within the realm was held void as "a monopoly and against the common law." § 19. Origin and basis of doctrine against restrictions upon competition.—Though for centuries monopolies have been condemned by the common law of England,' it follows from what we have seen that such condemnation was, until recently, limited in its scope to monopolies created by the crown. Stating here by way of anticipation that the condemnation now comprehends monopolies created merely by the acts of private parties, we proceed to consider the grounds on which it is based. The most obvious ground is the power of the monopolist to raise prices, thus producing injury to the public, especially in case of a monopoly in a necessary of life. So the opportunity and temptation to produce commodities of an inferior quality are largely increased.3 Anwhat was originally covered by the term. With reference to the use of the term "monopolize" in the Federal and Louisiana anti-trust acts, it is said in American Biscuit & Manuf. Co. v. Klotz, 44 Fed. Rep. 721 (Cir. Ct. La., 1891): "In construing the Federal and State statutes we exclude from consideration all monopolies which exist by legislative grant; for we think the word 'monopolize' cannot be intended to be used with reference to the acquisition of exclusive rights under government concession, but that the lawmaker has used the word to mean 'to aggregate' or 'concentrate' in the hands of few, practically, and as a matter of fact, and according to the known results of human action, to the exclusion of others; to accomplish this end by what, in popular language, is expressed in the word 'pooling."" 2 Thus, it is said in Darcy v. Allein, note 1, above (p. 86b), that, as one of "three inseparable incidents to every monopoly against the common wealth," "the price of the same commodity will be raised, for he who has the sole selling of any commodity may and will make the price as he pleases; and this word Monopolium, dicitur año rov μovov kαι пwλε∞ quod est, cum unus solus aliquod genus mercaturæ universum emit, pretium ad suum libitum statuens." See also Central Ohio Salt Co. v. Guthrie, 35 Ohio St. 666 (1880); United States v. Trans-Missouri Freight Assoc., note 1, p. 97, below. But the doctrine seems capable of application to a reduction of prices injurious to producers. See, for instance, Texas Standard Oil Co. v. Adoue, 83 Tex. 650; s. c., 19 S. W. Rep. 274 (1892). 3 Thus, in Darcy v. Allein, note 1, above, it is said that, as another other ground not so commonly relied on, but still one on which considerable stress has been laid, is the injury to those forced out of or prevented from entering the same line of business. It may be a question for the economist, rather than the jurist, whether, from the standpoint of the public interest, this injury is outweighed by benefits.2 These being the commonly accepted grounds of the condemnation of monopolies, it now concerns us to note that this condemnation, originally confined to monopolies created by the crown, has, within a very recent period, been extended to other restrictions upon competition not amounting to monopolies, "inseparable incident," "after the monopoly granted, the commodity is not so good and merchantable as it was before; for the patentee, having the sole trade, regards only his private benefit, and not the common wealth." See also People ex rel. v. American Sugar Refining Co., 7 Ry. & Corp. L. J. 83 (Super. Ct. San Francisco, 1890). 1 Thus, in Darcy v. Allein, note 1, p. 96, above, it is said that, as another "inseparable incident," "it tends to the impoverishment of divers artificers and others, who before, by the labor of their hands in their art or trade, had maintained themselves and their families, who now will of necessity be constrained to live in idleness and beggary; and the common law agrees also with the civil law." In State ex rel. v. Standard Oil Co., 49 Ohio St. 137, 187; s. c., 30 N. E. Rep. 279 (1892), it is said, referring to this ground as stated in Darcy v. Allein: "The third objection, though frequently overlooked, is none the less important. A society in which a few men are the employers and the great body are merely employees or servants, is not the most desirable in a republic; and it should be as much the policy of the laws to multiply the numbers engaged in independent pursuits or in the profits of production, as to cheapen the price to the consumer. Such policy would tend to an equality of fortunes among its citizens, thought to be so desirable in a republic, and lessen the amount of pauperism and crime." Similar views were expressed in Lufkin Rule Co. v. Fringeli, — Ohio St. —; S. C., 49 N. E. Rep. 1030 (1898). So, in United States v. Trans-Missouri Freight Assoc., 166 U. S. 290, 324; S. C., 17 Supm. Ct. Rep. 540 (1897), is emphasized the public misfortune caused by the loss of the "services of a large number of small but independent dealers." 2 For an argument that combinations in restriction upon competition work no substantial injury to the public, see Stickney's "State Control of Trade and Commerce," ch. & The and created merely by the acts of private parties. propriety of this extension of the condemnation is generally recognized, in this country at least, but has in some quarters been denied, though it is not always clear whether the denial is based on the impropriety of allowing any such extension, or on the impropriety of allowing it in the particular 1 How recently is indicated by so comparatively recent a decision as Kellogg v. Larkin, 3 Pinney (Wis.), 123, 147 (1851), where an agreement was sustained as not tending to create a monopoly, the court saying: "The cases cited all arose upon royal grants or by-laws, and consequently were cases of involuntary restraints. They do establish the doctrine that the grant of a monopoly is void; but they do not support the averment of the plaintiff in error. . . . I assert that the right to stifle competition by contract, so far as it is injurious to the parties contracting, has not before been denied or questioned for two hundred years, unless two cases reported in 4 Denio, 349, and 5 Denio, 434, are to be considered as denying the right." (Referring to Hooker v. Vandewater and Stanton v. Allen, respectively.) It is asserted by Francis Wharton in 3 Crim. Law Mag. 1, 5 (1882), that, "in this country, the right of individuals to buy up staples, provided no fraud or coercion be practiced, was not, at least between 1820 and 1875, questioned." Compare Queen Ins. Co. v. State, 86 Tex. 250, 269; S. C., 24 S. W. Rep. 397 (1893). But on the other hand it is said in People v. North River Sugar Refining Co., 54 Hun (N. Y.), 354, 377; s. c., 7 N. Y. Suppl. 406 (1889): "The monopoly with which the law deals is not limited to the strict equivalent of royal grants or people's patents." So in State ex rel. v. Standard Oil Co., note 1, p. 97, above: "The objections lie not to the manner in which the monopoly is created. The effect on industrial liberty and the price of commodities will be the same, whether created by patent, or by an extensive combination among those engaged in similar industries, controlled by one management. By the invariable laws of human nature, competition will be excluded and prices controlled in the interest of those connected with the combination or trust." Here it was also said (p. 186): “Monopolies have always been regarded as contrary to the spirit and policy of the common law," the only authority cited on this point being Darcy v. Allein, a case, as we have seen, of a monopoly created by act of government. In Stickney's "State Control of Trade and Commerce," which contains an elaborate criticism of the prevalent doctrine in condemnation of restrictions upon competition, the point that its true basis is the doctrine against monopolies is not considered. See, however, pp. 94, 95. case.1 But, in any view, it is clear that the condemnation cannot be extended to even all monopolies (to say nothing of mere restrictions upon competition, not amounting to 1 Thus, in Kellogg v. Larkin, 3 Pinney (Wis.), 123, 150 (1851), recovery was allowed on a lease of a warehouse, though to the knowledge of the plaintiff, executed in furtherance of an agreement between proprietors of six wheat mills on the one hand, and the proprietors of twelve warehouses on the other, whereby the warehousemen were to give the former “full, absolute and uninterrupted control of the Milwaukee wheat market, so far as they shall be able to do so, by virtue of their capacity as warehousemen or vessel and dock owners." But, as said in United States v. Addyston Pipe & Steel Co., 54 U. S. App. 723, 752; s. c., 85 Fed. Rep. 271, 285 (6th Cir., 1898), this decision cannot be upheld in view of the more modern authorities. Although other grounds are relied on, the court (in Kellogg v. Larkin) thus vigorously attack the maxim that "competition is the life of trade": "If it be true that competition is the life of trade, it may follow such premises that he who relaxes competition commits an act injurious to trade; and not only so, but he commits an act of overt treason against the commonwealth. But I apprehend it is not true that competition is the life of trade. On the contrary, that maxim is one of the least reliable of the host that may be picked up in every market place. It is in fact the shibboleth of mere gambling speculation, and is hardly entitled to take rank as an axiom in the jurisprudence of this country. I believe universal observation will attest that for the last quarter of a century competition in trade has caused more individual distress, if not more public injury, than the want of competition. Indeed, by reducing prices below or raising them above values (as the nature of the case prompted), competition has done more to monopolize trade, or to secure exclusive advantages in it, than has been done by contract." Similar views as to the evils of competition had been expressed in Palmer v. Stebbins, 3 Pick. (Mass.) 188 (1825); Chappel v. Brockway, 21 Wend. (N. Y.) 157, 165 (1839). In Pierce v. Fuller, 8 Mass. 223 (1811), an agreement between proprietors of two rival stages between Boston and Providence, that one should not run a stage between those points, was sustained. The court say: “The public appear to have no interest in this question." In a note by Francis Wharton in 11 Fed. Rep. 11, it is suggested that this decision, and that in Perkins v. Lyman, 9 Mass. 522 (1813), may be explained on the ground that the acts complained of were breaches of trust. In Whitney v. Slayton, 40 Me. 224 (1855), the tendency in this country to excessive competition in business, was regarded as ground for liberally construing exceptions to the common-law rule against contracts in monopolies).1 The sole ownership of any particular piece of property involves the idea of a monopoly of the right to restraint of trade. In Central to raise the price of the commodity, Shade Roller Co. v. Cushman, 143 Mass. 353; s. C., 9 N. E. Rep. 629 (1887), a combination among manufacturers and sellers of curtain fixtures known as "wood balance shade rollers," to sell at a uniform price for their common benefit, dividing the profits, was sustained, they being the principal dealers and substantially supplying the market, though others were engaged in the business "in a small way." The court say: "The general purpose of the combination was to prevent, or rather to regulate, competition between the parties to it in the sale of the particular commodity which they made. This is a lawful purpose. it is one which the parties have a right to make. To hold otherwise would be to impair the right of persons to make contracts, and to put a price on the products of their own industry." In Skrainka v. Scharringhausen, 8 Mo. App. 522 (1880), an agreement among twenty-four proprietors of stone-quarries in a portion of St. Louis, providing for the sale of all the rubble buildingstone of such quarries by a common agent for a period of six months, at prices fixed by the agreement, was sustained. By its terms the agreement was designed to prevent the depression of prices resulting from competition, making it impossible to work quarries at a Even if such an agreement tends profit. We shall show elsewhere 1 A very little consideration will show the untenability of, for instance, the following oft-quoted statement in Hooker v. Vandewater, 4 Denio (N. Y.), 349 (1847): "Competition is the life of trade. It follows that whatever destroys or even relaxes competition in trade is injurious, if not fatal, to it." It is said in Oakdale Manuf. Co. v. Garst, 18 R. I. 484; S. C., 28 Atl. Rep. 973 (1894): "It does not follow that every combination in trade, even though such combination may have the effect to diminish the number of competitors in business, is therefore illegal. Such a rule would produce greater public injury than that which it would seek to cure. It would be impracticable. It would forbid partnerships and sales by those engaged in a common business. It would cut off consolidations to secure the advantages of united capital and economy of administration. It would prevent all restrictions and exclusive privileges, and hamper the familiar conduct of commerce in many ways. There may be many such arrangements which will be beneficial to the parties and not injurious to the public." In Oakes v. Cattaraugus Water Co., 143 N. Y. 430; s. c., 38 N. E. Rep. 461 (1894), it was held not illegal for a person whose business is threatened with competition, to persuade his competitor to abandon his business and take employment with the other, at a stated compensation. |