INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER

THURSDAY, DECEMBER 15, 1938

UNITED STATES SENATE,

TEMPORARY NATIONAL ECONOMIC COMMITTEE,

Washington, D. C.

The committee met at 10:50 a. m., pursuant to adjournment on Wednesday, December 14, 1938, in the old caucus room, Senate Office Building, Senator Joseph C. O'Mahoney presiding.

Present: Senators O'Mahoney (chairman) and King; Representative Reece; Messrs. Henderson, Arnold, Patterson, Berge, and Peoples.

Present also: Department of Justice Staff for Temporary National Economic Committee study-counsel, H. B. Cox (Special Assistant to the Attorney General); Joseph Borkin, Ernest Meyers, Charles L. Terrel, Benedict Cottone, David Clarke, George Dession, Fowler Hamilton, H. C. Engelbrecht, Victor H. Kramer, J. M. Henderson, Monroe Karasik, Irving Glickfeld, Hyman Ritchin, Norman Bursler, and Seymour Lewis; also chief counsel for Federal Trade Commission Temporary National Economic Committee study, George W. Williams.

The Chairman. The committee will please come to order. Mr. Cox, are you ready to proceed.

Mr. Cox. I am, sir. The first witness this morning will be Mr. F. C. Ball. Mr. Bracken, will you be sworn, too? Mr. Bracken will be sworn.

The CHAIRMAN. Do you and each of you solemnly swear that 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. BALL. I do.

Mr. BRACKEN. I do.

The CHAIRMAN. Proceed.

TESTIMONY OF FRANK C. BALL, PRESIDENT, BALL BROS., MUNCIE, IND.; A. M. BRACKEN, ASSISTANT TREASURER AND COUNSEL, BALL BROS., MUNCIE, IND.; and E. W. McCALLISTER, PATENT ATTORNEY, PITTSBURGH, PA.-Resumed

Mr. Cox. Mr. Ball, will you give the reporter your name and address?

Mr. BALL. Frank C. Ball, Muncie, Ind.

Mr. Cox. Mr. Bracken, will you do the same?

Mr. BRACKEN. A. M. Bracken, Muncie, Ind.

Mr. Cox. Mr. Ball, you are president of the Ball Bros. Co. ?

Mr. BALL. I am.

Mr. Cox. That company manufactures glass containers?

Mr. BALL. Yes, sir.

Mr. Cox. Principally fruit jars?

Mr. BALL. Yes, sir.

THE FRUIT JAR PRODUCERS

Mr. Cox. Could either you or Mr. Bracken give us an approximate figures as to the percentage of fruit jars which in any given year are manufactured by your company? If I should suggest around 60 percent, would that be substantially accurate?

Mr. BALL. That is about right.

Representative REECE. That is, Mr. Cox, of all the fruit jars in the country?

Mr. Cox. Of all the fruit jars in the country.

Mr. BALL. That refers to fruit jars only.

Mr. Cox. How long have you been manufacturing fruit jars, Mr. Ball?

Mr. BALL. Since 1882.

Mr. Cox. You were one of the licensees under the original Owens suction machine, were you not?

Mr. BALL. Yes, sir.

Mr. Cox. Do you remember when you obtained that license?

Mr. BALL. In 1909.

Mr. Cox. And you are now a licensee of the Hartford-Empire Co. ? Mr. BALL. Yes, sir.

Mr. Cox. How long have you been a licensee of the HartfordEmpire Co., Mr. Ball?

Mr. BALL. Since 1933.

Mr. Cox. Had you at any time before entering into the negotiations which led to that license agreement negotiated with Hartford-Empire with respect to obtaining a license under their patents?

Mr. BALL. Before that time we had some little discussion, but not to any extent.

Mr. Cox. Nothing ever came of it?

Mr. BALL. No.

Mr. Cox. That was about in 1926?

Mr. BALL. In that neighborhood.

Mr. Cox. Were you interested at that time in obtaining a license from Hartford-Empire?

Mr. BALL. No, sir; not particularly.

Mr. Cox. It was a matter, rather, of that company approaching you than of you approaching that company?

Mr. BALL. Yes, sir.

Mr. Cox. Now, were you at some time in 1931 notified by HartfordEmpire that the equipment which you were using to manufacture glass containers infringed their patents?

Mr. BALL. I think they notified us several times that, in their opinion, we were infringing some of their patents.

Mr. Cox. And was that one of the circumstances which led to the making of the license agreement in 1932?

Mr. BALL. No, sir; not directly.

Mr. Cox. Well, did that circumstance have anything to do with the negotiations which led to that contract?

Mr. BALL. The only thing that had anything to do with it was the decision in the Hazel-Atlas case that indicated that perhaps gob feeds might infringe.

Mr. Cox. Was the decision in that case as far as your company was concerned the decisive factor which led to the making of the license agreement?

Mr. BALL. Yes, sir.

Mr. Cox. Now, in connection with your negotiations with the Hartford-Empire Co., did you make any request to them in connection with the granting of the license? I will strike out that question, if I may, and start again. Whom did you negotiate with in connection with the license of the Hartford-Empire, Mr. Goodwin Smith?

Mr. BALL. When we commenced negotiations; yes, sir.

Mr. Cox. With Mr. Goodwin Smith, and in connection with those negotiations, did you suggest to Mr. Goodwin Smith that if you were going to take a license, you wanted a license that was exclusive for fruit jars?

Mr. BALL. Yes, sir; as far as they were in a position to grant it. Mr. Cox. In other words, you wanted a license which would permit you to make fruit jars on their machinery and no one else, so far as they could give it to you?

Mr. BALL. Yes, sir.

Mr. Cox. Did Mr. Goodwin Smith ever suggest to you that he was denying other people the right to make fruit jars on Hartford equipment as an inducement to you to enter into this license agreement with him?

Mr. BALL. Yes, sir; he made that suggestion.

Mr. Cox. I am going to show you a letter now, Mr. Ball, and ask if you or Mr. Bracken can identify this letter as a letter which you received from Mr. F. Goodwin Smith.

Mr. BRACKEN. Mr. Cox, this is not a letter which you got from our files, is it?

Mr. Cox. I think not.

Mr. McCallister. It is dated April 22, 1932, and it is addressed to you, Mr. Ball.

Mr. Cox. Do you recall whether you in fact received a copy of that letter?

Mr. BALL. I don't recall it; no. Probably it was received, if it was addressed to our company.

Mr. Cox. Neither you nor Mr. Bracken recollect ever having seen this letter before?

Mr. BRACKEN. I don't.

Mr. BALL. I don't recall having seen it.

Mr. Cox. But you are quite clear in your own mind that Mr. Goodwin Smith spoke to you about denying others the right to make fruit jars in consideration of your accepting a license from his company?

Mr. BALL. Yes, sir; as far as he could, beyond the licenses that he had already granted.

Mr. Cox. Then on March 25, 1933, your company took a license from Hartford-Empire Co., you testified a moment ago, and would it be correct to say that that license agreement provided that as long as you made royalty payments, Hartford would not thereafter during the continuance of the license grant to any other person any further license or right to use in the continental United States their machinery for the making of fruit jars for the domestic household use? Mr. BALL. Yes, sir; in substance that is as we understand it. Senator KING. Could I interrupt right there? You stated that he said he would give an exclusive right so far as he could, and intimated that he had granted licenses to others. Did he so state that a

license had been granted to other corporations for the manufacture of fruit jars?

Mr. BALL. Limited licenses we understood; yes, sir.

Senator KING. Similar to the one you were seeking?

Mr. BALL. I don't know the shape of their license.

Senator KING. All I want to know is whether he said to you whether or not you had an exclusive license or whether other people had received a license at that time.

Mr. BALL. Exclusive as far as they were in position to grant, which would refer, as we understood it, to companies who had not so far taken licenses. We understood that they had granted limited licenses to one or two companies, but that they had not so far granted licenses to other companies, and, if they entered into this license agreement with us, they would not grant to others.

Mr. Cox. I hand you this document and ask you if you or Mr. Bracken can identify it as a correct copy of the license agreement which was entered into between your company and Hartford-Empire. Mr. BRACKEN. Without reading it all through, I assume that it is. Mr. Cox. Would you have any objection if we offer it subject to correction?

Mr. BRACKEN. No.

Mr. Cox. This document which I am about to offer as an exhibit contains in schedule C

The CHAIRMAN (interposing). What is the document?

Mr. Cox. The general feeder license agreement between HartfordEmpire Co. and Ball Brothers Co., dated March 25, 1933. Schedule C thereof shows that as of the date of this contract Hartford had granted certain licenses to other persons; prior to the date of this contract Hartford had granted licenses to certain persons to make fruit jars on the Hartford machines. The companies which have been so licensed included the Salem Glass Works, Gayner Glass Works. Salem is owned by the Anchor Hocking Glass Co. The other two licenses that I wish to mention as having licenses at this time to manufacture fruit jars were Owens-Illinois and Hazel-Atlas.

I should like to offer this document now. It is not necessary to have it printed in the record. I should like to have it certified as an exhibit.

The CHAIRMAN. The document may be admitted for the files and certified without printing in the record.

(The contract referred to was marked "Exhibit No. 143" and is on file with the committee.)

The CHAIRMAN. You were referring to schedule C.

Mr. Cox. Schedule C; yes.

There are some other companies listed in that schedule, but they are not licensed for fruit jars.

Mr. BRACKEN. It is only 1, 2, 5, and 6.

Mr. Cox. Salem and Gavner, Hazel and Owens. And I think the same document shows the Hazel and Owens licenses were unrestricted as to number.

Mr. McCALLISTER. At least it doesn't say they were restricted.

Mr. Cox. The other two were restricted as to number.

Mr. Ball, can you tell us what consideration you paid for this

license agreement?

Mr. BALL. I think it was $400,000.

Mr. Cox. Did that $400,000 include any damages for past infringement?

Mr. BALL. That was to settle any past damage claims that they might make.

Mr. Cox. I want to ask you one more question about your reasons for entering into this contract. Would it be accurate to say that after the Hazel-Atlas decision you felt that if you did not come to some agreement with Hartford you would be faced with involved and expensive and perhaps lengthy litigation which you didn't wish to endure?

Mr. BALL. Yes, sir. We wanted to escape any such unpleasant litigation, and any claims that they might make for past damages. Senator KING. Had any suits been instituted by the Hartford or by the Owens against your company for alleged infringement of their patents? Prior to the time you made this settlement with them, had either of those corporations, the Owens or the Hartford, instituted any suits against your company for alleged infringement of their patents?

Mr. BALL. No, sir.

Mr. Cox. At this point, Mr. Chairman, I should like to recall Mr. McNash and Mr. Levis for some brief testimony.

The CHAIRMAN. Before these gentlemen are recalled, let me ask, Is it your intention to develop at this point in the record the provisions of section 2 of this document, which you have just had certified?

Mr. Cox. I had paraphrased the provisions of that section in my question.

The CHAIRMAN. Let me suggest that you read it into the record and ask the witness what his understanding of that section is. It strikes me as being very important.

Mr. Cox. I shall now read into the record the provisions of section 2, the section I paraphrased to you a moment ago, Mr. Ball. That is on page 5.

Mr. BRACKEN. Section 2 of article II?

Mr. Cox. Article II; yes. [Reading from "Exhibit No. 143":]

Hartford agrees, if Ball shall make the minimum payments provided in Section 3 below, that it will not hereafter during the continuance of this General Feeder License Agreement grant to any person, firm or corporation, other than Ball, any further license or right to use in continental United States for the making of fruit jars for domestic (household) use any apparatus and/or method for dropping mold charges of molten glass into molds; Provided, however, that said agreement of Hartford not to grant such license or rights to others shall not be held to conflict with or in any way prejudice the rights now outstanding of certain concerns to use, under license from Hartford, apparatus and/or methods for dropping mold charges of molten glass into molds for the manufacture of fruit jars for domestic (household) use, as set forth in Schedule C annexed hereto. Hartford represents that there are no such rights outstanding, other than those listed in said schedule C.

I ask you, Mr. Ball, if it was your understanding that, after the execution of this contract, and during the life of the contract, Hartford-Empire would not be free to grant any new license to any one to use its machinery for the manufacture of domestic fruit jars in the continental United States?

Mr. BALL. Yes, sir; that was our understanding.