from coal-mining companies was essential. Its chief backing came from independent coal operators. The most important and influential of them was the firm of Simpson & Watkins, who controlled and operated eight collieries in the region, having an annual output of more than a million tons. The time for such a competing means of transportation was auspicious. Much of the output of the district not tied up by contracts of sale or transportation was pledged to this project and much more was promised.

The construction of this projected independent railroad would not only have introduced competition into the transportation of anthracite coal to tide water, but it would have enabled independent operators reached by it to sell their coal at distributing points in free competition with the defendant coal companies.

The defendant companies combined together for the purpose of shutting out the proposed railroad, and preventing competition with them in the transportation of coal from the mines to other States, and the sale of coal in competition with their own controlled coal in the markets of other States. The plan devised was to detach from the enterprise the powerful support of Simpson & Watkins and the great tonnage which their co-operation would give to the new road, by acquiring the coal properties and collieries controlled by that great independent firm of operators. This would not only strangle the project, but secure them forever against new schemes induced by the large coal tonnage produced by these eight collieries, and secure not only that tonnage for their own lines, but keep the coal forever out of competition with that of their own coal-producing companies.

The scheme was worked out with the result foreseen and intended. The capital stock of a small concern called the Temple Iron Company, aggregating only $240,000, was all purchased. That company was then operating a small iron furnace near Reading. Its assets were meager, but its charter was a special legislative charter from the State of Pennsylvania, which gave it power to engage in almost any sort of business, and to increase its capital substantially at will. Control of that company having been secured, it was used as the instrument for the purpose intended.

The Temple Company increased its capital stock to $2,500,000 and issued mortgage bonds aggregating $3,500,000. Simpson & Watkins agreed to sell to the Temple Company their properties for something near $5,000,000. They accordingly transferred to the Temple Company the capital shares in the several coal companies, holding the title to their eight collieries, and received in exchange $2,260,000 in the shares of the Temple Company, and $3,500,000 of its mortgage bonds, which they subsequently transferred and sold for cash. Thus the Temple Company became a mere holding company for and was entirely owned by the combination of the defendant railroad companies, each company having a proportionate interest therein. This combination of the defendants through the Temple Iron Company was effective in bringing about the desired result. The New York, Wyoming & Western Railroad Com

pany was successfully strangled, and the monopoly of transportation collectively held by the six defendant carrier companies was maintained.

It was then charged by the government that the defendant companies made with nearly all of the independent operators along their lines, new contracts containing substantially uniform provisions agreed upon beforehand by the defendant carriers in concert, some of the operators contracting with one of the defendants and some with another, by which such operators "severally agreed" to deliver on cars at breakers "to one or the other of the defendant carriers, or its subsidiary coal company, all the anthracite coal thereafter mined from any of their mines now opened and operated, or which they might thereafter open and operate at a price 15 to 50 cents more than such operators could realize when shipping and selling on their own account. The object of these contracts was to control the sale of the independent output, so as to prevent it from being sold in competition with the output of their own mines.

The government asked that the combination be dissolved. The lower court held that the combination effected through the Temple Iron Company was void, but refused to hold that the contracts between the defendant companies and the independent operators were likewise illegal. In consequence, appeals were taken both by the government and the defendants to the Supreme Court.

MR. JUSTICE LURTON delivered the opinion of the court:

The defendants insist that these contracts, i. e., between the defendants and the independent operators, were but the outgrowth of conditions peculiar to the anthracite coal region, and are not unreasonably in restraint of competition, but mutually advantageous to buyer and seller.

That the act of Congress does not forbid or restrain the power to make normal and usual contracts to further trade by resorting to all normal methods, whether by agreement or otherwise, to accomplish such purpose, was pointed out in the Standard Oil Case, 221 U. S. 1. In that case it was also said that the words "restraint of trade" should be given a meaning which would not destroy the individual right of contract, and render difficult, if not impossible, any movement of trade in the character of interstate commerce, the free movement of which it was the purpose of the statute to protect. We reaffirm this view of the plain meaning of the statute, and in so doing limit ourselves to the inquiry as to whether this plan or system of contracts entered into according to a concerted scheme does not operate to unduly suppress competition and restrain freedom of commerce among the states.

Before these contracts there existed not only the power to compete, but actual competition between the coal of the independents and that produced by the buying defendants. Such competition was, after the contracts, impracticable. It is, of course, obvious that the law may not compel competition between these independent coal operators and the defendants, but it may at least remove illegal

barriers resulting from illegal agreements which will make such competition impracticable.

Whether a particular act, contract, or agreement was a reasonable and normal method in furtherance of trade and commerce may, in doubtful cases, turn upon the intent to be inferred from the extent of the control thereby secured over the commerce affected, as well as by the method which was used. Of course, if the necessary result is materially to restrain trade between the states, the intent with which the thing was done is of no consequence. when there is only a probability, the intent to produce the consequences may become important. United States v. Terminal R. Asso., 224 U. S. 383, 394; Swift & Co. v. United States, 196 U. S. 375.

But

In the present case the extent of the control over the limited supply of anthracite coal by means of the great proportion theretofore owned or controlled by the defendant companies, and the extent of the control acquired over the independent output which constituted the only competing supply, affords evidence of an intent to suppress that competition, and of a purpose to unduly restrain the freedom of production, transportation, and sale of the article at tide water markets.

The case falls well within not only the Standard Oil and Tobacco Cases, 221 U. S. 1, but is of such an unreasonable character as to be within the authority of a long line of cases decided by this court. Among them we may cite: Northern Secur. Co.v. United States, 193 U. S. 197; Swift & Co. v. United States, 196 U. S. 375; National Cotton Oil Co. v. Texas, 197 U. S. 115; United States v. Terminal R. Asso., 224 U. S. 383, and the recent case of United States v. Union P. R. Co., 226 U. S. 61.

We are thus led to the conclusion that the defendants did combine for two distinct purposes,-first, by and through the instrumentality of the Temple Iron Company, with the object of preventing the construction of an independent and competing line of railway into the anthracite region; and, second, by and through the instrumentality of the 65 per cent. contracts, with the purpose and design of controlling the sale of the independent output at tide water. *

(The court then discusses the question of the several so-called "minor combinations," such as the acquisition in 1901 of a control. of the Central Railroad of New Jersey by the Reading Company and holds that the lower court was guilty of no error in refusing to enjoin these transactions since they were not proved to be in furtherance of a general scheme of combination between all the defendants.)

The opinion continues as follows:

The decree of the court below is affirmed as to the Temple Iron Company combination. It is reversed as to the 65 per cent. contracts, and the case will be remanded with direction to enter a

decree canceling each of these contracts, and perpetually enjoining their further execution, and for such proceedings as are in conformity with this opinion.

Note.-In Eastern States Retail Lumber Dealers' Association v. United States, 234 U. S. 600 (decided June 22nd, 1914), the Supreme Court decided that the concerted, systematic, and periodic circulation by associations of retail lumber dealers, among their members, through a so-called "official report," of confidential information of the names of wholesale lumber dealers engaged in interstate trade, selling directly to consumers, violates the prohibitions of the Sherman Anti-Trust Act as a conspiracy in restraint of trade between the States. Even though each retailer belonging to the association was free to act as he saw fit, nevertheless, the court held that these reports were circulated with the intention and effect of causing the retailers to withhold their patronage from the listed wholesalers, and thus directly and appreciably impair their interstate trade. The words of Mr. Justice Day, delivering the opinion of the court in this case, are very significant when applied to cases of this character. He says (page 614): “A retail dealer has the unquestioned right to stop dealing with a wholesaler for reasons sufficient to himself, and may do so because he thinks such dealer is acting unfairly in trying to undermine his trade. 'But,' as was said by Mr. Justice Lurton, speaking for the court in Grenada Lumber Co. v. Mississippi, 217 U. S. 433, 'when the plaintiffs in error combine and agree that no one of them will trade with any producer or wholesaler who shall sell to a consumer within the trade range of any of them, quite another case is presented. An act harmless when done by one may become a public wrong when done by many acting in concert, for it then takes on the form of a conspiracy, and may be prohibited or punished, if the result be hurtful to the public or to the individual against whom the concerted action is directed.' When the retailer goes beyond his personal right, and, conspiring and combining with others of like purpose, seeks to obstruct the free course of interstate trade and commerce and to unduly suppress competition by placing obnoxious wholesale dealers under the coercive influence of a condemnatory report circulated among others, actual or possible customers of the offenders, he exceeds his lawful rights, and such action brings him and those acting with him within the condemnation of the act of Congress."

Note.-In Hopkins v. United States, 171 U. S. 578. The members of the Kansas City Stock Exchange agreed under the by-laws of their organization to transact no business with traders who were not members of their association, and further to charge commissions in accordance with rates fixed by the association. The members bought live stock shipped into the State from other States and sold the same not only to the large packing houses in Kansas City, Missouri, and Kansas City, Kansas, but also shipped them to other outside markets. The Government sought to dissolve the exchange on the ground that it was a combination in restraint of interstate trade. The Supreme Court held that the local business of buying live stock at stock yards in the city by members of an exchange as commission merchants is not interstate commerce, although most of the purchases and sales are made in other States, and therefore not contrary to Sherman Anti-Trust Law.

5. Criminal Section of the Sherman Act.

UNITED STATES v. JAMES A. PATTEN, ET AL.
COTTON CORNER CASE.

226 U. S. 525. January 6, 1913.

This was a criminal prosecution under the Sherman Anti-Trust Act, in which the defendants were charged with engaging in a conspiracy in restraint of trade. It was alleged that the defendants were to do what is commonly called "running a corner in cotton." The court analyzed the averments in the counts of the indictment as follows:

1. The conspirators were to make purchases from speculators upon the New York Cotton Exchange of quantities of cotton for future delivery, greatly in excess of the amount available for delivery when deliveries should become due.

2. By these means an abnormal demand was to be created on the part of such sellers, who would pay excessive prices to obtain cotton for delivery upon their contracts.

3. The excessive prices prevailing upon the New York Exchange would cause similar prices to exist upon other cotton markets.

4. As a necessary and unavoidable result of their acts, said conspirators were to compel cotton manufacturers throughout the country to pay said excessive prices to obtain cotton for their needs, or else curtail their operations.

The defendants demurred to the indictment on the ground that it did not set forth an offense within the meaning of the criminal clause of the Sherman Act. On this point the contention of the defendants was sustained by the Circuit Court, whereupon the Government appealed the case to the Supreme Court.

MR. JUSTICE VAN DEVANTER delivered the opinion of the court. We come, then, to the question whether a conspiracy to run a corner in the available supply of a staple commodity, such as cotton, normally a subject of trade and commerce among the States, and thereby to enhance artificially its price throughout the country, and to compel all who have occasion to obtain it to pay the enhanced price or else to leave their needs unsatisfied, is within the terms of section 1 of the Anti-Trust Act, which makes it a criminal offense to "engage in" a "conspiracy in restraint of trade or commerce among the several States.' The Circuit Court, as we have seen, answered the question in the negative; and this, although accepting as an allegation of fact, rather than as a mere economic theory of the pleader, the statement in the counts that interstate trade and commerce would necessarily be obstructed by the operation of the conspiracy. The reasons assigned for the ruling, and