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Justice Harlan alone dissented, holding that "the object in purchasing the Philadelphia refineries was to obtain a greater influence or more perfect control over the business of refining and selling sugar in this country, "* and that Federal authority should therefore be asserted over it since its monopoly, achieved by these purchases, gave it power to control, throughout the country, the price of a life necessity.
The effect of the Knight decision was to shatter the popular belief that the great industrial combinations were to be destroyed or controlled under the Sherman Act. The decision seemed to leave all control of manufacturing enterprises to the individual states.
The next important decision by the Supreme Court, under the Sherman Act, was in the Trans-Missouri Freight Association case,† in which the Government filed suit to enjoin certain railroads on the ground that their rate-fixing agreement violated the Trust Act. Eighteen railroads had contracted to fix rates, by agreement, for all traffic west of the Missouri River. The original bill, filed in the Circuit Court of the District of Kansas, November 28, 1892, asked for the dissolution of the association and for an injunction to restrain the several companies from carrying into effect the agreement. This bill was dismissed by the Circuit Court, whose ruling was affirmed by the Circuit Court of Appeals, but was reversed by the Supreme Court.
The railroads claimed: (1) That Congress did not intend the Trust Act to apply to railroads because the
*156 U. S. 18.
+United States v. Trans-Missouri Freight Association. 53 Fed. 440; 58 Fed. 58; 166 U. S. 290.
Inter-State Commerce Act impliedly gave railroads the right to fix rates. (2) That the Trust Act did not apply to reasonable restraint of trade and that their rate-agreement provided for reasonable restraint of trade.
Mr. Justice Peckham delivered the opinion of the divided court, representing five justices. This majority opinion held: (1) That the Commerce Act and the Trust Act are consistent with each other and therefore the Trust Act applies to railroads just as if there were no Commerce Act. (2) That the Trust Act says every contract is in restraint of trade. Therefore, the courts have no right to confine the scope of the Act to contracts in unreasonable restraint of trade. It includes all contracts in restraint of trade whether reasonable or unreasonable. (3) That the agreement, therefore, violated the Trust Act and an injunction was proper, and that the case should be remanded to the Circuit Court for further proceedings in conformity with this opinion.
Covering the first of the above points in the opinion, and relating this case to the Knight case, Justice Peckham said, in part:
"An Act which prohibits the making of every contract, etc., in restraint of trade or commerce among the several states, would seem to cover by such language a contract between competing railroads, and relating to traffic rates for the transportation of articles of commerce between the states, provided such contract by its direct effect produces a restraint of trade and commerce. What amounts to a restraint within the meaning of the act, if thus construed, need not now be discussed.
"We have held that the Trust Act did not apply to a company engaged in one state in the refining of sugar under the circumstances detailed in the case of the United States v. E. C. Knight Company, 156 U. S. 1, because the refining of sugar under those circumstances bore no distinct relation to commerce between the states
and with foreign nations. To exclude agreements as to rates by competing railroads for the transportation of articles of commerce between the states would leave little for the Act to take effect upon. We think, after careful examination, that the Statute covers, and intended to cover, common carriers by railroad."*
The railroads further contended that, since the Sherman Act was entitled "an Act to protect trade and commerce against unlawful restraints and monopolies," it meant those restraints which the common law regarded as unlawful, that is, only unreasonable restraints of trade. In reply to this Justice Peckham said: "We are of the opinion that the language used in the title refers to and includes and was intended to include those restraints and monopolies which are made unlawful in the body of the statute. It is to the statute itself that resort must be had to learn the meaning thereof the plain and ordinary meaning of such language is not limited to that kind of contract alone which is in unreasonable restraint of trade, but all contracts are included in such language, and no exception or limitation can be added without placing in the act that which has been omitted by Congress.
If the act ought to read as contended for by the defendants, Congress is the body to amend it and not this
*166 U. S. 313, 326, 327.
court, by a process of judicial legislation, wholly unjustifiable.”*
Justices White, Field, Gray, and Shiras dissented from this opinion, holding as the leading theme of an elaborate argument that Congress must have meant to forbid only such agreements as were in unreasonable restraint of interstate trade. This part of the dissenting opinion was destined, fourteen years later, to become the central proposition of the court opinion in the famous Oil and Tobacco cases. But for the time being, although the court was nearly evenly divided, the majority opinion determined the meaning of the anti-trust law for the nation and this majority opinion reaffirmed the Knight case distinction, asserted the application of the Trust Act to railways, and held that the act forbade all agreements, reasonable or unreasonable, which restrain interstate trade.
In the Joint Traffic Association case* the decision 3 by the Supreme Court, October 24, 1898, again by a divided vote, reaffirmed the Trans-Missouri case decision and held that this agreement of thirty-one railroads engaged in transportation between Chicago and the Atlantic coast to determine what rates should be charged and what portion of the business each company should do, was in violation of the Sherman Act because it affected interstate commerce by destroying competition.
The constitutionality of the Sherman Act as construed in the Trans-Missouri case was attacked in this case, the railroads alleging that it deprived the
*166 U. S. 327, 328, 340.
†United States v. Joint Traffic Association, 76 Fed. 895; 89 Fed. 1020; 171 U. S. 505.
citizen of the liberty guaranteed him by the fifth amendment to the Constitution. Summarizing the court's opinion as to the constitutional issue, Justice Peckham said:
"Notwithstanding the general liberty of contract which is possessed by the citizen under the Constitution, we find that there are many kinds of contracts which, while not in themselves immoral or mala in se, may yet be prohibited by legislation of the states, or, in certain cases, by Congress. The question comes back whether the statute under review is a legitimate exercise of the power of Congress over interstate commerce and a valid regulation thereof. The question is, for us, one of power only, and not one of policy. We think the power exists in Congress, and that the statute is therefore valid."*
The Addyston Pipe case,† decided by the Supreme Court, December 4, 1899, further affirmed the Knight case by emphasis of the contrast between the two. In this Pipe case the defendants were six corporations manufacturing cast iron pipe which they sold throughout thirty-six states. They formed an association whereby they agreed not to compete with one another. The plan was that a committee, consisting of a representative from each corporation, set the price for each job. The corporation which would give the largest bonus for the job got it, the others putting in higher bids to make an apparent competition.
The undivided opinion of the court in this case was that the arrangement eliminated all competition and was therefore clearly in violation of the anti-trust
*171 U. S., 572, 573.
†Addyston Pipe and Steel Company v. United States. 175 U. S. 211, see also 78 Fed. 712, 85 Fed. 271.