The association's attempt to control prices directly has been unsuccessful largely because it feared price cutters and the courts, as well as on account of the necessity of a signed agreement. Control of prices by indirect methods, however, has proved partially successful, in a great measure because of the coopera tion of the manufacturers. The plan adopted was to have the manufacturers fix the retail prices.
The unqualified success of the association in cer tain fields has been attained because (1) the members have presented a united front against common rivals, and (2) the association has disarmed these rivals by adopting the legal and business organization of the latter. The case most illustrative of the association's success is its victory over the jobbers. In 1899 the organization purchased the so-called Buyers' Ex change. In 1903 the exchange, in purchasing for all tbe members, ordered goods in such quantities as to be able to buy directly from the manufacturers. The jobbers brought pressure upon the manufac turers to remove the association from their list, and some of them yielded. The association solved the problem, however, by selling the exchange to the Girard Grocery, Company, a corporation organized to do a jobbing business, and tbru it the members of the association were able to do their purchasing on practically the same terms as before.
9. would be beyond the scope of this book to attempt a complete classification and descrip tion of pools.1 Many formal pooling agreements were made between 1879 and 1887. These formal agreements gave the constituent corporations com plete possession and control of their separate prop erties. They controlled the amount of output, di Vided the markets, according to either territory or quantity, or in some other way pooled the profits. A better idea can be obtained of their general na ture from a description of their method of business.
10. Steel 1887 the steel-rail pool was formed. Some of its operations were guided by an express agreement, some according to outside ar rangements. The agreement created a Board of Con trol of three men who, under certain restrictions, al lotted the steel-rail output of the country to the con stituents, in a proportion running from 1.4 per cent to 13.5 per cent. There was a penalty of $1.50 to
$2.50 for each ton produced in excess of the allotted amount. This last provision was not stated in the agreement, nor was the schedule of prices, tho there is little doubt that such a schedule was fixed and gen erally adhered to. The pool finally broke up be cause, while the price schedule was observed, it was found that the largest company was furnishing to its customers, without extra charge, the spikes needed to fasten the rails to the ties.
11. Addyston pipe pool -svhich was the object of the first successful-prosecution of an indus trial combination under the Sherman Anti-Trust Act —the Addyston pipe pool—is described by- Haney as follows: 1 The avowed object of the pool was to regulate prices, and its chief means lay in a pooling of the incomes, which will be described briefly below ; but half the story hangs upon its division of territory. In the first' place, the United States was divided into two great territories, known as "pay territory" and "free territory." It must not be supposed that pipe was free in the latter region. It was merely the territory in which the members of the pool were free to sell on such terms as they chose, without paying anything into the pool. "Pay territory," on the other band, embraced the states in which, for every sale made, a bonus had to be paid into the pool. There were thirty-six such states, Virginia and her sister commonwealths to the north and east being "free." The fixed bonuses ran from $1 to $4 per ton ac cording to the state.
Besides this territorial arrangement a system of "re served cities" was evolved. Thus a resolution of 1894 pro vided that "The Addyston Pipe and Steel Company shall handle the business of the gas and water companies of Cin cinnati, Ohio, Covington and Newport, and pay the bonus heretofore mentioned, and the balance of the parties to this agreement shall bid on such work at such reasonable prices as they shall dictate. . . . Dennis Long and Company of Louisville, Kentucky, shall handle Louisville, Kentucky, Jef fersonville, Indiana,, and New Albany, Indiana, furnishing all the pipe for Gas and Water works in above-named cities," and so on for each member. Clearly a prominent feature of this agreement was a pooling of ,the market.