7 
 
 %u tlxjc Circuit (&anv t of the jltates 
 
 FOR THE SOUTHERN DISTRICT OF NEW YORK. 
 
 United States of America, 
 Complainant, 
 
 YS. 
 
 The American Tobacco Company, 
 and Others, 
 
 Defendants. 
 
 To the Honorable the Judges of the Circuit Court of 
 the United States for the Southern District of 
 New York : 
 
 The United States of America, by Henry A. Wise, its at¬ 
 torney for said district, acting by direction of the Attorney 
 General of the United States, answering the petition of the 
 American Tobacco Company and all the other defendants to 
 the above entitled cause, except the Imperial Tobacco Com¬ 
 pany (of Great Britain and Ireland), Limited, United Cigar 
 Stores Company and R. P. Richardson, Jr., and Company, 
 Incorporated, filed in this court October 16, 1911, and by 
 way of cross-petition, respectfully shows : 
 
 I. Under the decision of the Supreme Court it is made the 
 duty of this court, either by way of an injunction restrain¬ 
 ing the movement of the products of the combination in the 
 channels of interstate or foreign commerce, or by the ap¬ 
 pointment of a receiver, to give effect to the requirements 
 of the Antitrust Act, unless within the time specified a con- 
 
 , CO 
 
2 
 
 dition of disintegration in harmony with the law is brought 
 about, either— 
 
 (1) As the consequence of the action of the court in as¬ 
 certaining and determining upon some plan or method of 
 dissolving the combination and recreating, out of the ele¬ 
 ments now composing it, a new condition which shall be 
 honestly in harmony with and not repugnant to the law or— 
 
 (2) By accepting a plan agreed upon between the parties. 
 
 And the matter is left to this court to work out a compli¬ 
 ance with the law without unnecessary injury to the public 
 or the rights of private property. 
 
 Obviously the effect of any plan of disintegration sub¬ 
 mitted to the consideration of the court must be more or 
 less a matter of conjecture, and it is impossible for the 
 court to determine in advance whether or not a plan which 
 proposes to restore competitive conditions will actually 
 accomplish the purpose intended. Any decree ascertaining 
 and determining upon a plan should therefore reserve to the 
 Government the right, at any time within five years from date 
 of entry, to apply to the court for other and further relief 
 upon a showing that, as a matter of fact, such plan has not 
 resulted in creating a new condition which shall be honestly 
 in harmony with and not repugnant to the law. To that 
 end, as well as for the other purposes hereinafter expressed, 
 each and every of the new corporations proposed to be or¬ 
 ganized for the purpose of carrying out tne plan should be 
 brought in as a party to this suit, in order to be subjected 
 to the jurisdiction of the court and bound by its decree. 
 
 II. The following conditions to the approval of the plan 
 submitted or of any other plan should be imposed, viz. : 
 
 1. That, during a period of not less than five 
 years, no one of the corporations among which the 
 properties and businesses now in the combination 
 are to be distributed, shall have any officer or di- 
 
3 
 
 rector who is also an officer or director in any other 
 of such corporations. 
 
 2. That the plan be so modified that the principal 
 company shall dispose of and, when the disintegra¬ 
 tion is complete, shall not retain any of the stocks 
 of any of the accessory companies, and each of the 
 accessory companies shall dispose of all of the stocks 
 held by it of the principal and of each of the other 
 accessory companies held by it. 
 
 3. That no one of the corporations among which 
 the property and businesses now in the combination 
 are to be distributed shall, during the same period, 
 retain or employ the same agency for the purchase 
 of tobacco leaf or other raw material, or for the 
 sale of tobacco or other products, as that of any 
 other of such corporations. 
 
 4. That no one of the corporations among which the 
 property and businesses now in the combination are 
 to be distributed shall retain or employ the same 
 clerical or other organization, or occupy the same 
 office or offices as any other of the said corporations. 
 
 5. That no one of the corporations among which 
 the properties and businesses now in the combination 
 are to be distributed shall retain and hold capital 
 stock in any other corporation, any part of whose 
 stock is also retained and held by any of the other 
 of the corporations among ivhich such properties 
 and businesses are to be distributed, or shall pur¬ 
 chase or acquire any stock in any other of such cor¬ 
 porations. 
 
 6. That no one of the corporations among which 
 the properties and businesses now in the combi¬ 
 nation are to be distributed shall, during a period of 
 five years, directly or indirectly acquire any stock in 
 any one of the others of said corporations, or pur- 
 
4 
 
 chase or acquire the property or business, or both, 
 of any other of said corporations. 
 
 7. To the end that the twenty-nine individual 
 defendants in this suit shall not increase their 
 control over any of the corporations among 
 which the properties and businesses now in 
 the combination are to be distributed, pursu¬ 
 ant to the plan, that such defendants be 
 severally enjoined from, at any time within 
 five years from the date of the decree, acquiring, 
 directly or indirectly, the legal or equitable owner¬ 
 ship of any amount of stock in any one of said cor¬ 
 porations in addition to the amounts which they will 
 respectively hold if and when the plan shall have 
 been carried out as proposed. 
 
 8. That the preferred stock of the American Cigar 
 Company, aggregating in book value $2,530,216.69, 
 held by American Snuff Company, and the stock and 
 bonds of American Tobacco Company, held by 
 American Snuff Company, referred to on page 11 of 
 the plan (foot-note A), be sold or otherwise disposed 
 of within one year, instead of three years, as pro¬ 
 posed in the plan, with leave to defendants to apply 
 to the court to extend such period for not more than 
 two years. 
 
 9. That, in the distribution of the properties and 
 businesses now held in the combination pursuant to 
 the plan of disintegration, no corporation shall be 
 allowed to acquire property, tangible or intangible, 
 which would invest it with as much as forty per cent, 
 in volume or in value of any particular line of the 
 tobacco business. 
 
 10. That the stocks of Liggett and Myers Tobacco 
 Company and P. Lorrillard Company, provided to be 
 sold in accordance with the plan, be deposited with the 
 
5 
 
 Guaranty Trust Company of New York, as the agent 
 or depository of this court in this cause, for the 
 purposes specified in the plan, and that, at the end 
 of the period designated, the court make an order 
 for their further disposition. That, in the mean¬ 
 time, no voting right, with respect to such stock, 
 shall be exercised except as the court may from time 
 to time order. 
 
 11. That all covenants in any way restricting the 
 right of any company or individual in the combina¬ 
 tion to buy, manufacture or sell tobacco or its 
 products should be rescinded by the affirmative 
 action of the respective parties thereto who are par¬ 
 ties to this suit. 
 
 12. That the action proposed in subdivision C of 
 the plan, on page 6, terminating certain covenants, 
 be amplified so as to include like action with respect 
 to all covenants not only concerning the tobacco 
 business, but any other business which is in any way 
 embraced in the combination. 
 
 13. That all contracts or covenants between the 
 American Tobacco Company, or any other companies 
 in the combination, and the British-American To¬ 
 bacco Company, giving to the latter company the ex¬ 
 clusive right to manufacture or sell brands belonging 
 to any of the companies in the combination, be re¬ 
 scinded or otherwise terminated. 
 
 14. That the stock of the United Cigar Stores 
 Company be sold and distributed to parties other 
 than the twenty-nine individual defendants or others 
 of the common stockholders of the American 
 Tobacco Company, to the end that the corporation 
 be entirely separated from any connection with the 
 corporations to which the properties and businesses 
 now in the combination are to be distributed. 
 
6 
 
 That appropriate provisions be inserted in the final 
 decree giving force to the foregoing conditions, by 
 way of injunction upon all parties to the suit, etc. 
 
 Ill. The questions of the capitalization of the various 
 corporations among which it is proposed to distribute the 
 properties and businesses now in the combination ; as to the 
 distribution of assets, as between preferred stockholders 
 and common stockholders; and as to the amount offered 
 to be paid or distributed to the holders of bonds of 
 either class, or preferred stocks, are submitted to the 
 court as matters concerning the stockholders of the 
 corporations and the bondholders ; the Government 
 being concerned merely with the disintegration of 
 an illegal combination, and the recreation of 
 competitive conditions under such circumstances and with 
 such safeguards as will insure the continuation of such com¬ 
 petitive conditions and prevent a recurrence of the unlawful 
 condition found by the court to exist in this case. 
 
 IY. That, by the final decree to be entered herein, it be 
 provided that the defendants named in the petition, their 
 respective officers, directors, agents, servants, and employes, 
 be forever ^enjoined and prohibited from continuing or 
 carrying into further effect the combination adjudged 
 illegal by the Supreme Court, and from entering into or 
 forming any like combination or conspiracy, the effect of 
 which is or will be to restrain commerce in tobacco or its 
 products, or in articles used in connection with the manu¬ 
 facture and trade in tobacco and its products, among the 
 states or in the territories or with foreign nations, or to 
 prolong the unlawful monopoly of such commerce obtained 
 and possessed by the defendants, as adjridged herein in 
 violation of the Act of Congress approved July 2, 1890, 
 either : 
 
 1. By causing the conveyance of the physical 
 property and business of any of the corporations 
 
7 
 
 among which the properties and businesses now in the 
 combination are to be distributed to any other of said 
 corporations ; by placing the stocks of any one or 
 more of said corporations in the hands of voting 
 trustees or controlling the voting power of such 
 stocks by any similar device ; or 
 
 2. By making any express or implied agreement or 
 arrangements together or one with another like those 
 adjudged illegal by the Supreme Court in this cause, 
 relative to the control or management of any of said 
 corporations, or the price or terms of purchase, 
 or of sale, of tobacco or any of its products, or 
 the supplies or other product dealt with in con¬ 
 nection with the tobacco business, or relative 
 to the purchase, sale, transportation or manu¬ 
 facture of tobacco, or its product or supplies 
 or other product dealt with as aforesaid, by 
 any of the parties hereto, which will have a 
 like effect in restraint of commerce among the 
 states, in the territories and with foreign nations 
 to that of the combination the operation of 
 which is enjoined in this cause ; or by making any 
 agreement or arrangement of any kind with any other 
 of such corporations under which trade or business is 
 apportioned between such corporations, in respect 
 either to customers or localities ; or by any of such 
 corporations doing business, directly or indirectly, 
 under any other than their own corporate respective 
 names ; by refusing to sell to any jobber any brands of 
 any tobacco product manufactured by it except upon 
 condition that such jobber shall purchase from the 
 vendor some other brand or product, also manu¬ 
 factured and sold by it; or 
 
 3. By the British-American Company and the Im¬ 
 perial Company employing a common agent for the 
 
the purchase of leaf tobacco in the United States, or 
 by either of said two companies uniting with any of 
 the corporations among which the properties and 
 businesses now in the combination are to be dis¬ 
 tributed, in the employment of a common agent for 
 the purchase of tobacco leaf ; or 
 
 4. By transferring to and vesting in any of the cor¬ 
 porations among which the properties and businesses 
 now in the combination are to be distributed, any 
 part of the stock of the United Cigar Stores Com¬ 
 pany ; or 
 
 Wherefore the United States prays the court that, in 
 connection w r ith any plan or method of dissolving the un¬ 
 lawful combination of the defendants found by the Su¬ 
 preme Court to exist in this case, 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, 
 which this court may ascertain and determine upon and in 
 the final decree, to be rendered in this cause, the foregoing 
 requests and suggestions be adopted and embodied. 
 
 Henry A. Wise, 
 
 United States Attorney for the Southern District 
 
 of New York. 
 
 [6833]