is true that some Standard marketing concerns did make shipments into the territory of other Standard concerns; these interterritorial shipments amounted in 1915 to over 200,000,000 gallons. But these shipments represented sales to the company whose territory was "invaded," and the latter was therefore free to dispose of the gasoline as its own product, and at such prices as it saw fit. Obviously such sales had no tendency to equalize prices; they permitted each company to maintain the monopoly price that yielded it the maximum net profit. And this they were enabled to do by virtue of the dominant position which they occupied in the trade. The Commission estimated that the Standard companies controlled approximately 65 per cent of the gasoline business throughout the United States. The "independents" thus controlled about 35 per cent; yet by no means all of their output could be regarded as competitive, since it included the sales of companies, such as the Tidewater Oil Company, in which the Standard stockholders had large interests. Moreover, the facts seemed to show that though the "independents" competed for business, they followed the prices fixed by the Standard companies in the several marketing

areas.

The explanation of the lack of competition among the Standard marketing companies, according to the Federal Trade Commission, was to be found in the fact that there was a community of interest among these companies based on common stockholding. This community of interest, it should be noted, included the oil-producing, pipe-line, and refining companies, as well as the marketing companies. The stockholder lists of the Standard companies as of January, 1915, made it clear that although some changes in the personnel of the stockholders had taken place since the dissolution, a majority of the stock of most of the companies continued to be held by the same small group.2 For example, 55 per cent of the stock of the Atlantic Refining

1 Report of the Federal Trade Commission on Price of Gasoline in 1915, p. 143. The approximate percentage by territories is shown on p. 144.

2 See Report of the Federal Trade Commission on Price of Gasoline in 1915, p. 145.

Company was held by the comparatively small group of individuals owning 300 shares or more apiece; and this same group held over 50 per cent of the stock of the Prairie Oil and Gas Company, the Prairie Pipe Line Company, the Continental Oil Company, and the Standard Oil companies of New Jersey, New York, Ohio, Indiana, Kentucky, and Nebraska. (If the holdings of less than 300 shares were included, the percentage of common holding would amount to approximately 70 per cent.) Moreover, the Standard Oil Company of New Jersey owned practically all of the stock of the Standard Oil Company of Louisiana and of the Carter Oil Company; and the presidents of the Standard Oil Company of New Jersey and the Standard Oil Company of New York owned about 70 per cent of the stock of the Magnolia Petroleum Company. A community of interest among the cleven Standard marketing companies and the crude oil and pipe-line companies was thus established.

In addition, the leading officers and directors of the Standard companies were frequently stockholders in several companies. To cite one instance, the president of the Standard of New Jersey owned 6,000 shares (worth $3,258,000 at the end of 1915) in his own company, 4,575 shares (worth $1,029,375) in the Standard of New York, 1,858 shares (worth $1,012,610) in the Standard of Indiana, 1,100 shares (worth $480,150) in the Prairie Oil and Gas Company, and 300 shares (worth $207,000) in the Atlantic Refining Company. Such common stockholdings naturally tended to restrain competition among the separate companies.

The conclusion of the Commission was that the combination, which was supposed to have been disintegrated, remained a combination in fact, if not in law,-a combination based on a community of interest, which in turn was the result of the interownership of stock. In making this statement, however, the Commission was careful to say that it did not charge the Standard companies with violating the decree; for common ownership was not prohibited by the dissolution decree. Neither did it in1 Report of the Federal Trade Commission on Price of Gasoline in 1915, p. 158.

tend to criticise the decree itself. The Standard Oil Company being the first important trust to be dissolved, the decree was more or less of an experiment. But it was the deliberate judgment | of the Commission that the experiment of dissolving corporations without separating owners had not led to the desired result, which was the restoration of competition. In reply to the argument that some time in the future a redistribution of territory might be brought about by the "operation of economic laws," the Commission said that there was not sufficient evidence of a tendency to a substantial rearrangement of territory to warrant a reliance upon time and the laws of trade.

The Commission, therefore, in accordance with the duty imposed upon it by the Trade Commission Act, recommended that Congress enact legislation to remedy the unfortunate state of affairs thus disclosed. The suggestions, so far as they relate to common ownership, were: (1) A law providing for the reopening of anti-trust cases on the application of the Attorney General, for the purpose of securing such modifications of decrees as new conditions might require. (2) The abolition by legislation, in certain cases, of common stock ownership in corporations which have been members of a combination dissolved under the Sherman Act, when these companies are engaged in the same line of commerce. (3) As an alternative to (2), an effective limitation upon common ownership of stock in potentially competitive corporations by withdrawing the power of voting and control. (4) If Congress deemed it inadvisable to prevent common ownership, with its almost inevitable restriction of competition, the Commission recommended the enactment of legislation that would fix upon the common owners of stock in potentially competing concerns the responsibility for such acts of each of these concerns as resulted in the prevention of competition. With respect to the pipe-lines, the Commission urged that the best policy would be to apply the principle of the commodity clause, and segregate the ownership of the pipe-lines from the other branches of the petroleum industry. This would involve, said the Commission, a prohibition against the controlling portion of the stock of any pipe-line company engaged in interstate

i

commerce being owned by individuals or corporations that were also owners of crude oil or refining properties, or vice versa.

The dissolution of the tobacco trust-the next trust to be dissolved-presented a much more difficult problem than the dissolution of the oil trust. As the Supreme Court had pointed out, a mere decree forbidding stock ownership by one part of the combination in another part thereof would not afford adequate relief, since there would still remain corporations dominating various branches of the tobacco business. For example, to prescribe that the American Tobacco Company should part with its control of the American Snuff Company would not fully meet the situation, since the American Snuff Company would still dominate the snuff branch of the tobacco business in violation of the anti-trust act. Again, the subtle devices-to use the Court's language that had been resorted to in establishing the trust were of such a character as to make it difficult, if not impossible, to formulate a remedy that would restore the prior lawful conditions. In view of this situation Justice Harlan recommended that the Supreme Court itself frame the dissolution decree, the record being sufficiently full, in his opinion, to enable the Court to formulate a plan. But the Court decided otherwise. It remanded the case to the court below, and directed it to hear the parties "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.

2

In view of the complex organization of the tobacco trust, the Circuit Court would have found its task sufficiently difficult,

1 On the dissolution of the tobacco trust see especially: 191 Fed. Rep. 371-431; Report of the Senate Committee on Interstate Commerce on the Control of Corporations, 1913, pp. 315-350; Report of the Commissioner of Corporations on the Tobacco Industry, part III; Annual Reports of the Attorney General; and Muhse, Political Science Quarterly, 28, pp. 249–278. 2 221 U. S. 187.

even had the Supreme Court in other cases laid down the rules of dissolution. But except for the simple remedy provided in the Standard Oil case-a remedy which the Supreme Court had declared to be inadequate in the tobacco trust case there were no rules. As the Circuit Court said, "We are left without guide to turn a condition in violation of the law into a condition honestly in harmony with it.” 1

The Circuit Court approached its problem by instituting a series of conferences between the counsel for the defendants and the counsel for the government (including the Attorney General), in order that a preliminary agreement upon the dissolution plan might be had. At these conferences, held in the presence of at least two members of the Court for a period of two months, many changes in the plan of dissolution suggested by counsel for the tobacco trust were made to meet the objections raised by the Attorney General. When affairs had finally reached such a stage that the differences between the parties could no longer be adjusted, the Court arranged for public hearings upon the matters yet in dispute; and at these hearings outside parties were given an opportunity to express their views. The plan proposed by the American Tobacco Company, modified in some respects as the result of these hearings, was then unanimously approved by the four circuit court judges, and made effective by a decree, entered November 16, 1911.

At these public hearings other plans for dissolving the trust were presented,-plans which in some instances differed widely from the plan of the defendants. But counsel for the defendants declared that they would not undertake to carry out any of these plans, preferring apparently to take their chances at receiver's sale. The Court therefore refused to consider them. It held that it had no power to enforce any plan of readjustment without the coöperation of the owners of the property. Its only recourse, in the event that the proposed plan did not meet the requirements laid down by the Supreme Court, or in the event that the defendants would not accept such modifications as the Court might require, was, it said, to seize the property and sell 1191 Fed. Rep. 386. 2 Ibid., 375.