the terms of the conference agreements were held not to violate the Sherman Antitrust Act, the defendants were enjoined in the Prince Line case from refusing to carry cargo at their regular berth rates when there was unengaged space in their vessels.

AMERICAN TOBACCO Co. v. UNITED STATES (221 U. S., 106), SUPREME COURT, 1911.-In this case the lower court dismissed the Government's bill as to two foreign corporations named as defendants, viz, the Imperial Tobacco Co. and the British-American Tobacco Co. On appeal the Government contended that the bill against these companies should not have been dismissed but that the companies should have been commanded to observe the Sherman Act so far as their dealings in the cases were concerned.

The final decree in the suit directed, among other things, that covenants between the Imperial Tobacco Co., the American Tobacco Co., and the American Cigar Co., by which the former and certain of its directors agreed not to engage in the manufacture or sale of tobacco in the United States, and the two American companies and certain of their directors agreed not to engage in said business in Great Britain or Ireland, and all three agreed not to engage in said business in countries other than Great Britain, Ireland, and the United States be rescinded, except such as related wholly to business in foreign countries or such as were covenants exclusively between foreign corporations and related wholly to business in or between foreign countries.

It may be noted that it was provided in the contracts containing the objectionable covenants that they should be construed and take effect as contracts made in England and in accordance with the law of England.

Section 7. Restraint of trade.

The meaning of the term "restraint of trade" as used in the Sherman Act, has been the subject of frequent definition by the courts. The first authoritative view was given by the Supreme Court in the Trans-Missouri Freight Association case (see p. 84), and was in effect that every contract in restraint of trade, whether such restraint was reasonable in its character or not, was prohibited. This view was subsequently somewhat modified, at least in the form of expression, by the same justice in the same court, in the Joint Traffic Association case. (See p. 85.) A further departure from this view was made in the Standard Oil case (see p. 86), which was also followed in the American Tobacco case (see p. 88). In the last two cases the view taken was substantially that the restraint of trade which was prohibited by the Sherman Act could be determined by the courts by applying the same standard of interpretation that had been applied by the courts in the interpretation of the common law

in England and in this country with regard to restraint of trade and monopoly.

UNITED STATES v. TRANS-MISSOURI FREIGHT ASSOCIATION (166 U. S., 290), SUPREME COURT, 1897.-In 1889 certain railway companies formed an association agreement for the purpose, among other things, of fixing the rates of transportation, alleged to be reasonable, in an area comprising a large part of the United States, and of fining the members who failed to maintain the rates so fixed. This association continued in operation after the passage of the Sherman Act on July 2, 1890. The Government brought suit to have the association dissolved and the parties thereto enjoined from further combination of like character.

It was claimed by the Government that the rates fixed were excessive, but apparently no attempt was made to prove this point. The defendant railroads set up the defense that the rates were reasonable and that without such agreement the railroads would incur great loss and possibly ruin; hence, they claimed, the agreement was a reasonable restraint of trade and not prohibited by the act.

The court held that the prohibitions of the Sherman Act apply to all contracts in restraint of interstate or foreign commerce without exception or limitation, and are not confined to those in which the restraint is unreasonable.

The court said in part (p. 328):

The term is not of such limited signification. Contracts in restraint of trade have been known and spoken of for hundreds of years both in England and in this country, and the term includes all kinds of those contracts which in fact restrain or may restrain trade. Some of such contracts have been held void and unenforceable in the courts by reason of their restraint being unreasonable, while others have been held valid because they were not of that nature. A contract may be in restraint of trade and still be valid at common law. Although valid, it is nevertheless a contract in restraint of trade, and would be so described either at common law or elsewhere. By the simple use of the term "contract in restraint of trade," all contracts of that nature, whether valid or otherwise, would be included, and not alone that kind of contract which was invalid and unenforceable as being in unreasonable restraint of trade. When, therefore, the body of an act pronounces as illegal every contract or combination in restraint of trade or commerce among the several States, etc., the plain and ordinary meaning of such language is not limited to that kind of contract alone which is in unreasonable restraint of trade, but all contracts are included in such language, and no exception or limitation can be added without placing in the act that which has been omitted by Congress. As a possible but not explicit modification of this rigid and sweeping rule, the following sentence should be noted (p. 329):

A contract which is the mere accompaniment of the sale of property, and thus entered into for the purpose of enhancing the price at which the vendor sells it, which in effect is collateral to such sale, and where the main purpose of the whole contract is accomplished by such sale, might not be included, within the letter or spirit of the statute in question.

In a vigorous dissenting opinion of four justices it was denied, however, that the term "restraint of trade" had a generic meaning which included all contracts restraining the freedom of trade, whether reasonable or unreasonable, and that where such language was used it was not a definition. The dissenting opinion on this point was as follows (p. 346):

Is it correct to say that at common law the words "restraint of trade" had a generic signification which embraced all contracts which restrained the freedom of trade, whether reasonable or unreasonable, and, therefore, that all such contracts are within the meaning of the words "every contract in restraint of trade"? I think a brief consideration of the history and development of the law on the subject will not only establish the inaccuracy of this proposition, but also demonstrate that the words "restraint of trade" embrace only contracts which unreasonably restrain trade, and, therefore, that reasonable contracts, although they, in some measure, "restrain trade," are not within the meaning of the words. It is true that in the adjudged cases language may be found referring to contracts in restraint of trade which are valid because reasonable. But this mere form of expression, used not as a definition, does not maintain the contention that such contracts are embraced within the general terms every contract in restraint of trade.

UNITED STATES v. JOINT TRAFFIC ASSOCIATION (171 U. S., 505), SUPREME COURT, 1898.-The facts and the judgment of the court in this case have been given in some detail above (see p. 73); the combination in question was a rate-fixing agreement of railroad companies. Counsel for the railroads argued that an agreement to fix reasonable rates was not in restraint of trade within the meaning of the Sherman Act. The opinion of the court, which was given by the same justice as in the Trans-Missouri case, maintained the same position as before, but the language was much less sweeping and made the distinction between the restraints of a direct and indirect nature.

The court said in part (p. 568):

In Hopkins v. United States, decided at this term, post, 578, we say that the statute applies only to those contracts whose direct and immediate effect is a restraint upon interstate commerce, and that to treat the act as condemning all agreements under which, as a result, the cost of conducting an interstate commercial business may be increased, would enlarge the application of the act far beyond the fair meaning of the language used. The effect upon interstate commerce must not be indirect or incidental only. An agreement entered into for the purpose of promoting the legitimate business of an individual or corporation, with no purpose to thereby affect or restrain interstate commerce, and which does not directly restrain such commerce, is not, as we think, covered by the act, although the agreement may indirectly and remotely affect that commerce. We also repeat what is said in the case above cited, that "the act of Congress must have a reasonable construction, or else there would scarcely be an agreement or contract among business men that could not be said to have, indirectly or remotely, some bearing upon interstate commerce, and possibly to restrain it." To suppose, as is assumed by counsel, that the effect of the decision in the TransMissouri case is to render illegal most business contracts or combinations, however indispensable and necessary they may be, because, as they assert, they all restrain

trade in some remote and indirect degree, is to make a most violent assumption and one not called for or justified by the decision mentioned, or by any other decision of this court.

This interpretation of every contract in restraint of trade provided a transition to the doctrine advanced in the Standard Oil case, which follows.

STANDARD OIL Co. v. UNITED STATES (221 U. S., 1), SUPREME COURT, 1911.-The Standard Oil Co., a New Jersey corporation engaged in refining oil, owned the capital stock of numerous other corporations engaged in producing oil, in transporting oil by pipe line, tank cars, tank vessels, etc., in refining oil, and in marketing oil in various States of the United States and in foreign countries. This corporation and its subsidiary companies transported more than four-fifths of the crude oil from the eastern oil fields, manufactured more than three-fourths of the refined oil in the United States, and marketed more than four-fifths of the illuminating oil and naphtha sold in the United States. The combination was consolidated by a trust agreement in 1882, which was superseded by a holding company in 1899. The trust and the holding company acquired through control of the subsidiary companies the power to fix the price of crude oil and the rates of transportation thereon. They also prevented competition between these numerous subsidiary companies. The Government claimed there was a continuing combination in restraint of trade and attempt to monopolize a part of interstate and foreign commerce. The court held that the Standard Oil Co. was a combination in restraint of interstate commerce.

The terms of the law, "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce," were held to signify all undue interferences with trade, of whatever form or description, and the existence of such interference was a matter for the court to determine according to the facts in the case and to the standard of reason which had been applied in the interpretation of the common law.

The court said in part (pp. 59–60):

(a) That the context manifests that the statute was drawn in the light of the existing practical conception of the law of restraint of trade, because it groups as within that class, not only contracts which were in restraint of trade in the subjective sense, but all contracts or acts which theoretically were attempts to monopolize, yet which in practice had come to be considered as in restraint of trade in a broad sense.

(b) That in view of the many new forms of contracts and combinations which were being evolved from existing economic conditions, it was deemed essential by an allembracing enumeration to make sure that no form of contract or combination by which an undue restraint of interstate or foreign commerce was brought about could save such restraint from condemnation. The statute under this view evidenced the intent not to restrain the right to make and enforce contracts, whether resulting from combination or otherwise, which did not unduly restrain interstate or foreign com

merce, but to protect that commerce from being restrained by methods, whether old or new, which would constitute an interference that is an undue restraint.

(c) And as the contracts or acts embraced in the provision were not expressly defined, since the enumeration addressed itself simply to classes of acts, those classes being broad enough to embrace every conceivable contract or combination which could be made concerning trade or commerce or the subjects of such commerce, and thus caused any act done by any of the enumerated methods anywhere in the whole field of human activity to be illegal if in restraint of trade, it inevitably follows that the provision necessarily called for the exercise of judgment which required that some standard should be resorted to for the purpose of determining whether the prohibitions contained in the statute had or had not in any given case been violated. Thus not specifying but indubitably contemplating and requiring a standard, it follows that it was intended that the standard of reason which had been applied at the common law and in this country in dealing with subjects of the character embraced by the statute, was intended to be the measure used for the purpose of determining whether in a given case a particular act had or had not brought about the wrong against which the statute provided.

Regarding the relation of this interpretation of the law to previous judicial decisions on the same subject the court said (pp. 67–68):

And in order not in the slightest degree to be wanting in frankness, we say that in so far, however, as by separating the general language used in the opinions in the Freight Association and Joint Traffic cases from the context and the subject and parties with which the cases were concerned, it may be conceived that the language referred to conflicts with the construction which we give the statute, they are necessarily now limited and qualified. We see no possible escape from this conclusion if we are to adhere to the many cases decided in this court in which the Antitrust Law has been applied and enforced and if the duty to apply and enforce that law in the future is to continue to exist. The first is true, because the construction which we now give the statute does not in the slightest degree conflict with a single previous case decided concerning the Antitrust Law aside from the contention as to the Freight Association and Joint Traffic cases, and because every one of those cases applied the rule of reason for the purpose of determining whether the subject before the court was within the statute. The second is also true, since, as we have already pointed out, unaided by the light of reason it is impossible to understand how the statute may in the future be enforced and the public policy which it establishes be made efficacious.

Although the decision in this case was unanimous and eight justices concurred in the opinion thereon, which was prepared by the Chief Justice, one of them, Justice Harlan, wrote a separate opinion concurring in the conclusion of the court but dissenting from some of the language used in the opinion. The dissenting part of this opinion related to the interpretation of the words "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce." Justice Harlan said in part (pp. 101-103):

When counsel in the present case insisted upon a reversal of the former rulings of this court, and asked such an interpretation of the Antitrust Act as would allow reasonable restraints of interstate commerce, this court, in deference to established practice, should, I submit, have said to them: "That question, according to our practice, is not open for further discussion here. This court long ago deliberately held (1) that the act, interpreting its words in their ordinary acceptation, prohibits all restraints of interstate commerce by combinations in whatever form, and whether reasonable or