As to the size of the unit: The evidence clearly showed that the Standard Oil Company of New Jersey held a preponderant position in the manufacturing and distribution of oil. There is a difficulty, however, in finding any passage in the opinion which describes the percentage of the total business which the Standard Oil did.

It may be assumed that there was ample evidence of illegal and unfair methods of competition, particularly in the early stages of the Standard Oil Company. Curiously enough, however, the opinion of the court is very weak in setting forth any such methods. The passages which purport to deal with them 35 contain a great many words, which give an impression of weight by their sound; but a careful attention to what is said must leave the reader in doubt as to whether any of the suggested methods were illegal or unfair methods of competition. One is impressed by the fact that in various forms the Chief Justice has simply reiterated the fact that the Standard Oil Company was large and successful. What he says boils down to size and

success.

The whole case against the Standard Oil Company as made in the opinion of the court seems to rest upon the defendant's attempt to monopolize by excluding others from the business. It is noticeable, however, that while the court talks about the intent to monopolize it does not specify that that intent is to be carried out by the use of illegal and unfair methods of competition. Yet that must be the assumption. An intent to succeed in business over rivals by the achievement of greater efficiency is not a crime or illegal at common law. The intent to monopolize, in the opinion of the court, arises only as a prima facie inference from size. The Chief Justice has used a great many and some very long sentences, but every time they are read carefully it will be found that they only assert that the Standard Oil Company was an organization of monstrously large size, and from this size, constantly referred to in various ways, the intent to monopolize is discovered. Nevertheless, it is said constantly that the intent to monopolize arises from size only as a prima facie inference or presumption.36

35-[1110, 1111]. 36-These

passages occur

[1108-1109] and about the middle

at of [1111].

§ 127. The character of the organization of the Standard Oil Company of New Jersey with respect to whether it was a combination of competing units or even, properly speaking, a combination at all, requires attention.

The Standard Oil Company of New Jersey as reorganized in 1899 was the precise point of attack by the government. It was that organization which was dissolved by the decree. Of course, the decree did not permit the older organizations to step into the place of the Standard Oil of New Jersey, but required a dissolution which created new operating units.

The Standard Oil Company of New Jersey as organized in 1899 was plainly not a combination of competing units. True, they may have competed years ago and before the Sherman Act; but when the Sherman Act was passed in 1890 they were allor substantially all-already combined in the Standard Oil Trust and had ceased to compete, and the combination was legal so far as the federal law was concerned. It follows, therefore, that the Standard Oil of New Jersey was a combination of non-competing units which never had competed since the Sherman Act was passed. The elimination of competition between the units combined before the Sherman Act could not be urged as a ground of illegality under the Sherman Act. The legality or illegality of the Standard Oil Company of New Jersey must have been determined with reference to a single combination of non-competing units.

One may even doubt whether the Standard Oil of New Jersey was, properly speaking, a combination at all. When the Standard Oil Trust was formed in 1882 it was perfectly legal so far as the federal law was concerned. It represented an effort at organization in larger units than formerly, in accordance with the demands of the industrial revolution which was in progress. If then it was not illegal-and it was not so far as the federal law was concerned since there was no Sherman Act-surely it must be regarded as a normal and proper method of creating a unit in the industrial world. Hence at the time of the Sherman Act, the Standard Oil Trust was a normal, legal, and proper industrial unit. Only in a very popular sense was it still a combination. In dealing with it under the Sherman Act the court was simply bringing within its jurisdiction an industrial

unit which was in existence and with respect to the legality of the original organization of which there could be no question.

§ 128. The Standard Oil case, therefore, seems actually to hold that a unit which started as entirely legal and which grew as its business succeeded until it held a preponderant position in the business, but which all the time had the intent to monopolize, would be illegal when it came to occupy the preponderant position. In short, it appears actually to hold that any unit, however formed, which secures a perponderant position by means, however legal and proper, and which then acquires the intent to monopolize, becomes illegal. You do not need combination. You do not need a unit which is organized in a particular way. You do not even need the elimination of competition between the units. You do not need abnormal growth, so called. What you do need is merely a preponderant position in the business coupled with an intent to monopolize.

If A, for instance, as an individual, manufactured low-priced automobiles; and had, by a process of the extraordinary growth of business, secured a preponderant position in the manufacture and sale of such cars; and if he should then, as an individual, start to use his power to exclude others by illegal and unfair methods of competition, or if there could be brought home to him the intent to monopolize by any other means, he would be carrying on business in violation of the Sherman Act. One does not quite see how equity could dissolve him; but indictment, and injunction against the committing of acts, would probably be ample remedies. Would a court of equity undertake to limit the size of his business and its output so as to reduce it to a unit not occupying a preponderant position? Could it split up his business and require parts of it to be sold? There are difficulties here, but the main proposition that the individual could violate the Sherman Act is sound.

§129. In United States v. Pacific and Arctic Railway and Navigation Company 37 the first and second counts of the indictment were sustained. They charged a combination between a steamship company, a wharves company, and a railroad which together occupied a preponderant position in the transportation

37-228 U. S. 87 (1913) [1035].

service from ports in the United States to places in Alaska. This combination had the actual purpose to exclude others from this transportation service and to secure a monopoly, and attempted to carry out this purpose by unfair methods of competition. The carriers were connected and not competing, and there was therefore no application of the principle of the Northern Securities case; 38 but the combination used its combined powers to exclude all other companies serving any part of the route in question. The railroad fixed local rates higher than the railroad's pro rata of the through rate which it made to members of the combination. The railroad then refused any through rate to steamship lines outside the combination. The wharves company charged more for freight if shipped by a line outside of the combination than it did for freight shipped on a line in the combination; and the wharves company had a monopoly of the wharfing facilities at the connecting port. The facts set up in the indictment clearly brought the case within the principle of the Standard Oil and Tobacco cases.39

SECTION 5

COMPETITIVE METHODS

§ 130. In Anderson v. United States 40 a rule of the Trader's Live Stock Exchange of Kansas City which provided that its members should not deal with any other yard trader unless he was a member of such exchange was sustained. Clearly the Trader's Exchange was competing with outside traders. It was trying to gain something by concerted action in refusing to deal with them. It seems to have been assumed that the exchange was not attempting primarily to force the outside traders out of business so as to secure the entire business for the members of the exchange, but was merely trying to hamper the outside traders sufficiently to bring them into the exchange where they would be subjected to standards of conduct which were assumed to be highly desirable.

38-Ante §§ 117, 118.

39-Post §§ 127 et seq.; ante

40-171 U. S. 604 (1898).

§§ 49 et seq.

§ 131. In Montague v. Lowry 41 we have an exclusive arrangement between the tile dealers of San Francisco and the manufacturers. The manufacturers were to sell only to those tile dealers in San Francisco and to no others. The plaintiffs were independent tile dealers in San Francisco who were injured because they could not buy from the manufacturers who were in the association. The plaintiffs had a verdict of $500 and a judgment under the Sherman Act for $1,500. This was affirmed.

This case is subject to the comment that it does not appear clearly how large the combination of manufacturers was. Did it occupy a preponderant position in the tile manufacturing business? Probably it did. Very likely the evidence disclosed the fact, but as it is a fact of the very utmost importance it is strange that the opinion of the court lays no emphasis upon it.42 If such an arrangement as this had been made with three manufacturers out of fifty, it would have been entirely unobjectionable. The plaintiffs would then have had ample opportunity to secure all the tile they wanted. It is only when the combination occupies a preponderant position and begins to connect up with collective units of dealers having also a preponderant position in the local situation that the prima facie inference of intent to use the power of the combination to exclude others by unlawful and unfair methods of competition arises, and the damage to the plaintiff caused by the exclusive contracts becomes a tort according to the common law.

§132. In Eastern States Retail Lumber Dealers Association v. United States 43 the Government obtained an injunction restraining an association of retail lumber dealers from circulating among its members lists of wholesalers who were attempting to sell directly to consumers.44 It was conceded that the circulation of these lists was for the purpose of systematically

41-193 U. S. 38 (1904) [1049]. 42-Was this because Mr. Justice Peckham, who wrote the opinion of the court, was still under the influence of his dicta in the TransMissouri Freight Association and Joint Traffic Association cases and therefore was declining to make size an element of illegality?

43-234 U. S. 600 (1914) [1157]. 44-It would seem that this was the only relief obtained. See United States V. Eastern States Retail Lumber Dealers Ass'n, 201 Fed. 581 (1912).