The Liberty to Trade as Buttressed by National Law/Monopolies

by George Howard Earle, Jr.

CHAPTER II

Monopolies

In respect to these, the Act again uses the word "every." "Every person who shall monopolize or attempt to monopolize, and it is not all, but "any part of the trade, etc.

What is it that the Act again denounces "every person" for either doing or attempting? What does "monopoly" really mean? What evil did it inflict? Why was it prohibited?

Mr. Justice Jackson says in In re Greene:^[1] "A monopoly, in the prohibitive sense, involves the "element of an exclusive privilege or grant which restrained others from the exercise of a right or liberty which they had before the monopoly was "secured," and gives many other meanings.

It is manifest, however, that Congress in these United States, and in the year 1890, was not legislating against the monopolies that bad been destroyed by the statute of James in 1623!

There is no doubt that, since the statute of James, to unlawfully exclude one from competing with you in trade is to monopolize; but it seems impossible that the word was not also used in the Act of Congress, in its primary, natural and simplest meaning. The real evil is aptly described by the exact meaning of the word monopoly, that is, "to sell alone." That power gave a right of taxing and oppressing the whole nation, only limited by its means and necessities! Then why was not the meaning of the word just what it naturally meant? Why should it not be construed as prohibiting the power of "sole sale" or "sole purchase" in national commerce? Is it not an evil that a single person or combination can regulate every interstate transaction in a necessity of life, thus usurping the power of Congress in that respect totally and completely? The question is but asked. Mr. Justice Peckham so thinks: "Nor is it for the substantial interests of the country that any one commodity should be within the sole power and subject to the sole will of one powerful combination of capital."^[2]

The industry and ability of Professor Stimson ("Federal and State Constitutions") excludes at least one reason for negative answer, and the statute of James another.

"Sole buying, selling, making, working or using of anything" was certainly denounced by that statute. It is asserted that the common law only prohibited these, as explained by Lord Coke, when resulting from exclusive grants, etc. But that is not so.

As demonstrated by Professor Stimson, the trade of the middle ages being controlled by corporations, or guilds, restraints, then, were generally by so-called "ordinances" or "by-laws;" and these were prohibited by a declaratory statute in 1436, the statute being against by-laws in restraint of trade, "by persons in confederacy for their singular profit and the common damage of the people." This statute was again reënacted in 1503. That such monopolies were illegal in the time of James is also shown by Lord Coke's own argument and the decision in Devenant's case.^[3] In denouncing monopolies, Parliament and courts, and Coke himself, perfectly familiar with the law, confined themselves not to those which alone were admittedly illegal, but only to those whose illegality was still contested—exclusive grants by the sovereign. The contest was not at all whether lesser powers could inflict the curse of "sole sale" upon the people. It was settled long before, that they could not; but whether the sovereign power itself could still do so.

Professor Stimson seems thoroughly to establish this. But beyond this it is now settled by In re Debs,^[4] the Addyston case,^[5] and Loewe vs. Lawlor^[6] that whatever is prohibited to sovereign States is likewise and a fortiori unlawful in mere aggregations of individuals. Finally, that "monopolies," in their modern sense, hark back to their natural and original common law sense as applied to "unifications," etc. See Mr. Justice McKenna's opinion, National vs. Texas:^[7] "Unified tactics with regard to prices"—the exact results of "sole sale" seven hundred years before!

But if this be so, why should not the general rule as to "tendency" constituting the offence, be applicable? This would certainly seem worthy of consideration, especially as it makes this provision a vital and useful part of the statute? If one person or group control the whole of a necessary commodity throughout the United States, there is not merely the "power and interest" necessary to create the tendency constituting illegality in other cases; but there is absolute necessity that he or it must regulate interstate transactions in that commodity. In view of the investigations of Professor Stimson, as well as the actual decision in National vs. Texas, it is not difficult to say what the ultimate conclusion will be.

In the Securities case Mr. Justice Holmes says:^[8] "There is a natural feeling that somehow or other the statute meant to strike at combinations great enough to cause just anxiety on the part of those who love their country more than money, while it viewed such little ones as I have supposed with just indifference. This notion, it may be said, somehow breathes from the pores of the Act, although it seems to be contradicted in every way by the words in detail. And it has occurred to me that it might be that when a combination reached a certain size it might have attributed to it more of the character of a monopoly merely by virtue of its size." And the test of Mr. Justice Jackson of "exclusion of others" evidently created great difficulty in Mr. Justice Holmes's mind. But if, as has been shown, the fundamental offence was "sole sale" or attempts to reach it, tendency to it; and exclusion by sovereign or other authority was but a single and, indeed, last phase of it, is not Mr. Justice Holmes's feeling fully supported by the very words of the Act? He says, at page 403: "Much trouble is made by substituting other phrases assumed to be equivalent, which then are reasoned from as if they were in the Act." And is not this difficulty here the result of substituting "attempts to exclude others" for the wider phrase "sole sale"? The other difficulties are answered in National vs. Texas:^[9] "To contend for these extremes is to overlook the difference in the effect of actions, and to limit too much the function and power of government. By arguing from extremes almost every exercise of government can be shown to be a deprivation of individual liberty." Reading of Mr. Justice Holmes' natural feeling, I could not but think of Lord Bramwell's dictum regarding the "feelings" of great lawyers, 13 Ap. C. 12, "the four judges were great lawyers, and I believe that a great lawyer may be, as it were, instinctively right, without at the moment being able to give a good reason for his opinion." In prohibiting monopolies, and attempts at monopoly, Congress and the common law never intended or could have intended to prohibit necessary and useful things that in their nature had to be to some extent monopolies. Two towns unconnected by a railroad were certainly not forbidden to have a railroad because a railroad would, in a sense, be a monopoly. What was and has always been the evil was substituting for "competition," where that was either established or naturally and ordinarily possible, "sole sale" or "unified tactics" as to prices, and not at all to prevent the starting of a new industry. And that this was the intent of the common law and statute of James declaring it is shown by the reservation of right to grant patents for new inventions. The policy was to encourage industry, and that answers such objections. In many phases of the matter "magnitude" is, as the word implies, the very gist of it, and the dangerous measure, as in many other cases, must be found through the sound sense of the tribunal deciding it. An ordinary partnership, an ordinary consolidation of two butchers, out of the thousands in New York City or the United States, can in nothing but a finespun impracticable sense, unfit for a basis of any sound jurisprudence, be said to constitute a monopoly, or a tendency to monopoly; although, without doubt, Mr. Justice Holmes was right in holding that the combination in United States vs. Swift^[10] was illegal. An "overshadowing combination" necessarily gives the power and necessary interest to inflict the evils flowing from "sole sale," while the evil may easily be totally wanting in many minor and convenient combinations which really facilitate trade. In construing every statute since Heydon's case,^[11] "what was the evil and effect" has always been carefully scrutinized. And in this matter "the evils" were "the effects" naturally flowing from the prohibited "sole sale," and not necessarily the mere method of accomplishing the prohibited thing which, however created, always and almost inevitably inflicted the evils.

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1. 52 F. 116 (1892).
2. 166 U. S. 324 (1897).
3. 1 Moore 580.
4. 158 U. S 581 (1895).
5. 175 U. S. 211 (1899).
6. 208 U. S. 274 (1908).
7. 197 U. S. 129 (1905).
8. 193 U. S. 407 (1904).
9. 197 U. S. 129 (1905).
10. 196 U S. 375 (1905).
11. 3 Coke 7 at p. 18 (1584).