Federal Trade Commission is seeking to help rather than to hinder, threaten, or punish business development, but it is hampered by the anti-monopoly mandates of the law. If these were elided from the law then lawmakers, courts, and administrative commissions at present engaged in the uninspiring and costly business of trying to thwart or defeat great industrial growth would all be thereby set free to do the stimulating, progressive work of guiding and directing the nation's great energies to their utmost achievements.

F

CHAPTER XV

TRUSTS AND THE FEDERAL COURTS

AROM October 13, 1890, when suit against the members of the Nashville Coal Exchange was

begun in the Circuit Court at Nashville, Tennessee, down to October 27, 1916, when indictment was returned in the Oregon District Court, charging certain officers and agents of nine cement companies with engaging in a combination to restrain and to monopolize trade and commerce in cement on the Pacific coast, one hundred and seventy-four suits have been filed in the Federal courts of the United States alleging violation of the anti-trust statutes. These cases were instituted under the respective presidential administrations as follows: During Harrison's four years, seven cases; during Cleveland's four years, eight; during McKinley's four and a half years, only three; during Roosevelt's seven and a half years, forty-four; during Taft's four years, eighty, and during the first three and two-thirds years of Wilson's first administration, thirtytwo. The subject matters of these suits cover a wide range and indicate both the reach of Trust development and the extension given to the anti-trust law. A score of the suits were against organized laborers. These labor suits begin with the notable injunction cases against the draymen of New Orleans in 1893 and against members of the American Railway Union during the

Pullman Strike of 1894 and continue to appear occasionally on the calendar down to the filing of indictments April 27, 1915, charging a conspiracy amongst labor unions in Chicago to prevent the installation of certain lighting fixtures. A number of these labor cases were dismissed. In others injunctions were granted. Merely nominal penalties were assessed in two of the cases, fines aggregating only $110 in a Louisiana case against seventy-two laborers, and sentences of four hours' confinement each against members of a Florida longshoremen's association who entered pleas of guilty to a charge of combining, conspiring, and agreeing upon rules for employment of workmen loading lumber vessels.

There were a number of suits against railway, wharf, and ocean shipping consolidations, including two of the leading cases in the interpretation of the Sherman Act, the Joint Traffic Association case, and the Northern Securities case.

There are many cases against combinations to control (1) Food supplies: sugar, meat, salt, groceries generally, butter, eggs, milk, ice, coffee, fruit, vegetables, canteloupes, breakfast foods, corn and corn products, wheat, oats, rye, and fresh fish; (2) Fuels, such as coal, oil, and kindling wood; (3) Household and manufacturing supplies, such as enamelware, plumbers' supplies, aluminum wares, incandescent lamps, thread, clotheswringers, school and church furniture, umbrella material, magazines, stationery, paper and paper boards, cash registers, lumber, stone, gunpowder and other explosives, tallow, fertilizers, paving bricks, wires and cables, shoe machinery, boot and shoe lasts, iron and

steel and other products, harvesting and agricultural machinery, posters, licorice paste, elevators, drugs and patent medicines, turpentine and resins, coal tar products, photographic supplies, telephones, gasolene tanks, gasolene pumps, and horseshoes. Even such sources of more or less innocent amusement as bicycles, motion picture machines, tobacco, whiskey, and tin cans have been compelled to answer the call of the court on antitrust grounds!

The net result of all this quarter century of Trust prosecution has been the collection of less than $600,000 in fines, a few mild confinement sentences, occasional grants of injunction and, particularly since 1911, some actual dissolutions of giant combinations. More important than these particular penalties has been the development of a general understanding in the business world that the Government will prosecute and that the courts will penalize if the anti-trust law is violated. This understanding has doubtless prevented the formation of combinations which would have been in peril of the law, and it has certainly aided in lessening the use of predatory competitive methods by big business.

The course of the court interpretation of the Sherman Act has not run entirely smoothly. Its earlier interpretations well nigh nullified the law. This accounts, in no small part, for the infrequent prosecutions of Trusts before 1905. Although one hundred and seventy-four cases were instituted under the Sherman Act during its first twenty-six years, only twenty-three of these cases were begun during the first fourteen years under that

act.

By 1904 and 1905, notably in the Addyston Pipe

Company case and the Northern Securities case, the court had made clear the way for effective and sweeping application of the law. The deluge of prosecutions followed, more than a hundred cases being filed in the Federal Courts in the eight years beginning 1905.

In May, 1911, came the famous decisions of the Federal Supreme Court in the Oil and the Tobacco cases. These established definitely the interpretative doctrine of the "rule of reason.' This doctrine had been used in application of the common law against monopolies and combinations in restraint of trade before the Sherman Act was passed. It had been invoked in dissenting opinions in the leading cases in 1904 and 1905 under the Sherman Act. It required, however, the almost unanimous decision of the Supreme Court in these elaborately prepared 1911 cases to give to the Sherman Act, authoritatively, its present meaning.

A brief review of eight leading cases under the Sherman Act will show the evolution of the court's interpretation of this law.

The Knight case,* instituted in the Circuit Court in Pennsylvania in January, 1894, and finally decided by the Supreme Court January 21, 1895, was the first case in which the law was given full consideration by the Supreme Court.

The bill in the Knight case charged that the American Sugar Refining Company, a New Jersey corporation, prior to March, 1892, had obtained control of all the sugar refineries in the United States with the exception of the Revere, of Boston, and four refineries in Philadelphia owned respectively by the E. C. Knight Com

*United States v. E. C. Knight Co., et al. 60 Fed. 306 and 934; 156 U. S., 1.