act, means the engrossing trade to one's self by means which. prevent other parties from engaging in fair competition with him. As defined by Blackstone,1 "it is the grant of exclusive right from the sovereign power." There must be therefore an exclusive right or privilege on the one side and a restriction or restraint on the other, which operates to prevent the exercise of a right or liberty open to the public before the monopoly is secured.

In the case cited the ownership of seventy distilleries in the country, constituting seventy-five per cent. of the distillery products of the country, did not make a monopoly because all other persons who saw fit to engage in the trade were at liberty to do so. Neither did paying of rebates to parties who dealt exclusively with the company, constitute an attempt to monopolize, as the purchaser was left at liberty to buy where he pleased, and all other sellers of the article were left unrestrained in offering at greater inducements. The agreement of rebate was wholly unilateral until there was compliance with the conditions by the purchaser.

The same construction of the term "monopolize" was made in the Continental Tobacco case, by the Circuit Court of Ap peals of the eighth circuit. The court said the purpose of the second section was the same as that of the first, to prevent the restriction of competition, and the second section ought to receive similar interpretation. It was not the purpose of the second section to prohibit or punish the customary and universal attempts of all manufacturers and traders engaged in interstate commerce to monopolize a fair share of it in the neces sary conduct and desired enlargement of their business, while their attempts left their competitors free to make successful endeavors of the same kind.

The

$73. Monopoly in law and in fact distinguished. construction in these cases is based upon the absence of an agreement for the restriction of competition between business competitors, and that the monopolizing is simply the effort of the trader to secure his own business, and that there is no monopoly in the legal sense without some exclusive privilege.

14 Blackstone Com., 159; Case of Monopolies (1601), 11 Co. Rep. 84b;

Habite of Monopolies (1623), 21 Jas. 1. c. 3.

2 Supra, p. 96 n. 3.

Monopoly in this sense can in this country be based only upon rights under patent or copyright laws. Monopoly in fact, however, though not in law, may exist where a party is in possession of the only source of supply, as where the owners of all the coal available for the supply of a locality are combined in a single corporation. Other illustrations may be

suggested.

While this construction of the section seems the only admissible one, it is obvious, in view of the facility of eliminating competition by incorporating under state laws, that the effectiveness of the act is now mainly limited to the restraint of combinations between interstate railroads.

The supreme court remarked in the Freight Association Case, supra, that it was readily seen from the ruling in the Knight Company Case, supra, that if the act did not apply to the transportation of commodities by railroads from one state to another, or to foreign nations, its application was so greatly limited that the whole act might as well be held inoperative.

74. No distinction in the act between necessaries of life and other articles. In the opinion of the circuit court of appeals in the Continental Tobacco Company Case, supra, it is said that tobacco, the subject of the contract in question, was not an article of "prime necessity," such as grain or coal. This was doubtless said in view of the recognized principle that the subject of the contract will be considered in the determination of the reasonableness of contracts in restraint of trade. The question in such cases is whether the public welfare is involved, and, if not, whether under the particular circumstances of the case the restraint upon one party is not greater than the protection to the other requires. In determining the enforcibility at common law of a contract, it might be material that it related to a subject of "prime necessity" in a restricted territory, and this might be a circumstance affecting the reasonableness of the restraint. This fact has also been held material in determining whether combina

1 Fowle v. Park, 131 U. S. 88, 1. c. 97 (1889), 33 L. Ed. 74; Gibbs v. Consolidated Gas Co. 130 U. S. 396 (1888), 32 L. Ed. 879. See also Oliver v. Gilmore, 52 Fed. Rep. 563.

in the Addyston Pipe & Steel Co. case, supra, that the cases showed that the common law rule against restraint of trade extended to all articles of merchandise, and that the "It was said, however, by Taft, J. introduction of the distinction (of

tions are injurious to trade or commerce in the jurisdictions where the common law of conspiracy prevails.'

In the same connection the court referred to the fact that the contract in question was not that of a public service corporation, recognizing that in the case of such corporations there was a different standard of determining the reasonableness of contracts in alleged restraint of trade.

There is, however, nothing in the Anti-Trust Act of 1890 warranting the limitation of its prohibitions according to what a court may adjudge are or are not necessaries of life. Tobacco and whiskey, and many other articles, may not be of such prime necessity as grain and coal, but in a complicated and progressive industrial civilization the standard of living of the masses is constantly advancing, and the comforts and even the luxuries of one generation are the necessities of another. At common law, contracts in general restraint of trade are unenforcible, irrespective of the subjects of the contract, and it was only in the determination of the validity of contracts in partial restraint of trade that the subjects of the contracts were considered. Monopolies were first judicially pronounced illegal as against common right in a suit involving a royal grant of a monopoly in playing cards.2 The mediaeval statutes long since repealed in England have never been in force in the United States in the law of interstate commerce, nor is there any common law of conspiracy in the laws of the United States. The only federal law restraining freedom of interstate commerce is the Anti-Trust Act. Under this statute, therefore, there is no basis for any distinction between. articles of prime necessity and other articles. The owners of both classes of property have the same rights under the law, and are subject to the same obligations.'

articles of prime necessity) only furnished another opportunity for courts to give effect to the varying economical views of its members. It might be difficult to say why it was any more important to prevent restraints of trade in beer, mineral water, leather, cloth, than of trade in certain shades of glue.

In People v. Sheldon, 139 N. Y. 251 (1893), a combination of coal

dealers was held an unlawful conspiracy under a statute making it a misdemeanor to conspire to commit any act injurious to trade or com

merce.

2 See case of Monopolies, 11 Coke Reps. 84b (1601).

3 See infra, § 82 et seq.

4 The Forestalling Statute, 25 Edward III, enacted in 1350, made criminal the forestalling of "wine

A contract directly affecting interstate commerce, which would be unenforcible at common law as in restraint of trade, whatever the subject, would be violative of the Anti-Trust Act. On the other hand, it would seem that a contract in private business relating to interstate commerce, whatever its subject, which would be valid and enforcible at common law as imposing only a reasonable restraint, and as ancillary to a valid contract, would not be violative of the federal act.

§ 75. No application to commerce within a state.— Although the jurisdiction of congress over commerce among the states and over foreign commerce is full and complete, it has none over that which is wholly within a state, and therefore none over combinations or agreements so far as they relate to a restraint of such trade or commerce; nor does it acquire any jurisdiction over that part of a combination or agreement which relates wholly to commerce within a state by reason of the fact that the combination also covers and regulates commerce which is interstate. This fundamental principle, which not only controls the construction of the act of July 2, 1890, but also the power of congress to enact any legislation concerning commercial combinations, was forcibly illustrated in the case of Addyston Pipe & Steel Co., supra. The combination in that case included both state and interstate commerce. As to such of the defendants as might reside and carry on business in the same state where the pipe provided for in any particular contract was to be delivered, the sale, transportation and delivery of the pipe by them under that contract

́and other victuals, wares and other merchandise that came to the good towns of England by land or water." The statute of Edward VI against "regrators, forestallers and grocers" included in merchandise, victuals or any other thing whatsoever. "Cattle, sheep, grain, butter, cheese, fish, or other dead victual whatsoever," were also included. These statutes were all repealed in 1771, Act of George III, 71. The preamble to the repealing act is as follows: Whereas, it has been found by experience that the restraints laid by several statutes upon dealing in

grain, meal, flour, cattle and sundry other sorts of victuals have a tendency to discourage the growth and to enhance the price of the same. which statutes if put into execution would bring great distress upon the inhabitants of many towns of this kingdom, and particularly upon the cities of London and Westminster."

In view of the ruling in Rex v. Waddington, 1 East. 167, that the offenses had existed at common law and the repeal of the statutes was insufficient, an act was passed, 7 and 8 Victoria, c. 24, in 1844, in express terms abolishing the offenses.

would be a transaction wholly within the state, and the supreme court said, modifying the judgment of the circuit court of appeals in that respect, that the statute would not be applicable to them in that case. They might make any combination they choose with reference to the contract, although it happened that some non-resident of the state finally obtained it. In the language of the court, in brief, their right to combine in regard to a proposition for pipe, deliverable in their own state, could not be reached by the federal power derived from the commerce clause in the constitution. A combination violative of the act may, however, include a series of acts, concluded in different states, when they are part of purpose, as in the purchase and shipment of cattle to control and monopolize commerce between the states.1

§ 76. Application to state holding companies. The Northern Securities case, supra, was novel in that it decided that the corporation organized under the laws of a state and empowered under its charter to hold the stock of other corporations, was prohibited by this act from holding the stock of competing interstate railroad corporations. The illegal combination was founded upon the fact of control of competing railroads in a single authority and the resulting power of direct suppression of competition through such control. Thayer, J., in the circuit court, said that a state could not invest a corporation organized under its laws to do acts in its name which operate in restraint of trade and commerce, and that the court would not consider whether a combination would be of benefit to the public; but that a holding corporation organized under the laws of the state was in violation of the Anti-Trust Act, since it destroyed any active form of competition between. the two roads, and it was immaterial that each company had its own board of directors.

The holding corporation was condemned in this case, not because it was a "holding corporation " merely, but because it held the stock of subsidiary corporations directly engaged in interstate commerce, and thus controlled competition as between those companies. The act, as such, has nothing to do with holding corporations where the subsidiary corporations See Chicago Meat Trust Case, 2120 Fed. Rep. 721.

supra.