hay tools in 1903, seeders in 1906, and manure spreaders in 1908. In 1910 a large tractor works was opened in Chicago. This was the only important new plant for the manufacture of agricultural implements constructed by the company in the United States.

From the sales end this extension into new lines was quite advantageous. The sales of harvesting machines in any given territory are generally made within a comparatively short period in each year. The sales force in the past had been employed for only a few months during each year, and it had then been disbanded. The extension of the business to include agricultural implements used at different seasons of the year made it possible to sustain an all-year-round selling organization, thus contributing decidedly to its efficiency.

The Harvester Company also strengthened its position in the export trade. This it did by the purchase of foreign companies, or by the construction of plants abroad. For example, in 1903 the International Harvester Company of Canada was incorporated. It built a large harvester factory at Hamilton, Ontario, and subsequently added tillage implements, seeders, and manure spreaders. Other smaller plants were likewise acquired in Canada. The Harvester Company also built or acquired plants in France, Germany, Russia, and Sweden, and organized marketing companies in a number of other countries. The establishment of these factories abroad was chiefly the result of the protective policy of these foreign countries. Generally speaking, it proved more profitable for the International Harvester Company to manufacture the machines abroad (thus saving the tariff duty) than to make them in this country and export them. Obviously there was a great saving in transportation charges as well, though this saving was offset in part, at least, by the greater cost of production in the foreign plants, the industry being one particularly suitable to this country, and one in which the economies of large-scale production are great.

In 1913 there was made an important reorganization directly affecting the newly acquired lines and the foreign business. On 1 Brief for the International Harvester Company (no. 757), p. 61.

1

account of the suit brought by the government to effect the dissolution of the International Harvester Company on the ground that it was a combination in restraint of trade, the board of directors organized in the state of New Jersey on January 27 a new company, called the International Harvester Corporation. To the Corporation were transferred all the domestic plants exclusively engaged in the manufacture of the "new lines," all the foreign plants, and all the transportation companies. The capitalization of the Corporation consisted of $30,000,000 preferred stock and $40,000,000 common. This, it may be noted, represented just half the total of each class of stock of the International Harvester Company. The Company, starting out with a capital of $120,000,000, all common, had in 1907 converted half of the common into preferred. In 1910 it had declared a 33 1/3 per cent common stock dividend, thus increasing its total capitalization to $140,000,000. Because of the organization of the Corporation with a capital of $70,000,000, the Company reduced its capital from $140,000,000 to $70,000,ooo, and changed its name to the International Harvester Company of New Jersey.3

This plan of dissolution was approved by the stockholders in February, 1913. Of this plan the Bureau said: "If intended as a part of a proposed plan of disintegration, the Bureau regards this method of division as very unsatisfactory. Obviously, it does not touch the most essential feature of the company as a combination of competitors, namely, the consolidation of the chief harvesting-machine plants of the country, and especially of the McCormick, Deering, Champion, and Osborne works." 4 In this connection mention may be made of another company, which is liable to be confused with one or the other of the foregoing companies. This is the International Harvester Com

2

1 Chron., 96, p. 365 (February 1, 1913).

Report on the International Harvester Company, pp. 169, 174.

3 Holders of the $70,000,000 cancelled stock were entitled to receive cash ($100 per share) or shares in the corresponding class of security of the Corporation.

4 Report on the International Harvester Company, p. 178.

pany of America. In the original merger the International Harvester Company did not acquire the stocks of the companies combined; it merely acquired their properties. But a few weeks later it did acquire the capital stock of the Milwaukee Harvester Company, and with it its charter. The stock of this company, as distinguished from its factory (which had already been acquired), was secured in order that the company might be employed as a selling agency, and thus relieve the International Harvester Company of the restrictions that it was likely to meet in the conduct of business in other states. Thus, the laws of some states excluded corporations with a capital as large as that of the International Harvester Company, and the laws of others, while admitting foreign corporations (that is, corporations chartered outside the state), subjected them to heavy taxation, and sometimes, if they were trusts, refused to license them. The International Harvester Company, being a new corporation, would doubtless have experienced some delay in securing licenses in the several states; it might have been denied a license in others on the ground that it was a trust; and it would probably have been subject to heavy taxation, since the laws of some states made the amount of capitalization the basis of taxation. The Milwaukee Harvester Company, however, already had licenses to do business in the several states, and it was thus well suited to serve as a selling agency. The International Harvester Company, therefore, transferred to the Milwaukee Harvester Company (the name of which was changed in September, 1902, to the International Harvester Company of America) practically all of its warehouses and other facilities for the sale of its machines, and constituted it its sole selling agent." The International Harvester Company (of New Jersey), through the ownership of all of the capital stock of the International Harvester Company of America, of course controlled its selling agent completely.3

1 Report on the International Harvester Company, p. 87.

2 Ibid., p. 90, and 237 Missouri Reports 383.

* The use of the International Harvester Company of America as a selling agency was held by the Supreme Court of Missouri to be in violation of the

The International Harvester Company at its organization produced, as we have seen, about 85 per cent of the country's output of harvesting machines. This figure is not exact, since the number of each type of harvesting machines produced by the independent concerns is not known. However, reasonably complete data for grain binders, mowers, and rakes-three of the most important machines-are available, and especially for the first two. We may therefore turn to an examination of the position of the International Harvester Company in these leading branches of the industry.

The number of each of these machines sold in 1902 by the trust and by the independents, with percentages, is shown in the following table.1

The trust, it appears, sold over ninety per cent of the binders, over eighty per cent of the mowers, and nearly seventy per cent of the rakes. These figures, it should be noted, are for the total sales of each group, including the export trade. Inasmuch as the independent binder concerns had a relatively large export trade, the International Harvester Company undoubtedly controlled a larger percentage of the domestic market than the figure for

state law forbidding a company with a capital as large as that of the International Harvester Company to obtain a license, and a fine and ouster (suspended conditionally), was ordered. 237 Missouri Reports 374, 398. This decree was affirmed by the Supreme Court of the United States. 234 U. S. 215.

1 Report on the International Harvester Company, p. 92.

2 Number produced in the case of the Milwaukee Harvester Company.

3 Number produced in the case of the Osborne Company.

4 Number for independents partly estimated.

total sales (90.9 per cent) would indicate. The same is true to a lesser degree of mowers also.

Similar statistics are not available for reapers or corn binders other important types of harvesting machines—yet in all probability the proportion of the business in these lines controlled by the International Harvester Company was nearly as great as the figure shown above for grain binders.

Always pertinent is an examination of the ability of a trust, once formed, to retain its monopolistic position. Sufficient data are available to indicate with substantial accuracy the relative position of the International Company and the independents in the leading lines from 1902 to 1911 and in 1918. The situation with respect to grain binders is shown in the table below.1

PRODUCTION OF GRAIN BINDERS IN THE UNITED STATES, 1902-1911, 1918

1 Report on the International Harvester Company, p. 180; and Report of the Federal Trade Commission on the Causes of High Prices of Farm Implements, p. 679.

2 Output of the five companies entering the trust in 1902.

When the number produced by the independents was not known, the number sold was used instead. As a rule it made little difference which figure was used.