tion of dealing with competitors by such customers through the payment of rebates to them conditioned on their not so dealing are not within the act. Whitwell v. Continental Tobacco Co., see supra, § 86.

Agreements with customers respecting sales in certain territory, in Phillips v. Iola Portland Cement Co., 125 Fed. 593 (1903), 61 C. C. A. 19, nor the incidental restraint of trade resulting in the purchase of competitors, In re Green, 52 Fed. 104 (1892), were held not within the act.

See also In re Corning, 51 Fed. 205 (1892), and In re Tyrrell, 51 Fed. 213 (1892).

An agreement is not in violation of the act where its effect upon interstate commerce is indirect and incidental only.

See Ellis v. Inman, 124 Fed. 956 (D. C. of Oregon 1903). A contract between the stockholders of a corporation engaged in dealing in fish at different places whereunder, in the purchase of the business and good will, they were not to enter into competition in the business for a term of ten years, was held, in Booth v. Davis, 127 Fed. 875 (E. D. of Mich. 1904), to be lawful and enforcible. In this class of cases where the restraint of trade is incidental and ancillary to a lawful contract and reasonable for the protection of rights under the contract, it has been uniformly held that they are not within the act.

See the Addyston Pipe case, supra.

It was held (Cir. Ct. App., second circuit), Delaware, etc. R. R. Co. v. Cutter, 147 Fed. 51 (1906), that a contract by a railroad company with a patron for the conduct of the business of transportation of milk, whereunder he was to receive a percentage of profit earned on the freight carrier and that the rate charged should not exceed those of competing roads, and plaintiff was to have the exclusive privilege of transporting milk over defendant's road so far as permitted by law, was not in violation of the

act.

§ 446. The Standard Oil case.-In the case of the Standard Oil Company of New Jersey et al. v. United States, 221 U. S. 1, 55 L. Ed. (1911), the supreme court affirmed with modifications the decree of the judges of the circuit court of the eighth circuit, 173 Fed. Rep. 177, and held that the unification of power and control over the oil industry, which resulted from

combining in the hands of a holding company the capital stock of the various corporations trading in petroleum and its products, raised the presumption of the intent to exclude others from the trade and thus centralizing in the combinations the perpetual control of the movement of these commodities in the channels of interstate and foreign commerce. The court said

that the aggregation of so vast a capital under the circumstances in evidence showed a purpose to maintain a dominion over the oil industry, not as the result of normal methods of industrial development, but by means of combination which were resorted to in order that the greater power that might be added than would otherwise have arisen, if normal methods had been followed. The presumption thus raised was made conclusive by considering the conduct of the persons and corporations who had been mainly instrumental in bringing about the power in the New Jersey holding corporation.

In answer to the suggestion that a very small percentage of the crude oil thus produced was controlled by the combination, the court said it was no answer to the attempt to monopolize, as substantial power over the crude product was the inevitable result of the absolute control which existed over the refined product, so that the monopoly of the one carried with it the power to control the other. In thus finding that the combination was an unlawful restraint of trade and was an attempt to monopolize, there was no dissent in the court. (As to the decree in this case, see infra, § 472). As to the construction of the Anti-Trust Act approved in this case, see supra, part I, chap. V.

§ 447. The American Tobacco Company case.-In United States v. American Tobacco Company, 221 U. S. 106, 55 L. Ed. (1911), the supreme court, while concurring in the main with the decree of the circuit court of the second circuit, 164 Fed. Rep. 700, made certain modifications in the decree and therefore remanded the case. (As to the decree, see infra, § 473.) The supreme court held that the acquisition of dominion and control over the tobacco trade by the principal and accessory and subsidiary corporations as the result of purchasing numerous competitors, in many cases closing out the business when acquired, and of obtaining stock control of other competitors, as well as of concerns manufacturing the elements essential to the suc

cessful manufacture of tobacco products, brought about in many cases after a ruinous trade war, the parties in interest uniformly covenanting not to engage in the tobacco business, and the former business often continuing ostensibly as an independent concern, violated the provisions of the Anti-Trust Act against combinations in restraint of commerce, by the monopolization or attempt to monopolize any part thereof, whether looked at from the point of view of stock ownership, or from the standpoint of the principal and accessory or subsidiary corporations viewed independently, including certain foreign corporations, in so far as, by contracts made by them, they became co-operators in the corporation.

§ 448. The Powder Trust case. The circuit judges of the third circuit construed and applied the opinions of the supreme court in the Standard Oil and Tobacco Cases in the case of the so-called powder trust, 188 Fed. 127 (June, 1911). The court found that the combination was based upon an illegal association, and that this illegality was not cured by the formation of a new company for the purpose of acquiring the assets of the other corporations, and vesting the ownership of their plants and the control of their business in that company. The court said the formation of such a corporation and its subsidiaries and the adoption of the new policy was merely a continuance in a different form of the illegal association, and that it constituted a combination in restraint of interstate commerce and to monopolize a part of the same which was unlawful under the Anti-Trust Act. The court discussed the decisions of the supreme court in the Standard Oil Case and American Tobacco Case, and said, "As we read those decisions restraint of interstate trade and restraint of competition in interstate trade are not interchangeable expressions. There may be under the Anti-Trust Act restraint of competition, that does not amount to restraint of interstate trade, just as before the passage of the act there might have been restraint of competition that did not amount to a common law restraint of trade;" adding, "It matters not whether the combination be in the form of a trust or otherwise, whether it be in the form of a trade association or a corporation, if it arbitrarily uses its power to force weaker competitors out of business, or to coerce them into a

sale to or union with the combination, it puts a restraint upon interstate commerce, and monopolizes or attempts to monopolize a part of that commerce in a sense that violates the AntiTrust Act."

8 449 (326). Labor combinations.-The act prohibits any combination or conspiracy in restraint of interstate commerce. It was held In re Debs, 64 Fed. Rep. 724, U. S. Cir. Ct. N. Dist. of Ill. (1894), in an exhaustive opinion, that the original design in the act was to suppress trusts and monopolies in the form of trusts, which of course would be of a contractual character, but that it was equally clear that a further and a more comprehensive purpose came to be entertained and was embodied in the final form of the enactment. Combinations were condemned not only when they took the form of trusts, but in whatever form found, if they be in restraint of trade, and that was the effect of the words "or otherwise."

The Debs case was taken to the supreme court, where the judgment of the circuit court was affirmed, 158 U. S. 564, 39 L. Ed. 1902 (1895), on the broader ground of the general power of the federal government in respect to interstate commerce. The court said however that this was not because it differed from the circuit court in its construction of the statute of 1890.

In United States v. Workingmen's Amalgamated Council of New Orleans, 54 Fed. 994 (1893), the United States circuit court of Louisana held that combinations of laborers as well as of capitalists in restraint of interstate commerce was violative of the act, and that it was no defense that the origin and general purpose of a strike were innocent and lawful, if they had been turned into an unlawful purpose for the restraint of interstate and foreign commerce, and that a general strike for the discontinuance of labor in all departments of business, including including interstate and foreign commerce, enforced by violence and intimidation for the sake of enforcing the employment of none but union men, was unlawful and properly enjoined. See also other cases to same effect at time of industrial disturbances of 1893 and 1894, Waterhouse v. Comer, 55 Fed. Rep. 149; United States v. Elliott, 64 Fed. Rep, 27, Phillips, J., in western district of Missouri; United States v. Agler, 62 Fed. Rep. 826, Baker, J., in District of Indiana; Thomas v. Railroad Co., 62 Fed. Rep. 803, Taft, J., in southern district of Ohio; Toledo, etc. R. Co.

v. Pennsylvania Co. et al., 54 Fed. Rep. 730, Taft, J., in northern district of Ohio; Same v. Same, 54 Fed. Rep. 746, Ricks, J. Charge to grand jury by Grosscup, J., 62 Fed. Rep. 828, and by Ross, J., 62 Fed. Rep. 834. See supra, chapter VI, Part 1, §§ 91, 92; and also sections 8 and 10 Interstate Commerce Act.

The contrary view was taken in United States v. Patterson, 55 Fed. Rep. 605 (1893); but with the exception of this decision the ruling in the Debs case was followed by the other circuit courts.

§ 450. Employment of common agency not necessarily within the act. It was held by the circuit court of appeals, eighth circuit, in Arkansas Brokerage v. Dunn, 173 Fed. 899 (1909), reversing the judgment of the circuit court, that the organization by a number of mercantile jobbers located in the same city, of a brokerage company of which they owned the stock, and the purchase of merchandise required by them from manufacturers and jobbers in other states through such company instead of through other brokers previously patronized, although there was no agreement binding them so to do, and the use of their influence to extend its business, did not constitute a combination or conspiracy in violation of the act. The court said if this expedient affected interstate commerce at all, it was not in a direct, immediate or necessary way which alone would make it obnoxious to the law, but only in an indirect, incidental, and unimportant way not within the denunciation of the law.

§ 451. Acts done outside of the United States not within the act. In American Banana Co. v. United Fruit Co., 213 U. S. 347 (1909), the court affirmed the U. S. court of appeals of the second circuit, 166 Fed. 261 and the circuit court of New York in 160 Fed. 184, in dismissing a complaint which sought to recover damages upon an alleged conspiracy with soldiers and officials in Costo Rica, acting under governmental sanction, the court saying that all legislation is prima facie territorial, and that what defendants did in a foreign country under the facts set forth in the complaint was not within the scope of the statute.

It is immaterial, however, that a combination is made in a foreign country, if it affects the foreign commerce of this country and is put into operation here. Thus, in Thomsen v. Union Castle Mail S. S. Co., 166 Fed. 251 (1908), the circuit court of