And the parties hereto mutually covenant and agree that all the provisions of this agreement shall be binding upon and inure to the successors, executors, administrators, and personal representatives of both the parties hereto.

In witness whereof the publisher has on the day and year first hereinabove written hereunto set his hand and seal, and the Eolian Company has caused its name and corporate seal to be hereunto affixed by its proper officer thereunto duly authorized.

Signature of publisher witnessed by

J. F. BOWERS,

PAULINE FLAHERTY.

CHICAGO MUSIC COMPANY, [SEAL.]
PLATT P. GIBBS.

THE OLIAN COMPANY,
By E. S. VOTEY, Director.

[SEAL.]

Memorandum of agreement made and entered into this 30th day of April, 1902, by and between Chicago Music Company, of Chicago, in the State of Illinois, party of the first part, hereinafter called the publisher, and the Æolian Company, a corporation organized under the laws of the State of Connecticut, and having a place of business in the city of New York, in the State of New York, party of the second part, hereinafter called the Eolian Company, witnesseth:

That whereas the parties hereto have, of even date herewith, entered into an agreement whereby the Eolian Company is to have the exclusive right for all perforated music sheets intended for use in controlling automatic musical instruments or machines for playing musical instruments, in and to the copyrighted musical compositions of which the publisher is the proprietor or as to which he is the owner of any rights, and in and to all those other musical compositions which may hereafter be protected by copyright and the copyrights or rights in which may be acquired by him; and

Whereas the parties hereto are desirous of entering into a further agreement with reference to the matters and things expressed in the above-mentioned agreement of even date herewith;

Now, therefore, the publisher, for and in consideration of the premises and the sum of $1, lawful money of the United States, to him by the Eolian Company in hand paid, receipt whereof is hereby acknowledged, does hereby covenant and agree that no charge shall be exacted from or be due from the Eolian Company for the manufacture or sale by it, or any of its customers, of any perforated music sheets of either of the kinds aforesaid, for playing any of the copyrighted musical compositions which are owned or controlled, or which shall hereafter be owned or controlled in whole or in part by the publisher, until a decision of the court of last resort in a suit which is to be instituted against some manufacturer or user, other than the Eolian Company, of such perforated music sheets for the purpose of testing the applicability of the United States copyright laws to such perforated music sheets, and not then unless such decision shall uphold the applicability of the United States copyright laws to perforated music sheets of the kinds aforesaid.

And for and in consideration of the premises the Eolian Company hereby covenants and agrees to pay all proper expenses of conducting said suit for the purpose of testing the applicability of the United States copyright laws to perforated music sheets of the kinds aforesaid, and that if the court of last resort shall in such suit decide that the United States copyright laws are applicable to such perforated music sheets, then and in such case and from that time forward the Eolian Company will keep books of account, render statements, and pay royalties, as provided by the aforesaid agreement of even date herewith, but shall be free from obligation to make payments for the past.

And it is mutually understood and agreed by the parties hereto that neither party hereto is to be obligated in any way by any of the provisions of this agreement, or of the aforesaid agreement of even date herewith, until the Eolian Company shall notify the publisher that a number of copyright owners, satisfactory to the Eolian Company, have made similar agreements with said company.

And the parties hereto mutually covenant and agree that all the provisions of this agreement shall be binding upon and inure to the successors, executors, administrators, and personal representatives of both the parties hereto.

ACL 06-9

In witness whereof the publisher has on the day and year first hereinabove written hereunto set his hand and seal, and the Eolian Company has caused its name and corporate seal to be hereunto affixed by its proper officer thereunto duly authorized.

DEAR SIRS: Pursuant to the provision of the agreement granting us the exclusive right under your United States copyrights for all preforated music sheets intended for use in controlling automatic musical instruments and machines for playing musical instruments, we hereby notify you that a number of copyright owners satisfactory to us have made with us agreements similar to our agreement with you. From this date, therefore, our agreement goes into effect. Looking forward to profitable and pleasant business relations, we remain, Yours, truly,

THE EOLIAN COMPANY,
E. R. PERKINS,
General Manager.

Mr. CHANEY. I would like to have this gentleman who has just spoken to us (Mr. Low) submit a typewritten statement relating to the various sections in the bill to which he objects, and setting out his objections.

The ACTING CHAIRMAN. Without objection that privilege will be accorded to him.

WASHINGTON, D. C., June 12, 1906.

To the Committees on Patents of the United States Senate and House of Representatives. GENTLEMEN: I file herewith in typewriting specific suggestions for the amendment of the said bill, in pursuance of the resolution of the joint committee, passed on the 8th day of June, 1906; these remarks or this statement to follow in the record the exhibit contracts which I presented to your committees at that time.

Very respectfully,

H. N. Low.

SUGGESTIONS AS TO THE AMENDMENT OF THE PENDING COPYRIGHT BILL.

To the Committees on Patents of United States Senate and House of Representatives. GENTLEMEN: If the allegations which have been made before the committee, and not denied, and which can not be successfully denied, that there has been effected a combination in the nature of a trust to secure practically all of the commercial business of this country in the manufacture, sale, and use of mechanical records or controllers for the production of music, etc., by mechanical means are true, then a very serious situation confronts you.

The agencies relied upon to make said combination of publishers and manufacturers successful are—

1. The contracts which have heretofore been entered into in anticipation of this legislation, four of which contracts have been filed in connection with the remarks of Mr. O'Connell and of Mr. Low.

2. New legislation of the character proposed by this copyright bill and especially by paragraph (g) of section 1.

In one of the contracts referred to, dated April 30, 1902, between the Chicago Music Company and the Æolian Company, it is provided

"During the existence of this contract, after the payment of the license fee thereunder, the Æolian Company obligates itself to prosecute diligently, at its own expense and by its own counsel, in the name of the proprietors of the copyright, all infringers of the rights granted to it, the Æolian Company.'

In the other contract of the same date and between the same parties, a facsimile of which has been filed with your committees, it is provided—

* * *

"That no charge shall be exacted from or be due from the Eolian Company until a decision of the court of last resort in a suit which is to be instituted against some manufacturer or user other than the Eolian Company of such perforated music sheets for the purpose of testing the applicability of the United States copyright laws to perforated music sheets, and not then unless such decision shall uphold the applicability of the United States copyright laws to perforated music sheets of the kinds aforesaid. And for and in consideration of the premises the Eolian Company hereby covenants and agrees to pay all proper expenses of conducting said suit," etc. Such test suit was instituted entitled The White-Smith Music Publishing Company v. The Apollo Company by and at the expense of the Eolian Company, the real complainant, and decided against the Eolian Company, the holding of the court of last resort, the United States circuit court of appeals for the second circuit, being that such perforated music sheets were not infringements of the copyrights of the nominal complainant.

Although defeated so far, it is not reasonable to suppose that the combination of the Æolian Company and its "number of copyright owners satisfactory" to that company would rest without further effort to make effective for profit the agreement into which they had entered. The only remaining means was by new legislation, and I submit that the aim and end of the pending bill is to be a substitute for that favorable decision of a court of last resort which the Eolian Company failed after strenuous efforts to obtain.

Certain provisions of the bill here and there-for example, the lengthening of the copyright term-have attracted to the support of the bill various interests who are totally indifferent one way or the other to the question of perforated music sheets or phonographic records, but I submit that these other provisions are more or less unimportant, do not improve the present law, and most of them would never have been heard of except for the desire of the special interests above referred to to obtain new legislation as to the mechanical producers of sound.

In the spring of 1904 attempt was made by this same combination to obtain the legislation desired by the insertion of a specific provision in the law to substantially this effect:

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Provided, That in the case of a musical composition authors or their assigns shall have the exclusive right to use said copyright musical compositions in the form of perforated rolls for playing attachments, copyright on which music rolls may be obtained by said author or his assigns in the same manner as now provided by law for copyright on musical compositions."

I have not been able to discover that this proposed amendment of the law was ever introduced in the form of a bill into either House of Congress. It may have been. But I am informed that it was formulated for the purpose of introduction as a bill in Congress in the terms above set forth.

It was found impracticable to obtain the new legislation in such specific and undisguised form, and resort is now had to a pretended revision or codification of the entire copyright law, for which there is not the slightest necessity and which will inevitably give rise to a great amount of litigation before the meaning and effect of the words used in the new law can be legally understood, for the sole purpose that the Eolian Company may have with its contracting publishers and copyright owners pleasant and profitable business relations," as expressed in the notice from the Eolian Company to the contracting publishers, dated May 5, 1902 (a facsimile of which I have filed with your committees). This notice states "a number a copyright owners satisfactory to us have made with us agreements similar to our agreement with you."

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Although the matters above referred to have been opened up before your committee in the remarks of Mr. O'Connell, I have felt it my duty to give my view of the matter in brief form, both in confirmation of what Mr. O'Connell has said, and for the purpose of indicating that the bill itself and proposed amendments thereto must be scrutinized by your committees with the greatest care before it is reported.

As to amendments of the bill, I see no alternative to the striking out of paragraph (g) of section 1. If the combine exists as is alleged it is obvious that the patents, inventions, machinery, and plants of all those manufacturers of mechanical records

who are not inside of the combine, that is to say, of all the manufacturers of perforated music rolls excepting the Aeolian Company, and all the manufacturers of talking machines and records excepting the two companies who are alleged to be members of another combination or trust for the exclusive manufacture of such machines, and of all without exception of the manufacturers and users and sellers of pianos and organs which are operated by perforated music sheets, will be rendered practically useless, the owners of such manufactories will be put out of business, and their workmen will have their field of labor and bread taken away.

If this will be the result of the bill, and especially of the paragraph section 1 (g), the bill is most unjust and class legislation of the worst type. And that is just what the bill is intended to be, but I am thankful that its object can not be concealed.

It is no answer to the above objection to say that the bill provides only for the future. So do the contracts between the Eolian Company and its "satisfactory number" of copyright owners. The said contracts are unlimited as to time, having been signed by the great bulk of the trade (meaning thereby almost all of the great music publishers of the country), they leave outside of the combination only small publishers, and the contracts provide as follows:

"Now, therefore, the publisher, for and in consideration of the premises, and of the sum of one dollar, lawful money of the United States, to him paid by the Aeolian Company, receipt of which is hereby acknowledged, and for and in consideration of the true and faithful performance by the Aeolian Company of its covenants hereinafter made, does hereby sell, assign, transfer, and set over unto the Aeolian Company the exclusive right for all perforated music sheets of the kinds aforesaid in and to all the copyrighted compositions of which the publisher is the proprietor, or in the case in which he is the owner of any less rights, to the extent of said rights, and does hereby covenant and agree with the Aeolian Company to give and secure to it the exclusive right in like manner for all perforated music sheets of the kinds aforesaid in and to all those other musical compositions which may hereafter be protected by copyright, and the copyrights or rights in which may be acquired by the publisher, except that if the Aeolian Company do not accept any piece offered them within three months after said offer then the publisher may be at liberty to dispose of the same otherwise."

From the foregoing we arrive at this conclusion, and there is no escape from it, that there is in existence a combination whose design and effect upon very important business and laboring interests of this country will be injurious and unlawful if the bill should be passed as proposed, which combination is of unlimited duration as to time, and which combination will control, for the purpose of producing perforated music sheets, all the copyrights or rights of production hereafter for such unlimited duration of time which may be acquired by the great bulk of the trade (music publishers) of this country. Your committees will see, therefore, that the bill provides for the profitable future of the members of the combination without limit as to time.

The result of this will be threefold:

1. The Eolian Company will secure for itself practically the entire business of the United States in the manufacture of perforated music sheets, and will be in a position to dictate the prices for such sheets to the trade, including the manufacturers and sellers of pianos and organs operated by said sheets as well as the sellers of the sheets alone, and to raise the price to the public generally for such sheets.

2. The publishers who have contracted with the Eolian Company to give the latter all the rights which the publishers have or may have in copyrighted music will receive from the Eolian Company certain royalties, which royalties will either be clear profit to the publishers or will be less than any extra royalties which the publishers will pay to the composers. It is practically certain that in the long run the composers will get no more royalties than they now receive, for the composer, for his own advantage in obtaining a large sale of his works, must go to one of the large publishers of music, and will be compelled by such publisher to accept in full payment of his copyright just such a royalty as he now gets under existing law, and all the extra profits which can be mulcted from the public under section 1 (g) of the bill will be divided between the members of the combination.

3. The public will foot all the bills without any more advantage to themselves than they have under existing law.

The assertion made in support of the bill, that it relates only to the future, is completely met with the reply that the bill does not provide for the future of anyone who is outside of the combination.

If the existing copyright law is bad or insufficient and anything like a revision of or a codification of the copyright statutes in a new law must be made in the interests of justice, let it be done. But let care be taken that you do not do injustice. If

a new copyright law is to be enacted, and the pending bill is to be the foundation of such a law, the practical question is, how is it to be amended in order that it may not cause the evils above referred to.

Mr. Putnam in his introductory remarks indicated that your committees would find evidences of "selfishness" in the bill. He is undoubtedly right. It is, however, much more far reaching in this respect than Mr. Putnam had any idea of. It is extraordinary that the conference which advised Mr. Putnam adopted such radical legislation as is proposed in section 1 (g) without inviting the attendance at the conference of a single person interested adversely to this legislation. In fact it would appear that such persons were purposely kept in ignorance of what the conference was doing.

But I do not think that the selfishness of the interests which are opposed to the said new legislation, and who are now fully aware that it is proposed, extends beyond a rightful effort to prevent their own extinction.

In my opinion the manufacturers of mechanical music controllers or records are willing to pay a fair and reasonable royalty to composers of music which they use, or to other owners of copyrights for musical compositions, but this must be provided for otherwise than by an enactment which will give rise to the evils attending the said paragraph, section 1 (g) of the bill. That paragraph should be eliminated and other parts of the bill corresponding with this paragraph, and there should be substituted for it, probably at some other more appropriate part of the bill, a provision like the following:

"Any person, firm, or corporation who shall make, use, or sell, or let for hire, any device, contrivance, or appliance especially adapted in any manner whatsoever to reproduce to the ear the whole or any material part of any work published and copyrighted after this act shall have gone into effect, shall pay to the author or composer of such work a fair and reasonable royalty to be determined according to the market price for such or similar royalties.

"And the author or composer of the work so used shall have the same remedies for the recovery from such person, firm, or corporation of such royalty or royalties as is provided in this act for the recovery of damages for the infringement of copyright.

"And after the amount of such royalty or royalties shall have been ascertained and become due by express contract between the parties, or shall have been ascertained and adjudged to be due by any circuit court of the United States, and is not paid, then the author or composer shall have the same remedy by injunction against such person, firm, or corporation, as is provided in this act in cases of the infringement of a copyright."

It is believed that such an enactment would give to the composers who have appeared before your committees all the rights and remuneration which is due them, and at the same time will defeat the unlawful combination which exists and is hereinbefore referred to.

I believe that it will not be at all difficult to arrive at the just value of such royal ties, and in almost every instance they would be settled by contract between the owner of the copyright and the maker of the mechanical appliance for producing the music. In the case of a composition of any value the composer will dispose of it for an agreedupon royalty to some music publisher in the usual way. He will then dispose of his right to the composition for reproduction by mechanical means to some manufacturer of such mechanical means for a royalty agreed upon. If any other such manufacturer, not in contractual relations with the owner of the copyright thereafter makes use of the composition, the amount of the royalty for which the owner of the copyright has contracted will aid in determining what royalty is fair and reasonable and is to be paid by such other manufacturer. I suppose that in some cases litigation may be necessary to arrive at the amount of the royalty, but not more than is inevitable in human affairs. It is not to be supposed that a manufacturer will resist the payment of the royalty for a musical composition which he has utilized and pay to the complainant the cost of litigation rather than make a fair settlement upon terms which are well settled, or will soon become well settled under this act, in the trade. A provision like that above suggested is analogous to, and appears to be quite similar in its effect to, the compulsory-license provision of some of the foreign statutes. For instance, in the law of the Dominion of Canada, lately enacted, in 1903, we have the following:

"7. (a) Any person, at any time while a patent continues in force, may apply to the commissioner, by petition, for a license to make, construct, use, and sell the patented invention, and the commissioner shall, subject to general rules to be made for carrying out this section, hear the person applying and the owner of the patent, and if he is satisfied that the reasonable requirements of the public in reference to the