New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1911-05-30
Follows Reasoning Of Standard Oil Decision in
Finding Against American Tobacco 90.
THE FACTS, LAW AND REMEDY
Gee Sent Back to Circuit Court to Give the Company
Opportunity to Create New Condition IN
Harmony with the Statute.

virtually TO have the dominant control as
7 a manufacturer of that product.
The organization of the Con,cy Foil Com
pany. manufacturers of tinfoil. an essen
tial for packing tobacco products the
American Cigar Company, the MacAndre"s
& Forbes Company, manufacturers OIL hVo-
rice another essential ingredient IN the
manufacture of tobacco. and the American
Stogle Company were considered at length
Finally. ne came down &c the~lnerger III
I 1894 Of the old American Tobacco Com
panv. the Continental Tobacco Company
and the Consolidated Tobacco Company
into the new American Tobacco Company.
Through the method Of distribution of the
stock of the new company. the Chief JUS
tice said that j. b. Duke, Thomas r. Ryan
| William c. Whitney. Anthony \. Brady
Peter A. B. Widener and Oliver n. Payne
were able 20 continue the control in the
new company that they had exercised IN
the old
4 few words were said concerning the
trade war between the big British tobacco
company, the Imperial. and the American
Tobacco Company, and finally the organ
ization by these two companies Of the Brit
i ISM American .lODdNOb NN'hP"HF' -
on a tobacco business outside OF England
and the United States.
Application Of Anti Trust Law.
In taking up the construction and appli-
cation of the sherman antitrust law. Chief
Justice White said that II the law was
applicable to the entire situation presented
in the tobacco case and was adequate 10
afford relief. 1T can only he because mat
law will be given a more conprehehslNe
application than has been aflXed 10 IL IN
anv previous decision questions NOT MIN
erto considered by the court were nciuded
in the case at bar. In connection with this
the Chief Justice said;
Thus. even if the ownership OF stock
by the American Tobacco Company IN
the accessory and subsidiary com panes
and the ownership OF stock IN any o.
those companies among them selves were
held. as was decided in the Standard on
case, to be a violation of the act, AND al
/ relations resulting from such stock own .
ership were therefore set aside, the ques'
| ton would yet remain whether the prIn'
cipaI defendant, the American Tobacco
| Company, and the five accessory defend :
ants, even when Invested OF their stock
| ownership in other corporations. by VIr'
| tue Of the power which they would con-
tinue to possess, even although thus
| stripped, would amount to violation OF
| both the first and second sections OF the
act.
Aoain, il il were held that tine
I corporations, the existence whereof
wss due to combination between
such companies and other companies
was a violation of the act. the
question would remain whether such OF
the companies as did not owe their ex'
| istence and power to combinations, but
/ whose power alone arose from the ex
! ercise Of the right to acquire and oWr
property, would be 'amenable to the pro
hbitions of the act. Yet further: Ever
if this proposition was held in the at
firmative. tho question would remair
whether the principal defendant, the
7 American Tobacco Company, wher
stripped of its stock ownership, wouo
be in. and of itself within the prohibition:
Of the act although that company was
organized and took being before the
anti act was passed.
Still further. the question would vel
remain whether particular corporation:
which, when bereft Of the power which
they possessed as resulting from STOCK
ownership. although they were not in.
! herently possessed of sufficient resld
and Of themselves either a restraint ot
trade, Of mono poIization or an attempt
to nonopoIize, should nevertheless be re
strained because OF their intimate con.
necton and association with other cor.
porations found to be within the prohi.
billions Of the act.
/ The necessity for relief from so many
aspects. the Chief Justice said. had evil
IDENTIFY led the government 20 resort &c
methods 81 construction which we're incom-
patible, and at the same time the de-
PENDANTS had not been able to do much
better with the situation. The difficutie.
I which arose, according TO the Chief JUS
tice. grew out Of a plain misconceptior
of hoth the letter and spirit of the anti
trust act.
&c added that the obscur'ty and result.
ing uncertainty which had enshrouded the
sherman antitrust act had been removed
by the consideration the court had given
the law in the Standard Oil case
Defends the "Rule Of Reason"
The Chief Justice then entered into a de-
fence ~ the rule Of reason" as laid down
by the court in the Standard OIL case. He
said
} IN l.ldl case u WAS nelG. without DEPART
ing from any previous decision OF the court.
that as the statute had not defined the
words restraint Of trade il became neces-
! sary 10 construe those words. a duty which
could only he discharged by a resort 10
reason We say the doctrine thus stated
was ia accord with all the previous de
clsions II this court. despite the fact that
! the contrary view was sometimes errone-
| used in two prior decisions (ihe Transmits
souri, Freight Association and joint ira fic
cases.. That such view was a mistaken
one was fully pointed out IN the STANDARD
: passage in the opinion in the joint traffic
case as follows:
The act OF Congress must have a rea-
! sonable construction or else there would
! scarcely he an agreement or contract
among business men that could not be said
10 have. indirectly or remotely. some bear
ing on interstate commerce and POSSIBLY to
restrain it
! Applying the rule of reason 10 the con-
struction OF the statute. il was held In the
Standard OIL case that as the words re-
straint Of trade al common law and I'm the
law Of this country at the time Of the adop-
ton Of the antitrust act only embra ced
acts or contracts or agreements or combi-
nations which operated TO the prejudice
Of the public interests by unduly restrict
ing comDeution or unduly obstructing the
due course OF trade. or which either be-
cause Of their inherent nature or effect Oh
because of the evident purpose Of the acts
etc. injuriously restrained trade that the
words as used in the statute were designed
10 have, and did have, but q like sieniA-
canoe. II was therefore pointed out that
the statute did not forbid or restrain the
power 10 make normal and usual contracts
70 further trade by resorting TO all normal
methods. whether by agreement or other
wise, TO accomplish such purposes
lr other words. il was held not tina,
acts which the statute prohibited coulc
be removed from the control Of its pro
hibitions by finding that they were
reasonable. but that the duty to inter.
pref which inevitably arose from the