« ForrigeFortsett »
dently did not intend to impose, the distinct with the law that each company should have barriers of the law between the powers of its an equitable proportion of the traffic. What rate board and the people and any one of the does equitable niean? It means that which roads concerned. It did not profess to look right and justice and the public interest reto any other interest than the exclusive in. quire. What did justice and public policy terest of the parties then selves; and it will require? And what does it still require in be seen, on a careful study of it, that it was respect of the nine great lines connecting the construed and constructed for the sole pur: western lakes and the valley of the Missispose of keeping and increasing rates, instead sippi and the whole continent beyond with of for the purpose of (as in the Joint Traffic the Atlantic seaboard? Was it not just and Association) of keeping them just and in necessary to public interest that each one of conformity with law, whether by reduction, these roads passing through great extents of increase, or other readjustment.
country, and having along them populations Other essential differences are stated in and interests to whose welfare the existence of my brief, which I need not take the time of each one of these roads was necessary, should the court to enlarge upon.
be considered with reference to the through These differences are illustrated by what traffic which should come from beyond ? The the pleadings in the two cases show. In our question answers itself. It is obvious, then, case, the practical operation of the agree that just so far as each road should be enament has been to continue the same compe-bled to carry the through traffic that naturtition that existed before. This is admitted. ally belonged to it, by just so far the people It has been to continue the same just and along the whole length of its line would be reasonable rates previously established, and benefited by increasing the income of the line, to give a co-operative and advantageous serv. and thereby contributing to its support and ice upon equal terms to everybody and of to its ability to make lower rates to all its equal benefit to the whole public. The bill people from one end of the line to the other. in the Trans-Missouri case alleged-there be. This provision of the 8th article, then, was ing, it will be remembered, no previously es- wholesome, lawful, and necessary, and it was tablished rates that were agreed upon—that the very thing which one of the clauses in the parties had refused to establish and the Commerce Act and the spirit of all its give their customers just rates. The an. provisions required. swer did not meet the charge, but evaded it I may be allowed to say a word in respect in the manner that the court will see stated of the objection that no one of the roads on page 34 of my brief. The practical con- could change its rates without giving thirty structions by parties to contracts in their days' notice, and therefore that this was a operations under them has always been con- restraint of trade in one sense or another. It sidered an important eleinent in determining will be seen on examining the agreement, that the true character and meaning of the con- each road had the absolute right, under the tract. What I have now stated shows the agreement and pursuant to its provisions, to operating difference between the two con change its own rates, and still continue a tracts.
member of the Association. This being so, The next principal contention of my it seems to me impossible to contend that learned brother is that article 8 of the agree any part of the agreement was any sort of rement violates the Trust Act by restraining straint, unless it can be established that the trade.
thirty days' notice was too long. It is a The words of the article are as follows: matter of history that when the Commerce "Article 8. Proportions of competitive traffic. Act was passed there was inserted in it the The managers are charged with the duty of requirement that no rate should be raised exsecuring to each company party hereto equit. cept on ten days' notice, and none should be able proportions of the competitive traffic lowered except on three days' notice, publicly covered by this agreement so far as can be displayed. What was the principle of this? legally done.”
It was that justice and fair play to customThis article provides that the managers ers and to the public and to all persons dishall endeavor so far, and only so far, as obe. rectly or indirectly interested in transportadience to the law-that is to say, conformity tion required that sufficient and timely with the Commerce Act and conformity with knowledge of changes in rates which, as we the Trust Act-will permit, to secure equita- know, affect in a greater or less degree all ble proportions of the competitive traffic to commercial and productive transactions, each one of the companies. It is sufficient an- should be had by every person and commun. swer to my brother's contention to say that ity interested. I suppose I may properly the very terms of the article do not require state it as a public fact, now known to every; or invite or allow the managers to act under body engaged in busine::s, that the time fixed it at all otherwise than the law shall permit. in the Commerce Act for notice was much If therefore the Trust Act condemns the ef- too short, and that unjust inequalities have forts referred to, then not to make the ef- arisen, again and again, from charges in forts. If the Interstate Commerce Act, ei- rates by particular roads on short notice, ther in terms or spirit, is adverse to such an that favored customers and favorite localeffort, the managers are not authorized to ities, etc., would get advantages over others, take a step. Does it violate the law to mere in violation of the spirit and substance of the ly authorize an agent to do something in the Commerce Act. It was
for the purpose, course of business so far, and so far only, as then, and with the effect of producing the the law will permit!
widest fair play and equality among all per: But I contend that it was in conformity sons, all roads, and all communities, that
this period of thirty days, instead of ten, the Trust Act, I beg Your Honor's careful at was agreed upon. It was obviously right, tention to the suggestions I have ventured to and being right, it should not be condemned, make in my printed points. I need not enlarge unless the rigor of a law that cannot be oth- upon them, and have only to call your atten. erwise construed and applied compels it. tion, first, to the grammatical construction of
I submit with sincere confidence, as re- the first section, and second to the citations I gards the provision I have just spoken of, have made from law writers, showing a disas well as regards all the other provisions of tinct and separate classification of the two the contract, that, instead of being even a phrases, "restraint of trade” in general, and partial restraint of trade, they are all pro- partial restraint of trade." If these visions of constraint in support and in pro-writers are correct (as nobody doubts, I motion of trade. Trade is a general word, think, they are), and these two phrases were and its operation, like all other operations known and treated in the law at the time of that require co-operating and associating the passage of the act as separate things, forces and arrangement, are advanced by, the one obnoxious and the other just and and indeed, cannot be carried on truly and hon. wholesome, then I respectfully and earnestly estly for public interest without checks and insist that the universal rule of construction regulations, some of which may restrain and requires that the words in the act shall be regulate the behavior of a particular element assigned to the first class and not carried in the whole operation, and by doing so do ver into the second. not restrain, but advance and promote, the Mr. John K. Richards, Solicitor Genwhole; just as, to take the simplest of illus- eral, for the United States, appellant in re trations that occurs to die, in mechanics the ply: safety valve of a locomotive, with its counter- 1. It is claimed that because nothing has weight, regulates and restrains or gives off been done under the agreement, no irrepara. the accumulating steam in the boiler, in the ble injury has been or can be shown, and first place conserving it, restraining it from therefore no injunction lies. But the antiescape, and in the second place, enabling it to trust law makes the agreement illegal, and escape. But all this does not restrain the vests the court with jurisdiction to prevent operations of the locomotive; it is necessary violations of the act. The carrying out of to its best and safest performance of duty. an illegal contract will result in irreparable A hundred illustrations might be given. injury to the public, and this sufficiently
My brother on the other side suggests appears from the provisions of the law de that the clause in the agreement providing claring the illegality and authorizing the infor abolishing soliciting agencies is re, junction proceedings. straint of trade. I have stated in my printed Mr. Carter said he would not reargue the points my answer to this. I may add, how questions considered in the Trans-Missouri ever, that soliciting trade or ceasing to so- case, and then proceeded to discuss what licit' trade is not trade itself, and does not be constitutes an agreement among railroads long to it even as an incident. Wherever it in restraint of trade, insisting that one is practised it is practised apart from any act which only prevents competition for the purof trade; it precedes it, and sometimes leads pose of maintaining reasonable rates is not up to it, and sometimes repels it. It was one in restraint of trade. perfectly competent, therefore, and certainly In the Trans-Missouri case this court held wise, for these roads to agree to abolish that such an agreement is in restraint of such agencies, and to join, so far as it trade, regardless of its purpose and the ac might be convenient to do for the informa- tual result of its operation. So, after all, tion of the public, in having agencies at the argument of Mr. Carter was directed to various points of importance to assist ship; a discussion anew of the questions argued pers and manufacturers in the most rapid and considered and settled by this court in and economical transmission of their pro- the Trans-Missouri case. ductions. The plan, therefore, substituted 2. It is insisted that an agreement in refor the old practice is one far more advan- straint of trade must restrain trade,-that tageous to the public who wish for hon-is, reduce, or diminish it; that trade must est and equal dealing than the old prac- bc injured. tice. But I submit that whatever character An agreement in restraint of trade may or may be imputed to soliciting business, it does may not diminish or reduce trade. The innot fall within the authority of Congress to jury sought to be averted by prohibiting regulate it at all. While it is going on the such agreements is the injury to the public. business solicited has not reached the point The stilling of competition, the creation of of being interstate commerce, and cannot a monopoly, may increase the trade in the reach it until its movement has commenced, product controlled, but nevertheless to the or is about to commence, definitely from one injury of the public. To stifle competition state to another.
is to create a monopoly and place the public I refrain from making any observation at the mercy of the monopoly. The benefits on the constitutional question arising if the resulting from cheaper products through moTrust Aot is to be construed as forbidding nopolies have never been held by courts or innocent contracts promotive of public pol- legislatures as sufficient to overbalance the icy, which I have insista upon in my printed evils to the government and people from the points, for the reason that in the division of creation of monopolies. It is a question of our subjects of discussion this matter will be method, rather than result. Trusts and mo ieft entirely to my brother, Mr. Phelps. nopolies are forbidden in order to preserve
In respect to the meaning of the words of competition, and thereby, as far as possible, freedom of action in industrial and commer, be authorized to combine and proveït compe cial life.
tition and keep up prices ? 3. It is said that competition is not trade, Competition drives the weak to the wall; but a mere incident of trade; that what pre the fittest survive; but the greatest good to vents competition does not necessarily injure the greatest number results. The opening of trade; on the contrary to restrict competi- new mines, the construction of new plants, tion may benefit trade; that the whole world the establishment of industries with imis now groaning under competition; that the proved methods of production and greater hard rule of the survival of the fittest bears natural advantages, lower the cost of proheavily upon the masses of the people; that duction of the commodity to the benefit of there is a spirit of unrest, of dissatisfaction, the public; but the person or corporation or and that, to avoid the effects of a ruinous region which cannot lower its cost of procompetition among employers and employees, duction to meet the new competition must combination is the rule.
suffer. Under competition the most improved It may be conceded that the law of the sur plant, the best trained labor, the most ecorival of the fittest is a hard one; that the nomical management, the wisest business sanecessity of competition under existing cir-gocity and foresight, is not only encouraged cumstances presses heavily upon the weak. but demanded for success. But, after all, competition is not only the life The best railroad, the one constructed and of trade, but the underlying basis of our so- equipped and managed in the best way, will cial and industrial life. There may be a get the bulk of the competitive business, and better way, but we have not yet found it. it ought to. It can afford to carry the traf.
Competition goes along with freedom, with fic at lower rates than the poorer roads, and independent action.
was it cught to be allowed to in the public infounded on the principles of liberty and terest. The poorer roads can get the busiequality. It sought to secure to every citi- ness by putting themselves in shape to do the zen an equal chance under the law. That is business. Roads equally fitted to the work all the people have demanded or do demand, will naturally divide the competitive busi. -a fair show in the race of life. Undoubt: ness in equitable proportions. Competition edly there is unrest, dissatisfaction, tenden- for traffic by improved service and lower cies to anarchy and socialism, but these re- rates will result naturally, not in ruining sult, not from competition, but the throt. the roads, but in building them up. Under tling of competition by trusts and combi-competition the best road fixes the rate; unnations, which seek to control the production der combination the poorest road. and transportation and dominate both work- Is it just to make the public pay rates ingmen and consumers. Against these the froni Chicago to the east fixed by the poorindividual citizen protests. He does not de- est system protected by the Joint Traffic mand no competition, but fair competition. agreement ? Combinations of workingmen accompany ag.
5. It is contended that there is no re-. gregations of capital. Thus the masses are straint on trade, because the railways still arrayed against the classes. If combina exist, with all their facilities for transportions of capital were prevented, if competi- tation, ready and willing to serve the public, tion among employers of labor were enforced, and with no inducement for service weakthe independent demand for labor from com ened; that competition in every desirable peting sources would tend to fair wages, such aspect remains, the railroads being permitted as prices might warrant.
to compete, but compelled to do it openly, 4. It is insisted that this agreement under the provision that a deviation from among railroads to prevent competition is the association rate cannot be made except not only innocent, but wise and salutary, by resolution of the board of managers and because in the case of railroads competition after thirty days' notice to the managers. is ruinous; that if competition reduces rates It is true that railways exist, with their below the point of profit for any line, it original facilities, but the inducement for must ultimately be bankrupted, for it cannot improvement by cheaper methods of transstop running nor can the capital invested portation is weakened, the motive for compein it be withdrawn.
tition removed, the means of competition de. But this argument applies to all great stroyed, and competition itself absolutely formodern industries, in manufacture as well bidden. The natural result of preventing as transportation. Capital fixed in a valu. competition is to keep up rates. An excess able plant cannot be withdrawn, nor can la- in rates over what would obtain under combor skilled in one industry be readily shifted petition amounts in effect to a tax on the to another. Both manufacturers and work. things transported. This operates as a buringmen are subject to the contingencies of den upon commerce and a restraint of trade. competition. The establishment of a new If a state should levy a tax on goods transplant with modern improvements may de ported through it, this court would hold stroy some old one, in which both have vir- such an act unconstitutional because it has tually risked their all.
laid a burden upon interstate commerce. Why are not men who put their capital Moreover, to increase rates and maintain or skill into a manufacturing plant just as them at a point above what would obtain un. much entitled to protection against ruinous der competition, decreases the business of competition as those who put their money or railroads, but enhances the cost of it, and skill in a transportation plant? Why thus restrains trade or
Lower should the railroads be singled out from all rates mean more traffic, both freight and pasthe great interests of this country, and alone' senger. Higher rates mean less traffic. It
may be to the interests of the railroads to in- | carrier from charging one person more than crease the rates and lessen the traffic. The another for the same service; it does not proprofits may be as much or more, but it is hibit a carrier from charging, one person done at the expense of the public and to the more or less than another railroad charges restraint of trade.
another person for the same distance. The 6. It is insisted that rates must be stable, 3d section forbids a common carrier to give not subject to change; that a manufacturer any undue preference or advantage to any cannot safely make goods or a dealer buy person or locality over any other. But this them unless he knows the rates for trans- only applies to the action of a railroad to: porting them to market, and may rely upon ward the people or places served by it. And these rates continuing; therefore agreements so, too, with reference to the long and short for main zining rates at a fixed point should haul provisions in the 4th section. be encouraged.
The interstate commerce law declares It is obvious the manufacturer or dealer tlrat all charges must be just and reasonable. must not only take into account the rates he it provides no means for securing this dewill have to pay to market, but the rates his sideratum except competition. The only competitors from every quarter by land and method of stilling competition when the law water will have to pay. “It is impracticable was passed was the pooling agreement, and to attain a cast-iron uniformity of this this was prohibited. Competition between kind, and neither the interstate commerce railroads was preserved, and to secure the law nor the Joint Traffic agreement attempts benefit of competition to all patrons of each it.
road it was provided that the competition Moreover, the agreement does not assume to should be open and above board, so the peoprevent a change of rates. lt virtually takes ple might be advised of the existing rates, the power to change from the companies, but and each railroad was required to treat its gives it to the managers of the association. patrons with uniformity, without discrimiFor natural it substitutes arbitrary change. nation and without preferences. The protest against any change in rates is a The object of the law was to secure the protest against progress. The history of benefit of competition to all, and not permit railroads shows a constant tendency towards a road to charge those shippers for whose cheaper rates. This has resulted from im- patronage it does not have to compete excesprovements forced by competition. The in- sive rates, while secretly granting lower ierest of the public lies, not in maintaining rates to those shippers for whose patronage hut in reducing rates, and to effect such re- it does have to compete. The competition duction competition is essential.
was to be restricted to where it belongs; be 7. Uniformity in rates is declared to be tween the railroads, and not between the essential, and it is urged that the provisions shippers. If a railroad can afford to carry of the interstate commerce law favoring freight of one shipper for a certain rate, it uniformity cannot be enforced except by sup can afford to carry for the same rate like pressing competition through this agree freight under similar conditions for every ment; and, to illustrate the need of uniform other shipper. ity, it is said that without it an industry Chicago & N. W. R. Co. v. Osborne, 10 U. in Michigan equidistant from market with à S. App. 430, 52 Fed. Rep. 912,3 C. C. A. 347, similar industry in Indiana might be wiped 4 Inters. Com. Rep. 257. out of existence by reduced rates in favor of 8. It is contended that uniform rates the Indiana industry.
should be maintained on the trunk lines in But neither the Interstate Commerce Act order to keep the weaker roads in operation por this agreement would prevent the alleged for the benefit of the sections through which injustice suggested. The case instanced in. they run. volves a reduction of rates on local traffic, As I have pointed out, the agreement does and the agreement only applies to competi- not apply to local traffic. As to it each road tive traffic. There is nothing in the agree has a monopoly, with power to fix its own ment to prevent any member of the associa- rates. The agreement applies only to com. tion from changing the rates from local petitive traffic between great centers. The points; the jurisdiction of the association is argument, then, amounts to this, that rates restricted to competitive traffic.
on through traffic are to be kept up in order Suppose two similar industries located in to preserve the weak roads as going conPennsylvania, each supplying the New York cerns for the benefit of the sections through market, and each equally distant from New which they run. What is this but to tax York, but one located on the Pennsylvania the many for the benefit of the few? It is not and the other on the Lehigh Valley system. the function of the government to neutralize For one industry the Lehigh Valley is theonly the advantages of locality. The people pay line to New York; for the other the Penn- for these and are entitled to them. If I settle sylvania. There is nothing in the Interstate in a flourishing region on a good line, I pay Commerce Act, or in the Joint Traffic Agree for the privilege in the cost of land, in taxes, ment, to prevent the Pennsylvania from re- ctc. If I settle in an undeveloped region on ducing the rate to New York; nothing to a poor road, I pay little for either the privi. prevent the Lehigh Valley from reducing lege or the land, and must expect to help euch rate.
bear the cost of development. The uniformity demanded by the Inter- 9. It is said that the Interstate Commerce state Commerce Act is uniformity in the Act was passed to suppress competition and treatment by each railroad of its own pa. secure uniformity in rates. trons. The 2d section prohibits a common It was not passed to suppress competition,
but to preserve it and secure its benefits to all. Competition between independent lines was preserved, and uniformity enforced to secure the benefit of this competition to all. Each carrier was required to treat its patrons with uniform fairness, without preference and without discrimination. The only effective arrangement used at that time by the trunk lines to stifle competition was the pooling agreement, and this was prohibited. It was recognized that competition would keep the rates reasonable, and the long and short haul provision was intended to secure to all points on each road the benefit of such competition. Unjust discrimination and undue preferences by a railroad among its patrons was prohibited. Thus the benefits of open competition were insured to all. The policy was, among the patrons of each road, uniformity, but between the roads open competition.
First Report of Interstate Commerce ComDission 1887, p. 33.
10. The point is made that railways are public highways, and the furnishing of railway transportation is a governmental functien; therefore the government should eliminate the advantage of locality by enforcing absolute uniformity in rates, or permit the railroads to do it by preventing competition and maintaining arbitrary
It may be conceded that the furnishing of railroad transportation is a public function, and therefore the government may regulate it. Government, state and Federal, has done this by forbidding the consolidation of competing lines, by prohibiting pooling contracts, and by making illegal all agreements
in restraint of trade.
The absolute uniformity demanded is neither practicable nor desirable. Absolute uniformity extending to every rate, from every point, on every railroad, means absolute consolidation of control and absolute arbitrary rates, and this is absolutely inconsistent with competition. It admits of no competition. The desirable uniformity is that which goes along with competition, and supplements it, and secures its benefits to all shippers without distinction. Each railroad should be required to treat its patrons-persons and places-with fairness and equality, without preference or discrimination. It should not be required, however, to treat its shippers no better than other lines treat theirs. On the contrary it should be induced to treat its shippers the very best it can, and thereby make it incumbent upon competing lines to treat their shippers as well. It should be induced to do this, not only in rates, but in service. The rigid, cast-iron, arbitrary rule of absolute uniformity as between railroads, contended for, would logically prevent all competition, whether in rates or service.
391; Freight Bureau Ceses, 167 U. S. 479, 42 L. ed. 243; Southern P. Co. v. Railroad Commissioners, 78 Fed. Rep. 236.
11. If the railroads are not to be permit ted to combine and prevent ruinous competi tion, and establish and maintain reasonable rates by arbitrary methods, then, it is said, they must either abandon transportation, or consolidate, or persistently violate the law.
There is a virtual consolidation now of these roads under the agreement. The public is not interested in consolidation except as it affects competition. The Constitutions and laws of many states prohibit the consolidation of railroads, but only of competing railroads. Lines which do not compete may consolidate, and the public thus gains the benefit of broader and more economical administration. Railroads which compete may not consolidate, because it prevents competition and keeps up rates.
Public policy has demanded the prohibition of the consolidation of competing lines; for the same reason Congress enacted the anti-pooling section of the Interstate Commerce Act. The pooling of freights and the division of earnings is not bad in itself. It is bad because used to stifle competition. Equally bad is the Joint Traffic Agreement before the court, which operates as effectually as any pooling arrangement ever devised. The people have not stopped to inquire whether consolidation would result of necessity in unreasonable rates; neither have they stopped to inquire whether pooling would result necessarily in unreasonable rates. It is the tendency, not the absolute result, which has operated to prohibit consolidation, to prohibit pooling, to prohibit contracts in
restraint of trade.
Pearsall v. Great Northern R. Co. 161 U. S. 646, 676, 40 L. ed. 838. 848; Louisville & N. R. Co. v. Kentucky, 161 U. S. 677, 698, 40 L. ed. 849, 858.
The railroads say that if they are not permitted to prevent competition they will compete, and in doing so will violate the interstate commerce law; that they should be per mitted to combine for the purpose of preventing violations of the law, even if in doing so competition be prevented.
But to prevent competition is in itself to violate the law. Better the chance to violate one law than the certainty of violating another. Better the motive to violate one law than the mandate to violate another. If the ability the railroads employ to circumvent the law were used to observe it, neither this agreement nor the arguments in support of it would be before the court. The railroads promise to obey one law if the court will permit them to violate another. Would they keep the compact, if made? Respect for the law based solely on self-interest is delusive and evanescent.
12. An attempt is made to distinguish this case from the Trans-Missouri case by say
Ames v. Union P. R. Co. 64 Fed. Rep. 165, 4 Inters. Com. Rep. 935; Interstate Coming that here the association simply adopted merce Commission v. Baltimore & O. R. Co. the admitted fair and reasonable rates then 145 U. S. 276, 36 L. ed. 703, 4 Inters. Com. in force and filed with the Interstate ComRep. 92; Cincinnati, N. O. & T. P. R. Co. v. merce Commission by the companies; while Interstate Commerce Commissioners, 162 U. in the Trans-Missouri case the association S. 184, 40 L ed. 935, 5 Inters. Com. Rep. was given power to fix rates. But in the