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Full text of "Agricultural implement industry in Canada, a study in the development of competition"

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T HE AGRICULTURAL IMPLEMENT INDUST RY 
IN CANADA 
A STUDY IN THE DEVELOP>CNT OF COMPETITION 






By 



William G. Phillips 



University of Toronto 
1953 



? 



THE AGRICULTURAL IMPLEMENT INDUSTRY 
IN CANADA 

A STUDY IN THE DEVELOPMENT OF COMPETITION 



L Of>^L EXAMINATION 
HlLOSOPHy 

y: - 



by 
William G. Phillips 



JF COMPETHION 



A Thesis submitted in conformity with the 
requirements for the degree of Doctor of Philosophy in the 

University of Toronto 
1953 .'/- 



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PREFACE 



UNIVERSITY OF TORONTO 
SCHOOL OF GRADUATE STUDIES 



PROGRAMME OF THE FINAL ORAL EXAMINATION 
FOR THE DEGREE OF DOCTOR OF PHILOSOPHY 



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ir!ustry of Canada 
:tle known, Inriustry. 
ibstantlal part of 
nplement industry 
islons when agri- 
» past, the poll- 
»ment industry. 
Mt reforms, and for 
icing and other 
t the industry 



WILLIAM GREGORY PHILLIPS 



4:00 P.M. FRIDAY, OCTOBER 30TH, 1953 
AT 44 HOSKIN AVENUE 



THE AGRICULTURAL IMPLEMENT INDUSTRY IN 
CANADA - A STUDY IN THE DEVELOPMENT OF COMPETITION 



COMMITTEE IN CHARGE: 

Professor E. A. Borr, Chairman 
Professor V. W. Bladen 
Professor A. Brady 
Professor J. M. S. Careless 
Professor S. D. Clark 
Professor A. W. CURRIE 
Professor W. T. Easterbrook 
Professor W. C. Hood 
Professor H. A. Logan 
Profes.sor D. C. MAcCtRliCOR 



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BIOGRAPHICAL 
Y/T 1921 —Born, Brantford, Ontario. 

1944 — B.A., University of Toronto. 

1947 — M.A., University of Toronto. 

If 1945—50 — School of Graduate Studies, University of Toronto. 

1948-50 — Part-time Instructor, Department of Political Economy, University 

of Toronto. 
1950-53 — Assistant Professor, Department of Economics and PoliticaK Science, 

Assumption College. 
1953-54 — School of Graduate Studies, University of Toronto. 



THESIS 

The Agricultural Implement Industry in Canada 

(ABSTRACT) 

This thesis is a study of comeptition in the agricultural implement industry 
in Canada. The approach to the subject is in part historical, since it is felt that 
the nature of competition in the industry at present cannot be explained solely 
in terms of immediate environmental factors such as the number of firms, 
product differentiation, and conditions of entry. The key to much of the 
competitive behaviour in this industry is to be found in past influences which 
have left their mark upon the firms. In the industry's long history the principal 
of these influences have been technological, geographical and political in nature. 

These three influences are the basis of the historical survey. Eacli of them, 
however, touches closely upon the relation between the Canadian and .-Xmerican 
implement industries, with the result that some prior knowledge of the American 
industry is indispensable. Witli a view to supplying this, the first three 
chapters of the thesis present selected aspects of the history of the American 
industry. 

Geographically, there have been some marked contrasts between the experi- 
ence of the American and Canadian industries. Through the nineteenth century, 
the American industry tended to follow the market westward from the Atlantic 
seacoast while the Canadian industry took root in southern Ontario and 
remained there. Competition for favourable plant location, important in the 
American industry before 1900, never became important in Canada. Through 
the nineteenth century Canadian producers met little American competition in 
Eastern Canada, principally because of the protection afforded by inadequate 
transportation facilities and a tariff on agricultural implements after 1847. Even 
in the develoiiing western market, where the advantage of proximity favoured 
the American industry, high National Policy tariffs effectively kept American 
sellers out before the 1890's. 

After the turn of the century, it becomes difficult to separate the geographical 
^J^i (ii t from the political influences. After 1894 the Canadian industry was faced with 

a declining tariff and with increasing imports into Western Canada. Thereupon 
it abandoned its former indifference to the tariff, and, relying largely on the 
Canadian Manufacturers' Association as its spokesman, exerted pressure for 
tariff retention. On this, as on several occasions in tliis century, the concentration 
of the major firms in the Toronto-Hamilton-Brantford area of Ontario, provided 
an environment conducive to concerted action in tlie industry. The industry's 
lack of success in the tariff struggle, evidenced in the decline of the tariff on 
harvesting implements from 35% to 7!^* between 1894 and 1924, resulted from 
the greater pressure excrtiMl liv .•igrionllMre in favour of free trade in implements. 



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PREFACE 



In these years, the Canadian implement industry was the object of much 
vigorous criticism from agricuhure. and the suggestion is put forth in the 
thesis that this sustained criticism, plus the constantly declining level of pro- 
tection, did much to foster in the industry a mode of thought favorable to 
mutual understanding in competitive matters. 

Technological influences blend with the political and geographical in the early 
years of this century. Before 1900 Canadian implement makers had relied 
almost entirely for new designs on their ability to adopt American innovations. 
This proved feasible as long as designs were relatively simple and American 
producers not active in the Canadian market. A serious problem arose, however, 
when the "tractor revolution" took hold in the American industry after 1910. 
Production of farm tractors rapidly became centralised within the American 
farm implement industry and the tractor became the hub around which pro- 
ducers planned and designed implements. Efforts to produce tractors in Canada, 
notably by the Massey-Harris Company, failed because of high costs and a 
limited market, and Canadian companies were forced to resort to selling- 
arrangements with American firms. Considerable attention is given to the way 
in which the "tractor revolution" increased the overall efficiency of American 
producers, enabling them to sell in Canada despite the tariff. Tractors swelled 
the tide of American implement shipments into Canada in the twenties, to 
such an extent that in 1929, the value of imports was more than three-quarters 
the value of implement sales in Canada. 

Political factors exerted a powerful influence in the thirties. The industry's 
policy of maintaining prices in a sharply declining market invited widespread 
criticism, particularly in view of the severe drop in farm prices, and of the 
high tariff protection given to the industry by the Bennett government in 1930. 
Criticism culminated in an extended federal government investigation of the 
industry in 1936 and 1937 and a provincial investigation in Saskatchewan in 
1938. Though neither of these resulted in any legislation affecting the industry, 
they exerted a strong indirect influence on price policies insofar as they put 
new life into the deep-rooted political consciousness of the industry. 

Technology, geography and war itself have been the dominating influences 
since 1940. War and post-war difficulties in foreign markets were partly the 
inspiration for more agressive marketing policies by the Canadian industry in 
the United States. The result has been a vast expansion in the American 
market for Canadian-made implements and a sharp decline in the importance 
of other export markets. In 1952 approximately 90% of total implement exports 
from Canada went to the United States. Examination of these suggests the 
degree to which international specialisation of production has accompanied the 
advance. The leading exports are combines, production of which has been 
specialised in Canada by the Massey-Harris and Cockshutt Farm Equipment 
Companies : seed drills, which the International Harvester Company has pro- 
duced exclusively in Canada since the removal of the Canadian tariff in 1944; 
and tractors, produced in Canada and shipped into the United States since 1947 
by the Cockshutt Company. Imports also reflect international specialisation. The 
leaders here are tractors and combines, both of which are imported by Inter- 
national Harvester from its parent company, while Massey-Harris imports 
almost all its tractors from its tractor-producing subsidiary in Racine, Wisconsin. 
With the increased markets and specialisation of the post-war years, the Cana- 
dian implement industry has experienced the full effects of the "tractor revolu- 
tion", tlie effect of which on competition is discussed at some length. 

With this background of the formative influences, Part III focusses attention 
on actual competitive beh.aviour from 1920 to 19.S0. The study is conducted 
within the framework of current price theory, this being used "as an embarkation 
point and general guide rather than as a fixed body of principles for detailed 
verification". Competition is broken down into two types — price competition 
and non-price competition. 

The main areas of price competition are found in the conditions of demand 
and cost and the pricing process. The "industry" demand for implements is 



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idustry of Canada 
-.tie known, Inrlustry. 
ibstantlal part of 
nplement industry 
aslons when agrl- 
e past, the poll- 
Bment industry, 
fit reforms, and for 
icing and other 
t the industry 

y for various 
dustry employed 
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id principally in 
rising fact that 
)orted approximately 
approximately 7^% 
sported. 

is not primarily 
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— the development 
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po thesis that 



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shown to have been highly responsive to changes in farm income but not to 
changes in price. Several factors are found to account for this dual phe- 
nomenon. The examination of costs reveals principally the importance of over- 
head costs in the industry, the changing significance of overhead consetiuent 
upon the "tractor revolution" and the effect of this upon the sources of inter- 
,,_-.__, firm cost differentials. I^rice behaviour is examined for the period 1920 to 1950, 

WOI T I' attention being given to changes in the general level of implement prices as well 

as to differences between the prices charged by individual firms. The stickiness 
which is found to have characterised the level of implement prices since 1920 
is attributed to the four-fold circumstance of few firms, high income elasticity, 
low price elasticity and rigid overhead costs. As for the prices charged by 
individual firms, a major effect of the "tractor revolution" has been to dissipate 
the tendancy toward uniform price which was increasingly evident until the 
late thirties, and to make single-firm price changes more common. Considerable 
attention is given to the rationale of jirice decisions in the individual firm, with 
emphasis on the role of estimated costs of production and distribution, manu- 
facturers' profit, and dealer discounts off suggested retail prices. An estimate 
is made of the importance of price leadership in the industry, with emphasis 
on the modifying influence of different firms possessing cost advantages in 
different implements. 

The overall conclusion is that, despite the greater independence exhibited by 
individual firms in their price decisions since the war, active price competition 
does not characterise the industry. Price competition is of a highly "considerate" 
nature, influences deeply rooted in the industry's past accounting for a greater 
tendency toward mutual understanding in pricing matters than is found in 
many comparable industries. 

The two chief areas of non-price competition are found in distribution and in 
credit extension. The peculiar features of spatial competition in the agricultural 
market were responsilile for the formation and the perpetuation of excessive 
distributive capacity in the industry after 1920. Likewise, the lack of organized 
sources of short-term and intermediate-term credit for agriculture imposed on 
the industry tlie obligation of financing implement purchases, with a resulting 
widespread use of liberal (and often unwarranted) credit terms to build up 
sales. Competition in these splicres was most active when price competition was 
least active — in the years prior to World War II. 

Since 1945, developments inside and outside the industry have diminished the 
importance of non-price competition, and these factors are examined in the 
thesis with a view to estimating the permanency of their effect. Chief among 
them have been the change in the dealer-company relationship and the passage 
of the I~arm Improvement Loans Act, both in 1945. It is speculated that the 
future may interpret these events as the first step towards the inclusion of the 
non-price aspects of competition, along with price, in (|uasi-agreements within 
the industry. 



ni Yrfcroeoii graduate studies 

Major Subject : 

Labour Economics ; Economic Theory — Professors H. A. Logan and 
G. A. Elliott. 

Minor Subjects : 

Economic History — Professor H. A. Innis. 
Sociology — Professor S. D. Clark. 



PREFACE 

The agricultural Implement Industry of Canada 
is at once a very well known, and a very little known, industry. 
It is well known because agriculture Is a substantial part of 
Canada's economy, and the products of the implement industry 
go exclusively to agriculture. On most occasions when agri- 
culture has been In difficult straits in the past, the poli- 
tical spotlight has been turned on the implement industry. 
At such times, demands for tariff and freight reforms, and for 
official Investigation of the Industry's pricing and other 
policies have been numerous and have brought the industry 
periodically into public view. 

It is a little known industry for various 
reasons. In its peak month In 1950, the industry employed 
only ,9% of the total persons engaged in manufacturing in 
Canada. More important, its product is sold principally in 
markets outside the country. It is a surprising fact that 
in 1951 the Canadian implement industry exported approximately 
71^2 of its product, while in the same year approximately 7^% 
of the farm machinery sold in Canada was imported. 

The present study, however, is not primarily 
concerned with the industry's export-import status, except 
insofar as these bear on the central theme — the development 
of competition, including its present forms. In this, the 
approach is largely historical, on the hypothesis that 



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competitive patterns are not generally accidental but are 
rooted In a variety of Influences which have conditioned an 
Industry's growth. 

The author extends grateful acknowledgment 
to the members of his committee, particularly Professor H.A. 
Logan, who first suggested the topic and whose patience and 
guidance have been Invaluable throughout Its preparation. 
Special thanks too go to Professors Easterbrook and Elliott 
for their numerous helpful suggestions and criticisms. The 
major companies In the implement Industry were most coopera- 
tive In granting Interviews and supplying Information at the 
author's request. Generous assistance was also extended by 
the personnel of the Dominion Department of Agriculture, 
particularly Dr. J.F. Booth, the Dominion Bureau of Statistics, 
and the Department of Trade and Commerce. The author found 
that the library staffs of the various governmental, academic 
and civic libraries consulted lived up to their reputation 
for courteous and effective assistance In the research. 



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TABLE OF CONTENTS 

Page 
Preface ill 

PART ONE 

COMPETITION IN THE NINETEENTH CENTURY 
AMERICAN INDUSTRY 

CHAPTER 

Introduction 1 

I. Instability: The Nineteenth Century h 

Beginnings of the Harvesting Machinery Industry h 

Competition for Patents: 1850 to 1890 19 

Competition for Sales: 1890 to 1900 3J+ 
Conclusions 



^^0 



II. Concentration After 1900 1*3 
The Formation of the International Harvester 

Company ^-3 

Public Interest in the Harvester Consolidation 55 

Other Concentration in the Industry after 1900 69 

Conclusions 76 

III. Revltallzation: The Effect of Gasoline Power 

on the Industry 81 

Farm Tractors Before 1920 81 

Ford and the Tractor Industry to 1928 89 

The Farm Tractor Industry Since 1928 101 

The Combine 108 

Conclusions 111 



PART TWO 

THE DEVELOPMENT OF THE IMPLEMENT INDUSTRY 

IN CANADA 

Introduction 115 

IV. The Canadian Industry in the Nineteenth Century II8 
Beginnings of the Farm Implement Industry 

in Canada 118 
The Implement Industry and Canada's National 

Policy 131 

Exports in the Late Nineteenth Century 139 

Conclusions 1h5 



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V. The Canadian Industry from 1890 to 1930 1^-8 

Major Changes During the Period 1^+8 

The Forrratlon of the Massey-Harris Company 156 

Tariff Movements: 1890 to 1930 l66 

Technological Influences in the Twenties 186 

Conclusions 191 

VI. The Industry Since 1930 195 

DeTDressions High Tariffs 195 

Recovery: Low Tariffs 20? 

World War II: Tariff Removal 213 
Review of Sales, Imports and Exports from 

1920 to 1950 219 

Conclusions 235 



PART THREE 

COMPETITION IN THE CANADIAN IMPLEI-IENT INDUSTRY 

Introduction 2^0 

VII. Price Competition I: Demand and Cost 2h$ 
Demand: Some General Considerations Regarding 

Elasticity 2^+5 

The Reasons for High Income Elasticity 250 
Price Elasticity and Other Factors in 

"Industry Demand" 26l 

Costs 271 

Conclusions 285 

VIII. Price Competition II: Demand, Cost and Pricing 288 

The Long-term Behaviour of Implement Prices 288 

Price Decisions in the Individual Firm 309 

Conclusions 33^ 

IX. Non-Price Competition I: Distribution 333 

The Reasons for High Distribution Costs 33^ 
Attempts by the Industry to Lower its 

Distribution Costs 360 

Conclusions 36*+ 

X. Non-Price Competition II: Credit Extension 367 

The Competitive Aspects of Credit Extension 367 

The Changing Credit Picture in the Forties 38*+ 

Conclusions 397 

Footnotes ^00 

Appendices 

A. restination of Exports ^h-0 

B. Composition of Exports '+'+2 

C. Farm Income, Implement Prices and Sales 1920-1950 ^+5 

D. Farm Gross and Net Income, Canada, 1926-1950 hh? 

E. Seasonal Variations in Employment ^'+8 



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LIST OF TABLES 

Page 
I. International Harvester Domestic Sales as a 
Percentage of Total Sales of the Industry, 
United States, 1902 and 1936 78 

II. Principal Statistics of the Implement Industry 

in Canada for Selected Years, 1891 to 191+9 l*+9 

III. Number of Occupied Farms in Canada, by Provinces, 

Census Years 1901 to 1951 152 

IV. Average Area (in acres) of Farms in Canada, by 

Provinces, Census Years 1901 to 1951 153 

V. Average Area (in Acres) of Farms in Nest-North- 
Central Area of the United States and in the 
Prairie Provinces of Canada, 1910 and 1935 15'* 

VI. Implements and Machinery as a Percentage of Total 

Farm Capital, Saskatchewan, 1910 to 19^6 155 

VII. Imports of Implements as a Percentage of Total 

Implement Sales in Canada, 193^ to I93I+, incl. 198 

VIII. Comparative Changes in Tariff Protection and 
Volume of Production for Farm Implements and 
Other Products between 1928 and 1932, Canada 199 

IX. Iron and Steel Used by the Implement Industry 
as a Percentage of Canada's Total Consumption, 

1928 to 1932 incl. 200 

X. Massey-Harris Foreign Sales as a Percentage of 

its Total Sales, 1922 to 1930, incl. 201 

XI. Canada's Implement Exports to Empire Countries 
as a Percentage of Total Implement Exports, 

1929 to 1939, incl. 207 

XII. Canada's Implement Exports to the United States 
as a Percentage of Total Implement Exports, 
192-^ to 1939, incl. 207 

XIII. Implement Sales of the "Big Three" as a Percent- 
age of Total Implement Sales in Canada, 1922 to 
1929, incl. 220 

XIV. Imports as a Percentage of Total Implements Sales 

in Canada, 1925 to 193^f incl. 220 



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XV. Tractor Imports as a Percentage of Total Implement 

Imports Into Canada, 1'335 to 1929, Incl. 221 

XVI. IiTiports (excluding tractors) as a Percentage of 

Total Implement Sales in Canada, 1925 to 1929 222 

XVII. Implement Imports as a Percentage of Total 

Implement Sales in Canada, 1931 to 19^0 223 

XVIII. Implement Imports (excluding tractors) as a 

Percentage of Total Implement Sales in Canada 

1931 to 19^0 incl. 22»+ 

XIX. Implement Imports as a Percentage of Total 

Implement Sales in Canada, 19'+'+ to 19^+9, incl. 225 

XX. Implement Imports (excluding tractors) as a 
Percentage of Total Implement Sales in Canada 
19^+1+ to 19^+9, incl. 225 

XXI. Implement Exports from Canada as a Percentage 

of Gross Value of Production, 1925 to 1929 228 

XXII. Implement Exports from Canada as a percentage 

of Gross Value of Production, 1930 to 1939 229 

XXIII. Exports as a Percentage of Total Sales, 

Cockshutt Farm Equipment Company, 19^5 to 19'+9 232 

XXIV. Implement Exports from Canada as a Percentage 

of Gross Value of Production, 19'+5 to 1950 235 

XXV. Exports to the United States as a Percentage of 
Total Exports: Combines, Plows and Drills, 1939 
and 19^9 238 

XXVI. Manufacturing Overhead as a Percentage of Direct 
Labour Costs in Canadian Implement Companies, 
1930 to 1935 incl. 283 

XXVII. All-Canada Group Index Numbers of Prices of 

Equipment and Materials used by Farmers, 1913, 

and 1920 to 1952 (1935-1939 100) 289 

XXVIII. Average Wages per hour in the Implement Industry 

in Canada, 1913, and 1920 to 1935 291 

XXIX. Index of Farm Implement Prices in the United 

States, 1913, and 1920 to 19^+0 (1926 100) 292 

XXX. Price Indexes of I'^aterials used by the Implement 

Industry, Canada, 1929 and 193^+ 295 



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XXXI. Percentage Increases over 19*+! Levels, of Wages, 
materials and finished IrnDletnent prices, Massey- 
Harrls and International Harvester Companies, 
1952 299 

XXXII. Prices of 8* Binders in Canada — Deere, Cockshutt, 

International and Massey-Harrls, 1920 to 1936 3O6 

XXXIII. Parts Sales as a Percentage of Total Sales for 
International Harvester and Massey-Harris 
Companies, 192^ to 1933 326 

XXXIV. Parts Sales as a Percentage of Total Sales in 

Canada by all Companies, 19^5+ to 1951 330 



LIST OF CHARTS 

I. Chronological Chart Showing the Principal Mergers 

in the Farm Implement Industry since I83O I7 

II. One Hundred Years of Implement Tariff History 

in Canada 16? 

Ill, Principal Destinations of Implement Exports 

from Canada, 1935 to 1952 (shown in percentages 

and omitting the war years) 233(1) 

IV. PrinciDal Components of Canada's Implement 
Exports to the United States: 19'+3 to 1952 
(shown in percentages) 233(11) 

V (A) and (B). Index of Farm Income, Implement 

Prices and Implement Sales in Canada: 1920 to 

1950 (1935-1939 100) 2hQ and 2^+9 

VI. Farm Gross Income, Operating Expenses and Net 

Income, Canada, 1926 to 1^50 25^ 

VII. Range of Seasonal Variations in Rmployoient in 
the Agricultural Implement Industry in Canada, 
1922 to 1952 267 



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PART ONE 



THE Df//E,LOPMENT OF THE AMERICAN IITOUSTRY 



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PART ONE 

COB" - 

INTRODUCTION 



No comprehensive survey of competition in the 
Canadian farm implement industry could be made without 
considerable familiarity with the American background. 
Not only Is the production of Implements in Canada 
partially controlled by American capital, but the annual 
sale of implements in the Canadian market contains an 
impressively large percentage of Hmerlcan manufacture. 
Indeed, so great is the participation of American firms 
in the Canadian market that it would be virtually Imnosslble 
to discuss any phase of competition intelligently without 
considerable reference to American firms. 

Similarly, no study of competition in an industry 
could be fruitful without a knowledge of how the pattern of 
competition came to be what it is. This is particularly 
Important in an older industry such as the Implement industry, 
in which every present-day "full line" companye can trace 
its descent through more than 100 years. For this 
reason, the three chapters which make up Part One of this 
work are Intended to present the American historical 
background which is considered essential to the study of 
the Canadian Industry presented in Parts Two and Three. 



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The theme In Part One Is the evolution of 

competition in the American implement industry during 

the 100 years from I831 to I931t The American industry 

since 1931 has been composed of seven large firms, each 

producing a complete line of farm implements including 

.tractors. These firms are 

International Harvester Company 

John Deere Company 

J.I, Case Company -? 

Allis-Chalmers Manufacturing Company 

Oliver Farm Equipment Company 

Minneapolls-Mollne Power Implement Company 

Massey-Harris Company. 

Because of the long history of each of these firms, a jf 

complete chronological account of their evolution into 

their present forms would be highly complex. In order 

to avoid such complexity, and at the same time to give the 

reader a convenient visual aid throughout the discussion 

in these early chapters, a chronological chart is included 

in Part One showing the principal mergers in the Industry 

since 1830, 

*T7r'try 

The 100 years covered in Part One are broken 
down into three periods: 

1) The years I83O to 1900, a period of continuing' 
instability during which the product and the market were 
both in a state of flux. This is treated in Chapter One, 
where considerable emphasis is given to the technological 



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dev«lopment of harvesting implements and its influence on 
early competition in the industry. 

2) The period from 1900 to 1915| when standardisation 

of the product and the cessation of expansion in the domestic 
market brought greater stability and the first wave of 
concentration in the industry. This period is treated in 
Chapter Two. 

3) The period from 1915 to 1931, when the revitalizing 
effects of the "tractor revolution" were experienced in the 
industry. By the end of this period, the character of 
competition in the industry had changed and the process of 
concentration of the Industry into its present form was 
complete. These years are covered in Chapter Three, 

In the construction of the chapters and the selection 
of material the author has been guided by two allied objectives; 
to set the stage for the examination of competition In the 
industry which follows at a later point; and to present as 
complete a history of the individual companies in the industry 
as is possible within the limits of a study of this type. 

Much of the development of the American Industry is 
closely paralleled by that in Canada, For the sake of clarity, 
however, mention of the Canadian Industry is avoided as far as 
possible In Part One, so that the parallel* and contrasts 
between the American and Canadian industries may be treated 
exclusively in Part Two, 



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o CHAPTER ONE 

few«?- INSTABILITY; THE NINETEENTH CENTURY 

r- 

P Contents 

*I, Beginnings of the Harvesting Machinery Industry 

The mechanKlcal reaper ~ Invention of the reaper — 
Early reaper patents In America — The McCormlck 
reaper In a widening market — New reaper and mower 
producers after 1850: The Importance of patents. 

II. Competition for Patents; 1850 to 1890 

The patent pools: The hlnged-bar mower Dool — the 
self-rake reaper pool — the harvester pool -- the 
wire binder — the twine binder pool. 

III. Competition for Sales: 1890 to 1900 

The final decade: a change In the character of competition 
— The "harvester war" of the nineties — Conclusions 
from the chapter. 



I. Beginnings of the Harvesting Machinery Industry 

The Mechanical Reaper 

The first significant step in the development of 
harvesting machinery was taken in the early nineteenth 
century when the mechanical reaper was invented to replace 
the sickle and the scythe in the cutting ot grain. The 
historical importance of the early reaper lies in the fact 
that it was to be the focal point of a long series of 
innovations and Improvements culminating after 100 years 
in the development of the modern harvester combine. 
Surprisingly, despite the multiple refinements Introduced 
during the century of development, the basic principles of 



ci2 



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1 .III 



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3 



operation found In the nineteenth century reapers have not 
been significantly altered. All of the earliest practicable 
reapers embodied in greater or less degree seven basic 
principles of operation without vhlch no modern grain-cutting 
machine can suffice. These principles were: 

1) The straight reciprocating knife, whereby the standing 
grain would be attacked by lateral motion as well as by 
the forward movement of the machine. 

2) The fingers or guards for the knife, which supported 
the grain at the moment of cutting. 

3) The reel, which gathered the grain in front of the 
reaper and held the heads in place as the fingers held 
the stalks. . ^. 

h) The platform, on which the severed grain might fall to 
be raked away in swath, 

5) The malnwheel, directly behind the horse, which carried 
the machine and operated gears to actuate the moving 
parts. 

6) The principle of cutting to one side of the line of 
draft, which permitted the horse to walk on the stubble 
while the cutter-bar worked in the standing grain. 

7) The divider, at the outer end of the cutter bar, to divide 
th« standing grain from that which was to be reaped, (i) 



REAPER OF 1S31 

<5) 







Invention of the Reaper 

To the question "who Invented 
the first mechanical reaper?" no 

really conclusive answer can be 

given. Most credit for the original 

invention has beea accorded to 

Cyrus Ho McCormick, a Virginia 

farmer who became the founder of 

the McCormick Harvesting Machinery 

Company. It has been established 



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that McCortnick successfully cut grain with his first reaper 
on a farm near his home in Virginia in I83I. But McCorraick's 
claim to the distinction of inventor lies principally in 
the fact that his machine was the first on record to embody 
all of the seven basic elements listed above in one unit. 
McCormick's was not the first mechanical reaper ever 
constructed. It is a matter of record that, between I786 
and 1831, there appeared 33 varieties of reaper in England, 
22 in the United States, two in France and one in Germany (2) 
Most of these were very Impractical reapers. None embodied 
all of the seven basic prisnciples, and those which they 
did embody were not well coordinated. In the main they 
were of little commercial value to their inventors. Among 
the precursors of the McCormick reaper, however, two stand 
out above the others. 

The first of these was constructed by an English 
schoolmaster, Henry Ogle , in 1822. Ogle's machine does not 
appear at any time to have performed satisfactorily in 

a 

the harvest field and no successful attempts were made to 
improve it. Its importance in the history of harvesting 
machinery stems from the fact that it contained all of the 
seven basic principles of operation except the divider; and 
in fact, the reel on Ogle's machine marked the "first use 
of a reel which resembled the modern one" ^3). The failure 
of Ogle's reapers to perform satisfactorily can only be 
attributed to some defects in their construction, and 
perhaps also to the hostile attlUi^ of the English labourers 
at the time of its introduction. 



^*Tlr f fil ■'- Tsen ipiet r no 

,ttats 9«o Hi ©vodfi neveo •ri* lo 11*= 

xerf;f doiriw eeorij- bne fSBlqtona! -ves eri;t to IIb 

tafiJe ovi ,i9vs',-rorf jf^qBeT T^oirr-'joOoM ftrii"- "io sioe'jtfos-jg ©ri:t 

ill XllioJoc^BlcfeB bsmiolisq everf o;t 9tiit& xnB iB lesqas 
oJ ^' '"t/P. Off ^nn F'''"^'* ?*???vt«'^ f.r'i 

B'' i "Jo *Uii*Cl« •i^^tOff Bri3 Oi 08.1 7 

.not int tit to •ffii;f erf:f :fA 



More promising than Ogle's reaper was one made 
^7 Patrick Bell ,, a Scotsman, In I827, Bell's machine, 
which was never patented, was most noted for its endless 
apron made of a canvas sheet on rollers, which carried 
the cut grain to the stubble side of the machine and 
discharged it in swath. Like Ogle's, it does not appear 
to have included a divider. 

About 20 of Bell's reapers had been produced 
by 1831, after which time its manufacture seems to have 
been discontinued for twenty years. Bell himself is 
said to have travelled to Canada in I833 as tutor to the 
family of Adam Ferguson, founder of the town of Fergus, 
Ontario, where he stayed three years before returning to 
Scotland n^'. There was a revival of interest in the 
Bell reaper in l85l, the year in which American reapers 
were first exhibited in the British Isles. That year 
marked the beginning of a promotional campaign throughout 
the British Isles in which Bell was hailed both as the 
inventor of the reaper and as the victim of American 
plagiarists (particularly McCormick) who had usurped his 
ideas for their own machines. The argument has never been 
settled, and exponents of either point of view may be 
found even in the present century ^^), 

To sum up, it appears that no definitive answer 
can be given to the question of where, or by whom, the 



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' 1o nof-^«oi/p ©rlct o;t nsvfj od nao 



mechanical reaper was Invented. The issue has been rendered 
more inconclusive by the patriotic and inter-company bias 
which has coloured most of the arguments on the subject. 
Without doubt, most of the seven basic principles which have 
made the McCorraick machine famous had been anticipated in 
earlier models. McCormick, however, was the first to so 
coordinate all of these principles as to produce a practical 
working machine. His claim to the title of inventor rests 
on whether the successful application of existing principles 
is considered to constitute an Invention. 

Biarly Reaper Patents in America 

McCormick does not appear to have realized the 
potential commercial value of the reaper which he demonstrated 
In 1831, for he allowed three years to pass before he applied 
for patent protection. This proved to be a costly delay for 
in December, I833, a reaper patent was granted to one Obed 
Hussev . then living near Clnclnattl, Ohio (°). Six months 
later, McCormick hastened to obtain a patent on his own 
Invnetlon. Having read of Hussey's machine in the Mechanics ' 
Magazine f he then proceeded to "warn all persons against the 
use of the aforesaid principle, as I regard and treat the use 
of it, in any way, as an infringement of my right" (7), 

Obed Hussey's original reaper embodied only four 
of the seven basic elements contained in the McCormick machine. 
It had no reel; no mainwheel, but two wheels of equal size; 
and no provision for side delivery of the cut grain. The last 
defect meant that the machine had to wait at the end of each 



fif^rri 'riBvnl R' yei Ipoineriooffl 

.:^ -'j 8r(;J no e: 3f'i lo JeoE i>eitiOxa& Sofi rioiriw 

aorfcTiW 

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nwo elri no n o;t jfolroioOoM ^isiJrI 



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9 



row until the binders had finished tying the swath into sheaves. 
For these reasons, Hussey's machine more closely resembled a 
mower than a reaper, a factor which goes far in explaining 
the greater success which it enjoyed in the eastern grass- 
growing states than in the grain-growing areas further west ^^\ 

By 18^0, Hussey had moved to Baltimore, Md., 

where he was producing reapers on a small scale and letting out 

contracts to a few producers in other states. In the same year, 

McCormick began once again to turn his attention to reapers, 

devoting less of his time to the ill-fated iron business in 

which he and his father had been engaged since I836. The 

progress of innovation and refinement was slow, however, since 

the market for such machinery was confined to areas close to 

the centre of production, and the work of experimentation under 

actual harvesting conditions had to be crow«ded into a few 

weeks of each year. Thus it was not until 18^-3 that the 

McCormick and Hussey machines came into open conflict and the 

"reaper war" began. In March of that year, a letter from Obed 

Hussey appeared in the Richmond Southern Planter . 

I see by your last Planter an account of another reaper 
in your state, which is attracting some attention; it 
shall be my endeavour to meet the machine in the field 
in the next harvest. I think it but justice to give 
this public notice, that the parties concerned may not 
be taken unawares but have the opportunity to prepare 
themselves for such a contest, that no advantage may be 
taken. These gentlemen who have become prudently 
cautious, by being often deceived by humbugs, will then 
have an opportunity to Judge for themselves. (9) 

It is not Intended here to examine the details 



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10 



of the vigorous rivalry which took place between HcCorralck 
and Hussey In the ensuing few years d^)^ -pj^^ rivalry gave 
rise to a controversy which, like that between the supporters 
of McCormlck and of Bell, has lasted Into the present cnetury. 
Dp and down the seabord states, the two reapers wei»e matched 
repeatedly In field trials and public exh&lts. Both McCormlck 
and Hussey bombarded the press with claims of superiority for 
their own machines and with belittling comments about the 
rival's ability. The campaign doubtless provSlded good 
advertising for the rivals, and for the idea of mechanic aL 
grain-cutting, but its results ^re highly Inconclusive as 
far as the respective merits of xne two machines were concerned. 

Both the Hussey and the McCormlck patents 
had been granted for a terra of 1^ years, and were due to expire 
In 18^7 and IS^+S respectively. In the years preceding their 
expiration, the protection afforded by the two patents effect- 
ively kept rival producers (except those willing to pay royal- 
ties) out of the field. But reaper production became wide open 
in l8*f8 when the Patent Extension Board refused the appeals of 
both KoCormlck and Hussey for extensions of their patents. 
Both appealed the Board's decision to Congress, where their 
cases were argued Intermittently for ten years before the 
refusal of extension was finally confirmed (H). 

The McCormlck Reaper in a Widening Market 

Even as the McCormick-Hussey rivalry was at 
its height along the eastern seabord, new markets for harvesting 
machinery were rapidly opening up in the interior. The 



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srfT .Totiiiinl srf* til ctu ^n.^rrerrc vr^frrp? siPV vmnnfffOBm 



J.X 



completion of the Erie Canal In 1825 made possible the first 
significant migration westward from the Atlantic states, and 
the la r'(?^- scale settlement of the regions bordering the Great 
Lakes. By 18^-0, settlers had pushed the frontier through Ohio, 
southern Michigan, Indiana and Illinois, and were beginning to 
penetrate the region west of the northern Mississippi ^^^\ 
The Erie Canal also provided the incentive for production of 
a variety of cereal crops along the western frontier. Whereas 

V- 1 ,q f ; 

prior to 1825 the only cereals grown on a large scale were corn 
and rye, used respectively for feeding animals and making 
whiskey, the access to the eastern market provided by the 
Erie made profitable the production of wheat, barley and 
other grains. 



The trends in population movement a 



nd 



■■'V > 



crop production were quickened by the rapid development of ^ 
the railroads. Following closely behind the vanguard of ^ 
settlers, the railroads by i860 by i860. hftd extended beyond 
the Mississippi River as far as St. Joseph, Mississippi, 
bringing both the products and the markets of the outside 
world to the settler's door, Impo,rtAt\t ajnoog the products 
were the newer types of farming equipment. The wooden plows 
which many settlers had brought from the east were found 
inadequate for breaking the tough prairie soil, the fertility 
of Which was generally underrated before the introduction of 
the steel raoldboard plow in the late l830's ^^^K The 
developing interest In grain production, an^ the gcarclty of 



or 



tteil'i 9cii eidJeeocf ^^?^^ 5S8l ctt leneO eitf3 erf:t to nof Jelqmoo 
bne ,8©;tB;Je iI^tftBl;^* erf* reoi^ L'iBw;tKev/ ^o.^;tfi•r3l•I ^ncsit Ingle 

oi anJtflniaetf siaw bas fZloatlll tms anBlbnl , • tM m«ri.ttfoB 

^(SI) ^^(,^^p.|po^^ rrn'^r'iJTO'^ erf* Jc +s»w rtolsei srf* e*e?*9n»C( 

'io noj. jDX/cLi-; -'ji 'jvi. jn-juijx yiu L'»i avom'^ ocie isnftC sliS firfT 

EBSteriW .'i I^noil rno^eew ©rf* shoIf eqoio leetao lo x^^J^ffi^ « 

nioo 5>Tcv ©l!?op "^."^tpI ? no •^'•'or-'^ Rfpeteo x-f*"*^ ^^'^ "^SBl oi toliq 

eri* \d Lsbivonq d'e^fiBfs meJee© sri* o* seeooe ori* ^-^Baltirfw 
bnB ^©-fiPt* fttseriw lo no.td^ouboiq ©rf* »I6BiiJoiq ©bam fil«c3 

.anlsia T©ri*o 

bns tfnemevom nolifsiirqoq rfi zlinai: eriT 
^o ;?. 3b blcBt »ri* Yd bf'oeMoiMp ^isw nolctoubo^ej rioTO 

^Jtqal'seirBJK ^riceaot .^B ee ifi*? e© nevlfl IqqlaaieelM ©/f* 

•£)1e*c""' •■■'■^"' <-v-T ,-•!:■' c-M-f.-^ Frtp prt'/r/ftrTr -^rf* did nnj'nrtTtf 

zioubotq ariJ afl0it>6 :iii&iioqtnl .'loob si'iaiJ.'as end oj oj.-io<*' 

Ewolq ns??oow ©rfT i/p© r "^ lo 8'^Y* T^wen art* e'rew 

r-..-.rir,'i- cit'-v -tpr-,'.-, «^rf:+ rnntf Tt'-^orrnTff ^ r -• -T«r:»^*pr y.-'i'!" fioirWt 

^o notiouboi^i citP'hnu xllBT9r9^ sfw rinlrfw lo 

eriT . ^^ nl voln ^TPocfflIo!n 1©©*? «rf* 



labour In newly settled areas resulted in a large potential 
demand for harvesting machinery. "In Europe", said Jefferson, 
"the object is to make the nnost of their land, labour being 
abundant; here It is to make the most of our labour, land 
being abundant" (1^), 

t^arkets likewise widened as the railways developed. 

Domestically, the rapid urbanization of the east, and the 

rise of the great packing and milling centres of the interior 

brought new and concentrated markets, while abroad the removal 

of the English Corn Laws in the early iS^fO's opened that 

country to American wheat* 

n IS of th« \}} g his a: 

There is a sharp contrast between the ways in 
which MoCormick and Hussey sought to adapt their small reaper 
enterprises to the shifting market for these machines. Hussey, 
as has been seen, invented his reaper in Ohio but moved east- 
ward to Baltimore to produce it. McCormlck, on the other hand, 
moved his centre of production from Virginia westward with the 
market. In I8U3 McCormlck was still producing limited numbers 
of reapers In his blacksmith shop on the family farm at Walnut 



4> A -1 



Girove, Virginia. In that year, he announced for the first 
time that he proposed to sell rights to other producers for 
the manufacture of his machine. Several contracts were 
written In the he*t few years, the two most imi^ortant being 
with Backus. Fitch and Company and Seymour and Morgan ^ both 
of Brockport, New York. In each case, the contract was to 
run until 18^-8, the date of the expiration of MoCormick* s'"'' 
original patent. 



•gcilsd iuoiSbS ifl^ oi aJ . io»tcfo ©rict" 

finipr yTrrnrffr Ttro tr. rt.-^'^r '=!r':t r/f^oi ot^ Hj^ rM r>Ted •:♦- ,ff 

. - ^olsveb i ' bsfleblw aelweiil a»?e3«isjM 

Ibvobsi exij heo'itijfi elirfw jgueiiiBm bSjfiiJnaoooo one wen Jriijijo'id 
d-sff^t beneq i'3l ylie© srid nJ- bwsJ moO dsil^n^ ed^ Jo 

leqaei iieaia il&si:i icebB o-J id^uoe veeeuii bns jf* imioOoM riolriw 

ibneii ifcitUc sn'cf no (ilolfflioC>oM ,5i soubc-iq 03 9T;oinI;JIefi oc f^Tf^w 
erf:t ri;t^w higw*89v; BlnrgilV wo'rt nol;foi;bo'iq to eirTns'O Bid bevon- 

K;;;isif. ^b e-ipI yiamB'i sriJ' no qofle ifcficie^'DtJ'd airi nJ eicw>'.ei lo 
tzilt Bdt 10^ beoflyonnfi sri ,i69y d-?;ri;t nl •sinJtsiJ'V ,evciO 

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13 



These early contracts, In addition to obviating 
the problems of transporting reacers to distant markets, 
vere helpful in overcoming the prejudice of pioneer farmers 
against machinery made at far distant points. The arrange- ^ 
ments were never very satisfactory to McCormlck, however, 
largely because of the poor quality of the work done by 
some of the contracting producers, all of which reflected 
adversely on the MSCormlck name ^5) , Most vexing for 
McCormlck was the fact that, as soon as his original patent 
expired in l8lf8, these firms which were building his machine 
on contract organized themselves into one of the most vigor- 
ous of the blocs opposing his application for an extension; 
and when the extension was refused, these firms immediately 
became McCormlck's leading competitors, producing and selling 
hla own machine (16)^ 

Whether or not McCormlck anticipated the worst, 
he was better prepared than Hussey to face the new conditions 
when their applications for patent extension were turned 
down. For In l8*+7 McCormlck made what was perhaps the most 
important single decision In the history of his company — 
the decision to certrallze his production in the midst of the 
developing western market. To this 3nd, he formed a partner- 
ship with one CM. Qray, his former licensee in Chicago, and 
built a factory in that city, then a raw little co-nmunlty of 
17,000 people. The first partnership ended In a lawsuit over 
the respective obligations of the partners and Gray sold out 



,isv©voff ,3{olin7o0oM o;t x'JO^Ofi'fs-^^BR yisv tevsn siov 8;tn'Mv 
vrf -nn'-.f -w^|•n'■r ■-^rf-f '"■o rrftfr^rrr TOOT er'.f lo «iEJ;6'i«3!:^ vI^^i.Tpr 

•lo"^ rsn Mr gr(:t no xleaievbe 

snJiioibW e.. ^I'^+'Oi ai oa-uaxe 

•io§lv ;t80fn 9rf;t 1o eno o:tnt ssvlf bsslnasto io*tino9 no 

•no * '''"^'' "■"■-■ ''' f- ^■'"■'^ i^ri *"?■■■'■■* rTnT" ? ^ *f T"f""r'o.'TrT'~! p'^io'"''^ cirfr'' ^o S'fc 

■^Js*r-ibG2ii;:i: ar. -xii sesr.w ,basi;j3i sbw no.tanca'xo srici nsnv -^ns 

Irfnisrn nwo eirf 
snoi.J Wfcri srU eoel o;} \eeei/"r! nsni &9*ieq©iq lad'^Jed esw srf 

'^ri^ to iebta erfcf ni no. iq slrf ©si oj rioieioeb erf* 

lo xil i;*:*!! w»i t nsxiJ ,Y^-io *srfiJ ot \ioi lUud 

JUiC tjx' ■ dd 'id gf 1 ©fl;t 



Ih 



to William B. Ogden, vho had been the first mayor of Chicago. 

Production continued under the name of McCormick, Cgden and ^ 

Company until this second partnership was dissolved in I8W9, 

McCormick buying Ogden's share of the business for ^65,000 ^7) , 

59 in 

>«*'» ««v-« McCormick 's move to Chicago brought to an end the 
"reaper war" between him and Obed Hussey. Although Hussey's 
machine remained popular in the East until he "sold out to a 
mowing machine syndicate in i860" ^1°'^ he never appears to 
have been a serious factor in the Western market. Likewise, 
McCormick experienced difficulty selling his reapers in the j 
eastern states after moving to Chicago. Nevertheless the new 
Chica'go company prospered rapidly. Fifteen hundred reapers 
were produced in the first two years of its existence, and 

the years following l8'+9 were a period of increasing prosperity. 

tb# ■ 
Following hard upon the labour shortage created by the Cali- 
fornia gold rush, came the Crimean War and the resultant 
increases in the price of wheat in 185"+ and l855» both of 
which stimulated purchases of harvesting equipment. By the 
year i860, Cyrus H, McCormick, the farmer-inventor from Walnut 
Grove, was a Chicago millionaire. 

.; the ri 

Hew Reaner and Mower Producers after 1850: The Important Role 
of Patents 

The expiration of the McCormick and Hussey patents 
In I8U7 and 18^8 attracted a host of new firms Into reaper 
production. It has been estimated that in the two years after 



r«rf tA V \mi 



o '10- -t'' orfcf ftaed br.^ oriv (n9b:?,0 .d niBlIJtW ot 

tttB f) -^M to 9T^£Ci 9rf- ff:tnoo ^oMoo^o•I«T 

^^•^^ 000, cu? lol £ao«i£;;*3 snd' lo s-ib.'z a'asr.'a'J snjvjjc 'si-ioOsM 

8'v»P8F«H rf9Wo-f*IA .Y©82i;}i bedO bne ciAri nsow^ad "ibw isqBST" 

,, i-,i ■'■+:-T'- -!■'-.•* .-^K;^ ■icrfforr h^rf^fii'^r^'' fin^Knnri' 

o;t STeeqqB Tsvsn ©xi , ■'^'^ "Octol iii a;tB0J:bn\s enixiOBE anxwoxB 

wen Qc^i sssieri^Tsv .ogsolrlD od' grrivon^ ■isct'te sajtsde niejaae 

e^«Kfp«?T ^oThrurf ^!«»f=>i^'t f^ .YJbJrrpT ^P1wr8ntfT vn«qfnoo oseolriO 

9tlt x6 i.^Je^vied lo e ^#^P v 

" ^ "? /^ :trte;>'iO(TwI 9ffT ;0$8 l ig^lB gieou^T^ TgypH fcr - ■ ^ - •- - 'V vapf 

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B;i H bfiB 7Jo^mto^^)M *d:t lo nol: 



15 



McCormlck's original patent expired, 30 new reaper firms had 
come Into existence <20)^ jjy ^^g^^^ ^,^^ ^^ reapers and 62 
mowing machines had been patented In the United States (21)^ 

0f Among this large number of new producers certain 
ones were able to gain early ascendancy In the industry and 
to retain their positions throughout the century. Firms like 
those of McCormlck, Manny, Seymour and Morgan, Fitch Barrie and 
Company, Warder, an^l^ Osborne, which were the leaders of the 
harvesting machinery Industry by the middle 1850'3, were still 
In the forefront at the end of the Civil War period and were 
destined eventually to Ipeopme. the. nucleus of one or other of 
the present-day full-line companies. ^^^^ ^^^^^^ ^^ 

Tn th^se formative yeats of the hltifeteenth cuentury, 

one factor overshadowed all others In shaping the t>attern of 

size and strength which evolved within the Industry. This was 

the possession of patents and patent rights. Much of the ^^ 

remainder of this chapter is devoted to Illustrating the 

Importance of patent priority to th^ fortunes of the nine- 

teenth century firms. - . . _^^ t.^ ♦.u-. -4.— «.-«.!« 

'. for l»prov«aienta In th« strength 

Tt nas been seen that the first Important entrants 
into reaper production after McCorralck*s patent expired were 
those which had already produced his reaper on contract. Among 
these, Seymour and Morgan, and Fitch Barrie and Company (success- 
or to Backus, Fitch) were the leaders. K glance at the 
chronological chart will show that both these firms have 
continued, with changes In name, to the present day. In 18^0 



b»si EOJ'ix! :"'T wan Oj; ^ositq-x» ineitsq Icni-^iic e '>'oitmoDr>M 

bnB Yi^sJ^f^i' Hii'J ii.' \onefineoBB x-fis© nles o;^ side »t»w eano 

ejlll ztnii'^. .xT^vHso ©rf;t i^x/off^aotri^t enol:MEoq iIbM nip**! o* 

^ne sliipfi riod: I ^i.tigioM ' *" •''"-->>"' ..rY^<r^^• ^xoiBiicOohl Jo BBOt\i 

9f<* 'to 8i9f)ssl arfJ Slew lioiiiw ,&n-iodfeO bns (tebifW ,\;nBqnjoD 

IIJ:t8 eiew ,8'0^8X elbfcirr- ericf ■'jcf yid^ei/bnl xisfJ^rfo^"" S^f.t8©vi6ri 

8i©w ons bolToq ibW livlO ©ri:f "to bns 9""* ^v "•'o'i'ieTol ert.-* pf 

lo lerfdo lo eno to aualoun sri^t amoo^d oi xllswc^n^ve beniib&h 

.salnecfmoo snil-IIirt xeb-^neeeiq sdtf 

SAW ftiflT .XT[^c.i<bfi f. 9f{j fliri:flw bevlove riolrfw ffigns-i^/e hno ecstie 
©rid' "to rfouM .ertrfgli rfnerfeq bns eineiea io noieaesEoq ecii 

^■r- 'C^f+Er -o-tn-jra r> ■- r "i Q-t 'f OCT'S cf.'-f '> r- t a ' r; ?■ oma-r 

-enJu sri;^ lo eefufi-io'j and o:t y^-^'io^i<T Jne^sq lo eonj&jToqmi 

Binsiitns :tna:tToq«l -teill ert:t *firf:t ne©3 need serf *T 

'A . JoftiiJnijo no Ttvn-'S'i slri b&ooboiq x^'K^'ilei hp,ri ripiriw eji 

©ff.t ir r,,. r.r-rcr ,.,,^-^ ..^cy (rfn;Jt'»f ,8t(?<3ea o^ 10 

»VBt 2-riJ'] • , wofie iilw (tiario IfiolgoXono-xrfo 

0^81 nT .\£b ;tnoE»iq erij- o* ,9men n! essnfsriD diiw , ^eirnt:tr!oo 



McCorrniek brought suit against Seymour and Morgan for 
Infringement of a minor patent taken out In iSky, Four 
years later, McCormlck was awarded victory In his suit, 
and Seymour and Morgan were ordered to cease production 
of the machine and to pay McCormlck $7,750. Fortunately 
for Seymour and Morgan they vere able to make arrangements 
In that year to manufacture the famous Ketchum mower on a 
royalty basis ^22)^ which enabled the comDany to hold Its 
place In the Industry until 189*+ when It was absorbed by 
the Adrlance-Platt Company ^^3^ ©f Poughkeepsie, New York. 
Adrianca-Platt was subsequently absorbed by the Mo line Plow 
Company of Mollne, Illinois, which later became the present 
Mlnneapolis-Mo lln e Power Imrtlemen-u Company . Fitch Barrle and 
Company was destined to become part of the Johnston Harvester 
Company in 1872, which in turn became part of the Massey - 
Harris Company in 1910. 

In addition to the producers who used the exnired 
McCormlck patent, many new firms came into existence to 
exploit Innovations which appeared In the late forties and 
the fifties. Suggestions for Improvements in the strength 
and design of both reapers and mowers were abundant In those 
years. Some of the Innovators had access to sufficient 
capital to set up their own factories, while others were 
forced to sell their Inventions to existing firms. In the 
former category the name of John H. Manny stands out. 

John H. Manny wgs a farmer-inventor who began 



luc'i .\-»'Ci. ni jjjo n'j>it-;t ;tneje'o, -iJi:!" - "^o d'nsrne^nliln.t 
,j^fjj8 elri ni •z'ioioi.v befciews esw ifoln'toDoM jteJel Bteex 

Xi^^BCik'^^'ic '. .uc;\<\c: j!!oj;:riu.j-jf" -^pq oj ^^B ©nlrfoem 9ri;t lo 
BirnerfogrtBTie ^-Aam oi side 9i9v \;9ri* nesnoM fine itrorr^sS lol 

e;Ji Woii oo -^nfiamoo siU beiticne rfoiriv ^^^-' aiCBd ^^;tIexo1 
Yd bsdiogdp eew 5t nsiivr -M^ai Xl;tnn >ci*8ir&n-f: ©riJ nl ©OBlq 

©rij ^d b-'dioede Yl;Jneap98dt;e sew ;f;tsIS[-eDnjEl'ibA 

^neEsiq sriJ ©sneoed lec^sl dolrfw ,eloftlIII ^snlloM "Jo ^neqinoO 

bnR eiiisfi do;?!'? . vnggisoO j-natBsJ qm l le wq^.. enilp M-eiloqBenniM 

Tf erii ^c ^i&q sojooed o;f ^eaid-aeb eevr ynsqinoO 

lo *if.q euTfroed anui nJ- doiriw ,S^8i nl ACftsqtooQ 

.OiP' •■' v/iipqpoO fli[?#|;l 

o:f oonajsxx© oini smso fewil'^ wsn ynem ^ctnecti-q jiotrcioOoM 

bfjp eeij-iot aJs.r 9di nl bsiescrqs dolffw efiol;tevonrfl itoXrtxB 

rf-j^na-bp c>rr-T ,i i !=, i^H enjsvoiqml '^r^'^ snoLtae^gt/fi .8©!:^^; .. j 

©eoricf ni iaebnudt sptsw aiswora bnB eifqeei iiio<i Jo n^tseb bns 

Jnsloilti/E oJ E89006 bad EioJsvocinl 9ri;t lo ©moc. .eiesY 

S'riJ Ai .Ei'xil sniJaxx© o;f eaoiia&vni 'i.tsri.t list o;t bsoiol 
.:fuo etnecfE -^^nneM .H nriot lo ©rasn sriJ X"iciS9*«c> twiiolt 

'Trgftcf oKw T • 'J -'fpm-:(5l e b«w '^ ol 



CHART r 

pARfn Implbnaemt Industry 



♦• ~ - - — - 






M*C0RMICK 



,I8»0 , 



S5b 



.liLO. 
I 



.Itjo, 



Jlio. 
I 



./89o 
I 



, (5I0Q 



.(fin. 



v/n-ROEK SWIHNtwl- • GLOanER, Co ^ 






PL-BNoReAPcR •— 



, AN£> OK£NOOR.FF a_ 



AULTMAN- Mll-LC«a 



MASSeV ■ 



FiTcm.Bbwbje.Co. 



CftAIMD DETMR PLO^CO-I 



T.H. MAWMf^ 



CHCKtoN- T*i.c.oT-r 



KOtK ISuAMO Plow* 



Hm*.5eti,i_CS manuF«cTv/hinc* 



MOun£ Wacons— 



t/AM Saunt ManuF'c ■— 



EIGHT 

Companies 



NltHOL.i • SnefAA,!! •— 



OLi^efl.CH'i-<-£D Plow •— 



Gaak, Scott -Co 



EP Ai.U5Co»- 



MlNNtAPoLlS HARvesTCR. Cq. | 



ToROMTO ReAP£l\ ^_ 



Ca,SC- WHlTlMC 



IlE-yo- MACGr CNCIMr Co. 



WALUAce TRACTqU^Co •— 



?yR/»CusE Chi LLED PloInts— 



WA-TERloo EncinC 



Anef^lCAN SEEDING M«.HlNe CO.f 



V-KFNZtt: C'WJUFAC.TUR.iMiit 



.l?20 



LACt^aase Puow , 



Monarch Tractor Col 



./9jo . 



J21S. 



INTeRNATlONAL 

MAf?ve:sTe-(< 



MaSSEY- HARRIS 



3:i.C/ssE 



John Dete'ret 



Oliv/£:r. Farm 



ALl_l5-CHALMe(^S 



ScyMOWI(*MO»<CAM ■— 



AoKiANce- Platt ■— 



h^OL.l)slC Pl-oW Co »— 



ThRCf 

CABRiflMT - Wagon 



NNeAP01.it TUAetH'NG MACHINE Gj • 



UNIVERSAL. TkIACTOR. I 



MONITOR DH.il_L. Co.l 



I. Co.* * 

3 L 



"mN 



MlNNeAPo(-lS- MOLl(\;t 



17 



patenting and producing reapers and mowers In the later 
l8^0*s. His machines were an Immediate success, as Is 
Indicated by the fact that In a six-day field trial at 
Geneva, Mew York, In 1852, sponsored by the New York State 
Agricultural Society, Manny's mower took first prize, and 
his reaper second, in competition with all the leading 
makes of the day (2>f)^ j^^ ^^xe same year, Manny made ^^ 
arrangements with the Walter A. Wood Mowing and Reaping 
Machinery Company of Hooslck Falls, New York, for Wood to 
produce mowers and reapers under his patents. '^''^^ ?nrr- 

Nothing did more for Manny's fame, however, 
than the patent suit brought against him In 185*+ by 
McCormlck, charging Infringement of McCormlck's minor 

Oi a- 

patent of ISU-?, In this case Walter A. Wood, fearing a 
defeat for Manny, came to terms with McCormlck on his own 
In 1855. To Wood's later chagrin, the Court exonerated 
Manny In the following year, and McCormlck appealed to the 
Supreme Court to no avail* Abraham Lincoln acted as one 
of the counsellors for the Manny firm throughout the case. 

The J.H. Manny Company eventually became on? ^ 
of the most Important acquisitions of the present J.I. Case 
Qompany . The name of the company was changed to the Emerson - 
yalcott Company In i860 and to the Emerson^Brantlngham Company 
in 1895» In 1912 this company absorbed a group of small 

i'i 

thresher and tractor companies, and in 1919 bought the 

Osborne line of harvesting machinery, of which the International 

Harvester Company was forced to divest Itself by court order. 



M 



eJ Bfi ,686001/6 e^slfjominl ne stew esnlriowD elH .e*0^8I 

*a l&lii Wall xfi^-xle a ni JiiiiJ J3b1 sri* xd faeaBoibnl 

•ie^ra ji'ioY weM eri^t yd bsioenoqe ,Sc'8i nl ,3fioY w»M .aveneO 

fr;fi ^psttq ^eiit >(oo:t tewom e'xnnsM ,x^9loo2 leiutfluolisA 

§ntfr,9l erf J lie ri^lw noiil;t©CTWoo nl ,bfloo«e ieqs*i elri 

•bfifli xnneM iisex enee sff^f nl .^♦^S' X«f> •ri* ^o 8eT(effl 

aflJaeeg bng anlwoM booW .A ie:HgW eri;f ri^lw ectnsmojnB-na 

oJ booW 10? ,3(ioY wsW ^ells*^ ?ColeooH ^o v qjffyaO vTenlriocM 

,e;fns*Bq airi isbaii sisqaei hns eiewoB aouboiq 

,*r9V«VGf( (eBfil E'xrrnflM lo'i ©nom 516 jnlri^oK _ 

Xd +*c'8X ni mlrf ^enlBss ^risiroid ;MrjB :fnr;:tscT srf;? unricf 

lonim e':7/olmioOoM 1o tn&caB^nltlLnt '^at:giRi\o jjiolmtoOoh 

8 gnliBsl ,booV.' ,A leiitisW eeeo elriiJ nl .^+'81 lo *ne*cq 

i-vD ?^l^ no ^oiflnoDnM 'i:tfw pmfs.-t o;t emso jX'^'^sM Tot :fBeleb 

bscteienox© **[uou eriJ ,i!J:iSririo i^3b1 8'booW oT .^?8l nl 

eri^ o* belBeqqfi jfolraioOoM bne ,ib9X sniwollo"! »ri;t al ^aeH 

©no EP ^f>.■t!^fi rficonlJ mBriBid* .IIbvb on oi iiuoD ©meiqvS 

• •8B9 BiVJ -Juod^^uotrii nrill xofeV' sri;t lot etollseni/oo ©ri;^ to 

eno ©fTsoed X-^lBUineve xneqrfoO xcQ'b^ 'H*^ •ri^ 

©egO .1.1 tfn9e©iq ©ri:t lo e^ol*.^elI;poB ^nsJioqnil *8om ©rf* 1o 

- noei»mg ©d;t ot ^s-^nprfr <?pw ynrrrfroo edit lo ©men ©riT . yneqinoO 

..2. 'r,:i:'sni.JI_ c.nj oJ f>ne Od8l ni YflgginpSI ^JooIbT 

llBOtB Jo qi/ois p hedioede xr'B<1"'oo elrl^ SI9I nl .^981 tit 

er;t cfrfrr-f^d PI^X nl fcnf ^eeln?rrmco TOctoeTd' ^^R lerfEeiri* 

icnoijc.Tisjni enj noinw to jX'xeni^"' "" .c.linevicd lo ©nil ©modeO 

.lebio iiuoo xd tI©B:tl Jeevlb o:t beoiot eaw xfBqnioO •i©:fe©viBH 



Through theae acquisitions, the Emerson-Brant Ingham Company, 
successor to the Manny Company, had become a full-line 
producer by the time it was acquired by the J.I. Case Company 
in 1928, (25) 

Manny, however, was an exception. After 1850, 
increasing amounts of capital were required in Implement 
manufacture and, although the case of the farmer- turned-inventor 
remained common enough, that of the Inventor-turned-manufactnrer 
became almost unknown. Instead of applying the principles 
of his invention in his own workshop, the inventor came more 
and more to depend on being able to assign his patent to some 
established company ^^^^ into whose employ he might hope to 
be taken. Such was the case with most of the memorable names 
In the technical advance of agricultural implements after 
1850. In the realm of the reaper and the mower, there stand 
out among such names three in particular: Ketchum, Burrall 
and Kirbyo f eatenta > «arlr 

William F. Ketchum patented one of the most 
successful mowers of his day in 18^*7. Two years later 
financial difficulties forced him to sell his patent to ***** 
R.L. Howard and Company of Buffalo, which later became the 
chief producer of the Ketchum Mower. Howard let out contracts 
to several other manufacturers chief amongwhom were Seymour 
and Morgan of Brockport, and Warder and Brokaw . an embryonic 
enterprise located in Springfield, Ohio ^27). Each of these 
later became part of one of today's full-line firms. Seymour 
and Morgan has been noted . Warder and Brokaw became Warder^ 



©ni*-j.j.jjl B Since £G j:Bri ,xn«qrnoO xn^^r ""^^ o;t loeeeoout 
XnfiqmoO «cj?0 .I.t ©ri* ytf bBitvpoB «bw *i ©ml* ©ri* \d leouboiq 

^^^5 .8S9I nl 

(CxQl isilh .noJ-Jqeoxs ne bbw ,iev©wori ^ 

tfnsmalqmi nJ. bsilupsi eiaw IbJIosd ^o ecfnooiiiB snieBsionl 

lo^aBvat-bea'iiji'-ieai&J eAi "io eseo eri:t riauori*lB ,bnB eiu^OBlunBBf 

ie'iffd'ostrTrf?!F-fcsn-cri:f-'To;Jn©vni ©r-fit *!© *Br{:t jrigcons nomrroo bsnlaniea 

esj.._>4 wH^uLi tfff* gflJtXlqqe :c oB9;tEnI .nwon-^'-" ■ somls emBoed 

eioffl ©infio ioJ"n©vfll ©rfj ,qofie'iiGW nwo eiri ni noJ:;tn©vr?i slri Tto 

emoe ot :fn?;tr<7 sM 0"?. !^b?p o* ©IcfB gnled no bnoqeb oi •torn bns 

o* »qorf drfgJ!'^ su ^oi^iiv eeoriw o;tnl ^"^' xasqaoo beAttldsitiB 

eeman ©Idsiocasa ©ri:f lo JEorc dc^lw ©sbo erii 8bw riouS .n©3(B;t scf 

leJ''^^ ''ttnorrl'Tf!'! iBii/itlL'otiSB "Jo ©onevbe l&oindoei »ri:t nl 

bnccfe si-^a.; , o; ecii bm ■is<j[fi©t edi lo mlesi erf:^ nT .0^81 

IIbiix/S ,«wrfo3^fi>[ iislwo-titieq ni 0S'iri;t ^&rt\Bn rioire gnoaiB ;fi;o 

• Xcftl}! beiB 

*eo£D ©fftf lo ©no &sd^ne:tsq ffijjffo^s^ , , ."g mlllJW 

leiRl eiBSY owl' .^+'81 nl XBb elri lo eiswor" lutsMoane 

o^ ;fn©*Bq alri Use o;t mlri bsoiol eel^fluolltllb iBlatiBnll 

etii em890<f T9*ei rfolrfw ^oJet^ua ^o YnsamoO bne bisvoK .J.JJ 

e^oBi^fnon j-uo ■ ' '" fviewv« , itti^oM wijiyy^/i ©/■'^ "^-i laotrboiq l©lrio 

tj B19W moriwsnoffifl tolrio Bi^tvtoBlunBm lerfcto lBT©v©e o^ 

olr W ^ns f^tcqjfr o nps'^"^ bna 

eeei... f- - J.\..; ^- ,^.L•l^t - ' -si^booI etin^iein© 

iroonje; ill ©nll-IIu'i e'xsbocT lo ©no lo ^t-xsq ©mroftcf i©*bI 

xi^JlfiW emfloerf wayfoiS bne lebrreW . bf>:ton need ZBti aBiio^ bnB 



i-'i 



Bushnell and Glassner In 1879, and was one of the five 
original constituents of the International Harvester Company 
in 1902. 

Less is known of Thomas D. Burrall and W.A. KlrbV y 
although their reapers and mowers were well known In the 
mid-nineteenth century. The Burrall machines were produced 
at Geneva, New York. Klrby patented a successful mower 
in 1856 and appears to have sold the patent to P.M. Osborne 
and Companv,. of Auburn, New York, for which company Klrby 
subsequently worked. The Osborne Company too was later 
acquired by the International Harvester Company ^28)^ 

II. Competition for Patents; 1850 to 1890 

The Patent Pools; The Hlnged-Bar Mower Pool 

The significance of patents in the early Implement 
industry lies not only In the strategic role they played In 
the development of Individual firms but also in their contrib- 
ution toward promoting cooperation among competitors. Patent 
pools were a device common in the Industry from the l850's 
until near the end of the century. Through the pools, groups 
of competing firms sought to centralize control over the 
principal patents covering an implement. If successful, the 
pool found Itself in a position to monopolize the production 
and sale of that Implement or to collect royalties from others 
who produced It under license. The most notable of such pools 



' "^n enc eev hns ,^'s'P^ "■ icneeeJO brte If (BWrieifg 
Xn«qBo3 le^eeviBH lanoiJaniP-tnl erf* 1o E*n»t/;fl:t8floo iBnig-tio 

.S09I ^-^ 

TVd7^ ?i ,A.W bns llBiii/g «a «agorfI' to nwonM el eeeJ 

erf;J nt nwon)J Hew ertsw eiewom '^i-' rTcna.of Tfc.rf,t dsxfod^lB 

tewoffl Ii;leper>r>uf! e bsiaeiBq \(ii:r .jfioY w«H , is 

gmocfgO .M.Q oJ ;tne;terT Bdi bloe evari o;t stBeqq* fens d^Sl ni 

',cfTt3[ xrffi<^f^oo ilotffw lol ^^lOY well ,flTOrf0A \o ^yatxjmoO baa 

io*eI EiBW oo;t eniodeO •xfT .b9>Jtow ylcfnei/poecfDe 

^(8S) YnaqmoO isJbsvibH Isnoi:tBni'5;tnT »rf;t >crf b»*ili/pOB 

: 7ol /! .II 

^nMBelqmi xliae erf* nt aiaBi^q lo ©onaotllnslB srfT 

nl bs^elq x^ri^ »-[oi ot-$9iBi&t Bri^ at \lao ioa eetl \ttBvbni 
'•dliinoo liecit at oela iu(5 airn^t L&vbtvtbnt \o cfnestcfolsveb eri:t 

• '0<J8I 9di ffloit -<'i^6t^fc«''^ e^iiJ fl-i noKimco eoJtveb b ©lew elooq 
gquoi^ , elooq erf* ristrotriT -^tneo 9ri;f to bne 9ri;t leen Lliau 

i'd-* , . ^u&irsi niit^voo ziaaie^q iBqioniiq 

floi;tM;toTq sriiJ esii r o;t nolitlBoq b nl ^i9^.ii bni/cl looq 

el' ufe lo •iiieJoiJ Jeofl! erfl .•ensoii lebnu ^1 beouboiq o/fw 



du 



centred around the mower, the self-rake reaper, the harvester 
and the twine binder. ,_■/) 

It should be mentioned that these pooling arrange-'* 
ments did not mean that the Identities of the participating * 
firms were in any way merged. Through aligning themselves 
with patent pools. Individual firms might hope to gain a 
temporary advantage over some rivals, but fdw ^ife'y^t ' " 
willing to enter into full-scale mergers. Individualism 
was the dominant characteristic of the industry as long as 
the market continued to expand rapidly and as long as the 
product continued to undergo constant change, ensuring ^^ 

'•- rapid prosperity for those firms shrewd (or fortunate) ^ 
enough to be holding the key patents. Looming large in 
the background of the merger movement when it did come in 

^r this Industry were a stabilised market and a product in 

which Improvement and innovation were at a virtual standstill. 

The first Important patent pool in the implement 
Industry was the hlnged-bar pool in mowers. In 1856 C. Aultman 
and Company of Canton, Ohio, makers of threshers since 18^+9, 
produced the first of the famous two-wheeled, front-out 
"Buckeye" mowers. The machines enjoyed Instant success and 
within a year Aulman had sold licenses to several other 
manufacturers, including Adriance-Platt, to build the Buckeye, 
At the same time Aiiltman, observing the growing number of 
patent infringement cases in the implement industry, shrewdly 
began to buy patents wherever he could. By I86l the company 



-egnBTtiB snllooq eesdi iecii beaoiinem ©cf hrixorfe il 

c: yj.eBm9cii s^ninaJtle riaur'"'^'" ."^t'"^!" ""tsw xae at '■"'-«•' ajnll 

erf;*' bs snol se /Xbiac ;x9 orf o9wnJ:tnco c^esfiera ei':t 

gnj^rror,,^ , 95in p ' " ^^'■.itfinoo ogiefcnr- '^j f-sx/ni*noo Srtsfxfiq 

i9iviiuiioJ to) bweirie eimtiT: 9e.ori;t lo'l ^Jlisqeoiq felqsi 

nl esisl gnJraiooJ .p.^neif^a y^^ f^rfj- 'onl'^fort ed o:f rfguono 

ni amor ■^'•'^ -'• ' ■"■-. ..^i -.:i.c/vG.-. .-^ir.'i', c..,.,) i,... i. i:v.oi8^'c>Bcf arii 

fli ;toubo'iq one ;j9>{iein beslIidBiB c »i«w Tji^^^t^i Eiri;t 

,lLtiKbnBis. l^uiiiv b iB siew noidr.vonni bne Jnstmevoiqojl rfolriw 

, ■ ^oi ednie cieriae'iri;t lo ets^era jOJrfO ,no;^nsO "io 

;tt/o-cfao7"» ,fc©X9eriw-ow* auorne'i »rf* lo ^Ts-rll ^ric^ b«o0f)oiq 

isrlrfo ifiis^ves oi eeeneoll Moi: berf flemdDjA tB9\ e nlrijflw 

.FY srfit bllLQ oi ,^tfBl<?-«ofi.KlTbA 8^^^,lf^o^l ^aieii/^oplirnfim 

•»r, -f, ^T,r,r nnfwr,^ .=.<+ ,.,.'■.-.•*.« dDii;t BmB8 ©li^^ ;JA 

XJ- , • nl d^nfeiiiblqaii e/ij kI eeeso dnsmegniilni ^fleisq 

Ynaqmoo ?«ffi Id8i x^ »bluoo ©ri leveierfw aJns^Bq ^x/d o^ aejeJ 



21 



EARlV H (^OGED"- BAR (^OWCR 

had acquired 3** mower patents 

embracing more than 50 claims ^^9)^ 

Among these was a patent bought in 

1858 covering a hinged cutter-bar, 

which later proved to be of great 

significance to the development of 

the mower. This was a device by 

which the mowing arm of the machine could be ungeared and raised 

by a lever to a position perpendicular to the ground, or could be 

swung around In front of the wheels. 







At about the same time another group, producing 
"Cajmga Chief" mowers at Auburn, New York, and dominated by one 
Cyrenus Wheeler, had purchased a formidable array of patent 
rights, Including a hinged-bar device, and was openly threatening 
to prosecute Infringers. Because of the considerable overlapping 
In the patents held by the Cayuga Chief and the Buckeye groups, 
an arrangement was made to pool most of the patents In i860. 
Thus there came Into being the hlnged-bar pool which dominated 
the mower trade from i860 to 1872. 

From the outset the pool encountered difficulties. 
Charges and counter-charges were made among the participants that 
some had withheld patents from the pool. Outsiders, including 
McCormlck, made a concerted effort to undermine the pool by 
resurrecting old unused patents which apparently covered the 
hlnged-bar. McCormlck employed Pinkerton detectives to track 
down two machines which supposedly embodied a hinged cutter-bar 
antedating that of the pool. Nevertheless the pool did experience 

•3,. 



yl 



/^^' emtelo 0? ni?rf;t f^totn •^ntonidme 
at id^vod *ns;te<T e r«w ecerf;)- gnoaiA '^ ^^ 

jeeTg ^o ©d orf bevona 19:^81 rfolrfv 
lo :tnemqoIe'v'9f> erf.-* ^■' '^'^ -eollingJ ? ■ ' 

yd solved e Ef<w elril .tsvop «ff:t 
b©2lf?T bCB beteegfja «d Mtfoo eolrfopio 9ri:t to rrns gniwom 9ri;t riolriw 
9d bijjoo -^ ^hnx/oi?. '^^'^ "'^ -rr-i ^./^ r t^.neqieg ^fn^ + :•.■>r.q g o;t irv-. r « ycf 

.elssriw srl^ To .^noal nt bntrois anuwe 

3nloufSo7q ,quo7g TsrfcfonB omlcf srrpe 9r<;t itfode :t^ 
eno yd b©:tenJ:fflob ^f!6 ^jfioY veM ^niudnA d's eiQwom "IsirlD bsuxbD" 

3flln«*B9ifi* yineqo ef^w baB ,eotv9b iso-bsaniri b sn^bt/lDni f^id^li 

snlqaeXisvo sldeneblenoo •d:^ ^o ©etrsoeS .eie§nlitn.t e*t;o©EOiq o:f 

,eqi/oi3 ©x©7(oua erf* fens telrfO s)^i;y;f;0 srii yd bisri B3-n9;teq »ff:t nl 

.Od8l nl 2*n9:Jflq 9ri:t lo J-eot!! looq o:f 9b«m eew *n©fr9snB7iB nB 

b9;tBnJtmob rinlrfw looq iBii-'bQ^til:^. eni sni9d oini ©mao eiecit ei/riT 

.S\'r5r *^-* "i-^n r moit ©bR'i;t -f<^.t.'0'-' ©ri;^ 

dfirid e;tn6qioli'XBq 9j{;f ^ncius efjBiri etgw eegifirio-'ifc'Ctnx/oo bffp eejiBriO 
anlbnlonl ,8^e^^E;t0O ,Icoq erfJ moiJ etrf©JBq Medrftiw bsd ©mot 

edi f-etvvoo xliiieaBqqe riolriw 8:tfie;JBq hB&unu bio jiniJoaTtUBftt 
jfosi* o;t esvtio©t©b nocfifis/ni^ beyolqm© jfolmioOoM .iBd-besnlrf 

•r'!i-f-To:tt;rn ^f^^nl ' ft fit, ^p;n.■<(ne ylbeaoqnt/e rfDlriw •©nlrif^o'" ow^t nwob 
•Ofloii' ' lb looq sd3 ae©Ibi.Uif>v9M .looq ©rii to ;fEri:f jjnl^tabsinB 

.e'^'f'l'-'i-f ■'!::<• 



23 



considerable success in Its suits against recalcitrant 
manufacturers who insisted on building such mowers without 
paying a royalty. Even McCormick was hailed into court in 
1870, Characteristically, McCormick fought the chnrge 
strenuously and only in I88I was It finally settled. In the 
meantime Wheeler, of the Cayuga Chief group, had sold all of 
his patents, together with his interest in lawsuits still in 
progress, to Aultman, and with this transaction the dooI proper 
had dissolved. In I88I Aultman agreed to dismiss his suit 
against McCormick upon payment by the latter of $25,000. 

After the dissolution of the pool, Aultman and 
Company, later the Quitman-Miller Company , continued to produce 
the Buckeye mower, which had become very popular In both the 
United States and Canada. This company, we shall see, was 
absorbed by the International Harvester Company in I903 ^30), 

The Self-Rake Reaper Pool 

An interesting observation on the development of 

y tnf? 

harvesting machinery is that Cyrus H. McCormidk, having contrib- 
uted so significantly to the development of the early reaper, 
had permanently abandoned his inventor's calling by 1850. 
Many reasons might be suggested for this but probably the 
most important were the tremendous demands on his time and -^"^ » 
energy made by the day to day affairs at the Chicago factory. 
McCormick took his two brothers into partnership in 1859, and 

this form of organization lasted until the business was 

i 



ii/ofld-fw zt^vron riowe snibllwd no 5»;tslsni oriw eT8itf;tofi^iinBra 

'^.-, rfc F r,-iy hcrf .fTtfCT'i: 'V'^t'^'^ K-urvp'^ ar?:? ^c ,T5.fpprfW ©wlitrf B»«rr 

isqoiq Ioo«j erf* notioaiaeiti Bin* f(;tlw hn« ,nBtriIuP* of ,fB0i8Oiq 

ctr-i? ';^,■^ eeiaie'''' "^^ Pic^^-^w,:: ap!r:trj;rA r88l nl .^P\^^c?.^lb hnri 

hnc nemdljjA ,Xooq eil:^ 'to noid-ulceelb eri? ie:t'^A 

,(<^£) fO^I ni Y.flB<?raoO ■ie;t2sviBH Ififloi:tfm:9;faI ericf y^ beritoecfB 

X^C^ ItqfifS, rtifrlA^g eff"^' 

to ;tn9mqoievi-)b 0ri;t no ncl:t6Vieedo gn cctesiejni nA 

■ili^noo gnivfiff ^j/ftlimoDoM ,H euixO lisdi si \tenltioBsr ^i^lizsv-ipti 

fteqe»![ X-flP" ''■-'^ "^o ;tn9rTnoIsv9^. eifrt o:t rf:linp')fJ*<^vitK op ^s;tI; 

.0?8l xd ^all^HO e'ioJrJevnJ" eJtil beiiODi^sdc \,i.;rfl&;;fiir'i;-;q rgd 

erf:+ Xldedo^q ;tud eiri^f lot b©;te»ssye «<f cjris^tn enoeBSi xcibH 

^^.^ 9ra-f:t t^rf no Bf»n«r9b nuobrffm»t:i aritf ©tow .-tre^-tTorrmf .tp.om 

.^iCJOt;*i ojr.oiiv.: «nj j6 fiic'i'ia \«n o^ vbd enj v,d e ■ ■■ " ^ ^leno 

bnu ,Pc8l nl qirieienJiBq oinl ow:i tid :loo:t AoicrtoDoH 



23 



Incorporated In 1879. During the partnership, serious 
disagreements arose between Cyrus and his brothers, partic- 
ularly Leander ^^ ', which doubtless sapped much of the 
energy of the former inventor. In addition, Cyrus alone 
appears to have been the driving force behind the exception- 
ally aggressive tactics in patent matters, advertising and 
selling for which the firm early became noted. 

Aggressive tactics appear to have been the 
principal reason for the McCorraick Company's continued lead- 
ership of the harvesting machinery industry throughout the 
nineteenth century despite its dependence on outsiders for 
its principal ideas and designs. In short, it seems that the 
talents of C.H. McCormlck were as well adapted to running a 
business as to inventing, and after the move to Chicago in 
I8W7 the demands of the former took precedence. How the 
personality of McCormlck affected the running of his business 
was demonstrated on many occasions, particularly in the 
company's relations with the patent pools, which for many 
years he defied. The pool which came into being around the 
self-rake reaper was no exception. O^) 

The first practicable self-rake reapers appeared 
in the United States in the early I850's. Although it has been 
estimated that 20,000 of these machines were in use in i860 ^33)^ 
it was not until the country experienced a severe labour shortage 
during the Civil War period that the machine really came into 
widespread use. Many different varieties came along in the 
fifties but the most popular of that decade was the one produced 



8' 



-ff 



'•^i&^i Off O'je^XJ' 






xj. _ 



*;h- 



by Seymour and Morgan, 

the first company to make 

use of the quadrant-shaped 
t 

platform which in time 
became standard on all 

self-rake reapers. In 

af/^2 : to pay i? 

1861, Seymour and Morgan 
purchased the patent 
rights on this device 




5ELF-RAKtK (N ACTiON 



and proceeded to license other firms to produce it. One 
licensee was McCormick,^began producing self-rakers in 1862. 

The Seymour and Morgan patents, however, were 
soon to be eclipsed by those of Samuel Johnston, head of the 
Johnston Harvester Company of Brockport, New York, successor 
to Fitch Barrle and Company O**), Johnston perfected a device 
(illustrated above) whereby the driver could, by us© of a 
pedal, control the speed of the automatic raking mechanism 
and thus make the gavels of any desired size. By I867, this 
innovation had rendered early self-rakers obsolete, and all 
of the leading producers, including Seymour and Morgan, and 
most of the firms in the hinged-bar mower pool, were paying 
tribute to Johnston for manufacturing rights. 

McCormick, however, stubbornly refused to pay 
royalties to the pool. It would not be possible here to examine 
in detail the oomnlicated maze of patents which entered into 
the struggle between McCormick and the Johnston pool, though 



^ot-^^h zlAi no e;tris2'r 
»nC .:tl sou&oiq o:t smil'l lerf^^c ©eneoil oi bsfiseootq bas 



©ri:^ lo b6©ri ,no*snrio\, IsuibbS to ©serf* \6 h^^i\iL^9> erf o;t nooe 
•ros8Sor)y8 e^fTi^Y weW , j-iooj^^ota T:o ^neqmoO la^EsviEH no^anrioT. 

fi lo ©61/ Yrf ,bIx/oo TPivlib erii^ Xrf®"i-ti*' (©vode dsc^ei;^ eulll) 

ffjp-^npr^oerr snlTfRi o^ + emcJrfp 9r':t lo Besqe ericf lotJnoo ^lebeq 

c.i?^t <\o3i X .t=ii-: ^;ti'ij.cf:j viir. lo r.Isvra s.-':t B2{Bm 8x/ri* bn« 

II« bois ,sJeIoado enejfsi-lf&e -^tliB© bsiebn©! beri nol;tBVOdnl 

fme ,r- ^r<? - , i Sflbcjloal eBieouboiq snib«©I 9ri;t lo 

inl\5.i '-'iGv ,. ^wom asd-bt'Sn-tri ©ri* nt Bfldil ©rf:f lo ieom 

.e^rfglT §nlti. Am lol no;teor(o1. o* 9iudlii 

\v\ oi bsBuJet xIaiodduiB ,Tf>v»wori ,iIoimioOoM 
•nlmexe ot ©Tsrf ©IcfleBoq ed iton bXi/ow ;JT ,Iooq ©ri3 oS fi»l^lBXOi 
oinl b©i©:tn© rioiriw BinB:i0q lo ©sefp ^e;tB0lI(IalO0 ©ri;t ilB^Bb nl 
ffstrortrf ,Iooq no^tenrioL ©riJ bne JlolraioOoM n©ev;t©d ©Igaui:t8 ©r(^ 



"i? 



the episode Is a classic Illustration of McCorralck's tenaclous- 
ness under adverse condltl.oas. Th,o pool brought suit against 
McCormlck in I87O. For the next nine years McCormlck fought 
the charge with his usual vigour and successfully prevented 
the reaching of a decision. Finally, within a few months of 
the expiry date of Johnston's key patent, McCormlck capitulated 
and agreed to pay a royalty of $3.35 for each self-raker he 
thereafter produced. This arrangement ended when the pool 
dissolved for lack of patent protection in late 1879. 

An interesting flidelight on the activities of the 

self-rake reaper pool, conveying a vivid impression of the 

Important role of patents as a competitive device, is described p 

by Professor Hutchinson: 

Hardly had the McCormlcks started to manufacture the 
Johnston self-raker than W.N. White ly charged that its 
mechanism Invaded some of his patent rights. The 
McCormicks at once sought from Johnston a guarantee 

^. of protection against suit by the Whltelys. Johnston 
finally gave it in late 1882 after the McCormicks had 

..V _ wlthh3ld the royalties due him on the rakes they had 
manufactured. Doubtless White ly tried by this threat 
to gain from the McCormlck? the use of some of their 
patents on binders. "'^ "' (35) 

The Harvester Pool 

The popularity and widespread use of the self-rake 



reaper owed much to the fact that its introduction coincided " 
with the farm labour shortage occasioned by the Civil War. 
Throughout the war period crops were generally abundant and 
demand for agricultural produce was high. Under the stimulus 
of good prospective returns, farmers were quick to adopt this 



srd 



;tBnlB3E ihje ;tri?,uoid looq ©dT .!?nol:JiPnoo eeisvbe, lennjj s£sn 

:^f, 81P9V ©nln :tx«n r'rf:t lo*? .0^81 ni aCoiinoOoM 

Jbedr***''^"'^ ■''"'■''''''-■''■■'"■ '"'^ Tfonr-^T rptr??rr strf rf'^i'w ejierfo ©rf^ 

to eridiioui niriuiw ,x-t-t«oiU .noieiooc s ic anirioesT sni 

bBiBlaitqBD jiolmioOoM ,:fn9Ji«q -ijsji e'noienrioT. to sisb \tiqr9 erii 

ffA r,r»ir^.,_'r rri, r'f-Lio. tn*} r'r.f.t *> Q YCflBXC" ^ '^'^'^ "^"^ besfr.B btiB 

iooq 9ric> neriw behn© JfieffieanemB strfT .ijeouboiq Te;tlB9isfi;r 

,(>V8I o*«X nl col*5«*OTq ;tn»*Bq lo ifoBi to^ bevloeelh 

•il^ lo a9J:;IivJ;;tos eri* no itrfsilsWa gni^r-^ift^nl nA 

9tit ?o noieefiiqai Wvlv s snlTjftvnoo ,Iooa i^k^p^t r-^r.--**! f^s 
bedlioaeb et ,9oiv«f> ©vli'ld^^qmos) e bs Bineisq to &ld-i JnFJ'ioqci 

:noeflJf(o:fi;H loseelotl y«^ 

B;it tlrfW .H.W n?r{l i©?iBi-'iIeE nc^ann'oT. 

nou -^i yrf ilu2 B noij'oeifo'icf lo 

bflff e ■ evfls S.^' 

^'^ ■ , . Qtii f-^r-. 

lisiij lo spjoe lo &20 eii;?' siioiaiio^' ' moil 

ejfBi-^Iae ©rf;J lo ©aw rw &n« x:tliBlj:Kioq srfT 

.tbW iivlw eri;J icti I'snoiisDoo 9ij«3iori8 liJouAl miel eri:t riiiv 
baB ir rXfiien»8 aiew eqoio botiftr; ibv etii ^i/offgtroiriT 

eitjj Jqobfi o3 ;iojx.p eiew eidarxj?,! ,£ni-jJsT *vi;^:ifeq8caq boo* "^o 



26 



mechanical innovation which promised worthwhile savings in 
harvest labour. Evaluated from the standpoint of its contrib- 
ution to the development of harvesting machinery, however, the 
self-rake reaper must be subordinated to a minor position. In 
the transition from the early reaper to the automatic binder, 
it was the harvester, not the self-rake reaper, which pointed 

the direction of advance. 

The purpose of the harvester 
was to eliminate the 
waste of grain and the 
exhaustive labour invol- 
ved in binding grain on 
the ground after It had 
been raked or swept from 
the platform of a reaper. 
The problem to be overcome was that of raising the grain from 

the platform up over the mainwheel of the machine to a table 

t>i« nool ni-Ji h: 

where It might be convenif?ntly bound by hand and then thrown 

to the ground in sheaves. 

In most harvesters this was accomplished through 
the inclusion on the machine of a series of canvas conveyor 
belts, a table onto which the grain was conveyed, and a footboard 
on which the binders might stand. With these accoutremrnts 
the harvester accomplished everything the self-rake reaper did, 
eliminated much wastage of grain and made the work of binding 







faster and easier. Most important, the harvester presented an 



-dJtiJnoo Bcfl 1:0 intoqbciBiz erf* moil b9;tPtFlf,va .luodal izeriBtl 

nl .nol^ieoq -loniiw b oJ LajBuioTocJi/s ecJ J5i/m i&cTfioi QjiRi-ilBZ 

.eonevPs to noioos'ij. 



^^^Tcl3V-?=)/^H 2fi"> 



lej-esviBfl or1;t to seoqiuq srJT 

9cii Bipnitrdle oi eew 

9ff;J bnB nisia lo eiJeew 

-lovni ix/odfll 9vl:fajJsriX9 

no filEig ^ntbntd nt hev 

■oi'i *c? 



•>•# 



.1?rri .J^jjjj-d ,-n-.j. 



, leCTB©'! xO 3110 .cj^«j.ri:) 

elcfBJ" c, d snirloern orij lo Iseriwui/^tn siij- x,>vg qi/ laiclJsicf Oi\3 
avtiir<i netii ftne bnsri y,d hr.uod xlinfitnevnoo scf trfglw it sieriw 

, p«?Vf,Mi-fr ^^ '-nrrnT^ r,rf;t oJ 

rlatio'T-^:* !:':,rf?,i'IcrT'oors?. srv Ej'rfrt HTo:t'r:psv'iRrf itsom nl 

T ac 2'3iies fi ':o •3i:i • ; orjj no acizulonl. sriJ 

biBoddfoo't B bnB ,b9"^^vnoo eew niatg sri;t riolriw o;^no aldsrt s ,8;tX9d 

8:tn'onjnt.-*rjoo5K <^^9ri■i rfrfiW .bnprfE :trfi5lm a'tshnld ?!d.t riD.fTlw no 

,blb ir/moi Q-ABi-ixaz Ha:i an ^ri;t^('I:•v^ biasliqicooyfi lOJsovisd e:l;t 

^low 9riJ ebsm has atui^ lo e^fi^esw riosjta < -nlle 

n.n b©:tns?:eT7 T«»*p*>vT:pr' ncit ^inr.iioaml ,?■^o^! .Tof-Erq ^^'R T©:t£:a1' 



27 



obvious challenge to inventors to perfect a device capable of 
replacing the human hahda in tJie binding process. 

The best known of the harvesters was the one 
Invented by C.W. and W.W. Marsh of Illinois in 1857. Not 
until 1863 were the Marsh brothers able to secure sufficient 
capital to build their machine. In that year, however, the 
Marsh Harvester Company came into being in Piano, a suburb of 
Chicago. Following the procedure common in the Industry, the , 
Marsh brothers sold manufacturing rights to other producers, 
including in this case Gammon and Easter Company of Chicago, 
and the Emerson- Talcott (successor to the Manny) Company of 
Rockford, Illinois. In I869 the Marsh firm and these two 
licensees pooled all of the harvester patents they had been 
able to accumulate, and then looked over the industry for 
potential infringers. 

Once again the patent arrangements under which 
the pool did business are too complicated to permit full treat- 
ment here. But at least two features of the pool Itself deserve 
mention. One is that out of it came two of the five original 
constituents of the International Harvester Company. Secondly, 
the pool acted as a check to the McCormicks who, as in 
previous instances, delayed several years before taking up the 
production of harvesters, and then did It is so aggressive a 
way as to provoke an infringement suit by the pool. 

Regarding the first point it should be said that in 



■\^ 



.e&eooTXi ;^ nt ebnsrf neoii/ri ©riJ SniosXqei 

^ , ."■■'-." ■'-'^ ^ ■'•tnsvni 

^neioj/iue eiuoee c;:^ aide etsricJoid rie'ieM eriC" siew fdbl ilinv 

acii jieveworf ,is<?y :tsr(^ nl .enirfoeir Tisri;t bllud o* le^lqeo 

lo dtudUB B , on Bin nl snxscl od^fii eniflo yflaqaoO rte^eavigH riSTsM 

'.tcteubnl eri;f nl nonfmoo e'lJ;f^©no^q ©ricf sniwollo"^ .osBO/rfO 

feteoi/borrcf T^t^c^o ort e^risit :!^niT;«;to.c^i/"«w bice eiori^torrd riaisM 

lo ©f!^ o:t Toeeeoox/c) Id^ooiel-floeiawrt ftri;f bee 

owS ft6t»ff:t ftni=^ tmi? rfeieM &f<cf c^^J nT .eJonI oH 

•rol \i:te.i;fni ©xfd^ levo t)'^>looI asrii ixie ,ej"iBlufliifooB oJ s16b 

.eiesn-titnl lBJ:;tnsrfoq 

riolriw iflbn?; s^fempariBTie d'oecteq 9rf;f nlegB er»nO 

?»vi98eb "ilecd-l looq off;t lo eetw^tset owj zTeBsI ;Jb :tu6 .eisri ^nem 

IsnlslTO evil ©rij lo ow:t shtbo *1 lo ^Juo ^teriiJ al fnO .noUneo 

f^iLbnooec .ynpqmoO •i";teevTBH lBnol;fBna9:fnI eri:f lo zinsuit tj-onoo 

nl 8F jOdlw eafolwioOoM erfiJ o;t 'sdo s ^B b»*0B looq arfj 

eri;t qi; gnl^/e;* ©toleid aiBs^ iBiftvac bftx^i^fc ,e9i5ftc:J'anl p.uolvwia 

B ^-«? - ^-^ ■'-r •^ r>.. • r f F- n5»rfi' P^ne ^GTB^f eevteri lo nolJoahontq 

• looo eii^ \d JJije ;tr fnlnl ns eAovoia oi ee y«v 

flJ ^p.(ii Mbe M tiluorle :tl inloq Jeill erf^f gntbTsjjefl 



eiO 



1870 the Marsh Brothers organize'? the Marsh Harvester Comnnny 
of Sycamore, Illinois, and sold their Piano plant to Gammon 
of Gammon and Easter Company, mentioned above ^37), Thereafter 
the fortunes of the Marsh brothers deteriorated until in iSS^f 
they suffered their second bankruptcy and the firm went out of 
existence ^3o}^ g^^ j^^ie Piano factory, now owned by Gammon, 
was to prosper. A few months after the Marshes left, William 
Peering, a former dry-goods manufacturer from Maine and a 

i 

newcomer to the harvesting machinery industry, invested $UO,000 
In Gammon's business, and entered the business as a silent 
partner. 

* At the end of nine years as a silent Partner 
Deerlng bought Gammon's share and thus acquired sole ownership 
of the business. Thus in 1879 there came Into existence the 
Peering Harvester Company , soon to be McCormick's foremost 
competitor and the second large?? t constituent 1n the organisation 
o*" the International Harvester Company In 1902 ^39), 

Regarding the second point — McCormick's relations 

with the harvester patent pool — it was not until 187*+, eleven 

♦ ■• 

years after the Marshes had begun to produce harx'esters at Piano, 
that the first McCorraick harvester was produced. Recognizing 
"'their error in regarding the harvester for many years as a 
"humbug", the McCormlcks oast about desperately in the early 
seventies for suitable patents. To add to the difficulties 

IV 

which they encountered, the original Marsh patents of 1857 v?ere 

in ';.••:.■;.',:; 

extended by the Patent Office for another Ih years in I872. 

1/ O. :i 



is;Mept «»■-<''' ,(^E^ ftvc"^?. iS?»r»of •<^r»^!e jYnsqrtroO lod'ea?/ bae nojcfiieO "^o 

to :)'U0 ;/n©w itiii'i ©dcf dab ^o:»'Tfi'i>ffi«u Uiooefc 'lita'fw b^'/slii/e ^f'lii 
,fl: ,v=To.-t' ;?X«i 9rf:f ;trja .^^^^ 9on9iatx<> 

000,0' -f f^i;t -^TiHopftt '^a^i^»vtt>ici st^i o* isjojoowsn 



»ri;f BCi' 



. l: c, •■•. i J. .r:>ju wi 



itorrij TO' 1:0 ir\ .rf* vd bidtne.txe 



In l873» « company official vrote to C.H. McCormlck: 

^^ Mr. L.J. (McCormlck) is beginning to feel the pressure 
of these facts (concerning the popularity of the Marsh 
Harvester) ... and he has had me write to Baldwin to 
investigate what is the scope and validity of the patents 
which stand in the way of manufacturing harvesters. 
L.J, is gtrongly inclined^ provided the way is ope n^ to 
take hold of that machine ^ the Marsh Harvester ^ without 
making any experiments y and build a certain proportion 
of the coming year's machines of that style . (^0) 

This was never done but in 187^- the McCormiicks 
finally contracted to build a harvester under the Garnhart 

patent, the property of the Granhart and Rice Harvester Company 

year 
of Madison, Wisconsin. In the following/there developed the 

most intricate array of patent litigation the industry has ever 
experienced. Barely discernible in the web of suits and counter- 
suits is the charge of infringement brought against the McCormlcks 
by the pool. In this affray McCormlck exhibited his usual 
ingenuity and appears to have browbeaten the pool into believing 
that he possessed evidence which would completely undermine the 
Marsh patents ^^^\ As a result, the plaintiff's ardour cooled 
somewhat and the suit was allowed to lapse. Partly as a result 
of McCormlck*3 threats, but more '^^ 'because of the appearance of 
the wire binder, little more was heard from the harvester pool 

after 1875. 

It 

The Wire Binder 

Although technologically the harvester may properly 
be placed mid-way between the reaper and the automatic binder, 
In point of time there was really no period during which the 
use of the harvester may be said to have predominated. Even 
during the heyday of the harvester pool, sales of self-rake 



:^lp,»f _^ Q-f r.itnTV ^c^n^^"^o V?'':-Ricn « .fr8l nl 



o; 



Q?..* 



•il^ &eqoI©vfi6 f* -ollo'l: etii nl .nlsnooalW ,no8lP)flM lo 

e>i' »{ii ;ter.ts3s *rf:;^i:ioicf ;' liilnl lo sgisrio 9ti& el aitJtue 

arsJ-voiiod cam icoq c»ri;/ no^fc-jciwcid -svei-j ci air ;n« xJi'^nsgn-i 

Bdi sftlfntr/ tioo oltrow rioJtrfw ©onefriro beRaaaeoq erf ;fBd;t 

^.u« edi bafi i«»cfjeei ei^i* n©'9w;t©rf xsw-bJtm b^oclq sd 
i-JlBi Ir • ,Iooq TffitR© a Tr trt «ff;t jnliufc 



reapers and reaper-mowers exceeded those of harvesters In the 



East and at least equalled them In the mid-West 



(lf2) 



The harvester, however, may be regarded as among ^ 
the first in a series of revolutionary developments which operated 
to change the character of American agriuolture from i860 to the 




:'fr 






end of the century. These the: wire Binder 
included not only innovat- 
ions in farm machinery but 
also vast improvements in 
tiransportation, the rapid 
growth of government aid 
to agriculture and a wide- 
spread movement toward agricult- 
ural education and scientific farming. In a milieu thus 
favourable to agriculture it is not surprising that barely 
ten years separated the introduction of the first harvester 
and that of the first automatic binder. Indeed, the first .^" 
binders, like the one shown above, were simply harvesters with 
a binding attachment added. The two men who had formerly stood 
doing the binding by hand were replaced by an arm which, when 
sufficient cut grain had been collected, would thrust its way 
'over it, seize a bundle, lock a strip of wire about it, out it 
loose, and toss the bundle upon the stubble. 



f A good deal of criticism was directed at wire 

binders during their brief period of use. Specifically, ita 
was contended by farmers and millers that small pieces of the 
wire inevitably broke off, and either remained on the ground 



•ri* ai. Bi lo 9eori;t • x© eiswoo-'ioqBe'i bne zi9qB6i 

je^cneqo riolriw e;tnf>iBqoIevsb xifiOO-tJJLfiovsT lo eejLiv*8 g ni ^eijt^ 9tii 
•ritf o* Od8l caoit miuiIovt'j:^B ttBciiBmA \o T:p:to«7Brfo ©ff;t ssnerio o:t 

»8©rfT .xiw^neo ©rf:* to bn« 
-;tevonnl ^Ino :ton 5«5x/Ionl 

bJ-6 ;fnefflni9V08 ?o rijfwons 

-eblw e ftnB ©lu^flwol^gf; o^ 

-;tii;oJ''i;§fi biBWo;t tfneffl avoir fcesiqe 

eudi U9llim b nl .gnJ:«ni£l Ojtli':tnsJ'oe bne nol^fsox/be leiu 

XleTfsd iBdi ^aislpqiuz ion el t.^ etifctli/olias od eldBtx/ovsl 

is;t6evifiri ^Eii*^ 6di lo nol^owboi^nl ori;t bft^tfiisqaa aisex "^^ 

i^eill sffj ,: .ief>fiicf ottBmoive itilt esii to ifarfcf b/iB 

rij-f.,, ^"o^aevTcrf ylqmlE ©lew ^evocjs nvorfa »no Bcii eaClI ^siebnld 

boocfe ■'t-i®n5io'^ t>Bri oriw newi ow;t ©riT .b»tbt ^n emtio R;t;Js ^n-^f^'^s' s 

nerfv (riolriw raic ne ^cf bfioaXqsi sisw baarf xcf snlbniff erf^f jnlob 

X«w e^J^ Jeuirf^ Mx/ow ,6»*oeIIoo nsad barf nleig ;tJLro ^naloIHua 

il iuo til iuod& ©Tlw lo qlicte £ ;{6oI .©Ihnud e eslee ,:tJ; ipvo 

• eldcfjj^e ecii aoqu elbnud •!!* eeo^f bne ,»eooI 

enlw *e ^•*09^ib esv meiol^flio lo Iseft boog A 

•tii lo afi>o©iq Iifi«fc iH»-f;t hiqIHhi bne eis^raiMl \d b©bae;tnoo esw 
bfli/ois erf* no beni/ginei isriJI© hnn ,llo eMoid Y-fd«:flv9fll ©tlw 



JA 



as a hazard to livestock or became mixed with the grain with 

111 effects on milling machinery. These deficiencies did not 

prevent the widespread adoption of the wire binder, nor did they 

detract from its importance as the greatest labour saver since 

the reaper. For the first time, farmers env'saged freedom from 

their dependence on an army of transient labour throughout the 

harvest season. The enthusiasm of farmers for the wire binder 

Was summed up by one historian in 1902: 

It is a curious fact that it would cost more to 
harvest grain with a wire binder, or even with 
machinery using twine, than with a Marsh Harvester, 
yet the demand for automatic binders was such that for 
many years after their introduction the manufacturers 
could not supply the demand. As one of the pioneers of 
that period has explained, what the farmers wanted was 
the facility of harvesting. Labour was becoming scarce 
on the farms, and the farmer wanted a machine that 
would make him independent, so that he could cut and 
bind his crop himself. Prior to the Civil War there had 
been an abundance of labour available for agriuclture, 
but at the close of the war the men who were discharged 
from the service preferred to go West and make homes for 
themselves under the military homestead law. Even as 
late as I88O there was an abundance of land awaiting 
settlement, and the prospect of acquiring a farm was more 
( Inviting to the young man of the Central States than the 
life of an agricultural labourer or renter. This demand 
for automatic machinery was a great stimulus to Inventors, 

(»f3) 

Although more than 80 patensits for automatic 

L -t or 

binding devices had been granted by the Patent Office by 
1868, only in the early seventies did the first successful 
models using wire appear for sale '^^^. Leaders among these 

were the Locke, made by Walter A Wood and Company, the 

,-1 

Withineton y made by McCormick, and the Gordon , made by Gammon 
and Deerlng, D.M. Osborne, Walter A. Wood, and the Buckeye 
Syndicate ^^^\ 



pn,-t ^fttor'^voTfii TcrcrfRl in» 



ifrHriB no 8*o?>^l» III 

jeiil Sari »cii 

lo y,ss\iB DB flo »sr(»bn»q«b tleri* 



iS.0'^1 al ft&iiou&li) ©nc xd 



•3i.'S SfiW 



o* «5"Ofr .tenia 






TftT' 






6BW 



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>+prf:) 



hf. 



,7 to 



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e 



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d C'«©'ia IB e«*.w' >t- 



ffl oiji^fnojtie xo'i 



r xcf boineig need bisri cenlvpb gnlbnid 



.r;"* ^ai-'viri!- .•fK^r^ «ift F~ f Ti s<.. ^^(-'■■.•^■«'o.•. v r ■ 



«^^8I 



9(ii ,X( hn« booW A ibUbV x<i mbBta . si 9oJ eilj^ aisv 



(?+') 



©;teo/^r»x8 



J«s 



The Twtne Binder Pool 

Hardly had the first wire binders been placed 
on the market when experleraents with machines using twine 
began to show promise of success. The experiments conducted 
by John F, Appleby of Wisconsin, and Marquis L. Gorham of 
Rockford, Illinois, were the leaders. 

Gorham took out patent protection in 1875. 
Appleby appears to have built a successful twine binder In 
the same year but he failed to obtain a patent on his Invention 
until 1878. In that year, Appleby, seemingly uftaware of his 
vulnerable position, sold to Gammon and Deerlng the exclusive 
right to build his machine for the Illinois market, and at the 
same time licensed several smaller manufacturers for other 
areas. 

The McCormick firm, which had been somewhat 
overskeptlcal of the wire binder and the twine binder alike, 
only began to acquire patents In earnest in 1879. By 1880 
the firm had licenses to produce both the Appleby and the 
Goreham twine binders, and had bought up a host of smaller 
patents. .With considerable discernment, the McCormick Company 
reached a conclusion later confirmed by the United States 
Circuit Court of Appeals, viz. that the Gorham patents had 
anticipated those of Appleby, that the possession of the Gorham 
patents should prove a very effective weapon against producers 
using the Appleby patents ^^^\ 



heioirhnon '■ t?>axe sr:' . - <90one ^o oalnoicf worie o* nes©cf 

-^!* r.-r- ,,-rprfn'-.r'V/ *^c ■--'■•^' ."! rrfol vd 

cf feBii . ;-iJ;'? 3J0J. . 9riT 

et*1 bCR ^idelqqA eri:t rfctocf sot/f-oiq o;t Eesnsoll barf Eitl eri;t 

e«*e:f8 ^e;tl^U ©ri:f i^d beroilVnoo loifS nolei/Ionoo s bf>riOB9i 

&C5 s:trr?t:tpcr rrprf-rp'* rr*:)- J-prf:t .niv ^slmqTA 't-> :*7"r"' ■t^^tr'^-riD 

merlioO snj lo nc'Eessc^oq onj ts::n'j ,xdslqqj^ lo 0r.Gx^i fjoj;;qiox^n« 

6'r*^«^o^q ^enl«aB noqtev evi;to©Ti9 x'^'^v s f^votq Mi/o/ie e^nectaq 



33 



At this time, the only other producer of the 
Gorhara binder was N.C. Thompson and Company of Rockford, 
Illinois, which had begun in 1859 buHdlng Manny reapers ^^7), 
In 1881, on McCormlck's initiative, an agreement was made 
among the McCormick Company, the Torapson Company ahd the 
Gorham heirs ^^°' to pool all the patents which they possessed 
and to demand royalties of $10, per machine from infringers. 
Thus came Into being the last of the important patent pools 
in the implement Industry's history. 

Until it passed out of existence with the 

expiration of the Gorham patent in 1889, the McCormlck- 

Thompson-Gorham pool was the most important entity in the 

twine binder industry. Immediately after its formation, 

the pool pressed suit vigorously against a number of firms, 

particularly those producing under the Appleby patents. 

Among the first to succumb to the threat of a lawsuit was 

the Deerlng Company; then followed the Marsh Brothers, 

Aultman, Walter A Wood, D.M. Osborne, and others. With 

binder technology k in such a state of change, quick action ' 

was essential to the pool's success. Even Nettie McCormick, 

wife of Cyrus the Inventor ^^9)^ wrote to her son in I883: 

Lack of promptness in moving, or lack of deciding 
while the iron is hot may lose us the expected 
profits of the pool. Dragging along loses everything 
in such a business where the best chance of bringing -^ 
the parties to terms is while they are under the 
impression of their peril In not coming to terms... 
Delay is loss. Strike while the iron is hot. And 
in the pool cases make more moderate demands than we 
have made but settle quick . That Is the secret. 
Settle while they are in the mood for settling. 

(50) 



4 1 



^,*_ 



ffnolJioofi "io ynaqiDoO fcna noeqworiT .O.M eev Tsbnld trcriioO 

_ 'r-;0 .,,.,. ^.^., -.,.-...^v ,ri r'.rr- ;rr rr=P.'- ,-. f ,.f.-,^r r-^e^i -^n'rfw .pfort/IJ 

»ri* fcns V' '^^•"^ ,vn«qincO MotinioOoM eii;J gnooa 

elooq ;tne*Rq ^nB^ioqpf- erf:* 1o cJeal sriiT s"^^*' o*n^ ^-^^ ^"^ 

;*r'«{t'fOor!fff ^teors »'<;♦ row Xooq ' 
riJIW ,8isr[*o bni . .M.a ^ booW h iscfleV 



:>f; ffp - Jorf 


■J 


i-«lCI .Icf'. 


<- 'J lo / 7 


«.. <,rfl.- r • 


"i.ycf 6 t . v/c. .ii 




o>l ppl^ticq f>ritf 


1 0^ • JOl\ 


■o^eeeiqal 


. ' '-' '• ■ ...... 9tii e . : 


. V..: s.^ '•juXea 


sw nmrii ~l^ e^ffTsfiorr e- 


Tooq 9£l* nl 


-. t^f^j 


^m ©VBfi 


■ ,j,tj. .' ««j9c *1<^ t I.'.'- .^i .»- J i • 


u. ; .V pl^;t08 


(«•) 





3** 



In mo3t cases the pool was able to collect 
from Infringers without need of court action* Peering 
paid $26,000 for his immunity In I883, Whitely gave in 
to the pressure in l88^•, Only after court action, however, 
did the Osborne, W.A. Wood and Aultman firms become 
convinced of the error of their ways. Osborne and Wood 
settled in I886 for $22,500 and $10,000 respectively, and 
^^ 'Aultman in 1888 for $23,000. 



III. Competition for Sales, 1890-1900; The 

Hjarvester War 



The Final Decade: A Change in the Character of Competition 

The twine binder patent pool died a natural 
death with the expiration of the Oorham patent in 1889. 
Its dissolution marked the end of the first era of compet- 
ition in the industry, which had lasted since the expiration 
of the original reaper patents in 18^-7 and I8lf8, and the 
beginning of a new era which culminated in the consolidation 
of the chief competitors. 

It is the purpose of this final section of 
Chapter One to examine the factors chiefly responsible for 
the change in the character of competition in the harvesting 
machinery industry after I89O. Such an examination, it is 
hoped, will serve the dual purpose of reviewing the principal 
features of the era which was ending, and introducing those 



'4k V 



arJtiesG ^tiot^OB cfiuoo ' ^ ;tifori:J .'v > oil 

9fiiOo«5Cf affiil'i FiBiPiluk ba ' effJt bib 

• 000, ££$ lol 88ftl nl nrwitXu/l 
eriT tO^^I-O^^I t^.r^frB "c'^ '"o.f:? ^:ttl"20 .III 



c , X bne V+'BI fli. e:tnp;f»q Tsq^^i . * to 

to n<'jJ09e IftT;.: ei.aj "io ©Boqxjjq . ' . 

'^nl'r^p.svrarf •"'-■: of*.?:" :'*i1^ 

I«q v»i "Jo EUb fM\i ©VIBE liiw ,f)eqori 



J7 



of the period which followed. The causative factors in the 
change were twofold: 

1) The era of rapid innovation in the Industry's chief 
product came to an end with the introduction of the 
twine binder, and a period of increasing standard- 
isation ensued. 

2) The domestic market for harvesting machinery ceased 
expanding with the disappearance of the western 
frontier around I89O0 

1) Stabilisation of the Product 
if 

Throughout the 50 years prior to I890, the focal 
point of competition in the Industry had been the product itself, 
Affected as it was by a succession of radical changes and 
Improvements between IS'+O and I89O, the product had provided 
an outlet through which competitive pressures might find 
release in the form of periodic scrambles for patents, patent 
infringement suits and pooling arrangements. Adequate patent 
protection early became a condition of survival in the industry 
and, as the product changed rapidly, patent matters became 
virtually an all-absorbing interest for the individual firms. 
The firm, or group of firms, which possessed the key patents 
for a particular implement, had little need of resorting to 
price outs, pressurized selling tactics or other forms of 
aggression in order to gain a competitive advantage over rivals. 
If a demand for royalty payments went unheeded, a lawsuit could 
usually be relied on to bring results© 

These conditions prevailed through the era of the 
reaper, the reaper-mower, the self-raker, the harvester and the 
binder. Unlike its predecessors, however, the binder did not 
give way in a few years to any new or radically different type 



end' lo nold^ eri:t n? hb oj a-viso dr 



,■ *^--' or #•. r- 



r/T' 



.Tilecctl tfowho-TCT ©r'^ a^f^d herf vt^Tv' ~^^r(* 0I nolo o "io ^flloq 

beblvo' itrijiiboiq Sff-I ,0981 bns 04*81 csew^od a^noc.ovoiqml 

■3* csTiiseeiq sv^.-tlcffjqnTco riolriw riitroirf^t Jelitx/o n« 

X" i ©rf* fli iBviviwe "^o Ciolitbnoo b drcBood x;iie» nol*o«»;?oiq 

BiTBO'-'' r'^ r;*gin ^tneJeq ,T{;IbiqBT fcRgns^^ ioubotr^ pr(:t es ebne 

.aiP'ii't J -1 s»ricf lol .^ il sfi-fcfJoedjB-ilB ns xilBi;;t'iIv 

e Xei 9f<:; 'loaeoeftoq rfolriw ^cfn^Jt^ lo qrioi^ ic ,flnJtl sriT 

lo amiol ledio lo Bo^^tr '(il»t bfisliueceiq ,ed^iJO eoliq 

' ■ f ■ . 

• ctXi/e*-! Cu'' no bpj:i©i so' x-f-fpwEir 

■Jo «i» ■ fielJfc »• : :oo »j.^riT 

•^ r 61-lXeE - , 1 9dcf jie^reei 

*orr 7;}h lebnld •rfJ ,if."«'.rtrr , r.T,>Re0©»f^, .rrr p^2 6;ilInU .t©fcnld 
•QX;^ sn0i»ltlb x,llBothsi lo wsn x^o o* RiBbt wel b nl x^w evij 



JO 



of machine* When the basic binder patents expired in the late 
eighties, there ensued a period of product stabilisation not 

i. 

previously experienced In the industry. Although patents by 
no means disappeared from the scene, they never regained the 
Important position which they had had in the industry before 
1890. 

As a result of these changes, the possibility of 
gaining competitive advantages through acquiring key patents 
during the nineties diminished considerably, and new emphasis 
was given on all sides to the development of elaborate selling 
organisations and selling techniques. Funds and personal . 
energies formerly devoted to seeking patent advantiges were 
free to be directed almost entirely into selling competition. 

2) Stabilisation of the Market 

Standardisation of the product would probably 
alone have sufficed to bring about a period of vigorous 
selling competition In the industry after 1890. The effect 
of standardisation was increased, however, by the cessation 
of expansion In the domestic market at about the same time. 

Held In check during the Civil War period, 
westward migration began anew In the late sixties and continued 
on a large scale throughout the next two decades. Encouraged 
by the Homestead Act of 1862 and the initiative of the Union 
and Central Pacific Railways In forging beyond the frontier of 
settlement, pioneers In the seventies pressed westward through 



e^BJ ■ ■■■■ziqxB tiaeinq iBtnid ottBdi srii neriW .onlrfoesi "ic 

©iot«KJ xiJeufftj sul^ 111 ' :J riolnv; ^ne^ioqaii 

wsif p - -TOO £ janift rtn/b 

aflille-. si© lo if -»vA^ *M-f.t ci* t»Ms Jip ffo n»vla efiw 

919W teijijTjsvne iiV:)Jeiii sal?i©0a o* &• Ttlieraio*}: ' je 

lo • Tl edi f- ni ex»wlisff o^lioe'l Xe-x^neO ^^« 



37 



South Dakota, Nebraska, Kansas and Oklahoma. From the end of 
the Civil War to 1880 the acreage and production of wheat 
almost doubled ^51), Th© rapid expaniion continued during the 
eighties under the stimulus of more prosperous times, continued 
railway development, and the increasing awareness that the 
supply of good free land was rapidly diminishing. In fact, 
says C.W. Wright, "the close of this decade is generally 
considered as marking the disappearance of the frontier and 
the end of the great westward movement" ^52;^ 

How did this stabilisation of the domestic market • 
affect competition in the implement Industry? In the first place, 
It meant that competition for favourable location of manufacturing 
facilities In relation to the market lost much of its importance. 
It will be recalled that the first harvesting machinery plants 
had been located along the eastern seabord. As the market 
expanded westward, production followed it into New York State 
via Brockport and Buffalo, through Ohio via Canton and Spring- 
field, and finally into Illinois where cities like Rockford, 
^ook Island, Mollne and Chicago became noted centres of 
harvesting machinery production. Some producers extended into 
Wisconsin and Minnesota. Generally speaking, the needs of the 
market dictated the geographical pattern of production. Mower 
firms, for example, usually remained in the hay- producing states 
of New York and Ohio, while reaper, harvester and binder jsroducers 
were to be found in the grain areas further west. After the 
market stopped expanding around I89O there were no further 



AC 



icerfv '^ci rto^:tf^rJ^o1^ hne esBPTOP 9d;t 0861 o;t leW IlvlO sri* 

b9vniinoo ,eemlJ ewoieqeoiq etOiii "Jo ewluauf^fe ©ri;^ "lebnu 8»J:;trf8l© 

i^oet nl .gninsxi-Jiujic \^ :aiiBi eew bnej. ssii cocg lo x-i^qqi/e 

\lle'ie>n»^ zi 9he»efc etri;> lo saoio •ff*" i^ris^iW M.O bxbb 

f-if\p Tof.trroT'^ ©rid" "Jo f nnpTEsacErl^ nrf* snl7?TPF; ae ^«»7?^iE^o<> 

^sjCtsw oli^9mob adii to no.l^££i.j.xcsc^£ srnj cio won 
,»o«Iq ^8111 ©fl* fli *i\iiBLtbnl iamiBlqtDt Bdi nt notiliQqmoo *oeH« 

»;tn«Iq yienlffoeaf gfjiJapviftri i^siil srfct ^srid' bellsosi «cf lllw il 

- '^iqS fcflfi ao;^neO dlv olrCO riguoiri^t ^olBllnffl fcnjB iioq-AooiB slv 

^^1o'!7{ooH s»?I.r e«i.tf5 ©loKv; eir;nJ-m o:?nf vllsni** ^rt.^ ,51911 

io ^cziiico t'^jcr •• -: nj dj::s eniicin ^bnfiiel >(ooH 

o^nl ^' 9 alftotfbol'; ,noi;tt3Uboiq xif'^-^rfos"' ^ntitevjBti 

»ff;t lo ebosn rrfit --c-^ ?. X-f fcionsO .ii:to8pnniM brE niercoElW 

"X'. 'O" .rioiociu''c'xq xo ij i ^cJ j e':T xaoinq£5"ii.- "., ^nj t©.7cJoi3 iesiiBH 

e»:f fsifMiq-\«ri erf* nl 6«n/s«nei x-ti' . aXqwsx© ;i-^t ,8nmJ;^ 

ei- P-fts •I9;tppvi.nf* ^iPcrpoT ui.trfv ^ofriO fcn?, ■♦fToY wr!f lo 

iBiiiivl on •Tsv Bierii Of>8l • «^ gni n^e ietitRai 



38 



significant changes in the location of plants, With few 

1 

exceptions, the principal centres of implement production 

in 1890 still hold that position at the present time. 

An allied effect of market stabilisation was the 
disappearance of many of the small firms which had previously 
produced on contract with the larger holders of key patents. 
This "fringe" group had served an important purpose In the 
years when Inadequate transportation led buyers to prefer 
local producers over distant ones. As transportation improved 
and the market ceased expanding, the usefulness of such arrange- 
ments diminished. Manufacturing in the industry came to be ^^£ 
carried on by the leading firms in their own plants. Most of 
the marked reduction In the number of firms between 1880 and 
1890 (from 1,9'*3 to 910 firms) was a result of the dls«appearance 
of firms along the fringe '53)^ 

In the third place, stabilisation of the market 
Induced manufacturers to give more attention to their distrib- 
utive organisations. From its Inception the practice of the 
Implement Industry had been to appoint agents who received 
Implements on consignment and sold them on commission throughout 
an allotted territory. In an expanding market, manufacturers . 
were handicapped in the selection of their agents bodause of the 
ever-present necessity of penetrating new areas and the uncert- 
ainty surrounding the conditions of sale and the best locations 
within those areas ^^\ By I89O, the improved communications, 
the development of towns and roads in newly settled areas and 



>fc»iq 



o 



i t r ■ f> 



zq ©riJ ftaotiofOXB 



i.-.r-i i^r-.,-i rr'Mt. rorr - •- 



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*ftiti:fne') no tq 






-s'^f. 



^T » fi r\ r ' 



.. : r 'f^fiiKr,- €.,■'.' , rr; ' Fn-^ t-r; vo 'r; a&'-, r^'^^l''Tc^^' rio"t '<nfl 



9iS 






•ri;f Jo Boi^OBtq eri* noi;fq©oni 8;ti ffioiH .enoiitf. ;o svliu 

T« ii . rtoi*o«».: Jed eiew 

^*^^' 8A»7P ©eof<;t nfrf;flw 



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ci.' 






•c^lP'SJiiJ 


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sril 


lo F 




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trre e/se'i. 



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.-f* 



th© Increasing specialisation in agricultural production, made 
it possible for manufacturers to turn in earnest to the 
Improvement of their selling organisations. Greater care was 
exercised in the selection of agents, and efforts were made by 
the leading companies to secure representation in all strategic 
points of the market. r„ 

The "Harvester War" of the Nineties 

Those were the characteristics of the product and 
the market which paved the way for the "harvester war" of the 
I890*s. During that decade, selling competition among harvest- 
ing machinery producers was carried to what now appear ridiculous 
extremes. Flamboyant advertising, extravagant field contests, 
unbelievably easy terms all seem to have been the order of the 
day. One favourite field test consisted of tieing two competing 
binders together and pulling them apart with teams to demonstrate 
that one or other was the stronger; another, in which an 
employee of one company drove the competitor's machine, called 
for ramming the cutter-bar of a mower into a post and then 
attempting to cut grass with it. 

In August of 1890 an implement trade paper reported 
that binder prices had never been more irregular and competition 
never more reckless than in that year ^^5', In January, 1892, 
complaints began to arise from dealers' organisations, especially 
in the West, urglgig "that the manufacturer through his agent 
will cancel any contract with any dealer that is found cutting 
prices during the season" ^^^\ in the same year, the chairman 






<a.-r:t Tc "tv '•-o+pArrTp-f" :^'r!:t TO'?' TF'.' or*:* f--^'rrr' r'- ^rfV ."tteijfTpfr 9'if^ 

fcellfO t9nirfOAi!! 8''io;tt srizf evortfc \inaqmoo sno to »9X0iqai9 

.f ■ !« ruBlwjftTil in;ow n«&d i«?>T©n bad eooiiq lebnld ^erW 

. -•' r ,y*raifrrpT nf ^\\'iJ irc,-^ :t"r'.-' nf nnr*:* pp-^/VnaT ''■^r- T-,-vT,a 



of the Western Dealers* Association's harvester committee wrote: 

What we desire of manufacturers of harvesting ir.achincry 
is that they should say how their goods should be sold, 
have fixed prices on the goods, and com-nel all agents 
to maintain fixed prices and terms. (^'/) 

To what extent manufacturers did try to prevent 

price cutting by dealers in not clear. It does seem that most 

of the reckless competition of the harvester war arose on the 

retail level and was not officially sanctioned by the companies 

involved. On at least one occasion, 2^- of the competing companies 

issued a Joint order to all dealers, bearing the signatures of 

their presidents, deploring "the habit of trying to break up 

sales made by other agents when you have not been successful 

in making a sale". In part It read: 

It has become a very common practice, as soon as a sale 
is made by one agent, for the agents of all other machines 
to try to break up that sale, by misrepresentations or by 
lowering the price ,,, *le wish It now thoroughly understood 
that we will not tolerate this practice in any agent, and 
we will be glad to have reports from you of the agents of 
any machines who have tried to break up your sales in this 
way... Our advice is: 

1. Hold firmly to your prices. 

2. Sell your own machine. Convince your purchaser that 
you have the best machine made. 

3. Settle for the machine at the time of delivery, k 
r^r machine works better after being settled for, 

k. If you lose the sale do not try to break up the sale 
1 of your competitor. It won*t pay. (58) 

Conclusions from Chapter One 

Following are the principal conclusions from our 
study so far: 

c- 1) In the latter half of the nineteenth century 

the acquisition and protection of patent rights was the 
principal type of competition in the harvesting machinery 
Industry. The design of the product was changing constantly, 



:tiotw emiilgmioo "'■-'■+ -•^•'"•'fo'-' r »x^ ? },jf.-.-r.;.A »-^i>.rf<>'^ Tra+ro/.,- orf-t tn 
^? 

' no £' tt ©VBff 

;tn«>v«*iq o^ xti bib sisix/^r ' *x© ;tBffw oT 

^eoc *«ff:f rs&et eeob ;tl /-o ton ni sielasb Tjd snf*;fuo ooIi'T 

8s ■ firi:t ^t<f bwioiiotiBt v,IIfi/i>i I'fo d-Oi\ aew hne a&v©^ Iif;f6i 

jj7lee30oi;e new! ton ©ver? t/ov. flftrfw etnosa i^rfto xdo^Bir s^Ibs 

V, ot y:r* ot 

• • • 

lo ' erft 1o J^? «d IIlw «v 



■:::./^ *- r-i '^ 



a: 

V' nlc\ Qri-j Jo IJcrf erit nl (I 

'■"■.t rr.w r:t''. 'T .-ti-^-fc^ "tvi no ^1^''c■to'<■nt hna rm f -f ^r f fn.^.c «i,,-Trt 

,y.i ioubomq erf* lo ^8tefl^ »riT ,xiiEuhai 



-rx 



and each major change lefl to the granting of numerous patent 
rights, many of which ver« In fllrect conflict. Generally, '-y 
only the stronger flr-Tis were able to acquire the key patents, 
and these either pooled their patents with firms possessing 
conflicting ones, or engaged in costly, and often Inooncluslve, 
lawsuits with them over patent priority. 

2) Added to this was the constantly changing 
domestic market. Geographical expansion as well as changes in 
the character of agriculture in particular areas, made for 
instability and uncertainty in the market for harvesting 
machinery. Thus a second focal point of cn^npetltion was the 
location of manufacturing facilities. The centre of production 
moved steadily westward from the Atlantic coast to the Chicago 
area as the century progressed. In the process, competition 
for favourable location led :'iOst of the larger aanufacturers 
to sub-license smaller firms in strategic market locations to 
produce under the key patents. 

® ^) The factors mentioned above were responsible 

for a rather definite "size distribution" which became discern- 
ible in the industry by 1360. About ten well established firms 
dominated, and a larger group of small firms with a high "turnover" 
existed along the fringe. 

k) The first modification of this pattern of 
competition took place around I89O, when the era of rapid 
change in both the product and the market came to an end. 



,y.r. rpirrt»jr .^triJ'^noo tofiih nJ •^.^v rfolrfw lo x"*"^ ,e;>ri3fi 

,?,- 'K:* eiJiupof. o;t nJde «19W c(n.?l t^snoicJE srftf ^Ino 

8fliEe&2E©cT ciTtlt ffifw sJnerfsq ilprf:* ^»Iooq iftriitfs »E©r(:t bns 

• YJtlioliq jn»;t£q levo Disrlit rf^.tw e^Jt'awel 

noliouboiq 1o s'lJnsc sriT .afti.tiIiOBl :^aliuio&JuciBm 'to nol;[aool 

ogeolrfri 9n';t ct :tR»0D nf;tnpI*A ©rf* moi^ btswcfsfw x-f-^fps*2 bsvom 

-"■'',+ '•■•• , xu 9ri^ nl . bsespiacrq v."'^'^" "''"^ '"^ eeie 

aieiOvJosli/fiew iss'iel 9fld lo cfaorc bsl noi;teooi eloBiuovel loTt 

o:t 8ncI;tsooI Je^i'iein ol^BieiiB nl smii^ tellfifne ©sn©olI-dU8 oi 

,8.1r rr-^ -^-'t- ■■'if"" ^^'^'jboici 

aidienoqesi siew p^'—'r f- -^ - : r--w,,,, p^oioe'^ -^'^"^ (f 
-meoelf) •wboscJ rfolrfw "nol^ycJiidell' esle" sd-inxlsb •terfJei f lol 
BBill berfelldBies IXew n©* c^wodA .Od8l ^cf \irfeobni offd" nl eldl 
i-T^^omu^t" riglri B ritflv; ecpt.M Heme Ic qnoig isstr' -^ ''^'^r ^ r,„4o«T-,„o.'^ 

.©gnlil erf;} a"0-f» beSelx© 

lo cn^i^tiq tlrii ^o noli^sottlbom ^fBiil ariT (4J 

1 I0 Bic «»ri:t neriw ,0p8J bnnoie ©aelq lioci nol*l*«qinoo 
.be© ns o;t wobo ;tejiiBin »rii fi'^ ^•^,f^nT<T f,f{^ ri^ocf nl ©snAXio 



"*.5 



Sub-llcenslng became less common In the last two decades of 
the century and the number of firms on the fringe consequently 
Jmlnished. Patents lost their place of preeminence and the 
competition among the larger firms therefore found different 
forms of expression. 

5) The harvester war illustrates the new type of 
competition which emerged. The standardised product, and the 
increasing distance which came to separate the manufacturer from 
the retailer as the practice of sub-licensing died out, paved 
the way ;^cut throat competition at the retail level. By 1900 
the new competition had become a source of real concern to the 
industry. 

The immediate result of the harvester war of 
the 1890 's and the forces which produced it, was a series of 
consolidations in the industry in the opening years of the 
twentieth century. Chief among these was the formation of 
the International Harvester Company, the principal subject 
of the following chapter. 



Je> 



--^cf rrt 



•^M-dire 



»ri;^ t-nc " to sr 



-J 4 ^r». 



^-^i 



noJt;Mj-oqB05 



' ; .. r I. .>'iq 3; •" 



'iflQl 



'to oqiCw v.Gi: firiu a'^j: -^j Li'.iJL. 
J :^ o £f licia f; f; t i &l > ' 



t -, t ■' 















XO uQJ-^&tl'.-Jl ■-Jiij iii:.',-: SL-Vl. ^n 



;to«tt'"8 I»qi:onl7q s.^u ,\ 



■j J. - ^ V 



J' ^wj 






-tj 



CHAPTER TWO 
CONCENTRATION AFTER 1900 



Contents 

I. The Formation of the International Harvester Company 

Constituents of Int'^rnatlonal Harvester — The method 
of merger — Early problems of the International 
Harvester Company. 

IT, Public Interest in the Harvester Consolidation 

Report of the Commissioner of Cor-oorations, 1912 -« 
Anti-trust suit by the Department of Justice, 1912 
-- The Consent Decree of l';i8 — Federal Trade Comm- 
ission investigation, 1920 — Suit to amend the 
Consent Decree, 1923-1927. 

III. Other ConGentration in the Industry after 1900 

Early concerted activity among plow manufacturers — 
Pull- line development of John Deere, Minneapolis- 
i'^ollne, Oliver, Advance-Ruraley — Trade Associations 
in the Industry — Conclusions from the charter. 



I. The Formation of the International Harvester Compapy 

Constituents of International Har^estey 

The harvester war of the late nineteenth century 
came to an end when the five largest producers of harvesting 
machinery in the country wera consolidated into the Internat- 
ional Harvester Company in 1902. They were 

The McCormick Harvesting Machinery Company, Chicago 
The Deering Harvester Company, Chicago 
The Piano Manufacturing Company, West Pullman, 111. 
Warder, Bushnoll and Glassner, Springfield, Ohio 
Milwaukee Harvester Company, Kllwaukee, Wis. 









'» '^':** r I ■? » ' 






lI2 



...r., .- 



The first four of these names will be recalled 
from the previous chapter. The McCormick Company was the 
oldest among them. The Deering Company was an outgrowth 
of the Marsh Harvester Company, and the Piano Manufacturing 
Company had come into existence when Deering moved to Chicago 
in 1880, Warder, Bushnell and Glessner dated back to around 
1850 when 3.H. Warder began to manufacture reapers under 
license from Seymour and Morgan of Springfield, Ohio, At 
the time of the 1902 merger, Warder, Bushnell and Glessner 
controlled the Champion line of harvesting implements ^^\ 
The Milwaukee Harvester Company was organized in Milwaukee 
in 1881 as the Parker-Dennett Company, changing its name in 
188»f ^^\ 

Within a year after its formation, the International 
Harvester Company acquired three more important companies: 
D.M. Osborne and Company of Auburn, New York, and Aultman- 
Mlller Company of Akron, Ohio, and the Minnie Harvester Company 
of St. Paul, Minn, Osborne, it will be recalled, had begun 
producing the Kirby mower at Auburn in 1858, and had later 
bought patent rights for several other important lines. 
In 1875» Osborne absorbed the business of the Cayuga Chief 
Manufacturing Company, formerly a prominent member of the 
hinged-bar mower pool. The Osborne Company had produced a 
successful wire binder under the Gordon patent in 1877» and 
twine binders under the Appleby patent in 1882, During the 
nineties, Osborne had taken up the production of certain 
tillage implements and binder twine, thereby enhancing its 



9di 8BW xneqaioO >?olnoOoM ©rlT ,l»Jqerio Euofv»iq wri;^ moil 

•:j.J'iusoB'ltJnB:-^ Ofifc :. ' ' ■ • , iiiEqaoO i?j sev -ii:' iisibM eri^ lo 

hriioiR o# 3lnsrf ^?!:♦s^ T'^^^.^?».':o ^nfi Ilffnn'RoS ,•?•^^1«Vr ,088l nl 

iA .olrO ,M»l"-:^nl'ia5 lo ne^nioM 5ns iifcn-v;»c tco-rl ©ensoil 

grsi?: to &£is.i aciqiv.Bi'lJ arij . ^iji07.3no5 

'. ;^wIiM nf. fee- o eevr y/ 'rsJeavteH eeiiiTBWIlM srfT 

^^ -:.- . r-.:* f rn'-n.-'-r'n yV^i^rrrrroD :t:tanneCI--T«»3^Ts1 erf:t be 1881 nJ: 

itefnBqmoo inB&ioqat ©lofii ©airi^t beitrpoB ^neqnioO io:fe©vieH 

r. ^^-Jd beti ,b»IJ80»*i or .r .iP. '\o 

i»;tE!l ft©'' ^TP ,?^8J f*' rrft'f^c* :t ■ t vcfi/j? frrf;}' 'ir.frstf^c'rrr 

IftiriO fijiintfi^ »ri* "io essnlewd orl* bodioedB emodaO ,^^8l nl 

bn« I'^VfiX tit ine siiu XjoleseooirB 

niEJ-is*: iu ncj:joi;i:- j qt' :ioji£j 6sr( omodf-'J ,£o.r.10iiin 

•iJt inlonerine \ . >nJw:f i»bnid hna e^nefCf^Iqml e^jslll* 



position In the trade. 

The Autlman-Mlller Company was seen In Chapter One 
as the producer of the Buckeye line of harvesting Implements, 
production of which was continued for a few years after the 
acquisition of the company by International Harvester. The 
Minnie Harvester Company had begun operations around 1880 
as the Minneapolis Harvester Company in Minneapolis, Minn., 
and had produced twine binders under the Appleby patents 
after 1880. In l893i this company was reorganized as the 
Minnie Harvester Company and removed to St. Paul, Minn. ^^'. 

The acquisitions of Osborne and Minnie Harvester 
were kept secret by the International Harvester Company for 
nearly two years, during which time the two companies were 
operated and advertised as independent concerns. Although 
International Harvester contended that such secrecy was ' " " 
necessary to facilitate the liquidation of certain accounts 
of the purchased concerns, much criticism and suspicion 
arose when the method became known. We shall see later that 
in 1912 the Bureau of Corporations cited these "bogus indepefld* 
ents* as one of the unfair methods of competition resorted to 
by the Harvester Company in its early years. 

In addition to these eight companies which had 
entered the Harvester merger by 1903, several others were 
seriously considered by the company, and in some cases 
negotiations were actually carried some way before they 



,eJn -1 sfii^E'Viert to snli •■^jisiiojj'd f-^j to 'isoi/boiq an;* sb 

'b STB to nolJot/bcia 

,^^ .Xr*<? .:t8 cl bsv- rtfi ^n i©Jef>vi£K ©i'f 

i9*e«vi?H "iJTijnlfi bus Jo Pxsold'Jlelupos sr-'! 

©^?»w eeluBOffioo ow;J sfiJ effiic! /folriw s^jli^iu f&iK,9\ owj xlifc-^ti 

»av' ^'■•^•>•f f»«»'^ I ■'-Iff?' rtftfft ':<c»F.;'<o-t,-rr-n t«)t r- /jv^t qT~ f ^;,^ .-^ '■:f ^..^f^.trrT 
£:!ruiooGj» rsififf'iso "io fio.'ifci:'i.vpi:i ©xi3 ®.j£,?iiiDji'I oJ \i. sat no an 

rtpfftt T^rfrl n«>e I.fpr'p s^' ,nMcn-}'. "r^^rm-'' ^o^1■r-'TT prf-t .-'^^Kv seotfi 

- -ctar^orr:.! Si. ' ri- Ufijto zdurje-icqioJ "io i/Bsiwt ©rid" '^1^1 nt 

otf f)e*:tT0S'5':. no "^:t?.-+e<:jiT'oc "^o a&orfJ'pm Tlfilnu srirf >o ©no ea "a^tn* 

■-rrfw r.-(j'n-.~~tOD :fif!»J"» 9Cf»rf;t c:t aol^lhf-r nl 
3eeB0 pflioc nl bnR , ^cf fteisblenoo t-tewol': 



^6 



broke down. Among these companies were the Walter A. Wood 
Mowing and Reaping Machinery Company of Hooslck Palls, N.Y., 
the Acme Harvester Company of Peoria, 111., and the Massey- 
Harrls Company of Ironto, Ontario ^ '. In addition, at least 
two other important concerns were offered to the International 
Harvester Company during the process of its formation, these 
being Adrianoe-Platt and Company of Poughkeepsie, N.Y. and 

t- 

the Johnston Harvester Company of Batavla, N.Y. Deerlng 
desired that these companies be accepted into the merger, 
but the McCormick Company, seemingly more aware of the 
desirability of preserving the appearance of competition 
in the Industry, successfully opposed him ^^K 

Mention should be made at this point of the 
vertical integration which characterised the International 
Harvester Company upon its formation, and much of which still 
does. This resulted principally from the acquisitions made by 
the Deerlng company during the competitive period of the 
nineties. Shortly before the merger, Deerlng had built a 
rolling mill near his plant in Chicago. He acquired a con- 
trolling Interest in a South Chicago blast furnace, bought 
leases on iron ore property on the Mesabi Range and coal 
lands in Kentucky, He purchased hardwood forests in Missouri 
and yellow pine in Mississippi. Deerlng apparently hoped by 
these purchases to gain a cost advantage over hi.*; chief rival 
in the binder trade. When the amalgamation took place they 
became part of the International jjarvester Company ^°'. From 
the outset, therefore. International owned many of its own 



bcoW .A n&^ilB^: en'.:! -'lOv" ^'■•■'i ----r- -^rf,. , : . .nwcr; t-o=id 

l£.no.f:ten->;s»cffti sxJ^ hssJ- *!:©;?!: •• noiiiw ;ioi;j£ia9inl iBoi:.riev 

IIi;te i-folrfw lo 6oim bne. faoiit?.mtcJ 8^1 floqw YnsqicoO i^^t^eevTBH 

e<1.t aO i:>0-i'T'q itVj-iJecjracD srJj g^iixft; xneqr.:oo s^f^-f'^^^J sn* 

_rtn--> ^ f e« • r.-r.-^f. <j^! . --' ; P. ■-■ ?■ rf D ft ^ iTTnJcr pfr^ ipan [I^f^ -.n^IJ!oi 

Ifioo bfij •«!* no \;;J' 1 no ee; 

Igvti "^ 'vo es«:}'n«v6B is' oi t- -^ 

t 



M.7 



sources of raw materials, a factor of considerable Importance > 
in the company's later competitive position. 

The Method of Mereer 

By what steps did this large consolidation take 
place? It was certainly not done on impulse. The formation 
of the International Harvester Company in 1902 brought to a 
close twelve years of intermittent discussion on the subject 
among the principal binder manufacturers. As early as I890 
a group of leading binder producers, including McCorraick and! 
Deerlng, had reached a tentative agreement to consolidate 
into the American Harvester Company. This company had already 
incorporated in Illinois when the negotiations broke down 
because of disagreements over valuations w). Following this, 
at least two conferences had taken place between the McCormick 
and Deerlng Companies with a view to amalgamation before 
1902 ^^K Only in June, 1902, however, did the House of Morgan 
enter the picture, and events proceeded rapidly after that. 

Considerable legal significance was attached during 

the early years of the Harvester Company to whether the 

..3 
amalgamation had been proposed and brought about by the 

House of Morgan or whether the companies themselves had 

conceived the idea and had turned to Morgan for assistance. 

The Harvester Company contended that the former had been the 

case but the Bureau of Corporations, on the basis of evidence 

collected, concluded emphatically that the Morgan interests 



T> aigiK Jo ■■■- • * ■^'-^ yri T 

>!'. erf:^ .-fv^f:t«d i^OBlq bed :. oo ow^ i&B&l iB 

Sflf1iJ^ 8i8W fiOCtBotlingtf: £e-^»S. 9£t 

to eiefitf eri* ao |i toO lo ifjB«ii;i: ©ri;t :fi;cf 9BB9 

^ .00 



hB 



had simply carried out the desires of the companies. According 

to the company, George W, Perkins, a partner In the Morgan 

Company, conducted the negotiations and brought them to a-^ 

successful conclusion In late 1902. 

The harvester men met together around a Morgan con- 
ference table In late July, Perkins talked again of 
the benefits to them and to their customers of a 
consolidated Industry, of economies in manufacturing 
and Indlstrlbutlon, of foreign fields waiting to be 
developed. He talked of his proposed financial structure 
and the new conquests of new fields of endeavour that 
^ould result. He talked so well and painted such a 
rosy picture of the future that his listeners almost 
forgot their ancient differences and were willing to 
try to be friends. C9) 

Such was the Harvester Company's later description of the 

method of procedure. 

The original International Harvester Company was 
capitalized at $120 millions, $60 millions being Issued to 
the merging companies for their plants, equipment and Invent- 
ories, $50 millions for bills and accounts receivable and 
$10 millions of stock Issued to the House of Morgan for 
oash ^^^', A remarkable feature of the merger, considering 
that it took place shortly after 1900, was the absence of 
any significant amount of watered stock in the newly formed 
corporation. The Bureau of Corporations estimated the assets 
of the original International Harvester Company to be worth 
$110 millions and, since this figure Included no allowance for 
good will, the Bureau concluded that in this case, "the usual 
practice of inflating the Issues of stock was not attempted in 
any marked degree". In explanation of this, the Bureau cited 



flfijioM a bnuone iv ;• iJeir new 'xr^tzavuBri eriT 

1o nrssB ^'^■■ ' ' ■ • - • e-iel 

^- *> - ? r?ri* 

i^tii 1 . • T'o ? ■'!O0 wen »fi;J tifiB 

, ■ e 

, t 

eri* lo noliqlioBwb iBiBl a'- sriJ sew rie-f 

-^nevit^ bnp. j rr lot Ealnsqraoo anJi^isci Ofi^ 

Isvtu e J eici' ■"•nifi erf;J ,XXlw ^o^).^ 

■' for. trv '''ic'r' '^o ^nuf-r^ «rrf:J sni:?!- soI*':pt..7 



JS' 



the market conditions of the tlma ^ , and the close family 
ownership of the companies merged. In the new companyi the 
McCormlek family received ^•2,6jC of the stock and the Deerlng 
family 3^*^%» 

Immediately after the amalgamation, the 
International Harvester Company acquired all the stock of the 
Milwaukee Harvester Company (of which It already held the 
property), changed the name of this subsidiary to the Inter- 
national Harvester Company of America, and transferred to the 
new company all of Its warehouses and other facilities for selling. 
Since then the International Harvester Company of America has 
been the separate selling subsidiary of the larger company. 
The reason for this move in 1902 was that the Milwaukee Company, 
with its smaller capitalisation, was allowed to do business in 
many states from which It was felt the combination might be 
excluded. 

Control of the policies of the Harvester Company 
during the first ten years of its existence was placed in the 
hands of a three-man voting trust composed of C.H. MoCormlck, the 
new president, Charles Deerlng, the new chairman of the board of 
directors, and O.W, Perkins of the Morgan Company, presumably 
respresentlng the smaller constituents. The purpose of the 
voting trust, which for ten years exercised all of the normal 
powers of stockholders, was "to carry the company through its 
first years and to retain control in the hands of the old 
harvester families" ^^^\ Although technically the voting trust 



■■J wea, ^il- V . &f{.u.;qjico Dili lo siifii-'i&awo 

erW 7c ii'.-/c;th ecLi lie. deil/jpoe \;neqffio;; a- -nR isnoiJr.ai.-.dnl 

©ri;t 6Ieri yfeeeila il rfoirfw lo) Tirr le^EsvisH »©3a;«wIlM 

tol 8©i*lll06l lerf;?© br ; crf?i'isw 8;tl lo Us 

gf!,-; cr, r ■'ff>r?.A lo Yfiaqin'^'^- Ti-.-^p.^-vT&n .r.onof.'tr'.rTc.i-nT r-,rf:«- r*>rt* rsr*- 

,'>jacq(T!oO e »ri:t jsrf* esw SO^I nl 9^0:-- aldi tol noeftai h,r!'; 

&-J jci§Ic floi;}£alcJir.oo sfii iisl eaw it rioiriw ace ■ is^Je y««^ 

i{nf «rf;f Ic ae to loiinoO 

lo bieod etii 'to noroij 1 e^IiBtiO ^iaf^f^teryr/r^ w^a 

IgvTion ©ri;t lo I/e ^s^Rliioy^ BTeex neiJ aol rfntrfw ,;?ri;i;f 8r..Uov 
i'jj-o Si; J "io feLnfiri SiiJ' ni ioiJr co nlis-^^i viJ- {jkib aiaex dt^ill 



50 



gave equal voice to the three representatives, the Bureau of 
Corporations found In 1913 that "the predominating influence app- 
ears to have been with the MoCormlck interests" ^^^\ 

Early Problems of the Harvester Company 

Foremost among the problems facing the International 
Harvester Company In 1902 was that of integrating into a unit the 
manufacturing and distributing operations of the constituent 
companies. The task was extremely difficult. In addition to 
the tremendous duplication of physical resources that existed 
in the new companyi an undercurrent of Jealousy hampered negot- 
iations among the former competitors. The persistence of family 
interests and the concentration of control In a voting trust in 
which the two most powerful families predominated, made rapid 
adjustment impossible » Cyrus McCormlck noted some years later 
that "the final solution of jealousy-bred, petty friction did 
not come until the flowering of company spirit at the expiration 
of the voting trust" ^^^\ 

Soon after the formation of the company, it was 
found that the market for harvesting machinery was shrinking 
relative to what It had been during the period of Intense 
competition in the 1890* s. This was partly a result of "over- 
selling" the market during the competitive period. An additional 
reason was the failure of wheat acreage and production to expand 
In the decade 1900 to 191^ at a rate comparable to that of the 
preceding decade. In fact, in the opening decade and a half of 
this century wheat acreage and production remained nearly 



ur 



lo . 9ri:r ,e9vl;ts*neefliqei ©eirid^ eric o* eoiov iBtrp© ©vaa 

-cfc,i ='^^ftrf^•T^:^ ■nn •'*^^l•^c^«'ICT sff:^^ :?'^rfl fl^l r.t hnt'el enol^P^CT'iToO 
."■*■'' '2^. ..eir-)3ni xol-xioCoM snj njiw nsso even oj ciis 

erfd' *inJJ t '^alini^eial io iBcii ebw SO^i as. xoBqa^c'J ie:fc<?vif.H 

ftod'ielx© iBtii eeDTf/086'i IsotsY/q ^o fiol*i?olIqx/5 Ewo^^©m«^•I* ^. ' 

-^Q^^'fl feftiecr-rr.rf vgjjolse?: lo itneiTWCJf^hmr <7n' ^'-T-^ctrrri wen ftrf;j al 

fll jEuit vr i^ov e ill lciiaor> Jo nol^tjsUneonoo erfvt bcis e^Be-ierfnl 

bib tioli^^i'l \tctJ9q ,b9id-x6^'0-fB®t "^o noiJi/Ioe l&nll ©rid-" dea's 
nc f ■ti^'vlrr— fs srf-!' +r. tTiin?: '-T'-^-T.r'rr) "to ^rfti'Vo.f?' erf:?' fli+ntr f»nrcr' :ton 



b-nj '_c> jf.n.; o*; a-.iCi'j'f.^ino:) eaj^T fc c £ ■^'xv-i- uj '..■'.;vJ. 8r«os:. bi-ivT i:i 
^iliBen b' t noiiouboiq tnr ^tjnt^nios :f?.effvr Y'lr.-tnoo 8lri.+ 



51 



stationary ^^^K 

One finds evidence of the decreased demand for 
harvesting machinery In the annual sales of binders and mowers 
made by the Harvester Company during Its early years. Whereas 
the average annual number of binders sold by the merging 
oompanies prior to 1902 had totalled 152,000, the binder sales 
of the International Harvester Company during its first ten 
years averaged only 91 » 000. For mowers, the figures for the 
same periods were 217,000 and 170,000. The reduced volume 
meant heavier average overhead costs in both manufacturing and 
distribution. It was an incentive for the company to rearrange 
its existing facilities with a view to broadening its line of 
products to include tillage as well as harvesting implements. 

For a full year after the merger, the organisations 
of the componeni companies were left virtually intact, being 
simply renamed divisions of the new corporation. By 190'+ it 
was possible to attempt some rearrangements. First, plant 
space rendered idle by the reduced sales of harvesting equipment 
was converted to the production of other types of implements. 
The Piano Company's machinery, for example, was moved to the 
Deering Works at Chicago, and the Piano plant turned over to 
the production of wagons and manure spreaders. Similarly, the 
Milwaukee Harvester Company's equipment was moved to the 
McCormick Works and the Milwaukee plant equipped to produce 
cream separators and stationary gasoline engines. 



^^^^ ^tRClOtiteiZ 



snigT^ Dies Eisfcrsia io lecTi/n iBuar.z ssbisvb 9ri;t 

F^^^is?^ is^Rl'J ^rit ,000, fetod- P^erf SO'-X odf loliq eolneqmoo 

9ff!x;If .000,0^1 btiB 000, '^IS «i©v e 

^o »nil ztl sn>*fiPf'porrd oit welv e ri;tlw 8©l:tlJJtoe^ sntc^elx© til 

.e^npicrr^Xrrmt nrfj.tesvt-, Cfov ^.r, 't.^p.TI.' _ .+ ? :♦ '^ - ; ^r rrr 



52 



,^-,,,- Secondly, the new company purchased In Its early 
years several firms already established in the production of 
tillage Implements. Acquisitions of this type were principally 
Inspired by the heavy distributive overhead incidental to 
marketing harvesting implements during very short selling seasons 
each year. In 190^ the Weber Wagon Company of Chicago and the 
Keystone Company of Rock Falls, Illinois, were acquired, the 
latter being the producer of an historic line of tillage and 
haying implements ^'*-°'. In 1906, two manure spreader plants 
operated by the J.S. Kemp Company at Newark Valley, N.Y. and 
Waterloo, Iowa, were acquired. 

In addition to purchasing short-line firms. 
International made selling arrangements with several of them 
under which the company marketed their products under its own 
name, -'•n 1905 such a contract was made with the Bettendorf 
Axel Company of Davenport, Iowa, for the sale of its entire 
output of steel wagons. In 1909, International contracted to 
sell in the Canadian market only, the plows of the Parlln and 
Orendorff Company of Canton, Illinois. A similar contract was 
made with the Oliver Chilled Plow Company in the following year. 
In 1912, through an arrangement with the American Seeding 
Machinery Company, International Harvester became the sole seller 
of the entire output of that company's Richmond, Ind . plant, 
later purchased by International in 1920, 

By these means International Harvester gradually 
transformed itself from a short-line company producing binders. 



Jo noliouhoiq, 9tii nl b9f^^lIdB^&e xbB»rlB 6«mll la-iovea ?'iesx 

orf^'TCf '»'!:*fv *tTX'^ sl'^'t "^"^ ?ir"^M'l»!.Pfrp'riA . p:+rf'^"'<^0'^fri ?grll-f^ 

9tit hr'9 or Jo yncqfsoO no3RW i«o>W omj +^091 fli .is^x riOB» 

btiB e, 'loitBiri OB 'to isowboiq eriJ" giiidd isi^tel 

'iioba^iioa 9dt rfcflv sfcsT. sf.w iop.iiaoo e rious 5091 n^ .scnsn 

bne alliB'^l •di Jo Bwolq 9ri;t «xino d-9>!i6rr /Tj^ibBfisO sff;t fll IIbz 

snlfc»»£ OBoiipnA eriJ' rf;t.' naiifi n« ri3i;oiri;t ,Si^I nl 

•foe ^rfd' f*ma,no:fi t«».-t l»aVT .9?*" TbHO / j Pf t«:f «! .vrt e.q.rcC' Y7«»r»lrfoBM 

.OSvI ri iBonii^Bnis^tnl ^rf beeerisiwq 19^0! 
,^1e^aJtd gnlot;hoiq ^neqajoo f^nll-^tiorie b moil llee^i fcfJtmo'^pnjBi* 



53 



mowers and rakes, into a long-line company marketing a year-round 

variety of farm equipment. The company's selling arrangements with 

other firms during the transition period helped It to retain its 

dealers in the inter-harvesting seasons even before it had become 

a full-line firmx. In fact, the company did not become a- 

full-line manufacturers until 1919| when it was able to announce 

in its annual report: 

The most important manufacturing development of 1919 
was the company's entrance into the plow business in 
the United States. This was accomplished by the 
purchase of the well-known and long-established Parlln 
and Orendorff plow business at Canton, Illinois, and of 
the Chatanooga Plow Works, Chatanooga, Tenn. By these 
purchases ..* the company has rounded out Its list of 
products with an essential implement not heretofore 
manufactured by it. It is interesting to note that 
while at its formation 1902, the Harvester Company 
manufactured only nine kinds of machinery, the 
"International line" now consists of 5** separate 
classifications. 

A phase of the integration problem which became 

increasingly important in the company's early years, and which 

was only eventually solved by the action of the courts, was that 

of trade names. What trade names should be used on International 

implements? For years the company hesitated to abandon the old 

names for fear of losing buyers who, through habit or conviction,^ 

had become attached to one of them. Vhen the Aultman-Mlller 

Company was acquired, for example, H.P. McCormick stated in a 

letter to C.S. Funk, general manager of the comJ)any: 

The Buckeye selling organisation will market a certain 
number of Buckeye machines each season by reason of the 
prestige of the Buckeye machine and on account of the 
standing that a good many of the dealers have In the 
country. They have always been able to hold some good 
strong dealers, and for this reason there is some natural 
demand for Buckeye machinery; and their local selling 



c^ 



Niwoi-iB»^ 6 — anol B (Dial fSsilfii bfl« eirswom 

ni B!j- 'S'di o:ial ■ ':ir> a'^nBcrrcoo eri:t saw 



f 
nil 18*$ 
Jo bne ,eion.t i f ,^ 




-jq 
bns 




.. .. ' ■■■■ '■- 




sftt ,xv 


<9nJ:n \ino 





sJ'e'raqeE i - ^c e.' ex:::nc;::) *on "»nl..' 



J 



j'srM Efiv je;fii;oo srfd 'to aotSos 9rf:t '^d fc»vXoE \llBVicL»v9 xlcio esw 

jynp(iwoo BCit to f^ajeni^m Xeiones ,Vnx;1 .8.0 o;t •i9d';f«X 

nl«cl-ino B *'^'>^T9ra XXiw nol:^flB.f'nF:^Tr r»n*f.r*p ^^:«?sOtrH »ffT 
edJ lo i: r.cit^fie rioe» lo 7ecfmi;n 

b^ 8 biorf ocf 9X<i« n«»cl XBiiT .^jiJnwoo 



organisation Is so generally scattered aver the trade 
J- that there is a local Influence and prestige connected 
with the sale of the Buckeye machine which is almost 
entirely lacking In the Acme line. (17) 

Thus in 1912, although the McCorralck and Deering lines had 

become established as the leading sellers, the company was 

still marketing harvesting equipment under the names of 

McCormick, Deering, Champion, Milwaukee and Osborne. 

This Involved severe handicaps. Consider, for 

example, McCormick and Deering implements only. During the 

competitive period, these two companies had both pressed their 

retail agencies into nearly every town, village and hamlet in 

the country. After the amalgamation, this dual set of dealer 

outlets was retained as the company sought to continue 

marketing both McCormick and Deering Implements. The problems 

involved were manageable as long as the company produced 

harvesting Implements only, but once production and marketing 

operations were extended to a variety of tillage implements, 

they became extremely difficult. Each set of dealers had 

to be provided with a complete line of Implements, distinct 

from the other in design as well as in name. For many years, 

two complete lines of both harvesting and tillage machinery were 

produced and for a while there were even two tractors. Needless 

to say, such a multiplicity of models taxed to the limit the 

planning a^iillty of the company's engineers and the productive 

ability of its plants. This situation persisted until 1923 

when, as will be seen presently, it was brought to an end by 
or 

court order. 






ts^nll sflli^eCT ^«B lOoii odd ri^£;o.{i.LB jSiI?I fii eudV 

icl jisMenoO .nqsolfensp- sievoe JbevIovaJ: atfTI' 

bsojybo'iq x"P<^'^o2 ftrli e« gnol ss ©Idesasnecn eisw bevlovnl 
©vJtd-OMbo-rq 9di f'fTB ^loenlgne e'\ o ©rf:f Ito x^-tXisfs gnlnnelq 



55 



II. Public Interest In the Harvester Consolidation 

The oonsolldatlon of 1902 brought under the 
control of the International Harvester Company about 90J^ 
Of the trade In grain binders and Q0% of that in mowers 
for the United States ^\ Ten years elapsed, however, 
before any action was taken by the government to test the 
legality of the company under the Sherman Anti-trust Act. 
It is probable that the government's delay resulted at least 
partly from the failures experienced In enforcing the Sherman 
Act since the first case had gone before the Supreme Court in 
1895. In that year the prestige of the Act had suffered 
irreparable damage through the narrow view taken by the Court 
regarding federal jurisdiction in the case of the American 
Sugar Refining Company. 

For a decade and a half following the Sugar 
Company decision, "responsible public officials and enter- * 
prising businessmen expressed their belief — the one in 
words, the other in deeds — that after this decision there 
was no barrier to the monopolization of American industry" ^^^^ 
Meanwhile, with regard to the farm Implement industry, the 
government did what it could in the way of investigation by 
passing a Senate resolution directing the Commissioner of 
Corporations to investigate the International Harvester 
Company and the farm implement trade ^20)^ j^ ^^le report 
of this investigation we now turn. 



^. —-allty, huA 



ai t lehnJtcf niei^ nl ed? lo 

nFmiBnt: t;.,v-t ;iO'ic'i.a:rc i.i fcsonsiiaqxa zeimizx and- r::ci'i ^il;t'i£q 
fil . r^>ioled an ©eso ^fe-xll sri^J- sonle *oA 

?• • ?: ^;•.-'■ .-♦oi. '^■'I'r' ^:t^«^^T ?»rf:> tpox'- :tR"ff:f j^T ,'""''^J" 

;i'iuoJ ©xlv ■"<,€; i"ie«j.;.r wq^v wcjisn i^itS ; 'si; t-iCis'isqei'xi 

k Jo oolitAsilccjonom srict o;t ifslrtiBCf on SfiW 



?o 



Report of the Commissioner of Corporations ^ 1912 

The report of the Commissioner of Corporations on 
the International Harvester Company was completed in 1912 
and published in 1913* The Commissioner probed two principal 
phases of the company's existence: 

1) the purposes of, and the circumstances leading to, its 
formation, and 

2) the competitive methods which the company had employed 
since 1902, 

On the first point the Bureau observed that although 
competition in the pre-amalgamaticn period had been k«en, it 
had not been as rulnoui it"th*y ebthpanles' had claimed. The 
profit records of the constituent companies were examined for 
the years prior to the merger and profits were found lo have 
been reasonably good. The profit i-eeord, supported by the '^® 
fact that the market for harvesting machinery had been increas- 
ingly buoyant during the decade of the nineties, led the Bureau 
to discount the claim that ruinous competition had made the 

(2\) 

merger inevitable ^'^■^\ Regarding the purpose of the merger, 

the Bureau concluded: 

There is no doub$ that the principal motive for the 
formation of the International Harvester Company was 
to eliminate competition and to secure a dominant 
position in the trade. (22) 

On the second point — the competitive methods used 
since the merger — the company was sal'l by the Bureau to have 
engaged since 1902 in at least four undesirable forms of 
competition. They were: 

1) the operation of "bogus independents", 

2) full-line forcing, 

3) monopolizing the best dealers in a locality, and 



i;R-?Tc.rH orf:t f';-r , a*? ;:* ■••nif! ■=>f<t "^o ecsoftb end s^J'iwb inB\ou<S xl-^ni 
Sftf e^e^n 5srf oot^^i -^ anonlt'i d'srij mislo mli iauoozlb oi 

(re) 

»! fioaf • 9ri& iterfit on ei: ft^arfT 

t 
( 

'lo BiiCiOt eI<J»ii ^-sfwijj ittel ;^efif'X ct* ui SO^I socii* f-- / ' 

leiaw Y^riT .no.t.t t*»qtnoc 

,"b ^'95noqȣ)ni zi/god"" "^o nol^fpnsqo erf:t (i 

,5»flioic1 «nil -II ti'I (S 
ftfle ,x*lIj»aoi rt txl %t%l%%'^ T (f 



1) Bogus Independents ; The secret acquisitions of the 
company In Its early years have already been mentioned. The 
Bureau of Corporations described at some length the extreme 
efforts of the company to keep these acquisitions secret. 
Apparently none but the very highest executives knew of the 
arrangements. On at least one occasion, the company had 
publicly denied rumours which happened to get Into circulation 
about the true ownership of the Osborne Company. 

2) Full-line Forcing t This Is the term generally used In 
the Implement Industry to denote exclusive de^^llng. The 
Bureau of Corporations found that the early International 
Harvester Company possessed, In Its virtual monopoly of 
harvesting implements, an effective weapon for use against 
dealers who wished to handle the tillage Implements of ether 
manufacturers. In other words, Harvester was found to be able 
to force dealers to handle Its new lines undor threat of 
depriving dealers of Its monopolized lines. The Bureau stated 
that the company had originally Included an exclusive-dealing 
clause In Its contracts with its agents but that this practice 
was discontinued In 1905 "when antitrust proceedings were 
threatened against the company In several states." 

3) Monopolizing the Best Dealers ; This abuse was a natural 
result of Harvester's continuing to produce and market the 
products of its five constituent companies. It is well demon- 
strated in the following extract from a company sales committee 
report; 

We believe that so long as there Is competitioa it is 
desirable for the Company to maintain five selling 
organizations for the purpose of getting the largest 



no "tlo o:^n.; o;t bsnftcrqiBff rfolr^w t bftlneb ylnllcfwq 

.\;neq0o3 eniodeO »jr{^ lo qiriP"-^'^^/'^ ^ .-,+ ^.ri:\ iuodB 

at fo»ew ^ilBiftn»g ini«>;J ' - ^i (S 

©ifT .snilpeb evl' . ^^J-onsfc oi \i;fsi;Etfit Jaoraelqml »ri:f 

XEiiol;teni©inI xliB- ■"' ' ■'• '^ fi^nirot EfioJ:;*B'ioqio' "' - uBe-uia 

Ic \^If ist;;J'siv tit nl ,?)eE8»?r:oq: ^nsqmoJ 't»:tG©VT[sH 

•IcfiB ed o* br\t!Ot ebv ler^eeviBH ,ebiow 7sri?o r m 

Tto ;^£8trf# T^hni/ BsviiJi wen e;tl eXbf'j?'^ of ^Tt^la^b aoic^ oJ 

8niIf70^— ©viex/iox-. as foebjyioni ^XJenlgiio dpH \nRqa^oo edi ipci 

?snlb«©ooiq JetriJ^id^ng nerfw" ^0?X mi h©t'nX;tnooe. . v.* 
".ce:i-B;f2 Xb'£«v«r ni xcecimoo eri^ iteniBse n€-n©:tFe>irf:t 

Xfi- n eew ?>e. . ■lit.JBilJ .'^ ^i 

t.' ••/iiBW boB t^oii.o'io 1 .1 ..n/wni;trn,t.i -- •leJ'Esvijt* i lo cfXiieei 

-V .0 evil eJX lo tiouboiq 

: rpXb8 s ffOT't cfof-idxe aniwoXXol ©rid' nX b^iBiie. 

el : ^ P a no f bW 

O 



58 



amount of effort from the greatest number of local 
agents without expense to the company, and for the 
purpose of utilizing in its own business as much as 
possible of the local agency tnaterlal rather than 
permit any of it to become available for competitors . (23) 

h) Resale Price Maintenance ; The Bureau also charged that 

The company at one time openly attempted, through a 
clause in Its commission contracts, to control the 

^. prices paid for Its machines by the farmer. Since 
the elimination of this cluase, "suggested" retail 
price lists have been rather generally circulated by 

^'' some of Its branches. (2^) 

It Was contended that the use of "suggested" price lists had 
virtually the same effect as an outright stipulation, especially 
In view of the company's strategic power to deprive an offendtlng 
agent of the right to handle Its monopolized products. 

In addition to these four abuses, the exceptional 

financial resources of the Harvester Company were cited as a 

contributor to the maintenance of Its monopolistic position. 

The company's connections with J. P. Morgan and Company and 

^John D, Rockefeller, the latter the father-In- law of one of 

the McCormlcks, gave It ready access to loan capital not so 

easily available to the company's competitors. This, the 

Bureau contended, 

not only enables It to secure the economies of large 
scale operations, which, as a rule, give It marked 
advantages In manufacturing costs, but also enables 
It to maintain a very elaborate selling organisation 
by virtue of the variety and extent of Its business. 
Furthermore, (the company's financial resources) give 
It a great advantage In extending credit to purchasers, 
an exceedingly Important feature of the farm machinery 
Industry, (25) 



:0;T r 






, i. -; .., ... f-t f lo ©flioe 



- - ":?■• .-A'-, '■' dr. o->rv ^ r..p -^rT:^ n.^t Tr + ri.'f ffr^Tm 

V ycf 



5^ 



Antl- trust Suit by the Department of Justice ^ 1912. , 

Stimulated by the findings of the Bureau of 
Corporations in 1912, the United States government immediately 
brought suit against the International Harvester Company for 
violation of the Sherman Anti-trust Act. Doubtless the action 
of the Supreme Court in 1911 in ordering the dissolution of the 
Standard Oil and American Tobacco Companies was a source of 
added encouragement to the government, for the evidence made 
available by the Bureau's investigation seemed to warrant hope 
that if the "rule of reason" enunciated in those cases were 
applied, the finding would favour the government ^^^K 

Before launching the suit the Attorney General 
requested the assistance of the Bureau of Corporations once 
again, this time to consider the terms of the government's 
petition to the courts. The government contemplated a decree 
splitting up the combination. Together, the Department of ' 
Justice and the Bureau of Corporations agreed that the primary 
requisite of such a split was the separation of the two chief 
elements of the combination, the McCormlck and the Deering 
plants and brands ^^'\ 

The original petition of the Department of 
Justice, filed In the United States District Court of Minnesota 
in April, 1912, asked for the appointment of a receiver for the 
company if It did not submit to a bona fide plan for such a 
separation. More than two years elapsed before the Court 
reached a decision. In August, 191^+, it found in favour of . , 



©ri;t "lo floliulosal!) erij anltafcio nl lx\;l al ;fiuoO saisiqiiB eri;t lo 

^o eo*^ooe e Eew e^ineqinoO oosecfoT rjgo.HeinA bne ilO 5i£hne*8 

(jbfiii) ©afis&ive ©ff:^ lol ,;Jnsmnievoa edJ •:' tnnin 99 silicone bebbs 

•lew esEBO seorl* nl be:t si onirn© "noEes? ''o ©ItJi" 9ff:f 11 :t6rf;t 
.v^S) ;fr9mn'i9vo8 ed;f iifovel blito. -u.!:5nll ,©dJ^ ,bsllqqft 

©ono encl^BioqioD ^o kb'&iitS ©n;J lo soaE;tsieaB cricf be^faeDpei 
3'p ■ lo emi^i 9r^J lebie.cioc oct snilJ sir':? ,ni:6j)B 

lo iciB.fiiisaeQ. Bi'i ^ ■Te»r[:l-©^,-'^ ,fioi:tBnl:dr( o &(ii qu aniitiJliqe 
170 '^ ' pnoj'.t®7or"ic'^ lo ."ps"r!:fff orfl bns ©olitput 

XL'ii:2 c?\, aiij ^c xiclj :i'i^4 yL' •.-•i.j u^i^- j^j.'^c; iz ao.c/a 'to 'j^le.JUpei 
3fili©®<.l Qdi bfiB >{Difn'ioOoM ©d:^ ,noi;Jfln^dtnoo ©rid' lo eJneiiel® 

.^"^' ebnind bas, s^nslq 

lo ito .:? lo ioiJI:t3(if .f en.^:;/?'- 

acfoesjfini' -iwo'' •*-'-' -,.-.,.. 7„ irj.; odj ' ■ ' ,9nl:t8uL 

•xii Icl nev.f.fioei 13 lo dii«*f!T:^ni:oraB ' AX titiqk at 

B rtoue lol fiBlq «bil unod e o:t JimdoB ;ton bib ;tl 11 ynsqfioo 

^t'r.ftn'"' r.M 97olgd 6»«qBle eiB«Y ovi nf.ri:f sicM ,noi;t«Tflqs« 

lo • 111 bnuol Jl ,^^1^1 id-sjjgt/A nl .nofeloeb s br*(iofi9t 



ou 



the govornment, and the company was ordered "separated and 
divided among at least three substantially equal, separate, 
distinct and independent corporations with wholly separate 
owners and stockholders" ^2"', 

Immediately the International Harvester Company 
appealed this decision to the Supreme Court of the United 
States, The appeal was argued Inconclusively in 1915 and again 
in 1917, and was then placed on the calendar for reargument. 
It was still unsettled early in I918 when, along with seven 
other anti- trust suits. It was postponed for hearing for the 
duration of the war ^ ^'. 

The Consent Decree of 191 8 

International's legal status remained thus in the 
balance until July, 1918, when the company, fretting under the 
uncertainty of the case, made a proposal to the Attorney General, 
The two parties agreed to enter c consent decree, the company 
stipulating that this should be a modified form of the original 
decree. Tliereupon the company moved to have its appeal on the 
I91I+ decision dismissed, and the modified consent decree was 
entered in November of the same year. 

The consent decree of 19^8 was probably the most 
important single item in the Harvester Company's legal history. 
Though its importance is found primarily in its effect on the 
company itself, the subsequent legal dispute over its validity 
is a significant episode in the history of anti-trust proceedings 



,*n©iriLrgiE3i 10.: ■iju.'nfj.i-:,^ *n:) no beoelq flen^ cbw fjns ,^X9I at 
ni»v?!-d riir.tw snolfi ,rrfldw 8i9I fli X-fis* bflliitesnr; 111*8 bbw *I 

. ^^' 'xbw efl;t ^o not&Rtub 

ai.j ii:-n:j ^: ■ j j t i ■ «\.Ii.' ,.00 f^ffrf- nerfw ,8lPI ,YlyL lijrjj ej^fiBlfid 

v.aeo!9or> -sic- fib or»9Bnoo p isd^ne ci beeige aeljiBtr owct eriT 

j.iu.'^.^'io rjiij lo miu. ^^fitibop b ed biwcrfa elri:J- d'eri;)' snid'Bltfqid-e 

•ff;J nc XseqqB 8:tl svBri o:t Esvoip xnxjqmoo ©f(;t rroqueieriT .eeir^sb 

esw ©eioeb ^nsenoo bsl'tibom «>f<J ^rfg , S»e£li:!elf> aolB^Dftb t^I?! 

,-i; 'N: ■"- revcK al beis^fl© 

d'eoip eri* ^IcfsdCiu tj^' SXPI lo e©io6i> ;tofc*enoo ©nT 
,\ioittd jLBSfl e'^naqmoO le^ecviBli ©ff:t nt meil el^nlz insiioqml 
9[ii no ^oe^ta tit cit \StiBmtiq bnuol nt ©oneJToqml eJl riStJOrfT 

p -oonq tf«jjii-J:;tnB lo ytoctBlrf ©ri* nt ■- © tfneoillnsie 1? el 



61 



in the United States during the period. 

The consent decree contained four main provisions. 
First , the Harvester Company was enjoined from having more than 
one agent or representative in any city or town in the United 
States for the sale of its harvesting machinery or other implem- 
ents. The immediate effect of this prohibition was a drastic 
reduction in the number of the company's dealers, from 21,800 
in 1917 to 13,860 in 1919 ^^^K An additional effect was the 
discontinuance by the company of the practice of producing two 
complete lines of Implements to bear the McCormick and Deering 
names. It will be recalled that the chief Justification of thi3 
practice had been its effectiveness in retaining the better 
dealers for the company. Under the new restriction, the prod- 
usction of two separate lines of implements became purposeless 
aiftfl iineconomlcal. Thus, by 1923 the company had designed an 
entirely new binder, which it claimed embodied the best features 
of both former models. This implement, shortly to be followed 
by" a host of others, introduced to the market for the first time 
the famous "McCormick-Deering" trade name which has sine* 
appeared on all the company's farm implements -^ . 

^ Secondly , the company was ordered to offer for sale 

the harvesting machinery lines now made and sold under 
the trade names of ' Osborne *. ' Milwaukee * and ' Champion *. 

'■ respectively, including the exclusive right to use such 

trade names, and all patterns, drawings, blueprints, dies, 

® Jigs and other machines and equipment specially used by 
the International Harvester Company in the manufacture of 
the said three harvesting machine lines respectively. (32) 

It was stipulated that the purchaser of these lines must be a 



,boJ:i«q »r{J snlii/fe zeieiB f>Wtit^ »dS nl 
.Brtoleivoiq nicm luol &9nJteJnoo ?>»iDSb jneanoo en'i 

■ So JO ^iiSiiJ'iii/fir j,n.:3csvi£n zzi ic sxna i:f:j tc'i sftits^S 

erfj- &BW ^JuRl-^e lenoi^It-foe nA .^*^^' 9IPi. fix OdS,£I o:r ^^l^.l ni 

o^i 8flJo«5cic Jo 9r> Bdi "jo xneqmoo sfftf xc^ »o«Bi/nlinooglb 

;inf.T«>*rT ?,fle jCoiof'to'^v: ©ri* isscf o;* ed-n^ffislqus ^ 'tn f-^fvil e;t9iqsoo 

c.td:t to ciottBolJl^Bul Islrfo srii^ ;tBrf:t ftallBosi s'd I-^lu- ;}! .ewsBfi 

883l©8oqii.fq ©meoftd erfneicelqasl to esnll s;tBi6q*sE ow5 lo noliosssi 
tie feonaiaeb heri \naqaioo eri* £S9X ^ef ^eurfT .leoimonoopflif Mb 

©nl* *eiH erf;^ lol d-mliein 9ri;r o:f F)«oi/&oijni ,eieri*o "^o ctaorf e yd 

n jeJnl-j r ria f«« .esBrefl it, -J 

\ ' " ' ' •' r-' }: 1. 1' 

(S£) ,xlevIiiye>qB9i ewill •^ ^ sn-t;t89Tififf B»idi Mbc er(;t 

fi ©cf :t8Arai e«all enorfct ^o 'repRio'rifc prf:t ±P!-<:f f)»:tRrtf,r f.-tp. Reir .fT 



ve. 



responsible manufacturer of agricultural implements in the 
United States, with no affiliation with International Harv- 
ester. In the event of disagreement over the price, the Court 
was to decide what it should be. As a result of this order, 
the Osborne line was immediately sold to the Emerson-Brantingham 
Company of Rockford, and the Champion line to the B.F. Avery 
Company of Louisville. The Milwaukee line was not disposed I 
of until 192lf, when it was sold to the Moline Plow Company 
of Moline, Illinois. , acta ^i Ki„£n 

Third IV y the company was required to offer for 
sale the plants in which it was then producing the Osborne 
line and the Champion line, these being located at Auburn, 
N.Y. , and Springfield, Ohio, respectively. ^^3) Apparently 
it was hoped that these plants would be sold to the buyers 
of the Osborne and Champion lines of implements, but these 
buyers did not want them. The Court, therefore, with the 
consent of the government, permitted the company to continue 
to operate these plants for other purposes. 

The fourth stipulation of the consent decree was 
that if. In the opinion of the government, competition had not 
been restored in the harvesting machinery industry within two 
years, "then the United States shall have the right to such 
further relief herein as shall be necessary to restore said 
competitive conditions and to bring about a situation in harmony 
with law". It will be seen that the government later took 
advantage of this provision. 



-riBH iBnolitemcaTfll ciilv noliBillllB en riilw ,c©;fB;tB fastflnD 
fiuoO ©If* ^solig «rf* i»vo ^nome^iaeBlb Jo Jnevs 9rf;f nl ,i9it9 

.'vrF .r jfr'- *t(- .■tri'r'"'T r. sA . S(^ f- rrrrrf? .t ^ "ff<rfv r^^riefi o^ 2p.V^ 

- i^,nxJfi6ici.-.iiCc'i&J?/. &ni 03 lloz \i sj bi ir-Siiiari sbw nail t»fl'ioa20 ©d^ 

X10V; . erf* o;I ®nlX nolqirfirfO erf* bns fbtoTi-Aoofl to yneqinoO 

\,nBq.iio'J wci-i snlloM &r;? oj i^^^loa esw 3i neriw ,+^ii^i Il^nu lo 

.Blonllll ,»n^IoM 1o 

icI 'so'i?o (j- bfiiixjpei e»w xnsqmoo ©rid" ,v. i 

ylitiBiBqqA ^^^^ •Xlovli'oeqesi ^olriC ^Msi^gnliqS bne ,.X.Il 

.->»r»'jr*(j ft£{;J r! 1 '■■'"('■{• «irr f.Tcr.'u. p-tMcT-r cr^^rf-! ^f^rfrt r>«CTfirf Ef*^' '^ I 

«t&i-<;f iacf ,eofiftii^aIq ' ■ 'io serili aoIqrcadO Uib t^fi'iocfeO Biii Jo 
ecii ri;tlw (©tc^sisri* ^iiuo:^ erlT *3!9ri;f :tnflw ;ton blh eie^ucf 

«^r^'^^.•*ar.'^ n't irpRrrnn-^ ■r.rf-' Fia;*:! rififfv, J:^^©ffin'll?■"■o^1 '^i-'*" "^n :tn©Bnoo 

aetiT Of—Of:., jneer?OD erfj "Jio noliJEluqli^c lijix^ p ? ©rfT 
:ton b/Bri noi;tl;t©qflJOo ^^netirmsvos ©rf;t Io nolniao ©riit nl ,lJt iBilt 

riojJB oj JAii»Ii ofij svBii iiBiii. £&jBjti ir;©JinU »nJ asri?^ 

^.^se ©7o:f8©-t c e nl»i9d Jctl^z iBtiituJ 

j.cio<j T«ij£j. Jn^rnT'Vos ph:? JiSiiJ us&e sg Xllw il ."wbX rictlw 

.noJaivoiq tittii Jo B-g^BictBvhn 



DJ 



The consent decree of 1918 was a turning-point 
in the history of the International Harvester Compgy. It 
forced upon the company a degree of unity in structure and 
purpose which might not otherwise have been achieved. Ever 
since its inception, the company had concentrated on both the 
McCormick and Deering lines, and had continued to produce the 
other lines, even though in ever-decreasing numbers for a local 
demand. The cost of this needless variety was reckoned in 
terras of duplication of effort and the sacrifice of much 
efficiency and economy which would have resulted from large- 
scale production in a unified organisation. It might even be 
suggested that the company welcomed the opportunity of 
divesting itself of these superfluous lines In 1918, since 
(as will be seen In Chapter Three) about this time costly 
changes in the strength and design of implements were becoming 
necessary In order to adapt them to tractor use. 

The consent decree was also significant from the 
government's point of view. In the Report of the Attorney 
General for 1918 '^^ the Harvester case was described as "the 
most fundamental issue which has arisen under the Sherman Act 
since its constitutionality was determined". The Attorney 
General cited the dissolution order of 19 1^ and the consent 
decree of 1918 as support for the government's contention that 
Industrial combinations "large enough to make the resulting 
restriction of competition direct and substantial" were unlaw- 
ful regardless of whether or not the combination had actually 



used its power wrongfully. 



«(^j iiiod no ■' -noo bed y,ntC'MOD &rid ,noi;icr>rpi S'jj: sonta 

»r<f •'•>wt^ofq o:* ?:f>un-f::fnoo bcri has ,8»ni;I sniiseCI fen;? jJoiraic 

uJt f iBV 8fc«If>e^fi Bill;! 'Jo ^tioo aiVI . ' ' 

rfouw lo »oltlio«E '^i-^^t '^na ;;^^ol1:9 to ciottnollqub "^o sbt-t©* 

•cf neve iii^^xm il .aoUatinB^iQ beliiau e fii fioicTouroiq sleoa 
1o x^inv^'rcK^rrr. 9[{i fc©fflooI»w -^jneqinoo eriJ" iBd^i be^eoaaue 



e': 



.-I ra r -. r I ? ^ er r ' f • •-/ A O O 



'^"' lO tlss:tf ar* ^;tP■:•Tr»^ 



XiSeoo enJict aldi iuocif > tV 'i^iusii'J at n©»c scf iiiw as) 

■^©mccd^A ©rfJ to i'aoq^K erf:f nl .w-itiv tc 5fiicq e'^necinievoa 

©ricf" 80 bedtioBQb sew ^bbo ip^BeviBH »ri* ^^' 8I9I lot lecisneO 

;toA •'■'?''■'';•••'? *>'':♦ «T'>fTfrr .-(ci.-j ? ,a ftrf rfofnW «atr»»f f air r<r'fs ^'■; nt rtj^.n"^ 

^6a'io;?iii 9i1j , "beiiiiJiejef. sew liJiifinoi^Jtio j Jenoo e:JJ: eonJe 
d-n»Bnoo •ritf bne ■♦^I^I to "isfcto noicrirloeeib eri;t fcfi;^io laieneO 

-WBlnw B19V '^iBlinaizduB bne *os•Ii^ .iol*i;f aqmco to aot&olitt»i 



6h 



Later events proved the Attorney's General view 
to have been over-optlmlstio, for within a decade Harvester 
was to be classified by the Supreme Court as one of the "good" 
trusts by reason of its having refrained from using In a 
predatory manner the power which It admittedly possessed. 
Before this was done, however, the Federal Trade Commission 
made Its first full-dress Investigation Into the Industry and 
a brief examination of Its findings follows, ^"**'' 

Federal Trade Commission Investigation In 1920 ^< 

In 1920 the Federal Trade Commission Issued its 
Report on the Causes of High Prices of Farm Implements, in 
which the consent decree of 1918 was declared to have had 
very little effect on the International Harvester Company's 
dominating position in the industry. As reasons for this, 
the Sommisslon cited the declining Importance of the lines 
which the company had given up, and the relatively high cost 
of production of those lines as well as the higher costs of 
Harvester's competitors In general. The Commission recommended 
the same remedy as had been sought by the Department of Justice 
and the Bureau of Corporations in 1912, viz. the separation 
into two companies of the MoCormlck and Deerlng plants and 
brands. In addition, the Commission advocated the separation 
of both these from the steel works subsidiary and the Iron ore 
and coal mines held by the International Harvester Company ^^^K 

In its 1920 report the Federal Trade Commission also 



'X».t89VinH stbso^b flJrfJlw tot »ol:t8Jtn'l*qo-ievo cf^d «>Y«ri o;r 

•'boos" «»rf:t "^-^ '^^'^ ^^- ■t '■;:'■''' "^ r-rrpTu?/ <^ff:J W ^oM^?^^sl8 ^'^ o# esw 

e rtl sfilati irio-ri oonisT^&i gniverf sJl to noecsi \c t^aai& 

.fieesse^oq X-Ib®*^-l:»lf>8 *i rioirfw iswoq er(^ T«nn«rp xio^'?f''=^'«l 

.ewcllo^ ssni&ni'i erfl I0 no lit BnliUBxe '1 slid s 
Q^X. • • ■ ■ ^3l 

fll ,E:tnsffi9lqmI criB**! 1;o eeoli'l riglH lo esei/sO sriJ no ;tioq»H 

,eif{^ 10I enoeaei sA .^iiteyfinl ©rfd" ni noJt^leoq gnlcfflnlmob 

eeffM nri* **?> ©on.ptTC-Tfrt s^.^'^i■Iof^ ?«ri.'^ 'S<=>:t.fo nolaslr^froD ©rfrf 

5 200 naxii visvijBi&i Sfii" bcii\ ,qu nevijTg Led XATjsqiccc erio rioify 

to e;t£oo isriglff »cii ee XIsw ee ssnll esorti Jo noiinuf-otq lo 

nolteisqea «ff^ .siv ,SX(?i nl 8noi;tfiioqior' Ic UBeiuQ eri;t ^^B 

^n.~ f:!'nrlr ir?*T«»*<^ T'Oe ??'^ In'-rcOoM erf.t "^o s^frrpffrrro ow:t o:fnl 

ftio noil Britf ^nF x'^BlbtedvB ejCiow Ie«»:fe firf:^ tnoil •eori* rfJotf lo 
. '^^•' XHHCivoO 19^ I«nolJerttfl*nI eri* yd bl»ri esnlrn leeo bne 

oBlfc no.leElmnioO »bBzT IB•Io^©*■ •/<;» iii>q9i OS^I eJI nl 



b? 



examined the competitive practices then followed In the 
implement Industry, directing its attention principally to 
trade association activity. Considerable evidence was prod- 
uced to show that tacit collusion existed in the matter of 
pricing through price comparison meetings, standardization 
meetings, exchanges of price lists, letters concerning contem- 
plated price changes, and so on. Nevertheless, very little i 
evidence was produced to Indicate that the International Harv- 
ester Company was still engaging in predatory practices, such 
as those cited by the Bureau of Corporations eight years earlier. 
The provisions of the consent decree had made some of these 
impossible, and It may be conjectured that the company was 
exerting extra caution during these years to avoid such 
practices. From this phase of the Commission's report of 
1920, it was amply clear that any dissolution suit by the 1 
government must rest its claim on Harvester's size relative 
to its competitors, rather than on alleged abuses in competition. 

Suit to Amend the Consent Decree. 192^ to 1927 

The Department of Justice did not take immediate 
action on the basis of the Federal Trade Commission report 
of 1920 but made some further investigation of its own. In 
1922, for example, it compiled figures to show that Internat- 
ional enjoyed in that year 75»^% of the total binders trade 
of the country, 66.75^ of the mowers, and 70.55^ of corn binders. 
Its closest competitor in that year was the John Deere Company, 
which produced between 11/f and 1$% of the total of these 



srii at b9Wollo1 n9tii b^oHobic svictl^J^irnoo 9ri;J bsnlinBXS 
0* xXIaqionliq aoitriBiiB etl aniJoaiJ:' ^\iisubnl iaooBlqial 

lo •x'::^j:m» Ai:ii nt b^inixe aolzulloo itriei iBn:i wcriE oi 5®ol' 

-ai©j-no9 goimoof^oo aieititel ,e:tell ©oliq to BegnBrfox© ,8snl^9Mi 

©Ia*il 'iisv fHoeleriiisrsVl .no oe fone ,B»3nsf(o sc^liq bsj-slq 

-vibH Ienoli^Bnie';tnI orfj ifidi «;tBoi:ftn.t oi- teouboiq esw ©onohlv© 

rfoj.rp ,3f»oiioetq ^•toifefce'Tq nt gnlSBgn^ litis, asw "\[nsqmoO i©:»ee 

•2Sff;t to M!OB sbEOi fccri ©eiosD :tnsp.noo eri;f lo enolcivoiq »rfT 

riOX/t-. -i...vii Oj Z'LueX Bi.^":. '.30 ei:fX6 3.::j19X9 

lo :^'rcqe'i a'nolBpJmflaoO sri:t lo szerio exd;t ffioi"? .8©oi:fOfiiq 
.not;tl;t»qiFOo nt ssEycfe bssslls no ncri;f isriJei ,eio*i:fec[ffloo 8:t2 o* 



,:uij^i>-iuJ..-jLa:^:L 



^eei ^-;. ji.-^c 'OvJ , ericf . bnoHT^ o;f itisQ 



ct70cTen rrole - l£i©b»1 efl;t ?o eleed dricf no nolitOB 

-i»eii9inl iBCi:i • -''- fafXiai'T beHqmoo dl ,9lqmB>« lol ,SS?i 

•bf,ii I' lo 3^4^,$^ leox iBdS at bexotci9 iBnot 

.«• n-ioo lo St^.O^ baa jei^wcc! sdi lo 'if^.iid ,\:'t:tnc(0{> eri;^' lo 

eeeil;; To IsJo^ i^rt;^ lo ^^i Uib «vli nd«w,1t^jo (;*DuboTq rioJtriw 



66 



implements ^36)^ g^ July, 1923, the Department had marshalled 
its evidence and in that month it filed a petition in the 
District Court of Minnesota for revision of the consent decree 
to bring about a further dissolution of the International Harv- 
•ster Company as recommended by the Federal Trade Commission in 
1920. The basis of the petition was the claim that the consent 
decree had failed to restore competition, and that International 
Harvester, by virtue of its size, still dbminated the industry. 

In 1926 the District Court denied this petition of 

the government. In so doing, the Court stated: 

The evidence in this case ... falls to prove ... that 
the International Harvester Company, since the sale of 
the 'Osborne', Milwaukee", and 'Champion* lines and 
their appurtenances has been or is unduly or unreason- 
ably monopolizing or restraining interstate commerce in 
harvesting machinery in the United States; but in our 
opinion it conclusively proves that it has not done and 
is not doing so, that competition in the manufacture and 
sale of harvesting machines in Interstate commerce in 
the United States has been and is free and untrammeled. "* 

The Court pointed out that since 1902 International's share 

of the market for all harvesting implements had decreased from 

about B^% to 6h% and that powerful competitors (doubtless 

referring to the John Deere Company) had entered the field, in 

whose presence "Harvester cannot and does not control or 

dictate the prices of the harvesting machinery". 

The government appealed this decision to the 
Supreme Court of the United States which, in June, 1927» 
upheld the decision of the lower court, thus bringing to an 
end Harvester's 15- year interim before the courts. In so 
doing, the Supreme Court issued the often-quoted dictum 



bell; tBii '-iqeQ cr.~ ,i...vi ,x^uu -^fl r^^' tiaem^lqtal 

-vifiii ii-. iftia^ &f*i to ncs3:;icez£r z. ■■ -'^d? gnlncf o) 

at f!0.^ : oO fbB'fi leisbe"? flri:f x^ ■-■•®'' s« >c » 

7. Atr;*^'. '^'K* *KK,t -fr^^-f^• «rfi- ?ev notd'.**PCf ••''•[■. "><? sized srfT .•' .-X 

^O 8i ' '- ^ I* > . ;■ i ' '^ -■'-■ . ^ - - , . ;-'."ilJ 

fill 00 ©cfsv e-xoitni nl eso-friosffl -d lo «ise 

.ftolocffliii^nw ftne i^eiT: el &ne n»9tf asrf asjcji iieJlnD ©fl;t 

«Tgda e*I«noi.JffrTe*flT S0o.[ »oflle ;t6rf;J cfuo fceitnloq d-'w/oO «ffr 

citr-lJaifch) cicji:;^ 0.3 COG- ^uVx'^ywoq Jan;? oaiv «rc cJ S;?^ 4tiod« 
al jMslT: eri;t bsreinm bsri {"XPffiqiaoO eie^fl nrfoL ©rfd' o* gniiisls't 

'■1 r.-tT-?nr"-. tor? Rf^ah ^rv .tnnrtrn T^iitR-^VT,-*!"' ftoffT^ntrr Bpor^w 

£ ,9«uL nl |ffotr*w ; '^o ^itioO •roeiqirE 

'"a e:t nrff'.f?^7£f arfrf:"- ..■♦-for "rv- f r.K^t *o r?n^-*'^<^^ ftrf:* tf^rfatr 

o.- • • .iSTuco «tir s'loir^d .Ti'jK-cr^'i ■^i'.o\-<'j e'Tojr 

3 erii ,8flloft 



o/ 



(repetitive of that contained In the steel decision) that 

the law does not make the mere size of a corporation, 
however impressive, or the existence of unexerted power 
on its part, an offense, when unaccompanied by unlawful 
conduct in the exercise of its power. (38) 

The Supreme Court conceded that independent firms usually sold 
their implements at the approximate prices charged by Internat- 
ional, but this was done "independently and as a matter of 
business expediency". Moreover, the Court stated that no 
instance had been discovered where Harvester had reduced its 
prices for the sole purpose of driving out a competitor. 

Significance of the Harvester Case 

•J 

Although no detailed analysis is here attempted, 

some brief comment follows concerning the Import of the 

proceedings just described. The Harvester case has generally 

been considered one of the more significant in the evolution of 

anti-trust policy in the United States. After the injection 

of the "rule of reason" into the interpretation of the law in 

the oil and tobacco oases of 1911, no concrete standard existed 

by which the legality of mergers might be tested ^-"^ . There- 
in U! m < •(- e 

after, legal doctrines which had been enunciated in specific 
eases (using such criteria as the intent to monopolize, the 
extent of market control and the abuse of power) became the 
only bases on which such tests might be made. 

In attempting to reach a decision on the Harvester 
Company's appeal in 1915, the Supreme Court was faced with the 

fact that the Company had been found guilty of certain competitive 

■7 in th^i . 



ns fiiaq ^il no 
(o£) ,iviv-oq ^di 10 ©cio-icxci oritt nJ ioisbcioo 

hlon "%'' 'i d-ne&flF iarii too JttroO rMi«iqu8 srfT 

.iGitl^eqiTOo e :^I/o jjuiviife Ic ©^o^'iwci Bios sriJ lol seol'iq 

s^'J 'to J^'ioqiui 0; 'n'le.'fioo ew^oilol Jflsftijico loiid »inoe 

^Xsion»8 earl seeo t©*Br ,ii>erfi1o^e^ iJe^t agnlf^^ceooiq 

"tn .jf. !-f fiff," i -^.-f . '^sin ^T' fff-^ f o ^^ -^..v •-./•♦ ^r, r*nr fiTj'?^ '■".rroo n*»ncf 

al mal Bdi Jo aoli> i. 9rii o?nl "aoBBBi lo «>iwi" ©rf.-^ "io 

bftiteJ'y^-' 'teftne^p n^^Ffi'^r.nr^ nr. ,r.rr>.r ^n p.s*BO ooosdo."^ "-frp. Tfi^ aK.-t 

6ti;> 6K2oe<i Ixewoq lo «»ei(<1b sxl;/ 5£ifi ioi^noo ;:;e2i'iBni Jo ia&ixB 
.C'bBO fic! dlffw no e©e0d x,lao 

tf ; no noifcioefc £ riOBtti o^ ..ie nl 



68 



abuses by the Bureau of Corporations. These, however, were 
neither as numerous nor as flagrant as those which had been 
found in the case of the oil and tobacco companies, a factor 
which probably accounted In part for the Court's inability 
to reach a decision. By 1920 the company appears to have 
abandoned Its predatory practices and shifted its attention to 
trade association activities. In the same year, the Supremeia 
Court made amply clear in the steel case that, in its view, 
size alone and the mere existence of power did not constitute 
monopolistic abuses. The final decision on the Harvester case 
In 1927 was merelya a reaffirmation of the stand which the 
Court had taken In the steel case seven years earlier. Following 
the decision of 1927, Harvester took its place with the United 
States Steel Corporation as one of the "good" trusts of the 
country. 

The 1927 decision on the Harvester case has 
recently been cited as an example of "bad law and bad economics" 
on the ground that power which exists must be used, whether for 
good or for 111, and that "unless it abandons its business 
objectives, a company will use Its market power to maximize 
Its earnings over some period, short or long" ^^^^. It should 
be pointed out with respect to this statement that the subsequent 
history of the farm implement industry has shown that the possess- 
ion of a preponderance of power by the Harvester Company did not 
prevent the rise of strong competitors or the relative decline 
of Harvester's position In the industry. 

When this is considered, the propriety of the 



9Vfi;i o Sri? OS^I xfi .not b doesi oJ 

?.«!: ens ,-iiiB\ ssr&E. en: .eeiaj.v-aD£ i:tj.jBlooeefi »bai;}" 

eri* rioJtffw bfiBcTa sdi "to / -^i r wx^^toei egw ^S^I nl 

If , ;t2irnj eJelxf* riolriw iswoq :Jf 013 erftf no 

-e^jSSLGq er;,? wfiii3 nworla er / :: Jfr ~ x sn; '10 -"iaoacia 

ioQ Wb o3 T»;t8»vTpH orf:t ^cf ^swoq lo sonBiebncxjaiq s I0 not 



69 



Supreme Court's Judgement In the case appears In a much more 
favourable light. Tested formulae are obstinately scarce In ^ 
the field of regulation of human activity, and often no 
standard exists for Judging such decisions other than the 
results they produce. Though it may appear as "bad law and 
bad economics", the Court's decision in the Harvester case 
may not have been bad psychology. In the company's viev, 
chastened by 15 years under threat of dissolution by the courts, 
the maximisation of earnings over a long period may well have 
been seen dependent on the establishment of a more competitive 
industry. And there is little doubt that competition was 
becoming keener In the implement industry during the years 
covered in this chapter. How did this come about? 



III. Other Consolidations after 1900 
in 

Early Concerted Activity Among Plow Manufacturers 

As long as the chief instruments of the harvest 
were the scythe and the cradle, the size of the crop which a 
farmer might safely plant was limited to the amount which he 
could harvest with these rundimentary tools. It was therefore 
only after considerable progress had been made in the develop- 
ment^ of harvesting machinery that a market began to develop 
for Implements designed to speed the work of preparing and 
seeding the soil. Plows and harrows, of course, had always 
been in demand, and improvements in the design and the materials 



yo 



on rsffJio Uiii ,^ii:vi;3T£: tiEoijjn '-^o nc : '^ t to blail erij 

?£6D iR:r2!?v-jc:: sr.J ni noi£;iocL c.*Jii'c.' s;!.' , ■■soxjicnoos ..BCi 

8'yf»flO[mo3 ©ri:^ al .^cgoj. ' beef n©»d ©VBfi ^on xb'^' 

r.oTro? ."5'f:t vcf rolJuJcae f ^ lo :^?s^^':^ ♦r^=?^^^ 8ir©Y ^-'' "^^ 'isnri-^arfn 

^9W 'jflis bciif'C s^oi B 1SVO c-^iUuits lo noi jeniiTtiXjBn. s^is 

jiofli B ^6 ;tn«MnflEJtIcfs;tr.e srfJ no i s»b naee n»©cf 

*i;tj:/0{Jg sffioo elrfS" Mh woH .iscfrp'^o slrfd nl beievoo 



rrtT-a; 5ffr.^ J" ^ *J"r>?:no!3 i^'.'^t'^ .TIT 



it " lo ziaen<tfiiEni ^©Irfo sri* sb anol sA 

eioleiedc} t ddlw ^agvicri fcluoo 

' ?- oi 95 e:' tol 

eT3Wl«< lat'.-cc to .SV^iTcrf bna nwoI<5 .TT'^p. nrf.t ^mfh^iOE 



70 



used in plows were among the first inventions to take place 
outside the harvesting machinery fold. One of the most notable 
features of plow production has always been the tremendous 
variety of shapes, strengths and designs which must be turned 
out to accomodate varying soil conditions. The opening of the 
prairies presented soil and growing conditions not previously -'^ 
encountered, and the variety of plows required was greatly 
increased. Among other things, superior strengths were required 
to break the tough prairie sod, and gang plows came to be 
greatly preferred over the single-furrow type which had prev- 
iously been most widely used. 

For 20 years after the cbse of the Civil War, 
plow producers appear to have been very numerous, competition 
among them intense, and the turnover of firms in the industry 
high. The experience in the plow industry was similar to that 
in the harvesting machinery industry, however, insofar as the 
stabilisation which set in in the latter part of the century 
produced for the first time conditions favourable to concentration 
in the industry. By 1900, the adaptation of the plow to new soil 
conditions was virtually complete and the competitive advantages 
to be gained from exploiting the market in newly opened areas 
had disappeared. Under these conditions, price and selling 
competition became more intense, consolidations were num^-erous 
and the number of firms in the industry greatly decreased. 

The first sign of concerted activity among plow 
manufacturers appeared in l88*f when a loose-knit plow association 
was formed by several of the leading producers ^^*^i Later In 



•ri* lo J -^ eriT . htlbaoo Hob -^nixiRV ^*R5cmoooB o;t ivo 

■^I;tB6i3 sew bciiiipei Ev-oiq .'.c ^^^re.'icv enj cxis ,be':- . i^oocre 

.&98I? Y-Tsf'-fw ctaom nsecf x-^ei/ol 

,t:8W livfO ©f** ^o »8cfo 9ri;t leJls siisex OS to"'! 

noii.t&sanor) ^ S'jciorcofj yt*x* n«««>cf •='VBr{ o;t ts©aqp eisoirboiq wolq 

cTsri^f o;^ iBlJtmls eew \ii?.ubcii volq sr(;t nl ©?nsl-r9qx9 «riT .riglff 
Bff* p.r ip'>or>nt .t^v^vnrt .v-i-f'trpin.f Yisn-f^^S-'^ ?:"/:+ s^vi a rf erf:?' nt 

ncic!-fti*n9onoo o* ©Icffi'iJ/ovfit 5fiOt;t.?f5noo etni^ JeilT- «ri;r Tot beowbonq 

8fi»iB ^ '• nl iQ-^tam »d^ gnlcflolqxe rooi'x : sd o;^ 

ED0 1 &• fiTXjfj C'l^V' cnojiJ'sfciloa.ico jSEiiajni e-'io:'- i;:ii£c;',^'w. i:oi.jij-Aiffioo 

wolq sflocJB b»;iiot>noo Jo ngie :f8"xl^ ©rfT 

nJ ■*;- I'll «.:■: - -Ji' ; -v'-iq ^i]_j ' ■tj'-i-i 'UiJ 1 -J JiSUfvt't: X'J b^flHOl B0W 



71 



the 1880 • 3 a broader organization was formed, known as the 
National Plow Association, comprising about 20 plow concerns, 
Including such important names as Deere, Mollne, Parlln and 
Orendorff, and Avery. Both of these organisations appear to 
have attempted with considerable success to restrict competition 
in the industry and regulate prices ^^2'. The first large-scale 
effort at consolidation was made in 1901 when an attempt was 
made to consolidate the leading plow manufacturers into one 
giant company to be called the American Plow Company, and to 
be capitalized at $70 millions. Deere and Company was the 
leader in this attempted consolidation but the project failed ^^' 

After the unsuccessful attempt of 1901 the large 
plow companies appear to have returned their attention to 
acquiring other firms, specifically firms producing other types 
of tillage implements, grain drills and seeders. Once again" 
their experience paralleled that of the harvester producers, - 
for it was found that the establishment of a strong and 
permanent dealer retail organisation required the handling of 
a full year-round line of both tillage and harvesting implements. 
Thus the tillage producers soon began either to develop 
harvesting machinery production in their own plants or to 
acquire firms already established in the field. Among the 
plow firms which expanded in this manner, Deere and Company, 
the Mollne Plow Company, and the Oliver Chilled Plow Company, 
were to become the most important. The development of each 
of these companies is now briefly traced. 



r\i/ 



< 05 wolq OS *ifodfi gnieltqtnoo ,f»oi:r/Bl30eaA wol*? lanol^taW 

Jbflfi nllit'^ ,©n/ .~^9»Q ee EsniBn ;>nB;>'ioqffli riouc snlbuionl 

o:r ifleqqa Bnol^rsalnssio •secCf 7^' ;f;roe .^i*»"* ^"p ,t1iohfl»iO 

8SW iqn»:i:iR nB ni?riw iO^I ni ©fcsm eew noliJeblloenoo .+ " ;t'^'>'>«. 

9«o oJ^nl ST^iiiJoelijniJin volq anrbesi srii siBbliotaoo oi &tB<r 

oi 6flB j^nfiqmoO woX*? nsoIifeniA sd:^ bfill^o ad oi ^inearaoo j^nals 

eri^ saw Y'^.s-TflfoO &«s !^-xe»>0 .enollliai O^lj d/s baslle^lqeo sd 

^^ 'bellel ;toft(;oiq «r(;f ;fjucf nold-fifclloenoo betiqiP^^ia tttii nt tsbssl 

•j|*l«I er(;t X091 "io Jqirs:?^ s iytspsooaenu Qcii i&ilA 

oi n.oi:iii&i&a tfesii bentL'tai ever! o:t feaqors setnsq.coo volq 

nfeyfi QonO .^^e5ft»^ fins clllifc tiieis ,edns!fr'9lqnl egslli:t T:o 

Jo gnllfMifiri »ff* b^iiupr^i noite-stcis^^io Stt^if^t iRlssh ;tn©neff'ioq 
.E. ■ gntj-s«»vie.rf bop ©gelir:? ri^tod "^o «niJ bnirpi-Teo^c IIx;^ s 

- .1 V. 

o;t io BinBlq nwo iJerf* nl noiJDt'hoiq x7»niiioB0T sni*eav7crf 

9f(;J .bl©tt »ri;t n.f 'rffed'ew ybpailpt sr^^^ siiupoa 

,NjneqmoO - :^io'"^^ 'onnBfr! eir'-' ~' hsbnijqx© rioldw arni-tl wolq 

t»ri:^ bnp ^Ync^rncn v.-oll eniJoM srf* 
ffo«9 tc ;t^<»trqoi9▼•^^ ' .^a.<»i'ro<rmt :t5orn *>r''t «>(5oo»d o:J »i»w 



72 



Full-line Development of the John Deere Company 

The present John Deere Company traces its history 
back to 1837 when John Deere, a blacksmith In Grand Detrour, 
111., fashioned the first commercial steel plow from a 
broken handsaw blade heated and hardened over a wooden form 
hewn from a log ^^^>, The most popular feature of the steel 
plow was its ability to scour, iflfhile the earlier wooden and 
cast-iron plows usually succeeded in breaking the sod, in 
later plowings the earth often clung to the raoldboard, 
increasing the draft and making the plow difficult to hold 
in the ground. A paddle to clean the moldboard had been 
standard equipment for every plowman, "^ ' " 

l^ls <^ After inventing his steel plow, Deere immediately 
formed a partnerdhip w4th one Major Andrus and began product- 
Ion for sal«. Nine years later, 1,000 plows were produced in 
the factory at Grand Detour. In 18^7» however, because of the 
difficulty of obtaining raw materials and of moving the 
finished plows from Grand Detour, John Deere sold out to his 
partner and moved to Moline, 111., where he again began the 
manufacture of plows. The Grand DetiourPlow Company, which 
Deere left, continued to flourish. Eventually, in 1918, it 
was absorbed by the J.I. Case Company (see chart). 

Once established in Moline, the Deere Plow Company 
grew so rapidly that adequate distribution facilities became a 
problem. To solve this, the company established branches In 
the main distributive centres where Deere products were sold. 
Sufficient volume for these branches was obtained by selling 



i!.\ 



1o i: - g eniX-XIx/a 

,'lifori:tP^ fbncTO nt rf.-tlrsj!9jElcf e ^sieeCl nrtoL nsrCv ^£8l oi 3iOB<J 

miol neboow f. i»vo 5t>n9?'XK--ri bne beiJBsri ©hfild wsebnecf n»>fcicf 

j;e«->;> o.'rt ^n c-rnlfs'^ 1 1-^ 1 1- cf OCT ;tEOT( is'fT .(+^+-) go/ * -noit nws*ff 

bflfi ny.'-uow 'xeii-iije enj siiaw .11100 e aJ \,jxxj-Ue cj ■■'■■a^ 

fli fboE 9cii afii5fB9id fli bsbpsoowe YilBireu Rvolq aatl-itBO 

, ^TftC'i-f ^fncf ^-^rf.-t ^:t -nx'lc^ nor^lc d;^ie» srlit euniwolq ib^bI 

nsed bfirf bTBOdblooi ©H;^ sq A .bnuo-xs srf* nl 

■^X0:t^-*^'-iT^n-f ^tp:%:: ,vnlr J:?9:tr: &i4 ^_^ ^?r-)vn.r ro-^"i^ 

ni fieo -^Iq QOO^I ,i9:Jfli eiBe^ ©n'T; .slee 10? noi 

eJtri o* itio bloB, e-ieoG nrioT, ,iuo^©a bneiO moil «woIq bsrielnll 

Fd? nft^od nJp.-'jp Gr* STsrfv ,.IS1 ^r;n.tIoM oj' bf>von^ tnr. if.n;)ipr^ 

'>9i ©199(1 

vrtKCf ■•^'Tpn '■;rf.-t .^inllaV nl betislIcfBitce sr'.itO 

nl £»rfoneid bsrieilcfdee ^cn«qa;oo .'^Idi ©vloe Ti9idoiq 



7^ 



the products of other manufacturers. In I877, the company » 
further Bincreased its volume by building a second plant at 
Mollne, which manufactured a variety of harrows, cultivators 
and other plowing and tillage implements. 

.... -^ . , -r By the end of the century, Deere and Company was 
recognized as the largest manufacturer of plows and tillage 
Implements in the United States ^^^\ Developments in the , 
first few years of the century, however, caused the company 
some concern. Not only did its efforts to consolidate the 
plow producers in I9OI fail, but in I903 a New Jersey corpor- 
ation called the American Seeding Machinery Company was formed 
to acquire the assets and plants of eight firms specialising 
in the production of tillage implements and seeding machinery. 
This company controlled about half the country's output of ^ 
grain drills. Though it eventually ran into difficulties 
because of inability to distribute its product efficiently, 
for many years it loomed as a real threat to other tillage 
machinery producers. By I903, moreover, the International 
Harvester Company had begun production of certain tillage 
lines and was becoming increasingly strong in that field. As 
has been seen, Harvester's distributive system, built up on 
its virtual monopoly of harvesting irapleraents, gave it a 
decided advantage in the introduction of its new tillage lines, 

^' The decision of the John Deere Company to become 

a full-line manufacturer of farm implements was made in 1911» 
In that year, the company was reincorporated to take ofer the 



;tB Jnslq fcaooes b galbliird xd smiflov ail hefeBsioal* ■i9i^:ti»il 

-■ •■^•'■* " " 
B'^BlSi^ bHB ;. ""o leiLiioBiunam JsaaiEl erij es baslngoosT 

edi nt E.tfnnmrrlevea . ^ pet?*? ^a•:t.^^" S'^t nl s;tn»m«Iqral 

©ri* 9j8blIo?no3 o* BiioVlB acrx bib it-^no Jon onoo emoe 

i:"'.r-£rjol^tJ?5 cJni net ^XIsii*«9v© *1 rfsjio/r .elllit nisia 

egRlll:t 'r9ri;to o* d'e^irfiJ Isei b eg bwjooi :+! fe-iesx Xn£ro lol 
I T *.rfvt ,T9V0S'socj ,£0^1 \B ,g'r!9r>r/boiq yisnJ'rfocff' 

no qi/ Jlitfo' ,ir©;jKi(e ^vt:^vdlti^l.b e'lscfesvisH ,n»©e nsecf efirf 
p t! ©vcn ■ TT/.i ~'^' Jo ^Xoqoncm Ipjtf^Tlr ecM 

' \RlLli '.-r.jn i-Jj. "J ;io.'':t';u:cijnJ: '?iij nj. 3;|8:tn.svbfi b«f'ioeb 

9ff;t -re^c «3f6^ oi bo^Btoqioonidt bbw xnsqmoo aril j-tR»v ;}riii nl 



property and the assets of eight companies formerly producing 
tillage implements, wagons, haying machinery, corn shellers 
and farm exlevators. In 1912 the list was lengthened by the 
acquisition of the Syracuse Chilled Plow Company of Syracuse, 
M.Y., makers of chilled plows for the eastern trade, and the 
Van Brunt Manufacturing Company of Horicon, Wis., one of the 
few important makers of grain drills not included In the 
American Seeding Machinery Company. At the same time as these 
acquisitions were being made, the company was working on the 
development of a binder, which it placed on the market in 1912. 
In the next few years an impressive variety of harvesting 
Implements was develojied and placed on the market by the 
company ^^°', 

By these various steps, including consolidations, 
acquisition by stock control, and expansion of plants to make 
new lines developed by its own research department, Deere and 
Company by 1915 had become a full-line firms and the second 
largest manufacturer of farm implements In the United States. 
In doing so, the company retained Its position as the leading 
manufacturer of plows and tillage equipment. ^ '^ 

Full-Line Development of the Mollne Plow Company 

^ The Mollne Plow Company, nucleus of the present 

Mlnneapolls-Moline Power Implement Company, was established 
in 1865 to produce plows, harrows and cultivators. The . jy, 
expansion toward full-line production began In 1911» the year 



Mi;a«50tq- ■^t'iieff''*'''^ P'-rnfirrnn rt'-'vffi '\o p.^'of;,?? od& hr.£ yjT-'-'TCTT 

ttftllerie moo ^-n.^iuicic^ir. ^.nlXEu ^noaxw jejne-sxqrnj; rjgsxi^j 

odJ xrf t" 88W Jail erl;t SI^I nl »eio;JBV8l«:9 rotel fxiB 

edit ^o 9no ,.aJ:W ,nooJioH lo ^fn£<|cor) ^atiuioRlunei* inviE naV 

9B9i?'3 fcs '-JiuJ-j enisr ex:; :!A ,\ne^J^-'c:. 'iii:.,:iri:?£i. srnDoO'- iisoIiSfflA 
.SI9I rrf i^sx't--!^ «.-^:t no &F-rjaIc:T ^^ rf-. ,':9bnlcf ? *>o :tr»*;TTCToIov«b 

srfj \a' rid- no nsogl ft©qol9V96 e«w e^tnemslqml 

TrtctT 

s>!r-.ir oJ ccinexq 'to nc .t. bae. fioiiaco jiloo^e xu noiil&lupoe 

&aA eie®-; <;+ •iCf^-f-TraAr^ ffons'=>8ei nwo 8*1 yd bsqol&veb Bsnil vsn 

NtOTy-ir fS'-'/ h~if ';r-"^ ,'?■■' ^i- IT, rr? rt firnnf>f»rf Fi^-^ ?r^r vrf vrpatrtr,'!) 

gnl&BsI erf.t E6 nol;tleoq «^1 /leniec^e'i YnfiC[ffioo ©/-(^ ,08 gnlofi nl 

^^ ' . irff^maftrns fi^eJTfl IbnR r.',/oIr "'r, T<^.-rr;-}-'^r.'^frr»fl,'T 

;tn»s»nq driJ lo ivloua fXnBqxoO vol'i enlloM erfT 
%B9X edwt flX^I fll n«secf nol;iouboiq eaXI-llul f)iewol nolenBqxa 



f7 



of the original Deere consollrJation, and was completed within 
a year. In 1911, the Moline Plow Company, recognizing the 
growing popularity of drill planting of grain, acquired the 
Monitor Drill Company of Minneapolis, Minn., thus adding a 
seed drill to its line of implements for the first time. With 
that acquisition, Moline became producer of a complete line 
of tillage machinery. Within a year, the company felt the 
need of rounding out its line of products with harvesting t.., 
implements. Instead of developing these in its own plants, 
as Deere, for example, had done, it chose to do so by acquisition, 
In 1912 the company acquired the well-known Adriance-Platt 
Company of lAorcester, Mass., which will be recalled as one 
of the more Illustrious of the harvesting machinery producers 
during the nineteenth century. 

Full- Line Development of the Oliver Chilled Plow Company 

^ In 1855, James Oliver of South Bend, Ind., seeking 
to improve the scouring and wearing qualities of plows, turned 
to the use of chilled metal and developed the successful Oliver 
Chilled Plow. The chilling process produced a hardened surface 
without brlttleness, which r«=>sulted in long wear, a boon to 
farmers working the older and sometimes sandy of gravelly soils 
of the East. The Oliver Chilled Flow Works at South Bend 
grew up around this product and, as growth continued, new 
tillage lines were added until by the 1920 's the company was 
among the leading producers of tillage implements in the country. 

Two principal acquisitions resulted in the Oliver 



a ^i^itbB eur*i t.aalV ■^ " roqsonnlM "^n v/-Krrnr,n rrftfr lorfinoM 
ri^l'W .Mild- tfeiil eri* i:©7 6Jn'>B;eIqir/J: lo s^nil £Ji ca iiiiD 

noliJieiuroB vcf 0£ ob o:) otv '■ ^;;n::'^' f--'-' ^'-'^nf-rgyr. «[nt ^ci^ie^e^r po. 

QiBouhoiq xisriirfDi:.- e^^-^^^sv-ifiri erit "> -^ •- -^ '~ ^: rr»; r; ©icai ©ri^ lo 

bsmifCf ,8woIq lo geJ-itJ-Iflup §niT«ew ftns gnliuooe eri^ evoiqmt oi 
'•■" i:,':ij;iB b©ri9li-iMiJ jubouq aesooiq ^nillirio *»riT .wol'i b&lllci'o 

Ln&u r{;juc6 ;^b <jiio\:> wol . belUriO ibvIIO ©xi'I .Jaeld en'^ lo 
•HfVLiKi 6rtJ nl 5e*ijjec»i enoJt^ieit/poB laqionitq oifT 



76 



Company's becoming a full-line producer. These were made 
somewhat later that in the companies so far observed, but 
the pattern is similar. Throughout the twenties, the American 
Seeding Machinery Company, like many specialty producers, 
found itself unable to withstand the competition of the new 
full- line producers, and was threatened with insolvency by 
1929. This company was acquired by Oliver in that year, and 
steps were Immediately taken by the Oliver Company to broaden 
Its line to include harvesting machinery. The r«ult was the 
acquisition within a few months of the Nichols and Shepard 
Company, on^of the leading producers of threshing machinery 
during the nineteenth century, and in 1929 a producer of 
tractors, combines and other harvesting machinery. The Oliver 
Company, therefore, had achieved full-line status by the end 
of 1929. 

Conclusions from Chapter Two 

1) Concentration in the agricultural implement 
industry In the first part of this century had t«o purposes: 
first, the elimination of the excessive selling competition 
which had grown up around a standardised product and a newly- 
stabilised domestic market; and secondly, the desire to achieve 
the economies of full-line distribution of implements. The 
preeminence of these motives is suggested not only by the 
course which the merger movement took in this industry, but 
also by the absence of significant overcapitalisation and 



wen Btli Tto noill^tsqwoo «rf* bciBttriitw oiJ sldenu lleeSl bnuol 

bar . JaaJ" ni 10^1^.0 y- ooii-apoe ecvv xr.sqiuou ^.n'l .^'S^I 

©Hu '.? .vf nr-j '-'«;pr. ^sr; j cf 8 pvTsrf ©'^"utor!.? rS ©ntf s:^! 

bisi: •• rnr. j;.io.ic.rii snj to on?nor: wel s ninj^v; nc_ jj.t;i.ijptJB 

pcor '>n 



-Xlwf^n b©8ib'i?!hnB;^e b biijois era Rwoig bsri rioiriw 

8f" . o noij juiijaiij Suil-Ai;;*! ':c t 

i ^Ino d .2 el zevl:^;. ri;J lo 9on«n.f:m9eiq 

^orf .VT:t^:r^n^ 3!i-f:+ rrl -Jen:} ^ngm^vc^ •»,•. ■ pr»:t r'n Mvr fi3r;roo 



n 



other financial abuses coiiraonly found in other large mergers 
of that day. 

2) The inability of single-line producers to 
distribute their products as efficiently and as cheaply as 
full-line firms, caused the move'nent to become oumalativ??, 
making the production of a full line of implements the goal 
of tillage and harvesting machinery producers alike. 

3) With variations in individual cases, the 
steps by which full-line production was achieved included: - 

a) Strengthening of one's position through the acquisition 
of (or merger with) competing companies (eg. the 
acquisition of the Osborne Company by International 
HariBfester) . 

b) Acquisition of companies producing non-corapeting 
products (eg. the purchase of the Nichols and Shepard 
Compaiiy by the Oliver Company). 

c) Conversion of plants or construction of new plants 
to manufacture other lines (eg. the entrance of the 
John Deere Company ' nto binder production), 

d) Entrance into contracts with manufacturers of non- 
competing lines to distribute the products of such 
independent companies in designated areas (eg. Inter- 
national Harvester's contract with the American Seed- 
ing Machinery Company in 1912). 

^■' \) The emergence of the full- line firm as the 

typical unit in the industry greately altered the pattern of 
competition. Where harvesting, tillage and threshing machinery 
producers had previously constituted three separate Industries 
not in direct competition, the trend tov/ari full-line production 
substituted for these one Industry, composed of a few large 
multi-product firms all in direct competition. 



»^CBb o 

1 « to nn.l-Joufcoiq ©rfJ' snljfwn 

) '10 
H 

iti lo rroi^oi/^^JefiOD io ectneia to noisievnoO (o 

©iU lo - . • - ■ ' -;;}• 






I 



it^ sno 8a9ff:t lol bs*o:fi:t,':d;f8 



78 



5) International Harvester was the only cne of 
the implements companies to be charged with violating the 
Sherman Act in the early part of this century. The long 
period during vhich thR conapany's case was before the courts, 
in addition to being one of the classic studies In the applic- 
ation of American combines legislation, may have had some 
effect in inducing the company to relinquish its monopolistic 
position In some products. How its relative position in some 
harvesting implements declined from 1902 to 1936 is shown in 
the following table from the Federal Trade Commission report 
on the industry in 1938. 

tabtj: t 

„ International Harvester Domestic Sales 

as a Pe]'centege of Total Sales of the 

Industry 

f Implement ,...« 1902 19 "^6 

Grain and Rice Binders 90^ 5(>»5% * 

Mowers 80% 51% 

Rakes 67% 53% 

To a considerable extent, however, the growth of 
strong competitors of the harvester Company appears to have 
been generated by the very process of what we are calling 
"full-line" development. A full line of farm Implements 
includes a large group of products not having any necessary 
technological resemblance to one another. Plows and binders, 
for example, have little in common from a technological view- 
point. Fxcept for the fact that they are both sold in the same 
market, and that the demand for them arises at different times 
of the year, there is really no economical reason why they 



o\ 



"to 



."/inU Is 






■^ ana a^ jo* rji^manc 
bolteq 



_ ••^ f r • f r' r" (^ .' ' 'f ' T 



? '-.rf'T 



frr. -r^ Cjpf-; 



olJBlIoqonom eJi riai.cpnlle'r. oj ';If^^l nJ ;tO0'il^ 



Itocr&i nolezlr 



*bsiT IjsTsbs^ »ffd- Riot'^ oldc;^ sniwoXIol art* 



es.l?;'- o_'": 



i.-H .I«nol 



■^i •'." 



£?L 



^^^ 
^^«^ 



,^7e^r 



i£ 






.-^ .•■ «) t 






,8iefenld fcfls avoX'il 



i r-. 1 ,-Mt '~i'^ a. 



i m 



•>ona ijTsv 9di Aid b^itsisneg need 



ftJT fli bloe iiio<i 9X9 X'^ul? : oal eiii lo'l :^q99x:il ..tnloq 



79 



ou<?:ht both to bs produced by the same firm. Tractors, to b« 
examined in the next chapter, are an outstanding illustration 
of this folnt, 

We have already seen sufficient of this full-line 
developraont in the impleiient industry to know that such 
development brought under the control of a few firms numbers 
of specialty companies of long standing in the production of 
the various implements. The relative position of newly-formed 
full-line companies in the trade depended to a grpat extent 
on the success previously experienced in the market by their 
component firms. International's position in the harvesting 
raachinary trade in 1902, for example, came close to being 
monopolistic because the component firms had, among them, 
previously dominated that market. When the development of 
full-line companies became general, however. Harvester's 
position in the market for tillage implements and threshing 
machinery was found to be inferior to that of most of the 
long-standing producers of these lines. The Federal Trade 
Commission in 1933 found that to some extent these companies 
had been able to use their advantageous position in tillage 
and threshing machinery to break into the market for harvesting 
implements by forcing dealers to handle their harvester lines 
as a condition of handling their tillage lines. For these 
reasons, not only did Harvester's overall position in the 
industry decline after 1902 but its position In the market for 
harvesting machinery also suffered. 

Full-line development In the Implement industry did 



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•>J '71 .' J '.l-i ! Ji.'.^: 



.11 J.TlEqCJ. 



lU.. -.LlJ'-i 



er* 



not cease with the coming together of tillage and harvesting 
machinery pro'?ncers. The second Important phase of full-line 
develotfflaent In this industry resulted from the appearance of 
the farm tractor in the early years of the century, and the 
gradual process of integration which followed betveen the 
tractor and implements generally. This is the story of the 
"tractor revolution", outlined in Chapter Three. 



tt. 



Off. :t'ou hewoiJol iJ:->lii» iiOi. Jh'TJjGo;; j ;o acsooiq IfiL'dcia 



81 



t 

, CHAPTER THREE 



REVITALIZATIONi THE EFFECTS OF GASOLINE POWER 

ON THE INDUSTRY 



Contents 

I. Farm Tractors Before 1920 

Early use of steam power In farms — Plowing with early 
Internal combustion tractors — The farm tractor industry 
before 1920: Independent firms, implement companies, the 
Ford Company. 

II. Ford and the Tractor Industry to 1928 

Implements for the Ford tractor — Ford loses out to 
International Harvester, 1928 — What Ford did for the 
tractor and the tractor industry. 

III. The Farm Tractor Industry since 1928 

New producers since 1928 — Improvements in tractor 
design — The return of Ford to the industry. 

IV. The Combine 

History of the combine's development — Conclusions 
from the chapter. 



I. Farm Tractors Before 1920 



Eayly Use of Steam Power on Farms 

The word 'tractor* is a comparatively new word, 
which only gained general acceptance in the English language 
around 1910 ^^\ Prior to that time, units which supplied 
power were usually referred to as either stationary or traction 
engines. Steam, of course, was the first source of engine 
power, and the use of steam engines in agriculture can be 



3:' )iRT /?5T'^AH0 



vlfRi^ rt^iw ^nluoJ''? — airijB'J nJt tawocr masie Jo «bii ^IikS 

=»i:,f — c- 

.,, . .... — . " ....... .. 4'ini jSflf't.- .. .. ., ■....,. .. .... 

»\ ■ 



:,«': 





...-dW — ,• 

• Xi- ' loioBii erf* bnB locfo; 






8§^X Boatv. ,xi-^eubnJ lO^ToeiT mifl'5 sriT 


TT 










'> sn'T 


.VI 



efloleoIonoC — .-tnsBiqoIsvef; e'enicfiooo ©ri:t lo liio^telH 



. ■ Yl9vf:tsTpqwoo e rl 'icioBti' Mow ©ffl 

nolsoBTJi 'to y,i6noiifidc. ib-rJie se oi iLt&iie'i4»i vilBi'ejj ©lew lowoq 
on D1WC3 inntJ Bcii saw ,seii/oo lo ,ire»j^S .aeaisn* 

©cf nrr. str/.-ti'ifo ^^8B nX eenlgnt, ...... "^r -sjjj of1;J ^^e ,T«woq 



0<i 



traced back to around 1850 In the United States and earlier 
in Eurpo* ^ K Until i860 these early steam engines, though 
often mounted on wheels, provided no tractive power and were 
used simply to activate stationary implements such as threshers, 
feed-mills and wpod-saws with belt-oonveyed power. ,,^j,^ 

By i860 some success had been achieved in deriving 
tractive power from steam engines on farms. In that year an 
Illinois farm paper reported what it called "the first actual 
success in steam plowing In America". According to this report, 
a steam engine pulling a gang of 13 plows ran for 23 minutes, 
stopped six minutes for wood, ran I3 minutes, stopped eight 
minutes for water, and ran one minute. It plowed 2.63 acres 
in 72 minutes. The crew consisted of a man and team to supply 
fuel and water, a fireman, two men to manage the plows, and 
one of the inventors ^^K 

Steam plowing became increasingly common in the 
Western States throughout the latter part of the nineteenth 
century. In 1867$ the United States Commissioner of Agricult- 
ure observed with regard to the new source of power: ^^^ j>«i.ng 

Insufficient power with light plows breaks Imperfectly 
a shallow depth, while the mighty power of steam, 
harnessed to strong Implements, breaking, pulverizing 
or intemlxlng soils, accomplishes all the results of 
a superior cultivation in less time and at less expense 
than any other method. (^) 

It appears that little attempt was made during 
the nineteenth century to adapt the steam traction engines to 
implements other than the plow, since horses were still more 
satisfactory amd economical for the lighter hauling. For this 



* fS9'ni^n9 mB9it \iiiiB 9B9ai Odwi il*nU . &oqii/3 at 

«£it.u.i;y.ii:.» ee done, siaem^lqn . „■.,,:.■ . -"-^'^ ''-t ^clqir.^p ^■^p.t; 

.i©woq ^®x'^vnoo-*If' >B£-tocw bnc elllra-r.es'i 

Sfllviidb ni b»T»lrioE n65d ^Ert Rseooiis B<?ioe Uooi vii 
(B«>v-tjjnl«' f? lo"^ net RWoXq ii "io soss b scliiw<3[ 9ni^n9 mB9^e b 

,(£) eT:o:tfl©vnJf ©d? lo ©no 



f-.fe©j. cfs briB »!■•"; Jo citi nj. «; B 

»Tom pt^BTc lE ,U'r ^ nan J 't^rf.to ccfi ^1 



sr 



reason the use of steam power never spread far beyond the areas 
of large-scale wheat and cereal culture. Within those areas, 
including the Canadian prairie provinces, the Dakotas and 
Minnesota, conditions for steam plowing were generally favourable, 
most land being held in large open tracts on which grades were 
seldom pronounced. A low-quality coal found underlying parts 
of this region was occasionally used as fuel since coal shipped 
In was very expensive i wi^wsMt*^'yH!nft<»s ^^K During the fall, 
straw served to a large extent as fuel. 

Plowing with Early Interna l Combustion Tractors 

The appearance of the internal combustion tractor 

shortly after 1900 greatly increased the Interest of farmers 

In traction plowing. In 1910 it was reported by the United 

States Department of Agriculture that 

The desire for economical motors In smaller units, 
together with the scarcity and high price of labour, 
and the limited supply of coal and water in some 
localities, has created a demand for Internal combustion 
tractors which has kept in advance of their development. 

(6) f 

In response to this new demand, many new firms came into being 

to produce Internal combustion engines, and many steam engine 

manufacturers added internal combustion engines to their output. 

It was noted in the same source in 1910 that 

The gasoline tractors are being used in the same 
localities and for the same work as the steam engines, 
and a few are being built in sizes approximately as 
large. They have been built also In small and medium 
size units and are being introduced into sections to 
• whloh large steam engines were not adapted. 



tsAiA 9rtt bnoY»cf ifil levefi is^-'cq trseie \o esii e/fJ n6iiJ»'t 

^EBSTs ©€Off:t r .qif-J'^^ir) leoitso Bab .-tsf^rfw glsoe-asiBl ^.o 

e-x^w eebeia riolrfw no ec^oipiit neqo sgiel nJ blerf anlecf bnBl *Rom 

'^a ijscc ^onit Ivirt 2b b«£ii xiisnojgR^oo e.«w n> 

Ic ©olio risiff tns yd^/oisoe ©ri;f fl^iw i©ri;f©:?o:t 



t 



OBI* 



jinled o^al S0TBO airill iwen ^jnew ,i'>nefr©b wsn Elrf;t o:f ©anoqeart nl 



bit 

TO , t '.' 



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f. Jon ii'few esiiih'Tw ii.iB»0.i aiJi'XBi iioidw 



OM- 



Tractor plowing had to be done with specially 
designed engine gang plows. These were of either the disc 
or the moldboard type. Moldboard gang plows were generally 
equipped with a steam- or a hand-lift to raise the plowshare 
when obstructions were encountered In the ground, while disc 
plows tended to accomodate themselves more readily to uneven 
surfaces and to roll over obstructions. It would be difficult 
to say that either the dl-sc or. the* moldboard plow was the more 
popular In the early days of traction plowing. Each type of 
plow had merits under various conditions, and within each type 
there were numerous variations to satisfy local requirements. 
One thing, however, appeared certain at the outset: plows 
built to be drawn by horses could not be used satisfactorily 
behind a tractor. The sustained pull of the tractor, which 
continued regardless of obstructions that might be encountered, 
called for greater strength In materials and construction than 
had ever been built Into horse-drawn equipment. For this 
reason, one of the first effects of the tractor on the Implement 
Industry Itself was a great Increase In the number and variety 
of plows produced. 

The Farm Tractor Industry Before 1920 

1) Independent Firms : 

What firms produced the early tractors for farm 
use? The production of farm tractors today Is carried on 
almost exclusively by firms In the farm Implement Industry. 
This was certainly not the case at the outset, for by 1910 



O-Jj^ (^fl? T iO 919W 

9iAi-c:kiXQ Kciu yii.ii::z -J j i^j.-i''nfl'rf 5 -^t -.- 30o e P riifjttf beqqltrps 

^xiJ0J::iii; &c: Jd.^^ . jvj-ivc'.:g rrovc IIci o:i bnB aeoBliue 

.i no£C fjir.c-iw u:£ ,3nQ..; j.nnoo ?.'JOl'i»v i95no - -'•--'•- fr^H ■ olq 
.e. t0pei Isooi vtci ®i«v stedi 

riolriw ,io;tosid^ erf* 1o Iluq benleJeue r-;frr .loifoei;* s bnliiod 

fisf-n- ACiJtiJi7eriO0 tine e-lsiiojs::- ni aj^neii^ -i^'jci.-- 'ioj -taiso 

c?Wfiif'-.©aiorf o;fnl' iltud nred lev" bail 

•^jgiii-^v Dne locfffii/n snj n." ".ox'i ' 'ij-c?.;^ vijaubnl 

pSgl - ^ ■' -ilT 

■ " toT: e'l ^eo0^o•'. 

0I9I xcf lo"^ ,;t©c.1i/o erf* :fB »eflo erf* *on ^Inlaiino 8fiW alifT 



wy 



scores of Independent manufacturers were turning out tractors 

for farm use. Many of these, of course, were built merely 

to sell, without seasoned or tested knowledge of requirements 

or performance. Regarding the industry's early development, 

the director of the Farm Equipment Institute later stated: 

The history of the (tractor) Industry In those early 
years reads like a counterpart of the history of the 

fc automobile Industry, Tractor factories sprang up all 
over the land, some of them little more than mere 

of ' machine shops and some probably little more than pro- 
motional projects, I have a list of 502 companies who 
were said to be in the tractor manufacturing business 
In 1915, (7) 



r 



A more conservative estimate holds that by 1916 as many as 
200 types of tractor had actually been placed on the market 
for farm use ^°'. 

I*? Among these pioneer machines the roost famous was 

designed by C.W. Hart and C.H. Parr of Charles City, Iowa, 

In 1902, Around this tractor grew up the Hart-Parr Company, 

the most successful of the early Independent tractor firms, 

cnem naa cone so 0. '■ 

later to be merged with the Oliver Farm Equipment Company 

when the latter decided to enter tractor production. The 

first Hart-Parr gaasoline tractor was a mammoth machine 
iyiO and n a 

weighing over ten tons. Despite its c<Tudlty, it proved to 
be constructed on sound principles and was able to operate 
satisfactorily. Hart and Parr developed a method for using 
kerosene as a fuel in 1905 and pioneered in the field of 
low-speed valve-ln-head construction ^°', By I906 the Hart- 
Parr Company was the oouikry's leading producer of farm tractors, 
the M. I ..',-■,-: 

a position which it held until surpassed by the International 



e^nemei-tupei lo •sbslwon^i beitseJ lo benoases Jxjorf;Mw ^ll»z oi 

,^0anicinInvo^ vlfBe s'virtet'fcn.^ eri* snlb^esoH .9c<nr;r:TcT:tocr to 
:b9;?£?«. TBStii ©J-i;;riJsnl SnDinqJiiJpi a-iei srlj 'to icjzeixr. srii 

IIjB qy gfleiqa eei ^ . __ _ .--^i^tex/hnl eX.MofiJo:fuB 

eiem nedcf eioir 9l^:tJtl merf^t lo ©moe ^boBl ©rid" isvo 

5p>oiq n«r(:t 9" ■ •- -• - - - ,, eqoffg ■ ■ -.jn 

Orfvr r «*r.^,^,- ro'; .. _ . .: . .: . ..... .^jo©£oiq I. _ _ ^ :•«; 

r <ti]-JoBlsjnBta loiOBii 9di fli 9d o* bJtee ©lew 

(^; ^191 ni 

t£ xciBtp. e« dl9I xd i&riS BbloA »iBtEiiB» •vi^tavieenoo eiora A 

i0:rfiBiB ari:f -. rsor?"'- .i«^='-' v rr^rrto* ^nf^ t^ioBti "io prwrvi- 00<^ 

,'°^ ©SI/ ifliel lol 

8BW awomfil ;J-aoffl eri;^ senlrioBm isenolq ©«eri* gnoirA 

«cvoI ,Y^E'> eeliBriO lo iibH. .H.D faoB i"iBH .W.O x<S beflgJtesb 

AjnaqoioO ;tn«jKqiup3 mie"? a©v.I:IO mii dil o& i©^«JL 

oi f)«voiq d^l f\31butit> 8^1 s^flqeeO .eno;t ne* i©to snlris-fsw 

•;t8i©q[c Ow ©IcTb bbw Crf' ut-rv ■■r,n f.ir- i^^r.-r r,-. ^^f»ym.i2.ao9 ©d 

snlei; lol bcriJftm b beqoiftvs^ 'iie^ bna JibH ,xli'io;iOBtBliBe. 

lo bl©ll ©ri:t nl b©iepaoiq bne ^0^1 nl I©i;l e bb ©neeci©3( 

■^IAE '• ''^"' ^'"'' C • .rto ■ +^^:r'f + j.r<r,»> ^nnrf.r-r! ^^y^BV b©©<je-WoX 

tofliit Mie'i lo looi/boiq ani f»aftl e'^iljijoo ©li* 8bw x^BqwoO iiB*i 
l«0ol;f«ni»*nl ©ri* ^d b©p.«jiqii/8 Il:rn0 bX©d :f f rfotrfvf nct:ifsoa a 



Harvester Company five years later. 

11) Implement Firms t 

Generally speaking, the first firms to take up 
tractor production within the farm Implement Industry proper 
were firms which had previously produced steam eaglnes to 
accompany their threshing machines. The M, Rumley Company 
of La Porte, Ind., (estd 1853), the Nichols and Shepard 
Company of Battle Creek, Mloh., (estd I836) and the J.I. 
Case Threshing Machine Company of Racine, Wig., (estd I8lf2) 
are the best examples. In these firms the changeover from 
steam engines to Internal combustion engines was accomplished 
with relative ease, and the production of tractors followed 
logically. 

Producers of harvesting and tillage Implements 
entered tractor production at various times, but most of 
them had done so by 1920, The first was International Harv- 
ester. Having experimented with the tractor since I906, 
International built Its first Tractor Works In Chicago In 
1910 and began producing on a large scale In that year. The 
first machines produced at the Tractor Works were 60 horse- 
power monsters weighing 11 tons. Through Its large number 
of dealer retail outlets the company was able to build up 
Its sales of these leviathans to exceed those of the Hart-Parr 
Company In 1911. In that year, Hart-Parr stood second, and 
the M, Rumley Company third. 



- J ^.aol'n ^ji9i<»iC aljasS 'io 50 

-VIS'-' ■••:t«''^T 3Vf :fr " " Yff riR #^o^ ^6rf .r^rf* 

ill o fll 83{T«W ^on^oeiT ;?8ill eil iliuc i«noi*sfli©*nI 



87 



* International Harvester was somaiiat unique 

among the tillage and harvesting machinery pro(!ucers In "t 
that it -developed Its ovn tractor and constructed the plant 
In which It was to be manufactured. Most of the other Imple- 
ment companies to enter tractor production before 1920 did so 
through the acquisition of companies already In existence. 
In 1912, for example, the Eraer son- Brant Ingham Company acquired 
a group of thresber and tractor producers. In 1915 the Mollne 
eARLv gasoline: -TR/^croK Plow Company acquired the Universal 

Tractor Company and began producing 
th« Mollne Unlverai Tractor. In 
terms of sales volume, two year» 
later International was still 
leading, followed by the Cas« 
Threshing Machine Company, which 
had produced its first gasoline 
tractor In 1911, with the Mollne 
Plow Company and the Avery Company standing respectively third 
and fourth ^^^K 

In 1918 two more Implement companies entered 
tractor production through the acquisition of existing comp- 
anies — the John Deere Company and the J.I. Case Plow Company. 
John Deere did this when it acquired the Waterloo Engine 

V 

Company, producer of a tractor known as the "Waterloo Boy" 

since 1893, which Deere immediately began to market as the 

John Deere tractor. 
1 

The J.T. Case Plow Company became a tractor producer 







ni ei9oubotq x^nnttioBm jnl^eevieri bnB b^^IH eri:^ gnomB 

It J- 79rf:fo 9tii "io ^«oH .beiw^toBlunefii ed oi saw *1 riolxiw ni 
08 hit 0£PJ «^Tole<f nol;to«boiq toioBii -le^ne o^ B^irfBq.noo *n»ffl 

isilxjpOB \ iniv+ne'ia-nofcisfisS end' ,9lq(0«X9 lo'i ^'^^I nl 

j-seiavlfl-. yi'.: i.'v,--^ i-'L.yS Xf'*'?''^^'' '-.■■-■'"- ,, ^,-:y ^i,>.>-.- ,^^. . . o 

the all-purpose, or tricycle-iypf 
, , r» ^ _rr in 1924 and In 1932 the farm l 

jnlOirbOiq nfiS^rf ^» X^fiqaoO lO^tOBlT ^^^ipped with rubber tires. These two 

great steps of progress not ^nly changed 
nl .lOf'inr'^ IsSt-VJnn anlloM »»rf* the course of the industry, tn. of agri- 
culture itself. They laid the foundation 
for modem tractor farming as we 
V1»9\ Owu ,: -..iwv ar,^«.: -' . know it today. 

The tricycle-type tractor combined 
lll&S BBW Ifl£10l;tBm9^nI -l&iBl drawbar usefuhvess for the first time 

with thp -b-Tty '■ '■'-' rr.v crop work. 

•8s0 »di ycf bswoIXol ,Si3lbBeI ^^ ^'^^ Ir^a'^Lmi' 

•vators am; 

rioiriw .xcBqKioO enirfoRM gflidep'rdT ompickers. 

' lift plows 

•fllXocea iBtfi tit beoLitotq bgC- 
•fllXoM ttW ri*lw ,XX?X nl loSoB'ii 

brlsii x-tsvl^o*?*®*! ^atbeie:fa ^rsficinon "^istvA »ri^ f.»nB "^naqwoO woX^ 

/^•^^ riitii/o'J. bne 

baieiJns e&Xneqmoo ;tn&in©Xqnii eiom ovi 8X^X ml 
-qwc s^f:t».f?r<» ^-^ notitzlupoB 9ff;t riguoiri;^ nolitouboiq lo^toBi^ 

ooj.'io;tsW «ri^ bsTlupoe ;ti n»Hw stlrJJ bic ••te»G nriol. 
'•X'3^ oofi':i:t«V'" «rt* as nwor*:'* To;Jf»f5f.-t fi ^r» leouboiq j^naqmoO 

•il^ ce .;-*/-iHi uj nBaeo tJ.t7o,: . i.t.,.. . ^.XT>- .'-'•-'<' .-r'Kr ^.o«f=. 

f^of/boiq •xo;to«'i;t -»d x^^^ko^ woX*1 •■•0 .1.1. prfT 



88 



in 1918 through acquiring the Wallis Tractor Company, producer 
of Wallis farm tractors since 1912. This company should not 
be confused with the J.I. Case Threshing Machine Company, as 
there appears to have been no corporate relation between the 
two companies. The J.I. Case Plow Company was first established 
as the Case-Whiting Company in I876 to manufacture plows and 
tillage implements. In their advertisements the two companies 
were always at considerable pains to impress upon farmers and 
the trade the fact that they were not the same company ' '. 
As each company broadened its line of implements, however, the 
problem of who had the right to use the "Gase" name, and on 
which implements, became acute. Eventually in 1920 the 
Supreme Court of Wisconsin ruled that the plows of the J.I. 
Case plow Company were the "original Case plows" and that that 

company was entitled to the exclusive use of the word "Case" 

(12) 
on all its plows and tillage Implements 

iii) The Ford son Tractor » 

The most significant entry into the tractor 
industry before 1920 was that of the Ford Motor Company. In 
1915 Henry Ford, then president and controlling owner of th« 
company, announced the beginning of experimental work on the 
Fordson tractor, a light unit model, without the huge frame- 
work and excessive trappings which had adorned most previous 
models ^^3), it was Ford's intention to produce these tractors 
as cheaply as possible using the methods of automobile construct- 
ion and to sell them at a relatively low price, in the vicintity 
of $600. Production began in 1917, vhen 25^ Fordsons were 



^on i oo 8i i;* 0"18l el: o 

^'li ,i&vswci'.: ,f . aji .0. --0 rtoes £i. 

o© fens t'? «i£e" ©rf;? ©EW o;J ^rlgli arf* fejifl oriv lo aieldoiq 

itisdif ^gWj [-.ns "ewoJTq ^^o" arict ©now ifflSQi^'oO vol^ ©aeO 



ti-- 



e. ' ■ _ '-"< ."vT tr " -^ - '^ 'i' r r 

- . 1,^1 r - .^ • -*^ 

ia» I' oJdleeog en yla psrfo as 

■ r -f r uft r V r '■ v r .■+ p r ■■, t h , •- > f 



89 



produced ^■*-^\ 

The Fordaon became Instantly popular with araaller- 
3cale farmers, so much so that within one year Ford had 
usurped International Harvester's place as the leading seller 
of farm tractors. In 1918, 3*+»l67 Fordsons were produced. 
In 1919, production increased to 56,98? and Ford cut his 
price from $885 to $750. International Harvester in that 
year stood second In tractor sales and the J.I. Case Threshing 
Machine Company third. In 1920, one in every three tractors 
sold in the United States was a Fordson. Ford established 
a record production in July of that year of 375 tractors daily ^■^^^ 

TI. Ford*3 Influence on the Industry to 1928 



Implements for the Ford Tractor 



iiiuersjat ^iic 



It was not long before Ford realized what all 
tractor producers were to realize sooner or later — that a 
farm tractor cannot attain the limit of its market potential- 
ities unless there is a line of implements marketed to go with 
it ^■^"•'. The first implements produced specifically for the 
Ford tractor followed an arrangement between Ford and the 
Otwell Mower Company in 1921, for the production of a mower. 
Power to drive this mower was taken from the Fordson pulley- 
gear and varied with the speed of the engine, 

.^-^-Between 1921 and 1925» the ysar in which Fordson 
sales reached their peak, several other implement companies 



vllBf etor iG is«-v: *BflT lo xXui nt noiioutotq bioosi b 



8SPI o:^ : . _. :, „9rf* _ 30 ; _ p 



» ^■ 



ILb *Briv besllsei b^o** stolsd jocI Son 8bw ^I 

-.Lsx3T.35oq 59:-ti£i3 Eji" 'I'D ::.:;r.J:. siij axfii-^ii aon.,:i£C! lOJC'e-; 

ri^lw OS oJ he^eMism . -si e'i?rfd^ eeelnw eei^l 

eri^ "T'^'t ^'[f rrs '■t •■"•^rT ^("oc/^ctt r:fr ••■"e.rc'r'/ Ipi*^ srfT .^o-i' .^f 

B»tf'i Jo ItBivVBe fAB^q tl^d:f bsffoe«i t»iBe 



took up produntlon of Implements specially designed for the 
Ford Tractor. Among the most active of these was the Oliver 

Company which, by 1925, was producing an almost complete 

(in) 
line of tillage Implements for this purpose ''. In 1925 

John Deere put on the market Its "No. hC" plow which It 

advertised for use with the Fordson. The Big Farmer Corporation 

of Fort Madison, Iowa, built a "spading attachment" specially 

for the Fordson, capable of digging up the soil, turning, 

mixing and pulverizing It In one operation. Nichols and 

Shepard and the Bell City Manufacturing Company of Racine, Wis., 

both produced small threshing machines adapted to the use of '^ 

power from the Fordson. In addition to these Implements, a 

variety of pulley i?ttachroents for wood-sawing and lawn-mowing, 

and even a crawler attachment to be fitted over the Fordson*s 

wheels, appeared on the market by 1925. 

Overshadowing all of these In Interest and 
Importance were the Implements Invented by Harry Ferguson 
and used with the Ford tractor. Ferguson, an Irish-born 
Inventor, had shifted his Interests successively from auto- 
mobiles to aeroplanes and finally, as a result of wartime 
persuasion from Ireland's Department of Agriculture, to the 
problems of agricultural production. In 1920 the 36-year-old 
Ferguson brought wlth^y^on a visit to the United States, patents 
taken out In England Ih 1918 coverialng his "Unit Principle of 
Integral Attachment" of Implements to the farm tractor. At 
this time, Ferguson had perfected only one Implement based on 
this principle — a plow, but he already planned an extension 
of the line. 



©r^-: ".'."^ f.'-nr,fpe,f vrTrtr>«rT5 ^:tn'-r:'^lTnl T'O rro ^tn.r.^'^^'7.<T nr ?Ioo;f 

10 it. ■ ««««r ,^S^I yd ,rfolriw x«Bq«BoO 

„r :-oti-J wolq "wK .Ci. " Kji je;ii£.T.' ■•>.']; no juq e-^esu nrfoL 
no; »riT rf*lw Tgvhfl 

, .. liot «r'3- iii; aKAS^iti "lo sicfi'^BO ,i-^c£r-io-^. snj 'xo'i 

Tj-;;. ;^^ ••nn rsl :fi gnlsiisvlirq frns gnlxlm 

'to r>eij efiS oJ ; ::-;oca- iinliiz,^'X(Vj iiSufS b^Oiif-'Ciq n;roa 

6 ,; d'i of noiiibhf^ nl .flosFbio'l f^dt mo7^ isvroq 

, an ^ ■•"'■"'-■ ''■ "" '■'"''• ■in ' '.vsr-'.orv •-♦.'>'* ,-+ ^•-•fr -'•>«* "t^^ vsif'^rf- *o -7tA^T«v 

e'noe&K isvo I*ed';3"jfl bo' a nsve bne 

.^291 xrf t^'TiiBSf 9ff* no ' -^s ,el»»rfw 

aioo-iiei'ii nis ,n'. . '-ioGi^ Mc'i drtJ ns 

-Oit 1 Yl9Ti88»ooi/8 e^^aaieitni elrf h®;t'>2rf8 berf ^loiJnevnl 

f^'f"; ''rr-ipY .} pp .v'"''n.■•^' .■»'^ft<!• f'/of Ap r»* Pftfrrfoffl 

bIo-1 7 laiucMtroligE lo iq 

■^o ©Iql; airi ,., riX fc«aX, 'O ri»j^eJ 

no' .insiv^ yt'toijp. fjj1 i^uc:' ,woJif 8 -- siQiofiJ;-iq aiilJ 

.snJtl wU lo 



91 



Ferguson visited Henry Ford during this trip and 
an arrangement was made tc have the Roderick Lean Company of 
Mansfield, Ohio, produce the Ferguson plow specially for the 
Fordson. Ferguson meanwhile returned to Belfast where until 
1925 he was occupied in developing a manual control by which 
his Implements could be raised or lowered by the tractor op- 
erator. In 1925 Ferguson returned to the iJnited States and 
the Ferguson-Sherman Corporation was organized to produce 
this plow for use with the Fordson tractor ^^9), 



Two basic features were contained in the Ferguson 
Unit Principle of Attachment. First, the implement became an 
Integral part of the tractor itself. Ferguson wished to elim- 
inate entirely the wheeled tillage implement and to this end 
he designed his plow as though It were part of the tractor 
Itself. Secondly, the method of attachment of the implement 





WHEELED TYPE- IriPLEMENT 



(Dotted line sKows li^e of Ji-ift) 



The Ferguson PkiNCiPlE 



to the tractor was intended to produce a different line 
of draft from that produced by other plows. This is illust- 
rated in the above diagram taken from one of the early advert- 
isements of the Ferguson plow. 



The advantage claimed for the "downward" line of 
draft on the Ferguson implement lay in its ability to penetrate 



liiUiJ &M»..,w uis'iisi:. o« bun-iii'Ssi oIi;!wr:e&ii; fioeij^isi .noenioi 



rioJrfw ycf loid'noo JiBunssi s 



^,00 fi; 






90 



w noidsioqioO nBffii3ri3-»no8Ug'i9''? erlS 



(91) ,-..f 



'^ ■-.■ "v . r 



Tr. ■-.?♦• o" A"-!-' .'i-*^ 



vnf^T ?-^n':f 






loJo&i;? s»d.1 to d^-ir.4 «iew .IJ: d-^uotii s& wgiq fci*r 



iaeo ©ii 



^n 



i ©rfcf "to *nsmffos;^ts "Jo bo/IJprr 9rf^ ,Y-rb^f>^©2 .\lepJi 






3;3Z 









/^^ 









'i.-.^j -1 j/r>\/^i 



>\iS ^neTf^llJtb soufroiq o^ fc^rvrsitrrJ: ebw 'jniiiBT:^ «rf:t n^ 



^f r r ' ' r ,' f"^ , r v 1^ fi-'' >■. r.ir" + .-, ircf f> «•■•-. r r f. <-> -c ,-■- H 



f f .-^ • 



noetrsrt©''! 96:) to b: 1 



7«^ 



harder soil and in the greater safety which it afforded against 
breakage from obstructions is the ground. When the plow 
encountered such obstructions, it was claimed, the line of 
draft was such that the rear wheels of the tractor tended to 
be raised from the ground and allowed to spin. On the wheeled 
type of implement, and on other plows, Ferguson claimed, "when 
the share point encounters an obstruction the tendency is to 
lift the front wheels of the tractor off the ground. The 
additional weight thus thrown on the rear wheels gives maximum 
traction end damages the implement" ^^O)^ 

Ford L oses Out to International Harvester. 192'7»1928 

The amazing success of the Fordson in the early 
1920 's posed a real threat to the existing farm-tractor industry^^^' 
In February, 1922, Agrimotor ^ trade journal of the industry, ' 
observed editorially, 

Henry Ford with his Fordson has turned into a visionary 
bogie-man to frighten many a parts and accessory maker 
from going into tractor business and to discourage and 
depress many an otherwise enthusiastic tractor manufact- 
urer. Many a time in the past few months we have heard, 
"The tractor industry is dead. There is nothing in it 
except Ford". 

Ford's early success resulted principally from 
his reputation for low-cost production in the automobile 
world, the aggressive publicity methods which his company used, 
and the unprecendentedly low price which he charged. The 
wonders which Ford had accomplished in the automobile world 
had long been appreciated by farmers. In fact, it had been 
an early complaint of the implement industry that farmers were 



s). 



n' to no fmB ,d^r <* 

"ndonej^ arJ;}' nol?OfJi;ted^ " •^" .tnA70Dn<» ^n^^'^^ ^'^^c - ^-t 

aril .r,'at/oi3 «»rf^ I'io iciosij »ri.J lo 8l>«dw inp-il enU i'tll 

,\Il6iio;^if:'«? bevieecfo 
bne iif oinl ti 

titow ni beficliqmoooff ben' bio*? rioJ"rfw eT^bnow 



somehow able to pay cash for automobiles but not for tractors 
or Implements ^'^'^\ When the leading autotcoblle manufacturer 
turned his attention to tractor production, therefore, It was 
a foregone conclusion that a substantial market awaited him. ® 
Wise publicity gestures helped expand that mgrket. In 1918, 
for example, when Ford tractors were first sold In large numbers, 
Ford distributed them through government agencies as a war » 
measure. This proved to be magnificent advertising for the new 
tractor, and It was hailed editorially even in the metropolitan 
press as the most promising solution to the urgent demand for 
farm power ^ -^ . 

Finally, Ford's prices were well within reach of 
most farmers. Much of the difficulty of the other tractor 
manufactuEers sprang from the long terms of credit necessary 
in tne sale of their machines. At the annual meeting of the 
Tractor and Thresher Department of the National Implement and 
Vehicxie Association in November, 1920 ^~ ' (from which assoc- 
iation Ford remained steadfastly aloof), considerable criticism 
was levelled at bankers for refusing to finance tractor purchases, 
"because of their utter ignorance of the ability of the tractor 
to materially lover the production cost of food" ■^\ Ford 
soughthis freedom from dependence on bankers by charging prices 
lower than his competitors could possibly meet. 

Having cut from his original price of $885 to $750 
in 1919, Ford had shaded it further to $625 by 1922. Tn February 
of that year, without any warning to the Industry, he suddenly 
put into effect a $230 reduction, bringing the price of the Ford son 



leiw^J-c »ii<.. "^ei ■^AVJ nsflw .'-q:.i -to 

,e ;> j-pnjfJ ©lew Bioiopti Mo? rj^riv ,©: lol 

• :';f9T er'j nJf «i*v« vllal'^c^itb^ beJ r^v #1 oat* 

lol R^Bm8^ JnegiiU -.,- M-.r-v= o«fr, f-- ,-.-t,. • orr ari.t ee eeeiq 

vioois \ ;.c«meT. btoi noilel 

,ef jnt'^iBi.t i»9nfc!n '^r!-^?r''*«'j. to^ s fo-^^'wif ^a ^<aJ level e/sw 

fno*? . ^"'^ "boo'J ?.o ;fBoo noi^ojjbotq wol ^liBliad^ein o* 

\' •! Bifid -*?! n: .^S^I yd ^S^l o;t 'tJ^rfitTtrl .-< fe berf Ho'- " nl 



9^ 



to an all-time low of $395. 

The company which stood to lose most from Ford's 
success vas the International Harvester Company, the long-time 
leader in the I'npleraent industry and, from 1912 to 1918, In 
the tractor industry as well. When the Fordson appeared on the 
market, International's principal tractor was the Titan 10-20, 
two-cylinder model with a double chain drive ^^^\ Although 
the Titan was not a small tractor, it had been relieved of 
many of the heavy accoutrements of its predecessors and was 
capable of being called "medium-sized". Harvester's first 
answer to the Ford challenge in the enrly twenties was a 
tremendous sales campaign in favour of the Titan '^7), 
Supporting this camnaign. International matched Ford's price 
decreases. When Ford cut his price by $230 in 1922, Harvester 
immediately reduced the price of the Titan from $930 to $700, 
and further announced that with each sale a tractor-plow 
would be given free to the purchaser ^^^K 

Harvester's most decisive step in meeting Fordson 
competition was taken in 1923 when two new and lighter models 
were introduced, the McCormick-Deering 10-20 and 15-30, and 
experiments were begun with a view to integrating the company's 
implements more closely with the tractor ^ ^ , Into these 
new models was built the entire story of Harvester's tractor 
experience. This was accompanied by renovation of the Chicago 
tractor plant and the replacing of obsolete machinery with modern 
labour-saving manufacturing equipment. In 192'-*', as a result of 
these efforts. Harvester's tractors/snowed an impressive increase 



said wi& , III 9ri* e«v EeonouE 

fcn.6 B'ro; -: Mil to ertnsir ooe \;vsori f»ri* 1o xn«m 

B e»w eeJdnew* ^Iift© »rf;^ ni 98n»IIi»rfo bto'i eni o;. >ie 

soli''' f. • f- - ''-'^" '■- • . i .:•../ ..o iV ■. '." . -^r.• : ^rr,^r. , rrP 

19J: . ai OtS| Y<J ©oliq sjtri >joo bioH n*»riW .e©es«io«b 

fioefc'jo'"^ §nI:ro«in ni qe*E 9vi,zic9b ;^EO£r ' Esvfjei 

U' road© '^o «n ' J hne rffiBTT To^nBT-* 

''' . '^'^'' nl ,ine:. .^■.,:j,,'i anJ-"' * -^^'^npin i^nl' - . ■ - . . 

• .r ^ L- ri 



95 



'and from that year until 1928, when For'1 discontinued the 
production of tractors In the United States, International's 
jposltlon in the market showed constant Improvement. 

There were other important contributory causes 
of Ford's relative decline in the tractor market during the 
middle twenties, Among these was the Increasing sales 
resistance from farmers tvwar^ a tractor with which no complete 
line of Implements was offdred, and those which were offered 
were produced by a variety of manufacturers, raany of whose 
names were hardly known In the Implement industry. Even more 
telling must have been the difficulties which the company 
experienced In marketing Its farm tractor through a distrib- 
uting organisation set up primarily to sell automobiles. 
Pord dealers In the city had no sales outlets for farm goods, 
and those In the country were generally unfamiliar with the 
farmers' equipment needs. Much of the company's communication 
with Its dealers in the middle twenties was in the form of 
exhortations to "develop this (tractor) business wholeheart- 
edly, if only for the benefits he will gain In his automobile 
and truck business by having a strong connection with the farm 
industry" ^30), 

In 1927, International Harvester's tractor sales 
exceeded the agricultural portion of Ford's tractor sales for 
the first time since 1918. In the following year. Ford discon- 
tinued the manufacture of tractors in the United States, removing 
these operations to Cork, Ireland, where they were continued 



?9 



^fi^ ^-wnlrTnooRlb biof n©iiw ,^ a ibbx *eri;t moiJ ba» 






Xnp'T.Too «««rli rfoJrfw 8«»t*/"o^*^^ ' rf«*M »vsrf #»,«» rirtj^llei 

-iHtizio & ii-^uoidi ■■■■■■• "■ ■^'"^'^ 

. epi Woato^UB Use oJ x-fjtismliq qu *•« nor iBBlnesTo scijii 

♦ ebooa Btet to*! Rt^-^Xftro sslse on ^^r« y*-^^ •rf^ "^^ eT«T«•^ f»tP7 

•Ildomod-UB eiri al nisi illv ©d eitilarred »rij- no** xlao 'U. ^xLbB 



96 



from 1929 through 1932. In 1933 » production was discontinued 
at Cork and moved to Dagenham, England, where It was carried 
on through 1938. After Fordson production was discontinued 
in the United States, Ferguson returned to the British Isles 
where he turned his efforts to developing other types of 
implements embodying the Unit Principle of Integral Attachment. 

When considering Ford's departure from the farm 

tractor Industry in 1928, it should be recalled that tractor 
"tine 

production was only an incidental phase of Ford's business. 
Perhaps the whole venture In tractors should be regarded more 
as an experiment than as a business venture. Ford later stated 
that "he was simply trying to find out how low the price might 
be at which farmers would buy tractors in quantities equivalent 
to automobiles" ^^ \ It is doubtful If Ford e^er answered 
this question to his own satisfaction, but in the ten years 
which he spent seeking the answer before 1928, he exerted a 
marked Influence on the development of the industry. 

What Ford did for the Tractor Industry 

What forms did this Influence take? These may be 
summarized by saying that during his ten years as a tractor 
producer. Ford hastened the appearance and development of 
many modern characteristics of tractor design and production. 
In this section the three most important phases of Ford's 
Influence will be exaTiined. 



In the first place. Ford hastened the trend toward 

laifl *t' 



noliouboii tti91 nl " ilgx/oirf^t 9'-iPI moil 

eelel rfel;tliS ©rf^ o^ f)emxj;t9i notu-^ie'^ ^B^iBi^ beilnXi ©ri* fll 



-f „ - ^. ^ 



.Eesni^eiKf e'Mol lo eesrlq Ie,Jfl©bioni ng vino epw nor^tnr/f^oiq 

sioffl 5©bies®i ©(J biifc '" "-'d'OB'ii nl eii/Jnov elonw -u^ rv. ^'^ 

r:f?cffij-2 'r??.t;i McI ,? ^..'^gccf r 8« nadd ;tfl«Hili^X8 as as 

^ligls! ©stTT ^J"'-^ ^ol Vforf j'lro bill ot snlvi't vi'ywjjp. ©pw ©rf" ?sf(^ 

Beiswene i©V^ bio\ 11 Ix/lJc^wob ej ;t , "^ "eel idonrocTifa o* 

£ uvv! ■jo:;.'; aii ,8291 S'loioo 'lewanr; i>i;j ^sr.osis. Jne;ia 9fi noiiiiif 
.Xirfsw^ni »f(^ lo ;^n!=»mQo.C©vaP: 9r{;t no aoa&uiJsil b^jiitrB 

e'b'jo'? lo Efieiiriq JnisJ-coqiri J'roat: ea7(^:f ©rfi nolio«t elrf* nl 

.bsnifrsYP ©<J lltM 9on**ulliai 



97 



smaller size In the design of the farm tractor, thus bringing 

into the industry a recognition of the needs of the small-scale 

farmer. Relatively little had been accomplished by the tractor 

industry prior to 1918 in the development of small farm tractors 

The explanation seems to lie in the fact that in these years 

Western Canada was the world's leading tractor market and 

farming conditions in the West called for power above all else. 

Dnwleldlness In a tractor was not particularly distressing to 

the farmer plowing 800 or 1,000 acres of prairie soil. But 

the implement Industry was lax In not recognizing the enormous 

latent demand which even then existed for a smaller, lighter, 

cheaper tractor. In endeavouring to explain International 

Harvester's failnre to develop a small tractor sooner than it 

did, C.H. McCormlck later wrote: 

Editorial writers clamored for small tractors; the 
American trade was becoming more important (than the 
Canaoiian) and American farms were smaller than Can- 
adian. Engineers dreamed of small power units — but 
the public seemed to want the largest, heaviest 
r- machines possible. Harvester would have preferred to 
refine Its original 15 and 20 horse-power models 
rather than to explore an uncertain way into the sphere 
of magnitude where it had no experience. But the 
company was helpless in the face of the demand. K3^) 

This reverence for what "the public seemed to want" 
retarded the development of small tractors for many years. 
Ford's influence was that he awakened tradtor producers to a 
greater consciousness of the power needs of the small farmer, 
and pointed the way by which these needs might be fulfilled. 
Once this way became generally known, tractor producers, and 
the Implement companies in particular, were quick to redesign 
existing models with lightness an Important consideration. 



oi«08-Iifiire sd^ lo ebesn erf* lo nolifinaooftT 8 xi^s^^f^-^ *^* o;:tni 

;oaorTj su*;.: j._js-t:e to ij;3 0iui;cj.aV3L> • SIQX oi •ir.'.L'iLj x'^'^^obilJ: 

ei6P'{ 9ee-W ni ^/jrf* *os1 erf;t nl »ii o;t ereae noltfanglqxe sriT 

'^f!P :t9>('tP!n ic'tc'T:* .>r!^ft«»r afm^^o^' s(1:t bbw Bb&tiF.'^ ht^jpsW 

.»?L!i-' i^i; 3voo'p '.•■'.'jq -iJi r _jLj.i2-.' J. •-">*■ '-iiJ al Baoii tbnvo ^nj-j-.K"^ 

o;t anlBBsi^Jeib xlt&lvotSiBq ion asw lod^OBrr* a nl -eesniblslvnU 

,"t!:.f? .r?T? ?^•tl.^T<T "io ?<*7^n 000, X to 008 'icJ'fJcL-' T^tnTBl 9rf;f 

fioSri'^.lS fif^IiBiBR B lot b»9BlX9 n9tit a9V9 riolrfw bn^meb :tn9:fal 

i.B:tw 'iE-noc'_ lojoii'-j axsase £ qoinv.'^;? c.t ciMiifci c. ' i-iJESViBh 

:e;toTw t«j-bI jlolrnioOoM .H.::; ,Mb 

.^osiJ IlBfT'B 'io''t '^PT-^r'^.rri ~T~rMtv/ rF''ioj'lba 

-nfiP ■ ©-XQW r 

*i.icf — ilBfr? , -^ ,, . -'C 

2'^31bI 9ff;^ Jnaw oi bemsoe ollrfoq ©ri;t 

O^ ' ' ' ' ■ " ■•."TI 

• ■ ■ ^ _ ._ ,_ . _ _ _ ^ -I 

9t ii oJnl ^iaw nlBitBoais hb eiolgxa o* nari^t lorfcJei 



'I 



a o;J eiaowboiq rtcJftaicf bsnsjCawa erf iJsri* aew eonfuilnl e'^yic'? 

jismifll I.I!ff{T'8 Sri J "^o i?b9*r ifjworr ^rfj- 'Jo eEon.":uo.*r)ffnnt> t?*:* Ti-n 

• fc' "wf dri^xiu yi-^son •sasiij :;oinw '^j ^£W ?tnj o©;Jnloq i;fla 

bne jEToouhoiq lod-oai^f ,nwon>{ x£J^«iw©3 ©maosd xaw tlrii eonO 



98 



A second influence of Ford on the development of 
the tractor industry was his help in dispelling a notion vhioh 
had persisted in the industry since its inception, viz. that 
the tractor was simply a substitute for the draft animal as a 
source of tractive power for implements. Not until this notion 
had been dispelled can it be said that farm tractor production 
began to be centralized within the farm implement industry. 
The Idea of a complete line of implements specially designed 
for taking power direofl.y from the tractor had never been 
taken seriously by the implement industry, partly because of 
the widely held belief that the tractor could only be used 
economically for pulling plows, and partly because of the fear 
that farmers would not buy a tractor which rendered obsolete 
the horse-drawn equipment which they owned. 

Ford hastened the demise of these opinions. His 
small, low-priced tractor featuring specially- built implements, 
prepared the way for the integration between tractors and 
implements generally, which dwe loped rapidly in the early 
twenties. Next to the depression of those years, the closer 
integration between tractor and implements was the most 
important cause of the disappearance of a large number of 
independent tractor producers by 1922. 

How did this integration develop? The biggest 
single step was the development of the "power take-off" 
attachment for standard tractors. This attachment was 
designed to effect direct transmission of power from the 



lo O'P to 9V '. I A 

V ^ii-.... .'V!-j ill -J.; -.11; (.iJcubiil erf* fll beJzlzifnq berf 

no,' J -"J.- u-:. ji-i'ijMv ■> -li: t j_'-.:x. ■ . :- c' 9<f SI ■ J-. V ^^iiJoqelb c'e!»c ' srf 

.Xii<^iihal Sr. ntdi.l bo scf o* negsd 

9i^IoRdo b' T rioiriw loS^on;^ & xud ioa Moaw etsm^e'i i&fiS 

fcrr« eioi?»jfi ■■'•;:t©d noJ:3«?.)5©7nl &H$ 10I x*" ^ 

"fto-'- T" erf? to . er(:t airW qf»Se 'il'gn.iir. 



99 



tractor to the Implement, fflmost all Implements except the 
plow, the cultivator and gome other tillage implemeVits, have 
some rroving parts which cust be activated as the machine 
moves. Until the power take-off appeared, power for such 
activation was derived from the mainwhe#i of the lifipleraeht, " 
as had been the case even in the earll<^st types of reapers. 

This entailed much wastage of power, placed great strain on 

it 
the malnwheel, and necessitated greater weight In the * 

implement than would otherwise have been required, in order 

to produce traction. ' *'^* 

A leader in the development of the power take-off 
was the International Harvester Company, which began its 
experiments in 1919. By 1922, implement companies (both 
those producing tractors and those not doing so) were advert- 
ising numerous implements. Including binders, which were 
designed to receive power direct from the tractor ^-^-^ . The 
widespread adoption of this new equipment on farms had to 
await the wearing out of many horse-drawn implements, but 
the increasing tractor sales of the International Harvester 
Company after 192^ suggest that the swing had begun by that 
year. From a technological point of view, the power take-off 
was probably the most important factor in Harvester's ability 
to drive Ford out of tractor production In 1928, 

A third Influence exerted by Ford had to do with 
the manufacturing methods used in the tractor industry. 
Throughout Its early years the farm tractor had been, to coin 



'^^ 



c:::iii.'6m c_ij -_£ D'_.J .-\'. JOE ju ,;s0ffl riolrfw act'fsq gnlvo^t! »rco8 
j*n?>rrpl0!t:i ed* Ite t'^m o^i '^ct'^ ►.^v-fT-?'^ C£W aotiBVttTiB 

no niBtie itBirts baoelq jiswcq "!:o ©as^eivw rfowm beJlRcTn© ElriT 

.noi.los'i:?' ©ojuboTCf o:f 

?:tl n.'s;"'^:!^ "f r* .'• "* V,' ^vfT'Trr!!?' •r«tr;'*-"rTjnH .tfl;ncM'enT«*?'nT srf:? saw 

-d'lQvbs Q-row (ca ■gatob ion ssorf;^ bne aio:tOEi3' gnlouboiq eaori^t 
©fsv? dr ■n.fd' '».ffl^?T'''n.? , "rlrTC'-r^j.f'TT.*: ?x;o'ir>7ii'r "ifrtei 

o;f beri Etript no cfnoaiqi'r.rpp w«5n 8.tr*t lo nol^rrobe b6©T:o|8shlv 

f^-i-ejrrcf -r-''::?- . v "^o rfrjj-ci Ipt !"^j of nnr*rt-';:t r tot*? .•y-T-'r 

.G^C-T ni notiouboiq ioio»ii ^o ;fi/o bio^ e^^tib oi 
r. ^•tftx<» ©oneuX^nl _^ A 



100 



a phrase, a technological orphan; no Industry appeared 
willing and able to adopt it and provide for Its development. 
This, therefore, was at best haphazard, being contributed 
to by a few of the stronger implement companies and by a 
huge variety of other companies, some strong and some weak. 
Technologically, the tractor was more closely akin to the 
automobile than to the farm implement, but the automobile 
companies, with the exception of Ford, steered clear of it, 
probably because they lacked sales ^organisations adapted 
exclusively to the agricultural market. On the other hand, 
the Implement Industry, although it possessed the necessary 
marketing facilities, lacked the technical "know how" 
necessary for the production of light cheap tractors in 
volume. Almost a century of experience in producing tillage 
and harvesting Implements — ingenious devices but neverthe- 
less crude alongside the refinement and precision of the 
gasoline engine ~ was no preparation for assuming the 
leadership In tractor design and production. 

Ford's greatest service to the industry in this 
ho 

respect was that he virtually forced it to adopt many of the 

standards of design and methods of production already in use 

In the new and vigorous automobile industry. According to 

C.H. McCormick in "The Century of the Reaper", 

In 1918, the manufacturing methods employed by all 
tractor producers were derived from implement and not 
automotive standards, and they were hardly up to date 
in terms of manufacturing progress. The record annual 
production ... in 1915 had been non- progressively 
assembled; and at a period in its early existence the 



ir 



'nsl 1^** ,•,?•* TVld 



- ' on ';■ ' 'i B jOPe'iffc b 

< ■ b 8^1 lot ftMvoTc; bttB it ;tqo6« oj sldB bo« 'ittllllv 

&llo »i,ii oj nsriJ «IIcfoffloJi/« 

ftl to 1R ?Je jf o floi ^ p>f{J rii'lw fS*^' oo 

f^rtp-i I'^riio oriit nO ,J»}fiecn Isi/J^tluolnas etiS oi xltrvt'&ulox^ 

iowboiq fll eon»li?»qx» ^o \iu$a»o e ^eofrlA .emx/Iov 
eri;^ snlmusee lol noi;^P!Tjiq»'rq on bbw — ftn^i^n-^ enlloeaj 

,.,■.-. ^f'^. .''-.<', Of 'i:.*^-. rr^4n«>r i^ldbesl 

•rid^ lo \/Hiim jqobjB oi ii '-'. . /i xllBUiitv erf Jfiff;^ eaw ;tooce&i 

«B</ ^ « nol^oytotq Ifo tbociie«: bne nglEob lo «f5iflbni3*8 

o* anibioooA .xiiRuinX '".lldosTiOiu^ fMOioTitv Mb ws»n erfJ nl 

,''Teqfl»B Bdi "io TftwctnoD srfT" nJt jfoiotrroOoM .H.O 

II« yrf hsvoiqme afiori^iim ■^cifiuSo^ttinf^m e>fi:t ,BfP.r nl 

X^ ae&v/ (^j. ni ... 'q 



xux 



flywheel of the Titan 10-20 travelled exactly one mile 
around the factory (as compared with a subsequent 300 
feet) before it was mounted on the tractor. Some few 
of Harvester's factory men realized what waste *here was 
In such methods. The production cost of a grain binder 
was surprisingly low, but it was a type of manufacture 
which required relatively little machining; and when the 
production methods which so cheaply produced so many 
Implements were applied to tractors, they fell short. 

(3*+) 

In 1923 International, spurred by Fordson compet- 
ition, led the Implement industry in the adaptation of 
automotive standards to tractor production. Subsequently 
Case, Hart-Parr, Deere and Mollne all took similar steps. 
In doing so they were aided by the fact that the demand for 
farm tractors was not so seasonal as the demand for tillage 
or harvesting implements and most companies therefore could 
produce tractors economically in a separate plant throughout 
most of the year. Thus tractor production brought within the 
reach of the Implement industry the economies of specialised 
production on a scale not possible as long as production was 
confiaed to tillage and harvesting Implements. At the same 
the automobile industry provided a fund of information on 
how such economies might best be realized. -^ok 



III. The Farm Tractor Since 1928 

New Producers after 1928 

vv .' Ford's departure from the tractor in dustry in .;,..•! 
1928 was the occasion for the entry of some Implement firms 
into tractor production for the first time, and for the 
strengthening of existing tractor lines by others. The chief 



-> r , _ . 1 1 . . -r -• •• -. r ', ... •'•i 



v»J f>- -'■ t no B eew ii eiotsd (i'se'r 



Jo aci ttt xiitisbnl edit feel tnol;tl 

«Tp.[.f^:t lot 'Tfp'rfsft ?rf* f»s i"?ne?cep oe ten fipv p^'^^t-ocit r-TPlt 
biijcc Sit ; ^'s^iL.zqxQD j^ciz biia •■■ ' :^j::„jEev7!';. lo 

eaw :q i5b gnol b/b oJ ;^on el so 8 e- no noJJoiiJboiq 

xio iTO-.: s.Tio:;ij: io oi:ii;i £ robivoiq \.Ttj cuDni aj.idor'iojMi:. ©dj 

.ftesilBsi ed d-esd Jtrfslm e«lmonoo» rfoue wori 



iU^ 



new entrant was the Oliver Farm Equipment Company which In 
1928 purchased, among others, the Hart- Parr Company and the 
Nichols and Shepard Company, both well-known tractor producers. 
It will be recalled that Oliver had been one of the principal 
producers of implements for the Fordson in the middle twenties. 
In 1929> the Minneapolis-Moline Company greatly strengthened 
its existing line of tractors through the acquisition of the 
Minneapolis Steel and Machinery Company, and the Twin City 
Company, makers of the Minneapolis and Twin City tractors 
respectively. 

A company whose history with respect to the tractor 
is the reverse of the ordinary case, is the Allis-Chalraers 
Company, a producer of farm tractors for many years before it 
began to produce farm implements. Like Ford, Allls-Chalmers 
found that many farmers were reluctant to buy a tractor for 
which there was no line of implements specially produced, and 
in 1928 it began a program of acquisition which eventually made 
it one of the larger full-line implement manufacturers. 

The Allis-Chalmers Company traces its history back 
to iS^-? when the Edward P. Allis Company was set up in 
Milwaukee to manufacture millstones. By 1900 this company had 
grown into a leading manufacturer of steam engines and indust- 
rial machinery. In 1901, with the acquisition of four other 
companies producing industrial machinery the name was changed 
to the Allis-Chalmers Company. Succeeding years saw the company 
expand, through further acquisitions, into production of 



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ftfiBOi Yli fai.gfi©vr. rioi/lw noiJJEliipOB ^o roBisoiq nB^ed Jl C^^J. nl 

• E'le'ii/d^oflunpffi ^tnsrcelqflii f^ail-LliA i^sibX ©rid' lo ^no il 

afoecf yio^elff s;^! eeoei? ^p&Qno'::) enefl'IsrfO-BJtllA sriT 

TAffd'o Tuot "to fTQj-:t'lsJ'[rrnEi virf:+ i-<:t ^^.' jTOPf n'^ . VTr..- frfriftm TrIt 

r.^'j- .rio e*w sman onj x*;w;iiloxii3 iciii^ bulAJ ^-jaOjji o'lq eoiijeqffioi/ 

Xn^qaoo •«!* Mme. eieft^ sflib<>©'>ci' ./li-r-'oD e^s-irlBilD-alllA erfit o;t 

'to nct:t?rf*^OTC cl'n ^ ♦Ertn^.t/ritrjr.'^R T--r;1-'<^xr^ r(y5;rrT,i:t , ^^«orTPl 



it>3 



hydraulic and eleotrlcal Industrial machinery, air brakes, 

generators and turbines. Production of farm tractors was 

t 
begun In 1915* 

t^- In 1928 the Allls-Chalmers Company turned Its 

attention to the manufacture of agricultural machinery. A 
glance at the chart will show how this was accomplished. 
A definite policy of acquiring old established firms manufact- 
uring both tillage and harvesting Implements was adopted; 
and the plants of the companies, In turn, were converted to 
the production of new types of equipment for use with Allls- 
Chalmers farm power plants. The first Important acquisition 
of this type was that of the La Qosse Plow Company of La Crosse, 
Wis., makers of plows and tillage implements since 1865 ^J"', 
In the same year, possibly as a result of Ford's departure 
from the Industry, the company sought to strengthen Its line 
of tractors through the acquisition of the Monarch Tractor 
Company of Springfield, 111., makers of a track- type tractor. 

The final and most Important of the Allls-Chalmers 
Company's acquisitions among Implement firms was that of the 
Advance-Rumley Company of La Porte, Ind., In 1931» The latter 
had been formed In 1912 through the merger of a group of thresh- 
Ing machinery producers. Advance-Ruml^ had continued to 
specialise In threshing machinery but had added several other 
products such as corn shellers and ensilage cutters to Its line. 
It also produced the well-known Rumley Oil-Pull Tractor, and 
by 1931 had developed a combine. When It acquired this company 
in I93I1 therefore, Allls-Chalmers became the producer of a 



fBm2i6i6 itB ("^ifinidops: Ici-i:rct/r>!ii xaoiiioeie err, uiit 

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^<d£) ^;spf ..rjf-fp ^-f.,,--r.^f^f„l ^.^rr^-^ f,^^ r.Ycfn "^o ifTr^-rprfr ,.r*W 
©nil 2*1 n«>ri;:t:sn®i;j8 o* Jrfigi/oa xflBqmoo 9ff;f ,\.i*eolbnl •rlcf moil 

&tSi lo tad* eew bbiiI? :tn<9m9l<Tnl soo'"*? enoi^J-leltipos g'^naqmoO 
-riae'irit to ouoiji ? io isgrsem erio ri§|t<oiri;t £XW ni fcemiol n«ecf berf 

.•nil «;ti oJ fift*:fuo ^acJlana r^riift eiellfirfe moo sb rfot/t: eJoi/Fioiq 

fcnp ^lortofiiT IlJ3*?-I10 icftlfflifiT nv'o«>t-J!r»w f»jrf:f ^«ot;^o•I^ oels tfl 

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iU*f 



full line of tillage and harvesting Implements. 

Allls-Chalmers was the last of the large implement 
companies to achieve full-line status. When it did so in 1932 
the evolution of the farm implement Industry in its present 
form Was completed. As may be seen ih the chart, only isolated 
Instances of consolidation may be found in the industry since 
that date, none of which has appreciably affected the nature 
of competition In the industry. 

Improvements in Tractor Design 

A number of improvements in tractor design were 
made in the late twenties and thirties, some a result of 
competition from Ford, some a result of competition among the 
implement firms themselves. One apparently traceable to 
Fordson competition aimed, like the power take-off, at the , 
closer integration of implements with the tractor. This 
was the development by several of the large implement companies 
of a variation of the unit principle of attachment, viz. the 
"all-purpose", row-crop, tricycle- type tractor ^^'', 

Actually the all-purpose tractor was being pioneered 
by the International Harvester Company as early as 192^-, but 
It was not being marketed in quantity until the later twenties ^-^"^ 
The essential difference between the all-purpose and the stand- 
ard tractor was that the all-purpose tractor was designed to 
serve as a carrier for many types of mounted and semi-mounted 
Implements — particularly cultivators and other tillage 



.a.-t. 1 .lijsfjvifiri bne '~§sllf:t 1o Ball lliA 

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etrd-flr: ©ri* f:^Q:tc«'J'ts vIcfB/osirrac serf ffr-lKv To acion .c^Bfi :^srf* 

.\-i^^i:iA~ii sfa as uo-iijsqaoc' 'io 

no.fi l;f«5qffloo lo ilwsei b «!Boe ,f)io'? raoni aoiilieqnoo 

slriT .loiOBicf 9ri;t ri*iw 8*flsni©Iqffll lo nol:tBriae;tnl if>eoIo 
&i13 .iilv , o-'j£ 1o v»iqfo,ii'iq sifiif Slid io noiJslifiv b lo 

s^bI -Jiiij xd^iJnisiJp iii. bei'^A'ieMi ^cil»d ion eew ;»! 

, i ,~ ~ .., -t f. . „ 

T1S0 B 8B SV^eP 

a^BilJit TArf^o bfia eiotBvttluo \liBluoiiiBq — c.+nsarfllqml 



105 

Implements. Designed as it was for row crop work, with 
higher axles and adjustable spacing of wheels, the all- 
purpose tractor combined draw-bar power with the ability 
to perform phases of tillage work other than simple plowing 
and discing. This, of course, necessitated much redesigning 
of tillage equipment so that the implements might be carried 
at the head of the tractor rather than pulled behind it. 
In time, other implements were adapted to the all-purpose 
tractor, such as corn-pickers, mowers, listers, bedders, 
lift- plows and others. 

Since the introduction of the all-purpose tractor 
with mounted implements, the most important advancement to 
be made in tractor design has been toward smaller sizes. This 
trend was paramount throughout the thirties. In 1933, the 
International Harvester Company introduced the Farmall F12, 
the smallest all-purpose tractor made by the industry up to 
that time. The F12, stated the company in its annual rexport 
for 1933» was "designed to meet the power requirements of the 
small farm and to supplement the tractor equipment of larger 
farms". In 1939 » International introduced two new models even 
smaller than the F12 — the Farmall A and the Farmall B, with 
four and three wheels respectively. In the same year a number 
of small implements specially built for these tractors was 
also introduced* 

Another Improvement in the farm tractor in the 
late twenties was the pneumatic tire ^39J^ in ^eral use on 
tractors by 1933. Pneumatic tires offered less resistance to 



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logtsX "io lo^foeitt ad^ ur o:f bne ansl Ilsaie 

neve elebor- \-'f>r ovf* ?)»o.n'''oi*nl .il |9£9i nl ."enjialt 

riiiw ,fi Ij. Bit" ii u wao r^fiiffTB'i 9tl-t -- SI1 ©ri;J neri- iftliBOia 

nmimua a i»»x «ffl«a sri* nl ; t eXeerfv eeiriij fins iuo\ 

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106 

rolling, Increasing the speed of the tractor and enabling 
it to deliver given amounts of drawbar power with less fuel 
than formerly. Other important Improvements In the thirties 
were the adoption of full electrical equipment on tractors, =* 
the application of the Dle^l* engine on larger models, 
standardisation of the power take-off and hitch locations, 
the use of high compression engines, and the Introduction 
of pressurized cooling systems '^', 

The Return of Ford 

• «n >^ 9r)A 
It Will be recalled that when Ford discontinued 

tractor production in 1928, Harry Ferguson returned to the 

British Isles where he endeavoured to develop a hydraulic 

mechanism for use with his Integrated Implements. As a 

result of nine years of experiment, Ferguson In 1937 

produced a hydraulically-controlled power mechanism to be 

built into the tractor. The main feature of this mechanism 

was that it was designed not only for raising and lowering 

the unit implements, but for keeping them at a predetermined 

depth in the ground, Ferguson returned to the United States 

in 1938 and made an agreement with Henry Ford to produce the 

Ferguson hydraulic system and a group of unit implements 

for the Ford tractor. The implements by then included a IM-" 

two-bottom plow, a 12" two-bottom plow with sod or digger 

bottoms, a 10" two-bottom plow, a 16" single-bottom plow, a 

general cultivator and a row cultivator. No harvesting 

implenents were included. <^ 



Iftirt su'-JL nni.' lir-a'Aiiii: ;o E^thtrbws nevi^ i«v*-ieD oif JJt 

8f erf* nt zi .xIiwdtoI nflri;t 

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Sio*^ "Sic ni u^ftg gffT 

f'?)rrn i "iTf^nr' ^^ ^•TFl'i? fi^rf'-r it.crr'.l' h^ri -rj'j" r--f ll^V rtl 

oli »ri 9T8i*fvr enlpj rfeltiiS 

9(5 o:f cTslnieffOdc? Tswoq &©IIoi:fnoo-y;Il8oil06ibYrf * beoubota 

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i #in« to qucn^ c brrg aje^nye nllustbxd nofiugi®' 

"+'1 F r->*p.tfirini npi* vcf t? tn'^ir'F/I.'rrnf nr'T .ic^t'oeiJ '-.ir^ eri;f lol 

•■ - , ... 'fo con. riJiw woi-^ tuoj^cci-owj "Si e ,woIq fi:o?iod-ow:f 

Q ,woIq mo;t:fod-9lsnI?. "dl b jvolq woiio^^owi "01 ,efl!o;J*ocf 

.bsi'i.JionJ' ©lew p.;Jn»BeIqml 



107 

Production of the Ford tractor was resumed In 
the United States in 1939| and the Ferguson-Sherman Corporat- 
ion was re-formed to manufacture the Implements and hydraulic 
control. In its announcement of this arrangement in 1939, th« 
Ford Motor Company stated: 

This is a memorable day, for we are privileged to 
a Introduce the most far-reaching series of develop- 
ments in the long history of agriculture — a new 
system of farm mechanisation, consisting of a phen- 
omenally light-weight Ford tractor of unltque design 
Incorporating the Ferguson system of hydraulic control 
for a line of light-weight indestructible implements. 
Y 

The announcement was unduly optimistic as the alllamce 
between Ford and Ferguson was to come to an abrupt end after 
seven years of dubious harmony. In 19'*6 their differences 
came to a head, the agreement was terminated, and each went 
his separate way, producing a tractor and Implements to go 
with it. 

The circumstances of the break between Ford and 
Ferguson need not be recounted here, except to point out that 
they culminated in a civil suit brought by Ferguson against 
Ford for $3lf 1,600, 000. Ferguson charged that the Ford 
tractor was simply a continuation of the Ferguson-system 
tractor, the only changes made by Ford being in paint, name- 
plate, model number and some things which were given to Ford 
engineers in confidence. The break between then, said Ferg- 
uson, had been precipitated by the "cupidity" of Ford execut- 
Ives. Ford denied these charges, claiming that the original 
Fordson tractor was, in fact, the prototype of the Ferguson 
tractor, and that Ferguson was making "an extravagant claim 



lo^toM bio''? 
o;J t ' ©ifl 9W tot e^«*^ ^ B el elilT 






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leifls bi: ■ nfi c Bw flcstrais'i baf> bicu r - 

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efftt iJsrft} . ,00t»,X+itl lol Ino^ 

-«v: /M-j ,j-j.i.fiq nl \ci sri«C! sf v;Xno 'ii.;? ,iojDf»-^j 

Xt teri^ 'ialmtBlo , ' Mo"? .e«vl 



that cannot be substantiated". The suit finally ended early 

in 1952 when Ford was ordered to pay to Ferguson %9 Tnilllons 

and to make some minor changes in the design of the Ford 

01 

tractor. 

Since the break with Ferguson, Ford has taken 
steps to produce most of the implements for its tractor in 
its own plants. The Wood Brothers Company of Des Moines, 
Iowa, a medium-size producer of threshing machinery and other 
harvesting equipment since 1897» was purchased in the late 
forties. This company owned and operated branch houses in 
several important centres throughout the United States, 
acquisition of which strengthened the Ford tractor dlsstrlb- 
utive organisation. At present, the principal implements supp- 
lied from the Wood Brothers plant are the Dearborn - Wood 
Brothers combine, corn-picker and corn harvester. Most 
tillage implements for the Ford tractor are manufactured 
at Ford*s Dearborn plant and these include plows, cultivators, 
disc and spring-tooth harrows, planters and others. In 
addition, many independent manufacturers produce specialty 
equipment for use with the Ford tractor. 

IV. The Combine 
t. 

W« now turn to the combine, another Important 
example of the application of gasoline power to farm 
implements. The combine is one of the most spectacular 
of the instruments of farming. Its purpose is to combine 
into one operation the cutting and threshing of grain, 
eliminating the separate process of binding, shocking. 



801 

. T-^.-.u: V* ::oeiJa'i'-' ^" ^^ > bfjiebio 8fiW bto'd nsriw S$^i al 

' 1o , ftxl;f fll eeafifirio ionic ©fl?oe ©ieo c* ftng 

.lOiJosiit- 

,89aJ;oM 89(1 ic y yoiis. ^ooW ^ . ?.:tnBlq avro Bit 

tit 89««Of) rioneicJ 5©;fjBi9qo 6n« ^9^vro ^necfrtioo slrfT .e&liict 

■Jo far' - ; ,8. ■ AJoo--gnJ:aqfc tme osj.i> 



inai-ioqml iPifiionn ^eniiitnoD eri* o:f mn;f won sW 

n-^p** oj- i9woq wif^f.^'-, Ic -^r '':tpr>^J'^-'P o pfaftTRxg 

j.>ij.ivjiv'0?>qe ^80iD ©rid re t'lio i sniaaioo en'i . ?.;t'n^frsIqir!J: 

c* el eeoqiwq eitl .animiBl lo siaeauit&nt ffcit "to 

,rtfPT« >o ^r? h bne 3n>J-:t/fo eriftt nol^eiaqo ©no o;tni 

,a...j A./o,.., f-:ilbnt(S to - ---^tij Q:faiBq»« eilf jnltiniffllls 



hauling and threshing In a stationary machine. 

Not all areas are equally suited to the straight 
combining method and variations of the process have been 
developed. Generally speaking, the use of the combine has 
been found most suitable in dry areas where the heads of 
grain contain a minimum of internal moisture at the time of 
harvest. Where the moisture content Is considered too high 
to permit grain to be safely binned, a variation of straight 
combining known as swathing, or windrowing, is often used. ' 
In this a swather, or windrowing machine, is used to cut 






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the grain and lay It In swath on the stubble, where it Is 
allowed to dry. Haln or other external moisture does not 
harm grain In swath, nor does hall knock it out of the prone 
heads. When grain so swathed is considered dry enough 
internally, it can be picked up by a regular combine 
equipped with a rotating device mounted in front of the 
platform canvas, when combining proceeds as usual. 



901 



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snlljyuri 






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o f- rs L' \..' i.*. I ^i 1 1 



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lo ehe©.'! «rit ev r^^t* x^f* ^-^ eldBaJi/e ieorr bcn/oT ne©tf 

rigid ood^ o«T- o ei : ;?8loi3 9{i:} ©leri* .^^eavieri 



^iio ci bsEK ?.i ,ei 



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development as have cotton harvesters. 
Strippers vjie simpler than pickers 

. 1 arrived first. The practice of 

n is on record in the 

as early as 1914, and 

in 1925 mule-o ^^v.'j. commercia'. strip- 

■■■ iv ,.-ere in!'.'' i. A few sijf ie-z'ov,' 

mounted 
v.cic . > •- .;■• J... out there \>. o ...-■. 
Interest in them at that time. These 









ano'cq erf^ lo ii/c *Jt ^oea-A Lteii ««ob ton «i1;t6W3 n} aitKtn ainsrf 
to *no^l al '■. t eriivoh jjnii'-tot b dJlw b»qqii;p» 



110 

The combine was first proven practical In the 
dry wheat areas of California and the Pacific coast. During 
the 1890' 3 at least three companies — Houser and Haines, 
Best, and Holt — were producing combines for this area on 
order ^^^', Like the early tractors, these were monster 
machines with as much as a 30* cut ^^^\ weighing from 10 
to 15 tons, and requiring as many as ^+0 horses. They 
resembled the threshing machine in appearance more than the 
modern combine. Ground drive was used to activate the moving 
parts until 1912, when combines appeared equipped with 
Internal combustion engines. The first engines were so heavy 
as to offset the reduction in draft due to wheel traction, 
with the result that about as many horses were required to 
pull the machine as before, 

-1 The first self-propelled combines were introduced 

in 1913» These machines were much too costly for popular use 
and remained so for many years. One writer pointed out as late 

as 1925: 

It Is not logical from an economical point of view 
to duplicate the propelling apparatus on machines 
g used only a few weeks each year, when the majority 
of the buyers already have tractors capable of 
pulling them. (^3) 

Use of combines spread quickly as a result of 
the shortage of farm labour during World War I, by the end ^ 
of which the combine had been widely adopted throughout 
Kansas, Texas, Western Oklahoma, eastern Colorado and 
western Nebraska ^^\ The popularity of the new method 



oil 

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v:eiv Ic :fiaioq I«olrnoooo» ne aToi*! laoigol cfon si *I 

'10 d^ir fjo-r ft 2B xI>Joiup &fl©iq8 ? "io qeL 

Lv^ »f{.t ^{d ,1 iflW feltoW ; ,'1 fflifiil I0 ege:JTorie ©riiJ 

bns otiB'iolOv; nio:u.6Li ,■ ,. axe'i ,£Bcr>Bi? 



XXX 



increased after the development of the power take-off 
attachment for tractors, vhich eliminated the need of an 
extra engine mounted on the combine, and thus made possible 
lighter and less expensive models. 

As had been the case with tractors, threshing 

machine manufacturers were among the first of the Implement 

firms to take up combine production. There was a close 

affinity between the threshing machine and the early combine. 

Moreover, most thresher manufacturers were already turning 

out engines for use with their threshing equipment when the 

first engine-equipped combines appeared. Thus firms such 

as Nichols and Shepard, the M. Rumley Company and the Case 

Threshing Machinery Company were among the first to produce 

such combines. In time, other implement companies either 

designed their own combine or added one to their lines 

through acquiring existing producers. International Harvester 

designed its own and began producing it in 191**. The Allis- 

Chalmers and the Oliver Companies exemplify the latter method. 

t" 

By 1932 all of the full-line implement companies in the United 

States were producing combines. 

1 

Conclusions from Chapter Three 

1) The beginning of the tractor era around 1915 
ended the 25-year period of standardisation which the imple- 
ment Industry had experienced since I89O. By 1915 Implement 
producers were finding that many implements had to be 
completely redesigned in order to be used with the tractor; 
and that others required greatly Increased strength. Moreover, 



ne lo b9^tt »di bo;+3niirJ:l9 li lol u s 

o " fens e®"" -^ f^o -yna Bt:tr« 

. e i 9 f)o n © vl en et.j X -^ =- r 1 -ji i>. % •-■.>> i ., ^ i -• 

;^,' ;i!i ©ri^ lo Jei.n 9ri;t Jinome siew eteitfiJoflili/nRffl eniriosm 

gn.tf}'iu:t X'^fi^'^-fB »isw ET9i0;tOB'iiinsfn TsriBeirf* ;J8oin iisvoeioM 

iiyue ejriTi't fii/rlT . bete ©'.7 or s ssnJdiroo 5eqqJ:ijp««p'9nl8fl» c^e-xll 

©i?,aD 9ri:t bns ^neqaioD xs-fo^w^ 'M ©rft ,&rt6q«ri£ bns elorfolH zb 

•oi;5o*iq oi itsill ?*(!* anoeie eisw xnecrcnoO Tt^'nfrfseM 5nlr'5«»i!fT 

rrsrf:tle esineqmoD ifismelqial isriJo ^smij u.. . c:r?jii.'^ir;oo uojje 

e»nl.r il^ri* oS ©«o bsbbB lo enidntoo nwo ^leri^t bsaglsab 

"if'^iS^'^t'^P /""cJ'rtprT'T**rf!^T , '^itc'DW^ctt sn?d'S*T'S ;<;r!*'Ti'"c'^p f^'^tfofrfit 

-Ejj.!^ 3i:j. .t-j.'c^ Hi: J^ ^JiJ.uiJ!-'U'i.q nij^'^o -/-.ji i!\^c i:j: ri::^j.tsL! 

.f '^cii x'^i^^^^^^^ ZBlnsqmoO levlIO eri* has S'lSffilsriO 

b©;^inU ^inBqffloo in^cnslom r- tJ^flif'^ flrfr^ "^c lie 5fPI x^ 

-- - - moi'^ ?npj;etf/pfl9? 

^iPr MuofB 8i«» Tocfo^Td- »ff:t Tr §©(5 ©rfT (r 

'J r>j:'w ijoUfieibTsbntj < i, r'0^'t»»q 'iii'-^x-i^S ori* b©bfl© 
io- ' < [ \n .0^81 ©on.fe h9>0[ e bari y ni 

jiPVO^To)* .riJ8ne'i;t8 beeeeioni xlie^i-^ b»ilupQi ti9tiio tBiii bna 



112 

som« Important new Implements, principally the combine, 
came into widespread use following the development of the 
tractor. 

2) The first farm tractors were produced by 
independent manufacturers outside the Implement Industry. 
Becmuse most threshing machinery firms had previously been 
producers of steam engines, the thresher producers were 
among the first in the Implement industry to enter tractor 
production. Only after Ford's departure from the Industry 

In 1928, however, did the farm tractor come to be exclusively 
associated with the farm Implement industry. Between 1915 
and 1928, Ford exerted a profound Influence on the develop- 
ment of the tractor, the methods of producing It, and the 
technical integration of tractors and Implements. 

3) As Integration proceeded, particularly with 
the development of the power take-off and the all-purpose 
tractor in the twenties, the farm tractor gradually became 
the "hub" around which the various lines of farm Implements 
were designed and built. Farm tractor production gradually 
centralised within the farm Implement Industry and scores of 
Independent producers went out of existence. Market 
experience hastened their disappearance as specialty 
producers of tractors found Increasing difficulty selling 
them without an accompanying line of farm implements. Many 
Implement manufacturers entered tractor production through 
acquiring tractor producers, and tractor manufacturers 



SSI 

. ..»r*ri-rf- ^ Irt --T- ri7fr:^ liif^i- s-,Mr':*£.'ri RT'^Ttft': n^trrrpr :t '^ «» nr -^r *> nn .!" 

,son To eisoi/boiq 

X9 9d o;t ©moo loiOB'^ii mriRt srt;^ blfc ,ievowciri ,8£9I fll 

-qci.ev&.'r stio' no si ' ;c& bio., ,8S?I bnis 

iii hne ,rfi j i:© 6 ?>rf;t ,io#oei* arf* lo ^nsfn 

■■♦.f^.Ti.ft rAff: f flft'fu'1^ r-T-Vi-'^r r.rf-i f7»^?ni^' r<r»ri(-iT<» "rff/rf* a Kcf 

lo eenooE bne y^ ; ^n«i. Bn«l f»r(,l niriilv b©eilBi:tn«o 

3» X* ft tniro^ BtoiryntS lo etsouhoiq 



113 

sought Alliances with Implement producers. This was 
responsible for a second wave of concentration in the 
industry, Instances of which may be seen even until the 
early thirties, 

h) The evolution of the Industry to Its present 

structure was completed when the Allls-Chalmers Company 

attained full-line status in 1932. 
of • 

,,.„, 5) The production of tractors and power-driven farm 

Implements had significant effects on the productive 

efficiency of the implement industry, conditioned as it had 

been for almost a century to the relatively simple and 

standardised methods of production of horse-drawn implements. 

As implement firms successively took up tractor production, 

there opened up in the industry new opportunities for 

competitive advantage derived from specialisation of methods, 

and specialised use of plant and machine equipment. As 

expressed by the Federal Trade Commission in its report on 

the industry in 1938, '^ '" ' ''"^^ 

It is in the production of tractors and certain Improved 
harvesting machines that new shop equipment and methods 
have been frequently adopted ... The volume of product- 
i^o ion and the demand for greater precision, accompanying 
the relatively recent widespread use of the farm 
tractor, requires and justifies the installation of 
special factory machines which reduce the labour needed 
to obtain that precision which is called for by the 
design. i^5) 

This transition to more highly mechanized methods of prod- 
uction we have called the "tractor revolution" in the 
American Implement industry. It heralded a new type of 
competition not previously experienced in the industry: 



iU 



r I! :■ y 



Gdi n^ noi J., i Mieonoo lo ©vew bncosa s "lo*^ ©XcIJenoqesi 
9(ii Itinu ns>v« nese sd ysm rfoJtriw to esone^enl ,xi-'^*tr^'''"^ 

6«e ©Iqrale ^IsvliJel*'! erfd^ o3 xiuitiBO b iBotvlB lot ns^^Cf 

,aoijojjDu'iq icJCCiJ qjj ?iocJ x-J-S'^-isi^Si^-we em^zi'i 3i::9c$xqinj eA 

icl B9i:f2ni;;*ioqqo wen ■«{iJ^8i;feni Bdi nt qu beneqo •lari^t 

ja5ori"''5r to r.c.fis^BrlEjOoa?. ir.ciJ boy it'?*': *^s^:'■'^sv^? «»v ^ :t- 1 ;t '?rr!FOO 

£*_ ..ncaqiijps $i:J:riQ£.'oi one jjicj.-^ ic o:--i; csEi-ciDC".; c. l-p.b 

flo ^loqei 8*i ni noleelnunoD ebs^-l laiPbe'^ srfct vcf fjszadiqxe 



-Joi/DO'iq "io 5 ... i1 neecf 

- ■■ - , *' 

lo nolJflllB.teni eriJ . fcnB eeilt/poi ,io?^Ofiii 

* . ' " '> pq 8 

— f-O'^rj ^O ?• ^r, ''^c ff fins ff«c.-''icirr IfXriaj!"^' anrtm cj j-vo f 1 " £•'/ cT + .?.^"^T 

lo sqxt Wftii 6 &«f)lBT«ff :tl ,yiJt.0hfti *nwi».[qflil nBotisal 



competition in the introduction of cost-saving methods of 
production. Although its revolutionary aspects applied most 
directly to tractor production, Its effects extended as well 
to the production of implements whose design had been 
appreciably changed or complicated by the tractor. 

6) By 1932, when the development of the implement 
Industry into its present form was complete, It was made up 
of seven large firms each producing a more or less complete 
line of tillage, harvesting and other farm Implements, as 
well as farm tractors; each enjoying, by virtue of the 
acquisitions made In the course of its full-line development, 
a stronger market position In some of its products than In 
others; and each in a position to enjoy, by reason of the 
"tractor revolution", substantial cost economies through 
Increased factory mechanisation. 



The first three chapters of our study have 
presented the influences conditioning growth, structure and 
competition In the American implement Industry throughout 
Its flraast hundred years. Though our main Interest Is 
competition In Canada, the American background will be found 
almost indispensable to our examination of the Canadian scene, 
At this point, attention is turned for the first time to 
Canada. The development of the Canadian implement Industry 
and Its relation to that of the American Industry Is 
surveyed In Part Two. 



9ittl ?.»! 10 ftiom e snloi/boiq r^s/s© emill «91bI -v-g ">o 

ff. Bsiffionoo© iteoo iBlrfaeitE . 'nol:fwIov»i io*OBid'" 



svBri xf5«^8 ttfo lo 2i<»^qsrio psiri^ J?, lit sriT 

^ ij-j..',t.'jciaj X'iJ c..u.t.':ii: jn'jniej.^f:;i: ciroi-". ., nciJi^sqrnoo 

r rtlfiir ijjo rfgi/oriT .aiesiY beinn'i/rf ;teiR'il'r e;Jl 

• ow? ;^'i64 nl 6o\;«v'ij:/8 



PART TWO 



THE DEVELOPMF.NT OF 
THE CANADIAN INDUSTRY 



C50'. 



115 

r PART II 

*^ l«sa 

. ^ INTRODUCTION 

The history of the Canadian Implement Industry 
^contrasts sharply In some respects with that of the American. 
The two industries grew up around their respective markets 
in the nineteenth century, neither doing much traffic across 
the international boundary. From the outset, however, the 
Canadian industry was deficient in the things which contrib- 
uted most to the American industry's growth — the ability 
to expand markets and specialise production, to attract 
capital and to pioneer innovations. Throughout the century 
the industry in Canada relied a ImoSTt entirely on the " ' '' 
American industry to point the dfrectlon of technological 
advance . 

This situation gradually changed near the end 
of the century. High National Policy tariffs, coinciding 
with the opening of Western Canada in the eighties and early 
nineties, widened the market of Canadian firms and gave rise 
to self-reliance artd ttie gradtiai shaking off of the former 
dependence. It was in this period that the Canadian industry's 
^one large-scale consolidation took place. Tariff protection 
^dwindled, however, as' farm sentiment became stronger, and 
^the Canadian industry was hard pressed to maintain its position 
^against American competition in Western Canada. The increased 
efficiency of the American Industry following the "tractor 



:^* 



«1 I.TT a-i I 



in 

II Tgj'i 
rri^ifbal ^nwmelqml nsl&BneC: orij^ lo xtoJelri arfT 

-dliSnco rfolriw ssnlrl* 9di at in^toilsb bbw xi*ei/5nl nalbenBO 

X^lllcff? ©ffit — riw+wots B*xi-ieubnl nflOli««A »ri;f o;J ;teoni b«*if 

;tOFid-;te od^ ,flol^Oijboiq »8ll6io«>qa btiB B^e>:HiBm bnaqxe o^ 

\tij;/:tn80 9[iS cfuorfswoiriT .enot^BVonni isenolq o^ bnn IsHqmo 

9ff* no v.CsTi-:fn9 ^tsomls f)«^iJ»i Bf'^EfrB'^ n.* >ji;t8j;;f>nJ: Qiii 
Isoigoicnnosj to nol^o**:^ srfd^ itiloq oi xioevhal nBOlnsmA 

. 90n6VbB 

btiB 9tiS iBsn bssnsrfo TtllecbBis notiBVilB elriT 

gnlMr'nloo ,5?l'tJ^is:t xoiXo*? iBnoiiBVi rf^lH .^tx/^neo erfcf to 

\jlifle bfljB aelirisi© ?'ri;t ctl BbBusj m©:te«W lo snineqo Bcii rf^lw 

©ell «VB3 6ns &miit nai benfiO ^o ^©Mibit »rij boneMw ,89l;tenlfl 

twnio'J »rij "io "^J.o :^nJ:3lBffe iai/bpis ©ri* bne ©oneilei-'ilae oi 

e.*\ii tubal nBtbBae'. -nj:,' iBdi bolt^q Bltii til 8bw ;^I .©one^nsqob 

aolioBioi.q llliaT .©obIct 3loo:f ao-f:tsb.tloenoo ©Isoe-BgiBl ©no 

fens ji9§no'T:tH ©weoscf .•tn9mi;tn©5 «t*rr^ rp ,T^vfvrrirr ,h)fkibnlwb 

noliisoqBit nlM^nlBtti o:) b©£2©iq bisii 8ew \i3sjl,':p.i nsjcanBD ©rf:t 

9ionI ©ffT .BbBttBD fli©:t8©\rf nl nol;tl*9e[Boo riBoliBtoA iealB:gB 

lo^OBti" ©ri* aniwollo? xiAtubal nBOtismk «ff;t lo >con©iol'51© 



116 

revolution" enabled American flrrai to sell profitably lii 
Canada despite the tariff. Seeking greater volume and less 
dependence on the highly seasonal Canadian market, the largest 
Canadian firms turned Increasingly to export markets In the 
opening years of this century, and to the acquisition of plants 
In the United States and abroad. 

In the late 1920 's a new type of dependence on 
the American Industry emerged. As full-line firms gradually 
came to plan and build their Implements around the tractor, 
those In Canada found themselves unable to produce tractors 
profitably In Canada, and vere forced to resort to sundry 
arrangements to sell the tractors of American firms In the 
Canadian market. Only since World War II has farm tractor 
production besn taken up with any success In Canada, and the 
success achieved In this venture has resulted largely from the 
arrangements through which these tractors are sold In the 
American as well as the Canadian market. 

For these reasons, "periods" In the development 
of the agricultural Implement Industry In Canada are much 
more difficult to Identify than In the American Industry. 
The Canadian Industry experienced no period of vigorous 
competition for patents and patent rights, no clear-cut 
period of concentration, nor was there any well-defined 
number of years during which the lrai»act of the tractor can 
be said to have affected the Industry. 

Of the three largest companies producing implements 
in Canada, one is a two-plant subsidiary of the leading American 



ao »ix -^^j to 9(wi wen « g'OSPI e:ta.t ori* aJ 

ztoiOBii 9o;.ifc)Oiq oi ©Idsnw 8i?»vli? ^sol ehcnfO ni seoiU 

»ff* ni Mob sib Bio*oiei;t e?Pff;t rfoJfrfi/ rfstfoiri^t a^tneajsgniBT'ts 

■J Hi ^ Ji 3fn»m • ''• 

/ oj : \lb 9':or- 

fc-- - V18 ■ *io« ffloiS. noo "io tclioq 



117 

concern, one a purely Canadian company with three plants In 
Canada and one in the United States, and the third is a 
Canadian company with fiveplants in Canada and two plants, 
along with a substantial market, in the United States. 
A considerable amount of International specialisation has 
accompanied this distribution of plants. To a considerable 
extent, the location of production as between the Canadian 
and American plants of these corapaniea has been determined 
by the Canadian tariff structure. 

Part II of this work traces the growth of the 
implement industry In Canada In the light of that of the 
American industry, described in Part I. The division into 
three main periods (to I89O; I89O to 1930; 1930 to the 
present) simply follows the movement of the tariff level 
on farm implements. Until I89O the direction of tariff 
change was steadily upward; from 1890 to 1930, downward; 
and after 1930 a sudden upward adjustment was followed by 
two equally sudden downward changes, to zero. 



ir 



fil i^flttlq ••idi ciiiv xaaqsioo ne-tbensD xl^txrq b eno ,ai9oaoo 

B tt bilcit ©ri:t baB fteisiB beilaV eri;t nl eno baa «5«n«0 

,E*naIq ow;t bna «b«nflO nl 8;tn8lq»vit rl^tiw xnaqmoo aMlbAriA:^ 

.zf^iBi't"^ fieiJlnU «iff* nl ,*eiiBffl I«';tnaJecfire s ri;flw gnola 

esn iuaidweiifiiofeqfc l3noiJfiflie;tni lo iJnuom* sldsiebienoo A 

eldBtsblenoo e oT .einslq to nolivdtiiBtb elrf* bBlnsqaoooB 

nBi bfineO srii n99w;tecf ce nol^oi/boiq 1o noiitsool sf(:t ,;tne*x» 

b«nlmi9:^»b need ebu c iflsqinoo sesd* to e^tnslq neoliamA bne 

.»'ti;:tf>n'r:t2 ttliB& nslbsneO »ri* x^J 

•ri^ lo ri^wois 9ri* 8eo6i:f >fiov zlcii lo II ;f7B*I 

•f(^ to isdi lo *ri§li eriJ nl absnaO nl ^i:taxfbnl *n»iH9lqail 

oial notzivlb eiiT .1 ^le'^i nl &©dlioe«b fXiitubal naoli^aA 

Bdi oi 0£9i ,-0£PX o:t 0^81 :0?8l o*) ebolieq nleai »»iri* 

l8v«I tt tiBt 9di lo ^tnecnsvon: &ri:f ewollol xlqala (;t^ee9^q 

lll'ie;f lo nol^oealb sdi 0^8X Xl;tflU .«;taeineXqfl3l masT: no 

{frtawnvob ,0£9X o^ 0(?8X fflonl ^biswqu xXlb«e:fe eev sgnarfo 

yd bewoIXo^ sew ^nejc^^sutba biswqu nebbtre « OfW lad'lB bnB 

.oies o;t ^aeanBrio b^awnwob nebbtre xllai;p» owS 



118 



CHAPTER FOUR 
THE CANADIAN INDUSTRY IN THE NINETEENTH CENTURY 

Contents 
!• Beginnin gs of the Farm Implement Industry In Canada 



Vf«! l-C! 



Early Incentives — Early firms — Early dependence 
on the American industry — Expansion through the 
sixties — The tariff and American dumping in Canada 



II. The Implement Industry and Canada's National Policy 

The Industry's confidence through the seventies — 
Implement tariffs under National Policy — Binder 
c*,f.-.v production in Canada after 1880 — The "harvester war" 
in Canada — The gradual loss of former advantages. 

Ill' Exports from Canada in the Late Nineteenth Century 

Massey and Harris firms develop export markets in 
the eighties — Reasons for their early success in 
export markets — The tariff and the location of 
plants before 1890 — Conclusions from the chapter. 

that. n.c©y i 

I. Beginnings of the Implement Indust r y in Canad^ f 

Early Incentives 

In lQh7 the Canadian Economist noted that 

agricultural implements, thus far, have but imperfectly 
engaged the attention of the manufacturers, although we 
see no reason why we should not make them as well as our 
neighbours. (1) 

A decade and a half later, R.L. Jones in his "History of 

Agriculture in the Province of Canada", stated that 

so great has the supply (of implements) become from our 
home manufacturers that an American machine is now as 
great a rarity as a Canadian one was a few years ago. 

(2) 



811 



©rii ri. — X" '- nsoiisHiA sri:J flo 

.gbfineO ni gniqaii/b neolismA bne HiiBit srfT — ee^rtxle 

YoUp q Ig.nol:ri|K a'atsflfiO bng Yi^eubnl Jnamelaffll erfT .II 

_ ,...i.._-^gg or'-' -J — ~ -i — :9bI1noo 8 'xi:f ?"'■''' 9riT 

— yoj\ sbcisj elllifiit : Iqml 

"iBW Tt»;^e©vierf" sri'j — Ob8X le^ls sbgnsO nl aolctoi/boiq 

.es8«Jnflv5/8 isiniol lo seol Ifli/bcts sffT -- ebBneO nl 

i' arf ;t «1 ebi^BS ffloi^ Eitioaxg .III 

nl E*f»'(i£ro iJioqxfi qoI«v«b ennlt eliieH bne \;9eEBM 

nl e?9oouE '^IiBe ild^:} lol eiiosBsH — eelrfrig-t® «ri* 

lo nolcteooi - ■* " - - -^^^ "-* en'T — eJsjiiBm Jioqxs 

.•xej^qfirio stii njo-. "^ «— 0981 eiolscf e;tnclq 



gbeneC nl xii'subcil ^n etnelgtal gr(:t ?o e^nlnnlasS .1 



89vl;tn9onI YI^fg 

;tflff;t becton Jelwan— 1 nalbgngO ©ri;f ^-i^Si nl 

Y/"--"- ' -- .-■-" -—'■' .- ^--mslqinl LaiuiiuotfgB 

©■ itnsi-iB ecii bssfi^ns 

iijo ee Hew bb aietii ejletn ;Jon bluorie ©w xrf*' flOEeei on ©©c 
(I) .8iuodrisl»n 

lo xio*8-tH" elri nl esnol .J.H ,i9*al llsff b bna ©bsoeb A 

iBtii bfiiBie /'ebenB'' lo eonlvo-rt ©rf^ nt 9iuiluott^k 

1U0 moil '— --'^ ^"-^"— -Iqal lo) vlqajjE ecii esri cteeng o? 
EB won ,li9mA ns i/^r.':t aTB^i/jOBli/nani snoi 

.ogfe ETB^x **o'i B B«v? 9no nalbanBO b eb vctliBi b :fB©ia 

(S) 



119 

The intervening years had seen th« beginning of the agricult- 
ural implement industry in Canada. 

The original stimulus to the formation of a local 
industry was the new demand for implements which arose as 
wheat gradually replaced timber production in Canada following 
the scaling down of the timber preference in Britain. There 
were, however, other incentives, without which the Canadian 
industry might never have survived its first embryonic stage. 

American producers made serious attempts to 
cater to the growing demand for implements in Canada. As 
early as 1839, scythes of American make were cited as 
displacing those of British make in Upper Canada, and American 
manufacturers established numbers of selling outlets in 
Canada during the forties ^^K Americans soon found, however, 
that they could not compete in the Canadian market with estab- 
lishments located in Canada, because of the threefold advantage 
enjoyed by the latter. These advantages were (i) natural 
protection, (ii) lower costs of labour and materials, and 
(iii) tariff protection. 

A certain amount of natural protection w as enjoyed 
by the Canadian implement Industry as long as the market was 
confined to Eastern Canada. This resulted principally from 
the lack of coneentration in the implement market, the need 
for on-the-spot repairs, and the inadequate transportation 
facilities of the country, all of which made markets local. 
In addition, some American producers noted sales resistance 



'XX 



leooi B 1o nc 



.»S»J/ 



Xt:f8irf3n2 in&r letu 

wf?n O'-fcf pp:i!? vi+ex;5n2 

— ^rfw 
•" gnllfloe »rf:f 

■ '3jj bfli 



■lyi ur 






-/.T n 1? I' 'i 



r St ylir;*i 



-cSx/c^' iij-!.^- .; y.d'iso! iZB~osiiB J ^iyJ -iS 






egeitnavbe 



XG «•: 



b9:tp->oI eitnemriBlI 



.nc -iq I'il'Iflj- (ill) 



rtf> ^ •♦ ^ -t- Of ,■ . 






120 

among Upper Canadian farmers during the mid-century. In 1856, 

for example, one of the Canadian agents of the KoCormick 

Company wrote to the Chicago office that "the Canadians are 

clannish and strongly prejudicial" In the matter of farm 

Implements. Again, In 186^ the company wrote to one of Its ^ 

agents that ... ... ...... ,. ^^^ ^^,^ ^^. 

high freights and duties have about played out that 
busin'^ss (in C?»nada) and ... th^ Canadians are a 
little shy of trading with Yankees, fearing that they 
will get the worst of the bargain always. < 

The sentliient seems to have persisted even in the early 

years of Western settlement, for in I876 the McCormick 

Company refused to allow its Minnesota agent to extend his 

district into Canada "In view of the 17"^% duty and the known 

preference of Canadians for binders made under their own 

flag"(^). 

The cost advantage enjoyed by Canadian producers 
In the mid-nineteenth cnntury sprang principally from the 
prices paid for materials and labour. Commodity prices and 
Wages rose considerably in the United Stat«;3 as a result of 
the rapid expansion following the discovery of gold in 
California. They mounted even faster during the Civil War 

and post-war period ^^K But the outstanding advantage of 

"Is 

the Canadian Industry in material costs resulted from the 
low Canadian duties on pig-iron, bar iron and steel Imported 
from Britain, which made these materials avallablf=» to 
Canadian Implement manufacturers at lower prices than to 
the American Industry. Even in the middle seventies, the 
McCormick Company, defending its prices against the attacks 
of the Granger Movements, complained that "if Congress 



OSI 

jfolraioOoM 9ri;t lo 2;tno3B nolb«n«0 edi 1o ©no ,eIqroBX9 lol 
818 analbfirieO ©rf;t" rteri* 60III0 ogeoldO Si:i* c;t 9;foiw xnBqmoD 

fliisl lo i©;f;fBfli ^^' !l ^'iBlottuls-iq \liaoi:tB bns rielnnslo 

c*l lo eno o;^ ec^oiw xn^qmoo Bcii +'^81 nl ,nifigA , E:f neraelqmJt 

iBcii e^fnesfi 

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Eeeijnor) 11" iadi benlalqinoo («^n©m©voM is^nBiO ©ri* lo 



121 

could be persuaded to reduce the Import duties (on iron and 
steel), the price of agricultural machinery vould certainly 
fall" ^^\ A3 it was, MoCormlck did very little selling in 
the Canadian market after 1857 when the company sold only 
three reapers in Canada, and these at a price of $l60, while 
similar Canadian-made reapers were selling for $125 and $130.^''' 

The first Canadian tariff on , fa s'" ^-'^P^Q'^g^t-s was 
imposed in United Canada in 18^7, and for many years acted 
simply to supplement the other advantages. This was the 
beginning of almost 100 years of implement tariff history, 
during which the level of the tariff, Its purpose and Its 
political Importance all showed great variation. Under the 
18^7 schedule the general line of agricultural Implements was 
made dutiable at 10^ ad valorem, while duties on threshing 
machines and fanning mills were placed at 12^5^. Although 
revenue was the avowed purpose of most of the tariffs imposed 
in l8'+7» some protective intent may have been present in the 
setting of higher duties on threshing machines and fanning mills. 
Many of the smaller producers in Canada in the fifties special- 
ised In the production of these implements, the firm of Paige 
and Johnston of Montreal being the largest. Probably as a 
result of the I8lf7 tariff, these Canadian companies met little 
d^Krican competition in the domestic market for these implements. 
As late as I878, threshing machines in use in Manitoba were 
reported as "all brought up from Ontario" ^ \ 

The tariff of l8'+7 evoked no observable reaction 



I SI 

hn« noil no; celJun iJioqnii ■?:'? SDufcM'of^feebexjtieq ed bluoo 

XialBitBo bluov xif^nlffoem laiutlx/olrtajs "So »oiiq Qfii ,(IoeJ-e 

Kf ^cnirr.^E '^J.itl!. vifTV M^ 2ff>.!rtoOi5M , eew it bA .^^' "list 

Xlno Mot V ^- - .Qoj. -XE'ififl :f«J(ifiBi nslbBneO ©rfJ^ 

e»w I'll?*,. iziil 96.1 

•f1? eew EifiT .£9Scon£-v^6 ■jeci^e ©(15 CuoiiioX^qsJ^ oi xiqrris 
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stfj 6nj5 seoqTwq &il ^J'^iiB^ ■"*''•* ^o TavcX nrfrt rfolrfw r^nliub 
eri^f isfinU .fioUelifiV cffiftii lew© fie iiB aoi-sjajtcqu^i ie.olixloq 

Snlriasirfi no p-^'!^*> ^^'fi^'w ^tcaioljpv be ^01 Sp f.IdR^:tuh sstBff 
A^fjodilli ,'k^'^ ie. fcsoaXq »i©w Blltrr, gninnBi wi* esninooa! 
J^iftd" *»rf;t lo ;teom "to «; 5»vovs »rii ebw ex;; 

-leloaqe a9i;t"m ©rf* ni isbsnaO aX st^ouboiq T»>II«ma ©ri* lo xn«M 

a en xloniic: .-eea'Xfiju »fia ^jiilc^i ipe-i^rjoM lo flo«£nfiow JUiia 
9litli tmi 8©i: a »B0ri:f »"Hii«* ^■♦'Sl orfl lo ctJifE©-! 

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"oliBtnO moil qif :trfatro'icf IJb" bb b©:fioq»i 

noJtitofifi ©Jcfpvrrsrcfo on bf^ovp V+'SI It© 1'V.f7B;t ©KT 



122 



.■^ ,- . > , i- i 



from °thV Implement Industry or the farmer. The' small amount 
of capital Invested In the lmpletn<ant Industry at the time and 
the other advantages which It possessed, explain its early 
indifference in tariff matters. Among farmers, there see^is 
to have been no unified sentiment, and no means of expressing 

^It if there were. Oddly enough, the only notable protest on 
behalf of the farmer was heard from the Toronto Board of 

. Trade, which erpressedL sollcitud* over 

. the injury inflicted on the Farmer by imrjorjing a higher 
^^ rate of auty on all Machines for agricultural purposes 

than on the general imports of the country; thus 
preventing him, so far as unequal and high rates of 
customs duties can, from introducing th'^se improvements 
^^ in his profession which science and experience are 

accomplishing In other countries. (9) 

The Board's fears that the tariff would deprive farniers of 

superior technology vere put to rest within the next ten 

years as Canadian manufacturers availed themselves of American 

designs and were producing similar implements at lower cost. 

in i;iiC :" iS an 

Early Firms 

The earliest establishments producing Implements 
In Canada appear to have been little moT'e than blacksmith 
shops In which a variety of rudimentary implements were prod- 
uced for a local demand. Canada's relat'ively small population 
and the slower development of her trans portaRt ion facilities 
combined to give to the early industry a predominantly local 
character. Producing only for local markets, individual 
manufacturers were unable to specialise their production. 
While the McCormlck Company in Chicago, like many others In 
the United States, produced only reapers throughout the first 



SSI 



*n«orT6 IffifTg or<T .T9wi8^ «rf^ TO x^^Bi'bnl inftmslqml «sri;t moil 

baa «ol* arfit :tB xi^subnl ir ui •rf* nl f)e;t«9vni Xe^tlqso Tto 

>CliBe 2^-t fllelqx9 ^buzzsBzoq ii liotdw 8«>3fi:tnBvbe t^rf^o »di 

gnlac'^TqKs lo ensera oa f^os ,;)-neEri^n«8 belllau oa fl««d everi o* 
no jBsJotq «Icfe;ton Y-fno •«?rf:f fd^uoa^ \I&50 .eiaw eierfit ^1 il 

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levo ebifj-lci: Jjoe i)9E8«':qxs_ffo^rJw ^ebBiT 

- .-: ' ' ' ' .-.'IwoligB lol £ - no x^*-'c^ "io »*si 

e;tns 

(9) . -fo nl . 

Ic -':- '■ -* yiiBi sn-* •*"^" -iflsl B'biBoT sriT 

n«.T j-xen ©rid- nlrij^iw j-a^t o;t ^wq 9i©w ^golonrfoa* noliequB 

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ai eiefi;to xncm sjijtl ^ogBoiriO i- O jlolinioOoM tnii «IXriy 

^Biil eri* :tuori8UOTri;t EiBqse'i \Ino heouboiq fB»^B;t8 ftsitlnU •di 



123 

quarter century of its exlst<pnce, the typical stiall Canadian 
msnufacturer was forced to divers Ify his output, producing 
a larger variety of smaller tools and implements. This absence 
of specialxlsation wss a principal factor in the relatively slow 
maturing of Canada's Implement industry throughout thr mid- 
nineteenth century. ^ 

The era of railway development in the 185^ 's 
brought some expansion of markets and set the pattern for the 
location of the enrly Industry. In lB^5» the Great Western 
Railway was completed, connecting Buffalo and Detroit. Along 
Its route the Harris Company ^^^^ first began production of 
agricultural tools at Beamsville in 1857; L. and P. Sawyer at 
Hamilton In 1856 ^^^^; David Maxwell at Paris in 186^ (12). t^^e 
Noxon Brothers at Ingersoll In 1856 ^^3^. Verity at Frances- 
town in 1857 ^^^\ The Northern Railway between Toronto and 
Collingwood, also completed In 1855» was an Important factor 
in the decision of Patterson and Brother Company to locate at 
Riehmond Hill ^^5), 'j^^ town of Erar.tford, where the Wlsner ^ 
Company located In 1857 ^^^^, and to which Harris moved In 
1871, was connected with Buffalo by the Brantford and Buffalo 
Railway and with Goderlch by an extension of the same line. 

The completion of the Grand Trunk between Toronto 
and Montreal In 1856 opened new markets to the scattered group 
of small establishments already strung along the nnrth shore 
of Lake Ontario and the St. Lawrence. Towns such as Newcastle, 
where Daniel Massey had produced implements since l8*f9 ^^7)^ 
Oshawa, where the Joseph Hall Works were set up around I86I , 



-fcij o;ij CLiC.-i^jo'inj \zizvbtii onsci&iqroi E'^bsnaO lo -^liuiBm 

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•io:t96'> d-ne:tioqml ns sbw ,^^31 nl bsiJelqajoo oeIs ^boowgnllloD 

^*e f^rtRooL -iJ- vrrnriror •ierf:to'id ^rb Aioeisj'.'t.g*? xo noislosb 9ff:t nl 

isnelw sriJ- 9'ie»TW , oio'J JnB'iu lo uwo3 eri'i ,'cl^ IIIH fcnoinrfelfl 

nl bovom eliijeH riolciw oJ bnB ,^o-C^ S'?8l nl b©:J-sooI xnagH'O^ 

Ofpt'tt:? r-'ftP. '^•Tot.-+np,tF PtoM ^jcf Ols'i'ix/a r^^fv hBSosnnon PftW ,IV8l 
.oal.i et:.£u op-J to nci£c:®:fx& nc \.cf nolieboO riJlv/ Lne xbwII/bH 

o^noioT nfleWsd ?JntfiT bn«iO »ri;J lo nol;f»iqaioo sffT 

qwoi3 bsTft^tvioes 9di oi eifiTiism vnn benoqo 3^81 nJt XBei;fnoM bne 

©TorfR K.-ffon oK-t ■<rto''c '3fff/Ti^. y*^'H<=iT Tfi nl'noin.-fp.iXdB^se XlBme lo 

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/ Q p\ 

I X ^B r hnifr-fiJ. -n tflt?- «»'toiW »V«ioW XXbH ffn-ApnT. «rfrt «T«fTijj , f WprfsO 



Port Hope, Cobourg and Bowmanvllle, all became important 
Imploraent- producing centres of the day. The widening of 
the market is reflected in the opening by the Masaey firm 
in the early l860's of an agency in Harallton, some one 
hundrea and fifty miles from the factory. Further eaot, 
the town of Smiths Falls grew up around the Frost and Wood 
Company which had been established there in 1839. This 
firm originally shipped implements along the Rldeau Canal 
as far as Ottawa and Kingston. By 1855» a branch railroad 
running from Perth to Brockville passed through Smiths ^-^^ 
Falls and Rave the company access to the Grand Trunk Railway 
at Broc.k\/i Ite- 

Early De pendence on the American Indus^j r y 

The success of the leaciit;g implement firms in 

Canada in the nineteenth century can be traced in large 

measure to their early success in establishing "connections" 

with one or more American firms, arranging for production In 

Canada of implements already being produced in the United 

States, None of the leading Canadian firms came into being ^ 

solely to exploit an invention or an innovation of its founder. 

This was in contrast to the leading American firms already 

examined, such as the McCormlck, Deere, Marsh, Oliver, Manny, 

Ketchum and others. Inventors remained singularly absent 

from the Canadian scene, and for all complex implements 

f 
Canadian manufacturers depended exclusively on American 

(19) 

designs and patents ^ , 

lun 



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npr>f;rtiT!A no xl^v/eifXr ^i np-^^sneO 

(ex: . .. 



125 

i..<*r. fr* .pjj^ history of th« leading Canadian firms In the 
nineteenth century Illustrates this dependence. The Massey 
Company, established In 18^-7, produced In Its first four » 
years at Bond Head and Newcastle, Ontario, only simple 
Implements constructed principally of wood and Iron castings, 
such as plows, harrows, scuff lers and rollers. It was not 
until 1851, when Hart Massey, son of Daniel Massey the 
founder of the company, returned from a visit to Buffalo, P. 
N.Y, , with patents rights for the Ketchum mower and the -^ 
Burrall reaper that the company really began to progress ^^^\ 

The Burrall reaper did not achieve the degree df 
popularity In Canada that It had in the United States and In 
the year 1855 therefore Hart Massey journeyed south once : 
again for fresh ideas. This time he visited the Walter A. 
Wood Reaping Machinery Company of Hooslck Falls, N.Y., and 
returned with patent rights to the Manny Combined Hand Rake 
Reaper-Mower, which Wood was then producing under license 
from Manny. This Implement, along with the Ketchum mower, 
did much to establish Massey' s early reputation. Six years 
later Massey again visited Hooslck Palls and obtained patent 

rights to Wood's Self-Rake Reaper, which he Immediately began 

(o-i \ 
to produce for the Canadian market ^'=''^-', 

other firms too relied on American connections, 
Patterson and Brother of Richmond Hill, later to participate 
in the original Massey-Harrls merger, produced reapers under 
license from Seymour and Morgan ^ ' . The Harris firm of 
Beamsvllle, succeeded around i860 In establishing a connection 



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126 

with th« D.M. Osborne Company of Auburn, N.Y., through 
which it received patent rights to produce in Canada 
several different machines in succeeding decades. Osborne, 
it will be recalled, was producing the Kirby mower and 
reaper in the early l860*s. After a Journey to New York 
by John Harris in 1865, this machine became the first 
major product of the Harris Company, The Joseph Hall 
Company of Oshawa produced the "Champion" mower. L. and P. 
Sawyer produced Pitt's threshing machines and Wood's mowers 
at Hamilton. 

An examination of the implement advertisements 
In the rural press of the l860's ^^^^ reveals further 
evidence of the dependence on American designs. By 1866, 
Patterson and Brother were producing Cayuga Chief mowers. 
Cayuga Chief, it will be recalled, was one of the two big 
names in the Hinged-bar mower patent pool. Ball's Ohio '* 
Mower and Reapers were produced by the Hamilton Agricultural 
Works (L. and P, Sawyer), the Stratford Agricultural Works, 
and by Joseph Hall Company of Oshawa from l86l on. James 
Scott and Company of Dundas produced Wood's mower and reaper 
throughout the sixties. By 1868 the Marsh Harvester was 
being produced by Paxton, Tate and Company of Port Perry, '* 
Ontario* Some individuals advertised themselves as the 
agents for the sale of the products of American fArms. 
Among these were Samuel Powlis of Peterborough, Canadian 
agent for Seymour and Morgan, and David Maxwell of Paris, 
at one time agent for the McCormick Company. Maxwell, in 



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Beojil .no 1^81 flioil «WBrfeO lo -^nsqwoO IIsH rfq»eoT. yd bne 

1^vT'?(%T ^r^ "ci-ccT e'^ooW bsnuboiq eabflifQ lo yneqaioO bnB ^:too2 

gfcw •/©?'• r' mi QdQl xB. .eallxls ©tW i uoci'^uondi 

lYine*? ^lo'^ lo xn«qaioO bnit ©cfeT ,ro^XB*? "^d gnlftd 

9iii ta 89rI»Brr?©d;t ^orlrtTsvbe elBwftivtbnt BrrcS .olte^fnO 

.8011*1 neoJtisinA lo sioulotq »ri;f lo slee 9d:f lol 8*n»8B 

nB.tbBnflO ffi'giJoiodif)te^ lo e^Iwo^ I»t/mB8 eiew ©8»riJ snomA 

,e^TR9 "^o TrBwrnM bfvp(T ^rre ,0^510?* hnp ir/onnfBB Tol J'nB'flfl 

al ,iie'*Xi3K .xnequ.oO ?(oiffiiojow efiJ lo'i jnss* aaU uno ;fB 



127 



addition to doing considerable patenting and manufacturing 
In his own plant, Imported binders Into Canada from the 
Dennett Harvester Company of Milwaukee and walking and sulky- 
plows from the J.I. Case Company of Racine, Wis. 

Expansion through the Sixties 

The general prosperity which Canada enjoyed In 
the years prior to 1857 was fully shared by the Implement 
Industry. Farm Income was high and farmers were receptive 
to the new types of machinery. Estimated wheat production 
in Canada Increased from 16 million bushels In 1851 to 26 
million bushels In 1856, and the expansion of output was 
accompanied by substantial Increases In the price of wheat 
during the first half of the decade '^M-)^, l. - 



jU- -i.ji,4^*ais 



Even the depression of lS57 does not appear to 
have seriously affected the implement Industry. Although 
H.A. Massey from Newcastle attended the General Meeting for 
the Promotion of Canadian Industry, held at Toronto prior 
to the passage of the Gait Tariff, no uniform Interest was 
Shown by the Implement Industry. Massey' s Interest In the 

meeting stemmed from Increased activity by American manufact- 

d 
urers dumping Implements In Canada during the depression. 

At this meeting a tariff petition was prepared and forwarded 

to the legislative assembly of the Province of Canada, calling 

for higher tariffs in view of depressed conditions. 

In 1861, when the census figures first published 



'fSI 



.elW jSnlOBfl lo v^nBqraoO bbbO .I.L driJ moil ewolq 

gei ;txiE eri: t rfsuoirlit nolenscfx3 
ni bexolne bLbabD doiriw \;fli9qso'iq iBisn^s ©rfT 

•vi;tq90©T eiew eioaiiBl bne rfjlri e«w smooni jaiB'i ,\t'xdei/bfil 

nol^ojj&oio *Berfv f?«9*EmI^e3 .xienlrioBffl lo Bsq^i wen ©rfct o;f 

dS o:r 1^81 nl t^sngi/d noilllffl ^I moil b»e6«ionl BbenfiO nl 

egw :tuq:fL'o lo nolenBqx® er(:t bcis ^d^Sl nl elerfet/d nollllm 

:fB9dv ^o solnrr -iriit nj- eseesTofll Ij5l:Jne:fed0e ^d belnsqwoooB 

.^■*^' 9^eo©^ drij- lo llBd J-eiit sri;t aali0b 

o;t a£j.c;c,£ J on esob S'cSi "o ncisesiqeb 8ri:t nsva 

rig: .Yt^awfcnl insfflslqinl srf;t bs^oellB xit^uolist njBti 

"lol ;^; J -t"! IPiSHflD ••ff;t be^ns*;tB 9l;J8B0W«H moil xose^M .A.H 

aoxiq o;tno'iox as tied ^vi^ei/bnl neibfinBD lo nold'omoi*! etii 

eaw ^Beis^tnl anolinxj on ,lllieT HbO edit lo easesBq 9cii oi 

»rii nt :izBiein} E'ynespM .Yi*ei;bnl ^flomslq'ni ?rf+ vcf nwode 

-itofi'imierj aiicneivjii x*^ 'c-'-fviJot beses'ioni i'oi'i Dsaunf?j£ sijx;te©« 

.noleec-iqftb sAi ^atittb sbwiBO nl c^nsmslqal snlqmub enmiu 

bebiBV'-tct tr.R bflTBcr^Ta esv nol j"i':t«=>q lll7B;t «t rn.f;t'^em etdi iA 

%nsii£.o ,eD«flB- '10 Boalvoi'i 9cii lo >c-fdra9Eefi ev/jslElael etii oi 

.Bnoiitbaoo fteeasiqeb lo vreiv ni Elliiei "isrigld nol 

5«. q :f8iil eeiusll eueneo »ri:t nsriw ,Id8l nl 



128 

figures relating to Implement manufacturing, ^-6 firms were 
listed as producing farm Implements to the value of $^•13,000. 
To what extent these producers were encouraged to begin 
producing Implements by the existing tariff can only be 
left to conjecture. The tariff had been increased from lOjC 
to 12^% In I8lf9, and to 15% In 1856. Under the Gait tariff 
of 1858, the duty on implements was raised again from 155^ 
to 20jC. It appears certain, however, that this first 
protective tariff, combined with the other advantages possessed 
by the Canadian industry in the home market, had virtually 
excluded American competitors from the Canadian market by 
the early l860»s. 

The decade of the sixties was marked by an even 
more impressive rate of growth. By I871, the number of firms 
had Increased from ^-6 to 252 and the value of output to 
$2,685,000. Although by far the greater number of these 6 
were still small blacksmith-shop enterprises with sales 
confined to their immediate localities, some few were already 
showing signs of Independent strength and development. a 

The economic conditions of the sixties favoured 
such growth. The completion of a number of additional local 
railways, the continued shortage of farm labour occasioned 
partly by the demands of the railway builders and partly by 
the American Civil War, the spectacular Increases in the 
price of wheat in 186M- and I867, the continued exploitation 
of American patents by Canadian manufactueers, and the almost 
complete absence of American firms from the Canadian market 



SSI 

ttav aain 6+^ ^juiiin^tOElunfiai inmmXnal oi gni^sl at eeiiisil 

,000,£l4^ "to «i/Ibv »£W .o;J e:tn?5nieIqnTl raic't gnlowboiq es b9izll 

d oi bfi^RiupoaB Btsw eiaouboiq Qzerii in9ix9 :teriw oT 

acf ^clno nfio ItiiciJ 8DJt:^eIx9 9ci& \<i e^fneoslqml SJ!JoJJ^o^q 

J^OI ffloi'J bs8««tTonl need beri I'iliRi erfl .e^0;toet^oo o* :tl<»I 

\11iBi ileO «rf:t le^nU .3581 nt ){5X o* bne .^-t^Sl at l^-^SI o;f 

)?$I moil nlcgs bwEiB*! sbw a^tnsmflXqml no \iub »ri* ,8^81 "to 

:J8ilY Btdi iBdi ,t©V9W-orf ,nlB*i90 eieaqqe f^ .3^0S o:f 

6»Bee88oq es8B;fnf«v?'p Terfcto srf:f rf*lw benldmoo ,'51.fiB:t •viitoaitoiq 

\u juii-iBc i3Ei:.Eni5^ yiij fT'' " ' -totfl:toqfljoo HBolismA hebi/Iox*^ 

aerp as xd ^eJl'IBffl bbw esJt^^xle 8ri;t "io shisosb sriT 

o;t *irq^iJO lo etflsv eoj ciiS S^S o^ d+* iroa'i beeKSioni bBrf 

©eerfd' lo iddmwfl led-seig »rf* i*^ Yd risxfori^tlA .000,^8^, S| 

e*J"ee (^■'■.fv' gfieJiTTc^Tio 70fi;p-r'.."t Jd' XIb;"e fl.^cf'a stsw 

.*n««nqoI©v»b nrs rf:^i;ne'i;te *ne 'at lo engla gnlworie 

bwitx/ovB.'r eeijxie »f(^ lo enol;fibnoo olraonooe ©riT 

IbooI lBnol*2bbE lo ifidmun b "^o noi^telqmoo ©rfT .ri^woig rioi/e 

henoigBOOO •ijjvuHX miel .".' ^'ai•:J'lO!l^ f)®ufll*noo sifcf ,SY«wii6i 

"id xX^iaq bne fcidbliud xbwIIbi ecii lo cbnBmeb sri;t Ycf ^i^iRq 

«ff* nl e«'E««T')rt TBiuoecfoeqe arii »iflW IlvlD nEoitsmA ©ri* 

aotistto^uKb D'junxJtivo &di ,Vci8l bn« ^681 al liB^dw lo »oiiq 

iBomla ©rf* bnu ,e'ie9jj:^9Blx/nBtn hbJ bBnaO \d e^tnocfsq n6oii»niA lo 

^•3{7«a! ^Bi^B^fO ©ri* jnoil emiil aboIiscqA lo ©oneedB ©*©lqmoo 



129 

a during the Civil War period, all contributed to the expansion. 

In July, 1867, the Cjtnada Farmer reported sales of reapers 
C and mowers as "unprecedented ly heavy" in Upper Canada. 

Most basic to the implement Industry's expansion 
t t,m an it 

during the period was the widespread adoption by farmers of 

the new harvesting methods. By the end of the decade of the 

sixties the use of harvesting machines was already fairly 

O' aiCvt.;. 

common throughout Eastern Canada. The Canadian Census of 

1871 showed 36,87**- reapers and mowers in use on farms in 

Ontarlo and 511^+9 in Quebec. Horse rakes numbered ^■6,2^-6 

and lOj'fOl. The smaller number of machines in use in s^uebec 

probably reflects the greater availability of labour there 

as well as the scarcity of manufacturing establishments east 

of Montreal. There were several threshing mill producers in 

the vicinity of Montreal and Quebec City, and threshing mills 

in use in Quebec, according to the census, numbered l5>'+76 

as compared with 13,305 in Ontario. Nevertheless the implement 

market developed much more slowly in Quebec. On July 15» 

1869 ♦ the following report from "Lo^^er Canada" appeared in 

the Canada Farmer . 

Not much progress has been made here in the introduction 
of most approved labour-saving implements — (The) more 
■"-■'■ refined implements for the cultivation of the soil are 
next to unknown. 



The Tariff and American Dumping in Canada 

The only exception to the steady upward trend of 
the Implement tariff between 18^-7 and I89O came in I866 when. 



9^ 

.floiEneqxe er^r^ ^-^ ^e;fu<5ti:fnoo Lin jfxji'xeq ibW IlviO ©rl^ ^nliifb 

noIenBqxs t^^rieutal inf^nfslqmt •ff;J o;t oieed cfeoM 

XliJtBl xt'JSSilB BBV B»nttioBm gnl^esv^sri lo eew Biii estixle 

to B.cfr'e."! nef'sefTft'^. m,rv .ebBttBO [iisiBBS. iuoti^uoicii nommoo 

nl biuibI ho ®ejj ni Eieworn bne eieqasi •♦^'\8jd£ 5©worie IV8l 

d+'S,d+' bei-idmi/n 8»j(«i »bioH .oedeup nl ^'f^I,^ bns ol'iB:fflO 

o»d9x;y ni: sejj nl eenliiOiea Jo imisaun 'lellBme ■•-fT , rrW.nr bns 

eisri;^ ii/odfii "io x;tlIidBlIsv6 le^ssia 0ri:t ectoel'isi ^IdBdoiq 

:f86» e:fnefflff elldeit 89 sciiwcfOBti/nem lo y^-^^ibos ®ri* 8b How sb 

ni eiroiJboiq 111m ■gnlciBBini Isievse sievf eierlT .iBQiinoVl 1^ 

Blllm afllHafsiffcf bns ^iJ^lO oedeut bns leeiitnoM lo \ilato.lv 9{iS 

d'^+'j^I b»i{Kfffiif« ,E08n9o odi o3 snlbtoooB ^oedeir^ nJ: bbu al 

iawBBlqtat odi EE&Ior^:* T^vAr .o^Tr.i^|0 nl ^08, £1 ri:tJfv ^ATs-qinco 8s 

,^I ^iluli fiC .o&cfeiu.> ni xlvolT". ©'torn rio0« boqoJfvsb isyliBtn 

ai beief>qqf« "fibenB ) 'i9W0a" «oil *ioq»i gnlwoXIol eri:t ,^58l 

' £1/^0 ni ••ler! sf--- • sceigoiq riox/m :toVI 

. ./ — cinf»fn9lami sr., .,.-.i. — .'I bevoiqqe :teom lo 

•IB lioe 0ri:t lo noli rvtilao ^rii icl 8:^nemoIqft'l bsnilsi 

.avrofljini; oi *x©n 

flbEflBO ni yuilatBva nBoligcoA bae IIIibT eriT 
,u»riw 06^1 nl i bits S'+^^-i neewj&c i'ii't6;t ;tn©in©Iqail ©riJ 



130 

as a preparation for the entry of the Marl times Into Confed- 
eration, there took place a considerable downward revision of 
Canadian tariffs. The downward revision on Implements from 
20J{ to 15% In 1866 evoked no comment from the Industry at the 
time. Overexpanslon throughout the American Industry during 
the Civil War, however, led to considerable dumping on the 
Canadian market when the war ended. In 187^- a select committee 
of the House was set up to Investigate the practice, and some 
Implement companies were among those submitting briefs to 
the Committee. They pointed out that "such dumping had embarr- 
assed domestic producers in 1870" ^^5'. 

These charges appear to have been Justified. 
In the first place the rapid obsolescence of farm machinery 
in the United States, which resulted from the extraordinary 
rapidity of invention in the nineteenth century, tended to 

make Canada a convenient "dumping ground" for machinery 

(26) 
considered obsolete below the border . Secondly, the 

large number of patent suits in the United States during the 
period accounted for much of the shipping into Canada since 
it was not uncommon for the losers in infringement cases, 
prevented from disposing of the infringing machinery In the 
United States, to sell them in the Canadian market. Hutchin- 
son reports that in the previously-cited case between McCormick 

and Seymour and Morgan, the latter were driven to market the 

(27) 
infringing reapers In Canada ^ ", 

Largely as a result of the findings of the 
committee of 187'* on this subject, the newly-elocted Liberal 



.'!» U 4 i Ju V, ^ ■ 



0£X 

-b9taoO oint z^mli littif mtl^ "^r, v^.tn«» sricf lo** no?:tP»t«csTa s sb 

to fir o^ »Jr • JO s aoElr Jiooj Ji-ioxiJ ,ncJ:j6T9 

moi\ ■ nJ no nolg^vei biswnwob »iiT .clllti^^f nsibBaeO 

mdi no snlqmufc ©Idsiablznoo o;t 5oI ,T:©v9Wori ,ifiW livlO eri* 

MBoe bag ,so.tJoe'Ui sriJ^ 936a-c^<i^vni od qu jee «bw etijoa ana to 
oi zl^itd "^nli-tiaiduB B^odi snonfi 9i»w «»ln»qmoo Jnemslqml 

>j;i©nirio«BT sBifll lo eon»o8«Io2do Mqei sri* eoslq *aill ©rf^t fli 

Atieni&Toatcfx© etii moil bad^Ii/BSi rioJtrlw ^eectad'S bs^inO eri^t ni 

o;J b«bno^ tXiuin^o i^nln edi nl aolinevcil Jo \ttblqBi 

itenlrfOBffl Tto^ "f-nuong sniqmi/b" in^t.aevaoo 6 Bbsn.'sO o:rf0n! 

-'-■•'■ iXibnoosS . T[»f>TGd 9ri:t wolsd 9:r«Iostfo f->9i9bi?noo 

eriJf ^litiisb 99ipJ2 b©;^ifiU siri* nl titue in9;Seq te iQCt&sjn ©sisl 

sonie Rf>«ini80 oi^ni ^niqqlrfe »r(;t 1o rfoi/ai lol &9:^n«o53B 5oJt'i«q 

,8SE'60 cfnsojssnl'^'^'-' i nf o'.epor ^ri;/ lot rKMnrooflXJ :fon p-^'" :*' 

©lief nl xi^^-trf'^sic aniafililiii c>ii^ lo gnleoqalb moil bsdn&veiq 

-fllrio, .ifiylttifr. nslbeaaO ecii cti mecii I£»t ot fti»&BiQ b^itnU 

afoJmioOc - '.i:+*d »ep'> ^o.t f r,«'.- r^jiro ^vaTl. ^ri-i ,-t_t iaiii ed"ioq«'i noe 

otli ish-iBii oi n»vli& eidw xd^Jctl srid ,a«;gioM bns ixrooix^S ^nc 

. ^ »bfifl«0 nl Bieqesa snljnlilnl 



131 

government of Alexander Mackenzie raised the tariff level 
on Implements In iSy** from 15% to 17^5^. This Increase 
coincided with an expansion of the domestic market consequent 
upon the completion of the Intercolonial Railway Into the 
Maritime Provinces In the early seventies. By l87^f Ontario 
lmpl?^ment firms had penetrated this market with considerable 
success ^ '» In the early seventies, therefore, the industry's 
position seemed secure and highly promising. 



II. The Implement Industry and Canada's National Policy 



The Industry's Confidence through the Seventies 

During the 1870*3 the confidence of the larger 

Canadian Implement producers In their ability to withstand 

American competition was at an all-time high. Kven th««<?1?i- 

severe depression of the middle seventies seems to have done- 

little to shake this confidence for throughout the midst of 

the depression the larger companies of the industry continued 

"to add to their manufacturing facilities. Denison reports that 

Throughout the 1870'3 Charles Massey kept adding build- 
ings to the works at Newcastle; A. Harris, Son and Company 
had to enlarge their new plant at Brantford; the Wisners 
erected a new plant at Brantford; Verity sold his st4v« i 
business to John McClary of London, so that he could 
C concentrate on plows; and the pattersons enlarged both t 
the volume and the scope of their business. (29) 

By 1876, when a Select Committee of the House of Commons was 

appointed to enquire Into "The Causes of the Depression in 

Trade and Commerce", the Massey Company considered Itself 

sufficiently secure to report to the committee that "the 

existing tariff is satisfactory to us, and is sufficient 



lit 

•8B8ioni sirfT .Jt^Vi o:t 3?^I moi*^ +^^81 nl ' ' ml no 

in-" 00 *95(iBm oi;fa9isofi niii Tfo noi ns rf^iw b»blonioo 

»rid^ od'ni XBWIlflfl leinolooio^nl Bcii 1o notifelqmoo 9ri;f noqu 

oltRinO fi^QL yfi .eel:Jn©ve8 tjItb© »ri:r nl eeonlvotS •■l;tiiflM 

9lcffii«»blenoo ditv :to^TBffl alrf;t fce;fBi*©n©q beri taitl ia&ta^Iqml 

.gnl 8 J:n?oi<ij X-I^riglri bne eujose bemoee nol:tleoq 

Bettnev ^ B 9f(^ ffatrpirfct ■'toneMlnoO e 'vile t/bnl eriT 

legiel eff:t 'io nnnebnnoo erf? e'OVSl 9ri;t gn-tiif^' 

bne*8rid-JtVf o:t Y^-t-f^oe 'xJ»rit ni eTeotfboiq ;tn©m6lqinl nelbeneO 

»ff;t n«»v3 .rfglff ftfflJ-it-IlB ns ^e 8pw nol:fi;feqfnoo nBolrrsmA 

•nob evBff o^ erneee eef^ffiWrse slbblm 9ri5 "^o acise&nqeb Pi©v©e 

lo i^ebifr »d^ :^voti^iioiiii tol eonsMlnoo eirfj ?»>(6rie o;t 9l:td-ll 

5«trnl*noo Tfid-itibfil »tii lo fedlneqraoo les^i/sl ©ri* noJt aeeiqeb ©ff;t 

;>Bri;t e^ioqsrr noRtnoQ ,eolitl}oB'i gnliuiJoBlunefn ilericf o* bbe oi 

>-».,' ^^.,^:-. ^q^j( ,^ge8BM eelieriO 8*0^81 Bdi ^'■~ '--iUotriT 

X-^ ,^lt1BB .A {«I;t8B0W»K cfp a^ficw i egni 

g-isneiw ©rirf^ ; f-'toT'itficiS :te jTrsIof w»n -li^rfit ©gielne oS bfiri 

9«r4;f£ alrf bXoe y,i}ifV ■ f--'' -^ .•»--'■- •^- ••, - r^ .^^^ p :,„. ^^,q 

bl0oo sri *Brid OS . tL o;J c.i;cf 

ri:fod begiBlns enoztod'^tpq ©picf bns fewolq rro miRiinsoaoo 
(fS) .eeenlcxrrf Tlerfrt lo aqooc 9fii bne ©mtflov »tii 

8BW enoininoO ^o ©ei/oK srfiJ lo •«:t;flminor- :to«I'e e nprfv ,dV8l xS 

fll noiEEeiqeC •rf;t lo esaufiO BriT" o:tnl silt/pn* o* be^nloqqB 

lI»B;tl bBiBbienoo xasqato'D x^bbbM Bcii ,''BoiftinmoD bna ebBiT 

erf J" ^Bffj »o:J.+ lcnaToo ecii oi cfioqoi oi bix/obb xX:tn»Jtomwe 

JnelolHuB b1 bnB ,eif o* \iQiOBtztiBe el lllis* snl;telxB 



132 

protection; perhaps even a little less would also be" O*^', 
The Frost and Wood Company pointed out again that labour and 
materials costs were lower In Canada, and added that "by 
competition we succeeded In driving them (the American producers) 
all out of the country" ^3^'. 

Amidst Increasing demands from the Manufacturers* 
Association of Ontario and the Dominion Board of Trade for a 
National Policy of protection, the confidence expressed by 
the Implement Industry at this time was almost unique. But 
it was not unfounded. The position of the larger Canadian 
companies for many years had resembled that of the "fringe 
group" in the United States which, It will be recalled, prod- 
uced under license from the larger American firms. There were 
Important differences, however, since Canadian firms were 
producing for a protected market in which they enjoyed defin- 
ite cost advantages over their American competitors. Moreover 
the arrangements by which Canadian firms produced under license 
from American holders of key patents had an addjed advantage. 
They enabled the latter to derive revenue in the form of royal- 
ties while at the same time escaping the payment of duties • 

It Is true that complaints by American firms that 

Canadian firms were deliberately copying their designs without 

permission were not unknown ^j*^', and in such cases not much 

at, 
could be done to the offender. Canadian patent laws made it 

difficult for American manufacturers adequately to protect 

their patents in Canada since they provided that no device 



( eieouborrq: asolisraA »rf;t) (n»rf^ 8»JNrlih nl babeaooira sw aolilimmoo 

• eneiLfi'oeljjneK 9fl;t moil ebnEmeb anleesionl d-eblmA 

B lot abBiT lo biBofi ttolnlaioQ srfit bne otiR^nO Jo noiJelooeeA 

XCf b«Be»iqx9 BDnsWlnoD erfrt ,nol*OBd^oiq lo itoJIo*? iBaoliaVl 

iiM .9uptau iteomlB esw eaili tldi is Yi*E»^f>nl *n©in»iqml 9tii 

neibsnBO isatel orf* "Jo aolStzoq drfT .bBbnwolnu *on bbw il 

•jnllf' Sri^ "to ■^c'*"'" fcrrfmoPQ'v ncrf p t o ov T;r^efr lol EBlflBqfllOO 

-boiq ,b6llB0»i «d II iw ii ,riolriw e9;^BJS bswinl. 9ri:t nt "quoig 

eiBW 9i9riT .emtll aBOliftsA le^iel wrfcf rnoilt f»«n90ll i9bnu bBou 

»i»v Bfnill nBibsnaO Bonla ,i9v©wori «E90fl9'i9l:1J'b cfrtB^tnoqinl 

-all«b beYOjciB \©d* rfolrlw nl (f93i(iBffl b9io9ioiq b tol snioirboiq 

iBVOBioM .EToJ-ijeqmoo nBolioraA ilsri^t levo a»8B:tnBVbB :f8oo •*! 

•en#olI isbnc r •fr'r.'-n, Bsaill nBlbansO rfolrfw ^tJ E;tfl©ffl»gn<'^^'^'^ 9rii 

.ftjBiJnflvf-'jB i)«tb&fi a^ beii e r ^9ii lo eieMorf nfloiiecuA (fioil 

-Xb\oi ^o ajio'J 9tii nl ean»v»i 9vli9b oi i^iSml »rf;t bBldsne \eriZ 

:tuo(f:tlw fen:*i.i<:&i. lidxiJ ani^qof) xIo^B'isdJtl.ab ©i»w BOttil flBibBHBO 
riowm :fon bbebo riouB nl bnB ,^^^' nwociDiau ton eiev noleElo!i9q 

;JoeJ^o'iq oi \l9iBup9bfi BimiuioBlunBrn nBOliftoiA 10I iiuollltb 
•olVBb on iBrtt beblvoiq \9riS sonle BbBOBO nt B:tn9:teq tt»ci& 



I 



133 

could b« accorded protection there if it had been covered for 
more than a year by the patent of another country ^33/, The>^ 
best known American machines, however, were generally pa^et^t^.d 
in Canada within the time limit, oi i. 

m 

Still another source of confidence to the 

Canadian industry at the time lay in the immunity which it 

enjoyed from the costly patent wars which affected most 

C 

American firms from i860 to 1890, The scarcity of innovation 

within the Canadian industry principally accounts for the 

absence of patent disputes. It seems reasonable to suppose, 

however, that even if the Canadian firms had been doing 

considerable original patenting, the fact that narkets were * 

still predominantly local would have diminished the intensity 

C for 

of disputes over patent rights. 



Implement Tariffs under National Policy 

In spite of the assurances given by the companies 
in 1876, the tariff level on farm implements was raised from 
17^% to 2^% as part of the Conservative governments National 
Policy in 1879 ^'^^\ with a still further increase to 35% in 
1883. The latter increase placed the implement tariff at the 
highest level it ever reached. 

It might be asked why the Conservative government, 
as part of its National Policy, doubled the tariff on farm 
implements In the short space of four years, even though the 
manufacturers themselves had stated that it was already ^, 



Hi 

eril . - • xiiaisoo lodions 'io jn®;taq erij xu a£o\ b nsffc^ Piora 
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nolitBVonfil lo ylioiBoe erfT .OPBl o;J Od8l moiTt aasiil npnt-rerTjA 

fSaoqque oi elcjenoea©! emsea ;tl .aeiuqutb iao:tn(i to BoasedB 

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aelflBqmoo eri;t x^ nsvig eeonBii/esB 9rf:t Io 9itqe nl 

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«ib1 no 'i11iB;t 9ri* 5«icJuob ,xoiIc<? iBnol^BM z^i Jo iieq bb 



sufficiently (If not too) high. The answer is ?oun^ In the 
three-fold nature of the National Policy of Protection, which 
aimed at stimulating not only domestic Industry, but also the 
development of Western Canada and of transcontinental railways. 
Behind these purposes, of course, stood the principal long-run 
aim of Nstional Policy, that of promoting industrialisation 

I 

premised '6n a purely Canadian market (35), since Western 

Canada had not yet emerged as an exporting region, the 

economic integration of the country appeared to be largely 

a matter of providing markets in one region for the products 

of another. The National Policy tariff on farm implements, 

even though It was not specifically requested by the industry, 
y €) & r s 

was an entirely logical attempt to preserve the Western 
Canadian market for the implement industry of Canada. Many 
envisioned a similar role for Eastern Canada as a market for 
the products of the West. 

Binder Production in Canada after 1880 

Both the Massey and the Harris firms began 
producing binders shortly after 1880. The circumstances of 
their doing so reveal continued dependence on American 

innovation. In 1881, the Toronto Reaper and Mower Company, 

'■• e ■■■' 

Which had been set up largely with American capital four 
years earlier, ran into unexpected financial difficulties. .« 
This company had produced mowers and reapers under the 
Whitely (Champion) patents. White ly havHing been carefult . 
to take out immediate patents In Canada on most of his designs. 



'••rf^ nl ^^fJJol el iftwen* sriT .riglrf (oc;J :ton 11) ^I;tn»lol'i1ue 

riolrfw ^nolioe^toT*? 1c ifoilo^ Xenct^sM ©ri:f lo »'ijj;rfin bIol»©»nri* 

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©rid fdoi^Bi iialiioqxB ne e« bssisnif* :t»\; ;ton feeri BbsnsD 

Xl»Si£l ed o;t beieeqqe xiJnuoo »tii lo noliai^ninl oimonooB 

,8*neffl9iqaii aie'i no lli^B.^ ^o-t-^o'^ iBxioliBH srlX .leriJonB lo 

n'i9;t'-. -■~f+ -^viaee" ■ ■^'^ -i-.—.-.^-.; ,. .i^oX \lBt}.SnB ne esw 

Y»^l5^ .BbBOBO lo Yrt:fejufini inamelqini ari:^ lol d'asiistn nelbBnBO 

loT: d'safiBin eb BbsnaO n-[9;tEe3 lol slo^ tsItmlB b banolslvna 

HBascf ermll eliTBH 9di bns ^seaeM 9tii ri;to8 

i^n ;• «')nG;JEffl.': '^" '^'^ °""^ ,^*^^'" -"-•»■>■><- "Ictio^rfs Biabnld 3nio0f"'O'iq 

HBoJiaffiA no aonabneqeb bewnUnoo iBavsT oe gniob itedi 

eXnsqffioO lavroM bne laqssH o^noioT ecii ,I88X nl .nol:tsvonnl 

luol IciiqsP neoliamA ri;tJfw xXegiBX qu ;t98 need bBff riolrfw 

,t9ltlsjolJ\tb Xalonflnll beJ^Dsqxanti oJnJ nB'i ,"X¥»1Xib9 2ie»x 

arf* iftbnu zieqB9i baB aisufoj! f'SDuboiq barf xnBqtcoo ElriT 

■r-,*;«^rp;5 naed ^niavBri "scX»:^irfW ^eJaectaq (noiqnJBrfO) ^{laJirfV/ 

.ensiaea etiti to cTcOiii no BbeneO al titiBiaq ad-Bibamnl ;tuo e;ia;J oi 



135 

By 1881, th.-? company had acquired the right to manufacture 
the Appleby tvlne knotter In Canada. Its financial troubles 
of that year resulted In the Immediate purchase of the assets, 
good-will and patent rights of the company by the Massey r 
Company, which had removed Its plant to Toronto In I88O. 
The Massey Company thereupon came into possession of a complete, 
ready-made set of American plans for a light tvlne binder. 
It was from these plans that the Toronto Light Binder waa 
designed and produced the following year. 

Meanwhile, in 1879, the Harris Company had begun 
to sell the Osborne wire binder on the Canadian market. Two 
years later. In I88I, Harris spent some time touring the 
United Stat'^s for further Isdeas on binder design and In the 
following year he began production of a model incorporating 
the best features of those he had seen. This was called 
the Brantford Binder, destined to become the forwmost 
ooffip^tltor of the Massey Company's Toronto Binder In the 
sales war which gained momentum as the decade progressed. 

"■ tr> ■ 
The "Harvester War" In Canada 

The harvester war during the eighties in Canada 
was a struggle between the Massey and the Harris firms for 
leadership In the binder trade, somewhat similar to that 
between the MoCormlck and Deering firms In the United States 
during the nineties. Patent disputes, it will be recalled, 
forestalled the outbreak of bitter sales competition in 



Ill 

flT:cf*o' c* :t£l3^i iid:i benli/poB be^ri \aeqtroo 9t{i ,I88I yfi 

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.0381 n^ o;JnoioT Oj inF.lq ztt bsvomei beri rfoJtrfw ,x««<l"o3 

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.lebaid »alvi ;trfgli b nol cnBlq nsoiiooA lo :f8E sfbBJH-YbMei 

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♦ iBe-^ SniwoIIcl eri# hsowbciq bna &»naia»b 

flLf^ed bed TjnfiqnToO rIi-ibH 9ff:f »?V8l n.t ,»IlffwnB«M 

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edt ^nimuolr (*t!iti ftatoc itnsqa elitsH ,1881 n/ ,-i9iBl aiBS'^t 

erf* ni fine nsleaft lebnld no ees&wi if=td*i0'i io1 ef^^BiB 6©*lnD 

lfll*«iocriooni I»^onI p 1o noi^ouhoiq nflgscf «»ri isby gnlvollol 

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*80ts»aol »di emcofid oi b«»^^*8e^ ,iftfbnie Mot^nBtS «ri* 

•ff* nl lebnia o^notoT e'vr»«rrtPo'^ veResM «»d* to lo^l^ecffros 

.b©8B©i30Tq ftbeo©^ ©lij e£ r-ujii'-aoi" _!ji!in3 iu^inV ifiv/ eej-si; 

gbfinsO til B9iifi%l» nri) ^ntTr.'^ tbw i9*8*>v7Bri »dT 

lot cfiit feiitBH eriv' -;.4 v.-.^^, t-i »rf* n99W*»d ©Iggi/i^s b e«w 

JBri* oJ iBllacie Jeriwemoe jebBt* i«bnid ©ri* nl qldeisbB©! 

••*e*8 b©*lnU erf* nt emilt anlisa'^ bne jfolraioOoM »ri* neew^sd 

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al noiiii'^qo'oo eoiee le^Jld to >Ie©id*i;o ©riJ bsIlB^eeiot 



136 

the United States until after the leading binder patents .„j 
expired around 1890. In Canada, where r-tcnt disputes 
were rare, sales competition reached its peak during th« > : ,,v 
latter half of the eighties. During those years the newly 
completed Canadian Pacific Railway, together with the 35J{ 
protection, gave the Massey and the Harris firms iinost 
unchallenged access to the Western Canadian market for 
harvesting machines. Imports, which exceeded $500|000 ^^ m 
1885, had dwindled to $1'46,000 by 1890. 

• 

Toward the end of the decade, the undesirable 
features of such competition must have become Increasingly 
evident to the rival firms. The cost of securing and 
maintaining competitive advantages became, steadily more ^^Xlr 
burdensome as the physical differences between the rival 
binders became less and less discernible. Costs rose as 
each company sought to differentiate through increasing the 
variety of sizes, models and accessories which it offered 
to the farmer. Salesmen, pressed for points on which to 
base th^JLr claims of superiority, tujrned to field contests, 
extravagant advertising, easy terras and high pressure tactics. 
Waste was evident In the duplication of distribution facilit- 
ies and the superabundance of dealers, salesmen and _,coliect^.on 
agents who were aligned on both sides. 

The Gradual Loss of Former Advantages ..^ , 

There were other factors, outside the control of 
the companies, to cause them concern. The decrease in Imports 



t1:n'-iB'3 •r<?V*d •!nlf)eel Bdi I9*'^e Ii:fnw ae*E*8 f'9;tlnXJ erf* 

eeiu^ztt uH'JviEi Bioriw jBLenaO nl .0981 bnuoiB baii%T» 

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ic^ ^oy^pr- nr.t^snnO fTf^JeeW (>rf* o* eeeooB fcesnei I erfonw 

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,0^81 \<i 0r;0,c)4^I| o* belbnlw6 bari ,^88l 

• 

eldfiTlBebfiW ?»n;t ,efef?o»5 erf* To ftne eri* biBWoT 
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. ' fe ri*od no ^p^glIB eT<»w orfw p*neg6 



lo I«'r:t 8*xio ,e'TO*OB'^ teri*© «ftew Pi^rfT 

Biioqmi al oBBeioeb eriT .moonoo meri* eeuBo o* jBelnaqmoo erf* 



137 

noted between 1885 and 1890 had been largely the result of 7 
extravagant sales and price competition between the leading 
binder producers in Canada. In reality, the advantages whloh 
the Canadian industry had enjoyed since its inception were 
rapidly decreasing in importance. As the market extended 

into Western Canada, natural protection in that market was, 

h 

In effect, reversed in favour of the American producers. 
In addition, the cose advantages in iron and steel dwindled 
as the American iron and steel industry grew. These will 
now be considered In more detail. 

1) Loss of natural protection as the market moved west : 
Regarding natural protection in the Western 
Canadian market, Canada's economic geography, and particularljr 
the presence of the Canadian Shield, are important. Although 
the Implement industry in the United States had been able to 
move westward with agriculture, the Canadian industry 
gradually became concentrated in Southern Ontario and stayed 
there. No significant effort was ever made by a leading 
Canadian implement company to remove any of its manufacturing 
operations to Western Canada. From Ontario, the industry 
has depended mainly on the long rail haul north of the Great 
Lakes in order to reach its western market. Before 1890, on 
the other hand, the American industry had spread throughout 
northern Illinois, Wisconsin, and Minnesota, and had numerous 
branch houses locatf9d close to the Western Canadian border. 
In 1882, a letter wtltten from the McCormick office expressed 

a feeling probably shared by iiost of the American companies; 

..on 



1© j±ut:s>:. ^le-giBl nsoo beri 0^81 bns ^8^1 neewjsd b©*on 

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ridlriw Er-^sJnfivbe ^n: (Vti-flssi nl .abBneC ni BiBOtshoiq lebnld 

■V f 

eiftw noI:}q©ofii v i -JL^.-.^e be\;ctns bad xii^ubal nslbsriBO Qctt 

b9bn9iye :t93fTBirr erii eA .sonedioqrai nl jjnlBeeiosb X-If'^ciST 

,8pv j©:}(i6m :fprf* nl nolioBioiq Isiuii^n ^BbhnaC} ntsd-aeW o:tni 

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.JlRit'-''- <—- - '• ' '"^-leblenoo ed vcn 

; Jeew bevom ^safism sffi cb nolJoeioaa iB'iuiBn lo eeoJ (I 

niarfeeW ^dt nl flOl*oe;toiCT iBii/Jen gnlfciBgeH 

^l•l»luoli'r.Bq bntr ,,xrfQ;siao®S ol^ionoos e'ebsneO ,;t<^j(iBm nelbenen 

riSt^of{:MA .itzisxtioofmx ©le ,bl©iff6 nsibgnfiD axlcf lo sonesf^tq Bcii 

ot 9ldB ae&d bBd z^iBtB beJ'lnU edi nl •y:i*8i;bnl ^ns.^slqml ©rf* 

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be^tBCte bnB oli&inO nifidiuoo nl betsiinBonoo aropo^d xllBubsi^ 

inlbB9l B •^d ebfiia isve bbw cftolT:© tneolllnsle oM .»i©i^:f 

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deeiO Bdi lo diion luBd Hat ^nol ©rl* no xlnlsm " ©t eeri 

no ,(X>3l diolafl nisif'^v »tt rf5<»?T oJ 'i^bio nl sejfBiI 

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Bjjoisfflun ofiri bne ^BitoeennlM bns ,nianooalW ^atoallll nian'^ion 

,iebiod nalbBnoO nia^te^W erid od ©eolo bftJaooi t rionetcf 

x8©losc,'J^ iieoIisoA edi lo ieofl? \,cJ b-^Tiirie Y-t<<8doiq j^nlleel a 



. ,: The IrksoTDeness of the tsriff on agricultural machinery 
going into Canada is much more felt in the region 
where the lino of separatioa la only imaginary. It 
seemed different when we had to cross the Lakes to 
reaf3h Canaia. It see-ae-i then as though it rcaliy was 
a foreign country, but now in the district alluded to 
(Manitoba), they are our n^ar neighbours. 5 s,ou iu- (36) 

The advantage of proximity to v;hat was soon * to 
become the principal Canadian market was thus reversed, with 
the American industry In the more advantageous position. 
Until as late as I883, the only way by which the Canadian 
Industry could reach the market at all was by rail through* 
the United States to St. Paul and thence l?y water and (after 
1879) by rail to Winnipeg, Some firms attempted to do this 
and met with mild success. In the early l870«s, for example. 
Verity plows were shippe<3 by r_all from Exeter to St. Paul, 
and from there over the water route to Winnipeg ^37), j^ 
1879, the Harris Company, by that time located in Brantford;^. 
Ontario, opened an agency in Winnipeg and began regular 
shipment of self-rake reapers and & few Osborne binders to 
Western Canada, some of which were sold as far west as 
Edmonton 08)^ -jv^^ completion of the Canadian Pacific Railway 
brought little relief In that rates were reduced only to a 
level competitive with the Amorican routo, leaving Canadian 
Impleraent producers virtually In tho same po:iition as before. ^^9; 
Many Canadian producers, such as the Maxwell Company, simply 
established agencies in Western Canada and importod implements 
from the United Gtatcs for sale there. 

A further advantage possessed by American producers 
In Canada's western market stemmed from the earlier completion 



sei 



nl ilel 910W rioi/fc ei eDenBO oSat s«lo8 

Oi 29>U- O _. , ,_ .. „. . _ -8 

" ' ^t nl won iucS f\iiauoo ngls-iol s 



xl^Jtw ^baeievsi tiwi:3 esw jo^iiErn ficibgni?;. isqioniiq sricf stnoced 
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, bio1:tf!e'ia n.f h«!tBPoI ftnilo' ;fBriJ^ yd «y. eltifiH ahJ ,<^^8I 

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XBVl: -^nsO odd' 'to no snT /°f^ no;tnoff!b3 

B o:t Y^fo foeoirbarr riiow aoctci ^ed^i fl.^ loilai slcfitiJ rtrfauoid 

n vroj. ,o3-i/oi neol-xoaiA orirt cittv ev -• ievol 

(pc) 

^^.9ioJed r.R . jq offijE arlcf nl vli. ctsoufcoiq :tn A. 

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J- hnB BftoneO nio.taeW ni caione^ bsffBlItfe^es 

.o'':'^'.:f:t ■ ;ol zBta. \i raotl 

eT»ouf)OTq nflf»fT«tB7A \6 ftaeeeaeoq »a«;t^Bv^p 7<?'^:^ti/^ A 
flol;f»Iqaicr '— <^ri:f moil b»iDine:Je • ►ii'i-jBew e'BbBnaO nl 



139 

of the harvest season In the United States. Canada's Western 
market provided to American implement manufacturers a good 
opportunity of lengthening the selling seasons for their 
ordinarily highly seasonal implements. In addition the 
Western Canadian market soon became a convenient outlet for 

surplus American stock shipped across the border and unloaded 

■ (ha) 

sometimes at sacrifice prices ^^^*, 

r.- 

2) Loss of the cost advantage in British iron and steel t 

Secondly, by the late l870's the Canadian 
Implement companies had begun to lose their traditional cost 
advantage in cheaper British iron and steel. Following the 
rapid adoption of the Beseemer process In the United States 
and the exploitation of the high-grade Lake Superior iron- 
ore, the American steel producers had gained a temporary 
advantage over the British In supplying Iron as early as 1872. 

Rapid expansion in succeeding years made this advantage 

.■•''It; ror 

permanent, and by the late iBCO's the former advantage of 
the Canadian Implement producers had been completely wiped 
,out. In 1895 Canadian Industry for the first time imported 
more Iron and steel from the United States than from Great 
Brltaln« 



III. Exports from Can ada durin g the Nineteenth Century 

Massey and Harris Firms D^y^lop Export Markets in l880*s 

*' Despite the loss of some former competitive 

advantages to the American industry, the Canadian Implement 



9tii nol;} 1 ?-'^"-' nT ,r.-*n©pr3lqini isnoe.^ec yJci^.*'i yjlir.nibio 

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Xieioqfflfto 8 Eifiinlss bsxf Bieouboi^ I0e;t8 n^otismk »ti:t ,©10 

.SVBl SR ^Iise SB notJt snl;Y-fq<li«f8 «1 r(el;*iiS sri;f isvo ©jB^fnevb* 

?v5b t>iti& 8ffim zieay snlboeoox/E ni noiansqxft biqafl 

beqlw xif5cfp»iq«C'0 neoa bBti eieorhciq inea;elqaj; nalbeflBO ftii* 

^6(pi- ft^r.'f'; -r^rft ee^^g^B fe©;HnU «ri* csofi I»9t» hnn nont 9iom 



3C. _»£f^_5fil3«L-f jnS33._li2oa2£l HI 

gj eJ»3liaM ;» - -^vil emJH pJ ngH bna ygegeM 

evlilieqmoo leiniol POfoe lo a«oI «»rl^ «»Jiqe*a 
^nwHelqKl n«lbansD tri* ,\iiBubnl naoiismA eri;t o;f eeaaitnevbs 



1»K) 

industry expanded appreciably in the last two decades of the 
nineteenth century. The value of output rose from $^>,lt05,397 
In 1881 to l7,W93,62»f in 1891 and $9,597,389 In 1901. The 
expansion took place because (1) under the National Policy 
tariffs Anierioan competition could not gain a foothold in 
Eastern Canada, where the advantage of location still favoured 
the Canadian industry, and (il) during this period, the 
rising exports of the Canadian industry gave evidence that 
new Tnarkets were being opened up. 

In early exports, the Massey and the Harris Comp- 
anies led the field, Massey* s formal decision to develop 
export markets was made In 1887. In that year, the company 
set up agencies in South America, England, Continental Europe 
and Australia. In the following year the Massey catalogue 
announced t 

We have this year for the first time completed a system- 
atic organisation in Great Bltaln and the Continent for 
the wider distribution of our goods. In Bngland, 
Scotland, Ireland, Prance, Germany, Belgium, Russia, 
Asia Minor, South Africa, Vrfest Indies, and Australia 
our machinery Is at work. 

In the same years the Harris Company also established 

outlets abroad, and a similar optimistic announcement was 

made by this firm in 1888. In 1890, total exports of Implements 

from Canada stood at $376,198, which, through not an impressive 

figure, was more than double the value of Imports, Ten years 

later exports had risen to $1,692,155. 

The fact that both these companies embarked on 
what developed into very successful export ventures during the 



0^1 



V^£«^CH^t'**l B^oil ©SOI tisqiuc to ^ulav edT ,xauJn«» ri*fl»e;t»fjin 

•riT .iOPI nl ^ 5nB 1^81 nl ♦'^,£^♦1,^1 ocT I88l fli 

TCOlio'I iBCicliB'A 9di i&bau it) eei/B09cf »o»Iq jIoo* nolensqxa 

fll Mori;iocl b iiis^ Jon fclijoo nolcJ"i;t»qB!oo a&otiecrk zJllizi 

ecii fboli9q eliii inliwb (11) bas fXiiRubal flfiibBflBp »rii 
tBiii eon»blv» ©vbs xi^si/bnl nsIbBnaD «cli lo s^ioqjc* sfllalt 

.qw beti&qo 'giit&d etBV 8:^«2f•IBm v«fl 

-qcior) eliifiH ari* bne ■' Qdi ,s;?ioqx» Y-^TCBe r;I 

qoleveb o;t noteto9b l^m-xol g'^sbsbM .blell erf* b9l zbIhb 

Xneqrooo erij ,i6©x *«rf^ ""^ .V88i ai •&»« bbv ei9:AiBm ;t'ioqx» 

eqOTfuS lAics9taJ:iaoO ,? i jBoJ:as>mA iii;>uo3 nJt telonesB qx/ J«s 

e^solB^BO ^eseiBM 9cii irbx gnlvollol ©rid- nl ,BtlBiiQuA baB 

t bdonironflB 

-medaxs fi ^ x erf* lol t:6«x zldi overf oW 

loTc ;Jn'^' -* ' ' -^-^ ---— r^j^^ 

'w «»ri* 
, ,ajtfi8i©tt fX'' f9onp,i''i ,bnBl«iI ,bf!fil*c'-^' 

beriellcfBd^e© obIb xnaqmoO aiiisH Bri* eibsx saiee sri:^ nl 

BBV rfnsffleonuonne oJt:fElraI*qo iBllmle b bnB (bBOidB e:f3l*i;o 

e*n®ffl»Iqml lo e^ioqx© Ib:^oS /^'•■I nT .8881 at milt Btdi yd Bbein 

•▼lEBe«xqasl nB :fon rigi/ox: . ^tioJi-w ,8^I,c)K'£t i'B boo;te BbBflaO saoiJ 

eiBBX '"^T .ertic o ©i/Xav Pri* Blduob flBrii eiocn eew ^sii/gll 

.^5I,S^0,I| o;t n«8ii bfirf e^ioqxB iBial 

no fterfiBCfiT!© er'inaqmoo ecBrfvt rf^ocf ;tBff* 3"ob1 ©rfT 
•.,r^ ^rtr.rr,^ RB'ijj;tr«'" :" t - rwlcRBootre xi»v otfnJ bBqoIovBb ;fBrfw 



years when protection in the home market was at the highest 
point in history, raises certain questions which will be 
treated in this and later chapters. It is true that, In the 
period up to 1890, the tariff on implements could be more 
readily considered a part of overall government policy than 
as a favour bestowed at the request of the industry. In 
later times, however, some companies of the industry have 
given more attention to the foreign market for implements 
than to the home market, and this indeed calls for some 
further comment. For the decade of the eighties, explanat- 
ion of the emphasis on export markets must be sought In 
three aspects of the export situation: the condition of the 
export market, some faeatures of the tariff itself, and 
transportation costs. 

Reasons for Success in Exports 

First , the export market for implements was , 
considerably widened in the late nineteenth century by the 
upward trend of labour costs in Europe, resulting from the 
migration of increasing numbers of peasants from the grain- 
growing areas of the Continent, to the Western Hemisphere, 

to Australia and New Zealand. The labour shortage in Russia 

(hi) 
incidental to the Crimean War had a similar effect 

Combined with a gradual lowering of world food prices 

consequent on increased use of labour-saving tillage and 

harvesting machinery in North America, this Increasing cost 

of labour in Europe quickened the interest of many European 



c^eeriglfi »ni *b esw ;i9-AiBm snrori ecli nl noI:to9Joiq nacfw ertaex 
9Kf IIlv rioiffw eno^:fE»i/p nlsit'xso eflelBt ,x^o*eiri nl Jnloq 

eiooj dd bluoo eitnsmsIqiHl no t11is;f »r:* ,0p3l o:r qu boliaq 

n£;rf:f x^-J-Co<l Jnemnievog Ils'revo lo :tiBq s fteiafSlenoo x-f-t&fisi 

nl .^ic^ew^^n^ ^'^* ^o :f?.8up9T ©ri* ;tB bewotted tuovel b zb 

evBfi xiieubnt f>[l& 1o eeineqffieo eroos ,i0vewori ,S9ml:t isJ-bI 

e^nefneXqjnl lol i^jitBOi nglsiol ©ri;t o;t nollneJ^s siora nsvl^ 

oinoe lo*^ all BO b«»fonl eiiW bns ,;f93liBffi smori Bdi o:t neriJ 

-*BnfiIqx» ,8el;tri8l» 9cii "- -^eosb eri:f t^ .itnsnwnoo i&diiifTL 

ai trfsuoe ©d A turn a^rBji-iaffi Jioqxe no elBBriqnie »iii lo noi 

•ri* lo aolilbnoo Biii inoliBuii^ d"ioqx9 9ri;f lo zioeqEs ©enri* 

6nF ■^■"^*- '*^-~"^ -^-'7 '" -"vJb9«1 gffloe ,;t9Jii«ffl :^ioqx9 

.ecfeoo noJ:JBd"ioq8nBi:t 

e^ioaxS at eesooye lo^ gfloeB»fl 

sn'-i xf^ y ^anxn »;JeJ srf^ nl t'snsMw xldeieftl enoo 

eff:t oioil 3flt;tii.f29'i ,9qo-iw3 ni e*»09 luocfel lo bnei* fciBwqir 

-nleig eri^ moil ej-flsEfsq to eiscfmun snleBeior' '^'^ noloBiaim 

^••lerfqelmsH m«:fe»W 9ri:f od- ,:fn9n2;tno0 9rl;J lo es9'iB snlwoig 

Blc8X/fl flJ 93B*iorie iuo6bI 9£fT .bn8l««5 wsH bne BllBt^KUA oi 

. ' :t69ll9 TBliralB 5j8ff ibW nfiomliO «ri:f o;t lBi^n«bloni 

80oliq bool blnow lo ^aiimwol lai/beis b rf;tlv benldmoO 

bn« 9?»JIl:f sntvf e-it/odel lo 9zu b»BB©ioni no Sa^tjpBznoo 

itsoo 3ii tc.fo i;-iij cj uj {.oj iiiA riit'ioW ni xisnirioftfli anl^esvisri 

nBQqoiuS ^cnflm lo izeitiint 9tli benejioli/p eqoii/a ni ix;odBi lo 



1^2 

farmers In machine methods. In this sense, every Increase " 
In the use of machinery in North America can be said to 
have contributed Indirectly to the expansion of the export 
market for such machinery. Since, along with a few plants 
in Britain, the Implement industry In the United States 
and Canada was best equipped to accomodate this expanding 
market, there was a strong economic Incentive for the latger 
Canadian companies to enter the foreign field. 

Second IV f some aspects of the tariff had the 
effect of encouraging exports from Canada. As early as 
1868 the Dominion government un<5*r Macdonald had provided 
for payment of drawbacks "on exports of manufactured 
products equal to the duties paid on Imported materials " 
used In their production" ^^^'. Although the Implement industry 
had long enjoyed this drawback In the case of products 
which It exported, no similar provision was made for mater- 
ials used in farm Implements sold domestically until 1907, 
twenty years after the first aggressive steps had been a 
taken by tha Massey and the Harris Companies to develop 
their export markets. The Importance of the drawback to 
the Implement Industry Is Illustrated by the fact that 52% 
of all drawbacks paid by the customs department In the 
fiscal year 1899-1900 were paid to the t implement industry.' ^"^^ 

Additional features of the tariff which doubtless 
contributed to the deoislon of Canadian producers to seeksn 
markets abroad were the uncertainty regarding the future 



^loqxe »rt* lo florenscfxs eri* o;f x^^ooi-^f'fl-^ bazTodli^noo everi 
ce;tfi:r3 ft»JlnU ©ri* nl x'i^£»-'^^ii Jnsnjelqiai stii ftilBil'iS. at 

• iiioli rj^-tt'ici Sii5 i©jn9 o^ eelneqinoo nBlbansO 

eri* fcBri lliiB;t 9ri;t lo E*os»qes emoe ^ vlbnooaS 

8B yIib* cA .sbenfiO moil e^ioqxB gnlsBiuoone lo *oell« 

5©F7-rr>TrT ^p.-f ^^pac^.'5•r•M Tsfcrfa :tr!«rrnf=vo'3 rrclnliDoQ eri;t 8d8l 

t»ei0joi5iijnfiffi 'ic 2J"ioqxs no" sjioeowBin lo Jnemxeq lol 

8lBli0;tBm b»*ioqml no blsq 8«l;Jx/b »ri^ o:f iBirp* e;toi/boiq 

TCid-awi)nx ;tn9jn8lqml ericf ^^cforl;tIA /^"^^"nolrtouboia ilarf* fll bsex; 

ecfouf^oiq lo sebo erf;t ni jfoscfweab elcii bQXo[.a» snol bsri 

-is^BiH lol BbBfli sew noielvoiq lellmJs on jbBcfioqx© :tl rioiriw 

^'i^O^i ilSau x,^ZRotiPsmn'-^ --tor. p.:fn9m»lqml miBJ nf be?i/ sIp.} 

neecf bsri Bqeie ov'i&i-.«iiaSB Jz-iil eri;J isS'iB a-ise-y; \;:rfisvj 

qoleveb o;^ BelueqmoO eiaipK Brii ba» "^eBEBM Biii \<i n03iiB;t 

O^ Mopcfvp'rb ^rf:f to scr-p.^io'^rnl Pd? .2:t93fipm ttoax© li-ir^lt 

tdi nl : Bqeb eino^euo edi \d blgq EJiosdw^ib XIb 'to 

^^^"^.Xt&zubri fammlrrml t c~di o:f b}ej *ipv; 00^I~PC8l iRoy Ir.oeil 

8e©I:fcfifob rioirfv ^tl're:t 9ri:t lo teivip'^J lp.nolithhA 

jiose. oj Bi&outoiq neibenBO to noiaioeD snj oj be^^i/dlictnoo 
•au:tol »rftf gnJbiBa©! x*nlB*i©onif ©rf^ ©i^w fcaoidfl e:t©3('iBff 



course of protection In Canada, and s growing consciousness 
within the Industry of the Imminence of organized farm 
opposition to the tariff. Tariff uncertainty, It will be 
seen presently, was the principal reason for McCorralck's 
refusal to manufacture In Canada In the nineteenth cnetury. 

The third factor contributing to the development 
of export markets prior to I89O was the seasonality of the 
Canadian market, especially In the remote Western Canadian 
market, and the continued high cost of reaching that market. 
,- The latter may be seen in "the cheapness of ocean freight 
rates from Eastern Canada to England, as compared with the 
long rail haul to Western Canada, amounting on a binder to 
$10 less from Ontario to London than Com Ontario to Saksatoon." 

A3 late as 1910, the Canadian Manufacturers* 
Association publication, Industrial Canada * charged that the 
railroads were 

t absorbing a very considerable part of the protection 

which the tariff was Intended to afford. As a consequ- 

*:,«>.i ^./»' ence , United States manufacturers are entering the 
Western market and are supplying that market with 
millions of dollars worth of goods which should be 
. supplied by Canadian firms from Canadian labour. (^5) 

In the same issue it was claimed that the freight rate 

from Hoosick Falls, N.Y. , to St. Paul (1^72 miles) was »+0^ 

per hundredweight, while from Smiths Falls to Winnipeg (1286 

miles) the rate was 6h^ per hundredvjeight for the same class 

of goods. •■ This would be a definite advantage for American 

producers shipping into Western Canada. "Up to a short 

time ago", the article pointed out, "the rates from some 



IS e bne ,BbBnBO at nol*t»#!iOT lo f 

JTi»fl«qoi9Vsc en5 oj aiii^jjoiij-ioo loitOB'i ftilrfJ *riT 
9di Jo li^tllenoasea srfi 8«w 0^81 o:f loliq e^eJfiBfiJ ctioqxs lo 
nelbBneO ms^tes'w 9:toin»i ©riit ni ^Ileloeqae j^ejfii?!!! n«JtbBnBO 
.i9:Ai&m iRtii anirfoBei Ic iteoo rfglri bewnJ:fnoo ©ff^t Jbn« ,;r»3l'XBn 
lenJ neeoo lo eeeflqe^ric ?»ri^" at neee ad -^Bfli i9;fjtfli •ilT) 
Sri* liSiw fcsncqnroo eis ,6£iBlsn3 o;t fiheneO nis:tEB3 moil es^Bi 
o;t lebn/d f. no f^atinuoatB (fibfinpO n'lsJes'w o;J^ lusri IIbi §noI 
".nood-BET^BB o;t oJiB^fnO raaS nBrf:t no&noJ o;J oiiBitnO {poil eeel Oir^i[ 

•e'iPiu5-O6l0n/''l nelbsHBO ©ri* tOI^I bb 9:tBl eA 

•ri* cferf* bsgifirio »«bB£i i^lML inold-Boilduq nolctBloocEA 

©ifitw e broil iei 

r -;toiq R:l;t lo ^^eq eS " x'^C'V b gnidioeds 

-up(....^- '■ ^"^ .bio'ilB o;t ^' - - .... .... lliiB^ 9ri;J rfolt'w 

9rf;^ :»nf» 9i« eieii/Soslynen e^eiBiB b»;tlnU ,eon» 

"518 f"' " ■■ .' 

ec. ..... . . - ,, . . . .:ow £1. .. .. _ .,. ^ : '.y. 

(^4^) .iwodBl nfiibenfiO moil 8mT:.M nelbBOBO \d 6«lIqqi/8 

^O+J 8SW (esliffl S^pi) Iub'? .iQ oi ,,1.A ^bIIbI iIoieooH moil 

d8SI) 8«qlnniW o* ells'? erf^Jtn8 moil sllriw ,;tflsiewjbe'sfra0r( laq 

bbbIo •«*? '•^ff'f fcT *ri3ji»wb'~7^^^ri i©q ^0 «bw «;t8i prfit (eelim 

nBCtiemA lol s»8e;JnBvbf. scJiiii"' --•o '• > P)li/ow elriT '. eboog lo 

^lorie A o;t qU** .«bBn«0 niA^eeW o:fnl snlqqlffe eieoi/hoiq 

•noE moTl pftrtBi eri:^" ,:ti/o be^nloq f^IoiiTo^ Arf.t ,"038 ami^f 



a 



points in EuKp« to Winnipeg were less than from Toronto or 

Montreal to Winnipeg" ^^^K 
a* 

The Tariff and the Location of Plants before 1890 

The hopes of the National Policy tariff makers 
of Inducing American producers to set up manufacturing oper- 
ations in Canada were only partially realized in the years 
before I89O. The difficulty of obtaining adequate patent 
protection in Canada | the uncertainty regarding the perman- 
ence of the Canadian market and the Canadian tariff, and to 
a smaller extent the fact that different types and strengths 
Mini ti^j.LJJ of implements were needed in the Canadian market, 
were principal factors in the reluctance of American firms to 
extend their manufacturing operations over the border. 
Hutchinson reports that in the early iBSO's the McCormlck 
Company "was considering the advisability of scaling th« 
tariff wall by assembling the separate parts of their implem- 
ents at a Canadian branch factory". Eventually McCormlck 
tabled the suggestion 

since he believed the ?fanltoba boom was too dependent 
upon one crop to last long and the Dominion would 
most likely amend her tariff legislation so as to 
levy heavy duties upon imported machine parts. (47) 

One should recall that it was the Deering Company which, 

around 1900 purchased the site at Hamilton which eventually 

became the location of the International Harvester Company 

of Canada. 

In 1883, the first year of the 35% tariff, the 
North American Agricultural Implement and General Manufacturing 



E'i«ftY •*<* ":Ib6i ti q xlno BitiV BbuciBO at tnoiiB 

srfit bn« ;f ©?fisiH n; ' ftrii lo ©on© 

erii'Sf';-'^'''*"' '">"'-' i^"" "^ t ■..•.•. •'^•^ ■ ", l ?•.-',■* .♦•^.''•> Oi-f;f :^r- ?,:?•; ^^ «tc» f for'S s 

;:;D «f';!' fii £jj»r'df=>n fi'~£^w airiaii.i©j.qiiii "Jo g----- ^ - --•" 

o;t saitil nao.t tslet ' r^ntiq ©isw 

-o;.. ....,71 ■ >?*<;■;'.'.■!• 1 -> rrt'T-ip .■'••^r.Tf.--rf.R o,,-'* -.-ft * '■.-f!^'>r -^p vi rfo;; "^^ fled' 

^1 o* qo 

r ' - 

tVK\ 



1^5 

Company wrs formed In Iiondon, Ontario, partly with American 
capital to take over tvo London factories and a Winnipeg 
selling organisation. Two of the seven directors of this 
company were American Implement men: Charles Deere, president 
of the John Deere Plow Company of Moline, Illinois, and M. 
Rosenfield, president of the Moline Wagon Company. This 
company, however, never became an important factor In the farm 
Implement industry In Canada, and appears by the end of the 
1880' s to have shifted its attention to other types of 
production. By 1889 its name had been changed to the North 
American Manufacturing Company '^°'. 

The only other significant example was the 
Toronto Reaper and Mower Company, which, as we have seen 
earlier in this chapter ^^9)^ y^g g^^ yp j^^ Toronto partly 
with American capital and under American oQanagement in the 
middle 1870' s. This company was unsuccessful, it will be -, 
recalled, and was purchased by the Massey Company in l88l. 



Conclusions from Chapter Fouy 

■ * 

From the survey of the early Canadian Implement 
Industry in this chapter the following conclusions emerge. 

1) The outstanding differences between the 
agricultural implement Industries in Canada and the United 
States during the nineteenth century can be traced to the , 
environments in which the early industries flowered. In 
Canada the growth of individual companies was Retarded by 



1^1 

(itlM ,oi dJ at bf^s oO 

/ nl ^flfiqffloD x©6««M ndt x^ ^i^<? eaw bne ,bell606i 



'^no'i >,•-:- .■■■.. »y riO , mo qit ^.^ ..j .■■.>;^ /.fo'J 
^natnsiqffll '••- ' '— :- 
el fesw eelncqitoo IjbuMvi o rl;tvois 9di sbsnsO 



l»+6 

the siialler market %nd the slower development of transportation 
factlltlos. The industry took root around the local markots 
of Ontario, the location of firms reflecting in the main the ^ 
routes of the early railways. The Canadian industry's fallui*e 
to contribute significantly to Innovations during the century 
resulted from the smaller scale of operations in Canada, the 
scarcity of capital and of facilities for experln#hta*>ion, 
and the ease with which Canadian producers were able to avail 
themselves of American inventions. 

2) American competition presented few problems ' 
to Canadian firms before 1885, because of the cost advantages 
of the Canadians, supplemented by tariff protection after 
18^-7. Except for occasional complaints over American dumping, 

the implement tariff was regarded with indifference by the 
Industry and farmers alike as long as Canada's market wa8 
confined to the east. Nor did corapietitlon among Canadian 
firms develon to the same extent as below the border. 
Conspicuously absent in Canada were litigation over patent 
rights and competition for favourable location in a contin- 
ually shifting market. The significant shift in the market 
In Canada came with the opening of the West, in which market 
the Canadian producers were from the outset considerably 
handicapped. 

3) In the Western Canadian market, proximity 
favoured A:aerican producers. Moreover, the opening of the 
West coincided with the development of the American iron and 
steel industry and the consequent loss of the Canadians' 



IIbvb 03- sliB Q-ie'*} t-iBOi/Do-xq aiiifasnsw noiriw niiw r^r '•- Tij baa 

taniqcrub rraoliftnA t©vo 8#nlaIqmoo IcnolReooo tcl cfqeoxa .^4^81 

.IS '-•'red' ©rfrt vnlf^r^ ri? ttnarfre ^tip^ <^r'J o:t ^nlsTrs^ p.ri.tT' 
-nld^noo s ni nolr^AooI elcfBinovB'J lo'i no-f^-^cfscmoo ^^e E^trfgli 

jcx'Ti/r: r:oir'.. at . ' fjrfd- 'to -gnln^qo ovl.T rl^i'^' sn.so etsnaJ ni 

. ^s^rrTpr; f-f rtnrf 

br« ncii n lo *. '^vnh sti:f riilu 6»f>lonloo ;J8»W 



1^7 

former advantage from cheaper British iron and steel. The 
Implement tariff took on new significance as American imports 
into Canada Increased throughout the nineties. Some Canadian 
firms (notably the Massey and the Harris Companies), attracted 
by cheaper traasportation and the drawback on materials used 
In exported products, turned their attention increasingly to 
export markets during the latter years of the century. j^ 

h) Within the Canadian industry, no clear-cut 
"size distribution" emerged in the nineteenth cantury comp- 
arable to that which emerged In the American Industry between 
the holders of key patents and the fringe group. Differences 
In size and strength among Canadian nineteenth century firms 
can be largely traced to varying degrees of success in 
establishing American "connections" and of aggressiveness in 
exploiting markets beyond their Immediate localities. 

5) The "harvester war" occurred almost a decade 
earlier in Canada than In the United States. This was because 
of 1) the absence of a binder patent pool in Canada, and 
11) the drifficulties of controlling competition at the 
retail level, occasioned by the scattered nature of the 
market and the longer distance separating the retail organ- 
isation from the centre of control. 



p.JiocjEJJ: /Jsoi."i9:£'A £S e^Aiesx _j.ui;j.i; ^'ca i:o d'.)-:. , i'tlTs^ Jnsflislqffll 

n«s'.;ie<f T^itfaj-'bril fiecliMiA ©rf? ni &p iolrfv; ^TBrfrJ o* sldRis 

bns ,e^*rfp,') r* J!o':'r in^^rr* i9bnt<5 b Jo fin"e2cra erf* (1 lo 



i^di JB iiOi J L J r_;:i:uy \^uxi±VliClCti "rO j.srji^.jj'j.f^I'l'I) '=*ri 



J. / 



»ri:t to eiuJen beieJ^tBoe edi x6 5»nol8BOoo , level lieJet 



IhB 



h.1. 



CHAPTER FIVE 
THE CANADIAN INDUSTRY FROM 1890 TO 19^0 

Contents 
I. Ma.lor Changes During the Period 

Expansion In the industry — Expand-on in agriculture. 

II. The Formation of the Massey-Harris Company 

Declining dependence on the Araerican industry — Massey 
and Harris merge* May, 1891 — Patterson and Wisner 
merge: August, I89I — Massey-Harrls and Patterson- 
Wisner merge; December, 1891 — Comparison of the 
Massey-Harrls amalgamation with the McCormlck-Deering. 

Til. Tariff Movements: 1890 to 19 "^0 

The appearance of organised agrarian opposition — 
Liberals continue protection after l89o — Internat- 
ional Harvester builds in Canada, 1903 — Protect- 
ionist campaign by Canadian manufacturers after I89O 
— The "compromise" tariff of 1907 — Reciprocity 
negotiations of 1910-11 — Growth of the Cockshutt 
Plow Company — Agrarian pressure and decreases in 
the implement tariff from 191"+ to 192»+. 

IV. Technological Influences in the Twenties 

The tractor — the combine. 



I. Ma.lor Changes During the Period 
Expansion in the Industry 



in 



In the period I89O to 1930 the Canadian implement 
industry changed markedly both In size and In structure. 
Substantial increases were made in the amount of capital 
and labour employed, and in the value of the Industry's 
product. At the same time there was a marked decrease in 



3fl 



iTU I 



— yidr . 



T .T-^r; r^r; ? 


Ai'^t 


rrr ^?ri^!2nGqxS 




_ 




inJtlosa 


1 


U «o 










■■ •? 








V 





.III 



-:f. 



- " - i lu < 

9rf:i' — 10:^061:? sriT 



Y' ..JQJLC, 

*r F^erfBO ©rf:t 0£91 o? 098i ^o.^'!•*>q 9(ii nl 



V*9 

th« number of eatabllshmants In the Industry, resulting both 

from mergers and from the withdrawal of many small producers 

from the Industry as the larger ones widened their markets 

and as the machines required by farmers became more complex. 

The census flrgures In Table II tell In outline the story of 

expansion. 

V I 

naf^it.^ <, •'' TABLE II 

Implement Industry Statistics ur - 

No. of Capital Wage Wages Product 
Firms $ ,000 Earners $,000 | JOOO 

1891 221 8,62»+ it,5»+3 1,812 yMh 

1901 11»* 18,207 5,788 2,129 9,597 

1906 88 28,»+90 6,711 3,077 12,836 

1910 77 '+5,232 8,83»* ^,7**0 20,723 

1921 75 9^,129 7,15^ 8,53»* 36,763 

1929 62 103,357 9,61+0 11,1+53 '+0,659 

1939 36 58,067 »f,259 if,380 16,035 

19»+7 61 13,688 25,982 89,1+23 

dev- 

Souroex Canada Year Book. 
P f 

These figures Indicate substantial growth even If 

no allowance Is made for changes In the general price level 

during the period. The fact that capital increased twelve i 

times between I89I and 1929, as contrasted with a fivefold 

increase in the value of production and a slightly more than 

twofold increase in the labour force, reflects the heavier 

capitalisation required to produce the more complex machines 

and Implements which were coming Into use during the period. 

Although, as will be seen, only an insignificant number of 

tractors were produced in Canada during the period, the effect 

of the tractor was slowly making itself felt on Canadian implement 



. leou'-czq liEine >cnfia lo laVBibri^Jtw ©rf;t rronl bn« ei^sieiB moil 

BiBiiiasi ilerfcf b»neblv eeno T- , 8c Yi*«t'6ni »ri* moil 

.■toni »BT«o0d Bieinel x^f beiii/psi aenJtffoBffl 9di ss bflB 

lo xioj-: :--: ' iii;tifO nl lis* "■' ^CdBT fli EBii/jil'i eueneo •riT 

,noI eneqxB 

II ajaiT 

' •-• ' "•^' , 4£$),e *-. 1^81 

^C0£,8I 4^11 I09I 

dfttlsj S^O^t liVtO oe+l.SS 88 ^091 

^>d,0-r^ ec'^^.II ~ Si> ^S9I 

.^i --- ' \-- , -. a£ ew 

;8 , Id V+l?! 



.1I008 i«eY BbanaO leoiuoS 

11 nev© rfiwois lal^nBCtRdue e^Boibnl eaiusll sesriT 

IsvoJ 93firr IpTsnes ©ri:f nl cftgnerfo lol ebam el sonievoilB on 

fivi.:? j bt.c.Be'ivnl SsHqRO iBdi itosl ©rfT .bolieq erfiJ snlii/b 

bIo1»vl1 £ liiiv 6e*Be7*noo a« / I98I noevJwf BSfll^ 

n«rf:t »iom x-f*t^8-*-f« » ^^b nol^owboiq lo ei/lBV Qcii at ©BBenonl 

isivB'jri »ri:f sioellBi ,«oiol ii/odel ©rf^ nl eese-^ionl blolovrl 

-ienlripBffl x»iqoToo «io« ©ri* eouboiq o;t beilupen nol^BellBJlqeo 

.ftol^tf •M sflliirb Beu o;tnl jalaoo bibv tiotciv Bia»meLqmt bnt 

lo i9<Si&un ^nsolllnjlenl ne, \lno ,nBBe ©d IIlw cb ,ri8U0ff*IA 

*o©llB 9di jbolieq mM jnlowjb BbanBO «1 beowborcq ©isw bio^^obi^ 

;fneinelq0l nalbsnAO no ;tlBl llse^^l aalj(Bi» ylwole eew io^obi^ stii to 



■ i~ '^ 



150 

producers. Full-line firms v/ere under Increasing pressure, 
whether they handled a tractor or not, to produce the more '"^' 
precisely built implements adapted for tractor use. 

During the J)eriod under review, the industry 
continued to be concentrated principally in Ontario. Implement 
production in other provinces was of a small-scale local 
nature. In 1906, although only 56 of the 88 plants were 
located in Ontario, that province accounted for 965C of the 
capital employed, 91/^ of the wage earners and 92?C of the 
product value. This picture had not changed much even by 
19^5 when, with only 2k of a total of $k plants, Ontario 
produced 9k% of the gross product value for the country. 

The most important change in the structiu-e wr the 
Industry in the period reviewed in this chapter was the 
development of the Maasey-Harris Company and the Cockshutt 
Plow Company into full-line firms, and the establishment of 
the International Harvester Company of Canada at Hamilton 
as one of the major components of the industry. Because they 
dominated the implement market in Canada during the twenties 
and thirties, these three firms have often been called the 
"Big Three" of the Canadian implement industry. Their 
development between I890 and 1930 is the more Interesting 
because this was a period of steadily falling tariff protect- 
ion. The tariff on implements remained at the level of ^5% 
from 1883 to 189^, after which it went into a steady decline 
until by 192^ it had reached the purely nominal level of 6%, 



.921; loioBiii io1 b9icf,Bb& 6i j-Jli/d vlseioanq 

d-;, nl TTTy-sjitor'^trr ^»i•r;-f:+^f'OCO'^ «Kf o* b^f.rnffnr9 

1* lo d^ x-ino :fli; ,cO^I nl ,9iuiBn 

■tc'^ ■ : Tjr eorr ?r?*?r* '^"'.t , : I ■■' '^ :+ TO nl b©tfeool 

. - '^" • IsjlqBO 

Xd n©v» riotfia fc- ' ;toL'boiq 

ol7.s:tnO ,8+??si^ "^o *^S t^no tittv ,n»ffw s^r 

3 lo xaBqmoO i&t iCtQitfAnieiol »ri* 

eidi b»IJa!> n»eo' n«?to «vjsr{ eiaail t=»©'ifl* sr.er'.t fZ9i;iixr'J hna 

■lei- i no 

»alS.O, .Ji;.i ..•ir.?- .. .' i'T^;-:.- 'SUtlB t+'t'Sl uJ j.c:U aiOlT: 



151 

The principal theme of the present chapter is the 
economic circumstances under which the rise of the Big Three 
took place. A close examination of sales and import and 
export trends is reserved to the end of Chapter VI where 
these are reviewed for the period 1920 to 1950 as a unit. 

Expansion in Agriculture 

The expansion of the Canadian implement industry 
in the opening decades of this century was dependent on 
the expansion of Canadian agriculture. Viewed absolutely, 
the expansion of implement exports in the first two decades 
of this century was not large when compared to the expans- 
ion of output in Canadian plants. Canada's output of 
agricultural implements increased from $9*500,000 in 1901 
to $20,723,000 In 1910 and $37,715,000 in 1919. Exports 
in the same years increased only from about $1,7^3,000 to 
$^,319,000 and to $8,832,000 and most of this increase can 
be traced to the Massey-Harris Company. 

What was the nature and extent of the agricultural 
expansion in these decades? Oirviously, a complete answer 
lies beyond the scope of this work. Yet in brief it may 
be noted that sizeable changes took place in the number 
and In the average area of occupied farms in the country. 

The total number of farms in Canada increased 
steadily from 1901 to 1931, although declines in the number 
of farms had set in in the eastern provinces after 1911. 



el T^ Ipqloaitq ri -t 

eieriw IV lo bn« «ri^ oi bsvic ■ u (tiaqx* 

8' '^ C" X 

nso »8B9ionl elrfiJ lo ?sow bnfi 000, S o;t fwie 000,?l£,4^ 

:3t:"..5V£ 'j);jj ni fcne 






nl 8»niIoeb 'Is ,X£^I o* lO^I coi'J x-C^tJ^ 



152 



TABLE III 
Occupied Farms In Canada and the Provinces 
Province 1901 1911 1921 19^1 19>»1 1951 

CANADA 511,073 682,329 711,090 728,623 732,885 623,091 



Nfld. 

Pr Ed Is. 

Nova Sc. 

New Bruns 

Quebec 

Ontario 

Manitoba 

Sask. 

Alberta 

B.C. 



13,7^8 1^,113 

5»*,»+78 55,tf91 

37,006 y?,n5 

m.0,110 1^9,701 

20>+,05^ 212,108 

32,252 ^3,631 

13,^»*5 95,013 

9,»+79 60,559 



3,626 

13,701 12,865 12,230 10,137 

»+7,^32 39,»+Mf 32,977 23,515 

36,655 3^,025 31,889 26,1+31 

137,619 135,957 15^,669 13'*,336 

198,053 192,17^ 178,20if 1^+9,920 

53,252 5^,199 58,02if 52,383 

119,^51 136,^72 138,713 112,018 

82,95^ 97,^08 99,732 8»*,315 



6,501 16,958 21,973 26,079 26,39»+ 26,^06 

Source: Census of Canada. 

Such declines have been general since 19^1 ^ . The presence 
of such declines might be taken to reflect a trend In the 
agricultural development of the country. Historically, the 
number of farms In each region has increased as the region 
developed, reached a maximum and then begun to decrease. 
The earlier decreases ^mlght be said to reflect the earlier 
completion of agricultural development there than on the 
prairies. The decreases in all cases must be the result of 
either the abandonment of farms or the absorption of one 
farm by another into larger units. The fairly steady increases 
which have taken place in the average area of farms, as shown 
in Table IV, give strong suggestion that absorption has been 
the more Influential factor. 

As may be seen in Table TV, the trend toward 
larger farms has continued steadily since 1891. The most 



S?I 



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c 



1^0, £ 



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<i) 



f» *T f •, 



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©Ofif 

aOigsT «»iw ■.--« ;'^s:L«®TO£JJt sari flois-sf i10f ' anti^l '^'^ •">?fiHjjn 

'■^ bap 9Vob 

ic.xlie?» oricf ^fD®!*!®! r^ him «' 'cb© enlT 

lo ;fii/e9i •rfj ed ©bbo -lIb fli fe«2B#n T "'.e^filiSrtq 

rifio ^o fro?;trfT«e>fs ^<»d^ id ^o^^fid8 • >rf?i«» 

as ^eanfil: lo «»i« • at «oeiq n©is;f svsri rioiriw 

nsed tg ,VI ftJcffiT nl 

.tcic '- IJoaifllnl mom «ri;^ 



153 

TABLE lY 

Average Area of Farms In Canada » In Acres 

Province 1901 1911 1921 19^1 19^1 1951 

CANADA 12h.l 159-7 198.1 223.9 236.8 279.3 

Pr Ed Is. 86.9 85.2 88.8 92.6 95.6 108,0 

Nova So. 93.3 100.2 99.6 109.1 115.7 13*+. 9 

New Bruns. 120.1 120.2 116.5 122,0 12^.3 I3I.2 

Quebec IO3.I 1^*^.3 125.»+ 127-3 II6.8 121+.2 

Ontario IOW.6 10»+.5 11^.3 118.9 125.6 I39.2 

Manitoba 27h,2 279.3 27^.5 279.2 291,1 338. W 

Sask. 285.1 295.7 368,5 ^07.9 1+32.3 550. U 

Alberta 288,6 286.7 353-1 »*00.1 ^33.9 527.3 

B.C. 230,3 lM.9.8 130.2 135.8 152.8 ^78. 8 

Source: Census of Canada. 

rapid increase for the country as a whole took place between 
1900 and 1921. The most spectacular Increases have taken place 
in the prairie provinces where, generally speaking, they have 
occurred later than in the rest of the country. 

The increases in Table IV could not have taken 
place without corresponding increases in the efficiency of 
farm Implements. In fact, it was because Canada's period of 
greatest agricultural expansion coincided with the period 
when power machinery was being Introduced that such expansion 
in farm-sizes was possible. Settlement in Western Canada did 
not really get under way until after 1900, and it proceeded 
rapidly for thirty years after that date. These thirty years 
saw the advent of a host of new power implements, headed by the 
tractor and the harvester-combine. By contrast, settlement 
of the main wheat-growing areas of the United States was 



e^i 



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o.css x.aa' 



,+'Si 



AOA^O 



P >.'r> P 





f 


o o -r. 


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S.OOI 


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r.»f,9 


1:: 


_:_r 




5. 

v. 


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■ T 


I. 
r. 




X.lct 




d.i38S 


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S.rfl 


^:.of:i 


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£.0£S 


.6;)BXv>,-' lo 


aj.;en» J 


; h'Oi;.'! |& 







.el ba 'cq 
.oE avoH 



-3 



.o.a 



•OBlq ne3ffl:t «v-ri ee3BS>tonl 'isluositosqe tsora oriT .1291 bns 0091 



.\aJXiuno saj xc 



nesiej, avan 3" on ajLucr 
noJ 



-iBi 13.11 a©easioal 9riT 

^-sw :tl ,j-'>«.'> ' . Til anal 



<<JX tr- I f:' • • 



,v' uv-.'.;. i.£jr.i jcar^"""-^ 






od^ 






1911 


289 


1921 


3S^ 


1926 


358 


1931 


331 


1936 


376 



1^ 

completed before the era of power machinery began. As a 
result, no such spectacular Increases in farm sizes took place 
there as In the Prairie Provinces of Canada. Thus, as may be 
seen in Table V, the average size of farms in the wheat-growing 
area of the United States increased by only 9.55^ while that in 
Canada increased by 30.1ji between 1910 and 1935. 

TABLE V [ -5 

Average Area of Farms in Acres 

West-North-Central Area Prairie Provinces 
in the United States pf Canada 

1910 209.6 

1920 23l+.lf 

1925 22 3.2 

1930 238.6 

1935 231.lf 

It say V- Sources C.¥», Wri^t, "Economic History 
of the United States", and Quinquennial Census of the 
Trairie Provinces. 

As farms In Canada have grown larger, the 

"degree" of mechanisation per farm has increased. Larger 

farms, in other words, generally have shown a higher ratio 

of machinery and equipment to tdtal capital and labour than 

smaller farms. 

*'*• Certain aspects of farm organization change as size of 
farm increases and result in an increased efficiency 
that contributes to the larger financial returns 
obtained on these fgrras. The ratio of capital to labour 
and, particularly the ratio of farm machinery to labour, 
is significant In this regard, reflecting an uneconomic 
substitution of labour for capital on the smaller 
units. (2) 

The figures for the Province of Saskatchewan, shown in Table 

VI, illustrate the increase in the ratio of machinery to total 

capital which has accompanied the Increasing size of farms. 



^1 



eSf;' 





V_ 




esioA 


nl BrBis*? "^o safA »^fi7»vA 




■ ^£••1'^ 


8e_.. . 




8?£ 


as^x S.fSS 


oiex 



.33cinJ:YOtc5 axtcxBTl 
erij ,i«>gTjpr nv/oii! sTo^-f r-cenEO rl snots'* s^ 

csrfd' iL'odal- fnp Ii?i.tcTPo Xetb:f g;J inesrotupe brtB YTsnlffoptr "io 

.erriel loiircre 
lo esle SE ©snerfo ncl^ssines'io misl "io Ejoeqse nle;tvfeO 

tuodBl oJ iRa/quo lo olJ-Bi .etrnsl eesrfit no fcsnlBd^cTo 

- B.rfl no XsJlqeo lot itfodcX lo cioi^uiliBduz 

•XdfiT nl nworie ,new©rlo:re'/eB3 lo ©onlvoi*? »ri:f lol esiugll sifT 
lB*ot o? x'rr'Cif'-'or'r Ic ol;Jp*r i?rf;+ r .*• fr-BOTOxTl ndf s.'tra^'girlll .TV 



155 

It might be remarked that a similar increase is found if th« 
figures for all of Canada are examined. 







TABLE VI 








Saskatchewan 




Census 


Tot. Implts. 


Average per 


Tot. Pan 


Year 


and Mach. 


Farm 


CaDital 


a 


$,000. 




$,000. 


1901 


3,830 


$289 


M+,i+60 


193^1 


57,5^0 


606 


832,810 


1916 


88,9^ 


855 


l,105,>+70 


Jil921 


176,680 


1,U79 


1,650,070 


1926 


169,530 


l,'+39 


l,3»+3,360 


1931 


185,510 


1,359 


1,272,660 


1936 
^ Wl 


131,095 


921 


1,023,099 


11+2, 75H' 


1,029 


896,013 


19^6 


223,1+62 


1,779 


1,230,901 



as i Tot. Cap 



8.7 


6.9 


8.0 


10.7 


12.6 


lif.6 


12o8 


15.9 


18.2 



Source: Quinquennial Census of the 
Prairie Provinces. 



It may be seen in the table that, during the twenty 

years from 1911 to 1931, the farm machinery and equipment of 

sale. V. 
the province more than trebled in value, and the value per 

farm increased from $606 to $1,359. In 1911, the value of 
machinery and equipment was 6.9^ of the total farm capital, 
whereas in 1931, the proportion had Increased to 1^'«6^. 
Efforts by farmers during ths expression to stretch out the 
life of old Implements resulted in a drop in the proportion 
of implements to total capital by 1936 but increases character- 
ised the next decade, h 

Withthis brief background of the broad outlines of 
growth during the period, we now turn to the story of the 
development of the implement industry after I89O. 









;.;uu,i. 



9.8 p^-^. ot5,£ lOQi 

0.8 ." cv.^ ' ' ^^ oIPI 



lo *n9ffiqlt/p9 &n« xisnlrfosm miel sri* el£9i ot 11^1 moil eSBO^ 

noi^ioqotq ori* nl qoif) e n/ rje^-tltrceT &;tnc " bio lo elll 

to aeniiaL-o bgoic ©rf^ '>o ftni/cLjiX'nfld teiicf eiriJdcf^u 

dil* 1:o xnots 9(ii oS oawzf won t*w fboir^q »cli '^nliub ri;two^8 



156 
II. The Formation of the Massey-Harrls Company 

Declining Dependence on t he A merican Industry 

Even before the Canadian Pacific had opened the way 
Into Western Canada, the Canadian ImnleTnent ladustry shoved 
signs of appr^ohlng maturity. Less reLslance was being placed 
on American designs as sonse Canadian companies, becoming 
stronger financially, exhibited a rcaasure of the Inventive 
ability which the American Industry had supplied throughout 
the nineteenth century. Even during the period of the early 
development of the binder, signs of the new independence were 
beginning to appear. Before moving to Toronto from Ne^^castle 
in 1880, the Massey Company had taken out the first Canadian 
patent on a wire binder which, thiough never produced for : 
sale, Was indicative of the new spirit -^ , 



The Harris Company, however, led the way among the 
Canadian implement makers in pioneering innovations. Inspect- 
ion of Canadian patent records for the decade of the eighties 
reveals that A. Harris, Son and Company of Brantford was one 
of the most frequent appiicants for patents. Among the more 
Important of Harris's inventions during the period was the 
Open-End Binder, which the company constructed for the English 
market around I89O. This machine was the most Important 
immediate factor leading to the amalgamation of the Massey and 
Harris firms in the following year. With this amalgamation, 
freedom from the long-standing reliance on American Initiative 
became virtually complete. 



gfijpooec' jEs.fncqnioo nsi ^p^g^ smoe es exiglesb neo-tiQicA no 

©ipvr -a--;'r,r-n''-^'^'''rr ^ '..--n rr't ^r ^^f^^?. ,T'-,brld ^cii 'to rtnfjffiqclsvsb 
©I^e«,ows». cjoiI o:rnc'io'i' oi giiivcrn eic':?:- .'TBeqqE oo sninniaed 

'iiiqe wen &iii 'io sviiBOljani eew ,6i£e 

Bito ej3V L iix ao \. fcne no2 ,GiTJ;c>H .A ^Ari:f eisevsi 

•lom ©113^^ . . :.I io^ 8:, /i *eoa 9rfd' lo 

;fnp,;tioqcil d-eoffl erf;t ecw tsnidonn eirlT ,0^8i b^uo^s :tf>::lT;Ba3 
bffE vsr^eM notif cr'P'jJIanTR odl c.i -nffnnf Tr-.-^r-'"'- '-,-^- ^^'^t^-'^ 

wiJutstttt naoliemA no eoneiiai anibnei^e-snol •di rco'il nrobssil 



157 
Ma3 3ev and Harris Merge; May. 1891 

The previous chapter, discussing binder production 

in C?jnada, described the vigorous binder competition which 

arose betveen the Massey and the Harris firms In the 1880' s. 

It Is difficult to say how long this type of competition 

vould have persisted had it not been for the technological 

victory of the Harris firm In its Open-End Binder. The 

success of this machine in the English harvest of I89O 

immediately bade fair to wipe out the lead which the Massey 

firm had traditionally maintained In foreign markets. The 

main advantage of the Open-End Binder was that it would cut 

grain with any length of stra^'. 

, ,; The mechanical difference between the original "closed 
back" and the succeeding "open-end" binder now seems 
trivial. In the former, the length of straw was limited 
by t>^.? width of the elevator, which was determined by 
the backboard, which protected the ends of the cut 
stalks of grain from becoming entangled in the operating 
mechanisin. In the open-end binder the backboard was 
eliminated by ft rearrangement of ths chain drive '^vhich 
operated the delivery and elevator canvases and by the 
introduction of the "floating elevator", a device which 
permitted the binder to handle crops varying from ten 
to seventy bushels to the acre. (h) 

This feature was of little importance in the United States 

or Canada where straw was regarded as of little value. 

Abraad, hovever, the situation was different and the machine 

gained immediate and widespread acceptance, much to the 

concern of the Massey interests. 

Thus, though the strain imposed by wasteful competition 
in the home market had doubtless laid the foundation, It was 
the success of the Harris Company abroad that gave urgency to 



v^x 



...jt:^ 



•i .tJ^itH tJi^iMSi Ifflg T»tfaW 



rfolrfvf nol*l*9<iffloo i^bnid ei/oiogiv odi bt*dl'ioeet' ,«b»neD fll 
.E in} firil"^ ©ff:t ^^B Y- ' nftovisd sroib 

ncU""- - r- .: airi;t gnol won \, ^ rr,^ ^^^'> ? r> p- :H 

0081 la •■• -"Ten' tlslIjjnS -i-"- ^' enlrfo?- r'-r^t^'^r ."■•>-;■• r,P 

f- !• ,-,-' .i v; •;.?eio'S ftjt &«olfl*n.tBm •yl.f^no-tit.^bei* barf mill 
ci-j biuGV it Jiio^ ' •' "■-■»''^f f='r'3-ff©qO 9ff* "lo sa<::fnr>vbs nlerc 

bflfe ' 

Sri;) /: '-^IL 1o rbw eii/^B©! eiriT 

•rid o 

ZfK ' ' 'cT«Tfll'fl ATI Off (fcrf't IV f 



158 

the discussions CKoncernlng merger vhlch began In the 
following soring. The Massey Company appears to have 
Initiated the talks, which continued for two months, and 
culminated in the announcement of the formation of the 
Ma?:sey-Harris Company in May, 1891. 

The plan of merger called for the Issuance by the 
new company of 27,000 shares of $100. par value stock. These 
went to the merging companies in return for physical assets, 
patents and good will: l6,785 for the Massey interests and 
10,215 for Harris. The company was authorized to issue 
50,000 such shares. No new capital entered the business at 
the time of the merger. Controlling ownership of the new 
firm did not pass from the hands of the two families 
involved before the merger ^^\ 

Patterson and Wisner Merge; August, 1891 

The original amalgamation between Massey and Harris 
was only a beginning. Alarmed by the threat to their own 
welfare posed by this unexpected merger, two of the former 
competitors of the Massey and Harris firms Immediately sought 
to protect themselves through similar action. Three months 
after the Massey-Harrls announcement, came news of a second 
amalgamation, this time between the Patterson and Brother 
Company, of Woodstock, and J.O. Wisner Son and Company of 
Brantford. 

The Patterson Company, it will be recalled, had been 



8? I 

edi ill i:B8»d riolriv igsieo gnJCnieonoso anolEsuoclb 6.i3 
•v«ri o; ^^qe. xf^BqaoO x9tttH ecil .gnliqa snlwollol 

■ \<S 9c. i 9Ai lot bsilBO legisin lo nslq ^ 

• T .r-fcoiB ©o-lftv IS I '5o ESTerie 000, VS lo vn^qaroo w©a 

,e3 ..,rr,-. leo-tiSYriq lol n'ljjts'i al selnsqioco sfliai^m '^^'-^ .--^ ■tn«iv 

fene ecteftietnJ! x«s«sM ari^i lol ^8^,cil :II2v ^c'■•'•, '^is sinvjieq 

©irapl o^ ^«sj' . asw - .eitiBK tot ^IS,OI 

w»fl •ri* lo qirtcisrr 'lloti: :•;?' ©rid" "o erciS edv 

9di to ovJ ,Tea'i«»in fi'^^fooqxonw ftlriJ >(d beeoq •ictlBW 

:t ly eli-xflll 6ns '^e^eeM »»-i:^ to eio^l^sqaoo 

firii'nc.. «w.xfll" .noldoe nallecliB ffgi/otri;^ ef»vI©Rj"'9rf:J' j'oe^tonq oit 

•i»ff:toia bti9. nc« srf;t ; J ztAi ^aoli&r.e.'^iiimB 

. biot^nete 



159 

successful In establishing American connections shortly after 
1850. By 1890 the company was producing the Johnston Self- 
Binder, an original product of the Johnston Harvester Comp- 
any of Batavia, N.Y., along with a wide range of both tillage 
and harvesting implements which had earned for it the reput- 
ation of being one of the world's first "full- line" producers. 
Wlsner, on the other hand, was one of the more flourishing 
of the smaller companies in the field, concentrating on 
seeding and cultivating machinery. At the time of the 
amalgamation, the Wisner plant at Brantford was employing over 
100 men and turning out more than 3»000 implements annually. 

Massey-Harris and Patterson-Wisner Merge; December, 1891 

p. Even yet the outbreak of consolidation had not 
run its course. As in the case of the original Massey-Harris 
merger, competition now became the motivating factor for 
further concentration. The new Patterson-Wisner Company 
held promise of becoming a formidable rival of Massey-Harris. 
Though amaller in size, the Patterson-Wisner Company had one 
Important competitive advantage in that it could offer to the 
farmer a range of tillage Implements as well as of harvesting 
implements. P§ircelving in its rival's success the advantages 
of full-line production, the Massey-Harris Company had ample 
reason for wishing to bring this diversified company under its 
control. Before the year was out, therefore, came another 
announcement, this time of the merger of the Massey-Harris 
and the Patterson-Wisner Companies. Formalized in December, 



0?i 

.\ij.£iijnriG EJiiciiSi-j.- <i, nsrj --rioii: jjjo ^uxirzjjj ons noffi 001 
If'^I .^ ^0" ; "^aic ; -fipeigt^f J e*! bns eJtnBH-y ?->eaBM 

icJ io;?osl sai^B^r sxnpoed won xnolJid'aqmoo jieatero 

•no bfirf xnsqmov.' ipnalw-noei^tfrfB*! ©riJ ,©sle nt •lellBBie riai/orfT 

inevbs •ri;^ ee^roxje e'lsvii eil nl antvleoie*! .e;fn' i 

©IqaiB barf x. •¥. ^-^i ^r.oif'^u'-orcf *>r. f I -.^ T ir^ Jo 

ir^i^Joas '. '-^ToJoi'-^'iii ,iwo a«w iBex eriiJ snolefl .loiJnoo 

eiiiBH-x^sBsM ©flc^ lo t^giwHT ©ri^ 1o ©ntJ Et-^l ,;tneT*r'nrrrir'nB 



160 

1891, this agreement called for the merging of the Identity 
of the smaller firm In that of the larger. The Massey-Harrls 
Company issued ^+,236 of its remaining $100 par value stocV ''' 
to the owners of the Patterson Company, and 718 shares to 
the Wisner group. 

Comparison of the Massey-Harrls Amalgamat ion with the McCormlck- 
Deering 



Even though the negotiations were precipitated by 
the technological victory of the smaller firm, the Massey- 



K» f 



Harris merger was made primarily in order to eliminate waste- 
ful competition in a standardised product. In addition, the 
amount of rearrangement of plant facilities which immediately 
followed the amalgamation suggests that potential savings in 
production casts were an Important factor considered through- 
out the negotiations. There is no substantiating evidence, 
but it is quite possible too that the movement begun In the 
United States in 1890 with a view to merging all of the 
leading harvesting machinery producers, was a factor prompting 
the leading producers in Canada to unite in their own defence^ 
The American movement, it will be recalled, resulted in the 
incorporation in Illinois of the short-lived American Harvester 
Company in November, 1890. 

(a) Legal Aspects : 

Our present purpose Is to contrast the experience 
of the Massey-Harrls Company and International Harvester 
Company in the years following their formations. Contrary 



X^liii&bl. 6»ri:} to aniaiem ?*rfd' toI .osii.BO anaajsaigB einj ^I'-^'dl 
oj EsierJc cl\" pae «\nfiCi3o-' ^lC^•ISJJ£^» sri? i.c ei?nwo snj oj 

-X^eeaM arcs Bdi lo xio^oJt^ iBolgoXonrfos* ©ff:^ 

Xl»^e X itflBlq lo ::jfif:its??'i lo ^auotBB 

-a§i:c-:aj" D3i3,oj.2no': tojobi jncjioq.i'x ns si©w ejeco noijci/coaq 
.?o; ^i;tnB;fedL'E on e1 »-r .enolJeJitoaen orf;t Jiro 

gniiqtHOtcf io;tofit 8 saw ,e iq X''' tesvifirf sn^'beel 

•ri^ at t'c-j-LLLi^-i ^bs^^BO-Bz Qo ij..;.v ,.'■■'- neoiTBitA sri'i 

isi^b^vtbH np.oIi»aA Mvil-^fiorie «ri* ^o ttonllll nt nol&BTcqioont 

i©:^Eev ttoiiBni&^aJ ^^e xni«itDoO eiirtBH-xsceaM ©rfj- lo 

'BTio^ rLit^cii Jiaivollot eijrsx «rf:t nl ynRrrfFcD 



161 

to the experience of the International Harvester Company, 
the Massey-Harris Company was never formally charged with 
contravention of anti-trust le|lslatlon. This is not entirely 
surprising since the Canadian company never did have as lagge 
a share of the Canadian market as International had of the 
American market at its inception. In the year preceding the 
Canadian merger, the Massey and Harris firms together accounted 

#033 slightly over half of the sales in Canada, exclusive of 

(7) 
imports ^'\ In the decade following the merger, the new 

company never captured more than (>0% of the total Canadian 

market, exclusive of imports, These, it will be recalled, are 

much lower than the corresponding figures for International 

Harvester. 

But the different legal experience of the two companies 

is probably to be explained chiefly by the different legislative 

approaches to the problem of monopoly taken in Canada and the 

United States. The Massey-Harris merger took place only two 

years after the passage of the first combinations law in 

Canada, a law which in itself was quite ineffective , largely 

because of the inclusion of the words "unduly" and "unlawfully" 

In its text. The Canadian law remained ineffective throughout 

the decade of the nineties, even though two months after the 

Massey and Harris firms had united, the sponsor of the law 

complained on the floor of the House of Commons that 

We have some reason to find fault with the Attorneys 
General of the various provinces for not having seen fit 
to enforce the law as it stands against those who are 
breaking it. (9) 



Xl©ii;Jne ion el Blt^l .noli&l&l^ol Szuti'liciE "io noJc:rn«vei:fnoo 

•SSel Sfi '^vsri "^^^"^ ■^'^v^n v;neqi!ioo naJ:''^-<'»p- "'^^ er^alE :5n.>.licri«8 

9(ii tc bfiri ienuiJBn'iecfnl fee ;)e>fT6Bi nitbBue,^ cti.\^ io e>iBna r 

©ri;t p^nibsostq i^ex ©rf^^ nl .noi*q«onI c;ri :fB d-«>{iBm aBoltsmk 

•IB ,b9ilB0«i ©d Iiiw #i ,ee«d7 ,eJ;oq£ni lo evJtduioxs ,ie^iflfl5 
lenotitsnis^nl tof Bftiugll gnlbnoqadiioo »ri;t nsri* mwol riowai 

eelneqinoo ow;^ 9ri;t to aone-t-K-xtx© laa©! i^neiel'i.tb &di iutl 

5-neT.- v;d "s£ll©lf(o bsn^elqx© ©cf o* xldFCfoiq el 

©fU bns : ' nl flffjis;t \:I< lo mnldoiq &{<J ci BPtrioBOiqqe 

ow:^ Xlfio ©o«iq >(oo:t le^'iem Bi'inBH-TjscscM ©riT .S(?iBiB be.llnD 

ni "aI eflol;ffinIdBioo d^Btil ©ri^ **© ♦gsBesq orl:t^ lecf^B eib©x 

"xIIl i'vL^uiu" bfiB "xlyftfitj** ebiow 9rf.+ Jo ac Izml on I »rii 1o ©exi63©d 

cfooriswo'ifW &viio©'Jlenl fc' ; wjrI np ©riT .ix9i eSl rtf 

»ri:f rt9*tB 8rf+r!<"« ow:t r(«>f,fr>rf# rf©v» ^BPitinafr^ '^rii "^o ehBO&h ©r(* 

is'ij enoaimoO "^c ©euoH ©ritf Ifo looll 9di no bsnislqffloo 



L+A ©rfct rittw .tfijpl fin tit oi^ nt'iRp^f «s>raoe ©verf ©W 



(^^ 



^"4 r\ •» /- , :- M r* 



162 

The most widely held opinion was that convictions 
would be impossible under the law not (as In the United States) 
because of legal Interpretation but because of the wording of 
the law Itself. At no time does a charge against the Massey- 
Harris Company appear even to have been contemplated. In the 
meantime, as noted elsewhere, the company was selling an increas- 
ingly large portion of its output in export markets, a fact 
which presumably rendered it less vulnerable to charges of 
restraining trade in Canada. Eventually in 1903, the opening 
of a large plant in Canada by International Harvester removed 
Massey-Harris further than ever from the shadow of the combines 
legislation. 

(b) Technical Aspects 

The problems of technical integration of formerly 
competing firms were less complicated for the Massey-Harris 
Company than for its American counterpart. Massey-Harris had 
made no secret acquisitions nor was any atte^npt made to continue 
marketing machines formerly in direct competition. The Toronto 
Light Binder was dropped, and the Open-End Binder was improved 
for sale under the Massey-Harris name. 

It will be recalled that much of the difficulty of 
Integrating the component firms of the International Harvester 
Company into a unit sprang from the close family control and 
the Jealousies srislng therefrom. Comparable difficulties were 
not encountered by the Canadian firm, even though the Massey 
Company had been entirely family-owned, and the ownership of 



sax 

Ic •■' JSBel ;ti hsiabnsl tq rfoJ-iiw 

cX' ^ i?89l ?T9W sfflii'i gni^-^nioo 



1** :*^ w e '^ 



163 

the Harris Company had centred vlthln the Harris family and 
a few top executives of the Company ^^^\ Several reasons 
might be advanced to explain the difference. Even the inclus- 
ion of the two principal family names in that of the new 
company may have been an appeasing factor. No voting trust 
was set up in the Massey-Harris Company similar to that in 
the American company and consequently family interests were 

not placed in such direct opposition. Although the Harris 

t 
Company was the snaller of the two principal companies, the 

competitive advantage which Harris possessed in the Open-End 

Binder may explain to some extent the allotting of the three 

top executive positions in the new company (with the exception 

of president) to former Harris men. Hart Massey became 

1 

president and Lyman Melvin Jones, J. Kerr Osborne and Joseph 

Shenstone became respectively general manager, vice-president 
and secretary. 

As with International Harvester, one of the first 
phases of the integration problem to be tackled was that of 
extending the line of products to include a year-round variety. 
Since the Massey-Harris line was particularly deficient in till- 
age implements, the first step was to acquire a hO% interest 
in the Verity Plow Company of Exeter, Ontario, Including the 
exclusive right to market Verity products throughout the 
world. As part of the general plan to specialise plant prod- 
uction, the Verity operations were moved to the old Wisner 
plant at 3rantfcrd, the machinery of which had been moved to the 
Toronto plant Itimediately after amalgamation. Other acquisit- 
ions with a similar intent were those of the Corbin Disc 



wen &i1* io liBni nl tsffisii x^-^'^^fi^ ifiqio/iliq cwo opiu ic nci 
cfeiit^f - r; ne n»etf ©verf xbb xnaqmoo 

Bdi :.h .noliti vt9©il& none n> : 

.T'if _ r^c-l-i .ii'^n": f .3T tor' ^''■rr rvr"+ r,rfrt **ri '^•^^TnrrR «>rfi' pc',.- Y'^"'''f^'^ 

riqeeoL bne emocfeO iieTi .1. ^ssnoT. nivI^M nsff-^J bus tneblzeiq 

-boiq ^nalq »«llBlo»qe o^ nrJq lB"r«»r!«8 »ri* to J'xcq eA .ftliow 
-ittelupOB Tftr/ctO .noi*Bn'33l8iPB i»J1b xI»;telb?OTir.t *n£iq o^tnoioT 



I6»f 

Harro^v Works of Prescott In I893, the Bain Wagon Company of 
Brantford in 1895 ( which operations were subsequently rnoved 
tb Woodstock), and a plant of the Kemp Manure Spreader Company 
In Stratford in 190»+ ^"^^^ 

(c) Eqonomio Aspects 

It will be recalled ^^^ that one of the first 
difficulties encountered by the International Harvester 
Company arose from the fall in binder sales during the first 
years of the company's existence, largely as a result of 
"overselling" during the competitive period. In addition 
to having to face a similar problem, the new Massey-Harrls 
Company came into being In the midst of a lingering depress- 
ion, which had been interrupted only by the brief trade revival 
which had accompanied the introduction of the National Policy 
and the commencement of the Canadian Pacific Railway ^^3\ 
The depression reached its nadir In the first years after 
amalgamation. Misgivings were arising concerning the desir- 
ability of the National Policy and in the Dominion election 
which preceded by two months the formation of the Massey-Harrls 
Company, the Liberals and agrarian interests had found much 
support for a policy of unrestricted reciprocity. Reflection 
of the depressed conditions, at least during the first four 
years of the company,' s existence, is seen In the drop of Its 
sales from $3,600,000 in 1892 steadily each year to .$2,821,000 

In 1895. 

it- 
Amid such unpromising economic circumstances the 

Massey-Harrls Company might have been expected to emerage as 



4bl 

fc ■ ' lA ^'^' 

•rii* lo cioliouboticil 9rii bslneqiuoooB bed rioiriw 

.••c-t/ ygwrXfgjT pnif>e<? n»Jf>BneO ecit I'o :fn6rn«!:in^m'^oo ©ricf bne 

■^-■' ij iix lib/ftn eji bon'OBr... ... x-^ti^-i.. '-^ •rfT 

... f.-.rTr.TT_^^ggg;- ^f, ,..-' ,. r - 5.rf;fflotn owd ifri bsbeosiq rioiriw 

cioam tnucl b&ii ml iitiJ 'j/s'i^-is ^r!fl Glj,i9;fiJ ©rid ,y. 

it- .v^looiqloei b(?;tof'id"«9'ina lo xo-^J^oQ c 'lo'i I'loqqi/e 

000,1 oj iBB\ i^OB^ ■^I^hee.te SP8l ni OCO^0O^,CJ moil eelBa 

*B e o;j b(ftjo«»qx« neM «»v«ri ctrigin: ^nuqmoO eliieH-xeeBBM 



165 

one of X the strongest remaining champions of protection. 

Curiously enough, and eontr^ry to the sentiment shared by 

the rest of the Industry, the company did no such thing. 

Indeed, many public statemonts which Massey-Harris made on 

the sub,1ect in succeeding yars denoted either indifference 

to the tariff or actual support for the idea of free trade. 

On the eve of the merger, W.E.H. Massey, then vice-president 

of the Massey Manufacturing Company, wrote in a letter to 

the Canadian Manufa otur pr: 

As to the question of tariff, our views may not coincide 
with yours; and we naturally look at it from a selfish 
standpoint. We firmly believe that the time has come 
when Reciprocity (though we do not want it), or Free 
Trade (which we would much prefer), would not be detri- 
mental to our business; in fact, we are of the opinion 
that the latter would give a greater impetus. (1^) 

3 

Although Mr. Massey' s attitude in 1890 was by no 

means consistently upheld by the Massey-Harris Company In 

succeeding decades, it is true that the company showed less 

concern over tariff matters than other Canadian companies. 

Politically speaking, this may have resulted partly from the 

Liberal background of both the Massey and the Harris families. 

Economically, it is to be explained by the company's increasing 

export trad^ and the relatively large-volume production which 

exports made possible. The company didn't resent the tariff; 

It was simply indifferent about it. In 1920, Thomas Flndley, 

president of the company, stated before the Tariff Commission, 

the Massey-Iiarris Company could, on account of its 
resources and foreign trade, withstand the effect of 
tariff remov.Tl — provided that their raw material 
were also free — but the 100 other implement manufact- 
urers in Canada who had no foreign trade would be 
destroyed. (15) 



, r! f' i ,1 '"1 * * f TfT 



•*, 



^C^X 



Jq Enof'^fTpri'"- T.nirf crpi ;+p«*i?rfr>T:tr *-fff « "^o ^nn 



^-^ti on J oj TjiP.iJnt. -irra v 5^i-' ---•'-' - 

il to «»M erfj- tot it-xocrque Ir oit 

\ 

• e fl moil it tB Tlcol xllBtu- dUv 

r fo»wods Y^eqiBoo art* ^«ri;^ ©^1:.+ si *1 ,8f ibssoox/e 

':-ix;2^' sffi si;n; " ' ■ ' 

♦ B91I1 rtifiH erf? bas x9P2f«M ftri;f rfJotJ lo hnuo': 

iltjxxiw flolj;:;!.'; - - .ei o; 

jllliB* 91 t*nbXb - 

BJJt lo j e*"n:r,>i-Yfte80(l Si'j 

J0C ««11 oeift «»T9W 

.P. 



166 



T 



9 V JW 



To the subject of the tariff, on whioh these "100 
other companies", according to Mr. Find ley, vere so completely 
dependent, we now turn our attention. 



J 



III. Tariff Trends. 1390-19^0 



5 The forty year period from 1890 to 1930 brought a 
reversal of the upward trend which had characteriaed tha 
Implement tariff since I8V7., ,, In this respect, the tariff 
on farm machinery contrasts With the level of the tariff on 
all goods, which "from 1879 to 1930 vas comparatively stable" ^^^l 
The reversed trend in implements follov/ed the rise of sect^. 
ional pressures in which organized farm groups, vigorously 
opposing the tariff, won out over the implement manufacturers 

who, in the main, pressed the government for its retention. 

r 

The Appearance of Organized Agrarian Opposition 






The National Policy tariff on agricultural Implements, 
still in effect at the time of the Massey-Harrls amalgamation, 
had been protested by farm groups for some years. As early 
as 1883 there had been included in the first declaration of 
rights of the Manitoba and Northwest Farmers' Protective 
Association a demand for the removal of duties on farm Imple- 
ments ^^7), Although this organisation fell apart after 
four years its action was indicative of farm sentiment. 
Such sentiment was strongest In Western Canada since the 
burden of the tariff fell most heavily on that region. In 



nn^t^ c,^..-.-M ,tr.rrt,.T rir ^tJlif'i^ ^^i "^0 irisrcri.;? '^rf:f oT 

,aclin»t&B 1U0 atv:i won ew ^inabaeq^b 



0fgl-0g8i Tefc"g't^ l^iigT .III 

B id-guovid Of^r r.:t 0P8I fflc^*^ •'olTsq ie9\; ij^tio^ ©rfT 

erf:t b«Ei'is.g&H'i£iiD hsri rioinw bn©it biBwqu sri* lo iBaif^vci 
fiii&i 9di (Crosqee-i elrl;f nl .^4^81 sonle ^IIib;^ ;tn©a;»Iqml 

5^-'-''" side Jo \.isvl;tfi'isujjoo eew u^Vl o^ vvol ooil" noin'.-; ,eooc 

-^■092 lo eEli erfd- bswoIIoT: sd-flecrjIqiEi ni bnsii baEisvai sriT 

viBiuioBlunAm insaelqal sriJ -isvo d-uo now f'l'ti'iBi eriJ sniaoqqo 
.nol;J-n9;f9i acM io^ ^tnenmsvos 9rf;t fcesB^iq ««isin 9rfd- nl ,oriw 

, gd^nefTfsiqfDi iBiuiluoli-^e no lilies yolIoSl lenoilsW ar(T 

yIiB9 eii .EiB&Y 9ffl08 lo'i eqijoia fiJiel x<^ Lei^eei'O'iq nfe.eci bsd 
■Jo nolitBiBloeb :tciil ©ri* nl bebuloat ne»d bBff •Teri;t £881 Gb 

-elqffli Kiel no esIJXjt ':o xsvomei 9iij 'loi ;:jn8iii9D s noxJe-ooeeA 

(vr) 
19^^0 iieqB IleJ nol*«elnB3io eldi d^uodSlh .^^ ^ eitnem 

.+n'^:mJ-:tn<5B pitb^ "to evlitp'^l^nt eew nol:tos Bil siesx iwol 

©rM 9oniB BhRfiB'J nifljRpv^i nx ji;--;3no'':f ^^ -■:■ .fa©ri:tn9e nouu 

nl .fiolg»i ^Btii no x-C-fvo-^ri itsom Ilet I^Iib^ »di 1o riBbiud 



167 

CHART IL 



/OO YEARS OF IMPLEMENT TARffF HISTORY IN CANAW^ 




168 

1895-6, Manitoba and the Territories were the source of 92% 
of the tariff collected on blndf?rs, and on all implenienta 
taken together, of 77. 65^. 

Increased solidarity in teriff matters was prompted 
iu 

among western farmers as a result of the rise of Western 
Canada as the major export centre of the country. Throughout 
the West opposition to the implement tariff in particular was 
Intensified by (a) the growing awareneiss among farmers that 
implement prices were higher in Canada than in the United 
States (a result partly of the vigorous price competition in 
the latter country preceding the McCormick-Deering amalgamat- 
ion in 1903), (b) the frequently-heard charge that Canadian- 
made implements were selling at lower prices aboad than at 
home v-^o'^ a^d (c) the trend toward concentration in the 
implement industry, of which the Massey-Harris merger was 
the chief manifestation. 

The appearance of farm opposition to the tariff 
after I89O coincided with a tendency on the part of the 
Conseraative government toward modification of the National 
Policy itself. Although belief in the protective principles 
of the policy were retained, mere attention began to be paid 
by the tariff-makers to the burden of the tariff on the 
consumer. In the case of most commodities, maintenance of 
protection was sought "not at the expense of the export indust- 
ries, but at the expense of the Dominion treasury" ^^^K 
This was accomplished through use of such devices as shifts 



tSneaoiqmi 11b no 5nB ,2i!^5nld no bBi09lloo "ittisi Brii to 

.J^d.^^ "io ^leri^sao^t n»7(s;t 

bed-qmoiq eew 87e;t:fBP llliecf ni Tc:tlnEbll08 b»86«ionI 

nT-tp.sW to eF.*T orf.t ^o .tluEoi a EB ETpmEl msj'eftw snofflB 
;fuofiai;oi;lT .^-iJiiuoo ©iiJ' Ic STJnoo Jioqxs aotJBXC 9r;v cr ebenftO 
e«w "xeli/oi^ticq nl ^Itisi ^tnsmelqicl eri* o* nol:tleoqqo *8»W eri* 

b&^ilnV »ri:t nJt nsricr Bf^enfiO ni isriglrf €»i©w esoiiq Jnemalquil 

til aotit&Bqmoo 9oiiq suoioaiv erf* to ylJiBq iluseii b) 8©rfp:t8 

-^tsmsaXeme snlissQ-^folmioDoK °r(:<^ ^nJtb»o©^q xiiduo^ iB:ttBl orii 

-nslbarfBO *sri:f egasrio bissri-^Unoupeit ©ri* (d) ,({^0^1 al not 

iB ncrfc^ bBOdfi eeoliq iswol ;te gnlllea eiew e^fnemelqiDl •£>Bn 

eri:f nl aot^Biineonoo biB^oi &n»i;t 9ri;t (o) fans » ©mori 

EBW isgisin elneK-xcEEBM sr(;t riolriw to ,Yilai;&ni ;tn©ffl©Iqml 

.noJt;fB;^e9tinBm telrio ©ri* 

ttiiB* ©ri^ o* noJt^ieoqqo mipl to ©on^iasqqB sffT 

9rf:t to itTECT 9rl:t no \;onsf-nG»:t b rl;tfw faeblnn.^oo OrSi is:ttB 

IfinoiJ^Bi* ©nj iQ nolJi-.ol'ilbosn Diewo:?' ^fneramev'^s ©vlJesisenoO 

eslqionliq evl;toe;toiq ©rid^ nl tellecf ri§i;ori;tIA .tl©e*l YoJ^-tCI 

ftlenr ©cf o:} nB9©cf nGJ-*n©J;tB ©iobt -honlei©! ©lew yo-tJ^oq ©r(:t to 

©fi;t no ttiiflj ofi;t to nefSixjo ©ri* o^ Bi©5iBni-ttiip:t eril yd 

lo ©onsno^n/sm ,e9iJibofninoo ;teom to ©bbo ocii nl .Tjraup.noo 

• :tetfr>nl ;t'ioqx?i orfrt to «»ar!©nyo sd;t j-e ;Jon** irf^i/oe eew nr ^-^o©d'o^q 

. ^ ' "■>c'tx/eijs-tJ noInlBioa ©ri;t to seneqx© sdi its :ri/cl ,8s1t 

ecftlffe SB 89oiv9fa ffoiJE to ©eu rfgt/oirfct fa©rf8lIqmoooB bbw eirfT 



169 

from specific to ad valorem duties (a recognition of the 
increased burden of specific duties in the years of falling 
prices), the granting of drawbacks, and the sacrifice of 
duties on materials and machine parts of a class not made 
In Canada. 

In the case of farm implements, however, a definite 
shift away from the protective principle became evident after 
1890. The downward trend began in 189*+ after Dalton McCarthy 
had Warned the Conservatives in Parliament of the strength 
of farm opposition to the tariff. A drlect attempt was made 
In that year to conciliate agrarians as the Conservative 
government selected farm Implements for the only major tariff 
reduction of the year. In 189^, the duty was substantially 
lowered from 35J^ to 20J{. McCarthy, an independent federal 
member from North Slmcoe, had championed the farmers* views 
throughout the debate. 

•i 

Liberals Continue Protection after I896 

After the return of the Liberals to power in I896, 
many expected to see severe limitations put on the operation 
of National Policy. Despite their earlier criticism of high 
tariffs, however, the Liberals maintained a general protect- 
ionist policy for the next ten years. A travelling tariff 
commission was appointed in I896, which solicited tariff 
views from Interested organisations as far west as Winnipeg, 
but only a few relatively unimportant downward adjustments 



e^i 



stfTi- ^.r>v.- .+4: ?j-Ti .1:liis* 9ri7 o:t no'-:tiaoaqo naial ^o 

'-v-: rev r, ©d'air-onoo o* ib&x ierii mi 

3^'6.L ^ w ■■-. .. :i99^oi^ 9£ffliJnoO eIfli«Kf.tJ 
no ' flc d^tKj ■ ^a esc oi b n 

9T w©l B ^xto iud 



w«re mad* in 1897. "In vl«w of the diitles retained at or 
near their former levels and the enlarged application of the 
subsidy system", says McDlarmid, "the Conservatives oould 
have argued ... that the Liberals had stolen their doctrines 
and policies" , 

Even farm implements, which the Conservatives them- 
selves had reduced substantially in 189*+, were not lowered by 
the Liberals before 1907, a fact which seems specially to 
indicate the acceptance by the Liberals of National Policy 
ideals. However, the Liberals* decision not to lower the 
implement duty between I896 and I907 should be interpreted 
in the light of prevailing farm pressure with regard to the 
tariff. Actually, such pressure diminished somewhat after 

' : em 

1896 because of (a) the temporary preoccupation of Western 
farmers with grain-handling facilities around the turn of 
the century, and (b) the fact that "Eastern farmers remained 
an uncertain quantity apparently readily persuaded by the 
home market argument for tariff protection" ^21)^ j^ l3«< !!• 
Improbable, especially In the light of later events, that 
the Liberal party would have Ignored any strong farm pressure 
for tariff reductions had it existed. »«<! t*> fl? kIII- 

International Harvester Builds in Canada in 190^ 

th* f ^t «f tv*» •! 

A very important structural change in the implement 

Industry after the turn of the century, and one which lent 

support to the arguments of the protectionists, was the 



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/°^^"e©lolIoq bne 

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to ntui ©riJ bnuoiB eslitlllosl snllbnErf-nlsia tittv 8i©ffl'iel 

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.b©;t8ix© ;tl bad 8noJ::foub©i tllisJ loJ 

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9d:t asw ,2;tKlnol*o©;Jo'iq ©dJ lo E:fn9ffli/aiB ©dJ oj JioqquB 



171 

decision of the International Harvester Company to build a' 

plant at Hamilton, Ontario. The site for this plant had • 
been purchased by the Deering Company during the years of 
intense competition with McCormlck. Apparently Deering 
had hoped to gain a competitive advantage over McCormlck 
in the Canadian market by producing in Canada, but he did 
not complete this plan before the Deering firm was merged 
into the International Harvester Company. It therefore 

remained for the latter in I903 to build the plant (22)^ 

^n tr to 

The purpose of the company in doing so, after its unsuccess- 
ful attempts to acquire the Massey-Harris Company, was to 
SQve the 205^ duty on its Canadian requirements of binders. 

It ■: -i ZO ■ 

mowers and such other machines as were built especially 
for the Canadian market. In addition, the plant was intend- 
ed to produce for export to British Empire markets and to 
South American markets, where implement requirements 
resembled those in Canada -* , 

■i Starting with an original capitalization of $1 mill- 
ion, the International Harvester Company of Canada was set 
up as a fully-owned subsidiary of the parent company in Chicago, 
Capital was Increased to $10 millions in 1917 and to $15 mill- 
ions in I918. Although the Canadian company has in recent ^ 
years been granted a considerable degree of autonomy , 
the original was simply a department of the parent company 
with executive personnel resident in Chicago. Prior to 1930 ^ 
the company imported from the parent company about 50^ of its 
Canadian sales, but this has dropped to around 20J{ In the 



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lo eiB»x »rf:t anliub ^nsgoicU snliseG eri* yd bseerioiuq need 

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/^^^ *nBla Bcii bllud oi £0^1 nl teiiBl eri* lol benlBtnei 

-ee^r"'"'="tf c. . . '^ '>atrif5 nt vneamoo 9cii "io eaoqitfq erfT 

orf eaw ,\inBqn;oO eliiBii-xsseBi' »-^ silupcs oi eiqfr.eiiB Ivl 

fBi^bnid Jo zinf^m&itijpBt nBlbfinsC Bit no x*J^E» ^^ ®ff* ®VBe 

YI ? >^ ^'-■QrTPc :t^^^.n' cr^iv rr p «^n f ;-fr. RfT f-^rfio fficjz bne etswonJ 

-bned"nl eew j'ufclq erii ,noi;JIbL6 ni .JsjiiEiT. neli)BnBJ Btii lol 

o* bne e^ejitefli ©ilqina riEl^lnfi oi iioqxB tol eouboiq o* be 

:: T.TQxoT ^f-nc>t -tr't^vrqail ©leriw ,bJ©>(i.p'^ r'F.r'f'TerrA rfrtiroE 

, ^ BbBnaO nl eeoriS teldicaEoi 

'lllm it lo nol^reslIsc^laBO Isnlslio ns tiiiv snlctiectS 

*©8 rev fibenfiD lo x^fiQinoO ledgsviBH iBnol^Bme^tal erii' »nol 

^osjB^i^dD ai xneqraod Jneteq '^'^t "^'^ viBlbledcf'^' f^onvo-^IXul s ee "t' 

-Iliffi ^I| o* bnfi ^1^1 nt enolllim Oil o* fc&as&ionl 8«w I8:tlqs0 

;tneoeT nt eeri \n6qmoo nslbBnaO erfit li^^uoiiilk .81^1 at enol 

^v+'i»; xniono;t/"= ''■''' c,«>t:9«iP' «!irrf«'fef ^p^on « ^e^^pl3 ne«*cf ptsey 

Xnaqmoo ^tneiaq oiii lo dnemcf'tBqeb s \Iqaile bbw IbhIsIio eri* 

OPfl o* lotiH .osBolriO nl ^nebleei lennoeisq evltfwoexe riitvr 

riar'rrn.': -iftittip'f crf-^ rjiriT** hs^tToqrnl xnpqnioo 6>n'* 
: S. bnuoig. oi wfeqqo'ib eeri elii^ iud tSelAB nelbanBO 



172 

succeeding years. From the beginning the export business has 
amounted to between 15% and 20% of the comrany's total sales. 

The International Harvester Company of Canada 

Immediately became a serious competitor of the Massey-Harrls 

flompany In the domestic market. Although sales figures for 

the early years are difficult to obtain, It will shortly be 

seen that by the 1920' s International Harvester had captured 

y in tbi 
a larger share of the Canadian market than any other company. 

In addition to Implements, International Harvester was to 

become an important Canadian producer of trucks. In 1911 

the company purchased the Chatham Wagon Plant, in vhich 

It produced wagons to supplement its line of implements. 

In 1921 this plant was first used for the manufacture of --^ 

trucks, of which It produced about 515^ of the total content. 

Subsequently, trucks have accounted for about one-third 

of the Canadian company's total sales. 

Protectionist Campaign by the CM. A. after 1900 

In the few years during which agrarian tariff 
pressure slackened around 1900', campaigning in favour of 
protection was renewed In earnest by Canadian manufacturers. 
The intensity of the campaign increased as it became apprent 
that the Liberal government had swayed even temporarily 
from Its former anti-protectionist position. Even the 
Massey-Harrls Company, alarmed by the upward trend In imports 
of Implements around the turn of the century, lent Its active 



.89lBE iB^oi e'^cnsqapoo srf;t lo 5?0S bns 3^^I ns»w;ted o^ b«inuoaiB 

elmBH-^seeeM »fiJ lo tojticfsqmoo euolise b etcBoed x-f»*E-tt>®'BB'l 

lol eeir;;?!! effeE rf^worfctlA .;t9?lT:Btr plJeeraof) eff:t nl ynBqmo9 

mi XiiioM^ i^i.v -i ^flis^cfo c:* ^r. ,.,-=.'+ M^ ^„^ 8.ib^\ x.i.ifie erij 

heiu^qeo fcBff i©*e9vifH renol;tBn'i9:>nI e'0S9X eri;t yd itari* ne»2 

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o;r 8f'-v !£•- teviBu j.finc.-L,;/Bni9:fnI ,BJ-nsm©Iqini o:t ac — ^^''-- nl 

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lo •ii;;tCBT:unBcn ©ri;t 10I beau cfeill ebw ;tnBlq elri:t L^'^1 nl 

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•*iOi .1, fj biBwqi; BtM ' -" '■^^ffiielB ,xneqinoO eIitsH-ypcebM 

•vl^OB edl ^nel ,\(T:n*n©D ©d;t to niui ^t\i bni/oiB e^nemolqnil lo 



173 

support ^^^\ In 1903, Finance Minister Fielding was report- 
ed to have told the Canadian Manufacturers' Association that 
"If the Manufacturers would educate the people to believe 

in higher protection, they might get what they wanted from 

(26)) 
the government" ^ ^\ This was a vague promise but sufficient 

nevertheless to give renewed vigour to the Association's 

propaganda campaign for protection. Among th« industries 

which the Association championed most spiritedly In this 

campaign was the agricultural Implement industry ^^'\ 

As early as 1901. editorials had begun to appear 

a's first 

In the Association's magazine Industrial Canad^ ^ advancing 
arguments for higher implement tariffs. Most of the arguments 
reflect a failure to anticipate the Implications of Western 
Canada's development into an exporting region, stressing 
solely the importance of keeping workers employed in the 
eastern factories. Cheaper raw materials in the United 
States and the larger home market available to American *i 
producers were most frequently cited as reasons why "the ,n 
present tariff of 205C forms no serious barrier to their *- 
admission". 

On the other hand, the Importance of cheaper implem- 
ents to the farmer who was coming to depend Increasingly 
on export sales was left out of the arguments. Nor did the 
fact that ^0% of the Massey-Harris production in 1900 had 
been exported receive any attention in the arguments. One 
recurring complaint, which was reminiscent of the earlier 
decades, concerned the practice of dumping by American firms 



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iB^yaqe oi m.'ssd f.erf els/70*ibe .lOPi ee ylie© eA 

nieJeaW lo ^esoliaonqml Bcii »iBqtolin& oi eiuliBJ e ^dsIIsi 

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. "nolaalmbB 

-BRlrrrrl T«»ctp<»rfr> to ff'>ne;:t'ToqnTl nr< ' ,'o '^rfrt nC 

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'" " . "i. eil^ . .! i.oljorjjjs 'iHE gvisop-i cej-ioqz.s nesd 

i9ll'iB9 eriJ lo itn^oelrrloei bbw riolriw ,:tnlFlqinoo snl-cioofri 

WDill nBOliftmA \d snlqcnt/b lo •ol^oeiq »ri:t b»m9onoo ,«»bB09b 



on the Canadian market. It vas contended that 

Q the Canadian business comes at the close of the United 
States harvesting season, an'? the manufacturer Is glad 
to ship his surplus machines, which are exactly adapted 
for the Canadian market, into this country at a low 

^ rate. (28) 

Though the complaint was probably well-founded in this 
instance, the existence of dumping has always been extremely 
difficult to prove in farm implements, where there Is a 
tremendous diversity in quality, strength and design among 
the various machines, Nevertheless the complaints of the 
implement makers after 1900 were an important factor in the 
government's decision to introduce Canada's first anti-dumping 
provision into the tariff in 190k ^^^\ 

Recognizing that the greatest potential source of 

opposition to the tariff was Western Canada, the Association 

repeatedly included in Itseflitorial campaign suggestions that 

the tariff might well lead to the industrialisation of the ' 

West ^30;^ g^^^ ^Yie somewhat wishful assertion that the farmers 

of Western Canada were actually in favour of protection. In 

1905* for example, it was stated in Industrial Canada that 

The failure to give adequate protection to Canadian 
industry is due almost entirely to the belief that 
while the people of the Eastern Provinces would 
approve of such a policy the farmers of the North 
West would rebel. 

This article continued by pointing out that R.L. Borden, In 

a recent trip west, "was agreeably surprised to find that his 

advocacy of protection for Canadian industry was favourably 

received throughout the North West". The article docs not 

specify from what sources Mr. Borden gained his Impression, 

though there is reason to wonder in view of the fact that in 



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•/•oiqqs 
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fll *8ff* ifoet Bcii lo wbIv nl lebnow o^ noe/Bei el ©iwri^t ria«or1;t 



175 

the following /ear representatives of the Manitoba Grain 
Growers' Association, the Manitoba Livestock Association, 
the Saskatchewan Grain Growers* Association, the Canadian 
Society of Equity, the Farmers* Association of Alberta, the 
Ontario Farmers' Association and the Dominion Grange, all 
appeared before the tariff commission of that year demanding 
reductions in the impleaient tariff -^ •u^.lumsu uuu«r t/'c^ 

These vigorous representations made by these organ- 
isations in 1906 reflected their temporary freedom from the 
pressure of wheat-marketing problems after the formation of the 
Grain Growers' CoTipany to market wheat on a cooperative basis 
in 1906. The next few years brought even greater momentum 
and solidarity to farm sentiment on the tariff, culminating 
in the uniflaation of western and eastern pressure with the 
formation of the Canadian Council of Agriculture in 1909, 
Fowke remarks that "the union of the Western Grain Growers* 
Association with the Grange and the Farmers* Association of 
Ontario in I909 to form the Canadian Council of Agriculture 

made possible a unity of thought and expression on the tariff 

(■12) 
which might not otherwise have been achieved" ^-^ 

The "Compromise" Tariff of 1907 

't. 

That the Laurier government recognized the increasing 
farm pressure, while still mindful of the vigorous arguments 
advanced by the implement industry In previous years, was 
reflected in the "compronilne" tariff of I907. As a concession 
to fsrm sentixent, the t'.uty on implements in:porte«1 from the 
United States was lowered from 20jj to 17^5^; as a concession 



nlff^ Fdc&}rr^' e'i'i lo t^rfr^niaf't^'^'r^i le^v ^ntwoliol erf* 
,r.oiJfiioc£EJi :>ioo3'tivj^ EOod'iriflM anj ,nox jEic>ceo;i '£-i9woT0 

©rid' ,6*iscfIA 1o flol^slocEP.A. 'ztsmis'^ srft ,Y:JlL'p3 lo \ir>lccZ 
ll£ ^H)^nBi\i tfoTntfeofl sna t>nB nolieioceBA 'eiaT.is'; oiijsi^nu 

•mastic '^'^fiff't vff ^^p,:r r?nr. r-tr1'<~sp.'^.T.-i?>T ntroiogtv PF'^r'T 
•ri;f ffioi'i mobesil \iBioqaiQ3 'jj&nd oswo&ilsi ^C^i ni enoi^teei 
•ff* lo nol;fBtmol 9ff;t i&itB Ecneldoiq sfi-f^^^is^^J-^Eeriw lo etugeeiq 

asjir.omciii leiBsi^ neve :^ri8i;o'ia oiss^; va'i :fxsn snT .oC^vi n^ 
^aiiBCtlwluo fllti&i Biii no ^^nsci^nse misl ocf \:;tliBbiIoE bns 

,QO?I nl 9iuiIi!oiii]i, ic lionu6?" ftBlbBneO sri^ lo noictEmiol: 

Ic nolu rlorspA •?T«inp,'7 erii bne. ^gnciO 9ff:t d*lw nol^BlooeeA 

9i5J2-iuoii^k 'io j-ioni/oO HBlfeBnaO bA^ mot oj- ^091 nl otiBtaQ 

JJliBi Brii tto CioSezBiqxe bnB ^rfsuori^t lo \;tina b sjlcfleeoq efcBm 

. ~'^' "he-"? ^^fr>P! n9?5c' ?,VRrf salwierij-o :ton rtrftjlm r^'jJrfvr 

V09I lo IIIib T "ge-tflTciamoO" 9riT 

z'XB'ix aisotv9iq ni X'ti^ubat Jrfexnslqml 9ri;t yd baoaBvbfl 
eri* raoil hp,.'iocL[ti ■:.': •tr.t no \t?u.'i .■)ri;t , Jn-^a.idnsa xiji-t oj 



176 

to the Implement Industry, a 995^ drawback was made payable 
on Imported pig iron and rolled iron and stpel used in 
manufacturing farm machinery for domestic sale. The three- 
column tariff schedule introduced in 1907 had little relev- 
ance for the implement industry and will be only mentioned 
here, since the volume of implements imported from countries 
other than the United States, which was included under the 
general schedule, was negligible. 

The 2^% reduction in duty in 1907 did little to 
pacify farm sentiment. On the other hand, the industry 
received favourably the long-sought domestic drawback on 
iron and steel. The granting of the drawback was accompan- 
ied by a counter-conceHssion to the steel industry in the 
form of a similar drawback on bituminous coal imported for 
use in that Industry. This arrangement did not please the 
steel industry, which immediately made its views known through 
the Canadian Manufacturers' Association. Once again. Indust - 
rial Canada spoke out editorially. 

The most glaring injustice in the new tariff is the 
application of a drawback to certain materials in the 
manufacture of articles for home consumption. This 
provision strikes a sever blow at some of our Canadian 
iron and steel industries ... It is intended, no doubt, 
to compensate the manufactur-^rs of agricultural imple- 
ments for the reduction of the tariff on their products 
by giving them free materials, but if it has the effect 
of crushing out the existence of the Canadian iron and 
steel works which manufacture these materials or even 
of preventing their development, it will do agricultural 
implement producers more harm than good for they will 
be at the mercy of foreign manufacturers in time of 
scarcity. (33) 

This statement evidences the increasing difficulty 



bfylLai baa noil giq • "i no 

^•i,T,.fr •> f "t •^c..■<-.-1^ I ,-rr.r» ;■?>.'-. i-'r. J" Off."' IT 'f' tiT''; nu r** ^ " V ^ ■•%;"> ?v'j: 

• eew ^ aril .iJi^'i £'•■;*? aoii 



ip 



Xsiu'ji ' fpife 



■1^7 

experienced by the Manufacturers' Association in presenting 
a unified front with regard to the tariff. Canada's prot- 
ective policy was designed to encourae both primary and 
secondary industry while avoiding as far as possible reper- 
cussions fro-n strongly organized agricultural groups. Since 
neither the steel industry nor the implement industry had a 
trade association of its own, they were both forced to rely 
largely on the Manufacturers' Association for expression of 
their views. When such a difficult question appeared as 
the provision of a drawback on iron and steel used in the 
manufacture of farm implements, this Association was hard 
put to reconcile the divergent views of its members, and so 
to give the appearance of unity. The weakness hampered the 
effectiveness of the Association as the spokesman for the 
Implement industry at the very time when the ability of 
farmers to voice their anti-tariff views was increasing. 

Reciprocity N e goti ations of 1910-11 

Largely traceable to the resurgence of Western free 
trade sentiment after 1906 was the willingness of the Llb'^ral 
government in 1910 to give serious consideration to overtures 
from the United States for a renewal of reciprocity, "he 
subject had been broached in 1910, and in November of that 
year American representatives had met in Ottawa with William 
Patterson, Minister of Customs, and w.S. Fielding, Minister 
of Finance, to discuss the possibility. In December of the 
same year, representatives of the Canadian Council of agricult- 
ure converged on Ottawa demanding, among other things, recip- 
rocity with the United tates In fam machinery, vehicales and 



189*8 «Cfd^ ' '^ 

sfi be rioiTB np Iv lisrf* 

08 vlb &d$ sllonoosi oJ ;tuq 

^o x*-t-iJ<^« 9Jrf* n?»rlw eol* •^lev »rij *a x^^EDbni ^nsfnelqml 
.snls»<=»'ion Ineif-ltfn/B lie rprtpl 

g€ >oo euorisiE svig o^ iisvog 

,; u V. a 



178 

parts. It was in the following month, January, 1911, that 
Fielding and Patterson journeyed to Washington to negotiate 
the agreement which was to have been subsequently effected 
through joint legislation. Although the required legislation 
was never passed in Canada, the early negotiations had one 
far-reiching effect on the impl-^i^ent industry, viz. the 
decision to remove part of the manufacturing operations of 
the Massey-Harris Company to the United States In November, 
1910. 

Generally speaking, Canadian industrialists had 
little to fear from the immediate effects of reciprocity, 
Fowke expresses the opinion that "Canadian industrialists 
in 1911 rallied to the defeat of an agreetient which in itself 
asked practically nothing of them. They fought it for what 
It might lead to, a later agreement which might not leave 
their position of economic privilege untouched" ^^ . This 
was not entirely true in the case of the farm implement ind- 
ustry. These companies had more than an average reason for 
concern. In 1909 the United States had included in the 
Payne Aldrich bill an offer of reciprocity in farm implements'-'^' 
and immediately farmers' groups in Canada, notably the United 
Farmers of Alberta and the newly-formed Canadian Council of 
Agriculture, pressed the government to accept it. Largely 
as a concession to this farm pressure, the early discussions 
regarding the proposed reciprocity agreement had specifically 
included agricultural iraiDleraents in Schedule B, on which 
identical low duties were to be placed. Reciprocity was 



,-! rf •-•V of 

»no bsff i»not.if trfoiert vrtp«» Rrf.-t y* tl feeeejscr isvan . 

,1 i ot y 



r-sr 



'5- ■ 



179 

therefore rightly viewed by the implement industry as equival- 
ent to another drastic cut in its tariff protection. 

Throughout all of the reciprocity negotiation, the 
Implement industry, along with other Canadian manufacturers 
and the railways, gave full support to the opposition. Until 
the defeat of the Laurier government in 1911, however, all 
signs had pointed to the successful conclusion of the agree- 
ment. To the Massey-Harris Company, the best way of meeting the 
threat apneared to lie in becoming firmly established in the 
American market. Vague statements concerning lower production 
costs were circulated in explanation of the anticipated move, 
but thp vital fact was t'-'at no Canadian producer had ever 
been able to penetrate successfully the American market with 
implements made in Canada. The company waited until after 
the American elections of November 7th, 1910j at that time the 
Democratic party succeeded in solidifying its position at the 
polls. Immediately the company called a shareholders' meeting. 
At this meeting, which took place November l^th, the acquisit- 
ion of the Johnston Harvester Company of Batavia, N.Y., was 
authorized. ^^^^ 

The decision had immediate political effects. It 
Was seized upon by the Conservative party and nress, and by 
the Canadian Manufacturers' Association, and was used extensive- 
ly throughout the election campaign of 1911 as an example of 
the probable effects of reciprocity on Canadian industry. 
Lloyd Harris, grarid'^on of the founder of the Harris Company, 
and in 1911 a Conservative member of the House of Commons, 



.noiJc 11ii«;t kJl al Jjjo oiieeiL •ir-'ri;}onB oJ ins 

r f +r, , ,■•■ ' j- ^l:. o--,-!o «"■<'* .■^■t .-^Tr -nrip Tfir** -...rfcT; . pv .•'!,' T ^o'*' ^rf-t '-rfr. 

lib fi fllQS. 1. "& le*.' 

-*»s7;,e ©ri* "^o 00 ..'0 Li 

i. 

bam \d noqif &esi98 eaw 

-©y t • 



J -'CI 



180 

carried the industry's argument into the House, where he:.: 

threntened, 

This (reciprocity) arrangement Is going to mean that 
the development of the agricultural implement business 
in Canada will stop. We are not going to develop the 
agricultural implements business in Canada. The 
concerns I am connected with have found It necessary, 
on account of the agitation and trouble which they think 
will come, to remove part of thoir works to the United 
States. They do not want to do that. (37) 

Precisely what "agitation and trouble" the Company had fore- 
seen resulting from the lowering of implement duties, was 
not disclosed by Mr. Harris in his speech to the House. 
There can be no doubt, however, that threats of this sort 
were a powerful factor in the defeat in 1911 of both recip- 
rocity and the Laurler government. 

Growth o f the Cookshut t Plow Company 

The year 1911 saw the incorporation of the Cockshutt 
Plow Company, a small producer which had ex^ianded slowly under 
the protection of the preceding decades. Until 1911» this 
company was owned almost entirely by the Cockshutt family, 
though some shares were held by the principal executives of 
the company. The circumstances of the incorporation are now 
vague but, according to oral evidence submitted to official 
investigatory committees in the thlrti^^s, the original 
financing was effected in London, England, through Parr's 
Bank, Limited. This investment house purchased about three- 
fourths of the outstanding shares for cash and one-fourth In 
return for preferred shares in the new company. Subsequently, 
It appears, some members of the Cockshutt family did consider- 
able reinvesting In the company. At the time of its incorpor- 



081 
erf «>Toriv^ jSRfioH Bcit oSai tn^mu^in t*\iiBSjbnl »rf;t bsl-riBO 

Tin 

v.\t,; .'ieiii ob o;;f ^obw Ion ob x®rfT .«9*»:tr3 

-diol 6eri xnsqmoO eiii "»IcfiJOi;t bne nol:f Bctigg" iedw xIqzIdbiH. 

^aEtioH iBff;^ ./ rirt'tqt : iiie .0 beeoJoBifc :fon 

; ^%0|L. Blil^ lo ecffi9'ifl;t ;:) ri fiauob on ©d rsso B-rsdl 

-fTlopi rfd^od lo II9X ni *«9leb 9ri:t nt to*«!?> jrr^-^ovrvr o ^t^w 

• itn'^fiini^vO^- 'i'::^'iJ..t^ y-ij Dili.; iw'-CiVI 

li.^ ._voJi_Ji.\. i_lCLj. 

elri* tll^l il.tflU .e- snibsoenq eri^ lo noi^o^itotq eri;f 

ic £3v/^ji.'o©xfa isqxoni'iq sfij xa ^asn sisw eeisfi? saioB n^jLTorij 
vcn 918 actiiioqioonl sdi lo 89one;l8(ni;o7lo erTl' 7moo eri;t 

i i- 1 ' : ' ' '.-: r:t •^'^:J:? P^-di;^ '■vc I bio r:* ^rrfbTorDr .itr/':' ^t'snv 

■•/.'^T «'8t;or' i'- .'-I p . bprttrr'iJ ,-»*r?fi 

-loqioofll tjj. lu ©raid' 9rf^ .+A .xncqif.-j vn'- ui a*^ ■ ^ i- .'iil^n ^ii.;j-. 



181 

ation, the company's capital consisted of $100 7% preference » 
shares to the value of !5»^65,000 and 50,000 $100 par value 
common shares to the value of $5»000,000. The latter were 
issued in consideration of patents, trademarks and goodvill, 
which item was written down to $1,00 In 1935. 

Prior to the Massey-Harris amalgamation of 1891, the 
Cockshutt Company had sold the bulk of its output of plows to 
the Harris Company, which retailed the^ along with its line 
of harvesting implements, This arrangement, of course, was 
discontinued when the Massey-Harris Company acquired control 
of the Verity Plow Company shortly after amalgamation, and 
the Cockshutt Plow Company then found itself with a gre=)tly 
reduced market for its plows. In succeeding years it added tf 
a few additional implements to its line, including grain 
drills and cultivators, and attempted to become established <^- 
in the domestic market. In 1905 the company became a member 
of the Canadian Manufacturers' Association and in 1^06 it 
advertised in Industrial Canada that its new works, covering 
21^ acres, was "the most complete plow factory in America" 

Difficulties in selling were experienced, however, 
principally because of the lack of harvesting implements in the 
company's line. It was in the hope of remedying this deficiency 
that the company bought in 1909, 8,87"+ of the 33,030 outstanding 
shares of the Frost and Wood Gomcany of Smiths Falls, and 
entered into a selling arrangement with t^a-. company whereby 
Cockshutt purchased Frost and Wood harvesting implements for 



o^ tWoIq ' two 8il lo j^Iud 9f(j 5Ioe ft«ri \nF 1arfe;iDcO 

Iciicto:^ beiiupop oD sxTisH-YdescM ©^ ' bountiaootlb 

b»b5s ;ti e nlbesooL'E nl .bwoIq e;tl tol itsjliem beoirbsi 

alfiiT? Tfn?!bcrrnnf ,'^,n.f'i 2i-f r-,t • i^nsffiolq .^ . ^o^•^f'^!''p• 
i I nC' : - r.-te ^T. pofl ' PTfj-Ttr.-t^.f.-'^rtfv.-s'.l ,-»3 » F o^-- a*^ ^.K-l *> q 

8flii9voo j23<'iow won aJi -sri? =ial;;ai»vfc£'. 

-mi gnliteevTeff ^ooW bn« :tso-T'si b^RBrto-fcq :t*uriEj(ocO 



182 

for sale in Canada west of Peterboro. Three years later a 

further arrangement was made whereby the Frost and Wood 

Company retailed Cockshutt tillage implements along with 

its own in the territory east of Peterboro ^^°\ Further 

acquisitions were made by the company in 1912, when it 

purchased the Adams Wagon Company and the Brantford Carriage 

Company, both of Brantford, Explaining this move in its 

Annual Report for 1912, the company stated: 

The manufactures of these companies are largely used 
by (this) company's customers and it was found con- 
venfent at the same time to take over their sales 
departments and incorporate them wit'-^i the sales dep- 
artment of the Company. The result of this move has 
been excellent. 

Agrarian Pre s s ure and the Decreases in the Implement Tariff 
from 191^ to 192^ ~ 

In the two years following the defeat of reciproc- 
ity, new pleas arose from Western farmers for government .; „ 
intervention in the wheat marketing process. The three 
prairie governments responded by extending liberal assist- 
ance in building and acquiring elevators which were to be 
run cooperatively by farmers' organisations ^39 J, Remark- 
able success was experienced by the cooperative elevators 
in their early years, sufficient apparently to stimulate 
interest in other forms of cooperation, one of which, on 
the consumer level, deservs brief notice. 

IT: 

Disappointed with the failure to secure lower 
Implement duties through reciprocity, the United Grain 
Growers' Limited made serious efforts in 1912 to market 



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h 



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ftnfl 



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;Jfi©Bimftvca not eieiTTe'i ni9;t8sW inoil sboib 6s»iq wen tX*- 
ed o^ ©i^v rff; Ts gniiJtiipoB hne snlbllucf nl ©on? 

e;ti»'';iBiI;t8 o* xlin^isnqB ^n^lol'^lue ,8ib9X X-fi«« i-t' rl;t nl 
.sorjon loiid avvisssb ^iovol loratisnoo sriJ 



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■°T n.? PltTO^I-A SCOf-'-'?. a^>,^:v he^SffrfJ • F.T'= votC 



133 

farm machinery and binder twine cooperatively. Fifty-seven 
retail agencies were set up throughout the Prairie Provinces 
in an attempt to meet quickly the needs of farmers for 
standard parts and expert service. This venture met with 
mild success for ten years but in 1922 "heavy losses forced 
the company to relinquish the machinery tasiness altogether**^ V 



Among the chief difficulties encountered by the cooperators 
Was that of finding manufacturers willing to supply implements 
to them. The implement companies, with one notable exception 
in recent years, have consistently refused to sell to 
cooperatives in areas where they already have established 
retail organisations. The limited success of the United 
Grain Growers was very largely a result of the willingness 

of some American companies, not already respresented in 

(Li ) 
Canada, to sell to them ^ ', 

After 191'+ there were further substantial reduct- 
ions in the implement tariff level as a result of the renewed 
political pressure from agriculture. These continued to a 
polht wh«Pe, by 192^, the implement tariff had been "eliminated 
as an instrument of protection". The principal tariff changes 
took nlace in the years 19m-, 1919, 1922, and 192*+. 

In 191^ the duties on harvesting iiachinery were 
lowered, from 17^5^ to 12^?^, the duties on other types of 
machinery being left at the 189^+ level of 20^. In 1918 it 
was announced that tractors priced at less than $1^00 would 
be admitted duty-free. In 1919, duty on tillage machinery was 



I« aeenfcsf x*!" rtali :^ ef{:f 

no.i J sldB^r .s^lneairoo d'n :J o^ 

f)*"V'*fj'~ . ~v=!'.i. iij-iaJ .! r >^!-ix4i! i '.-ill.' iii isrtol 

• ^e^? 'i'*t.*T.'? ' -Iff •'Kit »+'?PJ vff . «'i«?r'v .fft-^or 

. ' ' '^1(^1 ^^191 eies^ «ri* at «9£!^ jloo* 

^1 8l<ri ill .jr-'i, JO j_f;-!x"jj. : «; C'J. yriJ J£ JiOJ. ;j,ilI3.- '>i7 9;>ii-iOEE 

i ied^ fceonuonns eev 



18^ 



redacGd to I5%j and on plows, higher priced tractors and 
portable engines , to 17h%* 

Had the Conssrvative governmpnt of 1919 recognized 

the signs of the times it is probable that the decreases would 
In V. 
have been more substantial, for post-war farm sentiment was 

beginning to express itself not merely in demands by farm 
organisations but in direct political action. By 1921, far- 
mers' governments were In power in Ontario, Manitoba and 
Alberta. Spurred by th« drastic fall In farm prices after 
World War I and by the growing realisation that on tariff 
matters the old parties differed only In detail, Western 
farmers had succeeded in organising the National Progressive 
Party in 1920 and carrying it through to a surprising total 
of 65 seats In the House of Commons In December, 1921 ^^2)^ 
Although the resulting shift of the balance of power to the 
West proved to be only temporary, it nevertheless caused 
considerable modification of the Liberal government's 
aspirations in the direction of stabilized tariffs after 
1921. The farm implement tariff in particular came to be 
regarded as a most effective Instrument for the conciliation 
of agrarian discontent. In McDiarmld's opinion, the Iraplem- 
ent tariff changes of 1922 and 192^- "were expected to form the 
basis of the Liberal party's appeal for agricultural support 
In the face of the still rising power of the Progressives' -* , 

The downward adjustments in these years were as 
follows. In 1922, a 2^% reduction was introduced, bringing 



^^- 



4?'^r 



bitrow f iqr ml il eerrl* eilv^ lo cnjile •ri* 

HItr* no ied.} n^i^salIp«T ^nlwot^i •di yd bne I leW blioW 

IP.:tQi «nlaJ-iqitfE a o* d^uotdi il ^rrixfrso has OSPI nl x^rteT 

JBO aeelerfcti&vea il^xf^ stf o* bsvcrq ;t8©W 

a* • a al ai ob srfT 



185 

harvRstlng machinery to 10^, tillage nachinery to 12^^5C, and 
plows to 15%* In 192**, harvesting machinery was lowered fro» 
10^ to 6%^ tillage machinery from 12^;^ to 7^%^ and plows from 
15% to 105^. Duties on tractors, which had been left at 1?^:% 
In 1922, wore eliminated in 192^- in the case of machines not 
valued in excess of $1^-00, and were left at 17^% on others. 

The implement industry did not accept these 

the. 
changes without a struggle. The lack of a trade association, 

however, once again hampered the ccnpanies in presenting a 
united front, and tho protests made consisted largely of 
propaganda emanating from a comnittee hastily organised In 
1923 and respresenting several of the companies. The comp- 
anies succeeded, hov/ever, in presenting to the government a 
plcbre sufficiently ominous to receive counter concessions 
in most instances vjhen the tariff was lowered. Similar in 
intent to the domestic drawback granted v;hen the tariff was 
lowered in 190? was the reduction in freight rates ih August, 
1922, on several articles used In manufacturing implements, 
including iron and steel parts and castings, pig Iron and 
lumber. Likewise the 192*+ tariff reduction was accompanied 
by the elimination of the sales tax on Implements as well as 
on all the materials going into their manufacture. In add- 
ition, pig iron, bar iron and bar steel were placed on the 
free list when used in the production of i'npleir.ents, and the 
duties on all other materials entering implement production 
were set at 7^%- These concessions, along with the slowly- 
returning prosperity, pacified the implement industry for the 



* -u - 



?8I 

KOI"! ii £ew xi-*"-i'f^3^''^ §ai«23viAn ^fVvl al •^^i oj cwolq 

■oil avolq &De ,3^^-V o* a^SI moil Yi&nJ^riOBffl 98BlIi;f ^Jyd o;r 5^01 

• a-j^rfito no I 919W bnfl ,C ;o eseox© ni baulev 

»8©ri:t ;tq900B ^on Mb \i. erfT 

^o X-f^^tiBl be^slsnoo sbarc tizBioiq ic ,jno*jl b«»tlnu 

OD sn'i .«.c.xr;r.4rjon e;iz io isiavoc; ijfixjiisssiq eoi tea t^^-I 
£ i+norvfTTflvoa 9r(;t o* ■^rtlinfizeir^ nl ^is'/o-forf ,b9b9900U8 8»ln« 

ill i£iir.^:.. ,xO©i5Woi aj3'- ■"'.iliBu s>flJ a&ri*' ssonsJsnA Jeos al 

fen* noii so baa tii 'tc bna noii" -anibuJonl 

38 Ix'.v afi i: : no y&i ssiRa erld lo not J3nlfiiii!=» 6iid %d 

I .^y oiai + XI 6 no 

en^ .1 lo ; al t>ecu /i£ov J- ell a«-j7 

nol;toi;boi(i ^nsmelqml snlis^tns bIb1ibJbi8 •i9ri:to 11b no a9l:tJLrb 



186 

time being. No strong protests were heard after 192^, and 
the tariff remilned unchanged until 1930. 

V 

IV. Technological Influences in the Twen t ies 
The Tractor 



To concluc^e this chapter we turn to the major 
technologlcjil influences which affected the Implement 
industry in Canada during the 1920' s. The principal of 
these were exerted by the tractor. Tractors, we saw earlier, 
were being sold in A'estern Canada as early as 1?10, the year 
in which the International Harvester Cocipany built its trac- 
tor works at Chicago. After 1910, International Harvester 
was one of the largest sellers in the Canadian market. The 

Massey-Harris Company, despite its connection with the 

(1+5) 
Sawyer-Msssey Company from 1891 to 1910 , produced no 

tractors before 1917^ In 1916 the corrpany bought the mach- 

Ir.ery of the ^eyo-Macey Company of Binghampton, N.Y. , and 

transferred It to a newly constructed plant at Weston, Ontario. 

Here It produced a tractor modeled after the Parrett tractor, 

then being built by the Parrett Tractor Company of Chicago 

Heights, 111. Only small numbers of tractors were produced 

at Weston, particularly after the removal of the duty on 

low-priced tractors In 1918, and In 1923 the company suspend- 



'C® 



ed tractor production altogether. ^ 

Shipments of American-made tractors into Canada 
Increased from 1,108 In 1918 to l^,>+80 In 1919. In the next 



lo 



X 



hnr. .-vJ^/'r T-,:t"!<r, fttfisff 919V ^.i z --.-^ gi" ■^rcrir ol' .'^nled fuj^li 



■ OBI.- ' ■ 

-'■'••■ -i-ppiv inf-l--. -^ ^ 

•idJE ik'i ■! .."1 

■no r..; ttrTT-vop^pM 

on Xi or aoz'i "maqiac'-J 

n^ 

It \InO .ill ,eJ(iaiaH 
no xtub «rf* . Jr 

:^xon »rf^ nl X ni 06*^^*^! oi 8j9I nl 80I,I moil b^eeeionl 



187 ^ 

ten years, through 1929, a total of 12^•,l50 duty-free trac- 
tors came into the country from the United States ^^7)^ gy. 
1926 the volume of American tractor Imports had become a source 
of growing concern to the Massey-Harrls and Cockshutt Plow 
Companies, both of which found increasing difficulty selling 
an otherwise full line of Implements without a tractor. 
Following Massey-Harrls 's experience with the Parrett tractor, 
however, neither company was willing to risk production in 
Canada because of the heavy capital outlay involved and the 
fear that sales would be Ireufficient to provide an adequate 
return ^""^K 



-^j-. , I- i<f 



To this potential dilemma there appeared a simple 

solution: to make an arrangement with an American company not 

already represented in Canada to sell its tractors In the 

Canadian market. Both cofflDanles did this, Masspy-Harris in 

1927. Arrangenents were made with the J.I. Case Plow Company 

of Racine, Wis., to market the Case Wallls tractor In Canada 

and parts of the United States , The arrangement was 

never a very profitable one, since the Wallls tractor was 

not well known In Canada, compared to the International 

Harvester, Deere and others. Moreover, as a newcomer into 

an established market, Massey-Harrls experienced difficulties 

finding suitable agents to handle tractors. 

When we were getting Into the tractor business we had 
to carry on a campaign of educrtion among our agents to 
sell tractors. The old-line agent — the binder, mower 
and rake agent — was not always equipped to sell trac- 
tors, and It required sometimes a younger type of man; 
and we have had to get, over the period since we stated 
in the sale of tractors, many new agents to handle 
tractors -- tractor-minded agents; usually the younger 
generation. (50) 



^31 



feSwfi^^v. besinu anj aoT'i yiini^oo '-'j c;ftu eri^u e-ioi' 
•siiroB fi ©troDsd bBri e^ioqwl lo^osiiJ neoJiemA lo omi/Iov erfiJ dSCI 

.loJauiit 6 Aiiodilw niasaelqail to ©nil IXol »BlWTt9ri;to ne 



■rr< L~ ff; »•»•*? rtjfv?' 



^<Jrtri\^' P^'JBE iT-''^ 'T = ftt 



rpj-. 



Cl'lkS iBI 



slqiria B beiseqqe •isri* ar iBtinsioq Bltii oT 

ni BiiiBH-x^ESfiM ,8ln:} bip eslneaHioo rf.t' .;J^e3(TBBi nBlbeaBO 
••0 voT^ •»«>«r) .T.i; oifi-f ff:t r« 919W Bitner^'ssneTiA .^S^I 



i i-vX'Ii 



.. f <.! .,r» ' '^ " •'' '■ 



oi' (i-svoetoK .eieriiJo bne 9i»ea ,ie;j8©VTeH 

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ion 8BW -- :^n«se «i>(ei ^^s 



t.. , „ I. . . 



; to sIbb Bcii nl 

.r: .<9.'4 



188 

An Interesting sidelight on the discussions between 
Massey-Harris and the J.I, Case Company concerning the Wallis 
tractor in early 1927 was that they gave rise to an unsuccess- 
ful attempt by the Case Company to purchase Massey-Harris and 
ultimately led to a much greater diffusion of the shares of 
the Canadian concern ^^1^^ 

Despite the relatively small sale of the Wallis 
tractor in Canada during the year, the Massey-Harris Comp- 
any decided In late 1927, in what was a surprising sequel , 
to the negotiations of a few months earlier, to purchase the 
J.I. Case Plow Company, taking over the assets of the company 
as well as the right to produce the Wallis tractor and a 
number of Case tillage Implements. The trade names of the 
latter were changed to "Massey-Harris" and the right to use 

the ease name on tillage implements was sold to the J.I. 

(52) 
Case Threshing Machine Company '^ . -1 

h ■ 

This acquisition was perhaps the most important 

ever made by the Massey-Harris Company. Through It, *^assey- 

Harris acquired not only a proven line of tractors and tillage 

implements, but also a ready-made distributive organisation 

ry^ <« «i'^ «v V*. 

throughout the United States, greatly superior to that 
acquired when the Johnston Company had been purchased in 1910. 
The Racine Company was immediately merged with the Massey- 
Harris Company of Batavia forming the Massey-Harris Company 
(United States) with headq arters at Racine ^^3/, 

The Cockshutt Plow Company, following the same course 
as Massey-Harris, announced in its Anrtual Report for 1928: 



nf no i. 1& gr 

-r. . -ixs ilk. cj ^;iA"i yvrii ..yz^j j ^i^j cir»r s ,^«-; J. >(.jit>s ni TO^tosi^ 

S^^J-C _X£!'iiS ViVV^J 1-XfS" ' -?■ J'-iet 

8e«5>i ^ »ni gniijub •ftenBCi nl io*obi^ 

Xnaqmoo eti-Jr lo e;J»»8iB ftri:t lovo ^nljfe* j^f^'TEoO woI*I seaO .I.T 

sstr oJ : Dnfi *'Biii. oJ cssnerio siew 79^;tel 

.1.1 er*;J^ o^ r-Io? ejtw ?-:^'rf^r«^.rrrirl 9:5sIIt:t re «;TBn ©spft «5riJ 

- ©ri;t • • 7ev9 

s'^sll "r; "nlT ^^v v.fno Jcrr hsTli'r: ^-reH 

•*:(<,+ (>;' re ;tlnU erf^ :ti;orf3Uoirfrf 

rr.r ^f rrnrfsffrfoT- ' -fv ^pt*T?lJ•n^r, 

'oj.fo'^ , /ftp' oil :t5uftei4f5Qn ?r*T 



189 



"' " We now have In addition to our regular and varied .4 
line of horse-drawn implements, a standard line of 
implements for power farming. Just recently we 
compl'^te-l arrangements with the Allis-Chalraers Man- 
ufacturing Company to market their tractors in 
Canada, which fills out our line and places our 
sales organisation in a strong position. 

Under this arrangernent, Allls-Chalmers was to supply two 

sizes of tractor, one suitable for general purpose work 

in Western Canada and a smaller one for Ontario and the 

East. 

The arran?;emGnt with Allis-Chalmers gave rise to 
rumours concerning an impending merger "^ , and when the 
company announced its intention of increasing its authorized 
canital in 1929, the Fiancial Post predicted the sal© of 
the newly-authorised stock to Allis-Chalraers "in order to 
cement a working agreement between the two firms" ^^^', 
Such sale never took place. Whether it was intended is not 
known but in his statements to the press at the time, Colonel 
Henry Cockshutt, chairman of the board, took care to intimate 
that control was safely In the hands of himself or of his 
family associates ^^'^\ Moreover, the arrangement with • 
Allis-Chalmers was terminated after two years when, as ^'111 
be seen later, Cockshutt mad© similar arrangements with 
another American firm. 

Thus by the end of the twenties all of the "Big 
Three" Canadian companies were importing tractors to comple- 
ment their lines of farm implements. In addition many 
purely American companies were shipping tractors into Canada. 
When the Oliver Company acquired the Hart-Parr tractor in 



y:'X 



1UO e ICO iuQ eili't rlolnw ^abftneO 

.:;. - ^.j ^iioi:t8 e rl noi;t8Bln«sio e^Iee 

oi ^f-HIA rf;tlw ;rn -lie. »riT 

*OfT el sew d^l le Dsla ioot i9V9a 91bb tii>uB 

rw Ioi.Jnoo isdi 
111*} 8 w:f •I©rfl!^ i -lait 8BW 8'i -elllA 

oj 610.1 ofiirf j^Tiiif'ioqfai -.'WW ^si o ueit-ennO *'e«iff1 



190 

1928 it also acquired the subsidiaries which Hart-Parr had 
establishe3 in Alberta and Saskatchewan five years earlier. 
No manufacturing was done in these subsidiaries but they 
provided important distributive facilities. The John Deere 
Company which until recently sold principally in Western 
Canada, had branches incorporated at Winnipeg and Regina, 
and the Minneapolis-Moline Company was also active in the 
Canadian tractor market prior to 1930. 

Combines 

The first successful combine in Canada was 
reported in 1922, when the Dominion Experimental Farms 
used a I^ssey-Harris No. 5 Reaper-Thresher at Swift Curr- 
ent, Sask. This machine was successor to the Massey-Harris 
No. 1 Reaper-Thresher, a ma in-wheel- powered machine which 
reaped, threshed, cleaned and delivered grain in one oper- 
ation. The No. 1, pioneered and tester? by the company since 
1906, had been sold in export markets since 1910. The 
principal improvement in the No. 5 was that power for the 
moving parts was provided by a gasoline engine mounted on 
the machine. Horses or a tractor, however, were required 
to pull it through the fields. ^^^^ 

As had been the case with the tractor, Internat- 
ional Harvester in the United States had been aniong the 
first large-scale producers of combines and consequently 
the "anadian company was in a position to offer imported 



Q<?1 
X9f^^ ^fsd 'e "* ni sr^ot saw ^^ni tiiiofiltrneia oW 

©onia ^tnsqsioo sri: oiepnolq , r , ^■' '^■•''^ , no lis 

e nl Moe 

no b«d-nircMB enlyie AftlioBAS "' bebJvoiq c.-~ iit-rrq ^nlvom 

fi.f esw ■ r!»dcf 



191 

machines in Canada at an early date. The Cockshutt Plow 
Campany, on the oth^r hand, produced no combine during the 
twenties. Most of the harvesting machines sold by this 
company, It will be recalled, were produced by the Frost 
and Wood Company at Smiths Falls. Cockshutt, on its part, 
concentrated mainly on tillage machinery, in which It made 
some Important Improvements. In the twenties, for example, 
the company developed a one-way Disc Seeder, which It marketed 
under the name of Tiller-Combine. As the name denotes, this 
Implement was designed to perform the work of breaking the 
soil, cultivating 3nd seeding in a singl-^ operation. The 
contributions made by Cockshutt to the disc seeder, and 
the work of Massey-Harrls in the combine, are fnrther 
evidence of the Canadian Industry's fast-growing Independence 
in the matter of implement design in the 1920's. 

Conclusions from Chapter Five 

Following are the principal conclusions from the 
material presented in this chapter. 

1) The motives for concentration in the Canadian 
implement industry, as Illustrated by the Massey-Harrls and 
Cockshutt Plow Companies, were similar to those in the Aier- 
ican industry: the elimination of excessive selling competition 
around a standardised product, and the desire to achieve the 
economies of full-line production and distribution. By 1910, 
these two companies were distributing ^ull lines of tillage 



.rt iBtiio 9di no ,xn[irj!VB^ 
Ah B al ^aiiBvl^iliJo (Hob 



.1 moil BDol;- Jiq srt^t eiB sn-f^'o-TJo'^ 

.•i> strii nl ftdJfrB89iq 

ni •sort* o* islliTic »i»w lefllnpqfoO voIH J;ti/ri8»(ooO 

r^ I 9nll-l -0 9 

npqmoo ow^ 0e»ri:f 



192 
and harvesting rnachlnery. '"'^ 

2) Canaiian companies were slow In taking up 
tractor production because of the comoetition from American 
firms in the Canadian markr^t, which was unprotected after 
1918 except for the more expensive tractors, and the diff- 
iculties which they experienced selling Canadian-made tractors 
and implements in the United States. It became even more 
difficult to meet the competition of American tractor manu- 
facturers in Canada as the "tractor revolution" brought an 
Increased measure of efficiency to the American implement 
industry after 1915 and through the twenties. As Logan 

■taaa has shown ^-'^ , value added by manufacture per wage 
earner in the American implement Industry increased from 
$1,869 in 1915 to $3,933 in 1929, while in Canada the 
corresponding increase was only from $1,052 to .2,l6l. 
Thus American Implement manufacturers were able to scale 
Canada's tariff wall with farm implements and to sell trac- 
tors in Canada draost without competition from Canadian firms. 

3) As the tractor became increasingly the unit 
around which implements were designed and built, Canadian 
producers without a tractor experienced grave difficulties 
in selling the tillage and harvesting implements which had 
formerly constituted a full line. By the late twenties, 
the pressure created by the integration between the tractor 
and implements forced the two leading purely-Qanadian firms 



tne 



in 



S9i 

f *l;t©CT»oo bM lo seuBoecf noIJoiibortq lo^foaitit 

"'-afll&sneO snilJse Ysri^i rfolrfvr 8»l*Iuol 

-wistn ID.-' i'.A lo ii-c ri? Jsacc oj jij :u:j^: 

93BW taq aTuitofi^unEffl yd fc»bhB euJev , ** nwoff£ ?rArt i ' 

.!('" r S;?0,Il!5 inoil >jIno ««w ©eeetonl snibnoqaeifoo 

-oei;f Use oo' i^ni-: zJcismQlqanl mie,J rMiw iitsw 'i'li^BJ- s'sf'snaO 
.8 • or) ;riTr^d.1'tw :tp.oflife afc^nsO ni 8io;t 

*aevi. Use nl 



1 



193 

into arrangements for the sale of American-made tractors to 
accoT.pany their lines of implements in Canada. The subsequ- 
ent decision of the Massey-Harris Company to discontinue this 
arrangement and to acquire a plant for the manufacture of its 
own tractor in the United States, was mainly a result of the 
company's heavy dependence on export markets during the twen- 
ties. As in Canada, the company had found increasing diffic- 
ulty selling its implements abroad without an accompanying 
tractor, and the only selling arrangements which could be 
made with American firms were limited to the Canadian market. 
Cockshutt, on the other hand, with a much smaller dependence 
on export markets during the twenties, found selling arrange- 
ments for the Canadian market sufficient. ^^ 

h) An important feature of the Canadian implement 
industry's history from 1890 to 1930 was the movement of the 
tariff level on farm implements. Contrary to the idea that 
farmers have not played a significant part in shaping govern- 
mental policy in Canada, it must be said that farm pressure 
did play a vital part in the uninterrupted downward movement 
of the Implement tariff during this period ^ , 

Not all of the companies located In Canada were 
equally affected by the tariff changes. International Harv- 
ester was affected least because of its heavy imports, and 
Cockshutt most because of its preoccupation with Canadian- 
made implements. Nevertheless the undercurrent of farm 
dissatisfaction with the tariff throughout the period had 
the effect of Imposing upon Canadian implement producers in 



tiff* ooEib o;t X' 'iif?H-yef.E;sM ©ri* lo nolzlosb *a© 

-n«wj ©ri:^ snliot e^safiajn *ioqx9 no eonefcneqsb xvBsri e'^naqooo 

^qJTI-* ■ T).-r ■■ - ,!^.j<To.-^ * hnr:n^ her-' \'i-i c.'-r ?fir • , ^rf.-t .r.*>.-,r<r1 rs "■ . . .I'i 

9cf bluon ffolffw eineraesneiiB anlllea ylno Bdi fens ,io;toB'i* 

»ofif' •cbiieffife riojjit^ fc rfiiJw ,5ijaii 'i&ti^o »rl:^ no fiiiuriB>LooO 

-95ff«T!js gnlllse bnuol jBe' orfit anlinb citeafisir zfToax© no 

, JTr-c, f <-. f*^" ; .;:- i *.- <■•. c-ir, i^ .^ r f-. e- -i '• ""! --.i-f '. • cm 

-!•'.■ orp a fr ■?■■.:. rt-"^ <■ -^-r r^i tot m ' --A ( *-? 

- ■; »ri;f o^ yiBiitflcO .ed^nsisalqnil asiBit no lav©! ^liiB* 

9'u; :^ blab- ed • ■ ' ,fl?)r,nsO tii \oIioq Is:fn©iD 

i- of» bfl^qifnec^nlni; 9ri;t n2 ;t'isq Isilv b ^fslq bJtb 

' ' 9b»nB ''©itBOO-i ^.7-.j ,,■..,. .o. - *'••• 

1 leo' I .e '. tllifi* oriJ^ \(i beiom'i'iB \llBrjpo 

;i!iB'i' "10 ^fisiiiroTabnt/ ©rid' eas loriittovs'I .ej'nemelqrai ©bfitn 

alJ lIllBit iv no/.tOBT:Rl:fB8Blb 

nf p-......F,.^.. +,^^,, i>,.(„2 nelbanaO noqx; snieoqwi 1o iof^Vi* 9ciS 



19^ : 

general a greater degree of cohesion than would otherwise 
have existed In the Industry. The solidity of agrarian 
opposition to the implement tariff resulted in its being 
singled out as an effective instrument of appeal to Canada's 
numerically predominant farm electorate. The threefold 
combination of sustained and effective criticism from farm- 
ers, a declining level of tariff protection, and the dimin- 
ishing effectiveness of the Canadian Manufacturers' Assoc- 
iation as a spokesman of its views, appear to have given 
rise in this industry to a greater measure of "inter-firm 
concordance" than is to be found in comparable industries. 
The extended official investigations into the industry in 
the thirties, presently to be examined, did much to solidify 

this sentiment. Its real importance, of course, lies in Its 

effect 

on competitive policies in the industry, the discussion of 
which is contained in Part III of the present work. 



- .s^ MO'jTt ftc.Lol vliToelte b: : *io iioi 00 

. ""^ I ttlsi/bii o'l Lid GcJ ei nsn:' ooaoo 

lo nolaeuoelb »rf^ ^xi^eubnl eri* al esloiloa 9vi;Jl;f©cr!roo no 



3. 



fin.^nci- ' ■'■■■■' .-.....-a '■■•'■ifffect- 

CH AFTER SIX 
THE INDUSTRY SINCE 19^0 

Contents "® 

I. Depression; High Tariffs 

The return to protection In 1930 — Protection 
increased Canadian firms' share of the market 
— But protection failed to prevent a severe dec- 
line in the industry — How the decline affected 
individual companies — British Empire Preference 
Agreements of 1932. 

II. Recovery: Low Tariffs 

Tariff reductions in 1935 and 1936 — Official 
^. enquiries: 1936 to 1939. 

III. V/orld War II; Tariff Removal 

The industry during World V/ar II ~ Tariff 
removal, 19*+^. 

IV. Review o f Sales, Import s and Exports from 192Q_to 
1950 

Sales and Imports — Significance for competit- 
ion -- Exports. 



I. Depression: High Tariffs 



The Return to Protection In 1930 



ii*:sn<ir3 acaQ 



The Conservative government of R.B. Bennett came 
to office in July, 1930, "pledged to test completely the 
effectiveness of the protective tariff as an offensive weapon 
to fight the deepest depression in the world's history" 
At this time, the urgency of the depression and the increasing 



^91 



XI 8 



8^' iif ir 

■ 1 

? ??JlgT wp j. ;yiBV009 g .II 

•^'' -- , i.nc '•;*■'■=''-- '^'^ '■"-'■ 

. ^ I o* c ' ^ 

lavocseH ^tligT ill laW ■■.i.j,^'! .Ill 

'^'>i:^ -- II ibW biioVJ afliiuft xi^sufcnt srfT 

c;t OSCJ tnon? : 3 lo w»Jvsff .VI 

-iflitsqiroo lol ewiBolllns^S — erf 2 



Bcit Xleiel ee:^ o '^&Iq" ,0£^I ,x-CwL nl ©oilTto o;r 



196 

financial difficulties of the Wheat Pools, rendered ineffect- 
ive any agrarian opposition to the raising of duties on farm 
Implements. Implement manufacturers, on the other hand, In - 
a period of generally falling prices and wage rates, responded 
eagerly to the prime minister's solicitation of commitments 
from industry that no price increases would be put into effect 
if,^ tariff protection were granted. During the special Sept- 
ember seision of Parliament in 1930, Mr. Bennett read to the 
House the following .lolnt letter from the implement companies. 

The >Tianufacturers are of the opinion that consumers of 
agricultural implements should not pay higher prices 
for them, and they are equally emphatic in the state- 
ment that. If the Canadian market is supplied from 
Canadian factories, Instead of being supplied in such 
volume by goods manufactured elsewhere, they will net 
increase the prices of agricultural l-nplements to 
consumers, provided the factors entering into manufact- 
uring; costs are not increased, 

(Signed) 
Massey-Harrls Co, Geo, Valentine, V-Pres. 

Sawyer-Massey Co. F.F. Malley, V-Pres, 

J. Fleury Sons, Ltd, H.W. Fleury, Pres, 

J. Goodl^on Thresher Co. H.R. Malley, V-Pres. 
Cockshutt Plow Co. R.A. Mott, Gen Mgr, 

Waterloo Mfg. Co. A.T. Thorn, V.P. snd G.M. 

,1.->ij,Q^rost and Wood Co. J.E. Ruby, V-Pres, 

(2) 

On September 17th, 1930, the tariff on farm imple- 
ments under the general schedule, which since 192'+ had ranged 
from b% on combines to lOjK on plows, threshers and parts, was 
raised to 255^. Simultaneously the duties on farm tractors 
priced above ^1^-00 was raised from the 1919 level of 17^% to 

J. T. 

25%» Tractors priced below $1^00 were left on the free list, 
in keeping with the Bennett government's policy of applying 
the tariff only to goods which were produced in Canada. By 



? 



6^1 

ttl : < larf^o <»r(i" ar 3fn :tn»rc©lqirl .gitnsajslqml 

;tt» ^tnl ,+ijq ed fcluow eptpee'ioni: soirtq c; i moi'l 

lo ^'T^T'P.rr'; trrf:t flci:nxqc etii Ic ••;.?• p.Tf^txf^Oj •■? 

ilo^'? nl r ' 9d lo ^^- elioJOBi nfllhsneO 

o.t ^ 1 
-;?oe*tr.rnftm o*nl snXietne cioJobI 9ri:t b&ttvoici fti- 



t '_ 



.oO leriBsiriT nceibooO .L 



.ae'r4-V .vduF .3.1 ,oO ■ ne J'e 



'"I lo l»v»I 91^1 em n sefei eew OC+'H^ dvods bsoliq 

Yfi .BhiBrtBO fli h9ouhoiq «»i»w riolriw Bboog otf X-Ino lllie:f 



^ 197 

way of Inducement, a provision was written Into Item 1+09 
of the tariff schedule providing for the re-lmposltlon of 
duties on low-priced tractors If and when "internal combust- 
ion traction engines for faprri pnrposes valued at not more 
than ll^-OO each, and traction attachments ... are being 
manufactured in substantial quantity in Canada" ^^ . This 
provision came under heavy fire from members from Western 
Canada, some of whom were reluctant to express confidence 
in the manufacturing ability of eastern Industrialists. No 
Canadian company, however, was In a position to "take up" 
this offer for 15 years, and by that time the entire tariff 
had been eliminated. 



Protect io n Increa se d Ca nadi an Firms* Sh are of the C anadian 
Market 



The 1930 tariff was instrumental, as its proponents 
hoped it would be, in retaining an increased share of the 
domestic market for the Canadian implement industry. A gen- 
eral review of imports and sales from 1920 to 1950 is reserved 
for the end of this chapter, but figures for the depression 
years are included here to illustrate the effect of the 1930 
tariff. 

Imports fell drastically after 1929, from $lf0.3 
millions in that year to $2.2 millions in 1933. Leading in 
the decline were tractors which dropped from 21,777 units 
valued at 18.9 millions in 1929 to I36 units valued at 
$107,650 in 1933. Binder imports fell from a high of over 



l^r.x.' .v.a:}'^ r-^tif r-^i.-t fTW F.a.V r 1 ,*P ^VOTCf s , Jn9B»ou*^n.' lo Y£».' 

■ -tor! :tp. hdiilpv EgsoffTrrr Ti^t to? p.fntnrr^i nolJoBT:^ no^ 

^rtlycJ SIS ... £.' ■ ■■ciCii aoiJO£.-U unn ,noBs> OOf'il nsrtj 

BlrfT .^^' "j tii xiiSciBup lelin8is<!luB tit b»iviOB'iunBm 



p'^ftonrai 






f>«r,Tr»rA- 



n?pr -irt ncpr .-nn'T'^ 



'o b 
> cii1;J lo bns eiU icl 



0£9i »ff* lo :^©9tl«» 9f<:? e^BtS^salll o;t 9i9d b»bult)al ©*is e7e«»>j 



■*■> • Tor- 



ino 



■iiis Oil 






0K7:f 9i9\/ ftall09b e:^? 



o A r !o f-,ciirr - IT 



i«vo "lo iiiiii te si)o-,1 xl»'l ei-ioqmi ir»r..nlti .£tvi nl v/^O.^OHj; 



198 

$5 nDillions in 1930 to $71,000 In 193*+, and plows from $2.2 
millions to $16,000. The declines in total imports were ■'" 
relatively gre^^ter than the decline in total sales for Canada, 
with the result that a larger proportion of the implements 
sold in Canada during the depression vere Canadian-made. 
This may be seen in Table VII. i» ^ 

TABLE VII 

Canada 
($000) 

Total Sales Imports as 
Year Exports Imports in Canada % of sales 

1930 18,396 30,075 38,^10 79% 

1931 7,188 16,1*95 12,130 1365^ 

1932 2,W5 3,316 6,119 9+% 

1933 l,32»f 2,208 6,106 365^ 
193^ 1,819 2,283 8,670 26% 

Source: Canada Year Book 

The excess of imports over sales in 1931 seems attributable 

to the disastrous drought in Western Canada in that year, 

which reduced the Income of wheat farmers from $20^- millions 

to a record low of $123 millions. Importers of harvesting 

machines were caught unawares and left with a large carryover 

of unsold machines. A total of 152"+ combines, for exarple, 

were brought in in 1931 and only I3 in 1932. 

But Protection Failed to Prevent a Severe Decline in the 
Industry 

Although the protectionist policy of the early 
thirties was successful in maintaining a larger share of the 
Canadian market for Canadian manufacturers, it did not suffice 



e; 



8^1 
5. la her ,^i9L r.l 000,1^1 oiJ Qt91 nl enolIIlB H 

.IIV 3lcr«T ni nssz sd \etn BiriT 

(0 

_^__ ij^ e^ioaittl E^iogxS ^gsY 

^" "^ 80S,S 

»MBiu<itiitB emsoe I£9I nl Bflies tsvo e;tioqml Ito eesox© ©rfT 

.,t. •' lo'i ^8Gi"!' 'o lc:j ' .t-r-'ni;not;i!J ej.oenx.' to 

.S£^I nl £1 xJCno bne I£ei nl r aoid eiov 



) 



dPf 


.81 


'^r 


■ J 


831 


,V 




r 
1 




fS 




< 


,-! 


CC 


-:i 


918 


»I 


*^£ 


f'l 



tea hlh il ,8i«itr;tosluneB nBlbmnB"^ lol ;t*>3<TBBt nBlbsneO 



199 

to prevent a sevei\£ decline In the Implement industry relative 
to other heavy ' industry in Canada. This decline is illust- 
rated in Table VIII, which shows in percentages the amount 
by which the tariff was increased between 1928 and 1933 
(general rate only) in each case, as w^l as the amount by 
which the gross value of production declined. It is to be 
noted that the tariff was raised more substantially, yet 
production fell more sharply, in the case of implements than 
in any of the oth«r products shown. 

TABLE VIII 

Changes from 1928 to 1933 

Increase In Decrease In 

Industry Tariff Production 

Agric. Implements lOOjC 885? 

Primary Iron & Steel 26% 70% 

Machinery 285? 6^5? 

Automobiles 205^ 73% 

Total Iron & Steel Prods. 33% 6b% 

Source: Adapted from Mackhtosh "Economic 
Background", p. 92. 

The relative decline of the implement Industry 
during the depression Is further Illustrated In the following 
comparisons. While the number employed In the Canadian iron 
and steel industry declined by 5^% between 1929 and 1932, ^ 
employment In the implement industry fell 75%- For wage 
totals the respective declines were ^6% and 79%. Table IX 
illustrates the decline which took place in the pprcentage of 
Canada's total consumption of Iron and steel used by the 
Implement Industry "■ '. 



inetoi^ ai a^ori^ tiolr. si iii tejci 

£f?i fen« 8SPI na^-fiJsti foeBoeTonl eb-' I'JI'ijs:^ «ri:t riolriw x<f 

©d o* 8l ji . r>s»fi ii J »ij uoio:- ' seoig sfiJ rtsiilw 

,n. iouboiq leiiJo on J ic %:i& r.i 

IlIV - 

£f£I_ol_£ 



iA-; 



ol ."• riaoirr 



■•4:._ 


Tf^teobnl 


</C01 


'A 




-,^^ To 0,4 p. 




2 9t>'lUOo 



gniwoIXol erii ni b©?et^ei/Iii leri^ijul el iioleeftiqsb »ri;t sniiub 
i nalhsneO «ff:^ nl ^e^oXqina idcfaiim 9ri:t sXiriV .enoeliBqmoo 

XI ftldAT .3^?'';' bnB 35^? S19W eonfJoab •^vi;to«qB3i ©rf;J eierfo^t 

1 f -t f ^ t» "^i T r.' .-T cit-f + fi f CK^fP'- •■'rtr.i r^rs } rfur oof ''r^jaf - r-f i ^ c. 4 o-t •♦ e f r J f f' 



200 



TABLE IX 



Canadg 
Percentage of total consumption of Iron 
Year and Steel used by the Implement Industry 

1928 ^. ^% 

1929 k,9% 

1930 k,0% 

1931 2.05C 

1932 1.8^ 

Source: Etudes Economlques, p. 463 
( see f odnote 4) 

How the Decline Affected Individual Companies 

Massey-Harrls ; 

Among the Big Three Canadian companies, Massey- fc.c, f. 
Harris was most severely affected by the depression. This 
company suffered losses on its operations each year from 
1930 to 1936 Inclusive, and saw Its surplus dwindle from 
$5'7 millions after divl'^ends In 1929 to a debit balance of 
$22.1 millions In 1935 ^^^. Sales, including the company's 
exports, fell from $lf3.7 millions In 1929 to$37.3 millions 
in 1930 and to $9.3 millions in 1932. 

Much of this company's difficulty during the 
depression can be attributed to the shrinkage of sales in 
export markets during the early thirties. Following the 
company's formal decision to direct Its most aggressive 
selling efforts into foreign markets in 1918 ^ , its 
export sales consistently exceeded domestic sales during 
the twenties. This may be seen in Table X. The higher 
percentage in 192W reflects the earlier return of stable 



oos 



. (^ f7 fv |7» '^ 



noil lo no/ 


; io ■:. 


■ i 




9;ij ^,;g !?9&l' 

5?0.S 

1-8. 1 


.. --7? 



ibgY 

8sri 
0£Pi 






-X^sbbM ,8oJtnsqmoo nsif' ^'eirfT siS sricf gnoaA 

iftniwfi ei/Icaue bH wee bne ,9vlBuIonI d£PI ot 0£PI 

?o eofi'^Incf it.fJ- ♦ "SPI ni efene^ ^I'lfc teethe ^noV:iJ;ir ^.51 

anoilXiffl £.^£|o;^ 95,91 al Bnollltm \.ti^ ffloil II9I ^*ioqxe 

.'^SO! at PnoMTfrr- r .f>, o.-t hne. CfPl a ^ 

aJ/ 81^1 fli >;J&>Jieiti n^ieio't cS^ni £;rTot'5© gulilea 



201 



TABLE X 



Massey-Harris Foreign Sales as a 
Percentage of Total Sales 



1926 


61% 


1927 


65% 


1928 


60% 


1929 


69% 


1930 


7^% 



1922 55% 

1923 595? 
192»f 72% 
1925 625? 



conditions abroad than at home after the depression of the 
early twenties. In 1930» on the other hand, the market at 
home dontracted much more quickly than the market abroad. 

The shrinkage of the Massey-Harris Company's export 

markets in the early thirties had a variety of causes "^ a.«ii.t,o» te 

Exchange depreciation and difficulties in transferring funds 

resulted in looses in the Australian and Argentinian markets. 

In April, 1930* the Australian market was virtually closed 
f 
to foreign-made goods as the government, in an effort to 

encourage home Industry, prohibited the import of most 
agricultural machinery and set high duties on the rest. In 
Europe, the rise of economic nationalisn resulted in high 
tariffs, elaborate quota systems and bilateral trade agree- 
ments. Germany's emphasis on barter arrangements Is a good 
example. In return for manuf=.ctured goods, Germany was 
accepting as imports only raw materials and foodstuffs. Thus 
it became "practically impossible to obtain import permits 
for machinery which was produced in sufficient quantities 

inside Germany. Imports of foreign agricultural implements 

(7) 
and equipment, therefore, were practically stopped" ' . 

In 1936, Massey-Harris was buying "steel and other items in 



£0': 



X 3JaAT 





fi 80 e 




Pf^r 


>r> 




2^ro 


\ ■ ■ - 


35O0 


8£PI 


S^9c 


'PS9I 


S^fK; 


Of PI 



• «~ •^ <r c/\ 



Jt^5 SG9I 



srl* "^^o . tls ©ipori ;t« aatii bsoide 8nol;Jlhfloo 

tdfi ite^iBBJ ft'rid rJB.iiJ Y-i^^oiJ^P s'l-c. noij:i: bs^/ot-.i:. en 

oi ^o.i.U.* nrr.^ "^o yjejipv B berl e9i*'ilff;t X-f^s© art* at BioiiBOi 

f>«eo'!o AjIlBrrj-Tlv 8bw ^oTfipgr n8lIfi'i:tei;A ©rid" ^C nl 

^ fi R neiie ifi^tfid no BleBricm© e'^nsansO .B:tnon 

e*frnt--KJ d"- '.eocrmJ! \IlBol;to«nq" ©meDed JJt 

-.1 leiijJIuoliaa . .>CnBin'xoy »hien-f 

. ** y& xilKOt-iotiiq eisw ^G-Toleisri^ ,Jn*>iHqlup© bne 

fit ;rff «P ...-"^jfiPSpM .v-^m nl 



/X il^ «^ 

202 



a^ 



Germany which we would not othprwlse buy" ^^' In order to 

be permitted to ship in knotters and other small items essent- 

C" (9) 

lal to implements manufactured in Its plants in that country . 

^. Italy placed all Imports on a quota and license 

„ basis in 193^» and followed this in 1935 with very stringent 

regulation of foreign exchange, Xe^tifylng, before the 1936 

Committee on Agriculture and Colonisation, J.S. Duncan of 

the Massey-Harris Comnany, stated: 

For harvesting machinery, small quotas have from time 
to time been allotted to various countries in proportion 
to their purchases from Italy. In the case of Canada, 
the quota which is available for Canadian Implements 
(based on Italian exports to Canada) is used for the 
purchase of raw materials such as nickel, copper, steel, 
lumber, etc.^ and It Is practically impossible to obtain 
import permits for Canadian agricultural Implements. (10) 

Although Germany and Italy are outstanding examples, 
they are not the only ones. Denmark, a direct competitor of 
Canada in the export of such items as dairy products, virt- 
ually disappeared as a market for Canadian-made implements 
during the thirties. Partially In retaliation for the prefer- 
ence given Canada in the British market for bacon in 1932, 
Denmark set low quotas on Canadian implements, forcing the ""^ 
Massey-Harris Company, which had previously supplied the Danish 
market from Canada, to transfer this business to the French 
and German plants of the company. Greece, Roumania, and Bulg- 
aria likewise restricted their implement purchases to countries 
which used their agricultural and forest products. 

Cockshutt Plow and Inte rnatio nal Harv ester : 

Neither the Cockshutt Plow Company nor the Internat- 



SOS 

-:ff!'^ ■ ' y. IlBtee iBciio bnp e'xe:f^on3{ nl Cflne o* bectitlrtfroq »d 

^ Titnr/co :fEr*;t nl E^nsla 2:ti ni bsitf^fOBlr/new E;tn»inoIqfnl o* I»l 

F>?n«r).M ctro s rro !::t'ioq«I IIb bsoslq xls^l 

;taG3ni.'iJe \tsv n^jii/ v:t,vi ni slrf* bewollol bne ,+*C.9I ai ElEsd 
d£9I mtii 9io^9(i snl^lltfesT .egnRrfoxe nslsiol lo nol^tslyasi 
lo flBonwa .8.x. ^nol^fig^nolo'^' bne '^'rr.r^.firr ^•IS'* no *»«;t:*lff"T!oO 

ap IS 









iBrf 10'? 








- ^i ci 








-^.4 oi 


iJlSVB 8l 






,. srf* 




« • 


SJS 




OiJfliiJ lO'.: 


a;tl 


mT«»c 


, J-;c^i::j: 



f \:IiBOlJor 
to It .^b B ,3!ftefl»n©0 .eerso ^J^no stli *on sib x®^* 

i^ 10 ; T.Mfid-?'! fil xXIbx- .sel^ilrf:t £iri;t anltub 

^Sm r.f nn-ifcf to**- *p-rfiprr r^pl-'lTS nrfrf nf phrn?,?' n<3-«r_^'q son" 
srij gnioio'i ,ejn9:.islqitjj n£lDsnB.>i ac o£:loi;^ wol Sbb i-i/ 
rielflBCT 9ri;t bsllqqoe X-Tewolvsiq bsrf riolriw ,X"£ 

.e;toi.'^oin :ts9io^ bnB iRtvilvolfsp. ilf»d:t 'nlrfw 

-JfliiT-ji-i s."ij Ton YOBqiooO woI*i ^ituflBJino;; gdi 79ft*li>5! 



203 

lonal Harvester Company suffered so drastically from the 
depression as did Massey-Harris, Throughout the late twenties, 
Cockshutt's exports sales had averaged only 12% of its total 
sales and International Harvester's around l65f. Nevertheless 
the Cockshutt Plow Company's total sales dropped from $6.2 
millions in 1929 to $1.3 millions in 1933, and the company 
suffered losses on its operations from 1931 to 1935 inclusive. 
Earned surplus, which stood at $1 million in 1929, had dwin- 
dled to $57,000 in 1935, from which it recovered steadily in 
suceeding years. Likewise, the implement sales of Intprnatlonal 
Harvester fell from slightly over $12 millions in 1929 to 
around $h millions in 1933* 

Following the termination of the tractor arrangement 
with Allis-Chalmers in 1930» Cockshutt made a similar arrange- 
ment with the Oliver Farm Equipment Company under which Oliver 
supplied a range of tractors which Cockshutt sold in the Canad- 
ian market under its own name. This arrangement with Oliver 
was to a certain degree a reciprocal one as Oliver accepted 
corn and grain binders from Cockshutt as part payment 
It was, moreover, a afortunate arrangement during the depression 
insofar as it enabled the Cockshutt Company to offer a tractor 
with its line of iraulements, without having to carry through 
the depression (as Massey-Harris had to do with Its plant at 
Racine) the he^vy burden of capital tied up in a tractor nlant. 

British Empire Preference AKree ments of 1932 

The shrinkage of export markets might have been even 



n 



£0S 

nr^:,t noi'J: rllp'^Ii^s'^.h os b'?7»'^^r'C vfBafroO "ets^vrr"" Iprcf 

sri5 bnp ,£f.9X nl eno JIII-t £.I|; oi 9S9I nl enolXIiffl 

-nivo Dijn ,<;^iiVi. ill .-ioiixj:!! ^4' Ji; rocje r^oj.' '. ,£ijj.qiij£ : eniB.': 
at xlibsi9it beiPiVooftT :f J -' tnoit jC'-SPI nl 000, V^t o;t b9lb 

bnuoiB 

J. -c^tOBtd sffJ "^o noUnnlmi" gnlwollo'il 

-•nnr""- TrL^mf? e pbpTi :t*r-'^E>'nr.'^ ,Orrr n_? rT^rnfRi^'^-slXr/^ rfitlw 

-b bloe iiudziiooD rfolriw B'io:toen;t "^o n-gasi & beilqque 

Tov/ir riitlv ^rrrr'?=innE'TTr. s.?rfT .smRn nwo n:fl irhnu i?7lt£^r net 

c''jqsco£ asvi:.. •- ££ ano iBooiqiosi £; 99T§&r nic-l- oj 2£v 

( «■ r ) 
. " ' dnnmYeq *i»q zb :t;tt;rfei'ooO ajciI eisbnlcf nleig bn« moo 

rrofsrp-TCS^ '^r^::t ^rrfTrr^ :tn'^'"S-^rf ttr r»:tpn:j:*'rc'*r .-verier .?p,v :+! 

n»vo naocf evprf :^.'^•!ltm Frf'^-yJTr^ rtTor^r /r.'^Trfr> r,rfT 



20^. 

more drastic had it not been for the British Empire preference 
agreements of 1932. The British Empire countries had never 
shipped implements to Canada, and so offered no conipetition 
to the Canadian industry in its own market. On the other 
hand, soQG vere capable of providing wcxthwhile export markets 

to the Canadian industry and it is here that the Empire pref- 

(12) 

erences become of some importance. ^ ' 

Outstanding among the Empire preferences which 
appeared In the thirties were those accorded by Great Britain 
herself. Under Britain's Import Duties Act of March 1st, 
1932, a IO5S ad valorem duty was imposed on all imports (exc- 
ept wheat, meat and other essential raw materials). Goods 
originating within Empire countries, however, including the 
Republic of Ireland and Burma, were permitted to enter free 
of duty. On April 26, 1932, the preference was raised from 
IO5S to 155^ on all agricultural machinery and, with minor 
exactions, It has remained at that level until today. Britain 
accorded a icreference to Canadian-made tractors when these 
were first produced in Canada in the late forties. Under the 
Geneva Agreement it was provided that after September 1, 19^8, 
a tariff of 10^ would be placed on Canadian-made tractors as 
against 155^ on tractors originating in the United States. 

Ceylon established an empire preferential rate of 
15^ on agricultural machinery and parts in January, 1933, as 
opposed to a 2^% general rate. These two rates were raised - 
to I7H and 27^^ in December, 19^7, lowered to 12*^ and 22^ 
in Ssptember, 19^9, and to 5% and ±5% in 1951. Trinidad since 
1929 has accorded a lOjJ preference on agricultural machinery, 



nolil •-' 6n fceisl'fo oa bns , c* z^fnafcelqini beqqlrte 

cjSJt'it.'' j'xcqxe diinwrjwTCw snifclvoiq Ic exacqBC siev 3::oe ^l-hbi^ 
-iaicf stlq«3 »di ;t*ri* ST©rf 8:1 it bak yi nalf^eneO srid^ ot 

.©onfi^togfnl smoe lo ©mooed s^onois 

,:t8J ffoigM Jo iok eelisjd iioqoil s'nisitlifi aebnU .llseiarf 
9rf:J j5nibuJoc!l ^isvsvforf ,eol'i;JntJoo ftTlqiSi^f nlrfitlw snltfenJtslio 

innxc rfc^iw , bne yv m iBiw^Ii/oiiaB lie no 3^?I o* 

n'--=^.1titi[ .rp^iCl It^^tTri J?vfi_r ■Jr.rf.t :tR Pnni'snm g-^i-f t ? , 8rfoKt,'fT>Tn 

»!ii iBbnV Jio^ »;tBl eriit nt jsheneD nl baonboiq ;taiit eiaw 

.e»:ta.ta " sri* nl fio bioJobiJ no S|^I ;? 

lo ©*Bi laJtifnoiatenq eTJtq.-© nB ' (bJbr 2 

iXianJf'^owr iB'iiJj±u'JX'i:\i iio coiieieiAiq J^OI « b»bno30B t«ri ^S9I 



205 

while "implements and tools, agricultural, Including those, 
driven by mechanical force" enter free under both the 
British preference and the general tariffs. Southern 
Rhodesia In l'^31» under the Customs Excise Amendment <Vct, 
imposed a 5% duty on agricultural Iraplementi? and machinery 
from all non-Empire countries, Empire products being admitted 
free. In June, 19lfO, this preference was increased to 155^ 
on plovs and parts thereof. 

The preferences granted by Australia. New Ze^iland 
and th e Union of South Africa havo been less impressive. 
Under the Canadian- Australian Trade Agreement of 1931, only 
certain I'^ss con'mon types of implements such as stump extract- 
ors, root cutters and straw stackers, were accorded a pref- ^ 
er'^nce by Australia. Reapers, threshers, harvesters, caitiv- 
ators, harrows, nlows, disc cultivators and drills were all 
made subject to the general tariff, those goods originating 
In the United Kingdon being the only ones entitled to the 
rates of thp preferential tariff. Generally speaking, the 
difference amounted to between 10^ and 1^% ad valorem. 

In New Zealand, the situation has been somewhat 
similar to Australia. Under the Canada-New Zealand Trad* 
Agreement of 1932, and until the present time, Canada has 
been accorded the general tariff rate of 35/S, but with a 5% 
surtax instead of the 22^^ surtax imposed on non-British 
countries, on cultivators, harrows, plows, drills, distrib- 
utors, and certain 3mall'3r implements. The duty on such 



b€^;f*lmfciR Ritr^i-boia eilqma ^BBiiiavoo e' -ion lie kot"^ 

3f?I orf f'-'^p.Fo-Tnn! SF.vf sr^n'^isloia eI.H:* ,0<^J .^mrl- '~T .i=»st'i' 

• Icr 'j'lfiQ .or:;^E gwoiq no 

. V,' ' r r-- - '.^ ;;,,;, ^-'(5 ^VBil £ hnij 

1 '.r EiU'L-o DOB EicjGVij^jjo oaih ,BWoiq- ,ewo7ierf .(Bio^te 



-all , ail XI;' ,awoi<; rasrl ,eioJf5Vx;?iiic» no jEelawniiCo 



2© 7 

goods originating in the United Kingdom was 10^ ad valorem. 
Certain types of plows, cultiv?=itors and seed drills have 
been free of duty regardless of origin. The Union of South 
Africa I on the other hand, has never accorded any preference 
to agricultural implements, although shipments to that country 
from Canada have always been considerable. (See pa,ge 233) 

It was suggested that the Empire preferences of the 
1930 's were of some importance in maintaining the export 
outlets of the Canadian implement companies during the depress- 
ion. This is illustrated in the following table showing the 
portion of total exports going to Empire countries during the 
decade of the thirties. The increase in this percentage, 
especially after 1932, reflects the relatively smaller decline 
in shipments to Empire countries than in those to other countr- 
ies. By way of comparison, Table XII shows similar percentages 
for the United States, where implements had been permitted 
free entry regardless of origin since 1913. These, it will 
be noted, dropped sharply after 1932. 

TABLE XI 



Canada 

Total Exports of Exports to T^nipire Empire as a 

Year Farm Machinery Countries & U.K. Percent of Totl 

1929 :.15,870,918 $3,573,817 20% 

1930 18,396,688 3,183,181 175^ 

1931 7,188,078 1,566,052 21% 

1932 2,U8»+,965 893,28»+ 335^ ' 

1933 l,32»+,776 753,»+35 5^Jf 
193^ 1,819,826 1,035,735 55% 

1935 3,567,253 1,956,991 9^% 

1936 6,3»+»+,^37 2,3^8,897 ^(>% 

1937 6,276,608 2,726,216 \3S 

1938 10,705,957 3,3^3,553 1>0% 

1939 6,'+53,0»+2 2,320,655 365^ 
Source: Committee on Agriculture and Colonisation, 

1936, p. 280 ; and Canada Year Books. 



to flotfU «i lo 8? to sen^ nsed 

933t 992) e^C^W; BTOll 

IIo"i oi^JetilXl »i eJ ol 

4 leileut: eworie IIX sXdeT inoeiieqrroD lo xtirg ^fi .esi 

/ ,8»;te:t8 i ©ri* nol 

Hi f-ow;.. .c- ' ■"•""■-te nJai'i ^ " ' easlbissei \1tn9 d^tt 

.S£9I letlp Y Tib jboitbn 9d 



^rr -« rr r< r^ ' 



1B«Y 












jA no e :aoijjo3 

!«<»¥ . bn« f08S .q toid 



208 



TABLE XII 

Canada 

Total Exports of Exports to the Exports to U.S. 

Year Farm Machinery United States as P'cent of Tot , 

1929 $15,870,918 $^,367Ao8 275^ 

1930 18,396,688 »+,ll8,8»+2 225^ 

1931 7,188,078 2,030,^36 28^ 

1932 2,»+8lt,965 7*+9,012 29lf 

1933 1,32^,776 220,79^+ 15% 
193^ 1,819,826 332,519 15% 

1935 3,567,253 603,0^0 17^ 

1936 6,3M+,i+37 2,»+67,203 3^% 

1937 6,276,608 1,926,351 30% 

1938 10,705,957 3,7^3,^73 3^% 

1939 6,^53,01+2 1,802,895 28jl 

Source: Committee on Agriculture and Colonisation, 
1936, p. 280 ; and Canada Year Books. 



II. Re cover yt Low Tariffs 

Tqirjff Reductions by the Liberal Government In 1935 and 1936 

By the middle thirties the desperate plight 
of Western farmers had given rise to considerable parliament- 
ary discussion of implement prices. The Liberal government, 
still much aware of the desirability of winning Western farm 
support, had its opportunity when it was swept to power in 
1935* Without delay the government began negotiations for 
a new trade treaty with the United States. That year ended 
the implement industry's second term within the protectionist 
fold. With the negotiation of the Canada-United States 
Trade Agreement, tariffs on implement Imports from the 
United States were reduced from 25% to 12^5^, and duties on ^ 



80S 



,8.n hf -•♦t' ■ -1 Rt*'' 



igl imI 



^^^^''cf^+^^S 'BfP/ 9S9X 

:i SfPi 

-i -5 of 91 

.1 a s'£9i 



c 



"> r 



i 5£9I 



fi9Y i bas j08S .q < 



a. 

siel: m»^8sW -gnlaaiv lo x^-fXlo«il8»f> eri;^ lo p" bwb rioinn II1;Je 

/>ePn« ie.fi\ ^iaci'i .eertflvJii bad-lnU »f(;t ditv ^iaetl ebei* van a 

Btii mof*^ e:t'T qwl no iiT^\itBS ^Jflfxt'efligA ©beiT 

no z^ltiub bnp. ,«t/<'S' ?'<% froTl fieoithrit «)"!Bw ao.fc;J8 hnitinU 



209 

all tractors from the United States were eliminated. 

This 50% decrease was really only a beginning. 
The Agreement came into effect on January 1, I936. At almost 
the same time, the new price lists of the Canadian Implement 
companies appeared announcing a 35? rise In the prices of a 
group of farm Implements. This price increase, which affect- 
ed only 28 of the 78 important machines sold in Western vCan- 
ada, and which the industry claimed was the result of higher 
steel prices, met with loud protests within the Liberal 
party. Many regarded it as a clear breach of the industry's 
pledge of 1930. As a result, on March 2nd, the House Standing 
Committee on Agriculture and Colonisation was ordered to 

f# r 

enquire immediately "into the causes underlying the high 
prices of farm implements, with particular reference to the 
advance in prices for the year 1936". Simultaneously, the 
industry was requested to suspend the price Increases until 
the Com.mittee had decided upon their Justification. 

Some of the implement companies complained 
against the appointment of the Committee, and this request, 
as having had the effect of slowing business at a time when 
recovery was just beginning ^13\ The request to defer the 
price increase was not heeded by the companies, however, and, 
after a vigorous debate in the House, the Liberal government 
retaliated by further reducing the duty on American imports 
from 12^ to 7^% In May, 1936. Very little opposition was 
voiced in the House of Commons to this second reduction, though 



-s JA .d£9I fl ^ ^ no :to»l'ie ocTnl omBO ^Tnerrdei: 

-cToa'tlB rfolf{. nl eniig alriT . 'ffll anel lo quoTs 

iBiedlJ 9f<:t Joiq bi/ol ri;tlw Jem ^eeoliq le^^c 

s*rt:tf to rf- be.*:<ics9i x' ■ .y^ieq 

o;t beiebio eew rtoiiBttnoIc s'TLfJiuolisA no »e;J*JticffloO 

rf"^tri «»ri:; p'' -rf:t Ov+nl" yj*»5s-f benr'-nl siiirpno 

OiiJ oj !jonoTel3i ifej-i: : nsxw ,Eir. . ■ 'i aieJ to eeoliq 

ex/osr "> Bf»oiiq at «* 

' ■ ' :) esii iuiiio; sijj ic • 

frr"5 

8SW nl ©nliq 

" .":f '^Z ^,T ^-^i-f.-* .^ipr'n'T c,,-*-t t f eirtnii^.:^^ T.ttor ■'>'^' fv p '"^+'^p 

fX Yt»^ •' ' teoTt 



210 

one Eastern member claimed, rather fancifully It would seem, 
that the 192^+ decreases had already "ruined the industry" ^^^\ 

Official Enquiries; 19^6 to 19^9 

-1 
The announcement of the impending Investigat- 
ion into the implement industry evoked various reactions. 
The industry as a whole appears to have resigned itself at 
the outset, and indeed it extended gratifying cooperation and 
assistance to the Committee throughout all of its work. The 

financial press was less urbane. One of the bitterest outbursts 

' - not 
against the investigation came from the Financial Post , which 

caterwauled editorially: 

Trouble looms for the farm implement industry. Every 
dependable sign points to this industry being made 
the victim of as implacable a hea^'-hunti ng expedition 
as any commercial enterprise since the more malignant 
days of the Price Spreads Committee. 

On Parliament Hill it is conceded that the implement 
industry has committed a major crime. It has seen fit, 
in the early days of the Liberal Ministry, to boost 
prices of implements — this at the very time the gov- 
ernment is reducing tariffs and cheapening production 
costs. Western Liberals are outraged. (15) 

The "head-hunting" expedition proved to be a most orderly and 
objective enquiry in which an extremely patient effort was 
made to secure all relevant facts from both industry and gov- 
ernment sources. The Committee on Agriculture and Colonisation 
did not complete Its investigation in 1936, and it was succeed- 
ed In 1937 by a Special Committee on Farm Implement Prices, 
which submitted a resport to the House in that year. 

In its report, the Committee found that the 



oxs 

,me«B Mtfow :*f xlLiAxoas'^ i»{ii»t jhsraiulo ';. b"^ ©no 

^^fi ^l Pit cJF'?! ; eqi-iicji,a ; J3.toi'^'»Q 

fcne noi^teifv^ooo ^r^^Y^ '■ + ?»•»'? ^<=•'^^'^t▼^ .+| beebrrJ; fin* ,'^'*etiJO 9tii 
8*87. ;ta9i9;^;fia snO . •'ru ea»I asw eaeiq iBlonsnll 

n £ «' 

' ■ f. i\ V . .i5HTl':- 

Erw jTot'ir? j-n«»J:-^B<; x-f^^^ei^^c© ns rfolrfw nJt ^lii/pno 3vlj-of>r,(-'o 

'nolo'" ' -•' ';'.'i3jL:::i::c'- ' .c;=;oiJJ..: ■'.IB 

' • SI ^ -vnl tSi • ion bib 



i^fi.t io't 


erao 


oX 

i 


t" Ib 

;--Avj^3 90,' 




'^0 YflO EC 


8l it : 






— e^r- ■■' 


..j. 


■i 
'10 eeol-tq 







211 

Implement companlfis over the perloi of their operations as 
a whole, had made "substantial profits on the capital invest- 
ed". The losses sustained in the thirties were a result of 
oi ti\e 'J 

farmers' inability to purchase implements, and not the fact 
that prices of farm implements were lower than was justified 
by manufacturing costs and distribution costs. With regard 
to tariffs the Committee concluded that tariff reduction had 
tended in the past to lower the price level to the farmer, 

"depending on the extent of free price competition in the 

that. 

Industry". The 193^ nrlce increase, concluded the Com-^lttee, 
was not justified by an increase in manufacturing or distrib- 
ution costs. In deed, the prices of implements over the per- 
iod 1891 to 1936 had been "maintained at too high a level as 
shown by the financial returns to the companies engaged in 
the industry during that period". 

Unfortunately, although some thousands of pages 
of oral testimony were collected by the Committee, an insuffic- 
ient attempt was made at the time to correlate the evidence and 
to make it readily available to the public. Indeed, in its 
final report, the Committee recommended "that some agency of 
Government should carefully analyse and correlate the evidence 
appearing in the records of the Committee". No such analysis 
was ever made, and the Committee's work stands as a monument 
to a patient but somewhat unfruitful investigation. One is 
struck by the contrast between the paucity of the conclusions 
in the report produced by the Canadian committee and that of 

the United States Federal Trade Commission on the implement 



^o *Ii/e9i G eisw Bs2*ilri* art* nl b^nls^eue eeeeol srfT ."b© 

-f.'.r^'! cri-i :^n' ',-:.-:. . ^ :» . 1 Q rr, fi f/i rr ^ -".R n -'mrr" ort v:tf rt'fRrfl ' H:'i-'>ir''T."t. 

htB««T r noiiudliisib bne 2*boo sniitfJorAunfifn \d 

isvBl ©oiic oJ Jaaq bs\3 nX r-oir-'i 

9rli al flc Tooo aoiia ©eit lo :tns:fx© arf* no ^nlbneqeb" 

-i©q eri: 'Ttni lo e»o2iq 9ri;t ,b©©5 nl .BJ-aoo nolitu 

in' 1 yi:J8t;hni ©ri* 



;sq to e£in«Ei-(o. 



_<-. fTt r- 



has 



8.1. 



eie^Xiirf 



("l^''r'. , ; Ci: 



,olSdfm 



La fXl9tBrtutnoJnU 



,e >■ ■< r.fr: 7 :i >; 41,'- Jc-''"- "O 

©Id/BllfiTB vJfbeflt :M ©jiem o;t 



•■^ *-*•-? r»»T i ey rt 



f*^ 



"^IBO IduOiif. 



enc .^ei/Ionoo »rii J.o x^^^^^'A •rt* ne©w:ted izatiaoo ©ri* yd i(oi/n*e 



no nc 



89*8*8 beiinU 9tii 



212 

industry in that country two years later. 

No tariff reductions resulted from the work 
of the Ottawa Committee. This investigation was followed 
in 1939 by a provincial enquiry into implement prices conduct- 
ed by the Prlvince of Saskatchewan. The Sask-^tchewan comm- 
ittee's resport included recommendations that the implement 
tariff be entirely eliminated, that proceedings be instituted 
against the industry under the Combines Investigation Act, 
that Crow's Nest Pass Agreement freight rates be restored 
on farm implements, and that extensive government assistance 
be made available to cooper^^tive associations interested in 
the manufacture and distribution of farm implements. Tjike ' 
that of its predecessor in Ottawa, however, this committee's 
work resulted in no positive action. 

In part this was to be explained by the recovery 
of agriculture and consequently of the implement industry in 
the late thirties. Cash income from the sale of farm products 
increased each year, from $536.0 millions in 1935 to $735.0 
millions in I9V0. Income of wheat farmers likewise rose, 
except for the drought year of 1937, from $173*0 millions in 
1935 to 309.5 millions in 19^+0. With the return of prosperous 
conditions, the controversy over implement prices quieted, 
and the industry accepted without much complaint the new 
tariff level ^1°\ in the absence of pressure, the government, 
faced with important proliema of reconstruction and dominion- 
provincial relations, limited its tariff activity to the 



bDWOiio'i EBV7 ricij^g.: J£y vi:„ c:j^.. .'j«ij.»i 

-^Jou&floo eeoiiq ;tn9fi'oiqB;i o:fni xnlupne lelonJtvoaq s x<i Vt^i ni 

jij jcfiJ £,coi^i:.i:m ui::oQ9i ijoi^juj-unx j-ich«pi e'eej'wil 

be^i/;tl*£fli scf eanifcsesoiq ;t«riJ ,tft;rf,nJ:cill9 YJ^9'il:tn9 ed lllie*- 

,,'• .- ,-nf.-f';r<-f^r?'vnl BT^rldtr.oZj eri; r vr;+f:L ■^^.j■ cr+ ^shIesb 

©or.Bd'elaeB Jn^'Cimsvoa ©vlcnetfx© *sr<j bns ,E:tne£'S-IqmJ: pieI no 

iix. •^i.te-.^fcrsj: :*».• ;'i jiiJ lo \ijn&i:i Banco bnz ■3ii:::iuoii'^c Ic 

g;totfboTa miBt lo slse srid^ ciotI smoonl riCBO .so'jilrii^ ©d'el srf* 

:♦ ?fr. . .-no^irir O.c^f?? ^^ot'!- ,ic<^y r^0":= ?;02.r«=»Tr/nl 

nl BnolIIlra 0.£S^IS aortl ,^tCI lo isax ^rta^cib flr(:t lol ;tqeox9 
wen 9.'i:t ^nlfilqmoo rioi/m iuocli.lv hs.tqaooB xi^swhnl 9ff:t bne 
etii oi \ilvtioz llliai zit bQiltall fZnoliBl9i laionlvoiq 



213 

renegotiation of the Empire agreements In 1937, and the 
drawing up of a new trade treaty with the United States 
in 1938, neither of which affected the tariff on f^rm 
implements. 

III. World War II; Tariff Removal 

The Industry duri ng W orld War II 

Before we examine the circumstances and method 
of the 19'+'+ tariff reduction, a brief survey of the Industry's 
experience during World War II wlllbe made. The most important 
effects of the War on the Implement industry were restriction 
of production, price control and rationing. In the United 
states, Increasing shortages of rrij^terials forced curtailment 
of production even before that coutry entered the war. On 
September 30, 19^1, the U.S. Limitation Order L-26 was issued 
restricting farm implement manufacturers to ^0% of their 19^+0 
tonnage In new machines and 150% in repair parts. This order 
was operative until October 31» 19^+2. 

r- 

The effect of the restriction was Immediately 
felt In Canada, where imnorts from the United States had com- 
prised over 55% of the total Implement sales in the three 
years through 19^1. Canada had as yet introduced no similar 
restrictions, but, as a result of the United States move, 
conferences were immediately held In Washington between 
representatives of both governments, following which the 



II i :■< ,Vf> J. 1. 8*f!ft^©9^§J5 9iJq«a ori* 1o noli ali oig^nei 
atf-t no ^Itliect ori;t ^9Joe"^*58 riDiriw lo •I9ri;t.t9n ,3£CJ nl 

• 83 i».->L'i-.'jn I ii-.j.. 



\3sw_: .III 

e'X'!:^ew^ ' yeviixE lelic Ti;totJb<»t l^lie* •t^+'PI 9ri:t lo 

fio ■ . • - ' ' '■■ 

be^lnb »ri;J nl ,'galDol:^Bi bne Iori;fnoo ©oitc ,nol;tor F-'Ta ^o 

ci on bBO!Jt)oii> >ri F.^B^eO .iV^i ngifoirtJ ci. 

,9V0ff ipf*>»*S f)«».^lnn Sri:? '♦e tflnaei a bg ,:fiff< ,8nol;:foi'i:t^?T 

•ri* r' Lot ,«ar nJod tc eevlJectnseo-iqei 



2lW 

United States War Production Board agreed to supply to Canada 
its full share of the restricted American production, based 
upon Imports into Canada for the year 19'>0. Simultaneously, 
Canada agreed to impose limitations on implement production 
similar to those in the United States and in January, 19^-2, 
the first Administrative Order affecting farm machinery was 
issued by the Wartime Prices and Trade Board, limiting pro- 
duction to Qh% of the 19'+0 tonnage In new machinery and 1^-0^ 
In parts. 

More drastic curtailment became necessary 
in 19^3 as steel shortages became more acute. Limitation 
Order L-170 of the United States War Production Board limited 
production of new machines for that year to 20^ of the 19^+0 
base, leaving parts at 150%, At the same time, through Admin- 
istrative Order A- 7^9 of the Wartime Prices and Trade Board, 
Canadian production was limited to 35^ in new machines and 
150% In parts. Some modification of these orders took place 
In late 19^3 as the materials situation began to ease, and 
continued throughout the first six months of 19*+^, until by 
July of that year virtually all restrictions on prodaction 
had been removed. 

Restricted production in the early 19'+0's 
coincided with a sharp rise in farm Income, as a result of 
a series of extraordinarily good crop years and favourable 
prices. As a result of the upward pressure on implement 
prices, the Wartime Prices and Trade Board in February, 19^-2, 



4rc 

LioBnfioIx/nlfc .Of'f I teax ^f*^ lo'i BbansO o;tni B^ioqmJ noqif 
noiJouboiq cfnofflsiqini no gnoLtiiJiciil ©eoqm' o;f bsonga absnaD 
,S4iPI ,xiBwnBo fil f>na e9.tfi.i8 ber^inl) orlit nl SEOfl^t o:f lallmla 

-07q 3ni;tlfiii.L , .^.n. - ^^^ • , •, ^- . ■. .. ---. ..-sv* adi \,ii bsxyeel 
S^O-rfl bnfi \ior,iii'jfint wen nl ageflno^t 0+^91 eri:* I0 ^+'8 c;} noiJoufc 

b®;timii biscwi iioIJouboi-i ibVs etijejc. hfiJinU arid 10 OSI-J lebiO 
0+lPI -, 3fOS o? x3e\. ::f6r(;) lol 8e.r«lrfo«?.m wen "^o noiloa^o-iq 

fhzeoH. absiT bna ssoiii ®rai;^TB(fc 9n^ to v+^^-A I9ba0 9vI^ai:teJt 
brtfi epntrfopfP w<»r« nl J!?5t o:i h<^:it'nfl ebw nolcfoi/boiq nalbenaD 

•oalq ^^u ; -■ - oc. . . tii'-i al ^0^1 

bne ,9269 o;^ nagsG aoii&uJlB eiaiisJara sri* ea £+^I stfal nl 

Il;Jnii ,H ;. Brfj-nopi xle t^Tt^ «>ff;t S'jod-^vozrf-i b<=»ij.Tt:tn^o 

nol;t'oi,''^0'iq no Rnoli^oii^ r > j. j. i ,., x.»- • o^ ■»■--*■ ^ ^ -\, -'^uj x^ \±ijv 

. -vorasi need barf 

a'O-f^J Xlifl9 sd:> nl no' b«»;tolT;tepH 

"ic .pfT rrTef<e a ffitiw bebJonJ-oo 

^a- i no ••tu8B&iq biBwqu nriit "to tijjiE.91 a ■■- ^olnq 

,S^fI ,>jiraid<!»'? nl biRoH ©baiT bna asoJtiq amliiaW 9rt:t ^Bsn^iq 



215 

froae Irrsplsinent prices at their 19'+1 level, announcing that 
separate ad.lustraenta not exceeding; 5% might be rnade in Indiv- 
idual cases through special application to the 3oard . Only 
two significant relaxa^-ions of this policy occurrei before 
price restrictions were completely removed in September, 
19^7, Late in 19^5» '^he Board permit t^d the prices of 
imported machines to be raised to the extent of the increase 
approved by the Office of Price Administration in the United 
States, Tn April, 19^+6, a 12^^ price Iroressc was allowed on 
domestic production in Canada, the first since 19^1. Concern- 
ing the latter increase, the Board statedj? 

Authority to raise prices was granted because, with 
the chanf,eover from war tc peacetime prc^uotlon, TJanu- 
facturers no longer appeared to be in a position to 
absorb the full v;art1;^r Jr.cre^-se In the cost of pro- 
duction. Moreover, sccae costs had recently increased 
because of the autliorlzed advance in the price of 
steel and castings an'3 because of the rising cost of 
component -arts Itnportr"^ ffoir the Cnlted nt^atss. The 
price adjustment was limited to the sm a llest practic - 
able aiT.o n t ajid vas ha3ed,_on. the best obtalnahle 
information on the current and prospoctlve oT5er3ting 
results of the companies concerned. The fact that 
export pric-s were considerably higher than '"lotrK^^stic 
prices was a significant factor in limiting the 
advance required in the domestic coiling. (17) 
(Emphasis supplied) 

The apologetic tome of the statetrient reflects 
the Board's awareness of the strategic political importance 
of farn irapleaont prices In Canada. Further reflection of 
this appeared in the making of the announcement of the auth- 
orized Increase by the Minister of Finance before the House 
of Commons, rr.th'=>r than by the rtartime Prices and Trade 3oTd, 
as was customary with ordinary price increases. It Is also 






-V 



snl 



Xf^Xlo;; - 3'i 3n6'j' '^ ovj 



fiX ©rid' gnl 



et *n ^. e «*w 



,bfoQ •' '!« ««>• dd xd 11' iJa^ ,BnoramoO to 

-olia •• TO ri*iw yij > e«w sb 



216 

true that the increased cost to the Canadian consumer result- 
ing from this price Increase, considering especially the large 
percentage of Imported Implements , was much l^iss than that 
resaltlng from many other Increases. The protest raised 
against It, however, both in and out of Parliament, was out 
of all proportion to the amount Involved. 

In addition to production and price controls, 
Canada and the United States both Imposed wartime export 
restrictions and an elaborate system of rationing on the 
implement Industry. Fxport restrictions were roughly com- 
parable to those on production. Rationing was begun when 
production was reduced in 19**2. Under this program prosnect- 
Ive purchasers submitted re-^uisition forms through the 
Implement dealers to the government rationing officers, who 
passed on their merit. Deliveries to implement dealers were 
scaled down In proportion to the decreased production. 

The sharp drop in implement production which 
followed wartime restrictions was balanced by war production 
orders. Of the total sales volume of the Cookshutt Plow 
Company In 19^3 and 19Ulf, amounting to $33,760,000, 60^ was 
War production. For the Massey-Harris Company the correspon- 
ding figures were $183,238,000 and 6^5^. At the outbreak of 
hostilities, the Massey-Harris Company wrote down the net 
assets of its GerT^an plant to 1 dollar, thus adding $682,000 
to its already-substantial debit balance in 1939 ^^ \ In 
the following year, the company's assets in Denmark, Belgium 
and France were also written down to 1 dollar, adding another 



.u«vIovni ^tnwocne ©fi;t oS nol^tioqoiq lie tc 

,eloirfno5 ©oJtnq ftne nclrfcuhcnq oJ ^c.f.■*J•5^p nJ 

:t7ccrTf> i»ffi:tTew ^p«sofTr? rftfotf 8ft;tt«:t8 ^9:♦l^If ©r**" ^^B B^eneO 

9ri.t no ■ >-• ? r- .--^ -' '■— ■ "^ <-> .♦-r'-i u .'? o ^ ■? r^ r.,'^ < ?' '^- r -^ ^1"? EfiniitDi'''* r -■" 

-«oo ^i' ''i«w fcnoi jf?/n;JRei r^iO' . {1cgJJ^^t JneiL'&Iqiri 

'Oiri;J emioi noicflsi -eBSi-fDiiLrq »vi 

oriw ,ei«tomo afllf!ol:t«T *n«mniovo? ©rf* r>:t e■IeIB*^ in^m^Iqmi 

noftrr.'F)©'!'? IP" Vf^ FN(«»«>rtfe r«rf ?«v ann Mo fi.tKisf ^mftTi^v ftevolio^ 
w^oi'^ ittsdzj^) '■ ■ ■'■■ ■-■.■■"f - •■hs rp^jc.i ->. t - .-i'i.-. J ■:, 

000, in}bbB «"(-' f"^ j'ff.IIof* J o.t cfnitrq itpm>T«»o 8.+ .^ '>o ^.tegBp 

«' uroiio't Brf;t 

iftfl^onB sn^fobB ,iBiIob I oJ nwob n0*;tlTw oels bibw eonei'? bns 



217 

tl, 3^9, 500 to the defioit. Thus by the time of the capital 
reorganisation of 19^1, most of the company's European assets 
he.d been added to the company's debit balance. When the war 
ended, it was found that the German plant had been completely 
destroyed, but the plant and branches in France, Belgium and 
Denmark were relatively unharmed. For some years after the 
var, all of the company's European assets were carried on the 
balance sheet at the nominal value of t'+.OO, "owing to the 

inflationary situation and the resultant continued uncertainty 

(19) 
as to the valuation of the various currencies" . 

Tariff Removal. 19'^•^ 

In 19^^ the Canadian gov'=?rnraent removed all 
tariffs from farm Implements and parts. This was done through 
the passage of Bill No. 167, In the form of an amendment to 
the Tariff Act itself, a procedure which immediately suggested 
that the change was Intended to be permanent. The step was -^iX 
consistent with the general post-war policy of facilitating 
low-cost production in all segments of Canadian Industry. It 
appears to have been similar in intent to the Prairie Farms 
Rehabilitation Act, the Agricultural Prices Support Act and 
the Farm Improvement Loans Act as a direct aid to the agricul- 
tural sector of the economy, and to the privilege accorded to 
industry of writing off certain t/p^s of new investment at 
special rates of depreciation for income tax purposes between 
19^^ and 1Q^7. In introducing Bill 167 to the House in his 
Budg'=>t Sreech in 19Mf, Finance Minister Ilsley stated: 



aji-'f-.et; naeqo-iii.a :;■ v'^^l -•'-••' '"* -' - -»-=-"■ <-^*^'i "*'-■ '■^-j.-'t ■'^-■I'-.^.i 
7SV trf* nsrfW .©on«Ied :tWeh e'^nfttraoo »KJ o^ bsbbs n»©d bsn 

9rl3 CJ aniwc. ' ouiEv j-animc Isd 

X^nlBii^oav bewnUnoo ;JneJIi;e«i srfrf ens notiBuiiz xiBtiotrtBlJal 

OJ 3Li€,ir.t>a9Sh ns "to i^'LOi sr.j lii ,\ox .c:a XJ.xa :c sgB£--£ii 3n:t 

anla^BJi-iiOfii 10 YOXjLoq •isw-iTeoq Isisnsg ©aj naiw jnecteiEnoo 
JI .xi^Bi/bnt n.^ibansO lo ^in9m■g9t He nl nol;touboiq itaoo-wol 

-Xooi 1 o^ blB *06ilb soJ ;t^»m9VC^q^rI aie.'K 9rf;t 

;fB :' an 'k- ' nii--' ' '^o gn^cMTV "'c xi-Tsurr.i 

nsgwrtffcf eeeoqioq xb:^ snrooni to^ noirtfllosicrsb lo Bft^fni leiosqa 



218 



The government desires to give concrete 
evidence of the direction vhlch it is endeavouring to 
follow in the formulation of post-war commercial policy. 
It desires also to give to agriculture assurance in 
respect of some of the conditions under which it may 
expect to operate after the War, Just as it has tried to 
give to industry some assurance in the field of taxation 
policy. 

Canadian agriculture will be faced with 
Important opportunities in the post-war period and if 
it is to take full advantage of them, its costs of pro- 
duction should be at the lowest practicable level ... 
With (this) end in view, the governrnent believes it 
appropriate to provide at once and without waiting for 
the completion of reciprocal arrangements with other 
countries, for the removal of all customs duties on 
agricultural implements. 

It is therefore recommended that agricultural 
machinery, including cream separators, and parts thereof, 
be made free under all tariffs. While it is impracticable 
from a revenue standpoint to remove the war exchange tax 
on the general range of commodities, the war exchange tax 
on agricultural machinery and cream separators and parts 
thereof is being removed along with the customs duties. 

(20) 



The government recognized, said Mr. I Is ley, 
that the step would have little Immediate effect on the volume 
of imports, because of the tremehjous backlog of demand which 
had built up in both Canada and the United States over the _ 
preceding 15 years. The move, in other words, was well timed 
to cause little immediate dislocation in the Canadian implement 
industry and to evoke as little protest as possible. The move, 
however, was not entirely free from political significance, for 
the government was to face a general election in the near 
future, and the rising strength of the CCF party, especially 
in Hestern Canada, could not be ignored. CCF mei^h-^r-:; of the 
House of Commons, led by Mr. Coldwell, had long con<t«w>T>ieJu 
the tariff and in l?**** were urging the government to set up 



8XS 

©rfj ai wollol 

^ p et)i *-'■' '. 

•io :t r 

c* el il 

... i u .. -^ 8 nol^oifb 

il ' n.t bna (cJ;-f:t) rf.-t ^W 

. Io I i ©rid- tol' , 

.8;Jn9Dti9lqmI JBii/JIuoiiae 

xb;^ e j ,e-' . no 

ert-"^ •^- •'■ ,-^,..;... ^^.^ no 

el loeTorf:t 
(Oil) 

tts-tS-T^ '1*^ bias ,f>©.sln?oo8t ^tffsiwntavos ©riT' 
eaiDlov 9cii no ito©!^© »;t£ ' elS^il «v/Bri Mi;ow qeis srf* rtarfc^ 

ffolrfw bneaieb ''o oljiosd tuobaem^-i^ •"-'"+ "^f 98tJ80«»cf feJioqmi Io 
•f[* levo eed^Bdci Cif*;flnU Qdi bne ebenftO rlJod nl qu tltini bsff 

fsicflr oiq «Ii;JlI as »iov9 o* bn« \ii^ubal 

•xoTt j»> FbdI. "lon^ 'T'^tl.'tn** :fr>n raw ,T*v9Worf 

'^ *d Ion bJt/o'> ,p^p^p^ nT<»:te»B nl 
qu *92 '-i evog imcf gnj stjj »i©»< I'tlie* Bdi 



219 

(21) 
government-owned plants for the manufacture of implements 

On the other hand, it is interesting to note that the Liberal 

member from Brantford, the home of a large segment of the 

Canadian industry, vigorously opposed the tariff elimination 

stating that it: was not in accord with the United Nations 

principle of multilateral action in tariffs. 



IV. Review of Sales, Imports and Exports from 

1920 to IQTO 



We conclude this chapter with a review of sales, 
Imports and exports, a topic reserved to this point so that 
the period 1920 to 1950 might be treated as a unit. « 

Sales and Imports : (a) The Twenties 

During the twenties the Big Three Canadian imple- 
ment firms dominated the Canadian market. From 1921 to 1929 
the combined domestic sales of these three companies approx- 
imated 705^ of the sales for Canda , the remaining 30^ 
being divided among about 65 small producers in Canada and 
a number of purely American firms selling through their own 
sales outlets in Canada. The domestic sales Dicture was as 
shown in Table XIII. 

Not all of the Canadian sales of the Big Three, 
however, were of implements produced in Canada. As has been 
seen, all three of these companies imported tractors for 
resale in Canada, either from their own plants or from others. 



Xfc ai JJ o i&ii;J nO 



•M »> ... V ,. . 



,n 



weiv "''* 

led* OB ;tn rocT e>Ki oJ b«vT»8ja"[ oiqoi s ,i»;tioqT9 hn^ eiioqnil 

s?;, 6fiT (b) tt j^ioTgil bnE se 

8^0f. snlnJfin'«»i ' BftnuO to'J s »rf;t to S^OV ■ 

br- •• "!i6C ill B'lsowboiq llp.^e $d Juode anoniB beblvib s':^*<^ 

,IIIX ©Id"- '-^ -■■'ofiR 

yhen«0 xit bdoubo-iq ejoeaie^Iqwl "io »i9W ,ievowori 
lolE BTo:toBi:t he^Tnamf BwJfnintqflioo <»Bfirf* to ©oirfit lie (neeg 



220 



whst 



pt 41 



Year I.H. Co. 
(approx) 

1922 $7,320 

1923 7,7^5 
192»+ ^t7^5 

1925 7,60«* 

1926 9,136 

1927 11,969 

1928 16,113^, 

1929 12,061 



TABLE XIII 






Implement Sales 


In Canada 






($,000) 










Total Big 


Total 


M.H. Co. 


C.P. Co. 
$2,269 


Three 
$16,519 


Canada 


$6,930 


$20,931 


7,385 


3,936 


19,066 


29,732 


»+,i>80 


1,592 


11,017 


21,677 


7,8kk 


2,809 


18,257 


23,631 


9,820 


3,^75 


22, lf6l 


38,897 


10,850 


i+,108 


26,917 


52,538 


1^,963 


"+,897 


35,973 


66 533 


13,6W8 


5,387 


31,096 


52,386 



Source: Pigxixes sui plied by cociranies; see also 
Ajpendix • 



and the Massey-Harrls and International Harvester Companies 
Imported other implements from their respective plants in the 
United States. For this reason, the figures for the total 
volume of imports into the country an'l for the portion of 
total Canadian sales made up of imported goods, appear surpris- 
ingly large. To illustrate, 275^ of the farm machinery sold 
in Canada in 1925 Was imported. In 1930, 79% was imported. 
The increase may be seen in Table XIV. 



Total imports Total sales Imports as a 

Year into Canada in Canada Pe rcent of sal es 

1925 $6,1+95 $23,631 27% 

1926 13,337 38,897 3*+^ 

1927 l8,9»+6 52,538 365C 

1928 29,636 66,533 ^^% 

1929 »+0,293 52,386 765C 

1930 30,075 38,^10 79% 

Source: Canada Year Book; for sales, see 

All endix • 



OSS 





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eeJtnfiqmoO id^tsevi- smsJnl fcne KiiiBH-ysasBM s»ri;t fens 

eri;f nl 8*nelq sviSos^qs-^'" "'■"''■■-) moil E*n<9ffl9XqHiI leriito fcecltoqinl 

to ncttnoq 9Ci^ lo"! f-ne \iJnwoo «ff;t o:fn.f Ritioqial 1o sofwlov 

bXoa X" "io ^VS ,9iBi.' i X-'^S^^ 

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221 

What accounts for the sharp increase in imports 
as a percentage of total Canadian sales? The answer lies 
principally In the increased imports of tractors, which vere 
not produced In Canada. Tractor imports rose from $2.6 mill- 
ions to $21.5 millions between 1925 and 1929. Table XV shows 
this increase and, to illustrate the predominance of tractor 
imports. It also shows them as a percentage of total implement 
imports, 

TABLE XV 

Total Value of Tractor imports as 

Year Tractor Imports P' cent Tot. Im pts. 

($ ,000) 

1925 $2,601* kO% 

1926 6,272 k7% 

1927 8,558 k5% 

1928 16,819 5658 

1929 21,581 53% 

Source: Canada Year Books, 

Increased tractor imports in 1928 and 1929 resulted In part 
from the importing done by the Massey-Harrls Company and the 
Cockshutt Plow Company in those years ~ Kassey-Harris from 
its own subsidiary in Racine, and Cockshutt Plow from the 
Allis-Chalmers Company. 

If tractors are eliminated from the sales and 
import pictures, and only imports other than tractors are con- 
sidered, it is seen that imports as a percent of sales Increased 
during the period, but not so markedly as when tractors are 
Included. From 1925 to 1928 inclusive, only between 18^ and 
25/i of implement sales other than tractors were imported (see 
Table XVI). The sudfen increase In this figure to 595^ in 1929 






• aiOOa T-S9X S-CSilSJ liiOXi'JO'2 



P'' 



;fisq nl be^tlueei 92^1 fens 8S?I nl etfioqal loiOBii bssseT^- 

&{ii^ noil woXSi j:^t ) bns ,?tnio«H nl x's-ffc-^^ '" 

.>£n0qfnoO a'nnleriO-slXiA 

R8 to :tn©o' as eiiofiml in t il ^bsip 

*,oj. .. . %j.n' -.L'^-jiij. o.i\j. C: "^'"' .b®biu.o;i 

ait 9,Xdi n .(IVX •!. r 



222 



ii' 3i 






TABLE XVI 
($,000) 






Total Ira:^o 


rts 


♦ 


Total Sales, 


Imports as 




Tractors not 




Tractors not 


a Percent 


Year 


included 






included 


of Sales 


1925 


$3f890 






$21,026 


1B% 


1926 


7,06k 






32,715 


21jg 


1927 


10,389 






»+»+,98l 


23^ 


1928 


12,817 






50, 71^+ 


2 5% 


1929 


18,713 






31,806 


59% 






S 


ource: 


Canade, Year Book 
also Appendix 


figures; see 



Is exeeptlnnal insofar as it reflects the optimistic expect- 
ations of importers after a year of record sales in 1928. 
Such expectations were not fulfilled. Wheat yield fell from 
567 million bushels to 302 million bushels and income of 
-wheat farmers from $1+51 millions to $317 millions between 1928 
. and 1929. Total cash income from farm products fell fro^ an 
unprecedented high of $1,069 millions to $937 millions. As 
expressed in the annual report o^ the Cockshutt Plow Company 
for 1929: 



AA 



1 



The first six months of the year were as anticipated — 
satisfactory; the latter neriod was 'disappointing on 
account of the drought which prevented growth, and 
consequently the harvest results were not up to expect- 
ations. 



lAs a result, all companies found themselves carrying heavier 

inventories. Those of Massey-Harris, for example, increased 
1: 
' from $2 5.8 millions to $31.8 millions between 1928 and 1929. 



(b) In the Thirties 



The relation of imports to sales during the 
early thirties has already been reviewed, and it will be 
recalled that domestically produced implements enjoyed a 














p 




':^^^ 


^^o,Jsa 


098, ta 






.c 






+«cn,^ 


*.r ':. 




M 






^.., _.. 


'^H 




•a 






^: . 


'<^^ 










ilst^l 


99a jgaiirail 


:>{ooC: 


x^&l si; 


3iX3 J 


:aoii;oS 






X 


rJbflsSqfcrA 


oal3 










I nl eels2 bioodT lo ibsx e iSvUe zi^iiocimi 1o KtiotiB 

3to'i'> US'! blsl\; iBBtf^ . !bftIIJ"^Ij:;t ;tr itol;j6;to©qx9 rioi/S 

■J*^ sffloonl bns elsrfai/d nollllra S0£ od^ Risrfautf nolHtia ^d? 

8S«?i frowJed anollllm VI£l oi BnolIIlm I^+^t rooil eieraiBl :tGerfw 

••■-■!:'! Ilet ^:tcu^o^q miBl rnoi"^ emoonl tiZBO laioT .QSfil bns 

.enolij^ic: \t'<* 03 encilliiis kbO^ lo rfglri bsc^nsbsoe'iqntf 

>foI^ iiutlifiooD BCii Jo Jioq©*! lei/nnc ecii nl beeesiqx© 

— r ■ ■ ■ --offl xJ 

btiB , -ffiq r liotb 9ri;J Tto inuoooB 

i9iv' -IxiiBO esvlaemenj bfix;o^ eslneqicoo 11b ^iiiiesT e sA 

beeef^Toni ,©IqciBX« toJ igliiBH-YSEEBM lo p>eoffT .eeiic^fnevnl 

. ::: ^ nl (d) 

•ri* Snltu^ eelee o* eiioqml To nol:tBle'i ©rfT 



223 

larger share of the Canadian market as a result of the high 
tariffs from 1930 to 1935* The figures for these years are 
repeated in the accompanying tables. Attention Is 'directed 
principally, hovever, to the latter half of the decade, years 
comparable to the period 1925-193^ In that they saw returning 
prosperity and. & relatively low tariff level on Implements. 
As In the late twenties, tractor Imports formed the bulk of 
all imports In the years 1936-19^+0, constituting 73/^ of the 
total value of farm machinery shipped into the country. If 
tractors are Included in sales and import figures, it is 
found that imports, which were 29^ of total Canadian sales 
in 1935, had risen to 6**^ by 19^0. This is shown in Table 
XVII. 

TABLE XVII 

($,000) Imports as 

Total Imports Total Sales a Percent 

Year (tr actors incl uded) (t ractors Incl uded) of Sales 

$12,130 136^ 

6,119 9*% 

6,106 365^ 

8.670 ^i^, 26^ 

13,000 (app.) 29% , 

19, 3*+^ ^Qi 

30,755 56% 

36,213 56% 

3^,060 615C 

1+7,7^8 6ifjf 

SoiiTce: Per Tables XVII to XX inclvisive: Canada 
Year Book; see also Apjendix • 

As In the late twenties, if tractors are excluded 
from sales and imports. It is found that only between 20^ and 
3I/C of implements other than tractors were Imported in the 
1935-19'+0 period. It is evident in Table XVIII that there 



1931 


$16,1+95 


1932 


3,316 


1933 


2,208 


193** 


2,283 


1935 


3,716 


1936 


9,373 


1937 


17,23»* 


1938 


20,320 


1939 


20,918 


19»*0 


30,673 



£SS 

bs*»ei.tb el no J .EoId«!* 8nlxf'Efl'»"30os 9^^ f^-f fcs^seqfti 

f-. c,,-,',-t ^rt ? rR,"^ "isJ^bI ari:^ '">■"* .-^'^vo'Tor* .a^IIbct '^nfT^•r^r 

§nlinij:t9i wbe HisiiJ wB^I? til 0£9I-5S^.t roii"-! ^ns oi eldBiBqmoo 

.Bcfnewoslatnl no I'^-v^l ^"Mist vol \levi\iBXQi b bns xd'liaqtoiq 

•^mM'-,'* ^■•'•''■ncffGl aod'OBI.'t ,Selji~'^w:^ '^^:^^^ nrf.-t rr ?• rS 

^I .xi^nsjoo »(ii ottit baqqlrfe "^ignlrfOBffi mieJ Ito eulsv Ip;)^o^ 

-:' * '* . i Iff, t. f^ rf T n-r '?■ ' f-ri:^. fATp?! 'ft ^s^^t.'■^r n f --t'l f p.•»^r^^)B•I^ 

gI!5bT fll . v'= N oU- r ?>6il "^^reX nl 

.TT?X 



IVX aJdAT 






<iT' 





-■> ' I 
'I 


i '- r - 


•v a 




mi 




.L 

I 

r 


. ao'i :eoTJJoa 




■■- ..L ' "" '''. 





.tjibsrrsO x&YlauLoul XX od" IIVX. 

, Xl5ns- ■'■ ^^tIs 993 

F>f:ir.ff r '•»ir«s lSlT«^ 3 1 n;1 M Oft "^ f . « a f rt . "■ r; T cn'.'t nf »i 

beiroqmt t^ loiopti nsri^f i«»ri;Jo e;f ttl 1o 1{I£ 

•toflcf irnii olr'RT '(«>Mv. -_.uq Of'PI-?rPI 



Total Imports, 
tractors 
Year not Included 



22k 

TABLE XVIII 
($,000) 



1931 


$9,352 


1932 


2,331 


1933 

193^ 


1,378 


1,510 


1935 


1,889 


1936 


2,879 


1937 


3,601 


1938 


5,501 


1939 
19W 


5,916 


8,if36 



Total Sales, 

tractors 
not included 


Imports as 
a Percent 
of sales 


$^,987 
5,18W 
5,276 
7,897 


iBBjf 
k6% 
26jg 
19^ 


11,173 
13,130 
18,232 
20,902 

19,291 
27,116 


17% 
225C 
20% 
2G% 
30J 
31^ 



was a definite tendency for imports to usurp a larger share 
of the Canadian market during the period, though their import- 
ance was much less than when tractors were included. " 

(c) The Forties 

It remains only to examine the period of the 
late forties. The war period is omitted here because pro- 
duction and import restrictions distort the picture. From 
19^^ on, the trend is found to be similar to that in the two 
periods Just examined. This period was also one of rising 
farm income, and the tariff, as has been seen, had been elim- 
inated. Prom 19^5 to 19^9 inclusive 65/f of the farm machinery 
imported into Canada was made up of tractors. Total imports, 
with tractors included, show the same tendency to increase, 
until be 19^9 they constituted 7'2.% of the total sies of farm 
implements in Canada. 



t'i^:: 



JJSR 



■ 14'; . • .-.!fc 



£?r,«e 


iroj 


i&£,5 


J 


8\r,I 


cLVl 


OI^I 


+f£5I 


^38,1 


^t^'i 


9ve . r 


dfPI 


I 


^£ei 


f 


srei 


c_ .• 


O-PPI 


df-^.8 



^•SS rrr.rf 



.^,?»^i^i^!^ t R ort-^Ef:! rerfw nsriJ eesI riouro esw sons 

i. (o) 

'■iax.<.» nsyd i)fcn ,n. :>c' tifci] 24; ,lll*iBi sriJ in: ■:; li oiel 

• effcr To ^^d r o:» ^+^1 moT'K .'-y anl 

2 iBioi 9iii Jo J^SV PI 9d Itinu 



225 



TABLE XIX 

^ ^ , , (1,000) Imports as 

Total Imports Total Sales a Percent 

Year (tractors Included) (tr actors Inclu ded) of Sales 

19i+»f S^0,6ll 

191*5 50A35 

19'+6 68,352 

19^7 105,1+05 

19»+8 139,993 

19»*9 177,210 

Again, If tractors are eliminated from the picture It changes 
somewhat. 



171,908 


56!< 


82. If 33 


61? 


102,525 


66^ 


1»+5,671 


72% 


197,662 


70% 


2»f5,193 


72% 


2-3S', ^T^O 


, (21 



Total Imports, 
tractors 
Year not included 

19i+>+ $11,59^ 

19^5 17,397 

19^6 22,733 

W 35,959 

19^8 51,326 

19»f9 58,706 



TABLE XX 
($ ,000) 



Total Sales, 


Imports as a 


tractors 


Percent of 


not Included 


Sales 


$lf9,^21 


23^ 


62,137 


2Q% 


IV 77,5^2 ^c.r>,. 


29% 


10i+,m8 


3^% 


13^,603 


38^ 


1^3,168 


ko% 


/^a,-n / 





,. IF ./ 



It is to be noted that in ^ach of the three 
rising-income, low-tariff periods examined, the percentage of 
imports other than tractors did show a definite tendency to 
rise, even though not in so pronounced a fashion as vhen 
tractors are included. Available data do not take account 
of the sales destination of imports, bnt it i3 reason-^ble 
to assume that the greater share of lrat)ort3 goes to Western 
Canada. This, combined with the greater degree of fluctuation 



•t ^ or- ,v. T 



8 



^ss 



(no^,t) 



VDC 



r*) J, 






8'- 



;tl 9'iu;toJfq srfi moil b?>i&ntml^& f-ca eio:to?i* 11 ^niz^A 



rn^- 









C'^iti^^i 



,e;f'ioqBiI Jfi^toT 



dCv 



T£9Y 



ff:K-t p-'crtcip Off nt ^ ?• 1'' 

lo •SBjiit'oie^q ©ri:t ,fcenJ.inexe efoiieq llliei-woi , ©moon i-anicii 



iTT 



*1 itAftf ^eJioqal ? nolitf^nf^eeb eels* orf^ lo 



226 

of prairie farm Income, goes far to explain the tendency. 

Another feature of the sales and import picture 
is the amount of specialisation which has taken place Inter- 
nationally. Tractors, of course, are the outstanding exa-^iple. 
Generally speaking, specialisation has been a leading determin- 
ant of where production has taken place. Taking the Internation- 
al Harvester and the Massey-Harrls Companies as examples, it 
may be said that implements whose market has been principally 
in the United States have been produced in that country, while 
implements for the Canadian market alone, or for the Canadian 
and British Empire markets, have been produced mainly in Can- 
ada. 

International Harvester, it will be recalled, 
Imported about ^0% of its Canadian sales prior to 1930> and 
of these, three-fifths to two-thirds were of tractors ^ . 
The chief implements produced by the International Harvester 
Company of Canada then were drills and cultivators, though 
binders, mowers and other harvesting machines were important 
items. At present, the company manufactures in Canada a full 
line of implements with the exception of tractors and combines. 
Massey-Harrls has Imported from its American subsidiaries, in 

addition to tractors, hay loaders, manure spreaders, disc plows, 

(26) 
corn binders and ensilage cutters 

Significance for Competition 

It appears, therefore, that although the Big 
Three have dominated the Canadian market in the past, they 



^,.rr ^^ J-^- -I .T,'-,- -nf '■■Msr r^stlfp. ,:rf:t "^o ^T-'tf^'-* Tprf^nnA 
.•Iqmsx© sni iiuoo 1o ,8io;to«iT .^cllfinoJtJen 

il ^Z9J.n zR s9int?qftioD 8lnBR-X©88«M ©rl* bae i»: 

nBlbensO »ff:t lol 10 ^snolB Jsjiism nsibBneO erf* lol E.tnsm©Iq«l 

_MO,ri nf "T'-^.' ^:^^:-'•r'- rre.iarf '^^'•prf , r :!<>>' tfisfr OTicrrT riE^^:tl^S fins 

.Bbs 
,b?>lJ'F c- Illvr d-1 iiarfesviBH Iflnol:fBni9:tnT 

;^- r, t •r-i^'ri'i -sglge nsibgnBO Sd^. '.off.-; Fll5:^•Trraf^f 

lujOtti;/ '.to *is»r ebilff;t-owj^ o;t eri^^li'i-eairiu ^searfJ lo 

j::^u :;.. . RIOT'S-. -II lib »'I«Vir r.^wM r.:.„r.^-, Tr, ^7rtp'^mO^ 

^nB^fioqml eti^v e-n^fiioem jjAxd-aeviBri teiijo bne eiewof bnid 

IIu: anaO nl esiif^De'tunBffi x^Bqcnoo eiii (^noae'iq :fA .gpsjjt 

.>,r,i ---.- !-.^„ ^.,,,4,.,,.,, 'ol:tq©oxf> -rf-^ rfrtiw 8.-tnsm9lqfr ^ "^r snll 

ttX jfiftltBi bl ediJ* nc bJ'I moil btrjnoqml eeri eiTiBn-Y^BaaM 

,ewoIq »plb fit. « fBTsbBOl Y«ri t«'io*OFid oJ nolJ^lbbB 



227 

have done so with a large percentage of American-made Imple- 
ments. The significance of this for competition Is that It 
has made attempts at control or scrutiny doubly difficult. 
Any regulatory body Is faced Immediately with the fact that 
around 705^ of the Implements sold In Canada are made outside 
the country. Thus not only are cost figures more difficult 
to obtain and use, but the variety of companies Involved 
ranges from purely American companies selling through Jobbers 
or branch houses In Canada, to companies such as Massey-Harrls 
and International Harvester Importing from their own plants 
in the United States, to purely Canadian companies Importing 
Implements from purely American companies for sale under 
their own names. 

Tractors hold a particularly Important place In 
this picture. From the point of view of competition, tractors 
are generally considered their "line leaders" by the full-line 
companies, and for this reason, as well as for the fact that 
they are higher priced than most Implements, tractor prices 
take on special significance for any attempt at regulation or 
control. But useful data on tractor production for such pur- 
poses are especially difficult to come by in Canada because 
of the large number made outside the country. 

Exports ; (a) The Twenties : 

To complement this brief import-sales analysis, 
and to show further examples of international specialisation 



-©icjii 8£>Bfl!-n*olTf5fliA '10 &§s;tn90i9q ssisl b fiJJtw of. ©nob ©veri 
Bf(:t 8i 0ol*l*«*qffloo lol: ztd^ 1o aoneoJllnsle arfT .ainem 

©fcleiJuo »be.tn ©le ebflnfiO ni Moe aci arfj to 3^0^ ftnuois 

:tli;'; ^t*l?5 g'Torr R«5TiLrrlt :frtor; t-ik vTrro Snn Ei/rfT .VTitntroD arirt 

Loviovf;.? ^9ia«qc;oo ic ^^Jwiasv anj Jijd ,9£i; fcns nx£'ao oj 

BTsdrfC't, rt?,iJOixl* snlXiee e^lneqajoo nBOliemA ^leiaq moit essnei 

J.. frr^oH-rr r. drtfR r.-^lrTrTrnr.o o.-t .F,^p^r^ a r a^rrror' r^onsiff to 

&.tat,.iq nwc iisftj ; ia.r£tv •GGXJCiTxa;;fli linfi 

1-0 fffiollfttnA xI^^Uq fflOtt BltflSBftfrrr^l 

.sflssn nwc li&ii;! 

f. Iq ^^neJioqffii \liBluDliiBq e 5Iori eio^obiT 

8ioj-o«i:t ^nolj-lj-^qnoo to wely to itnloq erfct k .»inJolq elri;J 

viiXlJ" JOo'i en J lol 36 ii9w £6 ,no8B©T 8lri;t lol baa ,89lnfiqaoo 
p tojtofli* ,r J^ *Rom nsrfi besliq rterfslri »nB xerfi^ 

-iisq noija lol «oi3yiJ&oiq[ loJoei:^ no b^bI lu'lseu J .- - . :oo 

9T8 8»80q 

««!' JBe-iioqmt iBiid tirij ;fn«tnelqffloo oT 



228 

in farm machinery production, exports are here reviewed. 
Farm machinery exports from Canada increased from $5.3 
millions in 1922 to $15.8 millions in 1929. In those years 
the principal foreign markets for Canadian implements were 
United States, the United Kingdon, South Africa and South 
America. The different timing of the harvest in southern- 
hemisphere markets assisted Canadian producers in overcoming 
the fluctuations In productive acltivity which result from 
dependence on the Canadian market alone. 

During the latter half of the decade the percentage 
of exports to total Canadian production remained fairly 
steady in the viclntity of hO%, 

TABLE XXI 
Percentage of Canadian Implem e nt Production Exported 

ffVoooT 

Gross Value Exports as a 

Year of Production Exports P'Cent of Prodn 

1925 $2lf,770 $11,3^3 ^% 

1926 38,269 13,628 3^5^ 

1927 fe,996 17,^13 39% 

1928 »+l,199 15,61*3 39% 

1929 »+0,659 15,871 395^ 

Soiirce: Canada Year Boolcs. 

Chief exports in these years were binders, which exceeded 
60,000 units, as compared with 18,000 imported. Total 
exports of plows were valued at $12 millions, as compared 
with imports of $7.2 millions. Threshing machines and 
mowing machines stood respectively third and fourth among 
exports, followed by a large number of smaller implements 
such as cultivators, drills, harrows, hay rakes, etc. No 



t nl XXlB 8.?X| od SSPX fll enolXXlin 

3 eri'iTti d'jvj'^ t^xv- 
-aiexi:Jxfoe nl i^.evtRd Bti^ to snltn_fj ;Jn*»T;9'J't lb »riT .boj-^ 
f! JaiocT'^vc nf STf*'>L'^cnrr nalberaO MitslEea etfsjfiara f 
fflOtl jj-xj^aa lioia l:J±os t><ijwu: '- * taoliBUioult Bdi 

' B ;t«2l'iBin nslbsnaO oil* no eon- '-. 

lo tlBci i©*:fBX erf* anliuQ 











rnsO lo 


^ai 


2i 










-rTpY pn.5«-(% 










£? 


f: 


.-J2. 




TSOY 




.a-iooa 


r+'r.fx^r 
I 

. X 

IV«J«^X 
•XBeY sfesttsO 


tao'ijjoc 


r 

r 




>s:px 

Vi^^^X 
85*^ r 



' ,eT,9!2fixa eizv eit^x seefiJ nx ejic 
Xe . ejB ,E^jtn« 000, Od 

bt^ifQ ■■ .pncl'I.r f- fit itp hf'ifJrv ^t^U' ewoXcr ^o Eittooxe 

c ■ d" PsvorTol - K'tTocrrfl 



229 

exports of combines are listed In official statistics before 
1930. 

(b) The Thirties ; 

Exports fell drastically in the early thir- 
ties, from a record high of 19.8.3 millions in 1930 to $1.3 
millions in 1933* Slow recovery began in 193^- and continued 
unevenly throughout the decade. The difficulties experienced 
in most of the industry's export markets during the depression 
are reflected in the fall in the portion of gross value of i 
production exported during the period. 









li 


^BLE 


XXII 






Per* 


sentage 


of 


Canadian Imple 


raent 


Production 


Exported 










($, 


000) 




■•■•«-3 






Gross Value 








Exports as a 


Year 




of 


Production 






Exports 


P'Cent of Prodn 


1930 






$26,902 






$18,397 


68^ 


1931 












7,188 




1932 






5,510 






2,»+8»f 


^5% 


1933 






5,326 






1,325 


2hi 


193*+ 






8,818 






1,820 


20jJ 


193? 






13,692 






3,567 


26J{ 


1936 






15,957 






6,3Mf 


395^ 


1937 












6,277 




1938 






21,299 






10,706 


505^ 


1939 






16,035 






6,»+53 


4-05<T» «n«5 



Soxirce: Canada Year BookB. ,^^^ 

sen 
After 1935, increases in this percentage 
took place, partly because of crop failures in Canada, and 
partly because of extraordinarily good conditions abroad. 
The sharp rise in average farm prices for wheat from .61^ 
in 1935 to $1.02 in 1937, benefitted producers abroad but 
Was insufficient to offset the effects of severe drought in 



9SS 

■jildl sdT (cf) 
-Tlff:f X-Cts« art* nl ylleold^eeib IIsl Biioqx3 

^ -I 



C\ 



S09«d£| 0£9I 

;s O.r' . Sf^I 






,1 ?£^I 

bn» tfibBfieO ai esii/Ilfll qoio lo seuBosd xiiiBq ,90Blq >foo;J 

-.'1 seoliq ffiTiii 9^sievii nl stli qifirie eriT 

b«**il I ni SO. II o* ^tei nl 

isel'U ...i .. ; ..-illt'enl 8»w 



230 

Canada In 1936 and 1937. In those years, the Canadian wheat 
yield fell to Its lowest level since 191^: 219 million bushels 
In 1936 and I80 million bushels In 1937- In 1938, the Massey- 
Harris Annual Statement reported record levels in world crop 
production and sales abroad were up correspondingly. In 1939 
a crop failure in Argentina and the elimination of much of the 
European market caused a decline. 

>n In Cfe 

Binders continued to lead the list of 

exports, plows being second, and exports of both these being 
substantially greater than cotres ponding imports. A newcomer 
to the list in 1930 was the combine, 2,535 of which were ^ 
exported In that year. Most of these, it seems, were the 
product of the Massey-Karris Comnany. Both exports and Imports 
of combines became negligibly small as the depression progressed, 
and recovered only slowly during the latter half of the decade. 
In 1939f 1»13^ were exported and 702 Imported. 

(c) The Forties ; 

The export picture, like that of imports, 
was distorted during World War II by wartime restrictions, and 
the war years are therefore omitted here. In point of volume, 
since 19^5 the absolute volume of exports for Canada has risen 
steadily. Moreover, Increases have taken place In the portion 
of Canadian production exported. The reasons for this are to 
be found in the experience of the individual companies. 

The removal of the tariff in 19^^ was 
instrumental in Increasing the exports of the International ' 



-,"-'■' ~~»F.^«3«3 ^fj;j ,£Tfi9v eeorid n.i .'\£PJ' bna d£OI nl sbaneD 
8l»ri8wd floiiiiffi 9IS z^lQl sonla loval ;j8s>woI 8*1 oi Il9*i blf^ly, 
->ff* u1:r ,8£9I nl .V£PX nl elerieud aollll^ 08l fjnB df^I nl 

9£Vi nl .X' rrilbnoqzstnoo qu ©i»w hao'io's esIbb bns ^ol*Olfbo^q 
«»fi* 1o rtouB lo rtold^«nliBlI» ©rf:t bne sc±in^'s,Ti\ nl siuXIbI qoio s 

"io ctell '"''^ ■■ '^ ..: '-■f^iifllino'^' - -> -■ r ,-, : >-: 

3W9n A .E^ioqaJl ;§n f h«oqE©tt>o nfiriJ teif.ais ^XlBl;tnBi^ecfn8 
easy riolriw Ic ^c--."' -. -'""-•• '>-<^+ eew 0£PI cii iztl f*r<i oi 

9C{i •19W ,8ffl9©8 Ji ,9E . IB^X i &di Ol b^ilOC(X9 

-. ..v ..,i^. J4 iiv ci97qe[; 9rl»1 ajs ilPflia xXrflfe- -a •' t-.;-fio»d eonlcftnoo lo 

; SO^ bns b&Sr -^i^w -^tl,! f9£PI nl 

te^-htTr'? O ff? (o) 

fZnotiotiiBei 9miiiBv \j;cf II teW blioW gnliob b«;Jio.telf> bbw 

fjinv ^o ;Jnloq nl tlno 9ioj9i9fii bi& eiee^j ibw ©rf* 

f.~>.-.x e.t.i: dbBflflO nol s^Toqy ■'- '^•isi.fjlov •ioIoBds 9fi;f 5+'^J- fionle 

tioliioq «o«Iq aeils^ «VBrf Reesaionl ,rrftvo9'i v .^II •"f*o:tB 

o;t •IB p.trti lol eoo«B«T ©rlT . b©;fTO''iXA noliovbct" nplf>nnBO lo 

.Eeln^qiBoo lewblvlbal aril '" "^nelTf^xe --•..■.: ;, : unuoJ 9d 

»rij "io etf-ioqxs «ri;t snl8B»Toni nl LB^n^fZiJiitnt 



231 

Harvest«>r Company of Canada. For Tiany years Harvester had 
produced grain drills, field cultivators, stationary threshers 
and brush-breaker plows in Canada for the Canadian, South Amer- 
ican and some British Empire markets. With the elimination of 
the Canadian tariff, it was deemed feasible to expand the 
Canadian company's operations in these lines, to the extent 
that at pro?sent the company's entire production of these imple- 
ments for its world-wide market is carried on in Canada. 

Another important factor in the increased 

exports since 19^5 has been the entry of the Cockshutt Plow 

Company into tractor production. When the tariff removal was 

announced, this company, Q3% of whose total sales in the ten 

years preceding 19*+^ had been made in the Canadian market, 

was most apprehensive =ibout the possible effects. In Its 

Annual Reports for 19^, the company stated: 

The action taken by our Government In removing the 
duty on farm implements imported into Canada is, we 
feel, certain to have an adverse effect upon our 
business. During the war period, vith the demand 
for farm implements being far greater than the supply, ,« 
the effect of this legislation has not yet made itself 
felt. The company has made known its views to the 
proper aut'-^ orities. 

^. : In 19^5 Cockshutt attempted to find sales 
outlf^ts in the United States and succeeded in establishing 
marketing connections with the National Farm Machinery Coop- 
erative, and Gamble Stores, Inc. Through these organisations, 
Cockshutt implements have been retailed in some areas of the 
United States under the names "Coop" and "Farmcrest" respect- 
ively since 19'+5. V-Zlth these ccmections established, Cockshutt 
entered tractor production in 19'*7 and tractors have since 



- ' 'A ri*0o8 inBihBnsO »riJ lo*^ li^B^eC) a! awol etd-dBin^f hae. 

*^o noid-RnisjlIe ■"•f"' ^f-f ?-• . '-v-r->fTK.-; '^.Tr'TP7?T ^r^-^_^•T8[ '^t'op ^hp ncol 

ij'ne^fxs 9ri:t o:t ,E*^nii sB€>iii nt 8nor*pT;-»qo e'vnBao^or- nsibpnFiO 

nsct eri:t ni ealBS l&iQ-i seoriw .to ^£8 ,xnsq.:-o.;> ^^>^j , '^'ocrjijonns 
jd^oi^tBff! nalbsneO »ri* ni ebBta a»9<i fcari *M9X snJ:&909iq eiBf^x 

evr ,8.* r 

■■"''•' ' . . .... ■ . . ,.< . . -\. 

V ,6oIi?q Tsw ari;t 

■IS tbI ; ■ IG"! 

-J O •■»<t »•■•.■ 1 ".t j-cfTft'^ e^T" f-i1>-^ "dc^"*" <= I .-^!-i .sri'^ teiSrtif ?i^^n;tr. ^9J1^U 



p \? ( ■» 1 



232 



become the company's leading exports to the United States ^^^^ 
The growth of the company's exports Is shown In Table XXIII. 

TABLE XXIII I 

■I 

Exports of the Cockshutt Farm Equipment Company 

($ ,000) 



Year 

19»+5 
19'+6 
19^7 
19^8 

19»*9 



Total 
Sales 

$17,556 
l»+,69'f 
27,629 
^1,765 
If 8, 21+6 



Exports 

$2,018 

3,785 
10,210 

16,377 
20,25»f 



Exports as a 
P'Cent of Salas 

use 

I »+25C 



Soiirce: Data furnished by the corijany. 



The roost spectacular post-v;ar advances in 

foreign -narkets have been nade by the Massey-Harrls Company, 

and these particularly in the United States. This company 

embarked on an expansion program In the United States in 

19^6. By 1952 new branches had been opened in Atlanta, Ga., 

Memphis, Tenn. , Des Moines, Iowa, Columbus, 0., Minneapolis, 

Minn., Omaha, Neb., Kansas City, Kan., and Dallas, Texas. 

Merrill Venison stated in 19*+7 that / JV^"'^ f 

the increases in Massey-Harrls sales in the U.S.A. 
have been 588 per cent in combines, as against 118 
per cent for the American implement industry as a 
whole, as reported by the United States Department 
of Conraerce in 19'+7; 2k0 per cent in tractors compared 
with Wo per cent; 2l8 per cent in general implements 
aganlst 77 per cent; and 650 per cent in supplementary 
^i sales against the IO8 per cent average of the American 
^ farm machinery industry. (28) 



r\ 



Massey-Harrls sales in the United States In 19'+8 were 31.9^ 
above 19'+7 levels, with a further Increase of 39. ^^ In 19^9. 
A substantial portion of these sales in the American market 



in 



i? ee £^1 



• VnSiJiOr* a TT" (i^-v^T.r. i c?' .■^rf^ vrf »%f-wir; if«T,''"' ^Vflrf 8^*!^^ ?r n'^^STC* 

f ni WBiaoiq ncl ab no bsjfifidBS 

.»0 fi'--r-f. ' . ■■ at,,-:-; ./.-r. CrCr vfT . ?)-;'P r 

.ecxeT jeellsQ , ,ne.*l tX^-f*^ eeensX ,.d©M ,er .anlh 

• rf*tw 



(8S) 



e as 






233(i) 



CHART ILL 

SHOWING THE 

PRINCIPAL DESTINATIONS OF IMPLEhENT EXPORTS FROM CANADA 

SHOWN IN PERCENTAGES •• FOR ABSOLUTE FIGURES SEE 

APPENDIK A 



rS 




233(ii) 



CHART ly 

S H O W ( N G 



PRINCIPAL COMPONENTS OP CAMADAS (MPLEMENT EXPORTS TO UN ITIP STATES 

(tv) pef?.ce(s)T^Ges ^ for absolute FiGuaes, see appsnuik B. 











\ 1 













i 



l3 o^ Cana^llan origin, nomhinea shipped from Toronto being 
the leading '^xa'nplf=»s. 

It shoul'l be remarked that the increases in 
"the Massey-Harris Corapanj^'a manufacturing capaicity abroad 
have probably reduced the percentage of its Canadian-made 
produce exported in recent years below what it was In the 
1920' s, exclusive of shipments to the United States. An 
example of the company's progress In manufacturing abroad is 
seen In SAFIM (South African Farm Implement Manufacturers), 
of Johannesburg, an interest in which was acquired in 19^7. 
The company became a distributor of "Saflm's" products in 
19^7 and acquired financial control In 1952. Since 19^9 the 
Massey-Harris Company has been consolidated on a North Amer- 
ican basis, all subsidiaries abroad being carried on the 
balance sheet as investments, only the dividends received 
from them being Included in the profit and loss account. 
"The continuing uncertainties", states the company, "as to the 
actual conversion values of the various currencies concerned 
and the remittance of profits to Canada make it difficult to 

state with certainty the value In dollars of the assets and 

(29) 
operating results of these subsidiaries'* 

These are the developments within the Big 
Three Canadian companies which account for the steady increase 
in exports since the war and for the Increase in exports rel- 
ative to total Canadian production. Both of these increases 
may be noted in Table XXIV. 



gn^'-'^d otnoir'^ roit brqq.?x^8 tmnMmoo ,^^^^^Tr> np^^^npT "^o f^ 

feaondB xd-Icisqeo ^niiu^oBlunEB e'^inBqmoD 8inBH-x»8EBM 9ri* 

«ri* nj ji J6J.W woasci m. ;.- jneosi ni beJioqxs ooytjoiq 

fl/- , :tB;t8 fesitlnll ©ri* o^ 8;tne(r!qlriB ^o evisiiloxft ,B'OSd- 

,(8i9T.i..';^oe'iiJriBM Jrtsasiqrd^ iiiiis'i lieoin'^A ri*x;o8) Ml''iAc. nJ: ns-ot 
.^■•^I ni bsiltrpos 8Bvr riolrfw al itBi&ial ns , gawds ©nnsrioX ^o 

9iiJ k:v-;i sonici .S^^I at Io'i5noo i-sinnsnll bsii^poB Dne \*^R1 

-iftfflA riJtoK B no bQ;fBbJIoenoo n©©d earf xnBqffloO eiiiBH-xessfiM 

^rf* rrn bnfTtr'"- nrfi^.r! •SroTrfp, p,ft fis f F.^Er^rrE Tip. -5^p^,'-f rff.sl 

b9vi90P'i fbnsr-ivi^ eriJ xifiO ,2:fn8cr;J89vni £fi JsAdt ©one.! stj 

.;tnuoooB 880I bns *Jt^oiq 9cii nl b^hulont gnlwd m^ri^ motl 

»ff"^ n. :-.-.'' . v.-tprTti-^r, ,i(<-* p.-^rf^rtr- . ''p.!T>l;fnJtB^"f '^•'^".ti sniff- ''^i^'*''' o'^T" 

ri»cno& BsioneTiijO iiuoliit.v f>iri^ lo b^jjIsv noiRievnoD iBXjd^oe 
oJ JliioiHib il sjfsm .r o;J tittoiq to sonBit .•timet ©rfcf bna 

iBx&ierfi/a «39ff;t lo E;tIue9T: ^niJ^isqo 

jiG orW nirfSi' I«v©b «r,t stb seeriT 

■^nt xbBBiE »cii 107 inuoooB rioiriw awineqwoo naibfinBD sstrfT 
ffy-'ya n^ '^ESBion? '^'"'''^ """"^ hoB t&v offiJ 9oniE Bcftoqx- 
w- easioni seoiiJ lo rf^ofi .uoi^Jouboiq nslbsnaO la^to^f oi •viJi? 

.VIXX dIdcT ni belon ed ^Bm 





ExTDorts as a 


Exports 


P'Cent of Prod'n 


$20,196 




3^^ 


28,662 




U5^ 


Up, 238 




^7-^ 


73,760 






02,527 




52% 


106,438 




71^ *t 



235 



tabij: XXIV 

Percentage of C ana dian Imple ment Produc t ion Exported 

(f,oooy 

Gross Value 
Year of Production 

19^5 $58,258 

19U6 63,239 

I9U7 89,U23 

19»f8 

I9U9 176,970 

1950 149,500 

Source: Canada Year Books. 

Conclualons from Chapter Six 

"fi-^^i^ Following are the principal conclusions which 

eraerge from the material covered In this chapter. 

1) The increased protection accorded tn the 
agricultural implement industry as part of the depression 
policy of the Bennett government of the thirties failed to 
prevent a severe decline in the industry relative to other 
heavy industry In Canada. Protection did, however, preserve 
a larger share of the market for iraple^nents made In Canada. 

2) The virtual cessation of tractor production 
In Canada after thp? removal of duties on cheap tractors in 
1918, and the consequent heavy volume of tractor imports from 
the United States, have contributed to the surprisingly high 
portion of Anerlcan-made machines included in the total sales 
of farm machinery in Canada. A post-war development making 
for a possible change In this pattern in future is the decis- 
ion of the Cockshutt Farm Equipment Company to p^-oduce trac- 

•in 

tors in Canada. This co-npany is now the only ma.^or producer 



^ts 



ro.^t'- r^^o^I*^ ^tnetnelgtni nejt bflngO to •»»:: 



rnetneiqtn 

ToooTfy 



nV ;: . „„ , _. l£2l 



V.', -.J^ Q-, - r-^4 ?4iOJ 

^IV ,dOX 003,61^1 0361- 

rfot.rfv rncl£ " "n.^-r ^---f:? «*rf=. sni ■.'orTo''^ 

©bf'.tt H+r'f5rrT9.rcrfrf «>>fT.'^'" '••rfrf "■ 

Boi^ B:fioqmi lo^foei^ lo aforrlov xvfi®^ *n©t/p©enoo »4rt^ bae ,8IPI 

8nJ>IfitT! ;tnf iBW-:feo(j A .BbEnsO ni vtonlriocrn mal 1o 

rmoubonq lo no ariJ won ei \;nBqmoo EirfT .fifcenaO ni eio^t 



236 

of farra tractors In Canada. The flecislon to produce tractors 
was part of the company's effort to increase its exports, 
since increasing difficulties had been experienced in selling 
its implements abroad without a tractor. 

3) The Cfinadian implement industry has since 
the opening of the century always exported a substantial por- 
tion of its total production. Prior to World War II, most 
of the exporting was done by the Massey-Harris Company. Since 
the war, both the International Harvester Company and the 
Cockshutt Farm Equipment Company have increased their exports 
with the result that total exports as a percentage of gross 
production have increased in recent years. What has motivated 
this increasing emphasis on exports? Several reasons rright 
be suggested. 

■tan ^aA-f^ai. 4^% .K ^ 

A maior factor has always bfeen the seasonality 
of the market in Canada, and the desire to smooth out seasonal 
fluctuations in production. This doubtless played a part 
even in the efforts of the early Massey-Harris CowT^any to 
export. Further motivation has probably stemmed from the 
desire to get away from a high degree of dependence on the 
Canadian market. Taking the Canadian implement market as a 
whole, it can be said that it is among the most unstable in 
the world. Not only does it fluctuate more than proportionately 
with the income of the farming group, but in the past, farm 
income in Canada has been very largely dependent on the world 
price of a single crop: wheat (minus, from the farmer's point 
of view, relatively fixed freight rates). Fear of a repetition 



eioJ?c''"* *> 



a a- 



*8orc ,11 isW hi '•^1*^* .noi^ouboiq Srioi zii lo noi* 



'T*^ ^o '^'Sr^^n?''^' 



bi:JEV_j u :: £3ii ^ Br 



nooe- ui r'acseiOiix svca ncj.a jijl'C :4 



snoSBST J fiisvso ?8iioqxe no eigBriqire anleesionl ztrM 



^ 'jjob ef "iq at fLnoli&vi'ouI'\ 

•ri* no "iTiv "-h to ftertji^b ris^ri b moil Xfi*'« *«»3 o^ aTtceb 

^II9*fl^oid^^oqo•Iq nariJ 9iom a-tfiu^fo/xfl it aso^ -^Ino ;toW .bliow eri^ 

"" TO ^n^bneqsb Xa-^yiej. ;i"'v nisno arin a: eiifi'.- ni. smooni 

;fnioq e'lsmiBl erf;* raott ,2unln) ;tB9riw :qoio oJanle b to aoiiq 

noi:^!*- to ib-»'? .(e»;tB'i iJrfgleil berit ^levi^-telsT .wslv to 



237 

of the drastic market curtailment of the early thirties T.ay 
have been ©n underlying factor In the various companies* decis- 
ions to push exports after World War II. Agriculture in the 
United States, nore diversified and therefore traditionally 
•nore stable than In Canada, afforded the opportunity of both 
increased voluae and less violent fluctuations, features which 
became even T.ore attractive with the disappearance of the 
Canadian tariff protection. In addition, of course, the backlog 
of demand for implements in the United States after the war 

Was greater than ever before In history. _^ 

?■['% 
The increased exports of the Cocksbatt and 

Massey-Harris Companies have gone principally to the United 
States. There Cockshutt products have been sold principally 
through the company's cooperative connections. The use of the 
"Coop" name renders less obvious the Canadian origin of the 
goods and is presumably an important factor in obviating the 
sales resistance formerly experienced by the company in market- 
ing its products in the United States -^ . The company's 
exports consist chiefly of tractors, combinos, swathers and 
plows. 

The other chief reasons for increased Canadian 
exports since the war are found in the increased specialisation 
of production between Canada and the United States. Both 
Massey-Harris and International Harvester have Increased the 
degree of specialisation, Massey-Harrls specialising its 
combine production in Canada, and International its production 
of plows and drills. The effect of this on Canada's exports to 



-8lt>9b 'eslnsq-'oo euoxisv •3ffD' nl 10:^981 g^''xI^<^^f»u ne r^fjcf ©veri 
XllBnoI^txbB'i;^ 9iol!9-i9rio .i. jallieieV'' -ion ,cm*b*8 be:tlnU 

SoIMoBGl Sfi* ,»eTtfoo Ito ,noidibfaB nl loeitOTtq lliaBi nsibanBO 

1BW »[i3' ie*xj?i zniB^c" f>«>*JffU «>ff.-t nJ e:;n«»n«.rciinJ lol ^new«^ lo 



XXifi^f^nIn?t bJo= need svrrf s;?r'tt^^f1'7 ^;tirrf8y?o0 •t^HT .?•>?.? J8 



a'Xf . '- 8e;ts*S beilnU oil* nl Blowbonq t^l gnl 

bns c we ,ecni eio:tOFT* lo ylleirfo itlznoo plioqx© 

.awolq 

noiJaciiBioeqe beeBoit : bnx.rol ©le "xaw 5»rf:t »onlE e^ir 

h'T -.llBloeqe r 

Biicj ao Einj ic jaeiio oriT .ami:.' bna ew,- t 



238 
the United States are shown in th<= accorrpariying tabic. 

TABLE XXV 

Export s of Specific Implements from Canada 
»- to the United St ates 

19^9 and l?!^? 
83 a Percentag e of Total Ir;pleffient Exports. 

Total Fxports Exports to F'Cent Exptd 
IropleTient Year from Canada United States to U.S. 

Combines 1939 No. 1,13** 305 27% 

19^9 No. 12,653 10,911 86jg 

Plows (all 1939 I 1,858,835 338,77^ l8jt 
kinds) 19^9 % 13,589,000 9,635,000 70^ 

Prills -nd 1939 f 353,3^2 25, 38W 7% 
sowers 19^9 $ 8,953,632 7,8lO,>+85 875^ 

Source: D.B.S, Publication Tyade of Canada * 
Volume II, Exports, 1959 and 1949. 

To what extent the increased specialisation reflected here 
was motivated by the import and exchange arrangements in 19M-7 
and after is difficult to ascertain. It seems probable, however, 
that these were important considerations. 

*♦) The Canadian implement industry did not 
experience a "trantor revolution" in ths same sense as the 
Aiierican industry did '■luring the twenties. Nevertheless the 
Increased spf^cialisation of production in the last ten years 
has had a co!npa''abl«? effect. Specialisation has tended to 
foster an uneven distribution of competitive advantage among 
the various firms and the various products. The result, to 
be examined more fully in Part III, is that it is very diffi- 
cult to point out on? firm as the overall "price leader" of 
the industry} a f^rrr which is the price leader for one 



8£S 

•"XX - . 



I £ « y Qj 






oi 8- 



50£ 4i£I,I 






10 8W- 


-• ^ ,5 ; 


.J r^ ]^ e, 




—'^S^- 


1 
r 

r 


e?»nicfinoO 

E>ne elllia 
Biewoe 






^4*^1 nl 8;^^ew©s^B■I16 Qgnerioy© hns itioqml edi \(i heisvliotr esw 

...v-^ucivf .' .--■r,-f. +r ,-?P.-?T-5-.-;- o+ tlmUJlt 8.} T>:i'^r fenc 

orf:T ?p«, r ■ir?;i--' -v-'T^ -■ ' "t r; ftw.1 Arfrf tnT'ifrff ?»?-^ v T.-t p.ir "n f r?^'^l^--rA 



239 

particular pro-'ucf-. rnay Jioncplvablf b? s follovmr In all others. 
Conpetltlon, of cour?^, has ^<5en influenced by this f^pvelopment, 
and It Is to the topic of competition that attention Is direct- 
ed throughout Part TIT. 



^;ffi *6rf:f rroJ.i >9 to olffoi ©rfJ o* el ;ti bne 



PART THREE 



COMPETITION 

IN THE CANADIAN INDUSTRY 

War 



^ >»i^->-« -» T T*- sr A w--^ «t tf 



'»d ft 



3HT VI 



ai-ffe 



21+0 '-^"^ 



PART THREE 

INTRODUCTIOH 

Parts One and Two of this work have provided 
the developmental background indispensable to a study of 
competition in an industry in which every firm is more than 
100 years old. Throughout the examination of the implement 
industry's early growth and development, emphasis was placed 
on the different forms which competition assumed, and on the 
significant contrasts between the American and Canadian scenes. 
Prom the beginning of this century until World War II, a most 
important aspect of competition from the point of view of the 
Canadian firms was the competition provided by American firms 
selling in Canada. The problem posed by such competition 
became more acute as the effects of the "tractor revolution" 
brought lower costs to the American industry and as the level 
of the Canadian tariff on implements was decreased. To meet 
it, the Canadian industry conducted a vigorous campaign in 
favour of protection in the early years of the century. When 
this was drowned out by the rising voice of agriculture, it 
Was abandoned and some individual companies endeaooured to 
develop and expand their export markets, particularly in 
British Empire countries. 

Since the end of World War II, some important 
changes have taken place in the competitive position of firms 
in Canada relative to those in the United States. A large 
expansion of exports has taken place. Coats have been much 



bablvon ":ow ^IriS 1o owT bne anO s:fiB*I 

Ji mt Bdi Jo noliBnlmBXs »ri^ iuori^ucidl .bio eieex OOX- 

eri;t CO bnc ,J. • noiiliBqaoo noiiiw r.rriol JneiaUlb 9£i3 no 

ieoffi B fll leW MioW Itinu xiisiaoo elri* Ito gnlnnlsed 9ri,t roi*? 
sri;t to vrsiv ^o inloq sri* moil noi;tl3"«qffloo 1o io&qsB inBitoqat 
emnll riBoXtsinA ycf beblvoiq nolii^^tsqEoo ©rid^ e«w smill nBlbcnsD 

nnfi^'^t-^rrTr^'^ -f--irr!.- vfiT beeoq oieldoiq 9riT .sbflneO nl •^ill»e. 

I»voI TiB \^T:d'ax;bnl nBoliftsA eri;J oi e-tcoo 19 vol ^rfgijond 

.i-^.r^sr. nT . , .W P^- 'f nO TtlilB^f flBibBflfiO 9X1* lo 

fli 'BO siio'ioaiv B b9;fo>jtnoD \i^sjjbnl n«lfcBnBO sffit ,;fl 

.yiiJifnso f^rfit lo ■ y-'J^^ ®rf* nl nol^oeitotq lo luoval 

cfi ''.f-.r -oolov jnJeJti ©ri;J \<S iuo banwoib bbw slrii 

oi bfiiijo' fcftJneqfnoo iBublvlbal »tt>OB bna bsnobnecfs bbw 

nl '({Iisluolc! viiBB (ttoqxs ileri^ bnBqxs bna qol9V9b 

.e9l'i:ffltfoo BTlqaia dBl^.'"^ 

emill lo aol^ieoq BvUl^eqaoo BtiS nl 99cJq noTlB^ BYsri BflsnBrio 

A .B9^e:}8 b9:tlnD ©rii nl eeorf* o* 9vliBl«i BbfinBO nl 

'^"f''* -+5.,^^ .nf>r.lq nB^B:f esri E::fioqx9 lo nolanBqxB 



2m 

affected by the "tractor revolution" which, though its effects 
were felt in the United States as early as 1920, did not 
appreciably affect the Canadian companies until the post-war 
years. When it did, its influence was to be noted not only 
in the position of the Canadian industry with respect to the 
American, but in the nature of competition among the, individ- 
ual firms. 

Our study is now continued, therefore. In " 
terms of competition within the industry, with emphasis on 
the competitive relationships among the firms rather than 
"those simply between the Canadian group and the American 
group. Moreover, competition on the Canadian scene and 
among the Canadian firms is to be featured, without detail- 
©d reference to competition from the point of view of the 
entire North American industry. ,^ 

For this purpose, competition is broken down 
into two types: price competition and non- price competition. 
Of the four chapters which make up Part Three, two are devot- 
ed to each type. The main areas of price competition are to 
be found in conditions of demand, costs and the pricing 
prbcess, and these are the focal points for the study of " 
price competition. In the Implement industry, the principal 
areas ofl non-price competition in the past have been in the 
methods of distribution and of credit extension, and these 
therefore are the focal points for this part of the study. 



la 



ic:.' bib ,0£^ ' cii.tij.. •yj^iuJ eri* al Slet ©isw 

ylrro Ion b<=):fon ?d c:f rev pnT^jfl^n! 8 J J- ,frth :t> n»riW .8T6»x 

-blTlbnl 9iii gntxcB noi*l**qffloo lo »7i':tBn eri^ nl ;tud ^nBoinetoA 

no ta- :iJiw , •^■rj ci^nni ti-^' nlri^w ncia ; - "^ "io air*i^;t 

fl««l* iSfftBi emill Qffit snoBB eqlrienoiiJ/Blei «>vi:tl;t,;jqffiOi> aiW 

-IlB^^eb 4«orf*i' ecf oi tt ttstilTi nBlbfinsO eriit snome 

nwob nexoic cl aox jid^eqaroo ,98oqai;q exnj lo"? 

.noi^- ^ri soliq-non bne no.r:tl;t9qnoo ©ol^q tEsqx* ovi o*nl 

o:f aifi noi-iJoqinoo soiiq to a&eie nifix aa'i ,&q\:S Hobb oi b» 
-; , .''-i"-' sri* hns 8:f?:oo ,bn6Bi©b To enol:tlbnoo nl bni/ot ©d 

ieqioniiq o/U ^vijei/bnl Jn^.^'.^iq*;;! 9rij ni .noiJ ' o eoliq 

©rfrf nl n© q erit ni nolJl^taqmoo ©olnq-non Illo 8iB»i8 

«5«»'^:t ^i^^ . rn f -rffilr?^ .-f^^'=;To T-o f-^f.- f -• ^.■t t.-rT r-f •? •- rr-. "'n p^m^-to-r 



To base a stufly of competition in the Implement 
Industry in Canada solely on the experience of the past ten 
years might prove rather unfruitful because of the extraord- 
inary condition of the market for farm Implements during that 
time. The shortages of implements during the war years and 
until about 1950 meant that all forms of competition were 
virtually in abeyance. In the study which follows, there- 
fore, attention is devoted to the competition which charact- 
erised the porlod prior to World War II, with emphasis on 
the permanent changes which have taken place since that time 
and which seem likely to affect competition in the future. 

Throughout, an attempt has been made to conduct 

the study of competition using current price theory "as an 

embarkation point and general guide rather than as a fixed 

body of principles for detailed verification" ^ , Although 

specific references to current theory are only incidentally 

made In the study, the Influence of theory on the general 

approach and on the framework used will bo obvious to anyone 

with an economic background. Occasionally, where It Is felt 

that empirical findings throw some question on the postulates 

of theory, mention of this Is made, but no detailed efforts 

to trace the ramifications of such questions Is Included. 

Rather the lines of demarcation are those stated by Joe S. 

Bain: 

The task of empirical research would seem to be to 
find out in many more cases how prices are made, and 
to examine the price-making process to find if the 
results are highly systematic, or in fact rather 
arbitrary and capricious. It is not evident that the 
question of whether profits are maximized is really 
amenable to treatment. (2) 



Jiinz" J. :j!a ilia no. ilOld'i^S^'b-' JUS •-••tBd oT 

*8Bq ftrit \o Bon&t" > no xlcJoe BbaneO nl yiJsuftnl 

-^•tof;•r:tx«* ?i'f:t ^o r>ar's'5e"5 Itf^;* *T."r^r tisT wvctff Jrf^tra eir^v 

eiBSTC lev «?K* gnliir?) e:t. art lo 8ogB:)"iorr8 sriT .eml^ 

-:fD6rrt>rio rloiriw floi;tJ ■■ 9ri:f oi b&iov&b at aotitte:tip^ ,9'io'i 

.•ii/j-irl art* fll floi;HJ3qmoo cfoeTi'Js oi x£9:ill nese riolriv fens 
itovbnoo o& »bfMs need esri Sqm°>i;iB hr ,:tt/orfguoiriT 

I:i-:;j. nsnj ■isi.jai scii-'o leisneg cks jnicq noiJsxiBdma 

ri A . "^ "no.f^ffiol'iiisv b©IJ:fi;teb loT: Bslqtontiq 1o -^jbod 

Yliff^n^L .tnn I' vino ptf TfODrfl +rrpiTj:r'^ o:^ Rs-^ngialPT o'-^'-o«>rTp 

encvciB oi auolvdo ad iliw feecjj jfioweiHB'r'? s^ri;^ no bns rioBoiqcTB 

t.'::'0li,'Jdoq 9,.j r;o nc^j£Sjjp eaioe wo'ifiJ E^nif)ni1 iBoiiiqii;© iBciJ 
r:^'to'iJ& ^b on i^orf ,9b«(r «1 alriS lo noiJnsm f\iO€*rii Jo 

tnittfi 

o."^ ">d o;t me^B bluow rfnTp'n-!a«r Jaoltiqme ^o jJeacf «»fiT 
^ »iG eeoliq Wv ,,r.o sTom ynem ni ^tiio bnl'f 

■ nl '1 , _^ _ _ _ ,_ ^.. ,.^... .. ^ __.... 

eriJ ;feri3 3n»blve *6n Bi il .euoiof icren bna Yietcfid'te 

vlS»-->- -' ' "mlxmrn min e;fi'tC' '.f to -.up 

(^) J o:t _ ^a« 



2^3 

^^ °^ Competition and pricing, moreover, are treated 

In succeeding chapters with relation to "market and cost func- 
tions only. Although institutional factors are considered 
Insofar as they bear on either of these functions, no attempt 
is made to treat the financial and other aspects of price 
policies not directly related to cost or demand (such as the 
part played in rigid prices by attempts to maintain dividend 
payments on an inflated capital structureX 

Much of the material in Part Three is based 
on personal contacts made by the author with executives of 
the leading implement firms. In the process not a little was 
learned concerning the most fruitful approach to be followed 
by the price policy researcher in making the best of such -"^ 
contacts. Difficulties are abundant in such research. 
Principally they arise from a lack of understanding on both 
sides. Not Infrequently businessmen becoiae appreheriglv# over 
the very fact of the researcher's Interest in the occult 
science of price setting. Reminiscences of public enquiries, 
or possibly of confidences betrayed in the past, or doubt 
concerning the researcher's sincerity or the extent of his 
familiarity with competing firms are all possible sources of 
suspicion. -^rfr-i-.. 

The price researcher learns early that it is 
extremely difficult for the businessman and the economist to 
meet on common ground. Once having conveyed to the business- 
man an idea of what he is attempting to do (somet>^ing which 



^oltq to «.: fcHB le il* *a«i;t o* f^tBtr. el 

no *eoD oi bs^aiet ^JJoftilb *on ealoiloq 

leii'ioviiz IbHoko beSBl^nt n& no e;tnsmYeq 
£>e ; »©irJT ;ti6*^ nl iRltfiiiBis. otii lo rioi/M 



; ..; "i' I Jii J 111 .>■;:• 'I J, i i^ ' 



' SnXii'B!?^ 311 J' 



olio*! »d oj^ riOBOiqqs Itfiitifil isom »r(;j gnim»f)noo bflmesl 



ri:Jod flo ar 






yq *to s^oneoalni .gniitJfte .<»oIiq 7o 9on«»loe 

■ *9r^;t nJ ^?•\-Rt:^«»d f'lSonebi'^rfOD tc vIc^lpporT to 

tin ic jr. .jxa Si-!.:- 'ic \;.7X'ie-jnia e ■ 'lonDir-'flEei nxij :5nir;iyorroo 

^o ESotcjoG sidleeoq XI b die cscjll tn-^^^^'oo liiiv y,iiie.:ihnB^ 

.nololatifs 



8-^ it Iftffit t/?."'^ ?»n' 

isa eri* oi^ 

rfotriw S! o 



•;•«»?» 



•VPrf 



•)" or^'' 



rjjjo: 



•xt~.r-!>i;xe 



.bawois nor' o :t9sffl 

•»ri :taffw T'o F«>f)i np rrnm 



..2Mf 



e 



must be accomplished, however awkwardly, if any cooperation 
at all Is hoped for), the researcher encounters a series of 
obstructions hanging from mere differences In terminology to 
entirely different concepts of the behaviour of such functions 
as cost and demand. Terms such as profits, revenue, variable 
costs, fixed costs, overhead costs, all must be used with . 
considerable care to ensure that they convey the same meaning 
to both persona. Different ideas of output-cost behaviour " 
are another hazard, and much inconclusive discussion may take 
place before the businessman's predilection for linear cost 
functions, and the economists for U-shaped functions, are 
recognized. 

Further comment will be made from time to time 
on the difficulties faced by the price policy researcher and 
the methods which might be used. An even more for'nldable diffic- 
ulty than that of method is often encountered when the research- 
er takes up the task of using what he has learned through such 
first-hand contacts. In most cases descriptions of the price- 
setting process cannot be documented with anything but the 
word of the price-setter himself. Price-setting is usually 
done within a highly subjective framework, and in the theory 
of price the subjective factors are recognized .as eigaai^ 
Important as the objective. The value of price policy research 
must therefore depend in part on the success experienced by the 
researcher in discovering and accurately recording the subject- 
ive factors Important in the price setting process. 



lo :jr.. i.iiE (i a-ieJnijoor.fe lafifi'i^asw-x sr-j ,k.ac: naqoii cJ' lie ;^b 

9ic(e2'-pv , ••■>i »&;tnoiq 2c ^J'^ •'s ?••"• r-ii; t;r.£ jeoo zb 

; «Kf ;tnuin lis. ,f.:Jc:co vo ,e:t800 hexi*J ,8:t80D 

9T{R:f -^am noieeu^eib svisifJonoonl rioun ftne ,bTBSBrf T:sri;^onB 

r. 
bciB T'Tr-'o,. IIOQ ^•••*''.'r ^H* v.'f ISa-^a*^ PA ft f rr^ f*^**- ffi t-rf^- to 

h«ie;*nuooa» n9:t^o bI ^o^foSl^ to ItsAi nBrf;f yd-Iu 
«ri* itwcf - ^.« fitttw ■ i/ooh ed ;fofln«3 eaftooaq 3ni;fd^»8 

a-' ■•* 

--i^^; -^t 91B e'io;fop1t ov^;toeitcfxiB ori^ soiiq lo 

wf^J X" fceonelieqxs seeooKB eriJ no cfieq ni bnsqjf'b «»io'Jeaedj ;teura 



2h5 



'fO 



CHAFTEP! SEVEN 

PRICE COMPETITION l i 
DEMAND AND COST 



Contents 

I. D emand; Some General Considerations Regarding Elasticity 

II. The Reasons for High Income Elasticity 

The nature of farm income — Durability of farm imple- 
ments — Technological changes — the availability of 
farm labour -- Credit terms offered by the industry. 

III. Price Elasticity and Other Facto rs in "Industry De mand ** 

Price inelasticity a reality — Tvo other factors 
affecting demand — Demand forecasting within the j, 
industry. 

IV. Costs 

The importance of manufacturing overhead costs -~ 
Interflrm cost differentials -- Computing manufactur- 
ing costs in the Individual firm. 



I. Demand; S o me General C o nside r ations Regarding Elasticity 

Analysis of pricing processes and price com- 
petition must ultimately revolve around the conditions of 
demand for products and the costs of producing them. The 
purpose of this chapter is to present and examine those aspects 
of demand and cost which most directly affect the pricing of 
farm Implements, leaving the discussion of the pricing process 
itself until Chapter VIII. 

A major problem in empirical research into 
price policies is the reconciliation of the subjective views 






-7f. 



ZfoeQ ,1 
il.lol_SflSaMfl-.9flT .II 

,.._. 9'-<:f0 bap, rite. ^i .III 

?l822 'VI 

■ ■.I 
.mill iBubivlbnt enit nl eSEoo ani 



-rror en It 7 ftne aeaeaoonq o[ to cIbxXbhA 

oial doieeBfti laoliiqma nl rasldoiq io(,B!n A 
2w»ly tvlitostduB ©riit ^o nolcfelJIoftoos'i •!!* el e«lolIoq ©olncr 



and estimates of sellers with the objective realities of the 
market. This is particularly true vhere rieinand functions are 
concecned. The uncertainty surrounding buyer behaviour in 
response to changes in income or in price mny give rise to 
what appears to be a subjective estimate of c^emand but is in 
reality an attempt to rationalise a long-standing price policy. 
One of the first tasks of price policy research, therefore, 
should be to assess the validity of subjective views held 
by sellers in the light of the actual market situation. 

In the first part of this chapter, attention 
is centred on the objective nature of the demand for farm 
implements. First, the effects of changes in buyers* Incomes 
are explored, and secondly the effects of changes in price. 
Conclusions regarding the effect of income changes are 
principally historical, being based on the actual response 
of purchases to Income changes in the past. When price changes 
are taken up, the approach becomes mainly cieductive, since 
historical changes in price levels afford little basis for 
observation. The overall conclusion of this part of the 
chapter is that, in the main, the interpretation of demand 
which is most vridely held among producers of farm Implements 
is infconformlty with the actual state of the market. 

The author's own research into the implement 
Industry as well as a study of the price policies which the 
industry has followed in the past, suggest the following as an 
approximate summation of the industry's view of the demand 
for its product. The demand for farm implements is determined 



»ifi Enoiaonii'i ^ o'tr-^nw "1 eirlT .rtsMien 

fli nuclvsrfscf i9\uo[ gnlfc' teonw sriT .bamsonoo 

^c»T^o'i'<?T-)'^:t . rfnTRS?:^'! '">?Ioq 9oi"iq ^o ?.?fpn:t ■^s'*.^"^ ^nt >o enO 

Tiiip'!; "iC'l ^^e. -=^ erf* ^c •'■it';Jsn »vl-;to9ttfo erfiJ no betcfneo el 

890iooni ' ^.d ni -no io e.-ioslls siii ,d'Eii ■ >IqiHJ: 

,Boitq nl e i lo e:Jo»'i'5e srf* Tclbnooee bne .beioiqx© •ib 

«8ncqES'i -LisirJDfi mis no csesc snisQ ,Ieoj:ioo ern \llBqionii:i 
>.■- •oliq D 9ri;t ni^ ■ ^ eoioonl o* eeEBrioioq lo 

*r o:tni rfoiBeeei nwo e'lorfitwe erfT 

ne E8 ::)niuoi.J c'l e;ij ■ oe ,c'Eeq ans' ni ]-ovoiioi ecu v.'^Jit;c>ai 

br lo wetv a'^T^st '* ^o noi;tEmmi;e ©rteffllxoigqe 



2>f7 



first and foremost by the level of farm income. Experience 
has shown that when farm Income is high, Implement sales 
are high and when farm Income Is low, Implement sales are low, 
ks a corollary to this, the view also seems to be generally 
held within the industry that changes in the level of farm 
implement prices do little to discourage purchases when farm 



X7L 



n 



income Is high or to encourage them when income is Ibw. In 

i 
the language of the economist, such demand Is characterised i 



by a high degree pf Incoine elasticity and a low elasticity for 



price charlgfi; 



High Income E lasticity is a Reality 




'^l 



N 



m 



t 



The use of available statistics to show th« 



historical relation between farm income, implement prices and 

Implement purchases leads to the conclusion that high income 
r XT Till M 

elasticity does characterise the demand for farm Implements,' 

i 

What data are available? In Canada, the Dominion Bureau of 

Statistics furaishea annually a complete set of farm income 

! u Xj 1 I I I I. I I I I i I 1 ! 1 I iJ 

figures for the country, ah index of farm implement prices 

based on the 1935-39 average and extending back to 1913> and 

the total sales of farm implements and machinery for Cs^nada^j 

.'ill I I I I 
Including parts. This combination of income-prlce-sales 

data was the principal source used in the construction of the 

accompanying chart. Here, simple index numbers, all based 

'"T" -r~r— r 

on 1935-1939 averages, are plotted for the period 1920 to 
1950, a period which, it will be recalled, Included a minor 
and a major depression, as veXl as a minor and a major period 

r.^ . J CnJ..J. ,) 1.. I .1 

of high income ^ . 



• _ sj.'^iij lUgji; c '"^ fl«riw *BdJ nworie eerl 

.' •. ; •If! eel«e *r L «i "^ ©ts 

Xi J o.-t ?(!'9»8 obIb wsiv srij ,8irt^ otf ytbIIoioo s eA 

rrT .wc.r 5j ' . i» oJ 10 '^'ilrf el amoorrt 

.s 9Dliq 

Y^JIg gn jB Bt ^itolJBf pop? ria^H 

' onl rialrf i&fii noleiflonoo srf^t o;t ebeei seeerioT^q Jnemslqaii 

»B!oo ♦ lo *9e sielqmoo b \IlBuaaB earfelciul 8oi:feI;tB*8 

«bBn«D -OT T<:i<=»nlri96« bus Ej-neaielqail roie't "^o seXpe Ifi:to;f eri* 

roIr:='-e3l-r?- -^ not" -oo ?MT .s:fTpfi Tinlbulonl 

oxij 10 ncijaiju Eiica ;-i'iJ .tx :;{Jc.iJ soiuge x£qionj:-iq on;! eew Bjsb 

d 11k ftiBdmun xGbnt ,ei«Il .iiBcfo ^atxaaqmooos 

(>i 0€P.f •^oJ'-r'^a ?>'^:t Tct ^pj•:^oXc fic .-'■"rT'^vr rr'^J-?fPf no 

Tcnir. s nBzuxons fb&xi^os'i ad iXlv ;-! ,iloi";iv boX-ieq e ,0!?C'X 

f^oiioq rrc bna locilm b zh II9V sb enotBcsiqw^ tof. sm b bns 

. ' fitroonl ;f<jlrf "io 



248 



CHART J (a) 


3H0lv'IN& 


INDEX OFFARn INCOME, flPLEMEMT PRICES AND MPLEriENrSALES 


CANADA; 15)20-1:^^0 


FARM INCOME l^^^ ~}Q^^ -- iqq 


— IMPLEMENT S PRICES . 






. .KXn, ,r;«<rMT CATC SOURCE SEE APPENDIX C . 
















1 




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249 







CHART VB 


~ A cx3Tntinu<a.ti( 


:>-»> op 


Cha.» t V(A> 














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k 










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R ON 



KN 



250 

To be noted In that chart are the greater-than- 
proportional changes in implement purchases which have accomp- 
anied changes in farm cash incoroe during the period. These 
characterise^^ the depression of the early twenties, the upswing 
of the late twenties, the depression of the early thirties and 
the subseqaent protracted inconie rise. The wartime restrict- 
ions on implement production in 19^2 and 19^3 interrupted a 
steep upward trend in purchases which began in 1935, a factor 
which doubtless intensified the rate of post-war increase ^ . 

In contrast to the fluctuating income and sales 
during the period is the relatively constant orice level of 
farm implements, especially from 192^ to 1938. Prices were 
not raised during the upswing of farm Income in the late twen- 
ties nor were they lowered during the downswing in the thirties. 
This behaviour of price is of considerable help to the histor- 
ian who Is trying to view in isolation the effect of farm 
income changes on the general level of implement sales, for 
it suggests immediately that a given change in farm cash 
Income, prices being held constant, Is likely to cause a rela- 
tively greater change in farm Implement purchases. 

II. The Reasons for High Income Elasticity 

The conclusion Is to be expected. Relatively 
high Income elasticity In the demand for durable goods is now 
a recognized economic reality. Bayers simply postpone their 



.bolitiq erf* snliwb emooni riaeo raiBl nl ZB^nBtio bslne 
bf!B e^Iu 'iXiiJ «AiJ lv» Tioioii jnavs tJsi irt3 lo 

TO^Ofil B t^ct^I fli iiJii^W i'ioitiw esafinO'iitq ni I)fl&»ij- ti^wqi; qs^ie 
.^^^ »p.d«ioni •i«w-.:feo<j lo s^sn ©ri:f ball I^tduob rioirfw 

©•18W esol-i'-i «bctl oi ^^i'c'i ifiO'i'i xli6la«?qee ,e:^fisiri&Iqir>i miB't 
"Ctswi &i»J ^ffi nl eipoonl flna" • i;t gniiub fceelsT :ton 

-lo^Jeiri Siii oi qleri ©idBiebiexioo 'lo ci eoiiq lo 11/oIvfcd.od ftiriT 
flfi*"? lo :tosll» »rl* nol**Ioel nl M9tr oi jnl^f * el oriv n»l 

oi \.r«3(/X el «;tn£^enoo bl«rf jnlecf esoliq , emooni 



vT" ■'•-'lEwIonoD -^'^ 

ei eboog sliiB'iub 10I ii al \:iJioiie< --oonl ff,^lri 

li' '8oq ylqale 8i»xof .'^:fll«©i olfronoo© besln5(oo©T 



I 

i 



2 51 

' purchases of durable pootis during low Incotue p«?riod3 qnd make 
replacements when Income Is high, with the result that sales 
of most durable goods vary over the course of a cycle more 
than the income Itself. 

•5- 

Such behaviour, however, though characteristic 
of most durable goods, may be more pronounced In some than in 
others. How pronounced the income elasticity is for any 

^particular durable good depends on whether (and how many) 
factors other than durability contribute to the effects of 
Income changes. If, for example, the conditions of sale of 
the product — say the credit terms offered — vary in differ- 
ent phases of an Income cycle, these may affect the response 
of sales to income changes. In the case of capital goods, 
variations In their productivity and in the availability of 

'substitutes in different phases of an Income cycle may like- 
wise affect income elasticity. 

is th«?r0t'cr« s\ 
Considerations of this natur* form the prln- 

elpal bases for the present examination of demand behaviour 

for farm implements. Specifically, attention is to be focussed 

on the following factors and the extent to which they have 

B 

contributed to Income elasticity of demand. 

1) The particular nature of farm income and expenses. 

2) The timing of technobgical changes In farm implements. 

3) The availability of farm labour as a substitute 
for machinery. 

:■ h) The credit policies of implement sellers. 

1) The Particular N ature of Farm Income and F.xpensea 
crop a. The farm income figures used in the construction 



. 8 1o oe-Wfoo ©li.t levo x^sv e^oo^ oldeni/f) ieoir lo 

.ll»ell sraoool eriJ neff;t 

fll n nl beonwonotq ©lom sd xjW ^eboos eidBiub ieom "^o 

to 8;t09t'i9 »riS cj sjjjaXTarnoo xcHiJtdeiJjb nsnit isrijo B^o*r)B'S 
Jo ftiee to 8no/ ©rft ,«* fol ,11 . -;aBrfo emoonl 

-lelllb ffi ' — C>ai«11o .;:i.! ■=-; .. • ;v..i:.' »ri* \&h — ioiihoiq e»xU 

i^i 9f(:t ^oslte xuffli 9S9ri* ,el9XO ©ooonl na 1o esesrfT ;tn9 

-93ill Yem 9lo me lo Boearfq ;fn«7')Tttib ctl Beitr^tl^edwe 

oi el noJtJn»**B iXllBOilir ml scieJ lol 

9ve: r oi iti9iX9 ©ri* bne tto^osl gnlwoIIn*t ?<rlt no 

.bna»»6 lo \iiolitBS.9 ?»moonl o:f b^iijjjL iiJnoo 

- (X 

e « t r ( £ 

.ii-7j ..^t- ..■;■*>( .^Xq oil to caioilocj JJ.LV1J 9ffT (■♦^ 



t.T ' +•'» r ( • 



:^^.i.i I).' oBBij eeiij^j. 1 'ji!iu-jiij miBl orfT 



252 

of the price-income-sales chart are those of farm cash income, 
the total receipts by farmers from the sale of farm produce, 
plus supplementary government payments. Until the Bureau of 
Statistics recently began estimating and publishing farm net 
income statistics for Canada, cash income was the only figure 
with which sales of farm implements could be meaningfully 
compared. However, a consideration of the meaning of farm 
net income, of its behaviour over the course of the farm 
income cycle, and of its relation to purchases of farm imple- 
ments, gives the first real clue to the interpretation of 
high income elasticity of demand for these products. 

Farm net income , is defined as the Income (from 
farming operations) accruing to farm operators as a group 
after deductions for farm operating expenses and depreciation 
charges ^^ . It represents payment to the farm family for 
management and labour services rendered in farming, and as 
return on their farm investment. It is therefore available 
for living expenses, payment of income tax and saving or 
investment, and as such it constitutes the stream out of 
which purchases of capital equipment, including implements, 
are made. 

Farm net income, the source of expenditures 
on farm implements, varies from year to year in greater 
proportion than farm cash income. This follows from the fact 
that operating expenses and depreciation charges are much more 
stable from year to year than the total cash received from 
crop sales, which may vary with weather conditions, prices, 



-v.- 



j:» «-!."* »^ ."« 



f 



fc' 






ill \4lao »rij bBw sp. •> ,«£)Bfi*w lol 8ol:tel*B3£. aoiootji 

vIItf'J.snlniBSi'n sd ftiuc::; a:fn«ffi»Iqiwl rai«l lo ssIbb riolrfw ri^fiir 

.a;^Diffjo ii^ lol bnaftTsfc "io \;;JJoiJc,eIy saooni rigirf 

qwoig p.« p-rod-Pti!»fTo mTpIt o;t snlaiooB (enoi^eisqo gnimisl 

■IO? xltmti'i i«ib1 offit o^ ;fi ' Ertn^e^iqci * "^o 

:n«l nl b^>i9br alviea inocfei fcne ir^ ; n 

,rA. ...^ ,,.,,M . +T ,>«.,->««„,, r jq^g-^ rtisriit no fliu;f9i 

no jjtilvBS forjis xe^J siiioonl lo ifl»!iy;Bq ,eP8neqxe gnlvJ^I tol 
lo ;tao (Tff B*».-txi^f;i linf.je bb bm 9vnl 

goir to aoiwoe »ff onJt ;Jon fiiTB^ 

•XB^Beig ni "taBX o^ i«9Y . -i^n^T^Xqwi ffinsl no 

*o.«l »[ii oioi'y ewoilo't eiflT .-*irjooni de*.;- l„ i : i i.t-hu noictioqoiq 

Rtfi 8«a':firto nol;tsio9'iq»b bna e^eneqxs aniJsisqo JsriiJ 

'■«»v^f»o«»i rf«ao iBitoit erfi >.< jex o;t i©©x moil nldsit 

, -?<K)j J :E)aoo ToriitBev ri*lw \i»v xma rfoiriw ,B»iBa qoio 



253 



and other factors beyond the farmer's control. This feature 
of the behaviour of farm net income is illustrated In the ' 
income chart on the following page, where gross and net income 
on Canadian farms are shown for the period 1926 to 1950. 



;^n the period 1928 to 1933, declines of 605C 
in cash income and ^8% in gross income were accompanied by 
an 825C decline in net income on farms,. Likewise in the long 
period of upswing from 1933 to 1950, cash and gross income 
both increased by approximately five times, while net Income 
increased by more than 12 times. .It is this highly unstable 
behaviour of net income, the source of expenditures on imple- 
.ments, which is basic to the explanation of the high income 
elasticity seen earlier. (See Appendix D) 

Q '^ Farm net income, as was noted earliet, Is 
the source of expenditures on farm family living as well as 
on investment in farm equipment. To some extent, implement 



purchases stand in a competitive relationship with goods 
which contribute to the living standards of farm families. 
It seems to be especially true that in periods of low farm 
Income the maintenance of reason4)le living standards takes 
precedence, contributing to an even more drastic fall In 
Implement piarchasfis than in net income itself. Fven when 
Income begins to rise after a depression, a year or two may 
elapse during which living standards are brought back to 

their former level before purchases of implements Increase 

I 

correspondingly. Discharge of more pressing current debt 



a 



' ni bt alll 8l ^monnt Jen wibI lo ii/olvfiffscf 9f(:f "J'o 

f ^»n 5nB eeois »i»riw t^S'^Q sfiJ*woIio"i •rftf' no iiBi .i 

n.^rr ,-.f v.cc r ^„->!-r.^ q^J io1 rfworie a'lB Eflnn*! nclbBflBD no 

sri;t ni sefwsjfl Te"! no snioonl i^n ni 9ntIo»b lfS8 am 

ftl<f«;tpnff ylrf^iff etrfrt 8^ *T ,8sm.f* SI nsrft Bioa \<i b9EB9tonf 

-»Av^. .;-T* J ...J • "is:- . •-- J.V. ...' ...sK o. -^lo ,9Hor>fll i^a lo ^l;o2vBt.-u 

' ©riit lo nc - eff;f o* oiesd eJt riolrfw ,e^n90 

(cr xil>«sq:'TA 968) .tt9.Hi6<» n99e t*-^J>'^*eBl9 

Jf fTn- jx€» eiflOE oT .?i pe miBl 0I *neffl;t89vnJ: no 

■ibI vrol io Bboiisq al ^sfl;t eui^f xi-tfi-io*<i8B ecf oi sbibbb ^I 
tBilBi zbi: I 9X'*rto».««»t ■>© f*')nBns?r!iRr' off:t ©moonJt 

"* '"'"■" "■'"* ^ ■^•' -J'/-:' Me J i^u X :i u6 lii cioo ,9C»n9b909iq 

>n nl aztii see? '^tiirq in»m9lqml 
\am o^t 10 IBVX ffl ,ffc •\f>i'\R feti r»t sn '■r^ef* ■^'po^ff 

oi >fo^d :tds£foid »i/.i KM-tihrnsJe gnlvij ^.-j' -..• ;^njxi.i -■lii:^':' 
J: a:tr 1 lo r «»nol9cf Isiv**! lennol 

1Ur> « ■•« *lo 9S-IBriDEia .VJ 'OfIC9'X"C0 



254 



-*ft- 



o 



o 
o 
o 



o 
o 



CHART 


Vi 




O 

o 




o 
o 



o 
o 
o 



o 
o 



O 

O 

Z 
V- 

z 

Z 
<t 

Ixl 
Z in 

a. -^ 
X • i 

I; '-» 111 
0^ < *!!, 

o5 

UJ 

o 

o 

z 



z 

O 
UJ 



o 



CO 
O 

< 



■J 00 



2 

2 o 

J o 

-I o 



o 
o 



o 
o 
o 



O 

o 



O 
O 

o 



o 
o 

in 



I 



255 

may also taka precedence. Some evldlence of such a time lag 
may be seen in the prlce-incorae-sales chart for the years 
1923-25 and 1932-3^, although in the former period, the 
income-sales relationship is obscured by a general increase 
in implement prices in 192*+. 

nt. 

To sum up, this brief exafnination of the nature 
of farm income suggests that there is a two-fold reason why 
implement pruchases have fluctuated more violently than cash 
and gross farm income. In the first place, the relative con- 
stancy of farm operating expenses amplifies the variations of 
farm net income, the source of expenditures on implements. In 
the second place, farm living expenditures probably absorb 
most of what net income exists in low Income periods and for 
a year or two after income begins to rise, leaving still less 

purchasing power available for capital expenditures, 
t 

3) Technological Changes in the Product 

A review of the timing of major technical 
advances in farm machinery In the past 30 years leads to the 
conclusion that these too have contributed significantly to 
the income-sales relation. The profitable operation of 
madern, large-scale farms demands that farmers avail them- 
selves eventually of cost-saving innovations in farm equip- 
ment. Consider, for example, the combine, one of the more 
striking examples of such innovations. An early survey of 
the Dominion Experimental Farms pointed out that: 



gpX »mli B rioue ^o eons&lvs srooB .esnebeoeiq siIb;^ oele y*"" 
81BPY Pfi* i«^ ^iBdo eelse-emoonl-SDliq 9ri:f ni nsee ed \Bin 

•tS9iofll iBier \.cf beiuoecfo el qldtaoliRlBi ceJBE-eisoonl 

.+^S9I nl e»ciliq itnomslqajl nl 

'>T:,r;t»5r' »r':f "^n f»r,f *«rtfrpey» •^«^licf elf1:f ,qi; muB oT 

rie«o n«ff;t iXitnsIolv sic ' ■vioiil'^ sverf e'^SBriouiq *nofflflIqnii 
-fco 9r.f:tfr^«, ^f<-t ,»ORlq ;*^8ii* ^ri& rjl .- irr;^ mie't eeoig bna 

I c ;in3i^ iiiiijv sn- eeiillqfflB eeciiyqxs ^^luioE-i'r'.iO inrtB^ 1o x^^ib^b 
nl .£" no B»ij/c-H hneqx© lo boiuob 9ri;J ^earoonl ?sn oibI 

■ii:- a:;c-:'icc dinc::.^!.: woi is.r s:tsJ^'- ■ j sn ;tBriw lo iteoffi 

Eeel ill^fe gnlvBel ,9b1i o:1 enljed smoonl le^lB ow* to ib9X « 

.B9ii/;tJthneqx© larMqEO lol elcfellBVB iswoq gnlBerJoiJjq 

ir r ni I il (£ 

lBOinffo©:t lor Btn to snlmlct sri:t lo w©iv©T A 

^di o>* c^n?*! £T^v Or * ■ -i nl vf^nlriosfli biirI ni e^^onrv^s 

cij ■ii;j.;;ri£C(i'i inaii; ceuL:::xijnao r-v^r.' oo:; oE^rfJ jehj noleulonoo 

lo noliteieqo oIdB;tlloiq oriT .noti^RleT. aelsc-ainoonl «ri* 

"W.^trii Z.l ■ J prfit c^njirrsb srotRl '^[roB-ea'iBl fntcf-em 

-qi' £1 nx wncijjo'.cnni ^niVBS-^EOo "ic \;iIjBJLf:fnev9 e9v*o£ 

©•roin ' eno ^enldwoo erli ,eIq!'BX9 lol ,Tr .^n©B 

lo \;ovti;E ylT^f* r* . •^nnf^tevonnf rfonr Ic epJamsTP "«;nJf:-ftT;te 

:3iinj Jijo T'^Jnioq Si xi noinimcC sxij 



256 

The Introduction during the last ten years of the 
combined reaper-thresher has made available another 
machine which, on the larger-sized farms has made 
possible a considerable reduction In the cost of 
growing wheat. With a yield of 20 bushels per acre, 
and ^85 acres In crop, It Is estimated that the 
combine will save 6.9^ per bushel over the binder and 
separator method. With light yields, such as 10 
bushels per acre, the combine will save 1^+^ a bushel. 
Obviously, where there Is only a small margin of profit, 
the use of the combine may make all the difference 
between a profit and a loss. (If) 

Introduction nf new models In farm Implements 
has never followed any regular pattern. Changes In construction 
and design of Implements may and do take place at any time, 
often as a result of the experience of farmers In the field. 
Nevertheless, an examination of the experience of the past 
thirty years reveals that the rate at which improvements and 
innovations have appeared has been highest in the years Immed- 
iately following a depression. During the low income periods 
of the early twenties and thirties emphasis on product improve- 
ment Increased. The Massey-Harrls Company, for example, which 
spent an average of $361,000 annually on engineering and devel- 
opment in the prosperous period 1925 to 1929, increased this 
to $510,000 in the depressed period 1930 to 1935 ^^^. The 
product Improvements made during those years appeared on the 
market in the early years of recovery. 

What was the nature of such Improvements? 
Mainly they took the forma of new designs, materials and 
construction. During the early twenties, the work done to 
perfect the combine stands out, but the combine was only one 
among many. As Denison remarks. 



9tti Tto 8tft»"\J nod" t&Bl ariS 

' no ,ri3J:rfw 
'Ic :t800 srJJ ni noi;tojjbf»T si 'snoo b sidleeoq 

hiifi i9hnid c-nJ tevo i IlJtw snldmoo 

01 BB rfoue ,8M9iv '' " ----'-:■•' — 
.Iftrieud 6 ^Vl 8VPa 11 iv 

f^ltoiq lo nis'isrc ilBme b \ltto e :t atsxiw ,xJe^'O-fvd0 

(dnid XO'S :fB »OBlq ^jIbJ^ o5 bns ^lem e^nsmelqai lo njleeh bna 
.Wall «ff* at eiefffs"^ '*o 9one^'''»fTXft ■"<:t >o dlire»i e sb ns:^!© 

Exifi B^tnsmsvoiqffll riolrfw ia e;JBi sriJ ietii zlserdi eibbx ^*'ilr(:t 

-svciqrnl *o0f>oiq no elsf aelj^ilrij bne e9l;tn»wj x-tiee BCii to 

-i«voL ■■:o \iiBLCine u-jj^ui . - ^mt,. 

Bttii bBtrie'ionl ,9*-;PI o:t ^S^I boltsq euoisqaoiq eri:J ni :tn9inqo 

srfT /^^ ^fPi oit Of PI boti^n ^?'e^s•Trrs^ erf* nl 000,01?? oi 

itiii no ' ovcxqcnl 3^o;.'f oiq 

^©1 ^o aiBsx TtlTBft ©ri* nl ;Je>''iBir 

ovoiqaji ffoiic lo ^itritsn ©rid bbv dp'^. 

IS*tr-. ■^ r p T'f ^.-t cfi- .rri^r^o . ol -'i^'+ >fno:t ■'.• '"'^'gM 

pi encb jl'iow . ©L^newJ x-t'f*^^ P'" .noIdoiiiJenoo 

•no 00 Brii iud «di/o shnede »nio ■ oo 9>di dosliaq 



257 



VHiat WorW War I had done for North American industrial 
technology as a whole, the depression that followed did 
for faming and the farm machinery industry ... The 
short period 1921 to 1925 witnessed greater changes in 
farm machinery and agricultural techniques than had the 
four preceding decades. (6) 

This period Denison refers to, somewhat colorfully, as "one 

of the most intensive periods of experimental development 

ever known. ^^ 



Similarly, improved products were developed 

with greater than usual rapidity in the depression of the 

thirties. The International Harvester Company introduced 

in 1933 the small Farmall Tractor F12 "designed to meet the 

power requirements of the small farm and supplement the 

tractor equipment of larger fans" ^^K In the same year, 

there took place a "remodelling of the entire McCormick- 

Deering line of tractors ... the introduction of the enclosed 

gear mower, a cream separator with stainless steel discs, 

an all-steel manure spreader and an improved line of hammer 

mills". These were supplemented in 193^+ by an even more 

impressive list of improvements including 

a full line of essential farm tools for use with the 
McCormick-Deering Farmall Tractors, with better means 
for planting and cultivating, three new types of har- 
vester-thresher for snpcial uses, with improvements in 
the older types, refrigerating and milk-cooling equip- 
ment; advancement in designing and producing Diesel 
engines for power and tractor unit adaptations; improve- 
ment in the McCormick-Deering TracTracTor models; a 
complete line of power units for stationary and port- 
able uses requiring power for varying loads; restyling 
and imnortant mechanical improvements in the Internat- 
ional motor-truck line, and the addition to the line 
of the new model C30. (8) 

It would seem, therefore, that the timing of 



■<:es 



Ir 



9(li. I 
(d) 



o'J 



c^; ii?»q Jfll rfBOffl drid^ io 



"^.nwonjl rreve 



[i9f;oi6V9fe ©'lew stfouhoiq bevoiqjnl ^'^liBXtmtB 

teamBii lo ©n^I ^e\'P'iT«i'i ne bns i-»^s'^t"? STnnsr Jsej-R-JIB n« 

ftion nev« n>-: «<,u -rc^x id bs^nsm^i-i^ijue aiy^; y;-. .eliitar 

gflibijionl a.tfleirwvonqfnj' lo d-sli evisaeiqml 

9cii dilv ©€u •xol eIoo:t mini IsJ:;tn®ess lo snil Ilifl « 
eneem isj-^fsd ri:fiw jeiod-OBiT IIb^ipS j^nlissa-iioinmoOoM 
-ir."' "^ ■' ' "^ "'■'" '--'^-' ,"-'■'•'■.■" ;-:1ion" ^ * ^-u-^r-. ^.-.i 

ni : . . TO*! 

-qlk iiooo-jLiiir pop 8ni3B'ieaJi'^5»i ,E»q\* laMo sri^f 

-•VOlq 

-*eni9jnl «r!;t ai 1 leoinerioem ;fnp^ToqMi bne 

( . W9n ••. 



-'res 
2 58 

technological change has supplemented the effects of income 
elasticity. The appearance of better and more proiuctive 
implements during recovery years must attract into tho market 
buyers who would not be induced by rising income -ilone to 
replace their present machinery. Likewise any expectation. 
on the part of buyers during low Income periods that improved 
machinery will be available when income improves, will hav« 
Its effect in further diminishing purchases. 

**) The Availability of Farm Labour 

Still another factor in the cyclical behav- 
iour o^ far-n Implement demand has been the availability of 
farm labour. It has been a paradoxical feature of agricult- 
ural enterprise that the movement of labour resources into 
and out of the industry has generally been the opposite of 
what might be expected on the basis of farm price movements. 
In times of high farm prices, labour tends to migrate to 
other sectors of the economy, and tends to move back into 
agriculture in periods of low prices and income. T.V/. Schultz 
examined this tendency and observed, on the basis of histor- 
ical experience, that "the more farm prices increased relative 

to other prices, the greater became the movement out of 

(9) 

agriculture" , Schultz further found that in moving from 

low to high employnent, the wages for human effort have increas- 
ed more in the agricultural than in the non-agricultural 
sector of the economy; and that within agriculture, the price 
of labour moved up more rapidly than prices of the other 



8c|S 
©r Sfiri 

o* eoole 9, ?ii \^ bluotf orfw ai 

J E^oii-jq doiocrji wox gnxiuL eis^iiC lo Jiaq enJ no 
. liiw ,?9voiqjBl ©flioonl noriw Aid/jIiavB etf Iliw xisnlrioBin 

•ij jodsJ mTg''3[ lo T^-tlidBlievA grf T CV 

-llwcl-rgs *t :!s»'> Isolxoheteq; f n««t^ E.'r! ;i-I .inocfel itne'^ 

iO &iiEoqqo ©nj os-Sij \ii6i9fiog sfiii ■^'i.^feuirjii •aili lo inc. r.np 
,e;tn9fn9VCffl ©oJiq eipI 1:o eief-d «ir[? no fcf • sd .Idain: itrdw 

oJnl A060 avosB oJ e.bisf'.t ru^ , • 'io E;o;Jo9e 'icri;^© 

s:Mj:/rioS .W.T .©raooni bne wol lo ^bo.^^sq nl ©7x;;tlt;c>' 

!'"''• . . ^18B 

• Vfifi 

:tIwo ftgp-nofT IMf^^T5^p *rf."f r • b* 

lo eeoi i •noaj qjj 5»voai liiooal lo 



259 

factors of prorluction. Osing 19'+0 as a base of 100, Schultz 
showed that by mld-19^7 the index of agricultural machinery .,_^ 
prices in the United States stood at iWO, while that of the 
wages of farm labour was 320 , 

This cyclical behaviour of farm labour vould 
seem to have a direct bearing on the demand for farm implements 
and machinery. Insofar as labour may be substituted for mach- 
inery, the tendency for labour to become cheaper and more 
abundant on farms during low-income periods is itself an 
economic incentive for the greater use of labour resources 
relative to machines In low-income periods. This may be 
accentuated if, as has been the case in the past, implement 
prices remain at or near their former levels. Conversely the 
scarcity and the increased cost of labour relative to farm 
machinery as farm prices and income rise, provides Impetus 
for substitution in the reverse direction. 

During the war years, the farm labour shortage 
characteristic of high income periods was intensified by the 
drain of manpower into the armed forces. The sever labour ,g 
shortage which developed during World War II, contributed to 
an unprecedented demand for farm machinery. Although this 
demand could not be satisfied because of restricted production, 
it is interesting to note in the results of a representative 
survey made by the Dominion Department of Agriculture in 
I9I+2 the various ways in which the farmers contacted planned 
to cope with the wartime shortage of labour. About half of 



»r':f T-o :tcrf:t ©liriw jO+^X ip feood^B ei^.^Pv^r ^«».tfnU ori* nl aeoliq 

(01) _ 

. . - c o. Vj r» * . . 

lot ' no gnii' eifn r ovsri o* rosse 

ns tIoe;ti zt ebolieq graooni-wo ' ii/b bbsif-I no cfjR 

e^sTuec^T iifocfBl ^o «??:• i*»Jc9'?:^ "►'^ avlitneoni olmonoos 

;;- ';s '"" .^ru_i-i ii"\L\?i} -w'jx u i esfilrioum o;t s>v.'.*el9i 

*n??! -rf:t nl eeeo srfJ" n«9cf esri ee ,^1 be^tei/JnsooB 

er - T ecaoont bne esoliq anel ee ■'cisniriofitn 

• oolttaeilb saisvei erfd- ni noi:f0?l:fi!di/8 to? 

luod&l 1SV98 ^M" .esoti. IB dritf r Twoqnein lo niBib 

o# ^?^:t^'rf.N:f^o'^ ,11 isW MioW '?nJfir^ fc-rroXfiveb r'strfw '>:3£;ticrf8 

all '■,...- ^oeiqcm na 

tnoJi oaile h1 Jon nluoo bnemeb 

• inoo aiaanBl f»ri;t rfoirfw nl bycw euoliBV erij^ SV^I 
Tlsri :ttK-»i^A .luorfj?! "Jo flsf^ioric emiiJTBW 9rf^ ri:tlw eaoo o;J 



260 

them reported inability to secure hired help, and of these 
some 505^ stated their intention of overcoming the help short- 
age by reducing the scale of their operations and farming less. 
Among a variety of other anticipated remedies, such as the use 
of more family labour, more cooperation with neighbours, 
readjustment between livestock and crops, and abandoning the 
farm, the most frequently specified was that of Increased 
purchase and more intensive use of machinery. More than 
half of the farmers planning continuance of operations at the 
current levels intended to do so through reliance on machinery 
without recourse to any other expedient. It seems probable 
that this portion would have been higher had It not been for 

the wartime shortage of farm machinery, which was at its 

(11) 
height at about this time 

k) The Credit Terms Offered by the Industry 

A final factor contributing to the effects 
of income changes has been the credit policies followed by 
the Implement industry. In the past, these policies have 
alternated between excesses of liberality in prosperous times 
and of restrictlveness in depression. As a result of this " - 
3lternatton of credit policies In different phases of the 
income cycle, large volumes of sales made on easy credit 
terms in the late twenties became an increasingly heavy bur- 
den on farmer-debtors as prices and income fell in the early 
thirties. Farmers so indebted were unable even to entertain 
hopes of purchasing new machinery. Many well-intentioned 
farmers, moreover, who might have purchased new machinery 



03? 

■ v^I- ';o 5ns ,qi9rl pe'iiti e*iwooe od' x^flj-xaefli bsj-ioqei rpetis 

I9VO lo nol;Jne:tni ileri^ beieiz S?0^ ©«oa 

leix^odffg^sn rf^lw noi^Bieqooo t i/odal x-J^-^^ibI ©ton lo 

ces&Bioal to iasii se- .i:cftq£i iliii&upail J aon: orfj ,ffi'i£l 

rfOEHi lo set; avjtane^ni siora bnB fserioiirq 

^liif; / isiisi riaiJO'iiiJ oe ou oJ tsfcna;;fni. eievei Jne-iiijo 

©IdBCfoiq emesB 3-1 .;Jn925eny9 lerfiJo yine o:t peijjoosi ;ti/Off:tlw 

ami* Elri* :ti;ocf/? :te c^rislsri 

Bfmii zijoi^qtoiq at \SiIPtQdlI to 8©Ee»oxs n©sw:t9tj b9;tBni&.}lB 

sfi 'frircT • t».'- .noieee'rq?»f) nJ .-po'-'^.v ; t- '71 •-■•«. -^ •■ , r-ne 

:f^fr«»'io xes9 no sbem e«J98 lo •ftnjjiov «»sipI ^eio^^ «>inaoni 

-If 'if v,iy ,■.•»,■< vT tii^ ?3. QOT'-Mi r -n -»Ti .--..•:.,•.' r.---' ( itnawJ »d'pl' sr^l "^ •^■foied' 

i 08 8T9mT«'? .esJj-Tlffd' 



261 

<••» ^> 

despite the depressed con'!ltlons, foun-' that the cref11.t 

terms offered by the nompanies had been tightened suffic- 
iently to rule them out of the market. 

Credit is discussed in detail in a later 
chapter where it is treated as an aspect of non-price compet- 
ition in the implement industry. There it will be seen that 
the importance Of credit to the implement Industry has tH-mt^nsked. 
«fcBd in recent years partly because of government action in 
this field. In the present context, however, credit policies 
are mentioned as another supplement to the income elasticity 
which has characterised implement demand. 



Ill, Price Elasticity and Other Fac tors in "Indust ry Demand " 

Tfj?*^ The fact that the price level of farm Imple- 

aients changed very little during the period of the late 
twenties and thirties has facilitated the praceding eramin- 
atlon of the effect of Income changes on purchases. The 

same fact, however, virtually precludes the basing of state- 
dp) 
ments about price elasticity on historical data ^ \ Deduc- 
tions concerning the way in which buyers would react to changes 
in the general level of implement prices must In fact be based 
primarily on hypothesis, and unfortunately some real difficult- 
ies stand in the way o** their formulation. 

One such difficulty is found in the nature 
of farming enterprise itself. Farming in Canada is principally 



Ids 

eoiiq-non Ic Jo&qe6 
iloa, itb*iio ,T9v«»woff ,;Jx»*noo rtnssenq ©rf* nl .MsH ^Irfit 






-'9lqfn.t etbT ^o itiv^l ©ojtiq ©riit jBri:t 3 oat sriT 

_f>.-rT-orT -'» ^•'•.••^ P, M no v.f ^ f^ ' :t pre Tf^ ►■s«-> >'fft -frif-vfc r-'-^<»;.< 

E9*,jn8r "DBftT id fioinw fix x^** ^^^ ^ninieonoo anof:t 

•wJ tf>8^ at ^BUtn e o Ip»v€»I IsTonos 9dr 



262 " 

k fanJlly-typd enterprise -^ , and not uncoramonly on family 

farms an Inadequate separation Is maintained between farm 

and family finances. In many cases capital Investment on the 

farm may suffer as a result of the more vivid and Immediate 

demands of every-day family living. 

The dally question is, shall today's income all be used 
for family living or shall a part be reinvested in the 
farm business. Today's demands for family living are 
vivid, real, urgent wants to be satisfied, while poss^ «- 
Ibllltles of increased income from investment can only 
be estimated. Uncertainties and risks are in the pic- 
ture. Future family living needs and how that increased 
Income will be spent, if realized at the future date, 
receive but little attention. ^^t, {ih) 

It is suggested that generalisations based on economic prop- 
ositions regarding demand for the agents of production may 
apply only in a limited way to farm equipment, since decisions 
regarding Investment in such equipment are often so closely 
tied in with family considerations as to divest them of any 
real economic significance. It is, then, with limitations i 
such as this one In mind that we proceed to the following 
discussion of price elasticity. 

Implement Sales Appear Unresponsive to Price Changes 

The assumption of price inelasticity is not 
uncommon in manufacturing industry. Particularly is this so 
among producers of durable capital goods, and there can be 
little doubt that Its prevalence has left its mark on pricing 
policies. In a sense, the assumption follows from observation 
of the pronounced effect which income changes have had on the 
demand for such goods. Producers tend to assume price elast- 
icity to be low because income elasticity is known to be 



^[liiiiet no ^J: -nu ion bn& t fie^iqi^faB eq^i-^LltDBt b 

erf;t '^''' :^^fc^.T.■|p^»vp'^ rprt'^'rp'" ^.■:<.5r.■^ v-f^T "^T . "atarrtftHf^ vrfrrp^- "rtc 

ft^Blbdffiffii l>nfi l>lviv mots &riJ lo Jlueei s ea lellus \£iB i&xfil 

.gnivlX vllmel xeb-yxsv* lo ebnemsb 

beeu ^r' TIo i^Tc^ni B'\Bboi IJ p.dt. ,. .lolJeax/p vffp^ »ffT 
«f{^ =>i sd ;trf.Bcr r II erie lo sinlvll '^ lol 

-<-■**'-..-. ^.■3nB'- ..- ., ,- ^_.j ■! <.. ^.Iv 

XlflO nso *ne I moil emoonl beeseionl io e^tillldt 

-..,._- . - - - .Atttrct 

• •;feb 3ivivt sdi ;f« bssilssi Jl ,*D©cf8 e<f IIlw ..1 

(^1) .no.finf>:i:tB ^lUll iv6 evlsosi 

-aoiq olinortooe no boeed enoiit/Beil/Bisnej ;tBri:t fee^e^satre b1 JI 

enolaioei; 90fiia jinsmqiup© sciisl oiT ybw be^Jimll b ni: ■^Jno xiqqa 

ijIqsoIo oe ne:t^o bib imsmclupa rfooe :ii anJtbtigsi 

vc,^ -^r. ■vf-' . .^ fprtoo xlim*l tiiiw nt b9ti 

^ anoiJajirell ^iiv fUf^cii ,ei :fl .•onjsoJ'^lnaJB olroonoo* 1b91 

gfllwollol ©rf;^ o; •»¥ ;t«ri;t bntm n.t efjo tlricf bb rfoue 

♦ Y^loi^^?-^ ••^ I'iq to nolee/Lip&ifc 

■ nn ai x*io-t*EfiX»nl ©olTq lo noirfamuBee «rfT 

oci i5B£> ••: 56 ,85003 lBiiq»o sldBiut lo aieouboiq igfjofflB 

Snloliq no TLiBts 8*1 ^1' «9ons»IdV©iq e.tj $Br{i triunb ^mtl 

*»^- flo -'eri £ i'joofli ri&lflw ;^o<9H»^ Leoat/onoiq 9ri;t lo 

oJ bna.t ei»ouboiH .eboos rioi^e lol bflBrasb 
' -; v-ffr,r _ ...oonl »eu80»d vol fxJ od' x;flnt 



263 

high. This assumption to be sure, contains some rationalis- 
ation: Why should a seller try to neutralize the effects of 
cyclical Income changes on sales by changing prices when 
(a) the Income changes may reasonably be expected to cancel 
themselves out over periods of time, and (b) such price 
changes may involve considerable uncertainty, expense and 
political risk. Considerations such as these may lead to 
the view that cyclical price adjustments are undesirable ^ 
without much specific consideration of their effectiveness 
in influencing the market. And, of course, if a producer 
considers price changes undesirable for any reason he is 
very close to voicing the assumption (and, having sufficient- 
ly incorporated it into his made of thought, acting on the 
assumption) that demand for his product is highly insensit- 
ive to price changes. 

It was stated at the outset of the chapter 
that the demand for farm Implements is regarded in the industry 
as highly inelastic to price changes. This view has on occas- 
ion been roundly challenged, particularly as it relatef to the 
industry's policy of prlc« maintenance during the depression. 
The question was taken up by the Farm Implement Prices Comm- 
ittee in 1937» and the industry's executives were successively 
queried regarding their views. A typical exchange follows. 

Committee Member ; During the period of depression if the 
price of implements had been cheaper — anywhere from 
10 to 25/f cheaper -- there would have been enough 
additional machines sold to balance that vastly increas- 
ed burden of cost which took place during that time of 
low production, when the other company's production 
went down to 8% of their total factory possibility. 



lo e; ©ri* =>n oJ- x^* islioe b bXi/oria xf^i'- inoiJe 

oiiq anisnr v? no e«»sf!edo eujooni lBolio\o 

l9o{\Bt> oi b9;>0Bqx© pa xicfBu^. snsrio 905000*^ '^'^•^ ^-^ 

©nliq riot<8 (d) bne ^QtiXi lo eholieq lavo :ftro e9v„ cf 

t£^ -jr/ eis e .u(,bB leoiJ -i^v erlij 

<t 9ci aoBB9i xae lol olrfsiieebnii eranftrio ©oiiq eieblenoo 
-d-nsloll^jje -gnlvBd ,bns) no/:fq0iu6EK ©ri:J sn-^o^ov oi 08OIO vt^v 
9ff* no gnlitofi t^^riguorf;^ lo ©bBfr eiri oirJ '* ' bs^eioqicor 
-*leneRo? Y'idalri ei inuboiq slrf lol bneiceb JBrid (nol;tqiCL'S8B 

.e9§nerfo eol^q o* svi 

is^tcTprfri *?'':'■ to Jspttwo •:•■? sp 

-8B0OO no serf v, , .ss^nsflo •oltq o* oliZRlnai x-iriS-^rf ■« 

.noJ'E8»Tq'?L' ?nj yuj'ifj: •^oiiEU"- j :: J kij'. tiD.i'iq 'ic \.'jjj.O'-:i e ' v":j ei-'Uiil 
-wcDoO Epoii^ ineweiqcnl mtb*^ arii Xd qw nsjlaJ bbw ciolieBup erfT 

.EWoIJol aanEurj/.e* x;=:iJ.'.i'v.j ^ .£W;j>i% liarJ auiDlcasi L-oii^'Up 

eriS tl noiB89iq«b I0 bolioq ©ri;t gniitf' tx .2 

moit siniiwxne — leqae"'- - ■ --' --, •.j^'^j-, 

daucne ne»ci 9r8ri L J CI 

-BBftioni x-f^esv Jflri;J ©oneind o* Mob B^aifioes^ IpnolilbbB 

■ vol 

' xiod^OBl Jb^oj Tiofij o? nwob *n»w 



261+ 



Vice-President of Massey-Harrla ; Well that Is, of course, 
an opinion we do not share. We think in those days the 
farmers did not have the money and they could not buy; 
they were not in the mooi to buy and they were not buy- 
ing. We could not have allowed a reduction of 2'j% if 
they had been in the mooi to buy, and we would not have 
been in business today If we had done that. (15) 

All Canadian companies expressed a similar 
view regarding price elasticity, though not, fortunately, in 
a style similarly iterative. To give support to their state- 
ments, the companies pointed out to the committee that in 
1932 and 1933 they had offered, in Canada only, a 105? discount 
on all purchases made for cash, but that the result, if there 
was any, was Insignificant. The Committee's only reaction ^ 
to this was that the Ihdustry, if sincere, would have left 
the discounts In effect longer; and that the whole idea 
appeared more like a device to get rid of inventories than, 
as some company executives had Intimated, an attempt to aid 



the farmer 



(16) 



What can be said objectively about price - 
elasticity of demand for Implements? One might begin by 
asking, how does behaviour of demand for farm Implements 
compare with that for other capital goods, especially those 
bought by farmers? Despite the difficulty of obtaining 
adequate data, one interesting comparison can be made, between 

Implements on the one hand and building materials purchased 

(17) 

by farmers on the other . Statistics available show 

that between 1928 and 1933 the expenditure by farmers on 
building materials dropped from $^1 millions to $lU millions. 



+ias 






%' 



11 »?S lo nol.+ -' aW .gnJt 



nl fXioJ&r.u7iO' fJoc, i'^i.:on^ ^xsiosiekj o soxiq sn.-' ' -^ : --; w?tv 

•lerfj 11 i^It/aflT r^iio ieiii ivd ^rfesD io1 e&sw E?insrir>Tuq lie no 

J'lel GVBi.' oluow ,i*i«0AiK 11 ,^13 eiffinl srfit'JerfJ eew elri* o;t 

'.^ ftlorlw oriJ- ;fBiii bnB jtegnol ;tD»1'ie n' ooelf) srf* 

r-^i'-f £..-. >'v,-, S: =,M,-! r io bii i&^ -ot soivsb s ©>I1I dioffl bsTsaqqe 

fc: sJufe rift jbaiBinlitnl b&A 8©vl;ttf0»x» xf^6<?^oo sflioa 8b 

■^olia iVQdB \l^^r}i09ldo Mae scf neo tferfi'^' 

8:fn9fn-ilqffii (m^l •lo'? fonsmeft lo luolveded tBob won ^pniTies 
«»eorf.l xll»ti:>e>a,nfi ,r?Soo3 Je^iqeo T9rf;to to*^ ierii rf:flv sieqEoo 

Snlnlfi^tJ- viluoj'^'i '■"' ■-■-^':< . .^t-'.. '. siermet 'v:cf :Jrf3.o-od 

f>#8Pff5', •lT*;tgir ^rtlMtt"^ bnp bnppf «»no Iqini 

(v. 

no eTf^ra-fe't \cf 9ii;;tibn9qx» sri:t ££?! bns ieewiJnd ;tBri^ 

.8noiIIlm 4<It oit ta 1^^$ moil baqqoTb elBiisiJeDa §nlMix/d 



265 

Between the same years, ©xpeir^ltures on nev farm equipment and 
repair parts fell much more drastically, from $102 miaillons 
to $15 millions. At the same time, however, the price of 
building materials used by farmers fell considerably more 
than did the price of farm implements, the declines in price 
being 25.9^ and 5.6^ respectively (these percentages derived 
from the published indices mentioned above). 

It would seem that the smaller proportional 
decline in farmers' purchases of building materials might be 
attributed at least in part to the larger decline in their 
prices. The price factor, however, does not entirely explain 
the difference noted in purchases. Among the circumstances 
seen earlier in this chapter affecting the cyclical levels 
of implement purchases were the timing of technological 
change and the possibility of substitution between labour 
and machinery. While each of these operated to increase 
the falling-off of Implement purchases during the depression 
neither had any such influence on the purchases of building 
material. In fact, it is not improbable that the decreased 
wages for farm help worked to offset the effect of decreased 
income on building material purchases, at least insofar as 
such decreased wages lowered the cost of maintaining farm 
buildings in a state of repair during the depressed period, 
and thus encouraged farmers to make such repairs. This 
circumstance then, as well as the effect of price, must 
be taken into account in explaining the difference in the 
depression behaviour of the purchases of implements and those 



briB Jnft miel ir»n no 8©iij*15n»qx« ,aTB»^ ©rass edo a»9vi9E 

tsnotlSlas SOIt fPOTt ,Y.rieo^.tseth ^-rom rfoupr lis*! p.t^TPCf Tlsqei 

" ■■ - .v^-wo; > '■"■■ .JL? o;t 

stofli -^idsieblenoo Ilei aT=>ra"£/' u eSeJtifi^Bm ^nibltud 

.(?»vod6 &9no_fjns»« fteoJbnJt bftrisiXdx/q 9ff;f moil 
iBnol^ioqotq if»IlBffl8 »ri* *sf(;t msea feii/ow ;tl 

'i_'i.aj r.s salxoep ie, ^ ^'- . ".s^ nl i-essl its beiufUnUB 

nielqxe x-f«i^^fl» *o" * =»V9W0(^ ,'io:toB'i soliq . Eftoiiq 

r:f?one:+?.r'XfOTir> srf:f snorcA .r^esd-Jiin n:f f5«?on '=''^^ST=*^'!^^^ eri:t 

leolgolonrfoeit lo gnlai Esseriotxrq o 

ao 9b 9ri3 sniiuf oitrq ;tn 1 lo llo-anlllfi^ erij 

fce- Bff* JselTo o* fcsiliow qlsrf roie^ lol Esgsw 

jf :??; .c-FR.-fDTr-' -^rt^m rirJ.^-I ft'rf no pmonnt 

n l:o e;Js:te s r,l Eg 
•riJf / : Jni/oooB I d 



266" 

of farm building materials. 

It is, in fact, true that the same factors 
.which account for high income elasticity of demand for imple- 
ments likewise account for low price elasticity. Stocks of 
implements, accumulated during high income periods, may make 
farmers quite indifferent to price changes in low Income 
years. The greater productivity resulting from machinery 
; improvements may be expected to mitigate the effect of price , 
increases in recovery years, as should the increasing price 
of farm labour during those years. Lower wages for farm 
labour in low-income years likewise would neutralize at 
least part of the effect of a decrease in implement prices. 

Two Other Factors in "Industry Demand " 

To this point in the present chapter, atten- 
tion has been centred on elasticity of demand. Attention is 
'now directed to two additional characteristics of demand, 
' each of which is an important short-run factor althouch not 
related directly to Income or price elasticity. They are 
(1) seasonality and (2) territorial differences. 

Seasonality » Seasonal variations in implement 
demand result from the seasonal weather conditions which 
define the periods of farming operations in the industry's 
market. Demand for tillage and seeding equipment reaches 
Its peak In the spring of the year, while demand for harvest- 
ing equipment materialises in the late summer and early fall. 



d::i 



Tlircf misl lo 



obI t it *Bi .ioB'5 nl ftX il 



■■■■•'• ■ ■,. , ..--oneq ©moon J: ob ^e f. 

■Jo ^ostla 11 ott •(! x^^ eJflpmevoiar. 1 

©oi*jq §fli8i?&ionJt o a e? t^'usffY. xt^voos? fit 



■ P-^ - 



el ■=»& lo x:^i9i:t8Bl8' co b 

'"I,'' '{-'"'" .7ji^i^^Bl» Bsliq 10 ©Hoorri o^ \lio9ttb b©:t 

s«Yi*8ubnl »ri* nl enol^Bisqo snlflifsl lo ebol-r^q erii i^nltsb 

fr«»frn ^t'r» pr^*'««r ^^p -rfiflf^ -re"! brBm»rr .&'^jlzp.m 
_•+«« ^ 'oj.j.;iw ,7P .jnxiqa ©rij nl Tleeq eJl 

.II b1 \Ii f'e acJel erfi^ al umslluiiBtBm ifnemqlup* jnl 



267 



RANGE OF SEASONAL VARIATIONS IN EMPLOyMtrTT 

A4ricw<tura.l X-m^teme.vtt'S In^MStrw 



(ZO 



no 



(^IX-I9X? 



So 



90 






1930-1939 



i9¥o-i9'^f 




/?vr-/9ri 




llO 



iiO 



90 



*Auou|cOe Jf«*»y*SON(«P JP MAMJJAS ONO TPmamTTasomp 



go 



For Soiirces and liethod of 
Computation, see Appendix E 



Production, therefore, following the pattern set by demand, 
tends to reach its peak in the months of March and April, 
with some tapering off until June and July, the peak months 
for the production of harvesting machinery. ■''^■ 

The chart above shows the average seasonal 
indices of employment in the farm implement industry ^^°\ 
reflecting the variations in productive activity. It is 
notable that in the 1922-29 period, the range of variation 
about the average level of eraploynent was l6^, while in the 
1930-39 period this range of variation increased to 32^. A 
leading contributor to the increased variation of the latter 
period appears to have bean the shrinkage of the industry's 
export markets in the thirties, which had long acted as an a 
offset to seasonal fluctuations at home. In the war years, 
of course, seasonality largely disappeared because of the . 
industry's war work. 



V^S 



T11-5MY0JSM3 Hi ^^^o^TAl>JAv jA>»o?/ae =w aaj^u^ 



*^«\-'kVV» 






Oit 












"1 












on 
oot 








^ 


^ 


^ 


■ 


a 


^ 


S 


« 


I 




^ 




















— 










._ 




'^Xtl-XJE^I 



0X1 



on 



^ 



el [ i I. i . 1 i I I I I i I l_LJ i I I ! I — J i- 1 i I 1 i-J — JJ U I I I I I 1 u — \ot 



lO £)0rfj'3M Los 3301008 10 1 



JVT^OJH rhj»« M 






\.idsij;.;i Kl asiel exiJ al 'ja&irriolqciB "Jo fceoihnl 

anj :o £;£ijfr.f»a bi^'ieeqqeelf) \;i£-3afcl \,3iifofiot.st^E ^aEiL-oo "io 



268 

'"' In th« period since the war, the range of 

seasonal variation about the avera^is level of employiient 
was considerably lower than In the pre-war years, suggesting 
that the industry has moved closer to ellralaatlng the effects 
of seasonality In the demand for individual Inplenients, 
This has been accomplished through (a) the development of 
larger export nrarkets In the post-war years ^^^\ (b) the 
greater specialisation of production in Canada by companies 
with plants both in Canada and the United States, and (c) the 
production of additional, less seasonal lines of implements 
such as tractors and milking machinery by Canadian firms. 
Helping to keep the seasonal problem at a minimum is the 
fact that the industry has never attempted to introduce 
regularity into its model changes, a practice which is res- 
ponsible for much of the seasonality in the demand for some 
durable goods, particularly automobiles , In the imple- 
ment industry it is felt that the regular Introduction of new 
models, restyled and with minor improvements, would do little 
to alter the sales pattern set by actual and anticipated 
farm income. 

Territorial Differences in Demand r*t a sre the : likely 

r.8ea (. 
Experience has taught implement manufacturers 

the benefits to be gained from spreading market risks over as 

wide and varied an area as possible. Partial crop failures 

on a local level occur annually in some part of the country, 

whether from droughts, floods, hail or insect pests. Occasion- 



8ds 

■an r-f p- •.,t^■,^■? .r-rrCi" ' - '.••ol vlf' PT? ^ „^ EH •" •" 

x,--f-t ri':* f-,ne BbE: --i rfrt nr' 

3;tnt-< .1 ls>t tasl ,lBno2;tibbfi "io noi;J0ijriO';q 

.8ciJ"^ nslbsneO yd xi^«f^'oBffl snJt.74lJtm Ens BioioBit es riot/s 

-891 ai rfolriw »ol;t©snq « ^eeansffo iehoro ed"! o;tn ^ ■\{*J^'i6-^i'Ti'=*'i 

van to nol-tf>r'^OTinf taTfrgfii ©ri^ tpff* ^I^f*! el ^f y!.t?«uftnt ;tn»m 

.(WDonnl tniBt 

iX'^^fo:- eriit 'lo iieq «tfo« f*i" >tjl£i/ruii». iwooo i«v»i i«ooI p no 



269 

ally thes*:- may occur ov«r very wide areas, as In Saskatch- 
ewan In 1^31 ani 1933, vlpln^ out the major part or all of 
the fanners' income. Fven In Saskatchewan, however, the . 
drought of these years was not unifom In It? effect. From 
193*^ to 1937 In the south-central district of the province, 
"the cash receipts in every year bat one were inadequate 
to meet living and farming costs"; ■'^ille in the north-eastern 
district, "in no year did receipts fall below the amount 
necessary to pay taxes and interest charges, and in most 

years there were substantial sums available to finance 

(21) 

repairs, replacements and depreci'^tion". 

This characteristic of demand has been a 
leading incentive for the setting up of retail outlets in 
every possible locality. It has been one of the basic 
reasons why all of the Implement companies have built elab- 
orate and costly distributive organisations, to be examined 
later. In this respect it is notable that, of all the charges 
of competitive malpractice which have been levelled at the 
Industry, engaging in Tarket-sharing arrangements has never 
been one. 

Harvesting implements are the type most likely 
to be affected by local crop failures. Purchases of new 
harvesting implements are usually postponed by farmers until 
it seems certain that crop yields will be good. When the 
harvest looks promising, many harvesting implements may be 
replaced while some farmers may even replace "across the 



;r ecfi it" bne> il'?L ci nev^ 

.Jcwl."& i^iX iii. cT'i Jon tew qirs^x e; b 

cfffL'CBTfi ©ri:t wolacf ilp^ aifqieoei bib lAe^ on ni" ,d-oJ7.:fel6 

;»;^rin' :i t f ,r« r . ■'- t^SlgdO ■* f it « -., *r< ? 'Tin gSXS^ Vun n,t v T fi p 5 C r a f! 

■^c;!.-"ni"L 0.1 s>.r '" V£ effii/s. Ifcii'iTe*sd";re ©tsw ei&fiw eifey 

s nssd esff finsBief) \o olJalts^tOBiBrio elrfT 

nl ... :ti-cp i^rf-f To*^ -vf rf rtf^on * Tirrffiji-^r 

0X86C) efij" lo eno nssd osri JI .xiJ^JIeDoI aldlEeoq %i»v^ 
-qrL9 iltud rsinsq/tioo JfietneXqail erf* lo II« x^'' 8flOEB9i 

segieoo <»rij Lis- lo ,t6dj -^idftJon ei j.t rf09t;e&i eirij r o;JsI 

arlrt Js hsflev^r rj«**cf «vsrf rtnlrfw eoUoeiqlem 9vl:f Icfsqnioo lo 

,aao na^d 

XisJfll 38om sqx^ »rf* eie 8*r -<ii jnl^ssvipK 

wan lo e^BBflotuS .«»»tcfXf«1: aoTo leool x<^ he:tosllfl ed o* 

'='(f^ nerfw . booa ed II I « eblei^ qcio iBiii nlB^iso smfiee ;tl 
»d x*" B^nsBsIqail 8n.f;te9viBri x"*"*" »snialmoiq e^lool ^fesvierf 



270 

board" In anticipation of continuing good crop returns. 
Generally speaking, purchases of tillage Implements are 
more predictable since they are used several months before 
the actual crop yield and its value can be known. This 
probably explainKS in part why it was the harvestl^ng mach- 
inery companies, not the producers of tillage and other 
machinery, which first built up excessive distributive 
organisations in the late nineteenth and early twentieth 
centuries, and why no counterpart of the "harvester wars" 
is to be found in the history of tillage machinery production. 

Demand Forecasting by Individual yirms 

a 

Of final concern in this survey of demand 

is the method used by the larger firms in the implement 

industry to estimate in advance the demand for their products. 

Principal reliance here is placed on "grass roots contact" 

with the market, salesmen and blockmen from the branches 

of the various firms canvassing individual dealers well in 

advance of the selling season for their estimates of what 

they can sell in the coming season. Typical of clauses in 

the contracts signed by the companies and dealers are the 

following: 

In order that the company may anticipate future 
requirements for different classes of product, the 
doalei' a£;roo3 that, when requested by the coQipany, 
he will submit estimated future requirements for 
such products on forms provided by tlie company for 
this purpose. (22) 

and 

tsn'^iThe dealer will place orders for goods a sufficient 



.erir!j;J'i'i qoio hoo^ §flliJ0id'floo to floJ:Jeqiol;tfls nl "hieod 
9ie Ki. ml 9:^edlii "Jo E 

eieled ttdiaca I«ievdE ^!?ai' ?'^'' ^^^^.-f-r ^r. r.-. 9lc[s;JdlM''" --.-mrr 

nsrii" 'ii -i©o«boic, ^■■■^- -'■■-''-■ ,a9inBqtt!oo xianl 

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ajItrs hi in ttisl 9ii3 nl saold-eelnsaio 

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.floi;fO£fbo'iq "in© 'lo "io siiolelrf arii tii iniUo'i »cf o:^ fci 

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■ -- ■■ ■ ■-■-' '-■=1 



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lo'J z3antn9ttup9n w ftri 

bns 



271 



tlffle In advance of his noeds so that the company has 
time for the orderly manufacture and ^distribution of 
such goods. C23) 

These estimates, reflecting the dealers' 
intimate contact v/ith the market, are generally reviewed at 
the branch offices, where they may be adjusted up or down 
by the manager largely in accordance with each individual 
dealer's past record for accuracy. Each branch then forwards 
its adjusted estimates to head office*, there they may undergo 
further revision, thl^ time on the basis of anticipated 
changes in farm income or of a planned Intensification of 
sales effort. Where farm Income changes are expected, the 
final estimates may be cross-checked by simple extrapolation 
of the firm's present market-share to the estimated future 
Industry sales. 



IV. Manufacturing Costs 

The Importance of Overhead Cost in Manufacturing Farm Implements 

Turning to the subject of costs, It may be 
said at the outset that a large portion of total cost of 
manufacturing and distributing farm implements is nade up 
of relatively Inflexible overhead. This characterfetic of 
costs takes on added Iniiportance viewed alongside the highly 
variable volume of sales of the industry. 

Overhead costs per unit in manufacturing 
tend to vary inversely with the volume of output, being high 



i^s 



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272 

la low-production years and low in high-production years. 
Costs of materials and labour, on the other hand, being 
generally more ssnsitive to cyclical changes in business 
coniitioas, 3how a greater lenCeacy over the course of a 
cycl-? to vary in the same direction as output . Thus 
an industry which operates under conditions of high overhead 
cost aay find that its full unit costs, including materials, 
labour and overhead, do not vary significantly from one phase 
of the cycle to another ^-''•', In cases where overhead costs 
are a large portion of total costs, and where cyclical var- 
iations in output are large, full unit costs of production 

■J J 

may actually rise during years of low production, despite 

the lower costs of material and labour. This appears to 

have been the case historically in the farm implement industry. 

Evidence of such cyclical behaviour of costs 
In Implement production Is not difficult to find. It may be 
seen, for example, in the findings of the Federal Trade Comm- 
isslon in the United States in 193B . Following are the 
Commission's figures for the average factory costs of produc- 
ing respresentative implements in the low year of 1932 and 
the higher year of 1936 (or 1937). 

Rcw-crop 

Tractors 8' Binders Threshers 

Mat'l $^82785 273.67 8C+2 767^1^^ 36I.02 360^73 

Dlr. lab. Z^-^^ 56.2lf 17.00 21.20 8'+. 19 96. Wl 

Overhead »+86.00 91.59 53.30 31.62 3^3-16 193.22 

Tot. Fact. — 

Cost $903.69 ^23,50 15"+, 72 129.26 788.37 650.36 

In the three cases shown, full unit costs were 



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273 

lover in the high production year because of the decreased 
overhead. The Coramission sutomed up its findings by pointing 
out that, as production rose froro 1933 to 1936, the effect 
of the decreased nnXt overhead costs was to reduce total 
unit costs of production by as much as kQ%, 

Similarly,, the Farm Implement Prices Comm- 
ittee produced the following material based on cost dat*? from 
the Massey-Harris Company. Considering the price to the far- 
mer as 100, the indices of unit factory costs were shown for 
a group of implements and machines accounting for about 7Q% 
of the company's total production In Canada. Included here 
are the figures for 1930 and 1932, between which years the 
sales of the company in Canada decreased by 66%. ' 

1230 1232 

Material 29.63 32.00 

Labour 5.11 ^.50 

Burden 11.95 21.^2 

Total Factory Cost '+6.^9 58.02 

■\ 
This Committee also found that In 193^ the 

total cost of manufacturing an 8' binder, then a represent- 
ative Implement, was hi: lover In the American plants of the 
International Harvester Company than in the Canadian, desnlte 
thg fact that the cost of labour •^.nd materials was 7^ lower 
in Cana'""!a. In view of the standardlgotion In the methods 
of binder proluction at the time, the difference seems 
attributable mainly to trie larger volume of production of 
the American plants ^ 



©rt;J o5 £c.'cl ffioil tigo'i noJ::roi/faoiq &b fJintii iuo 

S££i oai 

.'/f^ :t.^rf:t itrp-^ erf* 

■'ij e. iq ■!;.- .^ 

neJa nEntTemA etiS 



t's 



The Changing Sign ifi cance of Overhead C osta In t he Industry 

The 3lgnlflcanc« of overhead costs h^as 

changed with the chmglng technolog:'' of the farra Implenient 

Industry. During the era of slnglf-llr.e flrrns, the mgln 

problem of ma nuf-ic taring overhead was that of Idle plant 

capacity occasioned by seasonal slack periods in the market 

for Individual inplemencs. McCoriniok states that 

When a faf^to^y made only such strictly seasonal goods 
!K9, grain binders, twine, wovmrs, rakes, corn binders 
ani a few other nollateril tools, lbs schedule of 
operation was either up or down, depending upon the 
weathar or the fortune of coinpetitlve 3ale3 efforts. 
-s Whole armies of workmen had to be dismissed for many 
month3 a year; the capital Invested In fictory build- 
ings and equipment stood idle too much of the time. 
It was the same in the field. \3 soon as harvest was 
over the best salesmen were retained to help vrith 
collections but others were turned loose. By the 
time the winter set in, the collectors also i^ere 
dismiassed, and the battalions waited in uoreraunerative 
idleness until spring. (29) 

This condition graduelly became less characteristic of the 
industry as seasonality declined in importance for the reas- 
ons noted earlier In the chapter. 

Simultaneously, however, other changes were 
becoming evident in the nature of the industry's overhead 
costs. The most important among these were traceable to the 
"tractor revolution" in the industry. It has been noted 
earlier that before the implement companies successively took 
up production of tractors and tractor-designed implements, 
the methods used in the production of horse-drawn implements 
had become highly standardised. As late as 1938 the Federal 



A^r 



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sisvr oEi B a viiJi ^al :ffte 'taciniw •^rl:)' '^mii 

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(?S) .gnfiqa lliau s ^ 

ariS OS »ioB« 'x'4W sg9ji;t gnonw: odd aril .eJ^eoo 






275 



Trade Commission reported that 

the methods of production and the machines employed to „ 
lessen hand labour, particularly in the manufacture of 
horse-drawn implements, were long ago pretty well stand- 
ardlHsed. No definite evidence was obtained that in 
recent years further labour-saving machinery for making 
such farm implements had been introduced to any apprec- 
iable extent. (30) 

With production methods standardised, econ- 
omies In unit overhead costs of horse-drawn equipment were 
mainly dependent on the volume produced. Given the plant 
facilities, the larger the volume produced the lower the 
unit costs. Thus there was a persistent incentive for firms 
to expand their outputs and as a result manufacturing quotas 
appear frequently to have been set beyond the firms' own best 
estimates of their sales potentials. The Ford, Bacon and 
Davis Company, Industrial engineers reporting on the Massey- 
Harris Company in the late twenties, stated that 

In past years the management of this company, in 
establishing Its manufacturing quotas, has gi^en 
insufficient consideration to the estimates sub- 
mitted by the Sales Division. Goods have been 
produced in excess of the amount which the Sales 
Department considered reasonable and attempts were 
made to force the sale of these goods, the effect 
of which policy was to build up an abnormal invent- 
ory in the hands of the local agents, and also led 
the company to establish an excessive number of 
agencies. (31) 

The tendency toward overproduction and the consequent 

accumulation of heavy inventories and excessive numbers of 

dealers, was a characteristic of competition dating back to 

the product and market stabilisation which preceded the 

"harvester war" near the turn of the century. 

The transition to the production of tractors 



$vs 






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j'nclq an-' nsvu .iibOUDoiq efci/Iov onj no jnsinaqsD '^xnisrc 

-\;©scn:-i eri;t ,10 ;^inj-:cc!:;-'T sisoxilans lBii;::2L'bni »Y''S£ 

r?^ .-rrjBqmoo eirfi lo ^nt-ifirsTJsnBar ed^ pt nl 

ccri ,ee:tot;p ^nJ uneta tiJ fs 



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Lia.'op'ij to ooijo;j5oiq odj ol noJ::ti8nBii' sriT 



and tractor Implements opened to the industry new sources 
of overhead economies In addition to large-volume production. 
The threat posed by Ford's success as a farm-tractor producer 
In the early twenties hastened this revolution in the Amer- 
ican industry by forcing the adoption of some of the more 
advanced productive techniques already in use in the auto- 
mobile industry. International Harvester's efforts in this 

direction, which began in 1910, were described in an earliet 

(■32) 
chapter ^-^ . Throughout the industry by 1920 well-«qulpped 

and well-planned buildings had begun to supplement the 

older brlck-and-wood, several-storey buildings which housed 

the production of horse-drawn machinery. Simultaneously 

labour-saving and material-economising methods and machinery 

were widely adopted in the production of implements for power 

farming. ^^^^ 

The result of these changes was a new emphasis 
on economies derived from efficiency and specialisation in 
manufacturing methods, both of which became important sources 
of cost differentials among firms, -> - ,o,(3 

These changes have taken nlace more slowly 
in Canada than in the United States. In fact, prior to 
World War II the tractor revolution exerted only a mild 
effect on the implement industry located in Canada. Produc- 
tion of the International Harvester Company of Canada was 
mainly of horse-drawn implements, tractors and power imple- 
ments being Imnorted from the parent company. The Cockshutt 



*» 



■^iinsvi xliB9 9di at 

•lorn srit * "^o nolJqoftF Prf;t gnlo-zol ^ Y*i*' ifio^ 

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(Si 

9di ' • s 0* nx/gecf barf esinlbllx/cf b«nnelq-li©w bn« 

b'^EKorf doJrfV' •^'^nl^rirtf^ vr-jr^its-Ij^isivftp. . hoow-fin.?-?fn lid laMo 

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nl rtoi;tB8lXeio9qe fens Tconsiollle mc < no 

89DT.UOH {frfpt-ToatrJ- •^mpof'id ^o rfrfocf . '*'^r '',^T^"-r:tfJft•=^i:^^pln 

XJ-irfoie S10B aoalq ne^^cJ ©vcn c=>;>»nBdO sRftrlT 

^^nU 9di at aBfii BbeneO ni 

-ouboii ^B^^ n* t)ojBcoi \'i:Jt qini ari^ no ^Oi-'H© 

Sium:Hooj an'i .xnflqjcoo Sii^'mq ^m moil bft;fTocrfnJ gnlad e;tjiero 



277 

Company had adapted some of its implements to tractor use 4 
through the power- take-off attachment, but was handling 
only small numbers of American-made tractors. The Massey- 
Harris Company, which acquired its tractor plant in the 
United States in 1928, had hardly entered tractor production 
before the depression set in, followed by the years of 
restricted production in World War II. 

Since the War, numerous signs in the Canad- 
ian industry point toward changes of the sort described above. 
Developments such as the concentration of production in Canada 
of certain lines by International Harvester and Massey-Harris, 
the expansion of markets and the consequent production in 
Canada of self-propelled combines by Massey-Harris and Cockshutt, 
and of tractors by the Cockshutt Company, have been leading; 
factors in such changes. New plants have been built to house 
specialised productive facilities. The Massey-Harris Company 
In Toronto now lays claim to "one of the most modern automot- 
ive-typp assembly lines on the North American continent" -* , 
Here the company's entire output of combines ■^'' is produced 
in a completely new, one-floor building housing a 562* assem- 
bly line, in which specialisation of processes exceeds any- 
thing previously known to the Canadian implement Industry. 

Assembly-line methods in new plants have 
similarly been adopted by the Cockshutt Farm Equipment 
Company at Brantford in its tractor and combine production, 
and by the International Harvester Company in threshing mach- 



•en- 10? surf* ot sinsm9lqsii eJi lo «moe )b»;Jq6bjs ns.i \ 

no : tq fniomi$ beis^n© ol ee^a^S hsi'inU 

."' 'sW bi'io.s fli noi.loiibo-iq b&JoiiJeei 
-feBflfiO •n'rf fll engie aijoissi.on ,t6\s( ydJ 9onJ8 

,«ififeH-\a8e«M bns ledssViAH iBfiol^Jf.maSni xd a^rtii nlij^J-ioo to j 

nl no Tq ;tn3£fp©enoo ftrf^f fen« tJsjJtem lo nolenaqxs erf* 

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•si/ori o* j'lawrf no I'd ectnslq waM .essnado rioue nl eiocfoel 

Xngqac'^ - *''ibP-X9B8bM ©jiT ,g«itflIIo-?; -^^litD^boiq '•^==^''' ^Ifiloeqe 
-;tomo:ftJB msborr :t20Hi ©rf* lo ©no" o;t tnialo bxbI voa o;^noioT nl 
irif>nl:fiioc nsolierA ©rfi no eanll Yldra«e8B ©qyiJ-evi 

r:«ojj.:'oiq r^ ^ r?!i.tcfraoo lo ituqJoo »ii;tn© e'^nsqeioo ®rii eteH 
- :ea 'Sd? B snl8i;ori ^atbllud looll-sno ,w»n x-C9*©-tirooo a nl 

.XTt;?c,i;i3»ii »t iKi naifienev c.io oJ fluon;i x-ie^^i^-iveiq gnlnj 

ir '? Jtfi "> 8rid xc br nsecf xJie-fJ'^-'* 

..r.-i frt- rr'Sc'^d Sflldflion F:'nF Tr-^opTjt rrt ^ ni •^•Tp**-:tr o-tET *p vnrrrnoO 



278 

Inery, seed drill and other large Implements. All companies 
have reported greatly increased expenditures on engineerings 
and research since the war, stressing improvements in operat- 
ing ef'ficiency through continuous studies of manufacturing 
methods. 

Interfirm Cost Differentials 

The above-mentioned factors have affected the 
sources of interfirm cost differentials in the industry. Diff- 
erences in the costs of production among firms in the Canadian 
implement industry have never been expallnable in any apprec- >:^ 
iable degree by the prices paid for labour and material. 
Because the industry is centralized in Ontario, and vertical 
integration is virtually absent, costs of these items do not 
differ appreciably from firm to firm. The explanation of 
such differentials must therefore lie In differences In the 
overhead costs of manufacturing, which, in turn, are affected 
both by the volume of production and by the degree of special- 
isation in manufacture. 

The multi-product nature of implement 
production makes it necessary to discuss cost differentials 

in terms of individual implements, since there is no reason 

■■ to 
why the lov-cost producer of one implement need be the low- 
cost producer of other implements. In fact there are indic- 
ations in the production of some of the newer and larger 
Implements at least, that cost advantages in individual 
implements are dispersed unevenly among the firms. 



ual si leriito hns llttb bsee ^X'jr-cii 



Xfl« I'^s fie?»cf Tsvsn ©veri \iieijbai innw.'ilqmi 

^ofl ofc emeJI ©esri? to 8*eoo ^^nsecfe x^^Buiilv zt noli&i'^eint 

r;?lAj 1:; -::!-'VJ.">'LM i ^^ : i.J '*' •; 1 ^ i ei'^/' . Bo. iii Jn3*I9 III r IIOUB 

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"' ■ ■ ■ -' '' '1 

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no;- ifl el i-.^ '^o en- >:t nl 

-otbni 91B 9i9Tii JobI nl ^o lo 'i90Jjfcoiq :teoo 

Ii..j;_!j viLnl n' jji'irv'rt jso'j j an; ,jebpj. js eJiiDiCO-iq':;! 



279 

■ This is in some degree to be expected in 

view of the century- long history which each firm has had and 
the varying degrees of success in mergers, acquisitions, 
development of new markets and new products and in plant 
specialisation. Consider the Massey-Harris Company, often 
now referred to within the implement industry as the low- 
cost producer of combines. This company's present status 
in combines can be traced in part to the expansion of markets 
in the United States and abroad which followed the acquisit- 
ion of the Johnston Harvester and the Case Plow Company, in 
part to the fact that the company developed and placed on the 
market its first combine as early as 1910, and in part to the 
highly specialised methods of combine production used since 
World War II. Leadership in combines, however, does not mean 
leadership for this company "across the board". Similar 
factors in the history of other companies may account for 
their leadership in other implements, " 

Such an observation on inter-firm cost differ- 
entials is very difficult to establish on evidence. In 1939 
the Federal Trade Commission reported on the market shares of 
the leading companies in individual implements up to 1936. ^^°^ 
Although taking all implements the International Harvester 
Company could easily be said to lead, nevertheless in individ- 
ual implements the company was not always the leader. It was 

^ "■ ■: ■'' '" 

exceeded by Allis-Chalmers and Beere in combines sales, by the 
Oliver Company and Deere in plow and cultivator sales, by Deere 
in corn planter sales. In Canada, unfortunately, even this 



n.f f o* 9HI08 nl tl e ■ • 

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neit^o .YnprrfT'or' rilnnH'-Y'^peBM sf^.t -xehlenoD .fiol;teeilBi09qe 

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eif;fB:t8 ?fl©89iq B^xneqrooc laoo 

volH 98«0 9ri? boB n9:Je»viBiH flo;tenrtoL sri;^ lo nol 

end' oj ji&q al ic ^ij.:^3^ zb saicssao je'i..' x 

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Vf-i-i- i2J. ,sonDLivc» no r!£ iiajii/ses oJ z±5s^^Ti^L: • \ - ' ^lA^ijne 

lo esie/le :f«3(TBi» art;* no h&iioq»i noiaelaiaoO •beiT X£i«b9'? »ri* 

.bfPl oi qtf si'ng -V-tfin^ n^ ^^■tn-nrrnn •^.nfhssl r<d:f 

-blvlbni al I iiBVf* I oi bifie »d x-t^«o& bluoo x^eqi^oO 

dl' bvpv.'Ir -ton at- '-o;-) "jdrt- ir-Tf Ipv 

\d (tslse T:o;tfivl;fl0O bna wolq ni eissO bna Yflsqff'oO icavilO 
elrflt n9V« ,?!«>:?■ r.rrrf^Tnlr^fr . ,1 ?• « r» p. ri n"'" .P.f.fpr- •rr^li'^rr' n-Ton rfi 



280 

type of evidence is lacking. 

To say with exactness which firm is the low- 
cost producer af any particular implement would be exceedingly 
difficult. Cost data are very hard to come by and even if they 
1A were readily available it would require correction for 
differences in methods of computing costs and for any differ- 
ence in the products. An analysis might possibly be b?ised 
on market-shares, concluding that the firm with the largest 
market share for each individual implement is the low-cost 
producer of that lmr>lement. But here too the data are diffic- 
ult to obtain and the conclusion does not strictly follow. 

Under these conditions of inader..n^,t« d°ta the 
subjective view of interfirm cost differentials entertained 
within the industry is of some interest. This subjective 
vl«w, insofar as the author has been able to discover it 
through interviews with executives in the industry, conforms 
with the view here stated — that cost advantages in produc- 
tion of particular Implements are unevenly dispersed among 
the firms. It is the author's conclusion, moreover, that an 
accurate recording of these subjective views would show that 
the Massey-Hasris Company (as heretofore indicated) is consid- 
ered currently to be the low-cost producer of combines, and 
the International Harvester Company the low-cost producer of 
certain types of grain drills in which the company's product- 
ion is highly specialised. Similarly and to a smaller degree 
it might be said that the Cockshutt Farm Equipment Company 



-wol etli tl mil'i riolrfw eeenJo Iw x^ 

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B^eb to 8foJ ;r J ^<ncD 9S©dt labnU 

8 /ftnif •IB 8*ne iuoi^Teq "^o ool* 

fte ip.rii ,f9>^o»'^om ,rfof swr-^fro s'Torf.+r/* ••Kit el ;tl .Rmit aff;j 

•bienoo el (.be:fBOJ:bnl ••io^o:fs'i6»ri bb) x^sqi^oO 8li«BH-x»ee6M Btii 

bate . -"T^on-vcS. ■^r'* f»d o:t Y-ftn^TifT- ^ft1<% 

-i-o.7r<oiq <. ©ri* rfolriw nl elllib n'Bis lo eeqx^ aiBSi9t> 

^ Tf: vlrfnlr^ nl nol 



281 

p(5s5i&s'S©s ffCWife advantage in the cost of producing svathers 
for the Canadian market, a harvesting Implement which the 
Frost and Wood Company had produced and sold with consid- 
erable "Success In Ca'na<!a before it was acquired by Cockshutt. 

Estimating Manufacturing Costs in , the Individual Firm 

Commenting on the methods used to determine 

manufpicturing costs in the implement industry, the Federal 

Trade Commission stated in 1933; 

Practically all the farm machinery manufacturers 
visited by the examiners of the commission, which 
included all the full-line companies, prepared only 
what might be termed "estimated costs" ... Even 
more remarkable was the fact that all except one 
were unable to furrfeh the number and tot^.l cost 
of each size and type of implement and machine man- 
ufactured in a year and tie in the total cost of sizes 
and types manufactured with the general ledger cost 
and exriense accounts. (37) 

The method used for estimating costs in the industry was 

found by the commission to be substantially uniform, "as 

there is close cooppr'='^1 -^n between the companies in the 

',, and t.c -1 larg« - 

matter of exchanging information as to each other's systems". 
This method ^^ reduced itself to an effort to determine 
costs in advance on the basis of the anticipated level of 
production and any anticipated changes in costs of materials 
and labour ^39;^ 

The author's own investigation of the costing 
methods used by Canadian firms disclosed similar findings. 
In this instance, particular attention was given to the 
methods used by one of the Big Three Canadian firms and in 



r«'.- 



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:; .ts noier J 

©no ;^a©ox9 Ilfi ;tsrf;f Job"! sri^ bbw sldesl^ '^lom 



.V-» r,^ 



■ IN. 1 r ^. t^ >"■ /r 



282 

the paragranhs that follow the cost picture for that firm 
is described. There do not appear to be any significant ;« 
differences, hovever, between the method here outlined and - 
those used by othpr firms in the industry. 

For purposes of estimating, manufacturing 
costs are divided into the usual three main groups: (1) mat- 
erials costs, including the costs of all materials actually 

the ;»> ifftftod of ! "ion «■ :'. 

included in the product, (2) direct labour cost, being the 

cost of employees directly engaged in the fabrication of the 

product, and (3) overhea-^ costs or burden, including all other 

f!;- s :: i" trie i' w' 1^ 

manufacturing expenses — indirect labour, supervision, main- 
tenance, fuel, lif;ht and heat. Insurance, taxes and deprec- 
iation. It is quite clear that, of these three, overhead 
costs are the most difficult to estimate accurately. The 
difficulty is greater than usual in the implement industry 
since the typical firm produces a large j^ariety of products 
ranging in complexity from simple plows to highly intricate 
machines such as combines and tractors, and to a large extent 
the same slements of burden are shared by these widely differ- 
ent products. 

The amount of overhead to be included in 
costs is generally expressed as a percentaj^e of the expected 
cost of direct labour, and is based principally on past exper- 
ience. If, for example, direct labour costs in a previous 
production period were $100,000 and overhead costs were also 
$100,000 the rate of burdon for that period vould be lOOjS. 






-^tsffl t oiat 

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,nr>f:fsl 

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i. oi ftne jeioctoBi." .00 zb rfoua eenl' 

srtnonsl 



a 8fi 1 

■.' ! "-ir': r-rn PiOP.ia., . ■.•ri:-i'' >^ ^ -trirsflF' ^n rtrri'> 



^rl ft' 



283 

The actual setting of a burden rate to be applied to current 
proiuctlon is necessarily a somewhat vaguely-defined process 
in which no uniform practice appears to be followed through-, 
out the industry. The company under review reported to the 
author that the rate of burden for each year's production is 
decided in advance at conferences between manageiient and manu- 
facturing supervision, and that the principal factors affect- 
ing the rate set are the expected volume of production and 
the expected level of efficiency throughout the plant. The 
higher the expected volume of production, based on the demand 
estimates of the firm, the lower the burden rate will be set. 
However, no precise formula for the setting of burden rates 
is in use. 

A view o^ the actual burden rates of indiv- 
idual companies during the thirties illustrates the relation 
between overhead and volume. Table XXVI shows manufacturing 
overhead as a percentage of the cost of direct labour f"or 
the Big Three Canadian Com'^nnies. 

TABLE XXVI 

Manufacturing Over head ais a Percentage of Direct Labour 
in Canadia n compa nies, 1 93 -~193^ {Ho) 

I.H. M.H. Cockshutt 

Year ( Hamilton ) (Ca nadian pl ants) ( rirantford ) 

1930 162 267 21+6 

1931 311 ^76 ^11 

1932 527 ^7^ 512 

1933 350 38»+ 562 
193^ 320 271 337 
1935 197 221 385 

Source: Evidence of the STecial Ccmmittee on Farm 

Imjlement Trices, Ottawa, 1957, Vol. 18, rassim. 



c8t 
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5 






281+ 

The figures in the table are the pereentages by which actual 
overhead costs exceeded actual labour costs in the years 
shown. It is obvious, of course, that the years 1931 to 1933 
in which sales and production of farm Implements were lowest, 
were the years in which overhead costs of manufacturing were 
highest, 

A further point of interest about burden rates 
in the company studied, and in others in this Industry, is that 
the same rate is applied to the entire output of the company, 
no distinction being made between implements whose production 
involves considerable overhead and those which" involve Tittle. 
Obviously this is done for the sake of economy, since, as one 
executive expressed it, if an atte-^ipt were made to compute 
individual burden rates, "we would lose money trying to save 
money". The significance of the practice is probably greatest 
from the point of view of pricing. To the extent that prices 
are based on costs of production, the result is that some prices 
are overstated and some are understated, the buyer of an imple- 
ment which requires little overhea'^ paying some of the cost of 
the machines which require a good deal of overhead. 

After tot'^l factory costs, including materials, 
labour, and overhead, have been estimated, there still remain 
two categories — administrative costs and selling costs -- 
to be added before full costs are obtained. Both these are 
handled through the application of a markup to factory costs. 
The markup for administrative costs is generally somewhat 



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IajOW SW" ,aS.JB-l fiSb'IiJG' iBJjLlvIfu-iX 

?L 3Jt »o ^o eoneolllnsls "nn 

6 > *»ri;J ,floi. ' 'to cJcoo no befc^.J ©ib 

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vo Ic oa 6 9iiup6'L dot i:t 

r :< svpff , I 

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© ri;;foci 6;Jdo jSoo iXirt €»'iol»d hebba e 

-^sl oct Afn ' -tFolI oitii ' ff 



285 

lower on Implements of which Tigny of the p^rts are purchased 
In coTnplf^ted form from other companies. A tractor enp;lne, 
for example, represents high material value but Involves 
relativ-^ly little administrative expense. The markup for 
selling costs is meant to cover the entire cost of operat- 
itig'the co"^pany's wholesaling facilities and is '".ade up 
principally of the expense of operating the branches. The 
amount of markup for this purpose appears to be around lOjS 
but there is reason to beli-eve that intuition is relied on 
to a greater extent than most manufacturers admit. On the 
subject of selling cost estimates, the Federal Trade Commiss- 
ion observed in 1938s 

Some manufacturers added a certain yearly amount to 
estimated costs at the factory for selling and coll- 
ection expenses in their cost records. Others were 
content to stop their cost compilations at the point 
of factory costs including packing and shipping and 
hope, without definite information, that the margin 
between factory costs and selling prices would provide 
for these and other general overhead expenses and 
produce a net profit. Those companies that did apply 
selling and collection expenses to the costs of 
specific products usually did so by applying a per- 
centage in ratio of these expenses to gross or net 
sales. ""■ ^' (kl) 

Conclusions from Chapter Seven 

From the material covered in Charter Seven the 
fbllowing principal conclusions emerge. 

1) The outstanding features of the demand for farm 
implem'^nts are high elasticity for changes in farm income and 
low elasticity for changes in price. Thus, although changes 









( ;. 



Ildl 



. ^.^llG 



286 

in farm Incorae from year to year in Canada have been frequent 
and pronounced since 1920, the resultant variations in the 
sales of farns implements have been more pronounGed. Aggra- 
vating the problems created by an unstable m&rket, is the 
difficulty of forecasting demand months ahead of the selling 
season when "best guess" estimates concerning farm yields, 
prices and income are alone possible. 

2) Overhead is the most significant component 
of the industry's cost?, not only because of the rigi'Sity 
it imparts to them but also because of the changes which 
have taken place in the nature of overhead costs as part of 
the tractor revolution in the industry, and the way in which 
overhead is handled by individual firms. 

The changes in the nature of overhead costs are 
the result of the new emphasis on efficiency and specialisation 
which have accompanied the production of power Implements, 
This has only become evident in Canada since World War II 
but already its effects may be noted in terms of new plants, 
new methods of production and a new consciousness of the 
importance of economies to be derived from the technique of 
production as well as the volume . 

3) The method of estimating overhead costs by 
individual firms has some significance for price theory^ and 
is quite important for an understanding of the industry's 
long-terra price policy, to be examined in the next chapter. 
Burden rates for overhead costs are generally set only after 



iq bne, 



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oq or 

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To eaift;J i. mi ecf '^ssi e;tDe'ne ^il is iuti 

«' 00 w»n s bnft ^old•oI/f)o^q to ebori^em w©n 

ee lidw c.£ ooiJojJboiq 
«oiia lot «onfir> Emilt I 

; ■ , i I f'- r «-' 

i ecf o^ ,\oJiIoq soliq fflisi-anol 



287 

conslieration of the planned volume of output. One effect 
of this is to impart sorae cyclical rlgi-ilty to costs, unit 
overhead declining in years of high output when costs of 
labour and materials are generally on the rise. 

As far as price theory is concerned, the practice 
of applying the same burden rate to all products in the line, 
though justifiable in view of the complexity of estimating 
individual burden rates, sheds doubt on the accuracy of 
cost computations for individual implements, particularly 
as they apply to pricing. It is to this latter topic that 
we now turn our attention. 



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! r 



288 

CFAPfm EIGHT 
FhlCE COi-T'ETITION lit 

DEMAND. COST AND PRICING 

Contents 

I. The Long-term Behaviour of Imp;iement Prices 

The "stickiness" of implonipnt prices since 1920 -- 
Principal changes since 1920 — The increases ctur- 
ing the thirties — The rationale of the Industry's 
long-term price policy — The question of collusion. 

il . Price Decisions in the Ind i vidual FiypB 

Suggested Factory Retail Prices -- Manufacturers ' 
Profit — Dealer commissions and Resale Price 
Maintenance — The pricing of repair parts. 



I. The Long-tern Behaviour of Ir^iplement Prices 

The "Stickiness" of Implement Prices Since 1920 

How have the prices o** farm implements behaved over 
the past thirty years? The purpose of the first section of 
this chapter is to find out why, taking Into a.c.count- a per- 
iod of this duration, farm Implement prices have been relat- 
ively sticky in their behaviour as compared with prices of 
pj[;^er goods which farmers buy. This feature of the behaviour 
of Implement prices was noted in Chapter Seven. It becomes 
more evident upon ex^imination of Table XXVII which shows the 
index number changes for the level of implement prices in 

Canada as well as tbos* ^n oth^r principal commodities which 

farmers buy. 



tiO: 



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snoj 



? LJo_ SffT .1 

t9V0 bftVBfldd eitnemelqmJt hiibI "^o esoltq ©ri* •VBri woH 

-itf 9VBii eeoJtiq J taie't ,^oi;t8^u^ eirii lo hoi 

w TTV lv» eio» 

oo isqionl «eorltf as Hew bib • 



289 



TA3IiE XXVII 



All Canada Group Index Numbers of Prices of F.gulp-nent and 

Materials us e d by Farmers , 



191-} and 1920 to 1952 

(l'^35-39 - 100) 



Year 

1913 

1920 
1921 
1922 

1923 
192»+ 

1925 
1926 

1927 
1928 
1929 

1930 
1931 
1932 
1933 
193*+ 

1935 
1936 
1937 
1938 
1939 

19W0 

19^1 
19^2 

19^+3 
19^^ 

19»+5 
19^+6 
19^+7 
191+8 
19^9 

1950 
1951 
1952 



Farm Build- Gasoln 

Mach- Ing Mat- Oil & 

inery erials Grease 

5^.6 83.5 



92.2 

lllA 

89.9 

92.9 

102 A 

97.9 
97.6 

97.5 
97.6 

97.5 

97.0 
91+. 9 
9'+.l 
92.1 
9'+.6 

95.5 

97.8 

97.2 

lOi+.l 

103.6 

105.8 
109.1 
ll^.W 
117.1 
117.9 

115.1 
118.8 

126.3 
138.8 

158.3 

165.0 
186.8 
195.^ 



175.6 
l»+5.6 
125.8 

128.5 
121.8 

116.7 
llW.O 

108.3 
115.0 
117.2 

101.8 

88.3 
80.1 

8^-.9 

87.5 

87.1 
97.3 

108.7 

98.7 

108.1 

116.0 
128.0 
1W8.1+ 
155.0 
172.'+ 

175.2 

175.2 

186.7 
220.2 

237.0 

255.0 
296.1 
303.3 



162 
132 
130 

123 
128 
118 

111+ 

11»+ 
105 
109 
106 
108 

105 
102 
100 

97 

96 

98 
105 
111+ 
115 
115 

111+ 
116 
121 
136 
139 

11+6 
1^+7 
150 



Feed 

99.8 

250 

152 

135 

128 

13^ 

136 
li+6 

1^+0 

106 

7h 
95 

91+ 

98 

128 

101 

80 

91 

96 

111+ 

120 

125 

127 
129 
1^0 
202 
210 

230 
228 
233 



Ferti- 
lizer Twine 



Seed 



129 
129 
121 
120 

11^+ 

107 

9h 

96 

98 

97 

98 

101 

103 
100 

106 
11»+ 
122 
113 
113 

^^? 
llW 

120 

^?^ 
ll+l 

11+7 
160 
181 



283 

21+2 

17^ 

160 



25^ 
138 
119 
119 



11+8 
130 
1^3 
11+5 
l'+3 



196 
185 
171 
11+8 
150 

157 
132 

90 

83 
105 

90 
101 

106 
109 

9^ 

* ^ • 

118 
126 
126 
126 
126 



• *si ..- 



126 

126 

193 
260 

301 

298 
31+2 

1+57 



100 
66 
61+ 

71 
92 

90 

100 

133 

97 

79 

88 

91+ 

115 

129 

136 

138 
1I+1+ 
168 
2U7 
212 

236 

2C5 
236 



Hard- 
Ware 



133.1 93.2 67.0 



II+5 
12i+ 

109 
111 
110 

108 
IOI+ 
102 

105 
102 

100 
100 
100 

91+ 

95 

96 

97 

101 
101+ 
102 

109 
111+ 
120 
121 
121 

120 
121 
130 
II+9 
165 

169 

187 

201+ 



Source: "Price Index Numbers of Commodities and 
Services used by Farmers, 1913 to 19l+8'\ D.B.S., Ottawa, 
19I+8, and supplements. 



"^/i o 



■ - ■ - 


- - - 


----- - - 












-k 


o.va 


S.£P 


I.££I 




8.PP 




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d.+J? 


rfpi 

■ 1 
I 


111 

o r r 


■ L ■*■ 










■■- • 


. 


i 

r' .. ■ I 


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ar'^i 

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290 

Inspection of Table XXVII reveals that farm 
machinery prices have varied less than those of any of the 
products shown except petroleum products and fertilizer, 
both of vhich are relatively new products since 1920, and 
considerably less than feed, binder twine, seed and hard- 
ware ^^\ Even when compared with the total of manufactured 
goods (not S'lown in the table), implement prices are notable 
for their stickiness. While the. prices of all fully and 
chiefly manufactured goods in Canada fell by 335^ between 
1925 and 1932, those of farm implements fell by 3.8:^. 
Similarly, in the period 1932 to 19^1, prices of ^11 nanu- 
factured goods rose by 27.35^ while Implement prices rose 
15.9^ ^^\ 

The Principal Changes since 1920 

Closer inspection of Table XXVII reveals that 

between 1920 and World War II, there were only five years 

when there took place what might be termed significant price 

increases in farm implements. The following discussion of 

price movements during the period centres around these five 

price increases. They may be seen in the table to have taken 

1+9 
place in the years 1921, 192W, 193^, 1936 and 1938. 

Increases in the Twenties ; Substantial price 
increases w«re nut into effect in 1921 nnd 192^ but these 
remained in effect throughout only one season, prices being 
restored to approximately their former levels in 1922 and 1925. 



91 i: ii 



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291 

Why werfl these increases nut Into effect In the first place^^'^f 
and why were they not retained? 

The principal justification for the price 
increase of 1921 is to be found in the increases which had 
taken place in the Industry's costs. Wage costs in the imple- 
ment industry had more than doubled since I'^IB. 









table; XXVIII 






Average 


Wages per 


hour in the 


Implement 


Industry 






1913, 


and 1920 to 
(in cents) 


1935 






Black- 


Machln 


Pattern 






Year 


smiths 


Ists 


Makers 


Moulders 


Labourers 


1913 


25 


26 


26 


30 


20 


1920 


65 


67 


7h 


73 


»f3 


1921 


60 


59 


66 


63 


36 


1922 


5«+ 


5^ 


58 


61 


35 


1923 


55 


56 


59 


62 


35 


192'f 


56 


56 


59 


62 


35 


1925 


56 


56 


59 


62 


35 


1926 


56 


56 


59 


62 


35 


1927 


58 


51 


59 


6h 


36 


1928 


58 


57 


60 


62 


36 


1929 


59 


58 


60 


63 


37 


1930 


59 


59 


61 


61 


3? 


1931 


53 


5^ 


59 


52 


36 


1932 


s 


W5 


53 


»+6 


35 


1933 


'^ 


50 


h5 


3^ 


193"+ 


^5 


W8 


»+8 


33 , , 


1935 


i+if 


h5 


1+8 


^9 


33 (3) 



Source: Evidence of the Investlagtlon by the Standing 
Committee on Agriculture and Colonisation, Ottawa, 1936, p. 209. 

Prices of raw materials had also Increased substantially 
since I9I3. When implement prices for 1921 were set by the 
Industry at the end of the year 1920, coal prices exceeded 
their 1913 levels by 1115^, prices of oak by 196^, prices of 






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steel bars by 97%% and of pig Iron by 175^ . Against these 
increases in variable costs should be set those In farm imple- 
raent xDrices which, in 1921, stood only 655^ above thPlr 1913 
level. 

The 192^ price increase cannot be linked with 

any increases in variable costs during that year, and in view 

of the fact that sales had increased in 1923 and fam income 

had stabilized, It is hard to see how an anticipated increase 

in unit overhead costs could have been a factor in the price 

Hjn or 
increase. Rather the 192^ increase appears as an effort by 

the industry to recover some of the losses it had sustained 
in the low-sales years of 1922 and 1923. In this, the Canad- 
ian firms were doubtless influenced to some extent by the 
corresponding increase in the nrices of implements in the 
United States in 192'+. 

Why did both these price increases last only 
one year? If this is to be understood, some further note 
must tae taken of the behaviour of prices in the United States 
in the same years. This is shown in Table XXIX. 

TABLE XXIX 

Index of Farm Implement Prices in United States 

(1926-100) 

1913 72.9 1932 8^.5 

1920 112.2 1933 83.5 

1921 lll.»+ 193^ 89.6 

1922 86.3 1935 93-7 

1923 98.8 1936 9"+. 2 
192£f 105.7 1937 9'+.0 

1925 100. »+ 1938 95.5 

1926 100.0 1939 93.^ 

1927 99.5 19*+0 95.8 (5) 

1928 98.8 Source: B. of L.S. Revised Index of 
Farm Implement Prices, Washington, 19^+8. 



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(?) . : 

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.S-f-'PI ^noitgnlrieeW jesoli'I (tnsmslqml biib'^ 



C_Vi 



293 

As can be seen In Table XXIX, A»Berlcan prices 
rose less between 1913 and 1921 that (lldl Cana^^lan prices; 
specifically, American prices rose 535^» ^tid Canadian prices - 
695^ between those years. The price Increase In Canada in 
1921 was not paralleled by any slrallinr Increase In the United 
States. In fact, the Index of American prices shows about a 
1% decrease In that year. Tn sum, this meant that during 
the 1921 season prices In the United States were about ^2% 
above their 1913 levels, while prices In Canada were just 
about double their 1913 levels. One can only sunlse that, 
tariff"? being only between 12i- and I5^i much of the Increase 
In Imports of that year Is attributable to the price differ- 
ence. Imports Into Canada increased from $6.9 millions In 
1920 to $2^.5 millions in 1921, and this despite the fact 
that total sales in Canada decreased from $82.1 millions to 
$5^.*+ millions. This alone would probably have Induced 

Canadian manufacturers to lower their prices in 1922, There 

ill pr'^iP'i 
was, however, an additional Incentive in the fact that the 

price level of agricultural Implements in the United States 

fell by about 205^ at the beginning of 1922. At the same time, 

therefore, prices of Implements In Canada fell by an almost 

identical amount. 

The movement of Implement prices from 1922 until 
World War TI ran roughly parallel In both countries although 
for certain individual years substantial differences may be 
noted. American prices rose arpreciably In 1923 and 192*+. 
Canadian prices rose by about 10^ In 192W but once again were 



9?. 9d npo bA 
til sP il «*Efi«TonJ: soliq ?• n »Hor(l n; d 

3 x-tno nB3 i^U ilerlJ sidi/ob :^ooc!a 

nl enoilitm 9*64 moil 5»EBeioni ehensn oJni eJio e 

.iSPi rj^T ?,4ic« oi 0^91 

•iq M .snoilXIffl <M.*»$| 

91 fie tJeji^t -:«voT c:t ftf^Ttf^tf ©"^r.'rTefr ^.p,^^^re^) 

JCJEi ana GX 3V X -.";•:■■ en 1 ii^noijicDfi «£ ,-i9V9woa «eEfe' 

-B n£- xc 1J.91 ^iq.Tij 10 £sr,iiq ,9Tol9a»riJ 



29"+ 

lowered In the following y3ar. This time the reason for 
low<>rlng prices so soon after they had been increased is to 
be found not only in the decline in the American price level 
in 1925 but also in the drastic fall in the sales of the 
Canadian companies which followed the increase in their prices. 
The experience of 192^, indeed, affords the only available 
empirical suggestion of price elasticity of de-nand for imple- 
ments. Desr)ite the increase of 7% in farm income in that 
year, total sales of farm implements in Canada fell by 27% 
(from $39. 9 millions to $29.9 millions). Massey-Harris sales 

fell ^+05^; Cockshutt Plow Company domestic sales fell 50^, 

• - * (6) 

though the company's foreign business showed an increase 

Since the decrease in price in 1925 dii not 
reflect any decreases in labour or materials costs, it 
must be attributed in large part to the 192^+ sales experience. 
This, of course, raises a question concerning the significance 
of the full-cost pricing principle, which will presently be 
discussed. 

The Increases of the Thirties ; The price increases 
in the thirties, though less extensive, received much more 
attention than those o^ the twenties because of their polit- 
ical significance against the background of the 'depression. 
Much criticism was directed at the industry for raising its.^^ ^ 
prices when, to all appearance, its costs had decreased. 
When the first increase was put into effect in 193*+* for 
example, costs of materials and labour were considerably 
lower than they had been in 1929. The decreases in wage 



- ©on. 

.^^ci•t '".imf rrtTRT To eof-'F; I'":to.t -tp'^v 



Pinv.'-nr'e j>iiAff Tf.ffrf f:'r> f t^r " [Rnror, «K:f rf^rxorf^ 



■J} • 'iuoobI ^b >tne i 



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I 



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295 

rates were seen in Table XXVIIl. Table XXX shows the percent- 
age amounts by which materials costs had fallen. 







TkBUZ XXX 




'Igrsia'^d 


Indexes of 


Material? 

c^ns»d^, 


Used 


by the Implements 


Industry 




1929 


and 193M- 




Ye?(r 


Pig 
Iron 


steel 

B^rs 




Coal 

(N.3.) Oak 


Linseed 
Oil 


1929 
193^ 


100 
81+.7 


100 
93.7 




100 100 
87.5 33.3 


100 
76.7 



Source: Proceedings and "vidence of the Committee on 
Agriculture and Colonisation, Ottawa, 1936, 
pp. l»+8ff. 

It was noted in the previous chapter, however, that cyclical 
decreases in variable costs during the depression were '^^ore 
than balanced by increases in unit overhead costs as a result 
of lower output. Thus full unit costs in these years actually 
increased. 

The Implement companies claimed that it was in 
order to meet these increased full costs that they raised 
their prices in 1935+ and again in 1936. The latter increase, 
although less than ^% on all Irplements taken together, was 
more substantial on some of the important individual implements. 
The amount of price increase on 8' binders, as an Illustration, 
were: International Harvester, from $263 to $281; Cockshutt 
Plow, from $268 to 280. These increases, it will be recalled, 
were the occasion for a Parliamentary investigation into the 
industry in 193^ and 1937. 

Throughout these enquiries, most of the argument 
over prices hinged on the complex interrelationship among 



D-r 



r 

C 

on ee 

Xl al B^^o^ Staa Hut et 



L 



3 no lo ;p r 

Jpnc '■' 

jOO-isosi ©a iJ. -uOi. oj oci-v aiaij <voi : 



^iisiisjnj: iC-. o-fi ^M-jx-i'<i 



296 

volume, costs and prices. A gulf separated the thinking of 
the Committees and that of the Industry In this matter, 
springing fro?n their different estimates of elasticity of 
demand, and leading to sharp divergence of opinion on what * 
should have been the industry's price policy during the 
depression. At one point, the Vice-'^resident of the Massey- 
Harris Company remarked to the Committee that "there is a 

large difference between your viewpoint and ours on some of 

(7) 
these matters" 

«*■ 
In retrospect, it appears that a real accomp-^ 

Itshment of the 193^ and 1937 price investigations, insofar, 

as they affected the industry's price policies at all, was 

to re-impress on the industry the political risk involved 

in price increases even during times of rising farm income.'"'"* 

The recurring theme of the Committee's criticism of the 1936 

price increase was the behaviour of unit overhead costs, which 

the Committee repeatedly asserted should be decreasing with 

the then increasing output. With this argument, the Committee 

sought to undermine the rather vague claims of the Industry 

that the Increase was made inevitable by rising costs and 

depression looses, without much attempt to explain why it 

was being made then and not earlier. 

After ^ close consideration of the proceedings 
and evidence of that Committee one finds difficulty avoiding 
the conclusion that the 1936 price Increase was a nolltlcally- 
umTlse attempt on the part of the industry to recover its 



no n' 



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to emoe no enuo fen: -^iv luox vf •rrf'^Tst'^]:'^ «*ri 

-Jin- 

19886 t-f 



\ 
1 



^o^^?■^T09^ 






297 

depression losses through the medium of a price increase In 
H highly inelastic market. In this respect, the 1936 increase 
bears a resemblance to that of 192^, the difference being 
,^,^hat in 192^- sales fell off as prices went up. The likeli- 
hood of a recurrence of this phenomenon in I936 was reduced 
by the greater length of the depression which had preceded, 
and by the fact that farrn income had been rising, albeit 
slowly, since 1933* The price increase put into effect In 
January of 1936 did not prevent the domestic sales of the 
Big Three Canadian companies from increasing as much as kO% 
in one case, but the lengthy investigation to which It gave 
rise has probably had an effect in ai^ . ^4i^ the extent of 
subsequent increases. 

Although Implement prices in the United States 
actually declined slightly in 1936, their overall behaviour 

^from 1933 to 1938 was quite similar to ,. that of Canadian 
prices. Probably as a result of the National Recovery Admin- 
istration policies, American prices rose steeply in 193^ and 

..1935» then renalned fairly stable through the remainder of 
the decade. Canadian prices were again increased in 1938. 

It may be noted that in 1939 there was a 
alight decrease in implement prices in Canada. Following 
the publication of the Report of the Federal Trade Commission 
Oh the Agricultural Iraplementfs Ihdustry In the United States 
in 1938, the International Harvester Company, doubtless 
mindful of Its former nrolonged expprlence before the courts, 
announced that it was voluntarily lowering its prices on a 



vc 



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•♦o 









trf^i-& 



5^ 



■><> -. 



Lcfc + E ttItJ^e'* '^^■n'Fr?)T n^w^it -rTPI 
.c. .esojt- >■■ .3r*» 

i3 £s' .. vi.i;:i as 3£.ai hsjcn so \i^ 

gfliwollo^ j nl r 

■^^'-^Jt u ax \-iiLi.onx l xjsijjj*iJiii^ ©rij no 

nl m 1 nl 

♦ P -ct<5cf ©orrnJ-fncTTS h-^-^noIa-n T'^-mn'T crtt To Jt-T^nlm 

:-inI-x3woI ^iii"^;cJ^UJlov eaw Ji jfiiij t@Dnwonafc 



298 

large number of Implements and also that it was eliminating 
every tracle practice criticized by the Cotunfeslon. This 
announcerTient gratified the Comrabslon, vhich in a later 
report took credit for its part in the achievement ^ . 
Other producers were forced to follow Harvester's lead and 
as a result, the general level of implement prices in the 
United States was 2% lower in 1939 than in 1938. The effects 
of this decrease seem to have been felt in Canada where the 
index declined slightly in 193'^» before going into the rise 
from which it has not yet emerged. 

The Rationale of the Industry's Long-term Price Policy 

What can be said from the foregoing analysis of 
implement price behaviour over the course of a farm income 
cycle? FroT an economic point of view, the key to the 
relatively stable price level of farm implements over the 
past thirty years Is to be found in the four-fold circumstance 
of few firms, high income elasticity, low price elasticity and 
rigid overhead costs. Because of high Income elasticity, the 
fluctuations in Canada's farm Income have been projected onto 
the opwratlons of the implement industry in magnified form, 
resulting in alternating periods of very high and very low 
output. Substantial profits have been niade by the Industry 
in high output years, primarily because of decreased unit 
overhead costs in those years rather than because of increased 
prices, .-.ikewlse, losses have resulted during years of low 
output, not because or falling prices but because of vastly 



89 S 



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iXJiV^S. 



to Ej-i^-^cns Id 9nj rcoil biee - 

vol QOliq BIG&JZ XlQVi2&\ - 1 

: to 

3Tii tc Hnol:f r.-^wrrc orf* 



' vl*Tpr.f''a .ETRf^v "tuTT-^cr^ 



■.T'rf r;s3fTCT -an' -iPiLrrrj'sri "tiTrr , .-trmrf t/n 



299 

increassd overhead per unit. Any hope which the In'lustry 
may entertain of stabilizing output and costs from period 
to period through cjitcllcal nrlce ad.lustment appears to be 
thwarted by the Inelasticity of the demand Itself. 

Further evidence of this cost and price 
behaviour may be seen In d??ta published by the Massey-Harrls 
Company and by the International Harvester Company In their 
annual reports for 1952. These show the percentage increases 
In the average hourly wage rates paid by these companies, 
in the raw materials prices, and in the prices of their 
farm implements between 19^1 and 1952. In its comment on 
this data, reproduced in Table XXXI, the Massey-R'^rris Company 
attributed the relatively smaller increase in Implements prices 
to the "high volume of sales resulting In a lower ratio of 
selling and production expenses and to the Increased effic- 
iency in production resulting from the extensive modernization 
programmes carried out by the company during the last few 
years" . 



TABLE XXXI 

% Increases over l^Wl levels of wanes, materials 
and imiDlement prices . 
1252 

Massey-Harris International 

Average 
hrly rates 1655^ 1'+^+^ 

Raw Materials 9^-^ 95/^ 

Prices of Comp- 
any's Iraplts 665? 835? 

Source: Annual Reports of the Companies for 1952. 



Cr-- 



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gfli^ii/jp iq fli X'' 



. ' 21'^'^X 



300 

Therft ts a fourth factor, indicated briefly above, 
which has hnd an Influence on the industry's lonp-terT price 
policies and without which these cannot adequately be explained. 
This Is the political significance of itnpleinent nrices and 
price changes. In so highly agricultural a country as Canada, 
it is not surprising that few years pass, whether farm income 
is low or high, without demands from some quarter that the 
price policies of the implement Industry be investigated . 
Certainly the position of the Industry among Canadian raanu- 
facturers does not warrant such attention, since It produces 
only around 1% of Canada's total manufactured product, and 
in 19^8 employed only l.Sjf of the total persons engaged in 
manufacturing industry ^^^\ it is the industry's position 
as an oligopolistic supplier of capital goods erclusively 
to agriculture which attracts to it the attention of sincere 
reformers and political opportunists alike. 

How has the political factor affected the 
industry's pricing polir:!ies? It is clear that, if economic 
factors alone had been considered, the prices of farm Imple- 
ments might have been considerably raised during the period 
of the late twenties or raised more sharply than they were 
after World War IT without materially affecting purchases. 
Even during the depression years, there is much to suggest 
that H price increase would have been the logical economic 
adjustment to the decreased demand. As Joan Robinson obser- 
ved, demand may well become less elastic as it falls, and 
under these conditions, " a rise in price may be the 






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3 

G 

V 



301 

appropriate response to a fall In demand, and not a mere act 
of folly on the part of the producer" ^^^K The fact that 
prices were.not raisfj^ ..dvirijig the trough of the depression was 
probably a result of fear of political reperjussions rather 
than of conviction that such increases were not economically 
justifiable ^^^\ -^,, . 

To sum up, the position of farm Impleraent 
manufacturers over the course of what 'night be termed a 
"normal" farm income cycle is one in which long-term incent- 
ives, both political and economic, point in the direction of 
stable prices. In low-income years, price increases, though 
they might decrease depression losses, would incur govern- 
ment and farmer ill-will, the ultimate effect of which could 
be decidedly unfavourable. Price decreases, on the other 
hand, would at best force sales in the low-income period and 
by so doing decrease the sales that might be made in the 
ensuing high income period at higher prices ^^^^. Similarly 
in periods of high farm income, subst'^ntial profits can be made 
even though prices are Increased less than the Increases in 
costs of material and labour, because of the offsetting 
Influence of decreasing overhead cost. 

Other Factors in the Industry's Long-term Price Policy 

Other factors have probably contributed to the 
long-terra stickiness of implement prices. Professor Dean 
points out that where there is an element of price leadership, 
"major price changes cause follower adjustments that are 



9& ai ilAt * r 



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' nqi^olvfloo lo nsfii 
(SI) 



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»ri;^ al 9bBm »d ., ..-^.n-. .. ri 



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yitBJJ 
©bBin sd i. iq ii 



boi- 



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•oliq tot Bin" 



302 

always unpredictable to some extent and to minimize these 
uncprtalnties, official prices are kept fized as long as 
there is hope of maintaining then" ^^ . Professor Dean's 
observation has relevance to the impleTient industry; the 
Federal Trade Commission vas of the opinion in 19*+8 that 
the International Harvester Company was still the price 
leader in the industry, even though one of its major post- 
war price changes (a downward revision in 19^7) was not 
followed by competing firms because of the buoyant market^ ^ , 
One might add to Professor Dean's o\iservation that the 
degree of uncertainty concerning follower adjustments 
would be increased in cases involving a line of products 
where no one producer had cost advantages in all of them, 
a characteristic already noted in the implement industry* 

Mention might also be made of the stabilizing 
effect of the administrative costs of price changes, which 
Professor Fellner suggests may discourage such changes esp- 
ecially if the shifts in market functions which induced them 
are expected to cancel out over time ^^ . This observation 
may be applied to the implement industry. A long-standing 

practice in the industry is that of issuing price lists 
it ' v1- ,.n l-y. '. 

annually and avoiding as far as possible interim price 

adjustments during the year. Prices of harvesting machinery, 

set months ahead, may not reflect the conditions which obtain 

in the market during the actual selling season. Yet the 

uncertainty surrounding the expected conditions of demand, 

combined with the shortness of the selling season and all of 



em snol ee bent 



.-5 nS i^ 



91B esolt 



i-f 



« fi ^. r.» 



o5 '^ TQnu 

1:1 srfi o:t f^onflvsIsT: lari no; i 



-:t8(j o eno fn^ «ri* al labe**! 



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."<**» f f^ 



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•^cf 08l«i t'^'slnj 



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303 

the administrative costs and difficulties of making raid-season 
price changes, h=5ve traditionally meant that these prices 
are nraintalned throughout the year. 

The vuestlon of Collusion 

So far we have been speaking of the "Industry's" 

price policy, virtually Implying that the implement industry 

acts as a unit in the matter of pricing. This method has 

been followed partly for the sake of convenience — to make 

easier the discussion of the general level of farm Implement 

prices — but partly too because single-firm price changes 

have traditionally been rare in the industry. Most of the 

price changes discussed In the early part of this chapter 

were introduced by all the companies at approximately the 

same time and in most cases for approximately the sam.e amounts. 

tb« 

Uniformity of pricing action in an industry over 

a period of time raises a question concerning collusion, or 

price understanding, among the sellers. The existence of 

collusion on price matters is, quite apart from Its effect 

on consumer welfare, extremely difficult to prove. Wherever 

it exists in modern Industry every precaution is taken to 

avp.id leaving traces. Many businessmen are sincerely of the 

opinion that price-understandings are not in themselves 

contrary to public interest, an^^ rnany therefore engage in 

and promote such unf^erstandlngs without nersonal qualm. 

Nevertheless, their awareness of th« disfavour In which the.- 



£or 



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30»f 

practice Is helfl by public bdles impels them to keep their 

actions secret. Very seldom is anything put in writing which 

may later serve as evidence that understan'llngs existed; and 

not uncommonly are younger executives censured for their 

imprudence in this regard. For these reasons collusion In 

pricing is still a dark corner in Tiost modern industry studies. 

Factual analysis necessarily gives way to inference and 

suggestion with only inconclusive results. Such inference 

may be seen in the following extract from the Report of the 

1937 Committee on Implement Prices in Canada: 

The comfanies Insist that no understanding existed 
between them In the matter of the 1936 price Increase 
and that the increases resulted from the same condit- 
ions arising in each company. It is extreraely diffi- 
cult for the Committee to understand the remarkable 
coincidence of the price increase occuring in the 
same month of the same year, and, generally speaking, 
on the same Implements to the same extent. (17) 

An excerpt from the minutes of the Committee's 
proceedings illustrates the difficulties which confront invest- 
igators in reaching even this type of conclusion. The Vice- 
president of Massey-Harrls was testifying. 

Q. If It were true, then. If the competitive factor were 
an Important one, obviously you would not have been 
able to raise your prices (In I936) until you were 
assured that the International Harvester Company were 
going to raise theirs? 

A. No; we arrived at our own price. 

Q. How on earth would (all the companies) arrive at exactly 
the same amount of Increase? 

A. I do not Vnow; I am not In a position to say that. 

Q. I think you will be forced to this conclusion that If 
your board m-^de thp price Increase first, the Internat- 
ional Harvester Company became ^ware of it and simply 
increased to the extent your company had increased. 



♦«0£ 
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bnB •onaiR'ini oJ ^bw gftvlg >t-i-^iB68*oon ele^tlsns ifli;:tOB''? 

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305 



A. No. I do not know by what process they arrived at It. 
I do not know their secrets. (18) 



Shortly afterward, the president and general 

manager of the Frost and Wood Company (also a director of the 

Cockshutt Flow Company) took the stand. 

Q. What were the reasons which induced the Cockshutt 
Company to increase prices in January of 1936? 

A. I am not going to argue that materials costs ... or 
labour costs were factors in that advance. I am not 
so sure about burden. I think that was not. 

Q. You flo not Join with International Harvester Company 
and Massey-Harris in asserting that? 

A. No, I do not... I am quite frank to admit that in the 
main wew&it until our competitors, our large compet- 
itors, come out; and then we might have to adjust 
our prices a little way one way or another, not very 
much. 

In the light of the vigorous denials of 
collusion by both of the larger companies, it is interesting 
to note the comparative prices and price changes in 8* binders 
sold by the four leading compani-^s in Canada during the per- 
iod 1920 to 1^36. These are shown In Table XXXII on the 
following page. It is evident that a marked similarity 
characterised binder prices, both in their levels and in the 
direction and extent of change. In the rerlod 1^25 to 1929 
virtually no change at all took place 1n any of the prices. 
Each of the companies decreased price by $5 in 1930 air^ again 
in 1932. In 1933, decreases of from SB to ^2 brought prices 
closer together than they had been previously. Small increases 
by John "Deere, Cockshutt and Massey-Harris in 1^35 were not 
paralleled by International Harvester but this company 



li^- V i:?i;acv • ..iswriertr 






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9f« 



nl 



306 



TABLE XXXII 



Prices of 8* Binders ^ Cgnai a 1 920 to 19^6 
TSasis Reglnal 



1920 1921 



Deere 

Cockshutt 

International 



$279 
275 
269 



333 
328 

326 



272 
270 
266 



192^ 

279 
278 
27^ 



192^ 

310 
306 
308 



1925 1926 1927 



Deere 286 285 285 

Cockshutt 282 283 283 

International 283 283 283 

M-H (at factory) 260 256 256 

I2il 1232 1233 



Deere 280 275 

Cockshutt 277 272 

International 278 273 

M-H (at factory) 250 2»+5 



1928 


1929 


19^0 


285 
283 
283 
256 


285 
283 
283 
2 56 


280 

277 
278 

251 


19 ^if 


19^5 


19^6 



265 265 268 282 

261+ 261+ 268 280 

263 263 263 281 

262# 262# 265# 280# 

#Regina prices 



Source: Reproduced from Proceedings and Evidence 
of the governmental committees of the thirties, passim. 

" In 

made a larger increase in 1936 to close the gap. As a 
result, In 1936 prices differed by an amount of only $2, 



The persistence of such uniformity as appears 
in Table XXXIT can scarcely be explained as a coincidence. 
True, the binder was by this time a highly standardized mach- 
ine, as were the methods of producing it, and changes in costs 
of labour and materials must have affected all firms some- 
what equally. But how explain the price increase of 192^, 
which was not accompanied by any significant changes in labour 
or materials costs? Or again, how explain the presence of a 
prolonged period such as that from 1926 through 1932 when 
price behaviour was absolutely uniform for all companies. 



f-~>^i 



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307 

despite the fact that substantial changes in output Tiust 
have affected the unit overhead costs of different firms 
in different degree. It does not appear that much credence 
can be attach'^'d to the companies' claim that price increases 
merely reflected similar cost changes in the various firms. 

These considerations suggest very strongly 
that the price changes mqdf? between 1920 and 1936 were not 
reached independently by the individual firms. In some way, 
collective action was achieved, whether through actual dis- 
cussion or through a simple "follow th^ leader" process. The 
latter, as has been seen, was admittedly the case with some 
of the smaller firms. That the former characterised the 
decision-making of the larger firms suggests itself even in 
the weakness of the argument which attempted to link these 
price changes with changes in costs. 

It would be much more difficult to establish 
an inference of collusion by examining prices for the period 
since 1936. This is so chiefly as a result of two factors: 
(a) the sellers* market which has existed during most of the 
period, and (b) the disruption of the standardisation which 
had formerly characterised the industry's chief products and 
processes. Both of these have been discussed earlier. Their 
effect has been to permit the existence of price differentials 
on many of the industry's chief products throughout the period. 
Regarding (b), it is probably true that the technical complex- 
ity of power implements, as contrasted with the simplicity 
of design of most horse-drawn implements, has placed a 



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308 

premium on selling effort relative to price as a me'ins of 
stimulating sales. Farmer-buyers are seldom versed In mech- 
anics, nor in the technical jargon of manufacturing. Hov 
much extra is an implement worth If the salesman says its 
wheels have been "heat-treated"? Most farmers, who could 
formerly trust to a close inspection to Judge the merits of 
different brands of implements, must rely increasingly on 
the word of salesmen to learn the peculiar merits of the 
newer implements. 

For these reasons, prices of combines, tractors 
and the other nerwer, more complicated implements have not 
shown the same correspondence as that which earlier charact- 
erised the price of binders. Price differentials do exist 
on these products because of differences among the products 
themselves — either differences which are real or are made 
to seem real to the mechanically untutored. *^hether or not 
these implements will develop through time as did the binder, 
showing Increased standardisation until eventually the various 
brands are almost identical, will only be known many years 
hence. It will be recalled that with the invention of the 
binder in the late nineteenth century, significant innovation 
in the implement industry ceased until the "tractor revolution" 
Should another such gap appear in future innovations, the 
industry may once againx show signs of Fellner's "completely 
mature oligopoly" ^ wherein quasi-agreement is extended to 
cover not only prices but also product variation and the other 
phases of non-price competition. 



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309 



II. Price D ec isions In the Individual F irm 

From a consideration of the long-term behaviour 
of f^rm Implement prices, we now return to the sphere of the 
Individual firm, this time to focus attention on the manner 
in which cost and demand factors affect the pricing process. 
It has been seen how full costs are built up on the basis of 
the expected sales of the product. From full costs, how is 
price formed? 

The following discussion of the price-setting 
practices In the Implement Industry is based on an study of 
the practice followed In one of the Big Three Canadian com- 
panies. Nevertheless it Is true that no really essential 
differences exist. In what follows, an effort is made to 
note the phases of the pricing process where differences do 
exist. 

Suggested Factory Retail Prices 

Typically, the price which a farmer nays for 

©. In 
an agricultural Implement Is the "suggested factory retail 

price", plus the freight costs to the point of purchase and 

any applicable taxes. Suggested factory retail prices are 

cash prices f.o.b. the various factories, and are issued in 

the form of a printed booklet by the company to its retail 

dealers. The spread between the "full costs" as described 

in Chapter Seven and the factory retail price of any implement 



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319 

Is made up of the manufacturer's profit and the compensation 
of the retail dealer. The following discussion of the price- 
setting process revolves around these two componenets of 
price. Specifically it is concerned with 

1) What considerations affect the amount of manufacturer's 
profit In the retail prices? and 

2) What is the dealer-company relationship regarding retail 
prices? 

1) Manufacturer's Profit 

The word "profit" and the different shades of 
meaning it conveys in different situations would be fertile 
ground for the student of semantics. The price policy 
researcher discovers early the dangers attendant on any 
indiscrete use of the term in his relations with business. 
This is especially true in discussion of the role of profit 
as a component of price. Businessmen prefer to think of 
profit as an item taken into account primarily in order to 
facilitate efficiency checks and inventory control. Profit 
is not universally thought of as a markup consciously applied 
to costs in order to arrive at a price. In fact, the role 
of profit in many casps could best be described as that of a 
buffer between costs and selling prices. 

In the farm implement industry, manufacturers' 
profit is the most flexible of all the components of factory 
retail price. Within one company, the profit margin may 
conceivably differ for every type of implement produced; 
according to the claims of the companies at least, most 



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311 

full- line producers regularly market some products at prices 

actually less than their full costs. International Harvester, 

as an example, pointed out in a price release announcing 

various price reductions in April, 19h7: 

In our own case, we cannot reduce price on all our 
products. Some of our products lose money, some 
barely break even, and some show a profit. The 
reductions therefore will not be uniform and each 
will be individually made. (21) 

It might be said that the notion of profit 
"markups" is seldom encountered in the farm Implement industry. 
Companies do not consider therriselves as "setting" a profit 
markup; rather the profit markup is for most companies some- 
thing "determined", being simply the difference between the 
cost of the product and the price at which it can be sold, 
the latter being dependent on the price at which other pro- 
ducers are selling a similar product. One official of the 
Allis-Chalmers Company stated to the Federal Trade Commission 
In 1938: 

Our trouble is not caused in trying to arrive at a 

list price because that is governed by competition 

more than anything else. Our, trouble is in keeping 
" our costs down. (22) 

The implication in this statement is that selling price is 

considered virtually a given datum, and that profits come 

within the control of the seller only insofar as he is able 

to control his costs. 

This particular view appears to be widely held 
throughout the implement industry. It is, in fact, a reflect- 
ion of the long-standing price leadership of the International 
Harvester Company and Deere and Company in the industry. Most 



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312 

small manufacturers, It appears, set their prices on the basis"- 

of those set by these companies, even though as has been seen 

earlier, the small manufacturer may actually be able to pro- '' 

duce some implements at a lower cost. Regarf^ing the adherence 

of the snialler companies to prices set by the larg-^r ones, the 

Federal Trade Comrrassion in 1939 made public a letter written' 

to the Minneapolis Moline Power Implement Company from the 

B.F. Avery Company, which stated: 

(Issuance of our price list) is usually along about 
the middle of October but much depends upon how soon 
some of the big fellows in Chicago and Moline get 
theirs out. However, .lust as soon as they are off 
the press v7e will see' that you are supplied with 
copies. (23) 

To find a workable framework for Illustrating 
the factors which affect profit levels on individual imple- 
ments, the author devoted considerable attention in research 
to the problems faced by a firm pricing a new addition to 
its line of products, an Implement which is already being 
marketed by competing firms. In this situation, what factors 
will influence the amount of profit included in the price 
selected by the firm making the addition? It is felt that 
the answer to this question presents in convenient form the 
main problems of price-setting in the industry. 

Two related considerations normally affect 
decisions regarding additions to the line of implements pro- 
duced. They are: 

1) The importance of the product to the firm's "full line". 

2) The costs of producing it, being related, of course, to 
the volume which the firm expects to sell. 



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313 

Ever since the full- line firm replaced. the single- 
line firm as the typical unit in the industry, pror'uction of 
a complete line c^^ implGinents has been the object of all firms. 
One reason for this has been the necessity of supplying a 
line complete and varied enough to retain retail dealers on 
a permanent basis throughout the year. In addition, consid- 
erable significance is attSiched by implement producers to the 
"prestige" which adheres to a full line of implements, and 
which may suffer if a particular implement is missing from the 
line. Instances have already been mentioned, where, production 
being considered unfeasible, selling arrangements have beeh' ' 
entered into with oth^r firms in ordpr to round out a partic- 
ular firm's line of products. The arrangements by which 
Cockshutt and Massey-Harrls marketed Oliver and Case tractors 
in the late twenties are examples. 

Suppose that on the basis of these considerations 
a firm desires to add a new implement, say a tractor, to Its-^' 
line of products. Having designed the machine and calculated 
material and direct labour costs, it adds the overhead markup 
for the current pro-auction period, plus a'lmlnistratlve and 
selling costs as seen earlier. Suppose further that the full 
costs so obtained are as high as, or higher than, the prices 
then being charged by competitors for tractors of about the 
same size and power, so that even the smallest profit markup 
would mean charging a price higher than competitors. 

Tn :^uoh a case, several questions must b*» nn<^wered 
before a final decision to produce the machine can be made. 



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Sustnlnecl converaations with executives In the Canaflian 
Implement industry suggest that the following would be the 
principal of such questions. 

l^/hat is the cause of the higher costs? Do 
they reflect high unit overhead and, If so, cin this be 
reduced through a stricter check on inefficiencies In the 
manufacturing process? To find this out a special coat anal- 
ysis might be conducted in an attempt to arrive at an indiv- 
idual burden rate apnlicable directly to that m^jchine. It 
will be r«='called that burden rates for individual machines are 
not normally calculated. 

On the other hand, do the higher costs reflect 
the fact that more quality (In materials, workmanship, design 
or even in the number of "extras" included) Is being built into 
this machine than into those of competitors? If this Is the 
case, a decision must be made concerning a reduction in quality. 
Such a reduction Itself would probably entail extra costs of 
redesigning so that a prior decision must be made as to whether 
the company should, through extn sales effort, try to persuade 
buyers to take higher quality even at the higher price. 
Finally, a decision which one company reported might result 
after a special "market and cost analysis" had been made, the 
t machine might simply be placed on the market at a price equal 
to that of competitors, and sales estimates increased on the 
assumption of farmers' prpfprences for higher quality at the 
given price. In this case, of course, the Increased sales 
estimate would result In lowpr estlmatpd full costs through 



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315 
a downward adjustment of the burden rate. 

Considerations similar to these were cited by 

the vice-president of Deere and Company to the Federal Trade 

Commalsslon In 1'338. Speaking of competitors' prices, he said: 

If we have an Implenent In our line priced higher than a 
competitive machine manufactured to do similar work, then 
we must show the farmer we have additional features and 
higher quality In our machine which are worth to him the 
additional price asked. 

If the farmer is convinced of this fact and he feels that 
our better quality and additional features are worth to hira 
the higher price asked, then he will buy our machine. 

If he thinks that even though our machine does have the 
higher quality and additional features, costs more money 
to build and is entitled to a higher price, but still 
believes that the lighter and simpler competitive machine 
sold at a lesser price will do his work equally as well, . 
will stand up to the work with no more upkeep co<?t and 
will last just as long, then he w 1,1], buy the competitive 
machine. '"' ' 

When this' ifappens, we maydecl'^e that this is all Vlpht 
with us. We will manufacture our machine for the farmers 
who want these additional features and higher quality. 

If, however, we find by experience that the majority of 
farmers decide that the competitive machine is perfectly 
satisfactory to them and the additional features which we 
supply are not worth the additional price we ask, then we 
must get busy and redesign our machine and build the best 
Implement we can for the work, and which can be sold at a 
reasonably competitive price with that asked for the com- 
petitive machine. (2*+) 

If consideration of none of the foregoing factors 
yields a solution, and the firm finds Itself unable even to 
build a machine comparable to the competitor's to sell at their 
price, then the only remaining question is whether the machine 
should be added to the line at all. The answer to this muat 
depend on the best estimates of the firm regarding its effect 
on total sales either through its enhancement of the prestige 






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316 

of the line of Implements, or through Its long-term effect 
In attracting and retaining for the company better dealers 
than it otherwise might have. The result may be that the 
machine is added to the line and sold below Its full cost, 
since its overall contribution is considered to outweigh 
the loss involved in its production and sale. 

Executives of individual firms show less assur- 

follow 

ance when discussing the policy they would ^.if, assuming similar 
circumstances, their estimated costs were found to t^ejielow 
the prices of competitors by an exceptionally wide margin. 
Such a firm would be potentially the price leader in that 
product, assuming that if it set its price lower than current 
competitors' prices they would be forced to follow. A decis- 
ion would have to be made concerning whether to charge a price 
as high as competitors were charging, realizing a relatively 
large profit per unit of sale, or to price below them taking 
a smaller unit profit on a larger volume. 

A whole complex of factors would necessarily 
enter such a decision, but principally it would hinge on the 
firm's estimate of competitors' ability to meet the lower price 
and the possibilities of retaUatipn from them in other Imple- 
ments. If it were known that all other firms could, and 
would, lower their prices correspondingly, so that each would 
gain only a sm^ll increase in sales (industry demand being 
Inelastic), the lower price would less prabably be chosen. 
If it were known that some other firms had in their power to 






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317 

retaliate by lowering prices on implements in which they 
possessed the advantage in costo, then it la highly improb- 
able that the lower pi^iqe would be chosen. Finally there is 
the possibility that, if the spread between the firm's low costs 
and the prices which competitors are charging is v^ry substan- 
tial, ethical considerations alone may inhibit the firm from 
charging a price as high as theirs, regardless of the results. 
This appears at present to be the case in some of the newer 
implements where perhaps one firm in the group has specialised 
its production in recent years far beyond its competitors. 

This example of a new product illustrates 
some aspects of the role of profit in pricing which are seen 
only with difficulty if price decisions on established pro- 
ducts alone are considered. Yet the problems seen in the 
example are essentially the same as face the producer in 
everyday decisions concerning prices of established lines. 
The pricing problem in the Implement industry is now more 
than ever a continuous process involving constant comparison 
of prices of hundreds of different items with prices charged 
by competitors, decisions to revise price being based prim- 
arily on comparisons among the products themselves and on 
buyers' reactions to existing price differentials.. It is 
evident that the role which costs play in pricing is really 
that of setting a floor below which individual prices should 
not be allowed to fall without special efforts to determine 
whether the product should be dropped from the line. More- 
over, the rate of profit on individual lines of implements is 

of tl 



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318 

by no means a definite criterion of their respective contri- 
butions to the company's total profit. Insofar as an Imple- 
ment contributes "prestige" to the line slmnly by its presence, 
or enables the company to market its pro'iucts through more 
efficient channels, its overall contribution may be consider- 
able even though in accounting terras it shows a loss. 

2) Dealer Commissions and Resa le Pr ice Ma intenance 

A full discussion of the role of the dealer in 
Implement selling is reserved for Chapter Nine, At present, 
attention is directed to the dealer's commission as a compon- 
ent of retail prices, and to the significance of Suggested 
Retail Prices to the actual prices charged by dealers. 

Commissions payable to farm implement dealers 
take tvo forms: there is the basic commission payble on all 
implements sold, more accurately called the dealer's discount 
since, in effect, the dealer nov> buys the implements from the 
company. In addition, there is generally a group of incentive 
discounts for which the dealer can qualify through efficiency, 
prompt payment of accounts, and so on. Most common among these 
Is the dealer's cash discount, for which he can qualify by 
remitting cash to the company within a stated time, usually 
ten days, after delivery of a machine to a purchaser. Another 
incentive used is the "performance bonus", which is an addit- 
ional cash discount to dealers whose matured obligations to 
the company as of October 3l3t o^ any year are ^ully paid. 

Such bonus may be paid or credited to the dealer at the option 
of the company ^^^\ 



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319 

Taking as an example one of the Big Three 
Canadian corapanlos, -examination of Its Suggested Retail Price 
Hat In'ilcates that at present basic commissions run about 
12^ to 165^ of the retail price, the average being around iM-jK. 
Cash discounts range between 3^% and M^5S, the average being 
around U',^% The performance bonus is a straight 2%, Thus the 
average commission for which a dealer Is able to qualify is 
slightly over 2051. The price to the dealer is, of course, 
the suggested retail price minus the basic commission, the 
other discounts being applicable only If payment is made 
in the manner stipulated. 

Some variation in these percentage rates 
exists among the companies, but if the arrangements regarding 
payment of freight rates and similar expenses are examined 
It Is found that the net results do not vary significantly. 
Between 1913 an<3 19**5» the percentage level of commissions 
remained fairly constant , the full commission and dis- 
counts averaging about 16^5^. In the latter year, as will be 
seen in Chapter 9, these were increased to their prpsent 
levels. 

To what extent may the actual prices charged 
by dealers differ from the suggested retail prices l?;??ned by 
manufacturers? According to 'Canadian law since January, 
1952 ^^'\ dealers are under no obligation to sell at the 
suggested prices, and are given recourse to law if any retal- 
iation is taken by manufacturers to curb price cutting. This 
is the issue of resale price maintenance, one of th^ more 



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320 

wifiely discussed of restrictive trade practices. The Committee 

to Study Combines (Qeglslsntion In Canfida appointed In June, 1950, 

defined resale price raaintpnance as follows: 

... the practice designed to ensure that a particular 
goc^ shall not be resold by retailers, wholesalers or 
other distributors at less than the price prescribed 
by the supplier, that is, In most cases, the manufac- 
turer. Measures to enforce the prescribed price may 
take different forms, such as warnings, fines, the 
"denial of supplies, and withdrawal of discounts. (28) 

In the hearings conducted by this Committee, manufacturers' 

and distributors' associations generally supported resale 

price maintenance, while labour, farm organisations and 

consumers' groups opposed it. 

The attitude of Canadian manufacturers of farm 

Implements toward price-cutting by'de^TerS'ii difficult' to 

define, especially since the law has become explicit on the 

Issue of price maintenance. Probably it varies among companies, 

asr'lt did among the companies appearing ■before the Federal 

Trade Commission In the United States in 1938. In that Instance, 

less concern was voiced by the International Harvester and the 

Deere Companies over dealer pr Ice-cut tlfli;, ("iSnle^'s, as 66das- 

lonally happens, the price at which he does sell makes him an 

undesirable risk"), than by smaller companies like the Mlnnea- 

polls-Mollne Power Implement Company, >/hlch told th* Commission: 

We disinherit a price-cutter as soon as we find out that 
he is one. We first try to educate him and failing that 
we just disinherit him. Our contracts all expire October 
Ist of each year and are subject to cancellation prior to 
that time for cause. We do not dictate and say 'You have 
to sell at a certain price'. (29) 

A survey of Dealer Purchase Agreements in effect 



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In Canada gives indirect suggestion of a similar divergence 
of attitude between the larger and the smaller companies. 
Whereas no mention of the policy to be followed by dealers 
in their pricing is made in the Dealer Purchase Agreement of 
the International Harvester Company, the agreement used by one 
of the smaller companies reminds the dealer that the company 

. i n r f • ,-■; f 

"expects" him to "sell on regular prices and terras laid down 

by the company". This is supplemented in the same company's 

1952 price list by the stipulation that 

notes of sales, which are not -nade in accordance with 
the terras and conditions laid down in the price list 
will not be accepted for direct credit. 

Despite the different attitudes which may exist 
among the co-npanies, it seems true that price niaintenance is 
a reality throughout the implement industry. The number of 
price-cutting dealers never has been large and is perhaps 
smaller now than ever before. There is little reason to 
believe, however, that this condition is the result of press-. 
ure applied by the manufacturers. The large implement com- 
panies have always acted as their own wholesalers and have 
therefore been able to screen projective retail dealers care- 
fully before allotting a dealership. Any prospect whose past 
record or financial contition suggests that he Is a potential 
price-cutter would presumably not be selected. In addition, 
the companies have in recent years increased the respensibll- 
ities of dealers in regard to servicing, advertising and main- 
tainlng adequate facilities for showing machines, each of which 
activities provides a new aren within which competition may 






'I o ir .i r f ^' ri 3 






322 

take place among 'dealers at given prices. To some extent too, 
the disfavour shown to a price-cutter by fellow dealers in a 
small rural town may act to discoura>:ie ooen price cuts. 

Resale price maintenance is also facilitated 
In Implement selling by the ease of making price cuts indirect- 
ly through trade-in allowances. Prior to the advent of the 
tractor, combine and related implements, trade-ins were not 
Important in the marketing of implements. For the most part, 
simple, horse-drawn machines were used by their original owners 
until their value became negligible, with replacement of the 
higher- priced implements, trade-ins have become more common. 
The resulting problem is now being considered more seriously 
than ever by the implement industry, but as yet has not been 
systematically dealt with by any of the major companies. 
Trade-ins are considered entirely the province and responsibil- 
ity of the dealer, whose ability to set the price of trade-ins 
and thus indirectly influence the effective price of new imple- 
ments is an important aspect of pricing at present. 

Factual data concerning the extent of such 
indirect nrlce cutting Is scarce. No mention of trade-ins 
Is included in the Dealer Purchase Agreements of the leading 
Canadian companies, and evidence is lacking from both industry 
and government sources in Canada as to the frequency with 
it takes place. The Federal Trade Commission in the United 
States gave brief attention to the question in 1938, relying 
mainly on interviews with dealers for its information. From 
these it concluded that "the indirect form of price cutting 



301 



^ %j :> - . I-..'' I J V. w J J. r> i M 1 J- a 



ace 



illis 



ni 



&nj io J nail- JL?i:-L-j 9-.: :m<.: •. ^ 

•^d ©veri eni-ebsiJ <8Jr -ni bsoi-iq-isri 

M':f to 






'i.if>T<no'i f:tg^ fpfTitop'^ 



J JL W i. 



323 

has become the most common methor! of price corcnetltion about 
which iealera complain" ^^ , The Commission noted that In 
numerou"? cases dealers had not bothered to remove the so-called 
trade-ins from the property of thR farmers from whom they had 
been purchased, a virtual admission that they were considered 
worthless. 

The Commission also founr! that in some cases 

manufacturers assisted dealers In making excessive trade-in 

allowances, such assistance often being 

distinctly of the nature of rebates to dealers to 
induce special effort to make a sale in which a 
machine of another manufacturer is taken in trade, 

(31) 

The most the author can say concerning the extent of this 
practice in Canada is that manufacturers are quite ready to 
confide their suspicions that their competitors are engaging 
In It. 

In sum, the attiturJe within the Industry 
toward indirect price cuts, whether assisted by the manufact- 
urer or not, seems to be one of quiet acceptance, not unlike 
that in the automobile Industry, where the practice was orig- 
inally frowned on but was eventually accepted "since the sale 

of new cars depended to so great an extent on the sale of used 

(32) 
cars'* -^ . As was pointed out by the Federal Trade Commission, 

the strongest ob.lectlons to the practice come from the dealers 

themselves. 

The existence of nrice maintenance In this 
industry does not appear to have had any pronounced 111 effects. 



ion f-^ri • 



oe nl ;tBri* f^nuoT oslfi aoIazlaiaoO »ri 



! '■j --t^ o . r» o <" f .' o. Wi*^ r •" ^ 



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e Jon , ,;fon no ibiu 

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nif^nc +fi^x» «ri'" 



32h 

Although there has long been a tendency toward an excessive 
number of retail outlets for farm implements, this has resulted 
more directly from the nature of spatial competition in the 
industry than from the practice of price maintenance. The 
policies of the companies, acting as their own wholesalers, 
have determined the number of dealers, not the prices which 
dealers charge. The number of dealers has actually decreased 
quite markedly in the past ten years ^ ^-^ while, as ha?, been 
noted, the degree to which prices have been maintained has 
probably increased. 

From the point of view of the buyer, an import- 
ant asrect of this question is that of servicing m^ichlnery after 
it is sold. A dealer not intending to supply service can sell 
profitably at prices lower than other dealers. He may do this 
by. not carrying parts or maintaining any servicing facilities. 
In one sense it might be argued th^.t the existence of these 
so-called curbstone dealers is in the buyer's interest since 
it leaves him free to choose between service and reduced prices. 
As stated in the British White Paper entitled "A Statement on 
Resale Price Maintenance", ^-' 

It is often said that the practice does not prevent 
traders from competing in the service they give. But 
this begs the question. It is true that, in order to 
attract "^ore customers, q trader may Increase the a'nount 
and quality of his service. But the potential customers 
may be comparatively indiffprent to extrq service, 
whereas they would be glad of the original a-Tiount of 
service =it a lower price. It is this alternative which 
resale price maintenance stops the trader providing. 

A consideration which bears on this argument 
and which seems at times to be overlooked is that good service 






. a i. J i v.- 



1' O'l : vi. J Lt ix ;_ e:-iu'-^ 



311 jg-isx-'ao 



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gicr eiij Aqo^Tc «' 



325 

might In some cases be validly regarded as part of the product 
Itself. A tractor is a tractor only insofar ss It does what 
tractors do, and the dej^ree to which a given tractor qualifies 
In this respect is almost certain to depend to some extent on 
the ready availability o^ spare parts and expert servicing. 
Prom the point of view of a manufacturer, therefore, the 
carrying of parts and the provision of service facilities by 
dealers may be an important part of the product, the cost of 
vhleh is intended to be covered by the dealer's commission. 
Any "extra" service whtdh a^ dealer is able to give his custom- 

..<;'■ ■ • -^ ,-> . ■ ^-^ . I ■ ■ 'u. 

ers is likewise in the nature of an improvement in the product. 
Contrariwise, a dealer who offers less service at lower prices 
is really selling an inferior product, which may considerably 
injure the manufacturer's reputation should a breakdown eccur 
without ^'acillty for quick repair -*^ . 

Pricing Repair Parts 

Sale of repair parts is an important part 
of the total business done by most implement manufacturers, 
particularly in years when sales of new implements are low. 
The following table shows repair parts sales as a percentage 
of total sales for the International Harvester Company of 
Canada and the Massey-Harris Company from 192^ to 1933* 
The sharp increases after 1929 reflect the efforts of farmers 
to prolong the useful life of their old implements. 

Parts prices have come in for particular scrut- 
iny not only because parts sales become relatively more 



no i 



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?se 



' fiff:r 



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•tF S fO 






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ilfisb fi rfolrfw 



• t>-»in • 



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in ^o 



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fio to 9%ii ii 



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' ijino !ton Y'l 



326 

T.\BLE XXXITI 





Parts Sales 


as 


a 


Percent, 


age 


of Total 


3: 




Inte 


rnation^l 


Ma< 


»3ey-Harr: 


u 


1921+ 
1925 
1926 
1927 
1928 
1929 




18. 
15. 
13. 
11. 

8. 
10. 


,6 
.8 
.7 
M 
.6 
,8 






2h,7 
17A 

17.7 
15.7 
11.7 
11. >+ 




1930 
1931 
1932 
1933 




13. 

20. 
26. 
26. 


.5 
.9 
,0 
.8 






15.1 
26.7 
33.»* 
29.1 





Source: Proceedings of the Special Committee on 
Farm Implement Prices, Ottawa, 1937, p. 127^+, 

important in depressed periods but also because prices of 
parts sold individually are considerably higher than the 
sum total of their prices in an finished machine. On 17 
representative iraolements the Fara Implement Prices Committee 
of 1937 found that the selling price of all repair parts was 
73J^ higher than the selling prices of the completed machines. 
The difference was found to be greatest on the heaviest vol- 
ume machines, viz. the binder and the mower. The Committee 
cited the report of the Ford Bacon and Davis Company on Massey- 
Harris, which stated that the parts business "is of the greatest 
Importance to the company as the net profits therefrom In the 
past two years have been rrore than half of the total net 
profits from the business" ^3o\ 

In an attempt to exnlain and justify the 
relatively high price of parts, the International Harvester 
CoTipany submitted a detailed brief to the Commltte« of l'^37. 



I i' I'* ;- . T -f .' ri «r Q 1 <• • 






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no 99;t;tlrnmoO lelosqS 9ri:t ^o sgnlbesooi^ :90i 

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ai3 \li 

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iBnoi:>6me:tni sd;:f ffiiiBo to ©oliq rigiri \l9vI:tBieT 

Jlmdvz V J 



327^ 

The coT.panies state that tho situation rp^garding parts pricing 
has not chingei materially nt th^ present time, and therefore 
the main points contained In the brief of 1937 are set forth 
below ^37)^ 

The principal factors accounting for the 
spread noted In parts prices are reproduction expense and the 
costs of distribution. When, as frequently happens, parts 
have to be reproduced for Teoalrs, production costs are ob- 
viously higher than normal, since all of the preparation nec- 
essary to the production of a large quantity must be un^^er- 
taken, often for only a few pieces. The costs of preserving 
and storing patterns and dies for this purpose are themselves 
a substantial item. 

Extra parts prc^uced at th^ time machines 
are assembled, and segregated for repairs stock, usually 
require further treatment at the factory such as oiling, 
special painting, tagging and numbering for Identlf'lcation. 
Storage in bins specially constructed for ready and convenient 
location of the different parts is another expense. Control 
of such stock necessitates perpetual inventory records in which 
all shipments and receipts are recorded. Physical handling of 
the stock, involving inspection, packing and ?o on, necessit- 
ates added labour outlay. 

Similar expenses are Incurred for stocks 
of parts stored at branch houses, where a wide assortment must 
be carried to ensure quick service on all machines which the 
company has sold in the area for several years previous. In 



©IS \t^l 






10^ anlitn- 



ioel 



'TTlT'-^'T £*«Tfl PA- 



cx-f-f Fin 1- o. r>nr.ri 'r'~i n 

-cfo 9i« aJEoo nolifojjboiq ^ct 



-. ;-| ^\ p r '^(J p 

I ©cf < 1 



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;tn 



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^Jouf 



ffCI>1-» . 



o.y-Vrrr'^ c-T f 



J ,§fl.Ijnieq 



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nl 



Bitaq To 



^ 328 

its brlpf. International stated that about 2^% of the stock of 
parts carried at its branches were for machines which had been 
out of production for 10 to 30 years, but many of which were 
still in service. Eventually most of these parts were scrapped 

Many orders for parts are received by 
dealers or at the branches in the form of meagre descriptions 
or rough drawings which require consi-^erable time to identify. 
Telephone and telegraph are used extensively in calling upon 
the factory and neighbouring branches to take care of urgent 

l'?Ct 

requirements. Finally, h substantial item of distribution 
expense Is represented by repair parts catalogues and price 
lists, preparation of which is a time-consuming process. 

The company also cited the low inventory 

■■ - of : 
turnover of repair r-arts, there being an inventory of about 

$3 (in terms of selling prices) for every $1 of parts sales. 

The cost of maintaining this inventory, it was stated, 

includes interest on the investTtent in parts themselves and 

insurance on them; interest, tax s, insurance and upkeep 

on the storage facilities required; and obsolescence. 

After considering the content of the Har- 
vester brief, th'=' Farm I'^nplement Prices Committee still con- 
cluded that "the present and past level of retail prices for 
these repair parts is not justified and that there should be 
a drastic reduction in the price at which these parts are 
furnished to farmers" '^^\ The Committee noted that, unlike 
the sale of complet«^i iTiplt^Tionts, most of thp parts business 



85;£ 



el een»c[r9 

.£<;90C1Q ^ - To flOl^, 

i;jj'. "jjusvax cjc. jjuj-^ii vjzuiij {c:^ae:, •XJ.i-qyi j.a -xsvcrivj 

snli 



hne 



•rq 9rt: 

•liJM.- J ni r.OlJ-Jt.'C'-':'! OJ.J2Blt B 

-^fffCT wrf* To :tsorp ^e:r fn air? ■^-frt 



329 

is done on a ca3h basis, which relieved the companies of 
credit costs. Moreover, it was pointed out by Professor 
Lawson Shanks on behalf of t>ie Manitoba government that prices 
of repair parts "are exceedingly close on both sides of the 
line and on some items where mail-order competition exists, 

f ->Q) 

Canadian prices are lower than American". ^-'•' This would 
suggest that the prices of repair parts are not related to 
relative average cost but instead are governed primarily by 
buyers' alternatives. Being sheltered from competition, they 
are, in Professor Dean's words, "priced to reflect this 
opportunity" ^^^\ 

This indeed seems to be the rationale of 
parts pricing in the iruplement industiy. The very large num- 
ber of parts handled by each company prohibits Hany accurate 
estimate of their average costs of production. Moreover the 
demand for parts is such that their prices cannot be expected 
to bear any close relation to their productivity. Lack of one 
small part may render a very expensive machine useless..,. Thus 
there has always been a tendency to set parts prices high 
enough to make a substantial profit, a fact which doubtless 

accounts for the number of speciality houses which have 

(hi) 
entered their production . The? sales of thsse coTipanies 

have kept prices down on many of the parts of siiipler lesign, 

but on ot'')f?rs the implement industry does not appear to have 

missed the opportunity provided oy unusual cost and jenand 

conditions. 

Parts sales have declined in relative 



d no 



Ej., 






■1 riofi© \' naci zii 



<vliouboiq il 






>e e^i; 



330 

Importance since World War II, but may bft expected to revive 
with any -iecllnp In the sale of new implements. They are 
shown below as a percentage of the total sales of the implement 
industry in Canada. 









TABLE XXXIV 




Parts 


Sales 


_as_a.Per< 


2enta£e of 


Total Sales 


in Canada 








T$ "■ "" 


,000) 




Parts as a 


Ye^r 


Parts Sales 






Total sales 


P'cnt of Total 


191+^ 




17,08^ 






51^,821+ 


31.2 


19^5 




18,651 






63,871 


29.2 


19^6 




20,827 






81,698 


25.5 


19'+7 




23,276 






122, 39U 


19.0 


19^8 




26,997 






170,660 


15.8 


19^9 




28,105 






217,090 


12.9 


1950 




29,862 






218,187 


13.7 


ig'Ji 




28,773 






235,620 


12.2 



Source: D.B.S. annual Publication of Farm r-quinment 
Sales in Canada. Parts have been shown 
separately since 19^. 



Conclusions f r om the Chapter 

From the material covered in Chapter Eight 
the following principal conclusions emerge. 

1) The prices of farm implements over the 
last 30 years have varied less than the costs of materials 
and labour in t^° industry and less than the total of manu- 
factured goods for the country. This has been so principally 
because of the nature of cyclical changes in unit overhead 
costs In the industry, rle.Tiand and sales being highly respon- 
sive to farm Income changes. 



,T r f <-, <i. f. V n • 



Is. : . .01 eeifl8 e^isq 



nliq 



ilBV ftvprf Bfr 



^O •IJU^B' 



94ip.C 



4 

I 

i 

I 

i 



331 

2) Exarnination of the prioing policies of the 
ImplqraGnt inlustry in Canaia since 1920 also suggests strongly 
that there has existed a comparatively hi/^h degr-?e of under- 
standing in the matter of pricing. Several factors have con- 
tributed to th^ development of such understanding, principally, 

a) the geographical coneentration of the Big Three 
firms, each having easy communication (by telephone 
or by automobile) with the others, and 

b) the existence of what has earlier been called "a 
greater measure of ' interf irm concor'^ance' than is 
to be found in comparable industries" ('+2), 

Also important, at least until the post-war years of rapidly 

rising cosos, was the long-standing practice of issuing price 

lists annually, a practice making for greater facility in 

comparing prices. 

3) It may be said, therefore, that active 

price competition is not a characteristic of the farm imple- 

tli" of pro';'.';:ing 

ment Industry. Most prices, it appears, are set on the basis 
of the prices charged by the price leader in the industry — 
the International Harvester Company. Not even this company, 
however, has cost advantages in all of the implements it 
produces and there is reason to believe that its role as price 
leader is shared in some of the newer implements by other firms 
in the industry such as John Deere, Massey-Harris and §ven 
some of the smaller companies. To the extent that this is 
true, it may be considered another important contributor to 
the development of mutual understanding on price matters. 

^) Considerable attention was given in this 
and the last chapters to the influences bearing on price- 



iee 



:i 



v 



P S ■- v-1 -J V t 1 t> <^ [■ f 



nt V- 



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eno. 



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tft *£ 



J J B • 



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«*t :; 



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ne. Be' 



?\C.' c 



.'iBtnE 



snliesd e 



ctael 6 



332 

getting by th^ I'^a'iJing mamifsiGtur«rs in the Implement industry. 
The general conclusion appears to be that only a very loose 
relationship erAntrs between th-- cogt? of producing =^ny par- 
ticular iTiplement anci the price set on it. The use of cost 
data can harily be considered 'aore than a general f^ulde to 
prlcinc. For one thing, in the absence of overhead rates for 
individual impleTr.ents, co^t^ata Itself may give an inaccurate 
picture of the actual r-lative costs of r^r educing different 
implements. Implement manufacturers recognize this linitation 
of cost data as a basis for pricing, but appear prone to 
disregard it on the ground that costs are a guide to pricing 
and a guide only. Moreover, insofar as an implem'-nt may be 
considered merely by its presence to a4d prestige to the 
others in the line, or to re-^uce the costs of distribution 
in the manner described in the chapter, the price charged 
may have practically no relation to the costs of producing 
it. 



.V 



' ^d^ \6 ^nlti'f 



V n 



' 1^ r^-i T. 



-IB' 



oi o' 



-I'Tcr 



Ty n^ ''Jf'TRrf r.K^. ^.'fp.f'i 



'iO 



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rfOJ 






.TO ^.f f^TFT 



on >j: 



333 



CHAPTER NINE 



NON-PRICE COMPETITION I 
DISTRIBUTION 



Contents 



I. Reasons for High Distribution Co3t3 

Characteristics of the market making for competition 
in distribution — Spatial competition: exclsulve 
iealing, clustering of retail outl'^ts — Excessive 
distributive capacity perpetuated by comnetitlon. 

II. Attempts by the Industry to , Lower its Distribution Costs 

1) The Change in the dealer relationship in 19'+5 — 
New status and responsibilities of dealers — Method 
of introduction of the change. 2) Cooperative sell- 
ing by the Cockshutt Farm Equipment Company. 

III. Inventories as a Phase of Distribution Costs 

Inventories and competition — Inventory costs and the 
recent changes in distribution policies. 



The high costs incidental to the distri- 
bution of farm implements have repeatedly been 'condemned both 
by governmental bo'^ies and by the industry itself. Typical of 
the comments on this subject is the following from the Ford, 
Bacon and D-^ivis report on the Massey-Harris Company in the' 
early thirties. 

'' Mechanically, farm implements being pro'^uced by the 
leading companies are excellent, but the selling and 
distribution method^ are far below the stanf^ard recog- 
nized as first-class in other fields of busin'^ss. (1) 

lari 

In the chapter to follow, we shall examine 
the method of distribution in the implement Industry with a view 



no 



ac 



.nol?f:t 



Yd jbf 



be 

'•119Z B 






- ^-r- / r 



©ri* Ifo noUoi/boiJnJ "lo 



9rf:t bne zizot> yaoJ'asvr 






^T:^!? 



/iSoc 



rrf Inrtr 



-f-^trf Pn"!' 



00 nssd \;iD3Jeeq0i ever! e-nscnsiqrji xici ro noljji/a 



.r-"'? -irft rrri'T*f "^rt ^l-■:n T To^ nr' 



■ n" f rfrrs rfr'tt rrn :':*n'^fTrTO'> ^rf:t 



bna snJtllsB »ri;f ;ti;d ,*neII©ox» ©le e© I 

(I) ,p n 






to seeing why the costs of distribution have always tended 
to be so highR, and what steps have been (a) recommended by 
governmental committees and (b) carried out by the companies i 
with a view to lowering them. 



I. The Reasons for High Distribution 

Costs 



Characteristics of the Ma rket leaking for Co mpetition in the 
Distribution of Implements 

Two characteristics of the market for farm 
iraple'Tients contribute to the high costs of distributing them 
and to their nature as competitive costs. ,,. 

First, the market for implements, unlike 
that for, say, automobiles, is not concentrated in |he larger 
centres but is spread out thinly over vast rural areas. The 
rural market is the only market for implements and is not 
merely a supplement to the urban T.arket. This factor itself ^ 
necesslfetes a special type of distributive organisation, a 
decentralised organisation capable not only of parcelling 
out shipments from the factory to the various distributive 
outlets, but capable also of keeping in touch with the prob- 
lems and needs of farmers in all of the Individual small 
sectors of the ^.arket, and of putting at the farmer's rlisposal 
adequate servicing facilities for machines in operation. 

The need for decentralization has been met 
by the implement industry through the evolution of the branch- 



^u 



hr 



vie ftVFil no id 



nr Off m/^ '>■*■■. 



00 9fi;J xci ;tijO beli 



to eiteoo eri:t ntesc o^ 

-It. rfw hrrr- .'?r'-f;_fr' np pcf o:t 

.ffidrfd^ gnliswol o;f wslv s ri^iw 



floiJifdJ7 :tF- 1*^ rf^f* tr'^ anoeseH etj 



ITf' . 



■ f ;- 



ey 



^ + ;• ^ T ft.t n R T (-• rf <-> ovtT 



^:fld"sqmo' 



■nlqcnJ^ 

t Ot bflfi 






olii B!^lleiiia90»b lo' 



»ri:f a 



335 

house method of distribution, whereby the companies m?*intaln 
branches located in Important regional centres at which stocks 
of implements are kept ^^\ Through the maintenance of stocks 
In. brarh warehouses, -manufacturers are en*led to avoid the 

pre.ssu,re. 

peak-season^on transportation facilities which would result 
if shipments were stored at factories, and also to take advant- 
age of the lower freight rates for carload shipments direct 
from the factory to the branch. Where companies operate more 
than one factory, this latter economy might be difficult to 
achieve were shipments made direct to individual dealers and 
diversified carloads necessary. In addition, branch storage 
permits reasonably quick delivery to dealers in the various 
regions and rapid adjustment of delivery quotas on short notice 
In response to unexpected changes in local demand. 

Besides serving as regional storage depots, 
branch houses keep the accounts with retail dealers in their 
respective territories, and supervise sales and servicing 
through travellers or "blockmen" who regularly make the rounds 
of retail dealers checking inventories, taking orders for new 
implements, noting the turnover in th^; various areas, and 
instructing dealers on servicing. 

Thus the branch system provides the flexibility 
in shipping which is necessary for proper distribution on the 
agricultural market. It means, moreover, that as far as the 
full-line co^npanies are concerned, the independent wholesaler 
is eliminated. It is not an accident that the companies act 



-! r , . bori ;J ftoi »euori 

eiosE G 8SirRq"oci s-xopa .rions-xu Bii:i cj x'loj-ji:! -jiu moil 

aoi'ifcn :tiorfe no sr;Jor/r rT«v*I«»^>o tnts-rrtr-uf h»' f>/<f et ^^fp 5ficia*»i 

Tf. -i! / s^nooooB »ff* q*»»7J epcuorf rionsid 

-jrlvT nttoii.i'T'ii sv "n 

,01 &r ■ onw "ni.;if:?iociQ ' lo EiPlIsvsi^f nsuoiriJ 

wan 1 To 

" no ElSiKfel' ^^^[ij SOI -l^'cnl 

ni 

• .".J ,::3ni9oaoo eis 28xni;qiroo 5»nxj. -j.il i 

'snimile ei 



336 

as their own wholesalers. The practice grew up with the 
industry itself, and became more than ever characteristic 
of the industry's marketing with the extension of the market 
through Western Canada and the increasing diversity of con- 
ditions which such extension entailed. 

Today it is perhaps more important than ever 
for the industry to keep in very close touch with agricultur-al 
conditions and prospects. In the implement industry there is 
little that can be done to adapt the demand to the product. 
Demand exists for implements built specifically to suit the soil 
and other crop-growing conditions in particular areas; and no 
selling method hqs yet been devised for persuading farmers to 
buy implements not so built. It is therefore necessary for 
manufacturers to find out through direct contact with the 
market what the needs are before attempting to supply them. 
The branch-house system, in addition to assisting in the 
ciElerly shipment of implements over long distances, permits 
a closer relation with the market than could be had under 
independent wholesaling conditions. 

; The establishment and maintenance of branch 

houses, however, involves considerable investment and expense. 
Offices, warehouses and salesrooms must be acquired and kept 
up, and clerical and accounting staffs maintained, as well as 
the travellers previously mentioned. These expenses are the 
first which must be considered in the distribution costs of 
the industry, and the basic reason for their existence is, as 
we have seen, the geographical character of the market. 



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337 

The second of the market characteristics 
which contribute to the high cost? of distribution is the 
lack of uniformity of demand on the market and the frequent 
and unpredictable changes among areas, re-^ulting from tempor- 
ary variations in crop-growing conditions. The importance of 
this Tiarket factor is seen mainly in the final phase of the 
distribution process, th':; actual retail sale and delivery of 
the implement to the farmer. The implement retailer must con- 
fine his activities to an area s^iall enough to permit him to 
maintain somewhat direct contact with the farmers in it, and 
them with him. But the significance of the size of an area 
Is relative to the transportation facilities within it. 
Considering the market as a whole, the more highly developed 
the transportation facilities, the fewer should be the number 
of retail dealers necessary to serve it. Year to year 
variations in individual areas, naoreover, will have less 
pronounced effects on retail dealers the fewer the dealers 
and the larger the area serve'^ by each. It is still true, 
however, that where unpredictable changes in local demand 
are frequent, a certain amount of excess distributive capacity 
is almost inaritable, even though it may decrease with decreases 
in the nurabor of outlets. 

Excess capacity of this type was prevalent 
and was very costly in the distribution of implements in Canada 
in the twenties and thirties. But excess cioapacity in imple- 
ment distribution tended to be pushed far beyond the minimum 
necessitated by unpredictability of local deraand, largely 



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338 

because of the type of spatial cornpetitlon which developed 
v/ith the expansion of the market. It nov becomes necessary, 
therefore, to examine the naT:ure of spatial competition In 
the distribution of implements to see how it engendered 
"excessive" excess capatcity in distribution, and, equally 
important, why the development of bett-^r transportation did 
not modify the situation earlier than it did. It is hoped 
that our attempts to answer these questions will shed light 
on the historical development of implement marketing as well 
as on the patterns of competition which developed. 

Spatial Competition 
Exclusive dealing 

Until about 1930, when geographical 
expansion of the ;;anadian market for implements came to a 
halt, the practice of exclusive dealing was gradually growing 
within the industry. This practice received impetus from the 
technological developments in farm implements which were 
primarily responsible for the development af, and eventual 
domination of the ■^iarket by, full-line firms. With a full 
line of implements to offer, firms were in a position to 
expect, and Indeed to demand, exclusive dealing arrangements 
with their retailers. 

In addition to having fostered the growth 
of full-line companies, technological developments worked in 
other ways to promote the practice cf exclusive dealing. The 
sale of new types of machinery, developed in response to new 



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339^ 

conditions as the market ^oved into previous ly-undevQlopad 
territories, called for a more specialised knowledge on the part 
of the dealer, and a closer relationship between dealer and,^ 
company for the exchange of Information on the success of new ^ 
lines and possible improvements in them. Moreover, advancing 
technology brought new problems in servicing, and costlier 
machinery brought new credit probiilems. For all of these 
reasons, exclusive dealing came to be considered the most ,.,. 
desirable practice. 

him Hiqf^ fifj 1 

Mechanisation thus was Important in creating 
the need for, and the means of bringing into effect, exclusive 
dealing in the Implement industry. With the de-wsLopment of 
more and more long-line firms the practice came to be accepted 
as part of the industry. Usually a clause was written into 
companies* contracts with, dealers specifying that they would 
handle one line exclusively ^-^ , In most cases, the companies 
reciprocated by granting to dealers exclusive rights of 
Representation In their respective territories, righit;?. wBiich 

the companies insist that they always guarded jealously In 

(1+) 
the dealer's interest . 

Clustering of Retail O utlet^ 

What part did exclusive dealing play in 
the development of competitive patterns in distribution? The 
story of the development of Western Canada after the opening 
of the Canadian Pacific Railway need only be mentioned here to 
recall the step-by-otep progress in bringing in new settlers 



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3,hO 

and opening up new areas, which lasted through th« first three 
decades of this century. This development is iTirortant In 
extJKlainlng the patterns of spatial competition In the Imple- 
ment Industry In Western Canada. Each new area that was opened 
provided a new market for implements. With each expansion of 
the market, a corresi^ondlng expansion In the distributive 
organisations of the Implement companies was necessary. In the 
absence of good road and transportation facilities, the farmer 
could not travel very far to purchase implements and the company 
whose dealer was most accessible to him had an initial advant- 
age. Thus competition for the advantage of proximity Induced 
the companies to open up retail outlets in most of the newly- 
developing towns and villages, which provided the selling-centres 
for implements, in order to tap the expanding new territories. 

As expansion continued, it became apparent 

that one result of exclusive dealing by manufacturers was the 

formation within each of the selling-centres of clusters of 

retail dealers, each rexpresenting a different company. This 

tendency to cluster among the implement dealers is reminiscent 

of Professor Hotelllng's statement in 1929 that 

... as more and more sellers of the same commodity 
arise the tendency is not to become distributed in 
the socially optimum manner but to cluster unduly. (5) 

The reasons for It, however, were not entirely attributable, 

as In Hotelllng's case, to competition. True, the impetus to 

open up in a given area was a competitive one; that is, pach 

producer felt that, regardless of what his competitors dld^he 

should move into the hmi areas or lose potential business, and 

thus all moved in. But the fact that Implement companies tend' 






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ti :t6rl;f J^oe^ eiM Jufl .ill b»voin Ila EixrfiJ 



3^1 

to cluster their dealers In the same sections of the market 
(in the selling-centres, as we have caller! them) is r*ier a 
result of simple geography and transportation and not of one 
company's calculated intention to locate as close as possible 
to its competitors. It was the location of the towns and 
villages which set the locational pattern in the distribution 
of implements, not a .juggling among the companies for the 
most advantageous position. 

ke;;. Thus the distributive pattern which evolved 

Was one of small clusters of implement retailers pinpointed 
all over the market area, each cluster containing several 
implement dealers, each trying to maintain a separate estab- 
lishment and to eke out a living principally from the sale of 
implements. As a result, excess capacity in the T.arketing of 
implements was duplicated many times over in each selling area. 
The scattered nature of the market meant that the volume of 
business done in any one of the clustered areas was at best 
relatively small, and when this ha'^ to be divided among several 
competing firms, the resulting low turnover nade a heavy over- 
head even more burdensome. Commissions had to be kept higher 
than would have been necessary if the numbers of dealers had 
been fewer and each had had a larger share of the market in 
the various areas; and even at that, during the Hepression 
many dealers were forced to allow their estabLishaments to 
depreciate and to turn to various sidelines to make ends meet. 
The large numbers of dealers made the inventory problem a 
costly one ^°\ Moreover, the large staffs of blockmen, .■ 



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3^2 

servicemen and particularly collectors coul'l not be signifi- 
cantly reiuced even when turnover was low. 

These were some of the costs incidental to 
excess distributive capacity in the Implement industry through- 
out the twenties and thirties. Perhaps even more telling than 
the monetary costs, however, was the general demoralization and 
lack of loyalty which resulted among the dealers. Tn the 
scramble which accompanied the westward expansion of the mar- 
ket, many dealers of inferior calibre had been selected -- 
dealers with little or no capital, little real interest in the 
companies they were representing, capable only of accepting 
goods on consignment and selling them if th^ could. These 
dealers, of course, could hardly be regarded as an advantage 
to the companies at any time, least of all during a depre55sed 
period like that of the thirties. But even the better dealers 
were dissatisfied and complained against the manufacturers* 
TDolicy of maintaining too many dealers, and of fostering 
unfair competitive practices among them. Representatives 
of the Farm Implement Dealers' Section of the Saskatchewan 
Retail Merchants' Association complained before the Saskat- 
chewan Committee in 1939 that they were not satisfied with 
the net return from a dealer agency. The Federal Trade 
Commission in the United States reported in 1939 that "the 
most frequent ctriticism voiced by dealers respecting their 
relations with manufacturers was that manufacturers have set 
up too many dealers ... which greatly increases competition 
for the business available" ^"^ . Not inapplicable in Canad 



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3^3 

jyias the complaint o? an American dealer of the International 
Harvester Co-npany, a^^P rejported by the Federal Trade Commiss- 
ion in 1939: 

„ In the past five years the farm Implement business 
^^^- has become a Joke in Wisconsin as far as the retail 
dealer is concerned. The large manufacturers insist 
that they must have representation in each city or 
village in the country, regardless of whether there 
is volume enough for the dealer to stand the pressure. 
The large manufacturer encourages the dealers to go 
out and chisel, cut prices and make wild trades, and 
the Wisconsin dealers have certainly become chisellers. 
""^ ' (8) 

Such were the ill effects of spatial 
comjpetition as it evolved in the itrplement industry in the 
early decades of this century, ^fe say "evolved" because, 
as has been seen, the patterns of spatial competition in the 
industry were set not so much through the conscious locating 
of one competitor relative to the location of the others, as 
through the historical and geogEphical development of the 
market. Market development depended not on the expansion of 
population or of national income, but on the opening up of 
new agricultural lands, which proceeded rapidly with the 
expansion of the western frontier. The industry did not set 
the apatial patterns but merely moved In response to the 
geographical expansion of demand; it was not a case of 
picking and c'noosing locations relative to the positions 
of buyers and other competitors, but of moving into the 
selling-centres successively opened up as the expansion 
proceeded. The result, as has been seen, was the development 
of clusters of retail outlets and the attendant burden of 









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3^h 

duplicated exce'3s capacity and all the financial and moral 
strains associated therewith. 

Exces3 Distributive Capacity Perpetuated by Competition 

If it was the pressure of competition vhlch 
led to the setting up of "top-heavy" distributive organisations, 
it is equally true that the same pressures were responsible 
for their perpetuation until after World War II. The most 
obvious remedy for the difficulties described above would 
have been for each of the companies to prune the numbers of 
its retail dealers, carrying out this policy progressively as 
roads and transportation in the market area were improved, as 
farms became fewer in number through consolidations and as 
the need for such large numbers of dealers became correspond- 
ingly smaller. No such steps were taken, however, even 
during the depth of the ""epression when the rate of turnover 
was at its lowest. The reason, of course, lies in competition 
Itself. While the companies one and all lamented the burden 
they were carrying, each hesitated to make the first move, 
apparently for fear of not being followed by the others. 

At first this may seem rathf^r strange in an 
Industry so often accused of acting In unison in matters per- 
taining to competition. But more significant even than the 
desire to cut down the numbers of dealers seems to have been ^ 
the fact that no one knew what areas should be cut down; the 
ever-present possibility that areas depressed today might 



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3^5 

suddenly become very profitable areas tomorrow, increased 
the reluctance of the individual manufacturers to make any 
move. Indeed, it can be said that this uncertainty which 
characterised local agricultural production, and to •which 
we have already attributed much of the excess capacity in 
implement distribution, has been one of the strongest forces 
raiiitating against any arrangement for sharing the market 
in the implement industry. No firm is willing to commit 
itself to any defined area. Every firm, rather, chooses 
to be represented in every area of the market on the principle 
that the losses sustained in some areas over a period of 
years will be balanced by the profits in others, the average 
of the total market being more easily predicted than the 
average of one area. 

The key to the competitive pattern in any 
industry can often be most readily found in the candid state- 
ments of the company executives. Testifying before the 
Standing Committee on Agriculture and Colonisation in 1936, the 
president of the Massey-Harris Company commented on the nature 
of spatial competition in the distribution of implements as 

follows. 

Implement distribution is a most costly business, 
and when I came into the business actively five and 
a half years ago, one of the things I said we were 
going to cut down on was this cost of distribution. 
I took the ground that many of these retail outlets 
which wer^ about ten miles apart, lust an hour s 
drive with horse and buggy, were unnecessary now 
that we have motor cars. I was ?oing to reduce these 
from three or four to one. Now I have not been able 
to do it for a number of reasons. First of all, a 
territory which has not been looking any good for 
four or five years suddenly blossoms out and does a 



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ffolriw xint^iieonu ettii isrii bise ad nao *1 jbesbnl .evom 

'10 fK ■ isvc CfaS'iB eiaoe nl bSiixeJEua eeeaai enJ JfenJ 

.riftie ©no lo ©a*<'it*vs 
-©;tBi BO 9ri."t ni hnuol vJ ttBoap ©cf n9;tlo nao v•I;t8JJ^^i 

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p.p. p.l'n^rf-iXfTmf ^n nr. rt-pf^ "n'rf rr f ,-r n ' t ?■ t a-t m -■> '^ Tr. f.-fp'Tp ^.-^ 

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3^6 

th* good business, and should not be left without adequate 
service there. Consequently, if you take away the 
agency from the man who has been handling your goods, 
he loses his means of livelihood, and this creates a 
new problem. What does he do? He gets some other 
agency to start in our place, and our positio n is 
weakened. (9) 

(Emphasis supplied) 

Clearly the existence of an excessive number of retail 

outlets Was recognized; .just as clearly was it the fear 

of a "weakened position" which retarded any action by the 

individual companies. The Farm Implement Prices Committee 

tc a 
of 1937 recognized in its report this competitive aspect of 

the distribution problem, but expressed doubt as to the 

possibilities of its being overcome by the industry itself. 

The companies, while recognizing the problem of 
duplication in distribution agencies, are each loath 
to rely on a common agency either to distribute its 
goods or to act as a servicing, collection or sales 
agency. Each appe ars to fee l „ it might lose its com - 
petitive position as a result s and none seems will- 
ing to consider this as a possible saving in distrib- 
ution as it now exists in Canada. 

The companies all recognize the very substantial cost 
of distribution of farm implements in Canada, and 
insist that each is studying the problem and attempting 
to cut down this expense. However, unless some outside 
agency or competition forces them to do so ^ it is 
unlikely that the companies themselves will initiate 
a more economical policy as each fears the loss of 
if^entity of its own organisation. TlO) 

Competition, we conclude, was the most Important 

factor in both* the excessiveness and the inflexibility of 

distribution costs through the twenties and thirties. 



II. Attempts by the Industry to Lower its Distribution Costs 

The Change in the Dealer Relationship in 19^5 

In 19^+5 a significant change took place in both 



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\-" yv"l i'la^ JA .II 



3^7 

the policy and method of distribution in most of the major 
co-npanles ^ ^^ , It is even yet too early to appraise the 
effects of this on the problems just outlined. An examin- 
ation of its content, however, suggests that many of the 
problems should hereafter be lessened in intensity. 

Content of the Change 

Two features of the chang'^ in I'^h^ stand out. 
They are: (1) the change from a consignment to a purchase 
agreement with dealers, and (2) a marked reduction in the 
number of dealers. 

Since the beginnings of the industry, retailers 
of implements had typically acted as the agents of the compan- 
ies, receiving Implements on consignment and selling them on 
commission. In 19'+5» all dealer contracts were rewritten 
with a view to making the dealer an outright purchaser of 
the implements, his "commission" becoming in effect the 
"discount" which he was to be allowed off the suggested 
retail price. 

At the same time the number of implement 
dealers was greatly reduced. C.W. Lockard, former president 
of International Harvester, states that the reduction by that 
company was roughly from 2^+00 to 1200. Comparable reductions 
were made by the Massey-Harrls Company, which at present has 
about 1300 dealers in Canada, and the Cockshutt Plow Company. 
The latter, the smallest of the Big Three, had over 2,000 
dealers In Canada prior to 19^5* 



-1 



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3^8 

" The New Status of Dealers 

These two central features of the change in 
distribution in 19^5 were accompanied by revisions of policy, 
particularly those regarding the position of the dealer. In 
this connection one should note the difference between the 
position of the implement "dealer-rataller" and that of many, 
small retail dealers in our economy. The distinguishing 
feature is the fact that the regular implement dealer operates 
under an exclusive dealing and exclusive representation 
arrangement with the company he represents. The typical 
implement dealer confines his activities solely to implement 
retail, and his Income is usually derived entirely from this 
source. In this respect, he differs from the retailer who 
carries various lines of competing and non-competing products, 
and whose reward as a middleman is largely in return for the 
service he performs in making a variety o^ products conven- 
iently available to buyers. 

The implement retailer, on the other hand, 
finds that his fortumes are interdependent with those of the 
company he represents. His reward is not so much a return 
for the service he provides in making goods available to 
buyers, as a return on the sales effort he makes on behalf 
of his company in his particular area. He is the coraoany's 
only direct contact with farmers in that area; and in the 
absence of large-scale persuasive advertising, the sales 
ability and the initiative of the individual dealer are the 
main determinants of sales, within the limits of buyer 



Iwf 2J.D 

Xnsii! 10 JsnJ cn£ "isiiCJfci-'i v^rBirsxqcix sr.j ic ncx;i:c;oq 

■gnlfie- 2lb »riT :uo nl eidlesF) Ile^Jsi Heirs 

ill. 'c;'r-:qs-i &>/ -' -'ji;:£ 2i:j.j.i;er evj.'.^Jja.ai.e m •I'^^^au 

iBolq- '=iiq9i 9ri x^pflffoo srf* ri:?Jtw j-ns ib 

i^u'ij. \j.o-ii.ji!w j.'3vn.i;i.' -i-L^tii-ica El Effloanj. ^iib-jbi 

o.ij re S20i'i3 no.r¥ jns. .laqBijitiJiji eii5 teroucfioi axn Jen? a^nil 
mu^sn f oe d'on el fnBWr ?'iqs'i srf xnBqmoo 

■:, no E©iiEJ! 3x1 Jior'Te esles -^r.^ no niiJi ^i e ex; ^BiGXi^ci 

frol:tTsa alri rfl v •> eirf "^n 

arid «ie 79l8»6 X«ut Hint ©rfj bne ^^tllldfi 

^ d lo 8;tlmil eri^ nl .ilfmsrfeh ntr^x 



3^9 

preference for thfi products of particular firms. Thus loyalty 
to the company and enthusiasm for its products on the part of 
the dealer are essential both to himself and to the company 
he represents. 

The industry realized, however, that a mere 
reduction in the numbers of dealers could not alone guarantee 
such loyalty and enthusiasm. Thus the reduction was accompan- 
ied by a general tightenting of policy with regard to the 
selection of dealers, greater emphasis being placed on financial 
status and general reputability in the co"imunity. These qual- 
ifications were prerequisittes to the dealer's proper fulfil- 
ment of his new role. For under the new arrangement, he was 
no longer to be a mere handler, or seller, of implements, but 
a businessman who bought and sold implements, maintained a 
service department for them, and ran his own credit department. 
Obviously, capital was essential to him. 

Salesmanship and personal ability are other 
requisites which have received more emphasis since 19'-+5. 
These have always been essential, but have become more import- 
ant since power farming, farmers are ordinarily cautious and 
conservative in their buying and wish to be shown that would-be 
Improvements in design and performance really are improvements; 
once convtced, they usually become lasting customers. Dealers, 
therefore, must have had considerable experience with, and 
ability to understand, the problems and the particular needs 
of the farmers In their areas. They must be capable of 



v^4i£ 



vr^Irvof f 






ri o;^ ri;lod iBiin^eee sib tslB^b eti* 



1 XI*- 

e£V ri;J^ ewriT 

• ' ^ " '■ ' V* voj ■ ^nt+ns: "j s y<^ ^^^^ 

-Ifiup 81 If Los i 

eew yu ,jiiwL'iN^M--i-i;i v-s. '-t Tftb;.^ .:::-Ioi wen elrf "^ 

JjjfJ ,ed^: ;i etftfli e ad oi^ lei^noi on 

'1 M<7» ^^p rfffswod oriw ' e 

' .'i'-jiu isqic jxij'i--i'j ii-a'o aj.ix ijfi'i vra ,'i!^iii.,> -iv . .■ aer^;tlfiq9^ ■•■■-■"•"■- r 

.BTlrf oi* ^aee bbw le^lqec 

If '.fflltdR lanoETsq bna qlfiename»lB8 

- • so 3Viiii JjjQ |X.3J.Jxiaes;» iieed B^jflwXa yV'^n ^<5wril 

bam ' lo 9T6 Bit^mie.'i .^nlit: "r aonia vt'-^.' 



350 

communicating to the companies information on coaipetltlve 
eonditions, the needs of farmers and their probable future 
ability to pay. Executives in the industry state that all 
of these requisites have become more important in the select- 
ion of dealers since their numbers were cut by^ .^the QpDip^n;ips 
in 19^5; and the cut in numbers has, of course, mad© such 
careful selection easier. 

New Responsibilities of Sealers . ^ t^^ 

In addition to this new "status" required 
of the dealer, credit and servicing of implements in his 
area were the two chief obligations which he assumed with the 
changeover in 19^5. The dealer's part in credit extension is 

discussed in the chapter to follow. We shall now consider the 

to V 

question of service. 

For many years It had been the policy of 
the implement companies to extend free servicing over the life 
of the implements sold. This was .dqj^ie. .through .t^he j^i^tenai:;ipe 
of staffs of service experts at the branch houses who covered 
the area, instructing and assisting dealers in performing the 
services required. As long as implements were of the simple, 
horse-drawn variety, this policy did not Involve excessive 
expense. In most cases farmers, piven the necessary parts, 
could make repairs themselves. 

The development of power implements changed 
this picture. The advent of the tractor brought a need for 
more service. Purchasers were less able to service tractors 



evj no a eff.t ci ^ntiBoh 

life i&iii 6iBih \ii- -LJi;o£ . xi-ca 

•^oslee erirf ni inBiiaqml sioic sajooad •veri E»*le.ljjp9i eearii to 

. nJ: iiso ' i 

o noi:tosI»e Ii/Ibtpo 



erfj rtJlw '. ioinw ofjr iGxr;o ow;r sua 3ii?w es-ik 



e^f4 



..•iDiV ISC 



Tto ^oiloq eriu nesd bjeii . :fl' 10*^ 

tt'itl 9cii imvo sniclvisE o;t eelneqrroo :rnempilqtr2 ©ri^t 

xe svlovui cfon I-lfc - lorl 

'2 0ir n 






351 

theTiselves not only because they lacked knowledge but also 
because they did not possess the necessary tools and equip- 
ment. In addition, the numerous machines built to utilize 
the tractor Dower brought complications in design theretofore 
unknown. All of these developments progressively increased 
the cost to fnanufacturers of maintaining their policy of 
life-time servicing. 

The Farm Implement Prices Committee of 

1937 suggested that the Industry "explore the pos^ility of 
f 'Oi^ c- 

the cooperative employment of service men and that, further, 

insofar as ^^ossible, the expense of maintaining those men 

fl2) 
should be borne by the customers who desire their services" 

No definite policy with regard to charging for service seems 

to have been laid down, however, and the obligation to provide 

service was hande*^ over to dealers in 19^5. Probably the 

reason once again was that each producer hesitated to lay 

down any set policy f"or fear that his competitors would not 

follow and this would be used as a selling point against him. 

Individual companies occasionally tried charging for service 

and found that this was exactly what happened. 

The free-service policy Imposed an undue 
hardship on those farmers who were most scrupulous In the care 
of their machinery, since they were paying .lust as much for 
service. In the form of higher prices, as more careless far- 
mers who needed frequent service. If the need for service 
varied Inversely with the care given to a n»cblne by the user, 



osle tjuff fiT.^'^U'cn^ ^f^vorX i^©rft -^ vino :ton eevlf. 

'loq lie nisitnlfinj ^o eneint^ 

. -9lll 

ftvl^Bioqor 

B.O0X .>'ii.E.£r' c- aJ •;,<.> 

ahi\roTC Oj noj;t-.-?M(^c ?fft ^rts ,T?'v«:'-'orf rHvro^ ^^fiT r^ecf evp-^ oi 

. Fjr.rf'^rTCTcrf :fBffw yi:topT9 ftBW pi/r ' hntrol top. 

-in b' vnllocr solvrsp-'??':^ rr''^ 

txeq ftiaw 



352 

It would seem much more equitable to discontinue the policy 
of free service and pass along the saving in the form of lower 
prices. That the industry did not do this probably resulted 
in part from the conviction that some implements needed 
considerable servicing regardless of the care given them, 
and in part from the fear that farmers would resent the 
imposition of service charges. Such resentment, of course, 
might be entirely avoided if the price decreases were immed- 
iate and the reasons for them thoroughly understood by the 
farmers. This idea was expressed in an unpublished bulletin 
of the Department of Trade and Commerce dated March, 19'+7s 

One difficulty which might be encountered if the 
industry e/ionted the principle of the service charge 
... would be the opposition of the farmers them.- 
selves. This system has been tried by indix^idual com- 
panies and has been discontinued because the farmers 
did not like it since they saw only that it increased 
c the costs to them in some instances and did not real- 
ize that th<^ cost was reduced in others. It could 
be probably introduced successfully only if there were 
agreeTient among all the large companies and if the 
appropriate reductions in the price of Implements were 
simultaneously made and given wide publicity. 

Increased Compensation to "'ealers 

We have seen how, since 19^5? implement 
dealers have assumed a new status and accepted new respon- 
sibilities from the manufacturers. Extra compensation to 
dealers was, of course, necessary to accomplish ttiis change. 
Financially, this has taken two forms. First, as a result 
of the decrease in the number of dealers, each dealer now re- 
presents his co-pany over a larger area, with presumably a 
larger gross sales. Secondly, commissions (now in the form 



S^£ 



'VJ.3 i'ljl: 



i Boiioivnoo tzac at 






" ■*.(: 



i \6 



-Ib91 Jon 51b hne 



.-. r . J. ■ 



eni 11 ba& « 



919*/ 



nx crsricf od^ aJeoo 



s/1* 



;Korf n©93 Bverf ©U 



leiBBb riojE isab Jo i^amun srij ni ©r 



o 9ri;r 'to 



i.if Biiu.i <•; ' i !-::inj-_, j ';^±!j(:;juy " 



j;. tr c:kij'i 



353 

of discounts) were increfised. The changeover was accoTipanied 
by an Increase from roughly l6% on machines sold, to around 
20J{. The dealer, that is, now buys implements at a price 
about 20^ lower than the "suggested retail prices" issued 
by the companies. Gonipetition for dealers tends to keep the 

discounts allowed by the various companies to their dealers 

(13) 
at approximately the same amount 

How the Changes were Inaugurated 

o- The post-war shortage of farm impleaents 

made 19^+5 an ideal year for introducing the changes described 
above. These origlnlated in a move by the International Har- 
vester Company which, without either consulting or informing 
the other companies of its intention, took the lead and pro- 
ceeded to remodel its Canadian distributive organisation 
along American lines. Without delay the other companies, 
with the exception of the John Deere Company, did the same. 

Why the other companies were so quick to 
follow Harvester's lead is explained by the enthusiasm with 
which the change w^^s received by dealers. The buoyant con- 
dition of the market enhanced the apneal of higher dealer 
returns and r^i-.ce<i the importance of the added responsibil- 
ities (both for rendering service and for extending credit) 
which were given to the 'dealer. 

Not all of the companies were enthusiastic 
about the change. Officials of the Cockshutt Farm Equipment 
Company state that it was with some reluctance that they 



f)G 



^r(^rn^ 



miftv (e. Jo 



eri j - woH 



E.t 



sit lo ©: fiw~:f80ci eri 



— '.•■.fr Fini! Fis:-<r.) r rM-'.+ ■.',■ 
1 C jf J o&^iifcig'lO «iV'-' 



. ;.--rtiv-,-,r, . • .i, rf -f ^. «iff^ 



n* 'V'n ^trr r. i-^ '!-;'--^i.,r r- tfnc^nrr'r.o -r^.i-fin '--frf 



-nc 






•T'^ fp.fi ^ T •-,<'; Trf 



it^*^ f' Hr'i'f r, ■* n>f'Y »" .r(r-f-f '> (T rtp T + f- 1' 



ia»:>Jai»^1 



91 



■ £ '■^_[ a «n r 



;.- ' rf.j 



to''! 



iJsTiJrit: 






Z5h 

adopted the change, and that they did 30 mainly because of 
pressure froT. dealers who were anxious to get the higher 
commissions. Their stated reason for this reluctance was 
that the costs of the changeover (In accounting methods, for 
example) wase gre^^ter than the anticipated benefits to be 
derived therefrom. There raay be much merit in this view, 
since the experience of the American companies, most of 
which have had dealer-purchase agreements since 192'm-, leaves 
doubt as to the effectiveness of this type of agreement in 
overcoming the problems we have outlined. The experience of 
the American companies suggests that in actual practice, the 
differencp between the two methods of distribution — consign- 
ment and outright purchase -- may be more apparent than real, 
ally bwi^u 

As a matter of fact, it would appear th^t there is 
very little difference in the two systems in actual 
practice so far as the custoT.er is concerned. United 
States companies maintain expert service men to assist 
the dealers in the .'nlted States. They malnt?ilned 
collection s.ents to assist in collection of farmers' 
notes and, Dartlculsrly durinj^ recent ye'^rs, have found 
it necessary to finance the dealer by accepting 
farmers' notes as security for the amount owing to 
the companies by the dealers. (ih) 

Cooperative Selling by the Cockshutt Farm Equipment Company 

A step in the direction of cooperative 
retallinr, of i-^plements has been taken in recent years by the 
Cockshutt Farm Equipment Company and should be included in the 
discussion of changes in the nature of distribution costs. 
Cooperative selling has repeatedly been rdcomraended by 
governmental coT.mlttees in Canada as a solution to the high 
high costs of distribution of farm implements. It was 



•j^j-. " --."-'-» hs^fi^e il9iiT .snolBclrot^oo 



:o ;r 



.ic,[fit*h ftcrf TftVftff rfofrfw 



..■ wi ~' I 1 o ": i i» "-'J c; jTj v* vi j^j v_/ C* 



Jo-rq ?»ri:f gnlraooisvo 
.Ib© • ©cf \ bns iawB 



Cil 87 



" oJ > 



0:^ am 
(VI) 



lib erid^ ni q»iB A 

iiojjLii "J will ■•xyvCi^ 

to n 



355 

particularly stressed by the Saskatchewan Committee of 1939. 
As a direct result of the work of this comraittee, a cooper- 
ative group known as the Canadian Cooperative Implements 
Limited came into being under Dominion charter in September, 
19^0, This group began canvassing for membership a.rong 
farmers in the three pnrairie provinces and in the following 
years raised share capital in the following amounts j 

19^1 - 0136,039 
I9V2 - 1^101,115 
191+ 3-1+ - $ 32,622 
19^5 - $562,099 

(16) 

The wartime shortages of implements prevented 
the C.C.I.L. from handling implements as soon as had origin- 
ally been expected. In September, 19*+*+, however, the group 
called n conference at Winnipeg, at which were represented 
the thr-^e prairie governmf^nts, the three Wlieat Pools, the 
United Grain Ctrowers and the Provincial Wholesale Cooperatives. 
As a result of this conference the three provincial govern- 
ments agreed to lend #250,000 to C.C.I.L. with the understand- 
ing that an additional $500,000 would be forthcoming if the 
farmers of Western Canada showed their interest by subscribing 
sufficient additional share capital to bring the total to 
$750,000. As can be seen above, this was done successfully 
in 19'+5« Coupled with this was an understanding embodied in 
a resolution passed unanimously that the major cooperatives 
Would, if necessary, lend to C.C.I.L. $500,000. 

It now became necessary for C.C.I.L. either 
to embark on the manufacture of implements tr to nake selling 



• A 
L- IlL X aviv s'l^'-^Ov.'v' UKi ;.■•!£••..■ •miJ ct^ ti^itoml ttOOIS dVlSfi 

nt •i©;f'ierfo 



q eir 'to BesaJiorie ooilJiaw erf: 

f Slow ' rw tfs 8f hsJIeo 

.!1 't.t'T.t'r Kit »rf;t 

•me- 

111 J am 88W si 1. nt 

2f t -v-r error tOf 



Xaeeeecion sjia^^io won .^ i 

i no 



356 



arrangements with one of the ma.lor manufacturers. It did both. 
In late 19'+'+ a small factory was purchased at Elmwood, ,Sa*lc..-^ 
where some tillage machinery, principally harrows and diskers, 
have been produced in considerable number. This factory 
employs about lUO men. In December, 19'+5» a contract was 
signed with the Cockshutt Farm Equipment Company at brantford, 
Ont., hy which the company agreed to supply the C.C.I. 'j. with 
a line of machinery at factory prices. The original contract 
was for a period of five years. In 1950, a further agreement 
was made for a two-year period, and this was renewed in 1952. 
The growth of the acttivitles of the C.C.I. L. since 19^5 may 
be gauged from the following total sales statistics. 

19^6 - .1^1,1+68, li+J* 

19^7 - $1,73^,193 

19^8 - $3» ^^8,669 

19»+9 - $'5,206,686 

1950 - $i+,9l8,600 

1951 - «i5, 092, 3^+6 

1952 - $7,535,896 (17) 

In 19^8, a reorganisation of the C.C.I.L. 
took place. A new Association using the same name was incor- 
porated by special act of the Saskatchewan legislature on 
March 25» 19^3, and the structure altered to resemble that 
of the Saskatchewan Wheat Pod.. As of February, 1953, total 

membership stood at 55,929: 10,232 in Alberta, 32,005 in 

Saskatchewan, and 13,692 in Manitoba. 

Many economies of distribution have been 
effected by the Cooperatives. Since cooperative selling 
relies heavily on loyalty to the coor'erative principle, 
many costs such as advertising, show-room costs, etc. are 



• ao aiwollo't sriJ B30'-; oo 



I 



no .^o &i\2 to Joe ifcioaqe Yd bo3 eac-| 

nl ?00,S£ ,B:tiedlA nl S£S,OI :PSP,^^ iB ^oo;t8 qlrfeisdmsm 

.edoilneM nl S^d,£I bne ,nBW9rio;te>fee8 

n© el ft ^o ' 

;i J 6190000 efl.; oJ \{JXbvoI no \ilV6Qrt Bf^ll^i 



357 

are entirely eliminated, while others, such as dealer com- 
missions, are greatly reduced. In Canada, a large portion of 
cooperative Implement retailing is done through grain elevator 
men, who, as a sideline, take orders for implements froni whoever 
comes in with the intention of buying. Commssions, originally 
set at 2Vjfc, have now been changed to a flat rate dollar pay- 
ment. Delivery, setting-up, servicing and repairs are handled 
ti 

from cooperative headquarters in each area, and by "fieldraen" 
equipped with panel trucks and placed at strategic points. 
As yet, the cooperatives have no clearcut policy on credits 
or trade-ins; business has so far been done strictly on a 
cash basis. In the matter of trade-ins, dealers may try to 
sell a used implement for a farmer, but no definite policy 
for buying them from him has yet been evelved. 

Despite the apparent success of the coop- 
erative in making genuine savings available to farmers, the 
volume of cooperative sales in Canada has been relatively 
small. T«o reasons are suggested for this by the cooperative 
itself. First, a great majority of farmers do not buy mach- 
inery as they buy other com'Qodities. They have become 
a ■ 
accustomed in the past to having their machinery sol'^ to them. 

There is thus a long-standing mode of thouglt among farmers 
which must be changed before large-scale success can be 
enjoyed by implement cooperatives. Secondly, the Cooperative 
points out that the farmer Is as slow to change his brand of 
machinery, particularly if it has served him well, as in older 
days he was to part witb the team of horses that give 



vTttfBf- -"'•"■ , ".no.trp.J"C 

i lo-Liui: GJiii iiiii £. . - won avpn ,^^S J:j j3£ 

"•'fp r?n~t? rrl ''.•L??!J''!'."'''Tr'"~^rf ^'".fif'~''"^'^r-oci rrc"!*! 
10 no x^-i-to<? -to on avari esvi^teneqooo er ei 

.-. nr> '/f i'^ fT^t* ■^."irl^ .•"('-■>--u'f -t-,"* ^p pprf r/p-in^ai/d JEflJt-^ofef''^^' '^<"' 

o« 'i^'ii \, 'ii-Ql-ii'iJ iiU nl «8l'8^ flee-; 

Xolloq eJlnlleb on iud fistai o1 ;Jn93if»Iqffil bezu b Ilea 

aJ9"t naod li ae iifBisqooo 1o emirJov 

svlifcidqoc^ =:■■'■< I v' i^ f.-t-t- -fo"> '--j:!.' r...-, ..;,p .-..,-r^ anoeea-T owT ,ll''--^p 

- ' Jon oo o'leni'iaM io \o'^lic 3 s ,;fa'il'^ ' -i^fi 

,r'.- ^fhp vrrar* ^r''^l?>.lV! •rf.^rf-t -artf ,?*■-' o-f ^-gq BcU^ fli Tt.-.: ,-i;^ejjj>5a 

io foq 

7ebIo 0i tf w ffllff havnee «»rf St Jl yXimlunti'\f\c< ^xt«nttiOBa 



358 

him r^gl service. There is thus a certain sales rpsistance 
aga.inst makes of machinery to which farmers are unaccustomed 
and this too has hampered rapid expansion of cooperative 
sales. 

How is this arrangement rpgaroed by the 
company and by the industry? Is *iould be stated that, at 
the same time as this arrangement was made with the C.^.,I..L., 
the Cockshutt Company signed a similar contract with the 
National Farm Machinery Cooperative in the United States. 
The latter has been much the more important contract to the 
company both in dollar terms and in the fact that it provided 
the distributive outlets in the United States which the 
company had never been able successfully to establish for 
Itself. On the surface, there is much to suggest that the 
arrangement with the Canadian cooperative was made partly 
because, in its anxiety to get the American contract, the 
company was in no nosition to refuse to deal with the Canad- 
ian group. 

The company has heard objections to the 
arrangement both from its own dealers ani^ from dealers' 
organisations, but these have not altered its course. A 
sample of such protests is seen below in the form of a resol- 
ution passed by the Alberta Retail Implement Dealers Assoc- 
iation in 19^9. 

TO AT.L MANUFACTURFRS OF FARM IMPLFM^'NTS IN CA!^'ADA 

Gentlemen: 

I have been directed to forward the following resolution 
to you from the Annual Convention of the Alberta Retail 



8U 

evrj. ::oi?.ni"-...,xs i.iQ£si 'cue ooj £iaj r^nt 

'iCit V.d RltB Elri^t 2l woH 

srfJ riJiw *oeT:^noo lelimle b bsngia ^neqmoO iiucie^ooO sM 

.sr-:*?.- lit rr.^ ^vltfcf^fToo"^ yisnlrf ! 

sr -os'ii; ^loci Qiij :1DJL/E nsea ec ."iJ. oriT 

5«bJtvoiq Ji *eri;t fl:^ nl bae eirisrt isllob nl riiJc ttoo 

!='-':^ 'uo 9\ •T:tEtt '-.'"'.t 

loi nei-S-OBjEs ijuiaesoot/a sldB n&©d i&ven taa \aBqaco 

fjaoo .jboi;. J i<4» oJ \>. ^jJiaHb «;tl nl ,^-. 

-^BrJP^y 6: afl xii eav \ > 



u6 ;tn^ ^ns 
9^Ib .srf »8Sri:J iud ,8r 

-lor.' ■fd' n ' '"'n ciTmrpp. 

it noliBt 



xscijr.: rinj :o iJoij;it;vac-' isi^nnA qxij i*.o-xi uo\ oj 



359 



Implerpent dealers Assncl^.tlon as conflr"^pd by the semi- 
annual Directors' Meeting of the same Association. 

Resolution 

"WHEREAS the Canadian Co-Opgrative Farm Implements are *"■ 
now In the farro Implement retail business; 

"AN? vVHEP.FAS they en,1oy special concessions In respect 
to trade practices that are not available to the regular 
Implement dealer; 

"ANT WHFPFAS the nrgctlce could very well lead to the 
disruption and destruction of our Canadian democratic way 
of living and that IXjsuch ..practices w«re , to_gTow to engulf 
all other business, It is the opinion of this association 
that there would be nothing ]^ft_Jij3J„^tate. . pwner^^ 

■•i'BT-'tT THTREFOKE RESOLVED thWt 'we/ 'aTt' ff .D, A. ," brin'g '' 
to the attention of farm implement manufacturers, the 
Provincial Governments, the Federal Government and the 
Retail Implement Dealers of Canada that something should 
be done as soon as possible to curb th° spread of this 
menace and that we believe that the manufacturers could 
clamp down on thlf? type of business by refusing to deal 
with any other thr.n a regular established dealer who 
sells in the regular way with no special tax or other 
concessions." 

Secretary 
ALBERTA RETAIL IMPLE^4ENT PEALERS ASSOCIATION. 



? 



The future holds many uncertainties for 

cooperative implement retailing, and of these, its apnears, 

the Cooperatives themselves are fully aware. Following is an 

extract from the Directors' Report of the C.C.I.L. for 19^+9: 

It must be borne in mind, however, that the final testing 
of the C.C.I.u. is still to corne. During the past three 
years machines have been scarce and little expense was 
Involved on the part of anyone in the business in selling 
machines. C.C.I. L. has made good savings -for its members, 
but so also have all engaged in competitive selling en.joyed 
good profits. This jiear should seo the beginning of the 
end of scarcity of machines and parts. The struggle for 
the rr.arket vjill soon be resumed. Here is where the real 
and final test of the soundness of the Idea upon which 
C.C.I.L. war= established will come. C.C.I.L. was not 
set up to enter the competitive market and sell machines. 
It was setup to provide farmers with en alternative to 



ion a-xB :fBri:f 






.J' 






r A ^ T 



I 



360 

competitive selling, namely, cooperative purchasing. The 
earnings of the past ten years can be maintained providing 
the members of C.C.I.L. order their Co-op -machines In the 
buyers' market of the future as they have In the sellers' 
market of the past. If they sit back and insist on waiting 
for the C.C.I.L. machines to be sold to them, the savings 
they will receive In dividnds will b^ reduced by the exact 
extent to vrhlch they sit back. 



III. Inventories as a Factor in Distribution Costs 

A cost closely enough related to the 
distributive process to warrant treatment here is that assoc- 
iated with the maintenance of inventorlps of finished goods. 
The seasonality which characterises the demand for ^ost 
Implements, the wide variety of lines produced, and the rela- 
tively long production period, mean that production iiust 
ordinarily take place some Tonths ahead of sales, the finished 
implements being stored until the season of demand. Seasonal 
irregularity of de^.and means too that implements not sold In 
the demand period for which they were produced must ordinarily 
be carried as inventory for r^nother full year. 

Often in the selling of farm Implements, 
a difference of one day In the ability to deliver a machine 
may decide whether the sale Is made or lost. Thus the imple- 
ments must not only be produced and stored In advance but 
they must be stored in places where they will be available 
on short notice when demand arises. This is where the invent- 
ory problem Is most closely associated with that of distribution, 
In a far-flung market, transportation difficulties and delays 



'■o£ 



©' 



Bvcrf xedt BB 9". 



Bi 






d-?. 



^fT porrtX *c 



Inll ?.!?Iee "^o F)f i;tfrotr emoe ©osier 9ilei \IltBnibio 

bolieq bnfixsb ©rii 

B 

eidBll«4Vs ea lilw ncf 

-:tr eoliJ' no 



3^1 

render unfeasible the use of a centralized storage depot to 
serve the vhole market or any sizeable portion of it. Instead, 
the branch houses and the thousands of sT,all r-^tall df»alers 
must be relied on to provide storage. Thus there is a constant 
tendency for inventories to become scattered and unvieldy and 
and a greatly increased danger of depreciation through lack 
of prop<^r care. posll 

•eoffli 

Inventories , qnd Competition 

In any industry, the inventory which must 

be parried will be larger the larger the number of retail 

outlets. As stated in BralthV'/aite and Pobbs in their "Dis- 

tj'ibution of Consumable Goods": 

The degree of irregularity of demand is greater for 
the individual trader than for the market as a whole; 
from vhich it follov/s that the actual sura total of 
^ stocks which moy reasonably be carried "■>y all of the 
traders in tho narket i'? consiiprably greater than 
would be necessary if these stocks could be pooled. 
It is generally true to say that the swalle r the scale 
on which a 'dealer works, the greater the irregularity 
with vJhich he ha s to co ntend. (19; 

r ;fr^~ lit: 

It is evident that abnormally high inventory costs dogged 
the implement industry during the twenties and thirties as 
a result of the excessive distributive capacity of those 
years. Inventory costs, that is, though Inevitably high, 
were pushed even higher as a result of spatial competition 
and excess capacity in distribution. A. sizeable part of 
them pTior to l?**?* thpre^ore, may be classified as costs 
incidental to apatial competition in the industry. 



•a r,.-i ty - 

bne yMsiwnu fcnis fcei»:ti^eoe s 

• OT- • orrq lo 



(91) 



ylfjarTOftrfo ;+j?ff:f itnsblv© 8l *I 



'IJE .Ct3J Jil'^'Wj vtlj VlUli'^ \'l>i tiJ ■JilJ- r__«. ^^j 






M rr 4 Off r\rv f^- ,.4<^^{kf**i-*^ 



362 



Inventory Costs and the Recent Changes in Distribution Policies 

The excess Iveness of inventory costs was 
brought home forcefully to the industry by the experience 
of the depression in the thirties. It is clear that 
inventory costs received scant attention while the overall 
market was expanding; and that the inventory position of 
the companies during the late twenties was becoming increas- 
ingly precarious. The case of the Massey-Harris Company 
is illustrative. Here inventories averaged h5% of the total 
assets of the company between the years 1926 and 1929 inclusive. 
Following are the figures. 

Massey-Harris Inventories 

Mi 1222 1228 1222 
Percentage increase 
in volume 33 31 6 23 

Inventories as a Per- 
cent of Total Assets ^5 ^8 ^3 ^ 

The sudden decrease in the demand for implements 

in 1930 left manufacturers with large inventories. Costs on 

these goods kept accumulating and the diminaished volume of 

production as a result of inventory accumulation meant 

larger overhead cost for each good being produced. In 1931» 

the situation was described as follows in the Report to 

the shareholders of the Massey-Harris Company: 

As a result of these conditions (i.e. the drop in 
demand) inventory on hand at the beginning of the 
year, which should easily have been disposed of if 
business had been normal, proved excessive and as 
a result our factories have practically been idle. 
Consequently we have had to carry a heavy burden of 
fixed charges with no corresponding output to absorb 
it. In an endeavour to meet this situation, expenses 



^i 



- ni floi b eri;t lo 

. r.Bitrsfi «ri? STB :?nlwoIIo'? 



^S9I 8S<?I 



SBBQIOnl ©3B*n90 

.[£ " . emx/Iov rii 



-Ts4 i3 SB €«»J:io:tnovnI 
4^i £+* ^+^' c;+' E^teeL/i Irr^oT To J-neo 

t'- arid ai sebsiosu asbbuz siiT 

no BieoO .asi '^■gisl dilv ziBiuioBlunBta ittsi 0£^l nl 

,I£9I fli .beoirboia s^-^®*^ 6003 rios© 10I ;tECO bBsriisvo iftsifil 

iYn/eqtuoO ei'xiBJti-, eni lo aieblorisiBflB ©riJ 

nl ) enoliti "to iluzai & sA 



od^ J on ffdHvr 8F 



363 



have been drastically cut in all departments of the 

business, and reductions have been n^ade both In per- 
sonnel and in salaries and wages of the staff. 

Since the Inventory problem was rooted in 
the spatial competition which characterised the industry 
during the depression period, it persisted for the same 
reasons. The first steps by the industry to solve the 
inventory problem took place after World War II when the 
general method of distribution was modified. Two aspects 
of this change represent attempts to solve the inventory 

f> ii Df '.S 

problem. First, the reduction in the number of dealers, 
and the wider territory served by each dealer now should 

smooth out to some extent the fluctuations experienced by 

h on the 
each one. Secondly, and more important, the change from 

consignment to outright-purchase is a step toward placing 

the inventory problem squarely on the shoulders of the dealer, 

who now buys the machines outright, relieving the companies 

of the costs of storage, credit and risk in return for part 

of his increased commission, or discount. In this respect, 
t it ns .felon to the In'"* 

clauses selected from two of the present dealer-purchase 

agreements are illustrative: 

The Company agrees to sell to the Dealer, who agrees 
%o buy, accept delivery of and pay for « the products 
covered by orders received by the Comrany from the 
Dealer, and accepted by the Company. 



and 



An order from the Dealer that has been accepted by 
the Company will not be subject to cancellation by 
the Dealer without written approval of the District 
Manager or Assistant District Manager. 
(Emphasis supplied) 



t lo : OB 

eiBfiS sri:> lol be 

^.-t-' -.^«<r/^T)T •T.a4'^c! ri^i-T^r ;. iViicrr' v«t r> + ri tiirn f 

biuorie won ibIb^v rtoe© x^i bevise xto-^-^ii®"^ 'lal'jw srij bfi£ 

ffloi^ agnfirir ■■••' . .i.n.u.j .^-.r.p .^..,^ ^'„„e. 

snloslq bie^oi qeiz b el 98firioii/q-i^ri8Xi;^r;o o:^ cfnemnalenoo 
ffwXw^b •♦ffit lo Pt^^luorir: ^dt no yl^iBupe mslffotq vno-fr,a,vr 

: lol muiJ^ei nl i^HXT hn?. H^.b'io ,sssicts lo E;Jeoo erij lo 
,*j>irTf#»r ?.frf* rrl .:*rff,'oor t^ to ,ari}- 

Xd b 



36»+ 

It might be expected that such clauses as 
these should mean the end of the inventory problem for the 
Implement manufacturers since they are now in something like 
the position of firms proc^uclng for advance orders. But for 
the industry as a whole, including distributors, it is obvious- 
ly not a lasting solution. As a matter of fact, the method 
of accounting for inventories followed by the individual 
companies suggests that they themselves do not consider the 
problem solved. Under the former consignment method of 
shipment, all goods in the hands of dealers were treated as 
inventories. Taking one of the Big Three companies as the 
example, this is still the method followed for balance sheet 
piipeses, even though on the company's books the total of 
accounts receivable from dealers is shown. It is difficult 
to determine the exact reason why inventories are treated in 
this way when, to all appearances, dealers purchase Implements 
outrlghtx from the company. At the very least, the practice 
indicates hesitancy on the part of the company to accept 
the new arrangement as a permanent solution to the inventory 
problem. Since 19^+5, of course, the outright- purchase method 
has worked without difficulty. A conservative attitude toward 
the future, however, is not surprising in view of the experience 
of the past. 

Summary and Conclusions 

Following are the principal conclusions 
springing from Chapter Nine. 



SAXJ. ^n^ujaivos " ■':-f'" -<, • ^-.-^^^ .^■...-.^ . ^-— elqinl 

nol .ETobio ' ^,nlo' aacixT 'io noi^^ieoq ©xfi^ 

Ifirblvlbnl Sri* yd bewoliol eeltoi^nevni lol anidnuooofi Ito 

< - 
^•I9W sbnsfl ©ri^ ni eboog lis ,:^n»mqirlB 

lo iB:to;f Bfl? ealood e'yr sri* no : 

eielflsb (eeonsieeqqB lis o^ ,a©riw yew Blci^ 

?..r(fw ?^RfiI vtpv '^r'J- :tA .VTBrrmoo eriit moil a:;td[:5li:fL'0 

Xioinevnl erf:^ o* nol^fx/Ioe d^nenBimsq e es cfnerasgnBiie w»n eri* 

1I6W0;; :j0 6 ; 'isenc yjljjc jlohjIw baaiow ecri 

srf* lo w»lv ni ^, 1 Bdi 

.■*■:. -.T ■:"'-r:t -Jo 



365 

1) It was stated in the last chapter that 
competition In pricing Is not a characteristic of the in- 
dustry and that a considerable degree of "understanding** 

on price matters appears to exist among the firms. This 

It 
observation does not apply to competition in distribution. 

' The methods of distribution have always been a focal point 

for active competition in the implement Industry. Firms 

■"compete for reliable and aggressive dealers and for good 

" 'sftes for retail outlets, as well as in terms of the 

"availability of their products and of service for themi'**^ 

These forms of competition lend themselves very poorly to - 

understandings or agreements. 

2) The symptoms of this competition are 
numerous. As was seen in Chapter Eight, some lines of 
implements may be produced and sold at a loss for the pur- 
pose of retaining good dealers. We have also seen previous- 
ly how the International Harvester Company in Its early 
years used its monopolistic position in harvesting imple- 
ments to force dealers to carry its other lines. But the 
most common form of distributive competition in the early 
decades of this century was the establishment of excessive 
numbers of retail outlets. This type of competition 
persisted despite the virtual uniformity of price action 
by the companies during those years. 

When action was finally taken to modify 
this form of competition, it was taken by the strongest 



^\.. .. A. J 



J, + 



.eJDiit 9rij - q3 eifidqqs ei«^;te'« ©oJtiq no 

nl nol:M;f»qinoo pvijos lol 
.mon* no"* ©olvrea lo fons B;tojjbo'jCf lisritt ^o \miQBllBva 

*to Bsall »ffloe ,;trfsl3 i^^qBriO nl nase A .euoisnun 

-tL'rr srf:? lo"* esoi p ;tR Mog fens &ooa^o^;^ t rtt'T-^TslTfrl 

■ Eucivsiq nset oeis svsn e leieaD ^003 aninj-^joi oq 

^Fies ai^l nl ^0 i&isQriBtt lenold^eniactnl erfd worf \1 

-ftlr'tnJ '?ni:J'?sv'TBrf nl rrolrfip.ocr old-sllocrenci r^n-irj ste^^v 

era sua .eeni:! lonJo sd'i yi'iso oj aialeoc soio'i oi eJnsiii 

XliB9 9tii nt aotil&Bqtaoo svltfucfii^alb lo mTol n ieom 

noiJijoqmoc 10 Gq\ .:;7-:.'.. 700 iiiijsi 10 ei 

nol:; iiq lo x*l'"io^lrt'^ lei/^ftiv 9ri:t 9;tlq8e5 bw^eleiaq 

.eiB«»y esoriit ^nlTut Eftfncaroo t^riS vd 

■'C'tlbew o:t n©?(r;t vSJp.nlt ecv nol*3p frsriW 



366 

firm and at a time when demand was buoyant and implements were 
in short supply. Although what appeared to be a far-reaching 
change in distributive methods took place in 19^5, there is 
reason to doubt that the new arrangements will solve the prob- 
lems incidental to distribution of farm implements. The most 
promising accomplishment was the decrease in the. number of 
dealers; Thus it might be premature to suggest that the new 
distributive arrangement represents a permanent shift of one 
of the phases of non-price competition from the producers of 
implements to the dealers, though that is what it has done 
since 19'+5. 

Competition in distribution at the present 
time is mainly a matter of exerting sales pressure at the 
retail level. In this, the implement dealer is the most 
important factor. The industry proceeds on the assumption 
that implements "do not sell themselves". Sales effort must 
be rooted in actual contact with farmers by the companies' 
dealers. Though local advertising media are used extensively, 
it is recognized that the advertising which most influences 
farmers is the record of actual sales made in their neighbour- 
hoods. Since World War II, therefore, rivalry for good and 
aggressive dealers in promising localities has been the 
principal form of competition In distribution. 

•i 



»if»w zin9faQj.qs:>.i. bne. ine.\oudi t^" '" r-nA »ajl:t s ^b bam milt 

obbI'-ibI b eci =? Jsriw nguorfct ' rfTorie nl 

-UOiq 9X1 V 6VX0E 

wsn ©fij '.-o.jj'js:. "^'' 

: o 1o d' a 9V-r ■:> 

Ineeaiq srf^t j-b aol:tsj<itiiBlb at nolJlJsqtroO 

nol: s sri;f no ebseooiq \ii' .nott' t 

f'-fi- r:oo:^; re'' v"! blio' • i1 



367 



SHAPTER TEN 
NON- PRICE COMPETITION lit CREDIT EXTENSION 

Contents 

I. The Competitive Aspects of Credit Extension 

Effects of credit extension on demand functions — 
Credit always Important in the Industry's marketing 
policies — Credit extension during the twenties — 
Its competitive aspects — The aftermath In the 
thirties. 

tr • 

II. The Changing Credit Picture in the Forties 

How the changes in distribution affected credit — 
The effects of the Farm Improvement Loans Act In 
Canada. 



I. The Competitive Aspe c ts of Credit Extension 

Competition in credit terms may be as Important as 
competition in price, and in principle an agreement 
on credit terras is as Illegal as agreements on price. 

Competition in terms of credit extension 
may frequently be found even in situations where price com- 
petition is practically non-existent. This results from the 
fact that credit extension Tiay have definite effects on the 
demand for products, even where price changes have little. 
These effects are first stated briefly here and then examined 
in greater detail. 



gr-: 



no lenerfxg ii.b&iO lo sJoeaaA »vi ■ eriT .1 






• J. J. 






■Jo E . 



,toi'ia no ■iiRB 8s Ibs^^H as el emasi iif>eio no 

(n 



»ri? : .-i '..'.I -^ .>. .-.H-v'''^-"'' tt^^f-i."' ■•<.- noiesned'r'" .-^ ^^<5i•f<^ rtair-t -rirji- 



368 

Effects of Credit Extension on Perrand Functions 

In the first place, the regular extension of 
credit by a producer may render the demand for his i^roduct 
more Insensitive to price changes, I.e. more Inelastic. 
Secondly, the producer who can extend more liberal credit 
terms than his rivals Is In a position to use credit as a means 
of differentiating his product from theirs and thus of shifting 
Its demand curve. Thirdly, credit extends the present potential 
market beyond those buyers who actually possess cash at the 
moment, and this serves again to shift the curve. 

tha 

1) With regard to the effect of credit 

extension on elasticity, the regular practice of selling on 
credit has a tendency to dampen or soften the effect of price 
changes on sales. If, for example, a seller Is asking for a 
down- payment of one- third of the purchase price of a product, 
a $30 price Increase will mean only a $10 Increase in the 
cash down-payment and thus the full extent of the price Inc- 
rease may not be appreciated by the buyer, as It need not be 

(2) 
paid by him at the time of purchase 

2) Secondly, credit extension may be effect- 
ive as a means of differentiating one product from another 

In the eyes of the buyer. Buying on credit leaves present 
purchasing power in the hands of the consumer, enabling him 
to acquire other goods in the present which he could not other- 
wise have obtained. This "ability to buy other goods in the 
present" may be regarded as an added feature attached to the 
product sold on credit and received by its buyer. In this 



ddt 

lg_P. ;tD9'l 'lta 

>o noiensctxs -^ 

^Ibeto ifiisdil ev- leo on'w idu. 

iBiitiBioq Jneawtq sri:^ sbneaxa Jibsio ,yIbilriT .evm/o biiBOisb ejl 
" cieRD p.«(?epo(T ylXsu^f^R orfvf sipytM •eoH,-t ^noy***^ rtf^jJi'-" 

. y V i.yi ■ ' - I. ;-,':'. Oil' 

: o 3fllIJ©8 lo solJDBiq "iBlt/ssi 9ri:f ,y;tli)l:taBl9 no noleneitxe 
*olTq ^o tfw'!^'^** '^'^S' nsj'^oe to rf<yTfreh or* vone^ns. "^ :t.!'hftt'> 

,70jjboiq e lOiuq eri:^ ^o bttdi-»no It' 

-yiij- is:.'i.'i'^ •?iij ij nut: J L'-s;! \_r^i -nwO;,^ ffSBO 

9cf ^on been il es ,T[e\;ji/d exl* yd bsJaioeiqqs ©d ;ton xbpi seesT 

(C) 

. ' ©esrioTi/q lo 9inl;t 9d:t ;ts mlrf yd b^aq 



'lerijo Jon dIi/oo on noiiiw jneeoiq stij m sDoog isrljo s-iijupos o:r 
EiiiJ fli .ifixucl eJl ^d bevleoBi i.>n« Jibsio nc ^aot; jouL-oiq 



369 

sense such a product may be differentiated In the buyer's 
ralnd from products physically Identical and priced equally. 
By buying the product with the more liberal credit terms, 
the consumer receives a "bonus" in the form of cash-ln-hand 
with which to increase his purchases of that product or of 
other products. 

The appeal here is once again largely psycho- 
logical. In strictly monetary terms, it is debatable whether 
buyers can hope to gain by postponing payment ^^ . Neverthe- 
less, insofar as consumers do prefer to sacrifice less of 
their purchasing power in the present, products otherwise 
identical may be sai^^ to be differentiated in in buyers' minds 
by the terms of credit. Producers are not necessarily concer- 
ned with what the buyer does with the cash he has left when 
he buys on credit. If they are, they may, through advertising, 
tie-in sales, etc., encourage him to spend it on other products 
which they produce. We conclude, then, that by extending 
credit T)roducers may hope, not only to make the demand for 
their own product less elastic, but also to increase it at 
any given price. 

3) With regard to the third effect of credit on 
1, 
demand, that of extending the market beyonci those buyers who 

possess ready cash, not much explanation is necessary. The 

effect once again is to shift the demand curve to the right. 

Credit extension therefore offers opportunities 
for competition which are perhaps even more attractive than 
competition in price. Indeed, to some of the more imaginative 



B^iBXSJd »ri^ tit be^Bi > od 

.virptr--' '^<=>'^.^T~ ^^f? T::irlT. 'iBr'f' iTtv^f^'^n mot'!' hn^m 

bnerf-ni-rieBO lo imol aritf nl "ewnod" e esvi^oei leBUjenoo erf* 

"fn TO rtorrfnTa ."tprfrt to s'52P,rf3irKT J:lrf 3eR9Torrl o:t riolffv ^:t2v 

.2J0i- .Oil JO 

-u-'nyeq xi»3'isj. nIfi,^B sono el s'.iail leaqqe - ' 

lo 88fti ftoili'iosfc o;} 'iSiwjq ob e'reicijenoo ea ifiloenl ,bfe9l 
selwisrf^o ecfouboiq e^/nassiq srfrt nl iftWoa ^nleerfoiuq ilerii^ 

• Off <r»\,-r if f-ijii-t ^ f^ -^rTa«T«" • ' /-»-( -^ f 1 no ft I" 

n«rfw ;tt?»I eerf Art de* rtitv 8»o& iw'^fi/d erf* *lw ben 

b;J ii/oone ,.o:j« ,fe«»J.Be ni-»i;t 

8nlbn»;ty«» yd istit in«K* e©bi;Iono9 »W .fioirboiq xtaii riolriw 

iJ^B a SEBeioni od- obIb s IJebIs eesi ;foi/bo'xq nwo alsri* 

.»ol"iq nsvla ^nB 

no : le bnlrf* Bri:f oJ biegsi t, 

.^trigli eri:t oi^ •vti/o bnp' i cftlrfe o:f el nlB^B eono ^ob^^b 

'lo »moe o.^ ■ ffl nolcflJeqoioo 



producers, the greater subtlety of credit competition, in 
contrast to the rather unsophisticated nature of price cutting, 
may have a peculiar appeal. In any case, in anticipation of 
the advantages to oe gained from any or all of the previously 
mentioned effects of credit extension, some producers may be 
tempted to extend "lore liberal credit terms than their rivals 
and thus gradually credit extension may become a field for 
active competition in an industry. 

Some of the more wary producers may, of 
course, hesitate, recognizing that credit extension carries with 
it very great risks and that the actual cost involved in 
extending credit on any sale Is never known until the last 
dollar owing has been paid. Nevertheless, if a sufficient 
number of producers in any line begin extending credit in large 
volume, even the wary producers may find themselves the unwill- 
ing participants in a great credit orgy, the ivy going to those 
possessing the largest capacity to extend credit, the weaker 
members collapsing under the strain. Unfortunately, dawn too 
often brings in its wake a sobering attack of bad debt losses 
and collection costs, and resolutions and agreements among the 
survivors to keep away from that vicfcus thing called credit 
in the future. 

Credit has Always been Important in the Industry's Marketing 
Policies 

Credit practices in the farm implempnt 
industry came close to reaching these proportions in the twenties 



i'j n'-xjoqlol^ns al ,9Bbo \aB nj . • is- j.i. -' ' ~^ 

•riJ lo lie 10 % 
©d vcr ?• fir ,f! '-> lo pt'^ 

lol bisll c sffloosd \;Bcr; noiene;fx» ;tIbeT.o xIlBwbBia 8Uff;t bns 

d eniJ x*^* ni aieouboiq 1o 79c 

-Jl.f-.'f-j 9rf;l "9vJ'n3rfrrf:t 5nJ1 vrT •jteou'^nTrf view 3rf;t n'5Vo f-T-EniJlov 

-iJ tX^'i-'^ m'-joio vijo'iii i icij'isq :gnl 

rt r f ■,-•'■?'> ^r»f^>:!0 ^nfrtrt f.-i^Hfr,f:j i'nrf:t rrTr** \-o.Wr i^ -,«>< nt pt < I'.r fvrjp 






371 

and thirties. It was as If, In the absence of price compet- 
ition, credit extension provided a safety-valve for the release 
of pent-up competitive pressures. Yet the motive was not solely 
a competitive one; credit extension had been a necessary part 
of the industry's marketing policy ever since its inception. 

The very nature of farming enterprise, with 

Its necessary waiting-period between outlay and receipts, and 

r. 

the tendency on the part of farmers to postpone their purchases 

of -nost types of implements until sure that crop conditions 
Warrant the expenditure, calls out for some workable solution 
of short-term credit to finance farming operations. But the 
uncertainties attendant on farm income have caused most of the 
established credit institutions to refrain from granting short- 
term credit to farmer-s. In Canada, as in the United 3tates, 
commercial banking principles in the twenties and early thirties 
had not been adapted to the needs of agriculture largely because 
of these uncertainties. As a result, the responsibility for 
supplying short-terra credit to farmers for the purchase of 
household goods and farm implements has fallen largely on the 
shoulders of the vendors of those goods themselves. 

Credit extension was one of the implement 
industry's earliest selling problems. A report on conditions 

in Upper Canada in 1825 stated » 

Extensive credit is almost universally given to the 
farmers, not one-tenth of whom have either inclin- 
ation or prudence enought to adapt their expendit- 
ures to their means, and, as they generally pay and 
contract debts in inverse ratio, their difficulties 
increase every year, and often at last terminate in 



■" ■" ■j„c;i: JtJii fcie>" •tr^ittofli ftfi7 ttoY , ^^ -'• .1 -r, •: ii^ vvxJ ii:--4Ji vi/ ..jw— ^i^tJi^ if' 
^fn/^ 7 B fleetf bsd / {©no 

.noi^qsonl 8*1 ©Oiile 7.flve votioq grti e'^iJ-Eijtni 9ff* "lu 

ritflw ,©i: .b1 to 91uJtBD xi»y -V 

enoij^ibnoo qoio JbHJ eiws JlJcuu 8;tn i lo Boqxi j^ecr lo 

rto.f:fi.'- ^mc? •■' ^ sll' :tn,«>!TT'5'A' 

r1;t to ffeoBf beeuso »vBfi amooni nnal no *nebn9;t*B esl jnxfi^isoni/ 

ee.i Yliee bas. zsIJnewd^ ©ri:f ni eelqlonliq ^nt^ned ifiloisrainoo 

i ■"I'='mf f)i=?;^T :tcn ^erf 

291 sac ,j^ii£9i P. - :ia£ji&onu : 

lo 9f W TO** BieflJiBl o* ilb9io im«* snlylqqwB 

. 9EonJ '10 ' 'UOiiZ 

' »[i3 lo eno 8fiV aoieijsjxs jILioi'J 
enoJt: no ^loqeit A .emelcfoiq ^ni esllifie v^xitzubtil 

'q 10 noi^fi 
at «* r }B V \ie^ 



372 

^' the sale of their property, which sometimes takes place 

with consent of the owner but oftener in consequence of 

^- a suit. (1+) 

Hutchinson reports at length on the credit difficulties of 

the early American industry in the mld-ninetBenth century. ^^^ 

Repeatedly throughout the early years of the present century, 

references to the industry's "very burdensoTie" credit load 

appeared in financial statements of companies. The Bureau of 

Corporations observed in 1913 that 

The granting of long terms of credit was originally 
developed in the harvesting machinery industry on 
account of the general inability of farmers to pur- 
chase expensive machines, like binders, for cash; but 
it has been continued to a certain extent at least, 
as a specific means of getting trade by those concerns 
which had ample financial resources. Moreover, it has 
been extended by them to other lines of farm implements 
'•' of a less expensive character in which the custom was 

not developed until a comparatively recent time. (6) 

Credit selling became more important than ever in the industry 

as more complicated and expensive implements for power farming 

were introduced in the early decades of this century. 



Credit Extension During the Twenties 

It is commonly felt that the late twenties 
were a time of great prosperity in Canadian agriculture. Yet 
there is reason to believe that much of the prosperity Was 
apparent rather than real, especially in Western Canada. 
Owners of many poorer grade lands, which had been brought 
into cultivation in the era of high World War I prices, found 
themselves heavily in debt during the post-war depression, and 
managed to continue in production through the later years of 



99«Iq t 



f 



snco ai -o use isa 



Jo Sir 



■r'i' r?r vf tp ?:tTO<T«*t nc '/H 



*6rf* il^l at bevieedo 8nol;tET 






r— ■•r-;:t "^.'^nl ^o ■^ffMTPTS 



B o:t 



a;i Q'lOBi &LiAO&C pallida JlDsiu 






)6ff;t j-Iel y.lnoinr.^oc) el jI 



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7 rTU iCbl^ISi •b«'"^ Tanrtni-, Vrvr- 



■<»ni'. ob nl 






373 

the decade only by virtue of the unusually large yields and 
prices of vheat after 192^. New settlers, who had bought land 
after the war for the most part at considerably inflated prices, 
emerged from the post-var deT)ression carrying a burdensome load 
of debt ^'^\ 

If auch warning signs as these were evident 

in the twenties they did little to induce a cautious attitude 

In the implement Industry toward credit extension. In the latter 

part of the twenties, receivables carried by the comnanies rose 

steadily relative to ether assets, reflecting credit policies 

which, even if agriculture had been enjoying genuine prosperity, 

would have been reekless to say the least. Those of the Massey- 

Harrls Company are good examples. Between 1926 and 193'5» the 

volume of this company's receivables showed substantial Increases 

each year over the preceding year, as did the percentage of 

receivables to total assets and to total sales. In 1930 the 

latter two percentages reached the inordinate levels of hO% 

and 79% respectively. At the same time, the percentage of 

reserve against receivables showed a steady d ecrease until 1930* 

The company apparently not only failed to see that each year 

its position was becoming more precarious; it even seems to 

have felt that the need for provir'lng against reverses was 

decreasing. Following are the percentages mentioned. 

1926 1927 1928 1929 19^0 
Percent increase in 

receivables ... -1.7 ^9 32 3^ 2? 

Receivables as a Percent , 

of Total Assets . . 20 25 2? 32 «+0 
Recievables as a Percent 

of Total Sales ... 3** ^1 ^5 52 79 ^ 
Percent of Reserve 

Against Receivables . 19 15 13 9 H 



tSi 



ioi/hn^ '^ ■■'■ '^ .r-t ->f 

'/e beworie Bsldevxeosi e'xnBqmoo Blri;^" 1:0 emulov 
S^O+l to BL9-V91 e oni aric^ foeriosei zs-s&in90i9q owi letiBl 

o:} nsv* :tt :axioi''T.Fa«?'TfT , 90' ?pvr nolj-^cocr 

Ofyi Jli il££i 

A> er Baton; 



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37^ 

Its Competitive Aspects 

Where fims compete on the basis of credit 
extension, the competition may take several forms. The most 
common of these relate to: 

1) The cash required as a down payment, 

2) The terns and coar^itions for payiiient of the balance, 
and 3) The willingness of sellers to accept notes from buyers 

who are definitely bad risks. 

In the Implement industry, credit competition during the 
twenties took all three of these forms. 

1) Prior to 1^23 the question of down pay- 
ments seems to have heen given little consideration by the 
industry, the practice having been most common at l^ast until 
after World War I of selling implements simply in exchange for 
the farmer's promise to pay when his crop matured. This policy 
apparently involved no difficulty for the industry during the 
prosperous pre-war expansion period, but some of the manufact- 
urers experienced real difficulties in the form of bad debt 
losses and collection costs during the depression which followed 
the War. Thus in 1923 several of the firms cooperatively 
decided to charge minimum down payments of 25%* This is the 
first evidence of cooperation in the industry in the matter of 

c;, 

credit policies. Even this good resolution, however, seems to 
have been forgotten as agriculture entered the period of high 
prices and yields from 192^ to 1930, and acceptance of much 
lower payrfints was not infrequent. In fact, there is reason 
to belirve that flagrant Violations of the 2^% agreement were 
common during the period, though care was usually taken not to 
allow such practices to become too evident. For the purposes 



9tii no e^^&qmoo esBill 

. (i 



9ii:i ^d no filiill iievlg gverf o;t ed^n^cn 

T-'' -^nerinv -^^..i^ij j ^jnille- • ■■■' f-r^-^i: ..,.4'>^ 

axri fiedw XfiQ o* ©eirnotq b'i ' 

b©woXIol r(f>.trfv no '■E8?ir"»f) -"^rf:t 'anlitf^ sc'ec*^ no^:tr»f>IIoo ^r*? ?f>8aoI 

rla-tri lo i)olieq tP es 

. Bff^ lo an 'y bI'I S. 



375 

of the books It \Jas elways possible to conslc^^r the (dealer's 
cominisslon In advance as the dovn-paytnent for the §ale. 

When the depression descended In 1930, the 
2 55^ requirement was more uniformly observed. But it vas not 
increased until 1935» vhen bad debt losses and collection costs 
Jiad already taken a heavy toll. When it was increased, no 
"striking uniformity was evident among the companies. In 1936, 
the required down payment varied from 50^ in the case of the 
International Harvester Company to hO't for Cockshutt Plow and 
John Deere, and 331/3!^ for Massey-Harris (though Massey-Harris 
charged 50% on some implements). In some areas depending on 
past collection experience International Harvester seems to 
have permitted acceptance of 1/3 down payments, although in 
other areas where difficulty had been experienced in collect- 
ion, such as the Assiniboia area, the International Harvester 
Company enforced an all-cash policy with no credit. Minnea- 
polis-Moline, an American company exporting into Canada, sold 
only for cash, while Oliver-Hart-Parr extended credit only 
where there was adequate collateral to pay the balance. 

Reflecting the more perilous condition of 
agriculture in Western Canada, the terms in Eastern Canada were 
more liberal than those in the West in most cases. The Inter- 
national Harvester Company, for example, continued to take 
25:^2 down payments in the East though in the West this was 
raised to 33 1/3* In 1935 and to 50^ in I936. Later in 193^ 
thes company saw fit to reduce the requirement to hO% to be 



.lit nsfi'V. 
')4 n;t ynpcffnoO leJ^a^viBK Isnol:tflm9i^nI 



no §/ ce nl .(e' ' "^ nd 



-■•'ool.;::- ■:■ nl bsonei'^ i' 

•isw Bb«neO mo:f8s3 nl enria^ •!!* ,BhBnBO r ijj;tlL'- 

I edW eti^ at risi/o 



376 

In line with Its chief compfstitors. 

2) A siTillar lack of uniformity is seen in 
the policies regarding terms and conditions for payment of the 
balance. Here the practice of "loading" v/as corTjmon among the 
firms. Through this practice, a higher initial price was 
charged to purchasers on time thanto all-cash purchasers. 
Thus time purchasers not only paid interest but paid it on a 
higher principal, in return for the privilege of receiving 
credit. 

The percentage markup for loading varied 
greatly among companies, and among different implements sold 
by the same company. The method traditionally followed in the 
industry called for payment of balances owing after the down- 
payment had been made in one or two "fall" payments, the number 
depending on the price of the implement. The first fall pay- 
ment ordinarily was due on October 1st of the year of purchase. 
The amount of loading applied to the cash price varied with 
the number of payments contemplated for the balance. 

'i 

To illustrate, the initial price of a Massey- 
Harris binder at Winnipeg in 1936 was ^270 if bought for cash, 
^^278 if bought for the required downpayment plus one October 
payment, and $286 for two October payments. For one fall pay- 
ment this constituted a loa'-'lng markup of approximately 2% on 
the cash price. When this is compared with the corresponding 
markup of other companies, considerable variation Is noted. 



GHJ gnome "gnlbec^- lo cL/ij^cq 3uj -v-jsr: .'f-.-.aj^BO 

B no J Ji.'c 3-eQ'iejni oxeq \;ir:o 7cn i ZL-q aais^ cum 

mi;;t9i r.l ,Isqionx', 

it sr ^esinsqccoo 

IIol xIIfinol;flbfiiJ^ boff:fsffl sriT ^xaBqtroo \d 

1 sno 
""i cfeill sriT ,tf- rai arf^ T:o ©olia eri;t no gnJ: 

sled ;tnoo elnemYfiq "lo ledmwn 

"io 90li. Int erirf ,e:tBi*Bi/IIl oT 

aO ei.. 

-yr : Ila'i eno lo"? ,e j;roO ow;f 10^ c)8S$ bne ^S; 



0^0 



177 

Deere and Company, for example, loaded the cash price by only 

2^% for one fall payment; Minneapolis-Holine and Oliver loaded 

these as high as 9^, and International Harvester 5% . For 

the general line o^ small Implcnents the following are the 

percentage amounts of loading for one fall payment then charged. 

Eastern Canada^ Western Canada 
1 fall 2 fall 1 fall 2 fall 

I.H. 6.52 8.11 7.51 9.75 

M-H. 6.82 8.79 6.16 9.93 

C.F. ^,92 7.61 6.57 11.23 

F & W. h.77 7.^+9 (no appreciable sales) 

Deere (no appreciable sales) 5.37 11.06 

During the late twenties the rates of interest 
charged on balances varied between (>% and 9% before maturity 
and G% and 10^ after maturity. During the early thirties 
the rate became more uniform and by 193^ all companies were 
charging G% in Eastern Canada {7% after maturity), and 7% in 
Western Canada (8^^ after maturity). 

The practice of loading, however, obscured 
the real cost of credit borne by the credit buyer. Effectively 
the rate of interest was much higher than these stated levels 
imply. To illustrate tnls, let us take the prices of the i'^iassey- 
Harris 8' binder, this time at "iegina. In 193^ this price was 
$281. A farmer wishing to buy on time was required to pay 5^% 
at the time of purchase, and could elect to pay the balance on 
October 1st of the year of purchase, or In two successive years. 
However, the time-purchaser's price on a one- fall payment plan 
was not i>23l but -$289. He was required to pay 50/^ of this, or 
$11+1+, 50, the balance of .|ll+>+,50 bearing 7% interest. In the 
following example it is assumed the machine was bought on July 



yino 



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iwoli 



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(,•■ 



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ol lo •olioftiq 9c 



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oilol 



378 

L5th, leaving 81 "Jays, including three days grace, before 
maturity. For this period, the interest charge is $2.2*+. 

Analysis of Addit ional Cost to Partner f or M achi ne Bo ught 

on Credit in 191^ 
(Regina basis) 

8 foot 22 X 38 

Binder Thresher 

Cash Price $281.00 1^1,109.00 

Price — ^ on delivery, balance 

October 1st $289.00 $1,1^9.00 

Difference cash and credit price I 8.00 l+O.OO 

Balance due $^^^.50 57^.50 

— - "• » 

Date of Purchase July 15 Aug. 1 

Day^ to due date 8I 6'+ 

Rate of Interest 7% 7% 

Aiiount of Interest $ 2.2lt $ 7.05 

Total Credit Charges $ 10, 2^- $ "+7.05 

Per annum Rate 31.95^ h6,7% 



The buyer in this case pays a total of ^10. 2*+ 
for the privilege of deferring the payment of $ll+'+.50 for 
81 days. Calculated on a per annum basis this means that 
farmers buying binders on time were paying about "^2% of the 
amount of their unpaid balances in return for credit. The 
binder is not an exceptional implement in this respect, 
since comparable data for other implements show many rates 
higher still. A farmer buying a Massey-Harrls thresher on 
August 1st, as shown above, paid in terms of credit charges 
h7% of the unpaid balance on a per annum basis. 

This is a heavy credit load for any enterprise 
to bear. It should be said in favour of the committees of the 
mid-thirties that it was their exposure o^ the effect of load- 
ing on interest rates that led ultimately to the discontinuance 



I. 









1 .;,- '-a Xix/; 

**^ re 






lo 9:fBH 



*8rict enewm elritt eJ^eed erunnB leq b no 5«*6loc' .sy«b I8 

ndi Jo >5f jTT -^e^w ??rf-: ■Tr.^,^^r' -•v^vfrr' 

,v' ton 8 

no r si'X'ifiii-^&asfiii b si?i\(;ucf •iftSiifi'T « .Ilicfe ■! 

fir f 7fTT'>.tn<> vrrp. toT PpoT ■t^^AT'^ vvpi->rf o r^ .-.• N-fi^ 



379 

of the practice by the companies in 1938. Ths corapsnies ba-il 
arguer? before the committees that loading was not intended 
as an interest charge but as an inducement for farmers to pay 
cash. Their position was at least partly inconsistent for 
they were arguing at the saiie time that decreased cash prices 
would have had no effect on sales during the depression years 
since farners simply didn't possess cash in those years. In 
any case, most time buyers probably did not realize the 
extent of the credit burden placed on them, and could not 
have avoided it by paying cash if they did, \7hen the compan- 
ies did drop the practice of loading in 193^ farm incomes were 
rising and it Is perhaps a notable point that In that year 
the general price level of implements was raised by aboufc 

To sum up, considerable variation existed 
among the companies in this period in the matter of terms of 
payment. Down payments were far from uniform; though cash 
prices were close together and tended, as we have seen, to 
move in unison, the prices charged on time sales differed 
considerably because of the different amounts of loading 
applied. ks far as the actual costs of credit to the purch- 
aser were concerned, these too differed widely from firm to 
firm, even though nominally the interest rates charged were 
.uniform. 

^ What about the third form that credit compet- 
ition may take -- the willingness of the competitors to 






..r _ -I _ _ ~ 



•«* 



nl .8"! 1 nl rfaao ee©. 

Pff^ osIJfi" or f^ec'ynf 

wcn DJ-ifoa cu ' -J no ut^seu-ii u^-'.'->'ii'u jxruia tsii^ lo Jii'jji^ 

anlXBq \d 3ri 

-5 ^cf b98ls7 BBW Iqcnx "5o i^vsL soil ii 



• ■ ■ — • \ 



"io ai 

ij 

stow fc 

0.1 



380 

questionable risks. This is a highly subject-^. ve factor md It 
Is difficult to gguge its importance in an historical situation. 
It Is particularly difficult to take inter-coTjpany comparisons. 
There is reason to believe, however, that little effort ••;as 
made to distinguish between good and bad risks during the 
credit era of the late twenties. There was a sharp increase 
in the percentage of all-cash to total sales after the depress- 
ion struck in 1930, reflecting a new consciousness of the 
necessity of carefully screening prospective time-buyers. 
The accompanying table illustrates this increase in the case 
of one manufacturer. 

1231 1932 1233 

Total Sales 100^ lOOjK lOOjl 

Tltre Sales 53. 6€ 52.l+,€ »+l.»-f^ 

Cash Sales 1+1.1+^ If 7. 65? 58. 6?? 

Following are the percentages of cash sales to total sales 

for all companies, illustrating the grf^ater prevalence of 

time sales in the West. 

Cash Sales as a Percentage of Total Sales 

A^est^rn ""lanaia East-^rn r:"nada 

1931 35,^ ^^■% 

1933 57% 60Jg 

The conclusions of the 1937 Fam Implement 
Prices Committee suggest that competition had led the indivi- 
dual companies to extend credit far beyond the limits justif- 
ied by the agricultural situation of the time. In this regard, 
the Committee stated that it was 

. . . f orce'i to the conclusion that the companies ordinar- 
ily must profit greatly by the rpturn on credit granted, 
or, in the alternative that If bad debt losses in normal 



,nc is iBoi'icih 



i- t: i;. TJ . «*•;•">■ " > 



He la e 

>fowi;ta noi 



rrei 


^£1 


ir^i 




^4i 


Spiir^ 


eelfie Ifl;tc 




•V 


lo eon9lBV9iq ler 








r. 






fil mifi'9 ^£?I erf;*' ^o enolerilonoo f'!'^ 
•^vl'h'«l «ri+ ^?>J ^pff ! or> +«ir'* :^p '«rii"i1 

E'^v.' ff if^f^i t«»'te:ts «o:f:tiraBioO erf* 



l«0i*ion nl eeeeoi *d9b bad tt *ariJ ©vlJemeJIs sriJ ni ,to 



381 

times exceed the amount collected by way of interest 
and loading, tv^is can only mean that there must have 
been unvarranted credit granted in the past ^ and that 
the cash purchaser and the "good" time purchaser have 
carried a load of cost of credit not fairly to be 
Imposed upon them. 

The Committee concludes, therefore, that there is in 
the implement industry an inclination to believe that 
a large volume of sales on such terras of credit is 
profitable. Both the farmer and the industry will be 
benefitted if credit is ^aore c areful ly scrutinized 
and the saving to the industry resulting therefrom 
passed on to the farmer by way of a price reduction 
and by a reduction in credit costs. (lo) 

One added thought belongs in this discussion 
of the implement industry's willingness tq^ccept qredit 
risks. Censure of the industry for having extended "unwarranted 
credit" in the twenties should probably be tempered with a con- 
sideration o^ what made the credit unwarranted. Does it seem 
possible to select ahead of time any farmer who wants to buy on 
time and who will keep up payments of principal and interest 
on time if a succession of years of drought and low prices 
follow the purcha'^e? This comes close to the heart of the 
industry's credit proliem. The unpredictable fluctuations to 
wVilch farm income is peculiarly susceptible may make decisions 
and commitments which appear warranted one year seem quite 
unwarranted the next. No formal criticism was directed at 
the implement industry for pursuing loose credit policies 
until farmers suddenly found themselves unable to keep up their 
payments. Then the industry was criticized, as has been seen, 
for giving them credit in the first place. 



I8£ 
1 Jo YB*' V 



•' ^ r-,, 

tr- 



io lo niuio>' 3 

au . - • -. ■ , - . 

-noo w beisqiBdJ 9<f X-' : &lw' J f^rf* til 

J iq ^o ed qw q99>I IIlw ox 9ffll:t 

?;^'»*'t:'^ "o.r fhnp ^r'nwoiP* lo ^t"^^ '*'> r!*ofp»*?ocn8 s T' ? "slit no 

- ScO- -tiiL^OJ^q snj >%'OlJoTt 

o* EnoiJBu;toiiIl 9idfi:toib9iqn£j e oiq ;tlb9io e'xi^eJ^&n-f 

-ioJfj».h rc 9lcfi:fa'3':c':.rc Y-rislXxir'?;'-'^ ct ©moon J" vr 

sJijjp IT'' -^X sno bejnfciijjw leeqqs noinw Ejns.TJiiEincD rns 

cfe 59j0 ©rf:f bsctncTiewnu 

^rrf^ee need epri ef. ,bsslol;tlio e«vr X" fT .e;tn©m\Bq 



382 

Not much more, however, can be said in the 
industry's favour on this subject. There is an anomaly in 
the fact that on» the one hand the volume of credit extended 
by the coTnpanles in the late twenties suggested an unbounded 
confidence in agriculture's future, while the terms (loading 
and interest) on which this credit was extended could only 
be justified by the anticipation of heavy bad debt losses 
and collection expenses. The heavy terms must reflect either 
(1) an awareness by the companies of the riskiness of their 
credit policies, in which case a greater degree of caution 
should indeed hr.ve been exercised; or (2) an attempt to 
exploit what was, in the absence of other credit agencies, 
virtually a monopolistic position in the field of short-term 
credit. 

The Aftermath in the Thirties 

The full ramifications of these credit policies 
of the late twenties did not become evident until after the 
depression had begun and the companies found themselves carry- 
ing huge amounts of receivables incurred in the prededing 
years. Taking Massey-Harris as our example once again, in 
1932 the accounts receivable in the company's annual state- 
ment amounted to 216^ of total sales for the year, and in 193** 
they amounted to more than 50% of the total assets of the 
company. Annual write-offs cf bad debts were common in all of 
the companies during the depression, and even during the late 
twenties. An indication of the abnormal extent of these is 



S8t 



■a jlt -ov »rii bneri ©no stii wno ;tf 1 sri;^ 

llnoo 

t bnB 

iHvi - ,.| c;*ji'. uii. 4. - .i OB 

•xi9ri:f "io 8e9nl3l8l:i srf:*^ to esineqinoo 9tii \ci seene s (X) 

fEGionsge iib9io necito "io at f cffolqx© 

i' nolrtleoc ol:' onon e yllBUJ-rtlv 



Sri noier 

-■■•:■ f.:? 

to IJb ni "• bud ta e^'Jo-eitJ' . -oo 

^!>i^pI ri'rsjh nsv? P'np ,po fsp!?ncr»6 9ri;t anHrf' r* o 9ri:t 

1 1 xiT.iionuE aaj lO noij£C>j.::ni -Ui .z^lSnevi 



383 

seen in the writeoff of bad debts by International in 1929, 
amounting to 2h% of its net sales for that year. The signi- 
ficance of the Dercentage is that in the co'^pany's whole 
history prior to 1926 bad debt losses had never exceeded 1% 
of net sales in any year. 

Costs of collection were another burden incident- 
al to credit extension, owing largely to the wide areas that 
had to be covered by collectors in interiaviewing debtors and 
the frequent failure of their efforts at collection. The 
practice of most companies was to send the collector, usually 
a company employee, to interview the debtor after his note 
had matured. Between 1926 and 1936, the Massey-Harris Com- 
pany spent $2,5 millions in collection costs in order to 
collect $23 millions, a little over 10^ ^^^K 

Much of the significance of these credit costs 
lies in their nature as inflexible overhead costs Incapable 
of being reduced when sales and production decreased. The 
cost of credit extended during the middle twenties was counted 
largely In terms of the collection costs and the bad-debt 
write-offs which followed during the years of low sales. It 
might be said that these made their own contribution to the 
price rigidity of Implements noted during the depression; at 
least they added to the pressure exerted by rising unit factory 
costs toward stable or even higher prices. 



sii'. 



£8£ 

liliB 610dCf»5 ^i;XwSi JL fix £1 OU \6 fcSl&VOO SQ' Gi &Brf 

•r ^lol' -^i Jo »iuLtBJ 



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(IT' 



6i;fd-ll B jEfloxiliR' £S<^ ^toelioo 



e^aoo :ribeio eearid- lo eofleoll " 

nl «: i"Ynl SB •itf*r,n lisriJ nl call 

:t«»'|)^ on sir 

.eesi" :* 8;jgoo 



38^- 



II. The Chang ing Pic ture In the Forties 

How the Change s in Dis tribution Affected Cre dit 

The current feeling in the implement industry 
is that a repetition of the extreme credit practices of the 
twenties is highly unlikely. The contention finds support 
in changes which have taken nlace both inside and outside the 

industry pointing toward a more stable set of credit nrsctices, 

oe o -i* 1 
from the point of view of the manufacturer at least. Inside 

the industry the principal change in this direction relates 

to the changed relationship between company and dealer examined 

in the preceding chapter. Outside the industry, the Farm 

Improveiient Loans Act of 19*+*+ is the leading item. 

How has the changed relationship between com- 
pany and dealer since 19^5 affected credit? Prior to 19M-5, 
when it was the practice to ship goods on consignment, the 
companies ordinarily accepted farmers' notes from dealers, 
and with them the responsibility for making collections. The 
dealer merely received the implements from the company, shel- 
tered them, and tried to sell them on the company's behalf. 
The dealer did not, of course, have a completely free hand. 
The practice of International Harvester and Massey-Harris will 
illustrate the type of restriction placed on him. International 
set a time li'nit of 60 days to follow the date of annual settle- 
ment with the dealer, during which time the company 'night 
determine whether the credit ratine of a customer was good, 
and if it so desired, might turn back a note to the dealer and 



♦'St 



©rf :fifO fine eblenl died e ^»3leJ svari cfolrfv. rfo nl 

■I I 
lib B r-rio iBqlonliq sxfJ xtie 

.•tr©;t2 an-tbsel ©ricf 8i ♦'•♦1^1 lo *oA eneoJ rTnemev 
-moo neow:f©cf alfisnol;^ bIst basnerio 9ri;t e/sri woH 

il8noo fio eLo( a c;J soltfOB-iq scli eew ^1 neriw 

!i 'bisbiibI bs^ceooe yllrrBnlMo e 00 

.11 ii no II«e od^ b»tti bne ,mf> 9* 

leJe^ tBnoi^Biiie^fil lo ooi.vOBiq erlT 

no r 11 

D Qri:t sails riDliiw gnliiJE) ^isifcef) arid ric^iw ;ln9m 
Nle«o B lo <s)ni;t8i ilbmio eriit Tcrf:>»i1w e^l^me*e^ 



385 

ask him to secure It or convert It Into cash. During the 
thirties, particularly where more expensive machines were 
involved, the company's branches usually sought to investigate, 
the credit responsibility of farmers even before delivery 
was tnade, so that the number of notes turned back to dealers 
in the manner described above was relatively small. 

The Massey-Harri?! Company followed the practice 
of holding the agent responsible for the portion of his comTn- 
ission covered by the unpaid balance of his sale. Thus if a 
farmer paid half th^ price of a machine and fell down on the 
other half, the dealer would receive only half his commission; 
or, if he had already received the whole commission, he would 
be charged back with half of it. 

Except for such provisions as these, the 
consignment method of shipment enabled dealers to escape 
the responsibility for collections and for losses from bad 
accounts. The resulting lack of responsibility on the part 
of dealers was one of the principal weaknesses of the consign- 
ment method of shipment. In 19^5 the dealer's position changed 
to one of complete acceptance of responsibility for collections 
from farmers. The dealer purchases the implements from the 

company and is then free, in principle at least, to dispose 

(12 1 

of them at whatever price and on wJhatever terms he wishes 

Since its inception, the new distributive 
arrangement has worked fairly well in relieving the companies 
of the responsibility of direct acceptance of farmers' notes. 



encf 



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A 'ii 



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386 

The larger companies, however, have not been oblivious to the 
da^ers of relying too heavily on the new giherne, the memory of 
the depression being still too vivid to permit such shortsight- 
edness. Recognizing that in the event of another crisis the 
financial resources of the dealers would soon prove inadequate, 
the larger cornnanies have all intro'iuced carry-over clauses 
into their dealer-purchase agreements, leaving the way open 
for company acceptance of farmers' notes shoiic'this become 
necessary. 

Whether or not it will become necessary 
depends on future trends in farm income. In Canada, the out- 
right-purchase method of dealer shipment has so far been tested 
only under conditions of a high and rising farm income. In the 
United States, where this method of shipment has been used by 
the major companies since 1921+, it was found necessary in 
certain areas during the depression to revert completely to 
the consignment method -* , an experience which emphasized 
the danger of building a sales structure too rigidly predi- 
cated on the dealer's acceptance of the responsibility for 
credit extension. 

In actual fact, a close reading of the dealer- 
purchase agreements of the leading companies leaves room for 
contending that they would still be legally classifiable as 
consignment agree'^ients. In each case a specific provision 
is inserted for acceptance by the company of farmers' notes as 
a direct credit on the dealer's indebtedness for the machines 
sold ilk). In the Dealer Purchase Agreement of the Cockshutt 



«>voTrr HOC- \ 

9froP9d Elrf:t!^;crfc ZBi<^n •e^pptib'? 1o eoneitrrsoop vnearoo ?o^ 
Xineeen^n c iii" on lo lonvenv.' 

o oj noiL ii;D ^. 'abJiso 

f) 9 ns , ' boril' 100 9Ai 

Ci en iVri ^ -3 n ? '' r- '-•• r e» r .| n .- ,t. a o t x, f ••■i '^ $! -f ''. i ' rt 



loiirt -islssa ©rlct nl ,(♦*!) Mob 



387 

Farm Equipment Company, this clause readls as follows: 

^silr:-> To assist the Dealer In paying for machines under 
this contract, the company agrees to accept good 
and collectable customers' notes taken In settle- 
ment on the resale by the Dealer by such machines, 
as a direct credit on the Dealer's Indebtedness for like 
machines, provided such notes were drawn in accordance 
with the coTnpany's terras and Finance Plan and lien Is 
properly registered and duly assigned to the company. 

The companies stand ready to accept such notes though so far 

there has been little call on them to do so. In consideration 

of such acceptance of farmers' notes, the companies do, of 

course, outline the terms which the dealers may extend in 

these cases. 

Thus it appears that at best the present arrange- 
ment merely shifts the emphasis from the problem of financing 
farmers directly to that of financing the dealers in their 
credit arrangements with farmers. There is little reason why 
this arrangement should not be satisfactory during prosperous 
periods when balances are settled on schedule. It does not, 
however, provide a solition for depressed periods, during which, 
unless financial assistance Is forthcoming to farmers from 
outside so'.irces, the companies will once again have to shoulder 

po L 1 C 

the burden of* credit. 

It was a recoKnition of this which inspired the 
International Harvester "^ompgny In the United States to set 
up In 19^^^ the International Harvpster Credit Corporation. 
Although no counterpart of this corporation has yet been set 
up by the Canadian company, the sten is interesting Insofar as 
it represents the American company's attempt to solve a problem 
perplexing to Canadian and American firms alike. The purnose 



^8£ 






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• i •" * 

nl ^n»*x9 xsf^ 8i©Ie»fe ©rf^ rfslriw emi9;f erf* »nll;}' luoo 

.89860 980ri^ 

:-'+ :+' --'^ e-ieeq^o ... 

sniofififlll "io ffloidoiq 9ri:f woi7 eiEBrfqms »ri:t ed^lirie x-t^i®''' c^nom 
tlsri^t nl 87©Ir rt :^nJ^nnpnl^ 'to iteri^ o* Ttld^osilb siemtel 

; eoiq sniiub yioctoB'^exd-Be sd :ton bluoria ^natrsgnsTis eirii 

,:J 'IrriS«r(f>R no b9i*;t«»R ©TB ?<»'>r«plpcf n«»riw e^olioq 

rtioii EiQtmsl o^ gnlmooridio'J el 9ons;t8leEB ipionsnll eeslni; 

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-l-T 

.nol**To j;tBSvriBFI iBnoli^BnisdriT «»rf:t lu 

T8 o* .^1 



I 



388 

of the Credit Corporation is "to provide financing for whole- 
sale an-^ retail sales in the United States of the products of 

International '^grvester ComDany to supplement V^e> -financing 

'1 1 Bt n ?■ o '"J ^ 
provided by ban'r<;s and other financing agencies". i'he credit 

company is capitalised at $15 millions (representing 150,000 
of an authorized 250,000 coT^raon shares of $100 vbv value) all 
of which stock is owned by the International Harvester Company. 
From the time of Its establishment in March, IQ^-Q, until 
October 31» 19^9, the Credit Corporation handled for the com- 
pany more than $123 millions in notes of dealeis, distributors 
and customers. At October 31» 19^9, it had borrowings out- 
standing of $h7 millions from banks. The operations of the 
Credit Corporation, of course, extend to International's sqles 
of industrial power equipment and trucks as well as farm imple- 
ments. 



The Effect of the Farm ImproveTient Lo ans .Act . 

We now turn to the Farm I prove'^ent Loans Act, 
the raalor gov^rnmontal measure bearing on implement credit 
policies. This Act was assented to on August 15, 19^-^ and 
brought into effect by proclamation on March 1, 19^5. Its 
duration was originally set at three years from the date of 
its coming into effect, but this has regularly been extended 
for three-year periods. The purpose of the Act is "to encou- 
rage the provision of intermediate term and short terra credit 
to farmers for the improvement and devetpnent of farms". 
This takes the form of the governments guaranteeing against 
losses any bank incorporated under the Banking Act, up to 10% 



sat 



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. r .J 1 1 9B 



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10I 1 oi 



389 

of the aggregate principal of its loans made under the Act. 

The Farm Improveraent Loans Act Is the Cana- 
dian government's attempt to remedy the chronic lack of short- 
and intermediate-term credit facilities In Canada's agricultu- 
ral economy. Although primarily intended as a measure of 
assistance to fsrraers, its benefits are felt as well by those 
who sell to farmers and who formerly had to carry the credit 
burden themselves. The Government had long recognized as 
undesirable the farmers' necessary dependence on manufacturers 
and merchants fdf slieh credit. In 1937» the Farm Implement 
Prices Committee reported: 

The companies point out that they extend credit to the 
farmers when no other credit agencies will extend such 
credit to them. Having in mind the terras on which this 
credit is extended, the Committee re grets that som^ 
agency such as our _banks or pth^r loa ning institut ion 
have not evolved a method whereby credit for this 
purpose could be extended to the Canadian farmer on 
a more satisfactory basis . 

The farmer, of all classes in our economic life, can 
least afford this undue burden of cost of credit. If 
this undue use and cost of credit is continued it is 
likely to result in perio-^ic nee'^ of -^ebt adju5;tment 
such as is now being experienced. The losses by the 
implement industry during the recent years of depress- 
ion illustrate the unfavourable result of such a con- 
dition to the farmer and industry alike. (15) 

The War caused the postponement of concrete action until 19^5, 

when FILA came forth as part of the government's "new" fiscal 

policy. 

In the original Act, the general principles 
to be followed were laid down while many or the particulars of 
its operation were left to the discretion of the Minister of 
Finance, to be included in the proclamation bringing the Act 
into effect. 



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390 

r 

In stating general principles, the original Act 

set a unlformratp of interest for all FILA lo-^ns at 5% simple 

interest r>er annum. The maximum duration of loans was set 

at ten years (since reduced to seven), and the maximum aggre- 

gate principal of loans by all banks under the Act at 1250 

millions in any three-year pc^riod. Left to the reconimendation 

of the Minister of Finance, to whom the administration of the 

Act was entrusted, wore the nature of the security to be taken 

for loans, the terms of repayment, the classification of 

various types of loans, the method of Tieasuring banks' losses 

and the steps to be taken in case of default by borrowers. 

Banks were permitted to accept farm mortgages as security 

for loans exceeding $2,000 and having a repayment period of 

more than five years, notwithstanding the provisions of the 

Bank Act. The matter of repossession or disposal of property 

taken as security against FILA loans was left to be worked 

out by the Minister of Finance, 

who may enter into an agreement on such terms and 
con^'itions as he may deem advisable with a bank or 
with any person engaged in the manufacture or dis- 
tribuLlon of agricultural implements, (etc.) ... or 
with both ... to provide for the repossession or 
disposal of any property on which security is taken 
for the repayment of a guara:teed farm improvement 
loan. 

In the Proclamation of 19^5 which brought the 
Act Into effect, loans were divided into seven classes accor- 
ding to purpose, of which agricultural Imple-^ent loans are the 
first. The conditions governing each cla^s of loan differ 
accortwding to the type of purchase which the borrower Intends, 
and are set out in full in the Proclamation. The terras of 



-aTjgp mrfrnfrpfr prfrt- ^nr- .frrovo? o:t ^•enJ:J^nT prinJr'! ptj^sv .-red' :tp 
05 S lit; c.;-: CC £niic-i io iBc^i erjbg 

+ ^T'9J .feoliBq ne©\-f»9'T at f iro 

-rfrt "»o rto ^.'tRT:t■p »TTfmFie nr'-^ irrorfw n:* .--.'- rr. en ^'^ "^ o t ',.-+?,! , :♦ n r, 

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I 



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^8 



391 

repayment in all classes are loft to the discretion of the 

bank making the loan, as they are expected to vary accorciing 

to the borrov;er's prospects and type of income. This, of course, 

Is subject to the Tiaximum duration stipulation, and also to the 

ruling (pertaining to farm implenients only) in the Proclamation, 

that "in the case of a loan for the purchase of a tractor, 

combine, reaper-thresher or thresher, the purchase price of 

which is $1500 or more, the term of the loan is restricted to 

a maximum of three years". In all other cases, the duration 

of loans is left to the discretion of the bank manager. A 

schedule of "maximum terms is suggested, however, as follows: 

Loans not exceeding Maximum term 

$ 200 18 mos. 
I ^00 2 yrs. 

$ 750 3 yrs. 

$1250 h yrs., 6 mos. 

$2000 7 yrs. 

S3OOO 10 yrs. 

The maximum amount of loans to one borrower, that may be out- 
standing at any one time, is $3>0C)0« 

The conditions governing loans for purchases 
of farm implements are set out separately from the other classes. 
Terms of repayment are, with the exception noted above, left 
f*lexible. To ensure a degree of financial responsibility in 
the borrower, loans are restricted to the owners or tenants of 
farms. The greater Incentive toward repayment which follows 
a partial equity in the property is recognized in the stipulat- 
ion that no loan will be made for more than two thirds of the 
cash price of the implements purchased. After a loans is made, 
the borrower is required to deliver to the bank a receipt 



x?e. 



91 



al i. 31 



.■ r vi 
'Jo ■' 

c:t F-'^j'oJ"r1'E<?7 i? ' ' 9ri:t . •to^ to •■' f^t fff>iT(w 

noia 

"Jo nc To 



.800 d , .E7Y 4^ 

"juo 30. YCtr: JEHJ tiev/oiTOC sno OJ eheox :o jauuciB ii:uc:i::£,rj sriT 

ifn/p :tB 

eeeeri-: ol §r 

nl ^yilld ielonanll lo s9na»D s sTaene o'j ' IxelT 

:; ';. ^ ' '" ■ .2 1 

'^f!J^ ?o R^TiT' ed IJ ^w '^roT or rff^it rot 

BO 



392 

evidencing that he has paid the purchase price of the implement, 
A feature of the entire proceeding is its simplicity and the 
absence of "red tape". 

Some flexibility is provide'^ in cases where the 

borrower is in default. In such cases, the bank "nay, with the 

borrower's approval, alter or revise the agreetrent either by 

extending the time allowed for repayment (even though this 

should run beyond the 10-year limit — or the three-year limit 

applying to certain implements), or by changing the time qt 

which periodic payments are to bo made. In clear cases of 

default, the bank may take wtia^'^ever legal action it desires 

ih order to (iollect the debt or realize on its security. In 

order to utilise the government's guarantee against loss, the 

bank must wait until the entire amount of t'^e loan has become 

due, at which time it may submit a claim for loss to the 

*' ^ in 

Minister of Finance, ""his claim shows the unpaid amount of 

the loan, the interest owing and any other charges incurred in 

connection with the debt or the bank's attempts to collect it. 

Such claims are to be approved (or rejected) by the minister 

within sixty days of their submission. All money to finance 

the Act is taken from the Consolidated Revenue Fund. 

Prom its inceritlon until December 31» 1^52, 
331,9^0 loans had been made under the Act by the Chartered 
Banks, to a dollar total of $353»6l+0,O0O. Of these by far 
the greatest number has been for the purchase of farm imple- 
ments. Tn 1952, for example, 92^ of total FILA loans were 
for implement purchases. The total annual figures since 19^5 



see 



Iw ,Y8f Mnsd 9£i . i ab at al iswoiiod 

ni/an/ Xr^s ^e gnlwo JEsisitnl art* ,near 

. ;J ■ Lcr o"* ?»t<7'n'»*-*g pMfgff -^rf* to Jfff»^ «(rf* rfJlw noi:to9nnoo 

T o:f \ .noieeJtmdoE ^ to exBn x^^^cie niriilw 

'loenc 



393 

are shown below, wit- the totals for farm irapleraents sho\»'n 

in parenthesis. 

Number of 
Year Loana Made Amount of Loans Made 

19h5 W,31l l3,38l,7»+2 

191+6 13, "'30 $9,880,565 

19h7 22,0»+6 (17,779) Sl8, 160,821 ($15,211,231) 

19»+8 30,1+31 (26,711) ^29,331,130 ($26,759,107) 

19if9 ^^,775 (39,197) !!^'+5,879,080 (S»+l,717,919) 

1951 75,063 (67,605) ..ii85, 326,227 ($78,302,385) 

1952 83,315 (75,3^7) 198,259,152 ($90,818,129) OU 

Default so far has been rare. As of Decerrber 3I, 1952, only 
80 claims had been paii to banks, in a total amount of 
$38,38»+. 

Canada's commercial banking system has been 
found readily adaptable to the operations of FILA. It placed 
at the government's disposal not only a sound, exnerienced 
credit "lachine, but also a far-flung system of branches capable 
of bringing credit to farmers in every part of the country 
without delay and at uniform rates. Freed from the necessity 
of going Into the credit business itself, the government has 
nevertheless been able to keep in close touch with the admini- 
stration of the Act through its o'dinary relations with the 
commercial banks. As has been seen, the successful ojjeration 
of the Act c=jll3 for a considerable amount of flexibility in 
its application, and much therefore has been left to the disc- 
retion of the individual bank T.anagers. The cooperation and 
understanding which have characterised the relation between the 
banks and the government have thus been essential to the smooth 
operation of the Act. Conversations with bank managers suggest 
that most often the banks are more scrupulous about making 






U ^ i;. C. 



q nl 


1£^ 





UO (v^^i, ^♦'^♦c^) c:it»t<i 



i?pj 



bsonp.: 'Ire for. lE?'0':Tstf» B':tr :.'b 

ST mn? trrrr '^^ +uori:t'iw 

erfJ rl;flw rlouoJ seolo nl qseii o;f Bids need eeelsrlJTsvsn 

r; o J. J f 00 

nJ o jntr<MB» eiciETf b io'i eiieo :foA Bd;i lo 

^ '^To' a jnolitfiS-Mrcs 8i"l 

nfJJ 

Bin nac: nJj.'.' eiioa J Euevjio.- .j-jii uiij i'j i:<j i j t^ isf^O 



39»+ 

guaranteed FILA loans than about lending their own funds, the 
reason being, of co-irse, that FILA loans come clce to being 
"the bankers' dream". They involve no risk, and the banks are 
consequently lo'jthe to do anything which might cause the govern- 
ment concern over FILA. 

The ultimate success of t^eFarm Iraproyewent 
Loans Act has depended, and will continue. to depend, on the 
degree to which farmers accept its principles, and on the 
soundness of its administration. There is every indication 
that farmers are accepting the Act and using it to an increas- 
ing degree, particularly for the purchase of farm implements. 
In 19^+9, 36^ of all tractors purchased in Canada and '+35? of 
all combines were financed by FILA. The figures are shown 
below. 

Tractors Harvester Combines 

Total number sold 60,270 11,362 
Number financed 

by FILA 21,567 ^+,882 

Percent FILA ^6% k^% 

It is apparent too that the Act is used to a much greater 
extent in the West than in the East. Below is shown tlie 
sale of FILA-financed tractors as a percentage of total 
tractor sales by provinces for 19'+9. 

FILA tractor sales as a percentage of total tract or sales 

(by Provinces) 
19»+9 
B.C. Alb. Sask. Man. Ont. Que. N.S. N.B. PEL 

335K 52% h9% h5% 15% 185? 105? 11% 305? 

(17) 



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-ni©vo3 Sffd^ aeuso xne c noo 



orfit |->C; ^Hf^ < ?'f ' Bit '• 

t jniBl lo ©eerioiijq srf* lolt X-Iieli/oJ'^iBq ,9eis©b snl 

, woi ed 

■■(■'- ■■ ■ ■ 

T^*.='-'?i^ rfrixftr: c rt beau »! :tr'' ••^rfj- 1'.F;rf:t '^o:t :trtrT.rfrr_n r* ^■T 
onj rjuc.'ie ■ :!j ni :;sfi3 jcow iiiiij ni jnojxa 

T s ee . i& ft© ^0 sIbb 

o*^ eennivoTT vcf •loitoet.'t 

. ■ , ._... ^a 

*''r >Rj ' >"+i >£> J^cc 



395 

^^ So far the FITjA has been tested only under 

prosperous contritions, and the worst nf the evils which Itx 
Was designed to remedy have not yet appeared. Cases of default, 
as we have seen, have been relatively few. A potentially 
serious problem has arisen, however, in the matter of reposs- 
essions, and to date no satisfactory solution has been worked 

r 
out. Repossessions have always been a difficult probtem for 

the Implement manufacturers. Despite the losses sustained 

during the depression, the comrianles did very little reposs- 

essing. The Price Spreads Commission of 1935 reported: 

Debt adjustment legislation, the difficulty of disposing 
satisfactorily of second-hand machines, and the desirabil- 
ity of Talntalnlng a reputation for fair dealing, have 
been niajor contributing factors In the policy of repos- 
sessing machines only Infrequently. Legal action, as a 
gen<?rai rule, has only been resorted to when the amount 
Involved is substantial and when evidence of bad faith 
has been present. 

The Farm Improvement Loans Act itself did not 
specify how this problem was to be settled, nor did the Pro- 
clamation of 19^5 offer any concrete solution. The banks have 
made It known that they do not wish to go into the retailing 
of used Implements and have asked the government for some 
definite solution. So far no method has been worked out 
although several three-way meetlng-n have taken place. The 
present hope o^ the government, according to a letter from 
D.M. HcRae, supervisor of FILA, is "that some arrangement 
may be ultimately made either with the companies or the dealers" 
to handle thn selling of repossessed Implements. Resale Is the 
only real problem. The Loans '\ct overrides any provincial 
legislation which might interfere with repossession, and the 



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:r sriT 

9l' 

i ciilM ©tf»" inf noJ 



396 

question of good will fades out because the decisions to 
repossess are no longer in the hands of the companies. 

It will be recalled that the method of dis- 
tribution Was modified by the companies shortly after the 
Farm Improvement Loans Act was pa'^sed. The companies insist 
that there was no causal connection between the two and, indeed, 
there is very little reason to believe otherwise. In a letter 
to the author, C.W. Lockard, until recently president of the 
International Harvester Company of Canada, states: 

The passage of the Farm Improvement Loans Act had no 
f bearing on our decision to modify our method of dis- 
tribution. A'e had Dlannsd to go to a sales contract 
rather than a consignment contract previous to the 
passage of the Act. 

We saw earlier that the main effect of the 
changeover in distribution was t^ shift the industry's credit 
problem from one of financing the farmers directly to one of 
financing the dealers. The Canadian banks do not as yet have 
any definite nolicy ^or assisting the companies in their dealer 
financing. They are still prohibited from discounting farmers' 
notes and from accepting implements purchased by dealers as 
secarity for loans to them, "^hey do '; ake a practice of lending 
to dealers on th- security of collateral notes, usually on the 
basis of flOO for every $125 in notes, and such loans are often 
used by dealers to take advantage of the cash discounts offered 
by the coTipanies. They can hardly be regarded, however, as 
an approach to a workable solution of the problem of dealer 
financing. Nor does th':* Farm Improve-nent Loans Act, except 
insofar as it increases the number of cash sales made by the 



^ lo aclit»up 



, b?9^'^t ,^n© ' ftol:f'>«?r'nor> I'^pfpr) or bpw 9T«»rf"t "tprf^f 



-)0 •jis'^piavt ■ 



■Jo :t!Df?'^'*o ntpt^ '^^^ 

^o ©no oi \I&z)9iib 8 o «no moil raeldoiq 

: i t «i i.'' •> J, J I." 1 li J , . ■ ii 

i\t no 



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riir-i lI i'n©ift©vo i ii'. I .^ji I on en 11 



397 

dealer, aid In the solution of t'nls problem, which Is left in 
the lap of the ccnpanles. 

Conclusions from Chapter Ten 

From the material presented in Chapter Ten 
the following principal conclusions emerge. 

1) Terms of credit, like *-,he -nethod of distrib- 
ution, have been important focal points for non-price competi- 
tion in the farm Implement industry. Cotnnetition in cre^^it 
extension reached its peak during the decade of the twenties 
when very little uniformity characterised ""--^ •i own- payments 
required, the terms offered or the willingness to accept credit 
risks by the various implement companies. An attempt to 
achieve a measure of uniformity in these activities by the 
industry in 1923 was forgotten when the market became more 
buoyant in the middle and later twenties. 

2) As in distribution, some modification of 
cbittpetition in credit terms has taken place in recent years. - 
This has come about through the action of the industry in 
changing to a purchase agreement with f^ealers, and throuph the 
aetibn of the povernroent in assisting the banks in financing 
farming operations. The industry's action does not appear to 
hold nny promi-^se that the credit problems o^ imnlement retailing 
will be lessened in future, a fact recognized by the companies. 
The operation of the Farm Improvement Loans Act, however, 

has very gre^tiy assisted the companies by relieving them of 






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398 

much of the loai of crodlt that they forrnerly carried. 
Although It cannot ne attributed to FILA alone, the substan- 
tial decrease in the iTirortance of receivables to the companies 
in recent years has resulted in some Pleasure from that Act. 
The Cockshutt Farm Equipment Company, for example, whose 
receivables (less reserve for doubtful debts) had ranged 
betveen 5^^ and 60% of the company's total sales between 1*^25 
and 1929 (9^.7% in 1925) saw this figure decline to l'+.9$^ in 
1951 an'^ 17.^% in 1952. 

3) A question which arises concerning non-price 
competition in the implement industry is why, in the years 
when price action was virtually uniform throughout the indus- 
try, competition in distribution and credit was so active. 
At least part of the answer is found in the nature of the 
market for implements. It was seen in the discussions of both 
distribution and credit that competition in these activities 
did not result primarily from any urge to compete within the 
industry but from the geographical character of the market 
and from the scarcity of other sources of credit for agricul- 
ture. The long history of development of the industry and the 
various phases of it which made for quasi-agreement in pricing 
matters, might have had similar effe'^ts on non-price compe- 
tition had the character of the market not fostered competition 
in distribution and credit extension. Quasi-agreements, 
however, are typically slower to appear in non-price than in 
price competition. As W.J. Fellner has pointed out. 

Price is the foremost variable to be regulated by 
quasi-agrepments because there is no special skill 
involved in undercutting. (1!?) 



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399 

The experience of the impleraent industry 
during the depression, when the expenses incidental to 
excessive distributive capacity, ba-i debts and collections 
became a heavier burden than ever before, may have prepared 
the way for the inclusion of distribution and credit, along 
with price, in quasi-agreements within the Industry. In a 
sense, the change in distribution in 19^5 might be interpreted 
as a step in this direction. 



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1) byrus H. McCor-^ick, "The Century of the Reaner'S N.Y., 1931, 
p. 17. 

2) W.T. Hutchinson, "Cyrus Hall McCormick" N.Y. , 1930» P.58. 
Hutchinson's ^lonuraent 1 two volume blo^rgnhy of McCormich 
was the source of ^nuch of the material in this chapter, 
particularly in the matter of patent disputes in the 
latter p-^rt of the chanter. 

3) ibi(T. 

h) A.E. Byt^rley, D.O., "pion'^ers and Pioneer Dyvs of Fergus", 
in Papt^rs of thP Ontario Historica l ooclety Vol, 30, n,li+3, 
"When Adam Ferpusson came to Canada (in I033) he had with 
his f'='7ii]y a tutor by the name of Patr ck Bell. This 
younp man, who came to be known as Dr. Bell, hbd studi-^d 
for the ministry and at times he preached in the village 
of Fergus before an est'abllshed minister ^rrivod ... He 
is recalled as an excellent preacher ...Dr. Bell spent 
the gre-^.ter p^rt of three years in Fergus, returning to 
Scotland in I837, where -^e became minister pt Carmylie, 
dyinr in 1869". 
In Bell's parish church at Carmylie are memorial 'indows 
in honour of his Invention of the r aper; Hutchinson, op. 
clt, I n. 68. 

5) Papers of tho Ontario Historical Society, ibid. 

"Credit may be given by misinformed people, or by those 
^blinded by their own ignorance, to Cyrus H. McCormick 
as the inventor o^ the first reaper, but his machine 
did not aripear until ?fter the 3ell machine had been In 
operation for several years and had been writtf=>n up in 
Scottish journals which, no doubt, had reached America". 
McCormick himself stated that he had nver heard or read 
of the Bell machine before 18^3, twelve years aft'^^r he 
had produced his first reaper. In his sunport, It should 
be stated that the differences In the design of the two k 
machines does not suggest that one was copied from the 
other. Bell's was a head-p-type machine which was pushed, 
r tb'?r than pull'?d, by the horses, '-ind there were signifi- 
cant diff-^renccs in the structure of the knife, the reel 
and the 1-tform of the two machln s. P'-rh-ps most 'e- 
vast^tinc to the clai-^iS that the Bell machine was the 
prototype of the McCormick is the fact that in 1853 Bell 
personally requested permission from the McCormick repre- 
sentatives In Scotland to use the McCormick /^rnife on his 
machines In return for a royalty payment, ^uch permission 
was granted and In 185^ the Bell machine app arf=?d so 
ejulpped. 

See "Scientific American" Nov. I3, 1852, p. 70, 
A cut and description of the Bell -nachine may be found In 



^XJL 



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:t to 



Footnotes to Chariter One 

"Official R'-trospective Exhibition of the Development of 
Hprvpsting Machinery for the Paris Exhibition of 1900", 
published by the Peering Harvester Company In 1900. 

6) Hutchinson, on, cit. I, r^.65. 

7) Lett'^r from C.H. McCor'nlck to the Mechanics' Magazine in 
May, I83U. 

In 1852, ccnmentlng on the McCorTiick-Hu-^sey patent dispute, 
Edmtind Burke, Commissioner of Patents, stated: "At that 
time (i.e. the l830's) the Patent Office made no examination 
upon the points of originality and priority of invention , 
but grnnted all patents applied for as a matter of course: 
quoted in George lies, "Leading American Inventors", 
Toronto, 1912, p. 295. 

8) See C.H. McCormlck, op. clt., p. 2>+. 

The mechanical differences between the reaper and the mower 
reflect the differences between the problem of cutting ripe 
f!:rnin and that of cutting grasses, Where-ns grain stalks 
ready for cutting are usually upright and brittle, grasses 
are more often tangle'i, damt) and matted. For reasons of 
economy, grasses must generally be cut clone to the ground 
whereas the length of the grain stu ble le^t may be 
altered somewhat without material difference. Thus the 
problem of coping with obstructions on the gromd is much 
more important in the construction of a mower. Another 
difference is in the manner of delivery aftfflr cutting. 
Most of the early reapers were designed to deliver the 
grain to the side of the machine opposite tho horse so 
that it vould not be trampled by the horses wh*n doing 
the next row. This, of course, was not a problem where 
grass-cutting was concerned. 

For these t reasons, mowers have always been more rup-gedly 
constructed than grain-cutting machines. Even in the 
early mowers, it was soon found desirable to construct the 
entire frame of iron cast in one piece, "^hoes were provided 
for either end of the cutter ^ar to rai=?e it upon meeting 
uneven patches In the ground. These and other differences 
made mowers quite distinct from reapers. Many attempts 
were made in the mid-century to produce a co-^bined nower 
and rear^er. Mast such machines required considerable 
adjustment in being chTnged from one use to the other, but 
they achieved a surprising popularity with farmers during 
the mid 19^entury. 

$) Quoted In Hutchinson, op. cit, I, p. 172-3. 

10) For detailed accounts of this rivalry, see: 

Casson, H.N. "The Romance of the Reaper", N.Y. , 1908. 
Greeno, ^.L. "Obed Hussey: A true Record of his Greatest 

Invention, the Re-^per" Rochester, N.Y. , 1912. 
McCormlck, C.H. op. cit. , , , 

Parsons, J.R. , Mill-r, L. , and Steward, J.F., "Overlooked 

Passafcies in Reaper History", '^hlcago, 1897. 
Swift, R.W. "Who Invented the Reaper?" 1897. 



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Footnotes to Chanter One 

11) During the ten years In which the McCormick and Hussey 
cases -'ere before Con ress, they became somewh'^t of a 
cause celebre . For a '"et-^iled discussion of the issues, 
see Hutchinson c". cit. I, Chapter XII, 

12) C.W. Wright, "Economic History of the United States" 
N.Y. , 19^1, p. 320. 

13) See Chqpter II, p.4?ff 

See also H.U. Faulkner "American Economic History", 
-^ > «.Y. 19^2, p. 2ll+. 

Ih) (Quoted in ibid., p. 219. 

15) Hutchinson, op. cit. I, p. 3^5- 

16) ibid. Chan. Xll, passim 

17) McCormick, or., cit., pp. 27 ff. 

18) Casson, op. cit. p. 119. 

This syndicate appears to have bean either the Buckeye 
or the Cayuga Chief group of mower producers. See p. 2),l»elow, 
mC;.' cit. 

19) Hutchinson, op. cit, I , p. 297* 

20) McCormick, p. 3*+. 

21) Hutchinson, op. cit. I, p l+lOn. 

22) See below, p. 18. 

23) See below, p. 75» 

2h) Hutchinson, op. cit. I, p. 3^2. 

25) U.S. Federal Tra'le Commisston t "Report on the Agricultural 
Implements Industry", 193i^» P- I23. 

26) Concerning the assignment of patents within the implement 

industry in recent ye^rs, see the Federal Trade Commiss- 
ion ReT3ort on the Industry producing Agricultural Implements 
for 19*+8, p. 106. 

27) Hutchinson, o'^. cit. TT, c. 369n. 

28) See boloT»»,p.'+^ 

29) Hutchinson, op. cit. II, p. 371ff. 

30) See below, p.>+W 

3U Hutchinson, op. cit. II, ?• 627ff. 
32) Hutchinson, op. cit. II, p. 392ff. 



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33) Ibid. 

3^*) Johnston had been a member of a partnership known as 
Johnston, Huntley and Company in Syracuse from 1868 to 
1871, producing '5elf-rake reapers. In I87I, Fitch, 
Barrie and Company of Brockport was purchased by the 
Johnston partnprshlp. 

35) Hutchinson, op. clt. II, p. ^O^+n. 

36) Ibid. n. 528. 

37) Paster was at this time organising his own selling firm 
in Chicago. 

See Casson, o^, cit. p. 70. 

38) R.L. Ardrey, "The Harvesting Machinery Industry" in 
^, Sc ientific American Supp. , Dec. 20, 1902. 

S^.W, Mo.rsh t>^en became editor of the Farm Implement News 
in ^hi cago. 

39) Ibid. 

ho) Quoted In Hutchinson, op. cit. II, p. 531» Emohasis supplied 

^1) Hutchinson, Op. clt, II, p. 535n. 

McCorralck sent soae of his men to the home town of the 
Marsh Brothers to look into the cir!:^um.stances of their 
original invention. Later, he wrote to a friend, '*I 
think Marsh will be glad to compromise and save his 
patents. We believe we have the name of the p^rty who 
invented the Ma^sh machine, as patented in 1858". 

Illustrative of the comr^lerity of the patent litigation 
of this period is the following: the Marsh pool was 
suing the Elward Harvester manufacturers, who were using 
the Mann patents, and Elward in turn was suing the pool. 
Mann hi rself and the Marsh pool were both suing the 
McCormlcks. See Hutchinson, op. ±cit. II, p. 532b. 

^+2) R.L. Ardrey, loc. cit. 

^3) ibid. 

hh) Hutchinson, op. cit. II, p. 539. The first patent for 
an automatic binding mechanism was gratted in 185*^: 
R.L. Ardrey, loc. clt. 

1+5) R.L, Ardrey, loc. cit. 

h6) Scientifio American. June 5, 19l5» P. 51^. 

1+7) Hutchinson, op. clt. II, p. 559n. The Thompson firm 
went bankrupt In 188^-, at which time it sold all Its 
t)atents and Its Interest In the pool to McCormicki 
Ibid, p, 567. 



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Footnote s to Chapter One 

h8) M.L. Gorhp.m xhad died in I876, Ibid., p. 561. 

^•9) Cyrus H. McCormick, the inventor, had died in 1881. 

50) Quoted in Hutchinson, op, clt. II, p. 5*^8. 

51) C.W. Wright, op. cit., p. 6h6. 

52) ibid. 

53) Ur^it ed Sta"^e5 C'^ns us of Manu factures , Washington 1900. 

5^) McCormick' s early agency systen is described in Hutch- 
inson, op. cit. II, p. 70h» 

55) Stuoted in "F^rm Machinery Trade Associations", Department 
of Commerce, Bure-^u of C orporations, 191 5 » P» 1^^ 

56) ibid. 

57) ibid. 

58) The notice and isignatures are reprinted in H.N. Casson, 
opi cit., p. 65-6. 



FQ0fN0TE3 ; CHAPTSV, TWO 
(p. '43 to p. 80) 

1) Warder had joined with various partners after 1850, and 
the firm did not becoTie kno'vn as w.irder, Bushn^ll and 
Glessn^r until 1879. In 18 67, this firm had roolod its 
business with another Springfield concern, Whitely, 
Fassler and Kelly, which had been 9Stabli?5hed in 1(356 

by William N. Whitely the inventor. The output of these 
two firms became known as th*^ Ch-apion line of Implements. 
In 1887, Whitely, Fassl-^r and Kelly f-^iled -nd w^s tik'^n 
over by the Warder, Bushnell and Glessner Company, 'hich 
thereattf^r controlled all of the Champion line. 
Report of the Commissioner o f _C or por ations on the Inter - 
national Harvester Company , V/ashington, 1913, ^. *+5^f. 

2) ibid. 

3) ibid. See also Hutchinson op. cit. II, p.55^n. 

•+) Commissioner of Corporations , 1913* 

It appears that the failure of the negotiations which 
took place with Massey-Karris v.'-s at lea~t one factor in 
Harvester's early decision to establish the International 
Harvester Company of Canada in I9O3. Apparently in an 



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effort to gain a competitive ??d"3ntage over McCormick 
in the 18 90s, Deering had acquired a factory site at 
Hamilton, Ontario, taut had not -egun building at the 
tirn9 of the raer er. 

5) Tyned memorandum from Stanley McCormick to George H. 
Perkins r»f the Morgan Company, dated June 27, 1Q02, 
renrinted in The Report of the Commissioner of Cornorations 
1^13. 

"Mr. Deering has urged that the whole trade be t-^ken 
into the combination. Against this it has been 
suggested to htm that if only 90^ were bro\]ght in, 
it would be quite po-^sible to dea 1 with another of 
the minor companies if a ny one made excessive demands . 
That is, no minor company is probably essential to the 
combination, although the five named are 'ndoubtedly 
the most desr'rable" (Emphasis supplied) 

6) Commissioner of Corporations 1913, p. 21. 

In the caso of the Mesabi leases, there is ample suggestion 
that Deering was not so much interested in improving his 
competitive position against McCormick as in turning over 
a rirofit in the forthcoming merg<^r. Sev«:'n months bef re 
the merger, Deering bou?;ht the Mesabi le ses for $675»000, 
At the time of the merger, these were valued at $7,960,0'^'^, 
which, of course, caused much dissatisfaction on the p-^rt 
of the McCormicks. The latter were virtually at Deering' s 
mercy in the matter, however, since "the banking interests 
back of the International Harvester Comnany hnd only a few 
weeks earlier claimed an extravagant v^lue for ore in 
defending the capitalisation of the United States Ste^l 
Corporation in imcort mt litigation then pending, and they 
were therefore in no position to '^eny excessive valuations 
for this Oeering ore". 

7) P-^rticI nating in this plan were McCormick, Deering, W.A. 
Wood, Johnston, A-^riance-Platt, Milwaukee Harvester, the 
Champion firms, flano, and Aultman-Miller. The pro-^oter 
w^s the !5hlteman and Varnes Company which ma^^e reaper- 
knives for most of thf' trade. Before the negotiations 
broke down, the following officers of the proposed company 
had been elected: C.H. MCCormick, ^resident; W.A. Wood, 
Vice-president; William Deering, Chairman and treasurer. 
Commissioner of Corpora tions . on. cit. 1913, p. 57-8. 

8) McCormick, op. cit., p. 112. 

9) ibid., p. lll+. 

10) The Morgan Company recieved ^3 millions for its services 

in bringing about their mert^er. App^^rently as a concession 
to the Sherman Ant i- trust Act, the new company bought, not 

the stock of the constituent companies, but their physical 
assets only. 

McCormick, op. cit., p. 117. 

It was not until the passage of the Clayton Act in 191H- 



Footnotes to Chapter Two 



9tii nt 



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Footnotes to Chapter Tv?o 

th'^it acqul'5itions through ^tock control were specifically 
outlawed in ca<3es where they tender! to lessen competition 
substantially. Aft^^r the Clayton Act, the m-^thod of ob- 
taining control through acqu ring the rhyslcal ts 5r>ts of 
comp'oting companies became much more common. As the 
Federal Tr-de Commission remarked 36 years after the 
Hqrvnster amqlg^Tatlon: 
"Most of the high derree of concentr<?tion which is found 
in the fgrm m??chlnery industry has been the result of 
the acquisition of the capital stock or the a."3SP*;s of 
competitors prior to the enactment of the Cl-^yton Act 
and there-^ft^r in the purchase of assets of the coranet- 
Iters rTth*»r than in the 'ourchase of their ca^^it-l 
stock". 

Federal Trade Commission Benort on the Farm Implement 
Industry, IP38, n. IO38. 
This led the same Commission to recomrrjend: 
"That Section 7 of the Clayton Act e amended so as to 
makr^ it unlawful for any corporation ... to acquire any 
of the stock or assets of a conipeting corporation when 
either ... is in interstate commf?rce (except) where the 
corporations involved control, in the aggregate, less 
that 10 percent of the total output." 
Ibid. 
In the absence of such an amendment, mergers through 
purchase of assets have continued even in recent years: 



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^•^^c••^f'' *^n«;to c-'iei. T r\"! "1 nr,'- '•^ ' 



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■•» 







"The acquisitions vihereby bir r - -rae bigeep aad thesir 

iiKtcpr.T'ent coiRp:titor3 fr\7:r x l_ Jag ea (thou??h at a 

slewf'r rate than In the pa^t)j as is evideacod by the acquisition 
of the Clerelao? lYactrr CoiiEiaiyr by niiv; p Fans • quipsent CoEpany 
aa late as 19^4* ^h n a'^qulaitions of stock control of a eoEspetitor 
nli?ht be questioned under existing lawj outright purchase of ^nts 
and business assets has been su'^otituted for acquisition by stock 
'ontrd." Hearings bsfare Sub'^^oinmittee Tle» 2 of the CoaBEJtt e oj;i 
tha Tudi iary * IIous'- of H rr . s ntatives , Washingtoa, 1947 • 

11) Warren and Poarsofa, "Frizes" ^J.Y,, 1933» pp. 2^-5| 

12) r.H. J'^Corrdnk, op. clt., p. IIS. 
^ongisaion^^r of "'orr»oratioHS « 19^ 3» p. 9. 
C.H. r-rorwi-k, op. rit., p. 120. 
C.W. '¥ifht, op. <*it,, p. 646. 
CH. Hr'Coral'-k, op. "it, p, IO6, 

" ^- "■•ation on this and the next f w pages prinipally frf>r> the 
aal_Traf'o C oBBilsai rn "-oTt on the Industry, 1935, jp. 115ff . 

1«5) TroH the of th - o f Oorporati o ns on the in4ua try» 1913. 

"irki-y- Xioe was dx.-ccr.;.ina-.-c. -y the cor.pai^ in 1S05. 

19) 

2O) C-.W» Stocklrr and U.S. Ifeitkins, ^Monrpoly and Froe rise", Twentieth 

Century F'a?y3, 1951, p. 267. Tor ' - • - - ,r r fining 

rase, 9CC H.L. Purdy t -J, ""c , ^ -. ^t p.30aff. 

A3^' sdtral o- „ -oBpany imtil 1"12, it 

"hr ationed th-:, i. . ; ^ th violatior! of anti-trust 

larra by svpral states, includin »rkana-s (1906), Kansrs, (1906), I issouri 
(1907), Texas (1^07), aori ^ result of these aetlons, th^ 

conpaqy uaa prov nt.d frr . in Arkansas froB 1906 to 1913, 

and in T&-aia from 1907 to 1919. Frosv.cution by state governments, however, 
did not chancre the eonpar^y's poll i a, an indication of the treakaess of 

efforts to 



* 



i 



^,(j? Footnotes to Chapter Two 

rej^ulate national corporations through local enactments. 
For an outline and criticism of ^tate antl-trnst legis- 
lation, see Purdy et al. op. *lt., pv, 2^6ff. 

22) Commissi oner of Corp o rations 1913 r>. 66. 

23) ibid., T). 11. 
2k) ibid., V. 20. 

25) ibid., Tj. 2^.. 

26) "As suggested in the Standard Oil and American Tobacco 

decisions, Intent (regarding the reasonablen^'ss of 
r-^straints of tr^de resulting fro-n mergers) w?3 to be 
inferred from the history of the combination, methods 
used to obtain control, the extent of market control, 
and the manner in which control, the extent of m-Tket 
control, an"! the manner in v;hich control was exercised 
3 and maintained against outside competitors" 
Purdy et al, op. cit., v, 33'^» 

27) Federal Trqde Commission 1=^38, p. 155. 

28) ibid., p. 156. 

Two months later the company succeedf^d in having the 
order amended to read: that the comp-^ny "be divided in 
such manner and into such number of parts of sep-^rate and 
distinct ownership as may be necessary to restore com- 
petitive conditions an^ bring about a nfw situation in 
harmony with l^^w" . 

29) C.H. MKCormick, ot>. r<lt., p.l87. 

30) ibid. 

31) Since 1923, all International Harvester farm equipment 
has been marketed under the trade name McCo rmick-Peering ^ 
although other trade names are to be soen on other of the 
comD^ny's products. Its genera l-r»ur pose f?rm tractors, 
for example, bear the name Farraall, while its Industrial 
wheel tr-Tctors, power units and motor trucks all bear the 
name International. The company's heavy, crawler-type 
industrial tractors are trade-named international 
TracTracTors . 

32) The consent decree is reproduced In full in the Federal 
Tra^e Commission Report of 1938, p. 157. 

33) C.H. McCormick, op cit. pp. 185-6. 
3>+) pp. 61-2. 

35) See the Reoort of th° Federal Trade Commission on the 

Causes of the High Prices of Farm Imniomp-nts . Washington, 
1920. 



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.36) Fe(geral Tr ade Commlsgion , Report on the Agricultunl 

Implonient Industry, V^ashington, 1^38, t). I6I. 

37) ibid., p. 162. 

38) This statement is Tjractically a repetition of a stntement 
contained in the Surreme Court's dec' sion rptifyinp; the -^x- 
iitonce of the United states Steel Comoration seven years 
eT^rlier. In the Cteel case, the Court had naid: 

"The CorpoTf^tion is ^undoubtedly of imiDressivp size and 
it takes an effort of resolvition not to be affected by 
it or to exat'gerate its influence. But we must adhere 
to the law and the liw doos not make mere size an offense 
or the existence of unexprted riower an offonse ... It 
does not compel competition nor require all that is 
possible". 

See Purdy et al. ^^r-. cit., ^.33^.. 

39) ibid., p. 3I+7. 

kO) G.W. Stocking and M.W. Watkins, op. clt., p. 277. 

Wl) Commissioner of Corporations 1913, p. 52, 

'+2) ibid. 

^3) ibid., p. 50. 

^U-) For the -nost complete account avallablp on the subject of 
Deere' s work at Grand Detour, see Neil M. Clark, "John 
Deere: He G^ve to the World the Steel Plow" (privately 

7, printed) Moline, 111. 1937. 

%5) Fed eral Trade Commit ^lon 1938, p. 118. 

1+6) ibid., p. 119. 

h7) Most factual data in the rer.aln'^er of the chapter If fi»om 
Federal Trade Commission reports of 1920, 1938 ^nd 19M-8. 



FOOTNOTES ; CHAPTER THREE 
( p. 81 to p. lllf) 



1) Credit for the introduction of the word to the industry 
was cl^^iiued by the Hart- Parr Company which came into 
being in 1901. See v. 85 below. 



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Footnote o to Chapt^'r Three 

2) "The Farm Engineer; A treatise on the application of 
steam and other motive powers to the thrashing machine" 
BlTckie and Son, Glasgow, 19^+9, 

"There is no place which can be pointed out either in 
Britain or on the Continent, at le-st so far as the 
author has observed, where more attention has been paid 
to the a' Plication of the resources of skill and 
mechanical contrivances to husbandry, than in the 
agricultural districts of Scotland. There the steam 
engine has been fully appreciated and extensively 
adopted as a motive power, and incorporated with the 
structure of the farmstead, and the result indicates the 
extended uses which may yet be made of it. This powerful 
agent may ultimately effect as great a change in agricul- 
ture as it has already done In contributing to the com- 
forts of manfind". 

3) "Land of Plenty", pamphlet from the Farm Equipment In- 
stitute, Chicage, 195'^» P. ^+8. 

k) Quoted by Harry G. Davis, Farm Equipment Institute, in an 
a'^dress Vie fore the Society of Automotive Engineers, 
Detroit, 1937. 

55) U.S.D.A. Bulletin . "Tractor Plowing", 1910, p. 10. 

6) ibid., p. 8. 

It is interesting to note in passing that steam tractors 
were sold on the Canadian prairies as late as 1920, when 
89 were sold for farm use. Agrlnotor . 15 May 1921 

7) Harry G. Davis, loc. cit. 

8) "The Tractor Industry and its Part in Power Farming" 
Harry ^isk and Sons, N.Y, 1929. 

9) Federal Trade Commission . 1938, p. 111. 

L<)) C.H. McCorm'ck, op. cit., pp. I57ff. 

•'^t should be remarked that the Avery Company mentioned 
here is not the B.F. Avery Company shown on the chart. 
The Avery Company mentioned here specialised in tractor 
production in Peoria, 111., since the iSy'^'s. Along with 
its tractors, it uroduced ^ line of industrial equipment as 
well as certain types of farm equipment. It nev^r did 
reach the status of a full line compnay. It annears to 
have been this company's tractors which are often recalled 
by old-timers as having been in common use for gang-plow- 
ing throughout Western Canada in the early years of this 
century. 

11) Sample advertisements appearing in Agrimotor ; 

"To avoid confusion, the J.I. Case Threshing Machine 
Company desires to have it known that It is not now and 
never has been interested in, or in any way connected 
or affiliated with, the J.I. Case Plow Works ^ompany, 
or the Wallis Tractor Company". 



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Footnotes to Chapter Three 

December Issue, 1920, ' 
"Notice: We want the public to know that the Wallis 
tractor Is m.de by the J.T. Case Plow Works Company 
of RacJne, Wise, and Is NOT the product of any 
other company with "J.I. Case" as r»art of its cor- 
porate name" Januaay issu^, 1921. 

12) Ibid., 15 April 1921. 

13) Actually a company known as the Bull Tr;^ctor Company 
had preceded Ford in the production of light tractors, 
-utting on the market in 1913 i machine weighing only 
3,000 pounds and selling for only $395. The Sull tractor, 
however, was never a mechanically souni product and it 
achieved only brief popularity. In 1920 the company 
dropped from the field. See Agrimotor . 15 December 1920. 

Ik) Because of the obj'^ctions of sotnn of the minority 
sh'ireholders, including the Dodge Brothers, against 
the company's going into tractor production, ^ord 
originally set up a separate corporation for their 
production, named 'ord and Son. From this the name 
Fordson logically derived. Early in the 1920* s, when 
Ford acquired full ownershit), this corporation was 
taken into the ^ord Company proper. 

15) Agrimotor , 15 July 1919, p. 12. 

16) In this connection, it is interesting to note that one 
of thp regular services of the tractor trade- journal 
Agrimotor from 1917 to 1922 was the publication of a 
list of tractors for which no Imnlements were specially 
Droduced, together with the make of implement whi h had 
generally been found most suitable for each. 

17) AKrimotor , 15 April 1921. -^his journal commentpd: "The 
Otwell mower is one of the first mowers ("designed for 
exclusive use with tractor power although at the same 
time it is restricted in use to one design of tractor 
only" . 

18) The implements and companies cited In the latter part of 
this paragraph were advertise^ extensively in the Farm 
Mqchanics' Magazine between 1923 'snd 1925. 

19) Production of the F rguson plow for the Fordson had 
actually been begun in 1923» when the ^^oderlck Lean 
Company of Mansfield, Ohio, began producing it. Farm 
Mechanics M q ^a^ine, May 192 3. 

Most of the material in this section of the chapter was 
obtained through conversations with Mr. George W. Sherman 
of the origiml *erguson-Sherman Corporation. 

20) Taken from an early advertisement of the Ferguson-Sherman 
Corporation. 

Perhaps Ford had more than an average reason to be inter- 
ested in the Ferguson line of draft and the advantage 



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here claimed . In Agrimotor . 15 April, 1921, the following 

appeared: 
"Fordsons having occa3i"inally b-^en kno^vn to turn over 
backward, it is desirable to protect the operator ^nd 
tractor by so!n« sort of device to prevent the machine 
from turning over. This end may be accomplished by 
attaching an extension drawbar which, vhen the tractor 
tlD3 ur), catches on the around and prevents the machine 
from turning co-'ipletely over." 

21) Fordson tractor production in the United States from 1917 
to 1928 was as follows: 

1917 2^h 1923 101898 

1918 3^167 192M. 83010 

1919 56987 1925 10lfl68 

1920 67329 1926 88101 
V- 1921 35338 1927 9397? 

1922 66752 1928 ,8001 

Data supplied by the Sherman Products Corporation of 
Royal Oak, Michigan, presently producing parts and 
Implements for the Ford tractor. 

22) See B.W. Currle, "The Tractor and Its Influence on the 
Agricultural Implement Industry" Phil., 1916, p. l'+3. 

"Of course it is an uneconomic situation and a galling 
one for the f rm Implement group. It has made it more 
difficult to sell farm Implements. Selling costs of 
both manufacturer and dealer have Increased out of 
all proportion to actual sales". 

23) McCormick, p. 195. 

2^-) The N-itional Implement and Vehicle Association wqs formed 
in 1911, succeeding a number of separate and independent 
associations, each representing the manufact'irers of a 
single line of implements, such as plows, drills, wagons, 
threshers, etc. Within the National Implement and Vehicle 
Association, speiclal deoartments were organized to carry 
on activities of special interest to manufacturers of 
partlcul.Tr lines. 

This organisation wts succeeded by the National 
Assoclatl n of Farm Equipment Manufacturers, and later 
bv thn Farm Equipment Institute in 1933* -^he latter 
organisation is the present trade association of the In- 
dustyy. For ? general discussion of Its activities see the 
Imports of the Federal Trade Commission on the implement 
industry for 1938 and 191+8. For a study of earli'^r trade 
•associations in the industry see the Report of the Commiss- 
lon-r of Corporations . U.S. Department of Commerce, en- 
titled "Farm Machinery Trade Associations" Wnshlnpton 1915. 

25) Agrimotor . 15 December 1920. 

26) The 10-20 Indicates ten horse-r^wwer at the dr=>wbar and 20 
at the belt pulley. 

27) McCormick, p. 199. 



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Footnotes to Chapter Three 

International's favourite adv ertislng slogan of thi^se 
years was "^on't Underpower Your'^elf". See Farm Mechanics, 
1921 to 1925, passim. 

28) McCormick, p. 199 

29) See below, pp 98-99. 

30) Circular from Company to dealers, 1925. 

31) McCormick, p. 199. 

32) ibid., p. 158, 

33) See Agrimotor, 1922, passim, 

3»+) pp. 195-6 

A year before Ford began tractor production, one agricult- 
ural observer had predicted, 
"Few automobile manufacturers have any expectation of 
invading the tractor field and shouldering the specialists 
to one side at a Jump. They see that the big farm 
implements manufacturers have great advantages over 
any other special class of competitor, provided they 
WAKE UP ANr- ADOPT MOD "RN BUSINESS -iETHODS in both 
manufacturing an'^ merchandising". 
B.W, Currie, op. cit., p. 1^3* (Emphasis supplied) 

35) See "How Tractors are Made", Farm Mechanics . July 1923, p. 22. 

36) For some years prior to 1928, Allis-Ch-^lmers had had an 
arrangement with the La Crosse Company, whereby its 
tractor dealers handled La Crosse implements. 

Tractor Field Book, published by Farm Implement News . 1929. 

37) Letter from- G.S. Sherman to E.G. Sherman (partners in the 
original Ferguson-Sherman Corporation"), Oct. *+, 1937s 

"The industry in the me??ntime has not been asleep as it 
quickly realized the necessity of unit implements. They 
knew that they could not make unit plows (because of our 
basic patent protection), so the did the next best 
thing and brought out the "A 11- Purpose" cultivating and 
harvesting tools". 

38) One of the first descriptions of the all-purpose tractor 
appeared in Farm Mechanics for A-^ril, 1926, p. '+6-7. I^ 
the same y^ar, the International Harvester (Farmall) 
Tractor works at Rock Island, 111., were completed. By 
1'529, Tn'^'enai-ional, Deere, Case and Oliver were all 
advertising all-pnrpose tractors. F grm Implement News . 
Tractor Field Book for 1929. 

39) Solid rubber tires for tractors had been advertised by 
Goodyear as early as 1929. Aeri-notor . 15 May 1922. In 
1929, an Allis-Chalnr^rs tractor was advertised with 
pneumatic tires. Farm Implement News . Tr-^ctor Fi'-ld Book 
for 1929. 



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^+13 Footnotes to Chapter Three 

hO^ See F..L. Barger et al. , "Tractors and their Power Unlt«s" 
N.Y. , 1952, Chap. 1. 

hi) W.F. MacGregor, "The Combine is 100 Years Old", in Farm 
Mechanics, May, 1925. 

k2) The wirith of the cutter-bar is the most comrnon indicator 
of the size of the combine. 

U3) W.F. MacGregor, loc.cit. 

hK) Agrimotor ^ Jan. 15, 1921, p. ?2. 

»+5) p. 186. 



FOOTNOTES TO CHAPTER FOOR 
rp7~ll^~to p. Ih7) 

1) Canadian Econom ist , Sept. 12, 18M-6; quoted in H.A. Innis 
and R.M. Lower (eds.) "Select Documents in Canadian Economic 
History", II, p. 303. 

2) p. 163. 

3) Innis and Lower, op.cit., p. 2^-3. 

The early displacement of British machines was partly a 
natural result of the similarity of the requirements in 
Am.erican and Canadian agriculture. 

See also ibid., p. 5^+2: William McDougall's report on 
agricultural conditions and methods: "So great is the demand 
for improved machinery that even American manufacturers 
have set up branch esta- lishments in Canada, with very 
profitable results". 

•+) Hutchinson, op. cit., II, p. 6U8-9. 

5) See G.F. Warren and P. A. Pearson, "Prices", N.Y. , 1'533, 

"In ISI+S gold was discovered in California. In iSM-g, 
$6 million was nroduced and in 1850, $33 million; in 
1856 production reached the maximum, $7"^ million. From 
1851 to 1857, com"^odity prices rose 3M-^. This was a 
period of great prosperity in United States. Immigrants 
arrived in increasing numbers. Rurooeans ware eager to 
lend funds to American industries'f and there were large 
foreign borrowings." 
See also Hutchinson, op. cit., II, p. 58. 

"Lumber more than doubled and pigiron and coal almost 
triDled in price between I86I and the summer of 186*+ ... 
In Aygu^t, 1862, the (McCormick) Company paid unskilled 
factory hands SI. 25 a day and stevedores M-0/ an hour. 
Fifteen months later, ordinary labourers received $1.50 
a day, carr'enters $2.00 and moulders doing piece work 



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^+1^ Footnotes to Chapter Four 

were making between $2,75 and 15 a day". 

6) Hutchinson, op. cit., II, p. 59"+. 

7) ibid., p. 6i+7n. 

1 The Canadian Agriculturalist reported In 1856 (p. 168) that 
'sll of the McCorraick machines sold in Upper Canada in that 
year were defective in construction, a factor which may have 
had a bearing on McCorniick's absence from the Canadian 
market in succeeding years. 

8) George Henry, "Seminiscences" , quoted in Innis and Lower, 
ot). cit., II, p. 7i+5ff: 

"A separator wo dd cost about •i5^'^ and a horsepower $300, 
That Would be Ontario prices. Then there was transport- 
ation which would mnke it $150 more .. In December the 
horsepower broke down. There were one or two farmers 
still to get threshed out and they had to wait about six 
weeks before repairs came from Ontario". 

For a chart depicitng 100 years of implement tariff history 
in Canada, see p. l67 below. 

9) Annual Report of the Council of the Toronto Board of Trade, 
quoted in Inls and Lower, op. cit., II, p. 36^. 

10) The Harris Company was founded by Alanson Harris, whose 
fa'fily had migrated into Canada from the 'Jnited States in 
the thirties. Canadian patent records show that a revolving 
horse rake was pat'^nted by ffohn Harris, i^ount Pleasant in 
the Gore district, on 4ugu?t ^, 18^5« John Harris, fath-^r 
of Alanson and an itinerant pr»?aoher, never produced this 
rake for sale. However, it was one of the first pro'iucts 
•^aie by the Harris Company when It began production at 
Beamsville in 1857. 

11) This firm, eventually to become the Sawyer-Massey Company, 
was established at HaT.ilton in I836 as the Turlington Iron 
Works. Shortly after the coinpletion of the Greit Western 
Railway, the firm moved to the foot of Wellington Street 
near the railway and took ur the production of agricultural 
imr^lemonts. Originally owned by one C. Mc-^uesten, in 
partnership with Luther and Payson Cawyf^r, the firm by 1862 
had passed into the hands o'' tht=> Sawyer Croth-^rs. 3y I870, 
its name had been changed to L.D. Sawyer and Company, though 
it was more popularly known as the HaT.ilton Apiricultural 
Works. The City of Hamilton Tiirect ory for I87O states: 

"One of the largest establishBments in Canada, engaged in 
the exclusive manufacture of agricultural implements is 
here carried on by Messrs L.D. Sawyer and Company, on 
Wellin'?;ton Street near the Great .vestern Railvay track, 
known as the Hamilton Agricultural Works ... Thres'Ting 
machines, mowers, reapers, straw-cutters, grain drills. 



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clover mills, self-rake reapers, etc. are manufactured to 

a very large extent-'. 

The firm carrie'i on under the names mentioned until 1891, 

If-when thf^ name was changed to the Sawyer-iMassey Company. 

12) David Maxwell cime to Canada from Scotland around i860. 
In iBoW, he formed a partnership with one Alex Whitelaw 
and set up an iron foundry ^nd machine shop on Willow 
Street In Paris, Ontario, which carried on under the 
names David Maxwell and Company and the Paris Agricultural 
'A'orks. In 1886 the company applied to the town of Paris 
for a loan. This being refused, it succeeded in getting 
the required capital from the town of 3t, Mary's, Ontario, 
and moved th^ business there the same year. The comnany, 
still in existence under the name Maxwell Limited, no 
longer produces agricultural implements. References to 
this firm throughout the chapter are based on corre<5pondence 
with William J. Mills, secretary-treasurer of the company 
from 1883 to 1936, and on "The HisHtory of Brant County", 
w'arner. Beers and Company, Toronto, 1883, p. "+75. 

13) James Noxon, founder of this company, came to Ingersoll in 
the early fifties and worked as a clerk in a hardware store. 
With his brother Samuel, he began pro'^ucing wood-sawing 
machines, reapers and mowers in 1856. The business prosper- 
ed for about two decades but f^ppears to have failed during 
the depression of the middle seventies. 

Ih) William H. Verity migrated to Canada from England in 1857» 
Shortly after arrival he formed a partnership with one Ir. 
Braddison at Francestown, Ontario, for the manufacture of 
plows. In 1870 the business was moved to Exeter, Ontario, 
where it remained util it was acquired by the ilassey/Harris 
Company. 

15) The Canadian Agriculturalist . 1856, p. I68. 

"We Intended in our last number to have called the atten- 
tion of readers in the nieghbourhood of Richmond Hill and 
adjoining townships, to the establlshsent of Paterson and 
Bro., near Richmond Hill Station of the Northern Railroad. 
They are an enterprising firm, and so far as we can learn, 
their machinery has given -r-uch satisfaction to those who 
have used It. They make an improved reaper of the Sey- 
mour and ('organ pattern; and fro"n the testimonials given 
them by a number of farmers, whose names are a sufficient 
guarantee of the truth of their statements, we have no 
hesitation in recommend inf; their reapers to the public. 
It is generally admitted that, as a reaper only, the 
Seymour and Morgan pattern is not excelled by any other p, 
yet introduced into Canada". 
Seymour and itorgan rearers were also produced by Darling 
and Atchison of Thornhill, Onsctario. Ibid. 



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^16 Footnotes to Chapter Four 

As will be seen later, the Patterson Comoany took part in 
the Massey-Harrls merger of 1891. 

16) Jesse 0. Wisner and his son Wareham moved to Brantford from 
New York in 1356. Until 1872, the father and son ran separ- 
ate businesses, Jesse s ecialislng in productioa of fanning 
mills and Wareham in seed drills. After the two joined 
forces in 1872, the corap^^ny continued as J.O. Wisner and 
don until it enetere i the i'assey-Harris Tierger in IS'^I. 

17) The Massey Company began as a partnership formed by ^aniel 
Massey and one R.F. Vaughan, at >ond Head, on the north 
shore of Lake Onatario in 18'+7. In the following year, 
Daniel Vxassey purchased a foundry in Newcastle on the route 
of the proposed Grand Trunk line and moved the burliness to 
Newcastle in l8'+9. By that time, Massey had acquired sole 
ownership of the business. 

18) The Joseph Hall Company at Oshawa was one of the first 
American implement companies to extend its manufacturing 
operations into Canada. In 1858, the Joseph Hall Company 
of Rochester, N.Y. , bought the buildings of the Oshawa 
-Manufacturing Company (an implement factory run by one 

A. 3. Whiting, v;hich had bailed during the depression of the 
mid-fifties) and proceeded to manufadure a variety of heavy 
equipment Including steam engines, pumps, valves, and farm 
machinery. Important in the last category was the "Champion" 
mower, the history of which was discussed in Part I. The 
company appears to have been run on an exceptionally lavish scaIc 
for alnost twenty years; even by today's stan'^ards, the 
company's advertisements in the press of its day appear 
extravagant. t^'aulty management over a number of ye^rs by 
Joseph Hall's son-in-law seems to have been the principal 
reason for the company's complete demise In 1886. 

19) The first patent on an agricultural implement in Canada was 
taken out in 1826 by one Noah Gushing in "Quebec, for a 
threshing machine. Between 1826 and i860 patent records 
contain an abundance of patents on threshing rrachlnes, 
horse rake 5, corn shellers, plows, stump extractors, and 
other relativ -ly simple tools. Only in 1859 lid one Samuel 
Morse of Milton, Canada West, patent an improved reaping 
and mowing machine, but no evidence of the manuf.TCture of 
this machine has been found by the author. One of the first 
distinctly Canadian patents to be manufactured was "The 
Wellington" Mower and Reaper, invented by John Collins of 
Guolph and patented by him in 186'+. "Its chief peculiarity 
consists in an endless bed delivery, by means of which the 
grain after cutting is adroitly shuffled into the form of a 
sheaf ... with the bed set in motion by the -^river's foot". 
The Canada Farmer , July I5i 1869. 



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20) 3ee "Farming in Northumberland County: I833 to 1895" in 
Papers !=> nd _Recgrd^_of_the^_0ntario_Historlc.al_SociGt2, Vol. 
30, p. 1^3. 

21) See Henison, op. cit., p. h?* 

22) The C anadian Agriculturalist, 1856, p. I68. 

23) Such publications Include: 

The Agriculturalist and Cana^'lan Journal, Toronto. 
The :;anadian Agriculturalist, Toronto. 
Farmer's Advocate and Home Magazine, London, 
The Ontario Farmer, Toronto. 
The Farmer's Journal, ''ontreal. 

In conncection with the Introduction of nev? irapleraents 
from the United States at this time, the following is of 
interest from the Papers and Records of the Ontario Histor - 
Inal So-oj.ety . Vol. 30, p. li+5T 
"The f'irst reaping machine brought here (Northumberland 
County) was brought in ... for the harvest of 18^-3; this 
working well, (more) were brought In of the same kind in 
18^-^. These machines were the old "Hussey"; they were 
something like an old low-down cart — the man that put 
off the sheaves also sat or stood on the cart, putting 
off the sheaves with a peculiar-shaped rake with the 
teeth straight out ... 
"In 18^+7, there were several McCormick reaping machines 
brought in — they did not do well as they sp>emed too 
slightly got up. The late Mr. Helm and Son of Cobourg 
began the manufacture of reapers on a plan similar to 
McCormick' s in 18U8, that took first prize at the Provin- 
cial Exhibition held at Cobourg that year. Several 
different reaping machines were soon after introduced. 
After mowing machines were introduced a number of com- 
bined machines Wf^rf? tried and some of these did fairly 
well for both purposes. About i860, self-raking reapers 
began to come into use — there was one or two tried at 
the Provincial latch at Dundas in I86I+, but they were not 
successful. Then the "Marsh i^arvester" was brought out 
in 1868; In clean crops t'ney cut more than the two men 
on the machine could bind. Then the self-binder came in, 
though rather awkward at first they are now driving out 
all other reapers (18^5). ?he first self-binder I saw 
was In the show-year at Rochester, N.Y. in 1868. This 
one bound with wire and seemed to do good work. It was 
several years after that before I saw one at work in the 
harvest field — it then bound with twine." 

2l+) Warren and Pearson, "Prices", p. 28. 

25) O.J. McDlarmid, "Commercial Policy in the Canadian Economy", 
Cambridge, IW, p. 157- 

26) Hutchinson, op. cit., I, p. 235. "The frequent Improvements 



-r 



•<I « 






1+18 



Footnotes to Chanter Four 



(In the reaper) ma'le It necessary to sell the surplus 
machines of one harvest In the following season at 
reduced prices, unless they could be marketed in Canada, 
CallforTiia, or some other territory where rivalry was 
not keen and where reaper literature rarely circulated". 
It is surprising that as late as 185"^, reapers were 
still the exception rather than the rule on Upper Canadian 
farms. See J. Croil, "History of Dundas County", quoted 
in Innis and Lower, op. cit., II, p. 5^+3. "These reapers 
are not essentials, yet those w-io possess them maintain 
they last for ten years and save their prime cost in two". 
Croil reported only ten reapers and 200 threshihg machines 
in use in Dundas County in 1859. 

27) Hutchinson, Op. cit., I. p. ^-30. 



28) See Innis and Lower, op. cit., p. 719. 

"In the report on manufactures of 187^ it was noted that ... 
William Chaplin of St. Catherines sent probably $18,000 
to $20,000 of agricultural implements to the Maritime Pro- 
vinces. In 1876 Frost and Wood sent about 112,000 of 
implements by boat to Pictou. Cossitt's Agricultural 
Works at Guelph manufactured fanning mills, lawn mowers, 
plows and turnip-sowers chiefly from Ontario, but with 
improved transportation larger quantities were exported 
to the Maritimes. In 1882, the Waterous Fngine Works 
in 3rnat^ord sold in New Brunswick and Nova Scotia 25 
portable steam engines and four grist mills." 

29) Denlson, "Harvest Sriumphant", p. 63. 

30) Journals of the House of Commons , 1376, App. 3» Report of 
the Select Committee nn the Causes of the Depression, p. 128, 

31) Ibid., p. 121. 

32) Hutchinson, on. cit., II p. 6^9. 

"The McCormlcks could only ineffectually protest when a 
factory at London, Onatrio, amde their wire-binders 
without license. Since the grain of Manitoba ripened 
after harvest was over in the United States, American 
manufacturers often tested their imnrovements north of 
the border. This furnished Canadian builders an excel- 
lent opportunity to keep in touch with the progress of 
invention" . 

33) Ibid. 

In addition, William McDougall, in his report on agricul- 
tural methods in the United States (Toronto, 1853) suggested 



- ^1 r n I 



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tti 9BU ni 



,qo 



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-oi"^ 



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'iveX ,«lilin 3^, 



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vvic 


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fiJiv 



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Footnotes t o Ch apter F our 

the granting of patents to American inventors ^or short 
periods to encourage the intrO'.iuctlon of American inven- 
tions. 

3^) In this tariff, agricultural implements were accorded 

separate listing for the first time; previously they had 
been Included under the general heading of iron manufac- 
tures and machinery. 

35) See W.A. Mackintosh, "Econojiic Background of Dominion- 
Provincial Relations", Apn. 3, Ottawa, 19hl, p. 19. 

36) Quoted in Hutchinson, op. cit., II, p. 6^9, 

37) Denison, op. cit., p. 157. 

38) Ibid., p. 71. 

See also George Henry, "Reminiscences", loc. cit., p. 751. 

"The first binder we used (in I878) was a wooden one and 
the price was 135^^. It tied witli wire and was made in 
Brantford by the Osborne Company. They made a good job 
of tying the sheqf. The wire was wound on spools and 
cost 11^ a pound". (The reference appears to be to thf^„ 
binder made under the Osborne patent by the Harris 
Cofnpany at Brantford). 

Among the American firms selling in Canada in the seventies 
and eighties, one of the most aggressi'^e was the John Deere 
Company of iMoline, 111., whose plows were widely known 
throughout ^'es'-ern Canada in the early iSSo's. 
McCormick returned to the Canadian market in I887 when, 
after an absence of 20 years, the company opened a branch 
at Winnipeg. As late as IB83, however, the secretary of 
the McCormick Company stated in a letter: "I believe that 
country (Manitoba) is yet too new and business too much 
scattered and times too hard for us to push our business 
there". Hutchinson, op. cit., II, p. 651n. 

The Canadian tariff was first applied in Manitoba In I873. 

39) See T.H. iiarris, "The Economic Aspects of the Crowsnest 
Pass Rates Agreement", Toronto, 193^» P« 56. 

"Prior to the Crowsnest Act, the western peninsula of 
Ontario had lower rates to the Canadian ^'est owing to the 
route by American lines via Chicago and St. Paul. The 
Grand Trunk Railroad had its establlshe'' route to Chicago 
and thence westward via its American connections to St. 
Paul, while the American railway lines connected that 
city with Winnipeg... The mileage via Chicago was there- 
fore less than via the North Bay route. Under these 
circumstances, the Canadian Pacific Railway Company was 
obliged to adopt the rates via the shorter mileage of its 
southern route competitors." 



o;t 8 



^1*^ 



^ 



.snoli 

Pofs-rn^ ^w ? i n-s* ITT -^i rami iBTuHuoti^B .'*'*iTB;t elriJ fli (+^£ 

fceri iteil"! 9ri;t tot i" eieieqsa 

-noi • - . • (5£ 

•V^I .q ,.:tlo ,qo ^noeinsa (5'£ 

.1^ .q ,.MdI (8£ 
.1^^ .q f.^to .ool ,*'e9Dn908lnl/n9H" ,xin»H ©gtosO obIb seC 
bne er- w 6 ebw (8^81 nl) bseir sw isbnlcf Jeill sriT" 

nl 9c. . „. - ::n6 silw rf:llw bBli il .0^£$ bbw solia ecii 

cfof. boos B ©bsm xetlT .^nsaffioO smodeO 9ri:t yd biolitnB'ia 

bnB Elooqe no r " ' " t to 

^di oi ad oi ei^ .^ ........ . ... , .tsoo 

eliieH 9ri;t yd ;ta9;tBq 9mod80 9ri:f isbnu ©bsm isbnld 

.(biolJ-nBiB ;^B yneqmoO 

•9l;tn9ve8 eri^ al ^nillsa emiJ:'! nsoIisraA sri* 

>i99a ndot erfc^ esw lo sno ,B9l:f ' 

.e*088l ylTB9 sri* n' Moidi 

E CB @iBl 8A »seq : :tB 

1" : fc iij - • ^^j^ 

;; — . ^senie:.- ...^ won --. . ^ -.; ^ ....^<oo 

rt'^nJtetfd luo rieuq oi eu lot biBri oct e9mli bns b9io:t:fE08 
.n'^" ." .noenlrio;tuH ."©i9rf:t 

.£^81 fll EdoiJlnsM nJt bsHqqa i&il'i bbw 1T:liB;t nslbenfiO oriT 

:tp<-,n?>v'nir erfj lo e:f09qeA olt^onooa 9ffT" .rf^TRTT ."H.? >.r.S (PT 
.^? .q ♦Of^I ,olnoioT ,";tf 

«=»ii:t c- ,^ . . J . _ .._ ,;■{ ol'i. 

grfT .1 osBoIriO Bi M nBoiigmA yd e^tjuoi 

3 

-eio ■ ...; '3 

...--: , .., --. 9ri;t e. _.. -ol 

yswIlBH ollloB'l nelbenfiO ftri;J ,8eonB;tEmtfoilo 
ulai iB^iorie eri;J bIv ^ ■^rict ;t ' fido 



^20 Footnotes to Chapter Four 

hCi) Cf,, for example, Denlaon, op. clt., p. 191. 

"The American harvest was orrilnarily comnloted by the time 
the Canadian harvest was beginning, and American manufac- 
turers were able to find a hter outlet for surplus stock 
by shipping it across the border and unloading it at 
sacrifice prices." 

^•1) See Hutchinson, op. cit., II, p. 6'+3n. 

Also Industrial Canada , ^ec. 190l+, p. 330. 

"The Crimean war has viought a violent change in the methods 
of the farmers in Siberia for -jII kinds of modern agricul- 
tural implements and machinery. These farmers were former- 
ly content to cultivate their land=? with the -nost anti- 
quated form of iTinletients. Now, however, that so large a 
number of able-bodied rnen have been requisitioned by the 
military authorities, the farmers have been compelled to 
order hastily all kinds of labour-saving machinery and 
perfected implements, and the sale of modern plows, 
threshers, reapers, etc., has shown an abnormal increase; 
in many instances the local agents have their stock 
exhausted. The use of binders among the more vealthy 
farmers has become quite general, and the smaller culti- 
vators, impressed with the advantage of these labour-sav- 
ing devices, have endeavoured to hire them from their 
wealthier neighbours". 

U-2) MoDlarmid, op, clt., p. 137. 

•+3) Sessional Papers; Audotor General's Report, 1900, 

1+^) McDlarmid, op. clt,, p. 2h9, 

h5) Industrial Canada . Oct., 1910. 

•+6) The Canadian Manufacturers' Association took up the cudgels 
on -oehalf of the manufacturers against the railways on 
several occasions in the early nart of the century. A 
sample of the type of charge made is seen in the follow- 
ing: "For a good many years after the CPR was constructed, 
adTtlration for the courage and foresight of the promoters 
prevented the public from becoming too critical of the 
returns which that courage and foresight, reinforced by 
ample subsi'lies from the government, were earning for the 

!4 , sharehol'^ers ... For years, shareholders have been the 
recipients of gratuities in the way of cheap stock and 
bonuses from the sale of lands. In spite of the devious 
schemes for cono-^aling the distribution of profits, the 
company is fln-iing it hard to keep the actual pay^pnts 
below the statutory limit. A huge surplus has been Piling 
un wnich is even now calling for distribution". Industrial 
Canada . Nov., 1910, p. W35, 



1L '!:+•' 



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Ci ^ 



8t 



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-iJnB Jeorr 9 ''o o^ :tn9:tnoo ^I 

• sgiel or ^--^ • .- ' ''- -^lol ^■'•-♦-' ■ 

^ri:t \6 f . '/firi n to r 

oJ ballsqmoo nssd everi eTscmfit Qtii ,89i;:^i-iort.tJUB 



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2Bri ,.od^9 jRTsqBsn jBierfp'^'triit 
fj bns ,iBT«n9^ f»;Jj 'Ft 

'- Hi -^ sriT (^4^ 

.:t to ■ no 

A .xtuJnso ©fid" to tiBOt \iiB9 ©ri:^ ni enolsBooo leievoe 

T 9ri:t to J ?»ri;t lot r 

en J inoit eai 

lO F. T 

to 9ip8 ©riit rr-oit e?iPunod 

'^ -" ' - ----- tot r' — ■'-p. 

El \ 

; oiti^BiB etii wolsd 

!'■ -.^t. . - " -'- * rr 



^+2 1 Footnotes to Chapter Four 

k?) Hutchinson, op. clt., II, p. 650. 

^+8) The Monetary Times . August 10, I883. Also the History of 
Ml^-^lesex County, Toronto, 1889, p. 32?. ^ 

h9) See gbove, p. 13'+« 



FOOTNOTES TO CHAPTER FIVE 
(p. 11+8 to p. 19'+T^ 

1) The app5r«=»nt 'decrease of 113*3^3 farms In Canada between 
19^1 anf! 1951 is not a true in'^ication of th*^ change 
because of the changes which were Tiede in the "definition ^ 
of a farm for census purposes. 

In the 1951 census, a far'n was 'defined as a holding on 
which agricultural operations were carried out. The hold- 
ing may consist of a simple tract of land or of a number of 
separate tracts held under different tenSures. It Ttust 'e 
(a) three acres or more in size or (b) from one to three 
acres in size with agricultural production in 1950 valued 
at $250 or more. i^There the farm is made up of several 
parts located in different municipalities, the 1951 Census 
reported the complete farm as one unit in the municipality 
where the headquarters were located. The 19^-1 Census counted 
as farms all holdings one acre or mare in size if the 19^+0 
production was v=lued at $50 or more. Unlike the 1951- Census 
it counte'^ as separate farms parts of farms lying outside 
the municipality in whic - the far"i headquarters were located 
although the farm area was counted only once. The Dominion 
lureau of 3t-=!tistics estimates that about 5'^% of the total 
decrease in number of farms from 19^1 to 1951 is a result 
of the change in definition. 

2) Gordon Haase, "A Study of Farm Business in Southeast ^as- 
Katchewan", the Economic Annalist , June, 19^+1. 

3) Denison, op. cit., p. 81, 

h) Ibid., p. 69. Factual data from Denison* s admirable history 
of the Massey-Harris Company has been relied on considerably 
for the discussion of the Massey-Harris merger In the next 
few pages of thl<3 chapter. 

5) The financial history of the company between 1891 and 1912 
i; is extremely difficult to trace. In 193^, the auditor of 
the Special Parliamentary Committee on Farm Implement Prices 
informed the Committee, "It is rather hard -- as a matter of 
fact, it is almost impossible to gpt the old records back of 
1912". Between I89I and 1912, the share capital of the 



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^r 'o TO bnel *lo :fofiTJ" ©I 

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bsi/Iev 0?PI nl notioubonq IbiuSIu^ 
If to qjj ebsm el miet eriiJ 

!^' '-"-■ ^<^.i fBetillBqtolnum *n©'i. 

ri:t ni ilnis ©no bb tmet eitelamoo erid" bsctioosn 

■ ^'^ .6' ■ - ^ ■ - •• --w 

^ . ., , , '.^> : ... ei»w . _ — . ? 

eueneD 1?PI erf* sifllnU .©lom tc eew noJ 7 

be- ..._.J :...., ._ .;. -... ,- „.-; 9d:t 

n< .9ono ylno bs^ni/or* bbw bsib DniBl 9rf;t riauori:tlB 

^ , -■ — . _ - - - . . , . . . -^ ^ — 

do 9ri* lo 

1 (+i 

\t to nolesxjog tot 

.'•isJ'fT^ffo a.fri* to Et- -"t 

srcj ^^^ IP8I nsewitad xnefffr'oo Bri:t to vioJelrf lelonRni^ srfT (5 

to ic "^I nl . -» ei 

eeoli'I I' — _ . no e' > - . -. , i . .. ,_ ed:t 

to i»itr R -- bnerf tfitiiBi Ki il" fQ&iiltsimo^ ©ri:t bomiotnl 

to i(c' ■ ^eeoq^^ ' tIb ei :ti ,;t06t 



^21 Footnotes to Chapter Five 

coTip-jny Increasefl from $3,^95,000 to 1^13,000,000, the 
latter representing 130,000 shares of pIOO par value. 
As far as the author has been able to fJlscovor, the 
bulk of the increase resulted fro-n the issuance of stock 
dividends during the period. 

Upon his death in 1896, Hart A. Massey, first president of 
the company, possessed 17,083 shares, most of which went 
to the Massey Founiation. 

6) See above, Chapter Two. 

7) Denison, op. cit., p. 119. 

8) Cf. L.G. Reynolds, "Control of Competition in Canada", 
Cambridge, Mass., 19>+0, pp. 133-5. 

"A more half-hearted statute can scarcely be imagined. 
Members of a combine could not be convicted unless the 
Crown proved that they were 'unduly' doing something which 
was already unlawful at common law". 

It is interesting to note that agricultural impleniPnts were 
among the 13 products, the producers of which were investi- 
gated for the presence of combines by a Select Committee 
of the House of Commons in 1888. Among these only two — 
agricultural implements and barley, were found to be free 
from Tono polls tic associations. See J. A. 3all, "Canadian 
Anti-trust Legislation", Baltimore, 103I+, p. 3. 

9) N.C. vvallace, sponsor of the original legislation, Debates 
of the Hou se o f Commons , Session 18*^0, Vol II, p. 2553. 
For a concise analysis of the differences between Arrerlcan 
and Canadian combines legislation, see H.A. Logan and M.K. 
Inraan, "A Social Approach to Econo-i^ics", Toronto, 19'+8, pp. 
209-216. 

10) Denison, op. cit., p. 119-120. 

11) Proceedings of the Special Committee on Farm Implement 
Prices . Ottawa, 1937, p. 10'+5. 

12) See above. Chapter Two. 

13) See D.G. Creighton, "Dominion of the North", Boston, 19^*+, 
p. 37W. 

IW) The Canadian Manufacturer ^ Toronto, June 6, 18<50. 

Probably ■a.^sey already had one eye on the American market, 
which was protected by tariffs until l'^13. 

15) Reported In the Canadian Annual Review , 1920, p. I60 

16) W.A. Mackintosh, "Econo-nlc Background", p. 83. 



in<»w 



«^- 



auoj.-: 






01 

CI 



\o nolr (£1 



■?I 
31 



1422 Foot notes to Ch apter Five 

17) V.C. Fowke, "Canadian Agricultural Policy: The Historical 
Pattern", Toronto, 19^7, p. 26.3. 

18) No one. It appears, has ever been able to prove this 
charge. The structural differences between the implements 
required at home and abroad renders such charges, when 
unsupported by detailed evl-^ence, difficult to prove or 
iisnrovn. 

19) Mackintosh, "Economic Background", p. 8'+; and McDlarraid, op. 
cit., p. 20l+. 

20) "Commercial Policy in the Canadian Foonomy", p. 205. 

21) Fowke, op. cit., p. 263. 

22) See above, p. h6. 

23) debates of the house of Comm ons . 1921+, pp. I8OO-I. 
Cf. C.H. McCormlck, "Century of the Reaper", P. 12^: 
"In those days the benefits of quantity production were 

not understood; so it is ot surprising that they expected, 
by having s Canadian factory, to save the entire duty. 
The International Harvester Company deteriiined to iranufac- 
ture there its Canadian requirements of binders, mowers 
and such other tiachines as were built specially for the 
Canadian market." 

2^-) Prior to January, 19'+'+, the Canadian Company was slmpljsr a 
department of the American parent company. In late i9'+3 
the latter company decided because of its wartime expansion 
to decentralize its operations, setting up various autonom- 
ous divisions, with the purpose of bringing control closer 
to the operating level. Separate divisions were set \ir 
for motor trucks, farm tractors, industrial power machines, 
refrigeration, twine, general sales and "anadian operations 
(including trucks in Canada). "A division", explained the 
company in Its Annual heport for 191+3, "in the sense in 
which we now use the term, is a new unit in our company. 
It differs ^rom a department in that a department deals 
with only one function, such as engineering personnel or 
sales, whereas a d- vision is a group of departrn^nts, each 
of which is concerned with Its own functions, but all of 
which are interested in the s'ime product or group of pro- 
ducts". Since January, I'^hk, the '^anadian company has had 
an almost complete autonomy ir the control of its operations. 
The general office of the Canadian company was moved from 
Chicago to Hamilton and the new policy adopted of having all 
officers of the Canadian company resident in Canada, "^he 
officials of the Canadian company are now, according to the 
president of the company, completely independent in matters 
such as the setting of prices, volumes to be produced, 
credit policies, and so on. 

25) Denlson, op. cit., pp. 59-60. 

26) Industrial 'anada . Nov., I903, p. 201. 



71; ;J^c 9 



(^i 



''>£ 






♦is 



. U -' 



'5 .qq |.^i 



J 11. -JIO 



(?S 



'+23 Footnotes to Chapter Five 

27) Industrial Canada . Dec, 1900, p. 263. 
Representatives of lea'^lng Imrlerripnt manuf-^cturer~ In 

2 "; Canada met on ?lay I6, 1900, to form themselves into a 
section of the Association known as the Agricultural 
Implement Section. 'epresented were Hassey-Harris, 
Cockshutt Plow, Frost and Wood, David Maxwell, Sawyer- 
Massey, and Noxon Manufacturing Coircany. 

28) Indust ri al Canada . Nov., I903, o. ?0i. '^ se,.es, voi. v.,, ,9^9. 

29) For details of this legislation, s-^^" McDiarmid, op. cit., 
P. 217-8. 

30) Industrial Canada . Feb., 1905, p. '-+I8. 

"The old ideq that the ^lorthwest must always be merely a 
farming country importing all the '^lanufactured goods 
required has been exploded. The cities and towns of Mani- 
toba are looking forward now to a gre-Tt industrial future, 
"he growing confidence of the people 6f the Northwest in 
their country will give strength to protectionist senti- 
ment, for it must be evi^lont to everyone that it will be 
very difficult to build up prosperous conditions and 
industries in Winnipeg and other towns of the Canadian 
Northwest so long as the manufacturing cities across the 
border have their present unfair advanliiges." 

31) V.C. Powke, op. cit., p. 26^. 

32) Ibid., p. 265. 

33) Industrial Canada . Jan., 1907, p. ^99 
3*+) Fowko, op. cit., p. 268. 

35) McDiarmid, op. cit., p. 228. 

It is interesting to note that in 1911 the trade association 
of the implement industry in the United States, then known 
as the National Implement and Vehicle Association, strongly 
supported the American government in its reciprocity nego- 
tiations with Canada, favouring decided reductions on agri- 
cultural implements from Canada provided Canada would 
reduce its tariffs likewise. A latter to this effect was 
sent from the Association to President Taft, and all members 
of the Association were urged to write their congressmen. 
See "Farm Machinery Trade Associations", Department of 
Commerce of the United States, Bureau of Corporations, 
Washington, 1915. 

36) The connection between Massey-Harris and the Johnston 
Company appears to have had its origins in the selling 
arrangements between the Patterson Brothers' Company and 
Johnston prior to I89I. 

With reference to the American sales-resistan^^e referred to, 
consider the following testimony of the president of the 
Massey-Harris Company before the Committee on A griculture 



flJ 






C; vr»Tl 



-i 



I 



(a 



'+2W Footnotes to ^hacter Five 

and Colonisation . 1936. (Page ^61 of the Proceedings of the 

Committee) . 

"I must say we fin's a very definite prejudice against 
Canal lan-ma-le goo(3s in the United States, moreso than 
we think our people feel Irward A-nerloan goods. We are 
accustomed to Arrjerican importation but our competitors 
in the tJnlted States do nnt hesitate to draw the attention 
of the farmer to the advantages of buying *?t home and 
helT^lng employnent, anf^ point out that the United States 
is the greatest manufacturing country in the world and 
why should they buy elsewhere". 

37) Speech by Lloyd '-arris, M.P., before the House of Commons, 
March, 1911, quoted in Indus tria l '^anada ^ April, 1911, 

p. 9h7, 

38) Special 7o'"^^-^tee on Farm Implement Prices, Ottawa, , 1937 * 
p. 918ff. 

39) See V.W. Bladen, "Introduction to Political Economy", t). 
l39-»+0. 

ho) See V,.A. 'acklntosh, "Agricultural eooperatlon in V.'estern 
Canada", 'Toronto, 192U. 

An Interesting view Is a'^vanced by Paul F, Sharp in "The 
Agrarian 'revolt in Western Canada", Minneapolis, 19^8, 
concerning the shift of farm sentiment in these years. 
"The W^eat Board agitation further revealed g fundamental 
change In agrarian thinking In the vvest. Under the impact 
of war, western farmers abandone'^ their frontier Jefferson- 
ian laissez-faire in favor of governrr^ent intorwentlon in 
the Tarketing process. This transaction placed the 
agrarians in an embarrassing position for it left them 
advocating free trade on th° one han'' and favoring 
governnent support for agricultural prices on th^ other, 
they were dangerously close to the position of denying to 
Industry what they demanded for themselves". 

•+1) Farm Implement Prices Committee . 1937, p. 921-3 

h2) See W.L. Morton, "The Progressive Party in Cana^^a", Toronto, 
1950. 

^•3) "Commercial Policy in the Canadian Economy", r>, 26U. 

hk) The first federal sales tar on farm Implements became 

effective on May 19, 1^20, in the ^orm of a l!^ ta- on raw 
materials, both domestic and lmTX)rted, as well as on 
finished Implements and parts. This tar rate was gra^i- 
ually raised t*irough th«» nert two years and, in 1923, it 
?tood at h^i. on dompstlc implements and parts, and 6% on 
Imports, with slightly lower rates, similarly differentiated 
as between domestic and Imported, on raw materials and set 



9( 



ar 



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at 6^ for finished Implpments arif' parts whether 'domestic 
or Imported. On April 11, 192'-*, the sales tax as it per- 
tained to implements, was completely abolishe-i. 

^+5) Standi ng Committee on Agr i culture ar^d Colonisation ^ Minutes 
of Procedings and Evidence, Ottawa, 1^36, p. ^+68. 

hS) Ibid. 

h7) Canada Year Book Figures. 

US) Of. the testimony of T.A.. Ruseell, prf^sident of Massey-Harris 
Before the .'omraittee on -\griculture and Colonl S'ition in 1^36, 
(p. h67 of the evidence of the Committee): 
"Today we -should like to build a tractor in Canada. As a 
matter of fact, the Cookshutt company '3nd ourselves 
during the past year considered whether in the interests 
of standardization, quantity and so on, we could get 
together on a tractor in which a lot of the essential 
parts were the same and make it. We concluded that we 
could not; that the volume was not big enough in the 
Canadian business alone even with the two companies. 
They are buying American tractors, and we are making ours 
In the Inited States". 

'+9) See above, pp. 87-88; also Henison, p. 278. 

50) Farm Implement Prices Gommittee * Ottawa, 1937» P. 7l6 

^l^t While In 1925 there were some 800 Individual shareholders 
in the company, controlling ownership was in the hands of 
members of the Massey family, Pr^'sumably as a result of 
the overtures regarding the tractor made by the Massey- 
Harris Company in late 1926, the J.I. Case Company, work- 
ing through the First National Bank of New York, made a def- 
inite offer for the shares held by the ^4assey Foundation 
and the Massey family. 3 fore closing the deal, th^ !'assey 
Interests communicated with the management of the company, 
which Immediately took steps to block it. See The Financial 
Post, Feb. 18, 1927, p. 1. The suddenness of the move is 
attested by the fact that Thomas Bradshaw, then vice-tresi- 
dent and general manager of the Toronto company, teceived 
the news of the Impendin.'^ sale aboard the train for a trip 
to Australia, ■'r. Bradshaw left the train at Fort William 
to return immediately to Toronto where, with J.H. Gundy of 
Wood, Gundy and Company, he nep:otiated the purchase of the 
shares held by the Massey Foundation, the Honourable Vincent 
Massey and the various estates. Cash necessary for the 
transaction wag advanced by the Canadian j^ank of Commerce, 
and in all some 70,noo shares were purchased for about 
$8 millions. The announcement of the deal, without details, 
was made on Feb. 12, 1927. On Mnrch »+, The Financial Post 



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h26 Footnotes to Jhanter Five 

reported: "Two men at present own effective control of 
the Massey-Harris Company thr-ough pruchase of the Massey 
Foundation and other blocks of shares. It is their 
purpose to bring about a diffusion of ownership of the 
shares. The splitting of the stock ... will facilitate 
this distribution and probably will net the present 
shareholders a profit on their transaction. But while 
these men intend to sell the bulk of their holdings 
recently acq ired, they will not be surrendering the 
control of the company which was acquired at the same 
time". Before the end of March the shareholders had 
authorized a four-to-one split for common, and shares 
were being placed on the market by the syndicate. Two 
years later, The Financial Post reported (Mar. ^, 1929) 
that shareholders in the Massey-Harrls Company numbered 
3135. 

52) Committee on Agricul ture , an d C olonisation^ 193^, p. W5^. 

^^3) Ibid. 

5^) The Financial Post . Jan. 29, 1929. 

"^ondon has heard the rumour that Cockshutt may merge with 
another agricultural inpleraent company. The usual denials 
may be expected fro-n Brantford." 

55) The Financial Post . 7 Nov., 1929. 

56) Ibid. 

57) Committe e on Agricult u re and Colonisation ^ 1936, p. 63. 

58) In/\'*Labour in Canadian-American Rel-^tions" , Yale, 1939. 

59) Cf., for example, V,6. Fowke, "Canadian Agricultural 
Policy'", p. 272: 

"Agricultural organization and the pressure of organized 
farm groups have been, at least until recently, of 
negligible importance in shaping the agricultural policy 
of the Canadian government ... They have generally been 
powerless to secure assistance which would benefit them 
at the expense of ts other substantial f^roups within the 
community. Canadian tariff history offers the clearest 
proof of this fact". 



TO :;hapter six 

(p. 195 to p. 239) 

1) McDiarraid, op. cit., p. 27"+. 

2) House of Co-Timons Debates, Special Session, Sept., 193^* P« 
576. It is to be noted that the International Harvester 



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Company, a heavy Importer, is not represented among the 
signatures. 

3) Ibid. The duty on higher priced tractors had been lowered 
from 17^% to 15%' between May and Septeniber 17,1930. 

*+) An interesting account of the experience of the Imriilempnt 
industry during the depression is contained in "L'Tndustrie 
de la Machine Agrlcole au Canada" in Ftudes EconoTiigues,. 
Ecole des Ilautes Ktudes Coramercigles de Montreal, IV, l^~\h. 
pp. »+6lff. 

5) This huge debit balance resulted in the complete reorganis- 
ation of th^ company's capital structure in 19^1. The com- 
pany's deficit before reorganisation was $21.3 millions, and 
unpaid dividends on the cumulative preferred stock amounted 
to more than $6 millions. Preferred shareholders waived 
their right to the dividend and in return received four new 
(i\% $20 par cumulative preferred shares and three new 
common shares. Holders of common received one new common 
share for each two formerly held. The change in the share 
capitalisation is seen in the following: 

19^0 

Preferred: 120,899 $100 par 5i Cumul. $12,039,900 

Common: 739,622 no par S?6,77'+,752 



Total 138,86^,652 



121+1 



Preferred: ^83,596 (i\% .$20 par Cumul. % 9,671,920 

Common: 732,508 no par (362,697 to $ ^•, 761,302 

former tsreference shareholders and ~f]jr~^+3T~222 

369,811 to former common shareholders; ' ' 

the new common were assigned a value of S6.50 each). 



The total reduction in the value of share capital was 
therefore %2h,h millions. \ prolonged battle between the 
Common Shnreholders' Protective Committee and the owners of 
preferred shares (90,";; of which had been owned by the Wood, 
Gundy Comnany in 1930) failed to save the common shareholders 
from b. taring the bulk of the depreciation in vnlue. The 
value-reduction was sufficient to wipe out the deficit and 
leave a surnlus of more than .$2 millions. 

6) Fvidence of J.S. runcan, Vice-President of Massey-Harris, 
to the Commi ttee on A griculture and Colonisation , 1^36. 

7) Ibid. 

8) Ibid. 






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9) 



?^assey-Harrl5 had 
iHts export trade 



founri Itsplf increasingly handicapped in 
because of the competition of the Inter- 



national Harvester Company whi-i-h, by 1910, had erected its 
own plants In Sweden, Germany, Prance and Russia. World 
War I Increased the difficulty of the Canadian company in 
tvo Ways, It brought to Furopean "manufacturers many of 
the more advanced manufacturing techniques which had been 
used in North /America for years, and It marked the begin- 
ning o*" a gra'^ual shift toward higher tariffs pnd currency 
depreciation t'-roughout T^urope. By 192'-+, according to 
Denison (p. 272), studies sho\7ed that "the Canadian company 
suffered a forty percent disadvantage in lald-down costs 
because of duty, crating charges, marine Insurance, and 
inland and ocean freights from Canada". 

As a result, Massey-Harris decided in 1925 to purchase 



plant Was 
y the following year this plant was producing mowers, 
and attachments for binders and mowers, as well as 
for the French Industry. In the following year a 
plant was erected at Cologne, 



25 acres of land near Lille, France, where a 

built- R 

parts 

parts 

small plant was erected at Cologne, Germany, where Massey- 

Harrls had had a sales branch since about 1900. In 1928, 

a second and larger German plant was acquired at Westhoven, 

and this nlant began production of implements for the 

German and North European trade in February, 1928. 

10) Evidence of J. 3. Duncan before the Com mittee on. Agriculture 
and Colonisation^ 19 36. 

11) The John Goodison Thresher Company of oarnla, established 
in 1897$ also had a selling arrangement with Oliver during 
the thirties, through which Goodison wold certain Oliver 
lines in Eastern Canada only. A similar arrangement between 
Goodison and Ollvei' '^tlll exists. 

12) The data in tVils section on Empire preferences was suonlled 
by the "vt'^^-nal Trade Br^.nch of the Department of '^ommofce, 
Ottawa. 

13) The Financial Post . May 17, 1936. 

1*+) House of Commons ^)ebatos . 1936, III, p. 2953. 

15) The Fln-sncial Post . May 17, 1936. 

16) The only slgnifi'^ant complaints came from the Cockshutt 
Plow Com any which repeatedly referred in Its Annual 
Rer^orts to the benefits which would accrue to the Canadian 
workman if the Implement tariff were raised high enough to 
exclude Amerlc?.n Implements. r '';■'.- 

17) Ret'ort of the Wartime Prices and Trade Board ,_ Ottawa, 19^6. 

For a complete account of wartime production restrictions 
in Canada and the 'Inited States, see ■Tou^'nals of the House 
of Commons , Vol. 83, 19'+3-»+, pp 727^f. 



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^30 Footnotes to Chapter Seven 



FOOTNOTES TO CH^PTF R SEVFN 
(p. 21+5 to p." 287) 

1) See Appendix C. 

2) Although It is riot intended ^t6"3evelop the point, it is in- 
teresting to note that during the war year'^ when farm iniple- 
rrents w^re scarce, and farm Inccnes were high, a marked 

•'(decrease took place in the total amount owing by farmers in 

the prairie provinces on farn mortgages. The figures, as 
_. supplied to the author by the fiominion Mortgage and Invest- 
' raent /Vssociation, are as follows; 

Total ftmount Owing by Farmers in the 

Prairie Provinces on Farm Mortgages and 

Agreements for c^alex held by 3^ ^Afe 

Insurance^ T r ust a nd Loan Companies 

~^,000. 
1937 168,661 

101+2 152,91^ 

191+3 129,973 

19kk '89,930 

19^5 66,01+2 

19*+6 50,035 

19^7 »+3,5l8 

19^8 36,222 

In a letter, Mr. N.A. vsTiltB, assistant secretary of the 
Association, stated: "In the years 19^+2 to 19^6, farm 
-nortgage debts dropped very sharply whereas the aiiount 
of farm iTirlerBents that could be produced was definitely 
restricted. My guess would be that if farm iiipl'^monts 
had been readily available for the period 19^2 to 19^+6 
then some of the money which was used to pay for debts 
would have been put toward the purchase of new implements". 

3) The following principal components are used in calculating 
Fam Net Income. See D.B.S. Reference Paper "o. 25» Farm 
Income, Ottawa., 19'^2. 

I. Cross 7arm Income: 

1. '"ash income from the sale of -^arm products, including 
participation and ad.lustment payments and subsidies. 

2. Income in kind: all products, valued at farm prices, 
consumed in homes on farm-? where grown, plus imputed 
rent on farm houses. 

3. Value of change in year-end inventories of grains and 
livestock on farms. 

II. Onerating Expenses and Depreciation Charges. 
III. Suppl'-^mentary Payments; These are payments made under the 
provisions of the Prairie Farm Assistance Act, the Prairie 
Fqrm Income Plan, and the Wheat Acreage Reduction Program. 

IV. Farm Net I ncome ; This is calculated as (I minus II) plus 
III. 



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h^l Footnotes to Chapter Seven 

h) Armstrong, Hopkins and Mitchell, "Cost of Producing Farm 
CroDs In the Prairie Provinces", Departiient of Agriculture 
Bulletin no. 15^, 1930, p. 7'^, 

5) Farm Implement Prices Committee * Ottawa, 1^37, p. 1068. 

6) "Harvest Triumphant", p. 263 to 270. 

7) Annual Report of the International Harvester Company ^ 1933* 

8) Ibifl., 193»+. 

9) T.W. Schultz, "Two Conditions Necessary for Economic 
Progress In Agriculture", in Canadian Jour.cf Economics and 
Politi cal Sclonce, 191+^, p. 3^^^^^ 

10) T.W. Schultz, "Emrlojrment and Factor Costs in Agriculture" 
Journal of Farm Economics , XXIX, pp. II3I-2. 

11) B.A. Campbell and J. Coke, "Farm Labour In Wartime", 
Dominion Department of Agriculture, 19'+2. 

12) See Chart V, p. 2M-8 and 2'+9. 

13) Of the 732,832 farms in Canada in 19^1, only 267,337 (36.5^) 
employed any hired help. The remainder, 63.5^ of the t'-^tal, 
were operated by the farm family alone. This was actually 
an increase over the proportion of family-operated farrae 

In 1931, when 38,6^ of the total number employed hired 
help. Provincewise, the p'^rcentage of farms employing hired 
help in 19^1 was highest in Ontario (^6.9/?) and lowest in 
Quebec (26.^+^). Canada Year Book figures. 
See G.V. Haythorne, "Land and Labour: A Social Survey of 
Agriculture and the Farm La^'our Market In Central Canada", 
Toronto, 19^1, pp. 195-6. 

1^) W.W. Wilcox, "Capital in Agriculture" in Quarterly Journal 
of Economics . LVIII, 19^3, P. 61. 

15) Fa rm Implement Pri ces Committee , Ottawa, 1937, p. 699. 

16) Ibid, p. 1265. 

17) For data on building materials purchased by farmers, see 
"Public Investment and Capital Formation, 1926-19^1", 
Dominion-Provincial Conference on Reconstruction, Ottawa, 
19>+5, p. 38; 

18) See Appendix E. 

19) See above, p. 227ff. 

20) C.F. Roos et al, "The Dynamics of Automobile Demand", General 
Motors Corporation, 1939, pp 73ff» 



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^•32 Footnotes to Chanter Seven 

21) V.W. Bla'len, "Introduction to Political Economy", Toronto, 
1951, p. 115. 

22) Dealer Purchase Agreement of the Cockshutt Farm Equipment 
Comnany , p. 6. 

23) Dealer Purchase Agreement of the International Harvester 
Company , p. 5- 

2I+) Cf. Joel Dean, "Managerial Economics", N.Y., 1951, P. ^60. 

"Variable costs ner unit tend to remain relatively constant 
over long periods and widely differing outputs. Fixed 
costs per unit, as reported in conventional accounts, 
vary Inversely with volume and with cyclically sensitive 
material prices. Current full costs, consequently, appear 
cyclically rigid and the prevalence of cost-^us pricing 
imparts some of this cost rigidity to prices." 

25) Ibid. See Chapter 5. 

26) Federal Trade Commission , 1938, pp. 736ff. 

27) Farm Im p le-r.ent Prices Committee, Ottawa, 1937, p. IIO3. 

28) Ibid ., p. 1276. 

29) McCormick, op. cit., p. II6. 

30) Federal Trade Commission . 1938, p. 179. 

31) Farm I-plement Prices Committee , Ottawa, 1937, Exhibit 9*+. 

32) See above, pp 92ff. 

33) FederaI Tr ade Commission , 1938, Chapter 5. 

3*+) "A Trip through the Massey-Harris Ccabine Plant", published 
by the Massey-Harris Company, 19^8. 

35) Some special-type combines which are sold only in the Jnited 
States are produced in the B^^tavia plant. 

36) Federal T rade Commssion . 1938, pp. I50ff. 

37) Ibid ., p. 691. 

38) Ibid ., p. 226. 

39) The comptroller of the International Harvester Company 
stated to the Federal Trade Commission in 1*^38: 

"In deter-nlninp: costs for the purpose of considering 
future selling prices, we cannot as a rule use the actual 
costs for the previous season since these costs may have 
been affected by conditions which are not likely to obtain 
during the coming season. Consequently, we compute costs 
based on the esti'nated prices of materials for the next 
season accoriLng to the best judgement of our purchasing 



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^+33 Footnotes to Chapter Seven 

department, and on the estimated labor costs for the 
season, including any wage Increases v^hich in the opinion 
of the management will become effective. Factory over- 
head expenses are included on the basis of a normal rate 
of operation as deter;''ined by past experience". 

^■0) Farm Implement Prices Committee ^ Ottawa, 1937, Vol. l8 
pqssira. 

*+!) Federal Trade Commission . 1938, p. 693. 



FOOTNOTES TO CHAPTER EIGHT 
(p. 288 to p. 332) 

1) See "Price Index. Numbers of Commodities and Services 

Used by Farmers, 1913 to 19'+8" and subsequent supplements. 
Prices Branch, Piominion 3ur«au of Statistics, Ottava. 

2) Index of all fully and chiefly manufactured goods from 
"Prices and Price Indexes", Vol. 21, Dominion Bureau of 
Statistics, 19^8. 

3) Standing Committee on J^gricu l ture and Colonisation. Ottawa . 
1936, p. 209. 

^) Ibid., pp. ll+8ff. 

^ Bureau of Labour "Statistics Revised Index of Farm Imple- 
ment Prices, Washington, 19^3. 

6) Figures supplied by the company. 

It bears mention that in 192"+, as in 1921, imports 
increased over the t)receding year. Imports of farm 
Implements into Canada were $Q.k millions in 1923 and 
11.8 millions in 1'52'+. This may reflect some cross- 
elasticity between Canadian and American irapxlements 
as a result of the 192^ price increase in Canada, though 
conjecture alone is Possible. 

7) Farm Implement Pr i ces Committee . Ottawa, 1937, p. 8^^. 

8) Federal Trade Comm ission. 19^+8, p. 6. 

9) The most recent investiagation into the industry took 
place in the Province of Saskatchewan in 1952. Although 
t'is Committee heard considerable evidence from govern- 
mental and cooperative sources, the implement industry 
did little to aid it in its work, and the results of the 
investigation therefore were negliglbale. One reason given 
by the industry for its lick of cooperation was its suspi- 
cion that the investigation was a politically-inspired 



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'+3'+ Footnotes to Chapter Eight 

move by the C.C.F. government in Saskatchewan in preparation 
for the 1952 election in that province. However true this 
may have been, one cannot help being struck by the unanimity 
of the Industry's view on the -natter. 

In corresnondence with the aut'nor, the chairman of the 
Saskatchewan Select Special Committee on Farm Implements 
wrote: "Because of the failure of the four major companies 
to supply the infornation, the main rec -emendation of the 
Committee for this investigation was that it be continued 
by the Federal Government, who have the power to obtain 
the infonmation, and at the same time could take appro- 
priate action following their findings. We have also 
suggested that for any future enquiries organisations 
such as the farm implement companies should be compelled 
by the Federal Government to give the requested infor- 
mation to the Provincial Legislative Committee" (April, 1952) 

10) In 19*+8, the agricultural implement industry in Canada 
employed an average of 19*001 t^ersons, as compared with a 
total of 1,156,006 engaged in manufacturing in Canada. 

11) "Economics of Imperfect Competition", London, 19^'8, p. 73. 

12) Verbal reactions of executives in the implement industry 
confirm this view. A typical remark: "Implement prices 
actually fell during those years. With our lower volume, 
we did very well not to raise them.". 

13) See W.J. Fe liner, "Competition Among the Few", N.Y., 19'+8. 
pp. I58ff. This is a case of what Fellner calls "rivalry 
through time" in durable goods. 

See also M.W. Reder, "Intertemporal ' elations of Demand and 
Supply within the Firm", Canad ian Journal of Ec onomics and 
Politica l Science . Feb., 19m, Vol~7, p. 25. 
Reder' s general conclusion is that equilibrium, output for 
any period is "that out ut which makes the profit from the 
output proiuced in the nresent period plus the discounted 
profit derived from the output in the next period, a 
ijjaximum" . 

iK) Joel Dean, '*iManagerial Economics", p. ^59. 

15) Federal T rade Commission, I'^'+S, p. 28. 

16) W.J. Fellner, op, cit., p. I67. 

"There is much to be said for not adjusting the price to 
those fluctuations which are expected to cancel out within 
reasonable ppriods of time. In other words, there is much 
to be said for making price adjustments o-ly when ( and to 
the extent that) the shifts are believed to reflect long- 
run changes", 

17) Fam Implement Prices Committee , Ottawa, 1^37i P. 126'+. 

18) Ibid ,, pp. 695ff. 

19) Ibid., Vol. 18, Passim. 



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^35 Footnotes to Chapter Eight 

20) W.J, Fellner, op. clt., p. I87. 

21) Federal T rade Commission^ 19^8, p. 3I. 

22) Ibid., IQ38, p. 229. 

23) Ibirl . 

25) Discounts for quantity were formerly used extensively 
throughout the InrJustry, based on the total volume of 
sales made by th--" dealer In the season. They are still 
used by the International Harvester Company. The chief 
objection to these came from the smaller dealers, who 
complained that they encouraged price cutting, and that 
they gave an unf*ilr advantage to the larger dealers. 

26) Farm Implem?nt Prices Sommlttee , Ottawa, 1937, p. 125^. 

27) In the form of an amendment to the Combines Investigation 
Act. 

28) Re ort of th e Coam lttee to ..Study C ombin es Leg islat ion, 
Ottawa, 195'^. 

29) Federal Trade Commis sion^ 1938, pp. 365-6, 

F.D. Siefkln, general counsel for the International Har- 
vester Company stated to the Commission: "We don't do 
anything atjout nrlce cutters. The persistent price cutter 
goes out of business eventually because he cannot pay 
his bills, If he gets ■ nto bad financial shape and 
cannot pay his bills, we will not renew his contract, 
not because he is a price cutter but because of his 
financial condition". 

30) Federal Trade Commissi on^ 1938, p. 367. 

31) Ibid . 

32) J.C.S. Grlmshaw, "Problems and Policies of Labour and 
and Management in the Automobile Industry", unpublished 
M.A. thesis. University of Toronto, 19^+6. 

33) See below, Chapter Nine. 

3^) Quoted in the Report of t he Commit tee to. .St udy Combines 
Legislation , 19^0, p. 67. 

35) Professor G.A. Elliott pointed out that this argument, 
as It relates to servicing, is limited in its validity, 
since an increasing number of operators are good mechanics 
capable of oroviding their own service, given the proper 
part*?. Most agricultural colleges now offer courses for 
farmers in the care and repair of tractors and other 
implements. In many such cases, the dealer's obligation 
might properly be said to end at keeping an adequate stock 
of parts readily available. 



^36 Footnotes to Chapter Eight 

36) Farm Implement Prices Committee , Ottawa, 1937, Exhibit 9k 

37) Ibid., pp li+7ff. 

38) Ibid., p. 127*+. 

39) Ibid ., Exhibit 2h, 

^0) Joel Pean "Managerial Econo-nics'*, p. ^+96. 

hi) Most companies seek to prevent dealers from handling the 
parts of any other company. Mail-order makes are commonly 
refereed to in the industry as "bogus", "vill fit" (often 
dubbed "ill fit") parts. A typical clausn frcn a Dealer 
Purchase Agreement in the Canadian industry follows; 
"The Dealer agrees to keep and maintain an adequate stock 
of the Company's genuine repair Parts to properly service 
the Comrany's products in his territory, and that he will 
not purchase repair parts for the Company's products from 
any other 'iianufacturer or supplier". 

1+2) See above, p. 19*+. 



FOOTNOTES TO CHAPTER NI NE 
(p. 333 to p. 366) 

1) Farm Implement Prices Committee , Ottawa, 1937, Exhibit 9"+. 

2) Cockshutt Farm Equipment, for example, has branches at 
Truro, N.S., Montreal, Que., Smiths Falls, Ont., Brantford, 
Cnt., Winnipeg, Man., Saskatoon, Sask., Regina, Sask. , 
Calgary, Alta., Edmonton, Alta. 

Massey-Harris Co"npany likewise has ten branches located in 
principal cities in Canada. 

3) Such clauses have now beaidropped from the contracts except 
for repair parts. 

Officials of de^^lers' associations in Canada, however, inform 
the author that exclusive dealing is "exppctei" of dealers 
as much now as ever, and is enforced just as rigidly only 
by more "subtle" means than through the contract. Complaints 
against the practice, they say, are more common in the West 
than in Eastern Canada vher*> dealer" usually have had more 
sidelines wit' which to bolster their incomes. 

k) They point out, for instance, that they have always refused 
to sell directly to farmers at the branch houses and that 
in any cases where such selling has taken place, the corarais- 
slon has been forwarded to the dealer in whose territory the 
buyer resided. In the United States, a very frequent complaint 



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•+37 Footnotes to Chapter Nine 

of dealers has been iirected at iianui^acturer-owned retail 
stores, v;hich because o'' tneir greater cap' tal resources, 
are able to carry larger Inventories and grant more 
favourable terms than independent dealeis. This practice has 
not been followed to any appreciable extent in Canada. 

5) In "Stability in Connetition" , Econo^.ic Journal . XXXIX, 1929, 
p. hi. 

See also A. Smithies, ^''Optiraum Location in Spatial Competition", 
Journal o f Political . Economy , X//IX, 19^+1, p. ^-23, for some 
interesting rnodifications of this tendency to cluster, par- 
ticularly those which appear when greater elasticity charac- 
terises the demand for the individual products. 

6) Inventory costs as a factor in distribution expense are 
treated later in this chapter. 

7) Federal Trade Commission . 1938, p. 310. 

8) Ibid . 

9) Standing Co mmi ttee on Agriculture and Co lonisation^ Ottawa, 
1936, p. ^6i+. 

10) Farm Implement Prices Committee . Ottawa, 1937, p. 1252. 

11) The changed relation, as described in succeeding pages had 
been almost universal throughout the United States since 192^+. 

12) Special Committee on Farm Implement Prices , 1937) r» 1259. 

13) See above, p. 3I8 ff. 

Ih) ■Special Committee on Implement Prices , 1937, P. 1251. 

Perhaps, too, a part of any reluctance there was at follow- 
ing International's lead is attributable to a lethargic 
attitude during prosperous times even toward changes which 
during poorer times had seemed desirable. For During the 
depression, 

the officials of the companies who were questioned as to 
the connarative merits of the systems prevailing in the 
United States and Canada indicated that in their opinion, 
from the company's standpoint, the United States system was 
preferable, as it removed from the companies a number of 
items of costs which are carried by the companies in Canada. 

15) ibid. 

16) Submission to the Select Special Committee on Farm Implements, 
1952, (Saskatchewan), by the Canadian Cooperative Implements 
Limited. See chanter 8, fn. 9. 

17) ibid., also Report of the C.C.I.L. Annual Meeting held in 
Saskatoon, February 23 to 27, 1953. 

18) The costs incidental to the maintenance of inventorie- in any 
industry include the cost of storage, the interest costs on 



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M-38 Footn-tes to C ha^-ter Nine 

the money tied ud, and the costs of risk-bearing. Since 
iri-^lements can usually be stored outside, storage is not 
necessarily a costly item except insofar as the space nec- 
essary during peak demand periods may not be easily p "t to 
profitable use thro t.hout the rest of the year. There is 
almost certain to be soTie excess cariacity in terms of sr;ace, 
the overhead of vhieh (taxes, for exam.ple ) will continue 
throughout the year, even when it is used for only a few 
"lonths or W'^rheps weeks. This constitutes p^rt o^ the 
overhe?-d which we have referred to as having been duplicated 
throigh the clustering of retailers in the distribution of 
imple-nents. Interest costs, of course, become larger as 
the i'nplement i^ moved further and further from the factory 
with q conseq^ient increase in its capital v^lue; and if 
the implement is sold on credit, as is most often the case 
in the implement industry, the interest charges continue 
on unpaid b-'.lances until the final 'i^ayment is made. The 
risk associated with inventories has always been high, 
especially when implem.ents were shipped to dealers on oon- 
slgnment. 



19) T^, 231 



FOOTNOTES TO CHAPTER 10 



( p. 367 to p, 399) 



1) Seager and feulick, "Trust and ^orporation Problem-" p.3l2. 

2) Cf. F.H. Chamberlin, "The Theory of Kononolistic Competition, 
HprvTrd, 19*+7, p. 56. 

"A general class of product is differentiated if any si;-n- 
ificant basis exists for distinguishing the goods of one 
sell'^r from those of another. Such a basis may be real or 
fancied, so long as it is of any importance whatever to b ly- 
ers, and le-ds to a preference for one variety of the product 
over another, where such differentiation exists, even though 
it be slight, buyers will be naired with sellers, not by 
change and at random (as under pure competition) but accord- 
ing to their preferences". 

3) Under the credit terms offered by the implement industry 
in Canada during the twenties and early thirties he cert- 
ainly could not hope to gain. See below, p, 378. 

W) John Howison, "^ketches of Upper Canada" Edinburgh, 1825. 
Quoted in Innis and Lower, "Select documents" II p. 239; 
see also ibid., p. 7^8. 



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M-39 Footno tes to ^ hapt er Ten 

5) Hutchinson, op. cit. II pp. 6Uff. 

6) Bureau of Corporations ^ "Report on the International Harvf^ster 
Company, 1913, p. 29. 

7) See V.C. Fowke, "Canadian Agricult iral Policy: The Historical 
Pattern", Toronto, 19^7, t. lS3ff. 

8) Special Committee on Farm Implement Prices , 1937, p. 1237, 

9) See above, p. 289. 

10) Special Committee on Farm Implement Prices , 1937, p. 1256. 

11) Cf. the president of the Massey-Harris Company to the ^tending 
Committee on Agriculture and Colonisation, 1936: 

"It seems a perfect tragedy on a morning In collection time 
to see eight men starting out with eight automobiles who 
have got to be paid by somebody, to collect accounts". 

12) See above, p. 319. 

13) Cf. the testimony of Professor E,A. Hardy before the Standing 
Committee on Agriculture and Colonisation, 1936, p. 295? 

"A number of years ago the Implements were sold outright 
by the American companies to their a /'^nts, leaving the whole 
matter of credit in the hgnds of the af^ents. However, dur- 
ing the Tjast number of years conditions In North Dakota 
and Montana have been such that the agents could not con- 
tinue In this way; consequently the Implement companies have 
been handling the credit for their agents and have practic- 
ally operated on a consignment system. A great many of the 
agents could not carry stocks at their agencies If they had to 
oay cash for them. In the event of time sales, the agent 
. . obtains a statement from the customer and submits it to the 
jvr' nearest brance office for approval, after whivh the trans- 
action Is practically concluded by the branch office," 

1*+) Clauses of this type are also common in the industry in the 
United States. For a comprehensive survey of the content 
of dealer contracts in the American industry, see the Report 
of the Federal Trade Commission on the Agricultural Implements 
Industry for 19^8, pp. Il3ff . . 

15) S pecial Committee on Farm Implement ^rices ^ 1937* P. 1257. 

16) Annual Report on F.I.L.A . for the year ending December 31, 
1952, Ottawa, 1953, 5'^'^ previous years. 

17) Annumber of reasons might be advanced for this but perhaps 
most important is the greater reliance on credit in the 
West resulting from the predominance of wheat as the main 
cash crop. 

18) "Competition Among the Few", p. 186. 



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APPENDIX A 

(Chart III - p. 223) 

Destination of Exports 

The United States has become an Increasingly 
i^port^nt market for Canadian agricultural iniiDlements. Of a 
total export of $23,^36»000 in the years 1937, 1938 and 1939 
(fiscal years), •^7,'+73»0^^» or 31.9^ were destined for the 
American mark-^-t. Of a total export of -1^287, 756, 0'^O in the years 
1^50, 1951, and 1952 (callendar year.-^), $237,331,000 or 82.75^ 
went to the American market. The relative imnortance of ex- 
ports to the United States was greatest in 1952 when just below 
30% went there. 

Great Britain, ^outh Africa, Argentina and 
Australia ?nd New Zealand, all relatively import-^nt markets 
for Canadian imrlements before VJorld War II had become almost 
insignificant parts of the total bp 1950. Together in 1952 
they accounted for only about 5% of the tot.l export. 



Destination of Exports (1935-^9) 

1215 1236 1232 

Total 

Export 3,567,253 6,3^1+, '+37 6,276,608 

U.S. 603,01+0(16.9^) 2,^+67,203(39. OA) 1,926,351(30.7^) 

S. Af. 1,038,636(29.1^) 1,1^0,725(18.0!^) 1,085,158(17.3$^) 

U.K. 593, 915(16. 65^) 77^,526(12.2^) 1,086, 5^+8(17.3^) 

Arg. 66i+,667(l8.6$g; 1,059,096(16.7.^) l,023,76'+(l6. 3J^) 

A.-N.Z. 2^3,310( 6.8^) 371,332( 5.9^) ^6l,922( 7.3^^) 

iSia 1232 

Total 
Export 10,705,957 6,*+53,0^2 

U.S. 3,7'+3,'+73(35 '^) 1,802,895(27.9^) 

S. Af. 1,21+1,678(11.6,^) 830,282(12.9,^) 

U.K. 1,1+ 12, 1+29 (13. 2^-^) 83I+, 563(12.9^) 

Arg. 2,695,17it(25.2^) 1,733,^86(26.9^) 

A.-N.Z. 555,962( 5.2^) 5'+3,030( 8.1+;^) 



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19^5 19'+6 I9tf7 

Total 

Exports 20,196,08'? 28,661,562 1+2,237,917 

U.S. 8,9<^3,712(i+»+.'^jS) l^,if60, 331(50. 5':^) 23,^78,709(55.65^) 

S. Af. 1,231, 36l( 6.1/*') l,856,772( 6.5^) 2,3'+l,65^( 5.5%) 

U.K. i+, 1+88,701(22.2,1) 2,58^,98i+( 9.0%) 3,35^,87^( 7.9^) 

Arg. I62,8n7( ,8t) 859,562( 3.'^^) 2,563,789( 6.1>) 

A.-N.Z. 220, 506 ( 1.1^) 211,3'+8( .7'^.') 5^+5, 350( 1.3^) 

France 1,033, 870( 5.1^) 9^6,0^1( 3.2^) 1,592,255( 3.8^) 

19^8 19'+9 

Total 

Export 73,760,071 92,527,276 

U.S. 50, 57 ■:■, 122(68.6'") 70,213,783(75.9,'^) 

S. Af. ^,033,30l( 5,5%) 2,Uq7,107( 2.7^) 

U.K. 3,836,o68( 5.2%) k,07k,095(i ^M) 

Arg. 236,226( — ) 31Q,696( — ) 

A.-N.Z. 35^,385( — ) 375,72l( — ) 

France 1,809, 5l6( 2,5'^^') 3,l60,'-+l6( 3.^;^) 



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"' APPENDIX B 

(Chart IV - p. 233) 

The Composition of Exports 

The principal types of inplements exported from 
Canada have shown some mnrked changes since 1935. Outstand- 
ing among these have been the spectacular increases in combine 
exports, and the appearance of tractors as an important item on 
the export list. Increases in combine exports havp been acc- 
ompanied by marked decreases in exports of binders and threshers, 
both of which had become negligible items by 1952. Plows, both 
disc and moldboard types have been important throughout the 
period. Drills, nigligible until the late forties when Inter- 
national Harvester concentrated their rnsnifacture in Canada, 
have become important in the early fifties. Harrows, cultivators 
and mowers have together accounted for only around 5% of total 
exports. 

In the accompanying tables, the composition of 
exports to the United States for the years 19^3 to 1952 are 
shown. The United States is the most important market for 
Canadian combines, tractors and drills. 



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APPENDIX C 
(Charts V(a) and (b) p. 2»+8 and 2»+9) 

Indexes o f Farm Income , Implement Prices and .I m plPTient S ales In 

Canada 

1920 to 1950 

(1935-39 == I'^O) 



Year 



1920 
1921 
1922 

1923 
192^+ 

1925 
1926 
1927 
1928 
1929 

1930 
1931 
1932 
1933 
193^ 

1935 
1936 
1937 
1938 
1939 

19^+0 
lPl+1 
19^2 

191*3 
19*+^ 

19'+5 
I9W6 

19^7 
19^8 
19»+9 

1950 



Farm 
Implement Sales Index 
($,0005 

61,227 182 

1+0,532 121 

20,932 62 

29,733 88 

21,677 6h 

23,631 70 

38,898 116 

52,538 156 

66,533 198 

52,38if 159 

38, "+10 11»+ 

12,130 36 

6,119 18 

6,106 18 

8,670 26 



19,3'+>+ 58 

30,755 91 

36,213 108 

3»+,060 101 

If 7, 7^8 IW2 

52,106 155 

50,1+62 150 

29,797 89 

5i+,82»+ 163 

6i+,293 191 

81,698 2U3 

122,395 36^ 

170,666 508 

217,690 61+6 

218,187 6»+9 



Implement 
Price Index 



92,2 

111.1+ 

89.9 

92.9 

102.1+ 

97.9 
97.6 

97.5 
97.6 
97.5 

97.0 
9'+. 9 
9^.1 
92.1 
9»+.6 

95.5 

97.8 

97.2 

loi+.i 

103.6 

105.8 
109.1 
111+.1+ 

117.1 
117.9 

116.1 
118.8 

126.3 
138.8 

158.3 



Farm 
Cash Income 
(1,0'Vo) 



963,^23 

9^+0,936 

1,072,^78 

936,297 

61+0, 5»+5 

1+50,1+55 
388,500 
£+02,038 
1+91,601+ 

519,1+63 
580,109 
639,991 
660,790 
718,701 

757,922 
Q25,8i+8 




1,701,179 
1,759,736 

1,^73,853 
2,1+70,611 
2,50»+,226 



165.0 2,233,^^8 



Index 



185 
126 
128 
12 1+ 

133 
155 

151 

172 
150 

103 
72 

62 
61+ 
79 

83 

93 
103 

106 

115 

112 
11+8 
185 
231 
296 

273 
282 

317 
396 
»+02 

358 









8^1 



C c o 



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<?cl 








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+'cl 






^ 


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Source s Used In Chart V, and App endix C 

Farm Impl ement .Sales; Annual Reports on the sale of farm 
implements and equipment in Canada base-i on returns submitted 
by Canadian manufacturers and by importers of foreign ^akes 
have been compiled and published by the Dominion Pmreau of 
Statistics since 1936. 

Figures for the years 1920 to 193^- 
Inclusive are those submitted by Pr. J.F. Booth of the 
Dominion Department of Agriculture to the Committee on Agri- 
culture and Colonisation in 1936. See the Minutes of Pro- 
cee'iings and Evi'lence of this Committee's investigation into 
the implement industry, Ottawa, 1936, p. I3. 

No reliable figure is available for 
1935. The base period used for computing the index for 
implement sales, therefore, was taken as 1936 to 19^0. 

Implement Price Index ; See "Price Index Numbers of Commodities 
and Services used by Farmers, 1913 to 19^8 (Revised 19^8)", 
Dominion Bureau of Statistics, Ottawa, 19'+8, and subsequent 
annual supplements. 

Farm Cash I n come ; Income figures since 1926 were furnished 
by the Agricultural Division of the Dominion Bureau of 
Statistics. They include direct government payments to 
farmers since 1939, though these have generally been less than 
1% of the total. Income figures for the years prior to 1926 
are not available; the index numbers used here were converted 
from a set of index numbers on a 1926 base presented by Dr. 
J.F. Booth to the Committee of 1936 (see Implement Sales, above) 
for "Gross Agricultural Revenue" for Canada. 



^ •- t, -.-, 



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1+1+7 

APPENDIX D 
(Chart VI, p. 25^) 



Farm Income In C anada 

($,000) 

Cash Income from Farm Farm 

Year Farm Produce Gross Income Net Income 

1926 965,871+ l,20i+,778 630,031 

1927 91+5,267 1,21+5,591+ 61+3,732 

1928 1,069,650 1,288,61+9 663,71+1+ 

1929 937,608 1,051+, 171 1+32,997 

1930 ' 61+7,070 918,706 339,620 

628,382 138,279 

57i+,872 133,535 

51+2,015 117,311 

658,11+6 210,500 

700,565 21+2,083 

708,721+ 21+0,671 

806,913 317,21+3 

85i+,l80 371,362 

951,218 i+5i+,9l5 

991,390 1+85,691+ 

1,030,600 516,501 

1,683,8^9 1,087,668 

1,551,21+1+ 878,133 

2,012,161+ 1,21+0,211+ 

1,761,831+ 971,582 

2,000,715 1,138,637 

2,251,085 1,206,209 

2,810,196 1,681,563 

2, 810, 7»+5 1,61+8,01+6 

2,737,211 1,1+91,876 

Data and Chart VI taken from D.B.S. Reference 
Paper ho. 25, Hanibook of Af;rlcu ltural St atistics « 
Part II, "Farm Income", Ottawa, 1952. 



While the above figures are for all of Canada, it 
should be mentioned that net income fluctuations in some areas 
are more pronounced than in others. In two provinces, net 
income was actually negative in some years of the depression. 
This was so in Manitoba in 1931, and in Saskatchewan in 1931, 
1932, 1933, 1931+ and 1937. 



1931 
1932 

1933 
193I+ 
1935 


1+76,101 

'+12,253 
1+22,567 
506,370 
536,030 


1936 

^^37 
1938 
1939 
191+0 


590,670 
61+1,976 
653,120 
716,062 
735,008 


19I+I 
191+2 

I9I+3 
I9I+1+ 
191+5 


885,257 
1,099,^^05 
1,1+06,970 
1,828,825 
1,695,811 


191+6 

191+7 
191+8 
19^9 
1950 


1,71+2,1+19 
1,965,01+7 
2,1+63,11+8 
2,i+Qt+,78l 
2,223,522 



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APPENDIX E 
(Chart VII, p. 267) 



Average S easonal I ndices of Employment 
In the Agricultural Implement Industry 



The first three boxes in Chart VII were taken 
from "Seasonal Variations of Employment in the Agricultural 
Implements Industry", The Labour Gazette . January, 191+8. 

The last was a-^ded by the author, the in'^ices 

being computed from e'nployraent figures (shown on p. '+'+9) 

supplied by the Employment and Payrolls Branch of the Dominion 
Bureau of Statistics. 

The indices deioicted in Chart VII were as follows: 

1922-29 1910-^9 l9l+o.^'^ 19^6-51 

Jan. 1 9h,5 98.0 97.6 96.9 

Feb. I 100.8 106.6 99.*+ 97.0 

«ar. 1 lOlf.6 111.6 101.5 100. 7 

Apr. 1 107.1 ll>+.7 100.5 102.2 

May 1 10^.^ 110.3 101.1+ 102.9 

Jun. 1 ink, 5 107.3 103.3 102.9 

107.6 103.0 101.8 

97.6 102.2 100.0 
85.0 98.2 98.1+ 

82.7 97.1 98.7 
88.2 97.2 97.6 
90.1+ 98.6 98.6 



Method of Comput ing the Indices 

Given the emploympnt data for the Industry by 
months, a centred 12-month moving average was computed. The 
original data was then expressed as a percentage of the 
appropriate centred moving average figure. These percentage 
deviations were then arrayed by months, for each of the 
periods shown, a modified mean of the percentage deviations 
was calculated and this mean was miltiplied by a correction 
factor in order to arrive at a final average seasonal index 
for the period. 



Jul. 


1 


105.8 


Aug. 


1 


102.6 


Sep. 


1 


93.7 


Oct. 


1 


^1.3 


Nov. 


1 


93.^ 


Dec. 


1 


97.3 



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