Washington standard. [volume] (Olympia, Wash. Territory) 1860-1921, 1903-04-17
MONOPOLY DEFINED.
EFFECT OF THE LATE DECISION
IN THE MERGER CASE.

Assistant Attorney General Beck States Exact
Effect Of Statutory Law-Decision of Court
Destroys the Legal Device for Suppression
of Competition - 1t Brings the Owner of
Stock in Railroads into Such Direct Rela-
tion With Interstate Commerce a, to Subject
Him to the PIsnary Power Of the Federal
] Government.
James NJ. Beck, Assistant Attorney
General, who argued the Northern Sc
curities case and the recently decided
lottery cases for the Government, when
questioned as to the scope of the deci.
sion in the former case, said:
Disclalming any purpose to ex.
press any opinion but my own, the
clear and exhaustive opinion OF Judge
Thayer seems to me to leave nothing
to be desired in the matter OF full
exposition OF the Federal law applica-
BILE to the consolidation of competing
interstate carriers. All interests should
welcome such a result, for it seems to
me OF first Importance that the exact
meaning of exact statutory law should
be definitely ascertained. When as
certained, the question of the wisdom
Of the statutes can be fairly debated in
the great court of public opinion.
The decision of the Circuit Court ac.
complishes this purpose. 1t destroys
the legal device for the suppression of
competition, shifts the whole question
from the courts to the people, and
leaves for their consideration and ulti-
mate decision the question whether
the consolidation under proper regula.
ton is desirable, or whether it should
be altogether prohibited.
"The wild suggestion that this deci-
sion is revolutionary and will disrupt
the American railway system is absurd.
1t simply reaffirms existing principles
and has no application whatever to
legitimate extensions of railway lines,
but solely applies to the suppression of
competition by railway consolidation.
Judge Thayer's decision, in effect,
demonstrates the inaccuracy of the
phrase. 'holding company and also
shows that the community of interest
plan through stock ownership, when it
suppresses competition and promotes
monopoly, is unlawful. 1t holds in
substance that, whenever the control Of
competing interstate carries is secured,
either by a combination of natural
persons or by corporation which
they create and the motive for compe.
tition has thus been destroyed by the
subsequent unity of interest, the anti
trust law is violated. The fact that
each of the competing lines is nomi-
nally operated by a separate board OF
directors is held immaterial, and the
court, disregarding form and looking
to substance, holds that the real policy
OF q railroad is controlled by those
who own the majority OF the stock,
and that such individual holders in o
real sense determine all important
corporate acts.
"The decision is also of first i'm
portance in holding that the mere
Ownership of stock in interstate rail.
roads brings the owner in such direct
relation with interstate commerce as
to subject him to the plenary powers
of the Federal Government with re.
spect thereto. Perhaps this holding
gives the decision its greatest import
ance. The defendants attorneys con-
tended that the mere acquisition OF
such shares had either no direct rela-
ton to interstate commerce, or that,
in any event, such relation was indi.
rect, collateral and remote. They
sought to establish an unsound distinc.
tion between ownership OF road and
its operation. This view the court
negatives, and holds that the purchase
of stock in an interstate railway sub
jects the purchaser to the constitu-
tional power of the Federal Govern
ment. The importance of this hold
ing, coming. as it does, upon the heels
of the lottery cases, cannot well be
overestimated. 1t greatly widens the
scope of Federal activity. The Con-
stitution remains unchanged, but the
sphere of human action, to which it is
applied, is, by means of wholly ex-
terror forces, greatly widened.
"When the Constitution was framed
the only media of interstate COM
munication were the coast sailing ves-
sells and the occasional stage coach
which crossed State lines, but steam
and electricity have indissolubly bound
the States together by lines of steel,
aggregating in the matter of railroads
alone 100000 miles in length, and this
has produced a centripetal action
which has inevitably increased the
sphere and scope of Federal activity.
In this respect the lottery cases and
the case just decided easily mark a
new and most important epoch in the
life of the nation. The lottery cases,
which sustained the power of Congress
to prohibit interstate traffic when pre-
judicial to the public welfare, and the
Northern Securities case which sub.
jects not only the immediate operation
OF every interstate road, but its very
Ownership through stock shares, to
Federal power, are simply inevitable