The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1907-10-15
TOBACCO TRUST
ADMITS FACTS
But Says the Govern
ment's Conclusions
Are Wrong
METHODS OF u
Competition Brands Contin
ues, Though the Trust Owns Part
oil Rival E.usineSs-AH Doubt
fui Trade Methods Aban-
nnneG-

com ana Ltlt CLIi|i dcIttANA2-itT =
the governments suit under the 3htf-
man antitrust law was nle YESTERDAY
afternoon in the United states Circuit
Court by Junius Parker, counsel fol
the American Tobacco Company.
The government began its suit on
JULY 9Th. 1t alleges restraint Of trace
and seeks the dissolution Of the cor
poration. The original suit names as
defendants the American Co,
together with sixty-tnree other cOrpor-
ate defendants, alleged 70 be IN one
way or anotheT subsidiary corporations
of the American Tobacco Company
or associated with 1t In the conduct
of its business, and thirty individual
defendants. prominet among the lat
ter are j. b. Duke. Thomas r. Ryan,
Anthony y. Brady, Benjamin \. Duke,
Pierre Lorillard and Peter y. T.. Wld-
ener.
The answer admits that all the i'm
portant allegations of the government
are true, but argues that the deduc-
ions made by the government attof-
neys are false. The answer gives q
history of the company's growth, even
going into the sO-called secret agree
ments, and then seeks to SHOW where
the conclusions draWn by the govern
ment are wrong. 1t says in part:
1T has not been a part OF the pollcy
of the American Tobacco Company to
disguise the ownership or use controil-
ed companies to break down oppos1-
ton and secure for il the benefit OF
public sentiment against combination
Its managing officers have, on the
other hand, believed that there IS no
advantage to any tobacco brand or
business in conceahng from the pup
lie the actual ownership thereof DC
~casionaIly the American Tobacco Com
pany has made an investment IN the
stock of a manufactures of obacco,
leaving a part of the stock IN the
ownership of those actively IN charge
Of the business.
sometimes, as in the case Of the
minority holders of the K. j. Reynolds
Tobacco Company, these minority
holders and managers of the business
have preferred that the ownership Of
a part of their business by the Anerl-
"a Tobacco Company should pc
known. with the belief that it would
strengthen their business in public es-
TEEN, and in such cases 1t has been
the policy of the American Tobacco
Company to accede to the wishes OF
those who are to run the business; IN
other it has been believed by
those who We're To run the business
that it would be more successfully run
by keeping from the public the fact
tnat the American Tobacco Company
owned a part of the stock, and 1t has
been the policy of the American To-
bacco to accede in these in
stances also to the wishes OF those
who were to conduct the business and
had a substantial investment in 1t.
The competition between n Amer
lean obacco Company and various
other tobacco manufacturing COM
panies the same whether the Anerf
car Tobacco Company owns all the
stock or none OF the stock at
all. Those various corporations,
except those like RlackwelFs
Durham Tobacco Company, which are
in fact only branches of the Amerl-
can Tobacco Company, are conducted
as separate corporations only for trade
method or trademark purposes. They
have their own leaf buying plants and
their own selling organizations, INC it
would serve no profitable use to any
one, but would be destructive of the
tobacco business, to attempt to ellni
nate or lessen competition. In truth,
the competition etWee different SINH
lar brands of tobacco owned by the
same manufacturer is just the same
as if there were not such ownership
The American Tobacco Company de-
MES that it started the United Cigar
Stores Company, but it was finally IN
duced to go into the business after it
had been appealed to repeatedly for
financial aid. Now it holds $500, 900
of the 100000 of common stock of
the United Cigar stores Company and
all the preferred stock, $l50,000, and
all the company's bonds, $2,S50,0 600.
The answer denies, however, that the
trust seeks to hinde or obstruct the
sale of tobacco products manufacture
ed by others. On the contrary, it
handles goods that show d
desire for, and the business is actually
managed by George j. Whelan and his
associates, who were the original own
ers of all the stock.
In regard to the charges that many
small plants have been bought in and
closed and eliminated by the American
Tobacco Company the answer declares
that so long as brands remain III ex-
1Stence competition cannot be destroy
ed as competition in the tobacco
trade is a matter of struggle between
brands, not factories. The answer
points out that none of the businesses
or brands has been abandoned but, on
the contrary, ali Ia been built up
and the business has been increased.
The answer says:
None Of the business has been
abandoned. From time to time, for the
sake of economy or efficiency OF other
wise, these manufacturers of various
brands have been consolidated into
some factory acquired by the Ameri-
can Tobacco Company, or new fac
tories have been built. The statement
that the American Tobacco Company,
having acquired a plant, closed it,
While in some cases true literally, IS
not true in the sense that the said
American Tobacco Company acquired
businesses for the purpos or with a
view to stopping them. The truth is
tAat no purchase has been made to
get rid of the competition of the ven
dor, but brands, properties and bust
nesses have been bought with a view
to the present and ultimate profitable
ness of the particular brand, business
or property"
n answer proceeds TO show that
many concerns which the company
has acquired are kept in active exis-
tence and remain under the contro
and management of their minority
stockholders. Specific cases are cited
among them the r. a. Patterson To
bacco Company and the Z. J.. Rey-
nolds Tobacco Company as examples
of specially active and evere com
petition"
in regard to the acquisition of the
American Cigar Company, the answer
asserts that the investment was made
on q related but non-competitive bust
ness. The control of the American
SNUFF Company is denied.
The governments charge of unfair
trade methods is not only denied bu1
the defendants maintain that they
have abandoned even those methods
which might be called of doubtful
propriety, though at present in use
by other tobacco manufacturers, sucI