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, Nos. 118 and 119.--0oroBE$ TExY, 1910. others. I Appeals from the Circuit 118 va. The American Tobacco Company and The United States of America, Appellant, ~ ' Court of the United States The American Tobacco Company and i for the Southern District of 119 Others, Appellants. ~ . 'i New York. as. • The United States of America. J [May 29,1911.] ~ . Mr. Chief Justice WHrrs delivered the opinion of the Court. . . This suit was commencea on July 19, 1907, by the United States, to prevent the continuance bf alleged violations of the first and seoend sec- tions of the Anti-trust Act of July 2,1890. The defendants were twenty- nine individuals, named in the margin,* sixty-five American corporations, most of them created in the State of New Jersey, and two Engiish cor- porations. For convenience of statement we classify the corporate de- fendants, exclusive of the two foreign ones, which we shall hereafter sep- arately refer to, as o ows : e rican Tobacco Company, a New Jersey corporation, because of its dominant relation to the subject matter of the controversy as the primary defendant ; five other New Jersey cor- porations, (viz., American Snuff Company, American Cigar Company, American Stogie Company, MacA^i±~ws & Forbes Company, and Con- ley Foil Company), because of their relation to the controversy as the accessory, and the fifty-nine other.American..corporations as the sub= sidiary defendants. The ground of complaint against the American Tobacco Company rested not alone upon the nature and character of that corporation and the power which it exerted directly over the five accessory corporations *James B. Duke, Caleb C. Dula, Percival S. Hill, George Arents, Paul Brown, Robert B. Dula, George A. Helme, Robert D. Lewis, Thomas J. Dd'a- loney, Oliver H. Payne, Thomas F. Ryan, Robert K. Smith, Georg® W. Watq, , George G. Allen, John B. Cobb, William R. Harris, William H: McAIister, Anthoriy' N. Brady, 'Benjamin N. 'Dake, H. M. Hbnna, Herbert D. Bingsbnry, Pierre Lorillard, Rnfus L. Patterson, Frank H. Ray, Grant B. Schley, Charlea N. Strotz, Peter A. B. Widener, Welford C. Reed (now deceseed ), and William- son W. Faller. -

2 Ilnited States vs. dmericau Tobacco Co. d, aL and some of the subsidiary corporations by stock ownership in .uch corporations, but also upon the control which it exercised over the eubsidiary companies by virtue of stock held in said oompaniee by the acceesory companies by stock ownership in which the American Tobacco Company exerted its power of control. The accessory companies were impleaded either because of their nature and_character or because of the ~wer eze _. Qver. ..thiosg7h •stock--flwnership lry the American Tobacco Company and also because of the_pow.er-w.ltich they in turn exerted by stock ownership over the subfiidiary corporations, and finally the subsidiarLcorporations were impleaded either because of their nature or becaase of the control to which they were subjected in and bX_virtue of the stock ownership above stated. We append in the margin a state- ment showing-the-stoet-eea#rel exercised by the principal defendant, the American Tobacco Company, over the five accessory corporations and also the authority which it directly exercised over certain of thesub- sidiary aorporations, and a list showing the control exercised over the subsidiary corporations as a reault of the stock ownership in the accessory ora ions, ~f`iey being in turn controlled as we have said by the prin- cipal defendant, the American Tobacco Companp* • Eztent of control of American Tobacco Company over the accessory u,r- porations : American Snuff Gbmpany-of 120,000 shares of preferred stock owns 12,517 shares direetlyand 11,274 shares by reason of stock control of P. Lorillard Co., in all 23,764 shares; of 110,017 shares of common stock owns 41,214 directly and 34,594 by reason of stock control of P. Lorillard Co., in all 75,808 shares. dm.rican Cigar Company-of 100,000 shares of preferred stock owns 89,700 shares directly and 5,000 shares through control of American Snuff Co., in all 94,700 shares; of 100,000 shares of common stock owns directly 77,451 shares. American Stogie Cbmpany-of 108,790 shares of common stock controls 73,072f shares through stock interest in American Snuff Company. The Ameri- can Stogie Company owns all of the stock-12,500-of the Union American Cigar Company=cigars and stogiee. llfacAndrev:s & Forbes Company-of 37,583 shares of preferred stock (no voting power) owns 7,500 shares; of 30,000 shares of common stock owns 21,129 shares directly and 983 shares through stock control of the R. J. Reynolds Co., in all 22,112 shares. The (bnley Foil Compa.ny-of 8,250 shares of stock, directly owns 4,950 shares. , T7u d,nurioatt Tobacco Company-by stock own.erahip.is the owper outTight of the following defendant cor-panies : .'8. Anargyros [The B. Anaagyros CJompanp owna ~all y)ie capital, stociC (10 shares) of.the London Cigarette Co.]; F. F. tldains-Tahatxo Co.;, i§lack- well's Durham Totiacco Co.; Crescent Cigar and Tobacco Co.; Day and Night Tobacco Co.; Luhrman & W ilbern Tobacco Co.; Nall & W illiams To- ~ w Co -b ~ v N y

TlnW States vs. American Tobacco Co. et a1. E The twof&eign eorporationa were impleaded either because of their nature and character and the operation and effect of contracts or agree- ments with the American Tobacco Company, or the power which it ex- erted over their affairs by stock ownership. As we shall have occasion hereafter in referring to matters beyond dis- pute to set forth the main facts relied upon by the United States as giving rise to the cause of action alleged against all of the defendants it suffices at this moment to say that the bill averred,the origin and riature of the American Tobacco Compauy and the origin and nature of all the other defendant corporations, whether accessory or subsidiary, and the connection of the individual defendants with such corporations. In effect the bill charged that the individual defendants and the defendant cor- porations were engagqd in a conspiracy in restraint of interstate and foreign trade in tobacco and the products of tobacco and constituted a combination in restraint of such trade in violation.o£.xhe_6zaLmFtion of the act, and Also were attemptigg~~nttito~i~, and_.$rer,e _actuaIly a , monQpolization of such trade in violation of the second section. In sup- port of these charges general averments were made in the bill as to the baocc Co.; Nashville Tobacco Works; R. A Patterson Tobacco Co.; Monopol Tobacco Works; Spalding & Merrick. The American Tobacco Co. also haa theEtNk4n+a s* 'rdicated in the follow- defendant corporations: British-American Tobacco Co.-owns 1,200,000 shares of 1,500,000 shares of pre- ferred stock and 2,280,012 shares of 3,720,021 shares of common stock. The Imperial Tobacco Co., &c.--owns 721,457 pounds sterling of 18,000,000 pounds sterling of stock. The John Bollman Co.-of 2,000 shares of stock owns 1,020 sliares. F. R. Penn Tobacco Co.-of 1,50.° shares of stock owns 1,002 shares (through Blackwell's Durham Tobacco Co. ) R. P. Richardson, Jr., & Co., Inc.-owns 600 out of 1,000 shares of stock and $120,000 of $200,000 issue of bonds. R. J. Reynolds Tobacco Co.-owns 50,000 out of 75,250 shares of stock. Pinkerton Tobacco Co.-owns 775 out of 1,000 shares of stock. Reynolds Tobacco Co. (of Bristol Tenn.)-owns 1,449 shares out of 2,500 shares. J. W. Carroll Tobacco Co.--owns 2,000 out of 3,000 shares. P. Lorillard Co-owns 15 813 oMt_of_20,OOD whn.wa nf prPfPrewd~d.4t.l .~he~ common stock (30,000 shnree),, hentueky Tobacco Product Co.-owns 14 of 1,900 shares preferred and owns directly 5,264, and, through the American Cigar Co., 355 out of 8,100 shares of common stock. [The Kentucky Tobacco Product Co. owns all the capital stock (100 shares) of the Kentucky Tobacco Extract Co.] Porto Rican-American Tobacco Co.-owns directly 6,578, and, through the American Cigar Co., 6,576 of 19,984 shares of stock. [The Porto Riean- =~;-,

American Tobacco Co. owns 190 of the 380 shares of preferred and 300 of the 450 shares of common stock of Ind. Co. of Porto Rico; also owns 2,150 of the 5,000 shares of capital stock of the Porto Rico Leaf Tobacco Co.] i The American Tobacco Company is also interested, as indicated, in the fol- .erdngful purpose and intent with which acts were committed which it was alleged brought about the alleged wrongful result. The prayer of the bill was as folloAs: Wherefore petitioner prays : " 1. That the contracts, combinations, and conspiracies in restraint of trade and commerce among the States and with foreign nations, together with the attempts to monopolize and the monopolies of the same hereinbe- fore described be declared illegal and in violation of the act of Congress passed July 2, 1890, and subsequent acts, and that they be prevented and restrained by proper orders of the court. `° 2. That the agreements, contracts, combinations, and conspiracies en- tered into by the defendants on or about September 27, 1902, and there- after, and evidenced among things by the two written agreements of that date, Exhibits 1 and 2 hereto, be de:,lared illegal, and that injunctions issue restraining and prohibing defendants from doing'anything in pursuance lowing defendants, supply or machinery companies: Golden Belt Manufacturing Co. (cotton bags)-owns 6,521 of 7,000 shares. _ 63i A ri T C B i i h 3 b M l C d b o me can enge o. (woo en ozes)- s - owns , o acco Box r t lk' of 6,000 shares of atock. ) [The Mengel Company owns all of the capital stock of the Columbia Box Com- pany and of the Tyler Box Company, respectively 1,500 and 250 eharea] of ns majorit to u cha s lies)-o l -( d S C A t y p r w am upp y o. agency se upp ma er ;,,a F 9 stock and controls large part of remainder through subsidiary companies. i Thomas Cusack Co.-(bill posting)-owns 1,000 out of 1,500 ehares. Manhattan Briar Pipe Co.--owns all of stock, 3,500 shares. International Cigar Machinery Co.-of 100,000 shares owns 33,637 shares di- rectly and 29,902 shares through Am. Cigar Co.-in a1163,539 shares. The American Tobacco Company is also interested in the following com- not named as defendants: panies , American Machine & Foundry Co.-owns 510 shares directly and remainder y (490) through Am. Cigar Co. 4 N J Mhi C 510h ditldid (490) ewerseyacneo.-owns saresrecy an remaner through Am. Cigar Co. Standard Tobacco Stemmer Co.-of 17,300 shares owns 16,895 shares. C.arson Vending Machine Co.-of 500 shares owns 250 shares. The American Snuff Company in addition to stock, &c., interests in the American Tobacco Co., American Cigar Company, and the Amsterdam Supply Company, has stock interests in the following defendants: _ FI. Bolander-owns all of stock, 1,350 shares; e-

. __. : .. . ... . . __ rlrtited b'datee vs. American Tobacco G'o. et al. 5 4 of or in furtherance of the same within the jurisdiction of the United States. " 3. That the Imperial Tobacco Company, it officers, agents, and serv- aqts be enjoined from Qngaging in interstate or foreign trade and com- merce within the jurisdiction of the United States until it shall cease to observe or act in pursuance of said agreements, contracts, combinations, and conspiracies entered into by it and other defendants on or about Sep- tember 27, 1902, and thereafter, and evidenced among other things by the contracts of that date, Exhibits 1 and 2 hereto. "4. That the British-American Tobacco Company be adjudged an un- lawful instrumentality created solely for carrying into effect the objects and purposes of said contract, combination, and conspiracy entered into on or about September 27, 1902, and thereafter, and that it be enjoined from engaging in interstate or foreign trade and commerce within the jurisdiction of the United States. De Voe Snuff Co.-owns all of stock, 500 shares. [The De Voe Snuff Co. owns all the capital stock, 400 shares of Skinner & Co., snuff.] Standard Snuff Co.-owns all of stock, 2,816 shares. The American Cigar Co. in addition to stock interests in the Amsterdam Supply Co., American Stogie Co., Porto Rican American Tobacco Co., Sen- tuckyTobacco Product Co. and International Cigar Machinery Co., has the stock interest indicated in the following defendants: R. D. Burnett Cigar Co.--owns 77 out of 150 shares ; M. Blaskower Co.-owns 1,875 rut of 2,500 shares pref. and 1,875 out of 2,500 shares of common. Cuban Land & Leaf Tobacco Co.---owns all of stock, 1,000 shares. [The Cuban Land, &c., Co. owns 1,320 of the 1,890 shares of stock of the Vuelta Abajo S. S. Co. ] Cliff Weil Cigar Co.-owns 255 out of 500 shares. Dusel, Goodloe & Co.-owns 510 out of 750 shares. Federal Cigar Real Estate Co.-owns all stock, 6,000 shares. J. J. Goodrum Tobacco Co.-owns 477 out of 600 shares. Havana-American Co.-owns all stock, 2,500 shares. Havana Tobacco Co.-owns 700 shares out of 47,038 preferred, 166,800 out of 297,912 common stock, an-i ; 2,' :0,000 of $7,500,000 bonds. Jordan Gibson & Baum Co., Inc.-owns all preferred and common stock, 250 shares each. Louisiana Tobacco Co. Limited-owns 375 out of 500 shares. The J. B. Moos Company-owns all of stock, 2,000 shares. J. & B. Mooa-owns all of common stock, 1,000 shares. Porto Rican Leaf Tobacco Co.-owns 2,500 out of 5,000 shares. The Smokers' Paradise Corporation-owns all of common stock (250 shares) and 349 of 500 shares preferred. Havana 7bbacco Co. has a stock interest in the following corporations: H. de Cabanis y Carbajal-all of stock, 15,000 shares. Hy. Clay and Bock & Co., Lira.-owns 9,749 out of 16,950 shares preferred and 14,687 out of 15,990 shares common.

"5. That the court adjudge The American Tobacco Company, the American Snuff Company, The American Cigar Company, the American Btog'~e Company, the MacAndrews & Forbes Company, and the Conley Foil Company is each a combination in restraint of interstate and foreign trade and oommerce ; and that each has attempted and is attemping to mono~olize, is in combination and conspiracy with other persons and cor- porations to monopolize, and has monopolized part of the trade and com- merce among the several States and with foreign nations ; and order and decree that each one of them be restrained from engaging in interstate or foreign commerce, or, if the court should be of opinion that the public interests will be better subserved thereby, that receivers be appointed to take possession of all the property,, assets, business, and affairs of said de- fendants and wind up the same, and otherwise take such course in regard thereto as will bring about conditions in trade and commerce among the States and with foreign nations in harmony with law. [The Hy. Clay, &c., Co. is owner of 16,667 shares of the ordinary capital etock 'of the Havana Cigar & Tobacco Factories, Limited ; and also owns 64 shares of the 1,890 shares of the capital stock of the Vuelta Abajo S. S. Co.] Cuban Tobacco Co.-owns all of stock, 50 shares. gavana Commercial Co.-owns 55,562 out of 60,000 shares - preferred and 124,718 out of 125,000 shares common. [The Havana Commercial Co. owns all of the capital stock-100 shares--of the M. Valle y Co.-cigars.] Havana Cigar & Tobacco Factories, Lim.-owns 6,774 out of 25,000 shares ordinary stock. J. S. Murias y Co.-owns all of stock-7,500 shares. Blackuvdd'e Durham Tobacco Co.-in addition to a stock interest in the Amster- dam Supply Co., has the stock interest, indicated, in the following de- fendant corporation : F. P. Penn Tobacco Co.-owns 1,002 out of 1,503 shares. Scotten-Dillon Co.--owns $10,000 out of $500,000 of stock. Wells-Whitehead Tobacco Co.-owns all of stock, 1,500 shares. (bnley Foil Company-ownu all of the capital stock (3,000 shares) of the John- son Tin Foil and Mccal Co. P,I_.orillard Gbmpany-has a stock interest in the American Snuff Company and the Amsterdam Supply Co. R. J. R~ye po1dR Tobacco Co.-in addition to a stock interest in the Amsterdam Supply Company and the MacAndrews & Forbes Company, owns one-third of the 5,000 shares of stock of the Lipfert Scales Co. The Britiah-dmerican Tobacco Gb.-in addition to a small interest in the Amster- dam Supply Company, has the following stock interest in certain defend- ants ; David Dunlop-plug--owns 3,000 of 4,500 shares. W. S. Mathews & Sons-amoking-owns 3,637 out of 5,000 shares of stock. T. C. Williams Company-plug-owns all of stock, 4,000 shares. 1P k ~ w to -A -.1 r.~ «.-

11 United 6tatta .a American Tobacco G'o. eE al. 7 4 "6. That the holding of ®tock by one of the defendant corporations in another under the circumstances shown be declared illegal, and that each of them be enjoined from continuing to hold or own such shares in another and from exercising any right in connection therewith. "7. That defendants, each and all, be enjoined from continuing to carry out the purposes of the above-described contracts, combinations, conspira- cies, and attempts to monopolize by the means herein described, or by an}• other, and be required to desist and withdraw from all connection with the same. "8. That each of the defendants be enjoined from purchasing leaf tobacco or from selling and distributing its manufactured output as a part of interstate and foreign trade and commerce in conjunction or combina- tion with any other defendant, and from taking part or being interested in any agreement or combination intended to destroy competition among , them in reference to such purchases or sales. "9. That petitioner have such other, further, and general relief as may be proper." As to the answers, it suffices to say that all the individual and corpo- rate defendants other than the foreign corporations denied the charges of wrongdoing and illegal combination and the corporate defendants in par- ticular in addition averred their right under State charters by virtue of which they existed to own and possess the property which they held and further averred that they were engaged in manufacturing and that any combination amongst them related only to that subject, and there- fore was not within the Anti-trust Act. The two foreign corporations as- serted the validity of their corporate organization and of the assailed agreements, and denied any participation in the alleged wrongful com- bination. After the taking of much testimony before a special examiner, the case was heard before a court consisting of four judges, constituted under the expediting act of February 11, 1903. In deciding the case in favor of the government each of the four judges delivered an opinion. (164 Fed. 700). A final decree was entered on December 15, 1908. The petition was dismissed as to the English corporations, three of the sub- sidiary corporations, the United Cigar Stores Company and all the indi- vidual defendants. It was decreed that the defendants other than those against whom the~etition,.wss-dismissed, .had theretofore entered.intQJand were L7~arties_to binations in restraint of trade, etc., an vielatien of the ,._ ___ _i _ Anti-trust Act and said defendants and each of them, their officers, agents, etc., were restrained and enjoined "from directly or indirectly doing any act or thing whatsoever in furtherance of the objects and pur- poses of said combinations ,and from continuing as pasties thereto.°" jt. specifically found that each of the, defendants, "The American Tobaccpo Company, American Snuff Company, American Cigar Company, Ameri- can Stogie Company, and MacAndrews & Forbes Company constitutes I -0 .r. ~ -,~ ~ IMMMW v rv

and is itself a combination in violation of the said Act of Congress." The corporations thus named, their officers, etc., were next restrained and enjoined "from further directly or indirectlv enMing in interstate or foreign trade and commeroe~n__leaf_ tobacco or the products manufac- tured therefrom or articles necessary or useful in connection therewith. But ' of said last-named defendants can hereafter affirmatively show the restorstion of reasonably corn~titive eeaditiens, such defendant may apply to this court for a modification, suspension or dissolution of the in- junction herein granted against it." The decree then enumerated the various corporations which it was found held or claimed to own some or all of the capital stock of other eorporations and particularly specified such other corporations, and then made the following restraining pro- visions : "Wherefore each and all of defendants, The American Tobacco Com- pany, The American Bnuff Company, The American Cigar Company, P. Lorillard Company, R. J. Reynolde Tobacco Company, Blackwell's Dur- ham Tobacco Company and Conley Foil Company, their officers, directors, agents, servants and employes are hereby restrained and enjoined from i h i b l b f h h y conveyance or ot erw Be, t aoqu ~nng e.p ant<or us nesa~ any enc cor~oa~ion wherein any one of them now holds or ; and each and hlI _ofeaid de-feniiant`corpora ions so o ding stock in other corpora- tions as above apeci8ed, their officers, directors, agents, servants and employes, are further enjoined from voting or attempting to vote said kh k i f h ld f " h i i i ng o stoc at any meet t e stoc o ers o e corporat t on ssu ng the same and from exercising or attempting to exercise any control, direction, supervision or influence whatsoever over the acts and doings of such cor- h f poration. And it is urther ordered and decreed that each and every of the defendant corporations "the stock of which is held by any other defend- ant corporation as hereinbefore shown, their officers, directors, servants and agents, be and they are hereby respectively and collectively re- strained and enjoined from permitting the stock so held to be voted by any other defendant holding or claiming to own the same or by its attor- neys or agents at any corporate election for directors or officers and from permitting or suffering any other defendant corporation claiming to own or hold stock therein, or its officers or agents, to exercise any control whatsoever over its corporate actg." Judgment for costs was given in -favor of the petitioner and against the defendants as to whom the petition had not been dismissed, ex- cept the R. P. Richardson, Jr., & Company, a corporation which had consented to the decree. The decree also contained a provision that the defendants or any of them should not be prevented "from the institution, prosecution or defense of any suit, action or proceeding t,o- prevent or re= etrain the infringement of a trade-mark used 'ih- interstate commetce or. otherwise assert or defend 'a claim to, any'property t)r Fights." In the event of a taking of an appeal to this court,,the decree provided that the .,«

injunction which it directed "shall be auspended during the pendency of xach appeal." The United States appealed, as did also the various defendants against whom the decree was entered. For the Government it iR contended : 1. That the petition should not have been dismissed as to the individual defendants. 2. That it should not have been dismissed as to the two for- eign corporations-the Imperial Tobacco Company and the British- American Tobacco Company and the domestic corporations controlled by the latter, and that, on the contrary, the decree should have commanded the observance of the Anti-trust Act by the foreign corporations so far as their dealings in the United States were concerned, and should have restrained those companies from doing any act in the United States in ~ violation of the Anti-trust Act, whether or not the right to do said acts .ras asserted to have arisen pursuant to the contracts made outside of or within the United States. 3. The petition should not have been dismissed as to the United Cigar Stores Company. 4. The final decree should have adjudged defendants parties to unlawful contracts and conspiracies. 5. The final decree should have adjudged that defendants were attempting to monopolize and had monopolized parts of commerce. More particularly, it is urged, it should have adjudged that the Ameriean Tobacco Com- pany, American Snuff Company, American Cigar Company, American Stogie Company, MacAndrews & Forbes Company, the Conley Foil Com- pany and the British-American Tobacco Company were severally attempt- ing to monopolize and had monopolized parts of commerce, and that appro- priate remedies should have been applied. 6. The decree was not suf- ficiently specific, since it should have described with more particularity the methods which the defendants had followed in forming and carrying out their unlawful purpose, and should have prohibited the resort to sim- ilar methods. 7. The decree should have specified the shares in corpora- tions disclosed by the evidence , c._ owned by the parties to the conspir- acy, and should have enjoined those parties from exercising any control over the corporations in which such stock was held, and the latter, if made defendant, from permitting such control, and should have also en- joined the collecting of any dividends upon the stock. 8. The decree improperly provided that nothing therein should prevent defendants from • prosecuting or defending suits ; also improperly suspended the injunction pending appeal. The defendants, by their assignments of error, complain because the petition was not dismissed as -to all, and more specifically, (a) because they were •adjudged parties to a combination in restraint of interstate and foreign commeree; and enjoined aceoidingIf ;(b) because certain defendant corporations holding shares in others were enjoined from voting

them or exercising control over the issuing company, and the latter from permitting this; and (c) because the American Tobacco Company, Ameri- ; can Bnuff Company, American Cigar Company, American Btogie Com- ~; pany and the MacAndrews & Forbes Company were adjudged unlawful .4 .~ and character of the suit and the defense thereto, the decree of the lower oombinations and restrained from engaging in interstate and foreign com- merce. The elaborate arguments made by both sides at bar present in many forms of statement the conflicting contentions resulting from the nature court and the proposrtions asagned as error to which we have,lust referred. In so far as all or any of these contentions, as many of them in fact do, involve a conflict as to the application and effect of sections 1 and 2 of the Anti-trust Act, their consideration has been greatly simplified by the analysis and review of that act and the construction affized to the sec- tions in question in the case of Standard Or•l Company et al. v. United Statea, quite recently decided. In so far as the contentions relate to the disputed propositions of fact, we think from the view which we take of , the case they need not be referred to, since in our opinion the case can be disposed of by considering only those facts which are indisputable and by applying to the inferences properly deducible from such facts the meaning and effect of the law as expounded in accordance with the pre- vious decisions of this court. We shall divide our investigation of the case inA _Qlrceau c_s: First, the undisnu _c e meaning of the Anti-trust law a di~~a~ plication as correctly construed to the nlt~ onclusiona of factsleri~ cible from the proof; third thp ~~TriPr] di d d ` Fi t tT rst ii spu e fa .,. a T~e matUMT5-B6-c6_n8_i'Tered under this heading we think can best be made clear by stating the merest outline of the condition of the tobacco industry prior to what is asserted to have been the initial movement in the combination which the suit assails and in the light so afforded to briefly recite the history of the assailed acts and contracts. We shall divide the subject into two periods, (a) the one from the time of the or- F ganization of the first or old American Tobacco Company in 1890 to the orzanization of the Continental Tobacco Company, and (b) from the date of such organization to the filing of the bill in this case. the conditions which• obtained 8ummarizin in the broadest wa y g ~ ; prior to 1890, as to the production, manufacture and distribution of to- bacco,the following general faeta are adequate to portray the situation. Tobacco was, grown in many sections of the eountry, having diversits j of soil and climate and therefore was subject to various vicissitudes re- sulting from the places of product,on and consequently varied in quality.

The great diversity of use to which tobacco was applied in manufacturing caused it to be that there was a demand for all the various qualities. The demand for• all qualities was not local, but widespread, extending as well to domestic as to foreign trade, and, therefore, all the prducts were marketed undercompetitive eonditione of a peculiarly advantageous nature. The manufacture of theproduct in this country in various forms was success- fally earried on by many individuals or concerns ecattered throughout the oountrq, a larger number perhaps of the manufacturers being in the vicinage of production and others being advantageously situated in or near the principal markets of distribution. fore Januai , 1890 five distinct e 1sa~rns-Allen & Ginter, with faotory at Richmon Va. ; W-Duke, Sons & Co., with factories at Dur- 'rham, North Carolina, and New York City ; Kinney Tobacco Company, with factory at New York City ; W. S. Kimball & Company, with fac- tory at Rochester, New York ; Goodwin & Company, with factory at Brooklyn, New York-manufactured, distributed and sold in the United Btates and abroad 95 per cent of all the domestic_cigarxette and less than 8 cent of the smo~mg tobacco ~roduced in the United s~. There ie no ou t. that t ese actones were competitors in the purchase of the raw product which they manufactured and in the distribution and eale of the manufactured products. Indeed it is shown that prior to 1890 not only bad normal and ordinary competition existed between the fac- tories in question, but that the competition had been fierce and abnormal. In anua , 1890, having agreed upon a capital stock of $25,000,000, all to be divi amongst them, and who should be directors, the, concerns to organized the American Tobacco Com an in N , "fo an manufacturing," with broad powers, and conveyed to it t ~u enai es, Mincluding good will and right to use the names of the old eoncerns ; and thereafter this corporation carried on the busi- neas of all. The $25,000,000 of stock of the Tobacco Company was allotted to the charter members as followN : Allen & Ginter, $3,000,000 preferned, $4,500,000 common ; W. Duke, Sons & Co., $3,000,000 pre- ferred, $4,500,000 common ; Kinney Tobacco Company, $2,000,000 pre- ferred, $3,000,000 common ; W. S. Kimball & Co., $1,000,000 preferred, $1,500,000 common; and Goodwin & Co., $1,000,000 preferred, $1,500,000 common. There is a charge that the valuation at which the respective properties were capitalized in the new corporation was enormously in excess of their actual value. We, however, put that subject aside, since we propose only to deal with facts which are not in controversy. Shortly after the formation of the new corporation the Goodwin & Co. factory was closed, and the directors ordered "that the manufacture of all ' ~ ~

12 i7nited Statea vs. dmeriaax Tobaoeo Cb. et a1L tobacco cigarettes be concentrated at Richmond." The new corporation in 1890, the first year of its operation, manufactured about two and one half billion cigarettes, that is, about 96 or 97 per cent of the total domestic out- put, and about five and one-half million pounds of smoking tobacco out of a total domestic product of nearly seventy million pounds. In a little over a year after the organization of the company it in- creased its capital stock by ten million dollars. The purpose of this in- crease is inferable from the considerations which we now state. There was a firm known as Pfingst, Doerhoefer & Co., consisting of a number of partners, who had been long and successfully carrying on the business of manufacturing plug tobacco in Louisville, Kentucky, and dis- tributing it through the channels of interstate commerce. In January, 1891, this firm was converted into a corporation known as the National•' -4 Tobacco Works, having a capital stock of $400,000 all of which was issued to the partners. Almost immediately thereafter, in the month of February, the American Tobacco Company became the purchaser of all the capital stock of the new corporation, paying $600,000 cash and $1,200,000 in stock of the American Tobacco Company. The members of the previously existing firm bound themselves by contract with the American Tobacco Company to enter its service and manage the business and property sold, and each further agreed that for ten years he would not engage in carrying on, directly or indirectly, or permit or suffer the use of his name in connection with the carrying on of the tobacco business in any form. In April following, the American Tobacco Company bought out the business of Philip Whitlock, of Richmond, Virginia, who was engaged in the manufacture of cheroots and cigars, and with the exclusive right to use the name of Whitlock. The consideration for this purchase was $300,000, and Whitlock agreed to become an employee of the American Tobacco Company for a number of years and not to engage for twenty years in the tobacco business. In the month of April the American Tobacco Company also acquired the business of Marburg Brothers, a well-known firm located at Baltimore, Maryland, and engaged in the manufacture and distribution of tobacco, principally smoking and snuff. The consideration was a cash payment of $164,637.65 and stock to the amount of $3,075,000. The members of the firm also conveyed the right to the use of the firm name and agreed not to engage in the tobacco business for a lengthy period. Again, in the same month, the American Tobacco Company bought out a tobacco firm of old standing, also located in Baltimore, as G. W Gail & Ax, engaged principally in manufacturing and selling smoking tobacco, buying with the business the exclusive right to use the name -of I I r

Unit.cd Stai,us vs. dmerioan Tobaeoo Co. et al. 13 the firm or the partners, and the members of the firm agreed not to en- gage in the tobacco business for a specified period. The consideration for this purchase was $77,582.66 in cash and stock to the amount of $1,760,000. The plant was abandoned soon after. The result of these purchases was manifested at once in the product of the company for the year 1891, as will appear from a note in the margin.* It will be seen that as to chervots, smoking tobacco, fine cut tobacco, snuff and plug tobacco, the company had become a factor in all branches of the tobacco industry. Referring to the occurrences of the year 1891, as in all respects typical of the occurrences which took place in all the other years of the first period that is during the years 1892, 1893, 1894, 1895, 1896, 1897 and 1898, we content ourselves with saying that it 'is undisputed that be- .tween February 1891. and October, 1898, including the purchases which we have specifically referred to, the American Tobacco C ' d fifteen going tobacco con xas doing business in the States of Kentucky, Louisiana, Marytand, Michigan, Missouri, New York, North Carolina aad Virginia. For ten of the plants an all cash consideration of $6,410,235.26 was paid, while the payments for the remaining five aggregated in cash $1,115,100.95 and in stock $4,123,000. It is worth noting that the last purchase, in October, 1898, was of the Drummond Tobacco Company, a Missouri corporation dealing principally in plug, for which a cash con- sideration was paid of $3,457,500. The corporations which were combined for the purpose of forming the American Tobacco Company produced a very small portion of plug to- bacco. That an increase in this direction was contemplated is mani- fested by the almost immediate increase of the stock and its use for the purpose of acquiring, as we have indicated, in 1891 and 1892 the owner- ship and control of concerns manufacturing plug tobacco and the con- ~ The output of the American Tobacco Company for 1891 was-- ~ Number. Pounds. Cigarettes ..................................... 2,788,778,000 ...... Cheroots and little cigars ...................... . 40,009,000 ...... Bmoking ...................................... ...... . 13,813,355 Fine cut ........ ............................. ...... 560,633 Snuff ......................................... ...... 383,162 Plug .......................................... ...... 4,442,774 Total output for the United States, 1891- Cigarettes .....................................3,137,318,596 ...... Smoking ................................... _. ...... 76,708,300 Fine cut .....................:................ ...... 16,968,870 Plug and twist ................................ ......' 166,177,915 Snuff ........................................ ...... 10,674,241

14 United ISlafea vs. American Tobacco !'.o. et al. sequent increase in that branch of production. There is no dispute that as early as 1893 the president of the American Tobacco Company, by authority of the corporation, approached leading manufacturers of plug tobacco and sought to bring about a combination of the plug tobacco interests, and upon the failure to accomplish this ruinous competition, by lowering the price of plug below its cost, ensued. As a result of this warfase, which continued until 1898, the American Tobacco Com- pany sustained severe losses aggregating more than four millions of dollars. The warfare produced its natural result, not only because the company acquired during the last two years of the campaign, as we have stated, control of important plug tobacco concerns, bu't others engaged in that industry came to terms. We say this because in 1898, in connection with several leading plug manufacturers, the American Tobacco Company organized a N~gw cor ration st led the Continental TobaccoCom- panYifor " trading and manufacturing," with a capita o , , afterwards increased to $100,000,000. The new company issued its stock and took transfers to the plants, assets and businesses of five large and successful competing plug manufacturers.* The American Tobacco Company also conveyed to this corporation, at large valuations, the assets, brands, real estate and good will pertaining to its plug tobacco business, including the National Tobacco Works, The James G. Butler Tobacco Co., Drummond Tobacco Company, and Brown Tobacco Co., receiving as consideration $30,274,200 of stock (one-half common and one-half preferred), $300,000 cash, and an additional sum for losses sustained in the plug business during 1898, $840,035. Mr. Duke, the -president of the American Tobacco Company, also became president of the Continental L:oiupany: Under the preliminary agreement which was made looking to the formation of the Continental Tobacco Company, tha comRan a uired fr=_t_beholdet's_ a1_1_tbe. $$ 000 000 of the common stock of the P. Lorillard Companp in_eschange for $6,000,M0 of its stock, and 81,581,300 o t e $2,000,000 preferred in exchange for notes aggregating a sum considera- bly larger. The Lorillard Company, however, although it thus passed * P. J. Sorg Co., having factory at Middletown, Ohio, who received preferred stock $4,350,000, common stock $4,525,000, and cash $224,375. John Finzer and Brothers, having factory at Louisville, lientucky, who re- ceived preferred stock $2,250,000, common stock $3,050,000, and cash $550,000. Daniel Scotten & Co., having factory at Detroit, Michigan, who received preferred stock $1,911,100, and common stock $3,012,500. P. H. Mayo & Bros., having dactory at Richmond, Va., who received pre- ferred stock $1,250,000, common stock °".,92,1,000 ard cash $66,125. John Wright•Co., having factory at Richmond, Va., who received preferred Qcock $495,000, common atock:495,000, and oash $4,116.67.

Zlnited &atu va dmerioau Tobacco Co. et al. 15 practically under the control of the American Tobacco Company by vir-- i tue of its owqerahip of stock in the:Continental Company, was } t ligui- ` d as a distinrjl_crr dated, but its business continued to be oonducte Yaon, its goods being marked and nu_~ t T_uuon the market just as if they were the manufacture of an independent concern. -p otl-owi'ng t~e organization of the Continental Tobacco Company the American Tobacco Company increased its capital stock from thirty-five • millions of dollars to eeventy millions of dollars, and deplared a stock dividend of one hundred per cent on its common stock, that is, a stock dividend of $21,000,000. As the facts just stated bring us to the pnd of the first period which at the outset we stated it was our purpose to review, it is we rieHy to point out the increase in the power and control nf the American Tobacco Company and the extension of its activitips_to all forms of tobacco pro- ducts which bad been accomplished just prior to the organization of the Continental Tobacco Company. Nothing could show it more clearly than the following: At the end of the time the company was manufa.c- turing ei h_~per cent or thereabouts of all the ci aret produced in the United Ctatee,a ove -s~g er cent of 'aII the smokine tobacco, more than twent -tw per cent of all plug tobac~c , fifty-one per cent of a11 little cigars, six per cent each of all snuff and fine cut to co, and over two per cent of all cigars and cheroots. A brief reference to the occurrences of the second period, that is, from and after the organization of the Continental Tobacco Company up to the time of the bringing of this suit, will serve to make evident that the trans- actions in their essence had all the cbara.cteristics of the occurrences of the first period. In the year 1899 and thereafter either the American or Continental Companies, for cash or stock; at-an aggregate cost of fifty millions of dol- lars ($50,000,000), bought and closed up some thirty competing corpora- tion-s and partners._li pa. theretofore engaged in interstate and fore'ign com= merce as manufacturers, sellers, and distributors of tobacco and related commodities, the interested parties covenanting not to engage in the busi- ness. Likewise the two corporations acquired for cash, by issuing stock, and otherwise, control of many competing corporations, now going concerns, with plants in various States, Cuba and Porto Rico, which manufactured. bought, sold and distributed tobacco products or related articles through- out the United States and foreign countrlea, and took from the parties in interest covenants not'to engage 'in the tobacco business. The plants thus.acquired were, operated until. the mer¢®r in-1904. to which we ehall hereafter refer, as 'a part of the general system of the American and Continental •companies. The power resulting from and

16 , tlnited Statea vs. American Tobacco Co. et al. the purpose contemplated in making these acquisitions by the companies just referred to, however, may not be measured by considering alone the busi- ness of the company directly acquired, since some of those companies were made the vehicles as representing the American or Continental Company for acquiring and holding the stock of other and competing companies, thus amplifying the power resulting from the acquisitions directly made by the American or Continental Company, without ostensibly doing so. It is 'a besides undisputed that in many instances the acquired corporations with , the subsidiary companies over which they bad control through stock own- ship ship were carried on ostensibly as independent concerns disconnected from either the American or the Continental Company, although they were controlled and owned by one or the other of these companies. Without going into details on these subjects, for the sake of brevity, we append in the margin a statement of the corporacions thus acquired, with the men- tion of the competing concerns which such corporations acquired.* * Monopol Tobacco Works (New York, N. Y. )-Capital $40,000-cigarettes and smoking tobacco. In 1899 the American Tobacco Co. acquired all the shares for $250,000, and it is now a selling agency. Luhrman & Wilbern Tobacco Company (Middletown, Ohio)-Capital f9Q0,000-scrap tobacco. This business was formerly carried on by a part- nership. Mengel Box Company ( Louisville, Ky. )-Capital $2,000,000-boxes for packing tobacco. This company has acquired the stock ($150,000) of Colum- bia Box Company and of Tyler Box Company ($25,000), both at St. Louis. The Porto Rican-American Tobacco Company (Porto Rieo)-Capital $1,799,600. In 1899 the American Company caused the organization of the Porto Riean-American Tobacco Company, which took over the partnership business Rucabado y Portela-manufacturer of cigars and cigarettes-with covenants not to compete. The American Tobacco Company and American Cigar Company eaoh hold $585,300 of the stock; the balance is in the hands of individuals. Kentucky Tobacco Product Company (Louisville, Ky. )-Capital $1,000,000. In 1899 the Continental Company acquired control of the Louisville Spirit-Cured Tobacco Co., engaged in curing and treating tobacco and utilizing the stems for fertilizers. By agreement, the Kentucky Tobacco Product Company was or- ganized in New Jersey, with $1,000,000 capital, $450,000 issued to the old stockholders, and $560,000 to Continental Company as consideration for agree- ment to supply stems. Golden Belt Manufacturing Company (North Carolina)-Capital, $700,000- cotton bags and containers. In 1899 the American Tobacco Company ac- acquired the business of this corporation, which was formed to take over a going business. : " •-The Conley Foil Company (New York)-Tinfojl Combination-Capital, $825,000. In December, 1899, The American Tobacco Company secured con- trol of the business of John Conley & Son (Partnership), New York, N. Y.,

UniEsd BEdes vs. dmerican Tobacco Co. et al. 17 It is of the.utmost importance to observe that the acquisitions made by the subsidiary corporations in some cases•likewise show the remarkable fact stated above; that is, the dMursement of enormous amounts of money to aoquire plants. which on beine purchased were not utilized but were immediately closed. It is also to be remarked, that the facts stated in the memoran um in the margin show on their face a singular identity between the conceptions which governed the transactions of this latter period with those which evidently existed at the very birth of the original organization of the American Tobacco Company, as exemplified by the • I transactions in the first period. A statement of particular transactions outside of those previously referred to as having occured during the period in question will serve additionally to make the situation clear. And to accomplish this purpose we shall, as briefly as may be consistent with clarity, separately refer to the facts concerning the organization during the second period of the five corporations which were named as defendants in the bill, as heretofore stated and which for the purpose of designation we have hitherto classified as ac:esssory defendants, such oor- manufacturers of tinfoil, an essential for packing tobacco products. By agree- ment the Conley Foil Company was incorp-rated in New Jersey " ° for trading and manufacturing," etc., with $250,000 capital (afterwards $375,000 and 5825,000)-which took over the firm's business and assets, etc., and The Ameri- can Tobacco Company became owner of the majority shares. The Conley Foil Company has acquired all the stock of the Johnson Tinfoil & Metal Company- a defendant-of St. Louis, a leading competitor, and they supply under fixed contracts, the tinfoil used by defendants. R. J. Reynolds Tobacco Company (Winston-Salem, North Carolina). In 1899 the Continental Tobacco Company acquired control of the R. J. Reynolds Tobacco Company, one of the largest manufacturers of plug-output in 1898, 6,000,000 pounds. By agreement, a new corporation (with same name) was organized in New Jersey and capitalized at :- r"v,000 (afterwards $7,525,000), which took over the business and assets of the old one. The Continental Company immediately acquired the majority shares and The American Com- pany now holds $5,000,000 of stock. The separate organization has been pre- served. There was acquired in the name of the new Reynolds Company, with cove- nants against competition, the following plants: In 1900, T. L. Vaughn & Company, partnership, of Winston, N. C.; consid- eration, b90,5o6; Brown Brothers Company, a North Carolina corporation, Winston, N. C.; consideration, $67,615; and P. H. Hanes & Company and B. F. Hanes & Company, Wineton, N. C., partnership ; consideration, E671,950. In 1905, Rucker & Witten Tobacco Company, . Martinsville, Va.; coneidera- tion, $512,898. In 1906,• D. H. Spencer & Company. Martinsville, Va.; consideration, $314,255. (All of the foregoing plants were closed as soon as purchased. ) A majority of the $400,000 capital stock in the Lipfert-8cales Company, of t6:

13 I7nited S`Ecctes ve. Amerioan Tobacco Co. et at. porations being the American Snuff Company, American Cigar Company, American Stogie Company, MatAndrews & Forbes Company (licorice), and Conley Foil Company. (1). The American Snuff Company. As we have seen, the Ameriran Tnhanrn Compan~• at the oommence- ment of tl~e first ceriod nrndnrPd a vr.~* xmall rinant.i Sy of snufi Itr~Ca- pacits botivever, in that regard was augmented owing particularly to the formation of the Continental Tobacco Com.pany' and the acguisition of thp Lorillarrd Companf. by which it came to be , a serious factor as a snnff producer. There shortly ensued an aggressive eompetition in the snuff business between the American Tobacco Company, with the force acquired from the vantage ground resulting from the dominancy of its expanded organization, and others in the trade operating independently of that or- ganization. The result was identical with that which had previously arisen from like conditions in the past. In March, 1900, there was organizeA in New Jersey a corpora.tien known as The American Snuff Cqmvanv with a capital of $25,000,000, Winston, N. C., a corporation largely engaged in the manufacture of plug to- bacco and interstate'and foreign commerce in leaf tobacco and its products, was acquired by the Reynolds Company. The separate organization of the Lipfert-Scales Company is preserved and the business carried on under its corporate name. The R. J. Reynolds Tobacco Company also holds $98,300 stock of the ?41acAndrevs & Forbes Company and $9,600 of the Amsterdam Supply Com- pany. Blackwell's Durham Tobacco Company (Durham, N. C. )-Capital $1,000,000. In 1899 The A merican Tobacco Company procured for $4,000,000 all the stock of Blackwell's Durham Tobacco Company at Durham, N. C., manufacturer and distributor of tobacco products. Thereupon the Blackwell's Durham To- bacco Couipany, of New Jersey, capitai, $1,000,000, all owned by the American, was organized and took over the assets of the old company, then under re- ceivership. Its separate organization has been preserved. The Durham Company has acquired control of the following competitors- Reynold's Tobacco Company; F. R. Penn Tobacco Company; and Wells- Whitehead Tobacco Company. The following companies came also under the control of the American To- bacco Compauy through acquired stock ownership. S. Anargyros---capital $650,000-Turkish cigarettes. In 189Q The American Tobacco Company procured the organization of corporation of S. Anargyros, which took over •that individual's going business and has since controlled it. Through this company the business .: TtirkiE:) cigarettes is largely con- ducted. The John Bollman Company ( 8an Francisco )-capital E2ll0,00U--cigar- ettes. In 190o The American Tobacco Company procured organization of The John Bolhman Company, which took over the business of the former camcern in exchange for stock. Its separate organization has been preserved. r. I k

__..o-..----~---- - United States vs. dmcrioau Tobacco Co. et al. 19 one-half preferred and one•half common, which t,ook over the Bnuff' hnsi- ness of the P Lorillard Company Continental Tobaern Companv and The American Tobacco Company, with that of a large competitor, viz : The Atlantic Snuff Co. The stock of the new company was thus ap- portione : t antic Snuff Company, preferred, $7,500,000, common, =25,000,000 ; P. Lorillard Company, preferred, #1,12,4,700, common, $3,459,400 ; The American Tobacco Company, preferred, $1,177,800, common, $3,227,500 ; Continental Tobacco Company, preferred, $197,500, common, $813,100. The stock issued to Continental Tobacco Com any and the defendants, P. Lo Company, is still held h• ar P. A mP A DDa~ n- trolling interest in the Snuff Company. All the companies, together with their officers and directors, covenanted that they would not there- after engage as competitors in the tobacco business or the manufacture, sale, or distribution of snuff. Among the assets transferred by the Atlantic Snuff Company to Ameri- can SnuffCompany were all the shares ($600,000) of W. E. Garrett & Sons, Inc., then and now one of the oldest and very largest producers of snuff, for a long time and still engaged at Yorkland, Del., in interstate and for- eign commerce in tobacco and its products, and which controlled through stock ownership the Southern Snuff Company, Memphis, Tenn. ; Dental Snuff Company, Lynchburg, Va., and Stewart-Ralph Snuff Company, Clarksville, Tenn. The separate existence of W. E. Garrett & Sons, Inc., has been preserved arid its business conducted under the corporate name. In March, 1900, the American Snuff Company acquired all the shares of George W. Helme Company, one of the oldest and largest pro- ducers of snuff and actively engaged at Helmetta, N. J., in interstate and foreign commerce in competition with defendants, by iesuing in ex- change therefor $2,000,000 preferred stock and $1,000,000 common ; and it thereafter took a conveyance of all assets of the acquired company and now operates the plant under its own name. As a result of the transactions just stated it came to pass that the American Tobacco Company, which had at the end of the first neriod only a very small rcenta of the snuff manufacturin business, came virtua j to ave the dominant control as a manufacturer of that product. 2. 04 ot mpany-manufadterers of tinfoil, an essential for pack- ing tobaoeo products. In December, 1899, the American Tobacco Company secured control of the business of John Conley & Sons, a partnership of New York City. By agreement the Conley Foil Company was incorporated in New I ork " ° for trading and manufacturing," etc., with $250,000 capital, ultimately incre.ased to $825,000. The corporation took over the business and assets of the firm, and the American Tobacco Company became owner of a ma- € PW

i 20 tlilited Slatea vs. dnneriean Tobacco Co. et al. jorit~of the sharea of stock. The ConlF^tt Can y bQ -°a all the shares of stock of the Johnson Tinfoil & Metal Company, of St. Louis, a ~ne cemnetitor, and they supply under z con racts at remunerative prices the tinfoil used by the defendants, which constitutes the major part of the total production in the United States. 3. merican 'rnnr I?rmepanu. Prior to 1901 the American and Continental tobacco com anies manu- factured, sold, and distributed cigars, stogies, and eheroots. In t e year sta e companies e rmine o engage in t e business upon a larger scale. Under agreement with Powell, Smith &. Comoan_v. large manu- facturers and dealers in cigars, they caused the incorporation in New Jersey of the Amedcan Ci~ar Company "for trading and manufactur- ing," etc., to which all three conveyed their said business, and it has since carried on the same. The American and Continental companies each ac- quired 464 per cent of the shares, and Powell, Smith & Company 7 per cent ; the original capitalization was $10,000,000 (afterwards $20,000,000), and more than three-fourths is owned by the former. The Cigar Company, arz~>;.pd ma~w competitors (partnerships and corporations) engaged in interstate and foreign commerce, taking from the parties covenants against engaging in the tobacco business ; and it has also procured the organiza- tion of controlled corporations which have acquired competing manufac- turers, jobbers and distributors in the United States, Cuba and Porto Rico. It manufactures, sells and distributes a considerable per centage of domestic cigars ; is the dominating factor in the tobacco business, foreign and domestic, in Cuba and Porto Rico, and is there engaged'in tobacco planting. It also controls corporate jobbers in California, Alabama, Virginia, Pennsylvania, G2orgia, Louisiana, New Jersey and Tennessee. 4. The MacAndrews & Forbes Com any-manufacturers of licorice. There is no question t at icorice aste is an essential ingredient in the manufacture of plug tobacco, and that one who is debarred rom o- taining such paste would therefore be unable to engage in or carry on the manufacture of such product. The control over this article was thus secured: In May, 1902, the Continental Company secured control of MacAn- drews and Forbes Co. of Newark, New Jersey, and organized "for trading and manufacturing " a corporation known as the MacAndrews & Forbes Co., with a capital of $7,000,000, $4,000,000 preferred and $3,000,000 common, which took over the business of MacAndrews and Forbes and another large competitor. The Continental Company acquired two-thirds of the common stock by agreeing to purchase its supply of paste from the new company. The American Tobacco Company, at the time of the filing the bill, was the owner of =2,112,900 of the common stock and $750,000 preferred. By various purchases and agreements the MacAndrews & Forbes Company acduired, substantially, the business of all competitors. t ~ . : ) ~''Vr..y

Unitcd States vs. American 1 ubucco Co. ct al. 21 I Thus, in June, 1902, it purchased the business of the Stamford Mfg. Co., of Stamford, Connecticut, and incorporated the National Licorice Com- pany, which acquired the business of Young & Smylie and F. B. & V. P. Scudder, and the National Company agreed with MacAndrew & Forbes not to produce licorice for tobacco manufacturers. In 1906 all the stock in the J. S. Young Company, ($1,800,000), which had been organized to take over the business of the J. S. Young Co. of Baltimore, Md., was ac- quired by the MacAndrews & Forbes Co. The MacAndrews & Forbes Co. use in excess of ninety-five per cent of the licorice root consumed in the United States. 5. dmeri.ean Stogie Compaozy. In May, 1903, the American Cigar Company and the American and Continental Tobacco Companies caused the American Stogie -' Company to be in i- 0 over t e sto~ie and tnhie business of the companies named in exchange for $8,206,275 stock and then in the usual ways acquired the businessof others in themanufacture salgand dirtrih ,tinn ofAnrh nrndurta_ wit_h covenant~~~,«,~+~, It acquired in exchange for $3,647,725 stock all shares of ' pany (which bad previously scquired and owned the business of important competitors) and subse- a quently took the conveyance of the plant and assets. Tbe majority shares always have been held by defendant, the American Cigar Company. As we think the legitimate inferences deduciblefrom the undisputed facts which we have thus stated will be su F.;i.._t to dispose of the controversy, we do not deem it necessary to expand this statement so as to cause it to em- brace a recital of the undisputed facts concerning the entry of the Ameri- can Tabacco Company into the retail tobacco trade through the acquisi- tion of a controlling interest in t e stoc o w a is nown as the United Cipr $tores m_any, as well as to some ot er subjects which for the sake of brevity we likewise pass over, in order to come at once to a statement concerning the foreign companies. The E78,o1ish Cam,naniee. In September, 1901, the American Tobacco Co. purchased for $5,347,000 a Liverpool (Eng.) corporation, known as Ogden's Limited, there engaged in manufacturing and distributing tobacco products. A trade conflict which at once ensued caused many of the English manufacturers to com- bine into an incorporation known as The Imverial Tobac<o Campany of Great Britain and Ireland, capital 15,000,000, afterwards increased to 18,000,000, pounds sterling. The trade war was continued between this corporation and the American Tobacco Company, with a result subetsn- ti y i en i wia w ic a it erto, as we have seen, arisen from such a situation. In September, 1902, the Imperial and the American companies entered

into contracts (eiecuted in England) stipulating hat thP formPr ahould limit i A business to t U i.d Kingdnm, except purchasing leaf in ltie` United States (it buys 54,000,000 pounds annually) ; thAt t.ho American com ani to the United States, its dependen- cies and Cuba; and that the Bratiah-American To acco mpany1 with capital of 6,000,000 pounds sterling apportioned betw them, should be organized, 4a1;e pop~ *~._ *" ~*ti An~ onerate in ot er countries, etc. This arrangement was immediately put into effect, and has been observed. The Imperial Com holds one-third and the American Company two-thirds of the eapital stock of the British American o acco pany, Limtt~3-r~~~L__~__~_~y matn tns a rane o ce m ew rk City and the vice-president of the American Tobacco Company is a prin- cipal officer. This company uses large quantities of domestic leaf, partly exported to various plants abroad and about half manufactured here and then exported. By agreement, all this is purchased through the Ameri- can Tobacco Company. In addition to many plants abroad it has ware- houses in various States and plants at Petersbutg, Va., and Durham; N. C., where tobacco is manufactured and then exported. The purchase of necessary leaf tobaoao ip the United States by the Imperial Company is now made through aiesident general agent and is exported as a part of foreign commerce. ,. - Not to break the continuity of the narr4tive of facts we have omitted in the proper chronological order to state the facts relative to what was known as the Consolidated Tobacco Company. We now particularly re- fer to that subject. The Consolidated Tobaoco Cb. In June, 1901, pa ies arge y interested in the Ameri~an and C,nnti- tinental companies caused the incorporation in New Jersey of the nsol-. i3ated-' oI`Tacco Company, capital $30,000,000 (afterwards $40,000,000). roa powers and perpetual existence; to do business throughout the world, and to guarantee securities of other companies, etc. A ma- jority of shares was taken by a few individuals connected with the old concerns : A. N. Brady, J. B. Duke, A. H. Payne, Thomas Ryan, W. C. Whitney, and P. A. B. Widener. J, B. Duke, president of both the old eompanies became president of the Consolidated. Largely in exchange for bonds the new company acquired su -tantha ly all the shares of com- mon stock of the old ones. Its business, of holding and financing, was continued u 190 hen, wifK'tf'i`e-A-ffrerica`n h - yRff ies, i was erged into th~present American Tobaceo Company. y, October, 1904, the (old) merican y proc~ ngs in ew Tobacco Company, Continental Tobacco Company and Consolidated To- bacco Company were merged into one co_rp(Lation. under the name of The

United Statee vs. dnurieart Tobacco Co. et al. 23 is beyond dispute : First, that since the orge.nization of tbt-.nPw A m rican Tobacco Company that cem an has a uired four lar e tobacco eoncerns2 nctive covenants against engeaginF in the tobacco busineas were which were used from the beginning continued to be employed. Thus, it whose $40,000,000 share capital was held by J. B. Duke, Thomas F. Ryan, William C. Whitney, Anthony N. Brady, Peter A. B. Widener and Oliver H. Payne, had acquired, as already stated, nearly all common shares of both old American and Continental Companies, and thereby control. The preferred shares, however, were held by many individuals. Through the method of distribution of the stock of the new company, in exchange for shares in the old American and in the Continental Com- pany, it resulted that the same six men in control of the combination throueh the nnsolidat~ Tnhar~ mm~anv r.ontmu . t at rnntrn y owerehip of atock in the mereed or new American Tobacco Com any. The aasets, property, etc., of the old companies passed to the American Tobacco Company (merged), which has since carried on the business. The record indisputably discloses that after this merger the same methods American Tobacco Com any, the rinci al defendant here. The merged oompany, wit perpetual existence, was capitalized at $180,000,000 ($80,000,000 preferred, ordinarily without power to vote.) The powers conferred by the charter are stated in the margin.* • Prior to the merger the Consolidated Tobacco Company, a majority of taken from the sellers. and that nr:~~~c:~.cata~ 0 ntinued in "e tion but were at once abandoned. Second, that the new company has i~ scquired control of eight additional coneer h concerns tng now carried on by four se arate cor orations all abso- lute y oon ro y t e erican Tobacco Company, although the ~on- nection as to two of these companies with that corporation was long and persistently denied. - Thus reacbing the end of the second period and coming to the time of 'tTo buy, manufacture, sell and otherwise deal in tobacco and the products of tobacco in any and all forms; . . . to guarantee dividends on any shares of the capital stock of any corporation in which said merged corpora- tion has an interest as stockholder; . . . to carry on any business opera- tions deemed by such merged corporation to be necessary or advisable incon- neetion with any of the objects of its incorporation or in furtherance of any thereof, or tending to increase the value of its property or stock; . . . to conduct business in all other States, territories, possessions and dependencies of the United States of America. and in all foreign countries; . . . to pnrcha . ae or otherwise acquire and bold, sell, assign, transfer, mortgage, pledge, or other'wiee dispose of the shares of the capital ntook or of any bonds, eecuri- tiee, or other evidences of indebtedness created by any other corporation or corporations of this or any other [4tate or government, and to ieaue its own obligations in payment or exchange therefor. ...

24 tbtited Sttatee vs. American Tobaeeo Co. et al. the bringing of the suit, brevity prevents us from stopping to portray the difference between the condition in 1890 when the (old) American Tobaco® common stock of the new American Tobacco Company exert over the mar- k~ting of tobacco as a raw product. its manafacture its marketing when manufactured, and its consequent movement in the channels of interstate Company was organized by the consolidation of five competing cigarette at concerns an at w tc eais at t e oommencement o t e suttt sI ue ton an t e vast power which the principa] and aeceasory corporate defendants and the small number of individuals who own a majority of the commerce Company case, to be a violation of the act and all rel ' esulting from ' us to pass at once to the second fundamental proposition which we are re- quired to consider. That is, the construction of the Anti-trust Act and the application of the act as rightly construed to the situation as proven in consequence of having determined the ultimate and final inferences properly deducible from the undisputed facts which we have stated. The conatruction and application of the Anti tntet Act. If the Anti-trust law is applicable to the entire situation here presented and is adequate to afford complete relief for the evils which the United States insists that situation presents it can only be because that law wilM be given a more comprehensive application than has been affized to it in any previous decision. This will be the case because the undisputed facts as we have stated them involve questions as to the operation of tha Anti-trust law not hitherto presented in any case. Thus even if the ownership of stock by the American Tobacco Company in the accessory" and subsidiary companies and the ownership of stock in any of those com- • panies among themselves were held, as was decided in the Standard Oil bold relief from the undisputed facts which have been stated as -tolead such stock ownership were therefore set remain whethex the prinri and the five accessor 6:1t/W(:FrURU p V AeIeuuanLFf aside t io _ Lt yPA : e Ame rican Toba AwS/aA$to ship in other corporations, by virtue of the tinue to possess, even although thus stri DI~ 0 Compan 44()(!K (1Wna r wer which they would con- d. would amount to a violation of both the first and second sections of the act. Again, if it were held that the corporattons, the existence w ereo was due to a combination between such companies and other companies was a violation of the act the_ uq estion would remain whether such thF-panies as did not owe their ezistence an wer to combinations but whose power alone arose from the exercise of the right to acquire and own property would be amenable to the prohi i-, tions o t e act. Yet rt er: ven t tia'proposltlon waa e In srin Ti e• the question would remain whether the principal defendant, the American Tobacco Company, when stripped o its stock ownership, Ift i

United b`tatea ve. American Tobacco Co. et al. 25 would be in and oi'it®elf within the prohibitions of the act altbough.xhat- company was organized and took bein f was p t 1 further, the queetion would yet remain whether Particular eorporations whicle, when bereft of the power which they posseseed as re- sa mg s o ners ip, o g ey were no ~n eren y possessed of a sufficient residuum of power to cause them to be in and of themselves either a restraint of trade or a monopolization or an attempt to mon!?po- lize, should nevergieless be restrained because of their intimat2 connection . and association with other corporations found to be within the prohibitions of ~ act. Th~ nec~asity o re ie as to a ese aspe , we mk, seemed to the G*aernment so essential, and the difficulty of giving to the act such a comp"hensive and coherent construction as would be adequate to enable it to meet the entire situation, led to what appears to us to be in their essence a resort to methods of construction not com- patible one wifi the other. And the same apparent conflict is pre- sented by the c3iews of the act taken by the defendants when their contentions arex€curately tested. Thus the Government, for the pur- pose of fixing she illegal character of the orig;nal combination which organized the aId• American Tobacco Company, asserts that the ille- gal character a!" the combination is plainly shown because the combi- nation was brmght about to stay the progress of a flagrant and ruinous trade war. Inntber words, the contention is that as the act forbids every contract, and ambination, it hence prohibits a reasonable and just agree- ment made fort;lie purpose of ending a trade war. But as thus construing the act by ther.xre of the letter which kills, would necessarily operate to take out of the rea&.of the act some of the accessory and many subsidiary cor- porations, theaiste or agreement o__ r+~+ t,~_ ,_*~ ., *r+P*P nurchat nrunerty, it is insisted in many forniarf'argument that the rule of construction to be applied niust be the spirit atifintent of the act and therefore its prohibitions must be held to extend to no even if not within the literal terms of the statute if they are within itsqfrit because one wi am m ~ rmg e ou e a 1 results which;i,was the purpose o the etatute to prohibit as he e en an .• i e i is argu on e one e forms by which various propaties were acquired in view of the letter of the act exclude, many of the sasiled transactions from condemnation, it is yet urged that giving to theat the broad construction which it should rightfully receive, whatever ma5iie the form no condemnation should follow, because looking ~at the case sue, whole eve act assailed is shown to have been but •a legitimate ank lawful result of the exertion o on a brought into~'ny for the purpoee o vanciag trade instead of with the object otabstructing and restraining the same. But the difficul- ties which a* from the complexity of the particular dealings which

26 fTnited States vs. dmerfean Tobaceo Co. at aL are here involved and the situation which they produce, we think grows out of a plain misconception of both the letter and spirit of the Anti- trust Act. We say of the letter, because while seeking, by a narrow rule of the letter to include things which it is deemed would otherwise be ez- cluded, the contention really destroys the great purpose of the act, since it renders it impossible to apply the law to a multitude of, wrongful acts, which would come within the scope of its remedial purposes by resort to a reasonable construction, although they would not be within its reach by a too narrow and unreasonable adherence to the strict letter. This must be the case unless it be possible in reason to say that for the pur- pose of including one class of acts which would not otherwise be embraced a literal construction although in conflict with reason must be applied and for the purpose of including other acts which would not otherwise be embraced a reasonable construction must be°esorted to. That is to say two conflicting rules of construction must at one and the same time be applied and adherred to. The obscurity and resulting uncertainty however, is now but an abstrac- tion because it has been removed by the consideration which we have given quite recently to the construction of the Anti-trust Act in the Standard Oil_case. In that case it was held, without departing from any previous decision of the court that as the statute had not defined the words restraint of trade, it became necessary to construe those words, a duty which could only be discharged by a resort to. reason. We say the doctrine thus stated was in accord with all the previous decisions of this court, despite the fact that the contrary view was sometimes erroneously attributed to some of the expressions used in two prior decisions (the Trans-Missouri Freight dssocaation and Toint Trafflc cases, 166 U. S. 290 and 171 U. S. 505.) That such view was a mistaken one was fully pointed out in the Standard Oil case and is additionally shown by a passage in the opinion in the Joint Traffic case as follows (171 U. S. 568) :" The act of Congress must have a reasonable construc- tion, or else there would scarcely be' an agreement or contract among business men that could not be said to have, indirectly or remotely, some bearing on interstate commerce, and possibly to restrain it." Applying the r .,,_o f_reawn to the construction of the statute, it was held in the Standard Oil case that as the words restraint of trade at coL- ^ion law and in the law of this country at the time of the adoption of the Anti-trust Act only embraced acts or contracts or agreements or combinations which operated to the pre- judice of the public interests by mndul .reetricting competition or unduly. obstructing the due course of trade or whic either because of -their in= herent nature or effect or because of the evident purpose of the acts,.etc.; injuriously restrained trade, that the words as used in the statute were de- signed to have and did have but a like significance. It was therefore.

United States vs. American Tobacco Co. et aZ. 27 pointed out that the statute did not forbid or restrain the power to make normal and usual contracts to further trade by resorting to all normal methods, whether by agreement or otherwise, to accomplish such purpose. In other words, it was held not that acts which the statute prohibited could be removed from the control of its prohibitions by a finding that they were unreasonable, but that the duty to interpret which inevitably arose from the general character of the term restraint of trade required that the words restraint of trade should be given a meaning which would not destroy the individual right to contract and render difficult if'not impossible any movement of trade in the channels of interstate commerce-the free move- ment of which it was the purpose of the statute to protect. The sound- ness of the rule that the statute should receive a reasonable construction, after further mature deliberation, we see no reason to doubt. Indeed, the necessity for not departing in this case from the standard of the rule of reason which is universal in its application is so plainly re- quired in order to give effect to the remedial purposes which the act under consideration contemplates, and to prevent that act from destroy- ing all liberty of contract and all substantial right to trade, and thus causing the act to be at war with itself by annihilating the fundamental right of freedom to trade which, on the very face of the act, it was enacted to preserve, is illustrated by the record before us. In truth, the plain demonstration which this record gives of the injury which would ariBe from and the promotion of the wrongs which the statute was in- tended to guard against which would result from giving to the statute a narrow, unreasoning and unheard of construction, as illustrated by the record before us, if possible serves to strengthen our conviction as to the cor- rectness of the rule of construction, the rule of reason, which was applied in the Standard Oil case, the application of which rule to the ;statute we now, in the most unequivocal terms, re-express and re-affirm. Coming then to apply to the case befure us the act as interpreted in the Standard Oil and previous cases, all the difficulties suggested by the mere form in which the assailed transactions are clothed become of no moment. This follows because, although it was held in the Standard Oil case that, giving to the statute a reasonable construction, the words re- straint of trade did not embrace all those normal and usual contracts essential to individual freedom and the right to make which were neces- sary in order that the course of trade might be free, yet, as a result of the reasonable construction which was affixed to the statute, it was • pointed out that the generic designation of the first and second sections of the law, when taken together, embraced every conceivable act which could possibly come within the spirit or purpose of the prohibitions of the law, without regard to the garb in which such acts were clothed. That is to say, it was held that in view of the general language of the

28 United Statea vs. American Tobacco Co. et alL statute and the public policy which it manifested, there was no possibility of frustrating that policy by resorting to any disguise or subterfuge of form, since resort to reason rendered it impossible to escape by any indi- rection the prohibitions of the statute. Considering then the undisputed facts which we have previously stated, it remains only to determine whether they establish that the acts, contracts, agreements, combinations, etc., which, were assailed were of such an unusual and wrongful character as to bring them within the prohibitions of the law. That they were, in our opinion, so overwhelm- ingly results from the undisputed facts that it seems only necessary to refer to the facts as we have stated them to demonstrate the correct- ness of this conclusion. Indeed, the hi_story of the combination is so replete with the doing of acts which it was the/ obvious urQoee of the statute to or i, so emons rattve of the existence from the be- ginning of a purpose to acguire dominion and control of the tobacco trade, not by t e mere exertion of the ordinary right to contract and to trade ut me si evise in or er monopo ize t e trade by driving competitors out of business. which were rut y carMsd ou ump ion a wor upon the fears or play upon the cupidity of competitors would make success possible. We say these conclusions are inevitable, not because of the vast amount of property aggregated b the combination, not because alone o t e many corpor tions which the roof shows were united y resor , on other. Aealn._not alone cause o_ er the tobacco trade which actually exi~ts, but becsuse we think th conclu- sion of w_rongful purpose and ille~al combination u~ overw e mg-ly es- tablished ~the following con$iderations; "rat organization or combination was impelled by a pre,y,}ousl existing fieic~trat~warz evidently inspired by one or more of th inch brought about and became parties to that combination. b(ecause, im- mediately after that combination and the increase of capital which foI- lowed, the acts which ensued iu exis. C&u-" ne 3e~aa::ft:ln:[:a:re:essfms:~~.. nrPrPntx+ : ~n11 r Aga~~~ n' r- ~ ther monopoli_ze thP tradP in tnhAron by mPAng of trad . confli ts designed to injure oth either la ~ry~~~~~the buainess or com- pellin them to become = artim to a rmbination-a purpose whose exe- cution was illustrated by the plug war which ensued and its results, by ~ the snu_ff ~was-which followed an3 iffresults, and by the confl ict which imme- diate y1`followed the entry of the combination in Eneiand and the_disi- sion of th ' tracts which ensued. y the ever-present manifestation which is exhibited of a conscious F. wrongdoin b nF aM-E nnw woro cmw-Aiu~ rom the beginnine ever chan~iny but ever in subatance the same. Now ~ the ornnization of a nP® ~~m~..y, now the control exerted by the taking oa .t,

United Stales vs. American Tobacco Co. et al. 29 of stock in one or another or in several, so as to obscure the result actu- ally attaine , nevert e ess uniform, in their manifestations of the pur- pose to restrain others and to monopolize and retain power in the hands of the few who, it would seem, -from the eginning contem- t e utastery of the trade which practically followed. (g)By the 'gradual absorption of control over all the elements essential to the success--£"uI_-ma_n_~' ure o bacco "pro'd-iicts,-aud placing sach control in tfie hans of seemingly independent corporations servin as perpetual barriers to the entry of others into the tobacco trade. e.~y persistent eapen ure o mt ions upon mi ions of lonarsin ~uvme out plants, not for the ur of utilizin them, but in order to c~ose [~e`ni~ up and render them useless for the purposes of tr e. y t e constantly recu rin sti ulations, whose legality, isolatedly viewed, we are not considering, by which numbers of persons, whether manu- facturers, stockholders or employees, were reguired to bind the vs- generallv f~~not n ra.mpete,,Wthe, future. Indeed, when the results of the undisputed proof which we have stated are fully ap- prehended, and the wrongful acts which they exhibit are considered, there comes inevitably to the mind the conviction that it was the danger which it was deemed would arise to individual liberty and the public well-being from acts like those which this record exhibits, which led the legislative mind to conceive and to enact the Anti-trust Act, considera- tions which also serve so clearly demonstrate that the combination here assailed is within the law as to ien.re no doubt that it is our plain duty to apply its prohibitions. In stating summarily, as we have done, the conclusions which, in our opinion, are plainly deducible from the undisputed facts, we have not paused to give the reasons why we consider, after giving them great con- sideration, that the elaborate arguments advanced to give a different complexion to the case are wholly devoid of merit. We do not, for the sake of brevity, moreover, stop to examine and discuss the various propo- sitions urged in the argument at bar for the purpose of demonstrating that the subject-matter of the combination which we find to exist and the combination itself are not within the scope of the Anti-trust law because when rightly considered they are merely matters of intrastate commerce and therefore subject alone to State control. We have done this because the want of merit in all the arguments advanced on such subjects is so completely established by the prior decisions of this court, as pointed out in the Standard Oil case, as not to require restatement. Leading as this does to the conclusion that the assailed combination in all its asr_nacts-that is to say, whether it be looked at from the pomt o view of etock ownership or from the standpoint of the principal corpora- tion and the accessory or subsidiary corporations viewed independently, including the foreign corporations in so far as by the contracts made by

30 Un,iEed Statee vs. dinerican Tobaeco Co. et al. them they became cooperators in the eombination-oomes within the pro- hibitions of the first and ctions of the Anti-trust Act, it remains on y nally to consider the remedy which it is our duty to apply to the situation thus found to exist. The remed . - Ou conc usion eing that the~mbination as a who1L, involving all its cooperating or associated pals, in whatever form clothed, conatitutes a restraint of trade within tho firot aactinn, and anattempt to monopolize or a monopolization within the second section of the Anti-trust Act, it follows that the relief which we are to afford must be wider than that awarded by the lower oourts, since that_ court urt merely decided that certain of the corporate defendants constituted combinations in violationaLthe firat eation of the act, because of the fact that they were formed by the union of previously competing concerns and that the other defendants not dismissed from the action were parties to such combinations or promoted their purposes. We hence, in determining the relief proper to be given, may not model our action upon that granted by the court below, but in order to enable us to award relief coterminous with the ultimate redress of the wrongs which we find to exist, we must approach the subject of relieffrom an original point of view. Such subject necessarily takes a two-fold aspect- the character of the permanent relief required and the nature of the tem- porary relief essential to be applied pending the working out of perma- nent relief in the event that it be found that it is impossible under the situation as it now exists to at once rectify such existing wrongful condi- tion. In considering the subject from both of these aspects three domi nant influences must guide our action : 1. Tbe duty of giving complete and efficacious effect to the prohibitions of the statute; 2, the accomplish- ing of this result with as little injury as possible to the interest of the general public; and, 3, a proper regard for the vast interests of private property which may have become vested in many persons as a result of the acquisition either by way of stock ownership or otherwise of interests in the stock or securities of the combination without any guilty knowl- edge or intent in any way to become actors or participants in the wrongs which we find to have inspired and dominated the combination from the beginning. Mindful of these considerations and to clear the way for their application we say at the outset without stoppinL to ampiify the reasons which lead us to that conclusion, we think that the court below clearly erred in dismiasine the individual oeienaanrs P oca~s Compang; and the foreign corporations and their subsidiary corporations. Looking at the situation as we have hitherto pointed it out, it involves difficulties in the application of remedies greater than have been pre- sented by any case involving the Anti-trust law which has been hitherto considered by this eourt : Fi~rstL_ Because in this case it is obvious that a mere decree forbidding stock ownership by one part of- the I in

combination in another part or entity thereof, would afford no ade- quate measure of relief, since different ingredients of the combination would remain unaffected, and by the very nature and character of their organization would be able to continue the wrongful situation which it is our daty to destroy. Speond. Because the methods of apparent owner- 7 ship by which the wrong"`K-l intent was, in part, carried out and the subtle devices which, as we have seen, were resorted to for the purpose of accom- plishing the wrong contemplated, by way of ownership or otherwise, are ' of such a character that it is difficult if not impossible to formulate a remedy which could restore in their entirety the prior lawfnI conditions. Tjzird. Because the methods devised by which the various essential elements to the successful operation of the tobacco busi- ness from any particular aspect have been so separated under various ` subordinate combinations, yet so unified by way of the control worked ;{ out by the scheme here cond mned, are so involved that any i: specific form of relief which we might now order in substance and effect might operate really to injure the public and, it may be, to per- petuate the wrong. Doubtless it was the presence of these difficulties ' which caused the United States, in its prayer for relief to tentatively ~~ suggest rather than to specifically demand definite and precise remedies. We might at once resort to one or the other of two general reme- dies--a, e a owance o a r restraining the com- bination as a universality and all the individuals and corporations which form a part of or cooperate in it in any manner or form from continuing to engage in interstate commerce until the illegal situa tio e cure , a measure of relief which would accord in substantial ~ effect with that awarded below to the extent that the.court found illegal ti, combinations to ezist ; or, b, to direct the appoigfinent ef ~receiver to take charge of the assets and property in this country of the combination r in all its ramifications for the purpose of preventing a continued viola- r` tion of the law, and thus working out by a sale of the property of the combination or otherwise, a condition of things which would not be re- pugnant to the prohibitions of the act. But, having regard to the prin- ciples which we have said must control our action, we-do not think- we ~s can now direct the immediate application -of either of -thess- temedies:-- m e so consider ss e rst use in view of t e eztent of the com i- nation, the vast field which it covers, the all-embracing character of its activities concerning tobacco and its products, to at once stay the move- ment in interstate commerce of the products'which the combination or its ; cooperating foreea prodace or control might inflict infinite injury upon the public by leading' to a stoppage of supply and a great enhancement of prioes. The second because the extensive power which would result from at once resorting to a receivership might not only do grievous injury to the public, but also cause widespread and perhaps irreparable loss to many in-

United States vs. American Tobacco Co. et al. zooeat people. Under these circumstanece, taking into mind the com- ty of the situation in all of its aspects and giving weight to the many- sided considerations which must control our judgment. we think so far as A8termanenE reliefto be awarded is concer ehould decree as follows - .1 to give effective orce our ecree in this regardy .ted to ear t e (,bat(That the combination in and of itse , as we~ eacFaniili of the elements composing it, whether corporate or individual, whether con- sidered collectively or separately, be~decrwd +n i,a in restraint of trade and an attem t to monopolize and a lization within the first and second sectio ti-trust Act. 2d. hat the court below, in order parties, Ly evi en or o erwiee, as it ma by e deemed proper, forthe pur- poee of ascertaining and determinin ~u n 's- solving the combination an o recreating, ou o t e elementsnow com- poeing it, a new condition which shall be honestly in harmony with and not repugnant to the law.3d.hat for the Qcoomplishment of these pur- poses, taking into view the tfficulty of the situation, a period of si mo_gths is e.llowed from the receipt of onr +r~ana^kp, with leave, ~owever, in the event, in the judgment of the court below, the necessities of the eituation requi extend such period to a further time not to exceed sizty days. ~th4 hat in the event, befo_re the expiration of the period thus fixed, a condition of disintegration :u harmony with the law is not brought about, either as the consequence of the action of the court in determining an issue on the subject or in accepting a plan agreed upon, it shall be the utv of the_coiut, either by way of an injunc- tion restraining the movement o t e products eembnnstion-m- re cannels-of-iut~re~a~e or`l~oretgn eommerce or by the appointment of a recei er~to give e$'ecE ta th~ ~ui~ineIlf~.4t ~=st$tute. P in the bringing about of the result just stated, each and all of the defendants, m ividua as we as rpora ions, s.ou res ram from doing any act which might further extend or enlar the wer of t e oom inati on, y any means or evice w ataoever. In view of the 'eonsiTration sonsiTration stions we ave stated we leave the matter to the court below to work out a compliance with the law without unnecessary injury to the public or the rights of private property. While in many substantial respects our conclusion is in accord with that reached by the court below, and while also the relief which,we think should be awarded in some respects is coincident with that which the court granted, in order to prevent any, complication and to clearly define the situation we think instead of affrrming and modifying, our decre in. view of•the broad nature of'our eoncluai~ns, sh reverea nd remandinith 'dirsstiQn~to the court below to enter a c eer con-. _ .. ... ., . . . : . . ~-- . .. . . . ..