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

the proper chronological order to state
the facts relative TO what was known
OF the Consolidated Tobacco Company
We now particularly refer to that sub.
ject:
The Consolidated Tobacco Company.
'1n June. 1901, parties lar gely interest ed
in the American and Continental COM
panies CAUSED the incorporation in New
Jersey OF the Consolidated Tobacco Com
pany. capital 10000. 900. afterward
So, 900. with broad powers and per-
petual existence. to do business through
ont the world and to guarantee securities
OF other companies. DC. A majority OF
shares was taken by few individuals con-
nected with the old concerns. A. y. Brady
J. B. Duke. y II. Payne. Thomas Ryan,
". c. Whitney and p. A. B. Widener. J. B.
Duke. president OF both the old companies.
became president Of the Consolidated
Largely in exchange for bonds the new
company acquired substantially all the
shares OF common stock Of the old ones.
Its business. Of holding and financing. was
continued until 1904. when with the Ameri-
can and Continental companies II was
merged into the present American Tobacco
/ Company
BY proceedings in New Jersey in Octo-
ber 1904. the told, American Tobacco
Company, Continental Tobacco Company
and Consolidated Tobacco Company were
merged into one corporation under the
name OF The American Tobacco Company.
the principal defendant here. The mer. cd
company, with perpetual existence. was
capitalized at sisO.0OO.OO $50 0CC. .OC0 pre-
I ferred. ordinarily without power to vote L.
Prior to the merger the Consolidated
Tobacco Company. "a majority Of whose
$40. Coz, 900 share capital was held by }. B.
Duke. Thomas r Ryan. William C. Whit
\
ner and Oliver II Payne. had acquired. as
already stated, nearly all common shares
OF both old American and Continental J
companies and thereby control. Tie pre-
ferred shares. however, we're held by many
individuals Through the method OF dis
tribition Of the ST oca Of the new company
in exchange for shares in the old American n
and IN he Continental company. II resulted
that the same six men in control Of the
combination through the Consolida.ed
! obacco Company continued that control
by ownership Of stock in the merged or
new American Tobacco Company. The
assets. property &c of the old companies
passed to the American Tobacco Company
merged. which has since carried on the
business
The record in disputablv lisclosas ,ha,
after this merger the same methods which
were Used from the beginning continued
to he employed Thus IL H. beyond dis
of the new American Tobacco Company
that company has acquired four large
tobacco concerns that restrictive cove
nants against engaging in the tobacco
business Were taken from the sellers and
that the plants were not continued in
operation. but were at once abandoned.
Second. that the new company hss be-
sides acquired control OF eight additional
concerns. the business OF such concerns
being now carried on by four separate
corporations. all absolutely controlled
by the American Tobacco Company. al-
though the connection as to two Of these
companies with that corporation was
long and persistently denied
Thus reaching the end OF the second
period and coming to the time of the
bringing Of the suit. brevity prevents us
from stopping to portray the difference
between the condition in ls90. when the
told American Tobacco Company was
organized by the consolidation OF five
competing cigarette concerns. and that
which existed ct the commencement Of
the suit. That situation and the vast
power which the principal and accessory.
corporate defendants and the small
number OF individuals who own a majority
OF the common stock Of the new American
Tobacco Company exert over the market
ing OF tobacco as raw product. its manu-
facture. its marketing when manufactured
and its consequent movement in the
channels Of Interstate commerce. indeed
relatively over foreign commerce and the
commerce Of the whole world. III the raw
and manufactured products. stand out
in such bold relief from the undisputeSi
facts which have been stated a. to lead
rs to pass at once to the second funda-
mental proposition which we are required
to consider. That Is. the construction Of
the antitrust Act and the application Of
the act a. rightly construed TO the sitia-
ton as proven in consequence Of having
4 .l..
ences properly deducible from the I'M
disputed facts which we have stated
Application Of sherman Act
The court then took up the construc-
tion and application Of the Sherman anti
trust act as viewed in the lighS OF the
courts decision Of the Standard Oil case
IL was this portion Of the decision that the
business world had awaited with keener
interes. than the finding Of facts in the
Tobacco case. The Chief Justice said:
IL the antitrust law is applicable 10
the entire situation here presented and
is adequate TO afford complete relief for
the evils which the United States insists
that situation presents IL can only be
because that law will be given a more
comprehensive application than has been
atfixed 10 II in any previous decision.
This Will be the case because the un- !
disputed facts. as we have stated them. |
involve questions as TO the operation
Oh tne ANTITRUST law NOT NlfherfO pre- I
sented in any case. Thus. even il the !
ownership Of stock by the American
Tobacco Company in the accessory and |
subsidiary companies and the ownership ,
Of stock in any Of fhese companies among !
themselves were held as was decided In
the Standard Oil Company case. to be a |
violation OF the act and all relations re- !
sulting from such stock ownership were
therefore SET aside. the question would !
yet remain whether the principal defend |
ant. the American Tobacco COMPANY.
and the five accessory defendants even
when divested of their stock ownership
in other corporations by virtue of the
power which they would continue 10 pos
sess. even although thus stripped. would
amount TO violation of both the first
and second sections of the act
Again, If II were held that the cor
porations the existence whereof was
due 10 a combination between such com
panies and other companies was a viola
lion OF the act. the question would re.
main whether such of the companies
~ did NOT owe their existence and POWER
to combination but whose power alone
arose from the exercise Of the riah, 10
acquire and own property would lie
amenable TO the prohibitions OF the act
Yet further: Even il this proposition was
held in the affirmative the question would
remain whether the principal defendant
he American Tobacco Company. when
stripped of its stock ownership would
De IN and of itself within the prohibitions II
ha mot a avh 81 l.