"Ibid., pp. 968-9.
47 Ibid., p. 968.
"Ibid., p. 969.
Other Cases Awaiting Decision
following the breaking up of the pool in 1890, led to local
combination and by 1897 the entire industry was in the
hands of seven producers, among which the Chicago Sugar
Refining Company was the largest. During that year six of
these companies, controlling 85 percent of the output, were
acquired by the Glucose Sugar Refining Company which was
organized for this purpose. The assets of the company
amounted to about $7,500,000, against which over $37,000,-
000 in stock was issued. 49 Yet the preferred stock soon sold
at $95 and the common at $52, yielding the promoters an
immediate profit of fully $4,500,000. 50 After four years
the stocks were selling at $109 and $62, respectively.
This combination, which raised the price of glucose to
$1.60 per hundred pounds or nearly 60 percent, had three
very prosperous years during which it paid over 21 percent
on its real investment. 51 During the first year a rebate of
25 cents per hundred was given, payable at the end of six
months to all customers who confined their purchases of glu-
cose and sugar to the combination. 52 This policy created
hostility on the part of the jobbing and candy trade and
brought retaliation and increased competition. Competition
was inevitable because glucose was a staple commodity and
there were no patented processes to prevent any one with
relatively small means from entering the trade. By the
end of the fourth year the combination's control had been
reduced at about 45 percent of the trade. 53 After announc-
ing a deficit for the year the price of the stock fell with a
To regain a dominant position a new consolidation was
planned. The strongest competitor was the New York Glu-
cose Company which was controlled by the Standard Oil
group. 54 No combination could succeed without including
this company. After securing 49 percent of its stock, and
confidently expecting to get 2 percent more, the promoters
49 Dewing, p. 79.
60 Ibid., pp. 80-2.
81 Ibid., p. 86.
Ibid., p. 83.
"Ibid., p. 85.
M Ibid., p. 85.
64 Trust Dissolution
proceeded in 1902 to organize the Corn Products Company
which took over the old combination and the Charles Pope
Glucose, Illinois Sugar Refining, and National Starch com-
panies. The $76,000,000 of capital stock of the new com-
pany was practically all given in exchange for the combin-
ing interests whose plants were not worth more than $12,-
000,000. 55 Yet the market value of the stock was over four
times this amount. 56 The acquisition of the National Starch
Company consolidated the control of the starch and glu-
The Corn Products Company started with about 80 per-
cent of the glucose refining capacity. 57 Its first year was
prosperous, but after that year fires, high corn prices, in-
efficient management, reckless finance, and vigorous compe-
tition reduced the combination to sorry financial straits. 58
By 1905 its refining capacity was only about 46 percent of
the total. 59 It never secured more than 49 percent of the
stock of the New York Glucose Company, its strongest com-
petitor, which in 1903 refused to co-operate and in the fol-
lowing year began to withhold all dividends on its stock.
Inefficient plants, financial weakness and friction within the
combination led to a reorganization in 1906, which was en-
tirely dominated by the New York Glucose Company. 60 The
new concern was the Corn Products Refining Company. The
stockholders of the old combination surrendered one-third
of their shares for the remaining 51 percent of the New
York company and the assets of two other outside com-
panies, and the management was also surrendered to the
New York company. 61 The total assets of the combination
were worth about $15,000,000, against which there were
$9,494,360 in bonds, $30,000,000 of preferred and $50,-
000,000 of common stock. 62 Yet the stocks began selling
65 Dewing, p. 94.
Ibid. p. 95.
Other Cases Awaiting Decision 65
at $80 and $25 respectively, or at eight times their actual
worth in the equities of the company. 63
The Corn Products Refining Company started out with
about 71 percent of the refining output, but its grinding
capacity was equal to from 85 to 100 percent of the total
grind. 64 Its actual grind of corn remained fairly constant
from year to year, being slightly greater in 1906 than in
1913. In the latter year it was 32,500,000 bushels or 65
percent of the total. 65 The remaining 35 percent was di-
vided among nine competitors, three of which were organized
after 1906. Gains in actual grinding were consistently made
by the independents. In the production of starch the com-
pany's percentage remained quite constant. It was about
64 percent in 1906, over 70 in 1907, 1910 and 1911, 67 in
1912, 63 in 1913, and 58 in 1914. 66 The figures for the
latter year were affected by the war and high corn prices.
In the production of glucose the company's percentage de-
clined. It was about 57 percent in 1913 and 53 percent in
1914. 67 Its production of mixed syrup declined from 100
to about 88 percent in 1914.
The new management in its efficiency, conservative
finance, and policy of expansion followed the methods of the
Standard Oil Company. Control was extended into the
candy business and other products. Every device which in-
genuity could discover was employed to maintain the control
of the industry. 68 A profit sharing plan was followed during
the first four years, according to which each customer was
to be repaid out of profits from 10 to 15 cents for every
hundred pounds of glucose or grape sugar purchased from
the combination, but these rebates, accumulating in any
one year, were payable at the end of the following year,
and then only on condition that the purchaser obtained none
of these products from another producer. 69 This made it
"Dewing, p. 108.
"334 Fed. Rep. 974.
"Ibid., pp. 994, 974.
"Ibid., p. 975.
Ibid., p. 974.
" Ibid., pp. 977-1011.
"Ibid., pp. 979-80.
66 Trust Dissolution
difficult for independents to secure customers. Another de-
vice was the maintenance of bogus independents for the pur-
pose of driving out competitors through price cutting. This
means was used especially in securing a position in the candy
business J During 1910-11 prices of the main products
were lowered greatly to drive out independents, the combina-
tion depending upon sales of package starch and glucose for
its profits. 71 The trust had almost enough refining capacity
to supply the demand and had almost complete control of
grape sugar, hence it was in a position to carry out such a
policy. In the early years railroad rebates were secured
through excessive allowance for switching roads, but this
was not long continued. The frequent dismantling of plants
was largely in the interests of economy. The combination
dominated the syrup trade in connection with its glucose
control, partly by mixing syrups and selling all syrup under
its most popular brands, chief among which was "Karo,"
without equal price differences. Efforts to fix prices and
restrict production were the objects of the numerous re-
In 1911, the Government filed a petition to dissolve the
Corn Products Refining Company and in 1916 the Circuit
Court entered a decree of dissolution. 72 The court held that
the plants of the company were as large as the law of in-
creasing returns demanded and that the inveterate, incor-
rigible and innate proclivity toward interfering with trade
in this industry demanded more relief than the injunction
gives. The defendants were given 120 days in which to file
a plan of dissolution with the Federal Trade Commission
which should act as a master in chancery. An appeal has
been taken to the Supreme Court.
THE QUAKER OATS COMPANY
The Quaker Oats Company is engaged in the business of
milling, manufacturing and selling cereals, particularly
rolled oats and its by-products. It is composed of various
70 234 Fed. Rep. pp. 980-85.
71 Ibid., pp. 985-95.
72 Ibid., p. 964.
Other Cases Awaiting Decision 267
concerns, the acquisition of the American Cereal Company
in 1906 being one of the important additions. In 1911, it
produced about 55 percent of the rolled oats output of the
country and sold about half of its output in package form
under the brand "Quaker Oats." 73 The company always
showed large profits but the Quaker brand lost some ground
just prior to 1911. By far the largest competitor at that
time was the Western Cereal Company which controlled from
15 to 20 percent of the rolled oats output and sold most of
its output under the name of "Mother's Oats." 74 Just be-
fore 1911 the amount sold under this brand gained rapidly
in volume but the company was running behind financially.
In 1911 the latter company was acquired by the Quaker Oats
Company whose earnings during the next five years were very
large. In spite of two extra common stock dividends of 50
and 10 percent, and the regular 10 percent cash dividends
on the common stock, the price of the latter rose rapidly from
$206 to $363. Recently it was voted to increase the common
from $7,500,000 and the preferred from $9,000,000, each
In 1913 the Government filed a suit against the Quaker
Oats Company alleging that the purchase in 1911 consti-
tuted a combination to restrain and monopolize trade in oat-
meal products and by-products. In March 1916, the Cir-
cuit Court decided the case adversely to the Government by
a two to one vote, each of the judges writing an opinion. 75
An appeal has been taken to the Supreme Court.
THE AMERICAN CAN COMPANY 76
The American Can Company, which was organized in
1901 during the great trust movement, was a speculative ven-
ture of the Moore, Reid and Leed interests. 77 Of the five
promoters only one, Mr. E. Norton, was a can maker. At
that time there were from 100 to 175 can makers who sold
T3 232 Fed. Rep. 504.
TB 232 Fed. Rep. 499-508.
78 230 Fed. Rep. 859 et seq.
" Ibid., p. 867.
268 Trust Dissolution
all or some of the cans they made. 78 Their plants ranged
from little shops to large factories, the Norton factory be-
ing the largest. The industry was growing rapidly on ac-
count of the increasing use of cans for packing various food
products, and patented can making machinery had been
The Moore interests through Mr. Norton readily secured
options on can making plants and patents covering can-mak-
ing machinery. 79 Many of the can makers had gone through
price wars with the Nortons, and they feared the opposition
of a large rival. They also regarded with dismay the con-
nection between the new company and the American Tin
Plate Company. The latter, which monopolized the tin plate
industry of the country, had been recently organized by
the Moore interests. 80 Being dependent upon the Tin Plate
Company for their raw materials the can makers were easily
forced into the combination through fear that unless they did
submit there would be price discrimination as well as dis-
crimination against them in deliveries of tin plate. They
were also more easily induced to join because Norton had
secured options on patents covering the best can-making
At the date of organization in 1901, the American Can
Company acquired 95 plants for which it paid $23,500,000,
but which were not worth over $8,500,000. 81 The promoters
gave about $7,000,000 more in cash making a total of about
$30,500,000, for which they received $78,000,000 of stock,
half preferred, which was then worth in the market about
$39,000,000. 82 The total stock was $88,000,000, half pre-
ferred. Within a short time 28 more plants were acquired,
making 123 in all. 83 As a part of the consideration the
vendors agreed not to reenter the business for fifteen years
within a radius of 3,000 miles of Chicago. The company
thus controlled from 90 to 95 percent of the tin can output,
78 230 Fed. Rep. 864.
"Ibid., p. 868-70.
80 Ibid., pp. 868-70.
81 Ibid., p. 873.
"Ibid., p. 868.
OtJier Cases Awaiting Decision 269
exclusive of supplies made by companies for their own use. 84
About three-fourths of its plants were dismantled before the
close of 1903. The company also acquired control of the
best can making machinery and for six years tried to close
the machine shops to its competitors. For a few years it
was practically impossible for competitors to secure modern
automatic machinery, but the demand stimulated new in-
ventions of good can making machinery.
Under the necessity of realizing large and quick profits,
prices were immediately raised, but this increased competi-
tion and the company had no money to purchase new com-
petitors. As a result prices were lowered, but were raised
usually during the canning season. 85 After 1904 the prac-
tice of charging high prices was discontinued. From 1911
to 1913 prices of cans, making allowance for the cost of
tin plate, were about the same as in 1897-9 although the cost
of labor and machinery per unit had declined materially. 88
The company always set the standard prices for packing
cans throughout the country, and these prices fluctuated
little within the year, or from year to year. 87
The Can company received material preferential rates
on its purchases of tin plate. From 1902 to 1913 the com-
pany bought its tin plate from the American Tin Plate
Company, a subsidiary of the Steel Corporation, under a
contract by which it was to get the tin at a lower price than
any other consumer. The advantage thus received during
these years amounted to $9,000,000. 88 The contract was
discontinued in 1913, just before the Government filed its
suit, and the Government alleged that this action was taken
in view of the impending suit.
The Can company continued to acquire competitors. 89
Ten were acquired between 1905 and 1909, some of them be-
ing operated as independents for many years. One of the
most important acquisitions was the Sanitary Can Company
84 230 Fed. Rep. 868-9.
85 Ibid., pp. 879-80.
89 Ibid., p. 893.
87 Ibid., p. 892.
88 Ibid., pp. 884-5.
89 Ibid., pp. 886-9.
270 Trust Dissolution
which had a business of about $2,000,000 in 1908. This
concern had a patent liquid compound which could be used
with machinery instead of solder to seal cans. Its sanitary
cans were fast becoming popular, but its business expanding
too rapidly, it felt the financial stress of 1907 and sold out
to the Can company. The Government alleged that the latter
used its control to exact higher prices for the sanitary cans,
although it cost no more to make them.
The output of cans for sale controlled by the Can com-
pany declined from about 90 percent in 1901 to about 50
percent in 1913. 90 The independents supplied the balance.
In that year about one-third of the output did not go upon
the market but was made by establishments for their own
use. 91 For some time prior to 1913 the company did not
attempt in any pronounced way to further monopolize the
business. It began to serve the trade through longer time
contracts, by providing storage facilities, and by its meth-
ods of standardization. Its prices, methods, and existence
were not condemned by customers or competitors at the time
of the trial. In 1915 the company was operating about 35
factories which were favorably located throughout the coun-
The earnings of the company upon the real value of its
assets have been excessive, although at first the company was
embarrassed because of 7 percent cumulative stocks amount-
ing to several times the value of the assets. In 1915 the
company had paid nearly all of the accumulated dividends on
its $41,233,300 of preferred stock and had a surplus of
$6,000,000. 92 The dividends paid would have averaged up-
wards of 20 percent on the actual value of the assets. Al-
though the common stock of equal amount had received no
dividends and represented only distant hopes when issued,
it sold as high as $68.50 in 1916.
In 1913 the Government filed a petition to dissolve the
company, charging a monopolization of the manufacture and
sale of tin cans, and in 1916 the Circuit Court gave a de-
90 230 Fed. Rep. 898-9.
Moody's Manual, 1916, pp. 2041-2.
Other Cases Awaiting Decision 71
cision in the case. 93 The record of the proceedings filled
over 8,700 printed pages. The court held that the company
in its organization and early methods was plainly illegal;
but, thM in view of its later fair methods and practices and
of certain benefits to the trade arising from the combination,
a dissolution was not conducive to the public interest. It
likened the case to that of the Harvester company. The
Court retained jurisdiction, but refrained from entering a
final decree in the hope that before a final decree would be
requested Congress would substitute some other method for
dissolution to be applied when a single corporation absorbed
a large part of the production in any one line. Later in the
year the Government entered a motion to have the court dis-
solve the company. The Court shortly afterward entered a
decree denying the petition for a dissolution, but retained
jurisdiction in order to give further relief if the company
should abuse its power. 94 The Government has appealed.
93 230 Fed. Rep. 859.
94 234 Fed. Rep. 1019.
OTHER DECREES AND DECISIONS UNDER THE TRUST LAWS
IT is the purpose of this chapter to give a brief state-
^ merit of other decisions, decrees and judgments under the
trust laws, which have not been noted in the preceding
pages. A few of the more important actions brought by
private parties are included among those instituted by the
Government. The cases are grouped according to the com-
modity or service involved.
It is significant that the first important application of
the Sherman law affected labor unions, an application per-
haps least intended by the framers of the law because it was
primarily enacted against capitalists. Elsewhere in this
study it is shown that the labor unions have been expressly
exempted from the operation of antitrust laws by recent
In 1893 a petition for a restraining injunction was filed
against the Workingmen*s Amalgamated Council of New
Orleans, a combination of workmen, draymen, etc., who were
interfering with the movement of traffic by threats and force
to compel the employment of union men only. An injunc-
tion was immediately granted. In 1894 Mr. Debs and others,
connected with the Pullman Car strike, were charged with
conspiracy to obstruct the mails and interfere with inter-
state commerce. A restraining injunction was entered by the
Circuit Court and was sustained by the Supreme Court. 1
Later in 1894 contempt proceedings were brought against
Mr. Debs and others for disobeying the injunction. The
defendants were found guilty and punished. In 1908 sey-
*158 U. S. 564.
Other Decrees and Decisions 273
eral indictments were returned against 72 laborers, charg-
ing a combination and conspiracy in restraint of trade and
commerce. 2 Early in 1911 three of the defendants were
found guilty and fines aggregating $110 were imposed. In
1911 several indictments were returned against members of
the Longshoremen's Association for combining upon rules
and requirements governing the employment of workmen
loading vessels with lumber. 3 The defendants plead guilty
and each was sentenced to four hours of confinement. In
1913 a petition was filed to enjoin several local unions of the
International Brotherhood of Electrical Workers from inter-
fering with the business of the Postal Telegraph Cable Com-
pany and an injunction was granted. 4
Perhaps the best known labor union case under the trust
laws is that of Loewe v. Lawlor, better known as the Dan-
bury Hatters' case. 5 This suit was brought by Loewe, a
manufacturer of hats, against the United Hatters of North
America, a labor organization forming a part of the Ameri-
can Federation of Labor, to recover under the Sherman law
treble damages for losses resulting from an attempt to force
Loewe to employ only union labor in his factory. The unions
had forced seventy of the eighty-two hat factories of the
country to employ union labor. Following Loewe's refusal
to unionize in 1901 the hatters' union in the factory went out
on a strike and induced the American Federation of Labor
to institute a boycott against Loewe and against all hats
sold by the firm and against all dealers handling the hats.
The boycott successfully prevented the firm from employing
other competent labor and from selling its hats. The busi-
ness was ruined and a loss of $80,000 was claimed. The case
was contested before the courts for more than a decade. 6
It went to the Supreme Court three times and two jury trials
were held. The plaintiffs were successful in both trials. The
second trial, in 1912, resulted in a judgment for $252,130,
being the amount of a trebled verdict, interest, costs and
The Federal Antitrust Laws, 1916, p. 60.
Ibid., p. 71.
4 Ibid., p. 80.
208 U. S. 274-309; 235 U. S. 522; 209 Fed. Rep. 721.
209 Fed. Rep. 723.
274 Trust Dissolution
counsel fees. 7 The validity of this verdict was affirmed by
the Supreme Court in 1915. 8 It is interesting to compare
the amount of this judgment with the smaller fines imposed
upon large industrial combinations.
COAL AND COAL PRODUCTS
In 1897 a petition was filed against the Coal Dealers' As-
sociation of California, charging a combination to maintain
fixed prices. 9 A temporary injunction, later made perma-
nent, was entered granting the relief sought. In 1899 a
petition was filed against the Chesapeake and Ohio Fuel Com-
pany and others, to annul a contract and dissolve a combi-
nation between producers and shippers of coal in Ohio and
West Virginia. 10 A decree dissolving the contract and com-
bination was entered the following year. A petition was filed
in 1911 against the Lake Shore and Michigan Southern and
five other railroad companies and three coal companies,
charging a combination to monopolize the production and
transportation of bituminous coal in and from the Ohio and
West Virginia fields. 11 In 1912 the Circuit Court ordered
a dissolution, but it was not until 1914 that a final decree
was entered by this court dissolving the combination in a
manner largely in accord with the petition of the Govern-
ment. In 1917 an indictment was returned against 109 coal
companies and 65 individuals, charging a combination to
raise prices of West Virginia coal. This action is pending.
Coal Products. In 1913 a petition was filed against the
American Coal Products Company, and others, charging
a monopolization of the supply of coal tar and restraint of
trade in the manufacture and sale of tarred roofing felts
and other coal tar products. A consent decree was immedi-
7 209 Fed. Rep.
8 235 U. S. 522.
The Federal Antitrust Laws, 1916, p. 50.
10 Ibid., p. 50.
"Ibid., p. 68; 203 Fed. Rep. 295.
Other Decrees and Decisions 75
FOODSTUFFS AND PRODUCE
Salt. A petition was filed in 1902 to enjoin the Federal
Salt Company, and others, from combining to suppress com-
petition in the manufacture and sale of salt in the western
states. 12 A restraining injunction was entered the same
Meat. An indictment returned in 1906 against an al-
leged combination in Arizona for controlling prices and re-
stricting competition in the sale of meats resulted in a ver-
dict of guilty as to one individual defendant, and a fine of
$1,000 was collected.
Sugar. The early history of the Sugar Trust and the
failure of the Knight decision to condemn it in 1894 has been
shown in previous pages. Since 1894 the American Sugar
Refining Company and its controlled companies have re-
tained a dominant position in the sugar refining industry,
but its relative proportion of the business has not remained
nearly so large as it was in that year. In 1909 an indictment
was returned against the American Sugar Refining Com-
pany, and others, but the trial resulted in a verdict of dis-
agreement in 1912. 13 In 1910 a petition was filed to dis-
solve the combination of the above defendants. After the
taking of testimony for the case had been concluded, the
court ordered the hearing to be postponed until the Supreme
Court entered decisions in the Harvester and Steel cases.
It is already twenty-three years since the Knight decision
was handed down and it will probably be several years more