The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1911-01-02
BRIEF OF U. S.
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manufacturing tobacco, over which
congress has no control.
The government has some new
thought to express to the court in re-
gard to monopolies
Congress in the Sherman act,'' says
the government, "has ordered the
highways of interstate commerce to be
kept free of monopolies. When one is
found there, the courts duty is to de-
molish it; and whether it was built by
means themselves in violation of COM
mon law or state statutes is beside the
question.
''The well settled rule at common
law is that tendency to monopoly
makes contracts or combinations I'M
lawful and not that the illegally of
the monopoly depends upon the use of
lawful means in acquiring it. The
power of congress is supreme; within
accepted doctrines defendants have a
monopoly and the duty of the court is
to demolish it by a decree adjusted to
the circumstances
"Of course, every mere acquisition
of property or business neither consti-
tutes nor indicates the combination in
restraint of trade; but we are con-
cerned with what the present record
reveals the government urges.
Through a series of years defendants
in combination in concert have acted
with the express purpose and effect of
destroying competition, restraining
trade and acquiring monopolies. The
result is the very thing which the
Sherman act was designed to prevent
and the mere fact that transactions
were in the form of acquisitions can
not be allowed to defeat the law.
'"The statute expressly requires the
courts to prevent and restrain viola
tons of it. With the wisdom of this
We have nothing to do; the duty is to
enforce the will of congress. 1t seems
rather prepOSterouS to maintain that
illegal restraint of commerce must con-
tinue because to destroy them would
interfere with the conduct of business
in ways satisfactory to those violating
the law"
History of the Case.
The tobacco case was instituted in
1907 in the circuit court of the United
States for the Southern district of New
York. The government was the COM
planning party Allies in the various
branches of the tobacco business, with
combined assets of more than $500, 000,-
600, constituted the organization which
the government sought to have the
court dissolve.
The four judges each rendered sepa-
rate opinions in the tobacco case, but
three of them united in a decree, hold
ing many of the corporations had en-
tered into a combination ''in restraint
of trade" in violation of the first sec
ton of the Sherman antitrust act.
These three decreed the dissolution of
this combination. Other corporations.
including the United Cigar Stores COM
pany, the Imperial Tobacco company,
were found not to be in the combina-
ton. None were held to be "nonopo-
liZing' in violation of the second sec
ton of the Sherman antitrust law.
The application of the Sherman anti
trust law involves not only an inVesti-
cation into the facts, but includes an
Interpretation of the law itself. The
principal uncertainties in regard to the
law cluster around three words in the
statute. These words form the basis
of three questions: What is com
merce"? What is restraint of trade
or commerce? and What is it to mon
opolize?"
Around what is commerce?' the
principal fight in the tobacco case
probably to be found. The commerce
which the government claims is being
restrained and monopolized is not COM.
merce, according to the tobacco attor-
neys. 1t is nothing more than the man
ufacture of an article which later en-
tiers into commerce. The bulwark be-
hind it's fight along this line is the
famous Knight decision, made by FORM
er President Roosevelt last fail in criti-
cising the decisions of the supreme
court. In that case the court declined
to suppress an alleged monopoly in
manufacture of sugar, on the ground
that it had authority to proceed only
by way of preventing monopolieS in
commerce. The tobacco corporations
claim that they are concerned only in
cidentally in commerce.
Again, the dispute as to what is in
cluded in the word Commerce." as re-
ferred to in the Sherman antitrust
law, arises in connection with the char
acter of a holding company. Both the
Standard Oil and the tobacco organiza-
tons contend that the power granted
by the constitution to regulate interstate
commerce is not SO extensive as to in
clude regulation of the acquisition and
ownership of a holding company of
stock in other corporations. The gov
eminent argues that whenever hold
ing company necessarily stiles or d.
rectly and substantially restricts free
competition in commerce, the United
States has power to protect such COM
merce.
Three Important Questions.
In the contest regarding the answer
to the question of What is restraint
of trade or commerce. the first dis
pute is over the Interpretation of "re-
straint of trade as equivalent to "the
absence of free competition" The gov
eminent advances the theory that re-
duction OF competition means a re-
straint on trade and consequently high
er prices. The corporations urge that
a combination of producers may mean
d reduction of expenses and consequent
ly lower prices
The government further contends
that the Sherman antitrust law re-
fers only to such restraints as are d.
rect and material. One judge in pass
ing on the tobacco case in the cir
suit court held that the law referred
to every restraint without regard to
directness of materiality. 1t is said
that this doctrine would stif1e legitimate
business. The defendant organizations
do not press this argument so much,
because they claim in their cases that
no direct and material restraint of
commerce exists. This claim is based
upon the argument that they are en-
gagged principally. not in interstate com
merce as were. the railroads in the