Legal rights of injured parties. The words "person" and "persons" defined. Ineffective for twenty years, the Sherman Act proves its strength in 1911. The American Tobacco Company ordered dissolved in 1911. Two posible reme demned by like proceedings as those provided by law for the forfeiture, seizure, and condemnation of property imported into the United States contrary to law. SEC. 7. Any person who shall be injured in his business or property by any other person or corporation, by reason of anything forbidden or declared to be unlawful by this act, may sue therefor in any circuit court of the United States in the district in which the defendant resides or is found, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee. SEC. 8. That the word "person" or "persons," wherever used in this act, shall be deemed to include corporations and associations existing under or authorized by the laws of either the United States, the laws of any of the territories, the laws of any state, or the laws of any foreign country. 161. A great trust ordered dissolved 1 The Sherman Act was designed to curb the illegal activities of the trusts, yet during the first twenty years of its existence, the act was largely a failure. Occasionally the law revealed elements of strength, but it was not until 1911 that it really proved to be an effective weapon against monopoly. In that year the Supreme Court of the United States ordered dissolved two of the greatest trusts in the country, the Standard Oil Company and the American Tobacco Company. In its decision in the case against the latter trust the Court concluded as follows: [In the disposal of this case,] we might at once resort to one or the other of two general remedies — (a) the allowance of a permanent injunction restraining the combination [and its constituent parts] from continuing to engage in interstate commerce until the illegal situation could be cured . . . or (b) to direct the appointment of a receiver to take charge of the assets and property in this country of the combination in all its the Supreme ramifications for the purpose of preventing a continued violation of the law, and thus working out by a sale of the property of the dies are rejected by Court. 1 From the Supreme Court of the United States, Decision in the case of The United States, v. The American Tobacco Company and others. 1911. combination or otherwise a condition of things which would not be repugnant to the prohibitions of the act. But having regard to the principles which we have said must control our action, we do not think we can now direct the immediate application of either of these remedies. We so consider as to the first because in view of the extent of the combination, the vast field which it covers, the all-embracing character of its activities concerning tobacco and its products, to at once stay the movement in interstate commerce of the products which the combination or its. coöperating forces produce or control might inflict infinite injury upon the public by leading to a stoppage of supply and a great enhancement of prices. The second, because the extensive power which would result from at once resorting to a receivership might not only do grievous injury to the public, but also cause widespread and perhaps irreparable loss to many innocent people. Reasons for rejecting these proposed reme dies. of the Under these circumstances, taking into mind the complexity of The decision the situation in all of its aspects, and giving weight to the manysided considerations which must control our judgment, we think, so far as the permanent relief to be awarded is concerned, we should decree as follows: First. That the combination in and of itself, as well as each and all of the elements composing it, whether corporate or individual, whether considered collectively or separately, be decreed to be in restraint of trade and an attempt to monopolize and a monopolization within the first and second sections of the anti-trust act. Second. That the court below, in order to give effective force to our decree in this regard, be directed to hear the parties . . . for the purpose of ascertaining and determining upon some plan or method of dissolving the combination and of re-creating, out of the elements now composing it, a new condition which shall be honestly in harmony with and not repugnant to the law. The American To bacco Com pany violates the act of 1890. The trust to be disreorganized solved and in accordance with law. within which this is to be accomplished. Third. That for the accomplishment of these purposes, taking Time period into view the difficulty of the situation, a period of six months is allowed from the receipt of our mandate, with leave, however, in the event, in the judgment of the court below, the necessities of the situation require, to extend such period to a further time not to exceed 60 days. The remedy in case dissolution does not take place within this period. Conclusion. Fourth. That in the event, before the expiration of the period thus fixed, a condition of disintegration in harmony with the law is not brought about, it shall be the duty of the court, either by way of an injunction restraining the movement of the products of the combination in the channels of interstate or foreign commerce, or by the appointment of a receiver, to give effect to the requirements of the statute. Pending the bringing about of the result just stated, each and all of the defendants, individuals as well as corporations, should be restrained from doing any act which might further extend or enlarge the power of the combination, by any means or device whatsoever. In view of the considerations we have stated, we leave the matter to the court below to work out a compliance with the law without unnecessary injury to the public or the rights of private property. . . . ... And it is so ordered. Additional anti-trust legislation in 1914. A Federal Trade Commission created. 162. Significance of the Federal Trade Commission 1 Notwithstanding the strength shown by the Sherman Act in effecting the dissolution of the Standard Oil Company and the American Tobacco Company in 1911, there continued to be agitation for additional legislation. It was thought that our anti-trust legislation should be more specific, and that it should deal more effectively with the early stages of monopoly. In the effort to secure these ends, Congress in 1914 passed two additional anti-trust laws, the Clayton law and the Federal Trade Commission law. Of these two acts, the latter is probably the more significant. The following are excerpts from the Federal Trade Commission Act: SEC. 1. Be it enacted by the Senate and the House of Representatives of the United States of America in Congress assembled, That a commission is hereby created and established, to be known as the Federal Trade Commission . . . which shall be composed of five commissioners, who shall be appointed by the President, by and with the advice and consent of the Senate. Not more than 1 From the Statutes of the United States, Federal Trade Commission Law, enacted, 1014. three of the commissioners shall be members of the same political . party. SEC. 5. ... The commission is hereby empowered and directed to prevent persons, partnerships, or corporations, except banks, and common carriers subject to the acts to regulate commerce, from using unfair methods of competition in commerce. It is empowered to prevent unfair methods of competi tion. before the Commission. Whenever the commission shall have reason to believe that any such person, partnership, or corporation has been or is using any un- Procedure fair method of competition in commerce, and if it shall appear to the commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue and serve upon such person, partnership, or corporation a complaint stating its charges in that respect, and containing a notice of a hearing upon a day and at a place therein fixed at least thirty days after the service of said complaint. The person, partnership, or corporation so complained of shall have the right to appear . . . and show cause why an order should not be entered by the commission requiring such person, partnership, or corporation to cease and desist from the violation of the law so charged. If upon such hearing the commission shall be of the opinion that the method of competition in question is prohibited by this act, it . . . shall issue and cause to be served on such person, partnership, or corporation an order requiring [them] to cease and desist from using such method of competition. . SEC. 6. That the commission shall also have power over corpo (a) To gather and compile information concerning, and to investi- Investigatgate from time to time the organization, business, conduct, practices, ing power and management of any corporation engaged in commerce, (except- rations. ing banks and common carriers subject to the act to regulate commerce), and its relation to other corporations and to individuals, associations, and partnerships. ... reports. (b) To require, by general or special orders, [such] corpora- Power to tions. to file with the commission in such form as the commis- require sion may prescribe annual or special, or both annual and special, reports or answers in writing to specific questions, furnishing to the commission such information as it may require as to the organization, business, conduct, practices, management, and relation to Power to investigate the carrying out of anti-trust decrees. Power to recommend readjustment of business. Power to make reports to Congress. other corporations, partnerships, and individuals of the [said] corporations. . ... (c) Whenever a final decree has been entered against any defendant corporation in any suit brought by the United States to prevent and restrain any violation of the anti-trust acts, to make investigation, upon its own initiative, of the manner in which the decree has been or is being carried out, and upon the application of the Attorney General it shall be its duty to make such investigation. (d) Upon the direction of the President or either house of Congress [the commission shall have power] to investigate and report the facts relating to any alleged violations of the anti-trust acts by any corporation. (e) Upon the application of the Attorney General [the commission shall have power] to investigate and make recommendations for the readjustment of the business of any corporation alleged to be violating the anti-trust acts in order that the corporation may thereafter maintain its organization, management, and conduct of business in accordance with law. (f) [The commission shall have the power] to make public from time to time such portions of the information obtained by it hereunder, except trade secrets and names of customers, as it shall deem expedient in the public interest; and to make annual and special reports to the Congress, and to submit therewith recommendations for additional legislation; and to provide for the publication of its reports and decisions in such form and manner as may be best adapted for public information and use. . Questions on the foregoing Readings 1. What is at present the dominant form of business organization? 2. At what time did Andrew Carnegie secure an interest in the business which later developed into the United States Steel Corporation? 3. What step toward integration was taken in the iron and steel business in 1881? 4. What was the amount of capital invested in the Carnegie Steel Company in 1892? 5. What were the circumstances which led to the formation of the United States Steel Corporation in 1901? |