directors, or stockholders were subject to prosecution or civil action under the Sherman antitrust law, and that, supposing such to be the fact, the information conveyed to him by Messrs. Frick and Gary did not materially alter the existing situation. Were you familiar with that letter? Mr. GARY. No; I was not. That is from the Attorney General to the President? Mr. LITTLETON. I am wrong about that. It is a quotation by the Attorney General from another letter of his which was written to the President, and this is contained in a letter to the chairman of the Judiciary Committee of the United States Senate. Mr. GARY. I never had any knowledge or information. I added the statement in substance that, in my opinion, based upon certain decisions of the Supreme Court, and especially the Knight case (156 U. S., 1), the transaction said by Messrs. Gary and Frick to be in contemplation would not in itself constitute an offense against the said law or furnish grounds for action by the Government to enjoin its consummation; but if this transaction had been preceded or should be followed by a series of others of like nature a materially different situation would be presented and the case would become, in some measure, analogous to those of the Standard Oil Co. and the Tobacco Trust and other combinations of the like nature. In the same conversation the President asked my opinion as to the legal correctness of the attitude he (the President) had assumed in his conversation with the gentlemen in question, that attitude being, in substance, that while he had no right to advise them to take the course they proposed or make any suggestion to them in the premises, he was not called upon to interpose any objection, and I replied that, in my opinion, such course by the President was strictly appropriate under the law. Judge Gary, if you have had time enough to consider it, do you understand him to mean if it had been preceded by a similar transaction or followed by a similar transaction? Mr. LINDABURY. Once again, apologizing for making an objection, might I suggest that Judge Gary's interpretation of Mr. Bonaparte's letter to the President would hardly be proper? Mr. LITTLETON. We have such abundant power to overrule the objection that I will withdraw the question. Mr. GARY. I do not think I quite finished the statement in regard to the examination of the purchase of these securities, although I have nearly done so. I returned to New York, and we entered an agreement for the purchase of the stock, or the properties through the stock, in the meantime having made as careful and full an examination as we could in regard to the properties, such examination having commenced almost from the very beginning of the negotiations or the request to purchase. I remember that Mr. Gates says in his testimony that he insisted that the board of directors pass a resolution that the minority stockholders should have the right to turn in their stock at the same price. He may have insisted upon that. I have no recollection of his having done so. If he did, it would seem to me as rather forcing us to buy stock instead of forcing them to sell stock, but, be that as it may, the original memorandum of agreement provided that we would take the minority stock at the same price. That agreement was consummated before Mr. Gates returned from abroad-before he landed in this country-and so I am inclined to think that he is mistaken about that, so far as I am concerned. I would like at the proper time, and as you may desire, to state to you some of the values of these properties and the conditions of this company. CHAPTER XII TRUST METHODS NOTE A DISPROPORTIONALLY large share of space in this volume has been devoted to readings on the above subject. The editor has felt that this is a most vital question. It bears directly on the issue between Competition and Combination. It is the theory of the editor that the advantages of combination are to be found chiefly in certain methods and not in the frequently alleged economies of saving of cross freights, saving in advertising and in salesmen, superior managerial ability, etc. etc. It is a very serious question whether, should certain practices be prevented, the alleged natural tendency to combination would not vanish into thin air. The exhibits given need no comment. They are made up of excerpts drawn from Government investigations and from the briefs, petitions, indictments and other documents in the various suits brought by the Government under the Sherman Act. For the purpose of affording greater convenience of study they have been subdivided into a series of groups each under a particular heading.-Ed. In September, 1910, defendants, in pursuance of their general purpose, through Jones Company, of New Jersey, acquired the business of G. Bell, who was engaged in the manufacture of machines designated and adapted for use in performing all the principal operations in the manufacture of and which can be performed by the aid and use of machinery. 1 United States of America v. Court of the United States for the District of Co. Petition, In the For at least two years immediately preceding September, 1910, said had invented, and had taken out letters patent of the United States and of foreign countries covering the same, machines designed and adapted for performing all the principal operations in the manufacture of and. Among such machines, which are too numerous to be referred to specifically in this petition, were machines, and machines, machines, and many others. On or about May 1, 1910, the said installed in the factory of G. machines, machines, Company, a corporation of New Jersey, issued capital $3,750,000, with its factory and principal offices at Boston, Mass., with a daily capacity of 17,000 of a complete set of the machines so owned and controlled by him, the said being the owner or in control of.a majority of the capital stock of the Company. For several years prior to the installation and use in the factory of the Company of the machines owned and controlled by G. —, defendants, through Company, of New Jersey, or some one or more of the corporations owned and controlled by them, had furnished and supplied all of the principal machines used in the factory of the Company in the manufacture of and —. Upon the installation in said factory of the machines owned and controlled by the officials of the Company caused the machines owned and controlled by defendants to be dismantled and removed and discontinued the payment of royalties on the same. in which G. Thereupon defendants instituted proceedings against Company in the Supreme Judicial Court of Massachusetts, Company, of New Jersey, was the party plaintiff, to enjoin the Company from using the machines which had been supplied to it by G.; to enjoin said from supplying or furnishing to the Company other machines. to be used in the place of machines owned and controlled by defendants, and to recover rents and royalties on defendants' machines during the period that -'s machines had been used in the factory of the Company. This proceeding was never prosecuted to a final determination for the reasons hereinafter stated. G. had advertised extensively, through the public press and otherwise, for several months prior to September, 1910, the machines which he had invented for use in the manufacture of and, and had solicited among manufacturers in various parts of the United States orders for the sale and lease of such machines., however, experienced difficulty in obtaining orders for his machines on account of the arbitrary, oppressive, unreasonable, and unlawful lease and license agreements, containing exclusive-use and provisions, hereinbefore mentioned and described, which defendants had theretofore required and manufacturers to sign, in order to obtain machines from defendants, and under which such manufacturers then held all of the essential machines necessary in the manufacture of · and However, a concerted effort was made by a number of prominent and manufacturers engaged in business in various States of the United States to acquire the inventions and machines owned and controlled by or an interest therein. Among such and manufacturers who were so interested were Company, St. Louis, Mo.; St. Louis, Mo.; Boston, Mass. & Company, Company, Chicago, Ill.; -, & Company, and G. Representatives of the above companies on September 22, 1910, were in Boston, Mass., in conference with with a view to either purchasing an interest in his inventions and machines or to make some arrangement which would enable them to obtain machines for use in their factories, and thereby be relieved from the domination and control of defendants. Defendants, being advised of the purpose and intent of said manufacturers, and well knowing that if any arrangement were made between them and G. whereby they could obtain for use in their factories machines not owned and controlled by defendants, such action would result in defendants' machines being dismantled and removed, as had been done in the factory of the Company, and that competition would be created in the sale, lease, and use of such machines, defendants, for the purpose of preventing such competition and to monopolize trade and commerce in machinery, on or about September 23, 1910, entered into agreements with said whereby they acquired all the inventions, letters patent of the United States and of all foreign countries relating thereto, together with all machinery, mechanisms, tools, and devices owned and controlled by said, designed and adapted for use in the manufacture of and ; and defendants acquired also the holdings of the capital stock, which constituted a majority thereof, which the said owned and controlled in |