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yet why Congress ever enacted the Miller-Tydings Act except under great pressure of special interest.

The CHAIRMAN. Would you care to comment on the insurance-moratorium bill, the so-called bill which is Public Law 15?

Mr. TOULMIN. There again you have a piecemeal attack upon the exemption to the antitrust laws. My suggestion to the committee is to consider whether it is wise for each industry to run into Congress and get an exemption as soon as it has been caught under the antitrust laws by a Supreme Court decision.

Insurance is too important to be treated in that manner. There again we have uncertainty, and when you have a conflict between the regulatory commissions, either railroads or insurance, I would suggest that the excuse for a moratorium-which is a temporary thing that you can review-but the excuse for such a special statute disappears when you stop to think that the antitrust laws are not laws that will interfere with the regulatory commissions, because the commissions, while they may set rates to control them, have no power over the combination of the various companies outside of the scope of the regulatory commissions.

There is a vast area of their operations that the regulatory commissions do not cover at all, and then you have got the practical case of having the commissions get to it. You have the practical case of not having a national policy because each State would have a different policy. You have the same thing in oil conservation.

The CHAIRMAN. I voted against Public Law 15, but the argument was made, you may remember, that after 60 years the Supreme Court had reversed itself and reversed the principle enunciated in the case of Paul against Virginia.


The CHAIRMAN. And held in the Southeastern Underwriters case that insurance was commerce, and, of course, that stunned those interested in insurance, and they clamored for some relief, and Congress granted them a moratorium to enable them to put their house in order, and to enable the various States to pass remedial legislation.

Now, the moratorium ended 2 years ago, and Congress has done nothing since to see

Mr. TOULMIN. That is right. That is my principal reason for appearing here that you have the opportunity now of making an overall overhauling of the antitrust laws, a completely new approach to them under modern conditions, and a reconciliation of the vast number of both Federal and State statutes, regulatory body statutes and others, of which a large number have grown up.

There are some States where you perform an act within that State, and you will have one penalty for the Federal law, and you will have another penalty for the State law-the same act. So that the situation is very confusing in the practical operation of business.

If we had one codified complete act that is very carefully drafted, as a document by which you could administer a business, and some means of determining your plan in advance, you would go a long way in getting the certainty that business wants to go to work with.

Mr. WILSON. Antitrust laws must, of necessity, be couched in very general language; must they not?

Mr. TOULMIN. No; I do not agree with that, sir.

Mr. WILSON. To apply to all businesses, all combinations? Mr. TOULMIN. No; I do not think that is necessary, but let me define why I differ-why we differ.

If you look at the antitrust laws, as they are now raised, without the Miller-Tydings amendment you have got them in such broad general terms that they were never able to enforce them until the Supreme Court in the Standard Oil case introduced the rule of reason.

Mr. WILSON. Well, of necessity it had to lay down certain standards taken from facts produced to show a combination in restraint of trade. Mr. TOULMIN. That is right.

Mr. WILSON. How could you set up that in so many words?

Mr. TOULMIN. I think you can set that up without difficulty. Let me go on now and take the rule of reason, which is a good example. The rule of reason has been challenged in recent Supreme Court cases. It has been whittled away.

Now, Congress in its good judgment, it would seem to me, should write into the statute something on the rule of reason. If the courts have already written it in, there is no harm to put it in, and it should be definitely in.

Does the rule of reason apply to a contest on patents in connection with the antitrust laws? The Supreme Court recently has indicated they think it does-one brief sentence or two.

Now, those are questions for determination. I think it can be drafted. In any event, as it is now, it is most difficult.

Mr. DENTON. Suppose a combination, an association, controls a patent, for instance, and they control a patent which they use for monopolistic purposes, to suppress competitors and to regulate prices and all that. Do you think there ought to be any relief against that? Is that not an abuse of the patent law?

Mr. TOULMIN. Well, that question ought to be decided by Congress. I agree with you, that ought to be decided by Congress. I am in full agreement with that.

Mr. DENTON. We have associations that pool their patents to suppress competition.

Mr. TOULMIN. I do not think, on the suppression of patents-that is an age-old controversy, but in my limited experience I have never seen any deliberate attempt to suppress patents. Maybe I have not been associated with the right people, but I have never seen that because most manufacturers are too eager to make a profit to ever suppress anything out of which they can make a nickel. Their self-interests usually take care of that, but there is this question, and it is a practical one: You may find that you can only embody in physical form one or two of your patents, although you need the others to prevent competition from using them in competitive commercial forms.

You could not afford to tool up for every patent you take out, but the patent has some other use than merely as a basis for your own manufacture. It frequently is a defensive patent, such as Ford takes out, or General Motors, to keep other people from monopolizing that particular idea and competing.

Now, that patent is being actively used in that condition although, I suppose, under some definitions they would say they were suppressing it. You have to get the definition of "suppression" first before you really can answer the question.

The CHAIRMAN. Well, Doctor, thank you very much.

I wish to state this: We would appreciate your continued assistance to the committee and, perhaps, you would be willing to place in concrete form some of these recommendations that you have made, which appear in your statement. They are generalizations, and we would like, if possible, to have them made for us specifically so that we can handle them in the nature of bills or resolutions.

Mr. TOULMIN. We will see what we can do, Mr. Chairman, with respect to submitting something to you.

The CHAIRMAN. Thank you.

The Chair would like to place in the record at this point excerpts from the decision of the Supreme Court in Allen Bradley Company v. Local No. 3 (325 U. S.), beginning at page 801, which depicts the history and the purpose of the Clayton Act provisions, with reference to labor, including the subsequent judicial interpretations. It is a very good extract to give in a brief way the history of the Supreme Court's attitude toward labor vis-à-vis the antitrust laws.

If there is no objection, the Chair would like to place it in the record, and it is as follows:

The Sherman Act as originally passed contained no language expressly exempting any labor union activities. Sharp controversy soon arose as to whether the act applied to unions. One viewpoint was that the only evil at which Congress had aimed was high consumer prices achieved through combinations looking to control of markets by powerful groups; that those who would have a great incentive for such combinations would be the businessmen who would be the direct beneficiaries of them; therefore, the argument proceeded, Congress drafted its law to apply only to business combinations, particularly the large trusts, and not to labor units or any of their activities as such. Involved in this viewpoint were the following contentions: That the Sherman Act is a law to regulate trade, not labor, a law to prescribe the rules governing barter and sale, and not the personal relations of employers and employees; that good wages and working conditions helped and did not hinder trade, even though increased labor costs might be reflected in the cost of products; that labor was not a commodity; that laborers had an inherent right to accept or terminate employment at their own will, either separately or in concert; that to enforce their claims for better wages and working conditions they had a right to refuse to buy goods from their employer or anybody else; that what they could do to aid their cause, they had a right to persuade others to do; and that the antitrust laws designed to regulate trading were unsuitable to regulate employer-employee relations and controversies. The claim was that the history of the legislation supported this line of argument.

The contrary viewpoint was that the act covered all classes of people and all types of combinations, including unions, if their activities even physically interrupted the free flow of trade or tended to create business monopolies, and that a combination of laborers to obtain a raise in wages was itself a prohibited monopoly. Federal courts adopted the latter view and soon applied the law to unions in a number of cases. Injunctions were used to enforce the act against unions. At the same time, employers invoked injunctions to restrain labor union activities even where no violation of the Sherman Act was charged.

Vigorous protests arose from employee groups. The unions urged congressional relief from what they considered to be two separate, but partially overlapping

For a comprehensive discussion of the history of the Sherman Act, see 51 Congressional Record, 13661-13668, 63d Cong., 2d sess. And see ibid., 13969-13971, 14013-14016, 14020-14023. See also Berman, Labor and the Sherman Act (1930), pp. 1-98; Mason. Organized Labor and the Law, chs. 7 and 8; Gompers, The Sherman Law. Amend It or End It. American Federationist, vol. 17, No. 3, March 1910, pp. 197, 202. For prior discussions in this Court of the dominant concern of Congress to protect consumers from business combinations, see United States v. Trans-Missouri Freight Assn. (166 U. S. 290): Standard Oil Co. v. United States (221 U. S. 1); Apex Hosiery Co. v. Leader (310 U. S. 469) United States v. Underwriters' Assn. (322 U. S. 533).

See note 3, supra. See also 51 Congressional Record 9068-9077; 9081-9091; United States v. Amalgamated Council (54 F. 994 (1893): Waterhouse v. Comer (55 F. 149 (1893)); United States v. Debs (64 F. 724 (1894); Loewe v. Lawlor (208 U. S. 274; 235 U. S. 522). And see appendix to Berman, op. cit., supra.

evils-application of the Sherman Act to unions, and issuance of injunctions against strikes, boycotts, and other labor union weapons. Numerous bills to curb injunctions were offered. Other proposed legislation was intended to take labor unions wholly outside any possible application of the Sherman Act. All of this is a part of the well-known history of the era between 1890 and 1914.5 To amend, supplement, and strengthen the Sherman Act against monopolistic business practices, and in response to the complaints of the unions against injunctions and application of the act to them, Congress in 1914 passed the Clayton act. Elimination of those "trade practices" which injuriously affected competition was its first objective. Each section of the measure prohibiting such trade practices contained language peculiarly appropriate to commercial transactions as distinguished from labor union activities, but there is no record indication in anything that was said or done in its passage which indicates that those engaged in business could escape its or the Sherman Act's prohibitions by obtaining the help of labor unions or others. That this bill was intended to make it all the more certain that competition should be the rule in all commercial transactions is clear from its language and history.


In its treatment of labor unions and their activities the Clayton Act pointed in an opposite direction. Congress in that act responded to the prolonged complaints concerning application of the Sherman law to labor groups by adopting section 6; for this purpose, and also drastically to restrict the general power of Federal courts to issue labor injunctions, section 2010 was adopted. Section 6 declared that labor was neither a commodity nor an article of commerce, and that the Sherman Act should not be "construed to forbid the existence and operation of labor, agricultural, or horticultural organizations, instituted for the purposes of mutual help * *." Section 20 limited the power of courts to issue injunctions in a case "involving or growing out of a labor dispute over terms or conditions of employment It declared that no restraining order or injunction should prohibit certain specified acts, and further declared that no one of these specified acts should be "held to be violations of any law of the United States." This act was broadly proclaimed by many as labor's Magna Carta, wholly exempting labor from any possible inclusion in the antitrust legislation; others, however, strongly denied this.



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This court later declined to interpret the Clayton Act as manifesting a congressional purpose wholly to exempt labor unions from the Sherman Act (Dupler Co. v. Deering (254 U. S. 443); Bedford Cut Stone Co. v. Journeymen Stone Cutters' Assn. (274 U. S. 37)). In those cases labor unions had engaged in a secondary boycott; they had boycotted dealers, by whom the union members were not employed, because those dealers insisted on selling goods produced by the employers with whom the unions had an existing controversy over terms and conditions of employment. This court held that the Clayton Act exempted laborunion activities only insofar as those activities were directed against the employees' immediate employers and that controversies over the sale of goods by other dealers did not constitute labor disputes within the meaning of the Clayton Act.

See authorities cited in footnotes 3 and 4, supra. And see Frankfurter and Greene, The Labor Injunction (1930); Berman, op. cit., supra, pp. 99-117. 6 38 Stat. 730.

S. Rept. No. 698, 63d Cong., 2d sess.

8 Ibid., 10-12.

Sec. 6 reads as follows: "That the labor of a human being is not a commodity or article of commerce. Nothing contained in the antitrust laws shall be construed to forbid the existence and operation of labor, agricultural, or horticultural organizations instituted for the purposes of mutual help, and not having capital stock or conducted for profit, or to forbid or restrain individual members of such organizations from lawfully carrying out the legitimate objects thereof; nor shall such organizations, or the members thereof. be held or construed to be illegal combinations or conspiracies in restraint of trade, under the antitrust laws."

10 Sec. 20 reads in part as follows: "And no such restraining order or injunction shall prohibit any person or persons, whether singly or in concert, from terminating any relation of employment, or from ceasing to perform any work or labor, or from recommending advising, or persuading others by peaceful means so to do; or from attending at any place where any such person or persons may lawfully be, for the purpose of peacefully obtaining or communicating information, or from peacefully persuading any person to work or to abstain from working; or from ceasing to patronize or to employ any party to such dispute, or from recommending, advising, or persuading others by peaceful and lawful means so to do; or from paying or giving to, or withholding from, any person engaged in such dispute any strike benefits or other moneys or things of value; or from peaceably assembling in a lawful manner, and for lawful purposes; or from doing any act or thing which might lawfully be done in the absence of such dispute by any party thereto; nor shall any of the acts specified in this paragraph be considered or held to be violations of any law of the United States."

Again the unions went to Congress. They protested against this court's interpretation, repeating the arguments they had made against application of the Sherman Act to them. Congress adopted their viewpoint, at least in large part and, in order to escape the effect of the Duplex and Bedford decisions," passed the Norris-LaGuardia Act (47 Stat. 70). That act greatly broadened the meaning the Court had attributed to the words "labor dispute," further restricted the use of injunctions in such a dispute, and emphasized the public importance under modern economic conditions of protecting the rights of employees to organize into unions and to engage in "concerted activities for the purpose of collective bargaining or other mutual aid and protection." This congressional purpose found further expression in the Wagner Act (49 Stat. 449).

We said in Apex Hosiery Co. v. Leader (supra, 488), that labor unions are still subject to the Sherman Act to "some extent not defined." The opinion in that case, however, went on to explain that the Sherman Act "was enacted in the era of trusts and of combinations of businesses and of capital organized and directed to control of the market by suppression of competition in the marketing of goods and services, the monopolistic tendency of which had become a matter of public concern"; that its purpose was to protect consumers from monopoly prices and not to serve as a comprehensive code to regulate and police all kinds and types of interruptions and obstructions to the flow of trade. This was a recognition of the fact that Congress had accepted the arguments made continuously since 1890 by groups opposing application of the Sherman Act to unions. It was an interpretation commanded by a fair consideration of the full history of antitrust and labor legislation.

United States v. Hutcheson (312 U. S. 219) declared that the Sherman, Clayton, and Norris-Laguardia Acts must be jointly considered in arriving at a conclusion as to whether labor-union activities run counter to the antitrust legislation. Conduct which they permit is not to be declared a violation of Federal law. That decision held that the doctrine of the Duplex and Bedford cases was inconsistent with the congressional policy set out in the three "interlacing statutes."

The result of all this is that we have two declared congressional policies which it is our responsibility to try to reconcile. The one seeks to preserve a competitive business economy; the other, to preserve the rights of labor to organize to better its conditions through the agency of collective bargaining. We must determine here how far Congress intended activities under one of these policies to neutralize the results envisioned by the other.

The CHAIRMAN. The Chair wishes to announce that the next witness will appear Monday morning at 10 o'clock, and he is Mr. Leroy Lincoln, president of the Metropolitan Life Insurance Co. He does state that he will take a plane from New York and, weather permitting, he will be here. Let us hope that the weather will be good.

If there are no further matters to come before the committee, the meeting will be adjourned.

(Whereupon, at 12:20 p. m., the committee adjourned, to reconvene at 10 a. m. Monday, August 1, 1949.)

11 Milk Wagon Drivers' Union v. Lake Valley Farm Products (311 U. S. 91); New Negro Alliance v. Sanitary Grocery Co. (303 U. S. 552).

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