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I am coupling with it the fact that without patents the parts fellow just wouldn't have been there. He couldn't have existed and developed and been what he is today.

Now, I am giving all the credit in the world to the great automobile manufacturer who by almost superhuman manufacturing methods and research and development of his own has done this, but for this industry which I so unofficially represent, I am also taking its share of the credit.

Dr. LUBIN. In other words, you don't think we would have 27,000,000 cars on the road today if it hadn't been for our present patent system?

Mr. CARLTON. No, sir; I do not think so.

Dr. LUBIN. I would like to ask a question as to what happens in your industry when a manufacturer suddenly decides that next year he is going to make his own parts of a certain type. Does it frequently happen that manufacturers who have been purchasing their parts from people in your organization suddenly make up their minds that next year we are not going to buy any more, or only buy a few of them, and we are going to produce those things ourselves?

Mr. CARLTON. Oh, that happens occasionally, I think. However, they have been pretty fair with it, and I believe that in most cases they have had pretty good reason for doing it when they did it. Possibly the manufacturer of the part went to sleep; maybe he didn't continue the development and research that he should have; maybe his prices got out of line; maybe he got into a jam one way or another. And then sometimes it happens that nobody knows why he did it.

Dr. LUBIN. But it is not a frequent practice for the manufacturer suddenly to make up his mind that hereafter he will make the part? Mr. CARLTON. Not frequent; it is very occasionally that it happens. Dr. LUBIN. But it does happen?

Mr. CARLTON. It does happen.

Dr. LUBIN. One hears a lot of rumors, a lot of stories round to the effect that the parts manufacturer who had geared his output to the demands of a given automobile manufacturer, and who because of the orders coming through has put in large amounts of capital, new investment, expanded his plant, and then finally wakes up one morning and has the manufacturer say to him, "I want half a million units this year, but you will have to sell them at X price," a price which the parts manufacturer cannot afford to produce at and make a profit. Does that thing every happen in the industry?

Mr. CARLTON. Oh, of course, purchasing agents will be purchasing agents. They have to go through about so much of that hysteria; but salesmen have to be salesmen, and when it is all boiled down I think that is mostly conversation. Idon't think there is any unfairness about the whole thing, as a rule. If I am selling an article at $1.50 and the purchasing agent says "I am only going to pay $1 for it" and I am simple enough to say, "Well, if that is all you will give I will take it," then I am a lousy salesman and my company ought to get a new sales manager. If I come out at $1.40 or $1.395, I am pretty lucky.

Dr. LUBIN. But the purchasing agent knows you have invested a large amount of capital in order to meet his demand, and there is no market but his, and you either take it or not. Chances are you have to take it or shut down. It isn't so much a question of being simple, it is a question of being in a position where you can't say "No."

124491-39-pt. 3—16

I don't know whether that happens or not.

Mr. CARLTON. They have a terrific club in their hands, but they don't wield it. They wave it around a little bit, but when you get all through they put it behind the door and are pretty decent about it. Senator KING. Has your association helped the effect of that club? You are still making parts.

Mr. CARLTON. We would all be out of business if they swung it very hard. We get along just beautifully, as a matter of fact.

The CHAIRMAN. The power exists, but it hasn't been exercised upon the three members.

Mr. CARLTON. It must be they don't want to put us out of business. Senator KING. You are a part of the contract, so you may wave the club over the automobile manufacturers, who don't produce the commodities you are producing, and you might say, "We will not produce this particular rim for less than so many dollars per unit.” Mr. CARLTON. We are pretty meek.

Senator KING. You have to find consumers for your products.
Mr. CARLTON. We have a very limited market.

Senator KING. But you produce something like how much$800,000,000 a year?

Mr. CARLTON. That's right.

Senator KING. And the other organization produces two or three hundred million dollars a year?

Mr. CARLTON. That's right.

Senator KING. So that there is over $1,000,000,000 you and your associates produce.

Mr. CARLTON. We don't dare tell them where to go for fear they might go, and we have great respect for their manufacturing ability. The CHAIRMAN. I think the witness's answer that the industry is meek probably stands.

Are there any other questions, Mr. Dienner?

Mr. DIENNER. I have nothing further, Senator.

The CHAIRMAN. We are very much indebted to you, indeed, for this very interesting testimony, sir, and you may now stand excused with the gratitude of the committee.

Mr. CARLTON. Thank you, gentlemen, for your patience.

(The witness, Mr. Carlton, was excused.)

The CHAIRMAN. The committee will stand in recess until 2 o'clock this afternoon.

(Whereupon, at 12:05 p. m., a recess was taken until 2 p. m. of the same day.)

AFTERNOON SESSION

The committee reconvened at 2:20 p. m. on the expiration of the

recess.

The CHAIRMAN. Mr. Dienner, are you ready to proceed?

Mr. DIENNER. Thank you, I am.

The next witness we shall call is Mr. Graham, an independent inventor. Mr. Graham, will you please be sworn?

The CHAIRMAN. Do you solemnly swear the testimony you are about to give in this proceeding shall be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. GRAHAM. I do.

TESTIMONY OF MAURICE H. GRAHAM, MINNEAPOLIS, MINN.

AN INDEPENDENT INVENTOR

Mr. DIENNER. Mr. Graham, will you please state your full name and occupation?

Mr. GRAHAM. Maurice H. Graham. I believe you would qualify me as an independent inventor.

Mr. DIENNER. What was your training which brought you to that state?

Mr. GRAHAM. Well, I went to high school 2 years and then I figured I needed a job more than I did any more school, so I hired out to a telephone company, digging post holes, and I worked at that for about 90 days, and then I became a lineman, and from that I became a trouble shooter, and from there I was in switchboard work. In 1914, when I practically quit the telephone business, I was district superintendent for the plant for the British Columbia Telephone Co. at Vancouver. In 1914, when the war broke out, the telephone company wanted to transfer me to Kamloops, and give me the commercial department as well as the plant department. I didn't like the commercial department so well so I came home. In 1915 I went into the automobile business.

I took up a Ford contract in the little town of Zumbrota, Minn., and I met another fellow that I had known when I was a boy. We bought the Ford agency. I operated that until 1925. I had done fairly well in the automobile business, and in 1925 there was quite a lot of trading, so I sold out the automobile business. I had a desire to get into the manufacturing business. I had always leaned more or less that way, so I took a year and went down to Florida and monkeyed around and came back to Minneapolis in the spring of 1926. I tried out several little penny ante inventions; some of them worked. For instance, a cigarette case I made would eject cigarettes out. I sold 250,000 and it was fairly profitable.

There was a limit to it, it was a kind of once-over and then it was all done.

I also tried out a garage door, an automatic garage door with a weight on it. You would come up to the post and trip the trip, at the post and the door would fly open, and when you got through you would close the door and wind the weight back up. But that wasn't so good. The door opener was all right but the doors would stick. The garages those days were made in such a way that when the wind was in one direction the garage usually leaned in the other direction and the doors were always stuck, so it didn't work so well. Representative REECE. The idea was good but it didn't work.

Mr. GRAHAM. Yes; it was just one of those things. At any rate, I tried some little schemes, some of them would come out, some of them wouldn't, so in August of 1930 I went over to the McGraw Electric Co. which was then known as the Toastmaster Co. under the name of the Waters-Genter Co., and I asked Mr. Waters why he didn't make a toaster that wouldn't burn the toast, that I figured the one he had did burn toast, and he said, "Well, that is a hard job." I said, "Give me a toaster and let me try it."

He did and I fooled with it for a while, and all of a sudden I conceived the idea that a clock was operating on a given time but a

toaster doesn't operate on a given time. As a toaster gets hotter, the time cuts down. In fact, it almost cuts in half. So I thought first that maybe the best thing would be to take the clock out, so I made a toaster for him with two electrodes that come up against the side of the toast, and when the bread toasted it would dry the toast out eventually so that the electricity wouldn't go through the toast any more, and then it would be automatically finished.

Well, that worked pretty good, but it left its mark on the bread and some people objected to that.

So then I made one where the bread was pulled down over a pin that had a very fancy little thermostat inside of a needle that timed the toast by the inner temperature of the bread. That was quite a popular toaster around the factory for quite a while, it worked very good, but it had its troubles. People toast molasses on bread, and butter, on bread, and everything else, and you have so many things to contend with.

So I was not so sure that the clock in the end was not possibly the best that we could make, if we could synchronize it with the time that it required to toast bread, from a cold toaster to a warm toaster, and one of the most difficult things in the toaster to overcome is when you have toasted until the toaster was warm; then you want to wait about 2 minutes, or you did wait about 2 minutes for some reason, you got an increase. On a minute and a half wait of a Toastmastertoaster you have to increase the time about 30 seconds. Well, it was hard to cool off the piece of bi-Metal in the toaster as fast as the toaster cooled off. Finally, I found that by taking advantage of the radiant head and various other conditions in the toaster that it was possible to do that. I built one; I built two of them, and I gave one to Mr. Waters and one to Mr. Genter, and they tried them out and they were very pleased with it.

It was during the first part of 1932 and things were not very good. So we started to put that in production. It was very simple; it didn't take a great deal of time. We tooled up and in August of that year we put that into production. It increased production some during that fall, we think-that is a guess, of course, as to what it did dobut anyway in the season of 1932 it was not on the profit side for the McGraw Electric Co.; 1933 it was on the profit side by considerable; 1934 was considerably better than 1933 and 1935, and so forth; and 1938 better than any one of the other years. I should judge that it amplified the business practically three times over what it was before that improvement was put on.

Well, after that, I was pretty well finished with the toaster business, I had a royalty contract with McGraw Electric Co. so I opened up a small shop or laboratory you might call it, and started to develop some other toasters. I developed one with a thermostat that would heat for a given time, and then cool for a given time during each toasting cycle. It had a lot of merit but the toasting art covers so many principles that you must cover. So I worked with several concerns; I would make a business of watching what somebody had in the electrical appliance field and if I did not think it was just right, or I could make it better, I would make a business of going over and telling them, why don't you do this or that?

So I developed a pressure cooker for the Pressure Cooker Co. with electric controls, the National Pressure Cooker Co. at Eau Claire,

Wis. That took quite a little time. I also made a flatiron and I licensed that, of which I will tell you later. It wasn't such a good experience, but it was a good flatiron. Then I shifted over into the coffee business. I had an entirely different idea for coffee urns. With most coffeepots the trouble is that you could only heat the water up about so far and then you started to circulate it through the coffee, then it should have no more heat, but to make coffee the way the book says it should be made is rather hard to do, so I think I pretty well accomplished that. When I got through with this particular coffeepot, I decided I wanted to show it to some bigger manufacturer to see what they could do with it. I took it up with the General Electric Co. and in conversation they were very much interested in this coffeepot, but they were also interested in this toaster that heated up and cooled off.

I negotiated a deal on the toaster first, which ended up in making a contract with the General Electric Co.-I don't know just how to put it-it was handled through the McGraw Electric Co., but it is the same patent that I got up that fall. So they took the coffeepot in their laboratory and studied it for about a year. You might wonder why I would take it to the General Electric Co. They have a large sales organization and a great many jobbers, over 100 jobbing houses and subsidiary jobbing houses, and I knew that this particular coffeepot needed advertising. I would like to show it to you.

Mr. DIENNER. Please do so.

Mr. GRAHAM. It looks just like a percolator; in fact it is built on a percolator but it has entirely different action than a percolator. The CHAIRMAN. Is there enough to go around?

Mr. GRAHAM. Not now; I could make it. It has a basket, just the same as a percolator, and so forth, but what actually happens to the thing, it heats the water up to 150°; then it turns that heater off; then it has another trick in here that causes the water to heat further by no direct contact with the heating element at all, on a different principle that heats the water from there on up to 204°, where it seems to be the right temperature for coffee to finish.

The General Electric Co. was very much sold on it. In fact there is a contract agreed to between the engineering department and their patent department. It has not been signed yet by the General Electric Co., but is has been O. K'd as far as the patent division, and the engineering division at Bridgeport. The point of it is I have found that the General Electric Co., even though they have a large laboratory, they have many engineers, I have found that they were in lots of ways easier to deal with than some of the smaller concerns. I haven't had a bit of trouble with them.

The McGraw Electric Co. had a lot of engineers, seven or eight when I was with them. I had no trouble with them.

INTEREST OF INDUSTRIAL CONCERNS IN INDEPENDENT INVENTIONS

Mr. GRAHAM. As an independent inventor it is my contention that if you have got something that has any merit to it you won't have any trouble finding plenty of people in the large organizations that are glad to listen to you and see what they can do.

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