Evening journal., 1912-11-18

Tobacco Company and its allied COM
psnics in accordance with the opin-
ion of the Supreme Court rendered
on May %. 1911. was handed down
on November 1e. 1911 The disin-
,egration Immediately. FOLLOWED and
so has been in at least partial opera
ton about year. and in total opera
tion since February IS. 1912.
A political campaign is ended in
which there was some discussion OF
the effect o. this decree. and such
discussion. as well as other discus
sion. has shown that there is very
considerable Misunderstanding Of
tho situation
The American Tobacco Company,
following rigidly its policy Of nom
participation in political matters, has
remained silent; but. now that the
campaign is ended. there can be no
reason urged against a frank state
nent OF conditions.
The Decree Itself,
There has not been a full under
standing of the drastic and radical
nature Of the decree entered on No
vember 16. 1911. The Supreme Court
had declared that a condition of mon
opoly and restraint Of trade existed,
and remanded the case 10 the Circuit
Court OF New York with instructions
to bring about az a date not later than
February 2s, 1912, a termination OF
this condition of monopoly and re-
strain OF trade and a condition hon
estly in harmony with the law.
The American Tobacco Company
was the parent and dominant figure
OF the sO-called tobacco combination,
and the Circuit Court. i'm carrying
out the opinion OF the Supreme Court,
required The American Tobacco Com
pany. as the very first step. 10 do
thing that has been lightly noted
in the public discussions Of the de-
cree, but that was OF tremendous inn
portance. viz
The American Tobacco Company
wns required 10 distribute among It's
stockholders. securities that had pro-
dnced an annual Income Of more than
sa.000,000, and that therefore had n
total value Of substantially SiO0,0O0,-
0OO.
These securities we're selected by
the Court itself and this distribution
took from The American Tobacco
Company the very things. and almost
all Of the things. that had excited
comment and criticism--those things
that we're said to have given to The
American Tobacco Company power
over other manufacturers. such as
(a) the control Of or connection with
the licorice business and th) the tin
foil business; (c) that instrument
which had. Justly or unjustly excited
tho complaint Of many manufacturers
and dealers. the United Cigar Stores
Company. which operates a chain of
retail stores: (dl the foreign alli-
ance. or connection with Tho Imper-
ial Tobacco Company. Limited. and
l}-itish-American Tobacco Company
Limited: (el all relation or alliance
with the r. J. Reynolds Tobacco
(omuany, large and successful
Southern manufacturer; () all rela.
fidn TO or alliance with American
SMUT Company, a large snuff manu-
iactnrer
Ned The American Tobacco Com
pany never possessed the things O
--'ich Il thus denuded itself, II 4
likely that Il would never have beer
proceeded against rs a monopoly.
Competitive Condition.
Tho next step ordered by the Cour
ors the disintegration of the ver
bad heretofore been owned outrigh
by The American Tobacco Company
This was affected by the creation o
two large manufacturing concerns
rallied respectively Liggett & Myers
Tobacco Company and P. Lorillart
Company.
The American Tobacco Compan.
made deeds and conveyances to thes
new companies Of definite properties
brands and businesses with definit
statements made to the Court as 4
what these factories. brands AM
businesses had made during the yea
1910 what their output OF pound
was. and what their use Of tobacc
was.
The price to be paid by these com
NAMES was fixed by the Court. an
The American Tobacco Company us
ed the purchase price in the reduC
tion of its own outstanding secur
ties
The Department of Justice repre-
senting the Government. the prose
cutor Of the case had the advantar
OF the expert knowledge Of the D'
partment OF Commerce and Labc
which itself had been investigator
'hf tobacco business for two or thrS
years. and which reported. throuE
the man who had made the long COZ
tinued examination Of the tobact
Industry. that so far as brands. typ
OF leaf tobacco used. territorial di
tribution Of business, and all 9TH
things the conditions brought abo
were in fact competitive.
Common Ownership Of stock.
This disintegration as every di
integration of so-called trul
which the Government has enforce
from the case OF the Northern Secui
ties Compsn to the present time. Il
the same body Of stockholders in q
various companies that were nomin
competitors
This feature Of the matter receiv
the careful consideration Of the pa
ties to the litigation and the Cou
The facts we're that the comm
stockholders Of The American Tobs
co Company numbered about III
and the decree provided that Fl
voting rights should be given to I
t preferred stockholders. numberi
more than 5000. who heretofore h
had no votes. and there was IN
added an even larger number 10 {
:. BODY Of controlling holders.
The disintegration. without Il
feature Of common stockholding, "
obviously impossible. unless prop
~ was 10 be absolutely confscsi
or the creation OF another social
mcnonoly permitted
Nothing more sane or comprehs
siye can be said on this subject th
vas said by Circuit Judge Moves
bis opinion az the time the decree
Novmber 16. 1911, was entered:
The nhinciinn 10 rnnfiial etnl