ployees, to be unlawful, subject to certain limitations. In declaring them unlawful it bound the Trade Commission and the Courts so to regard them. Congress, by declaring them unlawful, relieved the Trade Commission of the duty of determining whether or not they constitute unfair methods of competition. They are condemned as they are, whether unfair methods of competition or not. Congress apparently deemed the wrongs occasioned by them so common and serious as to justify special legislation. It enacted that private persons suffering injury to their business or property by reason of such wrongs should be entitled to recover threefold damages in actions based thereon. The Trade Commission law contains no such provision. No action for damages, threefold or otherwise, is authorized therein against one found to have violated its provisions. That Congress intended substantially to differentiate between the Trade Commission law and the Clayton law is apparent from the fact that in defining "Anti-trust laws" in both of its new enactments Congress omitted the Trade Commission law from the definition.

INHIBITION OF THE TRADE COMMISSION
LAW.

"Unfair Methods of Competition in Commerce Are Hereby Declared Unlawful."

This declaration of Congress is the backbone of the Trade Commission law. It is a new legislative standard-the declaration of a new Federal policy. It is universal in its application to persons, partnerships or corporations doing business in interstate or foreign commerce, but no power for its enforcement is given as against banks and common carriers. It

is not limited by definition. Indeed, Congress considered whether or not it should define the words and declined to adopt amendments to the reports of the committees attempting to make such definition. The reason undoubtedly was that to enumerate would be to weaken and offer opportunities for evasion. Large numbers of well known practices might be specifically listed by way of definition but the ingenuity of man could easily circumvent any catalogue of specific

acts.

From the fact that the Trade Commission, whose duty it is to enforce this new standard of business conduct, is authorized to do so only when it shall first determine that a proceeding will be in the public interest, it is plain that Congress intended to prevent the use of only such methods of competition in interstate commerce as will have a harmful effect upon the public.

INHIBITIONS OF THE CLAYTON LAW.

Under section 11 of the Clayton law the Trade Commission cannot inquire whether a proceeding to enforce the inhibitions of the Clayton law will be in the public interest, but must act if the law has been violated.

1. Price Discrimination.

Section 2 of the Clayton law makes certain discriminations in price between different purchasers of commodities unlawful, and section 11 gives the Trade Commission, Interstate Commerce Commission and Federal Reserve Board authority to enforce the provisions of section 2 if and where applicable to ordinary business corporations, common carriers and

banks respectively. Common carriers and banks do not ordinarily deal in commodities which "are sold for use, consumption or resale," and seem plainly not intended to be regulated by this section. This same Congress has created an elaborate machinery to regulate the dealings of banks in exchange, which is an additional reason why this section seems not to apply to banks or banking. Probably only ordinary commercial operations are intended to be covered by section 2. Where a bank or common carrier engages in merchandising either directly or indirectly the Interstate Commerce Commission or the Reserve Board would have jurisdiction to enforce this section. But in practical application this section will seldom if ever be invoked against banks or common carriers.

The language used shows that business is not intended to be unduly restricted. Differences in price are permitted because of differences in grade, quality, or quantity of the commodity sold, or differences in the cost of selling, or the cost of transportation. And finally aside from all these exceptions discrimination in price is permitted without any of the foregoing causes, if made in good faith to meet competition. And merchants are permitted if acting in good faith to choose their own customers.

The section applies only to price discrimination which substantially lessens competition or tends to create a monopoly.

2. Tying or Conditional Contracts.

It is probable that section 3 was passed as a result of the agitation against the practice of certain large concerns, by which in contracts of sale or lease of patented appliances they customarily inserted conditions tying up their customers so that they would be

unable to purchase from competitors. Hence it is usually referred to as the "tying clause" section. It makes unlawful the insertion of a condition in a contract of sale or lease of goods, wares or merchandise, patented or unpatented, in interstate commerce, which condition binds the lessee or purchaser not to use the goods of a competitor of the lessor or seller. But such contracts are made unlawful only where the effect thereof is substantially to lessen competition or to tend to create a monopoly. The question to be determined is largely one of fact.

The Interstate Commerce Commission and the Federal Reserve Board are specifically given the power by section 11 of the Clayton law to enforce this section as to common carriers and banks respectively. But the section applies only to merchandising, to "the sale or lease of goods, wares, and merchandise for use, resale or consumption." And plainly in the normal course of their operations carriers and banks do not perform acts to which this section could apply.

3. Stock Ownership by One Corporation in Another.

The inhibitions against stock ownership apply to corporations only.

The first paragraph of section 7 provides that no "corporation engaged in commerce" shall acquire directly or indirectly the whole or any part of the stock of another corporation engaged also in commerce, where the effect thereof would be substantially to lessen competition between the corporation owning the stock and the corporation whose stock is so acquired, or to restrain commerce or tend to create a monopoly.

The second paragraph of the section is directed against so-called "holding corporations" whether

engaged in commerce or not. It provides that "no corporation" shall acquire capital stock of two or more corporations engaged in commerce where the effect of such acquisition or the use of the stock by voting of proxies or otherwise may be substantially to lessen competition between such corporations or any of them whose stock is so acquired, or to restrain commerce, or tend to create a monopoly. This applies to banks, common carriers and all other corporations.

The section is not applicable to the purchase of stock by a corporation for investment only, where there is no bringing about or attempting to bring about a substantial lessening of competition.

The section states that its provisions are not intended to prevent a corporation from forming subsidiary corporations for the actual carrying on of its immediate lawful business or the natural and legitimate branches or extensions thereof, or from owning or holding all or part of the stock of such subsidiary corporations when the effect thereof is not substantially to lessen competition.

The application of the stock ownership provisions to common carriers is discussed under the heading "Common Carriers."

The provisions of the section are not to be held to affect or impair any existing lawful stock ownership of one corporation in another, nor shall they authorize or make lawful anything made illegal by the Anti-trust laws, nor exempt any person from the penal provisions thereof or the civil remedies therein provided.

Broad as are the prohibitions of section 7 against stock ownership by corporations, ownership by one or more persons of any part or all of the capital