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 HD2778 .T12 
 Anti-trust act and .the „ Su£ren;e „Court^^ / b 
 
 olin 
 
 3 1924 032 432 993 
 
The original of tliis book is in 
 tine Cornell University Library. 
 
 There are no known copyright restrictions in 
 the United States on the use of the text. 
 
 http://www.archive.org/details/cu31924032432993 
 
THE ANTI-TRUST ACT 
 
 AND 
 
 THE SUPREME COURT 
 
 BY 
 
 WILLIAM HOWARD TAFT 
 
 KENT PHOFESSOK OF LAW, TALE UNIVEESITy 
 
 HARPER & BROTHERS PUBLISHERS 
 
 NEW YORK AND LONDON 
 
 MCMXI V 
 
 LV 
 
A^*1$ 
 
 HO 
 
 COPYRIGHT. 19 M. BY HARPE R ft BROTHERS 
 
 PRINTED IN THE UNITED STATES OF AMERICA 
 
 PUBLISHED OCTOBER. 1914 
 
 l-O 
 
CONTENTS 
 
 CHAP. 
 
 I. Limitations upon Rights op Contract as to 
 
 Peopebtt, Business, and Labor at Common 
 Law 1 
 
 II. General Function of Constitution and Courts 
 
 IN Protection and Limitation of Individual 
 Rights of Property, Contract, and Labor £7 
 
 III. The Sugar Trust Case, Its Narrowing Effect 
 
 on the Usefulness of the Statute — Justice 
 Harlan's Dissent Now the Law .... 49 
 
 IV. Error op Mr. Justice Peckham in His Opinions 
 
 fob the Majority in the Trans-Missouri 
 Freight and Joint Teapfic Cases in Refusing 
 Aid of Common Law in Interpretation op the 
 Statute — Confusion in Terms but Not in 
 Ultimate Result 61 
 
 V. Cases After the Sugar Trust Case and Before 
 
 THE Standard Oil Case in which the Effect 
 OF THE Sugar Trust Dectsion was Practically 
 Eliminated 70 
 
 VI. The Standard Oil and Tobacco Trust Cases — 
 
 Effect op Anti-trust Law on Combinations 
 
 OF Labor Obstructing Interstate Commerce 85 
 
CONTENTS 
 
 CHAP. P-*a° 
 
 VII. Ten Cases Under Trust Law, Following Stand- 
 
 ard Oil and Tobacco Decisions, Showing 
 Broad Scope of Those Decisions .... 100 
 
 VIII. Popular Misconception of Supreme Court's 
 
 Attitude in Constructing Anti-trust Law — 
 No Assumption of Power to Enforce Economic 
 OR Poutical Views of Judges — Merely Fox/- 
 LOWiNQ A Common-law Standard — Admirable 
 Adaptabiijit of Decrees in Equity to En- 
 forcement OF Statute — Efficacy of Standard 
 Oil and Tobacco Decrees 113 
 
 IX. Summing Up of the Effect op Anti-trust Law 
 
 ON Big Business — Value of First Two Sections 
 AS Construed — Danger in Amendments Look- 
 ing TO Greater Severity 126 
 
THE ANTI-TRUST ACT AND THE 
 SUPREME COURT 
 
THE ANTI-TRUST ACT 
 AND THE SUPREME COURT 
 
 CHAPTER I 
 
 LIMITATIONS UPON EIGHTS OP CONTRACT AS TO 
 PKOPERTT, BUSINESS, AND LABOR AT COMMON 
 LAW. 
 
 THE prospect of legislation at this session 
 of Congress amendatory of the Sherman 
 law has again brought before the public the 
 whole question of anti-trust legislation. A 
 great deal of misunderstanding concerning the 
 effectiveness of that law has been displayed in 
 such discussion as has already arisen. 
 
 The decisions of the Supreme Court inter- 
 preting the statute have not been clearly under- 
 stood by many of those who have taken part 
 in that discussion. The proposals for further 
 
 I 
 
THE ANTI-TRUST ACT 
 
 legislation do not take into account the progress 
 of those decisions in making the statute eflfective. 
 In what follows I shall try to set forth in a 
 summary way the present legal status of trusts 
 and combinations in this country. I shall not 
 attempt to discuss in any detail the proposals 
 to amend and supplement the existing statute 
 against trusts now pending in Congress. I shall 
 confine myself to making clear the law against 
 trusts and monopolies as it grew up under the 
 common law, as it was changed by statute, as 
 it has been enforced by the courts, and as it 
 is to-day. 
 
 (The federal anti-trust law is one of the most 
 important statutes ever passed in this country. N 
 It was a step taken by Congress to meet what 
 the public had found to be a growing and in- 
 tolerable evil in combinations between many 
 who had capital employed in a branch of trade, 
 industry, or transportation, to obtain control 
 of it, regulate prices, and make unlimited profit. 
 Whether Congress intended it or not, it used 
 language that necessarily forbade the combina- 
 tions of laborers to restrain and obstruct inter- 
 state trade. 
 ■ The statute, therefore, qualified three im- 
 
AND THE SUPREME COURT 
 
 portant phases of what we include in the general 
 term "individual liberty" — the right of prop- 
 erty, freedom to contract, and freedom of labor. 
 
 In this law Congress used general expressions, 
 "restraint of trade," "monopoly," "combina- 
 tions," and "conspiracy." It was passed in a 
 country which recognizes as controlling the 
 customary law handed down to us from Eng- 
 land and known as the common law. It was 
 drafted by great lawyers who may be presumed 
 to have used those expressions with the inten- 
 tion that they should be interpreted in the light 
 of common law, just as it has been frequently 
 decided that the terms used in our federal 
 Constitution are to be so construed. 
 
 It is of the highest importance, therefore, to 
 consider, as a preliminary basis for our discus- 
 sion of the statute, what the common law was 
 in respect to restraints of trade — that is, its 
 limitation upon the right of property and the 
 right of free contract, and upon the right of one 
 to dispose of his labor. Just what use should 
 be made of the common-law rules on these 
 subjects in giving effect to the statute we can 
 determine later. 
 
 The statute made unlawful a great number of 
 
THE ANTI-TRUST ACT 
 
 business methods and plans, all directed to the 
 same purpose of suppressing competition and 
 controlling prices, which until the passage of 
 the act had been regarded merely as shrewd 
 and effective, and as justified in the struggle 
 for success. Such methods had resulted in the 
 building of great and powerful corporations 
 which had, many of them, intervened in poli- 
 tics and through use of corrupt machines and 
 bosses threatened us with a plutocracy. 
 
 Combinations of labor also in the field of 
 interstate commerce had grown to most for- 
 midable proportions. A few years after the 
 passage of the anti-trust statute, Debs and the 
 American Railway Union attempted to take the 
 country by the throat and to stop the arterial 
 circulation of interstate commerce in order to 
 win a victory in the matter of better terms of 
 employment for employees of a particular in- 
 dustrial company. 
 
 The statute was passed in 1890. It has, 
 therefore, been nearly a quarter of a century on 
 the statute-book. It has had the benefit of con- 
 struction by the Supreme Court of the United 
 States in a series of most important cases which 
 presented issues that have in their decision 
 
AND THE SUPHEME COURT 
 
 searched its meaning; and, in spite of a great deal 
 of assertion and intimation to the contrary, the 
 effect of those years of htigation has been to 
 give us a valuable and workable interpretation 
 which any one who gives it sincere attention can 
 understand and can follow iu the methods of 
 his business, in the use of his capital, or in the 
 organization and rules of action of his trade- 
 union. 
 
 One difficulty in giving the public a clear un- 
 derstanding of the meaning and effect of the 
 statute is that it has been made a football of 
 party politics, that shibboleths have been fab- 
 ricated out of it without any clear understand- 
 ing of the distinctions which the court has 
 made, that results have been misrepresented, 
 and the superlatives of stump oratory have been 
 substituted for a clear statement of the scope 
 and operation of the law. Politicians have 
 seized upon phrases that would attract the pub- 
 lic eye, the meaning of which in the law they 
 have not themselves understood, and have pro- 
 posed amendments to accomplish purposes of a 
 most indefinite character, without knowing or 
 caring how they were to operate, if only the 
 pressing of the amendment gave them a ground 
 
THE ANTI-TRUST ACT 
 
 for appeal for votes and for a claim to the 
 gratitude of their constituents. 
 
 The statute dealt with a most difficult sub- 
 ject. The members of Congress who passed it 
 knew that it was a difficult subject. They made 
 plain the object that they had in mind, and they 
 used general expressions to accomplish it, which 
 they thought had had definition in the existing 
 law. The evil to be remedied was manifest, and 
 they pursued the legislative course, so often 
 pursued before, of trusting to the learned, just, 
 and equitable construction of the courts to 
 effect their legislative intention. 
 
 As early as the second year of Henry V, a 
 restraint which any man put upon himself by 
 contract not to engage in any branch of trade 
 or labor was not legally binding on him and was 
 unenforceable. This was in 1415. There is no 
 authority that goes so far as to indicate that the 
 making of such a contract was indictable, but 
 the rule that it was void was without exception 
 for two centuries. An effort to make an excep- 
 tion appears in the eighteenth year of James I., 
 where it was held that a contract not to use a 
 certain trade in a particular place was an excep- 
 tion to the general rule. 
 
 6 
 
AND THE SUPREME COURT 
 
 It was regarded as against the general interest 
 of freedom of labor and trade to enforce a man's 
 agreement to disable himself to earn his own 
 livelihood, and so to become a charge upon the 
 community. Probably that was the sole pur- 
 pose at first. Later on the kings exercised the 
 power to grant the privilege to individuals of 
 exclusive dealing in particular trades, and they 
 did this by patents for monopolies. Naturally, 
 such an exclusion of all others from any particu- 
 lar business or trade by arbitrary royal act 
 stirred the indignation of the people, and the 
 abolition of those statutory monopolies fol- 
 lowed. 
 
 Meantime there had arisen abuses growing out 
 of the attempt on the part of traders to exclude 
 others from the sale of foodstuffs and other 
 necessities of life by what was called engrossing 
 or regrating — that is, by cornering the market 
 and enabling them to raise and exact exorbi- 
 tant prices. These were made the subject of 
 statutes punishing them as crimes. As the re- 
 sults of the royal monopoly and of the cornering 
 by engrossing and regrating were in more or less 
 degree the same, there came to be a confusion of 
 the terms, and the word "monopoly" came to 
 
 7 
 
THE ANTI-TRUST ACT 
 
 be applied also to the result of the cornering of 
 the market. 
 
 The history and growth of the exceptions to 
 the at first absolute rule avoiding all restraints 
 of trade are interesting and important, and their 
 development has continued down to very recent 
 years. The absolute restriction proved in some 
 ways to be embarrassing to trade rather than in 
 the interest of its freedom. If a man had a 
 business and wished to sell it, with its good will, 
 he could get a better price if he might lawfully 
 bind himself not to interfere with that business 
 which he was selling by engaging in the same 
 business within the same territory. This was in 
 the interest of the purchaser, because he wished 
 to secure the benefit of his bargain and make 
 legitimate profit out of it, and it was not con- 
 trary to the public interest, because it did not 
 affect the public. The condition of trade was 
 not changed by the transfer from the one to the 
 other, and the status quo was maintained by the 
 agreement. 
 
 Of course, if the restraint upon the seller's 
 going into business was larger in its scope 
 than the business which he sold, either in the 
 matter of territory or in the character of the 
 
 8 
 
AND THE SUPREME COURT 
 
 business, it was beyond the proper and legiti- 
 mate purpose of such a restraining term of the 
 contract. Therefore it was held to exceed the 
 just limits of the exception to the old rule and to 
 be unreasonable and unenforceable. It was not 
 punishable as an offense; it was merely a term 
 of the contract for the breach of which the other 
 party could not recover damages and in respect 
 to which a court of equity would not aid him. 
 
 The instance of sale of a business with its good 
 will is only one of a number of analogous cases in 
 which a contract restraining the contractor in 
 his future trade or business was deemed to be 
 germane and legitimately adopted to the lawful 
 purpose of the principal contract, and, therefore, 
 enforceable as part of it if the restraint was 
 limited in its terms to the needs of the main 
 transaction. Another instance was that of an 
 agreement by a retiring partner not to compete 
 with the firm which he had just left, which was 
 quite analogous to the sale of a business and its 
 good wiU to a stranger. 
 
 A third instance was that of one entering 
 a partnership stipulating that while he was a 
 member of it he would not do anything to in- 
 terfere by competition or otherwise with the 
 
THE ANTI-TRUST ACT 
 
 business of the firm, which presents an exact 
 analogy to the two previous cases. A fourth 
 was where one sold property to another, and 
 that other agreed not to use the property in 
 competition with the business retained by the 
 seller. In this case it was held proper for the 
 owner of the property, who had full liberty 
 either to sell or not to sell, to prevent injury 
 to himself and his business by taking a contract 
 from the buyer not to use it for such purpose. 
 
 A fifth instance was where an assistant or 
 servant or agent entering upon a contract of 
 service agreed as an incidental term not to com- 
 pete with his master or employer after the ex- 
 piration of his time of service. This was to 
 protect the employer in his business from dam- 
 age or loss caused by the unjust use on the 
 part of the employee of the confidential knowl- 
 edge he might acquire in such business. 
 
 It is conceivable that other analogous in- 
 stances might arise in which exceptions would 
 be made at common law to the general rule 
 preventing the enforcement of contractual re- 
 straints upon the contractor's trade, though 
 after a thorough search of the authorities I do 
 not find any other instance suggested. 
 
 10 
 
AND THE SUPREME COURT 
 
 These exceptions were made because it was 
 said that they were reasonable restraints of 
 trade. Now, they were reasonable not because 
 in a general way the judges thought they would 
 not hurt anybody under the particular circum- 
 stances, but they were held to be reasonable 
 as measured by the lawful purpose of the prin- 
 cipal contract to which they were subsidiary 
 and ancillary. 
 
 This gave a definition for judicial guidance. 
 It laid down the purposes to which such a con- 
 tract must be confined, and it was not open to 
 the criticism that it enlarged judicial discretion 
 into legislative action. I do not think that any 
 well-reasoned and well-supported case can be 
 found in which an agreement has been enforced 
 by the courts of England or of this country 
 where the main object was either to get or to 
 keep another man out of business or to restrict 
 his business in quantity, prices, or territory. 
 When no other purpose than one of these has 
 been manifested in the contract it has always 
 been unenforceable at common law. 
 
 It used to be said that partial restraints of 
 trade would be enforced if they were reason- 
 able. The expression "partial " was not a happy 
 
 11 
 
THE ANTI-TRUST ACT 
 
 one, and it was rejected later on because there 
 came before the courts instances in which an- 
 cillary contracts of this character had to be, 
 not partial, but general, had to include the 
 whole realm, or it might be the whole world. 
 For instance, where a man was engaged in the 
 manufacture of large ammunition, great guns, 
 or war material, which to be profitable must be 
 sold chiefly to sovereign governments and in 
 which he had established a good-will that was 
 world-wide, and he wished to sell his business to 
 another. If the seller was to secure a good 
 price, and the purchaser was to receive and 
 enjoy the good-will and world-wide business 
 which he was paying for, it was reasonable for 
 the seller to stipulate in the contract of sale, 
 as a term of it or as ancillary to it, that he would 
 not go into the same business at all or anywhere. 
 What I wish to insist upon and emphasize 
 as much as I can is that when it is said that a 
 contract in restraint of trade was reasonable 
 at common law, it was not a contract in which 
 the restraint was the sole or chief object of the 
 contract. The restraint was a mere instrument 
 to carry out a different and lawful purpose of 
 the main contract. 
 
 12 
 
AND THE SUPREME COURT 
 
 Fear of monopoly was one of the reasons 
 why such restraints were not enforceable at 
 common law. We see this clearly set forth by 
 Chief -Justice Parker in 1711, in the leading 
 case of Mitchel vs. Reynolds, I. P. Williams, 
 181, 190, where he stated the objections to a 
 contract in the restraint of trade of one of the 
 contracting parties as follows: 
 
 First. The mischief which may arise from them: 
 (1) to the party by the loss of his hvelihood and the 
 subsistence of his family; (2) to the public, by de- 
 priving it of a useful member. Another reason is 
 the great abuses these voluntary restraints are 
 liable to; as, for instance, from corporations who 
 are perpetually laboring for exclusive advantages in 
 trade and to reduce it into as few hands as possible. 
 
 The reasons were stated at length in Alger 
 vs. Thacher, 19 Pick, 51, 54, by the Supreme 
 Judicial Court of Massachusetts when Chief- 
 Justice Shaw was at its head, and when Putnam, 
 Wild, Morton, and Dewey were associates. Re- 
 ferring to the rule as stated by Chief-Justice 
 Parker in 1711, the Court through Justice 
 Morton said: 
 
 That the law under consideration has been adopt- 
 ed and practised upon in this country, and in this 
 
 13 
 
THE ANTI-TRUST ACT 
 
 State, is abundantly evident from the cases cited 
 from our own reports. It is reasonable, salutarj^ 
 and suited to the genius of our government and the 
 nature of our institutions. It is founded on great 
 principles of public policy and carries out our con- 
 stitutional prohibition of monopolies and exclusive 
 privileges. 
 
 The unreasonableness of contracts in restraint of 
 trade and business is very apparent from several 
 obvious considerations: (1) Such contracts injure 
 the parties making them, because they diminish 
 their means of procuring livelihoods and a compe- 
 tency for their families. They tempt improvident 
 persons, for the sake of present gain, to deprive 
 themselves of the power to make future acquisi- 
 tions; and they expose such persons to imposition 
 and oppression. (2) They tend to deprive the pub- 
 lic of the services of men in the employments and 
 capacities in which they may be rnost useful to the 
 community as well as themselves. (3) They dis- 
 courage industry and enterprise and dinynish the 
 products of ingenuity and skill. (4)<They prevent 
 competition and enhance prices. (5) They expose 
 the public to all the evils of monopoly; and this 
 especially is applicable to wealthy companies and 
 large corporations, who have the means, unless re- 
 strained by law, to exclude rivalry, monopolize busi- 
 ness, and engross the market. Against evils like 
 these, wise laws protect individuals and the public 
 by declaring all such contracts void. 
 
 The changed conditions under which men 
 have ceased to be so entirely dependent for a 
 
 14 
 
AND THE SUPREME COURT 
 
 livelihood on pursuing one trade have rendered 
 the first and second considerations stated by 
 Chief-Justice Parker, for this rule against the 
 restraints of trade, less important to the com- 
 munity than they were in the seventeenth and 
 eighteenth centuries; but the disposition to 
 use every means to reduce competition and 
 create monopolies has grown so much of late 
 that the considerations last stated by the learned 
 judge have lost nothing in weight as time has 
 passed. 
 
 It will be observed, however, that the re- 
 straints in contracts in which the question of 
 reasonableness or unreasonableness played any 
 part at the common law were contracts in 
 which one of the contracting parties disabled 
 himself, and- that constituted the restraint. 
 Contracts or combinations between persons to 
 restrain the trade of a third person were at 
 common law voided by the statute against 
 engrossing, and certainly never at the common 
 law did the question arise whether such con- 
 tracts were reasonable or unreasonable. They 
 were always void and were never enforced. 
 Early in the nineteenth century a contract 
 restraining the trade of others came before 
 
 15 
 
THE ANTI-TRUST ACT 
 
 Lord Chancellor Eldon m a case of this 
 kind. 
 
 A combination of wholesale grocers formed 
 what was called a fruit club and appointed a 
 select committee to act for them. Their pur- 
 pose was to purchase all imported fruits that 
 came into the market in order that they might 
 control the trade and compel all the other 
 wholesale dealers to apply to them for a supply. 
 They sold to their own members at a small price 
 and to the outsiders at advanced prices and in 
 such quantities as they thought proper. If 
 any importer sold to any other wholesale dealer 
 without making an offer to the club its com- 
 mittee refused to have any further dealings with 
 the importer, and thus the club obtained com- 
 plete control over the price of fruit. 
 
 The plaintiff had been a member of this club 
 and then withdrew from it, but subsequently 
 entered into an agreement with it to buy two 
 cargoes of fruit, the club agreeing to let him 
 have a quarter of the purchase at the price the 
 club paid. The club purchased the two cargoes 
 and furnished one-quarter of the whole lot to 
 the plaintiff. He paid part of the price the club 
 charged, but then declined to pay the rest on 
 
 16 
 
AND THE SUPREME COURT 
 
 the ground that the price charged him exceeded 
 what the club paid. In order to make his com- 
 plete defense and to elicit the facts he applied 
 to Lord Eldon in a bill of discovery to compel 
 the club to show what its dealings were with re- 
 spect to these two cargoes of fruit, and Lord 
 Eldon declined to give him any relief on the 
 ground that the association to which he orig- 
 inally belonged, and with which he was then 
 seeking to enforce a partnership agreement, was 
 contrary to public policy. 
 
 In the early part of the nineteenth century 
 the regrating and engrossing statutes were re- 
 pealed with a recital by Parliament that they 
 interfered with the freedom of business instead 
 of promoting it. There was thereafter no pen- 
 alty for those acts which would have consti- 
 tuted engrossing or regrating, even though they 
 resulted in monopolies. As Lord Justice Fry 
 says in Mogul Steamship Company vs. Mc- 
 GregorrL. R. 23, Q. B. D. 598, 629, referring 
 to the recital of the act: "This statement is 
 very noteworthy. It contains a confession of 
 failure in the past, the indication of a new 
 policy in the future." But in spite of this 
 change in the statutory law of England it is 
 
 17 
 
THE ANTI-TRUST ACT 
 
 perfectly clear that such engrossing or regrat- 
 ing combinations or contracts to interfere with 
 and restrain the trade of third persons, though 
 no longer criminal, continued to be unenforce- 
 able as between those who combined. 
 
 In Hilton vs. Eckersly, tried in the Court 
 of Queen's Bench about 1863, a number 
 of employers entered into a bond that they 
 would carry on their works for a year in the 
 matter of wages, employing workmen, and main- 
 taining the rate of wages and the terms of the 
 employment in accordance with the vote of the 
 majority. One member violated the agreement, 
 and this was a suit against him on the bond 
 for his breach of the agreement. 
 
 One of the judges in the Queen's Bench, 
 Mr. Justice Crompton, expressed the opinion 
 that the contract was not only unenforceable, 
 but that it gave a right of civil action to any 
 one who was injured thereby, and that it was 
 indictable as a common-law misdemeanor. The 
 two other judges. Lord Campbell being one, 
 agreed that the bond was unenforceable, but 
 did not think that it was criminal. The Court 
 of Exchequer Chamber on error held that the 
 bond was unenforceable, but declined to pass 
 
 18 
 
AND THE SUPREME COURT 
 
 on the question whether such a combination 
 gave an action for damages or was indictable. 
 
 The Mogul Steamship Company case, de- 
 cided by the highest courts in England in 1892, 
 has figured very largely in the question of 
 trusts and monopolies in this country, and 
 has frequently been misunderstood. The 
 facts were that a number of ship-owners who 
 were regular carriers of tea entered into a 
 combination to drive out of business an out- 
 sider who was in the habit of coming into the 
 harbor of Hankow and lowering prices. The 
 combiners agreed to conduct a year's steady 
 and persistent campaign of underbidding against 
 his ships and thus end his competition. Then 
 the outsider brought suit for damages against 
 the combiners for the injury they had done him. 
 
 This case turned on the question whether 
 the combination was aflBrmatively illegal in 
 such a sense that it was indictable at common 
 law. Lord Coleridge held that it was not. In 
 the Court of Appeals, two justices, Lord Jus- 
 tice Bowen and Lord Justice Fry, held that it 
 was not, while the Master of the Rolls, Lord 
 Esher, held that it was, following the authority 
 of Justice Crompton in Hilton vs. Eckersly. 
 
 19 
 
THE ANTI-TRUST ACT 
 
 In the House of Lords there was a unanimous 
 judgment that the combination was not il- 
 legal in the sense of being actionable or indict- 
 able. 
 
 This case has been quoted frequently as in- 
 dicating that such a combination as that was 
 a reasonable contract of restraint at common 
 law. It has no such effect. It will be found 
 in nearly every one of the judgments that a 
 clear distinction is made by the judges between 
 an illegal contract and one which is unenforce- 
 able, and that the combination in that case was 
 conceded to be unenforceable as a contract 
 between the parties to it and to be void at 
 common law. 
 
 ijTherefore we find that the state of the com- 
 mon law when Congress passed the anti-trust 
 statute was that contracts in restraint of trade, 
 in so far as they restrained a party to the con- 
 tract, were void, unless they were reasonable in 
 the sense that they were merely ancillary to a 
 main contract which was lawful in its purpose, 
 and were reasonably adapted and limited to that 
 purpose, and that all contracts or combinations 
 in which the contracting parties agreed to com- 
 bine to restrain the trade of a third party or 
 
 20 
 
AND THE SUPREME COURT 
 
 aflfect it injuriously were void at common law, 
 without exception, and there were no reason- 
 able contracts or combinations in restraint of 
 trade of that kindy When one party to such a 
 contract sought to enforce it against another 
 the court left both where it found them and 
 gave no aid to either. 
 
 iOwc anti-trust statute, however, now makes 
 such restraints, which were thus only void and 
 unenforceable at common law, positively and 
 affirmatively illegal, actionable, and indictable.y 
 
 It has been frequently said that at common 
 law a combination among laborers to raise their 
 wages was illegal. I think this untrue. There 
 were statutes punishing laborers for combining 
 in this way, but it was not illegal at common 
 law. Lord Bramwell in Mogul Steamship Com- 
 pany vs. McGregor, said: 
 
 I have always said that a combination of work- 
 men, an agreement among them to cease work ex- 
 cept for higher wages, and a strike in consequence, 
 was lawful at common law. 
 
 And, while cases can be found in this country 
 in which the illegality of combinations of la- 
 borers for this purpose has been asserted, they 
 cannot be sustained. 
 
 21 
 
THE ANTI-TRUST ACT 
 
 But it is one thing to say that a combination 
 of laborers to cease work in order to secure a 
 raising of wages or more favorable terms of 
 employment is not actionable, and it is quite 
 another thing to say that such combination for 
 other purposes and to accomplish other results 
 may not have been actionable at common law. 
 The great weight of authority is that in certain 
 cases they were. 
 
 It may reduce the employer's profits if he 
 is obliged to pay his workmen on a higher scale 
 of wages when they combine to leave his em- 
 ployment. The loss which he sustains, if it 
 can be called such, arises merely from the ex- 
 ercise of their lawful right to work for such 
 wages as they choose and to get as high rate 
 as they can. The loss is caused by the work- 
 men, but it gives no right of action against them. 
 
 Again, if workmen are called upon to work 
 with the material of a certain dealer and the 
 material is of such character as to make their 
 labor greater or more dangerous than that sold 
 by another, they may lawfully agree that they 
 will refuse to work with such material. The 
 loss caused by such joint action of the workmen 
 to the employer or the material man is not a 
 
 22 
 
AND THE SUPREME COURT 
 
 legal injury, and not the subject of action. 
 The issue the workmen make and the purpose 
 they have relate normally and directly to the 
 terms of their employment and the work they 
 have to do. 
 
 But on this common ground of common 
 rights, where participants in business and manu- 
 facture and trade, employers and employees, 
 are lawfully struggling against each other in 
 peaceful methods for their respective interests 
 and where losses suffered in the struggle must 
 be borne, there are losses which are actionable, 
 when wilfully caused by combinations in the 
 exercise of what otherwise would be a lawful 
 right, because of the indirect and unjustifia- 
 ble means taken to accomplish the end sought. 
 They may not use a lockout or a strike or a 
 threat of either, or a withholding of patronage, 
 or a threat of it, to compel third persons to 
 join them in the fight which they are lawful- 
 ly making with their competitors, their em- 
 ployees, or their employers. 
 
 This is a secondary boycott, so called. The 
 essence of its illegality is in the coercion of 
 third persons to lend assistance in a legitimate 
 competition in business, or a perfectly lawful 
 
 23 
 
THE ANTI-TRUST ACT 
 
 contest between employers and employees, m 
 which each may use against his rival or opponent 
 his right of patronage, his right of labor, or his 
 right of employment as he will. He may not 
 by the same means coerce others to join him in 
 the fight against their will. This view of the 
 law has been taken in many cases in this coun- 
 try, and, while there have been some dissenting 
 opinions, it has now been embodied in many 
 statutes. A person injured' by such a secondary 
 boycott may invoke the action of the common- 
 law courts in a suit for damages, or the courts 
 of equity by way of injunction against the 
 wrong-doers. 
 
 A secondary boycott has such possibilities 
 in the way of injuring the whole community, 
 of bringing into contests that are none of their 
 own making so many indifferent and innocent 
 persons, that ethics and law and public policy 
 all require the recognition of the distinction 
 which makes lawful the combination of work- 
 ing-men against employers in their natural 
 controversies over wages and terms of employ- 
 ment, but condemns the use of combination by 
 either party to compel third persons against 
 their will to come into the fight. 
 
 24 
 
AND THE SUPREME COURT 
 
 The suggestion is made that the working-men 
 ought to be allowed to use the secondary boy- 
 cott, because if they do not, then they will re- 
 sort to force. This seems to be a very poor ar- 
 gument. It assumes that militancy and the 
 use of criminal means to further a cause should 
 be recognized as an effective method of changing 
 law. 
 
 The proper reason for the legality of a com- 
 bination of laborers to raise prices is to be found 
 in the necessity for enabling them to deal on 
 an equality with their employers. If they did 
 not have this power they would be at the mercy 
 of employers who have capital and resources 
 and who are not compelled to live from day to 
 day on their daily earnings. The power to 
 cease employment together — that is, to strike — 
 is a most useful and legitimate weapon to bring 
 their employers to terms. But why should 
 they be permitted to use the strike to threaten 
 third persons, and to compel such third persons 
 to cease association with the employers on pain 
 of being brought into the controversy and of 
 themselves being subjected to similar treatment? 
 
 But it is said the right of labor is free. It 
 is like any other right: it is free to use for a law- 
 
 3 25 
 
THE ANTI-TRUST ACT 
 
 ful purpose. But it is not free when it is used 
 in a combination that effects such injustice as 
 that I have described. To use the language 
 of Mr. Justice Holmes speaking for the Supreme 
 Court in Aikens vs. Wisconsin, 194, U. S. 205: 
 
 No conduct has such an absolute privilege as to 
 justify all possible schemes of which it may be a 
 part. The most innocent and constitutionally pro- 
 tected of acts or omissions may be made a step in 
 a criminal plot, and if it is a step in a plot, neither 
 its innocence nor the Constitution is sufficient to 
 prevent the punishment of the plot by law. 
 
 And so why should the right of labor be used 
 to coerce third persons and thus bring about 
 a result which will terrorize a community, as 
 it did in the Debs case when the combination 
 of the American Railway Union took the pub- 
 lic by the throat and said, "We will starve 
 your babies, we will prevent your food coming 
 to you by stopping these railroads unless you 
 intervene between Pullman and his employees 
 and compel Pullman to pay higher wages than 
 he is now willing to pay them".? 
 
AND THE SUPREME COURT 
 
 CHAPTER II 
 
 GENERAL FUNCTION OF CONSTITUTION AND 
 COURTS IN PROTECTION AND LIMITATION OP 
 INDIVID DAL RIGHTS OF PROPERTY, CONTRACT, 
 AND LABOR. 
 
 IN the first chapter I considered the state of 
 the common law with reference to its hm- 
 itations upon contracts and combinations in 
 the exercise of the right of property and right 
 of labor in the field of business, commerce, and 
 industrial employment. It seems to me wise 
 now to take up, in the course of discussion and 
 as germane to it, a very general subject — to 
 wit, the function of the courts in our system 
 of government in the enforcement and limita- 
 tion of such rights. 
 
 The United States Supreme Court's decis- 
 ions under the Sherman law have been made 
 the basis for a general attack upon our courts 
 and for arguments in favor of grotesque and 
 revolutionary changes in our judicial system 
 
 27 
 
THE ANTI-TRUST ACT 
 
 which bear the name of "the recall of judges 
 and the recall of judicial decisions." We have 
 heard much denunciation of what is called 
 "judicial legislation" and "judge-made law." 
 It will aid, at this point, before we attempt to 
 state the result of judicial construction of the 
 great anti-trust statute, to examine into the 
 utility and indispensable character of the office 
 that courts have performed in the history of 
 the common law, in the construction of statutes, 
 and in the application of written constitutions. 
 
 For purposes of discussion we can say that 
 our municipal law is divided into three branches. 
 The first is the customary or common law, in- 
 herited from England, and varied to meet our 
 differing conditions here; the second is the 
 statutory law, which, whenever the legislative 
 branch of the government desires to change 
 the customary or common law, is substituted 
 for that law; and the third, the fundamental 
 or constitutional law, which lays down the per- 
 missible hmits of legislative discretion in en- 
 acting statutes. 
 
 In respect to the common law, we must have 
 some official authority to say what it is. It 
 was the judges in England who were learned 
 
 28 
 
AND THE SUPREME COURT 
 
 in the customs of the realm that in Htigated 
 cases between individuals adjudged what their 
 rights and duties were by that custom; and 
 their decisions, covering century after century, 
 preserved ia reports, made up the body of the 
 common law. 
 
 As times changed in England, as new condi- 
 tions arose for the application of the law of 
 rights and duties and the lawmaking power 
 of Parliament was silent, the judges exercised 
 a wise discretion on principles of justice and 
 morality to determine new forms for the ap- 
 plication of old principles, by way of analogy, 
 following so far as they could interpret it the 
 prevailing morality and the predominant pub- 
 lic opinion. From time to time it was found 
 that the progressive quality of the law did not 
 keep pace with enlightened public opinion and 
 obvious public necessity, and then changes oc- 
 curred both by statutory provision and by 
 direct action of the king. 
 
 The customary law has been handed down to 
 us, and its history one can trace ia much detail 
 for six hundred years. Indeed, if one will con- 
 sult the great books on this subject like Holmes 
 on the Common Law, Pollock and Maitland's 
 
 29 
 
THE ANTI-TRUST ACT 
 
 History of English Law, and other works of 
 similar character, he can note the interesting 
 development and progress that has been made 
 in the Enghsh law from time to time under the 
 necessities that the changing conditions in so- 
 ciety imposed. 
 
 \ Sometimes the law has lagged behind public 
 Informs and popular judgment. It generally 
 lags behind the moral rules, but not so much 
 now as in the past. The growth of equity in 
 the English law presents one of the most in- 
 spiring histories that I know of, and the rules 
 of equity, with some exceptions, represent as 
 high a moral tone as we can hope to reach in 
 municipal law. 
 
 If one would realize the growth of the com- 
 mon law in this respect he should read an article 
 by that jurist and professor of law, James Barr 
 Ames, on "Law and Morals," in the twenty- 
 second volume of The Harvard Law Review, 
 page 97. Dean Ames points out that the Eng- 
 lish law has squared itself more and more with 
 the moral law and with the progress of society 
 through two great instrumentalities. 
 
 The one was the statute of Westminster, 
 Thirteenth Edward I., which, after all, was only 
 
 30 
 
AND THE SUPREME COURT 
 
 a statute of procedure, by which the clerks in 
 chancery were authorized to form new writs 
 for new cases, by analogy to old writs. This 
 elasticity gave power to the lawyers as the ini-, 
 tiators of new writs and declarations, on the 
 one hand, and to judges in the consideration 
 and approval of such writs and declarations 
 on the other, to give progress to the principles 
 of law under the common-law system and to 
 adapt its rules and its remedies to the public 
 and social needs. 
 
 The other instrumentality grew out of the 
 king's executive interference with the common- 
 law courts to abate their rigid technicalities 
 and injustice through his Chancellor. This 
 exercise of the royal prerogative was regarded 
 by common-law lawyers as a great abuse. It 
 settled down, after many years, into a judicial 
 system grafted on to that of the common-law 
 courts. In the greater variety of remedy in the 
 Courts of Equity, in the opportunity to compel 
 the defendant to act by way of restitution and 
 specific performance, there was offered a means, 
 which was fully improved by the great Chan- 
 cellors stimulated by high ideals, to give the law 
 a much more practical moral result than it ever 
 
 31 
 
THE ANTI-TRUST ACT 
 
 had before. That is why equity seems more 
 all-embracing than law. 
 
 Professor Pound, of Harvard, has given the 
 legal profession a great deal of aid in his dis- 
 cussion of the comparative jurisprudence ol the 
 various countries and of progress which the law 
 has made. He thinks that in the adaptation 
 of the common law to our new country and its 
 development between the first years of the nine- 
 teenth century and the close of the Civil War 
 a wonderful work was done by our courts, but 
 that since the war they have not advanced the 
 law as rapidly as they ought to have done, and 
 he attributes it to the introduction of the elec- 
 tive judiciary and the failure to maintain ex- 
 perts of the law in independent judicial posi- 
 tion since that time. 
 
 He points out that recent criticisms of courts 
 based on their alleged failure to follow the 
 changes in public opinion and to shape and 
 adapt that law to the progressive needs of the 
 people find their chief ground in the decisions 
 of courts in which the judges are elective. His 
 view is that great judges are those who under- 
 stand so fully the fundamental principles of 
 the law which must be retained, and have so 
 
 32 
 
AND THE SUPREME COURT 
 
 clearly the sense of proportion which expert 
 legal knowledge gives, that they are able to 
 keep the law abreast of the times by rejecting 
 from it what is casual and retaining those funda- 
 mental principles in its administration the de- 
 parture from which would involve disaster to 
 society. 
 
 Judges are men. Coiu-ts are composed of 
 judges, and one would be foolish who would 
 deny that courts and judges are aflfected by 
 the times in which they live, as well by the 
 defects of those times as by the higher ideals 
 prevailing. 
 
 The first half of the nineteenth century, end- 
 ihg in the Civil War, resulted in a great moral 
 elevation of the people in the struggle over 
 slavery and its final excision. Afterward we 
 settled down to a tremendous material expan- 
 sion, in which all the people had their atten- 
 tion focused on the extended applications of 
 invested capital to further development. It 
 was a period in which the political duties of 
 the people were negligently exercised and in 
 which the influence of wealth over politics be- 
 came greater and greater, until plutocracy 
 threatened: and if the attitude of the courts 
 
THE ANTI-TRUST ACT 
 
 reflected the attitude of the people, and the 
 law did not make as much moral progress in 
 that time, it is only because the courts were 
 doing what it is denied they do now — i. e., 
 keeping pace with society. 
 
 Now the people have waked up. Now the 
 courts have waked up. Now Congress has 
 waked up and the legislatures have waked up 
 to the danger that was before us, and a great 
 reform in public spirit has come. It infuses 
 not only the people, but legislatures and the 
 courts. 
 
 Remedies for the ills that have developed in 
 society, for the injustices that exist, are being 
 suggested and pressed into operation with all 
 the enthusiasm and all the lack of discretion 
 that such a popular uprising as we have had at 
 first inspires. The leviathan, the People, can- 
 not thus be given a momentum that will not 
 carry them in their earnestness and just indigna- 
 tion beyond the median and wise line. The 
 excesses, which we may hope are only tem- 
 porary, are part of the cost that we have to 
 pay in curing the original disease. Therefore I 
 think we may take heart in reference to the 
 administration of our laws, and have confidence 
 
AND THE SUPREME COURT 
 
 that in the end and after some possibly serious 
 mistakes we shall bring it into wise conformity 
 with public needs and continue the courts as an 
 effective instrument for the highest good. 
 
 I would not by anything I may say seem to 
 uphold the diatribes and unjust and ignorant 
 attacks that for demagogic and other purposes 
 have been made upon oiur courts. All I mean 
 to say is that they in their administration of 
 the law have not been unaffected by the con- 
 dition of the public mind, both for better and 
 for worse, in the latter half of the nineteenth 
 century. 
 
 Coming now to the field of statutory law, we 
 find that while Congress has many lawyers, they 
 are not always great jurists, they are not always 
 exact in their knowledge of existing law, or states- 
 manlike in their appreciation of the operation of 
 new law, and it is impossible for them to antici- 
 pate the myriad phases of transactions and points 
 of contest between members of society that have 
 to be decided in litigated cases. The necessity 
 for filling the lapses that may occur in a statute, 
 the inconsistencies that the statute has in itself 
 and that it often has in concurrent operation 
 with other statutes, require, in order to secure 
 
 35 
 
THE ANTI-TRUST ACT 
 
 any reasonable working of the law, a tribunal 
 which shall supply these lapses by reasonable 
 inference as to the intention of the legislature, 
 and shall reconcile the inconsistencies. 
 
 Of course, it is impossible that such a func- 
 tion as this could be performed by judges, who 
 are only men, without at times exceeding their 
 just discretion, without at times stepping over 
 the line which is very hard to draw between 
 judicial construction and judicial legislation. 
 But it must always be remembered that the 
 legislatm-e has complete power in this regard, 
 and that if the courts in their construction of 
 law miss the intention of the legislature there 
 is immediate relief at hand in a new law which 
 may be made more clearly to set forth the legis- 
 lative will. 
 
 [Finally, we are brought to the function of 
 courts in reconciling statutes to constitutional 
 limitations and in declaring when the permis- 
 sible discretion of the legislature conferred by 
 the Constitution has been exceeded inseeming 
 laws which must be declared to be invalid. 
 This requires a short consideration of our form 
 of government and what the object of govern- 
 ment is. We believe in popular government 
 
 36 
 
AND THE SUPREME COURT 
 
 in this country. But we insist that its duration 
 and usefulness can only be secured in the long 
 run by a recognition on the part of all the people 
 that they must impose restraints upon them- 
 selves in order that the rule of a majority of the 
 electorate, which is the only possible form of 
 rule under a popular government, shall certainly 
 be just and fair to the minority and the in- 
 dividual. 
 
 We believe that government is, of course, 
 for the benefit of society as a whole, but that 
 society is composed of individuals and that 
 the benefit of society as a whole is only con- 
 sistent with the full opportunity of its members 
 to pursue happiness and their individual liberty. 
 This, in its broadest and proper sense, includes 
 freedom from personal restraint, right of free 
 labor, right of property, right of religious wor- 
 ship, right of contract. 
 
 The people have imposed upon the electorate 
 that represents them — and that is only a com- 
 paratively small percentage of all the people — 
 certain restraints intended to preserve individual 
 liberty and embodied in a written constitution. 
 Were these restraints to be removed, and were 
 a majority of the electorate, acting through 
 
 37 
 
THE ANTI-TRUST ACT 
 
 temporary passion or before the formation of 
 a settled public opinion based on real knowl- 
 edge and deliberate consideration, to do injus- 
 tice to the minority or to the individual in the 
 supposed interest of the majority or society, 
 then the knell of popular government would 
 be sounded. The injured minority would ulti- 
 mately drift into forcible resistance to the au- 
 thority of laws the outgrowth of the selfish 
 exercise of power and of not doing justice; 
 and, after chaos, we would have the "man on 
 horseback." 
 
 Therefore those of us who insist upon the 
 preservation of constitutional limitations upon 
 the action of a majority of the electorate are 
 convinced that we are the best friends of popu- 
 lar government. Popular government is only 
 an instrument to be used in promoting the op- 
 portunity for the pursuit of happiness by so- 
 ciety and its members. It is not an end; it 
 should not be a fetish. 
 
 When men have capacity to govern them- 
 selves popular government offers greater benefit 
 to them than the government by one or a few. 
 When they do not have that capacity as a whole, 
 then, as in the past and as in many parts of the 
 
 38 
 
AND THE SUPREME COURT 
 
 world to-day, government by one or the few is 
 better. 
 
 Indeed, it is only a matter of degree. As I 
 have already said, we are governed by the ma- 
 jority of an electorate. The minority of that 
 electorate takes part, and therefore it cannot be 
 said that it has not a voice in the government, 
 because the minority changes into a majority 
 and the majority into a minority in the practical 
 operation of popular elections from time to time. 
 But perhaps eighty per cent, of all the people 
 never have any actual vote at all, and they are 
 governed by the action of the twenty per cent, 
 of the electorate. The electorate in a sense repre- 
 sents them, and, because their interests are simi- 
 lar or the same, in the long run the electorate 
 carries out the public opinion of the whole 
 body of the people — men, women, and chil- 
 dren. 
 
 What we must keep clearly in mind, however, 
 is that the end is the pursuit of community and 
 individual happiness, that the means is popular 
 government. There is not, therefore, the slight- 
 est reason a priori why we should not maintain 
 in such a government the constitutional limita- 
 tions upon the temporary action of the majority 
 
 39 
 
THE ANTI-TRUST ACT 
 
 of that comparatively small percentage of the 
 whole people which constitutes its electorate. 
 
 The electorate, of course, must ultimately 
 control the fundamental law containing these 
 restraints. They may amend it in parts or re- 
 vise it as a whole. But it is essential to a wise 
 revision or amendment that the changes pro- 
 posed be carefully weighed by constitutional 
 conventions or legislatures in the light of their 
 general application, and that they be consid- 
 ered abstractly and from a statesmanlike stand- 
 point, with a wide vision of their probable 
 operation, not only in the immediate present, 
 but in the far future. Such a discussion of con- 
 stitutional limitations excludes the possibility 
 of a narrow partisan or one-sided view, stimu- 
 lated by particular cases of a sensational and 
 exaggerative color which lead to hasty and ill- 
 advised generalizations. 
 
 Having fixed our constitutional limitations, 
 We need somebody to keep us within them. We 
 need somebody to whom the individual or 
 the minority, unjustly treated by the majority, 
 may appeal, and who will enforce the limita- 
 tions that it was intended by the Constitution 
 to impose. | 
 
 / 40 
 
AND THE SUPREME COURT 
 
 This calls for an independent judiciary, for a 
 judiciary whose tenure and salary and learning 
 and ability and character are such that they 
 can face temporary unpopularity with the ma- 
 jority in defending the rights of the individual 
 or the minority. That is the federal system, 
 and while it has been criticized and attacked 
 with ill-disguised vituperation from Mr. Jeffer- 
 son to Mr. Roosevelt, a calm review of history 
 made by independent observers, not of our 
 country, shows that there has been nothing in 
 om- form of government so admirable and use- 
 ful in its workings as the Supreme Court of the 
 United States and the authority which it has 
 exercised, in its steadying opinions, in the se- 
 curity it has given to life, liberty, and property, 
 in its keeping open, as far as the Constitution 
 can secure it, the equal opportunity of all men. 
 
 Its peculiar functions undoubtedly make it 
 the most powerful tribunal in the world. The 
 fact that it has been able to maintain its au- 
 thority against such attacks as those we had at 
 the birth of the nation and that are being re- 
 newed to-day is a sufficient proof of the sound 
 sense, the imderlying conservatism, and the clear 
 governing capacity of the American people. 
 
 41 
 
THE ANTI-TRUST ACT 
 
 The governing capacity of a people is measured 
 by its self-restraint, by its recognition of the 
 rights of the minority, and by its wilHngness to 
 admit its liability to err and to lessen its liability 
 to such error through fundamental restrictions 
 upon its own action. 
 
 No one can read the judgments of the Su- 
 preme Court of the United States without real- 
 izing that no small or narrow prejudices con- 
 tract their judicial views, or without recogniz- 
 ing that its members are, as they ought to be, 
 not only great jurists, but great statesmen, 
 and discharge their duties with the broadest 
 appreciation of their responsibility and their 
 duty not to substitute their opinion for the 
 discretion which under our system it was in- 
 tended that Congress and the State legislatures 
 should exercise. The whole trend of their judi- 
 cial decisions is as progressive as possible, and 
 those who do not see it and assert the contrary 
 are not familiar with them and speak in igno- 
 rance. 
 
 The Supreme Court of the United States is 
 the final tribunal in all the critical issues of the 
 present day arising out of the the Fifth and 
 Fourteenth Amendments. Under those amend- 
 
 42 . 
 
AND THE SUPREME COURT 
 
 ments Congress and the States are forbidden to 
 pass any laws depriving a person of life, liberty, 
 or property without due process of law. 
 
 The rights included in these amendments are 
 all the individual rights that we have come to 
 regard as valuable in the pursuit of happiness. 
 They embrace the right of personal freedom, 
 the right to labor, the right to property, and 
 the right to contract. Now it has always been 
 recognized that these rights are not absolute 
 rights, that they have to be exercised with ref- 
 erence to the exercise of similar rights by other 
 individuals in the same commimity, and with 
 due regard to community welfare, and that 
 the permissible limitations upon their enjoy- 
 ment must be affected by the changing condi- 
 tions prevailing in society. 
 
 Three generations ago this was a sparsely 
 settled country with a small population to the 
 square mile, with small cities and towns and vil- 
 lages, with the great bulk of the population living 
 in the country and most of them entirely inde- 
 pendent in supplying themselves with the means 
 of living. They raised their own food and pre- 
 pared it, raised their own clothing and made it, 
 they cut their fuel from the forest, and the 
 
 43 
 
THE ANTI-TRUST ACT 
 
 mutual dependence of one upon the other was 
 far less than it is to-day. The urban population 
 has greatly increased in proportion to the rural 
 population, while the feeding of the people, 
 and their clothing, their education, their health, 
 and their domestic comfort have necessarily 
 cut down somewhat the free exercise of indi- 
 vidual rights, which was wider half a century 
 ago; and the courts have recognized the change. 
 
 Consider the restraints upon personal freedom 
 of action contained in the modern health laws. 
 Take, for instance, the compulsory vaccination 
 laws sustained by the Supreme Court. I have 
 had an opportunity to witness the effect of such 
 laws in the Philippines upon a people that had 
 not had popular government and had been 
 steeled to arbitrary rule, and yet they resent- 
 ed the health laws as savoring of intolerable 
 tyranny. 
 
 What is true of personal restraint is true also 
 of the right of property, of the right of labor, 
 and of the right of contract. Tenement-house 
 acts frequently require a destruction of in- 
 come-producing property, and this without 
 any compensation to the owner. We now 
 have statutes which affect the rights of 
 
AND THE SUPREME COURT 
 
 contract, like that preventing the truck sys- 
 tem, and like those which affect the char- 
 acter of insurance contracts that can be 
 made. 
 
 Then there are statutes that change the law 
 of agency and create liability against employers 
 and limit their power to exempt themselves 
 from it by contract. 
 
 jThen we have the limitation upon the right 
 of labor in the statutory inhibition against 
 work for more than a certain number of hours 
 and in child-labor laws. 
 
 In Lochner vs. New York, 198 U. S. 45, a 
 statute of New York, which attempted to limit 
 the hours of bakers' labor on the ground that 
 baking was an unhealthful employment, was 
 held by the Supreme Court, by a vote of five to 
 four, to be unconstitutional. With the changed 
 personnel of the court and the present trend 
 of their decisions, I am inclined to think that 
 a similar case before that court would meet a 
 different fate. 
 
 The truth is that the court as at present con- 
 stituted has shown itself as appreciative of the 
 change of conditions and the necessity for a 
 liberal construction of the restrictions of the 
 
 45 
 
THE ANTI-TRUST ACT 
 
 Constitution, with a view to such changes of 
 conditions, as any court could be. 
 
 Mr. Justice Brown, in Holden vs. Hardy, 
 197 U. S., in considering the question whether 
 the legislature of Utah had the right to pre- 
 scribe hours of labor for miners, referred to the 
 changes in the statutory law aflFecting individual 
 rights which had been recognized as valid and 
 as not transgressing constitutional protection 
 of those rights. Speaking of those instances, 
 he says: 
 
 They are mentioned only for the purpose of call- 
 ing attention to the probability that other changes 
 of no less importance may be made in the future, 
 and that, while the cardinal principles of justice 
 are immutable, the methods by Vi^hich justice is 
 administered are subject to constant fluctuation, 
 and that the Constitution of the United States, 
 which is necessarily and to a large extent inflexible 
 and exceedingly difiicult of amendment, should not 
 be so construed as to deprive the States of the power 
 to so amend their laws as to make them conform 
 to the wishes of the citizens as they may deem best 
 for the public welfare without bringing them into 
 conflict with the supreme law of the land. 
 
 Of coiu-se, it is impossible to forecast the char- 
 acter or extent of these changes, but, in view of the 
 fact that from the day Magna Charta was signed 
 to the present moment amendments to the struc- 
 
 46 
 
AND THE SUPREME COURT 
 
 ture of the law have been made with increasing 
 frequency, it is impossible to suppose that they will 
 not continue, and the law be forced to adapt itself 
 to new conditions of society, and particularly to 
 the new relations between employers and employees, 
 as they arise. 
 
 This shows the state of mind and the view of 
 its duty in which the Supreme Court has ap- 
 proached the construction of the anti-trust law 
 and the recognition that it has given to the fact 
 that under the changes of business and social 
 conditions limitations of the Constitution af- 
 fecting the right of property, the right of free 
 contract, and the right of free labor may be 
 qualified in a limited way without a breach of 
 individual liberty and without removing or dis- 
 regarding the fundamental ancient landmarks 
 set by the Constitution of the United States. 
 It is not that the court varies or amends the 
 Constitution or a statute, but that, there being 
 possible several interpretations of its language, 
 the court adopts that which conforms to prevail- 
 ing morality and predominant public opinion. 
 
 It is before such a court that a great number 
 of instances of monopoly and attempted mo- 
 nopoly, prosecuted by indictment and conviction 
 
 47 
 
THE ANTI-TRUST ACT 
 
 or by bill in equity and decree in the inferior 
 federal courts, have been brought, and it will 
 be my effort in the chapters following to show 
 how thoroughly the court has responded to 
 settled public opinion in the construction and 
 application of the anti-trust la\Y and that the 
 criticisms of those who attack that great court 
 on this account are born of ignorance or dem- 
 agoguery. 
 
AND THE SUPREME COURT 
 
 CHAPTER III 
 
 THE SUGAR TRUST CASE, ITS NARROWING EFFECT 
 ON THE USEFULNESS OF THE STATUTE — ^JUS- 
 TICE HARLAN's dissent now THE LAW. 
 
 THE text of the first and second sections 
 of the Sherman anti-trust act, in so far 
 as they are important for consideration, are 
 as follows: 
 
 Section 1. Every contract, combination in the 
 form of trust or otherwise, or conspiracy, in restraint 
 of trade or commerce, among the several States or 
 mth foreign nations, is hereby declared to be il- 
 legal. Every person who shall make any such con- 
 tract or engage in any such combination or conspir- 
 acy shall be deemed guilty of a misdemeanor, etc. 
 
 Section 2. Every person who shall monopolize 
 or attempt to monopohze or combine or conspire 
 with any other person or persons to monopolize any 
 part of the trade or commerce among the several 
 states, or with foreign nations, shall be deemed, etc. 
 
 The act was passed in Mr. Harrison's Ad- 
 ministration in 1890. The first important 
 case under it was known as "In re Greene" 
 
 49 
 
THE ANTI-TRUST ACT 
 
 (52 Fed. Rep. 104). It arose in August, 1892, 
 on a petition for a writ of habeas corpus pre- 
 sented to Circuit Judge Jackson, afterward Mr, 
 Justice Jackson, to test the legality of a warrant 
 of removal under an indictment fovmd in Massa- 
 chusetts against Greene as one of the officers of 
 the Whisky Trust, for violating the first and 
 second sections of the act. 
 
 The indictment charged that the distilling 
 company had acquired seventy distilleries in 
 the whole country, had united them for the 
 purpose of controlling the business of distilling 
 whisky, and one count contained the specifica- 
 tion that for the purpose of controlling the busi- 
 ness and prices and establishing a monopoly it 
 had sold its whisky with a contract for a rebate 
 on the price to those who would maintain retail 
 prices, and that by this restraint of trade it 
 sought to compel purchasers in the market to 
 maintain the price of its whisky. In this case 
 Mr. Justice Jackson narrowed the application 
 of the statute in such a way that it is interesting 
 to read his language in the light of the present 
 condition of the law, as follows: 
 
 It is very certain that Congress could not, and 
 did not, by this enactment attempt to prescribe 
 
 SO 
 
AND THE SUPREME COURT 
 
 limits to the acquisition, either by the private citi- 
 zen or state corporation, of property which might 
 become the subject of interstate commerce, or de- 
 clare that, when the accumulation or control of 
 property by legitimate means and lawful methods 
 reached the magnitude or proportions that enabled 
 the owner or owners to control the traffic therein, 
 or any part thereof, among the States, a criminal 
 offense was committed by such owner or owners. 
 
 He further says: 
 
 All persons, individually or in corporate organi- 
 zations, carrying on business avocations and enter- 
 prises involving the purchase, sale, or exchange of 
 articles, or the production and manufacture of com- 
 modities which form the subjects of commerce, will 
 in a popular sense monopolize both state and in- 
 terstate traffic in such articles or commodities just 
 in proportion as the owner's business is increased, 
 enlarged, and developed. But the magnitude of a 
 party's business, production, or manufacture, with 
 the incidental and indirect powers thereby acquired, 
 and with the purpose of regulating prices and con- 
 trolling interstate traffic in the articles or commodi- 
 ties forming the subject of such business, produc- 
 tion, or manufacture, is not the monopoly or attempt 
 to monopolize which the statute condemns. 
 
 He follows then with a discussion of what 
 monopoly means. After defining engrossing, 
 he says: 
 
 51 
 
THE ANTI-TRUST ACT 
 
 It will be noticed that in all the foregoing defini- 
 tions of "monopoly" there are embraced two lead- 
 ing elements — viz., an exclusive right or privilege on 
 the one side, and a restriction or restraint on the 
 other, which will operate to prevent the exercise of 
 a right or liberty open to the public before the mo- 
 nopoly was secured. 
 
 Then, referring to the facts as averred in 
 the indictment, lie says: 
 
 In this acquisition and operation of the seventy 
 distilleries which enabled the accused, or said Dis- 
 tilling and Cattle Feeding Company, to manufac- 
 ture and control the sale of seventy-five per cent, 
 of the distillery products of the country, it does not 
 appear, nor is it alleged, that the persons from whom 
 said distilleries were acquired were placed under 
 any restraint, by contract or otherwise, which pre- 
 vented them from continuing or re-engaging in such 
 business. All other persons who chose to engage 
 therein were at liberty to do so. The effort to con- 
 trol the production and manufacture of distillery 
 products by the enlargement and extension of busi- 
 ness was not an attempt to monopolize trade and 
 commerce in such products within the meaning of 
 the statute, and may therefore be left out of further 
 consideration. 
 
 It would be very difficult to reconcile this 
 case with Miles Medical Co. vs. Park Sons & 
 Co., 220 U. S. 373, in which just such a contract 
 
 52 
 
AND THE SUPREME COURT 
 
 for maintaining retail prices was held a restraint 
 of trade under this statute. Mr. Justice Jack- 
 son's view of the monopolies and restraints 
 affected by the law was a much too narrow 
 one. He evidently felt that the Constitution 
 did not extend to Congress the power so to 
 qualify the right of acquiring and of dispos- 
 ing of the property as to make the acquisition 
 of property for the purpose of controlling inter- 
 state commerce in it or in the products of it 
 a criminal monopoly. He further took the 
 ground, which we shall see elaborated and in- 
 sisted upon in U. S. vs. E. C. Knight Company, 
 156 U. S. 1, that the mere acquisition of plants 
 in different States for the ultimate purpose of 
 using this ownership to control and restrain 
 interstate commerce was a subject only within 
 the jurisdiction of the States and not within 
 the control of Congress. 
 
 In the Knight case the statute was fully con- 
 sidered in the Supreme Court for the first time. 
 It was argued in October, 1894, and decided 
 in January, 1895. The opinion of the court 
 was delivered by Mr. Chief Justice Fuller, 
 the Attorney-General was Mr. Richard Olney, 
 and he with the Solicitor-General, Mr. Max- 
 
 53 
 
THE ANTI-TRUST ACT 
 
 well, and a former Solicitor-General, Mr. Phil- 
 lips, represented the Government. 
 
 The bill in the Knight case alleged that the 
 defendant, the American Sugar Refining Com- 
 pany, was engaged in the refining and sale of 
 sugar; that the other four defendants were 
 corporations separately engaged in refining 
 and dealing in sugar at Philadelphia; that the 
 product of their refineries amounted to thirty- 
 three per cent, of the sugar refined in the 
 United States; that they were competitors of 
 the American Sugar Refining Company; that 
 the products of their several refineries were 
 distributed among several States of the United 
 States, and that all the companies were en- 
 gaged in trade or commerce with several States 
 and with foreign nations; that prior to March 4, 
 1892, the American Sugar Refining Company had 
 obtained the control of all the sugar refineries 
 of the United States with the exception of the 
 Revere of Boston and the refineries of the other 
 four defendants above mentioned; that the 
 Revere produced annually about two per cent, of 
 the total amount of sugar refined; that theAmer- 
 ican Sugar Refining Company in order to obtain 
 complete control of the price of sugar in the 
 
 54 
 
AND THE SUPREME COURT 
 
 United States entered into an unlawful scheme to 
 purchase the stock, machinery, and real estate of 
 the other four members defendant, in pursuance 
 of which on March 4, 1892, the defendant Searles, 
 an agent of the American Sugar Refining Com- 
 pany, made a contract with each of the other 
 companies by which for shares in the stock of 
 the American Sugar Refining Company the 
 American Sugar Refining Company received the 
 shares of stock of these four companies. 
 
 It was averred that the American Sugar Re- 
 fining Company, thus becoming the owner of 
 refineries refining ninety-eight per cent, of the 
 sugar refined in the United States, monopolized 
 its sale in the United States and controlled its 
 price; and by these contracts of sale of the stock 
 Searles and the American Sugar Refining Com- 
 pany combined and conspired with the other 
 defendants for the purpose of restraining, and 
 in fact restrained, commerce in refined sugar 
 among the several States and foreign nations 
 in violation of the statute. 
 
 The prayer of the bill was as follows : 
 
 1. That all and each of the said unlawful agree- 
 ments made and entered into by and between the 
 said defendants on or about the 4th day of March, 
 
 55 
 
THE ANTI-TRUST ACT 
 
 1892, shall be delivered up, canceled, and declared 
 to be void, and that the said defendants, the Amer- 
 ican Sugar Refining Company and John E. Searles, 
 Jr., be ordered to deliver to the other said defend- 
 ants respectively the shares of stock received by 
 them in performance of the said contracts, and that 
 the other said defendants be ordered to deliver to 
 the said defendants, the American Sugar Refining 
 Company and John E. Searles, Jr., the shares of 
 stock received by them respectively in performance 
 of the said contracts. 
 
 2. That an injunction issue preUminary until the 
 final determination of this cause, and perpetual 
 thereafter, preventing and restraining the said de- 
 fendants from the further performance of the terms 
 and conditions of the said unlawful agreements. 
 
 3. That an injunction may issue preventing and 
 restraining the said defendants from further and 
 continued violations of the said act of Congress, 
 approved July 2, 1890. 
 
 4. Such other and further relief as equity and jus- 
 tice may require in the premises. 
 
 The view which the court took, in holding 
 that the bill did not state a case aflFecting inter- 
 state commerce so directly as to constitute a 
 violation of the statute was evidently much 
 influenced by the emphasis laid in the bill and in 
 the main prayer for relief on the acquisition of 
 shares of stock by the American Sugar Refining 
 Company in sugar-refining plants in Pennsyl- 
 
 56 
 
AND THE SUPREME COURT 
 
 vania. The court could not apparently look 
 beyond the acquisition of property in one State 
 to its ultimate purpose, which certainly was the 
 control of the sale of refined sugar iu country- 
 wide trade. 
 The court said: 
 
 The contracts and acts of the defendants related 
 exclusively to the acquisition of the Philadelphia 
 refineries and the busiaess of sugar refining in Phila- 
 delphia, and bore no direct relation to commerce 
 between the States or with foreign nations. The 
 object was manifestly private gain in the manu- 
 facture of the commodity, but not through the con- 
 trol of interstate or foreign commerce. 
 
 It is true that the bill alleged that the products 
 of these refineries were sold and distributed among 
 the several States, and that all the companies were 
 engaged in trade or commerce with the several 
 States and with foreign nations; but this was no 
 more than to say that trade and commerce served 
 manufacture to fulfil its function. Sugar was re- 
 fined for sale, and sales were probably made at Phila- 
 delphia for consumption, and undoubtedly for re- 
 sale by the first pm-chasers throughout Pennsyl- 
 vania and other States, and refined sugar was also 
 forwarded by the companies to other States for sale. 
 Nevertheless, it does not follow that an attempt to 
 monopolize, or the actual monopoly of, the manu- 
 facture was an attempt, whether executory or con- 
 summated, to monopoHze commerce, even though 
 
 5 57 
 
THE ANTI-TRUST ACT 
 
 in order to dispose of the product the instrumen- 
 tality of commerce was necessarily invoked. 
 
 There was nothing in the proofs to indicate any 
 intention to put a restraint upon trade or commerce, 
 and the fact, as we have seen, that trade or commerce 
 might be indirectly affected was not enough to entitle 
 complainants to a decree. [Italics mine.] The sub- 
 ject-matter of the sale was shares of manufactur- 
 ing stock, and the relief sought was the surrender 
 of property which had already passed and the sup- 
 pression of the alleged monopoly in manufacture 
 by the restoration of the status quo before the trans- 
 fers; yet the act of Congress only authorized the 
 Circuit Court to proceed in the way of preventing 
 and restraining violations of the act in respect of 
 contracts, combinations, or conspiracies in restraint 
 of interstate or international trade or commerce. 
 
 The dissenting opinion of Mr. Justice Har- 
 lan was a very strong statement, and I don't 
 think it is too much to say that it represents 
 much more fully the present view of the court 
 as to what may constitute a direct restraint 
 upon interstate commerce than does the opin- 
 ion of Chief-Justice Fuller. Mr. Justice Har- 
 lan, in his dissenting opinion, comments on the 
 fact that the prayer of the bill was not vpisely 
 framed, for he says in the close of his opinion: 
 
 While a decree annuUing the contracts under 
 which the combination in question was formed may 
 
 58 
 
AND THE SUPREME COURT 
 
 not, in view of the facts disclosed, be eflfectual to 
 accomplish the object of the act of 1890, I perceive 
 no diflScnlty in the way of the court passing a de- 
 cree declaring that that combination imposes an 
 unlawful restraint upon trade and commerce among 
 the States, and perpetually enjoining it from further 
 prosecuting any business pursuant to the unlawful 
 agreement under which it was formed or by which 
 it was created. Such a decree would be within the 
 scope of the bill, and is appropriate to the end which 
 Congress intended to accomplish — namely, to pro- 
 tect the freedom of commercial intercourse among 
 the States against combination and conspiracies which 
 impose unlawful restraints upon such intercourse. 
 
 But the truth is, as is shown by the above 
 quotation from the opinion of Chief - Justice 
 Fuller, the case for the Government was not 
 well prepared at the circuit. No direct evidence 
 that the sales of sugar across State lines, and 
 the control of the business of such sales and of 
 prices, were the chief object of the combination 
 was submitted to the court. Nor was this chief 
 feature of the Government's real case sufficiently 
 set forth in the bill of complaint. And yet these 
 facts must have been easily capable of proof. 
 Especially noteworthy was the failure of the bill 
 to pray for specific action by the court to enjoin 
 the continuance of the combination. 
 
THE ANTI-TRUST ACT 
 
 The effect of the decision in the Knight case 
 upon the popular mind, and indeed upon Con- 
 gress as well, was to discourage hope that the 
 statute could be used to accomplish its mani- 
 fest purpose and curb the great industrial trusts 
 which, by the acquisition of all or a large per- 
 centage of the plants engaged in the manu- 
 facture of a commodity, by the dismantling of 
 some and regulating the output of others, were 
 making every effort to restrict production, con- 
 trol prices, and monopolize the business. So 
 strong was the impression made by the Knight 
 case that both Mr. Olney and Mr. Cleveland 
 concluded that the evil must be controlled 
 through State legislation, and not through a 
 national statute, and they said so in their 
 communications to Congress. 
 
AND THE SUPREME COURT 
 
 CHAPTER IV 
 
 EKBOR OF MB. JUSTICE PECKHAM IN HIS OPINIONS 
 FOR THE MAJORITY IN THE TRANS-MISSOURI 
 FREIGHT AND JOINT TRAFFIC CASES IN REFUS- 
 ING AID OF COMMON LAW IN INTERPRETATION 
 OF THE STATUTE — CONFUSION IN TERMS BUT 
 NOT IN ULTIMATE RESULT. 
 
 I WISH now to point out an error which the 
 majority of the Supreme Court at first 
 made in rejecting as an aid in construing the 
 statute the common-law rule for determining 
 reasonable, valid, and enforceable restraints of 
 trade. 
 
 In 1891 a suit was begun to enjoin contiuued 
 performance of a contract between eighteen 
 different railroads by which the contracting 
 parties agreed through common action to fix 
 the rates of traffic in all the vast territory west 
 of the Missouri River and to abide by the rates 
 thus fixed. 
 
 In the Circuit Court of Appeals there was a 
 
 61 
 
THE ANTI-TRUST ACT 
 
 divided court, two of the judges holding that 
 the anti-trust law was intended to strike down 
 only those combinations in restraint of trade 
 which would be unreasonable and so invalid at 
 common law, and that it did not appear that 
 the provision for fixing the rates, or that the 
 rates themselves, were unreasonable or would 
 have been so regarded at common law, and 
 therefore that the agreement was not a restraint 
 of interstate commerce within the statute. 
 Judge Shiras, of Iowa, dissented, holding that 
 the contract was a restraint of trade denounced 
 by the statute, and differing from the majority 
 in their view as to its validity at common law. 
 When the case came to be decided by the 
 Supreme Court, U. S. vs. Trans-Missouri Freight 
 Asso., 166 U. S. 290, the court divided, five 
 judges holding that the bill ought to have been 
 sustained below, reversing the decree of the 
 Circuit Court of Appeals. The two great 
 points considered were, first, whether the terms 
 of the anti-trust law in regard to combinations 
 applied to interstate commerce carriers whose 
 regulation was especially provided for by the 
 interstate-commerce law, and, second, whether, 
 assuming the contract to have been valid at 
 
AND THE SUPREME COURT 
 
 common law, the statute was to be construed 
 as striking at only those restraints of interstate- 
 commerce trade which would be held to be un- 
 reasonable at common law. A majority of the 
 court held that the anti-trust law did apply to 
 interstate railroads and supplemented the regu- 
 lation of them by the interstate-commerce law; 
 and, second, Mr. Justice Peckham, speaking for 
 the majority, used language declaring that the 
 inquiry whether the restraints were reasonable 
 or unreasonable at common law was unimpor- 
 tant because the statute denounced all restraints. 
 
 What I wish to emphasize in respect to this 
 case, as well as in respect to the opinion in the 
 case of the United States Joint TraflSc Associa- 
 tion, 171 U. S. 93, which presented almost iden- 
 tically the same issues, and was decided soon" 
 after, is that, while the majority of the court did 
 say that Congress intended to include in the 
 condemnation of the statute restraints of inter- 
 state trade, whether reasonable or unreasonable 
 at common law, they in fact, by express lan- 
 guage in their opinion excluded from the opera- 
 tion of the statute all restraints which would be 
 reasonable at common law. 
 
 The truth is, the lower court. in the Trans- 
 
THE ANTI-TRUST ACT 
 
 Missouri case erred in holding the contract 
 reasonable at common law, and the Supreme 
 Court gave little attention to this point, as- 
 suming its correctness. This error Mr. Justice 
 Brewer subsequently pointed out, as we shall 
 see. The judges misconceived the effect of the 
 decision of the highest English courts in the 
 Mogul Steamship Company case and failed 
 to note the difference I have already pointed 
 out between the affirmative illegality and indict- 
 ability of the combination in restraint of trade 
 in that case which the House of Lords denied, 
 and its void and unenforceable character at 
 common law, because it was unreasonable, 
 which the House of Lords admitted. Now the 
 anti-trust law destroys this distinction by mak- 
 ing restraints of trade unenforceable at common 
 law, both criminal and actionable, when affect- 
 ing interstate commerce. It must have been 
 this Mogul Steamship Company case and a 
 failure to note the distinction I have pointed 
 out that temporarily drove the majority of the 
 court away from the rule of reasonableness at 
 common law in construing the terms of the 
 statute. Mr. Justice Jackson in "In re Greene," 
 52 Fed. Rep. 104, already cited, made the same 
 
 61 
 
AND THE SUPREME COURT 
 
 error. Mr. Justice Peckham, in speaking for 
 the majority, used this language: 
 
 Proceeding, however, upon the theory that the 
 statute did not mean what its plain language im- 
 ported, and that it intended in its prohibition to 
 denounce as illegal only those contracts which were 
 in unreasonable restraint of trade, the courts below 
 have made an exhaustive investigation as to the 
 general rules which guide courts in declaring con- 
 tracts to be void as being in restraint of trade, and 
 therefore against the public policy of the country. 
 In the coiu-se of their discussion of that subject they 
 have shown that there has been a general though 
 great alteration in the extent of the liberty granted 
 to the vendor of property in agreeing, as part con- 
 sideration for his sale, not to enter into the same 
 kind of business for a certain time or within a cer- 
 tain territory. 
 
 So long as the sale was the bona-fide consideration 
 for the promise and was not made a mere excuse 
 for an evasion of the rule itself, the later authorities, 
 both in England and in this country, exhibit a strong 
 tendency toward enabling the parties to make such 
 a contract in relation to the sale of property, in- 
 cluding an agreement not to enter into the same 
 kind of business, as they may think proper, and this 
 with the view to granting to a vendor the freest 
 opportunity to obtain the largest consideration for 
 the sale of that which is his own. 
 
 A contract which is the mere accompaniment of 
 the sale of property, and thus entered \into for the 
 purpose of enhancing the price at which the vendor 
 
 69 
 
THE ANTI-TRUST ACT 
 
 sells it, which in effect is collateral to such sale, and 
 where the main purpose of the whole contract is ac- 
 complished by such sale, might not be included within 
 the letter or spirit of the statute in question. [Italics 
 mine.] 
 
 In this language it will be seen that Mr. 
 Justice Peckham concedes that a contract 
 which is the mere accompaniment of the sale 
 of property, entered into for the purpose of en- 
 hancing prices at which the vendor sells it, and 
 where the main purpose of the whole contract 
 is accomplished by such sale, was not included 
 within the letter or spirit of the statute. As I 
 attempted to demonstrate in my first article, 
 such a contract and analogous contracts involv- 
 ing the same principle were the only kind of 
 contracts in restraint of trade which were re- 
 garded as reasonable at common law, and all 
 other contracts in restraint of trade were unen- 
 forceable. It follows, therefore, that the posi- 
 tion of the Supreme Court as shown by Mr. 
 Justice Peckham's opinion in these two cases 
 in fact admitted that the statute might properly 
 be construed not to include in its denunciation 
 contracts in restraint of trade that were held 
 reasonable and valid at common law. 
 
 66 
 
AND THE SUPREME COURT 
 
 This is shown even more clearly by the lan- 
 guage he uses in the Joint Traffic case, 171 
 U. S. 93, in which in the lists of restraints ex- 
 cepted by him from the operation of the statute 
 are the five classes of contracts that were the 
 only restraints regarded as reasonable at com- 
 mon law, and they are all described by him as 
 restraints "incidental or indirect." 
 
 The same view was enforced by the opinion 
 of the court given by Mr. Justice Holmes in 
 the Cincinnati, etc.. Packet Co. vs. Bay, 200 
 U. S. 879. In that case the owner of a line of 
 steamboats on the Ohio River, engaged in inter- 
 state trade, sold his steamboats, and, as part 
 of the contract of sale, agreed that he would 
 not go into that trade for a period of years. 
 One of the parties sought to avoid obligation 
 under the contract on the ground that it was 
 illegal, being a contract in restraint of inter- 
 state trade, and a violation of the anti-trust 
 law. 
 
 The court held that the eflFect was incidental 
 to the contract of sale and not within the 
 statute. 
 
 As already said, the combinations in the 
 Trans-Missouri and Joint Traffic Association 
 
 67 
 
THE ANTI-TRUST ACT 
 
 cases were both void at common law because 
 they restrained the members of the combination 
 from charging different prices from those fixed 
 by the Joint Committee, they prevented the 
 operation of free competition, and thus they 
 restrained trade, and this was the main purpose 
 of the contract. The fact, if it was a fact, that 
 the rates which were fixed were reasonable did 
 not make the contract reasonable or change 
 its void character at common law. 
 
 I am strongly sustained in this view by the 
 opinion of Mr. Justice Brewer in the case of 
 the Northern Securities Company vs. the United 
 States, 193 U. S. 197, where he concurred with 
 the majority in a separate opinion in which, 
 after stating that he was one of the majority in 
 the Joint TraflSc Association and Trans-Missouri 
 cases, he said that, while a further examination 
 had not disturbed his conviction that those 
 cases were rightly decided, he thought in some 
 respects the reasons given for the judgments 
 could not be sustained, and that instead of 
 holding that the anti-trust act included all 
 contracts, reasonable or unreasonable, in re- 
 straint of interstate trade, the ruling should have 
 been that the contracts there presented were 
 
 63 
 
AND THE SUPREME COURT 
 
 unreasonable restraints of interstate trade, and 
 as such within the scope of the act; that that 
 act, as appears from its title, was leveled at 
 only "unlawful restraints and monopolies"; 
 that Congress did not intend to reach and de- 
 stroy those minor contracts in partial restraint 
 of trade which the long course of decisions at 
 common law had affirmed were reasonable and 
 ought to be upheld; that the purpose rather 
 was to place a statutory prohibition which pre- 
 scribed penalties for those contracts which 
 were in direct restraint of trade, unreasonable, 
 and against public policy; that whenever a 
 departure from common-law rules and defini- 
 tions was claimed, the purpose to make the de- 
 parture should be clearly shown; that such a 
 purpose did not appear and such a departure 
 was not intended. 
 
THE ANTI-TRUST ACT 
 
 CHAPTER V 
 
 CASES AFTER THE SUGAR TRUST CASE AND BE- 
 FORE THE STANDARD OIL CASE IN WHICH THE 
 EFFECT OF THE SUGAR TRUST DECISION WAS 
 PRACTICALLY ELIMINATED. 
 
 WE now begin a building up of authority 
 which finally has destroyed the obstruct- 
 ing effect of the Sugar Trust case in the effort 
 of the Executive Department to reach these 
 industrial trusts which by combining manu- 
 facturing plants have monopolized countrywide 
 trade in the products made. The first of these 
 was the Addyston Pipe Company case, 175 
 U. S. 211, 85 Fed. Rep. 271 (Feb., 1898, Dec, 
 1899). 
 
 The bill of complaint in this case struck at a 
 contract between various manufacturing com- 
 panies in iron pipe which, except for the con- 
 tract, were independent companies and re- 
 tained their separate corporate lives. This was 
 a much easier case to bring within the purview 
 
 70 
 
AND THE SUPREME COURT 
 
 of the statute and the direct field of interstate 
 commerce, because the subject-matter of the 
 contract embraced what the Supreme Court in 
 a long series of decisions had held to be inter- 
 state commerce. 
 
 The purposes and action of the combination, 
 through the treachery of a stenographer, were 
 laid before the court, so that minute dissection 
 was possible. It was, in short, an agreement 
 by which all the iron-pipe companies in the 
 Ohio Valley and the Mississippi Valley, from 
 which manufacturers in other parts of the 
 country were naturally excluded by freight 
 rates, agreed that they would maintain prices 
 and share profits, and that in pursuance of 
 these purposes no one of them would offer iron 
 pipe to any intending purchaser, who was usu- 
 ally a municipal corporation, inviting public 
 competitive bids, without the permission of the 
 combination, and only after there had been a 
 secret bidding among the members of the com- 
 bination to see which member would make such 
 a bid as would from the profits of the contract 
 allow the best bonus to be divided among the 
 other members of the combination. 
 
 It would be diflScult to state a case of contract 
 71 
 
THE ANTI-TRUST ACT 
 
 for sales among vendors more certainly restric- 
 tive and more selfish and monopolizing in char- 
 acter than this was. The Circuit Court of 
 Appeals, of which Mr. Justice Harlan was the 
 presiding justice, and Judge Lurton and I were 
 the associate judges, held that as a large part of 
 the sales to be made necessarily involved, in the 
 geographical location of the plants and indeed 
 in the division of territory that also appeared as 
 a feature of the combination, interstate com- 
 merce, the combination was certainly a restraint 
 within the jurisdiction of Congress. 
 
 We referred to the language of the opinions 
 in the Joint Traffic Association and Trans- 
 Missouri cases, declaring that every restraint 
 was aimed at in the statute, whether reasonable 
 or unreasonable at common law; but in spite 
 of that we thought it wise to show by an ex- 
 tended examination of the authorities that this 
 combination would have been regarded as un- 
 reasonable at common law and pointed out the 
 distinction that I have emphasized in what I 
 have said, that the only contracts in restraint 
 of trade that were regarded as reasonable at 
 common law were those incidental contracts 
 strictly commensurate with the needs of a prin- 
 
 72 
 
f^D THE SUPREME COURT 
 
 cipal lawful contract of sale of good will or con- 
 cerning the making or dissolution of partner- 
 ships. 
 
 The case went to the Supreme Court, and the 
 Supreme Court unanimously affirmed the judg- 
 ment of the court below. Neither in the Court 
 of Appeals nor in the Supreme Court was any 
 difficulty found with the opinion of the Su- 
 perior Court in the Sugar Trust case, for in the 
 Addyston case the subject-matter of the con- 
 tract was not acquisition of title to property; 
 it was actual and intended sales in interstate 
 commerce. The relief sought was injunction 
 against continuance of the combination, and 
 the right to such a remedy was plain. 
 
 The next important case in the history of 
 the proper construction and application of the 
 law was the Northern Securities case, entitled, 
 "Northern Securities Company vs. the United 
 States," 193 U. S. 197. That, stated shortly, 
 was an agreement between the owners of the 
 majority of stock in the Great Northern Road 
 and in the Northern Pacific Road, which were 
 two railway lines extending from the Lakes to 
 the Pacffie coast through the northern tier of 
 States, to unite their interests in a holding com- 
 
 6 73 
 
THE ANTI-TRUST ACT 
 
 paiiy organized in New Jersey which should take 
 over into its possession not only a majority of 
 stock in each of these roads, but also stock of the 
 Chicago, Burlington & Quincy Railway Com- 
 pany, which owned a network of lines between 
 Chicago and Minneapolis and Omaha, and 
 made a convenient terminal union of the two 
 longer lines. 
 
 The individuals who had to do with making 
 the arrangement and the combination by which 
 it was to be carried out, together with the three 
 corporations, were made party defendants, and 
 the relief sought was an injunction against the 
 further execution of this arrangement and the 
 rending of it asunder so far as it had been car- 
 ried out, and this on the ground that it was a 
 combination to restrain commerce among the 
 northern tier of States. 
 
 Relying on the Sugar Trust decision, the de- 
 fendants resisted the suit on the ground that it 
 sought to nullify the acquisition of property and 
 bring about the status quo before the consum- 
 mated transfer of title, as in that case. It was 
 insisted that the transaction in railway stock 
 here had no more direct effect upon interstate 
 commerce than had the acquisition of stock in 
 
 74 
 
AND THE SUPREME COURT 
 
 the various sugar-refining plants there. It was 
 pointed out that the Northern Securities Com- 
 pany was a State corporation authorized by a 
 State to hold stock in other railways and that 
 it was not within the power of Congress to in- 
 terfere with acquisition of such property, that 
 this transfer of property was preliminary to in- 
 terstate commerce and did not directly affect 
 it, and there was nothing to show in actual 
 running of the railroads and fixing of rates that 
 any restraint had been put upon either, growing 
 out of the project. 
 
 The majority of the court, however, held 
 that what this whole arrangement amounted 
 to was an arrangement between the actual 
 controllers of the property of the three great 
 railroad systems to run them as one system, 
 and thus acquire power to avoid competition 
 and to monopolize interstate railroad trans- 
 portation in a large section of the United States. 
 
 This decision, delivered by Mr. Justice Har- 
 lan, was a most important step forward in the 
 useful application of the anti-trust act, because 
 it brushed away many of the difficulties that 
 were presented in the opinion of the Sugar Trust 
 case in enforcing the act. With the Addyston 
 
 73 
 
THE ANTI-TRUST ACT 
 
 Pipe case making clear the application of the 
 law to any restraiat by combination upon sales 
 from one State to another, and with this North- 
 ern Securities case laying down the rule that 
 courts might imply the intention and purpose 
 of such a combination from its necessary effect 
 to monopolize and control, and might enjoin 
 its consummation before actual execution, the 
 wide application of the statute became manifest. 
 
 There was nothing in this Northern Securi- 
 ties case that varied from the common-law rule 
 as to reasonable and unreasonable contracts. 
 This was made clear by the language of Mr. 
 Justice Brewer, which I have already quoted. 
 
 The court, as courts of equity do, looked 
 through the form of the transaction to its real 
 essence and treated all the transfers of stock 
 and the various corporate organizations as mere 
 steps in the carrying out of a combination in- 
 tended or calculated to secure a monopoly of 
 interstate-commerce business. Such a contract 
 as between its makers would certainly have been 
 unenforceable at common law, and so the de- 
 cision in this case was not inconsistent with the 
 view that the statute was to be interpreted in 
 the light of the common law. 
 
 76 
 
AND THE SUPREME COURT 
 
 The existence of the intent to gain power of 
 control over interstate commerce is given more 
 importance as cases proceed, as indeed it ought 
 to be, and the circumstances that the particular 
 transactions or steps alleged are immediately 
 concerned with things or property or sales within 
 a State does not prevent their being treated as 
 part of a scheme to control interstate commerce 
 if the intent to do so is averred and clearly made 
 manifest by the evidence. We see this clearly 
 in the next case to which I wish to refer, decided 
 in 1905, just after the Northern Securities case. 
 This was the Meat Packers' Trust case, 196 
 U. S. 375, in which the bill charged a dominant 
 proportion of the dealers in fresh meat through- 
 out the United States with maintaining a com- 
 bination not to bid against one another in the 
 live-stock markets of the different States at 
 Chicago, Omaha, St. Joseph, Kansas City, East 
 St. Louis, and St. Paul; to bid up prices for a 
 few days in order to induce cattlemen to send 
 their stock to the stock-yards; to fix prices at 
 which they would sell, and to that end to restrict 
 shipments of meat. when necessary; to establish 
 a uniform credit to dealers and to keep a black- 
 list; to make uniform and improper charges for 
 
 77 J 
 
THE ANTI-TRUST ACT 
 
 cartage; and, finally, to get less than lawful 
 rates from the railroads, to the exclusion of their 
 competitors, with intent to monopolize the com- 
 merce among the States and prevent competi- 
 tion therein. 
 
 The opinion is by Mr. Justice Holmes, and 
 is very illuminating as to the attitude of the 
 court in adapting the principles of pleading 
 and procedure to the new conditions presented 
 by litigation under the act. It was objected 
 that the bill did not set forth sufficient or defi- 
 nite or specific facts. He said: 
 
 This objection is serious, but It aeems to us in- 
 herent In the nature of the case. The scheme 
 alleged is so vast that It presents a new problem in 
 pleading. If, as we assume, the scheme Is entertained, 
 it is, of course, contrary to the very words of the 
 statute. 
 
 Its size makes the violation of the law more con- 
 spicuous, and yet the same thing makes it impossible 
 to fasten the fact to time or place. The elements, 
 too, are so numerous and shifting, even the constit- 
 uent parts alleged are and from their nature must 
 be so extensive In time and space, that something 
 of the same impossibility applies to them. 
 
 The law has been upheld, and we are bound to 
 enforce it notwithstanding these difficulties. On 
 the other hand, we equally are bound by the first 
 principles of justice not to sanction a decree so vague 
 
 78 
 
AND THE SUPREME COURT 
 
 as to put the whole conduct of the defendants' busi- 
 ness at the peril of a summons for contempt. 
 
 We cannot issue an injunction against all possible 
 breaches of the law. We must steer between these 
 opposite difficulties as best we can. 
 
 The sales described in the bill were actual 
 sales and deliveries of cattle at the various 
 stock-yards, followed by slaughter and prepara- 
 tion of meats in slaughter-houses, none of which 
 by itself was an act of interstate commerce. It 
 was urged that as these constituted the real acts 
 under attack, it was effect upon state commerce 
 and not interstate commerce that was com- 
 plained of, and so it was not within the statute. 
 
 Mr. Justice Holmes's opinion in this case 
 develops the importance of intent under the 
 statutes and answers the objection as to the 
 interstate effect of the acts charged as follows: 
 
 The scheme as a whole seems to us to be within 
 reach of the law. The constituent elements, as we 
 have stated them, are enough to give the scheme 
 a body, and, for all that we can say, to accomplish 
 it. Moreover, whatever we may think of them sep- 
 arately, when we take them up as distinct charges 
 they are alleged sufficiently as elements of the 
 scheme. 
 
 It is suggested that the several acts charged are 
 lawful and that intent can make no difference. But 
 
 79 
 
THE ANTI-TRUST ACT 
 
 they are bound together as the parts of a single plan. 
 The plan may make the parts unlawful. (Aiken vs. 
 Wisconsin, 195 U. S. 194, 206.) The statute gives 
 this proceeding against combinations in restraint of 
 commerce among the States and against attempts 
 to monopolize the same. Intent is almost essential 
 to such a combination and is essential to such an at- 
 tempt. 
 
 Where acts are- not sufficient in themselves to 
 produce a result which the law seeks to prevent — 
 for instance, the monopoly — but require further acts 
 in addition to the mere forces of nature to bring 
 that result to pass, an intent to bring it to pass is 
 necessary in order to produce a dangerous proba- 
 bility that it wiU happen. (Commonwealth vs. 
 Peaslee, 177 Massachusetts 262, 272.) But when 
 that intent and the consequent dangerous proba- 
 bility exists, this statute, like many others, and like 
 the common law in some cases, directs itself against 
 that dangerous probability as well as against the 
 completed result. 
 
 What we have said disposes incidentally of the 
 objection to the bill as multifarious. The unity 
 of the plan embraces all the parts. 
 
 And, again, he says: 
 
 It is said that this charge does not set forth a case 
 of commerce among the States. Commerce among 
 the States is not a technical legal conception, but a 
 practical one, drawn from the course of business. 
 When cattle are sent for sale from a place in one 
 State, with the expectation that they will end their 
 
 80 
 
AND THE SUPREME COURT 
 
 transit, after purchase, in another, and when in effect 
 (399) they do so, with only the interruption neces- 
 sary to find a purchaser at the stock-yards, and when 
 this is a typical, constantly recurring course, the 
 current thus existing is a current of commerce 
 among the States, and the purchase of the cattle 
 is a part and incident of such commerce. 
 
 The whittling down of the scope of the 
 Knight - Sugar Trust case goes on under the 
 deft hand of Mr. Justice Holmes by bearing 
 down on the general intent of the acts and plan. 
 He says: 
 
 One further observation should be made. Al- 
 though the (397) combination alleged embraces re- 
 straint and monopoly of trade within a single State, 
 its effect upon commerce among the States is not 
 accidental, secondary, remote, or merely probable. 
 It is a direct object, it is that for the sake of which 
 the several specific acts and courses of conduct are 
 done and adopted. Therefore the case is not like 
 United States vs. E. C. Knight Co., 156 U. S. 1, 
 where the subject-matter of the combination was 
 manufacture and the direct monopoly of manufac- 
 ture within a State. 
 
 However likely monopoly of commerce among 
 the States in the article manufactured was to follow 
 from the agreement, it was not a necessary conse- 
 quence nor a primary end. Here the subject-mat- 
 ter is sales, and the very point of the combination 
 is to restrain and monopolize commerce among the 
 
 81 
 
THE ANTI-TRUST ACT 
 
 States in respect of such sales. The two cases are 
 near to each other, as sooner or later always must 
 happen where lines are to be drawn, but the line 
 between them is distinct. 
 
 It thus becomes clearer and clearer that the 
 Sugar Trust judgment, in the opinion of the 
 Supreme Court, turns on the defect in the plead- 
 ings and evidence in that case, in the failure of 
 the Government to aver and prove that the 
 purpose of the purchase of the stock in the 
 Philadelphia refineries was only a step in a 
 great scheme to monopolize the business of 
 selling refined sugar among the States of the 
 United States, a fact that, it would seem, might 
 have been easy to establish. Wo one can deny 
 that a plan merely to monopolize manufacture 
 of sugar would be a State affair and not involve 
 commerce among the States. Suppose that the 
 profit in refining sugar was in tolls charged for 
 the refining, as in grist-mills for grinding flour; 
 this would be clearly only a State matter. The 
 criticism of the court's decision in the Sugar 
 Trust case, therefore, should really be directed, 
 not against the principle of constitutional law it 
 lays down, but against the narrow inferences of 
 fact the majority of the coxui: drew as to the 
 
 82 
 
AND THE SUPREME COURT 
 
 necessary and controlling effect of the union of 
 the sugar refineries of the country upon the 
 business of selling and delivery of sugar among 
 the States. The man in the street knew that 
 the acts set forth in the bill were part of a plan 
 to monopolize interstate trade in sugar. Why 
 should the court have refused to see it.? ^ 
 
 Thus by further consideration, in the Addy- 
 ston Pipe case, in the Northern Securities case, 
 and in the Meat Trust case, the court now 
 reached a conclusion in regard to the practical 
 application of the statute that justifies one in 
 saying that if the Sugar Trust case were again 
 brought before the court, different inferences 
 of fact would be drawn from the evidence and 
 a more liberal construction of the pleadings 
 and the prayer for relief would be given and a 
 different result would be reached. 
 
 The breadth and eflScacy of the common-law 
 rule as to restraint of trade finds a clear expo- 
 sition in the opinion of Mr. Justice Hughes in 
 Miles Medical Company vs. Park & Sons Com- 
 pany, 220 U. S. 373. Contracts between manu- 
 facturers and wholesale and retail dealers un- 
 der which the manufacturers attempted to con- 
 trol the prices of their products in future sales 
 
THE ANTI-TRUST ACT 
 
 by their purchasers and subpurchasers, were 
 held to be unenforceable at common law, and, 
 if they affected interstate commerce, to be a 
 violation of the anti-trust act. This is a most 
 important case in demonstrating that the effort 
 to control prices in interstate trade by contracts 
 with retail men with penalties or threats of non- 
 dealing is in the teeth of the Sherman act. 
 
AND THE SUPREME COURT 
 
 CHAPTER VI 
 
 THE STANDAED OIL AND TOBACCO TRUST CASES 
 EFFECT OF ANTI-TRUST LAW ON COMBINA- 
 TIONS OF LABOR OBSTRUCTING INTERSTATE 
 COMMERCE. 
 
 WE next come to the great and crucial 
 Standard Oil case, 221 U. S. 1, which ap- 
 plied the interstate-commerce law to the greatest 
 monopoly and combination in restraint of trade 
 in the world. Its making and building up cov- 
 ered a period from 1870 down to the date of the 
 opinion in the spring of 1912. The Standard 
 Oil Trust was probably one of the chief reasons 
 for passing the statute in 1890. The record in 
 the case covered 12,000 printed pages. It took 
 184 printed pages just to tell the summary 
 story of the birth and growth of the monopoly. 
 It had resulted in nine different Standard Oil 
 companies and sixty-two other corporations 
 and partnerships operating oil-wells, refineries, 
 pipe-line and tank-line companies. The ruling 
 
 85 
 
THE ANTI-TRUST ACT 
 
 body was the Standard Oil Company of New 
 Jersey, that held stock in the other companies 
 and did eighty-five per cent, of all the business 
 of the United States selling refined oils and other 
 products of petroleum. It was indeed an octo- 
 pus that held the trade in its tentacles, and 
 the few actual independent concerns that kept 
 alive were allowed to exist by sufferance merely 
 to maintain an appearance of competition. 
 
 In this case Chief-Justice White adopts for 
 the court the view of Mr. Justice Brewer, ex- 
 pressed in his separate opinion in the Northern 
 Securities case, that the terms of the statute, 
 being words having common-law significance, 
 are to be interpreted in the light of their mean- 
 ing at common law and that the statute is 
 thus to be construed by the rule of reason. 
 The Chief -Justice states the history of restraints 
 of trade and of monopolies and engrossing and 
 regrating at common law, and shows the ulti- 
 mate significance given to those terms and then 
 applies it to the statute. He shows how the 
 great congeries of corporations and business in- 
 terests that were concentrated in the Standard 
 Oil Company under one management were 
 plainly an attempt to monopolize the refining 
 
 86 
 
AND THE SUPREME COURT 
 
 and sale of petroleum oil and its products 
 throughout the country, among the States and 
 in the foreign trade, and concludes that they 
 were therefore obviously within the statute. 
 
 Mr. Justice Harlan, in a concurring opinion, 
 criticizes the language of the court in its conr- 
 struction of the statute and calls the applica- 
 tion of common-law meaning to the terms of 
 the statute, judicial legislation. 
 
 In the next great case, reported in the same 
 volume of the Reports, that against the Amer- 
 ican Tobacco Company for the monopoly of the 
 tobacco business, the court reached a similar 
 decision. The evidence of intent to restrain 
 country-wide commerce and to monopolize it 
 was not quite so overwhelming as it was in the 
 Standard Oil Company case, only because care 
 had been taken through the advice of keen 
 counsel to make the transactions appear more 
 innocent. 
 
 These two great judgments gave the widest 
 scope to the anti-trust law, as may be seen 
 from two passages that I must quote, one from 
 the Standard Oil case and the other from the 
 Tobacco case. In the Standard Oil case the 
 
 Chief -Justice said: 
 
 87 
 
THE ANTI-TRUST ACT 
 
 In view of the many new forms of contracts and 
 combinations which were being evolved from ex- 
 isting economic conditions, it was deemed essential 
 by an all-embracing enumeration to make sure that 
 no form of contract or combination by which an 
 undue restraint of interstate or foreign commerce 
 was brought about could save such restraint from 
 condemnation. 
 
 The statute under this view evidenced the in- 
 tent not to restrain the right to make and enforce 
 contracts, whether resulting from combination or 
 otherwise, which did not unduly restrain interstate 
 or foreign commerce, but to protect that commerce 
 from being restrained by methods, whether old or 
 new, which would constitute an interference that 
 is an undue restraint. 
 
 In the Tobacco case the same great judge 
 said: 
 
 Coming then to apply to the case before us the 
 act as interpreted in the Standard Oil and previous 
 cases, all the difficulties suggested by the mere form 
 in which the assailed transactions are clothed be- 
 come of no moment. This follows because, although 
 it was held in the Standard Oil case that, giving to 
 the statute a reasonable construction, the words 
 "restraint of trade" did not embrace all those nor- 
 mal and usual contracts essential to individual free- 
 dom, and the right to make which was necessary in 
 order that the course of trade might be free, yet, as 
 a result of the reasonable construction which was 
 affixed to the statute, it was pointed out that the 
 
AND THE SUPREME COURT 
 
 generic designation of the first and second sections 
 of the law, when taken together, embraced every 
 conceivable act which could possibly come within 
 the spirit or purpose of the prohibitions of the 
 law, without regard to the garb in which such acts 
 were clothed. That is to say, it was held that in 
 view of the general language of the statute and the 
 public policy which it manifested there was no 
 possibiUty of frustrating that policy by resorting 
 to any disguise or subterfuge of form, since resort 
 to reason rendered it impossible to escape by any 
 indirection the prohibitions of the statute. 
 
 Notwithstanding the decrees for the United 
 States in these cases and the all-embracing char- 
 acter of these decisions and the opportunity 
 they afford through the statute to reach every 
 conceivable trust or combination at which the 
 statute could have been aimed, they were 
 made the object of attack by many politicians. 
 
 A calm and considered examination of the 
 opinions of Chief-Justice White in the Standard 
 Oil and Tobacco cases, and the use of the rule 
 of decision which he laid down in applying the 
 act to subsequent cases, will show that those 
 who charged that the court had narrowed the 
 act, or had not comprehended the settled pub- 
 lic opinion that found expression in it, spoke 
 without knowledge. The verbal difference be- 
 
 7 89 
 
THE ANTI-TRUST ACT 
 
 tween the coui-t and Mr. Justice Harlan, how- 
 ever, was soon reflected in controversies carried 
 on in Congress, in the press, and in political 
 contests, and its echoes are still sounding. This 
 issue was engendered merely by language and 
 not by real differences in result, or, indeed, 
 in principle. The too-sweeping sentences of Mr. 
 Justice Peckham in the Trans-Missouri and Joint 
 Traffic Association cases, as to the irrelevancy 
 of common-law meanings, with express excep- 
 tions really based on the common law such 
 as I have pointed out, was really a statement 
 of exactly the same principle of reasonable 
 construction as that upon which Chief-Justice 
 White proceeded in his opinion in the Standard 
 OU case. Indeed, the much - criticized "rule 
 of reason" of the Chief - Justice was only a 
 change of phrase from the expression which 
 Mr. Justice Peckham had himself used as the 
 guide to a proper construction of the statute. 
 For in the Joint Traffic Association case that 
 Justice says: 
 
 An agreement entered into for the purpose of 
 promoting the legitimate business of an individual 
 or corporation, with no purpose to thereby affect 
 or restrain interstate commerce, and which does 
 
 90 
 
AND THE SUPREME COURT 
 
 not directly restrain such commerce, is not, as we 
 think, covered by the act, although the agreement 
 may indirectly and remotely affect that commerce. 
 We also repeat what is said in the case above 
 cited [{. e., in his own opinion in the Trans-Missouri 
 case], that " the act of Congress must have a rea- 
 sonable construction, or else there would scarcely be 
 an agreement or contract among business men thai 
 could not be said to have, directly or remotely, some 
 bearing upon interstate commerce, and possible to 
 restrain it." [Italics mine.] To suppose, as is as- 
 sumed by counsel, that the effect of the decision 
 in the Trans-Missouri case is to render illegal most 
 business contracts or combinations, however indis- 
 pensable and necessary they may be, because, as 
 they assert, they all restrain trade in some remote 
 and indirect degree, is to make a most violent as- 
 sumption, and one not called for or justified by the 
 decision mentioned, or by any other decision of this 
 court. 
 
 Again, the error which Mr. Justice Harlan 
 made in his concurring opinion in the Standard 
 Oil case, in saying that the use of the common 
 law to interpret the meaning of the anti-trust 
 statute was "judicial legislation," may be in- 
 ferred by reference to his own course of reason- 
 ing in his very able and convincing dissenting 
 opinion in the Sugar Trust case, which, as I , 
 have already said, has really become the posi- 
 tion of the court. But when the court came 
 
 91 
 
THE ANTI-TRUST ACT 
 
 over to him and that opinion, he could not 
 bring himself to see the real victory he had 
 won. 
 
 In his dissenting opinion in the Sugar Trust 
 case he used this language: 
 
 The fundamental inquiry in this case is. What 
 in a legal sense is an unlawful restraint of trade? 
 
 Sir William Erie, formerly Chief-Justice of the 
 Common Pleas, in his essay on "The Law Relating 
 to Trades-Unions," well said that "restraint of 
 trade, according to a general principle of the com- 
 mon law, is unlawful"; that "at common law every 
 person has individually and the public also has col- 
 lectively a right to require that the course of trade 
 should be kept free from unreasonable obstruction," 
 and that the right to a free course for trade is of great 
 importance to commerce and productive industry, 
 and has been carefully maintained by those who 
 have administered the common law. [Pages 6, 7, 8.] 
 
 There is a partial restraint of trade which in cer- 
 tain circumstances is tolerated by the law. The 
 rule upon that subject is stated in Oregon Steam 
 Navigation Company vs. Minor, 20 Wall 64, 66, 
 where it was said that "an agreement in general 
 restraint of trade is illegal and void; but an agree- 
 ment which operates merely in partial restraint of 
 trade is good, provided it be not unreasonable and 
 there be consideration to support it. In order that 
 it may not be imreasonable, the restraint imposed 
 must not be larger than is required for the necessary 
 protection of the party with whom the contract is 
 
 92 
 
AND THE SUPREME COURT 
 
 made. (Homer vs. Graces, 7 Bingh. 735, 743.) A 
 contract, even on good consideration, not to use a 
 trade anywhere in England, is held void in that 
 country as being too general a restraint of trade." 
 But a general restraint of trade has often resulted 
 from combinations formed for the purpose of con- 
 trolling prices by destroying the opportunity of 
 buyers and sellers to deal with each other upon the 
 basis of fair, open, free competition. Combinations 
 of this character have frequently been the subject 
 of judicial scrutiny, and have always been con- 
 demned as illegal because of their necessary ten- 
 dency to restrain trade. Such combinations are 
 against common right and are crimes against the 
 public. To some of the cases of that character it 
 will be well to refer. 
 
 The learned Justice then considers a great 
 many cases at common law in this country to 
 show that a case like the Sugar Trust would be 
 an unlawful restraint in trade within a State, 
 and so also in interstate trade, and so must be 
 within the statute. In other words, he pro- 
 ceeded exactly as the Chief-Justice did in the 
 Standard Oil case, to find out what the com- 
 mon law was, and in the light of the common- 
 law definition of undue or unreasonable re- 
 straints of trade to bring the case before him 
 within the statute. Yet this course, which he 
 himself took in the Knight case, he pronounces 
 
 93 
 
THE ANTI-TRUST ACT 
 
 to be improper judicial legislation on the part of 
 the eight Justices who voted for the majority- 
 opinion in the Standard Oil case. 
 
 In spite, however, of the breadth of the 
 court's decision in the Standard Oil case, and its 
 useful reconciling of the inconsistencies of pre- 
 vious decisions, the phrase "the rule of reason" 
 brought out the condemnation of everybody 
 of demagogic tendencies prominent in politics, 
 and evoked from statesmen of little general 
 information and less law, proposals to amend 
 the statute, "to put teeth" into it, and to 
 eliminate from the power of the court the right 
 to use the rule of reason in the construction 
 and application of the anti-trust law. Were it 
 not for the then hysterical condition of the pub- 
 lic mind, the futility and manifest absurdity of 
 such a proposition, which its very words neces- 
 sarily implied, would have aroused the sense 
 of humor of the American people. 
 
 After the opinion was announced, I invited 
 the gentlemen who were most stentorian in 
 condemnation of the interpretation given to 
 the statute by the Supreme Court to mention 
 and describe a case in which they would have 
 the statute apply to which it would not apply 
 
 94 
 
AND THE SUPREME COURT 
 
 under the reasoning of the court, and up to 
 this time I have never heard such a case stated, 
 and I think I may infer that the reason is that 
 there is no such case. 
 
 But those poHticians and demagogues who, as 
 they have said, wish to draw blood, and whom 
 nothing would satisfy but the absolute annihila- 
 tion of the capital used in the trusts, are not 
 the only persons who have made mistakes in 
 dealing with the subject. There are those who 
 are utterly opposed to the spirit of the law and 
 who take the view that Lord Justice Bowen of 
 the English Court of Appeal evidently took, 
 judging by his language in the Mogul Steamship 
 Company case, that the only proper way to 
 remedy the evil of trusts and combinations of 
 this character is to let them run riot and cure 
 themselves. The contention of these opponents 
 of the law has been that it is impossible for 
 business men to live under the anti-trust law 
 because nobody can tell what it means. They 
 have continued this cry until they have put it 
 in the mouths of their extreme opponents, who, 
 acceptiag their view, now come forward to say 
 that the law ought to be changed so as to de- 
 nounce specific acts as in themselves criminal, 
 
 95 
 
THE ANTI-TRUST ACT 
 
 whether they are used to promote the real evil 
 aimed at by the statute or not. 
 
 The truth is that the course of the construc- 
 tion of the statute in the last twenty years has 
 been a valuable asset for the public. No man 
 who reads this series of decisions need be 
 doubtful whether, when he is making a busi- 
 ness arrangement, he is violating the law or 
 not. He can search his own heart and he can 
 tell what his purpose is and what the effect of 
 his act is going to be. If what he is dealing 
 with is interstate commerce, if what he is going 
 to do is to reduce competition and gain control 
 of the business in any particular branch, if that 
 is his main purpose and reduction of competi- 
 tion is not a mere incidental result, if except for 
 that purpose he would not go into the arrange- 
 ment, then he must know he is violating the law, 
 and no sophistry, no pretense of other purpose 
 need mislead him. It is a question of self- 
 knowledge; it is a question of intention and 
 necessary effect. 
 
 The operation of the act upon conspiracies of 
 members of labor-unions to injure the interstate 
 trade of employers by restraints that are direct 
 and illegal — ^to wit, by a secondary boycott—' 
 
 96 
 
AND THE SUPREME COURT 
 
 should be considered. It is quite clear that the 
 mere striking to secure better wages or other 
 terms of employment, and thus embarrassing 
 the operation of a railroad engaged in interstate 
 commerce, would not be within the statute, be- 
 cause such a combined action was not unlaw- 
 ful at common law, and it has come in modern 
 days to be recognized as a legitimate means by 
 which working-men through united action may 
 put themselves on a level of resource and power 
 with their employer. But when they go further 
 and seek by striking and united withholding of 
 patronage to coerce others who have no normal 
 relation to the fight to assist them in it and 
 injure their employer, they step over the line of 
 lawfulness, and if by such means they obstruct 
 the interstate trade of their employer they 
 violate the act. 
 
 In the case of Loewe vs. Lawler, 208 U. S. 
 274, a hat-manufacturing company in Danbury, 
 Connecticut, declined to accede to the demand 
 of the hatters' imion, consisting of nine thousand 
 men, in respect to their terms of employment. 
 Thereupon the hatters declared a boycott 
 against the company, and the Federation of 
 Labor, a federation embracing a number of 
 
 97 
 
THE ANTI-TRUST ACT 
 
 trades -unions having a membership of one 
 hundred and fifty thousand, declared a boycott 
 against the Danbury company all over the 
 country, and notified the hat dealers that they 
 would not purchase hats made by the Danbury 
 Hat Company, and threatened the dealers them- 
 selves with a boycott if they sold such hats. 
 The Danbury company sued the leaders of the 
 boycott and the hatters' union for damages 
 under the anti-trust act. Their liability was 
 declared by the Supreme Court of the United 
 States. This boycott, it will be noted, was a 
 secondary boycott, because, while it was directed 
 against the original manufacturing company, it 
 sought to compel the hat dealers of the country 
 to range themselves on the side of the labor- 
 unions and injure the manufacturing company. 
 
 This was held to be a combination in restraint 
 of interstate trade, and a substantial verdict 
 for the company has since been recovered under 
 the statute. The recovery would have been 
 sustained at common law, and I do not know 
 any reason why it does not necessarily come 
 within the statute. 
 
 Attempts are being made in Congress to ex- 
 clude from the operation of the anti-trust act 
 
AND THE SUPREME COURT 
 
 trades-unions and farmers. I hope this will 
 never be done. It will be legislation establish- 
 ing a privilege for a class that is supposed to 
 be powerful in votes, without any real reason 
 for the distinction. A law with a similar ex- 
 emption was passed by the legislature of Il- 
 linois. It was held by the United States Su- 
 preme Court to be invalid because it denied to 
 all the people of Illinois the equal protection of 
 laws. While that case was imder the Four- 
 teenth Amendment, which prevents a State from 
 denying equal protection of the laws to any 
 persons within its jurisdiction, it would be a 
 question whether the Supreme Court might not 
 find in the first eight amendments of the Con- 
 stitution a prohibition upon Congressional legis- 
 lation having similar unjust operation. 
 
THE ANTI-TRUST ACT 
 
 CHAPTER VII 
 
 TEN CASES UNDEB TRUST LAW, FOLLOWING 
 STANDARD OIL AND TOBACCO DECISIONS, SHOW- 
 ING BROAD SCOPE OP THOSE DECISIONS. 
 
 IN order to justify my statement as to the 
 comprehensive character of the decisions in 
 the Standard Oil and Tobacco cases I wish now 
 briefly to state the effect of the ten cases which 
 have been decided since, and the further ap- 
 plication of the rule of construction as finally 
 given in those two leading cases, all by a unani- 
 mous court. 
 
 The first of these involved the legality of a 
 terminal association of railroads in unifying 
 the terminal facilities of St. Louis, which, owing 
 to the geographical conditions, all railroads en- 
 tering St. Louis were under compulsion to use. 
 It appeared that the combination was made by 
 less than all the companies entering the city, 
 and that an existing member could arbitra- 
 rily exclude new applicants for membership. It 
 
 100 ,' 
 
AND THE SUPREME COURT 
 
 was held that such a combination effecting "ex- 
 clusive ownership and control came within the 
 first and second sections of the act and was 
 an attempt to monopolize commerce among the 
 States which must pass through the gateway of 
 St. Louis; that a combination of all the com- 
 panies for the purpose of giving every company 
 entering St. Louis the same treatment would 
 not have been a violation of the act. This case 
 illustrates how the court by use of the remedial 
 process of equity can effect exactly the right 
 result. The "insiders" Were required, on pain 
 of being enjoined from doing any terminal busi- 
 ness under the agreement, to let every other 
 railroad entering St. Louis into the agreement 
 on exactly equal terms as a member. 
 
 In the Bath-tub case, 226 U. S. 20, the 
 defendants, sixteen manufacturers controlling 
 eighty-five per cent, of the trade in enameled 
 iron ware, were shown to have united to destroy 
 competition, fix prices and terms of sale, and 
 establish penalties for violation of the agree- 
 ment. This was quite within the inhibition of 
 the Addyston Pipe case. An attempt was made 
 to escape the statute on the ground that some of 
 
 the parties had patents covering the goods whose 
 
 101 
 
THE ANTI-TRUST ACT 
 
 sale was the subject of the agreement. But the 
 court held that, while rights made by patents 
 are extensive, they do not give any more than 
 other rights a universal license against positive 
 prohibitions of the statute. In answer to the 
 proposition that the defendants had a good mo- 
 tive in their combination, Mr. Justice McKenna 
 said that the cases in the court had demon- 
 strated the sufficiency of the statute to prevent 
 evasions of its policy by resort to any disguise 
 or subterfuge of form or the escape of its pro- 
 hibitions by any indirection, nor could the de- 
 fendants escape by proof of good motives, add- 
 ing that the law is its own measure of right and 
 wrong, of what it permits or forbids, and the 
 judgment of the courts cannot be set up against 
 it in a supposed accommodation of its policy 
 with the good intention of the parties. It should 
 be said that the good motives here averred and 
 sought to be proved were the desire through 
 a monopoly and control of the market and 
 prices to prevent the sale to the public of in- 
 ferior enamel for bath-tubs. 
 
 In the United States vs. Union Pacific Rail- 
 road Company, 226 U. S. 61, the bill in equity 
 was directed against the consummated acqui- 
 
 102 
 
AND THE SUPREME COURT 
 
 sition of forty-six per cent, of the Southern 
 Pacific stock by the Union Pacific Coinpany 
 when the two raihroads were competing systems. 
 Mr. Justice Day delivered the opinion of the 
 court and held that the purchase was within 
 the anti-trust act, and that the mere purchase 
 of stock by one corporation in another if the 
 intent and effect are to restrain commerce and 
 obtain power to control competition is within 
 the statute. 
 
 In United States vs. Reading Company, 226 
 U. S. 324, decided December 16, 1912, the de- 
 fendants, a number of coal-carrying railroads 
 and mining companies producing and transport- 
 ing seventy-five per cent, of the annual supply of 
 anthracite coal, combined to prevent the con- 
 struction of an independent and competing line 
 of railway into the anthracite region. The plan 
 devised was to acquire for the Temple Iron 
 Company, a corporation all of whose stock was 
 owned by the defendants, the coal properties and 
 collieries controlled by the largest independent 
 producer whose support had been promised to 
 the proposed new independent competing Ime of 
 transportation. The plan succeeded, for, the 
 independent properties having been acquired by 
 
 103 
 
THE ANTI-TRUST ACT 
 
 the Temple Iron Company, the projected com- 
 peting railroad was abandoned. It was con- 
 tended that because the new line had been 
 abandoned it would be idle to enjoin the doing 
 of an act already accomplished. In answering 
 this contention, Mr. Justice Lurton for the 
 court said: 
 
 The combination by means of the Temple Com- 
 pany still exists. It has been and still is an eflB- 
 cient agency for the collective activities of the 
 defendant carriers for the purpose of preventing 
 competition in the transportation and sale of coal in 
 other states. . . . 
 
 So long as the defendants are able to exercise the 
 power thus illegally acquired it may be most effi- 
 ciently exerted for the continued and further sup- 
 pression of competition. Through it the defendants 
 in combination may absorb the remaining output 
 of independent collieries. 
 
 The evil is in the combination. Without it the 
 several groups of coal-carrying and coal-producing 
 companies have the power and motive to compete. 
 
 It is, of course, obvious that the law may not com- 
 pel competition between these independent coal 
 operators and defendants, but it may at least remove 
 illegal barriers resulting from illegal agreements 
 which mil make such competition impracticable. 
 Whether a particular act, contract, or agreement 
 was a reasonable and normal method in furtherance 
 of trade and commerce may in doubtful cases turn 
 
 104 
 
AND THE SUPREME COURT 
 
 upon the intent to be inferred from the extent of the 
 control thereby secured over the commerce affected 
 as well as by the method which was used. 
 
 Of course, if the necessary result is materially to 
 restrain trade between the States, the intent with 
 which the thing was done is of no consequence. But 
 when there is only a probabihty the intent to pro- 
 duce the consequence may become important. 
 
 Here we see the important principle an- 
 nounced that when a combination necessarily 
 effects a monopoly it is no defense that the 
 combiners did not intend a monopoly; but 
 when the result is not complete or controlling 
 as a monopoly, the intent is the important fac- 
 tor. 
 
 In United States vs. Patten, 226 U. S. 525, 
 decided in January, 1913, the defendants were 
 indicted for a conspiracy to run a corner in 
 the available supply of the staple commodity 
 of cotton, normally a subject of trade and com- 
 merce among the States, and thereby to enhance 
 artificially its price throughout the country and 
 compel all who had occasion to obtain it to 
 pay the enhanced price or else leave their needs 
 imsatisfied. The court held that the indict- 
 ment was good in the terms of Section I. of the 
 act, that to run a corner is to acquire control 
 
 8 105 
 
THE ANTI-TRUST ACT 
 
 of all or the dominant portion of a commodity 
 with the purpose of artificially enhancing the 
 price, and that one of the important features 
 of the corner is the purchase for future delivery, 
 coupled with a withholding from sale for a lim- 
 ited time. Mr. Justice Van Devanter pro- 
 noimced the judgment of the court. He said: 
 
 It may well be that running a corner tends for 
 a time to stimulate competition; but this does not 
 prevent it from being a forbidden restraint, for it 
 also operates to thwart the usual operation of the 
 laws of supply and demand, to withdraw the com- 
 modity from the normal current of trade, to enhance 
 the price artificially, to hamper users and consumers 
 in satisfying their needs, and to produce practically 
 the same evils as does the suppression of competi- 
 tion. 
 
 Upon the corner becoming effective, there could 
 be no trading in the commodity save at the will of 
 the conspirators and at such price as their interests 
 might prompt them to exact. And so, the con- 
 spiracy was to reach and to bring within its domi- 
 nating influence the entire cotton trade of the country. 
 
 The case of United States vs. Winslow, 227 
 U. S. 202, came to the Supreme Court on a 
 judgment sustaining a demurrer to an indict- 
 ment. The indictment charged that three 
 companies engaged in different lines of busi- 
 
 106 
 
AND THE SUPREME COURT 
 
 ness and not competing, but making respec- 
 tively sixty, eighty, seventy, and eighty per 
 cent, of the lasting-machines, welt-sewing-ma- 
 chines, heeling-machines, and metallic-f asteniag- 
 machines made ia the United States, organized 
 a new company to which they turned over their 
 several businesses. 
 
 The court aflSrmed the judgment of the 
 court below in sustaining the demurrer. Mr. 
 Justice Holmes in delivering the judgment 
 said: 
 
 On the face of it the combination was simply 
 an effort after greater efficiency. The business of 
 the several groups that combined, as it existed be- 
 fore the combination, is assumed to have been legal. 
 The machines are patented, making them a mo- 
 nopoly in any case, the exclusion of competitors from 
 the use of them is of the very essence of the right 
 conferred by the patents, and it may be assumed 
 that the success of the several groups was due to 
 their patents having been the best. 
 
 As by the interpretation of the indictment below 
 and by the admission in argument before us, they 
 did not compete with one another, it is hard to see 
 why the collective business should be any worse 
 than its component parts. We can see no greater 
 objection to one corporation manufacturing seventy 
 per cent, of three non-competing groups of patented 
 machines collectively used for making a single prod- 
 uct than to three corporations making the same 
 
 107 
 
THE ANTI-TRUST ACT 
 
 proportion of one group each. The disintegration 
 aimed at by the statute does not extend to reducing 
 all manufacture to isolated units of the lowest degree. 
 It is as lawful for one corporation to make every 
 part of a steam-engine and to put the machine to- 
 gether as it would be for one to make the boilers 
 and another to make the wheels. Until the one in- 
 tent is nearer accomplishment than it is by such a 
 juxtaposition alone no intent could raise the conduct 
 to the dignity of an attempt. 
 
 This brings out clearly that mere bigness, 
 not used to effect monopoly, but only to increase 
 efficiency, is not a violation of the statute. 
 
 In the criminal case of the United States vs. 
 Pacific and Arctic Railway & Navigation Com- 
 pany and Others, 228 U. S. 87, the defendants, 
 a railroad company and two steamship com- 
 panies, who were not competitors, but together 
 formed a continuous line of transportation by 
 water and rail from Seattle to the interior of 
 Alaska, had combined in order to put out of 
 business a steamship company that was com- 
 peting with one of the defendants on part of 
 the through route and to throw all trade into 
 the hands of the defendant steamship com- 
 panies. The steamship defendants agreed with 
 the defendant railroad company to establish 
 through routes and joint rates with them, and 
 
 108 
 
AND THE SUPREME COURT 
 
 the latter agreed to refuse to do so with the 
 competing steamship company. Defendants 
 with like purpose so fixed the local rates that 
 the combination of local rates was greater than 
 the through rate agreed upon. 
 
 It was held that this was an infringement of 
 the anti-trust law, and was something more 
 than the exercise of the common-law right of 
 selecting connections, and that the scheme was 
 therefore illegal. 
 
 In Nash vs. the United States, 229 U. S. 
 373, a criminal case and conviction under the 
 statute, the chief argument for the defense 
 was that the anti-trust law was so indefinite 
 and vague as to be inoperative on its criminal 
 side. The court held that there was no merit 
 to this contention. Mr. Justice Holmes said: 
 
 The objection to the criminal operation of the 
 statute is thought to be warranted by the Standard 
 Oil Company vs. United States, 221 U. S. 1, and 
 the United States vs. American Tobacco Company, 
 221 U. S. 106. Those cases may be taken to have 
 established that only such contracts and combina- 
 tions are within the act as, by reason of intent or 
 the inherent nature of the contemplated acts, preju- 
 dice the public interests by unduly restricting com- 
 petition or unduly obstructing the course of trade. 
 . . . We are of the opinion that there is no consti- 
 
 109 
 
THE ANTI-TRUST ACT 
 
 tutional difiBculty in the way of enforcing the crimi- 
 nal part of the act. 
 
 In that case the court also held that a con- 
 spiracy indictment under the act need not aver 
 the commission of an overt act, "as the Sherman 
 act punishes the conspiracies at which it is 
 aimed on the common-law footing, and we can 
 see no reason for reading into the Sherman act 
 more than we find there." 
 
 The last exposition of the Supreme Court's 
 broad view of the purpose of the statute and 
 practical enforcement of it is in the case of 
 Straus vs. the Publishing Company, 231 U. S. 
 222. There it appeared that a publishers' as- 
 sociation, composed of probably seventy-five 
 per cent, of the publishers of copyrighted books 
 in the United States, and a booksellers' associ- 
 ation, including a majority of the booksellers 
 throughout the United States, entered into a 
 combination and agreement by which their 
 members bound themselves to sell copyrighted 
 books only to those who would maintain the 
 retail price on copyrighted books. It further 
 appeared, as a result of this combination, that 
 competition on copyrighted books at retail was 
 
 almost completely destroyed and that the plain- 
 110 
 
AND THE SUPREME COURT 
 
 tiflfs in the case, who conducted a department 
 store in New York and because of their methods 
 of business had been able to undersell other 
 bookstores, were put on a "cut-off" list and 
 were unable to secure a supply of such books in 
 the ordinary course of business because dealers 
 who had supplied them were wholly ruined by 
 the combination. Applying the principle of the 
 bath-tub case, that the monopoly of a patent 
 did not enable those who dealt in the patented 
 device to enjoy immunity under the Sherman 
 law, which was to be regarded as a limitation 
 of rights which might be pushed to evil conse- 
 quences, the court said: 
 
 So in the present case it cannot be successfully 
 contended that the monopoly of a copyright is in 
 this respect any more extensive than that secured 
 under the patent law. No more than the patent 
 statute was the copyright act intended to authorize 
 agreements in unlawful restraint of trade and tend- 
 ing to monopoly, in violation of the specific terms 
 of the Sherman law, which is broadly designed to 
 reach all combinations in unlawful restraint of trade 
 and tending, because of the agreements or combi- 
 nations entered into, to build up and perpetuate 
 monopolies. 
 
 From this review of the Supreme Court's de- 
 cisions, it is perfectly clear that the court has 
 
 111 
 
THE ANTI-TRUST ACT 
 
 no disposition to narrow the effect of the stat- 
 ute or to exclude any case that is properly 
 within the evil which Congress intended to 
 strike down. 
 
 The effect of the cases is that a mere union 
 of capital in the same branch of industry for 
 the purpose of promoting economy and effici- 
 ency, though it uses interstate commerce, and 
 though to the extent of the business of the two 
 firms or companies it suppresses the competi- 
 tion of each against the other, is not within the 
 statute unless what is done necessarily has the 
 effect to control all the business or can be shown 
 by the character of the acts to be intended to 
 effect that purpose or to be a step in the plot 
 to bring it about. Mere bigness, is not an evi- 
 dence of violating the act. It is the purpose 
 and necessary effect of controlling prices and 
 putting the industry under the domination of 
 one management that is within the statute. 
 This evil is to be punished or restrained under 
 the statute, no matter how ingenious or varied 
 the device for bringing it about may be. The 
 court will look through the form of the device 
 adopted to evade the effect of the law to its 
 essence, to the intent, and to the result. 
 
 112 
 
AND THE SUPREME COURT 
 
 CHAPTER VIII 
 
 POPULAR MISCONCEPTION OF SUPREME COURT's 
 ATTITUDE IN CONSTRUING ANTI-TRUST LAW — 
 NO ASSUMPTION OF POWER TO ENFORCE 
 ECONOMIC OR POLITICAL VIEWS OF JUDGES — 
 MERELY FOLLOWING A COMMON-LAW STANDARD 
 —ADMIRABLE ADAPTABILITY OF DECREES IN 
 EQUITY TO ENFORCEMENT OF STATUTE — EFFI- 
 CACY OF STANDARD OIL AND TOBACCO DECREES. 
 
 ONE might well infer from the unfair and 
 false strictures upon the attitude of the 
 Supreme Court in construing the statute that it 
 had asserted its power to say, "It is true that 
 this contract restraining trade and this monop- 
 oly it effects are within the literal terms of the 
 statute, but, on the whole, we think, from our 
 views of political economy, it would be unwise 
 and unreasonable to include them, and so we 
 limit the operation of the express words of the 
 act to those thiags we believe to be injurious 
 to the public weal." 
 
 I have said little to my purpose if I have not 
 
 113 
 
THE ANTI-TRUST ACT 
 
 made clear that the only reasonableness in the 
 application of the statute which the court as- 
 sumes to consider and decide is that of the re- 
 straint of trade, ancillary to a main contract 
 with a different purpose and which the common 
 law has for years furnished practical and defi- 
 nite legal rules for determining. The idea of 
 the Supreme Court's ignorant but enthusiastic 
 critics is that the court has said, "There are 
 good trusts and bad trusts, and we have the 
 power to say what are the good trusts and what 
 are the bad trusts, according to our economic 
 and political views." Now, of course, the court 
 has asserted no such power. It would be im- 
 wise to intrust this power to the courts. It 
 would be legislative power, not judicial power. 
 What the court has said in effect is this: 
 
 "It is evident what the Congress had in its 
 mind from the language it uses. We know 
 from current history the evil it sought to 
 remedy. It has used terms that had a well- 
 understood meaning at common law — to wit, 
 restraint of trade, monopoly, combination, and 
 conspiracy. It is a settled rule of all Ameri- 
 can and English courts in construing statutes 
 and constitutions that common-law terms are 
 
AND THE SUPREME COURT 
 
 to receive common-law meaning unless there is 
 good reason to the contrary. In the light of 
 reason, and applying common-law meaning to 
 such statutory terms, we hold that such inci- 
 dental restraints as were reasonable at common 
 law were not intended to be included within 
 the term 'restraints of trade' used in the 
 statute." 
 
 That is not assuming legislative power at 
 all. It is only exercising the function that 
 courts have exercised in applying a well- 
 measured and definite yardstick to contracts 
 incidental and ancillary for now more than three 
 centuries. 
 
 The legislators and political orators who re- 
 joice in outradicaling every one else object to 
 the courts using the rule of reason in construing 
 statutes and say that in this regard the courts 
 of our country exercise more power than in 
 any other country. They are wrong. I com- 
 mend them to the statute which has been passed 
 in Australia, the home of radicalism and fads 
 and nostrums on the subject of trade restraints. 
 
 The Australian act makes it a criminal of- 
 fense to enter into any combination in relation 
 to trade or commerce among the states of the 
 
 115 
 
THE ANTITRUST ACT 
 
 Commonwealth (a) with intent to restrain trade 
 or commerce to the detriment of the public, or 
 (&) with intent to destroy or injure by means 
 of unfair competition any Australian industry 
 the preservation of which is advantageous to 
 the Commonwealth, having due regard to the 
 interest of producers, workers, and consumers. 
 The act also makes it a criminal offense to 
 monopolize, or attempt to monopolize or com- 
 bine or conspire with any other person to mo- 
 nopolize, any part of the trade or commerce 
 among the states with intent to control to the 
 detriment of the public the supply or price of 
 any service, merchandise, or commodity. 
 
 It seems to me that this is conferring on the 
 judges and courts a power that ought never to 
 be intrusted to them. It is submitting, not to 
 their legal, but to their economic and business 
 judgment questions for decision that are really 
 legislative in character. I regret to say that 
 this is the tendency of the pending bills in Con- 
 gress, in which it is proposed to leave first to an 
 executive board and then to the courts to de- 
 clare and forbid what in their judgment is un- 
 fair competition. If this means more than 
 what is included in unreasonable restraints of 
 
 116 
 
AND THE SUPREME COURT 
 
 trade at common law now denounced by the 
 anti-trust law, it would seem to be conferring 
 legislative power. 
 
 By misrepresentation, ignorant or malicious, 
 the public in this country have been given the. 
 impression that the power which the Australian 
 courts are thus given, and which it is now pro- 
 posed to give to the new trade commission and 
 the coTirts, our Supreme Court has assumed to 
 exercise. If I have made clear the unjust and 
 unfounded character of this impression I shall 
 count what I have written worth while. 
 
 Before concluding a discussion of the State, 
 I wish to say something on the chief civil remedy 
 provided by the anti-trust law for reaching the 
 evil aimed at — to wit, the elastic and many- 
 sided remedies afforded by procedure in equity. 
 
 The first advantage in dealing with a trust 
 by decree of a court of equity is that the power 
 of punishment by summary contempt pro- 
 ceedings for violation of the provisions of the 
 decree insures their performance. No jury 
 trial need intervene between a disobedience 
 of its terms and deterrent punishment. 
 
 The second advantage is that the decree can 
 be shaped to suit the situation so as to stamp 
 
 117 
 
THE ANTI-TRUST ACT 
 
 out the evil of monopoly and restraint, and yet 
 to leave the capital and plant ably organized, 
 to reduce the cost of production, and to carry 
 on legitimate business for the benefit of the 
 public. The court of equity can take hold of a 
 trust and use the varying form of its remedies 
 by injunction and receivership to squeeze the 
 unlawfulness out of a trust and retain for the 
 benefit of society those features of it that great 
 business energy and genius have created and 
 that can be continued entirely within the law. 
 
 This leads me now to the consideration of 
 the decrees in the Standard Oil case and in the 
 Tobacco case. Both of them have been re- 
 ferred to as altogether ineffective and of no 
 use in preventing the continuance of the evil 
 which the court found to exist and against 
 which it entered its decree. I am firmly con- 
 vinced from an investigation of the decrees in 
 these cases that this charge is altogether un- 
 founded and that the decrees were quite as 
 effective to bring about the result desired as 
 any decree in equity ever was. 
 
 In the Standard Oil case the decree required 
 a dissolution of the company holding stock 
 in the many other companies constituting the 
 
 118 
 
AND THE SUPREME COURT 
 
 congeries of agencies for the monopoly of the 
 trade and followed the language of the prayer 
 of the bill asking the dissolution of the trust. 
 The holding company was enjoined from con- 
 tinuing its control and its stock was distributed 
 to the various stockholders, and they were en- 
 joined from maintaining any further concert or 
 combination. The argument against the effec- 
 tiveness of this decree is based on the fact that 
 after the decree was put into operation the 
 stock of the individual companies increased 
 greatly in value. In other words, because the 
 decree did not destroy or injure the value of the 
 property, it shows that it was not effective to 
 destroy the combination. 
 
 Nothing has been cited to show that the parts 
 into which the combination was divided have 
 violated the decree. Such violation could be 
 promptly met and summarily punished by con- 
 tempt proceedings before the Circuit Court. 
 The mere fact that the business of the separate 
 corporations into which the combination was 
 divided has been good since the decree is no 
 evidence that the decree is not effective to re- 
 lieve the business of refining and selling oil 
 from the heavy hand of the old monopoly. 
 
 119 
 
THE ANTI-TRUST ACT 
 
 In the first place, the increase in the market 
 value of the stock of the old constituent com- 
 panies is easily explained by two circumstances 
 which have nothing to do with the decree. The 
 first one is that the judicial investigation into 
 the affairs of these companies disclosed what 
 was not known to the public — ^that each com- 
 pany had a large surplus which did not appear 
 in the published statements and which made its 
 stock much more valuable than its previous 
 market quotation had shown it. And the sec- 
 ond is that the very large increase in the con- 
 sumption of gasolene, a product of petroleum, 
 due to the substitution of automobiles for car- 
 riages and wagons, has so increased the demand, 
 and thus the price, as naturally to make the 
 gasolene business more profitable. 
 
 But there are two circumstances that show 
 beyond question the influence of the decree to 
 accomplish the purpose of the act, which is to 
 rid trade from restraint and give way to free 
 competition. One of the manifestations of the 
 power of the Standard Oil Company, when it 
 was a monopoly, was the power it exercised to 
 keep down the price of crude oil. The Standard 
 Oil Company owned only a small percentage 
 
 120 
 
AND THE SUPREME COURT 
 
 — less than fifteen per cent. — of the oil-wells 
 of the United States. It purchased the crude 
 oil, and there was no circumstance showing its 
 complete power over the trade more clearly 
 than its keeping down to a point almost below 
 cost of pumping the price of the crude oil. Un- 
 der the influence of the decree the price of crude 
 oil has gone up one hundred per cent, beyond 
 what it was in the halcyon days of the trust. 
 
 Again, the percentage of the amount of oil 
 refined and sold by the independent companies 
 that never were in the Standard Oil combi- 
 nation, as compared with the percentage of 
 those companies into which the Standard Oil 
 was dissolved, has increased to forty-four per 
 cent, from fifteen per cent., as it was before 
 the decree. Indeed, counting as an indepen- 
 dent the Waters-Pierce Company, which was 
 controlled by the Standard Oil Company and is 
 now in litigation with and in the bitterest oppo- 
 sition to its former associates, the independents 
 refine and sell considerably more than half the 
 oil of the country. An inquiry made of any 
 leading independent oil-refiner will lead to con- 
 firmation of the view that the decree has been in 
 every way most effective to help them to a free 
 
 9 121 
 
THE ANTI-TRUST ACT 
 
 and profitable business. But it is said prices 
 have not been reduced. Gasolene has increased 
 in price for reasons that have been explained. 
 Other products of oil remain at about the same 
 price. The increase in the price of crude oil, 
 which the trust had kept down, easily explains 
 this. Moreover, if competition is restored the 
 statute has accomplished its purpose. The 
 effect of this upon prices, to keep them lower, is 
 an economic result dependent on so many causes 
 that failure to reduce them can certainly not be 
 charged to the form of the decree or the char- 
 acter of the remedy. 
 
 The Tobacco decree has been even more 
 severely criticized than the Standard Oil de- 
 cree. The fact is it was far more drastic. In 
 it the Supreme Court for the first time recog- 
 nized as a possible step in the equitable remedy 
 against a monopoly the appointment of a re- 
 ceiver and the sale of the company's assets, 
 if it be necessary to protect the public. 
 
 The details of the decree were left to the 
 three judges of the Circuit Court to settle. 
 They did so. It was not taken to the Supreme 
 Court again. The decree divided the trust into 
 four large companies, and the result has been 
 
 122 
 
AND THE SUPREME COURT 
 
 a genuine and strong competition between these 
 four companies by advertising and lowering 
 prices, so that the small so-called independent 
 companies, in the face of the competition be- 
 tween the large companies, have been less com- 
 fortable than under the tolerance of the To- 
 bacco Trust. But this furnishes no ground for 
 criticizing the decree or its effect. These com- 
 panies are not affected by illegal methods in the 
 competition. They are only not able to keep 
 the pace in modern business methods of selling 
 and economical production. The object of the 
 statute is to give opportunity for free and 
 genuine competition. 
 
 There was found in the working of the To- 
 bacco Trust the same feature as appeared in 
 the case of the Standard Oil Trust. This was 
 the concerted suppression of competition in the 
 purchase of the raw product. The result in 
 bearing down the price of white burley tobacco 
 caused the night-riders and their lawless vio- 
 lence in Kentucky and Tennessee, intended by 
 them to curtail the crop and compel higher 
 prices. The price of that important raw prod- 
 uct in the tobacco field of business under the 
 effect of the Tobacco decree soared to one hun- 
 
 123 
 
THE ANTI-TRUST ACT 
 
 dred per cent, more than it had been. The four 
 companies into which the trust was divided are 
 trying to get business one from the other. They 
 are not trying to drive independent companies 
 out of business, but their purpose to win business ■ 
 in competition with one another leads them to 
 great eflFort and expense. The mere fact that 
 smaller companies are unable to keep the pace 
 is an indication that they must have greater 
 capital in order to keep down their cost of pro- 
 duction so that they can sell with the other 
 and larger companies. The objection to the 
 decree, then, is that it did not divide up the 
 companies into small enough pieces to prevent 
 effective competition. In this view it is the 
 aim of the anti-trust law not to free trade from 
 obstruction or restraint, but rather to destroy 
 the larger businesses whose capital and large 
 plants enable them to produce goods cheaply, 
 in order that small plants that cannot produce 
 them as cheaply may live. This is not the pur- 
 pose of the statute, and those who insist that it 
 ought to be true misunderstand its useful inten- 
 tion. 
 
 The criticism of the Standard Oil and To- 
 bacco decrees is that the dissolution into its 
 
 124 
 
AND THE SUPREME COURT 
 
 parts of each trust left the old shareholders 
 owning aliquot shares in each corporation of 
 those into which the trust was divided. That 
 is true, but it was thought that the monitory 
 efifect of the decree and contempt proceedings 
 and the motive for independent action would 
 necessarily compel a voluntary separation of the 
 interests when they could not be united for 
 direct control of the whole business. Restric- 
 tions in the decree as to interlocking directorates 
 and other limitations preventing the resumption 
 of a common management justified this belief. 
 In spite of the unjust criticism and misrepresen- 
 tation, these anticipations have been vindicated. 
 
THE ANTI-TRUST ACT 
 
 CHAPTER IX 
 
 SUMMING UP OP THE EFFECT OF ANTI-TRUST 
 
 LAW ON BIG BUSINESS VALUE OF FIRST TWO 
 
 SECTIONS AS CONSTRUED — DANGER IN AMEND- 
 MENTS LOOKING TO GREATER SEVERITY. 
 
 WHAT, then, is the result as to the lawful 
 business, and especially the big business, 
 of our country under the statute and these de- 
 cisions? It is this: 
 
 It is possible for the owners of a business of 
 manufacturing and selling useful articles of 
 merchandise so to conduct their business as 
 not to violate the inhibitions of the anti-trust 
 law and yet to secure to themselves the benefit 
 of the economies of management and of pro- 
 duction due to the concentration under one 
 control of large capital and many plants. 
 
 If they use no other inducement than the 
 constant low price of their product and its 
 good quality to attract custom, and their busi- 
 ness is a profitable one, they violate no law. 
 126 
 
AND THE SUPREME COURT 
 
 But if they attempt, by a use of their pre- 
 ponderating capital and by a sale of their goods 
 temporarily at unduly low prices, to drive out 
 of business their competitors, or if they attempt, 
 by price-controlling contracts with their patrons 
 and threats of non-dealing except upon such 
 contracts, or by other methods of a similar 
 character, to use the largeness of their resources 
 and the extent of their output compared with 
 the country's total output as a means of com- 
 pelling custom and frightening off competition, 
 then they disclose a purpose to restrain trade 
 and to establish a monopoly and violate the 
 act. 
 
 The object of the anti-trust law was to sup- 
 press the abuses of business of the kind de- 
 scribed. It was not to interfere with a great 
 volume of capital which, concentrated under 
 one organization, reduced the cost of produc- 
 tion and made its profits thereby and took 
 no advantage of its size by methods akin to 
 duress to stifle competition with it. 
 
 I wish to make this distinction as emphatic 
 as possible, because I conceive that nothing 
 could happen more destructive to the pros- 
 perity of this country than the loss of that 
 
 J27 
 
THE ANTI-TRUST ACT 
 
 great economy in production which has been 
 and will be effected in all manufacturing lines 
 by the employment of large capital under one 
 management. There is usually a limit beyond 
 which the economy of management by the 
 enlargement of plant ceases; and where this 
 happens and combination continues beyond 
 this point, the very fact shows intent to mo- 
 nopolize, and not to economize. 
 
 The original purpose of many combinations 
 of capital in this country was not confined to 
 the legitimate and proper object of reducing 
 the cost of production. On the contrary, the 
 history of most trades will show at times a 
 feverish desire to unite by purchase, combina- 
 tion or otherwise, all plants in the country en- 
 gaged in the manufacture of a particular line 
 of goods. The idea was rife that thereby a 
 monopoly could be effected and a control of 
 prices brought about which would inure to the 
 profit of those engaged in the combination. 
 
 The path of commerce is strewn with failures 
 of such combinations. Their projectors found 
 that the union of all the plants did not prevent 
 competition, especially where proper economy 
 had not been pursued in the purchase and in 
 
 128 
 
AND THE SUPREME COURT 
 
 the conduct of the business after the aggrega- 
 tion was complete. The unemployed wealth of 
 the country soon was devoted to the construc- 
 tion of new competing plants. In such cases 
 they found they had, in order to keep out or 
 destroy new competition, to resort to deep un- 
 derselling, to exclusive dealing with retailers, to 
 buying and dismantling competing plants, to 
 making preferential contracts with railroads, 
 and to doing many other things of an unfair 
 character, which their capital and their control 
 of a large part of the trade enabled them to 
 make effective weapons for the purpose. 
 
 The statute has been on the statute-book 
 now for two decades, and the Supreme Court 
 in more than twenty opinions has construed it 
 ui application to various phases of business 
 combinations and in reference to various sub- 
 jects-matter. 
 
 The Sugar Trust escaped dissolution not be- 
 cause it was not held to be a trust, but because 
 it was thought by the court to be a case with- 
 in State jurisdiction. Every other important 
 trust that has been haled before the Supreme 
 Court in the twenty years which have elapsed 
 since that decision has been condemned, and 
 
 129 
 
THE ANTI-TRUST ACT 
 
 the terms of the statute have been given a 
 scope which leaves little doubt that every 
 other one of these octopuses, as its organization 
 and methods are disclosed and analyzed, will 
 be subjected to the heavy hand of the law. 
 
 A statute which is rendered more and more 
 certain in its meaning by a series of decisions 
 of the Supreme Court is more and more valu- 
 able. This furnishes a strong reason for leav- 
 ing the act as it is, to accomplish its useful 
 purpose, even though if it were being new- 
 ly enacted useful suggestions as to change of 
 phrase might be made. 
 
 The effect of this series of decisions to pre- 
 vent new organizations of this kind is already 
 manifest. New combinations of large capital 
 are few in number, and when projected they 
 are made with the greatest circumspection to 
 avoid breach of the law. 
 
 Existing organizations that feel themselves 
 near the line of illegality have abandoned prac- 
 tices that would give color to the claim that they 
 seek to restrain competition or aspire to mo- 
 nopoly. Many companies, rather than stand 
 the test of litigation, are consenting to dissolu- 
 tion by agreement with government authorities. 
 
 ISO 
 
AND THE SUPREME COURT 
 
 How strongly this result makes manifest the 
 thorough manner in which the Supreme Court 
 has construed the statute to reach the evil 
 aimed at! But for these decisions of which 
 I have attempted to give a resume the work 
 of concentrating all business of the country in 
 a few hands would have gone on and we would 
 have had our being and our comfort largely 
 under control of a small number of iron mo- 
 nopolies. 
 
 What now of the proposed amendments to 
 the anti-trust act? I have already referred to 
 one or two features of them. As I write, 
 though they have passed one House, it is so 
 certain that they will be much changed in the 
 other House that it would not be worth while 
 to discuss them. I can, however, properly refer 
 to the disposition of some members of Congress 
 to make the statute more severe. It has even 
 been proposed to require sentences of imprison- 
 ment for conviction under the anti-trust law. 
 I quite agree that a few prison sentences would 
 have put a wholesome fear of violating the 
 statute earlier into the hearts of promoters of 
 trusts. Some such sentences have been already 
 pronounced. But my impression is that ap 
 
 m 
 
THE ANTI-TRUST ACT 
 
 amendment leaving no discretion between fine 
 and imprisonment to the court would make 
 convictions very much harder to secure. Even 
 the fear of jail sentences when the court has 
 had such discretion has led to many acquittals 
 where the proof was conclusive and where the 
 jury convicted the corporation but acquitted 
 the president and other oflficers who really did 
 the work. The fear of the law now is much 
 greater than it was. The Supreme Court de- 
 cisions have made it so. In theory, members of 
 the public wish to draw blood, but when they 
 are in a jury-box they do not like to send their 
 fellow-citizens to jail for doing what some years 
 ago was only regarded as shrewd business, un- 
 less there are some elements of outrageous 
 defiance of public sentiment in what they have 
 done. And even then, as in the meat-packers' 
 indictments in Chicago after the civil suits were 
 won, a complete case before the jury against 
 men whose attitude cannot be said to have been 
 contrite resulted in an acquittal lest a prison 
 sentence should follow. A change of the law in 
 the direction of greater severity or more specific 
 definition of criminal acts would demonstrate 
 its lack of wisdom by experience without per- 
 
 132 
 
AND THE SUPREME COURT 
 
 haps doing much harm, except as it would 
 frighten capital and business men at a time 
 when business conditions are by no means sat- 
 isfactory. A change of the first two sections 
 of the existing statute would be most harmful, 
 however. The very value of the statute under 
 the view the Supreme Court has taken of it is 
 its general and widely inclusive language, which 
 embraces every form of scheme to suppress 
 competition and control prices and effect mo- 
 nopoly. What else does the legislator desire? 
 If the law interpreted by the Supreme Court 
 remains on the statute-book as it is, it will con- 
 tinue to free business from its real burdens. 
 
 THE END