The means employed in respect of the combinations forbidden by the anti-trust act, and which Congress deemed germane to the end to be accomplished, was to prescribe as a rule for interstate and international commerce (not for domestic commerce), that it should not be vexed by combinations, conspiracies or monopolies which restrain commerce by destroying or restricting competition. We say that Congress has prescribed such a rule, because in all the prior cases in this court the anti-trust act has been construed as forbidding any combination which by its necessary operation destroys or restricts free competition.1

Following this doctrine in the Harriman v. Northern Securities Company case, the plan of dissolution proposed by Mr. Harriman was rejected because it would tend to reduce the competition then existing between the Union Pacific and Northern Pacific Railroads. This, it was declared, "would directly contravene the object of the Sherman law, and the purposes of the government suit." 2

In the Shawnee Compress case, the Court nullified the lease to the larger company on the ground that "the first effect would necessarily be the cessation of competition." Again, in the Dr. Miles Medical Company case, because a system which eliminated all competition had the same effect as a combination of retailers, the plan was declared invalid.

The Standard Oil and American Tobacco cases were based on the doctrine that monopoly must inevitably be harmful to the public, and that the restoration of competitive conditions would insure the safeguarding of the common interest. The acts of both of these companies were found to have destroyed the potentiality of competition by the formation of a monopoly; this monopoly was, therefore, dissolved.

1 193 U. S. 337.

* 197 U. S. 297.

In the Union Pacific case, in discussing the form of the mandate,1 the Court declared that

the main purpose of the act is to forbid combination and conspiracies in undue restraint of trade or tending to monopolize it, and the object of proceedings of this character is to decree, by as effectual means as a court may, the end of such unlawful combinations and conspiracies.2

3

And in the Patten case, the Court again proclaimed its policy to be the assurance of competition.

It well may be that running a corner tends for a time to stimulate competition; but this does not prevent it from being a forbidden restraint, for it also operates to thwart the usual operation of the laws of supply and demand, to withdraw the commodity from the normal current of trade, to enhance the price artificially, to hamper users and consumers in satisfying their needs, and to produce practically the same evils as does the suppression of competition.

Throughout the entire period, then, the policy of the government has been to regard competition as beneficial. It has deemed free competition to be a sufficient, if not a perfect, regulator of prices. The whole energy of the government, therefore, has been bent on the insurance of competition. In all its discussion of monopoly, its evil has been taken for granted. However, we must be careful to remember that by this the government has always referred to a monopoly having complete power, and never to a monopoly subject to regulation.

1 Jan. 6, 1913.

In its original decision, on Dec. 2, 1912, the Court said: "To preserve from undue restraint the free action of competition in Interstate commerce was the purpose which controlled Congress in enacting the statute, and the courts should construe the law with a view to effecting the object of its enactment."

Jan. 6, 1913.

For the recognition that this may exist, we have but to turn to the interstate commerce acts, and to the patent acts. These, however, lie rather outside of the field of this study. In connection with industrial monopoly, this idea seems to have been strictly excluded, and the discussion limited to the question of free competition versus absolute monopoly, with the decision unanimously favoring the former. This fact is clarified by the reasons which have been declared by the government to be the causes for the forming of combinations.

The reasons which have caused the formation of

combinations

A study of the Congressional Record shows the motives. assigned by the authors of the Sherman bill for the formation of trusts to be mainly anti-social.

Senator Sherman made various statements in this regard. While he said in one place, " In providing a remedy, the intention of the combination is immaterial; the intenton of a corporation cannot be proven,"1 and later spoke of the great benefits which corporations, especially those of a quasi-public nature, had brought about through the cheapening of production, still the combinations he was dealing with he described in vivid language as formed solely for the objects of making competition impossible, of controling the market, of raising or lowering the prices, according to their selfish interests. "Its governing motive," he asserted, "is to increase the profits of the parties composing it," and again, "The sole object of such a combination is to make competition impossible."

The possible advantages of combinations were quite lost sight of in the later discussions. Every page of the debates

1 Congr. Rec., 1890, vol. xxi, p. 2456.

Ibid., p. 2457.

is filled with complaints of increased prices and wrongs inflicted on the public by combinations. The Reagan bill,' which was added in toto to the original Sherman bill, specifically prohibited certain acts of combinations, which acts, evidently, combinations were created to perform. Since this bill was endorsed by a large majority of the Senate, it shows clearly the trend of thought at that time. The acts prohibited were the prevention of competition, and the altering of prices.

In the House, also, there was unanimity of opinion concerning the evil purposes of the trusts. Mr. Wilson described them as being formed only when production had outstripped consumption, in order to raise prices, and Mr. Taylor, although differing with Mr. Wilson in his tariff views, nevertheless agreed in describing a trust as the "monster who robs the farmer on one hand, and the consumer on the other." These opinions are merely typical of all the speeches with which the pages of the Congressional Record are filled previous to the passage of the act. Consequently, it is concluded that the attitude of Congress towards combinations was thoroughly hostile-that it regarded them as existing for the sole purpose of robbing the general public. This view was accordingly taken over by the Supreme Court.

In the Joint Traffic case, it declared that

the agreement affects inter-state commerce by destroying competition and by maintaining rates above what competition might produce. If it did not do that, its existence would be useless, and it would soon be rescinded, or abandoned. Its acknowledged purpose is to maintain rates, and if executed, it does so.

1 Congr. Rec., 1890, vol. xxi, p. 2611. 171 U. S. 569.

In the Addyston Pipe case, the Court again clearly announced its belief that the reason for a combination was to obtain higher prices, in the following language:

The combination thus had a direct, immediate and intended relation to and effect upon the subsequent contract to sell and deliver the pipe. It was to obtain that particular and specific result that the combination was formed, and but for the restriction, the resulting high prices for the pipe could not have been obtained.1

Again, the Court said that the sole purpose for the formation of the Northern Securities Company was the suppression of competition. To quote from the language of Justice Harlan :

All the stock it [the Securities Company] held or acquired in the constituent companies was acquired and held to be used in suppressing competition between those companies. It came into existence only for that purpose.2

The cessation of competition was a chief factor in the decision of the Shawnee Compress Company case. The larger Gulf Compress Company had bought the smaller one, which at the same time contracted not to re-enter the industry, and to aid the other. "The first effect," the Court declared, "would necessarily be the cessation of competition.

In the Standard Oil case, the Court went further and assigned reasons for the formation of combinations in addition to that of increasing prices. An examination of past laws led to the conclusion

that as to necessaries of life the freedom of the individual to

1175 U. S. 243. '209 U. S. 433.

193 U. S. 354.