tion in a war upon it. This is not all, how-surface and were not then apparent to those ever, for the agreement further provides that counsel.

the managers are to have power to organize The point not being raised and the decisuch joint freight and passenger agencies as sion of that case having proceeded upon an they may deem desirable, and if established they are to be so arranged as to give proper representation to each company, and no soliciting or contracting passenger or freight the constitutionality of the act it is now [565]agency can be maintained by any of the *companies, except with the approval of the man-straint of trade are not necessarily prejudi

agers. They are also charged with the duty
of securing to each company, party to the
agreement, equitable proportions of the com-
petitive traffic covered by the agreement, so
far as can be legally done. The natural, di-
rect, and necessary effect of all these various
provisions of the agreement is to prevent any
competition whatever between the parties to
it for the whole time of its existence. It is
probably as effective in that way as would
be a provision in the agreement prohibiting
in terms any competition whatever.

It is also said that the agreement in the
first case conferred upon the association an
unlimited power to fix rates in the first in-
stance, and that the authority was not con-
fined to reasonable rates, while in the case
now before us the agreement starts out with
rates fixed by each company for itself and
filed with the Interstate Commerce Commis-
sion, and which rates are alleged to be rea-
sonable. The distinction is unimportant.
It was considered in the other case that the
rates actually fixed upon were reasonable,
while the rates fixed upon in this case are
also admitted to be reasonable. By this
agreement the board of managers is in sub-
stance and as a result thereof placed in con-
trol of the business and rates of transporta-
tion, and its duty is to see to it that each
company charges the rates agreed upon and
receives its equitable proportion of the traf-

fic.

assumption of the validity of the act under either construction, it can, of course, constitute no authority upon this question. Upon earnestly contended that contracts in re

cial to the security or welfare of society, and
that Congress is without power to prohibit
generally all contracts in restraint of trade,
and the effort to do this invalidates the act
in question. It is urged that it is for the
court to decide whether the mere fact that
a contract or arrangement, whatever its pur-
pose or character, may restain trade in some
degree, renders it injurious or prejudicial to
the welfare or security of society, and if
the court be of opinion that such welfare or
security is not prejudiced by a contract of
that kind, then Congress has no power to pro-
hibit it, and the act must be declared uncon-
stitutional. It is claimed that the act can
lice power, and that the constitutional guar-
be supported only as an exercise of the po-
anties furnished by the Fifth Amendment
secure to all persons freedom in the pursuit
of their vocations and the use of their prop-
erty, and in making such contracts or ar-
rangements as may be necessary therefor.
In dwelling upon the far-reaching nature of
the Language used in the act as construed
in the case mentioned, counsel contend that
the extent to which it limits the freedom and
destroys the property of the individual can
scarcely be exaggerated, and that ordinary
contracts and combinations, which are at the
same time most indispensable, have the effect
of somewhat restraining trade and com-[567]
merce, although to a very slight extent, but
yet, under the construction adopted, they are
illegal.

The natural and direct effect of the two
agreements is the same, viz., to maintain
As examples of the kinds of contracts which
rates at a higher level than would other- are rendered illegal by this construction of
wise prevail, and the differences between the act, the learned counsel suggest all or-
them are not sufficiently important or mate-ganizations of mechanics engaged in the
rial to call for different judgments in the same business for the purpose of limiting
two cases on any such ground. Indeed, the number of persons employed in the busi-
counsel for one of the railroad companies on
this argument, in speaking of the agreement
in the Trans-Missouri case, says of it that
its terms, while substantially similar to
those of the agreement here, were less explic-
it in making it just and reasonable.

Regarding the two agreements as alike in their main and material features, we are brought to an examination of the question of the constitutionality of the act, construed [566]as it has been in the Trans-Missouri case. It is worthy of remark that this question was never raised or hinted at upon the argument of that case, although, if the respondents' presert contention be sound, it would have furnished a conclusive objection to the enforcement of the act as construed. The fact that not one of the many astute andable counsel for the transportation companies in that case raised an objection of so conclusive a character, if well founded, is strong evidence that the reasons showing the invalidity of the act as construed do not lie on the

ness, or of maintaining wages; the formation
of a corporation to carry on any particular
line of business by those already engaged
therein; a contract of partnership or of em-
ployment between two persons previously
engaged in the same line of business; the
appointment by two producers of the same
person to sell their goods on commission;
the purchase by one wholesale merchant of
the product of two producers; the lease or
purchase by a farmer, manufacturer, or mer-
chant of an additional farm, manufactory,
or shop; the withdrawal from business of
any farmer, merchant, or manufacturer; a
sale of the goodwill of a business with an
agreement not to destroy its value by engag-
ing in similar business; and a covenant in
a deed restricting the use of real estate. It
is added that the effect of most business con-
tracts or combinations is to restrain trade in
some degree.

This makes quite a formidable list. It
will be observed, however, that no contract

of the nature above described is now before | Congress, in the exercise of its right to regu-
the court, and there is some embarrassment late commerce among the several states, or
in assuming to decide herein just how far the otherwise, has the power to prohibit, as in
act goes in the direction claimed. Neverthe- restraint of interstate commerce, a contract[569]

less, we might say that the formation of cor-
porations for business or manufacturing pur-
poses has never, to our knowledge, been re-
garded in the nature of a contract in re-
straint of trade or commerce. The same may
be said of the contract of partnership. It
might also be difficult to show that the ap-
pointment by two or more producers of the
same person to sell their goods on commis-
sion was a matter in any degree in restraint
of trade.

or combination between competing railroad corporations entered into and formed for the purpose of establishing and maintaining interstate rates and fares for the transportation of freight and passengers on any of the railroads parties to the contract or combination, even though the rates and fares thus established are reasonable. Such an agreement directly affects and of course is intended to affect the cost of transportation of commodities, and commerce consists, among other things, of the transportation of commodities, and if such transportation be between states it is interstate commerce. The agreement affects interstate commerce by destroying competition and by maintaining rates above what competition might produce.

We are not aware that it has ever been claimed that a lease or purchase by a farmer, manufacturer, or merchant of an additional farm, manufactory, or shop, or the withdrawal from business of any farmer, merchant, or manufacturer, restrained commerce or trade within any legal definition of If it did not do that, its existence would be [568] that term; *and the sale of a goodwill of a useless, and it would soon be rescinded or business with an accompanying agreement abandoned. Its acknowledged purpose is to not to engage in a similar business was in- maintain rates, and, if executed, it does so. stanced in the Trans-Missouri case as a con- It must be remembered, however, that the act tract not within the meaning of the act; does not prohibit any railroad company from and it was said that such a contract was charging reasonable rates. If in the absence collateral to the main contract of sale, and of any contract or combination among the was entered into for the purpose of enhanc- railroad companies the rates and fares would ing the price at which the vendor sells his be less than they are under such contract or business. The instances cited by counsel combination, that is not by reason of any have in our judgment little or no bearing provision of the act which itself lowers rates, upon the question under consideration. In but only because the railroad companies

would, as it is urged, voluntarily and at once inaugurate a war of competition among themselves, and thereby themselves reduce their rates and fares.

Has not Congress with regard to interstate commerce and in the course of regulating it, in the case of railroad corporations, the

Hopkins v. United States [post, 290], decided
at this term, we have said that the statute
applies only to those contracts whose direct
and immediate effect is a restraint upon in-
terstate commerce, and that to treat the act
as condemning all agreements under which,
as a result, the cost of conducting an inter-
state commercial business may be increased, power to say that no contract or combina-
would enlarge the application of the act far tion shall be legal which shall restrain trade
beyond the fair meaning of the language and commerce by shutting out the operation
used. The effect upon interstate commerce of the general law of competition? We
must not be indirect or incidental only. An think it has.

As counsel for the Traffic Association has truly said, the ordinary highways on land have generally been established and maintained by the public. When the matter of the building of railroads as highways arose, a question was presented whether the state should itself build them or permit others to

agreement entered into for the purpose of
promoting the legitimate business of an in-
dividual or corporation, with no purpose to
thereby affect or restrain interstate com-
merce, and which does not directly restrain
such commerce, is not, as we think, covered
by the act, although the agreement may in-
directly and remotely affect that commerce. do it. The state did not build them, and as
We also repeat what is said in the case their building required, among other things,
above cited, that "the act of Congress must the appropriation of *land, private individ-[570]

have a reasonable construction, or else there
would scarcely be an agreement or contract
among business men that could not be said
to have, indirectly or remotely, some bear-
ing upon interstate commerce, and possibly
to restrain it." To suppose, as is assumed

uals could not enforce such appropriation without a grant from the state.

The building and operation of a railroad thus required a public franchise. The state would have had no power to grant the right of appropriation unless the use to which the

by counsel, that the effect of the decision in land was to be put was a public one. Taking
the Trans-Missouri case is to render illegal land for railroad purposes is a taking for a
most business contracts or combinations, public purpose, and the fact that it is taken
however indispensable and necessary they for a public purpose is the sole justification
may be, because, as they assert, they all re- for taking it at all. The business of a rail-
strain trade in some remote and indirect de- road carrier is of a public nature, and in
gree, is to make a most violent assumption, performing it the carrier is also performing
and one not called for or justified by the de-
cision mentioned, or by any other decision of
this court.

to a certain extent a function of government
which, as counsel observed, requires them to
perform the service upon equal terms to all.

The question really before us is whether This public service, that of transportation

of passengers and freight, is a part of trade|tion or in any of the amendments to that in

and commerce, and when transported be-
tween states such commerce becomes what is
described as interstate, and comes, to a cer-
tain extent, under the jurisdiction of Con-
gress by virtue of its power to regulate com-
merce among the several states.

Where the grantees of this public franchise
are competing railroad companies for inter-
state commerce, we think Congress is compe-
tent to forbid any agreement or combination
among them by means of which competition
is to be smothered.

strument. Monongahela Nav. Co. v. United
States, 148 U. S. 312-336 [37:463-471]; In-
terstate Commerce Commission v. Brimson,
154 U. S. 447-479 [38: 1047-1058, 4 Inters.
Com. Rep. 545].

Among those limitations and guaranties
counsel refer to those which provide that no
person shall be deprived of life, liberty, or
property without due process of law, and
that private property shall not be taken for
public use without just compensation. The
latter limitation is, we think, plainly irrele
vant.

Although the franchise when granted by the state becomes by the grant the property *As to the former, it is claimed that the [572] of the grantee, yet there are some regulations citizen is deprived of his liberty without due respecting the exercise of such grants which process of law when, by a general statute, he Congress may make under its power to regu- is arbitrarily deprived of the right to make late commerce among the several states. a contract of the nature herein involved. This will be conceded by all, the only quesThe case of Allgeyer v. Louisiana, 165 U. tion being as to the extent of the power. S. 578 [4]: 832], is cited as authority for the We think it extends at least to the prohi- statement concerning the right to contract. bition of contracts relating to interstate com- In speaking of the meaning of the word "libmerce, which would extinguish all competi- erty," as used in the Fourteenth Amendment tion between otherwise competing railroad to the Constitution, it was said in that case corporations, and which would in that way to include, among other things, the liberty restrain interstate trade or commerce. We of the citizen to pursue any livelihood or vodo not think that when the grantees of this public franchise are competing railroads seeking the business of transportation of men and goods from one state to another, that ordinary freedom of contract in the use and management of their property requires the

cation, and for that purpose to enter into all
contracts which might be proper, necessary,
and essential to his carrying out those ob-
jects to a successful conclusion.

We do not impugn the correctness of that
statement. The citizen may have the right
to make a proper (that is, a lawful) con-
tract, one which is also essential and neces-
sary for carrying out his lawful purposes.
The question which arises here is, whether
the contract is a proper or lawful one, and
we have not advanced a step towards its so-
lution by saying that the citizen is protected
by the Fifth, or any other amendment, in his
right to make proper contracts to enable
him to carry out his lawful purposes. We
presume it will not be contended that the
court meant, in stating the right of the citi
zen," to pursue any livelihood or vocation,"
to include every means of obtaining a liveli-

[571] right to combine as one consolidatd and
powerful association for the purpose of sti-
fling competition among themselves, and of
thus keeping their rates and charges higher
than they might otherwise be under the laws
of competition. And this is so, even though
the rates provided for in the agreement may
for the time be not more than are reasonable.
They may easily and at any time be in
creased. It is the combination of these large
and powerful corporations, covering vast sec-
tions of territory and influencing trade
throughout the whole extent thereof, and act-
ing as one body in all the matters over which
the combination extends, that constitutes the hood, whether it was lawful or otherwise. Pre-

cisely how far a legislature can go in declar

alleged evil, and in regard to which, so far
as the combination operates upon and re-ing a certain means of obtaining a livelihood

strains interstate commerce, Congress has power to legislate and to prohibit.

unlawful, it is unnecessary here to speak of.
It will be conceded it has power to make some
kinds of vocations and some methods of ob-
taining a livelihood unlawful, and in regard
to those the citizen would have no right to
contract to carry them on.

The prohibition of such contracts may in the judgment of Congress be one of the reasonable necessities for the proper regulation of commerce, and Congress is the judge of such necessity and propriety, unless, in case of a possible gross perversion of the principle, the courts might be applied to for re-ces and upon certain subjects. Frisbie v. lief.

The cases cited by the respondents' counsel in regard to the general constitutional right of the citizen to make contracts relating to his lawful business are not inconsistent with the existence of the power of Congress to prohibit contracts of the nature involved in this case. The power to regulate commerce has no limitation other than those prescribed in the Constitution. The power, however, does not carry with it the right to destroy or impair those limitations and guar

Congress may restrain individuals from making contracts under certain circumstanUnited States, 157 U. S. 160 [39:657].

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 the "legislation of [573] 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 ques

anties which are also placed in the Constitution is, for us, one of power only, and not of

policy. We think the power exists in Con- | the lower courts, led us to the most careful
gress, and that the statute is therefore valid. and scrutinizing examination of the argu-
Finally, we are asked to reconsider the ments advanced by both sides, and it was

question decided in the Trans-Missouri case,
and to retrace the steps taken therein, be-
cause of the plain error contained in that
decision and the widespread alarm with
which it was received and the serious conse-
quences which have resulted, or may soon
result, from the law as interpreted in that

case.

It is proper to remark that an application for a reconsideration of a question but lately decided by this court is usually based upon a statement that some of the arguments employed on the original hearing of the question have been overlooked or misunderstood, or that some controlling authority has been either misapplied by the court or passed over without discussion or notice. While this is not strictly an application for a rehearing in the same case, yet in substance it is the same thing. The court is asked to reconsider a question but just decided after a careful investigation of the matter involved. There have heretofore been in effect two arguments of precisely the same questions now before the court, and the same arguments were addressed to us on both those occasions. The report of the Trans-Missouri case shows a dissenting opinion delivered in that case, and that the opinion was concurred in by three other members of the court.

That opinion, it will be seen, gives with great force and ability the arguments against the decision which was finally arrived at by the court. It was after a full discussion of the questions involved, and with the knowledge of the views entertained by the minority as expressed in the dissenting opinion, that the majority of the court came to the conclusion it did. Soon after the decision a petition for a rehearing of the case was made, supported by a printed argument in its favor, and pressed with an earnestness and vigor and at a length which were certainly commensurate with the importance of the

case.

[574] *This court, with care and deliberation, and also with a full appreciation of their importance, again considered the questions involved in its former decision.

A majority of the court once more arrived at the conclusion it had first announced, and accordingly it denied the application. And now for the third time the same arguments are employed, and the court is again asked to recant its former opinion, and to decide the same question in direct opposition to the conclusion arrived at in the Trans-Missouri

case.

The learned counsel while making the application frankly confess that the argument in opposition to the decisionin the case above named has been so fully, so clearly, and so forcibly presented in the dissenting opinion of Mr. Justice White, that it is hardly possible to add to it nor is it necessary to repeat it. The fact that there was so close a division of opinion in this court when the matter was first under advisement, together with the different views taken by some of the judges of 171 U. S.

U. S., Book 43.

after such an examination that the majority
of the court came to the conclusion it did.

It is not now alleged that the court on the
former occasion overlooked any argument
for the respondents or misapplied any con-
trolling authority. It is simply insisted that
the court, notwithstanding the arguments
for an opposite view, arrived at an erroneous
result, which, for reasons already stated,
ought to be reconsidered and reversed.

As we have twice already, deliberately and earnestly, considered the same arguments which are now for a third time pressed upon our attention, it could hardly be expected that our opinion should now change from that already expressed.

While an erroneous decision might be in some cases properly reconsidered and overruled, yet it is clear that the first necessity is to convince the court that the decision was erroneous. It is scarcely to be assumed that such a result could be "secured by the [575] presentation for a third time of the same arguments which had twice before been unsuccessfully urged upon the attention of the court.

We have listened to them now because the eminence of the counsel engaged, their earnestness and zeal, their evident belief in the correctness of their position, and, most important of all, the very grave nature of the questions argued, called upon the court to again give to those arguments strict and respectful attention. It is not matter for surprise that we still are unable to see the error alleged to exist in our former decision or to change our opinion regarding the questions therein involved.

Upon the point that the agreement is not in fact one in restraint of trade, even though it did prevent competition, it must be admitted that the former argument has now been much enlarged and amplified, and a general and most masterly review of that question has been presented by counsel for the respondents. That this agreement does in fact prevent competition, and that it must have been so intended, we have already attempted to show. Whether stifling competition tends directly to restrain commerce in the case of naturally competing railroads, is a question upon which counsel have argued with very great ability. They acknowledge that this agreement purports to restrain competition, although, they say, in a very slight degree and on a single point. They admit that if competition and commerce were identical, being but different names for the same thing, then, in assuming to restrain competition even so far, it would be assuming in a corresponding degree to restrain

commerce. Counsel then add (and therein we entirely agree with them) that no such identity can be pretended, because it is plain that commerce can and does, take place on a large scale and in numerous forms without competition. The material considerations therefore turn upon the effects of competition upon the business of railroads, whether they are favorable to the commerce in which 19 289

tary action of the managers of the several 1. The business of buying and selling live stock