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Governmental Interference with Industrial Combinations
Published online by Cambridge University Press: 04 October 2013
Extract
I shall not attempt to cover the whole trust question in twenty minutes. I shall assume that, whether for economic, political, social or moral reasons, you desire some higher power to interfere with the so-called industrial trusts if effective interference be practicable without doing more harm than good; and that you ask me only to express the views of a lawyer, from a legal standpoint, as to what remedies may be available to the Federal Government, which alone is strong enough to grapple with the situation.
True, some lawyers and statesmen of the first rank still argue that all regulation should be left to the states. But they are generally elderly men, whose views became fixed under conditions that are past. No single state is strong enough now. The Constitution does not allow any group of states to form an alliance among themselves. It does not allow them to compete with each other; and too many of them compete for corporation patronage.
I shall assume that you wish me to confine myself to remedies which are direct in their operation. I shall say nothing about the tariff, or about special railroad privileges. You are the experts best qualified to tell whether the trusts that have built themselves up with the help of these advantages are now strong enough to stand without them.
- Type
- Papers and Discussions
- Information
- Proceedings of the American Political Science Association , Volume 1 , December 1905 , pp. 184 - 199
- Copyright
- Copyright © American Political Science Association 1905
References
1 The word trust, in its modern and anomalous use, may be defined to mean a combination rich and powerful enough to affect any industry in which it is engaged, and therefore to constitute a political issue.
2 If there are any genuine exceptions they are negligible.
3 2 Morawetz on Corporations, § 940; Sugar Trust case, 121 N. Y. Reports, 582.
4 1 Morawetz, § 431; Elkins v. Camden & Atlantic R. R., 36 New Jersey Equity Reports, 5; De la Vergne v. German Savings Inst., 175 U. S. Reports, 40, 54-58. The Georgia Constitution of 1877 forbids this in a clause drawn up by Robert Toombs. Trust Co. v. State, 109 Georgia Reports, 736.
5 There were some under special charters, such as the Pennsylvania and the Southern Pacific.
6 See authorities collected by the writer in an article on the “Northern Securities Company” in the Yale Law Journal for June, 1902.
7 The United States Bank charters of 1791 and 1816 each restricted the amount to which a single member could subscribe. The former allowed membership to “any person, co-partnership or body politic;” the latter to “individuals, companies or corporations.” Both restricted the voting power of shares held in large blocks, a practice then common and analogous to that by which some recent charters, following English precedents, classify their stock, giving part much greater voting power than the rest.
8 2 Morawetz, § 971. A striking illustration is Doyle v. Continental Ins. Co., 94 U. S. Reports, 535. This principle has been applied to the case of anti-trust laws in Waters-Pierce Oil Co. v. Texas, 177 id., 28.
9 For instances of its exercise, see Pearsall v. Great Northern Ry. Co., 161 id., 646; McKee v. Maynard, 179 id., 46; People v. O'Brien, 111 N. Y. Reports, 1.
10 Lottery case, 188 U. S. Reports, 321.
11 Luxton v. North River Bridge Co., 153 id., 525.
12 Pensacola Telegraph Co. v. Western Union Telegraph Co., 96, id. 1.
13 Conn. Mutual Life Ins. Co. v. Spratley, 172 id., 602. Of course, as long as interstate commerce remains in the hands of state corporations they must obey the laws of their creator as well as those of Congress. Louisville & Nashville R. R. v. Kentucky, 161 id., 677, 701. A passage in the opinion in this case (p. 702) has since been quoted by one of the judges, as confirming a supposed theory that the instrumentalities of interstate commerce, as distinguished from interstate commerce itself, are under supreme control of the states (193 id. at p. 383); but the writer of the opinion thus quoted did not concur in the interpretation, nor did the theory receive assent from a majority of the court.
14 Kochersperger v. Drake, 167 Illinois Reports, 122; Magoun v. Illinois Bank, 170 U. S. Reports, 283.
15 Knowlton v. Moore, 178 id., 41.
16 See for instance People v. Home Insurance Co., 92 N. Y. Reports, 328; 134 U. S. Reports, 594.
17 See for instance the Income Tax cases, 157 id., 429. and 158 id., 601, and cases therein cited; also Knowlton v. Moore, supra, and cases therein cited.
18 Analogously to the Federal game law of 1900.
19 See the able paper on a National Incorporation Law by Prof.Wilgus, H. J., in the Michigan Law Review for February, 1904Google Scholar.
20 Constitution, Art. IV, § 3.
21 Compare United States v. Addyston Pipe Co., 85 Federal Reporter, 271; affirmed 175 U. S. Reports, 211; and Montague & Co. v. Lowry, 193 id., 38, with Hopkins v. United States, 171 id., 578; Anderson v. United States, 171 id., 604; and Whitwell v. Continental Tobacco Co., 125 Federal Reporter, 454.
22 The decisive case (United States v. Trans-Missouri Freight Asso., 166 U. S. Reports, 290) was argued in 1896, and decided by the casting vote of Justice Peckham, who had taken his seat during that year as successor to Justice Jackson, a strong opponent of the liberal construction of the law. (See In re Greene, 52 Federal Reporter, 104.) Congress failed to provide means for its efficient enforcement, as twice requested by Attorney-General Harmo n in that year. Evidence against an industrial combination was not obtainable until about that time, when a discharged stenographer revealed to a -district attorney the secrets of the Addyston Pipe case.
23 Trans-Missouri case, supra.
24 There is a somewhat prevalent notion that the words “restraint of trade” meant “unreasonable restraint of trade” at common law, but an examination of all the authorities by the writer as counsel in the Addyston case showed that the notion is erroneous. “Restraint of trade” might be reasonable and lawful or unreasonable and unlawful.
25 Northern Securities Company v. United States, 193 U. S. Reports, at pp. 360-361.
26 Four justices in the case last cited restated the rule at p. 391. Of the remaining four, one had actually written the opinion in which it was first laid down, another had concurred in that opinion. All four concurred in reaffirming the previous decision. (Compare pp. 386, 405.)
27 See for instance Interstate Commerce Commission v. Alabama Midland Railway Co., 6 Interstate Commerce Comm. Reports, 1; 69 Federal Reporter, 227; 74 id., 715; 168 U. S. Reports, 144.
28 Northern Securities case, 120 Federal Reporter, 720; 193 U. S. Reports, 197.