Evening star. [volume] (Washington, D.C.) 1854-1972, 1911-12-05

and restore competition involved the re-
| division OF the capital and plants of the
| wnoie trust between some of the COM
| panies constituting the trust and new
companies organized for the purposes of
| the decree and made parties to 1t. and
numbering, new and old, fourteen
Situation After REIMBURSEMENT.
The American Tobacco Company fold).
readjusted capital So, ZOO, 600; the Ls-
gett & Meyers Tobacco Company fnew,
capital. s67. 200. 600: the P. Lortllard Com
pany new. capital. $47. 600, 600, and the R.
J. Reynolds Tobacco Company (old). capi-
tai. V.525, 900. are chiefly engaged In the
manufacture and sale of chewing and
smoking Snao tobacco and cigars. The for
into two, one of $s25OOO capital and
the other of $500 600 The one snIff
company is divided into three compa-
MES. one with a capital of $4,000. 900,
another with capital of So. 600, 900 and
a. third with a capital of $4,000. 600.
| The hcorice' companies are two. one
| with capital of $5,75&3 300 and another
! with a capital of $2.0O0.OOO. There is
also the British-American, Tobacco
company, q British corporation. doing
| business abroad with capital Of 500
100000; the Porto Rfcan Tobacco Com
pany, with capital of $500. 900, and
the corporation of United Cigar Stores,
Under this arrangement each OF the
dlnerent kinds of business will be dis
tr1buted between two or more compa-
MES, with a division Of the prominent
brands In the same tobacco products
SO as to make competition not only pos
s1ble but necessary. Thus the smoking
tobacco business of the country is d.
vided so that the present independent
companies have 21.39 per cent, while
the American Tobacco Company will
nave SS OK ha e.
ers zoos per cent. the Lorillard COM
pany 22.s2 per cent and the Reynolds
company 2s6 per cent The stock of
the other thirteen companies, both pre-
from the defendant American Tobacco
Company and has been distributed
among its stockholders. All covenants
restricting competition have been de-
them has been enjoined. The preferred
stock of the different companies has
now been given voting power. which
was denied it under the old organiza-
ton. The ratio of the preferred stock
to the common was as. g to 40. This
the character of the ownership and
control of each company.
In the original suit there were twenty
nine defendants who were charged with
being the conspirators through whom the
Illegal combination acquired and exer-.
cised its unlawful dominion. Under the
decree these defendants will hold amounts
Of stock in the various distributee COM
panies ranging from II per cent as q
maximum to 2S1k per cent as minimum.
except in the case of one small company.
the Porto Rican Tobacco Company, in
which they will hold As per cent. The
Twenty-Five individual defendants are
enjoined for three years from buying any
stock, except from each other, and the
group Is thus prevented from extending
its control during that period. All par
ties to the suit, and the new companies
who are made parties, are enjoined per-
petually. from in any way effecting any
combination between any of the COM,
panies in violation of the statute by way
of resumption of the old trust. Each of
the fourteen companies Is enjoined from
acquiring stock in any OF the others. All
these companies are enjoined from hav-
ing common directors or officers or COM
mon buying or selling agents. or COM
mon offices. or lending money to each
other. ~
Size Of New Companies. +.
Objection was made by certain indie
pendent tobacco companies that this set
Element was unjust because it left COM
panies with very large capital in active
business, and that the settlement that
would be effective to put all ON an equal
ity would be division of the capital and
plant of the trust into small fractions In
amount equal 10 lHdC VI
each, of the independent companies.
This contention results from a misunder-
standing of the antitrust law and it's
purpose. 1t is not intended thereby to
prevent the accumulation of large cap
ital in business enterprises in which
such a combination can secure reduced
cost of production, sale and distribution.
1t Is directed against such an aggrega-
ton of capital only when its purpose is
that of sitting competition. enhancins
Or controlling prices and establishing
monopoly. If we shall have by the de-
cree defeated these purposes and re-
stored competition between the large
units into which the capital and plant
have been divided, we shall have accom-
plished the useful purpose of the statute.
confscation Not the Purpose Of the
Statute.
1t is not the purpose Of the statute to
confiscate the property and capital of the
offending trusts. Methods of punishment
by fine or Imprisonment Of the individual
offenders. by fine of the corporation or
by forfeiture of its goods in transporta-
ton, are provided, but the proceeding in
equity is = specific remedy to stop the
operation of the. trust by. Injunction AMI
prevent the future use of the plant and
capital in violation of the statute
Effectiveness of Decree.
I venture to say that not in the his
tory of American law has decree more
effective for such purpose been en- cred
by a court than that against the tobacco
trust. AS Circuit Judge Noyes said in
his judgment approving the decree:
1.-THE extent to: which It has been nee
essary to tear apart this combination and
force 1t into new forms with the at
tendant burdens ought to demonstrate
that the federal antitrust statute is q
drastic statute which accompiishes effect
i've results; which SO long as it stands on
the statute books must be obeyed, and
which cannot be disobeyed without in
curing far-reaching penalties And, on
the other hand, the successful reconstruc-
ton Of this organization should teach
that the effect of enforcing this statute
is not to destroy, but to reconstruct; not
ance with the conditions which the Con-
gress has declared shall exist among the
people Of the United States"
Common-stock Ownership.
1t has been assumed that the present
pro rata and common ownership in all
these companies by former stockholders
of the trust would insure a continuance
Of the same old single control of all the
companies into which the trust has by
decree been disintegrated This is err
roneous and is based upon the assumed
inefficacy and innOcuousness Of judicial
injuncttons. The companies are enjoin-
ed from cooperation or combination
~ yNoyy