goods from those who held under consignment or from other dealers, wholesale or retail, who had purchased them. And in which way the "retail agents" who supplied the medicines to the defendant, had bought them is not shown.

The bill asserts complainant's "right to maintain and preserve the aforesaid system and method of contracts and sales adopted and established by it." It is, as we have seen, a system of interlocking restrictions by which the complainant seeks to control not merely the prices at which its agents may sell its products, but the prices for all sales by all dealers at wholesale or retail, whether purchasers or subpurchasers, and thus to fix the amount which the consumer shall pay, eliminating all competition.

But it is insisted that the restrictions are not invalid either at common law or under the act of Congress of July 2, 1890, c. 647, 26 Stat. 209, upon the following grounds, which may be taken to embrace the fundamental contentions for the complainant: (1) That the restrictions are valid because they relate to proprietary medicines manufactured under a secret process; and (2) that, apart from this, a manufacturer is entitled to control the prices on all sales of his own products.

First: The first inquiry is whether there is any distinction, with respect to such restrictions as are here presented, between the case of an article manufactured by the owner of a secret process and that of one produced under ordinary conditions. The complainant urges an analogy to rights secured by letters patent.

But whatever rights the patentee may enjoy are derived from statutory grant under the authority conferred by the Constitution. This grant is based upon public considerations. The purpose of the patent law is to stimulate invention by protecting inventors for a fixed time in the advantages that may be derived from exclusive manufacture, use and sale.

The complainant has no statutory grant. So far as appears, there are no letters patent relating to the remedies in question. The complainant has not seen fit to make the disclosure required by the statute and thus to secure the privileges it confers. Its case lies outside the policy of the patent law, and the extent of the right which that law secures is not here involved or determined.

Second. We come, then, to the second question, whether the complainant, irrespective of the secrecy of its process, is entitled to maintain the restrictions by virtue of the fact that they relate to products of its own manufacture.

The basis of the argument appears to be that, as the manufacturer may make and sell, or not, as he chooses, he may affix conditions as to the use of the article or as to the prices at which purchasers may dispose of it. The propriety of the restraint is sought to be derived from the liberty of the producer.

But because a manufacturer is not bound to make or sell, it does not follow that in case of sales actually made he may impose upon purchasers every sort of restriction.

Nor can the manufacturer by rule and notice, in the absence of contract or statutory right, even though the restriction be known to purchasers, fix prices for future sales. It has been held by this court that no such privilege exists under the copyright statutes, although the owner of the copyright has the sole right to vend copies of the copyrighted production. Bobbs-Merrill Co. v. Straus, 210 U. S. 339.

Whatever right the manufacturer may have to project his control beyond his own sales must depend, not upon an inherent power incident to production and original ownership, but upon agreement.

The present case is not analogous to that of a sale of good will, or of an interest in a business, or of the grant of a right to use a process of manufacture. The complainant has not parted with any interest in its business or instrumentalities of production. It has conferred no right by virtue of which purchasers of its products may compete with it. It retains complete control over the business in which it is engaged, manufacturing what it pleases and fixing such prices for its own sales as it may desire. Nor are we dealing with a single transaction, conceivably unrelated to the public interest. The agreements are designed to maintain prices, after the complainant has parted with the title to the articles, and to prevent competition among those who trade in them.

But agreements or combinations between dealers, having for their sole purpose the destruction of competition and the fixing of prices, are injurious to the public interest and void. They are not

saved by the advantages which the participants expect to derive from the enhanced price to the consumer.

The complainant's plan falls within the principle which condemns contracts of this class. It, in effect, creates a combination for the prohibited purposes. No distinction can properly be made by reason of the particular character of the commodity in question. It is not entitled to special privilege or immunity. It is an article of commerce and the rules concerning the freedom of trade must be held to apply to it. Nor does the fact that the margin of freedom is reduced by the control of production make the protection of what remains, in such a case, a negligible matter. And where commodities have passed into the channels of trade and are owned by dealers, the validity of agreements to prevent competition and to maintain prices is not to be determined by the circumstance whether they were produced by several manufacturers or by one, or whether they were previously owned by one or by many. The complainant having sold its product at prices satisfactory to itself, the public is entitled to whatever advantage may be derived from competition in the subsequent traffic.

CHAPTER VIII

INTERNATIONAL AGREEMENTS

NOTE

COMPARATIVELY speaking, international agreements have been rare in the combination and trust movement. On this account, if for no other reason, those that have been made are of peculiar interest.

It is a rather remarkable coincidence that the two most famous international agreements should have been brought into being by identical sets of circumstances. In the case of the tobacco combination, the American manufacturers invaded the territory across the water. In the case of the explosives trade, the situation was exactly the reverse, and the foreign companies were the aggressors. In each case, the outcome was the adoption of an international agreement, drafts of which are given below.

In the nineties the American Tobacco Company established a depot in London, England. In 1901, this company with a view to purchase, opened negotiations with Ogden's (Limited), one of the largest tobacco concerns in Great Britain. By the end of September of that year substantially all the outstanding stock of Ogden's had been acquired. This purchase alarmed the British Manufacturers, and thirteen of the largest concerns in England united to form the Imperial Tobacco Company. This organization began an active campaign to check the invasion inaugurated by the American Tobacco Company, and threatened, as a part of their program, to invade the territory on our side of the Atlantic. The upshot of the matter was an agreement, embodied in two documents, which was made on September 27, 1902.

In 1897, certain foreign manufacturers of black powder, detonators and high explosives, began the erection of factories in Jamesburg, N. J. intending to enter into competition with the explosives combination which at that time existed in the United States. Representatives of the latter visited Europe, toward the close of 1897, and began negotiations with the foreign manufacturers who

had begun factories in the United States. A draft of an agreement embodying the result of these negotiations was ratified by the American Companies. This agreement has been variously styled the London Agreement, Jamesburg Agreement, International Agreement, and European Agreement. It was dated October 26, 1907, and is probably the most interesting single document among the many which the industrial combination and trust movement has produced. Another international agreement that has only recently come to light is the A. J. A. G. Agreement in the aluminum trade, excerpts from which form the fourth exhibit of this chapter.-Ed.

EXHIBIT I

AGREEMENT OF THE AMERICAN TOBACCO COMPANY INTERESTS AND THE IMPERIAL TOBACCO COMPANY, LIMITED, RELATIVE TO THE LIMITATION OF THE SPHERE OF THE OPERATION OF EACH, AND THE TRANSFER OF OGDEN'S LIMITED

1

An agreement made the twenty-seventh day of September, one thousand nine hundred and two, between Ogden's Limited, being a company duly incorporated under English law (hereinafter referred to as the "Ogden Company"), of the first part; The American Tobacco Company, a corporation organized and existing under and by virtue of the laws of the State of New Jersey, one of the States of the United States, of America (hereinafter referred to as the "American Company"), of the second part; Continental Tobacco Company, a corporation organized and existing under and by virtue of the laws of the said State of New Jersey (hereinafter referred to as the "Continental Company"), of the third part; American Cigar Company, a corporation organized and existing under and by virtue of the laws of the said state of New Jersey (hereinafter referred to as the "Cigar Company"), of the fourth part; Consolidated Tobacco Company, a corporation organized and existing under and by virtue of the said laws of the said State of New Jersey (hereinafter referred to as the "Consolidated Company"), of the fifth part; British Tobacco Company, Limited, being a company incorporated under English law (hereinafter referred to as the "British Company"), of the sixth part; and the Imperial Tobacco Company (of Great Britain and Ireland), Lim

1 Report of the Commissioner of Corporations on the Tobacco Industry, Exhibit No. 1, Part I, pp. 431 ff.