And the Court decided that the combination was illegal in the beginning.

In the Shipping Trust case the Court says that the main subject matter of the controversy is the controlling of transportation so as to allot proportionate shares of it to the different defendants who are in the combination. Then the Court concludes (p. 974):

"There is nothing to add to the elaborate presentation of all sides of the controversy, * * * and we find it most persuasive to the conclusion that in view of the peculiarities of ocean transportation, the method adopted by the defendantsif purged of its obnoxious feature, the 'fighting' ship-is a reasonable one, which, so far from restraining trade, really fosters and protects it, by giving it a stability which insures more satisfactory public service for all concerned."

In the Harvester case the Court practically eliminated from consideration the results which flowed from the combination, whether good or evil (and the Court in fact found the results not to be evil), and based its decision upon its finding that the combination of the companies was illegal in the beginning.

Quite to the contrary of what the Court did in the Harvester case, the Court in the Shipping Trust case ignored any consideration of the question as to

the statute a reasonable construction, the words 'restraint of trade' did not embrace all those normal and usual contracts essential to individual freedom, and the right to make which was necessary in order that the course of trade might be free, yet, as a result of the reasonable construction which was affixed to the statute, it was pointed out that the generic designation of the 1st and 2d sections of the law, when taken together, embraced every conceivable act which could possibly come within the spirit or purpose of the prohibitions of the law, without regard to the garb in which such acts were clothed. That is to say, it was held that, in view of the general language of the statute and the public policy which it manifested, there was no possibility of frustrating that policy by resorting to any disguise or subterfuge of form, since resort to reason rendered it impossible to escape by any indirection the prohibition of the statute."

whether the combination at its inception was legal or illegal, but considered only the results of the combination.

Both the Harvester and the Shipping Trust cases will be passed upon later by the Supreme Court when some of the existing conflict of ideas as to the meaning of the Sherman law will no doubt be removed.

PURPOSE OF THE TWO NEW LAWS.2

It is the apparent purpose of the new laws to establish guides for business, to afford relief from the condition of uncertainty that has existed, to restrain the development of trusts in their inception, and to assist the Courts in effecting dissolution of any such corporations or associations found to exist in violation of the law.

The Federal Trade Commission law provided for the establishment of governmental machinery for the interpretation and enforcement of its own provisions, of the Sherman law and of any other laws affecting the regulation of business. In addition to creating this machinery, the control of which was vested in the Federal Trade Commission, this law established a new legislative standard in declaring that "unfair methods of competition in commerce are hereby declared unlawful." The Sherman law was aimed only at contracts, combinations and conspiracies in restraint of trade, and monopolies and attempts to monopolize, but did not specifically condemn unfair methods of competition. The phrase "unfair methods of competition" is new in the law. Unfair competi

2. Two laws were passed. The Federal Trade Commission law received the approval of the President on September 26, 1914, and the Clayton law on October 15, 1914.

tion is an old phrase but its meaning has been narrowly limited by the Courts in some decisions.3

In establishing the legislative standard declaring unfair methods of competition unlawful Congress supplemented the rule of the Sherman law and added substantially to the protection afforded to business by the court decisions referred to. The purpose of Congress was to inhibit in their inception those methods which if allowed to continue unchecked or unregulated, would produce the evils to the public which the Sherman law was designed to prevent.

The Clayton law is commonly known as the Supplemental Anti-trust law and is amendatory of the Sherman law. It established new legislative standards by condemning certain price discriminations, lease or sale contracts known as tying contracts, ownership of stock by one corporation in another, and interlocking directors, officers or employees. These new standards are not in conflict with or in limitation of the standard established in the Trade Commission law. They condemn practices upon which Congress desired to place its stamp of special disapproval, although they might be comprehended within the inhibition of the Trade Commission law against unfair methods of competition.

It is to be noted that in adopting this new rule of public policy Congress has safeguarded the rights of corporations and persons against whom charges have

3.—Unfair competition was held to be misrepresentation of the character or brand of goods, attempting to obtain or obtaining trade secrets in violation of the rights of the owners thereof, and similar practices. Howe Scale Co. v. Wyckoff, Seamans & Benedict, 198 U. S. 118, 140; Coats v. Merrick Thread Co., 149 U. S. 561; Fischer v. Blank, 138 N. Y. 244, 252; 33 N. E. 1040, 1041; Rathbone Sard & Co. v. Champion Steel Range Co., 189 Fed. 26, 30; Eastman Kodak Co. v. Reichenbach, 79 Hun. 188, 194; Little v. Gallus, 38 N. Y. Supp. 487, 490.

been or are to be made. The Trade Commission cannot file complaint unless the proceeding appears to be in the public interest. Opportunity for hearing is given. The orders of the Commission are not selfenforcing. There is no penalty for failure to obey them. Opportunity to review the orders in the Courts by any or all parties to Commission proceedings is provided for and the Commission can only enforce its orders after Court proceedings for that purpose. It is doubtful whether there is any private right of action for alleged violations of the prohibition against unfair methods of competition until after the Commission has passed upon the facts in question. The inquisitorial powers of the Commission are not effective as against persons but only as against corporations.

No new crimes are defined or created in the Trade Commission law, except such as concern officers or employees of the Commission. Penalties, of course, are provided for persons who fail to appear as witnesses or produce evidence or who wilfully falsify, mutilate or destroy records.

4

Formerly the Department of Justice alone was vested with authority to enforce the public policy of the Sherman law both by proceedings in equity and by criminal prosecutions, but the ex parte character of the proceedings prior to actually starting the cases in the Courts hampered the government and greatly and unnecessarily annoyed those under attack. The new machinery provides what promises to be substantial relief from these conditions.

The large body of reports and rulings to be published by the Trade Commission will soon be of material assistance to business men in ascertaining the application of these laws to the different lines

4.-State of Minnesota vs. Northern Securities Company et al., 194 U. S. 48 at page 71.

of business. Like the decisions of the Interstate Commerce Commission, the decisions of the Trade Commission will come from one body and will undoubtedly be consistent in their interpretation and elucidation of the statutes.

That the new laws as they now stand are perfect will not be claimed. In a later portion of this discussion we call attention to some probable defects that may call for amendment.

FEDERAL TRADE COMMISSION LAW AND
CLAYTON LAW COMPARED.

It would have been possible to combine the provisions of the Trade Commission and Clayton laws in one enactment. Legislative expediency possibly suggested two laws instead of one, and there is some substantial basis for two separate laws. The Trade Commission law is general in its scope, declaring unfair methods of competition unlawful, and creating the Commission to determine the facts and enforce the rule. But the Commission may act only when it believes a proceeding would be in the public interest. This is one of the distinguishing characteristics of the Trade Commission law. In establishing the rule against unfair methods of competition and placing its interpretation with the Commission and Courts, Congress did not relinquish the right further to legislate on the subject or to declare specific acts unlawful Contemporaneously with its consideration of the measures ultimately enacted into the Trade Commission law, Congress had under consideration and subsequently by only a few days passed the Clayton law in which it declared price discrimination, tying contracts, stock ownership by one corporation in another, and interlocking directors, officers or em