Evening star. [volume] (Washington, D.C.) 1854-1972, 1903-12-15
AGAINST THE MERGER
Continued from First Page,

CONTINUED from First Page)
anstrumentalities of transportation, and
transportation Is commerce. There, the r5-
.traint upon commerce was indirect, be-
cause IT only operated upon commerce
through its effect upon production. that 10:
by monopolizing product 1t restrained
production, and that. in its turn, had an IN
direct effect upon commerce. But here. 1t
being a monopoly of Observation-Disclosures or
commerce the effect upon commerce Is d.
rect immediate and necessary.
Invasion Of State Rights.
The Attorney General next discussed the
alleged invasion of state rights.
"Of course" he said "a state has certain
powers over the instrumentalities or COM
,nerce which 1t creates as 1t has over the
individuals by whom commerce Is conduct
ed But a state has no power over either
instrumentalities or individuals that can be
.ntsrposed between them and the obliga-
lions imposed by a. federal statute regulat-
snK interstate commerce.
1.-THE question in this case is not whether
Congress can regulate and has regulated
state corporations or the ownership OF
their capital stock. The question is, can the
owners of such capltal STOCK Regulate lhlSi-
state commerce?
TT IS settled law that interstate commerce
cannot be regulated by state constitutions,
nor by state legislatures existing under
state constitutions, nor by corporations ere
ated by state legislatures acting through
their directors. as attempted in the trans
Missouri and joint traffic cases.
Whence comes such power. then, 10
stockholders II the sources Of all their
rights and powers are impotent to defeat
the law of Congress?
"But put the proposition as 1t Is put by
appellants: Can Congress regulate the own
nf t,1fn
power to regulate commerce among the
states and has 1t done SO by this act OF
1880?
"Most certainly, yes Congress can regu-
late anything and everything in the sense
that II can prohibit and prevent Its use In a
way that will defeat a law that Congress
may constitutionally enact For this pur-
pose the supreme power operates upon eV-
erything, upon every one. -
In concluding, the Attorney General salo'
"As l said in opening this argument spe-
officially this suit was instituted 10 oete,
mine whether this device, winch oeleno-
ants employed to restrain interstate COM
rnerce by monopolizing the business OF
transportation, will prevail against a law
making all devices to that end illegal II
In this particular device that Is before the
court and no other. In considering 1t l
have directed your honor's attention only
to its legal aspects and agree that II must
be Judged upon these alone. The possiole
effects of such Judgment upon other oe-
vices alleged to have been employed 20 inc
same end is not for present consideration
Enormous Possibilities.
THE possibilities of a securities holding
company of this kind. as a financial ma
chine for manipulating railroads and other
properties and concentrating their control
in the hands of a powerful clique are, how
ever legitimate considerations. and am
safe in saying they simply enormous
II has again and again been pointed OUT
since the organization of the Northern Sc
ourittes Company, that In its simplest FORM
1t Is possible for a group of men. by In
cooperating themselves as securities
holding company, to control two raiiroao
companies upon the holding of half the
amount of stock that would be required IN
the hands of individuals.
Individuals will be required to hold 81
per cent of the stock of both railroads in
order to ccI troll them. but If a particular
group of men had the control Of a securt-
ttes holding company that held 81 per cent
of the stock of both roads. they would
control beth roads upon holding OF 81
per cent of the shares of the holding COM
pany. or practically one-fourth of the COM
bined capital of the two roads. This does
violence to a simple rule Of vulgar frac-
tiGns, because 1t works out that a half of a
half Is equal to a half of whole. OF
course, it Is a simple proposition to bring
any number of railroads under the same
control without increasing the stock of the
securities holding company or without In
oreastnG the stock of the holders Of the
control Of the securities holding company,
by employing the device resorted to by the
defendants in the purchase of the Burling-
ton road, namely. by having one Of the
reads controlled by the securities company
acquire the stock and pay for It with its
own obligations secured by q pledge Of the
stock acquired. All the roads west of the
Missouri river which were brought into
temporary harmony under the trans
Missouri arrangement could easily be
Drought into permanent harmony. without
physical consolidation. under the arrange
ment have described.
1 cannot think that a combination held
together by rope OF sand comes within
the prohibition Of the law. and that one
which fs bound by links Of steel may DEFY
its wisdom and Its power.
TO prevent such a dangerous concentra-
ton OF power-dangerous to commerce and
a menace to our freedom-the people have
under our system Of government They
have legislated against 1t. II this law can
De construed 20 as not to cover the situa-
don- or II the court says yea to the propo-
sition affirmed In the last paragraph of Mr.
Morgan's answer, namely, Congress has no
power to prevent such combinations then
Indeed. the governments grave concern as
to this litigation may be easily understood"
Questioned by the Court.
Mr.. Knox had spoken for an hour and a
half before he had been interrupted with a
question. Then Justice Holmes asked him
In respect to his Interpretation of the law
az applied to state and interstate commerce.
Justices Harlan. Fuller and White made
suggestions in respect to the manner in
which state and Interstate commerce are
differentiated.
Mr.. Knox closed his argument after
speaking an hour and thirty-five minutes
Mr.. Young Opens.
Mr.. Knox closed at 1:4O pm., and was
Immediately followed by George B. Young
on behalf of the securities company. He
began his argument by saying that his
clients do not seek to in any way limit the
authority of Congress over Interstate COM
merce. nor was the securities company
seeking to In any way evade the law. But
1t was not, he said, necessary to stretch a
law covering interstate commerce to make
IL cover something that is not Interstate
commerce.
We are not dealing here with commerce
or the operations of railroads at ALL" he
said, but we are dealing with the question
OF property"
He referred to previous cases in the Su-
preme Court under the antitrust law, and
said that Congress had not defined the re-
8traint of trade and that bod haa