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the subject. Although this decision was rendered with reference to the power of the state over an interstate express company, it would seem to follow, as the only regulating power is that of congress, that it can determine what, if any, regulation is required for the conduct of interstate commerce with corporate facilities.

But assuming that congress may have the power to determine on what conditions commerce may be conducted under corporate organizations, or by corporations, it does not follow that it would have an unlimited power in prescribing the terms and conditions of corporate organization to be exacted as a condition of such licenses. These requirements, it would seem, should have a reasonable relation to the business of interstate commerce, over which alone congress has the regulating power.

§ 71 (63). The development of the latent federal power in the regulation of commerce.-The commerce clause in the constitution written in the days of the stage coach and the sailing vessel, has been, and is being adapted, by legislative enactment and judicial construction, to the age of steam and electricity. This does not mean that there has been any strained judicial construction of the constitutional power, for the powers of government were wisely declared in the constitution in broad and comprehensive terms which have proved adequate for the changed economic conditions and the tremendous development of commerce between the states. These forces have compelled a judicial recognition of the latent federal power in the commerce clause of the constitution. These influences will doubtless be felt in the future as they have in the past. Questions of the present day which are now crowding for solution, growing out of new business conditions, the development of great combinations both of commerce and labor, discussed in the succeeding chapters, will bring about new legislation and, doubtless, in time influence the judicial construction of the commerce clause in the application to new conditions which demand an effective governmental control.

Whatever the old time prejudice against the extension of federal power under the complex governmental system of the United States, the practical good sense of the American people recognizes the necessity of substituting an adequate federal

authority in place of an inadequate state authority to meet pressing public needs. This is illustrated in the practical unanimity with which such legislation as the Interstate Commerce Act, the Anti-Trust Act, and the recent extensions of authority have been enacted by congress. Capitalists in control of great commercial combinations prefer one regulating master to forty-six. In like manner the labor organizations, such as the Brotherhoods of Railroad Employes, seek for legislation for their interests which will be adequate and effective and therefore ask for federal in place of state action. It is therefore because there are public needs for the exercise of authority adequate to deal with them, that this exercise of federal authority is demanded.

The broadened judicial conception of the federal power in interstate commerce, is illustrated in the comparative unanimity of the recent (1911) decisions of the supreme court in the application and enforcement of the commerce clause, recalling therein the unanimity of the court in the great constitutional decisions of our early history, and contrasting with the close divisions of the court of a more recent date.1

Judicial constructions as well as legislation may be influenced not only by new business economic and social conditions, and the public opinion based thereon, but also by changes in the moral standards of public opinion. Thus the prevailing opinion in the lottery cases was based upon a distinctly moral ground that public opinion condemned lotteries as recognized public nuisances; while at the time of the adoption of the constitution and for a generation thereafter lotteries were a recognized means approved by public opinion for raising money for educational and charitable purposes. It would have appeared strange indeed to the framers of the constitution that the federal power could ever be successfully exerted to prohibit interstate traffic in lottery tickets.2

1 The Anti-trust and Railroad cases, infra, chapter V; Lottery cases, supra, § 65; Northern Securities case, infra, § 76.

See Waite, C. J., in Stone v. Mississippi, 101 U. S. 814, 25 L. Ed. 1079 (1879). In Cohens v. Virginia, 6 Wheat. 264 (1821), 5 L. Ed. 257, wherein Marshall, C. J.,

delivered his great opinion on the supremacy of the federal judicial power, the case was that of a party claiming the right to sell lottery tickets in Virginia for a lottery in the District of Columbia, estab lished under a charter granted by congress in 1812

§ 72.

73.

74.

CHAPTER V.

BUSINESS COMBINATIONS IN INTERSTATE COMMERCE.

The demand for federal regulation of business combinations.
The Anti-Trust Act of 1890.

Restraint of trade in interstate commerce under the common law. 75. Constitutionality of the act.

76.

Railroads included in the act.

77. A reasonable construction and reasonable restraints of trade

distinguished.

78. Direct and incidental restraint of trade.

79. Suppression of competition must be substantial to be a restraint

of trade.

80. The modern law of restraint of trade.

81. Illegal combinations in interstate commerce.

82. Complete suppression of competition not essential.

83. Monopoly within the meaning of the act.

84. No application to commerce within a state.

85. State holding companies.

86.

Restrictive sales in interstate commerce.

87. No distinction as to commodities subject of contract.

8 72 (64). The demand for federal regulation of business combinations. As the demonstrated incapacity of the states to regulate interstate commerce was the direct occasion for the enactment of the Interstate Commerce Law in 1887, so the antitrust agitation following thereafter caused the demand for the exercise of the federal power in dealing with business combinations in commerce which the states were powerless to control. The distinct economic trend in industrial development, which was then manifested in the efforts to save economic waste in production and distribution by the concentration of capital in business enterprises, resulted in different forms of combinations for the restriction of competition in business, which aroused public hostility and led to the enactment by many states of anti-trust laws more or less drastic, prohibiting all combinations in restraint of competition. Such laws, however, proved inadequate, as they could have no extra-territorial operation beyond state lines, and the freedom of commerce secured under the constitution of the United States precluded the states from excluding "trust-made" goods im

ported from other states. Public opinion, which has found frequent expression in judicial opinions, was firmly convinced that the repression of competition tended to monopoly, and that the control of production and prices by the elimination of competition in any industry was dangerous to the public welfare. It was recognized that the control of prices could be exercised not merely in raising, but also at certain times in certain localities in unduly depressing them so as to crush competitors by underselling. The evil aimed at was the unregulated power of control over industries resulting from the successful elimination of competition through the extension of the principle of business association.

This agitation in congress and out of it resulted in the passage of the so-called Sherman Anti-Trust Act, which was approved July 2, 1890.1

1 In the Standard Oil opinion, the supreme court said that the debates in congress conclusively showed that the main cause which led to the legislation was the thought that it was required by the economic condition of the times; that is, the vast accumulation of wealth in the hands of corporations and individuals, the enormous development of corporations, the facility of combination which such organizations afforded, the thought that the facility was being used and that combinations known as "Trusts" were being multiplied, and the widespread impression that their power had been or would be exerted to suppress individuals and to injure the public generally. The court added that although opinions could not be used as a means for interpret ing the statute, as had been held in the Trans-Missouri Freight As sociation case, 166 U. S. 318, 41 L. Ed. 1007 (1897), that rule in the nature of things is not vio

lated by resorting to debates as a means of ascertaining the environment at the time of the enactment of the particular law; that is, the history of the period when it was adopted.

Hon. William B. Hornblower, in his annual address before the Am. Bar Ass'n, 1911, on Anti-Trust Legislation and Litigation, said:

"The word 'trust' acquired an unenviable prominence in the eighties and became the familiar and common expression for a combination of competing interests under one management. To-day and for many years past, the so-called trust in its original sense has become rare, but the expression sur vives and has assumed a generic significance as indicating and connoting every form of combination of competing interests. The orig inal trust arrangement was, as will be remembered, an arrangement whereby a number of com peting manufacturers, individual or corporate, while retaining their

§ 73 (65). The Anti-Trust Act of 1890.-This act, which was entitled "An Act to Protect Trade and Commerce Against Unlawful Restraints and Monopolies," declared illegal and criminal, punishable by fine or imprisonment or both, every contract or combination, in the form of trust or otherwise, or conspiracy in restraint of trade and commerce among the several states or with foreign nations, and any monopolizing or attempt to monopolize any part of trade or commerce among the states. The act provided penalties for its violation, included contracts in any territory or the district of Columbia, provided for seizure and condemnation of property in the course of transportation owned under any contract made in violation of the act, and gave the right of action to private persons injured by such combinations with three-fold damages, and a summary procedure in equity at the suit of the United States to prevent and restrain violations of the act.1

individual or corporate identity and their individual or corporate ownership of their respective properties, put into the hands of trus tees their respective interests, the trustees being clothed with the right to dictate to the respective competitors the terms on which they should compete, the amount and character of their output and the prices at which the output should be sold. The term 'trust' soon became a term of opprobium and has so remained. The large combinations of capital which now exist in various branches of industry have inherited the oppro bium attaching to this term. To call a combination or a corporation a trust is to excite public condemnation and to put the combination or the corporation on the defensive."

1 See infra, § 432 et seq., for the act in full, with the judicial construction and application of the several provisions.

The Tariff Act of 1894 contained substantially the same prohibition, of combinations, conspira cies, trusts and agreements in restraint of trade or free competi tion in lawful trade or commerce, or to increase the market price in any part of the United States for an article imported or intended to be imported into the United States or of any manufacture in which such imported article enters or is intended to enter. Penalties were imposed and the circuit court vested with jurisdiction to prevent and restrain such violation. Provision was also made for the forfeiture of property owned by any such combination and for a private right of action with three-fold damages and reasonable attorney's fee to any party injured thereby. These sections were continued in force by the Tariff Act of 1897 (see 2nd Comp. Stat. p. 1702), were not repealed by the Tariff Act of August 5th, 1909, known as

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