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REPORT

OF THE

ATTORNEY GENERAL.

DEPARTMENT OF JUSTICE,

Washington, D. C., December 10, 1910.

To the Senate and House of Representatives of the United States of America in Congress assembled:

I have the honor to submit the following report of the business of the Department of Justice during the fiscal year ending June 30, 1910, as required by law:

The period covered by this report was one of great activity in the Department of Justice, taxing its capacity to the utmost. With the earnest, enthusiastic cooperation of all the members of the force, the department has been able to handle a constantly increasing volume of business with comparatively little delay. The salaries paid to lawyers regularly employed by the Government are small, and the funds available for special counsel do not permit the payment of fees which bear any comparison with those offered by private interests in the transaction of their legal affairs; but notwithstanding these obstacles, the department is fortunate in having been able to secure the services of earnest and competent lawyers, to whose ability and industry is due the very large measure of success that has attended the management of the legal business of the Government during the past year. I desire to record here my high appreciation of the intelligent and devoted cooperation of the members of the staff employed at the Department of Justice.

Following the practice of previous years, the report of the work of the department during the past year will be summarized under special heads.

PROSECUTIONS UNDER THE ANTITRUST LAW.

Probably more public interest is felt in the prosecutions under the antitrust law than in any other branch of the work of the Department of Justice. At the date of my last annual report it was hoped that during the ensuing year the application of this law to the great combinations of corporations effected by means of intercorporate stock

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holdings would have received authoritative interpretation by the Supreme Court in the two suits against the so-called Tobacco Trust and the so-called Standard Oil Trust, respectively. The case against the Tobacco Trust was argued and submitted to the Supreme Court in December, 1909, and the appeal of the Standard Oil Company in March, 1910. Mr. Justice Moody was prevented by illness from sitting at the hearing of either of these appeals, and after the cases were argued and submitted Mr. Justice Brewer died. Following his death the court restored the cases to the docket and assigned them for reargument before a full bench. They are now assigned to be argued in January, 1911.

The suit in equity brought against the Southern Pacific Railroad Company and the Union Pacific Railroad Company, to enjoin the continued control of the former by the latter, has been argued and submitted to the Circuit Court of the United States in the Eighth Circuit, but no decision has been rendered.

The prosecution of the Reading and other companies as constituting an illegal combination of the bituminous coal producers and car riers in Pennsylvania was argued and submitted to the Circuit Court of the United States in the Third Circuit some months ago, but no decision has yet been rendered.

The prosecution of E. I. du Pont de Nemours & Co. et al., known as the "Powder Trust," has progressed during the year. The taking of testimony has been completed and the case will be shortly submitted to the United States circuit court in the Third Circuit for its decision.

In the suit against the Terminal Railroad Association of St. Louis and others, instituted in 1906, to dissolve an alleged monopoly of the terminal facilities at the city of St. Louis, Mo., the four circuit. judges who heard the case were equally divided in opinion, and accordingly certified the case to the Supreme Court without decision. That court during the year decided that it was without jurisdiction to act until a judgment was rendered by the Circuit Court, and therefore remanded the case for further proceedings to the lower court, which then entered a judgment dismissing the petition. The Government appealed to the Supreme Court from that judgment, and the appeal is now pending.

It has been the policy of the department to carefully investigate all complaints made to it concerning contracts, combinations, or conspiracies in restraint of trade or commerce in violation of the Sherman Act. Many of these complaints, upon investigation, prove to be groundless, or develop sources of complaint wholly outside of the scope of the federal law. The decisions of the Supreme Court, however, sustain, beyond controversy, the proposition that every contract, combination in the form of trust or otherwise, or conspiracy having

for its purpose, or directly and necessarily effecting the control of prices, suppression of competition, creation of a monopoly, or other obstruction or restraint of trade or commerce among the States, is made illegal by the Sherman Act; and that every person who shall make such contract, or engage in such combination or conspiracy, is guilty of a misdemeanor and liable to fine and imprisonment. Therefore, where the evidence tends to show that the defendants have combined under contract, agreement, trust or otherwise, with the obvious intention of restricting output, dividing territory, fixing prices, excluding competition or otherwise restraining interstate or foreign commerce, or attempting to monopolize commerce among the States or with foreign countries, the department has considered these facts as evidence of such a deliberate attempt to violate the law as to justify the use of any or all of the remedies provided by law which are adequate to prevent the accomplishment of such purposes, and to punish the attempt. In such instances the department endeavors, when the evidence warrants, to secure the indictments of the individuals responsible for the acts complained of. In the administration of this law, however, the department has refrained from instituting criminal proceedings where the evidence merely tends to show that men without intent to violate the law have acted in technical contravention of it, and in such cases has resorted to civil proceedings to restrain a continuance of the acts complained of.

The following are some of the most important prosecutions instituted during the year:

PAPER BOARD ASSOCIATION.

In December, 1909, an indictment was returned in the Southern District of New York against a large number of corporations alleged to be members of the Paper Board Association, a combination restricting competition in the purchase of paper and fixing uniform prices and increasing prices. The defendants plead guilty and were fined sums aggregating $57,000.

NIGHT RIDER CASES.

So many complaints were received by the department respecting acts of violence occurring in Kentucky arising out of the tobacco troubles that a careful and extensive investigation into the situation was made, resulting in the indictment in the United States Circuit Court, Western District of Kentucky, in February, 1910, of a number of individuals on the charge of having combined to interfere with an interstate shipment of tobacco by a farmer of Dry Ridge, Ky. Eight of the defendants were tried and convicted in April, and sentenced to pay fines aggregating $3,500.

83933°-Ab. 1910-vol 1-62

COTTON CORNER.

In April, 1910, charges were laid before the department to the effect that certain individuals had formed a combination and conspiracy to monopolize raw cotton and withhold it from the market for speculative purposes, with the object of greatly increasing its price; and that the high prices for raw cotton established by this combination had resulted in closing many mills, which were unable to market goods manufactured on the basis of such prices for the raw material. The matter was carefully investigated by a grand jury in New York and indictments were returned against James A. Patten, Eugene G. Scales, Frank B. Hayne, William P. Brown, and Robert M. Thompson, charging them with conspiracy to monopolize interstate commerce in available cotton, and with finally selling the cotton to consumers at arbitrary and excessive prices. The result of this prosecution will have very important consequences in determining how far the Sherman Act is adequate to break up "pools" or "corners to control the price of articles dealt in on commercial exchanges and to punish those who take part in them.

SUIT AGAINST TOWING MONOPOLY.

A suit in equity was brought in June, 1910, in the United States Circuit Court at Cleveland, Ohio, to break up a monopoly alleged to have been acquired by the Great Lakes Towing Company and other defendants in the towing of vessels on the Great Lakes. The importance of this suit can be appreciated from the fact that the tonnage which passes through the Sault Ste. Marie Canal is many times that of the Suez Canal-more than 100,000,000 tons making up the annual cargo of ships plying in the waters of the Great Lakes and requiring upward of 1,500 vessels to transport it.

PROCEEDINGS AGAINST BEEF PACKERS.

Very careful investigations have been conducted by the Department of Justice into the business in fresh meats and cattle among the States, and these investigations have resulted in three separate criminal proceedings:

(a) In April, 1910, an indictment returned at Savannah, Ga., charging the Armour Packing Company, Swift & Co., Morris & Co., Schwarzschild & Sulzberger, and Cudahy & Co., and Frederick M. Hull, jr., Emmett B. Adams, and William D. Cooper with engaging in a combination to fix and control the prices of fresh meats and to destroy competition.

(b) In September, 1910, indictments in the United States District Court at Chicago against Louis F. Swift, Edward F. Swift, Charles H.

Swift, Francis A. Fowler, Edward Tilden, J. Ogden Armour, Arthur Meeker, Thomas J. Connors, Edward Morris, and Louis H. Heyman, charging them with engaging in a combination and conspiracy in restraint of interstate trade in cattle and fresh meats.

(c) In October, 1910, indictments in the United States Court at Boston against John Reardon & Sons Company, the Consolidated Rendering Company, Ferdinand Sulzberger, Horatio W. Heath, and Cyrus S. Hapgood, charging them with an attempt to divide the territory between themselves throughout the New England States so as to avoid competition and to enhance prices and drive out competitors in the rendering business.

WHOLESALE GROCERS' COMBINATION.

In June, 1910, a petition was filed in the United States Circuit Court in the Northern District of Alabama against the Southern Wholesale Grocers' Association and others, based on evidence indicating that the members of that association had attempted to control the business of the Southern States in groceries and other necessaries of life and to prevent manufacturers from selling to other wholesale grocers than members of the association.

BUTTER AND EGG BOARD.

In June, 1910, a petition was filed under the Sherman Act in the United States Circuit Court at Chicago against the Chicago Butter and Egg Board, the evidence obtained by the department tending to show that this is a combination which controls the prices of butter and eggs dealt in among the States.

BRICK TRUST.

During the summer of 1910 complaints were made to the district attorney's office at Chicago that certain brick manufacturers selling paving bricks and paving blocks throughout Illinois and adjoining States had formed a combination to control prices. The matter was investigated by a grand jury and indictments found in September against the individuals and companies forming the combination.

BATH TUB TRUST.

A civil suit has been brought and is now pending against a combination of manufacturers of bath tubs and sanitary enameled iron ware, embracing 16 of the 20 manufacturers in the United States of this article, and comprising 85 per cent of the business. These defendants by means of uniform licensing agreements under certain patents have attempted to fix the price to the consumer of every article manufactured and sold by them. The combination controls

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