U.S. Supreme Court United States v. American Tobacco Co., 221
U.S. 106 (1911) United States v. American Tobacco
Company Nos. 118, 119 Argued January 3, 4, 5, 6,
1910 R; restored to docket for reargument
April 11, 1910 Reargued January 9, 10, 11, 12,
1911 Decided My 29, 1911 221
U.S. 106 APPEALS FROM THE CIRCUIT COURT OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK Syllabus Standard Oil Co. v. United States, ante, p. 221 U. S. 1 ,
followed and reaffirmed as to the construction to be given to the
Anti-Trust Act of July 2, 1890, c. 647, 26 Stat. 209, and held that the combination in this case is one in restraint
of trade and an attempt to monopolize the business of tobacco in
interstate commerce within the prohibitions of the act. Page 221 U. S. 107 In order to meet such a situation as is presented by the record
in this case and to afford the relief for the evils to be overcome,
the Antitrust Act of 1890 must be given a more comprehensive
application than affixed to it in any previous decision.

															In Standard Oil Co. v. United States, ante, p. 221 U. S. 1 , the
words "restraint of trade" as used in § 1 of the Anti-Trust Act
were properly construed by the resort to reason; the doctrine
stated in that case was in accord with all previous decisions of
this Court, despite the contrary view at times erroneously
attributed to the expressions in United States v.
Trans-Missouri Freight Association, 166 U.
S. 290 , and United States v. Joint Traffic
Association, 171 U. S. 505 .

															The Anti-Trust Act must have a reasonable construction, as there
can scarcely be any agreement or contract among business men that
does not directly or indirectly affect and possibly restrain
commerce. United States v. Joint Traffic Association, 171 U. S. 505 , 171 U. S.
568 .

															The words "restraint of trade" at common law, and in the law of
this country at the time of the adoption of the Anti-Trust Act,
only embraced acts, contracts, agreements or combinations which
operated to the prejudice of the public interests by unduly
restricting competition or by unduly obstructing due course of
trade, and Congress intended that those words as used in that act
should have a like significance, and the ruling in Standard Oil
Co. v. United States, ante, p. 221 U. S. 1 , to this
effect is reexpressed and reaffirmed.

															The public policy manifested by the Anti-Trust Act is expressed
in such general language that it embraces every conceivable act
which can possibly come within the spirit of its prohibitions, and
that policy cannot be frustrated by resort to disguise or
subterfuge of any kind.

															The record in this case discloses a combination on the part of
the defendants with the purpose of acquiring dominion and control
of interstate commerce in tobacco by methods and manners clearly
within the prohibition of the Anti-Trust Act, and the subject
matters of the combination and the combination itself are not
excluded from the scope of the act as being matters of intrastate
commerce and subject to state control.

															In this case the combination in all its aspects, both as to
stock ownership and as to the corporations independently, including
foreign corporations to the extent that they became cooperators in
the combination, come within the prohibition of the first and
second sections of the Anti-Trust Act.

															In giving relief against an unlawful combination under the
Anti-Trust Act, the court should give complete and efficacious
effect to the Page 221 U. S. 108 prohibitions of the statute, accomplish this result with as
little injury as possible to the interest of the general public,
and have a proper regard for the vested property interests
innocently acquired. In this case, the combination, in and of
itself, and also all of its constituent elements, are decreed to be
illegal, and the court below is directed to hear the parties and
ascertain and determine a plan or method of dissolution and of
recreating a condition in harmony with law, to be carried out
within a reasonable period (in this case not to exceed eight
months), and, if necessary, to effectuate this result either by
injunction or receivership.

															Pending the achievement of the result decreed, all parties to
the combination in this case should be restrained and enjoined from
enlarging the power of the continuation by any means or device
whatever.

															Where a case is remanded, as this one is, to the lower court
with directions to grant the relief in a different manner from that
decreed by it, the proper course is not to modify and affirm, but
to reverse and remand with directions to enter a decree in
conformity with the opinion and to carry out the directions of this
Court, with costs to defendants.

															164 F. 700 reversed and remanded with directions.

															The facts, which involve the construction of the Antitrust Act
of July 2, 1890, and the question whether the Acts of the
defendants amounted to a combination in restraint of interstate
commerce in tobacco, are stated in the opinion. Page 221 U. S. 142 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 Anti-Trust Act of July 2, 1890. The
defendants were twenty-nine individuals, name in the margin,
[ Footnote 1 ] sixty-five
American Page 221 U. S. 143 corporations, most of them created in the State of New Jersey,
and two English corporations. For convenience of statement, we
classify the corporate defendants, exclusive of the two foreign
ones, which we shall hereafter separately refer to, as follows: The
American Tobacco Company, a New Jersey corporation, because of its
dominant relation to the subject matter of the controversy, as the
primary defendant; five other New Jersey corporations
( viz., American Snuff Company, American Cigar Company,
American Stogie Company, MacAndrews & Forbes Company, and
Conley Foil Company), because of their relation to the controversy
as the accessory, and the fifty-nine other American corporations as
the subsidiary defendants.

															The ground of complaint against the American Tobacco Company
rested not alone upon the nature and character of that corporation
and the power which it exerted directly over the five accessory
corporations 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 Tobacco Company exerted its power of control.
The accessory companies were impleaded either because of their
nature and character or because of the power exerted over them
through stock ownership by the American Tobacco Company, 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 because 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 Page 221 U. S. 144 the stock control exercised by the principal defendant, the
American Tobacco Company, over the five accessory corporations, and
also the authority which it directly exercised over certain of 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
Company. [ Footnote 2 ] Page 221 U. S. 145 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 Page 221 U. S. 146 Company, or the power which it exerted over their affairs by
stock ownership.

															As we shall have occasion hereafter in referring to matters Page 221 U. S. 147 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 defendants, it suffices at this Page 221 U. S. 148 moment to say that the bill averred the origin and nature of the
American Tobacco Company and the origin and nature of all the other
defendant corporations, whether accessory or subsidiary, and the
connection of the individual defendants with such corporations. In
effect, the bill charged that the individual defendants and the
defendant 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: " Page 221 U. S. 149 "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 evidenced, 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 Company, its officers, agents, and
servants, be enjoined 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 pursuance 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 Company be adjudged an
unlawful instrumentality, created solely for carrying into effect
the objects and purposes of said contract, combination, and
conspiracy entered into on or about September 27, 1902, and
thereafter, and that it be enjoined from engaging in interstate or
foreign trade and commerce within the jurisdiction of the United
States."

															"5. That the court adjudge the American Tobacco Company, the
American Snuff Company, the American Cigar Company, the American
Stogie Company, the MacAndrews & Forbes Company, and the Conley
Foil Company is each a combination in restraint of interstate
and Page 221 U. S. 150 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 commerce 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 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 combination intended to
destroy competition among them in reference to such purchases or
sales."

															"9. That petitioner have such other, further, and general relief
as may be proper."

															As to the answers, it suffices to say that all the
individual Page 221 U. S. 151 and corporate 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 engaged in manufacturing, and that any combination amongst
them related only to that subject, and therefore was not within the
antitrust act. The two foreign corporations asserted the validity
of their corporate organization 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 opinion. 164 F. 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 Company, and all the individual defendants. It was
decreed that the defendants 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 directing or indirectly doing any act or thing whatsoever
in furtherance of the objects and purposes of said combinations,
and from continuing as parties thereto."

															It specifically found that each of the defendants,

															"the American Tobacco Company, American Snuff Company, American
Cigar Company, American Stogie Company, and MacAndrews & Forbes
Company, constitutes and is itself a combination in violation of
the said act of Congress."

															The corporations thus named, their officers, etc., were next
restrained Page 221 U. S. 152 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 injunction 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 restraining
provisions:

															"Wherefore each and all of defendants, the American Tobacco
Company, the American Snuff Company, the American Cigar Company, P.
Lorillard Company, R. J. Reynolds Tobacco Company, Blackwell's
Durham Tobacco Company, and Conley Foil Company, their officers,
directors, agents, servants, and employees, are hereby restrained
and enjoined from acquiring, by conveyance or otherwise, the plant
or business of any such corporation 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 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 attempting 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, directors, servants, and
agents, be and that are hereby respectively and collectively
restrained and enjoined from permitting the stock so held to be
voted by any other defendant Page 221 U. S. 153 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, except the R. P. Richardson, Jr. & Company, a
corporation which had consented to the decree. The decree also
contained a provision that the defendants or any of them should not
be prevented

															"from the institution, prosecution, or defense of any suit,
action, or proceeding to prevent or restrain the infringement of a
trademark used in interstate 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 suspended
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 individual defendants. 2. That it should not have been
dismissed as to the two foreign corporations, the Imperial Tobacco
Company and the British-American Tobacco Company, and the domestic
corporations controlled by the latter, and that, on the contrary,
the decree should have commanded the observance of the 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 outside of
or within the United States. 3. The petition should not have been
dismissed as to the United Cigar Stores Page 221 U. S. 154 Company. 4. The final decree should have adjudged defendants
parties to unlawful contracts and conspiracies. 5. The final decree
should have adjudged that defendants were attempting to monopolize
and had monopolized parts of commerce. More particularly, it is
urged, it should have adjudged that the American Tobacco Company,
American Snuff Company, American Cigar Company, American Stogie
Company, MacAndrews & Forbes Company, the Conley Foil Company,
and the British-American Tobacco Company were severally attempting
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 described with more
particularity the methods which the defendants had followed in
forming and carrying out their unlawful purpose, and should have
prohibited the resort to similar methods. 7. The decree should have
specified the shares in corporations disclosed by the evidence to
be owned by the parties to the conspiracy, 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 improperly suspended the
injunction pending appeal.

															The defendants, by their assignments of error, complain because
the petition was not dismissed as to all, and more specifically,
(a) because they were adjudged parties to a combination in
restraint of interstate and foreign 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 Company, American Page 221 U. S. 155 Snuff Company, American Cigar Company, American Stogie Company,
and the MacAndrews & Forbes Company were adjudged 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. Insofar as all or any of these
contentions, as many of them in fact do, involve a conflict as to
the application and effect of §§ 1 and 2 of the Anti-Trust Act,
their consideration has been greatly simplified by the analysis and
review of that act and the construction affixed to the sections in
question in the case of Standard Oil Co. v. United States, quite recently decided, ante, p. 221 U. S. 1 . Insofar
as the contentions relate to the disputed propositions of fact, we
think from the view which we take of the case they need not be
referred to, since, in our opinion, the case can be disposed of by
considering only those facts which are indisputable, and by
applying to the inferences properly deducible from such facts the
meaning and effect of the law as expounded in accordance with the
previous 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 conclusions of fact deducible from the proof; third, the
remedies to be applied. First. 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 contracts. Page 221 U. S. 156 We shall divide the subject into two periods: (a) the one from
the time of the organization of the first or old American Tobacco
Company, in 1890, to the organization of the Continental Tobacco
Company, 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
diversity of soil and climate, and therefore was subject to various
vicissitudes 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 competitive conditions of a peculiarly advantageous
nature. The manufacture of the product in this country in various
forms was successfully carried on by many individuals or concerns
scattered throughout the country, a larger number, perhaps, of the
manufacturers being in the vicinage of production, and others being
advantageously situated in or near the principal markets of
distribution.

															Before January, 1890, five distinct concerns -- Allen &
Ginter, with factory at Richmond, Virginia; W. Duke, Sons &
Company, with factories at Durham, North Carolina, and New York
city; Kinney Tobacco Company, with factory at New York City; W. S.
Kimball & Company, with factory at Rochester, New York; Goodwin
& Company, with factory at Brooklyn, New York -- manufactured,
distributed, and sold in the United States and abroad 95 percent of
all the domestic cigarette and less than 8 percent Page 221 U. S. 157 of the smoking tobacco produced in the United States. There is
no doubt that these factories were competitors in the purchase of
the raw product 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 factories in question, but that the competition had
been fierce and abnormal. In January, 1890, having agreed upon a
capital stock of $25,000,000, all to be divided amongst them, and
who should be directors, the concerns referred to organized the
American Tobacco Company in New Jersey, "for trading and
manufacturing," with broad powers, and conveyed to it the assets
and businesses including goodwill and right to use the names of the
old concerns, and thereafter this corporation 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 &
Company, $3,000,000 preferred, $4,500,000 common; Kinney Tobacco
Company, $2,000,000 preferred, $3,000,000, common; W. S. Kimball
& Company, $1,000,000 preferred, $1,500,000 common, and Goodwin
& Company, $1,000,000 preferred, $1,500,000 common.

															There is a charge that the valuation at which the respective
properties were capitalized in the new corporation was enormously
in excess of their actual value. We, however, put that subject
aside, since we propose only to deal with facts which are not in
controversy.

															Shortly after the formation of the new corporation, the Goodwin
& Company factory was closed, and the directors ordered "that
the manufacture of all tobacco cigarettes be concentrated at
Richmond." The new corporation, in 1890, the first year of its
operation, manufactured about two and one-half billion cigarettes
-- that is, about 96 or 97 percent of the total domestic output,
and about five and one-half million pounds of smoking tobacco
out Page 221 U. S. 158 of a total domestic product of nearly seventy million
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
increase is inferable from the considerations which we now
state.

															There was a firm known as Pfingst, Doerhoefer & Company,
consisting of a number of partners, who had been long and
successfully carrying on the business of manufacturing plug tobacco
in Louisville, Kentucky, 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 February, the
American Tobacco Company became the purchaser of all the capital
stock of the new corporation, paying $600,000 cash and $1,200,000
in stock of the American Tobacco Company. The members of the
previously existing firm bound themselves by contract with the
American Tobacco Company to enter its service and manage the
business and property sold, and each further agreed that for ten
years he would not engage in carrying on, directly or indirectly,
or permit or suffer the use of his name in connection with the
carrying on, of the tobacco business in any form.

															In April following, the American Tobacco Company bought out the
business of Philip Whitlock, of Richmond, Virginia, who was engaged
in the manufacture of cheroots and cigars, and with the exclusive
right to use the name of Whitlock. The consideration for this
purchase was $300,000, and Whitlock agreed to become an employee of
the American Tobacco Company for a number of years, and not to
engage for twenty years in the tobacco business.

															In the month of April, the American Tobacco Company also
acquired the business of Marburg Brothers, a well known firm
located at Baltimore, Maryland, and engaged Page 221 U. S. 159 in the manufacture and distribution of tobacco, principally
smoking and snuff. The consideration was a cash payment of
$164,637.65 and stock to the amount of $3,075,000. The members of
the firm also conveyed the right to the use of the firm name, and
agreed not to engage in the tobacco business for a lengthy
period.

															Again, in the same month, the American Tobacco Company bought
out a tobacco firm of old standing, also located in Baltimore, as
G. W. Gail & Ax, engaged principally in manufacturing and
selling smoking tobacco, buying with the business the exclusive
right to use the name of 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 1891, as will appear from a
note in the margin. [ Footnote
3 ] 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.

															Referring to the occurrences of the year 1891, as in all Page 221 U. S. 160 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 purchases which we have specifically
referred to, the American Tobacco Company acquired fifteen going
tobacco concerns doing business in the states of Kentucky,
Louisiana, Maryland, Michigan, Missouri, New York, North Carolina,
and Virginia. For ten of the plants, an all-cash consideration of
$6,410,235.26 was paid, while the payments for the remaining five
aggregated in cash $1,115,100.95 and in stock $4,123,000. It is
worth noting that the last purchase, in October, 1898, was of the
Drummond Tobacco Company, a Missouri corporation dealing
principally in plug, for which a cash consideration was paid of
$3,457,500.

															The corporations which were combined for the purpose of forming
the American Tobacco Company produced a very small portion of plug
tobacco. That an increase in this direction was contemplated is
manifested 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 Company, by authority of the corporation,
approached leading manufacturers of plug tobacco and sought to
bring about a combination of the plug tobacco interests, and upon
the failure to accomplish this, ruinous competition, by lowering
the price of plug below its cost, ensued. As a result of this
warfare, which continued until 1898, the American Tobacco Company
sustained severe losses aggregating more than four millions of
dollars. The warfare produced its natural result not only because
the company acquired Page 221 U. S. 161 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 Company organized a New Jersey corporation styled the
Continental Tobacco Company for "trading and manufacturing," with a
capital of $75,000,000, afterwards increased to $100,000,000. The
new company issued its stock and took transfers to the plants,
assets, and businesses of five large and successful competing plug
manufacturers. [ Footnote 4 ]

															The American Tobacco Company also conveyed to this corporation
at large valuations, the assets, brands, real estate, and goodwill
pertaining to its plug tobacco business, including the National
Tobacco Works, the James G. Butler Tobacco Company, Drummond
Tobacco Company, and Brown Tobacco Company, receiving as
consideration $30,274,200 of stock (one half common and one-half
preferred), $300,000 cash, and an additional sum for losses
sustained in the plug business during 1898, $840,035. Mr. Duke, the
president of the American Tobacco Company, also became president of
the Continental Company.

															Under the preliminary agreement which was made, looking to the
formation of the Continental Tobacco Page 221 U. S. 162 Company, that company acquired from the holders all the
$3,000,000 of the common stock of the P. Lorillard Company 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 Company, however, although it
thus passed practically under the control of the American Tobacco
Company by virtue of its ownership of stock in the Continental
Company, 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 Company,
the American Tobacco Company increased its capital stock from
thirty-five millions of dollars to seventy millions of dollars, and
declared a stock dividend of 100 percent 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 Tobacco Company 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 Company.
Nothing could show it more clearly than the following: at the end
of that time, the company was manufacturing eighty-six percent or
thereabouts of all the cigarettes produced in the United States,
above twenty-six percent of all the smoking tobacco, more than
twenty-two percent of all plug tobacco, fifty-one percent of all
little cigars, six percent each of all snuff and fine cut tobacco,
and over two percent of all cigars and cheroots.

															A brief reference to the occurrences of the second period --
that is, from and after the organization of the Continental Tobacco
Company up to the time of the bringing of this Page 221 U. S. 163 suit -- will serve to make evident that the transactions in
their essence had all the characteristics of the occurrences of the
first period.

															In the year 1899 and thereafter, either the American or
Continental Companies, for cash or stock at an aggregate cost of
fifty millions of dollars ($50,000,000), bought and closed up some
thirty competing corporations and partnerships theretofore engaged
in interstate and foreign commerce as manufacturers, 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 concerns, with
plants in various states, Cuba and Porto Rico, 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 companies. The power resulting from
and the purpose contemplated in making these acquisitions by the
companies just referred to, however, may not be measured by
considering alone the business of the company directly acquired,
since some of those companies were made the vehicles as
representing the American or Continental Company for acquiring and
holding the stock of other and competing companies, thus amplifying
the power resulting from the acquisitions directly made by the
American or Continental Company, without ostensibly doing so. It is
besides undisputed that in many instances the acquired
corporations, with the subsidiary companies over which they had
control through stock ownership, were carried on ostensibly as
independent concerns, disconnected Page 221 U. S. 164 from either the American or the Continental Company, although
they were controlled and owned by one or the other of these
companies. Without going into details on these subjects, for the
sake of brevity, we append in the margin a statement of the
corporations thus acquired, with the mention of the competing
concerns which such corporations acquired. [ Footnote 5 ] Page 221 U. S. 165 It is of the utmost importance to observe that the acquisitions
made by the subsidiary corporations in some cases likewise show the
remarkable fact stated above; that is, the disbursement of enormous
amounts of money to Page 221 U. S. 166 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 Company, 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 purpose, we shall, as briefly as may be
consistent with clarity, separately refer to the facts concerning
the organization during the Page 221 U. S. 167 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 Company,
American Cigar Company, American Stogie Company, MacAndrews &
Forbes Company (licorice), and Conley Foil Company.

															(1) The American Snuff Company. As we have seen, the American Tobacco Company 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 Company
and the acquisition of the Lorillard Company, by which it came to
be a serious factor as a snuff producer. There shortly ensued an
aggressive competition in the snuff business between the American
Tobacco Company, with the force acquired from the vantage ground
resulting from the dominancy of its expanded organization, and
others in the trade operating independently of that organization.
The result was identical with that which had previously arisen from
like conditions in the past.

															In March, 1900, there was organized in New Jersey a corporation
known as the American Snuff Company, with a capital of $25,000,000,
one-half preferred and one-half common, which took over the Snuff
business of the P. Lorillard Company, Continental Company, and the
American Tobacco Company, with that of a large competitor, viz.: the Atlantic Snuff Company. The stock of the new
company was thus apportioned: Atlantic Snuff Company, preferred,
$7,500,000, common, $25,000,000; P. Lorillard Company, preferred,
$1,124,700, common, $3,459,400; the American Tobacco Company,
preferred, $1,177,800, common, $3,227,500; Continental Tobacco
Company, preferred, $197,500, common, $813,100. The stock issued to
Continental Tobacco Company and the Page 221 U. S. 168 defendants P. Lorillard Company and the American Tobacco Company
is still held by the latter, and they have at all times had a
controlling interest in the snuff company. All the companies,
together with their officers and directors, covenanted that they
would not thereafter engage as competitors in the tobacco business
or the manufacture, sale, or distribution of snuff.

															Among the assets transferred by the Atlantic Snuff Company to
American Snuff Company 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, Delaware, in interstate and foreign commerce in tobacco
and its products, and which controlled through stock ownership the
Southern Snuff Company, Memphis, Tennessee, Dental Snuff Company,
Lynchburg, Virginia, and Stewart-Ralph Snuff Company, Clarksville,
Tennessee. The separate existence of W. E. Garrett & Sons,
Inc., has been preserved and its business conducted under the
corporate name. In March, 1900, the American Snuff Company acquired
all the shares of George W. Helme Company, one of the oldest and
largest producers of snuff and actively engaged at Helmetta, New
Jersey, in interstate and foreign commerce in competition with
defendants, by issuing in exchange therefore $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 transaction just stated, it came to pass that
the American Tobacco Company, 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 Company -- manufacturers of tinfoil, an
essential for packing tobacco products. In December, 1899, the American Tobacco Company secured control
of the business of John Conley & Sons, a Page 221 U. S. 169 partnership of New York City. By agreement, the Conley Foil
Company 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 Company became owner of a
majority of the shares of stock. The Conley Foil Company has
acquired all the shares of stock of the Johnson Tinfoil & Metal
Company, 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 Company. Prior to 1901, the American and Continental Tobacco Companies
manufactured, sold, and distributed cigars, stogies, and cheroots.
In the year stated, the companies determined to engage in the
business upon a larger scale. Under agreement with Powell, Smith
& Company, large manufacturers and dealers in cigars, they
caused the incorporation in New Jersey of the American Cigar
Company "for trading and manufacturing," etc., to which all three
conveyed their said business, and it has since carried on the same.
The American and Continental companies each acquired 46 1/2 percent
of the shares, and Powell, Smith & Company 7 percent; the
original capitalization was $1,000,000 (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 the parties
covenants against engaging in the tobacco business, and it has also
procured the organization of controlled corporations which have
acquired competing manufacturers, jobbers, and distributors in the
United States, Cuba, and Porto Rico. It manufacturers, sells, and
distributes a considerable percentage of domestic cigars; is the
dominating factor in the tobacco business, Page 221 U. S. 170 foreign and domestic, in Cuba and Porto Rico, and is there
engaged in tobacco planting. It also controls corporate jobbers in
California, Alabama, Virginia, Pennsylvania, Georgia, Louisiana,
New Jersey, and Tennessee.

															4. The MacAndrews & Forbes Company -- 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
Company secured control of MacAndrews and Forbes Company of Newark,
New Jersey, and organized "for trading and manufacturing" a
corporation known as the MacAndrews & Forbes Company, with a
capital of $7,000,000, $4,000,000 preferred and $3,000,000 common,
which took over the business of MacAndrews and Forbes and another
large competitor. The Continental Company acquired two-thirds of
the common stock by agreeing to purchase its supply of paste from
the new company. The American Tobacco Company at the time of the
filing the bill, was the owner of $2,112,900 of the common stock
and $750,000 preferred. By various purchases and agreements, the
MacAndrews & Forbes Company acquired substantially the business
of all competitors. Thus, in June, 1902, it purchased the business
of the Stamford Mfg. Company, of Stamford, Connecticut, and
incorporated the National Licorice Company, which acquired the
business of Young & Smylie and F. B. & V. P. Scudder, and
the National Company agreed with MacAndrew & Forbes not to
produce licorice for tobacco manufacturers. In 1906, all the stock
in the J. S. Young Company, ($1,800,000), which had been organized
to take over the business of the J. S. Young Company of Baltimore,
Maryland, was acquired by the MacAndrews & Forbes Company. The
MacAndrews & Forbes Company use in excess Page 221 U. S. 171 of 95 percent of the licorice root consumed in the United
States.

															5. American Stogie Company. In May, 1903, the American Cigar Company and the American and
Continental Tobacco Companies caused the American Stogie Company 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, in the
usual ways, acquired the business of others in the manufacture,
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 Company (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 Company.

															As we think the legitimate inferences deducible from the
undisputed 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 concerning the entry of the American Tobacco
Company into the retail tobacco trade through the acquisition of a
controlling interest in the stock of what is known as the United
Cigar Stores Company, 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 foreign companies. The English companies. In September, 1901, the American Tobacco Company purchased for
$5,347,000 a Liverpool (England) corporation, known as Ogden's
Limited, there engaged in manufacturing and distributing tobacco
products. A trade conflict which at once ensued caused many of the
English manufacturers to combine into an incorporation known as
the Page 221 U. S. 172 Imperial Tobacco Company of Great Britain & Ireland, capital
15,000,000, afterwards increased to 18,000,000, pounds sterling.
The trade war was continued between this corporation and the
American Tobacco Company, with a result 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
entered into contracts (executed in England) stipulating that the
former should limit its business to the United Kingdom, except
purchasing leaf in the United States (it buys 54,000,000 pounds
annually); that the American companies should limit their business
to the United States, its dependencies and Cuba, and that the
British-American Tobacco Company, with capital of 6,000,000 pounds
sterling apportioned between them, should be organized, take over
the export business of both, and operate in other countries, etc.
This arrangement was immediately put into effect, and has been
observed.

															The Imperial Company holds one-third and the American Company
two-thirds of the capital stock of the British American Tobacco
Company, Limited. The latter company maintains a branch office in
New York City, and the vice-president of the American Tobacco
Company 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 Company. In addition
to many plants abroad, it has warehouses in various states and
plants at Petersburg, Virginia, and Durham, North Carolina, where
tobacco is manufactured and then exported.

															The purchase of necessary leaf tobacco in the United States by
the Imperial Company 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 Page 221 U. S. 173 have omitted in the proper chronological order to state the
facts relative to what was known as the Consolidated Tobacco
Company. We now particularly refer to that subject. The Consolidated Tobacco Company. In June, 1901, parties largely interested in the American and
Continental companies caused the incorporation in New Jersey of the
Consolidated Tobacco Company, capital $30,000,000 (afterwards
$40,000,000), with broad powers and perpetual existence, to do
business throughout the world, and to guarantee 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 common stock of the old
ones. Its business, of holding and financing, was continued until
1904, when, with the American and Continental Companies, it was
merged into the present American Tobacco Company.

															By proceedings in New Jersey, October, 1904, the (old) American
Tobacco Company, Continental Tobacco Company, and Consolidated
Tobacco Company were merged into one corporation, under the name of
the American Tobacco Company, 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.
[ Footnote 6 ] Page 221 U. S. 174 Prior to the merger the Consolidated Tobacco Company, 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
common shares of both old American and Continental Companies, and
thereby control. The preferred shares, however, were held by many
individuals. Through the method of distribution of the stock of the
new company in exchange for shares in the old American and in the
Continental Company, it resulted that the same six men in control
of the combination through the Consolidated Tobacco Company
continued that control by ownership of stock in the merged or new
American Tobacco Company. The assets, property, etc., of the old
Companies, passed to the American Tobacco Company (merged), which
has since carried on the business.

															The record indisputably discloses that, after this merger, the
same methods which were used from the beginning continued to be
employed. Thus, it is beyond dispute first that, since the
organization of the new American Tobacco Company, that company has
acquired four large tobacco concerns, that restrictive covenants
against engaging in the tobacco business were taken from the
sellers, and that the plants were not continued in operation,
but Page 221 U. S. 175 were at once abandoned. 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 by the American Tobacco Company, 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 Company was organized by the consolidation
of five competing cigarette concerns and that which existed at the
commencement 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 Company 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, and 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 Anti-Trust Act and the application of the act, as rightly
construed, to the situation as proven in consequence of having
determined the ultimate and final inferences properly deducible
from the undisputed facts which we have stated. The construction and application of the Anti-Trust
Act. If the antitrust law is applicable to the entire situation here
presented, and is adequate to afford complete relief for the evils
which the United States insists that situation presents, it can
only be because that law will be given a Page 221 U. S. 176 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 Company 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 United States v. Standard Oil Co., 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 Company, 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 corporation, 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 remain
whether the principal defendant, the American Tobacco Company, when
stripped of its stock ownership, would be, in and of itself, within
the prohibitions of the act, although that company was organized
and took being before the Anti-Trust 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 Page 221 U. S. 177 and of themselves, either a restraint of trade or a
monopolization or an attempt to monopolize, should nevertheless be
restrained because of their intimate 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 act such a comprehensive 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 character of the
original combinations which organized the old American Tobacco
Company, 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
combination, 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 subsidiary corporations, the existence of which depends
not at all upon combination or agreement or contract, but upon mere
purchasers 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 Page 221 U. S. 178 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 condemnation 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
Anti-Trust Act. We say of the letter because, while seeking by a
narrow rule of the letter to include things which it is deemed
would otherwise be 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. 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, are now but an
abstraction, because it has been removed by the consideration which
we have given quite recently to the construction of the Anti-Trust
Act in the Standard Oil case. In that case, it was held,
without departing from Page 221 U. S. 179 any previous decision of the Court, that, as the statute had not
defined the words "restraint of trade," it became necessary to
construe those words -- a duty which could only be discharged by a
resort to reason. We say the doctrine thus stated was in accord
with all the previous decisions of this Court despite the fact that
the contrary view was sometimes erroneously attributed to some of
the expressions used in two prior decisions (the Trans-Missouri
Freight Association and Joint Traffic cases, 166 U. S. 166 U.S.
290, and 171 U. S. 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. 171 U. S.
568 ):

															"The act of Congress 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 upon interstate commerce, 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 Anti-Trust Act only embraced
acts or contracts or agreements or combinations which operated to
the prejudice of the public interests by unduly restricting
competition, or unduly obstructing the due course of trade, or
which, either because of their inherent nature or effect, or
because of the evident purpose of the acts, etc., injuriously
restrained trade, that the words as used in the statute were
designed to have and did have but a like significance. It 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 prohibited could be removed from the control
of its prohibitions by a finding Page 221 U. S. 180 that they were reasonable, but that the duty to interpret, which
inevitably arose from the general character of the term "restraint
of trade," required that the words "restraint of trade" should be
given a meaning which would not destroy the individual right to
contract, and render difficult, if not impossible, any movement of
trade in the channels of interstate commerce -- the free 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 required in order to give effect to the
remedial purposes which the act under consideration contemplates,
and to prevent that act from 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 Standard 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 by the mere form in which the assailed
transactions are clothed become of no moment. This follows because,
although it was held in the Standard Page 221 U. S. 181 Oil case that, giving to the statute a reasonable
construction, the words "restraint of trade" did not embrace all
those normal and usual contracts essential to individual freedom,
and the right to make which was 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, there was no possibility of frustrating that policy by
resorting to any disguise or subterfuge of form, since resort to
reason rendered it impossible to escape, by any indirection, the
prohibitions of the statute.

															Considering, then, the undisputed facts which we have previously
stated, it remains only to determine whether they establish that
the acts, contracts, agreements, combinations, etc., which were
assailed were of such an unusual and wrongful character as to bring
them within the prohibitions of the law. That they were, in our
opinion so overwhelmingly results from the undisputed facts that it
seems only necessary to refer to the facts as we have stated them
to demonstrate 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 Page 221 U. S. 182 the fears or play upon the cupidity of competitors would make
success possible. We say these conclusions are inevitable not
because of the vast amount of property aggregated 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 which actually exists, but because we think the conclusion of
wrongful purpose and 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 inspired 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 inference 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 followed 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 conscious wrongdoing by the
form in which the various transactions were embodied from the
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 monopolize
and retain power in the hands of the Page 221 U. S. 183 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 placing 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; (f) by the constantly recurring stipulations,
whose legality, isolatedly 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 conviction that it was the danger
which it was deemed would arise to individual liberty and the
public wellbeing from acts like those which this record exhibits,
which led the legislative mind to conceive and to enact the
Anti-Trust Act -- considerations which also serve so clearly to
demonstrate that the combination here assailed is within the law as
to leave no doubt that it is our plain duty to apply its
prohibitions.

															In stating summarily, as we have done, the conclusions which, in
our opinion, are plainly deducible from the undisputed facts, we
have not paused to give the reasons why we consider, after great
consideration, that the elaborate arguments advanced to affix a
different complexion to the case are wholly devoid of merit. We do
not, for the sake of brevity, moreover, stop to examine and discuss
the various propositions urged in the argument at bar for the
purpose of demonstrating that the subject matter of the Page 221 U. S. 184 combination which we find to exist, and the combination itself,
are not within the scope of the Anti-Trust Act, 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 principal corporation and the accessory or
subsidiary corporations, viewed independently, including the
foreign corporations insofar 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 Anti-Trust
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
attempt to monopolize or a monopolization within the second section
of the Anti-Trust Act, it follows that the relief which we are to
afford must be wider than that awarded by the lower courts, since
that court merely decided that certain of the corporate defendants
constituted 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 Page 221 U. S. 185 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
two-fold 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 relief in the event that it be
found that it is impossible, under the situation as it now exists,
to at once rectify such existing wrongful 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 regard for the
vast interests of private property which may have become vested in
many persons as a result of the acquisition, either by way of stock
ownership or otherwise, of interests in the stock or securities of
the combination without any guilty knowledge or intent in any way
to become actors or participants in the wrongs which we find to
have inspired and dominated the combination from the beginning.
Mindful of these considerations, and to clear the way for their
application, we say at the outset, without 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 Company, 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 Page 221 U. S. 186 ingredients of the combination would remain unaffected, and, by
the very nature and character of their organization, would be able
to continue the wrongful situation which it is our 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 we have seen, were resorted 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 successful
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
condemned, 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. We 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 universality, and all the
individuals and corporations which form a part of or cooperate in
it in any manner or form from continuing to engage in interstate
commerce until the illegal situation be cured, a measure of relief
which would accord in substantial effect with that awarded below to
the extent that the court found illegal combinations to exist, or
(b) 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 preventing a continued violation
of the law, and thus working out, by a sale of the Page 221 U. S. 187 property of the combination or otherwise, a condition of things
which would not be repugnant to the prohibitions of the act. But,
having regard to the principles which we have said must control our
action, we do not think we can now direct the immediate application
of either of these remedies. We so consider as to the first
because, in view of the extent of the combination, the vast field
which 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 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: 1st, 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 restraint of trade and an attempt to monopolize
and a monopolization within the first and second sections of the
Anti-Trust Act; 2d, 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 ascertaining and determining upon some plan or
method of dissolving the combination and of recreating, out of the
elements now composing it, a new condition which shall be honestly
in harmony with and not repugnant to the law; 3d, that for the
accomplishment Page 221 U. S. 188 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 sixty days; 4th,
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 restrained 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 unnecessary injury to the public or the rights of private
property.

															While in many substantial respects our conclusion is in accord
with that reached by the court below, and while also the relief
which we think should be awarded, in some respects, is coincident
with that which the court granted, in order to prevent any
complication, and to clearly define the situation, we think,
instead of affirming and modifying, 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. Page 221 U. S. 189 [ Footnote 1 ]

															James B. Duke, C. Dula, Percival S. Hill, George Arents, Paul
Brown, Robert B. Dula, George A. Helme, Robert D. Lewis, Thomas J.
Maloney, Oliver H. Payne, Thomas F. Ryan, Robert K. Smith, George
W. Watts, George G. Allen, John B. Cobb, William R. Harris, William
H. McAlister, Anthony N. Brady, Benjamin N. Duke, H. M. Hanna,
Herbert D. Kingsbury, Pierre Lorillard, Rufus L. Patterson, Frank
H. Ray, Grant B. Schley, Charles N. Strotz, Peter A. B. Widener,
Welford C. Reed (now deceased), and Williamson W. Fuller.

															[ Footnote 2 ]

															Extent of control of American Tobacco Company over the accessory
corporations:

															American Snuff Company -- 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 control of P. Lorillard Co.; in all, 75,808 shares.

															American Cigar Company -- of 100,000 shares of preferred stock
owns 89,700 shares directly and 5,000 shares through control of
American Snuff Co.; in all, 94,700 shares; of 100,000 shares of
common stock, owns directly 77,451 shares.

															American Stogie Company -- of 108,790 shares of common stock,
controls 73,072 3/4 shares through stock interest in American Snuff
Company. The American Stogie Company owns all of the stock --
12,500 -- of the Union American Cigar Company -- cigars and
stogies.

															MacAndrews & Forbes Company -- of 37,583 shares of preferred
stock (no voting power) owns 7,500 shares; of 30,000 shares of
common stock, owns 21,129 shares directly and 983 shares through
stock control of the R. J. Reynolds Co.; in all, 22,112 shares.

															The Conley Foil Company-of 8,250 shares of stock, directly owns
4,950 shares.

															The American Tobacco Company -- by stock ownership is the owner
outright of the following defendant companies:

															S. Anargyros [The S. Anargyros Company owns all the capital
stock (10 shares) of the London Cigarette Co.]; F. F. Adams Tobacco
Co.; Blackwell's Durham Tobacco Co.; Crescent Cigar & Tobacco
Co.; Day and 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 defendant 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 Blackwell's Durham Tobacco Co.)

															R. P. Richardson, Jr. & Co., Inc. -- owns 600 out of 1,000
shares of stock, and $120,000 of $200,000 issue of bonds.

															R. J. Reynolds Tobacco Co. -- owns 50,000 out of 75,250 shares
of stock.

															Pinkerton Tobacco Co. -- owns 775 out of 1,000 shares of
stock.

															Reynolds Tobacco Co. (of Bristol, Tennessee) -- 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
Kentucky Tobacco Extract Co.]

															Porto Rican-American Tobacco Co. -- owns directly 6,578, and,
through the American Cigar Co., 6,576 of 19,984 shares of stock.
[The Porto Rican-American Tobacco Co. owns 190 of the 380 shares of
preferred, and 300 of the 450 shares of common stock of Ind. Co. of
Porto Rico; also owns 2,150 of the 5,000 shares of capital stock of
the Porto Rico Leaf Tobacco Co.]

															The American Tobacco Company 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 of 5,000 shares of stock. [The Mengel Company owns all
of the capital stock of the Columbia Box Company and of the Tyler
Box Company,-respectively, 1,500 and 250 shares.]

															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 Company 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 Company, in addition to stock, etc.,
interests in the American Tobacco Co., American Cigar Company, and
the Amsterdam Supply Company, has stock interests in the following
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 pref. and
1,875 out of 2,500 shares of common.

															Cuban Land & Leaf Tobacco Co. -- owns all of stock, 1,000
shares. [The Cuban Land, etc., Co., owns 1,320 of the 1,890 shares
of stock of the Vuelta Abajo S.S. Co.]

															Cliff Weil Cigar Co. -- owns 255 out of 500 shares.

															Dusel, Goodloe & Co. -- owns 510 out of 750 shares.

															Federal Cigar Real Estate Co. -- owns all stock, 6,000
shares.

															J. J. Goodrum Tobacco Co. -- owns 477 out of 600 shares.

															Havana-American Co. -- owns all stock, 2,500 shares.

															Havana Tobacco Co. -- owns 700 shares out of 47,038 preferred,
166,800 out of 297,912 common stock, 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., Limited -- owns 375 out of 500
shares.

															The J. B. Moos Company -- owns all of stock, 2,000 shares.

															J. & B. Moos Company -- 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., Lim. -- 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, Limited, and
also owns 64 shares of the 1,890 shares of the capital stock of the
Vuelta Abajo S.S. Co.]

															Cuban Tobacco Co. -- owns all of stock, 50 shares.

															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. Valley Co. -- cigars.]

															Havana Cigar & Tobacco Factories, Lim. -- owns 6,774 out of
25,000 shares ordinary stock.

															J. S. Murgiasy 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 1,500 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 Company -- owns all of the capital stock (3,000
shares) of the Johnson Tin Foil & Metal Co.

															P. Lorillard Company -- has a stock interest in the American
Snuff Company and the Amsterdam Supply Co.

															R. J. Reynolds Tobacco Co. -- in addition to a stock interest in
the Amsterdam Supply Company and the MacAndrews & Forbes
Company, owns one third of the 5,000 shares of stock of the Lipfert
Scales Co.

															The British-American Tobacco Co. -- in addition to a small
interest in the Amsterdam Supply Company, 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 Company -- plug -- owns all of stock, 4,000
shares.

															[ Footnote 3 ]

															The output of the American Tobacco Company for 1891 was:

															Number Pounds

															Cigarettes . . . . . . . . . . . . 2,788,778,000 ----------

															Cheroots and little cigars . . . . 40,009,000 ----------

															Smoking. . . . . . . . . . . . . . ---------- 13,813,355

															Fine cut . . . . . . . . . . . . . ---------- 560,633

															Snuff. . . . . . . . . . . . . . . ---------- 383,162

															Plug . . . . . . . . . . . . . . . ---------- 4,442,774

															Total output for the United States, 1891-

															Cigarettes . . . . . . . . . . . . 3,137,318,596 ----------

															Smoking. . . . . . . . . . . . . . ---------- 76,708,300

															Fine cut . . . . . . . . . . . . . ---------- 16,968,870

															Plug and twist . . . . . . . . . . ---------- 166,177,915

															Snuff. . . . . . . . . . . . . . . ---------- 10,674,241

															[ Footnote 4 ]

															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 & Brothers, having factory at Louisville,
Kentucky, who received preferred stock $2,250,000, common stock
$3,050,000, and cash $550,000.

															Daniel Scotten & Co., having factory at Detroit, Michigan,
who received preferred stock $1,911,100, and common stock
$3,012,500.

															P. H. Mayo & Bros., having factory at Richmond, Va. who
received preferred stock $1,250,000, common stock $1,925,000, and
cash $66,125.

															John Wright Co., having factory at Richmond, Va. who received
preferred stock $495,000, common stock $495,000, and cash
$4,116.67.

															[ Footnote 5 ]

															Monopol Tobacco Works (New York, N.Y.) -- Capital $40,000 --
cigarettes and smoking tobacco. In 1899, the American Tobacco Co.
acquired all the shares for $250,000, and it is now a selling
agency.

															Luhrman & Wilbern Tobacco Company (Middletown, Ohio) --
Capital $900,000 -- scrap tobacco. This business was formerly
carried on by a partnership.

															Mengel Box Company (Louisville, Ky.) -- Capital $2,000,000 --
boxes for packing tobacco. This company has acquired the stock
($150,000) of Columbia Box Company and of Tyler Box Company
($25,000), both at St. Louis.

															The Porto Rican-American Tobacco Company (Porto Rico) -- Capital
$1,799,600. In 1899, the American Company caused the organization
of the Porto Rican-American Tobacco Company, which took over the
partnership business Rucabado y Portela -- manufacturer of cigars
and cigarettes -- with covenants not to compete. The American
Tobacco Company and American Cigar Company each hold $585,300 of
the stock; the balance is in the hands of individuals.

															Kentucky Tobacco Product Company (Louisville, Ky.) -- Capital
$1,000,000. In 1899, the Continental Company acquired control of
the Louisville Spirit-Cured Tobacco Co., engaged in curing and
treating tobacco and utilizing the stems for fertilizers. By
agreement, the Kentucky Tobacco Product Company was organized in
New Jersey, with $1,000,000 capital, $450,000 issued to the old
stockholders, and $550,000 to Continental Company as consideration
for agreement to supply stems.

															Golden Belt Manufacturing Company (North Carolina) -- Capital,
$700,000 -- cotton bags and containers. In 1899, the American
Tobacco Company acquired the business of this corporation, which
was formed to take over a going business.

															The Conley Foil Company (New York) -- Tinfoil combination --
Capital, $825,000. In December, 1899, the American Tobacco Company
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 Company was incorporated in New Jersey "for trading 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 Company became owner of the majority
shares. The Conley Foil Company has acquired all the stock of the
Johnson Tinfoil & Metal Company -- a defendant -- of St. Louis,
a leading competitor, and they supply, under fixed contracts, the
tinfoil used by defendants.

															R. J. Reynolds Tobacco Company (Winston-Salem, North Carolina).
In 1899, the Continental Tobacco Company acquired control of the R.
J. Reynolds Tobacco Company, one of the largest manufacturers of
plug, output in 1898, 6,000,000 pounds. By agreement, a new
corporation (with same name) was organized in New Jersey and
capitalized at $5,000,000 (afterwards $7,525,000), which took over
the business and assets of the old one. The Continental Company
immediately acquired the majority shares, and the American Company
now holds $5,000,000 of stock. The separate organization has been
preserved.

															There was acquired in the name of the new Reynolds Company, with
covenants against competition, the following plants:

															In 1900, T. L. Vaughn & Company, partnership, of Winston,
N.C.; consideration, $90,506: Brown Brothers Company, a North
Carolina corporation, Winston, N.C.; consideration, $67,615, and P.
H. Hanes & Company and B. F. Hanes & Company, Winston, N.C.
partnership; consideration, $671,950.

															In 1905, Rucker & Witten Tobacco Company, Martinsville, Va.;
consideration, $512,898.

															In 1906, D. H. Spencer & Company, Martinsville, Va.;
consideration, $314,255.

															(All of the foregoing plants were closed as soon as
purchased.)

															A majority of the $400,000 capital stock in the Lipfert-Scales
Company, 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
Company. The separate organization of the Lipfert-Scales Company is
preserved and the business carried on under its corporate name.

															The R. J. Reynolds Tobacco Company also holds $98,300 of stock
of the MacAndrews & Forbes Company and $9,600 of the Amsterdam
Supply Company.

															Blackwell's Durham Tobacco Company (Durham, N.C.) -- capital,
$1,000,000. In 1899, the American Tobacco Company procured for
$4,000,000 all the stock of Blackwell's Durham Tobacco Company at
Durham, N.C., manufacturer and distributor of tobacco products.
Thereupon the Blackwell's Durham Tobacco Company, 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 Company has acquired control of the following
competitors -- Reynold's Tobacco Company; F. R. Penn Tobacco
Company, and Wells-Whitehead Tobacco Company.

															The following companies came also under the control of the
American Tobacco Company through acquired stock ownership:

															S. Anargyros -- capital $650,000 -- Turkish cigarettes. In 1890,
the American Tobacco Company procured the organization of
corporation of S. Anargyros, which took over that individual's
going business and has since controlled it. Through this company,
the business in Turkish cigarettes is largely conducted.

															The John Bollman Company (San Francisco) -- capital, $200,000 --
cigarettes. In 1900, the American Tobacco Company procured
organization of the John Bollman Company, which took over the
business of the former concern in exchange for stock. Its separate
organization has been preserved.

															[ Footnote 6 ]

															"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 interest as stockholder; . . .
to carry on any business operations deemed by such merged
corporation to be necessary or advisable in connection with any of
the objects of its incorporation, or in furtherance of any thereof,
or tending to increase the value of its property or stock; . . . to
conduct business in all other states, territories, possessions, and
dependencies of the United States of America, and in all foreign
countries; . . . to purchase or otherwise acquire and hold, sell,
assign, transfer, mortgage, pledge, or otherwise dispose of the
shares of the capital stock or of any bonds, securities, or other
evidences of indebtedness created by any other corporation or
corporations of this or any other state or government, and to issue
its own obligations in payment or exchange therefor. . . ."

															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
principal defendant, the American Tobacco Company, and its
accessory and subsidiary corporations and companies, including the
defendant English corporations, constitute a combination which "in
and of itself, as well as each and all of the elements composing
it, whether corporate or individual, whether considered
collectively or separately," is illegal under the Anti-Trust 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 recreating out of the elements now composing it,
a new condition"

															which shall not be repugnant to law. The Court, in its opinion,
says of the present combination that its illegal purposes are
overwhelmingly established by many facts; among others,

															"by the ever-present manifestation which is exhibited of a conscious wrongdoing by the form in which the various
transactions were embodied from the 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 Page 221 U. S. 190 others, and to monopolize 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 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 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 undoubtedly does -- warrants the
characterization which the Court has made of this monster
combination, why cannot all necessary directions 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 Page 221 U. S. 191 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
decree, 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 subsidiary 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 Anti-Trust 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 made Congress say that it means only to prohibit the
"undue" restraint of trade.

															If I do not misapprehend the opinion just delivered, the Court
insists that what was said in the opinion in the Standard
Oil case was in accordance with our previous decisions in the Trans-Missouri and Joint Traffic cases, 166 U. S. 166 U.S.
290, 171 U. S. 171 U.S.
505, if we resort to reason. This statement surprises me
quite as much as would a statement that black was white or white
was black. It is scarcely just to the majority in those two cases
for the Page 221 U. S. 192 Court at this late day to say or to intimate that they
interpreted the Act of Congress without regard to the "rule of
reason," or to assume, as the Court now does, that the act was, 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 -- what, 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 interstate commerce
even where such restraint could be said to be "reasonable" or
"due." In short, the Court now, by judicial legislation, in effect
amends an act of Congress relating to a subject over which that
department of the government has exclusively 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 well as others what the rules of reason require when
a court seeks to ascertain the will of Congress as expressed in a
statute. It is obvious 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, Page 221 U. S. 193 that the court could not, consistently with the Constitution,
and would not, usurp the functions of Congress by indulging in
judicial legislation. They said in express words, in the former
cases, in response to the earnest contentions of counsel, that to
insert by construction the word "unreasonable" or "undue" in the
act of Congress would be judicial legislation. Let me say also
that, as we all agree that the combination in question was illegal
under any construction of the Anti-Trust Act, there was not the
slightest necessity to enter upon an extended argument to show that
the Act of Congress was to be read as if it contained the word
"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 views 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 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 , 207 U. S. 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.

Summary:
In United States v. American Tobacco Co., the Supreme Court applied a comprehensive interpretation of the Anti-Trust Act of 1890 to address the issue of a combination in restraint of trade in the tobacco industry. The Court reaffirmed its previous ruling in Standard Oil Co. v. United States, where it construed the phrase "restraint of trade" in the Anti-Trust Act reasonably, aligning with previous decisions. The Court emphasized that the Act must be reasonably construed as many agreements among businesses can indirectly affect interstate commerce.

The Court clarified that "restraint of trade" referred to acts or contracts that unduly restricted competition or obstructed the course of trade, and Congress intended to prohibit such practices. The public policy expressed in the Act was broad, aiming to cover any conceivable act that could fall within its spirit. The Court found that the defendants in this case intended to acquire control of interstate commerce in tobacco through methods violating the Anti-Trust Act.

However, Justice Harlan dissented in part, disagreeing with the majority's interpretation of the Act. He argued that the majority effectively amended the Act through judicial legislation by implying that "restraint" meant "unreasonable" or "undue," which he believed Congress did not intend. He emphasized that Congress had not amended the Act to include such qualifications and that previous majorities had refrained from such judicial interpretation.