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Opinion of the Court.

orously to function according to letter and spirit of the agreement. It will suffice to state a few of the steps taken.

The United States were divided into eight zones for price quoting; and it was stipulated that each member should quote a basic price for zone number one and should add thereto one, two, four, six, seven, eight and eleven cents, respectively, for the others. At subscribers' meetings regularly held "matters pertaining to the industry" were discussed; members were "put on the carpet" and subjected to searching inquiry concerning their transactions. A meeting held October 29, 1919, adopted the following rule: "In order to provide that the daily market information as relayed by the bureau shall at all times contain the fullest measure of news value, it is agreed that hereafter no council member shall dispatch changes in his prices as last filed with the bureau to more than one buyer without instantly thereafter telegraphing such full and complete information to the bureau as, and in the form, required by the service contract." Another meeting "resolved that it now be recorded that the recommended terms of this council for the sale of oil be 1% discount for cash settlement in 10 days, or 30 days net trade acceptance from date of shipment, and in order that a specific list of the terms of sale of all the council members may now be compiled and distributed, it is further resolved that all council members shall send to the bureau, not later than January 27th, a full explanation of the terms of sale as quoted by them to their trade."

[387] The bureau displayed great industry in making inquiries, collecting information, investigating the smallest derelictions and giving immediate advice to subscribers. Hundreds of so-called "market letters," relating to divers transactions, were sent to subscribers. A sale of two barrels of oil below schedule was deemed worthy of special attention. Also from time to time it gave counsel concerning "unfair merchandising" and the necessity for establishing sound policy by constructive coöperation. The

Opinion of the Court.

following letters-224 and 245-dated February 5 and 12, 1919, are characteristic:

"Will all council members please reply promptly and fully through the bureau whether or not they made the sale in question to the following?

NEW YORK N. Y., Feb. 3, 1919.

ARMSTRONG BUREAU OF RELATED INDUSTRIES, Chicago.

GENTLEMEN : Our Chicago manager advises us that under date of February 1st the Enterprise Paint Mfg. informed him that they had bought 10 barrels linseed oil at less than $1.46 from another crusher in the Chicago territory. Will you kindly bulletin the subscribers with a view to finding out if any of the crushers sold this lot at under their published price?

Yours very truly,

AMERICAN LINSEED COMPANY."

"In the file of replies today completed, 11 subscribers state, in effect, that they have neither quoted nor sold the Enterprise Paint Mfg. Co. The sale was apparently made by subscriber No 6, whose letter follows:

MINNEAPOLIS, MINN., Feb. 6, 1919.

ARMSTRONG BUREAU OF RELATED INDUSTRIES, Chicago.

GENTLEMEN: Replying to your market letter No. 224, we sold Enterprise Paint Manufacturing Company on February 3rd five bar. rels of bleached linseed oil at $1.50 delivered their plant. This is our price in the Chicago market at the present time.

Yours truly,

MIDLAND LINSEED PRODUCTS CO."

The prices of oil became more stable.

[388] Defendants continued with meticulous care actively to carry out the several provisions of the agreement amongst them; and that they intended further to pursue the plan unless restrained is not denied.

The obvious policy, indeed the declared purpose, of the arrangement was to submerge the competition theretofore existing among the subscribers and substitute "intelligent competition," or "open competition "; to eliminate "unintelligent selfishness" and establish "100 per cent confidence"-all to the end that the members might "stand out from the crowd as substantial coworkers under modern co-operative business methods."

In American Column & Lumber Co. v. United States (257 U. S. 377), we considered a combination of manufac

Opinion of the Court.

turers got up to effectuate this new conception of confidence and competition and held it within the inhibition of the Sherman Act because of inevitable tendency to destroy real competition, as long understood, and thereby restrain trade. Our conclusion there cannot be reconciled with the somewhat earlier opinion and judgment of the court below. They are in direct conflict.

The Sherman Act was intended to secure equality of opportunity and to protect the public against evils commonly incident to monopolies and those abnormal contracts and combinations which tend directly to suppress the conflict for advantage called competition-the play of the contending forces ordinarily engendered by an honest desire for gain. "The statute did not forbid or restrain the power to make normal and useful contracts to further trade by resorting to all normal methods, whether by agreement or otherwise, to accomplish such purpose. * The words restraint of trade should be given a meaning which would not destroy the individual right to contract and render difficult if not impossible any movement of trade in the channels of interstate commerce-the free movement of which it was the purpose of the [389] statute to protect." United States v. American Tobacco Co. (221 U. S. 106, 179, 180); Ramsay Co. v. Associated Bill Posters (260 U. S. 501); Federal Trade Commission v. Sinclair Refining Co. (261 U. S. 463).

*

Certain it is that the defendants are associated in a new form of combination and are resorting to methods which are not normal. If, looking at the entire contract by which they are bound together, in the light of what has been done under it the Court can see that its necessary tendency is to suppress competition in trade between the States, the combination must be declared unlawful. That such is its tendency, we think, must be affirmed. To decide otherwise would be wholly inconsistent with the conclusion reached in American Column & Lumber Co. v. United States, supra.

The record discloses that defendants, large manufacturers and distributors-powerful factors in the trade-of commodities restricted by limited supplies of raw material (lin

Opinion of the Court.

seed), located at widely separated points and theretofore conducting independent enterprises along customary lines, suddenly became parties to an agreement which took away their freedom of action by requiring each to reveal to all the intimate details of its affairs. All subjected themselves to an autocratic Bureau, which became organizer and general manager, paid it large fees and deposited funds to insure their obedience. Each subscriber agreed to furnish a schedule of prices and terms and adhere thereto—unless more onerous ones were obtained-until prepared to give immediate notice of departure there from for relay by the Bureau. Each also agreed, under penalty of fine, to attend a monthly meeting and report upon matters of interest to be there discussed; to comply with all reasonable requirements of the Bureau; and to divulge no secrets.

With intimate knowledge of the affairs of other producers and obligated as stated, but proclaiming them[390] selves competitors, the subscribers went forth to deal with widely separated and unorganized customers necessarily ignorant of the true conditions. Obviously they were not bona fide competitors; their claim in that regard is at war with common experience and hardly compatible with fair dealing.

We are not called upon to say just when or how far competitors may reveal to each other the details of their affairs. In the absence of a purpose to monopolize or the compulsion that results from contract or agreement, the individual certainly may exercise great freedom; but concerted action through combination presents a wholly different problem and is forbidden when the necessary tendency is to destroy the kind of competition to which the public has long looked for protection. The situation here questioned is wholly unlike an exchange where dealers assemble and buy and sell openly; and the ordinary practice of reporting statistics to collectors stops far short of the practice which defendants adopted. Their manifest purpose was to defeat the Sherman Act without subjecting themselves to its penalties.

Counsel for Parties.

The challenged plan is unlawful and an injunction should go against it as prayed by the original bill. The cause will be remanded to the court below with instructions to issue such an injunction and promtly to take any further action necessary to carry this opinion into effect. Reversed.

UNITED STATES v. MOORE ET AL.

(District Court, S. D. New York.

October 27, 1920.)

[275 Fed. Rep., 992.]

MONOPOLIES 9-PAYMENT OF BROKERAGE FEES BY STEAMSHIP COMPANIES NOT INTERSTATE OR FOREIGN COMMERCE.-The payment by steamship companies of commissions or brokerage fees on shipments secured through freight brokers, who act as agents for shippers is not interstate or foreign commerce, and an indictment against steamship companies doing business through the port of New York and members of the Steamship Freight Brokers' Association charging a conspiracy in restraint of interstate and foreign commerce, based on an alleged agreement that the steamship companies will allow a brokerage fee only to members of the association, which is limited in numbers, but which does not allege that the steamship companies refuse shipments from any other broker or shipper, or that there is any agreement restraining competition in rates, held not to charge any offense under the Sherman Anti-Trust Act, § 3 (Comp. St. § 8822).@

Criminal prosecution by the United States against Walter Moore and others. On demurrer to indictment. Demurrer sustained.

Francis G. Caffey, U. S. Atty., of New York City (Henry A. Guiler and Rush H. Williamson, Sp. Assts. U. S. Atty., both of New York City, and Ryland W. Joyce, Sp. Asst. U. S. Atty., of Washington, D. C., of counsel), for the United States.

Burlingham, Veeder, Masten & Fearey, Bullowa & Bullowa, Kirlin, Woolsey, Campbell, Hickox & Keating, Coudert Bros., Duncan & Mount, Gilbert & Gilbert, Haight, Sandford, Smith & Griffin, Har- [993] rington, Bigham &

"Syllabus copyrighted, 1921, by West Publishing Co.

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