GOVERNMENT: Auction-Room Aromas

“Say, have you got the time?” “Certainly, it’s ten o’clock, ten-ten-tenel-tenel-tenel-temel-bolda-tenel-roulma-dodl-ten-temel-ten Ten o’clock.”

Thus every hour on many a U. S. radio station the American Tobacco Co. spreads the suggestion of aromatic tobacco auction rooms. Last week Thurman Wesley Arnold’s pugnacious Anti-Trust Division charged that in the auction rooms it smelled, besides tobacco, monopoly. The marketing systems for leaf tobacco, said the Arnold indictment, “have been deliberately designed to enable [the companies] to dominate and dictate terms to growers. . . .” It charged six U. S., two British tobacco companies and their executives with criminal guilt.

If Arnold makes his suit stick, the U. S. tobacco industry will have the rare distinction of being trust-busted twice in 30 years. The late, great James Buchanan Duke had built up a well-nigh invulnerable trust by 1910, controlled the market for every tobacco product but cigars. Roosevelt’s and Taft’s trustbusters broke it into pieces, rearranged the pieces so that there were at least two companies making each important product, four important cigaret makers. Those four, American, Liggett & Myers, Reynolds, and Lorillard, plus hefty Newcomer Philip Morris, are the “Big Five” today.

Observers like Louis D. Brandeis (later Justice of the Supreme Court) thought at the time that the dissolution would not really block monopolistic practices. That suspicion has kept trustbusters sniffing at the tobacco companies ever since. Meanwhile the ex-members of the trust, competing boisterously on every front (notably advertising) save price, have multiplied the old trust’s market and profit possibilities many times.

Question for the Department of Justice last week was raised by the Wall Street Journal: although the Government can break up monopolies and prevent “conspiracy,” can it force the fragments to compete where they do not want to? Trust-Buster Arnold took broad moral ground, made much of the disparity in size and bargaining power between the five manufacturers, the thousands of small growers. Answered American Tobacco Co.’s President George Washington Hill: “If the prosperity of an industry, the growth and successful operation of a company . . . were to be made causes for attack, then we could scarcely expect to be immune.”