Volume 2, page 874

(Washington: Government Printing Office, 1907)._

COMBINATIONS: A. D. 1906-1910. The Standard Oil Company. Suit of the Government for its dissolution. Decree for its dissolution by the Circuit Court. Appeal to the Supreme Court.

Entirely distinct from the criminal prosecutions of the Standard Oil Company by the United States Government, as reviewed above was a suit begun in November, 1906, in the United States Circuit Court for the Eastern Division of Missouri. The former actions were to penalize the Company for violations of the Elkins Act, by the procuring of railway rebates. The later suit was to dissolve the combination in restraint of trade which the Company was alleged to be, and therefore illegally existing, in the view of the Sherman Anti-Trust Law. The complaint was directed against the parent organization, known as the Standard Oil Company of New Jersey, with its various subsidiary corporations. It was also directed against seven individuals namely, John D. Rockefeller, William Rockefeller, Henry M. Flagler, Henry H. Rogers (now deceased), John D. Archbold, Oliver H. Payne, and Charles M. Pratt. The main company, its branches, and these individuals were charged in the complaint with having entered into an agreement, combination, and conspiracy to restrain trade and commerce among the several States, to monopolize the trade in petroleum, both in its purchase and its shipment and transportation by pipe-line, steamships and by rail, also in the manufacture and refining of petroleum.

One of the evidences of its monopoly adduced by the Government was the enormity of its earnings which were summarized thus: The Standard Oil Trust and the Standard Oil Company, on an investment of $69,024,480, had earned up to the end of 1906, $838,783,783. Adding the estimated profits of 1907 and 1908, we have substantially, the brief states, a billion dollars earned by this company in twenty-seven years, with an original investment of about $69,000,000.

The United States asked for a perpetual injunction, and for the dissolution of the Standard Oil combination. Hearings were held in New York, Washington, Chicago, Cleveland, and St. Louis, about four hundred witnesses being examined. It was not until the 5th of April, 1909, that the case reached the stage of argument, before Judges Walter H. Sanborn, Willis Van Devanter, William C. Hook and Elmer B. Adams, constituting the United States Circuit Court at St. Louis. The decision of the Court was announced on the 20th of the following November, the four judges concurring in the opinion, written by Judge Sanborn, which held the Standard Oil Company to be an illegal corporation and decreed its dissolution. The character of the decision appears from the syllabus of Judge Sanborn’s opinion, which reads:

"Congress has power under the commercial clause of the Constitution to regulate and restrict the use in commerce among the several States, and with foreign nations, of contracts, of the method of holding title to property and of every other instrumentality employed in that commerce, so far as it may be necessary to do so, in order to prevent the restraint thereof denounced by the Anti-Trust Act of July 2, 1890 (26 Stat. 29).

"Test of the legality of a combination under this act is its necessary effect upon competition in commerce among the States or with foreign nations. If its necessary effect is only incidentally or indirectly to restrict the competition, while its chief result is to foster the trade and increase the business of those who make and operate it, it does not violate that law. But if its necessary effect is to stifle or directly and substantially to restrict free competition in commerce among the States, or with foreign nations, it is illegal within the meaning of that statute.

"The power to restrict competition in commerce among the several States, or with foreign nations, vested in a person or an association of persons by a combination, is indicative of the character of the combination, because it is to the interest of the parties that such a power should be exercised, and the presumption is that it will be.

"The combination in a single corporation or person, by an exchange of stock, of the power of many stockholders holding the same proportions, respectively, of the majority of the stock of each of the several corporations engaged in commerce in the same articles among the States, or with foreign nations, to restrict competition therein, renders the power thus vested in the former greater, more easily exercised, more durable, and more effective than that previously held by the stockholders, and it is illegal.

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"In 1899 the stockholders of the Standard Oil Company of New Jersey owned a majority of the stock of nineteen other corporations in the same proportions that they owned the stock of the Standard Company, and those twenty corporations controlled by the owners of the majority of their stock or otherwise many other corporations. Each of these corporations was engaged in some part of the business of producing, buying, refining, transporting, and selling petroleum and its products, and they were conducting about 30 per cent. of the production of the crude oil and more than 75 per cent. of the business of the purchasing, refining, transporting, and selling petroleum and its products in this country. Many of them were engaged in commerce in these articles among the several States and with foreign nations, and were naturally competitive.

"During the ten years prior to 1879 the seven individual defendants had acquired control of many corporations, partnerships, and refiners that had been competing in this business, had placed the majority of the stock of those corporations and the interests in property in business thus obtained in various trustees to be held and operated by them for the stockholders of the Standard Oil Company, one of the nineteen companies in which the individual defendants were principal stockholders, and had thereby suppressed competition among these corporations and partnerships.

"In 1879, they and their associates caused all the trustees to convey their interests in the stock, property and business of these corporations to five trustees, to be held, operated and distributed by them for the stockholders of the Standard Company of Ohio. From 1879, until 1892, they prevented these corporations and others engaged in this business, of which they secured control, from competing in this commerce by causing the control of their operations and generally of a majority of their stocks, to be held in trust for the stockholders of the Standard Company of Ohio, and, from 1892, until 1899, they accomplished the same result by a similar stock-holding device, and by the joint equitable ownership of the majority of the stocks of the corporations."

Appeal from the decree has been taken to the Supreme Court, where it was preceded by the appeal of the Tobacco Trust from a similar decree, involving substantially the same questions, according to what seems to be the general view of the Bar. On the 17th of January, 1910, the Supreme Court of the United States granted the motion of the Government for the advancement on the docket of the Standard Oil case, and set the hearing for March 14.

COMBINATIONS: A. D. 1907. The chief existing combinations. Their operation through stock ownership.

"Passing the matter of railroad combinations, as to which it may be said that through stock ownership the control of all American lines is now concentrated in seven groups of parent properties, we are chiefly concerned with the practical use that has been made of the new corporate power by the largest and strongest of our manufacturing and industrial enterprises.

"The United States Steel Corporation, organized under the laws of New Jersey, with a capital stock of $1,100,000,000 owns a majority of the stock of eleven subsidiary companies, and controls industries scattered over the entire country under different styles and corporate names. This corporation owns or manages 213 manufacturing and transportation plants and forty-one mines located in eighteen different States; it has more than 1,000 miles of railroad tracks to ore, coke and manufacturing properties, and a lake fleet of 112 vessels. This stock ownership gives it control of hundreds of millions of capital that is not represented by its own billion dollars of stock.

"The Amalgamated Copper Company, incorporated in New Jersey, has no asset whatever except the stocks of other corporations. It owns all the stock of four operating companies and a controlling interest in seven others, and has taken them over by an issue of $155,000,000 of its own stock.

"The American Smelting and Refining Company, organized under the laws of New Jersey, controls the business of thirteen corporations, in which it either owns the entire stock or a majority interest. Associated with it are the American Linseed Company, the National Lead Company and the United Lead Company, and they together control twenty-eight concerns and ninety-three affiliated corporations.

"The Standard Oil Company, incorporated in New Jersey, with a capital stock of $110,000,000, controls, directs and manages more than seventy corporations through its possession of a majority of their stock. Some of these companies own stock in still other corporations, and all together the combine operates more than 400 separate and distinct properties, thus monopolizing 90 per cent, of the export oil trade and 84 per cent. of the domestic trade. The market value of its capitalization is about $650,000,000, and all this vast property was brought together under one head without the payment of a single dollar of cash, the whole consolidation being effected through the issue of stock in the holding company in payment of stock in the companies that are held.

"The United Gas Improvement Company, incorporated in Pennsylvania, own stock in thirty corporations doing the character of business for which it was organized, and in addition to this is interested in numerous street railway properties, including the New York City surface railways. With it is allied the Public Service Corporation of New Jersey and the Rhode Island Securities Company, which last named owns all the stock of the Rhode Island Company, which again has leased for 999 years several of the most important railroad companies doing business in that State. The power of this corporation, through this system of stock ownership, is scarcely calculable, and the value of properties controlled would equal hundreds of millions, although its own capital stock is but $36,000,000.

"The American Tobacco Company, organized under the laws of New Jersey, with a capital stock of $40,000,000, practically controls the whole market through its ownership of the stock of innumerable other corporations.

"The International Harvester Company, incorporated in New Jersey, with a capital stock of $120,000,000, while probably not a holding company, maintains most, if not all, the corporations which it has bought out, and they are operated as if they were distinct and competing concerns.

"The American Sugar Refining Company, incorporated in New Jersey, with a common stock of $40,000,000, controls fifty-three other corporations.

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"The American Telegraph and Telephone Company, incorporated in New York, with a capital stock of $250,000,000 controls, through stock ownership, thirty-five subsidiary corporations.

"The Western Union Telegraph Company owns stock in twenty-four other corporations; the Distillers’ Security Company owns 90 per cent. of the stocks of the Distilling Company of America, and has acquired ninety-three plants, representing 60 per cent. of the industry; the Philadelphia Rapid Transit Company owns the stock of twelve elevated and street railway companies; the Brooklyn Rapid Transit Company owns the stock of seven others; the Metropolitan Securities Company of New York owns the stock of many traction companies, and the controlling interest in others; the Inter-State Railways of New Jersey own all the stock of the United Power and Transportation Company, which latter company controls the capital and franchises of about forty other projected companies in New Jersey and Pennsylvania; while the International Mercantile Marine Company of New Jersey owns a majority of the shares of many of the most important steamship companies whose vessels cross the Atlantic Ocean.

"These are but a few instances of the promotion of combinations through stock ownership."

_Wade H. Ellis, Attorney-General of Ohio, Paper read at National Conference on Trusts and Combinations, Chicago, October 22, 1907._

COMBINATIONS: A. D. 1907. National Conference on the Trust Question, invited by the National Civic Federation.

A remarkably representative and impressive assembly at Chicago, of delegates from all parts of the country, and voicing all interests, was brought about by the invitation of the National Civic Federation, in October, 1907, for a thorough discussion of the questions which troubled the country and confused its attitude toward Trusts and Combinations, as subjects of regulation by law. There had been a similar conference at Chicago in 1899, at the call of the Civic Federation of that city; but no common ground of agreement could then be found. The subject, as was afterwards said, "was too new, too vaguely understood for men to be of one mind in regard to it." But eight years later, in 1907, "it appeared to the leaders of the National Civic Federation not improbable that a new conference might lead to some definite pronouncement of opinion. … Leaders of opinion in all walks of life gave the project their hearty endorsement. … The matter was taken up with great interest by the Governors of the several States and by the presidents of commercial bodies, who named delegates in response to the invitation of the National Civic Federation. A significant evidence of this greater interest is found in the larger number of delegations appointed in 1907 than in 1899. The records show the following:

Delegations. 1899. 1907.

Appointed by Governors 33 39

Appointed by national and State organizations 22 33

Appointed by labor organizations 7 14

Appointed by local commercial bodies 33 58

Total 95 144

"Furthermore, the attendance of 492 delegates in 1907 might be contrasted with that of 238 delegates at the earlier conference.

"The conference of 1907, though larger in numbers, was much more of a unit in sentiment. It developed at an early stage of the discussion that there was no important element antagonizing the trust and combination as such. There were few speakers who failed to dwell upon the advantages which had accrued to the nation from some combinations, and from the spirit of association which, after all, cannot be separated from them. On the other hand, there was no lack of emphasis in dwelling upon the evils which had been disclosed among trusts and combinations.

"The resolutions of the conference, adopted by a unanimous vote, reveal these tendencies. They are a call for further examination and more light, but a call for such examination along certain pretty well-defined lines. They should receive the attention of Congress as an expression of the popular will on this pressing question."

The Conference held nine sessions, extending over four days, focusing the thought of the best minds of the country, and the counsels of the largest practical experience, on all points in the many-sided problem before it. On all that appear most important among those points it came to a full and clear agreement in its conclusions, as embodied in the following resolutions, which were adopted by unanimous vote, a committee being appointed to present them to Congress and to the President:

"After twenty years of Federal legislation as interpreted by the courts, directed against the evils of trusts and combinations, and against railroad rebates, beginning with the interstate commerce act of 1887 and the anti-trust act of 1890, a general and just conviction exists that the experience gained in enforcing these federal acts and others succeeding them demonstrates the necessity of legislation which shall render more secure the benefits already gained and better meet the changed conditions which have arisen during a long period of active progress, both in the enforcement of statute law and in the removal of grave abuses in the management of railroads and corporations. These changes now demanded are:

"First—Immediate legislation is required, following the recommendation of President Roosevelt and the Interstate Commerce Commission, permitting agreements between railroad corporations on reasonable freight and passenger rates, subject in all respects to the approval, supervision, and action of the Interstate Commerce Commission.

"Second—The enforcement of the Sherman act and the proceedings under it during the administrations of Presidents Harrison, Cleveland, McKinley, and Roosevelt have accomplished great national results in awakening the moral sense of the American people and in asserting the supremacy and majesty of the law, thus effectually refuting the impression that great wealth and large corporations were too powerful for the impartial execution of law. This great advance has rendered more secure all property rights, resting, as they must, under a popular government, on universal respect for and obedience to law. But now that this work is accomplished, it has revealed the necessity for legislation which shall maintain all that the Sherman act was intended to secure and safeguard interests it was never expected to affect.

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"As the next step in executing the determination of the American people to secure in all industrial and commercial relations justice and equality of opportunity for all, with full sympathy and loyal support for every effort to enforce the laws in the past, we urge upon Congress without delay to pass legislation providing for a non-partisan commission, in which the interests of capital, of labor, and of the general public shall be represented. This commission, like a similar commission, which proved most successful in Germany in 1870, shall consider the entire subject of business and industrial combinations and report such proposals, as to the formation, capitalization, management and regulation of corporations (so far as the same may be subject to federal jurisdiction) as shall preserve individual initiative competition, and the free exercise of a free contract in all business and industrial relations. Any proposed legislation should also include modification of the prohibition now existing upon combinations on the following subjects:

"1. National and local organizations of labor and their trade agreements with employers relating to wages, hours of labor, and conditions of employment.

"2. Associations made up of farmers, intended to secure a stable and equitable market for the products of the soil free from fluctuations due to speculation.

"3. Business and industrial agreements of combinations whose objects are in the public interest as distinguished from objects determined to be contrary to the public interest.

"4. Such commission should make a thorough inquiry into the advisability of inaugurating a system of federal license or incorporation as a condition for the entrance of certain classes of corporations upon interstate commerce and also into the relation to the public interest of the purchase by one corporation of the franchises or corporate stock of another.

"On no one of these subjects must what has been gained be sacrificed until something better appears for enactment. On each, this conference recognizes differences between good men. On all, it asks a national non-partisan commission to be appointed next winter to consider the question and report at the second session of the approaching Congress for such action as the national legislature, in the light of this full investigation, may enact.

"Third—The examination, inspection and supervision of great producing and manufacturing corporations, already begun by the Department of Commerce and Labor and accepted by these corporations, should be enlarged by legislation requiring, through the appropriate bureaus of the Department of Commerce and Labor, complete publicity in the capitalization, accounts, operations, transportation charges paid, and selling prices of all such producing and manufacturing corporations whose operations are large enough to have a monopolistic influence. This should be determined and decided by some rule and classification to be devised by the commission already proposed.

"Fourth—The conflicts between State and Federal authorities raised in many States over railroad rates being now under adjudication and under way to a final and ultimate decision by the Federal Supreme Court, this conference deems the expression of an opinion on these issues unfitting, and confidently leaves this great issue to a tribunal which for 118 years has successfully preserved the balance between an indissoluble union and indestructible State, defining the supreme and national powers of the one and protecting the sovereign and individual powers of the other."

_Proceedings of the National Conference on Trusts and Combinations, Chicago, October 22-25, 1907 (New York: National Civic Federation, 1908)._

COMBINATIONS: A. D. 1907-1909. Thievery of the Sugar Trust.

In the fall of 1907 disclosures were made to the Government which led to an investigation of the methods whereby imports of raw sugar for the American Sugar Refining Company, known commonly as the Sugar Trust, were weighed for the payment of Customs duties, at the Company’s docks in Williamsburgh and Jersey City. The result of the investigation was to prove that this enormously wealthy corporation, not satisfied with extortions of profit from the public by its monopoly of the vast sugar trade of the country, had stooped to practices of systematic theft from the Government, by devices that would almost shame the professional players of a thimble rigging game. Several ingenious inventions of trickery with the weighing scales had been employed at the sugar docks prior to 1904, but the crowning one appears to have been brought to use in that year. "This," said the New York _Evening Post_ of April 29, 1909, in a full rehearsal of the story of the Sugar Trust larcenies, "consisted of a thin steel corset spring, which was inserted through a hole drilled in the uprights or stanchions supporting the scales. If inserted at a time when there was a load on the platform, its pressure against the walking beam of the scale resulted in creating a false balance, and in making the load appear considerably lighter than it really was. This little device proved to be so satisfactory for the purposes for which it was designed that it was fitted to all the seventeen government scales at the Havemeyer & Elder refinery. Holes were drilled in the stanchions of each of the scales—hence the ‘case of the seventeen holes’ to which Mr. Stimson called attention. So successful was the operation of this mechanism that it was used constantly down to the very day, November 20, 1907, when a United States Treasury agent found it in use.

"The method of use was simple. The scales were placed with the stanchions in a dark corner, next to the wall, and close beside this stanchion sat the company’s checker, whose ostensible duty it was to record in a little book the weight of each load as it was read off to him by the government weigher standing at the other end of the scale. The checker’s really important duty seems to have been, however, to manipulate the steel spring through the hole in the stanchion, so that on each truck load, the company which employed him was saved the payment of duty on some fourteen pounds of sugar.

"Evidence was adduced at the subsequent trial to show that the company considered this special service on the part of its checkers worthy of additional compensation. For although there were seventeen scales, all of which could be used for this purpose, practically all the weighing was done on six, and the six reliable checkers who, year in and year out, operated the little steel springs, all received extra pay in their weekly pay envelopes for this service."

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Consequent on the discovery of these facts, "several indictments were found against the Sugar Trust’s employees, and with that discovery as a basis the government began to work up its case. … When the government came to work up its case and to fix approximately the amount out of which it had been defrauded, it was found possible to present a piece of evidence which so thoroughly clinched the case that defence, when it came to be made, was so weak as to be negligible. This evidence consisted of a tabulation comparing the weights of sugar on which duty was paid and the weights for which the company paid the planters between the time the first cargo of sugar of December, 1901, arrived at the refinery and the discovery of the fraud in November, 1907.

"It took a score or more of accountants working steadily for six months to complete the tabulation, but when it was finished the astonishing corroborative story it told made it well worth all the time and trouble expended. Never was there a better example of the deadly parallel. For every entry the weights on which duties were levied was set alongside of the weights for which the company paid the planters."

The first result of the proceedings of the Government against the thievish Trust was a pecuniary settlement with it, concerning which the following official statement was given out at Washington, by Attorney-General Wickersham, on the 29th of April, 1909:

"The Attorney-General, with the concurrence of the Secretary of the Treasury, has just approved a settlement between the American Sugar Refining Company and the United States Government of all the claims which the latter has against it arising out of the fraudulent weighing on the docks of its refineries at Brooklyn and Jersey City. In making this settlement the sugar company pays in full the recent judgment for the penalty in the amount of $134,411.03, which was awarded against it by the jury in the case tried in the federal court last March, with interest, and agrees to take no appeal from the judgment.

"In addition to this, it pays into the United States treasury $2,000,000 more, representing the duties which have been unpaid during the last twelve years, owing to the fraudulent practices, $1,239,088.97 of this amount has already been paid in under protest to Collector Loeb on his reliquidation, as a result of the trial above mentioned, of the duties upon the cargoes entered at the Havemeyer & Elder refineries between the years 1901 and 1907, when the frauds were discovered.

"The sugar company abandons its protests on these payments and gives up its right to appeal from Mr. Loeb’s reliquidation and in addition to this pays into the United States treasury the above judgment and over $760,000 more to cover the duties unpaid at the Havemeyer & Elder docks prior to 1901 and at the Jersey City refinery between 1896 and 1906.

"This settlement with the sugar company in nowise affects the criminal prosecution of the individuals who are responsible for the perpetration of these frauds, and such prosecutions will be pressed to a finish by the government."

[Soon after this settlement with the Government by the Sugar Trust for shortage in payment of duties, the firm of Arbuckle Brothers made a similar settlement, paying $695,573.19.]

A few days after the above announcement of a pecuniary settlement with the American Sugar Refining Company, the Grand Jury of the Circuit Court in the New York District presented indictments against Oliver Spitzer, who was superintendent on the company’s docks, Thomas Kehoe, Eugene M. Voelker, Edward A. Boyle, J. R. Coyle, J. M. Halligan, Jr., and Patrick J. Hennessy.

In November, further indictments were found against these employees of the company, and James F. Bendernagel, general superintendent of the Williamsburgh refinery for many years past, was arrested on an indictment found by the same grand jury. The trial of the accused, in the United States District Court, was opened on the 30th of November.

On the 17th of January, 1910, Charles R. Heike, secretary and treasurer of the American Sugar Refining Company, was arraigned before Judge Hough in the criminal branch of the United States Circuit Court, charged with making false entries and conspiring to defraud the government.

COMBINATIONS: A. D. 1907-1909. Suit of the Government against the Tobacco Trust. Decree of Circuit Court restraining the combined companies from interstate and foreign trade.

On the 10th of July, 1907, the Government began suit at New York against the so-called Tobacco Trust. The defendants in the case included 65 corporations and 27 individuals, the principals, however, being six companies, namely, the American Tobacco Company, the British-American Tobacco Company, the Imperial Tobacco Company, the American Snuff Company, the American Cigar Company, and the United American Cigarette Company. Of these the parent organization, dominating all the others, is the American Tobacco Company, which began the finally gigantic combination in a small way in 1890. The object sought in the Government’s suit was an injunction to restrain the combination as such from engaging in interstate and foreign trade, or for the appointment of receivers to take the management of the business concerned.

The case was argued before the Second Circuit Court of the United States in May, 1908, and the decision of the Court was announced on the 7th of November following, Judges Lacombe, Noyes, and Coxe agreeing and Judge Ward dissenting. The Court found that an injunction should issue against some, but not all, of the principal defendants, to prevent the continuance of their violation of the Sherman Anti-Trust Law. It acquitted the Trust, however, of the charge of dishonest and oppressive practices, and it denied the application for receiverships. The final decree of the Court was filed on the 15th of December, 1908.

Appeals to the Supreme Court of the United States were taken, both by the Government and by the defendants, and the case was pending in that Court at the close of the year 1909. Mean time the decree has been in suspense.

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COMBINATIONS: A. D. 1907-1909. Suit to dissolve the alleged Anthracite Coal Combination.

The following statements were made in an Associated Press despatch from Philadelphia, March 8, 1909:

"Testimony of the Government in its suit against the anthracite coal-carrying railroads and several coal companies, to dissolve a so-called Trust agreement, alleged to be existing among them, has been filed in the Circuit Court of the United States for the Eastern District of Pennsylvania.

"Suit was begun here on June 12, 1907, and in the course of three months all the defendants made answer, denying the allegations of the Government. Subsequently, the court appointed an examiner to take testimony, and a great part of last year was taken up in hearing witnesses, sessions being held mainly in Philadelphia and New York.

"The Government closed its case in New York several weeks ago, having taken more than its allotted time, and the next move will be for the Government to file a motion apportioning a certain amount of time for the defendant companies to present their witnesses for examination. Much of the testimony thus far has been documentary, and it is believed this will be the case with the defendants. After all the testimony is filed with the court for review, arguments will be had on the case.

"It is impossible at this time to indicate when the case will be ended, but it seems probable that a year or more will have elapsed before it is legally decided whether a hard coal monopoly, as alleged, exists in Pennsylvania."

See, also, proceedings under the "Commodities Clause" of the Hepburn Act, and decision of United States Supreme Court, in this Volume, under RAILWAYS: UNITED STATES: A. D. 1906-1909.

COMBINATIONS: A. D. 1908. Declarations in Party Platforms on Trusts.

See (in this Volume) UNITED STATES: A. D. 1908 (APRIL-NOVEMBER).

COMBINATIONS: A. D. 1908-1909. Amending the Sherman Anti-Trust Law. Action of the National Civic Federation.

The resolutions adopted at the great National Conference of 1907 on the Trust Question, as recited above, were duly presented to Congress at its next session, and to the President, with results which were stated at the annual meeting of the National Civic Federation in December, 1908, by its President, the Honorable Seth Low, as follows:

"When these resolutions were presented to the two Houses, the Conference Committee was asked to submit a definite Bill in legislative form to carry out its proposals. The Conference itself had given no such authority to any Committee; but, in view of the situation as it had developed, the Executive Committee of the Federation took the matter up. The result of its action was the preparation of a Bill, which was submitted in due time to Congress, and which became the subject of numerous hearings before the Judiciary Committees both of the House and of the Senate, but especially of the House. The Bill of last spring was based upon the belief that at that time, and before the approaching Presidential election, it would be impossible to change the substantive law as embodied in the Sherman Anti-Trust Act. This being taken for granted, it became impossible to do more than propose a method by which, without changing the law, certain restraints of trade, if not disapproved in advance by some government authority, might be assured freedom from prosecution. The hearings before the Congressional Committees made it evident that no relief from the embarrassments caused by the Sherman Anti-Trust Law can be looked for along this line of procedure. Perhaps it ought also to be said that none ought to be looked for, because the situation really calls for a change in the substantive provisions of the law. Let no one imagine, however, that it is an easy thing to say what such changes in the law ought to be. Your Committee last spring began its work in the hope that it would be able to submit a law which would command very large support, not only from employers but also from organized labor. After working upon the subject for many weeks, the Bill which it actually presented commanded no large measure of support from either. The mercantile classes favor amendments to the law which, instead of forbidding all restraints of trade, will forbid only unreasonable restraints of trade; and which will provide amnesty for the past, (1) on the theoretical ground that what has been done has often been done without any realization that it was contrary to the law; and (2) on the practical ground that to attempt to rip up what has already been done will destroy the industry of the country. The representatives of organized labor, on the other hand, ask to be omitted altogether from the provisions of the Sherman Act. It is evident to your Committee that the changes desired by the mercantile classes are going to meet with very serious objection, unless they are combined with some positive legislation which will provide some effective method of assuring to the country, in the future, the power to protect itself in advance from new combinations in the industrial sphere, such as have been made in the past, and which originally created the sentiment which placed the Sherman Anti-Trust Law upon the statute books.

"In other words, precisely as a city may desire to limit the height of buildings, for the future, without taking down those that are already erected, so many persons believe that the right to make commercial combinations, in the future, should be under some sort of governmental control, even though those already formed be left unmolested; and such persons, also, believe that there is the same inherent right in the body politic to do the one as the other. On the other hand, the demand of organized labor to be exempted altogether from the operations of this Act has been objected to in the past, and is likely to be objected to in the future, as class legislation of a kind that has no place on American soil, because organized labor is believed to be capable of exercising restraint of trade no less than commercial corporations.

"These being the terms of the problem, it is apparent, on the face of things, that the effort to amend the Sherman Anti-Trust Law in any effective way is beset by difficulties at every turn. … The whole subject is made infinitely difficult by the Constitutional limitations upon the power of Congress, which have led the United States Supreme Court to decide, in effect, that Congress can regulate inter-State commerce, but cannot regulate the corporation that does it; because the corporation that does inter-State commerce is a creature of the State and not of the United States. The separate States, on the other hand, can regulate the corporations that do inter State commerce, because they create them; but the States cannot regulate the inter-state commerce that is done, because under the United States Constitution, inter-State commerce is under National control. It cannot be too clearly apprehended that the effect of this situation is, that neither sovereignty—neither the National sovereignty nor the State sovereignty—can regulate both the agent that does inter-State commerce and the inter-State commerce that is done."

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In the _National Civic Federation Review_ of March, 1909, it was announced that "the Executive Council of the National Civic Federation has appointed a committee to draft proposed amendments to the Sherman Anti-Trust act. By request of the lawyers upon the committee Seth Low will serve as chairman. The other members are Frederick P. Fish, of Boston; Frederick N. Judson, of St. Louis; Reuben D. Silliman, of New York, and Henry W. Taft, of New York.

"No attempt will be made to submit anything to the present session of Congress. It is proposed to draft a tentative bill as soon as a careful study of the problems will permit. This will then be submitted for examination and suggestion to various representative bodies in all parts of the country, and with the aid of the comments thus received the final draft of the bill to be submitted will be prepared."

COMBINATIONS: A. D. 1909. Report of the Commissioner of Corporations on the Tobacco Combination, or so-called Trust.

Parts of an elaborate report on the organization of the Tobacco Combination were published in February, 1909, by the Commissioner of Corporations, Herbert Knox Smith. It showed the combination to be composed of "the American Tobacco Company and its three great subsidiary combinations, the American Snuff Company, the American Cigar Company, and the British-American Company, besides eighty two other subsidiary concerns doing business in the United States, Porto Rico, and Cuba. The combination represents a total net capitalization of over $316,000,000. A very small group of ten stockholders controls 60 per cent. of the outstanding voting stock of the American Tobacco Company, through which company the entire combination is controlled."

A list of the subsidiary companies controlled, "including over twenty hitherto secretly controlled, so-called ‘bogus independent concerns,'" is given in the report. It is shown also that the combination is practically the only important exporter of tobacco manufactures from this country. In 1891 the combination controlled 89 per cent. of the business of cigarette manufactures, and this proportion practically is maintained. In cigars its output increased from 4 per cent. of the business in 1897 to 14.7 per cent, in 1906; while in manufactured tobacco (chewing, smoking, fine-cut, and snuff) "the combination’s output increased from 7 per cent. of the total in 1891 to 77 per cent. in 1906. Finally, in 1906, the combination controlled of these separate products, respectively, plug, 82 per cent.; smoking, 71 per cent.; fine-cut, 81 per cent., and snuff, 96 per cent." In the year 1906 the combination used in the manufacture of its various products nearly 300,000,000 pounds of leaf tobacco. The report adds:

"An idea of the absorption of competing plants and of the changes through combination within the last decade may be had from the fact that in 1897 the combination had ten plants, each producing over 50,000 pounds of manufactured tobacco or snuff per year, while there were 243 independent plants of the same class. In 1906, on the other hand, the combination had 45 plants of this class, and independent manufacturers 140. Especially conspicuous has been the absorption of the large plants. In 1897 the combination had eight plants, each producing over 1,000,000 pounds of these products per year, while its competitors had forty-six such plants. In 1906 the combination had thirty-four plants of this size, and independent concerns only seventeen."

COMBINATIONS: A. D. 1909. Merger of Telephone and Telegraph Corporations.

Announcement of one of the most important financial mergers of recent years was made November 16, 1909, when the American Telephone and Telegraph Company disclosed its acquirement of control of the Western Union Telegraph Company. "The American Telephone and Telegraph Company has obtained the control of a substantial minority interest in the shares of the Western Union Telegraph Company," was the wording of the official statement, but it became known that sufficient voting rights of other stock had been obtained to give the telephone interests control of the telegraph company.

According to a statement issued on May 1, 1909, the total capital and outstanding interest-bearing obligations of the American Telephone and Telegraph Company and allied systems was $592,475,400. This amount included capital stock aggregating $361,636,800, subdivided as follows: American Telephone and Telegraph Company, $208,393,500; associated operating companies in the United States and Canada, about thirty-five in number, $142,674,400; associated holding and manufacturing companies, $10,668,900. "The Western Union has a capitalization of $125,000,000 in stock and $40,000,000 in bonds.

COMBINATIONS: A. D. 1909. Threatened combination to control the Water Power of the country.

Speaking at the National Irrigation Congress, convened at Spokane, Washington, in August, 1909, the National Forester, Gifford Pinchot, declared that, notwithstanding the contradictions issued by the parties in interest, a gigantic combination was forming to seize the sources of the country’s water power, and be in a position later to dominate all industry.

"There could be no better illustration," he said, "of the eager, rapid, unwearied absorption by capital of the rights which belong to all the people than the Water Power Trust, not yet formed, but in rapid progress of formation. This statement is true, but not unchallenged. We are met at every turn by the indignant denial of the water power interests. They tell us that there is no community of interest among them, and yet they appear year after year at these Congresses by their paid attorneys, asking for your influence to help them remove the few remaining obstacles to their perpetual and complete absorption of the remaining water powers. They tell us it has no significance that the General Electric interests are acquiring great groups of water powers in various parts of the United States, and dominating the power market in the region of each group. And whoever dominates power, dominates all industry. … The time for us to agitate this question is now, before the separate circles of centralized control spread into the uniform, unbroken, nation-wide covering of a single gigantic Trust. There will be little chance for mere agitation after that. No man at all familiar with the situation can doubt that the time for effective protest is very short."

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The same warning has been given by others who are in a position to speak with knowledge, and heed has been given to them by the Government. The annual report of the Secretary of the Interior, the Honorable Richard A. Ballinger, made public November 28, 1909, contained the following important announcement: "In anticipation of new legislation by Congress to prevent the acquisition of power sites on the public domain by private persons or corporations with the view of monopolizing or adversely controlling them against the public interest, there have been temporarily withdrawn from all forms of entry approximately 603,355 acres, covering all locations known to possess power possibilities on unappropriated lands outside of national forests. Without such withdrawals these sites would be enterable under existing laws, and their patenting would leave the general government powerless to impose any limitations as to their use.

"If the Federal government desires to exercise control or supervision over water-power development on the public domain, it can only do so by limitations imposed upon the disposal of power and reservoir sites upon the public lands, the waters of the streams being subject to State jurisdiction in their appropriation and beneficial use. I would, therefore, advise that the Congress be asked to enact a measure that will authorize the classification of all lands capable of being used for water-power development, and to direct their disposal, through this department. …

"Unreasonable or narrow restrictions beyond the necessity of public protection against monopoly, or extortion in charges, will, of course, defeat development and serve no useful purpose. The statute should, therefore, while giving full protection against the abuses of the privileges extended, so far as consistent, encourage investment in these projects; and it must always be borne in mind that excessive charges for the franchise will fall upon the consumer. Legislation of this character proceeds upon the theory that Congress can impose such contractual terms and conditions as it sees fit in the sale or use permitted of government lands so long as such limitations do not conflict with the powers properly exercised by the State wherein they may be situated."

COMBINATIONS: A. D. 1909. The Sugar Trust settles a conspiracy charge.

While the American Sugar Refining Company, in the spring of 1909, was being forced to make good to the Government its long cheating of the Custom House, it was being compelled, at the same time, to indemnify a competitor in business, whom it had ruined by means which the Sherman Anti-Trust Law forbade. Its victim was the Pennsylvania Sugar Refining Company, whose refinery had been established by Mr. Adolph Segal, of Philadelphia, in 1903. Segal became financially embarrassed, and was lured into taking a loan of $1,250,000, from a person who acted secretly in the transaction for the American Sugar Refining Company. The loan was made on terms which gave the lender control of a majority of the stock of the Pennsylvania Sugar Refining Company, and Mr. Segal found, when too late, that the real lender was the Sugar Trust. It used its power to shutdown the plant, which was said to be the most perfect of its kind, and the Pennsylvania Company was wrecked. It brought a suit for damages to the amount of $30,000,000, inflicted upon it in contravention of the Anti-Trust Law. Before the trial ended, the defendants found so much reason to fear its outcome that negotiations were opened which resulted (June 8, 1909) in a settlement of the claim outside of court. The settlement was said to involve a cash payment by the American Company to the Pennsylvania Company of $750,000, the cancellation of the $1,250,000 loan made by the trust to Adolph Segal, of Philadelphia, and the return of the securities given by Segal as collateral for the loan.

Subsequently the Government procured indictments of certain of the officials of the American Sugar Refining Company for their participation in the conspiracy; but the prosecution was blocked in October by a decision from Judge Holt, of the United States Circuit Court, that the acts charged were outlawed by the statute of limitations. Later, in November, it was reported that the Government was preparing an appeal to the Supreme Court.

COMBINATIONS: A. D. 1909. Dissolution of a Paper-making Combination.

By a decree of the United States Circuit Court, Judge Hough, at New York, in May, 1909, the Fiber and Manila Association, a combination of 25 paper manufacturers, located in many parts of the country, East and West, was adjudged to be an illegal combination in restraint of trade, and perpetually enjoined from further operations in such combination. The members were enjoined further from fixing prices or the qualities that shall be manufactured or to maintain any pool or fund made up of contributions from its members. Counsel for the Association announced that no appeal would be made.

COMBINATIONS: A. D. 1909. Chartering of the United Dry Goods Companies.

"Details of the greatest dry goods combination ever attempted in this country were available to-day for the first time since the United Dry Goods Companies took out a Delaware charter last Friday [April 21, 1909], The concern will control many of the largest dry goods stores in this city and at important commercial centres of the South and West, acting first as a holding company and later possibly as an operating concern, with headquarters here. John Claflin will be the head of the combination. The present managers of the various absorbed stores will be continued. J. P. Morgan & Co. are financing the deal, and public announcement will be made immediately.

"The United Dry Goods Companies will have a capital of $51,000,000. Of this only $20,000,000 will be immediately issued in the form of $10,000,000 7 per cent. cumulative preferred stock and $10,000,000 common stock. The preferred stock has preference as to both assets and dividends. The new combination will purchase $8,650,000 of the outstanding $17,250,000 capital stock of the Associated Merchants’ Company. …

"John Claflin said this afternoon that the new company would not buy any mills, as it was not the purpose of the combination to control the sources of production. All the stores—there are more than forty, which the United Companies and its allies will own in whole or in part—will be free to purchase from whatever interests they wish, without being restricted to any one market or to the product of any special mills. The general business will be directed from the city, but resident directors at different centres will have full charge of the detail work."

_New York Evening Post, May, 25-26, 1909._

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COMBINATIONS: A. D. 1909. The illegality of a Trust invalidates a debt to it.

In a suit brought by the Continental Wall Paper Company to recover a debt, payment of which was resisted on the ground that the Company was an illegal combination in restraint of trade, the Supreme Court of the United States, on the 1st of February, 1909, affirmed a judgment of the Circuit Court of Appeals which had dismissed the suit. The case was so decided by a bare majority of one. The opinion of the majority, delivered by Justice Harlan, held that a judgment in favor of the Company would give effect to agreements constituting the illegal combination. "Upon the whole case," said Justice Harlan, "and without further citation of authority, we adjudge upon the admitted facts that the combination represented by the plaintiff in this case was illegal under the anti-trust act of 1890; is to be taken as one intended, and which would have the effect, directly to restrain and monopolize trade among the several states and with foreign states; and that the plaintiff cannot have a judgment for the amount of the account sued on because such a judgment would, in effect, be in aid of the execution of agreements constituting that illegal combination. We consequently hold that the circuit court of appeals properly sustained the third defense in the case and rightly dismissed the suit."

In the dissenting opinion by Justice Holmes and others it was set forth that "whenever a party knows that he is buying from an illegal trust, and still more when he buys at a price that he thinks unreasonable, but is compelled to pay in order to get the goods he needs, he knows that he is doing an act in furtherance of the unlawful purpose of the trust, which always is to get the most it can for its wares. But that knowledge makes no difference, because the policy of not furthering the purposes of the trust is less important than the policy of preventing people from getting other people’s property for nothing when they purport to be buying it."

COMBINATIONS: A. D. 1909-1910. Morgan & Co. Banking Combination.

See (in this Volume) FINANCE AND TRADE: UNITED STATES.

COMBINATIONS: A. D. 1910. Special Message of President Taft on Legislation touching "Trusts."

An important special Message, recommendatory of legislation on the two subjects of interstate commerce and the combinations called "Trusts," was addressed to Congress by President Taft on the 7th of January, 1910. It had been expected that the Executive would advise amendments to the Sherman Anti-Trust Law, so-called, but he did not. On the contrary he favored the policy of leaving that law untouched, on the ground that its defects have been cured already to a great extent by judicial decisions, and that it is safer and better for the business interests of the country to trust the law to the gradual molding which the courts are giving it, than to undertake amendments which would start anew series of judicial interpretations. But the President’s conclusions on this point were supplemented by the advocacy of an enactment to provide for the federal chartering of corporations engaged in interstate commerce, as a means of substituting continuous regulation of such organizations for the spasmodic and disturbing investigations which the Government is now compelled frequently to institute.

In part, the President’s discussion of these questions is as follows:—

"The statute has been on the statute book now for two decades, and the Supreme Court in more than a dozen opinions has construed it in application to various phases of business combinations and in reference to various subjects-matter. It has applied it to the union under one control of two competing interstate railroads, to joint traffic arrangements between several interstate railroads, to private manufacturers engaged in a plain attempt to control prices and suppress competition in a part of the country, including a dozen States, and to many other combinations affecting interstate trade. The value of a statute which is rendered more and more certain in its meaning by a series of decisions of the Supreme Court furnishes a strong reason for leaving the act as it is, to accomplish its useful purpose, even though if it were being newly enacted useful suggestions as to change of phrase might be made.

"It is the duty and the purpose of the Executive to direct an investigation by the Department of Justice, through the grand jury or otherwise, into the history, organization, and purposes of all the industrial companies with respect to which there is any reasonable ground for suspicion that they have been organized for a purpose, and are conducting business on a plan which is in violation of the Anti-Trust law. The work is a heavy one, but is not beyond the power of the Department of Justice, if sufficient funds are furnished, to carry on the investigations and to pay the counsel engaged in the work. But such an investigation and possible prosecution of corporations whose prosperity or destruction affects the comfort not only of stockholders, but of millions of wage-earners, employees, and associated tradesmen, must necessarily tend to disturb the confidence of the business community, to dry up the now flowing sources of capital from its places of hoarding, and produce a halt in our present prosperity that will cause suffering and strained circumstances among the innocent many for the faults of the guilty few. The question which I wish in this message to bring clearly to the consideration and discussion of Congress is whether in order to avoid such a possible business danger something cannot be done by which these business combinations may be offered a means, without great financial disturbance, of changing the character, organization, and extent of their business into one within the lines of the law under Federal control and supervision, securing compliance with the anti-trust statute.

"Generally, in the industrial combinations called ‘Trusts,’ the principal business is the sale of goods in many States and in foreign markets; in other words, the interstate and foreign business far exceeds the business done in any one State. This fact will justify the Federal government in granting a Federal charter to such a combination to make and sell in interstate and foreign commerce the products of useful manufacture under such limitations as will secure a compliance with the Anti-Trust law. It is possible so to frame a statute that while it offers protection to a Federal company against harmful, vexatious, and unnecessary invasion by the States, it shall subject it to reasonable taxation and control by the States, with respect to its purely local business.

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"Many people conducting great businesses have cherished a hope and a belief that in some way or other a line may be drawn between ‘good Trusts’ and ‘bad Trusts,’ and that it is possible, by amendment to the Anti-Trust law, to make a distinction under which good combinations may be permitted to organize, suppress competition, control prices, and do it all legally, if only they do not abuse the power by taking too great profit out of the business. … Now, the public, and especially the business public, ought to rid themselves of the idea that such a distinction is practicable or can be introduced into the statute. Certainly under the present Anti-Trust law no such distinction exists. It has been proposed, however, that the word ‘reasonable’ should be made a part of the statute, and then that it should be left to the court to say what is a reasonable restraint of trade, what is a reasonable suppression of competition, what is a reasonable monopoly. I venture to think that this is to put into the hands of the court a power impossible to exercise on any consistent principle which will insure the uniformity of decision essential to just judgment. It is to thrust upon the courts a burden that they have no precedents to enable them to carry, and to give them a power approaching the arbitrary, the abuse of which might involve our whole judicial system in disaster.

"In considering violations of the Anti-Trust law, we ought, of course, not to forget that that law makes unlawful, methods of carrying on business which before its passage were regarded as evidence of business sagacity and success, and that they were denounced in this act, not because of their intrinsic immorality, but because of the dangerous results toward which they tended, the concentration of industrial power in the hands of the few, leading to oppression and injustice. In dealing, therefore, with many of the men who have used the methods condemned by the statute for the purpose of maintaining a profitable business, we may well facilitate a change by them in the method of doing business. …

"To the suggestion that this proposal of Federal incorporation for industrial combinations is intended to furnish them a refuge in which to continue industrial abuses under Federal protection, it should be said that the measure contemplated does not repeal the Sherman Anti-Trust law, and is not to be framed so as to permit the doing of the wrongs which it is the purpose of that law to prevent, but only to foster a continuance and advance of the highest industrial efficiency without permitting industrial abuses. …

"A Federal compulsory license law, urged as a substitute for a Federal incorporation law, is unnecessary except to reach that kind of corporation which, by virtue of the considerations already advanced, will take advantage voluntarily of an incorporation law, while the other State corporations doing an interstate business do not need the supervision or the regulation of a Federal license and would only be unnecessarily burdened thereby.

"The attorney-general, at my suggestion, has drafted a Federal incorporation bill embodying the views I have attempted to set forth, and it will be at the disposition of the appropriate committees of Congress."

COMBINATIONS: A. D. 1910. Renewed investigation of the Beef Trust.

A renewed investigation of the business methods of the great meat-packing concerns at Chicago, by the grand jury of the United States District Court, Judge K. M. Landis, was begun on the 24th of January, 1910. It is understood to have special reference to the causes of the rising prices of meats. The firms against which the Government is thus preparing to proceed are: Swift & Co., Armour & Co., and Morris & Co., who, it is alleged, control the National Packing Company, for their common benefit.

----------COMBINATIONS: End--------

COMMERCE AND LABOR, The United States Department of.

See (in this Volume) UNITED STATES: A. D. 1903 (FEBRUARY).

COMMERCIAL UNIVERSITIES, in Germany: Their recent rise.

See (in this Volume) EDUCATION: GERMANY: A. D. 1898-1904.

"COMMISSION PLAN," of City Government.

See (in this Volume) MUNICIPAL GOVERNMENT.

COMMITTEE OF ONE HUNDRED.

See (in this Volume) PUBLIC HEALTH.

COMMITTEE OF UNION AND PROGRESS.

See (in this Volume) TURKEY: A. D. 1908 (JULY-DECEMBER), and after.

COMMODITIES CLAUSE, of the Hepburn Act: Supreme Court decision on.

See (in this Volume) RAILWAYS: UNITED STATES: A. D. 1906-1909.

COMMUNAL SYSTEM, Russian: Its modification.

See (in this Volume) RUSSIA: A. D. 1906 AND 1909 (APRIL).

CONCENTRATION CAMPS.

See (in this Volume) SOUTH AFRICA: A. D. 1901-1902.

CONCILIATION BOARDS, Canadian.

See (in this Volume) LABOR ORGANIZATION: CANADA: A. D. 1907-1908.

CONCILIATION COMMITTEE, of National Civic Federation.

See (in this Volume) LABOR ORGANIZATION: UNITED STATES: A. D. 1902.

CONCORDAT OF 1802, The.

See (in this Volume) FRANCE: A. D. 1905-1906.

CONFÉDÉRATION GÉNÉRALE DU TRAVAIL.

See (in this Volume) LABOR ORGANIZATION: FRANCE: A. D. 1884-1909.

CONFERENCE OF STATE GOVERNORS.

See (in this Volume) CONSERVATION OF NATURAL RESOURCES: UNITED STATES.

CONFERENCES FOR EDUCATION IN THE SOUTH, Annual.

See (in this Volume) EDUCATION: UNITED STATES: A. D. 1898-1909.

CONGER, Edwin H.: U. S. Minister to China.

See (in this Volume) CHINA: A. D. 1903 (MAY-OCTOBER).

CONGESTED ESTATES.

See (in this Volume) IRELAND: A. D. 1909.

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----------CONGO STATE: Start--------

CONGO STATE: How the natives have been enslaved and oppressed. The "Domaine Privé."

"The Berlin Conference laid it down that no import dues should be established in the mouth of the Congo for twenty years. But in 1890 King Leopold, alleging the heavy expenses to which he had been put by the campaign against the Arabs in the Upper Congo, applied for permission to levy import duties. It was the first disillusionment; and the British Chambers of Commerce began to wonder whether their opposition to the Anglo-Portuguese Convention had not been mistaken. The King’s request was granted (the Powers merely reserving to themselves the right to revert to the original arrangement in fifteen years), but not without the bitter opposition of the Dutch, who had very important commercial interests in the Congo, backed by the British Chambers of Commerce and all the traders in the Congo, irrespective of nationality. A representative gathering was held in London on November 4th, 1900, presided over by Sir Albert Rollit, to protest against the imposition of import duties and to denounce the hypocrisy which attributed to philanthropic motives the desire on the part of the Congo State so to impose upon them. …

"They were able to show that … King Leopold, notwithstanding his formal assurances to the commercial world that the Congo State would never directly or indirectly itself trade within its dominions, was buying, or rather stealing, ivory from the natives in the Upper Congo and retaining the proceeds of the sale on the European market. They proved that, profiting by the silence of the Berlin Treaty on the subject of export duties, the Congo State had already imposed taxes amounting to 17½ per cent. on ivory, 13 per cent, on rubber and 5 per cent. on palm kernels, palm-oil and ground-nuts, the total taxation amounting to no less than 33 per cent. of the value of the whole of the trade. Finally they had no difficulty in demonstrating that, with all his professed wish to stamp out the slave-raiding carried on by the half-caste Arabs in the Upper Congo, His Majesty was himself tacitly encouraging the slave trade by receiving tribute from conquered Chiefs in the shape of slaves, who were promptly enrolled as soldiers in the State army. …

"Five months after the termination of the Berlin Conference King Leopold issued a decree (July, 1885) whereby the State asserted rights of proprietorship over all _vacant lands_ throughout the Congo territory. It was intended that the term vacant lands should apply in the broadest sense to lands not _actually occupied_ by the natives at the time the decree was issued. By successive decrees, promulgated in 1886, 1887 and 1888, the King reduced the rights of the natives in their land to the narrowest limits, with the result that the whole of the odd 1,000,000 square miles assigned to the Congo State, except such infinitesimal proportions thereof as were covered by native villages or native farms, became _‘terres domaniales.'_ On October 17th, 1889, the King also issued a decree ordering merchants to limit their commercial operations in rubber to bartering with the natives. This decree was interesting merely as a forewarning of what came later, because at that time the rubber trade was very small. In July, 1890, the same year as the Brussels Conference, the Congo State went a step further. A decree issued in that month confirmed all that was advanced in November of the same year by the speakers at the London Conference held to protest against the imposition of import duties by the State. By its terms King Leopold asserted that the State was entitled to trade on its own account in ivory—the first open violation of his pledges. Moreover the decree imposed sundry extra taxes upon all ivory bought by merchants from the natives, which, since the State had become itself a trading concern, constituted an equally direct violation of the Berlin Act, by establishing differential treatment in matters of trade. Such were the plans King Leopold made, preparatory to obtaining from the Powers the power to impose import duties. Everything was ready for the great _coup_, which should also inaugurate the Fifth Stage of His Majesty’s African policy.

"The Brussels Conference met. The Powers with inconceivable fatuity allowed themselves to be completely hoodwinked, and within a year the greatest injury perpetrated upon the unfortunate natives of Africa since the Portuguese in the XVth century conceived the idea of expatriating them for labour purposes had been committed, and committed too by a Monarch who had not ceased for fifteen years to pose as their self-appointed regenerator. On September 21st, 1891, King Leopold drafted, in secret, a decree which he caused to be forwarded to the Commissioners of the State in the Uban-ghi-Welle and Aruwimi-Welle districts, and to the Chiefs of the military expeditions operating in the Upper Ubanghi district. This decree never having been published in the official Bulletin of the State, its exact terms can only be a matter of conjecture, but we know that it instructed the officials to whom it was addressed ‘to take urgent and necessary measures to preserve the fruits of the domain to the State, especially ivory and rubber.’ By ‘fruits of the domain’ King Leopold meant the products of the soil throughout the ‘vacant lands’ which he had attributed to himself, as already explained, by the decree of 1885. The King’s instructions were immediately followed, and three circulars, dated respectively Bangala, 15th December, 1891, Basankusu, 8th May, 1892, and Yokoma, 14th February, 1892, were issued by the officials in question. Circular Number 1 forbade the natives to hunt elephants unless they brought the tusks to the State’s officers. Circular Number 2 forbade the natives to collect rubber unless they brought it to the State’s officers. Circular Number 3 forbade the natives to collect either ivory or rubber unless they brought the articles to the State’s officers, and added that ‘merchants purchasing such articles from the natives, whose right to collect them the State only recognised provided that they were brought to it, would be looked upon as receivers of stolen goods and denounced to the judicial authorities.’ Thus did the Sovereign of the Congo State avail himself of the additional prestige conferred upon him by the Brussels Conference. …

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"In theory, then, the decrees of September, 1891, and October, 1892, made of the native throughout the _Domaine Privé_ a serf. In theory a serf he remained, for a little while. But as the grip of Africa’s regenerator tightened upon the _Domaine Privé_, as the drilled and officered cannibal army, armed with repeating rifles, gradually grew and grew until it was larger than the native forces kept up by any of the great Powers of Europe on African soil, as the radius of the rubber taxes was extended, as portions of the country began to be farmed out to so-called 'Companies' whose agents were also officials of the King, the native of the _Domaine Privé_ became a serf not in theory only but in fact, ground down, exploited, forced to collect rubber at the bayonet’s point, compelled to pay onerous tribute to men whose salaries depend upon the produce returns from their respective stations—the punishment for disobedience, slothfulness or inability to comply with demands ever growing in extortion, being anything from mutilation to death, accompanied by the destruction of villages and crops."

_E. D. Morel, The Belgian Curse in Africa (Contemporary Review, March, 1902)._

CONGO STATE: A. D. 1903-1905. The alleged oppressiveness, barbarity, and rapacity of its administration under King Leopold. Observations of Lord Cromer on the Nile border. Reports of a British Consular Officer, and of King Leopold’s Belgian Commission. Action of the British Government.

Serious accusations of oppression and barbarity in the exploiting of the natural wealth of the so-called Independent Congo State, under the administration of its royal proprietor, King Leopold, of Belgium, were beginning to be made a dozen years ago, as will be seen by reference to the subject in