# The Liberty to Trade as Buttressed by National Law/Competition

CHAPTER VII
Competition
Competition does represent, not the productive forces of trade, but only its police. Unfortunately, it is none the less necessary, on that account. Civilization is but a curtailment of competition, a substitution of coöperation for universal strife and enmity. To say, therefore, that a restraint of competition is equivalent to a restraint of trade, is to admit that, however far civilization has advanced, it has not yet eliminated a barbarous degree of selfishness; and, unfortunately, this is so!
But there must be some limitation upon that which disintegrates society; some protection to that which unites. That which raises us from the savage state cannot wholly be condemned; even though men are still so selfish as to necessitate the enforcement of police protection against the results of their cupidity.
While no more able, righteous, or legally correct opinion was ever delivered than that of Mr. Justice Harlan in the Securities case; while I doubt if we can even yet appreciate the obligations we rest under because of it (the Constitution has been subjected to enough strain in any event from the discontent of the people), I must confess that Mr. Justice Holmes in his dissent enunciates much that appeals to me as manifestly true, although, for reasons easily gatberable from this ​essay, I have been unable to accept his final conclusion or inference of fact in that case.
I am perfectly conscious that much in opinions of the very highest authority contradicts what I am about to say. I nevertheless and notwithstanding consider the law to be as I am striving to explain it.
Just as it is believed that "tendency" is the paramount consideration in cases of restraint, and is limited and defined by the doctrine of "indirectness," so I believe that the basis of our civilization, law, and religion is "coöperation." Though constituting the greatest source of human power for either good or evil, coöperation in turn is limited and defined by the doctrine of competition, that it may accomplish legitimate purposes only.
As to religion, I take it no one will question what I say. It would be an anomaly if a nation's law and religion were diametrically and irreconcilably in conflict on such a subject. As to our civilization, to deny this position would be equivalent to the assertion that civilization is not civilization, for civilization is coöperation among men!
And, so, to the law.
I think it is on this subject, as on the others of which I have treated, largely controlled by purpose, intent, tendency. Where men coöperate for good they are most effectively engaged in furthering the public welfare; and it is no less true that where they coöperate for evil, they in like measure intensify the evils aimed at. That I understand to be the whole doctrine of criminal conspiracy.
So, while I feel that in the Securities case the test of the stifling of all motives for competition was absolutely correct and properly applied, and while I ​think it has been properly applied in every case in which it has been applied by the Supreme Court; I do not think that it is by any means a universal test; and that, so far as it has been so stated as applying to all cases that must be, in the first place, limited by the case actually before the Court, and in the second place, by the fact that many exceptions have already been admitted, although the principle upon which they rest has not been formulated, the statement of the rule—though with strong dissent—still being general.
Mr. Justice Holmes forcibly says: "The provision of the statute against contracts in restraint of trade * * * does not require that all existing competitions shall be maintained. * * * 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. * * * A partnership is not a contract or combination in restraint of trade between the partners * * * 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."
But, as has so often happened, the vindication of the opinion of the majority is found in the common law.
The extreme of the evil that the law strikes at is reached in monopoly, "sole sale;" that is, an extermination of competition. Suppression of competition is ​the method of accomplishing restraint universally adopted; where it is, therefore, undertaken in unusual ways or great degree, the primary presumptions against all that may restrain still needs to be negatived. In present times, to say that a suppression, an elimination of competition on a great scale, or out of the beaten and ordinary path, would not tend to oppression, would be substantially to reverse the ordinary presumption though that involves no greater hardship than the readiness to display a clean bill of health. "But if there are circumstances recited in the instrument" (or probably if they appear by averment) "it is for the court to determine whether the contract be a fair and reasonable one or not, and the test appears to be whether it is prejudicial or not to the public interest, for it is on grounds of public policy alone that these contracts are supported or avoided.
By the suppression of competition one of these magnificent combinations can, and has, filched millions of money from the people in a single year; and so, when the National police has been stricken down on his beat, is it too exacting to require that it should at least be able to establish that its purpose was not also to rob the house? To make that at least reasonably clear? Can any one say to-day that, as a rule, the stifling of competition on a great scale does not tend to raising prices, restraining trade in most cases? And if so, is the rule or exception to be proved? Is there not in such cases, just as the court has again and again said, "tendency," if not the completed injury? And where is the case that says that the provision of the statute of James as to "tendency" has ceased to be a part of the law?
​But when so much is said, I feel that it will be ultimately decided that competition has thus served its full purpose; that properly used coöperation is not precluded, nor man's best friend exiled.
If it be asked, "What test must be applied to determine where coöperation may begin and competition be limited?" the answer seems clear.
Prima facie, a stifling of competition on a great scale or in unusual ways imperatively needs explanation; and the one explanation that can be safely accepted is that the greater good, "coöperation," is substituted for it; but substituted "to make," not merely "to take;" to benefit, not injure; to increase production and trade, not to limit either; to profit by more largely supplying, not denying! If that be proved, and so long as it continue, "tendency" is not present, and lawfulness continues, too! That was thought to be the Knight case!
No matter how general the language of the cases, their admitted exceptions are without intelligible explanation if this be not what the courts really mean, the underlying doctrine!
But it again only brings us back to the common law—"the exception is in furtherance of the rule."
And so we are again at our starting place. The court regards substance, not form or nomenclature. That which advances trade, plenty, happiness, is legal; that which limits or tends to limit, unlawful.
"The public have an interest in every one carrying on his trade freely; so has the individual. All interference with individual liberty of action in trading, and all restraints of trade, of themselves, if there is nothing more, are contrary to public policy and therefore void. That is the general rule. But ​there are exceptions. * * * It is sufficient justification, and indeed it is the only justification, if the restraint is reasonable—reasonable, that is, in reference to the interests of the parties concerned, and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose interest it is imposed, while at the same time it is in no way injurious to the public." That is the latest deliverance of one of the greatest of judges in one of the greatest two courts of the world!
A mere look at the statute books, at the decisions of the courts, at the public press, at political conventions, or any other declarations of public opinion in the last few years, must convince any one that this is not the time to relax the safeguards thrown around society by the presumption of illegality in the absence of adequate explanation, where power and interest so unite that the public may be made to contribute enormous sums to those accomplishing such union.
* ↑ 193 U. S. 197 (1904).
* ↑ 193 U. S. 406 (1904).
* ↑ Baron Parke, Mallan vs. May, 11 M. & W. 665 (1843).