of the board, and I have only picked up such information in connection with questions that would arise from time to time before the board. I can not give you that. Senator REED. You spoke of having European plants. How many European manufacturing plants have you? Mr. JONES. There is a plant at Norkopping in Sweden. There is a plant in Russia. Senator NELSON. At Odessa? Mr. JONES. No; there is a warehouse at Odessa, but not a manufacturing plant. The manufacturing plant is at-well, I will remember the name in a minute. It is a Russian name. There is a manufacturing plant in France. Those manufacture the parts of the harvesters; those are harvester manufactories primarily. Senator REED. Mowing machines, too? Mr. JONES. Mowing machines and harvesters. Senator REED. Are there any other European plants than those three? Mr. JONES. No, sir; there is no other European plant that is actually going. Senator REED. Well, have you some Mr. JONES (interposing). Property has been acquired in Hungary, but the plant is not completed; it is only in process. Senator REED. They are building it now? Mr. JONES. Well, the plant has been acquired, and the tracks are laid; the actual building has not been begun, but the property has been acquired. Senator REED. Did you buy the factory out there, or did you build one? Mr. JONES. The European factories have been built mostly de novo. In the case of the Russian plant, the buildings were in existence for an entirely different line of business, and the property was bought and transformed into an entirely different factory. There was no harvester or mower business purchased in Europe. Senator REED. Have you established any plants in Asia? Mr. JONES. None. Senator REED. Or in Japan? Mr. JONES. None at all in the Orient. Senator CRAWFORD. Any in South America? Mr. JONES. No; no plants in South America; no manufacturing plants. Senator REED. Can you tell me where the Russian plant is Mr. JONES. Norkopping is the Senator NELSON (interposing). Norkopping is in Sweden. Mr. JONES. That is in Sweden; yes. I am trying to think out that Russian name. Senator REED. Well, you may get it later, perhaps; it is not material. When were the steps taken to acquire this plant in Hungary? Mr. JONES. About a year and a half ago. Senator REED. You knew all about that? Mr. JONES. I did. Senator REED. And sanctioned it? Mr. JONES. I did. Senator NELSON. Had these plants in Russia and France and Sweden been started before you became a member of the board? Mr. JONES. They had all been started but had not been finished; that is, we made appropriations to them from time to time; but my recollection is that the initiation of the enterprises were all under way before I became a member of the board, exceting the one in Russia. Senator REED. Let us take the plant in France; when was that initiated? Mr. JONES. I could not give you the date. Senator REED. How much has been done on that in the way of enlarging it, or enlarging its sphere of activity, since you became a member? Mr. JONES. Not so much as Norkopping and the Russian plants. Senator REED. Now, of course, it is perhaps a little indefinite and hard to get it definite Mr. JONES (interposing). Do you mean how much money we have appropriated? I do not remember. Senator REED. Let us take the Russian plant. When was the acquisition of that? Mr. JONES. I can not tell you the date of the inception of that, either. Senator REED. What has been done with that since you became a member of the board in 1909? Mr. JONES. We have made several appropriations providing for certain plant extensions and providing for machinery, equipment, etc. Senator REED. Extending the plant? Mr. JONES. Extending the plant and extending the equipment of the plant that was there. Senator REED. What has been the extent of that? Mr. JONES. In money? Senator REED. Yes; what would you approximate? Mr. JONES. I do not think I could tell you that. Senator NELSON. May I ask a question there, Senator Reed, to clear the matter up? Senator REED. Certainly. Senator NELSON. When you start in foreign countries, do you incorporate in those countries, or how do you get the right to do business there? Mr. JONES. It depends on the country, Senator. There must be an ownership in all the countries; that is, either a corporation organized under the laws of those countries, or what we call ordinarily a partnership. For instance, in Hungary corporations are not allowed to operate at all. There there are certain trustees. They have a peculiar form of organization there that is substantially our form of copartnership; that is, the property has to be held in the name of individuals as trustees, but no corporation can be organized. Senator NELSON. But in France and Sweden and Russia they are corporations? Mr. JONES. Corporations. Senator NELSON. You incorporate under the laws of those countries? Mr. JONES. Yes. Senator NELSON. But you hold a majority of the stock? Mr. JONES. We hold all of the stock. Senator NELSON. But you have to get some of the citizens of those countries to act as officials? Mr. JONES. Yes, sir. Senator NELSON. And to hold some stock? Mr. JONES. That is, qualifying shares; yes, sir; but the substantial holdings are in the International Harvester Co. Senator REED. In other words, in all of these places-and when I say all of these places I mean all of these European places where you have established yourselves the harvester company is in control of the business and owns substantially all of it? Mr. JONES. Yes, sir. Senator REED. Does your company own it, or the individual members of the company? Mr. JONES. The company holds-do you mean Senator REED (interposing). The International Harvester Co. Mr. JONES. The International Harvester Co.; yes, sir. Senator REED. Holds the interest? Mr. JONES. That is, you understand that in 1912 the foreign business was put in a separate corporation? Senator REED. Yes. Mr. JONES. The International Harvester Co., which was the original organization. Before the suit was begun, with the concurrence of the legal department, the foreign plants, and foreign business, and the so-called outside lines, there was a corporation organized under the name of the International Harvester Corporation. Senator REED. With the concurrence of what legal department? Mr. JONES. Of the law department of the Government. Senator REED. Of the United States Attorney General's Office? Mr. JONES. Yes, sir. Senator REED. You organized a separate corporation to run the European business? Mr. JONES. Yes, sir; to take over the European business. Senator NELSON. May I ask a question? You have two domestic corporations, have you not the New Jersey corporation, and then a corporation succeeding the Milwaukee corporation? Mr. JONES. Well, that was the International Harvester Co. of America. That was the selling agency. Senator NELSON. That was the Milwaukee company? Mr. JONES. Yes, sir. Senator NELSON. That is the selling agency of the International Co. of New Jersey? Mr. JONES. Yes, sir. Senator NELSON. The one manufactures and then turns it over to the other to sell? Mr. JONES. Yes, sir. Senator NELSON. But they are all controlled by the same interest? Mr. JONES. They are. Senator REED. When you organized this European companywhat is the name of it-the one to take over the European business? Mr. JONES. The International Harvester Corporation. SD-63-2-vol 28-24 Senator REED. The International Harvester Corporation, and not "company"? Mr. JONES. Yes, sir. Senator REED. Now, who constitutes the International Harvester Corporation? Who holds that stock? Mr. JONES. The stock originally of the International Harvester Co. was reduced by substantially one-half at the time of the organization of the International Harvester Corporation and stock of the International Harvester Corporation was issued for the amount so reduced. Senator REED. And put in the hands of these same voting trustees? Mr. JONES. No, sir; that was after the voting trust had expired. Senator REED. Then, in whose hands was it put? Who actually came in possession of that stock upon the incorporation? Mr. JONES. Those who surrendered the stock, by the amount by which it was reduced by the original International Harvester Co., received stock of the International Harvester Corporation. Senator REED. Well, who are those people, the principal ones that surrendered this stock and took the stock of the International Harvester Corporation? Mr. JONES. Who are the individuals? Senator REED. Yes; the principal ones? Mr. JONES. Well, the McCormick family and the Deering family together. Senator REED. And Perkins and the Morgan interests? Mr. JONES. And Perkins and the Morgan interests have some stock, as I understand. I am not familiar with the details of the stock holding. Senator REED. Well, just to get at it so that we can get it all in a nutshell—I take it there is really no dispute about the facts? Mr. JONES. None whatever. Senator REED. This stock, the great majority of it, was owned by the International Harvester Co., by the Morgan interests, represented by Mr. Perkins; by the McCormick interests and by the Deerings; that is the situation, is it not? Mr. JONES. If you state it in the reverse order I can say yes; it was owned largely by the McCormicks and the Deerings, and the Morgan interests held a certain amount of stock. Senator REED. Those three interests had a majority of the stock in that company? Mr. JONES. That is my understanding. Senator REED. Yes. Now, subsequently you organized a sales company known as the International what? Mr. JONES. You are referring now to the International Corporation? Senator REED. No; the sales company. Mr. JONES. That is the International Harvester Co. of America. That was not subsequently organized; that was one of the original companies. Senator REED. One of the original companies? Mr. JONES. Yes, sir. Senator REED. Now, these same three interests control a majority of that, do they not? Mr. JONES. My understanding is that the stock of the International Harvester Co. of America is owned by the International Harvester Co. Senator REED. Owned by the parent company? Mr. JONES. Yes, sir; controlled by them. Senator REED. When you organized the International Harvester Corporation to take over the European business, did these same three interests continue to control the majority of the stock in that? Mr. JONES. The stock of the International Harvester Corporation was, as I said, issued to those whose stock had been reduced in the amount which it had been reduced in the International Harvester Co. Senator REED. You told us a moment ago that the International Harvester Corporation stock Mr. JONES. Yes. Senator REED (continuing). Was given in lieu of International Harvester Co. stock and to the people who surrendered International Harvester Co. stock? Mr. JONES. Yes. Senator REED. Now, what I am coming to is this: Did not that leave the control of the International Harvester Corporation to these same three interests? Mr. JONES. Certainly. Senator REED. The Morgan interests represented by Mr. Perkins and the Deerings and the McCormicks. That is correct? Mr. JONES. That is correct. Senator POMERENE. If I may clear up my thought, the stock of the International Harvester Corporation was not in fact then held by the American companies? Mr. JONES. By the American companies? Senator POMERENE. Yes. Mr. JONES. No, sir; held by the stockholders. Senator REED. Now, as a matter of fact, these three corporations in their practical operation, are all run under one general management and control, are they not? Mr. JONES. Well, strictly that is not correct; substantially it isthat is, the same persons Senator REED (interposing). Manage all of them? Mr. JONES. Yes; legally they are entirely separate entities. Senator REED. I understand. But the controlling interest is the same in all three of them? Mr. JONES. Yes. Senator REED. Can you tell us how much the stock of the International Harvester Co. was reduced at the time you separated the European business from the American business? Mr. JONES. My recollection is that it was reduced by $30,000,000 of each kind of stock, $30.000,000 of common and $30,000,000 of preferred; $60,000,000, divided substantially into half. Senator REED. And for that $60,000,000 of stock there was stock issued in the European ventures? Mr. JONES. That is correct. Senator REED. So that there is now $60,000,000 invested-at least, so far as the face of the stock goes in the European investments? |