swered by the statement that the particular contract was in truth obtained and not prevented. The parties to such a combination might realize more profit by the higher prices they would secure than they could earn by doing more work at a much less price. The question is as to the effect of such combination upon the trade in the article, and if that effect be to destroy competition and thus advance the price, the combination

is one in restraint of trade.

It is almost needless to add that we do not hold that every private enterprise which may be carried on chiefly or in part by means of interstate shipments is therefore to be regarded as so related to interstate commerce as to come within the regulating power of Congress. Such enterprises may be of the same nature as the manufacturing of refined sugar in the Knight Case - that is, the parties may be engaged as manufacturers of a commodity which they thereafter intend at some time to sell, and possibly to sell in another state; but such sale we have already held is an incident to and not the direct result of the manufacture, and so is not a regulation of or an illegal interference with interstate commerce. That principal is not af fected by anything herein decided.

The views above expressed lead generally to an affirmance of the judgment of the court of appeals.

OTHER EARLY CASES 1

HOPKINS V. UNITED STATES

(171 U. S. 578; Supreme Court, October 24, 1898; Opin., Peckham, J.)

This was a bill in equity, filed by direction of the AttorneyGeneral, against Hopkins and other members of the Kansas City Live Stock Exchange, to secure a dissolution of the exchange on the ground that its members were in a combination in restraint of commerce among the several states.

1 Reply of the Attorney-General to a communication from the Hon. George F. Hoar, Chairman of the Committee on the Judiciary of the United States Senate, Jan. 3, 1903.

It seems that this exchange was an association of men doing business at the stock yards in Kansas City, part of these yards being in Missouri and part in Kansas. The business of the members was to receive live stock shipped from other states, care for and sell the same, and account to the owners for the proceeds after deducting charges and expenses. Under the rules, members were prohibited from buying live stock from commission merchants in Kansas City not members of the exchange. The rules also fixed a commission, prohibited the employment of agents to solicit consignments except upon stipulated salary, and forbade the sending of prepaid telegrams or telephone messages with information as to the condition of the markets.

The Court held that the business conducted by the members of the exchange was not interstate, but local in character, and therefore decided the case against the government.

Page 588:

The sale or purchase of live stock as commission merchants at Kansas City is the business done, and its character is not altered because the larger proportion of the purchases and sales may be of live stock sent into the state from other states or from the territories. Where the stock came from or where it may ultimately go after a sale or purchase, procured through the services of one of the defendants at the Kansas City stock yards, is not the substantial factor in the case. The character of the business of defendants must, in this case, be determined by the facts occurring at that city.

If an owner of cattle in Nebraska accompanied them to Kansas City and there personally employed one of these defendants to sell the cattle at the stock yards for him on commission, could it be properly said that such defendant, in conducting the sale for his principal, was engaged in interstate commerce? Or that an agreement between himself and others not to render such services for less than a certain sum was a contract in restraint of interstate trade or commerce? We think not. On the contrary, we regard the services as collateral to such commerce and in the nature of a local aid or facility provided for the cattle owner toward the accomplishment of his purpose to sell them, and an agreement among those who render the services relating to the terms upon which they will render them is not a contract in restraint of interstate trade or commerce.

Page 590:

The selling of an article at its destination, which has been sent from another state, while it may be regarded as an interstate sale and one which the importer was entitled to make, yet the services of the individual employed at the place where the article is sold are not so connected with the subject sold as to make them a portion of interstate commerce, and a combination in regard to the amount to be charged for such service is not, therefore, a combination in restraint of that trade or commerce. Granting that the cattle themselves, because coming from another state, are articles of interstate commerce, yet it does not therefore follow that before their sale all persons performing services in any way connected with them are themselves engaged in that commerce, or that their agreements among each other relative to the compensation to be charged for their services are void as agreements made in restraint of interstate trade.

Page 592:

The contract condemned by the statute is one whose direct and immediate effect is a restraint upon that kind of trade or commerce which is interstate. Charges for such facilities as we have already mentioned are not a restraint upon that trade, although the total cost of marketing a subject thereof may be thereby increased. Charges for facilities furnished have been held not a regulation of commerce, even when made for services rendered or as compensation for benefits conferred.

ANDERSON v. UNITED STATES

(171 U. S. 604; Supreme Court, October 24, 1898; Opin., Peckham, J.)

This case was somewhat similar to the Hopkins case, being a bill in equity filed by direction of the Attorney-General against the members of the Traders' Live Stock Exchange of Kansas City to compel its dissolution. The main difference between this exchange and that involved in the Hopkins case was that while the members of the Traders' Exchange were purchasers of live stock on the market, the members of the Live Stock Exchange were only commission merchants who sold the live stock upon commission as a compensation for their services.

The rules of the exchange relied upon by the government as

restraining interstate commerce were those which forbade the recognition of any yard trader unless he was a member of the exchange, which required all the members of a partnership to be members of the exchange, which provided that no member of the exchange should employ any person to buy or sell cattle unless such person was a member of the exchange, and which prohibited the payment of any fee to any buyer or salesman for buying cattle from or selling cattle to such party.

Without passing upon the question whether the members of this exchange were or were not engaged in interstate commerce, the Court held that the rules objected to were of a character to enforce the purpose and object of the exchange, and viewed in that light were reasonable and fair. They could affect interstate trade or commerce in but a remote way, and therefore could not be regarded as in restraint of such trade or commerce. The Court (page 615) restated the rule that where the subject matter of the agreement does not directly relate to and act upon and embrace interstate commerce, and where the undisputed facts clearly show that the purpose of the agreement was not to regulate, obstruct, or restrain that commerce, but that it was entered into with the object of properly and fairly regulating the transaction of the business in which the parties to the agreement were engaged, such agreement would be upheld as not within the statute.

A few minor Supreme Court cases under the Harrison, Cleveland, and McKinley administrations may be dismissed even more briefly. The Greenhut proceedings of 1892 were directed against the Whisky Trust but proved abortive. The cash register combination [Chapter XVIII, infra] was indicted; but the case was allowed to lapse "because of reconciliation of complaining witness with defendants." In other words, the independents were merged with the combination. There were several labor decisions; such as the Debs cases which arose out of the great railway strike at Chicago in 1894. Several local coal dealers' associations were proceeded against. But except for the opinions outlined in this and the preceding chapter, they played no part in the unfolding of a public policy toward industrial monopoly. — ED.

XVII

DEFINITIVE ANTI-TRUST LAW INTERPRETATION

1901-1911

It would be futile, if not confusing, even to outline all of the Federal court decisions which during a decade led up to the great Standard Oil opinion of 1911. The great activity of the Federal Department of Justice under Presidents Roosevelt and Taft has already been described.1 All that need be done is to classify these decisions according to the nature of the defendants. For however positive in their repressive effects, none of these judgments contributed to any real development of the law. Even the Northern Securities case, aside from its bearing upon the device of the holding company and upon the constitutional question of states' rights, only disclosed the conflict of opinion as to the regulation of monopoly in the mind of the court. It is interesting, nevertheless, to group the numerous proceedings, even if they fail to mark any real turning points in legal construction.

2

The great staple monopolies are represented, aside from the petroleum, tobacco, steel, and harvester companies herein described in full, by repeated attacks upon the beef trust, the sugar refining combination and the gunpowder monopoly. The first beef prosecutions were directed against the Swifts in 1902, followed three years later by prosecutions against Armour & Co. It was in the latter that the issue really became one of procedure in obtaining evidence. For without competent witnesses, namely those really connected with the business, little progress was possible. The involved mass of technicalities led up to the "immunity bath" decision and statutes, which are primarily of importance to the specialist. As for the sugar trust, its fate still hangs in the balance. The explosives combination was attacked in 1907, and four years later was ordered dissolved by decree of the Supreme Court of the United States. The glucose combination in the person of the Corn Products Company is just now on trial for its life. Next in popular interest, probably, come the cases in transportation, already outlined in chapter XV as to railroads; the water carriers were dealt with by proceedings against agreements in the South American, Oriental and Alaskan carrying trades, against 1 P. 490, supra. 2 P. 491, supra.

3 Details in Ripley, Railroads: Rates and Regulation, p. 550.

An admirable account of this combination is in Quarterly Journal of Economics, Vol. XXVI, 1912, pp. 444–481, and of its dissolution in Idem, XXVII, 1912, p. 202 ff.