The sun. [volume] (New York [N.Y.]) 1833-1916, 1911-05-30

today contends thai inc rule OF reason
as applied in the standard Oil case ha.
been generally misunderstood.
We took nothing out Of this statut
by the rule of reason." said the Chic
Justice to-day. We gave TO that stat,it,
vivifyins potentiality no honest mat
may fear"
The Chief Justice added further that
too literal construction Of the act would b,
suicidal so far "a its main object was con
cerned. He contended that an attempt q
fpply the letter Of the Sherman antitrust
Law to the present case would in fact have
resulted in the escape Of several Of the
associate companies. which have been in
cluded through an Interpretation OF the
law in the light Of reason.
The tobacco trust decision was handed
down At the end Of a busy day by the Su.
preme Court. II was about 40 O'Clock
when the Chief Justice began reading his
opinion. and it was almost clock before
he had finished. The court room wa.
tivcs. Government officials and eminent
lawyers. and the Capitol corridors we're
thronged with people who were vainly
seeking admission to the court room.
The scenes Of interest about the entrance
to the Supreme Court chamber have no,
been eaualled in years.
Sixty five American corporations. two
English corporations and twenty nine in q.
dividuals were defendants in the tobacco
trust suit.
The Undlsputed Facts.
Tho Court divided its investigation Of
the oase into three subjects: First-the
undisputed facts: second. the meaning of
the antitrust law and its application 10
the conclusions OF faots. and. third. the
remedies to be applied under the head OF
undisputed faCts. The court said.
The matters TO he considered under
this heading We think can best be made
clear BY stating the merest outline OF the
condition OF the tobacco industry prior
to what is asserted 10 have been the initial
movement In the combination. which the
suit aasails. and in the light 80 Afforded 10
briefly recite the history of assailed acts
and contracts We shall divide the sub
ject into two periods (a). from the time OF
the organization Of the first or old Ameri-
can Tobacco Company. in 1880. to the
organization Of the Continental Tobacco
Company. and (b). from the date OF such
organization TO the fling Of the bill in
this case.
Summarizing in the broadest way the
conditions which obtained prior to 1901
as to the production. manufacture and dis
tribution OF tobacco the following general
facts are adequate TO portray the situa-
ton:
Tobacco was grown in many sections
OF the country having diversity Of soil
and climate and therefore was subject to
various vicissitudes resulting from the
places OF production and consequently
varied in quality. The great diversity
OF use to which tobacco was applied in
manufacturing caused IL To be that there
was demand for all the various qualities
Tho demand for all qualities was not local
but widespread. extending as well 10
domestic as to foreign trade. and there
competitive conditions Of a peculiar
advantageous nature. The manufacture
OF the product in this country in various
forms was successfully carried on by many
individuals or concerns scattered through
out the country. a large number perhaps
OF the manufacturers being in the vicinage
Of production and others being advan-
tageously situated in or near the principal
markets Of distribution
Before January. 1890. FIVE distinct
concerns Il Ginter, with factory
at Richmond. Va; W Duke Sons 4 Co.
with factories az Durham. y. g. and New
York city; Kinney Tobacco Company.
with factory az New York city; W. 5
kimball Co. with factory az Rochester.
y. T.; Goodwin 4 Co., with factory At
Brooklyn. n. Y. manufactured. dis
tributed and sold in the United States
and abroad a5 per cent Of all the domestic
cigarette and less than per cent. Of
the smoking tobacco produced in the
United States. There is no doubt that
these factories were competitors in the
purchase Of the raw product which they
manufactured and in the distribution
and sale of the manufactured products
Indeed it is shown that prior to 1890 not
only had normal and ordinary compe-
tition existed between the factories In
question. but that the competition had
been fierce and abnormal
American Company OrEanized.
@In January. 1900. having agreed upon
a capital stock Of SIS. 900 900, all TO be
divided among them. and who should
be directors, the concerns referred to
organized the American Tobacco Com
pany in New Jersey. for trading and
manufacturing. with broad powers. and
conveyed 10 il tho assets and business.
including good will and right TO use the
names Of the old concerns. and therefore
this corporation carried on the business
OF all The SIS 900 600 Of stock Of the
tobacco company was allotted 10 the
charter members as follows: Allen a
Ginter. 100000 preferred. $500 900
common; ". Duke Sons 4 Co.. %. 600 600
preferred, $3.50 900 common; Kinney To-
bacco Company, s. OOO, 900 preferred.
$1,000 OOo common; W. 8. Kimball Il Co b.,
$l,oo0. 900 preferred. 1890 oOO common
and Goodwin 4 Co; 81. 900 900 preferred
sl.50o 900 common
There Is charge that the valuation
at which the respective properties were
capitalized in the new corporation was