NORTHERN SECURITIES COMPANY v. UNITED STATES (1904)

Introduction:

Soon after its E. C. Knight decision, the Court realized that its reasoning did not match economic reality. Thus, it began to retreat from its rigid position in Addystone Pipe & Steel Co. v. United States, decided in 1899. In that case, the Court upheld the Government's anti-trust suit against pipe manufacturers who had divided the market, recognizing the connection between commerce and manufacturing. This decision helped prompt the new president, Theodore Roosevelt, to launch a series of anti-trust prosecutions under the Sherman Act. The first initiative was against the Northern Securities Company, the Great Northern Railway Company, and the Northern Pacific Railway Company, and the leading men who put together the Northern Securities Company--James J. Hill and J. Pierpont Morgan, Arvil Harriman, and a few others. This was a good test case because the principals had formed a railroad combination with an open purpose of eliminating competition and integrating railroad properties in the Northwest. It seemed easier for the Supreme Court to find a railroad combination restraining trade than a sugar monopoly. Harlan=s majority opinion, in the 5-4 decision, took an expansive view of interstate commerce. But Harlan also espoused a literalist interpretation of the Sherman Act, which, to some, put almost any business cooperation in danger of prosecution. The dissent by newly-appointed Justice Oliver Wendell Holmes, Jr. called for a "common sense" reading of the law and led, eventually, to the development of the "rule of reason" (see Standard Oil v. U.S. and American Tobacco Co. v. U.S.).

DOCUMENT:

Brief on behalf of Northern Securities Company, the appellant:

Mr. George B. Young argued the cause and filed a brief for appellant the Northern Securities Company:

The government is not entitled to maintain this proceeding . . . for the conspiracy or combination charged in the petition and found by the circuit court, if it ever existed, had done all it was formed to do, and had come to an end, before the proceeding was instituted.

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

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

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

The formation of corporations for business or manufacturing purposes has never been regarded as in the nature of a contract in restraint of trade or commerce. The same may be said of the contract of partnership. The only question is, Does the contract or combination itself, or do the things the parties contracted to do, restrain commerce? If they do, the parties are criminals, however good their motives. If they do not, the parties are innocent, however reprehensible their designs. . . . .

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

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

. . . The power of Congress is only to regulate, and is the power to prescribe the rule by which commerce is to be governed. The interstate commerce power of Congress justifies only such regulations as act upon that commerce directly, and does not authorize regulations abridging the police powers of the states or the personal rights and privileges of individuals, if they affect that commerce only indirectly, remotely, incidentally, and collaterally. If the decision of the circuit court is correct, all the state laws either forbidding or authorizing consolidations of interstate carriers are and always have been void. . . .

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

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

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

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

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

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

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

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

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

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

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

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

Brief on behalf of the Government, the appellee:

Attorney General Knox argued the cause. . . .

A combination or consolidation of two competing railroads, brought about by transferring to one road a majority of the stock of the other, is such a monopoly. To prove that a combination or monopoly exists within the meaning of the act, it is not necessary to show that the immediate effect of the acts complained of is to suppress competition or to create a complete monopoly. It is sufficient to show that they tend to bring about those results. The very existence of the power to restrain trade constitutes a restraint. . . .

By acquiring a majority of the shares of the Great Northern and Northern Pacific the Securities Company has obtained the control of, and therefore the power to suppress competition between, two rival and competing lines of railway engaged in interstate commerce, and in that way has monopolized a part of interstate commerce. In the exercise of its regulative and police powers over interstate commerce, Congress may suppress monopolies in restraint thereof, by whomsoever created, notwithstanding that in doing so it restricts the right of private contract to some extent. . . .

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

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

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

The Great Northern Railway Company and the Northern Pacific Railway Company owned, controlled, and operated separate lines of railway . . . The two lines . . . were and are parallel and competing lines across the continent . . . , and the two companies were engaged in active competition for freight and passenger traffic . . . .

Early in 1901 the Great Northern and Northern Pacific Railway Companies, having in view the ultimate placing of their two systems under a common control, united in the purchase of the capital stock of the Chicago, Burlington, & Quincy Railway Company . . . . By this purchase of stock the Great Northern and Northern Pacific acquired full control of the Chicago, Burlington, & Quincy main line and branches.

Prior to November 13th, 1901, defendant Hill and associate stockholders of the Great Northern Railway Company, and defendant Morgan and associate stockholders of the Northern Pacific Railway Company, entered into a combination to form, under the laws of New Jersey, a holding corporation, to be called the Northern Securities Company . . . to which company . . . was to be turned over the capital stock . . . of each of the constituent railway companies, with power in the holding corporation to vote such stock and in all respects to act as the owner thereof, and to do whatever it might deem necessary in aid of such railway companies or to enhance the value of their stocks. In this manner the interests of individual stockholders in the property and franchises of the two independent and competing railway companies were to be converted into an interest in the property and franchises of the holding corporation. Thus . . . all inducement for competition between the two systems was to be removed, a virtual consolidation effected, and a monopoly of the interstate and foreign commerce formerly carried on by the two systems as independent competitors established. . . .

The Securities Company . . . was not organized in good faith to purchase and pay for the stocks of the Great Northern and Northern Pacific Railway Companies, but solely "to incorporate the pooling of the stocks of said companies," and carry into effect the above combination; that it is a mere depositary, custodian, holder, or trustee of the stocks of the Great Northern and Northern Pacific Railway Companies . . . .

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

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

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

[The Northern Securities Company] in the fullest sense dominates the situation in the interest of [the stockholders of the Great Northern and Northern Pacific Railroads]; as much so, for every practical purpose, as if it had been itself a railroad corporation which had built, owned, and operated both lines for the exclusive benefit of its stockholders. Necessarily, also, the constituent companies ceased, under such a combination, to be in active competition for trade and commerce along their respective lines, and have become, practically, one powerful consolidated corporation, by the name of a holding corporation, the principal, if not the sole, object for the formation of which was to carry out the purpose of the original combination, under which competition between the constituent companies would cease. Those who were stockholders of the Great Northern and Northern Pacific and became stockholders in the holding company are now interested in preventing all competition between the two lines, and, as owners of stock or of certificates of stock in the holding company, they will see to it that no competition is tolerated. . . The result of the combination is that all the earnings of the constituent companies make a common fund in the hands of the Northern Securities Company, to be distributed, not upon the basis of the earnings of the respective constituent companies, each acting exclusively in its own interests, but upon the basis of the certificates of stock issued by the holding company. No scheme or device could more certainly come within the words of the act,-- "combination in the form of a trust or otherwise . . . in restraint of commerce among the several states or with foreign nations,"--or could more effectively and certainly suppress free competition between the constituent companies. This combination is, within the meaning of the act, a "trust;" but if not, it is a combination in restraint of interstate and international commerce; and that is enough to bring it under the condemnation of the act. The mere existence of such a combination, and the power acquired by the holding company as its trustee, constitute a menace to, and a restraint upon, that freedom of commerce which Congress intended to recognize and protect, and which the public is entitled to have protected. If such combination be not destroyed, all the advantages that would naturally come to the public under the operation of the general laws of competition, as between the Great Northern and Northern Pacific Railway Companies, will be lost, and the entire commerce of the immense territory in the northern part of the United States between the Great Lakes and the Pacific at Puget sound will be at the mercy of a single holding corporation, organized in a state distant from the people of that territory.

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

Is the act to be construed as forbidding every combination or conspiracy in restraint of trade or commerce among the states or with foreign nations? Or, does it embrace only such restraints as are unreasonable in their nature? Is the motive with which a forbidden combination or conspiracy was formed at all material when it appears that the necessary tendency of the particular combination or conspiracy in question is to restrict or suppress free competition between competing railroads engaged in commerce among the states? . . . How far may Congress go in regulating the affairs or conduct of state corporations engaged as carriers in commerce among the states or of state corporations which, although not directly engaged themselves in such commerce, yet have control of the business of interstate carriers? If state corporations, or their stockholders, are found to be parties to a combination in the form of a trust or otherwise, which restrains interstate or international commerce, may they not be compelled to respect any rule for such commerce that may be lawfully prescribed by Congress? . . .

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

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

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

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

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

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

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

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

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

. . . In our opinion, the recognition of the principles announced in former cases must, under the conceded facts, lead to an affirmance of the decree below, unless the special objections . . . which have been made to the application of the act of Congress to the present case, are of a substantial character. . . .

[I]t is said that the question here is whether the power of Congress over interstate commerce extends to the regulation of the ownership of the stock in state railroad companies, by reason of their being engaged in such commerce. Again, it is said that the only issue in this case is whether the Northern Securities Company can acquire and hold stock in other state corporations. . . . Such statements as to the issues in this case are, we think, wholly unwarranted, and are very wide of the mark; it is the setting up of mere men of straw to be easily stricken down. We do not understand that the government makes any such contentions . . . . It does not contend that Congress may control the mere acquisition or the mere ownership of stock in a state corporation engaged in interstate commerce. . . . But it does contend that Congress may protect the freedom of interstate commerce by any means that are appropriate and that are lawful, and not prohibited by the Constitution. It does contend that no state corporation can stand in the way of the enforcement of the national will, legally expressed. What the government particularly complains of--indeed, all that it complains of here--is the existence of a combination among the stockholders of competing railroad companies which, in violation of the act of Congress, restrains interstate and international commerce through the agency of a common corporate trustee, designated to act for both companies in repressing free competition between them. Independently of any question of the mere ownership of stock or of the organization of a state corporation, can it in reason be said that such a combination is not embraced by the very terms of the anti-trust act? May not Congress declare that combination to be illegal? . . . How far may the courts go in order to give effect to the act of Congress, and remedy the evils it was designed by that act to suppress? These are confessedly questions of great moment, and they will now be considered.

By the express words of the Constitution, Congress has power to "regulate commerce with foreign nations and among the several states, and with the Indian tribes." In view of the numerous decisions of this court there ought not, at this day, to be any doubt as to the general scope of such power. . . . Again and again this court has reaffirmed the doctrine announced in the great judgment rendered by Chief Justice Marshall for the court in Gibbons v. Ogden that the power of Congress to regulate commerce among the states and with foreign nations is the power "to prescribe the rule by which commerce is to be governed;" that such power "is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution;" that "if, as has always been understood, the sovereignty of Congress, though limited to specified objects, is plenary as to those objects, the power over commerce with foreign nations and among the several states is vested in Congress as absolutely as it would be in a single government having in its constitution the same restrictions on the exercise of the power as are found in the Constitution of the United States;" that a sound construction of the Constitution allows to Congress a large discretion "with respect to the means by which the powers it confers are to be carried into execution, which enable that body to perform the high duties assigned to it, in the manner most beneficial to the people;" and that if the end to be accomplished is within the scope of the Constitution, "all means which are appropriate, which are plainly adapted to that end, and which are not prohibited, are constitutional." . . .

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

It may well be assumed that Congress, when enacting that statute, shared the general apprehension that a few powerful corporations or combinations sought to obtain, and, unless restrained, would obtain, such absolute control of the entire trade and commerce of the country as would be detrimental to the general welfare. . . .

Many suggestions were made in argument based upon the thought that the anti-trust act would, in the end, prove to be mischievous in its consequences. Disaster to business and wide-spread financial ruin, it has been intimated, will follow the execution of its provisions. Such predictions were made in all the cases heretofore arising under that act. But they have not been verified. It is the history of monopolies in this country and in England that predictions of ruin are habitually made by them when it is attempted, by legislation, to restrain their operations and to protect the public against their exactions. In this, as in former cases, they seek shelter behind the reserved rights of the states and even behind the constitutional guaranty of liberty of contract. But this court has heretofore adjudged that the act of Congress did not touch the rights of the states, and that liberty of contract did not involve a right to deprive the public of the advantages of free competition in trade and commerce. Liberty of contract does not imply liberty in a corporation or individuals to defy the national will, when legally expressed. Nor does the enforcement of a legal enactment of Congress infringe, in any proper sense, the general inherent right of every one to acquire and hold property. That right, like all other rights, must be exercised in subordination to the law.

But even if the court shared the gloomy forebodings in which the defendants indulge, it could not refuse to respect the action of the legislative branch of the government if what it has done is within the limits of its constitutional power. The suggestions of disaster to business have, we apprehend, their origin in the zeal of parties who are opposed to the policy underlying the act of Congress or are interested in the result of this particular case; at any rate, the suggestions imply that the court may and ought to refuse the enforcement of the provisions of the act if, in its judgment, Congress was not wise in prescribing as a rule by which the conduct of interstate and international commerce is to be governed, that every combination, whatever its form, in restraint of such commerce and the monopolizing or attempting to monopolize such commerce, shall be illegal. These, plainly, are questions as to the policy of legislation which belong to another department, and this court has no function to supervise such legislation from the standpoint of wisdom or policy. We need only say that Congress has authority to declare, and by the language of its act, as interpreted in prior cases, has, in effect, declared, that the freedom of interstate and international commerce shall not be obstructed or disturbed by any combination, conspiracy, or monopoly that will restrain such commerce, by preventing the free operation of competition among interstate carriers engaged in the transportation of passengers and freight. This court cannot disregard that declaration unless Congress, in passing the statute in question, be held to have transgressed the limits prescribed for its action by the Constitution. But, as already indicated, it cannot be so held consistently with the provisions of that instrument.

The combination here in question may have been for the pecuniary benefit of those who formed or caused it to be formed. But the interests of private persons and corporations cannot be made paramount to the interests of the general public. Under the Articles of Confederation commerce among the original states was subject to vexatious and local regulations that took no account of the general welfare. But it was for the protection of the general interests, as involved in interstate and international commerce, that Congress, representing the whole country, was given by the Constitution full power to regulate commerce among the states and with foreign nations. . . .

We will now inquire as to the nature and extent of the relief granted to the government by the decree below. [The Court issued an injunction essentially destroying the Holding Company.]

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

Mr. Justice Holmes, with whom concurred the Chief Justice, Mr. Justice White, and Mr. Justice Peckham, dissenting:

I am unable to agree with the judgment of the majority of the court, and although I think it useless and undesirable, as a rule, to express dissent, I feel bound to do so in this case and to give my reasons for it.

Great cases, like hard cases, make bad law. For great cases are called great, not by reason of their real importance in shaping the law of the future, but because of some accident of immediate overwhelming interest which appeals to the feelings and distorts the judgment. These immediate interests exercise a kind of hydraulic pressure which makes what previously was clear seem doubtful, and before which even well settled principles of law will bend. What we have to do in this case is to find the meaning of some not very difficult words. . . . [W]hen [the judges'] task is to interpret and apply the words of a statute, their function is merely academic to begin with,--to read English intelligently,--and a consideration of consequences comes into play, if at all, only when the meaning of the words used is open to reasonable doubt.

The question to be decided is whether, under the act of July 2, 1890 [the Sherman Anti-Trust Act], it is unlawful, at any stage of the process, if several men unite to form a corporation for the purpose of buying more than half the stock of each of two competing interstate railroad companies, if they form the corporation, and the corporation buys the stock. I will suppose further that every step is taken, from the beginning, with the single intent of ending competition between the companies. I make this addition not because it may not be and is not disputed, but because, as I shall try to show, it is totally unimportant under any part of the statute with which we have to deal. . . .

[T]he statute is of a very sweeping and general character. It hits "every" contract or combination of the prohibited sort, great or small, and "every" person who shall monopolize or attempt to monopolize, in the sense of the act, "any part" of the trade or commerce among the several states. There is a natural inclination to assume that it was directed against certain great combinations, and to read it in that light. It does not say so. On the contrary, it says "every," and "any part." . .

[In] United States v. E. C. Knight Co. [the Court held] that "the fact . . . that trade or commerce might be indirectly affected was not enough to entitle complainants to a decree." Commerce depends upon population, but Congress could not, on that ground, undertake to regulate marriage and divorce. If the act before us is to be carried out according to what seems to me the logic of the argument for the government, which I do not believe that it will be, I can see no part of the conduct of life with which, on similar principles, Congress might not interfere.

This act is construed by the government to affect the purchasers of shares in two railroad companies because of the effect it may have, or, if you like, is certain to have, upon the competition of these roads. If such a remote result of the exercise of an ordinary incident of property and personal freedom is enough to make that exercise unlawful, there is hardly any transaction concerning commerce between the states that may not be made a crime by the finding of a jury or a court. . . . I state these general considerations as matters which I should have to take into account before I could agree to affirm the decree appealed from, but I do not need them for my own opinion, because, when I read the act I cannot feel sufficient doubt as to the meaning of the words to need to fortify my conclusion by any generalities. Their meaning seems to me plain on their face.

The 1st section makes "every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states, or with foreign nations' a misdemeanor, punishable by fine, imprisonment, or both." Much trouble is made by substituting other phrases assumed to be equivalent, which then are reasoned from as if they were in the act. The court below argued as if maintaining competition were the expressed object of the act. The act says nothing about competition. I stick to the exact words used. The words hit two classes of cases, and only two,--contracts in restraint of trade and combinations or conspiracies in restraint of trade,-- and we have to consider what these respectively are. Contracts in restraint of trade are dealt with and defined by the common law. They are contracts with a stranger to the contractor's business . . . which wholly or partially restrict the freedom of the contractor in carrying on that business as otherwise he would. . . . The notion of monopoly did not come in unless the contract covered the whole of England. . . .There was no objection to such combinations merely as in restraint of trade or otherwise unless they amounted to a monopoly. Contracts in restraint of trade, I repeat, were contracts with strangers to the contractor's business, and the trade restrained was the contractor's own.

Combinations or conspiracies in restraint of trade, on the other hand, were combinations to keep strangers to the agreement out of the business. The objection to them was not an objection to their effect upon the parties making the contract, the members of the combination or firm, but an objection to their intended effect upon strangers to the firm and their supposed consequent effect upon the public at large. In other words, they were regarded as contrary to public policy because they monopolized, or attempted to monopolize, some portion of the trade or commerce of the realm. . . . My general summary of the two classes of cases which the act affects is confirmed by the title, which is "An Act to Protect Trade and Commerce Against Unlawful Restraints and Monopolies."

[The Act] does not require that all existing competitions shall be maintained. It does not look primarily, if at all, to competition. It simply requires that a party's freedom in trade between the states shall not be cut down by contract with a stranger. . . . [It the Act were interpreted as the majority does to mean] "every contract in restraint of trade is a crime . . . ," [partnerships would be outlawed.]

If the statute applies to this case it must be because the parties, or some of them, have formed, or because the Northern Securities Company is, a combination in restraint of trade among the states, or, what comes to the same thing, in my opinion, because the defendants, or some or one of them, are monopolizing, or attempting to monopolize, some part of the commerce between the states. But the mere reading of those words shows that they are used in a limited and accurate sense. According to popular speech, every concern monopolizes whatever business it does, and if that business is trade between two states it monopolizes a part of the trade among the states. Of course, the statute does not forbid that. It does not mean that all business must cease. A single railroad down a narrow valley or through a mountain gorge monopolizes all the railroad transportation through that valley or gorge. Indeed, every railroad monopolizes, in a popular sense, the trade of some area. Yet I suppose no one would say that the statute forbids a combination of men into a corporation to build and run such a railroad between the states. . . . But the act of Congress will not be construed to mean the universal disintegration of society into single men, each at war with all the rest, or even the prevention of all further combinations for a common end. . . .

There is much that was mentioned in argument which I pass by. But in view of the great importance attached by both sides to the supposed attempt to suppress competition, I must say a word more about that. I said at the outset that I should assume, and I do assume, that one purpose of the purchase was to suppress competition between the two roads. . . . Not every act done in furtherance of an unlawful end is an attempt or contrary to the law. There must be a certain nearness to the result. It is a question of proximity and degree. . . .

But I say that the law does not prohibit the result. If it does it must be because there is some further meaning than I have yet discovered in the words "combinations in restraint of trade." I think that I have exhausted the meaning of those words in what I already have said. But they certainly do not require all existing competitions to be kept on foot, and, on the principle of the Trans-Missouri Freight Association's Case, invalidate the continuance of old contracts by which former competitors united in the past.

A partnership is not a contract or combination in restraint of trade between the partners unless the well known words are to be given a new meaning, invented for the purposes of this act. It is true that the suppression of competition was referred to in United States v. Trans-Missouri Freight Asso. but, as I have said, that was in connection with a contract with a stranger to the defendant's business,--a true contract in restraint of trade. To suppress competition in that way is one thing; to suppress it by fusion is another. The law, I repeat, says nothing about competition, and only prevents its suppression by contracts or combinations in restraint of trade, and such contracts or combinations derive their character as restraining trade from other features than the suppression of competition alone. To see whether I an wrong, the illustrations put in the argument are of use. If I am, then a partnership between two stage drivers who had been competitors in driving across a state line, or two merchants once engaged in rival commerce among the states, whether made after or before the act, if now continued, is a crime. For, again I repeat, if the restraint on the freedom of the members of a combination, caused by their entering into partnership, is a restraint of trade, every such combination, as well the small as the great, is within the act.