Volume Vi Part 19 (1/2)

[1907]

The Northern Securities Company is a corporation, formed under the laws of New Jersey, for the purpose of obtaining control of a majority of the stock of the Northern Pacific Railroad and part of the stock of the Great Northern Railroad. These roads, which parallel each other from Lake Superior to the Pacific, have been held by the courts, in the case of Pearsall vs. the Great Northern Railway, to be competing lines.

The organizers of the Northern Securities Company contended that their ultimate purpose in organizing the company was to control the two railway systems not for the purpose of suppressing compet.i.tion, but to create and develop a volume of trade among the States of the Northwest and between the Orient and the United States by establis.h.i.+ng and maintaining a permanent schedule of cheap transportation rates.

When the company had completed its organization and the full significance of the organization was known, the State of Minnesota inst.i.tuted proceedings against the company in the State courts. Later the case was transferred to the federal Circuit Court and eventually carried to the Supreme Court of the United States, where the contentions of the State were overruled.

In March, 1902, a suit was inst.i.tuted by the United States in the Circuit Court of the eighth federal district. The judges who sat upon the case decided unanimously that the acquisition of the stock of the Northern Pacific and the Great Northern Railways by the Securities Company was a combination for the restraint of trade among the States, and therefore a violation of the Sherman act. A decree was issued by the court prohibiting the company from acquiring any more of the stock of these roads and from exercising any control over either of the roads in question.

[Ill.u.s.tration: Group portrait.]

Copyright by Clinedinst. Was.h.i.+ngton.

W. Van Devanter. H. H. Lurton. C. E. Hughes. J. R. Lamar.

O. W. Holmes. J. M. Harlan. E. D. White. J. E. McKenna W. R. Day.

Justices of the United States Supreme Court who acted upon the cases of the Standard Oil and American Tobacco Companies.

The case was carried to the Supreme Court which by a vote of five to four, affirmed the decree of the lower court. In the majority opinion the court took the position that the mere acquisition by the Securities Company of the stock of the two roads was in itself a combination for the restraint of trade. The power to do things made unlawful by the Sherman act had been acquired and this in effect violated that act.

Another point was made clear by the court. The defendants had vigorously denied that the power of Congress over interstate commerce was extended to the regulation of railway corporations organized under State laws, by reason of these corporations engaging in interstate commerce. The court declared that while this was not the intention of the Government, the Government was acting within its rights when it took steps, not prohibited under the Const.i.tution, for protecting the freedom of interstate commerce. Furthermore, it was held that no State corporation could stand in the way of the enforcement of the national will by extending its authority into other States. In substance the court denied the right of any State to endow a corporation of its creation with power to restrain interstate commerce.

The contention of the defendants, that the Sherman law was intended to prohibit only those restraints which are unreasonable at common law, was dismissed on the ground that this question had been pa.s.sed upon by the lower court in other cases.

The dissenting opinions were two in number and were written by Justice White and Justice Holmes.

Several conclusions of importance may be drawn from the court's decision.

1. That Congress may forbid transactions of purchase and sale when such transactions confer on an individual or group of individuals the power to destroy compet.i.tion.

2. No State can create corporations and confer upon them power to interfere with interstate commerce.

3. The Sherman law is not to be interpreted as forbidding the reasonable restraints of trade which are not objectionable at common law.

The Bailey case is one of importance by reason of the fact that the decision handed down by the Supreme Court was an effective blow against the ”peonage system,” which is an evasion of the const.i.tutional prohibition of slavery. The Alabama law provides, in effect, that the mere act of quitting work on the part of a contract laborer is conclusive evidence that he is guilty of the crime of defrauding his employer.

Alonzo Bailey was engaged by a corporation to do farm work and signed a contract for a year, the wages being $12 a month. The company, to bind the contract, paid Bailey $15 down and it was agreed that thereafter he should be paid at the rate of $10.75 a month. After working a month and a few days he left. Instead of suing him for a breach of contract and recovery of damages, the company caused the arrest of Bailey on the charge of an attempt to defraud. No direct evidence could be produced that this was his intention, but the law expressly authorized the jury to find him guilty of fraud, on the ground that he quitted work. The accused was not allowed to testify as to his unexpressed intention. His opportunity to escape prison was to pay back the $15 or to work out the sum. In case neither was done, he was to be fined double the amount paid at the time of making the contract or go to work at hard labor.

The attorneys for Bailey, wis.h.i.+ng to test the const.i.tutionality of the Alabama law, carried the case to the Supreme Court of the United States.

The const.i.tutionality of the law was called into question on the following grounds: (1) That it violated the prohibition against involuntary service; (2) it denied the plaintiff in error the right of due process of law; (3) that by laying a burden on the employee and no equivalent burden on the employer, the law denied to the plaintiff the const.i.tutional right of equal protection of the laws.

The decision of the court was not unanimous. Justices Holmes and Lurton upheld the Alabama law, but the majority, in an opinion written by Justice Hughes, declared the law in conflict with the Thirteenth Amendment, which prohibits slavery or involuntary servitude, except as a punishment for crime.

The significance of the decision is this--slavery has been outlawed by our highest court, and one more legal barrier to the progress of the black man has been removed.

The case of Loewe vs. Lawler, probably better known to the public as the Danbury Hatters case, was decided by the Supreme Court in February, 1908, Chief Justice Fuller rendering the decision. The action was brought originally in the United States Circuit Court for the District of Connecticut and, after pa.s.sing through the Circuit Court of Appeals, reached the Supreme Court late in 1907.

[Ill.u.s.tration: Portrait.]

Photograph copyright by Clinedinst, Was.h.i.+ngton.