what modify and alter the light in which the subject could be regarded. If only that kind of contract which is in unreasonable restraint of trade be within the meaning of the statute, and declared therein to be illegal, it is at once apparent that the subject of what is a reasonable rate is attended with great uncertainty. What is a proper standard by which to judge the fact of reasonable rates? Must the rate be so high as to enable the return for the whole business done to amount to a sum sufficient to afford the shareholder a fair and reasonable profit upon his investment? If so, what is a fair and reasonable profit? That depends sometimes upon the risk incurred, and the rate itself differs in different localities. Which is the one to which reference is to be made as the standard? Or is the reasonableness of the profit to be limited to a fair return upon the capital that would have been sufficient to build and equip the road, if honestly expended? Or is still another standard to be created, and the reasonableness of the charges tried by the cost of the carriage of the article and a reasonable profit allowed on that? And in such case would contribution to a sinking fund to make repairs upon the roadbed and renewal of cars, etc., be assumed as a proper item? Or is the reasonableness of the charge to be tested by reference to the charges for the transportation of the same kind of property made by other roads similarly situated? If the latter, a combination among such roads as to rates would, of course, furnish no means of answering the question. It is quite apparent, therefore, that it is exceedingly difficult to formulate even the terms of the rule itself which should govern in the matter of determining what would be reasonable rates for transportation. While even after the standard should be determined there is such an infinite variety of facts entering into the question of what is a reasonable rate, no matter what standard is adopted, that any individual shipper would in most cases be apt to abandon the effort to show the unreasonable character of a charge sooner than hazard the great expense in time and money necessary to prove the fact, and at the same time incur the ill will of the road itself in all his future dealings with it. To say, therefore, that the act excludes agreements which are not in unreasonable restraint of trade, and which

tend simply to keep up reasonable rates for transportation, is substantially to leave the question of reasonableness to the companies themselves."

§ 261. The Anti-Trust Act.-The Anti-Trust Act of 1890, entitled "An act to protect trade and commerce against unlawful restraints and monopolies," declared illegal and criminal every contract or combination, in the form of trust or otherwise, or conspiracy in restraint of interstate or foreign trade or commerce. Violations of this act were at first punishable by either fine or imprisonment, but the second form of punishment has been abolished.

70

A narrow interpretation was given to this act by the Supreme Court of the United States in the Sugar Trust Case, where it was held that the statute could not be held to apply to the case of a State manufacturing company which was acquiring by purchase of the stock of other refining companies through shares of its own stock nearly complete control of the manufacture of refined sugar in the United States.

The most important decision arising under the Anti-Trust Law has been that of the Northern Securities case."1 71

The following synopsis of this case is taken from the latest work on the subject of interstate commerce:

"The Northern Securities case was novel in that it decided that the corporation organized under the laws of a State and empowered under its charter to hold the stock of other corporations was prohibited by this act from holding the stock of competing interstate railroad corporations. The illegal combination was founded upon the fact of control of competing railroads in a single authority and the resulting power of direct suppression of competition through such control. Thayer, J., in the circuit court, said that a State could not invest a corporation organized under its laws to do acts in its name which operate in restraint of trade and commerce, and that the court would not consider whether a combination would be of benefit to the public; but that a holding corporation organized under the laws of the State was in violation of the Anti-Trust Act, since it destroyed any active

70 United States v. Knight Company, 156 U. S. 1.

"United States vs. Northern Securities Company, 193 U. S. 197.

form of competition between the two roads, and it was immaterial that each company had its own board of directors."

The holding corporation was condemned in this case, not because it was a "holding corporation" merely, but because it held the stock of subsidiary corporations directly engaged in interstate commerce, and thus controlled competition as between those companies. The act, as such, has nothing to do with holding corporations where the subsidiary corporations are not engaged as competitors directly employed as public carriers in interstate commerce. The right of the holding corporation in other cases depends upon the authorization of its own charter and the laws of the State whereunder the subsidiary companies are organized and do business.

In the Trans-Missouri Freight Association case72 the question was directly raised whether the prohibitory provisions of the act of 1890 applied to all contracts relative to interstate or foreign trade or commerce, or only to such contracts as provided for unreasonable restraints. The Supreme Court by a vote of five to four held that the act covered all restraints.

In the case of Addyston Pipe and Steel Co. v. United States the contract in question was held to be violation of the law, and the rule was laid down that no contractual restraint of trade was enforcible at common law unless it was merely ancillary to some lawful contract involving some such relations as vendor and vendee, partnership, employer and employee, and necessary to protect the covenantee in the enjoyment of the legitimate fruits of the contract, or to protect him from the dangers of those unjust acts by the other parties. The main purpose of the contract suggests the measure of protection needed, and furnishes a sufficiently uniform standard for determining the reasonableness and validity of the restraints; but where the sole object of both parties in making the contract is merely to restrain competition and enhance and maintain. prices, the contract is void and not enforcible at common law, and where made in interstate commerce is violative of the act of 1890.

72 166 U. S. 290.

175 U. S. 211; 85 Fed. Rep.

$262. Recent statutes and decisions. The last amendatory act (to date) of the Interstate Commerce Act was that of June 29, 1906. The most important provision of this act is the one giving to the commission the power to fix maximum rates. Most of the other effective provisions contained in the original draft of the bill were stricken out before its final passage.

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A recent important decision as to the powers of the State over carriers is that in Atlantic Coast Line v. N. C. Ry. Commission, in which the power of the commission to require a carrier to put in an additional train to be run at even a pecuniary loss (of course, however, not causing the company to run its entire business at a loss), but necessary to meet the convenience of the traveling public on connecting with another train, was sustained.

Two other extremely important recent decisions are Miss. Ry. Comm. v. Ill. Cent. Ry. Co.75 and Atlantic Coast Line Ry. Co. v. Wharton, in which it is held that the State, acting through its administrative agent, a railway commission, may, in the absence of congressional legislation, require an interstate train to stop at stations within the State when it is necessary to do so to furnish the citizens proper facilities; yet when the public service is reasonably fulfilled, State cannot compel interstate trains to stop.

These three cases, taken together, give the State full power to compel adequate service to the public.

A number of important cases involving interstate commerce in some form or other have recently come before the Federal courts. The prosecution of the Standard Oil Company in 1907 attracted great attention, but the decision decided no important legal question.

Two important decisions have just been handed down by the Supreme Court, the cases being those of In the Matter of Edward T. Young, Petitioner, and Thomas F. Hunter, Sheriff of Buncombe County, State of North Carolina, v. James H. Wood. The legislatures of both Minnesota and North Carolina had passed acts regulating the rates to be charged by railroad

206 U. S. 1.

75

203 U. S. 35.

in the States, and inflicting heavy penalties for the violation of such rates. Injunctions were issued by the circuit courts of the United States against the enforcement of the statutes by the States. The decision in each case was against the constitutionality of the State acts.

Under existing Federal statutes and decisions any effective. regulation of common carriers seems impossible either by State or nation.