Northern Securities Co. v. United States

CO. 'v. NORTHERN SECURITIES UNITED STATES. 19T Syllabus. 193 U. S. COMPANY

NORTHERN SECURITIES v. UNITED STATES. (cid:127) APPEAL FROM CIRCUIT COURT OF THE UNITED THE STATES FOR

THE DISTRICT OF MINNESOTA. Argued No. December 15,1903. 14, 1904. March Decided Railway of the Northern and Stockholders Great Northern Pacific com- having competing parallel panies corporations substantially and lines — Mississippi Great Pacific from the Lakes the River to the Ocean at scheme,of Puget organizing Sound—combined and conceived the' a cor- poration, Jersey, under the laws of New hold the shares should shareholders, companies, of the stock of the constituent such lieu companies, receive, agreed value, their shares those to an basis upon holding corporation. shares in the Pursuant to such combination the Company organized holding corporation Northern Securities executed; through which that scheme should be and under that scheme holding corporation such properly speaking, became the holder—more the custodian—of more than nine-tenths of the stock of the Northern Pacific, and Northern, more than three-fourths of the stock the Great companies, stock, the stockholders of the receiving, who delivered their agreed basis, shares stock in holding corporation. Held, that, necessarily, companies ceased, the constituent arrange- under this ment, competition be in active along trade and commerce their respective lines, became, practically, powerful one consolidated cor- poration, by holding corporation, the name of a principal, if not the sole, object for carry the formation of which purpose was to out original competition combination under which between constitu- companies ent would cease. Held, arrangement illegal was an combination in restraint of in- prohibitions terstate commerce and fell within the provisions of the July 2, 1890, act of and it was power within the Court, Circuit action, brought by Attorney an General of the United States after the completion of the enjoin transfer such stock it, holding com- pany, voting from exercising any stock and from control whatever doings acts over the companies, enjoin the railroad also companies paying, any railroad from holding dividends to the corpora- any of tion on their stock held it. Held, although brought cases should not containing within a statute provisions criminal clearly that are by it, not embraced the court should by narrow, technical or forced .construction of words exclude cases from obviously it that are provisions .within its and while the act July 2, 1890, contains .criminal provisions,, the Federal court has under 4 of equity in a prevent § act suit in and restrain violations TERM, 1903. Syllabus. act, accomplish practical so as to mould its decree results' justice such as law and demand. and JJ.1 McKenna

Harlan, Brown, Day, is, meaning Congress 2, July The combination within the act “trust”; Act, not, known as the Anti-Trust a but if isit a combina- commerce, in. and tion restraint international and that enough bring under the condemnation of-the act. court, prior following propositions eases in this From are and deducible this embrace case: known, Although Congress the act of as the Anti-Trust Act has no reference production to the mere manufacture or or commodities within articles States, the limits of several illegal it embraces and declares to be every contract, conspiracy, combination or form, in whatever of what- nature, parties it, ever and whoever directly to which or neces- sarily operates in among restraint of trade or commerce the several States foreign or with nations. trade, The act is not limited to restraints of interstate and international commerce nature, that are unreasonable in their but embraces all direct restraints, unreasonable, imposed by any reasonable or combination, con- n spiracy monopoly such trade or commerce. engaged Railroad carriers in interstate or international trade or commerce n by are embraced the act. Combinations, among private even manufacturers or dealers, whereby "interstate or restrained, international commerce is equally» áre embraced by the act. Congress power has the to establish rules which interstate and inter- governed, national commerce shall be the Anti-Trust Act has prescribed competition the rule of free among engaged those in such commerce. Every conspiracy combination or extinguish which would competition competing railroads, engaged between otherwise in interstate trade or commerce, way and which would that restrain such trade or com- merce, illegal by is made the act. competition The natural effect is to commerce, increase agreement an , prevent whose direct effect is to play of competition in- restrains promotes stead of trade and commerce. combination, a Congress To vitiate such as the-act condemns, it need not 1Mr. Justice Harlan announced the affirmance of the decree of the Circuit opinion delivered an in which Court JJ., McKenna Brown, Day, separate concurred. Mr. Justice Brewer delivered a opinion in which he affirming the decree óf concurred Circuit Court. dissenting opinion Mr.. Justice White delivered in which the Chief concurred; JJ.j Peckham and. Mr. Justice Holmes Justice Holmes, dissenting delivered a (cid:127)-opinion in which the Chief and White Justice . JJ., concurred. . Peckham, CO. UNITED NORTHERN SECURITIES 199 r. STATES. Syllabus. U. S. 193 results, result, combination, fact, in a will total be shown that such monopoly, only complete but it is essential suppression of trade or in a necessary operation it tends to restrain interstate or show that commerce, monopoly or tends to create in such international trade or public advantages flow commerce, deprive and to trade or competition. from free prevent liberty of contract does not Con- guarantee

.The constitutional competition engaged for those gress prescribing rule of free from interstate and international commerce. regulate among the several States and with Under its authority question. nations, Congress to enact the statute foreign had 1; Knight Co., U. United v. Trans- v. 156 S. States United States E. C. 290;- Freight Association, United States v. Joint Missouri 166 U. S. Traffic 578; 505; Hopkins States, v. Association, United 171 U. S. An 604; Addyston States, Pipe v. United & Steel Co. v. Uni derson 211; Lowry, Montague States, ted U. & Co. S. U. by any may protect of interstate commerce means Congress the freedom prohibited by lawful and appropriate are and that are the Con- stitution. general judgment Congress public If in convenience or the welfare competition natural laws of are left un- will be best subserved when the all, by commerce, be, that must engaged those in interstate for disturbed government laws, matter, if is to remain a and not the end of the. this of men. contracts, Congress conspiracies in re- When declared combinations illegal, nothing apply more than it did straint of trade or commerce to by long applied the several a rule-that had been to interstate commerce of their dealing- in restraint States when with combinations were domestic commerce. Subject by upon the imposed' such as are the Constitution restrictions Congress over interstate' and inter- power, power exercise of all the (cid:127) complete power any is bf as the State commerce is as full national its domestic commerce. over other, any mode, can, by merely creating corporation,. a or in No State States, prevent Congress from authority other so. as to project its into over interstate exerting possesses it under Constitution exempt corporation engaged commerce, or so as to its and international any lawfully rule established commerce from obedience in interstate ’ commerce; give corporation a by Congress for nor can State . authority interstate or under to restrain international created its laws lawfully expressed by as against the nation Con-' the will of ' by necessarily subject Every is to the gress. corporation created State supreme law of the land. subject commerce is every instrumentality of domestic to state Whilst control, every instrumentality interstate commerce be reached authority, compel respect so far as to it to by and controlled national Congress. by lawfully established rules for such commerce TERM, 1903. Equity.

inBill Brewer. By Mr. Justice title, only unlawful by at leveled, appears July 2, The act to reach de- not intend Congress did monopolies. restraints long of trade which partial restraint the. stroy minor those contracts reasonable and affirmed were had commonTaw decisions at course of upheld. ought to be by power which each indi- language act is limited general The place and and determine the property manage his own has to vidual among respects in these is of action Freedom of its investment. manner every rights of citizen. inalienable recognized purposes for as a some of law while fiction corporation, A citizen, jurisdiction is not endowed with as a purposes for person and person, an rights person, but is artificial of a natural the inalienable of business. existing only convenient transaction for the created and involved, but there is a com- is Where, however; no individual investment ' owning competing two separately individuals several bination commerce, place engaged in companies railroad control organized purpose for ex- corporation, is single in a of both competing instrumentality which the railroads pressly and as a mere of trade combined, resulting restraint combination direct can be illegal meaning of the act by destroying competition, and is within the ' July 2, bj- Attorney this brought of the United States to declare A suit General 2, 1890, is an illegal July under the interference combination act. of * companies railroad the control of the States under which the company were, respectively, organized. holding ' action the decree of the Circuit pleadings are as follows: Court

PETITION.1 To the Circuit Court United States judges of Of District Minnesota: comes the United States'of D. America, by Now Milton States, page, supra. equity of United this Bill in Incorporation of Company, of Northern Exhibit: Certificate Securities 216, post. page page Securities-Company, 221, post. of Answer Northern defendants, page 241, post. of Hill and other Answer Railway page of Great Northern Answer Company, 241,-post. Railway Company, of Northern page!.242, post. Answer Pacific Morgan defendants, page 247, post. of and other Answer Lament, 255, post. defendant, page of Answer STATES. CO. UNITED SECURITIES NORTHERN Equity. Bill in Minne- for the District of attorney United States Purdy, Attorney-General direction under sota, acting petition of States, brings proceeding by way and United corporation organ- a Company, the Northern Securities against Jersey; laws of the State of New and'existing under the ized and a Railway Company, corporation organized Northern Great Minnesota; the Northern the laws of the State of under existing existing corporation a Railway Company, organized Pacific Hill, J. Wisconsin; of of James laws the State under the Paul, St. of Minnesota and resident of of the State citizen James, Kennedy, P. D. Willis John- S. Clough, and William Baker, Bacon, George J. Robert Pierpont Morgan, F. of York and the State New resi- Lamont,

Daniel citizens of on com- belief, York information City, aftd, of New dents says: plains Railway Company Pacific defendants,

I. Northern at the times Railway Company, were, Northern and the Great common are, carriers, and now em- mentioned, hereinafter among of and passengers ployed transportation freight States and between such of the United States the several States 255, Court, page post. Circuit Decree George Young argument for Summary Mr. B. of facts from brief 257, post. appellants, page n appellant Northern argum.nt of Mr. John Johnson for G. Abstract page-26S, post. Company, Securities appellant for Northern Bunn argum nt Mr. Charles W. Abstract Company, page 273, post. Railway Pacific Griggs appellant Mr. John W. submitted for brief Northern Abstract n 276, post. page Company, Securities appellant Mr. M. D. Grover for submitted Great of brief Abstract 280, post. jiage Company, Railway Lynde Francis by Mr. Stetson and Mr. David- brief submitted Abstract of Lamont, page 290, post. Morgan, Bacon appellants Willcox Attorney Mr. Knox and of Mr. General argument Abstract and brief States, ap- Attorney General, for the United- Day, A. William assistant pellee, page post. 297, Opinion 317, post. page Mr. Justice Harlan, 360, post. Opinion page Mr. Justice Brewer, page post. Opinion Mr. Justice .White, 400, post. Opinion page Mr.- Justice Holmes, TEEM, 1903. Equity.

Bill in as such carriers so and, employed, were nations, foreign and and commerce the among in trade several engaged and are nations. foreign and with States day of November, 1901, the to de- and prior

II. On I3th Hill, William P. D. .Clough, Willis J. and James, fendants, James other persons whose are Kennedy, and names John S. /certain unknown but complainant, to the whom it prays have made parties to this action when (hereinafter ascertained referred tó as James'J. Hill and his associate stockholders), owned or controlled stock-of majority capital the defendant, the Great Northern and Railway Company, the defendants,-J. Pier- pont and Robert Bacon Morgan (members and representing firm of J. P. banking Morgan Co., of New York City), & F. and George Baker Daniel S. and Lamont, certain other per- sons names are unknown whose to the complainant, but whom to have prays parties to this action made when ascertained’ (hereinafter referred to as J. Pierpont and Morgan his associate stockholders), owned or controlled a majority the capital defendant, of-the the Northern Pacific Railway Company.

III. The Northern Pacific Railway and Company the Great Northern Railway and Company).at prior doing acts hereinafter owned or complained of,, controlled and oper separate, two parallel, independent, competing’lines ated railway'running east and west into across the States Wis consin, Minnesota, Idaho, North Dakota, Montana, Washington, Oregon, extending Pacific from-Ash- system, in land, Duluth and Paul, State of and from St. Wisconsin, in the in Helena, State the State of Minnesota, through Seattle, Montana, pf in Spokane, Washington, the State in Portland, Tacoma, the'1State of Washington, State of Oregon, extending and the Great Northern system, Duluth and Superior, from the State of and from Wisconsin, Paul, St. of Minnesota, State through Spokane, ' to Everett and State Washington, State Seattle/ Portland, Washington, State .Oregon;-with Helena, line to the State of branch Montana, furnishing thus STATES. UNITED CO. SECURITIES NORTHERN Equity. Bill in 193'U.S.' lines transcontinental and competing parallel two public River Mississippi Lakes and the the Great

connecting mentioned, theAt times the Pacific Ocean. Sound and Puget be referred to will hereafter which two railway systems, these and the Great Pacific system as the Northern respectively and controlled with its leased which, each of system, Northern miles in 5,500 length, over main and lines, branch, aggregates across extending of railway lines only were the transcontinental from the Lakes, of the Great northern tier of west the States and Ocean, River to the Pacific and Mississippi Great Lakes the with one another for in active engaged competition were then of States the and traffic the several among freight passenger and foreign countries, and such States United States between with terminals, only at its eastern system connecting each to other. and river steamers of but with lake railway, lines and at its western terminals countries, and to foreign States and Territories, posses other States, vessels to sea-going countries. foreign of and to sions the United States Pacific system Prior to the Northern IV. the year Pacific Rail- and the Northern operated by owned controlled and under cer- existing organized road Company, corporation the year of Congress. During tain acts and resolutions hands line was the insolvent, placed became the company While of courts of the United States. receivers the proper in. an sale, arrangement foreclosure condition, awaiting of of the bondholders the majority was entered into between a and the the Company defendant, Pacific Railroad Northern for a virtual Company, Railway Great Northern consolidation systems Pacific and Great Northern the the Northern of the Northern Pacific practical system control placing the Great Northern the hands of the defendant, Railway Company. contemplated This under sale, arrangement foreclosure, of and 'franchises property Pacific Railroad to a committee Company bondholders, who should to be known organize corporation, new as the Northern Pacific which was to become Railway Company, TERM, Equity.

Bill in tt Pacific Railroad of the Northern one-half successor Company; company stock'of the new was to capital be turned over defendant, the shareholders Great Northern Rail- was to way Company, guarantee turn payment the bonds of the Northern Pacific Railway 'An Company. agreement was to. be entered into for the exchange traffic at and for intersecting connecting points division earn- therefrom. out of ings carrying this arrangement was de- feated by the decision Court of Supreme the United States the case Pearsall The Great Northern Railway oí (which was decided March Company 30, 1896, and is.reported in the one hundred and sixty-first volume reports said*court, on to which beginning page made), reference is in which it was held effect would practical be the con- solidation of two parallel competing lines railway, giving the the the Great defendant, Northern Railway Com- to a of all traffic in pany, monopoly the northern half of the State of Minnesota, as well as of all transcontinental traffic north of. the line of the Union Pacific, to the detriment of public n in and violation of the laws of the' of State Minnesota.

V. in Early year 1901the defendants, the Great Northern and Pacific Northern Railway companies, for acting the purpose of their promoting joint and in interests, of contemplation placing the Great ultimate Northern and Northern Pacific systems under a common source of control, united in the pur- chase the total capital stock of the Chicago, and' Burlington (cid:127)Quincy Railway Company, Illinois, giving the joint bonds of the Great Northern and Northern Pacific Railway companies, cent, in payable twenty years from date, interest at per per annum, at stock, $200 the rate of in bonds in ex- $100in for each in change and this manner and purchased stock; about $107,000,000 $112,000,000 total capital acquired stock of the Burlington and Chicago, Com- Quincy Railway pany,,or about cent thereof. In! per at the time manner, stated, the defendants, the Great Northern and Northern Pacific Railway companies,secured control of the system vast of rail- CO. UNITED SECURITIES NORTHERN Equity. inBill about miles 8,000 system, known as the Burlington lines way from in the State Paul, Minnesota, St. extending in length, Northern with the Great Northern connects where Minnesota, States through the systems, Pacific Railway of Illinois, in State to Illinois, Chicago, Wisconsin, through States and and from two cities said through these Colorado, Dakota, South Missouri,.Nebraska, Iowa, States of Illinois; in State of Montana, Quincy, to Wyoming, Iowa; to St. Des.Moines, the State Burlington of Missouri; and-St. the State Louis, City, Joseph, Kansas Nebraska; Lincoln, State Denver, Omaha in the State of Colorado; Cheyenne, Wyo- the State of Montana, where it again and to ming, Billings, State Pacific these Railway system, with the connects Northern west of and south of the States crossed Chicago (cid:127)States lying and' and Northern Pácific systems, the Great Northern what part by is known constituting territory occupied a Union Pacific has been and is Railway system, as the territory within said with the parallel competing system Burlington system-. said in the controlling

VI. The turn over a interest attempt of the Northern Pacific to the Great Railway Company a Railway Northern and thus effect virtual consolida Company thus, of the two railway systems, having year 1896, tion (cid:127)been defeated decision the Court the United Supreme defendants J. Hill and States, the James his associate stock defendant, Com Railway holders Great. of the stock of that owning controlling majority pany, and the defendants and Pierpont J. his corporation, Morgan Pacific defendant, associate stockholders the Northern or a Railway Company, owning controlling majority of that for corporation, stock themselves as such stock acting and on behalf of holders the said railway companies owned or on they interest, held and to the controlling prior November, 13th and day 1901, contriving unlaw intending to trade or fully restrain the commerce among thé several States TERM, 1903. Equity.

Bill in 193 U.-S. carried, and countries on foreign by' said States between arid systems, Pacific and Great Northern and Northern thé .con and to or intending unlawfully monopolize to triving attempt or and and coinmerce, contriving such trade intend monopolize to restrain and said unlawfully prevent competition among ing to such interstate and trade inrespect foreign railway systems to unlawfully deprive commerce, contriving intending on of advantagés carrying facilities public trade or commerce theretofore en and foreign such interstate railway sys of said competition through independent joyed to combination or conspiracy into an unlawful tems, entered Pacific and of the Northern Great a virtual consolidation effect all upon competitive and' to restraint' systems, place on by them, trade or commerce carried and foreign same, to and to attempt monopolize monopolize and to between said rail existing theretofore competition suppress foreign- comriierce, said interstate trade way systems to wit: instrumentality following, the means through A to be called the Northern Securities holding corporation, Jersey, the laws of New with .wasto be formed under Company, which, $400,000,000, .exchange- stock of capital rate, a certain basis-and at a certain was own capital and transferred the or' a con capital stock, to be turned over in the of each of the defendant capital stock, interest trolling corporation railway companies, holding and in all respects thereof, act as the owner vote such stock1 iri deem might necessary and to do whatever aid railway or enhance the value of their companies manner these, In the individual manner, stocks. .stockholders and (cid:127)competing railway to bé independent companies two were and a common the Northern single stockholder, eliminated substituted; the interest of the Securities-Company, and franchises of the property individual stockholders was to thus terminate, being converted railway companies two an into interest franchises the Northern property individual Securities company. of' the stockholders STATES. CO. UNITED. SECURITIES NORTHERN Equity. Bill in to hold no longer were Railway Company Pacific Northern from the their dividends or draw in the an interest property and the individual Pacific system; of the Northern earnings were Railway Company Northern of the Great stockholders their or draw' hi the property hold an no to longer interest Northern ^system, of the Great earnings dividends from' the companies in the railway to be but. ceased stockholders having corporation, holding the become stockholders having and of both earnings dividends from the both were their draw holding corporation.' the and distributed collected systems, -system of each the stockholders making mannér, by In this by practically pooling and systems, both interested jointly of the former stock for the benefit systems earnings the both the directors the selection of and each, by vesting holders the wit, cofnhion body, system officers of each and but the duty only not holding corporation, with not of interests, which would policy promote to pursue a of both at the other, but one at the system expense between competition all inducement expense public, a virtual consolidation removed, to be was systems the two com .foreign and a effected, monopoly parried independent two systems on formerly merce competitors-established. ‘ conspiracy combination or In pursuance VII. unlawful an instrumentality through .aforesaid, solely .as November, day on the thereof, 13th purposes "effect Company, organized Securities defendant, the Northern Jersey, prin- of the State New laws general under with an authorized Hoboken, State, said office cipal of incor- A of the articles of $400,000,000. copy stock capital of this part made of such is attached company poration inserted designedly petition. .Among purposes powers- in-said, only'to “pur- articles is the purpose power, stock of chase” and “hold” other capital “shares wrong- company under which said corporation corporations,” by exchange fully exercising claims and the power acquire TERM, in.Equity. 193 U. Bill Pacific and the Great North- and hold and power, the purpose but while Railway companies, ern all and rights, powers, “to exercise the thereof, privileges owner the stock, to vote such collect dividends ownership;” is, of a railway and in all act as such thereon, respects stockholder manner and-power any and the “to-aid purpose companies; ... of which bonds ... or any any corporation . . . and do acts or' held, any things designed stock are or the value of any enhance protect, preserve, improve, . do stock,” meaning thereby . .-or whatever bonds to aid in manner the Northern Pa- deem necessary or to Railway companies, preserve cific and the Great Northern enhance of their or bonds. the value stocks In of the unlawful combination pursuance VIII. further aforesaid, instrumentality as an solely through and conspiracy thereof, on or -about the 14th day the purposes which to effect Northern November, the defendant the Securities a board of by the election of directors organized Company and the officers, and a other defendant president the selection and controlling power J. the Hill, president James Northern Railway of the defendant Great management thereof; a president chosen director and being Company, in further unlawful combination or pursuance thereupon, aforesaid, J. Hill and the defendants James his asso conspiracy Northern Railway. the defendant the Great ciate stockholders North and transferred to the defendant the assigned, Company capital a amount of the stock of Company, large ern Securities Railway the exact amount Company, being Northern Great a complainant, constituting controlling but interest unknown thereof, believes thé therein, complainant majority $180, value, capital of the par basis of exchange agreed Company Securities each share said Northern Railway Company; stock of the-Great capital Northern associate stockholders of Morgan J. his Pierpont defendants Railway assigned Pacific trans Company Company the Northern Securities the defendant ferred CO. v. NORTHERN SECURITIES UNITED STATES. Equity. Bill in of the stock of

large majority capital the defendant the North ern Pacific Railway Company, exact amount unknown being to complainant, upon agreed basis of exchange $115, par stock of value, capital the said Northern Securities Com for each pany share stock of the capital Northern Pacific Railway Company; thereafter, pursuance further unlawful combination or conspiracy aforesaid, the defendant, the Northern Securities offeredto the Company, stockholders of the defendant railway companies to issue and its exchange capi tal stock.for the capital stock such railway companies, upon the basis of' exchange no aforesaid, other consideration being In further required. pursuance of unlawful combination aforesaid conspiracy the defendant the Northern Securities an Company additional has.acquired amount of the stock of the railway defendant companies, issuing lieu thereof own (cid:127) stock upon the basis of and now exchange aforesaid, is holding, as owner and proprietor, substantially all of the capital stock of the Northern Pacific Railway and, as Company complainant believes and a charges, of majority the stock of the capital Great Railway but not á Company, at- majority, Northern least a interest controlling therein, and is the same and voting is the dividends in collecting thereon, and all is respects acting the in owner .as thereof the organization, and management, operation of said railway in companies, and and receipt control of their and will earnings, continue do so, unless restrained the order of this court. By reason whereof a virtual consolidation under one and ownership source of con trol of the Great Northern and Northern Pacific Railway systems effected, has been a combination.or conspiracy re straint the trade or commerce among the several States and with foreign nations formerly carried on the defendant rail way companies independently and free competition one with the other has beén formed and inis operation, defend ants are thereby attempting monopolize, have mo nopolized, such interstate and foreign commerce, trade the great and irreparable damage of people the United

VOL. cxciii—14 TERM, 1903. Equity.

BiU common rights, of their violation States, derogation An-act to July 1890, pro of Congress of the act entitledfl‘ and mo unlawful restraints against trade' and tect ' nopolies.” has Securities Company If the Northern IX. the defendant stock of the defend- capital large majority'of a acquired Railway is because Company, Northern ant the Great in the com- named, and their associates individual defendants them, in this or some charged petition, or conspiracy bination corporate their that the it became apparent since legality^ railway o.f the stock of merger competing device for com- holding of a central or instrumentality through' panies, courts, have purposely would be assailed corporation, amount of the withheld, large capi- or caused to withheld, said, from the stock railway company transfer tal stock dis- Company, purposely Securities and-have of the Northern exchange the transfer and such prevented couraged all for Company, for the stock of the Northern Securities scope object real concealing purpose aforesaid, and conspiracy deceiving unlawful combination and of fur- authorities, and Federal the state misleading for the defence that the Northern Securities nishing ground not hold a clear the stock of the majority does Company of. avers Railway complainant Northern Company. Great or not stock, so withheld transferred person now the hands some Company, Securities to and under friendly (unknown complainant) to the persons named and their defendants influence the individual be and will either not them, or some of aforesaid, associates with Northern stock harmony the Great voted, be voted until the question Securities Company, held the Northern for corporate merging compet- this device legality determined, finally railway judicially lines shall ing stock will either be turned over to the Northern when such or continue to be held and voted outside Company Securities but company harmony the Great Northern said CO. SECURITIES UNITED STATES. NORTHERN o. Equity. Bill

193 U. voted as at by it, may stock held and the time seem advis- ’ able. X. In further pursuance unlawful combination or con- the Northern Securities spiracy.aforesaid, Company (subject; be, to the condition stated the next preceding para- will, is about restrained graph) unless order of hold court, receive hereafter and control acquire, substantially owner and all proprietor, capital stock of the defendant lieu railway companies, issuing thereof its own stock to the full capital issue, extent the authorized of which, upon the basis of exchange aforesaid, the former stockholders of the Great Railway Northern Company have received or will receive and hold about 55 cent per thereof, the balance going to the former stockholders of the Northern Pacific Railway Company. n XI. No consideration whatever has will existed, exist, for the transfer as aforesaid of the railway defendant companies from their stockholders the Northern Securities Company, other than the issue the stock the Northern Securities to them in Company exchange therefor, pur- pose, after the manner, and the basis aforesaid. defendant, the Northern Company, Securities was not

organized good faith to purchase pay for the stocks of the Great Northern and the Pacific Northern com- Railway panies. organized It was solely to incorporate pooling the stocks of said companies and to into carry effect unlaw- ful combination or conspiracy aforesaid. The Northern Securi- ties is a Company mere depositary, custodian, holder, and trustee of the stocks of the Great Northern and the Northern Pacific Railway companies, and its shares of stock are but beneficial certificates issued against said stocks to railroad designate interest of pool. holders The Securities does Company not have and never had capital sufficient to warrant such a stupendous operation. Its sub- scribed capital but and its $30,000, authorized capital stock of $400,000,000 is just all sufficient, issued, when

212 TEEM, Equity.

inBill U. (cid:127) of substantially and cover the value exchange represent Pacific Rail- the Great Northern and Northern entire stock and agreed upon, the basis at the rate way companies, which, $122,000,000 capital is about excess of the combined railway companies par. stock the two taken at ' XII. If fails out of prevent carrying the Government to aforesaid, defendant, and the combination or conspiracy to receive and hold Company, permitted Northern Securities and Great act of the Northern Pacific and as owner of will a vir- aforesaid, only companies as Railway Northern lines, transcontinental competing tual consolidation of two and a their be earnings, effected, practical pooling formerly commerce interstate and foreign monopoly all created, be and effective competitors on carried them carrying lines in the of interstate and between such competition but to all to use destroyed, thereafter, desiring traffic be foreign be presented, whereby, through an available will it, .’method aforesaid, device the act of Congress scheme or' corporate and “An act trade 2, 1890, protect entitled July circum- may and be monopolies,” unlawful restraints against lines, transcontinental indeed all naught, and set at vented country, absorbed, of the systems railway the entire thus at the abso- consolidated, placing public merged, holding corporation.’ mercy lute furtherance, unlaw- object purpose In XIII. or at- monopolize aforesaid to or conspiracy ful combination several among or commerce the trade monopolize tempt countries, formerly and foreign such States States, and between defendants, the Northern competition by on in free carried place Railway companies, and Great Pacific their named and the individual defendants thereon, restraint railway companies, of the defendant stockholders associate and with other with one another or conspired have combined but complainant, to the (whose names are persons unknown this action when ascer- parties.to whom it prays liave made p^ome the corporate addition to tained) employ, use CO. UNITED STATES. NORTHERN SECURITIES Equity. Rill in in aid ichemes, or device various other aforesaid, thereof, and details of which are devices, instrumentalities, the precise but will be laid before complainant at unknown to present ascertained, by which, the court when means unless pre- and court, of this by object purpose vented order may combination or aforesaid and will be conspiracy unlawful (cid:127) accomplished. PRAYER. and inasmuch in whereof,

In consideration as adequate relief can be obtained in this only court, the United premises your order, of America honors to and prays adjudge, States or the combination de- conspiracy decree hereinbefore all and that acts done or to be in unlawful, carry- done scribed (cid:127) in of the derogation rights out are common all the peo- ing in and act of United States violation of the Congress of the ple “An act to trade and 2, 1890, protect entitled July and and that monopolies,” unlawful restraints against them, and their every officers, and and one defendants each and and servants, each stockholders, agents, directors, from act be them, enjoined doing any one of every perpetually same, for the out the purpose carrying of or pursuance be the several defendants respectively and, addition, as follows: enjoined defendant, the Company, That the Northern Securities

First. officers, directors, committee, executive its stockholders, its servants, them, per- and each and one be every agents from hold- purchasing, receiving, enjoined acquiring, petually inor otherwise), or manner voting (whether by proxy any ing, capital stock of as the owner of acting any shares or the Great Company the Northern- Pacific Railway either mandatory injunction and that Company: Northern-Railway to recall Company Northern Securities issue requiring it in by of stock issued purchase and cancel any certificates capital of the shares of stock any for exchange or TERM, Equity. Bill in surrendering return there- railway companies, of said either holders thereof the certificates the respec- lieu of were railway companies they issued. tive That the the Northern Pacific defendant, Railway Second. officers,directors, stockholders, agents, its serv- Company, every them, enjoined each and one of perpetually ants, or accepting the Se- recognizing manner any from or holder of shares of its any the owner Company curities to vote company such such and from stock, permitting capital and from otherwise, paying any by proxy whether stock, said company assigns, unless such stock dividends from as valid court, recognizing authorized such assignment company pledge, transfer, mortgage, this court. authorized stock, unless the Great Northern defendant, Railway That the Third. officers, directors, stockholders, agents, and serv- its Company, be every them, perpetually enjoined and one and each ants, or the Northern accepting Se- recognizing from in manner any or holder shares of its any as the owner curities Company such vote such company from stock, permitting and capital otherwise, and from paying any, or by .proxy whether stock, or assigns, said unless company stock to such dividends from and valid court, recognizing any this by authorized or such assignment by company pledge, transfer, mortgage, this court. authorized stock unless named, and their individual defendants That the Fourth. every and each and stockholder either stockholders, associate who has his stock therein exchanged companies railway said each, Securities be Company, of the Northern for stock in any from manner holding, enjoined perpetually respectively, any of the stock the North- as the owner of or voting, acting exchange for stock issued Securities Company, ern -authorized unless railway companies, of the said either n issue may requiring a mandatory injunction court; North- to surrender defendants of the said each him, held and accept Company acquired so ern Securities NORTHERN CO. r. SECURITIES UNITED STATES. 215 Equity. U. 103 S. Bill in therefor the stock of the railway company ex- defendant for which the' change issued. same-was.

Fifth. That individual defendants named, their asso- ciate and each and stockholders, every person combining or conspiring with-them, hereof, as charged .Paragraph XIII and their trustees, agents, assign's, or .present future, and each and one of ¿very them, from perpetually enjoined doing any and act or every thing mentioned said inor paragraph, or combination conspiracy furtherance described therein, or intended or tending place capital stock of the defend- ant railway or the companies, competing railway systems oper- ated by or the them, or competitive interstate foreign trade commerce carried on by under the them, control, legal practical, the defendant, the Northern Securities Company, or of any person or association or persons, corporation, acting or in lieu of said company, carrying out unlaw- ful combination or conspiracy-described said paragraph. n The United States for such prays other and further relief as the nature of the'case may the court require deem in the proper premises.

To the end, therefore, that the United States of America may obtain the relief to which it is justly entitled the premises, itmay please honors to your unta it grant writs of subpoena directed tó the said defendants, the Northern Securities Com- pany, the Northern Pacific Railway Company, Great North- ern J. Railway Company, James Hill, William D. Clough, P. and John James, Willis Kennedy, their associate stock- holders of the Great Northern Railway as their Company, may names become known to and complainant the court be thereof, advised J. Pierpont Morgan, Robert Bacon, George F. Baker, and Daniel S. and Lamont, their associate stockholders of the Northern Railway Company, as their Pacific names may become known to and the court complainant be advised thereof, and XIII persons Paragraph referred hereof, as' their complainant become known to may names and the court be and each of thereof, them, advised commanding them, and TERM, 193U. S. Equity;

inBill Exhibit. (but oath) answer not under herein and them, to'appear each of in the and abide foregoing petition, contained the allegations as the court make may order decree and perform of hearing case, the final tem- that, pending and premises; and the defendants enjoining order issue restraining porary stockholders, di- of and their them, and each associates, their prayed. as hereinbefore rectors, servants officers, agents, D. Purdy, Milton signed The was verified petition Minnesota, District of for the of the United States Attorney of Attorney-General Knox, C. also Philander signed by Solicitor-General Richards, and John K. States, the United of the United States. the charter as an exhibit

Annexed to petition as follows: Company, Northern Securities Incorporation Securities of Northern Certificate

Company. Jersey,, State New ss: for the form a corporation order to

We, undersigned, to the provi- under and stated, pursuant hereinafter purposes State of New Jersey legislature act sions 18.96), (revision corporations” “An act concerning entitled thereto, do supplemental amendatory and the acts thereof as follows: hereby certify is Securities corporation The name of the

First. Company. ' office the State of its principal The location Second. Hoboken, street, city Newark at is No. Jersey New agent therein, The name Hudson. county of' against corporation may process whom thereof, upon charge is to be the Such office Company. Trust Hudson served, corporation. office the» registered, which, is formed are: the corporation Third. objects or. otherwise, subscription, purchase, To (1) acquire by or evidences or other securities hold bonds investment, r. STATES. NORTHERN CO. UNITED SECURITIES Equity; U. Bill in Exhibit. or capital or of stock created issued indebtedness, any shares or or association associa- corporations, other any corporation of or of other Terri- Jersey, any State, of the State New tions, or country. tory, transfer, hold, sell, assign, mortgage, To

(2) purchase, pledge, bonds or or evi- of other securities dispose any or otherwise or .other corpora- created issued by any dences of indebtedness or associations, or association the State of corporations, tion State, Territory, country, or any or other Jersey, New all the rights, powers, priv- thereof to exercise while owner ownership. ileges transfer, To

(3) hold, sell, assign, mortgage, pledge, purchase, capital of shares stock other any or otherwise dispose or association or corporations, associations, corporation or of other or coun- Jersey, any State, Territory, of New State all rights, and while owner of such exercise try, stock privileges ownership, including right vote powers, thereon. any or association of any corporation To aid in manner

(4) or indebted- or other securities evidences bonds any do acts or and to any or are held ness stock corporation, or enhance the designed preserve, improve, things protéct, or or of in- bonds other securities evidences Value of debtedness stock. and hold own, personal such real and

(5) property To acquire, or convenient the transaction its necessary bemay business. business, from corporation is time to purpose

The things one or more the acts and herein set do any time forth. to conduct business have corporation shall and to have countries, one more foreign

other States hold, purchase, mortgage, State, out this offices out of State. real and convey personal property capital corporation total authorized Fourth. The dollars divided into ($400,000,000), million four hundred TERM, 1903. Equity; Bill in Exhibit. 193'U. S.. of the value of one par four million shares hundred (4,000,000) of capital The amount the stock with ($100) dollars each. commence business thirty will thou- the corporation sand dollars. addresses of post-office incorpo-

Fifth. The names of stock subscribed for each of shares rators, and the nilinber of being amount subscriptions capital of such (the aggregate will commence sto,ck business), are company with which follows: The duration of the shall be corporation perpetual.

Sixth. of of Seventh. The number directors be corporation shall from but by th'e-by-laws; number, fixed time fixed time at more than shall be some of three, multiple three. The directors shall be classified the time for which respect hold office .they severally by dividing them into three sho.ll of one-third of the classes, consisting each whole of the number of board directors. The directors of class be the.first shall elected for a term of one of year, directors class second .for a of years, term two and the of the third .class for directors of years; term three at each annual election the successors to the of class directors whose term shall expire that year shall be elected to hold officefor the of term three years, so the term of officeof one class of directors shall in each expire year. ,

In of any case increase the number of the of directors the may additional directors shall be elected as be provided by-laws, by the directors the stockholders at an annual or and one-third their number shall special meeting, be elected for the then of the'term of the unexpired portion directors of the class, first one-third their number the unexpired portion v. UNITED STATES. NORTHERN CO. SECURITIES Equity; Bill in Exhibit. 193U..S. class, of the term the directors second one-third term number for the unexpired portion

their class, the third so that each'class directors shall directors of increased, be equally. class of directors vacancy any through

In case or other cause, the re- death, resignation, disqualification, a majority vote by affirmative maining directors, successor to hold officefor the elect a directors, may board director whose place term of shall unexpired portion a successor. election of be and until the vacant, have hold their meet- of directors shall The board at as from places of New outside the State ings Jersey by-laws, by resolution designated time to time the of di- number may of board. The by-laws prescribe the of the board of constitute quorum rectors to necessary number, than a of the majority be less may which directors, number of the directors. whole of of New ofthe the State legislature act by

As authorized the the seventeenth amending section March passed 22,1901, Jersey 1896), of action any (revision corporations of act concerning the of the holders of two- consent which the. required theretofore to or given, after notice them meeting thirds of the stock at any filed, may upon to be be taken writing in their consent required by, and filed the holders given consent of, consent and the the t of of two-thirds of the stock class such represented each at or meeting person by proxy. officer elected or

Any appointed by the board of directors at time any be removed the affirmative of a may major- vote of em- of the whole'-board directors. other officer or ity Any of the be at time ployé corporation any removed vote may of of or committee or offi- directors, by any superior the board be cer whom of removal conferred the upon may power such or directors. by-laws by vote of the board of of a directors, by The of the affirmative vote majority board from the directors an execu- board, may of whole appoint the. constitute a committee, majority quorum, of tive shall TERM, Equity; Exhibit.

Bill in the and be provided by-laws to sued extent as shall such com- or may any have and all mittee shall .exercise powers directors, including to cause the seal power board of cor- all may to affixed to be poration papers require it. directors one may appoint The board of or more vice-presi- or treasurers, one more assistant and dents, one or more assist- and, secretaries, by-laws, ant extent provided respectively, so shall have and persons appointed, may exercise all of the treasurer, and of the powers president, secretary, respectively. board directors shall from time to time to have amount of the vary working

fix and determine and to cap- any, whether and any, ital of determine corporation; shall be any accumulated declared divi- profits what part determine stockholders; to the the time or paid dends payment dividends, for the declaration and times disposition any surplus direct and to determine use in; above the stock capital paid or net over its profits and. use and such apply discretion the board of directors profits purchasing acquiring or accumulated surplus obligations, capital or other shares bonds such manner such to such extent corporation shall deem but shares expedient; the board directors terms as acquired may resold, capital purchased stock so retired for the shall have been purpose such shares unless "the extent stock of capital corporation decreasing law. by authorized ' time shall determine time to directors, from board of The and and at times .extent, places and what what whether and to and the accounts books regulations, what under conditions-aud inspec- be them, open or shall any corporation, have any shall no stockholders stockholders, tion of the the cor- book or document any account or. right inspect of New of the State by statute conferred except poration a resolu- byor directors the board by or authorized Jersey, tion stockholders. u. STATES. CO. UNITED SECURITIES

NORTHERN Company. Securities Answer of Northern U. 2. from time to by-laws, make may of directors board by-laws by-laws; any or but amend, any alter, repeal may time by be altered repealed board of directors made by at meet- any special at annual meeting the stockholders repeal alteration of such proposed ing, provided notice meeting. the notice included our hands and seals" set we have hereunto In whereof witness day November, the 12th Baker, Jr., F. Geo. by sealed and

Signed, acknowledged Trimble. Richard M. Hyatt .Abram to the Company of the Northern Securities The answer as follows: America, United petition was. States rail- and avers that the defendant admits I. This defendant the petition, at the time mentioned were, way companies transportation freight carriers employed common aré now of the United those States among within and and passengers situated, and by them are the railways operated in which States in commerce and are otherwise, engaged but were not further or nations. foreign . the several States among 13, on and to November that, prior admits II. This defendant was railway companies defendant stock the capital shareholders, and and controlled their respective, owned belief, outstanding capital on information avers, Railway Company Northern owned of the Great stock (1,800) and the separate owners, hundred more than eighteen Railway of the Northern Pacific outstanding capital (3,500) thirty-five more than was owned hundred Company owners; the Great and that among separate shareholders Railway (hereinafter called the Great Northern Company Hill, James, Company) Clough, Northern were the defendants Morgan, and Kennedy; among and that shareholders (hereinafter Northern Pacific called the Railway Company Morgan, Pacific were defendants Company) Jamés, and Lamont. It Bacon, Baker, Hill, Kennedy, avers to be designated peti- named and meant persons TERM, of .Company. Answer Northern Securities tion as or owning, controlling, as associated in being the owner- and control a of ship majority the stock of the Great North- ern not at in Company, any time, did nor any manner, own or control a of said majority stock, nor as much (J) as one-third in holdings thereof. said stock were part .Their at all times individual, and in separate and association with each or with other or other, any and person persons, neither them or to any obligation promise any was under of the others, hold, or vote any use, or other his stock person, other- should, from time, wise than as he time to be determine to individual best his own The persons interest. named designated and meant to be in the as petition con- owning, or in trolling, being associated the ownership and control aof of the stock of the majority Northern Pacific Company, manner, named, nor not, did at the date at or in any tifne, any majority stock, own control nor as much as one- (i) Their in part third thereof. holdings said stock at were times individual, all and separate neither them any had holdings control or-of other, any other person of them and neither promise under persons, obliga- hold, to.any to the other, person, tion use or vote his stock' should, otherwise than as from to time, he time determine best for his own individual interest. averred, as herein admitted and Except this defendant de- each allegation nies II of every subdivision the petition. III. This defendant that the Northern Pacific Com- admits owned and operated railway Ashland, Wisconsin, from pany Duluth, Paul, Dakota, via and from St. Minnesota, across North Idaho, and into Montana, Washington, and Oregon, passing Montana, Helena, the State through Spokane, Tacoma and Seattle in Washington, extending State and to Portland that the Great Oregon; Washington, railway extending lines of from Company operated Minnesota, said State and North Paul, the State across St. Idaho, Washington to Everett and Dakota, Montana, Spokane passing State. Washington, through Seattle CO. UNITED STATES. SECURITIES NORTHERN Company. Answer of Northern Securities by companies lines so said operated the said that It admits that, directly and either railway lines, other with connected railway lines, they connected lines other with means of by ocean; Great Lakes and the and that on the the of steamships fifty-five about by companies aggregated said mileage operated for the-..Northern Pacific and Company miles (5,500) hundred (4,128) and miles twenty-eight about hundred the forty-one (cid:127) Company. Great Northern that, are par- said by companies It the lines denies operate^, and to for the short distances the except or competing,

allel and com- mentioned, denies that said hereinafter limited extent other, with in active each ex- competition engaged were panies the extent hereinafter in manner and to stated.' the cept depies each stated, hereinabove and hereinafter Except III of in said petition. and subdivision every allegation and to 1893 prior IV. admits avers those This defendant , of the lines of the only, and those portions, portions operated by which had been built and.were Pacific Company Northern- Pa- virtue the act of the Congress incorporating (cid:127) 2, were July cific Railroad owned approved Company, lajSt-named’ in year and that the by the company, operated lines passed became insolvent into company receivers, the various Federal hands courts. appointed while,in made, It admits that condition contract was case, in the of the Pearsall to in as set forth referred the report It avers made under and in that said contract' petition. was. act of conformity the the provisions incorporation only Great Northern that the Company, objection made to validity contract in provisions was that said charter under which it was made had been subse- repealed quent general, laws of the State. It denies that case, .the that the decision in therein, correctly stated the petition. And it avers that nor neither the said contract the issues raised and decided in case have relevancy said the'matters controversy this-.case. admits,

V. This defendant and avers that the winter and TERM, . Company. Answer Northern Securities of 1901 defendant railway spring companies, for the pur- their several pose promoting interests and the interests of traversed their country lines and by those of the Chicago, Quincy Railroad Burlington Company, purchased equal the stock parts company last-named amount and at the the terms of price payment stated It admits that the lines operated petition. by the Chicago, Quincy Railroad Burlington Company and its connections substantially as stated petition. are It denies that what petition Burlington system is called was or is par- allel to or with what is therein competing called' the Union but system, Pacific admits that some of the lines of each sys- tem with some .the other. compete lines that said of stock purchase It denies was made contempla- of the ultimate of the Great placing tion Northern and Northern under a common source of systems Pacific control, or that it was any for other motive or with any made other than purpose as stated. hereinafter herein as denies each Except and every allega- admitted/ ' V of the

tion subdivision petition. defendant denies prior VI. This that its organization the Hill J. or J. Pierpont. defendants James or Morgan, said Hill any or Morgan, persons associated with them, or either of or a them, owned controlled majority of, or held a controlling in;

interest the stock either of said railway companies. It denies that said or persons, that the persons con- in its organization, cerned contrived or intended any of the in subdivision VI of alleged the petition or things entered into conspiracy any,of do -any agreement the things charged subdivision. said and avers that said J. Hill

It admits James and other holders number) the stock ten (not exceeding of. the Great North- including but ern defendants Company, Morgan, Bacon, with an did its Lamont, plan organization authorized capital of four hundred million ($400,000,000) for the pur- dollars set forth in only, those its poses, certificate incorporation. CO. NORTHERN SECURITIES UNITED STATES. ÍÜ5 Company. Answer Northern Securities U. J. Hill and J. P. that James Morgan agreed It denies between or with other themselves, stockholders either of the defend- or with either of said railway railway ant companies, companies, a whomsoever, or with that interest of anyone controlling railway stock of of said should companies be turned over either defendant, or transferred to this whether in. for exchange stock or otherwise.

It that any denies of the matters stated said subdivi- sion ofVI were petition contemplated intended; or have resulted, or will from result, its formation and And operation. it denies the that allegation duty it is’the directors said railway companies pursue which will .policy promote systems interest of both at the expense public.

It motives and alleges intentions of the persons .the so this defendant were forming such, and such only, as are and.are stated, this answer and it each every denies allegation in, subdivision VI of the not herein petition expressly admitted or denied.. specifically This defendant admits its formation under the laws of

VII.. New with the Jersey, articles, of which copy is attached to the and that the of said petition, provisions articles were designedly (cid:127) fully inserted thefbin and were authorized by the general cor- poration says laws of State. And it that the exercise of of a powers provided stockholder in-said articles not, stated irnthe wrongly petition, of,, confined to the stock defendant railway-companies which this defendant might hold. It that the in avers clause said articles, in quoted para- partially VII of the graph petition, was not to, and does not, intended its as enlarge powers, the same in are set forth the preceding articles, clauses of said but makes clear its to do power such acts as or making procuring money advances of to any corporation whose are it, securities held by the indorsement or guaranty it of by obligations such corporation, becoming surety therefor, or in any lawful manner using its name or resources in aid of such corporation.

-VIII. This defendant admits and avers that or about on -vol, . 1$ oxcm — TERM, . Company. Securities of Northern

Answer directors and officers were November, 1901, day 14th Hill J. James as a di- them thé.defendant among elected, and he or is the that was controlling but denies and president, rector the Great Northern management Company. and avers that' thereafter defendant James J. admits It other stockholders the Great Northern Company, Hill and alone, for any and each himself and without severally acting any stockholder, effect with other this to that sold to agreement Northern stock at one hun- a amount Great large defendant ($180) share for exchange dollars stock eighty per dred at but avers that stock so sold par, of this defendant qf ma- twenty-six ($26,000,000) million dollars not within of the stock the Great Northern Company. jority 22, and avers that thereafter and about November It admits it offered like terms of to the other purchase shareholders the offer to hold Company, good of the Great date, from its of the sixty days many that shareholders alone, that each for himself company, acting accepted and made such sale.' offer that the defendant J. P.

It admits avers Morgan of the Northern Pacific sold to Company other shareholders of the Northern majority defendant Pacific Com- that this defendant has received such pany, as dividends on been the shares paid by it, have held the same manner shareholders; and at the samé as other but it denies that rate acted, whether as owner of it has stock or otherwise, or direction of either of management railway said companies or control of the receipt or of either of earnings them, and no whatever has change it avers that taken place the man- railway the said or companies, either of them, agement by is managed each of them the same board of directors the organization before and officers existed this defendant. any things done It denies the defendants Hill or Morgan, them, J. and J. either of Pierpont James directors, defendant or its promoters, officers, were them, done pursuance pre- stockholders/ e. CO. STATES. UNITED 227 NORTHERN SECURITIES Company. Answer of Northern Securities or subdivision VIII conspiracy alleged combination tended instrumentality to effect the purposes or as an of the petition, of or of thereof, any reason matters it denies of any a virtual or consolidation alleged in the petition them been or their has business railway companies said defendant or combina- intended; any and it denies conspiracy effected or States, or with or commerce among tion restraint of trade them are any defendants or of or that nations, foreign any or restrain such monopolize or intending attempting trade commerce. IX every subdivision allegation

IX. denies each It of petition. that it does not know and cannot set says

X. This defendant railway of either additional stock defendant forth how much since each shares likely acquire, acquisition company it on the willingness other among contingencies, it depends, stock to sell it terms upon the holders said willing accept. defendant XI. defendant it has for has says bought paid This records, of the Great to be transferred to it upon caused n with' the of that by-laws accordance Company, Northern (A) shares, com- about five-twelfths company, stock; for, but has not' yet and has also negotiated pany’s to the Northern Company caused to be Great presented records, other shares of the of that com- transfer stock (A) about four-twelfths total amount -pany aggregating büt stock, acquired of its has voté as stockholder right on stock not so Company the Great transferred. defendant, shares of thé Great Northern Com- acquiring This of the Northern Pacific dealt pany Company, solely owners the said shares'in their separate indi- respective vidual It. has no capacities. knowledge any agreement, promise, understanding between the holders of said it, the sale thereof to and it concerning denies that any. (cid:127) agreement, was ever made. promise, understanding transfers the said stock to All sales and this defendant TERM, Company. U. Securities Answer Northern of any right and reservation any absolute without were or to to the seller other any or share thereof any interest person. all the of not for the Great paid

This defendant has Northern Pacific Company of the and Company on the stock,-but, of its contrary, shares own by it acquired million (140,000,000) of dollars forty has upward expended Every share of the of such making purchases. cash in the Northern Pa'cific Company and the Great Northern Company been, lopg and so it remains by this defendant has acquired be, will continue'to held' and of this defendant the property any under agreement, it in its by right, owned own .and on or on the its stock- part or understanding part, promise, or held, owned, the same shall officers, kept holders or that any or under whatever, agreement time any period immediately and any right that manner restricts its or con- same, or or restricts dispose sell otherwise same, might any any lawfully trols extent usé stocks. There has any other owner said be exercised or understanding between agreement, promise, been is no and defendant, this stock so any acquired holders said .the or any person and other any corporation, or of them between held, used, at time be or any of said shares should any or con- for the purpose combining voted defendant by this or one common or control placing under solidating management of the North- of the Great'Northern and railways Company thereof, or for the purpose or the business Company, ern Pacific between traffic or restraining competition monopolizing companies stockholders of the said railways. Many the said to this defend- sell, never their shares sold, have not any of have not nor have ant; railway'companies said act, informal, formal by any of them, directors of either share- respective of their ever solicited by suggestion, This defendant defendant. to this to sell their-shares holders allegations all the faith, and it denies good was organized the-petition. XI.of subdivision CO. UNITED SECURITIES STATES. 229

NORTHERN Company. Answer Northern Securities in' and every XII. This defendant allegation denies.each petition. subdivision XII every This defendant denies-each allegation-

XIII. XIII of petition. subdivision

Second. informa- defendant, upon the petition, answering Further facts purchase as to the belief, says that tion and Railroad Com- Quincy Burlington the Chicago, shares of Company) (hereinafter Burlington pany called motives, and the . of this defendant and forming planning con- corporations the persons intentions, and purposes them, not as or either were in cerned these of enterprises, were and are follows: but stated in the erroneously petition, a§ line of Northern Company the Great When the projecting I. contem and its directors company Pacific coast, to the and merely for the line not State creating necessity the of plated all the Nearly an commerce. interstate, but international then but sparsely the line was or reached country traversed It agricultural, all. was principally or not at settled settled mountain mineral the deposits-in timber land, or grazing, not or valuable, but developed and large believed be ranges for region might furnish commodities explored. Whatever of and bulk material, weight great carriage raw would transportation not to its which would proportion value, bear silc|h made as could be rate, to market except mileage at a low \i)i of trans the cost only reduction possible every practical far products market for all portation. available sufjh from the of places production. In and bodies are finest Washington largest and Oregon of for standing timber the best market States, in the United which is of Valley east prairie Mississippi States from the Rocky shingles and Mountains; but lumber Pacific those coast would bear the transportation, not cost empty, the cars them be hauled back carrying States had to 2,000 1,500 for-a of from miles. And nearly so, distance TERM, 1903. Company. Securities 193 U.

Answer Northern On hand, the' other the other products. the same is true of country along line, or sparsely populated unoccupied not a- could furnish market for commodities by it, reached cars; the result to load the unless enough returning being carriage the Pacific beyond' could secure traffic for company exist no either could or be created. great way coast traffic Great Northern Company To meet conditions the these in the expense went additional construction its only great than those other line to line to obtain lower gradients efforts, but also made to create and coast, great the Pacific Asia countries of eastern a demand increase after the country; and soon its completion this products line company induced a to run a railway Japanese 1893it on railway, with its the route between steamships,' connecting China, Siberia, Japan,' Russian ports Seattle been actively has since creating engaged succeeded flour which the manufactured building a commerce up along- (cid:127) (both raw and iron and line, manufactured), cotton steel rails and machinery, such other (especially plates), steel market as a could be found country manufactures been Asia, made for in have carried to oriental ports, eastern oriental products and return as are cargoes consumed have been back. A country brought in this large west-bound, traffic east-bound, as an has thus been as well secufed increased make enabling it to such rates on lumber company, by the it as country of served them to products permit other be markets with a profit to Eastern to the shipped shippers. purchase, before the this oriental .year Burlington One traffic the Great Northern proportions had reached such Company of the construction run steamships to be from begun caused the and Japan, China, Philippines, which, to ports Seattle carrying (being the capacity largest their the from great very (if low full able to at rates world), carry cargoes will be the and thus enable to move secured), company the can be (and traffic also of east-bound volume of west-bound largest traffic) cost. at the lowest r. CO. UNITED STATES.

NORTHERN SECURITIES Securities-Company. Answer Northern In the and international commerce which the 'Great Northern thus both Company competes has up, built country this and the ocean the other transconti- .on (including Pacific), nental lines thé Canadian and at the oriental commerce for rates ports-it competes world. Its are and of. must be made with the competition rates ocean carriers and ofway the Suez Canal..

The thus followed policy Great Northern Company an international, interstate, and building thereby commerce up been followed Pacific Company has since its Northern reorganization

In creating and maintaining competitive interstate and Great, international both the Northern and Company the Northern Pacific Company placed were and at a hampered the other disadvantage.with railways, transcontinental well as with European the want of competitors, by sufficient direct territory connection with offering the best markets-for products country their along lines, and with the places production centers distribution from which great their traffic For many must months before supplied. the pur- chase of Burlington, they shares had' considered the best closer to such markets and of.getting supply. sources means n lines'of the better those'of Burlington, .The other than company, both Great requirements fulfilled n and the Northern Pacific Company Company respect markets for east-bound for freight west-bound traffic. lines-traverse Burlington the treeless States Illinois, Iowa, Missouri, Nebraska, Wyoming, Kansas,- Colorado, and. for afford best lumber Pacific markets coabt. They Denver, reach- Kansas City, Omaha, and Aurora, where the-' are located principal smelters silver-lead oi’es,such as are mined near the lines of the railway defendant companies.

They Omaha, reach Kansas City, Chicago, where are great packing great houses markets cattle .the Dakota, sheep .the North ranges Montana, Wyoming, Idaho, Oregon, Washington. n TERM, 1903. Company. of Northern

Answer Securities there with City, Louis and Kansas They connecting reach St. from which come raw States, the cotton and traversing lines for China and required shipment Japan. manufactured cotton connect with the which they At St. Louis lines Chicago and steel, manufactured ma- supply iron, the points, reach articles that a market manufactured find chinery,- and other and China. Japan from and St. Minneapolis The line southward Burlington reaches the coal great deposits River along Mississippi Paul the of Pennsylvania the west West Illinois, largest of southern and and low cost light gradients consequent and its Virginia; on make it such coal to possible supply points transportation company defendant east of the railway the lines each Mis- the the of that terri- River, railways and relieving people souri from the tory dependence Pennsylvania entire West yearly from which is mines, supply becoming the more Virginia costly and certain. less for

The said stock was lower price paid Burlington per mile by main covered than that for which track stock large system other well established stock same could then been territory bought. have general by Burlington Northern Pacific purchase companies parts equal hnd Great Northern served each com- well it were owner of stock, as the sole such while pany have might beyond been financial purchase' means of by itself. company either Pacific

The Great Northern companies there- an shares, number of purchased equal each fore the Burling- best means and for the sole tion stock as purpose reaching best, products-of territory markets their along furnish, connections would securing and of lines, respective roads, of traffic foAtheir increase the largest amount trav- interchange'of regions trade commodities.between and their and the Burlington lines ersed connections or reached the Great Northern North- regions traversed lines, Pacific connecting their lines of on shipping ern CO. UNITED STATES. NORTHERN'SECURITIES Company. 193 U..S. Answer Northern Securities the Pacific coast. and These interchange connections traffic were deemed to' be and are indispensable to the mainte- nance of their business, local as well as interstate, to the of the development country 'served their respective lines, and of like advantage Burlington lines the country served by them, and each in strengthen company competi- tion with the more to the southerly lines Pacific with the coast, Canadian Railway, arid with European carriers, Pacific.

trade commerce"of,the Orient. In such purchase there was no purpose to lessen any compe- tition of the with Burlington lines those' of either of the pur- chasers, for they are not competitive, to lessen any competi- tion between the purchasers. Such'purchase was'not intended to have, and it cannot have, any such effect.

The purchase Burlington stock was not in made view of the formation of this but defendant, solely from the motives and with the purposes already stated.

II. The project of forming holding kind company any was in not the result, way, failure of the which plan was defeated decision Court the Pearsall Supreme casé. There no, connection whatever between the two. project of holding company finally developed into the formation of this -defendant had its inception years before date, among several gentlemen, not ten exceeding numbér, who had been large shareholders in the Great Northern Company and its predecessor, St. Paul, Minneapolis Manitoba Railway Company; some'of them from the original organization of the latter company 1879, and others from dates not-long after that time. have They never held a major- ity the stock of-the Great Northern Company, but have taken an active interest policy administration; have aided it when necessary financing its operations; have acted to- gether in promoting its interests; have, with some exceptions, n served from time to time as directors and (Mr. Hill .officers having been president of the successive 1882); companies since and by reason of their active interest the company.and serv- TERM, Company.

Answer Northern Securities influenced, ices to it have to a large degree its and' policy these,, 1893,-most As far back management. gentlemen n well advanced and some being far- advanced in years, they began to discuss together what would be the effect policy which under their influence the had company pursued' benefit to great its shareholders and public, should their by death or holdings otherwise become scattered, what holdings means their could be so as kept together, secure the continuance of such policy management the- It was -considered that if a company. company should they formed which might transfer-their holdings, .individual their shares were to be likely held so together, as the -long majority the holding should company wish, so and. this would stability tend to give to the policy of the Com- Great Northern be aid to it in pany,- financial operations, and maintain the value of their investments. These conclusions were the result of various consultations among persons or mentioned, some but no them, agreement definite was made for such forming or company anyone to binding transfer it if his shares to formed.

From time to time, with beginning the reorganization of. the Northern -Pacific Company 1896, Mr. Hill said other Great Northern shareholders who had discussed him the plan forming holding had company,, pur- made' large phases of Northern Pacific shares, him- individually, each for action, self, any without concerted solely investments. 1, 1901, About May their aggregate holdings the common' to, of the Northern stock Pacific .Company, nearly amounted twenty million dollars ($20,000,000) of the million dol- eighty lars common ($80,000,000) stock of the company, also stock, had a seventy-five million preferred amounting dollars with the ($75,000,000), as the voting power same common (cid:127) At this time the J. P. stock. firm of & Co. held Morgan about ($6,000,000) six million dollars the common stock. In the fall of 1900 Mr.- said Great Hill Northern shareholders discussed the their question putting holdings of Northern - STATES. 235 CO. UNITED SECURITIES NORTHERN Company. of Northern Securities Answer as well as the holding company, proposed into the Pacific stock other stockholders of Great Northern that all the suggestion selling be trans- given opportunity should Company and that holding company, capital their shares ferring enable it to buy such .large enough'to made stock should known that the holders of any it was not though holdings, stock, other than of Great Northern those amount .considerable ' (cid:127) transfer. desire to make such would named, above Burlington of the it was of the shares purchase At the time or its share- company either purchasing contemplated between the purchasing companies, alliance any holders that needed to to each shareholders, preserve was their among secured advantages pur- of the its fair share company manifest-interest of each' com- that the It was thought chase. security needless. But guaranty rendered further pany . for the negotiations conclusion of the after the just

pending of the the interest acting stock, parties Burlington Union Northern Pacific shares, did purchase Railway system Pacific the amount of about seventy- tó and preferred, common both majority a.clear ($78,000,000),being dollars eight million intent apparent company. capital entire it would have successful, and, to defeat purchase Bur- which the purposes out carrying defeated, the Great Northern bought by been had- shares lington inter- and the development Pacific companies, of and would them, of each and international' state to an interest of each adverse the policy have .subordinated Pacific and .companies, and Northern Northern both the Great their lines. to the served public of the Northern of the shareholders the interests

To protect made additional pur- P. & Co. Morgan J. Pacific Company, which, with stock, eommon Pacific of Northern chases Northern and other Great of Mr'. Hill in said stock holdings of a forming him the plan had discussed who shareholders million dollars forty-two about constituted company, holding In the common stock. of majority being ($42,000,000), TERM, 1903. Company. Securities Answer Northern injury view of both apprehended companies, to their shareholders, and to protect the better their interests’in the Great future, Northern holding shareholders Northern shares-, Pacific deemed it advisable the projected holding’ (cid:127)company purchase should have not only their own Pacific Great Northern Northern but also shares, the shares other Great Northern Northern Pacific shareholders to said might holding wish sell company, and their already formed, companies shares of and others that might for the the traffic or formed, purpose aiding operations of the Great Pacific companies, Northern respec- Northern not tively. by any At this time it expected the persons n that any concerned Northern Pacific shares except said million forty-two ($42,000,000) would dollars be acquired by the company. organization proposed holding of such was not on company dependent agreement it should majority acquire railway the shares either defendant It would have been company. organized the Burlington pur- chase had been ii made, promoters and its had had no other thirty-four shares to transfer to it than the million dollars ($34,000,000) Great Northern stock and the twenty million Pacific ($20,000,000) dollars Stock held by them on It May 1, was not'known that all dr how many of either railway shareholders would be companies likely their to transfer shares to this defendant when formed.’ After this its organization defendant-bought and still holds about one fifty million hundred dollars of the stock of ($150,000,000) Pacific the Northern and it Company; purchased has also for the negotiated purchase stock of the Great Northern. as hereinbefore stated. Company, Neither the said persóns formation who were concerned defendant, nor the from hah said whom it persons acquired the stocks said rail- nor way this defendant itself since its nor companies, formation, officers, stockholders, directors, have planned intended railway that the stock companies acquired by said de- thi.s thereof, fendant, or'any should be part held, used, voted NORTHERN SECURITIES CO. v. STATES. UNITED Gompany. Answer of Northern Securities it, by or its or officers, for agents proxies, of com- purpose or bining) consolidating under one common placing manage- ment or control of railways the Great Northern and North- ;.or Pacific or for ern the business thereof companies, purpose of or between the monopolizing restraining said competition railway companies;, any for other than election or purpose each of by said of a railway companies competent distinct of board each of directors, able them intending manage of their Qther, and for benefit share- independently By holders and of the of legislature acts public.

State' Minnesota incorporating Railway the Great acts of the of the State of Company, by the legislature Com- Railway Wisconsin Northern Pacific incorporating substance, is, provided that the business affairs pany, aby shall be board of each'railway di- company managed stockholders, to be and that all rectors elected of each powers to said corporation relating .matters shall be vested such board.

(cid:127) issued Every share this defendant has been issued to the persons corporations receiving the same good faith, it, full value either or paid cash its and in equivalent, with the provisions its articles incorporation .accordance and with the State of laws New No Jersey. agreement, or has understanding been made between promise, this defend- between, ant and or any stockholders, its stockholders or or any them, themselves between said stockholders or any other persons the stock corporations, defendant or voted held, used, should other than each stockholder, individually, and in separately way as he should see fit; and there has been no agreement, or promise, understanding between said stockholders themselves, or them, be- tween said stockholders and any other person corporation, they or any of them should use, hold, or vote their stock in this defendant in association for anj>-common purpose or object. The owners and holders of stock of this defendant are more than thirteen (1,300) hundred in number, and the owner- n TERM, 1903.

'238' Company.

. of Northern Securities 193 Answer U. S.- changed day day from to being by sales ship course dealing. in-the usual The said persons transfers concerned were otherwise the formation formed or who held, all never, together, have owned or other- this defendant amount'of stock the said to company equal an controlled wise whole amount thereof out- much as .the so one-third now no or to has contract obligation pur- This defendant standing. railway whatever in any company, or shares either acquire chase or to purchased which it has negotiated pur- addition to those by fixed authorized was chase, capital per- as above stated. Its it to to each give who. to enable planned organization sons an railway in each of the defendant companies op- stockholder so, it, to to should he see fit to do his stock sell portunity it. fixed acquire this desire to The sum should defendant the formation of by planned those who this -deemed ample to for all furnish the means such pay defendant to shares by it, to leave likely acquired remaining large be would for corpora- used of stock other purchase amount which carriers, might not common this defendant con- tions, This not beneficial to defendant was formed as acquire. sider known the act of as the Congress a “ device evade scheme or..a whatever, solely or other law but Act,” any Anti-Trust hereinbefore stated. purposes formed, nor did of those any III. This defendant was con- formation, any of who sold their in its those shares nor cerned any intention, or to restrain it, have trade purpose of stock competition railway or to between said commerce, lessen or whatever; traffic in any manner monopolize companies, from follow the formation or operation results nor can In fact, since the organization defendant. point of this railway lines, the defendant companies’ rates'on defendant have both, and from common vol- points rates to including their earnings to decrease reduced as been so untarily. For all annually. of million dollars upwards railway the defendant com- lines of either on the on own ending lines their traffic except beginning panies, n CO. STATES. NORTHERN UNITED SECURITIES U..S; Company. of Northern Securities .Answer tariffs with connecting joint the rates are fixed respectively, of, defendant neither In to all such traffic respect lines.' rate- had, have, any independent can has ever companies All with joint or control of traffic tariffs making rates. of'the from common to the lines to or points other companies been, necessarily always have railway companies defendant one or the is carried same, whether the traffic .must-be, the inter- of all other amount other of said Companies. total on two common traffic, is, points between state traffic to rates and quality both as roads, competitive is not rate-making power carriers having equal with other- service traffic total interstate than cent them, per is less of two companies. form of of transfer property,

IV. The sale-and whether never been otherwise, adjudged or has of stock (cid:127)shares corporate of Congress of act of in'violation be, not, .to and is July Act.” the "Anti-Trust 1890, known as it has no company, not a railroad defendant is This make or control railways or rates' manage to or operate any of traffic nor 'to monopolize-or of transportation, restrain of said any provision to violate intending land. far from So' in organizing who concerned were persons act Congress, to it' had who have .their and those sold this defendant shares were did believe such sales to believe and every reason In act. common with of that way not in contravention any aware that the eleven they during were the general public, in many instances the stock of that act since the years passage been its com- railway acquired has company of a competing thereof, acquisition including or the shareholders petitor throughout of the many railways doing-business principal from any country. objection This has been done without States, and has United branch of the Government con- railway companies to the invariably beneficial proven sales stocks making and those cerned the‘public, and to such sales no reason had this defendant believe.that whatever. legal were open any objection question TERM', 1903. Company. Answer Securities V; was not for the organized purpose This defendant of ac- stock either the Great quiring majority Northern or the Northern Pacific merely but Company, purchase sell, those who wished to as above not stated, organized-for purpose controlling railway rates in.the slightest and has not had and cannot degree,- have any such n effect. The transactions referred to the petition have com sisted of a organization lawful corporation the pur- it. All chase acts done property relation to the organi- zation and in this defendant the conduct of its business have been expressly by law, authorized and have no' had effect whatever to restrain trade commerce among the'several States or If with these lawful foreign transactions nations. should effect hereafter-have to restrain trade or commerce among (which or with several States foreign nations hereby denied), that-effect would be indirect, remote, merely (cid:127) incidental,. and collateral, intended, and' as nothing compared great 'expansion volume of interstate international, commerce which was intended, and which this defendant believes is destined to result from the enter- two prise railway companies, that culminated in the n the Burlington stock. purchase And defendant says:' “Anti-Trust was not intended prevent Act” an of a

(cid:127)defeat aid enterprise great competitive interstate merely and international commerce because such enterprise with it may carry, possibility incidental restraint commerce, trifling some both as respects territory and volume. limit

2. Nor act intended of the several power to was.the to define corporations, create their fix the purposes, States determine of their who capital, may buy, amount own, their stock. sell ‘ Otherwise-construed, the act would unconstitutional, because: to power

The regulate with foreign nations and NORTHERN SECURITIES CO. STATES. UNITED of Hill and Answers other Defendants. give Congress' regulate the States'does among above of the matters any respect corporations mentioned States; and by the because created may

Persons not be of their deprived without due property law, from process by taking them the it as their right sell interest suggest. because,-

VI. There a defect of defendant, is necessary parties already forth, as set persons who made sales of stock railway said to this companies numerous, defendant "were ex- than ceeding 1,300 number, any more had and few them connection whatever or of this de- planning forming and in fendant, their from no absence this decree can litigation be made their affecting rights the premises. And

VII. this defendant denies all all and manner unlawful combination and confederacy wherewith is the said peti- charged, tion without this, that matter, there is other cause, or thing or petitiQn necessary contained material defendant to make this answer and not unto, herein hereby well and sufficiently confessed, answered, traversed,, arid avoided denie'd, knowledge same is not true defendant; of this belief all of which and things matters this defendant ready willing aver, maintain, prove this honorable court direct, shall and humbly prays hence to.be dismissed, with its charges reasonable costs and behalf most wrongfully sustained. (no verification)

Signed for the Northern Securities Com- John W. pany, by Griggs Geo. B. Young/ solicitors- and counsel.

A was separate answer filed the defendants J. Hill, James William P. D. Willis Clough, James, S. Kennedy, John F. George Baker, substantially was the same as the an- swer defendant Northern Securities Company. answer the Great Northern Ttailway Company

substantially the same as that of the Northern Securities Com-

von, cxciii —16 TERM, 1903.. Railway Company.

Answer of Pacific 193 U. Northern II of the Paragraph with the second state- omission pany ment of defence. Railway the Northern Pacific of the defendant answer was as

Company follows: I allegations admits -the Paragraph I. This defendant and the Northern Rail- defendant Great that this petition mentioned said and petition were at the times way Company in the transportation employed are common .carriers now the several States the United among and passengers freight by them railways operated which the are'situated. within States every allegation each and other of par- This defendant denies I of the petition. agraph II of allegations admits Paragraph

II. This defendant 1901, the to November prior that the petition shareholders, controlled and owned and defendant was in that behalf parties them were the alleged. among that any knowledge information This defendant denies suffi- every other Para- allegation of each and cient to form belief II of petition. graph allegations admits the III Paragraph This defendant

III. at the that this defendant times mentioned of the petition railway from Ashland in extending Wis- operated and owned Duluth, Minnesota, and from St. Paul, Minnesota, via consin Dakota, Montana, Idaho, North and Minnesota, Wash- across Helena, Montana, the State of and through ington, passing to Tacoma Washington, extending in the State Spokane, Seattle, Portland, Oregon; and to Washington, of railway lines éxtend-. Company operated the Great Dakota, North Minnesota, Paul aforesaid across from St. ing Washington, Idaho, passing through Spokane and. Montana, Seattle, afore- Everett the State last extending to lines, lines connected with railway other the said said; or means of such other directly railway lines either on the steamships Great lines connected ^akes said joy operated companies aggre- ocean, mileage and that for this miles five thousand five defendant hundred gated about NORTHERN CO. SECURITIES UNITED STATES. 243 Railway 193 U. S. Answer of Company. Northern Pacific four thousand and and about one hundred miles twenty-eight for Great Northern the Company.

This defendant denies each and of every other allegation (cid:127)I'll of the petition. Paragraph

IV. defendant the of allegations This admits IV Paragraph that, year of to the a the.petition prior known corporation as the Northern Pacific Company, Railroad and organized exist- under certain and of ing acts resolutions and which Congress, then some of of operated parts lines this defendant, the became and in placed insolvent the of hands appointed receivers States; various of courts in that, United while this condi- of tion, plan reorganization was entered into by the bond- holders of said and that an company, arrangement was between proposed the said bondholders and the Great Northern Company-which was never carried out. This de- fendant admits a case entitled' Pearsall against .that Great Northern Company was decided Railway by the Su- Court of preme the United on 30,1896, States March and is in of volume 161 reported reports said court, beginning on 696. page This defendant denies knowledge information suffi-

A cient form a belief of each every and other allegation IV of the It Paragraph petition. is informed and believes that said wholly paragraph irrelevant action, cause any, the petition. stated

V. This defendant admits the allegations in Paragraph V early petition year 1901 this defendant and the Great Northern Company, acting purpose promoting their several interests, each purchased shares of stock of-the Chicago, Burlington Quincy Illinois, Railroad Company paying therefor with joint bonds of the Great Northern Com- pany and the Northern Pacific Company, payable twenty, years from date, with interest at 4 per annum, cent per at the $200 rate $100 in bonds in stock, for each this manner acquired (cid:127)the said companies severally' purchased and each stock; cent that the lines said operated by about per said TERM,' Railway Company. Answer of Northern Pacific and its connections Burlington geographically were Company as stated some said lines petition, compete called Pa- with some lines what is the Union petition system. cific

This was made these purchase primarily defendants in- order to secure a terminus connec- Chicago permanent markets, tion with eastern southeastern are to the and mineral agricultural valuable especially products northwest, Burlington system and also because the serves and the was deemed territory, purchase large growing It had no with desirable itself. connection profitable any formation of whatsoever and' was not company future statute, any to violate the or common law of made with intent States, and not iii violation of any or of the United State law. each and other of Par- every allegation This defendant denies It is informed and believes that said V agraph petition. action, irrelevant to the cause of wholly any, paragraph in the petition. stated or any knowledge defendant denies information

VI. This of each and of Para- every allegation to form a belief sufficient petition. VI of the graph of allegation Paragraph This defendant admits VII

VII. the defendant Northern Securities Com- of the-petition, believes, is informed and organized, was heretofore pany Jersey. laws of the of New State under the general or information any knowledge denies suffi- This defendant of other of every allegation each a belief cient to form the petition. ofVII Paragraph of admits allegations Paragraph

VIII. deféndant This. defendant, that the Northern Securities of the petition VIII ma- and now holds and large has owns purchased Company, and that defendant, of this the Securi- stock of the capital jority on dividends as have been paid received such has Company ties it. any shares held or information knowledge suffi- denies any defendant

This ‘,CO. NORTHERN UNITED STATES. SECURITIES Railway Company. Aiiswer of Northern Pacific a belief of other allegation to forni and every cient each VIII of the petition. Paragraph defendant denies or information any knowledge

IX. This a belief each of Para- every form allegation sufficient to of the petition. IX. graph

X. defendant any knowledge This denies information form belief each and of Para- every allegation sufficient to X of graph petition. This,

XI. defendant each and every allegation denies of-Para- XI graph petition.

XII. defendant each and every allegation This denies Para- XII of the It graph is informed believes that petition. merely expressions said consists paragraph opinion, and is, therefore, without cause of weight support action. ,XIII. This defendant any knowledge denies information each sufficient to form a belief of of Para every allegation XIII of the graph petition. believes,

XIV. this defendant is informed As the pur- ¡Securities by-the chase Company shares this defendant and the sale thereof the owners have been by law. have had no expressly They authorized effect what- ever, or in fact, law restraint or of tradfe or monopoly com- merce among foreign several States nations. at

petition allege any does not within the place jurisdiction any of this court or elsewhere such restraint or has monopoly been effected.

If lawful transactions, merely these consisting pur- of chase and property, sale should hereafter have any effect in or restraint trade monopoly or commerce among several States or with foreign not nations, that would be their direct effect, but would be merely indirect, incidental, remote, and col- lateral, therefore, and would, not bring said transactions within said act'of Congress above mentioned. other Any construction would render unconstitutional, the statute as beyond the power of Congress, the sellers depriving stock thus sold and also the stockholders of this defendant who have not sold TERM, 1903. Railway Company. Northern Pacific

Answer of of liberty shares to the Securities Company, their property law, because, thus process construed, due would without an to sell their If right inhibition their property. be sustained, right of the owner' complainant’s contention will be what dependent upon to- the 'same property sell been the may courts time hold to have intention any at future This result would- buying property. purchaser and the value his of the owner liberty seriously impair guaranties to the constitutional contrary and is ‘property, . : thereof. not’within the act Con- therefore, are, These transactions mentioned; any nor constitutional Congress has above gress by authorized action thus prohibit expressly to annul or has hereafter which the same been statutes under state be taken. defendant necessary parties herein,

XV. There is a defect of to annul all sought this it is sales shares made because suit of this defendant by shareholders Securities cancel all certificates of stock of the and. to latter Company The parties the same. making issued company purchase had of them no numerous, many are connection such sales shares to Securities matter' save Com- with the. sell-their It their is organization. after its obvious absence pany annulling be made such sales to can the Securi- adjudication no to such effect as for prayed A decree . Company. ties sellers their deprive'such original would necessarily petition law. All who sold persons due process without property Company there- Securities are, in this defendant shares bad reason of the petition is fore, necessary parties, ' their absence. all un- all manner denies defendant And this XVI. by the said confederacy wherewith.it lawful combination matter, other if there is this, that without charged, petition necessary material or petition in the contained cause, thing unto, and herein here- make answer defendant confessed,' traversed, and answered,- sufficiently well and NORTHERN SECURITIES-CO. UNITED STATES. 247 Morgan U. of Answer and other Defendants. denied, avoided same is true the knowledge defendant; all of which belief this matters things 'and is ready willing aver, defendant maintain, prove as humbly this honorable court shall direct, prays be hence with reasonable- charges dismissed its costs this behalf wrongfully most sustained. five first the answer of paragraphs the defendants,

J. and Robert Pierpont Morgan Bacon, were substantially the same as the paragraphs same answer of the Northern 'Pacific the remainder of Railway and answer such de- was as follows: fendants

VI. These defendants admit-that James J. defendant Hill and certain other decided persons upon formation of a securities set forth in company purposes the certificate Northern incorporation Securities Company attached to the all petition and as therein respects stated.

These defendants each and deny every- other allegation of VI of Paragraph petition.

'VII. These defendants admit the allegations Paragraph ofVII that on petition November 13, 1901, the defendant Northern Securities was Company organized under the general laws the State New Jersey, its office in principal Hoboken, State, said and with an authorized stock of capital $400,000,000,.and that a copy articles of incorporation correctly company powers said stating attached to the petition. deny These defendants each and every other -allegation of n VII of

Paragraph- the-petition. These defendants VIII. admit the allegations Paragraph petition VIII that on or about November 1901, the defendant Northern Securities Company organized election of officers; directors and that the defendant James J: Hill was thereof; chosen a director and president there- Hill said James J. and other stockholders of the each Company, individually Great and separately m TERM, Defendants, Morgan

Answer of and ether others, Company large from the sold the Securities amount stock of the Northern for capital Company of the Great $180 value of the of par capital stock the Securities price of for each share of the of capital stock the Great Company North- that-these defendants and of Company; ern other stockholders Pacific individually each Company, sepa- the Northern others, from the to the a large sold Securities rately Company of the stock of the Pacific capital amount Northern Company; for a limited Company offered, period, that also Securities of to the other shareholders of Great purchase like terms now holds Securities-Company Company; of the Northern and owns a of stock majority capital large amount, a large though Pacific less Railway Company, of the stock Great Northern controlling interest, than a for the of additional purchase and has Company, negotiated Company of that Securities has company, shares any have been on shares held paid received such dividends as it. every allegation other- of These defendants each and deny (cid:127). VIII of the Paragraph petition. and every allegation each of' deny

IX. These defendants IX the petition. of Paragraph ‘ deny any knowledge information X. These defendants - and every fbrm a of each of Para- allegation belief sufficient X of the graph petition.. each deny every allegation

XI. These defendants 'and XI the p'etition. Paragraph deny defendants each and every'allegation These

XII. of. are informed and They XII of the be- petition. Paragraph merely expressions paragraph fi<Jve that said consists weight.in without therefore, support is, opinion, action. cause of every each and deny allegation defendants

XIII. These (cid:127)' XIII of the petition. Paragraph In stock Northern Pa- July, 1896, capital XIV. the. fixed at-$155,000,000, Railway Company cific STATES. CO. v. UNITED NORTHERN SECURITIES U, Morgan Defendants. and other Answer common stock. $80,000,000 were preferred $75,000,000 exchange was issued company stock of the The preferred Pacific Railroad former Northern obligations various new accept holders thereof would the- because Company it was contem- the same time At stock therefor. common. stock preferred arrive when said that the time would plated then was, accordingly, pro- and it retired, should properly in whole or be retired might vided that the stock preferred including to and day January, up- at on any first part par subject were made classes January 1,1917. Both others, continuing and in Morgan trust this defendant voting in the trustees by but terminable 1, 1901, until November date. their discretion at an éarlier pros-' the recent

The Pacific shared Company Northern its-common stock appreciated and country, perity out the carry original value until it was deemed practicable terminate and also to intention of the stock retiring preferred ' the by was terminated trust Accordingly the trust. said voting was and the preferred January 1, trustees upon and contemplation action was retired: the latter Although termination time before the some decided practically was of formal action subject the it was voting trust, the not.made and was 13, 1901, until November the board directors January 1, completed upon in 1901, the Northern stated, early hereinbefore

XV. As each Company, pur-' the Great Northern Pacific and Company, the Chicago, the stock of capital about 49 per chased cent This purchase Railroad Quincy Company. Burlington in order to primarily Pacific Company made the Northern connection secure a terminus at with Chicago permanent which markets, the eastern and are especially southeastern valuable for the and mineral the products agricultural northwest, system but the serves a Burlington also because large and was deemed territory, purchase growing the desirable profitable itself...

These, were as the made, petition alleges, “in purchases TERM, 1903. Morgan other Defendants.

Answer of the Great placing of the ultimate contemplation under a common source system Pacific and Northern con- whatever connection with trol.” had no They future of the- Company, any formation Northern Securities other no connection whatsoever, and had with the fact company Pacific in the that the Union Railway system alleged petition system extent a competing to some the Burlington system. were not made with intent to violate purchases said States; or of common law of any State United

statute law, were not violation of are not charged in any to have been petition respect'unlawful. During reorganization XVI. the Northern Pacific firm of system' Co., J. P: & which Morgan these defend members, ants are acted as reorganization' managers, and ever of the Northern reorganization since Pacific Company has been its fiscal Said firm'has agent. at accordingly all times desired to further the best interests of the company and all its stockholders, and to aid especially steadily devoloping the n business of and the company prosperity the country firria Said considered these results were serves. far so as accohaplished, possible, policy-pf company during trust, existence voting above stated. Not after termination long of the voting trust, arid however, the. in early firm very May, 19.01,said became aware that unusually of both large purchases classes of stock in were in progress in a market, apparently single interest. Said firm wTas that purchases these were for the apprehensive. purpose control the direction of the Northern Pacific Com securing not for what firm it, thus said managing and conceived pany but for some company, to be the interest ulterior best firm not informed. said was purpose com- firm, May 7, 1901, said Accordingly prior purchased Pacific in mon stock the Northern considerable Company amounts, day and their that holdings upon amounted to about In thousand making hundred shares. these purchases two said UNITED STATES. CO. NORTHERN SECURITIES Morgan Answer and other Defendants. in acted own and firm on its account behalf of no other person. no and was actuated motive whomsoever, save those above stated. nob made with intent to

The said were violate the purchases law of the United any States, common State statute of any not such.law. were in'violation Hill and the defendant others who years XVII. For some but not Company, the Great Northern were interested in- the formation of defendants, had cluding these contemplation their inter- separate of purchasing for the corporation purpose that said interests general object company, ests that and course and the business together policy held should be continuous Company develop,- should the Great Northern territory served and' it, system ing company’s from inconsistency and possible to radical subject change In as this August, 1901, plan ap- or about time time. for similar said reasons determined maturity, parties proaching the new when they company, formed, also sell to would Pacific in the Northern which were Company, interests their considerable, amount, and that com- capital new it to sufficiently large purchase made to enable should be pany Pacific com- Northern all shares of the Northern’ Great desire to other which the holders sell might panies - new deem it advisable might which the company' shares acquire. had become known that the tile’ purchases

By time:it Pacific of. of the-Northern to which Company, market shares made.above, been made in behalf of a had corpora- reference Line known Railroad con-' Oregon Company, as the Short tion Union there Company; Pacific'Railroad trolled the. Hie Pacific held that interest Com- were shares.of stock, $41,000,000 preferred about amount pany January 1, on which, was to however, be retired 780,000 shares $37,000,000 stock, making of common together of the total majority capital stock an absolute constituting and therefore, Thereupon Pacific Company. the Northern TERM, 1903. n Answer of Morgan and other Defendants.

with the view and for the of purpose protecting Northern Pacific Company and the holders its common stock against the possible control of the direction of said ad- an company verse interest, these defendants determined and also advised their friends sell their Pacific Northern stock to the new company.

As set forth in the petition, the Northern Securities Com- duly was to the pany organized pursuant laws of New Jersey November was upon organized law, It according to possesses all the forth in set its incor- powers certificate of and has full do act poration, every which it has fact doné, and petition the- does not allege contrary.

It known become that the having Oregon Short Line Com- satisfactory disinclined pany terms to' sell its of the Northern holdings major part Pacific stock, the P. & firm of J. Morgan Company, deeming such action for the

best interest of the Northern Pacific Company, purchased from Line all said Short its Oregon Company holdings capital Northern Pacific Company. After organization its the Northern Securities Company duly all the shares of the Northern Pacific purchased Company and Great Northern Company hereinbefore ih- mentioned, firm cluding purchased by those of J. P. Morgan & Com- n from the Line pany Short for Oregon Company, which it paid cash and own shares. partly also partly was willing 1‡ purchase any shares other shareholders the Great who Northern Company, desired sell for same, the price of one hundred and eighty dollars each share the Great in its own Company, payable shares, and actually did for considerable pay amounts said stock purchase at such price.

None of these the Northern purchases Securities Company made intent violate the statute or were common law of any States, State or the United were violation law. XVIII. correct statement of all foregoing the mat- v. UNITED' STATES. CO. SECURITIES NORTHERN Morgan and other Answer of Defendants. . many in the irrelevant petition, omitting mentioned

ters facts conclusions, and of some other adverbs, adjectives, of The to the formation transactions prior thereto. addition whatever had.no connection Company Securities That com- as above stated. thereof, save with the formation majority for the of acquiring not purpose was pany organized, Pa- Northern or the Northern the Great of the of either stock It not organized as above set forth. but cific Company, or railway rates affecting competition for the purpose In any not had such effect. the trans- and has slightest degree, they far as are these defendants so actions above stated and,j who have been therein have engaged aware, parties the other July 2, act of Congress intended to violate the or sought never and commerce against “An act to trade protect 1890, entitled (26 647), c. or Stat: monopolies” unlawful restraints and trust or combination the form of contract, any into to enter of trade or commerce restraint otherwise, conspiracy or or to mo- nations, or with foreign States the sevferal among or combine or with conspire monopolize, attempt nopolize the trade any monopolize, part or persons other any person or with nations. foreign several States among or commerce - merely the organization have consisted The transactions Jersey pur- and the sale to of New corporation a lawful All done in lawfully salable. acts it of by property' chase and the Company Securities the organization relation to railway companies it of shares purchase have been authorized expressly the owners thereof sale fact, or in whatever, law have had no effect They law. or commerce among of trade the sev- or monopoly in restraint does not petition allege with nations. foreign eral States of this court or jurisdiction within the else- any that at place has been effected. any where such restraint or monopoly If transactions, consisting merely the pur- these lawful any hereafter have effect chase and should sale of property, among trade or commerce the several monopoly restraint or nations, such effect would not foreign be their States - OCTOBER'TERM, 19.03. Morgan Answer of and other Defendants. 193 IT. S. merely but would be effect, indirect, remote, direct incidental, collateral, and aside from intention the parties, said bring therefore would within transactions said act Any other construction would Congress.. render the statute ¿s beyond power' unconstitutional .as of Congress, and de- and the these defendants sellers priving generally of the stock sold, liberty thus without due property law, process their, construed, thus it would be an inhibition because, their, If right property. complainant’s sell contention be of the owner of sustained, right to sell property thé same will any what the courts at dependent upon future time been hold to have the intention of the in purchaser buying such Such result would property. seriously impair liberty of the and the value of his property, owner and is contrary to the constitutional thereof. guaranties are, therefore, transactions

These within act of Con- mentioned; above nor has gress, Congress any constitutional annul or action prohibit to thus expressly by authorized state under which the same statutes has been taken.

XIX. is a defect of necessary There parties defendant herein to annul all sought because this suit is salés shares made by shareholders Great Company and the Northern Pacific to the Northern Company Securities Company, and to cancel all certificates stock of the latter company As already same. purchase forth, set the par- issued numerous, ties sales are making such and of them no many had , connection with matter save to sell shares the rail- .their to the way Securities companies Company organization. after their no It is obvious absence can be adjudication made sales the Securities A annulling such decree Company. prayed petition necessarily effect would such sellers of their original without due property proc- deprive All who sold in the persons railway shares com- of law.’ ess are, therefore, necessary Securities Company panies bad of their reason absence. petition parties, (cid:127) and all deny these defendants And all manner XX. STATES. . TIES UNITED CO. NORTHERN .SECURI Court. Decree of the Circuit they wherewith are confederacy combination unlawful this, there without is. charged, petition said contained, or, material petition cause, thing matter, other and not unto, to make answer for these defendants necessary answered, confessed, sufficiently, well and hereby herein not true to the denied, the same. traversed, avoided is. all which defendants; of these matters or belief knowledge ready aver, main- willing these defendants are and things direct, humbly court tain, and this honorable shall prove as costs and dismissed with- their reasonable pray be hence sustained. wrongfully this behalf most charges Daniel S. Lament was The answer of defendant sub- Bacon, that of stantially Morgan the same as defendants P. to the actions J. Mor- that certain 'as except, allegations were XVI and XVII omitted. &gan Paragraphs Co. a Cir- after the had been case tried before April 9,

On Sanborn, Caldwell, of Circuit consisting Judges cuit Court (for Thayer, opinion Judge Vandevanter .see Thayer and following decree entered: 120 Fed. Rep.'720), follows, to wit: “Ordered, and decreed as adjudged “That have entered above named heretofore defendants or and con- into combination of trade conspiracy restraint States, Congress, merce the several such as an act of among 'An and July act to trade 2, 1890, entitled approved protect restraints, de-’ unlawful against monopolies’' illegal. nounces as Railway

“That all the Com- stocks Northern Pacific Railway Com- and all the stock of the Great Northern pany now claimed to be and held the defend- pany, owned Securities and is ant, Company, acquired Northern combination or now held it virtue conspir- acy among restraint trade and commerce the several States.

“That officers, agents, Northern Securities its Company, they are from be and hereby employés enjoined servants TERM, Decree of the Court. U. Circuit or acquiring, attempting- further stock of either of acquire railway aforesaid companiés. “That the Northern Securities from Company enjoined be now or voting aforesaid.stock which'it holds acquire from it, any to vote at attempting -meeting stock- holders either of railway the aforesaid and from companies or exercising attempting any exercise control, direction,’ or influence whatsoever over the supervision acts and doings railway of said or companies either them virtue of its such stock therein. holding “ That Railway the Northern Pacific Company and the Great their Railway Company, officers, Northern directors, servants they hereby be and are agents respectively and collectively enjoined from the stock permitting aforesaid be voted by or in the Northern Securities its Company, behalf, by at- n or at torneys agents any corporate election for or directors of either of the officer's -aforesaid railway companies. “And they, together officers, their directors, serv- agents, ants and likewise enjoined and respectively re- any from to' paying strained dividends the Northern Securities aforesaid, on account either of Company railway now companies hold; claims to own and “And that the railway aforesaid companies, their officers, directors, agents, servants and be enjoined from or' permitting suffering the Northern Securities Company any of its offi- agents, cers as such-officers agents, to exercise control over corporate whatsoever acts either of the aforesaid railway companies. nothing

“But herein contained shall be construed as prohib- Northern Securities iting Company from returning and Pacific transferring Railway Company Railway Great Northern Company, respectively, any and all shares of-stock either' of railway said companies which said, The Northern Securities*Company, may have heretofore from such stockholders in received exchange stock; its own herein contained nothing shall be as prohibiting construed r. NORTHERN CO. STATES. UNITED SECURITIES n Young Argument for Appellants. of Mr. Securities from Company making such transfer assignments stock to such person aforesaid as now be the persons holders and owners of its own stock issued in originally or in exchange for payment stock claimed to have been by it in the acquired aforesaid railway companies.

“It is further ordered and adjudged the United States from the recover defendants its costs herein expended, the same to be taxed clerk of court, this and have execution therefor.”

Mr. B. George Young for appellants argued presented in a brief the following summary the facts: years

1. For some tó prior 1901 the two railway companies had in an been engaged enterprise in- building up great terstate and Oriental commerce.

2. In 1901, they April, nearly, all purchased the Burlington ¡Sharesat a cost of over $200,000,000, paying with them their joint bonds, and the bonds of the Burlington stated the decision of the lower court. They made the purchase with any view of placing companies, .not two. their or their commerce, shares under a single control. Immediately

3. after purchase, persons interested Pacific to obtain the attempted control Union Northern Pacific, their object being prevent carrying out of the enterprise the defendant railway companies, especially to prevent carry- the use of the Burlington road ing out that enterprise. (as This “raid”- called) it is on the Northern Pacific stock

failed, the failure due to an érror of being largely the raiders in buying common stock. But instead there was preferred imminent like danger attempt might that another be made and' be successful.

5. Such raid, would successful, destroy, in aid which railway were companies building up, they had bought Burlington shares.

vot. cxcm —17 TERM, 1903. 258 Argument Young Appellants. of Mr. for Hill years For some to Mr. prior 6. ten other Co., in the Great Northern holding less' than shareholders 30 cent of its stock had per contemplated formation of a they to should make absolute company which transfers their consideration the shares of such new shares company. was that' the Their shares should- be voted alike purpose had they the future as been past, they should any fare alike sale them that be might made. In June, 1901, raid,

7. after the defeat it was first suggested proposed should be so company enlarged - (about as to include the Northern Pacific common stock $21,000,000) by held the same persons, and later -the plan was include, further widened still so as the Northern Pacific to (about common $20,000,000) by stock held J. P. & Morgan they Co. should desire to make such disposition the- stock held them.

8. It had all Hill along'been of Mr. and his purpose ten associates that every shareholder in the Great Northern Co. ¡jhould be an given opportunity to join, company as orig- inally planned, not because needed or they desired the —this accession of such other shareholders, but to avoid ai com- y of unfair plaint treatment on their part.

9. This purpose carried into the enlarged project, and was at the instance of Mr. Morgan, same opportunity was to given holders Northern (cid:127).be Pacific stock. And like the company originally projected, the enlarged company was authorized and expected was acquire shares coal mines industrial enterprises utility "to the railways, but whose stock the railway could companies, not -hold, and also bé a financial as well as an investment company, in that' capacity to aid railway of -the operations or of other companies, companies or securi- whose shares > it hold. might ties . amount Great Northern Mr. Hill 10. held' . and his ten from millions out associates ' of; In 1896,"they total capital $125,000,000. had severally NORTHERN SECURITIES CO. UNITED STATES. 259 u. Argument Young Appellants. of Mr. of Northern- Pacific $29,000,000 stock, common acquired on been had, May 1, 1901, amount reduced sales to $20,000,000. In Co. it forming Securities was the inten- that it a ma- promoters could,

tion should acquire, of Northern Pacific jority stock, thereby such stock protecting raids, from future the commerce of the rail- -protecting would, from the ruin that result from a successful ways raid. did not-desire that the Co. They expect Securities should a of Great Northern shares. majority Such acquire acquisi- not deemed for necessary tion was of the stock protection of that or of the commerce of the company roads.

12. While the the Securities Co. is .capitalization nearly, (as exact opinion) it is' not stated amount required all railway tó for the shares the two at the pay companies $115 ($180 for Great for Pa- Northern prices cific) fixed for such exchanges. Mr. Hill and ten his promoted

13. associates Securi- who did not or bind agree ties Co. even to themselves transfer own shares to Securities Co. Each of their them was the. for himself. Mr! Hill left to decide retained between two and three millions his shares. nor they, any

And neither one concerned in promoting nor P. Co., J. & Co. ever Morgan agreed any Securities organization manner the Securities Co. they other would “use stockholders in induce their'influence to do companies likewise,” their respective erroneously the decision lower court. stated Co. is not a railway 14. The Securities company has no or railways. to build Its are operate powers limited to and other buying, selling- holding stocks, securities, bonds with power any in any company aid manner whose stock or bonds hold, all acts designed to do to aid any company whose may hold, shares securities it and protect investment; enhance the value of its also to hold real for the personal property required transaction of its business. OCTOBER-TERM, 1903.

n Argument Young Mr. for U. Appellants. n at once an investment and financial com- it is short, In (cid:127) pany. and on November 18, Soon after its organization, Co. the Northern Pacific purchased' shares

the Securities those concerned in the by been acquired raid, had known as had Harriman shares. Those been from purchaséd them P. Morgan purchase J. & Co. comprised $37,023,000 $41,085,000 stock, of common stock and at a preferred lump (and $91,407,500, paid) $8,915,629 cash, price payable $82,491,871 shares the Securities Co. at About- par. the same time it received from its and J. P. promoters Morgan (about Co., $42,000,000) & the Northern Pacific common stock (cid:127) held them. It availed itself of its a common right as stock- holder of the Northern Pacific to at purchase cash, par (issued common stock replace $75,000,000 pre- new. retired) ferred stock to the amount of 75-80 amount of . common held it. As result these purchases, the Co., year 1902, Securities at the beginning before (in 1902) begun March, this suit was held $152,000,000 about $155,000,000 of the.total stock of the Northern Pacific. after Hill 16. Soon Mr. and the organization, other pro- moters the Securities Co. transferred to it aboút 30 millions $180 Northern Great shares at exchange Securities .of at shares within par, three from organization, months its (and before the commencement' of suit,) this the Securities had on the. acquired, Co. same from other holders, terms and about 65 millions of Great shares, Northern its-total making - of 95 millions the total holdings of capital 125 millions. It the fact, 17. is not in the decision that stated Co. was enabled to Securities make the of purchase 65 millions from of bought non-promoters, any it, by or of or advice, the Great procurement persuasion n had been shareholders who instrumental organizing the any Co. There is not evidence in Securities support/ eyidence conclusive it. finding, is against beyond The facts are that each proveti question pürchase' NORTHERN CO. SECURITIES UNITED STATES. 261 Argument Young for Appellants. of Mr. 193'U. an transaction independent

was between seller of stock, and the Co.,'without Securities or solicitation, persuasion other by Co., any influence the Securities one else.. At the time of the formation

18. the Securities the' Co., Great Northern shareholders were 1,800 number. Of them 1,200 their about transferred shares to the Co. Securities n When this suit begun, April, 1902, the shareholders of the Securities Co. were more than 1,300; October, Í902, were they 1,800. about n 19. Securities Co. is the absolute owner shares by it and of the acquired thereon. The shares dividends are pooled consolidated, nor are the earnings two roads It in no pooled. is sense a “trust.” The promoters

20. of the Securities Hill Co.—Mr. and his ten all of not, associates —do them together hold, nor have they held more than ever one-third of the $360,000,000 stock of the Securities Co. that has been issued outstanding, these and J. P. gentlemen Morgan & Co. have never more held than $140,000,000.

21. By the of each railway charter company, its commerce is controlled by and directed wholly board of directors, the members which are chosen for prescribed terms and cannot (cid:127) terms; be removed their And during laws Minne- sota Wisconsin no who person is a director in' one com- can be director the other. pany ' 22. The Securities Co. has not attempted control meddle commerce or. the with the management either railway, nor is there evidence it purposes doing either. Ever since formation such commerce been has conducted the two boards directors complete, independence each other. There has been no agreement and no suppress suppres- sion of railway between the two competition companies, which is as active as was before Securities Co. was formed.

(cid:127)24. The entire two railways, rates on'which can controlled those companies with- out other competition connecting lines, falls consent short TERM, 2G2 OCTOBER. Young Appellants. for 193 U.

Argument of Mr. commerce; and any interstate of their total cent per three by event Securities any imposed could restraint that could only commerce affect this three Co. on their cent. per of each railroad (including

All the interstate cent) largely has been since per three increased competitive Co., to the ad- owing great of the Securities organization connection, the protection and to vantages of the Burlington by major- commerce of the roads placing afforded all the beyond raids, Pacific the reach shares ity Northern Co. And during period of the Securities the ownership an! extent as to reduce net reduced to such rates have been $1,000,000. by earnings upwards increase of either capitalization been no 25. There has of that of the watering railway com- nor railway company, Co. The capital each or of the Northern Securities' panies ' If the Co. had Securities issued unchanged. remains railway shares, money buy the rail- cash, for used its at par at their market value,-its in the market for cash way shares than at It present. would be more would outstanding shares of its shares, at least 190 able and sell have had to issue be. of Great Northern each 100 shares for cash buy of its own only 180 shares. by exchange obtained And has $115 for more than pay have had to Pacific. it would of watering any way instead The Se- pursued, course stock, has furnished company prop- curities Co.'s value considerably market and excess of a erties intrinsic it in issued for payment value shares them. of the par Anti-Trust Act and as to the contend meaning: Appellants law, criminal directed to wholly a the punish- act is 1. The remedy of crime. injunction, ment and prevention is not to protect fourth section in- property etc., given “violations of (i. this Act” solely to e. prevent but terests, act is a crime, every and, violation without crime's, competence not be within would court section, by injunction). to restrain equity STATES. CO. SECURITIES UNITED NORTHERN Young Appellants. for Argument of Mr. statute, a criminal the act is not to be enlarged by 2. Being The be construction. first section cannot stretched so as (and make criminal whatever the section unlawful, declares it criminal, and makes criminal nothing makes it has not declared unlawful) every agreement, or conspiracy combination merely tends to restrain commerce States, or that among on confers to it or one re- parties else the strain trade. The contract,

3. act makes unlawful criminal every combination or' restraint interstate conspiracy direct trade or commerce. gist contract, crime is the combination or con- on the offense is such con-

.spiraey, complete making or tract, the formation such combination or conspiracy, be though carry out, done nothing though trade fact restrained. to constitute a or But combination restraint of conspiracy commerce, interstate trade or or con- parties must combine if acts, which, to do spire performed, will of restrain themselves or such trade will "commerce,,and directly is,, restrain it—that' such, acts directly which on commerce. operate If the acts which the combine' or to do parties conspire fall this, they short of are not such on directly operate commerce, by such operation directly it, restrain' then the , or combination is not within the act. conspiracy

4. The act criminal those contracts, makes combinations and only directly and conspiracies immediately restrain in- or terstate trade commerce —that acting directly and immediately or trade 171 U. commerce. (cid:127). S.

592; 175 U. S. 234, 245.

5. As crime consists contracting, or con- combining to do spiring acts which their own will operation directly and immediately commerce; restrain interstate it necessarily follows that if acts Whichthe parties combine to contract do are of they law, violate the description, they had though no conscious to restrain purpose “specific interstate intent” TERM, 1903. OCTOBER-

'264 Argument Young Appellants. of Mr. U. all. means acts or at by the of'such commerce hand, if the to be done are not such as On the other acts directly it, on their restrain operation own combination to do those is not contract, -conspiracy acts Act. 175 under the Anti-Trust U. S. 234. crime every contract, etc., criminal in direct 6. The act makes without commerce, respect persons. restraint crim- conspiracy A or oí that would be contract combination inal commerce or made be- in restraint of interstate trade is a if made railway tween or more crime companies, equally two or by stage- two more or wagon between interstate Garners or ferry, coach or or interstate traders between two more . or U. wholesale retail. 166 S. 312. or commerce, of interstate to restrain power

7. restraint Any in- it, directly acquisition property the consequent is nor is the ownership, not, agreement such cident to for. act. U. by, made criminal this 156 S. 16. acquisition or where interstate trade commerce Hence, competitors or a do a or partnership corporation, form where agree to the or a third buys other, one of them out association person buys both, out whatever persons suppression competition suppress competition may not, follow is nor is the power such agreement partnership form associa- corporation, such, by purchase, tion for made-criminal the act. U. 171 S. . 505,567. a combination formed to

8. where is and which acquire, So all of an article common use nearly through- does acquire, country' shipped large out quantities among ownership, though gives the to control power such States, it. ' and commerce such article, trade sup- interstate (cid:127) not, commerce altogether, trade and nor is such such press is prohibited by commerce Anti- combination, restraint an incident of Act,, being 156 ownership. Trust U. 16. By Congress this act regulates, punishing STATES. CO. UNITED

NORTHERN.SECURITIES Young Appellants. for Argument of Mr. fine contracts certain making imprisonment. throughout uniform the.United is and must be The regulation when done Minnesota can- act made criminal an States, for done in Massachusetts. The matters be innocent when regulation thus act, requiring in the uniform embraced -ju- matters within exclusive country, are throughout the. are not and no matters that within Congress, risdiction of If it are the act. appears .within jurisdiction exclusive (e. jurisdiction g., ownership have matter States (cid:127) railway companies in or doing the consolidation act, the ex- business) an claimed to within in' conclusive that such istence of .the States is jurisdiction act. matter not within the maintain therefore, following proposi- appellants,

tions :

1. The is not entitled this proceed- Government maintain Act, 1 and of Anti-Trust nor had the under sections ing sections, Circuit it under those jurisdiction Court in the petition or combination found conspiracy charged existed, if it had done all it Court, the Circuit ever an before the do, end, and had come to proceeding formed to was instituted. any only

2. The combination of which there- is evidence is commerce, in aid of to-liberate, protect a combination formed it, liberated; and not to which has restrain enlarge it, aided and has not restrained and enlarged protected, it. does threaten to restrain not or no evidence the combination conspiracy

(cid:127)3.' There is of. or of the combination or in the charged petition, conspiracy' found the Circuit Court. by

4. The or combination whether conspiracy question as alleged by Court, or found the Circuit petition as .was anot combination in restraint of com- conspiracy or interstate merce, which the thereto things parties for the combined only n (T) or done were the organiza- to do or to be conspired procure Co., (2) acquisition tion of the Securities Se- TERM, 1903. 2GG Argument Young Appellants. for 193 U. of Mr. S. of a majority their of Co., large curities the shares help, -in railway of each of companies exchange the defendant own its shares.

The to be or to procured (whether so done be done things are such do taken as not and cannot separately together) commerce, wise any restrain interstate hence a combina- tion or to do them procure them to be done conspiracy is of restraint interstate commerce.' (1)

The in holding Circuit Court erred that the Securities majority shares, such of Co., having has to acquired power railway between In suppress competition companies. fact, Co. is without to power com suppress Securities - It a mere and .not a petition. is shareholder director. The office director is created State and not by the share to being holder. As directors distinct from power those of Hoyt Thompson, v. N. Y. Bur shareholders, 216; see 19 207, Bank, rill Nahant Pullman Car v. 163; Metc. Co. Mis v. 2. souri Co., Pac. Ry. 115 U. S. 587. The charter of each rail way the board directors all company gives the powers in the attributed decisions. Rev. foregoing Stat. Wiscon 1878, §1804; c. Stat. sin, 87, Minnesota, 1894, Gen. §2717; such -(2) it obtained and holds power means and the combination or arid party conspiracy not as an incident shares; (3) ownership its possession such of itself,, suppress competition irrespective exercise, a restrairit commerce; and there (4) combination fore conspiracy question commerce. restraint allege does not nor do- petition the proofs disclose or a

any showing monopoly conspiracy facts or attempt foreign interstate or commerce. For monopolize definition Texas Interstate v. Com. Com., 162 see monopoly, Pacific United States Freight Association, 197, 210; U. S. Northern, Pearsall v. Great S. United 290; 676; U. 646, Co., In Knight States v. E. C. re Corning, 10; 156 U. 211. 205, Fed. Rep.

' CO. UNITED SECURITIES r. NORTHERN Young Argument Appellants. of Mr. for U. S. 193 for in Act, any Anti-Trust view not within'the 6. case is their effect commerce— of, matters complained of the for for or ill—is indirect and little, good much or whether of Con- Apt regulative power remote. The Anti-Trust are alike Constitution, clause of the under the commerce gress immediately directly limited to matters strictly commerce. or foreign affect interstate In a combination in direct restraint what is determining between direct'and indirect regula commerce the distinction v. Fargo Michigan, becomes see important, tions v. 122 U. 230; 326, 121 U. Phila. S. Co. S. Pennsylvania, S. S. Erie U. 328; Y., Pennsylvania, ; N. L. &c. R. Co. v. 158 S. 431 217; Trunk 142 Pickard Railway Co., Maine v. Grand U. S. 34; Pullman Co., Pennsylvania, v. Pullman 117 U. S. Co. v. ,In 141 of the 18, U. S. 25. the declarations limitations the act and of thé the court has power Congress, merely v. its settled doctrine. 155 U. S. repeated Hooper California, . 655; Williams v. 179 U. 648, Fears, 270, S. 278 Where for commercial are of a nature subjects regulation or admit of one uniform or system plan regula- to require exclusively them is tion, power regulate Congress,. enlarge State whether attempted regulation ultra of a restrain, vires, it is simply usurpation vested Wabash Co. v. Illi- exclusively Congress. Railway 574; Robbins v. nois, 557, Shelby Taxing District, 489, 492; U. S. S. Co. v. Philadelphia Pennsylvania, S. 336; Chicago, etc., Co., 122 U. Bowman R. R. 326, S. therefore, not within 465, Anything, "exclusively 480. is not within the act. jurisdiction Congress very language 7. The Anti-Trust Act general include combinations to purchase railways not intended to nor railway shares, non-competing, consolida-' competing railways actual or or railway tions “virtual” companies. did Congress, when the act so with full passing knowledge of the situation. Ches. & O. Tel. Co. v. U. Manning, railway It knew that systems country TERM, 1903.

268 Argument Johnson for of Mr. Northern Securities 193 Co. U. S. combinations by rested on'such authorized state laws, some of them? having many years. existed are history

These matters and within public the knowl Ohio L. T. the court. & Co. v. edge Debold, 16 416, How. 435; R. 21 Maryland, 456, 469; R. Co. v. Wall. Brown v. Piper, 37, 42; 91 U. v. 1-11 Phillips Detroit, S. U. 604, 606; Lehigh Valley Pennsylvania, 192, 201; v. 145 U. S. Louisville & Nashville v 677, 699; . 161 U. S. Preston Kentucky, v. Browder, 115, 121; Wheat. United States v. Union Pacific, 72, 91 U. S. 79; Platt v. Union Pacific, 55.

(cid:127) If had meant to declare Congress such consolidations and stock competing companies to be illegal, the se- purchases by curities issued them void and legislation- unconstitu- §tate tional, it said so plain, specific would.have and apt language. The construction on the act all put branches of the gov- ernment and to the everybody commencement of dpwn has been full proceeding, accord pur position act has to do nothing that the with combinations to rail- own railway shares. The ways following consolidations of com- railroad lines existed at the time of the passage peting or have been effected since act time: Boston & Maine Company competing lines; Railroad York, New New Railroad Co., Haven & and New England ..Hartford Railroad - roads; Co. and other New York Central Railroad and the' and Rome, West Shore Watertown other Ogdénsburg railroad companies; Pennsylvania Railroad and Bal- Company timore and Ohio other companies; Reading Company. n in- any Even the Government were entitled to though Government, far beyond what junction, goes the decree receive, the Circuit Court authorized to was entitled grant. - Q. Johnson, John appellant,

Mr. Securities Company, argued:'

The facts found the court below cannot be deduced from testimony of the'bill filed,, the substratum ar-> STATES. CO. SECURITIES. UNTIED NORTHERN Co. Argument of Mr. Johnson-for Northern Securities of the lower and of the decision its support, below gnmerits which never existed. of a conspiracy was the assertion court ma- did Company acquire Securities that the is conceded It and such acquisition railroad companies of both jority charge- company to acquire. of its intent was because an intentional' acquisi- all legal consequences able with indi- however, denied, It is tion of such shares. . do anything except conspired or corporations viduals Northern Pacific shares acquire form a corporation twenty-seven and about them, to belonging Railway Company Railway Company. of of the Great Northern cent the stock per cent of fifty of an additional per The subsequent acquisition for over whom the was third persons Northern stock the Great n an invita- no control but who simply accepted had defendants after Company issued the Securities sell their stock tion to of that was company capital formation-. authorized all enable it to the stock acquire' to sufficiently large made both, of any combination, pursuance roads but this was but of the to let policy appellants or contract conspiracy have the bene- of the railroad companies co-shareholder every for themselves. obtained every advantage fit of Vas done complains of which the Government- Everything out.-with results the working permanent intention with the In order and international commerce. problem a and to arrangements promote great pub- to effect permanent commerce, low rates, a increased at greatly end through lic Burling- the -shares railway purchased companies t]ie two their and sev- $200,000,000, joint for over paid road ton able bonds, being give permanency thus assurances eral necessary-in were do such other things of low rates and resulted commerce. This great building up enlarging Pacific, for a the traffic part the Union demands Line acting on their refused the Short being Oregon amount, a control- Pacific almost acquired the Union large interest, in the Northern The situa- ling Pacific. and the tion was critical organization Com- Securities TERM, Argument of Mr. Johnson for Northern Securities Co. 193'U. S. and all that pany followed was for the purpose of preventing a-raid on the stock similar to that which had so nearly suc- ceeded and done solely with .the attempt secure the maintenance of the benefit commerce, which resulted, had. which, still more the future, would result from the ac- quisition Burlington shares.

Such alliances as that with the Burlington Pacific and Great Northern are valuable because they an give opportunity number of securing large markets a great territory and rich under a fairly permanent transportation policy. They are enormous value to the people along railroads, lines of the the country generally to the world. To business, large transact investments must be made and the condition prerequisite thereto is reasonable assurance of con- tinuance. When the Government seeks condemn an ar- rangement promotes- interest of the whole nation by that it was intended to pretending, restrain trade, it must es- tablish the existence of convincingly the illegal intent alleged.

The sole of law question to be determined is whether or not aby of a acquisition corporation- controlling interest The (cid:127) of two competitive railway shares companies, violates the Act. It is not for an illegal Sherman existing corporation interest; acquire controlling it is not for illegal persons a sufficient number of holding shares to enter into an agree- that will form a ment company acquire such control. An to do what agreement is cannot an legal illegal conspiracy, combination or contract. a one,

The Sherman Act is penal a defining criminal offense, for which it a provides It an punishment. is indispensable, ato conviction for a criminal prerequisite misdemeanor, es be no'criminal intent, there peciálly.if and such does not exist case, that the offense present condemned shall be clearly de and it well fined, is settled that penal laws to be strictly ar.e v. construed. United States Willberger, 76; 5 Wheat. United Whittier, Dillon, v. 5 35, States United States citing v. Morris, 464; United v. 2 Sheldon, States Wheat. 119; 14 Pet. United CO. UNITED STATES. v. NORTHERN SECURITIES 271 Argument of Mr. S. Johnson Co. U. Securities 193 2 Dillon, 219; Statutory Crimes, v. on Clayton, Bishop States 2 41; States, 213; Andrews v. United United States Story, sec. 385, 396; Swearingen States, 6 Wall. v. United Hartwell, v. 451; States, France v. 446, 676, 161 U. S. United 164 U. S. 61; 682; Paulina’s v. Cargo States, 52, Schooner United 7 Cr. v. Reese, 214, 219; United States 92 U. United v. S. States 902; Chase, 25 Fed. United Comerford, Rep. States 255, 261; 102; v. Goldehberg, 95, United States Sarlls States, v. United U. 570, S. 575.

This court will not but will legislate merely duty discharge If a can- legislation incomplete construction. is crime not be fastened one who has done innocently something as criminal. An defined act not made criminal cannot be not even, more, condemned because it seem or evil equally, than- one criminal. made That had no Congress clearly defined understanding nature the misdemeanor at struck, is evidenced the final debates the House of Representatives.

The a or purchase person of a corporation, majority of two the shares not “a con competing railway companies, is tract, combination in the form of a trust or con otherwise, restraint spiracy, among several trade The a States.” Sherman Act not contract prohibits, tending trade, actually restrain one restraint thereof. The .but meaning “restraint was well trade” understood when the Association, Sherman' Act was United States v. passed. Freight 290, U. In the' Addyston Case, 175 U. S. 1 the contract was actually restraint trade. a holding person corporation as owner of a ma- jority of two' railway shares competing companies, “a contract or combination dr conspiracy restraint of trade” within the of the act. meaning

A corporation, for the though purpose hold- incorporated .ing, actually shares of two holding, majority n competing railway is not such combination or' companies 646; conspiracy. United States Case, See Pearsall 161 OCTOBER-TERM, 1903: Argument of Johnson for Mr. Northern Securities Co. 1-93U. S. v. Association, Joint 171 U. 505, 567. A person S. or Traffic by a of corporation; purchasing majority shares two competing railway companies does or monopolize, attempt “any to of the trade or monopolize, part commerce among the several States.” As' to what a is, In re monopoly see Green, 104; 52 Fed. Rep. opinion Story, J., dissenting, v. Warren Bridge Charles River Bridge, 420, 606; Pet. 11. 846; Ency. Law,. Am. & Eng. Rawle’s Bouvier’s Diction cited; ary, 435, 159; Blackstone,. IV, cases Bk. Century Dictionary.

n The by one purchase person, property rival-, his thereby destroy with the intention to his competition, is not he will illegal, although-by purchase acquire power to' v. Oregon Winsor, the same. Coal Co. prevent 20 Wall. 64. or owner, as A-person corporation, holding, majority railway of the shares of two companies, does not competing or to monopolize, attempt monopolize the trade “any'part or commerce among several States.” does,

The power Congress regulate commerce not corn upon it who right prescribe persons may engage fer. therein, control, regulate, ownership shares of stock of therein. corporations engaging States United 1; U. Louisville Knight, 156 S. & Nashville v. Kentucky, 161 U. create railroad States corporations may prescribe .and shares,

the manner issuance and the their method of In of title thereto. the use transfer operation railroads commerce, engaged corporations owning must submit to Federal jurisdiction same but -this does not in- on the part volve the United to control right States of shares shareholders, though transfer even transfers the b^ of said interest trans- controlling result not within the power It is- of the Federal government ferred. déstroy the title to property to' created the State. has unrestricted

Congress' prevent restraint of interstate as the commerce, authorities de-- monopolization v. NORTHERN CO. SECURITIES UNITED STATES. 273 Bunn, Argument Railway. U. S. of Mr. 193 .for Pacific words, but not as the now fine those United States claims.' Sherman Act is Prope^y interpreted, constitutional but .the the United States is now to have its endeavoring provisions, as to be so violative of interpreted States’ rights. Such construction should not be if there one which har- adopted, is with the monizes Constitution. Grenada v. County Brogden, 412 261; U. Hawaii S. v. Mankichi, U. 190 S. 197.

The mere of ownership an property cannot be re illegal straint of trade. As to the power the State over railroad Railroad corporations, see Co. v. 21 Maryland, 456; Wall. v. 153 U. Ashley Ryan, S. 436. relief decreed the lower was improper court under

. United aspect case. States v. Knight, 156U. S. 1, 17. Bunn

Mr. W. Charles .appellant, Northern Pacific Rail- way Company, argued:

The Sherman Act only declares those contracts illegal which are in restraint trade. The government cannot rest on of combination proof but conspiracy must establish restraint of commerce and to do this must prove pwnership by one person stocks two roads competing se per such restraint. The statute must be to fall interpreted so as within the con- stitutional powers Congress which do not extend to de- termine the ownership stock in corporations to the . regulation consolidations railroad companies chartered by the States. States;

This power belongs Congress only has the power regulate use of such in commerce property be- tween the States. See definition of commerce Gibbons v. Passenger Ogden, 1, 9 Wheat. 189, 196, as this Court repeated ses, 7 How. Henderson v. 283, 394, 462; Mayor, 92 Ca U. S. 259, 270; 321, Case, has Lottery Congress 188 power only Constitution, 8, I, under Art. § X Amendment all not thus is reserved granted power regulating Congress States. Under the guise cxciii —18 vol: TERM, 1903.

274 Argument Railway. of Mr. Bunn for Northern U. Pacific S. rules to transfer of real prescribe general personal cannot of stock and bonds purchase because property prohibit be used in a they may when business carried on with bought re or restrict interstate commerce. In intent to monopolize 113, Mobile Kim Greene, 104, citing County 52 Fed. Rep. 702; Gloucester Co. v. ball, 691, Ferry U. Pennsylvania, S. 203; Co., United v. E. C. U. Knight 114 U. States S. only to 1. The extends those Congress things commerce; immediately pertain directly powers many indirectly include things operate the States Gibbons v. 9 Ogden, on commerce. though importantly For this demarkation 1, cases between involving 203. Wheat. national and States v. Joint powers, see United state Traffic Association, 505; States, Co. v. United Addyston Pipe 171 U. S. 228; v. 171 U. States, 578, United S. 211, U. S. Hopkins 175 615; States, 604, Anderson v. 171 U. S. Sherlock 592; United v. 99; Louisville & Nashville Alling, Kentucky, v. 93 U. S. In last this court cites 677, U. S. 701. case -decisions 161 or permitting in which state statutes consolida prohibiting would have been if the tion were enforced. This erroneous of Congress, within the for power fell complained things of all action, is exclusive state it exists that it be uniform. in re so in order As must be matters may acts, States act until Congress which the see gard 299; Port 12 Wardens, v. Board How. The James Cooley 184; 21 v. Fraser, Turck, The How. Pound 95 v. John Gray 489, 459; Shelby v. U. Taxing District, Robbins 120 S. No rule of law cited is introduced 492; supra. and cases Act; what was restraint commerce -is the same Sherman of the act is the preliminary feature only making now; the- forbade The itself restraint crime. a Constitution conspiracy In re 564. A com Debs, 158 S. commerce. U. of trade of trade now was restraint restraint that is bination and consolidation of com leasing, buying the act of before both before fifty years on gone has railroads peting the act since 275' v. STATES. SECURITIES CO. UNITED

NORTHERN Railway. Bunn for Northern Pacific Argument 193 U.' S’. of Mr. If a thing restrains interstate commerce it is immaterial how

. may be, innocent intent and if it restrain it, does not it is immaterial how evil be. the intent is does question restrain trade or commerce. agreement United States v. 341; U. Freight Association, 290, Case, 166 Addyston supra. If an action be lawful its is immaterial. purpose This is ele mentary. Nowlen, v. 72 N. Y. Phelps 39, 45; v. You Kiff 329; N. mans, 324, 281; Y. Wood v. Y. Amory, 278, 86 105 N. Lough 271, 282; v. N. Y. Adler v. Outerbridge, 143 24 Fenton, 410; How. 407, United States v. Fed. Greenhut, 205, 51 Rep. In 211; 104, 111; re Fed. Greene, 52 Randall v. Rep. Hazle 418; ton, Allen, 12 Brackett 412, 454; v. 112 Griswold, N. Y. Isham, 496; United v. States Wall. Dickerman v. Northern 181; Trust v. Co., Fahrney Kelly, Fed. Rep. 403; v. S. S. Mogul McGregor, (1892) 41; Co. App. Cas. Allen Flood, (1898) 1; L. R. App. Cas. Bohn Mfg. v.Co. Hollis, Minnesota, 223, 234. The opinion of the court be low that a proceeds upon proposition combination of two competitors is restraint trade because it lessens competi This is error. The tion. Trans-Missouri, Joint . Traffic Addyston only cases prove contract rival restraining from companies is a competing restraint trade. No such. agreement exists this case. law The does not com require petition. The of a may business rival be for purchased the' rid of purpose being Queens his Gamble v. competition. Co., Water County 123 N. Y. 91, 104; Diamond Match Co. v. Y. Roeber, 473; 106 N. Rafferty City Gas Buffalo N. Y. Co., 621; Div. App. Trenton Potteries Co. v. N. 680; J. Olyphant, Eq. Oakdale Co. v. Garst, 18 R. I. The Securities is neither nor Company alleged to proved have done or omitted which can be anything construed as a viola- tion of the Anti-Trust Act. If has the to it or suppress diminish it not it and if competition has used the act has been all violated at must due to the mere existence the Se- its curities Company, powers applicable railway com- TERM, 1903. Griggs for Northern Securities Co. of Mr. Brief can illegality The illegal origin. something panics court. of this under decisions not be sustained Northern Securities W. Griggs appellant, Mr. John a brief: submitted Company, com- contract, not do constitute

The of the defendants acts trade or com- bination, restraint conspiracy of the Sherman meaning prohibition merce within allegations: two rests its case Act. United States The has been Company the Northern Securities First. That of the shares the two majority over a and has taken formed pleadings manner indicated companies railroad and proofs. necessary of those intended and the effect That the

Second. the two com- destroy between railroad competition acts is panies. is: of the defendants

The answer the formation of the Northern Securities Com- That First. two by it railroad acquirement and the pany transaction, solely by a lawful local governed companies any in contravention of and not laws, provision state or statutes. Federal Constitution all the acts'of defendants were done That Second. . destroy or re- purpose without faith, competition good trade. strain concisely: defendants contend that

To it more put lawful, has no direct done is effect restraint they have what was not intended to restrain competition. competition, railway the form of corporations; their cor The creation character their cor qualities organization; porate take, which their stock; the roads shall whether routes porate with other roads the same running connect may gen they they may or consolidate with direction, wdrether eral lines lines, parallel through operate por different parallel are, been, these matters and always of a State—all have tions Nashville Louisville v. jurisdiction. of state R. Co. subjects r. STATES. CO. UNITED SECURITIES 277 NORTHERN Co. Griggs Northern Securities U. S. Brief of Mr. 193 161 702; Northern, Pearsall v. Great U. 161 S. Kentucky, U. Ohio, v. S. Lake & Mich. Southern 646; Shore 613; Cleveland Haber, Kansas & Texas v. 169 U. S. Missouri, 285; U. 514. Illinois, & v. S. Railway c. the de- of fact that not find as matter

The lower court did or commerce; or trade any way had restrained fendants contracted do; or that had they had so to they attempted court did find and decide do. What or combined so to whereby they had done certain was, things that the defendants between two suppress competition had obtained the power own and operate competing par- carriers who interstate This, idea is repeated again again allel lines of railroad. “ of in- of a direct restraint It throughout opinion. speaks would have the hands placed commerce because terstate the power suppress competition of a coterie of men small carriers.” between two competing, cannot To that one. several say person, persons, acquire of two cor- a of the stock majority competing.railroad own they thereby because are occupying vantage porations an choose, effect they can, they agree- from which ground two companies between the restraint understanding ment or that the commit crime is say is to competition, to its actual commission. equivalent lawful, The acts of the defendants being prima facie they the Government to show that burden' proof bona Attorney General but a were, charges, fide, as the device intended to defeat the provisions' formal mere Trans-Missouri, Act. Joint Traffic, Addyston Sherman Pipe Cases; 578; v. United States Hopkins, United States Fed. Council, 994; v. Workingmen’s Amalgamated Rep. Co., Warehouse 67 S. W. Shippers State & Compress Rep. (Texas) 1049; W. C., affirmed, Rep. 69 S.

Any restraint of result from trade the acts- done indirect and incidental only, the defendants is In every not covered the act. instance where this court has had occasion to act pass upon meaning TERM, 278 1903. Griggs

Brief of Mr. for Northern 193 U. Securities Co. S. carefully between acts which distinguished it has re directly commerce, only indirectly strain acts incidentally that effect. United States v. E. Knight Co., have C. 156 U. 16; 566; Joint 171 U. 1, 12, Case, 505, S. S. United Traffic Co., 93; v. & Ohio Fuel Fed. af C., States Ches. 105 S. Rep. Fed. 115 610. firmed, Rep. can

If the Act be so construed as to forbid the sale Sherman of two .railroad to one competing corporations pur- act is an interference on the chaser, part then that attempted of which are within the wholly transactions Congress Union, control of the that the act respect States is unconstitutional. to the extent state over the instru legislative-power

As Louisville commerce, of interstate see & Nashville mentalities 702; Bridge & C. Co. v. Case, 677, Kentucky, 161 U. S. C. 154 commerce, "of be constitutional, U. S. 204. Regulation itself, be confined to commerce and cannot reach out to must which not as of such things being designed agencies those commerce, actually enjoined therein, may- yet not being have an indirect ultimate relation thereto. would in Con- a' construction the Constitution vest

Such of all from 'the branches business regulation productive gress Wall. Cases, first' License Tax 5 462. beginnings. their an an- The fact that article was manufactured export commerce. other State does not make it an article of interstate 517; 116 U. Kidd U. S. 1. Errol, Pearson, Coe v. S. v. 128 of state tire creation corporations the.regulation af sales shares to the class business corporation belong over which the have United jurisdiction." fairs States exclusive 425; Fed. v. R. R. & v. 82 Clark Central Boyer, Rep. States J., 30, 1893, June U. S. Cir Banking Georgia, Jackson, Co. of 112; Savannah; 104, In re Fed. Court, Greene, Rep. cuit 671; v. Northern, Rogers v. Great Nash Pearsall Fed. Ry. Co., Rep. ville &c. under the commerce clause may,

But assuming Congress restrain commerce, a regulation of the Constitution CO. NORTHERN SECURITIES UNITED STATES. 279 Griggs IT. of Mr. for Northern Brief Securities Co. from prerogatives the exercise their the States permitting to which the States have corporations or more given 'two life on the yet purpose merging, part from Govern- clearly be distinctly ought expressed, not be ment doubtful judicial interpretation found language con- tained in statute. penal that, forbid argued Congress

So the sale of another, railroad to it is enough reply one. that it has never the Sherman Act not so; expressly, done does or by any do so. interpretation, just statute; every Act is a act penal

The Sherman which injunctive would, order committed and prevented to criminal parties prosecution. The rule proven, subject be therefore of strict'construction must United applied. States 35; v. 2 Whittier, Dillon, Sheldon, v. 5 United States Wheat. 119; 385; v. Wall. Hartwell, United States 6 United States v. 445; United States v. 2 Mason, Clayton, 5 Dillon, Shachford, 219; 42 Garretson, 22; united States v. Fed. Rep. Dwarris’ 641; Johnstone, Hubbard v. 3 Taunt. 177. Stat. for by the Government more than eleven

Acquiescence years actual and consolidation of merger many important and lines of railroads and competing en- parallel steamships commerce, in interstate and international has a gaged given 1890, of July 2, construction to the act practical effect forbid, not intended to and does not forbid, it was which are un- brought unification about processes natural lease, consolidation, commu- merger, iqodern der methods As held in interest,'or ownership stock. 1803 nity of Laird, Cranch, 299, where the a right justice Stuart a Court to' sit as Circuit was Supreme Judge challenged, such, not been as and ground that, having appointed upon as the act of distinctly such, been commissioned having Court under which the Circuit was origi- Congress unconstitutional. nally instituted, ¿ for years, and several period “Practice acquiescence system, organization judicial cofnmencing. TERM, 1903. Railway. Brief Mr. Grover Great Northern U. an indeed fixed the con- answer, affords irresistible has interpretation It most contemporary struction. is. is too practical exposition strong nature. This forcible course, question obstinate be shaken controlled. Of not to be disturbed.” rest, ought is at upon founded principle jurisprudence, This is a just of public equity. considerations very highest in order to pre- been invoked enforced It has frequently affairs important unsettlement vent disturbance reliance public general been transacted have did not them its the law include belief that private terms of condemnation. that no case arisen the assertion has ever

But we venture rule of construction salutary of that disregard in which a injury and irremediable in such widespread would result Not that decree-which this court vested interests .this. defendants would particularly make these against could interests, their but because the decision radically affect property such transactions applies made that the Sherman once Act consolidation lines lease, merger parallel purchase, as'the. every such transaction for would render of transportation, unlawful; require Attorney years last thirteen his to duty, of suit for dis- discharge bring in the due General, Unnumbered millions dollars injunction. solution railroad mergers and bonds issued and con- stock .capital or illegality, would be tainted affected solidations property against they withdrawal value in underlying roads long ago Purchases stock were issued. unsettled, for would be financial chaos made and paid would result. for Great Northern appellant, Railway

Mr. D. Grover M. brief: á submitted Company, decree which the rests .upon fact are con findings clear by is made "to evidence. This separating the"

trary on the evidence each bearing and considering findings NORTHERN CO. v. STATES. SECURITIES 28Í UNITED. . Railway. Brief of-Mr. Great Northern Grover There no or separately. was desire vintent to evade the Act, Anti-Trust to competition, restrain to monopolize trade, securities, inflate water or- create stock, .fictitious , capital. . ’ I. It is not denied that the Northern Securities Company corporation lawfully- under of the organized laws is\a State of New with charter Jersey, purchase sell of all and-to kinds, hold, vote-and purchase, securities all sell of any the shares or of single corporation Its non-competing corporations. right 'hold, purchase, vote and sell all the stock of the Great Northern- Com- Railway pany alone, the Northern Pacific Railway alone, Company -- . is not denied. II: The organization of a company was result to form plan which-had holding company, an'.investment its inception years before its articles were not ex- filed, among ten ceeding of Great large holders who had stock, taken an active in the of the and its policy company interest administration, but who never held in had the aggregate exceed one-fourth of its stock.' It was outstanding thought formed were to which their company they might sell individual their shares would be be held to- holdings, likely'To gether, so long as a majority should holding company n wish,and that this would tend to to the give stability policy be of aid company, to it its financial operations, maintain the -value its investments.

III. The Burlington was "made purchase enlarge trade, not to it; restrain to increase not to competition, suppress it. At the time purchase contemplated was not either purchasing company its shareholders alliance between the or its shareholders purchasing company needed to fair to each share the ad- preserve company secured vantages by the purchase.

IY. At the time of the Com- organization Securities the Great Northern shareholders referred to pany owned about stock, $35,000,000 of Great Northern 130,000,000 ' TERM, 190á. '.

Brief Mr. Grover for Railway. Great Northern 193 U. 8. of Northern Pacific common stock, increased their having holdings the latter from J. P.- purchases & Co. Morgan did They not control a majority the shares of either of the In railway companies. view of the injury defendant appre- hended both and their companies, and the shareholders, better, to their in the protect’ future, interests against raids interests, adverse the Great Northern referred shareholders deemed it advisable the holding had company they that considered-should be organized, ’should have pur- chase, only their own’Great Northern and Pa- Northern cific shares, but also shares of such other Great Northern . and Northern Pacific shareholders as might wish to their sell it, also of companies shares already formed, and others that be might formed, purpose aiding the traffic of the Great operations Northern and Northern companies. Pacific

V. At this time it was not expected by the persons concerned, any Northern Pacific shares, except $42,Q00,000owned them J. P. & Morgan Co. would by the acquired proposéd holding The or- company. was not company dependent on any ganization agree- (cid:127) , ment that it should acquire, upon the' of, nor- question of the shares of either of majority the defendant railway com- There was no panies. agreement understanding' between .to, the Great Northern shareholders referred they either them would undertake to influence'any one of the other Great Northern 1,800 shareholders, 3,600 other Pacific shareholders, to Northern sell their com- shares to the pany.

VI. The Great Northern shareholders referred to, organization Securities Company and the sale of their to it, shares parted such stock control as they had the.Great Northern and Northern Pacific companies. They do not own to exceed one-third of the outstanding capi- tal stock of the Securities Company. At the time of the trial the stock Securities wás Company .the held by 1,800 r. CO. UNITED NORTHERN SECURITIES 2S3 STATES. Railway. of Mr. for S: Brief Great Nbrtbenl U Grover The control of the Securities Com- owners: separate or therefore, eight ten Great Northern is, pany to; 1,790 but other referred shareholders shareholders at owning least Company, of the- Securities two-thirds its shares. outstanding been done has Nothing except purchase by

VII. óf a majority the stock of the Company Great Securities Pacific Northern companies. Northern The Securities owner of the stock VIII. so Company it or it. It has made no pledge sell agreement purchased do with or how it will it, it, what it will vote or it as to how received of the dividends it. It is not a upon will dispose thpse pf shares, from whom it received such and owes trustee duty respecting shares, no or since obligation they them further interest them. have no or not claimed that the pretended

IX. It is defendant rail- into any have entered contract or combination way companies or either of them trade, has done in restraint anything law. It is not claimed that trade in violation to restrain restrain trade, can Company except through the Securities of the as owner shares it purchased, of its right, exercise in the election of a meetings, at stockholders’’ sepa- vote them for each of the defendant com- railway of directors rate board separate the boards must be under the laws of the for panies; Minnesota and States Wisconsin. suit, brought prevent was not restrain the ex-

X. This combination,-in or the of a contract, forming of a re- ecution trade, but to restrain the Securities from Company straint meetings, owns at stockholders’ from stock it voting the thereby thereon, preventing payment dividends- receiving for the payment its own shares issued shares dividends that mere vot- possession it purchased, upon ground an unlawful restraint ing power shares, regula- is of the defendant com- railway tion of the panies. The has no financial interest

XI. Government this suit. TERM, 1903. Railway. Brief of Mr. 193 U. Grover’ Great which the Securities only way Company could restrain railway the commerce of the two companies, through If of the shares it' voting owns. purchased .had only one companies, right shares to vote such be Trade could would not' questione4 not, shares within the Government,'* contention of the ruling court, restrained the Securities should its Company, voting powers to the shares of one of the companies. be limited The decree of it from the shares either enjoins voting company and from from The either. effect receiving decree is dividends it of-the means to deprive pay upon to dividends its own stock in for whether issued the stock it or payment purchased, issued destroys for Thus the decree the earning power cash. of the a large majority the Securities of which Company, stock is bona by held over hundred in eighteen now holders fide course of business not to the parties usual suit.

The are: 1. Does the important questions commerce clause of the Constitution of the United States confer upon Congress regulate issue, to sale and jurisdiction of the ownership under the capital corporations organized laws of any States, or one the several to into the inquire motives of in- buyers or of the or of their sellers corporators, shares? under 21 Has the commerce Congress, clause of the Con- of the United to States, power stitution forbid or regulate the by or one lease, railway purchase company engaged in inter- commerce, railway its competitor, state or the pur- or the owner of chase lease one ferryboat, or stage coach in steamboat, engaged trade, river interstate of the ferryboat, river of a steamboat, coach'or on stage competitor, ground or lease through purchase competition re- strained, regulated? and commerce unity ownership

3. Is the through purchase, partnership, lease, or of a majority consolidation shares compet- in corporation's, engaged trade, interstate ing contract or in the form of trust or otherwise, combination forbidden Act, restraint of the Anti-Trust trade? SECURITIES CO: UNITED STATES. o.

NORTHERN 2-S5 Northern'Railway. Brief of Mr. Great Grover 193 U. in connection with the there anything organization

4. Is or its Company, purchasers stock, Northern Securities to vote and divi- any way distinguishes right receive from of any interest, the right single dends such stock vote and receive dividends Upon individual corporate, trade, corporations engaged shares competing business, course of ordinary acquired purchased gift inheritance? 4 of under section the Anti-Trust brought This suit was court and restrain

Act, jurisdiction prevent which gives .the violation of the act criminal. Every violations of the act. is, therefore, jurisdiction prevent court and re- given of a crime. Months the commission the suit strain before had Company acquired majority the Securities large begun, time railway companies, of the shares the defendant from time, shareholders, from hundreds of individual who sold much of faith, and the stock taken holdings good their so has since been sold and therefor payment exchanged, n many hands, usual through course of business. passed Act the court annul give jurisdiction Does the Anti-Trust the Northern by the made Securities purchases Company, Payment' the shares it for the return of compel purchased? in in It only. it was made own stock bought part shares $40,000,000. of over The of cash to the amount owners paid from day; they are to are not be- changing day shares such The decree not restrain a contract or fore the does court.. in of the destroys trade. It impairs combination restraint worth owned by many of of dollars of property, value millions good of who their title faith acquired people hundreds First. The commerce clause to this suit. are parties who away does not take Constitution United States the of authorize formation to the several States right from the fix the of their business, their amount define corporations, sale regulate issue, or purchasing power, capital stock. ownership capital their one by corporation of the shares respects purchase

As TERM, 1903. Railway. of Mr. Brief Grover for Great Northern matter rests with the another, 'the States which have created Should unification of ownership property the corporations. to an proceed extent to be corporations thought policy, may prevented States, against public by the several limiting the through corporations, restraining their to business. right engage the practice,

It has been since the infancy of railroads this one railroad to -country, company or lease the purchase railroad of a competing company,"or majority acquire aof company, the shares or of competing two com- companies other, each or to effect peting with the consolidation of com- This been peting companies.. has done objection without from Government, branch Federal and has invariably railway beneficial proven companies concerned, to their which, and to shareholders, public. extent to this has record, been done appears and is shown extracts from Poor’s Manual and from annual reports made the Interstate Commerce Commission to from Congress, And see the of- brief Judge where Young at subject length is discussed proper reference to the record. Unity of

Second. shares of ownership competing corpora- trade, tions, does not engaged restrain such trade, and is not forbidden Anti-Trust Act, nor is such unity" a regulation of interstate ownership commerce, and thus to exclusive Federal subject jurisdiction under the commerce Constitution. Traffic, clause of the Joint Trans-Missouri and Addyston Co. cases. Pipe

There a distinct difference between an agreement between concerns, the owners of competing divide territory, to re- strain to maintain output, prices, unconditional sale of business of one them property to the other, or of property business both another In person. former case, the in terms agreement restrains competition trade between operations, owners separate establishments, instrumentalities such engaged operations. agree- CO. UNITED STATES. SECURITIES v. NORTHERN Railway. of Mr. for U. S. Brief Great Grover shall con- competitors to the manner relates ment buys plant If one concern competing their business. duct di-' thereby of its is not competitor) competition business merely is case, any, The restraint in such rectly restrained. fact of and the that an ownership property, incident of a forbid acquiring there be such restraint does not may By necessarily of not unity output such interest is ownership. contrary, limited, necessarily are not increased. On prices may be be reason may benefited, less public prices and less cost unit per volume business increased greatly of. production. and, is as con- penal

Third. The Anti-Trust Act a statute unity of a below, ownership the court makes strued in' engaged corporations of the shares majority competing how acquired, no such trade, ownership matter crime. criminal, such to commit ownership gives power because far control It is that so as it ownership, conceded such for lawful can exercised corporations, the policy and re- building trade, increasing up competition purpose, prices. ducing in the under review

It is claimed or case pretended unity court held that restrained, yet been below trade has rail- the stock the defendant ownership majority criminal, unlawful, and, therefore, way because companies necessarily something has caused ownership doing such done; trade, has necessarily not been restrained that has has not been restrained. trade though below way, in another the court decided owner- Stated of a of stock the' Company majority the Securities ship the commerce of railway companies regulates defendant in fact been so commerce has reg- companies, though . competition trade, ulated build increase reduce up as to necessarily regulated it has been so restrain prices, law trade, and increase because prices through suppress competition unity destroyed. has been ownership compete motive 246; v. States, United I. C. C. R. R. Co. Rep. Dey, Tozer TERM, 1903. 288 .OCTOBER Railway. of Mr. for Brief Grover Great Northern 325; 2 I. Paulina’s v. United Cargo C. C. Schooner Rep. States, 52, 61; Reese, United 92 Cranch, States S. 214. U. Trade Fourth. has not been restrained through exercise of voting power these stocks. The that trade ruling been restrained, contrary facts, has to the the. charges in engaged individuals this transaction with a crime, that has not been committed nor intended.

When this suit was the shares of the begun, Northern Se- were held over by eighteen curities hundred Company separate in faith, who. had them in purchased good owners the usual of The of course business. shareholders the defendant rail- who in way weré instrumental companies, the Se- organizing have never Company, curities owned to exceed of one-third The control of the far Company, stock. Securities so as stock can control 'it the election of a ownership through board directors, is-not Northern- eight who Great shareholders were concerned organization company, of. but hundred and ninety seventeen shareholders owners more than The two-thirds'of which the combination its.stock. convicted the individual eight defendants, court was not one by they which were control over the two acquire railway themselves, for but one which companies, through such con- necessarily trol would be conferred upon the seventeen hun- other ninety dred and stockholders of the Securities Company. (cid:127)' the court that ruling possession the voting majority, the shares' of power the defendant railwáy' Securities companies Company, necessarily restrains trade, through suppressing no competition, support finds facts. The boards directors of both railway pompanies be elected the Securities The executive Company. of the two will be elected companies officers these boards, ruling courts rests that proposition, officers, will influenced, boards and or coerced persuaded such way, will com- thpy lack their former incentive to underbid, traffic, for to obtain it other, from each pete for the it; each other purpose that they will enter getting CO. v. UNITED STATES. NORTHERN SECURITIES ' “ Railway. Mr: Brief of Great Grover action, concert of way through some main- contracts into rates, maintained; to be than other ought words, higher tain rates, unreasonable will not charge provide will they extend facilities, nor lines. construction adequate no has Company Securities motive The Northern any single owner-of majority restrain trade have, ,shares railway would not companies of defendant have, bylaw- did owners shares mot individual the before action, they’.transferred concert ful conference and to it. their shares were and railway .companies hampered placed

The defendant with as well railways, other transcontinental disadvantage at want compétitors by the sufficient direct with ocean -as the -markets for traffic -centers best offering with' connection ,lines, country places «f the and with along1 the products their from which their traffic and must distribution production they Through Burlington purchase acquired the supplied. to markets and sources instead supply, access permanent one to resting upon joint subject change rates of a temporary . Having to their interest. made regard without any at time resulting' joint several the assumed purchase the highest became a matter of the' importance it. obligations, (cid:127) that- the burdens should .be borne company equally to each advantages the' shared. Through placing equally' majority of a of the shares of both ownership companies single owner, hands benefits of the purchase Burlington would became better assured be the if the were shares than case in many hands, held and liable to an at time to be sold interest adverse to the building of the de up business . fendant railway country which their companies lines traverse.'

It has not been shown that rail- the defendant way can companies competition restrain affect more than three or four cent of their per traffic, or that has lines, can affect construction of their affected extension or the or quality amount their Through of their equipment. CXCIII—19

VOL. ' TERM, 1903. Morgan Brief of Mr. Stetson Mr. for U. Willcox and others. 193 ownership Burlington shares, reason of the obliga- assumed shares, they tion have a' common paying interest the traffic of each with building up connection This connection Company.- necessary became' Burlington of their patrons, welfare and to the to-their prosperity, of ’a successful;meeting competition. world-wide What has done, restrain competition, been done was but to en- .not n if. large of their shares has ownership not restrained unity comrqerce either, and the extent which such unity nothing is as it, compared can restrain increase great and international in volume of interstate commerce which was (cid:127) will from the intended, and which result out of' the carrying in the companies purchase of the Bur- enterprise two. and the stock, preservation purchase, of. and- its lington the stock of the railroad benefits, where by placing companies become scattered and to likely pass, less under it is control interests, than it would be held by many owners. of-adverse Mr¡ Mr. David Stetson and Willcox for Lynde Francis ap- Lamont, Bacon and Morgan, -submitted brief': pellants, alleged entirely are lawful in The transactions their char n merely organization consisted .in of a They acter. lawful Jersey, to, the sale by, corporation purchase New lawfully salable. All the acts it of were property expressly' law. legal effect authorized transaction has of stock in owner one of the railway that the companies been Securities Company, same and has re has sold the Securities Company, therefor stock which com ceived merely one railway stock com owns pany -the of both. So that each the stock individual but -who panies, to the Securities his property Company has transferred has entirely something an namely, therefor obtained different— other holding in a com company interest railway in the manifest-that fullest possible It is sense as well. pany a,-sale of the property. Berger constituted v. U. S. Steel r. 291 NORTHERN CO. STATES. UNITED SECURITIES Morgan Mr. Willcox for and others. 193 U. S. Brief of Stetson and Mr. (N. J.) Atl. The title Rep. passed 53 68. valuable Corp., to a authorized to hold purchaser consideration the property. from the form the corporate transaction, Aside the effect, each stockholder one of too, railway was' com- an interest his panies holdings every transferred other such stockholder. transactions lawful are not being

These affected allega motive which actuated them. tions as to the As means lawful, only question must were be whether employed was unlawful. Pettibone result accomplished States, v. United v. I 203; sham, U. United States 17 Wall. 197, 496; 148 S. Adler v. 407, 410; v. 24 How. Fenton, Yourmns, 86 N. Y. 324, Kiff v. 329; approval Connolly cited with Union Sewer Pipe Co., 540, 546; Randall v. 12 Hazleton, 412, U. S. Allen, 418; 184 190; Dickerman v. Northern Co., 181, Strait v. Trust Co., Rep. 819; National Harrow 51 Fed. v. 72 Nowlen, Phelps Y. Wood v. 105 N. Y. 278, 281; N. v. 39, 45; Amory, Lough 143 N. Y. National 271, 282; Assn. v. Outerbridge, Cumming, 315, N. Y. 326, 340; Mogul McGregor, 170 Co. v. Steamship Allen v. 1892, 25, 41, 42; L. R. pp. Flood, App. Cas. Cas. App. v. L. R. Ch. Div. 1898, 1; 70, Pender 6 p. Lushington, An to violate Act, intent the Anti-Trust and therefore to crime, commit could not case be but inferred, á must be actually proved.

No or remote effect of lawful indirect these transactions railway between the bring could competition companies Federal Anti-Trust Act. them within the fact that a contract has The mere the effect of restraining trade or some does not competition degreé suppressing bring render it to the welfare and thus it within public injurious police 64; v. 20 Gibbs Oregon Winsor, Co. power. Wall. v. U. Richmond Co., 396; Co., 471, Gas v. Hyer Board, Fed. Continental Ins. 839; Co. affirming, Rep. 67 v. Y. 310; Roeber, 473; Fed. Diamond Match Co. N. 106 Rep. v. N. Y. Lorillard, 519; v. 107 N. Y. Leslic Sloan, 244; 110 Hodge v. Press, v. N. Y. Matthews 136 480; Tode 127 Associated Gross, TERM, 1903. 292 Morgan Mr. Mr. Willcox for and others. 193 U. S.' Stetson-and Brief N. Y. 271, 601; v. 143 N. Y. 145 333; Lough N. Y. Outerbridge, v. 430; Y. Co., Galen, v. 143 N. Curran 152 Cattaraugus Oakes 36; Pool, 157, v. 51 127 Hun, N. Y. Co. affirmed 33, Watertown v. Cushman, Shade Roiler Co. 143 485; N. Y. Central Massachusetts,353. Co., 1; E. U. S. v. Knight Hopkins States v. C. 156

In United Anderson v. States, U. S. United 171 States, 578; United 171 Steel Co. v. United Pipe States, U. & 604, Addyston S. Act 246, only agree the Anti-Trust those concerns 211, is to direct and immediate effect restrain which the ments of and, under review was.lawful, transaction now commerce. The Act, not the Anti-Trust considered; prohibited was however interstate trade or commerce, restraint because such indirect, would be collateral and re might as it impose, any, mote. statute its meaning act is criminal pure simple

This also .as must be its meaning now determined effect basis a criminal when made the of. Con- proceeding. effect the act should receive such constructioh as it only versely, for the trial of those indicted its violating would receive upon Criminal intent is essential to constitute a crime, provision. bearing always thereon for the the-testimony question 148 Y. v. Wiman, 29, 33; N. People Flack, jury. People Y. N. of411other considerations on presented argu

Regardless under review must be reversed unless it is ment, judgment matter as law that the mere .possession -to established all control the means of to. of two transportation power carriers interstate commerce operates the effec competing and,directly affects tual such interstate com exercise the fact that notwithstanding merce, power has never and the further fact possessors, that it is been exercised in a them exercise’ it practicable perfectly perfectly for now under way. Support proposition review proper case, in' the Pearsall 16 U. below sought 646, 674, case, Trans-Missouri case arid Joint Addsyton Traffic 293 v. STATES. CO. UNITED NORTHERN SECURITIES Morgan Mr. Willcox for and others. S. Brief of Mr. Stetson 193 U. can from however, be deduced The proposition, case. Pipe distortion. As to us violent' what .only by cases these .seems Co., Minnesota v. Securities see cited, the case first . 692, Fed. 705 Rep. 123 also cases decided Circuit

(cid:127). In the other cases had formed the combinations been and Court Appeals, Court independ business engaged or individuals by corporations their- regulate had they agreed one another ently of the rules of the on their business by carrying or mode of prices ' Fed. Co., Rep. v. Coal 46 States Jellico combination. United States, Association, Dealers 85 Coal v. 432; United California States, Fuel v. 115 Fed. Co. United 252; Chesapeake Fed. Rep. 118 Fed. 120. McNeeler, Rep. Gibbs v. 610; Rep. restraints as that such result repeatedly

It has been held' are not within the of property or the purchase from the sale (cid:127) it is the settled Indeed, statutes. of anti-trust provisions law. is not because it restrains illegal the transfer a business Winsor, v. Oregon covenant. Co. an trade, express even by 354, Fed. aff’d Connolly, Rep. v. 99 Wall. 64; 20 Union Co. 217; Fed. v. 116 Lennen, Rep. U. S. Fisheries Co. 540; 184 v. 304; Hodge Sloan, Fed. 116 Co., Rep. v. Harrison Glucose v. 519; Gross, Y. Tode Lorillard, v. 110 N. Y. Leslie 244; 107 N. Y. 430; N. Water Cattaraugus Co., v. 143 Y. 480; N. Oakes 127 485; N. Y. 157, 127 Wood Hun, approved town v. Pool, Co. 51 v. Div. Co., 545; Dwight, App. Y. Walsh 40 v. N. Whitehead 165 v. 54 Druggists’ Association, Y.) & Sons Co. 513; Park (N. Y. Diamond Match 1; N. Co. C., S: 175 Y.) 223; (N. Div. App. 473. Roeber, v. 106 N. Y. the formation of ruled precisely it has

So, too, been because the result illegal,' or corporations associations . States, v. United 171 Hopkins will be restrain competition 604; United States States, 578; Anderson v. United Y. v. Foehrenbach, 58; Rafferty 148 N. v. Vinegar Co. Buffalo Queens County v. 618; Y.) Gamble City (N. Co., Gas 37 Div. App. 104; Greene, 52 Fed. Rep. In 104; re 91, Y. N. Water 123 Co., 51 Fed. Terrell, In re 205; Rep. Fed. 51 Greenhut, v. States United TERM, 1903. 294 Mr; Morgan and others. Willcox 193 TJ. S. of Mr. Brief Stetson v. 58 N. J. Potteries Co. 213; Olyphant, Eq. 507; Trenton Rep. (1892) Cas. App. 25; Lough v. McGregor, S. Co. Mogul S. v. Continental Tobacco 283; Co., N. Y. State Outerbridge, Rep. (Mo.) W. ' case the second section. whether doubtful very It is Langdell, Prof. Harvard to railroads. act applies Thorndike, Mr. June, 1903; Pamphlet, 1903, Review, Law Case, p. 32. Merger The court did not define speóifically cases the

In Joint Traffic it had the to it meaning given but said that “monopoly,” which was not involved Act, Anti-Trust body there cannot now be urged upon- and the decision case, Pearsall its freedom construction of a limitation court as this International Bridge Co., Laredo v. 66 Fed. See the statute. 246. Rep. of two railroads authorized by

Obviously, a consolidation they enter would not be con- every State laws nor a would a constituting monopoly; purchase demned as similarly a road au- competing of one road g.11the stock condemned; nor a combination to induce would be so thorized to authorize a con- States such the several legislatures the. It cannot be that, prohibit- a or such purchase. solidation to forbid familiar intended these Congress monopolies, ing when if, authorized amalgamation, of railroad processes act is not a it monopoly, the consummated law, state it has-not been so author- merely because not be such would ized. would make statute unconsti claimed

The construction Company would the Securities deprive it because tutional of law. are Corporations due process without its property ' of their protection constitutional the same property entitled Railway Co. v. Beck Minneapolis persons. natural rights Co. v. Sand 164 Turnpike ford, 26; Carrington 129 U. S. with, 154; U. S. Lake Ellis, 150, 165 v. 592; Co. 578, U. S. Gulf 684, 690; County Santa Clara Smith, 173 v. Co. Shore Rep. 385, 404; County Fed. Co., 18 R. R. Southern v. Pacific CO. UNITED v. NORTHERN SECURITIES STATES. 295 ¡3. Morgan Brief Mr. and Mr. U. Stetson and others. .Willcox Mateo v. Southern R. R. Co., San Fed. Rep. 722, Pacific 745, constitutional provision protects right

This to acquire with the- hold the right same after property equally —to — Holden Hardy, 391; v. 169 U. acquired. has been 179; v. Julow, W. Va. State Goodwill, State 129 Mis 163, 173; Case, 156 U. S. 1. souri, Knight Case, 646, distinctly The Pearsall recognizes that entirely at liberty would be all the person buy natural t¿e his means North- permitted shares which and the Pacific Great Northern Rail- Railway Company ern way Company. creating corporation might State -limit Congress but had no respect, general- such to cut down the authority powers granted by the States to instead, merely they their because are artificial corporations; it is persons.- Therefore, obvious that a corpora- natural authority by its charter to make having purchases tion n ' merely because it is a c.annot, corporation, prevented, from it of that right without without doing depriving proc- .so .due ess law. by construed and Circuit Court applied

As the-Anti-Trust in that it -unconstitutional, Act is discriminates between per- rights th'e matter on property privileges grounds sons are arbitrary are and without purely justification reason. (cid:127) to suppress competition between two- power compet- railroad companies being always ing existent' of the theory always under Circuit Court to a attaching majority both, per- shares whether owned one by several, Act, son the Anti-Trust understood as intended do away with such enforced so as to power, pre- should be vent one any much two or moré person, any per- as as from com- sons, both of acquiring such-competing panies.

-If as construed Act below, the court Anti-Trust arbitrarily and without discriminates persons reason between the matter of their the act rights privileges, property, TERM,. 1903. .

296 Morgan of Mr. Brief Stetson and Mr. Willcox and others. 193 U. S. is beyond clearly as as it be- power Congress would be yond power legislature. state “Liberty,” used as the Fifth Amendment Con to the not merely bodily liberty stitution means from —freedom duress, but effect all physical comprehends substantially civil those citizen which personal rights it meant place beyond general government destroy Slaughter Cases, 122, 16 impair. 36, Wall. House Munn 127; Illinois, 142; v. 113, Walsh, People v. 60; 117 N. Y. Union Crescent Co. v. 111 S. Co., Butchers’ U. 746; 578; v. U. United v. Allgeyer Louisiana, S. States 165 572; Joint Association, 505, 171 U. Addyston S. &Pipe Traffic States, 228; Steel Co. v. United 211, 175 U. O’Reilly, S. v. Bertholf 509; 98; 74 N. Y. In re Jacobs, N. v. People 98 Y. 109 Gillson, 389; 418; N. Y. v. King, N. Y. People Wige 110 Godcharles v. Pa. v. man, Druitt, 113 St. 431. And see Regina 10 Cox C. C. 592, 600. follows,

It used in that, as the Fifth Constitutional Amend ment, “liberty” includes equality rights under the law and similarly secures citizens situated against be discriminations tween- them which are arbitrary and without foundation v. reason. United States 92 U. Cruikshank, S. Yick 542, 554; Wo v. U. 356, 369; S. Colorado Hopkins, Gulf, & Santa Fe Co. v. 165 U. Ry. Ellis, S.

Hence, the principles affirmed and acted by this court- Fourteenth applying the Amendment state legislation, in. are to legislation con equally applicable by Congress, and, as below, strued the Anti-Trust Act is court invalid “liberty” óitizens, -by trespassing upon them denying equality between them in the rights discriminating .of arbitrarily rights, matter their property reason. withóut U. City Yards, 106; v. Kansas Stock Cotting Connolly S. 540; Co., 184 U. v. Union Sewer Connolly, Barbier 27, 31. U. S. Circuit

As applied Court, construed and the statute of1, due because without process' law, unconstitutional 297 CO. v. NORTHERN SECURITIES UNITED STATES. Argument Attorney General for United 193 States.

would these defendants and all deprive others who sold to the If Company Securities their there property. were on the it would not companies apply to their prohibitions A and its stockholders corporation stockholders. are different entities. Pullman v. Missouri Co. Pacific, 587; Watson v. American Bonfils, 157; 116 Fed. Preserves Rep. Co. Norris, 711; v. Fed. Electric 43 Co. v. Jamaica Rep. Co., 61 655, Fed. Rep. effort to limit

Any to sell right necessarily would deprive these defendants of their without due property process of law. Cleveland Co. v. Backus, 154 U. S. 439, 445; ex People rel. Manhattan v.Co. N. Y. Barker, 304, 312; 146 ex rel. People Manhattan Institution v. N. Y. Otis, 48, 52; 90 Holden v. Hardy, U. S. 366, 391; 169 v. N. Y. People Marx, 99 386; People v. Y. Gillson, 389; 109 N. Forster Y. Scott, v. 136 N. 577; Inger soll v. Nassau Co., 157 N. Y. 453, 463; v. Erie R. Purdy R. Co., Y.N. v. 42, 49; City Collins Baking Co., Div. App. (N. Y.) 432; Rochester Co. v. Joel, 41 Div. Turnpike App. Y.) Peo (N. 43; Div. ple Meyer, Y.) App. (N. 1; Ingraham v. National Salt Co., 72 Div. App. (N. Y.)582; Janesville v. 77 Wis Carpenter, consin, 288, 301.

If complainant’s contention should sustained, right of an owner' of property sell the same would be dependent what the courts at any future time hold to be might intention of the purchaser Such buying property. result would seriously impair liberty owner, value his property.

Whatever view be taken of the character of the transaction the decree of the Circuit Court transcended authority the court statute, under the ground the.sole source of its jurisdiction.

Mr. Attorney General whom Knox, Mr. William A. Day, Assistant was on General, brief, Attorney States, the United appellee:

The bill was filed by the United to restrain a violation States

298. TERM,

Argument Attorney for General United States. of the Anti-Trust Act 209; July 2, 1890, 26 Stat. the de- fendant, Northern Securities is a Company, corporation organ- ized under the laws of New the two general Jersey; railway are .companies carriers engaged common and freight passen- ger traffic the several and among nations; States with foreign, the Great Northern was chartered the State of Minnesota and the Northern Pacific Company Railway operates under n Federal originally franchise to the granted Northern Pacific Railroad and over that franchise it-not Company, taking only became with the invested incident rights privileges but thereto, duties, also became with the charged obligations and-conditions which Congress attached to granting thereof. The Northern .Pacific Company Railroad constant concern Congress. July See Act Re's. 2,1864, May 7, 1866, for extending time Act of June completion; 25, 1868,rel- ative to Joint filing Resolution, reports; July 1, 1868, extend- time for Joint of March ing completion; resolution 1, 1869, issue of allowing bonds; Joint Resolution, 10, April 1869, right of Resolution of granting way; May 31, 1870, author- izing issue act of bonds; September 29, 1890, forfeiting lands; certain granted February 26, 1895, providing ;act for classification of mineral lands; July 1, 1898, act granting lands in lieu of taken by those settlers.

The individual defendants were, prior November 13, 1901, large influential holders of stock, some of one railway and some of company both two companies. The railroads are for practically parallel their entire each length; sj^stem runs east and through west Minnesota, Dakota, Mon North tana, Idaho and Washington; each connects’with steamers on. (cid:127) Lake running Buffalo and other Superior points eastern at Seattle with lines the steamships trade with engaged court found that Orient.’ The lower the roads “are, have ever regarded as, been public parallel estimation competing.” testimony this-case establishes that fact which is also res Pearsall Great judicata, Railway Co., and even if the U. roads only competed for. STATES. CO. UNITED SECURITIES NORTHERN r. Attorney Argument of General United States. com- of their business be they cent would three per lines. peting dominating the ever aim of those' present

It has been Pacific, during the Great Northern the Northern policy interest about a years, bring community few past from form of union to the end that the motive some closer at On springs might extinguished. which competition Mr. their Mr. Hill and and Morgan least occasions prior three in in transactions both roads: acted concert affecting associates of Pacific the transfer of half the stock the Northern attempted in for a of exchange guarantee to Gréat Northern the bonds the Pacific of which was held to of the the Northern be violative Co., laws of Pearsall v. Great Northern 161 Minnesota, Ry. in purcháse U. the of the in 646; joint Burlington J901; leading up May, to the of After panic the events 1901. the the Union Pacific to an in to admit the refusal interest- in those control of Union purchase, the Burlington Pacific of control the Northern Pacific and as acquire attempted Hill and Mr. of they Mr. heard Morgan attempt soon as it in concert, and this understanding oppose reached an in .threat to the preferred resulted the retire Pacific, which the conference at subsequent 1, of June in the Street announced statement Wall' plan of arranged. testimony was The defendants shows Summary, of the Securities and its incorporation Company, a of large the stock of both acquisition majority railway designed results of a or plan were understanding companies defendants Hill and Morgan their associates, between out which carried to the letter thereto. parties was them, facts, recapitulated The as the Government asserts are the Circuit Court. opinion that, On the facts" as maintains proved Government means of combination has been the Securities accomplished 1 of the 2, ; is violation of act Company July § have monopolized attempted monop- that the defendants foreign' commerce of the United part olize a TERM, 1903. Argument Attorney General for United States. . and that if either result has been

States accomplished, relief the Circuit Court was granted by authorized law. contention to whether the Anti-Trust The Act is not a not material. Nor criminah statute is was it in the Joint Case, primary 171 U. S. 505. aim of Congress Traffic the act was not to create new passing offenses but to pro- public policy nounce and declare rule cover a field has supreme wherein the Federal government exclusive the United States has no common jurisdiction. As con- law, would not be tracts restraint trade repugnant law or of the United rule of States the absence of a policy and the of the act statute, controlling purpose was to declare nation forbade public policy contracts, com- restraint of binations, conspiracies, monopolies inter- commerce, trade and jurisdic- state international tion conferred courts to restrain equity violations to uphold the act intended as a means and enforce the asserted, therein not as a principle policy means to public the commission crimes. United States Trans-Mo. prevent Assn., Freight Anti-Trust Act is a' criminal in statute,

If the is also statute; as such it is in remedial invoked highest degree to case, and as such it be construed bar, ought liberally at consistent with the language the'widest effect given employed. not to be away by It refinements of criti- ought frittered Am. Legal Maxims, ed., Broom’s 5th 3d London cism. ed., 231, 234; Dwarris on Stat. and Const. 80; Potter’s Pierce and It no in Str. 253. makes 'difference the application Hopper, that the statutes have a as well penal of these rules' as a re- Prac. Ch. 215. medial side. be one may penahin part

A statute another remedial a strict construction may put in the same act part. But construction on a on and a liberal remedial 'clause penal Statutory clause. on "Construction Consti- Sedgwick ed.) Dwarris on 309, 310; Statutes, tutional Law, (2d Cogan, Doug. v. 702. '655; Hyde CO. NORTHERN SECURITIES UNITED STATES. 301 Attorney Argument of General for United States. Act was framed broad and purposely The Anti-Trust in. in order' to defeat language subterfuges designed general framed sweeping comprehensive language it. It is evade form or includes every combination, regardless which its of trade or commerce the several structure, among restraint natural or nations, every States or with foreign person, artificial, monopolize, to’ com- monopolizing, attempting other of such any person any part bining monopolize or commerce. trade

The form or framework is no Congress, doubt, immaterial. anticipated attempts that would be made to its will defeat “ contrivances of and ingenious minds,” through powerful these it used and meet the broad and all-embracing language and it is act; found this that light language And to be Construed.' the devicé of a holding corporation for the the law . can be no more purpose circumventing than other means. on any Noyes Intercorporate’ effectual Relations, § court has decided

This this act to common -applies as well all by railroad, carriers other natural or persons, U. Case, artificial. Trans-Missouri S. 290. The words of trade as used the act extend to restraint and all reasonable or unreasonable, restraints whether partial total, why there are reasons peculiar applies railroad corporations.

In over exercising powers commerce Congress may to contract, extent limit the right private some right without property, violating and sell the Fifth buy Amend- - declare that no contract, ment. combination, It monopoly restrains trade or commerce by shutting out the operation general law competition shall be legal. Trans-Missouri Case, Joint Case, supra; supra; Traffic Addyston Case, 175 U. S. 211. Pipe Co. When its natural to stifle, smother, effect is destroy, prevent, n

or shut out or competition, agreement combination is in restraint of trade or commerce 1 illegal under section of'

302 TERM, Attorney

Argument of General United States. in or international trade or if commerce. the act Case, supra. Trans-Missouri or suppress competition” and “to

“To restrain prevent in fact, by judges often used are, trade” convertible terms thought. and the same one express v. L. R. 25, Co. Cas. McGregor, App. (1892), S. S. Mogul statute, common law there no principles,- being decided unlawful, Act, making Federal Anti-Trust it such as the or into combinations restraint agreements to enter criminal of trade. and House Lords held that the Appeal

Both the Court because, if it -not be maintained even were action could in restraint of not trade, an trade was agreement restraint law the sense that it at common furnished cause unlawful -it, but damaged by only civil action one the sense for a void and unenforceable sued on. that was not claim that Government does ordinary corporations The formed faith good ordinary course of partnerships s within the of the act inci prohibition business come because restrict may competition, to some extent but dentally they or formed for corporation partnership those where the is businesses. combining competing The' act em purpose but only monopolies attempts monopolize. braces arid legislators as used modern monopoly judges term the hands of combining bringing together signifies control, control, persons or set of person one so that employment, competition business particular over v. Gas Trust Chicago suppressed. People therein River v. North Re Illinois, 294; Sugar People 130 Company, v. E. Knight States C. (N. Y.), 377; Hun United Co., 54 fining Pearsall v. railroads, see Great U. 1. And as to Co., 677; Louisville & Nashville Railway, U. S. 677. Kentucky, R. Co. R.

. exists within the meaning monopoly A combination or of the acts immediate effect complained if the act even a complete monopoly. or to create competition not to suppress v. NORTHERN SECURITIES CO. STATES. UNITED 303 (cid:127) Attorney Argument S. for United U. General States. 193 to show tend to they sufficient that bring It about is those v. cited Cases Salt Co. 35 supra, Guthrie, results. Ohio St. 672. or is not to show that person persons

It essential charged .the or have monopolizing combining actually with raised prices or or restrained or suppressed competition, monopolized-trade or to order them within bring commerce the condemnation of act. It 'the enough necessary is that effect the com- or is monopoly give bination them the do those things: The decisive is whether question the power exists, whether it has been not exercised. In the Trans-Missouri, Pearsall and Trajjic, Addyston Joint Cases, supra, this court held that it immaterial that or trade commerce had not restrained —that actually been made no difference, even, prices that rates and had beén lowered, it being enough to the combination within bring the condemnation of the act it had the to restrain or. power. trade commerce. The existence of the under very these power, rulings, a constitutes restraint. is necessary

It order to bring combination or con hind, within the spiracy the act that the members operation, each the other to themselves do the acts alleged be in restraint of It is enough they trade. act together of a common pursuance object, while, of course, this between "them presupposes agreement broad sense, an or agreement contract the technical sense is not at all essential. Re v. C. & P. g. Murphy, 8

A or a monopoly, combination the necessary effect which is restrain trade or commerce, is a violation of the act, arid aim, motive, intention, with which design the combina- is tion entered into or the created is monopoly wholly imma- terial and outside the It question. may have been aid further than to it; commerce restrain but if in point rather law the effect or the tendency the combination is to restrain trade commerce combination is unlawful, and the motive behind it, not alter however does that fact in beneficent, TERM, 1903.

Argument Attorney General United States. slightest degree, Case, Trans-Missouri U. C. 341; & O. Fuel States, Co. United Fed. Rep. 623.

A combination or monopoly lines of competing railway competing instrumentalities of interstate com- —of merce—is a monopoly combination restraint of interstate within prohibition of the act. The transporta- tion of persons and things commerce and a combination or of monopoly transportation is a or combination in monopoly restraint of within act, commerce .it hence follows as illegal, corollary a a that or combination monopoly of the means or of instrumentalities transportation is a combination likewise in restraint monopoly of com- merce, a because monopoly the means transportation leads to a directly inevitably monopoly transportation itself. a the means

Again, monopoly in transportation puts monopolist in power stifle competition business and a transportation, combination or which monopoly bad competition to stifle power the business transportation restraint among States of interstate commerce and therefore illegal.

From still another standpoint, Congress may prohibit, and has combinations and prohibited, monopolies the business (cid:127) and international of interstate transportation. But what does if amount to Congress this power may not also mo- prohibit of the means nopolies instrumentalities of such transporta- tion —of the roads themselves? Virtually he who nothing; of the means of has a monopoly transportation has a mo- itself. transportation See the nopoly Trans-Missouri and Pearsall Case, Joint Case Case, supra. Traffic Act The Anti-Trust combinations and prohibiting monopo of interstate and commerce is an foreign lies restraint exer commerce, Congress regulate cise of power granted term v. Ames, 321, U. S. and the Champion 188 “commerce” which, the instrumentalities grant used embraces Fuller, bn. Railroad v. carried Co. is v. UNITED STATES. 305 NORTHERN SECURITIES CO. Argument Attorney General for United States. 193 560, 568; 280; Welton U. Missouri, 275, Wall. Co., v. West. Tel. U. 1 ; Un. S. Gloucester Co. Tel. Pensacola Pennsylvania, v.Co. Ferry as it is put Can Con-

But put the proposition appellants: railroads, ownership under its gress regulate States, among and has it done regulate commerce certainly/ so Most yes. this act 1890? can Congress sense that it can regulate anything everything pro- in way its use will defeat law that prevent hibit. enact; constitutionally For Congress may purpose, supreme power operates upon everything, upon every one.

No device of State individual can be interposed- creation authority as a the Federal shield between those who at- it. tempt to subvert No rules of law which govern rela-. inter sese, tions individuals- have created of which have' been assumed between and a State, are to be con- themselves sidered an between them issue and- the United States to de- feat the ends of a constitutional The Federal power law. . would not be supreme operation of its law's could be de- feated, embarrassed, or by any means impeded whatsoever.

It is no of violation the reserved rights States, but, on' the is within contrary, clearly the Federal power Congress for to enact that no persons, artificial, natural form shall a or. combination of the instrumentalities of of any part interstate commerce the. effect or tendency of which would be to restrain interstate trade or commerce, and that no person persons, or artificial, natural shall acquire of monopoly such instru- mentalities. This is a natural and logical deduction from the supreme, plenary, and exclusive nature of power the the Federal Government over foreign and interstate' commerce, in the exercise of which Congress descend to most the minute directions. The “penetrating all-embracing” nature of power- this n

has often been, stated, this, explained, and emphasized by court. Gibbons v. Ogden, 1, 197, 9 Wheat. and see concurring opinion Johnson, J., also. The principles announced' vol. oxcm—20 TERM, 1&03.

306 Attorney Argument General United States. 193 U. S. from, but departed this have never been have case been again by court, time and notably reaffirmed Brown 419; v. Wheat. Passenger Cases, 7 How. Maryland, 283; v. In re 158 U. S. Debs, 564; Ames, Champion 321; v. R. Co., Stockton Baltimore & N. Y. Rep. 11, Fed. 16. in recent interstate fact commerce has come years to be on railroads over artificial has highways carried the constitutional scope pro- in no narrowed the manner over com- Congress the such power vision or abridged same control contrary, merce. the fullness of. exists On other, in the in the and the same to remove power one case as from the other. obstructions from one it course, makes no difference whether obstruction Of it be a mob, or economic—whether sand bar, be physical from the of a vessel sinking result a monopoly—whether Congress remove competition power the stifling —the v. Gilman Philadelphia, same each case. 3 Wall. it is the 724. 713, no jurisdiction. have legislatures

On these state subjects Boardman v. Case, 211, 232; Co. Lake Addyston Pipe N. Y. Co., 84 Ry. Shore &c. legislate upon has of con power subject

Congress when the corporations of railroad consolidations solidations lines; legislation Congress, the absence form but legislate upon subject, in the States exists the power by Congress legislation in the presence Noyes Intercorporate on excluded. subject o'ver States & Nashville Kentucky, citing §19, Relations, Louisville supra. of the Federal Government over jurisdiction

This exclusive > States, among nations foreign commerce, includes instrumentalities over the its over those equivalent, which is or, of police, power and which breadth fullness undefined in all its subjects police is the far-reaching power as full, complete, júst is state, within the, subjects reference with legislatures' v. CO. UNITED STATES. NORTHERN SECURITIES Argument Attorney General for States. United In jusridiction exclusive the States. either case are there limitations to its exercise, no the constitutional except guar- of life, anties favor 'and liberty, property. Thayer’s CaséS on Law, 742, note; Const. Lim. on Cooley’s 723; Const. Noyes Rel. 409.. Intercorp. §

Anti-trust are statutes enacted the exercise of the police, or an v. analogous, power. State Firemen’s Fund Ins. Co., Missouri, v. 46; Brewing State Schlitz Co., 715; 104 Tennessee, . v. State, Waters-Pierce Co. 19 Tex. Civ. App. 1

Congress having police power, equivalent, over and interstate commerce and foreign the instrumentalities thereof, inmay exercising it, strike down restraints upon from commerce, they whether result combinations and mo nopolies agencies transportation otherwise, just as a State could similar prohibit restraints interstate To contend commerce. otherwise is to contend that power Federal over interstate foreign is but is supreme, some subordinate state author respects .in ity ; or the reserved police powers powers the States are, some paramount purposes, powers Congress wherein the Federal fields Government has been invested complete supreme authority;. Constitution not so. v. This, course, New Orleans Gas Co. Louisiana Light Co., 115 U. S. 661. Case,

The Louisville & Nashville does not supra, hold that has no Congress power prohibit of com consolidation Congress railroads. has peting created in “the conimerce,” of such has passed struments regulations to do concerning them, these power things is now unquestioned. Co., Railway 127 U. 1.S. Pacific California What the court meant the Louisville Case was that in re of a spect matters local nature, which did not admit or require uniform regulation, the States may “regulate instruments of such commerce” until Congress legislates on the same subjects,-while of matters respect of national importance, which admit of uniform regulation, . TERM, 1903. 308 Attorney for United States. 193 U. S. General Argument of distinction The was stated excluded. wholly States is of the U. S. 275. Missouri, v. 91 in Welton stock, of its constitutes the control majority of a Ownership is whether a when combination inquiry a corporation competition formed stifle between has been monopoly rival, Intercorp. railroads. Noyes on competing two or more v. Co., L. T. Co. N. Y. &c. R. R. Farmers’ & 294; § Rel. Co., v. & Gas Trust 130 Chicago 410, 424; People N. Y. 150 5; Richardson Policy, on Public Greenhood Illinois, 268, 291; 666; v. Ohio St. Guthrie, 35 343; v. N. Y. Salt Co. Crandall, 48 Y.) 29; Pearsall W., How. (N. v. L. E. & 64 Y., Milbank N. Pullman v. 646, 671; U. S. Co. Railway, 161 Great Commonwealth, Pa. R. Co. v. 587; Co., Mo. Pac. R. 115 . 371 Rep. Atl. Pacific Railway and Northern com- The Great Northern carriers, have been combined panies, competing Act, say, the Anti-Trust that is to violation of section to a of each road has been transferred of the stock majority which is thus vested trustee, Company, common the Securities both roads for the common to control and direct with the power of each. benefit of the stockholders terms "com- every Anti-Trust Act condemns express and if trust,” companies -in form of those have bination "in a violation of the trust,” very combined the form of been has been proved. letter the statute what Congress at difficulty getting There is no great term was well of the meaning a "trust.” The meant at the time world' and industrial the economic understood The word and is now. Act, Anti-Trust of the passage the business whereby an describe arrangement first used to and combined is centralized corporations competing several least, constituent of the stock at a majority by causing trustee, who, return, to a transferred to be corporations The trustee "trust certificates.” issues to the stockholders to vote right and has holds the title the. shares legal control them, exercises oyer complete this way CO, v. UNITED STATES. 309 SECURITIES NORTHERN for United States. Attorney General Argument of The trustee also receives the combination. business former of these shares, pays on out dividends ' dividends on the constituent corporations stockholders Eng. Am. & Century Dictionary; certificates.” See “trust & v. Standard Trusts; 2d title State ed., Monopolies Ency. Law, Combinations, 582; Noyes on 137; Eddy Ohio St. Co,, Oil § on Combi Dodd’s 304; Pamphlet Rel. Intercorp. on § The-facts show Their Uses Abuses. nations : all' constitutes a trust —it Company Securities Northern has. a and as such trustee, elements of one. It is the essential legal it has the of two competing companies; holds the stock to the title, property. have title, equitable stockholders is a trust agreement, and cases cited. There Morawetz, 237, § an to show charter; whereof aré it is sufficient the terms under any if the stockholders acted pursuance agreement . v. scheme, Harding verbal or otherwise standing plan Co., Am. 182 551. The certificates Illinois, Glucose office as trust and fill the same represent of the company vote the stock has the certificates; company .both. and thus elect the directors of As railways of both both com dividends on the stock of it collects the trustee, exactly dividends on its own stock and thereout pays panies on the trust certifi a of a trust collects pays trustee cates. light a in another also. As the courts

It trust constitutes unanimity that the country held throughout practical a class illegal, described is second waá just of “trusts” class that have control other acquired of corporations invented This is organization their stock. by purchasing corporations but form general preceding, of the same character as of the decisions of the is order to the force changed escape on courts Beach Monop- relating corporate partnerships.

olies The Securities Trusts, Company Industrial 159. § clearly “trusts.” classification of within this second comes v. §§310, 393; Chicago Noyes 285, People Rel. Intercorp. on Illinois, 292, 302, ChicagoGas citing Co., Gas Trust TERM, 3-10 Attorney States, for United Argument of General Am. Glu- Co., Gas Light Light Co. People’s Illinois, 530; Case, cose supra.

It is to show that essential, however, .not Great Pacific have been combined Railway companies and Northern “trust,” combination,” in the technical form of or “corporate a call it when the trustee is holding corpora- as some writers Act covers every tion. Section 1 of the Anti-Trust A violation of that section will have form of combination. shown that— therefore, been established, Mr. Mr. and the other individual Morgan, defendants, Hill, or in of a previous understanding, concert acting pursuance have title to shares of'the Great a.majority caused the Pacific be vested companies Northern-and Northern centering Securities single person Company thereby —the — control head and effect- single wáy the two roads a combination them, effect of which is tendency ing between them. suppress competition which the disguise by sought When defendants analyzed their combination, to hide fact of the connection there- that with, thin and it is á cause of appears transparent so have a adopted wonder that ever they flimsy should device. n ' a in baffling It for time who may persons succeed an have interest and has suc preventing being done .was a ceeded, but* it mere to evade the crafty contrivance v. The Great North of the law. Attorney-General requisition' 1 Company, S. C., ern Railway (N. S.) 1006; 6 Jur. Drew. & Smale, 159. that could thought -they

The defendant's seem to have pro of a it do cure the and-have what organization corporation do lawfully agency could hot they through themselves would illegal as that which have been natural persons, amatural lose person would agency if done through a agency if done through corporate stamp illegality Co., R. Central v. Attorney but see General organization; Milk lili- Shippers’ Assn., 155 Ford Chicago v. 52; J. N. Eq. 50 v. STATES.. 311 CO. UNITED SECURITIES NORTHERN , U. Attorney General United Argument States. 180, citing Moraw.etz, Í on 178, 227; Kyd nois, 166, § v. ex rel. Standard Oil Co., State St. 13; 137; Ohio Corp. Feeding Illinois, and Cattle Co. Distilling' People, that it is immaterial Defendants insist that a combination be discovered behind the fiction that the Se going can a wiijh is an Company private sep curities existence person from its members, because, they say, arate as apart law will not allow fiction to contra disregarded |be dicted—will not allow the acts of the to be entity corporate as treated the acts the natural persons compose who it. The defendants thus seek to law aby defeat ends' of the fiction invented to cannot promote them. This proposition be sustained. v. North River N. Y. People Sugar Rfg. Co. 121 582, 615.

It can never be a question as to to a parties whether com- bination restraint trade áre individuals or corporations; always it is as to the nature, question effect, operation of the combination.

Of á course State has powers over the instrumen- certain creates, talities it as it has over the indi- viduals whom commerce is conducted. But a State has no over either power instrumentalities that can individuals between them and interposed the obligations imposed by Federal regulating statute interstate commerce.

Where the is national subject its character the Federal power exclusive state power. Welton v. Missouri, 91 U. S. 280..

Congress has power regulate commerce among the States, when exercise it becomes necessary to legislate instrumentalities of respecting com- merce, may so, do irrespective how or question what (cid:127)by authority those were created. instrumentalities And if of regulation control of. these instrumentalities essential to prevent a subversion of .policy Congress it regulate control. TERM, 1903. 193 Ü. Attorney

Argument of General United States. the several States- among The power regulate'commerce restraint commerce. upon includes the such power prevent it. To commerce is regulate restrain which restrains any law of State interstate any Therefore invalid; between individuals any commerce is contract form any which restrains combination'in corporations, commerce is invalid. Under to the whole subject. extends supreme ha;s com interstate power Congress supervised plenary therein, franchises to engage merce from granting its For this operation. pur the’ minute directions as-to most (cid:127)in the be all which existed States pose possesses powers have Constitution, and which fore the of the National adoption In Debs, re of England. Parliament always existed 3 Wall. 725. 586; Philadelphia, Gilman v. which the law pro- accorhplishes If arrangement .that law it is cer- which the prohibits, the means hibits, through and if this were a law, tainly prohibition within' instead of a com- being authority under consolidation state' foot of every the law of that which defies bination' which effects be no hesita- there should railroads occupy, land which these if it accom- statute, the Federal that it violated tion saying To hold other- interstate commerce. a restraint plished a to the effect that proviso be to read into wise-would law. the,-act combination took the form when the apply should .-- .-authority legislation. under state "of-a railroad consolidation can invented to never law, justice, promote Fictions “In defeat. juris semper accomplish invoked fictione esquitas n Morris v. 177; Mostyn Fabriges, Cowper, existit.” on 227; Morawetz, 1, Taylor Corpora 1243; Pugh, §§ 3 Burr. 22 ; on Private and Marshall Corporations, Clark tions, 50;§ Ford v. Milk 137; St. Co., Ship Oil 49 Ohio v. Standard State cited- and other cases supra. supra, pers, of section Company,' Securities The Northern violation has Act, monopolized part Anti-Trust \the of the- shares of the large majority by acquiring commérce . NORTHERN SECURITIES'CO. UNITED STATES. 313 Argument Attorney of for General United States. stock of the Great Northern Northern capital Pacific Railway companies parallel competing lines engaged —two in commerce; interstate and the Northern Securities Company and the individual or two or more defendants, of have them, n combined, each other, with the so a of monopolize part, interstate commerce. >

From the argument facts made it already appears by acquiring shares the Great Northern a-majority that and Northern Pacific the has obtained Company Securities the control of, and, therefore, power suppress competi- between, tion two rival and lines competing railway engaged in interstate that commerce, has a way monopolized part commerce. This conclusion interstate is sustained of this court the case of Pearsall v. Great judgment which is conclusive of Railway, the case at supra, bar, since establishes the that to principle vest, designedly, in one a set of stock of'two persons, majority person lines of is to competing railway monopolize part of interstate railroad traffic.

Even if a could whal lawfully natural have done person that would no done, argument Securities has be Company not doing, the Securities so has vio prove Company, the law against Sugar lated North River monopolies^ People v. . Refining 625 Company, p. supra, It is denied that contention that .the very spirited in- construction the law puts upon the Government question to do they terferes with the what will with power people their property. and it véry law, certainly

That was the object sale, contract contemplated rights purchase, far controlled, necessary, prevent be so those would to defeat the law. from exercised rights being be into imagined coming A combination cannot existence redistribution between indi- property without more or less sales, contracts. Combinations viduals through purchases, ready us made. never bestowed upon are TERM, Argument Attorney States. General United complained remembered that the of is monopoly It be must traffic from railway resulting centering a monopoly controlling stock interests two rail- single body competing Congress and whatever ways, may state legislatures general, over monopolies they unques- regulative in the exercise of broad tionably, powers their over of corporations, prohibit any monopoly gmsi-public . within their of spheres railway transportation respective action. to contention that' the transaction is a sale of simply

As the investor and to it as would stamp illegal stock to an be an infringement right contract, unwarranted of and that intended to Company Securities never take active two controlling in the part companies, argument the' is not and it is demonstrated by sincere testimony individual defendants that the Securities Company was the instrument for and designed directing controlling policies - lines. competing

As to circular of Mr. Hill to the stockholders, it is well that because a has settled the- person right purchase stock does, not follow that stockholders two or more compet can ing among combine themselves and with corporations him their to sell stock induce person others do the same, so as center the controlling interests of the several in a head, violation corporations single of statutes against ’ combinations, consolidations, and monopolies. Noyes on 3,6 Rel. R. ;-Penna. Co. v. Intercorp. Com., 7 Atl. § Rep. 373. actual bona

This distinction between an sale, and one fide nominal merely really cloak under which to which a combination sometimes leads accomplish to confusion of thought. See Trenton language Potteries v.Co. Olyphant, 507; 58 N. J. on Noyes Rel. 354. Eq. Intercorp. § argument As that the appellants “acquiescence than Government for more eleven years the merger of many important consolidation parallel and competing CÓ. v. UNITED STATES. SECURITIES NORTHERN Argument Attorney General for United States. steamships lines railroad interstate com engaged given has merce construction foreign practical Act of to the effect July 2,1890, to the Anti-Trust it was and does not forbid the not intended forbid natural processes brought of unification which are about under modern methods lease, consolidation, merger, community interest, no there is force whatever to the con (cid:127)ownership stock,” court below deemed too evidently flimsy tention to refer But the to it is threefold—the to. case even answer^ holding for the stocks of two of a formed company purpose one lines is a new and arose railways competing case; the first in this of the act constitutionality for time to railroads was not settled until application and its and Joint Cases, the decision Trans-Missouri supra;' Traffic if there as to certain combinations even had been acquiescence to an Government against it would amount estoppel Nashville v. Ken action. Louisville & prosecuting U. tucky, the United monopoly charged

The combination do not commerce, on interstate operate directly States remotely. on only incidentally, Noyes indirectly, affect cited. Rel. and authorities there 392, Intercorp. § not case is whether the means which The this question is into are direct brought play the combination power its indirect, itself, but the combination whenever whether into not how play has been matters indirect' brought power —it it into bringing have been means employed play— interstate or international commerce. on directly operates to this mind of the defendants’ counsel bear has The failure to to elaborate show very arguments them make led affects Government charged combination In con- remotely. reply to the only indirectly the court after opinion below, on see tention point, 1; v. E. C. 156 U. S. citing Knight Company, United States Anderson v. States, 578; United United Hopkins which for 171 U. on counsel rely, defendants- States., 3Í6 TERM,

Argument Attorney General United' States. 193 Ü. S. held that no properly combination could more immediately such commerce. affe.ct

The relief granted by the Circuit Court was authorized by section of the Act. Anti-Trust gist

The charge being Government’s that a. combina- tion the two railway has formed companies by centering been majority the title to a respective their shares the .Se- curities which Company, by obtaining such of both majority stocks has acquired a violation of the Anti- monopoly—all Trust Act and as unlawful combination and monopoly exists solely by virtue of the Securities Company’s such ownership majorities logical and most direct toway destroy the com- bination and monopoly prevent continued violation statute strip which ownership, acquired of an pursuance illegal object, of its powers incidents— to disarm it of power its to violate the law. And this is what the Circuit Court did. Clearly this decree violates' no rights property the Securities Company any of other defendants is entitled claim.

It is grant'this proper even relief though purpose thé had company been already accomplished. combina tion. charged-by Government is combination of the two railways, formed by concentrating the Securities Company to control both roads. This combination did not to an “come end,” “accomplish did purpose,” the organization of the Securities Company, and therefore the violation of the Anti-Trust Act did not “come to an end” there, but continued on without interruption, and under the (cid:127)act the Circuit can restrain, Courts prevent, enjoin or other violations wise'prohibit thereof, and are left free frame their remedial process meet the exigencies of the case, and as courts' equity they enjoy same wide latitude in formula relief in ting they cases this class that enjoy any other class of cases within jurisdiction of equity. v. Taylor 4 Simon, Mylne & Craig, 141; R. I. & P. Chicago, Ry. Co. v. Union Ry. Co., 47 Fed. 26. Rep. 15, Pacific v. STATES. CO. bNITED NORTHERN SECURITIES J., Affirming Decree. Hablan, S.U. 193' all interests affected materially no of parties; defect There by the par- of the Circuit Court are represented decree by the court. before ties who of the rail- 1,300 persons exchanged, were

There a for stock of Securities Company, companies .the way n interests of absent represented court of equity parties,¿re the court. olfore having are parties when there similar interests Swornstedt, v. 16 How. Smith have might a defect parties as to

Any question which the form of the removed from the case ’has been existed Court, simply adjudges the Circuit entered decree defendant, into an unlawful com have entered that the parties commerce, restraint of bination and conspiracy-in defendants, Securities' enjoin and then proceeds things from doing railway companies and the Company, force to the. combination. life and give which alone and materi to the bill only on the parties decree thus operates - corporations interests. The defendant only affects their ally Sanger of their stockholders. respective for the interests stand Minne 329; v. U. S. Glenn, Hawkins 59; v. Upton, Co., 184 U. S. 199. sota Northern Securities affirmance of the de- announced the Mr. Harlan Justice following and delivered the Court, opinion: of the Circuit cree United against States brought suit was This of New Jer corporation Company, Securities Northern of' Railway corporation Company, Great Northern sey; the a cor Railway Pacific Company, Minnesota ; the Minnesota ;1 a citizen of Wisconsin; Hill, J. James poration Kennedy, John S. James, P. D. Willis Clough, and William F. Baker Bacon, George Robert J. Pierpont Morgan, York. of New Lamiont, Daniel S. citizens defendants, enforce,'as against towas object Its general July 2, 1890, commonly known of the statute provisions act to entitled protect Act, $s “An trade Anti-Trust TERM, 1903. 318 J., Affirming Decree. U. Harlan, unlawful restraints and against monopolies.” and commerce below the By the decree United 26 Stat. 209. States was asked substantially by the relief it the bill. given very not and as the long, the act is determination of the As this case arising a consid- require particular questions most of meaning of the provisions, eration í¡j|,ope iii full: is here given “ contract, 1. combination in form Every of trust or Sec. in restraint of or otherwise, or trade commerce conspiracy, or .States, with foreign nations, hereby the several among Every be who shall make illegal. person any declared to such in any or such combination contract or engage conspiracy/ misdemeanor, of a guilty and, be deemed on conviction shall by fine not shall be five thereof, punished exceeding thousand not one or dollars, by imprisonment exceeding year, by or both in the discretion of the court. said punishments, “ who shall Every 2. or person monopolize, attempt Sec. combine or with conspire any or other monopolize, person or any monopolize part tláde or persons, commerce or with States, nations, shall foreign the several. be among misdemeanor, and, on conviction thereof, deemed guilty by fine not 'five exceeding dollars, be thousand punished shall year, one or by imprisonment exceeding or both said in the discretion of the court.- punishments, “ Every contract, combination in form Sec. of trust or otherwise,-or restraint of or conspiracy, trade Territory the United States or of any the District Co- or in or lumbia, restraint trade commerce between any or Territory another, any Territory between such or or or any Territories and State States the District of Colum- or nations, or with between the District of Co- bia, foreign or or any nations, State States is hereby lumbia foreign Every who illegal. person any declared shall make such con- such combination or engage tract shall conspiracy, of a misdemeanor, on guilty and, be deemed conviction thereof, fine not punished exceeding five dollars, shall thousand CO. UNITED STATES. SECURITIES NORTHERN' J., Affirming Decree. Harlan, year, no.t one both exceeding said by imprisonment of the court. the discretion punishments, “ 4. The several Circuit Courts United are Sec. States vio- prevent restrain hereby jurisdiction invested of the several act; duty of this and it shall be the dis-* lations districts, in their attorneys States, respective trict of the United Attorney-General, under the direction of the institute pro- in and restrain such violations. ceedings equity prevent may by way Such be forth the proceedings petition setting case and that such violation shall be or other- praying enjoined wise When of shall have prohibited. parties complained .the been notified of the court as duly petition such shall proceed, may be, case; soon to the and determination of the hearing as and final and, petition decree, before the court' pending at time make such or may any order temporary restraining in as shall be deemed prohibition just premises.

“ 5. Whenever it shall appear Sec. to the court before which any under section four this act be proceeding may pending, the ends that other justice require parties should be court, may before the the court cause them brought to be sum- whether in moned, they reside the district which the court not; is held or to that end subpoenas may be served any by district the marshal thereof. “ Any Sec. 6. owned property any under contract or by any (and or combination, pursuant any conspiracy being thereof) mentioned section one of subject act, this and' in the course of from transportation one State to an- being or to a other, foreign country, shall be forfeited to the United States, seized and condemned by like proceedings as those law for provided forfeiture, seizure, and con- demnation of into the property imported United States con- trary to law. “ Sec. 7. Any person who shall be injured his business or property, by any other or person corporation by reason of any forbidden or thing declared to be unlawful by act,1 may sue therefor in any Circuit Court the United States the dis TERM, J., Affirming Decree.

Hablan, in which the trict defendant or found, resides without re-' to the amount controversy, Spect shall recover threefold n by him damages sustained, of suit, costs including attorney's a reasonable fee. “ 8. That the word ‘person,' ‘persons,’ wherever used Sec. act in this shall be deemed include corporations and associa- tions under or existing by the laws of authorized either the States, United any the.laws the Territories, the laws of any State, or the laws' of any country.” foreign

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

The Great Northern Railway Company the Northern Railway Company owned, Pacific controlled and operated sep- lines of railway arate former road from Su- extending —the and from Duluth and St. perior, Paul,' Everétt, Seattle, and' Portland, with a branch Helena; line to the latter, extending Ashland, from and Duluth and Paul, from St. to Helena, Spo- Tacoma kane, Seattle, and Portland. The two main lines, 9,000 and about branches, miles were áre length, and paral- and lines competing lel across the continent the north- through tier States ern- between the Great Lakes and the Pacific, two and the companies were iii engaged active competition traffic, freight passenger each road at re- its connecting lake, .with or terminals lines with spective railway, and river steamers, or with vessels. seagoing 1893, system

Prior Northern Pacific or was owned the Northern controlled Pacific Railroad operated organized under certain acts and res- Company, corporation of Congress. company insolvent, olutions That becoming road and into the property receivers passed appointed hands States, courts In advance United foreclosure v. NORTHERN CO. UNITED SECURITIES STATES. 321 ' J., Affirming Harlan, Decree. U. of its bondholders made an majority arrangement sale a with Railway for a Company Northern virtual the Great consolida and for systems, giving practical tion of the two control Pacific to the Great of the Northern Northern. That was the declared Pearsall Great arrangement Northern Railway 646, to be illegal under the Company, statutes of Minnesota which forbade railroad corporation or the or purchasers managers any corporation, to consolidate stock, or property franchises or corporation, purchase of, lease or in any works franchises way control, other railroad corporations owning having under their control or competing Laws, lines. Gen. parallel Minn. 29; c. ch. 1881.

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

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

VOL. oxciit—21 TERM, Affirming J., Decree.

Harlan, a Jersey, holding laws of New to be under the corporation, a capital the Northern Securities with Company, called stock and which $400,000,000, company, exchange for its stock and a certain rate, own certain basis at capital turned over the or a capital stock, was to be inter- controlling of each of the capital stock, est the constituent railway in the to vote companies, power holding corporation such in all to act as the owner respects thereof, necessary do deem might railway aid whatever or to In enhance the value of their companies stocks. manner the interests individual stockholders the prop- two erty and franchises of the independent competing railway companies were to be converted an into interest ' franchises of property holding corporation. Thus, “ as in Article VI of bill, by stated making stockhold- system jointly ers each interested both systems, and by practically earnings of both for the benefit of pooling each, the former stockholders vesting selection ,of the directors and officers of each system a common body,' wit, the holding corporation, with not" only the duty but to pursue policy which would promote interests, not of system one at the of expense other, but of both at the expense all public, inducement for between systems the two competition was to be removed, a effected, virtual consolidation and a monopoly inter- foreign, state and on formerly carried the two systems independent competitors established.” In of this combination pursuance its objects, effect defendant, the Northern Securities Company, organ- 13, 19.01, ized November under the laws of Jersey. New Its certificate stated incorporation objects for which the was formed were: To company “1. acquire otherwise, or and to purchase,'subscription hold as investment, or other bonds securities evidences indebtedness, or any shares stock created or issued capital by any other cor- associations, association poration corporations, UNITED, STATES. CO. SECURITIES e. NORTHERN Affirming Hablan, J., Decree. coun- State, or Territory or other Jersey, any of New of State (cid:127) mortgage, sell, transfer, hold, assign, To purchase, 2. try. bonds or other securities any of dispose otherwise or pledge other by any or issued created or of indebtedness evidences or. of the associations, association corporations, or corporation coun- State, Territory or other Jersey, any of State of or New all the rights, powers owner to exercise and while thereof try, as- hold, sell, To purchase, of 3. ownership. and privileges otherwise of shares or transfer-, mortgage, dispose sign, pledge or corporation corporations, of other any stock capital or Jersey, óf or of the State New associations, association owner State, country, or and while Territory other any and rights, powers privileges to exercise all the such stock 4. To aid to vote thereon. including ownership, right any or of which any manner association any corporation or stock other or evidences indebtedness bonds or securities any do things and to acts or de- corporation, are held the value preserve, enhance signed protect, improve, or other of indebtedness any such bonds securities evidences To and hold such and acquire, personal 5. own real stock. or convenient for the transaction necessary be property of its business.” or pur-

It was declared the certificate business' from time to do one pose corporation thé .was timé to acts things, more the corporation should' have conduct its business other States and ill have one or more countries, offices, hold, foreign real and purchase, mortgage convey personal property, Jersey. of New out

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

This Hill obtained, and his associate' having charter been Railway Company, stockholders Great Northern - TERM, (cid:127) J., Affirming Decree. Harlan, 193 U. S and associate stockholders Morgan Pacific to the Railway Company, assigned Securities Company con- amount of the stock bf trolling capital the respective con- an stituent agreed basis companies exchange Securities capital stock of the for- Company each share of of capital stock the other companies. In further pursuance combination, the Securities Com- acquired additional stock of the pany defendant railway com- in lieu panies, issuing thereof its own stock upon the above basis, and, at the time of the of this bringing suit, held, as owner and all- proprietor, substantially the capital stock of the Northern Pacific Railway and, it Company, is alleged, a con- interest of trolling stock the Great Northern Railway “and is Company, the same and is voting collecting the divi- thereon, and in dends all respects acting as the owner thereof, the organization, management and of operation railway said and in companies receipt control their earnings.”

No consideration whatever, the bill has alleges, existed will for exist, transfer the stock of the rail- defendant way companies the Northern Securities other Company, than the issue the stock of the latter company the pur- after the pose, manner, and upon the basis stated.

The Securities Company, the bill also alleges, was not or faith to ganized good purchase and pay-for the stocks of the Great Northern and Northern Pacific Railway companies, but solely “to incorporate the pooling stocks said and- companies,” carry into effect the above combination; that it is a mere depositary, custodian, holder or trustee of the of the Great Northern stocks and Northern Pacific Railway companies; that stock are but shares beneficial certifi cates said railroad against stocks designate interest of in the holders that it does not pool; have and never had to' capital warrant such an operation; that its subscribed was but capital $30,000, and its authorized capital stock was $400,000,000 just sufficient, when all issued, to represent . CO. STATES. SECURITIES UNITED NORTHERN Affirming J., Decree. .193 U. S. Harlan, value of substantially and cover the the entire exchange Pacific Great Northern com Railway Northern and at the the basis rate panies, upon agreed upon, $122,000,000 about excess the combined stock of capital par; railway taken at companies that, two unless pre vented, Securities would as owner-and Company acquire all the substantially proprietor capital stock the Great Pacific Northern Railway companies, issuing .in lieu thereof its own stock to the capital full extent of its issue, which, authorized basis of agreed exchange, the former stockholders the Great Northern Com Railway have received would receive and pany hold about fifty-five per cent, the balance to- the former going stockholders of the Northern Pacific Railway Company. Government, that if charges the combination was held of,

not to be violation of the act of then all Congress, efforts the National Government to preserve people bene- of free fits competition among carriers engaged wholly commerce will be unavailing, all transcontinental indeed the entiré lines, railway systems of the country, may be absorbed, merged consolidated, thus the placing public mercy at the absolute of the holding corporation: The several defendants denied all the of allegations the bill to them a imputing puipose evade the provisions of the act of or form a Congress, combination or conspiracy having for its either object to restrain to monopolize commerce or trade the States with among foreign nations. They denied combination or conspiracy was in formed violation of the act.

In our the evidence judgment, fully sustains the material bill, the and shows a allegations violation of the act of Con- far gress, so as it illegal every declares combination or con- spiracy restraint of commerce among the several States and with foreign nations, and forbids attempts such monopolize commerce or any of it. part

Summarizing principal facts, it is indisputable upon this TERM, Affirming

Harlan, J., Decree. of the Hill record that under the defendants leadership Great Northern stockholders Morgan the North- having Pacific Railway corporations, competing-and ern sub- from Great Lakes lines and the stantially Miss- parallel the Pacific Ocean at Sound Puget River to combined issippi a under the corporation conceived the scheme organizing hold the which should shares of the Jersey, New stock laws shareholders, such lieu of companies, of the constituent receive, an companies, their shares those upon agreed in the value, holding corporation; pursu- basis shares combination the Northern ant to such Securities Company as the which organized holding corporation through executed; be and under that scheme should such hold- scheme holder —more become the ing corporation properly has speak- more nine-tenths of the than stock of ing, custodian —of and more than of the Pacific, the Northern three-fourths stock Northern, the stockholders the companies Great who agreed delivered stock basis receiving their shares corporation. stockholders holding these such, as for the competing companies disappeared, moment, two stockholders of immediately as reappeared holding but guard thereafter to which was interests both company and to unit, manage, as cause stockholders sets of. if of railroad as held one both lines managed, ovmership. or arrangement this combination Necessarily holding dominates the in- in the fullest sense situation company who were stockholders constituent com- terest those so, every it had practical purpose, as much been panies; had built, owned, corporation itself oper- railroad for the exclusive benefit ated both lines stockholders. companies ceased, constituent under also, Necessarily, for competition in active trade and to be com- combination, a have lines, become, practi- their respective merce along corporation, the name one consolidated of a cally, powerful sole, if not thé principal, object holding corporation purpose out carry of which was original formation NORTHERN CO. SECURITIES UNITED STATES. 327 Harlan, J., Affirming TJ. Decree. combination under which between the competition constituent would who companies cease. Those were stockholders Great Northern and Northern Pacific and became stockhold- ers are now holding company preventing interested all competition between the two lines, owners or of certificates of stock in the will holding they company, see it that no is tolerated. competition They will take care that no persons chosen directors of the com- are holding who will pany permit competition between the constituent companies. result of the combination that all .The is of the constituent earnings companies, make a cominon fund in the hands of Securities to be Company dis- tributed, not basis earnings of the respective constituent each companies, acting in- exclusively its own terest, -but upon the basis of the certificates of stock issued by the No holding company. scheme or device could more certainly come within the words of the act —“combination in the form of a trust or otherwise ... restraint of com- merce among several States nations,” foreign —' or could more effectively certainly suppress free competi- tion between the constituent companies. This combination / is, within the meaning act, “trust;”- if not, but ais combination restraint and international com- merce; .and that enough condemnation, it under the brin^ of the act. The mere existence of such a combination and the by*the power acquired holding company trustee, as its consti- to, tute menace and a restraint upon, that freedom of com- merce which intended to Congress recognize protect, and which the public is entitled' to have If protected. such com- bination be not all the destroyed, advantages that would naturally come to the under the public operation the gen- eral laws of competition, as between the Great Northern and Northern Pacific Railway will companies, lost, be and the en- tire injmense commerce of the territory the northern part of the United States between the.Great Lakes and the Pacific at Puget Sound will at mercy of a single cor- holding TERM, 1903. J., Affirming Decree.

Harlan, in á distant from the State that poration, organized people territory. undoubtedly right Court was when said—all it Circuit

the court the Judges concurring that combination re —that to the n inevitably following First, ferred to “led it results: in the control the two roads the placed single hands of the Company, Securities virtue of its owner person, wit, of a of the stock of both ship majority sec large companies; for ond, every competition it motive destroyed between two roads traffic, were com .engaged natural the business, by earnings the petitors pooling two roads for the common benefit of the stockholders of com both -;120 Fed. panies.”'' Rep. case record,

Such what being prin- are made control the decision of the case?- Do ciples present must that former adjudications determine controlling questions raised by proofs? pleadings

The contention of the that, Government is be regard had former adjudications, present case must be determined in its Javor. That view and the is contested defendants insist that a decision their favor will not be inconsistent with be in anything heretofore decided would harmony with _ act of Congress. Is the act to construed as forbidding 'every combination conspiracy restraint of' trade or commerce among the or with foreign Or, States nations? only embrace does restraints as are their unreasonable nature? motive Is the which a with forbidden combination or conspiracy was formed all at material.wheh it appears necessary tendency of combination or particular conspiracy question is to re- competition free between suppress strict rail- competing roads in commerce engaged among States? Does act rule for Congress as -a interstate or prescribe, international commerce, operation natural laws of competi- between in such tion those commerce engaged shall not be or interfered by' any contract, restricted combination or STATES. CO. UNITED SECURITIES NORTHERN Affirming Decree. Harlan, J., the af- Congress go regulating far may How conspiracy? carriers engaged corporations state or conduct fairs which, corporations state the States among commerce, in such themselves directly engaged although If carriers? state business yet have control to be stockholders,‘are parties found or their' corporations, re- which otherwise, form of a trust combination, not be they commerce, may or international strains interstate commerce, bemay rule for such any respect compelled n by lawfully Congress? prescribed able earnestly by discussed at the bar were These questions their the full consideration and have received which counsel, importance demands. Act under the Anti-Trust arising case this court

The first 1. The next Co., v. E. 156 U. S. Knight United States' C. was As Freight v. Trans-Missouri was that of United States case by That was followed United 166 U. S. 290. sociation, States v. United Association, 171 U. S. Hopkins v. Joint Traffic 505, Anderson 171 U. S. States, v. United U. 578, States, 171 S. States, & Steel Co. v. 175 604, Addyston Pipe United U. To these & v. S. 38. Lowry, Co. 193 Montague U. Railway, Pearsall v. Great Northern S. be added in the Anti-Trust Act, under 646, which, arising although under which the Great Northern an agreement volved Railway should consolidated companies Northern' Pacific those was to .companies between by competition which v. E. it was held that Knight Co., In States C. United cease. had there involved reference or arrangement the agreement by those en sugar only production to the manufacture (cid:127) directly but it had em combination, in tlie gaged alleged it would then commerce, or international braced interstate would have Anti-Trust Act and by have been covered been Associa Freight v. Trans-Missouri States United illegal; railroad companies certain tion, that an between agreement for their mutual establishing providing maintaining, in respect rules and rates, regulations protection, reasonable TERM, J., Affirming Decree. Harlan, U. (cid:127)of freight.traffic, through local, and by free com- those petition among companies was restricted, was, rea- son of such restriction, under the' illegal Act; in Anti-Trust. United States v. Joint Association, an arrange- Traffic ment between certain companies railroad reference to rail- road traffic among States, by which the railroads involved were not subject competition among themselves, also act; forbidden Hopkins United States An- v. United act States, that the' embraced only agreements dersonat had direct connection with interstate commerce, and that such.commerce for all comprehended intercourse the purposes trade, and all .forms,’ including the transporta tion, sale and purchase, exchange commodities between citi States, zens of different and the to regulate it embraced all the instrumentalities which such conducted; commerce is & Co. v. United Addyston Pipe States, Steel all the' members that the act of Congress court'concurring, made illegal an between certain agreement private companies corpora in in tionsiengaged different the manufacture, sale States whereby of iron transportation pipe, competition them among ayoided, by was covered the Anti-Trust Act; and Mon was in tague v. all the members the court Lowry, again concurring, by that a combination created an agreement between certain in tiles, manufacturers dealers private grates man tels, States, whereby they different controlled or sought control the such articles those price States, con In by demned the act of Pearsall Great .Congress. v. North which, ern Railway, already stated, as involved the consolida tion' of the Great Pacific Railway. Northern “The the court said: consolidation of companies, these two unavoidably will great result corporations giving to de of all monopoly fendant Great traffic in [the Northern] northern half the’ well Minnesota, State as all trans line of continental traffic north the Union Pacific, against which will be but a feeble public protection. regulations acts Minnesota’Legislature'of undoubtedly CO. STATES. UNITED NORTHERN SECURITIES J., Harlan, Affirming Decree that their best public, sentiment general reflected the in competition,” is security incumber this extended extracts from opinion by

We will It is to say of this court. sufficient the former opinions in the abové cases certain are propositions from decisions -the . cage. the present and- embrace Those prop- deducible plainly ositions are: known as the Congress

That the act although Anti-Trust manufacture or no reference to the mere production Act-has within the limits of the States, or commodities several articles to be illegal every contract, embrace and declare com- it does form, or whatever whatever conspiracy, nature, bination be to which or it, directly and whoever parties necessarily in restraint oí trade or among several operates nations; ór foreign States %oith thg'aet

That is -not limited to' restraints in- interstate and ternational trade commerce that are unreasonable in their all restraints but embraces direct nature, imposed by any com- commerce'; bination, conspiracy monopoly upon such trade or That railroad carriers interstate or international eiigaged act; embraced trade .or commerce.are . combinations even among private That manufacturers interstate or international commerce re- whereby dealers embraced by act; are equally strained That has the establish rules which in- Congress and international commerce and, terstate shall governed, Act, has the rule of free prescribed competition the Anti-Trust (cid:127) engaged commerce; those among That combination or which would every extin- conspiracy between guish competition otherwise railroads en- competing in interstate trade or gaged commerce,and would such way restrain trade or commerce, by act; is made illegal That the'natural effect of is to incréase com- competition merce, and an whose direct effect is to agreement prevent restrains instead' of trade play competition promotes commerce; TERM, . J., Affirming

Harlan, Decree. as the act of combination, vitiate such Congress That to. it need not be shown that the condemns, combination, fact, or will in a results result total trade or in suppression a com- but it is essential to plete monopoly, only show that by its necessary it tends to restrain or interna- operation tional or. trade commerce tends create monopoly trade or commerce of the ad- deprive public that flow from free competition; vantages liberty .That the contract does guarantee constitutional from rule of free prescribing prevent Congress compe- in interstate and international com- engaged tition those merce; and, under regulate

That its the sev- among nations, and with foreign eral States had Congress authority enact the statute question. assume, deny we will one, No these were propositions in the former distinctly announced decisions of this court. cannot be their effect avoided They ignored by intima- the. court obiter dicta. indulged tion that the What was said was within the limits of the cases issues made those In our opinion, recognition an- parties. principles must, in former cases under the facts, nounced conceded lead below, an- affirmance of decree unless the objec- special them, which have been tions, some made to the applica- of Congress of the act to the present tion' case are of. a sub- character. We will now consider those objections. stantial argument behalf of the Underlying defendants is the the Northern Securities idea that as is a cor- Company st^te its as of the stock of acquisition the Great poration, Pacific Railway Northern is not in- companies with the conferred powers charter, the en- consistent act of Congress, those against corporations, forcement interference, an, unauthorized the national govern- will be ment with the internal the States creating.those commerce This does not at all us. corporations. suggestion impress There is no reason to had suppose Congress any purpose NORTHERN CO. SECURITIES UNITED STATES. 333 o. Harlan, J., Affirming Decree. to interfere with the internal in nor, affairs the our States, any for ground is there whatever the opinion, contention that Act regulates the domestic By Anti-Trust their commerce. its very act regulates terms the States only among in if foreign act, states. that light, Viewed for, within the powers by must be Congress, respected; explicit Constitution, words and the instrument laws in' enacted Congress its are pursuance provisions, law the in supreme land, “anything the constitution any laws of State to contrary notwithstanding”— States, over supreme courts, over the and even ..over people States, United the source of all under our power governmental system of the objects for which respect con-, National Government was ordained. An.act of Congress stitutionally under passed commerce' power regulate and with among binding all; States nations'is foreign as much if it embodied, terms, so as were in the Constitu-’ tion Every judicial officer, whether of a national or a' itself.'. state under court, of an obligation oath so regard lawful enactment evén Congress. Not less State, still one '‘creatures, its artificial can the way stand of its enforce- ment. If otherwise, it were the Government and its laws might be at the local prostrated feet' of Cohens authority. Virginia, Wheat. 264, 385, 414. These views have been often this court. expressed

It is said .that whatever be the power of a over State such subjects Congress cannot forbid single individuals from of their stock in disposing a state if corporation, even such' corporation engaged-in international com- merce; that the aby state holding corporation,, purchase or the purchase the stock of individuals, of another corpo- ration, whatever matters purpose, are which respect Congress Constitution; has no authority that, under so far as the concerned, Congress is citizens state corporations may dispose property their and invest their money in any way they choose; to all- regard TERM, 1903. J., Affirming Decree.

Harlan, are corporations subject, and state matters, citizens such authority lawful to the State authority, only whose reside, or laws such under corpora- citizens (cid:127) unnecessary It is this case to con- are organized. tions abstract, court need not general questions. sider such ex-, with them. are not to be They itself now concern here determined, and well be for may left consideration amined and their determination. necessarily involving in' Case some that the contention of connection, suggested it is In this and in ownership stock acquisition is that Government commerce, interstate is itself corporation a state railroad in interstate commerce. This be engaged that corporation in ways, in different sometimes express is made suggestion instance, For it by times is said words, implication. .at'other whether the over Congress here is that the question to the the owner- regulation commerce extends interstate by railroad reason of companies, state of the stock ship it Again, commerce. is said that their such engaged being whether the Northern is Securities this case only.issife .the in other state hold stock corpora- acquire Company can asked, whether further, generally, organi- it Still tions.- is not under the control of ownership railroads zation-or into they came existence? Such whose laws under tire States are, case we think, wholly issues as Statements mark; wide of the it is the very setting are Unwarranted easily to be stricken down. We do men of straw of mere up any such con- the Government. makes that not understand those statements imply. any positions of takes such tentions the mere ac- control may that Congress not contend It does in a state corpora- of stock ownership or the mere quisition does it contend Nor interstate commerce. tion engaged in corporations organization control the state can that Congress in interstate inter- to engage their charters authorized that may contend Congress But it does national commerce? commerce by any means the freedom protect and-not that.are lawful prohibited. are appropriate that STATES. NORTHERN SECURITIES CO. UNITED Hablan, Affirming J., Decree. It contend that no Constitution. does state' corpora- of the enforcement of way the national tion can stand What the Government' will, expressed. particularly legally all indeed, here, it is the ex- of, complains complains the stockholders of among competing istence of a combination which in violation- of the act of companies Congress railroad international through restrains interstate of a- common trustee to act for corporate designated agency free between repressing competition both them. companies the mere question ownership Independently of a can corporation, or of the state organization reason a combination is not-embraced by said the very- Act? May Congress terms the Anti-Trust declare that combination to-be illegal? Congress legislates If the pro- tection of the it not on the public, proceed ground that aby when- effected combination are wrongs powerful more more dangerous require stringent supervision than when effected they are be Callan single person? v. Wilson, to 540, 127 U. How far the S. 556. courts ingo order to to the act of give Congress, effect the remedy evils it was that act to are designed by suppress? These confessedly ques- moment, they tions will great now be considered.

By Constitution, the words the express Congress has power to commerce with “regulate nations and foreign among States, and with In' several the Indian tribes.” view of the numerous decisions of not, this court there ought this day, at. to be doubt as to the general In scope power. Some / circumstances regulation may the form properly and have take the effect of In prohibition. 545; re Rahrer, 140 U. S. Lottery Case, U. 321, 355, S. and authorities there cited. Again 188. again court has reaffirmed the doctrine announced the great judgment by rendered Chief Justice Marshall for the Wheat; court in Gibbons v. Ogden, 1, 196, 197, 9 that the power of Congress, to regulate commerce States and among foreign nations the rule power “to .prescribe which is. commerce is to be that such governed;” power “is complete

336 TERM, 1903.

Harlan, J., Affirming Decree. U. 193 S. itself, may be exercised to its extent, utmost and acknowl .in no limitations other edges than are prescribed the Constitu tion;” “if, that as has always been understood, the sovereignty limited to Congress,-though specified objects, is as plenary to those objects,-the over power commerce with foreign na tions arid the several among States, is vested as Congress it as would be in a absolutely single government in its having constitution the same restrictions on the exercise 'are States;” Constitution of, United in.1 .found sound construction of the Constitution to allows Congress discretion, “with' large respect means which the it confers are to be powers into which execution, en carried body perform able that the high duties it, assigned .manner most beneficial to the people;””and the end to within accomplished scope of the “all Constitution, which means are appropriate, are plainly adapted n that end are not prohibited, and which are constitutional.” Brown v. 419; Wheat. v. Maryland, Davenport, Sinnot 238; 227, How. Henderson v. The Mayor, 259; 92 U. S. Rail Husen, road v. 465, 472; 95 U. S. Company County Mobile 691; Kimball, v. M., 102 U. S. K. & Texas v. Ry. Haber, Co. 626; 613, U. Lottery Case, In v. 6 Wheat. Virginia, 264, 413, Cohens this court said that the United were for many important purposes “a States single “in nation,” and that all commercial are regulations we one the same people;” has since frequently declared among that commerce several States a unit, and sub to national Previously, ject McCulloch Maryland, control. 316, 405,

4 Wheat. the court had said that the Govern ordained- and established was, ment Constitution within it, “the powers granted all; the limits Government of (cid:127) all; all, are and acts for delegated represents its powers' action.”, within its of all,”-and “supreme sphere was Ás late In Debs, 564, 582, every case of re this court, as the said: “The of concurring, strength member entire it. part used enforce land the Nation NORTHERN r. SECURITIES CO. UNITED. STATES- 337 Harlan, J., Affirming Decree.

full and free exercise of all National powers and the security of all entrusted rights by the Constitution to its care. The arm of strong the National Government may be forth put all brush obstructions to away the freedom of interstate com or merce transportation If mails. the emergency arises, army Nation, and all militia, its are at the service of the Nation to compel obedience to its laws.” .-

The means employed respect combinations forbiddeh- Act, Anti-Trust and which Congress deemed germane to the end to be accomplished, was to a prescribe rule for in- terstate and commerce, (not international.. for domestic com-. merce,) that it should not be by combinations, vexed conspir- .. acies which restrain monopolies commerce destroying /We restricting competition. say Congress prescribed has that. - in- rule, such a because all the prior cases this court the Anti- Trust Act has been construed as forbidding any combination- which by necessary its com- operation’destroys restricts free other, those petition among engaged commerce; in words, to destroy or- : restrict free in interstate competition commerce to restrain such commerce. 'Now, can court' say that such rule is prohibited by the Constitution or is not one that could Congress appropriately when exert- prescribe - ing under clause the Constitution? operation Whether the free of the normal laws competition is a wise and wholesome 'rule trade' and commerce is an for. economic which this .court' question need not consider or de- Undoubtedly, termine. there are those who think that interests and business general prosperity country will ' if the be best rule is promoted competition not applied. But who there are others believe that such rule more necessary days these enormous wealth than it ever was in any former of our all period history. may, Be this as it Congress in effect, has, recognized the rule free competition by de-' n daring combination or illegal every conspiracy restraint interstate and commerce. As in international the judgment- and the Congress public general convenience welfare cxciij —22

von. 1903;' TERM, Affirming

.Harlan, J., 193 U. Decree. when, the natural of competition laws will be best subserved in commerce, by those engaged are left undisturbed in rule a has embodied that that Congress statute, and as. if matter, of the this is remain be, all, must the end not of men. laws, and government created under laws corporations said railroad It is authority be with only of a can consolidated State that, in case is made we'cannot Why suggestion State. combination here understand, for there is no pretense under of the States whose authority was under the question But even were created. these railroad corporations laws follow consolidation would not that the the State allowed railroad corporations, having of two or more state stockholders commerce, and in interstate law- lines could engaged competing distinct to hold the corporation and form a combine fully and, by com- corporations, destroying of the constituent them, in violation act Congress, between petition with States and foreign commerce nations. among restrain Congress, rule of competition,-prescribed And we and cannot in any at new trade commerce. all moved Congress-to reason that incorpora- as to the doubt reason-was thus That stated that rule'into statute. tion of Association: "Has nqt v. Joint Con- States United Traffic commerce and the course to interstate gress regard of railroad corporations, in the case it, power of regulating combination shall be legal contract or that no say. out the operation shutting shall restrain trade We think it has. . . '. law competition? general powerful of these large combination corpora- It is the territory vast sections influencing trade tions, covering thereof, whole extent one acting body .the throughout .ydiich the over combination extends, matters that- all which, so as the evil, regard alleged constitutes far restrains interstate commerce, operates combination and to prohibit.” (pp. legislate has Congress 571.)' applied That a'rule was to interstate commerce SECURITIES CO. v. UNITED STATES. 339. NO.RTHERN J., Harlan, Affirming Decree. surprised any not have one. Indeed, should when Congress contracts, combinations and conspiracies declared restraint than, or commerce to be trade it did more illegal, nothing interstate commerce a rule that had been apply long ap- the several States .when by dealing with plied combinations in restraint of their domestic that were commerce. The deci- subject sions in are general only courts nu- state they and instructive but show the merous circumstance's tinder Act was which the Anti-Trust It well passed. be assumed when that' enacting statute, Congress,, that shared the general few that a powerful apprehension corporations combina- obtain, and, sought restrained, tions unless obtain’ would control the entire such absolute trade and commerce of the would be detrimental the country general welfare.

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

Harlan, Decree. hungry mouths are stinted. The paralyzed influence a. lack a of an supply price rise article of such necessity cannot be measured. It prime permeates the entire mass of the and leaves of its community, few members un touched Such a combination more withering is blight. contract; than it is an offense. ... In all such a combina unlawful, injurious tions where the purpose gist Men often do com can conspiracy. offense is no could many severally what one accomplish, bination innocent. . . when done one would be . even what combined, in numbers when law There is a potency where, is the The same overlook, injury consequence.” cannot Elmira Co., in Arnot Pittston & applied were Coal principles 565, which was the case of combination N. Y. of them a give in order one companies, monop two coal Court of oly particular region, Appeals coal “ such a a combination to effect holding purpose New York all and that public, to the of the. contracts is inimical interests contrary an end are public policy, to effect such designed They were also the illegal.” applied and therefore Su v. of Ohio Salt Co. Guthrie, Ohio Central 35 Court preme 672, which was the case of a combination 666, among Ohio St. of in a large salt-producing territory, manufacturers salt the say “It is no answer to that in the saying: competition court destroyed, not fact the price trade was salt will not unreasonably was advanced. Courts commodity as to the injury public; the degree stop enquire of inflicted such contracts to know that the inevitable tendency it is enough of to the is injurious public.” 346, 350, which was Illinois, v.

So, in 79 McConoughy, Craft by which com- dealers grain of a combination among the case as competition stifled, saying: long court “So was petition trade, laws of The safe. free, was the interest was public guar- all was competition, in connection the rigor combination created the secret anty public required,-but created, a destroyed all competition monopoly the contract 341 r. SECURITIES CO. STATES. NORTHERN UNITED Harlan, J.; Affirming Decree. had no, .which the interest against public protection.” Again, v. Gas Trust People Chicago Co., Illinois, 268, 297, which validity involved the of a organization gas corporation which obtained the business of monopoly illum furnishing in the inating gas city Chicago stock of four by buying cither it was avail it ¿hs companies, any' said: “Of what is number of be gas companies may formed under general law, if a trust can .incorporation giant be clothed with company buying up stock and .of holding property and, the control companies, through thereby can attained, direct all their operations weld them into one com huge bination?” To the same effect are cases almost too nu- ' merous to cited. But them among we refer Richardson v. Buhl, 632, which the case of the Michigan, organi zation in' corporation Connecticut to unite one cor all match manufacturers the United States, poration obtain thus to control of the business manufacturing Mill matches; Santa Clara & Lumber v. Hayes, Co. 76 Cali 387, which fornia, 390, was the case a combination among control, manufacturers lumber, by which it could the business localities; in certain and India Association Bagging Kock, La. Ann. which was the of a case combination among commercial various firms control the prices used bagging planters. cotton cases, cited, just true, relate to the domestic com States. the, merce of the But serve to they show authority States possess guard the public against combinar tions that individual repress and interfere with enterprise of the natural operation laws competition among those in trade within their limits. engaged serve also to They give to the declaration of this court in point Gibbons v. Ogden, 9 Wheat. 197—a never modified principle by any subsequent limitations that, imposed the the subject Con decision— stitution the powers granted, exercise by that with poy^er “the over commerce foreign nations instrument^ in and is vested among the several States as Congress absolutely TERM, 1903. J., Affirming Harlan, U. Decree. in it would be in a its constitution single government having as same, restrictions on the exercise of as are found power there, States.” then, any the Constitution Is United -¿hat, from conclusion to such escape subject only restric tions, over and international Congress power as and State complete commerce is full as is power down over If a State strike may commerce? domestic by destroying that its domestic commerce combinations restrain what commerce, such amongiliose engaged free competition protect competent that of except 'Congress, power, wv-enassailed and international commerce freedom of interstate stifling commerce 'ey combination. restrains such that in it? those competition among engaged n if held that, asked to to embrace Now, adjudge the court,'ife Act is the Anti-Trust ds, repugnant the case before this In view we are unable Constitution the United States. not defendants could to concur. contention The. effect, overruling prior decisions sustained without, ag/fo/the of the Anti-Trust Act. scope validity court can strike down a combina held, Congress as cóiírt has If, corporations persons private tion private between that in Addyston in iron among pipe (as trade the States restrains States), tiles, or in grates v. mantels & Steel Co. United Pipe surely ought be doubted (as Montague Lowry), illegal declare a combination that that Congress has States, foreign nations, among commerce restrains lines of railroad competing companies on 'Carried over such commerce. engaged exercising public-franchises, ,We strike down combinations agree Congress may cannot tiles, in iron pipe, and dealers grates manufacturers 'among among the restrain States mantels down combinations among not strike stock but articles, carriers, which restrain com railroad holders of competing transportation passengers as involved merce private parties may States. If the several among property themselves, among restrain interstate combination not, by n v. UNITED CO. STATES. SECURITIES NORTHERN 343- n Harlan, J., Affirming Decree. U. in violation commerce of an act of and international Congress,- can restraint be tolerated when much less such imposed commerce as imposed upon to be carried on over attempted Indeed, the contentions the highways. public defendants in .companies not all the the why may railway a*resound United in under state engaged, charters, that are States, interstate enter into a commerce, combination such and international in of a by one here device question, as the hólding the absolute control throughout obtain corporation entire passengers freight, beyond rates country-of power their against exactions? Congress protect public in behalf of the defendants leads necessarily to such argument invested results, Congress, although by places people with full Authority United States regulate in commerce, a condition of utter and international helplessness, protection public against so far as combinations is concerned. Congress

Will it be said that can meet such emergencies by the rates interstate carriers shall be prescribing in transportation freight If governed passengers? fix has' the such rates —and that Congress power ques- no we does choose to express opinion tion exercise its —it in or to that extent. It way has, all will power agree, a as to the discretion means to be large employed exercise to it. For it has determined granted .present, farther than to protect no the freedom go the States and foreign declaring illegal states among contracts, combinations, all re- conspiracies monopolies and make it a commerce, straint of such offence to violate public rule thus How much further it prescribed. may. go, we do (cid:127) say. not now We need at this time consider whether only has exceeded its the statute here powers enacting question. without Assuming, discussion, further before case is within the terms of the and that the act act, us is not excess we recur to the powers Congress, how far question,* the courts may go reaching suppressing the combination teé TERM,

Harlan, J., Affirming Decree. agree in the bill? All will that if described the Anti-Trust Act constitutional, and if the combination be in question the courts enforce provisions, violation the pro- visions the statute such orders and .decrees as are neces- and as sary that end consistent with appropriate to it, the legal procedure. all, fundamental rules of wé take And court, will agree, firmly by as established the decisions that over to of;Congress the commerce extends all’the power commerce, every instrumentalities of such and to device that with may be to interfere the employed freedom commerce States and with among foreign the nations. we. Equally, will the assume, agree that Constitution and the legal all of-Congress are, by express enactments words of the Consti- in land, law of tution, supreme anything the the the constitu- tion and to any Staté the contrary laws notwithstanding. the Nevertheless, defendants, strangely in enough, invoke their behalf the Tenth the Amendment Constitution- which de- clares that “the to powers delegated the United States by Constitution, nor prohibited by the it to the States, are re- served to the States to respectively People;” and we are confronted that order or suggestion any decree will of the court which prevent Federal Northern Se- from exercising curities it Company power acquired in becoming the stocks the Great holder Northern and companies Northern' will be an Railway Pacific invasmn of the State rights of under Securities Company the. chartered, as rights well as of the of the States creating words, In if other other companies. State New Jersey the. even, a charter to gives corporation, obtaining in to pursuant is fact a combination charter under which the holder of the stocks of in shareholders two com- .becomes railroad peting, parallel companies engaged interstate com- re-, whereby States, competition other merce between roads those is to be spective companies destroyed and enormous commerce carried on over them restrained by sup- must competition, Congress stay its -hands and pressing allow CO. NORTHERN UNITED STATES. SECURITIES (cid:127) Affirming J., Decree. Harlan, to continue to the such restraint detriment of the public because, forsooth,- corporations concerned them some We cannot possible state how it corporations. are conceive is. for contend such a It any seriously proposition. one than that nothing Congress, regulating means less commerce, act in subordination to the will States must their to create No-such exerting corporations. when can for a moment. view be entertained that in the nothing record say It proper passing^ State of New had reason to Jersey tends show of its advantage incorpora- those who took liberal suspect that tion laws had when the Securities view, organizing Company, railway two carriers destroy competition great between of the Union.' interstate commerce distant States engaged under very of the combination was concealed purpose real purposes no clue whatever general gave words organization who about the the Securities brought those that the com- incorporation If the certificate of Company. object' that the was company had stated the pany expressly lines of destroy parallel to between competition competing, the the seen, outset, all would have at that carriers, interstate national and that authority, to the hostility' scheme Congress. -or the act-of was a to violate evade there purpose view of the relations of the We National reject- any as composing Union, and the States that Government contend. Such a view cannot be main- which the defendants just authority United destroying tained without all the of this court It inconsistent with decisions States. National Government over matters powers a merely creating can, by corpo- committed to it. No State into mode, authority its other any project other ration, as to from continent, prevent Congress so and across the States, under the Constitution over it exerting power possesses commerce, or so as to its exempt 'and international interstate commerce- from obedience interstate engaged corporation for such com- by Congress rule lawfully to any established TERM, Affirming Harlan, J., Decree. 193 U. S State any may give that corpora- It cannot be said merce. authority restrain laws, its under tion, created will of the nation as against commerce or international n Every corporation created by Congress. lawfully expressed to the supreme law of the subject necessarily a State is that is made to restrain a state suggestion land. And .yet with the free course of trade and interfering from corporation of an violation act of States, Congress, among (cid:127)commerce of the States. The Federal rights to the reserved is- hostile forfeit the -charter of the Se- not have may court declare how its shares of stock may curities Company; nor it from books, prohibit on its acquiring be transferred may its All or increase stock. capital estate, real nor.diminish regulated by matters are to be the State and like these the end that effect given But to the'company. created Congress will, lawfully expressed, may prevent the national as a holding in its capacity corporation that company, of a purposes out -combination carrying from trustee, of interstate commerce. The Securities formed restraint present combination; the' its head part is itself Company if It would be extraordinary court, front; trustee. could not lay the act of hands executing Congress, doing it from will which, done, company prevent grounds like Congress. Upon can, defeat the act the court the two orders, railroad by appropriate prevent competing from with the cooperating here involved Securities companies In among the States. restraining Company necessary make order about bring the court short, illegal of an combination that suppression dissolution interstate, All can commerce. be done without restrains degree upon just authority the the States. infringing any will only of the below mean that judgment affirmance no The is than stronger however the law or combination, powerful, pretext to avail itself mf the that to will permitted prevent be a if would defeat which, done, legal that enactment doing it rights to attack the reserved is States. It Congress, CO., v. UNITED STATES. (cid:127)NORTHERN SECURITIES J., Affirming Decree. Harlan, represents all, can, mean Government which that would compel within limits of its obedience acting powers, when mean no device authority. It would that to its evasion may device been skillfully however have provisions, .its is contrived, combination, formed, no whomsoever land, the reach of law of the if'such device beyond supreme directly combination restrains commerce operation 'its foreign with nations violation of the among States .or Congress. a‘ct-of confidence, upon

The defendants with some the case rely, 21 Wall. Maryland, of Railroad Company with any is inconsistent nothing principle' But we have.said recognized there that case. announced court its that a own terri State has “over principle plenary powers franchises, its corporations,” its its tory, highways, that are bound to sustain constitutional observed “we as well as States, those of the prerogatives powers are before us States, they brought whenever for adju United what Of consequences.” no matter dication, sense, power over every has, general plenary State course, it that a State, is conceivable when But corporations. its creation, of its power corporation may prevent over exerting by Congress power with which any the exercise or embarrass In the Constitution? the case just referred is it invested and it not to be say, supposed court does that to the in a State to say, any prevent exists ever will enactment of Congress, a lawful to invest enforcement business corporations, whatever engaged, enactment or defeat its authority disregard such legitimate On has court operation. contrary, steadily held doctrine, vital well as to to the United States as the States, a state in the exercise of its enactment, even passed acknowledged in case to the yield, conflict, must powers, United States and the supremacy of the Constitution its provisions. acts of This pursuance Congress enacted nature as well from the of the Gov- said, the court has results, 348 TERM, 1903.

Harlan, J., Affirming Decree. 193 U. S. words of Constitution. v. as from the Gibbons eminent 22 v. How. 1, 210; Davenport, 243; Wheat. Sinnot Ogden, 9 564; Missouri, In re U. S. Kansas & Debs, 158 Texas Railway In Texas 613, 626, v. v. Haber, White, 7 Wall. “that 700, 725, the court remarked ‘the people each State State, a its own compose having government, and endowed with all functions essential to separate independent existence,’ union, and that ‘without the States could there body be no such the United States. political County v. 76. Not can there Oregon, only, therefore, Lane Wall. be no States, loss to the separate independent autonomy through their union under the but Constitution, unreasonably said that the and the preservation States, much governments, maintenance are as within the their and care of as the design the Constitution preservation Union and the National maintenance Government.” These doctrines are at the basis of our Constitutional Govern ment, safety. cannot be disregarded The defendants also on Louisville & . Nashville Railroad rely v. In that case it Kentucky, 677, 702. was contended assumption the railroad that the company State to forbid consolidation of parallel lines competing was an interference with Congress over power interstate commerce. court that but little observed need be said answer to such for “it has never proposition, been supposed that the dominant over interstate com- power Congress took from of legislation merce the States the with re- power to the so far as spect commerce, instruments of such the legis- lation was within ordinary powers.” case police But. a division of distinctly "recognized power be- there tween and the to interstate Congress respect railways, States that com- and that had the to control Congress superior right and forbid while to the States therewith, interference merce remained the to create and to the instruments regulate of such commerce, so far as to the conservation necessary interests. If public anything there is that case which STATES. UNITED CO. SECURITIES NORTHERN Harlan, Affirming Decree- 193 U. J.r in corporation may state that a State evenfintimates Con- commerce, over restrain directly way we been control, Constitution, complete have gress has, unable find it. relations of the General Government

The question contention by the presented specific is again with the States the intend "to limit did not Congress that of each defendant n define create their corporations, power of the several States their, who and determine capital, fix of the amount purposes, their, All true, that is generally sell stock.” buy, own and may far meeting falls short of the but the contention speaking, case. To meet this this contention controlling questions said But things already opinion. some we must repeat harm. will do no sound, be repetition what we have said concerned, the United is far the of States So as Constitution a define its may, indeed, corporation, powers, a create State which it of its stock the' mode prescribe amount corpo authorize of its may It even one transferred. every kind; domestic, of inter commerce engage rations purely international.- or regulatioh state control and- the.State, with is, course, commerce of a State domestic what is done has it so as long no direct over Congress with operations' State does not interfere by A Government, Congress.- General any legal enactment State, if it submit to the existence do, may chooses so to even its internal that restrain combinations within its limits But trade. neither a nor state its stockholders corporation can, by by reason or means of the State non-action.of combination stockholders, interfere any among enforcement Con complete lawfully by rule devised any for the gress conduct of or with among commerce the States foreign nations; for, seen, as we have interna tional is' by commerce Constitution under the control of Congress, and it to the belongs legislative department Government com prescribe rules for conduct that If it merce. were otherwise, declaration the Constitu TERM,

Harlan, J., Affirming Decree. tion of. supremacy, the supremacy as well of the in pursuance laws made of its provisions, was waste words. Whilst every instrumentality domestic subject to state control, instrumentality of every interstate commerce may be reached and controlled national authority, so far as to it to the rules compel respect such commerce lawfully established by Congress. corporate No can person excuse from or of that rule under departure violation plea that which it has done or omitted to do is or not permitted forbidden State under into authority came whose. y We no repeat existence. can State endow of its an corporations, combination of its citizens, with authority restrain interstate international commerce, disobey or to the national will as in legal enactments of Congress. manifested as long Congress keeps So within the limits of its authority Constitution, defined no infringing recognized or rights that by instrument, secured its of regulations and commerce, international whether founded in wisdom or riot, be submitted all. Harm must and only harm can come this, from the failure of the courts to recognize fundamental of constitutional principle construction. To it depart from of of the circumstances special cases,'or because because the rule, may. possibly in its affect operation, the interests of bush is to the and endanger safety ness, integrity our institutions mean and.make the Constitution it what but says what wish it to mean at a parties interested particular time and circumstances. The particular law supremacy under of the upon foundation rock our rest. The is the institutions in States v. Lee, 220, said United 106 U. court law, this in our power system of supreme only government. this court rests than to duty upon no higher enforce, And legislative department will of the decrees, Gov in such statute, as a unléss be expressed statute ernment, and violation of plainly unmistakably Constitution. is, If constitutional beyond the statute of Congress, in the a solemn the court would fail if performance duty v; STATES. 351 CO. UNITED NORTHERN . SECURITIES Affirming J., Decree. Harlan, S.U. that than more can be said nothing But declare. not so did as understood court must not be has erred —andThe Congress error remedy erred—the or has not it has that saying .the Senators of new mischief is selection and the attendant will make such who, by legislation, Representatives, and statutes, as new statutes, or1'adopt existing changes consistent constituents their be demanded law. the' based made argument

. were Many suggestions to be end prove would Anti-Trust Act that the thought business Disaster to in its consequences. mischievous will follow intimated, been ruin, it has financial wide-spread made were predictions Such of its provisions. the execution they' But under that act. arising heretofore in all the cases in this history monopolies It is the verified. have not been habitually ruin are that predictions country in'England to restrain by legislation, is attempted, them when it made by exac- their public against protect operations and their behind cases, seek shelter they former this, In tions. consti- behind' the States even rights the' reserved court has contract. But this tutionaj. liberty guarantee did not touch Congress the act of adjudged heretofore involve did not liberty of contract States, rights of free advantages public com- deprive a right of contract does Liberty and commerce. trade petition the’ defy or individuals to liberty corporation not imply Nor' does the enforce- will, expressed. when legally national in any Congress,infringe, proper legal enactment ment every acquire inherent one general right sense, must rights, like all other be That property. right, hold in law. subordination to the exercised in forebodings if which gloomy

But even the court shared (cid:127) action not refuse to respect it could indulge, the defendants Government what it has done branch of the legislative constitutional power. sugges- within the limits of its have, we apprehend, origin business their of disaster to tions TERM, J., Affirming Decree. 193 U. Hablan, who to parties opposed zeal are the policy in the underlying 'or in Congress are interested the result the act of this par- case; at any rate, suggestions ticular that imply the court ought and to refuse the enforcement of the provisions of inif, Congress the act its judgment, was wise prescribing which'the rule conduct interstate international is to be that governed, every commerce combination, whatever form, its restraint of such commerce and the monopolizing to such monopolize attempting shall be .illegal. as to These, questions plainly, policy legislation are. another belong and this department, court has no to. supervise legislation function to from the standpoint wisdom We poliejn only need say Congress au- has thority declare, language act, as interpreted prior cases, declared, has, the freedom of effect. shall interstate international commerce not be obstructed by any combination, or disturbed conspiracy monopoly that will restrain such commerce, by preventing the free operation competition among interstate carriers engaged the trans- portation passengers This court freight. cannot dis- regard that declaration unless Congress, passing statute be held have question, transgressed limits prescribed for its action the Constitution. But, as already indicated, so it cannot be held consistently with the provisions of that instrument. in question

The combination here may have been for the benefit of who pecuniary those formed or caused it But the private formed. interests of persons corporations made paramount cannot be the interests the general Under the Articles of Confederation commerce public. among was States to vexatious original subject regula- and local that took account of the general tions no welfare. it. But was for the protection general interests, as involved in commerce, international that Congress, repre-. the whole senting country, given by the Constitution full regulate commerce among States and with foreign NORTHERN CO. UNITED STATES. 353 SECURITIES v. Harlan, J., Affirming 193 U. S. Decree In v. 446, nations. Brown 12 Wheat. it Maryland, 419, was who “Those felt the from this state of injury arising said: andthose who were things, capable estimating influence , of commerce on the prosperity perceived the ne nations the control over this to a cessity giving important subject It may any be doubted whether single government. from

evils the feebleness the Federal Government proceeding which contributed more to that revolution introduced great system than the 'and conviction that present deep general commerce to be Railroad ought regulated Congress.” in Freight we said the Trans-Missouri Association companies, commerce, “are instruments of their business i case, s itself.” And such it must be remem companies, established for the. bered,, “public highways, primarily operate are people, subject gov therefore convenience v. control and Cherokee Nation Kansas regulation.” ernmental 641, 657; U. S. &c. R. R. Co. v. Co., Chicago 135 Railway Co., 79, 90; 139 U. S. Interstate Commerce Com Pullman Car U. v. Brimson, 447, 475; v. S. United States Trans- mission Association, 290, 332; Smyth Freight Missouri U. v. Ohio, Lake Shore &c. 466, 544; Ry. U. S. Co. Ames, 169 . carriers, public When such the exercise 301 transportation franchises, passengers engage they become—even state they the States among freight may lawfully to such rules as Congress corporations subject— commerce. for the conduct establish that the circumstances under which in argument It was said obtained the stock of the Company Securities the Northern an investment imported simply companies constituent .stock; purchase corporations, of other .stock not contended,- it is was forbidden or purchase, investment made could not be illegal company the charter of the fallacious, wholly This view act by any Congress. There was no actual transaction. with the

does comport the Northern sense, by any substantial investment, actual two com- in the stock constituent Company Securities von. cxciii—23 - TERM,. 1903.

35á J., Affirming Decree. Harlan, transaction, not, form, such was, If it pañíes. However, companj? may kind. have that' one fact, Great North- itself acquired for no matter it obtained the Railway how companies, Pacific ern in it or the con- all held acquired do the stock so, to means to be and used sup-r was companies acquired held stituent It came into companies. those between 'competition pressing If had full -any one knowl- only purpose. existence and accomplished, to be as what designed what was edge combination accomplished, by question, actually was In testimony his he was Morgan. asked, defendant it was the of both the stocks companies] “Why put these.[constituent frankly answered: “In holding company?” one .into He. was holding company question place, first simply]a it had no other alliances.” That custodian, because disclosed transaction, nature of the was only organize actual Company Northern Securities as holding company, a real or absolute hands, purchaser whose as but owner, to be custodian, placed as were the stocks the con- simply custodian to companies represent the com-' stituent —such bination formed between shareholders the constituent necessary effect of the direct and such combination companies, and already indicated, restrain being, monopolize inter- or by (to use suppressing state the words of this “ court States v. Joint Association) smothering” United Traffic between the lines of two railway competition carriers. We will now as to the nature and inquire extent of the relief to the granted Government decree below. ' it the decree the Circuit Court was found and By adjudged the defendants had entered into a or con- combination in restraint of trade or spiracy commerce among the several such as the States, act denounced as Congress illegal; and that all of the stocks of the Pacific Northern Railway Company all and the stock of the Great Northern Railway Company, to be owned claimed and held the Northern Securities Com- was it acquired, pany, held, virtue such com- NORTHERN CO. UNITED STATES. SECURITIES Harlan, J., Affirming U.' S. Decree. or conspiracy,., restraint trade and commerce bination It the several States. decreed among as follows: therefore “That the Northern Securities Company, officers, agents, be and employes, they are hereby enjoined from servants attempting further stock of acquiring, acquire, either of aforesaid railway companies; that the Northern Securities be Company enjoined voting from the aforesaid stock which now holds or from acquire, attempting vote it, at any meeting stockholders either the aforesaid and from railway companies exercising attempting to exer- control, direction, supervision cise or influence whatsoever the acts and of said doings over railway companies, either them, by of its holding virtue stock therein; that the Pacific Railway Company the Great Northern their Railway Company, officers,directors, servants agents, are they hereby respectively and collectively.enjoined from the. stock aforesaid to permitting by be voted the North- in- or Company, ern Securities its behalf, by its or attorneys at any corporate election for or agents, directors officers of of the railway either aforesaid companies; they, together officers, directors,, with their servants and agents, be likewise and respectively restrained from enjoined paying any dividends stock, Northern Securities on Company account of of the aforesaid railway companies-which either it now claims and that hold; to own and the aforesaid railway companies, directors, servants and officers, their agents, be from enjoined or permitting suffering Northern Securities Company as such any agents, of its officers officersor agents; to exer- control cise whatsoever over the corporate acts either of the. aforesaid railway companies. But herein con- nothing shall tained be construed as prohibiting the Northern Securi- ties from Company to the returning transferring Northern Pacific Railway -and Company the Great Northern Railway either, and all Company, respectively, any shares of stock in ' railway said, of said which companies The Northern Securities have- heretofore received from such may stock- Company, TERM, 1903. J., Affirming Decree.

Harlan, stock; nothing its own herein con- exchange holders construed as the Northern Securities prohibiting shall be tained of the assignments such transfer making from Company now be the person persons- to such aforesaid stock originally its own stock issued ex- and owners of holders -for the stock claimed to- have been or in payment change railway companies.” it in the aforesaid acquired court was appeal per- and before Subsequently, in the Circuit Court to this effect: an -order was made fected, an bond to' the United approved “That giving in the of fifty of the defendants sum or on behalf States their prosecute appeal conditioned dollars thousand which may all result to. the United damages and to pay effect contained order, portion the'injunction from this States Pacific forbids the Northern final decree herein in the Railway Company, and the Great Northern Railway Company from directors, agents, paying servants' officers, their Securities on account of Company' to the Northern dividends which the Securities railway companies either hold, is suspended during claims to own Company day. herein this All other allowed appeal pendency and of the contains remain injunction the decree portions this order.” and are unaffected in force below, can be made to the decree form objection valid No If was a combination or conspiracy there in substance. of- between the Congress, the act of stockholders of violation of Pacific Railway and the Northern com- the Great Securities Cbmpany the Northern formed whereby panies, intérstate whereby holding -corporation, aas was companies the constituent it restrained, lines of over the act, execution of that court, that the to must follow parties could the it, prohibit to evade to the the efforts defeat which things from the doing specific béing combination done .the act. To that by say the result denounced affect the would it say that to powerless so far is enforce go court could illegal--combination, powerless suppress act or CO. UNITED STATES. NORTHERN SECURITIES J., Affirming Harlan, Decree. as that combina- public against the rights protect .of tion. had alleged that combination ac-

It is here suggested the commencement of this suit, its before object complished had then and had organized, Securities Company in that of the stock of the two constituent majority received actually a. can now no effective relief argued, companies; therefore, it.is This same view was pressed Government. to the granted It completely and was was Court, rejected. the Circuit it the second “Concerning when said: that court answered novel, say it would be a not-to that observe contention, we the Anti-Trust Act to hold after absurd, interpretation is formed and has acquired an unlawful combination namely, to restrain right acquire, no which it had power and is competition, proceeding to commerce by suppressing the combination use it and purpose execute of the power that it has possession it must be left’in formed, it. Obviously to exercise the act, with full freedom acquired, no will bear such construction. fairly when Con- interpreted, place any direct restraint destroy power aimed to gress commerce, on when combination interstate trade natural or formed either artificial conspiracy, persons, such a had and the acquired; been Government as well intervene and demand relief after the combination is fully as while it In organized process of formation. is.in instance, as have already said, we Company Securities made-itself a to a combination in party of interstate restraint antedated its as came organization, soon into existence, doing so, course, under the direction of the very individuals who it.” The Circuit Court has promoted . actual,

done only what Its situation demanded. decree has done than to meet the nothing requirements more statute. It could not have done less without declaring impotency who have with those violated the law. dealing interests, will decree, executed, destroy, not the property original'stockholders the constituent companies, but TERM, 1903. 358 IT, J., Affirming Decree. 193 Harlan, as the an instrument of holding corporation combination of which it was the to do illegal spirit, master interstate and which, done, that would restrain international of that power being restrained, commerce. The exercise will be left object Congress accomplished; undisturbed, will be valueless for any practical pur- the act question pose.

It is said that this contains criminal provisions statute must therefore The rule be.strictly construed. that sub- is a ancient one. It very that ject salutary only means we must not cases within the a bring provisions such statute not it, are embraced nor clearly by narrow, technical or forced construction of exclude cases from words, it that are obviously provisions. within its What must be for sought is the intention of the and the always legislature, duty court is to effect to that intention as give disclosed words used.

As as the case v. Inhabitants early King Hodnett, T. R. 96, Mr. Justice Buller “It is not said: true that the courts of penal statutes are to narrow exposition the construc- In Wiltberger, tion.” United States v. 5 Wheat. 76, 95, Chief Marshall, delivering judgment Justice this court and to the rule that statutes are to referring penal be construed said: “It is modification of the ancient strictly, maxim, amounts to laws are to this, though penal be construed are not to be construed so strictly, they strictly as to defeat legislature. the obvious intention of the The maxim is not be so as to narrow the words of applied the statute to the. their words, exclusion of cases those ordinary accepta- that sense which the tion, legislature has obviously comprehend. used would The intention of them, the legis- is to be collected from the words they employ. lature Where is no there is no words, there room for ambiguity con- Morris, In v. Pet. United States 464, 475, struction.” Taney, said: “In by Chief Justice court, speaking expounding will not certainly the court extend it statute penal beyond n ' CÓ. STATES. NORTHERN UNITED SECURITIES (cid:127) Affirming J., Decree. Harlan, it has been long of its well meaning words; the plain Yet strictly. must be construed settled that such statutes be defeated legislature ought the evident intention of the So, 5 Wheat. 95.” a forced and overstrict construction. Mr. in The 1 Gall. Justice 114, 117, Story SchoonerIndustry, to statutes penal "We are bound construe undoubtedly said: their beyond meaning and not them strictly; to extend .obvious we áre bound to hand, On the other by strained inferences. import words, to the manifest interpret according them the words and the mis and -to hold all which are within cases In chiefs to be within influence statute.” the remedial "I agree another case eminent said: to that’ jurist, the same in that that is, penal rule its and statutes sense;.and true sober are not to extended cases not enlargedby implication be ’ and In obviously short, within their words ... purport. in all is to it to me that the course these cases appears proper and search out follow the intent the true legislature, words harmonizes the best with adopt sense the .which the manner the context, promotes apparent in. fullest v. Winn, States objects legislature.” United policy 290, 212. In 6 Sumner, 209, 211, Bartow, Cowen, People a "Although court of New York said: statute highest penal court not to strictly, disregard is to be are construed intent of the other it is well plain legislature. Among 'things, a good settled that statute which is made of the public, it be to receive an ought, although penal, equitable construc in v. Martin, Commonwealth So, Massachusetts, 359, tion.” court of' said: a highest statute, Massachusetts “If a be of two creating increasing penalty, capable construc that construction which in tions, undoubtedly operates favor of life is liberty to be but it is not adopted; justifiable this, any more than case, imagine other ambiguities, merely that a If lenient construction be adopted. ‘ were the court, of a it would be to obstruct privilege easy the public will in enacted; rarely almost statute for it every and exact in happens precise terms, one is so its as to TERM, concurring.

Mr. Justice Brewer, the exercise of doubts preclude ingenuity raising about its There cases construction.” are almost without number in n country and in to the England same effect. long-established Guided these rules of it construction; is that if manifest the Anti-Trust Act is held a embrace is now us, case such before intention of plain legis- as^ lative the Government will be If Congress branch defeated. has the words used in the this and not, act, described like find cases, would, we words that apprehend, impossible This,.it remembered, would describe them. must be suit- “to by authority Congress prevent instituted equity, restrain violations of act,” 4; court, virtue of § settled rule may mould governing proceedings equity, well so as to practical decree results —such results accomplish n aslaw justice demand. The defendants no just have complain decree, law, cause to matter of and it should affirmed. be.

The of the court is that below judgment the decree be and with .hereby affirmed, liberty is the Circuit to proceed Court in the execution of its as the decree circumstances require.

Affirmed. Mr. Justice concurring. Brewer, I to all in cannot assent is said an- opinion just nounced, importance believe that the of the case and the involved questions justify a brief statement my views. let me that while I First, say was-with majority of the in decision in States court United v. Freight Association, 290, followed the cases of United v. Joint States 171 Association, 505, Addyston U. S. & Steel Pipe Com Traffic States, 211, Montague 175 U. v. United & Co. v. pany U. S. at the present decided term, while Lowry, and, has been (which examination induced a further able and of counsel arguments present case) exhaustive has not the conviction that those cases were disturbed rightly decided, CO. STATES. UNITED SECURITIES NORTHERN Brewer, concurring. Justice Mr. for the given judg- reasons I think that some respects Anti- that the holding Instead cannot be sustained. ments contracts, unreasonable, all reasonable included Trust Act have ruling should been that trade, of interstate restraint of- were unreasonable restraints there presented contracts n act. That scope within the of the and as such trade, “unlawful only leveled at title, from its act, appears intend to reach did not Congress and"monopolies.” restraints minor restraint trade partial those contracts and destroy had affirmed common law of decisions at which the course long rather purpose to be ought upheld. were reasonable statutory prescribed penalties a prohibition was to place which direct contracts were re- and remedies those public policy. unreasonable and trade, against straint- of and definitions a from common law rules departure Whenever should be departure to make the claimed, purpose is clearly does not and such appear departure Such a purpose shown. intended. was not , limited by of the act is also

Further, general language his own manage individual has to property each and manner of its investment. Free- the place and determine rights the inalienable among dom action these respects If, thought present case, every applying citizen. of á majority that Mr. Hill was the owner it appeared could Railway Company the Great Northern he Congress deprived right investing act in the of stock of the Northern surplus purchase his means . although might-tend Railway Company, purchase Pacific through to vest in him control over both ownership words, In other which all other companies. right, citizens Pacific stock could not be denied had, purchasing Northern to him in by because of his Congress ownership ruling in Pearsall Great was Company. Northern Such U. which this court Great Railway, of the stockholders of right the- 671), said reference (p. the stock of purchase Company Great Northern TERM, Brewer, concurring. Mr. Justice Northern Pacific Railway Company: “Doubtless these stock- holders coúld lawfully by individual acquire purchases a ma- or even the jority, whole of the stock of the reorganized com- and thus obtain its pany, possibly ultimate control; but the would still remain (cid:127)companies separate corporations with" no .interests, such, common.” 'But no such investment aby single

. individual of his means is here a presented. There was combination by several indi- viduals separately stock in two owning competing railroad companies to control place the of both a single corporation. purpose combine combination com- destroy petition existed before the organization the corporation, the Securities That Company. corporation, though nominally having stock of had capital $400,000,000, no means of its own; $30,000 cash was into its put treasury, but simply for the expenses organization: The organizers might just as well have made the nominal stock a thousand millions as four hundred, and corporation would have been no richer (cid:127)or poorer. A corporation, while fiction of law recognized for purposes some as a person for purposes jurisdiction as a citizen, not endowed with the inalienable rights of a -natural person. It is an artificial created person, and existing only the convenient transaction of In business. this case .¿mere instrumentality separate railroad prop- were combined under one pities control. That combination is as direct restraint of trade by destroying competition, as the appointment of a to regulate committee rates. The pro- hibition of such a combination is not at all inconsistent with of an right individual to stock. The purchase transfer of. stock to the was a mere Company incident, Securities manner in which destroy, the combination to competition and thus was carried out. unlawfully restrain trade

If the railroad parties these two companies interested can, through instrumentality holding of a corporation, place both under control, manner, one then like as was conceded' the argument by on one of the counsel for the appellants, could. CO. STATES. UNITED SECURITIES NORTHERN V. Brewer, concurring. Mr. Justice country all railroad be companies control of Nor need this arrangement in a single corporation. placed The holders with what been done. already has stop for control in the Northern Securities Company of stock $201,000,000 to hold their stock that another organizó corporation might holding majority and the new of the corporation company, Company acting the Northern Securities obedi- of a its stockholders majority to the wishes would .ence Company through control the action of the Securities it railroad companies, process the action- the two a whose stock was single corporation be extended until might would control practical three or four parties owned before us of com- roads, or, having possibilities both system the control of the whole bination, transportation a or lawful I cannot believe that to be reasonable country. of trade. restraint no interference with state control. there is this suit

Again, than a of its action. This disregard It is a rather recognition - destruction of was not competition of control and merging the State which prohibited by but authorized, specifically and within railroad whose companies, created one of the largely of both were located much boundaries the lines transacted. The purpose policy their business the decree. So far as the work State are-therefore enforced the two railroad was companies commerce, subject Congress, the control of and its purpose policy were the act under which this- expressed brought. suit was conditions, It must also-be remembered under present railroad single is, not a legal, largely practical, monopoly, and the arrangement by the control of these two com- peting roads was in a merged broadens and single corporation extends I monopoly. cannot look it as other -than an unreasonable combination in restraint of interstate com-- merce—one in conflict with state law and within the letter and spirit of the statute and Therefore I Congress. concur judgment affirmance TERM, 1903. JJ., White, J., 193U. S. Justice, PecKHAM,Holmes, dissenting. Chief I have these observations for fear felt constrained to make language opinion broad and sweeping legitimate court tend to business might enterprises, .unsettle im- activities, stifle or business encourage retard wholesome (cid:127) contracts .and unnecessary reasonable invite proper disregard litigation. (cid:127) whom. concurred Me. White,

Me. Justice with Chief and Mr. Fullee, Peckham, Mr. Justice Justice Justice Holmes, dissenting.

n is a New Company Jersey The Northern Securities corpo- ration; Railway Company, Northern a the Great Minnesota Railway Pacific a one; Company, and the Northern Wisconsin in bar argument at the Whilst the Govern- corporation.. to the nevertheless it subject, expressly ment referred dis- for any claim relief the fact claimed that the predicating in of the Northern Pacific Railway title predecessor Company fact, by act Congress. created That corporation was therefore, be eliminated. borne mind to essential to be understand my

The facts details, without into are view, going The point follows: Pacific the Great Northern Northern Railway lines of the transcontinental, is, are both trunk lines to companies' are aspects Pacific some conceded to be Ocean, the Mr. Mr. Hill and a few im- persons Morgan competing. acquired with owned mediately separately associated them Railway Company, Northern Pacific ag- stock capital Mr. Hill and others associ- majority thereof. gregating about one-third of manner, same owned, him ated Railway Company, Northern of the Great- stock capital about among eight- distributed being of the stock the balance Mr. Hill and his im- Although een hundred stockholders. stock, con- only one-third owned mediate associates that.,- through PTill was such proxies, Mr. reposed fidence affairs of that company. was dominant his influence CO. UNITED STATES. SECURITIES NORTHERN JJ., Justice, Peckham, Holmes, White, J., dissenting. The Chief Mr. Mr. Hill Morgan organized circumstances these Under Jersey the Northern Securities Com- New the laws under that the should become the conipany was purpose pany. railroads. was be ef- of the two This of the stock holder Company Securities .by having give fected two railroad .for that exchange companies. stock in. mainly was promoters purpose exchange Whilst the them the two railroads the Northern held the stock stock, nevertheless the stock- right Company Securities two railroads to make a similar ex- holders generally stock to the Securities Company to sell their change Under the arrangement for. Northern Securi- provided registered came be the holder of a majority Company ties It of both the railroads. is not denied that it, acts done under the Northern charter, and the Securities authorized the laws of New Jersey, and, were Company, in so far as those laws were to therefore, competent sanction in the held the stock the rail- transaction, corporation two the the law the State its domicil. by secured roads bill by its the of the North- challenges right The government in to hold and own the stock the Company two ern Securities which the relief grounds upon sought railroads. were, speaking, as follows: That as the two generally

based in in competing part were lines engaged railroads creation the Northern commerce, the Securities Company it of a of the acquisition majority and the stock both' contrary to the act of known Congress as the Anti- roads was Stat. 209. The clauses of act which Trust Act.. violated were- section, were the first charged declaring ivas in form of “every contract, combination trust-or illegal or or otherwise, conspiracy, restraint trade commerce States, nations;” or with the several and the among foreign second making section it misdemeanor for provisions to or com- any person attempt “monopolize, monopolize, any bine or other conspire person monopo- persons, trade or part lize the several among TERM,

White, J., Justice, The Chief PeckhaM, Holmes, JJ., dissenting. U. or with States foreign nations.” The court below sustained the contentions of the government. It, therefore, enjoined the two railroad companies from allowing Northern Se- Company curities vote the stock standing its name or to tq to that pay company any dividends upon the stock itby held. . On however, giving, fixed the court below bond pf the decree to the relating payment dividends was' sus- pended pending, appeal this court!

The court the' recognized,(cid:127)'(cid:127)however, of the Northern right Securities Company the stock retransfer both.railroads n tothe from whom it had been persons acquired. The correct- of the decree below ness is the question presented for decision. Two arise. questions Ddes the Act, Anti-Trust when rightly to the apply interpreted, acquisition ownership by the Company Securities Northern stock the two railroads, second, does, if it had and, Congress the power, regulate or control such acquisition As the ownership? question at the root of the I case,. lies come at once to consider Before «subject. doing so, however, order to avoid misled irrelevant being issues; it is essential to false consider briefly questions two fact. It is said, first, that by exchange the mete Company Securities Northern stock the railroads did not make the stock; the'.real owner of Company Securities stock rail-' roads, since-the effect the- transaction was to cause the Se- to become Company merely custodian or trustee curities in- railroads; second, of the stock two railroads both- over-capitalized, were in them furnished no suf- Northern, for ficient consideration the issue of the stock of the It wofild Company. Securities suffice to point out, a, that that nearly the shows nine million proof dollars were paid by for a Company portion the Securities bf the stock acquired and'that, moreover, nearly by it, thirty-five million dollars were by the Securities Company the of expended purchase bonds Pacific of the Northern which Company, been have converted into stock of Company the Securities the that by railroad, NORTHERN SECURITIES CO. v. UNITED ¿807 STATES. 193 U. White, J., The Justice, Peckham, Holmes, Chief JJ., dissenting. Holds;- and, b, now which Securities the Company the moreover, of is, indisputably value the railroad stocks market on to have been to the value'fixed by proof equal shown the for of the or- such exchangé purchase the-purpose .them ' this as it by stock the Securities Be Company. it is manifest these considerations can have' no may, on influence the the possible question power Congress the and .therefore the can serve premises; suggestions only If the the controversy. power Congress obscure was on the it immaterial what subject wholly becomes legislate . nature the consideration for by was the the paid company .of it and held if by acquired the stock and owner- acquisition if real, even violated the act of If on con- Congress. the ship, authority the could not trary Congress embrace the right Northern Securities own Company acquire of what stock, consideration the Northern question Se- for the stock or Company paid curities the method which transferred must necessarily beyond scope act of Congress.

In I shall testing power Congress proceed upon that the act of Congress forbids the assumption acquisition of two competing a stock railroads majority engaged commerce corporation in interstate combina- part of persons. tion it is authority, Congress, by all, conceded must rest by the section delegated eighth .the of the first

upon Constitution, “to regulate article Commerce for- Nations, and the several among States and eign with the ' tribes.” The proposition Indian case thé' then government depends- is that ownership in railroad created corporations State is interstate commerce, wherever the railroads engage interstate com- merce.

At outset, the absolute correctness is admitted of Mr; declaration of Chief Justice Marshall Gibbons v. Ogden, that the power Congress regulate among TERM, 368 Peckham, Holmes, JJ., dissenting. Justice, J., The Chief White, U. S. in itself and foreign complete and nations “is States and no limita- extent, acknowledges utmost be exercised to its Constitution;” the that if are prescribedin tions other than is the of the Constitu- scope the end to be accomplished within “all are which are tion, appropriate, plainly means which and which are not are con- prohibited, to that end adapted stitutional.” over commerce, The' plenary authority Congress

> fix extent, to it to the fullest to the rates to right regulate its ' to commerce, legis-' of interstate charged for the movement actually ways engaged late the vehicles concerning other over such traffic, any every power to exert from conferred authority commerce which flows the the. But is thus concessions thus Constitution, conceded. do in this is question case, made not concern which . to scope Congress regulate commerce, but power tp extends of stock regulate ownership power .whether railroads, ^in which is not at confusion commerce .all. which from failing, results to observe distinction .will from for in an of Gibbons v. analysis Ogden, appear accurate case Chief was careful to great Justice define the commerce, power regulate was conferred I Congress, passages previously which have quoted, out the rule which it pointed was to be determined simply case whether Congress, acting upon subject, had' in. beyond the limits power regulate commerce as gone in the opinion. Accepting was defined the test announced it v. for whether Ogden determining exercise given Gibbons has regulate effect transcended it is the' lumi limits of essential also regulation, accept ap announced. case and definition of commerce nous that. since, for times and hence test the many question so proved “ is Commerce decision definition. The definition this: isinter traffic, but undoubtedly something more, it'is It the. commercial intercourse between na- course. describes n and is parts branches, regulated tions of nations all STATES. CO. UNITED SECURITIES NORTHERN Holmes, Peckham, Justice, JJ., dissenting. J., White, The Chief (Italics on that intercourse.” carrying rules by prescribing mine.) to to authority Congress regulate delegation,

Does the States embrace the to power regulate the among - in corporations, state such stock because ownership the in in interstate commerce?' part .engaged be corporations may is to be. defini- governed by the question if not, such Certainly from Let me Gibbons Ogden. just quoted of commerce tion undoubtedly traffic, “Commerce is the definition: analyze intercourse;” it is that traffic more, something it is but is> I intercourse between the States. the States between in a cannot be corporation of stock the state ownership think traffic between the States or intercourse in sense to be said “It The definition.continues: describes the them. between parts between nations nations.” intercourse (cid:127)commercial corporation, by a state the most ownership the Can “com- construction, by be embraced the words latitudinarian nations and of nations?” parts intercourse between mercial doubt, points to remove all the definition out the meaning, And of, is regulate, says of the to since it that it delegation power rules for on that inter- “regulated by carrying to be prescribing course.” Can it reason maintained that to prescribe be rules the of stock within a State governing ownership it is within corporation by prescribe created the to power rules for the intercourse between citizens regulation different 'States? if be at powers

But the' looked with reference to the question Federal and state the governments,- general nature and the local which it other, the one character of the was the of the Constitution to it seems purpose perpetuate, create the.authority to me evident that the that contention National clause gives Government under the commerce to right to of stock Congress regulate ownership railroads. chartered absolutely state destructive authority, which Constitution, provides Tenth that Amendment ‘ States the Consti- to the United powers delegated ‘the vol. cxcin—24 TERM, Justice,

White, J., Pbckham, Holmes, JJ., dissenting. The Chief nor tution, prohibited by to the are States, reserved to the States or to the respectively This must people.” follow, since authority on in' Congress regulate can subject alone reason rest that proposition power over control right commerce embraces the of rail- ownership (cid:127) roads an doing interstate commerce But part business. of all power to control the would" ownership railroads necessarily embrace their Hence it would organization. result Congress abrogate every it would be such railroad from the granted by beginning charter States if conferred such state Congress rights deemed to restrain commerce between the States or charters tended the same. monopoly concerning create Besides, to, be acceded it must reason principle held consolidation state every to embrace railroads in business, do interstate commerce even may part although an been authorized expressly by have the consolidation such the creating corporations. States laws every law likewise overthrow state forbidding It would of' in ownership if the stock state consolidations, corpora- regulating power Congress within under the tions be .the by and can be prohibited Congress, clause would commerce to body permit of that that which it the had be within to prohibit. right the the is ownership property that embraced principle the

But commerce, Congress regulate whenever the power within a.particular that character if ownership, deems body that restrain commerce between the continue, may States allowed conflict thereof, my opinion monopoly or create rights For' elementary conceptions property. most deemed that Congress acquisition by follow it would in interstate engaged commerce more individuals one would property be amount prejudicial a certain than more or' commerce, property the amount held to interstate in be employed could amount regulated. could CO.

NORTHERN SECURITIES UNITED STATES. 371 J., White, JJ., dissenting. Justice, Peckham, Holmes, Chief In argument at bar many of the consequences above a& indicated from necessarily resulting the contention made frankly were since it admitted, was conceded that, even al holding the two though railroads the’ by Northern Securities which is here Company assailed, was expressly authorized the laws of both by the States by which the railroad corporations created, were as it was the law f of the State of New. Jersey, nevertheless as i such authority, exerted by States, would be a regulation of interstate com merce, it would be to the Constitution repugnant as an attempt . on the part the States with the paramount interfere au- on thority Congress True, that subject. assertion; made the oral argument, printed argument is qualified an intimation that rule would to state apply action taken before of the Anti-Trust adoption Act, since up time, that of the inaction of on consequence Congress subject, the States free legislate were as they pleased regard ing the matter. But' this is without suggestion foundation to rest on. It has long since been determined by this court- that particular where matter is national subject char acter and uniform the absence of requires regulation, legislation on the the will of subject indicates Congress Congress should be free from state control. subject County of v. Kimball; Mobile U. 691; Robbins v. Shelby Taxing- District, 120 U. S. v. E. 489, 493; United States C. Knight Com pany, said,

It is decision of moreover, this case does not consequences out, involve the above'pointed since the only right issue this case-is the of the Northern Securities Com- to pany acquire and own the of right stock. The that company to do it so, is of is one argued, thing; power individuals or corporations, when not to hold merely organized stock, an entirely different mind to seize thing. My fails the distinction. The only premise by the- of power Congress which can- be ex- tended to the subject right matter of the Securities to own the stock be the Company must proposition that such TERM, 1903. JJ., dissenting. J., 193 U. Peckham, Holmes, The Chief White, Justice, Congress, is within the and if legislative power ownership not what perceived by be admitted is proposition over the Congress subject reasoning power process, limited to ownership by particular is be ownership matter of If the embz’aces persons.' power classes of corporations ownership all over authority Congress then the ownership, affect interstate neces- which its judgment commerce result' of the asserted words, the logical In other sarily exists. Either that things. nothing of two distinction amounts to one no entered foundation having that a decree is is decided or . control of is said because which to rest. This one and the competing roads ownership same n and creates a power Congress, is within the corporation it is by Congress, forbidden monopoly of trade restraint n conceivable ownership by how similar one exactly to me or mo- not create the same restraint individuals would more within the which it is decided prohibition and be nopoly, equally . Besides the con- incongrzzity has imposed. Congress distinction, from to admit it would resulting alleged clusion the letter and spirit Constitution, violence both do although particular that, in effect hold act’was it would since or a monopoly thereof, upon interstate a burden act, only they lawfully provided do could individuals of a But instrumentality corporation. this- not use the did . commerce, regulate declared that the long court since and includes alike “general upon Congress, conferred cor- individuals, partnerships, associations comzn'erce 8 Wall. Virginia, Paul porations.” mind to follow an the natural reluctance Indeed; conclusion,, thus to necessary to its principle erroneous - from the wrong arising 'erroneous grievous to a effect give itself is principle- wrong. an admonition is principie, conclusively afforded submit, by. I admonition, That out stopping point Without affirmed. now which is decree contradiction and denial confusion, to be the to me what seems decree me see exemplifies, let rights- property STATES. CO. SECURITIES 373 NORTHERN UNITED n ». Holmes, JJ., dissenting. J., Justice, Peckham, White, U. S. Chief in conflict with the war with itself if effect it is not at and. it to be based. which is assumed principle to be remedied sought the evil Fundamentally considered, and the monopoly of interstate commerce is the restraint about, through been brought to have thereof, alleged Mr. and Mr. Hill and friends their by Morgan acquisition of both the of a interest the stock associates, controlling And whilst the use yet decree, forbidding roads. its Company, the Northern Securities by

stock authorises not restrain to the does alleged conspirators, return .them If the control from the exercising resulting ownership. from and was illegal, my combination existed conspiracy be its full why produce mind fails to it should' left perceive whom it by and effect the hands of the individuals force into. conspiracy was entered charged ,1 be said that even if the results which may, however, It from indicated be held to arise necessarily principles have follow that by contended does not government, exerted, would ever be exerted would by Congress, or, power to the detriment of charters States' granted by be enforced fhe effected under state thereof, to railroads consolidations in- or the such railroads authority, by stock ownership or the of individuals to dividuals, rights property by acquire and to and all lease make contracts purchase, otherwise, become the may thereafter concerning property subject first suggestion matter of interstate commerce. The is at met the consideration it has been decided by by once as the Anti-Trust Act that, any restraint, this court forbids contracts or agreements. embraces even reasonable it therefore If, of the two railroads then, ownership by Company Northern Securities the act it repugnant follows whether the individual ownership, corpo- another would ration, prohibitions within the equally the act. to the second, As true it is that the terms the Anti-Trust in motion provisions is, Act the as to put many confided to the law officer of highest govern- particulars, TERM, 1903. Peckham, White, J., Justice, Holmes, JJ., dissenting. The Chief U. if that officer did not invoke thé aid the courts' merit, and of the railroads rights previously to restrain the chartered benefits them upon the to the conferred state enjoy by States or to individuals from their legislation, prevent exercising contract, law in-these right ownership respects of the But to this indulge would remain dead letter. assumption law not be say would but to that the enforced the by be would officer of a' conclusion of highest government, .which, law the in for a In not be moment. indulged view, could course, but the that proposition rights such involves vast suggestion resting upon of instead of constitutional and property, legal alone an must whether executive officer sanction, depend to law—a conclusion might, elect enforce the to repugnant of every liberty justice. principle of reason to un- by light thus the show the Having sought that of of the the proposition power soundness to Congress to the regulate controlling extends acquisition of stock railroad corporations, otherwise, state ownership be an interstate commerce they may doing because business, the companies consolidation of such under sanction of of citizen to his right state to the legislation, enjoy contract let me now ownership, freedom of endeavor of show, a review the both practices governments, - national, from the and the beginning adjudications state how merit is the con- court, wanting proposition this tended for. It not be doubted that from the foundation may all events to time of the at government, adoption Act there 1890, Anti-Trust was an entire absence that it by Congress-even suggestifig was deemed any legislation power possessed by Congress one to control by any of stock in railroad or other .ownership corporations; be- in interstate corporations engaged cause -commerce. On when came to exert its '-contrary, Congress authority commerce as carried on interstate mani- regulate railroads, of the interstate commerce adoption act, fested 24 Stát. confined the sedulously provisions act to the CO. v. UNITED STATES. NORTHERN SECURITIES The Chief White, J., Justice, Peckham, Holmes, 193 U. JJ., dissenting. itself, on interstate commerce including the reason- carrying charged the rates be on such carrying ableness com- undeniably other matters merce and the fact concerning The same commerce. conception was manifested in legislation subsequently concerning safety appliances used by railroads,.since provisions of the act were confined to such when appliances actually employed business of interstate commerce. 27 Stat. 531. It also not be doubted that from the beginning the various States Union have treated incorporation organization railroad companies and the of stock ownership therein as matters within their exclusive authority. Under con- States, ception universally prevailing and always acted the entire railroad upon, system of the United been built Charters,.leases States has and up. consolidations under of laws the sanction state lie at the of basis that enor- of mous sum and those vast property interests represented by the railroads of United the States. Extracts from the Commerce reports Interstate Commission and from a standard on which authority the were subject, received in in evidence, demonstrate that effect nearly every railroad great in of system the United States is the result the consolidation of unification often roads, various con- competitive, such solidation or management unification of been having brought about in every form, conceivable sometimes by lease under authority, state sometimes by leases made where there' was no prohibition against them, by stock acquisitions made by persons in corporations order a con- acquire interest trolling both roads. Without stopping recite details on the subject, I content myself merely mentioning a few of the instances of great where railroad systems have been formed by the unification the management competitive roads,-by consolidation often otherwise, by au- statutory thority. These instances embrace the Boston and Maine system, York, the New New Haven and Hartford, the New Central, York the Reading, and the Pennsylvania systems. TERM, 1903. J., PecKHAM,Holmes, JJ., dissenting.

White, Justice, The Chief U. -to the New York Central One illustrations—as system the River Railroad on —is the case of Hudson one side of the and the West Shore Railroad on Hudson River the both other, directly competitive, roads and both united parallel of a b.yauthority legislative It is indeed management one act. subject if the whole was within paramount remarkable, States, within'-the Congress authority of power been a understanding that there have universal should in, When it is borne mind that contrary beginning. from the of the most vital action related interests such universal concerning of enormous amount character, involving property it impossible the welfare of the whole reason people, assumption that was universal deny soundness and not had control States, Congress, conviction that the ownership of rail- organization matter subject ' same inference is appli- the States. And the by roads created has things condition of existed since cable to the Act Who can deny the Anti-Trust adoption to this consolidations and unification man- from that date individuals leases, stock ownership -means agement, by carried when not on, prohibited have been or corporations, that, this time, all laws, extent, during to a vast state Anti- government invoking despite energy no under that Law, Congress assertion Trust ever knowingly of stock was made ownership to control the act Quite Congress recently this'cause. has until first asserted provisions act deemed interstate commerce amended the operative, practically more prohibitions to make essential even to the lends itself provisions of such no one yet one that of -by any power it -was deemed that inference n Congress ownership. Cer- control of stock to the extended it. .As a matter -of considered not so have the States tainly long since, by that not be observed it' is to history, public a Massachusetts, of the State authority legislature road- Albany Boston-and interest lease controlling York system. to -the New Central passed CO. STATES. UNITED SECURITIES NORTHERN v. Justice, Peckham, Holmes, JJ., dissenting. White, J., The Chief S. U. for mind leave no room of this court to my decisions The I already shown, very' As have . subject. on doubt announced commerce, as regulate to power definition that it extends conception excludes the Ogden, in Gibbons a multitude I not to review stop shall ownership. to stock commerce, interstate of this- court concerning decisions authority Congress paramount whilst which, upholding elementary, time treated it as the same at subject, over - between the States of the power ovenpommerce the effect con- oí their right legislate the States deprive not to «was character or every of property ownership cerning to endow them with such corporations railroad create indi- or to deprive appropriate, were deemed powers property by own enjoy freedom to acquire, of his vidual or other because railroads otherwise, contract descent, of interstate commerce. subject become might property was as to the 8 Wall. the question v. Virginia, In Paul insurance foreign license Virginia of the State power contentions considered was whether and one company, .commerce, it was related to since insurance, contract and not of the Congress regulating within the of in the was disposed proposition The .Virginia. State 183): language (p. following not a com- of insurance is transaction of

“Issuing policy contracts of indemnity against simply are policies merce. and the into between the corporations entered fire, loss the latter. These con- paid a consideration for assured, in any meaning proper of commerce not articles are tracts and barter offered of trade subjects are not They word. an existence and having value something market as in the They them. are commodi- of the parties independent one State another, or forwarded from shipped to be ties other personal are like They contracts sale. put up then their completed by signature which are parties between Such contracts are not of the consideration. the transfer parties may be domiciled though transactions, TERM, 1903. 378 Justice, Peckham, Holmes, JJ., White, J., dissenting. The Chief U. in do not policies different States. The take effect—are not executed contracts —until delivered by agent Virginia. local They are, then, transactions, are governed by the local law. do They not constitute a part the commerce between the States than a contract any more purchase sale of goods Virginia a citizen New York whilst in Virginia would constitute a of such portion commerce.”

In other words, the court out plainly pointed the distinction between interstate commerce as such con- contracts or the which cerning, ownership property might become the subjects And commerce.' of Paul authority v. Virginia has been repeatedly approved cases, subsequent familiar are so as not to citation. require (cid:127) In Railroad Co. v. 21 Wall. Maryland, 456, the question was this: The State of Maryland had chartered the Baltimore Ohio Railroad Company, the charter had imposed upon it the duty paying to the State proportion certain all from receipts freight, which as well applied to interstate as domestic freight. The argument was that these provisions were repugnant to the clause, because they neces- sarily increased the sum which the railroad would have to charge, thereby constituted a regulation of commerce. The court held the law not to be repugnant to the Constitution, and in the course the opinion 473): said (p.

"In view, however, of the very plenary powers which a State has always been conceded to have over its own territory, its highways, its franchises and its corporations, we cannot regard stipulation, question as amounting to either of these unconstitutional acts.” it,

True is that some of the expressions used in the opinion in the case cited, just giving rise to the inference that there was power State to regulate rates of on freight inter commerce, state bemay considered as having been overruled Wabash Railroad v. 118 U. Company Illinois, S. 557. But case also the fullest manner pointed out the fact that regulate conferred commerce, on Congress CO. STATES. UNITED SECURITIES NORTHERN dissenting. J., Justice, Peckham, Holmes, The Chief White, JJ., ownership the mere of property related Constitution, concerning because such property, property contracts or to. used interstate commerce or be become subsequently might instance, it.' the definition of inter- given of For the subject v. Ogden, previously to, Gibbons referred commerce state the definition expounded and in addition reiterated was Kimball, Mobile was County 691, approvingly of 574): follows definition was as (p. That quoted. “ ‘ and the foreign among States, Commerce with countries including intercourse and construed, traffic, consists Strictly and the and transit transportation navigation in these terms as as and and well the sale purchase, of persons property, of commerce For the regulation of exchange commodities. system rules, one of only applicable can be as thus defined there for and the which can act authority whole country; alike to the such a .Action adopt system. alone country whole the can Lan- not, therefore, permissible. separate States upon by of of power the over -grant affirming the exclusiveness guage inaccurate, not be when it would thus defined which upon subjects merely to legislation so .are applied be ” n to commerce.’ auxiliary 153 U. S. this was the In w Ashley Ryan, question: corporations the operating of various property railroad The. had Ohio, Indiana, Illinois Missouri Michigan, States of of foreclosure. of.the purchasers under been sold decrees statutes, lines availed themselves the Ohio respective, into to form single all one so as corporations consolidated the presenting On the articles consolida the Wabash. system, Ohio, of State of that officer tion to the demanded Secretary statutes, predicated by upon a fee the Ohio the imposed sum total the the consolidated capital This company. on of Ohio was refused State had no ground right make the doing so was to the repugnant charge, commerce clause the Constitution the United States to the Fourteenth This court Amendment. decided against that, right this contention. It held as the to consolidate could TERM, 1903. Holmes, JJ., dissenting. Peckham, Justice, J., The Chief White, could law, corporation not avail from Ohio arise alone condition avoid the law imposed. law of that the court said consolidation, (p. 440): Speaking could only grant sought acquired “The thus rights their existence Ohio, depended upon of the State Without that State’s consent could they of its laws. provisions been procured.” not have of the authorities concerning review copious after

And, consolidation, the case was summed State over the 446): (p. in the following passage the court up that the do, payment charge as we “Considering, taking the State Ohio imposed a condition franchises, exercise of corporate corporate-being'or will that State,” (italics on the solely to which right depended entirely- for the was liability charge “and hence that mine,) that the exaction constituted no tax we conclude optional, to on commerce, right carry same, the thé interstate upon and that its thereof, ór instruments enforcement involved the on the of the State to extend its part taxing power no attempt limits.” its territorial beyond was to depend solely upon a which thus decided right

How to of the States can now be said depend solely authority the I do not Congress, perceive- the'will upon U. Co., In v. E. C. S. the facts and Knight States United Mr. by based on them were thus stated Chief Justice the relief court 9): the Fuller, delivering opinion (p. four the of the stock the

“By purchase Philadelphia stock, of its own the American refineries, Sugar shares nearly complete control the acquired Refining Company within the United States. The sugar of refined manufacture contracts under these purchases that the charged bill trade, restraint of and combinations made constituted were and con- into them the defendants combined in entering that commerce refined sugar to the trade and restrain spired foreign nations, contrary and with the several States among Congress July 2, act of 1890.” to the CO. STATES. NORTHERN SECURITIES UNITED J., Peckham, Holmes, JJ., The Chief White, Justice, dissenting. 193 U. general way, to what a referring, constituted After of trade at common the law, question or restraint monopoly 11): stated (p. thus decision.was is, whether the conceding that question fundamental

“The manufacture established a monopoly existence directly can under suppressed that evidence, monopoly by this bill.” attempted in the mode act of Congress power Congress, Examining question 11): observed (p.

-, of a to protect denied that the' State power “It cannot be and to citizens, preserve property health and lives, morals, 'the men power govern good public order dominion,’ limits of its is power origi- within the things States, to the surrendered belonging always nally nor directly restrained government, the general them States, essentially United exclu- Constitution sive.” Congress over power out that the

Next,-pointing legislate its failure to over subjects and the fact that will of Congress legislation expressed uniform requiring to act on that subject, be without power should State of Congress whether to consider court came authority regulate commerce embraced regulate in the com- sugar of stock state refining ownership control the when manu- "the of such companies products because panies, become the of interstate commerce.’ subject might factured reaffirming Elaborately passing question commerce, of in con- Chief Justice Marshall of the definition it stitutional'sense, was of that, Congress held whilst the power not to commerce as it did embrace defined, extended thus .the of products in because the ownership stock state corporations, - become the might subject of such manufacture subsequently of interstate commerce. cases is The one complete. between the parallel two other and competing corpo- the of stock

corporation acquired own, for It the conceded, was’ its rations exchange TERM, White, J., Justice, Peckham, Holmes, JJ., The Chief dissenting. 193 U. S. that purposes case, so had doing monopoly been - about the' of brought refining that the sugar, to be sugar produced likely was to become the subject of interstate com- merce, indeed of it part would certainly become so.- .that But the power was Congress decided not to extend to the because subject, the ownership the stock the corporations was not itself commerce.

In v. Pearsall The Great Northern Railway Company, U. 646, S. the was question whéther the the acquisition by Great of’a Northern road interest controlling the the Northern Pacific Railway was violation Company of a statute the prohibiting consolidation of competing .Minnesota lines. It at if once evident that subject the consolidation . authority was within the -of Congress, as had Congress its will the expressed subject, the act' of legislature was Minnesota void because- repugnant to the Constitution But possibility the United States'. such contention was not either thought the cause or party by the court itself. Treating power the State as undoubted, the court, Mr. speaking through Brown', Justice decided that the Min law nesota should be enforced. .It was pointed out as the charter was opinion that, one granted State, and the railroad of stock company ownership therein was sub law, and this was ject to state made the basis of .the the-decision. however, Whilst, resting conclusion upon the power corporation by created, State over the the court was careful recognize that the was authority the State so complete, was a state company corporation, the State had do it chose to so, right, consolidation, even authorize if the lines were competing. although

In Louisville & Railroad Kentucky, 161 U. Nashville State to a law pass power forbidding the con corporations solidation of state railroad competing doing was part again considered, an interstate business in which the was exercised upheld. a state statute it is observed the consolidation Here, again, of. v. UNITED STATES. SECURITIES CO. 383 NORTHERN dissenting. Holmes, JJ., J., Justice, Peckham, U. The White, Chief S. an they because did inter- corporations, part railroad state business, authority was within paramount state was exclusive and the authority regu- that state Congress, court was void. And this question, upheld lation which case, without consideration of the passing vital to the did not escape which it could have been decided upon it was court explicitly pressed upon since observation, Mr. court, The speaking through determined. directly was Brown, (pp. 701, said Justice 702): ' to be said the final contention of “But little need answer to error, assumption right that the of a forbid plaintiff is an lines inter- parallel competing consolidation over interstate commerce. Congress with the power ference be with to all may police regu- made respect The same remark railways. of interstate lations power has been the dominant supposed

“It never commerce took from the over interstate States the Congress to instruments of such legislation with.respect power as the within its commerce, ordinary so far legislation Nearly railways all the powers. have country police under state and it authority, constructed cannot been to abandon they intended their over them power supposed The to power as were finished. construct them they as soon to necessarily regulations involves impose their as sound for the operation regard interests of the to In division seem render desirable. of au- public to railways Congress reserves thority respect their right to control commerce and forbid the superior itself therewith;'while to the States remains the power interference the instruments of such regulate commerce, create and conservation of the public inter- necessary so- far ests.” completely

How could be decisive oite case more another I am ruling just quoted than unabl§ this, the.case perceive, TERM, 1903. White, J., Justice, Peciiham, Holmes, JJ., dissenting. 193 U. The Chief in In was' at circuit re subject Greene, considered A Fed. 104. The was this: was Rep. case indicted in person in violation monopoly one State for creating the Anti- Trust Act of Congress and was held another State for extra- dition. The writ of habeas was corpus invoked, the upon contention that the face of the indictment did not state an States, offense the the against United since matters charged not involve commerce. The case to, did is referred and it arose at circuit was although determined before the decisions this court the Pearsall and Louisville Nash- and it Mr. cases, ville because was decided by Jackson, Justice then Circuit "who became a Judge, subsequently, member court. The manifests that case opinion the' was considered Jackson with by Judge that care which was his conceded himby characteristic and was stated that lucidity In his wont. the accused on discharging the grounds Jackson, application stated the for the writ, Judge said 112): (p. may

“Congress place restrictions and limitations the upon and corporations created right organized under authority and acquire, dispose use It property. may also impose restrictions limitations such the citizen respect public exercise of a privilege -the or franchise by conferred But Congress United States. has certainly not or the power under the authority commerce or clause, any other provision Constitution, limit restrict the right corpora- created States, States, tions or the citizens control and acquisition, disposition property. Neither can or Congress regulate prescribe price prices or at which such thereof, or shall products be sold property, owner or owners, corporations whether individuals. It is equally that has no Congress jurisdiction over, clear and cannot make criminal, aims, inténtions purposes persons and control of which the acquisition property, States of their It permit. creation sanction residence not material such or the thereof, products become property; v. CO. UNITED SECURITIES STATES. NORTHERN Justice, Peckham, White, J., Holmes, JJ., dissenting. Chief U. S. the several among of trade or commerce States or with subject among States, Commerce within the nations. foreign ‘ of Congress, consists of intercourse regulating power exclusive citizens, and traffic between their includes the transporta tion as well as the sale and persons property, purchase, Mobile v. County Kimball, of commodities.’ exchange 691, 702; Ferry Pennsylvania, Gloucester Co. In definition, of this application comprehensive Supreme is settled the decision Court actual of com includes, only transportation States, between the but also the instru modities and persons transportation. mentalities and of such processes or manufacture of production neither the articles ."That commerce, and which commodities which constitute subjects States, and traffic with citizens of other intended for trade are their from the State transportation nor the' preparation' for. commencement manufactured, the prior where-produced State,. to another transfer, actual or transmission thereof the within, which the commerce comes' that interstate constitutes the ter- and, further, after Congress; regulating power of commodities or articles of the transportation mination or merging and the another, mingling, traffic from one State to in State of destinar -property in the general thereof the mass in the distribution .and thereof tion, sale, consumption the no of interstate commerce.” part latter State forms in had been written the now considered If this case opinion than its does have dis- completely reasoning not more it could cor- of stock ownership by contention that the posed railroads commerce. in was competing poration : was this Association, v. Freight United States made A who were railway companies, number of large defend into an association, ants in cause, had formed themselves and the known Freight.-Association, as the Trans-Missouri contained provisions had -bound themselves companies relating Many stipulations in the articles of agreement.' vol. cxciii—25 TERM, Peckham, Holmes, JJ., dissenting. J., Justice,

White, The Chief on over the roads which of interstate commerce carrying in it, agreement to the were contained section were parties as follows: provided rates, establish rules appointed

“A committee shall traffic to this subject association, on the and regulations and make rules for changes therein, meeting to consider conclusions, outside lines. Their when unani- competition they order, they shall be made effective when so but mous, at managers differ issue be referred to the question shall they lines and if it shall be parties hereto; disagree arbitrated the manner article VII.” provided sought to dissolve the association on the government that the restrained commerce ground agreement between Act; States, and therefore was violation the Anti-Trust hearing court, On the as the agreement directly related to interstate many particulars transportation charge, therefor, to be made it was on all conceded hands that em- within subjects braced came the power of Congress commerce. The on regulate contentions behalf of the asso- ciation were these: First. That the movement interstate commerce railroads not within Act, the Anti-Trust Congress since had regulated subject did act, not intend to amplify provisions by the respect subsequent enactment of the Anti-Trust Law. Second. That even if this were' case, and movement interstate commerce by railroads was affected by the Anti-Trust Statute, particular agreement question did act, not violate the because the agreement did not unrea- restrain sonably interstate commerce. Both these conten- against tions were decided the association, the court holding that Act the Anti-Trust did embrace interstate carriage by corporations, and as that railroad act prohibited any contract in restraint interstate commerce, hence all embraced character, they contracts that whether were reasonable or unreasonable. same, in

The was considered subject subsequent case, CO. v. UNITED STATES. NORTHERN SECURITIES U. Justice, Peckham, 193 S. White, J., Holmes, JJ., dissenting. Chief Association, 171 U. In Joint S. 505. States United Traffic no that question there was be- agreement case also to the related movement of com- tween the railroads interstate it was insisted- that the merce, particular agreement but there hot to fix but rates, only involved did seek secure the con- which had just tinuation of rates been already fixed, hence Law. If this was not within the Anti-Trust were held not in a -reconsideration true, questions decided was Association The court Freight case reviewed invoked. in Freight made Association rulings reiterated case in particular agreement held came question within them.

I cases mention these two last not because they apposite are for, hand, they are since not, the case the contracts which com-, confessedly were involved them concerned interstate merce, whilst this case the sole is whether the question stock in competing does involve ownership railroads inter- commerce, to in state The cases are referred connection cited, because, the decisions taken previously together, they the distinction court has main- illustrate always power tained between the over com- Congress want of authority merce and its not' em- regulate subjects grant. within that The same braced distinction is shown aptly cases. subsequent v. United 171 U. States, Hopkins involved whether into particular agreement entered between persons carrying commission, on the business cattle selling exclusively at on valid. At City yards the Kansas yards cattle those of in through were received vast numbers channels and from commerce') terstate thence were distributed' through For reasons the business engaged channels. these those yards on exclusively the sale of cattle the stock was asserted to be and within thé of Congress interstate commerce court, In the delivered Mr. regulate. opinion Justice' 586):. said Peckham, (p. it was at the outset on “The relief this.case is based sought exclusively TERM, 1903. Peckham, Holmes, JJ., Justice, dissenting. 193 White, J., U. S. The Chief ‘ c. An July 2, 1890, 647, entitled act Congress approved act unlawful against trade and commerce restraints protect to Anti-Trust of as the Act. 26 commonly spoken monopolies,’ Stat. only or reference to that trade commerce which

“The act has the several States or with exists, exist, among or may foreign whatever to other any has no trade nations, application or commerce. threshold, therefore, us at the meeting question

“The defendants, nature the business what is the is, case of them any or subdivision referred by-laws, above and arc or restraint trade their direct effect to, nations; or with or does the foreign States the several among bill and show that one of the made answer case attempted to monopolized, monopo- has above defendants persons monopolize, other lize, conspired combined several among trade or commerce States any part nations?” foreign or with it was then, pointed consider

Proceeding, agreement, on stock yards that the sale of cattle that the contention out without merit. The dis- interstate commerce was constituted interstate commerce between tinction property clearly contracts and to and sell was buy make agreement distinction the held and because stated, the act of because that act could Congress, not to be within commerce. only did relate day the was announced just And on the decision referred the Anti-Trust Act was decided. Anderson case under another U. between that States, 171 S. 604. The difference v. United Mr. case was thus stated Justice the Hopkins case and 612) court : delivering (p. Peckham, opinion v. Hopkins States, from that United “This case differs defendants are fact that these themselves pur- supra, market, while the defendants of cattle on the chasers who commission merchants sold the only case were Hopkins their compensation commission as cattle services. STATES. CO. UNITED NORTHERN SECURITIES J., JJ., dissenting. Peckham, White, Justice, Holmes, Chief that, agreement any for the Government assert “Counsel from of other buyers coming cattle among or combination in anis agree- of nature of the by-laws question, the States, of in restraint interstate trade com- or combination ment merce.” did necessary said it not deem it court, however,

The into that who whether the fact the merchants entered decide in other States and them bought shipped cattle agreement the com- their business to be interstate States, to other caused that opinion the court was of the merce, because.in event any even it involved interstate agreement assailed, which was of not in violation of commerce, provisions was Act. the Anti-Trust by Addyston case followed &Pipe was Steel Anderson U. S. 211. The case involved States, deciding

Co. United manufacturers, look pip„e a combination particular whether transportation of the sale and pipe to the control ing su.ch many States a embracing division large territory, over a combination, the members the was between territory the the Anti-Trust Act. to con Coming prohibitions within the Mr. court, through Peckham, Justice subject, sider the monopolistic out its features. pointed contract and analyzed of ivas In matter argument complained to the answer only pipe, it related sale commerce, not because Knight the rule announced was within therefore was reviewed, case cases, Knight approvingly Hopkins was reaffirmed, the court observing doctrine effect and its (p. 240): Knight of the combination case

“The purpose direct There no sugar. of the manufacture was the control terms, future regarding combination or agreement, articles; looking to a nothing manufactured disposition of interstate commerce. in the nature transaction «a «L 4^ 4* v «u 4^ 4' 4* 4f *4* V us involves contracts of the think now before "We the case mentioned, incidentally or collaterally, last before nature (cid:127) TERM, White, Péckham, Holmes, JJ., J., Justice, dissenting. The Chief as a direct immediate result the combination but en- n . The gaged by defendants. . . by reason defendants this combination could and agreement only send their goods out in which they State were sale and manufactured for delivery State, another terms and .upon pursuant combination. As provisions pertinently asked below, court was not this direct restraint upon interstate (Italics mine.) those goods?” found Having agreement thus concerned interstate th¿ commerce, directly purported because control move- ment of from one State to the goods other, and besides sought that movement or restrict the same prohibit to particular individuals, it contract was, was held that the for these reasons, within act of the the prohibitions Congress, and was there- fore void. I do not to consider the pause case of Montague & Co. v. U. decided at this Lowry, term, 193 S. on since the face it is opinion patent that the contract directly concerned goods the from one State to shipment another, ' was the sole exclusive basis of the decision. it

Now, submitted, that the decided just cases reviewed demonstrate that the acquisition ownership of stock in competing railroads, organized under state law, by several is not persons by corporations, interstate commerce, and, to therefore, subject not of Congress. It is, indeed', the..control the suggested cases establish contrary doctrine. This is sought by to be demonstrated quoting from passages the opinions from their context separated apart from the questions which the cases involved. But as the issues which were de- in cided the in Knight, Pearsall, the the and Nash- Louisville ville case and the case directly exclude Hopkins signifi- the cance attributed to the from the passages. opinions in those cases relied follow that upon, it must such passages could, separated when have the context, from their meaning attributed n them the expressions -would be mere obiter. And this con- it unnecessary sideration renders me analyze the passages show that when connection they are read with their con- NORTHERN SECURITIES CO. UNITED STATES. 391 J., dissenting. Holmes, JJ., The Chief 193U. White, Justice, Peckham, they meaning have now sought to, text to be attached other But considerations equally it-unnecessary them. render review the sentences relied There can particularly upon. expressly be no that it was decided in the Knight doubt case of stock one corporation other cor- acquisition so to control all them was not com- porations merce, although goods whose manufacturing companies become acquired might interstate commerce. subject pf If then the from the case passage Knight could be given sought it, be affixed to meaning result would be but to say that that case overruled itself. And this would be the in the Pearsall case, since that case was result it decided that the States had to forbid power consolidation com- railroads, even peting by means of stock. acquisition Besides, as the Louisville and case, Nashville immediately following the it Pearsall, was expressly decided that the inter?

state Congress did not embrace such con- solidation, and could Congress, therefore, not restrain a State from either it to take forbidding permitting would place, follow that if the sentences the Pearsall had the case import now applied to that that case hot them, only itself, overruled but was besides overruled the Louisville and Nashville case, and this two'cases were although the decided on the same .day, in both opinions having cases been delivered same . Justice.

The same confusion and contradiction from separating arises from citing their context and applicable as to this case passages from opinions the the Association Freight and Joint Traffic I cases, cases. Those as have previously stated, related ex- com-?., to a clusively contract admittedly interstate involving and it merce, was decided that restraint of such commerce was forbidden Anti-Trust the Act. Now the Hopkins case, decided Freight the Association subsequent and Joint cases, the contract considered unquestionably involved Traffic a restraint, but, restraint did not such' concern as interstate it not to commerce, held come within the power of Congress. was TERM, 1903. QCTOBER Peokham, Holmes, JJ., dissenting. 193 U. White, J., Justice, The Chief if from opinions the then, quoted would follow sentence's It cases, which cases and Joint Association Freight in the Traffic completely which was com- only that concerned was not such that the commerce, to that which merce, applied cases, although opinions overruled both these case Hopkins no Justice, were delivered same by- all of the cases It would also overruling. such suggested intimation those cases Hopkins overruled that, having after result through the same court, opinion case, expressing case, which related Pipe Addyston proceeded Justice, to overrule the case commerce, Hopkins only to interstate cases. prior reaffirm the n no that ground holding is opinion, there course, my .Of embody such extreme contradictions the decided .cases consistent, confusion. cases are all -such utter The. produce they distinction which elementary upon proceeded only is, that difference which arises from the obscured, be not one interstate commerce on the power Congress regulate on the that hand, authority other, regulate and its want Indeed, the'confounding commerce. which'is not interstate are one, things wholly different, which is the treating .and all for the the contentions Government. permeating .error- n been to show previously What has said suffices the reasons and I well my judgment, might nothing which control say were, earnestly more. three so however, propositions There n pressed at bar theory they the Government that ownership that common demonstrate majority power railroads is to the subject regulating of competing briefly give I reasons propose Congress relied upon the contentions are conclude cause me to without merit. has declared urged,- frequently that the court,

1. This commerce includes over interstate Congress commerce, instrumentalities authority regulate v. are cited: Railroad Co. Fuller, and the cases following Missouri, U. S. 275; Pensacola Tele- 560; Welton Wall. *. CO. UNITED 393 SECURITIES STATES. NORTHERN Peckham, Holmes, JJ., dissenting. J., The Chief Justice, White, U. Co., Co. v. S. Gloucester Telegraph 1; Western Union 96 graph Pennsylvania, Co. v. U. 196. To these might cases Ferry hav¿ many others, be added some of those which including to argument been referred now made previously by me.' to instrumentalities, the extends and railroads is, power as are such instrumentalities, therefore the and acquisition ownership persons of irailroads, by corporations, is commerce sub- of ject power regulate.. to the to But this involves a Congress non and a confusion sequitwr, of from thought arising again which are confounding one, things different. wholly True, the instrumentalities of interstate commerce are to the subject to power regulate commerce, therefore such instrumen- when employed talities interstate commerce regu- lated as to their such by Congress Use .commerce. But this entirely -distinct from the to power regulate the acquisition instrumentalities, such and the ownership many forms from which contracts such arise. The ownership may same distinction exists between the two obtains between the to power Congress the movement regulate property channels interstate commerce and its want authority the same regulate acquisition ownership property. in the This difference was out cases which have pointed been referred and the tó,' distinction between the two has been from dividing beginning line, demarking power national on government the one hand on the States All ownership other. rights railroads belonging to organized under -state corporations law, poU>er to acquire same, mortgage, mortgages, foreclose lease, them, contract relations concerning have from the foundation had their sanction in the several legislation States. One may search in vain in Congress acts any legisla- tion even suggesting-that over these subjects deemed to be in Congress. contrary, On the the legislation of Congress concerning the instrumentalities railroads under the power clearly contention, refutes the since legislation relates only instrumentalities TERM, 1903.

White, Holmes, JJ., J.', Justice, Peckham, dissenting. The Chief in actual use interstate commerce and not other- their during with the can the How, consistently proposition, wise. great be which in both number of cases Federal and explained the with the ownership courts have dealt railroads and state by otherwise, foreclosure under their instrumentalities rights parties that the were assumption the controlled And subject? the here it would governing again state laws by all adopted,'that body if the the vast follow, proposition would subject on the be void from the state legislation of property rights depending and the enormous sum beginning lost, if the impaired would be since upon legislation such it was one power Congress were within the requiring subject and therefore the inaction of Congress a uniform regulation, in of power an entire want the States signify would over subjects. . in is has a number cases declared court, urged, States were without power directly

that the several burden commerce. The acquiring interstate one ownership by majority of a in corporation competing person in commerce, interstate is engaged argued, being railroads it. in power to'regulate therefore burden, subject a direct is States. and not Congress Undoubtedly only others, referred to but many including decisions most of by which have been me quoted, those absolute want legislate in the States to concerning interstate commerce power directly declared, or to burden it has been and the doctrine elementary is too its fullest citation author- scope require upon But to decide case that ity. assumption of stock ownership railroads competing acquisition in interstate commerce is a regulation commerce, engaged it,- a direct burden on would but thing, what is the same be or, for decision. arising question to assume the which within by is exerted State its authority Where an authority as exercised does not touch interstate power, instrumentalities, and can commerce its have an effect only reason of the reflex and remote results upon CO. NORTHERN UNITED SECURITIES STATES. 395 Peckham, White, J., Justice, Holmes, JJ., dissenting. U. The Chief lawful it cannot be power, without said, the exertion terms, power exercised is a regula- a contradiction burden commerce. To upon a direct tion, say because that no on any declare however subject, would-be contrary be local in could exercised the States it was character, deemed or the courts thdt would by Congress there be produced some commerce. The whether question effect burden is direct and regulation therefore constitutes a of inter- state commerce is to be determined whether by ascertaining the power exerted is lawful, generally speaking, .then whether its finding exercise case was particular such as to'cause it to illegal, because directly burdening interstate inIf commerce. case given the be lawful and power the mode in it is be exercised not such as to directly burden, regulation there is no of commerce, although as an indirect lawful, result of exertion the some power may the effect be other, produced In words, commerce. where the power is it lawful but is it asserted been so as to has exerted amount to a direct there must so to burden, be, speak, privity between the the the and burden. power resulting manifestation of The- distinction.is illustrated the cases which have well been to, very referred was out lucidly' pointed by Judge in Jackson the Greene Knight case. Take the case. There as the contract merely concerned the purchase stock the refineries, and contained condition to relating no the movement in interstate goods commerce of the to be manufactured the the refining companies, right court held'as the to acquire owners, not within the clause, commerce the fact that the the manufactured product might thereafter so act concerning. the product as burden no commerce, there was direct burden acquisition from the mere resulting On the ownership. in the contrary, Addyston case, stating after Pipe the fullest way authority paramount com- Congress concerning merce, the court the term's of approached the contract order whether it determine related to interstate if commerce, did, it it In whether created a direct burden. doing as it so, TERM;, 1903.

396- dissenting. Peckham, Holmes,-JJ., Justice, 193 U-.S. White, J., The Chief interstate both related to found that the contract same, the contract was held to be burdened the directly Knight case. It concerns comes within void. This case ownership stock. No. contract is acquisition of the owners stock the rail- controlling made question of their duties as carriers of interstate roads in performance that as the result of the contention is commerce. The sole-' arise, operation may of the stock ownership there is, That that such commerce. a burden on interstate roads, and owner- from "the acquisition result may indirectly burden therefore, it must be contention, To maintain ship. if ownership property acquired because decided commerce, acquire therefore used as to burden so would be but to declare that however, This, ’'own is to burden. nature and essence indirect is direct. very that which was (cid:127) - denied that the common it not be But, said, may it is railroads endows the holders competing ownership common in both with a interest of the stock majority it,.to choose to exert authority, they railroads and to suppress competi- of the roads as management unify so within the insisted, is power, them. This tion Between over commerce. authority Congress regulating broadly Congress is that has not In the contention words, other the exercise of interstate com- regulate authority only has right regulate under that but merce, if the property, enjoyment possession ownership and if who them possessed they engaged would those enable .rights a over the same. But power commerce to exert in' interstate in another form that right the only asserts proposition to. commerce, and therefore was interstate the stock was acquire and by the reasons Congress, authority within-the is.refuted That if proposition, advanced. the already and authorities to all Congress subjects the power would extend adopted, in considering previous stated 'the local, already essentially So clearly mind manifest. is this the my is to proposition, considered, now being that, proposition result of the particular * n .UNITED STATES. CO. SECURITIES -NORTHERN dissenting. Teckham, Holmes, JJ., Justice, J., The Chibe White, Under subject. the I illustrate again of repetition, risk at the n this, individuals by to be acquired of property the sum doctrine (cid:127) would may make, they which contracts corporations, the If judged it were of Congress. power regulating be within his should be crops in sowing farmer that Congress by. overproduction because a certain production limited to would that regulate could commerce, Congress to affect give power of property by amount óf a large If the acquisition subject. him upon to confer by Congress was.deemed an individual - it, if he engaged to affect interstate power If wage-earner that regulate subject. could Congress that believed Congress his condition to better organized would it were give power, organization of such the existence forbid, could commerce, Congress to affect interstate exerted, doctrine Indeed, the of all labor associations. the organization right Congress to a concession reason lead to. must character capacity aptitude, concerning regulate to be by Congress deemed -If individuals were of persons. in the management ability participation of such possessed them, would railroad endow enterprises competing of two’great commerce, Con- affect injuriously with the power If- the principle were participation. could forbid such gress which would arise from so Were doing and the power adopted, destroy only the result would be state exercised, of authority, but from implication governments, Federal about, brought would -be there be which the destruction would the ruins both endowed the' government erected life, great guaranty liberty .the disregard arbitrary safeguard upon organized other property every I guaranty, civil society depends. say my. because and one united, cannot be opinion three indissolubly are destroyed course, push propositions, without the other. Of to the is often an extreme to which lead unsafe they naturally guide. But at cannot escaped the same time conviction me principles conduct relation one bear concgrn. other, matters of especially public .The fathers TERM, 1903. JJ., dissenting. 193 U. >3, J., The Peckham, S Justice, Holmes, Chief Wl. an basis of upon enduring government right, 'founded our power. of limitation of the Destroy .principles principle, which I they limitations am impose;, unable to not, when may unrestrained, give conduct rise to .say to the truths great violence doing destroyed action which embodied. principles is, of all the contentions of the Government fallacy to summing the case for the up illustrated

my mind, in the at bar. The to ac- right made Government argument involves, of competing says the stock railroads quire own. of an individual “to do” up, power (italics that summing own, with claim as he his whilst the mine) absolutely pleases right is that the owner of prop- the Government (italics mine) own may as .his he'pleases “to do” erty in the interest public legitimate legislation. be controlled to right own, involves the acquire case the' But the mine). (italics the two rise to Confusing gives “to do” right my been endeavor to which it has out. Un- point the errors possess poyrermver corporations, the States created doubtedly consolidation, or forbid whether accom- by them, permit otherwise, to forbid one ownership corpo- stock plished another, and to on impose holding from ration be deemed may best: Gen- regulations such subjects other however, the to do these right things springs erally speaking, is created by the fact that corporation alone from to the conditions rights sübject and holds its attached States, creator, State, as the regulations to the grant, creature, corporation. More- may lawfully impose relation of creator creature, is,-. over, irrespective sense that govérnment possesses in a general true course, just limits, certain what an authority regúlate, within. power first property. do with his 'But- .owner to exact authority of conditions grantor from the arises the conduct of or to regulate grantee a grant making that a govérnment, to the irre- proposition no sanction gives' general has the grant, authority spective .its NORTHERN CO. UNITED STATES. SECURITIES White, J., Holmes, JJ., dissenting. Peckham, U. The Chief Justice, limit the character and which ac- quantity property, may. be and owned. And quired power; general gov- second one, reasonably ernmental control the use property, affords no foundation for the proposition that there exists power limit’ government and character of quantity the. bemay which property acquired and owned. The difference between the two is that which exists and con- between a-free government restrained an by law and absolute stitutional. unrestrained government by any of the which are principles necessary perpetuation and the society protection life, liberty property. cannot be denied that It the surtí of all just governmental by was States and power enjoyed the people .the before the of the United Constitution States was None of that formed.. that abridged by instrument power except restrained and hence by safeguards, constitutional none was by lost of the Constitution. adoption Constitution, whilst dis- The. tributing preexisting authority, preserved it all. With of thé the full States over power corporations created by them and with their authority to' local respect legislation, in- and with over power Congress interstate commerce carried I degree, to its fullest cannot conceive if .these powers, admittedly by both, be possessed fully exerted a remedy can- fully be provided adequate suppress evils which may not from arise combinations deemed to be injurious. This must be unless be concluded that by true effect of the mere-dis- made power tribution partial .Constitution impo- tency authority of governmental has resulted. ifBut this be conceded,’ arguendo, Constitution itself has pointed out by which, the method are changes needed, they may be about. No remedy, brought my opinion, for any supposed can infirmity real be-afforded disregarding the Constitu- tion, by the lines which destroying separate state and Federal authority, implying the of a existence which power to all those repugnant rights life, fundamental liberty and just government property, must rest. TERM, Justice, White, Peckham, JJ.,

Holmes, J., The Chief 193 U. dissenting. If, however, the of the question power Congress be con- as;to and' the ceded, assumption meaning Anti-Trust in for Act which has been indulged purpose consider- out of view, it would ing put yet remain to be Act determined whether Anti-Trust embraced the.acquisi- tion and the stock ownership question by the Northern It is unnecessary me, Securities Company. however, "to for. led state reasons which have me to the conclusion that the act, properly interpreted,, when does embrace the acqui- stock, sition since that con- ownership subject is an Holmes, Mr. Justice opinion sidered which explains -as interpretation statute, the tme it is understood by I me, clearly more that wóuld be able to do. the of the reasons Being opinion, given, heretofore n was to power .regulate without

Congress acquisition and of qiiestion ownership Securities I and because think even if there were súch Company, not it has been exercised Act, Anti-Trust Congress, Mr. opinion as is of Justice I Holmes, shown' dissent. I am to that the Chief Justice, say . Mr. authorized Justice Holmes, Peckham Mr. Justice concur in this dissent. Mr; Holmes, with whom Justice concurred the Chief Jus- White, Justice and Mr. tice, Mr.- Justice Peckham, dis- senting.

I agree am unable to judgment majority of the. I think although court, useless undesirable, as I to' dissent, feel bound do rule, express a so this case and for'it. my reasons give like hard make bad law. Great cases cases For great cases reason their real great, called importance are law but future, because some shaping accident of interest which overwhelming appeals the feel- immediate ings judgment. distorts These immediate interests 00. «. NORTHERN SECURITIES UNITED .401 STATES. Holmes, J., The Chief JJ., Justice, White, dissenting.J93TJ. Peckham. a kind of hydraulic exercise which pressure makes what pre- even, clear seem viously doubtful, was and before well do, of law will principles settled What have to we bend. case is to find the of some meaning hot very, difficult I We must try5 tried,, words. have do it with the same freedom natural and sppntaneous interpretation that one would be sure if the same question arose an indict- a ment for similar which excited no public attention, and act importance only prisoner before the court. Fur- while thermore, at times judges need for their work the train- of economists ing statesmen, and must act in of their view foresight consequences; yet when thfeir task tois interpret of a apply, statute, the words their merely function is aca- demic to With—to read begin English intelligently con- —and of consequences sideration comes into if play, all, only at when words used is meaning-of to" open reasonable doubt. to be question decided is whether, under the act c. July 2, 1890, Stat. 209, it is unlawful, at stage if men process, several unite to form a corporation for th'e more than half purpose buying the stock of each two interstate railroad competing companies, they form cor- and the poration, corporation buys the stock. I will suppose further that every step taken, from the beginning, with the. single intent competition ending between the companies. I make this addition not because it not -may be and is not dis- because, but as I shall to try it puted show, is totally unimpor-. any tant under of the part statute with we have to which deal. of which we statute to have find the is a meaning crim-

inal The two on sections which .statute. Government re- lies both make certain acts crimes. That is their immediate purpose that is what It is vain they say. to insist that this is a not criminal The words proceeding. cannot be read one way in a suit which to in- fine is end imprisonment and another way an injunction. one seeks The con- struction which is in adopted case must be adopted one

VOL. cxciti—26 TERM,. 1903. Beckham, JJ., dissenting. J., White, Holmes, Justice, The Chief I friend of am no artificial interpretations of the other sort. kind rather than but all another, is one statute because.a to be a statute is taken to that which punish before agree that lawful it must its intent in clear always express has been read the before say' words. I we must us as So words two small exporting grocers go whether should question were to jail. very a and general is of charac- sweeping the statute

Again or “every” contract combination of ter. the pro- It hits small, and “every” person hibited who sort, great shall to monopolize, act, monopolize “ attempt sense ” trade or commerce several part among States. it There a natural assume that is was directed inclination combinations' and to read certain it that against great On the say contrary, not so. it “every,” It does light. says it Still less was directed “any specially part.” against a There even was reasonable doubt whether it in- railroads. until the was point cluded railroads decided this court. must be construed in such Finally, way as not statute far merely constitutionality but, so to save consistent not to with a fair raise on interpretation, grave doubts that assume, discussion, for the purposes I it although score. take, serious that step (cid:127)would some great be .case measures, to it to need heroic Congress that seemed might regulate, (inly commerce, but instruments commerce or bearing of which upon contracts the commerce would be only that the indirect. But is clear mere fact of an indirect effect not shown to be commerce certain and upon very great, a law. The decided justify would not in United point Knight Co., 156 U. S. 1, 17, v. E. C. was that “the fact States might indirectly affected trade to a decree.”- complainants to entitle Commerce enough -not but could Congress not, on population, depends If regulate rnarriage divorce. ground,-undertake out to be carried according before us is what seems act the Government, me the logic argument which I do CO. v. SECURITIES UNITED STATES. NORTHERN Holmes, J., Justice, White, Peckham, JJ., dissenting. The U. Chief be, not that it will I can no believe see of the conduct part life which on similar inter- principles Congress might not fere.

This act is construed the Government to affect the pur- of shares in two chasers railroad because companies if may have, or, you like, have, effect it is certain to If of these competition roads. such a remote result an ordinary exercise of incident of property personal freé- dom is to make that enough exercise there unlawful, is hardly any transaction concerning between the States not be made a crime of a or finding jury The ascendency a court. of one personal man may be such it would to his give advice the effect of if command, a he share in each owned but road. single The tendency his in the stockholders’ presence meetings might certain to and thus competition, advice, his prevent not his mere exist- ence, become crime.

I general state these considerations as matters which I should have to take into account I agree before could to affirm the de- dp cree but I them from, my need own appealed opin- I road I ion, when the act cannot because feel sufficient doubt meaning-of words to need to fortify my conclu- sion Their by any generalities. meaning seems me on plain their face.

The section “Every first makes contract, combination in the otherwise, form trust conspiracy restraint of trade States, among or commerce the several or with foreign na- fine, misdemeanor, tions” a punishable by imprisonment or both. Much trouble made substituting other phrases as- sumed to be equivalent, then are reasoned from as if they were argued act. The court below ifas maintain- ing competition were the expressed object of the act. The act says nothing- about I competition. stick to the exact words used. words hit two classes of cases, and only two—Contracts -restraint of trade and combinations con- spiracies of trade; in-restraint and we have to consider what. TERM, Justice,

Holmes, J., White, JJ., Peckham, dissenting. The Chief 193 TJ.13. aré. in respectively these Contracts restraint of trade are by and defined the common law. dealt are They con- .with stranger with a to the contractor’s business, (although tracts on a one,) in some cases similar or carrying wholly par- of restrict' the freedom the contractor tially on carrying otherwise he would. The objection that business as of the on primarily -law to them was the common contractor’s own The did not come in unless the monopoly notion account. the whole of Mitchel v. England. covered Reynolds, contract Of did 1 P. Wms. course not objection apply forms, any, or other there were partnerships substituting of interest where there had been competition. community was to such objection merely no combinations as re- Tfiere ,or trade, they otherwise unless amounted to a' straint I of trade, Contracts restraint were monopoly. repeat, business, to the contractor’s strangers contracts with the own. restrained was contractor’s trade conspiracies restraint on trade, Combinations keep were combinations to to the hand, strangers agree other business. to them objection out of the The was an ment upon parties making to their effect the contract, objection an of the combination or but firm, objection members firm effect to the and their' upon intended strangers their sup-. In large. effect at upon public posed consequent other' they contrary were as words, regarded public policy because or attempted portion some they monopolized to'monopolize States v. E. or commerce realm. See United trade C. thfe . All U. S. 1 that is added to first section Co., by 156 Knight that, every are penalties imposed single person like 2 is§ combination, attempts to monopolizes monopo without who, States; and that the liability is ex among lize such trade tó monopolize part to attempting tended an aid to the more as construction important ít is commerce. It' own account. shows that whatever 1 it is on its than § of combination is criminal by way equally- done when criminal That I'am right my man. by single interpretation if done STATES. UNITED CO. SECURITIES NORTHERN JJ., dissenting. J., White, Peckham, The Chief Justice, Holmes, form of “in the trust by the words words of is shown § trusts, prohibition suggestéd or otherwise.” was not the union which, every knows, one objection exercised or but the sinister power sup former competitors, rivals out the combination in keeping be exercised posed - in. It already those who were ruining business others, not the ferocious extreme competition was the was the evil among competition partners, cessation an action 7, giving Further is to found proof feared. § the for his business or injured property to any person This cannot refer to to the parties agree conduct. bidden in their means that outsiders who are injured ment and plainly with a or other similar combination to trust compete attempt U. S. Montague for it. & Co. v. 193 Lowry, recover may is be or how far it goes, How effective section 38. yof the two my point. My general not to material summar title, by which the act affects is confirmed of cases classes and Commerce against “An Act to Trade protect which is and Monopolies.” unlawful Restraints this I now ask is under which classes foregoing What to and that must be answered come, question supposed case is in if we were with the dealing as definitely precisely as to follow this decision. The logically ought dictments which against of the statute contracts restraint provision held to to contracts apply railroads, trade been between has by which" independent, they restricted remaining otherwise as to rates. This their freedom restriction con respective to the a contractor’s business is the stranger ground tract with in United States v. Joint of the decision Association, Traffic 505, following United States affirming v. Trans- Missouri Association, 166 U. S. I Freight accept those absolutely, only decisions not binding me, but as de cisions which I no to have desire criticise But abridge. and, it decided, me, has not been seems to could provision of plain language, not without to perversion apply be decided ended competition which com- arrangement through to an is TERM, 1903. Holmes, Justice, White, J., Peckham, JJ., dissenting. The Chief munity of interest —an arrangement which parties leaves the external That without restriction. taken provision, alone, all does require existing competitions shall main- not does look if primarily, all, tained. It not to competition. at that'a freedom in It.simply party’s trade between the requires cut down contract with stranger. States shall a So .be to it- lawful abolish goes, competition by that phrase far as any form of It would seem to me impossible say union'. a that the contract restraint trade is crime “every words would send the of a members punishable imprisonment,” .with of, consolidation two cor- between, trading partnership more it forbade impossible' say that porations to'prison —still he man stock as liked corporation purchase one as much have would that effect this clause in both. Yet words those For to the defendants here. cannot be too applies § applies remembered that clause carefully “every” kind —a contract of the forbidden consideration was the Freight Trans-Missouri Association’s turning point case. case it must

If the be because the applies statute formed, have or because the Northern them, or some parties, combination restraint trade Company is, Securities what comes to the samé States, or, thing my among because,the or some or defendants, them, one are opinion, or some attempting monopolize part monopolizing But mere those reading between the States. commerce are used a limited and accurate they that words shows every concern According popular speech, monopo- sense. does, it if that is trade business business whatever lizes a of the trade monopolizes part among it' two States between the statute does not forbid that. It Of course the States. must A business cease. railroad single that all not mean does a mountain through gorge monopo- or valley a down narrow through that valley railroad transportation lizes all the in a sense, monopolizes, popular railroad every gorge. Indeed no one Yet I would suppose say the trade of some area. STATES. NORTHERN CO. UNITED SECURITIES 40? Peckham, Justice, White, JJ., dissenting. J., The Chief Holmes, a of men into corporation a combination forbids statute a railroad between the States. and run such build that, I the Minnesota charter Great Northern assume Pacific both are charter the Northern the Wisconsin either road that, built, Minnesota, valid. before Suppose system States, of a between the had part transportation as a railroad authorized to build all the company singly .created actually built, the States now owned controlled lines either of the two I take it that existing companies.

charter would have been as the even just good one, present if which we are had been force. In considering the statutes it would have created a monopoly present whatever sense It would have been a but large one, charter does. the act no makes discrimination to size. Size Congress according has A to do with the matter. monopoly “any part” nothing among States is unlawful. The supposed would have owned lines that have been com- company might one present does. But the act of Con- peting probably — will not be construed to mean the gress universal disintegra- into each at war all society men, tion of with single rest, of all further for a com- prevention even the combinations mon end.

There is natural that somehow7or other the feeling statute at combinations to cause great enough just meant strike country on the of those who love their more than anxiety part it viewed such little as I money, while ones have supposed notion, may said, indifference. This it be just somehow act, from the it seems to be con pores although breathes the words detail. And it every way by tradicted has oc be a combination curred mb that it that when reached might have attributed to it more of the certain char might size than acter of a virtue its size would monopoly merely by I clear attributed one. am that it is quite only to a-smaller could play any part. connection with that size But monopolies been, In the already. indicated first size place answer has my. an inevitable incident and it were an the case railroads ' TERM, White, Pjbckham, JJ., dissenting. Holmes, J., 193 U.-S. Justice, The Chief Great Northern and the act, under the the objection too and encountered the In great were law. already Pacific it in the railroads case that the place the next is'evident other is reached for ends than of the combination those size The monopolies. thém combinations are which would make from the excluding others field. formed for the purpose will have the same tendency railroad to even a small Finally, great from narrow area that ones have to exclude others one, and the from a statute attacks the greater exclude others very The words of the great. as well as monopolies small case and impossible distinction this- it has make such a act - (cid:127) terms. express attempted not been have above would which I have imagined If charter in a sense, notwithstanding monopoly, popular been good led is to ask whether and awhy one next created, it roads, although ac- existing or consolidation combination company exactly powers into one the same competition, tual law,, inore be to the Al- extent, would obnoxious Louisville Nashville & Railroad it decided Co. though was statute,, that since the 701, before, Kentucky, 161 to regulate matter, said, power have the States á consolidation would be that such unlawful, in the argument, Attorney me that the General was to compelled and it seems But I maintain-his case. think in order to that logic to say so. there, denying him short stop not let would to authorize one company time to present at the con- of State lines might parallel compete. two and own struct ifas the roads were would the same consolidated monopoly it is on compete begun had they' footing after —and supposing objection I am made. But now monopoly prevention competition objection meet the at the that three parties to a time, apply I will State same suppose and possibly for of two new one each charters; competing lines, for both of these and one that the respectively, lines I last. think that charter would be granted charter argument I think whole contrarv rests good, v. UNITED STATES. 409 CO. NORTHERN SECURITIES Holmes, J., Justice, White, The Chief Peckham, JJ., dissenting. U. S. instead of an accurate and a popular legal conception on in the I “monopolize” the word statute repeat, what means. no my opinion in there is attempt that monopolize, I have in what, said, as the same my judgment amounts to there is no in trade, that combination restraint of until thing, is done with intent to to the something exclude strangers from it in combination some of the busi- part competing it carries ness which on.' I am of what a entirely

Unless wrong understanding imply in restraint of trade” then the same means, combination individual, be and effected an by monopoly attempted in I not that ease But and is made 2. do equally illegal § that Mr. could be sent to hear it maintained Morgan expect as he of the Great' many as shares liked buying prison even if them Pacific, bought and the he Northern more than half the stock got at the time and both sapie (cid:127) road. each I much that mentioned argument is There in view of the attached great importance But by. pass’ I attempt suppress competition, to the supposed both sides I I that more that. said at the outset a word about say must assume, I that one of the pur and do assume,- purpose should I between two roáds. suppress competition was to chase that there are argument independ the force appreciate be each; it cannot that the presumed that ent stockholders act; will propose any illegal of directors- boards respective be all that restrained, could and that they should they that if from the result to yet illegal as too remote done is been has every Not aet done further ás an attempt. even be classed contrary to the law. an attempt unlawful end is of an ance to the It is a question a certain nearness There must result.. Massachusetts, v. Peaslee, and decree. Commonwealth proximity is the So, said, amenability I have acts with commerce the States among of interference furtherance to the intimation according So, Congress. legislation under stat- liability present court, is the question TERM, 1903. Justice, White, Peckham, JJ., Holmes, J., Chief 193 U. S. dissenting. ute. v. United States, 578; Hopkins Anderson v. I United 171 U. 604. But assume States, S. further, for the been done discussion, what has is near purposes enough to the to fall under the if-the law law, result prohibits that nearly result, assumption very not con- although quite v. E. United States C. Knight tradicts the decision Co., 156 I that the law say prohibit U. 1. But does result. If there some it be because further does must meaning I the words yet than have discovered in re- “combinations I I think that have exhausted the straint trade.” meaning I have. already what said. But those words they cer- all-existing competitions do not to be tainly require kept on Trans-Missouri foot, on the As- and, principle Freight invalidate the continuance of old sociation’scase, contracts in the united competitors past. which former A not a contract or combination in is partnership restraint the well known partners of trade between unless are words new invented for the purposes a given meaning this act. It was suppression competition is true that referred to in v. Trans-Missouri Freight Association, United 166 U. States I that in connection with said, as have was a-contract 290, but, the defendant’s business—a true with a stranger'to contract To competition of trade. suppress way restraint is it another. by fusion is I suppress law, one thing, re- only about says nothing competition, prevents its peat, contracts combinations restraint suppression trade, derive their contracts or'combinations character such as from other than the trade features suppression of restraining I am alone. To see whether wrong, illustra- competition If I am, are of use. then a argument partner- tions put had been two who competitors between drivers ship stgge line, or two merchants once across a state driving engaged whether made among rival commerce States after or be- For, is a Grime. act, continued, now I again fore repeat, on the freedom of.t-fiemembers of a if the combina- restraint into a entering partnership caused their tion restraint of EATON BROWN. Appellant. Counsel as well the every combination, such small

trade, great, the act. is within my the statute I do interpretation

In view fur- go power Congress. the question ther into That has brother White and I concur in by my been dealt with the main I know that happy only with his am views. minority of my interpretation brethren an' law which in adopt my bellum opinion make eternal the omnium would contra omnes society so far as could into disintegrate rtj individual atoms. If that were I its intent should regard calling law a regulation-of commerce as a mere It would be pretense. an attempt reconstruct I society. am not concerned wisdom of such an attempt, but I believe that Congress not entrusted by the Constitution with make I am deeply persuaded that it has not tried.

I am authorized to say the Chief Justice, Mr. Jus- tice White and Mr. Justice Peckham concur in this dissent.

EATON v. BROWN. THE APPEAL FROM AND ERROR TO COURT OF APPEALS OF TH® OF COLUMBIA. DISTRICT Submitted March 3,1904. No. March 14, 1904. Decided regard do not incline to a will as Courts conditional where it reasonably can merely be held that the testator was expressing his inducement to make it, although language, strictly his construed, express would a condition. facts are stated the opinion of the court. Mr. J. Altheus Johnson and Mr. A. Burlcart Joseph for the appellant.

Case Details

Case Name: Northern Securities Co. v. United States

Court Name: Supreme Court of the United States

Date Published: Mar 14, 1904

Citation: 193 U.S. 197

Docket Number: 277

Court Abbreviation: SCOTUS