carried on. Morgan offered a standard license to the Columbia Paper Bag Company of Springfield, Massachusetts on September 28, 1868, to use his improved paper bag making machines for a dollar, as long as they agreed to pay on a quarterly basis his license fee of 3 cents per thousand bags made. The license granted them manufacturing rights for the region within 75 miles of Springfield City Hall, but not in New York State.
The terms also stated they may not use any other paper bag machines, “excepting, however, any Paper Bag Machine adapted exclusively to the manufacture of Flour Bags with square bottoms, and capable of holding each not less than twenty five pounds of flour.” This was a market Morgan Brothers had not entered.
Charles’ focus on the license fee for bags made, not machines rented, and his granting a license for a smaller territory than previous agreements all suggest that the paper bag industry had matured by 1868, dominated by a few large players competing on price for products that the public perceived as comparable. Without the lawsuits, owning the Rice patent would have been a “cash cow” for Morgan and his brother, generating large cash flows at sustainably high price levels.
The most suitable offer came that November from Ellis A. Hollingsworth of the firm Hollingsworth & Whitney. Like Morgan, Hollingsworth had patented his own paper bag machine in 1865 and also had faced legal action, in his case with Wolle. Boutwell telegraphed Morgan at 5:10 p.m. on November 10, 1868 with the offer of $10,000 for his interest in the paper bag machine patents and the extension he had purchased in December 1866. Morgan responded immediately by return telegram, accepting the offer, but asking to retain the patent rent due him from his licensees back to October 1.
“I will come to Boston on the 12th instant to complete the bargain,” he wrote Boutwell later that same day. The sale was unconditional, and Hollingsworth granted Morgan the back royalties due him.
Morgan felt the timing was right, considering the growing obstacles he faced to profitably expand the paper bag business. He wrote his longstanding colleagues and licensees, Messrs. Chatfield & Wood, that same month, noting:
you doubtless think hard of this, but gentleman I ask you to put yourself for a few moments in my place with 2 lawsuits look me in the face after having worked hard for 10 years to realize something from the Patents, and having failed to make a combination with you and others with capital to defend the Patents. When their alternatives were presented to sell out or fight I chose to sell out and think you would have done likewise.
Securing those final patent rent payments proved to be taxing. Almost two years later, Morgan wrote attorney George Harding that when Stokes of Philadelphia had come to Worcester on business on April 8, 1870, he had “caused him to be put under bonds to appear and defend a suit here for the account his firm owed.” The court date, however, would have to be the following winter.
The fighting in the paper bag business continued. In May 1870, Union Paper Bag Machine sued Chatfield & Wood of Cincinnati for infringement. In stark contrast to the financial and legal response to Wolle v. Nixon, Morgan distanced himself from the affair, writing after his former customers forwarded the legal notice to him,
as you already know ... some 16 months ago I sold my entire interest in Paper Bag Machine Patents & License under the same to E.A. Hollingsworth, a resident of Boston, Mass. The notice to Thurston Priest I return as I do not know where he resides.
The Wolle brothers continued to harass Morgan licensees with lawsuits and went on to consolidate their business, merging with multiple licensees and agents from across the country, including then-industry leader Wheeler, Fisher & Company of Chicago and six other licensees in 1874. Holding a near-monopoly position in the market, Union Bag & Paper Company, as it was known after the merger, flourished. By the end of the century, it manufactured 80 percent of all paper bags sold in the United States.
As one indication of the size of this expanding industry, an 1881 Supreme Court case cited the production of 93.5 million bags between 1871 and 1875 by just one company in Richmond, Indiana that had been using both Morgan and Rice machines. The case, not surprisingly, was Nixon v. Union Paper Bag Machine Company.
There were more innovations in paper bag machines after Morgan left the business. The bags made through the 1860s were more like envelopes, flat with a single flap to close the bottom. But on November 9, 1869, an employee of the Columbia Paper Bag Co., working on paper bag machines licensed from Charles Morgan, filed a patent for a machine to fold and paste flat-bottom bags. With her invention, Margaret E. Knight became one of the first women to hold a United States patent, which was granted, after her own infringement battle, on July 11, 1871.
A dozen years later, a Philadelphia inventor, Charles Stillwell patented a square bottom bag with pleated sides that could stand up straight on its own. Known as the Self-Opening Sack (S.O.S.), the model patented June 12, 1883 closely resembles the paper bags in use today. Improvements on the machine to manufacture this style bag were patented in 1890 by William Purvis, who later licensed his invention to the Union Bag & Paper Co.
Decades later, Union Bag & Paper merged with Camp Manufacturing Company to form Union Bag-Camp Paper Corporation in 1956. Renamed Union Camp Corporation in 1966, that company was in turn acquired by International Paper in 1999. Most of today’s flat-bottomed brown paper grocery bags are made by International Paper. Their patent portfolio includes the original machine design improved by Charles Hill Morgan.
Morgan’s commercial interests, however, had decidedly turned from paper to metals as he dedicated his time and creative energies to Washburn & Moen’s rolling mills for the next two decades. His brother, too, eventually made the shift to metals. By 1867, Henry had relocated to Boston, continued manufacturing paper bags for a time, and then helped establish the Morgan Spring Company with Charles in 1881. They worked together in that company until Henry’s death in 1899.
The Morgan brothers had profited from their role in the earliest days of the paper bag business. They capitalized upon a new market with their mechanical and business skills to such a degree that by the mid-1860s, Morgan paper bag machines could be found in most states east of the Mississippi. The lessons learned from that experience as entrepreneurs fueled the success they found in their next endeavors.
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