United States v. Reading Company No 198 Temple Iron Company v. United States No 206 Reading Company v. United States No 217 217
| Citation | 33 S.Ct. 90,57 L.Ed. 243,226 U.S. 324 |
| Decision Date | 16 December 1912 |
| Docket Number | Nos. 198,206,s. 198 |
| Parties | UNITED STATES, Appt., v. READING COMPANY et al. NO 198. TEMPLE IRON COMPANY, Appt., v. UNITED STATES. NO 206. READING COMPANY et al., Appts. v. UNITED STATES. NO 217. , and 217 |
| Court | United States Supreme Court |
[Argument of Counsel from pages 324-326 intentionally omitted] Messrs. J. C. McReynolds and G. Carroll Todd, Special Assistants to the Attorney General, and Attorney General Wickersham for the United States.
[Argument of Counsel from pages 326-329 intentionally omitted] Messrs. John G. Johnson and Charles Heebner for the Reading Company et al.
Mr. Frank H. Platt for the Lehigh Valley R. Co. et al.
Messrs. Robert W. de Forest and Jackson E. Reynolds for the Central R. Co. of New Jersey et al.
Mr. William S. Jenney for the Delaware, L. & W. R. Co.
[Argument of Counsel from pages 329-331 intentionally omitted] Mr. James H. Torrey for the Enterprise Coal Company et al.
Messrs. James H. Torrey and William S. Opdyke for the Delaware & Hudson Company.
[Argument of Counsel from page 332 intentionally omitted] Mr. William W. Green for the Mercantile Trust Company.
Messrs. Adelbert Moot and George F. Brownell for the Erie Railroad Company et al.
[Argument of Counsel from pages 333-335 intentionally omitted] Mr. Everett Warren for the Temple Irom Company.
[Argument of Counsel from pages 335-337 intentionally omitted] Mr. Justice Lurton delivered the opinion of the court:
This is a petition in equity, filed by the United States in the circuit court of the United States for the eastern district of Pennsylvania, for the purpose of enforcing the provisions of the act of July 2, 1890 [26 Stat. at L. 209, chap. 647, U. S. Comp. Stat. 1901, p. 3200], known as the Sherman anti-trust act, against an alleged combination of railroad and coal-mining companies formed and continued for the purpose of restraining competition in the production, sale, and transportation of anthracite coal in commerce among the states.
The defendants originally made such, and alone referred to hereafter as the defendants, were the following:
The Philadelphia & Reading Railway Company; the Philadelphia & Reading Coal & Iron Company; the Lehigh Valley Railroad Company; the Lehigh Valley Coal Company; the Delaware, Lackawanna & Western Railroad Company; the Central Railroad Company of New Jersey; the Erie Railroad Company; the New York, Susquehanna, & Western Railroad Company; the New York, Susquehanna, & Western Coal Company; the Lehigh & Wilkesbarre Coal Company; the Pennsylvania Coal Company; the Hillside Coal Company; the Reading Company; and the Temple Iron Company. By an amendment certain other defendants were brought in, consisting of holders of contracts made by independent operators of coal mines, and trustees holding securities which might be affected by the relief sought against the carrier and coal-mining companies, the original defendants. A list of these later defendants is set out in the margin, and when they are referred to herein they will be specifically mentioned.
The Delaware & Hudson Company; Elk Hill Coal & Iron Company; St. Clair Coal Company; Enterprise Coal Company; Buck Run Coal Company; Llewellyn Mining Company; Clear Spring Coal Company; Pancoast Coal Company; Price-Pancoast Coal Company; Mount Lookout Coal Company; People's Coal Company; George F. Lee Coal Company; North End Coal Company; Melville Coal Company; Parrish Coal Company; Red Ash Coal Company; Raub Coal Company; Mid Valley Coal Company; Austin Coal Company; Clarence Coal Company; Nay Aug Coal Company; Green Ridge Coal Company; Excelsior Coal Company; Lackawanna Coal Company; Dolph Coal Company, Limited; Mary F. W. Howe, Frank Pardee, and Sarah Drexel Van Rensellaer, constituting A. Pardee & Company; Lafayette Lentz, William O. Lentz, and Lewis A. Riley, constituting Lentz & Company; William Law and John M. Robertson, constituting Robertson & Law; Richard White, W. R. McTurk, and Robert White, constituting E. White Company; Joseph J. Jermyn, George B. Jermyn, Emma J. Jermyn, constituting John Jermyn Estate; Joseph J. Jermyn, Michael F. Dolphin; the Pennsylvania Company for Insurance on Lives and Granting Anuities; and the Mercantile Trust Company.
The bill alleges that anthracite coal is an article of prime necessity as a fuel, and finds its market mainly in the New England and middle Atlantic states. The deposits of the coal, with unimportant exceptions, lie in the state of Pennsylvania, but do not occupy a continuous field, though found in certain counties adjoining in the eastern half of the state, and embrace an area of 484 square miles. This coal region is from 150 to 250 miles from tide water. The region itself is broken and mountainous, and the natural conditions and character of the deposits are such that the mining and reduction of the coal to suitable sizes for domestic use require very large amounts of capital. Its value commercially is dependent, in a large degree, upon quick and cheap transportation to convenient shipping points at tide water, from whence it may be distributed to the great consuming markets of the Atlantic coast states.
The whole problem of advantageously developing these deposits and supplying the eastern demand for fuel was one which presented enormous difficulties. From an early day it has been the settled policy of the state of Penn- sylvania to encourage the development of this coal region by canal and railroad construction, which would furnish transportation to convenient shipping points at tidewater. One of the defendant carriers, the Delaware, Lackawanna, & Western Company was given the power to acquire coal lands and engage in the business of mining and selling coal in addition to the business of a common carrier, and all railroad companies were permitted to aid in the production of coal by assisting coal mining companies through the purchase of capital stock and bonds. Thus, it has come about that the defendant carriers not only dominate the transportation of coal from this anthracite region to the great distributing ports at New York harbor, but also through their controlled coal-producing companies, produce and sell about 75 per cent of the annual supply of anthracite. As a further direct consequence of the state authorized between coal-producing and coal-transporting companies, it has come about that the defendant carrier companies and the coal-mining companies affiliated with the carrier companies now own or control about 90 per cent of the entire unmined area of anthracite, distributed, according to the averments of the petition, as follows:
Reading Company 44 per cent
Lehigh Valley Company 16.87 per cent
Del. L. & Western Company 6.55 per cent
Cent. Railroad of New Jersey 19 per cent
Erie Railroad 2.59 per cent
N.Y.S. & Western Railroad .54 per cent
-------------
89.55 per cent
It further appears that, in addition to the great coal-mining companies subsidiary to one or another of the defendant carrier companies, there are a large number of independent coal operators whose aggregate production from coal lands, in part leased from the railroad companies or the railroad-controlled coal-producing companies, amounts to about 20 per cent of the annual anthracite supply. These independent operators are said to no longer have the power to compete with the carrier defendants and their subsidiary coal companies, because a large proportion of them have severally entered into contracts with one or the other of the carrier or coal-mining companies defendant for the sale of the entire product of their mines for the consideration of 65 per cent of the average market price at tide water.
Thus, there exists, independently of any agreement, combination, or contract between the several defendant carrier companies for the purpose of suppressing competition among them, this condition:
First: Excluding two carrier companies not made defendants, which reach but a limited number of collieries,—the Pennsylvania Railroad Company and the New York, Ontario, & Western Railroad Company,—the six carrier companies who are defendants are shown to control the only means of transportation between this great anthracite deposit and tide water, from whence the product may be distributed by rail and water to the great consuming markets of the Atlantic coast states.
Second: These carriers and their subsidiary coal-mining and selling companies produce and sell about 75 per cent of the total annual supply of anthracite coal. Of the remainder, the independent operators mentioned above produce about 20 per cent.
The chief significance of the fact that the six carrier defendants control substantially the only means for the transportation of coal from the mines to distributing points at tide water is in the fact that they, collectively, also control nearly three fourths of the annual supply of anthracite which there finds a market. The situation is therefore one which invites concerted action and makes ex- ceedingly easy the accomplishment of any purpose to dominate the supply and control the prices at seaboard. The one fourth of the total annual supply which comes from independent operators in the same region has been sold in competition with the larger supply of the defendants. If, by concert of action, that source of competition be removed, the monopoly which the defendants, acting together, may exert over production and sale, will be complete.
This bill avers that the defendants have combined for the purpose of securing their collective grip upon the anthracite coal supply by exerting their activities to shut out from the district any new line of transportation from the mines to tide water points, and to shut out from competition at tide water the...
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