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the Æolian Company of the fact that they have a large number of these contracts? There is no provision in the contract that it shall be abrogated if the Supreme Court of the United States fails to sustain their contention in the case on appeal. There is no provision at all for abrogating that contract. Do you mean to tell us that when this corporation has these exclusive contracts, so that the public has not only got to buy their rolls, but their machines, that it does not constitute a monopoly?
I would like to offer this contract in evidence as a part of the record. I will say that the Universal Music Company is in fact the Æolian Company.
The CHAIRMAN. It may go in the record as part of your remarks. The contract referred to is as follows:
MANUFACTURERS' SIXTY PER CENT CONTRACT.
Agreement made this day of
in the year one thousand nine lundred and six, between the Universal Music Company (hereinafter called the company) and
(hereinafter called the buyer). Whereas the company has special facilities for manufacturing perforated music rolls, which shall be considered by the buyer as a standard in size and design, and the buyer desires for himself and his dealers to obtain the benefits and advantages thereof.
Now this agreement witnesseth that it is mutually agreed between the company and the buyer as follows:
THE COMPANY COVENANTS AND AGREES
(1) To sell to the buyer perforated music, cut by the company as ordered by the buyer, and at all times to construct such perforated music so that same shall equal in quality that which the company sells to its regular agents, dealers, customers, or contract houses, and so that said perforated music shall include the marking of the dotted expression line and regular musical terms thereon.
(2) To guarantee each roll herein referred to to be free from defect.of workmanship or material, and to replace same if so defective when such defective roll is returned by the buyer to the company's factory, transportation charges prepaid, except that the company does not guarantee the paper used in the manufacure of said rolls or warrant that such paper will not swell or shrink or be affected by variations of temperature. All claims above referred to and of whatever nature must be made by such buyer within ten days after receipt by him of rolls because of defects in which claim is made; otherwise no claim will be allowed by the company.
(3) To supply such buyer with any selection in perforated form which shall appear in the company's catalogue, regularly issued, and which the company shall produce for the use of the Æolian Company in instruments manufactured by said Æolian Company; but it is expressly understood that this paragraph refers only to the music known as “ Pianola standard sixty-five (65) note, six perforations to the inch music rolls, cut from paper eleven and a quarter (111) inches wide, except as hereinafter referred to."
(4) Upon such orders as shall be sent to the company by the buyer's manufacturer or dealer, provided such manufacturer or dealer handles exclusively the players, or player pianos, or parts therefor made by the buyer, then the company shall fill such orders direct and bill to the buyer, and the company reserves the right to solicit orders for itself from the manufacturer or dealer direct, excepting the dealer who handles exclusively, the players or player piano actions therefor, made by the buyer, excepting players or player pianos which take a roll not made by the company.
The word manufacturer " under this contract refers to a piano or player maker who shall purchase player actions from the buyer, and the word “ dealer" under this contract refers to a retail piano or music dealer who exclusively markets to the consumer.
(5) To ship rolls direct to a manufacturer or dealer upon instructions from the buyer without making an extra charge therefor.
(6) To sell to the buyer such music rolls as are covered herein which he shall order, and bill the same to the buyer at sixty (60) per cent discount from the catalogue prices current at this date and subject to a further rebate on annual purchases as follows:
A rebate of ten (10) per cent if not less than twenty-five thousand rolls are purchased and paid for in any one year.
A rebate of fifteen (15) per cent if not less than fifty thousand (50,000) rolls are purchased and paid for in any one year.
A rebate of twenty (20) per cent if not less than seventy-five thousand (75,000) or more rolls are purchased and paid for in any one year.
A rebate of twenty-five (25) per cent if not less than one hundred thousand (100,000) or more rolls are purchased and paid for in any one year.
In case said buyer purchase twenty-five hundred (2,500) rolls in any month, he may retain ten (10) per cent of the purchase price thereof; in case said buyer purchase forty-five hundred (4,500) rolls in any month he may retain fifteen (15) per cent of the purchase price thereof; in case said buyer purchase sixty-five hundred (6,500) rolls per month, he may retain twenty (20) per cent of the purchase price thereof; in case said buyer purchase eighty-five hundred (8,500) rolls per month, he may retain twenty-five (25) per cent of the purchase price thereof; it being understood, however, that the buyer may retain the amount of but one of these percentages during each month. At the end of each year the amount so retained shall be applied on account of the rebate to which the buyer shall then be entitled, but if said buyer shall not be entitled to any rebate, or said rebate does not amount to the amount so retained, any balance so retained shall forthwith 'be due and payable by said buyer to said company.
(7) To sell to the buyer for his use or for distribution by him such catalogue of the Universal Music Company as he shall order from time to time, charging therefor thirty-three (33) cents each net, and monthly bulletins at three-quarters (i) of a cent each.
(8) To supply to the buyer music-roll catalogues or bulletins under this agreement, the same bearing the name and address of the Universal Music Company, and no other name and address to be placed by the company on either music rolls, music-roll boxes, catalogues, or bulletins, except as hereinafter provided.
(9) To supply to the buyer music rolls having a special width the same as the buyer has been obtaining from The Æolian Company, said rolls and boxes to have the buyer's special label, but such special rolls to be taken by the buyer in lots of not less than fifteen (15) of each number ordered.
In consideration of the foregoing agreements on behalf of the company the buyer covenants and agrees :
(1) That he will not purchase for his own use or for sale, directly or indirectly, or through his branches, any perforated music rolls, except those manufactured by the company, and that he will not offer for sale, sell, or deal indirectly, or through his branches, any perforated music rolls except those so manufactured by the company.
(2) That he will cooperate with the company in order to induce his manufacturers and dealers to purchase only such perforated music rolls as are manufactured by the company, as hereinbefore provided, and to endeavor to induce such manufacturer or dealer to sign an agreement to that effect, and should any manufacturer or dealer at any time decline to handle the company's rolls exclusively, excepting rolls of the size and style which the company does not make, and provided further the said manufacturer or dealer shall not at all times maintain the prices on the new rolls covered by this agreement, then the company shall have the right to demand that the buyer discontinue the sale of such rolls to such manufacturer or dealer, without violating this contract.
(3) That he will construct all the piano players and player pianos, or parts of same, manufactured and dealt in by him either directly or indirectly, to accept the pianola width or standard roll with flanges and pins, or the said instruments shall be made to accept the special width roll previously made for the buyer by the Æolian Company.
(4) That he will not engage in the manufacture of perforated music rolls in any form, either directly or indirectly.
(5) That he will at all times maintain the list prices established by the company on perforated music rolls, and that he will endeavor, either himself or through his manufacturer, to procure from each dealer, as far as possible, a contract wherein such dealer shall agree to maintain list prices, and in case any of said dealers shall at any time decline to handle the company's rolls exclusively, excepting rolls of a size and style which the company does not make, and provided further, that the said dealer shall not at all times maintain the catalogue prices on the rolls covered by this agreement, then the company shall have the right to demand that the buyer or his manufacturer discontinue the sale of its rolls to such dealer, without violation of this contract, and a manufacturer purchasing rolls of the buyer shall also agree to exact the same condition of said manufacturer's dealer.
It is further mutually agreed between the parties hereto as follows:
(1) All rolls purchased from the buyer, or his manufacturer, by buyer's or his manufacturer's dealers, shall be invoiced at not to exceed fifty (50) per cent off from the list prices in the company's regular catalogue.
(2) No dealer shall be eligible under this agreement as a purchaser of the buyer, or his manufacturer, of the rolls referred to, unless he is a recognized piano and music dealer.
(3) Nothing contained in this agreement shall be construed to cover any rolls manufactured by the company for the Æolian Company, or to fit its pipe organ, or with metrostyle or other special patented markings for special nise for the instruments manufactured by the Æolian Company.
(4) Should the buyer manufacture piano players or player pianos, or player parts, which instrument shall accept a roll other than covered by this agreement, then, in such case, the buyer agrees to supply such special rolls upon terms and conditions to be specially agreed upon.
(5) It is expressly understood and agreed that if the perforated music is made the subject of copyright by statute, or it is adjudged by any trial or appellate court to be the subject of a copyright, then in either or both of these events the company may, at its option, at any time, and as often as is necessary, increase the price thereof, so as to cover royalties paid by the company, including expenses of accounting therefor; all other expenses incurred by reason of copyright by ary increase as above shall likewise operate as to all contracts similar to this one with other parties.
(6) The buyer agrees that he will not offer for sale music rolls, either directly or indirectly, or through his manufacturer or branches, to the dealers of the Æolian Company, when such dealer handles no other player.
(7) The company shall have the right to solicit music-roll orders from all dealers, but only for the account of the buyer or his manufacturer, when such dealer handles exclusively the players or player pianos manufactured by the buyer or his manufacturer.
(8) The company shall fill all orders for the buyer or his dealer or manufacturers within a reasonable time and as promptly as the company supplies its own dealers, excepting in case of delay from fire, flood, strikes, or other unavoidable contingencies.
(9) In case the buyer or the company violates any of the covenants of this agreement to be performed on his or its part the injured party shall have the right to terminate this agreement forthwith.
(10) And it is further agreed that should the company waive any breach of this contract on the part of the buyer the said company shall not thereby waive any subsequent breaches thereof.
(11) This agreement applies only to the United States of America and shall become operative on
and shall continue in full force and effect for three years from said date.
(12) It is further agreed that should this contract be violated by either party and become null and void that the company shall have the right to purchase back from the buyer any new or unsoiled music rolls, purchased of the company by the buyer and which the buyer may have in stock at such time. upon the basis of ten (10) per cent less than the net cost of such rolls to the buyer.
In witness whereof the parties hereto have attached their corporate seals and caused to be affixed the signature of their respective officers authorized for the purpose the day and year first above written.
In consideration of being permitted to purchase perforated music manufactured by the Universal Music Company, and further, in consideration of the privilege of having access to their complete catalogues and monthly bulletins, and further, in consideration of the protection in selling prices of said music rolls by other dealers :
I, therefore, agree to at all times sell rolls purchased under this agreement at the catalogue prices, and I will in no manner, either directly or indirectly, cut such prices, and will handle for sale or otherwise no perforated rolls other than those manufactured by said Universal Music Company, provided such rolls shall be invoiced to me at all times at as low a price as to any other dealers in like quantity, and further, provided I am supplied with catalogues and monthly bulletins without cost to me for such catalogues and monthly bulletins, and further, provided my orders for rolls shall be filled with promptness equal to that of any other dealers, delay from strikes, fire, flood, or other unavoidable causes excepted.
The CHAIRMAN. Who is the representative of the Æolian Com
Mr. POUND. It is Mr. Bowers.
Mr. Bowers. That is a misstatement. I stated this morning that I did not represent the company, and I did not.
Mr. Pound. He is in charge of the sheet-music department of Lyon & Healy, who are the agents of the Æolian Company. He said to me last night, in the Raleigh Hotel, that he, personally, was the one who solicited and obtained most, if not all, of these contracts. His name is signed as a witness to most of these contracts for the Æolian Company. If that does not make him the agent of the Æolian Company, I do not understand the law of agency.
Mr. O'CONNELL. Mr. Pound says there is no provision for the abrogation of this contract. There is such a provision. It is provided that in the event a dealer or buyer sells any other kind of roll they then lose their right to get any more from the Æolian Company.
Mr. Pound. Yes; but what I mean is that there is no provision for the abrogation of the contract as has been claimed in the event that the Supreme Court fails to sustain their contention.
Mr. HINSHAW. How many contracts of that kind have been executed ?
Mr. POUND. I do not know.
Mr. WALKER. Does not this contract provide that if legislation can be secured it shall go into effect at once ?
Mr. POUND. Yes; it anticipates this legislation.
Mr. Bowers. I wish to say that this contract which the gentleman has presented is not the contract made between the Æolian Company and the publishers.
Mr. POUND. No; they make a different one with the publishers. I have already stated that they made two contracts.
Mr. CURRIER. This is the contract they make with the manufacturers?
Mr. Pound. Yes, sir.
Mr. O'CONNELL. These contracts are not to be made with houses that cut music rolls. They are only to be made with houses that, as manufacturers and dealers, use music rolls. The consequence is that if they buy a single roll anywhere else they can not get any more from the Æolian Company
Mr. BURKAN. Is not that in violation of the Sherman Act?
Mr. Pound. Possibly it may be. But I say this committee should not put us in the position of being molested and harrassed. It is not for us to be compelled to go to the courts and to have our business tied up simply because it is possible that the contract of some other person
is in violation of the Sherman Act. Now let me explain further along the line of the Æolian contract. The Æolian people have filed for copyright in this office, and have obtained copyrights, down to the first day of this month on 984 of their rolls. On the 6th day of this month, the day before this hearing was commenced, they filed 10 more perforated rolls for copyright. The list is here and may be seen. I observe, if you please, that they have taken practically all the music of the masters. They have taken Beethoven and Handel and Chopin, Mozart, and others and have copyrighted every single one of those things. All of the older symphonies and the older operas have been copyrighted by the Æolian company on these perforated paper rolls. To date there are 994 of them. I notice that two of Mr. Sousa's marches, “ The Bride Elect” and “ The Stars and Stripes Forever,” are included in that list. He tells me that this is news to him and that he never knew the Æolian company had done it.
Mr. Sousa. Do you know that they have any right to do it?
Pound I question their right to do everything that they have done in this matter, and I am here to question it. The Æolian company went into this campaign three years ago last March and they say they have spent $40,000 getting ready for this fight. We are brought into it at the last minute. But I say that whatever may be your opinion or your judgment as to the necessity of this bill along other lines, the independent manufacturers of this country, and there are large numbers of them, ought not to be handed over to the inercy of this monoply or this trust which is already created.
Mr. HINSHAW. Do you know who constitutes the Æolian company?
Mr. Pound. I can not tell you. It is a Connecticut corporation and is a $10,000,000 corporation.
Mr. CHANEY. It is not a New Jersey corporation !
The CHAIRMAN. It is now 5 o'clock and the hour for a recess has arrived.
The committee, at 5 o'clock p. m., took a recess until 7.30 o'clock
Mr. BOWERS. Mr. Chairman, before Mr. Pound begins I just wish to say
that in the matter of the Æolian contract alluded to, that I got it for the music publishers and not for the Æolian Company; and in addition to that I make statement in answer to Mr. Cromelin that