Richmond dispatch. [volume] (Richmond, Va.) 1884-1903, 1894-12-05
CIGARETTE TRUST.
Notable Litigation In Which The Charter
Is Sought 10 Be Dissolved.
SELL ONLY ON COMMISSION.
Device by which tho American Tobacco
Company Shuts on Competition--A
Very Important Issue.
Me,v York Herald.)

In the suit OF John II. Miller q Co, TO-
hacco jobbers. Of Newark, N. j., against
the American Tobacco Company, the So
called cigarette Trust" has got on Its
hands the battle OF It's life.
The suit was brought In the Court OF
Chancery OF New Jersey, and pending It's
trial a vast amount OF testimony is being
gathered by the lawyers representing the
complainant tending TO show that the
American Tobacco Company Is trust
IN the most obnoxious sense OF the word,
and that It is practically holding the to-
bacco trade Of the whole country by the
throat
The trial in Trenton, II is said, will be
the most interesting and important since
trusts became actualities. and upon its
result will probably hang the fate OF
several other similar aggregations of vast
capital. The issues In this case have not
so far been clearly set before the public.
According TO the complaint, for years
previous TO January. 1890. the five great
cigarette manufacturing firms Of the coun-
try-nameiy, the Allen & Glnter Company,
of Vireinia; w. s. Kimhall & Co., or
Rochester, N. "; Goodwin g. Co.. of New
York, w. Dukes Sons & Co. OF North
Carolina, and the Kinney Tobacco Com
pany, Of New Yorh-were engaged in a
most active competition. and spent vast
sums yearly in advertising and advancing
their individual interests by rebates to
iobbers and offers of pictures and prizes
To consumers.
In this way, II Is stated. they spent from
$4,000 10 $4,000 apiece yearly. The Dukes.
for instance. gave jobbers what they
called a monthly dividend for advancing
their interests. Allen & Ginter accom-
pllshed their end by christmas presents
EFFECTED A COMBINATION.
Combination was effected through the
mediation of promoter and on January
q, 1890, the American Tobacco Company
was Incorporated. 1t was capitalized at
SIS 100000, Of which 100000 were devoted
to purchasing the plants. appliances, Sc
crets, trademarks, and good VIII OF the
several concerns. The balance Is alleged
TO be water"
According to an agreement between
the parties the stock was to be
divided among the concerns on u
basis OF 80 per cent. each to Allen
e. Ginter and the Dukes. and 10 per cent.
each to the others. In the articles of In
corporation, however this did not appear;
ten men, members of the several COM
panies, appearing as equal stockholders
At this time the company controlled at
least 80 per cent of the cigarette manu-
featuring interest of the country.
The primary object OF the combination
was to save the enormous sums previ-
ously spent in competitive advertising
and inducements. and had the company
contented itself with this, 1t would have
had clear path before 1t.
One of its first acts, however, was 70
devise a system, the practical effect OF
which was to cut off all competition.
The plan was exceedingly ingenious. The
company merely refused to- sell cigar
cites to jobbers at all. but made each
customer a factor or commission mer-
chant, and bound him by I'm agreement.
SHOWED ITS HAND.
The significant points in this agreement
are these: First, that the agents sell only
at prices fixed by the company; second
that they guarantee all sales, something
that no commission agent Is required 10
do In any other business; third, that the
agents" retain fixed commission. and
retain also an additional commission of
per cent. for remittances within ten
days.
This was merely another way of saying
'2 per cent. off for cash sales" In other
words. practical sales were made to the
the difference only lying in the form of
expression.
Further. the dealers were to guarantee
the company against loss on stock un-
paid for. They were also to receive the
usual commissions, provided they should
Cooperate with the company and pro-
mote it's interests and handle its cigar
cites to its satisfaction" and If they did
comply with this the company reserved
mt niogt N
future.
This seemed innocent enough, and all
the tobbers in the country signed the
agreement. 1t was not until then that
the company showed the full strength OF
its hand and indicated In an unmistakable
way that what 1t meant by the agents
promoting it's interests was that they
refrain from selling any other brands.
AS IS per cent. of the demand was for
combination cigarettes. the dealers had
no option but to buy or be ruined.
Less than six months after the COM
pany began Its operations this issue came
up In Texas. The company refused 10
sell to tobberS there who handled other
cigarettes, and warrants were issued for
the arrest OF Mr.. Duke, the president,
and others on q charge OF violating the
antitrust laws of the State. They were
arrested and heavily fined. Since then
Texas. but that Is the only free State
to-day.
1t was about this time. too, that the
company was compelled TO buy out five
rival companies in the South. For this
purpose the capital stock was increased
TO $35, 10000. The average earnings on
this stock, $2s, 900 of which Is alleged
d be unauthorized water" have been
II per cent. for common stock and
per cent. for preferred.
REFUSED TO SUBMIT.
An immense amount of dissatisfaction
has resulted In this neighborhood over
the company's tyrannical methods of
refusing 20 "place cigarettes on commits
sion" with jobbers unless they refused to
handle non-trust cigarettes, and out OF
that grew the present suit.
John X. Miller & Co., OF Newark, re-
fused to submit, and their supply of lead
ing brands was cut off. The company
expressed q willingness to sell outright
but without the commission necessary to
make business profitable. This Mr.. Mil
Ter would not hear to, and through him
action has been brought in the New Jer-
sey Court of Chancery in the name Of
Acknowledgement John =. Stockton for
the dissolution of the companys charter
on the ground that 1t is an unlawful COM
bination for the obstruction of free and
untramelled trade.
The lawyers for The compliments are
McCarter Williams & McCarter, of New
ark; ex-Judge Frederic w. Stevens, OF
Newark, and Einstein & Townsend, of
this city. For the company appear X.
V. Lindabury, ex-Judge Joseph II. Choate,
Lucien Oudin, Ralph Oakley, and John
II. Emery.
The contention OF the defendants is
that they have the right to sell their
goods In any manner they please and
through agencies il they so choose. They
deny that the consignment OF goods to
agencies only is device TO cover actual
sales as the compliments aver. and deny
that IL Is a cover for the enforcement
OF practical monopoly. AS TO the al
legged watering OF their capital stock.
they assert that they have done nothing
not fully warranted by law and custom.
They deny. too, the allegation that stock
was distributed TO companies, declaring
that individuals only formed the company.
10 fha x..to ~