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for the railroads. Mr. J. C. Carter argued for the Joint Traffic Association, the renowned Edward J. Phelps for the New York Central & Hudson River Railroad, and the Hon. George F. Edmunds, clarum et venerabile nomen, for the Pennsylvania Railroad Company. It is perhaps safe to say that no greater and more experienced lawyers ever appeared before an American court. The then Solicitor General appeared for the government. The court, after the most elaborate inquiry and careful consideration, reaffirmed its conclusions in the TransMissouri Case.
In Addyston Pipe & Steel Co. v. United States, 175 U. S. 240, 20 Sup. Ct. 96, 44 L. Ed. 136, this great statute against modern monopolies again came under review. There the ruling of the court below was made by Circuit Judge Taft. The case involved a combination to control the manufacture and sale and transportation of iron pipe. Said Justice Peckham for the court:
"While no particular contract regarding the furnishing of pipe or the price for which it was furnished was in the contemplation of the parties to the combination at the time of its formation, yet it was their intention, as it was the purpose of the combination, to directly and by means of such combination increase the price for which all contracts for the delivery of pipe within the territory above described should be made, and the latter result was to be achieved by abolishing all competition between the parties to the combination. The direct and immediate result of the combination was therefore necessarily a restraint upon interstate commerce in respect to articles manufactured by any of the parties to it to be transported beyond the state in which they were made. The defendants, by reason of the combination and agreement, could only send their goods out of the state in which they were manufactured for sale and delivery in another state upon the terms and pursuant to the provisions of such combination."
The court held that this was a combination in restraint of trade, and, to the extent to which interstate transactions were involved, the judgment of the court below was affirmed. On the constitutional question the court held that Congress may enact such legislation as shall declare void and prohibitive the provisions of any contract between individuals or corporations where the natural and direct effect of such contracts shall be, when carried out, directly, and not as a mere incident to other and innocent purposes, to affect to any extent interstate or foreign commerce. An association waso formed in California by the manufacturers and dealers in tiles, mantles, and grates. The dealers agreed not to purchase material from manufacturers who were not members of the association, and not to sell unset tile to nonmembers for less than list prices, which were 50 per cent. higher than prices to members, and all manufacturers who were residents of states other than California agreed not to sell to any one other than members. Vio-' lations of the agreement rendered the member subject to forfeiture of membership. Each member was required to carry $3,000 worth of stock. Whether applicants were to be admitted was a matter for the arbitrary decision of the association. A firm of dealers in tiles, mantels, and grates in San Francisco who had not sought or been asked to join the association, and did not carry $3,000 of its stock, brought an action to recover damages under paragraph 7 of the anti-trust act of July 2, 1890, namely, the act under consideration (26 Stat. 210 (U. S. Comp. St. 1901, p. 3202]). The court held that although the sales
of unset tiles were within the state of California, and although such sales constituted a very small portion of the contract involved, the agreement of the manufacturers without the state not to sell to any one but members was part of a scheme which included the enhancement of the price of the unset tile by the dealers within the state, and that the whole matter was so bound together that the transactions within the state were inseparable and became a part of a purpose which, when carried out, was a combination in restraint of interstate trade or commerce. They held furthermore that the association constituted and amounted to an agreement or combination in restraint of trade within the meaning of the act of July 2, 1890, and that the parties aggrieved were entitled to recover threefold damages found by the jury.
In the case of Swift Co. v. United States, printed in 196 U. S. 375, 25 Sup. Ct. 276, 49 L. Ed. 518, and decided January 30, 1905, the court gives its attention to combinations in restraint of trade among the dealers in fresh meat throughout the United States. It is aimed at what is called the "beef trust," and declares that a combination of a dominant proportion of the dealers in fresh meat throughout the United States not to bid against each other in the live stock markets of the different states, to bid up prices for a few days in order to induce shipments to the stockyards, to fix selling prices, and to that end to restrict shipments of meat when necessary, to establish a uniform rule of credit to dealers, and to keep a blacklist, to make uniform and improper charges for cartage, to secure less than lawful freight rates to the exclusion of competitors, with intent to monopoly, is an illegal combination within the meaning and prohibition of the act of July 2, 1890, and can be restrained and enjoined in an action by the United States. The court goes further and holds that it does not matter that the combination of this nature embraces a restraint and monopoly of trade within a single state, if it also embraces and is directed against commerce among the states. It, however, declared that the effect upon interstate commerce is direct and not incidental. It further holds that if a principal element of such a scheme were lawful, and the participants are bound by a common intent as part of the unlawful scheme to monopolize interstate commerce, the balance may make the parts unlawful. To illustrate, they hold that when cattle are sent for sale from a place in one state, with the expectation that they will end their transit, after purchase, in another, and when in effect they do so, with only the interruption necessary to find a purchaser at the stockyards, and when this is a typical, constantly recurring course, it constitutes interstate commerce, and the purchase of cattle is an incident of such commerce.
In the famous Northern Securities Co. Case, 193 U. S. 197, 24 Sup. Ct. 436, 48 L. Ed. 679, the following facts were developed: A holding corporation was formed called the “Northern Securities Company.” It became the custodian of more than nine-tenths of the stock of the Northern Pacific, and more than three-fourths of the stock of the Great Northern. These were competitive lines. The stockholders of the companies who delivered their stock received upon similar conditions shares of stock in the holding corporation. The court held that the constituent companies ceased under this arrangement to be in active competition for trade and commerce along their respective lines, and became practically one powerful, consolidated corporation by the name of the holding company, the principal, if not the sole, object of which was to carry out the purpose of the original combination under which competition between the constituent companies would cease. It was held to be an illegal combination in violation of the anti-trust law, and that it was within the power of the Circuit Court to enjoin the holding company from voting such stock and from exercising any control whatever over the acts and control of the railroad companies, and also to enjoin the railroad from paying any dividends to the holding corporation on any of their stock held by it. "If," said that renowned and venerable American jurist, Mr. Justice Harlan, ever insistent to protect the rights of those who cannot help themselves, “the anti-trust law is held not to embrace a case such as that now before us, the plain intention of the legislative branch of the government would be defeated. If Congress has not by the words used in the act described this and like cases, it would, we apprehend, be impossible to find words that would describe them.”
Cases of this general character have been and are of immense consequence to the American people. A large number of cases involving these principles are pending elsewhere in the United States. The law has been of force for 17 years. Its constitutionality has been settled in the great case of United States v. Joint Traffic Association, 171 U. S. 505, 19 Sup. Ct. 25, 43 L. Ed. 259. A large number of cases have been decided in which such combinations and trusts have been restrained because in violation of the law.
A case of this sort is Swift Co. and Others v. United States, already referred to. There a combination between individuals and corporations engaged in the business of purchasing live stock, converting it into fresh meat, and selling the products in interstate commerce, whereby competition both in purchasing live stock and the sale of the meat was suppressed, was declared unlawful by the Supreme Court of the United States.
The same result happened in the case of General Paper Company v. United States (U. S.) 26 Sup. Ct. 356, 50 L. Ed. 686; in United States against the Nome Retail Grocers' Association, in far Alaska; in the case of the United States against the Otis Elevator Company; in the United States against the Federal Salt Company. An indictment was also had against the salt company. Under the penal clauses of the law they were found guilty and sentenced to pay a fine of $1,000. A great many similar cases are now pending in the various states and territories. All these, and many others of equal or greater interest, appear in the latest report of the Attorney General to the Congress of the United States.
An illustration of the vital significance of this law may be found in the case of Tift et al. v. Southern Railway Co. et al. (recently decided by this court) 138 Fed. 753. There, as in the Trans-Missouri Case, it was in effect held that a combination to control the rates of a number of railroad companies, called the “Southeastern Tariff Association,” was a combination in restraint of trade. Pur:uant to the deliberations of that body, they had made an advance of 2
cents per 100 pounds on all lumber shipped from this section to Ohio river points and points beyond in car load lots. As this is a Georgia case, it will perhaps be justifiable to quote a brief extract from the opinion of the court:
"They have no right, to graduate their charges in proportion to the prosperity which comes to industries whose products they transport. With equal reason they might demand an increase of rates for the transportation of cotton with every increase in the value of our great staple. Indeed, to concede the principle for the fixation of rates upon which the railroads, through the medium of the Southeastern Freight Association, have acted in this case, would concede their power to levy for no better service auginentation of tolls for every increase of profit in every line of endeavor won by the enterprise, sagacity, and industry of the American people. It is superfluous to add that a government of law and not of men will never tolerate such domination and control of the trade, manufacture, and commerce of the American people. These views relate exclusively to the facts before the court in this case, as proven incontestably by the evidence, and as found by the Interstate Commerce Commission. Here is no attempt to discredit the incalculable services which are hourly rendered the country by the railways. In nothing do we share the animus or purposes of that sinister, selfish, and insincere agitation which would excite, if it could, the masses of the people to hatred and injustice toward corporations. Such a propaganda provokes in the justly balanced mind, and particularly in the mind trained for the administration of law and for the protection of property and personal rights, disapprobation, and, indeed, abhorrence.
"With sincere enthusiasm the judge of this court has elsewhere testifiedl to the wonderful material blessings bestowed upon our once prostrate Southland by our great railway systems. In 'economies of operation; in constant, if gradual, reduction of rates; in increased facilities and more expensive accommodations ; in more uniform service for longer distances without change of cars; in abolition of short, disjointed lines under different management; in augmentation of shipping facilities in physical perfection of the properties, and consequent safety to the public; in the steady increase in value of all the securities of these great highways of Southern commerce. And with what result?
“Where formerly asthmatic engines attached to unsafe and noisome trains, through the solitudes of an impoverisbed country, like a wounded snake dragged their slow length along, now we behold, on massive rails of gleaming steel, on roadbeds of granitic ballast, successive sections of long freight trains sturdily steaming through a prosperous land smiling with luxuriant crops, heautiful with neat and happy homes, the chimneys of great factories giving employment to thousands, almost marking the miles; or the admiration kindles and the pulse leaps as the limited express, laden with its human freight, glances by on its mission of progress and civilization.
"In nothing do we abate that enthusiastic approval of the services of the railways to the people, but not more than any other human agency is railroad management infallible.”
Can it be that such eulogium, earnestly spoken, will be made a travesty of the facts by a shortsighted, sinister, and criminal policy, which ignores rotting cross-ties and quivering roadbeds, which places the adolescent, the ignorant, the indifferent, and the underpaid at the telegraph key, which recks not the daily story of colliding or derailed trains, flaming engines, of murdered and mangled passengers, of brave engineers and trainmen, officials of every rank, crushed into bleeding shapes or burned to cinders-a policy whose shibboleth is that of "damned Iago”: “Put money in thy purse.” “Go, get money."
The patriotic and proper solution of every controversy, involving the vast questions of combination in restraint of trade, of trusts and
transportation, is simply the trial of each case on its particular facts, and with an eye single to the merits of the one party or the other. In interstate commerce this is exclusively a duty of the national tribunals, and the laws regulating such commerce are within the exclusive power of Congress, and within the control of a fearless and clear-eyed people who, as Emerson said, “whether James or Jonathan sits in the chair and holds the purse" with their common sense, will conserve the safety of our country.
The inquiry to which your attention will be directed, as I am officially informed, will not, like the Tift Case (known as the “Lumber Rate Case"), involve interstate and foreign commerce in lumber. I am informed by the district attorney that it will relate to the kindred products of turpentine and rosin, commonly known as "naval stores. These products are of immense value to the people of this and adjacent states. Nor does it appear, notwithstanding predictions to the contrary, that the great natural resources found in the pine forests of Georgia, Florida, and other southern states are about to disappear. It cannot be doubted that with judicious forestry laws and careful attention on the part of the people the pine forests will in a large measure regain their pristine vigor and value. The port of Savannah is believed to be the greatest port for the export and handling of naval stores in the world, and its people, like those of every state from North Carolina to Texas, and the consumers everywhere, should be deeply interested in your inquiry.
You will ascertain then, gentlemen, from the evidence, oral or otherwise, whether there are those who, within the jurisdiction of this court, have entered into contracts or combinations, in the form of trusts or otherwise, or conspiracies, in restraint of trade or commerce among the several states or with foreign nations. You will inquire whether there are those who have monopolized or attempted to monopolize, or combined or conspired with any person or persons to monopolize, any part of the trade or commerce among the states or with foreign nations. I charge you that the word "person" or "persons" in this connection imports corporations also. If you are the men the law presumes you to be, and which I am sure you are, you will permit nothing but the law, the evidence, and your consciences to control your action.
You will have other grave duties to perform, involving other laws enacted to protect and promote the business, welfare, and happiness and security of our people, in so far as that is within the jurisdiction intrusted to you. The assistant attorneys will be your legal advisers, and you can rely on their interpretation and construction of the law. The court will, on occasion, afford you any assistance in its power.
Grave as are the interests of the people intrusted to your care—for the government and the people are powerless in the lack of your duty well performed—to you the matter of gravest moment and most lasting import is the effect of your conduct, in the presence of these mighty issues of public law, upon the strength and elevation of character, conscience, and citizenship. I adjure you in familiar words, “Let all the ends thou aimest at be thy country's, thy God's, and truth's." To each grand juryman will I confidently say, "To thine own self be