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The Princeton union. [volume] (Princeton, Minn.) 1876-1976, December 07, 1911, Image 6

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MESSAGE OF
THE PRESIDENT
Mr. Taft Champions the Anti
trust Statute.
NEW REMEDIES SUGGESTED,
Mot Repeal op Amendment, but Sup
plemental Legislation NeededThe
Tobacco Trust Decision an Effective
"OneFederal Incorporation Recom
mended and a Federal Corporation
Commission ProposedThe Test of
"Reasonableness."
To the Senate and House of Repre
sentatives: This message is the first of several
which I shall send to congress during
the interval between the opening of
As regular session and its adjourn
ment for the Christmas holidays. The
amount of Information to be commu
nicated as to the operations of the
government, the number of important
subjects calling for comment by the
executive and the transmission to con
gress of exhaustive reports of special
commissions make it impossible to in
clude in one message of a reasonable
length a discussion of the topics that
ought to be brought to the attention
of the national legislature at its first
regular session.
The Anti-trust LawThe Supreme
Court Decisions.
In May last the supreme court hand
ed down decisions in the suits in equi
ty brought by the United States to en
join the further maintenance of the
Standard Oil trust and of the Ameri
can Tobacco trust and to secure their
dissolution. The decisions are epoch
making and serve to advise the busi
ness world authoritatively of the
scope and operation of the anti-trust
act of 1890 The decisions do not de
part in any substantial way from the
previous decisions of the court in con
struing and applying this important
statute, but they clarify those deci
sions by further defining the already
admitted exceptions to the literal con
struction of the act. By the decrees
they furnish a useful precedent as to
the proper method of dealing with the
capital and property of illegal trusts.
These decisions suggest the need and
wisdom of additional or supplemental
legislation to make it easier for the
entire business community to square
with the rule of action and legality
thus finally established and to pre
serve the benefit, freedom and spur of
reasonable competition without loss of
real efficiency or progress
No Change In the Rule of Decision,
Merely In Its Form of Expression.
The statute in its first section de
clares to be illegal "every contract,
combination in the form of trust or
otherwise or conspiracy in restraint
of trade or commerce among the sev
eral states or with foreign nations"
and in the second declares guilty of a
misdemeanor "every person who shall
monopolize or attempt to monopolize
or combine or conspire with any other
person to monopolize any part of the
trade or commerce of the several states
or with foreign nations."
In two early cases, where the statute
was invoked to enjoin a transporta
tion rate agreement between inter
state railroad companies, it was held
that it was no defense to show that
the agreement as to rates complainea
of was leasonable at common law, be
cause it was said that the statute was
directed against all contracts and com
binations in restraint of trade, whether
reasonable at common law or not It
was plain irora the record, however,
that the contracts complained of in
those cases ould not have been deem
ed leasonable at common lav. In sub
sequent cases the court said that the
statute should be given a reasonable
constiuction and refused to include
within its inhibition ceitain contrac
tual restraints of trade wh*eh it de
nominated as incidental or as indirect
These cases of restrant of trade that
the court excepted from the operation
of the statute were instances which
at common law would have been call
ed reasonab'e In the Standard Oil
and tobacco cases, therefore, the court
merely adopted the tests of the com
mon law and in defining exceptions to
the literal application of the statute
only substituted for the test of being
incidental or indirect that of being
reasonable, and this without varying
in the slightest the actual scope and
effect of the statute In other words,
all the cases under the statute which
have now been decided would have
been decided the same way if the
court had originally accepted in its
construction the rule at common law.
It has been said that the court by in
troducing into the construction of the
statute common law distinctions has
emasculated it This is obviously un
true By its judgment every contract
and combination in restraint of inter
state trade made with the purpose or
necessary effect of controlling prices
by stifling competition or of establish
ing in whole or in part a monopoly of
tuch trade is condemned by the stat
ute. The most extreme critics cannot
Instance a case that ought to be con
demned under the statute which is not
brought within its terms as thus con
strued.
The suggestion is also made that the
supreme court by its decision in the
last two cases has committed to the
court the undefined and unlimited dis
cretion to determine whether a case of
restraint of trade is within the term*
^fW5^r/^w^W"$^^^fA^^
of the statute. This Is wholly untrue.
A reasonable restraint of trade at com
mon law is well understood and Is
clearly defined. It does not rest In the
discretion of the court. It must be
limited to accomplish the purpose of a
lawful main contract to which in order
that It shall be enforceable at all it
must be incidental. If it exceed the
needs of that contract it is void.
The test of reasonableness was never
applied by the court at comman law
to contracts or combinations or con
spiracies in restraint of trade whose
purpose was or whose necessary effect
would be to stifle competition, to con
trol prices or establish monopolies
The courts never assumed power to
say that such contracts or combina
tions or conspiracies might be lawful
if the parties to them were only mod
erate in the use of the power thus se
cured and did not exact from the pub
lic too great and exorbitant prices. It
is true that many theorists and others
engaged in business violating the stat
ute have hoped that some such line
could be drawn by courts, but no court
of authority has ever attempted it
Certainly there is nothing in the deci
sions of the latest two cases from
which such a dangerous theory of ju
dicial discretion in enforcing this stat
ute can derive the slightest sanction.
Force and Effectiveness of Statute a
Matter of Growth.
We have been twenty-one years mak
ing this statute effective for the pur
poses for which it was enacted. The
Knight case was discouraging and
seemed to remit to the states the whole
available power to attack and suppress
the evils of the trusts. Slowly, howev
er, the error of that judgment was cor
rected, and only in the last three or
four years has the heavy hand of the
law been laid upon the great illegal
combinations that have exercised such
an absolute dominion over many of our
industries. Criminal prosecutions have
been brought, and a number are pend
ing, but juries have felt averse to con
victing for jail sentences and judges
have been most reluctant to impose
such sentences on men of respectable
standing in society whose offense has
been regarded as merely statutory
Still, as the offense becomes better un
derstood and the committing of it par
takes more of studied and deliberate
defiance of the law we can be confi
dent that juries will convict individu
als and that jail sentences will be im
posed. The Remedy In Equity by Dissolution.
In the Standard Oil case the supreme
and circuit courts found the combina
tion to be a monopoly of the interstate
business of refining, transporting and
marketing petroleum and its products
effected and maintained through thir
ty-seven different corporations, the
stock of which was held by a New Jer
sey company. It in effect commanded
the dissolution of this combination, di
rected the transfer and pro rata distri
bution by the New Jersey company of
the stock held by it in the thirty-seven
corporations to and among its stock
holders, and the corporations and indi
vidual defendants were enjoined from
conspiring or combining to restore
such monopoly, and all agreements be
tween the subsidiary corporations tend
ing to produce or bring about further
violations of the act were enjoined
In the tobacco case the court found
that the individual defendants, twen
ty-nine in number, had been engaged
in a successful effort to acquire com
plete dominion over the manufacture,
sa'e and distribution of tobacco in this
country and abroad and that this had
been done by combinations made with
a purpose and effect to stifle competi
tion, control prices and establish a
monopoly, not only in the manufacture
of tobacco, but also of tin foil and lic
orice used in its manufacture and of
its products of cigars, cigarettes and
snuffs. The tobacco suit presented a
far more complicated and difficult case
than the Standard Oil suit for a decree
which would effectuate the will of the
court and end the violation of the stat
ute. There was here no single hold
ing company, as the case of the
Standard Oil trust. The maiu company
was the American Tobacco company,
a manufactuimg. selling and holding
company The plan adopted to de
stroy the combination and restore com
petition involved the redivision of the
capital and plants of the whole trust
between some of the companies con
stituting the trust and new companies
organized for the purposes of the de
cree and made parties to it and num
bering, new and old. fourteen
Situation After Readjustment.
The American Tobacco company
(old), readjusted capital $92,000,000
the Liggett & Meyers Tobacco company
(new), capital $67,000,000 the P. Loril
lard company (new), capital $47,000,
000. and the R. J. Reynolds Tobacco
company (old), capital $7,525,000. are
chiefly engaged in the manufacture
and sale of chewing and smoking to
bacco and cigars. The former one tin
foil company is divided into two, one
of $825,000 capital and the other of
$400,000. The one snuff company is
divided into three companies, one with
a capital of $15,000,000, another with a
capital of $8,000,000 and a third with
a capital of $8,000,000 The licorice
companies are two, one with a capital
of $5,758,300 and another with a capi
ta] of $2,000,000. There is also the
British-American Tobacco company, a
British corporation, doing business
abroad with a capital of $26,000,000.
toe Porto Rican Tobacco company,
with a capital of $1,800,000, and the
corporation of United Cigar Stores,
with a capital of $9,000,000
Under this arrangement each of the
different kinds of business will be dis
tributed between two or more compa
nies with a division of the prominent
brands in the same tobacco products,
so as to make competition not only
possible, but necessary Thus the
smoking tobacco business of the coun
try is divided so that the present in
THE PBIKCETOK UNION: THtTBSBAY, DECEMBEB 7,
Cependent companies have 21.39 per
cent while the American Tobacco com
pany will hare 33.08 per cent, the Lig
gett & Meyers 20.66 per cent, the Loril
lard company 22.82 per cent and the
Reynolds company 2.66 per cent. The
stock of the other thirteen companies,
both preferred and common, has been
taken from the defendant American
Tobacco company and has been dis
tributed among its stockholders. All
covenants restricting competition have
been declared null and further per
formance of them has been enjoined
The preferred stock of the different
companies has now been given voting
power which was denied it under the
old organization. The ratio of the pre
ferred stock to the common was as 78
to 40. This constitutes a very decided
change in the character of the owner
ship 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 various
distributee companies ranging from 41
per cent as a maximum to 28ys per
cent as a minimum, except in the case
of one small company, the Porto Rican
Tobacco company, in which they will
hold 45 per cent The twenty-nine in
dividual defendants are enjoined for
three years from buying any stock ex
cept from each other, and the group is
thus prevented from extending its con
trol during that period. All parties to
the suit and the new companies who
are made parties are enjoined perpet
ually 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 en
joined from acquiring stock in any of
the others. All these companies are
enjoined from having common direc
tors 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 it left
companies with very large capital in
active business and that the settle
ment that would be effective to put all
on an equality would be a division of
the capital and plant of the trust into
small fractions in amount more near
ly equal to that of each of the inde
pendent companies. This contention
results from a misunderstanding of
the anti-trust 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. It
is directed against such an aggrega
tion of capital only when its purpose
is that of stifling competition, enhanc
ing or' controlling prices and establish
ing 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
Confiscation Not the Purpose of the
Statute.
It 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 a spe
ciflc 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.
I venture to say that not in the his
tory of American law has a decree
more effective for such a purpose been
entered by a court than that against
the tobacco trust As Circuit Judge
Noyes said in his judgment approving
the decree*
"The extent to which it has been
necessary to tear apart this combina
I tion and force it into new forms with
the attendant burdens ought to demon
strate that the federal anti-trust statute
is a drastic statute which accomplishes
effective results, which so long as it
stands on the statute books must be
obeyed and which cannot be disobey
ed without incurring farreaching pen
alties. And, on the other hand, the
successful reconstruction of this or
ganization should teach that the ettect
of enforcing this statute is not to de
stroy, but to reconstruct: not to de
molish, but to recreate in accordance
with the conditions which the congress
has declared shall exist among the
people of the United States."
Common Stock Ownership.
It has been assumed that the pres
ent pro rata and common ownership in
all these companies by former stock
holders of the trust would Insure a
continuance of the same old single con
trol of all the companies Into which
the trust has by decree been disinte
grated. This is erroneous and is based
upon the assumed inefficacy and innoc
aousness of judicial injunctions. The
companies are enjoined from co-opera
tion or combination they have differ
ent managers, directors, purchasing
and sales agents. If all or many of
the numerous stockholders, reaching
Into the thousands, attempt to secure
concerted action of the companies with
view to the control of the market
their number is so large that such an
attempt could not well be concealed,
ind its prime movers and all its partic
ipants would be at once subject to con
tempt proceedings aqd imprisonment
of a summary character The immedi
ate result of the present situation will
necessarily be activity by all the com
panies under different managers, and
ihen competition must follow or there
will be activity by one company and
stagnation by another. Only a short
ime will inevitably lead to a change
to ownership of the stock, as all op
portunity for continued co-operation
must disappear. Those critics who
speak of this disintegration in the trust
as a mere change of garments have not
given consideration to the inevitable
working of the decree and understand
little the personal danger of attempt
ing to evade or set at naught the sol
emn injunction of a court whose object
is made plain by the decree and whose
Inhibitions are set forth with a detail
and comprehensiveness unexampled in
the history of equity jurisprudence.
Voluntary Reorganizations of Other
Trusts at Hand.
The effect of these two decisions has
led to decrees dissolving the combina
tion of manufacturers of electric
lamps, a southern wholesale grocers'
association, an interlocutory decree
against the powder trust, with direc
tions by the circuit court compelling
dissolution, and other combinations of
a similar history are now negotiating
with the department of justice looking
to a disintegration by decree and re
organization in accordance with law.
It seems possible to bring about these
reorganizations without general busi
ness disturbance.
Movement For Repeal of the Anti
trust Law.
But now that the anti-trust act is
seen to be effective for the accomplish
ment of the purpose of its enactment
we are met by a cry from many differ
ent quarters for its repeal. It is said
to be obstructive of business progress,
to be an attempt to restore old fash
ioned methods of destructive competi
tion between small units and to make
impossible those useful combinations
of capital and the reduction of the cost
of production that are essential to con
tinued prosperity and normal growth
In the recent decisions the supreme
court makes clear that there is noth
ing in the statute which condemns
combinations of capital or mere big
ness of plant organized to secure econ
omy in production and a reduction of
its cost It is only when the purpose
or necessary effect of the organization
and maintenance of the combination
or the aggregation of immense size are
the stifling of competition, actual and
potential, and the enhancing of prices
and establishing a monopoly that the
statute is violated Mere size is no
sin against the law The merging of
two or more business plants necessari
ly eliminates competition between the
units thus combined, but this elimina
tion is in contravention of the statute
only when the combination is made for
purpose of ending this particular com
petition in order to secure control of
and enhance prices and create a mo
nopoly.
Lack of Definiteness In the Statute.
The complaint is made of the stat
ute that it is not sufficiently definite
in its description of that which is for
bidden to enable business men to avji
its violation. The suggestion is that
we may have a combination of two
corporations which may run on for
years and that subsequently the at
torney general may conclude that it
was a violation of the statute and that
which was supposed by the combiners
to be innocent then turns out to be a
combination in violation of the statute.
The answer to this hypothetical case
is that -when men attempt to amass
such stupendous capital as will enable
i them to suppress competition, control
prices and establish a monopoly they
know the purpose of their acts. Men
do not do such a thing without having
it clearly in mind. If what they do is
merely for the purpose of reducing the
cost of production, without the thought
of suppressing competition by use of the
bigness of the plant they are creating,
then they cannot be convicted at the
time the union is made, nor can they
be convicted later unless it happen
that later on they conclude to sup
press competition and take the usual
methods for doing so and thus estab
lish for themselves a monopoly. They
can in such a case hardly complain if
the motive which subsequently is dis
closed is attributed by the court to the
original combination
New Remedies Suggested.
Much is said of the repeal of this
statute and of constructive legislation
intended to accomplish the purpose
and blaze a clear path for honest mer
chants and business men to follow It
may be that such a plan will be
evolved, but I submit that the discus
sions which have been brought out In
recent days by the fear of the con
tinued execution of the anti-trust law
have produced nothing but glittering
generalities and have offered no line
of distinction or rule of action as defi
nite and as clear as that which the su
preme court itself lays down in en
forcing the statute
Supplemental Legislation Needed, Not
Repeal or Amendment.
I see no objection, and Indeed I can
see decided advantages, in the enact
ment of a law which shall describe
and denounce methods of competition
which are unfair and are badges of the
unlawful purpose denounced in the
anti-trust law. The attempt and pur
pose to suppress a competitor by un
derselling him at a price so unprofita
ble as to drive him out of business or
the making of exclusive contracts with
I customers under which they are re
quired to give up association with oth
I er manufacturers and numerous kln
i dred methods for stifling competition
and effecting monopoly should be de
scribed with sufficient accuracy In a
criminal statute on the one hand to
enable the government to shorten Its
task by prosecuting single misdemean
ors instead of an entire conspiracy and
on the other hand to serve the purpose
of pointing out more In detail to
the business community what must be
avoided
Federal Incorporation Recommended
In a special message to congress
1911.
new
1ESMOK'
.22
CARTRIDGES
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Jan. 7, 1910. ventured to point n*
LOSTA black lynx rug muff, be
tween village of Princeton and Ed
Larson's place in Wyanett. Finder
please return to Union office for
reward. lto.
LOSTBlack fur coat, between the
church on Sfcanchfield Jake road
and the village of Princeton. Finder
please leave at Swan Olson's for
reward. ltp
FOB SALE.
APPLESOff car at depot at from 75
to 95 cents per bushel. ltp
FOR SALEFive shares of the
capital stock of the State Bank of
Milaca. Address O. A. Zierold,
305 Century Building, Minne
apolis. 50-4t
FOR SALEAbout 30,000 "feet of
birch, basswood, oak and elm
lumber. Wolf Bros., section 7,
Greenbush. 48-3 tp
FOR SALEA Chicago cottage organ
in good condition. Apply at Mc
Ilhargey 's store or of Mrs. W. G.
American Northwest
TWIN CITY
LAND SHOW
ST. PAUL AUDITORIUM
December 12 to 23
(Under Auspices of Northwest Development League)
Complete Exhibits from
Minnesota Montana North Dakota Oregon
Washington Idaho South Dakota Alaska
AH famous sections valleys and cities have special exhibits. If you are looking
for a home, the Land Show will enable you to decide wheretheopportunities are.
Special Rates on the Railroads
REPEATING RIFLE
Racy beauty of line, perfect balance.
Its appearance often sells it.
Andit's as keen a rifle for its size as the most
highly developed military arm.
Built by expert gunsmiths on the Remington
IdeaSolid Breech, Hammerless, Take-down.
Shoot PenUngto/irUMC Lesmok .22s. Their
accuracy enabled Arthur Hubalek to break
World's Record in 100 consecutive shots, scoring
2,484 in a possible 2,500.
Icte/nJngtOfcUMC the perfect shooting com-
Wntt for a free set of Targets.
Remington Arms-Union Metallic Cartridge Co.
299 Broadway. New York City
J. M. JOHNSON
EWELER
MAKE a specialty of repairing all kinds of com- &
plicated watches and clocks. If you have old,
worn out jewelry bring it to me and I will make it
I like new on short notice. *j* $
to sell at home.
WANT COLUMN!
^"Notices under this head will be inserted
at one cent per word NO advertisement will
be published in this column for less than 15cts
LOST.
HUNTERS'& TRAPPERS'GUIDE
450pages, leather bound. Best thing on the subject ever written. Illustrating all Fur
Animals. All about Trappers' Secrets, Decojs, Traps, Game Laws. How and where
to trap, and to become a saccessf al trapper. It's a regular Encyclopedia Price, $2.
To our customers, SI 25 Hides tanned into beautiful Robes Our Magnetic Bait and
Decoy attracts animals to traps, $1 00 per bottle. Ship your Hides and Furs to
and cet lushest prices. Andersch Bros.? Dept. 112 Minneapolis* Minn-
I
*S"*
Skins HORS E UIII170
and CATTL E MUtO
and all other kinds of RAW FURS
bought for spot cash. lO to 50% more money
for you to ship Raw Furs and Hides to us than
Write for Price List, Market Report, and about our-
Fredricks. 49-tfc
FOR SALECheap, a cream separ
ator in good working order. Apply
to J. H. Fullwiler, on the old
Wheeler farm, Blue Hill Route 1,.
Princeton. ltp
MISCELLANEOUS.
WANTEDYoung men, no experience
necessary, to act as agents. In
quire of C. L. Stedman, Com
mercial hotel next, Tuesday between*
9 a. m. and 7 p. m. ltp
WANTEDFat cattle. Bring all you
have to Hummel's meat market,
opposite starch factory, Prince
ton. 42-tfc
FOR SERVICEA Duroc Jersey
boar, registered. No. 96,775. Arthur
W. Steeves, Route 2, Prince
ton. 49-6tp
SELL your hides and furs to A. E.
Hayes, where you always get a
square deal. I will be in town
every afternoon and Saturday all
day at my old stand north of Byers'
store. A. E. Hayes. 49-tfc
FOR SERVICEA Poland-China
pedigreed boar. H. C. Nelson,
Route 1, Princeton. 50-4tp
Henry Arnhold has traded his
dairy farm to M. L. Wheeler for real
estate property in the village.
"11
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