LIBRARY OF THE UNIVERSITY OF CALIFORNIA. GIFT OF Class IN THE Supreme Court of the United States OCTOBER TERM, 1909. No. 725. STANDARD OIL COMPANY BT AL., Appellants, vs. THE UNITED STATES. Appeal from the Circuit Court of the United States for the Eastern District of Missouri. BRIEF ON THE LAW ON PART OF APPELLANTS. D. T. WATSON, JOHN M. FREEMAN, ERNEST C. IRWIN, For Appellants. Smith Bros. Co. Inc., Franklin Print, 412 Grant St. Pittsburgh. UN1VE3S or Purpose of the Brief. It is to show FIRST. The case is one involving the rights of indi- vidual citizens of the United States, whom, the petition charges, conspired to and did restrict and monopolize inter- state trade in oil in contravention of the Sherman Act. The court below so held, and in that erred, because : (A) The Government failed to so prove: (B) The things the individuals did do were lawful and not forbidden by the Sherman Act. SECOND. The court below held that because (and solely because) the individual joint owners of a group of non-competitive properties engaged for forty years in pri- vate trade in the manufacture and sale of oil, instead of continuing to so hold through nine trustees under the con- trol of the seven individual appellants, changed in 1899 the method of holding their properties by conveying them to the Standard Oil Company of New Jersey, but still un- der the management of the seven that such change in the method of holding titles was a violation of the Sherman Act, and had been so ruled by this court in the Northern Securi- ties case. This, we submit, is plainly and markedly erroneous. 230494 II THIED. As proven by the evidence, the Standard Oil business as it existed in 1906, and still exists, was the natural development and outgrowth of the business begun in 1862, and steadily pursued by the Rockefellers and others. By untiring energy, with infinite skill with abundant capital and the steady reinvestment of early profits, these men and their associates created out of an entirely new, unique and unprecedented production of crude oil, a new, uni- versally used and cheapest illuininant the world has known. By creative skill they secured from refuse oil valuable by-products. They invented the huge reservoirs for storing oil the combined pipe line system which gathers up and carries the natural products the tank cars which carry the refined product. They created the export trade in oil, transporting it in ships of their own construction, and selling it in Asia, India, China, Japan, Russia and all Europe. They devised the trading stations the tank de- livery wagons and used every means to cheapen the pro- duct and the quality. From 1862 to 1906 (44 years) the work went on. They took the risk of the failure in produc- tion, of destruction by fire and tempest, besides all the ordi- nary risks of trade. They met all emergencies with competent skill and sufficient funds. The unexpected, enormous in- crease in production greatly increased their business and ad- ded to its importance and profit. Their methods of holding their joint properties and the management of them were dic- tated by economic reasons. They used the best and cheapest methods in the holding of titles, and in the transportation, production, refining and sale of oil, and they sought to and did always produce the best and cheapest product. They competed with the same energy and skill they built up. Ill They succeeded, as if one had developed unexpectedly a gold or diamond mine, and abundant revenue legitimately became theirs. Their business thus created was a lawful one, and the owners thereof were and are lawfully entitled to continue the same, and if in 1906 when the petition was filed, they were not restricting interstate trade or by unlawful means seejdng a monopoly (which it was not), the court should not have in- terfered with it. And yet without finding any such illegal acts or any il- legal act, and after forty-four years of this toil and strife and enterprise and skill and devotion to one business, and after energies spent by a remarkable group of men, and when the narvest was being gathered for their nigh half century's \\ork, then in 1910 the court below struck them down and dis- integrated their organization, and why Not because in 1906 they were restricting interstate trade, or by then unlawful means were maintaining a mo- nopoly ~Not because they had by force or fraud or illegal acts eliminated their competitors and gained in an unlawful way the control of the interstate trade in oil Bat solely and only because in 1899 they conveyed all their property to *he Standard Oil Company of New Jersey which (the court below held) was a violation of the Sher- man Act. Before they so conveyed, they were a lawful group, lawfully doing business IV After the conveyance, and solely by reason thereof, a group of lawless conspirators. With great respect for the Bench which so held, we sub- mit that such a rule is not justified by any possible construc- tion of the Sherman act nor sanctioned by any ruling of this court. The Court erred in making the decree it did FOURTH. In this equitable proceeding the Sherman Act only gave the court (See Section 4) after petition filed "setting forth the case" " jurisdiction to prevent and restrain violations of this Act" "to prevent and restrain such violations" "such violation shall be enjoined or otherwise pro- hibited". The power is plainly only preventive and negative; it is to prevent the continuing, then existing violations of the Sherman Act or such foreseen and expected and at present arranged violations. Yet the Court below entered a decree which (in results) orders a dissolution of the Standard Oil Company of New Jersey. Divides its now united plant into many units which were not competitive, and compels competition. Creates new V units where none existed before. Prevents the use of units with each other. Restricts appellants to the joint ownership of only one unit. Segregates into units properties actually built with appellants' money for necessary joint use in the economical conduct of appellants' business. Regulates the ownership of real estate in different States. Compels the appellants to continue their business (if at all) with these separated units at the risk of an attachment for contempt under a vaguely worded decree; and restricts the appellants from any participation in interstate commerce until such dissolution of the Standard Oil Company of "New Jersey is effected. FIFTH. The Government not having appealed cannot assign error to the decree of the Court below, or object to its findings of fact, or ask to have additional facts found which the Court below did not find. If the facts found are not sufficient to support the decree, it must be reversed. IN THE Supreme Court of the United States OCTOBER TERM, 1909. No. 725. STANDARD OIL COMPANY BT AL., Appellants, vs. THE UNITED STATES. Appeal from the Circuit Court of the United States for the Eastern District of Missouri. Brief on the Law on Part of Appellants. 2 Argument. I. THE GOVERNMENT HAS FAILED TO MAINTAIN THE AFFIRMATIVE OF THE IS- SUE MADE BY THE PLEADINGS, AND TO PROVE THAT THE SEVEN INDIVIDUAL AP- PELLANTS, AS A MATTER OF FACT, WERE, WHEN THE PETITION WAS FILED, IN CON- TROL AND MANAGEMENT OF, AND DICTAT- ED TO, THE OTHER DEFENDANTS IN THE BILL IN AN EFFORT TO RESTRAIN INTER- STATE TRADE OR MONOPOLIZE ANY POR- TION OF THE SAME IN CRUDE PETROLEUM AND ITS PRODUCTS, CONTRARY TO THE PRO- VISIONS OF THE SHERMAN ACT, AND THE COURT BELOW ERRED IN HOLDING TO THE CONTRARY. It is a familiar rule that when the Sovereign, either the State or the United States, comes into a court as a suitor, she stands exactly as the citizen with whom she dis- putes, and can claim no other or higher or greater privileges than that citizen. She is governed by the same rules of law and equity that govern the citizen. She is subject to the rules of pleading, not in a proceeding like this under the Sherman Act to common law precision, but still she is sub- ject to those rules of pleading which imperatively require that the Petition and the Answer and the other pleadings must frame an issue, and the issue, when once framed, is the sole point to which the testimony in the case should be di- rected ; and the solution of the issue is the termination of the case. 3 In Brent vs. The Bank, 10 Peters, 615, the Supreme Court said: "Thus compelled to come into equity for a rem- edy to enforce a legal right, the United States must come as other suitors, seeking in the administration of the law of equity relief. * * This court, in Mitchell vs. U. 8., 9 Pet., 743, have recognized the principle in the common law, that though the law gives the King a better or more convenient remedy, he has no better right in court than the subject * * *." In The Siren,, 7 Wallace, 154, the court said that the United States as a suitor stands: "in such proceedings, with reference to the rights of defendants or claimants, precisely as private suitors, except that they are exempt from costs and from af- firmative relief against them, heyond the demand or property in controversy." No matter what latitude has been given to the form of these petitions under the Sherman Act, it must still be true that the Petition must state, in a definite and plain way, its cause of action; that the Answer must respond to these allegations, and the replication must seal the issue. In Sivift & Company vs. United States, 196 U. S., 395, Mr. Justice Holmes said, in discussing the sufficiency of a Petition, that, while it need not have the precision of an in- dictment one hundred years ago, "It is to be taken to mean what it fairly conveys to a dispassionate reader by a fairly exact use of Eng- lish speech." What Should the Petition Contain? It should substantially comply with Eule 26 of the Su- preme Court of the United States, and should "be expressed in as brief and succinct terms as it rea- sonably can be." Daniels Ch. PL, Vol. 1, p. 314, lays down the rule thus: "In all cases the bill must contain as concisely as may be a narrative of the material facts, matters and circumstances on which the plaintiff relies." On star page 605, the same author states as to a pe- tition, that it "must state the material facts upon which the appli- cation is founded." Pleadings. What is the issue made by the pleadings? Let us examine at some length the Petition and its Prayers and the Answers: The charges in the Petition by the United States (Record Vol. A, page 6) are that seven men named as de- fendants have engaged in a conspiracy to restrain interstate trade in and to monopolize such trade in petroleum and its products. That in 18 TO the original conspiracy was formed by John D. Rockefeller, William Rockefeller, and Flagler; afterwards Archbold, Payne, Rogers and Pratt, between 1870 and 1882, joined them. t) These seven men are the individual defendants named in the Petition. The Petition alleged that the original con- spiracy formed in 1870 extended over the entire time from 1870 to the present date and still exists. That it has heen (Eec. A, p. 7), "a continuing conspiracy organized and controlled by the individual defendants herein and has assumed va- rious forms and devices and has covered various pe- riods." It is one identical, continuous conspiracy which the individual defendants originated in 1870, and have ever since continued. Whatever form it took, it was one the seven individual defendants used as a means to carry it on. Now it was a partnership, now a limited partnership, now a corporation, and now a trust ; but the petition with reitera- tion avers that always it was the seven defendants as indi- viduals in control. They may have used other men to help them, or all kinds of companies, combinations, cor- porations or trusts, but always it was the seven individuals who used them and were in control. Referring to different pages of the Petition, we find the following averments: (Rec. A, p. 6-7) : "That the defendants, John D. Rockefeller, Wil- liam Rockefeller and Henry M. Flagler, in or about the year 1870, and at all times since said time, to- gether with the other individual defendants herein, who thereafter from time to time, between said time and 1882, joined said conspiracy, to-wit, Henry H. Rogers, John D. Archbold, Oliver H. Payne and Charles M. Pratt entered into and have ever since been engaged in a conspiracy with each other, and with other persons, corporations, co-partnerships and limited partnerships, 6 as hereinafter more particularly stated, to restrain the trade and commerce in petroleum, commonly called 'crude oil/ in refined oil, and in other products of pe- troleum, among the several States and Territories of the United States, the District of Columbia and with foreign nations, and to monopolize the said commerce. "That said conspiracy extended over the entire time since about the year 1870 until the present time, and still exists, and that the same finally in or about 1899 culminated in the corporate form of said conspi- racy, hereinafter more particularly described, which has continued during each and every year until the present time between said individual defendants, the defendant Standard Oil Company of New Jersey, and the various other corporations, defendants herein, and that through- out said period from about 1870 to the present time, said conspiracy has been maintained for the purpose and with the effect of restraining the commerce in said products among the several States and Territories of the United States and the District of Columbia and with foreign nations; and for the purpose and with the effect of monopolizing the commerce in said products in and among the several States and Territories of the United States and the District of Columbia and with foreign nations, as hereinafter more particularly al- leged; that said conspiracy has been a continuing con- spiracy, organized and controlled by the individual de- fendants herein, and has assumed various forms and devices, and has covered various periods, among the principal of which are the following: a The period from 1870 to 1882 ; the period from 1882 to 1899, and the period from 1899 to the present time." 7 (Eec. A, p. 72 : "That said conspiracy has been a continuing con- spiracy organized and controlled by the individual de- fendants herein and has assumed various forms and de- Without cumbering the record with further extracts, see also following pages of the Petition in Volume A: 7, 8, 9, 11, 12, 14, 16, 18, 19, 20, 31, 32, 37, 39, 41, 42, 43, 46, 49, 50, 57, 59, 60, 97, 98, 107, 110. Answers. Many answers have been filed, but they all agree in this : Each unequivocally and broadly denies these averments of the Petition. They deny all charges that there ever was, by the appellants or any of them, a conspiracy in re- straint of interstate or foreign trade and commerce in crude oil, or that any of the appellants had monopolized or at- tempted to monopolize interstate or foreign trade in crude oil and its products. What is the Issue? We have analyzed the petition and read its charges and the appellants' answer, and we have seen that the issue is the charge made in the petition, denied in the answer, and re-as- serted in the replication, and it is that the seven individuals (repeatedly called throughout the petition the "individual defendants," being John D. Eockefeller, William Kocke- feller, John D. Archbold, Oliver H. Payne, Henry M. -8 Flagler, Charles M. Pratt and Henry H. Rogers), combined and conspired, and continued to combine and conspire at the time when this petition was filed, to restrain interstate trade in oil and to gain a monopoly of the same. It is reiterated on half of the pages of the petition. The conspirators are always identified as the "seven individual defendants," and it is averred that these individual defendants worked through various corporations, and partnerships and limited partner- ships, and the petition always alleges that these individual defendants controlled all these partnerships and limited partnerships and corporations, and used them as their tools to effectuate the conspiracy. The answer denies these aver- ments. It is not important here and we assume (for sake of the argument) that if there was such a continuing conspiracy (?) as charged in the petition, each one of the corporations used by the seven individual defendants be- came a party to the conspiracy by aiding or abetting (U. S. vs. S. 0. Company, 152 Fed. Rep., 294) ; but the Court below said that "The alleged conspiracy is one. Its scheme is sin- gle. It has but one object." Undoubtedly, then, this one alleged conspiracy is that charged in the petition (Rec. A, p. 6), as follows : "That the defendants, John I). Rockefeller, Wil- liam Rockefeller, and H. M. Flagler, in or about the year 1870, and at all times since said time, together with the other individual defendants herein, who there- after, from time to time, between said time and 1882, joined said conspiracy, to-wit: H. H. Rogers, John D. Archbold, Oliver H. Payne and Charles M. Pratt, en- tered into and have ever since, been engaged in a con- spiracy with each other and with other persons, cor- -9 porations, co-partnerships and limited partnerships, as hereinafter more particularly stated, to restrain the trade and commerce in petroleum, commonly called crude oil, in refined oil and in the other products of petroleum among the several States and Territories of the United States and the District of Columbia, and with foreign nations, and to monopolize the said com- A conspiracy not originated ~by and continued and con- trolled by these seven individual appellants is not the one charged in the petition. The answer denies such a conspi- racy. Stated in the form of a question, the issue is : Does the proof show that these seven individual appel- lants, the two Rockefellers, Archbold, Payne, Elagler, Pratt and Rogers, at the time when this petition was filed, con- trolled the Standard Oil Company of ISTew Jersey which has been termed the "Holding Company," and through the Stand- ard Oil Company of New Jersey, controlled all the other corporations, partnerships and limited partnerships named in the petition, and by means of them restrained interstate trade, and created a monopoly in that trade in oil contrary to the provisions of the Sherman Act ? The question primarily involves : (1) Do the seven individual appellants control these partnerships and corporations ? (2) Do these seven thus controlling use these part- nerships and corporations to restrain interstate trade in and a monopoly of such trade in oil ? 10 Finding of the Court Below. a* * * * Evidence in this case too volumi- nous for recitation or review has convinced that- prior to 1879 these seven defendants combined to se- cure and obtained the control of companies competing in interstate commerce in oil and suppressed their com- petition, that they caused the formation and execution of the trusts of 1879 and 1882; that they directed and followed that unique method of distributing the stock held in the latter trust by which it was not distributed to the majority of the stockholders for many years after 1892, while they and their associates held the control of it and of the corporations it commanded; that they caused the stockholding trust of 1899 and that by means of that trust they still hold the actual control and di- rection of the Standard Company and of its subsidiary corporations and that since 1899 they have been and still are engaged in carrying into effect and executing that trust." (Eec. A, p. 577). We call special attention to the fact that the court has not found any conspiracy on the part of the seven to unlaw- fully restrict interstate trade or gain a monopoly. The Court did not find that we had done any of the unlawful things charged in the petition and denied in the answer. The Court did not find that this combination prior to 1879 was a violation of the Sherman Act or forbidden by any federal law. Its finding is that the seven "combined to secure and obtained the control of com- panies competing in interstate commerce in oil and suppressed their competition." But that did not necessarily, and unlawfully, directly, immediately and substantially restrict that trade. The sup- pression of competition was after, not "before the competing 11 refinery was purchased and became part of the whole group and then that condition of entering into and becoming one of a non-competitive group necessarily ended competition. Private traders may lawfully combine by joint ownership to eliminate a competitor, annex him as one of themselves and thus suppress his competition, but they cannot do this by unlawful means. If by lawful means it is neither technically nor substantially unlawful restraint of interstate trade. We early call attention to the fact that the Court has not found fraud or force or unlawful acts on part of ap- pellants. THE COUBT ERRED IN THIS FINDING OF FACT Evidence in the ease as to the interests of the seven individual appellants and their control of the Standard Oil Company of New Jersey. The evidence in the case shows that the seven indi- viduals do not own at the present time, and did not own at the time when the bill was filed in this case, a majority of the stock of the Standard Oil Company of New Jersey, or any- thing like a majority. The appellants 7 Exhibit No. 1 (Vol. 18, p. 1) gives a list of all the stockholders of the Standard Oil Company of New Jersey on August 19th, 1907. From this we find that there have been issued 983,383 shares of stock, and that the seven individual appellants own the following num- ber of shares each: John D. Archbold (p. 3), 6,000 shares; H. M. Flagler (p. 29), 30,500 " O. H. Payne (p. 63), 40,000 " Charles M. Pratt (p. 66), 5,000 " H. H. Eogers (p. 71), 16,020 " John D. Rockefeller (p. 71), 247,692 " 12 William Kockefeller (p. 71), 11,700 " Total, 356,912 " This gives to tlie seven individual appellants between and 37% of the total shares issued by the Standard Oil Company of 'New Jersey. It is also shown by the evidence that the seven individ- ual appellants constituted a minority on the Board of Direc- tors of the Standard Oil Company of New Jersey. Petitioner's Exhibit 'No. 8, offered in evidence by the Government itself (see Vol. 7, p. 53), gives the directors and officers of the Standard Oil Company of New Jersey and of the sub-companies for the year 1907. This Exhibit shows the following directors of the Standard Oil Company of New Jersey (see Vol. 7, page 78) : John D. Rockefeller, Charles M. Pratt, William Kockefeller, E. T. Bedford, H. M. Magler, Walter Jennings, John D. Archbold, James A. Moffett, H. H. Eogers, C. W. Harkness, Wesley H. Tilford, Col. Oliver H. Payne, Frank Q. Barstow, John D. Kockefeller, Jr., A. C. Bedford. The above list comprises fifteen directors in all, of which the seven individuals constitute a minority, the board stand- ing seven to eight against them. It must not be forgotten that Mr. John D. Rockefeller had not for years prior to 1906 been in active touch with the business. See Vol. 16, pages 3183, 3192, 3202, 3225. On page 3182 Mr. Kockefeller testified: # * * j nave b ee n out of this business for the last fifteen years." 13 II. THE COURT BELOW ERRED IN HOLD- ING THAT THE TRANSFER IN 1899 TO THE STANDARD OIL COMPANY OF NEW JER- SEY BY THE THEN OWNERS, PRIVATE TRAD- ERS IN PETROLEUM AND ITS PRODUCTS, OF THEIR TITLES TO VARIOUS NON-COMPETI- TIVE REFINERIES, PIPE LINES, RESERVOIRS, TRADING STATIONS, TANK CARS, AND OTHER PROPERTIES, JOINTLY USED BY THEM AS ONE PROPERTY IN THE PRIVATE TRADING BUSINESS OF THE ACQUISITION, TRANSPORTATION, MANUFACTURE AND SALE OF OIL, WAS OF ITSELF, AND REGARD- LESS OF ANY ACT PRIOR TO 1899, OR SUBSE- QUENT THERETO, A RESTRICTION OF INTER- STATE TRADE AND AN ATTEMPT TO MONOP- OLIZE, BY UNLAWFUL MEANS, SUCH INTER- STATE TRADE, AND A VIOLATION OF THE SHERMAN ACT. We submit'. (a) The Sherman Act permits trusts, combines, corporations and individuals to enter into and compete for interstate trade so long as they act lawfully, and the act does not seek to regulate the method in which the properties which make the articles that enter into interstate trade shall be held ; nor does it forbid those who enter into the trade from doing their business in the form of a trust or corporation or combine. The method or form in which they carry on business was immaterial, provided they carried it on lawfully. (b) The Court below eliminated from the case, (for the purpose of its opinion), all the charges in the pe- tition of fraud, force or unlawful conduct on the part of appellants. It also held that to constitute a crime under the Sherman Act the restriction of interstate trade must be direct, immediate, necessary and material. It did not pretend that the appellants in transferring their prop- erties to the Standard Oil Co. had any intent to restrict or monopolize interstate trade (except as inferred from the transfer itself) . (c) It is quite certain that the Standard Oil Co, of New Jersey after 1899 might legitimately and properly compete for interstate trade. Undoubtedly the combination of the group of properties gave it a great power in so competing, but equally undoubtedly the com- bination after 1899 might lawfully compete for the inter- state trade and foreign transportation, provided it did not restrain such trade or by unlawful means seek to gain a monopoly contrary to the provisions of the Sherman Act. (d) There is nothing in this case to show, and the court did not pretend, that after 1899 the combi- nation did unlawfully compete; did unlawfully restrict interstate trade ; did by unlawful means seek to monopo- lize the interstate trade; yet, such proof was indispens- 15 able to prove that the combination was, in 1906, when the bill was filed, violating the Sherman Act. See the Calumet and Hecla cases : Judge Knappen, 167 Fed. Ept., 709, 715. Judge Lurton, 167 Fed. Ept., 727, 728. In disregard of the foregoing the Court below did find against appellants, and we turn to the opinion to find out why and to ask, What did the court decide? What were the reasons given for the decision ? Can the decision below be maintained ? What Did the Court Decide? The Court below puts its decision solely on the grounds of the conveyance of 1899 to the New Jersey Standard Oil Company. This and only this, the Court said, was a viola- tion of the Sherman Act under the decision in the North- ern Securities Case. The Court therefore assumed that prior to 1899 and in 1899 the 5,000 owners of the jointly held properties partly evidenced by stocks directly held in the subsidiary companies and largely by trust certificates, were the lawful owners of a large group of then non-competing properties, used in the oil business, and that in 1899 they were not, in so holding and in operating their plants, violating the Sherman Act. 16 Section 1 of the decree distinctly finds that the conspir- acy to restrain trade began ''since the year 1890," not before 1890, but after it. T\ T e, in another part of this brief, discuss the position of these owners prior to and in 1899, and the validity of the Trust Agreement of 1882 ; but now as we are solely concerned with the Opinion of the Court below, and that Court ignored all acts prior to 1899 and assumed their validity, we have to do likewise to be fair to that Court. The Court below explicitly and directly decided this case on the authority of the Northern Securities Case (193 TJ. S., 197), and held that the former ruled the latter. That the Court did so treat this case, look at the fol- lowing : The Court said (Eec., Vol. A, p. 577) : "The acts of these and other defendants prior to July 2, 1890, did not violate the anti-trust act of that year because it was not then in existence. Whether or not their transactions constituted a violation of the com- mon law is a question much discussed which it is un- necessary to determine in this case. * * * * "Laying out of view the acts of the defendants prior to July 2, 1890, except as evidence of their purposes and of their continuing conduct and its effects, does the stockholding trust of 1899 and its continuing operation constitute an illegal restraint of interstate or inter- national commerce in violation of the Anti-trust Act of 1890?" The Court again said (Eec. Vol. A, p. 585) : the questions whether or not the charges in the bill that other unlawful means were or are employed 17 are true, and whether or not the power of the Court to prevent the 'existence or continuance of a monopoly is limited to the prohibition of the use of illegal means and their like have become moot and it is unnecessary to express any opinion upon them." (Rec. Vol. A, p. 579), the court considered the North- ern Securities Company case, 193 U. S., stating what it was and asserting that a "group of stock-holders subsequently trans- ferred their controlling interest in the stock of each of these companies to the Northern Securities Com- pany in exchange for its stock, and the Supreme Court decided that this transaction constituted a combination in restraint of commerce among the states and affirmed a decree of this court which enjoined the continuance of its operation. The defendants and their associates acquired the control of a majority of the stock of more than thirty corporations many of which were potentially and naturally competitive, prevented their competition by means of this ownership, and then by the transfer of the stock of nineteen of them to the principal com- pany in exchange for its stock placed in that company the control and management of all of them. If it was a violation of the anti-trust act to combine the con- trol of competitive corporations in a third in the case of the Northern Securities Company, why was it not as much of a violation of it to combine the control of ten or twenty or thirty of these corporations in one of their number in the case in hand ?" Again (Rec. Vol. A, p. 581) : "It is true that railway corporations owe duties to the public which do not rest upon trading., manu- facturing and private transportation companies, such as the duty to operate continually their railroads and the 18 duty to carry persons and property presented for trans- portation at reasonable rates, but the power of Con- gress to regulate interstate and foreign commerce and the exertion of that power manifested in the anti-trust act embrace all persons and corporations engaged in such commerce, as is amply illustrated in the various applications of the act which have been made in the several decisions here cited. The mischief against which that law was levelled is not less threatening from a vast combination of private corporations owning and using in interstate and foreign commerce property worth hundreds of millions of dollars than from a combina- tion of two railway companies. The act make& no dis- tinction between them, it excepts neither class and where Congress has made no exception it is not the province of the courts to do so. No countervailing reason over- comes these considerations and the vesting of the ma- jority of the stock of many potentially competitive pri- vate corporations engaged in interstate commerce in a holding company which would be violative of the anti- trust act if made by the stockholders of railway companies of that character must be subject to the condemnation of that statute." Again (Kec. Vol. A, p. 582) : "Counsel argue with persuasive force that the transfer of the stock of the nineteen corporations to the principal company wrought no substantial restriction of competition because the owners of that stock had and exercised the same power of restraint before that trans- fer that was vested in the Standard Oil Company of New Jersey thereafter. But the power of the principal company after the transfer of 1899 to fix the prices at which the thirty corporations should buy and sell the articles in which they dealt, the terms of their purchases and sales, their rates for the transportation of oil and 19 its products and all the infinite details of their vast operations in which they might compete and thereby to prevent their competition was greater, more easily and quickly exercised and hence more effective than it would have been in the hands of 3,000 scattered stock- holders. The trust deed of 1879, the trust agreement of 1882, the withholding of the separate certificates of shares of stock in each corporation from the holders of the trust certificates in the dissolution of that trust until they took their shares in all of the corporations, bear convincing testimony to the soundness of this pro- position. The combination formed by that transfer and its power to restrict competition were less liable to be destroyed, more reliable and permanent than those spring- ing from the joint ownership by three thousand stock- holders of each corporation. There is much more probability that corporations potentially competitive will separate and compete when each of their stockholders has a separate certificate of his shares of stock in each corporation which he is free to sell than when a ma- jority of the stock of each of the corporations is held by a single corporation which has the power to vote the stock and to operate them. And although the group of stockholders led by Mr. Hill and Mr. Morgan had the same power to prevent competition between the two railway companies that the stockholders of these cor- porations had to prevent competition between them, the Supreme Court held in the case of the Northern Se- curities Company that their transfer of their stock to the holding company granted to that corporation a power so much greater and more effective than that held by the stockholders of the railway companies that the necessary effect of it was a restriction of competition so direct and substantial that it made it an illegal com- bination in restraint of interstate commerce. 20 "Because the power to restrict competition in inter- state commerce granted to the Standard Oil Company of New Jersey by the transfer to it of the stock of the nineteen companies and of the authority to manage and operate them and the other corporations which they controlled was the absolute power to prevent compe- tition among any of these corporations, because this power was greater, more easily exercised, more effec- tive and more durable than that which the three thou- sand stockholders of these corporations previously had, because many of these corporations were potentially com- petitive and were engaged in interstate commerce and the necessary effect of the transfer of the stock of the nineteen companies to the holding company was, under the decision in the case of the Northern Securities Com- pany, a direct and substantial restriction of that com- merce, that transfer and the operation of the companies under it constituted a combination or conspiracy in re- straint of interstate and international commerce in vio- lation of the anti-trust act of July 2, 1890." Judge Hook in his concurring opinion said (Rec. A, 857). "The principal conclusions upon which we are all agreed may be briefly stated as follows: A holding company owning the stocks of other concerns whose com- mercial activities, if free and independent of a common control, would naturally bring them into competition with each other is a form of trust or combination pro- hibited by section 1 of the Sherman anti-trust act. The Standard Oil Company of New Jersey is such a holding company. The defendants, who are in the combina- tion^ are enjoined from continuing it and from forming another like it." 21 In the decree Section 1 the Court charge that the con- spiracy began not in 1870 or 1882 or prior to 1890 but "since the year 1890" The words are : " * * * that since the year 1890 the defendants named in Section 2 of this decree have entered into and are carrying out a combination or conspiracy in pursuance where- of about the year 1899 * * *" The court then considers only the stockholding trust of 1899 and what it did. It ignores and thereby as- sumes the validity of the trust of 1882. That trust was ended in 1899, and now the Court turns to the new one of 1899. That this new one is invalid under the Sherman Act, the Court says, was ruled by this Court in the Northern Securities Case, and quite an argument follows to prove this. Then the Court sums up its conclusion in this language : "Because the power to restrict competition in inter- state commerce granted to the Standard Oil Company of New Jersey by the transfer to it of the stock of the nineteen companies, and of the authority to manage and operate them and the other corporations which they controlled, was the absolute power to prevent competi- tion among any of these corporations because this power was greater, more easily exercised, more effective, and more durable than that which the three thousand stock- holders of these corporations previously had, because many of these corporations were potentially competitive and were engaged in interstate commerce, and the neces- sary effect of the transfer of the stock of the nineteen companies to the holding company was, under the de- cision in the case of the Northern Securities Company, a direct and substantial restriction of that commerce, that transfer and the operation of the companies under 22 it constituted a combination or conspiracy in restraint of interstate and international commerce, in violation of the Anti-trust Act of July 2, 1890." (A, p. 583). WHAT WERE THE REASONS THE COURT GAVE FOR SUCH CONCLUSION ? Those reasons are briefly outlined in the above extract, but let us more closely examine the facts as found in the opinion be]ow. The Court briefly sketched the development of the Standard Oil Company beginning in 1865 with the firm of Rockefeller and Andrews, as the owner of a refinery in Cleve- land, Ohio, down through the firm of Rockefeller, Andrews & Flagler, owning two refineries ; the firm of William Rocke- feller & Company owning another; the organization of the Standard Oil Company of Ohio in 1870, and the acquisition by it and through it between 1870 and 1879 of forty other refineries located in various places, during which period Mr. Rogers, Mr. Archbold, Mr. Payne and Mr. Pratt joined Rockefeller and Flagler in the oil business. On April 9, 1879, the stockholders of the Standard Oil Company of Ohio were the equitable and exclusive or majority owners "in the property and business of more than thirty com- panies engaged in the oil business." (Rec. A, p. 574). On April 9, 1879, the legal and equitable title to all these properties was conveyed to Vilas, Keith and Chester "in trust to hold and manage them for, and to divide and distribute them among, the thirty-seven stockhold- 23 ers of the Standard Oil Company in proportion to their holdings of the stock of that company. (Rec. A, p. 574). That these trustees managed these properties "and with their earnings purchased other property and the stock of other companies until, in 1882, they held in this trust property worth more than $55,000,000.00." In 1882 the legal and equitable owners of all these properties "entered into a trust agreement to the effect that" all said properties were conveyed to nine trustees during their lives, and the life of the survivor of them, and for twenty- one years thereafter, unless the trust was sooner dissolved by vote of the stockholders; and the Trustees were given power to vote stocks held by them and manage and operate the properties, and "buy with the trust funds" bonds or stocks of other companies engaged in a like business, and divide among the cestuis que trustent the profits. Six of the individual defendants in this case were among the trustees, and these trustees issued to their cestuis que trustent certificates of the par value in the aggregate of $97,250,000.00. In March, 1892, the Supreme Court of Ohio enjoined the Standard Oil Company from further operating the trust because it violated the laws of Ohio and was beyond its cor- porate powers. The details of the dissolution of the trust are then given with the assertion that "the individual defendants, however, and their more in- timate associates * * * secured to themselves the 24 control and management of all the companies in that way until the year 1899." The Standard Oil Company of New Jersey, organized in 1882, one of the constituent companies in the trust and it- self owning and operating refineries called the Bayonne, at Bayonne, New Jersey, the Eagle Works, at Communipaw, New Jersey, the Camden Consolidated refinery at Parkers- burg, West Virginia, and a refinery at Baltimore, Maryland, had its charter powers enlarged in 1899 to include holding of stocks in other companies, and its capital increased to $100,000,000, and the above described trust certificates and other properties were exchanged for the stock of the Standard Oil Company of New Jersey, which Company "succeeded to the legal title to the majority of the stock of the nineteen companies, and thereby to the manage- ment and control of those companies and of all the com- panies which they controlled." (Rec. A, p. 576). From 1899 to the filing of the present Bill in 1906 "the affairs of the principal company and of the sub- sidiary companies have been managed by the former as the business of a single person." (Rec. A, p. 576). The par value of the capital stock of the under- lying companies in 1899 was about $100,000,000.00; in 1903 more than $150,000,000. The New Jersey Company through its stock ownership is the owner of sixteen refineries, besides several directly owned by the said Company and used in refining illumin- ating oil and other products of petroleum; twelve (12) trans- portation companies, which owned in 1899 only 10,749 miles of gathering lines as compared with 45,227 in 1908; and 25 3,904 miles of trunk lines in 1899, as compared with 9,338 miles in 1908, capable of transporting oil from one state to another; and six marketing companies with 3,574 selling stations, and several producing companies. The New Jersey Standard Oil Company, by itself and subsidiary companies, from 1899 to 1907 produced more than one-tenth (1-10) of the crude oil obtained in this Coun- try; transported more than four-fifths (4-5) of the petroleum derived from the Pennsylvania and Indiana oil fields ; manu- factured more than three-fourths (3-4) of all the crude oil refined in this country; owned and operated one-half of all the tank cars; marketed more than four-fifths (4-5) of the il- luminating oil sold; exported more than four-fifths (4-5) of all the illuminating oil sent forth from the United States; sold more than four-fifths (4-5) of the naphtha; and sold more than nine-tenths (9-10) of the lubricating oil sold to railroads. The Court further stated that a by means of this trust (Standard Oil Co. of Jersey) and the commanding volume of the oil business which it acquired, thereby secured, and it has since exercised and is using, the power to prevent competition between the companies it controls, to fix for them the purchase price of the crude oil, the rates for its transportation, and the selling price of its products. It has prevented and is preventing any competition in interstate and interna- tional commerce in petroleum and its products between its subsidiary companies and between those companies and itself/' (Kec. A, pp. 576-577). 26 That the seven individual defendants "caused the stockholding trust of 1899, and that by means of that trust they still hold the actual control and direction of the Standard Company and of its sub- sidiary corporations, and that since 1899 they have been and still are engaged in carrying into effect and execut- ing that trust." (Eec. A, p. 577). The Court then eliminated from its consideration the acts of the defendants prior to July 2, 1890, and whether those acts did or did not constitute a violation of the common law, reserving the right to consider such acts as evidence of a purpose in similar business transactions since that date. The Court eliminated all acts prior to July 2, 1890; not some, but all See Ante, page 21. It is then plain that the Court did not decide this case on the ground that the Government in its petition and brief asked it to do i. e. that the Trust Agreement of 1882 was when made void as a restriction of competition as tend- ing to a monopoly : that it was void under the Sherman Act, and, as the Standard Oil Co. in 1899 only succeeded to the properties of the Trustees, and as they did continue to carry on such business, they restricted competition: that the ap- 27 pellants did certain alleged illegal things there enu- merated. The Court declined to do so, declined to find the facts so alleged in the petition. Was not that practically a denial of the position? It is expressly noticeable that the Court did not find that in the acquisition of our prop- erties we used any illegal means either fraud or deceit or intimidation. The Court did not find that the purpose of making the trust agreement of 1882 was to smother competi- tion or gain a monopoly. Or that in the strife for inter- state trade we used illegal means. But the facts upon which the Court acted stated still more briefly, were : On July 2, 1890, the nine trustees were the legal owners of all the properties of the Ohio Standard Oil Company, and other corporations and the cestuis que trustent were all the stockholders of that Standard Oil Company. All this property was one entire whole, and oper- ated as such; as if it were all owned by one person. The combined legal and equitable titles made an indefeasible ownership. All this property was man- aged and controlled by the seven individual defendants in this case, acting through the nine trustees. There was no competition between or among any of the properties. It was expressly and strictly a non-com- petitive group, and if at any time any parcel of the group had been in any kind of competition, that ceased before 1879, and since then competition never had ex- isted. Such parcels of the group as were purchased prior to 1879, had been so changed and enlarged that it had become, by 1890, (certainly by 1899) to all intents and purposes, a new parcel. What kind of competition, 28 if any, had actually existed prior to 1879 between any one unit then purchased and the then group, whether reasonable or unreasonable, the Court does not find, re- garding it as unimportant in the Court's view of the case. It did find that prior to 1879 we had acquired competing refineries, but how of what importance under what circumstances, it did not find. And it did not charge or find that our acquisition of any of those properties was by improper or unlawful methods or that it was illegal for us to acquire them. The Vilas, Keith & Chester Trust of 1879 and the new trust of 1882 were not, the opinion assumed, legally objectionable, or at least dismissed as immaterial, the Court, in its view of the case, treating them, at least for the purposes of the opinion, as methods of holding prop- erty, which were not objectionable under the Federal law prior to July 2, 1890, or indeed under the common law. The increase after 1879 in the properties held in 1879, both in numbers and values, was largely by use of the earn- ings of those properties in improving those already held and purchasing like properties, and all this increase was by the persons who owned them in 1879. The Court said: "It is true with negligible exceptions that the stockholders of the defendant corporations were the joint equitable owners of them from 1879 or from their subsequent organizations respectively until July 1, 1899." (Rec. A, p. 580). 29 The owners of these properties, acting through the Trus- tees, used the earnings of their property to purchase other properties arid enlarge and improve their own. (Rec. A, p. 574). And the Court recognized it was dealing with the rights of the seven individual appellants: they were the ones charged in the Bill. The corporations, including the Stand- ard Oil Company of New Jersey, were merely the pawns in the game which the seven used. The question always is the rights of the seven and their associates, and not the cor- porate power or rights of coc removed, a virtual consolidation effected, and a monopoly of the interstate and foreign commerce for- merly carried on by the two systems as independent competitors established." (p. 324) : "In further pursuance of the combination, the Securities Company acquired additional stock of the de- fendant railway companies." 38 (p. 325): The Securities Company was not organized in good faith, but as a mere method of perfecting the conspiracy. By this scheme "the former stockholders of the Great Northern Rail- way Company have received, or would receive, and hold almost fifty-five per cent, of the Securities Co. stock., the balance going to the former stockholders of the Northern Pacific Railway Company." (p. 326): Justice Harlan delineated the scheme "of organizing a corporation under the laws of New Jersey which should hold the shares of the stock of the constituent companies, such shareholders in lieu of their shares in those companies to receive upon an agreed basis of value shares in the holding corporation." (p. 335) : "What the Government particularly complains of, indeed all that it complains of here, is the existence of a combination among the stockholders of competing rail- road companies, which, in violation of the Act of Con- gress, restrains interstate and international commerce through the agency of a common corporate trustee, desig- nated to act for both companies in repressing free com- petition between them." (pp. 333 to 347) : Justice Harlan combats the assertion that the Northern Securities Company, as a stock corporation, might lawfully 39 acquire and hold the control of the two competing railroads, which was the chief defense offered. (pp. 349-350) : 'That New Jersey could not grant power to the Securi- ties Company to restrict interstate commerce. (p. 354) : All the stock the Securities Company acquired in the two railroad companies a was acquired and held to be used in suppressing com- petition between those companies. It came into exist- ence only for that purpose." We respectfully insist that an examination of Jus- tice Harlan's opinion will demonstrate that the Court below unintentionally, but most decidedly, fell into error in its assertion above quoted. (p. 362) : Justice Brewer said: "There was a combination by several individuals separately owning stock in two competing companies, to place the control of both in a single corporation. The purpose to combine, and by combination destroy competi- tion, existed before the organization of the corporation, the Securities Company." It was part of the purpose to organize the Securities Company, and competition itself was to be and was destroyed only by conveying to the Securities Company and not prior thereto. 40 (p. 365) : Justice White said that Hill and his friends owned con- trol of the Great Northern, and Mr. Morgan and his friends of the Northern Pacific, and that under these circum- stances "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." (f) In the Securities Case the defense was under and relying upon the power of the charter of New Jer- sey to the Securities Company, which was organ- ized solely and only for the purpose of securing such control of both railroads as would enable it to smother the existing competition. The question in that case was the power of the Securities Com- pany to accomplish such result. Did it lawfully have that power ? It was admitted that the status of each stockholder in each of the competing railroads was changed by the transfer to the Securities Company. He lost his direct ownership in his separate railroad, which he theretofore had, and became merely an owner of Securities stock. He became, through the Securities Company, inter- ested in two railroads, as one, and the management and control of his former property was changed. In the case at bar, the Standard Oil Company of New Jersey was a bona fide organization in 1882 to refine oil, and was in 1899 the owner of large refineries and doing a large business. As the Court below found, this Company was one part of the trust property of 1882-1899, which in 1899 was under the same control and management of the seven appellants as were all the other parcels of the trust group. All, including the New Jersey Standard Oil Company, were owned in common by the same persons and were not competing. In- deed, the New Jersey Corporation, (S. O. Co.) was organized in 1882 and never had competed with any other one of the group. Now by conveying to the New Jersey Cor- poration these non-competing properties, the men who as one group owned them all, gained no addi- tional power, and did not in the least change the status of the properties or the status of those who were owners of them prior to such conveyance. The properties were still held in trust for them with this change, that before the conveyance they had certificates of the Trustees, afterwards stock of the Standard Oil Company. But their real interests were not changed. They did not get by the transfer an interest in other property they did not have before, as did the Securities people. They did not get or attempt to get, or try to get, by the New Jersey Charter, a power to suppress competi- tion, either lawfully or unlawfully. There was no competition to suppress, as between the Jointly held properties. The seven appellants were just as fully in control of all these properties before 1899 as after 1899, and their power over all of it 42 was not added to or changed, unless lessened, by conveyance to the New Jersey Standard Oil Com- pany. In a word, the main and marked difference between the two cases is: In the Securities Case the Securities Company did gain the power to smother then actually existing com- petition between two parallel and competing railroads, for which purpose alone it was organized and for which purpose the stocks were conveyed to it. The manage- ment of the separate railroads was changed. A new power was gained which was additional and other than the Morgan-Hill groups ever before owned. As the Supreme Court of Washington, in the State of Washington vs. Cascade Ry. Co., 51 Wash. 346, said of the Northern Securities Case: "The ground upon which the decision rested was that the effect of the stock ownership by the Securities Co. would be to stifle competition which had thereto- fore existed between the two railroad companies." In the case at bar the New Jersey Standard Oil Company did not gain any such power. There was no existing competition to smother. There was no effort or purpose to give it that power. The management of the properties conveyed to it was not changed, but was under the same seven who had it before. The Trustees under the agreement of 1882 had larger powers than the Stand- ard Oil Company of New Jersey in 1899 when convey- ance was made to it. It is a true and fair statement of the ruling of the Court below to say: Seven men controlling for, say 5,000 people, 70 parcels of property, devoted to private business enterprise and for which the 5,000 held trust certificates of trustees, in 1899 determine that thereafter the 5,000 shall hold stock certifi- cates of the New Jersey Standard Oil Company for the same properties in the same proportions and with the same power and management. Neither the 5,000 owners nor the seven managers gained any new power or property or changed their status or smothered competition by the change, but they did gain, as they think, an easier and more economical method of holding and managing the joint properties. They did not intend to nor did they manage the properties after 1899, ex- cept as they managed them before, and they had no idea of restricting competition between their jointly held properties, because there was none to restrict. Yet the Court below held that the mere transfer itself: (1) Was a violation of the Sherman Act passed to fur- ther and protect interstate commerce; and (2) That the Northern Securities Case was on all fours with the present case, and ruled it against appel- lants. The error of the learned Court in so ruling is further demonstrated by other portions of its opinion. Judge Sanborn's Opinion. (1) His Honor overlooked the fact that in the Securities Case there were then and before that Com- pany was organized and when the stocks were trans- ferred to it, two independent competitive groups actually competing, one group having, with Hill, con trol of the Great Northern, and the other, with Morgan, having control of the Northern Pacific ; but these groups never amalgamated or merged or became one group until after the conveyance to the Securities Company ; and by that conveyance to the Securities Company the two groups amalgamated and became one, and thus virtually and to all practical effect the two parallel competing railroads were merged and became one, and competition between them was smothered. Whereas, in the case at bar, all the properties convey- ed to the New Jersey Standard Oil Company were non- competitive, were owned by only one group of men, and as a fact were not competing among themselves or any of 45 themselves and the Standard Oil Company of New Jer- sey and really never had competed. Competition was not smothered by that conveyance, as in the Securities Case. The conveyance to the New Jersey Standard Oil Company did not increase the power of the seven, who managed these properties, and certainly such convey- ances did not create a new power to smother competi- tion, as in the Securities case. (2) The Court below does say that "Hill, Morgan and their associates acquired control of the two railway corporations long before they placed their stock in the Securities Company in 1901." (Ree. A, p. 580). Pearsall vs. G. N. R. Co., 161 U. S. 64-6. "Those companies were natural and potential com- petitors, but this group of stockholders held the power to prevent them from actively competing, and it is as incredible that they were actually doing so after they came under the control of that group as it is that the de- fendant corporations were engaged in actual competition in the nineties." (Rec. A, p. 580). But here again the Court overlooks the plain facts in the Securities Case that there were two independent, uncon- nected and rival sets of actually competing stockholders : the one group owning control of the Great Northern and the other of the Northern Pacific Railway. These two groups were not one as the Court below assumed. They were pronouncedly two. True if the two had united in 46 action, they could jointly have suppressed competition. But they never did unite in one group or in action until they organized the Securities Company and conveyed the stock of both competing railways to that Company. The two groups existed and the active competition ex- isted between the two railways, and the power given the Securities Company was the power to smother an actu- ally existing competition, not one that had been in ex- istence, but had ceased. There is no evidence in the case that such competition had ceased, and this Court found directly to the contrary. On page 320 of the opinion of this Court by Justice Har- lan in the Securities case (193 U. S.) he finds: That the Great Northern Company and the Northern Pacific Company owned and operated separate lines of rail- way which ran across the continent and "were and are parallel and competing lines;" "and the two companies were engaged in active competi- tion for freight and passenger traffic." With that competition existing and in active operation, and for the very purpose of eliminating it and gaining the lawful right to do so, the Securities Company was formed, as hereinbefore stated. If any one doubts this, please read the whole of Justice Harlan's opinion. Take page 326, in speaking of the effect of the Securi- ties Company, he says: "Necessarily also the constituent companies ceased under such a combination to be in active competition for trade and commerce along their respective lines, and have be- come practically one powerful consolidated corporation, the principal, if not the sole object of the formation of 47 which was to carry out the purposes of the original com- bination, under which competition between the constitu- ent companies would cease." Not that it had already ceased, but that it "would cease." Again on page 362 he says: "There was a combination by several individuals separately owning stock in two competing railroad com- panies to place the control of both in a single corpora- tion." (3) Judge Sanborn says that some of the properties owned by the Appellants were "potentially and naturally competitive:" "were natural and potential competitors:" and their competition was prevented by their being jointly owned by the same persons, and therefore he concludes they must be treated as if they were actually competing, and in the decree made it is sought to make such properties actually compete with each other. Potential Competition. We submit that the idea of competition between prop- erties all owned by the same persons is a novelty. The idea that properties themselves compete and that if one man owns two or more he must compete with himself is startling. Com- petition between joint owners is also novel. "The law does not and did not require that these parties should compete in the purchase of product." Fairbanks vs. Leary, 40 Wisconsin, 642, 643. It is with great respect we urge that a constructive crime under a highly penal statute is a novelty, and if it is applied, as it was in the Court below, it widens the scope of the Sher- 48 man Act and lessens the scope of the private tradesmen to an unexpected extent and seems inconsistent with Whitwell vs. Continental Tobacco Co. (125 Fed., 454). Competition is the striving of two or more persons, or corporations, either individually or jointly, for one thing, i. e., trade; it is personal action; the strife between dif- ferent persons. Properties do not compete. Their relative locations may more readily enable their owners to use them in competition, but of themselves and as against each other, they do not compete. The Court below then meant that, assuming certain re- fineries were so located that they might be used, i. e., their product might, in the race for the trade, be used in competi- tion, if one and the same group of persons owned two or more of such refineries, this of itself violated the Sherman Act is a restraint of trade and tends to monopoly, because if owned by two or more independent groups, each group would compete with each other group. This idea makes the Sherman Act read that the same person or group of individuals shall not own and operate two or more sites for refineries or for stores or any kind of manu- factories which might be used by different owners in com- petitive strife. See this Court in the Trans Missouri case, 166 U. S., 321, cited infra (p. 55). Closely looked at, it would be simply incredible that the Sherman Act could be so construed, or that any Government would so shackle and restrict trade. Read the Sherman Act and these results inevitably follow. The words "potential" or "naturally competitive" are not in the Sherman Act. It says nothing of potential compe- tition or natural competition. (a) It is plainly not within the letter of the Sherman Act. If it is to he added, Congress must do it, not the Courts. (h) It is not within the spirit of the Act, for the spirit of the act is to further and increase trade, while such a doctrine would lessen and restrict it (c) The man who violates the Sherman Act is a crimi- nal. If the merchant or manufacturer or trader owning one store or manufactory or plant wishes for his increasing trade to increase his facilities in the production or handling of his goods, see how this rule cripples him. He may not buy the ad- joining lot for it undoubtedly is "potentially and naturally competitive." The natural place which would suit him would be one where he could use or operate it jointly and in connection with his other places. But this new rule forbids that. It would be folly for him not to select a new site which would accommodate the trade he had ; yet under this rule he could not, for some rival of his, for the same trade, could use such site to compete. If he does hazard it and selects a new site, which a jury might think suitable for a rival loca- tion, he is a criminal and liable to fine and im- prisonment, besides punitive penalties and the re- strictive powers of a Court of Chancery. And Ms under a statute which was passed to fur- ther and increase trade. 50 (d) When we recollect that this rule only refers to the ownership of properties, and the Sherman Act only covers interstate commerce, the wonder grows. That the Court below thought that the mere ownership of properties by one which, if owned by two might compete, violates the Sherman Act clearly appears from the language used in the opin- ion, Vol. A, pp. 578, 579 : "The principal company and many of the subsidiary corporations were then, and still are, engaged in interstate and interna- tional commerce, many of them were capable of competing with each other in that trade, and would have been actively competing if they - had been owned ~by different individuals, or different groups of individuals" A case inconsistent with the lower court's theory of "potential competition" is State of Washington ex rel. Cascade 'Railway Co. vs. Superior Court, 51 Wash. 346, 98 Pac. 739 (1909). The Great Northern and Northern Pacific railroad com- panies operated competing lines between Seattle and Spo- kane, Washington, and each desired to build an extension from Spokane to Portland, Oregon. Instead of building sepa- rate competing lines, they organized and each subscribed for half the stock and contributed half the capital of a new rail- way corporation which constructed the desired extension. 51 The Supreme Court of Washington held that this cor- poration jointly controlled was not in violation of the Sher- man Act, saying : "It is difficult to understand how transportation facilities can be impaired when two existing separate and independent corporations, each of which continues its individual identity, organization and control, sub- scribe for the capital stock of a newly created corpora- tion and thereby aid in building a railroad which opens and serves additional territory. It would appear that the creation of the new corporation, instead of curtail- ing the transportation facilities already enjoyed by the public, would increase the same." That court distinguished the Northern Securities case because "The ground upon which the decision rested was that the effect of the stock ownership by the Securities Company would be to stifle competition which had there- tofore existed between the two railroad companies." But the ownership of properties is wholly un- der the laws of the state. Congress cannot and does not pretend to regulate their acquisition. Yet this rule would broaden the Sherman Act so that a federal law regulates land titles in the state. The Securities Case (193 IT. S.) does not jus- tify it. There the effort was to merge two parallel and actually competing railroads whereby the com- petition between them for interstate traffic would be smothered and trade restricted. 52 This new rule would forbid both the com- peting raidroads from acquiring adjacent land to widen the road-bed of each, or acquire ad- ditional facilities to increase its business, be- cause perhaps some independent corporation would buy that land and build an opposing and competing railroad. (e) This new rule of the Court below assumes: (1) That a rival trader will buy: (2) That he will build a refinery and operate it: (3) That he will make the kind of product that the other man does: (4) That he will use that product to compete with the other man for the same trade. Need I comment ? Was ever such a crime before conceived of? The Sherman Act is a highly penal one. In a criminal prosecution under the Act the degree of proof is beyond a reasonable doubt. In a civil suit under it, the degree is not so great but the proof must be direct, plain and con- vincing. -53 The Sherman Act is a Criminal Statute. United States vs. Freight Association, 58 Fed., 77, Sanborn, J. : "The Anti-Trust Act is a criminal statute." Northern Securities Co. vs. United States, 193 U. S., 197, 401, Holmes, J. : "The statute of which we have to find the meaning is a criminal statute. The two sec- tions on which the Government relies hoth make certain acts crimes. That is their im- mediate 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 im- prisonment, and another way in one which seeks an injunction." In considering the degree of proof, the Su- preme Court of Missouri said in State vs. Con- tinental Tobacco Co., 177 Missouri, page 1 : "However, it must be remembered that this proceeding partakes of the nature of a criminal prosecution, severe penalties are im- posed; hence, it is not sufficient to warrant a finding adverse to respondents, that we may entertain strong suspicions, or even strong probabilities of their guilt. Such conclusions should only be reached upon a clear showing of the testimony, fully satisfying the minds of the Court that they were guilty of the viola- tions of the law as charged in the informa- tion." (f ) Again Judge Sanborn says, speaking of the Se- curities Case and the case at bar: "For some time, therefore, before the transfer in each of these cases, a group of stockholders controlling a majority of the stock of potentially competitive cor- porations, which they vested in the holding company so that the latter had the power to operate them together without competition, and the rule which governs one must control the other." (Rec. A, p. 580). Here again is the fundamental mistake which he makes : (1) He says the two cases are identical because before the transfer to the Securities Company there was no actual competition between the two railroads. As we have shown, this is a plain mistake. Such active competition did exist, and as we have shown ante, it was to smother this that the Securities Com- pany was formed. (2) He says the two railroads were owned by the one group of men, just like all the Trust properties of Standard Oil were owned, which was that each in- dividual of the group had a like interest in both railroads. This we have shown ante is directly contrary to the facts. (3) He overlooks this plain distinction between the two cases: Even if it had been true (which it was not) that active competition had ceased between the railroads, yet they were parallel lines, and the law of their being compelled them to compete. It was unlawful for their owners 'not to compete. They were quasi public corporations bound to com- pete. 55 In our case we are individuals owning private trad- ing corporations. We are not bound to compete. It is lawful for one to own forty refineries and not compete. (g) Judge Sanborn says comparing the two competi- tive railroads in the Securities case with the different re- fineries in the Standard Oil case that: "The act makes no distinction between them, it ex- cepts neither class and where Congress has made no ex- ception it is not the province of the Court to do so. No countervailing reason overcomes these considerations and the vesting of the majority of the stock of many poten- tially competitive private corporations engaged in inter- state commerce in a holding company, which would be a violation of the Anti-trust Act if made by the stock- holders of railway companies of that character must be subject to the condemnation of that statute." With profound respect for the learning of the Judge of the court below, we do not comprehend how, under the cases and consistent with the principles which must govern, he can say that there is no distinction be- tween competing railroads and private trading corpora- tions. Each class, he asserts, is alike under the Sher- man Act. One rule is applicable alike to each. But the authorities are directly to the contrary. In the Trans-Missouri Case, 166 U. S., 321, Mr. Justice Peckham considered the difference between a public corpora- tion, such as railroad companies, and private corporations, which are really trading companies, and on pages 320, 321 he, inter alia, said: "The trader or manufacturer, on the other hand, carries on an entirely private business and can sell to whom he pleases ; he may charge different prices for the 56 same article to different individuals; lie may charge as much as he can get for the article in which he deals, whether the price be reasonable or unreasonable ; he may make such discrimination in his business as he chooses, and he may cease to do business whenever his choice lies in that direction ; while, on the contrary, a railroad com- pany must transport all persons and property that come to it, and must do so at the same price for the same service, and the prices must be reasonable, and it can- not, at its will, discontinue its business." Again on page 324 he said: "It is entirely appropriate generally to subject cor- porations or persons engaged in trade or manufacturing to different rules from those applicable to railroads in their transportation business." Again on page 333 the learned Justice said, speaking of the railroad corporations and the business of such corpora- tions : "It is of such a public nature that it may well be doubted, to say the least, whether any contract which im- poses any restraint upon its business would not be preju- dicial to the public interests/' Again on page 333 the Court said: "It was said in Gibbs vs. Baltimore Gas Company, 130 U. S., 396, at page 408, by Mr. Chief Justice Ful- ler as follows: 'The supplying of illuminating gas is a business of a public nature to meet a public necessity. It is not a business like that of an ordinary corporation engaged in the manufacture of articles that may be fur- nished by individual effort. * Hence, while it 57 is justly urged that those rules which say that a given contract is against public policy, should not be arbitrar- ily extended so as to interfere with the freedom of a contract, (Printing & Registering Co. vs. Sampson, L. E. 19 Eq., 462), yet in the instance of business of such a character that it presumably cannot be restrained to any extent whatever without prejudice to the public inter- est, courts decline to enforce or sustain contracts impos- ing such restraint, however partial, because in contra* vention of public policy." Mr. Justice Harlan in the Securities Case (193 U. S., 353) said: "Railroad companies, we said in the Trans-Mis- souri Freight Association Case, 'are instruments of com- merce, and their business is commerce itself;' and such companies, it must be remembered, operate 'public highways established primarily for the convenience of the people, and therefore are subject to governmental control and regulation. 7 " But the Court below says the Sherman Act does not in words make any distinction between railroad corporations and private trading partnerships or corporations and therefore both must be treated alike. The answers are many: (a) This Court, as above authorities show, have decided to the contrary. (b) The Sherman Act is general. It does embrace all persons, all corporations, all combinations. But it was passed only to prevent any person, any cor- poration, any combination, from restricting or monopolizing interstate trade. jSTow different acts by different persons or corporations will effect com- re- petition in interstate trade. But the same act if done by two independent groups will not necessarily effect competition under the Sherman Act. Private traders may buy competitive plants and this does not, the law says, per se, and of itself restrain trade and tend to monopoly. Yet, if one competitive parallel railroad buys another this of itself and per se is illegal, because it does restrain trade and tends to monopoly. (c) A broad general statute as the Sherman Act does not go into detail and by the use of appropriate words lay down a special rule for each case. It recognizes the complex business life of the day and also recognizes the existence of other laws, common law and statutory law, and this new statute fits into and becomes one in the complex whole. Especially a statute like the Sherman Act does not disintegrate society or strike down other laws which bear upon the same question. Such a statute, for example, does not pretend to say to two competing railroads, You can unite, or to two competing private traders, You cannot. It does not say that that which the other laws say is legal, has become illegal ; that that which the other laws say does or does not constitute a monopoly or restriction of competition, is now no longer true, but that after the Sherman Act all acts done by all classes of persons have one and the same significance. It does not repeal, but assimilates itself with and becomes a part of the general mass of common law and statutory law. 59 United States vs. Sanges, 144 U. S., 311 "This statute, like all acts of Congress, and even the Constitution itself, is to be read in the light of the common law, from which our system of jurisprudence is derived. * as aids, therefore, in its interpreta- tion, we naturally turn to the decisions in England." (d) But the Court in our case regards the group only at the time (1899) of transfer. Then the whole group was non-competitive. In the Securities case the two railroad groups were competitive and com- peting. But notice further: Who are the real appellants in this case who are charged with restricting competition ? Why, seven individuals, each of whom is a citizen of the United States. Each has inalienable rights which are supe- rior to any corporate rights. The right of each of the seven to compete in interstate trade by all legitimate methods antedates the constitution which C. J. Marshall said (9 Wheat on, 211) recognized and gave power to Congress to regulate. Mr. Justice Brewer said in the Securities case (supra (362): "A corporation, while by fiction of law recognized for some purposes as a person, and for purposes of juris- diction as a citizen, is not endowed with the inalienable rights of a natural person/'' 60 Yet the Court below, after expressly avowing that these seven were the real defendants and it was their acts which the bill denounced, apparently forgets that and their rights and treats them as if they claimed only corporate rights. The learned Justice says as to the Securities Case (supra) : "* * * no question of the mere acquisition or method of holding or of disposing of the title to property was there or is here in issue, that the question Ehere was as it is here, whether a certain method of holding the stocks which control several corporations may be used to prevent competition between them in interstate and international trade." We confess to a difficulty as to the real meaning It is first definitely stated that "no question of the mere acquisition or method of holding * * prop- erty was there or is here in issue" And yet right on its heels comes this "that the question there was as it is here whether a cer- tain method of holding the stocks which control several corporations may be used to prevent competition be- tween them in interstate and international trade." But all methods of holding properties may be used to prevent competition. Does the Court here merely mean that some methods of holding titles are more readily used to control competition, Gl than others, and that therefore the Sherman Act does for- bid certain methods of holding properties and carrying on business ? If so what words in the Sherman Act say so and how can one determine what difference in degree will consti- tute the offence under the Sherman Act? If one method of holding enables the owners to compete a little more easily than the other, will that be the crime, or will it require a greater degree of ease? And who shall de- termine it ? Method of Holding. No matter how held or what the manner of holding, if, as a fact, the owners use them in preventing competition, and without the stocks competition could not be prevented, and with them it could and is prevented, and is prevented merely by the holding of the stocks as it was in the Securities Case ; then such holding violates the Sherman Act because it gives the power to do what is unlawful, as in the Securities case, smother active competition then being carried on between two parallel and competing railroads, and prevent the two railroads from competing in the future, as it was their duty to do. The idea this excerpt seems to imply, that the mere method of holding the stocks was itself, and aside from the power to stifle competition, a violation of the Sherman Act, is a new reading of that much-abused and much-construed act. His Honor not only implies, but he assumes, at least for the case, that the control of the seven through the Trus- tees under the agreement of 1882 of all this property was not 62 a violation of the Sherman Act, but, and only but, and only because, all such properties were conveyed to the Standard Oil Company of New Jersey, that and only that, and of itself, is a violation of the Sherman Act. In plain language he so decides. The words he uses are: a * * * THAT transfer (1899) and the opera- tion of the companies under it constituted a combina- tion or conspiracy in restraint of interstate and inter- national commerce, in violation of the Anti-Trust Act of July 2, 1890." And he says that this was the question in the Securities Case. It was what the Government complained of in that case. But here again His Honor seems to ignore what this Court said the complaint of the Government was. On page 335 Mr. Justice Harlan said: "What the Government particularly complains of, indeed all it complains of here, is the existence of a com- bination among the stockholders of competing railroad companies which, in violation of the Act of Congress, restrains interstate and international commerce through the agency of a common corporate trustee designated to act for both companies in repressing free competition between them. Independently of any question of the mere ownership of stock or of the organization of the State corporation, can it in reason be said that such a combination is not embraced by the very terms of the anti-trust act." 63 The charge of the Government in its Bill in the Securi- ties Case was stated by Mr. Justice Harlan in that case (p. 322) in this way: "Thus as stated in Article VI of the hill 'by mak- ing the stockholders of each system jointly interested in both systems and by practically pooling the earnings of both for the benefit of the former stockholders of each, and by vesting the selection of the directors and officers of each system in a common body, to-wit, the holding corporation, with not only the powers but the duty to pursue a policy which would promote the interests not of one system at the expense of the other, but of both at the expense of the public, all inducement for com- petition between the two systems was to be removed, a virtual consolidation effected, and a monopoly of the interstate and foreign commerce formerly carried on by the two systems as independent competitors estab- lished.' " And notice too, the error of the Court below as to the position of the individuals who assigned to the Securities Company, and what each got in return, as com- pared with the case at bar: In the Securities case the individuals were separate owners in either the Great Northern or the Northern Pacific Railways, but not, with rare exceptions, owners in both. He assigned, for example, one hundred (100) shares of Northern Pacific, and the Securities Company gave him, say, one hun- dred (100) shares of its own capital stock, but the sole prop- erty of the Securities Company was the capital stock of both the Great Northern and the Northern Pacific, so that when the assignments to it (the Securities Company) of all the stocks in each of these railways were completed, and it had issued in lieu thereof to the stockholders who thus assigned its (Securities Company) own stock, each of the old holders of stock in the Northern Pacific and the Great Northern became interested in both the Northern Pacific and Great Northern. The ma- jority of the stockholders of the Securities Company con- trolled both the old railroads. Their management was changed. In the case at bar,, the holders of trust certificates under the Agreement of 1882 hold an interest jointly in all the prop- erties of the Trust. If the holder had, after 1892, helped to dissolve the Trust, he had received an assignment of a proper- tional interest in each one of all these properties, i. e., the stocks of each. But in truth, whichever way he held the in- terest was jointly with all the other owners. All were in- terested in each property. All the properties were man- aged and controlled by the seven defendants. Now what change was there after the assignment to the Standard Oil Company of New Jersey ? Just this: Each still had the identical interest which he had be- fore the assignment. The sole change was that before the assignment he held trustees' certificates or assignments, and after the assignment, stock certificates in the Standard Oil Company of New Jersey. He gained no additional interest in any other property, and especially competing properties, by the assignment, as did the stockholders in the Securities Case. The management of all the properties was not changed as it was in the Securities Case, but the seven, tne Court be- low held, remained in control after such assignment as be- UNIVERSITY fore. The stockholders of the Standard Oil Company of New Jersey had no other powers whatever, except what they had before the assignment, while in the Securities Case each of the separate stockholders in each of the railroads got a new interest in the other railroad, and a majority of the stock- holders in the Securities Company, a power they never before had, to control competition and to act together as one body with one interest, and not two bodies with distinct interests. Why did the Court below think the mere transfer to the Standard Oil Company of New Jersey, as made of itself and by itself, a violation of the Sherman Act ? Its reasons we give in its own words: "But the power of the principal company, after the transfer in 1899, to fix the prices at which the thirty corporations should buy and sell the articles in which they dealt, the terms of their purchases and sales, their rates for the transportation of oil and its products, and all the infinite details of their vast operations in which they might compete, and thereby to prevent their com- petition, was greater, more easily and quickly exercised, and hence more effective than it could have been in the hands of 3,000 scattered stockholders. The trust deed of 1879, the Trust Agreement of 1882, the withholding of the separate certificates of shares of stock in each cor- poration from the holders of the trust certificates in the dissolution of that trust until they took their shares in all of the corporations, bear convincing testimony to the 66 soundness of this proposition. The combination formed by that transfer and its power to restrict competition were less liable to be destroyed, more reliable and per- manent than those springing from the joint ownership by three thousand stockholders of each corporation." (Eec. A, p. 582). The Court below then did not claim that the assignment to the Standard Oil Company gave that Company any new or additional power to stifle competition than it had before, for it said: "Counsel argue with persuasive force that the transfer of the stock in the nineteen corporations to the principal company wrought no substantial restriction of competition because the owners of that stock had and exercised the same power of restraint before that trans- fer that was vested in the Standard Oil Company of New Jersey thereafter." (Rec. A, p. 582). Then follows the previous quotation. Now here is the new test as to whether a business comes under the Sherman Act. It merely depends on how it is or- ganized. Take any large private business, whatever its organiza- tion as a trust or partnership. It desires to re-organize to more economically and easily handle its business, but it does not give to the new re-organization any additional power it did not before have, or change the persons who own it and its properties, or change its management. Yet, if by this new re-organization, it could the more easily and quickly fix prices and the terms of purchase and sale, the rates for trans- portation of its products, and all the infinite details of its vast operation in which it might compete and thereby pre- vent competition, it is, the Court below says, a violation of 67 the Sherman Act, not because it prevents competition by out- siders, but merely competition between the jointly held prop- erties. Why? Because its power is (a) less liable to be destroyed. (b) more reliable and permanent than it wag before. The power is the same after as before the transfer. It is exactly the same power, but it has become more permanent and reliable, and this violates the Sherman Act. The words of the Court in the foregoing excerpt "in which they might compete and thereby to pre- vent competition," refer solely to the business of the organization which it would be possible for its owners to split up and have the parts com- pete with each other. This the joint owners are not bound to do. Each individual may own all the refineries which his in- dustry, his skill or his capital enables him to acquire. He may join others with him in such acquisition and owner- ship, and if he has lawfully acquired he may lawfully own and use. The number of plants he owns is immaterial if he or they lawfully acquired them. But how could the parts compete with each other each part is owned by the same individuals and in the same pro- portions If they competed it would be with themselves which is evidently absurd. Assume, as the Court below did, that our acquisitions up to 1899 were lawful, and before the transfer we lawfully owned them, there was no obligation on the part of the own- ers to compete with each other before or after the transfer. 68 The Court said : Your joint ownership of so many plants gives the power to stifle competition. But our answer is in the words of the Court below : monopolies of part of interstate and international commerce by legitimate competition, how- ever successful, are not denounced by the law and may not be forbidden by the courts." (Rec. A, p. 585). As was shown in Whitwell vs. The Tobacco Co., (125 Fed. 454), by the same learned judge, if the power was law- fully acquired in a private trading enterprise, the Sherman Act does not condemn it. If the magnitude of our acquisitions gives certain power, it only gives power rightfully acquired. Certainly the Sher- man Act does not put limits to the acquisition of wealth. Judge Hook in the Court below said : "Magnitude of business does not alone constitute a monopoly, nor effort at magnitude an attempt to monop- olize." (Rec. A, p. 589). 69- Because and only because by the change we could, the Court said: (a) more readily and easily fix prices; (b) and the terms of purchase and sale of their prod- ucts; (c) and the rates for the transportation of oil; (d) and the infinite details of our business: we had committed the crime of violating the Sherman Act. This brought us under the Sherman Act, though be- fore that we were not under it. But the Sherman Act says nothing about the methods in which one may carry on business. So far as that Act is concerned all methods are lawful provided the one selected is not used for the purpose of violating the Sherman Act. Because (e) the conveyance to the Standard Oil Company ren- dered our organization more stable and permanent ; (f) and it was less likely that the business would con- tinue as one under the old agreement of 1882 than under the new agreement of 1899 ; we had walked out of safety and most unknowingly to ourselves, had violated the Sherman Act, and had become criminals. 70 If this be so the Sherman Act controls the methods in which individuals or corporations must hold properties in the state if they want to do interstate commerce. We always supposed Congress had naught to do with that, and that this Court had expressly so ruled : Fuller, C. J., said in the Knight Case, 156 U. S., 16, that Congress did not attempt by the Sherman Act to "assert the power to deal with monopoly directly as such, or to limit and restrict the rights of corporations created by the States or the citizens of the State in the acquisition, control or disposition of property * * * or to make criminal the acts of persons in the acquisi- tion and control of property which the States of their residence or creation sanctioned or permitted." Northern Securities Co. vs. United States, 193 U. S., 197, 346, Harlan, J. : "The Federal Court may not have power to for- feit the charter of the Securities Company; it may not declare how its shares of stock may be transferred on its books, not prohibit from acquiring real estate, nor dim- inish or increase its capital stock. All these and like matters are to be regulated by the State which created the company." Eidd vs. Pearson, 128 U. S., 1. Now how, seven individuals hold their real and per- sonal property, depends solely on State laws. The United States has no power over that. Whether these seven see fit to hold it as tenants in common or joint tenants or as part- nership property or under a limited partnership or under a corporate organization, is solely and only for the State to determine. ISTo one of these methods more than another looks toward or does tend to interfere with or restrict . in- terstate commerce. Certainly the change, as in this case,, from nine trustees holding all the property to it being held by a corporation does not, of and by itself, restrict or tend to restrict interstate commerce, and especially so when the man- agement of the seven continues as before. Therefore and necessarily the mere fact of such change cannot be of itself an offense against the Sherman Act. (g) The Court below had already held that the seven defendants were in management and control of the trust properties after the conveyance of 1899 as they were before. The words are : "they still hold the actual control and direction of the Standard Company, and of its subsidiary corporations,, and that since 1899 they have been and still are engaged in carrying into effect and executing that trust." (Rec. A, p. 577). Well if so they arranged prices, etc., the same after- wards as before, they just as easily, just as readily, but perhaps a little more economically, arranged details after- wards as before. But the plain answer to the whole proposition is : (1) The Sherman Act does not pretend to dic- tate how one shall hold his real and personal property, 72 and if it did, directly collides with Kidd vs. Pearson (128 U. S. 1) E.G. Knight # Company, (156 U. S. 1) and the Northern Securities Case. (193 U. S. 197). (2) The transfer of the property in 1899 to the New Jersey Standard Oil Company was not of itself an interference with or a restriction of interstate com- merce, nor did it give to the Standard Oil Company a "power to so restrict. It still left all the property under the control of the same seven who controlled it before, and as the Court below assumed that under the Trust Agreement of 1882 and such control of the seven it did not violate the Sherman Act, no more did it do so after the assignment. (3) The Securities Case widely differs: (a) There the Northern Securities Company gained a power which before that did not exist, i. e., it prac- tically merged the two separate competing rail- roads into one, and thus had the power to stifle competition. (b) Before the conveyance to the Securities Company, there were two independent, actually competing railroads owned separately by two independent competing groups, which by the conveyance to the Securities Company were united into one group. (c) Before the conveyance, each individual of each group owned a certain interest in his one rail- road, but after the conveyance he owned an in- terest in both of the railroads. (d) Before the conveyance the interest of each stock- holder in his own separate railroad led him to favor competition with the other railroad, whereas after the conveyance he had no such interest. 73 (e) Before the transfer each stockholder of, say, the Northern Pacific owned his shares as one in a body of, say, one thousand stockholders ; after the trans- fer he was one of a body of, say, two thousand shareholders in a new and distinct corporation. Thus the status of each railroad and each stock- holder was radically changed. Whereas in the case at bar : Before the conveyance of 1899 to the New Jersey Standard Oil Company all the property conveyed to that Company was managed and con- trolled by the identical seven men with the same powers, who after the conveyance still controlled, just as before. They gained no additional power by the transfer. The Standard Oil Company gained no additional power that the Trustees did not have prior to that transfer. The individuals who through trust certificates before the transfer owned proportionately all the property, after the transfer, through stock of the Standard Oil Com- pany, still owned the same property in the same proportions. No one gained an interest in any other property than that he had before the transfer. Before the transfer the trust certificate hold- ers numbered, say, 5,000, and after the transfer they still numbered the same. Before the transfer the nine Trustees held and the seven defendants managed a group of non- competitive properties. Each certificate holder then owned and had a common interest in each one of the group. As such joint owners they were not bound to split up the one united group into dis- 74 tinct competitive groups. They might lawfully hold and operate the whole group as a unit. These certificate holders owned the one united group after the transfer as before. It was non-competi- tive before the transfer. It remained so after- wards. The owners of the one united group were not morally or legally bound to disintegrate the one united non-competitive group either before or after the transfer. Thus the status of the owners and of the properties with whatever powers they had> was not changed by the transfer. The Court below found that by this conveyance to the Standard Oil Company in 1899 the combination of 1879, 1882, 1899 was the more easily and readily enabled after 1899 to fix prices at which it would sell; to fix its rates of transportation and to arrange the infinite details of its enormous business. It became more stable and in a word better equipped for a competitive business life. But this is hardly correct. As to durability: Under the Trust Agreement of 1882, the duration was for nine lives and twenty-one years at least, and probably, by new appointees, more. 75 As to stability: According to the findings of the Court below, this identical business has been in charge and control of the seven individual defendants from 18 79, and even after the assign- ment of 1899 to the New Jersey Standard Oil Company, that company was still under control of these seven ap- pellants. As to power: The seven through the nine trustees had a greater power than did the Standard Oil Company of New Jersey. But even if it was true this does not violate the Sher- man Act. That Act was passed to enlarge and increase the fields of competition, to promote competition, increase trade. Only combinations which restricted competition are forbidden by the Sherman Act, and the fact of a trader pre- paring himself to do a larger business and to more effectively compete could hardly be seriously claimed to be a restriction of competition. -76- See the opinions of Judge Sanborn, in Whit well vs. The Tobacco Co., 125 Fed. Rep., 454, and Phillips vs. lola Port- land Cement Co., 125 Fed., 593, 594, quoted at length on pp. 172 to 175. In his opinion in this case the learned Judge reiterated these views. (See Rec. A, pp. 573-581). But the Court below further said that after the conveyance in 1899, the seven, through the Standard Oil Company of New Jersey, prevented competition between the parcels of properties which made up one united group. The Court admits the group itself was not objectionable; that the mere size of the group was not forbidden. But because the separate items which composed the group were not made by their owners to compete with others of the group, this violated the Sherman Act. The absence of competition inside the group was just the same before 1899 as after; then why does the Court hold one legal and the other illegal ? But were the owners of the group bound to split them up into competing groups? Where does the Sherman Act so provide? What case so rules? 77 If one man owned all of the group, he could not com- pete with himself. As ail the owners of the one group owned jointly all the group, how could they, by splitting up the group, com- pete with themselves now as owners of this group against tBemselves as owners of another group ? Need I elaborate? According to the Court below, nothing brought us under the Sherman Act except the transfer of 1899 an d the future operations under it. Not only did the Court directly place its conclusions on acts done after 1890 (not before but after) and turn its back on and eliminated all acts prior to 1890, but in its decree it did this latter in a most marked manner. The decree reads: "That in and prior to the year 1899 there were twenty corporations organized respectively under the laws of various states engaged in commerce in petro- leum and its products, either among the states or in the territories or with foreign nations, and these corpora- tions held a majority of the stock and controlled the business and operations of many other corporations en- gaged in that commerce, that one of these corporations was the Standard Oil Company of New Jersey, here- after called the Standard Company, which had a capital stock of $10,000,000, that since the year 1890 thio defendants named in section two of this decree have 78 entered into and are carrying out a combination or con- spiracy in pursuance whereof about the year 1899 they caused the capital stock of the Standard Company to be increased to $100,000,000.00, etc., etc. * * *: that this- combination or conspiracy is a combination or conspiracy in restraint of trade and commerce in petro- leum and its products among the several states in the ter- ritories and with foreign nations such as * the (Sherman Act) declares to be illegal." The conclusion of Section 2 alleges the same combina- tion is attempting to monopolize "in violation of Section 2 of the Anti-trust Act." Here in the most marked manner the Court finds that the conspiracy which contravenes the Sherman Act is one subsequent to 1890. It is not influenced or determined by any act done prior to 1890. Are there other facts found in the opinion upon which a decree could be rested ? The answer is No. The only thing that the Court has found which might look in that direction is the following : The finding of fact by the Court other than contained in the decree starts with Mr. John D. Rockefeller owning the refinery in Cleveland in 1865, tracing his course in con- nection subsequently with others, and stating that Rogers, Archbold, Payne, and Pratt joined the Rockefellers and Flagler, and that they organized the Standard Oil Company of Ohio, and increased its capital stock to $3,500,000, and stating that the Standard Oil Company of Ohio had be- come the owners of "more than forty competitive refineries located re- spectively in Cleveland, Pittsburgh, Titusville, Parkers- 79 burg, Baltimore, Philadelphia, Bayonne, New York Harbor, Boston and other places, and the ownership of the entire interest or of a controlling interest in more than thirty companies. 7 ' In this finding the Court did not allege that these refineries were acquired in any other than a lawful business way. It did not pretend to allege that there was any con- spiracy to defraud or conspiracy to cause a monopoly by which they were obtained. Then comes the Vilas, Keith & Chester Trust of 1879, and the Trust of 1882, both of which are described, but no opinion is passed upon either by the Court below. The Court did not declare this to be unlawful. Then follows the recital of what happened after the decision of the Supreme Court of Ohio in 1892 and the manner of the dissolution of the Trust; and then the increase of the capital stock of the Standard Oil Company of New Jersey and the conveyance to it by the different parties in interest of the same pro- perties that had been in the Trust of 1882. In a brief way the assets and business of this Stand- ard Oil Company of New Jersey are described, and then it is alleged that the Standard Oil Company of New Jersey "is using the power to prevent competition between the companies it controls between its subsidiary companies, and between those companies and itself." It is not alleged that the Standard Oil Company has the power or is exercising it to prevent competition among outside companies, or with outside companies, or that it is using illegal means to acquire a monopoly of the trade. It finds the fact that the seven individual appellants prior to 1879 * * * combined to secure and obtain the control of companies competing in in- 80 terstate commerce in oil, and suppress their competition, that they caused the formation and execution of the trusts of 1879 and 1882, that they directed and fol- lowed that unique method of distributing the stock held in the latter trust by which it was not distributed to the majority of the stockholders for many years after 1802, while they and their associates held the con- trol of it and of the corporations it commanded, that they caused the stockholding trust of 1899, and that by means of that trust they still hold the actual con- trol and direction of the Standard Oil Company and of its subsidiary corporations, and that since 1899 they have been and still are engaged in carrying into effect and executing that trust." Bee. A, 577). It will here again be noticed that the Court did not find as against these appellants that they had been guilty of any fraud or unlawful conduct. The court did not use the word conspire, but only used the word combine, as to the co-operation prior to 1879. The combination prior to 1879 and even now of several private traders "to secure and obtain the control of companies com- peting in interstate commerce in oil and suppress their competition/' was and is perfectly legitimate and proper if it was done by lawful means. The Court does not find that it was done by unlawful means. Webster defines combine: "To form a union to agree to coalesce." He defines conspiracy: "A combination of men for evil purpose an agree- ment between two or more persons to commit a crime in concert." 81 All the charges in the bill that this combination was fraudulent and that, through unlawful rebates and by unlaw- ful control of railroads and by various and divers unlawful acts, it acquired a control of these refineries, are disallowed by the Court. The Court does not find any such averments to be true. They were denied in the answer. They are not found in the opinion or decree below, and in this court the action of the Court below is conclusive because the Government saw fit not to appeal therefrom. So if the position which we have hereinbefore argued be correct that the Court erred in holding that the transfer to the Standard Oil Company of New Jersey in 1899 was a violation of the Sherman Act, then there is nothing else in the findings of fact or in the decree of the Court which would justify a decree against the appellants. 82 III. DECREE. (I) THE COURT ERRED, FOR THE REA- SONS HEREINAFTER GIVEN, IN ENTERING THE DECREE IT DID. (i) The decree authorized by the Sherman Act is one that merely enjoins stops an illegal thing in opera- tion when the petition is filed or which then is forseen. It is wholly negative. The fourth section of the Sherman Act gives the Federal Courts power "to prevent and restrain violations of the act." The only jurisdiction given is to stop some- thing going on something being done when the petition is filed. That section reads: "The several circuit courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this act; and it shall be the duty of the several district attorneys of the United States, in their respective districts, under the direction of the Attorney-General, to institute proceedings in equity to prevent and restrain such violations. Such proceed- ings may be by way of petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited. When the parties complained of shall have been duly notified of such petition the court shall proceed, as soon as may be, to the hearing and determination of the case; and pending such peti- tion and before final decree the court may at any time make such temporary restraining order or pro- hibition as shall be deemed just in the premises. 7 ' Primarily "to prevent" means to hinder something that hereafter is to take place; the word "restrain' bears its own plain meaning of pulling back that which is in actual motion ; which is then being done. So when you say that a court may prevent and restrain you necessarily consider only and restrict yourself to the present and the future. You cannot either prevent or re- strain a thing that was done twenty or one year ago ; you can prevent and restrain that which is now in operation and con- tinuing, but It is simply impossible to prevent and restrain that which has been done. This Court said in Lacassagne vs. Chapuis, 144 U. S., 124: "The function of an injunction is to afford pre- ventive relief, not to redress alleged wrongs which have been committed already." Not only do these words prevent and restrain demon- strate this, but the same section adds that proceedings to enforce the Act may be by way of "petition setting forth the case and praying that such violation shall be enjoined or otherwise prohibited;" and then it adds that the courts may "make such temporary restraining order or prohibition as shall be deemed just in the premises." 84 Twice the expression is "prevent and restrain;" then the word "enjoin;" then the phrase "restraining order" and the word "prohibited" and "prohibition." Each one of these can only mean to give jurisdiction over a present continu- ing or then foreseen violation of the Act. Every word is prospective; not one retrospective. Besides, the Act itself clearly shows two remedies given for the misdemeanor; the one is the ordinary criminal remedy to punish for what has been done, and the other is the extraordinary and unusual remedy of preventing and restraining the commission of a misdemeanor now in action and being done which is a violation of the Act, In the Knight & Company Case, Fuller, C. J. (156 U. S. 17), said that the Sherman Act "only authorized the Circuit Courts to proceed by way of preventing and restraining violations of the Act in respect of contracts, combinations or conspiracies in restraint of interstate or international trade or com- Harriman vs. Northern Securities Company, 197 U. S. 244, 289, Fuller, C. J., quoted with approval the comment of Judge Thayer on the decree in the latter' s opinion in 128 Fed. 808: "The decree was wholly prohibitory. It enjoined the doing of certain threatened acts. In its bill of complaint the United States prayed, among ather things, for a mandatory injunction against the Securi- ties Company, requiring it to recall and cancel the certificates of stock which it had used, and to surrender the stock of the two railway companies in exchange for which its stock had been issued. This prayer for relief was denied/' 85 Swift & Co. vs. United States, 196 U. S., 375, 402, Holmes, J., said the decree issued '''restrains such combinations only to the extent of cer- tain specified devices which the defendants are alleged to have used and intend to continue to use." The Sherman Act prescribes certain specific meth- ods of relief which are exclusive of all others. Noyes on Intercorporate Relations (2nd Ed. of 1909) Sec. 406, says of the Sherman Act: "The statute, being penal in its nature, must be strictly construed. It imposes new liabilities and pro- vides particular modes of redress, both for the public and the individual, and the methods so prescribed are exclusive." Greer, Mills & Co. vs. Stoller, 77 Fed. 1, 3 : "The statute, being highly penal in its character, must be strictly construed; and, having created a new offense, and imposed new liabilities, and having pro- vided the modes of redress to the public and the private citizen, by established rules of construction, these reme- dies are exclusive of all others." In Minnesota vs. Northern Securities Co. 194, II. S. 48, 71, Mr. Justice Harlan in holding that a state could not file a bill in equity under section four, said: "Congress has prescribed a specific mode for pre- venting restraints on it (interstate commerce.)" 86 Barnet vs. National Bank, 98 U. S., 555. 558. "Where a statute creates a new right or offense, and provides a specific remedy or punishment, they alone apply. Such provisions are exclusive." East Tennessee, etc. R. Co. vs. Southern Telegraph Co. 112 U. S., 306, 310. "The remedy is statutory only, and every court which takes jurisdiction for its enforcement is limited in its powers by the statute under which alone it can act." Farmers' & Mechanics' Nat. Bank vs. Dearing, 91 II. S., 29, 35. "Where a statute creates a new offense and de- nounces the penalty, or gives a new right and declares the remedy, the punishment or remedy can be only that which the statute prescribes." United States vs. Union Pacific Railroad Company, 98 U. S., 569. An Act of Congress directed the Attorney-General to institute a suit in equity in the name of the United States against the ^TJnion Pacific Railroad Company, and all per- sons who had received stock in it without paying full value, or profits from construction contracts or bonds or lands, which should have been accounted for to the company. . The purpose of the bill was for discovery, etc., and the restoration to the company of such moneys and property. The Supreme Court sustained a demurrer to the bill on the ground, among others, that the relief asked was not within the terms of the act. 87 Mr. Justice Miller said that it was "clear that any bill brought by the Attorney-General under the fourth section of the act of 1873 must be limited by the provisions of that act, both as to the grievances on which it counts and the relief which it seeks." Mr. Justice Miller further said: "Congress might also have directed the Attorney- General, either as part of this proceeding or as an independent one, to ask the court to declare the fran- chises of the company forfeited. It might have order- ed a bill to inquire if the company was insolvent, and if so, to wind up its affairs and distribute its assets. In short, there are many modes in which the legislature could have called into operation all the judicial powers known to the law. But it has not done so, and that is the constantly recurring answer to this bill. It pro- vided in the statute for a mode of securing a full in- quiry into the affairs of the company, by enacting that the Secretary of the Treasury should have free access to all its books and correspondence, a mode of ob- taining information far more effective than a bill of discovery. The statute, therefore, did not authorize a bill of discovery. * * * * It limited the re- lief to be granted under this act, therefore, both by the terms in which it was granted and by other provisions, to the recovery of a moneyed decree, or a restoration of specific property to which the United States or the company was by law entitled." -S8 The decrees that have been made under the Sher- man Act. In Northern Securities Co. vs. United States, 193 U. S., 197, 255, the Supreme Court affirmed the decree of the Circuit Court, which was as follows: "That the Northern Securities Company, its of- ficers, agents, servants and employes be and they are hereby enjoined from acquiring or attempting to ac- quire further stock of either of the aforesaid railway companies. That the Northern Securities Company be enjoined from voting the aforesaid stock which it now holds or may acquire, and from attempting to vote it, at any meeting of the stockholders of either of the aforesaid railway companies and from exercising or attempting to exercise any control, direction, supervision or in- fluence whatsoever over the acts and doings of said rail- way companies or either of them by virtue of its hold- ing such stock therein. That the Northern Pacific Railway Company and the Great Northern Railway Company, their officers directors, servants and agents be and they are hereby respectively and collectively enjoined from permitting the stock aforesaid to be voted by the Northern Securi- ties Company, or in its behalf, by its attorneys or agents at any corporate election for directors or officers of either of the aforesaid railway companies. And that they, together with their officers, di- rectors, servants and agents, be likewise enjoined and specitively restrained from paying any dividends to the Northern Securities Company on account of stock in either of the aforesaid railways companies which it now claims to own and hold. 89 And that the aforesaid railway companies, their officers, directors, servants and agents, be enjoined from permitting or suffering the Northern Securities Com- pany or any of its officers or agents, as such officers or agents, to exercise any control whatsoever over the cor- porate acts of either of the aforesaid railway companies. But nothing herein contained shall be construed as prohibiting the Northern Securities Company from returning and transferring to the Nbrthern Pacific Rail- way Company and the Great Northern Railway Com- pany, respectively, any and all shares of stock in either of said railway companies which said, the Northern Securities Company, may have heretofore received from such stockholders in exchange for its own stock; and nothing herein contained shall be construed as pro- hibiting the Northern Securities Company from making such transfer and assignments of the stock aforesaid to such person or persons as may now be holders and owners of its own stock originally issued in exchange or in payment for the stock claimed to have been acquired by it in the aforesaid railway companies." In the majority opinion Mr. Justice Harlan said: "The Federal Court may not have power to for- feit the charter of the Securities Company; it may not declare how its shares of stock may be transferred on its books, nor prohibit it from acquiring real estate, nor diminish or increase its capital stock. All these and like matters are to be regulated by the State which created the company." From the report of Harriman vs. Northern Securities Company, 197 II. S., 244, 299, it appears that the directors of the Northern Securities Company voluntarily adopted a 90 resolution distributing the shares of the Northern Pacific and Great Northern ratably among its stockholders. On page 289 Chief Justice Fuller quoted with approval the following comment of Judge Thayer on the decree in his opinion (128 Fed. 808), refusing the application of Harriman et al. for leave to intervene after the Supreme Court had affirmed the decree: "The decree was wholly prohibitory. It enjoined the doing of certain threatened acts. ***** In its bill of complaint the United States prayed, among other things, for a mandatory injunction against the Securities Company requiring it to recall and cancel the certificates of stock which it had issued, and to sur- render the stock of the two railway companies in ex- change for which its stock had been issued. This prayer for relief was denied. The Government was satisfied with the relief obtained, and expresses itself as fully satisfied therewith at the present time." Swift <& Company vs. United States, 196 IT. S., 375. The Supreme Court affirmed the decree of the Circuit Court, making perpetual a preliminary injunction. The injunction as modified by the Supreme Court, included com- bining to obtain rebates from common carriers, and was as follows : "1. And now, upon motion of the said attorney, the court doth order that the preliminary injunction heretofore awarded in this case, to restrain the said de- fendants, and each of them, their respective agents and attorneys, and all other persons acting in their be- half, or in behalf of either of them, or claiming so to act, from entering into, taking part in, or performing any contract, combination or conspiracy, the purpose or effect of which will be, as to trade and commerce in 91 fresh meats between the several States and Territories and the District of Columbia, a restraint of trade, in violation of the provisions of the act of Congress ap- proved July 2nd, 1890, entitled 'An Act to protect trade and commerce against unlawful restraints and monopolies,' either by directing or requiring their re- spective agents to refrain from bidding against each other in the purchase of live stock; or collusively and by agreement to refrain from bidding against each other at the sales of live stock ; or by combination, conspiracy or contract raising or lowering prices or fixing uniform prices at which the said meats will be sold, either di- rectly or through their respective agents; or by cur- tailing the quantity of such meats shipped to such markets and agents ; or by establishing and maintaining rules for the giving of credit to dealers in such meats *as charged in the bill, the effect of which rules will be to restrict competition ; or by imposing uniform charges for cart-age and delivery of such meats to dealers and con- sumers as charged in the bill, the effect of which will be to restrict competition ; f [or by any other method or device, the purpose and effect of which is to restrain commerce as aforesaid,] and also from violating the pro- visions of the Act of Congress approved July 2, 1890, entitled 'An Act to protect trade and commerce against unlawful restraints and monopolies, 7 by combining or conspiring together, or with each other and others, to monopolize or attempt to monopolize any part of trade and commerce in fresh meats among the several States and Territories and the District of Columbia, by de- manding, obtaining, or, with or without the connivance of the officers or agents thereof, or of any of them, receiving from railroad companies or other common car- *Words in heavy type inserted by Supreme Court. fWords in brackets stricken out by Supreme Court. 92 riers transporting such fresh meats in such trade or com- merce, either directly or by means of rebates, or by any other device, transportation of or for such means, from the points of the preparation and production of the same from live stock or elsewhere, to the markets for the sale of the same to dealers and consumers in other States and Territories than those wherein the same are so prepared, or the District of Columbia, at less than the regular rates which may be established or in force on their sev- eral lines of transportation, under the provisions in that behalf of the laws of the said United States for the regu- lation of commerce, be and the same is hereby made per- petual." The decree, as Mr. Justice Holmes said (p. 402), "re- strains such combinations only to the extent of certain specified devices, which defendants are alleged to have used and intend to continue to use." United States vs. Chesapeake & Ohio Fuel Co., 105 Fed. 93: The defendants were the members of an association of coal producers, and a fuel company, who had made a con- tract by which the fuel company agreed to sell all the coal of the members of the association at prices to be fixed by a com- mittee of the association, and to account to the association for the same. The decree was that the defendants it* * # kg en j i ne d from selling or shipping under this contract coal or coke into any state other than the state in w r hich they reside, and the contract, in so far as it affects interstate trade and commerce, is declared to be void and illegal, and the combination of the de- fendants thereunder will be dissolved." The decree was affirmed by the Circuit Court of Ap- peals in 115 Fed. 610. 93 New Haven Railroad Company vs. Interstate Commerce Commission, 200 U. S. 361, 404. Interstate Commerce Commission filed a bill in equity alleging that the Chesapeake & Ohio Railway Company was purchasing and transporting and selling coal at a price per ton which, after deducting the cost of purchase and the cost of delivery, amounted to less than the published freight rate for coal. The Supreme Court held that these acts amounted to an undue preference in violation of the Interstate Commerce Act. That Court, however, limited the injunction granted to the specific offense charged and the relief took the form of "perpetually enjoining the Chesapeake & Ohio from tak- ing less than the rates fixed in its published tariff of freight rates, ~by means of dealing in the purchase and sale of coal." The Interstate Commerce Commission had taken a cross appeal in this case, claiming that the Court "should have further enjoined and restrained the Chesa- peake and Ohio Railway Company from giving to said railroad company, or to any other person, firm, or com- pany, any undue or unreasonable advantage or prefer- ence, and should further have restrained and enjoined the Chesapeake and Ohio Railway Company from trans- porting coal from one State to or through any other State for the New York, New Haven and Hartford Railroad Company, or for any firm, person or company, at a less rate than the duly established freight rate of the said railway company in force at the time, and from further failing to observe its published tariffs, or from giving 94 to the said New York, New Haven and Hartford Kail- road Company, or to any person, firm, or company, in any manner whatsoever, any undue or unreasonable preference or advantage." The Supreme Court refused this form of decree, and, in its opinion, Mr. Justice White said : "The contention, therefore, is that whenever a car- rier has been adjudged to have violated the act to regu- late commerce in any particular it is the duty of the court, not only to enjoin the carrier from further like violations of the act, but to command it in general terms not to violate the act in the future in any particular. In other words, the proposition is that ~by the effect of a judgment against a carrier concerning a specific viola- tion of the act, the carrier ceases to be under the protec- tion of the law of the land and must thereafter conduct all its business under the jeopardy of punishment for contempt for violating a general injunction. To state the proposition is, we think, to answer it. Swift & Company vs. United States, 196 U. S. 375. The con- tention that the cited case is inapposite because it did not concern the act to regulate commerce, but involved a violation of the anti-trust act, we think is also answered by the mere statement of the proposition. The require- ment of the act to regulate commerce that a court shall enforce an observance of the statute against a carrier who has been adjudged to have violated its provisions, in no way gives countenance to the assumption that Con- gress intended that a court should issue an injunction of such a general character as would be violative of the most elementary principles of justice. The injunction which was granted in the case of In re Debs, 158 U. S. 564, was not open to such an objection, as its terms were 95 no broader than the conspiracy which it was the purpose of the proceeding to restrain. To accede to the doctrine relied upon would compel us, under the guise of protect- ing freedom of commerce, to announce a rule which would be destructive of the fundamental liberties of the citizen." The Tobacco case is now before and so recently argued in this court that it need not be cited at length. In that case for the first time under the Sherman Act, all participation in inter-state commerce was enjoined. (2) The decree itself must be plain, defining ex- actly the things which the appellants are prohibited from doing. The Supreme Court of the United States in Swift & Company vs. United States, 196 U. S., 375, 396, 402 ; in con- sidering the decree of the court below in the above case, said : "We equally are bound by the first principles of justice not to sanction a decree so vague as to put the whole conduct of the defendants' business at the peril of a summons for contempt. We cannot issue a gen- eral injunction against all possible breaches of the law. So modified, it (the decree) restrains such combination only to the extent of certain specified de- vices which the defendants are alleged to have used and intend to continue to use." In the Addyston Pipe Case, 175 U. S. 247, the decree below was also modified and made more specific. 96 Lyon vs. Botchford, 25 Hun. (N. Y.), 57: "It seems to us that the injunction order, at least in those two particulars, exceeded the office of an injunc- tion, which should show upon its face all those things which it is necessary for the defendant to know in order to obey it, and should plainly indicate to the defendant specifically all the acts which he is thereby restrained from doing without calling upon him for inferences, or any conclusions only to be arrived at by a more or less uncertain process of reasoning, and about which the parties might well differ in opinion either as to the facts or law. The act prohibited must be the doing of some tangible or distinct thing, or series of things, to be clearly pointed out and described. An in- junction should in itself contain sufficient to apprise the party what he is restrained from doing without resorting to the bill on file. (Sullivan vs. Judah, 4 Paige, 444). Its language should be so clear that an unlearned man can understand it without employing counsel. (Laurie vs. Laurie, 9 Paige, 234; Moat vs. Holbein, 2 Edw., 188). It should be so expressed that defendants may distinctly understand what is prohibited. (Clark vs. Clark, 25 Barb., 76)." Laurie vs. Laurie, 9 Paige, 234: Chancellor Wai worth: "As the defendant is bound to obey the process of the court at his peril, the language of the injunction should in all cases be so clear and explicit that an un- learned man can understand its meaning, without the necessity of employing counsel to advise him what he has a right to do to save him from subjecting himself to punishment for a breach of the injunction. And the 97 language of the writ should at the same time be so re- stricted as not to deprive him of any rights which the case made by the bill does not require that he should be restrained from exercising." Robinson vs. Clapp, 65 Conn., 365, 396: "The court also erred in granting an injunction in so indefinite terms. It is impossible to lay down any precise rule of universal application upon the subject But the person enjoined is entitled to know with reason- able certainty what acts he may and may not do without making himself liable as in contempt of an order." Moat vs. Holbein, 2 Edw. CL, 188 : Sullivan vs. Judoih, 4 Paige, 444. (3) The decree of the Court below in the case at bar. See decree at length, Record, Vol. A, page 525. The decree is in nine sections; Section 1 recited that prior to 1899 twenty corporations had been organized and engaged in commerce in petroleum, and further decreed that ''Since the year 1890 the defendants named in Sec- tion two of this decree have entered into and are carry- ing out a combination or conspiracy in pursuance where- of about the year 1899 they caused the capital stock of the Standard Company to be increased to $100,000,- 000.00, caused a majority of the stock of the nineteen companies, and the power to control them, and to man- age their trade, and the power to control the corporations which they controlled and to manage their trade, to be 98 vested in and held by the Standard Company in exchange for its stock which was issued to the former holders of the stock of the nineteen companies, and caused the Standard Company ever since to control all these cor- porations, hereafter called the subsidiary corporations, and to manage their trade without competition among themselves as the trade and business of a single person ; Such a combination is forbidden by the Sherman Act. Section 2 Names the conspiring defendants, and decrees that "by means of this combination the defendants named in this section have combined and conspired to monopo- lize, have monopolized and are continuing to monopolize a substantial part of the commerce among the states, in the territories and with foreign nations in violation of Section 2 of the Anti-Trust Act." Section 3 Names the defendants it eliminates from the decree. Section Names the companies in which the Standard Oil Com- pany of New Jersey owns the whole or part of the stock, and finds that the said Standard Oil Company "controls the subsidiary companies and directs the man- agement thereof so that none of the subsidiary compan- ies competes with any other of those companies or with the Standard Company, but their trade is all managed as that of a single person." Section 5 "That the stocks of the various corporations which are named in Section 2 and described in Section 4 of this decree held by the Standard Company were ac- quired and are held by it by virtue of the illegal com- bination." (a) That the Standard Oil Company and others "are enjoined and prohibited from voting any of the stock in any of the subsidiary companies named in Sec- tion 2 of this decree" and "from exercising or attempting to exercise any control, direction, supervision or influence over the acts of these subsidiary companies by virtue of its holding of their stock." The subsidiary companies are enjoined (b) from paying any dividends to the Standard Oil Company on such stocks ; (c) from permitting the Standard Oil Company to vote stock in or direct the policy of or exercise any con- trol over the corporate acts of such companies "by virtue of such stock or by virtue of the power over such subsidiary corporation acquired by means of the illegal combination," But "the defendants are not prohibited by this decree from distributing ratably to the stockholders of the principal company the shares to which they are equitably entitled in the stocks of the defendant corporations that are parties to the combination." 100 Section 6 Defendants named in Section 2 are prohibited "from continuing or carrying into further effect the combination adjudged illegal hereby/' or "from entering into or forming any like combination," Either (1) by use of liquidating certificates "in two or more potentially competitive parties to the illegal combination," or by a conveyance of the physical property and business of any one or more of the defendants to "a potentially competitive party to this combination," or by placing control of any of said corporations in a trustee "by causing its stock or property to be held by others than its equitable owners or by any similar device," or (2) By making "any express or implied agreement or arrangement to- gether or one with another like that adjudged illegal hereby relating to (a) the control or management of any of said corpora- tions, or (b) "or the price or terms of purchase," or "of sale" or "the rates of transportation of petroleum or its prod- ucts" 101 or "relative to the quantity thereof purchased, sold, trans- ported or manufactured by any of said corporations which will have a like effect in restraint of commerce among the states, in the territories and with foreign nations to that of the combination, the operation of which is hereby enjoined." Section 7 Defendants are prohibited "until the discontinuance of the operation of the illegal combination from engaging or continuing in commerce among the states or in the territories of the United States." (4) Purpose of decree. We suppose the real purpose of the whole decree is to force a dissolution of what the court calls the combination: We are enjoined from continuing it, and are enjoined from doing any interstate trade until we do distribute the stocks. Such distribution can only be to the stockholders of the Standard Oil Company, each his pro rata share of the stocks the Standard Oil Co. holds but the method of distribution and the future use by the stockholder of his shares of the stock seems from the opinion of the Court to be to prevent two or more of such owners to agree with each other as to the 102 future use of the same to prevent the owners of one refinery making any contract with another or a pipe line <>r trading station or tank cars as to the sale or quality or transportation rates or, indeed, about anything relating to petroleum. If, say A, one stockholder is willing and offers to buy from B. C. D. their shares, the decree forbids it. If A wants to get refineries from the others, he cannot.. JVo one of the stockholders of the Standard Oil Company- seems able to do aught with the shares of stock the Standard Oil Company will transfer to him except to hold them or sell them to an outsider. "No one of the subsidiary corporations may contract with any other subsidiary corporation about the business of each, nor may it contract with any stockholder. We know the scope of the injunction is limited to actions "which will have a LIKE effect" to that of the present combination but who can determine- that in the complex business, such as that of the present organ- ized Standard Oil Company. Nature of Our Organization. Our case has no analogy in decided cases The Joint Traffic, The Trans-Missouri, The Addyston Pipe case were all cases where a number of independent, unconnected compet- ing corporations by contract sought to make freight rates or- 103 fix prices or regulate sales or production. Strike down the contract and each corporation thereby assumed the relation it had before the contract. But in our case seven individuals, assisted by others, buy a portion of their properties, but build a much greater portion. They do all of this out of their joint funds and their joint enterprise. No one of their properties is or does compete with any other. All are jointly held and used and controlled as one property. There is no contract to fix prices or regu- late production or regulate rates for freight. The decree, if carried into effect, will not, as in the Addyston Pipe case and others, simply leave scores of old corporations where it found them, but will recreate new bodies, now parts of one whole, and now so used as to facilitate and carry out one united business. This is elaborated supra. (5) The Sherman Act does not give power to the Courts to strike down organized business or destroy its property. If such had been its intention, adequate words would have been used to so indicate. It is not the continuance of business the courts may prevent, but solely and only "violations of this Act." If the facts show that the existing organization can legally continue without violating the Sherman Act, the court cannot destroy it, but only prevent it in the future doing un- lawful acts. As, for example, seven (7) men by grouping 100 parcels of property, pipe lines, refineries, ships, etc., into one non-competitive group, own the group and may lawfully own it. Suppose they did not use the group to 104 make a product, but held it for sale for future rise in price; evidently the fact of the existence of that group does not per se violate the Sherman Act because it takes no part in inter- state commerce. Evidently then it is the use of the group that creates that which goes into inter-state commerce, and not the ownership of it. But the handling of the group's product in interstate commerce may be legitimate or it may be ille- gitimate. The mere putting of the product itself openly and fairly in the market putting it up as it were at auction, and selling it to the highest bidder in inter-state commerce, would not violate the Sherman Act. Therefore the group itself and the legitimate use of its product does not violate the Sherman Act. But if the owners of the group make a contract in restraint of trade or commerce between the states, then that contract is a violation of the Sherman Act, and its continuance will be restrained. But the organized group will not be stricken down, because of this violation. It is the violation which is at fault, and not the group. So also, if the owners of the group, by unlawful means, exclude others from the inter-state trade, such exclusion is a violation of the Sherman Act, and will be restrained. But the organized group will not be stricken down. Therefore in this case, if the owners of the organized group, by contract to restrain commerce through restricting competition, or by unlawful acts, exclude others from the inter-state trade, the continuance of both acts should be re- strained, but the lawful group should not be destroyed. Northern Securities Co. vs. United States, 193 U. S. 19T, 346, Harlan, J. : "The Federal Court may not have the power to for- feit the charter of the Securities Company; it may not 105 declare how its shares of stock may be transferred on its books, nor prohibit from acquiring real estate, nor dimin- ish or increase its capital stock. All these and like mat- ters are to be regulated by the state which created the company." (6) Continuance at the time of filing the Bill is a condition precedent to the exercise of the Chancellor's power as to an act which began before the Bill was filed. If that act has ceased, an injunction would be useless. Tt is also plain that as under the Bill and the Sherman Act equity jurisdiction is given by it only to merely restrain violations of the act then taking place or about to begin, it is immaterial whether the organized group was formed in part by acts themselves violations of the Sherman Act. The Fed- eral Court is acting under a Federal Statute to restrain a con- tinuing Federal crime. The acts the Federal Courts may restrain are violations of the Sherman Act not violations of any supposed Federal common law. As the Sherman Act was not passed until 1890, acts prior to that date would not be violations of the Act. Therefore, it is useless to consider what the acts were prior to 1890, for they can throw no light on the present controversy. These alleged acts of railroad re- bates, alleged unlawful exclusion of others (which we deny), were ended long prior to 1906 when this bill was filed. They were not then actually taking place. They were ended. Evidently the Court below so thought for as we have seen, it declined to find these acts prior to 1890 were true or material, and though it did find a conspiracy, this conspiracy the Court said began, not in 1870, as charged in the petition but after 1890. 106 Let me assume, for argument's sake (which I deny) that the Trust Agreement of 1882 was illegal at common law: that the present Standard Oil Company organization was by illegal acts prior to 1890 enabled to increase its size: that the same Standard Oil organization thus formed was in ex- istence when the present bill was filed. Would this authorize the Chancellor, by his decree, to strike down the present organization ? The answer is plainly No. This bill is under the Sherman Act. The court's jurisdiction is solely under that Act. Congress might have broadened that Act to include all kinds of illegal trade combinations, and have broadened the powers of the court as to the relief granted but it did not do so. It provided only for relief against the "violations of this Act;" and the things which are denounced by the act are only two : (1) Contracts or combinations in restraint of trade: (2) Attempts to monopolize by illegal means. (7) Government's failure of proof. In 1906, is there a particle of proof that there then ex- isted and was being carried out any contract in restraint of trade ? If so, what is it ? On what page is the proof given ? 107 In 1906, is there a particle of proof that by illegal means the present organization was then excluding any one from the inter-state trade ? Please refer us to the page proving it. If the reply he that the original organization formed prior to 1882 still continued, and this was in part enlarged by means illegal at common law, and the organization itself was also illegal at common law and therefore the Sherman Act is violated I answer: But under the Sherman Act only continued "violations of the Act" set out in the Bill filed, give a court of equity jurisdiction, and these facts must show an existing continuing contract in restraint of trade or a present existing effort by illegal means to gain a monopoly of it. Illegal acts which were done prior to 1906 and which were ended prior to 1906 cannot be in 1906 continuing violations of the Act. The aggregation of properties is not of itself a violation of the Sherman Act if they are merely for private trading purposes. This may or may not be a violation of state laws, but the Sherman Act only concerns interstate com- merce, and it is only the use of the product made on or in or by reason of the properties that goes into inter-state commerce. Now this product as it enters inter-state com- merce may do so lawfully or unlawfully, but the mere fact that the men who made it had illegally or improperly acquired the properties on which it was made, does not of itself prove that in the bargaining, sale or transportation of the product in inter-state commerce, there necessarily was either a con- tract in restraint of trade or an attempt to monopolize. The existence alone of the aggregation does not prove a violation of the Sherman Act. There must be something more. And so it was ruled in the Calumet and Hecla cases cited infra, pages 109-110. 108 If it be true that the mere aggregation of properties was void at common law (which I deny) then I reply: But the Sherman Act does not so provide. It does not make the mere organization a violation of the Act, and if it did so pro- vide, as such an organization was not of itself inter-state com- merce, and only after its products went into inter-state com- merce the commerce clause would attach, its constitutionality would be doubtful. It recognizes as proper methods of holding properties and carrying on business, persons, combinations, corporations, and trusts. // it be said, however, that the real question is the ex- istence of the Power to restrain trade and monopolize it and not its actual exercise and that the Securities case ruled that the answer is: (1) The Securities case involved two parallel and competing railroads, whose duty it was to compete and who could not unite. It was unlawful for them to so unite. Therefore, the placing the control of the two in possession of one person was practically to unite the two and thus violate the law. (2) But it is lawful to purchase and group properties for private trading purposes, and one com- petitor may purchase the property of another. It is law- ful to gain the power to restrain trade and monopolize trade if it is the result of lawful competition. (3) Inter-state commerce is not concerned with the real estate which does not enter into interstate trade. 109 It is concerned solely with the product of it. The fact that the ownership of the group was illegally acquired does not of itself prove that the owners of it have or will exercise the power to restrain inter-state trade in oil or monopolize the same. Calumet and Hecla Mining cases (167 Fed. Rpt., 704; 167 Ibid, 721 overruling 155 Ibid, 869). There the Calumet Co. obtained control of the Osceola Co. Considering the lawfulness of the power to control divers private trading corporations engaged in the same business, the Circuit Court said, after reviewing all the Supreme Court cases: a* * # j n( j no thing in them sustaining the propo- sition that the direct, immediate and necessary effect of a control by a corporation over a competitor through stock ownership is to restrain trade or create a monopoly either in manufacturing or selling. * * * Beyond such indirect restraint as is incidental to a common manage- ment it is difficult to see that competition will be neces- sarily unlawfully restricted. It is true that an oppor- tunity for restricting competition is afforded by the re- lation ; but this is equally true of every case of a common general management. * * * In either of the cases presented further acts in addition to the mere forces of nature are required to bring about the restraint of competition beyond such restraint as indirectly, remotely and incidentally results from the relation of a common management the authorities do not go to the extent of holding that in the absence of intent or of special features or conditions every case of control by a manufacturing or mining corporation over a competitor through stock ownership and consequent direction of cor- porate management creates per se directly, immediately and necessarily a restraint upon trade, and I am not pre- pared to hold that such is the effect." 110 The Circuit Court of Appeals, 167 Fed. Rptr., 728, af- firmed this view, Judge Lurton delivering the opinion : "But when the agreement or combination in ques- tion does not in its terms provide for the suppression of competition, or the creation of a monopoly, nor bring about such a result as a necessary legal consequence, but requires further acts or conduct to bring about such an unlawful result, some evidence of an unlawful intent becomes essential, and the courts may say that if not stopped and prohibited, restraint is likely to be created. The power of stock control which the Calu- met Company has acquired may be exercised only in a legitimate and lawful way in the interests of an economi- cal management of both companies. In that case it has done nothing directly affecting commerce among the states.' 7 The Court below in this case so held. Judge Sanborn : * * * monopolies of part of interstate and international commerce by legitimate competition, how- ever successful, are not denounced by the law and may not be forbidden by the courts." (Rec. A., p. 585). Judge Hook : "To offend the Act the monopoly must have been secured by methods contrary to the public policy, as ex- pressed in the statutes or in the common law. Congress did not intend to impede legitimate commer- cial activity nor put a limit to its fruits." (Rec. A, p. 589). // the argument is, however, that the original combina- tion of the seven (7) was to gain a monopoly, and such an Ill- organization so combining and intending still continues and existed in 1906, and this constitutes a violation of the Sher- man Act, I answer : The Sherman Act expressly recognizes the existence and lawful operation in inter-state trade of combinations, trusts and corporations, and it is only when such combinations at- tempt to restrict trade that the Act denounces them only when by unlawful means they attempt to monopolize, that they violate the Act. Neither at common law nor under the Sherman Act was it or is it unlawful for seven (7) men to organize and by law- ful competition and lawful means seek, to monopolize inter- state trade. Whitwell vs. Tobacco Co., 125 Fed., 454. As the court below in this case said (Rec. A, p. 585). and its true construction is that while unlawful means to monopolize and to continue an unlawful monopoly of interstate and international con)' merce are misdemeanors and enjoinable under it, mo- nopolies of part of interstate and international com- merce by legitimate competition, however successful, are not denounced by the law and may not be forbidden by the courts." Tf it is said that this position allows the combination to keep and use property it got by unlawful means the reply is, NO. 112 It only means that under this form of procedure that question is not before the Court. There are adequate methods to punish such acts, but an equitable proceeding under the Sherman Act is not one of them. All the Court decides is that Congress in its wisdom has not deemed it proper to give any other equitable relief than en- joining the continuance of the unlawfully restricting trade or monopoly of the same. Objections to Decree. It is too general too vague too indefinite too broad. It includes business within a state as well as between states. Yet admittedly the Sherman Act only covers inter- state commerce. It seeks to regulate and control the ownership of and uses of private property in the hands of persons not parties to this Bill. It denies to each individual defendant the right of hold- ing his property as he chooses either by legal or by equitable title. It denies him his right to buy what he may of all the physical properties the Standard Oil Company owns whether such be "potentially" competitive or not. (See opinions of Justices Brewer and Holmes in Northern Securities Com- pany case, 193 U. S.) 113 It repeatedly, in speaking of 'a person (party) designates him as (Section 6) "potentially competitive parties" "potentially competitive party" "potentially competitive parties" without otherwise designating him. It does not earmark the unit nor designate how one shall determine who are and who are not "potentially competitive parties." It enjoins the individual defendant from making "any express or implied agreement or arrangement to- gether or with one another * * relative to the control or management of any of said corporations or the price or terms of purchase or of sale or the rates of transportation of petroleum or its products in inter-state or international commerce or relative to the quantities thereof purchased, sold, transported or manufactured by any of said corporations." And while it adds a qualification "which will have a like effect" as the present combination, it does nothing to in- dicate how one can determine that and tell what would and what would not have a like effect, and without limitation of time, compels the individual to transact business under in- tolerable conditions. As the evident purpose of the decree is to compel com- petition where none ever before existed, and if, as the opin- ion and decree seems to decide, each one of these companies, and each individual is a competitor of all the others, the result will be baffling. Some of the situations (a) Here are say twenty companies each actually helping in producing refined oil what alliance, if any, may each one of these forty have either with one or more of the refineries or one or more of the pipe lines, or one or more of the tank reservoirs? (b) Here are eleven pipe line companies carrying oil. What contracts may any refinery or oil well OP reservoir have with any one or more of them ? (c) What contract relations may each individual have with any one or more of the refineries other pipe lines tank lines or reservoirs ? And yet each corporation and individual must do business under threat of imprisonment of its managers if a move or a contract or sale or purchase be made which a Judge may think restricts commerce or tends to monopoly. The decree seeks to and does, under Section 6, follow and control the use of the stocks of the individual stockholders in their hands in the sub-companies, and to hamper and restrict such stockholders in the use they shall make of them to whom they shall be sold. No one of these individual persons 115 is a party to this Bill. They have never been heard or had an opportunity of being heard on the justness of such con- clusion, and therefore as against each of them the decree is in that respect void. Corporations parties to the Bill do represent their stock- holders, but only within the scope of corporate power and con- trol over such stockholders, but not as to the individual rights of the stockholder to do with his property as he chooses. Brown vs. Pacific Mail Steamship Co., Fed. Cas. No. 2,025, 5 Blatch., 525 : A bill was filed against the Pacific Mail Steamship Com- pany and certain of its stockholders to enjoin the voting of stock by the latter at an election of directors. The Court sustained the bill, but refused to include in the injunction stockholders who had not been served with notice of the application for the injunction. Judge Blatchford said: * the words 'and all the other share- holders of the Pacific Mail Company,' which are in the prayer of the bill, must be stricken out from the in- junction. I do not think I can enjoin the other share- holders without notice, or that service upon the Pacific Mail Company is to be considered, for the purpose of this second prayer, as service on such other share- holders." Under constant threat of proceedings for contempt in the violation of such a broad, comprehensive, and yet vaguely worded decree (Section 6) that no one could in advance cer- 116 tainly foretell whether any given act was a violation how could business be carried on. It seeks to and does cover the future business operations of the defendants in petroleum and now adjudges, but in a vague and indefinite way, in advance of the facts, and the exact situation in the future, what things may be or may not then be done. It does not, as the Sherman Act says it may, after and upon petition filed "restrain violations of the Act" but without a petition filed, and without a hearing as to any future act, it now condemns certain of them, but which ones no man can tell till the case comes to trial on proceedings for contempt. (See remarks of Judge Hook in the court below). (Rec. A, p. 587). The Sherman Act closely limits and defines the power of the court on a petition filed to give equitable relief. Section 4 of that Act is printed (ante, page 82). The things the Court may do are : "to prevent and restrain violations of this Act' 7 "restrain such violations." 117 The petition must pray "that such violations shall he enjoined or otherwise pro- hibited." It is these VIOLATIONS of the Act that the court may enjoin, and only such violations. But the court helow enjoined all the defendants from "engaging or continuing in commerce among the states" until a certain event. The very purpose of the Sherman Act is to encourage and promote inter-state commerce, and to restrain one from engaging in it is a strange way of promoting it. This portion of the decree is clearly not within the words of the Sherman Act. Assume for argument's sake that the Standard Oil com- bination of 1899 is illegal (which we deny), yet the seven (7) individual appellants may in the future, as part of their constitutional rights, engage in inter-state commerce by them- selves singly or jointly or with others. The Sherman Act does not impose the penalty that if one once violate the Act he forever or for a time loses his right to engage in inter- state commerce. Where, then, does the court below find its authority to authorize it to enter such a decree, especially when that court recognized the doctrine of this court. "Past unlawful competition does not deprive parties of their right to conduct lawful competition.'" New Haven R. R. case, 200 U. S. 361, 404. 118 Undoubtedly a court in equity may and must shape its decree to suit the pending case, and hundreds of cases may be cited to so prove but each of such decrees was suitable to the facts and the law as it then existed. But when Con- gress sees fit to pass a new statute creating a new offense which it designates as a crime and gives a new and limited jurisdiction to the Chancellor, and the Act itself defines the power of the court, is it not plain that the Chancellor is re- stricted in such cases to such named powers? As the Sher- man Act says, the power of the court is to prohibit and enjoin "violation of this Act." Does not that define the court's power ? The Act does not say "You can appoint a receiver for a trust," or "You can fine it or put in jail the guilty members." As the Act. does not so say, is it possible the court can exercise such powers merely because they would prove effective? The very purpose of the Act was to make inter-state trade free, open, and encourage every one to enter it. But this decree prevents seven (7) citizens of the United States and their associates from doing so until some other thing done in the past has been effectively repented for, and works meet for such repentance have been done. This, the Act never said a Chancellor could do. , This court never so held. And with great respect it is asserted there is not a con- trolling analogy or authority that authorizes such a decree. 119 Effect of the Decree. The seven (7) individual defendants and Thirty-eight (38) corporate defendants are named in Section 2 of the decree as having formed a combination in restraint of inter-state trade. The corporations include eleven pipe line companies fifteen refining companies seven marketing companies four producing companies, and one tank line company. The decree carried out compels: (1) Each one of these companies to stand single and alone and without any relation to another : (2) Each one to compete with all the others: (3) Each to refrain from either expressly or im- pliedly having any contract relation with each other in reference to (a) The control or management of any of said corporations : (b) Or the price or terms of purchase or of sale, or the rates of transportation of petroleum or its products in interstate commerce: (c) Or the quantity thereof purchased, sold or transported or manufactured by any of them ; (d) And then adds "which will have a like effect in restraint of commerce." The effect of this decree is to take away from the in- dividuals defendant and from the Standard Oil Company of New Jersey any and all joint control over the different sub- companies, and to prevent them from exercising that control 120 in any way whatsoever in the future, either by creating a new corporation or by agreeing or contracting together with one another in any way whatsoever with respect to such control. In other words, the effect is to compel the different sub- companies named in the bill to stand alone, to act independ- ently from all and each of the others, to compete with one an- other, and yet every one of such units will be owned by the same individuals and in the same proportions. The inherent vice of this decree is that it seeks to create an artificial division which never existed before; it does not seek to compel members who were formerly independent to resume that independence, but it seeks to compel different sub-companies, which have never been independent, which have never been more than mere agencies created for certain purposes, to sever their allegiance with their principal, and to stand apart, independent and hostile to that principal and to each other. In the cases heretofore where an injunction has been granted, the purpose of the injunction has always been restorative; the decree has always aimed to put things back into the place they occupied before and under like conditions as before the contract or combination distorted affairs and dis- turbed the course of inter-state trade ; thus where A, B and C are each the owner of an independent competing business an injunction will restrain them from combining together to control prices or to divide up the territory between them or to in any way destroy competition, when this would affect the interstate trade, and an injunction restraining the com- bination merely puts them back where they were before, as separate independent competitors. 121 But the relief granted in the case at bar is wholly diifer- ent from that. This is a case where seven individuals nnd their associates have been engaged in a common business, act- ing together for thirty-four years, with common interests, with common aims, and now having a great business built up by common effort, divided for convenience in operation into numerous separate departments or agencies, and practically all built by their own hands, acting not separately, but joint- ly. Now comes this decree which seeks to split up this busi- ness into as many independent parts as the owners have seen fit to divide it into departments or agencies, and to compel each of these departments or agencies to stand alone. The effect is not that men who have been operating independently heretofore shall continue to remain independent, but that seven men and their associates who have been, as it were, in partnership for thirty-four years, shall dissolve that partner- ship; not that competition shall be restored to its former con- dition, but that a competition which never existed shall be created; in other words, it is not sought to restore an old, but to create an entirely new status and new competition. To cite some concrete examples of the things sought to be attained by the proceeding in this case : (a) The seven individual appellants and their as- sociate now own 54,616 miles of pipe line, and for ease of management have divided the whole into eleven dif- ferent parts, putting each part under the control of a separate corporation, these all being named in Section 2 of the decree, as follows: Buckeye Pipe Line Com- pany, Crescent Pipe Line Company, Cumberland Pipe Line Company, Eureka Pipe Line, Indiana Pipe Line Company, National Transit Company, New York Tran- sit Company, Northern Pipe Line Company, Prairie Oil & Gas Company, Southern Pipe Line Company, Southwest Pennsylvania Pipe Line Company. 122 These companies jointly own 54,616 miles of pipe lines, of which the seven individual defendants and their associates built over 50,000 miles. In these pipe lines the seven individuals and their as- sociates have an investment of over $61,000,000.00. All of these different lines are joined together into one compact, connected system and operated as a whole. With the insignificant exceptions already noted in another place, no cne except the seven individuals and their associates were ever in any way interested in any of these pipe lines ; the owners who huilt them divided up this complicated system into eleven different divisions and gave the control of each of these divis- ions to an agency created hy themselves for the purpose of local supervision and control ; these agencies comprise the twelve pipe-line sub-companies. These local sub-companies were never independent, never did compete, never were any- thing but the agents of the seven individuals and their asso- ciates, the prcdvd of those individuals' joint creative labor. This decree splits up this pipe line system into eleven different parts, takes away from the owners, who jointly built the pipe lines and who created the sub-companies, all control over the different sub-companies, and compels the eleven dif- ferent parts to stand alone, independently of their principal and of each other, to be hostile to and to compete with their principal and with one another. (b) The seven individuals and their associates working jointly, have dotted the world with selling stations, costing from $1,000 to $20,000 each and upwards. In 1882 they had 130, most of which they built, some of which they bought; in 1908 they had 3,242, almost every one of which they built with their own hands. 123 They put these selling stations chiefly under the control of five marketing companies the Standard Oil Company cf New York, the Standard Oil Company of California, the Standard Oil Company of Kentucky, the Standard Oil Com- pany of Indiana, and the Continental Oil Company. Now by this decree, these companies must stand alone, which they never did before, must compete in the marketing business, which they never did before, must be hostile to their principal and to each other. (c) The seven individuals and their associates operate at the present time about eighteen (18) refineries. John D. Rockefeller, Samuel Andrews and William Rockefeller origi- nally built the one now operated in Cleveland about 1865 ; this refinery, immensely enlarged and very greatly improved, is now under the control of the Standard Oil Company of Ohio ; the Solar Refining Company was created by the seven individual appellants and their associates in 1885, who con- structed the refinery at Lima ; the Standard Oil Company of Indiana was created in 1889 and built the great refinery at Whiting and one at Sugar Creek, Missouri ; the Standard Oil Company of Kansas was created in 1892 and constructed the refinery at Neodesha ; the seven individuals and their asso- ciates also built, through the agency of the Standard Oil Com- pany of California, a great refinery near San Francisco in 1903, and one at Marcus Hook, New Jersey, in 1895, through the agency of the Atlantic Refining Company. Of the other refineries which they own, none of them has been purchased since 1882, and all those originally purchased have been vast- ly enlarged and improved ; the one purchased in 1882 at $84,- 000.00 now being worth $1,450,000.00. This decree takes away from the seven individuals and from the Standard Oil Company of New Jersey all control, 124 all supervision over these different refining companies, even over those which they themselves, working jointly, have abso- lutely created with their own joint means, and compels these refineries to stand alone, to be independent, to compete with one another. (d) To facilitate the shipments of refined oil, gasoline, etc., over the railroads of the United States, the seven indi- viduals and their associates have huilt over 10,000 tank cars for their own use, and today have them on every railroad on the continent. For the purposes of efficient control and man- agement they put all these tank cars in charge of a sub-agent, the Union Tank Line Company. The company, its property, its business, its capital, are all and absolutely the work of the seven individuals and their associates, and these tank cars are valuable only as they are used with the entire plant, and especially refineries. And now, perforce, this corporation is cut away, must stand alone, cannot be controlled in any sense, manner or form by its founders and owners ; must itself, the creature, compete with, fight against its creator. (e) Along with their other developments, the Standard interests have created a great foreign trade. Every civilized country on earth is dotted with their selling stations. This foreign commerce is of immense volume, being 63% of the illuminating oil produced and of course a large per cent, also of the by-products. In order to best economize their efforts, they put practi- cally all this foreign trade under the control of one corpora- tion, the Standard Oil Company of New York. That Com- pany owns the ships, the docks, the selling stations in the dif- ferent countries ; with some few exceptions as in Great Bri- tain where the Anglo-American Oil Company takes care of the selling business. The other companies that export oil 125 do it through the Standard of New York. The chief com- panies that thus export oil are the Standard Oil Company of New Jersey, the Atlantic Refining Company, Standard Oil Company of California, and the Standard Oil Company of New York. These different companies are all named in Section Two of the decree, and it is difficult to see how the present ar- rangement can be continued without violating the sweeping terms of Section Six of that decree. If the Standard of Cali- fornia, the Standard of New Jersey and the Atlantic Refin- ing Company all do their exporting through the Standard of New York, they will certainly not be competing in the for- eign trade, and this would clearly be such an "express or implied agreement or arrangement together or one with another," as to come within the terms of Section Six of the decree. This decree means, therefore, that all these different companies must enter the contest for the foreign trade, each fighting with the other. If they are to continue in that trade, each must buy or build ships, each must establish selling sta- tions, each send representatives to the different foreign coun- tries, underbid one another for the trade, each company scheme to supplant the other. Although France, for instance, is already well covered with selling stations by the Standard of New York, yet the other companies (all owned by the same men who own the Standard of New York) must enter that country, establish selling stations, actively compete with the Standard of New York and with each other to the great finan- cial loss of all of them. As in the above instances cited a competition in foreign trade is to be created where none ever existed before. 126 (f) It unlawfully restricts and limits the individual rights of each of the seven defendants by preventing each from purchasing with his individual means such of the prop- erties of the Standard Oil Company of I^ew Jersey as he may desire, and also restrains the stockholders and corporations from selling to one such properties. It distinctly denies the right of an individual with his own means to buy all such properties. The individual defendants and their associates, by the labor of their own hands, have built up a mighty business, not by combinations of and agreements with competing interests, but almost wholly by construction; they have divided the business for the purposes of local control and government into a number of different departments or agencies. These have each been put under the control of an agent, a sub-company. These latter are the sub-companies named as defendants in the petition. May the courts, under the Sherman Act, split up this homogeneous business into as many independent parts as the owners have seen fit to create departments or agencies? May the courts, under the Sherman Act, take away all control of the men who created both the sub-companies and fhe property under their control, and compel each of these agents, these sub-companies, to become independent, to com- pete with each other. 127 The decree must stand, if at all, upon one of two propo- sitions : (1) The Sherman Act forbids men to unite their abilities and their means, through partnerships and the like, for the joint development of an industrial enter- prise; it denounces all united action, requires each man to work by himself; (2) If men may work jointly, the Sherman Act requires that each industrial unit which they create must stand separate, apart, free from, hostile to every other industrial unit which they create. If they, the creators, hold these units jointly, and do not require, or at least permit them to compete with one another, they have formed a combination and a monopoly in violation of law, and may be sent to jail for the crime. And is this not a demonstration, a reductio ad alisurdum, conclusively showing that this decree cannot stand? We submit that there are no precedents in the books nor logical reason justifying such a confiscatory, such a ruinous decree as entered in this case; that such a decree if carried to its logical conclusion attacks the very foundations of the modern business world. 128 THE GOVERNMENT, NOT HAVING AP- PEALED, CANNOT ASSIGN ERROR TO THE DE- CREE OF THE COURT BELOW, OR OBJECT TO ITS FINDINGS OF FACT, OR ASK TO HAVE ADDITIONAL FACTS FOUND WHICH THE COURT BELOW DID NOT FIND. IF THE FACTS FOUND ARE NOT SUFFICIENT TO SUPPORT THE DECREE, THE CASE MUST BE REVERSED. The Government has not excepted to or appealed from the finding of facts in the decree of the Court be- low, and THEREFORE in a case of this nature where an extraordinary special remedy is given, it is concluded by such finding. We submit that the Government must stand or fall on that opinion on the findings of fact in that opinion and on the decree. We appealed from it. The Government did not. We filed exceptions to it. The Government did not. The Government, we submit, stands and must stand on that opinion and that decree. It cannot now and in this court claim another decree by disregarding that opinion and that decree. The charges made in the bill were of a conspiracy in 1870 and different unlawful acts were charged prior to 1890. Rebates from railroads were charged. Illegal contracts with railroads were alleged. Unlawful acts of competition. All 129 these were in pursuance of a conspiracy made, the bill said, in 1870 and continued until 1906. The Court below found the conspiracy originated since 1890, not in 1870 and followed by the unlawful acts prior to 1890, but the conspiracy did not originate until after 1890. Is not this a distinct finding of fact, which, unappealed from by the Government, is conclusive on it ? The words of the decree are: The decree recited that (Section 1) in and prior to the year 1899 there were twenty corporations in various states engaged in commerce in petroleum and its products among the states, and that one of these was the Standard Oil Com- pany of New Jersey; "that since the year 1890 the defendants named in section two of this decree have entered into and are carrying out a combination or conspiracy, in pursuance whereof about the year 1899" * * * they increased the capital stock of the corporation and con- veyed to it the different properties. "That this combination or conspiracy is a combina- tion or conspiracy in restraint of trade and commerce in petroleum and its products among the several states, in the territories and with foreign nations. * * *" Section 2: "That the defendants, John D. Eockefeller, William Eockefeller, Henry H. Eogers, Henry M. Flagler, John D. Archbold, Oliver H. Payne, and Charles M. Pratt, hereafter called the seven individual defendants, united with the Standard Oil Company and other defendants to form and effectuate this combination, and since its for- mation have been and still are engaged in carrying it into effect and continuing it." 130 Here follow the names of the different corporations, and this portion of the decree giving these names, then continues : "have entered into and became parties to this combina- tion and are either actively operating or aiding in the operation of it; that by means of this combination the defendants named in this section have combined and conspired to monopolize, have monopolized, and are con- tinuing to monopolize a substantial part of the com- merce among the states, in the territories and with for- eign nations, in violation of section 2 of the anti-trust act" Is not this a distinct finding of fact which unappealed from by the Government is conclusive on it. We have hereinbefore (pages 15-30) especially con- sidered the Court's opinion on facts, and have called atten- tion to the fact that no finding in that opinion supports the averments of the bill or conflicts with the findings of fact in the decree. In treating of the fact whether the seven did control the group, the Court found they did, but did not find they conspired to do any unlawful act prior to 1890. The Court did say they combined (not conspired) to secure con- trol of competing refineries, but such combination was not unlawful if it used lawful means, and the Court did not find such unlawful means were used or intended. Webster defines Combine: "To form a union; to agree; to coalesce; to con- federate." He defines Conspiracy: "A combination of men for an evil purpose. An agreement between two or more persons to commit a crime in concert." 131 If it is now alleged by the Government that there are facts in this case which the Court below should have found, but did not, and which facts the Government now asks this Court to find, the reply is the Government has not appealed, and under the established practice cannot now be heard to al- lege error on the part of the Court below. What the Government asks this Court to do is practically to allow it to assign error. This proceeding is in Equity, but by a special statutory proceeding wherein the power of the Court is sharply defined. It is a summary proceeding on "petition setting forth the case/' As soon as the parties are notified "the Court shall proceed as soon as may be to the hear- ing and determination of the case." In such a proceeding, to allow the Government to turn its back on the case as the Court below ruled it, and claim that this Court should take up and consider nearly twenty thousand (20,000) pages of evidence in passing on disputed questions of fact, and that with the necessarily limited time counsel have for argument in the crowded condition of the dockets of this court they should argue and discuss such evi- dence, is, we submit, unreasonable. A party cannot complain of a finding from which he has taken no appeal. McGourkey vs. Toledo & Ohio Railway, 146 U. S., 536, 569: * * as no appeal was taken by the defend- ant from this decree, of course it is not entitled to com- plain of this finding in this court." 132 Chittenden et al. vs. Brewster, 2 Wallace, p. 195 : " * * * the rule is settled in the appellate court that a party not appealing cannot take advantage of an error in the decree committed against himself, and also that the party appealing cannot allege error in the de- cree against the party not appealing. If the appellees de- sired to avail themselves of this error in the decree they should have brought a cross appeal. By omitting to do so they submit the correctness of the decree as to them. The case stands before the appellate tribunal the same as if the error had been waived at the hearing." Carey vs. Brown, 92 U. S., p. 175. The "Stephen Morgan" 94 TJ. S., p. 604. Mount Pleasant vs. Bedcwith, 100 U. S., p. 527 : "Parties who do not appeal from the final decree of the Circuit Court cannot be heard in opposition to the same when the case is regularly brought here by other proper parties. They may be heard in support of the decree and in opposition to every assignment of error, but they cannot be heard to show that the decree below was erroneous." London vs. Taxing District, 104 U. S., p. 774: "The city took an appeal from that part of the decree which gave to the appellant affirmative relief, but that appeal has been dismissed * * * for want of prosecution. The case stands here now as though no such appeal had been taken. The city can therefore only be heard in support of the decree as it stands. This has long been the settled rule in this court. ATI appeal 133 brings up for review only that which was decided ad- versely to the appellant." Landram vs. Jordan, 203 U. S., p. 62 : "According to the rule that has been laid down in this court, Gabriella, as she did not appeal, cannot go beyond supporting the decree and opposing every assign- ment of error." Daniell's Chancery Pleading and Practice, vol. 2, p. 1488: "But if the application is to discharge an order as not being justified by the evidence which has been used in the Court below, the Court of Appeals looks at that evidence only which is recited in the order as having been read." At p. 1459, note: "The distinction between an appeal in Chancery and an appeal to the House of Lords is important, and should be borne in mind; for the effect of the appeal is different, and it is the latter class of appeals which pre- vails in the United States. An appeal in Chancery is a rehearing, and the Appellate Court has power to deal with the whole case. Kireton Coal Co., L. E. 7 Ch., 730. And the Appellate Court may make a decree as upon a trial de novo. * * * Upon an appeal to the House of Lords the respondent cannot argue, without a cross appeal, that the decree below was too favorable for the appellants. Kellett vs. Kellett, 3 H. L. Cas., 161 ; Yates vs. University College, L. R., 7 H. L., 438. In the United States, as a general rule, the ap- pellee cannot be heard to assign error." (See cases ante}. 134 CASE CONSIDERED DE NOVO. QUESTION. From pages 4 to 10, ante, we have discussed the issue raised by the pleadings and we may here briefly re-state it thus: Have the seven appellants and associates using different methods of holding their properties and carrying on business as private traders conspired or combined to restrain and gain a monopoly of interstate and international commerce by means prohibited by the Sherman Act ? We have so far endeavored to prove that the Court below was in error in finding : (1) That the seven individuals controlled all the ap- pellants. (2) That the decree as entered, (a) was not justified nor required by the Northern Securities case; (b) that the mere transfer in 1899 of properties justly used in private trade to the Standard Oil Co. of New Jersey was not a violation of the Sherman Act; (c) That the decree in form far exceeded the power given to the Court sitting in Equity by the Sherman Act. (3) We have suggested that the Government not having appealed is bound by the decree as to the questions, of fact. But now (4) We propose to show considering the case de nova that it is without merit, and the petition should be dismissed. 135 IV. THE THING WHICH, AND THE ONLY THING WHICH, THE GOVERNMENT, IN ITS PETITION, DOES COMPLAIN OF, IS THAT WE WERE, WHEN THE PETITION WAS FILED, THEN RESTRAINING AND MONOPOLIZING IN- TERSTATE AND FOREIGN TRADE IN OIL. WHATEVER TRADE THERE THEN WAS, WAS DISTINCT AND INDEPENDENT FROM WHAT- EVER TRADE THERE HAD BEEN IN 1890. THE GOVERNMENT DOES NOT AND CANNOT COM- PLAIN OF OUR MONOPOLIZING (WHICH WE DENY) THE STATE INDUSTRY OF PRODUC- ING AND REFINING OIL; BUT ONLY THAT WHEN THE PETITION WAS FILED, WE WERE ACTUALLY RESTRAINING AND BY UNLAW- FUL MEANS MONOPOLIZING THE THEN IN- TERSTATE AND FOREIGN TRADE IN OIL. This Brief, in support of the foregoing proposition, dis- cusses and maintains the following: (1) The fact that the Standard Oil Company of New Jersey when the petition was filed, was the owner, either by direct title or through stock ownership where the legal title was vested in other corporations, of certain refineries, pipe lines, reservoirs, tank cars and other property, and was using them all under one ultimate management for the production or purchase of crude oil, its transportation and storage, and the refining of it and its products, and the sale of the same, does not of itself violate the Sherman Act. The appellants were lawfully entitled to so hold and use in interstate trade 13G such combined properties. To succeed in this case, the Gov- ernment must also show that the said Standard Oil Company was then in 1906 using its power to actually restrain inter- state or foreign trade in oil, or was then in 190G atempting to or was by illegal means excluding others from said trade and attempting to monopolize the same, or a part thereof. (2) That the Government's case depends solely and only on the Sherman Act, which Act is wholly prospective and not at all retrospective. That the Petition asking for equitable relief must of necessity assert, and the Government must maintain, that when the Petition was filed in Novem- ber, 1906 (and not at some prior time), the appellants were then actually engaged in illegally restraining and monopoliz- ing interstate and foreign trade in oil, contrary to the pro- visions of that Act. In such proceedings as this, the sole and only relief the Government can ask is to prevent, restrain and prohibit the continuation of the particular things which are violations of the Sherman Act. (3) This case involves, and only involves, the ques- tion of the restraint and monopolization of inter-state and foreign trade in oil in November, 1906, when the Petition was filed; it does not involve any alleged restraint or monop- oly of the oil industry in any of the States, and even if it had been proved (which it has not) that the defendants mo- nopolized the production and refining of oil in each of the States in which it carried on business, or that it monopolized the sale of oil in each of those States (which it has not), these would in no way aid the Government in the mainten- ance of the present suit, which involves only the question of the violation of the Federal Statute, which statute is passed to protect only interstate and foreign trade. (4:) Each of the alleged conspirators in this case as citizens of the United States had the right as such citizens 137 to adopt such calling or trade as to him was most conducive to the exercise of his liberty, and to enter, if he desired, into interstate and foreign trade; and having adopted such trade or industry, it became his property just as much as if he had invested his money in a parcel of real estate. Each had the right to follow such trade, associate himself Avith others, and adopt such means, as the formation of partnerships, trusts and corporations, which the law allowed in so following; and to use all his ingenuity, skill and property to make his business a success. He might lawfully enter and compete for the interstate and foreign traffic; there is no federal law which limits or attempts to restrict the extent to which he may compete for that interstate and foreign traffic, or denies his right to associate others with him in partnerships or in corporations or so-called trusts, in such competition. (5) The federal law allowed and allows each of the individuals to compete freely for the interstate and foreign traffic in oil and its products. He may use all the weapons his ingenuity and skill can suggest to wage a successful war- fare. His rights to compete are not limited to merely such as are fair or reasonable, but are only limited by such as are unlawful and directly tend to the violation of the Sherman Act. No federal law has or does restrict such competition by saying it must not be "unfair" or "undue" or "unreason- able," but gives the widest liberty in such strife and limits the means only by forbidding the use of that which is unlaw- ful. The federal law also allows and assures to each com- petitor whatever share, however large, of the interstate or foreign trade in oil he or they may win. Provided his means are not unlawful, he may win all he can of such trade, even gain a temporary monopoly and temporarily fix prices. Such 138 monopoly is comparatively harmless if the future trade is left open to competition. (6) The Sherman Act was passed to protect trade and further competition. The Act does not forbid, but recog- nizes as lawful, combinations, corporations, and trusts en- gaged in interstate and foreign trade, and only prohibits them from making contracts directly, substantially and im- mediately restraining such trade or attempting by unlawful means to monopolize the same. It makes such restraint and monopoly a crime and in- flicts, on conviction, severe penalties for such offense. It does not limit the quantity of such trade any one or more may gain. It does not forbid the legitimate growth of lawful business, however great that growth may be, nor does it forbid the wealthiest of corporations and men to en- gage in such trade. It permits one set of competitors to purchase the prop- erty of other competitors solely to avoid further competi- tion. The mere size of the competing corporations or com- binations is immaterial. In addition to the indictment and punishment, and dis- tinct from it, the act allows the courts, on petition of the Gov- ernment, to restrain, prohibit and prevent the continuance of acts forbidden by said act, and which it makes crimes. To sustain the present petition, the Government must clearly prove : (1) The commission by appellants of a crime. (2) That such crime was actually being com- mitted when the petition was filed in November, 1906. 139 (7) The alleged monopoly that is complained of is not in the ownership of the oil or refineries or pipe lines them- selves, nor in the production or refining of oil, but merely in the intangible, shifting, uncertain thing called interstate and foreign trade in oil. The monopoly of a trade at common law was forbidden because, and only because, it excluded all others from prac- ticing such trade, and seems to have been then limited to a Royal Grant, as, for example, giving the exclusive right to manufacture playing cars. It was and is, a distinct thing from engrossing, regrating or forestalling the market, all of which were based on the prevention of artificial prices for the necessaries of life. No one of these falls under Federal jurisdiction but each is subject to state control only. To prove a monopoly as is here alleged, the Government must show that the monopoly (using the word in its popular sense) was created by unlawful means and that the defendants, when the petition was filed, were using unlawful means to exclude others from the trade. (8) The present litigation is between the Federal Government and certain of its citizens. The questions in- volved are solely the rights of these Federal citizens and the effect upon those rights of the Sherman Act, and whether these Federal citizens have violated the provisions of that Act. The violation of that Act, the Act itself makes a crime, and the Government must prove the commission of such crime by acts unlawful under Federal laws. There was and is no such thing as a Federal crime, aside from express Congressional acts, and as no such act was 140 in existence prior to 1890, as to the matters charged in the petition, all the matters and things done by the defendants prior thereto are immaterial. (9) The character of the oil business was and is such that a great corporation was and is an economic necessity for carrying on that industry ; the facts in this case and the his- tory of the development of the oil industry prove that what is commonly called the Standard Oil Company was the neces- sary means by which the industry was fostered and advanced, and without which it would have languished and been much less successful. The growth and success of the Standard Oil Company was the result of the individual enterprise and the natural laws of trade, and the position gained by it was the natural result of the lawful use of competition direct- ed to a unique and unpar ailed business by a strong, earnest, intelligent group of men with abundant capital, where the risks and the uncertainty of the business justified more than usual profits in the handling of the same. It was not the result of unlawful means but of skill, unremitting toil, de- nials and hardships, where continuous use of skill, labor and capital in forty years reached a great success. (10) To prove a violation of Section one of the Sher- man Act the Government must show when the petition was filed that we were then by contract actually restraining inter- state trade in oil. To prove a monopoly under Section two of the Sherman Act, the Government must show: (1) That the appellants were, when the Petition was filed, then using unlawful means to maintain their control of the industry. (2) That the appellants were then by unlawful means excluding others from said industry. 141 DISCUSSION. (i) This case is one where individual citizens, being the joint owners of private non-competitive prop- erties, are using the same in private trade. They are not in a public or quasi public business. Their business is confined to one thing only: i. e., crude petroleum and its products. They are producers, manufacturers and traders in it. As such, their rights and privileges are far different from that of competing railroads or gas companies or businesses or occupations impressed with a public duty. They may deal with whom they chose and refuse to deal with others. They may compete for the whole interstate trade in oil and lawfully win. The extent of their properties, the extent of their business, the eager energetic methods with which it is carried on, are not forbidden, but are encouraged by the law. The partnerships, limited partnerships and corpora- tions through which they work are all private traders, and if the Petition in this case is to be believed, managed and controlled by the seven individual appellants. Their pipe line system is an indispensable and absolutely necessary adjunct to their refineries, to transport to them the oiL They do carry principally from the wells to their reser- voirs or tanks oil for others; but this is a distinct and com- paratively small part of their business, and does not char- acterize or stamp or necessarily connect itself with their other and main business of refining crude petroleum and selling the refined oil and its by-products. The consideration of the case should begin with a recog- nition of these facts, and the acknowledgment of the truth 142 that such cases as the Trans-Missouri Freight Associa- tion, the Joint Traffic Association and the Northern Securi- ties Company are entirely different, governed by different rules ; and to consider them is merely to mislead as the North- ern Securities case did the Court below. We should also remember that the Court below declined to find in favor of the Government on the charges in the petition of fraud and unlawful conduct which were denied in the answer and on which issue was joined. (II) This case only involves interstate and for- eign commerce; and limiting even the word "com- merce," I further state that this case only involves inter- state trade in oil and its products. I include in the word "trade " (a) the article traded in while, but only while, it is in actual transit from one state to another; (b) the bargaining for the same or exchange of the articles ; (c) The transportation from one state to another of the articles. All three of these make up the interstate and foreign trade. Such trade has no direct relation to the owner- ship of the article traded in, but solely and only to its presence as the thing transported and bargained about. When you speak of interstate trade, you mean not the article dealt in, except as the object of trade, but the bargaining for the selling of and the transportation of that article between the states. The oil, before it goes into interstate trade, is not under Congressional control. 143 The federal Government does not concern itself with how one acquired the article put into interstate trade. When the article traded in has been joined with the general mass of state property, it has passed out of interstate trade, and no matter what may be the future means used to gain the state trade in that article, this does not violate the Sherman Act or bring it under federal control. Anything then done before the oil got into interstate commerce, or after it got out of interstate commerce, cannot Fe a violation of the Sherman Act. (Ill) This case in nowise involves any question under the statutory laws of any of the States, or of the common law of any of the States in reference to what constitutes a restraint of trade or a monopoly of trade, or any policy of Ohio or Illinois. No matter what vio- lations there may or may not have been of State laws or of the common law of any one of the States as to re- straint of trade or monopoly, such are now and here wholly unimportant. As the Supreme Court said in the Knight & Co. case, 156 U. S., 10, the "monopoly and restraint denounced by the Act are the monopoly of interstate and international trade or com- merce/ 7 and not of "a monopoly in the manufacture of a necessity of life." This case does not involve how or when or by what means the appellants acquired their title to all their properties; or whether in any respect they violated any of the State laws 144- in so doing; whether, for example, in any State they gained a monopoly of the refining business or the pipe line business. All these things are matters between the several States and the appellants and not between the United States and the appellants. "The power of the State to impose restraints and burdens on persons and property in conservation, and promotion of the public health, good order and pros- perity, is a power originally and always belonging to the States; not surrendered by them to the general Gov- ernment." Fuller, C. J., Lottery case, 188, U. S., 364. Douglass vs. Kentucky, 168 U. S., 488. U. 8. vs. E. C. Knight & Co.. 156 U. S., 16. The present case solely and only involves the use of products of that property in the interstate trade, and while it is so in it. Until it enters into the interstate trade, its acquisition and ownership are matters not within Federal jurisdiction. Fuller, C. J., said in the Knight Case, 156 U. S., 16, that Congress did not attempt by the Sherman Act to "assert the power to deal with monopoly directly as such ; or to limit and restrict the rights of corporations created by the States or the citizens of the States in the acquisi- tion, control or disposition of property; * * * or to make criminal the acts of persons in the acquisition and control of property which the States of their resi- dence or creation sanctioned or permitted." The extent to which Congress may control the ownership, is not here for discussion, for in the Sherman Act it is only sought to control not the thing itself (except where it 145 authorizes its forfeiture) but contracts, combinations, con- spiracies and monopolies which interfere with and restrain free open trade between the States. In this suit the petition mentions crude oil and its products. It alleges violations only of the Sherman Act. The sole question is: Are the appellants violating the Sherman Act; and the sole statute we have to study and construe is the Sherman Act. Unless the Government has proved that when the peti- tion was filed the appellants were then actually violating the Sherman Act, its case fails. Let me assume (what is not a fact) that the appellants have gained a monopoly of the manufacture of refined oil and practically control the refining of oil in different States. Admittedly, that is not a matter of which this Court has jurisdiction, or, indeed, can have. The alleged violation of State laws or the formation of State monopolies or the crea- tion of restraints of trade inside the States is foreign to the discussion. This case does not involve any title or property right of the appellants. All such titles and property rights are con- ferred and governed by the laws of the several States, and over those cases and over such property or property rights congress has no control. In the Northern Securities Case, Mr. Justice Harlan said that the purchase of stock in a State corporation the acquisi- tion and sale of property were under State control; and 146 he added that the Federal Courts of Federal laws could not compel the dissolution of a State corporation. Northern Securities Case, 193 U. S., 19T. Kidd vs. Pearson, 128 U. S., 1. This does not deny that to determine whether the ap- pellants have violated the Sherman Act you may take into consideration all the facts and circumstances in the case, but it does deny that because the appellant may or may not have used in different instances improper methods to gain State trade or properties, you can infer from such State viola- tions that the defendants violated the laws for interstate trade. (IV) These appellants have not been indicted and are not being tried on the criminal side of the court for something HERETOFORE done in violation of the Sherman Act. The Sherman Act does provide penal- ties for such violation, makes the crime a misdemeanor, and declares that, on conviction thereof, certain punish- ments shall be inflicted. That portion of the Act is the criminal portion, and clearly indicates a trial in the methods assured to the individual by the Constitution of the United States. Such a trial, under the Federal Constitution, Article III, must be by jury; the proof would have to be beyond a reasonable doubt ; the charge would be a prior well-defined act ; and the results would have far other and different consequences than under the present case. In one sense, indeed, the two distinct, independent provisions of the Act, i. e., punishment for a crime already committed and prevention of further commission of a con- tinuing crime have close connection with each other ; for to 147 find an indictment on the criminal side as well as to file a petition on the civil side, requires proof of the identical crime. The difference is that on the criminal side you refer solely to the past, while on the civil side you refer solely to the present. The Sherman Act is a Criminal Statute. United States vs. Freight Association, 58 Fed. 58, 77, Sanborn, J. : "The Anti-Trust Act is a criminal statute/' Northern Securities Company vs. United States, 193 U. S., 197, 401, Holmes, J. : "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/' As the thing charged is a crime, it is by no means cer- tain that the Government should not prove its case beyond a reasonable doubt. In considering the degree of proof, the Supreme Court of Missouri said in State vs. Continental Tobacco Co., 177 Missouri, page 1 : "However, it must be remembered that this pro- ceeding partakes of the nature of a criminal prosecution, severe penalties are imposed; hence, it is not sufficient 148 to warrant a finding adverse to respondents, that we may entertain strong suspicions, or even strong probabilities, of their guilt. Such conclusion should only be reached upon a clear showing of the testimony, fully satisfying the minds of the Court that they were guilty of the violations of the law as charged in the information." The Sherman Act has no retroactive effect, but is prospective only. The Supreme Court said in the Trans-Missouri Case, 166 U. S., 342, that "there can be no question of any act being regarded as a violation of the statute which occurred before it was passed." In Deuber Watch Company case, 66 Fed. Rep., 637, 641, the Circuit Court of Appeals said that the only acts that the plaintiff could contend were forbidden by the Sherman Act (< are those done after its passage/' (V) That the case involves the Sherman Act only, and not some supposed Federal common law, and is governed and must be determined solely by the Act, seems perfectly plain. The petition's prayers for relief are only under the Sherman Act. Thus the first prayer is that the Court decree that the acts done are "in violation of the Act of Congress of July 2nd, 1890, entitled 'An Act to protect trade and commerce against unlawful restraints and monopolies.' 7 -149 The second prayer is for a decree that the individual defendants "in violation of the provisions of Sections 1 and 2 re- spectively of the said Act of Congress, approved July 2nd, 1890, entered into an agreement," etc. The third prayer is that the holdings etc., be decreed "to be in violation of said Act of Congress." So each of the other prayers is based solely on the Sher- man Act. There is no other federal statute authorizing the filing of such a petition, or giving the extraordinary power to a court of equity to restrain the commission of a crime in such cases as alleged in the petition. The prayer that the acts done under the alleged con- spiracy "are in derogation of the common rights of all the people of the United States" is probably rhetorical and so intended, because no one could suppose this court had such power. The Wilson Act merely refers- to imports from foreign nations, and not to interstate or foreign export trade, and therefore has no application to this case. In the Addyston Pipe Case, 78 Fed. Rep., 712, where the United States filed the petition, the Court said : "In a suit such as this in the name of the United States jurisdiction depends alone upon the (Sherman) Act." Not upon any alleged Federal common law, but solely upon the Sherman Act. 150 (VI) The size or magnitude of a business is not controlled by the Sherman Act, and therefore the size of the Standard Oil Company, its large properties, re- sources and power are just as lawful under the Sherman Act as if it owned one refinery instead of eighteen, or one mile of pipe line instead of thousands. The Court below so ruled : " * * * monopolies of part of interstate and inter- national commerce by legitimate competition, however successful, are not denounced by the law and may not be forbidden by the Courts." (Rec, A, p. 585). Judge Hook said : "Magnitude of business does not alone constitute a monopoly, nor effort at magnitude an attempt to monop- olize." (Rec. A, p. 589). And again Judge Hook said (Rec. A, p. 590) : "Success and magnitude of business, the rewards of fair and honorable endeavor, were not among the evils which threatened the public welfare and attracted the attention of Congress." In the Northern Securities Case (193 U. S., 407), Justice Holmes said, speaking of the size of the corporation or its wealth or power : "* * * the act of Congress makes no discrimination according to size. Size has nothing to do with the mat- ter." 151 In United States vs. American Tobacco Company, 164 Fed., 700, 709, Judge Coxe said: "It has never been held that the mere fact that a business is large and is extended over a wide territory renders its promoters amenable to the statute. Success is not a crime." United States vs. American Naval Stores Co.. 172 Fed., 455, 458, 459, (So. Dist. Ga., May 12, 1909) : District Judge Sheppard, charging the jury in an in- dictment under Sections One and Two of the Sherman Act: