monthly calls on the other companies' stock subscriptions during a period when it was operating the newly acquired plant, it was "engaged in commerce," and potentially engaged in competition with the A Company, when the latter company's stock was acquired, within the meaning of Clayton Act, Par. 7 (Comp. St. Par. 8835g).

8. MONOPOLIES KEY NO. 20-CORPORATION TEMPORARILY SUSPENDING MANUFACTURE HELD NEVERTHELESS ENGAGED IN COMMERCE.

Where a corporation purchased a going business in the manufacture and sale of sheet aluminum, and engaged in such business, it did not cease to be engaged in commerce, within Clayton Act, Par. 7 (Comp. St. Par. 8835g), by temporarily suspending the rolling of sheets, while changing from an old mill to a

new one.

9. MONOPOLIES KEY NO. 20-MOTIVE OF ACQUISITION OF STOCK IN ANOTHER CORPORATION HELD IMMATERIAL.

Under Clayton Act, Par. 7 (Comp. St. Par. 8835g), the effect of a corporation's acquisition of stock in another corporation as substantially lessening competition, restraining commerce, or tending to create a monopoly, and not the motive for the transaction, is the question for the court, and it is immaterial that the object of the transaction was not to evade the statute, but to increase production and maintain reasonable prices.

(The syllabus is taken from 284 Fed. 401.)

Petition for Review from Federal Trade Commission. Petition by the Aluminum Company of America to review an order of the Federal Trade Commission. Order sustained.

George B. Gordon, S. G. Nolin, and Gordon & Smith, all of Pittsburgh, Pa., for petitioner.

Francis W. Treadway and Treadway & Marlatt, all of Cleveland, Ohio, for Cleveland Metal Products Co.

Edward L. Smith, Wm. H. Fuller, and Adrien F. Busick, all of Washington, D. C., for respondent.

Before Buffington, Woolley, and Davis, Circuit Judges, Buffington, J., dissenting.

WOOLLEY, Circuit Judge:

This is a petition of Aluminum Company of America for review of an order of the Federal Trade Commission commanding that corporation, on a finding that it had violated section 7 of the Clayton Act, 38 Stat. 730, to divest itself of all its stockholdings in the Aluminum Rolling Mills Company, another corporation.

The relevant facts, shortly stated, are these:

The Aluminum Company of America (to which we shall refer as the Aluminum Company) is the dominant

factor in the aluminum industry. Its business, and that of its subsidiaries, extends to the production and sale of crude or pig aluminum and of aluminum ingots; the production and sale of sheet aluminum rolled from ingots; and the manufacture and sale of articles fabricated from sheets.

During the time covered by this controversy the Aluminum Company produced one-half of the pig aluminum and aluminum ingots made in the world and all that was made in the United States. Its ingot output was 150,000,000 pounds a year. In the domestic field, one substantial competitor-the Southern Aluminum Company, of French affiliation, with a capital of $8,000,000-arose before the war; but during the war it succumbed to financial difficulties and its properties were purchased by the Aluminum Company.

Pig aluminum and aluminum ingots are used for two general purposes, namely; for casting articles and for rolling sheets. From aluminum sheets many things are made, among them kitchen utensils and automobile bodies. The Aluminum Company and its subsidiaries produce one-half of all the sheet aluminum made in the world and, prior to the war, they produced all of the sheet aluminum made in the United States.

In March, 1915, the Cleveland Metal Products Company-of which we shall have more to say presentlybuilt a mill for rolling sheet aluminum of a width of 60 inches and entered the trade in competition with the Aluminum Company, and its subsidiaries.

In 1916 the Bremer-Waltz Corporation became a competitor of the Aluminum Company and its subsidiaries in the manufacture of sheet aluminum 30 inches wide. In 1919 this concern sold a part of its physical assets, including its rolling mill, to the Aluminum Goods Manufacturing Company, of whose stock the Aluminum Company owns thirty-six per cent.

In 1916.the United States Smelting & Aluminum Company became a competitor of the Aluminum Company and its subsidiaries in sheet aluminum of the width of 30 inches.

Thus during the time in question the Aluminum Company had no domestic competitors in the manufacture of aluminum ingots and but three competitors in the manufacture of aluminum sheets, two of narrow sheets, and one of broad sheets, the difference in width of sheets being a factor in the breadth of the sheet market, for only broad sheets are used in the manufacture of automobile bodies.

Prior to 1913 there were two corporations doing business in the City of Cleveland, the Cleveland Metal Products Company and the Cleveland Foundry Company, which were owned by the same people. The Cleveland Metal Products Company (hereafter referred to as the Cleveland Company) was engaged in the manufacture of

enameled steel cooking utensils, and the Cleveland Foundry Company (hereafter dropping out of the case) was engaged in the manufacture of oil stoves with aluminum parts. These corporations were merged in January, 1917, under the name of the former.

In 1913 the Cleveland Company contemplated the extension of its steel cooking utensils business by adding aluminum cooking utensils. With this in view it took up the matter of rolling its own sheet aluminum from which to fabricate its cooking utensils and stove parts. Its first step was to investigate the sources of raw material. It knew that aluminum ingots could be purchased from the Aluminum Company, the sole domestic source. Its president, however, went abroad and found that aluminum ingots could be purchased in Europe. Being assured of an ingot supply from the foreign source, the president returned to America and, on his report, the Cleveland Company began the erection of a plant. This plant was completed in 1915 at a cost of $227,000. In order to roll sheets for its own use at a low cost, the mill was constructed on a scale larger tan the company's own needs. Its capacity was 250,000 pounds of sheet aluminum a month, of which later the company used twenty-seven per cent in the manufacture of its products and sold seventy-three per cent on the market. Recourse to the foreign market having been cut off by the war, the Cleveland Company obtained ingots from the Aluminum Company, the only available source. From sheets sold on the market (not from sheets used in its own business), the Cleveland Company earned net profits of $23,000 for the six months ending December 31, 1915; $219,000 for the year 1916; and $52,000 for the year 1917. Profits in these substantial amounts were due, it is explained, to several causes: One was that the demand for sheet aluminum arising from the war exceeded the supply; another, that the market price for sheets was fixed by extensive time contracts of the Aluminum Company at a point considerably below what the trade was willing to pay for spot deliveries, and that the Cleveland Company, declining to make time contracts, was able to sell its product at the higher figures.

When the United States entered the war and was about to fix the price of sheet aluminum (which it did in March, 1918), prices of the upper level began to recede toward those of the lower level, and the Cleveland Company found that the "spread" or difference between the cost price of ingots, fixed by the Aluminum Company, and the selling price of sheets likely to be fixed by the Government, was not sufficient to cover the cost of converting ingots into sheets. Therefore, with a market responding to this situation, the Cleveland Company incurred losses of $14,000 a month for the first two months of 1918, with a prospect of continuance. This condition of actual and

impending losses was made more acute by the fact that the Cleveland Company had outstanding a contract with the Aluminum Company for the purchase of ingots running into the future. The Cleveland Company asked the Aluminum Company to relieve it from its contract. The Aluminum Company declined. There followed interviews, discussions, negotiations between the officers of the two companies, and eventually the development of a plan to meet the difficulty. This plan contemplated the organization of a new corporation, to be known as " Aluminum Rolling Mills Company," and its capitalization at $1,000,000, of which $600,000 was to be issued; the sale by the Cleveland Company of its rolling mill and sheet business to the new corporation at a figure somewhat above the cost of the mill; subscription by the Cleveland Company for $200,000 and by the Aluminum Company for $400,000 of the capital stock of the new corporation; and the organization of the new corporation and the operation of the mill by the Aluminum Company. This plan was carried out with an assurance to the Cleveland Company that its needs for sheet aluminum would be cared for at market prices. This is the transaction which the Federal Trade Commission found to be violative of section 7 of the Clayton Act.

The findings of the commission were based solely on section 7 of the Clayton Act (hereafter referred to as "the section "). Hence, this is the only law involved in the case. The applicable provision of the section is as follows:

"SEC. 7. That no corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital of another corporation engaged also in commerce, where the effect of such acquisition may be to substantially lessen competition between the corporation whose stock is so acquired and the corporation making the acquisition, or to restrain such commerce in any section or community, or tend to create a monopoly of any line of commerce.

* *

The Aluminum Company, maintaining under recent decisions that it is for the courts, not for the commission, ultimately to determine, as matter of law, what acts "lessen competition," "restrain commerce," or "tend to create a monopoly " within the meaning of the section, Federal Trade Commission v. Gratz, 253 U. S. 421; Curtis Publishing Company v. Federal Trade Commission, 270 Fed. 881; Standard Oil Company v. Federal Trade Commission, 273 Fed. 478, challenges the commission's order on several grounds. All are based on the proposition of law, arising from the power of Congress to enact laws controlling interstate commerce, that before there can be a violation of the section both the corporation acquiring stock and the corporation whose stock is acquired must at the time be engaged in interstate commerce.

Taking up the events in the order of their occurence, the Aluminum Company's first contention is that this requirement of the section is not met by the phase of the transaction relating to the Cleveland Company because, although that corporation was engaged in interstate commerce, it was not the stock of that corporation which the Aluminum Company acquired. While this is literally true we can not thus summarily drop the Cleveland Company out of the case. The Cleveland Company was one of two actors in the transaction whose effect on trade the commission found violated the section. Therefore, we must inquire, as did the Aluminum Company in its briefs, into the effect of the transaction on commerce, not with reference to lessening of competition alone but with reference as well to its tendency to create monopoly.

Clearly, the object to which the section is directed is not the mere acquisition of stock of one corporation by another. It is the "effect" of such acquisition upon commerce. Our first inquiry, therefore, is whether in this case the effect was substantially to lessen competition between the two corporations. The Aluminum Company meets the issue of lessened competition as it bears on the two phases of the transaction, one between itself and the Cleveland Company and the other between itself and the Rolling Mills Company.

As between itself and the Cleveland Company, the Aluminum Company contends there never was competition during the three years the latter concern was rolling and selling sheets, because, it maintains, under the exceptional conditions arising from war, there was always a sellers' market; that is, a market where, as we understand it, sellers do not have to compete for trade, but where the trade competes for sellers' products. It is hard to believe that Congress intended that violations of section 7 of the Clayton Act should be determined according to market movements and that the section may be violated when stock acquisition is made on a buyers' market and not violated when a like acquisition is made. on a sellers' market. We are of opinion that the finding of the commission that there was competition between the Aluminum Company and the Cleveland Company during the period in controversy is supported by the testimony.

The next question is whether the testimony shows that this competition was substantially lessened by the stock acquisition which followed. As the transaction eliminated the Cleveland Company from the sheet trade, manifestly it put an end to competition between that corporation and the Aluminum Company and its subsidiaries. The "effect" of a transaction which ended competition between the Aluminum Company and its one competitor in the manufacture and sale of wide sheets and ended competition between it and one of only two