its purpose was to prevent undue restraints of every kind or nature, nevertheless by the omission of any direct prohibition against monopoly in the concrete it indicates a consciousness that the freedom of the individual right to contract when not unduly or improperly exercised was the most efficient means for the prevention of monopoly, since the operation of the centrifugal and centripetal forces resulting from the right to freely contract was the means by which monopoly would be inevitably prevented if no extraneous or sovereign power imposed it and no right to make unlawful contracts having a monopolistic tendency were permitted. In other words that freedom to contract was the essence of freedom from undue restraint on the right to contract.

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We see no cause to doubt the correctness of these conclusions, considering the subject from every aspect, that is, both in view of the facts established by the record and the necessary operation and effect of the law as we have construed it upon the inferences deducible from the facts, for the following reasons:

(a) Because the unification of power and control over petroleum and its products which was the inevitable result of the combining in the New Jersey corporation by the increase of its stock and the transfer to it of the stocks of so many other corporations, aggregating so vast a capital, gives rise, in and of itself, in the absence of countervailing circumstances, to say the least, to the prima facie presumption of intent and purpose to maintain the dominancy over the oil industry, not as a result of normal methods of industrial development, but by new means of combination which were resorted to in order that greater power might be added than would otherwise have arisen had normal methods been followed, the whole with the purpose of excluding others from the trade and thus centralizing in the combination a perpetual control of the movements of petroleum and its products in the channels of interstate commerce.

(b) Because the prima facie presumption of intent to restrain trade, to monopolize and to bring about monopolization resulting from the act of expanding the stock of the New Jersey corporation and vesting it with such vast control of the oil industry, is made conclusive by considering (1) the conduct of the persons or corporations who were mainly instrumental in bringing about the extension of power in the New Jersey corporation before the consummation of that result and prior to the formation of the trust agreements of 1879 and 1882; (2) by considering the proof as to what was done under those agreements and the acts which immediately preceded the vesting of power in the New Jersey corporation as well as by weighing the modes in which the power vested in that corporation has been exerted and the results which have arisen from it..

CONTINENTAL WALL PAPER Co. v. LOUIS VOIGHT & SONS Co. (212) U. S., 227), SUPREME COURT, 1909.-More than 30 companies and firms manufacturing wall paper in various States and selling the same in interstate commerce formed a combination which comprised 98 per cent of the production and sales thereof in the United States. This combination organized the Continental Wall Paper Co., whose stock was owned and whose directors were chosen by the parties to the combination, and which was constituted a selling company for the said parties.

The Continental Wall Paper Co. in the further carrying out of the plan of combination made agreements with the jobbers of wall paper intended to compel them to patronize exclusively the members of the combination and to sell the goods purchased at prices fixed by the combination. Jobbers refusing such agreement were not to be supplied with wall paper. Immediately after forming this combination

ates The consumers [of wall paper] ted States. The jobbers and wholesalers, entire demands from the Continental were in every state.

oing companies was engaged in both

of each, with respect to prices and and interstate commerce directly affected peices which resulted. A more complete 3 pvdably never been brought about. It more complete scheme to accomplish he shifts resorted to for suppressing freedom shown by the reported cases, is half so com

with which this may be compared is more asperation, and more evil in its purposes. astraint of trade," whether we confine spection of that term, or apply that given to the

staring combinations.

V directed against combinations in spedence it is unnecessary to cite cases to stions may be in the purview of the act. Now that a combination directly affects interwen onder to bring it within the law. For sve statement of what is meant by interwarte would entally show what branches of business

or other activities are comprehended within the meaning of the law. It is more convenient, however, for a clear outline of the scope of the law to take up the principal branches of business activity separately.

Trading combinations in restraint of trade, as defined by the Supreme Court in recent decisions, as already stated, are within the prohibition of the law, provided they are engaged in interstate

commerce.

In the discussion of the topic of interstate commerce it was shown that at the beginning a distinction was made in the Knight case (see p. 74 above) between manufacture and commerce, and it was held that combinations of manufacturers as such were not necessarily combinations in restraint of interstate trade. Practically all manufacturers and combinations of manufacturers, however, are engaged in trade and commerce, as there is no pecuniary profit in manufacture without the sale of the product. It is quite possible, of course, that a combination of manufacturers might exist which was not engaged in interstate or foreign commerce, and, therefore, would not be within the prohibition of the law. Generally speaking, however, manufacturing combinations are engaged in interstate commerce, and, if so engaged, would doubtless be held obnoxious to the Sherman Act, provided such combinations were in restraint of trade, as defined by the Supreme Court.

Section 10. Labor combinations.

That combinations of labor in so far as they are in restraint of interstate trade and commerce were prohibited by the Sherman Act was decided as early as 1893, but no decision was made on this subject by the Supreme Court until 1908, when this rule was affirmed. Labor combinations generally have not been held unlawful.

LOEWE v. LAWLOR, OR DANBURY HATTERS' CASE (208 U. S., 274), SUPREME COURT, 1908.-A manufacturer of hats at Danbury, Conn., engaged in interstate commerce in the sale of hats, was boycotted by the United States Hatters of North America, a labor union, because he would not agree to employ union labor exclusively. The hat manufacturer brought an action at law for the recovery of damages under section 7 of the Sherman Law. The brief of the defendants made no claim that combinations in restraint of trade, if made by laborers or labor unions, would be excluded from the operation of the act. The court held that the act was applicable to this case, and said in part (p. 301):

Nor can the act in question be held inapplicable because defendants were not themselves engaged in interstate commerce. The act made no distinction between classes. It provided that "every" contract, combination or conspiracy in restraint of trade was illegal. The records of Congress show that several efforts were made to exempt, by legislation, organizations of farmers and laborers from the operation of the act and that all these efforts failed, so that the act remained as we have it before us.

An important case in an inferior Federal court was the following: UNITED STATES v. DEBS ET AL. (64 FED., 724), CIRCUIT COURT, 1894.-Debs and others had led a strike which forcibly interfered with the movement of trains and the transportation of the mails and goods. They were enjoined to desist, and failing to do so proceedings for contempt in equity were instituted. The court held that the court below had not exceeded its jurisdiction and that there was a conspiracy in restraint of trade contrary to the Sherman Act which was broad enough to embrace conspiracies of laboring men as well as of capitalists.

While this case was appealed and the judgment affirmed in the Supreme Court, the grounds of the decision were not the same. The Supreme Court, however, expressly stated that it did not thereby intend to deny the correctness of the opinion of the court below. (158 U. S. 564.)

Another case in an inferior Federal court, decided in 1893, was as follows:

UNITED STATES v. WORKINGMEN'S AMALGAMATED COUNCIL OF NEW ORLEANS (54 FED., 994), CIRCUIT COURT, 1893.-A labor combination which comprised workmen in various trades, including draymen, interfered with the shipment of goods in interstate commerce in New Orleans by threats and force to compel the employment of union labor only. The Government brought a suit in equity to obtain an injunction restraining such interference. The court granted the injunction, chiefly on the basis of the Sherman Act, on the ground that the members of the union were guilty of a conspiracy in restraint of interstate commerce.

The court said in part. (p. 996):

It is true this statute has not been much expounded by judges, but, as it seems to me, its meaning, as far as relates to the sort of combinations to which it is to apply, is manifest, and that it includes combinations which are composed of laborers acting in the interest of laborers.

The following case is of interest in this connection, as well as in connection with the Clayton Antitrust Act (see p. 138), in regard to the question of the constitutionality of the express exemption of labor combinations from the operation of the antitrust laws.

INTERNATIONAL HARVESTER Co. v. COMMONWEALTH OF MISSOURI (234 U. S., 199), SUPREME COURT, 1914.-Quo warranto proceedings against the International Harvester Co. in the supreme court of Missouri under the antitrust laws of that State were carried to the United States Supreme Court. The appellant company contended that the Missouri statute was unconstitutional because it exempted from its operation and penalties all "combinations of persons engaged in labor pursuits" and was limited to "persons and corporations dealing in commodities." The United States Supreme Court

held that the courts can not disturb the power of classification which a legislature may exercise "unless the courts can clearly see that there is no fair reason for the law that would not require with equal force its extension to others whom it leaves untouched."

After citing a number of cases the court went on to say (pp. 214215):

Other cases might be cited whose instances illustrate the same principle and in which this court has refused to accept the higher generalizations urged as necessary to the fulfillment of the constitutional guaranty of the equal protection of the law, and in which we, in effect, held that it is competent for a legislature to determine upon what differences a distinction may be made for the purpose of statutory classification between objects otherwise having resemblances. Such power, of course, cannot be arbitrarily exercised. The distinction made must have reasonable basis.

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And so in the case at bar. Whether the Missouri statute should have set its condemnation on restraints generally, prohibiting combined action for any purpose and to everybody, or confined it as the statute does to manufacturers and vendors of articles and permitting it to purchasers of such articles; prohibiting it to sellers of commodities and permitting it to sellers of services, was a matter of legislative judgment and we cannot say that the distinctions made are palpably arbitrary, which we have seen is the condition of judicial review. It is to be remembered that the question presented is of the power of the legislature, not the policy of the exercise of the power. To be able to find fault, therefore, with such policy is not to establish the invalidity of the law based upon it.

It is said that the statute as construed by the Supreme Court of the State comes within our ruling in Connolly v. Union Sewer Pipe Co., 184 U. S. 540, but we do not think so. If it did we should, of course, apply that ruling here.

The Federal antitrust laws have been modified with respect to labor combinations by certain provisions of the Clayton Act which is described below. (See pp. 138, 141-142.)

Section 11. Railroad combinations.

The application of the Sherman Law to common carriers by railroad was established at a comparatively early date, namely, by a decision of the Supreme Court in 1897.

UNITED STATES v. TRANS-MISSOURI FREIGHT ASSOCIATION (166 U. S., 290), SUPREME COURT, 1897.-The facts in this case have been set forth above (p. 84), which, briefly stated, are that a rate-fixing pool had been formed by certain interstate railway companies, and continued to operate after the passage of the Sherman Act. The Government sought to have the railroad companies enjoined from further combinations of this character. The railroad companies claimed that the Sherman Law did not apply to them. The court held that contracts in restraint of interstate commerce made by railroad companies were within the prohibitions of the law. The court said in part (pp. 312–314):

A contract therefore that is in restraint of trade or commerce is by the strict language of the act prohibited even though such contract is entered into between competing