New Britain Herald Newspaper, June 4, 1915, Page 14

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Handed Down Refusing Petition of ent fo Dissolve Defendant Com- d October_ 26, 1§ Ings beguni May ulj]d ;nJMul;or. 1914, lecided L1916, ony-fifled ‘Xs’poo'imma‘ allegsli that capi- fion of sx.tn.t« 000 con- £ $600,000,000 . of “wa jplants acquired by the atlon’ controlled Dbetween L 82 per cemnt.. of the #'s total production. e m m!unotlon.‘ finds on is not 1y, -tS ngthe steel Ireely open to compe- e asiibaet $500,000, of which yfltx Dy the of & von-hlo dc- eommon stock gained .1 3-8, .adding gs; or 25 per cent. | all*issue. % e, 4.—The United court:for New Jersey i &/ funantmous doeilian Mg the 'pétition of the | Gt’n'rernmont to dissolve | tates Steel corporatton, —-held that the Steel Cor- laoquiring its foreign and 3, did not violate the Sher- it act anfl refused all the éd for by the depart-‘ on for Infunction, | the Steel Corporation acquiring | Tennessee Coal &''Iron company dur- held that the committee 8 in by 85 per trade or the country, 1 Corporation, subse- uu ‘famous Gary dinners of 'yéars'ago, were unlaw- to/centrol prices, but gs had stopped before nent filed its complaint in f, 1911, there was no occaslon unction. nion of the-court sumau L practices lle within the @ of the new federal trade sion, but adds that if their re B is apprehended the court will < cn motion 6f the government retain Jurisdiction of the case ror that par- ticular purposc. One of Business racts. A synopsis of the decislon, which was written by the senior judge, Joseph J. Buffington, prepared by di- rcetion of the court, says that the keynote of the entire opinion is that “this ‘case, a proceeding ' under the Sherman anti-trust law, is largely one of business facts.” In another part of the opimon the court says that “the real test of mo- noply is not the size of tnat which is acquired but the trade power of that which is not acquired.” “If mere size were the test of mo- noply and trade restramt” the court ‘further on said, “we have not one but half a dozen unlawful monopolies in the large daputment stores - of a single city.” A Tennessee Deal Upheld. Fhe court found nothing wrong in the ing the financial panic of 1907 and thus virtually approved the attitude of the Roosevelt administration in not irterfering with that deal. On this pcint the court held that the output of Tennessee at the time was only 1.7 ’ per cent. of the country’s total output; that up to that time its principal pro- duct, rails, was made at a loss; that its ultimate success was doubtful and involved a further outlay of $25,000,- 000, and that the purchase of the ‘Tennessee property, as well as that of several other steel concerns earlier in th hostory of the big corparation, was wade in fairbusiness course and was “the honest exertion of one’s right to contract for one’s ‘benefit , unaccom- panted by a wrongful moutve to injure cthers.” With regard to Andrew Carnegle, who, the government charged, was a party to the ‘“unlawful combination,” and “took the bonds of the corpora- tion with all the ‘infirmities attaching to such participation.” The court found that there was no proof that he accepted any other relation in the for- mation of the Steel Corporation than that of seller of his stocks and bonds. The court declared to be true Mr. Carnegie's statement that hesdisposed of his interests in a desire to retire from the hazards and respon!iblllty of active business. Four judges, Pherson, Hunt, in‘ the case. was filed in Buffington, Mece- and Woolley, sat ‘While the suit the district court it Roast!Beef PRSI Ree T ) 150 b «Coqu?Beef.....................alb Vs nder Steak cut f from heavy Steer Beef alb 160 ‘-l&,\Bames Smoked Shoulders ...aIb 13¢ - Compound! Lard S 2 e, 19¢ | Large: Cans +ork and Beans w1th tomato sauce 8 c 10 lb\bags of Fine ‘l‘able Salt 10c Brand Condensed . Milk . WillianisRoot Beer Extract . ... Cc .. .a bottle llc ble, Chicken or Tomato Soup ....acan 8¢ COMBINATION SALES 25¢ - 25c¢ 1 stantial steel product, weze heard on &. writ of expedi- tion by the judges of the third judi- cial eircuit, whe form the court of appeals. The next step in the case will be the fiiing of a formal decree and the government will probably then take an appeal to the supreme court. Judges Agree as to Order. Judge Buffington wrote the prin- cipal opinion. and Judge Woolley wrote a concurring opinion in which Judge Hunt concurred. stated that “all the members of the court are in agreement as to the de- cree that will be entered, although they are not in complete accord con- cerning every step by which that re-| sult is reached.” The ' opinion covers 150 pages. It was filed here and abstracts were giv- en out in Trenton and in the United Stateg court at Philadelphia, where the case was heard. e The opinion of Judge Buftlnstcn. apart from a brief summary of the law at its beginning, is a discussion of the business of the steel corpora- tion covering the ten yvears of its ex- istence up the time the suit was filed, the acquisition of its home and foreign trade, and the proofs as to whether it has restrained or sup- pressed competition or been guilly of acts to warrant its dissolution. Discussing the law Judge Buffing- ton says the construction of the Sher- man law was settled by the supreme court in the Standard.Oil and the to< bacco cases, \ The opinion shows that in determinating what are the unlaw- ful restraints and monopolies against which the Sherman act protects trade the supreme court summarized all its trust decisions by stating in a late case that ‘““these cases may be taken to have established that only such. combinations are within the act as by reason of intent or the in- herent nature of the contemplated acts prejudice the public interests by unduly restricting competition or un- duly obstructing the course of trade.” Ountgrown by Competitors. Judge Buffington then discusses the American trade of the corpora- tion, and shows that 60 per cent of the steel of this country is produced by the Steel company's competitors, and that in the ten years since jt was formed, while its business has in- creased much faster. After duoting the testimony both of the steel company's competitors and of consumers using its product, the court says: We have carefully and patiently studied the = voluminous testimony bearing on the general course of all branches of the steel trade covering the whole time the steel corporation has been engaged in such trade. The testimony covers proofs by its man- ufacturing competitors in | all branches, and also the different classes of customers whose trade it and its fellow-competitors seek. Tt is apparent that among this latter class—that is, the consumers of its product—we would naturally find ev- idence of any throttling of competi- tion or any undue restraint of the steel trade. No . Lack. of Competition. No one can read the testimony and fail to be satisfied that this great body of business men, scattered over all parts of the country, in keen com- petition with each other in their sev- eral lines, is alert in seeing that com- petitive conditions exist between the manufacturers of basic steel products from whom they buy, gnd the sworn testimony of these men, who are vi- tally interested in the maintenance of real competition between the steel corporation and its manufacturing competitors, that such real competi~ tion does exist and has existed during the past ten years, cannot but car- ry a conviction that such is the case. A study of the testimony of- these men, who are close to and vitally in- terested observers of the prices of these products, shows that a single large concern, by lowering the price of any substantial neel‘product it sells, can = depress the obtainable price, Tt furthepshows that the con- verse s not the case; that no single large concern, by ralsing or even maintaining the price of any sub- can’ raise the obtainable price, t Discusses Foreign Trade,’ The court then discusses the for- elgn trade of the steel corporation and shows that it had been built up not by restraining or taking away the trade of others, but by creating fits own. It is shown in the opinion that when the steel corporation was .formed the Amecrican steel companies had no dependable foreign trade. Such foreign steel sales as were then mado consisted in what was known or dumping steel at low prices into as “dumping,” that ls, in unloading forelgn markets when the American market was oversupplied. Of the corporation’s $91,000,000 of trade, the opinion says, $30,000,000 is done is conjunction with 158 other American concerns, which companies made articles the steel company did not make, but got thelr basic sup- plies for making them from the steel carporation. The difficulties of establishing such foreign trade are discussing at length. It 1s shown that the tariffs of Ger- many, Italy, Austria, and Russia pre- vented the sale of steel in those coun- tries, and the trade acquired had to be built up in other parts of the world. The foreign trade branch of the c¢ase is summed up by the court as follows: With these facts, figures, and re- sults .proved in this record, we are warranted in holding that the foreign trade of the steel corporation, its mode of building it up, and its re- tention when built up, are not con- trary’ to the Sherman law,, Discussing the question of domestic and foreign trade generally, the court says: In taking up this question, we dis- miss once and for all the gquestion of the mere volume or bigness of bus- iness. The question before us is not how much business was done, or how large the company that did it, the vi- tal question is: How was the business whether big or little, done—was it, in the test of the supreme court, The court done by prejudicing the public inter- | ests, by unduly restricting or unduly obstructing trade? The question is one of undue restriction or obstruc- tion, and not one of undue volume of l trade. £ No Ground for Dissolution, | Having shown that, when the bill was ~filed in 1911, ithe steel - cor- poration was not monopoliz- ing = or restraining home or | foreign trade and that no injunction | should issue, the opinion then takes 'up the question whetder, when the | Steel corporation was formed in 1901, its inherent nature was such as to necessitate its dissolution. After dis- cussing the evidence on this ques- tion, fthe court said: Recurring, therefare, to the partic- ular question with which this partic. ular part of this opinion deals, name- 1y, whether we should now enter a decree dissolving the Steel corpora- tion on the ground of its original, inherent, {llegal character in 1901, and whether we should also dissolve the severa] constituent, companies which it acquired on the like ground of their original, Iinherent, illegal character when they were farmed, we think there is ground for our hold- ing in view of the facts, proofs; and views set forth, that we ,are not as a court of equity warranted in taking such a drastice course as now to de- cree the dissolution of the Steel cor- poration or its constituent companies. The subsequent acquisition by the Steel corporation’ of several proper- ties, including the Tennessee Coal and | Iron company and the James J. Hill | ore leases, are discussed in the opin. fon. | The testimony of Colonel Roosevelt that he had not interfered with the purchase of ‘the Tennessee plant as| a means of averting the panic of 1907 | was cited and the court further stated that the Hill ore leases were surren- dered -before the bill was filed. Gary Dinners Tllegal. As to the Gary dinners and the meetings of manufacturers subsequent thereto the court says: Freedom of speech and freedom of individual action are justly prized in American society, and no legislation forbids men to come together and speak freely to each other about every detail of their comm business, and if each individual should choose to announce at such a meeting the price he . intends to charge for his wares we are aware of no law that forbids some so to do. ‘But at this point we approach debatable ground, far an individual is permitted to do some things that are denied to an asso- clation of individuals. * * ¢ To our minds the testimony taken as a whole makes the conclusion in- evitable tHat the result of these meet- ings was an understanding about prices that was equivalent to an agree- ment. We have no doubt that among those present some silently dissented and went away intending to do what they pleased, but many, probably most of “the participants understood and assented to the view that they were under some kind of an obliga. tion to adhere to the announced or declared’ general sense of the meet- ing. * * * We cannot doubt that such an arrangement or understand- ing or moral obligation—whatever name may be the most appropriate— amounts to a combination or common action forbidden by law. * * * It is only fair to add that in our opin- jon the participation in_ this move- ment did not intend to act illegally. No doubt they .did intend to exercise their full legal rights, and, of course, such exercise:could not he wrong, and they believed they had succeeded in keeping .within the proper limits. For the reasons given we think they were mistakes, but we acquit them to trick- iness or attempted evasion. But the period of co-operation passed away before the bill was filed, and as far as we can see it is not likely to be repeated. = We do not think the Gary movement would jus- tify us in imposing so drastic a pen- alty as the dissolution of the corpor- ation, but we will, if the government moveg for such action, retain the bill for the purpose of restraining any similar movement by the defendants that might be contemplated here- after. We may, perhaps, suggest that un- der recent legislation congress may have provided a. sufficiently inclusive rémedy for any future action that might have for its cbject the adop- tlon or the maintenance of unreason. able prices. No Ore Monopoly. With regard to the government charge that the steel corporation had monopolistic control of ore resources the court said that all the basic plants of the steel corporation are inland and dependent on Lake Superior ores, while the Atlantic Steel companies— Bethlehem, Pennsylvania and Mary- land—have unlimited supplies of Cu- ban and other ores at water freights. The court further says: Suit Long in Preparation. The suit against the Steel corpora- tion was flled at Trenton on October 26, 1911, in the Taft administration, and. wag started by George W, Wicker- sham, attorney general at the time. Before that the corporation had been under investigation several times. The bureau of corporations under differ- ent administrations delved into the aperations of the,concern, and a con gressional committee headed by Rep- resentative A. O, Stanley of Kentucky investigated the alleged trust. In preparing the case of department of Justice had the benefit of all these investigations. The defendants in the original bill were the Steel corporation, its sub- sidiaries and J. P. Morgan, (de- ceased), Charles Steele, 'George W. Perking, E. H. Gary, Charles M, Schwab, Andrew Carnegie, Henry C. Frick, James Gayley, Willlam H. Maore, J. H, Moore, Edmund C. Con- verse, Percival Roberts, jr., Daniel G. Reid, Norman B. Ream, John D. Rockefeller, John D. Rockefeller, jr., P. A. B. Widener and Wililam P, Palmer, past or present directors of the Steel corporation, together with certain companies,, known, as the James J. Hill interests, and Louis V. Hill, James N, Hill, Walter J. Hill, Edward T. Nichols, J. H. Gruber, who were sued as trustees of the Hill com- panies. In brief, the general charge was that some of the companies in them- selves, were combinations in restraint of trade and that the creation of the Steel corporation;,” which took in the steel and certain other: companies named in the -suit, was “an attempt to monopolize and a monopolization™ §n violation of the Sherman anti-trust aw, The Hill ore compapnies were in. volved in the suit by reason of the fact that the Steel corporation leased the are deposits held by the ore com~ Panies, the government alleging that this lease gave the corporation a mo- nopoly of the ore supply of the United States. This lease was canceled at- ter the suit was filed. Charged Restraint of Trade. The government’s complaint stated that the Federal Steel company, Car- negie company of New Jersey, Amer- ican Steel and' Wire company of New Jersey, National Tube company, Na- tional Steel company, American Tin Plate company, American Steel Hoop compdny,” and American Sheet Steel company were each a combination of companies or concerns in restraint of trade; that competition was largely eliminated in their respective line that at the time of ,the United States Steel corporation was formed the Car- negie, Federal, and National were in actlve competition with each other; that several of the companies were preparing to still further increase their capacity to compete by estab. lishing themselves along new lines of manufacture, and that for these rea- sons and for the general purpose of suppressing competition and control- ing trade and cammerce the United States Steel corporation was formed by the directors mamed in the suit, all of whom except the Rockefellers had been variously connected with one or more of the companies. The proofs further show that, with the enlargement of the Erie Canal system, Lake Superior ore will be canal frieghted from Buffalo to New York Harbor at 28 cents a ton less than the same ore is rail freighted from Lake Erie to points in the Pitts- This Is Cerfainly the Storp® That Is Giving a Distinct Ser- Hart, Schaffner & Mam - vice by Showing Varsity Fifty burg districts. With the enlargement of that al, the proofs are that blast| furdaces ate now planned for location on seaboard waters in New York Harbor lmits.. . ' The concurring opinion of Judge Woolley, which is adopted by Judge Hunt, draws the distinction between the actual power of the Steel Corpor- ation to monopolize and the intent of those who formed it jo actually mon- opolize. As to its power to monopolize, Judge Woolley finds that with respect to its control over raw materials the corporation is acquitted of monopoly and the bill dismissed against the de- fendants Rockefeller, who were charged to have combined with the corporation in restraining trade in in iron ores. As to finished products ,he holds the Steel corporation does not domin- ate, that its size and power have not retarted the growth of compe- titors, and, distinguishing its power from the intent of its formers, it is not in its inherent nature a monopoly nor is its necessary effect to unduly restrain trade. Says Intent Was Monopoly. On the question of intent Judge ‘Woolley holds the-intent of those forming it was to monopolize and unduly restrain trade, but that when organized the corporation was con- fronted by forces beyond its control, and. was affected by trade laws and conditions which in its organization were either forgotten or ignored, and in its combat with its competitors it was unable to do what its organizers intended; that lacking the power in itself of monopoly it was forced to re- sort to ‘pools to control prices. As to the intent of he corporation shown after its formation, Judge Woolley holds that the only conduct of the corporation violative of the- statute was its co-operating with «its competitors from 1901 to 1904, when it was stopped, in pool agreements di- viding territory and fixing prices, in meetings with its competitors from 1904 to 1907, wheh understandings were controlled, and from then on in the Gary dinners and meetings, In the opinion of Judge Woolley and Hunt, the organizers of the cor- poration intended to monepolize and restrain trade, but the'Steel corpora- tion itself neither attempted, nor was it able to monopolize, and a decrew for its desolution lhould not be award- ed. Good Effect, Says Perkins, George W. Perkins, a Director, of United States Steel, long prominently identified with the corporation, said last night in response to a request for his view of the decision in the steel sui Suits at $18; $20,. 922, You can See In our Our Showm of lNTERWO 'f SOCKS Is Complete--ZSc, 50c and $1.00 a- Pw is another Taft failure,” but compelling in this connection is Expected by Wickersham, Albany, N. Y., June 4.—Former United States Attorney General George W. Wickersham when inform- ed last night and the United States court had rendered a decision adverse to the government in the suit begun by ‘Mr. Wickersham while in office, for the dissolution of the United States Bteel corporation, said: “This case was pending when I left office. I am not surprised at the decision. Some recent decisions 4n the same court had prepared me for the result. “I presume, of course, that the case will be carried to the United States supreme court by the government. The final decision will be rendered by that tribunal. Mr. Wickersham would not discuss the merits of the case. thought of some officials that the dis- missal of the suit would have a good effect on market conditions. The government further stated that the Steel Corporation’s capitalization aggregated $1,402,846,817; that this capitalization wag not less than $600,- 000,000 in excess of the value of the properties taken over; tha: its earn- ings were not commensurate with its actual capital, nor were they entirely the legitimate fruits of the earning ca- pacity of the properties acquired, separately controlied, but were largely the result of power exerted over trade by such a vast combination, more the Paid for Promotion. It was further charged by the gov- ernment that many millions were paid consider the decision a very great victory fer twentieth century economics. It is a victory for moral conduct over:legal technicalities. The effect upon business will be most beneficial and it will .be prompt and very general. The whole business or- ganization of the country will be heartened by this proof that moral conduct and not legal technicalities really does determine the legality of the country's great business under- takings. Administration Not Sorry. ‘Washington, June 4.—News that the government had lost its dissolu- tion suit against the United States Steel corporation was received with great interest yesterday afternoon. At- torney General Gregory sald he had only seen a short summary of the decision, so that he did not wish to discuss it. From other sources it was learned that an appeal would probably be taken by the govern- ment. Under a recent law suits of this sort may be appealed by either party losing ir the Jower courts, and most of them ultimately reach the Supreme court, But while an appeal is probable, there is good reason to think that many officials high in the administra. tion who are closely interested in its political , welfare are more relieved than depressed by the failure of the suit. In the first place, m- one of- ficlal remarked this afternoon, “it for mere promotion and underwriting, the petition stating that Morgan & Co. &nd the syndicate it represented re- celved $25,000,000 in cash for their expenses, services, and risks. and $129,998,768 of stock of the corpora- tion, The Steel Corporation acquired works, the petition stated, with an annual capacity rating from about 60 to 82 per cent. of the country's pro- duction, with the exception of pig iron, spiegel, and ferro, which had 43.2 per cent. The petition also charged that sub- gequent to the formation of the cor- poration many companies were ab- sorbed. to suppress competition, in- ciuding the Tennessee Coal, Iron and Rallroad company, which has acquired during the money panic of 1907, One Monopoly Alleged. BY the acquisition from the Rocke- fellers of the Lake Superior Consoli- dated Iron Mines and aiiied transpor- tation companies for more than $56,- 000,000; the leasing of the Hill ore deposits, and the absorption of thcl Tennessee company, Witi its large ore holdings, the government charged, the Steel Corporation achieved a com- Pennsylvania. The petiti said: “It controls over 180 From the tigie ©of its o) down to near the time of the petition, it, by the p verious or its subsidl ful pools, agreements, meetings, and undertal time to time, and over 1i time, helped to controlj prices. of various steel; ficially, thereby subjecting ti to unlawful ‘tribute, “Through interlocking di to exercise vast influence ests to the detriment o€ its veriously ditectors in trust o banks, railread c large consumers of ‘steel prog The government ' corporation as well ‘as. subsfdiaries were in the law them be di - and weparate control, with,no common, and with the. no person or company sl works whose produnction., persentabe to be 36 of the country’s tre ‘he maximum _production was ten per ocent, Separation both from the o achieved and has malnamed country and thereby advance | tion and from each other of carrying railroads and the dive the Tennessee Conl -nuron é were included in the Complaint Against O The government asked drew Carnegie be adjudged “the unlawful combinat rule that he “took the corporation with ail.the inf taching to such partic) t1 A receiver was 0 cver all the dissolved prope to recover from the myndl reribers and promoters “th Letween the par wvalue of 1ecelved by them and tie of the properties or heretofore, in order that sc far as possible, other stockholders. Only one of the thrée § were on the bench when thd filed figured Willlam M. Lanning having' Judge George Gray naving from judicial life. ' When Ly came up for final argument in delphia in October, 1914, jt by Judges Buffington, MeP sneceeded Judge Lanning: J appointed in Judge Gray's p Hunt, case “ays STORAGE/ manding position over its competitors in the matter of ore ownership and transportation, and tha: tarough the acquisition of the H. C. Frick Coke company it controlled large areas of the best coking coal lands in Westeirn Fireproof Bullding. able. ELM STORAGE, AU COMMISSION Elm and Seymour Sts. Uptown office, 338 Main, ' L in the decision, who was called in to sit The arguwment consume # [ the filin; ters. Thirteen of fte i x fl urged that sfivera mmu