that the statute was drawn up in the light of economic conditions; that it was broad in its classifications; and that judgment was therefore necessary in its application. The standard to be inferred, none being named, was consequently the standard of reason. Moreover, the Chief Justice later contended that "reason" had always been the standard; that it was only by separating certain statements from the whole context that the opposite could be maintained; and that, in consequence, his announcement was not as revolutionary as it appeared.

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This standard of reasonableness was reaffirmed in the American Tobacco Company case, in even more positive language. The soundness of the rule that the statute should receive a reasonable construction, after further mature deliberation, we see no reason to doubt."1 And again, the Chief Justice insisted that he did not depart from any previous decision. That there is much justification for this view is undoubted. But there is also evidence to show that a change of the test for the legality of a restraint has taken place.

But the directness of the restraint has not been completely superseded, as was shown in the Patten case. The defendants insisted that the restraint, if any, was at most an indirect one. But to this Mr. Justice Vandeventer refused to accede. And after explaining the nature of a corner in cotton, he decided that

We regard it as altogether plain that by its necessary operation it would directly and materially impede and burden the due course of trade and commerce among the states and therefore inflict upon the public the injuries which the anti-trust act is designed to prevent.

1221 U. S. 180.

The conclusion arrived at in this study is that there has been a gradual and continuous increase in the use of “reason" in the determination of the validity of the restraint. It seems clear that at first this question centred about the inevitable result of the contract: when this was primarily to restrain trade, the contract was nullified. The next step was the use of reason in deciding whether the effect of the contract was a direct or an indirect restraint. The present policy is considered to be that the inevitableness of the restraint is held subordinate to its reasonableness, in regard to the public and the covenantees.

This opinion is held despite Chief Justice White's argument that there is no substantial difference between the test of reason, and the test of directness applied with reason, especially in view of the reasonableness of the decisions which applied the directness of the restraint. That the two often coincide, does not render them identical. For when the directness of the restraint is regarded as due to its necessity, and the reasonableness of the restraint is judged with reference to its equity in regard to public and individual welfare, the difference is fundamental.

Conclusions

A summary of the government policies in regard to these questions leads to the following conclusions:

Monopoly is regarded as necessarily an evil. Free competition is the law which must govern all industry. The reasons for the formation of combinations are entirely anti-social; that is, combinations are created solely for the sake of preventing competition and securing a monopoly.

In the condemnation of monopolies the single acts of combinations, taken by themselves, are disregarded. The legality of the acts, judged singly, does not render legal the combination in its entirety. The evil is inherent in the

creation of so large a combination as to be a monopoly. Moreover, all classification of monopolies, made with a view to render some monopoly, through its particular kind of business, or through the form in which it is embodied, immune from prohibition, is forbidden. All monopolies, of whatever kind or form, are to-day included under the act.

The only classification which is permitted is in the kind of restraint of trade. When this, in the judgment of the Court, is unreasonable, in respect to the parties involved and the public welfare, it is prohibited. Only those kinds of restraint which, in these respects, are reasonable, are permitted.

In this connection it is interesting to note that since the adoption of this criterion by the Supreme Court, no restraint has ever been considered a reasonable one: the Court has never specifically declared a contract to be in restraint of trade, and yet of so reasonable a character that it has permitted it. The significance of this, however, must not be overestimated. The Court may decide only those cases brought before it; and it simply means that its judgment thus far has been in accord with the Department of Justice, which brought the case before it to decide.1

2

It is for this reason that the policy of the Administration has been of importance. While there are few data by which this may be judged, it is yet fairly clear that the reasonableness of many contracts and combinations has been judged favorably in the past.

A few cases have been instituted by private parties, with a view to recovering alleged damages. These, however, are exceptional, and affect the truth of the above statement only in a minor degree.

'The fact that suits against many combinations have not been instituted by the government furnishes confirmatory evidence of a negative character.

The validity of all contracts, then, depends on their conforming to the standard of reasonableness, in regard both to the covenantees and the general public; and this reasonableness is subject to the judgment, first, of the Administration, including the President and the Attorney-General, and second, of the Supreme Court.

PART II

In part two are considered those policies of the government more directly concerned with the methods by which monopolies should be treated. These are four in number:

First, the policy in regard to the state or national scope of the trust problem.

Second, the method by which prices should be fixed.
Third, the relation of large size to monopoly.

Fourth, the policy in regard to the enforcement of publicity.

The policy in regard to the state or national scope of the trust problem

Great confidence in the ability of the states to deal with the trust problem was shown in the earlier stages of discussion, and this continued to be a factor even as late as 1903.

In passing the Sherman act, Congress was solicitous of not taking away any power from the states, and even considered an amendment to the effect that "Nothing in this act shall be deemed or held to impair the powers of the several states in respect of any matters in this act mentioned." It is significant that this part of the amendment was never questioned, and that it was rejected only because it was proposed in conjunction with certain other features which were objected to.

'Congr. Rec., 1890, vol. xxi, p. 5950.

The bounding of the national power was thus left to the courts, which in the beginning followed the general opinion then current.

In the Knight case, the Supreme Court took the narrowest view of the trust question as a national one, evidently believing that the states could and would fill in the gaps. One of its reasons for not nullifying this combination was that if it extended the national power to combinations of production, "comparatively little of business operations and affairs would be left for state control", and it asserted that Congress did not attempt " to make criminal the acts of persons in the acquisition and control of property which the states of their residence or creation sanctioned or permitted."

This view was further endorsed by President Cleveland. In his annual message of December 7, 1896, after noting the increase of combinations, and the widespread alarm, he said: "

2

If the insufficiencies of existing law can be remedied by further legislation, it should be done. The fact must be recognized, however, that all federal legislation on this subject may fall short of its purpose because of inherent obstacles and also because of the complex character of our governmental system, which, while making the federal authority supreme within its sphere, has carefully limited that sphere by metes and bounds that cannot be transgressed. The decision of our highest court on this precise question renders it quite doubtful whether the evils of trusts and monopolies can be adequately treated through federal action unless they seek directly and purposely to include in their objects transportation or intercourse be

1156 U. S. 16.

'Richardson: Messages and Papers of the Presidents, vol. ix, pp.