The Leavenworth echo. [volume] (Leavenworth, Wash.) 1904-current, 1911-06-30
GOOD TRUSTS AND BAD TRUSTS
Business and the Supreme Court Decision
A Discussion of It's Effects Upon the
People-By Charles 6. Dawes

A Discussion of It's Effects Upon the
People-By Charles 6. Dawes
The supreme court of the United
states has held that contracts which I'M
necessarily and unduly restrict compe-
tition OF unreasonably restrain interstate
trade are prohibited by the Sherman law.
The question which Immediately con-
fronts the business man is-What con-
stitutes reasonable contract in restraint
of trade that would not come under this
prohibition7 He cannot be certain Of
the reasonableness of a contract without
judicial determination of the question
in each particular case. The business
world, therefore, must still be in doubt,
with this advantage only as compared
with the past: that whereas, heretofore,
under the strict reading Of the statute,
business man was certainly criminal
if he made a contract in restraint Of
trade, he is now one only if the courts
should say his contract was unreason-
able after it was made.
What the business world wants is to
know what kinds of contracts in restraint
OF trade are reasonable and what kinds
are unreasonable before he makes them,
and in this the decision does not ma
terially help him. II dealers in meat.
fruit, butter and other perishable COM
modities agree that they will not ship
ten carloads a week to community
that can consume only five carloads,
since by so doing they save the five
extra carloads from being spoiled, which
would have resulted in loss to them
and in the long run to the commun-
ity, which always pays the eventual cost
of such waste-they might expect such
contract in restraint of trade to be
held as reasonable. Yet might it not
be attacked on the ground that, had
the FIVE extra cars not been diverted, the
immediate effect of selling an over-sup-
ply comparatively would have meant
lower prices to the community for the
time being, and that the agreement,
therefore, was one to exhort higher
prices?
1t is easy to understand that the max
ing OF such contracts still involves risk
to the business community, for the
courts might ascribe either good or
bad intention TO such contracts accord
ing TO the standpoint from which the
court viewed their rusults. A prudent
scrupulous business man is still in a
quandary. for he wishes to take no risks
of violating the law. In regard TO Of
lenses other than those against the Sher-
man law our statutes governing bust
ness are reasonably specific. The truth
is, we are in a transition state in bust
ness, and the managers of the great in
dustrial coroprotions are OF necessity
in a dangerous situation.
Take the case OF the United States
Steel Corporation, which is said to ad-
vocate the policy of staple prices and
undoubtedly at times in the past has
sold steel at lower price than was JUS
tilted by the demand and the general
condition Of business. 1t has generally
been called a good trust while this was
going on. 1t has, until very recently,
maintained its prices, understand, in
time of slack demand; and, in con-
sequence, unquestionably lost consider
able business TO competitors. Suppose
it should change its policy and though
still selling steel at profit, reduce its
price to the community to a point
where many of its smaller competitors
would have to close shop. Would it
then be bad trust? Supposed it main
tains its prices until ii begins to lose so
much business that self-preservation
compels it to go into market and take
the business at a price that, owing to
the lesser price of large production en-
ables il TO outsell its competitors and
drive them to the wall, will not such
an action Immediately place it, as
corporation, and its managers personally
in jeopardy, by raising the question as
TO whether its past absorption of plants
was not for the purpose of crushing
competition and establishing eventual
monopoly The truth is the supreme
court decision still leaves the country