disruption, and in the spring of 1897 it seemed almost certain that no agreement would be made for the coming season's business. An arrangement was nevertheless entered into by some of the leading producers, but on a very much lower basis as to price. Thus, whereas the standard price for Gogebic ores in 1896 had been $4 a ton, the basis in the 1897 agreement was about $2.75.

ΤΗ

IV

THE ADDYSTON PIPE COMPANY1

HE relevant facts may be classified under the following headings: first, the terms of the trust agreement; second, its purposes; third, its practical construction and operation; fourth, its effects upon the public.

It is to be borne in mind in understanding this agreement that the greater part of the business consists in taking contracts for municipal corporations, gas or water companies, and other large institutions which usually invite bids from various competitors.

The earlier agreement of December 28, 1894, is of present importance only in so far as its provisions have been continued in effect, namely, in respect to the "reserved cities" and to the extent of the "pay territory." The main agreement was proposed by John W. Harrison, President of the Howard Harrison Co., on May 16, 1895, and adopted on May 27, 1895, in the form of a resolution entered upon the minutes of the association. It is as follows (page 83):

1 From argument of Hon. E. B. Whitney, U. S. Assistant Attorney-General, in U. S. v. Addyston Pipe and Steel Co., U. S. Circuit Court of Appeals, Sixth Circuit. Appeal Case No. 498. Page references run to the testimony in the official court record. The opinion in the above case is reprinted in part in Chapter XVI, infra.

That from and after the first day of June that all competition on the pipe lettings shall take place among the various pipe shops prior to the said letting. To accomplish this purpose it is proposed that the six competitive shops have a "representative board" located at some central city to whom all inquiries for pipe shall be referred, and said board shall fix the price at which said pipe shall be sold, and bids taken from the respective shops for the privilege of handling the order, and the party securing the order shall have the protection of all the other shops. . . . All division of bonuses to remain as now established during the year 1895.

...

This system of bidding is known as " buying a job" (page 89). One exception to the general rule is that of the "reserved cities" which remain tacitly under the resolution of December 28, 1894, as follows (pages 77-78):

Third. The Addyston Pipe and Steel Company shall handle the business of the Gas and Water companies of Cincinnati, Ohio, Covington and Newport, Ky., and pay the bonus hereafter mentioned, and the balance of the parties to this agreement shall bid on such work such reasonable prices as they shall dictate.

Fourth. Dennis Long and Company of Louisville, Ky., shall handle Louisville, Ky., Jeffersonville, Ind., and New Albany, Ind., furnishing all the pipe for Gas and Water works in above named cities.

Fifth. The Anniston Pipe and Foundry Company shall handle Anniston, Ala., and Atlanta, Ga., furnishing all pipe for Gas and Water companies in above named cities.

Sixth. The Chattanooga Foundry and Pipe Works shall handle Chattanooga, Tenn., and New Orleans, La., furnishing all gas and water pipe in the above named cities.

Seventh. The Howard Harrison Iron Company shall handle Bessemer and Birmingham, Ala., and St. Louis, Mo., furnishing all pipe for Gas and Water companies in the above named cities; extra bonus to be put on East St. Louis and Madison, Ill., so as to protect the prices named for St. Louis, Mo.

Eighth. South Pittsburg Pipe Works shall handle Omaha, Neb., on all sizes required by that city during the year of 1895, conferring with the other companies and coöperating with them; thereafter they shall handle the Gas and Water companies of Omaha, Neb., on such sizes as they make.

NOTE.It is understood that all the shops who are members of this association shall handle the business of the gas and water companies of the cities set apart for them including all sizes of pipe made by them.

A modification was made, however, on December 19, 1895, as follows (page 84):

That upon all inquiries from prices from "reserved cities" for pipe required during the year of 1896, that prices and bonus shall be fixed at a regular or called meeting of the principals.

Another exception recognized was that of "special customers" of the different concerns. As to these it was resolved

on May 27, 1895 (page 84):

That when an inquiry is reported to which a member can properly establish a claim as a special customer, such inquiry should not be disposed of by the "auction basis," but shall be handled by such member, the committee fixing the price and bonus, such price and bonus to be commensurate with prices and bonuses at the time such inquiry shall be reported.

It was further resolved on the same day (page 84):

That all parties to this association having quotations out shall notify their customers that the same will be withdrawn by June 1, 1895, if not previously accepted, and upon all business accepted on or after June 1st, bonuses shall be fixed by the committee.

The provisions of this agreement operated only in what was called the "pay territory " or "bonus territory." This territory is described in the pleadings, the opinion of Judge Clark, and the resolution at page 78 of the record. It includes the whole of the United States except Virginia and the States north and east thereof, and except the Territory of Alaska.

The bonuses, when not fixed on the auction basis," are fixed by a schedule shown on page 78, by such modifications as have since been made therein, or by special order of the committee.

To carry out the objects of the association, headquarters were established at Cincinnati, Ohio, with an office force and a committee of representatives from the various shops (pages 83-84). The bonuses, after December 20, 1895, were divided according to a schedule based on the following estimated tonnage of the various shops (page 86):

The bonuses were not paid upon the acceptance of the bid or even upon the successful closing of the contract with the purchaser, but only upon the actual shipment of the pipe. Thus the schedule last quoted reads as follows (page 86):

Ist. On the first 90,000 tons of pipe shipped into "pay territory" 16" and smaller sizes shall be divided among the six shops [etc.].

In order to insure the proper working of the combination, an auditor's office was established and regular reports required. Thus (pages 80-82):

Third, Sec. 1st. Each shop shall report daily to the auditor all orders secured in bonus or free territory, giving the shop number [etc.].

Sec. 2d. On the 1st and 16th of each month they shall report to the auditor all shipments made in all territory, giving shop number [etc.]; showing the amount of bonus and tonnage, of the bonus as well as free territory.

Sec. 4th. The auditor shall make carbon copies daily of all reports received, and send one to each shop, and to such others as may be designated.

Sec. 3d. He shall on the 1st and 16th of each month, or as soon as practicable, send to each shop a statement of all shipments reported in the previous half months, with a balance sheet showing the total amount of the premiums on shipments, the division of the same, and a debit credit balance of each company; also a statement of free orders secured during the same period; and a memorandum of balance payable from one to another.

Whoever has a representative at any public letting shall instruct him to send to the auditor a full list of the bids and bidders on same; also that all information in regard to work taken in pay territory by the shops outside of this association shall be reported to the auditor, who shall