Gilpin observer., 1911-12-07

d.
former one tin-foil company is di-
vided into two, one of ss25,O0O cap
ital and the other of 100000. The
one snuff company is divided into
three companies, one with a capital
of $15,O00,000; another with a cap
ital of $S.0O0,000; and third with a
capital Of $S.000,000. The licorice
companies are two, one with a cap
ital of $5,75S.00 and another with a
capital Of s2.O0O,00O. There is, also.
the British-American Tobacco com
pany. British corporation, doing
business abroad with a capital of
.S26,OOO,OOO. the Porto Rican Tobac-
co company with capital of
$1,SOO,O0O, and the corporation of
United Cigar Stores. with a capital
OF S9OOO,000. Under this arrange
ment each of the different kinds of
business will be distributed between
Two or more companies. with di-
vision of the prominent brands in the
same tobacco products, SO as to make
competition not only possible but
necessary Thus the smoking tobac-
co business of the country is divided
SO tnat the present independent com
panles have 21.39 per cent, while the
american Tobacco company will have
33.OS per cent. the Liggett and
Meyers 20.05 per cent, the Lorillard
company 22S2 per cent. and the
reynolds company 2.66 per cent The
STOCK OF the other thirteen companies
ooth preferred and common, has been
taken from the defendant American
looacco company and has been dis
'riputed among it's stockholders All
covenants restricting competition have
| peen declared null and further per-
lormance of them has been enjoned
Inc preferred stock of the different
companies has now been given yot-
ing power which was denied it under
me old organization. The ratio of
'he preferred stock to the common
was as rs to 40. This constitutes
very decided change in the character
OF the ownership and control Of
each company,
In the original suit there were twen-
ty-nine defendants who were charged
with being the conspirators through
whom the illegal combination acquired
and exercised its unlawful dominion
Under the decree these defendants
will hold amounts of stock in the va
rious distributee companies ranging
from Al per cent. as a maximum to
2S1a per cent. as a minimum, except
IN the ease of one small company, the
Porto Rican Tobacco company, in
which they will hold 45 per cent The
twenty-nine 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 Pc
riod. All parties to the suit, and the
new companies who are made parties.
are enjoined perpetually from in any
way efiecting any combination be-
tween any of the companies in viola
tion Of the statute by way of resump
ton 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
having common directors or officers.
or common buying or selling agents.
or common Offices. or lending money
to each other
Size of New Companies.
Objection was made by certain in
dependent tobacco companies that this
settlement was unjust because 1t left
companies with very large capital in
active business. and that the settle
ment that would be effective to put all
ho ct Nf
the capital and plant of the trust into
small factions in amount more nearly
equal to that of each of the independ-
ent companies. This contention re-
suits from a misunderstanding of the
antitrust law and its purpose It is
not intended thereby to prevent the
accumulation of large capital in busi-
ness enterprises in which such a COM
bination can secure reduced cost Of
production. sale and distribution. 1t
is directed against such an aggrega-
tion of capital only when its purpose
is that Of sitting competition. enhanc-
ing or controlling prices and estab
fishing a monopoly. If we shall have
by the decree defeated these purposes
and restored competition between the
large units into which the capital and
plant have been divided. we shall have
accomplished the useful purpose OF
the statute.
conflscation Not the Purpose Of the
Statute.
II 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 transportation, are provided.
but the proceeding in equity is spe-
cific remedy to stop the operation OF
the trust by injunction and prevent
the future use of the plant and capital
in violation Of the statute,
Effectiveness Of Decree.