The Washington herald., 1915-01-30
The Keystone Watch Company Case.

Knows that Two WiQely Q1nercnt interpretations
of the law have long struggled for the mastery in
the courts of our country. The view of one class
of judges has been and is that the Sherman law
forbids any sort of trade combination whatever
good bad, or indifferent. The mere fact that two
competing enterprises in interstate commerce have
joined their forces is sufficient to make such
binaton illegal entirely irrespective of the prob
ability, certainty, that this combination has
actually been beneficial to trade and industry.
Those holding this view have always maintained
that the mere largeness of corporation was one
of the most conclusive proofs of its illegal char
acter. 1t was built to dominate the trade by bulk
and was deserving of legal suppression. The other
view is that largeness and even combination of
previously competing corporations, is not in itself
sufficient to bring the combination under the ban
/ of the law. 1t must be shown that competitors
have been oppressed or coerced; that fraudulent
or unfair rivalry has been pursued; that prices
have been lowered or raised to improper level
boycotts started, etc, and that in general the
conduct of the corporation has been such to
merit the condemnation OF fair-minded people,
| We believe that good lawyers generally were
convinced that this diversity of thought to the
intent of the law was clarified and settled for all
time by the decision of the Supreme Court of the
United States in the Standard Oil and American
Tobacco cases. In the Tobacco case one OF the
lower Federal courts had held that the American
Tobacco Company was illegal, not because its
conduct was unfair, but merely because it
combination Of previously competing corporations.
But the Supreme Court, although it ordered the
dissolution of the American Tobacco Company,
did so not upon the ground that it was a large
combination of previously competing corporations,
but exclusively upon the ground that its conduct
had been unfair. and the court took occasion to
1 4 81, >;
since famous rule of reason" as the standard by
which supposed infractions of the law there
after to be determined. The court declared that
la common sense view must be taken of every
organization or combination of trade corporations
and that restraint of trade, to be unlawful should
be direct and not merely incidental and should
also be undue unreasonable 1t has always
seemed to us, if we may be pardoned for express
ing an opinion. that the only trouble with this
decision was that the court did not cxpound at
greater length its definition of undue" and "un-
reasonable" The reason, doubt, why it did
not do so because it was unnecessary in the
Standard Oil and American Tobacco cases, as
both the companies concerned therein had in
dulged in such grossly unfair practices to leave
it the consensus of all intelligent men that their
operations had been in restraint of trade.
Be this as it may diversity of opinion on the
part OF the courts dS 10 luC exact CNlCUl Ol lHC
prohibitions of the antitrust law still continues
as a source of trouble and uncertainty to the bus
ness interests of our country. Last year the
United States Circuit Court of Appeals in the St
Louis district handed down decision in the case
of the Harvester Company which emphasized the
contention that mere largcnesS of combination
and the mere fact of a merger between previously
competing corporations were alone sufficient to
make the combination illegal regardless of any
evidence of oppression or Of injury trade in the
conduct OF the business. Two judges concurred
in the decision and one judge dissented. But
now, in the present month, another bench of Cir
cult judges of the United States, this time in the
New Jersey district, have handed down unani-
nous decision in another case based entirely upon
the opposing view OF the law which we have here
tofore described.
This was in the case of the Keystone Watch
Company. a corporation organized in 1885, which
had gradually acquired the business OF large
number Of its competitors, so that at the time the
government began its suit it was in control of
from 90 to : per cent of the trade in what are
known as filled" watch cases in the United States.
The Circuit Court held that the growth of the
keystone Watch Company and its policy OF &C
quiring or controlling a large number of other
competitive plants was in way ground for
condemnation. There was no conCealment of
such growth OF the successive acquisitions
made by the company, nor was there any pretense
that these acquisitions had been made by improper
methods So far as the organization of the COM
pany was concerned, therefore, the concern was
held to be legal. The court did object, on the
other hand, to certain business practices, utilized
or sought to be utilized OCCASION in the
conduct OF the Keystone Watch Company. The
company issued a circular to the trade which, in
substance, seemed to be attempt to fix retail
trade prices The issuance Of this circular was
held by the court to be illegal act, and order
was issued calling for its discontinuance. How
ever, the court declared that this improper
act was not sufficient to call for the dissolution of
the company, and that all necessary relief could
be procured by the issuance of injunction of
the kind stated.
The Harvester Company and the Keystone
Watch Company cases have been taken to the
Supreme Court OF course When the Supreme
Court reviews the decisions of the lower Federal
tribunals, there will be, perhaps, clearer and
more general understanding of the scope of the
antitrust law than prevails. At any rate
there will be end to the radical and unfortunate
of oDnion on fundamental grounds asl