Thursday, June 30, 2011

Charges Filed in Wire Trust Case

Indictments were handed down yesterday in New York against nine wire industry associations.  They have been charged with violating sections one and two of the Sherman Anti-Trust Act.  Eighty-three men from thirty-five companies were named in the indictments, officers in the alleged illegal pools and combinations said to have the power to fix prices.  Included among them are Edwin Johnson, Jr. of New York who was named in each of the nine indictments as a supervisor and treasurer in the combinations, and William Palmer, who was named in seven of the indictments.  Palmer is the President of the American Steel and Wire Company, a subsidiary of the United States Steel Corporation, and is a director in the Steel Trust.  Herbert Satteriee, a son-in-law of J. P. Morgan, was also indicted, along with Frank Gould, president of the Old Dominion Iron and Nail Works, and Charles Morgan, a Republican Party Committee member from Connecticut.

The associations named in the indictments are: the Bare Copper Wire Association, the Wire Rope Manufacturers, the Underground Power Cable Association, the Weatherproof and Magnet Wire Association, the Horse Shoe Manufacturers' Association, the Telephone Cable Association, the Fine Magnet Wire Association, the Rubber Covered Wire Association, and the Lead Encased Rubber Wire Association.

The defendants have been charged with:
Entering into an unlawful combination and conspiracy to wrongfully and unduly restrain business, trade, and commerce in violation of Sections 1 and 2 of the Sherman Anti-Trust Law...

That all the times mentioned in this indictment the aforesaid corporations produced at their various factories in the aggregate 95 per cent of the entire amount of . . . steel wire product . . . consumed in the United States, and by association and co-operation they possessed the power to control and fix the price therefor within the United States;

That because said corporations, all such times, have been and, in fact, now are separate and distinct from each other, their said interstate business, trade, and commerce should have been and should now be conducted by each of them strictly on a competitive basis, and would have been and would so be conducted but for the unlawful combination and conspiracy by and among the aforesaid individuals . . .
As an example of the types of arrangements had, the New York Tribune looked at the case against the Bare Copper Wire Association. The Feds allege that on June 1, 1908, the defendants met in New York to form an illegal combination, which they used to conspire to restrict business and trade until the association was disbanded in November 1909.  The Feds allege that the association were to cause and procure the corporation to purchase, at arbitrary and non-competitive prices to be fixed and determined by the defendants, the raw material from which to make bare copper wire.  The prices were lower than they would otherwise have to pay or that corporations not in the association had to pay.  The bare wire that was manufactured was then sold at non-competitive prices that were higher than what it would otherwise had been sold for.

The Tribune had some reaction to the indictments from the defendents.  The supposed supervisor of the combinations, Edwin Johnson, is in Europe and could not be reached for comment but a person close to him at his office in New York said that Johnson was just the supervisor, and not the originator.  The counsels for the various companies involved signed off on the agreements and it wasn't until work had reached them that the government was investigating their associations that they began to be dissolved.  He went on to say that the associations were nothing more than social gatherings and no business was discussed at these parties among business associates.

The penalty provided by the Sherman Law is imprisonment not to exceed one year, $5,000, or both.

Link: U. S. Jury Indicts 83 Men, Officials of "Wire Trust" [The New York Tribune]
Link: Wire Trust Men Indicted by Jury in Combine Pact [The Washington Herald]
Link: Wire Trust Charged with Big Conspiracy [The Bisbee Daily Review]

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