also having parallel and competing lines going to the same place. That is true today and has been for some years.

"Now, we say that many of these matters have been necessarily well known, during all this period, to all the officers of the government, both before and since the passage of the Anti-trust Act. And they were done under the authority of state legislation which is plainly unconstitutional if these acts are restraints upon interstate commerce. Consequently we say that all of these matters are to be taken into consideration in determining, first, what congress intended by the passage of the act; and secondly, what the universal construction of the act has been since that time."

From the point of view of history, the Northern Securities Company is the logical culmination of a long series of events as old as the railway itself, in which the inherent tendencies toward combination have been in perpetual conflict with laws assuming natural competition. In this conflict the forms of co-operative effort and combination have been metamorphosed into new shapes to avoid the ban which the law had placed upon the old. These new forms have generally been slightly in advance of the law.

The lines of attack pursued by the government are indicated in the following series of propositions which, the assistant attorney general stated, had been derived from applicable decisions of the federal appellate courts, and which he applied to the facts of the merger under consideration:

1. Public policy requires free competition between competing transportation lines and forbids all attempts to restrict such competition or create a monopoly.

2. The police power extends to corporations which are engaged in a public service, and which are, therefore, subject to legislative control so far as becomes necessary for the protection of the public interests, and it is competent for the legislature of a state with respect to domestic trade, and congress with respect to interstate trade, to prohibit either corporations or individuals from combining, either directly or indirectly, so as to eliminate competition.

3. The purchase of stock by a railroad corporation in a competing line is contrary to public policy and void, and this

even though accomplished by individual stockholders, acting in behalf and for the interests of the purchasing company.

4. Where the direct and necessary result of a given combination is to eliminate competition, and thereby restrain trade, the intent to accomplish that result will be presumed and need not be formally proved.

5. It is not important that the proposed combination does not secure a complete monopoly of a given subject of commerce; a partial monopoly is equally offensive to public policy.

6. The fact that the power of the combination has not been exercised to increase prices or rates is not important. The law is concerned not with what is done, but with the power to do.

7. The law will look to the substance and not to the form, and will not permit a monopolistic combination, no matter by what corporate or legal devices it may be attempted.

8. Corporations as personalities only exist in a fiction of the law and for practical and beneficial purposes which subserve public interests. Where such fiction is evoked to violate criminal statutes or to defeat sound public policy, such fiction will be disregarded and the law will look to the acts of the individuals who control the corporation as the acts of the corporation itself.

9. Therefore, the mere fact that such a consolidation takes the form of a purchase by the stockholders of one company individually of a portion of the capital stock of a competing line will not legalize the transaction, and this notwithstanding the fact that the capital stock so purchased is less than a majority, provided it be purchased with a view to the control of the competing line.

10. The liberty guaranteed by the fifth amendment to purchase and sell property is clearly subject to the police power of the state, and does not sanction purchases and sales of capital stock with a view to a practical consolidation of parallel and competing lines.

CHAPTER VI.

DECISIONS OF THE FEDERAL TRIAL COURT AND OF THE UNITED STATES CIRCUIT COURT.

Two different decisions were rendered in this case by circuit judges of the United States before it reached the supreme court for the first time. The one by four judges, 20 referred to above, sitting as a trial court, under a special act of congress; the other by the regular circuit court.27 The former decided the case brought by the federal government, and the latter that brought by the state of Minnesota.

The decision of the trial court, written by Judge Thayer and concurred in by the other three, recites very briefly the facts derived "from admissions made by the pleadings as well as from much oral testimony." Subsequent to the acquisition of the Burlington, recites the court, certain influential stockholders of the Great Northern and Northern Pacific, "acting in concert with each other," placed the great majority of the stock of the two constituent companies in the hands of a single person, the Securities Company. This destroyed every motive for competition between natural competitors. Since every person "is presumed to intend what is the necessary consequence of his own acts, when done willfully and deliberately, we must conclude that those who conceived and executed" this plan intended to restrain commerce and acquire the power of establishing unreasonable rates. The fact that unreasonable rates have not yet been established is no guarantee against extortion in the future, for the power to extort exists in the hands of the Security Company. This is prohibited by the Anti-trust act, which declares illegal every combination in the

24 Circuit Judges; Caldwell, Sanborn, Thayer, Van Devanter.

27 Circuit Judge; Lochren.

form of a trust or otherwise. The generality of the language of the act indicates the desire of congress to prohibit every scheme which might be devised to restrain trade, whether known at the time of enactment or whether still to be invented. The Securities Company accomplishes the object which congress has declared illegal perhaps more effectually than other forms of combination generally known in 1890 when the Antitrust law was passed. Nor would the prohibition of an arrangement like the Securities Company constitute an undue, perhaps unconstitutional, restriction of the right of private property and of private contracts, for congress has the power, under the constitution, to prevent a citizen from entering "into those private contracts which directly and substantially, or indirectly, remotely, incidentally and collaterally" restrain commerce among the states. Referring to the contention of the defendants that since the Securities Company had been fully organized and the majority of the stock of the two railways acquired before the bill of the government was filed no relief could be granted to the government, the court held that "it would be a novel, not to say absurd, interpretation of the Antitrust act to hold that after an unlawful combination is formed and has acquired the power which it had no right to acquire and is proceeding to use it and execute the purpose for which the combination was formed, it must be left in possession of the power that it has acquired, with full freedom to exercise it." One of the objects for which the Securities Company was formed was the promotion of commerce. Upon this point the court expressed itself as follows:

"It may be that such a virtual consolidation of parallel and competing lines of railroad as has been effected, taking a broad view of the situation, is beneficial to the public rather than harmful.

"It may be that the motives which inspired the combination by which this end was accomplished were wholly laudable and unselfish; that the combination was formed by the individual defendants to protect great interests which had been committed to their charge; or that the combination was the initial and the necessary step in the accomplishment of great designs, which, if carried out as they were conceived, would prove to

be of inestimable value to the communities which these roads serve and to the country at large.

"We shall neither affirm nor deny either of these propositions, because they present issues which we are not called upon to determine, and some of them involve questions which are not within the province of any court to decide, involving, as they do, questions of public policy which congress must determine.

"It is our duty to ascertain whether the proof discloses a combination in direct restraint of interstate commerce,-that is to say, a combination whereby the power has been acquired to suppress competition between two or more competing and parallel lines of railroad engaged in interstate commerce.

"If it does disclose such a combination, and we have little hesitation in answering this question in the affirmative, then the anti-trust act, as it has been heretofore interpreted by the court of last resort, has been violated and the government is entitled to a decree."

In accordance with these conclusions the court declared the acquisition of the stock by the Securities Company, illegal; it enjoined the Securities Company from acquiring additional stock, from voting the stock already acquired, and from paying dividends on its stock or exercising any control whatsoever over the corporate acts of the Great Northern and Northern Pacific Railway Companies. Permission to return to shareholders the stock not held was expressly granted. So much of the decree of this court as restrains the two railway companies from paying over to the Securities Company dividends upon shares owned by it was subsequently suspended by the court during the appeal of the case to the supreme court on condition that the litigation would be prosecuted with due diligence.

The difference between the opinion of the trial court in the federal case just described and the opinion of the United States Circuit Court in the state case are clearly fore-shadowed in the statement of facts in the latter opinion. Judge Lochren states briefly the facts of organization of the Great Northern and Northern Pacific railway companies; he refers to the interests of the state of Minnesota as a land owner, shipper, and pur