Northern Securities Co. v. United States, 193 U.S. 197 (1904)

The government is not entitled to maintain this proceeding, nor had the circuit court jurisdiction of it; for the conspiracy or combination charged in the petition and found by the circuit court, if it ever existed, had done all it was formed to do, and had come to an end, before the proceeding was instituted.

The only combination of which there is any evidence is a combination formed in aid of commerce, to liberate, protect, and enlarge, and not to restrain it, and which has liberated, protected, aided, and enlarged it, and has not restrained, and does not threaten to restrain it.

All the facts and circumstances are to be considered in order to determine the fundamental question whether the necessary effect of the combination is to restrain interstate commerce.

Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 245, 44 S. L. ed. 136, 149, 20 Sup. Ct. Rep. 96; Oregon Steam Nav. Co. v. Winsor, 20 Wall. 64, 68, 22 L. ed. 315, 318.

The law of self-defense and protection applies to one's business as well as to one's person.

United States Chemical Co. v. Provident Chemical Co. 64 Fed. 946.

The combination here is analogous to the covenant of the seller of a business that he will not engage in it, which has been declared not to testrain trade.

United States v. Trans-Missouri Freight Asso. 166 U.S. 290, 329, 41 S. L. ed. 1007, 1023, 17 Sup. Ct. Rep. 540.

If this combination is to be adjudged a combination and conspiracy in restraint of commerce, there is scarcely an agreement or contract among business men that cannot be said to have, indirectly or remotely, some bearing upon interstate commerce, and possibly to restrain it.

Page 193 U.S. 197, 265

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Hopkins v. United States, 171 U.S. 578, 600, 43 S. L. ed. 290, 299, 19 Sup. Ct. Rep. 40.

Congress did not attempt by the antitrust act to limit and restrict the rights of corporations created by the states, or of citizens of the states, in the acquisition or disposition of property, or to make criminal the acts of persons in the acquisition and control of property, which the states of their residence or creation sanctioned or permitted.

United States v. E. C. Knight Co. 156 U.S. 1, 16, 39 S. L. ed. 325, 330, 15 Sup. Ct. Rep. 249.

At common law a cessation or diminution of competition, springing from a unity of ownership,-as, where one competitor sold his business to another, or both sold out to a third person, etc.,-was never regarded as a restraint of trade; such cessation or diminution being incident to the union of property or business in one ownership, and not a restraint imposed by contract.

And so such purchases, or agreements to purchase, have never been held contracts in restraint of trade.

Trenton Potteries Co. v. Oliphant, 58 N. J. Eq. 507, 46 L. R. A. 255, 43 Atl. 723; Oakdale Mfg. Co. v. Garst, 18 R. I. 484, 23 L. R. A. 639, 28 Atl. 973.

The formation of corporations for business or manufacturing purposes has never been regarded as in the nature of a contract in restraint of trade or commerce. The same may be said of the contract of partnership.

United States v. Joint Traffic Asso. 171 U.S. 505, 567, 43 S. L. ed. 259, 286, 19 Sup. Ct. Rep. 25.

The only question is, Does the contract or combination itself, or do the things the parties contracted to do, restrain commerce? If they do, the parties are criminals, however good their motives. If they do not, the parties are innocent, however reprehensible their designs.

United States v. Trans-Missouri Freight Asso. 166 U.S. 290, 341, 41 S. L. ed. 1007, 1027, 17 Sup. Ct. Rep. 540; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 234, 44 S. L. ed. 136, 145, 20 Sup. Ct. Rep. 96.

The power to suppress competition is not of itself suppression.

Page 193 U.S. 197, 265

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State v. Northern Securities Co. 123 Fed. 592.

The position of the government rests on a wholly erroneons view of the relations of the shareholders of a railway company to the commerce of the company, and of the power of a majority of the shareholders to restrain or otherwise control that commerce.

Hoyt v. Thompson, 19 N. Y. 207; Burrill v. Nahant Bank, 2 Met. 163, 35 Am. Dec. 395; Pullman's Palace Car Co. v. Missouri P. R. Co. , 29 L. ed. 499, 6 Sup. Ct. Rep. 194.

A monopoly of trade embraces two essential elements: (1) The acquisition of an exclusive right to or the exclusive control of the trade; and (2) the exclusion of all others from that right and control.

United States v. Trans-Missouri Freight Asso. 7 C. C. A. 15, 19 U. S. App. 36, 4 Inters. Com. Rep. 443, 58 Fed. 58.

An attempt to monopolize any part of the trade or commerce among the states must be an attempt to secure or acquire an exclusive right to such trade or commerce by means which prevent or restrain others from engaging therein.

Re Greene, 52 Fed. 104.

Monopolies are liable to be oppressive, and hence are deemed to be hostile to the public good. But combinations for a mutual advantage, which do not amount to a monopoly, but leave the fleld open to others, are within neither the reason nor the operation of the rule.

Oakdale Mfg. Co. v. Garst, 18 R. I. 484, 23 L. R. A. 639, 28 Atl. 973.

The anti-trust act and the regulative power of Congress under the commerce clause of the Constitution are alike strictly confined to matters which directly and immediately affect interstate or foreign commerce.

United States v. E. C. Knight Co. 156 U.S. 1, 39 L. ed. 325, 15 Sup. Ct. Rep. 249; United States v. Trans-Missouri Freight Asso. 166 U.S. 291, 41 L. ed. 1011, 17 Sup. Ct. Rep. 540; United States v. Joint Traffio Asso. 171 U.S. 505, 43 L. ed. 259, 19 Sup. Ct. Rep. 25; Hopkins v. United States, 171 U.S. 578, 594, 43 S. L. ed. 290, 296, 19 Sup. Ct. Rep. 40; Anderson v. United States, , 43 L. ed. 300, 19 Sup. Ct. Rep. 50; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 44 L. ed. 136, 20 Sup. Ct. Rep. 96.

Page 193 U.S. 197, 265

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A state may not tax railway earnings from transportation as such, for that is taxing the commerce, and is a direct regulation of it.

Fargo v. Michigan, 121 U.S. 230, 30 L. ed. 888, 1 Inters. Com. Rep. 51, 7 Sup. Ct. Rep. 857; Philadelphia & S. Mail S. S. Co. v. Pennsylvania, 122 U.S. 326, 338, 30 S. L. ed. 1200, 1202, 1 Inters. Com. Rep. 308, 7 Sup. Ct. Rep. 1118

But it may tax the tolls received by a local railroad company for the use of part of its road by another company engaged in interstate commerce; for this is a tax on property, and not on commerce. Any increase of rates by the carrying company, consequent on a raising of the tolls because of the tax, is 'too remote and indirect' to make the act a regulation of commerce.

New York, L. E. & W. R. Co. v. Pennsylvania, , 39 L. ed. 1043, 15 Sup. Ct. Rep. 896.

A state may tax the franchise of a foreign corporation upon a valuation measured by gross receipts from interstate and foreign as well as domestic commerce. This is not a direct regulation; the tax is not laid on the commerce itself.

Maine v. Grand Trunk R. Co. 142 U.S. 217, 35 L. ed. 994, 3 Inters. Com. Rep. 807, 12 Sup. Ct. Rep. 121, 163.

A law imposing a privilege tax of $50 on every sleeping car running over the railroads of the state is void as to cars used in interstate transportation, for it is a direct regulation of commerce.

Pickard v. Pullman Southern Car Co. 117 U.S. 34, 29 L. ed. 785, 6 Sup. Ct. Rep. 635.

But the state may tax the same cars, not because used in commerce, but because within the state, as property in the state; and the tax may take the form of a tax on the company's capital. Here the tax is laid directly on the property of the company,-its cars,-and not on the use of the cars in interstate commerce; and if it regulates such commerce at all, it does so indirectly.

Pullman's Palace Car Co. v. Pennsylvania, 141 U.S. 18, 25, 35 S. L. ed. 613, 617, 3 Inters. Com. Rep. 595, 11 Sup. Ct. Rep. 876.

A state may not tax United States bonds as such. It may not tax an individual or corporation on the value of the bonds held by him, for this would be to tax the bonds directly. But shares in a national bank are taxable by a state at their full

Page 193 U.S. 197, 265

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value, like other property, no matter how much of the bank's capital is invested in United States bonds. Such tax does not fall directly on the bonds.

Van Allen v. The Assessors, 3 Wall. 575, 18 L. ed. 229.

If the power to regulate interstate commerce applied to all the incidents to which said commerce might give rise, and to all contracts which might be made in the course of its transaction, that power would embrace the entire sphere of mercantile activity in any way connected with trade between the states, and would exclude state control over many contracts purely domestic in their nature.

Hooper v. California, 155 U.S. 648, 655, 39 S. L. ed. 297, 300, 5 Inters. Com. Rep. 610, 15 Sup. Ct. Rep. 207; Williams v. Fears, 179 U.S. 270, 278, 45 S. L. ed. 186, 190, 21 Sup. Ct. Rep. 128.

A complete bar to the government's attempted encroachment on the rights of the states and their citizens is found in Pearsall v. Great Northern R. Co. , 40 L. ed. 838, 16 Sup. Ct. Rep. 705, and Louisville & N. R. Co. v. Kentucky, 161 U.S. 677, 40 L. ed. 849, 16 Sup. Ct. Rep. 714.

Congress, when passing the act, knew that the railway system of the country rested on consolidations, actual or virtual, authorized by state laws, some of them having existed many years.

Chesapeake & P. Teleph. Co. v. Manning, 186 U.S. 238, 245, 46 S. L. ed. 1144, 22 Sup. Ct. Rep. 881.

These are also matters within the judicial knowledge of the court.

Ohio L. Ins. & T. Co. v. Debolt, 16 How. 416, 435, 14 L. ed 997, 1005; Baltimore & O. R. Co. v. Maryland, 21 Wall. 456, 469, 22 L. ed. 678, 683; Brown v. Piper, 91 U.S. 37, 42, 23 S. L. ed. 200, 202; Phillips v. Detroit, 111 U.S. 604, 606, 28 S. L. ed. 532, 533, 4 Sup. Ct. Rep. 580; Lehigh Valley R. Co. v. Pennsylvania, 145 U.S. 192, 201, 36 S. L. ed. 672, 675, 4 Inters. Com. Rep. 87, 12 Sup. Ct. Rep. 806; Louisville & N. R. Co. v. Kentucky, 161 U.S. 677, 699, 40 S. L. ed. 849, 858, 16 Sup. Ct. Rep. 714; Preston v. Browder, 1 Wheat. 115, 121, 4 L. ed. 50, 51; United States v. Union P. R. Co. 91 U.S. 72, 79, 23 S. L. ed. 224, 228; Platt v. Union P. R. Co. , 25 L. ed. 424; Chesapeake & P. Teleph. Co. v. Manning, 186 U.S. 238, 245, 46 S. L. ed. 1144, 1147, 22 Sup. Ct. Rep. 881.

If Congress had meant to declare such consolidations and stock purchases of competing companies to be illegal, the securities issued by them void, and the state legislation unconstitutional, it would have said so in plain, specific, and [265-Continued.]

apt language.

There can be no question but that every combination declared illegal by the act would have been equally so-no more, no less-before the act.

Re Debs, 158 U.S. 564, 581, 39 S. L. ed. 1092, 1101, 15 Sup. Ct. Rep. 900; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 229, 44 S. L. ed. 136, 143, 20 Sup. Ct. Rep. 96.

Page 193 U.S. 197, 268

Mr. John G. Johnson also argued the cause and filed a brief for appellant the Northern Securities Company:

Page 193 U.S. 197, 270

The acts which can be prevented and restrained by proceedings in equity are those, and those alone, made criminal by the 1st and 2d sections of the Sherman act. [Footnote 1] The statute is therefore a penal one, defining a criminal offense, for which it provides a punishment. It is an indispensable prerequisite to a conviction for a criminal misdemeanor,- especially if there be no criminal intent, and such did not exist in the present case,-that the offense condemned shall be clearly defined.

United States v. Wiltberger, 5 Wheat. 76, 5 L. ed. 37; United States v. Whittier, 5 Dill. 35, Fed. Cas. No. 16,688;

Page 193 U.S. 197, 271

Andrews v. United States, 2 Story, 213, Fed. Cas. No. 381; United States v. Hartwell, 6 Wall. 385, 396, 18 L. ed. 830, 832; Swearingen v. United States, 161 U.S. 446, 451, 40 S. L. ed. 765, 16 Sup. Ct. Rep. 562; France v. United States, 164 U.S. 676, 682, 41 S. L. ed. 595, 597, 17 Sup. Ct. Rep. 219; The Paulina v. United States, 7 Cranch, 61, 3 L. ed. 269; United States v. Reese, 92 U.S. 219, 23 L. ed. 565; United States v. Comerford, 25 Fed. 902; United States v. Chase, 135 U.S. 255, 261, 34 S. L. ed. 117, 119, 10 Sup. Ct. Rep. 756; United States v. Goldenberg, 166 U.S. 102, 42 L. ed. 398, 18 Sup. Ct. Rep. 3; Sarlls v. United States, 152 U.S. 570, 575, 38 S. L. ed. 556, 558, 14 Sup. Ct. Rep. 720.

The meaning of the words, 'contracts in restraint of trade,' was thoroughly understood in jurisprudence and in business when the Sherman act was passed. It was not the intention of Congress to create any new offense.

United States v. Trans-Missouri Freight Asso. 166 U.S. 328, 41 L. ed. 1023, 17 Sup. Ct. Rep. 540.

The Sherman act does not apply to the formation of a corporation to carry on any particular line of business by those already engaged therein, or to a contract of partnership or of employment between two persons previously engaged in the same line of business.

United States

Page 193 U.S. 197, 272

v. Joint Traffic Asso. 171 U.S. 567, 43 L. ed. 286, 19 Sup. Ct. Rep. 25.

The idea of monopoly involves something more than a mere acquisition of the whole, or of the major part, of a commodity or of shares of stock. It involves the idea of exclusion of other supply, as well as inclusion of what is actually acquired.

Re Greene, 52 Fed. 104; Charles River Bridge v. Warren Bridge, 11 Pet. 606, 9 L. ed. 847; 20 Am. & Eng. Enc. Law, p. 846; 2 Bouvier, Law Dict. Rawle's ed. p. 435; 4 Bl. Com. 159; Century Dict. Monopoly; United States v. Joint Traffic Asso. , 43 L. ed. 259, 19 Sup. Ct. Rep. 25.

The purchase by one person of the property of his rival, with the intention thereby to destroy his competition, is not illegal, although by the purchase he will acquire the power to prevent the same.

Oregon Steam Nav. Co. v. Winsor, 20 Wall. 64, 22 L. ed. 315.

The power of Congress to regulate commerce does not confer upon it a right to prescribe the persons who may engage therein, or to regulate or control the ownership of shares of stock of corporations which engage therein.

United States v. E. C. Knight co. 156 U.S. 1, 39 L. ed. 325, 15 Sup. Ct. Rep. 294.

That construction of a statute should be adopted which, without doing violence to the fair meaning of the words used, brings it into harmony with the Constitution.

Page 193 U.S. 197, 273

Grenada County v. Brogden, 112 U.S. 28 L. ed. 704, 5 Sup. Ct. Rep. 125.

In interpreting a statute the intention of the law-making power will prevail even against the letter of the statute. A thing may be within the letter of the statute, and not within its meaning, or within its meaning, though not within its letter.

Hawaii v. Mankichi, 190 U.S. 197, 47 L. ed. 1016, 23 Sup. Ct. Rep. 787.

In Baltimore & O. R. Co. v. Maryland, 21 Wall. 456, 22 L. ed. 678, a stipulation in the charter of a railroad company, that the company should pay to the state a bonus, or a portion of its earnings, was held, not repugnant to the Constitution of the United States.

In Ashley v. Ryan, 153 U.S. 436, 38 L. ed. 773, 4 Inters. Com. Rep. 664, 14 Sup. Ct. Rep. 865, a state was permitted, in allowing consolidation between corporations of different states, to charge upon the new consolidated company a percentage on its entire authorized stock as a fee, inasmuch as, without the franchises conferred by the state, it could not exist; and such charge was not an interference with interstate commerce.

The relief decreed was improper under any aspect of the case.

United States v. E. C. Knight Co. 156 U.S. 1, 17, 39 S. L. ed. 325, 331, 15 Sup. Ct. Rep. 249.

Mr. Charles W. Bunn argued the cause and filed a brief for appellant the Northern Pacific Railway Company:

The power of Congress has never been more accurately or completely described than by Chief Justice Marshall in Gibbons v. Ogden, 9 Wheat. 1, 189, 190, 6 L. ed. 23, 68: 'Commerce, undoubtedly, is traffic, but it is something more,-it is intercourse. It describes the commercial intercourse between nations and parts of nations, in all its branches, and is regulated by prescribing rules for carrying on that intercourse.'

This definition has been frequently repeated by the court.

Passenger Cases, 7 How. 283, 394, 462, 12 L. ed. 702, 748, 777; Henderson v. Wickham, 92 U.S. 259, 270, 23 S. L. ed. 543, 548; Lottery Case, 188 U.S. 321, 346, 47 S. L. ed. 492, 497, 23 Sup. Ct. Rep. 321.

The power of Congress is only to regulate, and is the [273-Continued.]

power to prescribe the rule by which commerce is to be governed.

Gibbons v. Ogden, 9 Wheat. 196, 6 L. ed. 79.

The interstate commerce power of Congress justifies only such regulations as act upon that commerce directly, and does not authorize regulations abridging the police powers of the states or the personal rights and privileges of individuals, if they affect that commerce only indirectly, remotely, incidentally, and collaterally.

Page 193 U.S. 197, 274

Re Greene, 52 Fed. 104; United States v. E. C. Knight Co. , 39 L. ed. 325, 15 Sup. Ct. Rep. 249; Gibbons v. Ogden, 9 Wheat. 203, 6 L. ed. 71; United States v. Joint Traffic Asso. 171 U.S. 505, 43 L. ed. 259, 19 Sup. Ct. Rep. 25; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 44 L. ed. 136, 20 Sup. Ct. Rep. 96; Hopkins v. United States, 171 U.S. 592, 43 L. ed. 296, 19 Sup. Ct. Rep. 40; Anderson v. United States, 171 U.S. 615, 43 L. ed. 305, 19 Sup. Ct. Rep. 50; Sherlock v. Alling, 93 U.S. 99, 23 L. ed. 819; Louisville & N. R. Co. v. Kentucky, 161 U.S. 677, 701, 40 S. L. ed. 849, 16 Sup. Ct. Rep. 714.

If the decision of the circuit court is correct, all the state laws either forbidding or authorizing consolidations of interstate carriers are and always have been void.

Cooley v. Port Wardens, 12 How. 299, 13 L. ed. 996; Cushing v. The John Fraser, 21 How. 184, 16 L. ed. 106; Pound v. Turck, , 24 L. ed. 525; Robbins v. Shelby County Taxing Dist. 120 U.S. 492, 30 L. ed. 695, 1 Inters. Com. Rep. 45, 7 Sup. Ct. Rep. 592; Mobile County v. Kinball, 102 U.S. 691, 26 L. ed. 238; United States v. E. C. Knight Co. 156 U.S. 11, 12, 39 S. L. ed. 328, 329, 15 Sup. Ct. Rep. 249; Addyston Pipe & Steel Co. v. United States, 175 U.S. 230, 44 L. ed. 143, 20 Sup. Ct. Rep. 96.

Except as it punishes contracts, combinations, and conspiracies, the statute intreduces no new rule of law. Whatever is a restraint of commerce now was such before this statute. The act is new only in making the preliminary conspiracy a crime.

Re Debs, 158 U.S. 564, 39 L. ed. 1092, 15 Sup. Ct. Rep. 900; Addyston Pipe & Steel Co. v. United States, 175 U.S. 230, 44 L. ed. 143, 20 Sup. Ct. Rep. 96.

If a thing restrains interstate commerce, it is immaterial with what innocent intent it may be done. On the other hand, if the thing complained of does not restrain interstate commerce, it is immaterial how evil may be the intent.

Page 193 U.S. 197, 275

United States v. Trans-Missouri Freight Asso. 166 U.S. 290, 341, 41 S. L. ed. 1007, 1027, 17 Sup. Ct. Rep. 540.

If an action be lawful, it is elementary that its purpose is immaterial.

Addyston Pipe & Steel Co. v. United States, , 44 L. ed. 136, 20 Sup. Ct. Rep. 96; Phelps v. Nowlen, 72 N. Y. 39, 28 Am. Rep. 93; Kiff v. Youmans, 86 N. Y. 324, 40 Am. Rep. 543; Wood v. Amory, 105 N. Y. 278, 11 N. E. 636; Lough v. Outer-bridge, 143 N. Y. 271, 25 L. R. A. 674, 38 N. E. 292; Adler v. Fenton, 24 How. 407, 410, 16 L. ed. 696, 697; United States v. Greenhut, 51 Fed. 205; Re Greene, 52 Fed. 104; Randall v. Hazelton, 12 Allen, 412; Brackett v. Griswold, 112 N. Y. 454, 20 N. E. 376; United States v. Isham, 17 Wall. 496, 21 L. ed. 728; Dickerman v. Northern Trust Co. 176 U.S. 181, 44 L. ed. 423, 20 Sup. Ct. Rep. 311; Fahrney v. Kelly, 102 Fed. 403; Mogul S. S. Co. v. McGregor

Page 193 U.S. 197, 1892

A. C. 25, 41; Allen v. Flood

Page 193 U.S. 197, 1898

A. C. 1.

If buying and voting the stock restrains interstate commerce, it is illegal. If it does not restrain interstate commerce, it is legal; and the conspiracy behind the formation of the company was a conspiracy to do a lawful thing.

Bohn Mfg. Co. v. Hollis, 54 Minn. 223, sub nom. Bohn Mfg. Co. v. Northwestern Lumbermen's Asso. 21 L. R. A. 337, 55 N. W. 1119.

A combination may destroy competition without restraining trade.

United States v. Joint Traffic Asso. 171 U.S. 567, 43 L. ed. 286, 19 Sup. Ct. Rep. 25; United States v. Addyston Pipe & Steel Co. 46 L. R. A. 122, 29 C. C. A. 141, 54 U. S. App. 744, 85 Fed. 271.

The business of a rival in trade may be purchased for the very purpose of being rid of his competition.

Gamble v. Queens County Water Co. 123 N. Y. 91, 9 L. R. A. 527, 25 N. E. 201; Diamond Match Co. v. Roeber, 106 N. Y. 473, 60 Am. Rep. 464, 13 N. E. 419; Rafferty v. Buffalo City Gas Co. 37 App. Div. 618, 56 N. Y. Supp. 288; Trenton Potteries Co. v. Oliphant, 56 N. J. Eq. 680, 39 Atl. 923; Oakdale Mfg. Co. v. Garst, 18 R. I. 484, 23 L. R. A. 639, 28 Atl. 973.

Page 193 U.S. 197, 276

Mr. John W. Griggs also filed a brief for appellant the Northern Securities Company:

In the division of authority with respect to interstate railways, Congress reserves to itself the superior right to control their commerce and forbid interference therewith, while to the states remains the power to create and to regulate the instruments of such commerce, so far as necessary to the conservation of the public interests.

Page 193 U.S. 197, 277

Louisville & N. R. Co. v. Kentucky, 161 U.S. 702, 40 L. ed. 859, 16 Sup. Ct. Rep. 714.

The courts of the United States since the passage of the Sherman act have been called upon to restrain projected consolidations upon the ground that they were contrary to state statutes, but no suggestion has been made that the legislation of Congress expressed in the Sherman act had any bearing on the subject.

Pearsall v. Great Northern R. Co. 161 U.S. 648, 40 L. ed. 839, 16 Sup. Ct. Rep. 705; Louisville & N. R. Co. v. Kentucky, 161 U.S. 702, 40 L. ed. 859, 16 Sup. Ct. Rep. 714.

The power exists in each state, by appropriate enactments not forbidden by its own or the Federal Constitution, to regulate the relative rights and duties of all persons and corporations within its jurisdiction, so as to provide for the public convenience and the public good. State legislation relating to commerce is not to be deemed a regulation of interstate commerce simply because it may, to some extent or under some circumstances, affect such commerce.

Lake Shore & M. S. R. Co. v. Ohio, 173 U.S. 285, 43 L. ed. 702, 19 Sup. Ct. Rep. 465.

In Missouri, K. & T. R. Co. v. Haber, 169 U.S. 613, 42 L. ed. 878, 18 Sup. Ct. Rep. 488, it was held that the authority given by 5258 of the Revised Statutes of the United States2 to carry 'freight and property' over their respective roads from one state to another state did not authorize a railroad company to carry into a state cattle known, or which by due diligence might be known, to be in such condition as to impart or communicate disease to the domestic cattle of such state.

And it has been expressly adjudged that the above statutory provision was not intended to interfere with the authority of the states to enact such regulations with respect, at least, to a railroad corporation of its own creation, as were not directed against interstate commerce, but which only incidentally or remotely affected such commerce, and were not in themselves regulations of interstate commerce, but were designed reasonably to subserve the convenience of the public.

Lake Shore & M. S. R. Co. v. Ohio, 173 U.S. 285, 43 L. ed. 702, 19 Sup. Ct. Rep. 465; Cleveland, C. C. & St. L. R. Co. v. Illinois, 177 U.S. 514, 44 L. ed. 868, 20 Sup. Ct. Rep. 722.

Page 193 U.S. 197, 277

-continued

All that has been done, even as contended by the government, has been to concentrate the ownership of a majority of the shares of the two companies into one hand, the owner being a corporation controlled by the same men who would own and control a majority of the capital stock of both railroad companies if the holding company had not been formed.

The companies remain distinct; the stockholders are not the corporation; each company is just as much subject to all the requirements of the law as though its stock-holders were entirely different.

Pullman's Palace Car Co. v. Missouri P. R. Co. 115 U.S. 587, 29 L. ed. 499, 6 Sup. Ct. Rep. 194.

When a contract, agreement, or arrangement of any kind is challenged as a combination in restraint of trade or commerce, the court will look at the form of the agreement, and if it appears on its face to have as a necessary and direct result the effect of restraining trade or commerce, no inquiry into the intention or motives of the parties is requisite.

United States v. Joint Traffic Asso. 171 U.S. 505, 43 L. ed. 259, 19 Sup. Ct. Rep. 25.

But if the arrangement is one which in itself is lawful, and is claimed to be invalid only because its ultimate object is to restrain commerce or competition, then it is necessary to examine the facts and circumstances to see if the forms of law are being used to further an illegal purpose.

United States v. Trans-Missouri Freight Asso. 166 U.S. 341, 41 L. ed. 1027, 17 Sup. Ct. Rep. 540; Hopkins v. United States, 171 U.S. 578, 43 L. ed. 290, 19 Sup. Ct. Rep. 40; United States v. Workingmen's Amalgamated Council, 26 L. R. A. 158, 4 Inters. Com. Rep. 831, 54 Fed. 994; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 44 L. ed. 136, 20 Sup. Ct. Rep. 96; State ex rel. Atty. Gen. v. Shippers' Compress & Warehouse Co. (Tex. Civ. App.) 67 S. W. 1049, 95 Tex. 603, 69 S. W. 58.

In every instance where the Supreme Court has had occasion to pass upon the meaning of the Sherman act, it has been extremely careful to distinguish between acts which directly restrain commerce, and acts which only indirectly or incidentally have that effect.

Page 193 U.S. 197, 278

United States v. E. C. Knight Co. 156 U.S. 1, 12, 16 S., 39 L. ed. 325, 330, 15 Sup. Ct. Rep. 249; United States v. Joint Traffic Asso. 171 U.S. 505, 566, 43 S. L. ed. 259, 286, 19 Sup. Ct. Rep. 25; Addyston Pipe & Steel Co. v. United States, , 44 L. ed. 136, 20 Sup. Ct. Rep. 96.

Over internal commerce and trade Congress has no power of regulation, nor any direct control. This power belongs exclusively to the states. No interference by Congress with the business of citizens transacted within a state is warranted by the Constitution, except such as is strictly incidental to the exercise of powers clearly granted.

License Tax Cases, 72 U.S. 462, 18 L. ed. 497.

The fact that an article was manufactured for export to another state does not make it an article of interstate commerce.

Coe v. Errol, 116 U.S. 517, 29 L. ed. 715, 6 Sup. Ct. Rep. 475; Kidd v. Pearson, 128 U.S. 1, 32 L. ed. 346, 2 Inters. Com. Rep. 232, 9 Sup. Ct. Rep. 6.

In United States v. Boyer, 85 Fed. 425, acts of Congress empowering the Secretary of Agriculture to make inspection of cattle, etc., at slaughter houses located in the several states, the products of which were intended for sale in other states or foreign countries, were declared to be without any constitutional warrant, and therefore void, although the government sought to sustain them as a legitimate exercise of the commerce powers.

The sale of the stock of the two railroad corporations, no matter to whom it may be sold, nor how often such sales and transfers of the stock may take place, cannot, in any proper sense, be said to affect the transportation business carried on by the company.

Clarke v. Central R. & Bkg. Co. 66 Fed. 16; Re Greene, 52 Fed. 104; Pearsall v. Great Northern R. Co. 161 U.S. 646, 671, 40 S. L. ed. 838, 846, 16 Sup. Ct. Rep. 705; Rogers v. Nashville, C. & St. L. R. Co. 33 C. C. A. 517, 62 U. S. App. 49, 697, 91 Fed. 312.

Page 193 U.S. 197, 279

The Sherman act is a penal statute; every act which may be prevented by injunctive order would, if committed and proved, subject the parties to criminal prosecution. The rule of strict construction must therefore be applied. United States v. Whittier, 5 Dill. 35, Fed. Cas. No. 16,688; United States v. Sheldon, 2 Wheat. 119, 4 L. ed. 199; United States v. Hartwell, 6 Wall. 395, 18 L. ed. 832; United States v. Shackford, 5 Mason, 445, Fed. Cas. No. 16,262; United States v. Clayton, 2 Dill. 219, Fed. Cas. No. 14,814; United States v. Garreston, 42 Fed. 22; Dwarris, Stat. 641; Hubbard v. Johnstone, 3 Taunt. 177.

Acquiescence by the government for more than eleven years in the actual merger and consolidation of many important parallel and competing lines on railroads and steamships engaged in interstate and international commerce has given a practical construction to the act of July 2, 1890,3 to the effect that it was not intended to forbid, and does not forbid, the natural processes of unification which are bronght about under modern methods of lease, consolidation, merger, community of interest, or ownership of stock.

Stuart v. Laird, 1 Cranch, 299, 2 L. ed. 115.

Page 193 U.S. 197, 280

Mr. M. D. Grover filed a brief for appellant the Great Northern Railway Company:

The commerce clause of the Constitution of the United States does not take away from the several states the right to authorize the formation of corporations, define their business, fix the amount of their capital or purchasing power, and regulate the issue, sale, and ownership of their capital stock.

It has been the practice, since the infancy of railroads in this country, for one railroad company to purchase or lease the railroad of a competing company, or to acquire a majority of the shares of a competing company, or of two companies competing with each other, or to effect the consolidation of competing companies. This has been done without objection from any branch of the Federal government, and has invariably proved beneficial to the railway companies concerned, to their shareholders, and to the public.

Unity of ownership of shares of competing corporations engaged in interstate trade, does not restrain such trade, and is not forbidden by the anti-trust act, nor is such unity of ownership a regulation of interstate commerce, and thus subject to exclusive Federal jurisdiction under the commerce clause of the Constitution.

If the legislature undertakes to define a new offense by statute, and provide for its punishment, its will should be expressed in such language as not to deceive or mislead the common mind.

Page 193 U.S. 197, 287

Tozer v. United States, 4 Inters. Com. Rep. 246, 52 Fed. 917; The Paulina v. United States, 7 Cranch, 61, 3 L. ed. 269; United States v. Reese, , 23 L. ed. 563.

Page 193 U.S. 197, 290

Messrs. Francis Lynde Stetson and David Willcox filed a brief for appellants Morgan, Bacon, and Lamont:

Each individual who has transferred his property to the Securities Company has obtained therefor something entirely different,-namely, an interest in a company holding stock of the other railway company as well. It is manifest that in the fullest possible sense this constituted a sale of the property.

Berger v. United States Steel Corp. 63 N. J. Eq. 809, 53 Atl. 68.

These transactions, being lawful, are not affected by allegations as to the motive which actuated them. As the means employed were lawful, the only question must be whether the result accomplished was unlawful.

Page 193 U.S. 197, 291

Pettibone v. United States, 148 U.S. 197, 203, 37 S. L. ed. 419, 422, 13 Sup. Ct. Rep. 542.

All the action taken being authorized by law, the motive clearly is unimportant.

United States v. Isham, 17 Wall. 496, 21 L. ed. 728; Adler v. Fenton, 24 How. 407, 410, 16 L. ed. 696, 697; Kiff v. Youmans, 86 N. Y. 324, 40 Am. Rep. 543; Connolly v. Union Sewer Pipe Co. 184 U.S. 540, 546, 46 S. L. ed. 679, 684, 22 Sup. Ct. Rep. 431; Randall v. Hazelton, 12 Allen, 412; Dickerman v. Northern Trust Co. 176 U.S. 181, 190, 44 S. L. ed. 423, 430, 20 Sup. Ct. Rep. 311; Strait v. National Harrow Co. 51 Fed. 819; Phelps v. Nowlen, 72 N. Y. 39, 28 Am. Rep. 93; Wood v. Amory, 105 N. Y. 278, 11 N. E. 636;

Page 193 U.S. 197, 292

Lough v. Outerbridge, 143 N. Y. 271, 25 L. R. A. 674, 38 N. E. 292; National Protective Asso. v. Cumming, 170 N. Y. 315, 58 L. R. A. 135, 63 N. E. 369; Mogul S. S. Co. v. McGregor

Page 193 U.S. 197, 1892

A. C. 25, 41, 42; Allen v. Flood

Page 193 U.S. 197, 1898

A. C. 1; Pender v. Lushington, L. R. 6 Ch. Div. 70.

No indirect or remote effect of these lawful transactions upon competition between the railway companies could bring them within the Federal anti-trust act.

United States v. E. C. Knight Co. , 39 L. ed. 325, 15 Sup. Ct. Rep. 249; Hopkins v. United States, 171 U.S. 578, 43 L. ed. 290, 19 Sup. Ct. Rep. 40; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 246, 44 S. L. ed. 136, 149, 20 Sup. Ct. Rep. 96.

The mere fact that a contract has the effect of restraining trade or suppressing competition in some degree does not render it injurious to the public welfare, and thus bring it within the police power.

Oregon Steam Nav. Co. v. Winsor, 20 Wall. 64, 22 L. ed. 315; Gibbs v. Consolidated Gas Co. , 32 L. ed. 979, 9 Sup. Ct. Rep. 553; Hyer v. Richmond Traction Co. 168 U.S. 471, 477, 42 S. L. ed. 547, 549, 18 Sup. Ct. Rep. 114, 366, Affirming 26 C. C. A. 175, 42 U. S. App. 522, 80 Fed. 839; Continental Ins. Co. v. Fire Underwriters, 67 Fed. 310; Diamond Match Co. v. Roeber, 106 N. Y. 473, 60 Am. Rep. 464, 13 N. E. 419; Hodge v. Sloan, 107 N. Y. 244, 17 N. E. 335; Leslie v. Lorillard, 110 N. Y. 519, 1 L. R. A. 456, 18 N. E. 363; Matthews v. Associated Press, 136 N. Y. 333, 32 N. E. 981; Lough v. Outerbridge, 143 N. Y. 271, 25 L. R. A. 674, 38 N. E. 292, 145 N. Y. 601, 40 N. E. 164; Oakes v. Cattaraugus Water Co. 143 N. Y. 430, 26 L. R. A. 544, 38 N. E. 461; Curran v. Galen, 152 N. Y. 33, 37 L. R. A. 802, 46 N. E. 297; Watertown Thermometer Co. v. Pool, 51 Hun, 157, 4 N. Y. Supp. 861, Approved in Tode v. Gross, 127 N. Y. 485, 13 L. R. A. 652, 28 N. E. 469; Central Shade Roller Co. v. Cushman, 143 Mass. 353, 9 N. E. 629.

This act is a criminal statute pure and simple, and its meaning and effect as now determined must also be its meaning and effect when made the basis of a criminal proceeding. Conversely, the act should now receive such construction only as it would receive upon the trial of those indicted for violating its provisions.

Criminal intent is essential to constitute a crime, and the testimony bearing thereon is always a question for the jury.

People v. Wiman, 148 N. Y. 29, 42 N. E. 408; People v. Flack, 125 N. Y. 324, 11 L. R. A. 807, 26 N. E. 267.

Page 193 U.S. 197, 293

Such restraints as result from the sale or the purchase of property are not within the provisions of anti-trust statutes. Indeed, it is the settled law that the transfer of a business is not illegal because it restrains trade, even by an express covenant.

Oregon Steam Nav. Co. v. Winsor, 20 Wall. 64, 22 L. ed. 315; Union Sewer-Pipe Co. v. Connelly, 99 Fed. 354, Affirmed in , 46 L. ed. 679, 22 Sup. Ct. Rep. 431; Fisheries Co. v. Lennen, 116 Fed. 217; Harrison v. Glucose Sugar Ref. Co. 53 C. C. A. 484, 116 Fed. 304; Hodge v. Sloan, 107 N. Y. 244, 17 N. E. 335; Leslie v. Lorillard, 110 N. Y. 519, 1 L. R. A. 456, 18 N. E. 363, 13 L. R. A. 652; Oakes v. Cattaraugus Water Co. 143 N. Y. 430, 26 L. R. A. 544, 38 N. E. 461; Watertown Thermometer Co. v. Pool, 51 Hun, 157, 4 N. Y. Supp. 861, Approved in Tode v. Gross, 127 N. Y. 485, 13 L. R. A. 652, 28 N. E. 469; Wood v. Whitehead Bros. Co. 165 N. Y. 545, 59 N. E. 357; Walsh v. Dwight, 40 App. Div. 513, 58 N. Y. Supp. 91; John D. Park & Sons Co. v. National Wholesale Druggists' Asso. 54 App. Div. 223, 66 N. Y. Supp. 615, 175 N. Y. 1, 62 L. R. A. 632, 67 N. E. 136; Diamond Match Co. v. Roeber, 106 N. Y. 473, 60 Am. Rep. 464, 13 N. E. 419.

So, too, it has been ruled precisely that the formation of associations or corporations is not illegal because the result will be to restrain competition.

Hopkins v. United States, 171 U.S. 578, 43 L. ed. 290, 19 Sup. Ct. Rep. 40; United States Vinegar Co. v. Foehrenbach, 148 N. Y. 58, 42 N. E. 403; Matthews v. Associated Press, 136 N. Y. 333, 32 N. E. 981; Central Shade Roller Co. v. Cushman, 143 Mass. 353, 9 N. E. 629; Rafferty v. Buffalo City Gas Co. 37 App. Div. 618, 56 N. Y. Supp. 288; United States v. Greenhut, 51 Fed. 205; Re Terrell, 51 Fed. 213;

Page 193 U.S. 197, 294

Trenton Potteries Co. v. Oliphant, 58 N. J. Eq. 507, 46 L. R. A. 255, 43 Atl. 723; Mogul S. S. Co. v. McGregor

Page 193 U.S. 197, 1892

A. C. 25; Lough v. Outerbridge, 143 N. Y. 283, 25 L. R. A. 674, 38 N. E. 292; State ex rel. Crow v. Continental Tobacco Co. (Mo.) 75 S. W. 737.

If the result of restricting competition should follow from the lawful transactions involved herein, it would not be their direct result, but only an incidental and collateral result, such as must always follow when business interests of a similar character pass into the same ownership. It would be precisely such a result as those recognized as lawful by the court in United States v. Joint Traffic Asso. 171 U.S. 505, 43 L. ed. 259, 19 Sup. Ct. Rep. 25.

It has been denied, and it is very doubtful whether in any case the 2d section of the anti-trust act applies to railroads.

16 Harvard Law Rev. 545, June, 1903.

It has generally been deemed wise and safe to use rather a process of exclusion, and determine what is not a monopoly, so far as the case in hand required.

Laredo v. International Bridge Co. 14 C. C. A. 1, 30 U. S. App. 110, 66 Fed. 246.

Corporations can invoke the benefits of the provisions of the Constitution and laws which guarantee to persons the enjoyment of property, or afford to them the means for its protection, or prohibit legislation injuriously affecting it.

Minneapolis & St. L. R. Co. v. Beckwith, 129 U.S. 26, 28, 32 S. L. ed. 585, 586, 9 Sup. Ct. Rep. 207.

Corporations are persons within the meaning of the constitutional provision forbidding the deprivation of property without due process of law, as well as a denial of the equal protection of the laws.

Covington & L. Turnp. Road Co. v. Sandford, 164 U.S. 578, 592, 41 S. L. ed. 560, 565, 17 Sup. Ct. Rep. 198; Gulf, C. & S. F. R. Co. v. Ellis, 165 U.S. 150, 154, 41 S. L. ed. 666, 668, 17 Sup. Ct. Rep. 255; Lake Shore & M. S. R. Co. v. Smith, 173 U.S. 684, 690, 43 S. L. ed. 858, 861, 19 Sup. Ct. Rep. 565;

Page 193 U.S. 197, 295

Santa Clara County v. Southern P. R. Co. 9 Sawy. 165, 18 Fed. 385; San Mateo County v. Southern P. R. Co. 8 Sawy. 238, 13 Fed. 722.

This constitutional provision protects the right to acquire property, equally with the right to hold the same after it has been acquired.

Holden v. Hardy, 169 U.S. 366, 391, 42 S. L. ed. 780, 790, 18 Sup. Ct. Rep. 383; State v. Goodwill, 33 W. Va. 179, 6 L. R. A. 621, 10 S. E. 285; State v. Julow, 129 Mo. 163, 29 L. R. A. 257, 31 S. W. 781.

These rights are not affected by the statute now invoked.

United States v. E. C. Knight Co. 156 U.S. 1, 16, 39 S. L. ed. 325, 330, 15 Sup. Ct. Rep. 249.

The 5th Amendment to the Federal Constitution secures all persons in their 'liberty,' and invalidates any legislation by Congress depriving them of liberty 'without due process of law.'

As thus used, 'liberty' means not merely bodily liberty,-freedom from physical duress,-but in effect comprehends substantially all those personal and civil rights of the citizen which it is meant to place beyond the power of the general government to destroy or impair.

Page 193 U.S. 197, 296

Slaughter-House Cases, 16 Wall. 36, 122, 127, 21 L. ed. 394, 423, 425; Munn v. Illinois, 94 U.S. 113, 142, 24 S. L. ed. 77, 90; People ex rel. Annan v. Walsh, 117 N. Y. 621, 22 N. E. 682; Reg. v. Druitt, 10 Cox C. C. 592; Butchers' Union S. H. & L. S. L. Co. v. Crescent City L. S. L. & S. H. Co. , 28 L. ed. 585, 4 Sup. Ct. Rep. 652; Allgeyer v. Louisiana, 165 U.S. 578, 41 L. ed. 832, 17 Sup. Ct. Rep. 427; United States v. Joint Traffic Asso. 171 U.S. 505, 572, 43 S. L. ed. 259, 288, 19 Sup. Ct. Rep. 25; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 228, 229 S., 41 L. ed. 136, 143; 20 Sup. Ct. Rep. 96; Bertholf v. O'Reilly, 74 N. Y. 509, 30 Am. Rep. 323; Re Jacobs, 98 N. Y. 98, 50 Am. Rep. 636; People v. Gillson, 109 N. Y. 389, 17 N. E. 343; People v. King, 110 N. Y. 418, 1 L. R. A. 293, 18 N. E. 245; Godcharles v. Wigeman, 113 Pa. 431, 6 Atl. 354.

As used in the 5th constitutional Amendment, 'liberty' includes equality of rights under the law, and secures citizens similarly situated against discriminations between them, which are arbitrary and without foundation in reason.

United States v. Cruikshank, 92 U.S. 542, 554, 555 S., 23 L. ed. 588, 592; Yick Wo. v. Hopkins, 118 U.S. 356, 369, 30 S. L. ed. 220. 6 Sup. Ct. Rep. 1064; Gulf, C. & S. F. R. Co. v. Ellis, 165 U.S. 150, 160, 41 S. L. ed. 666, 670, 17 Sup. Ct. Rep. 255.

This court has held invalid statutes singling out railroad companies and requiring them to pay attorneys' fees to successful adverse litigants ( Gulf, C. & S. F. R. Co. v. Ellis, , 41 L. ed. 666, 17 Sup. Ct. Rep. 255), and singling out a single stockyard company, under pretense of classification, for reduction of charges (Cotting v. Kansas City Stock Yards Co. 183 U.S. 79, 46 L. ed. 92, 22 Sup. Ct. Rep. 30), and permitting two or more live-stock raisers to combine to prevent competition, while making it criminal for two or more persons holding property for sale or exchange to combine for the same purpose (Connolly v. Union Sewer Pipe Co. 184 U.S. 540, 46 L. ed. 679, 22 Sup. Ct. Rep. 431).

One of the objects of this suit is to annul all sales of stock of the railway companies to the Securities Company, and to cancel all certificates of stock of the latter company issued in purchase thereof.

Page 193 U.S. 197, 297

Even if there were any prohibition in the premises on the railway companies, it would not apply to their stockholders.

A corporation and its stockholders are entirely different entities.

Pullman's Palace Car Co. v. Missouri P. R. Co. 115 U.S. 587, 29 L. ed. 499, 6 Sup. Ct. Rep. 194; Watson v. Bonfils, 53 C. C. A. 535, 116 Fed. 157; American Preservers' Co. v. Norris, 43 Fed. 711; Electric R. Co. v. Jamaica & B. R. C0. 61 Fed. 655.

Any effort to limit the right to sell would necessarily deprive these defendants of their property without due process of law.

Cleveland, C. C. & St. L. R. Co. v. Backus, 154 U.S. 439, 445, 38 S. L. ed. 1041, 1046, 4 Inters. Com. Rep. 677, 14 Sup. Ct. Rep. 1122;

Any combination 'for the purpose of 146 N. Y. 304, 40 N. E. 996; Ingersoll v. Nassau Electric R. Co. 157 N. Y. 453, 43 L. R. A. 236, 52 N. E. 545; People ex rel. Manhattan Sav. Inst. v. Otis, 90 N. Y. 48; Holden v. Hardy, 169 U.S. 366, 391, 42 S. L. ed. 780, 790, 18 Sup. Ct. Rep. 383; People v. Marx, 99 N. Y. 377, 52 Am. Rep. 34, 2 N. E. 29; People v. Gillson, 109 N. Y. 389, 17 N. E. 343; Forster v. Scott, 136 N. Y. 577, 18 L. R. A. 543, 32 N. E. 976; Purdy v. Erie R. Co. 162 N. Y. 42, 48 L. R. A. 669, 56 N. E. 508; Buffalo v. Collins Baking Co. 39 App. Div. 432, 57 N. Y. Supp. 347; Rochester & C. Turnp. Co. v. Joel, 41 App. Div. 43, 58 N. Y. Supp. 346; People v. Meyer, 44 App. Div. 1, 60 N. Y. Supp. 415; Ingraham v. National Salt Co. 72 App. Div. 582, 76 N. Y. Supp. 1016; Janesville v. Carpenter, 77 Wis. 288, 8 L. R. A. 808, 46 N. W. 128.

Whatever view be taken of the character of the transaction, the decree of the circuit court transcended the authority of the court under the statute, which was the sole ground and source of its jurisdiction.

Thorndike on the Merger Case (Boston, 1903).

Attorney General Knox argued the cause, and, with Mr. W. A. Day, filed a brief for appellee:

The anti-trust act is not primarily a criminal statute.

The civil remedy by injunction, and the liability to punishment under the criminal provisions of the act, are entirely distinct.

Page 193 U.S. 197, 300

United States v. Trans-Missouri Freight Asso. 166 U.S. 342, 41 L. ed. 1028, 17 Sup. Ct. Rep. 540.

In its remedial aspect it ought to be construed liberally and given the widest effect consistent with the language employed. It ought not to be frittered away by the refinements

Broom, Legal Max. 5th Am. ed. 3d London ed. 80; Potter's Dwarr. Stat . & Const. p. 234.

And it makes no difference in the application of these rules that the statute has a penal as well as a remedial side.

Dwarris, Stat. 653, 655; Sedgw. Stat. & Const. Law, 2d ed. p. 309, 310; Hyde v. Cogan, 2 Dougl. 702.

Page 193 U.S. 197, 301

Every contract, combination, or conspiracy in restraint of interstate of foreign commerce is illegal. The method adopted in bringing about the combination is immaterial; and the device of a holding corporation for the purpose of circumventing the law can be no more effectual than any other means.

Noyes, Intercorporate Relations, 393.

The anti-trust act applies to and covers common carriers by railroad, as well as all other persons, natural or artificial.

United States v. Trans-Missouri Freight Asso. , 41 L. ed. 1007, 17 Sup. Ct. Rep. 540.

The words, 'in restraint of trade or commerce,' as used in the anti- trust act, are not confined to unreasonable or total restraints only, but extend to any and all direct restraints of trade or commerce, even if reasonable or only partial.

Ibid; United States v. Joint Traffic Asso. 171 U.S. 505, 43 L. ed. 259, 19 Sup. Ct. Rep. 25.

And while this rule applies with equal force to restraints upon individuals, private corporations, and quasi-public corporations, such as railroads, there is a peculiar reason for its application to restraints upon the latter.

United States v. Trans-Missouri Freight Asso. 166 U.S. 290, 41 L. ed. 1007, 17 Sup. Ct. Rep. 540.

In exercising the powers over commerce vested in the Federal government, Congress may to some extent limit the right of private contract, the right to buy and sell property, without violating the 5th Amendment. It may declare that no contract, combination, or monopoly which restrains trade or commerce by shutting out the operation of the general law of competition shall be legal.

United States v. Joint Traffic Asso. 171 U.S. 505, 43 L. ed. 259, 19 Sup. Ct. Rep. 25; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 44 L. ed. 136, 20 Sup. Ct. Rep. 96.

Any combination 'for the purpose of avoiding the effects of competition' in interstate or international trade or commerce is within the prohibition of the act.

Page 193 U.S. 197, 302

United States v. Trans-Missouri Freight Asso. 166 U.S. 290, 41 L. ed. 1007, 17 Sup. Ct. Rep. 540; United States v. Joint Traffic Asso. 171 U.S. 505, 43 L. ed. 259, 19 Sup. Ct. Rep. 25; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 244, 44 S. L. ed. 136, 148, 20 Sup. Ct. Rep. 96.

As used in the act, the word 'monopoly' is not confined to its common- law meaning of an exclusive grant to one or a few to do that which before had been free and open to all in common.

United States v. Trans-Missouri Freight Asso. 166 U.S. 342, 41 L. ed. 1028, 17 Sup. Ct. Rep. 540.

The term, as used by modern legislators and judges, signifies the combining or bringing together, in the hands of one person or set of persons, of the control, or the power of control, over a particular business or employment, so that competition therein may be suppressed.

People ex rel. Peabody v. Chicago Gas Trust Co. 130 Ill. 294, 8 L. R. A. 497, 22 N. E. 798; People v. North River Sugar Ref. Co. 54 Hun, 377, 2 L. R. A. 33, 3 N. Y. Supp. 401; United States v. E. C. Knight Co. , 39 L. ed. 325, 15 Sup. Ct. Rep. 249.

A combination or consolidation of two competing railroads, brought about by transferring to one road a majority of the stock of the other, is such a monopoly.

Pearsall v. Great Northern R. Co. 161 U.S. 646, 677, 40 S. L. ed. 838, 16 Sup. Ct. Rep. 705; Louisville & N. R. Co. v. Kentucky, , 40 L. ed. 849, 16 Sup. Ct. Rep. 714.

To prove that a combination or monopoly exists within the meaning of the act, it is not necessary to show that the immediate effect of the acts complained of is to suppress competition or to create a complete monopoly. It is sufficient to show that they tend to bring about those results.

People v. North River Sugar Ref. Co. 54 Hun, 377, 3 N. Y. Supp. 401; United States v. E. C. Knight Co. 156 U.S. 1, 39 L. ed. 325, 15 Sup. Ct. Rep. 249; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 237, 44 S. L. ed. 136, 146, 20 Sup. Ct. Rep. 96;

Page 193 U.S. 197, 303

Central Ohio Salt Co. v. Guthrie, 35 Ohio St. 672.

The very existence of the power to restrain trade constitutes a restraint.

United States v. Joint Traffic Asso. 171 U.S. 505, 571, 43 S. L. ed. 259, 288, 19 Sup. Ct. Rep. 25; United States v. Trans-Missouri Freight Asso. , 41 L. ed. 1007, 17 Sup. Ct. Rep. 540; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 44 L. ed. 136, 20 Sup. Ct. Rep. 96; Pearsall v. Great Northern R. Co. U. S. 646, 40 L. ed. 838, 16 Sup. Ct. Rep. 705.

It is not necessary in order to bring a combination or conspiracy within the operation of the act, that the members bind themselves each with the other to do the acts alleged to be in restraint of trade. It has always been held to be enough that they act together in pursuance of a common object, and while, of course, this presupposes agreement between them in a broad sense, an agreement or contract in the technical sense is not at all essential.

Reg. v. Murphy, 8 Car. & P. 397.

If in point of law the effect or the tendency of the combination is to restrain trade or commerce the combination is unlawful, and the motive behind it, however beneficent, does not alter that fact in the slightest degree.

Page 193 U.S. 197, 304

United States v. Trans-Missouri Freight Asso. 166 U.S. 341, 342, 41 S. L. ed. 1028, 17 Sup. Ct. Rep. 540; Addyston Pipe & Steel Co. v. United States, 175 U.S. 234, 44 L. ed. 145, 20 Sup. Ct. Rep. 96; Chesapeake & O. Fuel Co. v. United States, 53 C. C. A. 256, 115 Fed. 623.

The anti-trust act, prohibiting combinations and monopolies in restraint of interstate and foreign commerce, is an exercise of the power granted to Congress to regulate commerce.

Lottery Case, 188 U.S. 321, 47 L. ed. 492, 23 Sup. Ct. Rep. 321.

The term 'commerce,' as used in that grant, embraces the instrumentalities by which commerce is or may be carried on.

Chicago & N. W. R. Co. v. Fuller, 17 Wall. 560, 568, 21 L. ed. 710, 714;

Page 193 U.S. 197, 305

Welton v. Missouri, 91 U.S. 275, 280, 23 S. L. ed. 347, 349; Pensacola Teleg. Co. v. Western U. Teleg. Co. , 24 L. ed. 708; Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 203, 29 S. L. ed. 158, 161, 1 Inters. Com. Rep. 382, 5 Sup. Ct. Rep. 826.

The commerce powers of the Federal government are broad and ample enough to prevent the restraint or obstruction of interstate commerce by combinations and monopolies of competing lines or instrumentalities of interstate transportation.

Gibbons v. Ogden, 9 Wheat. 1, 6 L. ed. 23;

Page 193 U.S. 197, 306

Brown v. Maryland, 12 Wheat. 419, 6 L. ed. 678; Passenger Cases, 7 How. 283, 12 L. ed. 702; Re Debs, , 39 L. ed. 1092, 15 Sup. Ct. Rep. 900; Lottery Case, 188 U.S. 321, 47 L. ed. 492, 23 Sup. Ct. Rep. 321; Stockton v. Baltimore & N. Y. R. Co. 1 Inters. Com. Rep. 411, 32 Fed. 11; Boardman v. Lake Shore & M. S. R. Co. 84 N. Y. 157; Noyes, Intercorporate Relations, 19; Louisville & N. R. Co. v. Kentucky, 161 U.S. 701, 40 L. ed. 859, 16 Sup. Ct. Rep. 714.

Of the various reasons for investing the Federal government with the power to regulate commerce among the several states, the one uppermost in the minds of the members of the constitutional convention was to keep the channels of such commerce open and free from obstructions and restraints.

Pensacola Teleg. Co. v. Western U. Teleg. Co. 96 U.S. 1, 24 L. ed. 708.

The exclusive jurisdiction of the Federal government over commerce with foreign nations and among the states, and over the instrumentalities of such commerce, includes the power of police, or that which is its equivalent, over those subjects in all its undefined breadth and fullness.

Cooley, Const. Lim. 722, 723; Thayer, Cases on Const. Law, p. 742, note.

The police power-or equivalent power-of the Federal government over interstate and foreign commerce is not less plenary and complete because, as to those commercial subjects which are local and do not admit of uniform regulation, the states are permitted to exercise the power until Congress, by its legislation, covers the same field.

Cooley, Const. Lim. 723.

Laws against combinations for the purpose of restricting production, maintaining prices, or suppressing competition have a relation to the end of all police regulations,-the comfort, welfare, or safety of society.

Page 193 U.S. 197, 307

Noyes, Intercorporate Relations, 409.

Anti-trust statutes therefore are enacted in the exercise of the police, or an analogous, power.

State ex rel. Crow v. Firemen's Fund Ins. Co. 152 Mo. 46, 45 L. R. A. 363, 52 S. W. 363; State ex rel. Astor v. Schlitz Brewing Co. 104 Tenn. 715, 59 S. W. 1033; Waters-Pierce Oil Co. v. State, 19 Tex. Civ. App. 1, 44 S. W. 936.

The police powers or the reserved powers of the states, are not, for any purposes, paramount to the powers of Congress in fields wherein the Federal government has been invested by the Constitution with complete and supreme authority.

New Orleans Gaslight Co. v. Louisiana Light & H. P. & Mfg. Co. 115 U.S. 650, 661, 29 S. L. ed. 516, 520, 6 Sup. Ct. Rep. 252.

When, in Louisville & N. R. Co. v. Kentucky, , 40 L. ed. 849, 16 Sup. Ct. Rep. 714, the court said that to the states remains the power to regulate the instruments of interstate commerce, it had in mind those regulations of a local character which the states are permitted to make in the absence of Federal legislation covering the same subjects, and did not intend to change any old principle, or to enunciate any new principle, of constitutional construction.

California v. Central P. R. Co. 127 U.S. 1, 32 L. ed. 150, 2 Inters. Com. Rep. 153, 8 Sup. Ct. Rep. 1073;

Page 193 U.S. 197, 308

Welton v. Missouri, 91 U.S. 275, 23 L. ed. 347; Cooley v. Port Wardens, 12 How. 299, 320, 13 L. ed. 996, 1005; Sherlock v. Alling, 93 U.S. 99, 104, 23 S. L. ed. 819, 821; Morgan's L. & T. R. & S. S. Co. v. Louisiana Bd. of Health, 118 U.S. 455, 463, 30 S. L. ed. 237, 241, 6 Sup. Ct. Rep. 1114; Smith v. Alabama, , 31 L. ed. 508, 1 Inters. Com. Rep. 804, 8 Sup. Ct. Rep. 564; Nashville, C. & St. L. R. Co. v. Alabama, 128 U.S. 96, 32 L. ed. 352, 2 Inters. Com. Rep. 238, 9 Sup. Ct. Rep. 28; Hennington v. Georgia, 163 U.S. 299, 41 L. ed. 166, 16 Sup. Ct. Rep. 1086; New York, N. H. & H. R. Co. v. New York, 165 U.S. 628, 631, 41 S. L. ed. 853, 854, 17 Sup. Ct. Rep. 418 Missouri, K. & T. R. Co. v. Haber, 169 U.S. 613, 626, 42 S. L. ed. 878, 882, 18 Sup. Ct. Rep. 488.

Ownership of a majority of its stock constitutes the control of a corporation, when the inquiry is whether a combination or monopoly has been formed to stifle competition between two or more rival and competing railroads.

Noyes, Intercorporate Relations, 294; Farmers' Loan & T. Co. v. New York & N. R. Co. 150 N. Y. 410, 34 L. R. A. 76, 44 N. E. 1043; People ex rel. Peabody v. Chicago Gas Trust Co. 130 Ill. 268, 8 L. R. A. 497, 22 N. E. 798; Pearsall v. Great Northern R. Co. 161 U.S. 646, 671, 40 S. L. ed. 838, 846, 16 Sup. Ct. Rep. 705; Pennsylvania R. Co. v. Com. (Pa.) 4 Cent. Rep. 495, 7 Atl. 368.

There is no great difficulty in getting at what Congress meant by a 'trust.'

Page 193 U.S. 197, 309

Century Dict.; State ex rel. Watson v. Standard Oil Co. 49 Ohio St. 137, 15 L. R. A. 145, 30 N. E. 279; Eddy, Combinations, 582; Noyes, Intercorporate Relations, 304; Dodd, Combinations; Their Uses & Abuses.

The trustee in a trust combination may be either a natural or an artificial person.

Beach, Monopolies & Industrial Trusts, 159; Eddy, Combinations, 582; People ex rel. Peabody v. Chicago Gas Trust Co. 130 Ill. 275, 8 L. R. A. 497, 22 N. E. 798.

The charter of a corporation is the unanimous agreement of its stockholders, declaring the nature and conditions of the trust relation between them and the corporate entity.

Morawetz, Priv. Corp. 237.

While a written trust agreement between the stockholders is a usual element of the trust form of combination, it is not an essential one. It is sufficient to show that the stockholders acted in pursuance of any understanding, plan, or scheme, written, verbal, or otherwise.

Harding v. American Glucose Co. 182 Ill. 551, 55 N. E. 577.

The Securities Company constitutes a 'combination in the form of a trust.'

Beach, Monopolies & Industrial Trusts, 159; Noyes, Intercorporate Relations, 310, 393; People ex rel. Peabody v. Chicago Gas Trust Co. 130 Ill. 268, 8 L. R. A. 497, 22 N. E. 798; Harding v. American Glucose Co. 182 Ill. 551, 55 N. E. 577.

Page 193 U.S. 197, 310

The disguise by which the defendants sought to hide the fact of a combination of the Great Northern and Northern Pacific, and their connection therewith, appears so thin and transparent that it is a cause of wonder that they should ever have adopted it.

Atty. Gen. v. Great Northern R. Co. 6 Jur. N. S. 1006, 1 Drew. & S. 159; Stockton v. Central R. Co. 50 N. J. Eq. 52, 17 L. R. A. 97, 24 Atl. 964.

Devices of exactly the same character had already been repudiated by courts of high standing.

Ford v. Chicago Milk Shippers' Asso. 155 Ill. 166, 27 L. R. A. 298, 39 N. E. 651; Distilling & Cattle Feeding Co. v. People, 156 Ill. 448, 41 L. ed. 188.

Page 193 U.S. 197, 312

Fictions of law, invented to promote justice, can never be invoked to accomplish its defeat.

Mostyn v. Fabrigas, Cowp. 177; Morris v. Pugh, 3 Burr. 1243.

It is well settled that, when it is in the interest of the administration of justice to do so, courts may and will ignore the fiction that a corporation is a legal being apart from the stockholders, and will consider its acts as the acts of its constituent members; and this is emphatically the case when the state-the sovereign authority-is the complaining party.

People v. North River Sugar Ref. Co. 121 N. Y. 582, 9 L. R. A. 33, 24 N. E. 834; Morawetz, Private Corp. 1, 227; Taylor, Priv. Corp. 50; Clark & M. Private Corp. pp. 17, 22; State ex rel. Watson v. Standard Oil Co. 49 Ohio St. 137, 15 L. R. A. 145, 30 N. E. 279; Ford v. Chicago Milk Shippers' Asso. 155 Ill. 166, 27 L. R. A. 298, 39 N. E. 651; Atty. Gen. v. Great Northern R. Co. 6 Jur. N. S. 1006, 1 Drew & S. 157; Pennsylvania R. Co. v. Com. (Pa.) 4 Cent. Rep. 495, 7 Atl. 368; Stockton v. Central R. Co. 50 N. J. Eq. 52, 17 L. R. A. 97, 24 Atl. 964. 'To monopolize' signifies the combining or bringing together, in the hands of one person or set of persons, of the control of, or the power to control, several rival and competing businesses, to the end that competition between them may be suppressed.

United States v. E. C. Knight Co. , 39 L. ed. 325, 15 Sup. Ct. Rep. 249; United States v. Trans-Missouri Freight Asso. 166 U.S. 290, 41 L. ed. 1007, 17 Sup. Ct. Rep. 540.

By acquiring a majority of the shares of the Great Northern and Northern Pacific the Securities Company has obtained the control of, and therefore the power to suppress competition between, two rival and competing lines of railway engaged in interstate commerce, and in that way has monopolized a part of interstate commerce.

Page 193 U.S. 197, 313

Pearsall v. Great Northern R. Co. 161 U.S. 646, 40 L. ed. 838, 16 Sup. Ct. Rep. 705; People ex rel. Peabody v. Chicago Gas Trust Co. 130 Ill. 268, 8 L. R. A. 497, 22 N. E. 798.

In the exercise of its regulative and police powers over interstate commerce, Congress may suppress monopolies in restraint thereof, by whomsoever created, notwithstanding that in doing so it restricts the right of private contract to some extent.

United States v. Joint Traffic Asso. 171 U.S. 505, 43 L. ed. 259, 19 Sup. Ct. Rep. 25; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 44 L. ed. 136, 20 Sup. Ct. Rep. 96.

Even if a natural person could lawfully have done what the Securities Company has done, that would be no argument to prove that the Securities Company, in so doing, has not violated the law against monopolies.

People v. North River Sugar Ref. Co. 121 N. Y. 625, 9 L. R. A. 33, 24 N. E. 834.

Page 193 U.S. 197, 314

Because a person has the right to purchase stock it does not follow that stockholders of two or more competing corporations can combine among themselves and with such person to sell him their stock and induce others to do the same, so as to center the controlling stock interests of the several corporations in a single head, in violation of statutes against combinations, consolidations, and monopolies.

Noyes, Intercorporate Relations, 36; Pennsylvania R. Co. v. Com. ( Pa.) 4 Cent. Rep. 495, 7 At1. 373.

The failure to observe the distinction between an actual, bona fide sale, and what is nominally a sale, but in reality only a cloak under which to accomplish a combination of corporate properties or interests, has sometimes led to confusion of language, if not of thought, in the discussion of trade combinations.

Trenton Potteries Co. v. Oliphant, 58 N. J. Eq. 507, 46 L. R. A. 255, 43 Atl. 723; Noyes, Intercorporate Relations, 354. [315

Even if it were true that the government had acquiesced for eleven years in the creation of combinations like the one now in issue, it would not thereby be estopped from prosecuting the case at bar; nor could its inaction for that period be considered a contemporaneous or practical construction of the act.

Louisville & N. R. Co. v. Kentucky, 161 U.S. 677, 689, 690 S., 40 L. ed. 849, 855, 16 Sup. Ct. Rep. 714.

That a combination or monopoly of competing interstate carriers affects interstate commerce directly, and not incidentally or remotely, is universally conceded.

Noyes, Intercorporate Relations, 392.

Page 193 U.S. 197, 316

The court below, as a court of equity, had ample power to decree the relief it did, and in the form it did.

Pomeroy, Eq. Jur. 2d ed. 111, p. 115; 170, p. 192; Taylor v. Salmon, 4 Myl. & C. 141; Chicago, R. I. & P. R. Co. v. Union P. R. Co. 47 Fed. 15.

Page 193 U.S. 197, 317

Mr. Justice Harlan announced the affirmance of the decree of the circuit court, and delivered the following opinion:

This suit was brought by the United States against the Northern Securities Company, a corporation of New Jersey; the Great Northern Railway Company, a corporation of Minnesota; the Northern Pacific Railway Company, a corporation of Wisconsin; James J. Hill, a citizen of Minnesota; and William P. Clough, D. Willis James, John S. Kennedy, J. Pierpont Morgan, Robert Bacon, George F. Baker, and Daniel S. Lamont, citizens of New York.

Its general object was to enforce, as against the defendants, the provisions of the statute of July 2d, 1890, commonly known as the anti- trust act, and entitled 'An Act to Protect Trade

Page 193 U.S. 197, 318

and Commerce Against Unlawful Restraints and Monopolies.' 26 Stat. at L. 209, chap. 647, U. S. Comp. Stat. 1901, p. 3200. By the decree below the United States was given substantially the relief asked by it in the bill.

As the act is not very long, and as the determination of the particular questions arising in this case may require a consideration of the scope and meaning of most of its provisions, it is here given in full: ' 1. Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal. Every person who shall make any such contract, or engage in any such combination or conspiracy, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. ' 2. Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize, any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. ' 3. Every contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade or commerce in any territory of the United States or of the District of Columbia, or in restraint of trade or commerce between any such territory and another, or between any such territory or territories and any state or states or the District of Columbia, or with foreign nations, or between the District of Columbia, and any state or states or foreign nations, is hereby declared illegal. Every person who shall make any such contract or engage in any such combination or conspiracy shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding five thousand dollars,

Page 193 U.S. 197, 319

or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. ' 4. The several circuit courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this act; and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney General, to institute proceedings in equity to prevent and restrain such violations. Such proceedings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited. When the parties complained of shall have been duly notified of such petition the court shall proceed, as soon as may be, to the hearing and determination of the case; and, pending such petition, and before final decree, the court may at any time make such temporary restraining order or prohibition as shall be deemed just in the premises. ' 5. Whenever it shall appear to the court before which any proceeding under section four of this act may be pending, that the ends of justice require that other parties should be brought before the court, the court may cause them to be summoned, whether they reside in the district in which the court is held or not; and subpoenas to that end may be served in any district by the marshal thereof. ' 6. Any property owned under any contract or by any combination, or pursuant to any conspiracy (and being the subject thereof) mentioned in section one of this act, and being in the course of transportation from one state to another, or to a foreign country, shall be forfeited to the United States, and may be seized and condemned by like proceedings as those provided by law for the forfeiture, seizure, and condemnation of property imported into the United States contrary to law. ' 7. Any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this act may sue therefor in any circuit court of the United States in the dis-

Page 193 U.S. 197, 320

trict in which the defendant resides or is found, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee. ' 8. That the word 'person,' or 'persons,' wherever used in this act shall be deemed to include corporations and associations existing under or authorized by the laws of either the United States, the laws of any of the territories, the laws of any state, or the laws of any foreign country.'

Is the case as presented by the pleadings and the evidence one of a combination of a conspiracy in restraint of trade or commerce among the states, or with foreign states? Is it one in which the defendants are properly chargeable with monopolizing or attempting to monopolize any part of such trade or commerce? Let us see what are the facts disclosed by the record.

The Great Northern Railway Company and the Northern Pacific Railway Company owned, controlled, and operated separate lines of railway,-the former road extending from Superior, and from Duluth and St. Paul, to Everett, Seattle, and Portland, with a branch line to Helena; the latter extending from Ashland, and from Duluth and St. Paul, to Helena, Spokane, Seattle, Tacoma and Portland. The two lines, main and branches, about 9000 miles in length, were and are parallel and competing lines across the continent through the northern tier of states between the Great Lakes and the Pacific, and the two companies were engaged in active competition for freight and passenger traffic, each road connecting at its respective terminals with lines of railway, or with lake and river steamers, or with seagoing vessels.

Prior to 1893 the Northern Pacific system was owned or controlled and operated by the Northern Pacific Railroad Company, a corporation organized under certain acts and resolutions of Congress. That company becoming insolvent, its road and property passed into the hands of receivers appointed by courts of the United States. In advance of foreclosure and

Page 193 U.S. 197, 321

sale a majority of its bondholders made an arrangement with the Great Northern Railway Company for a virtual consolidation of the two systems, and for giving the practical control of the Northern Pacific to the Great Northern. That was the arrangement declared in Pearsall v. Great Northern R. Co. , 40 L. ed. 838, 16 Sup. Ct. Rep. 705, to be illegal under the statutes of Minnesota which forbade any railroad corporation, or the purchasers or managers of any corporation, to consolidate the stock, property, or franchises of such corporation, or to lease or purchase the works or franchises of, or in any was control, other railroad corporations owning or having under their control parallel or competing lines. Minn. Gen. Laws, 1874, chap. 29, 1881, chap. 109.

Early in 1901 the Great Northern and Northern Pacific Railway Companies, having in view the ultimate placing of their two systems under a common control, united in the purchase of the capital stock of the Chicago, Burlington, & Quincy Railway Company, giving in payment, upon an agreed basis of exchange, the joint bonds of the Great Northern and Northern Pacific Railway Companies, payable in twenty years from date, with interest at 4 per cent per annum. In this manner the two purchasing companies became the owners of $107,000,000 of the $112,000,000 total capital stock of the Chicago, Burlington, & Quincy Railway Company, whose lines aggregated about 8,000 miles, and extended from St. Paul to Chicago, and from St. Paul and Chicago to Quincy, Burlington, Des Moines, St. Louis, Kansas City, St. Joseph, Omaha, Lincoln, Denver, Cheyenne and Billings, where it connected with the Northern Pacific Railroad. By this purchase of stock the Great Northern and Northern Pacific acquired full control of the Chicago, Burlington, & Quincy main line and branches.

Prior to November 13th, 1901, defendant Hill and associate stockholders of the Great Northern Railway Company, and defendant Morgan and associate stockholders of the Northern Pacific Railway Company, entered into a combination to form,

Page 193 U.S. 197, 322

under the laws of New Jersey, a holding corporation, to be called the Northern Securities Company, with a capital stock of $400,000,000, and to which company, in exchange for its own capital stock upon a certain basis and at a certain rate, was to be turned over the capital stock, or a controlling interest in the capital stock, of each of the constituent railway companies, with power in the holding corporation to vote such stock and in all respects to act as the owner thereof, and to do whatever it might deem necessary in aid of such railway companies or to enhance the value of their stocks. In this manner the interests of individual stockholders in the property and franchises of the two independent and competing railway companies were to be converted into an interest in the property and franchises of the holding corporation. Thus, as stated in article 6 of the bill, 'by making the stockholders of each system jointly interested in both systems, and by practically pooling the earnings of both for the benefit of the former stockholders of each, and by vesting the selection of the directors and officers of each system in a common body, to wit, the holding corporation, with not only the power, but the duty, to pursue a policy which would promote the interests, not of one system at the expense of the other, but of both at the expense of the public, all inducement for competition between the two systems was to be removed, a virtual consolidation effected, and a monopoly of the interstate and foreign commerce formerly carried on by the two systems as independent competitors established.'

In pursuance of this combination, and to effect its objects, the defendant, the Northern Securities Company, was organized November 13th, 1901, under the laws of New Jersey.

Its certificate of incorporation stated that the objects for which the company was formed were: '1. To acquire by purchase, subscription, or otherwise, and to hold as investment, any bonds or other securities or evidences of indebtedness, or any shares of capital stock created or issued by any other corporation or corporations, association or associations, of the

Page 193 U.S. 197, 323

state of New Jersey, or of any other state, territory, or country. 2. To purchase, hold, sell, assign, transfer, mortgage, pledge, or otherwise dispose of any bonds or other securities or evidences of indebtedness created or issued by any other corporation or corporations association or associations, of the state of New Jersey, or of any other state, territory, or country, and while owner thereof to exercise all the rights, powers, and privileges of ownership. 3. To purchase, hold, sell, assign, transfer, mortgage pledge or otherwise dispose of shares of the capital stock of any other corporation or corporations, association or associations, of the state of New Jersey, or of any other state, territory, or country, and while owner of such stock to exercise all the rights, powers, and privileges of ownership, including the right to vote thereon. 4. To aid in any manner any corporation or association of which any bonds or other securities or evidences of indebtedness or stock are held by the corporation, and to do any acts or things designed to protect, preserve, improve, or enhance the value of any such bonds or other securities or evidences of indebtedness or stock. 5. To acquire, own, and hold such real and personal property as may be necessary or convenient for the transaction of its business.'

It was declared in the certificate that the business or purpose of the corporation was from time to time to do any one or more of such acts and things, and that the corporation should have power to conduct its business in other states and in foreign countries, and to have one or more offices, and hold, purchase, mortgage, and convey real and personal property, out of New Jersey.

The total authorized capital stock of the corporation was fixed at $ 400,000,000, divided into 4,000,000 shares of the par value of $100 each. The amount of the capital stock with which the corporation should commence business was fixed at $30,000. The duration of the corporation was to be perpetual.

This charter having been obtained, Hill and his associate stockholders of the Great Northern Railway Company, and

Page 193 U.S. 197, 324

Morgan and associate stockholders of the Northern Pacific Railway Company, assigned to the Securities Company a controlling amount of the capital stock of the respective constituent companies upon an agreed basis of exchange of the capital stock of the Securities Company for each share of the capital stock of the other companies.

In further pursuance of the combination, the Securities Company acquired additional stock of the defendant railway companies, issuing in lieu thereof its own stock upon the above basis, and, at the time of the bringing of this suit, held, as owner and proprietor, substantially all the capital stock of the Northern Pacific Railway Company, and, it is alleged, a controlling interest in the stock of the Great Northern Railway Company, 'and is voting the same and is collecting the dividends thereon, and in all respects is acting as the owner thereof, in the organization, management, and operation of said railway companies and in the receipt and control of their earnings.'

No consideration whatever, the bill alleges, has existed or will exist, for the transfer of the stock of the defendant railway companies to the Northern Securities Company, other than the issue of the stock of the latter company for the purpose, after the manner, and upon the basis stated.

The Securities Company, the bill also alleges, was not organized in good faith to purchase and pay for the stocks of the Great Northern and Northern Pacific Railway Companies, but solely 'to incorporate the pooling of the stocks of said companies,' and carry into effect the above combination; that it is a mere depositary, custodian, holder, or trustee of the stocks of the Great Northern and Northern Pacific Railway Companies; that its shares of stock are but beneficial certificates against said railroad stocks to designate the interest of the holders in the pool; that it does not have and never had any capital to warrant such an operation; that its subscribed capital was but $30,000, and its authorized capital stock of $400,000,000 was just sufficient, when all issued, to represent

Page 193 U.S. 197, 325

and cover the exchange value of substantially the entire stock of the Great Northern and Northern Pacific Railway Companies, upon the basis and at the rate agreed upon, which was about $122,000,000 in excess of the combined capital stock of the two railway companies taken at par; and that, unless prevented, the Securities Company would acquire, as owner and proprietor, substantially all the capital stock of the Great Northern and Northern Pacific Railway Companies, issuing in lieu thereof its own capital stock to the full extent of its authorized issue, of which, upon the agreed basis of exchange, the former stockholders of the Great Northern Railway Company have received or would receive and hold about 55 per cent, the balance going to the former stockholders of the Northern Pacific Railway Company.

The government charges that if the combination was held not to be in violation of the act of Congress, then all efforts of the national government to preserve to the people the benefits of free competition among carriers engaged in interstate commerce will be wholly unavailing, and all transcontinental lines, indeed, the entire railway systems of the country, may be absorbed, merged, and consolidated, thus placing the public at the absolute mercy of the holding corporation.

The several defendants denied all the allegations of the bill imputing to them a purpose to evade the provisions of the act of Congress, or to form a combination or conspiracy having for its object either to restrain or to monopolize commerce or trade among the states or with foreign nations. They denied that any combination or conspiracy was formed in violation of the act.

In our judgment, the evidence fully sustains the material allegations of the bill, and shows a violation of the act of Congress, in so far as it declares illegal every combination or conspiracy in restraint of commerce among the several states and with foreign nations, and forbids attempts to monopolize such commerce or any part of it.

Summarizing the principal facts, it is indisputable upon this

Page 193 U.S. 197, 326

record that under the leadership of the defendants Hill and Morgan the stockholders of the Great Northern and Northern Pacific Railway corporations, having competing and substantially parallel lines from the Great Lakes and the Mississippi river to the Pacific ocean at Puget sound combined and conceived the scheme of organizing a corporation under the laws of New Jersey which should hold the shares of the stock of the constituent companies; such shareholders, in lieu of their shares in those companies, to receive, upon an agreed basis of value, shares in the holding corporation; that pursuant to such combination the Northern Securities Company was organized as the holding corporation through which the scheme should be executed; and under that scheme such holding corporation has become the holder-more properly speaking, the custodian-of more than nine tenths of the stock of the Northern Pacific, and more than three fourths of the stock of the Great Northern, the stockholders of the companies who delivered their stock receiving upon the agreed basis shares of stock in the holding corporation. The stockholders of these two competing companies disappeared, as such, for the moment, but immediately reappeared as stockholders of the holding company, which was thereafter to guard the interests of both sets of stockholders as a unit, and to manage, or cause to be managed, both lines of railroad as if held in one ownership. Necessarily by this combination or arrangement the holding company in the fullest sense dominates the situation in the interest of those who were stockholders of the constituent companies; as much so, for every practical purpose, as if it had been itself a railroad corporation which had built, owned, and operated both lines for the exclusive benefit of its stockholders. Necessarily, also, the constituent companies ceased, under such a combination, to be in active competition for trade and commerce along their respective lines, and have become, practically, one powerful consolidated corporation, by the name of a holding corporation, the principal, if not the sole, object for the formation of which was to carry out the purpose of the original

Page 193 U.S. 197, 327

combination, under which competition between the constituent companies would cease. Those who were stockholders of the Great Northern and Northern Pacific and became stockholders in the holding company are now interested in preventing all competition between the two lines, and, as owners of stock or of certificates of stock in the holding company, they will see to it that no competition is tolerated. They will take care that no persons are chosen directors of the holding company who will permit competition between the constituent companies. The result of the combination is that all the earnings of the constituent companies make a common fund in the hands of the Northern Securities Company, to be distributed, not upon the basis of the earnings of the respective constituent companies, each acting exclusively in its own interests, but upon the basis of the certificates of stock issued by the holding company. No scheme or device could more certainly come within the words of the act,- 'combination in the form of a trust or otherwise . . . in restraint of commerce among the several states or with foreign nations,'-or could more effectively and certainly suppress free competition between the constituent companies. This combination is, within the meaning of the act, a 'trust;' but if not, it is a combination in restraint of interstate and international commerce; and that is enough to bring it under the condemnation of the act. The mere existence of such a combination, and the power acquired by the holding company as its trustee, constitute a menace to, and a restraint upon, that freedom of commerce which Congress intended to recognize and protect, and which the public is entitled to have protected. If such combination be not destroyed, all the advantages that would naturally come to the public under the operation of the general laws of competition, as between the Great Northern and Northern Pacific Railway Companies, will be lost, and the entire commerce of the immense territory in the northern part of the United States between the Great Lakes and the Pacific at Puget sound will be at the mercy of a single holding cor-

Page 193 U.S. 197, 328

poration, organized in a state distant from the people of that territory.

The circuit court was undoubtedly right when it said-all the judges of that court concurring-that the combination referred to 'led inevitably to the following results: First, it placed the control of the two roads in the hands of a single person, to wit, the Securities Company, by virtue of its ownership of a large majority of the stock of both companies; second, it destroys every motive for competition between two roads engaged in interstate traffic, which were natural competition for business, by pooling the earnings of the two roads for the common benefit of the stockholders of both companies.' 120 Fed. 721, 724.

Such being the case made by the record, what are the principles that must control the decision of the present case? Do former adjudications determine the controlling questions raised by the pleadings and proofs?

The contention of the government is that, if regard be had to former adjudications, the present case must be determined in its favor. That view is contested and the defendants insist that a decision in their favor will not be inconsistent with anything heretofore decided and would be in harmony with the act of Congress.

Is the act to be construed as forbidding every combination or conspiracy in restraint of trade or commerce among the states or with foreign nations? Or, does it embrace only such restraints as are unreasonable in their nature? Is the motive with which a forbidden combination or conspiracy was formed at all material when it appears that the necessary tendency of the particular combination or conspiracy in question is to restrict or suppress free competition between competing railroads engaged in commerce among the states? Does the act of Congress prescribe, as a rule for interstate or international commerce, that the operation of the natural laws of competition between those engaged in such commerce shall not be restricted or interfered with by any contract, combination, or

Page 193 U.S. 197, 329

conspiracy? How far may Congress go in regulating the affairs or conduct of state corporations engaged as carriers in commerce among the states or of state corporations which, although not directly engaged themselves in such commerce, yet have control of the business of interstate carriers? If state corporations, or their stockholders, are found to be parties to a combination in the form of a trust or otherwise, which restrains interstate or international commerce, may they not be compelled to respect any rule for such commerce that may be lawfully prescribed by Congress?

These questions were earnestly discussed at the bar by able counsel, and have received the full consideration which their importance demands.

The first case in this court arising under the anti-trust act was United States v. E. C. Knight Co. 156 U.S. 1, 39 L. ed. 325, 15 Sup. Ct. Rep. 249. The next case was that of United States v. Trans-Missouri Freight Asso. 166 U.S. 290, 41 L. ed. 1007, 17 Sup. Ct. Rep. 540. That was followed by United States v. Joint Traffic Asso. 171 U.S. 505, 569, 571 S., 43 L. ed. 259, 287, 288, 19 Sup. Ct. Rep. 25; Hopkins v. United States, , 43 L. ed. 290, 19 Sup. Ct. Rep. 40; Anderson v. United States, 171 U.S. 604, 43 L. ed. 300, 19 Sup. Ct. Rep. 50; Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 44 L. ed. 136, 20 Sup. Ct. Rep. 96, and W. W. Montague & Co. v. Lowry, 193 U.S. 38, ante, p. 307, 24 Sup. Ct. Rep. 307. To these may be added Pear sall v. Great N. R. Co. 161 U.S. 646, 40 L. ed. 838, 16 Sup. Ct. Rep. 705, which, although not arising under the anti-trust act, involved an agreement under which the Great Northern and Northern Pacific Railway Companies should be consolidated and by which competition between those companies was to cease. In United States v. E. C. Knight Co. it was held that the agreement or arrangement there involved had reference only to the manufacture or production of sugar by those engaged in the alleged combination; but if it had directly embraced interstate or international commerce, it would then have been covered by the anti-trust act and would have been illegal; in United States v. Trans-Missouri Freight Asso. that an agreement between certain railroad companies providing for establishing and maintaining, for their mutual protection, reasonable rates, rules, and regulations in respect

Page 193 U.S. 197, 330

of freight traffic, through and local, and by which free competition among those companies was restricted, was, by reason of such restriction, illegal under the anti-trust act; in United States v. Joint Traffic Asso. that an arrangement between certain railroad companies in reference to railroad traffic among the states, by which the railroads involved were not subjected to competition among themselves, was also forbidden by the act; in Hopkins v. United States and Anderson v. United States, that the act embraced only agreements that had direct connection with interstate commerce, and that such commerce comprehended intercourse for all the purposes of trade in any and all its forms, including the transportation, purchase, sale, and exchange of commodities between citizens of different states, and the power to regulate it embraced all the instrumentalities by which such commerce is conducted; in Addyston Pipe & Steel Co. v. United States, all the members of the court concurring, that the act of Congress made illegal an agreement between certain private companies or corporations engaged in different states in the manufacture, sale, and transportation of iron pipe, whereby competition among them was avoided; and in W. W. Montague & Co. v. Lowry, all the members of the court again concurring, that a combination created by an agreement between certain private manufacturers and dealers in tiles, grates, and mantels, in different states, whereby they controlled or sought to control the price of such articles in those states, was condemned by the act of Congress. In Pearsall v. Great Northern R. Co. which, as already stated, involved the consolidation of the Great Northern and Northern Pacific Railway Companies, the court said: 'The consolidation of these two great corporations will unavoidably result in giving to the defendant [the Great Northern] a monopoly of all traffic in the northern half of the state of Minnesota, as well as of all transcontinental traffic north of the line of the Union Pacific, against which public regulations will be but a feeble protection. The acts of the Minnesota legislature of 1874 and 1881 undoubtedly

Page 193 U.S. 197, 331

reflected the general sentiment of the public,-that their best security is in competition.'

We will not encumber this opinion by extended extracts from the former opinions of this court. It is sufficient to say that from the decisions in the above cases certain propositions are plainly deducible and embrace the present case. Those propositions are:

That although the act of Congress known as the anti-trust act has no reference to the mere manufacture or production of articles or commodities within the limits of the several states, it does embrace and declare to be illegal every contract, combination, or conspiracy, in whatever form, of whatever nature, and whoever may be parties to it, which directly or necessarily operates in restraint of trade or commerce among the several states or with foreign nations;

That the act is not limited to restraints of interstate and international trade or commerce that are unreasonable in their nature, but embraces all direct restraints imposed by any combination, conspiracy, or monopoly upon such trade or commerce;

That railroad carriers engaged in interstate or international trade or commerce are embraced by the act;

That combinations, even among private manufacturers or dealers, whereby interstate or international commerce is restrained, are equally embraced by the act;

That Congress has the power to establish rules by which interstate and international commerce shall be governed, and, by the anti-trust act, has prescribed the rule of free competition among those engaged in such commerce:

That every combination or conspiracy which would extinguish competition between otherwise competing railroads engaged in interstate trade or commerce, and which would in that way restrain such trade or commerce, is made illegal by the act;

That the natural effect of competition is to increase commerce, and an agreement whose direct effect is to prevent this play of competition restrains instead of promoting trade and commerce;

Page 193 U.S. 197, 332

That to vitiate a combination such as the act of Congress condemns, it need not be shown that the combination, in fact, results or will result, in a total suppression of trade or in a complete monopoly, but it is only essential to show that, by its necessary operation, it tends to restrain interstate or international trade or commerce or tends to create a monopoly in such trade or commerce and to deprive the public of the advantages that flow from free competition;

That the constitutional guaranty of liberty of contract does not prevent Congress from prescribing the rule of free competition for those engaged in interstate and international commerce; and,

That under its power to regulate commerce among the several states and with foreign nations, Congress had authority to enact the statute in question.

No one, we assume, will deny that these propositions were distinctly announced in the former decisions of this court. They cannot be ignored or their effect avoided by the intimation that the court indulged in obiter dicta. What was said in those cases was within the limits of the issues made by the parties. In our opinion, the recognition of the principles announced in former cases must, under the conceded facts, lead to an affirmance of the decree below, unless the special objections, or some of them, which have been made to the application of the act of Congress to the present case, are of a substantial character. We will now consider those objections.

Underlying the argument in behalf of the defendants is the idea that, as the Northern Securities Company is a state corporation, and as its acquisition of the stock of the Great Northern and Northern Pacific Railway Companies is not inconsistent with the powers conferred by its charter, the enforcement of the act of Congress, as against those corporations, will be an unauthorized interference by the national government with the internal commerce of the states creating those corporations. This suggestion does not at all impress us. There is no reason to suppose that Congress had any purpose

Page 193 U.S. 197, 333

to interfere with the internal affairs of the states, nor, in our opinion, is there any ground whatever for the contention that the anti-trust act regulates their domestic commerce. By its very terms the act regulates only commerce among the states and with foreign states. Viewed in that light, the act, if within the powers of Congress, must be respected; for, by the explicit words of the Constitution, that instrument and the laws enacted by Congress in pursuance of its provisions, are the supreme law of the land, 'anything in the constitution or laws of any state to the contrary notwithstanding,'-supreme over the states, over the courts, and even over the people of the United States,-the source of all power under our governmental system in respect of the objects for which the national government was ordained. An act of Congress constitutionally passed under its power to regulate commerce among the states and with foreign nations is binding upon all; as much so as if it were embodied, in terms, in the Constitution itself. Every judicial officer, whether of a national or a state court, is under the obligations of an oath so to regard a lawful enactment of Congress. Not even a state, still less one of its artificial creatures, can stand in the way of its enforcement. If it were otherwise, the government and its laws might be prostrated at the feet of local authority. Cohen v. Virginia, 6 Wheat. 264, 385, 414, 5 L. ed. 257, 286, 293. These views have been often expressed by this court.

It is said that whatever may be the power of a state over such subjects, Congress cannot forbid single individuals from disposing of their stock in a state corporation, even if such corporation be engaged in interstate and international commerce; that the holding or purchase by a state corporation, or the purchase by individuals, of the stock of another corporation, for whatever purpose, are matters in respect of which Congress has no authority under the Constitution; that, so far as the power of Congress is concerned, citizens, or state corporations, may dispose of their property and invest their money in any way they choose; and that in regard to all

Page 193 U.S. 197, 334

such matters, citizens and state corporations are subject, if to any authority, only to the lawful authority of the state in which such citizens reside or under whose laws such corporations are organized. It is unnecessary in this case to consider such abstract, general questions. The court need not now concern itself with them. They are not here to be examined and determined, and may well be left for consideration in some case necessarily involving their determination.

In this connection, it is suggested that the contention of the government is that the acquisition and ownership of stock in a state railroad corporation is itself interstate commerce if that corporation be engaged in interstate commerce. This suggestion is made in different ways; sometimes in express words, at other times by implication. For instance, it is said that the question here is whether the power of Congress over interstate commerce extends to the regulation of the ownership of the stock in state railroad companies, by reason of their being engaged in such commerce. Again, it is said that the only issue in this case is whether the Northern Securities Company can acquire and hold stock in other state corporations. Still further, it is asked, generally, whether the organization or ownership of railroads is not under the control of the states under whose laws they came into existence? Such statements as to the issues in this case are, we think, wholly unwarranted, and are very wide of the mark; it is the setting up of mere men of straw to be easily stricken down. We do not understand that the government makes any such contentions or takes any such positions as those statements imply. It does not contend that Congress may control the mere acquisition or the mere ownership of stock in a state corporation engaged in interstate commerce. Nor does it contend that Congress can control the organization of state corporations authorized by their charters to engage in interstate and international commerce. But it does contend that Congress may protect the freedom of interstate commerce by any means that are appropriate and that are lawful, and not prohibited

Page 193 U.S. 197, 335

by the Constitution. It does contend that no state corporation can stand in the way of the enforcement of the national will, legally expressed. What the government particularly complains of-indeed, all that it complains of here-is the existence of a combination among the stockholders of competing railroad companies which, in violation of the act of Congress, restrains interstate and international commerce through the agency of a common corporate trustee, designated to act for both companies in repressing free competition between them. Independently of any question of the mere ownership of stock or of the organization of a state corporation, can it in reason be said that such a combination is not embraced by the very terms of the anti-trust act? May not Congress declare that combination to be illegal? If Congress legislates for the protection of the public, may it not proceed on the ground that wrongs, when effected by a powerful combination, are more dangerous and require more stringent supervision than when they are to be effected by a single person? Callan v. Wilson, 127 U.S. 640, 556, 32 S. L. ed. 223, 228, 8 Sup. Ct. Rep. 1301. How far may the courts go in order to give effect to the act of Congress, and remedy the evils it was designed by that act to suppress? These are confessedly questions of great moment, and they will now be considered.

By the express words of the Constitution, Congress has power to 'regulate commerce with foreign nations and among the several states, and with the Indian tribes.' In view of the numerous decisions of this court there ought not, at this day, to be any doubt as to the general scope of such power. In some circumstances regulation may properly take the form and have the effect of prohibition. Re Rahrer, , 35 L. ed. 572, 11 Sup. Ct. Rep. 865; Lottery Case, 188 U.S. 321, 355 47 L. ed. 492, 500, 23 Sup. Ct. Rep. 321 and authorities there cited. Again and again this court has reaffirmed the doctrine announced in the great judgment rendered by Chief Justice Marshall for the court in Gibbons v. Ogden, 9 Wheat. 1, 196, 197, 6 L. ed. 23, 70, that the power of Congress to regulate commerce among the states and with foreign nations is the power 'to prescribe the rule by which commerce is to be governed;' that such power 'is complete

Page 193 U.S. 197, 336

in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution;' that 'if, as has always been understood, the sovereignty of Congress, though limited to specified objects, is plenary as to those objects, the power over commerce with foreign nations and among the several states is vested in Congress as absolutely as it would be in a single government having in its constitution the same restrictions on the exercise of the power as are found in the Constitution of the United States;' that a sound construction of the Constitution allows to Congress a large discretion 'with respect to the means by which the powers it confers are to be carried into execution, which enable that body to perform the high duties assigned to it, in the manner most beneficial to the people;' and that if the end to be accomplished is within the scope of the Constitution, 'all means which are appropriate, which are plainly adapted to that end, and which are not prohibited, are constitutional.' Brown v. Maryland, 12 Wheat. 419, 6 L. ed. 678; Sinnot v. Davenport, 22 How. 227, 238, 16 L. ed. 243, 246; Henderson v. Wickham, 92 U.S. 259, 23 L. ed. 543; Hannibal & St. J. R. C. o. v. Husen, 95 U.S. 465, 472, 24 S. L. ed. 527, 530; Mobile County v. Kimball, , 26 L. ed. 238; Missouri, K. & T. R. Co. v. Haber, 169 U.S. 613, 626, 42 S. L. ed. 878, 882, 18 Sup. Ct. Rep. 488; Lottery Case, 188 U.S. 321, 348, 47 S. L. ed. 492, 498, 23 Sup. Ct. Rep. 321. In Cohen v. Virginia, 6 Wheat. 264, 413, 5 L. ed. 257, 293, this court said that the United States were, for many important purposes, 'a single nation,' and that 'in all commercial regulations we are one and the same people;' and it has since frequently declared that commerce among the several states was a unit, and subject to national control. Previously, in M'Culloch v. Maryland, 4 Wheat. 316, 405, 4 L. ed. 579, 601, the court had said that the government ordained and established by the Constitution was, within the limits of the powers granted to it, 'the government of all; its powers are delegated by all; it represents all, and acts for all,' and was 'supreme within its sphere of action.' As late as the case of Re Debs, 158 U.S. 564, 582, 39 S. L. ed. 1092, 1101, 15 Sup. Ct. Rep. 900, 905, this court, every member of it concurring, said: 'The entire strength of the nation may be used to enforce in any part of the land the

Page 193 U.S. 197, 337

full and free exercise of all national powers and the security of all rights intrusted by the Constitution to its care. The strong arm of the national government may be put forth to brush away all obstructions to the freedom of interstate commerce or the transportation of the mails. If the emergency arises, the army of the nation, and all its militia, are at the service of the nation to compel obedience to its laws.'

The means employed in respect of the combinations forbidden by the anti-trust act, and which Congress deemed germane to the end to be accomplished, was to prescribe as a rule for interstate and international commerce (not for domestic commerce) that it should not be vexed by combinations, conspiracies, or monopolies which restrain commerce by destroying or restricting competition. We say that Congress has prescribed such a rule, because, in all the prior cases in this court, the anti-trust act has been construed as forbidding any combination which, by its necessary operation, destroys or restricts free competition among those engaged in interstate commerce; in other words, that to destroy or restrict free competition in interstate commerce was to restrain such commerce. Now, can this court say that such a rule is prohibited by the Constitution or is not one that Congress could appropriately prescribe when exerting its power under the commerce clause of the Constitution? Whether the free operation of the normal laws of competition is a wise and wholesome rule for trade and commerce is an exonomic question which this court need not consider or determine. Undoubtedly, there are those who think that the general business interests and prosperity of the country will be best promoted if the rule of competition is not applied. But there are others who believe that such a rule is more necessary in these days of enormous wealth than it ever was in any former period of our history. Be all this as it may, Congress has, in effect, recognized the rule of free competition by declaring illegal every comoination or conspiracy in restraint of incerstate and international commerce. As, in the judgment of Congress, the public convenience and the general welfare

Page 193 U.S. 197, 338

will be best subserved when the natural laws of competition are left undisturbed by those engaged in interstate commerce, and as Congress has embodied that rule in a statute, that must be, for all, the end of the matter, if this is to remain a government of laws, and not of men.

It is said that railroad corporations created under the laws of a state can only be consolidated with the authority of the state. Why that suggestion is made in this case we cannot understand, for there is no pretense that the combination here in question was under the authority of the states under whose laws these railroad corporations were created. But even if the state allowed consolidation, it would not follow that the stockholders of two or more state railroad corporations, having competing lines and engaged in interstate commerce, could lawfully combine and form a distinct corporation to hold the stock of the constituent corporations, and, by destroying competition between them, in violation of the act of Congress, restrain commerce among the states and with foreign nations.

The rule of competition, prescribed by Congress, was not at all new in trade and commerce. And we cannot be in any doubt as to the reason that moved Congress to the incorporation of that rule into a statute. That reason was thus stated in United States v. Joint Traffic Asso.: 'Has not Congress, with regard to interstate commerce, and in the course of regulating it, in the case of railroad corporations, the power to say that no contract or combination shall be legal which shall restrain trade and commerce by shutting out the operation of the general law of competition? We think it has. . . . It is the combination of these large and powerful corporations, covering vast sections of territory and influencing trade throughout the whole extent thereof, and acting as one body in all the matters over which the combination extends, that constitutes the alleged evil, and in regard to which, so far as the combination operates upon and restrains interstate commerce, Congress has power to legislate and to prohabit.' pp. 569, 571, L. ed. pp. 287, 288 Sup. Ct. Rep. p. 32. That such a rule was applied to interstate commerce

Page 193 U.S. 197, 339

should not have surprised anyone. Indeed, when Congress declared contracts, combinations, and conspiracies in restraint of trade or commerce to be illegal, it did nothing more than apply to interstate commerce a rule that had been long applied by the several states when dealing with combinations that were in restraint of their domestic commerce. The decisions in state courts upon this general subject are not only numerous and instructive, but they show the circumstances under which the anti-trust act was passed. It may well be assumed that Congress, when enacting that statute, shared the general apprehension that a few powerful corporations or combinations sought to obtain, and, unless restrained, would obtain, such absolute control of the entire trade and commerce of the country as would be detrimental to the general welfare.

In Morris Run Coal Co. v. Barclay Coal Co. 68 Pa. 173, 186, the supreme court of Pennsylvania dealt with a combination of coal companies seeking the control, within a large territory, of the entire market for bituminous coal. The court, observing that the combination was wide in its scope, general in its influence, and injurious in its effects, said: 'When competition is left free, individual error or folly will generally find a correction in the conduct of others. But here is a combination of all the companies operating in the Blossburg and Barclay mining regions, and controlling their entire productions. They have combined together to govern the supply and the price of coal in all the markets from the Hudson to the Mississippi rivers, and from Pennsylvania to the Lakes. This combination has a power in its confederated form which no individual action can confer. The public interest must succumb to it, for it has left no competition free to correct its baleful influence. When the supply of coal is suspended the demand for it becomes importunate, and prices must rise. Or if the supply goes forward, the price fixed by the confederates must accompany it. The domestic hearth, the furnaces of the iron master, and the fires of the manufacturer all feel the restraint, while many dependent hands are

Page 193 U.S. 197, 340

paralyzed and hungry mouths are stinted. The influence of a lack of supply or a rise in the price of an article of such prime necessity cannot be measured. It permeates the entire mass of the community, and leaves few of its members untouched by its withering blight. Such a combination is more than a contract; it is an offense. . . . In all such combinations where the purpose is injurious or unlawful, the gist of the offense is the conspiracy. Men can often do by the combination of many what, severally, no one could accomplish, and even what, when done by one, would be innocent. . . . There is a potency in numbers when combined which the law cannot overlook, where injury is the consequence.' The same principles were applied in Arnot v. Pittston & E. Coal Co. 68 N. Y. 558, 565, 23 Am. Rep. 190, 194, which was the case of a combination of two coal companies in order to give one of them a monopoly of coal in a particular region, the court of appeals of New York holding that 'a combination to effect such a purpose is inimical to the interests of the public, and that all contracts designed to effect such an end are contrary to public policy, and therefore illegal.' They were also applied by the supreme court of Ohio in Central Ohio Salt Co. v. Guthrie, 35 Ohio St. 666, 672, which was the case of a combination among manufacturers of salt in a large salt- producing territory, the court saying: 'It is no answer to say that competition in the salt trade was not in fact destroyed, or that the price of the commodity was not unreasonably advanced. Courts will not stop to inquire as to the degree of injury inflicted upon the public; it is enough to know that the inevitable tendency of such contracts is injurious to the public.'

So, in Craft v. McConoughy, 79 Ill. 346, 350, 22 Am. Rep. 171, 174, which was the case of a combination among grain dealers by which competition was stifled, the court saying: 'So long as competition was free, the interest of the public was safe. The laws of trade, in connection with the rigor of competition, was all the guaranty the public required; but the secret combination created by the contract destroyed all competition, and created a monopoly

Page 193 U.S. 197, 341

against which the public interest had no protection.' Again, in People ex rel. Peabody v. Chicago Gas Trust Co. 130 Ill. 269, 297, 8 L. R. A. 497, 506, 22 N. E. 798, 804, which involved the validity of the organization of a gas corporation which obtained a monopoly in the business of furnishing illuminating gas in the city of Chicago by buying the stock of four other gas companies, it was said: 'Of what avail is it that any number of gas companies, may be formed under the general incorporation law, if a giant trust company can be clothed with the power of buying up and holding the stock and property of such companies, and, through the control thereby attained, can direct all their operations and weld them into one huge combination?' To the same effect are cases almost too num

Northern Securities Co. v. United States, 193 U.S. 197 (1904)

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