Joseph P. Cotton, jr., in 1902 law clerk for the firm of Guthrie, Cravath & Henderson, worked on the papers relating to the incorporation of the International Harvester Co., and attended to the incorporators' meeting on August 12 (I, 348, fol. 4). Although this witness helped prepare the papers for the transfer of the several properties to Lane and the other papers relating to the transfer from Lane to the International Harvester Co., he was unable to state the purpose of using Lane in the transaction (I, 349, fol. 3). He said: That was a question that did not come before me at all. It was not determined by me at all. I think I would not be sure whom it was determined by * The firm for which I was working were the counsel who were engaged in the matter then (I, 349, fol. 4). * I do not recall anything that anybody said to me about the purpose of using Lane in this transaction (I, 351, fol. 3). * * * * * * * The arrangement for 6 directors lasted only a day. On August 13 the by-laws were changed so as to provide for 18 directors (I, 350, fol. 3). The witness said he did not know what the purpose was in having only 6 directors at first (I, 350, fol. 4). The resignations and the subsequent elections were in accordance with the plan which had been adopted for conducting the meeting of August 13. There were no surprises (I, 354, fol. 3). Nor did the witness know why the company was incorporated in New Jersey instead of Illinois (I, 352, fol. 1). Lane's proposition to the International Harvester Co. was prepared in Cravath's office, Lane leaving "all of those details to us," who were counsel for Lane and J. P. Morgan & Co. (I, 354, fol. 1). IX. THE POLICY WHICH DEFENDANTS ADOPTED FOR MARKETING THEIR OUTPUT WAS INTENDED TO STIFLE COMPETITION-UNDUE CONTROL OVER DEALERS IN AGRICULTURAL IMPLEMENTS. As a rule, there are not more than three dealers in agricultural implements in an ordinary town in the grain sections of the United States. Sometimes, but not often, there are four or five. Frequently there are less than three. (Middlekauff, I, 171, fol. 2.) It has been pointed out above, supra, page 37, that harvesting implements have always been sold under trade names, each trade name applying to the entire line of harvesting implements. Ever since its formation the International Harvester Co. has adopted the policy of dividing its harvester lines among all the dealers in a town. That is, it gives to one dealer the McCormick full lines of binders, mowers, rakes, twine, tedders, corn binders, and so forth; to another dealer, the Deering line; and so on, as long as the dealers last. In respect to this practice the petitioner alleges (petition, p. 21): In towns where there are more than one retail implement dealer defendants have adopted and are now carrying out the policy of giving to each dealer the exclusive agency for a certain well-known machine, such as the McCormick or Deering grain binder or mower, instead of giving to one dealer an agency for all defendants' lines, intending thereby to obtain for themselves the services of all implement dealers, and by means of the contracts before described to monopolize all trade and commerce in harvesting and agricultural implements. To this allegation defendants answer (answer, p. 22): They admit that in many cases where there is more than one retail dealer in a town the International Harvester Co. of America gives an agency for the McCormick machines to one and for the Deering machines to another of the dealers, instead of giving to one dealer an agency for all its said lines. But they deny that the International Harvester Co. of America does this to monopolize trade and commerce in harvesting or agricultural implements, or for any purpose other than to stimulate trade and competition. There is printed in the record (II, 264), a report of the sales committee of the International Harvester Co., comprised of the men directing the selling policy of the company, dated January 15, 1903, which in the form of a declaration of principles describes the selling policy of the company in language almost identical with that quoted above from the petition. The existence of this report was unknown to the Government at the time the petition was drawn. In the report the sales committee unanimously recommends against allowing the Champion agents to sell the Deering header or the McCormick shocker or allowing the Milwaukee agents to sell the Plano header for reasons which it summarizes as follows (II, 264, fol. 2): First. We believe that so long as there is competition it is desirable for the International Harvester Co., to maintain five selling organizations, for the purpose of getting the largest amount of effort from the greatest number of local agents without expense to the company, and for the purpose of utilizing in its own business as much as possible of the available local agency material rather than permit any of it to become available for competitors. Second. To carry out this plan it becomes necessary for each division, as far as possible, to make exclusive contracts, and thus get for that division the exclusive effort of the local dealer. To secure this it is necessary to give the local dealer the exclusive sale of the full line of goods of the division he is representing. Third. The sales committee recommends from its standpoint that each division sell only the product of that division, and that in line with this, if any of the divisions have not already a large enough variety of goods, that the variety be provided either by purchase or by equipping the division to manufacture the articles required to complete the line. At the time this report was written the International selling organization was divided into five divisions, called McCormick division, Deering division, etc., corresponding to the old selling organizations of the five companies, each division selling only one line. The heads of the five divisions formed the sales committee and were A. E. Mayer, McCormick division; C. H. Haney, Deering division; R. C. Haskins, Champion division; O. W. Jones, Plano division; and M. R. D. Owings, Milwaukee division. Each of these men (except A. E. Mayer, who died a few years ago) holds to-day an important position with the International (II, 275). Each of them signed the sales report above quoted. Haskins is to-day president of the America company and consequently the head of the sales organization of the International; Haney is head of the foreign sales department, and Owings head of the advertising department. Jones is head of the St. Louis collection agency. Before Mayer died he had been promoted to the position of general manager of sales, which position he held a number of years. Alex. Legge, Haskins, and Haney comprise to-day the three men most influential in determining the selling policy of the International (excluding, of course, the McCormicks and Deerings, large stockholders, and important officers, who will be referred to later). Alex. Legge recently succeeded Clarence S. Funk as general manager of the company. The general manager takes the place of the executive committee to be described below (I, 33, fol. 1). There has occurred a gradual elimination of the Plano and to some extent of the Milwaukee lines so that to-day the International Harvester Co. maintains throughout the country three lines, McCormick, Deering, and Champion, and in the eastern States also the Osborne (III, 295, fol. 2; III, 292, Exhibits 263-A-P, IV, 298-313). These lines are divided among the dealers according to the policy adopted in 1902. Nearly every implement dealer called by defendants who came from a town in which there are three or more dealers testified that each dealer in his town carries one of the International harvesting lines, each dealer in the town having a different line from the others. In most towns there are two implement dealers, one carrying the McCormick, and the other the Deering lines. Each of the following witnesses testified that there are three dealers in his town (a few of them said four or five dealers) and that each of the three dealers has one of the International harvesting lines, no two dealers carrying the same International line in the same town: Jones, Ed. S., Falls City, Nebr. (VII, 192, fol. 4). Collins, George W., Belleville, Kans. (VII, 439, fols. 2-4) James, Ed., Beloit, Kans. (VII, 356, fols. 1-2). Max, Louis, Union, Mo. (VIII, 114, fol. 1). McNaul, George L., Maitland, Mo. (VII, 207, fols. 2-3). Mosiman, John, Falls City, Nebr. (VII, 284, fols. 2-3). Muenzenmayer, William F., Junction City, Kans. (VII, 574, fol. 4; 575, fol. 1). Bulliert, V. H., Corydon, Ind. (XI, 72, fol. 4; 73, fols. 1-3). Conrad, J. P., Monee, Ill. (XI, 101, fols. 1-3). Dillavou, S. E., Champaign, Ill. (XI, 113, fol. 4). Emison, John W., Vincennes, Ind. (X, 305, fol. 4; 306, fols. 1-6). Foster, Edwin J., Grass Lake, Mich. (X, 505, fol. 4; 506, fols. 1-3). Franklin, S. H., Glasgow, Ky. (XI, 81, fols. 3-4). Gilstrap, John W., Samle, Ind. (XI, 78, fols. 2-4). Huston, A. B., Paris, Ill. (X, 301, fols. 2-4). Marshall, J. A., Manito, Ill. (X, 443, fol. 4; 444, fols. 1-3). McGlasham, Charles G., Rockford, Ill. (XI, 209, fols. 1-2). Miller, Joseph, Payne, Ohio (X, 455, fols. 3-4). Nordgren, C. A., Paxton, Ill. (XI, 116, fols. 3-4). Payne, William E., Owasso, Mich. (X, 501, fols. 2-4). Scheve, F. C., Sumner, Iowa (XI, 51, fols. 1-4). Taylor, J. E., Mason, Mich. (X, 501, fols. 2-4). Leon, C. H., Decatur, Ill. (XI, 143, fols. 2-4). Purchase, J. L., Grand Rapids, Mich. (XI, 455, fols. 1–2). Crary, A. R., Boone, Iowa (XII, 565, fols. 1-3). Epperson, George F., Sumter, S. C. (XII, 375, fols. 1–3). 54991-S. 'Doc. 558, 63–2– -5 Lindhal, Al., South Bend, Ill. (XII, 518, fols. 1-2). McGeehan, Grover T, De Pere, Wis. (XII, 490, fols. 2-3). Doyle, Michael A., Westminster, Md. (XII, 126, fols. 2–3). General Manager Legge, witness for defendants, stated on direct examination by defendants' counsel that the International Harvester Co. to-day pursues the policy of having separate representations, so far as it can, for the separate harvesting lines that it manufactures. (Legge, XIV, 36, fol. 4.) He said also that his company has preferred and still prefers to have the exclusive service of an agent if it can get it (XIV, 37, fol. 3). Since 1902 the International Harvester Co. has entered upon the manufacture of many new kinds of agricultural implements, particularly wagons, nanure spreaders, engines; hay tools, such as tedders, presses, and loaders; seeding machines and tillage implements. The complete list of new machines is stated in Government Exhibit 22 (IV, 116), together with the year each new kind was first manufactured. For each of these new kinds the International Harvester Co. has adopted the same policy of distribution and marketing that it adopted in 1902 for its harvesting implements; that is, it manufactures several lines of each machine, gives to each line a different trade name, and then distributes the different lines to the several dealers in a town. The machines of the several lines are substantially identical with each other, differing only in trade names. The purpose of this method of marketing is made clear by a letter written by the head of the sales department, A. E. Mayer, general manager of sales, to James Deering, vice president, June 7, 1904. He says (III, 248, fol. 3): We have, as you know, reached the conclusion in connection with the elimination of two of the present lines, that it is absolutely necessary that each of the agents who is to handle one of the three lines be supplied with a tedder or any other article which we may see fit to manufacture. We will, of course, by supplying each of the three sets of agents with a separate line of tools be able to cover the best of the selling organization of the country, in so far as local agents are concerned. Having reached this conclusion, we are naturally led to suggest that in developing further lines of implements it will be well for the experimental department to take into consideration the immediate necessity for supplying the sales department with three lines of tools. In the development of the cream separator we could, for instance, build one line of the De Laval type; we might take for a second line the Sharples type; and perhaps develop for the third line a separator patterned somewhat after the Reid machine. In view of the findings of the patent department that the field is rather an open one, this should make the proposition very simple. The same policy should prevail in the development of drills. As time goes on, after we have fully developed and established our line of gasoline engines, and they have become standard machines, we will wish to make some variations in these engines, in order to give our three sets of agents an independent line of gasoline engines to sell. It would probably take a year to bring about such a situation. In the meantime, we think we can do a large profitable business with the gasoline engine as an International tool. Eventually, however, as stated, we must provide, either by different painting or different branding, the three lines of these engines. In our judgment it will be a simple matter to arrange our stacker and sweep rake so that we can supply each of these agents with something different. Perhaps in that case, these tools being so much like many others that are on the market at this time, simply a little variation in painting, with the names Deering, McCormick, and Champion stenciled, will meet the situation. (Italics ours.) Regarding tedders, we can market the present tedder, known as the International, now built at the Champion Works, through Deering agents; the Reynolds tedder, already developed and now being offered for sale in small quantities, through McCormick agents; and we can, in order to complete the line, make a copy of the Osborne tedder for the Champion agents. After reading these suggestions, I trust the officers of the company may see fit to suggest that the experimental work be shaped to the end that in the development of any new tool this policy may continually be borne in mind. Respectfully, A. E. MAYER. Four days later, June 11, 1904, James Deering, vice president, writing Mayer, for the executive department, stated that Mayer's policy of having three lines was "accepted and approved" (III, 249, fol. 4). To-day the International Harvester Co. sells three lines of wagons, under the trade names "Weber," "Columbus," and "Bettendorf" wagons; three lines of manure spreaders, whose trade names are "Corn King," "Clover Leaf," and "Twentieth Century" (IV, 132, fol. 3); three lines of cream separators, with trade names "Dairymaid" and "Bluebell" and "Lily" (IV, 137, fol. 3); three lines of drills, called "Hoosier," "Kentucky," and "Empire" (III, 218, fol. 2; 220, fol. 4); six lincs of cultivators, called "Champion," "Deering," "McCormick," "Milwaukee," "Osborn," and "Keystone" (IV, 309); six lines of disk harrows, six lines of spring-tooth harrows, and six lines of peg-tooth harrows, all with the trade names "Champion," "Deering," "McCormick," "Milwaukee," "Osborne," and "Keystone" (IV, 310-312); three lines of tedders, called "Deering," "McCormick,' and "Osborne' (IV, 308); three lines of side delivery rakes, known as "Deering," "McCormick," and "Osborne" (IV, 307). All the implements named in the last paragraph are lines which the International Harvester Co. has begun to sell since 1902, as appears from Government Exhibit 22 (IV, 116). Sometimes a supply of sweep rakes and stackers is shipped to general agents, who are supplied with stencils, so that they may stencil the machine "Deering" or "McCormick," depending upon whether the implement dealer who may buy them is a Deering or McCormick agent (III, 259, fol. 1; 261, fol. 2; 459, fol. 4). (See also Carr, II, 482, fol. 2.) A circular letter to the general agents issued April 30, 1907, announces that the International Harvester Co. is now in a position to furnish the Bettendorf line of farm wagons to all the general agents and urges that the sale of their goods "be pushed to the utmost." The circular states (III, 468, fol. 4): It is not our purpose to sell the Bettendorf and Weber lines to the same dealer, but rather to keep them separate. That the effect of the international policy of dividing its lines among the dealers in a town is tɔ make it difficult for another manufacturer of harvesting implements to get a sufficient number of agents was the testimony of the president of the Acme Harvesting Machine Co. (Middlekauff, I, 173.) |