deal published in all of the current literature with respect to the increased opportunities for labor which arise as a result of invention, but as I pointed out in questioning Dr. Bush, these new enterprises have been accomplished, strangely enough, by increased unemployment. Do you think of anything that industry can do or that government can do to solve this very, very important question? Dr. COOLIDGE. Again I am being taken out of my field, Senator. The CHAIRMAN. You don't see anything in the patent field which would solve it? Dr. COOLIDGE. No. The CHAIRMAN. Are you satisfied that the natural individual is sufficiently protected by the present system against competition from huge collective enterprises such as that by which you are employed? Dr. COOLIDGE. I think so. The CHAIRMAN. You think he is. Dr. COOLIDGE. I think so. We are always on the lookout for new inventions (I mean our company is), whether they come from our laboratory or whether they may be from outside. Mr. DIENNER. Did you hear the testimony this morning about the manner in which an individual is sometimes compelled to, having obtained a patent, go to great expense through a very complicated legal system to maintain his rights? Dr. COOLIDGE. Yes; and I can see that it would be very nice if that could be simplified. The CHAIRMAN. But you have nothing of yours to add to that story? Dr. COOLIDGE. No, sir. The CHAIRMAN. Are there any other questions to be asked by any other members of the committee? Admiral Peoples? Mr. Frank? Mr. Williams? Judge Davis? Congressman Reece? Commissioner Coe? Representative REECE. Except, Mr. Chairman, I would be interested to know what policy your company has with reference to making its patents available to the public, particularly those patents which might be evolved in your laboratory which the company itself does not use. Dr. COOLIDGE. I think that in general it has been the policy of our company to license other companies under such patents. The CHAIRMAN. Are there any other questions to be asked? If not, Dr. Coolidge, the committee is very much indebted to you for a very interesting afternoon. Mr. DIENNER, your next witness will be who? Mr. DIENNER. I shall call Mr. Flanders, of Jones & Lamson, and Mr. Graham of the Motor Improvement Co. The CHAIRMAN. Will it be convenient for you to begin with them in the morning? Mr. DIENNER. I would appreciate that. The CHAIRMAN. If there is no objection, the committee will stand in recess until tomorrow morning at 10 o'clock. (Whereupon, at 4:15 p. m., a recess was taken until Wednesday, January 18, 1939, at 10 a. m.) Supra, p. 855 et seq. INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER WEDNESDAY, JANUARY 18, 1939 UNITED STATES SENATE, TEMPORARY NATIONAL ECONOMIC COMMITTEE, Washington, D. C. The Temporary National Economic Committee met pursuant to adjournment yesterday, at 10:30 a. m. in the Caucus room of the Senate Office Building, Senator Joseph C. O'Mahoney presiding. Present: Senator O'Mahoney (chairman); Representative Williams; Messrs. Henderson, Frank, Peoples, Thorp, and Coe. Present also: Senator Homer T. Bone, of Washington, chairman of the Senate Patents Committee. Counsel: John A. Dienner, special counsel for committee; Justin W. Macklin, First Assistant Commissioner of Patents; Leslie Frazer, Assistant Commissioner of Patents; Henry Van Arsdale, Assistant Commissioner of Patents; Grattan Kerans, administrative assistant to the Commissioner of Patents; George Ramsey, of New York, assistant to Mr. Dienner. The CHAIRMAN. The committee will now come to order. Mr. Dienner, you are recognized to proceed. Mr. DIENNER. Yesterday our last witness was a representative of a large industry, of a wide variety of products, fields and interests, with a large research laboratory at his command. Now we are introducing a witness representing a relatively small enterprise which has for a long period maintained its position in industry under the patent laws and without the advantages of a research laboratory. We call Mr. Ralph E. Flanders. Mr. Flanders, will you be sworn? The CHAIRMAN. Do you solemnly swear the testimony which you will give in these proceedings will be the truth, the whole truth and nothing but the truth, so help you God? Mr. FLANDERS. I do. TESTIMONY OF RALPH E. FLANDERS, PRESIDENT, JONES & LAMSON, SPRINGFIELD, VERMONT Mr. DIENNER. Mr. Flanders, will you tell us your occupation and connections? Mr. FLANDERS. I am president of the Jones & Lamson Machine Co., of Springfield, Vt., maker of machine tools. Machine tools are roughly metal working machinery; and I am an inventor and designer as well as having some responsibility for the business management of the company. Mr. DIENNER. Give us some further facts in regard to your background. Mr. FLANDERS. Well, I was born up in the country in Vermont, taken as a child down into Rhode Island, served an old-fashioned 124491-39-pt. 3- 7 925 apprenticeship to the machinist trade at Brown's shops in Providence, stayed there for 5 years, worked in the drafting room there and in other places for a number of years, roving about; then was associate editor of Machinery, a publication dealing with machine tools in New York for 5 years, from 1905 to 1910; then I went from there back to Vermont, to Springfield, where I now live, for work with the machine-tool industries of that town in various connections. Mr. FRANK. Mr. Flanders, you are one of the co-authors of a recently published important book known as Toward Full Employment?! Mr. FLANDERS. I am a co-author, sir, of that book. The CHAIRMAN. You don't object to the adjective, I am sure. Mr. FLANDERS. It is a much more difficult and praiseworthy task to be a co-author than it is to be an author. The CHAIRMAN. I thought you meant the word "important." HISTORY OF JONES & LAMSON TOOL COMPANY Mr. DIENNER. Will you tell us the history of your present company, which I believe is Jones & Lamson Machine Co.?" 2 3 Mr. FLANDERS. Yes. There are photostats here of a genealogical chart of my company. One new ancestor has been found since this chart was made. This chart, by the way, is taken from a book by Prof. Joseph W. Roe, then of Yale, Sheffield School, titled "English and American Tool Builders." The line is traced back one generation earlier to Asahel Hubbard, an inventor of Windsor, Vt., who in 1834 was granted a patent, of which photostats are available for a revolving hydraulic engine. This patent carries the signatures of President John Quincy Adams (the Adamses were important in those days); Henry Clay, Secretary of State; and William Wirt, Attorney General of the United States. They got on all the names that were available. A patent was a pretty serious thing; it was an outright monopoly without much qualification or subject to much doubt. The fact that Mr. Hubbard was able to get a patent that enabled him to get the backing of a local capitalist to set up a little machine shop in Windsor, and he built these so-called revolving hydraulic engines which were nothing more than an early form of rotary pump, and from that little town way up in the North, far from the centers of urban civilization, salesmen were sent all over this country, and the first public water system of the city of St. Louis had the water pumped by one of these pumps made up in Windsor, Vt., at that time. I am not going to go into all of this in detail, but I will touch one or two high spots. The next step was when Nikanor Kendall (these names are good-Asahel Hubbard and Nikanor Kendall-they are country boys) married the daughter of Asahel Hubbard. Nikanor Kendall was a gunsmith, had a country gun shop, and made guns by hand. When he married into the family of a man with a machine shop they commenced making guns by machinery instead of by hand, and it was the development of machine tools for making guns which 1 Co-authors with Mr. Flanders: Henry S. Dennison, Lincoln Filene, Morris E. Leeds, published 1938 by McGraw-Hill Book Co., Inc. Mr. Dennison subsequently testified before the committee, see hearings held May 22, 1939. Subsequently entered as "Exhibit No. 208". See infra, p. 1149. Subsequently entered as "Exhibit No. 207". See infra, facing p. 1149. has been continued down through to my company to the present day. I just touch one or two of the high spots in that thing. I notice here on the left the Enfield gun machinery. Mr. DIENNER. You are referring to the genealogical chart? Mr. FLANDERS. Of our company; yes. That is the Enfield Arsenal in England, and the machinery for making the Lee-Enfield gun, with which the British fought the Crimean War, was made up in Windsor, Vt. They made such good guns that were exhibited at a royal exhibition in London, that the British Army sent over a buying commission which wound up in Windsor, Vt., and bought machinery for equipping the Enfield Arsenal. Coming down through, there is another interesting split-off here. You see the Windsor Manufacturing Co., 1865, in the lower middle center, with a line in the left running off to Sullivan Machinery Co. This firm through its history built almost everything imaginable, including in 1865 certain mining and quarrying machinery, and with regard to the line of quarrying machinery there was a patent suit on, and a couple of young fellows in the Windsor Manufacturing Co. thought that they had a scheme for a channeling machine that was better than the one that was held up by the lawsuit, and so they tried to sell the new idea to the people in charge of the firm, didn't succeed in doing it, so they went down to the livery stable, hired a buggy, and the two of them set off for the neighboring town of Claremont, N. H., and on their way they stopped to talk to a well-to-do farmer of Claremont, Deacon Upham, and with him sitting on one side of the flat-top stone wall and they on the other, they spread out their sketches and he financed them to the making of the new channeling machine. That was the beginning of the Sullivan Machinery Co., which is one of the leading builders of mining and quarrying machinery in the United States-another case of the starting of a new industry from the ideas of a couple of young fellows. Now, this central company has gone into decline two or three. periods throughout its history and had to be reorganized, and in each case the reorganization and the new success was built on new inventions and new patented inventions, clear down through to the last one, James Hartness, who came there in 1888 and revived the fading institution with new blood and new ideas, and again brought it to the front. The last thing I will mention is the three names below Mr. Hartness' name to which a fourth has been added since this chart was made: Mr. Lovejoy. There is a succession of chief draftsmen from Mr. Hartness, each of whom had a patentable idea, each of whom left the parent company, got financial backing for his idea, and each of whom founded a successful company existing and operating today. This genealogical chart of companies is, if looked at from the patent standpoint, a series of patentable ideas, branching off from the central parent stem and becoming a new and successful and going organization. Mr. DIENNER. Each enterprise founded on an idea not coming from a research laboratory, I take it. Mr. FLANDERS. No. In fact, one of the most picturesque of these is Mr. E. R. Fellows, who before he went with Mr. Hartness was a window dresser in a department store in Torrington, Conn. That wasn't a research laboratory proposition. Mr. DIENNER. Mr. Chairman, may we have these charts introduced in the records as exhibits? I think they would be helpful to explain the testimony of the witness. The CHAIRMAN. Without objection, so ordered. (The documents referred to were marked "Exhibits Nos. 207 and 208" and are included in the appendix on pp. 1148-1149.) VALUE OF PATENT PROTECTION TO INDUSTRY Mr. DIENNER. Mr. Flanders, in your particular industry what do you feel would happen without patent protection to your company? Mr. FLANDERS. Without patent protection-really, I can't imagine. It is the patent protection which makes it worth while for us to spend the tens and sometimes hundreds of thousands of dollars involved in developing a new idea. I don't know just what we would do without patent protection. I am sure that there would not be so much improvement because you couldn't afford to put the money into the development. I never tried to think what it would be without patent protection. Mr. DIENNER. Assume that you even had the disadvantage, or the advantage, of a compulsory license provision in the law, what would be the effect upon your industry? Mr. FLANDERS. The compulsory license provision-well, of course, most of the patents, not all but most of the patents we take out we put into use, and we wouldn't lose much ourselves that we had patented, but I am not able to answer these hypothetical questions quite so well as I am to describe actual experience. I haven't tried to think through what would happen with a licensing provision. Mr. DIENNER. In other words, if someone had the right to come to you and ask for a license on the payment of a fee, royalty, you consider that would be beneficial. Mr. FLANDERS. I see, you are not referring to the same situation they have abroad where you must either work it yourself—— Mr. DIENNER (interposing). No, that is called a working agreement. Mr. FLANDERS. The idea being if people had a right to demand a license of us? Mr. DIENNER. Yes. Mr. FLANDERS. That is different. Mr. DIENNER. What do you think of it? Mr. FLANDERS. If they had the right to demand a license, it would depend on what the license fee was. If it was something that required $100,000, which is by no means, even in our line, a large sum, to develop and get possible future profits from it, we should need to have a license fee large enough to have warranted that expenditure and it would be a pretty large fee. Mr. DIENNER. Would you like to have some existing with you, even though you did receive a royalty on your own ideas? Mr. FLANDERS. We might be willing on any particular thing to receive licenses large enough so we could sit back and do nothing on that particular thing, but we wouldn't want to be compelled to sit back and do nothing on everything we did and just receive money without having any fun in business. I don't know, this proposal is something that I haven't given much thought to. You speak about having competition. We do have very severe competition, and the competition at the present time |