Northern Securities Company v. United States (193 U.S. 197)/Dissent Wendell Holmes, Jr.

United States Supreme Court

193 U.S. 197

Northern Securities Company  v.  United States

 Argued: December 14, 15, 1903. --- Decided: March 14, 1904

Mr. Justice Holmes, with whom concurred the Chief Justice, Mr. Justice White, and Mr. Justice Peckham, dissenting:

I am unable to agree with the judgment of the majority of the court, and although I think it useless and undesirable, as a rule, to express dissent, I feel bound to do so in this case and to give my reasons for it.

Great cases, like hard cases, make bad law. For great cases are called great, not by reason of their real importance in shaping the law of the future, but because of some accident of immediate overwhelming interest which appeals to the feelings and distorts the judgment. These immediate interests Under these circumstances Mr. Morgan and Mr. Hill organized under the laws of New Jersey the Northern Securities Company. The purpose was that the company should become the holder of the stock of the two railroads. This was to be effected by having the Northern Securities Company give its stock in exchange for that of the two railroad companies. Whilst the purpose of the promoters was mainly to exchange the stock held by them in the two railroads for the Northern Securities Company stock, nevertheless the right of stockholders generally in the two railroads to make a similar exchange or to sell their stock to the Securities Company was provided for. Under the arrangement the Northern Securities Company came to be the registered holder of a majority of the stock of both the railroads. It is not denied that the charter and the acts done under it, of the Northern Securities Company, were authorized by the laws of New Jersey, and, therefore, in so far as those laws were competent to sanction the transaction, the corporation held the stock in the two railroads secured by the law of the state of its domicil.

The government by its bill challenges the right of the Northern Securities Company to hold and own the stock in the two railroads. The grounds upon which the relief sought was based were, generally speaking, as follows: That, as the two railroads were competing lines engaged in part in interstate commerce, the creation of the Northern Securities Company and the acquisition by it of a majority of the stock of both roads was contrary to the act of Congress known as the anti-trust act. 26 Stat. at L. 209, chap. 647, U.S.C.omp. Stat. 1901, p. 3200. The clauses of the act which it was charged were violated were the 1st section, declaring illegal 'every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations;' and the provisions of the 2d section, making it a misdemeanor for any person to 'monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize, any part of the trade or commerce among the several states or with foreign nations.' The court below sustained the contentions of the government. It, therefore, enjoined the two railroad companies from allowing the Northern Securities Company to vote the stock standing in its name or to pay to that company any dividends upon the stock by it held. On the giving, however, of a bond fixed by the court below the decree relating to the payment of dividends was suspended pending the appeal to this court.

The court recognized, however, the right of the Northern Securities Company to retransfer the stock in both railroads to the persons from whom it had been acquired. The correctness of the decree below is the question presented for decision.

Two questions arise. Does the anti-trust act, when rightly interpreted, apply to the acquisition and ownership by the Northern Securities Company of the stock in the two railroads? and, second, If it does, had Congress the power to regulate or control such acquisition and ownership? As the question of power lies at the root of the case, I come at once to consider that subject. Before doing so, however, in order to avoid being misled by false or irrelevant issues, it is essential to briefly consider two questions of fact. It is said, first, that the mere exchange by the Northern Securities Company of its stock for stock in the railroads did not make the Northern Securities Company the real owner of the stock in the railroads, since the effect of the transaction was to cause the Securities Company to become merely the custodian or trustee of the stock in the railroads; second, that as the two railroads were both over-capitalized, stock in them furnished no sufficient consideration for the issue of the stock of the Northern Securities Company. It would suffice to point out (a), that the proof shows that nearly nine million dollars were paid by the Securities Company for a portion of the stock acquired by it, and that, moreover, nearly thirty-five million dollars were expended by the Securities Company in the purchase of bonds of the Northern Pacific Company, which have been converted by the Securities Company into the stock of that railroad, which the Securities Company now holds; and (b), that the market value of the railroad stocks is, moreover, indisputably shown by the proof to have been equal to the value fixed on them for the purpose of the exchange or purchase of such stock by the Northern Securities Company. Be this as it may, it is manifest that these considerations can have no possible influence on the question of the power of Congress in the premises; and therefore the suggestions can serve only to obscure the controversy. If the power was in Congress to legislate on the subject it becomes wholly immaterial what was the nature of the consideration paid by the company for the stock by it acquired and held if such acquisition and ownership, even if real, violated the act of Congress. If, on the contrary, the authority of Congress could not embrace the right of the Northern Securities Company to acquire and own the stock, the question of what consideration the Northern Securities Company paid for the stock or the method by which it was transferred must necessarily be beyond the scope of the act of Congress.

In testing the power of Congress I shall proceed upon the assumption that the act of Congress forbids the acquisition of a majority of the stock of two competing railroads engaged in part in interstate commerce by a corporation or any combination of persons.

The authority of Congress, it is conceded by all, must rest upon the power delegated by the 8th section of the first article of the Constitution, 'to regulate commerce with foreign nations and among the several states and with the Indian tribes.' The proposition upon which the case for the government depends, then, is that the ownership of stock in railroad corporations created by a state is interstate commerce, wherever the railroads engage in interstate commerce.

At the outset, the absolute correctness is admitted of the declaration of Mr. Chief Justice Marshall in Gibbons v. Ogden, that the power of Congress to regulate commerce among the states and with foreign nations 'is complete in itself, may be exercised to its utmost extent, and acknowledges no limitations other than are prescribed in the Constitution;' and that if the end to be accomplished is within the scope of the Constitution, 'all means which are appropriate, which are plainly adapted to that end, and which are not prohibited, are constitutional.'

The plenary authority of Congress over interstate commerce, its right to regulate it to the fullest extent, to fix the rates to be charged for the movement of interstate commerce, to legislate concerning the ways and vehicles actually engaged in such traffic, and to exert any and every other power over such commerce which flows from the authority conferred by the Constitution, is thus conceded. But the concessions thus made do not concern the question in this case, which is not the scope of the power of Congress to regulate commerce, but whether the power extends to regulate the ownership of stock in railroads, which is not commerce at all. The confusion which results from failing to observe this distinction will appear from an accurate analysis of Gibbons v. Ogden, for in that case the great Chief Justice was careful to define the commerce the power to regulate which was conferred upon Congress, and in the passages which I have previously quoted, simply pointed out the rule by which it was to be determined in any case whether Congress, in acting upon the subject, had gone beyond the limits of the power to regulate commerce as it was defined in the opinion. Accepting the test announced in Gibbons v. Ogden for determining whether a given exercise of the power to regulate commerce has in effect transcended the limits of regulation, it is essential to accept also the luminous definition of commerce announced in that case and approved so many times since, and hence to test the question for decision by that definition. The definition is this: 'Commerce undoubtedly is traffic, but it is something more,-it is intercourse. It describes the commercial intercourse between nations and parts of nations in all its branches, and is regulated by prescribing rules for carrying on that intercourse.' (Italics mine.)

Does the delegation of authority to Congress to regulate commerce among the states embrace the power to regulate the ownership of stock in state corporations, because such corporations may be in part engaged in interstate commerce? Certainly not, if such question is to be governed by the definition of commerce just quoted from Gibbons v. Ogden. Let me analyze the definition. 'Commerce undoubtedly is traffic, but it is something more,-it is intercourse;' that is, traffic between the states and intercourse between the states. I think the ownership of stock in a state corporation cannot be said to be in any sense traffic between the states or intercourse between them. The definition continues: 'It describes the commercial intercourse between nations and parts of nations.' Can the ownership of stock in a state corporation, by the most latitudinarian construction, be embraced by the words 'commercial intercourse between nations and parts of nations?' And to remove all doubt, the definition points out the meaning of the delegation of power to regulate, since it says that it is to be 'regulated by prescribing rules for carrying on that intercourse.' Can it in reason be maintained that to prescribe rules governing the ownership of stock within a state, in a corporation created by it, is within the power to prescribe rules for the regulation of intercourse between citizens of different states?

But if the question be looked at with reference to the powers of the Federal and state governments,-the general nature of the one and the local character of the other which it was the purpose of the Constitution to create and perpetuate,-it seems to me evident that the contention that the authority of the national government under the commerce clause gives the right to Congress to regulate the ownership of stock in railroads chartered by state authority is absolutely destructive of the 10[[|[[|[[|[[|th Amendment]]]]]]]] to the Constitution, which provides that 'the powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively or to the people.' This must follow, since the authority of Congress to regulate on the subject can, in reason, alone rest upon the proposition that its power over commerce embraces the right to control the ownership of railroads doing in part an interstate commerce business. But power to control the ownership of all such railroads would necessarily embrace their organization. Hence it would result that it would be in the power of Congress to abrogate every such railroad charter granted by the states from the beginning if Congress deemed that the rights conferred by such state charters tended to restrain commerce between the states or to create a monopoly concerning the same.

Besides, if the principle be acceded to it must in reason be held to embrace every consolidation of state railroads which may do in part an interstate commerce business, even although such consolidation may have been expressly authorized by the laws of the states creating the corporations.

It would likewise overthrow every state law forbidding such consolidations; for if the ownership of stock in state corporations be within the regulating power of Congress under the commerce clause, and can be prohibited by Congress, it would be within the power of that body to permit that which it had the right to prohibit.

But the principle that the ownership of property is embraced within the power of Congress to regulate commerce, whenever that body deems that a particular character of ownership, if allowed to continue, may restrain commerce between the states or create a monopoly thereof, is, in my opinion, in conflict with the most elementary conceptions of rights of property. For it would follow if Congress deemed that the acquisition by one or more individuals engaged in interstate commerce of more than a certain amount of property would be prejudicial to interstate commerce, the amount of property held or the amount which could be employed in interstate commerce could be regulated.

In the argument at bar many of the consequences above indicated as necessarily resulting from the contention made were frankly admitted, since it was conceded that, even although the holding of the stock in the two railroads by the Northern Securities Company which is here assailed was expressly authorized by the laws of both the states by which the railroad corporations were created, as it was by the law of the state of New Jersey, nevertheless, as such authority, if exerted by the states, would be a regulation of interstate commerce, it would be repugnant to the Constitution as an attempt on the part of the states to interfere with the paramount authority of Congress on that subject. True, this assertion, made in the oral argument, in the printed argument is qualified by an intimation that the rule would not apply to state action taken before the adoption of the antitrust act, since up to that time, in consequence of the inaction of Congress on the subject, the states were free to legislate as they pleased regarding the matter. But this suggestion is without foundation to rest on. It has long since been determined by this court that where a particular subject-matter is national in its character and requires uniform regulation, the absence of legislation by Congress on the subject indicates the will of Congress that the subject should be free from state control. Mobile County v. Kimball, 102 U.S. 691, 26 L. ed. 238; Robbins v. Shelby County Taxing Dist. 120 U.S. 489, 493, 30 L. ed. 694, 1 Inters, Com. Rep. 45, 7 Sup. Ct. Rep. 592; United States v. E. C. Knight Co. 156 U.S. 1, 39 L. ed. 325, 15 Sup. Ct. Rep. 249.

It is said, moreover, that the decision of this case does not involve the consequences above pointed out since the only issue in this case is the right of the Northern Securities Company to acquire and own the stock. The right of that company to do so, it is argued, is one thing; the power of individuals or corporations, when not merely organized to hold stock, an entirely different thing. My mind fails to seize the distinction. The only premise by which the power of Congress can be extended to the subject-matter of the right of the Securities Company to own the stock must be the proposition that such ownership is within the legislative power of Congress, and if that proposition be admitted it is not perceived by what process of reasoning power of Congress over the subject-matter of ownership is to be limited to ownership by particular classes of corporations or persons. If the power embraces ownership, then the authority of Congress over all ownership which, in its judgment, may affect interstate commerce, necessarily exists. In other words, the logical result of the asserted distinction amounts to one of two things: Either that nothing is decided, or that a decree is to be entered having no foundation upon which to rest. This is said because, if the control of the ownership of stock in competing roads by one and the same corporation is within the power of Congress, and creates a restraint of trade or monopoly forbidden by Congress, it is not conceivable to me how exactly similar ownership by one or more individuals would not create the same restraint or monopoly, and be equally within the prohibition which it is decided Congress has imposed. Besides the incongruity of the conclusion, resulting from the alleged distinction, to admit it would do violence to both the letter and spirit of the Constitution; since it would in effect hold that, although a particular act was a burden upon interstate commerce or a monopoly thereof, that individuals could lawfully do the act, provided only they did not use the instrumentality of a corporation. But this court long since declared that the power to regulate commerce, conferred upon Congress, was 'general and includes alike commerce by individuals, partnerships, associations, and corporations.' Paul v. Virginia, 8 Wall. 168, 183, 19 L. ed. 357, 361.

Indeed, the natural reluctance of the mind to follow an erroneous principle to its necessary conclusion, and thus to give effect to a grievous wrong arising from the erroneous principle, is an admonition that the principle itself is wrong. That admonition, I submit, is conclusively afforded by the decree which is now affirmed. Without stopping to point out what seems to me to be the confusion, contradiction, and denial of rights of property which the decree exemplifies, let me see if, in effect, it is not at war with itself and in conflict with the principle upon which it is assumed to be based.

Fundamentally considered, the evil sought to be remedied is the restraint of interstate commerce and the monopoly thereof, alleged to have been brought about through the acquisition by Mr. Morgan and Mr. Hill and their friends and associates, of a controlling interest in the stock of both the roads. And yet the decree, whilst forbidding the use of the stock by the Northern Securities Company, authorizes its return to the alleged conspirators, and does not restrain them from exercising the control resulting from the ownership. If the conspiracy and combination existed and was illegal, my mind fails to perceive why it should be left to produce its full force and effect in the hands of the individuals by whom it was charged the conspiracy was entered into.

It may, however, be said that even if the results which I have indicated be held necessarily to arise from the principles contended for by the government, it does not follow that such power would ever be exerted by Congress, or, if exerted, would be enforced to the detriment of charters granted by the states to railroads or consolidations thereof, effected under state authority, or the ownership of stock in such railroads by individuals, or the rights of individuals to acquire property by purchase, lease, or otherwise, and to make any and all contracts concerning property which may thereafter become the subject-matter of interstate commerce. The first suggestion is at once met by the consideration that it has been decided by this court that, as the anti-trust act forbids any restraint, it therefore embraces even reasonable contracts or agreements. If, then, the ownership of the stock of the two railroads by the Northern Securities Company is repugnant to the act, it follows that ownership, whether by the individual or another corporation, would be equally within the prohibitions of the act. As to the second, true it is that by the terms of the anti-trust act the power to put its provisions in motion is, as to many particulars, confided to the highest law officer of the government; and if that officer did not invoke the aid of the courts to restrain the rights of the railroads previously chartered by the states to enjoy the benefits conferred upon them by state legislation, or to prevent individuals from exercising their right of ownership and contract, the law in these respects would remain a dead letter. But to indulge in this assumption would be but to say that the law would not be enforced by the highest law officer of the government,-a conclusion which, of course, could not be indulged in for a moment. In any view, such suggestion but involves the proposition that vast rights of property, instead of resting upon constitutional and legal sanction, must alone depend upon whether an executive officer might elect to enforce the law, a conclusion repugnant to every principle of liberty and justice.

Having thus by the light of reason sought to show the unsoundness of the proposition that the power of Congress to regulate commerce extends to controlling the acquisition and ownership of stock in state corporations, railroad or otherwise, because they may be doing an interstate commerce business, or to the consolidation of such companies under the sanction of state legislation, or to the right of the citizen to enjoy his freedom of contract and ownership, let me now endeavor to show, by a review of the practices of the governments, both state and national, from the beginning, and the adjudications of this court, how wanting in merit is the proposition contended for. It may not be doubted that from the foundation of the government, at all events to the time of the adoption of the anti-trust act in 1890, there was an entire absence of any legislation by Congress even suggesting that it was deemed by any one that power was possessed by Congress to control the ownership of stock in railroad or other corporations because such corporations engaged in interstate commerce. On the contrary, when Congress came to exert its authority to regulate interstate commerce as carried on by railroads, manifested by the adoption of the Interstate Commerce Act (24 Stat. at L. 379, chap. 104, U.S.C.omp. Stat. 1901, p. 3154), it sedulously confined the provisions of that act to the carrying on of interstate commerce itself, including the reasonableness of the rates to be charged for carrying on such commerce and other matters undeniably concerning the fact of interstate commerce. The same conception was manifested subsequently in legislation concerning safety appliances to be used by railroads, since the provisions of the act were confined to such appliances when actually employed in the business of interstate commerce. 27 Stat. at L. 531, chap. 196, U.S.C.omp. Stat. 1901, p. 3174. It also may not be doubted that from the beginning the various states of the Union have treated the incorporation and organization of railroad companies and the ownership of stock therein as maters within their exclusive authority. Under this conception of power in the states, universally prevailing and always acted upon, the entire railroad system of the United States has been built up. Charters, leases, and consolidations under the sanction of state laws lie at the basis of that enormous sum of property and those vast interests represented by the railroads of the United States. Extracts from the reports of the Interstate Commerce Commission and from a standard authority on the subject, which were received in evidence, demonstrate that in effect nearly every great railroad system in the United States is the result of the consolidation and unification of various roads, often competitive, such consolidation or unification of management having been brought about in every conceivable form, sometimes by lease under state authority, sometimes by such leases made where there was no prohibition against them, and by stock acquisitions made by persons or corporations in order to acquire a controlling interest in both roads. Without stopping to recite details on the subject, I content myself with merely mentioning a few of the instances where great systems of railroad have been formed by the unification of the management of competitive roads, by consolidation or otherwise, often by statutory authority. These instances embrace the Boston & Maine system, the New York, New Haven, & Hartford, the New York Central, the Reading, and the Pennsylvania systems. One of the illustrations-as to the New York Central system-is the case of the Hudson River Railroad on one side of the Hudson river and the West Shore Railroad on the other,-both parallel roads and directly competitive, and both united in one management by authority of a legislative act. It is indeed remarkable, if the whole subject was within the paramount power of Congress, and not within the authority of the states, that there should have been a universal understanding to the contrary from the beginning. When it is borne in mind that such universal action related to interests of the most vital character, involving property of enormous amount, concerning the welfare of the whole people, it is impossible in reason to deny the soundness of the assumption that it was the universal conviction that the states, and not Congress, had control of the subject-matter of the organization and ownership of railroads created by the states. And the same inference is applicable to the condition of things which has existed since the adoption of the anti-trust act in 1890. Who can deny that from that date to this, consolidations and unification of management, by means of leases, stock ownership by individuals or corporations, have been carried on, when not prohibited by state laws, to a vast extent and that during all this time, despite the energy of the government in invoking the anti-trust law that no assertion of power in Congress under that act to control the ownership of stock was ever knowingly made until first asserted in this cause. Quite recently Congress has amended the Interstate Commerce Act by provisions deemed essential to make its prohibitions more practically operative and yet no one of such provisions lends itself even to the inference that it was deemed by any one that the power of Congress extended to the control of stock ownership. Certainly the states have not so considered it. As a matter of public history it is to be observed that not long since by authority of the legislature of the state of Massachusetts, a controlling interest by lease of the Boston & Albany road passed to the New York Central systean.

The decisions of this court to my mind leave no room for doubt on the subject. As I have already shown, the very definition of the power to regulate commerce, as announced in Gibbons v. Ogden, excludes the conception that it extends to stock ownership. I shall not stop to review a multitude of decisions of this court concerning interstate commerce, which, whilst upholding the paramount authority of Congress over that subject, at the same time treated it as elementary that the effect of the power over commerce between the states was not to deprive the states of their right to legislate concerning the ownership of property of every character or to create railroad corporations and to endow them with such powers as were deemed appropriate, or to deprive the individual of his freedom to acquire, own, and enjoy property by descent, contract, or otherwise, because railroads or other property might become the subject of interstate commerce.

In Paul v. Virginia 8 Wall. 168, 19 L. ed. 357, the question was as to the power of the state of Virginia to license a foreign insurance company, and one of the contentions considered was whether the contract of insurance, since it was related to commerce, was within the regulating power of Congress, and not of the state of Virginia. The proposition was disposed of in the following language (p. 183, L. ed. p. 361):

'Issuing a policy of insurance is not a transaction of commerce. The policies are simply contracts of indemnity against loss by fire, entered into between the corporations and the assured, for a consideration paid by the latter. These contracts are not articles of commerce in any proper meaning of the word. They are not subjects of trade and barter offered in the market as something having an existence and value independent of the parties to them. They are not commodities to be shipped or forwarded from one state to another, and then put up for sale. They are like other personal contracts between parties, which are completed by their signature and the transfer of the consideration. Such contracts are not interstate transactions, though the parties may be domiciled in different states. The policies do not take effect-are not executed contracts-until delivered by the agent in Virginia. They are, then, local transactions, and are governed by the local law. They do not constitute a part of the commerce between the states any more than a contract for the purchase and sale of goods in Virginia by a citizen of New York, whilst in Virginia, would constitute a portion of such commerce.'

In other words, the court plainly pointed out the distinction between interstate commerce as such and the contracts concerning, or the ownership of property which might become the subjects of, interstate commerce. And the authority of Paul v. Virginia has been repeatedly approved in subsequent cases, which are so familiar as not to require citation.

In Baltimore & O. R. Co. v. Maryland, 21 Wall. 456, 22 L. ed. 678, the question was this: The state of Maryland had chartered the Baltimore & Ohio Railroad Company, and in the charter had imposed upon it the duty of paying to the state a certain proportion of all its receipts from freight, which applied as well to interstate as domestic freight. The argument was that these provisions were repugnant to the commerce clause because they necessarily inereased the sum which the railroad would have to charge, and thereby constituted a regulation of commerce. The court held the law not to be repugnant to the Constitution, and in the course of the opinion said (p. 473, L. ed. p. 684):

'In view, however, of the very plenary powers which a state has always been conceded to have over its own territory, its highways, its franchises, and its corporations, we cannot regard the stipulation in question as amounting to either of these unconstitutional acts.'

True it is that some of the expressions used in the opinion in the case just cited, giving rise to the inference that there was power in the state to regulate the rates of freight on interstate commerce, may be considered as having been overruled by Wabash, St. L. & P. R. Co. v. Illinois, 118 U.S. 557, 30 L. ed. 244, 1 Inters. Com. Rep. 31, 7 Sup. Ct. Rep. 4. But that case also in the fullest manner pointed out the fact that the power to regulate commerce, conferred on Congress by the Constitution, related not to the mere ownership of property or to contracts concerning property, because such property might subsequently be used in interstate commerce or become the subject of it. For instance, the definition given of interstate commerce in Gibbons v. Ogden, previously referred to, was reiterated, and in addition the definition expounded in Mobile County v. Kimball, 102 U.S. 691, 26 L. ed. 238, was approvingly quoted. That definition was as follows (p. 574, L. ed. p. 250, Inters. Com. Rep. p. 37, Sup. Ct. Rep. p. 12):

'Commerce with foreign countries and among the states, strictly considered, consists in intercourse and traffic, including in these terms navigation and the transportation and transit of persons and property, as well as the purchase, sale, and exchange of commodities. For the regulation of commerce as thus defined there can be only one system of rules, applicable alike to the whole country; and the authority which can act for the whole country can alone adopt such a system. Action upon it by separate states is not therefore permissible. Language affirming the exclusiveness of the grant of power over commerce as thus defined may not be inaccurate, when it would be so if applied to legislation upon subjects which are merely auxiliary to commerce.'

In Ashley v. Ryan, 153 U.S. 436, 38 L. ed. 773, 4 Inters. Com. Rep. 664, 14 Sup. Ct. Rep. 865, this was the question: The property of various railroad corporations operating in the state of Ohio, Michigan, Indiana, Illinois, and Missouri had been sold under decrees of foreclosure. The purchasers of the respective lines availed themselves of the Ohio statutes and consolidated all the corporations into one so as to form a single system,-the Wabash. On presenting the articles of consolidation to the secretary of state of Ohio, that officer demanded a fee imposed by the Ohio statutes, predicated upon the sum total of the capital stock of the consolidated company. This was refused on the ground that the state of Ohio had no right to make the charge, and that its doing so was repugnant to the commerce clause of the Constitution of the United States and to the 14[[|[[|[[|[[|th Amendment]]]]]]]]. This court decided against this contention. It held that, as the right to consolidate could alone arise from the Ohio law, the corporation could not avail of that law and avoid the condition which the law imposed. Speaking of the consolidation, the court said (p. 440, L. ed. p. 776, Inters. Com. Rep. p. 668, Sup. Ct. Rep. p. 866):

'The rights thus sought could only be acquired by the grant of the state of Ohio, and depended for their existence upon the provisions of its laws. Without that state's consent they could not have been procured.'

And, after a copious review of the authorities concerning the power of the state over the consolidation, the case was summed up by the court in the following passage (p. 446, L. ed. p. 778, Inters. Com. Rep. p.670, Sup. Ct. Rep. p. 868):

'Considering, as we do, that the payment of the charge was a condition imposed by the state of Ohio upon the taking of corporate being or the exercise of corporate franchises, the right to which depended solely on the will of that state,' (italics mine) 'and hence that liability for the charge was entirely optional, we concluds that the exaction constituted no tax upon interstate commerce, or the right to carry on the same, or the instruments thereof, and that its enforcement involved no attempt on the part of the state to extend its taxing power beyond its territorial limits.'

How a right which was thus decided to depend solely upon the authority of the states can now be said to depend solely upon the will of Congress, I do not perceive.

In United States v. E. C. Knight Co. 156 U.S. 1, 39 L. ed. 325, 15 Sup. Ct. Rep. 249, the facts and the relief based on them were thus stated by Mr. Chief Justice Fuller, delivering the opinion of the court (p. 9, L. ed. p. 328, Sup. Ct. Rep. p. 252):

'By the purchase of the stock of the four Philadelphia refineries, with shares of its own stock, the American Sugar Refining Company acquired nearly complete control of the manufacture of refined sugar within the United States. The bill charged that the contracts under which these purchases were made constituted combinations in restraint of trade, and that in entering into them the defendants combined and conspired to restrain the trade and commerce in refined sugar among the several states and with foreign nations, contrary to the act of Congress of July 2, 1890.' After referring, in a general way, to what constituted a monopoly or restraint of trade at common law, the question for decision was thus stated (p. 11, L. ed. p. 329, Sup. Ct. Rep. p. 253):

'The fundamental question is whether, conceding that the existence of a monopoly in manufacture is established by the evidence, that monopoly can be directly suppressed under the act of Congress in the mode attempted by this bill.'

Examining this question as to the power of Congress, it was observed (p. 11, L. ed. p. 329, Sup. Ct. Rep. p. 253):

'It cannot be denied that the power of a state to protect the lives, health, and property of its citizens, and to preserve good order and the public morals, 'the power to govern men and things within the limits of its dominion,' is a power originally and always belonging to the states; not surrendered by them to the general government, nor directly restrained by the Constitution of the United States, and essentially exclusive.'

Next, pointing out that the power of Congress over interstate commerce and the fact that its failure to legislate over subjects requiring uniform legislation expressed the will of Congress that the state should be without power to act on that subject, the court came to consider whether the power of Congress to regulate commerce embraced the authority to regulate and control the ownership of stock in the state sugar refining companies, because the products of such companies, when manufactured, might become the subject of interstate commerce. Elaborately passing upon that question and reaffirming the definition of Chief Justice Marshall of commerce, in the constitutional sense, it was held that, whilst the power of Congress extended to commerce as thus defined, it did not embrace the ownership of stock in state corporations because the products of such manufacture might subsequently become the subjects of interstate commerce.

The parallel between the two cases is complete. The one corporation acquired the stock of other and competing corporations by exchange for its own. It was conceded, for the purposes of the case, that in doing so monopoly had been brought about in the refining of sugar, that the sugar to be produced was likely to become the subject of interstate commerce, and, indeed, that part of it would certainly become so. But the power of Congress was decided not to extend to the subject, because the ownership of the stock in the corporations was not itself commerce.

In Pearsall v. Great Northern R. Co. 161 U.S. 646, 40 L. ed. 838, 16 Sup. Ct. Rep. 705, the question was whether the acquisition by the Great Northern road of a controlling interest in the stock of the Northern Pacific Railway Company was a violation of a Minnesota statute prohibiting the consolidation of competing lines. It is at once evident that if the subject of consolidation was within the authority of Congress, as Congress had not expressed its will upon the subject, the act of the legislaturo of Minnesota was void because repugnant to the Constitution of the United States. But the possibility of such a contention was not thought of by either party to the cause or by the court itself. Treating the power of the state as undoubted, the court, speaking through Mr. Justice Brown, decided that the Minnesota law should be enforced. It was jointed out in the opinion that, as the charter was one granted by the state, the railroad company and the ownership of stock therein was subject to the state law, and this was made the basis of the decision. Whilst, however, resting its conclusion upon the power of the state over the corporation by it created, the court was careful to recognize that the authority in the state was so complete, as the company was a state corporation, that the state had the right, if it chose to do so, to authorize the consolidation, even although the lines were competing.

In Louisville & N. R. Co. v. Kentucky, 161 U.S. 677, 40 L. ed. 849, 16 Sup. Ct. Rep. 714, the power of the state to pass a law forbidding the consolidation of competing state railroad corporations doing in part an interstate commerce business was again considered and a state statute in which the power was exercised was upheld. Here, again, it is to be observed that if the consolidation of state railroad corporations, because they did in part an interstate commerce business, was within the paramount authority of Congress, that authority was exclusive and the state regulation which the court upheld was void. And this question, vital to the consideration of the case, and without passing upon which it could not have been decided, did not escape observation, since it was explicitly pressed upon the court and was directly determined. The court, speaking through Mr. Justice Brown, said (pp. 701, 702, L. ed. pp. 859, 860, Sup. Ct. Rep. pp. 723, 724):

'But little need be said in answer to the final contention of the plaintiff in error, that the assumption of a right to forbid the consolidation of parallel and competing lines is an interference with the power of Congress over interstate commerce. The same remark may be made with respect to all police regulations of interstate railways.

* * * * *

'It has never been supposed that the dominant power of Congress over interstate commerce took from the states the power of legislation with respect to the instruments of such commerce, so far as the legislation was within its ordinary police powers. Nearly all the railways in the country have been constructed under state authority, and it cannot be supposed that they intended to abandon their power over them as soon as they were finished. The power to construct them involves necessarily the power to impose such regulations upon their operation as a sound regard for the interests of the public may seem to render desirable. In the division of authority with respect to interstate railways Congress reserves to itself the superior right to control their commerce, and forbid interference therewith; while to the states remains the power to create and to regulate the instruments of such commerce, so far as necessary to the conservation of the public interests.'

How one case could be more completely decisive of another than the ruling in the case just quoted is of this, I am unable to perceive.

The subject was considered at circuit in Re Greene, 52 Fed. 105. The case was this: A person was indicted in one state for creating a monopoly in violation of the antitrust act of Congress, and was held in another state for extradition. The writ of habeas corpus was invoked, upon the contention that the face of the indictment did not state an offense against the United States, since the matters charged did not involve interstate commerce. The case is referred to, although it arose at circuit and was determined before the decisions of this court in the Pearsall and Louisville & Nashville Cases, because it was decided by Mr. Justice Jackson, then a circuit judge, who subsequently, became a member of this court. The opinion manifests that the case was considered by Judge Jackson with that care which was his conceded characteristic, and was stated by him with that lucidity which was his wont. In discharging the accused on the grounds stated in the application for the writ, Judge Jackson said (p. 112):

'Congress may place restriction and limitations upon the right of corporations created and organized under its authority to acquire, use, and dispose of property. It may also impose such restrictions and limitations upon the citizen in respect to the exercise of a public privilege or franchise conferred by the United States. But Congress certainly has not the power or authority under the commerce clause or any other provision of the Constitution, to limit and restrict the right of corporations created by the states, or the citizens of the states, in the acquisition, control, and disposition of property. Neither can Congress regulate or prescribe the price or prices at which such property or the products thereof, shall be sold by the owner or owners, whether corporations or individuals. It is equally clear that Congress has no jurisdiction over, and cannot make criminal, the aims, purposes, and intentions of persons in the acquisition and control of property which the states of their residence or creation sanction and permit. It is not material that such property, or the products thereof, may become the subject of trade or commerce among the several states or with foreign nations. Commerce among the states, within the exclusive regulating power of Congress, 'consists of intercourse and traffic between their citizens, and includes the transportation of persons and property, as well as the purchase, sale, and exchange of commodities.' Mobile County v. Kimball, 102 U.S. 691-702, 26 L. ed. 238-241; Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 203, 29 L. ed. 192, 1 Inters. Com. Rep. 382, 5 Sup. Ct. Rep. 826. In the application of this comprehensive definition, it is settled by the decision of the Supreme Court that such commerce includes not only the actual transportation of commodities and persons between the states, but also the instrumentalities and processes of such transportation.

* * * * *

'That neither the production nor manufacture of articles or commodities which constitute subjects of commerce, and which are intended for trade and traffic with citizens of other states, nor the preparation for their transportation from the state where produced or manufactured, prior to the commencement of the actual transfer or transmission thereof to another state, constitutes that interstate commerce which comes within the regulating power of Congress; and, further, that after the termination of the transportation of commodities or articles of traffic from one state to another, of in the general mass of property in the of in the general mass of property in the state of destination, the sale, distribution, and consumption thereof in the latter state forms no part of interstate commerce.'

If this opinion had been written in the case now considered it could not more completely than its reasoning does have disposed of the contention that the ownership of stock by a corporation in competing railroads was commerce.

United States v. Trans-Missouri Freight Asso. 166 U.S. 290, 41 L. ed. 1007, 17 Sup. Ct. Rep. 540, was this: A large number of railway companies, who were made defendants in the cause had formed themselves into an association, known as the Trans-Missouri Freight Association, and the companies had bound themselves by the provisions contained in the articles of agreement. Many stipulations relating to the carrying on of interstate commerce over the roads which were parties to the agreement were contained in it, and § 3 provided as follows:

'A committee shall be appointed to establish rates, rules, and regulations on the traffic subject to this association, and to consider changes therein, and make rules for meeting the competition of outside lines. Their conclusions, when unanimous, shall be made effective when they so order, but if they differ the question at issue shall be referred to the managers of the lines parties hereto, and if they disagree it shall be arbitrated in the manner provided in article 7.'

The government sought to dissolve the association on the ground that the agreement restrained commerce between the states, and therefore was in violation of the anti-trust act. On the hearing in this court, as the agreement directly related in many particulars to interstate transportation and the charge to be made therefor, it was conceded on all hands that it embraced subject which came within the power of Congress to regulate commerce. The contentions on behalf of the association were these: First. That the movement of interstate commerce by railroads was not within the anti-trust act, since Congress had regulated that subject by the Interstate Commerce Act, and did not intend to amplify its provisions in any respect by the subsequent enactment of the anti-trust law. Second. That even if this were not the case, and the movement of interstate commerce by railroads was affected by the anti-trust statute, the particular agreement in question did not violate the act, because the agreement did not unreasonably restrain interstate commerce. Both these contentions were decided against the association, the court holding that the antitrust act did embrace interstate carriage by railroad corporations, and as that act prohibited any contract in restraint of interstate commerce, it hence embraced all contracts of that character, whether they were reasonable or unreasonable.

The same subject was considered in a subsequent case (United States v. Joint Traffic Asso. 171 U.S. 505, 43 L. ed. 259, 19 Sup. Ct. Rep. 25). In that case also there was no question that the agreement between the railroads related to the movement of interstate commerce, but it was insisted that the particular agreement there involved did not seek to fix rates, but only to secure the continuation of just rates which had already been fixed, and hence was not within the anti-trust law. If this were held not to be true, a reconsideration of the questions decided in the Freight Association Case was invoked. The court reviewed and reiterated the rulings made in the Freight Association Case and held that the particular agreement in question came within them.

I mention these two last cases, not because they are apposite to the case in hand, for they are not, since the contracts which were involved in them confessedly concerned interstate commerce, whilst in this case the sole question is whether the ownership of stock in competing railroads does involve interstate commerce. The cases are referred to in connection with the decisions previously cited, because, taken together, they illustrate the distinction which this court has always maintained between the power of Congress over interstate commerce and its want of authority to regulate subjects not embraced within that grant. The same distinction is aptly shown in subsequent cases.

Hopkins v. United States, 171 U.S. 578, 43 L. ed. 290, 19 Sup. Ct. Rep. 40, involved whether a particular agreement entered into between persons carrying on the business of selling cattle on commission exclusively at the Kansas City stock yards was valid. At those yards cattle were received in vast numbers through the channels of interstate commerce, and from thence were distributed through such channels. For these reasons the business of those engaged exclusively in the sale of cattle on the stock yards was asserted to be interstate commerce and within the power of Congress to regulate. In the opinion of the court, delivered by Mr. Justice Peckham, it was at the outset said (p. 586, L. ed. p. 294, Sup. Ct. Rep. p. 43):

'The relief sought in this case is based exclusively on the act of Congress approved July 2, 1890, chap. 647, entitled 'An Act to Protect Trade and Commerce Against Unlawful Restraints and Monopolies,' commonly spoken of as the anti-trust act. (26 Stat. at L. 209, U.S.C.omp. Stat. 1901, p. 3200.)

'The act has reference only to that trade or commerce which exists, or may exist, among the several states or with foreign nations, and has no application whatever to any other trade or commerce.

'The question meeting us at the threshold, therefore, in this case is, What is the nature of the business of the defendants, and are the by-laws or any subdivision of them above referred to, in their direct effect in restraint of trade or commerce among the several states or with foreign nations; or does the case made by the bill and answer show that any one of the above defendants has monopolized, or attempted to monopolize, or combined or conspired with other persons to monopolize, any part of the trade or commerce among the several states or with foreign nations?'

Proceeding, then, to consider the agreement, it was pointed out that the contention that the sale of cattle on the stock yards constituted interstate commerce was without merit. The distinction between interstate commerce as such and the power to make contracts and to buy and sell property was clearly stated, and because of that distinction the agreement was held not to be within the act of Congress, because that act could and did only relate to interstate commerce.

And on the day the decision just referred to was announced another case under the anti-trust act was decided. Anderson v. United States, 171 U.S. 604, 43 L. ed. 300, 19 Sup. Ct. Rep. 50. The difference between that case and the Hopkins Case was thus stated by Mr. Justice Peckham, in delivering the opinion of the court (p. 612, L. ed. p. 304, Sup. Ct. Rep. 52).

'This case differs from that of Hopkins v. United States, 171 U.S. 578, 43 L. ed. 290, 19 Sup. Ct. Rep. 40, in the fact that these defendants are themselves purchasers of cattle on the market, while the defendants in the Hopkins Case were only commission merchants who sold the cattle upon commission as a compensation for their services.

'Counsel for the government assert that any agreement or combination among buyers of cattle coming from other states, of the nature of the by-laws in question, is an agreement or combination in restraint of interstate trade or commerce.'

The court, however, said it did not deem it necessary to decide whether the fact that the merchants who entered into the agreement bought cattle in other states and shipped them to other states, caused their business to be interstate commerce, because, in any event, the court was of opinion that the agreement which was assailed, even if it involved interstate commerce, was not in violation of any of the provisions of the anti-trust act.

The Anderson Case was followed by Addyston Pipe & Steel Co. v. United States, 175 U.S. 211, 44 L. ed. 136, 20 Sup. Ct. Rep. 96. The case involved deciding whether a particular combination of pipe manufacturers, looking to the control of the sale and transportation of such pipe over a large territory, embracing many states and a division of the territory between the members of the combination, was within the prohibitions of the anti-trust act. Coming to consider the subject, the court, through Mr. Justice Peckham, analyzed the contract and pointed out its monopolistic features. In answer to the argument that the matter complained of was not commerce, because it related only to a sale of pipe, and therefore was within the rule announced in the Knight and Hopkins Cases, the Knight Case was approvingly reviewed, and its doctrine in effect was reaffirmed, the court observing (p. 240, L. ed. p. 147, Sup. Ct. Rep. p. 107):

'The direct purpose of the combination in the Knight Case was the control of the manufacture of sugar. There was no combination bination or agreement, in terms, regarding the future disposition of the manufactured article; nothing looking to a transaction in the nature of interstate commerce.

* * * * *

'We think the case now before us involves contracts of the nature last above mentioned, not incidentally or collaterally, but as a direct and immediate result of the combination engaged in by the defendants. . . . The defendants, by reason of this combination and agreement, could only send their goods out of the state in which they were manufactured for sale and delivery in another state, upon the terms and pursuant to the provisions of such combination. As pertinently asked by the court below, was not this a direct restraint upon interstate commerce in those goods?' (Italics mine.)

Having thus found that the agreement concerned interstate commerce because it directly purported to control the movement of goods from one state to the other, and, besides, sought to prohibit that movement or restrict the same to particular individuals, it was held that the contract was, for these reasons, within the prohibitions of the act of Congress, and was therefore void. I do not pause to consider the case of W. W. Montague & Co. v. Lowry (decided at this term), 193 U.S. 38, ante, 307, 24 Sup. Ct. Rep. 307, since on the face of the opinion it is patent that the contract directly concerned the shipment of goods from one state to another and this was the sole and exclusive basis of the decision.

Now, it is submitted, that the decided cases just reviewed demonstrate that the acquisition and ownership of stock in competing railroads, organized under state law, by several persons or by corporations, is not interstate commerce, and, therefore, not subject to the control of Congress. It is, indeed, suggested that the cases establish a contrary doctrine. This is sought to be demonstrated by quoting passages from the opinions separated from their context, apart from the questions which the cases involved. But as the issues which were decided in the Knight, in the Pearsall, in the Louisville & Nashville Case and in the Hopkins Case directly exclude the significance attributed to the passages from the opinions in those cases relied upon, it must follow that if such passages could, when separated from their context, have the meaning attributed to them the expressions would be mere obiter. And this consideration renders it unnecessary for me to analyze the passages to show that when they are read in connection with their context they have not the meaning now sought to be attached to them. But other considerations equally render it unnecessary to particularly review the sentences relied upon. There can be no doubt that it was expressly decided in the Knight Case that the acquisition of stock by one corporation in other corporations so as to control them all was not interstate commerce, although the goods of the manufacturing companies whose stock was acquired might become the subject of interstate commerce. If, then, the passage from the Knight Case could be given the meaning sought to be affixed to it, the result would be but to say that that case overruled itself. And this would be the result in the Pearsall Case, since in that case it was decided that the states had the power to forbid the consolidation of competing railroads, even by means of the acquisition of stock. Besides, as in the Louisville & Nashville Case, immediately following the Pearsall, it was expressly decided that the interstate commerce power of Congress did not embrace such consolidation, and Congress, therefore, could not restrain a state from either forbidding or permitting it to take place, it would follow that if the sentences in the Pearsall Case had the import now applied to them, that that case not only overruled itself, but was besides overruled by the Louisville & Nashville Case, and this although the two cases were decided on the same day, the opinions in both cases having been delivered by the same justice.

The same confusion and contradiction arises from separating from their context and citing as applicable to this case passages from the opinions in the Freight Association and Joint Traffic Cases. Those cases, as I have previously stated, related exclusively to a contract admittedly involving interstate commerce, and it was decided that any restraint of such commerce was forbidden by the anti-trust act. Now, in the Hopkins Case, decided subsequent to the Freight Association and Joint Traffic Cases, the contract considered unquestionably involved a restraint, but, as such restraint did not concern interstate commerce, it was held not to come within the power of Congress. It would follow then, if the sentences quoted from the opinions in the Freight Association and Joint Traffic Cases, which cases concermed only that which was completely interstate commerce, applied to that which was not such commerce, that the Hopkins Case overruled both these cases, although the opinions in all of the cases were delivered by the same justice, and no intimation was suggested of such overruling. It would also result that, after having overruled those cases in the Hopkins Case, the court, in expressing its opinion through the same justice, proceeded in the Addyston Pipe Case, which related only to interstate commerce, to overrule the Hopkins Case and reaffirm the prior cases.

Of course, in my opinion, there is no ground for holding that the decided cases embody such extreme contradictions or produce such utter confusion. The cases are all consistent, if only the elementary distinction upon which they proceeded be not obscured, that is, the difference which arises from the power of Congress to regulate interstate commerce, on the one hand, and its want of authority, on the other, to regulate that which is not interstate commerce. Indeed, the confounding and treating as one, things which are wholly different, is the error permeating all the contentions for the government.

What has been previously said suffices to show the reasons which control my judgment, and I might well say nothing more. There were, however, three propositions so earnestly pressed by the government at bar upon the theory that they demonstrate that common ownership of a majority of the stock of competing railroads is subject to the regulating power of Congress that I propose to briefly give the reasons which cause me to conclude that the contentions relied upon are without merit.

1. This court, it is urged, has frequently declared that the power of Congress over interstate commerce includes the authority to regulate the instrumentalities of such commerce, and the following cases are cited: Chicago & N. W. R. Co. v. Fuller, 17 Wall. 560, 21 L. ed. 710; Welton v. Missouri, 91 U.S. 275, 23 L. ed. 347; Pensacola Teleg. Co. v. Western U. Teleg. Co. 96 U.S. 1, 24 L. ed. 708; Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 29 L. ed. 158, 1 Inters. Com. Rep. 382, 5 Sup. Ct. Rep. 826. To these cases might be added many others, including some of those which have been previously referred to by me. The argument now made is, as the power extends to instrumentalities, and railroads are such instrumentalities, therefore the acquisition and ownership of railroads by persons or corporations is commerce and subject to the power of Congress to regulate. But this involves a non sequitur, and a confusion of thought arising from again confounding as one things which are wholly different. True, the instrumentalities of interstate commerce are subject to the power to regulate commerce, and therefore such instrumentalities when employed in interstate commerce may be regulated by Congress as to their use in such commerce. But this is entirely distinct from the power to regulate the acquisition and ownership of such instrumentalities, and the many forms of contracts from which such ownership may arise. The same distinction exists between the two which obtains between the power of Congress to regulate the movement of property in the channels of interstate commerce and its want of authority to regulate the acquisition and ownership of the same property. This difference was pointed out in the cases which have been referred to, and the distinction between the two has been from the beginning the dividing line, demarking the power of the national government on the one hand and of the states on the other. All the rights of ownership in railroads belonging to corporations organized under the state law, the power to acquire the same, to mortgage, to foreclose mortgages, to lease and the contract relations concerning them, have, from the foundation, had their sanction in the legislation of the several states. One may search in vain in the acts of Congress for any legislation even suggesting that the power over these subjects was deemed to be in Congress. On the contrary, the legislation of Congress concerning the instrumentalities of railroads under the interstate commerce power clearly refutes the contention, since that legislation relates only to such instrumentalities during their actual use in interstate commerce, and not otherwise. How, consistently with the proposition, can the great number of cases be explained which, in both the Federal and state courts, have dealt with the ownership of railroads and their instrumentalities by foreclosure and otherwise under the assumption that the rights of the parties were controlled by state laws governing the subject? And here again it would follow, if the proposition was adopted, that all the vast body of state legislation on the subject would be void from the beginning and the enormous sum of property rights depending upon such legislation would be impaired and lost, since, if the subject were within the power of Congress, it was one requiring a uniform regulation, and therefore the inaction of Congress would signify an entire want of power in the states over the subject.

2. The court it is urged, has in a number of cases, declared that the several states were without power to directly burden interstate commerce. The acquiring and ownership by one person or corporation of a majority of the stock in competing railroads engaged in interstate commerce, it is argued, being a direct burden, therefore power to regulate the subject is in Congress, and not in the states. Undoubtedly, not only in the decisions referred to, but in many others, including most of those which have been by me quoted, the absolute want of power in the states to legislate concerning interstate commerce or to bunder it directly has been declared, and the doctrine in its fullest scope is too elementary to require citation of authority. But to decide this case upon the assumption that the acquisition and ownership of stock in competing railroads engaged in interstate commerce is a regulation of commerce, or, what is the same thing, a direct burden on it, would be but to assume the question arising for decision.

Where an authority is exerted by a state which is within its power, and that authority as exercised does not touch interstate commerce or its instrumentalities, and can only have an effect upon such commerce by reason of the reflex and remote results of the exertion of the lawful power, it cannot be said, without a contradiction in terms, that the power exercised is a regulation, because a direct burden upon commerce. To say to the contrary would be to declare that no power on any subject, however local in its character, could be exercised by the states if it was deemed by Congress or the courts that there would be produced some effect upon interstate commerce. The question whether a burden is direct and therefore constitutes a regulation of interstate commerce is to be determined by ascertaining whether the power exerted is lawful, generally speaking, and then by finding whether its exercise in the particular case was such as to cause it to be illegal, because directly burdening interstate commerce. If, in a given case, the power be lawful and the mode in which it is exercised be not such as to directly burden, there is no regulation of commerce, although, as an indirect result of the exertion of the lawful power, some ffect may be produced upon commerce. In other words, where the power is lawful but it is asserted that it has been so exerted as to amount to a direct burden, there must be, so to speak, a privity between the manifestation of the power and the resulting burden. The distinction is well illustrated by the cases which have been referred to, and was very lucidly pointed out by Judge Jackson in the Greene Case. Take the Knight Case. There, as the contract merely concerned the purchase of stock in the refineries, and contained no condition relating to the movement in interstate commerce of the goods to be manufactured by the refining companies, the court held, as the right to acquire was not within the commerce clause, the fact that the owners of the manufactured product might thereafter so act concerning the product as to burden commerce, there was no direct burden resulting from the mere acquisition and ownership. On the contrary, in the Addyston Pipe Case, after stating in the fullest way the paramount authority of Congress concerning commerce, the court approached the terms of the contract in order to determine whether it related to interstate commerce, and if it did, whether it created a direct burden. In doing so, as it found that the contract both related to interstate commerce and directly burdened the same, the contract was held to be void. This case comes within the Knight Case. It concerns the acquisition and ownership of stock. No contract is in question made by the owners of the stock controlling the railroads in the performance of their duties as carriers of interstate commerce. The sole contention is that as the result of the ownership of the stock there may arise, in the operation of the roads, a burden of interstate commerce. That is, that such burden may indirectly result from the acquisition and ownership. To maintain the contention, therefore, it must be decided that because ownership of property, if acquired, may be so used as to burden commerce, therefore to acquire and own is to burden. This, however, would be but to declare that that which was in its very nature and essence indirect is direct.

3. But, it is said, it may not be denied that the common ownership of stock in competing railroads endows the holders of the majority railroads and with the authority, if they railroads and with the authority, it they choose to exert it, to so unify the management of the roads as to suppress competition between them. This power, it is insisted, is within the regulating authority of Congress over interstate commerce. In other words, the contention broadly is that Congress has not only the authority to regulate the exercise of interstate commerce, but under that power has the right to regulate the ownership and possession of property, if the enjoyment of such rights would enable those who possessed them if they engaged in interstate commerce to exert a power over the same. But this proposition only asserts in another form that the right to acquire the stock was interstate commerce, and therefore was within the authority of Congress, and is refuted by the reasons and authorities already advanced. That the proposition, if adopted, would extend the power of Congress to all subjects essentially local, as already stated in considering the previous proposition, is to my mind manifest. So clearly is this the result of the particular proposition now being considered, that, at the risk of repetition, I again illustrate the subject. Under this doctrine the sum of property to be acquired by individuals or by corporations, the contracts which they may make, would be within the regulating power of Congress. If it were judged by Congress that the farmer in sowing his crops should be limited to a certain production because overproduction would give power to affect commerce, Congress could regulate that subject. If the acquisition of a large amount of property by an individual was deemed by Congress to confer upon him the power to affect interstate commerce if he engaged in it, Congress could regulate that subject. If the wage-earner organized to better his condition and Congress believed that the existence of such organization would give power, if it were exerted, to affect interstate commerce, Congress could forbid the organization of all labor associations. Indeed, the doctrine must in reason lead to a concession of the right in Congress to regulate concerning the aptitude, the character, and capacity of persons. If individuals were deemed by Congress to be possessed of such ability that participation in the management of two great competing railroad enterprises would endow them with the power to injuriously affect interstate commerce, Congress could forbid such participation. If the principle were adopted, and the power which would arise from so doing were exercised, the result would be not only to destroy the state and Federal governments, but, by the implication of authority, from which the destruction would be brought about, there would be erected upon the ruins of both a government endowed with the arbitrary power to disregard the great guaranty of life, liberty, and property and every other safeguard upon which organized civil society depends. I say the guaranty, because in my opinion the three are indissolubly united, and one cannot be destroyed without the other. Of course, to push propositions to the extreme to which they naturally lead is often an unsafe guide. But at the same time the conviction cannot be escaped by me that principles and conduct bear a relation one to the other, especially in matters of public concern. The fathers founded our government upon an enduring basis of right, principle and of limitation of power. Destroy the principles and the limitations which they impose, and I am unable to say that conduct may not, when unrestrained, give rise to action doing violence to the great truths which the destroyed principles embodies.

The fallacy of all the contentions of the government is, to my mind, illustrated by the summing up of the case for the government made in the argument at bar. The right to acquire and own the stock of competing railroads involves, says that summing up, the power of an individual to do (italics mine) absolutely as he pleases with his own, whilst the claim of the government is that the right of the owner of property to do (italics mine) as he pleases with his own may be controlled in the public interest by legitimate legislation. But the case involves the right to acquire and own, not the right to do (italics mine). Confusing the two gives rise to the errors which it has been my endeavor to point out. Undoubtedly the states possess power over corporations created by them, to permit or forbid consolidation, whether accomplished by stock ownership or otherwise, to forbid one corporation from holding stock in another, and to impose on this or other subjects such regulations as may be deemed best. Generally speaking, however, the right to do these things springs alone from the fact that the corporation is created by the state, and holds its rights subject to the conditions attached to the grant, or to such regulations as the creator, the state, may lawfully impose upon its creature, the corporation. Moreover, irrespective of the relation of creator and creature, it is, of course, true in a general sense that government possesses the authority to regulate, within certain just limits, what an owner may do with his property. But the first power which arises from the authority of a grantor to exact conditions in making a grant or to regulate the conduct of the grantee gives no sanction to the proposition that a government, irrespective of its power to grant, has the general authority to limit the character and quantity of property which may be acquired and owned. And the second power, the general governmental one, to reasonably control the use of property, affords no foundation for the proposition that there exists in government a power to limit the quantity and character of property which may be acquired and owned. The difference between the two is that which exists between a free and constitutional government, restrained by law, an absolute government, unrestrained by any of the principles which are necessary for the perpetuation of society, and the protection of life, liberty, and property.

It cannot be denied that the sum of all just governmental power was enjoyed by the states and the people before the Constitution of the United States was formed. None of that power was abridged by that instrument except as restrained by constitutional safeguards, and hence none was lost by the adoption of the Constitution. The Constitution, whilst distributing the pre-existing authority, preserved it all. With the full power of the states over corporations created by them and with their authority in respect to local legislation, and with power in Congress over interstate commerce carried to its fullest degree, I cannot conceive that if these powers, admittedly possessed by both, be fully exerted, a remedy cannot be provided fully adequate to suppress evils which may arise from combinations deemed to be injurious. This must be true unless it be concluded that, by the effect of the mere distribution of power made by the Constitution, partial impotency of governmental authority has resulted. But if this be conceded, arguendo, the Constitution itself has pointed out the method by which, if changes are needed, they may be brought about. No remedy, in my opinion, for any supposed or real infirmity, can be afforded by disregarding the Constitution, by destroying the lines which separate state and Federal authority, and by implying the existence of a power which is repugnant to all those fundamental rights of life, liberty, and property upon which just government must rest.

If, however, the question of the power of Congress be conceded, and the assumption as to the meaning of the anti-trust act which has been indulged in for the purpose of considering that power be put out of view, it would yet remain to be determined whether the anti-trust act embraced the acquisition and ownership of the stock in question by the Northern Securities Company. It is unnecessary for me, however, to state the reasons which have led me to the conclusion that the act, when properly interpreted, does not embrace the acquisition and ownership of such stock, since that subject is considered in an opinion of Mr. Justice Holmes, which explains the true interpretation of the statute, as it is understood by me, more clearly than I would be able to do.

Being of the opinion, for the reasons heretofore given, that Congress was without power to regulate the acquisition and ownership of the stock in question by the Northern Securities Company, and because I think even if there were such power in Congress, it has not been exercised by the anti-trust act, as is shown in the opinion of Mr. Justice Holmes, I dissent.

I am authorized to say that the Chief Justice, Mr. Justice Peckham, and Mr. Justice Holmes concur in this dissent. exercise a kind of hydraulic pressure which makes what previously was clear seem doubtful, and before which even well settled principles of law will bend. What we have to do in this case is to find the meaning of some not very difficult words. We must try,-I have tried,-to do it with the same freedom of natural and spontaneous interpretation that one would be sure of if the same question arose upon an indictment for a similar act which excited no public attention, and was of importance only to a prisoner before the court. Furthermore, while at times judges need for their work the training of economists or statesmen, and must act in view of their foresight of consequences, yet, when their task is to interpret and apply the words of a statute, their function is merely academic to begin with,-to read English intelligently, and a consideration of consequences comes into play, if at all, only when the meaning of the words used is open to reasonable doubt.

The question to be decided is whether, under the act of July 2, 1890 (26 Stat. at L. 209, chap. 647, U.S.C.omp. Stat. 1901, p. 3200), it is unlawful, at any stage of the process, if several men unite to form a corporation for the purpose of buying more than half the stock of each of two competing interstate railroad companies, if they form the corporation, and the corporation buys the stock. I will suppose further that every step is taken, from the beginning, with the single intent of ending competition between the companies. I make this addition not because it may not be and is not disputed, but because, as I shall try to show, it is totally unimportant under any part of the statute with which we have to deal.

The statute of which we have to find the meaning is a criminal statute. The two sections on which the government relies both make certain acts crimes. That is their immediate purpose and that is what they say. It is vain to insist that this is not a criminal proceeding. The words cannot be read one way in a suit which is to end in fine and imprisonment and another way in one which seeks an injunction. The construction which is adopted in this case must be adopted in one of the other sort. I am no friend of artificial interpretations because a statute is of one kind rather than another, but all agree that before a statute is to be taken to punish that which always has been lawful, it must express its intent in clear words. So I say we must read the words before us as if the question were whether two small exporting grocers should go to jail.

Again, the statute is of a very sweeping and general character. It hits 'every' contract or combination of the prohibited sort, great or small, and 'every' person who shall monopolize or attempt to monopolize, in the sense of the act, 'any part' of the trade or commerce among the several states. There is a natural inclination to assume that it was directed against certain great combinations, and to read it in that light. It does not say so. On the contrary, it says 'every,' and 'any part.' Still less was it directed specially against railroads. There even was a reasonable doubt whether it included railroads until the point was decided by this court.

Finally, the statute must be construed in such a way as not merely to save its constitutionality, but, so far as is consistent with a fair interpretation, not to raise grave doubts on that score. I assume, for the purposes of discussion, although it would be a great and serious step to take, that in some case that seemed to it to need heroic measures, Congress might regulate not only commerce, but instruments of commerce, or contracts the bearing of which upon commerce would be only indirect. But it is clear that the mere fact of an indirect effect upon commerce, not shown to be certain and very great, would not justify such a law. The point decided in United States v. E. C. Knight Co. 156 U.S. 1, 17, 39 L. ed. 325, 331, 15 Sup. Ct. Rep. 249, 255, was that 'the fact . . . that trade or commerce might be indirectly affected was not enough to entitle complainants to a decree.' Commerce depends upon population, but Congress could not, on that ground, undertake to regulate marriage and divorce. If the act before us is to be carried out according to what seems to me the logic of the argument for the government, which I do not believe that it will be, I can see no part of the conduct of life with which, on similar principles, Congress might not interfere.

This act is construed by the government to affect the purchasers of shares in two railroad companies because of the effect it may have, or, if you like, is certain to have, upon the competition of these roads. If such a remote result of the exercise of an ordinary incident of property and personal freedom is enough to make that exercise unlawful, there is hardly any transaction concerning commerce between the states that may not be made a crime by the finding of a jury or a court. The personal ascendency of one man may be such that it would give to his advice the effect of a command, if he owned but a single share in each road. The tendency of his presence in the stockholders' meetings might be certain to prevent competition, and thus his advice, if not his mere existence, become a crime.

I state these general considerations as matters which I should have to take into account before I could agree to affirm the decree appealed from, but I do not need them for my own opinion, because, when I read the act I cannot feel sufficient doubt as to the meaning of the words to need to fortify my conclusion by any generalities. Their meaning seems to me plain on their face.

The 1st section makes 'every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce among the several states, or with foreign nations' a misdemeanor, punishable by fine, imprisonment, or both. Much trouble is made by substituting other phrases assumed to be equivalent, which then are reasoned from as if they were in the act. The court below argued as if maintaining competition were the expressed object of the act. The act says nothing about competition. I stick to the exact words used. The words hit two classes of cases, and only two,-contracts in restraint of trade and combinations or conspiracies in restraint of trade,-and we have to consider what these respectively are. Contracts in restraint of trade are dealt with and defined by the common law. They are contracts with a stranger to the contractor's business (although, in some cases, carrying on a similar one), which wholly or partially restrict the freedom of the contractor in carrying on that business as otherwise he would. The objection of the common law to them was, primarily, on the contractor's own account. The notion of monopoly did not come in unless the contract covered the whole of England. Mitchel v. Reynolds, 1 P. Wms. 181. Of course, this objection did not apply to partnerships or other forms, if there were any, of substituting a community of interest where there had been competition. There was no objection to such combinations merely as in restraint of trade or otherwise unless they amounted to a monopoly. Contracts in restraint of trade, I repeat, were contracts with strangers to the contractor's business, and the trade restrained was the contractor's own.

Combinations or conspiracies in restraint of trade, on the other hand, were combinations to keep strangers to the agreement out of the business. The objection to them was not an objection to their effect upon the parties making the contract, the members of the combination or firm, but an objection to their intended effect upon strangers to the firm and their supposed consequent effect upon the public at large. In other words, they were regarded as contrary to public policy because they monopolized, or attempted to monopolize, some portion of the trade or commerce of the realm. See United States v. E. C. Knight Co. 156 U.S. 1, 39 L. ed. 325, 15 Sup. Ct. Rep. 249. All that is added to the 1st section by § 2 is that like penalties are imposed upon every single person who, without combination, monopolizes, or attempts to monopolize, commerce among the states; and that the liability is extended to attempting to monopolize any part of such trade or commerce. It is more important as an aid to the construction of § 1 than it is on its own account. It shows that whatever is criminal when done by way of combination is equally criminal if done by a single man. That I am right in my interpretation of the words of § 1 is shown by the words 'in the form of trust or otherwise.' The prohibition was suggested by the trusts, the trusts, the objection to which, as every one knows, was not the union of former competitors, but the sinister power exercised or supposed to be exercised by the combination in keeping rivals out of the business and ruining those who already were in. It was the ferocious extreme of competition with others, not the cessation of competition among the partners, that was the evil feared. Further proof is to be found in § 7, giving an action to any person injured in his business or property by the forbidden conduct. This cannot refer to the parties to the agreement, and plainly means that outsiders who are injured in their attempt to compete with a trust or other similar combination may recover for it. W. W. Montague & Co. v. Lowry, 193 U.S. 38, ante, 307, 24 Sup. Ct. Rep. 307. How effective the section may be or how far it goes is not material to my point. My general summary of the two classes of cases which the act affects is confirmed by the title, which is 'An Act to Protect Trade and Commerce Against Unlawful Restraints and Monopolies.'

What I now ask is under which of the foregoing classes this case is supposed to come; and that question must be answered as definitely and precisely as if we were dealing with the indictments which logically ought to follow this decision. The provision of the statute against contracts in restraint of trade has been held to apply to contracts between railroads, otherwise remaining independent, by which they restricted their respective freedom as to rates. This restriction by contract with a stranger to the contractor's buisiness is the ground of the decision in United States v. Joint Traffic Asso. 171 U.S. 505, 43 L. ed. 259, 19 Sup. Ct. Rep. 25, following and affirming United States v. Trans-Missouri Freight Asso. 166 U.S. 290, 41 L. ed. 1007, 17 Sup. Ct. Rep. 540. I accept those decisions absolutely, not only as binding upon me, but as decisions which I have no desire to criticize or abridge. But the provision has not been decided, and, it seems to me, could not be decided without a perversion of plain language, to apply to an arrangement by which competition is ended through community of interest,-an arrangement which leaves the parties without external restriction. That provision, taken alone, does not require that all existing competitions shall be maintained. It does not look primarily, if at all, to competition. It simply requires that a party's freedom in trade between the states shall not be cut down by contract with a stranger. So far as that phrase goes, it is lawful to abolish competition by any form of union. It would seem to me impossible to say that the words 'every contract in restraint of trade is a crime, punishable with imprisonment,' would sent the members of a partnership between, or a consolidation of, two trading corporations to prison,-still more impossible to say that it forbade one man or corporation to purchase as much stock as he liked in both. Yet those words would have that effect if this clause of § 1 applies to the defendants here. For it cannot be too carefully remembered that that clause applies to 'every' contract of the forbidden kind,-a consideration which was the turning point of the Trans-Missouri Freight Association's Case.

If the statute applies to this case it must be because the parties, or some of them, have formed, or because the Northern Securities Company is, a combination in restraint of trade among the states, or, what comes to the same thing, in my opinion, because the defendants, or some or one of them, are monopolizing, or attempting to monopolize, some part of the commerce between the states. But the mere reading of those words shows that they are used in a limited and accurate sense. According to popular speech, every concern monopolizes whatever business it does, and if that business is trade between two states it monopolizes a part of the trade among the states. Of course, the statute does not forbid that. It does not mean that all business must cease. A single railroad down a narrow valley or through a mountain gorge monopolizes all the railroad transportation through that valley or gorge. Indeed, every railroad monopolizes, in a popular sense, the trade of some area. Yet I suppose no one would say that the statute forbids a combination of men into a corporation to build and run such a railroad between the states.

I assume that the Minnesota charter of the Great Northern, and the Wisconsin charter of the Northern Pacific, both are valid. Suppose that, before either road was built, Minnesota, as part of a system of transportation between the states, had created a railroad company authorized singly to build all the lines in the states now actually built, owned, or controlled by either of the two existing companies. I take it that that charter would have been just as good as the present one, even if the statutes which we are considering had been in force. In whatever sense it would have created a monopoly, the present charter does. It would have been a large one, but the act of Congress makes no discrimination according to size. Size has nothing to do with the matter. A monopoly of 'any part' of commerce among the states is unlawful. The supposed company would have owned lines that might have been competing; probably the present one does. But the act of Congress will not be construed to mean the universal disintegration of society into single men, each at war with all the rest, or even the prevention of all further combinations for a common end.

There is 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 than would be attributed to a smaller one. I am quite clear that it is only in connection with monopolies that size could play any part. But my answer has been indicated already. In the first place, size, in the case of railroads, is an inevitable incident; and if it were an objection under the act, the Great Northern and the Northern Pacific already were too great and encountered the law. In the next place, in the case of railroads it is evident that the size of the combination is reached for other ends than those which would make them monopolies. The combinations are not formed for the purpose of excluding others from the field. Finally, even a small railroad will have the same tendency to exclude others from its narrow area that great ones have to exclude others from the greater one, and the statute attacks the small monopolies as well as the great. The very words of the act make such a distinction impossible in this case, and it has not been attempted in express terms.

If the charter which I have imagined above would have been good notwithstanding the monopoly, in a popular sense, which it created, one next is led to ask whether and why a combination or consolidation of existing roads, although in actual competition, into one company of exactly the same powers and extent, would be any more obnoxious to the law. Although it was decided in Louisville & N. R. Co. v. Kentucky, 161 U.S. 677, 701, 40 L. ed. 849, 859, 16 Sup. Ct. Rep. 714, that since the statute, as before, the states have the power to regulate the matter, it was said, in the argument, that such a consolidation would be unlawful, and it seems to me that the Attorney General was compelled to say so in order to maintain his case. But I think that logic would not let him stop there, or short of denying the power of a state at the present time to authorize one company to construct and own two parallel lines that might compete. The monopoly would be the same as if the roads were consolidated after they had begun to compete; and it is on the footing of monopoly that I now am supposing the objection made. But to meet the objection to the prevention of competition at the same time, I will suppose that three parties apply to a state for charters; one for each of two new and possibly competing lines respectively, and one for both of these lines, and that the charter is granted to the last. I think that charter would be good, and I think the whole argument to the contrary rests on a popular instead of an accurate and legal conception of what the word 'monopolize' in the statute means. I repeat, that in my opinion there is no attempt to monopolize, and what, as I have said, in my judgment amounts to the same thing, that there is no combination in restraint of trade until something is done with the intent to exclude strangers to the combination from competing with it in some part of the business which it carries on.

Unless I am entirely wrong in my understanding of what a 'combination in restraint of trade' means, then the same monopoly may be attempted and effected by an individual, and is made equally illegal in that case by § 2. But I do not expect to hear it maintained that Mr. Morgan could be sent to prison for buying as many shares as he liked of the Great Northern and the Northern Pacific, even if he bought them both at the same time and got more than half the stock of each road.

There is much that was mentioned in argument which I pass by. But in view of the great importance attached by both sides to the supposed attempt to suppress competition, I must say a word more about that. I said at the outset that I should assume, and I do assume, that one purpose of the purchase was to suppress competition between the two roads. I appreciate the force of the argument that there are independent stockholders in each; that it cannot be presumed that the respective boards of directors will propose any illegal act; that if they should they could be restrained, and that all that has been done as yet is too remote from the illegal result to be classed even as an attempt. Not every act done in furtherance of an unlawful end is an attempt or contrary to the law. There must be a certain nearness to the result. It is a question of proximity and degree. Com. v. Peaslee, 177 Mass. 267, 272, 59 N. E. 55. So, as I have said, is the amenability of acts in furtherance of interference with commerce among the states to legislation by Congress. So, according to the intimation of this court, is the question of liability under the present statute. Hopkins v. United States, 171 U.S. 578, 43 L. ed. 290, 19 Sup. Ct. Rep. 40; Anderson v. United States, 171 U.S. 604, 43 L. ed. 300, 19 Sup. Ct. Rep. 50. But I assume further, for the purposes of discussion, that what has been done is near enough to the result to fall under the law, if the law prohibits that result, although that assumption very nearly, if not quite, contradicts the decision in United States v. E. C. Knight Co. 156 U.S. 1, 39 L. ed. 325, 15 Sup. Ct. Rep. 249. But I say that the law does not prohibit the result. If it does it must be because there is some further meaning than I have yet discovered in the words 'combinations in restraint of trade.' I think that I have exhausted the meaning of those words in what I already have said. But they certainly do not require all existing competitions to be kept on foot, and, on the principle of the Trans-Missouri Freight Association's Case, invalidate the continuance of old contracts by which former competitors united in the past.

A partnership is not a contract or combination in restraint of trade between the partners unless the well known words are to be given a new meaning, invented for the purposes of this act. It is true that the suppression of competition was referred to in United States v. Trans-Missouri Freight Asso. 166 U.S. 290, 41 L. ed. 1007, Sup. Ct. Rep. 540, but, as I have said, that was in connection with a contract with a stranger to the defendant's business,-a true contract in restraint of trade. To suppress competition in that way in one thing; to suppress it by fusion is another. The law, I repeat, says nothing about competition, and only prevents its suppression by contracts or combinations in restraint of trade, and such contracts or combinations derive their character as restraining trade from other features than the suppression of competition alone. To see whether I an wrong, the illustrations put in the argument are of use. If I am, then a partnership between two stage drivers who had been competitors in driving across a state line, or two merchants once engaged in rival commerce among the states, whether made after or before the act, if now continued, is a crime. For, again I repeat, if the restraint on the freedom of the members of a combination, caused by their entering into partnership, is a restraint of trade, every such combination, as well the small as the great, is within the act.

In view of my interpretation of the statute I do not go further into the question of the power of Congress. That has been dealt with by my brother White and I concur, in the main, with his views. I am happy to know that only a minority of my brethren adopt an interpretation of the law which, in my opinion, would make eternal the bellum omnium contra omnes and disintegrate society so far as it could into individual atoms. If that were its intent I should regard calling such a law a regulation of commerce as a mere pretense. It would be an attempt to reconstruct society. I am not concerned with the wisdom of such an attempt, but I believe that Congress was not intrusted by the Constitution with the power to make it, and I am deeply persuaded that it has not tried.

I am authorized to say that the Chief Justice, Mr. Justice White, and Mr. Justice Peckham concur in this dissent.

Notes