purpose or effect, then the court must consider the circumstances attending the en- tering into the contract or combination, i. e., the purpose in the minds of those entering into it, the course and conduct of the parties since the making of the contract or combination, the nature and condition of the business in which the parties are engaged, the course and extent of actual competition ex- isting in the business, the freedom with which others in the business may extend and develop their business, and the free- dom with which those not in the business may engage success- fully therein; and from these and other pertinent facts pre- sented, determine the question whether or not the effect of the contract or combination is to injure the public and limit the rights of individuals freely to trade. In the decisions applying the Sherman Act, the courts have constantly kept in mind the principle that size or proportion of business, in and of itself, is not a violation of the Act. Judge Sanboen, writing the opinion of the Circuit Court in the Standard Oil Case (173 Fed., 177, at page 191), said: "It (the Sherman Act) was enacted not to stifle, but to foster competition, and its true construction is that while 32 unlawful means to monopolize and to continue an unlaw- ful monopoly of interstate and international commerce are misdemeanors and enjoinable under it, monopolies of part of interstate and. international commerce by legitimate competition, however successful, are not denounced by the law, and may not be forbidden by the courts. ' ' Judge Hook, in liis separate concurring opinion filed in the Standard Oil Case, supra, said (pp. 195, 196) : "Magnitude of business does not alone constitute a monopoly, nor effort at magnitude an attempt to monop- olize. * * * On the other hand, Congress did not in- tend to impede legitimate commercial activity nor put a limit to its fruits. The genius and industry of man when kept to ethical standards, still have full play and what he achieves is his; and this applies as well to a corporation in Avhich the energies of many are concentrated under the authority of law in a single organization. * * * So of an industrial corporation, the wisdom and business sagac- ity of whose managers have foreseen and taken advantage of the natural tendencies of trade and caused it to out- strip all competition. Success and magnitude of business, the rewards of fair and honorable endeavor were not among the evils which threatened the public welfare, and attracted the attention of Congress. ' ' See, also: TJ. 8. V. American Naval Stores Co., 172 Fed., 455, at p. 458. Nash V. U. S., 229 U. S., 373, at p. 376. U. S. V. St. Louis Terminal Conqmnii, 224 U S 383 410. TJ. S. V. Reading, 183 Fed., 427, 456; S. C, 226 U. S., 324, 358. Hopkins v. U. S., 171 IT. S., 578, 588, 592. In Umtrd Stales v. Winslow, 195 Fed., 578, Judge Putnam said (page 594) : . ' 'It is also urged that as a result of these leases in com- bination with the four groups consolidated as alleged the respondents have dominated 98 per cent, of the business 33 to which these groups related. We do not attach much importance to this percentage, because that standing alone, is like one of the terms of an algebraic equation, which, of itself, is non-efficient." In United States v. Winslow, 227 U. S., 202, a combination was assailed as illegal under the Sherman Act. It appeared that three groups of defendants had been engaged in the man- ufacture of shoe machinery. The machines were patented and not competitive. Each of the three groups possessed from 70 to 80 per cent, of the business of the manufacture of the particular machinery made by it. These three groups organized a company and turned over to it the stocks and business of the several corporations, thus vesting in the one corporation, 70 to 80 per cent, of all the business in the United States in the manufacture of machinery used in making shoes. The validity of this combination was attacked by the Depart- ment of Justice because, among 'other things, of the proportion of the business vested in one control by the combination. The claim of the Government was as follows (p. 205) : "The question presented then, is w'hether the combina- tion into one group of 75 per cent, 'of the whole business of the country in a particular line is in such restraint of trade as to violate the Sherman law, it being conceded that the combination was not attended by any methods of unfair competition or illegitimate trade practices. With- out attempting to determine exactly at what percentage of trade control a combination passes into the region of illegal iresitrainlj, the Government insists tha^t when a combination acquires between 70 and 80 per cent, of the total trade in a particular business, the line between legal and illegal combinations has been passed; and that this is so even though the combination is made without re- sorting to any wrongful methods to coerce anyone to come into the combination." The Supreme Court of the United States, however, refused to follow the argument made by the Department of Justice and overruled the contention. The court said (page 217) : "It is said that from 70 to 80 per cent, of all the shoe 34 machinery business was put into a single hand* * * But taking it "as true, we can see no greater objection to one corporation manufacturing 70 per cent, of three non- competing groups of patented machines, collectively used for making a single product, than for three corporations making the same proportion of one group each." The Supreme Court of the United States, in its opinions in the Tobacco case (221 U. S., 106) and Standard Oil case (221 F. S., 1) has expounded the purpose and true construction of the Sherman Act. After making clear the fact that the Sherman Act was designed to prohibit the undue restraint of trade by any means, the court decided the cases against the defendants, finding that the acts proved constituted a viola- tion of the statute. But, in each case, that court with pains- taking care made it clear that the decision as to the guilt of the defendants, did not rest upon the mere size of the corporations, or the proportion of the business which they re- spectively possessed. In holding the combination of the To- bacco Company a violation of the statute, the court said (pages 181-182) : "Indeed, the history of the combination is so replete with the doings of acts wliicli it was the obvious purpose of the statute to forbid, so demonsti'ative of the exist- ence from the beginning of a purpose to acquire domin- ion and control of the tobacco trade, not by the mere ex- ertion of the ordinary right to contract and to trade, but by methods devised in order to monopolize the trade by driving competitors out of the business which were ruth- lessly carried out upon the assumption that to work upon the fears or play upon the cupidity of competitors would make success possible. We say these conclusions are inevitable,not because of the vast amount of property aggregated by the combination, not because alone of the many corporations which the proof shows were united by resort to one device or another ' ' etc. In deciding that the Standard Oil Company was a viola- tion of the statute, the Supreme Court held that the Circuit Court of the Eighth Circuit was correct in its findings that the 35 acts and dealings established 'by the proof in the case oper- ated to destroy the "potentiality of competition," which would otherwise have existed, to such an extent, as to make the combination a conspiracy in violation of the Sherman Act. The Supreme Court based this conclusion upon specific rea- sons which are stated in the opinion; and in referring to the size of the Standard Oil Company and the unification of power and control which was the result of its organization, the court speaks in guarded language with reference to the precise point under consideration. The Standard Oil Com- pany of New Jersey, as the result of the combination, became invested with all the properties in the United States, and all the business in petroleum in the United States Avhich had theretofore been acquired by many companies and acquired by methods which the court held to be tyrannical and unlaw- ful. Yet, even this tremendous aggregation of capital and of trade was held by the Supreme Court to be only prima facie evidence of an unlawful intent and purpose, and in holding it to be such prima facie evidence, the court called attention to the "absence of countervailing circumstances." The record in that case showed the accumulation of tre- mendous capital, property and business without any evidence of a legitimate need therefor in the proper development of the trade. Manifestly, in a ease where the proof is overwhelming to the effect that the combination was effected for the purpose of legitimately developing the foreign trade in harvesting ma- chinery, and was a necessary incident to that lawful purpose, we have the proof of "countervailing circumstances," and, therefore here, size of the corporation and the proportion of its business do not create even a prima facie presumption of wrongful intent. # * The acquisition by one company of the business of various 36 companies, theretofore competing, necessarily terminates such competition. But such fact is by no means decisive as to the invalidity of the transaction. A large proportion of the ordinary contracts made in the course of business, can Avell be said to in some way restrict competition. If two parties engaged in a like business enter into a partnership, this would necessarily terminate the pre- vious competition between them. If one man sells his busi- ness, and, in order to obtain a fair value for his good will, covenants with reasonable restrictions as to time and terri- tory that he will not engage in a like business, the neces- sai-y effect of the covenant is to restrict competition. But these instances, as well as many others that might be cited, are transactions the validity of which cannot be questioned under the Sherman Law. In the case of the acqui- sition by one company of the business of others, the validity or invalidity of the transaction will be determined, as in the other cases mentioned, by the real and dominant purpose in the minds of those taking part therein. If the dominant pur- pose was tlie restraint of trade through suppression of compe- tition, then the transaction is invalid, regardless of its form. But, if the dominant motive and purpose of those taking part in the transaction was the lawful and proper extension of their trade and business, by lawful means, and the lessening of competition was merely an incident to this lawful purpose, then the transaction is valid under the Sherman Law. In the opinion of the Circuit Court by Judge Sakbobn in the Standard Oil Case, 173 Federal, 177, it is said (p. 188) : "The purpose of the act of July 2nd, 1890, was to pre- vent the stifling and substantial restriction of compe- tition in interstate and international commerce. The test under that act of the legality of a combination or con- spiracy, is its direct and necessary effect upon such com- petition. If its necessary effect is but incidentally or in- directly to restrict competition, while its chief result is 37 to foster the trade and increase the business of those who make and operate it, it is not violative of this law." Judge Hook, in his separate concurring opinion in the same case, said (page 194) : "But if the restraint is direct and appreciable and not merely incidental to some contract having a lawful pur- pose, it falls clearly within the prohibition of the statute, and there is no room for further construction." In United States v. Joint Trafjic Ass'n., 171 U. S., 505, the Supreme Court said (page 568) : "An agreement entered into for the purpose of promot- ing the legitimate business of an individual or corpora- tion, with no purpose to thereby affect or restrain inter- state commerce, and which does not directly restrain sucih commerce, is not, as we think, covered by the act, al- though the agreement may indirectly and remotely af- fect that commerce. We also repeat what is said in the case above cited, that 'the act of Congress must have a reasonable construction or else there would scarcely be an agreement or contract among business men that could not be said to have, indirectly or remotely, some bearing upon interstate commerce, and possibly to restrain it. ' To suppose as is assumed by counsel, that the effect of the decision in the Trans-Missouri case is to render illegal most business contracts or combinations, however indis- pensable and necessary they may be, because, as they as- sert, they all restrain trade in some remote and indirect degree, is to make a most violent assumption and one not called for or justified by the decision mentioned, or by any other decision of this court." In Standard Oil Case, 221 U. S., 1, the court said (pages 58, 60) : "Without going into detail, and but very briefly sur- veying the whole field, it may be with accuracy said, that the dread of enhancement of prices and of other wrongs which it was thought would flow from the undue limita- tion on competitive conditions caused by contracts or other acts of individuals or corporations, led, as a matter of public policy to the prohibition or treating as illegal all contracts or acts which were unreasonably restrictive of competitive conditions, either from the nature or char- 38 acter of the contract or act or where the surrounding cir- cumstances were such as to justify the conclusiou that they had not heen entered into or performed with the legitimate purpose of reasonably forwarding personal in- terest and developing trade, hut on the contrary were of such a character as to give rise to the inference or pre- sumption that they had been entered into or done with the intent to do wrong to the general public and to limit the light of individuals, thus restraining the free flow of commerce and tending to bring about the evils, such as enhancement of prices, which were considered to be against public policy. * * * The statute under this view evidenced the intent not to restrain the right to make and enforce contracts, whether resulting from combination or otherwise, which did not unduly restrain interstate or foreign commerce, but to protect that commerce from being restrained by methods, whether old or new, which would constitute an interference, — that is an andue restraint." In the Tobacco Case, 221 U. S., 106, the court said (page 179): "Applying the rule of reason to the construction of the statute, it was held in the Standard Oil case that as the words 'restraint of trade' at common law and in the law of this country at the time of the adoption of the anti-trust act only embraced acts or contracts or agree- ments or combinations which operated to the prejudice of the public interests by unduly restricting competition, or unduly obstructing the due course of trade or which, either because of their inherent nature or effect or be- cause of the evident purpose of the acts, etc., injurious- ly restrained trade, that the words as used in statute were designed to have and did have but a like signifi- cance. It was therefore pointed out that the statute did not forbid or restrain the power to make normal and usual contracts to further trade by resorting to all normal methods, whether by agreement or otherwise, to accomplish such purpose."' 39 ARGUMENT. The International Harvester Company was not organized, as charged, for the purpose of destroying competition in the agricultural implement trade and creating a monopoly therein. It was organized for the purpose of developing and occupy- ing the foreign market for American harvesting machinery and to develop an all-yeax-round business in agricultural im- plements in the United States. The means adopted to accomplish these lawful purposes were necessary and proper. The eliminatioaa of the existing competition between the vendor companies was a mere incident, and has not interfered with absolute freedom of trade in agricultural implements in the United States. The charge of the Goveniment is that "the International Harvester Company was incorpo- rated as an instrumentality to effect the unlawful purposes of defendants, as a means of destroying compe- tition, and unlawfully combining and confederating a num- ber of independent manufacturers., dealers in and dis- tributors of harvesting machinery, tools and implements, and binder twine, and creating a monopoly in interstate commerce therein." (Pet., p. 17.) The defendants deny this charge, and aver that the objects of the formation of the International Harvester Company were the expansion of foreign trade in harvesting machinery and the development of that trade in the United States. These objects have been accomplished without restricting competitive conditions. Thus what was the dominant purpose in the or- ganization of the International Company is presented 40 to the court as an issue of fact. This issue must be deter- mined by a consideration of the evidence as presented in the record. The evidence introduced by the Government upon this point (omitting testimony as to the subsequent conduct of the busi- ness which will be discussed under a separate head) consisted of the testimony of witnesses and documentary evidence, relat- ing to the negotiations which resulted in the acquisition of the various plants and business of tlie five vendor companies and the oi'ganization of the International. Mr. Perkins, the man who organized the company, and who conducted these negoti- ations for the acquisition of the plants and business of the vendor companies, was not called as a witness by the Govern- ment. Its testimony, therefore, upon this point is, necessarily, incomplete. The omissions, however, have been supplied by the defendants' evidence. AH the evidence in the record relating to these negotiations and the organization of the Company is found under Point I of the "Appendix to Defendants' Biief," submitted herewith. (App., 1-202.) THE HISTORY OP THE HARVESTING MACHINERY BUSINESS IN THE UNITED STATES PRIOR TO 1902. John F. Appleby, the man who invented the knotter and built the first successful twine- hindiiig liarvesting machine, has, in his testimony (App., 186-188; XIII, 370-380) de- scribed the evolution of the present grain binder, from the orig- inal reaper through tlie Marsh harvester and the wire binder. A like interesting story is told in the testimony of John F. Steward, a pioneer in the designing and manufacture of har- vesting machineiy. (App., 177-183; XTII, 313-331.) ^ Mr. Alexander Legge, now goueral manager of the Interna- tional Harvester Company,— who began his career as a travel- 4] ing collector and salesman for the McCormick Harvesting Ma- chine Company in 1891, and who has since steadily advanced in the harvester business from traveling collector to local collection manager, general agent, manager of collection de- partment, assistant manager of sales, assistant gen- eral manager and general manager — detailed the his- tory of this business in the United States, from its com- mercial side, and its condition in 1901. (App., 30; XIV, 23, 24-26.) Need for Long Credits and Readij Repair and Expert Service. Plows and small tools were sold outright to the dealer, whereas, from the beginning, the larger, more complicated and expensive machines, such as harvesting and threshing ma- chinery, were necessarily handled by the local dealers on com- mission agency contracts. The central western part of the United States was settled mostly by homesteaders ; men who, in the main, were without money to finance a farm or buy machinery. As a necessary result of that situ- ation, the sales of agricultural implements to these western farmers had to be made on long-time credits. The business of the manufacturer of harvesting ma- chinery did not end with the making of the machines and their sale to farmers ; the machine had to be set up in the field ; expert help had to be furnished to instruct the farmer in the use of it, and kept constantly available to the farmer in case of any breakdown, and a supply of repair parts had to be pro- vided, so that the farmer might promptly obtain and replace any broken or worn out part. The delivery of harvesting ma- chinery in any given territory has always had to be made with- in a very short period of the year. Hence, stocks must be ready to be delivered in this short period. The sales organization was employed during only a few months each year and then disbanded, and then reorganized the following season. (App., 357; XIV, 42.) 42 Largv Capital Requirements. By reason of tlie long credits necessarily given the farmers in the sales of harvesting niachinery, and because the manufac- turers assumed, not only the work of making and selling the machine, but of looking after it when it was sold and m op- eration, and because of the shortness of the season, as well as the necessity of having a supply for an abundant harvest in territories where the harvest was uncertain, the harvester busi- ness required very large capital— a greater amount of money in proportion to the annual turn-over than almost any other business. And the need of this proportionately excessive amount of money increased each year as the business grew. (x\pp., 30; XIV, 25,26.) "Dead Zincs" Established. On account of the large amount of money required to sell these machines in the newer settlements, and the risks in- volved in the long credits, some manufacturers did not extend their business, to the western country. Dead lines were established, extending north and south. Some com- panies did not attempt to extend their sales in any quantity west of Ohio. Such for a long time was the policy of the Adriance-Platt and Walter A. Wood Companies. The Os- borne and Johnsiton Companies originally sold in the east and only extended their business to the west as it became a settled country. The McCormick and Deering Companies, on the other hand, carried their business to tlie frontier, and re- mained constantly abreast of the movement which changed the western prairies into cultivated farms. Trend Toward Longer Lines. Mr. Legge further described the trend in the harvesting ma- chinery business toward longer lines; that is., to increase the kinds of farm machines made. As the harvesting machines were marketed during only a few months of the year, and the 43 selling organization was necessarily re-assembled each year a tendency toward the manufacture of other implements nat- urally developed, to the end that the selling organization might be kept together. The object, of course, was ultimately to acquire a line which would justify an "all-year-round" sell- ing organization, whereby a maximum of economy and effi- ciency could be realized. The advantages of this were early sought by such com- panies as the John Deere Plow Company and the Moline Plow Company, which, beginning with plows, had each established a large trade in a long list of tillage implements and vehicles. When Mr. Legge went with the McCormick Company in 1891, it sold in Nebraska only binders and mowers; reapers were not then much used in the west. During the following eight or nine years (App., 31; XIV, 27) the McCormick Company extended its line by adding sulky hay rakes, headers, push-binders, corn binders, corn shredders, knife grinders and twine. The development of its business and the entering upon these additional harvester lines greatly increased the amounts of capital required. Yet it appears (App., 31-32; XIV, 28, 29) that the heads of various departments of the McCormick Company were constantly advising in 1901 and 1902 the add- ing of still other lines of implements. None of these recom- mendations were adoiJted, because the resources of the com- pany, in capital and credit, were already fully utilized in the business as then carried on. (App., 31-32; XIV, 28, 29.) Capital Requirements of McCormick Co. It is difficult to realize the extent to which the harvester business required — and still requires — large amounts of money. Concrete illustrations are given in the course of the McCormick Company in 1898 to 1902, inclu- sive; the amount of the capital and surplus combined and invested in the business increased from about $25,000,000 to $40,000,000; its earnings, by years, were, in 44 round numbers, as follows: 1898, $4,500,000; 1899, $4,500,000; 1900, $3,000,000; 1901, $4,500,000; 1902, $5,000,000, an aggre- gate earning of over $20,000,000. Out of these total earnings, in the five years named, there were only $2,100,000 paid in dividends. Over 90% of the earnings during these years was left in the business and was required by its needs. In addition to tlie amount of money invested in the business from year to year out of earnings, the MeCormick Company's borrowings increased as follows : In 1898 the borrowings were $1,100,000 In 1899 they amounted to 3,000,000 In 1900 they amounted to 7,000,000 In 1901 they amounted to 8,000,000 and in 1902 they were $11,000,000. All this is shown by the testimony of George A. Eanney. ( App., 33-34 ; XIII, 201-203.) These figures indicate iiow completely in 1902 the recent ex- pansion of the business and the addition of the new harvest- ing lines had absorbed all its available resources and credit in the business as it then was carried on. THE FOREIGN TEADE IN AMEBICAN HARVESTING MACHINEEY : ITS CONDITION AND POSSIBILITIES IN 1902. While at various times prior to 1890, samples of American harvesting machinery were exhibited in foreign countries, and an export trade established, its volume was small and no thor- ough or adequate work for its development had been undertaken. Shortly afterward, however, American manufac- turers of harvesting machinery, notably, the McCormicks and Deerings, began to explore and develop the foreign trade. In 1892, the Deering Harvester Company sent Mr. Charles H. Haney abroad thoroughly to investigate this field. In the early days of development in Colorado, Wyoming, Montana, New Mexico and Arizona, as the Indian reservations were taken over and the land brought under cultivation, he had in- vestigated conditions and reported to his company the possi- 45 bilities of this new and unsettled country, advised as to the establishment of agencies, and the extension of its business throughout this territory. Investigations of Foreign Trade Conditions. He was. sent abroad by the Deerings in 1892 to perform the same service throughout the foreign countries. He made per- sonal and similar investigations in the different countries of Europe, South America, Australia, New Zealand, South and North Africa and in Asiatic Eussia — in practically all the grain-growing countries of the world. He remained abroad from 1892 until 1902, in charge of the foreign business of the Deering Company. Since 1903, he has been in charge of the foreign business of the International Harvester Company. Probably there is no man living who is more conversant with the world conditions as they affect the agricultural implement business than is Mr. Haney. In his testimony (App., 1-11; XIII, 133-183) the history of the foreign trade in harvesting machinery, the conditions attending its develop- ment, its position and possibilities in 1902, and its subsequent development by the International Harvester Company, are fully detailed. Mr. William V. Couchman, who was sent abroad by the McCormick Company in 1899, and was in constant charge of the foreign business of that company until 1902, and who, since the organization of the Inteiiiational Harvester Com- pany, has been identified with its foreign trade and is now the European inspector of sales, also described (App., 11-15 ; XIII, 189-200) the opportunities for foreign trade in American harvesting machinery in 1902, and what was required to em- brace them. The testimony of these two pioneers of American commerce is alive with interest, but the limits of this argument pre- vent the presentation of more than a summary of it. 46 Naturally, the more advanced countries first took up the use of harvesting machinery. The earlies.t and largest de- velopment was in England, where machines were largely used and the field fairly well covered. In France there was a partial development of the trade ; in Germany, somewhat more than in France, and less than England, in the other countries of Europe, a considerable number of these machines had lieen sold hut the field was relatively untouched. (App., 11; XIII, 190.) Before 1902 Foreign Trade Handled Jnj Jobbers. The foreign business in harvesting machinery prior to 1902 had ]iractically all been conducted through foreign jobbers These merchants bought the machines delivered in New York City usually for cash. Credits extended to the jobbers were few and for short periods. These jobbers bought only such ]nachines as they felt sure they could sell, and sold them in the easiest market. When the jobber had sold his machine, delivered it to the farmer and set it up, he regarded his work as finished. He had no interest in the use or maintenance of the machine by the farmer. (App., 2, 3; XIII, 136.) Therefore, his only purchasers were those who had available mechanical skill to understand and operate the machines. Therefore outside of England and portions of France and Germany, practically the only persons buying machines, who could employ skilled mechanics were the proprietors of large estates. Moreover, the landed proprietors were able to pay for the machines, either in cash or upon short time ; and, con- sequently, the business with them was within the capital of the foreign jobbers. These proprietors naturally appre- ciated the value of the harvesting machinery, and were com- paratively quick to avail themselves of them. (App., 3; XIII, 137.) Thus, by 1902 there had been developed a considerable for- eign business in American harvesting machinery by the Deer- 47 ing and the McCormick Companies. From 1898 to 1902, the foreign sales of the Deering Company increased from $1,400,- 000 to $3,488,000, a gain of about 146 per cent. (XIII, 179.) The foreign sales of the McCormick Company increased from $1,864,000 in 1898 to $4,336,000 in 1902, a gain of 132 percent. (App., 15; XIII, 200.) Possibilities of a World Market. These sales, however, were merely skimming the cream of the foreigTi business. Back of these landed proprietors were the millions of ordinary farmers cutting their grain by hand as it had been done for generations, ignorant of the value of the harvesting machine, without enough ma- chanical skill to understand its construction, operation or maintenance. These millions of men all over the world, of- fered a possible market for harvesting machinery, the magni- tude and extent of which oouLl scarcely be computed. Influence of Paris Exposition. The fact that American machinery had been sold abroad and was in successful operation on so many foreign estates and farms, aroused and stimulated a growing interest on the part of manufacturers in the possibilities of a world market for these products. This was intensified by the Paris Exposition in 1900, where American manufacturers, notably the McCor- mick and Deering Companies, had elaborate displays of their various harvesting machines. From all over the world men interested in agriculture came to the Exposition and visited these exhibits of American harvesters. Government officials, whose duty it was to develop the agricultural lands of their respective countries, were frequent and interested visitors. These men, impressed with the value of these machines in the promotion of the agricultural interests of their countries, pointed out to the American manufacturers in glowing terms, the opportunity which the various countries presented for the 48 sale of these machines. Thus there ,i^re\v in the minds of the leading men of these two American harvester companies, a comprehension of the vastness of the commercial opportunity which the condition of the agricultural world offered as a field for harvesting machinery. (App., 12, 13, 31; XIII, 193; XIV, 28.) Foreign Manufacturers Active. But American manufacturers were not the only ones to ap- preciate the future demand for harvesting machinery in for- eign countries. Men in England, Germany, France and in other countries entered upon the manufacture and sale of such machines. As there were no basic patents upon any of these American machines, these European manufacturers duplicated them and gave them names identical or similar to those of the American make and Lx'gan to push their sale. Massey, Harris & Co., Ltd., the great Canadian company had had strong representation abroad since 1891, and was rapidly developing a foreign trade in har^-esting machinery. (App., 10, 16-18; XIII, 154, 183-189.) Hornsby, the English har- vester manufacturer, had already an established trade in Europe and Australia. Thus, there was existing and appreciated, a business op- portunity almost unparalleled; and various forces were at work in an endeavor to avail themselves of it. It was under- stood, however, that the realization of these tremendous pos- sibilities involved overcoming vei'v many and very serious oh- Sitaoles. Difficulties to be Overcome Abroad. The experienced men wlio investigated and reported to their American companies the vast opportunities of the foreign market, also reported the difficulties to be overcome before the market could be successfully created and supplied. The millions of farmers who, as consumers, were to create 49 the demand for tlie machines, were, in many countries, ig- norant, prejudiced, superstitious, and wedded to old customs in harvesting their crops. Therefore, the solution of the problem involved the overcoming of this ignorant inertia, the conversion of these millions of farmiers to a belief in the need and value of the machines, and teaching them sufficient me- chanical skill to operate and maintain them. Moreover, as the customs of the people, the animals used as the motive power, and the climatic and other conditions affect- ing the crop varied in different countries, the successful in- troduction of machines involved their proper readjustment or reconstruction, so as to make them available properly to har< vest a crop in each country. It involved also, the abandon- ment of the system of selling through jobbers, and the estab- lishment of an organization in each country, by which the company itself, through its representatives, could direct the sale of the machine to the farmer, educate him in its use and maintenance, and provide him with all needed expert help and supply parts so as to insure the successful operation of the machinery. (App., 5.) American Organization Necessary. The men who had spent years abroad in studying the ques- tion, advised their employers that the organization to be suc- cessful, should be American, and made up of men who thor- oughly understood the machines and the business. If they knew the foreign language so much the better. It was evident that to supply foreign markets with American harvesting machinery, involved the manufacture of these machines in the United States, their transportation to the foreign countries, and delivery to the various distribut- ing centers, far enough in advance of the harvesting season, so they could be sold and used for the harvest of each year. It was recognized that the farmers, especially in Russia 50 and Siberia, wherein lay the g-reatest possibilities, were un- able to pay cash for their machines when purchased, and long credits must be given. (App,, 7-10.) Large Outlay of Muncy Ecquircd. It was, therefore, clearly understood liy the American manu- facturer, that the realization of the tremendous opportuni- ties which the foreign nations presented involved great labor and skill, and required above all else, a tremendous outlay of money and great resources and credit. The outlay of money required was twofold: First. There was the enormous expense of perfecting and establishing an American organization throughout these foreign countries, and in carrying on the educational work to redeem tlie millions of farmers from their primi- tive customs and to ijistill into their minds the desire to use the machines. Second. There was the still greater outlay of money re- quired in m.anufacturing and distributing the machines, after the demand for them was created, and in selling them upon long credits. It Avould be entirely futile to do the preliminary educational work, at large expense, and thus create the demand for harvesting machinery, without being able fully and promptly to supply the demand thus created. And it could not be done properly on a small scale or at slow rate. Consequently, the successful solution of the problem, the ade- quate realization of the colossal opportunity, involved the abil- ity and courage to expend the large sums of money required for the preliminary educational work, and for the manufac- ture and distribution of enough machines to supply the de- mand when and as created. All of these facts are fully and with detail and illustration spread upon the record in this case, in the testimony of Messrs. Haney (App., 1-11; XIII, 133-183) and Couchman (App., 11-15; Xiri, 189-200). 51 Vision of Foreign Trade. The broad visionecl American manufacturers, like Mr. Mc- Cormiek, President of the IMd'ormick Harvesting Machine Company, therefore, in 1902, ]iad clearly in their minds, this great and glowing conception of the possibilities of extension of the American trade into foreign lands, and especially into Europe and Siberia. They saw all the factors in the problem, and the necessity of tremendous resources of capital, credit and men, which were essential to make the vision a reality. It is worthy of note, that this alluring field was not to be won by warfare. It was not a case of invading a region al- ready occupied and driving out its possessors. It was a vir- gin field. The conquest sought was a victory over suspicion, inertia and ignorance, without the destruction of any estab- lished business. But European and Canadian manufacturers were awake, and it was seen that the race would be to the swift. Hoiv the Supply of Raiv Materials Affected Foreign Trade, As shown, the owners of the McCormick Company, because of their experience and the information gained at the Paris Exposition, and that reported b}- experienced men whom they had sent abroad to investigate the foreign conditions and pos- sibilities, and because of the business already being done by them in the foreign field, had full knowledge of the factors entering into the pi'oblem of creating and supplying the de- mand on the part of the foreign farmers for American har- vesting machinery. Their thought was centered upon the ac- quisition of the capital and resources essential to working out the problem successfully. Their discussions developed new demands for capital if the foreign trade was to be adequately developed. It was pointed out to them by the head of theij purchasing department that to undertake to supply the' for- eign field with machinery required the possession of plants by which raw material, principally steel and iron, could be manu- 52 factured, to the end that they would be assured of a constant and steady supply of this essential raw material at fairly stable costs. The testimony in this regard of J\Ir. Herbert F. Perkins (App., 21-29; XIII, 290-292) follows: "Q. After you became connected with the McCormick Harvesting Machine Company in 1899, did the question of securing for that company raw materials for the use in its manufacturing come up? If so, in what way and to what extent was it considered? A. I was employed for the purpose of securing their raw materials and that was my regular occupation, but there was a special consideration given to that subject along in 1900, I would say possibly in 1901 also — I am s.ure it extended into 1901 — in connection with a discus- sion of the expansion of the company along the line of their foreign sales. Q. When the question came up with respect to the expansion of their foreign trade, what was your statement or position as to that matter of securing a permanent supply of raw material? A. I had become astonished in the year or two preced- ing and during my relation with the McCormick Com- pany at the proportionate expense which was involved in the raw material as related to the cost of their machin- ery, and there was going on in the discussions of the ^Ic- Cormick people, their head men,, the question of going after the foreign trade. Our foreign sales organization had begun to feel that there was an almost indefinite fu- ture there if they could get after it; and without urg- ing the management to take steps so that they could get this forei.gn business, in the discussions as to procedure I said to Mr. McCormick and to the gentlemen who were discusising the question — ■ Mr. Grosvenor: Which Mr. McCormick? The Witness : The three of them ; the family was there. 'This question of raw materials is so vital in your costs, would it not be well to stop a moment before you go very much further in discussing the extent of your expansion in Europe, to consider the question of covering your raw material situation so that you can go into that expansion on a safe ground?' Q. What was the course of prices in raw materials between 1899 and 1901 and 1902? 53 Mr. Grosvenor: I object to all this as immaterial. A. I cannot oiT-hand state exactly the conditions in those two years, but my position was based on the fact that the price of raw materials fluctuated strongly up and down and made a very uncertain basis for cosit and the tendency seemed to be rather to grow higher in cost, because of the conditions of labor and the gradual eating up of lumber and ore supplies. ***** Q. Which one of these raw materials were you par- ticularly interested in at that time? A. I made a particular point with the company on their pig iron and steel supplies. Q. You had had former experience in that line 1 A. For ten years. Q. What, if anything, did you do to explain your posi- tion and the way it could be carried out in the McCor- mick Harvesting Machine Company business! A. After the discussion as to the ver}- important rela- tion which the material costs bore to their total costs, the matter that I was questioned about, I Avas told to go ahead and make plans with a view to seeing on what basis we could get into the production of our own pig iron and steel. So I employed engineers and had plans drawn for a steel mill and blast furnaces for the McCormick Harvesting Machine Company, and also estimates pre- pared of the capital necessary to install such plants. Q. When were those plans and estimates completed? A. The latter part of 1901 I think. Q. What was the minimum figure at which such a plant as you had plaimed could be built and equipped? A. I estimated at that time that to get it on a basis that was at all reasonable would take $5,000,000, and that did not cover some things that later 1 would have had to include. Q. Would that include the working capital? A. No. Q. That was simply the capital expenditure for the plant? A. For the plant. Q. How much more would be required for working capital ? A. I never figured that. My judgment, however, is that it would take perhaps $2,000,000 more. 54 Q. Was this reported to Cyrus McCormick and Ms brothers or either of them, this estimate as to cost? A. Yes, sir. Q. What was the result? A. There was no one in the company at that time who had had anything to do with the steel business, and they were veiy much astonished at the amount of money in^ volved in getting into that business and felt that they could not possibly undertake it. Q. Why? A. They were short of capital, I imagine. Q. You reported to them, as you stated, that it was unsafe to plan to go, in a large and strong way, into the expansion of the McCormick Company 's foreign business without providing for this safety in raw materials? A. Yes, sir. Q. That was the fact in your judgment, at that time? A. Yes, sir. Q. And that could not be done at that time without largely increasing the financial resources of the company, could "it? A. No, sir. Q. It could not? A. No, sir." (App., 22.) Mr. Legge, speaking of tlie discussions among the heads of different departments of the McCormick Company as to means of acquiring additional capital so as to extend the business, testified as follows (App., 32 ; XIV, 29) : "Q. At the meetings where these heads were called in to discuss various projects that had arisen as to expan- sion of the business, were there various discussions as to how to add to the working capital of the company? A. Yes, many plans were discussed. We had very lit- tle in the way of precedent to go by in the development of the farm machinery trade. The Studebaker people had put out a small bond issue prior to that time, and I think either Deere or J. I. Case, one of the other manufacturers. Aside from that we were discussing something new and untried so far as the farm machinery trade was concerned. We discussed bond issues and increase of capital stock. I do not think I could attempt to state how many differ- ent thiiigs were discussed. We covered the field fre- quently and broadly." 55 Effort of McCormick Co. to Get Additional Capital. Thus, by the summer of 1902, the owners of the McCor- mick Company were fully informed as to the possibilities and opportunities of the foreign trade in harvesting machinery, and of the difficulties to be surmounted in creating and occu- pying that market, and of the resources essential to the suc- cess of the attempt. They also knew the fact, as we have shown it to be, that their company was then utilizing all its resources of capital and credit in its business as it was then carried on. Therefore, in June, 1902, Mr. Cyrus H. Mc- Cormick, President of the company, went to New York to consult with J. P. Morgan & Company in an endeavor to secure their financial support to enable his com- pany promptly and strongly to seize the opportunity of the foreign mai^ket. There he met Mr. George W. Perkins, an active partner in the firm of J. P. Mor- gan & Company and presented the need of the McCor- mick Company for large financial assistance. He described to him the condition of the harvesting machine business at home and abroad, the vast opportunity, and the factors of the prob- lem, — as above detailed, — of creating and supplying the for- eign demand, and the essential need of very great resources to enable the McCormick Comyjany to develop and expand the foreign trade immediately. Negotiations loiih George IV. Perkins. Mr. George W. Perkins, for a number of reasons, was ex- ceptionally qualified to comprehend the situation as it was presented to him, to understand clearly the possibilities whicli lay in the world at large for a market for harvesting machines, and the best methods by which there could be provided the means necessary to accomplish the desired end. He was born in Chicago and lived a large part of his life in the west. His business brought and kept him in close contact with the conditions of the west 56 as they developed. He was employed by the New York Life Insurance Company, and for years traveled throughout the west establishing- agencies for that company. Later, called to New York as the vice-president of the company, he year after year visited Europe, establishing agencies and organizing the company's business throughout the various countries. Hav- ing traveled throughout the west in the days of its agricul- tural development, he was naturally familiar with the methods and machinery employed by the farmers in harvesting their crops. Going with this, knowledge and experience to Europe, and traveling throughout the various countries there, he was forcefully impressed with the contrast between the primitive methods employed in harvesting machinery there and the progressive methods employed in this country. His testimony in this regard is as follows (App., 36-37; XIII, 211- 213): "Q. Mr. Perkins, in 1902 what was your business 1 A. I was a member of the firm of J. P. Morgan & Com- pany. Q. When did you enter the firm of J. P. Morgan & Company? A. About the middle of 1900 I think. Q. Prior to that time what was your occupation? A. I was connected with the New York Life Insur- ance Company. Q. At the home office in New York? A. For a number of years I was travelling out in this western country, pretty thoroughly over this western country and later in New York and Europe. Q. Did your business for the New York Life Insur- ance Company call you to Europe, and if so, did it call you there frequently? A. Yes, sir. Q. In a brief way describe how^ often and how gen- eral were your visits to E-urope on behalf of the New York Life? A. They were very frequent, almost annual for a num- ber of years. The company was seeking concessions to do business in a number of countries there ; they had had some difficulty with their concessions in other countries 57 and I went * * ^ for the development of the New York life business in Europe, building up our agency system there and generally organizing the business in Russia and all parts of Europe— Germany, Hungary, Switzerland, France, England, Holland; in fact, practically all the countries. Q. And those visits to Europe extended over how many years prior to your leaving the New York Life? A. About ten years.. Q. And it was practically an annual visit? A. For a number of years I went each year; stayed sometimes several months. Q. Where were you reared Mr. Perkins? A. I was born here in Chicago. Q. And have you lived your life in the west? A. A large part of it, yes. Q. How familiar were you with the development of the western part of the United States and during what years ? A. I was quite familiar with it. I moved from here to Cleveland in 1879, and two or three or four years after that I weut to Denver and Kansas, making my headquar- ters at Denver ; I travelled very thoroughly over the cen- tral and western states, such as Kansas, Nebraska, Iowa and clear out to the coast. I was engaged for several years in the work of organizing the agency department of the New York Life. Q. In travelling about the United States what is the fact as to whether your observations made you familiar with the agricultural conditions and development in a general way? A. Yes, I was familiar with that and with the general development of the country. Of course, that was really part of my business with the New York Life — to keep our agency organization there abreast of the development of the country in the different states. Q. And you observed and knew in a general way the mode of cultivating farms and the method of harvesting crops in the United States? A. Yes, sir ; in a general way. Q. Did your later travels throughout Europe impress you with the contrast between the agricultural conditions and the methods of farming and harvesting crops abroad and those of this country? 58 A. Yes, sir; very much. There was a very striking difference. Q. In a general way describe it I A. In those years, we were doing our work on the farm with machinery, with various farm implements. Abroad, perhaps the most noticeable difference was in Eussia, where they liad very little machinery, except on the very rich man's farm. He perhaps knew something about machinery and had some of it, but aside from that you would see people scratching around on the earth, prac- tically with their hands. There was very little farm im- plement business done in those early days when I went there. Q. You may state whether the fact that Europe was so far behind in the utilization of machinery had made an impression upon your mind? A. Yes, sir ; a very decided impression. I do not think anyone could have travelled through Europe without be- ing very much impressed mth that fact, especially if he knew our western country." (App., 36-37.) Mr. Perkins at once took up the problem and gained from men best informed, tlie various facts with respect to the busi- ness prospect and its requirements. He testifies as follows (XIII, 214) : "Q. And did you talk with Mr. Stanley McCormick? A. Yes, I talked with Mr. Stanley McCormick, and I think with Mr. Harold McCormick. Q. Mr. Stanley McCormick had been in charge of the Paris Exposition exhibit of the McL'ormick Company! A. Yes, he had a good deal to do, as I remember, with their foreign business ; he had been with their exhibit at Paris I believe. I had a very important talk with him I remember, about the foreign end of the business generally; that interested me, because I was just fresh from the gen- eral question of developing American business in Europe. The question was rather absorbing the attention of a good many men then; it was presenting new opportunities; other industries had gone into Europe and I had been there so much that I was naturally more or less familiar with it. Q. So, the opportunity of the harvesting machine busi- ness presented by Europe and Asia developed in vour mind? 59 A. It had been in my mind for sometime. It was a very great opportunity, and especially in countries like Russia, Germany, Austria-Hungary, great territories that were almost unscratched, and lying there just waiting, it seemed to me, for the same opportunity to till the soil that had been furnished to the American farmer." Large Cotnpany Needed to Develop Export and Yeai -Round Business. As was said, Mr. Perkins talked with the McCormicks and others. Mr. P. D. Middlekauf, an old harvester man who years before had been employed by the Deering Co., was in New York with an option on the Milwaukee Company. Mr. Per- kins consulted with him. As the vision of the possi- bilities of American trade in harvesting machinery throughout foreign lands became more and more cleared, and the needs in money and credit essential to make this vision a reality, were fully appreciated, Mr. Perkins concluded that the plan presented by Mr. McCormick was not commercially prac- ticable ; that this company was not sufficient to furnish a basis of resources and of credit and men, efficiently and quickly to develop and occupy this foreign field and outstrip the European and Canadian manufacturers in the race for that business. His testimony in that regard is as follows (App., 39-40; XIII, 216-7) : ' ' Q. Mr. Middlekauf, had brought the Milwaukee option to you in New York and he was a well informed man in the harvester business? A. Yes, sir, I believe he was. Q. And you talked with him frequently? A. Yes, T talked with him and talked with other peo- ple. If I may anticipate your question a little, perhaps, the more I thought about Mr. McCormick 's proposition the less I thought it was an advantageous one from the standpoint of what I believed to be the opportunities in the business in which his company was engaged. Q. That is the point I wish you would develop? A. I tliought his way of getting at it — that is, to en- large his one particular company — was not the right way ; 60 it did not appeal to me as being quite big enough or broad enough to cover wliat I considered the opportunities at that time. Q. Why? A. Because I believed there were two very important channels to develop in the agricultural implement business. One was a method of handling it so as to estabhsh an all- year-round selling organization, which at that time did not exist. They would sell for two or three months and then the organization would be idle, and it was very ex- pensive. The other was the colossal opportunities for the export trade, and I did not see how any one company, with the credit of only one company, and with the men in only one company, could be developed promptly enough and vigorously enough, and in the most satisfactory way, to accomplish those objects. Q. You knew, of course, that to properly work out that plan and properly occupy the foreign market meant large money and large credit resources? A. Well, it meant large men. You see 1 had been deal- ing with a pretty big unit — the New York Life Insurance Company. It was an organization of thousands of men and many millions of dollars, and I had found when I went to Europe with that backing that I was able to make great progress in those different countries, and that it needed men, and needed men just as much as it needed credit, to command the situation over there. Q. And that you recognized as true in the harvester line? A. A fixed and suceessf al principle in one business will guide you in another. Q. What did you do then in working out the plan that you had formulated? You say that Mr. McCormick's plan of one company doing that you recognized as not one com- mercially feasible? A. I did not think it was as good as could be done. I felt that what was needed was a very much larger com- pany than could be formed with one company as a basis for credit or that one company could furnish in the way of men, and the result of a good deal of thought and discus- sion and talk about it was a plan in my mind. I thought perhaps we could use the situation to form a company that would be large enough to do the things that I saw in the future of the business. 61 Q. What did you do then in working out the plan of forming a new company, Mr. Perkins? A. I set about to talk to other companies, men of other companies, with a feeling that the only way such an ar- rangement as I had in mind could be brought about was to get a number of the best equipped and the most ex- perienced harvester men together in one company, with sufficient capital behind them to make a drive for the ex- port trade, and for an organization that could do business all the year around." (App., 39-40.) On cross-examination Mr. Perkins testified further upon this point as follows (App., 60-61; XIII, 276-277) : "Q. Mr. Perkins, there is another question I want to ask you about your testimony of 3'esterday on direct ex- amination. You testified, as I recollect the purport of your testimony, that Mr. McCormick's proposition to enlarge his company did not appeal to 5'ou because you did not think it was large enough. You testified as follows, at page 217 (Rec, Volume XIIT) of your testimony 'I felt that what was needed was a very much larger company than could be formed with one company as a basis for credit.' How large a company did you think was neces- sary? You knew that the McCormick Company was the largest company in the business at the time, did you not? A. I do not recollect whether T knew it was the largest. I knew it was one of the largest. Why, Mr. G-rosvenor, from what I knew of the commercial conditions in this country and abroad, I believed there was the opening of an enormous opportunity for us people in the United States to develop trade abroad ; that it would be futile to take in one company at that time and attempt to build up, on the credit of one company alone as a foundation, what I believed could be accomplished. I might, for in- stance, have taken Mr. McCormick's suggestion and worked on that, and perhaps the average banker would have done that, and would have been glad to do it. He would have said, 'If you want 10 or 12 million dollars more, issue some bonds and we will take them.' That would have been a simple, nice banking proposition, and probably would have made a verv nice commission, and that would have been the end of it. Now, supposing I had done that? Someone told me yesterday that the Mc- Cormick business was 25 or 30 million dollars. The busi- 62 ness of the company that wc~J. P. Morgan & Company did organize is today doing more business in Russia, has more money outstanding in the hands of farmers— we have loaned them more money to buy American harvest- ing machinery — than the entire amount of the McCor- mick business at that time. Q. That may be true, Mr. Perkins? A. Now, may I answer that question fully ? How could we have built up on one company's credit, or with one group of harvesting men, a great organization that would have accomplished what I believed could be accom- plished! I had been all through that with the New York Life. I liad tried to develop business in Russia by just scratching around in Russia. I found that I had to take American men — who knew the business — over there to do it, with an enormous credit behind them. Now, as to the amount of money I thought we ought to have, I wanted not only immediate money, a large amount, 100 millions, or something like that — but I wanted a foundation on wliich we could get 200 or .300 millions of dollars. As it turned out, wc did not build it big enough. We built the credit big enough; we laid the foundation in tangible as- sets so strong that, if it had not been for this suit, we could probably ]iavo had another $50,000,000 or $100,- 000,000 in tlie business. We have had-- 0. (Interrupting.) Mr. Perkins — A. (Interruptina:.) T think this is important. We have borrowed, as I said vesterdav, in London and Berlin and Holland over 90 millions of dollars, that has been brougM to this country and paid out in wages and materials and put into machinery that has been sent to and sold in Europe. Now, if my vision was wrong about this, if it could have been done some other wav. well and good; but it was my conception of how to do' it, and I took the best and the most business-like and honorable methods to accomplish it, and I did not believe, and I do not believe todav, that it could have been done if T had picked up Mr. McCormick's suggestion and lent him five or ten or twenty or thirty millions of dollars." WorUng Out Plan for New Company. When Mr. Perkins decided that the organization of a new and stronger company was the only proper and feasible way 63 by which the foreign trade in harvesting machinery could be created and supplied, he took up the work of carrying out his plan with vigor. After describing the plan as outlined in his mind, he testified as follows (App., 40; XIII, 217) : "Q. What did you do then in working out the plan of forming a new company, Mr. Perkins? A. I set about to talk to other companies, men of other companies, with a feeling that the only way such an ar- rangement as I had in mind could be brought about was to get a number of the best equipped and the most ex- perienced harvester men together in one company with sufficient capital behind them to make a drive for the ex- port trade and for an organization that could do business all the year round, Q. And what conferences did you have and with whom? A. Oh, as I remember, I had a good many. I had con- ferences with the Deering brothers, with Mr. Howe of the Deering Company, and with a good many different har- vesting men; Mr. Grlessner of the Ohio Company, with which company I was familiar. I lived in Ohio a good many years. I knew Grovernor Bushnell intimately and I knew more or less about their business. I would not pre- tend to say from memory with how many I did have con- ferences or talks, but with anybody I could get my hands on who I thought knew anything about the business. Q. You gathered this information from conversation with various men? A. Yes, sir. Q. Stanley McCormick, Cyrus MeCormick, the Deer- ings, Mr. Glessner, Mr. Howe, and all these men? A. Yes, sir. Q. And as a result, what was the final accomplishment? A. The final accomplishment was the organization of the International Harvester Company." Purpose a Strong Company, Not Acquisition of Five Com- panies. It was made quite clear in the cross-examination of Mr. Perkins that his plan did not contemplate, of necessity, the particular five companies whose properties and business were acquired by the International Company, but that his plan con- G4 templated a strong organization whicli would result from the acquisition of several plants and businossos. What companies were to be acquired necessarily depended on the outcome of negotiations. He testified on that point on cross-examina- , tion as follows (App., 49 ; XIII, 234) : "0 However that mav be Mr. Perkins, from the first of Juiv 1902 you were endeavoring, were you not, to pur- chase 'and acquire the stocks and control of the Piano Company, the Champion Company, the Deermg Company and the McCormick Company! ,, ^, . ,, , , A. No, sir, I never had a thought ot buying the stocks of those companies. Q. What were you trying fo do? A. I was out trying to buy the best properties that I thought I could buy on a cash basis, without regard to good will or names or patents or anything of that sort, to form a company that I believed would accomphsh the purposes I had in mind. Q. Were you not trying to get the property and busi- nesses of each of the companies I have named? A. I was trying to get the properties of one or two or whatever company ; for instance, I actually bought the Milwaukee Company, and we would have gone on with that and gone into business with it and have tried to get one or two more companies, or perhaps more until we had reached a point where we could go out and capture what I believed was a very desirable export trade for this country. ' ' Also as follows (App., 52 ; XIII, 240, 241) : "Q. Please answer my question, and you can make any argument you desire on re-direct examination? There have been a number of witnesses in this suit Mr. Perkins, who have testified in regard to per cents, and output- persons who dealt with you. Did you consider with any of them, the relative amount of business that was being done in this country by the ^ve companies which went ' into the International? A. I was after just one thing— the actual value of these companies, their utility in the plan I had in mind, and the ability of the men they had to carry it out. Now, when we got together, the fact that they had 69 per cent, or 70 per cent, or 82 per cent, or fourteen per cent, or 65 21 per cent, had no interest to me, and it hadn't anything to do with the plan. I knew Avhat men I was getting. I knew that if I could send those men abroad and if I could . get them together in one organization, similar to the one I had been welding together, the New York Life, I could accomplish some results. That is what I was driving at. Q. In other words, you did not care whether you got 80 or 85 or 90 per cent, of the business, so long as it en- abled you to have a large company to go into this foreign business! A. Absolutely. Q. You did not care how large a per cent, of the do- mestic business was controlled by you? A. That is it exactly. We were after munitions of war, to go after the export trade. Now, you have got it exactly as it was. Q. You knew that the companies you were acquiring were the largest companies in the United States? A. There were other very important companies and I would like very much, for instance, to have had the Mas- sey-Harris Company, which I knew a great deal about and which had a strong footing abroad, and I figured we would try to see what we could do with them. If we had not secured the McCormick Company, we probably would have taken the Massey-Harris and perhaps the Adriance- Platt and the Acme Company, there were good enough men in them to form a company to go to Europe with. Q. You gave then, some consideration to the thought of getting the Massev Company? A. Yes. * * * " I knew the Massey-Harris Company from seeing their operations; they had offices in London, had agents in Paris; looked to me as though they were about the most vigorous thing over there in my days in Europe." And (App., 55; XIII, 244), as follows: "Q. Mr. Howe also testified, page 149: 'Q. The whole idea then, was that the new company was to pur- chase a number of businesses ? A. That was my idea. Q. All the time? A. Yes.' Now, Mr. Howe's understand- ing from the time he appeared in New York, the begin- ning of July, 1902, throughout the period of time he was there, was that the new company was to acquire other 66 companies. Do you wish to be understood as testifying contrary to what Mr. Howe testified to? 1 No. I want to make it clear that I was out to get- here and there where I could, but not necessarily any par- ticular company— enough power, enough men with brains and knowledge of this business, and enough credit, to put behind a concern to accomplish what I thought I could accomplish if I could get what I wanted." And at XIIT, 275-276 (App., 60), as follows: "Q. And you did not want to organize the company which was to acquire these five properties until your trading had been successfully put through? A. Well, there again of course, you put it wrong. You say the company was to acquire these five companies. That was not the idea at the outset— that we should ac- quire five companies. "We were organizing a company. We would have organized the International Harvester Company if we had not had five companies, or these par- ticular live companies. I wish there was spme way Mr, Grosvenor, by which you could see this as it was. I am looking at this thing from the time it started; you are looking at it back ten years on a theory that you have con- structed. Q. We have to look at wdiat you did do, not what yon may have started out to do. A. Then, why didn't the government call me as a wit- ness and allow me to state it? I would have been with- out opportunity to make this statement if I had not come on the stand, and I am now here and am notified by you that I will probably be criminally indicted for having given you this information. ' ' He further said (XIII, 278; App., 62) : "Q. Did you know at the time you acquired those prop- erties in 1902, that in vast sections of the middle west, the great grain growing sections of the country, these five companies did, as the evidence in this case shows, from 80 to 90 per cent, of the business in harvesting imple- ments 1 A. No, sir; I knew they did a very large business, but the exact percentage was not a factor in what I was do- 67 Reason for Selecting Name "International." Mr. Perkins, told how the name "International Harvester Company" came to be chosen for the new corporation, — it was adopted because it explained the object and purpose of the organization (App., 41-42; XIII, 219-221): "Q. Now, who named the International Harvester Company ? A. Who selected the name? Q. Yes? A. I did. Q. I wish you would tell how and why the name 'Inter- national Harvester Company' was selected by you? A. It was the natural outcome of the conception of the plan that I was trying- to work out, namely, that we should have a company large enough to be very potential in the export trade ; and perhaps the experience I had before with the New York Life, if I may refer to that — Q. I wish you would tell us about that? A. It had to do directly with the selection of the name of the company. In my operations in Europe for the New York Life, we had found that the name 'New York' was regarded more or less as a local name over there ; 'New York' did not mean as much there as it does here, or did at that time. And I just chanced on the discovery after I had worked pretty well through Europe for the New York Life, that the New York Life had been doing business in Europe and in a large number of countries outside of the United States for a longer period of time than any other life insurance company; therefore it was the oldest 'international life insurance company' in the world, and I thought that was a good trade mark and a good canvassing argument. So immediately, I began to give that to our agents, suggested that they use it and it became sort of a second name for the New York Life. "We found that when we talked in Enssia about the New York Life, the oldest International Life Insurance Com- pany, it meant more and placed us in a little more com- fortable situation there than when we called it the New York Life Insurance Company — and it was very success- ful. That one thing was worth a great deal of business to the company, and I naturally followed that experience when I began to take up the development of this larger 68 idea in the harvester business, and determined to call the company the International Harvester Company, be- lieving that it would find itself more readily at home and would more nearly express the scope that I hoped the company would be able to accomplish. Q. Did you have any conferences with Mr. Morgan with respect to the name? A. Yes, I had conferences with a good many people, but no one agreed with me very much ; they thought that it was a pretty ambitious name. Q. "Was Mr. J. P. Morgan in this country at that time? A. No, sir, he was in Europe. Q. Did you have any communication with him by cable respecting the name of the company? A. Yes, sir. Q. And what name did he suggest? A. I think he suggested the name United States Har- vester Company, or if not just that, some similar name; and other people suggested the name American Harvester Company. Q. Did 3^ou cable to Mr. Morgan the reasons why you preferred the name International and why you thought it was the appropriate name? A. Yes. He was rather inclined not to agree with me about it, and so I cabled gi\n.ng him my reasons for think- ing 'International' should be the name. Q. Have you found a copy of that cable ? A. Yes, sir. Q. Will you produce it please ? A. (The witness produces a paper.) Do you wish me to read it or shall I hand it in ? 0. I ask you to read it? Mr. Grosvenor: Is this the original? The Witness: It is a copy. One who sends a cable does not retain the original. The original is sent to the cable office. Mr. Grosnevor : Is that the original copy which vou re- tained ? The Witness: Yes, sir, made at that time. Mr. Grosvenor : Let me see it please. (The paper was handed to Mr. Grosvenor, and after in- spection by him was returned to the witness.) Q. You may read the cablegram please? 69 A. (Eeading.) 'Eiverdale, August 10, 1902. J. P. Morgan, Dover House, London. Thanks for cable today. Three of the companies have quite extensive business abroad, in Eussia, Germany, Argentine, Austraha, Mexico. Very desirable to have company International so that it can comply with laws of various countries and be at home everywhere. We thought as the business is so entirely different from ship- ping and in view of importance of foreign trade to com- pany, you would not object to using International; but if after considering this phase of it, you do, we will use some other name.' Q. Mr. Morgan, acquiesced in your suggestion? A. I have been unable to find any answer to this, but I think it is because this cable was sent from my home. I remember distinctly the question over the name, and I have not been able to find any cable correspondence, but I just happened to think that it might have been sent from my home in Eiverdale because sometimes I work out there and we found this among my papers there, but evidently, Mr. Morgan acquiesced because we took that name." (App., 41-42.) 1. H. Co. Organised on Honest Business Basis — No "Water." It is made quite clear in the testimony of Mr. Perkins that the International was organized on an honest business basis, and that all the stock issued represented actual value in as- sets of the corporation. It was organized, therefore, for com- petitive conditions and earnings, and not for monopolistic trade or profits. Pie testified on this point as follows (App., 43; XIII, 222) : "Q. In the organization of the International Harves- ter Company, state the basis on wliich the Company was organized and the stock issued? A. It was organized and the stock was issued on a cash basis, dollar for dollar. There was no 'water' to use a common expression in the organization ; nothing allowed for good will or any accessories, such as are often put into companies ; the properties were appraised very con- servatively, I always thought; stock issued for full value and for actual cash, dollar for dollar; there was no syndi- 70 cate or anything of that sort, in connection with the or- ganization. ' ' On cross-examination upon this point, Mr. Perkins said (App., 62-63; XIII, 278-279): "Q. Now, the capitahzation of this new company was $120,000,000. Isn't it a fact Mr. Perkins, that the only new capital that was put into the harvesting business through the organization of tlie International Harvester Company was $10,000,0001 A. It is not a fact. Q. You agree that the capital stock issued was $120,- 000,000? A. I do. Q. Of that, $26,000,000 and more was issued to the McCormick interests for the properties acquired from the McCormicks; is that not true? A. Xo, sir. We appraised the properties that the In- ternational Harvester Company acquired; the appraise- ments were scaled down and scaled down and scaled down until, in my judgment, they were worth a great deal more money than the International Harvester Company acquired them for; and it acquired them for the exact final appraised value, and the stock issued for that pur- pose was better than a gold dollar in its value, in my judgment. That amounted to something hke $60,000,000. The other $60,000,00 making up the $120,000,000 was is- sued and accepted by various people at par, for cash, paid in real American money, without a commission of one cent or discount of one cent to anybody, without any underwriting syndicate of any shape, form or kind. Q. Now, that is what I am getting at. $60,000,000 of the $120,000,000 went for properties, didn't it? A. Yes, sir, appraised properties. , Q. I understand. Now, the other $60,000,000 went for cash. A. For money, new capital." /. E. Co. Organised to Promote Foreign Trade. It is therefore established by the testimony of the man who organized the International, that it was organ- ized and acquired the properties of the vendor companies 71 as a means of promoting foreign trade; that the pro- portion of the business done in the United States by the companies whose properties were acquired, was not the moving consideration of the organization of the company, but was a mere incident. The testimony establishes the fact that the International Harvester Company was organized in order that an instrumentality might be available with sufficient resources in the way of assets, credit and experienced men, to make the vision of the ]30ssiilities in the foreign trade in harvesting machiner.y which has been so fully detailed a reality. ThiSi does not rest upon the testimony of Mr. Perkins alone. Mr. S. J. Llewellyn, who was one of the owners of the Piano Manufacturing Company, testified to his being called to New York and to tbe negotiations with Mr. Perkins resulting in the sale of the plant and business of his company to the Interna- tional. He was called as a witness by the government. After relating his meeting with Mr. Perkins, he testified as follows (App., 81; I, 185): "Q. What did you talk about? A. The harvester business. Q. What about the harvester business ? A. Mr. Perkins had an idea that it could be vastly improved; that there could be a great deal more money put into it to enlarge the foreign business, to standardize the manufacture, and save the crossing of freights, and all the things that promoters generally talk about in such a way. ' ' Mr. John J. Glessner, who was one of the owners of the Warder, Bushnell and Glessner Company, a business which was acquired by the International Harvester Company, was summoned as a witness by the government, and testified to lieing called to New York and to the negotiations with Mr. Perkins resulting in the sale of the business of his company to tlie International. With respect to this particular matter, he testified as follows (App., 70; I, 447) : 72 " Q Did you know what properties the Harvester Com- pany to he 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. T 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 existence at the time, had sufficient capital to properly enter that trade." Thus we have in the record in this case, the positive testi- mony of witnesses called by the Government, that the main object in the mind of the organizer, and of those who joined him in the enterprise, was that it should be made strong enough to enter and occupy the foreign field— this virgin field which no existing company could adequately enter because of the lack of sufficient capital, in money, in credit, in men. The Government called nineteen persons connected with the organization of the International Company or the negotiations leading to its acquisition of the five original Harvester plants and businesses. Not one of them testified to any purpose to secure a monopoly or to control the harvesting machine trade; but all of them, as well as the persons connected with those transactions, who were called by the defendants, testified 1^ what was done — they were normal business transactions, en- tered into and carried out for lawful purposes and for proper and adequate business reasons. 73 The details of the formal incorporation of the International Harvester Company are spread upon the record, but have no special sigriificance. Mr. Perkins negotiated separately with the owners of the four properties, and after weeks of negotia- tion, an agreement was reached with each whereby each owner agreed to sell the property of his company to the corporation to be organized. For convenience, the contracts of purchase were made with one William C. Lane, President of the Stand- ard Trust Company of New York. When each of these con- tracts was executed, the International Harvester Company was organized under the laws of New Jersey, and through Mr. Lane, the properties were conveyed to the newly created com- pany. Voting Trust Created. To insure the permanency of his oft-stated policy and the carrying out of the objects which he had in organizing the company, Mr. Perkins provided that practically all of the stock should, for from five to ten years, be deposited with three men in a voting trust; the three voting trustees were Messrs. Perkins, McCormick and Leering. This insured stability of policy, and did away with all incentive to speculative activity in the stock, since, for the first five years at least, ownership of stock carried no voting power. Mr. Perkins also named the first Board of Lirectors. THE TEST OF TIME AND CONDUCT PUTS BEYOND REASONABLE QUES- TION THE FACT THAT THE INTERNATIONAL COMPANY WAS OR- GANIZED WITH THE DOMINANT PURPOSE OF CREATING AND SUP- PLYING A DEMAND FOR HARVESTING MACHINERY THROUGHOUT THE WORLD. In the interest of justice it is fortunate that this suit was not begun until after the International Harvester Company had been in active business for ten years. Had this case been 74 instituted immediately upon the organization of the company, the proof of the purpose and objects which controlled in the organization, would have rested upon the declarations of par- ticipants and upon the fact that there was a great opportunity in foreign fields. The delay of ten years in the institution of this suit, has resulted in the demonstration of the actual pur- pose and objects of the organization of the International Com- pany. "By their fruits ye shall know them," is as true in com- mercial life, as it is with respect to conduct in general. It has always been a canon of construction, applied by courts, that the conduct of parties under an agreement is the best evidence of the meaning of the agreement. "Tell me" said Lord Chancellor Sugden, "what you have done under a deed, and I will tell you what that deed means." As the judges of this court have said, "This statement of tJie Lord Chancellor is a maxim in the construction of contracts." Therefore to test the truth of the statement that the Inter- national Harvester Company was organized and acquired the properties of the vendor companies, for the purpose of hav- ing a company strong enough in resources, assets, credit, and experienced men, to enable it first to create, and then supply the demand for harvesting machinery throughout the various nations of the world, we turn to the record of the ten years of business done by the company to see whether, upon its or- ganization, it entered upon this tremendous undertaking and bent its energies and resources toward its successful accom- plishment: — to see "what tiiey did do." The record in this case is full and complete upon this subject. The testimony of Mr. Charles H. Haney (App., 1-11, 143-152; XIII, 133-183) is a description brief enough to be interesting, and yet detailed and comprehensive enough to be coraplete, of the activi- ties of the International Harvester Company in foreign 75 fields during the last ten years. This testimony, although a plain narrative of facts, is of surpassing interest; it is the record of a commercial expansion, along business lines, in a new field, probably unparalleled. Achievements in Foreign Fields. The limits of this brief, of course, forbid more than a sum- mary of this testimony. It must be read in full to be appre- ciated; for it is a record of the facts which exemplify the wisdom and business sagacity which provided a company with $60,000,000 of available cash and $60,000,000 of other tangible assets to carry out the purpose of those who organized it. We have seen that it was recognized, as the first requisite to the development of the harvesting trade among the great mass of farmers in foreign countries, that there be created and maintained an organization, in each country, of Americans, thoroughly familiar with the American harvesting machines and the methods which had been so successfuly carried out in the business in tlie United States. (App., 151; XIII, 182.) The International Company had an avail- able supply of these trained men in the organiza- tions of the various vendor companies whose business it had acquired. The American organization was therefore es- tablished, maintained and developed in the various foreign countries. Through constant effort and demonstration, the farmers of the various countries of Europe, and in Siberia, and elsewhere, were taught the value and need of the har- vesting machine in gathering their crops. Experienced me- chanics were sent throughout the world and made a study of the conditions attending the harvesting in each country, in- cluding the customs of the country, the animals used as motive power — whether ponies, cows, donkeys, camels, buffaloes or horses — the climatic conditions as they affected the harvesting of the crop, and with these considerations in mind, machines were devised in some instances and, in other instances modi- 76 fied and adjusted, so that in each country there was provided a machine especially adapted to its needs and adequate prop- erly to do its work. (App., 18-20; XIIT, 306-312.) Agencies were established at convenient points throughout the various countries, and adequate stores of machines and repair parts were kept on hand so as to be readily and quickly distributed when needed. A force of experts was held avail- able in every section of every country to accompany the ma- chines to Ihe fields when sold, so as to set them up and explain to the farmer their operation. These experts were also held available so that, in case any farmer encountered trouble in the operation of his machines, help was furnished him prompt- ly in order that the harvesting of his crop be not delayed; and the supplies of repair parts for the machines were so Avidely distributed that in case of their need, a new part could be furnished and inserted without delay, and, consequently, without danger of loss of the crop. Stocks of machines were manu- factured in the United States and shipped abroad, and there distributed so as to keep abreast of their demand. Not only was this Avork carried out throughout the settled portions of Europe, but it was extended into Siberia then in the course of development. Russia had been aiding in the transportation of men from the crowded portions of its European territory and settling them upon the fertile plains of Siberia. The In- ternational Harvester Company followed the frontier as it progressed in Siberia, and supplied those settling there Avith machines. Though the settlers Avere poor, and machines were sold on terms of long credits, the re- sources of the International Harvester 'Company were suiB- cient to enable it to do the preliminary educational work through the organization it established, and to supply the ma- chines as the demand was created, and to carry the long credits necessarily extended to the farmers. 77 Growth of Foreign Business. What the International Harvester Company accomplished in the foreign field in ten short years is well illustrated by figures contained in defendants ' exhibits 83 and 84, introduced in con- nection with the testimony of Mr. Haney. (XIII, 156, 157.) These exhibits tell the story of the growth of the foreign business of the Interna- tional Harvester Company by years. In 1902, the companies whose business was acquired by the International Company did a foreign business in machines, repairs and twine of $10,400,000 in round numbers. In 1903, the first year of the business of the International Company, its foreign business amounted to $12,000,000, a gain of 17.6 per cent, over the busi- ness done the year before by the vendor companies. In 1904, the foreign business was $15,000,000 a gain of 47.4 per cent, over 1902. In 1905, the foreign business was $16,900,000, a gain of 62.4 per cent. ; in 1906, it was $20,000,000, a gain of 93.9 per cent. ; in 1907, it was $24,000,000 a gain of 135 per cent.; in 1908, it was nearly $25,000,000 a gain of 138.1 per cent. ; in 1909, it was $28,000,000 a gain of 170.1 per cent. ; in 1910, it was $34,000,000, a gain of 228.3 per cent. In 1911, it was $42,000,000 a gain of 306.2 per cent. ; in 1912, it was $50,- 896,000 a gain of 388.6 per cent. Thus, in the tenth year of its organization, the foreign business of this company was more than $40,000,000 in excess of the foreign business done in 1902 by the vendor companies. These figures disclose how ener- getically and successfully the International Harvester Com- pany has pursued the objects of its creation. Defendants' Eixhibit 85 (App., 143; XIII, 158), is interesting as a comparative statement of the foreign and domestic sales of the International Har- vester Company since its organization, and the per- centage which each bears to the total. The exhibit shows that the proportion of the foreign business to the total 78 business of the company was constantly increased from year to year, and the domestic sales of the company in proportion to the total, have constantly decreased. Thus, it appears that in 1903, the first year of the business of the International Har- vester Company, its domestic sales were 76.5 per cent, of its total sales, and the foreign sales but 23.5 per cent, of the total. The next year, the domestic sales were 69.1 per cent, of the total, while the foreign sales had increased to 30.9 per cent, of that total. So, year by year throughout the ten years the foreign business of the International Harvester Company in- creased its relative proportion until last year, this foreign business was 44.3 per cent, of the total and the domestic only 55.7 per cent. In the space of ten years, this corporation has so effectively carried out the chief objects of its organization that through- out a great territory wherein there was practically no demand for the machines, the company has created and supplied a de- mand which is almost equal to the market in the United States. In connection with Mr. Haney's testimony there was intro- duced Defendants' Exhibit 96 (App., 143; XIII, 172). This ex- hibit gives some interesting comparisons which makes it easier to realize the tremendous strides which the International Harvester Company has made in the de- velopment of the foreign market. In this exhibit,- it appears that the total sales, both foreign and domestic, in 1902, of the two greatest harvesting machine companies, the McCormick and Deering, were $42,000,000. Comparing this with the $50,000,000 of foreign sales of the International Har- vester Company for the year 1912, we realize that this defend- ant company did more business last year by $8,000,000 in the foreign market than the Deering and McCormick Companies did both at home and abroad in 1902. Moreover, the same exhibit shows that the total sales, for- 79 eign and domestic, of the International Harvester Company in 1903, the first year of its existence, were $52,000,000. Com- paring this with tlie $50,000,000 of sales in foreign countries, in the year 1912, we realize that in ten years the International Harvester Company has created a foreign business aggregat- ing within $2,000,000 of the amount of its total foreign and domestic business the first year of its existence. During the ten years it has been in business, the Interna- tional Company has received from its foreign trade and re- mitted to the United States, in cash, $159,407,000. (Defts'. Ex. 200; App., 152; XIT, 102.) World-Wide Distribution of Machines and Repairs. In connection with Mr. Haney's testimony, there was introduced Defendants' Exhibit 86 (App., 144; XIII, 159-162). This exhibit is a list of the points in foreign countries where stocks of International machines and repairs are carried for wholesale distribution, exclusive of the retail agents. At the following number of points are these stocks carried for wholesale distribution, namely: Africa, 17; South and Central America, 14; Australasia, 12; Austria, 6 ; Belgium, 3 ; Bulgaria, 5 ; Denmark, 1 ; Finland, 3 ; France, 9 ; Germany, 9 ; Great Britain, 5 ; Greece, 2 ; Holland, 4; Hungary, 4; India, 1; Italy, 7; Mexico, 8; Norway, 3; Por- tugal, 1; Roumania, 5; Russia, 42; Servia, 1; Siam, 1; Spain, 6; Sweden, 5; Switzerland, 3; Turkey, 6; total, 183. From this an idea may be gained of the world-wide organi- zation established and maintained by this company for the sale and distribution of its machines in foreign lands, and of the need of large resources, in capital, credit and men, to maintain it. To vizualize the thoroughness with which the com- pany has provided distributing points for machines and supplies throughout the world, there were identified and in- 80 troduced as exhibits, maps of Eussia, including Siberia, Af- rica, South America, Australia, New Zealand, Mexico and Europe, wherein are marked with red circles, the points where stocks of machines or repairs of the International Harvester Company are maintained for distribution to the trade. These maps accompany the printed record. When we inquire as to the number of local dealers through foreign countries who are handling machines of the Interna- tional Harvester Company, the extent of its work still more clearly appears. It is shown by the testimony of Mr. Haney (App., 145; XIII, 165) that, in 1912, there were 30,888 local dealers handling machines of the International Harvester Company in countries other than the United States. Russimi Business. In 1912 the International Harvester Company did more business in Eussia than the entire business done by the Mc- Cormick Harvesting Machine Company in 1902. (App., 143; XIII, 172.) To find the branch house of the International Harvester Company which in 1912 did the largest business, we must cross Europe, cross the Ural Mountains, and go to Central Siberia, where, at Omsk, is a branch house of this company which, in 1912, did a business of $3,184,325. (App., 151; XIII, 182.) At Vladivostok, the terminus of the Trans-Siberian Rail- way, on the Pacific Ocean, the branch house of this company last year did a business amounting to $569,278. (App., 152; XIII, 183.) Foreign Trade ilie Doviinard Purpose. When we comprehend the tremendous growth of the foreign business of the International Company in the ten years of its existence and realize the vast capital and prodigious and 81 ceaseless effort necessary to accomplish this result, we know that the men who organized it spoke the truth when they said the purpose of its organization was the development of the foreign trade. Their works verify their words. What they did do confirms what they said they intended to do. Foreign and Domestic Business Conirasled. This remarkable development of the foreign trade by the In- ternational has special significance as showing the dominant purpose of its organization, when we contrast it with the course of the business of the company in the United States. The facts are set forth in Defendants' Exhibit 198 (App., 156; XIV, 98). While ihe sales of the harvesting machinery (the old lines) in the foreign trade increased yearly from $9,000,000 in 1902 to $33,000,000 in 1912, the sales of these machines by this com- pany in the United States fell off year by year. In 1903 the sales in the old lines — "the monopolized lines" — in the United States fell off 18.16 per cent, from the sales by the vendor companies in the United States for 1902. In 1904 this de- crease was 29.92 per cent. In 1905 this decrease w^as 32.82 per cent. In 1908 this decrease was 38.85 per cent. The average yearly sales by the International Company of the old lines in the United States, since its organization, have been $33,- 290,154.57. Contrasting this with $46,142,158.64, the domestic sales of the vendor companies in 1902, or with $37,763,858.45, the domestic sales of the International Company in 1903, we have added assurance that the great predominant object in the organization was the development of the foreign market. This is true also with respect to the new lines. Exhibit 198 shows that while the sales in the new lines in the United States increased in the ten years 1,277.85 per cent., the foreign sales in the new lines increased 3,485.84 per cent. The foreign sales in the new lines in 1912 amounted to $17,000,000, while the domestic sales in the new lines last 82 year were $24,000,000. In the new lines, as well as the old, the foreign field is the growing market. An instructive showing as to the decrease of the sales of grain binders by the International Harvester Company is found in Defendants' Exhibit 188. (XI7, 53-59.) From this it appears that the average number of binders sold in the United States hj the vendor companies for the five years pre- ceding the organization of the International Company was 152,364; the average number of binders sold in the United States by the International Harvester Company during the ten years of its existence has been 91,465. The exhibit shows that during the past ten years the average acreage and produc- tion of small grain in the United States were greater than in the five years preceding 1903. Moreover, a computation made from the figures given in De- fendants' Exhibit 198 (App., 156; XIV, 98) Avill show that the entire business done by the International Harvester Com- pany in the United States, throughout the past ten years, has amounted, on an average, to $46,810,067; this is more than a million dollars less than the domestic business done by the vendor companies in 1902. And fliis average includes the sales of the new lines added since the International Company was formed. The contrast between the growth of the foreign business and the growth of the domestic business of the company gives added emphasis, if any were needed, to the fact that the In- ternational was organized with the development of foreigr trade as its great dominant purpose. Future of the Foreign Business. But the testimony of Mr. Haney presents further facts of much interest and of great significance. He says that the foreign field as a market for harvesting machinery is not yet fully developed. There was presented in connection with his 83 testimony, Defendants' Exhibit 95 (App., 146 ; XIII, 168). This exhibit is a comprehensive tabulation by countries, from the last and the best available statistics, of the production of small grain, that is cut by our harvesting machines. It appears from this exhibit that more than 10,900,000,000 bushels of small grain were grown in all the countries of the world in 1910. Of these, only a little more than 2,000,000,000 bushels were grown in the United States. It is shown in the testimony of Mr. Haney (App., 147; XIII, 169) that, as- suming that all the grain grown in the United States, Canada, Australia, New Zealand and South America is harvested by machiner}', the fact still remains that only about 55.15 per cent, of the grain grown in the world is harvested by machinery. In Europe, Asia and Africa, only about 39 per cent, of the grain grown is har- vested by machinery. Of the grain grown in the world ex- cluding North America, only 41.36 per cent, is harvested by machinery. Thus of all the grain grown in the world, 44.85 per cent, is still harvested by hand. Therefore, with respect to the present acreage and produc- tion of grain in the world, we can see a great and growing future for the foreign trade in American machines. The wis- dom and business sagacity of those who organized the Inter- national to supply this foreign demand is proven by the result already realized. Undeveloped Grain Countries. But the possibihties of the future increase in the demand for American harvesting machines abroad, are not yet fully disclosed. It appears in Mr. Haney 's testimony (App., 147, 148; XIII, 170-1) that in Siberia there arc millions of acres of land as fertile as the prai- ries of Nebraska and Kansas, as yet entirely unsettled and uncultivated. Other stretches of land in Argen- tine, Australia and other countries, available for cultivation, 84 are not yet developed. Some day these lands will come under cultivation. An area as great as the heart of the grain-grow- ing section of the United States and capable of raising as great crops of grain, is as yet untouched. As these millions of acres come under cultivation, the demand for harvesting machinery will increase ; and a consideration of this fact still further broadens our realization of the extent of the foreign market, which the International was organized to occupy. It was the knowledge of these facts that led Mr. Perkins to say on cross-examination : "As it turned out we did not build it big enough. We built the credit big enough; we laid the foundations in' tangible assets," etc. (App., 61; XIII, 277.) In this connection, attention should be called to the fact testified to by Mr. Haney (App., 147; XIII, 171- 2) that the International l^eps in constant and close touch with the development of the various countries of the world, and as soon as the economic development of any country or section is such that harvesting by hand becomes more expensive than by machinery, the or- ganization of this defendant company is set to work to create and supply the demand for harvesting machinery in such country or section. The testimony of Mr. Haney above referred to is cor- roborated by George H. Bartlett (App., 18-21; XIII, 306-313). Mr. Bartlett was one of the experts employed by the In- ternational and sent throughout the countries of the world to investigate conditions attending the harvesting of crops, and to devise changes in the standard machine when that would suffice, or to design entirely new machines where that was required, in order that harvesting machinery adapted to the varying needs of the different communities could he supplied. Mr. Bartlett tells in simple narrative, of the work he did throughout the world ; and, from his testimony, one can get some conception of the enormous expenditure of money, 85 labor and time involved in this one particular phase of the foreign business of the defendant company. Capital Required in Expanding Foreign Trade. We have shown that the organizers of the International realized the need of great resources in the way of assets and credit, in order that the work of develop- ing and supplying the foreign market might be carried on, and we have shown that the company entered upon its business career with $60,000,000 of available cash working capital and $60,000,000 worth of tangible properties. The proof in this record is clear that the means provided were necessary to the end to be accomplished. Not only Avere all the cash resources of the company utilized in its business, but the credit of the company was drawn upon to its limit. Defendant's exhibit 210 showing the annual maximum bor- rowings of the company and the amounts borrowed in Europe, with the percentage of the European borrowings to the total by years, follows (App., 153; XIV, 120) : ANNUAL BOEKOWINGS 1903 TO 1912. Percentage of Amount European bor- Total borrowed rowings to total Year borrowed money in Europe borrowed money 1903 $14,974,000.00 15,630,000.00 21,470,000.00 1904 1905 $3,772,000.06 17.6 1906 23,774,000.00 5,740,000.00 24.1 1907 34,915,000.00 7,558,000.00 21.6 1908 25,988,000.00 9,237,000.00 35.5 1909 29,922,000.00 10,252,000.00 34.3 1910 37,048,000.00 12,279,000.00 33.1 1911 ^ 54,930,000.00 17,950,000.00 32.7 1912 65,920,000.00 19,264,000.00 29.2 It appears that the International gradually increased its borrowings from $14,000,000 in 1903, the first year of its ex- 86 istence, to $65,000,000 in 1912. Clearly, the tremendous credit which was provided for this company, was essential to the successful carrying out of its purpose. Moreover, from the Company's earnings during the ten years it has retained in the business about $43,000,000, which would naturally have been paid out as dividends. The actual cash dividends paid in the ten years have averaged only 4.3% on the capital invested in the business. It thus appears that the capital reeources and the credit of the International, great as they were, were scarcely adequate to the test of working out the purpose for which it was created, and that the owners of the company were compelled, in order to maintain the devel- opment of the business to use from the earnings of the com- pany, $43,000,000 in ten years. (Defts' Ex. 211; App., 165; XIV, 122.) Experience of Masseij, Karris & Co. Confirmation of the necessity of the large resources of the International, in order quickly and successfully to occupy the world market for harvesting machinery, is found in the testi- mony of Mr. Thomas Findley, Vice President of the Massey, Harris Company, Ltd., of Toronto, Canada. It has resources amounting to $30,000,000. In 1901 this was one of the largest and strongest companies in the world, in farm implements. It was doing a large export business in the various countries of Europe and in Asia, Australia and New Zealand. It had an organization in London of 30 or 35 salaried men, and agents in Prance, Germany and other coun- tries. The greatest market for harvesting machinery has been in Eussia and Siberia. Massey, Harris & Company recognized that the only efficient way to expand its trade was through its own organization, selling directly to the farmers. But, while appreciating the opportunities of extension of trade in these countries, Massey, Harris & Company, until very recent years, 87 continued to sell in these countries only tbrougli jobbers, de- ferring its branch house organization because it was unwilling to risk the large amount of capital required in this trade. Upon this point Mr. Findley testified (App., 16; XIII, 186) : "A. In Eussia, in 1902, we were still doing a jobbing trade only," and went to the branch house basis about four years ago. "Q. And what was the reason for not going earlier? A. Russia was a country that we felt was difficult from the standpoint of credit, that possibly it would involve a greater outlay of capital than we were prepared to under- take at that time, and we were developing our own west- ern Canadian trade, which was rapidly expanding during the same time; and for that reason, and for the reason that we did not want to expand unduly quickly, and hav- ing other branches that were expanding, we continued to use the method that we had been usin^ for some ten years previous to our amalgamation. AVe were jobbing in Rus- sia for practically thirty years before we went into a branch organization, always having tlie knowledge that we could expand our trade there very greatly if we were prepared to go to the trouble of making a branch house and of extending the credit that was necessary under that form of organization." As between the jobbing and the branch house methods, tlie difference in the amount of capital required is very great. Foreign Trade Requires Larger Capital. The foreign trade requires a much larger capital to do a particular volume of business than is required in the United States. The investm.ent in supplies and repair parts in foreign countries so as to have them available for quick delivery when needed is veiy large. In 1912 it amounted to over $15,000,000. (App., 7; XIII, 146-8.) Defendants' Exhibit 78 graphically presents the relative amounts of the selling investment and the per cents, of such investment to gross sales in the domestic and in the foreign trade. (App., 8; XIII, 149.) The term "Selling Investment" represents the investment 88 in the selling business at the close of the season; it includes accounts outstanding, due from agents, bills receivable, notes due from customers or agents or from any source ; the in- ventories of machines, twine, and all stock on hand unsold; and in the case of machines and twine it includes the items of freight and duty; it also includes the office and warehouse equipment, office furniture, etc. (App., 7; XIII, 148.) COMPARISON OF VOLUME OF SALES AND SELLING INVESTMENT. Per cent, of selling in- Selling vestment to Year Gross sales investment • gross sales United States. 1907 $46,402,585.05 $30,298,933.42 65.3 1908 41,823,997.98 29,298,344.10 70.1 1909 50,097,165.69 30,410,535.39 60.7 1910 56,502,982.96 36,069,131.86 63.8 1911 56,867,909.24 40,133,179,68 70.6 1912 64,007,748.88 41,557,146.89 64.9 Forei^ ?n. 1907 24,478,544.17 25,362,534.93 103.6 1908 24,804,793.38 26,188,827.00 105.6 1909 28,134,375.66 29,589,866.59 105.2 1910 34,196,055.60 36,657,153.03 107.2 1911 42,314,678.67 52,832,524.27 124.9 1912 50,896,963.24 66,965,725.33 131.6 During the year 1912 there was manufactured in this coun- try and shipped abroad to be sold in the season of 1913, ma- chinery at invoice prices amounting to $11,169,000— one item m the investment made one year in advance in preparation for the foreign trade. (App., 8 ; XIII, 150.) Defendants' Exhibit 81 shows that a much larger propor- tion of the amount of the sales is in notes in the foreign trade than at home. (App., 10; XIII, 153.) 89 We have also called attention to the fact that carrying the foreign trade directly to the farmers of the foreign countries, necessitated a change from doing 'business through jobbers to the system of doing business through the company's own or- ganization. Selling Expense Investment Increased. This greatly increased the selling-expense investment. Doing business through jobbers as was done by the Deering Company in 1902, although the Deering Com- pany then did have in Europe various representatives looking after its business, entailed a percentage of expense to sales of 11.5. Whereas, in 1912, the foreign branch house busi- ness of the International Harvester Company entailed a per- centage of selling expense to sales of 28.7. (App., 9; XIII, 152.) When these percentages are applied to the tremendous volume of sales made in foreign markets, the difference can be appreciated. The actual experience of the defendant company, in its foreign business, has demonstrated, as these exhibits show, the soundness and accuracy of the judgment of the experienced men who, prior to 1902, in outlining the possibilities of the foreign market, also called attention to the tremendous in- vestment in money which the development of that market would require. Lawful Purpose to Promote Foreign Trade. Upon the proof in this record of the condition of the trade in harvesting machinery, foreign and domestic in 1902 ; upon the proof in this record of the colossal opportunity which was clearly seen in the possibilities of the creation and supplying of a foreig-n demand for American machinery to the mil- lions of farmers throughout the world ; upon the proof in this record of the circumstances leading up to the organization of the International Harvester Company; upon the proof in 90 this record of the purpose for which the International Har- vester Company was organized, adduced by those who or- ganized the company; and upon the proof in this record of what the company has done in carrying out and effecting the purpose of its organization, we submit to the court that it is established beyond reasonable question in this case, that the International Harvester Company was organized for the law- ful purpose of developing the foreign trade in harvesting ma- chinery, and thereby promoting the business interests of the men who organized it; and that the proportion of the business done in the United States by the vendor companies which the International acquired in the purchase of their plants was a mere incident to the great and lawful purpose for which the company was organized. 91 II. No monopolizing methods or practices shown. The evi- dence completely disproves all the petition's charges of mo- nopolizing or oppressive trade methods and practices: no monopolization was effected or attempted. We have shown that the purpose of the organization of the International Harvester Company was not the domination of trade in the United States, hut the legitimate promotion of business in the expansion of the foreign trade. We have shown the development and extent of this expansion. When we turn to the conduct of the business of the Inter- national Harvester Company in the United States through the ten years of its activities, we find corroboration of the testimony as to the object of the organization, in the fact that instead of the business of the company in the United States being characterized by unfair or oppressive methods, it has always been characterized by fair, legitimate and honorable methods. THE COTJESE of BUSINESS OF THE INTEEKTATIONAL HARVESTER COM- PANY IN THE UNITED STATES EVER SINCE ITS ORGANIZATION, IS SHOWN BY OVERWHELMING PROOF TO HAVE BEEN BUSINESSLIKE AND FAIR. If the conduct of the International Harvester Company was characterized by unfair or oppressive business methods, the competitors would necessarily know this and feel its effects. On the other hand, if its course of business was fair, honor- able and businesslike, the competitors would know this fact. Of all men in the United States, those who have been engaged in the agricultural implement business in competition with the International Harvester Company through the years, are the ones best qualified to testify as to the business standards 92 which have characterized its conduct. The record in this case is complete in the testimony of such competitors upon this point. TESTIMONY OF COMPETITOBS. Mr. Danforth Geer, president of the Walter A. Wood M. & E. Isl. Company and identified with that company for years, was called as a witness by the government. The Walter A. Wood Company has been engaged in the harvesting machinery business in the United States ever since 1865. Therefore, this company, during the entire ten years of the activities of the International, has been manufacturing and selling harvesting machinery in competition with it. The president of this company testifies (III, pp. 305-306) as follows : "Q. Mr. Geer, you are doing business in active com- petition with the International Harvester Company! A. Yes. Q. And have been since its organization? A. Yes. Q. And your business has been prosperous? A. Fairly so, yes. Q. Now, the competition is normal and in business lines ? A. Yes. Q. When you need a new agent in a place have you any trouble in getting an agent? A. Not any more difficulty against the International than against anybody else. Q. The opportunities before you for the development and conduct of your business are normal and in business lines? A. Yes." Mr. Given Moore, who from 1902 to September, 1905, was the sales manager of the Walter A. Wood Company, and as such, immediately in touch with the conditions of the busi- ness, testified as follows (Vol. XII, pp. 421-422) : "Q. So that you had charge of the business of the 93 Walter A. Wood Company so far as sales were concerned throughout the United States in 1903, 1904, and up to September, 19051 A. Yes sir. Q. And you were selling your implements in direct competition with the International Harvester Company during those years? A. Yes sir. Q. How did you find the competition of the Interna- tional Harvester Company in those years, in that terri- tory, Mr. Moore, as to wlaether it was normal and busi- nesslike? A. I found it very fair competition. Our business grew all of the time during those years." Mr. William I. Shaw, who was Sales Manager of the Walter A. Wood Company from 1907 to 1913, was called as a witness and asked with respect to the conduct of the business of the International Harvester in competition, testified as follows (Vol. XII, p. 499) : "Q. During all that time you sold your goods in com- petition with the International Harvester Company? A. Yes sir. Q. And you were in the harvesting machine business? A. Yes sir. Q. And competing with the International Harvester Company? A. Yes sir. Q. How did you find the competition of the Interna- tional Harvester Company? Was it fair and along busi- ness lines? A. I considered it along business lines and fair. Q. Mr. Shaw, during the time that you were sale man- ager of the Walter A. Wood Company did the business grow? A. Yes sir." The Johnston Harvester Company has been engaged in sell- ing harvester machinery in competition with the International for the past ten years. Mr. George W. Baker, its Assistant Sales Manager since 1900, was of course familiar with the course of its business since 1902. He testified that the com- 94 petition of the International Harvester Company was fair and businesslike. (Vol. XII, 48.) The Adriance-Platt Company, during the ten years of the existence of the International, has been manufacturing and selling harvesting machinery in competition with it; through sales agents in the Eastern territory, and through jobbers in the West. Mr. George H. Simons during practically all that time, was in charge of the sales of his company in the United States. He testified as follows (Vol. XI, p. 482) : "Q. During the time you were connected with the Adriance-Platt Company, in the territory over wliich you presided, were you familiar with the competitive methods and practices of the International Harvester Company! A. In a general way, yes. Q. I wish you would state whether they were fair and usual and businesslike or otherwise? A. It was very keen, sharp competition, but I think it vras Irasinesslilco. Q. State whether it was fair or otherwise? A. I think it was fair, yes." The witnesses whose testimony has been quoted, are men who were doing business in the manufacture and sale of har- vesting machinery in competition with the International from its very existence. It would have attempted to crush and in- jure their business, if monopoly were the purpose of its exist- ence. These are the men against whom unfair and wrongful methods would have been used if restriction of competitive conditions were desired or intended. Yet these men, with one accord, testify to the fairness which controlled in the busi- ness methods of the International Company. Special significance attaches to the testimony given by Mr. Samuel H. Miller upon this point. Mr. Miller, manager of the Sieberling k :\Iiller Company, has been in charge of its business in the manufacture and sale of harvesting machinery in the United States since 186.3. It is a very small company, doing a very small business. It manufactures and sells in the 95 U. S. from 75 to 100 binders and from 200 to 300 mowers a year and a few reapers. It exports about 25 binders and 75 mowers and 40 reapers a year. It makes no special effort to push its trade. But, in the person of Mr. Miller, we have a witness representing the smallest competitor in harvesting machinery in the United States during the past ten years. His testimony upon this point is as follows (Vol. XlII, 82) : "Q. To the extent that you do business, you do busi- ness in competition with the International Harvester Com- pany? A. Yes sir. Of course, we realize that we are small competitors, but we sell where we know they are in busi- ness and do business. Q. How have you found the International Harvester Company competition. Was it fair and businesslike ? A. It has been very fair and businesslike. Q. What is the fact as to whether the field in the har- vesting business is open — ^has been for ten years — to do business in competition with the International'? A. We have not found anything else but what is fair and open, and as fair competition as we have ever ex- perienced. ' ' But the testimony as to the fairness of the conduct of the International is not confined merely to its competitors in the harvesting machinery business. The men who have been en- gaged in competition with the International in the other lines of implements made by it also testified upon this point. Mr. E. J. Fairfield, of Lindsay Brothers, wholesale jobbers of farm implements and manager of its business throughout most of the Northwest, testified that not only in harvesting machinery, made by the Johnston Company, but in various other implements, he has been for over ten years in compe- tition with the International Company. Asked as to the char- acter of its competition, he testified as follows (Vol. X, p. 270): "A. Just as it was before, so far as we are concerned. Q. And as to whether it is normal, businesslike and fair or otherwise? A. We certainly regard it so. "' 96 Mr. Albert C. Barber, Sales Manager of the Moline Plow Company which has been engaged in competition with the In- ternational in the sale of many implements throughout the United States, testified as follows (Vol. XI, p. 335) : "Q. Mr. Barber, how did you find the competition of the International Harvester Company about the United States, in the period you have named, or so much of it as you were in competition with the International Harvester Company as to whether the competition was normal and healthy and businesslike and fair, or otherwise? A. I have never found them other than clean and fair." Mr. Charlton C. Troxell who from 1903 to January, 1911, was manager of the Nebraska-Moline Plow Company at Omaha, and in charge of its business throughout a consider- able portion of the western territory, testified (Vol. V, pp. 606- 607): "Q. All of those implements you sold throughout the territory during those years, or portions of them in com- petition with the International Harvester Company? A. Yes sir. Q. Were your sales of these implements to the retail implement dealers throughout the territory ? A. Yes sir. Q. And in large degree your sales were to retail im- plement dealers who handled International Company's harvesting machinery? A. Yes sir. Q. Now, state what the fact is as to whether, during those years — doing business in competition mth the In- ternational Company, as you have said — the competition you met with in the International Harvester Company was strong, normal, businesslike, healthy and fair! A. Normal and healthy. Q. You found no oppression on their part? A. No sir. Q. And your business grew during those years? A. Yes sir. Q. In the lines with which you were in competition with the International Harvester Company? A. Yes sir." 97 Mr. F. E. Davis of 'Council Bluffs, Iowa, President of the Pioneer Implement Company, has been a jobber selling im- plements in competition with the International Harvester Com- pany throughout a considerable portion of the western coun- try, for the past- ten years. After detailing the goods which he sold in competition with the International, he testified (Vol. V, p. 625) that the International Harvester Company's competition was normal and healthy. It would unduly extend this argument to quote the testimony of all the competitor witnesses who paid tribute to the fairness of the business methods of the International Harvester Company in its competition for busi- ness in the United States. A list giving the names of these witnesses and the volume and page wherein their testimony appears, is attached as "Exhibit A" to this brief. The testimony of these competitors puts beyond reasonable question the established policy of fair dealing, which has char- acterized the business methods of the International Harvester Company. One incident, however, rnaaj be cited further to il- lustrate the fact. The Acme Harvesting Machine Company has been a competitor of the International since 1902. In 1902, 1903 and 1904, this company was in financial straits, and in the hands of a creditors' committee. The incident is set forth in the testimony of Mr. Porter. (Vol. XII, pp. 378-379.) It ap- peared that certain traveling men of the International were making statements of the financial condition of the Acme Com- pany which were interfering with that company's sales. Mr. S. D. Porter, who was then managing the company on be- half of the creditors' committee, immediately reported the matter to Mr. Mayer, the head of the sales department of the International. The action of the men was disavowed by Mr. Mayer, who at once did everything that Mr. Porter asked him to undo the mischief and prevent its recurrence. This trans- action, testified to by this disinterested witness, shows the 98 purpose and policy of the International from the beginning to keep its course of business free from wrongful, oppressive or unfair methods. ]\Ioreover, it is established Ijy the evidence that when in 1904 two traveling men of the International Company had made false statements respecting the Adriance-Platt Com- pany, a competitor, the action of the men was repudiated l)y the International and the men discharged. (See testimony of M. E. McCuUough, Vol. XII, p. 274.) THE EXCLUSIVE AGENCY CLAUSE IN THE EARLY COMMISSION CON- TRACTS WAS NOT USED AS A MEANS OP COERCING THE DEALER: THE EXCEPTIONAL INSTANCES PROVE THE RULE. The petition charges that the exclusive agency clause in the commission contracts of I. H. 'Co. of America was adopted and used during 1903, 1904 and 1905 as a means and policy of monopolizing all the local dealers, and of excluding com- petitors from obtaining local representation for their harvest- ing machines. It is true that such a clause was in the International agency contracts. The evidence indisputably shows that this pro- vision, requiring the dealer to handle one line of harvesting machinery exclusively, was practically universal in all com- mission contracts for the sale of agricultural implements and similar goods for many years prior to 1902; that it was used by the Johnston Harvester Company not only prior to 1902, but also during 190.3, 1904 and 1905. (XIV, 252-8.) Year by year, as the local dealer became a merchant doing business upon his own capital instead of a mere agent of the manufacturer, this and other similar clauses in the commission contracts became dead letters. The various restrictive provi- sions survived after they were largely ignored in practice. (G. A. Stephens, XIV, 2; James A. Carr, XIII, 366.) By 1903 many of the dealers had far outgrown the old posi- 99 tion, and were buying what goods tliey desired from any and all manufacturers. Nevertheless, the tradition and custom of exclusive representation still remained, and were regarded much more by some manufacturers than by others. The rec- ord in this case shows that during the first year or two of the International's operations, when the selling company was car- rying on the business through divisions, some divisions were very insistent upon exclusive representation, as the circular letters show. Other divisions, at the same time, practically ignored it. Seventy-three local dealers from different parts of the central-western grain fields have testified that during 1903 to 1905 — while the exclusive agency clause was still in the In- ternational contracts, — they were, in fact, handling the Inter- national's harvesting machinery and also that of a competitor, without objection from the International. Without stopping to detail their testimony, a list containing their names and locations is appended, as "Exhibit B." The testimony of Mr. S. D. Porter who, during 1904, was general manager of the Acme Harvesting Machine Company, and selling harvesting machinery through local dealers throughout the Vnited States in competition with the International, is direct upon this point. His testimony is as follows (XII, 379) : "Q. Now, you sold the output of your plant in com- petition with the International Harv^ester Company dur- ing those three years, and sold them through local im- plement dealers? A. Yes sir. Q. What is the fact as to whether in those years and in 1904 you sold your harvesting machinery through deal- ers who were handhng and selling harvesting machinery of the International Harvester Company? A. Yes. Q." You did that? A. Yes. Q. In a number of instances 1 100 A Yes. q' So that you did not find that the exclusive clause which was in the International Harvester Company's eon- tract in 1904 operated to prevent the dealers from taking up your line in connection with the International Imes? A. Well, we marketed through the same men." Moreover, tlie testimony of ^Ir. E. P. Arraknecht is to the same effect. He testified that in the fall of 1904, as a member of a committee of the Implement Dealers' Associa- tion, he asked the officials of the International to omit the exclusive clause from its contract. He testified that this exclusive clause was a dead-letter and inoperative, and tliat the Dealers' Association desired it omitted, he- cause, although it was not effective, they did not desire it to remain in the contract, since sometime, in individual instances, trouble might be caused tliereby. (App., 411 ; Vol. XI, 413-414.) Mr. Legge, general manager of the International Harvester Company, testified that during 1903, 1904 and 1905 the exclusive clause of the contract was practically a dead-letter as far as preventing dealers from handling com- peting harvesting machinery at the same time they handled International Harvester machinery; and that during those years, dealers in considerable numbers were actually handling several lines of harvesting machinery. (XIV, 39.) It is thus clearly established by the testimony that the ex- clusive clause in the agency contracts of the International was not an innovation nor invention of the International Com- pany, but was inherited from an epoch in the trade that was passing. Its use was no part of the policy of the Interna- tional, and it was not employed to compel the local implement dealers of the country to refrain from handling and selling competing harvesting machines. This clause was omitted from the contract forms in 1906 and subsequent years. 101 CANCELIATION OLAXJSE IN COMMISSION AGENCIY CONTEACTS. The petition charges that when the exclusive agency clause was omitted from the commission contracts after 1905, the In- ternational inserted, as a substitute and for the same pur- pose of coercing the dealer, a provision that it might cancel the contract whenever it deemed its interests neglected or jeopardized. As a matter of fact, the commission agency contracts used by harvester companies in the United States during the ten years preceding 1902 contained a provision that the company might at any time at Us option cancel the con- tract and recover possession of the consigned goods. (App., 290.) The International modified as above the terms of this uni- versal and reasonable provision and put it in its commission contracts in 1903, and there was no change therefore in this respect when the exclusive agency clause was omitted in 1906. The original clause providing for cancellation "at the option of the company "'has been continued, in the Johnston and Acme Harvester Companies' contracts up to 1912 and some sucli clause is used in all harvester company contracts. Inasmuch as under these commission agency contracts ma- chines are consigned to dealers without any payment on account, and the title still remains in the manu- facturer, it is necessary that there be preserved to the manufacturer the right, in case of an emergency, to retake possession of his own property. All who have had to do with controverted questions respecting consignment contracts i" any line of business will recognize the propriety and necessity of such a provision. The other provisions in the contract requiring the agent dealer to sell at retail prices to be fixed by the company and to obtain all his repairs from the company, and restricting his territory, were all natural, and lawful provisions, which were 102 merely adopted in the beginning from the custom of the trade, but had become largely dead letters, and were entirely so after 1905. There was not a provision in these agency contracts adopted by the International which was not a usual one in the trade in 1902 ; and it modified or omitted, in the interest of the dealer, some of these usual provisions ; for example, that which required the dealer to pay the insurance on the consigned goods. This has nc'^'er been in the International contracts. NO COERCION OF DEALERS. THE PROOF CONCLUSIVEJ.Y ESTABLISHES THE FACT THAT THE IXTER- NATIOKAL HAEVESTEE C()MPAX'!i' HAS XEVER ADOPTED A POLICY OF ATTEMPTING TO COEECE LOCAL IMPLEMENT DE.VLEES. THE PROOF ALSO ESTABLISHES THE FACT TILAT THE IXTEENATIOXAL HAR- VESTER COMPANY COULD NOT SUCCEED IN A POLICY" OF ATTEMPT- ING TO COERCE TI-iE LOCAL DEALERS, IF SUCH POLICY WERE AT- TEMPTED. The agricultural implement business has been carried on throughout the country through local implement deal- ers who sell direct to the farmer. The Government, in its petition in this case, charges that the International Harvester Company has coerced the local implement dealers of the United States into refusing to handle harvesting machinery made by other manufaeture]-s, and has rhere'by made effective competi- tion with the International Harvester Company in the manu- facture and sale of harvesting machinery, impossible. It is further charged that the International Harvester Com- pany has coerced the local implement dealers of the United States into refusing to liandle agricultural implements of any kind made and sold in competition with those of the Inter- national, and that, thereby, effective competition in these other lines of agricultural macliinery lias been made well-nigh im- possible. The claim of the Government is, that this alleged coercion 103 has been exercised upon tlie dealers by threats that sucli deal- ers would not be allowed to handle the harvesting machinery of the International Company, unless they agreed to and han- dled International goods exclusively. Government's Evidence as to Coercion. The International Company has been doing business throughout the United States for ten years. There are about 40,000 local dealers in the Uuited States handling Interna- tional goods. The International Company has nearly 100 general agents throughout the country and over 2,000 block- men and canvassers representing the company as traveliug salesmen. In all, the sales force in the field numbers about 4,500. (App., 357.) The Government called twenty-two local implement dealers, who testified either that representatives of the International Company refused to allow them to handle International goods in connection with like goods of its com- petitors, or to other acts of alleged misconduct; and letters of one of the general agents of the International Company, urg- ing upon a traveling man not to contract with dealers for the harvester machines unless they bought other lines. (App., 294-361.) It has been proven that, with respect to some of theSiS in- stances, the International Company took their goods from the local dealer because his lack of financial standing and slowness of payment made a change advisable. In other instances, the proof shows that the dealer was not giving to the sale of the In- ternational goods proper attention. But, in some instances, it is true that representatives of the International Company did threaten to discontinue busi- ness with local dealers because of the determination of such dealers to handle goods sold in competition with those of the International. Although the International, during the past ten years, has had thousands of employes representing it as traveling can- 104 vassers and blockmen, and has been making annual settlements with over thirty thousand local dealers, only twenty-two deal- ers were found to testify to any misconduct on the part of a representative of this Company. In view of the thoroughness with which the Government would naturally seardi for such evidence, it must be clear that these are isolated cases only, and do not represent the Company's policy. It is common knowledge that, in so large a force of men scattered over the entire country, occasional instances of misconduct and disre- gard of the employer's poHcy and instructions are bound to occur. Defendants' Evidence from 823 Implement Dealers. But in this case, the International Company was not willing to rest this phase of the ease upon this consideration, however manifest. With careful and complete thoroughness, the In- ternational Company has spread upon the record the story of its transactions with the local dealers through- out the United States during the ten years of its existence and it has demonstrated beyond the possibility of cavil, that it never has been the policy of the company to attempt through coercive methods to compel the local dealers to han- dle any of its goods and refrain from handling competing goods. Eight hundred and twenty-three local implement dealers from twenty-four states were called by the defend- ant company. The men tlms called, were typical and representative implement dealers. With very few ex- ceptions, all of these dealers handled International harvesting machinery, and many handled in connection therewith, the har- vesting machinery of competing companies; and all of them handled other competitive implements. The business done by these dealers with the International Company was but a fraction of the aggregate business which they did with the other agricultural implement companies. 105 Naturally, these were the dealers with whom the International would use coercive methods to secure more of their business, had such been its policy. These hundreds of dealers all testi- fied that the International Company had never tried to dictate their purchases either from it or from any competitors, and had never intim_ated to them that they could not handle the harvesting machinery of the International Company if they did not handle it exclusively, or if they did not handle exclu- sively, the line of other implements made by the International Company. This positive testimonj- from so many uncontra- dicted witnesses as to the course of business of the International Company in all sections of the United States and covering the period of the entire ten years of its existence and activities would seem to be sufficient to put beyond a reasonable question the fact that the policy of the International Company has never been to attempt coercive methods with the local dealers and to show that the few instances to the contrary above mentioned were sporadic and isolated cases where individuals have disregarded the pol- icy and instructions of the company. As an illustration of the testimony given by each of these witnesses, we quote the testimony of Mr. B. P. G-rigsby, a deal- er, of Bardstown, Kentucky (App., 426; XI, 62-63). As a dealer in farm implements, vehicles and twine he does a busi- ness of $50,000 annually; $10,000 to $12,000 of Avhich is with the Internationa] Company. He is the president of two cor- porations in the local implement business, in the same town, and is handling the McCormick harvester line, as well as the Johnson and Wood machines. The questions asked Mr. Grigsby on the matter of attempted coercion by the Interna- tional Company and his replies thereto, are as follows : "Q. Has the International Harvester Company ever said to you that you could not handle their harvesting machinerv unless you quit handling the Johnston or the Wood? A. No. 106 Q. Has the International Company ever said to you that you could not liandle their harvesting machinery un- less you increased your purchases from that company? A. No, sir." The testimony given l)y hundreds of dealers is similar to that given hj Mr. Grigsby. A list (with their location and volume and page of their testimony) of those who have testi- fied to the effect that the International has never attempted to coerce their purchases and has never threatened to refuse to sell them harvesting machinery unless they agreed to handle International harvesting implements exclusively, is attached to this brief as "Exhibit C." Testimony of Competitors. But the proof that the International Company has never adopted the policy of attempting to coerce local dealers, does not rest alone upon the testimony of the dealers. The men who manufacture and sell agricultural implements to the retail trade of the United States in competition with those of the International Company, and who have l^een engaged in this business for years and know the conditions under which the business has been carried on, testified with one accord that they never have found any attempt on the part of the In- ternational Comi^any to coerce a dealer to handle its goods. One after the other of the representatives of competing manufacturers have been called to the stand in this case, and all have testified that they sold their agri- cultural implements to local dealers throughout the country in competition with like goods of the International; that most of the dealers to whom they sold their implements handled In- ternational Company's harvesting machinery; and that they found the dealers entirely free to buy their implementsi sold in competition with those of the International, notwithstanding the fact that such dealers were handling International harvesting machinery. 107 As an illustration of the testimony given by competitors upon this point, we refer to the testimony of John L. Jones. (XI, 420-422.) Mr. Jones has for years been the man- ager of a branch house of the John Deere Plow Company, doing business throughout thirty-seven central counties of Iowa, and selling a long line of implements, including binders, mowers and rakes in competition with the Interna- tional Harvester Company. His testimony in this regard is as follows (p. 422) : "Q. Your implements were sold to the retail dealers throughout your country? A. Yes, sir. Q. In the territory you have named? A. Yesi, sir. Q. And your competing implements were sold to deal- ers who handled International Harvester Company's har- vesting machinery? A. Yes, sir. Q. Did you find that the fact that the dealers were handling International Harvester Company's harvesting machinery an impediment to the sale by you to the deal- ers of your competing implements"? A. No, sir." Mr. Edward A. Rumely who has been an official of the M. Eumely Company and has been selling various implements throughout the United States in competition with like imple- ments of the International Company, testified on this point as follows (XIV, 10-11) : "Q. So that after going into the work of manufactur- ing and selling tractors in competition with the Interna- tional, you kept on a par of equality so far as volume of sales was concerned? A. We did, yes. Q. And how Avere the sales in these other lines ? A. Our sales in the other lines have increased. In cream separators we are selling this year probably three and a half times as many as we sold last year. In stationary engines, we have found it easy to build up a market of substantial volume. 108 Q. Now, doctor, you sell your implements to the local retail dealers throughout the country? A. We do. The dealer is an important factor in our business. Q. You sell in large degree to dealers who handle In- ternational Han-ester Company's harvesting machinery! A. I should say between 25 and 35 per cent, of our dealers are also agents of the Harvester Company. Q. Have you found the fact that the dealers were han- dling the International Harvester Company's harvesting machinery an obstacle to your selling to them your im- plements '? A. We have found them free ; we found the dealer measured up the price and the terms upon which we would sell the tractor and the price and the terms upon which the Harvester Company would sell a tractor; and as to the ease with which our tractor could be sold ; and we had to match what we had to otfei" against what the Harvester Company had to oi^'er in the same line, and to that extent naturally, it was more difficult than if there was- no other tractor that the dealer could get. Q. But that was legitimate competition? A. We felt so. We have found the fact that the dealer handled the Harvester Company's implements no obstacle to our inducing him to handle our tractors. Q. That is the point. I do not think I got a categorical answer to the question I asked a moment ago, doctor. Take the competition of the International as you met it; what was the fact as to whether it was business like and fair? A. We found it fair, and we have encountered in the three or four years no unfair practices that prevented our getting the business we desired to get." It is entirely impracticable to set forth in this brief and argument, the testimony of all competitors upon this point. A list (with volume and page of their testimony) of the competitors of the International Harvester Company, who testified that the implement dealers of tlie United States handling International harvesting machinery are free to buy and do buy their implements in competition with like imple- ments, is attached to this brief as "Exhibit D." If the men who were selling to the dealers agricultural implements 109 in competition with the Internationa], found the dealers free to buy their competing implements, notwithstanding the fact that such dealers were handling International harvesting ma- chinery, clearly the dealers were under no compulsion to buy of the International Company exclusively. THE INTERNATIONAL COULD NOT SUCCESSFULLY BNEOECE A POLICY OP COEECING LOCAL DEALERS. It has been established by the testimony that the manage- ment of the International has never adopted or sought to en- force, a policy of attempting to coerce the local implement dealers as to their purchases either from it or competing com- panies. The proof is equally conclusive that the International Harvester Company could not enforce such a policy, and that any attempt in that direction, w^ould result merely in failure and in the loss to the company of the business of such dealers. Testimony of Implement Dealers. The hundreds of representative local implement dealerfi who testified stated not only that no coercion was attempted, but also that any attempt at such coercion would result dis- astrously to the International. It has been shown by the testimony of the witnesses, as heretofore stated, that the implement dealers of the United States have long since ceased to be merely personal represen- tatives of particular manufacturers, but for years have been strong and independent merchants in their respective commu- nities. When the court reads the testimony of these dealers and notes the extent and volume of the business done by them annually, the position and standing of these men as successful merchants will be understood and appreciated. Manifestly, the testimony of each of these dealers upon this point, cannot be incorporated in this argument. An illustra- tion will suffice. C. W. Davey, a local implement dealer at liU Hamburg, Iowa, wlio lias been engaged in that business con- tinuously since 1894, testified as follows (V, 241-243) : "Q. What line of harvesting implements — binders, mowers and rakes — do you handle? A. The Deering. Q. Do you handle any other mowers, or binders or rakes 1 A. I have, yes, sir. I have handled the Emerson- Brantingham or Standard mower and the Dain. Q. Do you handle either of them now? A. I handle the Dain, but not the Emerson, not for three years; it has been three years since I handled the Emerson. Q. How" long have you handled the Dain? A. About three or four years. Q. Do you handle farm implements other than harvest- ing machinery manufactured by the competitors of the International Company and sold in competition with their goods? A. Yes, sir. Q. I wish you would give us a statement of those? A. I handle the John Deere line of farm implements, such as plows, disc harrows, corn planters and the Dain hay tools; they manufacture those. Q. Just enumerate the hay tools. A. Mowers, hay loaders, side delivery rakes and sweep rakes. Q. Do you handle engines? A. And gas. engines. Q. What make? A. Root & Vandervoort and the Dempster. Q. How about cream separators ? A. I handle the De Laval. Q. How about wagons? A. Emerson & Brantingham wagons, or the Newton and Peter Schuttler. Q. What are included in the John Deere line that you handle, listers? A. Yes, sir; plows of all kinds, sulky, gangs and walk- ers ; some of his cultivators ; not the full line ; I only han- dle part of them. Corn planters, stalk cutters, disc har- rows and drag harrows. Q. Stalk cutters ? A. Stalk cutters. Ill Q. Do you handle any of the Moline Plow Company's goods? A. Yes, sir. Q. What? A. I handle a lister I get from them, and some culti- vators. Q. Any Pattee goods? A. Yes, sir; the Pattee Plow Company of Monmouth, Illinois. Q. Have you any objection to telling us the aggregate amount of your business, Mr. Davey ? A. About $30,000 a year. Q. How much of that represents sales of goods you buy of the International Harvester Company? A. About one-sixth of that. Q. That would be about $5,000 ? A. About $5,000. Q. Now, has the International Harvester Company, through anyone, at any time, attempted to coerce you in your business and intimate to you that if you did not abstain from handling the Dain mower or the Standard mower they would not let you handle their harvesting goods ? A. No, sir. Q. Has the International Company, in any way, or through anyone, at any time, intimated to you that you could not handle their harvester goods unless you refused to handle all or some of these goods that you handle for their competitors? A. No, sir. Q. There has never been any attempt at coercion? A. Never any attempt whatever. Q. Suppose there were such an attempt made, what would be the effect of it? A. I would not permit it. I would tell them to walk out. Q. And you would cease to do business with them on those terms ? A. Yes, sir." The list of the dealers attached to this brief as Exhibit "C" gives the names, with volume and page of the record, of the dealers who testified that a policy of coercion by the In- ternational Harvester Company could not succeed. 112 Testimony of Competitors. Moreover, upon this point, the testimony is not confined to the local implement dealers who were called as witnesses. Men, who have for years been engaged in the sale of agricul- tural implements to these local dealers throughout the various parts of the United States, are well acquainted with the deal- ers and their methods of doing business, and are fully quali- fied to give an opinion as to the effect upon the business of the International Company of any attempt to coerce the dealers in their purchases. These men — not only those in charge of the business of the International Harvester Company — but those who have been in the agricultural busi- ness for many years and are now engaged in that business in competition with the International, have testified upon that point. (App., .358, 364-397.) As an illustration of this, we cite the court to the testimony of Mr. Albert C. Barber, who for years has been the sales manager of the Moline Plow Company, and for more than ten years has been engaged in the sale of agricultural implements in competition Avith the International Company, and who has for six years had charge of the sales of the Moline Plow Company throughout the entire United States. His testimony is as follows (App., 383; XI, 340-341): " Q. In all the years you have named, while you were general sales manager of the Moline Company, in charge of all of its sales for the past six years and while you were assistant sales manager for three years and in that way in touch with their sales, and while you were general agent at Kansas City, and at Minneapolis, and at St. Louis, you have been kept in constant touch with the retail dealers, have you not? A. Yes, sir. Q. And are thoroughly familiar with the methods of the retail dealers and the manner in which their busi- ness is conducted and carried on? A. Yes, sir. Q. Mr. Barber, if the International Harvester Com- pany should adopt and put into effect the policy of saying 113 to tlie dealers of the country that they could not han- dle the harvesting machinery of the International Har- vester Company unless they handled that machinery ex- clusively and unless they carried the full long line of the International Harvester Company's implements, and carried those implements exclusively, what, in your judg- ment, would be the effect upon the business of the Inter- national Harvester Company'? A. There is no question in my mind but the Interna- tional Harvester Company would lose their good dealers. There are some perhaps, with whom they might be able to do that, but it would not be a dealer who had very much self-respect. I do not think they could do it." Mr. E. G. Fairfield, a member of the firm of Lindsay Broth- ers, at Minneapolis, who for years has been in charge of the sales of agricultural implem-ents for his firm, through- out the Northwest, testified as follows (App., 389; X, 270- 271): "Q. Take the Johnston Harvester Company's harvest- ing machinery, that you sell ; what has been your experi- ence in respect to the selling of those implements, as to whether the implements were considered by the dealers on the merits of the machines, as they would consider any other implement? A. That is certainly the way they buy them. <5. Have you found" anything to show they did not consider them and were not free to consider them on their merits? A. No, sir; we have not. Q. Then you have competed for ten years with the International Harvester Company in practically the com- plete line of farm implements that the Harvester Com- pany sells! A. We have. Q. You are acquainted with the dealers in the terri- tory you have described, pretty generally? A. Yes sir. Q." And are acquainted with their methods of doing business? A. Very well, indeed. Q "What, in your judgment, would be the effect on the International Harvester Company's business, in the ter- 114 litory yoLi have described, if it went out and adopted and attempted to enforce the policy of saying to all of these dealers that they could not handle the International Harvester Company's harvesting machinery unless, they handled International goods exclusively. A. I think they would soon get out of the territory if they tried it." Mr. E. Gr. Blanton, who for seven years has been manager of the business of B. F. Avery & Sons Plow Company in Okla- homa, and who has been selling implements in that territory in competition with the International, testified upon this point as follows (App., 385; VI, 7:J0-731.) '■'^*. As a matter of fact in a great many instances, the sales, that you make of implements you named are to dealers Avho handle the harvesting machinery of the In- ternational Harvester Companvf A. Yes. Q. "^Vliat is the fact, in your judgment, as to whether the field in agricultural implements, in the territory that you have named, in tlie period covered, has been open to competition with the International Harvester Company? A. Yes, sir; I think the field is open to everyone that will go after it, and get it on the merit of their goods or — Q. Do you feel that Aour acquaintance with the deal- ers in agricultural implements in your territory is suffi- ciently intimate and of long enough standing to be able to inform your judgment as to whether, if the Interna- tional Han-ester Company adopted a policy of attempting to coerce the dealers into ])urchasing their long line of goods, or coerce them into refusing to handle goods of competitors by making that as a condition to allowing the dealers to handle the International harvesting ma- chinery — whether or not that would be a policy that would be successful in vour territorv? ,Do you get my ques- tion? A. Yes, sir. I do not think it would be a successful policy for anyone. Q. What would you say as to the effect on the busi- ness of the International of adopting and trying to effect such a policy"? A. My judgment would be that they would lose busi- 115 ness by a policy of tliat kind. I am speaking on broad general principles. Of course, I am not intimately ac- quainted with the policy of the International Harvester Company or any of my competitors, but just as a gen- eral, broad business proposition. Q. The policy of coercion would not corce in your territory; that is your opinion? A. I do not think it would." List of Competitors Who Testified. As the limits of this brief do not permit the quotation of the testimony of all of these competitors, upon this point, we have prepared a list of those testifying that coercion is im- possible. This list with reference to the volume and page of the record is attached to the brief as Exhibit "E." Attention is also directed to the fact that the competitors who testified not only repi-esent the small as well as the large manufacturing companies, but they (as well as the deal- ers) were called from every section of the United States where harvesting machinerj^ is used. Men on the witness stand have detailed the conditions of the trade in agricultural implements, on tlie Pacific slope, throughout Idaho, Montana, and Colorado, the entire country between the Eocky Mountains and the Alleghenies, as well as the East- ern territory. The record advises the court, with complete thoroughness, of the conditions which obtain in this line of business throughout the entire grain-growing section of the country. Government's Witnesses Prove Coercion Impossible. Moreover, the testimony of the Grovernment 's witnesses illustrates the truth stated by defendants' witness — "coercion would not coerce. ' ' Some twenty local dealers testified to at- tempts of this sort. But their testimony shows that, in only three instances did the dealers yield to the attempt to interfere with their business. The others quit doing business with the 116 International and took on competing machines which they thereafter represented and sold. Thus the very evidence which is introduced in the hope of establishing a coercive pol- icy on the part of the International, only makes clear the fact that such a coercive policy could not be successfully carried out. THE riGUEES SHOWING THE ACTUAL BUSINESS IN NEW LINE IMPLE- MENTS PEOVE THAT THE CLAIM 01? THE GOVERNMENT THAT THE IXTEENATIONAI. HAEVESTEE COMPANY HAS UTILIZED ITS LINE OF HAEVESTING MACHINES TO COEECE DEALERS TO PURCHASE OTHER IMPLEMENTS, IS ENTIEELY WITHOUT FOUNDATION. The claim of the Government, that the International Har- vester Company has utilized its old lines, namely, the harvest- ing machinery, to compel local dealers to purchase the new line of implements manufactured by the company has been discussed, and the testimony referred to seems conclusive upon this particular point. In addition to this testimony the ab- sence of either attempt or power on the part of the manage- ment of the International Harvester Company to coerce the local implement dealers in the matter of their purchases is clearly proven by the figures showing the business actually done in the new lines. In connection with the testimony of Mr. Legge, General Manager of the International Harvester Company, there was introduced in evidence Defendants' Exhibit 184 (XIV, 44), showing : 117 NUMBER OF DEALERS REPRESENTING I. H. 00. OF AM. IN THE UNITED STATES ON THE FOLLOWING MACHINES. No. of Per Cent. Commission & New Line Sale-Contracts Dealers Old Lines 1908 1909 1910 1911 1912 1913 to Old (Binders, mowers 5/31 Line Dealer & reapers) 31,758 32,611 30,801 30,941 30,731 29,500 1913 Side Delivery rakes, 2,371 2,888 2,937 2,759 2,.542 2,25S 7.6 Hay Ijoaders 2,ir<9 2,542 2,804 3,047 2,487 2,197 7.5 Tedders 3,304 2,059 1,880 6.4 Sweep Rakes 2,495 2,191 1,631 5.5 Stackers 1,286 1,223 610 2.1 Hay Presses 1,479 1,680 942 3.2 Shellers 1,420 1,874 1,776 2,125 3,018 2,()91 9.1 Disk Harrows 10,455 11,204 10,869 36.8 Spreaders 0,417 10,674 8,507 7,524 6,483 5,214 17.7 Wagons 4,191 5,870 5,131 6,598 6,388 4,503 15.3 Cream Separators 5 3,495 4,439 4,(137 4,653 5,346 4,013 13.6 Feed Grinders 1,828 2,143 1,9.55 0.6 Autos 894 859 497 1.7 Engines & Tractors 4,1.>3 6,155 5,402 6,382 6,538 5,768 19.5 This exhibit is instructive as to the point now under discus^ sion. Some dealers handle International harvesting machin- ery without handling any of the new line goods, and other dealers handle some of the new line implements without han- dling the harvesting machinery. This exhibit gives the pro- portion of the dealers handling the respective lines. It ap- pears from this exhibit that the number of dealers who han- dle disc harrowSi of the International is 36 per cent, of the number of dealers who handle International harvesting ma- chines, while the number of dealers who handle o4her imple- ments in the new line range from 17 per cent, of the number handling harvesting lines down to 1 per cent. Clearly, there- fore, the International Harvester Company has not made the old lines carry the new. There was also introduced Defendants' Exhibit 185 (XIV, 46): lis ST\TEMENT OF SALES IX THE UNITED STATES BY DISTRICTS, OLD AND NEW LINES. SEASON 1912. Per Cent, of Per Cent, of Old Old Line New New Line Line Sales to Line Sales to District Total Sales Sales Total Sales Sales Total Sales Central $10,433,788.20 $6,060,244.13 58.1% $4,373,544.13 41.9% Eastern 10,005,761.59 5,089,070.28 50.9% 4,910,691.31 49.1 Northweist 18,132,867.64 12,8.j9,063.44 70.9 5,273,814.20 29.1 Southern 6,656,842.31 3,201,083.22 48. 3,4.55,759.09 52,0 Southwest 16,694,925.83 11,853,004.29 71.0 4,841,921.54 29,0 $61,924,185.63 $39,082,4.55.36 63.1% $22,861,730.27 30.9 Tlie testimony of Mr. Legge (XIV, 45 ; App., 359) shows that in the Northwest district, and the Southwest district, there is the largest sale of binders, and that in the Eastern and South- ern districts, there is a comparatively small binder sale; yet the exhibit above mentioned shows that in the Eastern and Southern districts, the per cent, of the new line sales to the total sales, is very much greater than in those districts where the binder sales are the largest. This shows that the new lines are sold upon their merits and are not carried by the sales of the harvesting machinery as charged. Defendants' Exhibit 213 (XIV, 125; App., 360), illustrates the fact by a more detailed statement. This ex- hibit gives the sales of grain binders, engines and wagons sep- arately at a number of general agencies of the International Company throughout the United States. From this, it can be at once seen that the sales of the new lines have been greater in agencies where binder sales were small than in agencies where binder sales were great. Without setting forth the en- tire exhibit, we call attention to one illustration furnished by it: At Helena, Montana, is an agency where many binders were sold, and at Jacksonville, Florida, an agency where very few binders were sold; yet the sales of engines and wagons at 119 Jacksonville, Florida, were greatly in excess of the sale of these new implements at Helena, Montana : Binders Engines Wagons Helena, Montana, 2407 132 1297 Jacksonville, Fla. 96 309 2136 The evidence therefore completely disproves the contention of the Grovernment, that the old lines have been nsed to force th purchase of the new lines. NO MONOPOLY OF LOCAL DEALERS. THE CIECULAB LETTEES AND EEPOETS OE SALES COMMITTEE INTEO- DtlCED IN EVIDENCE, SHOW NO WEONGEUL ACT OE PUEPOSE. It is charged in the petition by the Government, that the International Harvester Company has monopolized the deal- ers of the United States by continuing to maintain the trade names of the various harvesting machines which it manufac- tures, and its policy of having each of these machines separ- ately represented by a dealer in each town if possible. To prove this charge, the Grovernment introduced a number of reports of the Sales Committee which existed during the first two years after the International's organization, and also a number of circular letters sent to general agents. It is true that the International has maintained the trade names of the various lines of harvesting machinery acquired by it, namely, the Deering, McCormick, Champion, Piano, Mil- waukee and Osborne, and in a measure has continued the separate representation for each line with the local dealers, which existed in 1902. The evidence shows, however, that the number of local dealers handling the International goods in 1902 was between forty-five and fifty thousand (I, 24), and that the number now handling International binders, mowers and reapers is less than thirty thousand (XIV, 39), and that the average number of dealers in each town handling such harvesting machiner\' of the Inter- 120 national is only 1.43 (XIV, 39). The policy of the Company should be judged by its actions and their results. At the out- set, competitors had the same opportunity to obtain agents which had existed before the organization of the International, and as the number of International agents decreased, this op- portunity increased. This fact, in connection with the testi- mony showing the widespread handling of competitors' goods by the same dealers and the overwhelming testimony of com- petitors that they have experienced no unusual difficulties in securing dealers to handle their goods and have found the methods of the International fair,— clearly refutes the charge that the Company has attempted or is attempting to exclude competitors from tlie field In- obtaining a monopoly of the local dealers. At the time of its organization and as a result of the pur- chase of going concerns, the International at once came into contract relations with forty-five thousand or more local deal- ers handling one or another of the several harvesting lines, many of them with established trade among the farmers grow- ing out of the handling of such lines in previous years. Be- fore any wrongful conduct is imputed to the International in continuing to do business with these dealers and to market its goods through the established channels, it may be asked of the Government with pertinence what conduct would be expected in such a situation of a Company trying to act fairly and with- out any intent to suppress competition. Would fairness to competitors require such a Company to refuse to continue business relations with more than one dealer in a town, with loss to itself, with injustice to the rejected dealers deprived of their established trade, and to the great disadvantage of the farmer, deprived of the benefits of the services of such dealers'? Unless these questions can be answered in the affirmative, the Government's charge of wrongful practice in this respect 121 seems strained. If the International had pursued the policy of placing all its harvesting lines in the hands of one dealer, would not the same charge of wrongful methods have been made, and with some plausibility? In any event, the evidence makes it clear that the other polic>' would have been, for ob- vious reasons, vigorously objected to by the farmers and deal- ers — by the farmers because they would be forced to discon- tinue satisfactory dealings with the former handler of the particular machine, — and by the rejected dealer, because, with- out reason, he would be deprived of a trade in a line of har- vesting machinery w^hich he, by his personal efforts, had largely built up among the farmers. The practice of having separate dealers handle similar lines of implements or machines sold under different trade names is not peculiar to the International. The Eumely Company and Emerson-Brantingham Company both pursue this prac- tice, which is shown to be entirely proper and justified by ample business reasons. (VIII, 520, App., 795 ; XIV, 13, App., 764.) The International merely continued the situation as it found it, for whicli experience furnished ample reason. It has con- tinued the policy so far as agreeable to the dealers for like valid business reasons. To understand them and the policy of the Sales Committee reports and circular letters, some general features of the harvesting-machine business may be noted and also the nature of the International's organization in its first two years. The binder is a machine of several thousand parts, some of which break or wear out, and it is essential that there be provided for the farmer a supply of repair parts so that they may be promptly delivered and placed in the ma- chine. Harvesting machinery is used, of course, only during the harvesting period. When the grain is ripe for cutting, it must be harvested quickly or serious loss will follow. If a farmer cannot operate his machine, or, if through any break of any part of the machine, the farmer is unable to use it, 122 promptness in the services of an expert to instruct the far- mer and promptness in the delivery and insertion of a new part is of the highest importance, since delay in these emer- gencies means a cessation of the work of harvesting the grain and might result in loss of the crop. Therefore, the manufacturer of harvesting machinery, to serve the farmer, must provide an efficient machine and an efficient expert and repair service, to be quickly available to the farmer when needed. The success of any manufac- turer of harvesting macliines, in disposing of his prod- uct, will depend in large part, upon the intrinsic merit of his machine and the effectiveness and promptness with which the services of experts and the delivery of repair parts are provided. It is plain that the manufacturer's interests require not only the improvement and perfection of the ma- chine whidh he sells, but also the maintenance of a high stand- ard of expert and repair service. The local dealer, being in touch with the farmers and the one through whom the repair parts are sold to the fanner, must, to hold and extend his business in agricultural ma- chinery be keenly alive to the needs of the farmers and always alert and efficient not only in making sales, but in providing the repair parts and co-operating in the furnishing of expert services. The various manufacturers necessarily must depend upon the local dealers who handle their ma- chines for this important and necessary work. Any inactivity or neglect of this work by the local dealer, means a loss of popularity, and a diminishing trade in the machine repre- sented and sold by him. Prior to the organization of the International Company each of the various vendor companies had, as had all the other manufacturers of harvesting machinery, a selling organiza- tion with its head at the home office; and at the principal points throughout the country, branch houses or 123 general agencies; through these general agencies, the busi- ness with the local dealers was carried on. It was the aim of every manufacturer to get, in each community, an ef- ficient local dealer to handle his goods, and, naturally it was the desire to have such local dealer devote his entire time, if possible to the selling of these implements. If the entire serv- ices of that local dealer could not be obtained, for the sale of one particular make, and the dealer insisted on handling a competing m.achine as well, of course, it was the effort of each manufacturer to have the local dealer devote as much of his energy as possible to the selling of his particular machine. Thus, in 1902 there were local dealers Avho were handling the ]\IoOormick, Deering, and other makes of ma- chines. Changes in the business of the local dealers were very frequent, inasmuch as any mer- chant in the community who was in touch with the farmers was available and free to take up, often at first as a side line, the sale of agricultural implements. The hardware merchant, the grocer, and, in the villages, the blacksmith frequently car- ried a line of these implements, and oftentimes the business increased until it became the principal line of the merchant. At the time of the organization of the International Com- pany, the various vendor companies had established relations with the local dealers; and in the main, each dealer repre- sented and handled one make of harvesting machinery be- cause in his judgment, he could more efficiently handle his trade by selling one machine only. However, in many in- stances, the local dealers did handle at the same time, various makes of harvesting machines, manufactured by different and competing companies. But the efforts of all the manufac- turers, as has been said, was naturally directed toward getting in each community, men whose entire service they could com- mand for the sale of their machine. 124 Delay in Rcorganizino Sales Force. When the International Company was organized, the prop- erties of the vendor companies were conveyed tj it m the fall of 1902 ; but the precise sum to be paid tlieref or had not been ascertained, because the appraisals had not been made. But the business of the vendor companies tbus united had to go forward in some fashion pending the appraisals, and a com- plete reorganization. Mr. Cyrus McCormick became the first president of the company and Mr. Charles Deering the chairman of the board of directors. For more than a year, the work of these ap- praisal companies went on. Their work was done with the utmost thoroughness and precision. Naturally these interested in each vendor company had a vital interest in the valua- tion of tlie property which they sold, and also a keen interest in the valuation of the properties of the other companies. The work of these appraisals absorbed the attention of many men. It was impossible therefore, to perfect a selling organ- ization for the International Company for some months. It was not accomplished in fact, until during 1904. Meanwhile, during the fall of 1902, all of 1903 and part of 1904, the old selling organizations of the vendor companies were continued under the name of divisions. Thus the old sales organizations of the McCormick Company continued to sell the McCormick machines and was called the McCormick Division of the Inter- national Harvester Co.; the old sales organization of the Deering Company continued to sell the Deering machines and was called the Deering Division. So wdth the other com- panies. Thus there were five selling organizations called divi- sions from the organization of the International Company until the autumn of 1904. These sales organizations conducted the business of seU- ing the particular makes of harvesting machineiy as they had done before the organization of the International Com- 125 pany, excepting that, during this transition period, a com- mittee, called the Sales Committee, consisting of one member from each of the divisions, met from time to time and con- ferred respecting the various matters which came up for con- sultation regarding this branch of the company's business. At the request of the Government, the defendants produced the records of the meetings and reports of the sales commit- tee and the executive and finance com.mittees covering all the business transactions of the Company and its subsidiaries for the first nine years of its operations and consisting of up- wards 2,500 typeAvritlen pages. Defendants also produced the circular letters, 1,942 in number, sent out mostly during 1903 and 1904. They present a clear and frank record of the con- fusion and difficulties attending the organization of the Sales Department upon an efficient, economical and businesslike basis. In only one instance was there any mention of a special ef- fort to meet the competition of a particular company, or of a special effort to obtain the services of dealers who repre- sented another company. And in this instance, the proof is conclusive that the suggestion was not carried out. At each of the general agencies of the various divisions throughout the country, there were traveling men called bloekmen who covered certain territory and made contracts with the local dealers and solicited orders for sales. "When- ever, because of a death or retirement from business, or for any other reason, a change was necessary, and a new local dealer was to be found to represent any make or machinery, the local blockman selected a dealer and arranged with him for the handling of the goods. Two things developed not long after the organization of the International Company with respect to the local dealers and the bloekmen ; in view of the fact that the International Com- panv was the owner of the plant and business of the various vendor companies, if a local dealer who had handled the Mc- 126 Cormick harvesting machine would, for any reason go out of business, the local blockman, following the line of least re- sistance and saving himself any effort to arrange with a new and separate dealer for the handling of these machines, took the easy course of bringing the machines to the agent of the Deering machine and contracted with him for the handling of both machines. This Avas in like measure true of the five lines of machinery. Again, inasmuch as one company man- ufactured and sold these five makes of harvesting machines, some dealers throughout the country desired and endeav- ored to obtain contracts whereby they would represent in their communities all these makes of machinery. This tendency toward a diminishing representation became pronounced. Its effect was two-fold ; if one dealer represented all or several of the lines of harvesting machinery, his activity on behalf of one would necessarily be somewhat limited, and the inevitable ef- fect would be a smaller effort to sell and, consequently, a di- minishing sale of these harvesting machines. Moreover, if one dealer represented all or several of these makes of machines, the tendency would necessarily be to diminish his activity in the matter of repair and expert service. Therefore, the sales committee took measures to counter- act this tendency ; various letters were written and sent to the general agents of the company in its various divisions, strong- ly insisting upon continued effort to secure separate represen- tation in the different communities, to the end that each line of harvesting machinery' sold by tke International Company would be represented by a separate dealer, and to secure, if possible, the entire time of such dealer to the sale of a par- .ticular line of machines. The testimony of Mr. Alexander Legge (XIV, 34-37) describes the pohcy of the International Harvester Company respecting securing separate representation by a local dealer for each machine when it can be done, and the business reasons necessitating this policy. 127 However, this policy has not resulted in a large number of dealers, on an average, in one town. The defendants' ex- hihit 183 introduced in connection with the testimony of Mr. Legge (XIV, 39), shows, as already stated, that in 1913 the average number of contracts (and hence local deal- ers) in a town handling harvesting machinery for the In- ternational Harvester Company, throughout the United States, was 1.43 ; and that since 1909, the first year for which the figures are available, there has been a steady decline in this average. It appears that the International Har\^ester Company is desirous of selling as many binders as it honorably can, which is entirely proper. The desirability of separate repre- sentation for each machine means more efficiency and activity not only in the sales of the machine, but in the attention given to the service in the way of supplying repair parts which is essential to the continued popularity of the machine. The policy, therefore, of the company and urged in the circular letters introduced in evidence, is one entirely proper and con- sonant with best business morality. This claim of monopoly of local dealers is made and insisted upon in the face of the constant and, in many instances, re- markable progress made by other companies in competition with the International Harvester Company which has already been referred to. Mr. Mason, the manager of the Acme Harvesting Machine Company, at Omaha, Nebraska, and in charge of the business of that Company in Nebraska, Southwestern Iowa, and por- tions of Kansas, Colorado and Wyoming, was called as a wit- ness by the Government and testified (III, 182) that the policy of the International Harvester Company in dividing their harvesting implements among different dealers in a town, made it somewhat difficult for him to get agents. This, of course, was true. If the International Harvester Company had only one local dealer representing it in a town, it would 128 be easier for others to get an agent than if the International Company had two agents. It is likewise true that if the In- ternational Harvester Company withdrew from the business entirely, and had no agent, it would be still easier for other companies to get agents in the town. But the question before the court is not whether it is harder to get agents, but whether through wrongful methods, the International Company has made it difficult or impossible to get agents. We look to the record which Mr. Mason has made in the sales of Acme harvesting machines, in competition with the International Harvester machines, in Nebraska, to see whether the difficulty in getting agents is a practical one and consti- tuted a serious impediment to the development of his busi- ness. AVlien we look at the record of the development of the ^Vcme Harvesting ^Machine Company's business in Nebraska as testified to by Mr. Mason, we find a growth and expansion truly remarkable. That portion of Neln'aska south of the Platte, spoken of as the "South Platte Country," is the great grain growing section of the state. It produced, in 1912, in wheat alone, more than 36,000,000 bushels. Mr. Mason testi- fied that when the International Harvester Company was or- ganized, the vendor companies which were acquired by the International did practically all the binder business in the South Platte country of Nebraska. He testified further, that the sales of the Acme harvesting machine in competition with the International Company throughout the South Platte coun- try had so grown, that one half of the grain binders sold throughout that great grain growing section, in 1912, were Acme machines. This is truly a record of remarkable growth; the acquisi- tion, in comparatively few years, of one half of the trade in a great grain growing section of the country, and this done in active competition with the International Harvester Com- 129 pany ; what the Acme Company gained, the International Har- vester Company lost. The testimony of Mr. Mason npon this point, is as follows (III, 181) : "Q. What per cent, would you say they (International Company) do in grain binders in south of the Platte ter- ritory ? A. I think soutli of the river, we do as much as they do. Q. That is about how much — 50 per cent.^ A. Yes." He further testified as follows (HI, 184-185) : • • Q. Now in 1901 and 1902, the companies that were taken over by the International Harvester Companj' — MoCor- mick, Deering, Piano, Champion, Milwaukee — did quite a large percentage of the business in the South Platte country and through all of the territory! A. They did practically all there was there- those days. Q. Practically all there was there, you say! A. Yes, sir. Q. So that these companies did practically all the business that was there when they organized the Interna- tional Harvester Company, and since that time the devel- opment has been such that in the South Platte territory — the great grain-producing territory — they now do only 50 per cent! That is the fact? A. Yes, sir." In the light of the exceptional development of the busi- ness of the Acme Harvesting Machine Company in the terri- tory under Mr. Mason's jurisdiction, what becomes of the claim that it was impossible for that company to get agents to handle its machines! When we realize that Mr. Mason's company has developed its business in this territory so as to do fifty per cent, of the total, is it not grotesque to argue that there has been a monopolization of agents and a sup- pression of competition thereby, because the International Company has separate representation among the deal- ers for its several lines of machines? 130 THE CLAIM OF THE GOVERNMENT THAT THE INTBRNATIONAIi HAR- VESTER COMPANY HAS DEVELOPED AND USED ITS NEW LINE IMPLE- MENTS EOR THE PURPOSE OF WRONGFULLY MONOPOLIZING THE LOC.UL, DEALERS OF THE COUNTRY^ IS UNFOUNDED. The Government claims in this case, that by means of its new lines, the International Harvester Company has monop- olized the services of the local implement dealers of the coun- try, and thereby prevented competitors from marketing their goods. The entire course of development of the trade in agri- cultural implements as shown by the testimony, disproves the contention, but a brief reference may be made to the claim of the Government in this regard. "We have already referred to the tendency which existed from the beginning on the part of the manufacturers of agri- cultural implements whether harvesting machinery or plows, to extend their business to manufacturing new lines of imple- ments ; and we have spoken of the development of the business of the International Harvester Company into new lines. But it must not be understood that the International Company has been exceptional in this regard. Indeed the fact is, that the International Harvester Company does not manufacture as long a line of implements as is manufactured by other and competing companies. The Deere Plow Company handles a hne of implements numbering 108 ; the ^loline Plow Company a line numbering 57, while the International Harvester Com- pany handles a line of implements numbering 59. There was introduced in evidence in connection with the testimony of Mr. George A. Eanney (XIV, 87) a de- tailed statement showing the lines of implements that are manufactured by the Deere Company, Moline Plow Company, International Harvester Company, Emerson-Brantingham 131 Company, the Eumely Company, the J. I. Case Threshing Ma- chinery Company, the Rock Island Plow Company, the Parlin & Orendorff Company, and the J. I. Case Plow Company. This detailed statement was introduced in evidence as defendants' exhibit 196 (XIV, 343). An inspection of the exhibit will demonstrate that the International Harvester Company has not extended its line of implements so as to possess the power of domination over the trade to any degree. This practical, natural, normal and businesslike de- velopment of trade is seized upon by the Govern- ment, as evidence of a wrongful purpose to monopolize deal- ers. It is claimed that the International Harvester Company makes various kinds of a particular implement such as wagons, and distributes them among the dealers, one to each dealer, and thus monopolizes the trade of these men. The testimony with respect to the trade in wagons completely over- throws the contention that the dealers are monopolized. But the facts with respect to the manufacture of these various kinds of wagons should be called to the attention of the court. They are set forth in the testimony of Mr. Legge. (App., 361- 363; XIV, 47-49.) It appears from this testimony, that the Weber Wagon Company has been for years making two classes of wagons ; one known as the Weber and the other as the Co- lumbus wagon. The International Company bought the M^eber Company, and thereby acquired these two lines. The growing scarcity and increasing cost of the wood which enters into the manufacture of wagons led to the belief that a steel wagon was liable to supplant the wooden wagon and steel wagons began to become popular. The International Harvester Com- pany bought the patterns and shop equipment of the Betten- dorf Company which manufactured steel wagons. Afterwards, the International Company developed another steel wagon of a different kind of construction, an improvement upon the 132 Bettendorf steel wagon; thus the International today puts out four different lands of wagons. The development has been natural and normal ; yet this condition, as a result of this nor- mal development, is asserted as evidence of a deliberate in- tent and purpose to crush competition. Some emphasis was placed, by tlio aovernment, upon the fact that the International Company placed the trade names :\IcL'ormick and Deering upon some new hne implements. The evidence establishes how inconsequential this practice is. Defendants' Exhibit 186 (App., 361; XIV, 47) shows that the total value of the "new lines" sold in the United States by the International in 1910 was $20,217,000, while the value of the new line goods sold under the trade names Deering and McCormick in 1910 was only $619,480. In 1912 the total value of new line goods sold was $23,332,000; of those sold under these trade names was $618,330. Thus it appears that the percentage of the new lines sold under the McCormick aud Deering names to the total sales was 3.06 per cent, in 1910, and had fallen to 2.65 per cent, in 1912. The proof is emphatic to the effect that, in the wagon trade, the local dealers have not been monopolized by the International Company, and that competitors have freely marketed their goods. Xot a single manufacturer of wagons has testified that the course and conduct of the International Harvester Company has in any way prevented the free de- velopment of his business. Ml'. Albert C. Barber, sales manager for the Moline Plow Company, after testifying that the competition of the Inter- national Company was clean and fair, and that during the en- tire time since the organization of that company the field in the United States has been open to successful business in competition with the International, gave the figures showing the sales of wagons by his company, by years, from 1902 to 1913, inclusive. This testimony shows (XI, 333-336) 133 that the Moline Plow Company sold in round numbers 6,000 wagons in 1902 the year the International was organized. The next year, the sales were over 9,000 ; the next year, over 10,000 and so, fluctuating somewhat according to trade conditions, the sales of 'wagons of the Moline Plow Company have in- creased through the years in competition with the Interna- tional Company, until in ten months of the past year, that com- pany sold 27,000. Other manufacturers of wagons having large factories, and others having small ones, have testified to the absence of any obstacle to the marketing of their goods. Testimony of B. A. McAleer. Mr. B. A. McAleer, an Oklahoma traveling salesman for the Rock Island Plow Co., testified that the competition of the International was "very disreputable." He mentions no single act of wrongdoing. His statement is based entirely on the fact that the International has separate representation through dealers for its various brands of implements. Mr. McAleer, like Mr. "W. H. Gveen, has been an active agitator against the International Company. He has written, as his testimonj' shows, numerous communications to the newspapers and sent letters to officials at Washington. Mr. McAleer was selling tillage tools in competition with the International. The practice which he condemns, on the part of the Internationa], we have shown to be businesslike and necessary to the best service not only to the Interna- tional Company but the farmer. The general agents in charge of the sales of the Rock Island Plow Co., for which Mr McAleer is a traveling salesman, know and testify to the fact that the practice did not inter- fere with them in selling their goods, and that the competi- tion of the International was fair and businesslike. Mr. Wadsworth, Manager of the Rock Island Plow Com- 134 pany at Sioux Falls, S. D. (VIII, 516), and Mr. Proc- ter, Manager of the Eock Island Plow Company at Minneapolis (X, 216), testified that they sold the products of the Eock Island Plow Company to dealers who handled Interna- tional goods ; that these dealers were free to buy and did buy the competing Eock Island Plow goods ; that their business was growing and satisfactory^; that the field was open, and that the competition of the International Company was fair. Both testified that the International Company could not succeed in a policy of coercing dealers, if such a policy were attempted. Moreover, men engaged in selling tillage implements in competition with the International in Oklahoma — Mr. Mc- Aleer's territory — testified to conditions there. Mr. Slaker, Manager at Kansas City for the Sechler-Janes- ville line of implements (VII, 17), Mr. Yount, Local Manager at Kansas City for the Oliver Chilled Plow Works (VII, 21), and Mr. J. E. Duncan, who for two years was manager of Parlin & Orendorff Plow Company at Okla- homa City (VI, 715) testified that in the Oklahoma ter- ritory they found the competition of the International Com- pany to be businesslike and fair; that their sales in tillage im- plements had increased; that the dealers were free to buy their tillage implements even though such dealers were handling International goods. It is apparent that Mr. McAleer, illustrating a well-known trait of human nature, is seeking to shift to another the blame for whatever there has been lacking in his salesmanship. THE WITNESSES E. B. SWIFT, WILLIAM H. GREEN AND MICHAEL H. LAMB, There is very little dispute of fact in the voluminous record in this case. This case will be decided upon the undisputed facts in the record. Practically all the witnesses testified in 135 good faith. But there are three witnesses who have testified for the government, who deliberately and wantonly perverted the facts in an attempt to discredit the management of the International Harvester Company. The particular facts to which they testified are not of controlling importance, but the fact that these vicious and unreliable witnesses appeared and testified for the Government, is not without its significance. Testimony of R. B. Sivift. Mr. K. B. Swift, whose testimony is found in Vol. I, 404 to 447, was a man who had at one time held an important confidential relation with the McCor- mick Harvesting Machine Company, having been in charge of the legal and experimental departments of the company (I, 405) and as such, was at the head of the business law de- partment of that institution. His connection with the company has long since ceased. Mr. Swift endeavored in his testimony to besmirch the In- ternational Company and its management by giving the im- pression that they had bribed a member of the Kansas legis- lature into sidetracking and abandoning a pending bill. Upon this point, his testimony is found in Vol. I, 428-433 (App., 274- 275). He testified that a bill had been intro- duced, and was pending before the Kansas State Legislature, to make illegal exclusive clauses in the commission agency contracts; that on February 7th, 1903, he was sent to look after the matter of this bill ; that he went to Kansas City and found that the bill had been in- troduced by a man who was in needy circumstances; that he there met Mr. Smith, of Rossington & Smith, Topeka lawyers, told him of the pending bill and of the financial condition of the member who introduced it; that Mr. Smith said that his partner, Mr. Rossington, was the better man at that sort of work; that the matter was left in their hands, and they soon 136 after reported that the bill had been "killed," or stopped. He further testified that later. Mr. Eossington sent in a bill for his services which bill was first questioned and afterwards paid. Here was no specific statement of bribery or attempted bribery, but the testimony was adroitly shaped so as to create the impression that bribery had been resorted to. A very plain tale has put Mr. Swift down as absolutely unv trustworthy in his testimony, and confirms the fact that this untruthfulness was deliberate and wanton. Mr. Eossington, whom the members of this court knew to be a gentleman of high professional standing, has been dead for some years ; but testimony oral and documentary was at hand to demonstrate the utter falsity of the insinuations which Mr. Swift endeavored to convey. Mr. Charles Blood Smith, partner of Mr. Eossington, was called as a witness for defendants. (App., 275-282; XIII, 1.) He testified that Mr. Eossington was with him when he met Mr. Swift, at Kansas City, and that no such conversation as Swift narrated occurred; that no suggestion that they were employed to lobby or to "kill" the bill was made by Swift, nor was any such intimation given ; that their employment was solely, as attorneys, to appear before the legislative investi- gating committee, which was to have its first hearing the fol- lowing day, — and that the only services they rendered were professional services as attorneys. He produced a certified copy of the journals of the legislature of Kansas for 1903, which disclosed the fact that the bill in question was not in- troduced until weeks after Mr. Swift's visit to Kansas City Mr. Swift could not have been mistaken as to the date, since it was fixed in the minutes introduced in evidence while he was on the stand. (I, 428.) Moreover, the history of the bill as shown by the journals of the legislature, is that the bill passed the House and, in the Senate, was referred to a committee ; and Mr. Eossington appeared before this commit- 137 tee, made a legal argument, based upon the brief prepared by Mr. Charles Blood Smith, to the effect that the bill was un- constitutional. The committee adopted this view, and so re- ported; and the bill was stricken from the calendar. This documentary evidence giving the history of this bill, disposes entirely of Mr. Swift's story and shows that his visit to Kan- sas City on February 8th, was not and could not have been with reference to the bill he mentions. Mr. William J. Calhoun of Chicago, was one of the attorneys for the International Harvester Company in 1903. (App., 282- 284; XIII, 31-35.) His testimony, as well as that of Mr. Charles Blood Smith, corroborated by the letter which Mr. Calhoun sent on February 7th, 1903 (App., 276-7; XIII, 4-6), shows that an investigation had been ordered by the Kan- sas legislature into the validity of the organiization of the International Harvester Company, and that a committee had been appointed to conduct such investigation, and that a witness had been subpoenaed to appear before the committee on February 8th. Mr. Calhoun by letter retained Messrs. Eossington, Smith & Husted to represent the company before the committee in the matter of this legislative investigation, and, in the letter, asked a member of the firm to meet Mr. R. B. Swift, in connection with the matter on February 8th. The conference was held at Kansas City with respect to this legislative investigation, and the firm of Bossington, Smith & Histed acted for the International Company and appeared be- fore the committee throughout the investigation and examined witnesses and made arguments. The bill rendered by the firm of Eossington, Smith & Husted was for legal services rendered to the company in the matter of the legislative investigation mentioned, and in the matter of appearing and making argument before the judiciary com- mittee upon the unconstitutionality of the bill mentioned. The services were entirely regular and the bill was paid. 138. It was fortunate that living witnesses and documentary evi- dence were available to prove the falsity of Mr. Swift's state- ments. His presence as a witness and the wantonness with which he perverted the facts in order to prejudice the Inter- national Harvester Company, are not without a manifest sig- nificance. Tesfimonii of ^Y. II. Green. \\. H. Green of Creighton, Nebraska, testified for the Gov- ernment. (App., 297-304; HI, 1-5-1.) His testimony is quite interesting. Mr. Green states that he was a local dealer in agriculUual implements at Creighton, Nebraska, in 1905 ; that in the spring of that year, a gentleman called upon him, and, engaging him in conversation, found that Mr. Green was of the opinion that large trusts and corpora- tions were dangerous to society and dangerous to all the small men in business. Thereupon, the stranger notified Mr. Green that he was in the secret service of the International Har- vester Company, and that Mr. Green would have to ' ' shut his mouth" or the International Company would take its goods from his store. Mr. Green says he refused to "shut his mouth," but continued to express his views, and that same year, a representative of the International Harvester Com- pany took from him the agency of its harvesting machinery and gave it to another, and, since then, the International Com- pany has contiiraously hounded him in his business with a view to his ultimate destruction. The fact that the International Company took the agency from Mr. Green in 1905 and arranged with another dealer to represent it, is true; but it is shown by the testimony of Charles M. Janes (App., 306; VII, 10), and by the testimony of Mr. W. J. Clarkson (App., 307-9; VIII, 545) that this was because Mr. Green had been continuously and exasperatingly dilatory in his payments and his financial standing did not warrant the company in longer doing business with him. 139 Mr. Lewis T. Yonnt, local manager at Kansas City for the Oliver Chilled Plow Works also testified (App., 307 ; VII, 24) that he knew Mr. Green and had done business with hina selling him goods, and that he had had trouble in getting his money from Mr. Green for goods sold him. Mr. Legge, general manager of the International Harvester Company, testified (App., 304-5; XIV, 51) that the Interna- tional Harvester Company never had maintained any secret service department, and that no person by the name of Calla- han (which was the name given by Mr. Green as belonging to the stranger who called upon him as above stated) was, in 1905, on the pay-roll of the International Harvester Company. The cross-examination of Mr. Green, however, discloses some interesting facts with respect to his activities in agitations and crusades against the International Harvester Company. He started a newspaper in 1905, and in it announced that he had two great objects in politics ; one was to advance the in- terests of ^Vm. J. Bryan; the other was to "bait the Interna- tional Harvester Company. ' ' He testified that he had been bom- barding the Department of Justice for five or six years, to get a lawsuit started by the Government against the International Harvester Company. He advertised after the suit was brought, that he had been summoned to Washington as a professional witness "for the Government" in connection with the matter, and he has been active in inter- views and speeches in denunciation of the Interna- tional Harvester Company and its officials. However, that business considerations and patriotism were not the sole or moving causes of his activities is shown by his own letters that were identified and put in evidence on cross-examination. In one letter (III, p. 38) after speaking of his activities in the matter at Washington, he says : "Of course, the political strategy is my big card. That is all that causes me to come down here and spend my few 140 dollars in expenses. It is an opportunity of a lifetime and I have made good here." Moreover, in another letter the witness states (VII, page 40) that he had an ambition to "run for congress or some equally good job" and thought that his efforts in this matter would give him some "good advertising."' He further testified that he became a candidate for Lieutenant Grovernor of Nebraska; and that whatever hopes he had that he would be Lieutenant Governor, were based largely upon the fight that he made against the International Harvester Company. He further admits, in his cross-examination, that he circulated the statement that the International Harvester Company was over-capitalized at a ratio of four to one. In his address, speaking of the organization of the International Harvester Company by Mr. Perkins, he said: "he made one dollar into five when he took property and old notes not worth 30 mil- lions of dollars, and coined them into $120,000,000. ' ' He tes- tified further, that he circulated the statement that the Inter- national Harvester Company was selling harvesting machines in foreign countries at almost one-half of what they were charging the American farmer. (App., .302-3; III, 43-47.) The testimony of Mr. Green hardly warrants the extended mention we have made of it, but a perusal thereof will show the controlling motives of this very active witness and its sig- nificance as showing how a desire for political prominence may induce virulent and long continued assaults upon a prominent business institution. It also appears in the testimony of Mr. Green (App., 301; III, 35) that as a result or cause of his activities against the International Harvester Company, he had been promised a job as a special investigator at a per diem compensation of $50.00. This compensation, however, was not promised by the Depart- ment of Justice. 141 Mr. Green further testifies as follows (App., 300; III, 31-2) : "Q. And your motive in going to Washington was to get this lawsuit started if you could, was it not 1 A. Yes, I wanted something done. I did not have the capability or understand how to work up a lawsuit of this kind. Q. You didn't? A. No. Q. You did not have any idea of how it ought to be done? A. No, I went down there to learn. Q. Did you not go to Attorney G-eneral Wickersham or the Department of Justice and tell them that if they did not bring an action against the International Harvester Company they would be impeached? A. I was sent to do that. Q. And did you not do it? A. Yes. Q. Yes. So you went to the Department of Justice and told them that if this suit was not started they would be impeached ? A. No, I did not say anything of the kind — I did not say anything of the kind, if this suit was not started, but I said if they gave the Harvester Trust an immunity bath like they gave the Tobacco Trust there would be impeach- ment proceedings. Q. So you threatened the Department of Justice in a certain contingency with reference to this company, that they would be impeached? A. I did not threaten. I just told them. Q. You just told them? A. Yes. Q. And you told them after you had talked to members of congress? A. No sir. I did not come there with any authority from the members of congress. Q. Yes, but after you talked with members of con- gress ? A. Yes. Q. And you told them that they would be impeached if the Harvester Company was not dealt with much more strinsfpntly than the Tobacco Trust was, and that that was official? 142 A. It was — Q. You told them that, didn't you? A. Yes. Q. And it was after that that this suit was brought? A. I believe it was, probably. Q. Oh, you know it, don't you? A. It was after that that it was instituted, yes." We do not attach serious importance to this statement, but set it forth merely as an interesting incident sworn to by this witness whom the Grovernraent was willing to call after such an experience with him. Tcsiimonij of Michael H. Lamb. Mr. Lamb was another witness for the Gov- ernment. (App., 267-9; II, 316-340.) Mr. Lamb had been general agent for the McCormick Har- vesting ^lacliine Company at Sioux Falls, South Dakota. After the organization of the International Harvester Com- pany, he was agent for the company, McCormick division, until 1904. He testifies to two facts : first, that in 1903, as general agent of the International Harvester Company, he made a concession of twenty to twenty-five dollars below the regular price in two instances where the Minnie Harvester trade was active ; one instance was a concession to Goldstein & Waskey, a firm of dealers at Madison, South Dakota, and the other to the local dealer at Rock Rapids, Iowa. The other fact to which Mr. Lamb testified was the receipt of money from the Inter- national Harvester Company to be given to a man to be used to defeat pending legislation in South Dakota for the estab- hshment of a twine mill in the penitentiary of that state. The testimony of Mr. Lamb as to reduced prices at Mad- ison, South Dakota, and Rock Rapids, Iowa, would have sig- nificance, if true. However, it was not true. Mr. Waskey of the firm at Madison, South Dakota, testified as follows (App., 269-70; VIII, 528-535) : 143 "Q. Was any International Harvester Company's har- vesting goods bought or handled by your firm in the years 1902, 1903 or 1904? A. No sir, not one dollar's worth. Q. Is it true that the International Harvester Com- pany, through Michael Lamb or anyone else, gave you in 1903 a reduced price on any harvesting machinery! A. They could not because we did not buy one dollar's worth of goods of them — not one cent's worth. Q. Is there any truth in such a statement, if made! A. Absolutely none. It is a positive falsehood, as far as that is concerned." Moreover, the testimony of ]\fr. A. E. Bowring (App., 271-2; XIII, 404-9) makes clear the fact that Mr. Lamb's testimony was as untrue respecting concessions at Eock Rapids, Iowa, as at Madison, South Dakota. Mr. Bowring produced the books of the International Harvester Company of its agency at Sioux Falls, South Dakota, showing the sales of McCormick binders at Eock Eapids, Iowa, in 1903. These records show that only one McCormick binder was sold at Eock Eapids that year, and that it was sold at the regular cash price and accounted for to the company in the regular way according to contract. It thus appears that Mr. Lamb misrepresents the facts when he said that he, as agent of the International Company, gave special reductions in prices at the two staions named ; but Mr. Lamb, like Mr. Swift, endeavored by insinuations to discredit the International Harvester Company and its officials in his statements respecting the payment of money to be used to de- feat legislation. His direct testimony is so adroitly framed as to leave the impression that the money was provided for some unlawful purpose in connection with the pending legisla- tion. But, upon cross-examination, he was forced to admit that the legislation looking to the establishment of a twine fac- tory at the penitentiary of South Dakota, was being opposed by the retail implement dealers of the state; and that the contribution was requested by a committee 144 of that association. The dealers were opposing the pending bill and were bringing men from various coun- ties to the state capitol to urge members of the legis- lature to oppose the bill. The interest of the retail dealers lay in the fact that the bill proposed that twine manufac- tured in the penitentiary should be sold direct to the farmer; in that way, it would work to the injury of the local dealers. Therefore, they were opposing the bill and soliciting various manufacturers to aid them in their open fight against the pro- posed legislation, and the International Harvester Company contributed $300 to that end. The incident reflects no dis- credit upon any one, excepting only, the man who endeavored to so pervert it as to leave an inference of wrongful conduct. The wantonness with which these men misstated facts and made untruthful statements, and their malicious activity in urging action against this company, may explain how the Grovernment oflScials may have been led to wholly misconceive the character of the management and conduct of the Interna- tional Harvester Company. BINDER TWIKB. The petition charges a successful attempt by the Interna- tional Harvester Company to monopolize the binding twine business of the United States. The evidence completely re- futes the claim. There are 16 competitors of the Interna- lional Harvester Company engaged in the manufacture and sale of binding twine in the United States (Vol. I, p. 61). Twine is made -with prison labor in the penitentiaries, of 8 states. Two of these states were engaged in the manufac- ture of twine before the International Avas organized. Binding twine is made exclusiAely from imported fibre, either sisal from Yucatan or manila from the Philippine Is- lands. Much the larger part is made from sisal. The price of binding twine has steadily declined for a num- 145 ber of years. Defendants' Exhibit 224 (Vol. XIV, p. 159) is a tabulated statement of the course of prices by years. A reference to tabulation in volume IV of the record (p. 416) of the prices of sisal fibre, by years, will show how the price of binding twine has constantly followed the price of the raw material. That the course of conduct of the International Harvester Company, in competition in the binding twine business in the United States, was not oppressive, but, on the contrary, was honorable, fair, and businesslike, is testified to by men identified with competing companies and who for years have been selling binding twine in the United States in competi- tion with the International Company. Mr. Edward Heidrich, Jr., Vice-President of the Peoria Cordage Co., testified (Vol. XII, pp. 589-593) that he has been engaged in the sale of binding twine in competition with the International Harvester ComDany. His testimony respect- ing the conduct of the International Company is as follows (Vol. Xn, p. 590) : "Q. How do you find the competition of the Interna- tional; is it normal and business like and fair? A. It is all three, I should say, yes." The largest competitor of the International Harvester Com- pany in the manufacture and sale of binding twine in the United States is the Plymouth Cordage Company. Mr. H. P. Finigan, a wholesale cordage dealer, handles and sells the Plymouth Cordage Co.'s binding twine throughout the west ■ and Southwestern portions of the United States. He also testified to the conduct of the International Harvester Com- pany in its competition in the sale of binding twine. His tes- timony in that regard is as follows (Vol. XIII, p. 114) : "Q. You sell that binding twine in active competition with the International Harvester Company? A. Yes, sir. Q. How long have you been selling Plymouth twine 146 throughout that territory in competition with the Interna- tional ? A. Since they organized. Q. Eiver since they organized? A. Yes. Q. How liave you found the competition of the Inter- national Harvester Compam^, whether it was fair and businesslike 1 A. Yes, sir. Q. It was? A. Yes, sir." Mr. Finigan further testified (Vol. XIII, pp. 114, 115) that in 1912 his business in binding twine in competition with the International Harvester Company increased 30 per cent, over 1911, and that 1913 would give liim a large increase over his business in 1912. Mr. Finigan further said (Vol. XIII, p. 116) that the out- put for 1912 of the Plymouth Cordage Company in twine was over 100,000,000 pounds. Petitioner's Exhibit 210 (Vol. Ill, p. 282) shows that the output of binding twine by the International Harvester Com- pany in 1911 (the last year for which figures are available) was 112,000,000 pounds in the United States, and 22,000,000 pounds in Canada. The testimony, therefore, puts beyond question the fact that competition in binding twine in the United States is ac- tive and unrestricted, and that the course of conduct of the International Company in the sale of this product is and has been businesslike and fair. 147 III. The new lines and subsequent purchases. The subsequent purchases were made in the development of the new line busi- ness and did not restrain, but extended the agricultural imple- ment trade in the United States. We have already referred to the development of the "new lines ' ' and the large part they have played in the vast increase in the total volume of the Company's business, both abroad and at home. During the ten years the International has continuously added to the lines of agricultural implements made hj it; and in 1912 was manufacturing about thirty differ- ent kinds of farm implements, not counting the different types of the same implement. In entering upon the manufacture of the so-called "new lines" the International in some instances purchased exist- ing plants — as in the case of tillage implements, hay tools, wagons and manure spreaders. In the otlier instances it de- veloped its own line of m.achines from the beginning, — as in gasoline engines, cream separators, tractors, seeders and planters. In pursuance of this plan, the purchases were made of the harvester, wagon and manure-spreader plants which the Pe- tition charges were made to advance the defendants ' purpose to restrain and monopolize trade. It is the contention of the Government, that the Interna- tional Harvester Company adopted a policy of purchasing plants and maintaining through them an apparent competi- tion, when in fact none existed, as a means of crushing real competitors. The fact that the Osborne, Minnie, Keystone and Aultman-Miller Companies for one or two seasons after 148 their purchase, were operated independently of the In- ternational Company, and advertised as independent, is the ground upon which the Government rests this claim. An examination of the facts with respect to each of these trans- actions, however, overthrows the claim of the Government, and makes it clear that the International Harvester Company did not entertain or attempt such a policy and that the course pursued in each of these cases was either made a condition of the sale by the vendor, or was necessary, as a temporary expedient, to protect property rights. PUECHASE OF THE OSBOENB PLANT. The D. M. Osborne Company was a corporation which, with a plant at Auburn, New York, manufactured and sold har- vesting machinery, and, also, a long and popular line of tillage tools, including peg-tooth harrows, spring-tooth harrows and disc harrows. The company also manufactured a line of ted- ders used in maturing hay. It also had an export business in all the machines it manufactured which was very large in proportion to its total business. Its plant at Auburn, New York, was advantageously situated for the export trade. The majority of its capital stock was owned by three women, only one of whom resided at Auburn, and all of whom, in the course of the business, were en- forced endorsers upon the bills payable of the com- pany, to the amount of $2,400,000 to $4,000,000 annually. Therefore, these women stockholders for a long time had been very, anxious to sell the plant and business of the company. After the incor- poration of the International Harvester Company, various at- tempts were made by the management of the D. M. Osborne Company to sell the plant to the new company. After two proposals by the Osborne people had been declined, a third was made which resulted in a sale of the Osborne Company stock on January 15, 1903. 149 The purpose of the purchase was to acquire the Osborne long line of tillage implements and to utilize its es- tablished export trade in building up the foreign busi- ness of the International Haryester Company. The bills receivable of the Osborne Company were retained by the vendor stockholders, as the International Harvester Company refused to buy them. These bills receivable amounted to about $3,000,000, of which $1,000,000 or more were owing from persons living in South America, Africa, Europe, Asia and Canada, and consisted of notes running from $10.00, the price of a harrow, upwards. In the purchase of the stock, the In- ternational Company paid $1,000,000 in cash and gave its notes for $3,500,000, secured only by the stock of the D. M. Osborne and Co. as collateral. Tlierefore the owners of the Osborne Company insisted on retaining the management of the Company and operating it as an independent company until their bills receivable were practically/ collected, and other security was provided for the $3,500,000 purchase money^ notes. (App.,221;I,377.) This insistence was based upon the recognized fact that if it were known that the business of the Osborne Company had been absorbed by the International Harvester Company, the collection of its bills receivable by its former owners would, in large measure, be impossible. It is well known that small debtors who pay their obligations regularly to a going con- cern with which they are still doing business, neglect payment to a defunct company or to parties with Avhom they no longer have business relations and who are without any organiza- tion to enforce collections without excessive cost. Again, as the only security for the $3,500,000 in notes was the stock of the Osborne Company, the owners naturally insisted on con- tinuing the company as a going concern in order to preserve the value of the collateral. 150 On the insistence of the owners of the Osborne Company, for the reasons stated, the business of the Osborne Company was managed by its old owners from January, 1903, to Decem- ber, 1904; and they did in fact, during that period, manage and control the company as completely as they had before the sale. They also advertised the company as an independent company and denied that the company was operated by the In- ternational Harvester Company. During that time the purchase was not known by the sell- ing organizations of either company. The advertising was done by and in the interest of the Osborne vend- ors to aid in the collection of their receivables. By December, 1904, the managers of the Osborne plant had collected $2,400,000 of the $3,000,000 of the bills receivable of D. M. <)sborne & Company.* By that time, the International Harvester Company had deposited as collateral for the $3,500,000 notes above men- tioned, farmers' notes with 20 per cent, margin. Thereupon, the reasons which had moved the owners of the Osborne Com- pany to insist upon secrecy having ceased, public announce- ment was at once made of tlic transfer of the Osborne Company to the International PEarvester Company; and since that time, the International Harvester Company has operated the said plant as a part of its business and in its own name, and has enlarged, extended and developed the business done at the plant. By this purchase, it acquired an additional valuable facility for the carrying on of its ex- port trade, and also acquired a long line of tillage tools with an established reputation. (App., 213-229.) In the testimony of Thomas M. Osborne (Vol. 1, pp. 360-369) and of Edwin D. Metcalf (Vol. 1, pp. 371-395) both called as * Since then they have only collected $200,000 (I 384). This shows the necessity from the vendors' standpoint of not announcing the sale of the stock. 151 witnesses by the GoverBment, the facts respecting this pur- chase and the business reasons for the secrecy observed, and the maintenance of the old management are fully detailed. It puts entirely beyond question that, in this transaction, the old management was continued, and the fact of the purchase with- held from the public, not pursuant to any wish or direction of the International Harvester Company, but solely by and at the insistence of the old owners of the Osborne Company, and to conserve their interests. PXJRCHASE OF THE KEYSTONE PI^ANT. At the time of the organization of the International Har- vester Company, it was not manufacturing or selling tillage tools, and had no line of hay tools other than sulky rakes and mowers. In 1904, the Keystone Company, as successor to the Key- stone Manufacturing Company, which had been in business for years, was operating a manufacturing plant at Sterling, Illi- nois. The Company manufactured certain hay tools, hay load- ers, and side delivery rakes, and also corn planters, corn shellers and mowers. The Company was developing a new binder which had not yet been upon the market. The plant of the Keystone Company at 'Sterling was well situated and possessed a water power of considerable value; the line of hay tools and corn shellers was a good line and popular. Its binder was hardly out of the experimental stage. As the In- ternational 'Company desired to add to its line the hay tools, corn planters and corn shellers and recognized the value from a manufacturing standpoint of the plant of the Keystone Com- pany at Sterling, certain officers of the International Com- pany, in the fall of 1904, purchased on behalf of their Com- pany, the stock of the Keystone -Company. At the time of the purchase, however, the work of the business for the season of 1905 was well under way; manufacturing had progressed, the 152 sales organization had 'been perfected for the year, a great many contracts made with dealers, and all arrangements made for the season of 1905. It was recognized that, if, in the then condition of the season's husiness, public announcement were made that the Keystone Company had sold out, and was to quit business, the sales organization would become scattered, con- tracts would probably be cancelled, and the business of the season demoralized. The old owners and officers of the Keystone Company were continued in the sole and active management of the business for the season of 1905. They advertised that they were in the exclusive management of the business, which was true, and denied that it was controlled 1)y the International Company or any other company. In the spring of 1905, all these ad- vertisements were stopped, and, in the summer, public an- nouncement was made of the purchase, and the plant was then taken over by the International Company and has ever since been operated by that company, its operations being enlarged and extended. The various lines of implements manufactured by the companj"- at this plant, have been improved from time to time, and are now manufactured in increasing numbers. The binder, however, of the Keystone Company proved a prac- tical failure when put to the test upon the farm, and the manufacture of this implement was discontinued. Mr. Jens Anderson (Vol. X, p. 2), Mr. Angus Ferguson (Vol. X, p. 60), Mr. Olaf Bjorke (Vol. X, p. 66), Mr. Theodore Coffey (Vol. V, p. 20.3) and Mr. John C. Hewitt (Vol. VHI, p. 286) all testified, as dealers, to the fact that the Keystone binders were failures. The testimony of Mr. Heniy B. Utley (Vol. I, pp. 191-211) and the testimony of Mr. A. J. Piatt (Vol. XIII, pp. 58-63) set forth all the foregoing facts. Mr. Utley is with the Inter- national Harvester Company, but Mr. Piatt has no connection with it. 153 It is clear, therefore, that the secrecy for a few months with respect to this purchase and the maintenance of the old man- agement, was not pursuant to any settled policy of maintain- ing a fictitious competition, but solely to conserve the par- ticular season's business which was well under way at the time of the purchase. (App., 239-248.) The court will note the fact that although the Keystone plant was purchased in the fall of 1904, and the fact of such purchase was not made known until the summer of the follow- ing year, yet in December, 1904, shortly after the purchase of the Keystone plant, the purchase of the Osborne plant was publicly announced. This clearly shows the fact that each of these transactions was separate, and handled in a way to protect business interests, but not reflecting any policy of concealment of its purchases by the International Harvester Company. THE PUECHASE OF THE MINNIE PLANT. Prior to the organization of the International Company, attempts had been made and were being carried on to find a product of our country which could be utilized as raw ma- terial for the manufacture of binding twine ; and these ef- forts were continued after the organization of the company. The importance of such a discovery can be realized from the fact that the annual importations of sisal from Yucatan and of manila from the Philippines for the manufacture of binder twine amount to from fifteen to twenty million dollars. Prior to 1901, a company with headquarters in Minnesota, known as the American Grass Twine Company became inter- ested in a project of making binder twine from grass straw or wire grass, which is found in Minnesota and Wisconsin. The company had patents on the machinery for spinning and making twine, and made unsuccessful efforts to induce manu- facturers of binders to adapt their machine to the use of the 154 twine manufactured from these grasses. The Walter A. Wood Company at one time made the attempt but none of the other manufacturers could be convinced that the twine in question could be successfully used. Failing to induce manufacturers to adopt their twine, in 1901, the American Grass Twine Company purchased the plant located at St. Paul, of the Walter A. Wood Harvesting Ma- chine Co. of Minnesota, defunct since 1898, and be- gan the work of manufacturing binders, which were called the Minnie binders, on the theory that the twine was so good it would sell the binders. The object was to get an out- let for the twine rather than to start a harvester company. The twine, however, proved a failure, disintegrating under ad- verse climatic conditions ; and, by the fall of 1902, the owners of the business recognized the failure. They were then con- fronted with the alternative of putting in large additional capital and establishing a competing harvesting machine busi- ness at this plant, or of selling their plant. They decided to sell. As the Grass Twine Company was doing a large busi- ness in the manufacture of rugs and matting, the owners seg- regated the plant which had been used in the manufacture of the binding twine, and conveyed it to the Minnie Harvester Company, a corporation organized by the owners of the Grass Twine Company in the fall of 1902 ; and the search by them for a purchaser of this plant and property began. Meanwhile, experiments had been carried on for some years in an endeavor to produce a practical binding twine from flax straw, and the officers of the International Com- pany were very much interested in these attempts and became satisfied that it was feasible to manufacture binding twine from flax straw grown in this country. Search for a proper plant, wherein to carry on the work of making this binding twine was taken up. Of course, space was necessary for the exten- 155 sive machinery used, but more than all else, tremendous ware- house space Avas needed to take care of the material and the finished product. This was true, because, only ten per cent, or less of the raw material used, remained in the finished prod- uct. It was necessary that the plant which should carry on this work on any large scale should be located as nearly as convenient to the great flax growing sections of the country so as to save freight charges upon the 90 per cent, of waste. St. Paul was particularly well located with reference to the flax growing regions of the country, and the plant of the Min- nie Harvester Company at St. Paul had very extensive stor- age capacity ; therefore, by reason of its size, construction and location, this plant was an ideal one for manufacturing bind- ing twine from American flax straw. The stock of the Minnie Harvester Company was therefore purchased by the Interna- tional Harvester Company from the Grass Twine Co. Septem- ber 30, 1903. Old Management Continued to Protect Vendor's Guaranty. Among the assets of the Minnie Harvester Company was a large amount of accounts receivable which the officers of the International Company declined to accept at their face value unless guaranteed. As a result, the vendor guaranteed to the International Company that there would be collected from these accounts receivable by October 1, 1906, the sum of $450,000. The vendor company as a condition of its guaranty, required that the officers of the Minnie Company should con- tinue to have the management and control of that company and should operate it until its guaranty was made good. Ac- cordingly, and, after the sale, the officials of the Minnie Com- pany remained in possession and control of the business, and held themselves out as being independent of any other con- trol or ownership. The purpose and the necessity for secrecy with respect to the sale, was to enable the vendor company to 15G collect these accounts receivable and to fulfill its guaranty. The contract gave to the vendor company until November 30th, 1906, in which to make the collections, during which time, its old officers were to remain in the control and management of the business. As a matter of fact, the vendor company collected the $450,000 on the accounts receivable and thus ful- filled its guarantee in the early summer of 1905, a year and a half prior to the date fixed in the contract, and public an- nouncement was at once made of the purchase by the Inter- national Company. (App., 249-258) Cosily Flax Tiv'me Experiment. As tlie plant was to be used for the work of manufacturing binder twine from American flax straw, the International Company officials organized a subsidiary company known as the International Flax Tmne Company, and the plant at St. Paul was transferred to that company. Thereupon, an elabo- rate, extensive and expensive plan for introducing the successful use of flax straw as a material for the manufacture of binding twine was carried on by this company. A campaign of education was planned. Seed was furnished to the farmers, and much enthusiasm in favor of the cultivation of flax was aroused. Grreat as was the storage capacity of the plant at St. Paul, never- theless, it was over-taxed, 40,000 tons of flax straw being stored there at one time. More than $1,500,000 was expended at this plant in an endeavor successfully to manufacture bind- ing twine from American flax straw. The result was failure. Binding twine made from flax straw, notwithstanding all the efforts to prevent it, was eaten by the crickets, and would not withstand adverse weather con- ditions and proved too unreliable for use. The plant at St. Paul is now used by the company for the manufacture of binding twine from sisal. The facts with respect to the purchase of the Minnie plant 157 as above set forth, are fully established by the' testimony of Mr. Frank J. Ottis of St. Paul (XIII, 44 to 52) and in the testimony of Mr. James J. Early of Valley City, North Dakota (XIII, 35 to 44) Mr. Early was sales manager of the Minnie Company, and Mr. Ottis was assistant general mana- ger of the Grass Twine Company, the OAvner of the Minnie plant. Both of these men were fully conversant with the facts and participants in the sale, and are entirely disinterested wit- nesses. The facts respecting the experience of the Interna- tional Harvester Company in the attempt to succssfuUy manu- facture binding twine from flax, are detailed in the testimony of Mr. H. L. Daniels. (App., 259 to 261; XIII, 52-58.) It is thus clear that in this case, as in others, whatever of secrecy was observed with respect to the sale, was for a par- ticular reason which related only to this sale, and the secrecy was observed at the request of the vendors to conserve their interests.* In this case, it is shown that when 'the busmess reasons for the secrecy ceased, the fact of the purchase was made public; and this, although it was a year and a half in advance of the time fixed by the contract, within which the vendors might make good their guaranty. This negatives the idea that the secrecy was maintained pursuant to any wish of the International Harvester Company, or for its henefit. THE PURCHASE OF THE AULTMAN-MILLEK PLANT. The company known as the Aultman-Miller Company which had been engaged in the manufacture of harvesting machin- ery known as the Buckeye machines, at Akron, Ohio, had be- fore the organization of the International Company, become bankrupt and gone into the hands of a receiver. It had a valu- able plant, well adapted to the manufacture of implements which the International Company desired to make. The plant ♦That it is very difficult for a concern going out of business to collect its recelTaibles is shown by tbe fact that The Audit Co. of N. Y. appraised the receivaWes of the Aultman-Miller Co. as a going concern at $91,061.00 and if liquidated at $37,294.00 (I. 552). 158 was therefore purchased from the receiver. As there was sold in connection with the plant a large amount of material in process of construction, a company was organized to carry on the business to the extent of completing the construction of the machines in progress and of making a stock of repair parts«to the end that all users of these machines would be protected. When this was done, the plant was transferi-ed to the Inter- national Company, and ir is now used by that company for the manufacture of auto delivery Avagons. (App., 229-236.) No Wrongful Purpose or Injurious Effect in These Transac- tions. We have set fortli the facts respecting the purchase of these plants, at so great length, because of the Government's charges that these transactions were in pursuance of a policy and plan to deceive the public and injure competitors. When all the facts are understood, it clearly appears that these purchases were eiitirely unrelated, and the contract of purchase in each case rested upon the peculiar circumstances of each case, and there was in them no fraudulent or wrongful object. It is entirely clear that if the International Harvester Company had adopted and was carrying out a policy of maintaining fictitious competition in the implement business, a totally dif- ferent course from that pursued in these instances, would have been followed. PURCHASE OP OTHER PROPERTIES, The Weber Wagon Co. is a corporation, the stock of which was purchased by the International Company in 1905. This company had long been engaged in making wagons, and this plant is now o-\\'ned and operated by the International Com- pany. In November, 1906, the International Company purchased from J. S. Kemp Mfg. Co., a manufacturer of manure spreaders, its equipment, supplies and product at Wa- 159 terloo, Iowa, and its plant, equipment and supplies at Newark Valley, X. Y. This plant has been increased and is now operated by the International Company. The use of the manure spreader, the evidence shows, has been very largely promoted by the International, not only to its benefit but also to the benefit of the farmers and its competitors. (XI, 350, 351.) In 1910 the International Harvester Company bought from the Bettendorf Axle Co. its patents relating to steel wagons, which had theretofore been manufactured by that company. All these purchases were made solely in pursuance of the policy of increasing the line of implements manufactured by the company, and were in the normal development of the busi- ness of the company. SUBSiniARY COMPANIES. The Wisconsin Steel Company and the Wisconsin Lumber Company are corporations organized in 1905, as subsidiaries of the International. The Steel Companj^ was organized to provide the Interna- tional with its necessary iron and steel, in the most convenient shapes, promptly and economically. The Lumber Company was organized so that the Harvester Co. could obtain the lumber and lumber products required in the manufacturing more economically and efficiently. The Illinois Northern Eailway is a railroad corporation, the stock of which was acquired by the International from the McCormick Company in 1902. It operates some 27 miles of railroad, on which are located the McCormick Works and Tractor Works of the International and many other indus- tries. The Chicago, West Pullman & Southern Eailroad Company is a corporation organized in 1909 by the International. It operates some 24 miles of track, upon which are located the 160 steel mills of the Wisconsin Steel Company and the Piano Works of the International Company and a number of other industries. These railroad companies are necessary for the manufac- turing business of the International Harvester Company and the Wisconsin Steel Company, and there is not a scintilla of evidence in the record in this case that these railroads have been operated in any wrongful or illegal manner. The International Flax Tv.ine Company is a corporation or- ganized in 1005 as a subsidiary company of the International for tbo manufacture of flax liinder twine as above described. The Purpose of These Transactions Was Lawful and Their Effect Harmless. All the foregoing ])urchases and organization of subsidiary companies and the development directly of the new lines, were made not with the purpose of monopolizing the trade in agricultural implements in the United States, but with the single purpose of extending the International's line of pro- ducts to give it an all-year-round business. All these things were done for the same proper, lawful business reasons that prompted the transfer of the manufacture of the Milwaukee harvesting lines to the 3[cCormick Works and the devotion of the old Milwaukee plant to the manufacture — and it has been very successfully so devoted — of cream separators, gaso- line engines and tractors ; and of the transf ei- of the manu- facture of the Piano harvesting machines to the Deering Works in order to devote the Piano plant to the new lines of manure spreaders and farm and mountain wagons; the same policy that led to the construction and equipment of one of the largest tractor plants in the world at ( hicago in 1910. In every one of these "new lines," except certain tillage implements, hay tools, wagons and manure spreaders, the In- ternational entered the trade as an additional competitor; and 161 in the others it merely succeeded to and expanded an exist- ing business and directly promoted by fair and energetic meth- ods the trade in these useful agricultural implements. The entry of the International into all of these "new lines" and the use of the practically defunct harvester plants ac- quired, have improved and not injured the agricultural im- plement business and the conditions of the trade. All this expansion of business was along lawful lines, by the direct purchase for cash or by original construction, and the record does not at all sustain the charges of the Petition that all these operations were entered upon for, or inspired by,- the unlawful purpose of destroying competitors and monopol- izing the agricultural implement trade. On the contrary, the e\idence shows that the International's operations in these re- spects were for an honest business purpose and have been a benefit and not an injury to the farmers and to the agricul- tural implement trade. 1C2 IV. The International has no monopoly features or effects. The evidence proves affirmatively that the defendants have pro- duced none of the results which are essential to and character- istic of monopoly and monopolization. It proves directly op- posite purposes and results. The Sherman Act was passed to protect the public against the evils of monopoly and monopolizing. What those evils are is matter of common knowledge. The construction which the Act received in the Standard Oil and Tobacco Cases proved its adequacy to meet any situation brought about through con- tract or combination, or by oppressive and unfair trade prac- tices, which destroyed competition or deprived the public of its benefits. To the consumer the benefits of competition are good products and reasonable prices. If the International Company is a combination in restraint of trade and possesses or has possessed a monopoly of the trade in harvesting machines, then it must have produced those results which are the essential indicia of monopoly or of a monopolizing combination. No corporation or combina- tion has yet been adjudged illegal under this Act, unless it actively showed some of the following traits and characteristics of monopoly: (1) Excessive prices and profits. The object of all busi- ness is profit; and the object of monopoly is excessive profit; and this profit must be the result of excessive prices paid by consumers. Never yet has a monopoly run its business for ten years without excessive prices or profits. (2) Deterioration in the quality of the product. (3) Reducing the tvages of labor. (4) Depressing the prices of the raw materials used. (5) Discriminatory prices and unfair methods. Selling 163 goods below cost in certain localities and other unfair and oppressive trade practices to destroy competitors have been present in every case of adjudged violation of Section 2. (6) Dismantling plants to limit production. (7) Controlling through patents, or in some other ivay, an essential element of successful production. Mr. Bryan has succinctly stated the characteristics of the "trust" thus:^ "The moment a corporation secures a practical monop- oly in the production or sale of any article, certain evils appear which outweigh any good that can come from large production or control. Wherever private monopolies exist ceitain irresistible tendencies manifest themselves: First, it raises prices — this is the first thing thought of for the increasing of profits. Then, in proportion as it becomes the only purchaser of the raw material, it reduces the price of the raw material, and the producer of that raw material, having no other market, must accept the price offered. In this way, too, the profits of the corporation are increased. Third, a reduction in the quality of the product affords an opportunity for increasing profits. Fourth, reduction in wages follows wherever conditions will permit." If these and similar acts which were tabu- lated in the opinions of the Supreme Court in the Stand- ard Oil and Tobacco Cases are the "irresistible tendencies" of a corporation having a "practical monopoly," then it can hardly be reasonably claimed that a corporation has a prac- tical monopoly which has caused none of these evil results. If an alleged combination is to be condemned when these characteristics are present, is not their entire absence con- clusive proof that a corporation is not a monopoly and has not monopolized trade? "Monopoly is that monopoly does." Apply that test to this record. 'Speech at Indianapolis, Aug. 25, 1908, Democratic Campaign Text Booli (1908), page 261. 164 >> (1) "It raises prices. The evidence shows that there was no increase in the prices of harvesting machinery from 1902 to 1908, although during that time the cost of raw materials and labor had increased, on an average, fully 20 per cent. (XIV, 110.) The increase in price in 1908 was only about five per cent, and this advance continued through the seasons of 1909 and 1910 and until the summer of 1911, when it returned substantially to the old level. (App., 166.) The evidence further shows that while the prices of harvesting machines in the United States have remained substantially unchanged for the past 15 years, the prices of all other agricultural implements, including wagons, have increased from 10 to 25 per cent. There was introduced in evidence a complete set of con- tracts of one dealer for binders and mowers for every year from 1892 to 1912. The net prices to the dealer during those years are printed in Vol. XIV, p. 304, and show that since 1894 the net prices to dealers have not changed more than six per cent. The wages of employes at the International Works increased in the ten years 32.52 per cent. (XIV, 108), and the costs of raw materials are shown in Exhibit 203, Vol. XIV, 107. The Petition charges that the defendants "have advanced the prices of harvesting implements in interstate commerce, to the grave injury of the farmer and the general public." (Pet. 41.) The Answer denied this, and averred "that the prices of harvesting machinery have increased but slightly, although the International Harvester Com- pany has greatly improved their quaUty, durability and efficiency, and the materials and labor entering into their manufacture have increased in cost, on the average, fully twenty-five per cent." (Ans., 56.) The Grovernment introduced the following evidence: Prof. Coulter testified that old machines used to be taken m exchange, which reduced the cost of the new machine to 165 the farmer ; that this practice had now ceased, and the free expert service had been taken off. (I, 503, 504.) Mr. Glass, of the Adriance -Piatt Company, testified that there had been no improvement in binders or mowers in the last ten years; and Mr. Curtis, of the Eiehardson Manufacturing Company, of Worcester, testified there had been no improvement in the mower in twenty years. When the defendants, to show the absolute error of these claims began to call representative farmers and dealers from all parts of the United States, the Government at once dis- covered that the evidence was immaterial. This statement, at the first hearing at Omaha, Nebraska, indicates the position taken by counsel for the Government: "Mr. Grosvenor: The witness has not shown any infor- mation as to the price. He is not in the business. He is merely a farmer. How does he Jcroo-ivf Mr. Doyle: The farmer pays for flie hinder. Mr. Grosvenor: Well, I object to it. It is absolutely incompetent." (V, 716.) The following quotations from the record show how quickly the Government attempted to evade this important issue : W. J. HowAED, of Schaller, Iowa, was the first witness called )\v the defendants. He testified as follows (V, 1-2-4) : "I have been an implement dealer thirty years. Pres- ident two years of the Iowa State Retail Implement Deal- ers ' Association. I handle the Deering and McCormick binders and mowers and the Standard mowers made by the Emerson-Brantingham Co. Have handled the Emer- son mowers 25 years. Q. What has been the course of prices in the farm im- plement business in the last 10 years? Take binders — A. Binders have advanced a little, about 5 per cent. Q. Now give us the course of prices of farm imple- ments other than harvesting machinery, in the last ten years. Mr. Grosvenor: As this line of questioning may lead to a very voluminous record of testimony, before it is entered upon I want to note my objection on the record ; that all testimony of this character is clearly irrelevant, 166 incompetent and without bearing upon the issues; if of any value at all, it is only of economic value. A. The hay and plow goods— small goods, as we call tiiem— have advanced from 10 to 15 per cent. Buggies and wagons have advanced more— buggies about 22 per cent, and wagons about 30 per cent, in the last 10 years. Q. How about cultivators? A. Cultivators have advanced 10 to 12 per cent. Q. As a matter of fact, tlien, the binder has advanced less in proportion than other agricultural implements? A. Yes ; all binders have advanced less. Q. What is the fact as to whether in the last ten years there has been an improvement in the harvesting ma- chinery that is manufactured and sold? A. All harvesting machinery has been improved, made lighter and more convenient ; more malleable iron instead of grey iron, or cast iron as it is sometimes called. Mr. Grosvenor : I want to enter the same objection to this line of testimony, before it is begun, as it is of course irrelevant. Mr. McHugh: This meets the testimony you put in. Mr. Grosvenor : I want to make the objection at the be- ginning. I Avant to make it clear that I object to this tes- timony as being only of economic value, if of any value. A. Tt makes it much more durable and reliable, so that the farmer does not have 'to have repairs for malle- able iron where he would have to have them for grey iron. Q. That is particularly true as to binders, is it not? A. Binders and mowers, yes, sir. Q. What is the condition of the farm implement busi- ness today as compared to the condition of the farm im- plement business ten years ago, so far as it affects the farmer ? A. Tt is much better for the farmer now than it was ten years ago. Q. In what particulars? A. Because he gets so much better service; his ma- chines are more durable; he can get repairs quicker, and the machines are more convenient and easier to oper- ate. (V, 4, 5.) As to complaints from farmers ; we do not receive one complaint now in ten that we received ten years ago, the quality of the machines has improved so much more. 167 I own and run a farm of 1180 acres, in Lyon County, Minn., and own a half section in Iowa wMch. I rent for casli. ' ' I. E. MuNEOE, farmer, Hastings, Neb. (V, 552), testified in substance : "I bought a Champion 6-ft. binder in 1897 or 1898 for $125, and in 1906 I paid $145 for an 8-ft. McCormick, with trucks and out end reel support. Mr. Grosvenor: I object to this and move to strike it out. You are asking about prices of retailers to these farmers. The retailers are not parties defendant, and therefore it is absolutely immaterial. How does he know the prices of the International to the dealers'? (V, 552.) Witness : The 8-ft. cuts about one-fourth more acres of grain in day's work than a 6-ft." Feank Zahnee, fanner, Modale, Iowa (V; 714-716), testi- fied: "Binders have been improved in the last ten years; they have made them lighter in some respects, and they work a little more scientifically than they used to. They have put on trucks. In various ways they have been im- proved. Q. How about the price? Mr. Grrosvenor: The witness has not shown any infor- mation as to the price. He is not in the business. He is merely a farmer. Mr. Doyle: The farmer pays for the binder. Mr. Grosvenor: Well, 1 object to it. It is absolutely incompetent. A. I do not see that there is much difference in the price of binders now than when I used to be selling them, along in 1896 to 1900." George Landgeen, farmer, Ong, Neb. (VI, 14), testified in substance : "The Johnston, Acme and Deere binders, besides the International, are sold in my vicinity. The International serAdce, rppairs and expert assist- ance, when needed, has been the very best. IGS Q. You are entirely satisfied, are you, with the serv- ices and also with the prices? A. Yes, sir. ]^Ir. Grosvenor : I move to strike out that question and answer, on the ground that it is unreasonably prolonging this record; and, further, it is shown that this farmer has had absolutely no deahngs with the International, and therefore his testimony is incompetent under the is- sues." (p. 14.) John C. Pfistee, farmer, Sutton, Neb. (VI, 101), testified in substance: "I know the prices at which harvesting machines have retailed in my neighborhood for the past 10 years. We pay $150 now for a 7-ft., and 10 or 12 years ago we used to pay $140 for a 6-ft. Mr. Grosvenor : I object to this testimony as to prices, his business having been with the dealer and not with the International. The Witness : Wc have got a truck under it now, and it means a 7-ft doesn't nm any heavier now than a 6-ft. used to run." Government objects to farmers' and dealers' testimony as to prices, improvements and service. At the opening of the Wichita hearing, the Government's counsel renewed objections made at the first hearing at Omaha to: "(1) All evidence in relation to prices of agricultural implements, either prices from the International Har- vester Company to dealers or prices from dealers to farmers, and irrespective of Avh ether the prices in rela- tion to which evidence is introduced apply to the period before or the period after the formation of the Interna- tional Harvester Company. (2) All evidence in regard to improvements claimed to have been made in harvesting and agricultural ma- chinery since August, 1902, and testimony making a com- parison of implements as tlioy are made today and as they were made before 1902. (3) All evidence relating to the subject of repairs, 169 that is, the testimony of farmers and dealers relating to the facilities now or previously afforded for getting re- pairs or relating to existing trade conditions in regard to repairs. The grounds of the objection are that the topics mentioned above and heretofore objected to by counsel for the Government, are immaterial under any of the issues in this case, and hence are inadmissible; that such topics have only an economic, if any, interest; that the statute under which this suit is brought is a declara- tion by Congress of its economic policy and an enactment of that policy into law. Therefore, the Grovernment con- tends that while all such Evidence might be material on the question whether or not the policy of the law is a right one, it has no bearing on the real issue in this case, namelv, whether or not the statute has been violated." (VI., 328.) In vtew of the charge in the petition and of the obvious fact that the farmer pays, and is gravely injured by, all excessive prices exacted by a "monopoly" in harvesting machinery, these objections of the Government are remarkable. Despite them, defendants called 228 representative farmers and 823 dealers from twenty-four states to testify whether the farmer — the sole consumer of International goods — had been com- pelled to pay excessive prices for deteriorated machines or had been in any way "gravely injured." If the consumers' interests and knowledge of the effects of the alleged "monopolization" and "restraint of trade" in agricultural implements are to be disregarded, whom then does the Government represent in this proceeding? — who besides Green, of Creighton, Neb. ? Since 1897 the net price to the dealer of a 6-ft. self-binder has been $95, with the exception of the years 1908-11, when it was $100.09 (XIV, 304) ; and the retail price has been $120 or $125. Although the binder contains over 3000 separate pieces and over 1000 formed parts, and the kn otter is almost as com- plicated as a sewing machine, it has actually been sold for 15 170 years to the farmer at about 7 cents per pound,— which is less per pound than he pays for his walking plow, or his cook stove. (V, 103-4.) While the prices of harvesting machinery have been prac- tically unchanged since 1896, the variation being less than 6 per cent. (XIV, 127), the prices of the products harvested with the binder and mower had increased from 1900 to 1912,— wheat 50 per cent., oats and hay 85 per cent. (XIV, 131.) Domestic cmd Foreign Prices. It is a familiar charge, perennially circulated and quite gen- erally believed, that International harvesting machines— and American agricultural implements generally— are sold to the foreign farmer for less than the American farmer pays. The falsity of tins statement has been demonstrated again and again, yet it persists. The International has never used the foreign field as a dump- ing ground for its surplus product. (XIII, 165.) The foreign retail prices of the International's products have always been much higher than the domestic. Mr. Thomas Findley, Vice President of the Massey-Harris Co., Ltd., the great Canadian manufacturer of agricultural implements, was a witness for defendants. In harvesting machinery that company is the second largest manufacturer in the world and in agricultural implements the third or fourtli. It sells a long line of agricultural implements throughout all countries ex- cept the U. S., and is actively entering here. Mr. Findley testified that the prices of agricultural implements in the United States are lower than in any other country in the world ; that the prices in Canada are higher than in the United States, and in all other countries the prices are still higher than in Canada; and that the prices of harvesting machinery are a little lower, relatively, than the prices of other agricul- tural implements. (XIII, 187, App., 14.) 171 (2) "It redioces the price of the raw material." As we have already seen, the prices of raw materials had increased in 1907 nearly 25 per cent, above the prices of 1902, and in 1912 they were still 5 per cent, above the average of 1902. (3) "It reduces the wages of labor." The wages paid the employes in the works of the Interna- tional constantly increased from 1902 to 1912, and the total increase amounts to nearly 33 per cent. (XIV, 110.) (4) "//■ reduces the quality of the product." The Grovernment does not claim this as to International products. By the testimony of the farmers, the dealers and agricul- tural implement experts, it was conclusively shown that the improvements in the various harvesting machines made by the International during the past 10 years have been constant and very numerous and substantial. $600,000 were spent in the improvement of the binders alone. Inspection and Experi- mental Departments have been maintained for the past 10 years at an average annual expense of over $400,000. (XIII, 325.) 'In the inspection work 756 men are employed (XIV, 86), and in the experimental work, designing and making improve- ments, about 200 men. (XIII, 324.) Mr. John F. Steward, an inventor and patent expert for many years in charge of the experimental work of the Deer- ing Harvester Co., who has been with the International since 1902, testified in detail to the great improvements made by the International; that it has been constant and energetic and successful in its endeavor to improve the character and quality of all the machines manufactured by it. (XIII, 318-324.) The extent and importance of these improvements in the harvester lines were also testified to by John F. Appleby, the inventor of the twine binder. (XIII. 370.) 172 Among other evidences of the marked improvement in the efficiency and durability of binders and mowers since 1902 and in the superior service in furnishing repair parts, is the marked decrease during the past ten years in the sales of the binders and mowers made by the International. Whereas, the average annual sales for the five years preceding 1903 was 152,365 hinders and 218,082 mowers; the average annual sales of the same l>rands during the ten years, 1903 to 1912, was 91,465 binders and 169,565 mowers, an average re- duction of 40 per cent, in binders and 20 per cent, in mowers. (XIV, 126.) This means an average saving to the farmers of upwards of $8,000,000 a year. (App., 171-5.) (5) Excessive profits. Of course, the motive for raising prices, reducing raw ma- terial and labor costs and the quality of the product is to increase the profits. There is no other reason or excuse for doing those things. If the International was organized to monopolize and has monopolized the agricultural implement trade in the United States, as the Petition charges, what could have been the ob- ject of such an illegal undertaking unless it was very large profits! "\ATaat is a m.onopoly for, unless excessive profits? In this case it is undisputed upon tlio record, that the total earnings of the International upon its actual capital invested in the business during the ten years averaged only 7.83 per cent, per annum : and that of these earnings there has been distributed to the stockholders, in dividends for the ten years, only 4.3 per cent, per annum. The balance of the earnings have been required and used in the business. In 1910, as representing a part of this surplus, a dividend in stock was issued, which, of course, gave nothing to the stockholders ex- cept more shares representing the same amount of propertv. (XIV, 122, 123.) 173 Defendants do not claim — the evidence in the case would disprove the claim if it were made— that the moderate prices and profits, and the largely increased efficiency and durability of International machines, are acts of benevolence. They are all dne to the competitive conditions in the harvesting ma- chine trade in the United States during the past ten years. If the International's prices had been excessive, if the quality of its machines or its service had deteriorated, or if improve- ment in tliem had stopped, the International could not retain the custom and good-will of the farmers. It has constantly improved its machines and the facilities for the distribution of them and their repair parts and has charged reasonable prices and made moderate profits, not simply because defend- ants thought that this course was. good policy but because they knew that it was necessary. Farmers and dealers alike, in large numbers, testified that the International's share in the trade depended upon these facts and upon no others. (6) No discriminatory prices nor oppressive trade methods to injure competitors. We have already considered in detail the charges of the Petition and the Grovernment's and the defendants' evidence relating to the International's trade policy and practices. Exceptional instances of unfair sales methods on the part of field agents were shown. Doubtless, others have existed and, doubtless, now and then they will occur in the future. In a sales organization covering the grain-growing portions of the United States it is plainly impossible to prevent occasional cases of misconduct by employes. The instances proven by the Government, even considered by themselves, in the field of ten years and thousands of em- ployes in which these instances were found, refute rather than sustain the Government's charge. When considered in per- spective with all the evidence in the record, it is clear that the business policy and conduct of the International since its 174 organization have been remarkably free frbm unfair or ob- jectionable trade practices. The competitors themselves fur- nish the conclusive evidence of this fact. With all their in- terest opposed to tlie International, with the too common readiness to attribute another's superior success to objection- able rather than commendable methods, the Government could tind, in the whole competitive field of hundreds of competing manufacturers with their thousands of officers and agents, no evidence whatever of the use of discriminatory prices or other oppressive practices to injure or destroy competitors. (7) Th.e International has no patent monopoly, nor control of any element or material essential for successful manufac- ture. The Petition, that no element of an artificially perfect case should be lacking, charges *' defendants have system- atically bought up patents and acquired all new inventions therein to perpetuate their combination and monopoly." (Pet. 23.) No evidence was introduced to sustain this charge. De- fendants disproved it. As a matter of fact, at the time the International was organized, there was no patent of any sort on any essential or important part of the self-binder. Of the 9000 patents that have been granted on grain harvesting machinery, all had expired by 1902. The new binders that have been put upon the market by Deere & Co. and the Minne- sota Prison are practically combinations of certain portions of the International's binders. (See testimony of John F. Appleby and John F. Steward, XIII, 377, 316.) WiUiam Butterworth, President of Deere & Co., which en- tered upon the making and selling of binders in the United States a few years ago, testified that he regarded the binder business as a proper field for enterprise for his Company, and that there were no obstacles to the manufacture of bind- ers or mowers on account of any patents held bv any other company. (II, 57, 59.) 175 The International has no exclusive right to anything essen- tial to the making of a harvesting machine equal in every re- spect to those made by it. Any manufacturer may duplicate its machines freely, and the repair part manufacturers, of whom there are several in the United States, copy the princi- pal wearing parts of the International's binders and mowers and sell such parts for use on International machines. These repair part manufacturers make the parts for every agricul- tural implement of large sale upon the market and compete with the makers of the macliine in that trade both in the United States and throughout the world. The International has no exclusive privilege or advantage of any sort ; the field for the making of harvesting machinery is as open as the field for making plows or "wagons or culti- vators—or hoes. (8) The International has not closed a plant or reduced or limited its product nor stopped development. The course of the International Harvester Company in its business throughout the United States is not marked by a sin- gle manufacturing plant closed up and idle. The purchase of a plant by the International Harvester Company has never meant a suspension of business at such plant, but on the con- trary, it has always meant enlarged and more constant ac- tivities. Defendants' Exhibits 207, 208 and 209 (XIV, 115, 116, 118) show (1) that in 1912 it employed more men in every plant owned by it in the United States (except the Piano) than were employed at those plants in 1902. In the Piano there was a temporary reduction due to the depression in the ma- nure spreader trade but in 1911 and 1913 the number em- ployed was greater than in 1902. Altogether, the increase amounted to 8,567 employes or an increase of 51.6 per cent. (2) That the continuity of the employment of these workers 176 had been very mucli increased at all of the plants. In 1902 the number of employes ranged from 12,000 in October to 16,000 in April and then fell rapidly to 13,500 in September, a variation of nearly 33 per cent. ; whereas in 1912, in the same plants of the five vendor companies, the highest point was in October and November 20,600, and the number declined grad- ually to 19,143 in May, and then rose to 19,600 in June, July and August, and fell to 19,000 in September, with an average for the entire year of 19,800 and a total variation of only 8 per cent. Exhibit 206 (XIV, 112) shows the various kinds of ma- chines manufactured at each of the Company's plants with the dates when the respective "new lines" were added at each plant. It also shows the transfers of harvester and other lines from one plant to another in the interest of greater economy and efficiency in manufacture. Not only has there been no lessening of activities in any of the plants owned or acquired by the International Harvester Company, but there has also been maintained a constant de- velopment and progress in the improvement of the machines manufactured. In the testimony of John F. Steward (XIII, 380-404) and in the testimony of J. 0. Warnes (XIV, 81-87) there is set forth fully and in detail, the character 'and extent of the work continuously going on at the plants of the Interna- tional Harvester Company in the constant endeavor to im- prove the character and quality of the machines manufactured. THE TESTIMONY OF THE FAEMERS. In the general index at the end of volume XIV on pages 46 to 51 is a list of the farmers, numbering 228, who have testified as witnesses in this case. They were called from all the grain- growing sections of the United States. The list mentioned 177 gives. the location of the farmers and the volume and page of the record where their testimony appears. The evil effects of any existing monopoly in the manufac- ture and sale of agricultural implements of any kind would necessarily fall upon the farmer as the ultimate consumer. The Government recognizes this in charging that the con- spiracy to restrain trade had been carried out "to the grave injury of the fanner and the general public." Yet the Gov- ernment — assigning the reasons which we have quoted above — called no farmer to prove the charge. The testimony of the farmers who appeared for the defendants furnishes the real reason for the Government's objection to their testifying and for its failure to call them. By the testimony of these farmers it is established that har- vesting machinery in the past ten years has improved more in quality and advanced less in price than any other farm im- plement; that during the past ten years the service rendered by the International Harvester Company, in the way of ex- perts and in the way of providing an available and sufficient supply of repair parts, has been maintained and improved-, that competition in the sale of harvesting machinery in the United States is real and active between the International Harvester Company and other manufacturers; that the farm- ers are canvassed to buy niachines of various makes; that their purchases of harvesting machinery are free and uncon- trolled, and are based upon their belief as to the merits of the ' respective machines, and the service in the way of experts and repairs rendered in connection therewith. This testimony makes clear that the volume of the busi- ness which any manufacturer of harvesting machinery pos- sesses, or has possessed, represents the free choice of the con- sumers and their opinion as to the merits of his machines. The Government in this case sought unduly to magTiify ITS the relative importance of the harvesting machinery to a farmer. No farmer was called upon this point, but Mr. J. L. Coulter, an expert statistician from the United States Census Bureau, who owns a farm, testified for the Government (I, 496) that the harvester, moAver and rake aggregate in value over one-half of the total mechanical equipment of the average farm between 100 and 175 acres. To show how wide of the fact the estimate of this expert statistician's testimony was, 201 of the farmers who were called as witnesses by the defendants were asked to give lists of the implements actually in use on their respective farms and the cost of each. These farmers cultivate farms of all sizes, ranging from 100 acres up. Their testimony makes it clear that instead of harvesters, mowers and rakes amount- ing in value to more than one-half of the entire mechanical equipment used on their farms they amounted to less than a fifth of it. (App., 379.) The average per cent., given by the 201 farmers, of their harvesting machinery to their total farm implements was 15.2 per cent. (App., 379.) A very accurate and reliable demonstration of the ratio which the value of harvesting machinery on an ordinary farm bears to the value of all farm implements, is furnished by the figures of the sales of the 108 dealers who gave their annual sales of harvesting machinery. The total amount of such sales was $390,543. (Appendix, 531.) The total sales of agri- cultural implements of these same 108 dealers amounted to $2,776,416, hence their sales of harvesting machinery is only 14 per cent, of their total sales of agricultural implements. Moreover, the defendants called as witnesses L. W. Chase (VI, 40), F. E. Crane (X, 20), and J. B. Davidson (XIII, 67). Two of these men are pro- fessors in agricultural colleges and in special charge of the instruction respecting the mechanical equipment of farms. 179 The other witness, Mr. Crane, is in charge of the agricultural extension works for the Great Northern Lines running from St. Paul to the coast. These men, who have made a special study of the mechanical equipment needed and used upon farms of the country, refute the testimony of Mr. Coulter, the statistician, and corroborate the testimony of the farmers and dealers in regard to the proportionate value of the har- vesting machinery upon the farm. (App., 577-579.) 180 V. Trade Is Not Restrained; the Field Is Free and Open. The petition charges that the defendants have restrained and monopolized interstate commerce in agricultural implements and particularly in harvesting machines and twine ; that this monopolization was secured and is now maintained through the large resources of the International Harvester Company and its large percentage of the trade obtained in its acquisi- tion of formerly competing properties, and by the use of the following oppressive, unfair, wrongful trade methods and practices, which are specifically charged : "exclusive agency" and "cancellation" clauses in agency contracts ; control of agents by distributing popular brands of ma- chines between the separate dealers and using these contracts and brands to force the dealers to buy International "new lines" in preference to competitive goods; purchasing competitor companies, concealing their owner- ship and operating them to injure other competitors and de- fraud the public; false statements and unfair business methods against com- petitors' machines and credit; selling at prices in certain localities below cost of produc- tion to injure competitors; entering into additional lines of agricultural implements and organizing sub-companies to aid in their economical pro- duction and operations; and through the power of such monopolization defendants have adx'anced the prices of harvesting implements "to the grave injury of the farmer and the general public. ' ' All these specific charges of oppressive and wrongful meth- ods and attempts to monopolize we have already shown are unsupported and, in the main, directly disproved by the evi- dence in this case. Unfair practices have not been used against competitors, as the competitors themselves have tes- tified. 181 THE RIGHT TO RELIEF DEPENDS UPON WHETHER TRADE IS NOW RESTRAINED OR NOT. But the fundamental question is — whatever the Govern- ment claims has been done or attempted to be done— Is trade in harvesting machinery and other agricultural implements now restrained by defendants as charged in the Petition? This is an equitable proceeding under Section 4. The peti- tion states: "The object of this suit is to remove the restraints which defendants herein have imposed upon trade and commerce in agricultural machinery and more particu- larly upon commerce * * * in harvesting machinery and binder twine." (Pet. 5.) If such restraints now exist the court may and should de- cree their removal ; but it may not remove restraints which do not now exist. This suit is purely remedial, and in its essential nature it is a bill to abate an alleged trade nuisance, — to dissolve an al- leged existing and operating conspiracy holding interstate commerce in harvesting machinery under restraint. There- fore, relief goes or not as the court shall determine this ques- tion of fact : Is this trade now restrained and monopolized by these de- fendants? Are competition and competitors stifled and ex- eluded? In U. 8. V. Du Pont et al, 188 Fed., 127, 129, which was a petition in equity to dissolve the so-called powder trust, the court by Lanning, C. J., said: "Our task is by a study of unimpeached documentary and other evidence to ascertain (1) what were the rela- tions of the defendants when this suit was commenced; (2) whether those relations are inimical to the law; and, if so, (3) what the relief shall be. That task will be sim- plified if, in the first place, we determine which of the defendants are clearly shown to have had no connection 182 at the time of the commencement of this suit with any combination or conspiracy of the nature described in the petition ; for, as the only relief we can grant in this pro- ceeding is injunctive, the petition must he dismissed as to any defendamt who was not violating the law, or threaten- ing to violate it, when the suit was commenced. ^ One may be indicted for a former connection with a combination or conspiracy violative of the anti-trust act; but, after he has in good faith withdrawn from such a combination 'or con- spiracy, he is no longer a subject of the injunctive power of a court of equity." Obviously, unless trade in harvesting machinery and binder twine is now restrained there is no restraint for this court "to remove." U. S. V. Standard Oil Co., 173 Fed., 177, 190. U. 8. V. North Bloomfield M. Co., 53 Fed., 625, 632. Ridley v. Greiner. 117 la., 679; 91 N. W., 1033, 1034. Haffey v. Liiiich, 143 N. Y., 241, 247; 38 N. E., 298. Therefore, the relief will be granted or denied as the court decides that question of fact upon the evidence in this record. THE FARMER IS THE CONSUMER AND KNOWS THE FACTS. If the fact were as charged by the Government it would seem to be easy to find not merely some patches and shreds of evidence of a more or less reputable character that suggest wrong-doing or incompetency by subordinates, but substantial and conclusive testimony. If trade in harvesting machinery has been monopolized for the past ten years and is now being restrained and monopolized, there must be thousands of per- sons who have been injuriously affected by such restraint and there must be persons Avho have been wrongfully excluded from entering such trade. These implements are purchased only by farmers from local implement dealers. The record shows there are over 40,000 183 local dealers who have sold harvesting machines in the last ten years. The record also shows that during that time these dealers have sold to the farmers of the United States over one million binders, over two million mowers and more than a million and a half of rakes, and that a very large proportion of these were of International manu- facture. These sales must represent transactions with at least one million, probably two million, farmers in the United States. If, as the petition charges, this monopoly has been created and maintained "to the grave injury of the farmers of the United States," there nuist be at least thousands of them ready and eager to testify to their injuries. And surelj^ the Government with its hundreds of thousands of dollars ap- propriated annually the past decade for investigation work by the Department of Justice could have found these thou- sands or at least hundreds, or at least tens of farmers ; — for Congress has never provided in those appropriations that the money shall not be used to prosecute violations of tlie Sher- man law by those engaged in manufacture or commerce.* But not one farmer appeared on behalf of the Grovernment in its effort to free the farmers from the thraldom of this "op- pressive monopoly." The Government preferred to rely on witnesses who have no interest in the suit and who were not victims of the alleged oppressions, untrustworthy witnesses exemplified by Green, Swift, Lamb and men of that ilk. ♦Sundry Civil Bill, H. E. 2441, p. 129, provides: "Enforcement of antitrust lavFs: For the enforcement of antitrust laws, including not exceeding $10,000 for salaries of necessary employees at the seat of government, $300,000: Provided, however, That no part of this money shall he spent in the prosecution of any organization or individual for entering into any combination or agreement having in view tlie increasing of loayes, shortening of hours or hettering the conditions of labor, or for any act done in furtherance thereof, not in itself unlawful: Provided farther, That no part of this appropriation shall be expended for the prosecution of producers of (arm products and associations of farmers who co-operate and organise in an effort to and for the -purpose to oMain and maintain a fair and reasona'bW price for their products." (Italics ours.) 184 NO Jj-AEMEB C.4LLED BV THE GOVERNMENT. The farmers have evidently not been deceived by the noise and clamor ^f their self-appointed friends, of whom Green of Creighton, Nebraska, is typical. They know whether the ma- chines and prices and service and general conditions of the business as affecting them have been changed by the Inter- national Harvester Company "to their grave injury," or not. The Government did not call a single farmer to sustain its charges; but 228 farmers from the principal grain-growing states voluntarily ap- peared to disprove them. Instead of grave injury having been done them, the farmers testified, on the con- trary, that the harvesting machines made by the International since 1902 and the service connected with their sale were bet- ter than ever before ; and that their prices had advanced very little or none at all, while all other agricultural implements had materially increased in price. COMPETITORS DISPROVE CHARGE OP RESTRAINT. Of course, if there were any such restraint as the petition charges it would necessarily affect injuriously the competitors of the International. The averment is that the defendants ' ' in divers ways have endeavored to destroy'" them. (Pet. 23.) The answer set forth by name who these competitors in the harvesting machine lines were, and how numerous they were in each line of implements manufactured by the Interna- tional. Many of these competitors — 26 representatives of some of them — the Government called ; but not one testified that any former competitor had been eliminated from the trade or was being driven out of the trade, or that any prospective com- petitor had been excluded from the trade, by the International Harvester Company. The Government's own evidence disproved the charge that 185 trade is restrained. Its first witness was Clarence S. Funk (then Greneral Manager of the International Harvester Com- pany, now President of Rumely & Company), who testified that the table in the answer giving the number of the Interna- tional's competitors in its various productions, there listed, was prepared with his assistance. "Q. Will you prepare for me an itemized statement of the names of the different manufacturers who are broadly classified on page 55 (of the answer) ? A. Yes, sir." That list he afterward prepared but the Grovernment did not introduce it in evidence. (Ill, 405.) He testified as fol- lows: These are the numbers of the competitors of the In- ternational in the various lines which it manufactures : Number of Names of Machines Competitors 1. Motor vehicles 40 2. Corn binders 4 (Emergency business fluctuating from year to year, depending on corn crop and hay crop.) 3. Corn buskers and shredders 15 4. iCorn pickers 3 (Barely out of experimental stage; sale is very small.) 5. Corn shellers 40-50 (International's production very small.) 6. Corn planters 55 (International's line insignificant.) 7. Cream separators 15-20 8. Cultivators •_ • • 75 (International makes small quantity of rid- ing and two-wheel sulky cultivators.) 9. Grasoline engines 150-175 (We make from 1 to 30 horsepower sizes for farm use.) 10. Feed grinders 78 (Insignificant line.) 11. Grain binders 8 186 Number of Names of Machines Competitors 12. Harrows °^ (Peg-tooth, disc and spring-tooth.) 13. Hay stackers 27 14. Hay tedders 15-20 15. Hay loaders 14 16. Hay presses 25 (A low estimate.) 17. Manure spreaders 28 18. Mowers 14 19. Side-delivery rakes 15 20. Sulky rakes 50-60 (Both are riding rakes, no others are made in large quantities.) 21. Eeapers 3 (Small and dwindling trado in U.S. Binders have supplanted reapers except in East, South and extreme West where farms are small and rough.) 22. Tractors 45 23. Wagons 103 (Making over 1,000 each, besides the small wagon-makers making a few each year.) 24. Binder twine 16 The harvesting machines are 'binders, mowers, reapers, rakes and corn binders, and binder twine is included. Grain binders are the most important. The other articles on the list are not harvesting implements and the Inter- national has since 1902 entered upon their manufacture. The Implement Blue Book of 1912 shows the Acme, Adri- ance-Platt, Sieberling-Miller, Johnston and the Wood as competitors in grain binders. Sieberling-Miller is a small company. The Minnesota Prison, and Deere & Co., have entered the harvester business within a few years. The State of Minnesota has about $1,000,000 worth of equip- ment applicable to making binders and mowers. Deere & Co. has a new plant at Moline ; they took over the Dain line of mowers. The Deere plant is the best and most modern harvester plant in this country outside of some of the International's. (I, 57, 61, 65, 69-79.) By the representatives of competitors in the harvesting 187 lines whom the Government called, it proved the numbers of binders, mowers and rakes sold by each competitor for the years beginning 1903, which, with the figures of the Interna- tional's sales of the same lines for those years, showed the total domestic business in those lines by years. From it the per cent, of the International's business can easily be com- puted and the range of the business of each company in the various lines disclosed. From their testimony and from fig- ures subsequently produced at the request of the defendants, the following tables are prepared, which show with substantial accuracy (there are a few unimportant omissions) the sales and per cents, in the three harvester lines — binders, mowers and rakes — for the entire ten-year period: 188 I. H. CO. AND COMPETITORS— SALES IN U. S. 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 Acme •. 1,000 2,920 3,884 2,002 2,688 4,352 6,196 7,829 11,000 12,600 Adriance-Platt... 816 615 879 1,155 1,126 683 882 1,051 1,056 898 1,600 Empire 75 75 75 75 75 76 76 76 75 76 Johnston 1,002 918 1,766 2,655 2,653 2,528 3,026 3,468 3,027 2,798 Wood 67 763 980 1,817 1,807 516 778 1,229 1,043 8602 New Competitors : Deere 101 93H 4,000 Independent 6 136 560 1,921 Minnesota 8 72 686 1,127 2,032 Total 1,960 3,371 6,620 9,586 7,663 6,289 9,127 12,225 14,285 19,610 20,632 I. H. Co 104,273 86,382 89,699 92,574 89,627 64,368 86,006 92,937 97,335 111,447 GrandTotal 106,233 89,753 96,319 102,160 97,290 70,667 95,133 105,162 111,620 131,067 I. H. Co. %.. 98.15 96.24 93.12 90.61 92.12 91.09 90.40 88.37 87.20 85.04 Note: Assuming that Independent, Johnston, Wood and I. H. Co. figures in 1913 are the same as 1912, the I. H. Co. % in 1913 is 81. MOWERS. 1903 1904 1905 1906 1907 1908 1909 1910 1911 1912 1913 Acme 4,174 6,047 4,186 3,488 5,694 6,196 6,092 9,000 10,000 Adriance-Platt... 5,401 5,792 6,871 6,443 6,659 4,471 4,959 5,660 4,763 5,683 6,364 Emerson-Br. . 2,201 2,871 3,566 4,627 6,000 6,912 9,519 11,460 9,553 9,592 Empire(S&M) 200 :iOO 200 200 200 200 200 200 200 200 Eureka 2 50 54 8 29 20 24 20 38 38 Johnston 2,527 3,300 4,456 6,814 6,047 6,386 7,011 8,457 7,026 7,843 Messinger. ... 14 10 16 16 16 26 32 20 34 34 Richardson. . . 2,600 1,553 1,228 1,500 2,050 1,028 1.042 1,226 1,695 2,026 Wood 5,140 6,199 6,362 9,356 6,019 5,660 7,898 7,401 6,612 7,1252 New Competitors: Dain (Deere) 1 39 490 1,930 3,092 4,660 6,930 7,314 9,560 Independent 194 1,121 2,750 Minnesota 5 25 232 968 1,674 2,173 Plattner 60 lib 220 312 390 430 542 587 Thomas 275 900 1,400 2,200 3,200 3,400 4,000 Ward,M.,&Co 331 450 543 704 890 ^ Total 17,985 19,975 26,005 34,916 33,255 31,900 43,985 62,075 49,891 60 816 I- H. Co 208,318 187,985 166,577 161,917 181,721 155,684 162.549 165,386 141,330 164,287 Grand Total 226,303 207,960 192,582 196,833 214,976 187,484 206,534 217,461 191,221 225 103 I. H. Co. %.. 92.06 90.39 86.49 82.26 84.53 82.98 78.70 76.05 73.90 72.98 RAKES. M03 19 04 1905 1906 1907 1908 1909 1910 1911 1912 Acme* Adriance-Platt . . Allen Belcher* Taylor. Dain (Deere) . Emerson-Br. . Johngton Messinger. . . . Richardson. . . Thomas Wood New Competitors Bateman .... 443 674 65 9,341 6,514 1,855 10 1,720 3,300 3,831 657 832 73 10,836 2,159 2,237 8 200 2,300 3,802 6,620 1,637 1,039 94 10,064 1,784 2,802 18 1,000 2,400 5,040 6,714 1,768 1,024 87 8,431 2,717 4,368 19 936 2,700 6,037 5,000 1,969 1,203 58 10,719 2,818 5,030 16 1,250 2,600 3,910 5,359 1,498 1,200 89 13,338 3,189 4,905 30 600 2,800 2,561 7,500 1,724 1,334 94 16,679 5,839 6,497 49 1,000 2,600 3,442 1,026 9,293 2,161 1,523 94 15,847 4,460 6,098 14 1,300 2,900 4,214 1,792 1,411 126 9,562 4,927 6,200 15 1,200 2,400 5,173 SuSSu:::: :;:;;; :::;:; ;:;;;; :::::: :::;■• ''°'' ^-^"^ l'^? Sears.R.&Co. Ward,M. ,&Co^ Total 27,753 23,104 23 600 309 9,600 2,286 3,812 5,653 2,700 3,586 730 600 384 2,722 1,079 500 536 . „ _ ,;;,•-,;; - 22,398 34,851 34,473 35,569 45,784 49,120 42 723 I-H.Co 157,160 119,168 113,888 108,602 121,244 102,33 103:47 4 106 584 89 912 I G'^°d Total 184,913 142 262 146 286 143 163 155 717 137,899 149,258 155,704 132!635 '..... l.ll.Go.%.. 84.99 83.76 77.85 75.71 77.86 74.21 69.33 68.46 67.79 • Hi,^,3- Discrepancies in Binder figures: 1911, 27; 1912, 933 TIT ■ifK „P'3"r«Panci.es in Mower figures: 1905, 37; 1907, 1,931; 1909, 4,384; 1910, 6,451; 1911, 6,725. . 111,305. Discrepancy in Bmder figures: 1912,820. , ^i'i", u,»ui, ion, u,ii». Ill, 305. Discrepancy in Mower figures: 1912, 6,074 Hay Tools (includes Sulky Rakes, Sweep Rakes and Stackers). References to foregoing binder, mower and rake sales are as follows: 1. Acme: I, 181; XII, 377, 604. 2. Adriance-Platt: III, 360. 3. Allen: III, 363. 4. Bateman: III, 398. 5. Belcher & Taylor: III, 396. 6. Deere(Dain):II,53;XIII,109. 7. Emerson-Brant'gham: II, 194 8. Empire (S. & M.): XIII, 84. 9. Eureka: III, 352. 10. Independent: II, 182-6. 11. Johnston: III, 378. 12. Messinger: III, 399. 13. Minnesota: XIV, 329. 14. Plattner: II, 515. 16. Richardson: HI, 388. 16. Sears, Roebuck & Co.: XII, 333 17. Thomas: III, 217. 18. Ward, M., & Co.: XIII, 340. 19. Wood: 111,305. 20. 1.H.Co.:IV,298-302;XIV,126 189 Inasmuch, as the G-overnment did not attempt to prove by these competitors any of the restraints or oppressions which the petition charges, it must now rely on the International's proportion of the business to support its charges of monopoli- zation and restraint. This table shows the International's per cent, of the business in the United States for the respec- tive years, in the three lines as follows : 1903 190i 1905 1906 1907 190S 190ft 1910 I'.jll 1912 Jnl3 Binders 98.15 96.34 93.12 90.61 92.12 91.09 90. JO SS.37 S7.2 85.01 SI. Mowers 92.05 90.39 86.49 82.26 84.53 82.89 78.70 76.05 73.90 72.98 — Rakes 84.90 83.76 77.85 75.7177.86 74.2169.33 68.45 67.70 ~- The most obvious fact is that in each line its share of the business has steadily decreased year by year, and the share of its competitors has in like measure increased. These figures substantially support the charges of the peti- tion as to the large proportion of the trade possessed by the In- ternational in the harvesting machine lines. This charge has never been denied. The precise figures of its share in the domestic trade in binders, mowers and rakes, it did not know, and naturally could not learn until its competitors were called to testify. But for ten years the Government has known, and the public generally has known, that, in these three lines, the International had a large majority of the business. NOT SIZE BtTT WRONGDOING AND RESTRAINT PROHIBITED. But the Sherman Act was not levelled at the size of busi- ness units, but against trade wrong-doing, injury and re- straint, regardless of size or methods. The popular idea of monopoly — the possession of a very large proportion of the trade — is not the legal one. The lat- ter involves some element of restraint either as to those within the contract, combination, etc., or of exclusion of others from ♦Assuming tliat the Independent, Johnston, Wood and International figures were the same for 1913 as for 1912, I. H. Co. per cent, is 81. 190 a share of the trade. Legally, there can be no monopoly or monopolizing without the power and purpose to limit the freedom of carrying on trade or commerce. In L\ 8. V. Standard Oil Co., 173 Fed., 177, 195, 196, Hook, J., said: (195) ''Magnitude of business does not alone consti- tute a monopoly, nor effort at magnitude an attempt to monopolize. To offend the act the monopoly must have been secured by methods contrary to public policy as ex- pressed in the statutes or in the common law. * * * (196) Success and magnitude of business, the rewards of fair and honorable endeavor, were not among the evils whieli threatened the public welfare and attracted the at- tention of Congress. Bid when they have been attained by wrongful or wilaivful methods, and competition has been crippled or destroyed, the elements of monopoly are present. * '^ *^ The modern doctrine is but a recognition of the obvious truth that what a government should not grant, because injurious to public welfare, the individual should not be allowed to secure and hold by wrongful means. The bane- ful effect is the same, whether the monopoly comes as a gift from a government or is the result of individual wrongdoing. ' ' And the Supreme Court said, in the Standard Oil Case, 221 U. S., 1, at p. 62 : "Although the statute by the comprehensiveness of the enumerations embodied in both the first and second sec- tions makes it certain that its purpose was to prevent un- due restraints of every kind or nature nevertheless by the omission of any direct prohibition against monopoly in the concrete it indicates a consciousness that the freedom of the individual right to contract when not unduly or improperly exercised was the most efficient means for the prevention of monopoly. * * * In other words that free- dom to contract was the essence of freedom from undue restraint on the right to contract." 'The italics in this and in the following quotations are ours. 191 In U. S. V. American Tobacco Co., 164 Fed., 700, the court, by Lacombb, C. J., said (p. 702) : "But every aggregation of individuals or corporations, formerly independent, immediately upon its formation terminates an existing competition, whether or not some other competition may subsequently arise. The act as above construed prohibits every contract or combination in restraint of competition. Size is not made the test: Two individuals who have been driving rival express wagons between villages in two contiguous states, who en- ter into a combination to join forces and operate a single line, restrain an existing competition; and it would seem to make little difference whether they make such combi- nation more effective by forming a partnership or not. Accepting this construction of the statute, as it would seem this court must accept it, there can be little doubt that it has been violated in this case. * * * Each one of these purchases of existing concerns, com- plained of in the petition, was a contract and combina- tion in restraint of a competition existing when it was en- tered into, and that is sufficient to bring it within the ban of this drastic statute." In the Supreme Court this construction of the Act was spe- cifically disavowed by counsel for the United States and by the court. In their argument counsel for the Government said (221 U. S., 116) : "The Government does not avouch and will not at- tempt to support this extreme construction which was adopted liy the presiding judge below. Contracts, combi- nations, or conspiracies which give power materially to restrain commerce and indicate a dangerous probability of its exercise and those which necessarily tend to monopoly are unlawful without more. (Citing the Knight, Trans- Missouri, Northern Securities and Standard Oil cases.) The essential purpose of the statute is to prevent inj;nry — not merely to reverse a course of conduct." The Supreme Court (221 U. S., 106, 179), by Mr. Chief Jus- tice White, said: (p. 179) "Applying the rule of reason to the construc- tion of the statute, it was held in the Standard Oil Case that as the words 'restraint of trade' at common law and 192 in the law of this coimtry at the time of the adoption of the Anti-trust Act only embraced acts or contracts or agreements or combinations, which operated to the preju- dice of the public interests by unduly restricting competi- tion or unduly obstriicting the due course of trade or which, either because of their inherent nature or effect or because of the evident purpose of the acts, etc., inju- riously restrained trade, that the words as used in the statute were designed to have and did have but a like significance. It was therefore pointed out that the stat- ute did not forbid or restrain the poiver to inahe normal and usual contracts to further trade by resorting to all normrd methods, whether by agreement or otherwise, to accomplish such purpose. In other words, it was held, not that acts which the statute prohibited could be removed from the control of its prohibitions by a finding that they were reasonable, but that the duty to interpret which in- evitably arose from the general character of the term re- straint of trade required that the words 'restraint of trade' shoidd be given a mea/ning which would not destroy the individual right to contract and render difficult if not impossible any movement of trade in the channels of inter- state commerce — the free movement of which it was the purpose of the statute to protect." The basis of the decree against the Tobacco Company was thus stated: (pp. 181, 182) "Indeed, the history of the combina- tion IS so replete with the doing of acts which it was the obvious purpose of the statute to forbid, so demon- strative of the existence from the beginning of a purpose to acquire dominion and control of the tobacco trade, not by the mere exertion of the ordinary right to contract and to trade, but by methods devised in order to monopolize the trade by driving competitors out of business, which were ruthlessly carried out upon the assumption that to work upon the fears or play upon the cupidity of competi- tors ivould make success possible. We say these conclu- sions are inevitable, not because of the vast amount of property aggregated by the comhina-tion, not because alone of the many corporations which the proof shows were united by resort to one device or an- other. Again, not alone because of the dominion and con- trol over the tobacco trade which aetuallv exists but be- 193 cause we think the conclusion of wrongful purpose and illegal combination is overwhelmingly established by the following considerations : ' ' (Enumerating a long list of the methods of injuring competitors and driving them or keeping them out of the trade. ) In U. 8. V. Americcm Naval Stores Co., 172 Fed., 455, p. 458, in charging the jury in a criminal prosecution for viola- tion of Sections 1 and 2 of the Sherman Law, Sheppaed, J., said: "The size of a htmness is not in itself a violation of this latv, and should carry with it no great weight in consider- ing the second coimt of the indictment. The criminal act in the statute is the certain and necessary prevention of all other persons from engaging in such business, and thereby stifling competition. The evil is not the enlarge- ment of the trade of one person or corporation, but the destniciion of the trade of all other persons in the same commodity. It is sometimes difficult to distinguish between a legiti- mate business enterprise and an illegal monopoly. From the law as has heen interpreted, it may be said, however, that fhe monopoly is the power acquired over the traffic, sale and purchase of a commodity, in the course of inter- state or foreign commerce, by which the free flow of such commerce and com.petition in such commodity is neces- sarily crushed and stift,ed. Since the size of the business alone is not necessarily illegal, it is the crushing of com- petition, by means of force, threats, intimidation, fraud or artfid and deceitfid means and practices, which violates the law." On appeal the judgment of conviction was reversed because of another part of the charge. Nash v. U. 8., 229 U. S., 373. The court, referring to the Standard Oil and Tobacco Cases, there said: (p. 376) "Those cases may be taken to have established that only such contracts and combinations are within the act as, by reason of intent or the inherent nature of the contemplated acts, prejudice the pphlic interests by unduly restricting competition or unduly obstructing the coivrse of trade.^ 221 U. S., 179." 194 The Standard Oil and Tobacco Companies were not con- demned because of tlieir vast size and resources but for their oppressive monopolizing and excluding acts 'and methods. The Standard Oil, beside these methods, controlled the pipe lines; control over the refined product gave control over the raw materials (221 U. S., 77); and the American Tobacco Co. had a practical monopoly of ' ' all the elements essential to the successful manufacture of tobacco products." (221 TJ. S., at p. 183.) The law does not compel anyone to enter the trade or to compete vigorously while therein {U. S. v. Reading Co., 226 U. S., 324, 369) or to remain in the trade. It does not prohibit any of the usual contracts of business, either in the purchase or sale of competing properties with their good will. {Bay Case, 200 U. S., 179, at p, 184.) The decision in the St. Louis Terminal Case, 224 U. S., 383, clearly makes a distinction between the possession of all exist- ing terminal facilities and the possession and control of all possible terminal facilities. The Terminal Association was condemned not because it had combined all existing terminal facilities, 'but because the physical conditions surrounding St. Louis made it impossible for any other terminal facilities to be created or acquired, and because of the urifair practices and discrimination in leasing those facilities, (pp. 398, 405-8.) The court said: (p. 398) "The physical conditions which compel the use of the combined system by every road which desires to cross the river, either to serve the commerce of the city or to connect with lines separated by the river, is the factor which gives greatest color to the unlawfulness of the combination as now controlled and operated. If the Terminal Company was in law and fact the agent of all, the mere unification which has occurred would take on quite a different aspect." The decision turned on the control of all possible terminal facilities and the discriminatory character of the terms upon 195 which their use was offered to roads having no interest in the Terminal Company, (p. 410) In Fonotipia, Ltd., v. Bradley, 171 Fed., 951, 959, the court stated both the law and the obvious economic fact, thus : "Nor is a 'monopoly,' in the sense meant by the stat- ute, merely the complete occupation of a certain field ichcrc that occupation does not unfairly exclude other com- petitors. The fact that a certain person is the only dealer in a certain goods may be entirely consistent with a free and unlimited opportunity to every other person to deal in the same goods, and the law of proper demand and supply may result in but one source from which certain things can be secur.ed, without thereby rendering the per- son supplying these goods liable to the accusation of ille- gally maintaining a monoply." In United States v. Reading, 183 Fed., 427-456, Judge Gkay thus construed the word "monopolize" in Section 2: "The word is hard to define, and no attempt at ex- haustive definition need be made. It will suffice to say that the mere eiient of acquisition of business or property achieved by fair or lawful means cabinet be the criterion of monpoly. In addition to acquisition and acquirement, there must be an intent by nnlawful means to exclude others from the same traffic or business, or from acquir- ing by the same means property and material things. As said by Judge Sanborn, in U. S. v. Standard Oil Co., 173 Fed., i77 : 'It (the anti-trust act) ^vas enacted not to stifle, but to foster competition, and its true construction is that, while unlawful means to monopolize and to continue an unlawful monopoly of interstate and international commerce are misdemeanors and enjoinable under it, monopolies of part of interstate and international commerce, by legiti- mate competition, however successful, are not denounced by the law, and may not be forbidden by the courts.' It has been said in many cases, and the brief of the United States admits, that mere acquisition of the ma- terial sources of wealth, and the enlargement of bivsiness and traffic, accomplislied without the illegal combination or conspiracy denounced by the act is not unlawful." The decision of the Circuit Court was that the 65 per cent. 196 contracts which were used to control the entire production of the limited field of anthracite coal were not illegal. The Su- preme Court held that those contracts were illegal and evinced a purpose and attempt to monopolize the limited field of an- thracite coal. U. 8. V. Beading, 226 U. S., 324, 358. The court said: "That the plan was calculated to accompHsh the design averred, in the present case, seems plain enough. The anthracite field was very limited. The means for trans- portation from the mines to seaboard shipping pomts were in the hands of tlie defendant carriers. They, to- gether with their subsidiary companies, controlled about ninety per cent, of the coal deposit and about seventy- five per cent, of the annual output. If the remaining out- put, that of the independent operators along their several lines, could be controlled as to production and sale at tidewater points, there would inevitably result such a dominating control of a necessity of life as to bring the scheme or combination within the condemnation of the statute. That these sixty-five per cent, contracts were the result of an agreement through protracted conferences between the independent operators, acting through an authorized committee, and officials of the carrier defendants, who were likewise officials of the coal companies subsidiary to the railroad companies, is plainly established. That they were designed by the defendants as a means of controlling the sale of the independent ontpxit in the marhet at tide- water points, thereby preventing competition with their own coal and as a plan for removing the' great tonnage controlled by the independents from being used as am, inducement for the entry of competing carriers into the district, is a plain deduction." The Sherman Act does not undertake to equalize competi- tors, or place any limit to the resources that may be united in the interest of a greater industrial and commercial effi- ciency. The most conclusive and unanswerable proof that the International did not restrain trade or monopolize it, and that it has not the power to monopolize it, is found in the very course of its trade in the United States in the past 10 years. In 197 binders, by the undisputed evidence, its proportion of the trade has declined from about 97 per cent, in 1903 to 85 per cent, in 1912, with a still more marked decrease indicated for 1913 — probahly to 80 or 81 per cent. ; and in mowers from 90 per cent, in 1903 to 73 per cent, in 1912; and in rakes from 85 per cent, in 1903 to 68 per cent, in 1911, with a still more marked decrease indicated for 1913. In the absence of some exclusive right or privilege essential to the manufacture and sale of harvesting machinery, the pos- session of this large per cent, of the trade does not give the International a monopoly of that trade. The record not only shows that there has been no attempt to drive competi- tors out of business, or to keep others from entering it, but that the mere possession of this large share of the trade did not give the International the power to do so. If it had had the power and the intention, its per cent, of the business would have grown instead of lessening — as the admitted fact is — and the per cent, of its competitors would have lessened instead of grown, as the competitors themselves testified was the case. TRADE IS NOT EESTBAINED UNLESS COMPETITORS AEE COERCED. The law does not guarantee to all competitors in business any more than to all persons equal ability to compete, but it does guarantee to all unrestricted opportunity to compete. There is no obstruction to interstate trade by the mere union of competing properties in a partner- ship or a corporation, unless and until competitors are by duress deprived of the opportunity to compete, or are excluded from the field. This may be done either by wrongful and op- pressive trade methods, such as local price-cutting and other methods of oppression which were conspicuous in the Stand- ard Oil and Tobacco cases, or by haA^ing exclusive control of some essential element in the industry. In the harvesting implement 'business in the past ten years. 198 not a single competitor has been injured by unfair or op- pressive methods, and defendants have no exclusive right to any element essential to the manufacture or sale of harvest- ing machinery. The raw materials, the labor, the manufactur- ing sites, the designs for efficient machines, and the facilities of advertising, distribution and sale are all entirely open and unrestrained. That the field is free and that competition and competitors are not suppressed or excluded, is proven by the testimony of the competitors themselves. Not only has the International driven out no competitor, but during this very period of the so-called "monopolization," new competitors of very large re- soiuTPs and facilities have entered the field in the harvester lines, as we will more fully show hereafter. The petition avers that the International, through its large resources and various brands of harvesting machinery, in it- self restrains the activity and progress of its smaller com- petitors, and prevents outsiders from coming into the busi- ness, and thus trade in harvesting machines is restrained and monopolized. The first and obvious, and perhaps all-sufficient answer is that the sworn testimony of the competitors themselves dis- putes both conclusions, and destroys the argument. Their share of the trade is small,— they have all been much smaller; they have all competed during the ten years, and are all com- peting; they all are able to continue in the business, and are all able to get such portion of the business as their resources their enterprise, their plans and desires determine. Some of them admit, and no one denies, that if the International's or- ganization and business methods are more efficient, it has, to that extent, an advantage; but not even those competitors who are, or who may suppose themselves to be, at this disadvan- tage contend, in a single instance, that they are foreclosed from the successful conduct and development of their business- 399 or that there is just ground for complaint against the Interna- tional on any such account. The universal, harmonious voice of all these competitors is, that the field is open and the In- ternational's competition is fair, normal and businesslike. (App., 644 to 799.) That the trade is not monopolized or restrained with re- spect to others entering the business is likewise proven, not only by the judgment of competitors, but by the acts of the very strong competitors themselves who entered upon the business of making and selling harvesting machinery in the United States only after the International's alleged "monop- •olization" had existed for several years. P. D. Middlekauff, the Grovernment 's own witness, Deere & Company, the Mohne Plow Company and Alassey-Harris Company of Can- ada have all come into the trade in the United States during this period of alleged "monopolization." CONCENTKATIOS AND EFEICIESTCY ABE NOT MONOPOLY. But, as a matter of reasoning and of law, the concentration by mere contracts of purchase and combination of 85 or 90 per cent, of the existing facilities for manufacture and sale of harvesting machines does not, and cannot, in .and of itself, create a monopoly. It can and should produce the advantages of manufacture and distribution on a large scale. It raises the standard of efficiency required for successful competition, and eliminates the waste and loss inherent in the old methods of competition, such as price-cutting, exclusive contracts, etc. Competition upon a basis more beneficial to the consumer than ever existed before has been developed, and is rapidly grow- ing, as is abundantly shown in this record. It was precisely this fundamental difference which is clear- ly pointed out by the decision of the Supreme Court in the United Shoe Machinery case — TJ. 8. v. Winslow, 227 IT. S., 202. The Government there claimed that, where there were three 200 corporations, each with from 70 to 80 per cent, of the trade of selling machinery for the manufacture of certain of the three main separate portions of a shoe, to unite those three corpora- tions into one, and to centralize in the hands of one corpora- tion 80 per cent .of the trade in the manufacture of all the machines that were used and were necessary in the production of a complete shoe, — where there was no other competitor that was making all the machines necessary to make a shoe; and even of the competitors who were making the machines for parts of a shoe, there was none that had more than a very small per cent, of the trade of the shoe machinery company, — this centralization and combination made it practically im- possible for the existing competitors to carry on their compe- tition, and still more difficult for any new competitor to enter the field. This argument was pressed with great ability upon the Supreme Court. The question was thus stated by the Solicitor General: (p. 203) "This ease presents the question whether it is legal to gather together into one corporation about 80 per cent, of all the interstate trade in some particular line of activity when it is done gradually by legitimate meth- ods and without any unfair competition such as charac- terized the Tobacco and Standard Oil cases. If that is legal, the sooner the business world understands it the better. (p. 205) The question presented, then, is whether the conibination into one group of 75 per cent, of the whole business of the country in a particular line is in such re- straint of trade as to violate the Sherman law, it being conceded that the combination was not attended by any methods of unfair competition or illegitimate trade prac- tices. Without attempting to determine exactlv at what per- centage of trade control a combination passes into the region of illegal restraint, the Government insists that when a combination acquires between 70 and 80 per cent, of the total trade in a particular business, the line be- tween legal and illegal combinations has been passed ; and that this is so even though the combination is made with- 201 out resorting to any wrongful methods to coerce anyone to come into the combination." The Supreme Court, in a unanimous opinion, said: (p. 217) "Hence the only question before us is whether that combination taken by itself was within the penalties of the Sherman Act. * * * Thus limited the question does not require lengthy dis- cussion, and a large part of the argument addressed to us concerned matters not open here. On the face of it the combination was simply an effort after greater efficiency. The business of the several groups that combined, as it existed before the eom'bination, is assumed to have been legal. * * * As, by the interpretation of the indictment below, 195 Fed. Rep., 591, and by the admission in argu- ment before us, they did not compete with one another, it is hard to see why the collective business should be any worse than its component parts. It is said that from 70 to 80 per cent, of all the shoe machinery business was put into a single hand. This is inaccurate. * * * But taking it as true we can see no greater objection to one corporation manufacturing 70 per cent, of three non-com- peting groups of patented machines collectively used for making a single product than to three corporations mak- ing the same proportion of one group each. The disin- tegration aimed at by the statute does not extend to re- ducing all manufacture to isolated units of the lowest de- gree. " This is directly in line with the following paragraph from an address of ex-President Taft when Secretary of War, at Columbus, Ohio, on August 19, 1907 : "Definition of Unlawful Monopoly: I conceive that it is not sufficiently defined by saying that it is the combination of a large part of the plants in the country engaged in the manufacture of a particular product in one corporation. There must be something more than the mere union of capital and plant before the law is violated. There must be some use by the com- pany of the comparatively great size of its capital and plant and extent of its output, either to coerce persons to buy of it rather than of some competitor, or to coerce thosewho would compete with it to give up their business. There must, in other words, be an element of duress in 202 the conduct of its iDusiness toward the customers m the trade and its competitors before mere aggregation of plant becomes an unlawful monopoly. It is perfectly concei>'able that in the interest of economy of production a great number of plants may be legitimately assembled undei' the ownership of one corporation. In such a case it is either not a trust, if the term involves unlawfulness, or it is a lawful trust, if a trust merely means a com- pany which has assembled a large part of the manufac- turing plants of any product." A like clear statement of the scope and purpose of this law was made by Mr. Justice Hughes while Governor of New York, in an addrei-s at Youngstown, Ohio, September '), 1908: "In a desire to correct the evils of business, are we to place an embargo upon honest endeavor whose activities present iione of the abuses requiring remedies, and, if not, wliat statutory definitions shall be found to be adequate and just if we lay down our prohibition in terms of vol- ume or ratio of business, and not in terms of right and wrong ? ' ' "It is the function of law to define and punish wrong- doing, and not to throttle business. In the fields of in- dustrial activity the need is that trade should be fair; that unjust discriminations and illegal allowances giving preferential access to markets should be prevented; that coercive combinations and improper practices to stifle competition should h^ dealt with regardless of individuals; but that honest industry, obtaining success upon its mer- its, denying no just opportunity to its competitors, should not be put under prohibitions which mingle the innocent and thf- guilty in a common condemnation." MONOPOLIZATION BY WRONGFUL AND OPPRESSIVE PRACTICES, TO THE DESTRUCTION OF COMPETITORS AND THE GRAVE IN- JURY OF THE FARMER AND THE PUBLIC IS THE GIST OF THE CHARGES. But the petition itself recognizes that the large per cents, of the trade in binders, mowers, and rakes which the Interna- tional enjoys, do not constitute a restraint or monopolization of trade for it does not rest its case on that ground. The 203 charges of tlie petition are tbat through agency contracts and popular brands of machines the local dealers are coerced not to handle either the harvesters or any of the new line goods of any competitors and that by wrongful and oppressive acts competitors have been eliminated and by these and other meth- ods, including patent purchases, the alleged monopoly has been created and maintained. If the International's large percentage of the harvester trade constitutes a violation of the Sherman Law, the Grovern- ment would hardly have filled its petition with its score or more of charges of fraud, coercion, deception, discriminatory prices, high prices, false statements, excessive division of railroad rates and other unfair and oppressive trade methods, and a patent monopoly; — as to some of which— discrim- inatory prices, high prices, and patent monopoly, — the Gov- ernment introduced no evidence whatever. If defendants are guilty of violating the Sherman law because the Interna- tional enjoys a large part of the domestic trade in three or four out of its twenty-four lines of agricultural implements, the Government could, and doubtless would, have taken judg- ment upon the defendants' answer, — which admits that the .companies whose properties the International Harvester Com- pany acquired were making "SO to 85 per cent, of the binders, mowers, reapers and rakes'" (Answer, p. 5), and that the In- ternational has "about 70 per cent, of the trade in grain bind- ers and 60 per cent, of the trade in mowers." (Answer, p. 51.) Instead of this, the Government made an exhaustive in- vestigation of the corporate defendants' records, circulars and correspondence, and all their business dealings through ten years with general agents and local dealers all 'over the West- ern country, to find, if possible, some act of unfairness or wrong-doing on the part of some representative, no matter how subordinate. The Government searched for discharged employes, to give them opportunity to vent their hostility; 204 and through the whole field of its competitors, not only in the "harvester lines," but in the "new lines," it sought for evidence of the wrong-doing which the Petition had improvi- dently charged. IS TRADE RESTRAINED? The record shows, as a fact, that trade in the harvesting lines, or other agricultural implements, is not restrained or monopolized. The Government called 26 representatives of competing implement companies, of whom 20 represented har- vester competitors, and the defendants called 76, of whom 30 represented competitors in the harvester lines. Here were the men, who must necessarily know the fact, if it is a fact, that thej^ and their 'business are being injured and their free- dom in the trade restrained by the defendants. If it is a fact, every one 'of them is directly interested in having the fact proven, and thus have the injury to him and his business stopped and his freedom of competing in the trade restored. It is impossible for the charges of the petition to be true and these witnesses to be ignorant of tlie facts. OOMPETITOES AND COMPETITION IN HARVESTING MACHINES. The competitors in the binder trade ever since the Inter- national was organized are the Acme of Peoria, 111., Adriance- Platt of Poughkeepsie, N. Y., Johnston of Batavia, N. Y., Walter A. Wood of Hoosick Falls, X. Y., and Sieberling & Miller of Doylestown, 0. In mowers, besides the foregoing, are the Emerson of Kockford, 111., Eureka at Utica, N. Y, Messinger Mfg. Co., Tatamy, Pa., and Richardson at Worces- ter, Mass. In rakes, in addition to all the foregoing, were Belcher & Taylor at Chioopee Falls, Mass., and the Thomas Co. at Springfield, 0. Into the entire harvesting line have come since 1903 these 205 new competitors : the Independent Harvester Co., Piano, 111., in 1910; Deere & Co., Moline, 111., in 1911— the largest plow manufacturer in the world and handling the longest line of agricultural implements of any company in the U. S. ; and the Minnesota State Prison, in 1911. MOWEBS. In mowers, in addition to these new factories, new capital and resources, and in addition to the 12 companies already mentioned, the Thomas at Springfield, 0., the Plattner Im- plement Co. at Denver, Oolo., and Montgomery Ward & Co., the mail order house at Chicago, have since entered the trade ; Plattner and Thomas in 1906 and Montgomery Ward in 1909. All the companies above mentioned — 15 in number — are mak- ing mowers and also rakes. The record shows that in addition to the foregoing, new management, new capital and greatly enlarged resources have come into the manufacture of the harvesting lines in the last five years, as follows: P. D. Middlekauff, who had been director of the Acme Co. for one year, in 1908 increased largely his investment in that company, became its president, and in four years increased its sale of binders in the territory from Illinois west to the Rocky Mountains from 2,588 to 11,000 machines; and in mowers from 3,488 to 9,000 ; and in rakes from 5,359 to 9,600. Massey-Harris Co., Ltd., of Toronto, the largest agricul- tural implement company in Canada, and one of the first three or four in the world, in January, 1910, bought a controlling interest in the Johnston Harvester Co., and soon after dou- bled its capacity for manufacturing harvesting machines. And in January, 1913, the Moline Plow 'Co., one of the three largest agricultural implement companies in the U. S., pur- chased the Adriance-Platt factories and business at Pough- 206 keepsie, N. Y., and in five months increased the sales of the product of that factory by 10,000 harvesting machines. . As to the strength in resources and organization of these various competitors, and the growth of their business, and the openness of the field a more detailed statement of their testi- mony is necessary. Taking up the Government's witnesses first: Government's Evidence on Competition in Harvesting Machines. COMPETITORS IN BIWBEBS. Of the Acme Company, P. D. Middlekauff, the president, and E. E. Mason, the Omaha manager, Nebraska, and W. D. Wor- ner, general agent at Aberdeen, S..D., all Government wit- nesses, testified: ACME HAEVESTINd MACHINE CO. P. D. Middlekauff (I, 147, 173-181): The policy of the International of giving one binder to one agent and another to anotlier as long as the supply lasts, makes it more difficult for other manufacturers and for my company to get a sufficient number of agents. In 1907-8 I thought there was a field for successful busi- ness in the harvesting machine lines in active competition with the I. H. Co. in the U. S. and in that belief I invested money in the Acme Co. We make only harvesting machines and we have been doing a growing and successful business in active competition with the I. H. Co. In 1908 the Acme had four genera] agents ; now it has 14, and the number of local agents lias increased two and a half times. He submitted figures showing sales of binders, mowers and hay rakes for the years 1905 to 1912, inclusive, and the volume of business from 1908 to 1912. The volume of business had increased from $779,672 in 1908 to $2,100,000 in 1912, and the total num- ber of harvesting machines sold had increased from 11,400 in 1908 to 31,000 in 1912. 207 R. E. Mason (III, 178, 182-184) : _ We have difficulty in getting agents in the North Platte ter- ritory. 1 think the policy of the International in dividing their harvesting implements among the different dealers in a town has an effect on us, because the laie/er the line theii have the eaiier it is to get agents. As Acme general agent I covered S. W. Iowa, all of Neb., a little of Kas., Colo, and Wyo. Its business in my territory has increased. North of the Platte the International does about 80 per cent, of the business in grain binders ; south of the Platte I think we do 50 per cent, of the business in binders; that is the big grain territory in Nebraska. W. D. WOKNEE (III, 188) : The division of lines among dealers makes it difficult for us to get good dealers. I judge about 20 per cent, of the dealers who handle our lines also handle those of the International; but, on the whole, they are not as satisfactory as other agents. My territory as Acme general agent southern part of N. D. and northern part of S. J). The International does about 70 per cent, of the business in grain binders; the balance is done by tlie Johnston, Acme and Independent harvester com- panies. Our business has grown in a measure. I do not think the Johnston Company's business is growing. The Independ- ent Harvester Co.'s business has made substantial progress and the indications are its progress will continue. DEEEE & CO. William Butteewobth, the president, testified (II, 52-62) : Deere & Co. was organized in 1868; in business since 1837; began with plows. Its capitalization is now $65,000,000 of which about $40,000,000 preferred is issued. This is not exact. [Later evidence shows that in June, 1913, the issued capital Avas $58,007,100 (XIV, 335).] It has added to the lines until it now makes, besides plows: corn planters, discs, wagons, manure spreaders, mowers, hay loaders, corn shelters, buskers and shredders, etc. About 15,000 dealers sell our lines. We have between 20 and 30 branch houses. We went into the mower business about five years ago, by buying the Dain plant, and into the binder business in 1911. We regarded it as a proper business 208 field for the enterprise of our company, and went into it as a business proposition. We expect that it will develop into much larger proportions than it now has. In mowers the sales in the U. S. have increased from 490 in 1906 to 7,314 in 1911; in binders we sold 27 in 1911 and 933 in 1912. The Deere & Co. binder and mower are very similar to the Inter- national type. THE JOHNSTON HARVESTER CO. A. C. Atwatek (III, 377), its secretary, produced list of its lines and sales in those lines from 1902 to 1911. Showed that its binder sales had increased from 1,002 in 1903 to 3,027 in 1911; its mowers from 2,527 in 1903 to 7026 in 1911; com binders from 528 in 1903 to 3,150 in 1911; and rakes from 1855 in 1903 to 5,200 in 1911. Capital stock issued, $1,800,000. THE INDEPENDENT HARVESTER CO. A. H. Bayston (II, 181-190), gave its sales, beginning in 1910. Company reorganized in 1907; paid-up capital is near $5,000,000. Beside harvester line, it makes plows, cultivators, harrows, spreaders, listers, and portable elevators. We have about 23,000 farmer stockholders, and branch bouses in a dozen or more states. The last three years the output has been doubled each year over the preceding one. WALTER A. WOOD MOWING & REAPING MACHINE CO. Daneorth Geer (III, 303-306), its president, testified: Our business began in 1852; incorporated 1865, and done chiefly in the eastern territory; in the middle west only through jobbers. We do business in active competition with the I. H. Co. and competition is normal and our business has been fairly prosperous. When we need a new agent in a place we l^bve no more trouble in getting an agent against the International than against anybody else. The opportunities for the de- velopment of our business are normal and businesslike. Fig- ures produced show sale of mowers increased from 5,140 in 1903 to 9,356 in 1906 and declined to 5,560 in 1908, rose to 7,898 the foUovsdng year, and in the 1912 the number sold was 6,074. In binders there were only 67 sold in 1903, 1,817 in 1906, 515 in 1908, 1,229 in 1910, and 820 in 1912. In rakes the 209 fluctuations are between 3,831 in 1903 to 6,037 in 1906, '2,561 in 1908, 5,073 in 1911 and 2,893 in 1912. ADBIANCE-PLATT COMPANY. Albert J. Glass (III," p. 355), its general manager 21 years: Company began manufacture of mowers 1855. Makes grain binders, corn binders, mowers, hay rakes and reapers, with business principally in the Eastern states. A large share of its business is export. Should say that the binder has not im- proved in quality in the last ten years ; stopped about ten or twelve years ago. Figures produced show sales in binders . 816 in 1903; 615 in 1904; 1,155 in 1906; 583 in 1908; 1,051 in 1910; 1,056 in 1911. In mowers there is a similar fluctuation from 5.401 in 19_03, increasing to 6,659 in 1907, 4,471 in 1908, 5,660 in 1910, 4,v63 in 19ll. The sale of rakes has increased from 443 in 1903 to 2,151 in 1910 and fallen to 1,792 in 1911 : corn binders from 243 in 1903 to 330 in 1911. We do not sell any binders throughout the Northwestern or Central West. We have not tried to develop our trade in that section. Mr. Glass, of the Adriance-Platt, complained of McCor- mick and Deei'ing machines being sold in Northeastern Maine at the same prices as in Ohio, and reported the suits against two International salesmen for false statements, which have already been referred to. In addition to these existing active competitors of harvest- ing machines, Frederick Eobinson (II, 129-137) of the J. I. Case Threshing Machine Company of Eacine, Wisconsin, with an authorized capital of $40,000,000, of which $20,000,000 has been issued, testified that his company (130, 137-41) had com- pleted an experimental binder that had been tried out in the field and was preparing to put it upon the market under the name "The Case," and was constructing a large plant for its manufacture ; that the company has 10,000 local agents whom the company expects to utilize in marketing its binder; that the company has competed with the International in gas tractors for eighteen months and in buskers and shredders for several years ; the output of tractors in 1912 being 1,200, and 210 in Imskers and shredders 300. Its business in both lines is growing in active and strong competition with the Interna- tional Harvester Company. Although the Acme representatives complained of the dis- tribution of International brands among the different local dealers, it appeared by the testimony of Middlekauff, that his company has increased its harvester business 400 per cent, in the last five years, and by Mason that in the grain- growing country south of the Platte, in Nebraska, the Acme has secured 50 per cent, of the entire hinder business. As a final representative of competitors, the Grovernment' called B. A. J\rcAleer (II, 343, 346, 354, 356), a canvasser for the Koek Island Plow Company at Oklahoma City, Okla. He complained of the coercion of the local dealers, and his testimony has already been dealt with in that connection. This was the sum total of the Government's testimony of representatives of companies making all the "harvester lines" with respect to the "monopolization" of those lines. Instead of proving, it clearly disproved the charge. This evidence alone shows active, actual, strong and growing competition in that field. goveenment's testimony of compbtitoes in mowees and hakes. In addition to the foregoing manufacturers wdio make the full harvesting line, the following manufacturers of mowers and rakes (but not binders) were called liy the Government. J. D. AVhite (II, 191-199), sales manager of Emeeson- Beantixgham rioMPANY, Rockford, Illinois, testified: This company has been doing business since 1852, prin- cipally in farm machineiy other than the harvesting lines. Many years ago it made reapers and it still manufactures the mower known as the "Emerson" since 1885 and as the "Emerson Standard" since 1901. Its principal lines are plows, cultivators, harrows, mowers, rakes, planters and disc harrows. The mower has alwavs been sold at a 211 slightly advanced price over the other well known mow- ers, such as the Deering- and MoCormick, and it still is so sold because it is a more expensive mower to build and a more desirable macliine for the purchaser. The witness produced the number of rakes and mowers, respectively, sold by his company each year 1903 to 1912 inclusive. The table shows (II, 194) "that its sales of mowers steadilv increased from 2,201 in 1903 to 11,460 in 1910 and fell to 9,592 in 1912. The company has eleven different plants manufacturing agricultural implements which include beside steam plows and threshing machinery, steam tractors, corn shellers, hay presses, gas tractors, harrows, planters, cultivators, rakes, drills, wagons, gas engines, hay loaders, stackers, tedders and manure spreaders. The company advertises itself as having the largest line of farm machines of any company in the world. It has 12,000 retail implement dealers handling its goods and has had an increasing busi- ness during the past ten years, during a large part of which time it has been selling most of its line in active competition with the International. THOMAS MANUFACTURING COMPANY. H. H. Beam, (III, 216, 217) its secretary, testified: In mowers the sale has increased from 275 in 1906 to 3,400 in 1911. In rakes sales had fallen from 3,300 in 1903 to 2,300 in 1904, and increased to 2,900 in 1910, and 2,400 in 1911. Also manufactures line of seeders, drills and other planting machines. The Plattnek Implement Company, represented by John Plattner (II, pp. 514-19) : Began to make mowers, stackers and sweeps in 1905, and has since been selling them in the Westel-n country in competition with the International, though at something of a disadvantage at Denver in freight rates. "We thought we could make a market and develop a growing business, and to a certain extent it has been proven that we were right. ' ' 212 KICHAKDSON MANUFACTTJKING COMPANY. John D. Ctjbtts (III, pp. 385-95), vice president, testified: Our business dates from 1864, making the "Worcester- Buckeye. ' ' The sale of mowers has decreased. Richardson business is confined to the New England States, in which the International, Johnston and Walter A. Wood are our principal competitors and are doing a successful business. The International has the advantage in the large selling organization and its canvassing force. "The New England farmer is a little peculiar. You might say that a large proportion of the sales made are forced sales." Like Glass, of Adriance-Platt, he thought that there had been no improvement in the machine in twenty years. It appears not to have occurred to either that the lack of im- provement in their machines may have accounted for the lack of growth in their sales. COMPETITOBS TN THE "NEW LINES." The Petition charges that the International's large per cent, in harvesting machines is used to coerce dealers into buying its "new lines" in preference to those of competitors. BUMELY & CO. As the representative of the competitors of the Internation- al in its so-called "new lines," Edward A. Eumely (II, 156, 161-67), treasurer and general manager of the Eumely Com- pany, of La Porte, Indiana, testified : This company has existed since 1853, and has expanded from a thresher company into a veiy long line of agricul- tural implements, engines, tractors, feeders, corn shred- ders and buskers, shellers, and jobbing gasoline engines, cream separators, etc., with the thresher and steam and oil engines the principal fine. Either the Eumely or the International is the largest company in tractors. We manufacture threshers on a very large scale. We understand that the I. H. Co. has entered on the sale of 213 threshers. They have sold different threshers at differ- ent branch houses, on the jobbing basis— the Belle City and the Aultman-Taylor, and in Canada, I think, the Buf- falo-Pitts. The tendency among manufacturers of agri- cultural implements today is toward distributing a full line of implements. By that I mean not confining the business to one article salable only at a particular time. In the early spring the farmer needs the plow, a little later the harrow, then the seeder, later the harvester and finally the thresher. A "full line" is known technically as the dealing in enough implements to have something to sell at every season of the year. Cross-Examination. Our business is prosperous and rapidly growing. It has grown with particular rapidity during the last five years. Last year we did $10,586,000 worth of business. Six years ago our business was about $800,000. That growth went on notwithstanding the competition of the I. H. Co. It is a competitor of ours in shredders, thresh- ers, tractors, gang plows, cream separators and gas en- gines. We went into the tractor business three years ago. The I. H. Co. was in the business then. The fact that it was making and marketing tractors did not convince us there was no opening in that business. We have gone into the tractor business and developed it in active competition with the I. H. Co. We made 50 tractors the first year. This year we made about 3,000. We went into the gas engine business in 1911. The I. H. Co. was in the business at that time. We went in because we thought the oil engine we were making would enable us to compete with the engine m.anufactured by the International Compam^. We sold several hundred last year. We are selling now on the basis of 15,000 a year. We began jobbing cream separators this year. We feel that we shall succeed in selling a reasonable number of them. My grandfather started the thresher business in 1858. We are still carrying on that manufacture and expanding the trade. We neither manufacture nor job harvesting machinery, but our business has been successful and rap- idly developing in the lines we do handle. The fact that the International makes a considerable proportion 214 of all the harvesting machinery sold in this country has not prevented our expanding our business in those other lines. I understand that the threslier, the cream separator, the shredder, the tractor and the gas engine are included in the term agricultural machinery. We have taken up successively various implements that have been dealt in by the Harvester Company. We have succeeded in build- ing up a profitable business in each line we undertook to deal in. Our company had 12,000 local agents in the United States in 1912. We estimate we will have 15,000 for the coming year. This includes Canada, where ap- proximately 20 per cent, of our agents are. We formerly found it difficult to secure local agents, when we had but one line of machinery, because the local agent felt the contract which we gave him was not suffi- cient for him to make a good living on. As we added to our hue and were able to offer the agent a variety of things, we found it easier to increase the number of local agents from 400 to our present number. In order to manufacture cheaply and economically, we must manufacture in large quantities. To sell the output of a factory turning out a large quantity one must cover the entire market. When you have covered that market and have located branch houses and a corps of traveling salesmen over a very wide area, to hold good men you must be able to keep them the entire year. To secure de- sirable branch house locations in the principal distribut- ing centers, you must rent buildings for the entire year or else build "them yourself. Having secured an adequate market for one particular implement, in order to use the idle time with results, you must add additional imple- ments to fill in the other ten or twelve months that are slack for the particular implement on which you started. We found, after recognizing that as an underlying fact and shaping our business policy in accordance with it, that our business immediately expanded in volume and profits. I do not know what proportion of the shredder business in the United States the I. H. Co. does. I think the Harvester Company does from 12 to 15 per cent, of the tractor business; between 15 and 20 per cent, of the gas engine business; about 16 2/3 per cent, of the cream separator business in the United States. These esti- mates are based on information available to me. The 215 International Harvester Company does . not do over 4 per cent, of the thresher business. Dealers in a^cul- tural implements in the United States other than the I. H. Co. have in the last ten years as a rule increased their business, their capacities and their organization. I find that I omitted the name of the Avery Company from my list of manufacturers of threshing machines, tractors and gang plows. I find also that I forgot to in- clude hay balers as among the line of goods which we job. A hay baler is the same as a hay press. Such was the substance of the Government's testimony from competitors. All this testimony is set forth in the Appendix to Defts' Brief, pp. 584 to 640. The significant thing about it is, that, instead of showing that the field is monopolized, or that trade in the harvesting lines is restrained, the Government proved facts that established the very opposite. Although the Government called twenty-six competitor witnesses, it did not interrogate them as to the competitive conditions and the freedom of the field in the harvester trade. And although nearly every one of the seventy-odd representatives of competitors called Ijv the defendants testified directly upon this point, in not a single instance did the Government cross-examine them upon it. Without exception, these competitor witnesses testified that the field was open and that the competition of the Inter- national was fair and businesslike. And by their own business experience it was demonstrated that the I. H. Co. has not monopolized trade in harvesting machinery or in the "new lines," and that it has no power nor inclination so to do. Defendants' Competitors Testimony. Although the testimony produced by the Government showed no monopolization of the harvester trade, the defendants called upwards of 70 men representing competitors in agri- cultural implements, of whom 30 were in the harvester trade. They were directly asked the questions which are the funda- 216 mental ones in this case: Is there actual, active competition in these machines T Is the International's competition fair and businesslike and is the field in harvesting machines and in other agricultural implements which the International makes, free and open! The testimony of these witnesses can only be very briefly summarized here, and will be arranged under the heads of the implement companies represented: DEEEE & COMPANY Al.L LINES. Floyd E. Todd (XIII, pp. 106-112) produced further figures showing the gro^i;h of Deere & Company's business in all the lines sold in competition with the International, giv- ing the per cents, of the growth as to all the "new lines" and the precise figures as to binders, mowers, rakes, wagons, spreaders. In mowers the increase in five years was 348 per cent. Their trade in binders in the United States had in- creased from 10 in 1911 to 4,000 in 1913, and the number of binder agents had increased from 5 to 376; the total sales of Deere & Co. in 1912 were $27,000,000 and they expect to con- siderably increase this volume in 1913; and that in his judg- ment other competitors had made a like increase. (XIII, 107- 111.) John L. Jones, Manager of Deere Co. at Des Moines, Iowa : I have charge of 37 central counties in that state, and com- \)ete with the International practically along its entire line, excepting tractors, thresliers and cream separators, com- mencing on harvesters in 1912. Before that I sold the Deere line of implements (without harvesters), through retail deal- ers, who handled International harvesting machinery and did not find that fact an impediment to the sale of the competing Deere implements ; I have found the field open to competition in my territory and have always found the International's competition fair. (XI, 421, 422, 428.) JOHNSTON HAKVESTEK CO. C. A. Denison (Vol. VIII, 6-10) : Branch manager at St. Louis, testified that the competitive field was open in his territory, and his company's business had 217 increased in the last five years 10 to 15 per cent, in grain bind- ers ; 100 per cent, in corn binders : 20 to 25 per cent, in mowers and 40 to 50 per cent, in rakes. E. J. Faikfieid (Vol. X, 268-270) : Manager of Lindsay Bros., at ]\Jinneapolis, Minn., whole- sale jobbers of agricultural implements. Eepre&entatives in the Northwest of the Johnston Harvester line for many years and handling all these lines in active competition with the In- ternational; that its competition in the harvester lines and m the other lines which they sold in competition with the In- ternational they found noi'mal, healthy, businesslike and fair. The fact that the dealra's through whom they sold goods also handled the International harvesting line was no impediment. Furnished a list of 484 agencies established throiigh Minne- sota, Montana, North Dakota, South Dakota, Wisconsin and Iowa. George W. Baker (Vol. XII, 47-50) : Assistant sales manager .Johnston Harvesting Co., at Ba- tavia, N. Y., since 1900. Am familiar Avith its business east from Indiana; that company, until .Ian., 1913, made only har- vesting machinery and handled them through local dealers in the territory from Indiana east. During the past 10 years we had no difficulty in getting local dealers ; the limited number sold was determined by the managers of the business; more agents could have been obtained and more machines sold if the company had been willing to expaJid in that direction; the competition of the International had been fair and business like ; from my knowledge of the trade it would be impossible for the International to coerce the dealer through its harvest- ing lines; and it would be detrihiental to any company that tried it. The Massey-Harris Co., of Canada, became the prin- cipal owner and factor in che management of the Johnston Harvester Co. nearly two years ago, and the capacity of the plant has since then been doubled. There are few instances where local dealers handle our product and International goods: I do not find that any ob- struction to my business, or interference with it. I produce a list of 1,018 agencies distributed through Illi- nois, Indiana. Iowa. Kansas, Miehig-an, Missouri, Oklahoma, and Ohio, beside which thp com.pany has 400 dealers in Penn- svlvania and 500 in New York. 218 The bulk of our business in 1901 and 1902 was east from Indiana. We were not doing any direct business, to speak of, west of Indiana then, (idem., 53.) Our business has expanded into the central West since the International was organized. (ib., 54.) L. D. CotLiNS (XIII, 334, 335) : Treasurer and assistant general manager of the Johnston Harvesting Co. ; secretary from 1902 until 1910, and acquainted with the business affairs and policy of the company during th« last 10 years. The sales of the Johnston Harvester Co. during the last 10 years in the United States were primarily governed by our re- sources and facilities, measured by our policy as to foreign trade. Our domestic sales would have been much larger dur- ing the last 10 years, if our financial resources and our manu- facturing capacity had enabled us to increase them. MASSEY-HAEEIS COMPANY. Thomas Findley (XIII, 183) : Vice-president and assistant general manager of the Mas- sey-Harris Co., Ltd., Toronto, Can. It was organized in 1891 of three harvesting machine companies and one tillage and one seeding machine company. Shortly after, and before 1902, plow, wagon and manure spreader plants were added. The Massey-Harris Co. has an issued capital stock of $15,- 000,000 and our resources are about $30,000,000. I think we are the largest manufacturers of harvesting implements in the world next to the International. We bought control of the Johnston 'Co. in January, 1910. WALTER A. WOOn COMPANY. William I. Shaw (Vol. XII, 498, 499) : Sales Manager Walter A. Wood Co. from 1907 until 1913. I succeeded Given Moore and extended "the trade in territory east of the Mississippi, and sold our goods in competition with the I. H. Co. We considered that competition along busi- ness lines and fair. Our busmess grew. We did all our capi- tal would permit; that was the only limitation. In the Ohio territory we increased our business from about $25,000 in 1907 to nearly $250,000. This included new lines. 219 THE ADEI.\NCE-PLATT COMPANY. George H. Simons (Vol. XI, 479, 482) : Sales Manager for Adriance-Platt Co. from 1903 until last fall — 1912. The failure of Adriance-Platt Company to expand its business in the binder and mower lines was that their binder was not adapted to tlie country where they would nat- urally look for their increased trade. It was a right-hand binder, and the Ohio and western trade, and some parts of the east, required a left-hand binder. They afterwards built one ; put it on the market 4 or 5 years ago, but it was hardly per- fected until about 2 years ago. Another reason was that in 1907 they cut down their selling appropriation about 30 per cent, which naturally limited and curtailed their sales. Their prices were usually a little higher than the International's. During the time I was sales manager was, in a general way, familiar with the eomiDetitive methods and practices of the I. H. Co. It was keen, sharp, competition, but I think it was busi- nesslike and fair. The limitation in the territory in which the Adriance-Platt machines were sold was due to the policy of the company, which was not a policy of expansion. They could have in- creased their domestic trade, if they had adopted the policy of expansion and had larger financial resources. If anything were lacking to the demonstration of the free- dom of the agricultural implement trade from restraint — that competition in harvesting machinery is actual and active and that defendants have not controlled it, and do not and cannot control it— it is furnished by the testimony and the acts of the owners of the Moline Plow Company, as shown in this record. Without a binder or mower, that Company has been in very successful competition with the International in wagons, hay loaders, disc harrows, lever harrows, manure spreaders, drills and corn planters. Its business, as shown by the following testimony, has grown by leaps and bounds. On January 1, 1913, it entered this "monopolized" harvester field 'by buying the plant of the Adriance-Platt Com- 220 pany, and in four months increased the sales of that Com- pany's harvesting- machines by 10,000 machines! Their testimony is so interesting and significant that it is presented somewhat fully. MOLINE PLOW COMPANY. Albert C. Barber (Vol. XI, 334-343) : Sales Manager jNIoline Plow Co. and its branches for six- years. Before that assistant sales manager three years; be- fore that manager at Kansas City, Minneapolis and St. Louis. For past nine years have been in executive charge, directly while sales manager, and under the manager as assistant sale:? manager, of the implement sales of the JNIoline Plow Co. whicli sells its products throughout the entire United States. During that period, or part of it, we have been in competition with the I. H. Co. in the sale of implements ; wagons, hay loaders, and that class of goods, as well as disc liarrows, lever har- rows, grain drills, and corn planters and manure spreaders. I have never foimd the competition of the I. H. Co. other than clean and fair. The field in United States has been open to successful busi- ness in competition with tlie 1. H. Co. in the implements I named. Business of the Moline Plow Co. and the sale of those implements have been growing; our business has been very, very good. In 1902 the output of the ^Moline Plow Company wagons was 6,419; in 1903, 9,390; in 1905, 11,871; in 1906, 18,830; in 1907, 23,468; in 1908, 18,829; 1909, 21,386; 1910, 24,175; 1911, 19,461; 1912, 22,814. For 1913 we have two months to go; for the ten months it was 27,034. In giving these numbers I refer to the fiscal year of my company, ending June 30th of each year. We went into the manufacture of hay loaders in 1910, put- ting out that year 100. In 1911 we put out 470; in 1912, 1,096; m 1913, about 3.000. Went into the manufacture of manure spreaders in 1905. Put out 249 that vear; in 1906, 2,384; 1907, 4,201; 1908, 1,700; 1909, 3.594; 1910", 5,618; 1911, 2,135; 1912, 2,140 ; 1913. about 4,000. In 1910 we abandoned the construc- tion we had up to that time, and begun another one. We had to begin over again in the business. In 1910 the large sale of 5,618 was due to the very low price we made. We cleaned up the stock we had of those old machines and raw stock we had 221 on hand, that we manufactured into machines that year, so that we started in with the remodeled machine. ■ We began maldns disc harrows manv, many years ago. In 1902 we made 6,477; 1903, 7,234; 1904, 8,459; 1905, 9,923; 1906, 12,891; 1907, 15,056; 1908, 11,728; 1909, 12,576; 1910, 14,936; 1911, 10,746; 1912, 13,140; 1913, about 15,000. Lever harrows are composed of two, three or four sections, so we keep account of output by sections. The output by sec- tions is as follows : 1902, 29,839 ; 1903, 31,498 ; 1904, 29,702 ; 1905, 30,085; 1906, 35,295; 1907, 38,439; 1908, 32,380; 1909, 36,348; 1910, 43,927; 1911, 32,681; 1912, 36,971; 1913, about 45,000. We bought the grain drill plant in October, 1908. In 1909 the number of grain drills was 6,950. That was for the year ending June 30, 1909. The output by years is as follows: 1910, 15,232 ; 1911, 9,447 ; 1912, 9,182 ; 1913, about 12,000. Increase of Capital. The business of Molina Plow Co. is manufacturing farm implements. Its business has had a steady and constant growth. Its capital in 1892 was $800,000. In 1902 it was $2,400,000. In 1902 we increased our capital stock from that to $3,200,000; in 1904 we again increased it to $4,000,000; in 1906 we increased to $6,000,000; in 1909 we increased from $6,000,000 to $7,000,000; in 1910 we increased from $7,000,- 000 to $9,000,000, and in 1913 we increased from $9,000,000 to $18,000,000. Outside of the increase in 1913, the increases of the capital stock were effected from the profits of the business and represented those profits. We sell our implements throughout the United States to re- tail implement dealers in the country. That includes imple- ments which we sell in competition with the I. H. Co. We bave sold them in quite a large proportion to retail dealers who handle I. H. €o. harvesting machinery. We did not find that fact an obstacle to selling them our machinery. AVe found no attempt on the part of the I. H. Co. to prevent deal- ers from buying our implements. A¥ithout the figures at hand, should say we sell our goods to from 25,000 to 30,000 dealers in the United States. "Coercion" of Dealers Impossible. In the years named, while I was general sales manager and assistant sales manager of the Moline Plow Co., and 222 General Agent at Kansas City, Minneapolis and St. Louis, have kept in close touch with retail dealers, and am thoroughly familiar with their methods and manner of doing business. If the I. H. Co. should adopt and put into effect the policy of saying to the dealers of the country that they could not handle I. H. Co. machinery unless they handled that exclu- sively or unless they carried the full long line of I. H. Co. implements and carried those exclusively, there is no question but what the I. H. Co. would lose their good dealers. There are some with whom they might be able to do that, but it would not be a dealer with very much self-respect. Do not think they could do it. The Moline Plow Co. has manufactured no harvesting machinery during the time I have been with them until this year. Harvester Field Open. From my knowledge of the implement business and the trade conditions during the past ten years, my judgment is, and ha^ been for a considerable time, that the field was open to a suc- cessful business in harvesting lines in opposition to the I. H. Co. in the United States, and that is the reason we are now engaged in the harvesting machinery business. The Molme Plow Co. has just entered upon that line through the purchase of the Adriance-Platt Company's plant at Poughkeepsie, New York, where wo make a full line of harvesting machinery. I have been a stockholder and director of the Moline Plow Com- pany for some years. I was consulted and took part in the deliberations Avhich resulted in the decision to purchase the Adriance-Platt plant. The purchase of that plant was simply an expansion of our business into a field of opportunity. We had arranged for quite an increase in our capital, and felt the harvester line was open as a field for expansion. The business of the Molinp Plow Co. has not been hampered in any manner by the fact that it did not have a harvesting machinery line. There has never been a year I have been with the Moline Plow Company when we have not done all the business our capital would war- rant. Made arrangement for harvester plant the latter part of November, 1912; took over plant January, 1913. We had increased sales of Adriance-Platt Co. in the United States some 10,000 harvesting machines up to May 1st. In de- ciding to go into the manufacture and sale of harvesting ma- chinery and purchase of Adriance-Platt Co.. we were not in- 223 fluenced in any way by this suit of the United States against I. H. Oo. We never thought of suoh a thing. Since the I. H. Co. was organized it has not been in com- petition with lis in the manufacture of plows, and it has no con- tract for the sale of our plows in any part of this country or Canada. Less than one-half the business of the Moline Plow Co. is in plows, including in plows, cultivators and corn plant- ers, and such as that. The increase in sales of Adriance- Platt binders that we have put out has been entirely in the middle west, Iowa, Illinois, Wisconsin, North Dakota, Minne- sota, South Dakota, Nebraska, Kansas and Missouri. /. JI. Co. Pioneer TForfc in Spreaders. For a great many years it was difficult to get the farmers in the country west of the Allegheny mountains to realize the necessity of fertilizing the ground. The I. H. Co. has done a great deal of pioneer work through agricultural colleges and advertising and in various ways, to educate farmers of the west into a realization of the necessity of the use of spreaders, and in creating demand for spreaders. My company has not done as much as many others in en- couraging the use of manure spreaders among farmers. No others have done it on so large a scale as the I. H. Co. Sometimes we give plows of the same sort, different trade names and assign them to different dealers in one town in the way that binders manufactured by the I. H. Co. are distributed among different dealers in a town. Have some trade where we divide lines in a town. It is not our regular practice be- cause we are able to sell one man in a town as much as we care to. Geoege a. Stephens (XIV, pp. 1-5) : Am president of the Moline Plow Company. Have been in the implement business since boyhood; worked through the shops into the office, paging the letter book; from that up through in the shipping, the timekeeping, billing, the cash, the ledger, purchasing agent, secretary, vice-president and president. As vice-president have always been in direct touch with the sales and sales organization of the company. Have been about the United States a great deal in connection with im- plement business we carry on. My acquaintance has been 224 quite general, through the years with implement dealers throughout the United States. Our business is conducted throughout the United States. Local Dealer Is a Merchant. Local dealers throughout the country have prospered and. become stronger and are rather more independent tactors today than thev were some years ago. In the beginning, the dealer was, to a very great extent the representative o± the manufacturer. We dictated to him very largely as to what he should do with our goods. The development of trade condi- tions has been that the dealer has gradually become a mer- chant instead of the manufacturers' representative. The re- strictive provisions in the old contracts, survived the fact and remained as dead letters even after the dealers became and were independent merchants, and some of them remain even today. "Coercion" a Losing Policy. In my judgment, based upon my knowledge of conditions of implement dealers and their position, the effect on the business of the I. H. Co., if they should adopt the policy and attempt to enforce it, of saying to these dealers that they could not handle the harvesting machinery of the I. H. Co., unless they took the entire line and handled it exclusively, would be that we would get more of the International trade. It would be a losing proposition for the I. H. Co. They could not successfully enforce such a policy. Field in liar resting Maeliines Open. We have only commenced the manufacture and sale of hax- vesting machinery this year. In January, 1913, we bought the business of the Adriance-Pla XI Bond, H. E., Jamesport, Mo VII Bonde, P. F., Watson, Minn X Bonniwell, Philip M., Whitewood, S. D V Book, Samuel, Quarryville, Pa XII Bornshein, Albert F., Brandon, Wis XII Bott, Fred, Springfield, Minn IX Botten, Peter, Bentley, N. D IX Boylan, B. T., Armour, S. D VIII Boylan, Otis H., Kalamazoo, Mich XII Brandt, F. W., Carmi, 111 X Brennan, John, Burr, Neb V Bresnahan, P. W., DeGraff, Minn X Brewer, D. W., Kasson, Minn IX Brewer, M. P., Prophetstown, 111 . . . XI Briggs, F. S., Neosho, Mo VIII Brim, J. A., Walnut Grove, Mo VIII Page of Record 462-467 745-749 274-276 250-253 240-246 488-492 271-274 524-529 467-472 407-410 163-167 814-820 484-487 9-12 522-526 1-8 513-514 522-524 382-385 400-403 525-529 119-124 164-167 65-68 209-213 539-543 430-433 31-34 191-193 293-297 318-320 105-110 114-118 162-172 126-129 406-408 156-162 515-517 473-476 478-481 471-473 732-734 105-108 270-274 418-420 146-149 135-138 266 Vol. Page of Record. Britton, B. H., Elgin, 111 X 550-552 Brobst, Harvey, Findlay, Ohio XI 500-506 Brooks, George W., Omro, Wis XII 453-455 Brown, H. M., Ashtabula, Ohio XII 151-155 Brown, James, Edmond, Okla VI 357-361 Browning, Frank A., Webber, Kas VII 369-375 Brumbaugh, John E., New Lebanon. Ohio X 296-298 Buchheit, John, Fair Grove, Mo . . . .' VIII 149-152 Buchner, Edward F., Pierce Citv, Mo VIII 169-172 Buck, W. H., Gibbon, Neb V 304-306 Buckley, George C., Menlo, Iowa V 345-350 Bulliert, V. H., Corydon, Ind XI 71-73 Bunz, Gust., Bennington, Neb V 268-271 Bupp, Edward, York, Pa XII 122-126 Burgess, B. A., Essex, 111 XI 108-111 Burnham, F. H., Watseka, 111 Xl 102-104 Burns, Robert N ., Appleton City, Mo VIII 98-107 Burt, W. R., Gait, Iowa XII 576-578 Busch, Edward G., Washington, Mo VIII 43^7 Buscher, John, Canistota, S. D VIII 526-528 Butterfield, Fred F., Humboldt, Neb VII 54-61 Butts, Henry P., Sodus, N. Y XII 30-33 Callan, T. R., Odell, Neb VI 119-122 Carl, W. H., Shreve, Ohio XII 238-241 Case, George W., Purcellville, Va XII 200-206 Casey, Charles, H., Jordan, Minn X 96-98 Cassells, H. W., Groton, S. D VIII 340-345 Casteel, E. R., Princeton, Mo VII 130-133 Casteen, W. F., Meade, Kan VI 452-458 Champlin, J. B., Canton, Kan VII 451-454 Cherny, John, North Bend, Neb VI 30-35 Chevalier, L. H., Berea, Ohio XII 235-238 Christenson, Edgar 0., Hartford, Wis XII 433^37 Claggett, George, Montevideo, Minn X 118-122 Clark, S. S., Caldwell, Kan VI 703-711 Class, P. G., Tipton, Mo VIII 86-90 Claussen, Peter, Renwick, Iowa XII 584-589 Clayton, John A., Cherryvale, Kan VII 526-531 Clift, C. R., Bluff City, Kan VI 762-767 Coates, W. N., Stuart, Neb V 189-195 Coburn, D. D., Laurel, Neb V 408-413 Cochrane, De Witt, Clark, S. D . . . . , VIII 247-252 Coleman, Guy, Platte City, Mo VII 198-201 Coleman, U. L., Marionville, Mo VIII 140-144 Collier, T. J., Marquette, Kan VII 443-447 Collins, George W., Belleville, Kas VII 437-443 267 Vol. Page of Rec d. Conover, Howard S., Franklin, Ohio XI 178-179 Conrad, J. P., Monee, 111 XI 99-102 Cook, W. L., Beaver Crossing, Neb VI 56-60 Cooper, Frank E., Vernon Center, Minn X 188-191 Cosgrove, C. S., Le Sueur, Minn IX 171-175 Gotten, Arthur G., Forest City, Mo VII 87-90 Cowen, E. J-., Frederick, Okla VI 428^33 Cozatt, J. A., Jasper, Mo VI 626-633 Crary, Arthur R., Boone, Iowa XII 563-566 Crisler, J. S., Rice Lake, Wis IX 14-17 Cronin, D. G., Morris, 111 X 540-543 Currie, Alex., Cando, N. D IX 494r497 Currier, J. Q., Nicollet, Minn IX 187-189 Curtis, J. H., Denton, Kan VII 208-211 Curtis, Orrin M., Goshen, Ind XII 531-534 Dahl, J. P., Staplehurst, Neb V 553-556 Dally, M. C, Dunlap, Iowa V 55-65 Dalton, W. W., Clinton, Wis XI 301-303 Danforth, W. M., Raymond, S. D VIII 277-282 Dannenburg, William, Allegan, Mich XI 455-458 Davey, C. W., Hamburg, Iowa V 241-247 Davis, A. E., Binghamton, N. Y XII 253-255 Davis, C. Roscoe, Cleveland, Minn IX 167-170 Davis, Silas, Hawk Point, Mo VIII 65-69 Deacon, R. R., Butler, Mo VII 229-232 Debilzan, George, Andover, S. D VIII 337-340 De Cou, A. E., Woodbine, Iowa V 254-260 De Long, George A., Foosland, 111 XI 93-98 Dempsey, C. J., Long Prairie, Minn IX 52-55 Deppe, J. F., Marshall, Wis XI 320-323 De Waters, F. E., Ehnira, N. Y XII 255-257 Dibbem, Henry, S., Milan, 111 XI 406-409 Dillavou, S. E., Champaign, 111 XI 111-114 Dillingham, David, Blue Springs, Mo VII 272-275 Ditmars, H. J., West Liberty, Iowa XI 390-392 Dobyns, F. L., Howard, Kan VI 738-743 Dodds, A. C, Skidmore, Mo VII 84-87 Doll, John, Prairie du Sac, Wis XI 331-333 Dooley, W. A., Dearborn, Mo VII 184-188 Downey, Daniel E., Philadelphia, Pa XII 196-200 Doyle, M. A., Westminster, Md XII 206-210 Doyle, S. J., Carrington, N. D X 18-20 Drommer, W. H., Pomeroy, Iowa. . , VIII 385-388 Duffy, John P., Greenville, Ohio X 361-364 Dunford, J., Canton, Minn IX 324-327 Dunkerton, E. W., Bronson, Kan VJ 585-589 Dunton, L. H., Arcadia, Kan VI 621-625 268 Page of "Vol. Record Dusenberry, E. A., Ludlow, Kan VII 319-321 Dwyer, Thomas J., London, Ohio XII 78-81 Dyer, A. W., Exeter, Neb V 139-145 Eason, T.. T., Marlow, Okla VI 469-474 Eastman, J. H., Barnum, Iowa VIII 405-407 Eaton, W. R., Lockwood, Mo VIII 128-132 Echtenkamp, Fred, Arlington, Neb V 335-339 Ede, J. C, Mondovi, Wis IX 37-40 Edgington, C. W., Gilmore City, Iowa XII 568-572 Edmundson, C. M., Galesburg, 111 X 413-417 Edwards, Daniel 0., Hazelton, Kas VI 773-778 Edwards, E. J., Alta, Iowa V 231-234 Eggenberger, J. J., Saunemin, 111 X 345-349 Eich, Joseph, Little Falls, Minn IX 214-218 Emison, John W., Vincennes, Ind X 303-307 Engel, Frank A., Hastings, Minn IX 267-270 English, W. E., Huron, Kan VII 215-220 Engram, Erastus, Plain well, Mich XI 434-436 Epperson, George F., Sumpter, S. C XII 372-376 Erickson, E. J., Bode, Iowa. XII 579-582 Esden, C. J., Sidney, Iowa V 629-635 Eskeldson, S. C, Ramona, Kan VIII 17-21 Estby, H. C, Cyrus, Minn X 206-208 Evans, J. A., Cimarron, Kan VI 416-427 Evans, James S., Vandalia, 111 XI 276-280 Even, William, Speer, 111 X 350-352 Everts, E. D., Warren, Pa XI 531-534 Fawley, A. F., Milford, Kan VII 584-587 Fearno, R. M., Palmyra, 111 XI 176-1-77 Ferguson, Angus, Bordulac, N. D X 59-62 Firey, A. M., Edinburg, 111 ' XI 145-150 Fisher, E. W., Lewiston, Minn IX 236-241 Fitzgerald, J. T., Colby, Kan VII 344-348 Fitzmaurice, Thomas, Mohall, N. D IX 562-564 Fitzsimmons, G. W., Scotia, Neb V 133-139 Flood, John, King City, Mo VII 68-73 Flora, Frank, Valley City, N. D X 50-55 FoUmer, J. F., Vicksburg, Mich XII 534-536 Foltz, F. F., Hagerstovm, Md XII 214-218 Ford, W. N., Rushville, Neb V 66-71 Foster, Edwin J., Grass Lake, Mich X 503-507 Francis, F. E., Carroll, Neb V 417-421 Franklin, S. H., Glasgow, Ky XI 80-82 Frederickson, P. B., Davenport, N. D X 71-74 French, J. P., Bismarck, N. D IX 509-512 i^rlzell, E. E., Earned, Kan VI 397-406 Funkhouser, C. F., West Plains, Mo ..'. VIII 172-177 269 Page of Vol. Record Gaines, A. A., Newport, Neb V 195-201 Geisendorf, L. S., Clearwater, Kan VJ 758-762 Gensman, George J., Enid, Okla VI 794r-801 Gilbert, H. S., Pine River, Minn IX 113-115 Gillan, C. D., Chambersburg, Pa XII 134-142 ' Gilstrap, J. W., Salem, Ind XI 76-79 Giltner, W. H., Ottumwa, Iowa XI 442-445 Glazier, C. F., Pauline,. Neb V 36-54 Glidden, F. B., Britt, Iowa VIII 381-385 Godfrey, S. P., Waupaca, Wis XII 481-484 Gooding, J. 0., Lewis Center, Ohio XII 99-102 Goodner, Geo. E. H., Weatherford, Okla VI 329-332 Gorder, August, Plattsmouth, Neb V 264-268 Gorzeman, Jacob, Hull, Iowa VIII 407^10 Gossard, 0., Oswego, Kan VI 571-585 Graham, W. P., St. Joseph, Mo VII 78-84 Gray, Howard, Saint John, Kan VI 542-548 Gray, 0. B., Page, N. D X 40-43 Greenawalt, John 0., Daykin, Neb V 482-486 Grell, Joseph H., Pierz, Minn IX 133-136 Griesy, V., Belhnont, Iowa VIII 417-421 Griffith, H. A., Oberlin, Kan VII 401-406 Grigsby, B. P., Bardstown, Ky XI 62-66 Groth, John, Remsen, Iowa V 385-392 Gunn, H. J., Lexington, Neb V 340-345 Haar, Fred, Freeman, S. D., VIII 485-i87 Hadden, Charles H., Webster, N. Y XII 18-20 Hahn, A. R., Utica, Mich X 571-574 Haley, C. F., Marley, 111 X 528-532 Hall, W. A., Hastings, Mich XI 451-453 Hamilton, Chas. P., Mangum, Okla , VI 341-346 Hansen, Anton, Upland, Neb V 495-504 Hanson, Hans, Minden, Neb VI 66-69 Hanson, J. 0., McPherson, Kan VI 849-854 Hanson, P. J., Cashton, Wis XI 382-384 Hard, W. D., Van Wert, Iowa X 446-449 Harms, Fred H., Momence, 111 XI 105-108 Hartman, J. A., Anamosa, Iowa XI 15-18 Hartman, J. F., Gettysburg, Pa XII 181-185 Haskard, H. J., Partridge, Kan VI 411-416 Haugen, C. D., Pelican Rapids, Minn X 202-205 Hauschildt, H. P., Marengo, 111 XI 256-260 Havens, C. E., Atkinson, Neb V 145-152 Haynes, L. D., Vining, Kan VII 358-364 Haynes, W. E., Emporia, Kan VII 563-571 Hebeisen, John, Carver, Minn X 62-65 Heckert, William H., Bakerstown, Pa XII 294^297 270 Page of Vol. Record Heclanan, P. F., Liberty, Kan VI 687-692 Heeney, Ed., Severance, Kan VII 323-326 Heetland, Henry H., Ackley, Iowa XII 341-345 Heid, John W., Jefferson, Wis XII 383-388 Heitschmidt, A. C, Michigan City, Ind XII 518-521 Helvern, L. E., Beattie, Kan VIII 153-157 Hermes, Peter, Browerville, Minn IX ' 55-61 Hertel, William P., Clay Centre, Neb V 542-546 Hewitt, John C, Nassau, Minn VIII 282-293 Hibbs, S. J., Alton, Kan VII 417-421 Hieb, Jacob, Marion Junction, S. D VIII 479H185 Hillery, R. H., Comanche, Okla VI 480-485 Hinde, A. C, Perry, Okla VI 752-758 Hitchcock, J. A., Marathon, Iowa ^111 410-413 Hitter, F. C, Monticello, Minn X 102-104 Hobart, H. W., Pemberville, Ohio XI 484r^89 Hobensack, William, Ivyland, Pa XII 194-196 Hockaday, Ed., Kingfisher, Okla VI 333-341 Hodge, J. E., Elkton, S. D VIII 294-296 Hodgson, Fred, Little River, Kan VII 447-450 Hodson, James, Mankato, Minn IX 189-192 Hoit, 0. W., Geneseo, 111 XI 392-395 Holmes, W. J., Detroit, Mich X 532-536 Holt, C. F., Eden, 111 X 377-379 Holz, L. C, Omemee, N. D IX 553-556 Horn, J. W., Lakeville, Ohio XII 210-214 Horney, Fred H., Brewster, Kan VII 412^16 Houser, John, Wilbur, Neb V 504-508 Howard, W. J., Schaller, Iowa V 1-18 Hoyt, W. D., Manchester, Iowa XI 41-46 Hubbard, W. IJ., Conway Springs, Kan VI 778-784 Hufschmidt, Robert, Lansing, Iowa XI 18-22 Hunter, John L., Gilmore City, Iowa VIII 427^29 Hunter, W. H., Mechanicsburg, Ohio XII 91-94 Hunter, W. M., Allison, Iowa XII 334-337 Hursh, Russell, Pratt, Kan VI 433-440 Huston, A. B., Paris, 111 X 299-303 Hutsinpillar, C. C, Ironton, Ohio XII 227-230 Hymes, H. R., Rochester, Minn IX 231-236 Ireland, G. L., Hankinson, N. D X 6-9 Ireland, Joseph, Perry, N. Y ' xi 538-541 Iverson, Iver L., Badger, Minn IX 417-^19 Jackman, W. W., Union City, Okla VI 444-^47 James, Ed^Beloit, Kan. ; yil 349-358 James, J. C, Lake Crystal, Mmn X 199-202 James, Oscar B., Richland Center, Wis XI 379-382 271 Vol. James, R. H., Delphos, Kan VII Jameson, J. M., Dana, Iowa V Jencks, George A., Barrington, 111 X Jenkins, J. F., Northville, S. D VIII 'Jerard, S. E., Belton, Mo VII Johnson, C. C., Butler, Pa XII Johnson, C. J., Centerville, S. D VIII Johnson, Curtis M., Rush City, Minn X Johnson, C. 0., Havelock, Neb VI Johnson, George, Simpson, Kan . VII Johnson, John, Rockwell, Iowa IX Johnson, Joseph, Elmwood, Wis . ■ IX Johnson, Thomas, Park River, N. D IX Johnston, John A., Eldora, Iowa XII Jones, C. E., Lisbon, N. D X Jones, Ed. S., Falls City, Neb VII Jones, H. E., Revillo, S. D Jones, J. C, Farragut, Iowa Jones, L. A., Attica, Kan ' Jones, Thomas, Jr., Barneveld, Wis Jones, Thomas E., Sparta, Wis Josselyn, George, Rochester, Minn Jurgensen, P. A., Farnhamville, Iowa VIII V ...'.. VI XI XI IX XII X IX X VI Kenny, C. B., Britten, S. D VIII Kaffer, W. H., Joliet, 111 Kelly, D. B., Truman, Minn Kelly, James, Breckenridge, Minn. . . Kennedy, T. K., Haven, Kan. Keonings, Theodore, Schleisingerville, Wis. Kern, J. A., Gilman City, Mo Kirchner, J. R., Herndon, Kan Kline, F. E., Cosby, Mo Klobe, Herman, Young America, Minn . Knapp, Arthur G., Lancaster, Wis. XII VIII VII VII X XI Knaup, Charles, Beaver Dam, Wis XII Knight, H. N., Oklahoma City, Okla VI Kokjer, M. M., Clarks, Neb '. ... V Koppenbrink, Peter H., Alma, Mo VII Kopplin, Gustav, Atterberry, 111 XI Korst, Frank, Bird Island, Minn IX Kraft, Peter, Stanley, Iowa XI Kreamer, J. H., Ada, Kan VII Kronquest, N. H., Holdredge, Neb V Kropp, H. F., Nehawka, Neb V Krueger, George, Ryder, N. D IX Page of Record 515-518 28-36 546-550 351-356 315-319 287-289 363-367 92-96 91-96 454-457 397-399 25-28 521-524 337-341 15-18 189-193 301-305 694-699 789-793 372-375 376-378 265-267 560-563 524-528 389-391 12-15 407-411 356-360 450-453 132-135 385-388 65-68 99-102 299-301 368-371 382-386 300-303 236-240 155-157 283-286 34-37 534-538 79-85 '659-665 550-552 272 Vol. Page of Record Laderer, W. C, Evans City, Pa XII 290-291 Laird, P. B., Tabor, Iowa ^ V 319-324 Landaal, George, Waupun, Wis XII 388-392 Lansche, J. P., Truxton, Mo VIII 58-61 Larson, A. B., Nerstrand, Minn IX 262-264 Larson, William, Bloomer, Wis IX 373-378 Lavelle, Frank J., Cadott, Wis IX 34r-37 Leach, C. A., Maquoketa, Iowa XI 46-49 Lease, M. B., Norton, Kan VII 431-436 Lee, J. C, Volga, S. D VIII 317-319 Leef, Harry, Fonda, Iowa XII 557-560 Legreid, Chris., Cambridge, Wis XI 329-331 Leiser, George A., Grand Island, Neb V 296-300 Leon, C. H., Decatur, 111 XI 138-142 Leonard, J. B., Wakarausa, Ind XII 505-507 Lewis, Andrew, Monroe, Wis XI 304-306 Lilly, Raymond, Varina, Iowa VIII 414-417 Lindekugel, C. W.,. Spencer, S. D VIII 477-479 Lindhal, Al., South Bend, Ind XII 516-518 Lindner, H. L., Milton, Pa XII 130-134 Lindsay, John, Darlington, Wis XI 236-240 Linnebur, H. C, Goddard, Kan VI 843-848 Little, J. H., Prairie City, Iowa XI 12-15 Lockstrom, J. A., Salina, Kan VII 481-485 Lonergan, J. W., Marengo, Iowa XI ,8-12 Longley, 0. G., Dows, Iowa XII 598-602 Look, W. H., Shullsburg, Wis XI 243-246 Loudon, Charles, Chapman, Kan VII 556-562 Loughran, S. L., Ames, Iowa V 234-241 Lovell, G. D., Beach, N. D IX 542-546 Lowe, H. J., Mullen, Neb V 184-189 Lirnd, A. J., Lanesboro, Minn IX 241-246 Lundberg, P. G., Kirkland, 111 XI 246-249 Lyle, W. C, Adair, Iowa V 351-356 Lynch, Martin, New Richmond, Wis IX 20-23 Lynch, M. J., Dumont, Minn X 210-216 Lynch, P. C, Foreston, Minn IX 137-141 Lyons, J. A., Prior Lake, Minn X 139-143 Machens, J. H., Machens, Mo VIII 47-50 Mack, Harry, Humansville, Mo VIII 107-110 Magee, R. W., New Hampton, Mo VII 152-155 Mair, John, Nortonville, Kan VII 334-338 Manley, Albert C, Harvard, 111 XI 240-243 Maim, J. A., Gallatin, Mo yU 142-146 Manville, George, Wathena, Kan ' yil 91-98 Marbaugh, John, Monterey, Ind [] XII 491-495 Marckel, A., Perham, Minn ^ ^ ] IX 61-66 273 Vol. Marshall, Albert E., Lyons, N. Y XII Marshall, C. D., Sauk Centre, Minn IX Marshall, J. A., Manito, 111 ' . x Martens, C. D., Lancaster, Ohio XII Mathews, L. G., Rushville, 111 X Mathre, P. A., Stanhope, Iowa VIII Mattes, Joseph, Oldebolt, Iowa V Matthews, C. D., Jr., Sikeston, Mo VIII Matthews, W. H., Clearwater, Kan VI Mattingly, T. A., Lebanon, Ky XI Max, Louis, Union, Mo VIII Maxwell, A. D., Arlington, S. D VIII Maxwell, A. H., Lowell, Ind : . . . . XI Maylott, A. J., Hancock, Minn X Mayo, C. N., Culver, Kan VII V XI IX XI XII XI V IX V XI McCarger, Hugh, Crete, Neb McCarty, J. R., Morocco, Ind McClintock, W. E., Owatonna, Minn. . McClure, J. H., Springfield, Ky McCormick, T. C, Kings Ferry, N. Y. McCoy, S. A., North Freedom, Wis. . . McCready, C. H., Macedonia, Iowa. . , McCutcheon, William C, Rugby, N. D McDonough, John, Osceola, Iowa McDougall, James D., Shirland, 111. McGeehanG. T., De Pere, Wis XII McGilton, John N., Menomonie, Wis IX McGlasham, Charles G,, Rockford, 111 XI McGrath, John, Barnesville, Minn IX McHugh, O. J., Cresco, Iowa IX Mcintosh, D. G., St. Thomas, N. D IX Mclntyre, James, Osseo, Wis IX McKeeth, Carl, Galesville, Wis IX McKinley, Bert, Morning Sun, Iowa XI McLoone, John, Waseca, Minn IX McMahon, C. H., State Center, Iowa XII McMahon, E. R., Fairfax, Mo VII McMichael, J. W., Riverton, Iowa V McMillan, David, Peterson, Iowa XII McMillan, J. E., Madill, Okla VI McNaul, George L., Maitland, Mo VII McPherrin, J. A., Tecumseh, Neb V McRae, J. J., Swanville, Minn IX Meacham, William H., Holly, Mich X Meier, August, Grundy Center, Iowa XII Melhouse, George, Olivia, Minn X Meyer, Ernest, Hiawatha, Kan VII Page of Record 24-27 126-128 441-445 74-78 359-361 401-404 281-296 69-71 697-702 82-85 110-115 252-257 122-124 194-196 509-511 115-127 117-120 223-226 73-76 94-99 387-390 649-652 559-562 413-417 260-262 488-491 1-4 207-209 121-124 384-386 419-422 43-46 253-257 415-418 153-156 328-330 156-163 700-705 593-597 387-392 205-208 18-28 144-147 559-562 348-350 130-133 61-65 274 Page of Vol. Record Meyer, G. A., Lake Elmo, Minn IX 200-204 Meyer, H. C, Lake Park, Iowa VIII 512-516 Miller, J. H.. Big Lake, Minn IX 70-75 Miller, Joseph, Payne, Ohio X 453-457 Miller, Miles, Crary, N. D IX 410-413 Miller, Oscar, Porter, Minn VIII 313-316 Miller, Peter, Rushford, Minn IX 246-250 Miller, T. F., Plato, Minn X 108-111 Miller, W. K, Lawton, Okla VI 485-490 Miller, W. M., Stanley, Wis IX 46-48 Millett, Charles 0., Beloit, Wis XI 306-310 Mills, J. H., Delia, Kan VIII 55-58 Mills, Joseph, Waukesha, Wis '. XII 442-444 Miner, F. W., Burlingame, Kan VII 477-481 Minick, G. W., Abilene, Kan VII 577-581 Minter, C. A., Pocasset, Okla VI 363-368 Mishler, John H., Sabetha, Kan VII 74-78 Misterek, P. C, Delmont, S. D VIII 464-469 Modlin, J. F., Beaver City, Neb VII 394-397 Mollenkamp, E. W., Higginsville, Mo VII 223-228 Morehouse, W. H., Waterloo, N. Y XII 36-42 Morton, Edwin, Blooming Prairie, Minn IX 180-183 Mosiman, John, Jr., Falls City, Neb VII 283-285 Motley, S. T., Vinita, Okla VI 692-696 Muenzenmayer, Wm. F., Junction City, Kan VII 571-577 Muir, J. C, Arcadia, Wis IX 257-261 Mulvey, M. v., Yukon, Okla VI 440-444 Munro, J. M., Cuba, Mo VIII 115-119 Murphy, J. W., Sloan, Iowa V 378-385 Murray, D. R., Clinton, Ind X 292-296 Murray, W. A., Austin, Minn IX 392-393 Myers," C. H., Dike, Iowa XII 324-328 Myers, 0. T., Ilhopohs, 111 XI 187-189 Nash, H., Lowell, Mich XI 448-450 Naylor, A. D., Oakland, Md XII 231-235 Nehring, A., Paynesville, Minn X 183-188 Nelson, A. W., Parkers Prairie, Minn IX 98-101 Nelson, James M., Republic, Mo VIII 181-186 Nelson, Martin, Hartington, Neb V 403-408 Nelson, Nels, Iowa Falls, Iowa XII 352-354 Neuhauser, Jonas M., Bird-in-Hand, Penn .'. XII 107-113 New, W. C, Winchester, Ohio XI 180-181 Newberry, C. A., AlHance, Neb " -\'- 86-96 Neyer, Charles A., Billings, Mo ,' VIII 138-140 Nise, P. H., Moberly, Mo VII 330-334 Nispel, J. J., Beatrice, Neb yj 74-78 275 Vol. Nixon, John D., Parnassus, Pa XII Nolan, M. H., Pontiac, 111 ] x Noll, Frank, Marshfield, Wis IX Noone, W. P., Jennings, Kan VII Nordgren, C. A., Paxton, 111 XI Nordman, William, Noonan, N. D IX Norheim, Olaf, Montevideo, Minn X Norquist, O., Clay Center, Kan VII Norris, R. M., Burdett, Kan VI Norton, R. M., Waterville, N. Y XII Norvell, L. G., Newman, Tenn XI Nuss, George, Hoisington, Kan VI Nutting, W. W., Russell, Kan. ; VII Ober, S. K., Miltonvale, Kan VII O'Brien, P., Norwood, Minn IX O'Dell, George T., Salt Lake City, Utah V O'Grady, Joseph, Dawson, Neb VII Oldham, John, Fair Play, Mo , VIII Oleson, John L., North Branch, Minn X Olson, Andrew, Ashby, Minn IX Olson, Martin, Brandon, Minn . IX O'Neill, D. C, Axtell, Kan VIII Opp, John R., Otterbein, Ind XI O'Rorke, John, Mansfield, Ohio XII Orr, J. L., Allensville, Ky XI Oscar, Thomas, Stoughton, Wis XI Osterholm, August E., Essex, Iowa V Ostrander, W. O., Bennington, Kan VII Owen, Rasmus, Thief River Falls, Minn IX Packer, W. D., Guthrie, Okla VI Padden, John, New Richmond, Wis IX Padley, T. H., Milford, Mich. X Palm, Walford J., Kingston, Minn X Parsons, J. R., Ruskin, Neb V Passage, C. J., Smithshire, 111 X Patterson, A., Martin, Mich XI " "" " V XI Pattetson, J. W., Kearney, Neb. Paul, Albert, Carlinville, 111 . Paulson, John E., Hillsboro, N. D X Payne, William E., Owosso, Mich X Peabody, C. E., Brainerd, Minn IX Peabody, 0. E., Oberlin, Ohio XII Pemberton, E. R., Marshall, Mo VII Peters, H. C, Yutan, Neb '. V Peterson, L. W., Dorchester, Wis IX Peterson, M. C, Geneva, Neb VI Page of Record 284-287 337-345 9-13 426-431 114-117 556-559 122-124 581-584 462-469 27-30 181-185 820-823 519-522 406-412 192-195 636-644 264-268 161-166 111-114 128-131 118-121 157-161 90-93 63-66 66-71 384-387 705-710 457-462 437-441 368-373 17-20 556-559 74-76 519-523 364-368 436-440 96-105 168-170 68-71 496-499 147-150 242-244 511-515 274-278 28-31 69-74 276 Vol. Pew, George E., Le Mars, Iowa VIII Pfingsten, H. F., Hampshire, 111 X Pflug, J. C, Ohiowa, Neb VI Phalen, B. A., Newark, Ohio XII Phillips, W. D., Trenton, Mo VII Pilling, A., Edgerton, Minn VIII Pitcher, Homer E., Spencer, Iowa VIII Porter, Henry, Walhalla, N. D IX Pound, C. L., Owatonna, Minn IX Powell, James, Richmond, Mo VII Powell, J. C, Eldorado, Kan VI Powell, W. F., Warren, Minn IX Powers, John, Murdock, Minn X Pratt, Ira C, Prattsburg, N. Y XII Prescott, F. H., Peabody, Kan VIII Price, T. L., Oregon, Mo VII Pritchard, Albert H., Frederick, Okla VI Proctor, Edward T., Gait, Mo VII Pullyblank, R., Caledonia, N. Y XII Purchase, J. L., Grand Rapids, Mich XI Purdue, Glen, Salisbury, Md XII Purdy, George S., Winona, Minn IX Purdy, W. C., Lewistown, 111 X Quinn, Wm., Waverly, Minn IX Rabius, G. H., Mayview, Mo VII Ralston, J. R., Caledonia, 111 XI Rankin, W. M., Tarkio, Mo VII Rasmussen, H. P., Wakonda, S. D VIII Rawson, W. C, Wilhston, N. D IX Reading, M. M., Churdan, Iowa XII Redfern, W. E., Bois D'Arc, Mo VIII Reed, Edward A., Ottawa, 111 X Reisinger, J. S., Woodland, Mich XI Reynolds, Sydney H., Dundee, Mich X Richards, Thomas U., La Porte, Iowa XII Ridge, B. F., Duncan, Neb VI Riegel, H. B., Lebanon, Pa XII Ringe, Louis, St. Charles, Mo VIII Robbins, E. W., Eau Claire, Wis IX Roberts, Len, Germantown, Kan VII Robertson, George W., Mexico, Mo VIII Robinson, C. D., Waterport, N. Y XI Robinson, John, Poplar Grove, 111 XI Robinson, J. B., Nevada, Mo VI Rodeman, John H., Jefferson City, Mo VIII Rood, H. O., Auxvasse, Mo VIII Page of Record 396-401 519-521 113-115 54-58 146-149 469-473 423-426 422-425 183-187 297-306 749-752 401^04 133-137 247-252 10-14 179-184 373-378 149-152 12-15 453-455 219-221 311-313 417-419 195-200 268-271 263-265 170-173 368-373 564-567 582-584 186-188 536-540 440-442 575-577 322-324 346-351 174-178 72-77 5-9 321-323 38-43 523-527 219-221 613-621 90-94 62-64 277 Page of Vol. Record Roof, A. J., Parnell, Mo VII 98-105 Ross, Walter D., Worcester, Mass XII 8-11 Roth, Janaes S., California, Mo VIII 82-86 Ruge, F. F., Everly, Iowa XII 566-568 Rumpel, W. J., Weston, Mo VII 280-283 Ryan, Andrew C, Waterloo, Iowa XII 346-348 Sackerson, N. N., Wakefield, Neb V 546-55o Saltsman, George E., Dansville, N. Y XII 16-18 Sapp, C. S., Moimt Vernon, Ohio XII 81-87 Sather, A. O., Starkweather, N. D IX 500-505 Satterfield, Chas. M., Chestertown, Md XIT 222-226 Scandrett, M. H., Liberal, Kan VI 498-504 Scheve, F. C, Sumner, Iowa XI 49-51 Schibley, J. H., Amherst, Ohio XII 149-151 Schibsby, E., Lansford, N. D IX 567-570 Schlect, William, Perrysburg, Ohio XI 489-495 Schluntz, A. C, Rembrandt, Iowa XII 319-322 Schmauss, John, Lake City, Minn IX 274-277 Schneider, E. L., Avenue City, Mo VII 134-137 Schneider, George, St. Peters, Mo VIII 25-30 Schnurr, C. W., New Hampton, Iowa XI 31-34 Schrader, A. L., Elmo, Kan VIII 15-17 Schraeder, Charles F., Markesan, Wis XII 401-403 Schrieber, Fred, Wisner, Neb V 105-115 Schriner, L., Greenleaf, Kan • . . . VII 423-426 Schroeder, Chas. C, St. Paul, Minn IX 221-223 Schulman, S., Garden City, Kan VI 458-462 Schulte, J. L., Fredericktbwn, Mo VIII 21-25 Schultz, Ezra, Hastings, Neb VI 60-66 Schultz, Henry A., Portage, Wis XI 326-328 Scott, Alexander, Stromsburg, Neb V 463-467 Scott, W. 0., Milford, Ind XII 525-527 Scoville, A. L. L., Seneca, Kan . VII 220-223 Seabury, D. H., Logan, Iowa V 71-78 Secrest, William H., Randolph, Kan VII 546-551 Seery, Harry, Topeka, Kan VIII 30-34 Seger, N. D., Atkinson, Neb VI 217-222 Sellers, George, T., Gap, Pa : XII 113-118 Sellers, S. M., South Charleston, Ohio XII 67-74 Sewell, John H., Maryville, Mo VII 201-205 Sewell, W. A., Lyons, Iowa XI 404-405 Shannon, T. B., lola, Kan VI 633-637 Shaw, Fred, Mount Carmel, 111 X 458-461 Sheaff, W. H., Stillwater, Minn IX 208-213 Shearer, H. M., New Alexandria, Pa XII 282-284 Sheehan, J. H., Claremont, Iowa XI 37-40 Shells, C. H., Edgeley, N. D , VIII 334-337 278 Vol. Shinkle, J. S., Kensington, Kan VII Shoestall, J. A., Elwood, Neb VI Shoffner, F. M., Bolivar, Mo VIII Shultz, John, Skaneateles, N. Y XII Shumate, Charles A., Rossville, 111 XI Sieberns, Otto, Spring Valley, Wis •• • ■ IX Siefert, August, Reedsburg, Wis XI Sikking, A. W., Springfield, 111 XI Simmons, T. L., Foxholm, N. D IX Simpson, W. A., Castle Rock, Minn X Sitz, A. J., New York Mills, Minn X Skaggs, W. 0., Rossville, Kan VII Skalak, W., Humbolt, Neb VII Skilliter, Thomas, Genoa, Ohio XI Skinner, H. D., Braymer, Mo VII Slattery, James, Mayetta, Kan VII Slingloff, George M., Arrowsmith, 111 X Smith, Arthur, Albanv, Wis XI Smith, Clinton, Shickley, Neb VI Smith, Murray, Clay Center Kan VII Smith, T. J., Grand Forks, N. D IX Smith, WiUiam F., Winterset, Iowa V Snavely, M. D., Ladora, Iowa XI Snell, A. F., Lake Park, Minn IX Snyder, H. F., Churchville, N. Y XI Sorenson, Peter, Toronto, S. D VIII Sourbeer, Benjamin F., East Germantown, Ind X Sparling, J. R., lantha, Mo VI Spaulding, C. L., Kimball, Minn X Spence, R. H., Fairfield, Iowa XI Spillman, James A., RoUa, Mo VIII. Spoonheim, E. K., Northwood, N. D IX' Spragins, J. B., Ardmore, Okla VI Sproul, M. H., Green, Iowa XII Sprowls, George B., Clayville, Pa XII Staab, Victor, Wall Lake, Iowa XII Stackpole, W. E., Warren, 111 XI Stahl, Charles, Elkhart, 111 XI Stakke, K. 0., Woonsocket, S. D VIII Stall, L. A., Thayer, Kan VI Stanton, Hugh, Union Star, Mo VII Stearns, F. D., Logan, Iowa V Stearns, H. J., Belvidere, 111 XI Steffy, George, Victor, Iowa XI Stelloh, Fred, Neillsville, Wis IX Stelzner, Otto, Wamego, Kan VIII Sterns, John, Hiawatha, Kan VII Page of Record. 381-385 116-119 124-128 33-36 86-90 386-389 359-362 157-160 546-550 56-59 191-194 490-493 260-263 495-500 232-236 485-489 369-372 314-317 35-39 543-546 404^407 311-318 28-31 108-112 535-537 297-301 307-310 609-613 137-139 445-448 77-82 497-500 351-357 316-319 277-282 572-575 213-215 150-1.53 500-506 683-687 311-314 178-184 272-274 26-28 49-52 34-38 45-54 279 Vol. Page of Record. Stewart, F. W., Medford, Okla VI 768-772 Stewart, William, Dorchester, Neb V 508-512 Stewart, W. H., Delevan, Wis XII 419^21 Stockwell, J. W., Fillmore, N. Y XI 527-530 Stonback, J. S., Harrisburg, S. D VIII 539-545 Stone, A. A., Morris, Minn IX 115-118 Stone, Walter, P., Crookston, Minn IX 460-463 Stoneman, J. W., Chagrin Falls, Ohio XII 188-191 Stoner, C. W., Iroquois, S. D VIII 305-313 Strattmann, William, Hartland, Wis XII 437-438 Streed, A. W., Middletown, Iowa XI 395-400 Stribling, 0. B., Paton, Iowa VIII 345-351 Strobel, J. F., Neenah, Wis ; XII 473-475 Strowig, A. R., Paxico, Kan VII 497-502 Stultz, H. L., HoUidaysburg, Pa XII 178-180 Summe, John, Silver Lake, Ind XII 527-530 Sundgren, Ebbie, Falun, Kan VII 473^77 Sutherland, A. E., Waverly, Neb VI 22-30 Sylvester, Albert E., Churchs Ferry, N. D IX 505-509 Talbot, Emry, Rantoul, 111 XI 124-128 Talbot, E. R., Watonga, Okla VI 448^52 Tamisiea, V. S., Missouri Valley, Iowa V 247-253 Tannahill, G. H., Vernon, Kan VI 644-646 Tavenner, A. S., Polo, 111 XI 265-268 Taylor, Jason E., Mason, Mich X 499-502 Taylor, J. M., Columbia, Mo... VIII 1-5 Taylor, J. W., Reedsville, Pa XII 142-144 Terhune, Ben, Mound City, Mo VII 246-249 Theisen, N. J., Albany, Minn IX 66-70 Thomas, Ivo E., Oskaloosa, Iowa XI 22-25 Thomas, U. C, Atwood, Kan VII 388-393 Thompson, Lewis, Ripley, Tenn XI 185-187 Thompson, M. D., Vermillion, S. D VIII 506-512 Thompson, W. E., Melvin, 111 XI 120-122 Tichenor, W. H., Owensville, Ind X 481^84 Tiedt, Fred, Argyle, Minn IX 413-416 Tilley, Prentiss C, Brazil, Ind X 310-315 Tomlinson,' James, Corning, Kan VII 253-257 Tongish, L. L., Herndon, Kan VII 470-472 Towner,.W. J., Osage, Iowa IX 399^01 Trembley, J. S., ArUngton, Kan VI 538-542 Tridle, E. P., Sidney, Ind XII 495-498 Trusler, Wm., Eskridge, Kan VII 551-555 Tucker, H. J., Lamont, Okla VI 711-714 Tullis, J. O., Sedan, Kan VI 784-788 Turner, Josiah, Marysville, Ohio XII 58-63 280 Vol. Turner, L. E., Aitkin, Minn ^ Tygart, J. M., Lebanon, Kan Vli Tyrholm, J. A., New Richmond, Minn I^ Ulmer, George H., Miles City, Mont IX Valentine, E. L., St. Johns, Mich X Van Berg, A. E., Hickman, Neb V Van Deventer, J. C, Tuscarora, N. Y XI Varns, E., Middlebury, Ind XII Vaughan, 0. P., Wauzeka, Wis XI Victora, William, Muscoda, Wis XI Vogt, Julius, Concordia, Mo VII Wachter, George A., Pender, Neb V Wackman, Casper, Detroit, Minn X Wade, J. G., Monroe City, Mo VII Wag-ner, C. A., Omaha, Neb V Wagner, William F., Erdman, Wis XII Waite, H. P., McCook, Neb V Walburt, Charles, West Mineral, Kan VI Walker, A. F., Prairie View, Kan VII Walker, F. L., Ellendale, S. D VIII Walker, William, Goodland, Kan VII Wallace, R. L., Chickasha, Okla VI Walters, F. A., Woodstock, 111 XI Warne, J. H., Batavia, 111 X Warner, C. L., South Bend, Ind XII Washburn, E., Humbird, Wis IX Washer, William, Matlock, Iowa VIII Waskey, George, Madison, S. D VIII Watson, Fred P., Mount Vernon, 111 XI Watson, James B., Fond du Lac, Wis XII Webb, Frank, Guthrie Center, Iowa V Weber, Norman F., Ackley, Iowa XII Webster, C. E., Hill City," Kan VII Weed, C. H., Plainfield, Wis XI Weir, W. S., Temple, Okla VI Wenner, N. C, Cold Springs, Minn IX Werckle, WilUam A., Peoria, 111 X West, E. E., Dunbar, Neb V Wheeler, Montie, Everton, Mo . . VIII Wherry, D. E., Pawnee City, Neb ^TI Whinery, L. R., Salem, Ohio XII Whiting, W. C, Whiting, Iowa V Whitman, A. C, Independence, Kan \l Wilcox, George A., Adrian, Mich. X Wilcox, J. E., Bancroft, Kan VII Page of Record 196-199 365-369 327-330 517-520 478-481 529-533 520-523 513-516 312-314 310-312 193-198 421-426 208-210 306-311 261-264 464-465 538-542 637-643 339-344 322-326 397-401 491-494 233-236 552-556 530-531 40-43 421-423 528-535 269-272 448-450 361-367 351-354 502-506 356-359 494-497 124-126 420-422 645-649 179-181 137-142 245-247 451-462 595-608 474-478 211-215 281 Page of f Vol. Record Wilcox, W. T., Redwood Falls, Minn VIII 389-392 Wilder, A. R., Clinton, Mo VIII 50-55 Wilder, E. W., Altamont, Mo VII 163-170 Wiles, T. G., Cherokee, Kan VI 504-517 Wilkening, W. J., Odessa, Mo VIII 166-169 Williams, E. J., Randolph, Wis XII 403-406 Wilson, James, Sac City, Iowa V 215-221 Wine, John W., Mount Morris, 111 XI 215-218 Winzer, Oscar, Troy, Kan VII 257-260 Wise, Fred J., Minneapohs, Minn X 179-183 Wolf, L. J., Aurora, 111 X 543-546 Woodford, E. C, Darien, Wis XII 439^42 WooUey, H. H., Osborne, Kan VII 465-470 Wolter, Fred, Appleton, Wis XII 476-478 Worcester, H. C, Roodhouse, 111 XI 153-155 Wright, R. L., Archie, Mo VII 494-497 Wumkes, W. H., Lennox, S. D VIII 461^64 Yates, John R., Billings, Mont X 385-390 Yost, B. S., Shelbyville, 111 XI 161-164 Zeck, Fred, New Carlisle, Ind XII 507-510 282 EXHIBIT "D." LIST OF 32 COMPETITORS WHO TESTIFIED THAT DEALERS WERE FREE TO BUY COMPETING IMPLE- MENTS WHEN HANDLING THE INTERNATIONAL HARVESTER COMPANY'S HARVESTING MACHINERY. Name Firm Allyn, C. H Madison Plow Co Baker, G. W Johnston Harvester Co Barber, A. C Moline Plow Co Bartholomew, J. B. .Avery Co Bateman, F. H . . . . Bateman Mfg. Co Bergman, W. C The Maytag Co Blanton, E. G B. F. Avery & Sons Bolens, H. W Gilson Mfg. Co Brinton, W. B Grand DeTour Plow Co Durkee, Geo Parlin & Orendorff Fairfield, E. J Lindsay Bros. — Jobbers Johnston line Hamey, B. F Parlin & Orendorff Jones, C. C Sandwich Mfg. Co Kenaston, F. E Minneapolis Thresher Co Kinney, H. M Winona Wagon Co Lumry, W. R Associated Mfgrs. Co Matson, G. M Lauson Mfg. Co Norton, F. L J. I. Case Threshing Machine Co. . Pierce, H. L Emerson-Brantingham Co Porter, S. D Acme Harvester Co Procter, Robt .... Rock Island Plow Co Renyx, G. W Omega Separator Co Robinson, G. M . . . . Charter Gas Engine Co Rumely, E. A Rumely Co Schreiber, Wm Wagon Manufacturer Slaker, C. S Sechler — Janesville Co Taylor, W. H Moline Plow Co Troxell, C. C Moline Plow Co Vietch, James Thomas Mfg. Co Wadsworth, S. D . . . Rock Island Plow Co . . Wallis, H. M J. I. Case Plow Works . . Yount, L. T OHver Plow Co Vol. Page XI 203 XII 49 XI 340 XII 484-485 XII 2 XI 5 VI 730 XIII 86 XI 354 V 612 X 270 IX 448 XI 430 XII 410 XII 399 XII 548 XIII 96-97 XII 457 IX 279 XII 379 X 218 XIII 117-118 XII 550 XIV 10-11 XII 367 VII 17 X 46 V 607 VIII 450 VIII 517 XI 253 VII 22 283 EXHIBIT "E." LIST OF 22 COMPETITORS WHO TESTIFIED THAT INTER- NATIONAL HARVESTER CO. COULD NOT COERCE IMPLEMENT DEALERS. Name. Occupation. VoL Page Allyn, C. H. ... Vice-President of Madison Plow Co., Madison, Wis XI 203,204 Baker, G. W Asst. Manager Johnston Harvester Co., Batavia, N. Y XII 48, 49 Barber, A. C . . . . Sales Manager of Moline Plow Co., Moline, 111 XI 340,341 Bergman, W. C. .Owner of Maytag Co., Newton, Iowa. XI 5 Blanton, E. G. . . .Branch Manager of B. F. Avery & Sons, Oklahoma City, Okla VI 730, 731 Brinton, W. B. . . .President Grand De Tour Plow Co., Dixon, 111 XI 354, 355 Caldwell, C. A.. . .Branch Manager of Moline Plow Co., Sioux Falls, S. D VIII 493, 494 Carr, J. A President of American Seeding Machine Co., Richmond, Ind XIII 365, 366 Craig, J. A General Manager of Janesville Mach- ine Co., Janesville, Wis XI 225,226 Duncan, J. E Branch Manager of Parlin & Oren- dorff Co., Oklahoma City, Okla ... VI 717, 718 Fairfield, E. J. . .Manager at Minneapolis, Minn., of Lindsay Bros., Jobbers of Johnston line X 270 Jones, J. L Branch Manager of Deere & Co., Des Moines, Iowa XI 423 Kennedy, F. H. . .Branch Manager of Moline Plow Co., Stockton, California VIII 193, 194 Manning, W. E. . .Branch Manager of Moline Plow Co., Kansas City, Mo VII 3,4 Pierce, H. L Branch Manager of Emerson-Brant- ingham Co., Minneapolis, Minn... IX 279, 280 Proctor, R. L Branch Manager of Rock Island Plow Co., Minneapolis, Minn X 219 284 Name. Occupation. Vol. Page Slaker, C. S. . . .Branch Manager of Sechler-Janes- ville Co., Kansas City, Mo. ... VII 18 Stephens, G. A. . .President of Moline Plow Co., Mo- line, 111 XIV 2,3 Taylor, W. H Branch Manager of Moline Plow Co., Minneapolis, Minn X 45, 46 Vietch, James. General Agent of Thomas Mfg. Co., Sioux Falls, S. D VIII 450 WaUis, H. M President J. I. Case Plow Co., Racine, Wis XI 253, 254 Yount, L. T Branch Manager of Oliver Plow Works, Kansas City VII 22, 23