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Watch Trust

Starting in at least the 1880s, watch and case manufactures, together with the largest jobbers in the U.S., created a series of "trusts" to control the sales and prices of watch movements and cases throughout the country. A set of key elements of the trust was to ensure that jobbers would only handle the products of those manufacturing members of the trust and that only equal amounts of cases and movements would be sold to retailers. The effect was to restrict the sales of independent movement and case manufacturers since, by themselves, the independent movement manufacturers could not ensure a supply of additional cases to a jeweler who would agree to handle their movements. The same situation applied to the case manufacturers.


Descriptions of the Trust and its Activities

The watch trust, consisting of the largest manufacturers and jobbers, had the power to almost totally dominate the market. The manner in which it controlled pricing and how it functioned to 'freeze out' of independent companies, is described in detail in an 1888 newspaper article on the subject, which related how a local jobber was driven into bankruptcy. Earlier that year, the similar activities of a sister organization, the Canadian Association of Jobbers in American Movements and Cases, was described in a hearing held by the House of Commons - Committee on Alleged Trade Combinations. This was reported on pages 323-345 of the Appendix to the Twenty-Second Volume of the Journals of the House of Commons of the Dominion of Canada (Volume 22, Issue 3) - From the 23rd February, 1888, to the 22nd May, 1888 (Both Days Inclusive), Contributed by Lorne Wasylishen (Scroll about 1/2 way down your screen to the page headed SECTION III.-- MANUFACTURERS and numbered 323 on the bottom right of the page).

The following information appeared a December 22, 2004 Message Board Post on the Watch Trust:

There was a long-standing marketing trust formed by the largest watch and case manufacturers. This also included jobbers. Although the following may seem local to New York City, bear in mind that this was the focal point of the watch trade. The New York Times carried an article on July 15, 1892 entitled:

"Amenable For Conspiracy
...
"The combination which has existed for the past seven years among the manufacturers and jobbers of watches, by means of which the price of timepieces in this county has been kept in the control of the makers, is just now receiving the attention of District Attorney Nicoll. The probable result of the investigation will be the indictment of several well-known New Yorkers for conspiracy.

"Two associations are responsible for the present condition of affairs. One is an organization in which are included the principal manufacturers of watch movements, and the other is the National Association of Jobbers of American Watches. In the former are the American Waltham Watch Company, the Columbus Watch Company, the Elgin National Watch Company, the E. Howard Watch and Clock Company, the New-York Standard Watch Company and the Seth Thomas Clock Company. The Trenton Watch Company was formerly a member, but withdrew several months ago.

"The association of jobbers includes nearly all the largest handlers of watches in the country. ...
"The purpose for which the association of jobbers was formed is expressed in a circular mailed to its members, in which the names of the manufacturers of movements and cases precede the following words:

'Please remember that only the above manufacturers are in co-operation with the association, and in return for such co-operation the members have agreed to handle no American movements or gold, filled, silver, or base metal cases except of their manufacture. Job lots of movements and cases, made by other manufacturers, are thrown upon the market from time to time, and have been offered to our members. Therefore, I desire to call your attention to the fact that it will be contrary to the agreement made with the manufacturers at the annual meeting if you purchase such goods under any circumstances, either from the manufacturers of them or from any other party or parties who may offer them for sale.'

"This was signed by James H. Noyes, Secretary and Commissioner."

A description of the trust's actions can be seen in this 'statement on a jobber price sheet from the Lapp & Florshem Co, Chicago,' NAWCC Pocket Watch Message Board by 4thdimension (Cort), June 21, 2006:

"At a meeting of the Watch Case and Movement Manufacturers, and the Jobbers, Association of the United States, the following rules were passed governing sales of product of
Elgin Watch Co. Springfield Watch Co. Brooklyn Watch Case Co. Waltham Watch Co. Howard Watch Co. Blauer Watch Case Co. Hampden Watch Co. Keystone Watch Case Co. Crescent Watch Case Co. Columbus Watch Co. Joseph Fahys & Co. Courvoisier-Wilcoxc Co. H. Muhr's Sons Bates & Bacon


"No Jobber shall be allowed to sell any American movements without cases. The cases may be of Gold, Gold Filled, Silver, or Base Metal, and it is not necessary that they should fit the movements sold with them, but as many cases as movements must be sold in each bill.

"Cases may be sold in excess of, and without movements to any desired extent, but not a movement without a case of some kind accompanying it."

Dueber-Hampden Fights Against the Trust

The actions of the trust affected a number of companies. The Dueber Watch Case Manufacturing Co. is a good example. One of John Dueber's main reasons for buying into the Hampden Watch Co. was to be able to offer movements and cases to independent jewelers. One of the means used by the jobbers to control the market was to only sell nearly equal amounts of cases and movements to retailers. Without a supply of movements, for which the jewelers had no cases, Dueber was having trouble getting his cases sold.

Even after creating Dueber-Hampden in Canton, OH, troubles caused by the watch trust Continued, showing that, to paraphrase a Mark Twain comment, Reports of its Demise Had Been Greatly Exaggerated. This led Dueber to Bring Suit for Damages against the members of the trust.

The Trust Appears Again

Several years after the above described trust apparently fell apart, another attempt got started. The New York Times reported, on June 18, 1896 that Mr. J.H. Noyes (Secretary and Commissioner of the former trust) told a reporter:

"Efforts have been made for a number of months to organize a new association of watch jobbers throughout the country. ... Mr. Noyes wished it understood that the new association was in no sense a trust."

Nevertheless,
" ...the essential features of the association will be as follows:

"Membership will be open to every dealer in the wholesale watch or jewelry business who keeps a stock of American watches, movements, and cases in proportion to the amount of his general business. Each member of the association shall place with the Secretary during the month of January in each year a true and complete printed copy of his price lists of all American watches watch movements, and gold, filled, silver, and base metal watch cases in which he deals, and shall not make any change whatever in the list without first communicating the change to the Secretary.

"The officers and Directors are to urge both manufacturers and retailers to do business with those jobbers who are members of the association,

"Each manufacturer is to pay to the Treasurer of the association on the first day of each month a sum equal to a certain per cent on his price list of all goods purchased of him by members of the association.
"The plan, it is declared does not provide for any regulation of the output or for any combination of manufacturers.
"

This sure sounds like a trust, with the manufacturers paying rebates to the jobbers. Apparently some body or some organization had significant negative input to the association. On July 16, 1896, the New York Times carried an item under the heading:

"No Watch Trust At Present
...
"It was decided at a meeting of watch jobbers at 130 Broadway yesterday that it was inexpedient for them to organize an association. About twenty-five jobbers from all over the country were present and it was said that they represented $20,000,000 of capital."

That the watch trust still continued in existence is indicated by a report that the South Bend Watch Co. was organized '… to fight what jewelry jobbers call the "watch trust." '

How the Trust Maintained Price Levels

In 1906, Representative Rainey of Illinois address the U.S. House of Representatives on the subject of how the watch trust maintained price levels in the U.S., particularly the price of the railroad watch as set by Waltham and Elgin. In his address, reported by the New York Times on April 6, he described one New York City retailer who bought Waltham and Elgin watches abroad, imported them duty free (since they were American-made) and still was able to sell them for about 25% below the list price that other retailers were required to charge. A Weak-Sounding Reply was made by Waltham.

The Trust Continues

Trusts and Similar Organizations Continued, such that in the `teens, a suit was brought by the Dueber Watch Case Manufacturing Co. in Cincinnati, claiming damages of $375,000, and the Burlington Watch Co. was selling mail-order, using a fight against "The Trust" as a major selling point. This started at least as early as May 1910 and Continued for a year or more. Shortly thereafter, on or about December 20, 1911, the U.S. government brought suit against the Keystone Watch Case Co. for violation of the Sherman Anti-Trust Act. There was a lot of truth in Burlington's claims, but there was a certain amount of advertising hype as well. Nahum Lewis wrote an excellent article, "The Burlington Watch Company's Fight Against the Trust," see References, below.

References


Books

"The Watch Trust Sells Cheaper Abroad Than At Home,"Democratic Campaign Book, Congressional Election, 1906, Democratic Congressional Committee, Chicago, 1906, pages 60 - 64.


Articles
Back issues of the NAWCC Bulletin are available to members on loan by mail from the NAWCC Lending Library and are also available online to NAWCC members who are currently logged in.

"The Burlington Watch Company's Fight Against the Trust," Nahum Lewis, NAWCC Bulletin, No. 311, December 1997, pp. 706-9.

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