shall abridge the privileges or immunities of citizens of the United States."

All the constitutional grounds which were thus held [6] to be without merit are within the errors assigned and relied upon, although predominance in argument is given to the asserted repugnancy of the statute to the commerce clause of the Constitution; and we come briefly to consider them all.

In the first place, we are of opinion that the distinction upon which the classification in the statute rests between a manufacturer selling goods by him made at their place of manufacture and one engaged as a merchant in whole or in part in selling goods of his manufacture at a place of business other than where they were made is so obvious as to require nothing but a mere statement of the two classes. All question concerning the equal protection clause of the 14th Amendment may therefore be put out of view.

In the second place, we are also of opinion that the interpretation given by the court below to the statute excludes all basis for the contention that the provision of the statute imposing the license tax upon the one class and not upon the other gave rise to such discrimination as resulted in a direct burden upon interstate commerce. And this whether the statute be considered from the point of view of the power of the state to enact it, inherently considered, or of the power as tested by the necessary operation and effect of the statute, if any, upon interstate commerce, and the plenary and exclusive power of Congress to regulate the same.

In the third place, we also conclude that, as the subject-matter of the statute was plainly within the legislative authority of the state, and as the previous conclusions exclude the conception of the repugnancy of the statute to the provisions of the Constitution, just considered, it necessarily follows that there is no ground for the assertion that the statute conflicted with the privileges and immunities clause of article 4 of the Constitution, or of the clause in the 14th Amendment providing that [7] "no state

But, it is urged, the statute should be held to be a burden on interstate commerce and repugnant to the Constitution because of the disadvantage to which, it is insisted, it necessarily, by way of a license tax, subjected goods manufactured in another state when sold in Virginia by a merchant manufacturing the same, while no such tax was by the statute imposed on a manufacturer in Virginia, selling his goods so manufactured at the place of their manufacture. But we have already tested the statute by its necessary operation and effect, and found it not to be repugnant to the commerce clause. Hence this argument but repeats in a different form a contention already disposed of. It follows, therefore, that if the asserted disadvantage be real, and not imaginary, it would be one not direct, because not arising from the operation and effect of the statute, but indirect, as a mere consequence of the situation of the persons and property affected and of the nondiscriminating exercise by the state of power which it had a right to exert without violating the Constitution, -which is indeed but to say that the disadvantage relied upon, if any, is but the indirect result of our dual system of government.

In other words, to resume, the error of the argument results from confounding the direct burden necessarily arising from a statute which is unconstitutional because it exercises a power concerning interstate commerce not possessed, or because of the unlawful discriminations which its provisions express or by operation necessarily bring about, and the indirect and wholly negligible influence on interstate commerce, even if in some aspects detrimental, arising from a statute which there was power to enact, and in which there was an absence of all discrimination, whether express or implied, as the result of the [8] necessary operation and effect of its provisions. distinction between the two has been enforced from the beginning as vital to the perpetuation of our constitutional system. Indeed, as correctly pointed out by the court below, that principle as applied in adjudged cases is here directly applicable and authoritatively controlling. York v. Roberts, 171 U. S. 658, 43 L. ed. 323, 19 Sup. Ct. Rep. 58; Reymann Brewing Co. v. Brister, 179 U. S. 445, 45 L. ed. 269, 21 Sup. Ct. Rep. 201. In saying this we have not overlooked or failed to consider the many cases cited in the

The

New

The fourth question should be answered in the negative on authority of: Dr. Miles Medical Co. v. John D. Park & Sons Co. 220 U. S. 373, 55 L. ed. 502, 31 Sup. Ct. Rep. 376; Bobbs-Merrill Co. v. Straus, 210 U. S. 339, 52 L. ed. 1086, 28 Sup. Ct. Rep. 722; Ford Motor Co. v. Union Motor Sales Co. 225 Fed. 373; Henry v. A. B. Dick Co. 224 U. S. 1, 56 L. ed. 645, 32 Sup. Ct. Rep. 364, Ann. Cas. 1913D, 880 (dissenting opinion); Continental Wall Paper Co. v. Lewis Voight & Sons, 19 L.R.A. (N.S.) 143, 78 C. C. A. 567, 148 Fed. 939, affirmed in 212 U. S. 227, 53 L. ed. 486, 29 Sup. Ct. Rep. 280; United States v. Addyston Pipe & Steel Co. 46 L.R.A. 122, 29 C. C. A. 141, 54 U. S. App. 723, 85 Fed. 271, affirmed in 175 U. S. 211, 44 L. ed. 136, 20 Sup. Ct. Rep. 96; Standard Sanitary Mfg. Co. v. United States, 226 U. S. 20, 57 L. ed. 107, 33 Sup. Ct. Rep. 9; United States v. Kellogg Toasted Corn Flake Co. 222 Fed. 725, Ann. Cas. 1916A, 78; Keeler v. Standard Folding Bed Co. 157 U. S. 659, 39 L. ed. 848, 15 Sup. Ct. Rep. 738; W. W. Montague & Co. v. Lowry, 193 U. S. 38, 48 L. ed. 608, 24 Sup. Ct. Rep. 307.

Messrs. Elisha K. Camp and Daniel N. Kirby argued the cause, and, with Messrs. James M. Beck and Gilbert H. Montague, filed a brief for the Graphophone Companies:

Motion Picture Patents Co. v. Universal Film Mfg. Co. 243 U. S. 502, 510, 61 L. ed. 871, 876, L.R.A.1917E, 1187, 37 Sup. Ct. Rep. 416; Bloomer v. MeQuewan, 14 How. 539, 549, 14 L. ed. 532, 537; United States v. Standard Sanitary Mfg. Co. 191 Fed. 172; Virtue v. Creamery Package Mfg. Co. 227 U. S. 8, 32, 57 L. ed. 393, 404, 33 Sup. Ct. Rep. 202; National Phonograph Co. v. Schlegel, 64 C. C. A. 594, 128 Fed. 733; Bauer v. O'Donnell, 229 U. S. 1, 15, 57 L. ed. 1041, 1045, 50 L.R.A. (N.S.) 1185, 33 Sup. Ct. Rep. 616, Ann. Cas. 1915A, 150; Straus v. Victor Talking Mach. Co. 243 U. S. 490, 61 L. ed. 866, L.R.A. 1917E, 1195, 37 Sup. Ct. Rep. 412; Henry v. A. B. Dick Co. 224 Ú. S. 1, 19, 56 L. ed. 645, 652, 32 Sup. Ct. Rep. 364, Ann. Cas. 1913D, 880; Mitchell v. Hawley, 16 Wall. 544, 547, 21 L. ed. 322, 323; Adams v. Burke, 17 Wall. 453, 456, 21 L. ed. 700, 703; De La Vergne Refrigerating Mach. Co. v. Featherstone, 147 U. S. 209, 37 L. ed. 138, 13 Sup. Ct. Rep. 283; United States Copyright Act, March 4, 1909, § 41; Stevens v. Gladding, 17 How. 447, 15 L. ed. 155; Stephens v. Cady, 14 How. 528, 14 L. ed. 528; E. Bement & Sons v. National Harrow Co. 186 U. S. 70, 88, 91-93, 46 L. ed. 1058, 1067-1069, 22 Sup. Ct. Rep. 747; United States v. Keystone Watch Case Co. 218 Fed. 502; Victor Talking Mach. Co. v. The Fair, 61 C. C. A. 58, 123 Fed. 424; American Gramophone Co. v. Boston Store, 225 Fed. Sales Co. 156 C. C. A. 584, 244 Fed. 785; Ford Motor Co. v. Union Motor 156; Ford Motor Co. v. Benjamin E. Boone, 156 C. C. A. 621, 244 Fed. 335; Keeler v. Standard Folding Bed Co. 157

also involves a contract.

The Fair v. Kohler Die & Specialty Co. 228 U. S. 22, 25, 57 L. ed. 716, 33 Sup. Ct. Rep. 410; Healy v. Sea Gull Specialty Co. 237 U. S. 479, 480, 59 L. ed. 1056, 1057, 35 Sup. Ct. Rep. 658; Henry v. A. B. Dick Co. 224 U. S. 1, 16, 56 L. ed. 645, 651, 32 Sup. Ct. Rep. 364, Ann. Cas. 1913D, 880; Geneva Furniture Mfg. Co. v. S. Karpen & Bros. 238 U. S. 254, 257, 59 L. ed. 1295, 1296, 35 Sup. Ct. Rep. 788.

Questions 2 and 3 should each be an

10 How. 99, 101, 102, 13 L. ed. 344, 345; Sup. Ct. Rep. 738; Wilson v. Sandford, Briggs v. United Shoe Machinery Co. 239 U. S. 48, 60 L. ed. 138, 36 Sup. Ct. Rep. 6; Hartshorn v. Day, 19 How. 211, 222, 15 L. ed. 605, 611; Albright v. Teas, 106 U. S. 613, 617, 27 L. ed. 295, 297, 1 Sup. Ct. Rep. 550; Dale Tile Mfg. Co. v. Hyatt, 125 U. S. 46, 48, 49, 31 L. ed. 683, 684, 8 Sup. Ct. Rep. 756; Excelsior Wooden Pipe Co. v. Pacific Bridge Co. 185 U. S. 282, 46 L. ed. 910, 22 Sup. Ct. Rep. 681.

Question four should be answered in the affirmative.

Standard Oil Co. v. United States, 221 U. S. 1, 49-64, 55 L. ed. 619, 640

646, 34 L.R.A.(N.S.) 834, 31 Sup. Ct. Rep. 502, Ann. Cas. 1912D, 734; United States v. American Tobacco Co. 221 U. S. 106, 178-181, 55 L. ed. 663, 693, 694, 31 Sup. Ct. Rep. 632; Continental Wall Paper Co. v. Louis Voight & Sons Co. 212 U. S. 227, 53 L. ed. 486, 29 Sup. Ct. Rep. 280; United States v. Union P. R. Co. 226 U. S. 61, 57 L. ed. 124, 33 Sup. Ct. Rep. 53; United States v. Reading Co. 226 U. S. 324, 57 L. ed. 243, 33 Sup. Ct. Rep. 90; Nash v. United States, 229 U. S. 373, 57 L. ed. 1232, 33 Sup. Ct. Rep. 780; Eastern States Retail Lumber Dealers' Asso. v. United States, 234 U. S. 600, 58 L. ed. 1490, L.R.A.1915A, 788, 34 Sup. Ct. Rep. 951; United States v. E. I. DuPont de Nemours & Co. 188 Fed. 127; United States v. Hamburgh-American S. S. Line, 216 Fed. 971; Great Atlantic & P. Tea Co. v. Cream of Wheat Co. 224 Fed. 568; United States v. Quaker Oats Co. 232 Fed. 502; Dr. Miles Medical Co. v. John D. Park & Sons Co. 220 U. S. 373, 55 L. ed. 502, 31 Sup. Ct. Rep. 376; Phillips v. Iola Portland Cement Co. 61 C. C. A. 19, 125 Fed. 593; Ford Motor Co. v. Benjamin E. Boone, 156 C. C. A. 621, 244 Fed. 335; Grogan v. Chaffee, 156 Cal. 611, 27 L.R.A.(N.S.) 395, 105 Pac. 745; D. Ghiradelli Co. v. Hunsicker, 164 Cal. 355, 128 Pac. 1041; Fisher Flouring Mills Co. v. Swanson, 76 Wash. 649, 51 L.R.A.(N.S.) 522, 137 Pac. 144; United States v. Addyston Pipe & Steel Co. 46 L.R.A. 122, 29 C. C. A. 141, 54 U. S. App. 723, 85 Fed. 271; John D. Park & Sons Co. v. Hartman, 12 L.R.A. (N.S.) 135, 82 C. C. A. 158, 153 Fed. 24; Bobbs-Merrill Co. v. Straus, 210 U. S. 339, 52 L. ed. 1086, 28 Sup. Ct. Rep. 722; Bauer v. O'Donnell, 229 U. S. 1, 57 L. ed. 1041, 50 L.R.A. (N.S.) 1185, 33 Sup. Ct. Rep. 616, Ann. Cas. 1915A, 150; Straus v. Victor Talking Mach. Co. 243 U. S. 490, 500, 501, 61 L. ed. 866, 870, 871, L.R.A.1917E, 1196, 37 Sup. Ct. Rep. 412; Bitterman v. Louisville & N. R. Co. 207 U. S. 205, 222, 52 L. ed. 171, 182, 28 Sup. Ct. Rep. 91, 12 Ann. Cas. 693; Sperry & H. Co. v. Mechanics' Clothing Co. 128 Fed. 800; Sperry & H. Co. v. Louis Weber & Co. 161 Fed. 219; Addyston Pipe & Steel Co. v. United States, 175 U. S. 211, 247, 44 L. ed. 136, 149, 20 Sup. Ct. Rep. 96; Muller v. Oregon, 208 U. S. 412, 421, 52 L. ed. 551, 28 Sup. Ct. Rep. 324, 13 Ann. Cas. 957.

Mr. James M. Beck also argued the cause and filed a brief for the Graphophone Companies:

It is often erroneously assumed that

at common law all restraints upon the alienation of personal property were invalid, whether complete or partial.

Co. Litt. § 360; 3 Co. Inst. chap. 5; Littleton, Tenures, § 361.

The decision of Mitchel v. Reynolds, |1 P. Wms. 181, 24 Eng. Reprint, 347 (decided in 1711), and all subsequent cases, simply recognize the common law, and the only change of doctrine was the growing recognition by the courts that all restraints upon alienation, growing out of contract, should be recognized as within the, fair rights of the contracting parties, unless such restraints were clearly prejudicial to the public welfare. As society emerged from the primitive conditions of Littleton's and Coke's times, and the great industrial era of the steamship, the railroad and the telegraph came, the courts and legislatures of the leading nations recognized that the true welfare of society required the greatest possible liberty of contract not clearly inconsistent with the public welfare.

This announced tendency, observable not only in England and America, but in all leading commercial countries, was in America temporarily checked by the mistaken interpretation placed upon the decisions of this court in the Traffic Asso. Cases, United States v. Trans-Missouri Freight Asso. 166 U. S. 290, 41 L. ed. 1007, 17 Sup. Ct. Rep. 540; United States v. Joint Traffic Asso. 171 U. S. 505, 43 L. ed. 259, 19 Sup. Ct. Rep. 25, until in the leading case of Standard Oil Co. v. United States, 221 U. S. 1, 55 L. ed. 619, 34 L.R.A. (N.S.) 834, 31 Sup. Ct. Rep. 502, Ann. Cas. 1912D, 734, this court again reviewed the whole subject and definitely established the principle that the Sherman Law simply affirmed, with respect to interstate and foreign commerce, the principle of the common law as to restraints of trade, as modified and developed by progressive decisions of English and American courts.

This court added that the statute did not forbid or restrain the power to make normal and usual contracts to further trade by resorting to all normal methods, whether by agreement or otherwise, to accomplish such purpose.

United States v. American Tobacco Co. 221 U. S. 106, 179, 55 L. ed. 663, 693, 31 Sup. Ct. Rep. 632.

As the legal test of a contract is the public welfare, it inevitably follows that the judicial declaration of public policy must conform to changing economic conditions. In this respect, as in all others,