n Congress \ 
 1st Session J 
 
 economics 
 
 DEPWTMEHT 
 
 SENATE 
 
 f Document 
 I No. 40 
 
 SUPREME COURT OF THE UNITED STATES 
 
 Nos. 118 and 1 19.— October Term, 1910 
 
 THE UNITED STATES OF AMERICA, 
 APPELLANT 
 
 V. 
 
 HE AMERICAN TOBACCO COMPANY AND 
 
 OTHERS 
 
 OPINION OF THE COURT DELIVERED BY 
 MR. CHIEF JUSTICE WHITE 
 
 DISSENTING OPINION BY MR. JUSTICE HARLAN 
 
 DELIVERED MAY 29, 1911 
 
 WASHINGTON 
 
 GOVERNMENT PRINTING OFFICE 
 1911 
 
 
 

 In the Senate of the United States, 
 
 June 1 , 1911. 
 
 Ordered, That the opinion of the Supreme Court of the United States in the 
 case of the American Tobacco Co. et al., appellants, v. The United States, with 
 the dissenting opinion of Justice Harlan, be printed as a Senate document. 
 Attest : 
 
 2 
 
 Charles G. Bennett, Secretary. 
 
SUPREME COURT OF THE UNITED STATES. 
 
 Nos. 118 and 119. — October Term, 1910. 
 
 & 
 
 118 
 
 The United States of America, 
 appellant, 
 
 v. 
 
 The American -Tobacco Company and 
 others. 
 
 119 
 
 The American Tobacco Company and 
 others, appellants, 
 
 v. 
 
 The United States of America. 
 
 [May 29, 1911.] 
 
 Mr. Chief Justice White delivered the opinion of the court: 
 
 This suit was commenced on July 19, 1907, by the United States, to 
 prevent the continuance of alleged violations of the first and second 
 sections of the antitrust act of July 2, 1890. The defendants were 29 
 individuals, named in the margin, 1 65 American corporations, most 
 of them created in the State of New Jersey, and 2 English corpora- 
 tions. For convenience of statement we classify the corporate de- 
 scendants, exclusive of the 2 foreign ones, which we shall hereafter 
 separately refer to, as follows: The American Tobacco Co., a New 
 Jersey corporation, because of its dominant relation to the subject 
 4 matter of the controversy as the primary defendant, 5 other New 
 Jersey corporations (viz, American Snuff Co., American Cigar Co., 
 American Stogie Co., MacAndrews & Forbes Co., and Conley Foil 
 7 Co.), because of their relation to the controversy as the accessory, 
 and the 59 other American corporations as the subsidiary defendants. 
 The ground of complaint against the American Tobacco Co. rested 
 ^.not alone upon the nature and character of that corporation and the 
 
 S’ - 
 
 d Hames B. Duke, Caleb C. Dula, Percival S. Hill, George Arents, Paul Brown, Robert B. 
 \-7Dula, George A. Ilelino, Robert D. Lewis, Thomas J. Maloney, Oliver IT. Payne, Thomas 
 F. Ryan, Robert K. Smith, George W. Watts, George G. Allen, John B. Cobb, William It. 
 OHarris, William H. McAlister, Anthony N. Brady, Benjamin N. Duke, H. M. Ilanna, 
 — Herbert I). Kingsbury, Pierre Lorillnrd, Rufus L. Patterson, Frank II. Ray, Grant B. 
 Schley, Charles N. Strotz, Peter A. B. Widener, Welford C. Reed (now deceased), and 
 Williamson W. Fuller. 
 
 f 357S5 
 
 Appeals from the Circuit 
 Court of the United 
 States for the Southern 
 District of New York. 
 
 3 
 
4 the AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 
 
 power which it exerted directly over the five accessory corporations 
 and some of the subsidiary corporations by stock ownership in such 
 corporations, but also upon the control which it exercised over the 
 subsidiary companies by virtue of stock held in said companies by the 
 accessory companies by stock ownership in which the American To- 
 bacco Co. exerted its power of control. The accessory companies 
 were impleaded either because of their nature and character or be- 
 cause of the power exerted over them through stock ownership by 
 the American Tobacco Co. and also because of the power which they 
 in turn exerted by stock ownership over the subsidiary corporations, 
 and, finally, the subsidiary corporations were impleaded either be- 
 cause of their nature or because of the control to which they were 
 subjected in and by virtue of the stock ownership above stated. We 
 append in the margin a statement showing the stock control exercised 
 by the principal defendant, the American Tobacco Co., over the five 
 accessory corporations and also the authority which it directly ex- 
 ercised over certain of the subsidiary corporations, and a list showing 
 the control exercised over the subsidiary corporations as a result of 
 the stock ownership in the accessory corporations, they being in turn 
 controlled, as we have said, by the principal defendant, the American 
 Tobacco Co . 1 
 
 1 Extent of control of American Tobacco Co. over the accessory corporations : 
 
 American Snuff Co. Of 120.000 shares of preferred stock owns 12,517 shares directly 
 and 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 con- 
 trol of P. Lorillard Co., in all, 75,808 shares. 
 
 American Cigar Co. 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 Co. Of 108,790 shares of common stock controls 73,072| shares 
 through stock interest in American Snuff Co. The American Stogie Co. owns all of the 
 stock — 12.500 — of the Union American Cigar Co. — cigars and stogies. 
 
 MacAndrews & Forbes Co. 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 Conley Foil Co. Of 8,250 shares of stock, directly owns 4,950 shares. 
 
 The American Tobacco Co. By stock ownership is the owner outright of the following 
 defendant companies : S. Anargyros (the S. Anargyros Co. owns all the capital stock, 10 
 shares, of the London Cigarette Co.) ; F. F. Adams Tobacco Co. ; Blackwell’s Durham To- 
 bacco Co. ; Crescent Cigar & Tobacco Co. ; Day & Night Tobacco Co. ; Luhrman & Wilbern 
 Tobacco Co. ; Nall & Williams Tobacco Co. ; Nashville Tobacco Works ; R. A. Patterson 
 Tobacco Co. ; Monopol Tobacco Works ; Spalding & Merrick. 
 
 The American Tobacco Co. also has the stock interest indicated in the following de- 
 fendant corporations : 
 
 British-American Tobacco Co. Owns 1.200,000 shares of 1,500,000 shares of preferred 
 stock and 2,280,012 shares of 3,720,021 shares of common stock. 
 
 The Imperial Tobacco Co., etc. 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 shares. 
 
 F. R. Penn Tobacco Co. Of 1,503 shares of stock owns 1,002 shares (through Black- 
 well’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 out of 20,000 shares of preferred and all the common 
 stock (30,000 shares). „ 
 
 Kentucky 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 Ken- 
 tucky Tobacco Extract Co.) _ . I ' 
 
 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 Rican-American Tobacco Co. owns 
 190 of the 380 shares of preferred and 300 of the 450 shares of common stock of Inde- 
 pendent Co. of Porto Rico ; also owns 2,150 of the 5,000 shares of capital stock of the 
 Porto Rico Leaf Tobacco Co.) .. . . , . . . 
 
 The American Tobacco Co. is also interested, as indicated, in the following defendants, 
 supply or machinery companies : 
 
 Golden Belt Manufacturing Co. (cotton bags). Owns 6.521 of 7,000 shares 
 
 Mengel Box Co. (wooden boxes). British-American Tobacco Co. owns 3,637 or 5,000 
 shares of stock. (The Mengel (<b. owns all of the capital stock of the Columbia Box Co. 
 and of the Tyler Box Co., respectively 1,500 and 250 shares.) 
 
THE AMERICAN TOBACCO CO. ET AH. V. THE UNITED STATES. 5 
 
 The two foreign corporations were impleaded either because of 
 their nature and character and the operation and effect of contracts 
 or agreements with the American Tobacco Co. or the power which 
 it exerted over their affairs by stock ownership. 
 
 As we shall have occasion hereafter in referring to matters beyond 
 dispute 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 defend- 
 ants it suffices at this moment to say that the bill averred the origin 
 
 Amsterdam Supply Co. (agency to purchase supplies). Owns majority of stock and 
 controls large part of remainder through subsidiary companies. 
 
 Thomas Cusack Co. (bill posting). Owns 1,000 out of 1,500 shares. 
 
 Manhattan Briar Pipe Co. Owns all of stock, 3,500 shares. 
 
 International Cigar Machinery Co. Of 100,000 shares owns 33,637 shares directly and 
 29,902 shares through American Cigar Co. — in all 63,539 shares. 
 
 The American Tobacco Co. is also interested in the following companies, not named as 
 defendants : 
 
 American Machine & Foundry Co. Owns 510 shares directly and remainder (490) 
 through American Cigar Co. 
 
 New Jersey Machine Co. Owns 510 shares directly and remainder (490) through 
 American Cigar Co. 
 
 Standard Tobacco Stemmer Co. Of 17,300 shares owns 16,895 shares. 
 
 Garson Vending Machine Co. Of 500 shares owns 250 shares. 
 
 The American Snuff Co., in addition to stock, etc., interests in the American Tobacco 
 Co., American Cigar Co., and the Amsterdam Supply Co., has stock interests in the fol- 
 lowing defendants : 
 
 H. Bolander. Owns all of stock, 1,350 shares. 
 
 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., Kentucky Tobacco 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 out of 2,500 shares preferred 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, 
 etc., Co. owns 1,320 of the 1,890 shares of stock of the Vuelta Abajo Steamship 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, and $3,500,000 of $7,500,000 bonds. 
 
 Jordan Gibson & Baum Co. (Inc.). Owns all preferred and common stock, 250 shares 
 
 each. 
 
 Louisiana Tobacco Co. (Ltd.). Owns 375 out of 500 shares. 
 
 The J. B. Moos Co. Owns all of stock, 2,000 shares. 
 
 J. & B. Moos. 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 Tobacco 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. (Ltd.). Owns 9,749 out of 16,950 shares preferred and 14,687 
 out of 15,990 shares common. (The Hy. Clay, etc., Co. is owner of 16,667 shares of the 
 ordinary capital stock of the Havana Cigar & Tobacco Factories (Ltd.), and also owns 
 64 shares of the 1,890 shares of the capital stock of the Vuelta Abajo Steamship Co.) 
 Cuban Tobacco Co. Owns all of stock, 50 shares. 
 
 Havana 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 (Ltd.). Owns 6,774 out of 25,000 shares ordinary 
 
 stock. 
 
 J. S. Murias y Co. Owns all of stock, 7,500 shares. 
 
 Blackwell’s Durham Tobacco Co. In addition to a stock interest in the Amsterdam 
 Supply Co., has the stock interest indicated in the following defendant corporations : 
 
 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. 
 
 Conley Foil Co. Owns all of the capital stock, 3,000 shares, of the Johnston Tin Foil 
 
 & Metal Co. 
 
 P. Lorillard Co. Has a stock interest in the American Snuff Co. and the Amsterdam 
 
 Supply Co. 
 
 R. J. Reynolds Tobacco Co. In addition to a stock interest in the Amsterdam Supply 
 Co. and the MacAndrews & Forbes Co., owns one-third of the 5,000 shares of stock of 
 
 the Lipfert Scales Co. 
 
 The British-American Tobacco Co. In addition to a small interest in the Amsterdam 
 Supply Co., has the following stock interest in certain defendants : 
 
 David Dunlop (plug). Owns 3,000 of 4,500 shares. 
 
 W. S. Mathews & Sons (smoking). Owns 3,637 out of 5,000 shares of stock. 
 
 T. C. Williams Co. (plug). Owns all of stock, 4,000 shares. 
 
6 THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 
 
 and nature of the American Tobacco Co. and the origin and nature 
 of all the other defendant corporations, whether accessory or sub- 
 sidiary, and the connection of the individual defendants with such 
 corporations. In effect the bill charged that the individual defend- 
 ants and the defendant corporations were engaged 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 of the first section of the act, and also were attempting 
 to monopolize and were actually a monopolization of such trade, in 
 violation of the second section. In support of these charges general 
 averments were made in the bill as to the wrongful 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 follows: 
 
 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 hereinbefore 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 entered 
 into by the defendants on or about September 27, 1902, and thereafter, and evi- 
 denced among other things by the two written agreements of that date, Exhibits 
 1 and 2 hereto, be declared illegal, and that injunctions issue restraining and 
 prohibiting defendants from doing anything in pursuance of or in furtherance 
 of the same within the jurisdiction of the United States. 
 
 3. That the Imperial Tobacco Co., its officers, agents, and servants be en- 
 joined from engaging in interstate or foreign trade and commerce within the 
 jurisdiction of the United States until it shall cease to observe or act in pur- 
 suance of said agreements, contracts, combinations, and conspiracies entered 
 into by it and other defendants on or about September 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 Co. be adjudged an unlawful instru- 
 mentality 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. 
 
 5. That the court adjudge the American Tobacco Co., the American Snuff 
 Co., the American Cigar Co., the American Stogie Co., the MacAndrews & 
 Forbes Co., and the Conley Foil Co. is each a combination in restraint of inter- 
 state and foreign trade and commerce; and that each has attempted and is 
 attempting to monopolize, is in combination and conspiracy with other persons 
 and corporations 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 defendants 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. 
 
 6. That the holding of stock 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, conspiracies, 
 and attempts to monopolize by the means herein described, or by any 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 combination with any other 
 defendant, and from taking part or being interested in any agreement or com- 
 
THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 7 
 
 bination 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 cor- 
 porate defendants other than the foreign corporations denied the 
 charges of wrongdoing and illegal combination, and the corporate 
 defendants in particular 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 en- 
 gaged in manufacturing, and that any combination amongst them 
 related only to that subject, and therefore was not within the anti- 
 trust act. The two foreign corporations asserted the validity of their 
 corporate organizations and of the assailed agreements, and denied 
 any participation in the alleged wrongful combination. 
 
 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 opin- 
 ion. (164 Fed., 700.) A final decree was entered on December 15, 
 1908. The petition was dismissed as to the English corporations, 
 three of the subsidiary corporations, the United Cigar Stores Co., 
 and all the individual defendants. It was decreed that the defend- 
 ants other than those against whom the petition was dismissed had 
 theretofore entered into and were parties to combinations in restraint 
 of trade, etc., in violation of the antitrust 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 what- 
 soever in furtherance of the objects and purposes of said combina- 
 tions, and from continuing as parties thereto.” It specifically found 
 that each of the defendants “the American Tobacco Co., American 
 Snuff Co., American Cigar Co., American Stogie Co., and Mac An- 
 drews & Forbes Co., constitutes 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 indirectly engaging in interstate or foreign trade and commerce 
 in leaf tobacco, or the products manufactured therefrom, or articles 
 necessary or useful in connection therewith. But if any of said last- 
 named defendants can hereafter affirmatively show the restoration 
 of reasonably competitive conditions, such defendant may apply to 
 this court for a modification, suspension, or dissolution of the injunc- 
 tion 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 corporations, and particularly 
 specified such other corporations, and then made the following re- 
 straining provisions: 
 
 Wherefore each and all of defendants, the American Tobacco Co., the American 
 Snuff Co., the American Cigar Co., P. Lorillard Co., R. J. Reynolds Tobacco Co., 
 Blackwell’s Durham Tobacco Co., and Conley Foil Co., their officers, directors, 
 agents, servants, and employees, are hereby restrained and enjoined from ac- 
 quiring, by conveyance or otherwise, the plant or business of any such corpora- 
 tion wherein any one of them now holds or owns stock ; and each and all of 
 said defendant corporations so holding stock in other corporations, as above 
 specified, their officers, directors, agents, servants, and employees, are further 
 
8 THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 
 
 enjoined from voting or attempting to vote said stock at any meeting of the 
 stockholders of the corporation issuing the same and from exercising or attempt- 
 ing to exercise any control, direction, supervision, or influence whatsoever over 
 the acts and doings of such corporation. And it is further ordered and decreed 
 that each and every of the defendant corporations the stock of which is held 
 by any other defendant corporation as hereinbefore shown, their officers, di- 
 rectors, servants, and agents, be and they are hereby respectively and collec- 
 tively restrained 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 attorneys 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 
 acts. 
 
 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., & Co., a corporation, which had con- 
 sented to the decree. The decree also contained a provision that the 
 defendants or any of them should not be prevented “ from the insti- 
 tution, prosecution, or defense of any suit, action, or proceeding to 
 prevent or restrain the infringement of a trade-mark used in inter- 
 state commerce or otherwise assert or defend a claim to any property 
 or rights.” In the event of a taking of an appeal to this court, the 
 decree provided that the injunction which it directed “ shall be sus- 
 pended during the pendency of such appeal.”. 
 
 The United States appealed, as did also the various defendants 
 against whom the decree was entered. For the Government it is 
 contended : 
 
 1. That the petition should not have been dismissed as to the indi- 
 vidual defendants. 
 
 2. That it should not have been dismissed as to the two foreign 
 corporations — the Imperial Tobacco Co. and the British- American 
 Tobacco Co. and the domestic corporations controlled by the latter — 
 and that, on the contrary, the decree should have commanded the 
 observance of the antitrust 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 antitrust act, whether or not the right to do said 
 acts was asserted to have arisen pursuant to the contracts made out- 
 side of or within the United States. 
 
 3. The petition should not have been dismissed as to the United 
 Cigar Stores Co. 
 
 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 
 American Tobacco Co., American Snuff Co., American Cigar Co., 
 American Stogie Co., MacAndrews & Forbes Co., the Conley Foil 
 Co., and the British-American Tobacco Co. were severally attempt- 
 ing to monopolize and had monopolized parts of commerce, and that 
 appropriate remedies should have been applied. 
 
 6. The decree was not sufficiently specific, since it should have de- 
 scribed 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 similar methods. 
 
THE AMERICAN TOBACCO CO. ET AU. V. THE UNITED STATES. 9 
 
 7. The decree should have specified the shares in corporations 
 disclosed by the evidence to be ownedi by the parties to the con- 
 spiracy, 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 enjoined 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 im- 
 properly suspended the injunction pending appeal. 
 
 The defendants, by their assignments of errors, 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 commerce, and enjoined accordingly; ( 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 Co., American Snuff Co., American Cigar Co., 
 American Stogie Co., and the MacAndrews & Forbes Co. were ad- 
 judged unlawful combinations and restrained from engaging in 
 interstate and foreign commerce. 
 
 The elaborate arguments made by both sides at bar present in 
 many forms of statement the conflicting contentions resulting from 
 the nature and character of the suit and the defense thereto, the 
 decree of the lower court, and the propositions assigned as error to 
 which we have just referred. In so far as all or any of these con- 
 tentions, as many of them in fact do, involve a conflict as to the appli- 
 cation and effect of sections 1 and 2 of the antitrust act, their consid- 
 eration has been greatly simplified by the analysis and review of that 
 act and the construction affixed to the sections in question in the case 
 of Standard Oil Company et al. v. United States, quite recently 
 decided. In so far as the contentions relate to the disputed proposi- 
 tions 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 ap- 
 plying to the inferences properly deducible from such facts the mean- 
 ing 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 into three subjects: 
 First, the undisputed facts; second, the meaning of the antitrust 
 law and its application as correctly construed to the ultimate conclu- 
 sions of fact deducible from the proof; third, the remedies to be 
 
 applied. 
 
 UNDISPUTED FACTS. 
 
 The matters to be considered 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 con- 
 tracts. We shall divide the subject into two periods, (a) the one 
 from the time of the organization of the first or old American To- 
 
10 THE AMEKICAN TOBACCO CO. ET AL. Y. THE UNITED STATES. 
 
 bacco Co., in 1890, to the organization of the Continental Tobacco 
 Co., and (b) from the date of such organization to the filing of the 
 bill in this case. 
 
 Summarizing in the broadest way the conditions which obtained 
 prior to 1890, as to the production, manufacture, and distribution of 
 tobacco, the following general facts are adequate to portray the 
 situation : 
 
 Tobacco was grown in many sections of the country having diver- 
 sity of soil and climate, and therefore was subject to various vicis- 
 situdes resulting from the places of production, 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 products were marketed under competi- 
 tive conditions of a peculiarly advantageous nature. The manu- 
 facture of the product in this country in various forms was 
 successfully carried on by many individuals or concerns scattered 
 throughout the country, a large number, perhaps, of the manu- 
 facturers being in the vicinage of production and others being 
 advantageously situated in or near the principal markets of dis- 
 tribution. 
 
 Before January, 1890, five distinct concerns — Allen & Ginter, with 
 factory at Richmond, Va. ; W. Duke, Sons & Co., with factories at 
 Durham, N. C., and New York City ; Kinney Tobacco Co., with fac- 
 tory at New York City; W. S. Kimball & Co., with factory at Roch- 
 ester, N. Y. ; Goodwin & Co., with factory at Brooklyn, N. Y. — manu- 
 factured, distributed, and sold in the United States and abroad 95 
 per cent of all the domestic cigarette and less than 8 per cent of the 
 smoking tobacco produced in the United States. There is no doubt 
 that these factories were competitors in the purchase of the raw prod- 
 uct which they manufactured and in the distribution and sale of the 
 manufactured products. Indeed, it is shown that prior to 1890 not 
 only had normal and ordinary competition existed between the fac- 
 tories in question, but that the competition had been fierce and abnor- 
 mal. In January, 1890, having agreed upon a capital stock of 
 $25,000,000, all to be divided amongst them, and who should be direc- 
 tors, the concerns referred to organized the American Tobacco Co. in 
 New Jersey “ for trading and manufacturing,” with broad powers, 
 and conveyed to it the assets and businesses, including good will and 
 right to use the names of the old concerns; and thereafter this corpo- 
 ration carried on the business of all. The $25,000,000 of- stock of the 
 tobacco company was allotted to the charter members as follows: 
 Allen & Ginter, $3,000,000 preferred, $4,500,000 common; W. Duke, 
 Sons & Co., $3,000,000 preferred, $4,500,000 common; Kinney Tobacco 
 Co., $2,000,000 preferred, $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. 
 
THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 11 
 
 Shortly after the formation of the new corporation the Goodwin 
 & Co. factory was closed, and the directors ordered “ that the manu- 
 facture of all-tobacco cigarettes be concentrated at Richmond.” The 
 new corporation, in 1890, the first year of its operation, manufac- 
 tured about 2,500,000,000 cigarettes, that is about 96 or 97 per cent 
 of the total domestic output, and about 5,500,000 pounds of smok- 
 ing tobacco out of a total domestic product of nearly 70,000,000 
 pounds. 
 
 In a little over a year after the organization of the company it 
 increased its capital stock by $10,000,000. 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, Ky., and' 
 distributing it through the channels of interstate commerce. In 
 January, 1891, this firm was converted into a corporation known as 
 the National Tobacco Works, having a capital stock of $400,000, all 
 of which was issued to the partners. Almost immediately thereafter, 
 in the month of F ebruary , the American Tobacco Co. became the pur- 
 chaser of all the capital stock of the new corporation, paying $600,000 
 cash and $1,200,000 in stock of the American Tobacco Co. The mem- 
 bers of the previously existing firm bound themselves by contract with 
 the American Tobacco Co.’ to enter its service and manage the busi- 
 ness and property sold, and each further agreed that for 10 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 Co. bought out the busi- 
 ness of Philip Whitlock, of Richmond, Va., 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 Co. for a number of years and not to engage for 20 years in 
 the tobacco business. 
 
 In the month of April the American Tobacco Co. also acquired the 
 business of Marburg Bros., a well-known firm located at Baltimore, 
 Md., and engaged in the manufacture and distribution of tobacco, 
 principally smoking and snuff. The consideration was a cash pay- 
 ment 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 Co. 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 the firm or the partners, and the members of the firm agreed not 
 to engage 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 18-91, as will appear from a note in the 
 
12 THE AMEBICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 
 
 margin. 1 It will be seen that as to cheroots, smoking tobacco, fine-cut 
 tobacco, snuff, and plug tobacco, the company had become a factor in 
 all branches of the tobacco industry. 
 
 Kef erring 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 between February, 1891, and October, 1898, including the pur- 
 chases which we have specifically referred to, the American Tobacco 
 Co. acquired 15 going tobacco concerns doing business in the States 
 of Kentucky, Louisiana, Maryland, Michigan, Missouri, New York, 
 North Carolina, and Virginia. For 10 of the plants an all-cash con- 
 sideration of $6,410,235.26 was paid, while the payments for the re- 
 maining 5 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 Co., a Missouri corporation dealing principally 
 in plug, for which a cash consideration was paid of $3,457,500. 
 
 The corporations which were combined for the purpose of forming 
 the American Tobacco Co. produced a very small portion of plug 
 tobacco. 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 
 ownership and control of concerns manufacturing plug tobacco and 
 the consequent increase in that branch of production. There is no 
 dispute that as early as 1893 the president of the American Tobacco 
 Co., by authority of the corporation, approached leading manufac- 
 turers 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 warfare, which continued until 1898, the 
 American Tobacco Co. sustained severe losses aggregating more than 
 $4,000,000. 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, but others 
 engaged in that industry came to terms. We say this, because in 1898, 
 in connection with several leading plug manufacturers, the American 
 Tobacco Co. organized a New Jersey corporation styled the Conti- 
 nental Tobacco Co., for “ trading and manufacturing,” with a capital 
 of $75,000,000, afterwards increased to $100,000,000. The new com- 
 pany issued its stock and took transfers to the plants, assets, and 
 
 i The output of the American Tobacco Co. for 1891 was: 
 
 
 Number. 
 
 Pounds. 
 
 
 2,788,778,000 
 
 40,009,000 
 
 
 
 
 
 13,813,355 
 560,633 
 383, 162 
 4, 442, 774 
 
 
 
 
 
 
 
 Total output for the United States, 1891: 
 
 3,137,318,596 
 
 
 76,708,300 
 
 16,968,870 
 
 166,177,915 
 
 10,674,241 
 
 
 
 
 
 Snuff 
 
 
 
 
THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 13 
 
 businesses of five large and successful competing plug manufac- 
 turers. 1 
 
 The American Tobacco Co. also conveyed to this corporation, at 
 large valuations, the assets, brands, real estate, and good will per- 
 taining to its plug-tobacco business, including the National Tobacco 
 Works, the James G. Butler Tobacco Co., Drummond Tobacco Co., 
 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 
 Co., also became president of the Continental Co. 
 
 Under the preliminary agreement which was made, looking to the 
 formation of the Continental Tobacco Co., that company acquired 
 from the holders all the $3,000,000 of the common stock of the P. 
 Lorillard Co. in exchange for $6,000,000 of its stock, and $1,581,300 
 of the $2,000,000 preferred in exchange for notes aggregating a sum 
 considerably larger. The Lorillard Co., however, although it thus 
 passed practically under the control of the- American Tobacco Co. 
 by virtue of its ownership of stock in the Continental Co., was not 
 liquidated, but its business continued to be conducted as a distinct 
 corporation, its goods being marked and put upon the market, just 
 as if they were the manufacture of an independent concern. 
 
 Following the organization of the Continental Tobacco Co., the 
 American Tobacco Co. increased its capital stock from $35,000,000 
 to $70,000,000 and declared a stock dividend of 100 per cent on its 
 common stock, that is, a stock dividend of $21,000,000. 
 
 As the facts just stated bring us to the end of the first period which 
 at the outset we stated it was our purpose to review, it is well briefly to 
 point out the increase in the power and control of the American To- 
 bacco Co. and the extension of its activities to all forms of tobacco 
 products which had been accomplished just prior to the organization 
 of the Continental Tobacco Co. Nothing could show it more clearty 
 than the following: At the end of the time the company was manu- 
 facturing 86 per cent or thereabouts of all the cigarettes produced in 
 the United States, above 26 per cent of all the smoking tobacco, more 
 than 22 per cent of all plug tobacco, 51 per cent of all little cigars, 
 6 per cent each of all snuff and fine-cut tobacco, and over 2 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 Co. up 
 to the time of the bringing of this suit, will serve to make evident that 
 the transactions in their essence had all the characteristics of the oc- 
 currences of the first period. 
 
 In the year 1899 and thereafter either the American or Continental 
 Co., for cash or stock, at an aggregate cost of $50,000,000, bought 
 and closed up some 30 competing corporations and partnerships 
 
 1 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 & Bros., having factory at Louisville, Ky., who received preferred stock 
 $2,250,000, common stock $3,050,000, and cash $550,000. 
 
 Daniel Scotten & Co., having factory at Detroit, Mich., who received preferred stock 
 $1,911,100 and common stock $3,012,500. 
 
 I’. H. Mayo & Bros., having factory at Richmond, Va., who received preferred stock 
 $1,250,000, common stock $1,925,000, and cash $00,125. 
 
 John Wright Co., having factory at Richmond, Va., who received preferred stock 
 $495,000, common stock $495,000, and cash $4,116.67. 
 
14 THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 
 
 theretofore engaged in interstate and foreign commerce as manufac- 
 turers, sellers, and distributors of tobacco and related commodities, 
 the interested parties covenanting not to engage in the business. 
 Likewise the two corporations acquired for cash, by issuing stock, and 
 otherwise, control of many competing corporations, now going con- 
 cerns, with plants in various States, Cuba and Porto Pico, which 
 manufactured, bought, sold, and distributed tobacco products or 
 related articles throughout the United States and foreign countries, 
 and took from the parties in interest covenants not to engage in the 
 tobacco business. 
 
 The plants thus acquired were operated until the merger in 1904, 
 to which we shall hereafter refer, as a part of the general system of 
 the American and Continental Cos. The power resulting from and 
 the purpose contemplated in making these acquisitions by the com- 
 panies just referred to, however, may not be measured by considering 
 alone the business of the company directly acquired, since some of 
 those companies Avere made the vehicles as representing the American 
 or Continental Co. 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 Co., with- 
 out ostensibly doing so. It is, besides, undisputed that in many in- 
 stances the acquired corporations with the subsidiary companies over 
 which they had control through stock ownership were carried on 
 ostensibly as independent concerns disconnected from either the 
 American or the Continental Co., although they were controlled and 
 OAvned 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 corporations thus acquired, Avith 
 the mention of the competing concerns which such corporations 
 acquired. 1 
 
 1 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 & AA T ilbern Tobacco Co. (Middletown, Ohio). Capital, $900,000; scrap to- 
 bacco. This business was formerly carried on by a partnership. 
 
 Mengel Box Co. (Louisville, Ky.). Capital, $2,000,000; boxes for packing tobacco. 
 This company has acquired the stock ($150,000) of Columbia Box Co. and of Tyler Box 
 Co. ($25,000), both at St. Louis. 
 
 The Porto Rican-American Tobacco Co. (Porto Rico). Capital, $1,799,600. In 1899 
 the American Co. caused the organization of the Porto Rican-American Tobacco Co., which 
 took over the partnership business of Rucabado y Portela, manufacturer of cigars and 
 cigarettes, with covenants not to compete. The American Tobacco Co. and American 
 Cigar Co. each hold $585,300 of the stock ; the balance is in the hands of individuals. 
 
 Kentucky Tobacco Product Co. (Louisville, Ky.). Capital, $1,000,000. In 1899 the 
 Continental Co. 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 Co. was organized in New Jersey, with $1,000,000 capital, 
 $450,000 issued to the old stockholders and $550,000 to Continental Co., as consideration 
 for agreement to supply stems. 
 
 Golden Belt Manufacturing Co. (North Carolina). Capital, $700,000; cotton bags and 
 containers. In 1899 the American Tobacco Co. acquired the business of this corporation, 
 which was formed to take over a going business. 
 
 The Conley Foil Co. (New York). Capital, $825,000; tinfoil combination. In Decem- 
 ber, 1899, the American Tobacco Co. secured control of the business of John Conley & Son 
 (partnership), New York, N. Y., manufacturers of tinfoil, an essential for packing tobacco 
 products. By agreement the Conley Foil Co. was incorporated in New Jersey “ for trad- 
 ing and manufacturing,” etc., with $250,000 capital (afterwards $375,000 and $825,000), 
 which took over the firm’s business and assets, etc., and the American Tobacco Co. be- 
 came owner of the majority shares. The Conley Foil Co. has acquired all the stock of the 
 Johnson Tinfoil & Metal Co. — a defendant — of St. Louis, a leading competitor, and they 
 supply under fixed contracts the tinfoil used by defendants. 
 
 R. J. Reynolds Tobacco Co. (Winston Salem, N. C.). In 1899 the Continental Tobacco 
 Co. acquired control of the R. J. Reynolds Tobacco Co., 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 $5,000,000 (afterwards $7,525,000), 
 which took over the business and assets of the old one. The Continental Co. immediately 
 acquired the majority shares and the American Co. now holds $5,000,000 of stock. The 
 separate organization has been preserved. 
 
THE AMERICAN TOBACCO CO. ET AH. V. THE UNITED STATES. 15 
 
 It is of the utmost importance to observe that the acquisitions made 
 by the subsidiary corporations in some cases likewise show the re- 
 markable fact stated above; that is, the disbursement of enormous 
 amounts of money to acquire plants, which on being purchased were 
 not utilized but were immediately closed. It is also to be remarked, 
 that the facts stated in the memorandum 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 Co., as exemplified by the transactions in the first period. 
 A statement of particular transactions outside of those previously 
 referred to as having occurred during the period in question will serve 
 additionally to make the situation clear. And to accomplish this -pur- 
 pose 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 accessory defendants, such corporations 
 being the American Snuff Co., American Cigar Co., American Stogie 
 Co., MacAndrews & Forbes Co. (licorice), and Conley Foil Co. 
 
 (1) The American Snuff Go . — As we have seen, the American To- 
 bacco Co. at the commencement of the first period produced a very 
 small quantity of snuff. Its capacity, however, in that regard was 
 augmented owing particularly to the formation of the Continental 
 Tobacco Co. and the acquisition of the Lorillard Co., by which it 
 came to be a serious factor as a snuff producer. There shortly en- 
 sued an aggressive competition in the snuff business between the 
 American Tobacco Co., 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 organization. 
 The result was identical with that which had previously arisen from 
 like conditions in the past. 
 
 There was acquired in the name of the new Reynolds Co., with covenants against com- 
 petition, the following plants : 
 
 In 1900, T. L. Vaughn & Co., partnership, of Winston, N. C. ; consideration, $90,506 ; 
 Brown Bros. Co., a North Carolina corporation, Winston, N. C. ; consideration, $67,615; 
 and P. H. Ilanes & Co. and B. F. Hanes & Co., Winston, N. C., partnership ; considera- 
 tion, $671,950. 
 
 In 1905, Rucker & Witten Tobacco Co., Martinsville, Va. ; consideration, $512,898. 
 
 In 1906, 1). II. Spencer & Co., 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-Scales Co., of Winston, N. C., 
 a corporation largely engaged in the manufacture of plug tobacco and interstate and 
 foreign commerce in leaf tobacco and its products, was acquired by the Reynolds Co. 
 The separate organization of the Lipfert-Scales Co. is preserved and the business carried 
 on under its corporate name. 
 
 The R. .T. Reynolds Tobacco Co. also holds $98,300 stock of the MacAndrews & Forbes 
 Co. and $9,600 of the Amsterdam Supply Co. 
 
 Blackwell’s Durham Tobacco Co. (Durham, N. C.). Capital, $1,000,000. In 1899 the 
 American Tobacco Co. procured for $4,000,000 all the stock of Blackwell’s Durham To- 
 bacco Co. at Durham, N. C., manufacturer and distributor of tobacco products. There- 
 upon the Blackwell’s Durham Tobacco Co. of New Jersey, capital, $1,000,000, all owned 
 by the American, was organized and took over the assets of the old company, then under 
 receivership. Its separate organization has been preserved. 
 
 The Durham Co. has acquired control of the following competitors : Reynold’s Tobacco 
 Co., F. R. Penn Tobacco Co., and Wells-Whitehead Tobacco Co. 
 
 The following companies came also under the control of the American Tobacco Co. 
 through acquired stock ownership. 
 
 S. Anargyros. Capital, $650,000 ; Turkish cigarettes. In 1890 the American Tobacco 
 Co. procured the organization of corporation of S. Anargyros, which took over that indi- 
 vidual’s going business and has since controlled it. Through this company the business 
 in Turkish cigarettes is largely conducted. 
 
 The John 1', oilman Co. (San Francisco). Capital, $200,000; cigarettes. In 1900 the 
 American Tobacco Co. procured organization of the John Bollman Co., which took over 
 the business of the former concern in exchange for stock. Its separate organization has 
 
 been preserved. 
 
16 THE AMEKICAN TOBACCO CO. ET AL. Y. THE UNITED STATES. 
 
 In March, 1900, there was organized in New Jersey a corporation 
 known as the American Snuff Co., with a capital of $25,000,000, one- 
 half preferred and one-half common, which took over the snuff 
 business of the P. Lorillard Co., Continental Tobacco Co., and the 
 American Tobacco Co., with that of a large competitor, viz, the 
 Atlantic Snuff Co. The stock of the new company was thus ap- 
 portioned: Atlantic Snuff Co., preferred, $7,500,000, common, 
 $25,000,000; P. Lorillard Co., preferred, $1,124,700, common, 
 $3,459,400; the American Tobacco Co., preferred, $1,177,800, com- 
 mon $3,227,500; Continental Tobacco Co., preferred, $197,500, com- 
 mon, $813,100. The stock issued to Continental Tobacco Co. and the 
 defendants, P. Lorillard Co. and the American Tobacco Co., is still 
 held by the latter, and they have at all times had a controlling in- 
 terest in the snuff company. All the companies, together with their 
 officers and directors, convenanted that they would not thereafter en- 
 gage as competitors in the tobacco business or the manufacture, sale, 
 or distribution of snuff. 
 
 Among the assets transferred by the Atlantic Snuff Co. to American 
 Snuff Co. 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 inter- 
 state and foreign commerce in tobacco and its products, and which 
 controlled through stock ownership the Southern Snuff Co., Mem- 
 phis, Tenn. ; Dental Snuff Co., Lynchburg, Ya. ; and Stewart-Ralph 
 Snuff Co., Clarksville, Tenn. The separate existence of W. E. Gar- 
 rett & Sons (Inc.) has been preserved and its business conducted 
 under the corporate name. In March, 1900, the American Snuff Co. 
 acquired all the shares of George W. Helme Co., one of the oldest 
 and largest producers of snuff and actively engaged at Helmetta, 
 N. J., in interstate and foreign commerce in competition with defend- 
 ants, by issuing in exchange 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 Co., which had at the end of the first period only 
 a very small percentage of the snuff-manufacturing business, came 
 virtually to have the dominant control as a manufacturer of that 
 product. 
 
 (2) Conley Foil Co ., manufacturers of tinfoil , an essential for 
 'packing tobacco products . — In December, 1899, the American To- 
 bacco Co. secured control of the business of John Conley & Sous, a 
 partnership, of New York City. By agreement the Conley Foil Co. 
 was incorporated in New York “ for trading and manufacturing,” 
 etc., with $250,000 capital, ultimately increased to $825,000. The 
 corporation took over the business and assets of the firm, and the 
 American Tobacco Co. became owner of a majority of the shares of 
 stock. The Conley Foil Co. has acquired all the shares of stock of 
 the Johnson Tinfoil & Metal Co., of St. Louis, a leading competitor, 
 and they supply, under fixed contracts at remunerative prices, the 
 tinfoil used by the defendants, which constitutes the major part of 
 the total production in the United States. 
 
 (3) American Cigar Co . — Prior to 1901 the American and Conti- 
 nental Tobacco Cos. manufactured, sold, and distributed cigars, 
 
THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 17 
 
 stogies, and cheroots. In the year stated the companies determined 
 to engage in the business upon a larger scale. Under agreement 
 with Powell, Smith & Co., large manufacturers and dealers in cigars, 
 they caused the incorporation in New Jersey of the American Cigar 
 Co., “ for trading and manufacturing,” etc., to which all three con- 
 veyed their said business, and it has since carried on the same. The 
 American and Continental Cos. each acquired 46^ per cent of the 
 shares and Powell, Smith & Co. 7 per cent; the original capitaliza- 
 tion was $10,000,000 (afterwards $20,000,000), and more than three- 
 fourths is owned by the former. The cigar company acquired many 
 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 or- 
 ganization of controlled corporations which have acquired competing 
 manufacturers, jobbers, and distributors in the United States, Cuba, 
 and Porto Rico. It manufactures, sells, and distributes a consider- 
 able percentage 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 job- 
 bers in California, Alabama, Virginia, Pennsylvania, Georgia, Lou- 
 isiana, New Jersey, and Tennessee. 
 
 (4) The M ac Andrews & Forbes Co ., manufacturers of licorice . — • 
 There is no question that licorice paste is an essential ingredient in 
 the manufacture of plug tobacco, and that one who is debarred from 
 obtaining 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 Co. secured 
 control of MacAndrews & Forbes Co., of Newark, N. J., and organ- 
 ized “ 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 & Forbes and another large competitor. The Conti- 
 nental Co. acquired two-thirds of the common stock by agreeing to 
 purchase its supply of paste from the new company. The American 
 Tobacco Co., at the time of the filing of 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 Co. acquired, 
 substantially, the business of all competitors. Thus, in June, 1902, 
 it purchased the business of the Stamford Manufacturing Co., of 
 Stamford, Conn., and incorporated the National Licorice Co., which 
 acquired the business of Young & Smylie and F. B. & V. P. Scudder, 
 and the National Co. agreed with MacAndrews & Forbes not to pro- 
 duce licorice for tobacco manufacturers. In 1906 all the stock in the 
 J. S. Young Co. — $1,800,000 — which had been organized to take over 
 the business of the J. S. Young Co., of Baltimore, Md., was acquired 
 by the MacAndrews & Forbes Co. The MacAndrews & Forbes Co. 
 use in excess of 95 per cent of the licorice root consumed in the 
 United States. 
 
 (5) American Stogie Co. — In May, 1903, the American Cigar Co. 
 and the American and Continental Tobacco Cos. caused the Ameri- 
 can Stogie Co. to be incorporated in New Jersey with $11,979,000 
 capital, which immediately took over the stogie and tobie business 
 of the companies named in exchange for $8,206,275 stock, and then 
 
 S. Doc. 40, 62-1 2 
 
18 THE AMEKICAN TOBACCO CO. ET AL. Y. THE UNITED STATES. 
 
 in the usual ways acquired the business of others in the manufac- 
 ture, sale, and distribution of such products, with covenants not to 
 compete. It acquired, in exchange for $3,647,725 stock, all shares 
 of United States Cigar Co. (which had previously acquired and 
 owned the business of important competitors) and subsequently took 
 the conveyance of the plant and assets. The majority shares always 
 have been held by defendant, the American Cigar Co. 
 
 As we think the legitimate inferences deducible from the undis- 
 puted facts which we have thus stated will be sufficient to dispose of 
 the controversy, we do not deem it necessary to expand this statement 
 so as to cause it to embrace a recital of the undisputed facts con- 
 cerning the entry of the American Tobacco Co. into the retail to- 
 bacco trade through the acquisition of a controlling interest in the 
 stock of what is known as the United Cigar Stores Co., as well as 
 to some other subjects which, for the sake of brevity, we likewise 
 pass over in order to come at once to a statement concerning the for- 
 eign companies. 
 
 The English companies . — In September, 1901, the American To- 
 bacco Co. purchased, for $5,347,000, a Liverpool (England) corpora- 
 tion, 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 combine into an incor- 
 poration known as the Imperial Tobacco Co. of Great Britain and 
 Ireland, capital £15,000,000, afterwards increased to £18,000,000, 
 sterling. The trade war was continued between this corporation and 
 the American Tobacco Co., with a result substantially identical with 
 that which had hitherto, as we have seen, arisen from such ,a 
 situation. 
 
 In September, 1902, the Imperial and the American companies en- 
 tered into contracts (executed in England) stipulating that the 
 former should limit its business to the United Kingdom, except pur- 
 chasing leaf in the United States (it buys 54,000,000 pounds an- 
 nually) ; that the American companies should limit their business to 
 the United States, its dependencies, and Cuba ; and that the British- 
 American Tobacco Co., with capital of £6,000,000 apportioned 
 between them, should be organized, take over the export business of 
 both, and operate in other countries, etc. This arrangement was im- 
 mediately put into effect and has been observed. 
 
 The Imperial Co. holds one-third and the American Co. two-thirds 
 of the capital stock of the British American Tobacco Co. (Ltd.). 
 The latter company maintains a branch office in New York City, and 
 the vice president of the American Tobacco Co. is a principal 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 American 
 Tobacco Co. In addition to many plants abroad, it has warehouses 
 in various States and plants at Petersburg, Va., and Durham, N. C., 
 where tobacco is manufactured and then exported. 
 
 The purchase of necessary leaf tobacco in the United States by the 
 Imperial Co. is now made through a resident general agent and is 
 exported as a part of foreign commerce. 
 
 Not to break the continuity of the narrative of facts, we have 
 omitted in the proper chronological order to state the facts relative 
 to what was known as the Consolidated Tobacco Co. We now par- 
 ticularly refer to that subject. 
 
THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 19 
 
 The Consolidated Tobacco Co . — In June, 1901, parties largely in- 
 terested in the American and Continental Cos. caused the incorpora- 
 tion in New Jersey of the Consolidated Tobacco Co., capital 
 $30,000,000 (afterwards $40,000,000), with broad powers and per- 
 petual existence; to do business throughout the world, and to guar- 
 antee securities of other companies, etc. A majority 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 companies, 
 became president of the Consolidated. Largely in exchange for 
 bonds the new company acquired substantially all the shares of com- 
 mon stock of the old ones. Its business of holding and financing was 
 continued until 1904, when, with the American and Continental Cos., 
 it was merged into the present American Tobacco Co. 
 
 By proceedings in New Jersey, October, 1904, the (old) American 
 Tobacco Co., Continental Tobacco Co., and Consolidated Tobacco Co. 
 were merged into one corporation, under the name of the American 
 Tobacco Co., the principal defendant here. The merged company, 
 with 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. 1 
 
 Prior to the merger the Consolidated Tobacco Co., a majority of 
 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 com- 
 mon shares of both old American and Continental Cos., and thereby 
 control. The preferred shares, however, were held by many indi- 
 viduals. Through the method of distribution of the stock of the 
 new company, in exchange for shares in the old American and in the 
 Continental Co., it resulted that the same six men in control of the 
 combination through the Consolidated Tobacco Co. continued that 
 control by ownership of stock in the merged or new American To- 
 bacco Co. The assets, property, etc., of the old companies passed to 
 the American Tobacco Co. (merged), which has since carried on the 
 business. 
 
 The record indisputably discloses that after this merger the same 
 methods which were used from the beginning continued to be em- 
 ployed. Thus, it is beyond dispute: First, that since the organi- 
 zation of the new American Tobacco Co. that company has acquired 
 four large tobacco concerns; that restrictive covenants against en- 
 gaging in the tobacco business were taken from the sellers, and that 
 the plants were not continued in operation, but were at once aban- 
 doned. Second, that the new company has, besides, acquired control 
 of eight additional concerns, the business of such concerns being now 
 carried on by four separate corporations, all absolutely controlled 
 
 1 To 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 corporation has an intei'est as stock- 
 holder; * * * to carry on any business operations deemed by such merged corpora- 
 
 tion to be necessary or advisable in connection with any of the objects of its incorpora- 
 tion 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; * * * lo 
 
 purchase or otherwise acquire and hold, sell, assign, transfer, mortgage, pledge, or other- 
 wise dispose of the shares of the capital stock or of any bonds, securities, or other evi- 
 dences of indebtedness created by any other corporation or corporations of this or any 
 other State or Government, and to issue its owu obligations in payment or exchange 
 therefor. * * * 
 
20 THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 
 
 by the American Tobacco Co., although the connection as to two 
 of these companies with that corporation was long and persistently 
 denied. 
 
 Thus, reaching the end of the second period and coming to the 
 time of the bringing of the suit, brevity prevents us from stopping to 
 portray the difference between the condition in 1890 when the (old) 
 American Tobacco Co. was organized by the consolidation of five 
 competing cigarette concerns and that which existed at the com- 
 mencement of the suit. That situation and the vast power which the 
 principal and accessory corporate defendants and the small number 
 of individuals who own a majority of the common stock of the new 
 American Tobacco Co. exert over the marketing of tobacco as a raw 
 product, its manufacture, its marketing when manufactured, and its 
 consequent movement in the channels of interstate commerce, indeed 
 relatively over foreign commerce, arid the commerce of the whole 
 world in the raw and manufactured products stand out in such bold 
 relief from the undisputed facts which have been stated as to lead 
 us to pass at once to the second fundamental proposition which we are 
 required to consider — that is, the construction of the antitrust act 
 and the application of the act as rightly construed to the situation 
 as proven in consequence of .having determined the ultimate aVid 
 final inferences, properly deducible from the undisputed facts which 
 we have stated; 
 
 THE CONSTRUCTION AND APPLICATION OF THE ANTITRUST ACT. 
 
 If the antitrust law is applicable to the entire situation here pre- 
 sented and is adequate to afford complete relief for the evils winch 
 the United States insists that situation presents, it can only be be- 
 cause that law will be given a more comprehensive application than 
 has been affixed 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 the antitrust law not hitherto presented in any 
 case. Thus, even if the ownership of stock by the American Tobacco 
 Co. in the accessory and subsidiary companies and the ownership of 
 stock in any of those companies among themselves were held, as was 
 decided in the Standard Oil Co. case, to be a violation of the act and 
 all relations resulting from such stock ownership were therefore set 
 aside the question would yet remain whether the principal defendant, 
 the American Tobacco Co., and the five accessory defendants, even 
 when divested of their stock ownership in other corporations, by 
 virtue of the power which they would continue to possess, even 
 although thus stripped, would amount to a violation of both the first 
 and second sections of the act. Again, if it were held that the cor- 
 porations, the existence whereof was due to a combination between 
 such companies and other companies was a violation of the act, the 
 question would remain whether such of the companies as did not owe 
 their existence and power to combinations, but whose power alone 
 arose from the exercise of the right to acquire and own property, 
 would be amenable to the prohibitions of the act. Yet, further, even 
 if this proposition was held in the affirmative, the question would re- 
 main whether the principal defendant, the American Tobacco Co., 
 when stripped of its stock ownership, would be in and of itself within 
 the prohibitions of the act, although that company was organized and 
 
THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 21 
 
 took being before the antitrust act was passed. Still further, the 
 question would yet remain whether particular corporations which, 
 when bereft of the power which they possessed as resulting from 
 stock ownership, Although they were not inherently 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 
 monopolize, should nevertheless be restrained because of their inti- 
 mate connection and association with other corporations found to be 
 within the prohibitions of the act. The necessity of relief as to all 
 these aspects, we think, seemed to the Government so essential, and 
 the difficulty of giving to the aqt such a cqmprehensive 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 compatible one with the other. And the 
 same ■'apparent conflict is presented by the views of the act taken by 
 the defendants when their contentions are accurately tested. 
 
 Thus the Government, for the purpose of fixing the illegal char- 
 acter of the original combination which organized the old American 
 Tobacco Co., asserts that the illegal character of the combination is 
 plainly shown because the combination was brought about to stay_ 
 the progress of a flagrant and ruinous trade war. In other words, 
 the contention is that as the act forbids every contract and combi- 
 nation it hence prohibits, a reasonable and just agreement made for 
 the purpose of ending a trade war. But as thus construing the act 
 by the rule of the letter which kills would necessarily operate to 
 take out of the reach of the act some of the accessory and many sub- 
 sidiary corporations, the existence of which depend not at all upon 
 combination or agreement or contract, but upon mere purchases of 
 property, it is insisted in many forms of argument that the rule of 
 construction to be applied must be the spirit and intent of the act, 
 and therefore its prohibitions must be held to extend to acts even 
 if not within the literal terms of the statute if they are within its 
 spirit, because done with an intent to bring about the harmful results 
 which it was the purpose of the statute to prohibit. So as to the 
 defendants. While it is argued on the one hand that the forms by 
 which various properties were acquired in view of the letter of the 
 act exclude many of the assailed transactions from condemnation, 
 it is yet urged that giving to the act the broad construction which 
 it should rightfully receive, whatever may be the form, no condemna- 
 tion should follow, because looking at the case as a whole every act- 
 assailed is shown to have been but a legitimate and lawful result of 
 the exertion of honest business methods brought into play for the 
 purpose of advancing trade instead of with the object of obstructing 
 and restraining the same. But the difficulties which arise, from the 
 complexity of the particular dealings which 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 antitrust 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 excluded 
 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. 
 
22 THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 
 
 This must be the case unless it be possible in reason to say that for the 
 purpose 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 resorted 
 to. That is to say, two conflicting rules of construction must at one 
 and the same time be applied and adhered to. 
 
 The obscurity and resulting uncertainty, however, is now but an 
 abstraction, because it has been removed by the consideration which 
 we have given quite recently to the construction of the antitrust act 
 in the Stanard 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 con- 
 strue those words, a duty which could only be discharged by a resort 
 to reason. We_ say the doctrine thus stated was in accord with al l 
 the previous decisions of this court, despite the fact that the contr ary 
 vie w was sometimes erroneously attributed to some of the expression s 
 usec T in two pricu r decision s. ( Trans-Missouri Freight Association 
 amTTIoint Traffic cases, 1G6 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 Con- 
 gress must have a reasonable construction 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 com- 
 merce, and possibly to restrain it.” ^“Applying the rule of reason to 
 the construction of the statute, it was held in the Standard Oil case 
 that as the words “ restraint of trade ” at common law and in the 
 law of this country at the time of the adoption of the antitrust net 
 only embraced acts or contracts or agreements o r combination s which 
 open) ted^ to the~prcjudice of the public interes ts by unduly re stnet- 
 mg competition'll midnlv o bstructing the due course of trad e or 
 whi ch7~either because of their~Tnherent nature or effect or because 
 oTthe evident purpose o f the acts, etc., injuriously restrained tra de. 
 tlTat^liiew vcuTts~as~iised in the~~statute were designed to Tiave and did 
 Have I5ut~a l ike significanc e, .pit was therefore 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 pro- 
 hibited could be removed from the control of its prohibitions by a 
 ‘finding that they were reasonable, but that the duty to interpret 
 which inevitably arose from the general character of the term “ re- 
 straint 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 movement of which 
 it was the purpose of the statute to protect. The soundness 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 
 
THE AMERICAN TOBACCO' CO. ET AL. V. THE UNITED STATES. 23 
 
 destroying 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 arise from and the promotion of the wrongs 
 which the statute was intended 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 correctness of the rule 
 of construction, the rule of reason, which was applied in the Stand- 
 ard Oil case, the application of which rule to the statute we now, in 
 the most unequivocal terms, reexpress and reaffirm. 
 
 Coming then to apply to the case before us the act as interpreted in 
 the Standard Oil and previous cases, all the difficulties suggested hy 
 the mere form in which the assailed transactions are clothed become 
 of no moment. This follows because, authough it was held in the 
 Standard Oil case that, giving to the statute a reasonable construc- 
 tion, the words “ restraint of trade ” did not embrace all those normal 
 and usual contracts essential to individual freedom and the right to 
 make which were necessary 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 statute and the public policy 
 which it manifested, t here was no possibility of frustrating that po l- 
 i cy by resorting to any disguise or subterfuge of form, sin ce resortto 
 reason rendered it impossible to esc ape by any indirection the prohi - 
 bitions ot the statut e^ 7 
 
 “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 overwhelmingly, results from the undisputed facts that it seems 
 only necessary to refer to the facts as we have stated them to demon- 
 strate the correctness of this conclusion. Indeed, the history of the 
 combination is so replete with the doing of acts which it was the 
 obvious purpose of the statute to forbid, so demonstrative of the 
 existence from the beginning of a purpose to acquire dominion and 
 control of the tobacco trade, not by the mere exertion of the ordinary 
 right to contract and to trade, but by methods devised in order to 
 monopolize the trade by driving competitors out of business, which 
 were ruthlessly carried out upon the assumption that to work upon 
 the fears or play upon the cupidity of competitors would make suc- 
 cess possible. We say these conclusions are inevitable, not because 
 of the vast amount of property aggregated by the combination, not 
 because alone of the many corporations which the proof shows were 
 united by resort to one device or another. Again, not alone because 
 of the dominion and control over the tobacco trade Avhich actually 
 exists, but because we think the conclusion of wrongful purpose and 
 
24 THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 
 
 illegal combination is overwhelmingly established by the following 
 considerations : 
 
 (a) By the fact that the very first organization or combination 
 was impelled by a previously existing fierce trade war, evidently in- 
 spired by one or more of the minds which brought about and became 
 parties to that combination. 
 
 (b) Because, immediately after that combination and the increase 
 of capital which followed, the acts which ensued justify the infer- 
 ence that the intention existed to use the power of the combination 
 as a vantage ground to further monopolize the trade in tobacco by 
 means of trade conflicts designed to injure others, either by driving 
 competitors out of the business or compelling them to become parties 
 to a combination — a purpose whose execution was illustrated by the 
 plug war which ensued and its results, by the snuff war which fol- 
 lowed and its results, and by the conflict which immediately followed 
 the entry of the combination in England and the division of the 
 world’s business by the two foreign contracts which ensued. 
 
 ( c ) By the ever-present manifestation which is exhibited of a con- 
 scious wrongdoing by the form in which the various transactions 
 were embodied from the beginning, ever changing but ever in sub- 
 stance the same. Now the organization of a new company, now the 
 control exerted by the taking of stock in one or another or in several, 
 so as to obscure the result actually attained,, nevertheless uniform, in 
 their manifestations of the purpose to restrain others and to monopo- 
 lize and retain power in the hands of the few who, it would seem, 
 from the beginning contemplated the mastery of the trade which 
 practically followed. 
 
 ( d ) By the gradual absorption of control over all the elements 
 essential to the successful manufacture of tobacco products, and plac- 
 ing such control in the hands of seemingly independent corporations 
 serving as perpetual barriers to the entry of others into the tobacco 
 trade. 
 
 ( e ) By persistent expenditure of millions upon millions of dollars 
 in buying out plants, not for the purpose of utilizing them, but in 
 order to close them up and render them useless for the purposes of 
 trade. 
 
 (/) By the constantly recurring stipulations, whose legality, iso- 
 latedly viewed, we are not considering, by which numbers of persons, 
 whether manufacturers, stockholders or employees, were required to 
 bind themselves, generally for long periods, not to compete in the 
 future. Indeed, when the results of the undisputed proof which we 
 have stated are fully apprehended, and the wrongful acts which they 
 exhibit are considered, there comes inevitably to the mind the con- 
 viction 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 antitrust act, considerations which also serve to 
 clearly demonstrate that the combination here assailed is within the 
 law as to leave no doubt that it is our plain duty to apply its prohi- 
 bitions. 
 
 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 w T hy we consider, after great considera- 
 tion, that the elaborate arguments advanced to affix a different com- 
 
THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 25 
 
 plexion to the case are wholly devoid of merit. We do not, for 
 the sake of brevity, moreover, stop to examine and discuss the vari- 
 ous propositions 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 antitrust 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 aspects — that is to say, whether it be looked at from the 
 point of view of stock ownership or from the standpoint of the prin- 
 cipal corporation and the accessory or subsidiary corporations viewed 
 independently, including the foreign corporations in so far as by the 
 contracts made by them they became cooperators in the combination — 
 comes within the prohibitions of the first and second sections of the 
 antitrust act, it remains only finally to consider the remedy which it 
 is our duty to apply to the situation thus found to exist. 
 
 THE REMEDY. 
 
 Our conclusion being that the combination as a whole, involving 
 all its cooperating or associated parts, in whatever form clothed, 
 constitutes a restraint of trade within the first section, and an at- 
 tempt to monopolize or a monopolization within the second section 
 of the antitrust act, it follows that the relief which we are to afford 
 must be \vider than that awarded by the lower court, since that 
 court merely decided that certain of the corporate defendants con- 
 stituted combinations in violation of the first section 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 relief from an original point of view. Such 
 subject necessarily takes a twofold aspect — the character of the 
 permanent relief required and the nature of the temporary relief 
 essential to be applied pending the working out of permanent re- 
 lief 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 
 condition. In considering the subject from both of these aspects 
 three dominant influences must guide our action: (1) The duty of 
 giving complete and efficacious effect to the prohibitions of the 
 statute; (2) the accomplishing of this result with as little injury as 
 possible to the interest of the general public; and (3) a proper re- 
 gard 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 knowledge or intent 
 in any way to become actors or participants in the wrongs which we 
 
26 THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 
 
 find to have inspired and dominated the combination from the be- 
 ginning. Mindful of these considerations and to clear the way for 
 their application we say at the outset without stopping to amplify 
 the reasons which lead us to that conclusion, we think that the court 
 below clearly erred in dismissing the individual defendants, the 
 United Cigar Stores Co. 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 presented by any case involving the antitrust law which has 
 been hitherto considered by this court: First, because in this case it 
 is obvious that a mere decree forbidding stock ownership by one part 
 of the combination in another part or entity thereof would afford 
 no adequate measure of relief, since different ingredients of the com- 
 bination would remain unaffected, and by the very nature and char- 
 acter of their organization would be able to continue the wrongful 
 situation which it is our duty to destroy; second, because the methods 
 of apparent ownership by which the wrongful intent was in part 
 carried out and the subtle devices which, as Ave have seen, w r ere re- 
 sorted to for the purpose of accomplishing 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 lawful conditions; third, because the 
 methods devised by which the various essential elements to the suc- 
 cessful operation of the tobacco business 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 con- 
 demned, are so involved that any 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 perpetuate 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; Ave might at once 
 resort to one or the other of two general remedies — (a) the allowance 
 of a permanent injunction restraining the combination as a uni- 
 versality and all the individuals and corporations which form a part 
 of or cooperate in it in any manner or form from continuing to en- 
 gage in interstate commerce until the illegal situation be cured, a 
 measure of relief which Avould accord in substantial effect with that 
 aAvarded below to the extent that the court found illegal combina- 
 tions to exist; or (fr) to direct the appointment of a receiver to take 
 charge of the assets and property in this country of the combination 
 in all its ramifications for the purpose of preA T enting a continued 
 violation of the laAv, and thus working out by a sale of the property 
 of the combination or otherwise a condition of things Avhich Avould 
 not be repugnant to the prohibitions of the act. 
 
 But, having regard to the principles which Ave haA T e said must con- 
 trol our action, Ave do not think Ave can iioav direct the immediate 
 application of either of these remedies. We so consider as to the first 
 because in vieAv of the extent of the combination, the vast field Avhich 
 it covers, the all-embracing character of its activities concerning 
 tobacco and its products, to at once stay the movement in interstate 
 commerce of the products which the combination or its cooperating 
 forces produce or control might inflict infinite injury upon the public 
 
THE AMERICAN TOBACCO' CO. ET AL. V. THE UNITED STATES. 27 
 
 by leading to a stoppage of supply and a great enhancement of prices. 
 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 innocent people. Under these circumstances, taking into mind 
 the complexity 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 the permanent relief to be awarded is concerned, 
 we should decree as follows : 
 
 First. That the combination in and of itself, as well as each and all 
 of the elements composing it, whether corporate or individual, 
 whether considered collectively or separately, be decreed to be in re- 
 straint of trade and an attempt to monopolize and a monopolization 
 within the first and second sections of the antitrust act. 
 
 Second. That the court below, in order to give effective force to our 
 decree in this regard, be directed to hear the parties, by evidence or 
 otherwise, as it may be deemed proper, for the purpose of ascertain- 
 ing and determining upon some plan or method of dissolving the 
 combination and of re-creating, out of the elements now composing it, 
 a new condition which shall be honestly in harmony with and not 
 repugnant to the law. 
 
 Third. That for the accomplishment of these purposes, taking into 
 view the difficulty of the 'Situation, a period of six months is allowed 
 from the receipt of our mandate, with leave, however, in the event, in 
 the judgment of the court below, the necessities of the situation 
 require, to extend such period to a further time not to exceed 60 days. 
 
 Fourth. That in the event, before the expiration of the period thus 
 fixed, a condition of disintegration in 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 duty of the court, either by way of an injunction 
 restraining the movement of the products of the combination in the 
 channels of interstate or foreign commerce or by the appointment of 
 a receiver, to give effect to the requirements of the statute. 
 
 Pending the bringing about of the result just stated, each and all of 
 the defendants, individuals as well as corporations, should be re- 
 strained from doing any act which might further extend or enlarge 
 the power of the combination, by any means or device whatsoever. In 
 view of the considerations we have stated, we leave the matter to the 
 court below to work out a compliance with the law without unneces- 
 sary 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 affirming and modify- 
 ing, our decree, in view of the broad nature of our conclusions, should 
 be one of reversal and remanding with directions to the court below 
 to enter a decree in conformity with this opinion and to take such 
 further steps as may be necessary to fully carry out the directions 
 which we have given. 
 
 And it is so ordered. 
 
SUPREME COURT OF THE UNITED STATES. 
 
 Nos. 118 and 119. — October Term, 1910. 
 
 118. 
 
 The United States of America, appel- 
 lant, 
 v. 
 
 The American Tobacco Company and 
 others. 
 
 119. 
 
 The American Tobacco Company and 
 others, appellants, 
 v. 
 
 The United States of America. 
 
 [May 29, 1911.] 
 
 Mr. Justice Harlan concurred in part and dissented in part : 
 
 I concur with many things said in the opinion just delivered for the 
 court, but it contains some observations from which I am compelled to 
 withhold my assent. 
 
 I agree most thoroughly with the court in holding that the prin- 
 cipal defendant, the American Tobacco Co. and its accessory and sub- 
 sidiary corporations and companies, including the defendant Eng- 
 lish corporations, constitute a combination which, “ in and of itself, 
 as well as each and all of the elements composing it, whether cor- 
 porate or individual, whether considered collectively or separately,” 
 is illegal under the antitrust act of 1890, and should be decreed to be 
 in restraint of interstate trade and an attempt to monopolize and a 
 monopolization of part of such trade. 
 
 The evidence in the record is, I think, abundant to enable the court 
 to render a decree containing all necessary details for the suppression 
 of the evils of the combination in question. But the case is sent back, 
 with directions further to hear the parties, by evidence or otherwise, 
 “ for the purpose of ascertaining and determining upon some plan or 
 method of dissolving the combination, and of re-creating out of the 
 elements now composing it, a new condition ” which shall not be re- 
 pugnant to law. The court, in its opinion, says of the present combi- 
 nation, that its illegal purposes are overwhelmingly established by 
 many facts, among others — 
 
 by the ever-present manifestation which is exhibited of a conscious wrong- 
 doing by the form in which the various transactions were embodied from the 
 
 29 
 
 Appeals from the Circuit 
 Court of the United 
 States for the Southern 
 District of New York. 
 
30 THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 
 
 beginning, ever changing, but ever in substance the same. Now the organization 
 of a new company, now the control exerted by the taking of stock in one or 
 another, or in several, so as to obscure the result actually attained, nevertheless 
 uniform in their manifestations of the purpose to restrain others, and to monop- 
 olize and retain power in the hands of the few, who, it would seem, from the 
 beginning contemplated the mastery of the trade which practically followed. 
 By the gradual absorption of control over all the elements essential to the 
 successful manufacture of tobacco products and placing such control in the 
 hands of seemingly independent corporations serving as perpetual barriers to 
 the entry of others into the tobacco trade. 
 
 The court further says of this combination and monopoly : 
 
 The history of the combination is so replete with the doing of acts which it 
 was the obvious purpose of the statute to forbid, so demonstrative of the exist- 
 ence, from the beginning, of a purpose to acquire dominion and control of the 
 tobacco trade, not by the mere exertion of the ordinary right to contract and 
 to trade, but by methods devised to monopolize the trade by driving competitors 
 out of business, which were ruthlessly carried out, upon the assumption that 
 to work upon the fears or play upon the cupidity of competitors would make 
 success possible. 
 
 But it seems that the course I have suggested is not to be pursued. 
 The case is to go back to the circuit court in order that out of the 
 elements of the old combination a new condition may be “ re-created ” 
 that will not be in violation of the law. I confess my inability to 
 find, in the history of this combination, anything to justify the wish 
 that a new condition should be “ re-created ” out of the mischievous 
 elements that compose the present combination, which, together with 
 its component parts, have, without ceasing, pursued the vicious 
 methods pointed out by the court. If the proof before us — as it un- 
 doubtedly does — warrants the characterization which the court has 
 made of this monster combination, why can not all necessary direc- 
 tions be now given as to the terms of the decree? In my judgment 
 there is enough in the record to enable this court to formulate specific 
 directions as to what the decree should contain. Such directions 
 would not only end this litigation, but would serve to protect the 
 public against any more conscious wrongdoing by those who have 
 persistently and “ ruthlessly,” to use this court’s language, pursued 
 illegal methods to defeat the act of Congress. 
 
 I will not say what, in my opinion, should be the form of the de- 
 cree nor speculate as to what the details ought to be. It will be time 
 enough to speak on that subject when we have the decree before us. 
 I will, however, say now that, in my opinion, the decree below should 
 be affirmed as to the tobacco company and its accessory and subsid- 
 iary companies and reversed on the cross appeal of the Government. 
 
 But my objections have also reference to those parts of the court’s 
 opinion reaffirming what it said recently in the Standard Oil case 
 about the former decisions of this court touching the antitrust act. 
 We are again reminded, as we were in the Standard Oil case, of the 
 necessity of applying the “ rule of reason ” in the construction of 
 this act of Congress — an act expressed, as I think, in language so 
 clear and simple that there is no room whatever for construction. 
 
 Congress, with full and exclusive power over the whole subject, has 
 signified its purpose to forbid every restraint of interstate trade, in 
 whatever form, or to whatever extent, but the court has assumed to 
 insert in the act, by construction merely, words which make Congress 
 say that it means only to prohibit the “ undue ” restraint of trade. 
 
THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED STATES. 31 
 
 If I do not misapprehend the opinion just delivered, the court in- 
 sists that what was said in the opinion in the Standard Oil case was 
 | in accordance- with our previous decisions in the Trans-Missouri and 
 l Joint Traffic cases (166 U. S., 290; lTl U. S., 505), if we resort to 
 ! reason. This statement surprises me quite as much as would a state- 
 ment that black was white or white Avas black. It is scarcely just to 
 the majority in those two cases for the court at this late day to say 
 or to intimate that they interpreted the act of Congress without re- 
 gard to the “ rule of reason,” or to assume, as the court now does, that 
 the act Avas, for the first time in the Standard Oil case, interpreted in 
 the “ light of reason.” One thing is certain, “ rule of reason,” to 
 which the court refers, does not justify the perversion of the plain 
 words of an act in order to defeat the will of Congress. 
 
 By every conceivable form of expression the majority, in the 
 Trans-Missouri and Joint Traffic cases, adjudged that the act of 
 Congress did not allow restraint of interstate trade to any extent or 
 in any form, and three times it expressly rejected the theory, which 
 had been persistently advanced, that the act should be construed as 
 if it had in it the word “unreasonable” or “undue.” But now the 
 court, in accordance with what it denominates the “ rule of reason,” 
 in effect inserts in the act the word “ undue,” which means the same 
 as “ unreasonable,” and thereby makes Congress say what it did not 
 say, Avhat, as I think, it plainly did not intend to say, and what, 
 since the passage of the act, it has explicitly refused to say. It has 
 steadily refused to amend the act so as to tolerate a restraint of inter- 
 state commerce even where such restraint could be said to be “ reason- 
 able ” or “due.” In short, the court iioav, by judicial legislation, in 
 effect amends an act of Congress relating to a subject over which 
 that department of the Government has exclusive cognizance. I beg 
 to say that, in my judgment, the majority, in the former cases, were 
 guided by the “rule of reason”; for, it may be assumed, that they 
 knew quite as Avell as others what the rules of reason require Avhen a 
 court seeks to ascertain the will of Congress as expressed in a statute. 
 It is ob\fious, from the opinions in the former cases, that the majority 
 did not grope about in darkness, but in discharging the solemn duty 
 put on them they stood out in the full glare of the “ light of reason ” 
 and felt and said time and again that the court could not, con- 
 sistently with the Constitution, and Avould not, usurp the functions 
 of Congress by indulging in judicial legislation. They said in ex- 
 press words, in the former cases, in response to the earnest conten- 
 tions of counsel, that to insert by construction the word “ unreason- 
 able ” or “ undue ” in the act of Congress Avould be judicial legislation. 
 Let me say, also, that as we all agree that the combination in ques- 
 tion Avas illegal under any construction of the antitrust act, there was 
 not the slightest necessity to enter upon an extended argument to 
 shoAv that the act of Congress Avas to be read as if it contained the 
 Avord “unreasonable” or “undue.” All that is said in the court’s 
 opinion in support of that view is, I say with respect, obiter dicta , 
 pure and simple. 
 
 These vieAvs are fully discussed in the dissenting opinion delivered 
 by me in the Standard Oil case. I will not repeat what is therein 
 stated, but it may be well to cite an additional authority. In the 
 Trade-Mark cases (100 U. S., 82), the court was asked to sustain the 
 
3 0112 061942287 
 
 32 THE AMERICAN TOBACCO CO. ET AL. V. THE UNITED 
 
 constitutionality of the statute there involved. But the statute could 
 not have been sustained except by inserting in it words not put there 
 by Congress. Mr. Justice Miller, delivering the unanimous judgment 
 of the court, said : 
 
 If we should, in the case before us, undertake to make by judicial construction 
 a law which Congress did not make, it is quite probable we should do what, if 
 the matter were now before that body, it would be unwilling to do. 
 
 This language was cited with approval in Employer’s Liability 
 cases (207 U. S., 463, 502). I refer to my dissenting opinion in the 
 Standard Oil case as containing a full statement of my views of this 
 particular question. 
 
 For the reasons stated, I concur in part with the court’s opinion 
 and dissent in part. 
 
 O