(2) Sale of patented articles [Dick case reversed] How it can be called substantial and unreasonable restraint of trade to refuse to deal with a man who avowedly is to use his dealing to injure the vendor; when said vendor makes and sells only such an advertisement-begotten article as Cream of Wheat, whose fancy name needs the nursing of carefully handled sales to maintain an output of trifling moment in the food market, is beyond my comprehension.1 The Circuit Court of Appeals at New York upheld the action of the lower court in refusing the injunction, basing its ruling on the fact that the Cream of Wheat Company had the right to refuse to sell to retailers, and that the Great Atlantic and Pacific Tea Company was a retailer. This interpretation, if followed by the Supreme Court may somewhat modify the reasoning already explained in the Miles case. It tends to show that the lower courts, at least, regard the Clayton Act as allowing price fixing, provided such price fixing does not "substantially" lessen competition. The third section of the act is in the nature of the legislative revision of the decision in the Dick case.2 It will be remembered that the court there held that the vendor of a patented article might sell his article on the condition that only such other articles as he specified were used with it. This section prohibits the selling or leasing of articles, whether patented or unpatented, on the condition that the purchaser or lessee shall not use goods or supplies of a competitor where the effect of such a condition would be to lessen competition substantially or to create a monopoly. There is room for judicial interpretation as to whether or not a specific conditional lease does actually lessen competition substantially; but the purport of the section is to sustain the dissenting minority in the Dick case and to uphold the reasoning of the majority in the Sanatogen case. It also should be remembered that the court has specifically reversed its ruling on the Dick case, and that upon independent reasoning and not upon this section of the law.3 1 American Year Book (1915), PP. 349, 350. See also an exhaustive discussion of this case by Sumner H. Slichter, "The Cream of Wheat Case," American Political Science Quarterly, Vol. XXXI, p. 392. 2 See p. 511. 8 See p. 513. tion of antitrust laws to labor organiza forbidden Section 6 is aimed at a recall of the decision in the Danbury (3) ApplicaHatters case.1 In this case it will be remembered that the anti-trust laws were invoked against a labor union in the case of a boycott. In the Clayton Law it is specifically declared "that tions the labor of a human being is not an article or commodity of commerce," and that "nothing contained in the anti-trust laws shall be construed to forbid the existence of labor, agricultural, or horticultural organizations from carrying out the legitimate objects thereof; nor shall such organization, or the members thereof, be held or construed to be illegal combinations or conspiracies in restraint of trade under the anti-trust laws." (4) Con solidations Corporations engaged in commerce are forbidden to acquire the whole or a part of the stock of other corporations where the and comeffect would be to lessen competition substantially. Exceptions binations are allowed in the acquisitions of stock for investment and not for the purpose of control; and in the formations of subsidiary companies and feeders for the lines of common carriers. locking Investigation showed that many banks and corporations, (5) Internominally in competition, had boards of directors containing directorates many of the same persons. Moreover, certain companies sold securities to or bought supplies from banks or corporations which had large representation upon both boards. Sections 8 and 10 of the Clayton Act attempt to check this. ment Any person who is injured by anything forbidden in the anti- (6) Enforcetrust laws may sue in the court of the district where the defendant resides, or is found, or has an agent, without respect to the amount in the controversy, and may recover threefold damages and a reasonable attorney's fee if his suit is sustained. The carrying out of the administrative provisions of the act are vested, for banks, in the Federal Reserve Board; for common carriers, in the Interstate Commerce Commission; for other corporations, in the Federal Trade Commission. Cases are taken directly to the Circuit Court of Appeals, which is directed to expedite them and give them precedence. In both the Trade Commission Act and the Clayton Act, the Commission and the court are forbidden to relieve or absolve any person from any liability under the anti-trust laws. Thus 1 Loewe v. Lawlor, see p. 508. Effect of Act on business it would appear that the policy of the government is still largely of a prohibitive or negative nature and that little advance has been made towards providing a body which can engage in constructive regulation. Such a commission should be able to do what the court has done in applying the rule of reason, namely, authorize harmless or beneficial combinations, perhaps allow price fixing in cases where it seemed beneficial, and have power to approve of practices which it deemed were not unfair. As it is, the order of the Commission gives no legal immunity. The case may be carried to the courts and the same principles applied as in the application of the Sherman Law. In one sense, however, these laws are of great importance and advantage. They provide for close and frequent supervision, and the mere publicity of their investigations and hearings will do much to prevent unfair practices and perhaps to influence public opinion in favor of a more constructive policy. CHAPTER XX THE EXERCISE OF THE POLICE POWER BY THE FEDERAL GOVERNMENT power The Supreme Court has briefly defined the police powers The police as "... nothing more nor less than the powers of government inherent in every sovereignty. . . that is to say, . . . the power to govern men and things." 1 The police inherent in power the states may power in those fields to it delegated The federal government, being one of delegated powers and this power not being delegated, it is consequently left with the states. It cannot be taken from them, either in whole or in part, and exercised by Congress. All that the federal government can do is to see that the states exercise this power under the limitations of the Constitution and do not, under the guise of exercising it, encroach upon the field granted to the national government.2 But if the police power be the power of government, Congress Congress must possess this power in the fields which are delegated to it exercise for control. Congress, therefore, while possessing no general the police police power, has, in exercising its right of controlling commerce and the other functions granted to it, the right to enact measures for the government of these functions; and these measures may affect the health, safety, and morals not only of persons engaged in the conduct of these functions but of the people at large. Thus, while it seems unlikely that Congress could, for example, establish a universal eight-hour day for all persons engaged in industry, yet it can place and has placed limitations upon the hours of labor of those engaged in interstate commerce. So also while a state has not the power to prevent the immigration of the Chinese, yet Congress through its control over immigration has not only excluded the Chinese but has enacted regulations for the protection of immigrant women after they have settled 1 License Cases, 5 How. 504, 583. 2 See T. M. Cooley, Limitations (6th ed.), pp. 705-707. Congress may not exercise the police power generally but only in those fields it controls Interstate commerce legislation (1) The within the states. Again, although Congress cannot prevent the publication of obscene or libelous matter, it may exclude the same from the mails. A very considerable number of statutes have been passed in which it appears that Congress is exercising a federal police power. On examination, however, it will be found that this police power is never exerted because Congress possesses such a general power but solely because Congress has been given certain fields of action, in which, having absolute power, it may legislate concerning the health and morals of the people in those fields. In other words, within the fields of delegated powers Congress may exercise a police power. Without attempting to enumerate all these statutes the following classification will show the extent to which legislation of this kind has been carried. GENERAL POLICE REGULATIONS FOR THE CONDUCT OF INTERSTATE COMMERCE Under this head would naturally be found all the legislation concerning interstate railroads, rates, and rebates, and the antitrust laws, the latest example of which is the Clayton Act. These have just been discussed in the previous chapter and need not be reëxamined. They were passed under the power of Congress to regulate commerce but contain, none the less, many provisions which are in the nature of pure police regulations. POLICE REGULATIONS CONCERNING THOSE ENGAGED IN INTERSTATE COMMERCE An example of the legislation concerning those engaged in interstate commerce is found in the Safety Appliance Act of 1893 with its various amendments. This act, which originally required that all trains employed in interstate commerce should be supplied with certain automatic safety appliances, was sustained in 1904 and 1907.1 In 1903 an amendment applied the provisions of the act to all trains and vehicles used on any railroads 1 Johnson v. Southern Pacific R. R. Co., 196 U.S. 1 ; and (1907) St. Louis, Iren Mountain & Southern R. R. Co. v. Taylor, 210 U.S. 281. |