Bottles' Bottleneck

In a Toledo (Ohio) Federal court, the Government's anti-trust suit against eleven major glass-container companies (and one trade association) finally went to trial last week. Jury box and coat racks were pulled out to make room for 23 company lawyers, Special Assistant to the Attorney General Samuel Shepp Isseks, six other Government attorneys. To the witness stand stepped dapper Francis Goodwin Smith, president of aptly named Hartford-Empire Co., which the Government charged had run the industry like a private NRA. Agile Sam Isseks opened fire. As Smith started answering, slowly and with long pauses, prospects were that he would not step down from the stand for good until at least mid-April.

Until 1905, milk bottles and fruit jars were made by blowers who worked molten glass into bubbles, dropped the bubbles into molds, huff-puffed them into shape. The most leather-lunged glass blowers could turn out no more than 800 bottles a day. Then one of them named Michael J. Owens, even longer on brains than on wind, built a machine which produced 30,000 a day. His invention made glassware a mass-production industry overnight. It also molded one of the tightest patent controls ever known in U. S. manufacturing.

Ownership of Owens' "suction" process (socalled because molten glass is sucked into a mold by vacuum) passed to Owens-Illinois Glass Co., now largest glass-container manufacturer in the U. S. Patents on the only other successful modern method (the more recent "gob-fed" process in which blobs of molten glass are dropped into molds) have been held by Hartford-Empire. Through cross-licensing agreements, Hartford-Empire gained influence over both methods, placed itself in a position where for all practical purposes no manufacturer could make a single bottle if Hartford-Empire turned thumbs down. Hartford-Empire's President Smith was one of the first witnesses to make good newspaper copy for TNEC when it began its patent hearings in 1938. In recent years, TNEC revealed, 96.6% of all glassware made in the U. S. has come from machines owned or licensed by Owens-Illinois and Hartford-Empire. Of three independent companies making the other 3.4%, two were being sued by Hartford-Empire for patent infringement. A patent holding company pure & simple,'Hartford-Empire merely licensed its patents or rented its machinery, made nothing but money (67.77% on the $2,870,000 capital employed in 1937 operations).

The Government's anti-trust suit alleges that Hartford-Empire dictated to its licensees what kind of glassware to make, how much to make and whom to sell to. The Government also charges that Hartford-Empire frequently refused to license manufacturers at all.

Two months ago, the glass men were reported ready to sign a consent decree. This would have dissolved Hartford-Empire and transferred its patents (for $15,500,000) to a new cooperative known as The Glass Institute, which would have held them for the benefit of the entire industry and any newcomers who might want to enter the field. But the signatures never reached the dotted line, and the Government went to court. One story was that Hartford-Empire balked at the prospect of having to pay income taxes on the $15,500,000 sale. Another: that the smaller defendants objected to helping pay for the Hartford-Empire patents, which henceforth would have been available free to new competitors.

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