policy. We think the power exists in Con-
gress, and that the statute is therefore valid.
Finally, we are asked to reconsider the
question decided in the Trans-Missouri case,
and to retrace the steps taken therein, be-
cause of the plain error contained in that
decision and the widespread alarm with
which it was received and une serious conse-
quences which have resulted, or may soon
result, from the law as interpreted in that


It is proper to remark that an application for a reconsideration of a question but lately decided by this court is usually based upon a statement that some of the arguments employed on the original hearing of the question have been overlooked or misunderstood, or that some controlling authority has been either misapplied by the court or passed over without discussion or notice. While this is not strictly an application for a rehearing in the same case, yet in substance it is the same thing. The court is asked to reconsider a question but just decided after a careful investigation of the matter involved. There have heretofore been in effect two arguments of precisely the same questions now before the court, and the same arguments were addressed to us on both those occasions. The report of the Trans-Missouri case shows a dissenting opinion delivered in that case, and that the opinion was concurred in by three other members of the court.

the lower courts, led us to the most careful
and scrutinizing examination of the argu-
ments advanced by both sides, and it was
after such an examination that the majority
of the court came to the conclusion it did.

It is not now alleged that the court on the
former occasion overlooked any argument
for the respondents or misapplied any con-
trolling authority. It is simply insisted that
the court, notwithstanding the arguments
for an opposite view, arrived at an erroneous
result, which, for reasons already stated,
ought to be reconsidered and reversed.

As we have twice already, deliberately and earnestly, considered the same arguments which are now for a third time pressed upon our attention, it could hardly be expected that our opinion should now change from that already expressed.

While an erroneous decision might be in some cases properly reconsidered and overruled, yet it is clear that the first necessity is to convince the court that the decision was erroneous. It is scarcely to be assumed that such a result could be secured by the [575] presentation for a third time of the same arguments which had twice before been unsuccessfully urged upon the attention of the court.

We have listened to them now because the eminence of the counsel engaged, their earnestness and zeal, their evident belief in the correctness of their position, and, most imThat opinion, it will be seen, gives with portant of all, the very grave nature of the great force and ability the arguments against questions argued, called upon the court to the decision which was finally arrived at by again give to those arguments strict and rethe court. It was after a full discussion of spectful attention. It is not matter for surthe questions involved, and with the knowl- prise that we still are unable to see the error edge of the views entertained by the minor-alleged to exist in our former decision or to ity as expressed in the dissenting opinion, that the majority of the court came to the conclusion it did. Soon after the decision a petition for a rehearing of the case was made, supported by a printed argument in its favor, and pressed with an earnestness and vigor and at a length which were certainly commensurate with the importance of the

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The learned counsel while making the ap: plication frankly confess that the argument in opposition to the decision in the case above named has been so fully, so clearly, and so forcibly presented in the dissenting opinion of Mr. Justice White, that it is hardly possible to add to it nor is it necessary to repeat it. The fact that there was so close a division of opinion in this court when the matter was first under advisement, together with the different views taken by some of the judges of U. S., Book 43.

171 U. S.

change our opinion regarding the questions
therein involved.

Upon the point that the agreement is not in fact one in restraint of trade, even though it did prevent competition, it must be admitted that the former argument has now been much enlarged and amplified, and a general and most masterly review of that question has been presented by counsel for the respondents. That this agreement does in fact prevent competition, and that it must have been so intended, we have already attempted to show. Whether stifling competition tends directly to restrain commerce in the case of naturally competing railroads, is a question upon which counsel have argued that this agreement purports to restrain with very great ability. They acknowledge slight degree and on a single point. They competition, although, they say, in a very admit that if competition and commerce were identical, being but different names for the same thing, then, in assuming to restrain competition even so far, it would be assuming in a corresponding degree to restrain commerce. Counsel then add (and therein we entirely agree with them) that no such identity can be pretended, because it is plain that commerce can and does, take place on a large scale and in numerous forms without competition. The material considerations therefore turn upon the effects of competition upon the business of railroads, whether they are favorable to the commerce in which



the roads are engaged, or unfavorable and in restraint of that commerce. Upon that question it is contended that agreements be[576]tween railroad companies of the nature of that now before us are promotive instead of in restraint of trade.

This conclusion is reached by counsel after an examination of the peculiar nature of railroad property and the alleged baneful effects of competition upon it and also upon the public. It is stated that the only resort open to railroads to save themselves from the effects of a ruinous competition is that of agreements among themselves to check and control it. A ruinous competition is, as they say, apt to be carried on until the weakest of the combatants goes to destruction. After that the survivor, being relieved from competition, proceeds to raise its prices as high as the business will bear. Commerce, it is said, thus finally becomes restrained by the effects of competition, while at the same time otherwise valuable railroad property is thereby destroyed or greatly reduced in value. There can be no doubt that the general tendency of competition among competing railroads is towards lower rates for transportation, and the result of lower rates is generally a greater demand for the articles so transported, and this greater demand can only be gratified by a larger supply, the furnishing of which increases commerce. This is the first and direct result of competition among railroad carriers.

In the absence of any agreement restraining competition, this result, it is argued, is neutralized, and the opposite one finally reached by reason of the peculiar nature of railroad property which must be operated and the capital invested in which cannot be withdrawn, and the railroad managers are therefore, as is claimed, compelled to, not only compete among themselves for business, but also to carry on the war of competition until it shall terminate in the utter destruction or the buying up of the weaker roads, after which the survivor will raise the rates as high as is possible. Thus, the indirect but final effect of competition is claimed to be the raising of rates and the consequent restraint of trade, and it is urged that this result is only to be prevented by such an agreement as we have here. In that way alone it is said that competition is overcome, and general uniformity and reasonableness of rates securely established. (577) *The natural, direct, and immediate effect

of competition is, however, to lower rates, and to thereby increase the demand for commodities, the supplying of which increases commerce, and an agreement whose first and direct effect is to prevent this play of competition restrains instead of promoting trade and commerce. Whether, in the absence of an agreement as to rates, the consequences described by counsel will in fact follow as a result of competition, is matter of very great uncertainty, depending upon many contingencies and in large degree upon the voluntary action of the managers of the several roads. Railroad companies may and often do continue in existence and engage in their lawful traffic at some profit, although they

are competing railroads and are not acting under any agreement or combination with their competitors upon the subject of rates. It appears from the brief of counsel in this case that the agreement in question does not embrace all of the lines or systems engaged in the business of railroad transportation between Chicago and the Atlantic coast. It cannot be said that destructive competition, or, in other words, war to the death, is bound to result unless an agreement or combination to avoid it is entered into between otherwise competing roads.

It is not only possible, but probable, that good sense and integrity of purpose would prevail among the managers, and while making no agreement and entering into no combination by which the whole railroad interest as herein represented should act as one combined and consolidated body, the managers of each road might yet make such reasonable charges for the business done by it as the facts might justify. An agreement of the nature of this one, which directly and effectually stifles competition, must be regarded under the statute as one in restraint of trade, notwithstanding there are possibilities that a restraint of trade may also follow competition that may be indulged in until the weaker roads are completely destroyed and the survivor thereafter raises rates and maintains them.

Coming to the conclusion we do, in regard to the various questions herein discussed, we think it unnecessary to further allude to [578] the other reasons which have been advanced for a reconsideration of the decision in the Trans-Missouri case.

The judgments of the Circuit Court of the United States for the Southern District of New York and of the Circuit Court of Appeals for the Second Circuit are reversed and the case remanded to the Circuit Court with directions to take such further proceedings therein as may be in conformity with this opinion.

Mr. Justice Gray, Mr. Justice Shiras and Mr. Justice White dissented. Mr. Justice McKenna took no part in the decision of the case.

HENRY HOPKINS et al., Appts.,



(See S. C. Reporter's ed. 578-604.)

Buying and selling live stock by members of a stock exchange is not interstate commerce-by-law as to commissions-stock sent from another state-by-law as to telegrams-agents soliciting consignmentsstock yards partly in one state and partly in another refusal to do business with persons not members-when agreement or combination is within the statute.


The business of buying and selling live stock at stock yards in a city by members of a stock exchange as commission merchants is not Interstate commerce, although most of the purchases and sales are of live stock sent from

other states, and the members of the stock | for decision. Reversed, and case remitted to
exchange are employed to sell by letter from the said Circuit Court, with directions to
the owners of the stock in other states, and dismiss the suit with costs.
send agents to other states to solicit business,
and advance money to the cattle owners, and
pay their drafts, and aid them in making the
cattle fit for market.

See same case below, 82 Fed. Rep. 529.

Statement by Mr. Justice Peckham: *This suit was commenced by the United [579] 2. A by-law of the Kansas City Live-Stock Exchange, which regulates the commissions to States attorney for the district of Kansas, be charged by members of that association acting under the direction and by the aufor selling live stock is not in restraint of in-thority of the Attorney General of the Unitterstate commerce, or a violation of the act of July 2, 1890, to protect commerce from un

lawful restraints.

8. A commission agent who sells cattle at their place of destination, which are sent from another state to be sold, is not engaged in interstate commerce; nor is his agreement with others in the same business, as to the commissions to be charged for such sales, void as a contract in restraint of that com


4. In order to come within the provisions of
the statute, the direct effect of an agreement
of combination must be in restraint of trade
cr commerce among the several states or with
foreign nations.

5. Restrictions on sending prepaid telegrams
or telephone messages, made by a by-law of a
live-stock exchange, when these restrictions
are merely for the regulation of the business
of the members, and do not affect the business
of the telegraph company, are not void as
regulations of interstate commerce.
6. The business of agents in soliciting con-
signments of cattle to commission merchants
in another state for sale, is not interstate
commerce; and a by-law of a stock exchange
restricting the number of solicitors to three
does not restrain that commerce, or violate

the act of Congress.

7. The fact that a state line runs through stock yards, and that sales may be made of a lot of stock in the yards which may be partly in one state and partly in another, has no effect to make the business of selling stock


Interstate commerce.

A combination of commission merchants at stock yards, by which they refuse to do business with those who are not members of their association, even if it is illegal, is not subject to the act of Congress of July 2, 1890, to protect trade and commerce, since their business

is not interstate commerce.

[No. 210.]

ed States, against Henry Hopkins and the
other defendants, residents of the state of
Kansas and members of a voluntary unincor-
porated association known and designated as
the Kansas City Live Stock Exchange. The
purpose of the action is to obtain the dis-
solution of the exchange and to perpetually
enjoin the members from entering into or
from continuing in any combination of a

like character.

As a foundation for the relief sought it was alleged in the bill that the members of this association, known as the Kansas City Live Stock Exchange, have adopted articles of association, rules, and by-laws which they have agreed to be bound by; that the business of the exchange is carried on and conducted by a board of directors at the Kansas City stock yards, which are situated partly in Kansas City in the state of Missouri and partly in Kansas City in the state of Kansas, the building owned by the stock-yards company being located one half of it in the state of Missouri and the other half in the state of Kansas, and half of the defendants have offices and transact business in these stock yards and in that part of the building which

is within the state of Kansas and the other

half in that part of the building which is in
the state of Missouri; that the Kansas City
Stock Yards Company is a corporation own-
ing the stock yards, where the business is
done by the members of the exchange; that
substantially all the business transacted in
the matter of receiving, buying, selling and
handling their live stock at Kansas City is
carried on by the defendants herein and by
the other members of the exchange as com-
mission merchants, and that large numbers
of the live stock, consisting of cattle and [580]
hogs and sheep bought and sold and handled
at the stock yards by the defendants and their
fellow members in the exchange, are shipped

Argued February 28, March 1, 1898. De- from the states of Nebraska, Colorado, Texas,
cided October 24, 1898.

Missouri, Iowa, and Kansas and the terri-
tories of Oklahoma, Arizona, and New Mex-

A WRIT OF CERTIORARI to the Unit-ico; that when this stock is received at the

the Eighth Circuit to bring up the whole bers of the exchange, to the various packing
case in which that court had certified cer- houses situated at Kansas City, Missouri,
tain questions. The suit was brought by the and Kansas City, Kansas, and it is also sold
United States against Henry Hopkins et al., for shipment to the various other markets,
members of the Kansas City Live Stock Ex- particularly Chicago, St. Louis, and New
change, to obtain the dissolution of the ex-York; that vast numbers of cattle, hogs, and
change and perpetually enjoin the members other live stock are received annually at
from entering into or from continuing in any the stock yards and handled by the members
combination of a like character. The Circuit of the exchange.
Court of the United States for the District The bill also alleges that large numbers of
of Kansas, First Division, granted the in-
junction, and from the order granting it an
appeal was taken by the defendants to said
Circuit Court of Appeals, and upon a writ of
certiorari the whole case was brought here

the live stock sold at the stock yards by the
defendants are encumbered by mortgages
thereon, executed by their owners in the vari-
ous states and territories, which mortgages
have been given to various defendants as se-

curity for money advanced by them to the different owners to enable them to feed and prepare the cattle for market, and that when the live stock so mortgaged are ready for shipment, they are sent to the defendants who have advanced the money and received the mortgages, and on the sale of the stock the amount of these advances and interest is deducted from the proceeds of the sale of the cattle by the commission merchants owning the mortgages; that ninety per cent of the members of the exchange make such advances, and that the market is largely sustained by means of the money thus advanced to the cattle raisers by the defendants, and that Kansas City is the only place for many miles about which constitutes an available market for the purchase and sale of live stock from the large territory located in the states and territories already named; that it is the custom of the owners of the cattle, many of them living in different states, and who consign their stock to the Kansas City stock yards for sale, to draw drafts on the commission merchants to whom the live stock is consigned, which the consignors attach to the bill of lading issued by the carrier, and the money on these drafts is advanced by the local banks throughout the western states [681]*and territories. These drafts are paid by the consignees and the proceeds remitted to the various owners through the banks.

Sections 2, 3, 4, 5, 6, and 7 relate to the amounts of such commissions, and it is alleged that in some instances the commissions are greater than had theretofore been paid. Section 8 permits the members to handle the business of *nonresident commission firms [582] when the stock is consigned directly to or from such firm, at half the rates fixed by the rule, provided the nonresident commission firms are established at the markets named in the section.

Section 10 prohibits the employment of any agent, solicitor, or employee except upon a stipulated salary not contingent upon the commissions earned, and it provides that not more than three solicitors shall be employed at one time by a commission firm or corporation, resident or nonresident of Kansas City. Section 11 forbids any member of the exchange from sending or causing to be sent a prepaid telegram or telephone message quoting the markets or giving information as to the condition of the same, under the penalty of a fine as therein stated. The rule, however, permits prepaid messages to be sent to shippers quoting actual sales of their stock on the date made; also to parties desiring to make purchases on the market.

Rule 16 provides, in section 1, “that ne member of the exchange shall transace basiness with any persons violating any of the rules or regulations of the exchange, or with an expelled or suspended member after notice of such violation, suspension, or expulsion shall have been issued by the secretary or board of directors of the exchange.”

The business thus conducted is alleged to be interstate commerce, and it is further alleged that if the person to whom the live stock is consigned at Kansas City is not a member of the exchange, he is not permitted It is alleged that the defendants in adoptto and cannot sell or dispose of the stock at ing these rules and in forming the exchange the Kansas City market, for the reason that and carrying out the same have violated and the defendants, and all the other commission are violating the statute of the United merchants, meinbers of the exchange, refuse States, approved July 2, 1890, entitled "An to buy live stock or in any manner negotiate Act to Protect Trade and Commerce against or deal with or buy from a person or com- Unlawful Restraints and Monopolies," and mission merchant who is not a member of the it is charged that it was the purpose of the exchange, and thus the owner of live stock defendants, in organizing the exchange and shipped to the Kansas City market is com- in adopting the rules mentioned, to prevent pelled to reship the same to other markets, the shipment or consignment of any live and by reason of the unlawful combination stock to the Kansas City market unless it existing among the defendants and the other was shipped or consigned to the Kansas City members of the exchange the owner is pre-stock yards and to some one or other of the vented from delivering this stock at the Kan-defendants, members of the exchange, and to sas City stock yards, and the sale of stock is thereby hindered and delayed, entailing extra expense and loss to the shipper, and placing an obstruction and embargo on the marketing of all live stock shipped from the states and territories to the Kansas City market which is not consigned to the stock-yards company or to the defendants, or some of The answer of the defendants admitted them, members of the stock exchange. their forming the exchange and becoming It is alleged that the defendants, as mem-members thereof, and adopting, among bers of the exchange, have adopted certain others, the rules specially mentioned in comrules, among them being rules 9 and 16, plainant's bill. They denied that the exwhich are particularly alleged to be in re-change itself engaged in any business whatstraint of trade and commerce between the states, and intended to create a monopoly, in contravention of the laws of the United States in that behalf.

Rule 9 provides as follows:

"Section 1. Commissions charged by members of this association for selling live stock shall not be less than the following named rates."

compel the shippers of live stock from other states and from the territories to pay to the defendants the commissions and charges provided for in rule 9, and to prevent such shippers *from placing their property on sale [583 at the Kansas City market unless these commissions were paid.

ever, and alleged that it existed simply in order to prescribe rules and provide facilities for the transaction of business by the members thereof, and to govern them by such rules and regulations as have been evolved and sanctioned by the developments of commerce, and which are universally recognized to be just and fair to all concerned.

It was further set up in the answer that

each member of the organization was in fact left free to compete in every manner and by all means recognized to be fair and just for his share of the business which comes to the point at which the members of the organization do business; that in adopting their rules they followed in all substantial respects the provisions which had been made upon the same subject respectively by the exchanges theretofore established at Chicago and East St. Louis, Illinois, and which have been since established at St. Louis, Omaha, Indianapolis, Buffalo, Sioux City, and Fort Worth. That the exchange at no time refused to admit as a member any reputable person who was willing to comply with the conditions of membership and to abide by the rules of the organization.

Various allegations in the bill as to the effect of the organization in precluding any sales or purchases of cattle other than by its members are denied.

such rules and regulations are in all respects
legal and binding. They deny all general
and special allegations of illegal agreements,
combinations, or conspiracies to violate any
law of the United States or of the state of

The complainants, in addition to their bill,
used several affidavits, the tendency of which
was to show that by virtue of the adoption
of rules 9 and 16, the members of the ex-
change refused to deal with one who had
violated a rule and had been suspended by
reason thereof, and that by reason of this
refusal to do business, the member thus sus-
pended was substantially incapacitated from (585)
carrying on his business as a commission
merchant, and that by this combination de-
fendants, in forming such rule and in adher-
ing to it, have greatly injured the business
of such member.

The defendants read counter-affidavits for
the purpose of sustaining their answer,
which were replied to by the complainants
filing affidavits in rebuttal, and upon these
affidavits and the pleadings above described
an application for an injunction was made
to the circuit court of the United States for
the district of Kansas, first division. That
court, after argument, granted an injunction
restraining the defendants from combining
by contract, express or implied, so as by their
acts, conduct, or words to interfere with,
hinder, or impede others in shipping, trading,
selling, or buying live stock that is re-
ceived from the states and territories at the
stock yards in Kansas City, Missouri, and
Kansas City, Kansas; also enjoining them
from acting under the rules of the exchange

The defendants also deny that the exercise of their occupation as commission merchants, doing business as members of the exchange, constitutes or amounts to interstate commerce within the meaning of the Constitution or laws of the United States. They allege that they have no part in or control over the disposition of the live stock sold by them to others, nor of live stock purchased by them as commission merchants acting for others. They allege that the stock-yards company permits any person whatsoever to [584]transact business at its yards who will pay the established charges of that company for its services, and that in point of fact a very large part of the business done at said yards is transacted by persons who are not mem-known as rules 9 and 16, and from attemptbers of the exchange and without the interposition of such members. It is also alleged in their answer that they are under no obligations to extend the privileges of the exchange to a person who is not a member thereof, who has violated its rules and been suspended from membership, and who has voluntarily withdrawn therefrom and announced his purpose to carry on his business as a competitor of the members of such exchange to the de-suasion, threat, or by other means, to deal or struction of said organization and its rules and to the injury of his competitors.

ing to impose any fines or penalties upon
members for trading or offering to trade with
any person respecting the purchase and sale
of any live stock; and also from discriminat-
ing in favor of any member of the exchange
because of such membership, and especially
from discriminating against any person trad-
ing at the stock yards, and from refusing, by
united or concerted action, or by word, per-

trade with persons with respect to such live
stock who are not members of the associa-
tion, because they are not members of such
association, or in any manner from interfer-
ing with the right and freedom of all and
any persons trading or desiring to trade in
such live stock at the stock yards, the same
as if the exchange did not exist. The defend-
ants were also enjoined from agreeing or at-
tempting to limit the right of any person
in business at the Kansas City stock yards
to employ labor or assistance in soliciting
shipments of live stock from other states or
territories, and from enforcing any agree-
ment not to send prepaid telegrams from
the stock yards to any other state or terri-

It is also set up that defendants cannot be compelled to deal with a nonmember of their organization, or a person violating its rules, or with one who has been suspended for such violation, or who has withdrawn therefrom, or who has announced his intention to destroy said organization and to compete with the members thereof, and the defendants allege that they cannot be compelled to deal with any person whatsoever, and that they had a right to establish said exchange, and now have the right to maintain the same, and to require the observance of its rules and regulations on the part of their associates so long as they desire to retain the privi-tory. leges of membership in the body. They allege The district judge delivered an opinion that their rules are in harmony with the rules and regulations of commercial exchanges which have existed for more than a hundred years, and which are now to be found in every state almost in the United States and throughout the world, and that

upon granting the injunction, which will be [586]
found reported in 82 Fed. Rep. 529. From
the order granting it an appeal was taken by
the defendants to the United States circuit
court of appeals for the eighth circuit, which
court certified to this court certain questions

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