United States v. United Shoe MacHinery Corp.

Findings of Fact, Conclusions of Law, and Opinions.

I.

■ Introduction.

December IS, 1947 the Government filed a complaint against United Shoe Machinery-Corporation under § 4 of the Sherman Act, Act of July 2, 1890, c. 647, 26 Stat. 209, 15 U.S.C.A. § 4 in order to restrain alleged violations of §§ 1 and 2 of tliat Act, 26 Stat. 209, SO Stat. 693, IS U.S.C.A. '§§ 1, 2.

Stripped to its essentials, the 52 page complaint charged, first, that since 1912 United had been “monopolizing interstate trade and commerce in the shoe machinery industry of the United States” [Par. 27 \(a)]. This first general charge was then subdivided, as it were, into these charges: (a) “monopolizing the manufacture and distribution in interstate commerce of all major shoe machines, except upper stitching and cement sole attaching .machines” [Par. 27(b)]; (b) “attempting to monopolize the manufacture and distribution in interstate commerce of cement sole attaching machines” [Par. 27(b)]; (c) ' “monopolizing the manufacture and distribution in interstate commerce of numerous minor machines” [Par. 27(c)]; (d) “attempting to monopolize the manufacture and distribution in interstate commerce of * * * minor shoe machines” [Par. 27(c)]; and (e) “monopolizing the manufacture and distribution in interstate commerce of parts used in shoe machinery leased by United” [Par. 27(d)]. The second principal charge laid by the complaint was that United had been (a) “monopolizing the distribution in interstate commerce of numerous * * * shoe factory supplies” and (b) “attempting to monopolize the distribution in interstate commerce of * * * other such supplies” [Par. 27(e)]. Third, the complaint alleged United was “attempting to monopolize and monopolizing the manufacture and distribution in interstate commerce of tanning machinery used in the manufacture of shoe leather” [Par. 27(f)].

In support of this three-pronged attack, directed to shoe machinery, shoe factory supplies, and tanning machinery, the Government set forth detailed allegations with respect to acquisitions, leases, patents, and a host of other aspects of United’s business. The- part of this opinion containing findings of fact sets forth, in the same order as does the complaint, the Government’s allegations concerning, and this Court’s finding upon, each of these aspects. ■ ;

After stating its charges, the Government prayed ior an adjudication of United’s violations of both § 1 and § 2 of the Sherman Act; an injunction against future violations; a cancelation of United’s shoe machinery leases; a requirement that United offer for sale all machine types “manufactured and commercialized by it and be enjoined from leasing shoe machinery except upon terms * * * approved by the Court”; a requirement that, on such terms as the court may deem appropriate, United make available to all applicants all patents and inventions relating to shoe machinery; an injunction against United manufacturing or distributing shoe factory supplies; a cancelation of exclusive contracts governing shoe factory supplies; and a divestiture of United’s ownership of virtually all branches and subsidiaries concerned with shoe factory supplies or tanning machinery.

Defendant answered seasonably, denying all the significant allegations, and relying upon the judgments rendered by the Supreme Court of the United States in an earlier case brought against this company’s predecessor under the Sherman Act, IS U.S.C.A. §§ 1-7, IS note, United States v. United Shoe Machinery Company of N. J., 247 U.S. 32, 38 S.Ct. 473, 62 L.Ed. 968 and another case against this company under the Clayton Act, 15 U.S.C.A. § 12 et seq., United Shoe Machinery Corp. v. United States, 258 U.S. 451, 42 S.Ct. 363, 66 L.Ed. 708.

A trial of prodigious length followed. The court attempted to shorten the hearings by requiring defendant in advance of trial to submit to the Government’s exhaustive requests for discovery, by requiring the Government at the opening of its case to file a brief correlating all its proposed evidence, by encouraging the use of sampling *299 devices, and by insisting that the Government should, in formal answers, indicate in each branch of the case on what evidence it principally relied. Nonetheless, the hearings took 121 days and covered 14,194 pages of transcript and included the offer of 5512 exhibits totalling 26,474 pages (in addition to approximately 150,000 pages of OMR’s and over 6,000 soft copies of patents) and 47 depositions covering 2122 pages. At the close of the evidence the Court asked for briefs, and requested findings of fact and conclusions of law. The Government offered briefs totalling 653 pages, and requests totalling 667 pages. United submitted briefs totalling 1240 pages, and requests totalling 499 pages.

In an anti-trust case a trial court’s task is to reduce, as far as fairness permits, a complex record to its essentials, so that the parties, the Supreme Court, other courts, the bar, and the general public may understand the decree, and may recognize the premises on which that judgment rests. It is not the Court’s duty to make a precise finding on every detail of four decades of an industry. It is not its duty to approach the issues as an historian, an archaeologist [See A. N. Hand, Trial Efficiency pp. 31, 32, Business Practices Under Federal Antitrust Laws, 1951 Symposium, N. Y. State Bar Assoc.], an economist, or even a master appointed to settle every factual dispute. A trial judge who undertakes such tasks will unnecessarily sacrifice the rights of litigants in other cases clamoring for attention. Moreover, he will encourage just that type of extravagant presentation which has come to plague the field of anti-trust law. Hence this opinion is to be construed as denying on the ground of immateriality every request not granted.

Endeavoring to keep within reasonable and readable limits, this opinion, after this introductory part, sets forth in Part II findings of fact addressed to (A) defendant’s corporate structure, (B) fundamentals of shoe manufacture, (C) aspects of the shoe manufacturing industry, (D) a definition of the shoe machinery market relevant to this case, (E) defendant’s share of that market, (F) acquisition of property and patent rights, (G) restrictive agreements, (PI) leasing, (including written provisions, unwritten practices, service, effect of these provisions and practices on United, its lessees, and its competitors, and United’s pricing policy), (I) research, (J) policing of competition, (K) patents, (L) secondhand machinery, (M) shoe machinery parts, (N) shoe machinery supplies, and (O) tanning machinery. The aforesaid sections F to O follow the order of the Government’s complaint, and in no sense reflect order of importance. Part III considers questions of law pertinent to defendant’s alleged violations of the Sherman Act; Part IV, questions of remedy.

II.

[The ordinary reader can skip the whole of Part II, since its gist is summarized at the start of Part III. The role of Part II is primarily to dispose of 1166 printed pages of Requests for Findings.]

Findings of Fact.

A. Defendant’s Corporate Structure.

February 7, 1899 United Shoe Machinery Company was formed and took over the business of Goodyear Shoe Machinery Company, International Goodyear Shoe Machinery Company, Consolidated' & McKay Lasting Machine Company and McKay Shoe Machinery Company. March 1899, it acquired the business and property of Eppler Welt Machine Company and' International Eppler Welt Machine Company. This phase of United’s history has been explored in the Sherman Act case reported in D.C., 222 F. 349 and 247 U.S. 32, 38 S.Ct. 473, 62 L.Ed. 968. No- material new facts respecting this early period were shown in the present proceedings.

By merger in 1917, this defendant, United Shoe Machinery Corporation, a New Jersey corporation, organized on May 2, 1905, became the successor of United Shoe Machinery Company. The business now conducted by United Shoe Machinery Corporation has been continuous since the organization of United' Shoe Machinery Company on February 7, 1899, and for the purposes of this case no distinction usually need be made between the *300 enterprise formerly conducted by it and its predecessor. The enterprise is therefore usually hereafter referred to as United whether the reference is collective to the several corporations prior to 1917 or to the defendant alone after that date. The predecessor is sometimes referred to as the United Company.

United and. its subsidiaries, viewed collectively, are engaged in the development, manufacture, and distribution of shoe machinery and parts for that machinery; the servicing of that machinery; the manufacture of shoe factory supplies; and the distribution of those and other shoe factory supplies.

United manufactures at its main factory at Beverly, Massachusetts, all its shoe machinery, except treeing machines, tree feet, and irons, which it manufactures under the name of O. A. Miller Treeing Machine Company, at Plymouth, New Hampshire. Before January 1950 it manufactured certain machines under the name of Booth Brothers Company, at Rochester, New York; but in 1950 it transferred those manufacturing operations to Beverly.

Through branoh factories, United itself manufactures dies, at Binghamton, N. Y. and St. Louis, Mo., eyelets, under the name of J. C. Rhodes & Co. at New Bedford, Mass, and the S. O. & C. Co. at Ansonia, Conn., awls and drivers, under the name of United Awl & Needle Có. at West Med-way, Mass., shanks, under the name of United Shank & Findings Co. at Whitman, Mass, and Plymouth, N. H., and boxboard and fibreboard, under the name of Davis Boxboard and Fibreboard Division at West Hopkinton, N. H.

United has a majority of the voting stock of the following subsidiary corporations: B. B. Chemical Co., manufacturers of cements, blacking, adhesives, inks, stains, finishes, re-inforcing materials, waxes etc.; S. A. Felton & Son Co., brushes; Hoague-Sprague Corp., shoe-boxes, shoe box blanks, and box forming machines; Fred W. Mears Heel Co., Inc., wood heels and wedge blocks; Shoe Form Co., Inc., plastic shoe and hosiery forms, plastic utility boxes, and fish hooks; Shoe Lace Co., shoe laces; The Turner Tanning Machinery Co., tanning machinery; United Last Company, shoe lasts and bowling pins; W. W. Cross & Co., Inc., cut tacks and nails; and Krippendorf Kalculator Co., supplier of technical services for shoe factories.

United owns about 20%, of the voting stock of Tubular Rivet and Stud Company, manufacturers of hooks, rivets, and grommets. Defendant and E. I. du Pont de Nemours Company each own one-half of the voting stock of Celastic Corporation, manufacturers of celastic material and celastic box toes.

At February 29, 1950 United and controlled subsidiaries had 6274 employees. In the five fiscal years ending February 28, 1946, 1947, 1948, 1949, and 1950, United’s assets, as reported to shareholders, fluctuated between 103 million dollars and just over 105 million dollars; earnings before federal taxes between 9.4 and 13.5 million dollars; and earnings after federal taxes between 6.2 and 8.79 million dollars.

B.. Fundamentals of Shoe Manufacture.

In relation to this case it is necessary only to summarize certain aspects of shoe manufacture. Basic facts are that shoes are made to provide an approximate fit for every foot; no two feet are alike; consumers wish shoes for widely varying purposes, of widely differing styles, and of widely differing materials. Shoe styles have become increasingly varied as shoes have developed to serve not only strictly utilitarian, but also aesthetic, purposes, which alter as fashion alters.

Almost all shoes are made over wooden lasts. Lasts are made in graded sizes, and in models appropriate for the particular type of last style desired by the shoe manufacturer.

A shoe consists principally of the upper and the bottom. The shoe upper (of which the main components are the tip or toe, vamp, quarter, tongue, backstay, counter, box toe, ' lining, and doublers) is usually made from leather, though other fabrics are also used. Leather characteristics vary widely not only between skins of different types, but even in different areas of *301 the same skin. There is less variation in fabrics. The parts of the shoe bottom (of which the main components are the insole, outsole, heel, and shank-piece, and in some shoes the mid-sole and platform) are made sometimes of leather, and sometimes of other materials. Fastening operations are made by tacks, nails, wire, cement, thread, or fibre.

Shoe manufacturing proceeds by cutting parts from flat stock, joining them together as sub-assemblies, and shaping them over a last. The successive steps are performed differently in the manufacture of different shoes, but, so far as concerns this case, it will be sufficient to state that the steps often are performed, in succession, in the upper-cutting room, the upper-fitting room, the stock-fitting room, the lasting room, the bottoming room, the making room, the finishing room and the treeing room.

There are at least 18 principal shoe manufacturing processes, each of which involves distinctive operations in lasting or sole attaching or both. Those processes principally in use are: McKay, turned shoe, pegged shoe, nailed shoe, screwed shoe, Goodyear welt, McKay welt, single-sole stitchdown, two-sole stitchdown, three-sole stitchdown, prewelt, lock-stitch, cement shoe, cement welt, slip-lasted, soft-sole, rubber shoe, and moccasin.

Shoes for every known end use are manufactured by more than one principal manufacturing process. Each shoe manufacturer may vary the steps and operations used in the various processes according to his preferences, the materials used, the type of shoe, the profit-making potential, and many other variables..

Shoe manufacture is a long chain of detail operations, each preparatory to a succeeding operation and often requiring individual correction or adjustment. The final goal is the production of pairs of shoes of uniform and agreeable appearance, and appropriate fitting characteristics. This requires progressive correction of inaccuracies due to lasts, materials, industry practices, and operator performance. Such correction makes the manufacture of shoes different from'the usual fabrication and assembly process current in many other types of manufacturing industry.

C. Aspects of The Shoe Manufacturing Industry.

Since machines were introduced, begining with the advent, during the Civil War period, of the first McKay machine, shoe production has steadily risen. In 1899, 217 million pairs were produced; in 1927, 367; in 1937, 424; in 1947, 485. Peak all-time production was reached in 1946 at 529 million pairs.

There is no evidence that this increased production has been accompanied by an increase in the number of machines. In fact, the market for the more complex and expensive machines may have contracted.

In 1911 the number of shoe manufacturing enterprises was Í300; in 1927, 1377; in 1937, 993; in 1947, 1462. Shoe factories are located in over 30 states. In 1947, 437 were in Massachusetts, 391 in New York, 122 in Pennsylvania, and 121 in Missouri. No other state had more than 100. In 1947, there were 664 known factories having capacity of 1,000 pairs per day or less; 226, between 1,000 and 2,000 pairs daily; 107, in excess of 5,000 pairs daily.

While there are a few shoe manufacturers such as International Shoe Corporation and General Shoe Corporation with assets, employment rolls, and bargaining power comparable to defendant, the overwhelming majority of concerns are small in production, assets, and employment rolls. The industry tends to disperse to small towns and to migrate gradually westward and southward.

It has been easy to enter the shoe manufacturing business. Many have started with small capital; and some, from a small start have become large producers. The shoe manufacturing business has been highly competitive with respect to style, cost, choice of processes, production techniques, and other factors.

There is no standard set or Humber of shoe machines which every shoe manufacturer must have. He not only has personal *302 choice as to which process, processes, or sub-processes he will use, but he has wide choice as to whether a particular operation will be performed by hand, or by one or another type of machine. Some machine types have 'been familiar for a long time; others have been newly called into being by a new process or sub-process; others have been adapted to- a different process. The consequence is that the concept ■ of “shoe machinery” includes complicated relationships between different types of machines : in function, some types are parallel to other types; some are sequential to other types; and occasionally a pair of types which are competitive when used in two different shoe -manufacturing processes, are complementary when used in a single shoe manufacturing process.

Moreover, shoe machinery types may be as simple as a marking machine or a tack-detecting machine; or as complicated as a pulling over, toe lasting, heel seat lasting, or side lasting machine. With respect to the more complicated machines these generalizations may safely be made. To design them requires advanced engineering skill, familiarity with the problems of shoe-making, and generally, prolonged expensive research. Such complicated machines must have versatility and adjustability to meet varying last-styles, size-width combinations, combinations of materials and fastening materials, and shoes processed with varying degrees of skill. These machines will work with greatest satisfaction if shoes presented to them have been properly prepared in preliminary processes, and sometimes by appropriate auxiliary machines. No matter how skillfully designed, these complicated machine types will require frequent repair service. And breakdowns of such machines should be promptly attended to, because, in the shoe manufacturing industry, stoppages are particularly costly. The shoe manufacturer produces in small units or case lots; he must meet a market notoriously volatile, seasonal, and'fashion-ridden; his consumer is traditionally impatient; and his own labor cannot be efficiently and economically used if there is much down time. Moreover, there is a high degree of interdependence of machine operations in each factory, which accentuates the factors stressed in the last sentence. In support of the foregoing generalizations, defendant offered a wealth of corroborative detail. Recitation of that detail is unnecessary for the Government challenges not the accuracy, but the relevance of the generalizations.

D. A Definition of The Shoe Machinery Market Relevant to This Case.

The Government in paragraph 27(a) of its complaint charged defendant with monopolizing apparently all of the “interstate trade and commerce- in the shoe machinery industry,” and then in the following sub-paragraphs suggested that there are four appropriate sub-markets: (1) major shoe machines, except upper stitching and cement sole attaching machines; (2) cement sole attaching machines; (3) minor machines-made by United; and (4) other minor machines.

If it were important, it would not be difficult to find that there were various sub-markets, each of which as a matter of fact constituted an identifiable “part of the trade or commerce among the several States” within the meaning of § 2 of the Sherman Act. But in this case it is expedient to move directly to the question whether there is a more comprehensive market including not all of. the trade in shoe machinery, but all of that trade, except dry thread sewing machinery.

For the moment the exception may be disregarded, and attention focused on the propriety of broadly including in one aggregate market all other types of shoe machinery. In the previous section dealing with, characteristics of the shoe machinery industry, it was noted that some types of machines perform parallel functions, some sequential functions in relation to each other, and that some types are used only in one process, others in more than one. But regardless of. the relationship of a particular machine type to another type or to a particular process, they are in the same market, because all processes are in competition with one another. Each shoe manufacturer, regardless of what class of *303 shoe he makes, is aiming for that part of the ultimate consumer’s dollar that is spent on footwear, - and the processes that he uses, and the machines -he selects, therefore, compete with the processes and machines which others select. Indeed, United itself repeatedly emphasizes in its requests for findings how highly competitive the shoemaking industry is in production techniques and other factors.

Furthermore, United, by itself offering virtually all machine types (except dry thread sewing machines), helps to define the shoe machinery market. To define a market in terms of ’what the most important producer offers does not involve circular reasoning. For the problem of defining a market turns on discovering patterns of trade which are followed in practice.

Nor is it inappropriate so to define the market as to exclude dry thread sewing machinery. Again, without any circular reasoning, this exclusion might be rested on the fact that the dominant and most experienced shoe machinery manufacturer, United, does not offer such dry thread sewing machinery, and shows in its records, its internal and external communications, and its research and other activities that such sewing machinery is apart from the broad field of other shoe machinery. But the exclusion rests also on additional bases. No major manufacturer of sewing machinery makes other types of shoe machinery; and no major manufacturer of other types of shoe machinery makes sewing machinery. Sewing machinery, unlike other shoe machinery, is used in many industries other than shoe manufacture, and its manufacture does not require detailed knowledge of the whole art of shoe making.

E. Defendant’s Share of That Market.

As an aid to calculating United’s share of the market, plaintiff offered records of machines in shoe factories as of certain dates. These were the Outside Machine Installation Reports (OMIR’s), Outside Machine Supplemental Reports (OMSR’s), and Outside Machine Removal Reports (OMRR’s), collectively referred to as OMR’s.

Each of the OMIR’s and OMSR’s reports a particular shoe machine not made by United, and said to be in a particular shoe factory. The report is on a form with spaces for recording its date and serial number, the name and address o’f the shoe manufacturer involved, the title of the' outside machine, the name of its manufacturer, its serial number, the name of the company installing the outside machine, the date of installation, the terms upon which it was installed, the payments made by the shoe manufacturer, whethér the outside machine is in use, the shoe manufacturing function it performs, and the type of shoe upon which it is used.

The OMRR’s. recite information on the removal of an outside machine, the date of its removal, whether it has been replaced by another machine or hand labor, and the reasons for its removal.

There are about 76,000 OMR’s ■ in United’s files, all but 3 of which were prepared by United’s employees, usually upon the basis of what they saw, sometimes upon the basis of what they were told by the supposed users of the machines, rarely from other sources.

OMR’s are prepared in quintuplícate. One copy goes to United’s Patent Department, another to its Research Division, a third to the interested operating department, and two are filed by the Miscellane-’ ous A Department. The record of this case abounds in instances where these OMR’s have been used in United’s business by the Miscellaneous A Department in preparing weekly bulletins, by United’s operating departments in preparing annual reports, by personnel in the Research Division, by the Patent Department and by others. Therefore, regardless of whether the author of a particular OMR himself observed what he reported, the OMR is admissible in evidence as an adoptive admission. United States v. United Shoe Machinery .Corp., D.C.Mass., 89 F.Supp. 349.

*304 In considering the reliability, as distinguished from the admissibility, of the OMR’s, these factors deserve mention! The OMR’s cover only the factories to which United’s representatives have access. Yet, without laboring the point, it is clear that these are factories where more than 95%, of all American shoes are made. The OMR’s are not absolutely current with respect to installations and removals of competitors’ machines; but the constant checking by United’s representatives keeps the inventory at least as up-to-date as is apt to be the case with any other industry-wide reporting system. The OMR’s do not report accurately the details in any particular shoe factory, as was evident from 45 depositions taken in 1948 — 1949; but these depositions also show that the aggregate industry picture was substantially as portrayed in the OMR’s — such discrepancies as existed being due, in part, to the fact that the sample was over-weighted in favor of factories using the cement process. Furthermore, the picture given by the OMR’s as to one very important area, that in which United competes with Compo, was proved to reflect with high accuracy the number of machines Compo had competing with United — for the testimony of Compo’s own witnesses tended to corroborate the OMR’s. Most important of all, is United’s own use of these OMR’s in connection with business decisions at the operating, patent, and research levels. They enter, albeit often indirectly, into the planning of production, the setting of terms of distribution, and a host of other business judgments. Although explicit use of OMR’s usually occurs at a subordinate level, and not by officers or the general manager, nonetheless the management makes its decisions on the basis of subordinates’ recommendations, which the latter make partly on the basis of the OMR’s. When a business allows its own important judgments constantly to be affected by a statistical survey unflaggingly made, diligently kept current, and repeatedly consulted at least by subordinate advisers to the officers, then the statistical material may be used by a court to some degree as reliable evidence against the business.

For the foregoing reasons, the Court finds that, subject to minor corrections not affecting the general picture, the following tabulation, drawn from the OMR’s, approximately reflects the relation between United’s machines and competitors’ machines in American shoe factories about May 1, 1947.

USMC and Other Shoe Machines Outstanding

In Footwear Factories as oe About 5/1/47.

USMC Machines Others Machine Types Total USMC Share of Total

16,346 1. Clicking ..................... 16,346 539 16,885 97%

2. Eyeletting ................... 2,296 545 2,841 81%

3. Cutting Press (Dinking)....... 3,319 316 3,635 91%

4. Pulling Over................. 3,145 19 3,164 99%

5. Lasting — Total ............... 12,561 796 13,357 94%

Bed Lasting.................. 5,233 54 5,287 99%

Hand Method Lasting......... 1,763 52 1,815 97%

Heel Seat Lasting............. 1,463 3 1,466 99%

Platform Cover .............. 361 332 693 52%

Pre-Welt Lasting ............ '99 90 189 52%

Staple Side Lasting............ 2,627 6 2,633 99%

Stitchdown Lasting........... 542 259 801 68%

Welt Toe Lasting............. 473 473 100%

6. Welt Sewing................. 1,470 40 1,510 97%

7. Inseam Trimming ............ 595 3 598 99%

*305 Machine Types USMC Machines Others Total USMC Share of T otal

8. Outsole Laying............... 1,029 99 1,128 91%

9. Rough Rounding ............. 1,430 31 1,461 98%

10. Outsole Stitching............. 3,537 309 3,846 92%

11. Cement Sole Attaching........ 870 1,319 2,189 40%

12. Littleway Lockstitch .......... Sole Sewing 580 58 638 91%

13. McKay Chainstitch........... Sole Sewing 498 65 563 88%

14. Loose Nailing................ 1,224 23 1,247 98%

15. Outsole Leveling .. /.......... 1,082 29 1,111 97%

16. Fibre Fastening .............. 470 470 100%

17. Heel Attaching. — Total........ 3,168 230 3,391 93%

Leather & Rubber............ Heel Attaching 1,682 27 1,709 98%

Wood Heel Nailing........... 814 172 986 83%

Wood Heel Attaching......... 672 31 703 96%

18. Slugging..................... Other Machine Types Listed By USMC Departments 773 72 845 91%

19. Cement Shoe................. 3,415 2,130 5,525 63%

20. Cutting Die .................. 673 87 760 89%

21. Eyeletting ................... 839 839 100%

22. Fitting Room ................ 13,555 9,730 23,285 58%

23. General ..................... 19,416 7,781 27,197 71%

24. Goodyear .................... 7,722 1,077 8,799 88%

25. Heeling ..................... 3,502 695 4,197 83%

26. Lasting ...................... 3,192 438 3,630 88%

27. Littleway .................... 853 50 903 94%

28. Metallic ..................... 3,380 986 4,366 77%

29. Pulling Over................. 4,138 138 4,276 97%

30. Rubber Shoe ................. 709 769 1,478 48%

Totals ......................115,787 28,374 144,141

At the Court’s suggestion, the Government took and offered in addition to the OMR’s depositions of 45 shoe manufacturers operating 55 factories. The Court arbitrarily selected from a standard directory of shoe manufacturers, the first 15 names that began with the first letter of the alphabet, the first 15 names that began with the eleventh letter of the alphabet, all 8 of the names that began with the twenty-first letter of the alphabet, and the first seven of the names that began with the twenty-second letter of the alphabet. This sample covers 3 per cent of the shoe manufacturers. The sample includes small and large factories, and concerns manufacturing shoes according to substantially the most popular shoe manufacturing processes. Probably the sample unintentionally overrepresented machines used in the cement process, somewhat under-represented those in the Goodyear welt process, and greatly under-represented those used in the stitch-down, Littleway Lockstitch, and some minor processes. But these and any other distortions discussed at this bar, would have the effect of showing United with a smaller percentage of the aggregate market than a better devised sample. And in criticising this sample, United has not suggested, much less offered, a preferable sample. If antitrust trials are to be kept manageable, samples must be used, and a sample which *306 is in general reasonable should not be rejected in the absence of the offer of a better sample. For the foregoing reasons, the Court finds that, subject to minor corrections not affecting the general picture, the following tabulation, drawn from the depositions, approximately reflects the relation between United’s machines and competitors’ machines in American shoe factories in the summer of 1949.

USMC and Other Shoe Machines Outstanding In 55 Selected Shoe Factories

Machine Types USMC Machines Others Total USMC Share of Total

1. Clicking ..................... 568 10 578 98%

2. Eyeletting ................... 48 12 60 80%

3. Cutting Press ................ 47 12 59 78%

4. Pulling Over................. 89 89 100%

5. Lasting ...................... 403 17 420 96%

6. Welt Sewing................. 36 36 100%

7. Inseam Trimming ............ 15 15 100%

8. Outsole Laying............... 18 19 95%

9. Rough Rounding ............. 35 35 100%

10. Outsole Stitching............. 100 4 104 96%

11. Cement Sole Attaching........ 19 60 • 79 24%

12. Littleway Lockstitch .......... 20 2 22 91%

13. McKay Chainstitch ........... 11 2 13 85%

14. Loose Nailing ............... 20 20 100%

15. Outsole Leveling ............. 41 44 93%

16. Fibre Fastening .............. 6 6 100%

17. Heel Attaching............... 110 6 116 95%

18. Slugging .................... 18 Other Machine Types Listed By USMC Departments 11 29 62%

19. Cement Shoe................. 95 139 234 41%

20. Cutting Die .................. 19 4 23 83%

21. Eyeletting ................... 5 5 100%

22. Fitting Room................. 587 726 1,313 45%

23. General ...................... 993 312 1,305 76%

24. Goodyear .................... 191 38 229 83%

25. Heeling ..................... 104 20 124 84%

26. Lasting ...................... 105 13 118 89%

27. Littleway .................... 31 1 32 97%

28. Metallic ..................... 108 91 199 54%

29. Pulling Over................. 160 7 167 96%

30. Rubber Shoe ................. 1 1 100%

Totals 4,003 1,491 5,494

To make a highly accurate computation of the share of the shoe machinery market which United 'had at the time the complaint was filed, more is needed than the OMR’s and the depositions which show only machines in position. But much of this additional material is in the record. It includes United’s own estimate in words, and in rates set, of the relative importance to the shoe industry of different machine-types; .United’s own statements as to the degree to which each machine-type is useful in each of the different processes; the periodic flow of both sold and leased ma *307 chines from United; and the periodic flow of revenues from both sold and leased machines. These are sufficient for calculating the share of a market of diverse products of which some are sold, and some leased. The calculation, for example, would not need to be based exclusively upon United’s share of the value of the outstanding stock of machines; it could be estimated from United’s share of the value of current services flowing from those machines, or on some hybrid method combining stock and flow.

There is no advantage in a Court discussing these or other different methods of calculation and applying them with minute care to the subsidiary facts in the record. For the evidence is all in one direction. United offered no evidence; did not suggest that some other method of sampling should be used; and does not now offer any method of calculation. This, of course, does not relieve the Government of its burden of proof. But, on the uncontradicted evidence, it is transparent that, by any measuring rod, United supplies 75% to 95% of the total current demand for shoe machinery, exclusive of dry thread sewing machinery. Different methods of weighting the various factors would produce different results; but no reasonable, qualified person would, by any rational process, reach a figure outside that range; and probably most methods would reach a figure close to the middle of it. Moreover, even though this high figure is not attained in every part of the market, nonetheless the figure may be fairly used since United supplies in every significant generic class of shoe machinery, except machinery used in the cement process, and in rubber shoe manufacturing, and of course, excepting dry thread sewing machinery, far more than 50% of the demand. In short, it is not inaccurate in this market to say United has a 75-95% share; and it probably would be accurate to say an approximately 85% share.

Before turning to the several different alleged means of monopolizing, (such as post 1920 acquisitions, leases, and other business practices,) of which the Government complains, it should be noted that by far the most important means by which United originally achieved its share of the market and its market power was that set of transactions in 1899 by which it brought under one corporate control the business.of the so-called constituent companies. But these transactions have already been adjudicated in favor of United, and are not now in issue. The issues of fact now under review relate to how United's market power has been maintained and exercised since the earlier adjudication. This requires a consideration of United’s acquisitions, agreements, leases, patents, research, and other business practices.

F. Acquisition of Property and Patent Rights.

In its complaint the Government listed 15 examples of United “disabling actual or potential competitors by the acquisition of their assets and the employment of their key men.” [Pars. 29-51], The trial brief added 15 more. The earliest of these 30 transactions occurred in 1916 or 1917; the latest in 1938, 9 years before the Government filed this complaint. All the property and patent acquisitions taken together appear to have involved just over 3% million dollars. This total is probably less than Veth of what was expended in the same time for research.

Under the Court’s prodding, the Government listed as the four most important acquisitions those involving General Shoe Machinery Company, Alexander E. Little, Beacon Folding Machine Company, and C. C. Blake, Inc. Probably it would be satisfactory to state summarily the findings on each of these four instances. But the immediately succeeding paragraphs give the first instance in some detail not only because so much testimony was addressed to it, but because the Government contended (a contention which the Court expressly rejects) that there was a covert, discreditable design not immediately apparent.

(1) General Shoe Machinery Company.

General Shoe Machinery Company was organized before 1916. In 1921 its shares of stock were held as follows: 575, by International Shoe Company, one of the country’s largest shoe manufacturers; 235, *308 by General’s president; 500, by an independent attorney, Gladney; 1500, by Gladney’s client, Ferguson; 583, by others. A reason for International’s original interest was its dissatisfaction with United’s then form of lease. After the Government secured a decree against United in the Clayton Act case, 258 U.S. 451, 42 S.Ct. 363, 66 L.Ed. 708, and after United’s subsequent change in its leases, and in the face of General’s losses in every year after 1917, International was unwilling to give General further financial backing. General could not proceed without outside aid.

International’s president, Rand, approached United on March 9, 1923. At that time, General’s commercial business was derived principally from its business in treeing machines, of which it leased over 100, mostly to International. But General’s inventor, Ballard, had made other inventions, including a welter, a sole layer, channeling machines, upper trimming machines, inseam trimming machines, hand tackers, and a device for creasing vamps. Moreover, from these inventions General had developed a complete line of shoe machines which was currently producing a cheap and a medium grade of welt process shoes at the Spencer, Massachusetts plant of Groat Shoe Company.

United’s president, Winslow, did not commit himself in March or later in 1923 to acquire all, or substantially all General’s assets. He was mindful of the risks of being charged with an anti-trust violation.

March 9, 1923, United wrote General a letter that United had information that General’s machines at the Groat factory were infringing United’s patents. In accordance with permission given by General’s representatives, United’s representatives examined the Groat factory machinery and the General patents. United’s representatives reported that Ballard’s invention was an improvement on United’s existing two types of channeling machines, and that Ballard’s application antedated United’s but that machines embodying Ballard inventions would infringe United’s patent, and that, therefore, there was a blocking situation. These representatives also reported that Ballard’s inventions in regard to upper trimming machines, inseam trimming machines, and hand tackers would constitute improvements in United’s machines. United purchased the foregoing Ballard inventions and application, any rights General had to Ballard’s future inventions, and a non-exclusive license under Erikson patent No. 1,084,259 with respect to a heel-breasting machine. United paid General $100,000 on June 8, 1923, and $300,000 more on August 11, 1923. When General disposed of these assets, it terminated Ballard’s employment but not his position as director. Ballard applied to United for employment, and received it.

After these 1923 transactions, General continued its development work on its welter and its sole layer, experimented with the former in International’s factories, and installed the latter at International and two other shoe manufacturers. Its power treeing machine business virtually ceased. It sold 128 of these machines to International which had been leasing them. It sold similar machines to other lessees. It made almost no new leases of similar machines in 1926 and 1927; so that by October 31, 1927 only 32 such machines were on lease.

In February 1927 Rand asked United to buy General’s assets; but Winslow, United’s president, refused to make such an agreement. In July 1927 Rand told Wins-low International was considering liquidating General and taking over what was necessary to maintain such General machines as International owned. Rand asked for Winslow’s advice, and Winslow said he did not know what help he could give but he would be glad to look over a list of General’s assets. Rand sent Winslow on July 28, 1927 a list of General’s assets, and on September 1, and again on September 20, a request for an appraisal by a United employee. December 27 Rand asked for the appraisal. ' December 31, Winslow, having seen the appraisal by United’s employee, Booth,’ wrote Rand that the Booth report would go forward but Winslow knew the figures would be disappointing to Rand as they were to him. January 31, 1928 Rand telegraphed Winslow that International was purchasing the assets and want *309 ed United to service the machines. March 1928 International purchased for $150,000 General’s assets, except its machine tools, transmissions, small tools, furniture, fixtures, raw material, and shipping supplies. In

March 23, 1928, United paid International $75,000. $35,000 was for spare parts, and the tools necessary to make