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business of each other, and gave to carriers and shippers some choice as to the way by which they would enter the city. The promoters of the defendant company, the Terminal Railroad Association planned to obtain the control of every feasible means of railroad access to St. Louis, or means of connecting the lines of railway on opposite sides of the river. By successive steps the association acquired the terminal railroad lines, the Eads Bridge, the Merchants Bridge, and finally the Wiggins Ferry, so that the three independent terminal systems were combined into a single system.
It was alleged that certain practices of the terminal association were arbitrary and discriminatory. The complaints related to rates for certain short hauls, rebilling at certain points, and exemption from such rates, in favor of other points, as well as general arbitrary conduct of the facilities owned and controlled. The lower court dismissed the suit of the government, thereupon an appeal was taken to the Supreme Court.
MR. JUSTICE LURTON delivered the opinion of the court: * *
We come, then, to the question upon which the case must turn: Has the unification of substantially every terminal facility by which the traffic of St. Louis is served resulted in a combination which is in restraint of trade within the meaning and purpose of the anti-trust act?
It is not contended that the unification of the terminal facilities of a great city where many railroad systems center is, under all circumstances and conditions, a combination in restraint of trade or commerce. Whether it is a facility in aid of inter-state commerce or an unreasonable restraint, forbidden by the Act of Congress, as construed and applied by this court in the cases of Standard Oil Co. v. United States, 221 U. S. 1, and United States v. American Tobacco Co., 221 U. S. 106, will depend upon the intent to be inferred from the extent of the control thereby secured over instrumentalities which such commerce is under compulsion to use, the method by which such control has been brought about, and the manner in which that control has been exerted. We are not unmindful of the essential difference between terminal systems properly so described and railroad transportation companies. The first are but instrumentalities which assist the latter in the transfer of traffic between different lines, and in the collection and distribution of traffic. They are a modern evolution in the doing of railroad business, and are of the greatest public utility. They, under proper conditions do not restrain, but promote commerce. * * *
While, therefore, the mere combination of several independent terminal systems into one may not operate as a straint upon the interstate commerce which must use them, yet there may be conditions which will bring such a combination under the prohibition of the Sherman Act. The one in question, counsel say, is not antagonistic to, but in harmony with, the anti-trust act, because it expands competition by extending equal conveniences and
advantages to all shippers located upon each of the three systems for all traffice to and from St. Louis; expedites and economizes the service.
The terminal properties in question are not so controlled and managed, in view of the inherent local conditions, as to escape condemnation as a restraint upon commerce. They are not under a common control and ownership. Nor can this be brought about unless the prohibition against the admission of other conpanies to such control is stricken out and provision made for the admission of any company to an equal control and management upon an equal basis with the present proprietary companies. (The opinion then discusses the practices of the association with respect to arbitrary charges on certain "short hauls," also an exception to these charges in the case of traffic originating in a section known as the “Green Line Territory” and also the practice of rebilling and of making a distinct hauling charge at East St. Louis. The Court finds that the violation of the anti-trust act is found principally in the methods of the administration and management of the properties and facilities of the association rather than in any inherent violation as found in the agreement consolidating the above described three systems. The opinion continues): Plainly the combination which has occurred would not be an illegal restraint under the terms of the statute if it were what is claimed for it, a proper terminal association acting as the impartial agent of every line which is under compulsion to use its instrumentalities. If, as we have pointed out, the violation of the statute in view of the inherent physical conditions, grows out of administrative conditions which may be eliminated and the obvious advantages of unification preserved, such a modification of the agreement between the terminal company and the proprietary as shall constitute the former the bona fide agent and servant of every railroad line which shall use its facilities, and an inhibition of certain methods of administration to whch we have referred, will amply vindicate the wise purpose of the statute, and will preserve to the public a system of great public advantage.
These considerations lead to a reversal of the decree dismissing the bill. This is accordingly adjudged, and the case is remanded to the district court, with directions that a decree be there entered directing the parties to submit to the court, within ninety days after receipt of mandate, a plan for the reorganization of the contract between the fourteen defendant railroad companies and the terminal company, which we have pointed out as bringing the combination within the inhibition of the statute.
First. By providing for the admission of any existing or future railroad to joint ownership and control of the combined terminal properties, upon such just and reasonable terms as shall place such applying company upon a plane of equality in respect of benefits and burdens with the present proprietary companies.
Second Such plan of reorganization must also provide definitely for the use of the terminal facilities by any other railroad not
electing to become a joint owner, upon such just and reasonable terms and regulations as will, in respect of use, character, and cost of service, place every such company upon as nearly an equal plane as may be with respect to expenses and charges as that occupied by the proprietary companies.
Third. By eliminating from the present agreement between the terminal company and the proprietary companies any provision which restricts any such company to the use of the facilities of the terminal company.
Fourth. By providing for the complete abolition of the existing practice of billing to East St. Louis, or other junction points, and then rebilling traffic destined to St. Louis, or to points beyond.
Fifth. By providing for the abolition of any special or so-called arbitrary charge for the use of the terminal facilities in respect of traffic originating within the so-called 100 miles area, that is not equally and in like manner applied in respect of all other traffic of a like character originating outside of that area.
Sixth. By providing that any disagreement between any company applying to become a joint owner or user, as herein provided for and the terminal or proprietary companies, which shall arise after a final decree in this cause, may be submitted to the district court upon a petition filed in this cause subject to review by appeal in the usual manner.
Seventh. To avoid any possible misapprehension, the decree should also contain a provision that nothing therein shall be taken to effect in any wise or at any time the power of the Interstate Commerce Commission over the rates to be charged by the terminal company, or the mode of billing traffic passing over its lines or the establishing of joint through rates or routes over its lines, or any other power conferred by law upon such commission.
Upon failure of the parties to come to an agreement which is in substantial accord with this opinion and decree, the court will, after hearing the parties upon a plan for the dissolution of the combination between the terminal company, the Wiggins Ferry Company, the Merchants' Bridge Company, and the several terminal companies related to the Ferry and Merchants' Bridge Company, make such order and decree for the complete disjoinder of the three systems, and their future operation as independent systems, as may be necessary, enjoining the defendants, singly and collectively, from any exercise of control or dominion over either of the said terminal systems, or their related constituent companies, through lease, purchase, or stock control, and enjoining the defendants from voting any share in any of said companies or receiving dividends, directly or indirectly, or from any future combination of the said systems, in evasion of such decree or any part thereof.
UNITED STATES v. READING COMPANY.
READING COMPANY v. UNITED STATES.
ANTHRACITE COAL TRUST CASE.
226 U. S. 324. December 16, 1912.
A petition in equity was filed by the United States in the circuit court of the United States for the Eastern District of Pennsylvania, for the purpose of enforcing the provisions of the Sherman AntiTrust Act against an alleged combination of railroad and coal-mining companies formed for the purpose of restraining competition in the production, sale, and transportation of anthracite coal in commerce among the States.
The defendants originally were as follows:
The Philadelphia & Reading Railway Company, the Philadelphia & Reading Coal & Iron Company, the Lehigh Valley Railroad Company, the Lehigh Valley Coal Company, the Delaware, Lackawanna & Western Railroad Company, the Central Railroad Company of New Jersey, the Erie Railroad Company, the New York, Susquehanna & Western Railroad Company, the New York, Susquehanna & Western Coal Company, the Lehigh & Wilkes-Barre Coal Company, the Pennsylvania Coal Company, the Hillside Coal Company, the Reading Company, and the Temple Iron Company. By an amendment certain other defendants were brought in, consisting of holders of contracts made by independent operators of coal mines.
The bill alleged that anthracite coal is an article of prime necessity as a fuel, and finds it market mainly in the New England and Middle Atlantic States. The deposits of the coal, with unimportant exceptions, lie in the State of Pennsylvania, but do not occupy a continuous field, though found in certain counties adjoining in the eastern half of the State, and embrace an area of 484 square miles. This coal region is from 150 to 250 miles from tide water. The region itself is broken and mountainous, and the natural conditions and character of the deposits are such that the mining and reduction of the coal to suitable sizes for domestic use require very large amounts of capital. Its value commercially is dependent, in a large degree, upon quick and cheap transportation to convenient shipping points at tide water, from whence it may be distributed to the great consuming markets of the Atlantic Coast States.
The whole problem of advantageously developing these deposits and supplying the eastern demand for fuel was one which presented enormous difficulties. From an early day it has been the settled policy of the State of Pennsylvania to encourage the development of this coal region by canal and railroad construction, which would furnish transportation to convenient shipping points at tidewater. One of the defendant carriers, the Delaware, Lackawanna & Western Company, was given the power to acquire coal lands and engage in the business of mining and selling coal in addition to the business of a common carrier, and all railroad companies were permitted to aid in the production of coal by assisting coal mining companies through the purchase of capital stock and bonds. Thus, it has come about that the defendant carriers not only dominate the transportation of coal from this anthracite region to the great distributing ports at New York harbor, but also through their controlled coalproducing companies, produce and sell about 75 per cent. of the annual supply of anthracite. As a further direct consequence of the relation between coal-producting and coal-transporting companies, it has come about that the defendant carrier companies and the coal-mining companies affiliated with the carrier companies now own or control about 90 per cent. of the entire unmined area of anthracite, distributed, according to the averments of the petition, as follows: Reading Company.
per cent. Lehigh Valley Company.
..16.87 per cent. Del., L. & Western Company.
6.55 per cent. Central Railroad of New Jersey.
per cent. Erie Railroad ..
2.59 per cent. N. Y. S. & Western Railroad....
.54 per cent.
89.55 per cent. In addition to the great coal-mining companies subsidiary to one or another of the defendant carrier companies, there are a large number of independent coal operators whose aggregate production from coal lands, in part leased from the railroad companies or the railroad-controlled coal-producing companies, amounts to about 20 per cent. of the annual anthracite supply. These independent operators are said to no longer have the power to compete with the carrier defendants and their subsidiary coal companies, because a large proportion of them have severally entered into contracts with one or the other of the carrier or coal-mining companies defendant for the sale of the entire product of their mines for the consideration of 65 per cent. of the average market price at tide water.
In 1898 many of the independent coal operators in the Wyoming or northern coal field became dissatisfied with the transportation and market conditions under which they were obliged to conduct their collieries. Many contracts for the sale of their coal to the defendant coal companies had expired or were about to expire, and they demanded either lower freight rates or better prices from the coal companies. A competing line of railway from the northern or Wyoming zone of the anthracite region to a point on the Delaware River, where connection would be made with two or more lines extending to shipping points at New York harbor, was projected as a means of relieving the situation. The New York, Wyoming & Western Railroad was accordingly incorporated. Large subscriptions of stock were taken, the line in part surveyed, parts of the right-of-way procured, and a large quantity of steel rails contracted for. As the road was to be mainly a coal-carrying road, support