United States v. United States Steel Corporation 12, 13 14, 1917
| Decision Date | 21 May 1917 |
| Docket Number | No. 6,6 |
| Citation | 40 S.Ct. 293,251 U.S. 417,64 L.Ed. 343 |
| Parties | UNITED STATES v. UNITED STATES STEEL CORPORATION et al. Argued March 9, 12, 13, and 14, 1917. Restored to docket |
| Court | U.S. Supreme Court |
[Syllabus from pages 417-419 intentionally omitted] Messrs. C. B. Ames, Asst. Atty. Gen., and Henry E. Colton, of Nashville, Tenn., for the United States.
[Argument of Counsel from pages 419-430 intentionally omitted]
Messrs. R. V. Lindabury, of Newark, N. J., David A. Reed, of Pittsburg, Pa., C. A. Severance, of St. Paul, Minn., and Geo. Welwood Murray, Kenneth B. Halstead, W. J. Curtis and Raynal C. Bolling, all of New York City, for appellees.
[Argument of Counsel from pages 430-436 intentionally omitted]
Suit against the Steel Corporation and certain other companies which it directs and controls by reason of the ownership of their stock, it and they being separately and collectively charged as violators of the Sherman Anti-Trust Act (Comp. St. §§ 8820-8823, 8827-8830).
It is prayed that it and they be dissolved because engaged in illegal restraint of trade and the exercise of monopoly.
Special charges of illegality and monopoly are made and special redresses and remedies are prayed, among others, that there be a prohibition of stoc ownership and exercise
of rights under such ownership, and that there shall be such orders and distribution of the stock and other properties as shall be in accordance with equity and good conscience and 'shall effectuate the purpose of the Anti-Trust Act.' General relief is also prayed.
The Steel Corporation is a holding company only; the other companies are the operating ones, manufacturers in the iron and steel industry, 12 in number. There are, besides, other corporations and individuals more or less connected in the activities of the other defendants, that are alleged to be instruments or accomplices in their activities and offendings, and that these activities and offendings (speaking in general terms) extend from 1901 to 1911, when the bill was filed, and have illustrative periods of significant and demonstrated illegality.
Issue is taken upon all these charges, and we see at a glance what detail of circumstances may be demanded, and we may find ourselves puzzled to compress them into an opinion that will not be of fatiguing prolixity.
The case was heard in the District Court by four judges. They agreed that the bill should be dismissed; they disagreed as to the reasons for it. (D. C.) 223 Fed. 55. One opinion expressed the view that the Steel Corporation was not formed with the intention or purpose to monopolize or restrain trade, and did not have the motive or effect 'to prejudice the public interest by unduly restricting competition or unduly obstructing the course of trade.' The corporation, in the view of the opinion, was an evolution, a natural consummation of the tendencies of the industry on account of changing conditions, practically a compulsion from 'the metallurgical method of making steel and the physical method of handling it,' this method, and the conditions consequent upon it, tending to combinations of capital and energies rather than diffusion in independent action. And the
concentration of powers (we are still representing the opinion) was only such as was deemed necessary, and immediately manifested itself in improved methods and products and in an increase of domestic and foreign trade. Indeed an important purpose of the organization was the building up of the export trade in steel and iron which at that time was sporadic, the mere dumping of the products upon foreign markets.
Not monopoly, therefore, was the purpose of the organization of the corporation, but concentration of efforts, with resultant economies and benefits.
The tendency of the industry and the purpose of the corporation in yielding to it was expressed in comprehensive condensation by the word 'integration,' which signifies continuity in the processes of the industry from ore mines to the finished product.
All considerations deemed pertinent were expressed and their influence was attempted to be assigned and, while conceding that the Steel Corporation after its formation in times of financial disturbance, entered into informal agreements or understandings with its competitors to maintain prices, they terminated with their occasions, and, as they had ceased to exist, the court was not justified in dissolving the corporation.
The other opinion, by Judge Woolley and concurred in by Judge Hunt (223 Fed. 161), was in some particulars, in antithesis to Judge Buffington's. The view was expressed that neither the Steel Corporation nor the preceding combinations, which were in a sense its antetypes, had the justification of industrial conditions, nor were they or it impelled by the necessity for integration, or compelled to unite in comprehensive enterprise because such had become a condition of success under the new order of things. On the contrary, that the organizers of the corporation and the preceding companies had illegal purpose from the very beginning, and the corporation
became 'a combination of combinations by which, directly or indirectly, approxia tely 180 independent concerns were brought under one business control,' which, measured by the amount of production, extended to 80 per cent. or 90 per cent. of the entire output of the country, and that its purpose was to secure great profits which were thought possible in the light of the history of its constituent combinations, and to accomplish permanently what those combinations had demonstrated could be accomplished temporarily, and thereby monopolize and restrain trade.1
The organizers, however, (we are still representing the opinion) underestimated the opposing conditions and at the very beginning the corporation instead of relying upon its own power sought and obtained the assistance and the cooperation of its competitors (the independent companies). In other words the view was expressed that the testimony did 'not show that the corporation in and of itself ever possessed or exerted sufficient power when acting alone to control prices of the products of the industry.' Its power was efficient only when in co-operation with its competitors, and hence it concerted with them in the expedients of pools, associations, trade meetings, and finally in a system of dinners inaugurated in 1907 by the president of the company, E. H. Gary, and called 'the Gary Dinners.' The dinners were congregations of producers and 'were nothing but trade meetings,' successors of the other means of associated action and control through such action. They were instituted first in 'stres of panic,' but their potency being demonstrated they were afterwards called to control prices 'in periods of industrial calm.' 'They were pools without penalties' and more efficient in stabilizing prices. But it was the further declaration that 'when joint action was either refused or withdrawn the corporation's prices were controlled by competition.
The corporation, it was said, did not at any time abuse the power or ascendency it possessed. It resorted to none of the brutalities or tyrannies that the cases illustrate of
other combinations. It did not secure freight rebates; it did not increase its profits by reducing the wages of its employes whatever it did was not at the expense of labor; it did not increase its profits by lowering the quality of its products, nor create an artificial scarcity of them; it did not oppress or coerce its competitors—its competition, though vigorous, was fair; it did not undersell its competitors in some localities by reducing its prices there below these maintained elsewhere, or require its customers to enter into contracts limiting their purchases or restricting them in resale prices; it did not obtain customers by secret rebates or departures from its published prices; there was no evidence that it attempted to crush its competitors or drive them out of the market, nor did it take customers from its competitors by unfair means, and in its competition it seemed to make no difference between large and small competitors. Indeed it is said in many ways and illustrated that 'instead of relying upon its own power to fix and maintain prices, the corporation, at its very beginning sought and obtained the assistance of others.' It combined its power with that of its competitors. It did not have power in and of itself, and the control it exerted was only in and by association with its competitors. Its offense, therefore, such as it was, was not different from theirs and was distinguished from 'theirs only in the leadership it assumed in promulgating and perfecting the policy.' This leadership it gave up and it had ceased to offend against the law before this suit was brought. It was hence concluded that it should be distinguished from its organizers and that their intent and unsuccessful attempt should not be attributed to it, that it 'in and of itself is not now and has never been a monopoly or a combination in restraint of trade,' and a decree of dissolution should not be entered against it.
This summary of the opinions, given necessarily in paraphrase, does not adequately represent their ability
and strength, but it has value as indicating the contentions of the parties, and the ultimate propositions to which the contentions are addressed. The opinions indicate that the evidence admits of different deductions as to the genesis of the corporation and the purpose of its organizers, but only of a single deduction as to the power it attained and could exercise. Both opinions were clear and confident that the power of the corporation never did and does not now reach to monopoly, and their review of the...
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