LIBRARY 
 
 Of THE 
 
 UNIVEJCkliY Of liliNOte 
 
 iiAiisiiGAL mmm, 
 
 JUH 6 1905 
 
 g*n Mje &npvexnv ®<m*t the &tat*&. 
 
 October Term, 1903. 
 
 ill. Library 
 
 ' No. 277. 
 
 The Northern Securities Company, The Great 
 Northern Railway Company, The Northern 
 
 The United States, 
 
 respondent. 
 
 RAILWAY “MERGERS” OPERATING A SUBSTANTIAL DIVISION OF TERRITORY 
 THE RESULT OF AN IRRESISTIBLE TREND OR TENDENCY IN RAILWAY 
 DEVELOPMENT— THEIR INEVITABILITY AS DISCLOSED IN THE 
 HISTORY OF RAILWAY COMBINATION AND AMALGAMATION 
 THROUGHOUT THE WORLD — THEIR CONSONANCE WITH 
 PUBLIC POLICY — THEIR ECONOMIC VALIDITY- 
 CONSTITUTIONAL CONSIDERATIONS. 
 
 ARGUMENT AMICUS CURIAE . 
 
 Charles F. Beach, Jun., 
 
 Pioneer Press Building , 
 
 St. Paul, Minnesota. 
 
Return this book on or before the 
 Latest Date stamped below. 
 
 Theft, mutilation, and underlining of books 
 are reasons for disciplinary action and may 
 result in dismissal from the University. 
 University of Illinois Library 
 
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 MAV 6 
 
 APR 1 7 
 
 8 1966 
 
 1978 
 
 1978 
 
 
 
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 October Term, 1903. 
 
 The Northern Securities Company, The Great 
 Northern Railway Company, The Northern 
 Pacific Railway Company, and Others, 
 
 appellants, 
 
 v. 
 
 The United States, 
 
 RESPONDENT. 
 
 ARGUMENT AMICUS CURIAE. 
 
 STATEMENT. 
 
 *71 
 
 Whatever may turn out to be the technical legal 
 quality or character of the Northern Securities Company 
 in respect of its promotion, organization and operation, 
 as it may ultimately be fixed by the final judgment of 
 
 V 
 
 this court, or, in other words, whatever it may at the end 
 
 . A 
 
 <5~~be held to be as matter of law — and putting that ques- 
 — tion and those considerations quite aside for the mo- 
 ment — it is a fact, which sufficiently appears in the rec- 
 ord and out of it, that what was sought to be accom- 
 plished and all that <ds actually accomplished through 
 ijtt® Northern Securities Company is a unity of inter- 
 
2 
 
 est between the owners of two lines of railway doing 
 business mainly in the same territory.^ There has been 
 brought about a community of interest between the 
 owners of what the Circuit Court found to be two 
 heretofore rival and competing lines , growing out of 
 the ownership by the Northern Securities Company of 
 a majority of the shares of the two companies. ^ The 
 creation of the Northern Securities Company was de- 
 
 A ff — 
 
 signed to place and does place the ownership of these 
 shares in a single interest, and it was no doubt de- 
 signed to make for and certainly does make for economy 
 in the operation of the properties. Whatever else it may 
 be and whatever else it may do, it certainly is and does 
 that. When we eliminate the rhetoric on the one hand 
 and the explanation on the other, this stands out as the 
 one essential fact. 
 
 Furthermore, it also appears in the record that the 
 
 A shareowners scheme put into effective operation through the North- 
 
 arrangement 
 
 fnter sese. ern Securities Company is an arrangement entirely be- 
 tween the owners of two formerly rival and competing 
 lines of transcontinental railway, and not between the two 
 companies, or between them and the public. In other 
 words, it is a sort of an indirect corporate arrangement 
 between the shareowners of two railway companies, and 
 is strictly inter sese . ^It affirmatively appears that neither 
 railway company is a party directly or indirectly to it; 
 
3 
 
 and it does not appear that the scheme in operation inter- 
 feres with, affects, abridges or takes away any right which 
 any member of the public has, or ever had, to fair treat- 
 ment at the hands of either company as a common 
 carrier, or that it has or can have any tendency so to 
 do, unless the mere ownership of the shares of the two 
 companies be held to be a direct restraint of trade. 
 Neither does it appear to curtail, limit or emasculate, 
 to any, even the slightest, extent, any right which any 
 shipper or other person has, or ever had, to invoke the 
 aid of the courts if and when they are injured by any 
 default or wrong-doing on the part of either company./ 
 ^None of the rights of the public is effected one way 
 or the other by the arrangement. ,\The two railways are 
 just as much bound as they ever were to perform all their 
 duties to the public; and they are just as liable as they 
 ever were to suit at the hands of any patron or other person 
 whom they may wrong or injure in any personal or proper- 
 ty right. They are each of them also and equally as much 
 holden as ever to perform all their duties to the State and 
 to the General Government. They are as much as ever the 
 subjects of governmental regulation — State and Federal 
 — as to the rates they may charge for the service they 
 render, and as to the manner in which such service is to 
 be performed. ' It does not appear that the arrangement 
 in question was designed, or could have any tendency if 
 
4 
 
 designed, to shield or protect either of the companies 
 as common carriers in respect of any duty owed by either 
 of them to anyone, or that in fact it has or can have any 
 effect upon any of their relations either to the people or 
 to the State or to the Federal Government, unless it be 
 held that this ownership of the shares of the two com- 
 panies is in and of itself a suppression of competition, and 
 to that extent such restraint of trade as is forbidden by 
 the Sherman law. 
 
 The public no! The public still has in full every remedy it ever had for 
 affected. 
 
 any wrong it may ever suffer; and the plenary powers 
 of the State and of the Federal Government to control 
 the operation and management of the two railways in all 
 respects, as provided by law, is in no degree abridged^ 
 The position of the two companies, qua the people and 
 qua the government, is exactly what it was before the 
 Northern Securities Company was organized, except 
 upon the theory of the effect of the ownership of the 
 shares just referred to, and unless the power incident to 
 the ownership of a majority of the shares is in se 
 restraint of trade. ^ It does not appear that either the 
 people or the government are put in a worse position 
 by the arrangement, but it does affirmatively appear 
 that the owners of the property are put, or believe 
 they are put, in a better financial position. In other 
 words, no outside interest is affected, and the owners of 
 the two lines are, or think they are, benefited. 
 
 
5 
 
 Under present conditions in the United States there 
 can be no competition among railways helpful in any way 
 to the public. The law taken in connection with the sys- 
 tem of joint tariffs universally in force between connect- 
 ing lines now renders all that legally and actually impos- 
 sible. Every duty which it has been thought the railways 
 of the country owe the public is expressly declared and 
 enjoined upon them by the Interstate Commerce law and 
 its amendments. This statute, for example, requires the 
 publication of rates, prohibits their change without notice, 
 makes unlawful a greater charge for a shorter than for 
 a longer distance, forbids pooling and discrimination in 
 every form, etc., etc. There are similar local laws in each 
 of the States; and Commissions, State and Federal, every- 
 where see to their due enforcement.- Competition between 
 railways, therefore, in any real sense, as affecting shippers^ 
 is now as impossible with us as anything well can be, be- 
 cause railways are not allowed to do anything in favor of 
 one shipper as against another which amounts to competi- 
 tion. Declamation about securing by statute or judicial 
 decision a free and unlimited competition between parallel 
 and competing lines, so that all the interests of the public 
 may be sacredly safeguarded, et cetera , et cetera , is, conse- 
 quently, mere cajolery — something to catch and mislead 
 the unthinking. It is heard mostly about election times, 
 as a shibboleth of party politics. 
 
 Legal compe- 
 tition practically 
 eliminated. 
 
i 
 
 A fi nancial 
 arrangement. 
 
 6 
 
 The arrangement sought to be invalidated by this suit 
 being, therefore, one between shareowners niter sese, and 
 not affecting either the two railway companies or the pub- 
 lic or the government, is entitled upon this appeal to an 
 adjudication in the light of these facts. • If it be a fact 
 that the existence of the Northern Securities Company 
 and what it accomplishes does not diminish or curtail any 
 of the rights of the public to good and efficient railway 
 service ; and if it be a fact that the two railway companies, 
 as servants of the public, are as much as ever obliged to 
 do their whole duty to the public as their patrons, and 
 are as much as ever subject to suits and actions at law 
 if they fail therein; if the arrangement in question does 
 not make suits against them more difficult, or in any way 
 Operate to complicate or restrain the action of the law 
 against them; if it does not diminish or take away any 
 fight of the public, or augment any privilege of the com- 
 mon carrier ; if as public carriers and public servants they 
 are no better off, and if their patrons as shippers are no 
 worse off; if finally all these rights, duties and relations 
 are unaffected one way or the other by the arrangement, 
 then the Northern Securities Company is entitled to an 
 adjudication at the bar of this Court without reference to 
 such rights, duties and relations, and to stand or fall on 
 its merits, as a modern scheme or method of American 
 railway regulation, supervision and control on the finan- 
 
7 
 
 cial side. In that state of case and upon that hypothesis 
 it is competent to eliminate from the problem all these 
 extraneous and ulterior considerations, to reduce the 
 rhetoric of the subject to its lowest terms, to disregard 
 the special pleading, to have regard as much as possible 
 to the larger equities of the situation, and to consider 
 the scheme of the Northern Securities Company along 
 financial and practical lines. 
 
 It is very respectfully urged that it will not be unwise 
 for this Court thus to consider this transaction at large 
 and as a whole, and on its economic as well as on its legal 
 side. ^If it be possible to believe that the possession of 
 the bare power incident to the ownership of a majority of 
 these shares — the mere right or the exercise of the right 
 to vote upon them — constitutes in some way and in some 
 legal sense some such restraint of trade as is forbidden by 
 the statute invoked, it will be many times easier to believe 
 that such an indirect, intangible and shadowy restraint* 
 (whatever it is, at the most) is nothing and quite fit to be 
 disregarded as compared to the benefits to the real par- 
 ties in interest, which are asserted to arise from the 
 arrangement — as compared to the economies which it 
 works, the stability of ownership which it secures, 
 the maintenance of the status quo , the orderly, con- 
 
 *“If shape it might be called that shape had none 
 Distinguishable in member, joint or limb.” 
 
Essentially 
 an economic 
 question 
 
 8 
 
 catenations and prudent operation of the financia 
 affairs of the two companies, and the consequent obvious 
 advantages to the owners of the properties without any , 
 even the slightest , offset by way of disadvantage to the public . 
 If it have much sound economic value along these lines, 
 and otherwise, as in the judgment of the owners of the 
 two properties it seems to have, that may be sufficient in 
 this court to outweigh whatever trifling, fanciful or tech- 
 nical objection may be possible to be urged to it on strictly 
 legal grounds. It is matter of common knowledge that 
 men in these days of keen competition in business enter 
 into combinations — form partnerships or “mergers” — in 
 order to get and to increase trade, not to restrain it, to 
 build up and not to pull down the general commercial pros- 
 perity of the community. 
 
 It is the more reasonable for us to ask consideration of 
 the questions involved on this appeal along these lines, 
 because’^at bottom the larger issues in this case are eco- 
 nomic more than legal, and, when the extraneous issues 
 are eliminated, the real question is in fact essentially 
 economic, because it appears that the arrangement at- 
 tacked in this suit affects the internal and not at all the 
 external affairs of the two companies^/ [It touches the 
 interests of the shareowners of two private corporations, 
 and not the interests of the railway companies as common 
 carriers. iUpon further consideration it may seem to be a 
 
9 
 
 combination in restraint of waste more than one in re- 
 straint of trade)' It was conceived and promoted to facili- 
 tate the financial operation of the two properties, and to 
 work economics in the management of the two lines, pri- 
 marily and as far as appears, solely in the interest and for 
 the pecuniary benefit of the owners. That was a lawful 
 purpose and it was economically a sound purpose. 
 Whenever, if ever, what is done in this direction goes 
 beyond that and injuriously affects any outside inter- 
 est — public or private — the shipper or the State, then and 
 then only it becomes unlawful, and then and then only it 
 is, as in any other case of wrongdoing by anybody, ob- 
 noxious to legal proceedings in the proper tribunal. But 
 that would be another story, and that is not this case. 
 
 SYNOPSIS OF ARGUMENT. 
 
 I shall in this argument discuss four propositions which 
 taken together comprehend the view I seek to present, 
 and which seem to me to cover the ground upon this par- 
 ticular phase of the controversy: 
 
 First: Such arrangements between railway owners as 
 that effected through the Northern Securities Company 
 are the result of an irresistible trend or tendency in rail- 
 way development everywhere, and are inevitable. 
 
 Second: They are, therefore, not contrary to public 
 policy, and it is open to this Court so to adjudicate upon 
 this appeal. 
 
10 
 
 Third: They have not in the past been, and cannot in 
 the future be, at all prevented by adverse legislation or 
 Judicial decision. 
 
 Fourth: Any statute which opposes itself to such a 
 trend 01 tendency in railway development is economically 
 unsound. Such unsoundness is not to be presumed of 
 any general federal statute; and when one construction 
 of such a statute opposes it to such trend or tendency, 
 while another, equally open to the Court, puts it in har- 
 mony therewith, the Court is remitted to the latter con- 
 struction. 
 
 That is the case as I conceive it. 
 
 ARGUMENT. 
 
 I. 
 
 These “mergers” operating a substantial division of 
 territory are the result of an irresistible trend or tendency 
 in railway development everywhere, and are, therefore, in- 
 evitable. 
 
 This proposition, put forward as the statement of a fact 
 m railway history, is either true or false; and its truth is 
 to be tested by an appeal, seriatim, to the history of rail- 
 ways and railway development in each of the chief coun- 
 tries in the world. I shall devote no time to the history 
 of railway consolidation in this country, because whatever 
 
II 
 
 the Court may not be assumed to take judicial notice of 
 within the limits of its own jurisdiction, seems to have 
 been carefully compiled and made a part of the record 
 upon this appeal. 
 
 The promotion, organization and existence of the 
 Northern Securities Company is a phase or manifestation 
 of a world-wide tendency to combine and consolidate rail- 
 way lines operating in the same territory. This tendency 
 manifests itself in every country in the world of any com- 
 mercial consequence where there are railways, and most 
 strongly in those countries which exhibit the highest and 
 most complicated commercial development. Sometimes 
 it takes one form and sometimes another, but it every*- 
 where exists as a dominating and controlling force in 
 railway economics. The practical result sought to be ac- 
 complished by the formation of the Northern Securities 
 Company is found to differ in no material respect or de- 
 gree from what is done and accomplished in railway 
 management, operation and control — in one way or an- 
 other — in almost every state in the Union and in every 
 considerable country on the globe where there are rail- 
 ways. Mergers of parallel and competing lines of railway 
 — in one shape or another — so as to operate as a substan- 
 tial division of territory between independent companies, 
 are a natural and absolutely inevitable result of the normal 
 growth and development of that modern scheme of trans- 
 
 An economic 
 evolution. 
 
12 
 
 portation by rail lines which obtains everywhere. They 
 are arrangements of universal and world-wide acceptance, 
 validity, utility and inevitability. The history of the mat- 
 ter throughout the world in detail fully supports this 
 proposition. 
 
 First, then, let us consider the history of railway con- 
 struction and consolidation in England and France, and 
 then on the Continent of Europe generally, and elsewhere. 
 I commence with the English railways only because they 
 are the best illustration of the truth of the propositions 
 I have laid down; and because our case in the United 
 States is most like theirs in England. Our methods and 
 mistakes in railway-making have unfortunately been much 
 the same as theirs — haphazard, competitive and waste- 
 ful. France is properly considered next, because the 
 French lines are the best examples of sound methods in 
 railway building and financiering, and in their govern- 
 mental regulation and control — or, in other words, of how 
 to do it, as these in England are of how not to do it. 
 The sharp contrast is, therefore, instructive. Railway 
 experience elsewhere in the world, to which less detailed 
 attention is given, emphasizes, however, the truth for 
 which I here contend. 
 
 English railways In February, 1872, a Select Joint Committee on Rail- 
 way Companies Amalgamation was appointed by the two 
 
13 
 
 Houses of the English Parliament to investigate and re- 
 port back the condition of the railways of Great Britain, 
 particularly in respect of the consolidation of lines and 
 the division of territory among the greater companies. 
 
 Mr. Chichester Fortescue, in moving the appointment of 
 the Select Committee in the House of Commons, on Feb- 
 ruary 23, 1872, said that “twenty years ago a Committee 
 had reported against the system of amalgamation, but since 
 that Committee reported amalgamation had gone on as 
 merrily as before — the fact being that 5,000 miles of rail- 
 way had been added to the greater railways since that 
 time.” (209 Hansard’s Parliamentary Debates, 943.) 
 
 This Committee called a great number of witnesses and Report of the 
 
 Committee of 
 
 went fully into the details of the matter throughout the 1872 . 
 
 British Islands, and on August 2, 1872, presented a vol- 
 uminous report, from which it appeared that, from the 
 commencement of railway construction in England down 
 to the time of that report, Parliament and the English 
 courts had united in efforts to prevent the consolidation 
 of independent railway companies in that country, wholly 
 without success. The facts reported by the Committee 
 disclosed that by the end of the year 1843 seventy-one 
 separate and independent lines had been constructed, 
 averaging about thirty miles each in length. During the 
 following year the average mileage per independent line 
 was reduced one-half, so that by the end of the year 1844 
 
14 
 
 the average was only about fifteen miles. Between 1844 
 and 1847, six hundred and thirty-seven separate companies 
 had been chartered, with a total authorized length of about 
 9,400 miles of line. Eleven proposals, for example, were 
 made to Parliament for lines of railway through a single 
 narrow valley, where but one line was possible. 
 
 This impossible and uneconomic condition called so 
 loudly for relief that consolidation began about 1847, an< 3 
 go proceeded, by the gradual absorption of the smaller 
 lines by the larger systems, and by a consequent division 
 of territory between the consolidated companies, that by 
 1872 it had come to pass that the railway business of the 
 Kingdom was substantially performed by no more than 
 about six of these great amalgamated companies. 
 
 The first English railway charters contained provisions 
 intended to prevent competition both between the lines 
 themselves and between them and the canals, especially 
 in freight traffic. George Stephenson, the father of En- 
 glish railways, seems to have appreciated clearly the mis- 
 chief to be avoided in the matter of competition, even at 
 that early day, and he, therefore, set himself to the task 
 of getting the railway system in that country started right 
 in this particular. His view on this subject was summed 
 Up in his much-quoted saying that “where combination is 
 possible, competition is impossible.” 
 
i5 
 
 In 1836, a Mr. Morrison, M. P., from Inverness, made 
 a remarkable speech in Parliament, in the course of a dis- 
 cussion of the then English railway situation, in which he 
 pointed out with uttermost clearness that a railroad must 
 in the nature of things be a monopoly; that competing 
 roads will inevitably combine ; that parallel lines are sheer 
 waste of capital, and that fixed maximum rates are useless. 
 (33 Hansard’s Parliamentary Debates, 977 et seq.) 
 
 This utterance is the more remarkable because it stated 
 clearly, at the outset of railway building and before there 
 was any basis of fact and experience upon which to found 
 such generalization, the ultimate principles which long 
 experience has since demonstrated to be sound. 
 
 Thus it is seen that the English railways started right; 
 but that they soon got wrong, and for the first thirty years 
 and more blunders in plenty were made in futile endeavors 
 to construct and operate railroads on the principle of inter- 
 competition. Uncounted treasure was wasted in these 
 attempts, and absolutely nothing but experience was 
 gained by it. By 1872 competition had been substantially 
 eliminated through the operation of natural laws and in 
 spite of hostile legislation and litigation. It was said in 
 Parliament, in the debates over the appointment of the 
 Select Committee in 1872, that there was not at that time 
 a single competitive rate existing in the Kingdom. With 
 the legislation of 1873 the general railway situation in 
 
 Settlement of 
 the question !n 
 England. 
 
Summary of 
 the English po- 
 sition, 
 
 16 
 
 England was fixed and determined, and the fatuous agita- 
 tion for competition ended. The railways ceased to be 
 bugbears, and fears of mischief to the public from the 
 growth of railway influence and power gave place to intel- 
 ligent criticism of railway methods and to a public-spirited 
 determination to get good service at fair rates while giv- 
 ing the companies a free hand to manage their finances in 
 their own way. Thus, after nearly forty years of experi- 
 ment, agitation and disturbance, the English people came 
 back about 1872 to their point of commencement. Mr. 
 Adams, in his “Railroads and Railroad Questions,” says 
 that then England “settled down on the doctrine of laisses 
 faire and President Hadley, in his “Railroad Trans- 
 portation,” says “It might better be said that it has settled 
 down on the policy of specific laws for specific troubles.” 
 By about 1872, as we thus see, the problem was solved 
 by the operation of immutable economic laws, and the 
 decision against competition between lines made beyond 
 all possibility of reversion. 
 
 To make a summary statement and to bring it quite 
 down to date, it appears that in 1847 there were about 
 5,000 miles of railway in England, owned and operated 
 by several hundred independent and competing compa- 
 nies; twenty-five years later there were 13,000 miles of 
 railway, owned and operated by twelve partly competing 
 companies; now there are a little over 15,000 miles, owned 
 
17 
 
 and operated by about six non-competing companies. 
 (Pendleton’s Our Railways, their Origin, Development, 
 Incident and Romance (London 1896); Paish’s The Brit- 
 ish Railway Position, (London, The Statist, 1902).) 
 
 What the English people would have saved in squan- 
 dered capital and wasted effort, if they had not abandoned 
 the sound economic principles upon which they began to 
 construct and finance their railways, and to which they 
 ultimately returned, are sums too vast for computation. 
 The futile effort to preserve the principle of competition 
 between railways in England was the costliest blunder ever 
 made outside of America in any single business matter by 
 any people on the earth since time began. It was a form 
 of insanity which Americans might well have avoided, 
 and it is a sort of politico-mental disorder that American 
 courts are not well employed in fostering and promoting. 
 
 Let us take up the history of some of the greater English 
 companies a little in detail. The London & North- 
 Western Railway was first opened for traffic in 1837, about 
 a month after the accession of Queen Victoria. In 1846, 
 it consisted of a main line from London to Birmingham, 
 with some insignificant branches. In 1852, a writer on the 
 position of the company complains that it “fell a few years 
 back into the error generally committed by railway com- 
 panies of amalgamation with numerous other railway 
 companies. From being a line from London to Birming- 
 
 The London & 
 Northwestern 
 lino. 
 
The Great 
 Western tine. 
 
 The North- 
 Eastern line. 
 
 18 
 
 ham 112^ miles, it has become a line or lines of 539J miles 
 long — five times its original length/’ Since that time it 
 has increased its mileage nearly four-fold, and has merged 
 into its system the Chester and Holyhead lines on the 
 West and the Lancashire and Carlisle on the North, be- 
 sides numerous smaller undertakings too numerous to 
 mention. (Stevens’ Investment & Speculation in British 
 Railways, 79, 80.) 
 
 The Great Western Railway has been absorbing smaller 
 independent lines in its territory for many years, and 
 altogether considerably more than 100 have been so ab- 
 sorbed within the last forty years. Since 1896 it has taken 
 over about 20 such lines, adding thereby 260 miles to its 
 system. Of its total capital expenditure from 1892 to 
 1901, amounting to about 15^ millions sterling, nearly 5 
 millions represented amalgamations. 
 
 The North-Eastern Railway is a consolidation of various 
 small lines which has resulted in a vast net work of 
 railway in the Northeast of England without a single in- 
 truder in the territory in the shape of a competitor. The 
 report of the Select Committee on Railway Amalgama- 
 tion in 1872 contained the following reference to this line: 
 
 “The case of the North-Eastern is a striking illus- 
 tration. That railway or system of railways is com- 
 posed of thirty-seven lines, several of which formerly 
 
19 
 
 competed with each other. Before their amalgama- 
 tion they had, generally speaking, high rates and 
 fares, and low dividends. The system is now the 
 most complete monopoly in the United Kingdom; 
 from the Tyne to the Humber, with one local excep- 
 tion, it has the county to itself, and it has the lowest 
 fares, and the highest dividend of any large English 
 railway. It has had little or no litigation with other 
 companies. Whilst complaints have been heard 
 from Lancashire and Yorkshire, where there are so- 
 called competing lines, no witness has appeared to 
 complain of the North-Eastern; and the general 
 feeling in the district it serves appears favorable to 
 its management.” 
 
 The Great Central Railway which was opened for all Th ® Great Cen- 
 tral line. 
 
 classes of traffic in April, 1899, has a total mileage of 665 
 miles. Of this mileage 465 belongs to it and 200 are 
 jointly owned with other companies. In addition, the 
 company owns 111 miles of canals and tramways. It Is, 
 therefore, a system essentially made up of joint lines and 
 canals. It is also the newest line in England, and may 
 stand for the most recent type of development in that 
 country. (Stevens’ Investment & Speculation in British 
 Railways, 114, 115.) 
 
 Mr. Yerkes and Mr. Morgan, working independently for 
 
20 
 
 London un- the time being, are revolutionizing, consolidating and re- 
 
 derground lines. 
 
 building the antiquated system of underground railway 
 in London, and are thus correcting the faulty competitive 
 construction and operation of these lines hitherto. Their 
 efforts, which are for the present sharply competitive, are 
 working harmony between the former conflicting and com- 
 peting interests, and are bringing order and system out 
 of the old antagonism and confusion. Much new mileage 
 and greatly improved facilities are and are to be the result. 
 It now seems certain that in no very long time all inter- 
 mural transit in London which is wholly or partly under- 
 ground, aggregating nearly 225 miles in length, will be 
 consolidated into no more than two great substantially 
 non-competing enterprises, dividing the territory in a way 
 between them, upon a line (roughly speaking) which runs 
 northwest and southeast through Piccadilly Circus, or 
 dividing, along non-competitive lines as much as possible, 
 about Piccadilly Circus and converging severally therein. 
 The Joint Parliamentary Committee of 1901 reported that 
 it was desirable that the working of underground railways 
 in and around London should be put under the control of 
 some one consolidated interest; and if we read into the 
 future of these underground lines the railway experience of 
 the past in England above ground, that is sure to be the 
 ultimate solution. 
 
 We consider in another place the recent amalgamation 
 
21 
 
 of the South-Eastern and Chatham lines ; and at this point 
 it may be stated that the absorption of small undertakings 
 by the larger railway systems has been continuously in 
 progress in England, and is still proceeding. 
 
 The French railway system was developed a little later French railways 
 than the English, but we must look as far back as the reign 
 of Louis XI, in the latter part of the fifteenth century, if 
 we are fully to understand and appreciate that develop- 
 ment. That sagacious and masterful prince, who reigned 
 from 1461 to 1483, broke effectually the power of the great 
 feudatories, and by a consolidation of authority in the 
 crown laid the foundation of the absolute monarchy. His 
 taking the postal service out of the hands of the feudal 
 authorities and away from the cities and making it a matter 
 of national administration, these four hundred years ago 
 and more, was one of the most notable acts of his reign, 
 and was in a way the first step toward the modern railway 
 system of France. “Modern history,” says President Had- 
 ley, in speaking of the nationalization of the French post- 
 office, “ — the history of nations as such — may almost be 
 said to have begun at this point.” 
 
 What Louis XI did for the power of the crown and for 
 the postal service of the country, Louis XIV and Colbert 
 did in laying the foundation of the national system of high- 
 roads and canals. The Ecole des Pouts et Chaussees was 
 
22 
 
 founded, and trained engineers graduated therefrom laid 
 out, constructed and perfected that splendid system of 
 canals and highways, radiating from Paris and reaching 
 every corner of the Kingdom, which long ago made France 
 the first country in the world in its roads and waterways. 
 There was from the beginning complete organization, 
 intelligent survey and construction and strict supervision; 
 so that an almost perfect system of lines of communication 
 existed in France before railways were known. In no 
 other country had such results been accomplished in road- 
 making, and nowhere else was such completeness of or- 
 ganization and development possible. The genius of high- 
 ways had in some sort come down to France as an inherit- 
 ance from Rome, whose military roads were one of her 
 most characteristic monuments. 
 
 In this state of case, with a perfect system of roads and 
 canals already built and in operation — which made railways 
 seem less necessary in France than in other countries — it 
 is not strange that the French built railways slowly and 
 cautiously. So it was not merely accidental that France 
 moved tardily in this matter.- It is not in the French char- 
 acter to make radical changes, or to do things piecemeal; 
 and it was easy for her highway engineers to see that other 
 nations were blundering in their first railway construction. 
 The racial qualities that distinguish the French, their spirit 
 of order and economy, their notion of proportion, and the : r 
 
23 
 
 conservative good sense in business, all had something to 
 do with their making haste slowly in railway building. 
 
 It is very much the French way to let other people make 
 the initial experiments in new things, and only to take a 
 thing up when h is demonstrably sound and feasible. It 
 is almost a racial instinct, and this is what happened in the 
 development of French railways. 
 
 The result is that they now possess the only railway sys- Th « Frencli 
 
 plan. 
 
 tern in the world which was intelligently conceived from 
 the outset as a unit, which was scientifically planned and 
 laid down by competent engineers working together to a 
 common end. and which was built as a whole. The condi- 
 tions in France that made this possible had their genesis 
 in the dominating sagacity and spirit of order of Louis XI. 
 
 The highways and canals led up to the railway lines, and 
 f he governmental regulation and control of the old land 
 and waterways grew naturally into the present system of 
 railway supervision. The system of roads and waterways 
 existing in 1830 suited the French nation exactly. They 
 were so arranged and classified that each bore its exact 
 proportion of importance, whether national, departmental 
 or local. They were regulated from Paris with ease and 
 with military precision. Never was there so efficient a 
 corps of engineers for carrying out such a scheme as that 
 which is trained at the Ecolc dcs Pouts et Chaussccs. 
 
 The first step taken by the government looking to a 
 
24 
 
 general railway system was the appropriation of a sum of 
 money to pay the government engineers for laying out a 
 general system of railway lines covering the whole of 
 France. When this survey was completed, and while the 
 lines existed only on the maps and blue-prints of the engi- 
 neers, the government next took up the question of owner- 
 ship and management. While other countries had been 
 acting and experimenting and making costly mistakes, 
 France had been reasoning and thinking the matter out. 
 There was a long series of debates in Parliament between 
 1837 and 1840. The plan finally adopted was the concep' 
 tion of Thiers, and was settled upon in 1842. The plans then 
 and thus deliberately conceived and matured — both of en- 
 gineering and of legislation — have since been carried ou| 
 consistently. 
 
 They were sufficiently elastic to be practicable. It waf 
 at the outset a policy of support and control without 
 actual ownership, or, in other words, a policy of subsidies 
 to encourage private companies, and in return for these 
 subsidies a reservation of more or less important rights 
 of State control. As the work proceeded and as new con- 
 ditions arose, amendments and modifications were incor- 
 porated into the plan as originally conceived. In 184^ 
 it was strictly a plan for subsidies; in 1852, extensions 
 of chartered privileges were granted to the companies; ’n 
 t859, a scheme for the guarantee of interest on the bonds 
 
25 
 
 was inaugurated, and, in 1883, the government guarantee 
 was extended to dividends. 
 
 Under the plan adopted thirty-three different companies 
 were chartered, contemplating about 2,500 miles of line. Franco- 
 Building went on rapidly until the Revolution of 1848, 
 and then again after the accession of Napoleon III in 
 1851. The lines have from the beginning been laid down 
 with the idea of avoiding all duplication and all waste of 
 capital; they were surveyed and traced by government 
 engineers, and each part stood in its proper and intelli- 
 gent relation to the whole. Parallel lines were forbidden 
 as a matter of course, and competition was not conceived 
 of as among the possibilities of the situation. By 1852 
 the number of independent systems had been reduced from 
 thirty-three to eleven, and in 1859 the eleven were reduced 
 to six, of which five radiated from Paris. Each had a 
 monopoly in its own territory. Competition running riot, 
 the construction of needless lines as a mere speculation in 
 the securities, rate wars with their attendant iniquities, 
 and the consequent wanton w^aste of money and effort 
 in construction and operation are essentially unthinkable 
 to a French railway engineer or official. New construc- 
 tion is undertaken only as required, and to meet the neces- 
 sities for more lines growing out of the development of 
 any particular territory. 
 
26 
 
 About 1859 it became obvious that a considerable 
 amount of new construction was necessary in order to 
 bring the railway system up to a proper standard of utility 
 and efficiency, and in order to secure this construction, 
 each of the six companies, and each in its own district, 
 undertook to construct a large number of branch lines. 
 The government took the initiative, and in order to facili- 
 tate this new work and to secure it promptly recourse was 
 had to a system of State guarantees of interest on the 
 bonds upon which the money for the new construction 
 was to be raised. This was the plan devised by De Franc- 
 queville. Money was, of course, easily raised by issues 
 of bonds upon which the government guaranteed 4 per 
 cent, this guarantee making the securities instantly mar- 
 ketable and extremely valuable. There was, accordingly, 
 no wasteful financiering, no iniquitous jobs, no lack of 
 funds, no foreclosures, no reorganizations, receiverships or 
 squeezing of investors. 
 
 In 1865 a further plan was proposed in the Chamber 
 for the construction of a net work of local roads not to 
 belong to the six companies, and the municipal authori- 
 ties were given the right to subsidize such lines. Pur- 
 suant to this plan, several thousand miles of these local 
 lines were built throughout the country within the next 
 five years. It was not, however, contemplated th^t they 
 should be combined into systems which might interfere 
 
27 
 
 in any way with the monopoly of the six companies. They 
 were designed to be feeders. However, after the war of 
 1871, the prohibition to combine was successfully evaded, 
 and these local lines by a series of combinations began to 
 be serious competitors in many places to the main systems. 
 This made it necessary for the government to take the 
 matter again in hand, and the problem was ultimately 
 solved by having the great companies take over the local 
 lines within their territories severally, upon terms. 
 
 In 1879, by a decree of July of that year in the Chamber 
 of Deputies, De Freycinet undertook to raise a loan of 
 three thousand millions of francs for the construction of 
 about 10,000 miles of additional line. This plan has been 
 slowly carried out since that time. There was at first some 
 delay, but by the beginning of 1884 this last comprehen- 
 sive scheme of railway development was settled upon, the 
 leading points of which were these: first, that the State 
 hereafter should confine its own railway operations to the 
 small district in the Southwest occupied by what is known 
 as the State line ; that isolated lines which the State owned 
 in various parts of the country should be taken over by 
 that one of the six great companies in whose territory it 
 lay; second, that additional lines as needed should in 
 future be constructed only by the companies 111 whose dis- 
 trict they belong; third, that the State should guarantee 
 each company a minimum dividend, and that when the 
 
 Recent French 
 financiering 
 
28 
 
 amount available for dividends exceeded a certain per- 
 centage — the rate differing for each line — two-thirds of 
 the excess should go to the State. The limit, however, 
 was placed so high that this provision has been practically 
 inoperative. Thus, for example, on the Northern line, the 
 guarantee minimum dividend is 13.5 per cent, while 
 the point beyond which the State shares the excess is 
 22.1 per cent. In the case of the Paris, Lyons & Medi- 
 terranean, the guarantee minimum is 11 per cent, the 
 State sharing in anything beyond 15 per cent, and so on, 
 with slightly lower percentages for the other companies. 
 
 All of the lines in France with one exception are 
 owned and operated by private companies. They are 
 concedes and become state property upon the expiration 
 of the concessions. Meantime they are subject to a strict 
 governmental supervision and control. The length open 
 for traffic on December 31, 1901, was 23,880 miles, which 
 fully meets all the requirements of the country. The orig- 
 inal scheme was for the government to contribute about 
 250,000 francs per mile; and private enterprise to find 
 about 200,000 francs per mile, thus dividing the expense 
 and the ownership. The concessions generally were to 
 fall in, first in about forty and later on in ninety-nine years. 
 When this occurs — about the middle of the present cen- 
 tury — the government will, it is claimed, become pos- 
 sessed of an asset in the shape of railway property suffi- 
 
29 
 
 dent in realizable value to pay off in full the national 
 debt. In 1892 the French railways were conservatively 
 valued at 16,000 millions of francs. The original plans of 
 construction and joint ownership were somewhat modi- 
 fied as time ran on. (Thery’s Histoire des grandes com- 
 pagnies des Chemins de fer frangais (Paris, 1894).) 
 
 In the construction of the French lines there has been 
 less waste of capital and better results for capital than else- 
 where in the world. French railways have cost less and 
 come to more than any others on earth. It need not be 
 argued that the French scheme put in practice would 
 inevitably reduce the cost of construction to a minimum 
 and would secure the best results for the least money. 
 Passing by the matter of the State guarantee of interest 
 and dividends, it may be said that the net earnings of the 
 six private companies have been upon an average far be- 
 yond anything accomplished elsewhere in the world in 
 that respect from railway operation. Furthermore, in 
 face of the strong position of the French railways as 
 monopolies, the government notwithstanding exercises a 
 sufficient control — one which is in many respects admira- 
 ble. No other country has in its civil service such a body 
 of trained engineers and inspectors, and nowhere else are 
 things done so well along these lines as in France. 
 
 A comparison of the rates charged by French railways 
 with those of other continental countries or with England 
 
 Economics of 
 the French 
 scheme. 
 
 French rates 
 and service 
 
30 
 
 are not unfavorable to the French system. They are, 
 speaking generally, lower than our rates in this country 
 for passengers and higher for freight, but that is because 
 a great majority of the passenger traffic is what we know 
 as third class, and because there is comparatively little 
 long-distance freight traffic. President Hadley has, how- 
 ever, wisely said: “The average rates per ton-mile are 
 anything but an infallible sign concerning a railroad’s wis- 
 dom or a State’s prosperity.” (Railroad Transportation, 
 202.) And nothing is more certain than that rates may 
 be too low as well as too high, having regard both to the 
 well-being of the carrier and to the best ultimate interests 
 of the public served by that carrier. The monopoly does 
 not work extortion in rates, and it does not prevent proper 
 governmental regulation. 
 
 Coming to the quality of the service rendered, the 
 French lines compare well with the best in ol/ier countries. 
 Their freight and military service is not inferior to that 
 of any other nation; and their passenger service is the 
 fastest and most luxurious, as well as the most comforta- 
 ble and satisfactory, in Europe. The greater number of 
 experienced travelers will, I think, pronounce it, upon the 
 whole, the first passenger service in the world. The lines 
 out of Paris, south and north, in speed and luxury proba- 
 bly have no equals anywhere. 
 
3i 
 
 The French plan, as is seen, forces the numerous inde- 
 pendent companies to work in harmony with one another, 
 while giving each of them an absolute monopoly in their 
 own territory. It renders, therefore, the process of con- 
 solidation within that territory easy and inevitable. What- 
 ever slight attempts have been made in the Chamber to 
 check or prevent combination or monopoly have been 
 promptly overruled as contrary to the general scheme. 
 This was particularly the case in 1875, when Phillipparfc, 
 a Belgium capitalist, undertook to consolidate the local 
 lines as against the six companies ; and even the State itself 
 in the operation of its own lines in the Southwest has never 
 succeeded in breaking into the monopoly of the Orleans 
 Company in that territory. While France prohibits ef- 
 fectively competition between her railway lines, she is con- 
 stantly spending large sums in improving internal water 
 communication; and private carriers using these water- 
 ways without paying any toll carry off more or less traffic 
 from the railways, and are allowed to do so. 
 
 To make a summary statement, we find the facts to be 
 that in France the railway system was intelligently planned 
 as a unit from the outset; that the lines were laid down 
 by competent government engineers and constructed with- 
 out paralleling; that in consequence very little money was 
 wasted in construction ; that competition did not enter into 
 the scheme as originally devised, and that when it arose — 
 
 Summary of 
 the French po- 
 sition. 
 
32 
 
 notably through the consolidations of the net work of local 
 lines built between 1865 and 1870 — it was suppressed by 
 the government; that railway investments have been al- 
 most uniformly profitable, and upon the whole much more 
 profitable than in other countries; that freight rates are 
 not excessive and that passenger rates are very low ; that 
 the public is well served, the passenger service especially 
 being of the very best; that governmental regulation is 
 not hampered or thwarted by the strength of the railways 
 as monopolies; that no mischief and much good seems 
 to have come from the elimination of competition between 
 lines, and that upon the whole the French scheme secures 
 a maximum of adequate, efficient and satisfactory service 
 at a minimum of cost and friction. (Picard’s Lcs Chemins 
 de fcr franqais (Paris, 1884); Ch. Gomel on the railways 
 of France from a historical, statistical and economic point 
 of view, with discussions of railroads in other parts of the 
 world, in the Nouveau dictionnairc d'economie politique, of 
 Leon Say and Joseph Chailley, 10th ed., Vol. 1, (Paris, 
 1900).) 
 
 Ah, but some mocker will say, “it is all very well for you 
 to talk about French railway administration, and its excel- 
 lence, and all that; but all such things are contrary to 
 our American idea of liberty — quite contrary, don’t you 
 know, to the genius of our Anglo-Saxon civilization,” etc., 
 etc. However expressed that will perhaps be some man’s 
 
33 
 
 thought; it often is, when it is said that “they do these 
 things better in France.” Now the short and ready an- 
 swer to all such stuff is that it is imported and decadent 
 twaddle — a phantasm fit only for boys while they are 
 Sophomores, or for old ladies gossiping over their tea 
 cups. It is not a man’s size in this country. To talk 
 about the “genius of our civilization” — whatever that is — 
 as a supposable justification or palliation of haphazard and 
 wasteful methods in the development of our railway sys- 
 tem, or to regard “Anglo-Saxon” notions and misconcep- 
 tions — whatever they may be — as in some vague and in- 
 definable way a sound basis for a differentiation of our 
 railway methods from those of the French is mere im- 
 becility. It is impossible to believe that grown men in 
 the twentieth century, confronted with a real problem, 
 will give it a moment’s consideration. The question is not 
 whether it is Gallic or Saxon, but whether it is good or 
 bad ; not whether it is Latin, but whether it will work. If 
 the French are in possession of any communicable sanity 
 on railroad problems, we want the benefit of it. It is a poor 
 enough excuse for slovenly methods that we have moved 
 along sound “Anglo-Saxon” lines, as if there were some 
 sanctity about mistakes because they are laid to racial 
 defects. All such rubbishy talk is either the stupidest 
 provincialism, or it is the intellectual refuge of men too 
 lazy or too dull to think connectedly on these questions. 
 
Rail ways 
 Belgium . 
 
 34 
 
 We had much better be sane than “saxon” in regulating 
 our railways, and we may well eliminate all considerations 
 of racial difference, so far as they are not imaginary, in 
 looking the railway problem squarely in the face. We had 
 better learn where and how we can, and reap as much as 
 possible full benefit from the experience of every country 
 on the planet where railway administration is sound and 
 successful. 
 
 in The policy of government ownership is perhaps best 
 typified by the Belgian system. Of all countries in the 
 world Belgium probably offered the best field for a State 
 railroad. The country is small, compact and rich, the 
 population crowded, active and intelligent, and the indus- 
 tries varied, all which insured a large volume of local traffic. 
 Moreover, Belgium is on the highway between England 
 and Germany, so that, in addition to a dense local traffic, 
 the Belgian lines were certain to secure considerable 
 through traffic on commodities moving between England 
 and Germany. There was in consequence of all this little 
 room for mistake in locating the main lines, and they were, 
 as in France, for the most part laid down intelligently and 
 built economically. 
 
 Railroad construction began as early as 1833. Private 
 companies were allowed to build lines wherever the State 
 did not choose to build, but competition between the lines 
 
35 
 
 owned by private companies and the State lines was not 
 at any time part of the original scheme. Like the French, 
 the Belgians saw from the start that competition would be 
 uneconomic and wasteful. The private railways increased 
 rapidly from 200 miles in 1850 to 700 miles in i860, and 
 1,400 miles in 1870. This rapid growth of the private lines 
 was accompanied by their inevitable consolidation into 
 systems, and in spite of the fact that competition had not 
 been contemplated, there began in Belgium about 1856 
 a period of railroad war between the State and the private 
 lines and among the private lines themselves. Theoretic- 
 ally, the State had and exercised the power to forbid the 
 private companies from entering into any competition with 
 the State lines, but, in spite of that, competition in Bel- 
 gium after about 1856-57 was keen. The State had the 
 better routes and in some sort the inside track, but some 
 other advantages possessed by the private companies prac- 
 tically offset this advantage. 
 
 This competition working the usual mischief finally 
 drove the government to the expedient of buying out the 
 private companies. This began about 1870. By 1874, the 
 government owned more than half the mileage of the 
 country. By 1880, it owned two-thirds, and in 1902, there 
 were 2,516 miles of railway in the country, all, or prac- 
 tically all, of which is controlled by the State, either 
 through ownership or lease, and competition is in conse- 
 
36 
 
 quence wholly eliminated. The State now owns more 
 than 70 per cent of the total mileage, and operates almost 
 all of the remaining 30 per cent by lease. 
 
 This is in brief the history of the development of rail- 
 ways in Belgium. It appears that competition was not 
 part of the original scheme ; that it nevertheless arose and 
 ran its course ; that when the State realized the disadvan- 
 tage of it, steps were taken to eliminate it entirely, and 
 that this was done by the purchase of the competitive lines. 
 There was at first the inevitable consolidation of the pri- 
 vate lines, eliminating competition between those lines 
 themselves, but intensifying it as between them and the 
 government lines. Then came the consolidation of these 
 lines with the State-owned lines by government purchase, 
 and competition was at an end. It is only another case 
 of the universal tendency to combine, and of the power- 
 lessness of government to prevent it. There is also pos- 
 sibly a suggestion that governments do well to facilitate 
 the elimination of competition when and how they can. 
 
 Italian railways. j n 1878, a Parliamentary commission in Italy undertook 
 an investigation of the railway situation in that country. 
 Testimony was taken throughout the kingdom, and an 
 enormous mass of material collected. In 1881, this Com- 
 mission made its report to the government, which was 
 subsequently published in seven quarto volumes. It was 
 
37 
 
 the most thorough railway investigation ever undertaken 
 in the world, and the report is probably the most valuable 
 in existence. The material parts of it have been trans- 
 lated into French, and are thus available. From the work 
 of this Commission it appears that, prior to the wars which 
 resulted in the union of the Italian States in 1870, the 
 principal railway lines of Italy not only were disconnected 
 and independent of each other, but also constituted iso- 
 lated or strictly local systems for each of the chief inde- 
 pendent states. Thus the lines in Tuscany, in Lombardy, 
 and in Piedmont were wholly distinct both from one an- 
 other and also from those centering in Venice, Rome and 
 Naples. Some of the early charters had come from the 
 Emperor of Austria and one from the Pope: the lines 
 were inadequate to the demands of the business of the 
 country, the service was very poor and the companies sub- 
 stantially bankrupt and irresponsible, but there was plenty 
 of competition. 
 
 The problem after 1870 was to unite and consolidate 
 these scattered and local lines into systems fit for united 
 Italy, to construct new lines, to reconstruct old ones, to 
 re-equip and to reconstitute ; and then to operate the re- 
 constructed lines as a whole. The range of mountains 
 from north to south which constitutes the back-bone of 
 the Italian peninsula dictated a natural division of terri- 
 tory for the amalgamated lines. There was as of course 
 
38 
 
 much local jealousy to overcome. Although Italy was too 
 poor to spend much money in experiments, there was 
 thought to be danger to the autonomy of the new state in 
 permitting foreign capital to come into the railways, and 
 it was prevented by the government, so that, in conse- 
 quence of all these matters and hindrances, things at first 
 moved slowly. Connecting links were first built, which 
 served to unite the isolated local systems, the plan being 
 to consolidate the local parallel and competing lines rather 
 than the connecting lines. Finally the roads fell into four 
 systems — that of Upper Italy, that of Rome, that of the 
 East coast, and that of Sicily and the South. Here, as 
 elsewhere in Europe, competition between parallel lines 
 did not enter into the scheme of construction and recon- 
 struction, and consequently consolidation was not only in- 
 evitable but easy, and it was facilitated wherever there was 
 duplication. Upon the division of territory between the 
 four systems, and with the consolidation of lines within 
 those four territories respectively and the building of the 
 connecting links, the problem of construction was in a way 
 to be solved ; or, in other words, the lines were laid down 
 and ready for operation. 
 
 State owner- Next came the problem of ultimate ownership and pres- 
 
 ship and private 
 
 operation. ent maintenance and operation. Soon after 1870 the State 
 had begun to buy up the lines, especially in the North, 
 where there was danger from Austrian influence, and by 
 
39 
 
 about 1875 a considerable part of the mileage of the king- 
 dom was owned and operated by the State. So that 
 by that time Italy seemed committed to what may be 
 called the Belgian system of State ownership and opera- 
 tion. But Belgium was rich and Italy was poor, and it 
 was soon found that the State was neither managing the 
 lines well nor making any money out of it; there was, 
 therefore, general dissatisfaction throughout the country 
 with the railway system; neither the poorly served public 
 nor the depleted treasury of King Victor Emmanuel was 
 satisfied. 
 
 It was in that state of affairs that the investigation of Result of the 
 
 Italian investi- 
 
 1878 was undertaken, the result of which was that the gation. 
 
 Italian statesmen who had the matter in hand came to the 
 conclusion that it was not the proper function of the Ital- 
 ian State to run its railways; that State management in 
 Italy had proved more costly and less satisfactory than pri- 
 vate management, and that the carrying on of so vast an 
 undertaking by the new State involved political risks and 
 dangers of a serious nature. The outcome was the char- 
 tering in 1885 of three private companies, one, the Adri- 
 atic, for the territory on the east of the Apennines, a sec- 
 ond, the Mediterranean, for the territory on the west, and 
 a third, the Sicilian, for Sicily, the two systems in the 
 peninsula being of about equal consequence, while the one 
 in Sicily was, of course, smaller. A fourth company has 
 
40 
 
 since been chartered to operate the lines in Sardinia. 
 These companies were to take over the rolling stock of 
 the lines within their respective territories at a valuation, 
 and thus become the owners of it, and to maintain and 
 operate the lines, dividing the gross receipts with the State 
 on an agreed basis. So that the ultimate solution was that 
 the State was to own the lines, while private companies 
 were to operate them. Practically the railway business of 
 Italy proper is in the hands of two companies, one on 
 either side of the Apennines, the lines meeting at Naples, 
 Rome, Florence, Milan, and elsewhere. Between 1881 
 and 1897 the length of the Italian railway system almost 
 doubled itself, and in 1898, there were 9,813 miles of line 
 open for traffic. The service is satisfactory and the rail- 
 way system is making rapid progress throughout the 
 kingdom. (Cucheval-Clarigny’s Les Chemins de fer italiens, 
 in Revue des Deux Mondes, July 1 and 15, 1884.) 
 
 Summary of the Thus we see that in Italy, as elsewhere, competition pre- 
 
 Italian position. 
 
 ceded combination ; that it was found to work mischief and 
 that attempts at combination were the inevitable result; 
 that when the matter was taken seriously and intelligently 
 in hand by the State, competition was eliminated by law, 
 and the territory divided; and that then, and then only, 
 were satisfactory results secured in railway operation. It 
 appears, therefore, that whether we choose State opera- 
 tion as in Belgium or reject it as in Italy, it is the same 
 
4i 
 
 as far as competition and combination are concerned ; that 
 the same economic laws govern in each case, and that in 
 the long run competition is eliminated. 
 
 Railways in Germany grew up very much as they did in 
 England, at first without any general plan, and without 
 any real comprehension or appreciation of the problems 
 involved. The Germans, however, like the English, seem 
 to have started right on the question of competition. 
 Their earliest statutes explicitly recognized the right to a 
 monopoly in their first lines. The country then consisted, 
 aside from the central Kingdom of Prussia, in large part 
 of a number of semi-feudal principalities, and local railway 
 systems sprang up in each of the States, which now consti- 
 tute the present German Empire, so-called. Prussia fol- 
 lowed Belgium in a general way in her early legislation 
 and initial construction. 
 
 The first state railway in Germany was built in Prussia 
 about 1848-50, from Berlin toward the Russian frontier. 
 Other state lines followed, but, pari passu, many private 
 lines were laid down, some of them securing some state 
 aid, by way of guarantees or subsidies or stock subscrip- 
 tions from the principal States. Some, however, even of 
 the smallest principalities, at first owned their lines out- 
 right and operated them too. So there was at the start 
 every sort of a railway in Germany. This haphazard and 
 
 Railways in 
 Germany. 
 
42 
 
 piecemeal work begot the inevitable result — fierce compe- 
 tition everywhere among the private companies and be- 
 tween them and the State roads. The results were ex- 
 tremely dissatisfactory ; the service was poor and the rates 
 high. 
 
 About 1861, Bismarck came into power, and from that 
 time dates the influence of militarism upon the railway sys- 
 tem of Germany. It has since shaped and coloured the 
 whole development and operation of the German lines. 
 He saw clearly enough that the mixed and competitive 
 system was a bad one, not only from a military point of 
 view, but also from the point of view of the country at 
 large. Steps were, therefore, gradually taken, in Prussia 
 especially, to acquire the private lines and to consolidate 
 competing and conflicting interests. The matter moved 
 slowly because the country was poor, but the mileage 
 nearly doubled between 1865 an d 1875. 
 
 After the war with France in 1871, more rapid progress 
 was made in unifying the railway system of the country. 
 By 1878, there were about 3,000 miles of State-owned and 
 operated lines; 2,000 miles of privately-owned and State- 
 operated lines, and about 6,000 miles of privately-owned 
 and privately-operated lines. In 1881, the government 
 owned more than 7,000 miles of line, only about 3,000 
 miles remaining in the hands of private companies. In 
 1885, the government owned 13,000 miles of line in Prus- 
 
43 
 
 sia alone, while only 1,000 miles remained in private 
 hands. In 1900, there were 30,597 miles of railway in the 
 German Empire, more than 93 per cent of which were 
 owned and operated by the State. Under the present law 
 the government is required to manage the railways “in 
 the interest of general traffic as a single system” (Consti- 
 tution of the German Empire, art. 42), and in 1886 the 
 government issued a Code of Railway Regulation, appli- 
 cable to the whole railway system of the country. (Re- 
 port on Prussian Railways in the English Consular and 
 Diplomatic Reports (London, 1902).) 
 
 Competition practically ceased in Germany by about 
 1875, and for the past quarter of a century the railways 
 of the country have been operated on non-competitive 
 lines. Pooling arrangements with the canals and other 
 competing waterways are sanctioned, in order fully to 
 eliminate wasteful competition and unjust discrimination. 
 So far, therefore, as the experience of the German lines is 
 of value to us, it confirms the views here contended for; 
 and the history of those lines bears out entirely the state- 
 ment upon which my argument is based, that wherever 
 combination is possible competition is impossible, so that, 
 a.- railways develop, territory is inevitably divided between 
 the lines and competition thus effectually eliminated. 
 (Mange’s U exploitation des Chemins de fer de la Prusse 
 depuis lear r achat par Vet at, in Revue des Deux Monde s , 
 May 1, 1893.) 
 
44 
 
 Railways in 
 Austria-Hungary. 
 
 In 1901, Austria-Hungary had 39,014 kilometers of line 
 open for traffic. The first Austrian charter was granted 
 in 1836, and construction went on actively thereafter until 
 the revolution of 1848. The original idea was to follow 
 the French system, and have the lines built and operated 
 by private companies. Their statute of 1838, it may be 
 noted, was the first general railroad law enacted in any 
 country in the world. It provided for undertakings by pri- 
 vate companies, and for guarantees by the State of in- 
 terest upon the cost of construction; it limited dividends 
 on shares to fifteen per cent, and absolutely prohibited the 
 construction of parallel lines. It was discovered, however, 
 as time ran on, that the French system was not well suited 
 to the condition of things in Austria; and in spite of statu- 
 tory prohibition, as the lines were constructed and put 
 into operation, competition ran riot. There was also the 
 usual iniquity growing out of constructing lines for a 
 chance to speculate in the securities ; and the competition 
 of the waterways — of the Danube and the canals — al- 
 though pooling between them and the railways was al- 
 lowed and encouraged, added to the confusion and disor- 
 der of private management. So in 1873, Austria fell into 
 line with the other countries of Europe, and started off in 
 the direction of State ownership and control. In 1885, 
 about three-quarters of the mileage in Austria was, how- 
 ever, still in the hands of private companies, but all the 
 
45 
 
 lines in Hungary were at that time owned and operated 
 by the State. By 1898, more than half of the Austrian 
 lines were under State management, and the tendency sets 
 more and more in that direction. 
 
 In May, 1900, Russia (including Russia-in-Asia) had Russian railways. 
 41,400 miles of completed railway, and 8,000 miles under 
 construction, including the great Trans-Siberian line, 
 which is the greatest railway enterprise yet undertaken 
 anywhere. Work began on this line in March, 1891, and 
 it is just now opening for traffic. The estimated cost is 
 about five hundred millions of dollars. (Gen-are’ s Greater 
 Russia.) The distance all rail from Paris to Port Arthur 
 01 Vladivostok is about 7,000 miles, and it is proposed 
 shortly to arrange a through-car service from la Gare de 
 I'Est to Port Arthur and Peking. The government has 
 furnished a large part of the capital required for construc- 
 tion, and owns and operates about two-thirds of the total 
 mileage in European Russia; it has in addition subsidized 
 and thus controls and dominates the policy of the lines 
 owned and operated by private companies. The tendency, 
 as elsewhere in Europe, is toward complete government 
 ownership and operation. There is, therefore, in Russia, 
 it will probably go without saying, no such thing as hurt- 
 ful competition, and, consequently, none of the evils inci- 
 den thereto. (Guide to the Great Siberian Railway, pub- 
 
46 
 
 lished by the Russian Ministry of Ways and Means of Com- 
 munication (St. Peterburg, 1900); Shoemaker’s Great 
 Siberian Railway (New York, 1903).) 
 
 Railways in j n the smaller European countries we find the same va- 
 the minor coun- 
 tries of Europe, riety in railway operation and control as in other things; 
 
 but the tendency everywhere is to government ownership 
 
 or to such a strict government regulation as effectually 
 
 eliminates anything like competition between the lines. 
 
 Thus in Norway, in 1902, there were reported 1,203 
 miles of line, all now owned and operated by the govern- 
 ment; whereas in Sweden, at the end of 1901, there were 
 7,217 miles of line in operation, of which only 2,392 were 
 government lines. But although in 1893 there were re- 
 ported to be not less than 108 different owners of private 
 lines in Sweden, the law strictly and successfully prohibits 
 competition between them, or between them and the State 
 lines. 
 
 The last available figures for the Spanish lines show 
 8,607 miles open for traffic in that country, all, as in Portu- 
 gal, owned by private companies, but supported and con- 
 trolled by the State. 
 
 In Switzerland, where in 1899 there were 2,396 miles of 
 line in working order, the governmental supervision has 
 until recently been much the same as in Spain. In 1898, 
 by popular vote, it was determined (in view of the evite 
 
47 
 
 <jt over-construction and some hurtful competition in spite 
 of legislative prohibition) to purchase for the government 
 the five chief lines, thus putting Switzerland in the Bel- 
 gian class of countries owning and operating their railway 
 lines. This scheme is now being financed and carried out 
 by the Swiss government. (Haguet’s Le rachat des 
 Chemins de fer suisses et des consequences (Paris, 1902).) 
 
 The railway history of these relatively unimportant Eu- 
 ropean countries is of much less interest and value to us 
 than that of the greater States, but it discloses nothing 
 which makes against the position here maintained. The 
 Italian system has been followed substantially in Holland, 
 and in Denmark and by some of the other minor Scandi- 
 navian countries. 
 
 The construction of railways in India, which commenced 
 in 1853, has been conducted on three different systems: 
 first, the employment of companies under a system of 
 guarantee; secondly, by the State through its own offi- 
 cials; and thirdly, by assisted companies either with or 
 without guarantee or subsidy from the State, and working 
 with capital wholly raised by themselves or partly with 
 capital provided by the State. Out of eight lines con- 
 structed on the first system, five have been purchased by 
 the State. Two of these are worked by companies. The 
 more important, the East Indian line, is carried on by the 
 
 Railways in 
 India. 
 
4 8 
 
 same company that constructed it in the first instance, on 
 special terms as to the sharing of profits. The second, 
 the South India line, is in the hands of a new company, 
 whose capital was subscribed by the shareholders of the 
 old one. The three remaining lines are worked by the 
 State, and all five come into the category of State lines 
 in the accounts of the Government of India. (Macgreg- 
 or’s Ways and Works in India (London, 1894).) 
 
 The total number of miles of Indian railway open for 
 traffic on the 31st of March, 1902, was 25,529. Although 
 construction began about the middle of the last century, 
 the system has been developed almost entirely since what 
 English writers on railway problems speak of as “the rise 
 and fall in England of the great fever known as the railway 
 mania; ” to which detailed reference has hereinbefore been 
 made. The Indian railways were, therefore, planned and 
 constructed in the light of the experience afforded by the 
 home construction and development, and many of the 
 cruder home blunders were thus avoided. They now fall 
 into one or other of four classes; (a) State-owned lines, 
 worked by companies, (b) State-owned and State-operated 
 lines, (c) lines constructed by guaranteed companies, and 
 (d) lines constructed by assisted companies. The English 
 government, following the French lead in that respect, 
 provided for a system of guarantees, by which the neces- 
 sary funds were cheaply found; in laying down the lines 
 
49 
 
 paralleling was avoided, and competition effectively pre- 
 vented. Where there is no competition there is the less 
 incentive for combination, and there seems not to have 
 been any great tendency in the Indian lines to combine. 
 India, therefore, stands negatively for the soundness of 
 my position. (Bell’s Railway Policy in India (London, 
 1894).) 
 
 These railways seem to be rather poor affairs; there is 
 much complaint of indifferent service and high rates. 
 How far these things may be chargeable to the inefficiency 
 of the government or may be due to the system itself does 
 not appear. They have up to the end of 1899 involved a 
 yearly loss to the Indian revenues, but the working of the 
 year 1900 resulted for the first time in the history of the 
 Indian Railway system in a net gain to the State of Rs. 
 87,239, and in 1901 Rs. 1,154,119. From the commence- 
 ment of railways in India, about half a century ago, to the 
 end of the year 1899, the loss to the Indian revenues 
 amounted to Rs. 57,811,487. 
 
 Whatever else may be true of the Indian lines, they have 
 been constructed and are operated entirely on the principle 
 of non-competition and division of territory, and there 
 being no competition there has been little tendency to 
 combine ; in other words, the evil of competition not exist- 
 ing or not being allowed to exist, there is no call for com- 
 bination. This is, as I have said, negative evidence in 
 
50 
 
 support of the contention that wherever competition is 
 possible combination is inevitable. 
 
 Railways in The present railway situation in Mexico is fully disclosed 
 Mexico 
 
 in an exceedingly valuable report recently made to the 
 government by Senor Limantour, Secretary of Finance. 
 It purports to have been based upon a careful investigation 
 of the facts, and is on the face of it as intelligent and com- 
 prehensive a State paper as any that has emanated in re- 
 cent years from any government office anywhere in the 
 world upon the subject. The fact that Senor Limantour, 
 who is now virtually Prime Minister of Mexico, has been 
 nominated by President Diaz as his successor in the presi- 
 dential office suggests his high standing at home and 
 gives weight abroad to his views on these questions. This 
 report, which seems largely to speak the voice of the Secre- 
 tary himself, deals at length with the problems of competi- 
 tion and combination, and discloses the fact that the policy 
 of the Diaz administration, as now settled and determined, 
 is to meet and solve these problems by absolute govern- 
 ment ownership, rather than by any further futile attempts 
 at legislative control. The government, finding that the 
 general railway law of 1898 (from which, when it was 
 passed — as in the case of our original Interstate Commerce 
 law — great things seem to have been expected) was prov- 
 ing inadequate to the due regulation and administration 
 
5i 
 
 of the lines, and realizing the necessity of stronger and 
 surer governmental control, has lately come to the policy 
 of going into the open market and of adopting the same 
 tactics as private individuals or companies in purchasing 
 the shares of such lines as it desires to control. Mexico 
 is, therefore, now fully committed to the theory of govern- 
 mental ownership, if not to that of governmental opera- 
 tion. The government is just now offering to purchase 
 the Vera Cruz & Pacific line, which has just been com- 
 pleted by American capital and lost to its original owners 
 by the recent suspension of the Maryland Trust Company 
 of Baltimore. 
 
 Those portions of Senor Limantour’s report which 
 disclose the processes by which the government has ac- 
 quired and is acquiring such a proportion of the shares 
 of the leading lines as will give it due preponderance in 
 their control are very interesting. The explanations of 
 the causes which have moved the government to this step, 
 as contained in the report, are of an even wider interest 
 and significance to students of the railway problem. In 
 brief, Senor Limantour’s explanation is this: The gov- 
 ernment has until recently been in the usual elementary 
 attitude of encouraging by concessions, subsidies and 
 otherwise all the railways which either citizens or foreign- 
 ers would undertake to build and operate as private enter- 
 prises, in the supposed interest of the most rapid possible 
 
 LIBRARY ' 
 
 UNIVERSITY OF ILLINOIS 
 
52 
 
 development of the country. It was only in 1898 that a 
 general railway law was passed, which, however, soon 
 proved entirely inadequate. It was, therefore, in addition 
 found necessary to prescribe new rules relative to granting 
 concessions for competing lines between points already 
 connected, and to establish a Tariff Commission — some- 
 thing like our Interstate Commerce Commission — which 
 was an attempt, through the agency of a governmental 
 bureau, to prevent combinations in freight rates, and to 
 regulate them in the public interest. 
 
 Influence of the i n the light of the experience of other countries — and, 
 United States. 
 
 as it appears, especially in the light of the experience in 
 the United States — competition between the lines is by this 
 report pronounced harmful, “except where traffic is large 
 enough to support it” — whatever that means. Govern- 
 ment ownership and regulation is declared to be the only 
 real preventive or remedy against such disastrous com- 
 petition — with its inevitable result of the consolidation of 
 competing interests. It is further suggested that the fact 
 that groups of foreign capitalists had undertaken to con- 
 solidate several of the principal lines, obliged the govern- 
 ment to take a definite attitude lest their great railway 
 properties should thus be taken over and controlled by 
 alien capital. It was clearly seen that these contests for 
 territory between the hitherto conflicting interests would 
 eventually and inevitably result in either the forced or the 
 
53 
 
 voluntary consolidation of the competing systems. The 
 law as it stood was inadequate to prevent the acquisition 
 in the open market by any private interest of a control of 
 the shares of any company sought to be acquired, and 
 there was no way to prevent the consolidation of inter- 
 ests through voting trusts or otherwise. 
 
 Specifically, the situation in the early part of 1902, which 
 seemed to drive the government strongly in the direction 
 of State ownership and control, was this: The railways 
 of the country were found already to be in the hands of no 
 more than four groups of capitalists, viz. : the Central, the 
 National (having lately absorbed the International), the 
 Interoceanic and the Mexican — all but the last showing 
 great expansive activity. The Central especially, by the 
 recent purchase of exclusive port concessions and the 
 building of new lines in and out of the City of Mexico, was 
 threatening to cripple the National line. Plainly, there- 
 fore, consolidation between it and the Central would 
 inevitably follow in the ordinary course. 
 
 Meanwhile, through Messrs. Speyer & Co., the National 
 was trying to acquire the control of the Interoceanic route, 
 but this was frustrated by the government. Various cir- 
 cumstances favored the government as against the foreign 
 bankers in its secret move to secure control of the Inter- 
 oceanic’s debentures. “The ability and high financial 
 standing,” says the report, “of the firm representing the 
 
State acquisi- 
 tion and control 
 proposed. 
 
 54 
 
 interests of the Mexican National constituted a serious 
 obstacle to the attainment of our aims, and it was neces- 
 sary to act as we did with decision, rapidity and absolute 
 secrecy.” A proposition for a common exploitation by the 
 government in association with the National, the Inter- 
 national and the Interoceanic companies followed; “but 
 it was soon recognized that such an arrangement could 
 not have the necessary durability nor afford the indispen- 
 sable conditions whereby the companies might secure 
 themselves definitely against the hostility of other corpo- 
 rations to which they might be exposed in time.” The 
 government thereupon, wisely declining to be drawn into 
 any partnership arrangement with the companies, reverted 
 to its original plan, namely, an arrangement such as would 
 give the State primary and absolute control of the three 
 systems, and in such a way as to protect each of them 
 against such future competition as would be sure to arise 
 under the existing state of things. 
 
 The report declares that the government has now deter- 
 mined to grant no concessions hereafter for competing 
 parallel lines, except in territories where dividends can 
 be earned by each such line. Several voting trusts, in 
 some of which the government has had an interest, have 
 existed in Mexico, but some of these have lately been dis- 
 solved upon the advice of American counsel. 
 
55 
 
 It was at first proposed that the government should 
 exercise control of the new consolidated system through 
 the voting trust of the National, already in existence. 
 But, “according to the valued opinion of American attor- 
 neys, who are specialists in affairs of this nature, it would 
 have been attended with many objections of a legal charac- 
 ter, and have proved a fruitful source of litigation.” Ac- 
 cordingly, the consent of its three members was obtained, 
 and the voting trust dissolved, an agreement being entered 
 into with Messrs. Speyer & Co. whereby they were to se- 
 cure for the government 40 per cent or more of the voting 
 shares. The report then enters into a detailed account 
 of the steps by which this was successfully accomplished, 
 4714 per cent of the shares being thus secured. It also goes 
 fully into the question of the probable earnings of the con- 
 solidated railways and of the issuance of treasury notes 
 for $12,500,000, American gold, to pay for them. 
 
 The advantages to the government, growing out of the 
 control of the new consolidated system, is summarized in 
 the report as follows: 
 
 “1. The having obtained by one stroke the control of the 
 lines belonging to the National and International with- 
 out losing control of the Interoceanic. 
 
 2. Having secured a considerable reduction in the total 
 cost of the operation ; and 
 
56 
 
 3- The ability to effect payments in such manner as in 
 no wise to disturb the equilibrium of the budget, and out 
 of funds which in the long run will be recovered by the 
 State.” 
 
 Experience in Repeated reference is made throughout the report 
 the United States 
 
 controlling. to the railway situation in the United States, and it is 
 obvious that our experience has strongly influenced the 
 Mexican government in its new departure in the direction 
 of State ownership. They have learned our lesson before 
 we have learned it ourselves; and, now that Mexico has 
 come into line with the rest of the world in its attitude 
 upon the question of railway competition and combination, 
 the United States stands alone among the greater com- 
 mercial countries of the earth in continued persistence in 
 the futile attempt to secure competition between railway- 
 lines and to prevent combination and the consequent 
 division of territory; and it leaves us upon the general 
 questions involved and upon the larger issues of the rail- 
 way problem, solitary and alone, the most backward nation 
 in Christendom or out of it, — distanced in the matter not 
 only by all the greater countries of Europe, but even by 
 Egypt, Japan and Chili, and, for the matter of that, by 
 Zulu Land and Zanzibar. 
 
 From a return prepared by the French Ministry of Pub- 
 lic Works and published in Le Journal Officiel of May 25, 
 1902 (from which many of the figures throughout this 
 
57 
 
 brief have been taken), it appears that there were in Mex- 
 ico in 1870 no more than 349 kilometers of line; that in 
 1880 there were only 1,120 kilometers, while in 1890 there 
 were 9,713 kilometers, and in 1900 a total of 15,454 kilo- 
 meters of railway in operation — now, as we have seen, all 
 substantially under government control or presently to 
 pass thereunder, as the result of the investigation and com- 
 parison of the advantages of private versus government 
 ownership and operation set forth in Senor Limantour’s 
 report. 
 
 In Australia, State ownership and control has since The Australian 
 
 lines. 
 
 about i860 been absolute and universal. The latest avail- 
 able statistics show 12,926.75 miles of line open, viz.: In 
 New South Wales (June 30, 1902), 3,025.75 miles; in Vic- 
 toria (June 30, 1901), 3,221 miles; in South Australia (June 
 30, 1901), 1,736 miles; in Queensland (June 30, 1900), 2,801 
 miles; and in West Australia, 2,143 miles, by the last re- 
 port. While there was at first some construction by pri- 
 vate companies, every mile is now State railway. The 
 English learned their lesson at home, and when it came 
 to the building and financing of colonial railways, they 
 profited, after a little initial blundering, by their home ex- 
 perience. So that all the later Australian lines have been 
 well and cheaply built, and have become, especially since 
 the legislation of 1884, strictly non-competitive by law. 
 
New Zealand 
 lines. 
 
 South Ameri- 
 can lines. 
 
 French and 
 British African 
 lines. 
 
 58 
 
 In New Zealand, in March, 1902, there were reported 
 
 2,235 miles of State railway, and 88 miles of private lines. 
 
 The figures intimate that there is no serious competition 
 there. 
 
 In South America the governments generally own the 
 lines. In Brazil, in 1897, there were 9,072 miles of line open 
 and 3,500 miles in course of construction. Of this mileage 
 the State actually owns but a small part, but it subsidizes 
 the rest, and thus exercises an efficient control over all, 
 which effectually prevents duplication and competition. In 
 the Argentine there were reported in 1901 about 10,259 
 miles of road, mostly government lines. Chili in 1902 re- 
 ported about 3,000 miles open, of which 1,458 belong to 
 the State. (Castro’s South American Railways (Monte 
 Video, 1893).) 
 
 The French possessions and dependencies in North 
 Africa reported, in 1900, a railway system amounting to 
 4,628 kilometers in length, as against 3,595 in 1890, and 
 517 in 1870; British South Africa seems to have had, in 
 1900, nearly 6,000 kilometers of lines in operation. There 
 were about 2,000 kilometers of line open in the Transvaal 
 at the commencement of the Boer war, and about 400 kilo- 
 meters in the Congo in 1900. The total length of all 
 operated lines in Africa, including the foregoing, the 
 Egyptian lines and some little development in Portuguese 
 
59 
 
 East Africa, amounted in 1900 to 18,467 kilos, substan- 
 tially all of which is government line. Competition and 
 combination are, therefore, not open questions in Africa. 
 
 The several European countries that have built the lines 
 there either operate them directly or see to their operation 
 on a strictly non-competitive basis. 
 
 No useful deductions can be drawn from the lines in Chinese rail- 
 ways. 
 
 China. About 1,000 miles were open in 1902, aside from 
 the Trans-Siberian line. These lines have been construct- 
 ed by British, French, Franco-Belgian and German com- 
 panies, and are so far isolated and insignificant that the 
 question of competition cannot yet have been a serious 
 one. The concessions have, however, not contemplated 
 competition or duplication. An ambitious scheme of con- 
 struction has been outlined, which will be many years in 
 working out. 
 
 Japan in 1900 reported 2,806 miles of private line, and Japanese rail- 
 ways. 
 
 833 miles owned and operated by the State. The gov- 
 ernment lines are worked at a profit. The roads are of 
 three classes, “State,” “Prefecture” and “Village” lines, 
 all maintained wholly or in part at the expense of the 
 government, and subject to complete governmental con- 
 trol. It is proposed in future that all the new lines shall 
 be built and owned by the government. 
 
6o 
 
 Egyptian lines. 
 
 Historical 
 
 summary. 
 
 In Egypt there were reported as of January i, 1901, 
 about 2,063 miles of completed line, 1,403 miles of which 
 are in the Delta of the Nile, and 660 in upper Egypt. Of 
 the total mileage all the standard gauge line, amounting 
 to 1,393 miles, is owned and operated by the State. About 
 670 miles of light agricultural line are owned by private 
 companies, but are operated without competition with the 
 government lines. 
 
 From the foregoing general view of railway history and 
 development throughout the world, it appears — and it is, 
 moreover, a matter of common knowledge — that 'there is, 
 as matter of fact, a universal and irresistible tendency in 
 competitive railways in the same territory to combine and 
 to divide the territory between them ;j that attempts by leg- 
 islation or litigation to prevent it have uniformly failed; 
 that States which at first recognized and sought to en- 
 force the principle of competition between railways have 
 one after another ultimately abandoned the attempt ; that 
 nowhere on the earth, except in the United States, is the 
 principle of competition now recognized or still sought to 
 be enforced ; that railways in new countries or colonies of 
 old countries, constructed during the last quarter of a cen- 
 tury in the light of the experience of the older countries 
 as to competition, have been constructed and operated 
 
6 1 
 
 from the start on non-competitive lines; that the amalga- 
 mation of parallel and competing lines is entirely consist- 
 ent with good service, reasonable rates and adequate gov- 
 ernmental supervision and control; that where railways 
 compete there is always an enormous waste of capital and 
 effort and frequently poor service and high rates ; that the 
 tendency everywhere is to eliminate competition where 
 any measure of it still exists ; that government ownership 
 is good or bad according to the point of view; that there 
 is a strong tendency in Europe, and elsewhere except here 
 and in England, toward government ownership and op- 
 eration; that the governments of Europe, with ten times 
 the police power of our own, have long since abandoned 
 all attempts to hinder and thwart the laws of trade and 
 commerce by restrictive legislation, or to prevent the in- 
 evitable in railway development; that, instead of oppos- 
 ing this economic evolution, the most enlightened Euro- 
 pean governments have on the contrary legalized it, and 
 seek to enforce and regulate it in the public interest ; that 
 the best and cheapest service is secured where competi- 
 tion is impossible, and where the State puts the emphasis 
 of its effort, not on interference with railway finance, but 
 on securing good service at fair rates. 
 
6 2 
 
 II. 
 
 Being thus universal and inevitable these amalgamations 
 operating as divisions of territory cannot be contrary to 
 public policy, and it is open to this Court so to determine on 
 this appeal. 
 
 To avoid misapprehension I ought to say preliminarily 
 that no argument is here contemplated which will put in 
 issue the expediency or wisdom of the Act of July 2, 1890, 
 known as the Sherman Act ; nor is the Court at all to be 
 asked to pass upon the justice or policy of that statute, 
 nor to find it unconstitutional upon its alleged contrariety 
 to public policy. It is conceded that all such considera- 
 tions in respect of this statute address themselves primarily 
 to the Congress, that such questions in this case concern 
 the legislature exclusively, and that with them this Court 
 has, therefore, now nothing to do. 
 
 What I seek to do is to draw the attention of the court 
 to the history of railway development as affecting the sub- 
 ject matter of this litigation; and what I have in mind is 
 an argument on the equity of the statute drawn from an 
 historical consideration of the constitutional questions of 
 public policy involved, arising out of the demonstrable in- 
 evitability of railway consolidations and mergers through- 
 out the world — considerations particularly fit to be urged 
 upon this Court in such a case as this, and proper to con- 
 trol its decision. 
 
^3 
 
 It is quite true that when the legislature speaks, public 
 policy becomes whatever the statute enacts; but it Is 
 equally true that every statute may still be a subject of 
 judicial construction, and that it is always open to the 
 Court, as between two or more possible constructions, to 
 adopt that one which speaks the language of right reason 
 and which is most consonant in such a case as this with 
 those circumstances and conditions which affect the mat- 
 ter throughout the world. To argue that the construction 
 placed upon a statute makes it contrary to public policy 
 is quite another thing than to argue the unconstitutional- 
 ity of the statute on grounds of public policy. It is not 
 here contended that the act is unconstitutional. 
 
 On the contrary my contention is : first, that this aggre- 
 gation or amalgamation of rail lines in the same territory, 
 being universal and inevitable in the normal growth and de- 
 velopment of railways, cannot be contrary to public policy; 
 and, second, that upon this appeal it is competent for this 
 Court by a fair construction of the statute so to adjudge 
 and determine. 
 
 Of a form or phase of railway development which is 
 world-wide contrariety to public policy cannot be alleged. 
 In the very nature of things it cannot be contrary to an 
 enlightened public policy; and any statute which flies in 
 the face of universality and inevitability, if open to con- 
 struction, calls loudly for construction. Just as, for 
 
 Public policy 
 as a rule of con- 
 struction. 
 
The function 
 of the courts ; 
 People v. Haw- 
 kins, 157 N. Y. 1. 
 
 64 
 
 example, we cannot legally predicate nuisance of 
 what is authorized by statute, however distasteful the 
 thing itself may seem to be, so we cannot predicate 
 contrariety to public policy of that which is universal, 
 whatever the plausibility of arguments in the abstract 
 against it, or however much it may seem to come 
 within the formal language of some prohibitory statute. 
 The inevitability and universality of a thing — of such a 
 thing as this — is its sufficient warrant from the stand- 
 point of public policy. Public policy is the policy or gen- 
 eral purpose and spirit of the law. We sometimes call it 
 the policy of the law. So also public policy is convention ; 
 it is, therefore, of the very essence of public policy that 
 whatever is, is right. 
 
 When we speak of public policy we mean the law of the 
 State, and that law is to be found in the Constitution, the 
 statutes and the judicial decisions. {People v. Hawkins, 157 
 N. Y. 1, 12.) It has these three sources, and under our sys- 
 tem equally these three. It is as much the proper function 
 of the Court, when a case arises, as of the legislature or of a 
 constitutional convention, to declare the public policy of 
 the State. A written constitution defines the public policy 
 of a people along general lines ; a statute is a declaration in 
 writing of that public policy in a particular matter; a 
 judicial decision in a given case operates on each of them 
 by way of construction, and thus declares or defines a rule 
 of public policy by interpretation. 
 
65 
 
 Considerations of public policy, when urged to the Court 
 in such a matter as this, are, therefore, in a broad sense 
 constitutional considerations. The federal constitution 
 itself was when adopted nothing more than a reduction to 
 writing of some of the established principles of public 
 policy which then made up the constitution of the more 
 civilized European states, especially of England, and that 
 is all that it is now. So, also, when we speak of “the Brit- 
 ish Constitution” we mean nothing but the body or the 
 sum total of the unwritten principles of public policy which 
 prevail for the time being in that country; and our own 
 federal constitution is nothing more than a statement in 
 writing of some of the principles of public policy which 
 prevail here. The word “Constitution,” as we use it in the 
 United States, is a collective name for the principles of 
 public policy on which our government is based, the funda- 
 mental or organic law reduced to writing. In England 
 a constitutional question is involved every time a question 
 of public policy is raised. There it is a matter of the dec- 
 laration and interpretation of an unwritten law; while in 
 this country our constitutional questions have to do with 
 the interpretation and construction of a written law in the 
 light of the public policy of the time. 
 
 If this be a sound view, it follows that statesmanship is 
 not confined to the legislative branch of a representative 
 
 Constitutional 
 
 considerations. 
 
 Judicial states- 
 manship. 
 
People v. Haw- 
 kins, 157 N.Y. 1. 
 
 Nordenfelt v. 
 Maxim - Norden- 
 felt Guns, etc., 
 Co., (1894) App. 
 Cas. 535. 
 
 66 
 
 government. It inheres oftentimes to the long robe as 
 well ; so that, as has just been said, it is, on occasion, for 
 the bench to define and delimit public policy by the right 
 construction of constitutions and statutes — by judicial pro- 
 nouncement — just as really as for the legislative depart- 
 ment of the government to prescribe it by formal enact- 
 ment. It is the function of the court to construe, and by 
 construction to declare. (People v. Hawkins, 157 N. Y. 1, 
 
 13-15-) 
 
 i 
 
 That has been very much the case in this court in every 
 period of its history. Our Constitution, as much as the 
 English or the French or any other, is the gradual develop- 
 ment of our political sense and intelligence. The thing 
 doesn’t stagnate, it grows. Writing it down on a sheet 
 of paper an hundred and twelve or fifteen years ago didn’t 
 paralyze our intelligence or lay an embargo upon our 
 thinking. So that the question here and now is, not what 
 was public policy an hundred or fifty or thirteen years ago, 
 but what is the public policy as of to-day — and for this 
 Court, what is the most enlightened present public policy 
 — which is now to control in the construction of this stat- 
 ute in this particular case. This notion is well expressed 
 by Lord Watson in a comparatively recent case in the 
 House of Lords : 
 
67 
 
 “A series of decisions based upon grounds of pub- 
 lic policy, however eminent the judges by whom 
 they were delivered, cannot possess the same bind- 
 ing authority as decisions which deal with and form- 
 ulate principles which are purely legal. The course 
 of policy pursued by any country in relation to and 
 for promoting the interests of its commerce must, 
 as time advances and its commerce thrives, undergo 
 change and development from various causes which 
 are altogether independent of the action of its courts. 
 In England, at least, it is beyond the jurisdiction 
 of her tribunals to mould and stereotype national 
 policy. Their function, when a case like the present 
 is brought before them, is, in my opinion, not nec- 
 essarily to accept what was held to be the rule of 
 policy a hundred or a hundred and fifty years ago, 
 but to ascertain, with as near an approach to accuracy 
 as circumstances permit, what is the rule of policy for 
 the then present time. When that rule has been 
 ascertained, it becomes their duty to refuse to give 
 effect to a private contract which violates the rule, 
 and would, if judicially enforced, prove injurious to 
 the community.” (Nor den felt v. M axim-N ordenfelt 
 Guns & Ammunition Co., (1894) App. Cas. 535, 553, 
 554 -) 
 
68 
 
 III. 
 
 These railway combinations have not in the past been and 
 cannot in the future be at all prevented by adverse legisla- 
 tion or judicial decision. 
 
 The English Parlimentary Committee, to whose investi- 
 gation and report reference has hitherto been made in the 
 court of this argument, sum up their view upon the effect 
 of hostile or prohibitory legislation on this subject as fol- 
 lows: “A long and varied experience has fully demon- 
 strated the fact that, while Parliament may hinder and 
 thwart it, it cannot prevent it.” The theory of the British 
 Constitution is that Parliament is omnipotent, and here 
 there is formal admission by Parliament itself, based upon 
 the fullest investigation, that there are things that omnipo- 
 tence cannot do. That was a full generation ago, and 
 now, for more than thirty years past, things have gone 
 on in England on that understanding. No serious at- 
 tempts, since the time of that investigation and that report, 
 have been made to prevent or even to “hinder and 
 thwart” railway consolidation in that country. 
 
 Chatham and Within the last five years the notable consolidation of 
 
 Southeastern 
 
 amalgamation, the London, Chatham & Dover and the London & South- 
 Eastern lines has been effected, which operates to merge 
 two theretofore independent parallel and competing lines 
 
6 9 
 
 and to allot the whole southeastern section of England to 
 the amalgamated company. This, as is usual in that coun- 
 try, was accomplished through special Parliamentary pow- 
 ers, which in this case were sought and obtained without 
 arousing any great opposition, engendering any consid- 
 erable heat, or provoking any declamation about a sacri- 
 fice of the rights of the public. In point of fact, nothing 
 but good seems to have flowed from it. 
 
 Previous to 1899 both these railways had achieved an 
 unenviable notoriety for the inadequacy, slowness, and 
 unpunctuality of their services, for the dilapidated condi- 
 tion of their stations and rolling stock, and generally for 
 the backward state of their accommodation. In the case 
 of the Chatham Company the financial position was also 
 precarious, and though the South-Eastern at one time was 
 nominally much stronger in this respect, it too had lost 
 much ground in the preceding five years, and for 1901 its 
 ordinary dividend at the rate of only 2 per cent was the 
 worst in its history. Competition of the worst kind be- 
 tween the South-Eastern and Chatham Companies was a 
 normal state of affairs, and as the result both railways 
 spent vast sums of capital and revenue for which there is 
 at the present time little to show except duplicate lines 
 and stations, and inadequate provision for traffic where 
 extended accommodation was most required. Many times 
 a fusion of interests had been urged upon the two com- 
 
Parliamentary 
 
 powers. 
 
 70 
 
 panies, but without result. Negotiations for amalgama- 
 tion were entered upon several times, but they always 
 broke down at the crucial moment. 
 
 At last, in 1898, an agreement between the two com- 
 panies was come to, not for a complete amalgamation, but 
 for the pooling of gross revenue and working expenses 
 and the division of net profits on a fixed percentage basis, 
 with additional arrangements for the joint contribution of 
 capital required. It was not the intention of the two 
 companies to seek Parliamentary authority for this ar- 
 rangement, as they were not bound to secure the sanction 
 of any other body than their shareholders. But the gov- 
 ernment virtually intimated that the new arrangement was 
 so important and far-reaching in its bearing on the inter- 
 ests of the public, that the terms of agreement ought to be 
 embodied in a bill. This bill was introduced in Parliament 
 in the session of 1899, and received the royal assent on the 
 1st of August following, and seven months thereafter the 
 new arrangement actually came into operation. 
 
 The preamble to the “Working Union Act” of 1899 
 recites that 
 
 “With a view to avoiding undue competition and 
 unnecessary expense and delays and other incon- 
 veniences arising from diversity of interests and to 
 turning to the best account the respective powers 
 and resources of the two companies * * * it is 
 
7i 
 
 expedient and will be for the public advantage that, 
 subject to the provisions and enactments in this 
 Act contained, the undertakings of the two com- 
 panies should be used, worked, managed, main- 
 tained, and improved from and after the passing of 
 this Act, as one undertaking * * 
 
 The Act constituted a Managing Committee to admin- 
 ister the two railways as one company, that new body 
 being made up of the directors of the two companies. 
 (Stevens’ Investment and Speculation in British Railways, 
 158-160.) 
 
 In its practical effect this amalgamation is in many re- 
 spects not unlike that worked out for the Great Northern 
 Railway and the Northern Pacific Railway through the 
 Northern Securities Company. 
 
 The ease with which this latest English amalgamation 
 has been accomplished suggests that in that country these 
 questions are now forever settled and at rest along sound 
 economic lines. It is true that a short time ago, under the 
 spur of local prejudice, and moved thereto by rather a 
 panicky national conceit, the English government de- 
 parted for a moment from its traditional laisser faire on 
 this subject, and made a boyish and entirely futile effort 
 to prevent the recent International Steamship combination 
 — all which further demonstrates that whether government 
 acts or whether it forbears it is the same. In either case 
 
 These ques- 
 tions settled In 
 England. 
 
72 
 
 the amalgamation is effected and accomplished, and in 
 neither case is the action of the government controlling. 
 With the government and without it alike these consolida- 
 tions go on. If they come to grief, and when they come 
 to grief, it is from the play of natural causes, and not be- 
 cause of legislative or judicial action. 
 
 This “merger” a The substantial unification of these two transcontinental 
 fait accompli. 
 
 railway lines — the Great Northern and the Northern Pa- 
 cific — which is in question in this litigation, has been ac- 
 complished ; the “merger” complained of is a fait accompli; 
 it is something done and settled. What has been thus 
 joined the law cannot put asunder. It may compel a 
 change of the form of union; it cannot alter the fact of 
 union. The hands of the clock do not go backward, and 
 this amalgamation, it may be respectfully urged even at 
 this bar, is now beyond the reach of courts and statutes. 
 Unless this particular matter is something beyond and 
 outside of the laws of railway development which are found 
 to obtain universally, unless this case is an exception to an 
 invariable rule, and unless we can do what has not been 
 done elsewhere on the earth, this working union between 
 these two lines of railway will ultimately prevail over any 
 legislation which attempts its destruction. In the con- 
 struction of such statutes it is for courts to do what they 
 can, and not try to do what they can’t. 
 
73 
 
 The mandate of the Court in this case, it goes without 
 saying, will — whatever it may be — be scrupulously obeyed 
 by every party to the cause. It is our way in this country 
 to bow to the law. But the thing itself will go on and 
 subsist. A judicial decision may “hinder and thwart it, 
 but it cannot prevent it.” Such a decision may disturb and 
 disarrange and postpone ; it may work temporary injury, it 
 cannot work ultimate destruction. AH history demon- 
 strates the absolute truth of this assertion. 
 
 The existence of every consolidated railway system in 
 the United States bears further testimony to the truth of 
 this proposition. It is absolutely and literally true that 
 every one of these amalgamations has been created in the 
 face of the very strongest legislative and judicial opposi- 
 tion possible to be brought against it. The statute books 
 of every state in the Union across which the lines of one of 
 those great consolidated companies run bristle with enact- 
 ments against the combination of parallel and competing 
 lines. Absolute prohibition is the universal law of statute 
 and decision alike; penalties are imposed, fines and con- 
 fiscations threatened, sometimes in constitutions, some- 
 times in statutes, and sometimes in judicial decisions. But 
 in spite of all this, the practical outcome has been every- 
 where the same. A bare mention of the States of New 
 York, Pennsylvania, Texas, the six New England States 
 taken as one, the territory southwest of St. Louis, and the 
 
74 
 
 State of California, and the most cursory consideration uf 
 the railway situation in those territories, severally illus- 
 trates to a demonstration the truth of all that is here 
 claimed — the entire futility of attempts to prevent by stat- 
 ute and judicial decision what in the nature of things can- 
 not thus be prevented. 
 
 Of all this the Court will so far take at least a quasi 
 judicial notice, that I shall not go State by State and sys- 
 tem by system into detail. It might be done if it were 
 necessary in order to get the view I seek to present fully 
 before the Court; and it could be done to the clearest 
 mathematical demonstration if it were proper, but it wouid 
 far exceed the limits of any brief that ever was written. 
 
 Legislative and No truth was ever any truer than this, and it needs only 
 judicial opposi- 
 tion ineffective, to be stated. Railway consolidations in the United States 
 
 have gone on and been made effective in face of all the 
 opposition, legislative and judicial, that could be brought 
 against them. This opposition, like that in England, has 
 perhaps at times somewhat “hindered and thwarted” 
 them, but it has not “prevented” them. It is difficult then 
 to see what useful purpose the opposition has served; it 
 has not been successful, and thus seems to have been mis- 
 directed and wasted effort. Where it has caused expense 
 and trouble to the parties concerned it has been something 
 worse. If it have operated merely to impede economic 
 advancement, to hamper development and to throw 
 
75 
 
 blocks under the wheels of human progress, it was 
 worse than a crime, it was a blunder. Prohibitory and 
 preventive statutes of this sort, both here and abroad, to- 
 gether with the judicial decisions which attempt to en- 
 force them, have become in only some few years after the 
 fact obsolete. The world moves on and quite away 
 from them, and in total disregard of them ; and presently 
 they are treated by one of the taxidermists and find shelf- 
 room as legal curios or mere antiques in the cabinets of 
 collectors of judicial and legislative curiosities. The stat- 
 ute books and the report-books are full of such legal mum- 
 mies. 
 
 We have found it so in every part of the world. 
 
 IV. 
 
 » 
 
 Any statute which opposes itself to such a trend or ten- 
 dency in railway development is economically unsound. 
 Such unsoundness is not to be presumed of any general fed- 
 eral statute; and when one construction of such a statute 
 puts it in opposition to such trend or tendency, while 
 another, equally open to the court, puts it in harmony there- 
 with, the Court is remitted to the latter construction. 
 
 That such a statute, if it squarely and unmistakably 
 opposes itself to this tendency of railways in the same 
 territory to combine, would be unsound from an economic 
 
76 
 
 point of view, follows from the fact that statutes rightly 
 conceived declare public policy and do not attempt to 
 thwart or hinder irresistible forces in economics, and do 
 not attempt to stay what is inevitable. It is not arguable 
 that railway combination is mala in se, and, therefore, it 
 is not to be pretended that such consolidations, like rape 
 or murder and the like, are outbreaks of original sin to 
 be held in check as much as may be by the strong arm. 
 No time, therefore, need be wasted over that. In con- 
 sideration of what has gone before in this argument, I 
 shall assume at this point that it need not be further in- 
 sisted that statutes of this character which fly in the face 
 of gravitation and the inevitable are unsound and im- 
 politic. 
 
 Such unsoundness and impolity is not to be presumed of 
 any general federal statute. (Cooley’s Const. Limit. (6th 
 ed.), pp. 218, 219.) There is every presumption that the 
 Congress acted wisely and judiciously in passing the act, 
 and that it proceeded to this legislation in the full light of 
 all the facts hereinbefore set out. Considerations of public 
 policy in such a case as this being constitutional considera- 
 tions, if the statute in question be open to a construction 
 which will bring it into harmony with constitutional prin- 
 ciples and intendments, it is the right and the duty of this 
 Court so to construe it. The rule of construction for which 
 I here contend is one heretofore frequently announced and 
 approved by this Court. 
 
77 
 
 In Grenada County Supervisors v. Br ogden, (112 U. S. 
 
 261, 268) the Court says: 
 
 “It certainly cannot be said that a different con- 
 struction is required by the obvious import of the 
 words of the statute. But if there were room for 
 two constructions, both equally obvious and rea- 
 sonable, the Court must, in deference to the legis- 
 lature of the state, assume that it did not overlook 
 the provisions of the constitution, and designed the 
 act of 1871 to take effect. Our duty, therefore, is 
 to adopt that construction which, without doing 
 violence to the fair meaning of the words used, 
 brings the statute into harmony with the provisions 
 of the constitution. Cooley Const. Limit., 184, 185 ; 
 Newland v. Marsh , 19 111 . 384; People v. Supervisors , 
 17 N. Y. 241 ; Colwell v. May, 4 C. E. Green, 249. 
 And such is the rule recognized by the supreme 
 court of Mississippi in Marshall v. Grimes, 41 Miss. 
 27, 31, in which it was said: ‘General words in the 
 act should not be so construed as to give an effect 
 to it beyond the legislative power, and thereby ren- 
 der the act unconstitutional. But, if possible, a 
 construction should be given to it that will render 
 it free from constitutional objection; and the pre- 
 sumption must be that the legislature intended to 
 
 Grenada County 
 Supervisors v. 
 Brogden, (112 
 U. S. 261) 
 
Hawaii v. Man- 
 kichi, (190 U. S. 
 197.) 
 
 78 
 
 grant such rights as are legitimately within its 
 power.’ Again, in Sykes v. Mayor, 55 Miss. 115, 
 143 : ‘It ought never to be assumed that the law- 
 making department of the government intended to 
 usurp or assume power prohibited to it. And such 
 construction (if the words will admit of it) ought 
 to be put on its legislation as will make it consistent 
 with the supreme law.’ ” 
 
 In the case of Hawaii v. Mankichi (190 U. S. 197, 212) 
 the same rule is declared and enforced, and the following 
 language from the opinion of Mr. Justice Brown is, it is 
 submitted, peculiarly applicable to the case at bar: 
 
 “Without going back to the famous case of the 
 drawing of blood in the streets of Bologna, the 
 books are full of authorities to the effect that the 
 intention of the law-making power will prevail, even 
 against the letter of the statute, or, as tersely ex- 
 pressed by Mr. Justice Swayne in Smythe v. Fiske, 
 23 Wall. 374, 380, 23 L. Ed. 47, 49 : ‘A thing may 
 be within the letter of a statute and not within its 
 meaning, and within its meaning, though not within 
 its letter. The intention of the lawmaker is the 
 law.’ A parallel expression is found in the opinion 
 of Mr. Chief Justice Thompson of the supreme court 
 of the state of New York (subsequently Mr. Justice 
 
79 
 
 Thompson of this court), in People v. Utica Ins. Co., 
 15 Johns, 358, 381, 8 Am. Dec. 243: ‘A thing 
 which is within the intention of the makers of a 
 statute is as much within the statute as if it were 
 within the letter; and a thing which is within the 
 letter of the statute is not within the statute, unless 
 it be within the intention of the makers.’ 
 
 “Without going farther, numerous illustrations of 
 this maxim are found in the reports of our own 
 court. Nowhere is the doctrine more broadly stat- 
 ed than in United States v. Kirby, 7 Wall. 482, 19 
 L. Ed. 278, in which an act of Congress, providing 
 that if ‘any person shall knowingly and willfully ob- 
 struct or retard the passage of the mail, or of any 
 driver or carrier,’ was held not to apply to a state 
 officer who held a warrant of arrest against a carrier 
 for murder, the Court observing that no officer 
 of the United States was placed by his position 
 above responsibility to the legal tribunals of the 
 country, and to the ordinary processes for his arrest 
 and detention when accused of felony. ‘All laws/ 
 said the Court, ‘should receive a sensible construc- 
 tion. General terms should be so limited in their 
 application as not to lead to injustice, oppression, or 
 an absurd consequence. It will always, therefore, be 
 presumed that the legislature intended exceptions to 
 
8o 
 
 its language, which would avoid results of this char- 
 acter. The reason of the law in such cases should pre- 
 vail over its letter.' A case was cited from Plowden, 
 holding that a statute which punished a prisoner 
 as a felon who broke prison did not extend to a 
 prisoner who broke out when the prison was on 
 fire, ‘for he is not to be hanged because he would 
 not stay to be burned/ Similar language to that 
 in Kirby's Case was used in Carlisle v. United States , 
 16 Wall, 147, 153, 21 L. Ed. 426, 429. 
 
 “In Atkins v. Fibre Disintegrating Co., 18 Wall. 
 272, 21 L. Ed. 841, it was held that a suit in per- 
 sonam in admiralty was not a ‘civil suit’ within the 
 nth section of the judiciary act, though clearly a 
 civil suit in the general sense of that phrase, and as 
 used in other sections of the same act. See, also, 
 Re Louisville Underwriters, 134 U. S. 488, 33 L. Ed. 
 991, 10 Sup. Ct. Rep. 587. So in Heydenfeldt v. 
 Daney Gold & Silver Min. Co., 93 U. S. 634, 638, 23 
 E. Ed. 995, 996, it was said by Mr. Justice Davis: 
 ‘If a literal interpretation of any part of it (a statute) 
 would operate unjustly, or lead to absurd residts, or 
 be contrary to the evident meaning of the act taken 
 as a whole, it should be rejected. There is no better 
 way of discovering its true meaning, when expres- 
 sions in it are rendered ambiguous by their connec- 
 
8i 
 
 tion with other clauses, than by considering the ne- 
 cessity for it, and the causes which induced its en- 
 actment.' To the same effect are the Church of 
 Holy Trinity v. United States, 143 U. S. 457, 36 E. 
 Ed. 226, 12 Sup. Ct.. Rep. 51 1, in which many cases 
 are cited and reviewed, and Lau Ow Bew. v. United 
 States, 144 U. S. 47, 59. In this latter case it was 
 held that a statute requiring the permission of the 
 Chinese government, and the identification of ‘every 
 Chinese person other than a laborer, who may be 
 entitled by said treaty or this act (of Congress) to 
 come within the United States,’ did not apply to 
 ‘Chinese merchants already domiciled in the United 
 States, who, having left the country for temporary 
 purposes, animo revertendi, seek to re-enter it on 
 their return to their business and their homes.' 
 Said the Chief Justice: ‘Nothing is better settled 
 than that statutes should receive a sensible con- 
 struction, such as will effectuate the legislative 
 intention, and, if possible, so as to avoid an unjust 
 or an absurd conclusion .’ 
 
 “Two recent English cases are instructive in this 
 connection : In Plumstead Board of Works v. 
 
 S packman, L. R. 13 Q. B. Div. 878, 887, it was said 
 by the Master of Rolls, afterwards Lord Esher: ‘If 
 there are no means of avoiding such an interpreta- 
 
82 
 
 tion of the statute’ (as will amount to a great hard- 
 ship), ‘a judge must come to the conclusion that the 
 legislature by inadvertence has committed an act of 
 legislative injustice ; but, to my mind, a judge ought 
 to struggle with all the intellect that he has, and with 
 all the vigor of mind that he has, against such an 
 interpretation of an act of Parliament; and unless 
 he is forced to come to a contrary conclusion, he ought 
 to assume that it is impossible that the legislature could 
 have so intended See, also, Ex parte Walton, L. R. 
 17 Ch. Div. 746.” 
 
 When a statute is unambiguous, and incapable or insus- 
 ceptible of more than one construction — that is to say, 
 when there is nothing to construe, and only one possible 
 meaning to the language used — it is for the Court to en- 
 force it without regard to the wisdom or unwisdom, the 
 polity or impolity, of the statute as legislation. But when- 
 ever a statute is open to construction it is the duty of the 
 Court to construe it ; and when it is open to two construc- 
 tions, it is for such a court as this to construe it in the 
 light of all the circumstances and conditions involved, in 
 the light of right reason, and so as to make it run in 
 harmony with constitutional principles — implied as well 
 as express, equitable as well as strict — if it can in any way 
 be done without doing violence to the meaning of the 
 words. 
 
83 
 
 In the light of Mr. Justice White’s dissenting opinion 
 in United States v. Trans-Missouri Freight Association, (166 
 U. S. 290, 343), it is respectfully submitted that the statute 
 in question comes within this rule and is certainly suscep- 
 tible of two constructions. That opinion suggests that it 
 is possible for judicial minds to take contrary views as to 
 the proper force and meaning of this statute, as well as 
 upon the general questions at issue. To the same point 
 may be cited the decision of Lochren, J., in State of Min- 
 nesota v. Northern Securities Co., (123 Fed. Rep. 692.) 
 
 It may here be pointed out that this statute is not un- 
 constitutional — in the equitable sense in which that term 
 is used in this argument — unless the Court construe uncon- 
 stitutionality into it. To affirm the decision in this case 
 would be the same thing in fact as to declare the statute 
 inoperative and void, because that would be to put a con- 
 struction on it which would render it ineffective, inopera- 
 tive and void. It would set it to do an impossible task, 
 to stay something which cannot be stayed, and that is ju- 
 dicial absurdity, to be avoided whenever possible on the 
 authority of the cases above referred to. 
 
 While statutes are not to be tested by the courts by any 
 mere rule of public policy, and thus be made to stand or 
 fall solely on that ground, it is still true, leaving constitu- 
 tional limitations for the moment out of view, that the con- 
 struction of a statute is properly so tested ; and that wher- 
 
 U S. v. Trans- 
 Mo. Asso , (166 
 U. S. 290.) 
 
 Minn, v Nor 
 Sec. Co., (123 
 Fed. Rep. 692.) 
 
8 4 
 
 ever any statute is open to two constructions it is proper 
 to urge considerations of public policy in favor of one 
 construction and against the other, which considerations 
 may properly be controlling. 
 
 When a court is called upon to declare a statute uncon- 
 stitutional — using that word now strictly — it goes to the 
 farthest verge of construction to sustain it. By analogy 
 it ought in this case, being confronted with the situation 
 as it is, to adopt any shift to avoid a construction which 
 makes the statute a practical nullity, or which makes it 
 equitably unconstitutional and involves judicial absurdity. 
 (Cooley’s Const. Limit. (6th Ed.), 216, 217.) 
 
 In the phrase of Lord Esher, “a judge ought to strug- 
 gle with all the intellect that he has, and with all the vigor 
 of mind that he has, against such an interpretation.” 
 
 piumstead Bd. ( Plumstead Board of Works v. S packman, L. R. 13, Q. B. 
 
 of Works v. 
 
 Spackman, L. R. Div. 878, 887.) 
 
 13, Q. B. Div. 
 
 878. As between two constructions of this statute which are 
 
 equally open to it, we ask that the court shall choose that 
 one which is consonant along broad lines with the most 
 enlightened modern public policy, and reject the one 
 which drives it into the predicament of declaring contrary 
 to public policy as matter of law, something which is dem- 
 onstrably not contrary to public policy as matter of fact 
 — which is perhaps only another way of asking the court 
 not to render a decision herein which will be a brutum 
 
85 
 
 fulmen in fact, however sound it may seem to be as mere 
 matter of law. 
 
 Moreover, this particular statute, as now construed and 
 sought to be enforced, is dead and past galvanizing back 
 to life, at this late day, by any amount of judicial decision. 
 As legislation it is in its present shape as dead as the 
 Fugitive-slave law. Let us see. It is legislation levelled 
 at combinations in restraint of trade ; it has been the law of 
 the land for more than thirteen years ; it has been invoked 
 repeatedly in the course of litigation against what are 
 popularly known as “trusts” ; as now construed it has never 
 yet destroyed a single such combination nor prevented the 
 creation of one. Let us get at the exact truth. In July, 
 1890, when the act was passed, there were in the United 
 States about an even dozen “trusts.” Now, after more 
 than thirteen years every one of these original trusts still 
 exists, and more than one hundred others have been cre- 
 ated in the meantime — more than an hundred by actual 
 count. The statute, therefore, has not had any tendency 
 to check the promotion and organization of trusts. So 
 far, therefore, it has in practice proved valueless. It for- 
 bids something in terms which it has not the slightest ten- 
 dency to prevent. From that point of view it is, therefore, 
 a fatuous enactment. Such statutes tend to bring the law 
 into discredit if not contempt with plain people. 
 
 “Innocuous 
 
 desuetude.” 
 
86 
 
 But this is only one feature of the subject. It may be 
 said — although that does not at all meet the difficulty in 
 this case — that no statute is self-enforcing; and that it is 
 not conclusive merely to say that a law is not obeyed. 
 Let us proceed then to a consideration of the cases in 
 which an enforcement of the statute has been attempted 
 in the courts. A careful examination of every reported 
 case in which the act has been sued upon discloses the 
 fact that it has proved of not the slightest use in efforts 
 
 Official list of to destroy “trusts.” An official list of such cases, put out 
 decisions to end 
 
 of 1902. by the Department of Justice, comes down nearly to the 
 
 end of the year 1902, and subsequent search has brought 
 it quite down to the moment of putting this brief to press. 
 All the cases have been examined. In a considerable 
 majority of the cases where suit has been brought under 
 the act the plaintiff has been defeated; in a few of them 
 some relief has been obtained against combinations of 
 laboring men ; some of the cases have been substantially a 
 draw ; and in every one of the remaining cases — being all 
 the cases where anything substantial has been accom- 
 plished by the litigation — it is found that the injury com- 
 plained of was illegal at common law, and that the plaintiff 
 would have recovered just as well without the statute as 
 with it. The statute, therefore, when invoked in the 
 courts, has proved to be utterly valueless. 
 
87 
 
 It is not exaggeration or intemperance to say of such a 
 statute that it is as dead as the laws of Carthage, and that 
 judicial decisions that have attempted or may in future 
 attempt to put the breath of life into it will in no long 
 time take rank with the Dred-Scott decision. They will 
 form no part of the living body of law for us in these 
 United States. So far as the statute has had the sem- 
 blance of life hitherto, so far as it has seemed to move and 
 have a being in our legal system, it has been only a dis- 
 turbing element; it has perhaps thwarted and hindered a 
 little, but it has not prevented the economic evolution of 
 our business affairs. Its pseudo-activity has been mere 
 agitation, and these agitations have — to take a phrase 
 from one of Macaulay’s Essays — “resembled the grinnings 
 and writhings of a galvanized corpse, not the struggles of 
 an athletic man.” 
 
 As was written to the angel of the apocalyptic church 
 in Sardis, so it may be said of this statute: “Thou hast a 
 name that thou livest, and art dead.” If, therefore, the 
 Act of July 2, 1890 (26 Stat. at Large, 209), is hereafter 
 to serve any useful purpose as a living law, it is high time 
 for courts that are called upon to construe it, to “be 
 watchful and strengthen the things which remain, that are 
 ready to die” — lest presently it be like Lazarus after he had 
 lain in the grave four days. From another point of view 
 it is very much like Sir Thomas Lipton, who, having sev- 
 
88 
 
 eral times failed to carry off the Cup, is now advised bv 
 his more judicious friends to desist, before his efforts be- 
 come a laughing stock. It was probably laudable in him 
 to try ; it will be wise for him to stop before “all men begin 
 to mock, and say this man began to build and was not 
 able to finish.” 
 
 The impeach- 'phis statute, therefore, as now construed, stands im- 
 
 ment of the 
 
 statute. peached at the bar of this court as an anachronism, as a 
 
 mere interference with trade and commerce, and as useless 
 and out of touch with the modern trend of human indus- 
 try. The contention that the validity and lawfulness of 
 contracts or combinations in restraint of trade as forbidden 
 by a statute in this country and in this year of grace do not 
 depend upon any consideration of reasonableness or un- 
 reasonableness in the restraint is anomalous, anachronical 
 and absurd. It has about it the old clatter of the rack and 
 chains ; and such a statute is as really unenforceable among 
 a free people — and it ought to be — as a statute which 
 should now attempt to punish witchcraft or poaching with 
 death. The manifest reasonableness of this view seems to 
 commend it to all men who take an intelligent view of the 
 past, appreciate the significance of the present and exercise 
 a scientific imagination with regard to the future. 
 
 “The tendency of modern thought and decisions 
 has been no longer to uphold in its strictness the 
 doctrine which formerly prevailed respecting agree- 
 
8 9 
 
 ments in restraint of trade. The severity with which 
 such agreements were treated in the beginning has 
 relaxed more and more by exceptions and qualifica- 
 tions, and a gradual change has taken place, 
 brought about by the growth of industrial activi- 
 ties, and the enlargement of commercial facilities 
 which tend to render such agreements less danger- 
 ous, because monopolies are less easy of accomplish- 
 ment.” (Beach’s Modern Law of Contracts, sec. 
 1 569 ; quoted and approved by Mr. Justice White 
 and referred to by him as a statement of “the mod- 
 ern and American rule on the subject,” in United 
 States v. Trans -Missouri Freight Association, 166 
 U. S. 290, 347, 348.) 
 
 The warfare that the politicians and the people are now 
 waging in this country against what they call “trusts,” is 
 a phase of the eternal struggle between Individualism and 
 Collectivism — a struggle common to almost every nation 
 af some period of its history. Fortunately for the race, the 
 battle is generally fought out and won once for all, and 
 the individual ultimately finds his proper place in an or- 
 ganized community. Unless the State disintegrates that is 
 the only and inevitable solution. Wherever in any age or 
 country Individualism makes the fight so as to render 
 Collectivism impossible, there follows a gradual blight of 
 public spirit, a slow deterioration of national character, a 
 
 Individualism v. 
 Collectivism. 
 
90 
 
 sapping of energy and a sure progression toward final na- 
 tional extinction. This is exceptionally and strikingly il- 
 lustrated in the history of the republic of Florence — a 
 short, sad history in spite of its brilliant artistic and lit- 
 erary successes, as well as its financial and military tri- 
 umphs. Whether one takes a dramatic or a scientific in- 
 terest in the story — whether it is tragedy or comedy to the 
 reader — it points the same moral, a moral instructive both 
 of itself and by comparison, and one fit to be recalled in 
 the consideration of the material and practical questions 
 which this litigation involves. Florentine Individualism, 
 the statecraft of Machiavelli and the personalism of the 
 Medici and other great families made Collectivism impos- 
 sible in Florence, and Florence fell. At the very time 
 when this was going on in Tuscany the Collectivism of 
 Louis XI. and of Edward III. was laying foundation for 
 the strength of modern France and England, so that in 
 our day Florence, with all her splendid achievement in 
 art and letters, in finance and government, is little more 
 than a faded vision, while France and Britain, that builded 
 better than the Tuscan, have preserved the continuity of 
 their existence as independent States and stand erect and 
 virile in the forefront of human progress. So equally of 
 every other modern state where the battle has been fought 
 out and won in the same way. We are in no danger in 
 this country of losing the fight for a conservative Collec- 
 
9i 
 
 tivism, and all this is for us merely academic, but the pos- 
 sibilities of evil for us if we should fail in the fight, may 
 well give radicals pause. 
 
 It will not, I hope, be regarded improper to argue this 
 
 case in this way on grounds of public policy, inasmuch as 
 
 the Court, in the opinion in the case of the United States 
 
 v. Trans-Missouri Freight Association , (166 U. S. 290), u - s - v - Trans- 
 
 Mo. Asso., (166 
 
 based their decision as it seems, to some extent at least, on u. S. 290.) 
 such grounds. At page 340, Mr. Justice Peckham says: 
 
 “We are asked to read into the act, by way of 
 judicial legislation, an exception that is not placed 
 there by the law-making branch of the government, 
 and this is to be done upon the theory that the 
 impolicy of such legislation is so clear that it can- 
 not be supposed congress intended the natural im- 
 port of the language it used. This we cannot 
 and ought not to do. That impolicy is not so 
 clear, nor are the reasons for the exception so po- 
 tent as to permit us to interpolate an exception into 
 the language of the act, and to thus materially alter 
 its meaning and effect. It may be that the policy 
 evidenced by the passage of the act itself will, if car- 
 ried out, result in disaster to the roads, and in a 
 failure to secure the advantages sought from such 
 legislation. Whether that will be the result or not 
 we do not know and cannot predict. These con- 
 
92 
 
 siderations are, however, not for us. If the act 
 ought to read as contended for by defendants, con- 
 gress is the body to amend it, and not this Court, by 
 a process of judicial legislation wholly unjustifiable. 
 Large numbers do not agree that the view taken by 
 defendants is sound or true in substance, and con- 
 gress may, and very probably did, share in that be- 
 lief in passing the act. The public policy of the 
 government is to be found in its statutes, and, when 
 they have not directly spoken, then in the decision 
 of the courts and the constant practice of the gov- 
 ernment officials; but when the law-making power 
 speaks upon a particular subject, over which it has 
 constitutional power to legislate, public policy in 
 such a case is what the statute enacts. If the law 
 prohibit any contract or combination in restraint 
 of trade or commerce, a contract or combination 
 made in violation of such law is void, whatever may 
 have been theretofore decided by the courts to have 
 been the public policy of the country on that sub- 
 ject.” 
 
 CONCLUSION. 
 
 It is respectfully submitted that grounds are here urged 
 to the court which lay a foundation for such a modification 
 of the views above expressed as will justify a distinction 
 
93 
 
 of this case from the Trans-Missouri Freight Association 
 case, to the extent of an adjudication upon this appeal, 
 that, in the case of railway combinations such as the one 
 at bar, either that the Statute is not applicable, or if it be 
 applicable, that not all restraint of trade, but only unlawful, 
 unreasonable or injurious restraint is here within its proper 
 purview. Such a decision in this case will put the statute 
 in harmony with the actual conditions surrounding the 
 growth and development of American railways, and will 
 harmonize our attitude with that of England and of France 
 and of other countries where these questions have earlier 
 arisen and where they have been settled along the lines 
 for which I here contend. With such an interpretation, 
 brought fairly into line with modern conditions, and made 
 to square with the eternal verities, this statute may still 
 have life and may yet serve a useful purpose in our corpus 
 juris. If given a practicable construction it may be en- 
 forced and so may cease to be a dead letter. 
 
 It is not now necessary that we should go to the full 
 length of absolute Government ownership and operation; 
 but, if the experience of all the rest of mankind is good 
 for anything, it is necessary, in order to put ourselves in 
 line with the best theory and practice, that like France and 
 England we completely eliminate the disturbing element 
 of competition between our privately-owned and operated 
 lines, that we legalize consolidation and division of ter- 
 
94 
 
 ritory as the rest of the world has done, and put the em- 
 phasis of our future effort on regulation, rather than on 
 repression, on securing good service at fair rates, and on 
 relieving the railway companies of the incubus and oppres- 
 sion of mere governmental intermeddling with their finan- 
 cial operations. This will put us in line with the rest of the 
 world. 
 
 I hope it may seem to the court that, in the presentation 
 of the historical statement upon which this argument is 
 based, I have taken the case in this aspect of it out 
 of that class of cases wherein arguments from con- 
 siderations of public policy fail by reason of the necessary 
 vagueness and uncertainty of the rule of public policy in- 
 voked. This I insist is not the case here. It is not the 
 case considered by Jessel, M. R., in Besant v. Wood, (12 
 
 Besant v. Wood, Chan. Div. 60s, 620) where he properly argues that in that 
 
 (12 Chan. Div. 
 
 605.) case, and in all such cases, public policy is vety much a 
 
 matter of individual opinion, and, therefore, not a safe 
 guide. But in that case with his usual incision and pre- 
 ciseness of view the Master of the Rolls declares that pub- 
 lic policy is convention and that it is a growth, so that what 
 was yesterday public policy is not necessarily so to-day, 
 and that what many excellent people think “very horrible 
 and against public policy” at one time may come to be 
 regarded by everybody as confessedly sound and sensible 
 at a later time. There are no two sides to the specific 
 
95 
 
 questions of public policy here invoked as affecting and 
 determining the decision of this case. 
 
 I haven’t looked much into the report-books to see 
 whether all these propositions square with the decided 
 cases, or whether decisions in point are to be found proper 
 to be cited in the usual way in their support. My argu- Gui bono ? 
 ment is in a sense, Cui bono? I haven’t cited many au- 
 thorities ; perhaps there are none. I have tried to present 
 a practical view, somewhat extra-legal perhaps, but not 
 for that reason the less worthy of being taken into account 
 in the decision of such a case as this, if what I have sug- 
 gested turn out to have the only merit claimed for it; 
 namely, that of presenting a plain man’s view of the eco- 
 nomic side of the question. I have passed by the law and 
 the solemnities of legal discussion, and have treated the 
 facts. It is as who should say, with Emerson, “Give me 
 health and a day and I will make the pomp of emperors 
 ridiculous,” because I have felt that, in dealing with these 
 world-wide economic questions, this august tribunal would 
 upon this appeal look past the precedents and beyond the 
 preachments of lawyers and law courts, in order to deal at 
 first-hand and directly with the naked verities of the situ- 
 ation. 
 
 Respectfully submitted, 
 
 Charles F. Beach, Jun. 
 
RECENT AND PENDING “TRUST” LEGISLATION AND LITIGATION 
 IN THE UNITED STATES 
 
 ADDRESS 
 
 BY 
 
 CHARLES F. BEACH, Jun„ 
 
 AT THE 
 
 UNIVERSITY OF MINNESOTA, 
 
 FEBRUARY 13, 1903. 
 
ADDRESS 
 
 OF 
 
 Charles F. Beach, Jun. 
 
 Mr. President and Gentlemen of the University: 
 
 At the present moment nothing within the range of the 
 modern science of Economics is accorded by the American 
 public such general attention and concern as what we 
 properly or improperly call “trusts.” This is not only so 
 now, it has been so for more than a dozen years past. In 
 fact, now for near half a generation of men, we, the people 
 of the United States, have been exciting ourselves about 
 aggregations of capital. For all these years very many of 
 us have talked glibly and some of us have thought seriously 
 upon the subject. We began about the year 1889, or a lit- 
 tle earlier — on the crest of a wave of general national 
 prosperity — to believe or to affect to believe that our 
 growing and crystallizing monied-capital, instead of being 
 a blessing and a benefit, was a public menace. As our 
 trade and commerce was then seen to be outgrowing its 
 swaddling clothes, and to be taking on the form and mag- 
 nitude of maturity, the people took fright, or pretended 
 to take fright; and instead of seeing in the creation of 
 these greater financial enterprises, the building up of fiscal 
 buttresses that were to enable us as a nation to rise out 
 of the category of provinces and into the larger rank of 
 world-powers, the people scented a public peril afar off. 
 The great trading, manufacturing and carrying companies 
 and combinations, then forming, instead of being regarded 
 as matters of congratulation and public felicitation — 
 something to be fostered and encouraged by wise laws 
 and the most enlightened public opinion— were by the 
 unthinking majority of the people set down with sweep- 
 ing generalization as something to be feared, something 
 to be curtailed and emasculated, to be cramped and crip- 
 pled, in the public interest, by all such restrictive and re- 
 
2 
 
 pressive legislation and litigation as could be devised 
 against them. 
 
 Consequently, upon that crude theory and working from 
 the bottom upward, the people addressed themselves, by 
 the mouth of their press and by the hand of their law 
 courts and of their legislatures, to the task of neutralizing 
 and undoing as much as possible what the intelligence, 
 enterprise, capital and skill of the commercial community 
 was devising for the increase and development of our 
 resources along the lines of modern methods in trade and 
 commerce. This course the people have resolutely pur- 
 sued for all these years, and are still pursuing. The 
 American people, speaking by the voice of the American 
 politician, seem to be of substantially one mind upon this 
 question — not to build Rome but to destroy Carthage. 
 The public machinery is employed without stint to this 
 end ; laws galore have been written into our statute books, 
 and countless lawsuits have been pressed and prosecuted 
 all to the same end. The legislative powers and the ju- 
 dicial enginery alike are worked at high pressure every 
 business day in the year at the high behest of the American 
 people for the undoing of the American trust. We went 
 in for it long years ago, and we are still hard at it. 
 
 It may now be wise to stop for a moment to take our 
 bearings — as a mariner would say, to take the sun, or a 
 trader, to take stock — in order that we may see what it is 
 all about, to ascertain accurately what we have done and 
 how far we have progressed, what the present status is and 
 what the fair prospect for the future. If we shall seem 
 to have been right in all this wordy warfare, we shall build 
 ourselves up in the faith and edify one another by the retro- 
 spect; if it transpire that we have been blindly wrong, 
 the review may give some of us salutary pause. 
 
 We mean, popularly speaking, by “trusts,” all combina- 
 tions of capital larger than those with which we have long 
 
3 
 
 been familiar in business partnerships and in the ordinary- 
 mercantile, manufacturing and carrying companies. If 
 this speech had been made at the beginning of the Nine- 
 teenth instead of at the beginning of the Twentieth centu- 
 ry, the subject, instead of being Trusts — because then there 
 were no trusts and very little capital in the United States 
 — would have been “Corporations, a menace to the com- 
 monwealth. ,, Then the people believed that the creation 
 and growth of corporations threatened their undoing, just 
 as now the same sort of people affect to believe that trusts 
 are working to the same end. In view of what mercantile, 
 manufacturing and transportation companies have, during 
 the past half century, accomplished for the material de- 
 velopment of our country and for the world at large, it 
 may be useful to recall for a moment the early popular 
 notions concerning them, and the honest belief that many 
 sober people entertained a century ago that they were 
 fraught with all sorts of possible financial and economic 
 evil. 
 
 It will be good for us to reflect how Mr. Burr, in his 
 effort to obtain from the legislature of the state of New 
 York a charter for a bank, was compelled, in order to pro- 
 cure the passage of his bill at Albany, to charter his new 
 bank ostensibly as a water company, calling it the Man- 
 hattan Company, giving it broadly the power of furnish- 
 ing water to the city of New York, and conferring upon 
 it banking powers, as it were, incidentally. So it comes 
 to pass that the directors of the present Bank of the Man- 
 hattan Company in Wall street are, in compliance with 
 the provisions of this compromise charter, elected every 
 year in a little room in Bowery, which is maintained as the 
 office of the bank as a pseudo water company. For some 
 reason or another, now hard for us to comprehend, it was 
 in those days supposed that corporations having banking 
 powers would be especially pernicious, and the greatest 
 
4 
 
 hostility was at that time manifested towards incorpora- 
 tions of this character. 
 
 Accordingly, no longer ago than about the year 1840, 
 and thus easily within the memory of men now living, in 
 the charter of the Bowery Savings Bank it was specifically 
 stipulated by the legislature of the state of New York, as 
 a condition of granting the charter, that the deposits of 
 that bank should not at any time exceed five hundred 
 thousand dollars, and that the real and personal estate of 
 the bank should never exceed the annual value of five 
 thousand dollars. The deviltry the bank might be up to if 
 its deposits were allowed to exceed half a million of dol- 
 lars the fathers regarded as a sound reason for this condi- 
 tion in the charter, and they took no chances in the matter 
 of allowing the bank to acquire realty — possibly for the 
 reason that land in North America at that time was very 
 scarce. But, be that as it may, on the first of January of 
 the present year, in spite of all this astonishing legisla- 
 tion, the assets of this great bank reached and now some- 
 what exceed eighty-eight millions of dollars; it now has 
 one hundred and forty thousand depositors ; in sixty years 
 it has received on deposit more than three hundred mil- 
 lions of dollars; it has opened more than nine hundred 
 thousand accounts; it has paid out in dividends nearly 
 seventy millions of dollars, and the value of its real estate 
 in the city of New York exceeds three hundred thousand 
 dollars ; in face of all this the people of the state of New 
 York are still, by the Grace of God, free and independent. 
 By the latest report of the Comptroller of the Currency 
 we are further informed that there are in the United States 
 at present more than one thousand savings banks, with 
 nearly seven millions of depositors and nearly three thou- 
 sand millions of dollars on deposit. What would the rural 
 solons who 'cautiously chartered the Bowery Savings Bank 
 have thought of that! 
 
So, too, we recall that hostility to banking corporations 
 less than a hundred years ago was an issue sufficient for the 
 platform of a political party; that the champions of the 
 second bank of the United States in the days of President 
 Jackson were not strong enough to save it, and that the 
 political fortunes of Senators of the United States were 
 made and unmade according to their views upon this 
 momentous question. In November, 1829, when the 
 struggle in Congress over the re-charter of the bank was 
 raging, Jackson wrote to Nicholas Biddle, then president 
 of the bank, as follows : 
 
 “I think it right to be perfectly frank with you. 
 I do not think that the power of Congress extends 
 to charter a bank out of the ten-mile square. I do 
 not dislike your bank any more than all banks. But 
 ever since I read the history of the ‘South Sea Bub- 
 ble’ I have been afraid of banks.” 
 
 And it was upon this key that under the hand of that 
 masterful man the legislation of the period proceeded. 
 The bank which had been exceptionally useful in restoring 
 order to the finances of the young republic was sacrificed 
 to the insane idea that banks meant mischief. All this 
 was only about seventy-three years ago. Now we have 
 our national banking system with all its benefits to the 
 commercial community; and now, within the space of a 
 human lifetime, the folly, the imbecility, the fathomless 
 idiocy of the prejudice against the institution of banks 
 stands confessed; nobody now has the intellectual hardi- 
 hood to attempt the slightest justification or even excuse 
 for it, and yet then it possessed many of the best people, 
 and everybody short of the very best people. Then Jack- 
 son was reading about the South Sea Bubble, and spelt 
 out of what he read that banks would never do ; now peo- 
 ple read rubbish in old English books about ‘‘monopolies” 
 and conclude that trusts are to be the end of us. A cen- 
 tury ago the good people of the country were having the 
 
6 
 
 same sort of spasms over the creation of corporations and 
 especially of banks that we are now having over trusts and 
 combinations. Sometimes reflection upon the facts of his- 
 tory helps one to keep sane. People in general are afraid 
 of what they are not used to, but accept as of course what 
 they see every day. Thus, to speak profanely, the public 
 is in some sort like a pair of half-broken colts, that shy at 
 an automobile or a road-engine, but are not afraid of a 
 load of hay or a boy on a sled. Accordingly, we now take 
 banks — even big banks — down at a gulp ; but have as yet 
 no stomach for ‘‘mergers.” 
 
 We may note at this point that the public are now exer- 
 cised and excited about trusts without smarting under any 
 specific injury actually and presently attributable to them, 
 because the impression is abroad that trusts are in some 
 way or another doing or are about to do a public mischief. 
 Senator Hoar has just said that “as yet there has been only 
 alarm and apprehension, without serious injury.” It is 
 significant that these fears in regard to combinations and 
 incorporations are peculiarly insular. They are English 
 to the back-bone; it is John Bull every inch of it. We 
 find on the continent comparatively little of this dread of 
 association. The unit of power in ancient Europe in time 
 of war was the Roman Legion, and in the later times of 
 peace in modern Europe business and commercial guilds 
 or corporations are its natural successors. But in insular 
 England there has always been a strong dread of what was 
 called “monopoly.” Now, in point of fact, a monopoly is 
 not necessarily an evil, it may be a great good. Let us get 
 that well into our heads. The monopolies to which we 
 are accustomed do not affright us — do not even seem to be 
 monopolies, such, for example, as governmental monop- 
 olies, the monopolies of the post office, of patents, of 
 trade-marks, and of copyrights, monopolies of gas and wa- 
 ter and electric lighting companies, of telegraph and tele- 
 
7 
 
 phone companies, and of railway and street car lines, within 
 the limits to which we have grown accustomed. 
 
 While Lord Coke in England was croaking out his 
 mediaeval nonsense in the law courts against monopolies, 
 Queen Elizabeth, under the better advice of Burleigh and 
 Bacon, was issuing patents to those great companies which 
 strengthened her throne and added infinitely to the wealth 
 and resources of her Kingdom. So, too, at a later day, 
 when the throne of William III. trembled to its founda- 
 tion, he chartered the Bank of England, the greatest 
 monopoly at that time in that country. Thereby he 
 insured to his house a permanent supremacy and laid the 
 foundation for the modern financial strength of the King- 
 dom. By that act he at once steadied himself in the sad- 
 dle, and at the same time built the clearing house of half 
 the world in Threadneedle street. So that, verily, the 
 throne and the commercial consequence of England were 
 founded directly upon the monopolies of Elizabeth and 
 William. The other side of the picture is Lord Kenyon’s 
 vituperative charge to a jury upon the trial of a poor fel- 
 low found guilty in an English court of the atrocious crime 
 of buying thirty quarters of oats and of endeavoring to sell 
 them again in open market at a profit of two shillings per 
 quarter; and Lord Eldon’s rubbishy talk about a very- 
 primitive combination in the London market to control 
 the sale of certain kinds of fruit as a “conspiracy against 
 the world at large.” 
 
 It is, moreover, distinctly a mistake to assume that mod- 
 ern trusts and combinations are in any essential sense the 
 successors or in any wise near of kin to the old monopolies 
 which the people of England thought that they dreaded. 
 It is a mischievous confusion of ideas to regard as “trusts” 
 such things as the mediaeval guilds, the famous Copper 
 Syndicate, Conrad Roth’s sixteenth-century corner in pep- 
 per at Augsburg, the Dutch, French and English East In- 
 
8 
 
 dies companies, and the numerous middle-age monopolies 
 of which these are in some sort types. Inasmuch as such 
 combinations of capital as we understand by the term 
 trusts are from a legal point of view absolutely new con- 
 trivances, the legal questions which their creation and ex- 
 istence raise are entirely open ones, and are to be deter- 
 mined for us here and now, not by reference to ancient 
 English statutes and the reading of what Bentham con- 
 temptuously called “the report books,” but rather on gen- 
 eral considerations of equity, expediency, utility and public 
 policy. It seems to me, therefore, that the strictly legal 
 arguments attempted to be made against trusts have been 
 in the main aside from the point really at issue. The old 
 statutes against regrating and kindred acts, and the old 
 common law notions thereabout, did not have to do with 
 any such mischiefs as their citation in a latter-day anti-trust 
 argument assumes. Neither are decisions of thirty or sev- 
 enty-five or three hundred years ago available for such an 
 argument except by way of a distinctly strained analogy 
 What Lord Coke or Lord Kenyon thought about “con- 
 spiracies” was never of much value at any time, and is cer- 
 tainly of no value now in fixing the legal status of modern 
 trusts. 
 
 Very many causes may be assigned for the present devel- 
 opment of the present day combinations of capital. It is 
 perhaps trite to say that the modern trust, like the earlier 
 corporation, is grounded in a commercial tendency, which 
 grows out of a commercial necessity. Lender primitive 
 conditions every man was able to do his own business by 
 himself and for himself; as his business grew he got a part- 
 ner, and so created a partnership; later on corporations 
 were formed, and now, when the ordinary corporations are 
 in some sense conceived to be inadequate, we resort to a 
 still larger, more refined and more complicated organiza- 
 tion of capital. It is a natural and inevitable evolution. 
 
9 
 
 It is perhaps not unfair to say, on such a rostrum as this, 
 that chief among the causes to be assigned for the present 
 development of trusts is the recent communistic trend in 
 the legislation in this country affecting corporations, or, 
 as one might say, aimed at corporations, by both the state 
 and the federal legislatures, making it more and more 
 difficult to form them, subjecting them more and more 
 to governmental intermeddling and interference, under the 
 guise of visitation and control, increasing their taxation 
 and decreasing their earning power, and checking and 
 hampering them in every thinkable way in the free trans- 
 action of their business. This has done much to induce 
 the formation of such other and further combinations as 
 seem to its owners likely to relieve capital from what they 
 regard unjust and injurious restrictions, not imposed upon 
 the whole body of the people in respect to their business, 
 but which it is unfortunately the tendency of our modern 
 legislation to impose upon corporations. Every winter 
 every legislature in the country, including the Federal 
 Congress, taxes its ingenuity to devise some new scheme 
 for harassing corporations, and in so far as trusts seem to 
 promise relief from such inquisitorial and pestiferous legis- 
 lation in matters of trade and commerce, we may believe 
 that we have one cause for their general favor with capi- 
 talists. Trusts seem, therefore, in some sort to be defen- 
 sive contrivances. 
 
 But the prime cause for the formation of trusts is the 
 decline in the commercial profit. Merchants, manufactur- 
 ers, importers and traders and common carriers by sea and 
 land are more and more confronted, in virtue of the con- 
 ditions under which business is done in this country, with 
 the problem of the vanishing profit. During the past five 
 and twenty years selling prices and in consequence the 
 margin of profit in almost every sort of business has been 
 reduced from 16 2-3 to 50 per cent, and it has become in 
 
10 
 
 \ 
 
 many lines of human activity a real problem whether or 
 not business can hereafter be transacted at all under exist- 
 ing conditions at a profit. Every considerable merchant 
 knows that for many years past in many lines of business 
 in the United States concert of action has been absolutely 
 necessary in order to make the business possible. As 
 prices decline and profits diminish the commercial com- 
 munity casts about for such means of relief as will enable 
 business to be conducted at once safely and at a living 
 profit at the going prices. 
 
 The slightest reflection enables the most unthinking 
 man among us to understand that when two men employ 
 themselves in doing what one man can do alone, there is 
 a waste of energy, for which, unless it vanish in the air, 
 at last the consumer of the product of those laborers, or 
 somebody else, must, in some way or another, pay. If this 
 supererogatory service, or any part of it, be paid for in 
 money or money’s worth, then the waste, quoad hoc , is 
 charged to the consumer. But if the service be wholly 
 or partially lost, then it comes, to the extent of the loss, 
 out of the wear and tear and nerve force of the laborer 
 who performed it, or else it is distributed around along 
 the entire class. In any event there is a waste for which 
 somebody must pay in full, and whereby the public is by 
 just so much the poorer. If it be true that the trust idea 
 tends substantially to check this waste of competition, that 
 would seem to be a point in its favor. It may well be 
 doubted — of course it is doubted — that unrestrained com- 
 petition is a public benefit. “I do not think,” said Judge 
 Gray of the Court of Appeals of New York, in a recent 
 decision ( Leslie v. Lorillard , no N. Y. 519, 534), “that 
 competition is invariably a public benefaction ; for it may 
 be carried on to such a degree as to become a general evil.” 
 To this dictum many wise men will instantly assent. It is 
 not hard to see that the unification of an industry may give 
 
rise to such economies in the conduct of the business as 
 will constitute a considerable profit without any increase 
 in the selling price of the commodity, and so, as soon as 
 the trust idea was conceived, almost every business capable 
 of taking advantage of it made haste to do so. 
 
 Something may not unfairly be said about the influence 
 of the labor organizations in the same direction. If labor 
 be organized — as very properly it may be — in its own in- 
 terest and against capital, it is not unnatural that capital 
 should be organized against labor, and there we find an- 
 other reason for the formation of trusts. A potent factor 
 undoubtedly in inducing these combinations at the outset 
 was the similar combinations or trusts of laboring men, 
 and the concerted attempt on the part of labor to dictate, 
 for itself and in its own interest, in respect to many details 
 of the business. The employer finds himself sometimes 
 between the devil and the deep sea, between all sorts of em- 
 barrassments incident to competition with insolvent rivals 
 and a bear market on the one hand and the labor organiza- 
 tions on the other. He thinks he is obliged to pay too 
 much for his labor and obliged to take too little for his 
 product. It may also possibly be true that the attitude of a 
 certain sort of politicians and the truckling tone of a certain 
 portion of the press have contributed something towards 
 organizing capital, and forcing capitalists to protect them- 
 selves on their part as laboring men are doing upon theirs. 
 
 Trusts, moreover, are one of the penalties of a surplus; 
 they are the plague of our prosperity; one of the results of 
 our over-production and of our abundant wealth. When 
 we were poor we were not perplexed in this way ; beggars 
 do not form trusts ; but now we seem to have passed the 
 stage where competition is a universal good, and find our- 
 selves in a condition of trade and commerce where in many 
 lines a monopoly is both a necessity and an advantage. 
 The Associated Press is a familiar instance of a real mo- 
 
12 
 
 nopoly but an unquestioned public convenience and bene- 
 fit, which few reasonable human beings in this country 
 would willingly be without. So, also, of the telegraph 
 companies, the traction companies, the gas and water 
 companies, and the various governmental monopolies, like 
 the post office and the money order service. 
 
 However much any of us may deplore the presence and 
 growth of these great combinations of capital, and how- 
 ever much it may be apprehended in any quarter that they 
 may work a public injury, we must face the fact that they 
 are inevitable. They are one of the by-products of universal 
 peace. Intelligent men throughout the world are for the 
 most part now busy in creating great commercial unions 
 for the conservation and increase of material wealth, in- 
 stead of equipping armies and building navies to destroy it. 
 These combinations, too, are upon us in a flood like the 
 tides; a manifestation in business of the same tendency 
 of things in this generation which has elsewhere and other- 
 wise shown itself in many directions, as, for example, in 
 the creation of the German state out of a score of half 
 feudal principalities ; in the union and consolidation of our 
 connecting railways into trunk lines; in the postal union; 
 in the agitation for imperialism in our already overgrown 
 republic; and in the fight for an international copyright. 
 It is the same evolution, the same centripetal force that a 
 century ago gave us cur federal union of states, against 
 the gravitating power of which, forty years ago, the great 
 armies of the Confederacy marched to defeat. It is a trend 
 or tendency in business in these last days against the gath- 
 ering and growing momentum of which frontier legislation 
 and the small arts of the politician of the baser sort are 
 as certain to be futile as an act of Parliament to stay the 
 precession of the equinoxes. 
 
 These combinations seem not only to be inevitable under 
 present conditions in this country, but under modern con- 
 
i3 
 
 ditions they seem to have in them as little of the element 
 of mischief as possible ; so that they may be said to be as 
 nearly harmless from an economic point of view as any 
 great engines of any sort set in motion in any direction 
 are likely to be. It is not a fair argument against anything 
 merely to say that it is strong, and that power may be 
 abused. That is a truism, and does not go to the root of 
 the matter. We must either, as it appears, destroy our 
 prosperity or now take it in this form. No one who thinks 
 at all can seriously think that in this country of abounding 
 resources, limitless capital and boundless energy, intelli- 
 gence and enterprise, any sort of business can be made 
 unduly profitable by any set of men or by any sort of a 
 trust, by an iniquitous increase in the selling price of the 
 commodity produced, without provoking competition and 
 calling other people into the same field of enterprise. This 
 is so much in the nature of things and along lines of com- 
 mon experience that I need not argue it. For the same 
 reason that famines, once a frequent occurrence, are now 
 in any civilized country as nearly impossible as anything 
 can well be — because, where there is a temporary de- 
 ficiency in any of the necessities of life the overflow from 
 other lands rushes in and supplies the want, and under 
 modern conditions of communication and transportation 
 such speedy interchange is possible, within a few days 
 or hours, that there can never long be any serious lack in 
 any quarter of anything necessary to preserve human life 
 — for that same reason, I say, trusts, except possibly as 
 they may be bolstered up by a protective tariff, can never 
 long corner any modern market in such a way as to make 
 seriously against the public interest. These industrial 
 combinations live and survive only as they serve the public 
 as well as or better than their competitors. Their se'.fish 
 interest and the public good thus lie along the same lines. 
 
 Nothing is so certain as that the profit in any line of busi- 
 
14 
 
 ness can never be raised, by increase of price to the con- 
 sumer, beyond a normal amount, for any length of time, 
 without tempting the cupidity of men in other lines and 
 creating at once an outside competition. Thus no com- 
 bination of manufacturers, not protected by government 
 patents, by a tariff or by an inequitable arrangement with 
 the railways, can, by never so strong a pact between them- 
 selves, prevent any other set of men from going into their 
 business whenever the general conditions of the trade 
 promise more than an average profit. No truth is any 
 truer than this, and it makes an end of the objection that 
 trusts in these United States and in this day are or can 
 ever be “monopolies” in any mischievous way. People 
 who are opposing trusts merely upon the score of monop- 
 oly may profitably consider this proposition seriously, and 
 try their hand a little at its defenses. Whenever, if ever, 
 profit grows excessive by reason of an increase of selling 
 price, or a greater demand, outside capital will come in or 
 the trust will disintegrate. 
 
 He is a somewhat credulous man, therefore, who can 
 keep his countenance and insist upon this line of argu- 
 ment in opposition to trusts, because it is precisely at this 
 point that the public safety is assured. The trust, even 
 though it secure what no trust has ever secured — a com- 
 plete unification of a given business — contains within itself 
 the elements of dissolution the moment it ceases to serve 
 the public by furnishing its product at a price as low or 
 somewhat below that at which outside capital can profita- 
 bly compete. Every one of the existing trusts has the 
 competition of outside dealers, and it has also the menace 
 of other and new competition unless the selling price of 
 its product be kept so low as to deter outsiders from em- 
 barking in its business. It not only must meet the compe- 
 tition that is, but must also forestall the competition that 
 may be. Ex-Speaker Reed, in the North American Re- 
 
15 
 
 view for December last — just before his untimely death, 
 well said : 
 
 “The fact is that every business man now knows 
 that the only monopoly anybody can get, except the 
 temporary one of patents, to which no one objects, 
 is by producing some article cheaper and selling it 
 cheaper than any other maker. Whether such a 
 monopoly is obnoxious and to be stamped out I 
 leave to the wise determination of the friends of the 
 peopled 
 
 While the outside public is complaining that the trust is 
 its undoing, because it is a monopoly and because it sells 
 its product too high, the competitors of the trust are 
 screaming out that the trust sells its commodity so low 
 that it is impossible to carry on competing enterprises. 
 And there you are. This is well illustrated, for example, 
 by the complaint that is made of the Standard Oil Com- 
 pany on the one hand by the general public, and on the 
 other hand by other and independent oil refiners; and 
 it suggests how little there really is in the complaints from 
 either source. If these complaints mean anything, they 
 mean that the public is well served, which makes an end of 
 the general criticism. 
 
 We have, therefore, this paradox: The same selfish 
 motive that prompts the individual dealer to charge the 
 highest price moves the trust to charge the lowest. The 
 individual charges all his customers will pay, the trust 
 charges all it can — without provoking competition. In 
 each case all that the traffic, regarded from the selfish 
 standpoint of the seller, will bear is charged. The same 
 self-interest which makes the price charged by the indi- 
 vidual as high as possible makes that charged by the trust 
 as low as possible, the same selfishness working in the two 
 cases this opposite result. The trust fears competition 
 more than the individual operator does, because the elimi- 
 nation of competition is its raison d'etre. The trust en- 
 
i6 
 
 larges the margin of profit at the bottom by cheapening 
 production, rather than at the top by increasing selling 
 prices. It cannot, with safety to itself, raise the price to 
 the consumer to a point where other capital will be tempt- 
 ed to embark in its business ; that is, to a point beyond the 
 normal profit; but it can by new economies in manufac- 
 ture cheapen without limit the first cost of its production, 
 and thus enlarge its gains within the four walls of its own 
 factory without openly inviting competition. Here, there- 
 fore, the self-interest of the trust works benefit to the pub- 
 lic. It keeps present selling prices low; as, for example, 
 the selling price of petroleum and sugar, and it stimulates 
 economies in production, which must eventually inure to 
 the benefit of the public. Trust economies tend ever to be- 
 come public economies. When the trust has once cheap- 
 ened the production of a thing, somehow in a free country 
 the business gets away from it, and the public in the end 
 reaps what it has not sown. Schemes for realizing inordi- 
 nate profits for the trusts or for any one else will not for- 
 ever stay put. 
 
 A very striking illustration of the truth of this proposi- 
 tion is found in what about ten years ago attracted wide- 
 spread attention as the “Reading Railroad anthracite coal 
 combination,” which, when formed, seemed to many minds 
 to be a very vicious sort of trust. The facts in point are 
 briefly these: At that time the anthracite coal carrying 
 companies were charging an open rate of one dollar and 
 eighty cents per ton on coal from the mines in Pennsyl- 
 vania to tide-water at and about New York, with a con- 
 tract rate to the independent producers of fifty per cent 
 of the tide-water prices. Mr. McLeod, the then president 
 of the Reading Railroad and the soul of the combination, 
 in order to “corral” the business of competing railroads 
 for the combination, offered a contract rate to the inde- 
 pendent producers of forty per cent of the price at tide- 
 
i7 
 
 water; this was a reduction of twenty per cent in tolls (the 
 average contract rate having theretofore been something 
 less than two dollars) which amounted to about forty cents 
 per ton, and it was a reduction which the combination 
 could well afford to make, if the Reading Railroad and its 
 allies could carry out their plan and thereby substantially 
 control the anthracite coal business of the country. The 
 Pennsylvania Railroad, which was not in the combination, 
 met this cut by making an open rate of one dollar and 
 forty-four cents, and announcing that for the future its 
 tolls would likewise be laid upon the basis of forty per cent 
 of the tide-water prices. So things ran on. In the full- 
 ness of time, as we know, Mr. McLeod’s bubble burst ; the 
 Reading coal trust fell to pieces, and the several anthra- 
 cite carriers again began to act as independently as ever. 
 But — mark it well — the old conditions as to tolls could not 
 be quite restored; the fifty per cent contract rate had re- 
 ceived a blow at the hands of the trust from which it could 
 not recover. So that, upon the collapse of the combina- 
 tion, the anthracite carriers by agreement fixed upon one 
 dollar and forty-five cents as the open rate to tide-water, 
 and forty per cent of tide-water prices as the contract rate, 
 thus making the reduced trust tolls the basis of their rates. 
 This thirty-five or forty cents per ton, lost to the carrier 
 and saved for somebody, was the direct result of the reduc- 
 tion in tolls made by Mr. McLeod, and is to be credited di- 
 rectly to the trust. This reduction, upon the assumption 
 that about one-third of the total production of the Pennsyl- 
 vania anthracite coal fields goes to market at tide-water, 
 thus takes from the railways as common carriers not far 
 from six millions of dollars per annum, and divides it be- 
 tween the producers and the consumers of anthracite coal. 
 As between the producer and consumer, any merchant will 
 bear me out in the statement that the consumer will in 
 the end get more than half of this saving; so that this 
 
i8 
 
 Reading trust, instead of working a public mischief, either 
 in its life or in its death, was the efficient cause of saving 
 some three or four millions of dollars annually to the con- 
 sumers of anthracite coal — that is to say, to the public — 
 on the Atlantic sea-board. And that saving was not for 
 that year only, but for all years, because railway people 
 know only too well that the hands on the dial seldom go 
 backward, and that freight rates tend ever downward. 
 This is only one of many instances which might be ad- 
 duced, and it well illustrates the truth of my proposition 
 that trust economies somehow inevitably and ultimately 
 inure to the benefit of the public. 
 
 Every trust in these times of diversified production and 
 wanton plenty must face the fact that its product, what- 
 ever it may be, is not an indispensable commodity. The 
 public can get on without it unless it comes at a reason- 
 able price, and they will get on without it more and more 
 in proportion as it is expensive. If we can’t have one kind 
 of breakfast-food cheap we can have another. It is in this 
 view of the matter that the whole seventy or eighty mil- 
 lions of the consuming public are pitted against any trust 
 which unduly raises its prices; thus every trust has for 
 its competitors, first, outside dealers in its own or some 
 similar product; second, rivals who will come in if the 
 business is made too profitable; third, the three-quarters 
 of a hundred millions of free Americans who will not use 
 its product, whatever it may be, except at a reasonable 
 price. This effectually draws the fangs of the most rapa- 
 cious trust. 
 
 We are confronted, when considering the matter of com- 
 mercial profits in connection with these combinations, with 
 such questions as these: Have men a moral right to do 
 business at a profit? Is the public morally entitled to the 
 benefits of such economies in the production by private 
 enterprise of a given article as accrue from the accumula- 
 
19 
 
 tion of capital and the concentration of interest in its 
 manufacture? Are the promoters of a trust entitled to 
 such profits as they can secure by reason of the economies 
 incident to the trust? Is it morally wrong, by concerted 
 action among manufacturers, to prevent the production of 
 more sugar, or oil, or strawboard, or what not, than can be 
 sold at a profit? Have the public a right to insist upon 
 over-production, so that manufactured products must be 
 sold at a loss? Is one man morally entitled to the advan- 
 tage of another man’s foresight and economy in the con- 
 duct of his private business? Is not a fair price for a thing 
 morally better than a low price for it? Is not a certain 
 price for a thing economically better than a fluctuating 
 and uncertain price? Do the politicians really believe that 
 competition unchecked and over-production unrestrained, 
 with the low prices, the inadequate and intermittent wages, 
 the glut of markets, and the sacrifice of energy incident 
 thereto, will better the condition of that class whose rights 
 they especially champion? Is anybody so credulous as 
 to believe that trusts of capital can be legislated or liti- 
 gated out of existence, while trusts of labor continue? 
 None of these questions need be answered, but some of 
 them seem to answer themselves. 
 
 It will not now be pretended that it has been the ten- 
 dency of any of the successful trusts to raise unduly the 
 price of their products. On the contrary, trust prices have 
 in general declined. Thus, for example, when petroleum 
 was first used as an illuminating oil, it sold for a dollar a 
 gallon. Now a much higher grade of refined oil is sold for 
 less than ten cents a gallon, and the Standard Oil people 
 handle it at times at a profit of one-eighth of a cent a gal- 
 lon — a margin that would ruin any small concern. The 
 same thing is true in general of other manufacturing com- 
 binations, as well as of the telegraph monopoly and of the 
 rates of the consolidated trunk lines of railway. If the 
 
20 
 
 corner groceryman were obliged to do his business upon 
 the margin of profit per cent earned by the larger trusts, 
 he would be speedily bankrupt. Nor need it be argued 
 that trusts, like other commercial enterprises, are entitled 
 to share in such general prosperity as has come to all 
 of us, in trade and out of it, in the good times with which 
 our country is at present favored. If there has been a 
 general rise in prices all along the line, and in wages for 
 all sorts of labor, no fair man will complain if it shall trans- 
 pire that the prices of trust commodities have also ad- 
 vanced. They are certain to obey the general laws of 
 trade, and to rise and fall with the economic tides. 
 
 Inasmuch as, according to the returns of the last census, 
 the total value of the output of all the manufacturing trusts 
 in the country was only about twelve per cent of the total 
 output of all our manufacturing concerns for the census 
 year — or about one-eighth of the whole amount of manu- 
 factured goods — there is as yet no very serious reason for 
 apprehension that the trusts are at once to absorb all our 
 industries, and so to have us, as the phrase popularly is, 
 at their mercy. And it is only fair to suggest here that if 
 the prices of trust-made or trust-handled goods in this 
 country had advanced in recent years in the proportion 
 that the wages for unskilled and half-skilled labor have 
 been advanced, there would be the very strongest grounds 
 for protest. Nothing is so well paid for with us as manual 
 labor, and nothing has felt the stimulus of good times so 
 much as the labor market. No greedy trust magnate has 
 been able to force up the price of what he has to sell as 
 much as the laboring man has been able to increase his pay 
 in these busy and prosperous times. 
 
 To what extent, if at all, trade ought to be interfered 
 with, or competition either facilitated or prevented by 
 courts and statutes, or how far trade may lawfully be re- 
 strained or prevented by private contract, involves at bot- 
 
21 
 
 tom elementary questions of public policy. We are to 
 understand, as of course, that the word “trade” in this con- 
 nection means much more than barter and sale, or even 
 merchandising in the broadest acceptation of that term; 
 and must include, when we consider legislation or litiga- 
 tion affecting it, not only the dealing of merchants, but 
 the business of railroading, insurance and manufacture, 
 and, indeed, not attempting now to speak with scientific 
 accuracy, the greater part of all the contractual relations 
 between man and man in a civilized community. This will 
 include statutes regulating the practice of medicine, and of 
 law ; statutes of patent and copyright ; usury laws ; Sunday 
 laws; laws regulating the sale of intoxicating liquors at 
 retail ; laws regulating the operation of mines ; laws against 
 champerty and maintenance; taxation of commerce, and 
 particularly, in this country, of interstate commerce ; 
 “drummers’ ” taxes; laws attempting to regulate dealings 
 in futures, forbidding wager policies on human life, pro- 
 hibiting the operation of lotteries, and all that large body 
 of legislation by which the regulation of labor is attempted. 
 
 When one begins to talk or think about “public policy,” 
 by which the economic soundness of all legislation of this 
 sort is to be measured, he is confronted at the outset with 
 the fact that it is a very vague and variable, or, as mathe- 
 maticians say, a very unassignable quantity. This notion 
 has crystallized itself many times in the law reports. Thus, 
 for example, it has been said by a famous English judge 
 that “public policy does not admit of definition, and is not 
 easily explained” (Kekewich, J., in Davies v. Davies , L. R. 
 36 Ch. Div. 359, 364), and by the Supreme Court of the 
 United States that “the application of the rule is more 
 difficult than a clear understanding of it.” (Bradley, J., in 
 Oregon Steam Navigation Co. v. Wins or, 20 Wall. 64.) 
 Again, it was a long time ago well said, in another Eng- 
 lish case, that public policy “is a very unruly horse, and 
 
22 
 
 when once you get astride it you never know where it will 
 carry you” ( Richardson v. Mellish, 2 Bing. 229, 252), and, 
 quoting once more from a recent English case, we find the 
 court saying: 
 
 “One thing I take to be clear, and it is this — that 
 public policy is a variable quantity ; that it must vary 
 and does vary with the habits, capacities and oppor- 
 tunities of the public.” (Davies v. Davies, supra.) 
 
 Lord Justice Bowen, also to the same effect, said not 
 long ago in the High Court of Chancery : 
 
 “The determination of what is contrary to the so- 
 called policy of the law necessarily varies from time 
 to time. Many transactions are upheld now by our 
 own courts which a former generation would have 
 avoided as contrary to the supposed policy of the 
 law. The rule remains, but its application varies 
 with the principles which, for the time being, guide 
 public opinion.” (Evanturel v. Evanturel , L. R. 6 
 P. C. 1, 29. Approved by Bowen, E. J., in Maxim- 
 Nordenfelt Guns & Ammunition Company v. Nor den- 
 felt (1893), 3 Ch. 630, 665.) 
 
 Nothing is more certain than the truth of these state- 
 ments, which might be multiplied indefinitely from the law 
 reports. They are iterated and reiterated by the judges 
 every day. 
 
 “Public policy is variable — the very reverse of that 
 which is the policy of the public at one time may be- 
 come public policy at another.” ( Griswold v. III. 
 Cent. R. Co. (1894), 90 Iowa, 265.) 
 
 “It changes with the changing condition of the 
 times. It is hardly to be expected that a people who 
 are transported by steam with a rapidity hardly con- 
 ceived of a century ago, who are in constant and in- 
 stant communication with each other by electricity, 
 and who carry on the most important commer- 
 cial transactions by the use of the telegraph, while 
 separated by thousands of miles, will entertain pre- 
 cisely the same views of what is conducive to the 
 public welfare, in commercial and business trans- 
 
23 
 
 actions, as the people of the last century, who 
 lived when commerce crept slowly along the coasts, 
 shut out of the interior by the absence of roads and 
 hampered by an almost impassable ocean. ,, (San- 
 born, J., in United States v. Trans-Missouri Freight 
 Ass’n, 58 Fed. Rep. 58, 68.) 
 
 Public policy differs also in different states and coun- 
 tries, as well as in the same country at different times. 
 As people differ in their beliefs, opinions, aims, habits and 
 surroundings, it is natural and inevitable that they should 
 entertain different views as to what will best promote the 
 public welfare. We need not stop to illustrate this simple 
 and obvious rule. 
 
 From the fact that public policy is thus variable, it fol- 
 lows that no fixed rule can be laid down as to what is or 
 is not contrary to public policy. We look to the law re- 
 ports to find what, from time to time, has been adjudged 
 upon the subject, and here we see in clearest perspective 
 the variance to which we have just referred. Upon the 
 most casual examination of the law books we instantly 
 discover that cases declaring a rule of public policy in one 
 year of grace are of very little or no value as authority in 
 ascertaining what is the true rule on the particular subject 
 in another and later year. For example, how would it do 
 to cite the decision in the Dred Scott case, which was ab- 
 solutely sound law at the time it was rendered, in one of 
 the cases arising in the year 1903 between a railway com- 
 pany and its employes? We see that it is for the most part 
 idle in discussions of this subject to-day to cite as author- 
 ity, or even by way of argument, the decisions of the courts 
 of half a century ago, or of even fifteen or a dozen years 
 ago. What was absolutely right then may be absolutely 
 wrong now. 
 
 This notion is well expressed by Lord Watson in a recent 
 case in the House of Lords: 
 
24 
 
 “A series of decisions based upon grounds of pub- 
 lic policy, however eminent the judges by whom 
 they were delivered, cannot possess the same bind- 
 ing authority as decisions which deal with and 
 formulate principles which are purely legal. The 
 course of policy pursued by any country in relation 
 to and for promoting the interests of its commerce 
 must, as time advances and its commerce thrives, 
 undergo change and development from various 
 causes which are altogether independent of the ac- 
 tion of its courts. In England, at least, it is be- 
 yond the jurisdiction of her tribunals to mould and 
 stereotype national policy. Their function, when a 
 case like the present is brought before them, is, 
 in my opinion, not necessarily to accept what was 
 held to be the rule of policy a hundred or a hundred 
 and fifty years ago, but to ascertain, with as near 
 an approach to accuracy as circumstances permit, 
 what is the rule of policy for the then present time.” 
 (Nor den felt v. Maxim-Nordenfelt Guns & Ammuni - 
 tion Co. (1894), App. Cas., 535, 553, 554.) 
 
 Conceding, or better realizing, this inherently fluctuating 
 character or quality of public policy, we see that the enact- 
 ment of statutes to declare or define it must of necessity be 
 a dangerous business, because such statutes, however ac- 
 curately they reflect the public policy of the moment of 
 their enactment, must almost immediately begin to be wrong. 
 The common law, reposing, according to the legal fiction, 
 in the bosom of the court, is flexible, and can change or be 
 changed, as we have seen, with the change of condition; 
 but a statute stands rigid on the statute book, and is the 
 same thing yesterday, to-day and forever ; so that it must 
 be amended or repealed, or modified, or disregarded in the 
 progress of time, as conditions change, in order not to be 
 quite out of tune and touch with the orderly progression of 
 things. 
 
 This is something which the rural legislator, in his zeal 
 to pass laws upon the subject of trade, seems entirely to 
 
have overlooked. Accordingly, this inexorable fact has 
 been the undoing of much of his work. By reference to 
 the law books, he is informed with sweeping generality 
 that at common law monopolies are illegal and void. If 
 he be industrious and curious, and reads Norman French, 
 he finds out that, as early as the reign of Henry V., in the 
 year 1415, a case ( Dier’s Case , Y. B. 2 Henry V., fol. 5, p. 
 26), which seems to have been the first of the sort, arose, 
 in which a dyer had bound himself not to exercise his 
 trade for half a year in the same town with the plaintiff. 
 In an action on the bond, this was held to be an unlawful 
 agreement, as in restraint of trade. This case was decided 
 long before there was any statute on the subject, and from 
 it has come down to us, in ordinary generation, a long 
 line of decisions upon the general question there involved. 
 At a later time patents or grants of the crown, in the na- 
 ture of monopolies, to certain persons or corporations, 
 secured to them the exclusive right to carry on some busi- 
 ness, trade or avocation. 
 
 I need not recount the familiar history of the creation 
 of these monopolies, commencing about the time of Henry 
 VIII., or a little later. By the forty-fourth year of the 
 reign of Queen Elizabeth these grants had begun to attract 
 the attention of the courts, and in “The case of Monopo- 
 lies,” reported by Lord Coke (11 Coke, 84b), they were 
 declared to be illegal at common law. There was still no 
 statute on the subject, and the argument ran back to the 
 old case of the dyer in the reign of Henry V. {supra). In 
 the case of “The Monopolies,” which is the leading case 
 upon the subject, it appeared that one Darcy had been 
 granted the exclusive right to buy beyond the sea all such 
 playing cards as he thought good, and to make and sell 
 them within the Kingdom, that he and his agents and 
 deputies should have the whole traffic and merchandise 
 
26 
 
 in playing cards, and that no other should have the right 
 of making playing cards within the realm. 
 
 “All trades,” said the court, “as well mechanical 
 as otherwise, which prevent idleness (the bane of the 
 commonwealth), exercising men and youth in labor 
 for the maintenance of themselves and their fami- 
 lies, and for the increase of their substance, to serve 
 the Queen when occasion shall require, are profit- 
 able for the commonwealth, and, therefore, the 
 grant to the plaintiff to have the sole making of 
 them is against the common law, and the benefit and 
 liberty of the subject.” 
 
 It is upon such a key as this that a vast deal of discus- 
 sion of this subject has proceeded thence to the present 
 time. Serious men, and able and conscientious lawyers, 
 have gravely argued in the United States, within the past 
 few years, to courts of justice, in cases involving ^he legal- 
 ity of modern commercial trusts, along precisely this line, 
 and have seemed not to understand that the case of “The 
 Monopolies” and other cases of the same sort, are no more 
 valuable as authority or available in argument in the twen- 
 tieth century, upon the question of the legality of our com- 
 mercial trusts, than if cited in a contention over the Mon- 
 roe Doctrine. 
 
 The struggle of the English people against monopolies 
 culminated in the passage of the statute of 21 James I., 
 which attempted their prohibition. In a legal sense mo- 
 nopoly at the present day simply means the obtaining, 
 without a grant from the sovereign, of the exclusive power 
 to carry on a certain trade or business. In a popular sense, 
 the term monopoly is applied to every large and successful 
 business enterprise; and some statutes, as, for example, 
 legislation against department stores, go so far as to seem 
 to proceed upon the notion that, because an enterprise has 
 attained large proportions, it is, in a legal sense, a monop- 
 oly — ergo , unlawful. Railways, national banks and corpo- 
 
27 
 
 rations of all kinds are, in the view of that part of the pub- 
 lic in sympathy with such legislation as this, obnoxious 
 as monopolies. 
 
 Recurring for a moment to the idea that considerations 
 of public policy are at the bottom of all sound legislation 
 affecting combinations in restraint of trade, and that public 
 policy is a changeable quantity in the problem, Lord St 
 Leonards, in a case in the House of Lords, decided a little 
 after the middle of the last century, used the following 
 notable language: 
 
 “My Lords, there are just a few remarks that I 
 wish to make upon public policy. I will not add a 
 word to what has been already said by my noble and 
 learned friends, but I will call your attention to what 
 fell from one of the learned judges (Mr. Justice 
 Cresswell) as regards the restraint of trade. That 
 learned judge says that with regard to the restraint 
 of trade, there is a maxim in common law, and he 
 refers to a case in Year Books (2 Hen. V., pi. 26), 
 to prove it; but the learned judge did not tell your 
 lordships upon what that maxim was founded. No- 
 body supposes that there was any statute upon the 
 subject in those times. Upon what, then, was that 
 maxim founded? Why, upon public policy for the 
 good of the realm. It was not good for the realm 
 that men should be prevented from exercising their 
 trades. Now, let us see what this particular case is; 
 it lies in few words and remarkable consequences 
 have resulted from it. It was an obligation with 
 a condition that if a man did not exercise his craft 
 of a dyer, within a certain town, that is, where he 
 carried on his business, for six months, then the 
 obligation was to be void, and it was averred that 
 he had used his art there within the time limited, 
 upon which Mr. Justice Hull, being uncommonly 
 angry at such a violation of all law, said, according 
 to the book, Ter Dieu, if he were here, to prison 
 he should go until he made fine to the king, because 
 he had dared to restrain the liberty of the subject/ 
 
28 
 
 I wish to draw your lordships’ attention to this case. 
 Angry as the learned judge was at that infraction 
 of the law, what has been the result of that very 
 rule without any statute intervening? That the 
 common law, as it is called, has adapted itself, upon 
 grounds of public policy, to a totally different and 
 limited rule that would guide us at this day, and the 
 condition which was then so strongly denounced is 
 just as good a condition now as any that was ever 
 inserted in a contract, because a partial restraint, 
 created in that way, with a particular object, is now 
 perfectly legal. Without any exclamation of the 
 judge, and without any danger of prison, any sub- 
 ject of this realm may sue upon such a condition as 
 Mr. Justice Hull was so very indignant at in that 
 particular case. That shows, therefore, that the 
 rule which the learned judge, whose opinion is now 
 before the House, thought depended upon some 
 rule of common law, regardless of policy, was found- 
 ed upon public policy, and has been restrained and 
 limited and qualified up to this very hour, and bene- 
 ficially so, by that very policy which it is supposed 
 had no bearing at all upon the foundation of the 
 rule.” ( Egerton v. Earl Brownlow, 4 H. L. Cas., 1, 237, 
 
 238.) 
 
 All legislation affecting monopolies, or combinations in 
 restraint of trade, is meant to be, or pretended or intended 
 to be, generally declaratory of the common law. This is 
 especially true of the recent legislation upon that behalf 
 in the United States. It has not, as far as I know, been 
 attempted by any of these statutes from the first one, in 
 the reign of James I., to the last one in the reign of Theo- 
 dore Roosevelt, to make anything unlawful which was not 
 assumed or supposed to be so at common law. The stat- 
 ute of James I. declared the law as it was understood then 
 to be — as, for an example, it had been decided to be in 
 the case of “The Monopolies,” and all the later statutes 
 have ostensibly done the same thing. 
 
29 
 
 In this country prior to about the year 1889, the subject 
 of monopolies, or contracts in restraint of trade, had not 
 attracted the particular attention of our legislatures. Oc- 
 casional decisions of the courts had assumed to prescribe 
 common law rules, but no statute, state or federal, of any 
 radical or strenuous character, had been enacted. During 
 the two or three years prior to 1889, however, the atten- 
 tion of the public was called to the subject by the discov- 
 ery that a large number of commercial trusts were in 
 existence in the United States, which were or which were 
 assumed or supposed to be, monopolizing, or tending to 
 monopolize, various lines of business. This was assumed 
 to be in violation of the rights of the public, and statutes 
 were at once proposed to remedy what it was taken for 
 granted was a growing evil. Men looked into the law and 
 found in the old English statutes, and especially in the 
 earlier reports, much crude denunciation of “monopoly,” 
 and much generalization upon the blessings and benefits 
 of competition in trade. This, upon a superficial view, 
 seemed to fit the case, and statutes were hastily drafted, 
 and more hastily crowded through the legislatures of 
 twenty or more states, under all sorts of partisan pressure, 
 with the practical result, speaking generally, of declaring, 
 in the United States, at the end of the nineteenth century, 
 the common law of England of the fifteenth, sixteenth and 
 seventeenth centuries. 
 
 These statutes, taking a general view of their intend- 
 ment, declare the law as the English judges of more than 
 an hundred years ago expounded it, with little or no re- 
 gard to the changed conditions of business since that time. 
 They write the dogmas of the pre-Revolutionary period 
 into our statute law of to-day. This was not, perhaps, an 
 altogether unnatural result of the widespread interest and 
 attention that “trusts” created in the subject. Every one 
 of these statutes — including the federal act of July 2, 1890. 
 
30 
 
 known as the Sherman Law, to which a further reference 
 will hereafter be made — is open fairly and honestly to the 
 same criticism, viz., that they seek to crystallize into stat- 
 utes doctrines of public policy which are obsolete or obso- 
 lescent, if not wholly outgrown and outworn. Nothing, 
 as was suggested above, is easier than to generalize in a 
 sweeping fashion about the evils of monopoly and the 
 blessings of competition. A legislator can do a very large 
 business in that line on a very small capital, and there is 
 some excuse, we must admit, for the activity which, espe- 
 cially in hard times, has been displayed in that business. 
 
 Englishmen have always had what they have hugged to 
 their hearts as a wholesome dread of monopoly. No Eng- 
 lishman ever knew — and no one of us can ever know — ex- 
 actly what “monopoly” in this precious phrase means ; but 
 that it means something perfectly awful and to be shunned 
 like the plague, no really sound Englishman ever doubted. 
 It is a sort of bogey that has served to scare an hundred 
 generations of them. So also, as of course, very much of 
 the recent agitation which has arisen over monopoly, and 
 which has provoked for the past dozen years a flood of 
 legislation and litigation in the United States upon the 
 subject, is the outcropping of the old grudge which the 
 “have-nots” always have against the “haves.” It gave 
 the politicians a chance, of which they were not slow to 
 avail themselves, and of which they have made the most. 
 
 It is a significant fact that during the same period of 
 time when our legislatures, including the federal congress, 
 have been going off upon a quasi-mediaeval tangent, the 
 courts have for the most part been unswerved, and have in 
 no notable instance been carried off their feet by the popu- 
 lar clamor. A great number of suits have been brought, 
 in which it has been sought to commit the courts to the 
 same radical views upon the subject which have been en- 
 acted into statutes, and in which it has been sought to 
 
3 1 
 
 secure adjudications upon the economic questions in- 
 volved — for the most part, as I shall attempt hereafter to 
 show, without success. And it is, I repeat, creditable to 
 the courts that this is so. The decisions of the courts of 
 last resort have, as a rule, in spite of the popular clamor, 
 come down, year by year, in an orderly and consistent 
 stream of precedent, substantially uninfluenced by the 
 accidental excitement upon the questions of combination, 
 competition and monopoly, which has more or less dis- 
 ordered the thinking of the soberest of us for the past 
 dozen years. 
 
 The courts, in the greater number of cases, have accord- 
 ingly reflected somewhat more accurately than the stat- 
 utes, the public policy of the times. No doubt the de- 
 cision in the case of “The Monopolies” formulated the 
 views upon the subject at that time. But, thence to the 
 present, there has been a constant relaxation of the rule as 
 far as it affects trade and commerce. A long line of de- 
 cisions, both here and in England, illustrate this ; and for 
 the reason just indicated it is to the decisions that we are 
 chiefly to look, rather than to the statutes, for the more 
 correct and intelligent view of the public policy of the 
 period. 
 
 It was as we have already seen a long step from the 
 blind bigotry of Mr. Justice Hull, in the dyer’s case in 
 1415, to the temperate language of Lord St. Leonards at 
 the middle of the last century. It is a longer step from 
 that decision in the House of Lords, to the latest cases 
 in point, which declare and define the public policy of the 
 present day. Let us look for a moment at some of them, 
 and, having seen how essentially public policy changed 
 between the reigns of Henry V. and Victoria, we shall 
 see how, within the past half century, the doctrine 
 of greater or greatest freedom in trade has grown and 
 developed in the hands of the judges. In a leading case,. 
 
32 
 
 more than twenty years ago, that consummate master of 
 modern equity jurisprudence, Sir George Jessel, M. R., 
 said : 
 
 “If there is one thing which more than another 
 public policy requires it is that men of full age and 
 competent understanding shall have the utmost 
 liberty of contracting, and that their contracts when 
 entered into, freely and voluntarily, shall be held 
 sacred and shall be enforced by courts of justice. 
 Therefore you have this paramount public policy to 
 consider — that you are not lightly to interfere with 
 this freedom of contract.” (Printing, etc., Co. v. 
 Sampson , L. R., 19 Eq. Cas. 462, 465.) 
 
 This language is adopted and approved in a later case 
 by Lord Justice Fry, and has been frequently quoted with 
 approval, both in English and American cases relating to 
 contracts in restraint of trade. Thus it is paraphrased in 
 a recent Minnesota case as follows: 
 
 “A contract may be illegal on grounds of public 
 policy because in restraint of trade, but it is of para- 
 mount public policy not lightly to interfere with 
 freedom of contract.” (National Benefit Company v. 
 Union Hospital Company, 45 Minn. 272.) 
 
 In 1894, in the House of Lords, the last remnant of the 
 old rule which attempted to distinguish between partial 
 and general restraints of trade, was swept away. Lord 
 Herschell, in delivering his opinion in the case, said : 
 
 “Whether the cases in which a general covenant can 
 now be supported are to be regarded as exceptions 
 from the rule which I think was long recognized as 
 established, or whether the rule is itself to be treated 
 as inapplicable to the altered conditions which 
 now prevail is probably a matter of words rather 
 than of substance. The latter is perhaps the sound- 
 er view. When once it is admitted that, whether 
 the covenant be general or particular, the question 
 of its validity is alike determined by the considera- 
 tion whether it exceeds what is necessary for the 
 
33 
 
 protection of the covenantee, the distinction be- 
 tween general and particular restraints ceases to be 
 a distinction in point of law.” 
 the same case Lord Macnaghten said : 
 
 “In the age of Queen Elizabeth all restraints of 
 trade, whatever they were, general or partial, were 
 thought to be contrary to public policy, and, there- 
 fore, void. In time, however, it was found that a 
 rule so rigid and far-reaching must seriously inter- 
 fere with transactions of every-day occurrence. 
 Traders could hardly venture to let their shops out 
 of their own hands ; the purchaser of a business was 
 at the mercy of the seller; every apprentice was a 
 possible rival. So the rule was relaxed. It was re- 
 laxed as far as the exigencies of trade for the time 
 being required, gradually and not without difficulty, 
 until it came to be recognized that all partial re- 
 straints might be good, though it was thought that 
 general restraints, that is, restraints of general ap- 
 plication, extending throughout the kingdom, must 
 be bad. Why was the relaxation supposed to be 
 thus limited? Simply because nobody imagined in 
 those days that a general restraint could be reason- 
 able, not because there was any inherent or essential 
 distinction between the two cases. * * * The 
 
 true view at the present time, I think, is this : The 
 public have an interest in every person’s carrying 
 on his trade freely ; so has the individual. All inter- 
 ference with individual liberty of action in trading 
 and all restraints of trade of themselves, if there is 
 nothing more, are contrary to public policy, and, 
 therefore, void. That is the general rule. But 
 there are exceptions. Restraints of trade and inter- 
 ference with individual liberty of action may be justi- 
 fied by the special circumstances of the particular 
 case. It is a sufficient justification, and, indeed, 
 it is the only justification, if the restriction is reason- 
 able — reasonable, that is, in reference to the inter- 
 ests of the parties concerned, and reasonable with 
 reference to the interests of the public, so framed 
 
34 
 
 i 
 
 and so guarded as to afford adequate protection to 
 the party in whose favor it is imposed, while at the 
 same time it is in no way injurious to the public. 
 That, I think, is the fair result of all the authorities. , ’ 
 (Maxim-Nordenfelt Guns & Ammunition Co. v. Nor- 
 denfelt (1894), App. Cas. 535, 548, 564, 565.) 
 
 Turning from this late case in England to the later cases 
 in the United States, we find the same trend and tendency 
 in the opinions. Chief Justice Fuller, in a case in the 
 Supreme Court of the United States, lately said : 
 
 “The decision in Mitchel v. Reynolds (i P. Wms. 
 181, decided in 1711) is the foundation of the rule 
 in relation to the invalidity of contracts in the re- 
 straint of trade ; but, as it was made under a condi- 
 tion of things different from those which now pre- 
 vail, the rule laid down is not regarded as inflexible 
 and has been considerably modified. Public welfare 
 is first considered, and if it be not involved and the 
 restraint upon one party is not greater than protec- 
 tion to the other party requires, the contract may 
 be sustained. The question is whether, under the 
 particular circumstances of the case and the nature 
 of the particular contract involved in it, the contract 
 is or is not unreasonable.” ( Gibbs v. The Baltimore 
 Gas Company , 130 U. S. 396, 409.) 
 
 In the famous case against the Sugar Trust, to which 
 a further reference will hereafter be made, Mr. Justice Bar- 
 rett, of the Supreme Court of New York, who tried the 
 case at Circuit, in rendering his opinion, upon deciding 
 the case, impressively said : 
 
 “Excessive competition may sometimes result in 
 actual injury to the public and anti-competitive con- 
 tracts to avert personal ruin may be perfectly rea- 
 sonable. It is only when such contracts are publicly 
 oppressive that they become unreasonable and are 
 condemned as against public policy.” ( People v. 
 The North River Sugar Refining Company, 54 Hun. 
 
 354, 370.) 
 
35 
 
 That was a notable decision and this is notable language 
 from a judge at Circuit, at a moment when the public tem- 
 per was inflamed against combinations of capital, in a case 
 involving vast interests, when “kill trusts” was in the air, 
 when the case had been tried with consummate ability 
 upon behalf of the People, and argued to the court with 
 an ingenuity and eloquence not often heard in these de- 
 generate days in courts of justice, when all the ancient 
 learning had been massed, when the sentiments of the 
 middle age upon the subject had been most persuasively 
 urged upon the court in rounded periods and polished 
 phrase; and when a trial court might well have been ex- 
 cused for indulging in a little rhetoric in the popular vein. 
 His honor after all calmly said : 
 
 “Excessive competition may sometimes result in 
 actual injury to the public, and anti-competitive con- 
 tracts to avert personal ruin may be perfectly rea- 
 sonable.” 
 
 In a comnarativelv recent case in Minnesota we find this 
 sober language : 
 
 “Modern investigations have much modified the 
 views of courts, as well as political economists, as to 
 the effect of contracts intended to reduce the num- 
 ber of competitors in any particular line of business. 
 Excessive competition is not now accepted as nec- 
 essarily conducive to the public good. The fact is, 
 that the early common law doctrine in regard to 
 contracts in restraint of trade largely grew out of a 
 state of society and of business which has ceased to 
 exist, and hence the doctrine has been much modi- 
 fied, as will be seen by comparison of the early Eng- 
 lish cases with modern decisions both English and 
 American.” {National Benefit Company v. Union 
 Hospital Company , 45 Minn., 272.) 
 
 While thus larger and larger commercial freedom has 
 been attained in the progress of time, as public policy has 
 adapted itself to more modern conditions, it is curious to 
 
36 
 
 notice how, in some other directions and along some other 
 closely parallel lines, the pendulum has swung the other 
 way. Commercial contracts in restraint of trade have for 
 one hundred and fifty years grown steadily in public favor, 
 and have constantly secured greater and greater sanction 
 in the courts, while in certain other analogous matters the 
 reins have essentially tightened up. Take, for example, 
 public opinion regarding lotteries. Only a comparatively 
 short time ago lotteries were entirely legal. Columbia 
 University, my alma mater in the law, lawfully secured 
 some part of its endowment, some part of the very fund 
 by which it is now nurtured and maintained, from the 
 profits of a lottery operated in its interest in the city of 
 New York. That was only something more than an hun- 
 dred years ago. But now no one believes that any Ameri- 
 can university will soon secure an increase of its endow- 
 ment in this way, and with the expiration of the charter 
 of the Louisiana Lottery, all such business in this country 
 became for the present legally impossible. ( Champion v. 
 
 Ames, 191 U. S., ; Francis v. United States , 191 U. S., 
 
 .) Public policy now strenuously condemns what a 
 
 century ago it frankly sanctioned and approved. 
 
 For another example, consider the matter of wagers, 
 from a legal point of view, and especially wager policies 
 on human life. A century or so ago, wagers, and actions 
 to enforce their payment, were sanctioned by the courts 
 both here and in England, and all sorts of wagers were en- 
 forced by law. Thus no longer ago than 1790 it was 
 adjudged to be “within the sound policy of the Kingdom ,, 
 for the Court of Kings Bench to serve as a stakeholder 
 between two persons who had made a bet whether or not 
 another person had bought a wagon of a fourth. ( Good v. 
 Elliott, 3 Durnf. & East (Term Rep.) 693.) 
 
 Lord Mansfield, during the reign of George III., pre- 
 sided at a trial and charged a jury, with becoming gravity, 
 
37 
 
 upon the astonishing question, which had been the subject 
 of a wager between the parties to the suit, whether a third 
 person, who wore the clothes and bore the name of a man, 
 was a male or a female. The jury found that it was a 
 woman. Subsequently, however, his lordship, upon a 
 hearing before the whole bench, had the grace to say: 
 “This case made a great noise all over Europe ; and soon 
 afterwards, I own, I was sorry.” (Da Costa v. Jones , Cowp., 
 729, 734, decided in 1778.) 
 
 Still later came the famous litigation which the English 
 courts entertained over what were known as the Napole- 
 onic wagers, mere bets that the Emperor would or would 
 not die within a certain time, or would or would not es- 
 cape from St. Helena within a given time. In the infancy 
 of life insurance, wager policies on human life were held 
 lawful, but come now, like all other wagers, under what 
 we are bound to regard the wholesome ban of our present 
 public policy. 
 
 While non-commercial wagers of every sort have, in the 
 process of time, become illegal, and are now so declared 
 by statute in perhaps every civilized community, it is an- 
 other curious illustration of the way in which freedom of 
 trade asserts itself in these days that — pari passu with the 
 decline in respect of legal sanction of mere wagers — deal- 
 ing in futures, which are, of course, a form of wager, have 
 become more and more legal and are now substantially 
 lawful in all enlightened communities. It will certainly 
 be but a short time until they will have the same unques- 
 tioned legal sanction as any other form of trading. It is 
 already impossible to pass a federal statute making them 
 unlawful, although attempts are made at almost every ses- 
 sion of Congress to get a law of that sort enacted. In 
 many of the states it is true that there are statutes upon 
 the subject in which such dealing is more or less positively 
 forbidden ; but here again the courts have been and are in 
 
38 
 
 advance of the lawmakers, and more in line with the most 
 enlightened public opinion. In spite of much attempt to 
 legislate such dealings out of existence, the courts have, 
 by refining and distinguishing the statutes which have been 
 improvidently enacted upon the subject, secured to them 
 a substantially unquestioned legality everywhere. Other 
 illustrations of the truth of this proposition will occur to 
 evefy lawyer. 
 
 It always seems easy to people of a certain type of mind 
 to believe that whatever strikes them as wrong in the world 
 may be righted — according to their conception of right 
 and wrong — by the enactment of a statute, and trusts have 
 not escaped the full measure of the application of this fatu- 
 ous notion. We have, therefore, had, as I have’ said, in 
 the United States a very considerable amount of recent 
 statutory law directed against trusts and monopolies. 
 Almost every state in the Union has enacted one or more 
 such statutes, and the Federal Congress has done the same 
 thing. Passing by the state legislation, which might, if 
 there were time, be profitably considered, let us look for a 
 moment at the Act of Congress of July 2d, 1890, known 
 as the Sherman Anti-Trust Law, entitled “An act to pro- 
 tect trade and commerce against unlawful restraints and 
 monopolies,” to which a brief reference has already been 
 made. The power of the Federal government in this be- 
 half, it may be here observed, is derived solely from that 
 clause of the Constitution which confers upon Congress 
 the power “to regulate commerce with foreign nations and 
 among the several states and with the Indian tribes this 
 power, it will be noted, is one to regulate and not to de- 
 stroy. It need, therefore, scarcely be said that assassina- 
 tion under the guise of regulation is not contemplated by 
 this constitutional provision, and that consequently Con- 
 gress can have no such power. 
 
 The Sherman Act, speaking generally, declares unlaw- 
 
39 
 
 fill every contract, combination in the form of trust or 
 otherwise, or conspiracy, in restraint of trade or commerce 
 among the several states, or with foreign nations ; it makes 
 every violation of the act a misdemeanor, and provides for 
 punishments by fine or imprisonment, or both ; it also de- 
 clares unlawful monopolies and any attempt to monopolize 
 or any combination or conspiracy to monopolize any in- 
 terstate or international trade, and makes every such 
 contract a misdemeanor; finally it provides for the for- 
 feiture of any property the ownership of which is involved 
 in any such illegal proceeding, and gives a right to the 
 injured party to sue for triple damages and a reasonable 
 attorney’s fee. This statute has now been in operation 
 for something more than twelve years and a half. It has 
 been the statute law of the land for all that time. We may 
 therefore now not unreasonably ask what has been accom- 
 plished under it. In passing, it may be said that this stat- 
 ute is merely declaratory of the common law on the subject. 
 It makes nothing unlawful that was not unlawful by the 
 law of the land before it was enacted ; all these proscribed 
 offenses were illegal as much before as after the passage 
 of the act. The statute, however, prescribes a procedure, 
 and fixes pains and penalties and forfeitures, and formu- 
 lates the law in a convenient way. 
 
 According to an official publication issued by the De- 
 partment of Justice, at the end of the year 1902, there have 
 been instituted and prosecuted by the Federal govern- 
 ment, under this act, in the Federal courts, up to this time, 
 twenty-six suits; and, including such suits as have been 
 brought by private individuals under the act in the Federal 
 courts, there have been in all fifty-three cases decided un- 
 der the act. Of the suits instituted by the Federal gov- 
 ernment the greater number have resulted in the partial 
 or total discomfiture of the prosecution. The fact that 
 only twenty-six suits have been brought by the Federal 
 
40 
 
 government in about thirteen years — that is, prosecutions 
 under the act at the rate of two suits per annum — may 
 intimate to us that the evil sought to be remedied by the 
 statute has not been regarded at the Department of Jus- 
 tice as very widespread or very flagrant; and the further 
 fact that only about four suits per annum, including the 
 government suits, have been prosecuted to a decision 
 throughout the whole of the United States, seems to sug- 
 gest that no very great number of the people have smarted 
 seriously under the impositions and wrongs to which they 
 have been subjected at the hands of the trusts. Men who 
 suffer legal wrongs are usually quick enough in this coun- 
 try to go to law about them. It is therefore significant 
 in face of the flood of desultory denunciation of trusts in 
 the newspapers and from the stump, that , in twelve years 
 and a half, less than two score of plaintiffs have been found 
 in all the length and breadth of the land to prosecute suits 
 to judgment under a statute which gives them a right to 
 triple damages, with costs and their attorney’s fees, for any 
 injury they establish. 
 
 But even this doesn’t state the case as strongly as it can 
 be stated in favor of the trusts. Eliminating the govern- 
 ment suits from the list of fifty-three cases decided, less 
 than thirty remain, and in more than half of these the 
 plaintiff was defeated at the trial. Thus a careful analysis 
 of this official list shows that about one person per annum in 
 the United States, out of a total population of more than 
 seventy-six millions, has secured a judgment under this act 
 against some corporation or trust held to have violated the 
 (aw. That would seem to be a result somewhat out of 
 proportion to the hue and cry everywhere set up over 
 trusts. Some of us may be pardoned for reading into 
 these figures something more than a suspicion that all this 
 clatter and manufactured wrath about monopolies and 
 trusts is, as a matter of fact, the merest crackling of thorns 
 under a pot. 
 
41 
 
 Turning to the twenty-six suits in the list as being those 
 instituted and prosecuted by the government to date, we 
 find that the United States as complainant lost eleven of 
 them outright ; that two are still pending ; two practically 
 a draw — neither side accomplishing anything substantial 
 — and that one was a trifling litigation, somewhat be- 
 neath the dignity of a sovereign power. That leaves, out 
 of the twenty-six suits, ten in which the government won. 
 Of this ten, four were won against combinations of labor- 
 ing men — leaving six as the total number in which the 
 United States have prevailed thus far in litigation against 
 trusts strictly so-called. Of this six, three were cases in 
 which the offense proven was clearly illegal at common 
 law, and in which a decision for the government could 
 have been secured as well without the statute as with it; 
 two others of the six were what might be called legal 
 boomerangs — the reference here being to the Trans-Mis- 
 souri Freight Association case and to the Joint-Traffic 
 Association case. In both of these suits the success of the 
 government in the outcome has been — it is not telling tales 
 out of school — very generally regarded by the friends of 
 litigation of this sort as supremely unfortunate. 
 
 In each of them there was an application of the Sherman 
 law to railways — something which it has been strenuously 
 insisted was not within the contemplation of Congress 
 when the statute was formulated and enacted — and both of 
 these decisions make unlawful traffic or pooling arrange- 
 ments between what are known as parallel and competing 
 lines of railway. As a result, the railways have been com- 
 pelled to abandon those particular forms of association or 
 arrangement inter sese, and the practical and substantial 
 net result to the public from the victory of the govern- 
 ment in these two cases has been the creation, in their 
 place and stead, of such larger consolidations as the South- 
 ern Pacific Company, and the Northern Securities Com- 
 
 / 
 
42 
 
 pany, and the absorption of the Baltimore & Ohio by the 
 Pennsylvania Railroad; so that the Trans-Missouri 
 Freight Association case and the Joint-Traffic case, what- 
 ever else they may have been worth to the enemies of mo- 
 nopoly, may, in a very proper sense, be declared to be 
 God-fathers both to the Great Southern and to the Great 
 Northern railway mergers — a result which cannot be ex- 
 ceptionally gratifying to the promoters of such litigation. 
 
 Haec fabula docet that if the litigation now pending 
 against the Northern Securities Company shall result in 
 a legal victory for the government, or for the state — a 
 very remote contingency — it will be all very well and just 
 the same, forsooth, as far as the public is concerned. We 
 shall then have in its turn the “Southern Insecurities Com- 
 pany, Limited,” or some other substantially equivalent 
 devise, to take the place of the present merger organiza- 
 tion, and to accomplish in some other way the same end. 
 At the very best for the prosecution it can only be another 
 Sugar trust case. The thing itself called u the merger ’ will 
 survive any lawsuit, and will remain and persist. It is now, 
 and as of to-day, a fait accompli, and the hands of the clock 
 in such matters do not go backward. To all such de- 
 structive litigation — of which this is here taken only as a 
 type — we interpose a revised version of an old legal 
 maxim : “De maximis non curat lex;” and herein consists 
 the applicability thereof. It interposes, along the broad- 
 est economic lines, an equitable demurrer to the jurisdic- 
 tion ; the case is not set for trial in the proper forum, and 
 the decree, whatever it may be, will in a catholic sense be 
 coram non judice. We admit all the complainant’s formal 
 case and then move for judgment for the defendants. 
 
 This is what I mean : Some things, some sorts of things, 
 are for the courts and the judges, and some things, some 
 sorts of things, are of an essentially extra-judicial cogni- 
 zance. In a free country it is inevitable that we go to law 
 
43 
 
 over trifles ; that is to say, about things trifling as compared 
 with great economic tendencies, with slow evolutions, with 
 centuries and cycles of human development and progress. 
 Courts and statutes have been established and enacted in 
 contemplation of this truth. Our rational conception of 
 the true and inevitable jurisdiction of the courts has these 
 metes and bounds. Some things we instinctively hold too 
 large for the judicial pint pot, however much they seem 
 to come within the formal language of some statute. 
 Thus, where the butcher sues on his past due account and 
 gets his judgment for $18.14, including his interest and 
 costs, it squares with our conception of a due administra- 
 tion of justice. Why shouldn’t one pay for his chops and 
 steaks? Another forecloses his mortgage and enters into 
 possession; a third probates his father’s will and that is 
 right enough. Then again the machinery of our criminal 
 law makes it safe for us to go about o’ nights, and protects 
 our exposed property. Of such is the scope and purpose 
 of our law. For these things and for other things like 
 these were courts and statutes and law and lawyers 
 devised. 
 
 Moreover , it is the proper function of the law to do what 
 it can and not to try to do what it can't. Mrs. Partington 
 with her broom was all very well in the face of a puddle in 
 the back yard; but when it came to sweeping away the 
 Atlantic ocean — well, that was another story, and the good 
 lady found it out. In the small joke that even the creative 
 power of the Almighty must, in the very nature of things, 
 fall short of the ability to make a two-year-old calf in five 
 minutes, there is the easy suggestion that it is as much be- 
 yond the contrivance of the average legislature or legisla- 
 tor to devise a statute which can stay an inevitable trend 
 and tendency in the trade and commerce of mankind, and 
 how beside and beyond the wit of man it must ever be to 
 prosecute successfully a litigation which thwarts and op- 
 
44 
 
 poses itself to what the gravity, and the centripetal forces 
 of the new century are imposing upon us and our business 
 affairs. In such a matter as lies at the bottom of this 
 “merger” litigation — of which the formation of the North- 
 ern Securities Company is but a symptom or a suggestion 
 — we find ourselves, when we take a large view of the 
 whole situation (and it is idle and like an ostrich to take 
 any other view) face to face with the infinities, with gravity 
 and the inevitable, with the eternal verities, with things too 
 big, too imperative, too elementary for courts and statutes 
 and the paid wrangling of attorneys before the bar. 
 
 Coming back to the Federal statute, and looking over 
 the whole field, and having regard to all the litigation un- 
 dertaken or pending under the present law, it is not intem- 
 perate or unfair to say that the Sherman Law, although 
 drawn by competent lawyers and with the greatest care, 
 has been found utterly inadequate to check or to mitigate 
 any of the alleged social evils to which reference was made 
 in its enactment; neither has the passage of the statute, 
 and its presence in the statute book, had any — even the 
 smallest — deterrent effect, as far as can be perceived, as to 
 the creation of new trusts. As Judge Grosscup of the Fed- 
 eral Court in Chicago pointed out, in a recent address at 
 the University of Nebraska, it appears that of the one 
 hundred and twelve presently subsisting and active trusts 
 in the United States, all but thirteen have been created 
 since the passage of the Sherman Act. This statute, there- 
 fore, seems to have not even the slightest tendency either 
 to do away with trusts after they are created or to prevent 
 their creation. We may, therefore, be excused for won- 
 dering what such a statute is good for, or whether it is 
 good for anything. And from what has been accomplished 
 in these dozen years under the Sherman Law we may 
 “guess,” as a Yankee might say, what is likely to be ac- 
 complished in future by amendments thereto, and by the 
 
45 
 
 further legislation of similar sort now proposed or pending 
 in Congress, or elsewhere. 
 
 We may perhaps find some illumination upon this point 
 in considering for a moment what happens in the case of 
 some other statutes that fly in the face of the commercial 
 community and thus attempt the impossible. Such stat- 
 utes are about the most useless of all useless things. For 
 example, there is in New York a highly penal statute 
 against usury — something always especially hateful to 
 rural legislators — and yet millions of dollars of paper daily 
 are frequently bought and sold and discounted in that 
 state in flat defiance of the statute, to which as of course 
 not the slightest real attention is ever paid when the mar- 
 ket rate for money is different from the statute rate; so 
 that if one might have in exchange for a lifetime of toil 
 the proceeds in cash of a single hour's output of paper 
 tainted with usury in Wall street in a tight money market, 
 he would have a glut of riches. The statute is not en- 
 forced because it is absurd and unenforceable, and because 
 the commercial community very properly resents such leg- 
 islation, and recognizes that it may safely ignore such stat- 
 utes as run counter to the established and subsisting order 
 of things. 
 
 We laugh now at the Pope's bull against the comet (but 
 men took it seriously enough then), and ac the decree of 
 the Convention re-establishing God and the immortality 
 of the soul from one end of France to the other, which 
 was serious and solemn business among a highly intelli- 
 gent people little more than an hundred years ago. When 
 are we to begin to see the humor in the fantastic notion 
 that a federal statute known as the “Sherman Act” can 
 block the wheels of our business enterprises, can put a stop 
 to the progress of our affairs, and stay the inevitable in 
 the evolution of our system of transportation by rail lines? 
 Once we had stage coaches, and mail carriers on horse- 
 
46 
 
 back, then little rail lines from A. town to B. town; then 
 the first consolidations; then the trunk lines; then sys- 
 tems ; now mergers, or whatever you care to call them. To- 
 morrow it will be something else, larger and fitter for the 
 service in a progression as certain as the tides and as re- 
 sistless as gravity or death. As well might Sherman acts 
 be directed against the stars in their courses ; as well might 
 courts seek to block the recurrence of the seasons. What 
 sort of a statute, or what kind of a court does any man now 
 think could have prevented the passing of the stage coach, 
 or of the local railway ; or by what solemn pronouncement 
 of a court of law could the recent railway consolidations 
 and reorganizations have been prevented? By what sort 
 of a writ of injunction or by what cunningly devised man- 
 damus shall we regulate the rising of the sun and the go- 
 ing down of the same? There are some things that courts and 
 statutes cannot do. Judges and lawmakers who set 
 themselves against a well-defined tendency in things, who 
 try to stem a tide, make little progress, and all who row 
 against the current of Niagara are buried in the same 
 grave. 
 
 All the allegations of these bills of complaint that are 
 solemnly drawn up against this or that trust may be true, 
 a thousand times true, and more. No doubt they are. But 
 the question really at issue is economic rather than legal. 
 It is not a case for lawyers and law courts. It involves is- 
 sues too big for a mere pleader — issues to be tried and 
 worked out and finally decided, not by any judge, however 
 wise; not according to any formal statute, however craftily 
 it may have been drawn. If the Northern Securities Com- 
 pany — taken now merely as a type — stands for something 
 useful, it is big enough to take good care of itself. No stat- 
 ute and no court can harm it very much. If it cumbers 
 the ground it will die of itself. If it have in it the seeds of 
 death it can’t be kept long alive by all its nurses. And it 
 
47 
 
 can’t be talked to death or sued out of existence if it is serv- 
 ing some economically useful purpose in modem Amer- 
 ican railroading. Whether it is or not, time and not liti- 
 gation will tell. It is on its trial to-day much more in the 
 forum of public opinion and in the fiery furnace of our 
 present economical competition than it can ever be in any 
 court of law. Its life and death struggle will be in the field, 
 not before any judicial tribunal. 
 
 We need not go far afield to find evidence in support of 
 this view. How many times, for an example, has the 
 Standard Oil Company, within the past dozen years, been 
 solemnly adjudicated and legislated out of existence; and 
 in how many court houses and state houses, from one end 
 of America to the other, has its death warrant been signed 
 and sealed and read out to a waiting world with unction 
 and emphasis? God knows. And yet in spite of all it was 
 never more alive, more virile or more efficient than now 
 —and no one at any time has ever seen any crepe on the 
 big door at 26 Broadway. Let not the shoemaker go be- 
 yond his last. De maximis non curat lex. 
 
 Some other recent litigation against trusts under state 
 statutes or at common law has been so notably barren of 
 results that it may instructively be considered at this point. 
 Take for example the famous Sugar-trust litigation in New 
 York, to which I have already made some passing refer- 
 ences. A few years ago the state of New York, by its at- 
 torney general, commenced two suits in the Supreme 
 Court of that state, the purpose of which was to destroy 
 the Sugar Refineries Company, then popularly known as 
 the Sugar trust. These actions were pressed with much 
 legal intelligence and vigor, and, after a sweeping victory 
 in the lower court, resulted in a judgment in the court of 
 last resort to the effect that the trust was illegal, and could 
 not lawfully transact its business in that state. Thereafter, 
 and to carry out the provisions of this solemn adjudica- 
 
48 
 
 tion, some part of the property of the trust was placed in 
 the hands of receivers; but in a surprisingly short space 
 of time the judicial machinery ceased to work, and the 
 property was returned into the hands of its owners by due 
 process of law. Presto ! The trust was reorganized as a 
 corporation under the laws of an adjoining state, and from 
 that day to this it has uninterruptedly carried on its busi- 
 ness, as a New Jersey corporation, at No. 117 Wall street, 
 w T ith precisely the same force and effect as to the public 
 that it formerly did as the Sugar Refineries Company. 
 
 Thus, a vast deal of time and money and effort were 
 spent in New York in driving the sugar refiners of that 
 state across the North River for a charter, and in com- 
 pelling them slightly to change the form of their organiza- 
 tion, but without to the extent of one iota altering the 
 conditions under which they do their business. When the 
 suits were brought they were doing their business in a pru- 
 dent and economical manner, and it was not possible by 
 litigation to drive them into doing it in an imprudent and 
 unprofitable manner. It ought to have a sobering effect 
 upon some of us here in Minnesota to reflect upon the 
 fact that all the money that was spent in that litigation, 
 and which resulted in absolutely nothing as far as the pub- 
 lic is concerned, had to be repaid by that same short-sight- 
 ed public, part of it in the shape of taxes to the state of 
 New York, and the rest of it in the prices the public was 
 called upon to pay for sugar. The state was sure to col- 
 lect the taxes, and the sugar people not unnaturally wanted 
 back from the community what money they had been com- 
 pelled to spend in that Quixotic litigation. 
 
 The railway situation in England throws an interesting 
 side-light on the subject. In 1872, a report was made to 
 Parliament by a committee theretofore appointed to inves- 
 tigate and report back the condition of the English rail- 
 ways. The report of this Select Committee on Railway 
 
49 
 
 Amalgamation contains much illuminative matter and par- 
 ticularly makes the significant statement that, from the 
 commencement of railway construction in England down 
 to 1872, Parliament and the English courts alike had unit- 
 ed in vigorous efforts to prevent the consolidation of in- 
 dependent railroad companies in that country ; that during 
 the same period of time, charters had been granted by 
 Parliament to over six hundred railroad companies; but 
 that in 1872 the railway business of the Kingdom was sub- 
 stantially performed by no more than about six companies. 
 At the same time the English people are well served by 
 their common carriers; they have costly roadbeds, fast, 
 punctual and an exceptionally safe service, and rates only 
 somewhat above the lowest that are charged by any rail- 
 roads in the world. 
 
 The same thing has been equally true in every part of 
 the United States, in respect to railway consolidation. 
 Thus, in New England every sort of effort was made, both 
 by statute and by litigation, to prevent railway combina- 
 tion, but to-day three consolidated companies control 
 about all the railway business that is worth controlling in 
 the six New England states. So in New York, where we 
 find the New York Central made up of a half score of 
 smaller companies; in Pennsylvania, where the Pennsyl- 
 vania Railroad controls almost the entire carrying busi- 
 ness of the state. In the South, where three or four amal- 
 gamated companies do almost all the carrying business. 
 We have all of us everywhere tried manfully to prevent 
 combination among railways throughout the United 
 States, certainly with no large measure of success. Isn't 
 it high time for even the dullest of us to learn that it can’t 
 be done? 
 
 Within the limits of no state in the Union is this to be 
 seen in a clearer perspective than in the state of Texas. 
 At the end of the Civil War, Texas had comparatively 
 
50 
 
 few miles of railway and no communication whatever by 
 rail with the outside world. As soon as railway construc- 
 tion commenced there, statutes of the most stringent char- 
 acter were enacted against the consolidation of independ- 
 ent companies. In 1875, the Constitution of the state 
 went to the extreme of the language in forbidding every 
 such concert or combination, and a State Railroad Com- 
 mission with plenary powers was duly created to safe- 
 guard the public interest along these lines. Suits have 
 also been repeatedly prosecuted by the state authorities to 
 check and prevent amalgamation. As a net result of all 
 these visionary doings, Texas now has something over ten 
 thousand miles of well-built and well-equipped railroad, 
 substantially all of which fall into one or other of three 
 systems, and with a single exception, which for the mo- 
 ment exists but does not much make against the rule, all 
 the railroads of any commercial consequence in that state 
 are substantially owned and absolutely controlled by three 
 gentlemen who live near together, not far from the cor- 
 ner of Fifty-seventh street and Fifth avenue, in the city of 
 New York. 
 
 Although there is criticism of trusts in plenty, and al- 
 though we have had for many years a wealth of sugges- 
 tion 011 the subject, it is not easy to find out and to formu- 
 late exactly and precisely what the critics would like to 
 have. This difficulty seems to have confronted the plead- 
 ers in drafting their bills of complaint in the various suits 
 that have been brought against trusts. It is found to be 
 far easier to deliver one’s self in rounded phrase upon the 
 evils of monopoly, and to prate piously about the op- 
 pression of the poor, than to draw a pleading in a suit in 
 equity so as not to have it demurrable. We may infer 
 from the legislation we are having that the drafters of 
 statutes against trusts have likewise been confronted with 
 the practical difficulty of putting down on paper some- 
 
5 * 
 
 thing that will stick. Nor has it been found easy, even 
 after the suit is brought and a demurrer to the complaint 
 overruled, to make intelligent and adequate proof of the 
 wrongs complained of. Much of the testimony offered on 
 behalf of the complainants in such of these trust cases 
 as get to trial has been puerile and grotesque ; so that, on 
 some familiarity with the testimony in many of these 
 cases, one is not surprised to find either that so few suits 
 are brought, or that so few of those tried result in judg- 
 ments against the trusts. 
 
 In one case brought under the Sherman Law, to which 
 my attention has lately been called, ( Whitwell v. Conti- 
 nental Tobacco Co., Circuit Court of Appeals for the Eighth 
 Circuit, May. 1903), where the complaint bristled with al- 
 legations of wrongdoing on the part of the defendant 
 trust, it turned out, upon a careful sifting of the material 
 allegations of the bill, that the gravamen of the complaint, 
 and the only specific wrong actually alleged, was that the 
 trust — a private corporation — refused to sell its product 
 to the complainant on terms attempted to be dictated to 
 it by the complainant, but that on the contrary it insisted 
 upon its right to do its own private business in its own 
 way and on its own terms. Lawyers find little difficulty in 
 drawing their pleadings when a plain violation of law is to 
 be stated, and little trouble in proving their cases, when 
 they have got a case to prove ; but the mouthings of blath- 
 erskites about “monopolies,” and frothy twaddle about the 
 evils of “combinations’’ and the hidden iniquity that lurks 
 in “conspiracies against trade and commerce,” when re- 
 duced to writing, or, as a mathematician would say, when 
 reduced to their lowest terms, whittle down very thin. 
 
 What then really is it that the critics want ? Do they want 
 to regulate trusts in the public interest, or to regulate 
 them out of existence? Do they want prices higher or 
 lower? If so, what prices, the prices of their own prod- 
 
52 
 
 uct or those of other people? Do they want more business 
 done, or less? Do they want to press the oak back into 
 the acorn, and relegate onr business to primitive condi- 
 tions? We know exactly what Andrew Jackson wanted. 
 His ideal twentieth-century commonwealth was to get on 
 without banks. He frankly put that in writing, gave his 
 reason and signed his name to it. We wish that our in- 
 genuous anti-trust friends, instead of treating us to gen- 
 eralities, and wearying us with declamation, would be as 
 specific in their statements, and tell us precisely what they 
 want and why they want it. Their propaganda is too 
 vague, and the remedies they propose out of all proportion 
 to any mischief in sight. It is an amazing fact that during 
 the present session of Congress more than one hundred 
 different so-called anti-trust bills have been introduced in 
 the two houses, proposing more than an hundred cures 
 for as many alleged public grievances in the nature of 
 trusts ; of the best of which bills it may be confidently as- 
 serted that they are no whit better than the Sherman Law 
 and of most of them that they seek to enact impossible 
 and transparent nonsense into our Federal statute book. 
 
 Sometimes it is over-capitalization and watered stock 
 that are the subjects of their animadversion ; and it is 
 sometimes pretended that there is some mysterious ratio 
 or relation between the amount of the nominal capital 
 stock of a concern and the price it can get in the market 
 for its goods, or, to state it in another wav, that dividends 
 must be earned on watered stock and that that considera- 
 tion fixes trust prices. People who know anything know 
 better than that, but still this sort of nonsense goes about 
 and does service sometimes as an anti-trust argument. No 
 amount of knock-out is able to kill it. One-half minute’s 
 sober thinking should, it seems, make an end of this ex- 
 ceptionally imbecile proposition. If any man thinks that 
 increasing his nominal capital stock will have any tend- 
 
53 
 
 ency to increase the earning- capacity of his property, let 
 him try it ; and if any man sees any connection between the 
 capital stock of the corner grocefy and the price of soap 
 and candles, except possibly as the larger capitalization 
 makes a little for lower prices on the average — why, we 
 can’t stop to argue with him ; and if anyone thinks that a 
 railway capitalized at sixty thousand dollars a mile can 
 charge twice as much for the transportation it has to sell 
 as a railway that is capitalized at thirty thousand dollars 
 a mile — or any fraction of a cent more because of its great- 
 er capitalization — why, that man is a hopeless case. The 
 sober fact is that over-capitalization cures itself, so far as 
 there is any call for a cure ; and as for watered stock the 
 market usually takes very good care of that. The late ex- 
 Speaker Reed, in the article already referred to, in speak- 
 ing to this point, aptly says : 
 
 “But cannot we stop this stock watering? Must 
 we not do it? Well, the value of stock is very much 
 a matter of opinion. It will be noticed that the 
 stock of one of our greatest companies can be 
 bought for less than forty dollars. The par value 
 is one hundred. In the judement of the world there 
 is sixty per cent water, and in the market the water 
 is squeezed out. Could a legislature do it more ef- 
 fectually? As that same stock once sold at fifty-five, 
 there was a time when there was only forty-five per 
 cent of water. Is it proposed in the new constitu- 
 tional amendment to specify how often the test for 
 water is to be applied? Are the stockholders to be 
 assessed daily for the variations of each dav, or are 
 the directors to be indicted daily? Shall officers of 
 the Government determine the value, or the public 
 in open market ?” 
 
 Then, again, we hear that publicity is the cure-all; but 
 here again only a little reflection serves to advise us that 
 free men cannot be compelled, in a free country, by a stat- 
 ute, to disclose what they wish to conceal about their busi- 
 
54 
 
 ness concerns. People who are sanguine on this point had 
 better study railroad reports a bit, to gain a realizing 
 sense of the capacity — rising almost to genius — that men 
 sometimes display for not disclosing things. Some of 
 these documents put Talleyrand to the blush. Again Mr. 
 Reed well says: 
 
 ‘‘Almost everybody announces that what we need 
 is ‘publicity/ Even this is vague. Do you expect 
 the public to be intrusted with the cost sheets? It 
 you do not, then what will your publicity amount 
 to? If you mean by ‘publicity 1 such a statement as 
 will enable the outsider to buy wisely, or the stock- 
 holder to sell at the true value, I fear we may be 
 going beyond the province of free government, 
 which certainly thus far has left the task of keeping 
 his fingers out of the fire to the citizen whose fingers 
 they were.” 
 
 Next comes a Solon with a bill up his sleeve for lim- 
 iting fortunes to, say, a maximum figure of ten millions 
 of dollars.-. Two such measures are now actually pending 
 in Congress, and one or both of them may become laws. 
 A scoffer has suggested that it would have been better 
 to provide for a minimum of no more than one hundred 
 thousand dollars for each adult male in the country. So 
 far from any such beneficent provision, however, it is by 
 these enactments proposed, on the contrary, to confis- 
 cate or forfeit any personal holdings of property in ex- 
 cess of the millionaire figure named. It might be just 
 as well, before relying too much on a remedy of this 
 sort, to devise some workable scheme for collecting 
 personal property taxes, which are only a sort of legal 
 confiscation annually of a small per cent of the great 
 fortunes proposed by this legislation to be confiscated at 
 once and in toto. Until we can collect the penny once a 
 year we had better not try to take the pound in fifteen 
 minutes. 
 
55 
 
 It is the function of a critic to criticise, and, at this mo- 
 ment being only a critic, I have not attempted to suggest 
 what legislation of this sort, if any, might be expedient 
 and politic; but rather to point out what appears to me 
 Lo be the inherent weakness and inutility of the existing 
 statutes of this character. There is, it goes without say- 
 ing, such a thing as an unlawful restraint of trade, which 
 is and ought to be contrary to public policy. My propo- 
 sition is, however, that the legislation upon the subject in 
 the United States, both state and federal, has thus far 
 been for the most part the outcome of a condition of the 
 public temper not calculated to promote sane legislation ; 
 that it has been out of joint, and out of line with the most 
 enlightened public policy; that all such legislation is un- 
 scientific, impolitic and fatuous, and that it cannot abide 
 the wear and tear of even the next short time. The furore 
 which occasioned it is already subsiding, and the country 
 will grow more and more away from it, and leave it stand- 
 ing as a monument to the over-zeal of ill-instructed or 
 half-instructed legislators. 
 
 It will in the end do no great harm, and it will do some 
 good if it serve as a warning to future lawmakers, that 
 statutes which fly in the face of enlightened public senti- 
 ment had better not be enacted, and will not be enforced 
 by the courts of a free country ; that such statutes have no 
 place in the corpus juris of an highly civilized commercial 
 community; that water cannot be legislated to run up hill; 
 and, finally, that it is the true function of the legislator to 
 catch the spirit of the time and the drift of affairs, to re- 
 flect them in his work, and laying aside his ill-digested 
 theories and his academic speculations as to what might, 
 in Utopia, be ideally excellent, to do, in the matter of stat- 
 ute making, what he can, and not try to do what he can- 
 not. 
 
56 
 
 Gentlemen of the University : I have not believed that 
 upon such a subject as this I ought to come to you with 
 a loose, extemperaneous harangue, or to address you with 
 the fopperies of rhetoric; I have therefore brought you in 
 sober phrase the message with which I have felt myself 
 charged. It is for university men to lead, and not to fol- 
 low, the thinking of their generation ; to be, on such ques- 
 tions as we have now been considering, not Andrew Jack- 
 sons, with minds befuddled over South-Sea Bubbles, but 
 rather Nicholas Biddles, in the forefront of the best 
 thought and the wisest action in the matter ; not to be of 
 the number of those who, ignorant or heedless of the plain 
 teaching of history and of the elementary verities of social 
 science, run madly now after one and now after another 
 political heresy, abandoning to-day what yesterday the) 
 preached for very truth, and to-morrow denying and pro- 
 testing against the ism of to-day, outgrowing one folly 
 only to grow into another. It is for you to contribute some- 
 thing to national sanity on national questions ; not only to 
 be sane and virile yourselves, but also to communicate 
 your sanity and virility to the commonwealth ; to be factors 
 in building up and not in pulling down ; to set your faces 
 against crude theories and hasty generalization on polit- 
 ical questions, and to be no party to the venting of blatant 
 nonsense in high places; to be clear enough of mental 
 vision calmly to realize, in the face of popular clamor and 
 partisan clack, that a pop-gun, as Emerson phrases it, is 
 only a pop-gun, though the ancient and honorable of the 
 earth proclaim it to be the crack of doom; to gird up the 
 loins of your minds against the intellectual follies of the 
 unthinking multitude, who yesterday feared savings-banks 
 and incorporated companies, who to-day shiver at trusts 
 and mergers, and who to-morrow will be possessed of 
 some new madness; to lay about yourselves lustily and 
 well, at the outset of your several careers, to the end that 
 
you may be, intellectually, materially and morally, of the 
 elect order of the “haves” and not of the “have-nots” ; that 
 you may produce something in your day and generation, 
 and acquire something good for yourselves and others, as 
 God shall give you scope and opportunity ; that you may, 
 in the strenuous existence of to-day, be something better 
 than blind leaders of the blind; and that thus, in a broad 
 and comprehensive sense, you may be in life, as it is given 
 you to live it, — not outsiders, good for nothing, but in- 
 siders, good for something, for of such is the Kingdom of 
 Heaven. 
 
 Charles F. Beach, Jun. 
 
 Pioneer Press Building, 
 
 St. Paul, Minn., Feby. 13, 190*.