about eight hundred such patents owned by the members of the N. A. C. C.

The practicability of this agreement is clearly evident when one stops to realize that a patent of this kind does not give the holder the right to manufacture a car. If it is an improvement on an engine, for instance, the holder of the patent must get licenses from the holders of all other patents on that engine before he can manufacture it. And none of these holders of other patents could make use of his improvement, which might be highly valuable, until they had gotten the right to do so from him. It is obvious that the development of an industry can be seriously retarded by patent conflict and litigation.

The nearest thing to this cross-licensing agreement that had existed up to that time was an agreement between the General Electric and the Westinghouse Electric companies covering an interchange of certain of their patents. But there a compensation was paid. The scheme has since been adopted by the aircraft industry, but never before had it been contemplated for an entire industry.

TH

"COÖPERATIVE COMPETITION"

HUS did the automobile makers solve in a new and sensible way one of the most difficult problems that faces young manufacturing industries. It was the principal rock on which most of the companies in the flour milling machinery industry were wrecked. It was the rock that split the agricultural implement concerns into bitter competitors. The solution in that latter case was the old method of combining the companies. That was not brought about, however, until the bankers had given warning that they would no longer supply money unless the companies stopped their costly patent litigation. There is an interesting story of how the bitter antagonists in that field were brought on to New York, lodged in separate hotels-while the plans for the formation of the combination were being completed-and how each one signed the agreement for the formation of the combination not knowing whether he was the first to sign or not. There has never been keener competition than in the automobile field, and yet there is wholesome cooperation. A phrase has been coined to describe this situation: "coöperative competition." By eliminating the rock on which manufacturers in other industries had been wrecked, or had been

forced to combine for their own salvation, the automobile makers reaped some of the advantages of combination without losing any of the benefits of competition. The life of this agreement was fixed for its trial at ten years, but it has operated so successfully for the past six years that there is little doubt that when it expires in 1925 it will be extended.

The National Automobile Chamber of Commerce performs other valuable service for its members in connection with patents. It maintains a patent department under the management of Mr. Robert A. Brannigan, which studies every patent that relates to the automobile industry. As one of every four patents issued by the Patent Office in Washington does relate to the automobile, this keeps several men busy. When any patent is brought to the attention of a member of the Chamber, it is referred to this patents department. If it seems to be a valid patent and the invention is one that has merit, the patents department then undertakes the negotiation of a uniform license for the benefit of the members of the Automobile Chamber of Commerce and the industry as a whole.

An example shows how this works. A man named Wright invented a hinge for the engine hood that was protected from the rain by a fold in the upper part of the hood. He licensed one company to use his patent at twenty-five cents a car; then he licensed another at fifteen cents, and another at ten. This got him into trouble with the companies that were paying the higher royalties. When he died, leaving his patent to his wife, she was realizing practically nothing from it. Other companies had seen the hinge and started using it.

Several members of the National Automobile Chamber were charged with infringement of the patent. Mr. Hanch, as chairman of the patents committee, saw Mrs. Wright. He explained to her that a small uniform royalty would not only be fairer to the industry, but also more profitable to her. Mrs. Wright fixed a five cent royalty. To-day she is receiving a handsome income from her husband's invention as it is being used on about eight hundred thousand cars a year.

A case of the opposite character, where it seems clear that the inventor is not getting anywhere near what he might, because he asked too much, is that of the Knight sliding sleeve valve motor. Mr. C. Y. Knight invented this type of engine in 1904 and pa

tented it in 1910. At that time the poppet valve motor in general use was not entirely satisfactory. The Knight motor was apparently an improvement over it. But American manufacturers would not consider using the new invention at the high royalty Mr. Knight asked for it. He went to Europe and was successful in getting some foreign makers of high-priced cars to adopt it. They agreed to a royalty based on horse-power that averaged about sixty dollars a car. They stipulated that if manufacturers in any other country were licensed at a lower rate, they were to get the benefit of the lower rate. Then Mr. Knight came back to this country and found American manufacturers more interested in his motor. But when he told them his rate of royalty again they said it was too much. And to-day only four companies in this country use the Knight motor, and under an agreement which, without changing the rate of royalty, limits the amount of payment each year to a fixed maximum. This, in effect, greatly reduces the royalty per car for a large producing company. (If the foreign companies' production ever brings their royalties up to this maximum they will enjoy the same limit.) It is believed that if Mr. Knight had not demanded a royalty that was regarded as prohibitive, the automobile industry would have adopted the Knight motor and abandoned the other. Instead of that it went ahead in its efforts to improve the poppet valve motor and the result has been that now the poppet valve motor compares favorably with the Knight motor.

The National Automobile Chamber of Commerce defends its individual members against patent suits when it is considered in the interest of all the members to do so. This protects the industry from patent hold-ups which might gain headway by starting with small companies that could not afford to defend suits. Other coöperative work done by the Chamber is through its traffic department, which keeps in close touch and assists the railroads to supply cars where needed for shipments of its members and checks all their freight bills for them. Through this department the Chamber has a united voice in connection with the fixing of freight rates and in all other traffic matters. Through its legislative department its members are heard as a unit in regard to legislative matters. There are also good roads, commercial vehicle,

foreign trade, and service departments, through which coöperative work is carried on in those various fields.

In the constitution of the National Automobile Chamber of Commerce is this clause: "Each manufacturing member shall render to the corporation [the N. A. C. C.] within the first fifteen days of January, April, July, and October of each year, written reports under oath setting forth the number and kinds of self-propelled vehicles made and sold, or otherwise disposed of, by such member, during the preceding three calendar months, and the aggregate net amount charged therefor. . . This clause is an inheritance from the old Licensed Association, as is much of the coöperative spirit in the industry. This information was necessary then in figuring the royalties under the Selden patent. To-day it is used as a basis for collection of dues in the Automobile Chamber of Commerce, but it is of much more value than that. These reports go out to each member. Each one, therefore, knows just what his competitors are producing. That places them all in much better position to make plans for the future. The cards in the automobile industry are on the table; the game is a friendly one.

Differences and misunderstandings arise among the members of the N. A. C. C. just as they do in every other industry, but four times a year representatives of the member companies are brought together in a general meeting-the Chamber pays the traveling and hotel expenses of these men-and their differences are brought out into the light of day and subjected to the views of all the members. The inevitable result is the correction of misunderstandings and usually the composition of differences. Friendly coöperation is thus maintained. Back of this is another man-Mr. Charles Clifton, chairman of the board of directors of the Pierce-Arrow Motor Car Company, who has been president of the National Automobile Chamber of Commerce since its organization. His great vision in regard to the industry, his remarkable personal charm and firm hold on the affections of its leaders have been largely responsible for the safe course that has been steered past the rocks of discord and dissension which have upset other industries.

Much could be learned by other industries from the "coöperative competition" in the automobile field.

Ο

N MY first ceremonious visit of introduction to Senator Platt after my election to the New York Assembly, I used the expression "it did not hurt my conscience." The "Old Man," as he was affectionately called by his followers, threw up his hands in mock horror-"Oh, my dear Mr. Post, there are two things a member of the Legislature should never mention; one is his conscience and the other his constituents."

Throughout the two strenuous years of Mr. Roosevelt's occupancy of the Governor's office, those two words were probably the ones that the members of the Legislature most wished to forget, or never to hear, yet they were the two spectres that walked the halls of the Capitol by day and by night. Wars and rumors of wars between the Governor and the organization were constant and most disturbing to the peace of mind. In ordinary times all that was necessary was for the member to listen for the vote of his floor leader and follow his lead. The organization supplied all the conscience necessary, and his constituents had fulfilled their destiny when they had recorded themselves at the polls as being for the party. But during those two years matters were continually coming up in such a way as to demand individual thought, which was bad, or wakened outside interference by those same constituents, which was much worse. The average legislator is the most timid creature in the world, and to find himself between the upper millstone of the organization and the nether of an aroused public opinion at home, tended to take the joy out of life most effectually.

But if Roosevelt was teaching a lot of old dogs new tricks he was also educating himself even more thoroughly. Up till then, I think, he still had the feeling that the more educated people would naturally be behind him in his

fights for reform, and it was during those two years that he learned that when a reform touched the pocket or the convenience of Fifth Avenue, the reactions, if more subtle, were just as adverse as those from Mulberry Bend. In fact they were more unpleasant as they were more painful, coming from a source that could reach him in a more intimate way. Once, when he was to make an address at a dinner of the Harvard Club in New York, he asked me to attend and find out what sort of an impression the address made. He had chosen as his subject: "Thou shalt not bear false witness against thy neighbor," stressing the point that this was just as grievous a fault as that of the commandment "Thou shalt not steal," the general tenor of the address being an answer to his critics. At that time he was frantically busy in Albany, and when he did come to New York his time was very thoroughly occupied, being called upon generally to make two or three addresses each evening. We attended the Harvard Club dinner, and the impression that I got was that 90 per cent. of the men there regarded the Governor as a favorite son and had the feelings of a fond parent when his child is to make a commencement address, when their desire to see him do well made them perhaps supersensitive.

The other speakers at the dinner were President Eliot of Harvard, President Hadley of Yale, and Secretary of the Navy Long, all of whom preceded Governor Roosevelt with polished and finished addresses. Mr. Roosevelt followed them with a speech which he had not taken proper time to prepare and which was certainly not in his usual style; it fell pretty flat. He felt the coldness of the audience and on our return to Albany the next day he called me to the Executive Chamber and asked me if I had noticed that the speech did not receive a very cordial welcome, and if I thought it was because the sympathies of the

Harvard Club men were drifting away from him. Asked for my candid opinion, I said, "Governor, I think the secret of the reason of the failure of your address was that it was a darn poor speech. You had thought up a very good text, but you had not prepared it, you were thinking of your Press Club dinner which was to follow that of the Harvard Club, and you were in competition with three of the most graceful speakers in New England. I think the feeling of your audience was simply one of disappointment, growing out of their very fondness for you." Instead of being nettled, as a smaller man might have been, he was delighted to realize that the failure of his speech was owing to his own shortcomings and had no political significance.

ROOSEVELT "ELIMINATED?"

UT those two years were training him thoroughly for the position of President, and there seemed to be a settled conviction that in 1904 nothing could stop his getting the nomination, until the master stroke of politics on the part of Platt and his friends shelved him with the nomination for Vice-President in 1900. I do not think that I have ever seen such wide-spread relief and joy as pervaded the Capitol in 1901. I visited the Legislature just after it assembled in January and there was a most distinct feeling that life was a simpler affair since Roosevelt had been eliminated "See what we've done to your proud Teddy, we've got him, all right, all right. I tell you that you can't beat the Old Man in this state and get away with it for long."

And if anything in connection with the tragedy that put him into the White House in 1901 can be described as ludicrous, the dismay of the New York organization was really funny; by their efforts to eliminate him they had only brought about the very thing they feared. As one gentleman remarked at the time "You cannot fight against God."

My own experience in receiving my appointment to Porto Rico is fairly typical, I think, of his memory, or faculty of cataloguing his available men for positions. On the night of the election in 1900 I telegraphed him, as a joke; "Make me Governor-General of Guam," and in due course received an engraved card from Mr. Loeb thanking me for my telegram of congratulation. The next time I saw him I laughingly told him that I was not to be put off; as the only member extant of the Roosevelt

machine I demanded an island for myself. Of course at this time he had nothing whatsoever in his gift, and we could joke with perfect freedom, and we did talk over the colonial service on several occasions with much interest.

Then came his accession to the Presidency and I did not see him or hear from him until February, when I was asked by telegram to come to Washington. Reporting at his office he said with a smile; "You have wanted an island-I am going to make you Immigration Commissioner at Ellis Island." I protested that I did not want it and was not fitted for it, but he merely remarked; "I am not arguing— I am telling you that if I wish you to be Immigration Commissioner-Immigration Commissioner you are going to be." Fortunately he found a better man, and I was let out, and again I heard nothing from him until once more I was sent for, and told that on the completion of the treaty with Denmark for the sale of the Virgin Islands I should be sent down as Secretary under Jacob Riis as Governor, or, if Riis continued to refuse, some other American of Danish blood.

The treaty for the sale of the islands failed, but as I had made my plans to go down there, I thought I might as well see what the islands were like in case the sale should happen to be completed, and so spent the winter in Santa Cruz. While there a cable reached me, instructing me to go over to Porto Rico and take the position of Auditor of the Island. On these occasions, without any reminder from me or any of my friends, he had fitted me in where he thought I would be of use.

J

[UST before leaving for Santa Cruz I saw him for a few minutes under circumstances that were most characteristic of his mental and physical courage. The White House was being renovated and he was occupying a private house in Washington. The weather was very hot and he had recently suffered a wound in the leg from an accident. The great anthracite coal strike had come to a crisis and he was using every effort to bring the opposing forces together to arbitrate. He was tired and suffering, but indomitable in his purpose; "This matter has got to be settled-I am going to give them every chance to settle it themselves, but if they don't, then I shall have to settle it for them. I know that they all say that it is unconstitutional for me to

interfere. There are people who consider the Constitution as designed to prevent things from being done; claim that nothing can be done unless the Constitution specifically provides that it shall be done. But I believe that when the welfare of the nation requires that I take action I must take that action unless the Constitution specifically provides that I shall not." Without discussing the merits of this opinion of the Constitution, the fact that he held it explains his readiness to act when more timid men would have been glad of an excuse for inaction. I could see this thought working continually in his relations with the Central American countries and West Indian Islands, the echoes of which reached to our own shores through Spanish-American sources. For, coupled with two other principles he had laid down for dealing with our American neighbors, it explained clearly his attitude toward them. These two were well expressed in what was at the time described as the Roosevelt corollary to the Monroe Doctrine, and the other in a remark made to me in connection with the Porto Ricans. The corollary to the Monroe Doctrine was that if we held that European powers were to be prevented from any interference in American affairs by the United States, and that the American nations were to be safe-guarded against foreign aggression, that it was equally incumbent upon us to see that European nations were not given just cause to interfere, or that weak American nations should not invite European aggression through their own unjust or aggressive acts. The remark to me was: "In dealing with the Porto Ricans, give them absolute justice and even more than justice-generosity, but in return demand justice to the United States. We have the responsibility of their welfare, and we must give all that we can and demand nothing in return that is in the slightest degree selfish, but we must have their respect, and we cannot have their respect unless we exact the same spirit of coöperation from them that we give."

It was this spirit, I think, that actuated the Porto Rican Government throughout Mr. Roosevelt's entire Administration.

In Santo Domingo, he gave us the best example of the application of his three principles. The little republic in our neighboring island had been for years in a state of political chaos-revolution was the normal state of affairs and president succeeded presi

dent with bewildering frequency. Each administration as it came into power would issue bonds either for the financing of the revolution that put them in, or merely to get the money. Naturally these bonds were issued at absurd discounts and at ruinous interest, and were almost as regularly repudiated or ignored by the succeeding administration. Finally the condition of the republic both internally and externally became so serious that international complications seemed inevitable. The whole Republic was in a state of anarchy, with two separate governments claiming authority and revolutions and counter-revolutions going on in every part of the island. Foreign creditors were bringing pressure to bear on their governments to intervene in their behalf. We faced a situation that either would lead European powers to coerce the Republic with grave menace to the Monroe Doctrine, or force us to refuse to allow any interference with the Santo Dominicans' divine right of self-slaughter and to prevent the collection of their debts.

Mi

COLONIAL MANAGEMENT

[R. ROOSEVELT was not content to do either. By simple negotiations, backed by a fleet of small naval vessels, the warring factions were brought to terms with each other and an agreement was reached whereby the customs houses, the chief and only prize of successful revolution, were to be taken over and administered by Americans named from Washington, but employed by Santo Domingo, and the receipts divided on a basis of 45 per cent. for the current expenses of the republic and 55 per cent. for a sinking fund to pay off the indebtedness. A commission headed by Professor Hollander of Johns Hopkins, who had been the first Treasurer of Porto Rico and the organizer of the Porto Rican fiscal system, overhauled the outstanding claims and was able to reduce the amount by a very great percentage. Mr. Colton, who later succeeded me as Governor of Porto Rico, and who had been trained in the Philippine customs service, took charge of the collection of the customs, and under his management the republic received more money from the 45 per cent. of the revenues than they had previously received from the total. The foreign creditors were more than satisfied, and, best of all, revolutionary attempts were reduced to a minimum, as the inducement to revolution was lacking with the customs revenues unattainable.