explained in large part by the customary retail prices and other peculiar price-making conditions of the tobacco trade, including statutory provisions, which make it impracticable in most cases to increase the quantity sold at the customary price. (30) That for the principal brands of plug tobacco, the manufacturer's cost in 1913 was approximately 50 per cent of the consumer's price, the internal-revenue tax 15 per cent, the manufacturer's profit 10 per cent, and the jobber's and retailer's margin 25 per cent; that for the principal smoking and cigarette brands the manufacturer's cost in 1913 was approximately 45 per cent of the consumer's price, the internal-revenue tax 20 per cent, the manufacturer's profits 10 per cent, and the jobber's and retailer's margin 25 per cent; and that for a number of the snuff brands the manufacturer's cost in 1913 was approximately 35 per cent of the consumer's price, the internal-revenue tax 15 per cent, the manufacturer's profit 20 per cent, and the jobber's and retailer's margin 30 per cent. OTHER COMPANIES It was impracticable to obtain price, cost, and profit data from all companies, other than the combination and successor companies. However, data were secured from 64 of the other principal concerns manufacturing plug and smoking tobaccos, cigarettes, and cigars. In respect to production, however, the total output of the country is available from the records of the Bureau of Internal Revenue, and these figures are used below in computing the percentages of the aggregate production of all other companies than the combination and successor companies. In 1913 the plug output of the companies, other than the successor companies, covered by the investigation represented 65 per cent of the total production of all such other companies, the smoking output 78 per cent, and the cigarette output 50 per cent. The salient points brought out by this part of the report relative to the business of companies other than the combination and successor companies, before and since the dissolution of the combination, are as follows: (31) That for companies other than the combination and suc cessor companies there were marked decreases in the proportions of their collective output in the plug, smoking, snuff, cigarette, and little-cigar branches, from 1905 to 1913. (32) That compared with both the combination and successor companies the manufacturing costs of the other companies covered by the investigation were extremely high in practically all branches. (33) That compared with either the combination or the successor companies the selling costs per unit of product of other companies investigated were extremely high in all branches. (34) That the larger margins above manufacturing and selling costs of the combination and successor companies enabled them in most branches to spend from three to five times as much per unit of product for advertising or competitive purposes as the other companies investigated and at the same time to obtain practically the same or even greater rates of profit. (35) That compared with the combination and successor companies the other companies investigated made an exceedingly poor showing of profits and that there was a marked decrease in profits of these companies in navy plug and Turkish cigarettes since the dissolution of the combination. (36) That among companies investigated other than the Combination and successor companies the operations of the larger ones were, as a rule, the most profitable; and, in the manufactured tobacco business, those doing a general tobacco manufacturing business usually were more prosperous than those manufacturing exclusively one class of product. The operations of certain small companies, however, having especially popular brands were also profitable. (37) That the companies other than the combination and successor companies which were the most successful in increasing their output were the ones that adopted the coupon advertising system, i.e., the method of giving coupons, which are redeemable in either cash or articles of merchandise, as an inducement for trade. (38) That the independent companies, like the combination, did not generally reduce prices in 1901 and 1902, during which time the revenue tax was materially reduced. (39) That the independent companies, like the combination, generally increased prices on smoking tobacco in 1910 to meet the increase in tax rate, and that the increase in price in most cases exceeded the increase tax, but, like the combination, they did not increase prices on plug, cigarettes, or cigars. IX THE INTERNATIONAL HARVESTER COMPANY1 TH CONDITIONS LEADING UP TO ORGANIZATION 'HE International Harvester Co. was organized in August, 1902, under New Jersey laws, as a consolidation of the following companies: McCormick Harvesting Machine Co. Deering Harvester Co. (a partnership). Warder, Bushnell & Glessner Co. (Champion). Milwaukee Harvester Co. These concerns were the principal manufacturers of harvesting machines. In fact, the only other important manufacturers of such machines were a few companies located in New York State, engaged largely in trade with foreign markets, none of which did an extensive business in the principal domestic market for harvesting machines, namely, the grain-producing States of the Mississippi River basin. The organization of the company followed a long period of keen competition among manufacturers of harvesting machines. An earlier attempt (in 1890) to bring about a general consolidation of the principal manufacturers of such machines proved abortive. Although a temporary organization was effected in that year under the name of the American Harvester Co., with $35,000,000 authorized capital stock, this had hardly been accomplished before the scheme fell through. From that time 1 From Report U. S. Commissioner of Corporations, March 3, 1913, pp. 2-37Omissions are not always shown in detail. Cf. also the Supreme Court opinion, Chapter XVIII, infra. down to the organization of the International Harvester Co., the harvesting-machine industry appears to have been peculiarly free both from efforts at consolidation and also from the ordinary price agreements which were characteristic of many industries. In fact, the formation of the International Harvester Co. has repeatedly been attributed by some of its principal officers to the severity of competition during this period. Cyrus H. McCormick, president of the company, in testimony in judicial proceedings in Missouri in 1908, described this competition as "fierce," and stated that a desire to remove what he termed "unbusinesslike methods" was one of the principal reasons for forming the consolidation. He further stated that during this period of competition a large portion of the sales of the competing companies were made below the listed prices. Again, J. J. Glessner, formerly of the Warder, Bushnell & Glessner Co., makers of the Champion machines, referred to the competition as a "bitter fight," stating that his concern did everything that it possibly could to prevent its competitor from making a sale. Still again, W. H. Jones, formerly of the Plano Manufacturing Co., stated explicitly that the merger was organized to abolish "fierce competition." This is shown by the following excerpt from his testimony in the Missouri proceedings: Q. So in order to get rid of this fierce competition you formed this new organization ?—A. We had to do it or wind up the business. If we had not, we would have thrown all our men out of employment. The best thing to do was to get rid of the fierce competition, to get rid of the waste of money in canvassers. We have not half as many canvassers to-day as we did have. Q. The canvassers were necessary to maintain your competition? - A. Before that, we did it to beat one another out of business. Q. Is that not what you call competition? — A. Pretty sharp competition. Q. It was to get rid of that you made your combination? A. Yes, sir; to better the entire thing; no question about that. While it has also been claimed that economies of consolidation and the possibility of developing more satisfactorily the export trade were likewise considerations in bringing about the merger, |