From an examination of this table it appears that the International Harvester Company increased its proportion of the output of binders from 90.9 per cent in 1902 to 94.2 per cent in 1903. This may be ascribed chiefly to the acquisition in 1903 of the important Osborne concern. Beginning in 1903 there was a decline, until in 1906 only 87.0 per cent of the output was produced by the trust. After a slight increase in 1907 and 1908 the percentage declined again in 1909 to 87, where it remained in 1910 and 1911. The International Harvester Company, therefore, in spite of the acquisition of several competitors, did not quite hold its own. Moreover, it is significant that while the total output of the independents increased between 1902 and 1911, notwithstanding the acquisition of several of their number by the Harvester Company, the total output of the trust actually declined. Nevertheless the International Company still had in 1911 a monopoly position in the manufacture of binders. Between 1911 and 1918, however, the company lost heavily. Whereas in 1911 it had produced 87 per cent of the total output, by 1918 its percentage had fallen to 65.3 per cent.1 This marked decline was partly due to the growth of some of its competitors, and partly due to the falling off in 1918 of the export trade, in which the International Harvester Company was the leading factor. The situation with respect to mowers is shown in the table on page 245.2 As with binders, the International Harvester Company, through the acquisition of the Osborne concern, increased its proportion of the country's output of mowers in the year after its organization. In 1902 the company produced 82.5 per cent of the mowers produced in this country; in 1903, 87.7 per cent. Yet its proportion since 1903 has shown a declining tendency. In 1911 it amounted to 76.6 per cent, and in 1918 to only 59.5 per 1 Report of the Federal Trade Commission on the Causes of High Prices of Farm Implements, p. 679. 2 Report on the International Harvester Company, p. 182; and Report of the Federal Trade Commission on the Causes of High Prices of Farm Implements, p. 679. PRODUCTION OF MOWERS IN THE UNITED STATES, 1902-1911, 1918 cent. Whereas the output of mowers by the independents increased nearly 7,000 between 1902 and 1918, that of the trust declined by over 210,000. The data for rakes are not so complete. The Bureau estimated, however, that the five companies merged into the International Harvester Company produced in 1902, 67.8 per cent of the rakes; that in 1903, with the acquisition of the Osborne Company, the proportion probably exceeded 80 per cent; and that in 1911 it had fallen to about 72 per cent.3 The percentage in 1918 was placed by the Federal Trade Commission at 57.5.4 The dominant position of the International Harvester Company is well brought out by the following table, which shows the number of harvesting machines of all kinds sold in 1911 by every 1 When the number produced by the independents was not known, the number sold was used. 2 Output of the five companies entering the trust in 1902. 3 Report on the International Harvester Company, p. 183. According to the Brief for the International Harvester Company (no. 56), p. 108a, the International Company in 1905 sold 77.8 per cent of the rakes disposed of in this country, and in 1911, 67.8 per cent. 'Report on the Causes of High Prices of Farm Implements, p. 679. concern contributing as much as I per cent to the country's total sales, and the percentage sold by each.1 SALES OF HARVESTING MACHINES IN THE UNITED STATES IN 1911, WITH W. A. Wood Mowing and Reaping Machine Co... Thomas Mfg. Co... The International Harvester Company in 1911 sold over three-fourths of the total number of harvesting machines sold in this country. Its percentage would be even larger were it calculated upon a basis of value rather than of number, since the company's control, generally speaking, was greatest for the higher priced machines, such as grain binders, corn binders, and headers. The next largest harvester concern was the Acme Company, with a capital of $3,500,000 (the capital of the International Company was $70,000,000).2 The Acme Company sold less than 5 per cent of the harvesting machines sold in this country, and unlike the International it did not make the entire line of harvesting machines. The only independent concern that did make an entire line was the Johnston Harvester Company, capitalized at less than $2,000,000, and producing less than 4 per cent of the total output of harvesting machines. In corn binders the International Company in 1911 had only three competitors; in reapers, only four; and in grain binders, eight, four of whom were quite unimportant. In mowers and rakes alone was there any considerable number of competitors; but none of them had as much as 8 per cent of the trade in either of these lines. Again, hardly any of the independents competed 2 Ibid., p. 111. 1 Brief for the United States (no. 56), p. 26. 3 Ibid., p. 110. with the International Company throughout the whole United States; their sales were confined mainly to the East, especially New York state and the New England states. Since the above date (1911) a number of strong concerns have entered the field. Among them is Deere and Company, with a capital in 1911 of $58,007,100. This expansion of the Deere Company was made on the principle of carrying a full line (no company, not even the International, had a really complete line of farm machinery),1 and the strong selling organization already possessed by the Deere Company and by other independents made it easier for them to secure a good share of the harvesting machine business than it would have been for a newly organized concern. So far as the lines other than harvesting machines are concerned, the Bureau of Corporations estimated that the International Harvester Company produced in 1909 the following percentages of the various products.2 Through the acquisition of other companies and through the expansion of its own plants, the International greatly increased its output in the new lines. Naturally its monopolistic position in the harvesting machine trade facilitated this development of its business. How is the ability of the International Harvester Company to 1 The acquisition of plow plants by the International Harvester Company in 1919 has given it practically a full line, since plows were practically the only type of farm implement it was not then producing. Report on the International Harvester Company, pp. 184-188. The estimate is based on the Census reports and the production of the International Company as given in its annual reports. maintain its semi-monopolistic position to be explained? The chief sources of its power seem to have been two: first, its productive efficiency; second, its possession of large financial re sourees. First. The International Harvester Company, generally speaking, produced its machines at a lower cost than its competitors. This was especially true of grain binders, the most important harvesting machine. Thus, the average factory cost of producing binders at the domestic plants of the International Harvester Company during the two years 1910 and 1911 combined was $56.32, the figures for the different plants being $54.11, $56.30, $64.94 and $73.78.1 (These factory costs do not include general and miscellaneous expenses, nor a very large item of selling expense.) The average factory cost for the four leading independents was $70.83. (To some extent these differences in cost resulted from differences in the machines, though the machines were substantially similar in type.) For only two of the four independents was the factory cost distinctly below the highest factory cost of the International Harvester Company, and for one independent the factory cost was distinctly higher than the cost in any of the four factories of the International Company. In each instance the output of the independent plants was much smaller than the output of any of the International Company's plants, except one. The relative smallness of the independent plants largely explains their higher factory costs. If we prorate over the total factory costs the general and miscellaneous expenses not included in the foregoing figures, the showing of the independent plants is even less favorable. While this may be the result in part of different methods of keeping costs, it is unquestionably due in considerable measure to the comparatively small output of the inde 1 Report on the International Harvester Company, p. 260. The basis of the discussion of costs that follows is the above report, pp. 260–265. It should be noted that the raw materials which are produced by the International Company for its own use are charged up to costs on the basis of the prevailing market prices, and, therefore, its costs are comparable with those of the independent producers. |