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arrangements to be violations of the law, yet transient in their purpose and effect. From a conviction of their futility they had been abandoned nine months before the suit was brought; and they had not been resumed, nor was there any evidence of an intention to resume them. Even the government did not anticipate their resumption, said the Court, for it failed to avail itself of the offer of the lower court to retain jurisdiction of the case for the purpose of enjoining such acts, if they were ever attempted.

The Corporation not having a monopoly, what could be charged against it? It had not the power unaided to fix prices; and it had not committed any acts of aggression upon its competitors. It was of impressive size, to be sure, yet the law, the Court held, does not make mere size nor the existence of unexerted power an offense; rather it requires the performance of overt acts. When there were no restraints of competitors in the trade nor any complaints by customers, it was difficult to see, said the Court, how there could be any restraint of trade.

In conclusion the Court found itself unable to discover how the public interest would be subserved by the dissolution of the Corporation; on the contrary, its dissolution might do injury to the public interest, including a material disturbance to the foreign trade. The bill of the government was accordingly dismissed.

The dissenting opinion held that the record left no fair room for doubt that the Steel Corporation and its several subsidiary corporations were formed in violation of the Sherman Act. It quoted with approval from the opinion of Judge Woolley of the lower court, who found that the control of the various steel companies later combined in the Corporation had embraced in some instances from 80 to 95 per cent of the total output of the country, and had resulted in an immediate increase in prices, in some cases double and in other cases treble what they had been before, yielding in consequence large dividends upon greatly inflated capital. It was held that the record disclosed that the Corporation for many years after its formation had exerted its power to control and maintain prices by pools, associations,

trade meetings, and dinners; and that in combination with its competitors it had an ability "to fix prices and restrain the free flow of commerce upon a scale heretofore unapproached in the history of corporate organization in this country."

The dissenting opinion agreed that the Sherman Act offers no objection to the size that a corporation may reach, nor to the continued exertion of lawful power, when that size and power were obtained by lawful means and developed by natural growth. But it declared that the reiterated decisions of the Supreme Court had held that this power might not legally be derived from conspiracies, combinations, or contracts in restraint of trade; and that to hold otherwise was practically to annul the Sherman Act by judicial decree.

Concluding the dissenting opinion Justice Day held that the decision of the majority amounted to an assertion that the Steel Corporation and its subsidiaries, although organized in plain violation and bold defiance of the Sherman Act, nevertheless were immune from a decree effectually ending the combinations, because of some reasons of public policy requiring such conclusion. But, he said, "I know of no public policy which sanctions a violation of the law, nor of any inconvenience to trade, domestic or foreign, which should have the effect of placing combinations, which have been able to thus organize one of the greatest industries of the country in defiance of law, in an impregnable position above the control of the law forbidding such combinations. Such a conclusion does violence to the policy which the law was intended to enforce, runs counter to the decisions of the court, and necessarily results in a practical nullification of the Act itself."

CHAPTER XVIII

TRUST DISSOLUTION PROCEEDINGS

In this chapter the record of the several administrations in the enforcement of the anti-trust laws will be summarized, the trust dissolution proceedings will be described at some length, and the results will be briefly appraised.

During the administration of Benjamin Harrison, who was President at the time of the passage of the Sherman Act (1890), four bills in equity and three indictments were brought under the anti-trust act. The first important case was U. S. v. Greenhut, a criminal indictment of the officers of the Distilling and Cattle Feeding Company (the whisky trust) for an alleged monopolization of the manufacture and sale of distilled spirits. The district judge in quashing the indictment said that the indictment averred merely that the defendants had monopolized the manufacture and sale of distilled spirits, and did not aver that they had monopolized, or combined to monopolize, interstate or foreign commerce in distilled spirits. The indictment therefore charged no offense within the letter or spirit of section two of the Sherman Act.

The outcome of this suit may be interpreted as a severe counter indictment of the Department of Justice; and it is perhaps indicative of the attitude of this department that it allowed itself to be discouraged by this rebuff, and decided to abandon altogether the prosecution of the whisky trust.

Another case was U. S. v. Patterson,3 a criminal proceeding

1 The Federal Antitrust Laws, July 1, 1916, pp. 44-46. This pamphlet contains a list of the cases instituted by the United States under the antitrust acts.

2 50 Fed. Rep. 469 (May 16, 1892).

3 55 Fed. Rep. 605 (February 28, 1893); and 59 Fed. Rep. 280 (June 1,

1893).

against the members of a combination to control the price of cash registers. The indictment was sustained in part by a lower court, but the Attorney General allowed the case to lapse because the complaining witness had joined the combination.' This was indeed a strange outcome of a case brought under a law designed to prevent combinations in restraint of trade.

A more important case was U. S. v. E. C. Knight Company, a bill in equity to prevent the American Sugar Refining Company (the sugar trust) from retaining control of the four Philadelphia refineries, the acquisition of which, it was alleged, constituted a violation of the Sherman Act. The government lost this suit, as already pointed out, because of defects in procedure. It attacked the defendants for acts relating to the business of sugar ref.ning within a state, and failed to produce any proofs of a restraint upon interstate commerce. Had the government under the direction of the Attorney General presented its cause properly the decision of the Supreme Court in this case-the first one involving the Sherman Act to come before it would probably have been different, and the trust movement of the late nineties might never have taken place.

None of the other four cases instituted during President Harrison's administration were trust cases. One was a freight association case (the Trans-Missouri Freight Association); another was a trade union case; and the other two dealt with combinations more or less local in character." It is clear, therefore, that the trust cases initiated during President Harrison's administration came to naught, and that this was largely owing to the attitude of the first two Attorney Generals, whose official duty it was to enforce the statute.

During the second term of President Cleveland (1893-1897) there were brought four bills in equity, two indictments, and two contempt proceedings. The most important of these cases was U. S. v. Addyston Pipe and Steel Company, a bill in equity

1 The Federal Antitrust Laws, July 1, 1916, p. 46.

2 See p. 388.

3 The Federal Antitrust Laws, July 1, 1916, pp. 44-46.

4 Ibid., pp. 46-49.

1

to dissolve the cast iron pipe combination. The government obtained a victory in this instance, a victory which doubtless restrained somewhat the subsequent activities of trust promoters, since it demonstrated that the Sherman Act was really possessed of "teeth." Yet this case was the only one of the eight that dealt with an industrial combination of national importance. Four of them dealt with trade unions, one with a traffic association (the Joint Traffic Association), and the other two with organizations of rather limited scope. It may be asked why no proceedings were instituted against the cigarette, oil, powder, cordage, and other trusts, all of which were more important than the cast iron pipe combination, which, after all, was essentially a pool, and therefore in some ways not so dangerous as the more binding organizations left undisturbed by the Attorney General. No doubt the Department of Justice was discouraged by the decision in the Knight case, and no doubt the funds available for investigation and prosecution were limited; 2 yet this hardly explains the failure to prosecute the trusts, against which the law was really aimed, rather than such organizations as the Kansas City Live Stock Exchange.

If the accomplishments of the Harrison and Cleveland administrations were meagre, those of the McKinley administration were even more so. During the four and a half years of McKinley's presidency no criminal prosecutions were brought and only three bills in equity. Of these three, one was against a local live stock association, another against a combination of coal dealers in California, and the third against a combination of coal producers in Ohio and West Virginia. It was during this administration that the modern trust movement reached its height, and yet not a single suit against a trust was brought.

Upon the death of President McKinley on September 14, 1901, Theodore Roosevelt became President. In marked contrast to his predecessor in office, President Roosevelt enforced

1 For the decision of the Supreme Court, see p. 395.

2 See Annual Report of the Attorney General (Harmon) for 1896, p. XXVII.

3 The Federal Antitrust Laws, July 1, 1916, pp. 49-50.

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