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more than 60 per cent. in 1910, including fair allowance for its shareholding in the smaller companies. According to the Sugar Trade Journal its proportion of the entire output has been since 1906 as follows:
A notable subsidiary of the American Sugar Refining Company is the Brooklyn Cooperage Company, a New York corporation, with cooper shops and storehouses in Boston, Brooklyn, Philadelphia, New Orleans, and Port Chalmette, La. This cooperage company, to insure needful supply of raw material, owned in 1915, 50,000 acres of timber land in New York State, with stumpage rights on 115,000 acres more. It owned 70,000 acres of timber in Arkansas and 90,000 acres in Missouri and controlled 60,000 acres in Pennsylvania. It also owned and operated seven stave and heading mills and 130 miles of logging railroads.
November 28, 1910, a petition was filed in the Circuit Court, S. D. of New York against this sugar combination, alleging that it was a combination in restraint of trade in the manufacture and sale of sugar and praying for its dissolution.
Three years were given to the taking of testimony and the case was ready for trial when the court ordered that the hearing be postponed awaiting the decisions of the Supreme Court in the Harvester and Steel cases.
In the Louisiana district courts there are some 200 suits which were filed against the Sugar Combination in 1914 by planters and sugar manufacturers. These cases demand in total sum more than $150,000,000 damages for alleged violations of the Sherman Act. In 1916 these cases had not advanced beyond the preliminary hearings.
In May, 1915, the Supreme Court of Louisiana decided in favor of the Sugar Combination a suit brought, in the name of the state, asking that the company be ousted from the state. A second ouster suit brought by the state is pending.
In 1915 a special session of the Louisiana Legislature passed a statute to constitute the business of refining sugar a public utility and to compel the payment of an arbitrary price, above the price prevailing in the Louisiana open market, to Louisiana planters for their raw sugar. This statute was unanimously declared unconstitutional by three judges of the Federal District Court in January, 1916, and their decision was confirmed April 20, 1916, by the United States Supreme Court. These citations serve to show that the way of the trust before the courts and under the laws of this goodly land is hard.
The American Sugar Refining Company has paid heavy fines for securing, through collusion of officers of the company with Federal customs employees, short weights as basis for paying duties on imported sugar and for receiving excessive drawbacks on exported syrup. The recovery by the government on the former item was above $1,800,000, and in the drawback case it was $700,000. The company has also been convicted and fined for taking rebates from railways.
3. AMERICAN TOBACCO COMPANY*
THE outline story of this trust falls naturally into four periods: (1) The period of beginnings of combination culminating in 1890 with the formation of the old American
This story is compiled from the opinion of the U. S. Supreme Court in the United States v. American Tobacco Company (221 U. S. 106), from the Report of the Bureau of Corporations on the Tobacco Industry, and from Moody's and Poor's Manuals of Industrials.
Tobacco Company; (2) From 1890 to the formation of the Continental Company in 1898; (3) From 1898 to 1904, when the new American Tobacco Company was launched; (4) From 1904 to the present.
Prior to the forming of the first consolidation in the tobacco business of America, competition had been very active. Tobacco was grown in many sections of the country, and because of variant climate, soil, and seasonal conditions, it varied greatly in quality. The wide diversity of uses of tobacco in manufacture created demand for all qualities of it grown, a demand that was not confined to the growing districts, but was national and even international. With many scattered manufacturers and traders in this field, the competitive conditions were unusually alive and made a warfare characterized by those who were taking part in it as fierce and abnormal. Largely moved by desire to avoid the fighting costs of their cutthroat competition, five of the largest concerns in the business, which together were manufacturing and distributing in the United States and abroad 95 per cent. of all the domestic cigarettes but less than 8 per cent. of the smoking tobacco produced in the United States, combined. In January, 1890, the American Tobacco Company, with a capital stock of $25,000,000, came into possession of all of the assets, including the good-will and right to use the names of the combining firms, of Allen and Ginter, with factory at Richmond, Va.; W. Duke, Sons & Co., with factories at Durham, North Carolina, and New York City; Kinney Tobacco Co., with factory at New York City; W. S. Kimball and Company, with a factory at Rochester, N. Y.; and Goodwin and Company, with a factory at Brooklyn, N. Y. The $25,000,000 capitalization allotted by agreement among these five companies was considerably in excess of the summed market values of the respective companies before consolidation.
Soon after the consolidation the old Goodwin and Company Brooklyn factory was closed and all manufacture of tobacco and cigarettes was concentrated at Richmond.
In the first year of its operation this new corporation manufactured nearly 97 per cent. of the domestic cigarettes, about two and a half billion cigarettes in all, and manufactured about 5,500,000 pounds of smoking tobacco out of a total domestic product of nearly 70,000,000 pounds.
During the next eight years the new combination widened its control over the tobacco business by establishing, or buying in, plants manufacturing little cigars, fine cut and plug tobacco, and snuff. The general methods are indicated by the activities in the year 1891.
The capital stock of the company was first increased by $10,000,000, evidently to give treasury stock for use in extending control over other plants. In February, 1891, the National Tobacco Works, a Kentucky corporation which had been formed in January 1891, to carry on the business of Pfingsts, Doerhoefers and Company, experienced and successful manufacturers and dealers in plug tobacco, was taken over by the American Tobacco Company. For the $400,000 capital stock of this company, the American company paid $600,000 cash and $1,200,000 in stock of the American Tobacco Company. The members of the previously existing firm contracted to enter the service of the American Tobacco Company, and each member of the old firm bound himself not to engage, for a period of ten years, directly or indirectly, in any form, in the tobacco business as a competitor of the American Tobacco Company, nor even to permit the use of his name in any such connection.
In April, 1891, the business of Philip Whitlock of Richmond, Virginia, a manufacturer of cheroots and cigars, was bought, with exclusive right to use the name of Whitlock. Whitlock became an employee of the American and agreed
not to engage, independently, in the tobacco business for twenty years.
In this same month a Baltimore firm, Marburg Brothers, manufacturing and selling principally smoking tobacco and snuff, was bought for cash and stock in the American Company, and the members of this firm also bound themselves not to compete for many years. Also in this same month another old Baltimore firm, G. W. Gail and Ax, engaged principally in making and selling smoking tobacco, was bought under agreements similar to those stated above. Seventy-seven thousand five hundred and eighty-two dollars and sixty-six cents cash and stock in the American Company amounting to $1,760,000 was paid for this company, and its plant was very soon abandoned.
By such purchases the American Company, by the end of 1891, had become a factor in all branches of the Tobacco business, though its share as yet, in smoking tobacco, was not large, and in the fine cut and plug tobacco and in the snuff lines its share was very small, when the whole business in the United States is considered. The following table shows this:
THE OUTPUT OF THE AMERICAN TOBACCO COMPANY FOR 1891
Including the above purchases, the American Company, between February, 1891, and October, 1898, acquired fifteen