cumulated a larger fund, and that would have been all right and satisfactory. But we have never been in position where we could do that, which I may touch on afterwards.

It produced constant friction with our stockholders. They were not versed in the matter of making shoes. They were absolutely ignorant of the details of shoemaking, and it created a great deal of dissatisfaction. I had hard work explaining to them, and the mere statement that this was so and so was not very often convincing enough. I never did convince them in my explanations of it. They were dissatisfied with the business, and naturally so. I do not blame them.

Another feature along about that time was this: We received-I do not know how often, but we did receive on several occasions notices of infringement of machines, where one company would notify us that a certain machine we were using in our factory that we had bought of another company was an infringement on their machine. While we never had any trouble--it never resulted in any trouble to us; at the same time it destroyed our peace of mind to a considerable extent, because we never knew what trouble it would make us. While we tried to pacify ourselves that the company that we bought the machine of would stand behind us in the case of an infringement, yet we did not know whether they would be in business or not.

When the consolidation took place we thought that we recognized immediately that that would be an advantage to us after we had learned what their method of business was going to be, particularly in the matter of service than anything else. And we felt that if the expense of the machinery department of our business was not any larger and that they would render us the service of taking care of the machines, it would be quite an advantage to us and a much better way to operate.

For the first five years after their consolidation, I think-I have taken occasion to try to remember-I think it was about 1899 or somewhere along there that they combined the three principal companies that were furnishing the principal bottoming-room machinery, and I think until about up to 1894 or 1895 or 1896 they were charging for certain of their machines an initial cost beside the royalty.

Well, now, that immediately simplified to us the question of machinery cost. As I stated a while ago, there are three principal items of cost in the making of shoes-the material, the labor, and the machinery cost. We never had been able to settle upon a stable machinery cost, because of the reasons set forth, that we had so many cases where we had to buy new machines which we were induced to think were improved machines. Some of them were and some of them were not. Some of them were practically useless to us. But we had to keep on buying the machines, and had to put our money into them. We have used certain machines for a few months and then have thrown them away.

We found that we could then determine the stability of the machine cost, because it was about on a stable royalty basis and the royalty was made uniform to everybody, all shoe factories, and so we know that we could not be taken advantage of in that way.

Four or five years ago, I think, they had practically dropped their initial part of their charging, except, I think, on a few machines,

which did not amount to very much, and charged a royalty except on what are called auxiliary machines. They have invented auxiliary machines. What we mean by that is smaller machines for preparing the shoe for the operation of larger or more important machines; doing the work that was formerly done by hand-such as certain skiving machines or shank-skiving machines and sole-laying machines, and such machines, where they charged us a very low, nominal amount of rental per year-from $5 to $50 a year those machines would cost us. Some of them cost as low as $4 a year. Then there are some other auxiliary machines where they charge us no royalty at all, but where they get their compensation by reason of the fact that we buy material from them.

Now, as I understand it, and I have read over the petition in regard to the case that has been brought up against them, these conditions are claimed to be oppressive. I can not say anything about anybody else except ourselves, except through hearsay or through the canvass that some of the papers have made in regard to the smaller factories of the country as to their attitude and their treatment that the company has given. I can say absolutely and truthfully that it has been of great advantage to us; that it has simplified our business; that on a small sheet of paper, covering no more than 4 inches square, we can cover by tabulated statement, the royalties absolutely entering into the cost of the machinery cost, as covering the particular machines that the United Shoe Co. furnishes.

Now that, as I stated awhile ago and I wish to touch on it again, is the question of service that we had in our peculiar location. In other words, we pioneered in the shoe business of building a factory on the prairies of Iowa to make a kind of shoe that nobody in the shoe-manufacturing business thought it would be possible for us to make or succeed in doing. And I think, honestly think, that we would have been out of the business before this if we had not had a condition come about whereby we could have arranged to know definitely right along, through the year and all time, the absolute machinery cost to us.

The service is what I refer to now, and I will give you some concrete examples of what I mean.

We put in about three months ago what is called a "puller-over machine." It is a very complicated machine for doing what seems to be a very simple operation. The pulling over means the placing of the upper, which is the leather part of the shoe, over the last and having this machine pull this upper over the last in the proper place and position on the last as it should be when the shoe is completed and driving a few tacks in just to hold it preparatory to lasting it, and the lasting consists of putting through another machine where it is tacked down all around securely preparatory to sewing on the sole or welting, if it is the case of a welt shoe. This puller-over machine is a machine that has been evolved and has been for several years being made to the point where it would do the work. That work was formerly done by hand. The machine had not been out very long until they made an improvement on it, as they have done with lots of their machines. Their policy always has been-and there has been no question about it; they have never deviated from it; it has been upon their own initiative and has not been from any

solicitation on our part-that we could have a new machine whenever we desired it. We would simply make application for it, and they would furnish us with a new machine. They send the new machine to us, and we send back the old machine. We pay the freight on both the machines, and that is all the cost there is to us for the improved machine. Then when the machine arrives and we get ready to have it set up-it may have come to-day, and we may want to wait until two or three days until we get to a certain stage in our work before having it set up, for it usually takes a day and sometimes a little more to set it up-when we get ready to have it set up we wire into Chicago-that is our source of supply. They keep a branch agency there, and also one at St. Louis, but we get our service from Chicago. We wire into Chicago for a man and he comes the next morning. That is to say, it is prearranged. They will notify us between when a man can come over, and if the machine is there we are to wire if we want the man to come within that time. He comes and sets the machine up and gets it in running order, teaches an operator to run it, and stays there until he has taught him, That is what they do when we make this change. They send us the improved machine, and we send back the old machine; the man stays two or three or four days and teaches our operators how to run it.

That was a very complicated machine; hard to operate and new to them, requiring a special expert machinist to run and operate the machine.

Nobody in our town could fix the slightest thing that happened to any of those complicated machines. We would not think of allowing them to tamper with them. My brother could not do it, although he can sometimes in light matter fix the machines, but so far as going into the machine and taking it apart and readjusting it and fixing it in a vital part is concerned, he could not do that. We always send for a man.

After having taught this operator this agent went to Des Moines. He had some work there with Bentley & Olmsted, who are manufacturing men's shoes. He. went down one evening, and the next morning about 10 o'clock this machine, for some reason, would not go; it stopped. The operator could not handle it, and the foreman in the room did not know what was the matter with it. My brother went up to see about it, but he did not know what was the matter.

When you consider that the process of making shoes consists of going through one machine for a certain operation, and then going to the next machine for another operation; that when one machine. stops we are tied up. That just stops the work right there. Unless we have some supply of shoes on hand that have been prepared for this next operation we might as well discharge and let go for the time being all our operators until we could get this machine fixed.

We called up this agent over the telephone in Des Moines and stated that we could not operate the machine, that it was out of commission and that we did not know what was the matter with it. He took the interurban train from Des Moines to Fort Dodge and got up at 3 o'clock of the same day that the machine stopped. He went into it, and in 10 minutes' time found out where the trouble was. was the head of a screw that had fallen out of some part of the ma chine and had gotten into the mechanism and stopped it. He had

It

it fixed in 10 minutes so that the operator went along with his work. He took the 5 o'clock interurban train back to Des Moines.

Now, there was no expense to us for that service; they rendered us no bill. We never pay them anything. It is part of their plan to give this service because it is to their interest, as we understand, to have the machines running, because in that manner they get their compensation.

Now, the cost of the royalty to us, as I stated awhile ago, we have it, when we come to figure our samples-we have the royalty cost on a little sheet of paper no larger than 6 inches square; it comprises the entire royalty cost of those machines, and we know exactly. In figuring up the cost of the samples we have a card like this that is ruled with four or five columns, and with every item of labor and every item of material and royalty for each identical sample, so that we know the total cost. We will take, for example, a pair of $2.25 welt shoes, wholesale price. We know by referring to this card just what that royalty cost will be on that $2.25 shoe, and we know that it will not change during the season.

Now, why do we know? We know because they do not charge us one cent for any improvement for any machine that we have put in. They give us an exchange, so that we will know that we will not have to buy any improved machine or put any money in any improved machines for the purpose of keeping up with our heavy and strong competition with the large shoe factories of this country. We know also that we are not paying any more than they do. We know that so far as the machinery cost is concerned we are exactly upon a competitive basis with them. So that that is so simplified, that particular important part of our business, that we can reasonably expect to be able to make a little money if we come as close in our figuring in other departments as we do in that. In fact, we get the closest to that cost; we absolutely know what that is.

In regard to the labor cost, while we can get very close to that, because we pay practically all our labor by piece for each operation, yet there is an item of overhead expense which is variable, in accordance with the volume of business, etc., that we do not get so close to it there.

Then in the matter of materials we can practically cover that, but there is a little deviation there. We have to approximate the amount that we want to use during the season. Should our business run over the amount we had contemplated, we might have to buy a little bit more and pay an advance for the material.

I want to go back a little. My attention was attracted some time ago to an article in a magazine accidentally that I happened to read, and I read it through, and I thought I saw intuitively that what has taken place up to this moment would take place, if the idea got circulated through the country and among the people that the company was really doing what the article stated that it was doing. I knew that it did not apply to our particular business. As to whether the United Shoe Machine Co. is a monopoly or a combination or a conspiracy or anything of that sort. I have nothing to do. I do not know; that is not within my province to determine. But I do know, which nobody can controvert nor convince me, is that if we had not had the advantage of the United Shoe Machinery Co.'s machines on the service they have rendered us, we would not have been able to

establish our business at Fort Dodge; and if it is taken away from us, or in any way so abbreviated, particularly in regard to the amount of service, judging from our past experience when we operated under a condition of what you might term a condition of competitive shoe machinery, which I know cost us more money, then the result, as I look at it, might be disastrous to us. I can not see how the company could afford-well, first I might probably bring in a little analogy there, although I do not know that it would be just an analogy. As you know, Senator, we have in some parts of the State of Iowa the lack of service in railroad facilities. The lack of service is brought about by reason of the fact that we have only one line of road over which we can ship stuff on account of the short-line road having a lower tariff rate. As you know-but I will not say any thing further on that, only to say that that does produce a lack of

service.

I do not see how any law could be enacted whereby it would compel the United Shoe Machinery Co. to give us service if they did not want to give it to us. You might say why would not the same incentive compel them to do so. That is to say, that the service they render in keeping machines running is the reason why they get compensation. Why would not the same institution give us the same service if we do not use all of their machines? They could not do it at the same price under any law of economy or operation of business, because the larger the volume of business the cheaper that that business can be done, and the cheaper the business is done the more profit will be made: the less business the less service will be rendered in a particular instance of shoe machinery. That is what I would be afraid of. I can not say that that would happen. But my attitude. is this: Why should we take any chance when the most that is charged for the highest price shoe we make is only 4 cents a pair,` approximately, covering all that part of the machinery cost? In other words, a shoe that retails at $4 or $4.50 a pair, the machine cost, so far as the United Shoe machines are concerned, is only 4 cents. It seems to me an amount so small that I fear that should we be compelled to operate under any other condition, particularly under the old condition that we operated under, that we would have to, in order to make ourselves safe and conservative, and covering our problematical machinery cost, have to figure that cost higher, probably two or three times as much. I know we did it. That cost was figured probably twice as high under the old conditions of affairs, but at the end of the season we found that we had not put it high enough.

Our company is not a large one. Were we in a position-and by that I mean had we large capital like some of the large shoe factories-we probably might not be so much concerned about this proposition. I can see where in some cases, like in the case of the St. Louis factories where they have $20,000,000 capital by reason of the consolidations there, they might buy their own machinery themselves, and afford to throw away their old machines. And, by the way, I almost forgot to say, to bring up another thing. I will drop the one on which I am speaking right now and come to that later. And that is this: The operation of the United Shoe Machinery Co., in my judgment, is different than the operation, we will say, of the Standard Oil Co. The Standard Oil Co. engages in the manufac