No piece of legislation can be understood, much less appreciated, except in the light of the circumstances attending its enactment.1 This is particularly true of the Sherman AntiTrust law as applied to transportation. Prior to 1887, industrial combination in the United States had scarcely passed the stage of incubation. Something was evidently doing within; but the outer shell had not yet been broken wide open. Certain combinations, notably the Standard Oil Company, had already, to be sure, grossly outraged public opinion. And it is indubitable that its offenses against commercial decency were among the causes contributing to the passage of the Act to Regulate Commerce in 1887.2 But the real outbreak of industrial combination over a wider field did not occur for some time thereafter. The later years of the decade of the '80s were associated with active investigation of industrial affairs with the tariff looming large in the background behind the issue of monopoly. A number of anti-trust laws were passed about this period, along with the far-reaching New Jersey statute of 1889, which empowered its corporations to hold stocks in other companies anywhere. It was undoubtedly the public feeling productive of these investigations and bits of state legislation, which also induced Congress to place the Sherman Act upon the statute books in 1890. This statute, succeeding the Act to Regulate Commerce after an interval of three years, seems to have been introduced primarily as a remedy for purely industrial evils, unassociated with railroading as such. For the Interstate Commerce Act was at the time regarded as adequate for dealing with the existing transportation abuses.

The Congressional history of the Sherman Act is important in its bearings upon the question as to the intent to bring common carriers within the prohibitions of the statute. As early as 1888 Senator Sherman of Ohio introduced a bill declaring all combinations, conspiracies and agreements in restraint of trade

1 From W. Z. Ripley, Railroads: Finance and Organization, pp. 549-574. Ripley, Railroads: Rates and Regulation, p. 445.

3 Most conveniently traceable in Bills and Debates in Congress Relating to Trusts, 57th Cong., 2d sess., Senate Doc. no. 157, I, 1903; Autobiography, by Hon. G. F. Hoar, vol. II, p. 362 et seq.

unlawful. This died in committee. An identical bill, except for the elimination of "conspiracy" and "restraint of trade" was reintroduced in the following year. The first decisive step was taken in 1890, when the Committee on Judiciary reported to the Senate, recommending that everything except the enacting clause in the latest Sherman bill should be stricken out, and that an entirely new measure drafted by Senator Hoar of Massachusetts be substituted. It was this bill which subsequently became the Sherman Act, so called as Senator Hoar somewhat tartly observes "only because Sherman had nothing whatever to do with it."

It is uncertain whether it was originally intended to include railroads under the Anti-Trust law. The indetermination of the Congressional mind is clearly brought out in the divided opinion of the Supreme Court of the United States in the Trans-Missouri Freight Association case.2 Five justices declared that it was "impossible to say what were the views of a majority of the members of each house," as well as "that the debates in Congress are not appropriate sources of information for this purpose." Not satisfied with this disposition of the matter, four justices in the dissenting opinion reviewed in detail the Congressional history of the bill. Evidence was found to their satisfaction that a determined effort was made, by means of amendments proposed, to include transportation contracts or agreements, but that the effort was unsuccessful. According to this interpretation there was no purpose to interfere with the Interstate Commerce Act. These dissidents, consequently, held that all activities of common carriers should be adjudged according to the provisions of the Act to Regulate Commerce of 1887 and not by the Sherman Act at all. It is rather significant in view of this closely divided opinion, that the statute has subsequently been so broadly applied to the common carriers of the country in the series of decisions henceforward to be reviewed.

The text of the Sherman Act 3" To protect trade and com

1 21 Cong. Record, pp. 2901 and 4089.

2 166 U. S. 317 and 359.

3 Reprinted in full, pp. 484, supra.

merce against unlawful restraints and monopolies" in the first section declares illegal:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations.

The second section turns from restraint of trade to monopoly.

Every person who shall monopolize, or attempt to monopolize, 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,

commits a misdemeanor, punishable by fine and imprisonment. By the third section of the Act, the same prohibitions are made applicable to the territories as well as to the states. The remaining clauses are unimportant for our purpose save, perhaps, the sixth which declares any prescribed property in the course of interstate transportation forfeit and defines the word "person" as including corporations. The law was indeed quite brief by comparison with the extended and elaborate Interstate Commerce Act.

As a background for the examination of the application of the Sherman Act to railroads, attention should be directed to the extreme unevenness with which that statute has been enforced by Federal executive authority. Only thus does it become apparent why combination among railroads was enabled to attain so considerable a momentum before the inhibitions of the Act were brought into play at all. The record of the different presidential administrations is illuminating. As Professor Seager observes, it will now scarcely be denied that three successive presidents and five successive attorneys-general were seriously remiss in their duty. Under the administration of President Harrison, to March, 1893, only four bills in equity were filed, and but three indictments were returned. The succeeding term of President Cleveland, to 1897, witnessed the same number of bills with only two indictments. The disappointing

1 Political Science Quarterly, vol. XXVI, 1911, p. 584. The pamphlet summary of Anti-Trust Decisions, published by the Department of Justice annually, contains the record.

outcome of the first prosecutions attempted probably accounts in a measure for this lack of interest; although the affirmed illegality of railroad pooling somewhat relieved the monotony. The low water mark of enforcement of the Anti-Trust law was touched under President McKinley, during the four years 1897-1901. The statute was practically a dead letter so far as either railroads or industrial combinations were concerned. The artillery of the Department of Justice was, to be sure, trained upon one petty live stock combination and certain agreements among local coal dealers. But the attention of the country seems to have been fixed rather upon sowing the seeds of monopoly than upon any attempt to prepare the soil for a more healthy industrial crop.

During this long dull period, while the existence of "teeth" in the Sherman Act was so wholly unsuspected, it is not surprising that its judicial interpretation as applied to railroads occurred only in connection with pooling. As a matter of fact the great railroad combination movement did not get under way until somewhat later. Hence the distinction of applying almost the first test was reserved for the Trans-Missouri Freight Association in 1897.1 The structure and functioning of organizations of this sort will be considered in the next chapter; but, inasmuch as this first railroad decision really turned upon the question of monopoly rather than of pooling per se as defined in the Act of 1887, its legality may be considered as a thing quite separate and apart from its economic serviceableness. particularly true since the latest turn of interpretation, awaiting our analysis, which holds that legality is to be adjudged in the light of reason and not according to any absolute and arbitrary standard. As for the Trans-Missouri Freight Association proceedings, both of the lower Federal courts held that the Sherman Act had not been violated; and the Supreme Court decision, reversing these judgments, was, as we have already seen, rendered by a bare majority, four justices out of nine dissenting. The first aspect of the matter, namely as to whether the Anti-Trust law comprehended common carriers by rail, has

This is

1 166 U. S. 290; reprinted as 55th Cong., 1st sess., Senate Doc. no. 12; cf. also Harvard Law Review, Vol. XI, 1897, pp. 80–94.

already been touched upon; especially the strong dissenting view that in the absence of a definite application of the AntiTrust law to railroads, inasmuch as the statute was expressed in general terms while the Act to Regulate Commerce antedating it by three years was specific, the latter exempted the carriers entirely from the drastic prohibitions against monopolistic combination.

The second judicial construction of the Sherman Act for common carriers within a few months reënforced the first. The Joint Traffic Association, an agreement entered into in 1895 by thirty-two railroads operating east of Chicago, was declared unlawful in 1898.1 This pool was attacked not only as violating the Anti-Trust law, as in the Trans-Missouri case, but also as being contrary to the Act to Regulate Commerce. An attempt was made to distinguish between this and the Trans-Missouri Freight Association case, on the ground that the latter association actually conferred power to fix rates, whereas the Joint Traffic Association merely provided for the adoption jointly of such rates as were in force. Both of the lower Federal courts once more held that such agreements were not repugnant to the provisions of the Interstate Commerce Act. But the force of the argument in the Supreme Court was directed entirely to the interpretation of the Anti-Trust law; and it was finally decided, as in the preceding case, that the agreement was in contravention of that statute.

Between the pooling decisions in 1897 and the suggested reorganization of the St. Louis Terminal Company fifteen years thereafter, despite the extraordinary activity in the field of railroad consolidation described in the preceding chapters, the Supreme Court only once passed upon the validity of attempts to substitute monopoly for competition in railroading. The one interrupting opinion is of great importance; but, before proceeding to its examination, it may not be out of place to inquire still further as to the reasons for the prolonged judicial quiescence. It is the more striking in view of the new life infused into the Sherman Act under the administration of President Roosevelt in 1901-1909. No fewer than twenty-five indictments and

1 171 U. S. 505.