Mr. TOLAND. In addition to that, you received a letter, did you not, dated April 6, 1942, in furtherance of the subpena, which requested you to bring with you

all correspondence, memoranda, agreements, contracts, records, and documents of any description whatever relating to or pertaining to (1) your activities, or the activities of the companies with which you were connected as an officer or director, during the years 1938, 1939, and 1940 that were designed to or intended to bring about the repeal of or suspension of the so-called Vinson-Trammell Act; (2) your separation from the companies with which you were connected as an officer or drector during the years 1938, 1939, 1940, 1941, and 1942 to date, including any settlements entered into in connection with such separation; and (3) your total compensation from the companies with which you were connected as an officer or director for each year you received compensation from them, broken down into the categories of salaries, bonuses, dividends, shares of stock, bonds, and commissions.

Is that correct?

Mr. BENDIX. Yes, sir.

Mr. TOLAND. Then you received an additional communication from me, did you not, dated April 22, 1942, asking you to bring

all correspondence, memoranda, agreements, contracts, and written material of any description relating to or pertaining to the granting or acquiring of licenses and patents, the payment or receiving of royalties on patents and the entering into of agreements or cartels between the Bendix Aviation Corporation and any company or companies located in Germany, Italy, Japan, and France.

It is expected that the above-described material as contained in your personal files as well as in the corporation's files will be produced. It is only necessary to bring the above-named materials since July 1, 1941, although you will be examined regarding such matters for prior periods.

You received all those communications?

Mr. BENDIX. Yes, sir.

Mr. TOLAND. You received the subpena?
Mr. BENDIX. Yes, sir.

Mr. TOLAND. What have you produced in answer to the subpena and letters?

Mr. BENDIX. Well, I produced a schedule of my pay, and I might offer this memorandum that I have.

Mr. TOLAND. Is this [indicating] the memorandum that you talk about?

Mr. BENDIX. Yes, sir.

Mr. TOLAND. That you produced?

Mr. BENDIX. And that is my memorandum with the company on

my pay.

Mr. TOLAND. So the record may be clear, the witness has handed me a letter dated April 24, 1942, to the Bendix Aviation Corporation, or a copy of a letter, signed by himself, which reads as follows:

In view of the fact that I have resigned as an active officer and director of Bendix Aviation Corporation, and any and all of its subsidiaries, and since it has been indicated that the Bendix Aviation Corporation desires to retain me as a consultant, I agree that, for and so long as I am retained in a consulting capacity, I shall do nothing detrimental to the interests of the Bendix Aviation Corporation; I shall not use or authorize the use of "Bendix" as a business or trade-mark in connection with any business, partnership, or corporation. I shall not have any interest, direct or indirect, in any business, partnership, or corporation engaged in the development, promotion, manufacture, or sale of any product the same or essentially similar to any product of Bendix Aviation Corporation, or any of its divisions or subsidiaries.

I have been advised, that beginning with the month of April 1942 it is the intention of the Bendix Aviation Corporation to make monthly payments to me of $4,000 a month, payable at the end of each month until further action of its board

of directors. On my failure to observe any of the above agreements, the said monthly payments (if not theretofore terminated by the board) automatically shall terminate.

I offer that and ask that it be marked.

(The letter as read above was received in evidence and marked "Exhibit No. 105".)

Mr. TOLAND. The other memorandum is a half of a sheet or full

sheet of paper

Mr. BENDIX. I have a full sheeet here.

Mr. TOLAND. The witness has substituted a copy, which reads:

VINCENT BENDIX, President:

Salary, 1938, $43,250.01; supplemental and fees, $7,206.53; total, $50,456.54. 1939, $49,999.32, and in addition $250, making a total of $50,249.92.

1940, $52,499.92, supplemental and fees, $36,532.83, making a total of $89,032.75. 1941, $60,000 salary, $35,500 extra in bonuses and fees, a total, $95,500. 1942, salary, $15,000; $300 supplemental and fees, making a total received to date of $15,300.

(The memorandum was received in evidence and marked "Exhibit No. 105A.")

Mr. TOLAND. Mr. Bendix, these are the only papers that you have produced in response to the subpenas and letters of this committee? Mr. BENDIX. That is correct, Mr. Toland.

Mr. TOLAND. Is it a fact, then, that you have no correspondence of your own with regard to your activities in connection with the suspension or the repeal of the Vinson-Trammell Act?

Mr. BENDIX. That is right, sir.

Mr. TOLAND. Is it a fact that you have no correspondence or copies of any agreements with regard to license agreements or cartels that your company was connected or associated with during the time that you were president of the company?

Mr. BENDIX. Mr. Toland, they were not available to me at the present time.

Mr. TOLAND. After you received the letters did you communicate with the officials of the Bendix Co.?

Mr. BENDIX. I did.

Mr. TOLAND. Did you come to any common understanding with them that the records that you were requested to produce, the present president would produce them?

Mr. BENDIX. I called Mr. Breech on the telephone yesterday morning and read your letter to him, and he said he had been served with a similar letter and would produce all the information.

Mr. TOLAND. So that, I take it, you have nothing other to produce to this committee, other than what you have just handed me? Mr. BENDIX. That is correct, Mr. Toland.

Mr. TOLAND. How long were you connected with the Bendix Aviation Corporation?

Mr. BENDIX. From its inception; I organized the company originally.

Mr. TOLAND. Mr. Chairman, for the record, in order to save time, I have a complete statement of the corporate structure of the Bendix Aviation Corporation, dated April 8, 1942, which I would like to file with the record.

The CHAIRMAN. The bells kept me from hearing. What was that? Mr. TOLAND. It is a statement of the corporate structure of the Bendix Aviation Corporation. I would like to file it and have it

printed. If there is any statement in there that is not completely accurate, the officials of the company will have the opportunity later to submit anything that is correct, or when Mr. Breech comes on.

APRIL 8, 1942.

CORPORATE STRUCTURE OF THE BENDIX AVIATION CORPORATION

The Bendix Aviation Corporation was organized on April 13, 1929, as a holding company of many individual subsidiaries which manufactured products principally in the automotive line. The nucleus of this corporation was the Bendix Corporation, with its important patents on many products including the Bendix drive. One million shares of Bendix Aviation Corporation were exchanged for all of the Bendix company common stock (500,000). One hundred and forty thousand shares of Bendix Aviation Corporation stock and $2,750,000 in cash were exchanged for all the assets of the Electric Auto-Lite (Delaware), Inc. This consisted of the minority interest (Bendix Corporation holding the majority interest) of 9,000 shares of the class B stock of the Eclipse Machine Co., 180,000 shares of Bendix Aviation Corporation were exchanged for all of the assets of Stromberg Carburetor Co. of America, Inc., and 70,000 shares of stock were exchanged for all the outstanding stock (2,843 shares) of Scintilla Magneto Co., Inc. The General Motors Corporation acquired 500,000 shares of stock of the Bendix Aviation Corporation, approximately 20 percent of the total, in consideration of the payment in cash of $15,000,000 and the transfer to the Bendix Aviation Corporation of all the outstanding stock (1,000 shares) of Delco Aviation Corporation and the granting of certain license agreements.

The Bendix Aviation Corporation entered the aviation field in 1929 by organizing the Eclipse Aviation Co., in which was concentrated all Bendix Aviation Corporation aviation manufacturing activities. In addition, it purchased all the common stock of the Pioneer Instrument Co., by exchanging 50,000 shares of the stock of Bendix Aviation Corporation. The preferred stock of Pioneer was later retired. Thereafter, additional companies were acquired, and in recent years many of the subsidiaries have become operating divisions of the parent corporation.

At present, the Bendix Aviation Corporation manufactures varied types of aircraft instruments and accessories. These types are listed in detail on the last 2 pages of Bendix Aviation Corporation's Annual Report for 1940. Its total backlog in aviation defense orders amounted to more than one-quarter million dollars as of September 30, 1941.

The principal stockholder in the Bendix Aviation Corporation is the General Motors Corporation. As of September 20, 1941, General Motors owned approximately 400,000 shares, or approximately 19 percent of the total stock in the Bendix Aviation Corporation. The corporate chart of the Bendix Aviation Corporation is attached herewith.

MEMORANDUM RE BENDIX-GENERAL MOTORS-ELECTRIC AUTO-LITE RELATIONSHIP When the Bendix Aviation Corporation was organized on April 13, 1929, the General Motors Corporation acquired 500,000 shares of stock, valued at $31,000,000 on the New York Stock Exchange, in consideration for the payment in cash of $15,000,000 and the transfer to the Bendix Aviation Corporation of all the outstanding stock (1,000 shares) of Delco Aviation Corporation, aviation battery ignition company, and the granting of certain license agreements. the Delco Aviation Corporation was at the time a corporation shell, it must be assumed that the major share of the difference between the $31,000,000 value and the $15,000,000 paid by the General Motors Corporation represented the worth of the license.

As

The Electric Auto-Lite Co. also acquired a 70,000 share interest in Bendix Aviation Corporation and $5,000,000 in cash in return for 9,000 shares of the class B common stock of the Eclipse Machine Co. Electric Auto-Lite further granted the "Bendix Aviation Corporation, like licenses and makes like covenants as the General Motors Corporation

* *

Under the terms of the General Motors-Bendix license agreement dated May 17, 1929, General Motors granted to Bendix "* a license exclusive for 5 years and thereafter exclusive except as against itself, for aviation purposes (with right to sublicense) under all present and future patent rights and inventions, relating to starters, generators instruments such as manufactured by

* * *

* * *

Pioneer and Consolidated Instrument Cos. and listed in their catalogs as of this date * * * and agrees not to manufacture said apparatus for aviation purposes during said 5-year exclusive license period "General Motors, however, reserved the right after 5 years at its option to terminate this agreement to grant rights on all inventions made after such termination, in case of a reduction of its stock holdings in Bendix below 80 percent of its initial proportion of the total stock authorized

* *

The breadth of the agreement, extending as it did to unpatented articles and even to possible illegal interpretations, was explained by W. L. McGrath, vice president of Eclipse Aviation Co., a subsidiary of Bendix, in a letter to E. H. Cassels, attorney for Bendix, under date of May 7, 1929:

"With respect to the matter of agreement not to manufacture said apparatus for said aviation purpose during said 5-year exclusive right license period, it would seem desirable to retain this clause in the agreement in whatever form is necessary to avoid conflict with antimonopoly laws, since the exclusive license is hardly sufficient in view of the fact that most of this apparatus will not necessarily come under any patents on which General Motors agrees to give us patent license, and, therefore, does not automatically close the door to its own manufacture of such apparatus for the 5-year period, without their agreement to stay out of this field, which, so far as they are concerned, they are giving us exclusively. It is our understanding that so long as there is a definite limitation, which in this case exists, both with respect to definite articles and a definite time and period, that the agreement was entirely legal, but if this understanding is erroneous, please find some way to keep it in the agreement."

The Cord Corporation requested a license from General Motors Corporation in the latter part of 1931 and was turned down because Bendix believed "that there can be no question that the contractual relationship is such as to reserve to us exclusively the aviation field in the products in question and that therefore your response to the request will be that you cannot entertain any consideration which might in any way interfere with the enjoying of the exclusiveness already granted.' Early in 1940, General Motors' stock holdings in Bendix dropped below 80 percent of its initial proportion of the total stock authorized and, consequently, on March 29, 1940, General Motors canceled its agreement with Bendix "to grant rights on all inventions" in the aviation field made after March 13, 1940. The reason for the sale of Bendix stock by General Motors was not, of course, made public, but in my opinion, the aviation accessories market had improved to the point where General Motors believed that they could profit by the direct manufacture and sale of aviation accessories, even to the extent of competing with Bendix Aviation, and particularly since they were in a position to dictate the Bendix Aviation price structure."

66* * *

It is well known that the aircraft accessory industry today suffers from a singular lack of sources of supply and is hampered by the pyramiding of production in critical items. There is no doubt that this agreement between General Motors and Bendix, in which General Motors assigned all of its present and future aviation patents to Bendix and further agreed to stay out of the aviation accessories industry for a subsequent 5-year period materially brought about the monopoly conditions existing in this industry.

(The statement was received in evidence and marked "Exhibit No 106.")

Mr. TOLAND. Is it a fact, Mr. Bendix, that in 1937, your company entered into an agreement with the Siemens Co., of Berlin, Germany? Mr. BENDIX. Which?

Mr. TOLAND. Siemens-S-i-e-m-e-n-s.

Mr. BENDIX. Siemens-Halske; yes, sir.

Mr. TOLAND. Is it a fact that your company made an agreement with Siemens?

Mr. BENDIX. That is my recollection.

Mr. TOLAND. Will you tell the committee the substance of the agreement your company made with the German company at that time, and the purpose of it?

Mr. BENDIX. I will state it very briefly and enlarge on it. My simple recollection of that is that it was an agreement to make avail

able to us any of the developments that the Siemens-Halske Co. might have made in connection with aircraft. They were to submit to us any of their ideas that they might have developed, and if we wished to make some contract with respect to them we should so indicate to them, and we could enter into a special agreement that automatically became an actual agreement.

Mr. TOLAND. Isn't it a fact-let me interrupt you-that the agreement of which I have a copy here, which I am going to show you, was a cross-licensing agreement between your company and the Germany company on various aircraft instruments covering a division of the world territory on patented and unpatented devices, the wide exchange of technical data and the payment of royalties? Isn't that true? Mr. BENDIX. I wouldn't recall that quite, Mr. Toland, without reading it.

Mr. TOLAND. You look at that and see if that isn't a fact. You signed that, didn't you?

Mr. BENDIX. Yes; I did.

Mr. TOLAND. In fact, the agreement is in effect right now, isn't it? Mr. BENDIX. I think so; yes.

Mr. TOLAND. So that there is still an agreement between the company of which you were the president, and a German company to divide the world with regard to the patents. Is that the subject matter of the agreement that is before you?

Mr. BENDIX. Well, I don't think that, Mr. Toland. There are officers of the company here who negotiated the agreement.

Mr. TOLAND. Will you look and see if you didn't sign it?

Mr. BENDIX. I signed it; yes, sir.

Mr. TOLAND. And it is your recollection, your knowledge now, that the agreement is still in effect?

Mr. BENDIX. I think so; yes, sir.

Mr. TOLAND. Isn't it a fact that in 1934 you sent officials to Germany to inspect the Siemens device?

Mr. BENDIX. That is hearsay; yes, sir.

Mr. TOLAND. Isn't that true?

Mr. BENDIX. I think so; yes, sir.

Mr. TOLAND. I show you a copy of a telegram, or a cablegram, signed by Reichel, addressed to NLT Lansing Eclipse, one of the subsidiaries of your company, and ask you if the substance of that is correct? Do you recall it at all?

Mr. BENDIX. I don't remember ever having seen that.

Mr. TOLAND. Do you recall receiving a letter from the same man that sent the cablegram?

Mr. BENDIX. Yes; I got that for my information.

Mr. TOLAND. Well, you received the letter, didn't you?

Mr. BENDIX. I think so; yes, sir.

Mr. TOLAND. The witness identifies the letter from the Pioneer Instrument Co., Inc., dated June 25, 1938, addressed to the witness:

During my visit to Dayton last week I learned that the Army is buying 140 automatic pilots from Sperry. I also learned that the Army is not satisfied with the Sperry pilot but is buying it only because there is nothing else on the market. What Army wants in automatic pilots is fully answered by Siemens' device with the addition of remote reading which can be easily provided by our Autosyns. Army is also interested in automatic pilots of a smaller type like the English Pollock-Brown.