responsible board its entire independence and self-control. Its stockholders had parted with the control which the charter gave them and the state required them to exercise. And graver still was the fact that the corporation had helped to create an anomalous trust, which was in substance and effect a partnership of twenty separate corporations; and it was a violation of the law for corporations to enter into a partnership. The Court therefore declared that the charter of the company should be forfeited, and its corporate existence annulled. The Court indulged in a dictum as to the injurious effects of monopolies upon the public, but did not decide the case on that ground, holding that it was needless in this instance "to advance into the wider discussion over monopolies and competition and restraint of trade and the problems of political economy."

State v. Standard Oil Company.1 We have already described at some length the Standard Oil "trust" agreement of 1882.2 The Supreme Court of Ohio in a decision rendered in 1892 declared the agreement illegal. In a line of reasoning similar to that of the New York court in the North River Sugar Refining Company case, it held that the action of the stockholders of the Standard Oil Company in turning over their shares to the trustees provided for in the agreement had affected the property and business of the Standard Oil Company in the same manner as if it had been a formal resolution of the board of directors, and that their acts should be regarded as the acts of the corporation. And the nature of the agreement was such as to preclude the Standard Oil Company of Ohio from becoming a party to it. The law required that a corporation should be controlled and managed by its directors in the interests of its own stockholders, and conformable to the purpose for which it was created by the laws of the state. But by the agreement entered into the defendant was controlled and managed by the Standard Oil Trust, an association with its principal place of business in New York, and organized for a purpose contrary to the policy of the laws of the state of Ohio. "Its object was to establish a virtual monopoly of the business of producing petroleum, and of manufacturing, refining 149 Ohio State 137 (1892). 2 Cf. p. 19.

and dealing in it and all its products, throughout the entire country, and by which it might not merely control the production, but the price at its pleasure. All such associations are contrary to the policy of our state and void." The Court therefore held that the Standard Oil Company should be forbidden to carry out the agreement which it had entered into with the "trust."

CORPORATE COMBINATION CASES

The last class of cases deals with the establishment of corporate combinations.1 The first of these was:

Richardson v. Buhl.2 The Diamond Match Company was organized in Connecticut in 1880 for the purpose of acquiring all the factories in the United States manufacturing friction matches, with the intent of monopolizing the business and controlling prices. The companies which went into the trust exchanged their real estate, machinery, patents, good will, and agreements not to reënter the match business for common stock in the Diamond Match Company; and agreed to buy preferred stock equal to one-half the amount of common stock received, the preferred stock to be paid for in matches or match materials on hand, or in cash. The Richardson Match Company not being in sufficient funds to buy the preferred stock, borrowed money from Buhl, and to secure the repayment of the loan endorsed the greater part of the preferred stock over to Buhl, with an agreement between the parties as to the division of the dividends received on the stock held as collateral. Suit was brought by Richardson in connection with this agreement.

The parties to the suit did not dispute the validity of the contract entered into, but the Court, on its own motion, raised the question. The Court held that the contract had been entered into to aid the Diamond Match Company in carrying out the object for which it had been organized,-the monopolization of the manufacture of friction matches in the United

1 See also People v. Chicago Gas Trust Company, 130 Illinois 268 (1889); and Harding v. The American Glucose Company, 182 Illinois 551 (1899). 277 Michigan 632 (1889).

States. But monopoly in trade or in any kind of business, according to the Court, was odious to our form of government; its tendency was destructive of free institutions, and repugnant to the instincts of a free people. The Diamond Match Company being unlawful, and the contract in question having been made to further its objects and purposes, the contract was void as against public policy.

Distilling and Cattle Feeding Company v. People.1 Reference has been made to the organization of the Distillers and Cattle Feeders' Trust in 1887.2 In 1890, because of court decisions holding similar trusts illegal, the corporate form of organization was adopted. In 1893 the Attorney General of Illinois brought suit against the Distilling and Cattle Feeding Company (the corporation which succeeded the "trust"), alleging that the company had misused its powers and franchises.

The Court held that no one who intelligently considered the scheme of the Distillers and Cattle Feeders' Trust could for a moment doubt that it was designed to be, and was in fact, a combination in restraint of trade; and that it was organized for the purpose of getting control of the manufacture and sale of all distillery products, so as to stifle competition, and to be able to dictate output and prices, and thus to create or tend to create a monopoly. The "trust" was clearly against the policy of the law, and it was therefore illegal and void. And the corporation had merely succeeded to the trust. Its operations were to be carried on in the same way, for the same purposes, and by the same agencies as before. The former trustees became the directors of the new corporation, and the trust certificate holders became its stockholders. The trust being repugnant to public policy and illegal, it was impossible to see, said the Court, why the same was not true of the corporation which succeeded to it and took its place. The control over the distillery business of the country, over production and prices, and the virtual monopoly formerly held by the trust, were in no degree changed or relaxed. The Court concluded, "There is no magic in a corporate organization which can purge the 1156 Illinois 448 (1895). 2 Cf. p. 21.

trust scheme of its illegality, and it remains as essentially opposed to the principles of sound public policy as when the trust was in existence. It was illegal before, and is illegal still, and for the same reasons." 1 The judgment of the court below ousting the company from its franchises was therefore affirmed.

The cases outlined in this chapter illustrate fairly the decisions of the courts of the country, which almost without exception have held illegal all agreements in unreasonable restraint of trade, and all monopolies or attempted monopolies, irrespective of the form in which they were clothed. The decisions of the courts declaring illegal the trust agreements in the cotton seed oil, whisky, sugar, oil, and preserving industries, and the corporate combinations in the match and whisky industries apparently left no loophole under the common law for the establishment of industrial monopolies.

We may now proceed to describe the federal legislation dealing with combinations and trusts, and the decisions of the courts interpreting this legislation.

1156 Illinois 491.

During the years 1882 to 1887 a number of trusts had been created. This movement toward industrial monopoly was viewed with great concern by the people of the United States, and a vigorous demand was made for the enactment of legislation that would definitely make these trusts illegal. As Justice Harlan said in 1911: "All who recall the condition of the country in 1890 will remember that there was everywhere, among the people generally, a deep feeling of unrest. The Nation had been rid of human slavery-fortunately, as all now feel-but the conviction was universal that the country was in real danger from another kind of slavery sought to be fastened on the American people, namely, the slavery that would result from aggregations of capital in the hands of a few individuals and corporations controlling, for their own profit and advantage exclusively, the entire business of the country, including the production and sale of the necessaries of life." 2 In 1888 both of the leading political parties referred in their platforms to the dangers inherent in trusts, and demanded action. Thus, the platform of the Republican party read

"We declare our opposition to all combinations of capital, organized in trusts or otherwise, to control arbitrarily the condition of trade among our citizens; and we recommend to Congress and the state legislatures, in their respective jurisdictions, such legislation as will prevent the execution of all schemes to oppress the people by undue charges on their supplies, or by unjust rates for the transportation of their products to market." 3

1 For a more detailed account of the legislation of this period, see Knauth, The Policy of the United States towards Industrial Monopoly.

2221 U. S. 83.

McKee, The National Conventions and Platforms of all Political Parties,

p. 241.