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ment, with the resulting combination to enforce it, relates only to the production and manufacture of hand-blown window glass, and not directly to interstate commerce therein, but, if interstate commerce is affected or restrained thereby, such restraint is so indirect or incidental as not to be within the law; (2) that this wage agreement is a lawful means of carrying out the legitimate objects of a labor organization instituted for purposes of mutual help, and is therefore exempt from the provisions of the Sherman AntiTrust Law by section 6 of the Clayton Act (Comp. St. § 8835f), even though it may indirectly and incidentally curtail production or restrict interstate trade in hand-blown window glass; (3) that, even if this wage agreement and the resulting combination to enforce it do restrict interstate trade and curtail production of hand-blown window glass, such restrictions are not so unreasonable under all the circumstances of the case as to be illegal and within the law. The government asserts the contrary of all these [230] contentions and that an illegal agreement and combination is shown directly and necessarily restraining and intending to restrain interstate trade or commerce in hand-blown window glass.

Before considering the law relating to these several propositions, a brief statement of the facts is deemed necessary. The controlling facts are not in dispute. A wage committee, acting for and on behalf of the National Association of Window Glass Manufacturers, on or about September 16, 1922, entered into an agreement with a wage committee acting for and on behalf of the National Association of Window Glass Workers. This Association of Manufacturers comprises substantially all the makers and producers of hand-blown window glass. Their factories are located in various states of the Union, among others, Pennsylvania, West Virginia, Ohio, Indiana, Illinois, Kansas, Oklahoma, Arkansas, and Louisiana. The bulk of their product is sold and shipped in interstate commerce in the usual manner, and in large part through the Johnston Brokerage Company, tincipal office of which is at Pittsburgh, Pa. The Na1 Association of Window Glass Workers comprises all

Opinion of the Court.

the skilled workmen in the hand-blown window glass industry. This trade is highly skilled. It is undisputed that there are no skilled workmen other than members of this organization, and that no manufacturer who cannot obtain a wage scale from this association can operate his factory or produce hand-blown window glass. This is true, not merely because there are no other available workers, but because members of the Workers' Association will not work in any factory which has not been given a wage scale such as was agreed to by the respective wage committees of the two associations.

The wage agreement now in force, and agreed upon on or about September 16, 1922, contains the following provision of which the government complains, namely:

"This wage agreement shall be in effect from September 25, 1922, to January 27, 1923, during which period the scale shall be in full force for 16 weeks or 96 working days, and from January 29, 1923, to June 11, 1923, during which time the scale shall be in force for 18 weeks or 108 working days."

Thus it appears that the factories are required to operate upon what is called a two-period system. The manufacturers are divided into two groups, called group A and group B. All are required to sign this wage agreement and must operate subject to the time limitations thus imposed. When this agreement took effect, it is said there were 65 factories in existence equipped to make hand-blown window glass, but of this number 56 only expressed a purpose to operate during the ensuing year. The half classified in group A, having signed the agreement, were in a position to operate during the first period of 16 weeks, and the other half, after having signed the agreement, were in a position to operate during the second period of 18 weeks. The plan of operation thus contemplated is the one which has been and is being followed.

No operator is given a wage agreement permitting him to operate during both periods, unless he shall have two separate factories and should be willing to operate one only during the first period, and close it at the time he opens the other for operation during the second period. [231] No

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operator having only one plant has been furnished a wage agreement permitting him to operate continuously during both periods. All applications under this agreement, and, as the evidence shows, under prior agreements of like nature, for permission to operate continuously through two periods, have been denied, except with a few rare exceptions, depending on special circumstances. The testimony shows that a number of applications have been made by factories operating under the present agreement in the first period, for permission to continue to operate in the second period, and that all of them have been refused. The testimony also shows that in the preceding year, under a similar agreement, an operator who desired to equip a second factory, so that he might continue production during the second period, was compelled, before being given a wage scale, to build an entirely independent factory, and not merely an additional furnace and equipment, at a cost of $75,000.

It must therefore be found that the true purpose and intent of all parties concerned is and has been that one-half of the manufacturers of hand-blown window glass should operate, produce glass, and sell and distribute it only during the first period, from September 25, 1922, to January 27, 1923; that they should then close their several plants and keep them idle during the remainder of the year; that the other group should keep their plants idle and out of operation during the first period, and that they should then, at the beginning of the second period, open their plants and put them into production from January 29, 1923, to June 11, 1923, at which time they should again close down and keep their plants idle during the remainder of the year. That this result was to be effected by means of the present wage agreement and by the division of the manufacturers into two groups, neither operating at the same time, but only in successive periods, must also be held to be fully established by the evidence.

This organization of the industry into two periods began the year 1918. The circumstances leading up to this orization bear materially on the intent of the parties in ntinuing it. The two-period system owes its existence to

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the restrictions imposed by the United States government during the war upon nonessential industries, in order to conserve fuel and labor. An order was made in the latter part of 1917, limiting the production of hand-blown window glass during 1918 to one-half of that which had been produced in the preceding year. This reduced quantity was agreed upon in conference between representatives of the Manufacturers' and Workers' Associations, on the one hand, and the proper authorities of the United States government, on the other. The quantity agreed to as one-half the production for the preceding year was 1,263 boxes per shop or pot. At the time this conclusion was arrived at a number of factories were idle, owing to the scarcity of gas and other fuel, resulting from an exceptionally severe winter, and thereupon the factories then idle refrained from resuming operations until the others then in operation had produced their respective quotas. As a result of this enforced restriction on production, it was discovered by the representatives of the workers, if not of the manufacturers, that this two-period system of operation was beneficial and advantageous, and the industry has ever since [232] been operated in this way. Certain reasons are advanced which it is claimed show that production is not diminished nor prices enhanced, and that advantages both to the workers and manufacturers are secured without injury to the public, and these are relied on to show that the agreement and combination is not unreasonable nor illegal. The facts bearing thereon will be stated later.

Certain conclusions must be deduced from the foregoing facts. One half of the productive capacity of the handblown window glass industry agrees not to operate while the other half is in operation. This being true, the half which is to operate for the first period of 16 weeks must of necessity limit its total production and sale of hand-blown window glass to that quantity only which can be produced in a period of 16 weeks. The same is true of factories which agreed to operate only during the second period of eighteen weeks. The inherent and necessary result of this method of operation is to curtail production of hand-blown window

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glass. This is so obvious that testimony to prove it would not strengthen one's conviction. Testimony that it does not so result would not produce conviction, but would suggest that other causes were responsible for the limited production of previous years with which the comparison is made. Another result is that the first group of factories must in 16 weeks, and the second in 18 weeks, make enough profit to pay all expenses of operation and yield some return on the capital invested. If this result is not accomplished, then obviously all such factories must sooner or later go bankrupt. The inherent and inevitable tendency of this situation is to induce manufacturers to market this limited quantity at a price higher than would otherwise be required, if the output were larger. This tendency also is so inevitable that evidence to prove it is not required, and testimony to the contrary would produce no more conviction than would testimony that a contract to do work at cost plus 10 per cent. is more economical than competitive bidding between independent contractors.

Another conclusion seems to me inevitable, although vigorously disputed by defendants. Trade or commerce, as well as the manufacture and production of hand-blown window glass, must be held to be restrained, and it seems to me that interstate trade or commerce therein is necessarily and directly restrained and competition therein obstructed. As already said, the producing factories are widely distributed in different states; the greater part of each factory's product has been and ordinarily is sold and shipped in interstate commerce. The larger part of the total product is marketed through the Johnston Brokerage Company, with offices in Pittsburgh, Pa. The effects of the agreement and combination, as disclosed by the foregoing facts, affect directly trade throughout the entire country in this necessary product. The necessary and inevitable effect is to restrain directly, and not merely incidentally, that interstate trade or commerce. The considerations to the contrary urged by defendants to show that their acts relate directly only to manufacture will be stated later in connection with the third proposition of law relied on.