1 some minds much alarm. Many industries | tions of capital in any form. The general Undoubtedly it may be possible for a large aggregated capital to wield greater power in many ways than would be possible for the same amount distributed among many separate owners or managers, and the suspicion was entertained that such power was employed in controlling markets, and perhaps in controlling legislation, and it was also thought to be an instrumentality by which the unequal distribution of wealth was fos tered and increased. The disfavor thus excited was, as was natural, turned to polit!cal account. Those opposed to a protective tariff charged upon its advocates that they were favoring and stimulating trusts, and the latter felt the need of repelling the charge by doing something to show that they were the declared enemies of trusts. Under such circumstances it was quite natural that schemes of legislation aimed against these supposed public enemies should be started, and any opposition to them would naturally draw upon the authors of it the reproach that they were the friends, and perhaps the paid defenders, of these powerful interests. While, therefore, all, or nearly all, professed themselves in favor of repressive leg islation, the question what legislation could be contrived was a difficult one and suggested some difficult questions. How was a trust to be legally defined so that a prohibition of it should not include a prohibition of the exercise of the clearest constitutional rights? Congress surely could not prevent the creation of corporations under state laws, or limit the capacity of forming partnerships, or in any manner interfere with the internal business of states. And was it certain that these so-called trusts were in every instance necessarily mischievous? Indeed, sensible legislators for the most part understood very clearly that the things complained of were but the necessary incidents and consequences of the progress of industry and civilization, and could not be arrested without checking the advance of the nation and crippling it in the fierce competitions with other nations, and that any useful effort to remedy the supposed evils must be directed against the abuses of the power of aggregated capital, and not at the aggregations themselves. Under these circumstances Congress proceeded very cautiously, and enacted the only measure which seemed possible without passing the plainest constitutional limits. It did not attempt to define "trusts" or limit aggrega It cannot be said that Congress has done an unwise or imprudent thing, and that if calamity occurs the fault lies at its door. It has prohibited nothing but contracts and combinations to create restraints of trade and monopolies. These, when properly defined are, beyond question, public mischiefs and ought to be prohibited. If any useful thing becomes stricken down by the law, it must be the result of some erroneous interpretation. The first question we design to consider is whether the agreement violates any of the provisions of the act referred to. To this end it is of much importance to have in mind the particular nature of the subject with which this act deals, and how that subject has been heretofore treated in law and legislation. It is obvious that Congress conceived itself to be dealing with acts supposed to be productive of injury to the public, and of injury to such an extent as to justify repressive legislation. It is not contracts only of a certain character which are condemned, but they are coupled together with certain other acts, presumably of a similar nature or tendency,namely, combinations or conspiracies in restraint of trade, and monopolies, or combinations or conspiracies to monopolize. Contracts therefore are dealt with, not so much as contracts, but as one form of acts relat ing to trade and commerce, assumed to be injurious in their tendency and effect. That contracts of a certain class may be opposed to sound public policy has been reeognized in the law from a very early period. The grounds or reasons of policy on which they are held void or illegal are very numerous and varied, but a class embracing numerous instances is formed of such as are supposed to have an injurious effect upon trade or commerce; between these, however, there is quite a marked distinction observable in the way they are treated in the law. One description embraces simply ordinary business transactions, where the parties make agreements with each other for supposed mutual profit and advantage, a breach of which would result in pecuniary loss or damage to the one or the other, and a demand for redress. In such cases the parties expect and intend to enforce the contract, and look to the ordinary legal remedies as the means of enforcing it. Contracts whereby a business is sold and the seller covenants that he will not thereafter carry it on, or where a man takes an apprentice with an agreement that he will not set himself up in opposition to his master in trade, supply familiar examples of this character. Inasmuch as such contracts would not be entered into unless it was believed that the law would afford redress in case of a breach of them, the repressive purposes of the law, where they are supposed to be opposed to public policy, are, in general, fully satisfied by declaring them void and denying redress, and this is usually the extent of the notice which the law takes of them. There is no occasion for criminal legislation, both for the reason that there is not present, ordinarily, any criminal purpose, and, if there were, repression is sufficiently accomplished with out a resort to it. The doctrine respecting contracts of this character belongs, therefore, to the law of contracts. often called an agreenient, or contract; but in giving it this name we should not lose sight of its real character. In reality it is simply an act, and innocent or guilty according as the law may be inclined to regard it. It is manifest that where the law does regard it as mischievous, and to such a degree as to call for repression, it is not enough to simply declare it illegal. The practice may nevertheless be persisted in, and as it does not rely for its efficacy upon legal remedies, the mere withholding of such remedies may be ineffectual. The action, therefore, which the law usually takes in respect to such socalled contracts, is in the form of prohibition and penalty; and the subject belongs, not to the law of contracts, but to the crim inal law, where it is usually dealt with under the head of conspiracy. We do not mean by the above observations that there may not be instances which partake to a greater or less degree of the quali ties of both the classes above mentioned; but the distinction between them is so con stant and pervading that it will be at once recognized. As a conclusion to what is said we desire to point out that the legal doctrine and policy to which this Anti-Trust Act belongs is manifestly the one last described. The circumstance that contracts are grouped together with combinations and conspiracies, and made the subject of criminal treatment, shows this very plainly. But there is another and much smaller description of contracts supposed to be injurious to trade, of quite a different character. They are not, properly speaking, business transactions. They do not involve the sale, leasing, or exchange of property, or the hire of services; nor does a breach of them usually result in distinct and ascertainable pecuniary loss. They are not, indeed, entered into by parties in different interests, as in the case of buyer and seller, one of which expects to gain something from the other, but by parties in the same interest having in The inaptitude of some of the language of view an object for the common good of all; this legislation is quite apparent. Undoubt nor do the parties to them generally look to, edly the object of Congress was to reach that or rely upon, any legal remedies to secure class of supposed mischiefs which flow from obedience to them. They spring out of cir- combinations. But the great bulk of the cumstances which impress the parties to cases in which the courts have felt called upthem with the belief that they have a com- on to say anything about contracts in remon interest, or that it is expedient to cre- straint of trade has been the business transate a common interest among them, and seek actions first alluded to, in which an agree to control or regulate the conduct of each ment has been entered into not to exercise a other in relation to business. Instances of particular calling,-as, where the keeper of this description of agreement are found a well-patronized tavern sells out his estabwhere laborers or employers unite, in the lishment and goodwill, and covenants not to form of agreement, to regulate hours of labor further carry on the business. Such agreeor prices, or where merchants or tradesmen ments at the common law have been held combine to transact their business in certain valid or void according to the supposed reaprescribed ways, or to establish uniform sonableness of the covenant; but surely even prices for their goods, or to suppress or reg- when void, there was nothing about them ulate competition among themselves; or calling for the intervention of the criminal where a class of producers or dealers combine law. And yet this statute bunches the valid together to control a product or a business, and void all together, and makes them all with a view of imposing upon others their criminal, when probably there was not the own terms as to prices, or other incidents of remotest intention to make any of them the business. The marked distinction between these cases and the ordinary business transactions first spoken of is that in the latter there is a difference of interest, sometimes regarded as a hostility of interest, between the parties, each seeking to gain the utmost from the other; whereas in the former the parties are in the same interest, each seeking the same end. The term "contract" does not well express this sort of agreement. It is a uniting together for a common purpose,-a combination, or, when thought to be of an objectionable character, a conspiracy. Such unions always suppose agreement, but it need not be in writing; where it is in writing it is criminal. These observations, of course, fully admit that the particular agreement or combination against which this action is aimed would be, assuming that the act covers the contracts between railroad companies, obnoxious to the penalty imposed by the act, provided it were in fact in restraint of trade or commerce between the states. That it is in fact in restraint of trade or commerce must be shown before this action can be maintained, and this is the proper subject for discussion in this action. This question is broadly open and unaffected by any decision of this court, and we expect to show that the agreement is, not only not in restraint of trade and commerce, but highly beneficial to both; that Congress has never declared or intended to declare it criminal, and that it is deserving, not of judicial condemnation, but of judicial encouragement and approval. Unless the act is subject to the interpretation hereinafter maintained, it is open to grave objections on constitutional grounds, which will be dealt with by other counsel. The court has no jurisdiction to entertain this suit unless it can be found in the provision of some statute. The bill sets forth simply the commission of a misdemeanor, and an intention on the part of the defendants to repeat the offense. No principle of the public remedial law of America or England is more fundamental than that the ordinary administration of criminal justice by the ordinary courts of common law, is sufficient for the repression of crime, and exclusive adhesion to it necessary for the protection of the citizen. Courts of equity have no jurisdiction to restrain the commission of crime, or to enforce moral obligations and the performance of moral duties; nor will they interfere for the prevention of an illegal act merely because it is illegal. High, Injunc. § 20; Atty. Gen. v. Utica Ins. Co. 2 Johns. Ch. 371; Re Debs, 158 U. S. 564, 593, 39 L. ed. 1092, 1106. In the case at bar nothing whatever is alleged except the mere violation of the law and the intent to continue it. It is not alleged that such violation does, or will in fact, lead to the imposition of any unjust or unreason able charge for the carriage of merchandise, or any unjust discrimination, or in any way diminish or impair any facilities for carrying on interstate commerce. Indeed, the avowed and apparent purpose of the agree ment is to secure justice, equality, and improvement in interstate transportation; and this purpose stands admitted. All that is averred in the bill is that the method chosen to accomplish the purpose is prohibited by penal law. The Anti-Trust Act contained provisions purporting to create a jurisdiction in equity to give relief by way of injunction; and perhaps the decision made by this court in the suit of United States v. Trans-Missouri Freight Asso. should be regarded as a determination that the Attorney General was at liberty, in case of any violation of the provisions of the act, to file a bill for an injunction, although it would seem necessary, upon familiar principles, to make out a case for equitable interposition in order to justify an appeal to the equitable jurisdiction thus created. But so far as it is sought to maintain the present action on the basis of an alleged violation of the provisions of the Interstate Commerce Act, no support can be derived from the decision above referred to. No such jurisdiction in equity is given by that act. And by implication at least it is withheld for in certain cases specially mentioned in §§ 6 and 13 jurisdiction is express ly given to courts of equity to grant injunctions. If it is not given in other cases it must be taken to be for the reason that it was not intended. Expressio unius est exclusio alterius. A clear understanding should be had at the outset with the meaning of the terms with which we are dealing. The contracts condemned by the Anti-Trust Act are such, and such only, as have the effect of restraining trade or commerce. The actual effect which the contracts have upon trade or commerce is the material consideration which determines whether or not they are included within the class. This is self-evident. But the possible suggestion may be made that there is a class of contracts called or named "contracts in restraint of trade,” and that the statute relates to these irrespective of their real and true effect. There is no foundation for such a suggestion. There is no class of contracts known to the law by the name of contracts in restraint of trade irrespective of their actual effect upon trade. Whenever heretofore the point has been made in the case of a particular contract whether it was in restraint of trade, it has been determined by an inquiry into its actual effect upon trade. No suggestion would have been indulged that it was valid or void according as it might or might not be called a contract in restraint of trade. Moreover, we are dealing with the criminal law, which never classes acts and makes them punishable under arbitrary names without regard to their supposed effects, as being actually mischievous or otherwise. This would be putting innocence on a par with guilt. Doubtless there are certain contracts which readily come to mind where contracts in restraint of trade are spoken of, and which may therefore be taken as good examples of the class. They are such as directly purport and assume to restrain trade, and which consequently do, in some sense and degree at least, necessarily restrain it. Mitchel v. Reynolds, 1 P. Wms. 181; Davis v. Mason, 5 T. R. 118. Agreements for combinations among persons engaged in the same employment. to promote their supposed interests,-as, of laborers and employers, or merchants, or tradespeople, have rarely, if ever, been styled agreements in restraint of trade. There seems to be no room for doubt concerning the meaning of the term "in restraint of trade or commerce." To restrain is to hold back, to check, to prevent, and thus to diminish. It is the injury to trade or commerce which the act is aimed to prevent. Unless, therefore, a contract injures trade or commerce, it cannot be deemed as and thus diminishes, or tends to diminish, in restraint of trade or commerce. The agreement under which the Joint Traffic Association was formed, and the carrying out of which is sought to be enjoined, is not a contract in restraint of trade or commerce within the meaning of the act of July 2. 1890. It does not in terms purport or assume to restrain or limit trade or commerce. No one of the parties to it undertakes in any manner to refrain from doing business. In-ard particularly so much of it as affects deed, it evidently assumes that all the par- competition, is in the highest degree proties to it are to continue to do all the busi- motive of trade and commerce. ness which their facilities enable them to do, and to strive against each other for a larger share of the business in every way except one. It does, indeed, purport to restrain competition, although in a very slight degree and on a single point. That is one of its objects; and if competition and commerce were identical, being but different names for the same thing, then indeed, in assuming to restrain competition even so far, it would be assuming in a corresponding degree to restrain commerce; but surely no such identity will be pretended. Commerce is the interchange of commodities. Competition is one of its incidents only, and but an occasional incident. To identify a thing with one of its occasional incidents would be an error. It is conceivable that a restraint upon competition, although competition is but an occasional incident of commerce must still necessarily restrain the latter; but, however conceivable, it is by no means true. The contrary is often true; namely, that such restraint enlarges, increases, and benefits it. The charges of railroad transportation in the United States have been constantly diminishing, and they are now lower than in any country in the world; and it is probably true that the capital actually invested in railroads was at the time of the passage of the Anti-Trust Act receiving a smaller annual return than capital invested in any other business, notwithstanding the risk to capital invested in railroads is far greater than that which attends many other investments. The reason why railroads are greater sufferers than other industries from the destructive effects of free competition is that the latter have several defenses against it, while the former have but one. The only resort open to railroads to save themselves from the effects of a ruinous competition is that of agreement among themselves to check and control it. The history of railroad transportation proves that whenever a railroad depends for its support upon traffic upon which another railroad is in like manner dependent, and the competition thus engendered has continued for any considerable length of time, one competitor has either swallowed up the other, or, if both survive, it is under some modus vivendi established by agreement. Competition is, in general, a good thing: it is what is called "the life of trade;" and artificial efforts to repress it may have an injurious effect opposed to sound public policy; but to infer from this that it is so Suppose the case of several rival lines, all under all circumstances, or that it may not of them much-needed public facilities, and to be productive of the most extensive mis-support all of which there is a sufficient trafchief, is a conclusion of ignorance utterly refuted by the teachings of experience, and long since discarded by all enlightened minds. But it is worth while to employ a few words in pointing what the true and great benefit of competition is, and when it ceases to be beneficial and becomes the source of mischief. There is a point beyond which competition may not only cease to be beneficial, but may become exceedingly injurious, not only to private individuals, but to the public also. When prices have reached the point which places the profits of a particular industry on a level with the average profits of industries generally, the further prosecution of the struggle is likely to be injurious to the community, and the competition becomes destructive and deadly, precisely in proportion to the difficulty of disengaging the capital employed. A restraint upon competition does not of necessity restrain trade, but may even promote trade. If the restraint on competition effected by this agreement is necessarily in the eye of the law a bad thing in its effect upon trade, injuring and diminishing it, then, although trade is not in terms restrained by it, it is so in fact; and if, on the other hand, it is in the eye of the law beneficial to trade, or cannot be seen to be injurious (for the burden of proving its injurious tendency is upon the plaintiffs), it must be held to be unaffected by the statute. The agreement in question, as a whole, fic at fair rates. The competition between them waxes fiercer and fiercer until the point is reached where there is no profit for the road possessing the least natural advantages. Can a word be said in defense of the proposition that public policy requires that this competition should proceed until it ends in the successive destruction of the weaker parties and the consequent loss of most useful public facilities? From this we venture to draw the conclusion that competition is useful only where it is voluntary. Such a thing as competition made compulsory by law is utterly abhorrent to every principle of public policy. Freedom of contract is, in general, the best public policy. Some will always be found who will abuse freedom, and make contracts of a mischievous public tendency. These contracts should be declared illegal, and may justify penal enactments. The courts have a broad jurisdiction to inquire into and determine what contracts are and what are not in conflict with public policy. The extinction of competition by agreement has always been going on in the industrial world, and to the principal ways in which it is done no sound lawyers or thinkers have ever suggested any objection. An ideally perfect railroad service would be one in which a shipper was assured that he could deliver any amount, large or small, of merchandise at any point in the country, at any time, destined for any other point, and have it delivered at its destination in safety and with despatch at a price known beforehand, which would fairly reward the service and be no greater or less than that | found in abundance in the often-repeated exacted from others in similar circumstances. declarations of the Interstate Conimerce This would include the following requi- Commission. sites. (1) Uniformity in rates; (2) stability in rates; (3) equality in rates; (4) despatch and safety; (5) ease and convenience effected by classification and publicity; (6) reasonable rates. It is an assured fact that whenever men are engaged in performing different parts of the same work they will co-operate in it; that is, they will agree with each other to the end that the work of each may be as little troublesome and as effective as possible. Self-interest and benevolence here concur with each other; and it may with equal confidence be said that men will under these circumstances always agree unless they are somehow pre vented. With the progress of railroad extension the need of stability, equality, and uniformity of rates became increasingly and at last overwhelmingly apparent, and the lack of them equally so. Under competitive conditions this was impossible except when brought about by agreement. The present agreement was the effort of honorable men to enable themselves to carry on the most necessary of all businesses, without ruin to the property employed and without crime. The situation was unendurable and demanded an earnest effort to discover whether some agreement, other than pooling, could not be contrived which could be enforced and which would be effective. Whether the one actually devised will be effective if it is sustained cannot be absolutely affirmed. It has not yet been fully tried; but there is no objection to it of a legal na ture, which upon any principle heretofore declared, can be sustained. Its object is not in any way to create a monopoly or raise rates; not, in any degree, to suppress or check competition other than secret and illegal competition. It punishes no conduct except criminal conduct. It seeks no other end than to maintain and enforce the observance of the Interstate Commerce Law, and to secure the stability, uniformity, and equality which are the chief objects of that law. So far as respects all forms and modes of competition save one, the agreement saves and cherishes competition. The improvement of tracks and equipment, increase of facility, safety and despatch in the conduct of the service, are all encouraged. The more these qualities are exhibited by every line the larger traffic it gains, and all these increased rewards are its own. It is competition in rates only which is aimed at; and this is not forbidden directly or indirectly. A temporary adherence to agreed rates for a period not exceeding thirty days is made obligatory. If further illustration were needed of the magnitude of the mischiefs brought about by unrestrained competition, of the impossibility of checking or preventing them in any other way than by mutual understanding and agreement between the railway lines, of the efficacy of that method, and of the necessity for voluntary self-regulation through co-operative agreement and association, it will be Boston Chamber of Commerce v. Lake Shore & M. S. R. Co. 1 Inters. Com. Rep. 763; Report of the Interstate Commerce Commission (1887) 1 Inters. Com. Rep. 653, 667-669, 671; Re Passenger Tariff & Rate Wars, 2 Inters. Com. Rep. 341. When competition leads to the transportation of property below the actual cost, fairly computed, it ceases to be legitimate. Fair and reasonable competition is a public benefit; excessive and unreasonable competition is a public injury. Competition is to be regulated, not abolished. Re Southern R. & S. S. Co. (1887) 1 Inters. Com. Rep. 288. It is inevitable that the probability that any prescribed rates will be accepted by the public as just shall to some extent be affected by the fact that at some previous time they have been lower, perhaps considerably lower. Report of Interstate Commerce Commission, 1 Inters. Com. Rep. 671, 672; Re Chicago, St. P. & K. C. R. Co. 2 Inters. Com. Rep. 148. Every change in rates affects values; it disturbs trade and alters to some extent the value of contracts. Re Chicago, St. P. & K. C. R. Co. 2 Inters. Com. Rep. 149. Public good is best subserved when all the carriers which the needs of the country require are suffered to do business at a reasonable compensation. Second Annual Report of Interstate Commerce Commission, 2 Inters. Com. Rep. 256. If it is important to the public that a railroad once constructed should be maintained, the ability to make charges that will render its maintenance possible is also of public int portance. Id. 258. There is nothing in the existence of such arrangements which is at all inconsistent with earnest competition. But in order to form them great mutual concessions are often indispensable, and such concessions are likely to be made when relations are friendly, but not to be looked for when hostile relations have been inaugurated. Id. 263, 264. The practice of employing soliciting agents, and the somewhat kindred one of establishing transportation lines, Red, White, Blue, etc., is in a large degree fruitful in violations of the law, dishonest artifices, and wasteful expenditure. Re Underbillings, 1 Inters. Com. Rep. 817. This agreement is likely to be very efficient in its operation, for (1) it takes away the temptation to violate the law; (2) it binds the parties not to violate it, and mulets then in a severe penalty if they do violate it; and (3) it makes it to the interest of all except the guilty parties to detect and expose any violation, and thus bring it to punishment. Fourth Annual Report of Interstate Commerce Commission, 3 Inters. Com. Rep. 339, 340. |